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TRANSCRIPT
Document of
The World Bank
Report No: ICR00002545
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(TF-95283)
ON A
GRANT
IN THE AMOUNT OF US$52.5 MILLION
TO THE
PEOPLE’S REPUBLIC OF BANGLADESH
FOR A
DEEPENING MTBF AND STRENGTHENING FINANCIAL ACCOUNTABILITY
PROJECT (P117248)
March 27, 2015
GOVERNANCE GLOBAL PRACTICE
SOUTH ASIA REGION
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CURRENCY EQUIVALENTS
(Exchange Rate Effective January 1, 2015)
Currency Unit = Bangladesh Taka
1.00 = US$ 0.013
US$ 1.00 = 77.9
FISCAL YEAR
July 1 – June 30
ABBREVIATIONS AND ACRONYMS
ACCA Association of Chartered Certified Accountants
ADB Asian Development Bank
ADP Annual Development Program
AMS Asset Management System
APR Annual Performance Report
BACS Budget and Accounts Classification System
BB Bangladesh Bank
BDT Bangladesh Taka
BMB Budget Management Branch
BMC Budget Management Committee
BMG Budget Management Group
BMS Budget Management Section
BMW Budget Management Wing
BSP Budget Strategy Paper
BWG Budget Working Group
C&AG Comptroller & Auditor General
CIDA Canadian International Development Agency
COA Chart of Accounts
COFOG Classification of Function of Government
COTS Commercial off-the-shelf
DANIDA Danish International Development Agency
DAO District Account Office/r
DFAT Department for Foreign Affairs, Trade and Development
DFID Department for International Development
DLI Disbursement-Linked Indicators
DMFAS Debt Management and Financial Analysis System
DMTBF Deepening MTBF
DSA Debt Sustainability Analysis
DSC Development Support Credit
EC European Commission
EFT Electronic Fund Transfer
ERD Economic Relations Division
FABA Foreign Aid, Budget and Accounts
FBE Forward Baseline Estimate
FD Finance Division
FIMA Financial Management Academy
FMIS Financial Management Information System
FMRP Financial Management Reform Program
FOC Financial Oversight Committee
FSMU Financial Systems Management Unit
FY Financial Year
FYP Five Year Plan
GDP Gross Domestic Product
GED General Economics Division
GFR General Financial Rules
GFSM Government Financial Statistics Manual
GoB Government of Bangladesh
GPF General Provident Fund
HR Human Resources
IBAS Integrated Budget and Accounting System
ICR Implementation Completion Report
ICT Information and Communication Technology
IDT iBAS++ Development Team
IFR Interim Financial Report
IPF Institute of Public Finance
IPSAS International Public Sector Accounting Standards
IRI Intermediate Results Indicator
ISR Implementation Status and Results
IT Information Technologies
JSF Joint Strategic Framework
KPI Key Performance Indicator
LM Line Ministry
M&E Monitoring and Evaluation
MDTF Multi-Donor Trust Fund
MEW Macro-Economic Wing (Finance Division)
MISC Management Implementation Support Consultant
MOA Ministry of Agriculture
MOF Ministry of Finance
MTBF Medium Term Budget Framework
MTDS Medium Term Debt Strategy
MTMF Medium Term Macro Framework
MTR Mid-Term Review
MTSBP Medium Term Strategic Business Plan
NBR National Board of Revenue
NLTA Non Lending Technical Assistance
NSAPR National Strategy for Accelerated Poverty Reduction
NSD National Savings Directorate
OCAG Office of the Comptroller and Auditor General
PAC Public Accounts Committee
PAD Project Appraisal Document
PC Planning Commission
PDO Project Development Objective
PEFA Public Expenditure Financial Accountability
PETS Public Expenditure Tracking Survey
PFM Public Financial Management
PMBMA Public Money and Budget Management Act
PMCU Project Management and Coordination Unit
QFMR Quarterly Financial Management Reports
RBM Results Based Management
RHD Roads and Highways Department
RIBEC Reforms in Budgeting and Expenditure Control
SAE Self-Accounting Entities
SAN Statement of Audit Needs
SMART Specific, Measurable, Attainable, Relevant, Time-bound
SOE State-Owned Enterprise
SPEMP Strengthening Public Expenditure Management Program
SRS System Requirement Specification
SWAPs Sector Wide Approaches
TA Technical Assistance
TDMW Treasury and Debt Management Wing
TMIS Training Management Information System
ToR Terms of Reference
TPP Technical Project Proposal
TSA Treasury Single Account
TTL Task Team Leader
UAO Upazilla Account Officer
UNCTAD United Nations Conference on Trade and Development
UNDP United Nations Development Program
WB World Bank
Vice President : Annette Dixon
Country Director : Johannes C. M. Zutt
Sector Manager : Alexandre Arrobbio
Project Team Leader : Jonas Arp Fallov
ICR Team Leader : John Ivor Beazley
BANGLADESH
Deepening MTBF and Strengthening Financial Accountability (P117248)
CONTENTS
A. Basic Information ....................................................................................................... i
B. Key Dates .................................................................................................................... i
C. Ratings Summary ....................................................................................................... ii
D. Sector and Theme Codes ........................................................................................... ii
E. Bank Staff .................................................................................................................. iii
F. Results Framework Analysis ..................................................................................... iii
G. Ratings of Project Performance in ISRs ................................................................... ix
H. Restructuring (if any) ................................................................................................ ix
I. Disbursement Profile .................................................................................................. x
1. Project Context, Development Objectives and Design............................................... 1
1.1 Context at Appraisal 1
1.2 Original Project Development Objectives (PDO) and Key Indicators 2
1.3 Revised PDO and Key Indicators, and Reasons/Justifications 3
1.4 Main Beneficiaries 3
1.5 Original Components 4
1.6 Revised Components 4
1.7 Other Significant Changes 5
1.8 Project Component Allocations: Revisions over Project Life 6
2. Key Factors Affecting Implementation and Outcomes .............................................. 7
2.1 Project Preparation, Design and Quality at Entry 7
2.2 Implementation 10
2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 16
2.4 Safeguard and Fiduciary Compliance 16
2.5 Post-completion Operation/Next Phase 19
3. Assessment of Outcomes .......................................................................................... 20
3.1 Relevance of Objectives, Design and Implementation 20
3.2 Achievement of Project Development Objectives 21
3.3 Efficiency 22
3.4 Justification of Overall Outcome Rating 22
3.5 Overarching Themes, Other Outcomes and Impacts 23
4. Assessment of Risk to Development Outcome ........................................................ 25
5. Assessment of Bank and Borrower Performance ..................................................... 25
5.1 Bank Performance 25
5.2 Borrower Performance 29
6. Lessons Learned ....................................................................................................... 32
7. Comments on Issues Raised by Grantee/Implementing Agencies/Donors .............. 36
Annex 2. Ratings and Outputs by Component ............................................................. 38
Annex 3. Economic and Financial Analysis ................................................................. 62
Annex 4. Expected Results per Objective (at approval) ............................................... 63
Annex 5. Grant Preparation and Implementation Support/Supervision Processes ....... 65
Annex 6. Summary of Grantee's ICR and/or Comments on Draft ICR ....................... 66
Annex 7. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 67
MAP .............................................................................................................................. 68
i
BANGLADESH
Deepening MTBF and Strengthening Financial Accountability (P117248)
DATA SHEET
A. Basic Information
Country: Bangladesh Project Name:
Deepening MTBF and
Strengthening Financial
Accountability
Project ID: P117248 L/C/TF Number(s): TF-95283
ICR Date: 03/26/2015 ICR Type: Core ICR
Lending Instrument: TAL Grantee: GOVERNMENT OF
BANGLADESH
Original Total
Commitment: USD 50.00M Disbursed Amount: USD 52.29M
Revised Amount: USD 52.50M
Environmental Category: C
Implementing Agencies:
Finance Division
Cofinanciers and Other External Partners: European Union (EU) Embassy of Denmark High Commission of Canada (CIDA) Dept. of Intl. Dev. (DFID)
Embassy of Netherlands
B. Key Dates
Process Date Process Original Date Revised / Actual
Date(s)
Concept Review: Effectiveness: 11/02/2009 11/02/2009
Appraisal: Restructuring(s):
05/07/2012
11/04/2013
06/29/2014
07/15/2014
Approval: 09/23/2009 Mid-term Review:
Closing: 07/31/2014 09/30/2014
ii
C. Ratings Summary
C.1 Performance Rating by ICR
Outcomes: Highly Unsatisfactory
Risk to Development Outcome: Moderate
Bank Performance: Highly Unsatisfactory
Grantee Performance: Highly Unsatisfactory
C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry: Highly Unsatisfactory Government: Highly Unsatisfactory
Quality of Supervision: Unsatisfactory Implementing
Agency/Agencies: Highly Unsatisfactory
Overall Bank
Performance: Highly Unsatisfactory
Overall Borrower
Performance: Highly Unsatisfactory
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): Yes
Quality of
Supervision (QSA): None
DO rating before
Closing/Inactive status: Unsatisfactory
D. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
Public administration- Financial Sector 100 100
Theme Code (as % of total Bank financing)
Public expenditure, financial management and
procurement 100 100
iii
E. Bank Staff
Positions At ICR At Approval
Vice President: Annette Dixon Isabel M. Guerrero
Country Director: Johannes C.M. Zutt Ellen A. Goldstein
Practice
Manager/Manager: Alexandre Arrobbio Joel Hellman
Project Team Leader: John Ivor Beazley Alma Kanani
ICR Team Leader: John Ivor Beazley
ICR Primary Author:
F. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document)
The objective of the Project per the Grant Agreement was "to strengthen and modernize
budget management institutions within the Recipient with a particular emphasis on a
performance orientation in public financial management through institutionalizing the
Medium Term Budget Framework and Strengthening Financial Accountability". This was
slightly different from the objective stated in the PAD which was to "deepen and
institutionalize the medium-term budget framework (MTBF) and build a more strategic
and performance oriented budget management process, while strengthening financial
accountability across the expenditure management cycle." For the purposes of the ICR, the
PDO in the Grant Agreement with the Government has been used as the basis for assessing
the results.
The Project supported fundamental reforms of operational budget management functions
in both central units and line ministries. Enhanced budget process and financial
accountability were considered likely to improve the allocative and operational efficiency
in public expenditure management which in turn would enable better provision of key
public services in support of the Government's social and economic policy objectives.
Revised Project Development Objectives (as approved by original approving authority)
The PDO has not been revised. With the benefit of hindsight it would have been advisable
to revise the PDO as part of the restructuring process, perhaps removing the emphasis on
performance orientation, since the Government showed relatively little interest in this
aspect of the reforms.
iv
(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 : Line ministries (LM) with MTBF meeting specific criteria (3)
Value
quantitative or
Qualitative)
0% N/A 80% 60%
Date achieved 02/28/2010 06/30/2014 09/30/2014
Comments
(incl. %
achievement)
The indicator was not achieved. Only one of the three criteria was fully achieved,
one achieved partially, and one not achieved. Some progress was made to
improve the quality of MTBF preparation and skills and comprehensive roll-out
to line ministries.
Indicator 2 : Line Ministries reporting annual performance results as per guidelines.
Value
quantitative or
Qualitative)
0 3 2
Date achieved 02/28/2010 06/30/2014 09/30/2014
Comments
(incl. %
achievement)
The indicator target was not achieved. Two LMs submitted Annual Performance
Reports for 2012 in 2013. 3 other LMs were selected to prepare APRs for FY14.
However, none of them submitted complete APRs by the end of the project.
Indicator 3 : Line Ministries producing quarterly financial management reports (QFMR)
meeting FD requirements
Value
quantitative or
Qualitative)
Irregular and with
considerable time lag 80% 80%
Date achieved 02/28/2010 06/30/2014 09/30/2014
Comments
(incl. %
achievement)
The level of achievement for reporting of the development budget was found to
be lower than the 80% reported, with only 29 of 57 ministries submitting
QFMRs by the end of the project.
Indicator 4 : Government Annual Financial Statements prepared as per IPSAS Cash based
standard consistent with COFOG and GFS 2001.
Value
quantitative or
Qualitative)
No Partial No
Date achieved 06/30/2009 06/30/2014 06/30/2014
Comments
(incl. %
achievement)
The indicator was not achieved. The failure to adopt the revised chart of
accounts made this target unachievable during the lifetime of the Project.
Implementation was also dependent on the new FMIS system to be able to
prepare the financial statements.
v
(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 : Deviation between forecasts in the original MTMF and actual results regarding
the budget deficit to GDP ratio
Value
(quantitative
or Qualitative)
1.0% +/- 0.7%
FY 14: Not yet
available
FY 13: -0.7%
Date achieved 02/28/2010 06/30/2014 09/30/2014
Comments
(incl. %
achievement)
The indicator was achieved in FY13, while data for FY14 is not yet available.
Progress was made towards meeting the target. However, it is questionable
whether the result is directly attributable to the Project.
Indicator 2 : Deviation between forecasts in the original MTMF and actual results regarding
the debt to GDP ratio
Value
(quantitative
or Qualitative)
-2.7% +/-0.5
FY 14: Not yet
available.
FY 13: -4.0% of
GDP.
Date achieved 02/28/2010 06/30/2014 06/30/2014
Comments
(incl. %
achievement)
The target was not achieved for FY 13 and is unlikely to be achieved for FY 14.
It is questionable whether the result is directly attributable to the project.
Indicator 3 : Debt management entities provide annual report to government
Value
(quantitative
or Qualitative)
0 4 0
Date achieved 02/28/2010 06/30/2014 09/30/2014
Comments
(incl. %
achievement)
The indicator was not achieved, as a delayed approval of the medium term debt
strategy (MTDS) which hampered the achievement of the target value prior to
project closure.
Indicator 4 : Cash balances calculated daily and consolidated by FD
Value
(quantitative
or Qualitative)
No
Partial
("Partial"
means that
cash balances
are calculated
monthly)
No
Date achieved 02/28/2010 06/30/2014 09/30/2014
Comments
(incl. %
achievement)
The indicator was not achieved. Cash plans for the 1st, 2nd and 3rd quarter of
FY14 were prepared, but not on a daily basis and not even on a monthly basis.
Indicator 5 : Variance between original budget and actual outturn for previous FY
Value
(quantitative
or Qualitative)
-8.1% +/- 5.0% FY 14: No data yet
FY 13: -9.0%
vi
Date achieved 02/28/2010 06/30/2014 09/30/2014
Comments
(incl. %
achievement)
The indicator was not achieved in FY13, and the variance between the original
budget and actual outturn for the previous FY even deteriorated. While data for
FY14 are not yet available, it is likely that the variance was higher than the
target.
Indicator 6 : Line ministries receiving regular oversight from FD related to MTBF
Value
(quantitative
or Qualitative)
Oversight is focused only
on budget processes
100%
oversight on
financial
reporting and
financial
performance
100% oversight on
quality MTBFs and
budget estimates
data entry achieved
Date achieved 02/28/2010 06/30/2014 09/30/2014
Comments
(incl. %
achievement)
The indicator was not achieved in FY13, and the variance between the original
budget and actual outturn for the previous FY even deteriorated. While data for
FY14 are not yet available, it is likely that the variance was higher than the
target.
Indicator 7 : Line ministries producing gender budget reports
Value
(quantitative
or Qualitative)
20 35 40
Date achieved 02/28/2010 06/30/2014 09/30/2014
Comments
(incl. %
achievement)
The indicator was achieved. Gender budget reports for 40 LMs are available in
draft to be published in the Gender Budget Report FY15.
Indicator 8 : Line ministries with budgets based on medium term strategic business plan
Value
(quantitative
or Qualitative)
0 5 1
Date achieved 02/28/2014 06/30/2014 09/30/2014
Comments
(incl. %
achievement)
The indicator was not achieved, although some progress was made. MTSBP for
the Ministry of Agriculture was finalized and published.
Indicator 9 : Adequate legal and regulatory support to the reforms provided
Value
(quantitative
or Qualitative)
No - existing legal and
regulatory framework
inconsistent with
evolving reforms
Partial
("Partial"
means that
revised/new
GFR and
Treasury rules
have been
promulgated)
No
Date achieved 02/28/2010 06/30/2014 09/30/2014
Comments
(incl. %
achievement)
The indicator was not achieved, although some progress was made towards the
target. A List of Rules and Regulations & Guidelines were prepared and three
Guidelines/Circulars were issued. A first draft of revised General Financial
Rules (GFR) was prepared.
vii
Indicator 10 : iBAS functionality enhanced and applied as an integrated FMIS across line
ministries, departments, subordinate and upazilla levels
Value
(quantitative
or Qualitative)
No
Budget and
ledger
functionality
available
No
Date achieved 02/28/2010 06/30/2014 09/30/2014
Comments
(incl. %
achievement)
The indicator was not achieved. There were enhancements made to IBAS to
support its use in line ministries and connections at upazila levels. Budget
functionality is available at the line ministries but not subnational levels.
Indicator 11 : Government financial statements are prepared on IPSAS cash basis in a timely
manner
Value
(quantitative
or Qualitative)
Statements are delayed
and do not comply with
international standards
Partial (system
ready)
Reporting has not
progressed beyond
baseline and
IBAS++ system not
ready
Date achieved 02/28/2010 06/30/2014 09/30/2014
Comments
(incl. %
achievement)
The indicator was not achieved. Final mapping of budget and account
classifications economic segment to the Cash IPSAS Financial Statements to be
completed.Reporting has not progressed beyond the baseline and the IBAS++
system not ready to prepare reports
Indicator 12 : iBAS used for Self Accounting Entities (SAEs) based on improved accounting
standards and procedures
Value
(quantitative
or Qualitative)
None for seven SAEs
Partial
(software
developed to
interface all 7
SAEs)
5 SAEs with
improved
accounting
standards.
Date achieved 02/28/2010 06/30/2014 09/30/2014
Comments
(incl. %
achievement)
The indicator was not achieved. Software was developed for 5 SAEs the Roads
and Highways Department (RHD), the Department of Public Works, the
Department of Public Health Engineering, the Post Office, and the Department
of Railways.
Indicator 13 : Budget classification revised to meet budget preparation and consolidation of
accounting data for financial reporting consistent with IPSAS
Value
(quantitative
or Qualitative)
0% 100% 50%
Date achieved 02/28/2010 06/30/2014 09/30/2014
Comments
(incl. %
achievement)
The indicator was not achieved, although some progress was made towards the
target. Detailed budget and accounting codes were completed for all eight
segments of the accounts code. The economic segment was prepared based on
IMF reviews.
Indicator 14 : Other iBAS enhancements
Value
(quantitative
or Qualitative)
0%
100%
(software
developed and
tested and
80%
viii
databases fully
populated)
Date achieved 02/28/2010 06/30/2014 09/30/2014
Comments
(incl. %
achievement)
The indicator was not achieved, although some progress towards the target was
made. Work on the employee and pensioner databases continues till date, and an
estimated 80 percent of records have been updated in the databases.
Indicator 15 : Public Servants receiving PFM training
Value
(quantitative
or Qualitative)
7% 89% 62.3%
Date achieved 02/28/2010 06/30/2014 10/30/2014
Comments
(incl. %
achievement)
The indicator was not achieved, although some progress was made towards the
target. 14,144 out of a total of 22,700 public servants (62.3%) were trained over
the course of the Project.
Indicator 16 : Public Servants reporting positive training outcomes
Value
(quantitative
or Qualitative)
0 80 97.7
Date achieved 02/28/2010 06/30/2014 10/30/2014
Comments
(incl. %
achievement)
The indicator was achieved. More than 97.7% of trainees reported positive
training results. The pace of instruction was rated 'just right' by 86% of trainees
on average. Instructor performance overall assessment was rated 'excellent' by
79% of trainees.
Indicator 17 : Number of training days engaged in PFM training and capacity building
activities
Value
(quantitative
or Qualitative)
0 1,400 16,913
Date achieved 02/28/2010 06/30/2014 09/30/2014
Comments
(incl. %
achievement)
The indicator was achieved. 16,913 training days were completed under the
Project (including study tours, foreign courses, E-trainings, workshops,
seminars, and 1,885 training days in each Quarter for Masters studies abroad).
Indicator 18 : Number of management reports prepared
Value
(quantitative
or Qualitative)
0 2 (yearly) 17 (cumulative)
Date achieved 02/28/2010 06/30/2014 09/30/2014
Comments
(incl. %
achievement)
The indicator was achieved. 17 reports were prepared (14 cumulative in FY13
and 3 in FY14).
ix
G. Ratings of Project Performance in ISRs
No. Date ISR
Archived DO IP
Actual
Disbursements
(USD millions)
1 10/24/2010 Moderately Satisfactory Moderately Satisfactory 8.91
2 05/07/2011 Moderately
Unsatisfactory
Moderately
Unsatisfactory 11.26
3 05/21/2012 Moderately
Unsatisfactory
Moderately
Unsatisfactory 23.54
4 12/23/2012 Moderately Satisfactory Moderately Satisfactory 32.32
5 06/24/2013 Moderately Satisfactory Moderately Satisfactory 38.76
6 11/28/2013 Moderately
Unsatisfactory
Moderately
Unsatisfactory 43.34
7 06/28/2014 Unsatisfactory Unsatisfactory 48.09
8 07/28/2014 Unsatisfactory Unsatisfactory 50.98
H. Restructuring (if any)
Restructuring
Date(s)
Board
Approved
PDO Change
ISR Ratings at
Restructuring
Amount
Disbursed at
Restructuring
in USD
millions
Reason for Restructuring &
Key Changes Made DO IP
05/07/2012 N MU MU 23.10 Simplification of the Project
management arrangements.
11/04/2013 N MS MS 43.05 Revision of the Project results
framework.
06/29/2014 N U U 48.09
Increasing the Grant amount
with an additional US $ 2.5
million
07/15/2014 N U U 50.34 Extension of the Project closing
date.
x
I. Disbursement Profile
1
1. Project Context, Development Objectives and Design
1.1 Context at Appraisal
Country background
1. The Project was prepared at a time when Bangladesh was experiencing strong
economic and social progress. Despite periods of political turmoil and natural
disasters, GDP grew by a rate of 6.21 percent per annum on average during the period
of the Project. Responsible fiscal and monetary policies kept inflation in single digits.
Fiscal prudence also kept public borrowing in check, preventing the crowding out of
private investment. Meanwhile, fiscal and monetary discipline, along with periodic
adjustments in the exchange rate, helped keep the external sector in balance. Sustained
public spending in key priority areas contributed to visible social outcomes with the
country outperforming most low-income countries on a range of social indicators such
as infant mortality rates and gender equality in access to primary schooling.
2. At the same time, the Project faced a challenging overall governance environment. Public administration was challenged by weak policy coordination, a poor incentive
structure, inadequate revenues, weak accountability and limited implementation
capacity that led to underperformance in the delivery of public services. Bangladesh
was governed by a Caretaker Government. The Caretaker Government stayed in power
from early 2007 until the end of 2008. It was replaced by an elected Government in
December 2008, which took office in January 2009.
Sector background
3. At the start of the Project, Bangladesh’s public finance management (PFM)
policies and institutions had gone through a decade-long process of incremental
transformation. Notable achievements included the consolidation and amendment of
the regulatory framework, the computerization of the transactions and budget process,
a new classification system, and the development and piloting of strengthened
expenditure management through a Medium Term Budgeting Framework (MTBF) and
better integration of the capital and recurrent expenditure programs. The Government
also began to develop capacity of key PFM staff through the establishment of the
Financial Management Academy (FIMA).
4. However, additional PFM reforms were considered necessary to sustain and
expand on the previous achievements. While the previous reforms were recognized
as important and essential building blocks of a comprehensive reform of public
expenditure systems, by themselves they were deemed to be insufficient to bring about
1 Bangladesh Bureau of Statistics (FY09-10 to FY13-14).
2
the desired sustainable change in the management of fiscal resources across
Government. The Bank’s Country Assistance Strategy (FY06-10) noted that the
country’s relatively weak governance environment could increasingly prove a barrier
to more rapid, inclusive and sustainable growth calling for improved quality of public
investments and overall public financial management.
Rationale for Bank assistance
5. The Bank’s assistance was based on the Government financial management
reform strategy and donor interest in supporting a joint program. In May 2006,
the Government of Bangladesh (GoB) prepared its financial management reform
strategy: “GoB Vision and Medium Term Rolling Action Plan” which provided the
framework under which all PFM-related reform initiatives could be incorporated under
a single ‘umbrella’. Several development partners agreed to provide their funding on a
joint and ‘programmatic’ basis. In response to the GoB Action Plan, the Strengthening
Public Expenditure Management Program (SPEMP) was developed to be financed by
a Multi-donor Trust Fund (MDTF) with the participation of five development partners,
the UK’s DFID, the European Union, Canada’s DFAT (then CIDA), the Danish
Embassy/ DANIDA and the Government of the Netherlands, with the World Bank as
the trust fund administrator.
6. The “Deepening MTBF and Strengthening Financial Accountability” (SPEMP A)
was the first Project to be prepared under the new pooled funding arrangement. It was the largest Recipient-Executed Trust Fund under the program aimed to
strengthen instruments of fiscal control and provide the means to ensure effective
implementation of budget allocations and greater transparency in government’s
financial management. Improving the expenditure management system and
streamlining associated budget preparation and implementation procedures were
expected to result in more effective management of government’s financial resources
and efficiencies in government budgetary transactions leading to improved public
services, and enhanced social and economic outcomes.
1.2 Original Project Development Objectives (PDO) and Key Indicators
7. The objective of the Project per the Grant Agreement was “to strengthen and modernize
budget management institutions within the Recipient, with a particular emphasis on a
performance orientation in public financial management, through institutionalizing the
Medium Term Budget Framework and Strengthening Financial Accountability”.
8. The expected results were described in qualitative terms in the Project document,
but mostly without specific, measurable, time-bound indicators. The Project aimed
to deepen and institutionalize the MTBF and build a more strategic and performance
oriented budget management process, while strengthening financial accountability
across the expenditure management cycle. The Project intended to support fundamental
reforms of operational budget management functions in both central units and line
ministries. It was expected that the enhanced budget process and financial
3
accountability would improve allocative and operational efficiency in public
expenditure management which in turn would enable better provision of key public
services in support of the Government's social and economic policy objectives.
However, the expected results were not expressed in the form of “SMART” indicators.
Please refer to Annex 4 for a detailed description of the expected results at project
approval.
1.3 Revised PDO and Key Indicators, and Reasons/Justifications
9. The PDO remained unchanged during the lifetime of the Project. However, the
key indicators were extensively worked on during the life of the Project, as part
of the ongoing development of the unfinished results framework. A number of
different results frameworks were proposed, notably during the 2012 and 2013 Project
restructurings. Different interim versions of the results framework were used for the
purposes of Project reporting from 2012 onwards. The latest version of the results
framework was set out in the 2013 Restructuring Paper and was used in the last
Implementation Status Report archived on July 28, 2014. This results framework
included indicators which were quite high level given the activities under SPEMP, and
prone to change given exogenous factors (such as intermediate results indicator 1).
These indicators were used for the purposes of the ICR and are set out in Section F
above.
10. The link between the PDO and the indicators was loose. This was particularly true
for Intermediate Indicator 1, where the gap between the activity and the attributed
results, i.e. smaller deviations on key macro-fiscal indicators was very large. Indicator
4, on budget to actual deviations, was similarly problematic. These were highly
influenced by factors outside the Project and therefore not good indicators of the
Project’s success or failure.
1.4 Main Beneficiaries
11. The direct beneficiaries of the Project identified in the Project Document were the
Finance Division of the Ministry of Finance, the Planning Commission and Line
Ministries. A link was made to the welfare of the citizens of Bangladesh through
improved resource management by government resulting from the reforms, in turn
leading to improvements in public services. Other indirect beneficiaries that might have
been identified include various important consumers of budget and accounting
information. These included, for instance, the Controller General of Accounts, the
Economic Relations Division of the Ministry of Finance, Bangladesh Bank, the Office
of the Comptroller and Auditor General and the Budget and Public Accounts
Committees of the parliament, and civil society organizations with an interest in
monitoring public finances.
4
1.5 Original Components
12. As originally designed, the Project had nine PFM components and one Project
Management Component. Nine of these covered the main technical areas of PFM
reform and one covered Project Management and Communications.
1) Strategic Budget Management in Finance Division;
2) Developing Capacities for Debt Policy and Management;
3) Capacity Development in Line Ministries;
4) Developing Planning Commission capacity in line with the MTBF approach;
5) Accounting and Financial Reporting;
6) Strengthening Treasury and Cash Management;
7) PFM Legislation and Regulations;
8) Payroll/Pension, General Provident Fund (GPF), Fixed Assets;
9) Training and Human Resources Development, and
10) Project management and communications
1.6 Revised Components
13. There were four Level 2 restructurings of the Project. These restructurings involved
changes in Project design (March 5, 2012), the revision of the results framework (July
23, 2013), an increase in the funding allocation from US$50 million to US$52.5 million
(June 25, 2014), and a closing date extension from July 31, 2014 to September 30, 2014
(July 13, 2014) which applied only to one specific Project activitiy to allow students in
an ongoing Masters program to finish their program.
14. The major restructuring in 2012 resulted in the original ten components being
rearranged to four components. Five of the other original components became sub-
components, with the exception of component 4 which was taken out of the Project.
The changes in components and the resulting allocations are shown in the chart below.
5
Figure 1: Funding reallocation between components (2012 Restructuring)
1.7 Other Significant Changes
15. The 2012 Project Restructuring also involved changes in implementation
arrangements. A Project Executive Committee was introduced, to review progress
reports, and address implementation issues. It consisted of the Additional Secretary
(Budget), the Project Director, Component Directors, the MISC Project Coordinator,
and focal points of selected line ministries. The Committee was expected to meet
quarterly to promote better coordination and ensure quick disposal of decisions by
higher authority.
16. The nine Component Coordinators were replaced by three full time ‘Component
Directors’. They were to report directly to the Additional Secretary, FD and supervise
overall Project implementation in partnership with the Project Director and Project
management team. The component director positions were filled by former senior FD
officials (working as consultants under the Project) with authority over policy and
technical issues as well as access to key personnel within government.
17. The restructuring approved in July 2014 extended the closing date by two months
to September 30, 2014. The extension was granted on a limited basis, to allow 26
scholarship students, already enrolled in overseas master’s programs, to complete their
studies.
6
1.8 Project Component Allocations: Revisions over Project Life
18. The original Project included nine PFM components and one Project
Management Component, each with its own funding allocation. The original
allocations were based on a total amount of US$67.17 consisting of the committed
funds of a US dollar equivalent of US$50 million, plus an additional US$17.17 that
were planned to be added once the amount would become available from the MDTF.
The PAD component figures and the 2012 restructuring of components are based upon
the US$67.17 million figure, whereas the loan categories cited in the Grant vary
between an initial US$50 million and US$52.5 million later in the Project life.
19. The June 2014 restructuring made further changes to the component allocations. As part of the restructuring, the total funding envelope was reduced from US$67.17
million (per the original Project Document) to US$52.5 million (June 2014
amendment). The allocations between expenditure categories were also revised.
US$2.5 million was added to the category of “Consulting services, training, and study
tours”. Funding for the “Goods” category was reduced due to delays in iBAS-related
procurements and reallocated to “Operating costs”.
Table 1: Post 2012 Cost Reallocations, US$ million
Components 2012 PAD 2014 Grant
Agreement
1: Strategy Policy, Planning and Budget Management
1.1 Macro Fiscal and Management
1.2 Debt, Treasury and Cash management
1.3 Strengthening Budget Management and MBTF
1.4 Strengthening Planning Commission
1.5 Legal and Regulatory
21.29 19.13
2: Public Financial Systems
2.1 Accounting and Financial Reporting
2.2 Payroll, Pensions, GPF, Loans, Advances & Assets
23.26 17.83
Component 3: Capacity Building and Training 13.74 8.99
Project Management and Implementation 7.38 6.55
Contingency 1.50
Total 67.17 52.50
20. In July 2014, there was a final Project restructuring to create a new spending
category for 26 ongoing training scholarships. The Project closing was also extended
by 2 months to accommodate the scholarship period and expenditures were allowed
during that period only for the scholarships. The other expenditures were only eligible
up to the original closing date.
7
Table 2. Reallocations by Category (US$)
Category 2009
Original
Amount of
the Grant
Allocated
2012
Amendment
Amount of
the Grant
Allocated
2013
Amendment
Amount of
the Grant
Allocated
June 2014
Amendment
Amount of
the Grant
Allocated
July 2014
Amendment
Amount of
the Grant
Allocated
1)Goods 4,508,820 10,810,031 NA 6,660,000 6,660,000
2)Works,
Consulting
Services,
Training and
Study Tours
38,660,930 31,285,313 42,113,000 41,972,400
2a)Training
for
Scholarships
NA NA NA NA 140,600
3)Operating
Costs
4,895,840 2,649,928 NA 3,727,000 3,727,000
4)Unallocated
Costs
1,934,410 5,254,728 NA 0 0
Total 50,000,000 50,000,000 NA 52,500,000 52,500,000 Notes: NA is not available.
2. Key Factors Affecting Implementation and Outcomes
2.1 Project Preparation, Design and Quality at Entry
Lessons of earlier operations
21. The SPEMP-A Project represented a continuation and expansion of a PFM
reform program that was already 15 years old. Two DFID-led projects RIBEC and
Financial Management Reform Project (FMRP), had, since 1992, achieved some
limited successes in improving budgeting, accounting and financial reporting,
enhancing audit and skills levels, and had helped the GoB to implement an automated
financial management information system.
22. The preparation and design of the SPEMP-A Project needs to be understood in
the context of donor commitments to improve development coordination. Donors
aimed at following the aid harmonization principles agreed under the Paris Declaration
and applying these to PFM. Previously, donor support to PFM reform in Bangladesh
had been fragmented. In 2005 the four largest development partners to Bangladesh —
the Asian Development Bank (ADB), the UK Department for International
Development (DFID), the Government of Japan, and the World Bank developed a Joint
Strategic Framework (JSF), a Statement of Partnership Principles, a Joint Outcome
Matrix, and a division of labor for sector coverage. This resulted in the World Bank
assuming responsibility for public finance management with financing through a Multi-
donor Trust Fund supported by UK’s DFID, the EU, Canadian Department of Foreign
Affairs, Trade and Development (DFAT, formerly the Canadian International
Development Agency, CIDA), the Netherlands Ministry of Foreign Affairs and the
8
Royal Danish Embassy. The Project design was successful in bringing the donors
together under one single umbrella program (SPEMP) and coordinating them around a
single program. However, the single program tended to be as wide as the interests of
the donor agencies supporting it, and was perhaps a contributing factor to the ambitious
agenda.
23. The Project was originally conceived as covering an even broader scope of the
PFM area. However, during the design stage it was decided to divide the SPEMP
program into three Projects for easier management: SPEMP-A, and additionally
SPEMP-B to support the Office of the Comptroller and Auditor General and SPEMP-
C to support the Parliamentary oversight function. Extending the same principle of
further dividing up the SPEMP A Project along organizational lines might have
prevented the problems which arose within SPEMP A in respect of the support to the
Planning Commission under component 4.
Risks and Mitigations
24. The Project Document rated the overall risks of the SPEMP-A Project as
“substantial”. The PD identified two key implementation risks:
- Lack of a sound human resources management strategy in GoB, in particular
regular reassignment of officers to new positions resulting in loss of knowledge and
continuity and the rivalry created by separate cadre systems such as that between
the administrative and economic and audit and accounting cadres, leading to a
potential unwillingness to cooperate on Project objectives.
- Insufficient coordination between MoF and Planning Commission reflected in
separate processes for the development and non-development budgets, making the
development of an effective MTBF and Forward Baseline Estimates (FBEs)
difficult.
25. The Project design did not include explicit measures to mitigate the turnover and
coordination risks. Although it would have been unrealistic to expect major changes
in HR policy, logical responses might have been to reduce the scope of the Project or
to allow a longer period for Project implementation. The second risk could also have
been addressed in the Project design, considering that Component 4 was later separated
from the main Project. Although there were other issues caused by government
officials being hired as consultants, one positive impact was the fact that they stayed
with the project until the end.
26. A number of other important risks were not discussed in the Project Document,
2008. First, there appears to have been limited consideration of the technical risks
associated with the size and complexity of the Project relative to GoB’s absorptive
capacity; and especially in light of the proposed ICT developments for a financial
management information system. This is now widely accepted as a significant reason
for the unsatisfactory outcome, as was commented on in the 2012 Bank ISR mission
9
and the 2013 Independent review initiated upon management request. Second, the risk
involved in the proposed procurement plan to have a single contract, requiring a single
firm to obtain consultants of adequate quality for such a large and diverse Project, was
not considered. Third, the institutional risks were greater than envisaged, given the
actual level of GoB ownership (across different organizations including Finance
Division, Ministry of Planning, Accountant General’s Office and line Ministries) of the
PFM reforms and the extent of potential resistance to change, which was not well
discussed in the Project Document. As such the change management aspects of the
Project design were not strongly emphasized or developed. As a result, some activities,
for example internal audit, performance budgeting and changes in legislation were
included in the Project although there was little or no demand.
27. The specific risks and challenges associated with introducing a new financial
management information system were not addressed. The challenge of introducing
a new chart of accounts under SPEMP which would require a large number of
stakeholders (including the Ministry of Planning) in addition to Finance Division was
also not addressed as a risk.
Project Design
28. The PDO and results framework were loose and broadly defined. The first part of
the PDO statement “strengthen and modernize budget management institutions” was a
broad objective and the logical connections between this and the other parts of the PDO
statement, “emphasizing performance orientation in PFM” and “institutionalizing the
MTBF and strengthening financial accountability” were not very clear. For example
the objective of strengthening financial accountability was only supported to a limited
extent by the Project outputs, which focused on accounting rather than accountability.
The logical connections between the PDO and the broad range of activities were also
not sufficiently clear. Overall, the results framework in the PAD was unsatisfactory
and incomplete. The results were framed as broad statements of goals, but they lacked
specific or measurable results indicators.
29. The Project design did not take sufficient note of the time taken to achieve results
in PFM as evidenced in earlier projects. The FMRP and RIBEC were affected by
delays in decision making, and problems in project management and coordination
which were later to affect implementation of SPEMP-A. In all cases project progress
was heavily dependent on few key officials, with vision and energy, pushing forward
the reform process. Given the inevitability of changes in key personnel and delays in
obtaining political approval for key strategic decisions, the Project scope could have
been reduced or the implementation period extended.
30. The Project design also did not adequately reflect the recipient agencies’ capacity
to manage a complex set of reforms simultaneously or the limited interest in some
activities. The original Project design was widely recognized as overly ambitious, with
nine PFM components being implemented in parallel. Later restructurings, although
consolidating components, largely failed to simplify the Project activities to make the
10
Project scope more focused and address the challenges of the original design.
31. Sequencing of various reforms, though rated critical during the design stage, did
not find proper reflection in the Project design. The Project followed GoB’s PFM
reform timeframe, as reflected in the PFM Vision and Medium Term Rolling Action
Plan, 2006. However, the approach was to take on most of the activities without a
greater attention to the prioritization and sequencing required.
32. The approach in component 1 of SPEMP-A was to improve good resource
management across all government, but without the new system introduced the
institutional reforms were quite burdensome for line ministries. For instance,
capacities in Line Ministries were stretched by the MTBF process and introduction of
new institutional set-ups and requirements and therefore staff were not able to place
sufficient focus on monitoring of budget implementation and cash requirements.
33. Insufficient preparatory work was done to clarify the information systems
strategy of the Finance Department. This had several negative impacts on the
Project. The GoB maintained an expectation that the existing iBAS system could be
incrementally developed and expanded to meet its needs, based on development of the
existing software. This turned out not to be possible, but it took more than one year
after the Project had started before the FD accepted that the iBAS system would have
to be replaced with new software. The same misapprehension resulted in the selection
of a consultant firm whose main skills and experience (in ICT), were as an implementer
of customized commercial-off-the-shelf software. The decision to develop bespoke
software meant that the main consultancy firm hired to deliver SPEMP A results had
to work outside its core expertise, and this resulted in additional delays as the firm
sought qualified individuals with software development skills to support the
development of the bespoke iBAS++ system, a new financial management information
system. Contrary to the impression given by the name, iBAS++ was not a development
of iBAS, but a completely new system.
2.2 Implementation
Initial Stage
34. The Project did not effectively get underway until mid-2010, even though the
Project Document was finalized in September 2008. Project implementation was
initially delayed by the time to declare the Project effective, as well as the processes of
selecting and consultants under the main contract (S-1: Management and
Implementation Support Consultancy (MISC)) and then mobilizing them. Although the
Project became effective on November 2, 2009, the contract with the MISC was not
approved until April 29, 2010 with consultants beginning work from the middle of
11
2010.2 Many of the individual consultants who were proposed in the bidding document
proposal turned out to be unavailable and replacements had to be found. Component
Advisors for all initial nine components were never made fully available.
35. Early on in the implementation in 2011, there were delays due to disagreement
between FD and PDP Australia on the way forward regarding specific reform
areas. Disagreements became apparent during the discussion of the Inception Report
prepared by the MISC in August 2011 and approved with reservations by the Steering
Committee only in January, 2012. The initial disagreements included the feasibility of
introducing forward-based estimates into the annual budget preparation, the type of
macroeconomic forecasting modelling, and whether to replace or upgrade the iBAS
system.
36. Problems in coordinating the work of the Planning Commission and the Finance
Division were apparent from 2010. The Planning Commission, which was
responsible for preparing the annual “development budget” did not see the benefit of a
common project and requested that “their” Component A4 be turned into a separate
project, independent of the Ministry of Finance. In October 2011, the Project suspended
its support to the Planning Commission until both the Finance Division and Planning
Commission agreed on reform priorities and implementation arrangements. In 2012 it
was agreed that technical assistance to the Planning Commission would be provided
under a separate Project.
37. By 2011, widespread problems in Project coordination and implementation had
become apparent. Performance on all aspects (except for financial management) was
rated as “Moderately Unsatisfactory”, and Monitoring and Evaluation (M&E) was
rated as “Unsatisfactory”. The Project underwent a first major restructuring beginning
in 2011 and approved in February 2012, with the amendment to the grant agreement
signed in May 2012. The main focus of the restructuring effort was to improve Project
management and coordination and to simplify what was recognized as an overly
ambitious set of objectives and a complex and ineffective Project design.
2012 Restructuring
38. The 2012 Project restructuring reduced the number of PFM components from 9
to 3 but did not lead to prioritization of activities. The restructuring of technical
components was accompanied by an organizational restructuring. Nine component
coordinators were replaced by three component directors, who were senior civil
servants (most were Additional Secretary Rank), and considered to be reform-minded.
Because of the close relationships between the strong component directors and the
Finance Secretary and Additional Finance Secretary, the Project Director was relegated
to a support role. This was not reflected in any formal redefinition of the Project
2 PDP Australia was the winning consultancy firm.
12
Director’s role, and the Project Director was afterwards widely perceived by Project
stakeholders as exercising influence by delaying decisions.
39. The restructuring process initiated the process of developing a proper results
framework, which was lacking. Under the restructured design it became easier to
relate activities to the PDO. Component 1 groups activities related to the first part of
the PDO “to deepen and institutionalize the MTBF and build a more strategic and
performance orientation…; while component 2 groups activities relate to the “…
strengthen financial accountability across the expenditure management cycle”.
However, the restructuring did not lead to a narrowing or prioritizing of activities
despite the complexities of working across such a broad range of PFM issues.
2013 Mid–term Review
40. In February and March 2013, an independent mid-term review of the Project was
prepared jointly between staff and consultants of the World Bank, DFID and EU. The report of the independent review requested by management noted the significant
lack of progress in many areas and highlighted a number of important problems
affecting the Project including:
the fact that the GoB was “not initially persuaded of the need for key Project
deliverables including the new Chart of Accounts (COA), FBEs, and the
replacement financial management information system rather than modification of
the existing IBAS system. As a result the consultants hired under SPEMP A, as
well as the Bank supervision team, had spent much energy in the first two years
dialoguing with the staff of the FD and Comptroller & Auditor General (C&AG)
of the importance of these specific reforms”.3
the very ambitious scope of SPEMP-A, which arguably exceeded the absorption
capacity of government.
structural obstacles to PFM reform, the most important of which were the cadre
transfer system under which senior staff were frequently transferred to very
different functions.
the entrenched system of dual budgeting (under which the preparation and
execution of the "development" and "revenue" budgets are to a large degree
separated).
41. The Mid-Term Review (MTR) also noted continued challenges in coordination
and other areas. It observed that in spite of the 2012 restructuring of Project
governance structures, coordination between the three major remaining components
still needed improvement and significant problems continued to exist in the interface
between the Project and Government in respect to the supply of materials (a
government responsibility) and the replacement and approval of new consultants. The
3 Mid Term Review Report, May 2013.
13
report concluded that while there was considerable momentum in the Project, some key
targets were likely to be missed. However given the long delay in the effective start of
the Project the MTR recommended a no-cost extension to the Project, focused on a
more limited set of objectives.
2013 - Second Project Restructuring and Deteriorating Progress
42. In 2013, the Bank team expressed concern about the continued lack of agreement
on the results framework. This led to a second Project restructuring in November
2013 which main purpose was to establish a proper results framework. Although a new
results framework was broadly defined and included in the first restructuring, in
practice FD and the World Bank did not agree on the details, which continued to be
debated and revised until the conclusion of the Project in 2014. By this time a new
results framework had been developed for the proposed Project extension.
43. The World Bank’s assessment of Project progress remained overly sanguine
through the first half of 2013. Although little progress was made in the areas of debt
management, legal and regulatory, and the payroll and pensions subcomponents,
overall progress was rated “Moderately Satisfactory”. The Aide Memoire noted that
the new accounts classification structure was on-track to be finalized by June 2013,
together with a new manual on accounting procedures, and the development of the new
integrated budget and accounting system (iBAS++) had progressed with agreements
on the functional scope of the new system, finalization of the overall technical
architecture, drafting of system requirement specification (SRS) documents and
adoption of quality management methods in the software engineering methodology.
44. By the summer of 2013 it was clear that the Project implementation had still not
gained in momentum. Critical decisions were pending with the Finance Division,
affecting core reform areas, including:
Ratification of the MTBF Roadmap.
Establishment of the Budget Management Wing in FD.
Approval of FBEs Guide (submitted to FD in 2012).
Decision on the role of Medium Term Strategy and Business Plans (MTSBPs) in
planning and resource allocation.
Approval of the new accounts classification structure by FD and GAG.
Project ratings were again downgraded to “Moderately Unsatisfactory” in components
2 and 3 which were most central to the overall development objective, including
strengthening of budget management and MTBF, as well as accounting and financial
reporting.
45. Project management and coordination had also deteriorated. Decisions on hiring
and procurement suffered from long delays; Project finances were not well managed
so that the Project was unable to produce credible disbursement plans; FD was not
exercising regular and systematic oversight of the Project; and decision-making was
hampered by a lack of coordination between FD, PMCU and the consultants under PDP
Australia.
14
Plans for Project Extension
46. In line with the MTR recommendations, the Government requested donors to
extend SPEMP-A and increase the total financing for SPEMP-A to US$79 million.
Significant work was done by the Government and the Bank team to design the Project
extension. As late as May 2014, a joint government donor meeting discussed the
extension proposal, but SPEMP donors expressed concerns about whether the SPEMP
A Project could be completed even with the proposed two year extension. Since an
extension of SPEMP A would require an extension of the MDTF and the SPEMP
program, many SPEMP donors were not able to commit to extending the trust fund
without more reassurance on current progress and details of activities to be carried out
by an extended SPEMP A with additional funds. At that time, project implementation
and progress towards the project development objective were rated as “Unsatisfactory”
in the implementation status reports. The request for an additional financing of US$29
million over the US$50 million grant was made, since the Project was almost fully
disbursed. This represented an additional US$11.8 million over the original Project
document amount of US$67.17 million.
Decision to close the Project
47. In early 2014, the World Bank reviewed progress on the ground which led the
SPEMP donors and the World Bank, as the trust fund administrator, to conclude
that the performance of SPEMP-A, and plans for the extension period, could not
justify the request for additional financing. An expert review of the IBAS++
implementation, in March 2014, was critical in forming this view. The resulting report
was critical in persuading the Bank management to recommend closure of the Project.
It reported:
Limited Government ownership and involvement, including lack of clarity on
objectives of iBAS++; and absence of authorization and clear decision-making on
system development;
Significant delays in system development, with less than 10 percent of software
code written; modules described as completed not running properly, poor design
documents and delays in installing critical;
Unrealistic implementation strategy, including unrealistic timelines, lack of
information on data clean-up and migration, and gaps in in critical diagnostics;
Inadequate Project Management, including lack of technical leadership,
insufficient focus on ‘soft’ factors of information system, i.e. people and processes;
and failure to follow-up on advice given during previous supervision missions;
Poor documentation, including outdated functional specifications and
Inconsistencies between and within design documents.The report concluded that,
even with a two year extension, it was unlikely that the system would be
successfully implemented.
15
48. Furthermore, under World Bank investment lending guidelines, SPEMP-A, a
Project which at that time was rated unsatisfactory at the PDO and IP level, would
not have been eligible for additional financing without a waiver. According to OP
10.00, Investment Project Financing, paragraph 29 states, “The Bank may provide
additional financing to an ongoing, well-performing Project…”. 4 Substantial
compliance with key loan covenants, including audit and financial management
reporting requirements. SPEMP-A would have only been eligible for additional
financing if the following three conditions would have been satisfied: 1)The PDO can
still be achieved; 2) there is an agreed plan on the way forward; 3) Recipient
performance is satisfactory.
49. The PDO could not be achieved in the original timeframe. The extension proposal
was not unanimously agreed as the way forward, with donors and the Bank expressed
concerns about the timetable for the IBAS++ development in particular. The recipient’s
performance was not considered to be satisfactory on the basis of the very limited
Project achievements.
50. Following discussions with Finance Division and the SPEMP donors, the GoB
request to extend and provide additional financing to SPEMP-A was not
approved. The proposed extension request was discussed by the Fifth Joint Donor
Government Committee meeting in May 2014, and there was no agreement at that
meeting on a realistic way forward. Subsequently, the Government sent an official
extension and additional financing request, which was not approved by the World
Bank. The World Bank’s procedures for extension and additional financing were
explained to the SPEMP donors and there was an agreement with the SPEMP donors
to allow the Project to close as per its original date. Given the long discussion on an
extension request, the Government and a few donors considered this to be an abrupt
change of direction in light of the earlier efforts that the Bank team and the Government
had put into developing an extension request.
2014 Restructuring
51. A final restructuring took place in July, 2014, after the decision had been taken
not to provide additional financing, and to allow the Project to close as per its due
date. The Bank team and the government discussed the activities that would be
adversely affected if the Project closed on time. A further restructuring was therefore
undertaken to allow Masters students who had been in receipt of scholarships, financed
by the Project, to complete their studies, and thus the restructuring granted specific
limited extensions to the Project closing date. The financing of $2.5 million was made
available to account for accounting changes that indicated commitments in excess of
$50 million needed to be met. The total $52.5 million for the project was below the
appraised and approved project total of $67.17 million.
4 “Well-performing” is defined as follows: ISR ratings for implementation progress (IP) and development
objectives (DO) have been consistently rated as moderately satisfactory or better over the most recent 12
months.
16
2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
52. The M&E framework described in the PAD included broadly stated objectives
and “performance indicators” but all of them lacked one or more important
attributes of SMART indictors or Objective Verifiable Indicators. The Project
design team’s rationale in leaving the Project objectives broadly defined was that the
detailed results could be worked out during implementation and that retaining
flexibility was an advantage. Once implementation started, the new task team leader
drew attention to the need for the development of a results matrix. However, it was not
until the first Project restructuring in 2011 that the development of a full results matrix,
with proper indicators, was initiated, but the process of agreeing the framework was
long drawn out, with the result that a stable framework for measuring the Project results
was never established.
53. The new results matrix began to be used in 2012, but remained subject to change
throughout the life of the Project. Further substantial revisions to the indicators
complicated the process of results measurement, monitoring and evaluation. For
example in Component 2, indicators 3 (Data interface into IBAS for all transactions
originating at Bangladesh Bank and Sonali Bank), and 5 (Timeliness of treasury
receipts and matching payments accurately using on-line challan verification) are
reported in 2012 but were later dropped.
54. The Project struggled to create an effective M&E unit in the PMCU. The 2012
Aide Memoire expressed concerns about the lack of initiative to put in place adequate
monitoring and reporting arrangements and to fill staffing gaps in M&E. The revised
TPP (the government’s equivalent of the Project Document and including a detailed
procurement plan) only had an allocation for hiring an international M&E Specialist
for 8 months. The mission recommended hiring a national M&E Specialist from
unallocated and miscellaneous budget. Given the complexity and size of the M&E task
the Bank recommended that a full-time national M&E staff be identified to work with
international experts, or that PMCU hire a national consultant on an intermittent basis.
By mid-2013 an M&E consultant had been recruited, but in July 2013 the Project was
still in the process of setting up effective monitoring and reporting practices.
2.4 Safeguard and Fiduciary Compliance
55. There were no social or environment safeguard issues arising from
implementation of the Project. Due to the nature of its activities, the Project was rated
a category “C” Project in terms of safeguards and as a result did not trigger any
safeguard policies.
17
Financial Management
56. Financial management was generally handled in a “Moderately Unsatisfactory”
manner. Interim Financial Reports (IFRs) were received by the due dates and found to
be in order. However, throughout the Project duration, financial management positions
at PMCU were understaffed which affected the quality of financial records and internal
control.
57. Audit reports were submitted on time and most audit observations were dealt with
satisfactorily. However, the Statement of Audit Needs, as required by the Project
Document, was submitted by the Project only in July 2012 and was taken as a basis for
audits for the FY2012-2013 onwards. In total, the auditors made 5 observations, 2 of
which were identified as material by the Bank team. All the recommendations, except
one, have been followed by the Project on time. There were repeated audit observations
on inadequate documentation and payment procedure of Karmadokhota Training.
These were resolved shortly before the closure of the Project.
58. Computerized accounting software became operational only in April 2013. Before
that, all accounting records were maintained in EXCEL format. Concerns were raised
that the Project team was unable to provide expenditure reports at sub-component level
in order to match expenditures with outputs and results. In 2013, the automated
accounting system was fully operational to record, process and report accounting
information of the Project. However, the ICR Bank team was unable to find anyone in
the PMCU who would be able to provide expenditures data disaggregated any further
than sub-components, which makes it impossible to track expenditures on individual
activities, especially IBAS maintenance and IBAS++ development. The lack of
disaggregated data also limits the reliability of estimates of cost efficiency and analysis.
The table below provides the estimated expenditures by component based on the latest
financial reports.
18
Table 3: Expenditures by Type and Component
Spent to date US$ million
Computers and hardware 4.02
Network and servers 1.30
Office equipment, furniture and vehicles 1.74
Refurbishment 0.14
Training 6.13
Consulting inputs
Component 1 - national 6.22
Component 1 - international 7.94
Component 2 - national 5.97
Component 2 - international 6.52
Component 3 - national 2.93
Component 3 - international 1.79
PMCU 0.32
Operating costs 3.03
Other 0.76
48.82
Procurement
59. The overall procurement performance is rated “Unsatisfactory”. Post-procurement
reviews observed no major deviations from agreed provisions of the Grant Agreement:
(a) procurement records well maintained, (b) the Project used appropriate tender
documents, and (c) all contractual payments made on time. However,a number of
deficiencies were repeatedly highlighted by the Bank team during implementation.
These included (a) poor quality of procurement planning; (b) consistent delays in
procurement processes especially at early stages of the Project; (c) procurement
capacity constraints due to regular absence of Senior Procurement Specialist; (c)
procurements by the Project outside the approved procurement plan.
60. The largest contract under the procurement plan the MISC contract for US$ 42.9
million (dollar equivalent) was time-based. This considerably limited FD’s capacity
for quality control, as no mechanism was in place to ensure value for money. This
arrangement was criticized by a number of officials interviewed as having contributed
to the 100% disbursement of Project funds despite many incomplete outputs.
61. A procurement issue to note was the practice of hiring government officials on
special leave (on lien), as part of the MISC contract. This practice, which was
carried over from previous PFM reform projects (funded by other donors), was contrary
to World Bank guidelines on hiring national consultants, but it was not flagged at the
time the contract was awarded. The issue surfaced at the time of the March 2012
restructuring, which involved hiring three officials (on lien) in addition to 12 who were
already working under the MISC contract as National Consultants. The World Bank
19
regional procurement manager cleared the hiring of the officials subject to two specific
understandings: (i) that after completion of their assignments consultants returning to
FD, would not be in a positions to follow up with the Project activities or have any
position that would cause a conflict of interest, and (ii) that this exception should not
set a precedent for future contracts funded by the Bank in Bangladesh. The PDP
Australia contract was amended to include these additional consultancies.
2.5 Post-completion Operation/Next Phase
62. As the SPEMP Trust Fund has been extended to December 2016 there are several
new Bank-executed non-lending technical assistance activities that are planned. Following the closure of the SPEMP A Project, the Bank held discussions with the
Finance Division and the other SPEMP donors for several Bank-executed NLTA to
provide “bridging support” for a period of 18 months to continue to review and support
selected activities which had been initiated under SPEMP A and where there was
consensus that these activities required additional support to embed the reforms initiate,
as follows:
Development of macroeconomic forecasting capacity in the Finance Department.
The bridging support for macroeconomic forecasting takes the form of a
US$250,000 non-lending technical assistance program, managed and executed by
the World Bank. This will provide key technical experts to assist the
Macroeconomic Wing in completing the development of the macroeconomic data
required for modelling, including the use of the new ‘rebased’ National Income
Accounts data.
A review of the budget management arrangements though assistance to four line
ministries and finance division to help them implement the Medium-Term Budget
Framework (MTBF), consistent with the implementation guidelines issued by the
Finance Division.
A Public Expenditure and Financial Accountability Assessment and analytical
support for a new PFM strategy.
63. GoB has approved a new program under their revenue budget and is financing
the continued development of the iBAS++ financial management information
system. Funding of 14 crore BDT (US$ 1.8 million equivalent) for continued
development of the new iBAS++ software has been approved for FY2015. As of
December 2014, the budget preparation module of IBAS++ is quite advanced (80
percent complete), but there is still substantial programming needed to be done before
the system could be used for either budget preparation or execution.
20
3. Assessment of Outcomes
3.1 Relevance of Objectives, Design and Implementation
Rating of Relevance of Objectives: Substantial
64. The relevance of the Project objectives is rated as substantial based on its general
alignment with Government and Bank development priorities. The area in which
the project was working was relevant and closely aligned to the Bank’s Country
Assistance Strategy (FY11-14), which noted that the country’s relatively weak
governance environment could increasingly prove a barrier to more rapid, inclusive and
sustainable growth and called for improved quality of public investments and overall
expenditures. It was also consistent with the country’s own development priorities.
These were articulated in the Second National Strategy for Accelerated Poverty
Reduction (NSAPR-II) and PFM Vision and Medium Term Rolling Action Plan
(2006). Improving fiscal management, through better management of debt stocks and
service levels, a more strategic approach to budgeting (MTBF) and improved controls
and transparency with respect to expenditure could all have been expected to contribute
to improved service delivery, improving the alignment between capital and recurrent
budget allocations, linking the budget more strongly to results, providing more
predictability of the public expenditure management system. At the end of the project
implementation period, the objectives remain relevant to the CAS objective to Enhance
Accountability and Promote Inclusion, including support to the Government to increase
the effectiveness and efficiency of public resource use (Outcome 4.1). Continued
support to strengthen PFM systems is specifically mentioned in the current CAS.
Rating of Relevance of Design and Implementation: Negligible
65. The relevance of the Project design is assessed as negligible due to:
There was no clear results chain analysis linking the activities to the PDO to guide the
development of the results framework.
An acceptable results framework was not in place until 2013, which hampered design
and implementation the overambitious and unmanageable design with nine
components covering all aspects of PFM reforms.
The decision to put all the technical assistance into a single contract, which limited
flexibility in managing the Project. A number of targets were overly demanding and highly dependent upon timely political
decisions on major outputs.
Sequencing was not neither carefully thought through nor followed.
The time and effort required for recipient decision-making and coordination were
underestimated.
21
3.2 Achievement of Project Development Objectives
Rating: Negligible
PDO: The objective of the Project per the Grant Agreement was “to strengthen and
modernize budget management institutions within the Recipient, with a particular
emphasis on a performance orientation in public financial management, through
institutionalizing the Medium Term Budget Framework and Strengthening Financial
Accountability”.
66. The Project had very limited success in “strengthening and modernizing budget
management institutions”. The few positive achievements were that the MTEF
process became better established. MTBF formats and quality were improved, and the
MTBF was extended to all 59 Line Ministries. MTBF Performance indicators and
medium-term budget outlooks were prepared for all ministries. While new institutional
arrangements for budget preparation (Budget Management Wings, Budget Working
Groups and Budget Management Committees) were designed and partly implemented,
in practice these do not appear to have reached the level of sustainability. By the time
of Project closure the new budget management institutions were mostly performing the
task of budget preparation, while the additional task of doing budget monitoring and
exercising control over execution remained a low priority. In other ares of institutional
improvements there were few results. The Institute for Public Finance was established,
but it remains essentially a shell. There was no progress in establishing an internal audit
function, and the component on legislative and regulatory changes delivered no
significant results.
67. Progress towards the objective of improving performance orientation was also
very limited. Officials interviewed during the ICR stated that the Government had not
committed to introduce a performance oriented budgeting system. Nonetheless by the
end of the Project one (target 5) Ministry had produced a strategic business plan, and
four others had got to the stage of preparing drafts. Key performance indicators (KPIs)
are included in the Ministry Budget Framework documents, but in the absence of a
Government commitment to move towards more performance oriented budgeting the
value of the strategic plans and KPIs is questionable.
68. The project was modestly successful in deepening and institutionalizing the
MTBF. As mentioned above the practice of preparing MTBFs has been established
across government and the quality improved. At the same time some key aspects of
deepening and improving the quality of MTBF were not achieved. The Project failed
to develop the macro-economic forecasting model, which meant that there was no
improvement to the medium term fiscal framework on which line ministries could
prepare forward budget estimates (FBEs). Furthermore, the methodology for FBEs was
not finalized by the FD or adopted as part of budget preparation. As a result a fully
functioning MTBF is not in place in any ministry. The latest MTBFs were prepared
based on Medium Term Macroeconomic Policy Statements. Some progress was in
building the foundations for future success in this area. A new accounts classification
22
system was developed, although not finally adopted. Work was started on the
development of the new computerized financial management system, but this is far
from complete and successful implementation is not assured. Some improvements
have been made to the existing accounting system which have improved its coverage
and functionality. However, very few of these activities were completed and the
targets set for the projects were not achieved. Improving financial reporting was not
achieved, due to the failure to adopt the new accounts classification system, accounting
standards and to develop a new financial management information system.
3.3 Efficiency
Rating: Negligible
69. The overall efficiency of the Project can be considered negligible given the gap
between the disbursed amount and Project outputs. In common with many such
projects the economic justification for the Project was not detailed in the Project
Document. It is therefore hard to measure the economic efficiency of the project.
However, the fact that the full budget of US$50 million was disbursed, plus a small
amount of additional financing, while very few of the planned outputs were delivered,
indicates a low level of economic efficiency. Significant investments were made in the
development of the IBAS++ system, and in PFM skills (see Annex 2 for more details).
These have the potential to deliver benefits in the future, but these are difficult to
quantify and are not assured. The IBAS++ system may not be implemented and the
civil service management system in Bangladesh means that those given financial
management training may not be in jobs where their skills will be used.
3.4 Justification of Overall Outcome Rating
Rating: Highly Unsatisfactory
70. Combining the relevance, achievement of PDO, and efficiency, the overall
outcome rating of the Project is rated Highly Unsatisfactory. The negligible efficacy
of the Project due to the lack of significant and sustainable progress towards the
achievement of the PDO and outputs and the negligible level of efficiency justifies the
highly unsatisfactory rating despite the modest relevance of Project objectives, design,
and implementation.
Table 4: Summary of Relevance, Efficacy, and Efficiency Ratings
Outcome Rating
Relevance of Objectives,
Design, and Implementation
Substantial (Objectives)
Negligible (Design and
Implementation)
Achievement of Project Development Objectives Negligible
Efficiency Negligible
Overall Outcome Highly Unsatisfactory
71. The fact that the Project did not achieve most of its PDO and intermediate
indicators also suggests a “Highly Unsatisfactory” rating. One out of four PDO
23
level indicators was reported to be achieved partially by the Project closure date – 51%
of Line Ministries produced quarterly financial management reports meeting FD
requirements, although the ICR found that the actual number may have been closer to
50% (29 out of 57 ministries). The composite indicator “Line Ministries with MTBF
meeting specific criterion” was not achieved , as Line Ministries fully met only one
criterion – unified budget format used in MTBF and other budget documents. The
second criterion was achieved partially with Budget Management Wings, the Budget
Working Groups and the Budget Management Committees established in all Line
Ministries, but not fully consistent with Terms of Reference suggested by FD. FD also
failed to introduce baseline estimates used as the basis for determination of budget
ceilings. Target for indicator two - Line Ministries reporting annual performance - was
achieved in FY13, but not in FY14 with none of the Line Ministries submitting the
APR in time in FY14. Finally, the indicator four was not achieved – Annual financial
statements prepared as per IPSAS cash based standard consistent with COFOG and
GFSM 2011. Out of 18 intermediate indicators only five intermediate results
indicatorswere fully achieved.
3.5 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
72. Due to the overall lack of results, the Project’s impact on poverty and social
development is likely to be minimal and limited with respect to gender aspects.
Gender budget reports for 40 LMs were published in the FY15 budget. The guidelines
on gender budgeting were further enhanced and re-issued. A model gender budget
report for the Ministry of Youth and Sports based on the gender responsive budget
guidelines was developed. However, gender budgeting still has a mostly reporting
function and it needs to develop into an instrument of a pro-active planning.
(b) Institutional Change/Strengthening
73. The Project had some limited positive impacts on PFM skills levels and
institutional arrangements. A large amount of PFM training was delivered to a good
standard which may have a long term positive impact on the quality of public financial
management. However, the effect is likely to be diluted by the Government’s HR
management practices which do not ensure that people trained in financial management
are assigned to posts requiring PFM skills. The Project also helped to establish the
Institute of Public Finance on a more sustainable basis to be a training provider,
although it remains heavily dependent on external financing of training. New budget
management structures were set up within the line ministries to support improved
budget practices. However, the long term sustainability of these institutions still seems
to be dependent on continued donor support for budget reforms.
(c) Other Unintended Outcomes and Impacts (positive or negative)
24
74. A positive outcome of the Project, which was not reflected in the results
framework was the improvement of the iBAS system, which remains the core
accounting system of the Government. Consultants paid for by the Project helped to
improve the functionality of the system, its reliability and system coverage. During the
period covered by the Project the system was extended to 325 (out of 400) Upazilla
accounting offices, electronic funds transfer was introduced as a new payment method
(used to pay government officials salaries in Dhaka) and a system for on-line
verification of challans was introduced. A version of iBAS was also developed for use
by 5 of the major self-accounting entities (SAEs), including the Public Works
Department, where the system is in use, Roads Department, Bangladesh Railways, the
Post Office and the Department of Public Health Engineering. New servers and
communications equipment were purchased which supported the expansion of the
system and improved its reliability.
75. Additionally, work was also undertaken to support PFM in the health and
education sectors. Specifically, the Project supported Sector-Wide Approaches to
adopt the IBAS as the financial management information system for the generation of
financial reports for the development partners who were contributors to the pooled
financing under the SWAps. The Ministry of Primary and MassEducation went on to
accept the advice and to a large extent adopt government systems for reporting
requirements. In the case of the Ministry of Health and Family Welfare however, there
was continued reluctance on the part of the officials and the donors to move to the
country system since IBAS was considered more unreliable than the system that had
been set up by the SWAp.
76. An unintended negative consequence of the Project was that the Ministry no
longer has a fully functioning automated debt management system. The Project
was designed to upgrade the DMFAS system, which it had operated successfully for a
number of years (with support from UNDP), with a new version of the system DMFAS
6.0 which was implemented under SPEMP A. The UNCTAD contract for
implementation and training in the use of the DMFAS 6.0 system has ended, and FD
now no longer receives the updates required to maintain the old version of DMFAS.
As a result, neither DMFAS nor DMFAS 6.0 are fully operational. Furthermore the
UNCTAD contract finished before the work had been completed to connect the debt
department with the Bangladesh Bank. During discussions on “bridging activities” no
request was made to continue the work on debt management. After the discussions had
been concluded a request for a retroactive extension was sent to the Bank, but this was
not approved. A repayment from UNCTAD of US$ 250,000 is due in respect of
payment made for services not completed.
25
3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
77. No beneficiary survey or stakeholder workshops were conducted.
4. Assessment of Risk to Development Outcome
Rating: Moderate
PDO: The Project aimed to deepen and institutionalize the MTBF and build a more
strategic and performance oriented budget management process, while strengthening
financial accountability across the expenditure management cycle.
78. The risk to the Development Outcomes of the Project has to be considered in the
context of the limited results of the Project. Since the Project fell far short of its
intended results, the risk of a major reversal to development outcomes is somewhat
lessened, and in the area of medium term budgeting the progress achieved is supported
by a follow on project. However, without continued external support, or changes in
Government HR practices, the impact of component 3 on training may be lessened.
79. The main achievements were improvements in medium term budgeting, a debt
management strategy, improvement and expansion of the pre-existing iBAS
system and extensive training of staff. The macro forecasting and expenditure
management reforms will continue to be supported by Bank NLTA projects. The
improvements in system coverage and performance of the legacy IBAS system are
sustainable but the PDO outcome of strengthening financial accountability is
contingent on the successful development and implementation of the FMIS which is
going ahead under a government-financed project, but success is not assured. While a
significant amount of preparatory work has been completed, including the development
of a new chart of accounts and design of the new financial management information
system, the outcome is still at significant risk as policymakers have not approved the
chart of accounts. The investment in PFM skills remains at risk due to civil service
management practices, which commonly rotate staff with specialized PFM training to
non- specialist posts.
5. Assessment of Bank and Borrower Performance
5.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
Rating: Highly Unsatisfactory
80. Although the Project was designed using analytical work and was broadly aligned
with the Government’ stated plans, it was not sufficiently targeted. The Project
built on the Government’s broad PFM objectives but did not sufficiently select areas
for which there was greater reform ownership and interest in the near term. Analytical
26
work included a 2006 PEFA assessment and a 2009 public expenditure and institutional
review. Despite this, the Project went for a comprehensive approach to a large number
of PFM reforms while the benefit of hindsight would indicate more prioritization and
attention to the sequencing of reforms would have made more sense.
81. The design did not take sufficient account of past evidence of the limited ability of
Government to coordinate effectively, or the capacity to implement such a
complex set of reforms over a limited period. The Project attempted to coordinate
the work of the Planning Commission, the Ministry of Finance and line Ministries, and
the work had implications for other agencies including the C&AG and Bangladesh
Bank. While recognition of the coordination challenges led to the original SPEMP
program being split into three Projects, SPEMP-A still faced significant coordination
challenges.
82. The team acknowledged that the Government had not requested to undertake
fundamental reforms of PFM but nevertheless incorporated fundamental reforms
into the Project design. Such fundamental reforms included the introduction of
performance budgeting, internal audit, commitment controls and changes to business
processes and budget legislation for which there was little demand. In practice these
activities were not carried out.
83. The design process failed to address different expectations with respect to the
future development of the iBAS system and agree on an IT strategy. The
Government continued to believe that the Project could achieve its goals through
incremental improvements to the existing iBAS system while the World Bank’s
expectation was that GoB would replace the iBAS system. As a result, almost a year
was spent preparing diagnostic studies and debating the approach to FMIS, and the
consulting firm selected for the main contract lacked the skills to develop bespoke
software. The failure to reach agreement on fundamental design issues on the FMIS
prior to signing the grant agreement, proved to be a significant factor in the delay in
implementation, such that there was insufficient progress on systems development by
the time the decision needed to be made on an extension and additional financing.
84. The failure to develop a solid monitoring and evaluation framework prior to the
approval of the Project was a significant weakness in the Project design. In
hindsight, this lack of precision contributed to gaps in understanding and expectations,
which led in turn to long debates and failure to implement many activities.
85. The type of contract and decision to use a single contractor to cover all of the
reform activities brought some problems. The rationale was that there would be
gains from integration and coordinated advice. In practice, the quality of the work
carried out by the MISC consultants was variable, with good results in some areas and
poor results in others. With the benefit of hindsight, better results might have been
achieved if separate contracts had been issued for different skills areas, or if payments
had been more closely linked to results. In making these observations, it is important
27
to recognize the challenges in attracting consultants to work in Bangladesh.
(b) Quality of Supervision
Rating: Unsatisfactory
86. Throughout the Project, the Bank maintained a dedicated team of staff based in
Dhaka. This consisting of a TTL, an Operations Analyst, a Program Assistant, a Team
Assistant, and a Research Analyst based in Dhaka to ensure close supervision of the
Project. In addition, an IT expert (consultant) and a Debt Specialist (Bank staff) were
regularly engaged in Supervision Missions to ensure technical expertise; and a full time
public sector specialist was added to the team in Dhaka from 2013. Supervision
Missions were conducted on time and the quality of Aide-Memoires and ISR’s are well
noted. There were three TTLs over the course of the Project, although for most of the
Project there was a reasonable level of continuity of staffing. Fiduciary supervision was
provided on a regular basis.
87. The Bank only partially addressed the weaknesses in the original Project design. The 2012 restructuring improved the Project design, but largely failed to address the
over-ambition of the Project design, keeping too many of the activities that were not
performing well. The lack of a proper M&E framework and inadequate staffing of the
M&E function were not satisfactorily resolved during the lifetime of the Project.
88. The quality of technical supervision was variable. Government officials argued that
the team could have been more proactive, or brought additional skills to bear, when
monitoring the quality of consultants provided by MISC and their outputs. For instance
the macroeconomic forecasting model developed by the MISC was first approved by
the Bank’s team, but then admitted not to be suitable. It also appears that the team was
over-optimistic in upgrading the Project performance in 2012-13. Although the
restructuring was helpful in re-establishing some momentum, it was already apparent
that the Project’s objectives were unlikely to be achieved without a significant Project
extension.
89. Government representatives expressed the view that the change of TTLs after
2012 impacted the Project. In the view of some officials, the incoming TTL was new
to the Bank, which impacted to the swift supervision of the Project, and also to
Bangladesh, which is widely acknowledged to be a challenging environment. In
addition, the TTL faced several other challenges, including:
Dealing with a FD request to extend the waiver request to allow new FD staff to be
hired as consultants under the SPEMP-A Project, which was not permitted by
Bank’s senior management. This issue became an overriding issue of dialogue
during much of 2013/4, and the TTL was the “messenger” of a difficult message.
A technically complex and ambitious Project design.
Unsatisfactory Project performance and implementing arrangements.
28
Maintaining relationships with multiple SPEMP donors, with different
perspectives.
Government officials’ unhappiness at losing a TTL with whom they were
comfortable.
This was compounded by changes in management which resulted in gaps of several
months, when both the Country Director and Practice Manager positions were vacant.
Conversely, upon management decision in March 2014, an independent evaluation
with highly specialized PFM experts was organized, and the TTL for the umbrella trust
fund changed.
90. The Bank’s stance on government officials working as National Consultants under
the Project had a significant negative impact on relations between the World Bank
and the Government and created a situation of potential conflict of interest.
Through an oversight the Bank had approved the original MISC contract which
included 12 national consultants on special leave (on lien). The conditions set by the
Bank in 2012 (see para. 63) for approving the appointment of the three additional
consultants prevented the Government from substituting new officials as consultants
when those who were contracted under MISC ended their assignments. The
Government was not happy with the new restrictions and there were numerous
discussions on this issue, which was raised to the level of senior management. Both
Bank staff and officials told the ICR team that the Government’s dissatisfaction with
the Bank’s stance on this issue soured the relationship, to the extent that the team leader
could not access senior government officials responsible for the project. Furthermore,
the fact that the government officials were on leave of absence and working for the
MISC, may have left a gap in terms of ensuring that there was sufficient qualified
government officials to oversee the consultancy firm. These officials were seen as
having the unique, required skills to make the project successful. If this was the case,
with such senior people on the consultancy team, it may have also added to the
challenge for government officials remaining within government to oversee and hold
the consultancy firm accountable for results.
(c) Justification of Rating for Overall Bank Performance
Rating: Highly Unsatisfactory
91. There were significant flaws in the Project design which contributed to problems
in implementation. Project supervision was not sufficiently effective in identifying,
addressing and following up on the various problems as they emerged. As a result of
the highly unsatisfactory rating for Project design and the unsatisfactory rating for
supervision, the overall Bank performance is rated highly unsatisfactory.
29
5.2 Borrower Performance
(a) Government Performance
Rating: Highly Unsatisfactory
92. Coordination across Government agencies was weak. The Finance Division of the
Ministry of Finance was responsible for leading implementation in close partnership
with the Planning Commission and line ministries. In practice, the Planning
Commission, by its own decision, stood apart from the Project and consultation and
involvement of line ministries was somewhat limited e.g. consultation with them as
users of the IBAS system.
93. The Project Steering Committee and Joint-Government Donor Committee met
irregularly. The Steering Committee, chaired by the Secretary (FD), and including the
Project Director, Component Coordinators, focal points representing line ministries,
the TTL and a representative from the Lead Donor was supposed to meet semi-annually
to review progress in implementation, performance against objectives, resolve
problems and provide guidance on implementation issues. In practice, only a few
meetings were held during the five years of the Project and at infrequent intervals,
indicating only limited support or steering from the top management. In practice most
of the decision making was made by individual component implementation units and
their heads. In the case of the IBAS++ component this appears to have been driven by
the consultants MISC. A Joint Government-Donor Committee was established as the
main regular oversight body for the Project to meet as needed, but at least six monthly.
It appears that it met irregularly.
94. The Project leadership arrangements were unclear with the official and de facto
leadership being quite different. While the head of the PMCU was officially the
Project Director, real leadership rested with the Finance Secretary and later with the
Additional Secretary. As a result of the restructuring in 2012, the Project Director’s
effective function became manager of Project support functions (procurement, Project
accounting, reporting and M&E). In many instances the Project Director was not
invited to key meetings and not part of important decisions, which were made by the
component directors and the Finance Secretary/Additional Secretary. In this sense, the
Project restructuring was incomplete and neither Government nor the Bank was
effective in recognizing or addressing the poor communication and coordination
between the Project Director/PMCU and the Component Directors which resulted.
95. The main implementation responsibility for all activities initially rested with nine
Component Coordinators, senior officials (Joint Secretary or above) supported by
Component Implementation Units made up of staff of the relevant units in the
Ministries and the Planning Commission. This arrangement proved ineffective. The
appointment of three Component Directors as part of the 2012 restructuring resulted in
improved implementation performance in selected areas.
30
96. The Planning and Management Coordination Unit (PMCU) did not fulfill its role
effectively. The PMCU was intended to serve as the secretariat and support Project
implementation through procurement, financial management and monitoring and
evaluation services. The PAD assigned the PMCU the role of being the primary point
for managing the linkages and ensuring the interface between the individual
components, and being largely accountable for the timely and effective implementation
of the overall Project. In practice the PMCU worked largely as a “post office”
processing requests from component implementation units. One PMCU Director
commented that that the unit was just a “cipher”. The PMCU was also widely criticized
for slowing down procurement and appointment of consultants.
97. Successive review missions identified weaknesses in PMCU’s monitoring and
evaluation function. It appears to have been difficult to obtain adequate international
consultants for this task. A strong monitoring and evaluation function would have kept
tabs on the performance of all components and identified required remedial actions
where progress was not on track. Instead it appears that the monitoring and evaluation
function was carried out in a perfunctory “tick the box” fashion rather than an in-depth
problem identification fashion which would feed into decision making.
98. Observations and recommendations made by Bank supervision missions were
frequently not followed up. The Bank regularly drew attention to areas of
unsatisfactory performance, with recommendations for improvement. Table 4 above
sets out the ratings of the different components over the period October 2011 to
February 2014. This raises questions about the impact of the supervision missions and
of the monitoring role of the PMCU.
99. Quarterly progress reports based on the Results Framework were prepared by
component teams and aggregated by the PMCU and forwarded to the Bank and
senior FD staff. Regular progress reports on SPEMP-A and the whole SPEMP
program were prepared and distributed regularly and made publicly available on the
SPEMP website.
(b) Implementing Agency or Agencies Performance
Rating: Highly Unsatisfactory
100. Aide Memoires identified serious gaps in communication and coordination
between officials in the Finance Department, the Project management team and
the implementation support consultants as early as 2011. Numerous reform
proposals made by consultants resulted in very few decisions by the FD. Supervision
reports regularly reported:
Lack of follow up actions by Government in response to recommendations made
in Aide Memoires, including filling critical positions.
31
Long delays in confirming the selection of new personnel to work on the Project.
Failure by senior management to take decisions on key strategic documents,
such as the IT strategy, the debt management strategy and the new Chart of
Accounts.
For example, in mid-2013 an M&E consultant had been recruited, but the July 2013
Aide Memoire reported that Project was still in the process of establishing effective
monitoring and reporting practices. This state of affairs was blamed on the
unnecessarily and unrealistically complicated implementation arrangements, which led
to confusion and decisions getting stuck in the pipeline.
101. By mid-2012, restructuring was reported to have improved decision-making
ability within each of the components. However, the roles of both the PD and the
team coordinator of MISC were reported as having become less clear. Communication and coordination problems continued between officials of the FD, the
Project management team and implementation support consultants persisted and parties
reported that they were still working in silos and that there was a lack of “drive” to
implement decisions across the 3 components. In 2012, the World Bank team
recommended that the quarterly meetings of the Project Executive Committee be held
continuously to raise and resolve issues needing of high level attention. These meetings
were expected to be supported by proper M & E-arrangements and a systematic
inventory of pending decisions discussed at frequent decision update meetings between
the PMCU and MISC. The mission also recommended that FD, the PMCU and the
MISC revisit the roles and functions of staff following the restructuring to address the
lack of clarity.
102. A critical issue affecting progress in the development of the iBAS replacement
system (iBAS++) was limited Government ownership and involvement in the
development of the new system. An independent assessment of the status of iBAS++
implementation in 2014 drew attention to the lack of clarity on objectives of iBAS++;
absence of authorization and clear decision-making on system development; and the
fact that key design documents (functional & technical) had not been formally signed
off by GoB. There was a lack of leadership with respect to the technical professional
aspects of implementation which contributed to unrealistic estimates of timelines and
slippages and insufficient follow-up, in between missions on advice given during the
supervision missions. There was also insufficient awareness and attention given to the
“soft” factors which are important in the development of new information systems, i.e.
communications, people and processes.
103. Finance Division refer to consultancy resources being used to upgrade and
improve the existing IBAS system, which may have slowed the IBAS ++
development. It is possible that a significant part of the Project budget was spent on
unplanned improvements to the existing iBAS system and fixes to help address
operating problems and increase the performance and coverage of the iBAS system.
32
From the point of view of the contractors, the performance of the PMCU posed
significant challenges. PMCU was responsible for coordinating with the main contractor
(MISC), including clearing consultant appointments, and ensuring that the Government
provided its contributions to the Project in the form of physical resources such as office
accommodation, office equipment and vehicles. Long time delays were experienced,
especially at the start of the Project. The Bank also for some time expressed concern
about the quality of PMCU accounting. The PMCU attributed these problems to the lack
of staff and delays in getting approval of staffing.
(c) Justification of Rating for Overall Borrower Performance
Rating: Highly Unsatisfactory
104. Borrower performance is rated highly unsatisfactory based on several factors
adversely affecting Project implementation. The Project experienced lack of
decision making on important issues and concerns highlighted during Bank missions;
lack of clarity with respect to internal Project management and leadership arrangements
and insufficient Steering Committee meetings; weaknesses in the performance of the
PMCU, especially with respect to M&E and processing of contracts and appointments;
diversion of resources to the old iBAS system; and lack of GoB commitment to
important parts of the reform agenda.
6. Lessons Learned
Project Specific Lessons
105. The Project goals could have been less ambitious, more prioritized and
sequenced, and better informed by previous projects and known capacity
constraints. Although the Project was generally aligned with the Government’s PFM
reform strategy, developed in 2006, the number and intensity of activities was much
greater than had been attempted under either of the previous PFM reform projects,
RIBEC and FMRP. Simplifying the objectives at the outset, or later during the
restructuring, might have improved the chances of success. Attempting to cover a wide
range of PFM reforms under a single 5-year project with 9 components was not realistic
and sufficiently adapted to the country and capacity context. Greater attention to
“getting the basics right” could potentially have helped gather the reform champions
and focused scarce capacity on a narrower set of activities.
106. More effective consultation with Government about their priorities and more
active questioning of paper commitments would also likely have led to a less
ambitious project. This could have avoided problems of lack of ownership and
increased the chances of success. Interviews with Government officials indicated that
they did not subscribe to many of the major reforms envisaged in the Project, which
were then not implemented. These included a major upgrade of the FMIS system,
performance oriented budgeting and internal audit. Similarly, a better understanding of
stakeholder preferences, including of FD and PC priorities, might have informed
Project design and potentially reduced some implementation challenges.
33
107. The consequences of the lack of a results framework, and results chain analysis
was evident in the design and implementation. In the absence of a more logical
explanation of why the PFM reforms were being prioritized the links between activities
to the objectives were ill defined. In fact, there was analysis to hand (for example the
Public Expenditue and Instiutitonal Review) that could have helped the team at the
design stage to focus on the more binding constraints of the PFM system to service
delivery. By including such a large number of activities, the emphasis on what was
needed to have better alignment of resource allocation and financial accountability was
lost. Furthermore the incomplete Results Framework did not service the Project well,
as even now it is difficult to report against the indicators, the indicators are not closely
aligned to the activities in some cases, and at the PDO level the indicators themselves
had a number of external reasons for them being met or not met, for example, the
deviation between the debt to GDP or deficit to GDP ratios at the start and the end of
the financial year.5
108. Greater use could have been made of the available TF resources to supplement
the technical knowledge of the task team, especially to provide more intensive
oversight of critical activities. Additional funds had been committed by donors but
were unutilized. These could have been usefully deployed, for example, to quality
assure key outputs, usch as the macro forecasting model that was rejected by the MOF
staff and by the Bank as too generic. Similarly, additional ICT specialist inputs could
have been helpful in following up on the advice offered by the Bank’s ICT specialists
during implementation support missions, helping for example to reach decisions on the
overall approach to FMIS development or strengthening management and oversight of
the main consultant’s activities. Additional support to Government on the IT aspects
could have resulted also in a clearer understanding and appreciation of the extent of the
progress made, or not made, in developing IBAS. It was an unwelcome surprise to
Bank management for example to discover in 2014 how much work remained to be
done on IBAS++, indicating that an extension of more than two years would be
necessary to fully implement iBAS++. This contributed to the decision not to extend
the Project.
109. More up front work to clarify the PFM IT strategy, system architecture and
user requirements, is advised before committing large amounts of funding to a
FMIS Project. In this case there was lack of clarity with respect to the basic strategy,
with the result that it was not until more than two years after the Project had started,
that the IT strategy was agreed. The PAD was notably unclear with respect to the
5 For instance, if the debt management activities were introduced as a result of the analysis that indicated
(despite low overall debt to GDP ratios) that debt service was crowding out fiscal space (debt service was
becoming close to the size of the education budget in 2008); then the indicator should have been debt service
as a percent of the budget; rather than debt to GDP ratios.
34
strategy for development of an integrated financial management system. This allowed
the Government to maintain its expectation that the Project would achieve this goal
through incremental improvements to the existing iBAS system while the World
Bank’s expectation was that GoB would replace the iBAS with a COTS solution.
110. Allowing the normal rules preventing officials being hired as consultants to be
circumvented carries significant risks. In this case the situation arose partly because
it was an established practice inherited from previous projects and partly because
because the Bank paid insufficient attention to the contract details at the time it was
agreed. Correcting the mistake during project implementation then resulted in damage
to the relationship of trust between the Government and the World Bank. It also limited
the Government’s independence and objectivity in respect of the consultants’
performance and vice versa.
General Lessons
111. Alternative instruments, including multiple projects, a programmatic
approach, or result-based financing, could be considered. An option to keep
projects supporting a larger reform agenda manageable could be to divide activities
into more than one operation which could be implemented either in parallel or as a
programmatic approach or series of projects. As a general rule, if there is an “and” in
the PDO, the rationale for two separate projects can sometimes be stronger. In this case,
for instance, a project for deepening the MTBF and a project for strengthening financial
accountability might have been easier for the Bank and the GoB to manage. Another
instrument to consider could be result-based financing combining incentives in the
form of result-based financing based on Disbursement-Linked Indicators (DLIs) with
technical assistance to support the client reach the objectives. Result-based
arrangement could also strengthen the alignment between disbursements and outcomes.
112. The use of larger contracts can represent both advantages and risks. The
project relied on one very large time based contract ($43 m) to provide almost all the
technical inputs. On the one hand, a consolidation of the procurement plan into fewer
contracts can provide operational benefits in contexts where a high number of
procurement processes may overburden limited procurement capacities. It can also help
ensure more effective coordination of inputs and reduce the risk of conflicting advice.
On the other hand, larger contracts can result in a concentration of risks in cases where
the selected contractor may face challenges in attracting and retaining adequate
expertise to cover all areas covered by the contract. Such risks may be higher in cases
when several different specialized skills are required combined with a challenge to
attract and retain these skills on the ground.
113. The appropriateness of time-based contracts has to be evaluated carefully. The
main MISC contract was time (or input)-based rather than output based. While time-
based contracts may be appropriate options in cases where few implementation
challenges are expected, they can represent significant disadvantages in other contexts.
In particular, they can limit the client’s capacity for quality control if the mechanisms
35
in place for ensuring value for money are not sufficiently strong. This can weaken the
link between disbursements and outputs and the overall efficiency of an operation.
114. Where there is uncertainty on basic aspects of the design of major IT
applications such as FMIS large amounts of funding should not be committed to
implementation. Where the IT strategy, system architecture and user requirements are
not defined, the Bank could use a two-stage approach. Stage one would focus on
completing redesign of business processes, development of the IT strategy, design of
the system architecture, specification of user requirements, preparation of bidding
documents and securing a consensus amongst key users. Once this design work is done,
the Bank could support implementation with a relatively quick disbursing grant/loan to
cover the development of software, the purchase and installation of hardware, system
acceptance testing and user training.
115. More importance should be attached to upgrades of legacy systems and interim
IT solutions. Given the long gestation period of most FMIS projects it is unrealistic to
expect governments not to continue to invest in upgrading and expanding existing
systems. SPEMP-A spent significant sums on upgrading and expanding the IBAS
system (see Table 3), although this was not well reflected in the results framework.
The Bank could also support the development of interim (low-tech) solutions (either
off the shelf or bespoke) in areas such as fixed asset management, commitment control
and payroll. This could deliver improvements in financial management and aid
transition to IFMIS, by cleaning up and reconciling the basic data, improving control
and reporting, and training users in the use of ICT. All of these steps should aid
transition to the new system and reduce the project risks. In this Project, some progress
was achieved in the area of payroll and pensions, but this could have been taken further.
116. Successfully designing and implementing such complex PFM projects requires
that key team members have strong Bank operational experience, combined with
technical and local knowledge. Strong Bank operational skills are a a critical factor
contributing to both a solid Project design and the ability to take effective corrective
action, within the constraints of the Bank’s institutional arrangements, policies,
procedures, and instruments. In this case the operational experience of the team was
limited and were not sufficienty compensated by management oversight and support.
117. Multi-donor trust funds can be difficult to manage and require strong
coordination to manage the expectations and demands of a diverse set of donors. While desirable to enhance donor coordination, MDTF-arrangements can also enhance
the complexity of operations. At the design stage of multi-donor operations and in order
to keep an operation manageable, measures could be taken to ensure an adequate level
of selectivity of project activities. For instance, this could be achieved by seeking a
donor agreement to put less funding on the table up front, but with the promise of
additional funds once key decisions have been taken. In addition, multi-donor
operations require strong and effective coordination and communication mechanisms
among donors and the Government throughout the project cycle. Task teams benefit
from planning adequate time and resources to ensure this important function.
36
7. Comments on Issues Raised by Grantee/Implementing Agencies/Donors
118. The draft report was circulated to donors and implementing agencies on March 17th
2015. To date no comments have been received.
37
Annex 1. Project Costs and Financing
(a) Project Cost by Component (in USD Million equivalent)
Components Appraisal Estimate
(USD millions)
Actual/Latest
Estimate (USD
millions)
Percentage of
Appraisal
Total Baseline Cost 65.67 52.29 80%
Physical Contingencies
0.00
0.00
0.00
Price Contingencies
1.50
0.00
0.00
Total Project Costs 67.17 52.29 78%
Project Preparation Costs 0.00 0.00 .00
0.00 0.00 .00
Total Financing Required 67.17 52.29
(b) Financing
Source of Funds Type of
Cofinancing
Appraisal
Estimate
(USD
millions)
Actual/Latest
Estimate
(USD
millions)
Percentage of
Appraisal
Trust Funds
Bangladesh Strengthening Public
Expenditure Management 67.17 52.29 78%
38
Annex 2. Ratings and Outputs by Component
1. Ratings By Component
Table A.2.1: Summary of Project Ratings by Component
Summary Rating
Component 1: Strategic Policy, Planning and Budget Management
1.1 Macro Fiscal Policy and Management U
1.2 Debt, Treasury and Cash Management U
1.3 Strengthen Budget Management and MTBF MU
1.4 Strengthening Planning Commission Discontinued
1.5 Legal and Regulatory U
Overall Component 1 U
Component 2: Public Financial Systems
2.1.1 Improving Accounting and Financial Reporting HU
2.1.2 Development of accounting procedures and standards U
2.1.3 Strengthening budget/accounts classification and fiscal reporting MU
2.1.4 Self Accounting (Departmentalized Accounting) Entities MU
2.2 Improved systems for Payroll, Pensions, Loans and Advances and
Government Provident Fund
U
Overall Component 2 HU
Component 3: Capacity Building and Training
Capacity Building and Training U
Overall Component 3 U
2. Level of Achievement of Project Indicators
Table A.2.2: Summary of Achievement of Project Indicators6
Type of Indicator Achieved Partially
Achieved
Not Achieved Total
PDO Indicators 1 (25%) 0 (0%) 3 (75%) 4
Intermediate
Indicators
4 (22.2%) 1 (5.6%) 13 (72.2%) 18
Total 5 (22.7%) 1 (4.5%) 16 (72.7%) 22
Level of Achievement of PDO and Intermediate Indicators
PDO Indicators Level of Achievement
PDO1: Line ministries with MTBF specific criteria Not achieved
PDO2: Line ministries reporting annual
performance results as per guidelines
Not achieved
PDO3: Line Ministries producing quarterly
financial management reports (QFMR) meeting FD
requirements
Partially achieved
PDO4: Government Annual Financial Statements
prepared as per IPSAS Cash based standard
consistent with COFOG and GFS 2001
Not achieved
Intermediate Indicators Level of Achievement
6 The table intends to provide a general summary on the level of achievement of individual indicators.
39
IO1: Deviation between forecasts in the original
MTMF and actual results regarding the budget
deficit to GDP ratio
Partially achieved
IO2: Deviation between forecasts in the original
MTMF and actual results regarding the Debt to
GDP ratio
Not achieved
IO3: Debt management entities provide annual
report to government
Not achieved
IO4: Cash balances calculated daily and
consolidated by FD
Not achieved
IO5: Variance between original budget and actual
outturn for previous FY
Not achieved
IO6: Line ministries receiving regular oversight
from FD related to MTBF
Partially achieved
IO7: Line ministries producing gender budget
reports
Achieved
IO8: Line ministries with budgets based on medium
term strategic business plan
Not achieved
IO9: Adequate legal and regulatory support to the
reforms provided
Not achieved
IO10: iBAS functionality enhanced and applied as
an integrated FMIS across line ministries,
departments, subordinate and upazilla levels
Not achieved
IO11: Government financial statements are
prepared on IPSAS cash basis in a timely manner
Not achieved
IO12: iBAS used for Self Accounting Entities
(SAEs) based on improved accounting standards
and procedures
Not achieved
IO13: Budget classification revised to meet budget
preparation and consolidation of accounting data
for financial reporting consistent with IPSAS
Not achieved
IO14: Other iBAS enhancements Not achieved
IO15: Public Servants receiving PFM training Paritially achieved
IO16: Public Servants reporting positive training
outcomes
Achieved
IO17: Number of training days engaged in PFM
training and capacity building activities
Achieved
IO18: Number of management reports prepared Achieved
40
3. Outputs by Component
Component 1. Strategic Policy, Planning and Budget Management
1.1 Macro Fiscal Policy and Management
Rating: Unsatisfactory
This sub-component aimed at provision of support to the FD capacity for developing
capacities for macro-fiscal forecasting and analysis, and fiscal policy management7.
The intermediate result indicator measured by the deviation between the forecast and
actual outturn for two key macro-fiscal performance indicators (budget deficit to
GDP and debt to GDP ratio) was achieved for one of the two sub-indicators, but there
are many exogenous factors that might have affected the indicator . The deviation
between the forecast and actual budget deficit to GDP ratio met the target of +/- 0.8 percent
of GDP in FY13 The deviation between the forecast and actual debt to GDP ratio was well
below the targeted of +/– 1.0 percent of GDP in FY13, and is unlikely to improve
considerably in FY14. The deviation between the forecasted and actual values was to be
reduced through building the capacities of the Macroeconomic Wing (MEW) of the FD
largely by replacing the existing spreadsheet model by a new macro-fiscal forecasting
model. However, since the macroeconomic forecasts were made based on the pre-existing
spreadsheet model, the results may be partially attributed to the Project.
Intermediate
Results
Indicators
Unit of
Measure Baseline
FY12
Target
Actual
FY13
Target
Actual
FY14
Target
Actual
Remarks and Status
Deviation between forecasts in the original MTMF and actual results regarding:
IO1: Budget
deficit to GDP
ratio
% 1.0 +/-0.9
+/-0.8
+/-0.7 Target partially achieved FY14: Not yet available.
FY13: Deviation between
forecasts and actuals was -
0.7%.
Achieved -0.7%.
IO2: Debt to
GDP ratio
% -2.7 +/-1.5 +/-1.0
+/-0.5 Target not achieved
FY14: Not yet available.
FY13: Deviation between
forecasts and actuals was -
4.0%.
Achieved -4.0%
The new macro model was to produce medium-term revenue forecasts and generate the
indicative aggregate expenditure ceilings to inform the Midterm Macro Framework
7 The objectives of each sub-component are presented as stated in the Schedule 1 to the Grant
Agreement dated October 29, 2009 as amended on March 19, 2012.
41
(MTMF) and the budgeting process. The macroeconomic forecasting model developed by
the MISC was first approved by the Bank’s team, but then admitted not to be suitable. The
macro-fiscal forecasting model that was developed by the consultant, was not used by the
MEW to formulate the MTMF due to a number of deficiencies identified by the core
macroeconomic modelling team at the MEW (static rather than dynamic modelling,
unconventional dummy estimates, manipulative nature of the model, unsatisfactory
estimation results, etc.) and their concern about the credibility of the results. The recent
decision by the Bangladesh Bureau of Statistics to change the base year of National Income
Accounts series from early 1990s to 2005/2006 has also undermined the confidence in the
model, which requires sufficiently long time series to produce reliable forecasts.
There are a number of factors common to the overall Project implementation that
hindered the production of a reliable model, including frequent changes of
consultants, lack of consensus on the model type from the beginning, insufficient
beneficiary capacities to assess the quality of deliverables on time and affect the
outcome. Frequent changes in macro-economic advisors and modelling consultants caused
substantive delays in deliverables. Conflict of opinions between the consultants and the
MEW, and limited capacity of the FD to influence the modelling design led to the
development of two models, both of which were not accepted by the MEW as operational.
It also took long MEW before it could prioritize activities under the building macro-fiscal
policy and analysis subcomponent. The outcome may have been different, would the MEW
staff worked closely with the consultant at the stage of the model development and the
World Bank team provided technical oversight to ensure the quality and adequacy of the
model.
A software-driven macroeconomic database, a unified electronic repository of key
macroeconomic data required for macro-fiscal modeling and macroeconomic
reporting, is operational, but has not reached the point of sustainability. Systematic
maintenance and need for monthly updating is difficult with given resources. Data needs
to be collected from a number of government agencies besides FD (BSS, BB, NRB, ERD),
while an inter-face for automatic data transfer is established only for the BB. Additional
funds beyond the Project will be needed to establish digital interface with other agencies
for the routine sharing of macroeconomic data, and appropriate management arrangements
are required to ensure the sustainability of the database.
A positive outcome of the sub-component was the creation of a core modelling team
under the MEW and its capacity building through training courses on applied
econometrics and time series techniques. The team now feels confident in using Project
purchased E-views software and plans to develop a new model (or revise the previous one).
However the team still requires technical assistance from the World Bank staff in ensuring
the robustness of the new model. Retaining of core modelling staff within the MEW is also
a critical issue. Another core output is the gathering of a large database of the required
macroeconomic indicators needed for macroeconomic forecasting. The development of
reliable historic data has been a positive output from this component.
42
Macro-fiscal policy and analysis capacities were strengthened through deepening and
extending the macroeconomic and fiscal analysis in the Medium Term Budgetary
Framework (MTBF) document presented with the annual budget, which was replaced by
a separate document “Medium Term Macroeconomic Policy Statement” in 2013 as
required by Public Money and Budget Management Act (PMBM). Formats of an enhanced
monthly macroeconomic monitoring report and monthly fiscal monitoring reports were
developed and used for the first time in 2014.
1.2 Debt, Treasury and Cash Management
Rating: Unsatisfactory
Debt Management
The sub-component’s objective was to strengthen the Recipient’s structures, processes and
skills to manage its debt obligations more effectively, more particularly in, inter alia: (a)
improving governance, coordination and monitoring mechanisms among all its agencies
dealing with debt management; (b) building capacity for preparation of the debt strategy,
debt policy formulation, data recording and analysis resource and debt management; (c)
building capacity to manage contingent liabilities; and (d) strengthening the regulatory
framework for public borrowing.
(a) improving governance, coordination and monitoring mechanisms among all its agencies dealing
with debt management
This was to be achieved through the installation of the Debt Management and Financial
Analysis System version 6.0 (DMFAS 6) in all related debt management entities. The MoF
has been using the DMFAS since 1996 for external debt management. The latest version
(DMFAS 6.0) was to support front, middle and back office operations in all debt
management entities. Fully operational DMFAS 6.0 would have allowed for integrated
coordination and monitoring of external, public and private debt data.
The DMFAS 6 is now operational in FABA, FD and BB, but not in ERD. The whole
picture on external and domestic debt data is not yet available, as the interface solutions
between the DMFAS 6.0 and BB’s MI module and IBAS were not completed. The
interface with BB is needed to ensure continual and smooth flow of data on domestic debt
from BB to DMFAS 6.
Many of the planned activities on DMFAS 6 (activation, developing interface and
training) were not accomplished by the date of Project closure, as the team had
anticipated the extension of the Project and scheduled many of the activities to be delivered
by December, 2014. Decision on non-extension and closure of the Project came late and
the debt entities were left out with only partially operational DMFAS 6. ERD found itself
in the worst position, as the previous version of DMFAS used since 2002-2003 for external
debt data, had stopped getting updates, while the new DMFAS 6 was not yet ready to
replace the previous version. ERD has reportedly gone back to record all data in Excel
datasheet.
43
(b) building capacity for preparation of the debt strategy, debt policy formulation, data recording and
analysis resource and debt management
Debt management capacities were strengthened through the establishment of a multi-
disciplinary working group of staff from MEW, FD, FABA and BB, who received
extensive training on DSA formulation and has prepared DSA with end-June 2012 data.
The sustainability of the DSA now largely depends on DMFAS 6, as the next update of the
DSA is recommended to source data from DMFAS 6. Retaining of staff who received DSA
training is also an issue, and if both conditions do not hold the sustainability of the
capacities to prepare DSA is highly questionable.
A Medium Term Debt Management Strategy (MTDS) was approved by the Minister
of Finance in 2014. The MTDS was developed by a multi-disciplinary group (the same as
for DSA), which benefited from training on Bank-Fund MTDS toolkit. MTDS is critical in
informing policy decisions while framing the annual borrowing plan and issuance calendar.
Delayed development and approval of the MTDS hampered the achievement of the
intermediate results indicator related to debt reporting on time. The debt entities will
now need to prepare quarterly and annual reports that include an evaluation of how the
borrowings and other debt-related transactions have complied with the requirements set in
the MTDS.
Intermediate
Results
Indicators
Unit of
Measure Baseline
FY12
Target
Actual
FY13
Target
Actual
FY14
Target
Actual
Remarks and Status
IO3: Debt
management
entities provide
annual report8 to
the government
Number No No 1 4 Targets not achieved for
FY13 and FY14.
Achieved 0 0
(c) building capacity to manage contingent liabilities
A concept paper on contingent liabilities of the Government of Bangladesh – identification,
measurement, policies, procedures, guidelines and legal system - was prepared in January
2014 and the respected guidelines approved by the Finance Minister on July 31, 2014.
Contingent liabilities database could not be completed to the full extent, as FD holds
information of the “issued amount”, while the actual outstanding are not available as the
SOEs do not report back to FD on how much have been repaid.
(d) strengthening the regulatory framework for public borrowing
8Reports to include an evaluation of how the borrowings, derivatives, and other debt-related transactions
have complied with the requirements set in the DM strategy.
44
A concept paper on the rules, policies and guidelines for public debt management by the
Government of Bangladesh was prepared, but was not formally approved by FD.
Cash Management
The sub-component also aimed at supporting the Recipient in the establishment of a sound
and coherent system of treasury, cash and debt management, by inter alia: (a) reviewing
treasury functions; (b) designing, testing and implementation of a preliminary module for
cash management; (c) installing of the requisite systems either as: (i) an interface or (ii) an
added functionality, to the integrated budget and accounting system; (d) improving treasury
and cash management; and establishing liquidity planning tools.
(a) reviewing treasury functions
Three reports were prepared in 2012 reviewing treasury functions and providing
recommendations on – 1) Report outlining current processes and systems relating to cash
forecasting and Treasury Single Account; 2) Report on building capacity for management
of financial assets; 3) Report on strategies for improving government capacity for treasury
and cash management.
(b) designing, testing and implementation of a preliminary module for cash management, and (c)
installing of the requisite systems either as: (i) an interface or (ii) an added functionality, to the
integrated budget and accounting system
This was to be achieved through the development of a Treasury and Cash
Management Module within iBAS and Budget Execution and Transactions modules
in iBAS++, which were not ready at the time of Project closure (more details in the
Component 2). Software to systematically record government shares and equities has not
been completed as well.
Software has been developed to extract past receipts and payments from iBAS for use
by Line Ministries in preparing the cash forecast. However, the capacities of Line
Ministries are still need to be strengthened to use the software. A budget implementation
plan module has been added to the existing IBAS; this module captures cash inflows and
outflows, as well as borrowing requirements and has the potential to help line ministries in
their cash management. However, this module is being used in some but not all line
ministries. Moreover, the accounting offices are still keeping all records in paper form for
verification, and some of the line ministry offices (e.g., Health, Education) are using
parallel systems for specific reporting needs.
(d) improving treasury and cash management; and establishing liquidity planning tools
Cash plans were introduced as a liquidity planning tool, but they are calculated on a
quarterly basis not on a monthly basis, as planned in the revised results framework.
Original thinking was to introduce cash balances calculated daily, which proved to be not
feasible in the absence of a complete TSA and FMIS. Therefore monthly cash plans were
45
defined as an intermediate state towards achieveing the original target. The guidelines for
the preparation of annual cash plans were developed under the Project in FY13, and they
are awaiting approval by FD. Cash plans for four quarters of FY14 were prepared and
submitted to the Treasury and Debt Management Wing (TDMW). However, the cash plans
were mostly prepared by the Project team using a top-down approach. Getting quality
bottom-up information from line ministries on cash requirements forecasts still remains an
issue. Capacities in line ministries were overburdened by the MTBF process and therefore
not able to place sufficient focus on monitoring of budget implementation and cash
requirements. Collecting bottom-up from line ministries also largely dependent on the new
iBAS’s commitment module, this has not fully developed by the time of Project closure.
Intermediate
Results
Indicators
Unit of
Measure Baseline
FY12
Target
Actual
FY13
Target
Actual
FY14
Target
Actual
Remarks and Status
IO4. Cash
balances
calculated daily
and consolidated
by FD
N/Y/P Cash
flow
plan
formu-
lated by
FD tech-
nical
commit-
tee
N N P
Target not achieved Cash plans prepared at
quarterly instead of monthly
basis.
“Partial” means by cash plans
calculated monthly, not daily.
Achieved N N N
The cash-forecasting model expected to be developed by the Project was not delivered. There was a continuous disagreement between the Project team and the TDMW on the
sourcing of information for the model – the Project team recommended to base it on
Treasury Single Account, whereas the TDMW inclined to use iBAS. In the end, TDMW
has developed its own model.
An Annual Report on government investment in shares and equities prepared and is under
process of approval by the Minister of Finance. Database for government shares and
equities developed, but the software is not ready yet.
1.3 Strengthen Budget Management and MTBF
Rating: Moderately Unsatisfactory
Provision of support to FD capacity for leading and managing all aspects of the MTBF
approach to budgeting including inter alia: (a) developing institutional processes and
capacities to provide guidance on MTBF to the cabinet and line ministries, including
reviewing MTBF submissions from line ministers; (b) strengthening poverty and gender
budgeting; (c) strengthening budget and accounts classification; (d) strengthening central
monitoring and evaluation of budget implementation; (e) strengthening capacity to play a
developmental role on the internal audit function in line ministries.
(a) developing institutional processes and capacities to provide guidance on MTBF to the cabinet and
line ministries, including reviewing MTBF submissions from line ministers;
46
Quantitative targets to monitor the extent of oversight by the Finance Division on
financial reporting were partially achieved: oversight on quality of MTBFs and
budget estimates data entry conducted, while oversight of financial reporting and
performance initiated, but not yet complete. Weekly meetings between FD and LMs
have been initiated to monitor budget preparation. Approval was obtained to increase FD
staff in this regard with 6 additional budget desk officers. These posts were expected to be
filled by end November 2014.
Intermediate
Results
Indicators
Unit of
Measure Baseline
FY12
Target
Actual
FY13
Target
Actual
FY14
Target
Actual
Remarks and Status
IO6LMs
receiving
regular FD
oversight
related to
MTBF
% Over-
sight
focused
on
budget
process-
es
100%
complia
nce on
Budget
calendar
100%
oversight
on quality
of MTBFs
and budget
estimates
data entry
100%
oversight
on
financial
reporting
and
financial
performanc
e
Targets achieved partially
for FY14.
Achieved 100 %
complia
nce on
budget
calendar
100 %
compliance
on budget
calendar
100 %
compliance
on budget
calendar
100%
oversight
on quality
of MTBFs
and budget
estimates
data entry
Targets for Intermediate Result 1.3 – Strengthened Budget Management and MTBF related
to the variance between original budget and actual budget out-turn were not achieved for
the last two fiscal years, in part due to the wide range of externalities associated with the
indicators.
Intermediate
Results
Indicators
Unit of
Measure Baseline
FY12
Target
Actual
FY13
Target
Actual
FY14
Target
Actual
Remarks and Status
IO5: Variance
between
original budget
and actual
budget out-turn
for previous FY
% −8.1 +/− 7.0 +/−6.0
+/−5.0 The target was not achieved.
Note that end result will also
be influenced by other factors
such as external and internal
shocks.
For FY13, the target was not
achieved, with the actual
variance of – 9.0% presenting
a deterioration compared to the
baseline. For FY 14, data are
not yet available but the
variance is likely to be higher
than target.
47
Intermediate
Results
Indicators
Unit of
Measure Baseline
FY12
Target
Actual
FY13
Target
Actual
FY14
Target
Actual
Remarks and Status
Achieved −9.0%
(b) strengthening poverty and gender budgeting;
One of the few areas where the Project reached its targets was with regard to the
formulation of gender budget reports. Gender budget reports for 40 LMs, and were
published in the FY15 budget. The guidelines on gender budgeting were further enhanced
and re-issued. A model gender budget report for the Ministry of Youth and Sports based
on the gender responsive budget guidelines was developed. However, gender budgeting
still has a mostly reporting function and it needs to develop into an instrument of a pro-
active planning. No records or references were found related to poverty budgeting.
Intermediate
Results
Indicators
Unit of
Measure Baseline
FY12
Target
Actual
FY13
Target
Actual
FY14
Target
Actual
Remarks and Status
IO7: LM
producing
gender budget
reports
No. 20 25
30
35 Target achieved
FY14:
Gender budget reports for 40
LMs to be published in the
Gender Budget Report FY15.
Achieved 25 40 40
(c) strengthening budget and accounts classification;
The revised budget classification and Chart of Accounts were developed but not
formally approved during the Project. This was addressed by the Component 2.1.3
Government officials also criticized the Bank’s role in evaluating the work of consultants
and major Project outputs. They argued that the team could have been more proactive, or
brought additional skills to bear, when monitoring the quality of consultants provided by
MISC and their outputs.
(d) strengthening central monitoring and evaluation of budget implementation
At the start of the Project the FD oversight was mainly focused on budget processes
and compliance with the budget calendar. There was no systematic and regular financial
reporting by Line Ministries and no performance reporting against KPIs and output
indicators. FD’s capacities were constrained to monitor the quality of submissions and
provide feedback to spending entities.
By the end of the Project 29 out of 59 line ministries submitted quarterly financial
management reports (QFMRs)9 based on new guidelines and associated forms for
9 According to the reporting in the Implementation and Support reports, over 80 percent of LMs submitted
QFMRs for Q2 and Q3, less for Q1 and Q4.
48
preparation of Budget Implementation Plans and QFMRs approved in 2013. The
verification on the quality of the submissions is being undertaken by Finance Division,
which was strengthened by additional 6 budget officers and managers to enable more effort
on monitoring of budget implementation. There are still issues about the quality and
timeliness of quarterly reports, including limited capacities and skills in Line Ministries
and Agencies. A special training course was delivered to all Line Ministries under the
Component 3, but developing and institutionalizing the appropriate skills will take some
time.
PDO Level
Indicator
Unit of
Measure Baseline
FY12
Target
Actual
FY13
Target
Actual
FY14
Target
Actual
Remarks and Status
PDO3: LMs
producing
QFMRs
meeting FD
requirements
% Irregular
and with
consider
able
time lag
0 60 51 Target partially achieved
Achieved 0 0 51
Although progress was made towards the introduction of Annual Performance
Reviews as part of the budget cycle, the second PDO indicator target for FY 14 was
not met. Two ministries (Ministry of Education and Ministry of Health and Family
Welfare) submitted Annual Performance Reports (APRs) for the period FY12 to Finance
Division on October 9, 2013. Revised guidelines and formats of the APR for FY13 were
prepared and issued by Finance Division on March 3, 2014. Three additional line ministries
(Ministry of Primary and Mass Education, the Power Division and Ministry of Agriculture)
started work on preparing Annual Performance Reports (of FY13 performance) but had
not submitted APRs by the end of the Project.
PDO Level
Indicator
Unit of
Measure Baseline
FY12
Target
Actual
FY13
Target
Actual
FY14
Target
Actual
Remarks and Status
PDO2: LMs
reporting annual
performance
results as per
guidelines
No. LM 0 0 2 3 Target achieved for FY13,
but not achieved for FY14.
Achieved 0 2 0
(e) strengthening capacity to play a developmental role on the internal audit function in line ministries
Internal Audit Cell has been formally established within FD and an organogram and
ToR for the Cell have been developed, but the Cell is not operational yet. As staffing
of the Cell will follow Government’s existing service rules, the Ministry of Public
Administration has been approached for recruitment of staff. The internal Audit manual
prepared by the Project has been approved by FD and the Ministry of Public Works has
been identified for implementation of internal audit guided by the new manual.
49
The second objective of the sub-component was to develop capacity in line ministries by
inter alia: (a) rolling out a more policy oriented budget processes to all line ministries; and
(b) developing institutional processes and administrative structures and capacities in line
ministries to enable them to implement effective internal controls, manage resources and
achieve results in line with policies.
This objective is measured by the first PDO level composite indicator, which was not
achieved . The indicator is composed of three sub-indicators, of which one achieved, and
one achieved partially. The composite nature of the indicator makes it difficult to assess
the overall success of the PDO level indicator.
PDO Level
Indicator
Unit of
Measure Baseline
FY12
Target
Actual
FY13
Target
Actual
FY14
Target
Actual
Remarks and Status
PDO1: Line
Ministries
(LMs) with
MTBF meet
specific
criterion as
follows
(1) BMCs, BCs,
BMWs/Bs/ Ss10
are operational
consistent with
ToR suggested
by FD
% BMCs/
BWGs
formed
in all
LMs
0 60 80 Target partially achieved.
BMCs, BWGs reconstituted
with revised TOR and
BMW/B/S established in 100
percent of 59 LMs by June
2012 but operational in 80
percent and not fully
consistent with TORs.
Achieved 80
(2) Baseline
estimates used
as the basis for
determination of
budget ceilings
% 0 0 60 80 Target not achieved.
Achieved 0 0 0
(3) Unified
budget format
used in MTBF
and other
Budget
documents
% MTBF
imple-
mented
in all
LMs
0 60 80 Target achieved.
Progress
Achieved
0 100 100
One of the Project’s successes is the roll out of MTBF to all line ministries using the
unified budget format (Sub-indicator 1.3). However, the MTBFs are not yet based on
Forward Baseline Estimates, which would have allowed for reliable estimate of budget
ceilings (Sub-indicator 1.2). The Forward Baseline Estimate (FBE) guidelines were
10 Budget Management Committees (BMCs), Budget Working Groups (BWGs), Budget Management Wings (BMWs), Budget
Management Branches (BMBs), Budget Management Sections (BMSs).
50
prepared and presented at a workshop held on September 28, 2013. The guidelines were
updated, incorporating recommendations received at the workshop and from a Bank-
commissioned review, but not finalized. The FD had expressed its intent to hold another
workshop, post Project closing, to finalize the guidelines, which at time of reporting have
not taken place. Therefore, FBEs will not be introduced before FY 16. The dual budgeting
practice with development budgets being the responsibility of Planning Commission and
recurrent budgets run by Line Ministries also undermines the realistic budgeting practice.
The quality of MTBFs considerably vary among Line Ministries pointing to the need for
extensive capacity building activities; this is agreed to be provided through the Bank
executed TA in 2015.
Only one MTBF (Ministry of Agriculture) is based on Medium Term Strategic
Business Plan (MTSBP) compared to targeted 5 in FY14. MTSBPs for other four Line
Ministries (Power Division, Local Government Division, Ministry of Education and
Ministry of Social Welfare) are in draft status. A revised draft guidance note on introducing
MTSBPs has been prepared. The technical committee in principle agreed to the Power
Division’s MTSBP at a meeting on April 10, 2014. A second revised draft of the MTSBP
of the Local Government Division was prepared with the help of a consultant and the
MTSBP for the Ministry of Education and Ministry of Social Welfare is at an initial stage.
The target of introduction of a program budget structure was dropped over the
course of the Project; this is justified from prioritization and sequencing point of view.
The targets for institutionalizing the MTBF Line Ministries were partly achieved. The core budget management institutions (the Budget Management Wings or Branches,
the Budget Working Groups and the Budget Management Committees) have been
established in all Line Ministries. However, most do not yet perform all of the functions
that were outlined in the terms of reference (TORs) for these institutions that were issued
by the Finance Division. By the time of Project closure budget management institutions
were mostly performing task of budget preparation, while budget monitoring and control
over execution remained to be of low priority. Standardized formats for Budget
Management Committees and Budget Working Group working papers have been
developed but have not been adopted or issued. The Finance Division has decided to
arrange quarterly meeting with Budget Management Wings/ Branches (BMW/B’s) in order
to strengthen FDs monitoring and guidance of LMs to make BMWs fully operational.
1.4 Strengthening Planning Commission
Intermediate
Results
Indicators
Unit of
Measure Baseline
FY12
Target
Actual
FY13
Target
Actual
FY14
Target
Actual
Remarks and Status
IO8:LMs with
budgets based
on medium term
strategic
business plans
No. Nil Nil 1
5 Target not achieved
Achieved 1
51
Rating: N/A
This sub-component was discontinued and has become a separate World Bank executed
Project.
1.5 Legal and Regulatory
Rating: Unsatisfactory
Under sub-component 1.5 support to the Recipient’s regulatory reforms in public financial
management was envisaged, including inter alia: (a) implementing a Public Money and
Budget Management Act (PMBMA); and (b) reviewing and revising the general financial
rules, including treasury rules and accounts codes.
Little progress was made toward Intermediate Result 1.5 – PFM Legal and regulatory
Reforms Achieved. The GFR and Treasury Rules have not been fully revised to make
them consistent with the 2009 Public Money and Budget Management Act and modern
financial management practices. The revision of the Treasury Rules, which was supposed
to have been completed by the end of FY14, was postponed by FD. The revised GFRs
have been drafted under SPEMP A, but were not approved and promulgated. Three
guidelines or circulars have been issued on: (a) financial reporting under MTBF, (b) budget
management wings to be constituted in all LMs, and (c) internal audit. A fourth circular,
related to the creation of a Financial Management Group of 200 staff to work in LMs and
Finance Division, a cadre controlled by the Finance Division, was not completed by end
of the Project.
Intermediate
Results
Indicators
Unit of
Measure Baseline
FY12
Target
Actual
FY13
Target
Actual
FY14
Target
Actual
Remarks and Status
IO9. Adequate
legal and
regulatory
support to the
reforms
provided
N/P/Y N (Exis-
ting
legal and
regula-
tory
frame-
work
incon-
sistent
with
evolving
reform)
N P P Target not achieved
FY14: List of rules,
regulations & guidelines
prepared and approved by the
relevant task force.
Draft GFR finalized, but not
approved and promulgated.
Revision of Treasury rules
postponed.
Achieved N
Component 2: Public Financial Systems
Rating: Highly Unsatisfactory
The Project, as originally designed, contained two components related to the development
of FMIS: improvement of accounting and financial reporting (A.5 US$0.5m) and
modernization of the treasury and cash management systems (A.6 US$19.3m). The
52
objective of Component A5 was quite broadly stated as “to build on the present iBAS
platform and establish key elements of a fully functional GFMIS (including integration of
budgeting and accounting functions), with the objective of supporting more informed fiscal
and financial decision making. Planned activities under component A5 comprised:
Improving the quality of accounts and the timeliness and reliability of financial
reports.
Reengineering existing business processes and procedures applying international
standards (IPSAS and GFS 2001).
Improving the Chart of Accounts and the quality and format of financial reports,
including incorporation (i.e. consolidation) of departmentalized accounting entities.
Developing the internal capacity to manage the systems and accounting and
financial reporting in government in conjunction with a wide range of outputs from
other SPEMP projects.
The objective of Component A6 was to establish the basis for a sound and coherent system
of treasury cash and debt management The main activities planned were to review treasury
functions with the objective of prioritizing actions under linked Project components and to
design test and implement a cash management module. A set of activities were also
identified as necessary to meet the objectives, in particular:
Interface between the cash management module and iBAS.
Implementation of an IFMIS.
Interface between IFMIS with government Banks.
Interface with reliable debt, macroeconomic and fiscal forecasting.
The start of FMIS development did not begin until two years after the start of the Project.
This delay resulted initially from the time taken to make the project effective and then to
contract and mobilize the consultants (MISC’s contract was signed in April 2010, and the
main team mobilized between June a d October 2010) and second due to a lengthy debate
(lasting around 1 year) over the IT strategy. The Government wanted to incrementally
develop iBAS, based on the existing software, while MISC, supported by the Bank made
the case for replacing iBAS with a COTS solution.
Several reports were commissioned in 201011 and 2011 to look into the options for further
development of iBAS. These were consistent in concluding that the existing iBAS was
unsuitable as the basis on which to develop a fully integrated FMIS. Nevertheless in
looking at alternative options the Ministry of Finance remained convinced that a
customized off the shelf solution was not suitable and that an iBAS+ system could be built
by combining an improved and expanded version of iBAS with commercial software
modules In the fall of 2011 the Bank team commented that building iBAS+ as a fully
11 SPEMP – Review of iBAS _ Moving toward 2nd Phase of iBAS (iBAS2), May 2010.
53
integrated financial management information system was unlikely to be achievable during
the lifetime of the Project due to:
the complexity of a hybrid solution involving both bespoke and COTS modules,
the need to redesign business processes before developing the technical
specifications and
the ongoing challenge of integrating internal and external expertise.
As early as 2011, it was apparent that the Finance Department and the consultants were in
fundamental disagreement regarding the approach, and communications had largely
broken down. The Bank team commented on the lack of sufficient discussion and
consensus between internal and external experts, with the result that none of the diagnostic
reports could be considered a blueprint for action. The Bank team also emphasized the
need to introduce much better quality management and assurance processes, observing that
this had contributed to significant problems with iBAS in the areas of security,
documentation, audit trail, reliability and performance.
In the period from 2011 to 2012 the Project underwent a major restructuring, which tried
to address the problems related to the development of iBAS. The Bank’s ICT expert
became closely involved in working out a solution and held a series of workshops with FD
officials designed to clarify the overall strategy. In 2011 a consensus was reached that the
existing iBAS could not support the additional functionality required by the government,
and that a new bespoke system should be developed to replace iBAS, rather than a COTS.
It was also accepted that, apart from the adoption of GFS 2001 and IPSAS cash accounting
standard, no major reengineering of business processes was foreseen. However it was not
until 2012 that the functionality of the new iBAS++ system was agreed.
The 2012 restructuring created a new Component 2 (Public Financial Systems) with two
subcomponents. Sub-component 1 (: Improving Accounting and Financial Reporting)
was comprised of 4 sub-activities incorporating the development of the new iBAS+ system
and related changes in budgeting and accounting policies and procedures. These were as
follows:
2.1.1 Development of the GFMIS (i.e. implementation of iBAS+)
2.1.2 Development of accounting procedures and standards (i.e. adoption of
IPSAS cash accounting standard)
2.1.3 Strengthening budget/accounts classification and fiscal reporting (consistent
with COFOG and GFS 2001)
2.1.4 Self Accounting (Departmentalized Accounting) Entities (i.e. supporting
consolidation of the accounts of non-core units of government, SOEs etc.)
2.1.1 Improving Accounting and Financial Reporting
Rating: Highly Unsatisfactory
54
This component aimed at improving the accounting and financial reporting, through the
introduction of an integrated financial management system and the adoption of a modern
accounts classification system.
The objective of enhancing the functionality of IBAS and applying it across
government was not achieved. The replacement IBAS++ system is still under
development and the prospects for successful implementation remain unclear. The
development of IBAS++ did not keep pace with the original Project schedule and as such
the targets have not been achieved.
Consensus on the new IT strategy and on the functionality of the system was captured
in the Aide Memoire of (July 2012). However, it should be noted that the Government
did not formally record its agreement in the form of an IT strategy or similar document,
and the requirements continued to be modified.
The Project did make improvements to the existing iBAS system. These helped to
stabilize the system and improve its operational performance in the following ways:
Hardware upgrades were installed and operational response time was improved,
Coverage of the iBAS system was extended to line ministries, districts and to 320
Upazilla Accounting Offices.
Account integrity was improved through introduction of reconciliation process
(cheques and challans), a trial balance and Last Pay Certificates,
New system security features and business continuity arrangements were
introduced
New software was developed for electronic fund transfer (EFT) allowing
paperless, rapid payments to employees, pensioners and suppliers. This has been
implemented in Dhaka for officers’ payroll.
New software was developed for SAE accounting (implemented in the Public
Works Department).
Software was developed for preparation of BCC1.
In addition, budget validation has been implemented in iBAS for all DAOs and
UAOs.
A technical review by the iBAS++ development team indicated that the required redesign
of the system would involve a larger effort than previously envisioned. The Bank
recommended that FD management and donors defer all non-essential requests for change
or improvement of iBAS so as not to divert resources needed for iBAS++ development
work. They also recommended a number of additional urgent steps needed to support
iBAS++ development including:
recruitment of 7 additional programmers/analysts for system development,
detailed implementation planning, including costs, staffing etc.,
strengthening the ICT organization and capacity within Government,
planning for space and infrastructure to support a much expanded system and
55
introduction of quality management systems, especially important given GoB’s
decision to develop the software rather than buying a COTS solution.
During 2013 and 2014 progress in developing the new system continued to be slow. There was still uncertainty regarding the final system requirements, as FD gradually
reduced the scope of the system (for example dropping commitment control). There were
delays in selection and appointment of consultants, and lack of decision making on key
system documents developed by the consultants, which required sign off. The chart of
accounts, which is core to the development of any FMIS, was developed but not approved.
The mid-term review of the Project, which took place in 2013, concluded that
although there was considerable momentum in system development there was little
chance of it being implemented within the original Project timetable. The MTR
recommended that the Project be extended for a further two years to allow the system to
be implemented, and the Bank team and the consultants readjusted their expectations and
a substantial amount of their efforts towards the design of a two year extension.
In the early months of 2014 Bank management, faced with an imminent decision on
whether or not to extend the Project, and concerned about the continued slow
progress, commissioned a new team of ICT consultants to review the status of the
iBAS implementation. The resulting report was critical in persuading the Bank
management to recommend closure of the Project. It reported:
Limited Government ownership and involvement, including lack of clarity on
objectives of iBAS++; and absence of authorization and clear decision-making on
system development.
Significant delays in system development, with less than 10 percent of software code
written; modules described as completed not running properly, poor design documents
and delays in installing critical.
Unrealistic implementation strategy, including unrealistic timelines, lack of
information on data clean-up and migration, and gaps in in critical diagnostics.
Inadequate Project Management, including lack of technical leadership, insufficient
focus on ‘soft’ factors of information system, i.e. people and processes; and failure to
follow-up on advice given during previous supervision missions.
Poor documentation, including outdated functional specifications and Inconsistencies
between and within design documents.
The report concluded that, even with a two year extension, it was unlikely that the system
would be successfully implemented.
At the end of the Project, functional requirements had been specified for five modules
of the new system (the general ledger, budget classification, budget preparation,
security and system configuration). System design documents had also been prepared for
classification, security, general ledger and budget preparation. Software development had
been significantly advanced for classification, security and budget preparation. Without a
fully functional iBAS the targets for this component could not be reached, since the
56
preparation of cash-based IPSAS compliant reports or GFS reports could not be prepared
using the existing system. Software development has continued although Project support
ended on July 31, 2014. Two of the modules have been developed and tested (security and
classification), two other modules are being developed (budget preparation and general
ledger), and the remaining four modules (budget execution, transactions, reporting, system
configuration) are pending.
Intermediate
Outcome
indicators
Baseline
(FY10-11)
Target
(FY11-
12)
Target
(FY12-
13)
Target
(FY 13-14)
ICR
Outcome
(September
30 2014)
Remarks and
status
IO10:..IBAS
functionality
enhanced and
applied as an
integrated
IFMIS across
ministries,
departments
local
government
and
subordinated
bodies
None None None Budget and
Ledger
functionality
available
Not
achieved
The functional
scope has been
defined and the
overall system
architecture
finalized. The
system is under
development,
using GoB funds,
but the prospects
for eventual
success are
unclear.
2.1.2 Development of accounting procedures and standards (i.e. adoption of IPSAS
cash accounting standard)
Rating: Unsatisfactory
The objective of preparing financial statements based on IPSAS cash accounting
standards was not achieved. Preparation of course materials for training on the new Chart
of Accounts, budget classification and IBAS++ continued until June 2014, but given these
were not formally adopted in time, the training targets set for FY14 were not achieved.
Training needs of LMs on the budget and account classification were identified and a
number of training sessions held with each ministry. Drafting of the accounting procedures
and operations manual, however was not completed by the end of the Project and the
proposed training did not take place. The final mapping of the BACS economic segment
to the Cash IPSAS Financial Statements is to be completed once BACS is completed.
Implementation is also dependent on implementation of iBAS++.
Intermediate
Outcome
indicators
Baseline
(FY10-11)
Target
(FY11-
12)
Target
(FY12-13)
Target
(FY 13-
14)
ICR
Outcome
(September
30 2014)
Remarks
and Status
IO11:..Government
financial
statements are
prepared on IPSAS
Statements
are delayed
and do not
comply with
None None Partial Not
achieved
Reporting
has not
progressed
beyond
57
Intermediate
Outcome
indicators
Baseline
(FY10-11)
Target
(FY11-
12)
Target
(FY12-13)
Target
(FY 13-
14)
ICR
Outcome
(September
30 2014)
Remarks
and Status
cash basis in a
timely manner
international
standards
baseline and
IBAS++
system not
ready
2.1.3 Strengthening budget/accounts classification and fiscal reporting (consistent
with COFOG and GFS 2001)
Rating: Moderately Unsatisfactory
A new budget and accounts classification system has been developed, which is consistent
with GFS 2001 and COFOG. However, although this was recently approved by the
Finance Minister it has not been formally signed off by CAG or the President’s office.
Implementation will not be possible without the implementation of iBAS++.
Intermediate
Outcome
indicators
Baseline
(FY10-
11)
Target
(FY11-
12)
Target
(FY12-
13)
Target
(FY 13-
14)
ICR
Outcome
(Septembe
r 30 2014)
Remarks and Status
IO13:.Budget
classification
revised to meet
budget
preparation and
consolidation of
accounting data
for financial
reporting
consistent with
IPSAS
0 0 0 100% 0 Detailed budget and
accounting codes for
all eight segments
completed. Economic
segment prepared
based on IMF reviews.
Draft prepared of
updated version of
Initial Budget and
Accounting Code
Report.
58
2.1.4 Self Accounting (Departmentalized Accounting) Entities (i.e. supporting
consolidation of the accounts of non-core units of government, SOEs etc.)
Rating: Moderately Unsatisfactory
The Project was partially successful in developing IBAS enhancement for Self
Accounting Entities (SAEs). For Public Works, the SAE software was presented to
authorities at PWD, concerned CAOs, DGs, Works Audit Directorate Officials, and
Controller General of Accounts (CGA) officials, and software training was provided to
accounts staff of 6 Dhaka PWD divisions. User Guides for PWD software were prepared.
The remittance and reconciliation software was rolled out in all Dhaka Roads and
Highways Departments and Public Health Engineering Divisions. The Post Office
interface was rolled out to two post offices (HPO Sadarghat and GPO Dhaka) and training
was provided to staff of 12 Head Post offices and GPO Dhaka on the SAE software.
Intermediate
Outcome
indicators
Baseline
(FY10-11)
Target
(FY11-
12)
Target
(FY12-13)
Target
(FY 13-14)
ICR
Outcome
(September
30 2014)
Remarks and
Status
IO12:..iBAS
used for self-
accounting
entities based
on improved
accounting
standards and
procedures
N N P P Partial
(software
developed
to interface
al 7 SAEs)
Component 2.2 Improved systems for Payroll, Pensions, Loans and Advances and
Government Provident Fund
Rating: Unsatisfactory
The Project met its goals with respect to systems for Payroll, Pensions, Loans and
Advances and Government Provident Fund only to a very limited extent. The original
objective of this component of the Project (Component 8 in the original design) was to
carry out diagnostic studies in preparation for the eventual automation of payroll, pensions,
loans and advances and the Government Provident Fund., as part of an expanded GFMIS
system, addressing some specific issues in each of these areas. The Project did not envisage
that additional modules of GFMIS would be developed to capture financial transactions in
these areas. Specific activities envisaged under the Project included:
59
Compared to the original list of activities the actual achievements under this component
were limited, although they provide foundations for future improvements in PFM. The
government has started to build the employee and pensioner databases as the first step and
about 80 percent of both databases are complete. This was an important step towards
automating these functions and, in the process data is being cleaned up and ghosts removed.
In both cases the database design and testing has been completed and the process is
underway to collect and clean up the data, in collaboration with ministries, local
governments etc.
Outcome
Indicator
Baseline
(FY10-11)
Target
(FY11-
12)
Target
(FY12-
13)
Target
(FY 13-14)
lCR
Outcome
(September
30 2014)
Remarks and
Status
IO14: Other
iBAS
enhancements
0% 100%
(software
developed
and tested
and databases
fully
populated)
80% Work on
Employee and
pensioner
databases
continues till
date.
Component 3: Capacity Building and Training
Rating: Unsatisfactory
The Project was unsatisfactory in achieving its training goals. A large number of people
received different types of training in many aspects of PFM. Even so, the final number of
people trained was only a little more than half the targets set in 2012. Although this is as
much as could reasonably have been delivered, given that the reforms requiring the biggest
training input (i.e. adoption of the new Chart of Accounts and roll out of the new iBAS++)
were not achieved. The relevance and quality of the training, as measured using standard
60
feedback questionnaires exceeded the targets set for the Project. Considerable effort was
devoted to monitoring the quality and relevance of training, using an established
international methodology. An objective assessment of the relevance of the PFM training
to the Project goals is an unanswered question. (economic efficiency) Arguably the
training that was delivered, including ACCA training, overseas scholarships etc. was less
well aligned with the PDOs than the planned training raising the question of economic
efficiency.
The Project was successful in institutionalizing 3 of the 4 Levels of Kirkpatrick’s
Training Monitoring and Evaluation Framework. (The Level 3 (transfer/utilization of
training) evaluation report was completed in the second quarter of FY14 and shared with
relevant stakeholders to take steps to ensure best use of the trained officials.) Targets set
regarding the percentage of participants reporting positive training outcomes had also been
achieved. Assessments done by the Project team using Level-1 and Level-2 of
Kirkpatrick’s evaluation framework showed that over 90 percent of participants think that
the training activities were valuable to them and that their learning had been in line with
the objectives of the training event. The pace of instruction was rated “just right” by 86
percent of trainees and instructor performance rated “excellent” by 79 percent and
“satisfactory” by 20 percent of trainees. FY13 and FY14 targets for the number of PFM
training days were exceeded—with 16,913 days of training carried out against a target of
1,400—including participation in study tours, foreign courses, e-training, workshops and
seminars, and Masters Studies
The Project achieved very limited progress towards the objective of establishing a
national PFM training institution on a long term sustainable basis. The order setting
up of the IPF was approved by the Minister in 2012, and the former Public Finance
Foundation (PFF), a research organization under the MoF, was merged into the IPF as its
research wing. In FY14 the IPF was established as a legal entity and the first governing
council meeting was held in March 2014. A transition plan to transfer training functions to
the IPF has been developed. However, the full complement of staff for the IPF is yet to be
recruited and the cadre of training specialists has not been established. An agreement has
been reached with FD regarding the role of the proposed online PFM journal and is
awaiting the appointment of an editorial board. A Training Management Information
System was established in FY13 (with one year delay) and will be used to record
information on training participants. So far, information on 4,500 training participants has
been entered into the system and reports can be generated electronically. The IPF staffs
have been trained in using the system. An Evaluation Handbook has also been completed
which is intended to provide guidance to IPF staff on monitoring and evaluating training
activities.
Sustainable financing of the IPF through demand for training is the main threat to
IPF sustainability. The IPF is open to receive funds from both government and external
agencies and the 2014-15 budget allocated 20 crore taka to IPF as an endowment. Despite
this progress, the sustainability of IPF future of IPF is not assured, mainly because IPF was
expecting the Project to finance training for another two years. A transition plan was
developed late in the life of the Project, but this envisaged IPF assuming responsibility only
61
from 2016. The key missing ingredient was an agreed financing plan for IPF to continue
as a domestically financed institution.
Intermediate
Outcome
Indicator
Baseline
(FY10-11)
Target
(FY11-
12)
Target
(FY12-
13)
Target
(FY 13-
14)
lCR
Outcome
(September
30 2014)
Remarks and
Status
IO15:..Public
servants
receive PFM
training
1661 15% or
(3,500)
41% or
(9,200)
89% or
(20,200) 62.3%
(14,144)
The target was not
met largely due to
the delay in
adopting the new
Chart of Accounts
and in
implementation of
iBAS, both of
which would have
required training..
IO16:.Public
servants
reporting
positive
training
outcomes
No
measurement
framework
70% 70% 80% 97.7% Satisfaction with
training is assessed
as high.
IO17:..
Number of
training days
engaged in
PFM training
and capacity
building
No record of
formal
training days
spent for
providing
training and
capacity
building in
PFM area
800 1200 1400 16,913
62
Annex 3. Economic and Financial Analysis
The Project was expected to strengthen instruments of fiscal control, provide the means to
ensure effective implementation of budget allocations and greater transparency in
government’s financial management. Improving the expenditure management system and
streamlining associated budget preparation and implementation procedures would result in
more effective management of government’s financial resources and greater efficiency in
government budgetary transactions.
Better expenditure controls were expected to generate financial benefits, in terms
of reduced leakage in public expenditures,
Improved cash management was to reduce idle cash resources thereby lowering
cash flow and financing costs
Economic benefits were expected to flow from improvements in operational and
allocative efficiencies in public expenditure programs.
More efficient execution of budgetary transactions would reduce delays in payments by
government creditors (beyond the period stipulated in contracts) and would eventually
reduce the costs of goods and services to the government.
The fact that the full budget was spent, while few of the planned outputs were delivered,
suggests a low level of economic efficiency. However it should be noted that an unknown
but significant level of resources was diverted from the development of the new IBAS++
system to the development of the existing iBAS system. This delivered a number of
improvements in system performance and coverage which are described in more detail in
Annex 2. Also, a considerable amount of training was delivered under component 3, which
has contributed to improved skills levels. This suggests that the expenditure was not
entirely fruitless.
63
Annex 4. Expected Results per Objective (at approval)
Objective 1.1 Modernize long term strategic planning and policy development
i. Long term development vision and strategy (beyond 3 years) and a process
for updating and monitoring it on regular basis are put in place
ii. Policy statements of key long term development policy objectives become
more credible as indicated by Budget deviation indexes becoming <10%
Objective 1.2 Institutionalize and deepen the MTBF approach
iii. MTBF becomes the only approach followed for budget planning to all Line
Ministries (LM)/agencies
iv. Macro-framework becomes more reliable
v. Linkage between sector strategies, resources allocations and key indicators
of performance is observed at the operational (LM/agency) level
vi. Costed and accounted medium term estimates
Objective 1.3 Improve budget classification for more effective budget management
vii. General Financial Statistics 2001 compliant budget classification is in place
viii. Program classification structure completed and implementation plan agreed
Objective 1.4 Effective Public Debt Management
ix. Formalized Debt Strategy in place
x. Reduced discrepancy in budgetary financing through retail debt
xi. Better adherence to the borrowing calendar
xii. All debt records are computerized in a streamlined and integrated system
Objective 1.5 Improve the linkages between procurement, planning and budgeting
xiii. LM’s Medium Term Budget Frameworks and Annual Budget Submissions,
explicitly take into consideration and reflect procurement plans
Objective 1.6 Integrated budgeting, accounting, and monitoring functions at the LM level
xiv. Formalized functions at the LM level that include all aspects of the budget
management cycle
xv. Integrated financial management function relating to budget execution in
LMs, carried out by single unit/department
xvi. Internal audit units are established
xvii. Formalize internal audit functions at the LM level through central guidance
from the ministry of Finance (MOF)
Objective 1.7 Consolidation of integrated Budget and Accounting System (iBAS) towards
a modern integrated budget and accounting system
xviii. Accounting system coverage linked with the budget
xix. iBAS fully developed and functioning
xx. Enhancement of systems and business process re-engineering
xxi. Sustain IT capacity through strengthening FSMU (shared service provider)
after completion of the Project.
64
65
Annex 5. Grant Preparation and Implementation Support/Supervision Processes
(a) Task Team Members
Names Title Unit Responsibility/
Specialty
Lending/Grant Preparation
Alma Kanani Senior Economist SARPS
Supervision/ICR
Burhanuddin Ahmed Sr Financial Management Specialist SARFM
Rubaba Anwar Research Assistant SASGP
Dilshad Sultan Dossani Operations Analyst SASGP
Diepak Elmer E T Consultant SASGP
Marghoob Bin Hussein Senior Procurement Specialist SARPS
Abha Prasad Senior Debt Specialist PRMED
Marinus Verhoeven Lead Economist PRMKQ
Jonas Arp Fallow Senior Public Sector Specialist SASGP Task Team Leader
Suraiya Zannath Sr Financial Management Specialist SARFM
Eduardo Talero Consultant IT Specialist
(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
Total: 0.00
Supervision/ICR
Total: 0.00
66
Annex 6. Summary of Grantee's ICR and/or Comments on Draft ICR
The draft report was delivered to the Government of Bangladesh in hard copy on March
18th. To date no comments have been received.
67
Annex 7. Comments of Cofinanciers and Other Partners/Stakeholders
The draft report was delivered to the SPEMP-A donors on March 17th. To date no
comments have been received.
68
MAP