world bank document · 2016. 7. 8. · cas country assistance strategy ceu central executing unit...

Document of

The World Bank

Report No:ICR00002822

IMPLEMENTATION COMPLETION AND RESULTS REPORT

(IBRD-73520)

ON A

LOAN

IN THE AMOUNT OF US$40 MILLION

TO THE

ARGENTINE REPUBLIC

FOR A

SUB-NATIONAL GOVERNMENTS PUBLIC SECTOR MODERNIZATION

PROJECT

November 29, 2013

Poverty Reduction and Economic Management

Argentina, Paraguay and Uruguay Country Management Unit

Latin America and the Caribbean Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective March 31, 2013)

Currency Unit=Argentine Peso

US$ 1.00 = ARS $5.12

ARS $1.00=US$0.1953

FISCAL YEAR

January 1 – December 31

ABBREVIATIONS AND ACRONYMS CAS Country Assistance Strategy

CEU Central Executing Unit

CPS Country Partnership Strategy

DGCT

FRL

General Directorate of the Territorial Cadastre (Dirección General

del Catastro Territorial)

Fiscal Responsibility Law

GDP Gross Domestic Product

IBRD International Bank for Reconstruction

and Development

ICR Implementation Completion and

Results Report

INDEC

MDP I

National Institute of Statistics and Censuses (Instituto Nacional de

Estadística y Censos)

Municipal Development Project I

MDP II Municipal Development Project II

PAD

PDP I

Project Appraisal Document

Provincial Development Project I

PDP II Provincial Development Project II

PMU ProvincialManagement Unit

PMG

PROGESA

SIAPP

SIT

Public Administration Reform/

Sector Management Program Program “Efficient Management of Health Expenditure

(Programa “Gestión Eficiente del Gasto en Salud)

Provincial Personnel Administration System (Sistema de

Administration de Personal Provincial)

Territorial Information System (Sistema de Información Territorial)

SLA Subsidiary Loan Agreement

TTL Task Team Leader

Vice President: Hasan Tuluy

Country Director: Penelope J. Brook

Sector Manager: Arturo Herrera

Project Team Leader: Henry Forero

ICR Team Leader: Henry Forero

ICR Primary Author: Azul del Villar

ARGENTINA

Sub-national Governments Public Sector Modernization Project

CONTENTS

Data Sheet

A. Basic Information

B. Key Dates

C. Ratings Summary

D. Sector and Theme Codes

E. Bank Staff

F. Results Framework Analysis

G. Ratings of Project Performance in ISRs

H. Restructuring

I. Disbursement Graph

1. Project Context, Development Objectives and Design ............................................... 1

2. Key Factors Affecting Implementation and Outcomes .............................................. 6

3. Assessment of Outcomes .......................................................................................... 12

4. Assessment of Risk to Development Outcome ......................................................... 15

5. Assessment of Bank and Borrower Performance ..................................................... 16

6. Lessons Learned ....................................................................................................... 18

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 19

Annex 1. Project Costs and Financing .......................................................................... 20

Annex 2. Outputs by Component ................................................................................. 21

Annex 3. Economic and Financial Analysis ................................................................. 24

Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 27

Annex 5. Beneficiary Survey Results ........................................................................... 30

Annex 6. Stakeholder Workshop Report and Results ................................................... 31

Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 32

Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 33

Annex 9. List of Supporting Documents ...................................................................... 34

Annex 10.Brief summary of results of PDP-I, PDP-II, MDP-I and MDP-II………….35

Annex 11.Changes In Intermediate Outcome Indicators……………………………...36

Annex 12.Project Modules, Eligibility Criteria and Initial Allocation of Loan

Proceeds …………………………………………………………………...37

Annex 13.Dissemination of Outcomes in Local Newspapers, Chubut and Formosa ..38

MAP

A. Basic Information

Country: Argentina Project Name:

Subnational

Governments Public

Sector Modernization

Program

Project ID: P070448 L/C/TF Number(s): IBRD-73520

ICR Date: November 29, 2013 ICR Type: Core ICR

Lending Instrument: SIL Borrower: Argentine Republic

Original Total

Commitment: USD 40.00M Disbursed Amount: USD 37.31M

Revised Amount: USD 37.31M

Environmental Category: C

Implementing Agencies:

Ministry of Interior - CEU

Provincial Government of Santa Fe

Provincial Government of Neuquén

Provincial Government of Rio Negro

Provincial Government of Chubut

Provincial Government of Formosa

Provincial Government of Mendoza

Provincial Government of Salta

Cofinanciers and Other External Partners:

B. Key Dates

Process Date Process Original Date Revised / Actual

Date(s)

Concept Review: 09/06/2005 Effectiveness: 06/12/2007 06/12/2007

Appraisal: 11/09/2005 Restructuring(s):

09/29/2010

02/02/2011

02/22/2012

02/20/2013

Approval: 12/15/2005 Mid-term Review: 6/30/2008 8/7/2008

Closing: 09/30/2010 03/31/2013

C. Ratings Summary

C.1 Performance Rating by ICR

Outcomes: Moderately Unsatisfactory

Risk to Development Outcome: Moderate

Bank Performance: Moderately Unsatisfactory

Borrower Performance: Moderately Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)

Bank Ratings Borrower Ratings

Quality at Entry: Unsatisfactory Government: Moderately Satisfactory

Quality of Supervision: Moderately Satisfactory Implementing

Agency/Agencies: Moderately Satisfactory

Overall Bank

Performance:

Moderately

Unsatisfactory Overall Borrower

Performance: Moderately Satisfactory

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): Yes

Quality at Entry

(QEA): None

Problem Project at any

time (Yes/No): Yes

Quality of

Supervision (QSA): None

DO rating before

Closing/Inactive status: Satisfactory

D. Sector and Theme Codes

Original Actual

Sector Code (as % of total Bank financing)

Sub-national government administration 100 100

Theme Code (as % of total Bank financing)

Administrative and civil service reform 29 29

Municipal governance and institution building 29 29

Personal and property rights 14 14

Public expenditure, financial management and

procurement 14 14

Tax policy and administration 14 14

E. Bank Staff

Positions At ICR At Approval

Vice President: Hasan A. Tuluy Pamela Cox

Country Director: Penelope J. Brook Axel van Trotsenburg

Sector Manager: Arturo Herrera Gutierrez Ronald E. Myers

Project Team Leader: Henry Forero Ramirez Miguel Mercado-Diaz

ICR Team Leader: Henry Forero Ramirez

ICR Primary Author: Azul Del Villar

F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document)

The project aims at improving the capabilities of the provincial governments and their

municipalities to more effectively manage their resources and improve the quality of

government administrative services. Its specific objectives are: i) to support the integrated

development and adoption of basic management tools that are conducive to the efficient

and transparent management of provincial and municipal resources; ii) to strengthen

provincial governments in such key areas as those related to land tax and tax

administration, human resources management, judicial services, civil registries, control

entities and public safety functions; and iii) to support the strengthening of municipal

governments through pilot activities designed to demonstrate the benefits of integrated

modernization efforts.

Revised Project Development Objectives (as approved by original approving authority)

(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 : In at least one province, the ratio of collected provincial taxes has increased 15%

in real terms.

Value

quantitative or

Qualitative)

0.0 15 25

Date achieved 09/30/2010 03/31/2013 12/04/2012

Comments

(incl. %

achievement)

Achieved. Formosa shows an increase of 40% and Chubut of 25% in collection

of taxes between September of 2010 and September of 2012. (Original PAD

indicator: The ratio between collected and emitted tax revenue for provincial real

property and motor vehicle taxes has increased from 55% to 70% Indicator

changed in restructuring.)

Indicator 2 :

In at least one province, the percentage of provincial staff operating under

integrated payroll information systems in human resources has increased from

0% to 30%.

Value

quantitative or

Qualitative)

0 30 40

Date achieved 09/30/2010 03/31/2013 12/04/2012

Comments

(incl. %

achievement)

Achieved. In the province of Chubut, 40% of staff have been integrated into the

electronic payroll system and personnel information system. (Original PAD

indicator: The percentage of provincial expenditures on human resources

operating under integrated payroll information systems has increased from 30%

to 55%. Indicator changed in restructuring.)

Indicator 3 : In at least one province, the exchange of information between property registries

and cadaster systems is done on a regular basis.

Value No Yes Yes

quantitative or

Qualitative)

Date achieved 09/30/2010 03/31/2013 12/04/2012

Comments

(incl. %

achievement)

Achieved. Chubut and Formosa: 100%. In these provinces the information is

exchanged on a regular basis (Original PAD indicator: In at least 50% of

provinces in the Advanced Module, the exchange of information between

property registries and cadastre systems is done on a daily basis. Indicator

changed in restructuring.)

Indicator 4 : Number of provinces with an interface between territorial cadastre administration

and Real State Property Register Systems

Value

quantitative or

Qualitative)

0 2 2

Date achieved 09/30/2010 03/31/2013 12/04/2012

Comments

(incl. %

achievement)

Achieved in Formosa and Chubut. (Original PAD indicator: In at least 50% of

provinces in the Advanced Module, the totality of built surface (in sq. meters)

incorporated in the cadastre system are automatically reflected into the property

tax Indicator revised in restructuring.)

Indicator 5 :

In at least 50% of provinces in the Advanced Module, municipalities

representing at least 60% of the urban parcels exchange information with the

provincial cadastre system in accordance with the tax cycle.

Value

quantitative or

Qualitative)

Date achieved Dropped

Comments

(incl. %

achievement)

Dropped in restructuring.

(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 : In at least one Province, the time for key services and administrative processes

(such as the informe de valuación) has been reduced from 15 to 10 days.

Value

(quantitative

or Qualitative)

15 10 10

Date achieved 09/30/2010 03/31/2013 03/31/2013

Comments

(incl. %

achievement)

Achieved. In the Provinces of Formosa and Chubut the process for producing

"informe de valuacion" which is the fiscal valuation of property has been reduced

to 10 days.

Indicator 2 : Number of provinces with integrated management systems working in the Real

State Property administration of the province

Value

(quantitative 0 2 2

or Qualitative)

Date achieved 02/24/2012 03/31/2013 03/31/2013

Comments

(incl. %

achievement)

Achieved. Two provinces Formosa and Mendoza have an integrated system.

Indicator 3 : In at least one Province, the percentage of registered properties in an electronic

format has increased from 90% to 95%.

Value

(quantitative

or Qualitative)

90 95 95

Date achieved 09/30/2010 03/31/2013 03/31/2012

Comments

(incl. %

achievement)

Achieved. In two provinces – Formosa and Mendoza the target has been reached;

95% registered properties are on-line in a database called "indice de titulares".

Indicator 4 : In at least one Province, the time to send information from registries to the

cadastre has decreased from 30 days to on-line access

Value

(quantitative

or Qualitative)

30 0 0

Date achieved 02/24/2012 03/31/2012 12/04/2012

Comments

(incl. %

achievement)

Achieved. Formosa and Chubut have on-line registry.

Indicator 5 : Number of provinces with integrated management systems working in their

Revenue Agency with "on-line" services

Value

(quantitative

or Qualitative)

0 2 2

Date achieved 02/24/2012 03/31/2013 12/04/2012

Comments

(incl. %

achievement)

Achieved in provinces Formosa and Chubut.

Indicator 6 : Number of provinces with integrated management systems working in the

territorial cadastre administration of the province with online services

Value

(quantitative

or Qualitative)

0 2 2

Date achieved 02/24/2012 03/31/2013 12/04/2012

Comments

(incl. %

achievement)

Achieved in 2 provinces Chubut and Formosa. In Formosa all the municipal

cadasters are integrated on-line. In Chubut two municipal cadasters are connected

but these 2 make up for about 80% of the population.

Indicator 7 : Number of provinces with an interface between territorial cadastre administration

of the province with online services

Value

(quantitative

or Qualitative)

0 2 2

Date achieved 02/24/2012 03/31/2013 03/06/2012

Comments Achieved in 2 provinces Formosa and Chubut.

(incl. %

achievement)

Indicator 8 :

In at least one Province, percentage of public employees included in the

integrated personnel information and payroll systems has increased from 0% to

30%.

Value

(quantitative

or Qualitative)

0 30 35

Date achieved 09/30/2010 03/31/2013 12/04/2012

Comments

(incl. %

achievement)

Achieved. 35% of employees are integrated to the system in the province of

Chubut and integration into the system will continue until it reaches 100%.

Indicator 9 : In at least one Province, hours required to produce a certificate of years of

service for public employees has decrease from 15 to 1 0 days.

Value

(quantitative

or Qualitative)

15 10 10

Date achieved 09/30/2010 03/31/2013 12/04/2012

Comments

(incl. %

achievement)

Achieved in Chubut.

Indicator 10 : Number of provinces which improved Data Center service capacity in at least

25%

Value

(quantitative

or Qualitative)

0 2 2

Date achieved 02/24/2012 03/31/2013 12/04/2012

Comments

(incl. %

achievement)

Achieved. Santa Fe has a Data Center with an increased capacity of 300% and

Salta has increased its capacity by 80%.

Indicator 11 : Number of provinces with reduced administration cost of Data Center in at least

20%

Value

(quantitative

or Qualitative)

0 2 2

Date achieved 02/24/2012 03/31/2013 12/04/2012

Comments

(incl. %

achievement)

Achieved. Santa Fe has reduced its costs by 20% and Salta by 45%.

Indicator 12 : In at least one province five or more organizational units (i.e. courts, tribunals) of

their judiciary system are integrated through an on-line management system

Value

(quantitative

or Qualitative)

0 1 1

Date achieved 02/24/2012 03/31/2013 12/04/2012

Comments

(incl. %

achievement)

Achieved. Santa Fe has 9 courts integrated through the system. Since this was a

pilot, future implementation will depend on availability of funding.

G. Ratings of Project Performance in ISRs

No. Date ISR

Archived DO IP

Actual

Disbursements

(USD millions)

1 06/21/2006 Satisfactory Satisfactory 0.00


3 06/25/2007 Satisfactory Unsatisfactory 0.10

4 01/03/2008 Satisfactory Moderately Satisfactory 1.67

5 10/17/2008 Satisfactory Moderately Satisfactory 2.34

6 06/25/2009 Moderately Satisfactory Moderately Satisfactory 2.98

7 12/17/2009 Unsatisfactory Moderately

Unsatisfactory 4.42


Unsatisfactory 5.29


Unsatisfactory 6.79

10 06/27/2011 Moderately

Unsatisfactory Moderately Satisfactory 15.98

11 09/12/2011 Moderately Satisfactory Moderately Satisfactory 18.62

12 03/21/2012 Moderately Satisfactory Satisfactory 30.30

13 08/06/2012 Moderately Satisfactory Satisfactory 32.42


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

09/29/2010 U MU 5.99

This restructuring included the:

(a) reduction of project scope in

order to focus efforts in priority

activities; (b) revision of

outcome indicators, in line with

the reduced scope of the project;

and (c) extension of the closing

date by 18 months, to allow for

the implementation of the

Restructuring Action Plan.

02/02/2011* U MU 8.49

The changes included: (a) the

reallocation of loan proceeds

between categories of

expenditures and (b) the

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

increase in disbursement

percentage to 100% in all

categories of expenditures.

02/22/2012 MS MS 30.30

The restructuring included: (a)

one year extension of the

Closing Date from March 31,

2012 to March 31, 2013; and (b)

a change in some PDO and

intermediate indicators. This

was the second extension for the

Loan’s Closing Date and

resulted in a cumulative

extension of 2.5 years.

02/20/2013 S S 35.92

The restructuring included the

reallocation of loan proceeds

between expenditure categories

to support the achievement of

the PDO.

Source: Restructuring papers.

* A partial waiver of Section 3.15 of the Loan Agreement to extend the deadline of March 30, 2011 for the

signing of new contracts to April 30, 2011 was granted on March 31, 2011.

I. Disbursement Profile

1

1. Project Context, Development Objectives and Design

1.1 Context at Appraisal

1. Argentina's recovery from the 2001-02 economic crisis was impressive. After three years of fast growth (averaging roughly 8.8 percent during 2003-05)

1, at the time of

design, gross domestic product (GDP) had recovered to the pre-crisis peak, thanks in

large part to prudent macroeconomic policies. Poverty was markedly reduced from 36.5

percent in the second half of 2003 to 24.7 percent in the second half of 20052, and

unemployment fell by almost seven percentage points over a similar period3. However,

inequality (on a long-term upward trend in Argentina) was exacerbated by the crisis and

remained above its pre-crisis level.4

2. Argentina faced the challenge of building upon the recovery to establish the foundation for sustainable, more equitably shared growth – requiring addressing difficult

structural and governance reforms. Increasing public sector transparency and efficiency,

and improving institutions at the national – and subnational – levels was crucial.

3. The bulk of Argentine social services were provided by its 24 provincial governments (including the City of Buenos Aires) and 2,150 local governments, which

varied widely in fiscal and social performance, as well as size, populations and

endowments. Many governments were ill-prepared to meet growing demands for

improved services related to enhancing local development and economic competitiveness

and providing more adequate safety nets to deal with poverty and unemployment, and

many municipalities were entirely dependent on the provinces for their organization and

taxing powers. Thus, in order to support the needed upgrade in the provision of public

services by provinces and municipalities, the Government identified the need to first

improve subnational fiscal performance as well as revenue and expenditure management.

4. The Project built upon previous efforts to modernize Argentine’s provincial administrations and their municipalities; namely the First and Second Provincial

Development Loans (PDP-I and II) as well as the Municipal Development (MDP-I and

MDP-II) operations5, in which significant progress was made in areas including tax and

financial administration, and property registration (See Annex 10 for details).

Notwithstanding these achievements, there was a need to continue working in these areas.

Public sector modernization had been recognized to be a process entailing progressive

1 Instituto Nacional de Estadística y Censos (INDEC), “Gráfico: evolución del PIB en miles de millones de

pesos de 1993,” http://www.indec.mecon.ar/ 2 INDEC, “Brecha de la pobreza. Total de aglomerados urbanos”, http://www.indec.mecon.ar/

3 Unemployment in the 28 urban areas, 19.1 percent in the first half of 2003, had reached 12.5 percent by

the first half of 2005. (INDEC, “Tasas de actividad, empleo, desocupación y subocupación por regiones y

aglomerados desde el primer semestre de 2003 en adelante”, http://www.indec.mecon.ar/) 4 Project Appraisal Document (PAD), Subnational Governments Public Sector Modernization Project, 2

5PDP I (P006005): $200 million, PDP-II (P006018): $225 million and MDP-I (P005963): $120 million,

and MDP-II (P006060): $210 million

2

advances in upgrading basic management capacities - especially in light of recent years’

technological drive, integration and standardization efforts in these types of systems.

5. The Government of Argentina requested further Bank support based on the following elements:

A. Demand. In response to a demand assessment of the Ministry of the Interior, the provincial governments submitted requests for institutional strengthening

assistance exceeded a total cost of US$120 million.

B. Need for public sector modernization at the sub-national level. Previous support had already shown beneficial economic and financial returns. The Implementation

Completion and Results Reports (ICRs) of the aforementioned projects indicated

that provinces that modernized their administrations had more opportunities for

fiscal autonomy, had more cushion for economic downturns, and were better able

to balance their accounts.

C. The Bank was well positioned to support the modernization agenda. Its more than ten years of experience in this sector in Argentina provided the Bank with the

capability to support the Government’s subnational government improvement

agenda, and the subnational implementation of the Fiscal Responsibility Law6.

6. Project objectives were fully consistent with the Country Assistance Strategy (CAS) discussed by the Board on April 15, 2004, which emphasized Argentina’s needs

for sustained economic growth with equity, social inclusion, and stronger governance7.

1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved)

7. The Project aimed at improving the capabilities of the provincial governments and their municipalities to more effectively manage their resources and improve the quality of

government administrative services. Its specific objectives were: i) to support the

integrated development and adoption of basic management tools that are conducive to the

efficient and transparent management of provincial and municipal resources; ii) to

strengthen provincial governments in such key areas as those related to land tax and tax

administration, human resources management, judicial services, civil registries, control

entities and public safety functions; and iii) to support the strengthening of municipal

governments through pilot activities designed to demonstrate the benefits of integrated

modernization efforts.

6Ley de Responsabilidad Fiscal, No. 25.917

7 The CAS (Report No. 27340-AR) emphasized (i) achieving sustained growth with equity through

maintaining macroeconomic stability; (ii) strengthening social inclusion by reaching poor and vulnerable

groups, and (iii) promoting better governance by improving accountability and transparency. The CAS

made it clear that the indicative lending program, while agreed with the Government at that time, would be

kept flexible to permit substitutions of some proposed projects within the agreed strategic pillars (para. 83).

3

Table 1. PDO Indicators (As per the PAD) The ratio between collected and emitted tax revenue for provincial real property and motor vehicle taxes has increased

from 55% to 70%

The percentage of provincial expenditures on human resources operating under integrated payroll information systems has increased from 30% to 55%

In at least 50% of provinces in the Advanced Module, the exchange of information between property registries and cadastre systems is done on a daily basis.

In at least 50% of provinces in the Advanced Module, the totality of built surface (in sq. meters) incorporated in the cadastre system are automatically reflected into the property tax.

In at least 50% of provinces in the Advanced Module, municipalities representing at least 60% of the urban parcels exchange information with the provincial cadastre system in accordance with the tax cycle.

1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and

reasons/justification

8. The PDO was not revised; however, PDO indicators and intermediate level indicators were revised in 2010 and 2012. In the 2010 restructuring, the results and output

indicators were updated according to current project circumstances and based on the

Government’s revealed priorities in implementation and existing limitations in

implementation capacity by the PIUs. As such, it was decided that effective measurement

of activities' impact upon PDO had to rely on (i) a limited number of indicators focused

on key results; (ii) indicators related to sub-projects and activities with higher probability

of implementation; and (iii) conservative and realistic targets. The restructuring

substantially overhauled and reformulated the results indicators and reduced the Project’s

scope. With respect to the intermediate outcome indicators, the original ones were

dropped, replaced and significantly reduced from 30 to 7.

9. In the 2012 restructuring, the results framework was again revised to: (i) include indicators for new public sector management areas that, although envisioned in the PAD

did not include indicators; and (ii) replace some indicators could not be measured with

others that better captured the results of the Project. The new set of indicators was

intended to reflect the real impact of this Project on public sector management which

could not be accounted for by other external factors. Additionally, some indicators and

targets were adjusted upward to better reflect Project achievements in 2012. Table 2

summarizes the original and revised PDO indicators. (See Annex 11 for the list of

intermediate outcome indicators adopted from the restructuring in 2010 and 2012,

including the justification for the changes introduced.)

4

Table 2. Changes in PDO indicators (PAD, September 2010, and February 2012) Initial PDO Indicators (PAD) Revised PDO Indicators (2010) Final PDO Indicators (2012)

1. The ratio between collected and emitted

tax revenue for provincial real property and motor vehicle taxes has increased from 55%

to 70%

2. The percentage of provincial expenditures on human resources operating under

integrated payroll information systems has

increased from 30% to 55%

3. In at least 50% of provinces in the

Advanced Module, the exchange of

information between property registries and cadastre systems is done on a daily basis.

4. In at least 50% of provinces in the Advanced Module, the totality of built

surface (in sq. meters) incorporated in the

cadastre system are automatically reflected into the property tax.

5. In at least 50% of provinces in the

Advanced Module, municipalities representing at least 60% of the urban

parcels exchange information with the

provincial cadastre system in accordance with the tax cycle.

1. In at least one province, the ratio of

collected provincial taxes has increased 1% by the end of the project period.

2. In at least one province, the

percentage of provincial staff operating under integrated payroll information

systems in human resources has

increased from 0% to 30%.

3. In at least one province, the exchange of information between property

registries and cadastre systems is done

on a regular basis.

4. In at least one province, the totality of

built surface (in sq. meters) incorporated

in the cadastre system are reflected into the property tax on a regular basis.

5. Dropped

1. In at least one province, the ratio of

collected provincial taxes has increased 15% by the end of the

project period. (Target value

increased) 2. No change from 2010

3. No change from 2010

4. Dropped in 2012

New 4. Number of provinces with an interface between territorial cadastre

administration and Real State Property

Register Systems.

Source: Restructuring Papers on a Proposed Project Restructuring of Loan 7352-AR, September 2010 (Report No. 56850) and

February 2012 (Report No. 59595)

1.4 Main Beneficiaries

10. The Project was expected to support the Ministry of the Interior, the coordination mechanism amongst provinces. In the beginning, the target beneficiary provinces were:

Misiones, Formosa, Entre Rios, Tucuman, Santa Fe, Santa Cruz, San Juan, Rio Negro,

Mendoza, La Rioja, Cordoba and Chubut. In the end, only seven provinces met the

eligibility criteria and participated in the Project (Chubut, Formosa, Mendoza, Neuquén,

Rio Negro, Salta and Santa Fe).

1.5 Original Components

11. Component 1: Basic Module (63 percent of Project costs - US$ 32.5 million total; of which US$26.62 million correspond to Bank financing): This module was to

consist of two sub-components, focusing on the fiscal core of provincial administrations

and their municipalities. Tools were to be developed at the provincial level and replicated

at the municipal level, preferably using prototypes that had been developed and proved

effective under the PDP-II (P006018). Special emphasis was to be given to ensuring the

full integration of these tools to fully capitalize on their potential fiscal impact (the

integration between cadastres and property registries, as well as of cadastres and tax

administrations) and improved information flows between levels of government.

12. Component 2: Advanced Module (25 percent of Project costs - US$13.0 million total, of which US$11.5 million correspond to Bank financing): This module

was open only to participating provinces that progressed further in the modernization of

their administrations and complied with the module’s criteria. It consisted of two

5

demand-driven sub-components. The first was to finance technical assistance (in areas

such as e-procurement; judicial modernization; advanced human resources management;

control and auditing, and business process re-engineering) to provincial governments that

demonstrated a strong vocation and capacity for public sector modernization The second

was to finance technical assistance to provincial governments in their efforts to improve

municipal governments’ basic management skills in priority areas (e.g. municipal

budgeting, capital investment planning, project evaluation). This sub-component was also

to finance the replication of the successful experience of the Municipality of the Third

Millennium (Municipio del Tercer Milenio, M3M) in provinces expressing a particular

interest, as well as the development of a system of municipal indicators, capitalizing on

lessons learned from Chile’s successful experience with SINIM (National System of

Municipal Indicators, Sistema Nacional de Indicadores Municipales).

13. Component 3: Project Management: (12 percentof Project costs - US$6.19 million total). This component was to cover the operating expenses related to the

coordination of Project implementation, and support project management activities. The

central executing unit (CEU) in Ministry of Interior was responsible for the coordination

of the Project while the Provincial Management Units (PMUs) were responsible for

implementation.

14. An overarching e-government strategy was intended to help integrate and standardize all activities’ frameworks by creating an enabling and collaborative ICT

environment. To be eligible to participate in the Basic Module, Provinces needed to

demonstrate commitment towards public sector modernization. Eligibility for

participation in the Advanced Module required that Provinces had shown substantial

compliance with reforms included in the Basic Module and continued with consolidation

of these reforms. (See Annex 12 for details on eligibility criteria and the allocation of

loan proceeds as approved in the PAD).

1.6 Revised Components

15. The components were not revised.

1.7 Other significant changes

16. The Project was restructured several times. A major restructuring was done in 2010. It entailed the following: (i) reduction in project scope in order to focus efforts in

priority activities; (b) revision of results indicators, in line with the reduced scope of the

Project; and (c) extension of the closing date by 18 months (from September 30, 2010 to

March 31, 2012), to allow for implementation of the Restructuring Action Plan. The

restructuring effected the reduction in project scope through the declaration of a deadline

for signing contracts (set initially on March 31, 2011) to be eligible for financing under

the loan. With the deadline, the eight areas of intervention were adjusted and the sub-

projects expected to be pursued and financed under the Project were reduced to 21. Even

with the extension of the closing date through March 2012, it was expected that only

6

about 90 percent of the loan would be disbursed by closing, and the restructuring was to

focus implementation on completing priority activities).

17. A second restructuring in February 2011 reallocated loan proceeds and increase the disbursement percentage to 100 percent to allow for full utilization of the loan

proceeds and to better capture the requirements of the sub-projects being implemented. In

March 2011, the Bank waived the contracting deadline date of March 31, 2011 to

accommodate earlier identified eligible contracts, the signing of which took longer than

expected. This waiver effectively set a new contracting deadline date of April 30, 2011.

18. In February 2012, with loan disbursements having reached 76 percent, another restructuring was processed to extend the closing date by another year from March 31,

2012 to March 31, 2013; and to revise results indicators. The extension was deemed

necessary to allow time for completion of ongoing activities and ensure a smooth

implementation during the change in administration. Most importantly, the additional

implementation time would allow for an evaluation of more measurable outputs and thus

the ability to better report on results and impact. (See Section 1.3 above.)

19. In February 2013, a final restructuring was processed to reflect the final reallocation of loan proceeds at closing.

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry

20. The quality at entry is viewed to have been moderately unsatisfactory.

21. As discussed above, the Project built upon several modernization projects8 which had made progress in key areas of public management, but additional work was needed to

integrate the isolated efforts (see section 1.1 above and below for further discussion).

Project objectives were consistent with those of the Country Assistance Strategy (CAS)

of 2004 (Report No. 27340-AR) --which emphasized that Argentina needed sustained

economic growth with equity, social inclusion, and stronger governance -- and were also

aligned with Government priorities.

22. Project design drew upon an understanding of shortfalls in previous modernization efforts, taking into account earlier operations’ lessons, risks and proposed

mitigation measures, while also drawing upon recent years’ technological advances,

integration and standardization efforts in this type of systems. While the previous two

provincial projects had provided solutions in the business process redesigns of supported

sectors, these were ad-hoc measures and did not take full advantage of “e-government”

and ICT developments, and had resulted in the modernization of ‘administrative islands.”

8PDP I (P006005), PDP-II (P006018), MDP-I (P005963), MDP-II (P006060)

7

To address these challenges, project design included the definition of areas of

intervention once progress was made (Advanced Module Component).

23. The Project included several layers of ex-ante procedural approvals, whose timelines were too optimistically estimated at design, including: (i) the adoption of

Provincial Debt Laws authorizing the Provincial Executive to access the project funding;9

(ii) Bank approval of Provincial Sector Strategies of Public Administration

Reform/Sector Management Program (PMG);10

and (iii) Bank approval for each Project

Document11

among the key eligibility criteria for provincial participation. Only thereafter

could a Subsidiary Loan Agreement (SLA) between the national government (through the

CEU, established within the Subsecretaria de Coordinacion under the Ministry of

Interior) and the participating province be processed. As a result, the Project encountered

significant start-up delays. The fulfillment of these conditions was needed to initiate

project procurement, which started only in 2008. Table 3 below illustrates the timeline

for the local debt laws approval and bank no objection to the subprojects.

24. The PAD indicated that the Project met the criteria for readiness for implementation. However, there were delays in signing the Loan and declaring

effectiveness. The Project was approved on December 15, 2005; the Loan Agreement

was signed only on December 20, 2006 and declared effective only on June 12, 2007.

Argentina’s Presidential Decree approving the terms of the Loan Agreement and

authorizing the signing of the Agreement was issued on November 8, 2006 (Presidential

Decree 1602/2006), about a year after Board approval. Subsequent to the decree, the

declaration of effectiveness required that at least one SLA be signed including legal

opinions issued that said agreement was authorized by the responsible authorities and was

legally binding.

Table 3. Timing of Provincial Debt Laws and Bank No Objection of the PMG12

Province AZApproval of Debt Law No Objection for Final PMG Delay since Debt Law approval

Mendoza 01/11/2006 08/13/2008 2 years, 7 months

Santa Fe 06/08/2006 10/06/2009 3 years, 4 months

Rio Negro 12/21/2006 07/25/2007 7 months

Neuquen 05/08/2008 08/15/2007 On time

Chubut 12/07/2007 01/22/2009 1 year, 1 month

Formosa 12/27/2007 06/20/2008 6 months

Cordoba - 10/27/2008 Law not approved

Salta 12/18/2008 07/24/2009 7 months

9Provincial Debt Laws. In order to access the Bank’s funding, and under the Argentinean federal system, Debt Laws

had to be approved ex ante by each participating Provincial Congress. This step required in some cases a significant

amount of time, and it took some Provinces up to 18 months after the loan effectiveness to adopt this law. 10Provincial Public Sector Management Program (PMG).Eligibility to the Program funded by the Bank loan also

required Provinces to prepare a Program of Public Sector Reform, which had to be approved by the Bank. While this

process was originally expected to be short, the actual fulfillment required almost 1.5 years on average. 11Individual Project Document. In addition to the PMG, eligible Provinces were expected to prepare an individual

Project Document, also subject to Bank approval, for each component/project of the approved PMG. These projects

should include five ‘basic’ public management areas, and five ‘advanced’ public management areas. However, this step

increased the delay: 84 percent of the selected projects were approved after September 2008 only. 12

Restructuring Paper on a Proposed Project Restructuring of Loan 7352-AR, September 29, 2010.

8

25. In addition to the 18-month effectiveness delay; a complex project design – Basic and Advanced Modules that were overly ambitious; the multiplicity of executing actors,

and limited implementation capacity –that had not been appropriately appraised,

contributed to having only 30 percent of the loan committed (signed contracts) and 15

percent disbursed by 2010 when the first restructuring and closing date extension took

place.

26. Even though the rationale behind having basic and advanced modules within the loan was technically sound, it was not well-suited to the provinces’ modernization

priorities. Conditions to move to the advanced module had to be relaxed in order to

motivate the provinces to engage within the scope of the Project. Requiring them to enter

through the basic module was not the best approach, and in practice, represented a flaw in

project design.

2.2 Implementation

27. The implementation of the Project is viewed to have been moderately satisfactory. Loan resources were lent by the national government to participating provincial

governments through SLAs. Project coordination was the responsibility of the CEU.

Provincial Ministries of Economy were expected to administer sub-loan implementation

through Provincial Management Units (PMUs).

28. Project implementation began slowly. After the described delays in signing and effectiveness, delays related to preparing the bidding documents were also encountered,

and project implementation was affected by the factors described below:

A. Change of Procurement Strategy for Complex ICT Contracts financed by the loan. In 2009, due to the need to speed up contracting, the Bank requested that the ICT

systems be procured through turn-key contracts. This differed from the original

procurement strategy, which consisted of conducting separate procurement

processes for the supply of ICT equipment; and hardware installation,

commissioning and customization of software packages resulting from previously

designed prototypes. However, these changes required modifications to efforts

supporting the prior strategy, and ended up generating additional delays upon

twelve tender dossiers out of 55. In terms of contract amount, the change was not

minor; it impacted the processing of contracts whose total amount was equivalent

to approximately 50 percent of the loan.

B. Weak Government Implementation Capacity in the area of Procurement. The procurement of the ICT equipment and software had to be processed directly by

Provinces, in which capacity was weak.

C. Increased Bank Procurement Challenges. Given the intensification of procurement processes by the client starting in November 2009, available

procurement resources were not sufficient to respond to demand in as timely a

manner as would have been ideal.

9

29. The Project was designed and appraised based on financing requests of interested and qualified provinces that had prepared preliminary PMGs during project preparation.

13

30. As these provinces had already invested a lot of time and resources, and were very committed, they remained in the Project and prepared the documents according to

the new ICT procurement strategy referenced above. (Other provinces, such as Cordoba

chose not to bear the additional cost, and stepped out in 2008.) However, the adoption of

the new ICT procurement strategy necessitated additional work and starting some of the

procurement processes again which, combined with the weak procurement capacity at the

provincial level and CEU, the Bank procurement constraints, as well as the high

turnaround of Bank procurement specialists and task team leaders14

, led to further

implementation delays. As a result of the unrealistic implementation schedule, including

failure to schedule sufficient time for start-up activities and mobilization, the contract

execution period was extremely short in most cases. In particular, out of eight provinces

with eligible projects, the implementation period in six provinces was only approximately

one and a half years by the time of the original closing date.

31. With implementation constrained by lack of progress in procurement processes, by Q4 of CY2009 and less than one year to original closing date, the Project had only

disbursed US$4.4 million (about 10 percent of the loan) vs. projected target of US$10

million. As mentioned, in addition to start-up delays, complex project design, the

multiplicity of executing actors, and limited implementation capacity,15

as well as

developments following the 2007 elections, 16

also impacted project execution.

Procurement issues not only negatively affected the execution of the Project but also

posed a risk to its continuity, triggering internal Bank discussions on a possible close of

the loan by its initial closing date in September 2010.

32. However, as a result of Bank supervision efforts in late 2010/early 2011- which included weekly progress reports on the status of all procurement processes and

deployment of additional staff to monitor and facilitate meeting the contracting deadline

of March 31, 2011 initially and then the final deadline date of April 30, 2011 -

disbursement increased more than three-fold from US$8.5 million in 2011Q1 to US$30.3

million in 2012Q1.

33. The project restructuring of February 2011 benefited from a collaborative environment between the Government of Argentina and the Bank until the final phases of

13Of the 24 provinces including the City of Buenos Aires, eight indicated that they were not interested in

participating (Catamarca, Chaco, Corrientes, Ciudad Autónoma de Buenos Aires, Jujuy, La Pampa, San

Luis and Santiago del Estero). Another group was interested but did not have the debt requisite

space/capacity or was not in a condition to get a sanctioning Law approved by provincial legislatures. 14

Over the period of project implementation, there were five task team leaders; four over the last three

years of implementation. 15

Restructuring Paper on a Proposed Project Restructuring of Subnational Government Public Sector

Modernization Project IBRD Loan Number 7352-AR to the Argentine Republic, September 29, 2010.

Report No. 56850. 16

Aide Memoire, Mission, July 30-August 8, 2008

10

implementation, helping ensure a successful completion (supporting all the procurement

processes and contract signatures); at closing US$ 37.31 million were disbursed.

34. Two additional project restructurings in 2012 and 2013 allowed the Project to disburse almost 100 percent of loan proceeds and, more importantly, allowed for

additional time for greater achievement of the PDO. Annex 3 presents the sub-projects

completed by each province and the expected/initial observed gains from the project,

with additional progress expected next year in provinces where projects were only

recently completed.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization

35. Responsibility for Monitoring was divided among the national level CEU, which monitored progress of provincial governments and PMUs which monitored progress of

municipalities. Monitoring arrangements were designed to support implementing

agencies strategic decision-making and create opportunities to benefit from continuous

learning. The M&E framework design and implementation is rated Moderately

Unsatisfactory, for the reasons described below:

36. M&E design. The results framework presented in the PAD provided for performance indicators for the PDO and intermediate results for each component.

However, the intermediate results indicators were neither clearly defined nor quantified;

they were left for provincial determination based on the actual sub-project implemented.

The 30 intermediate results indicators in the PAD were also too numerous. In general, the

results indicators were considered too complex and in some cases beyond what the

project activities could effectively deliver as outcome. As such, modifications were made

during implementation. Nevertheless, the problem was not adequately addressed.

Revisions of the results framework during the restructuring in 2010 mainly focused on

reducing targets for the indicators in a way that further limited the ability of the indicators

to capture actual success and impact of the project – which necessitated further revisions

in 2012. In the end, all targets were achieved but such success hardly demonstrates the

depth of the value added of the Project as a whole.

37. M&E implementation. The PDO and intermediate indicators were adjusted during project restructurings to establish a better link with project activities. The Bank regularly

monitored progress under the Project through periodic supervision missions. The Project

did not establish a proper M&E plan whereby provinces could share experiences and

provide feedback. The Project called for periodic “high” level meetings between

Ministers to discuss the progress of the projects, but these meetings did not occur as

planned and when they did, they could not provide the guidance to the Project at the

technical level needed. During the 2012 workshop17

, provinces expressed their desire to

17A workshop to discuss lessons learned during implementation of the project, in which all of the provinces

participated, was held in Buenos Aires in 2012.

11

have had more provincial exchanges earlier in the Project in order to exchange

information, challenges and areas of opportunity, etc.

38. M&E utilization. The PDO and intermediate results indicators, particularly with respect to the target measures or percentages, were closely monitored by the Bank

supervision team and reported in ISRs. They have been heavily referenced and utilized in

justifying the two cases of Closing Date extension. As noted above, during 2010-2011,

the Bank team engaged in intensive supervision of the Project. During the last years, the

quality of the progress reports improved considerably - becoming more comprehensive,

timely and disaggregated at the subnational level. Considerable effort was made by the

CEU and PMUs to improve the M&E of the sub-projects to better assess the outcomes

and impacts of investments.

2.4 Safeguard and Fiduciary Compliance

39. The PMUs and CEU’s relatively weak procurement capacity was an issue during the first phases of project implementation. Due to the delays experienced during the

initial stages and changes in procurement strategies, strengthening local capacity was

difficult. However, with support from the Bank, the CEU’s performance on procurement

improved notably particularly after the 2010 restructuring, helping to support significant

progress in project implementation and the Project’s successful completion.

40. Project financial management was considered to be satisfactory throughout project implementation. Financial monitoring reports were submitted on time and were

acceptable to the Bank. All minor inconsistencies found during supervision were properly

addressed by the client and did not impact the outcome and controls of the Project.

Annual audit reports for the Project were submitted accordingly and reviewed by the

Bank, and auditors issued unqualified opinions.

41. With respect to safeguard, no safeguard policies were triggered by the Project at design, an appropriate decision, as no such issues arose during implementation.

2.5 Post-completion Operation/Next Phase

42. In the 2012 workshop, all participating provinces reaffirmed their commitment to the reforms that they were pursuing. To date, with the exception of one sub-project in

Mendoza (which is supposed to be finished by May 2014), all sub-projects have been

completed. Continuing commitment to the development objective beyond of the scope of

the loan has been demonstrated through the decisions of actors including the municipality

of Puerto Madryn and the province of Mendoza to engage in related activities with their

own funding, as well as the development of a post-implementation support plan for the

territorial information system in the province of Formosa.

43. There are also positive signals that future Bank engagement in Argentina would include a focus on strengthening capacities of sub-nationals for public service delivery.

To this end, the lessons from this project are expected to inform future operations and

12

could therefore help consolidate and sustain gains under previous interventions and this

project in the area of sub-national governments’ public sector modernization.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation

44. Argentina is one of the most decentralized countries in Latin America, underscoring the importance of local service delivery. Provincial and local governments

are responsible for approximately 50 percent of expenditures, on par with the United

States and Canada, but subnational governments collect only 20 percent of consolidated

revenue. On average, local revenues represent about 40 percent of total provincial

revenues; the remaining 60 percent are transfers from the federal tax sharing system.

45. Project objectives continue to be highly relevant for the country, given the roles and responsibilities of subnational governments in service delivery. Project outcomes

clearly show reductions in cost as well as savings in public sector management areas

identified in each province. Outcomes also include improved service delivery in

provinces like Mendoza, where IDs can now be issued in one week (previously one year)

following the modernization of the civil registry (as described in Section 3.3).

Presentations by the involved provinces in a workshop in Buenos Aires in 2012

highlighted the projects’ progress and emphasized the relevance of the Bank’s support

towards accomplishing their public management modernization objectives.

46. The objectives and demonstrated results were also consistent with the Country Partnership Strategy (CPS) for 2010-2012

18 and well-aligned with the outcomes targeted

under the pillar focused on improved governance (strengthened effectiveness, efficiency,

transparency and accountability of public sector management; expanded performance

management and improvement in the quality of public expenditure, enhanced service

delivery outcomes and trust in institutions; strengthened public sector capacity to spur

investment and growth). The governance agenda, as well as improved fiscal and public

sector management at the federal and subnational levels remain priorities. Through this

project, the Bank was able to sustain a meaningful relationship with sub-national

governments.

3.2 Achievement of Project Development Objectives

47. While fewer provinces were involved in project implementation than foreseen at design and the project scope reduced through restructurings, all revised PDO and

intermediate outcome indicators were achieved, and tangible improvements in service

delivery have been observed. The ratio of collected provincial taxes has increased in real

terms in two provinces; the percentage of provincial staff operating under integrated

payroll information systems in human resources has increased from 0 percent to 30

18Report No. 48476-AR, discussed by the Board on June 9, 2009

13

percent in two provinces as well; the exchange of information between property registries

and cadaster systems is done on a regular basis; and some provinces have an interface

between territorial cadastre administration and Real State Property Register Systems.

48. The Basic Module Component (Component 1) was originally designed to support reforms in core management areas such as revenue administration, cadaster, financial

management and human resources. However, as not all the provinces met the eligibility

criteria to receive funding under this module, most provinces elected to finance these

reforms with their own resources and instead applied for resources under the Advanced

Module (Component 2). The provinces that executed Component 1 were Formosa and

Chubut. In Chubut, human resources, revenue administration and cadaster systems

projects were completed. The initial outcomes reported are: 40 percent of staff has been

integrated into the electronic payroll system and personnel information system, and tax

collection has increased 25 percent between September of 2010 and September of 2012.

In Formosa, land registry, cadaster and revenue administration projects were completed.

The initial outcomes reported are: 40 percent increase in tax collection between

September of 2010 and September of 2012, an interface between territorial cadastre

administration and Real State Property Register Systems has been developed, and the

process for producing the fiscal valuation of property "informe de valuacion" has been

reduced to 10 days. (See illustrations in Annex 13 regarding dissemination of outcomes

in local newspapers in Chubut and Formosa.)

49. Most of the provinces supported by the Project demonstrated progress in the core sector reforms and applied for funding under the Advanced Module (Component 2)

(Mendoza, Neuquén, Rio Negro, Salta and Santa Fe participated). Reforms supported

under this component included the following areas, among others: judicial management,

electronic government, and public registries. Initial reported achievements include:

A field visit to Mendoza in 2012 demonstrated that the civil registry is now able to issue an ID in one week versus one year (after Civil Registries Modernization). The

property registry is moving to establish a database and digitization, including

scanning of all its records (which are currently processed with manual typewriters).

The construction and establishment of the Data Center in Santa Fe has been completed. The Project also funded computer equipment for the Center, and the

province is moving forward to implement many e-services for citizens

Santa Fe increased the service capacity of its Data Center by 300 percent and Salta by 80 percent. Costs have also been reduced significantly in both provinces.

50. While changes to indicators made during restructurings were consistent with the

overall project development objective and against such a metric project outcomes could

be considered moderately satisfactory, modifications during restructurings were such that

final project outcomes cannot be compared with these original PAD indicators,

suggesting that by such a metric, project outcomes could be viewed as moderately

unsatisfactory.

14

3.3 Efficiency

50. The reduction in scope and the time required for implementation suggest that overall project efficiency was lower than expectations at design. However, the Project’s

interventions in eight areas (e.g. tax administration, property registries, etc.) have offered

financial gains to the participating provinces. While impact indicators have yet to be

measured (given the fact that most subprojects were only operational at the end of project

implementation), results from participating provinces already point to improvements in

service delivery and large annual potential savings in public sector management.

Assuming the provinces continue to implement the projects, annual savings are expected

to exceed the initial one-time investment of the systems in place. Annex 3 presents the

observed/expected gains from the various subprojects which are all geared towards

achieving greater public sector efficiency at the provincial level, and reflects some cost

savings and potential benefits in future years (increased tax collection, savings in

operational costs, etc.) In some provinces like Chubut the project investment was paid off

by the increase in revenue (tax collection went up 2 percent in 3 months).

3.4 Justification of Overall Outcome Rating

Rating: Moderately Unsatisfactory

51. As discussed above, project achievements demonstrate significant progress towards the overall PDO of improving capabilities to more effectively manage their

resources and improve the quality of government administrative services. The public

sector management areas supported under this Project are now starting to contribute

significantly to the economic efficiency of provinces. Streamlining of processes,

organizational modernization, and better data management, have resulted in improved

decision-making and resource planning (see section 3.1) by (i) promoting inter-

government coordination at multiple levels, (ii) supporting system integration, and (iii)

encouraging transparency and accountability in public administration at the local level, as

well as improving administrative processes requiring direct involvement of civil society.

52. While the Project fully achieved all of its revised outcome indicators, the significant changes in these indicators during implementation, the reduction in project

scope, and lower than anticipated efficiency vis-à-vis project design suggest that as

measured against the PAD, the overall outcome is moderately unsatisfactory.

53. Nevertheless, the Project’s relevance remains high, with engagement on subnational governments work remaining a priority. While the future financial gains have

not been sufficiently quantified19

, based on experience, it is expected that continuing

maintenance and operationalization of systems investments will allow for the savings

over time to far exceed the costs.

19 As subprojects were only recently completed, and results in improved service delivery are evident, the

measurable results will only be available in the coming quarters (or next calendar year).

15

3.5 Overarching Themes, Other Outcomes and Impacts

(a) Poverty Impacts, Gender Aspects, and Social Development

54. No direct poverty, gender or measurable impact on the population is directly attributable to the Project. However, the Project’s impact on public sector management

areas has the potential to indirectly impact poverty and social conditions through the

effect of fiscal stabilization and improved service delivery conditions, as well as by

allowing for generated savings to be channeled into other provincial priorities.

(b) Institutional Change/Strengthening

55. This operation clearly contributed to institutional strengthening both at the federal

and subnational levels. The federal and provincial governments strengthened their

capacities in eight areas of public sector management through the completion of the

systems’ development and implementation. The Project has been effective in

strengthening the technical capacity of the PMUs, and has facilitated the accurate

collection of critical information required by law, as well as improving service delivery

and fostering citizen participation.

(c) Other Unintended Outcomes and Impacts (positive or negative)

56. No significant unintended outcomes or impacts were identified.

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops

57. No beneficiary survey or stakeholder workshops were conducted specifically for reviewing Project performance.

4. Assessment of Risk to Development Outcome Rating: Moderate

58. Considering both the nature of the investments made and the next steps envisioned, the risk to the Development Outcomes is considered to be moderate. Project

advances represent a new, automated platform for public management in these provinces.

By nature, this type of investment cannot be easily rolled back, and in fact, serves to

increase momentum behind business process service modernization within the public

sector, as evidenced by the municipality of Puerto Madryn’s decision to finance hardware

to extend the functionalities of the system linking the municipal and provincial cadasters.

Moreover, the province of Mendoza is committed to completing its judicial

modernization project by May 2014.

59. Nevertheless, in the medium to long term, further advances in efficiency and operational effectiveness, building off of project activities, will likely require additional

investments in technology and process redesign. While after implementing the

subprojects directed to improve public sector management tools, the Government (both at

16

the federal and provincial levels) has developed the capacity to undertake similar

exercises in the future and expand the results to the remaining provinces, such efforts will

require a long term financial commitment.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance

(a) Bank Performance in Ensuring Quality at Entry

Rating: Unsatisfactory

60. This Project was intended to expand the positive results in public management achieved by previous experiences supported also by the Bank, and was prepared taking

into account lessons learned from preceding projects. It was consistent with the federal

government’s objectives and the Bank strategy with Argentina. However, several

shortcomings in project design posed significant challenges to implementation. In

particular, the underestimation of timing to pass the local indebtedness laws, the failure to

identify the challenges involved in coordinating with several subnational governments,

and the overestimation of the team capacity to carry out complex procurement processes

caused significant risks to the successful completion of the Project. Likewise, the delay

alone in declaring the loan effective (18 months from Board approval) suggests

significant under-estimation of the Project’s readiness to implement. Additionally, the

significant problems with the design of the original monitoring and evaluation framework

(mentioned above) - indicators that were too complex, too numerous, and in some cases

more than the project could expect to deliver and not well-defined - required that

substantial changes be made in project restructurings.

(b) Quality of Supervision

Rating: Moderately Satisfactory

61. The initial supervision phase of the Project could be characterized as overly-optimistic and highly focused on technical aspects, with inadequate attention paid to

operational constraints. For example, while all SLAs for the eligible provinces were not

yet signed (and neither commitment nor disbursement levels above 10 percent of the

loan), there were already discussions of possible additional financing. Realistic

assessment of project implementation constraints early on could have facilitated an

earlier turnaround of the Project, and the Bank’s 2009 request for the change in

procurement strategy generated challenges for the counterpart. There were also

indications that communications between the Bank team, CEU and PMUs could have

been better.

62. By 2010, a new Bank task team had been assigned to provide implementation support. From then on, the Bank flagged potential issues and took action to solve them

effectively throughout the extension period. As noted above, the Bank team engaged in

intensive supervision, including weekly progress reports of procurement processes and

more staff time devoted (Public Sector, Country Management Unit and Procurement) to

facilitate meeting the contracting deadline for signing new contracts. The joint effort of

17

the Bank teams provided enough flexibility to find a solution for each province that

helped place the Project’s processes back on track, including almost full disbursement of

the loan. The Bank’s proactive supervision also contributed to the improvement in the

quality of the progress reports in the last years of implementation. The sum of these

issues is the reason for considering Bank supervision Moderately Satisfactory.

(c) Justification of Rating for Overall Bank Performance

Rating: Moderately Unsatisfactory

63. Based on the Bank performance in ensuring quality at entry, and in the quality of Bank supervision, the overall Bank performance is rated as moderately unsatisfactory. A

number of challenges that led to delays in project start-up and execution were not fully

identified at design, and communication between the Bank and the client could have been

better in the initial part of implementation. However, this ICR recognizes the Bank

supervision team’s significant efforts during the latter part of implementation to solve the

procurement issues and to get the project back on track. While Project outcomes as

restructured were achieved and all prioritized programs and activities were undertaken

moderately satisfactorily, the significant problems with original M&E framework (which

impacted the assessment of the final project outcome) lead to an evaluation of moderately

unsatisfactory performance on the part of the Bank.

5.2 Borrower Performance

(a)Government Performance


64. Despite the fact that project implementation suffered delays in the initial stages, the areas supported under this Project were part of the Government of Argentina’s agenda

with respect to improving service delivery by strengthening public sector management at

the local level. In addition to the political commitment, Argentinean provinces were able

to strengthen their capacity and devised the institutional and technical tools needed to

complete their projects. However, this commitment could have translated into proactivity

in ensuring that the Project was progressing satisfactorily. There is insufficient evidence

on the steering committee exercising its role to facilitate project implementation.20

(b) Implementing Agency or Agencies Performance


65. The CEU did a good job in coordinating all the efforts at the different levels and especially in disseminating Project results and attracting demand for expanding the

coverage of local public sector management improvements. Provinces requested more

support from the Bank and the national government to conduct the processes related to

project activities and manage the associated contracts. Since subnational projects were

relatively small, they had difficulties in obtaining sufficient bids to comply with Bank

20 Section 3.1.4 of the Loan Agreement covenants the establishment and operationalization of the steering

committee whose function include overall coordination of the Project.

18

rules and when contracts were signed, they had difficulties enforcing the conditions of the

contracts. However, the CEUs and PMUs’ strengthening is evidenced by their improved

project management capacities, as can been seen in their increasing procurement

capacity over implementation and the quality of the progress reports, which improved

considerably towards the last years - becoming more timely, comprehensive and

disaggregated at the subproject level.

(c) Justification of Rating for Overall Borrower Performance


66. Considering the above arguments, the overall borrower performance is deemed moderately satisfactory.

6. Lessons Learned

67. Interventions should be limited to a few key institutional and management reforms. Without such a focus, implementation by the Borrower and supervision by the Bank risk

losing sight of the operation’s priorities. In this case, the restructuring of the loan’s scope

and indicators proved to be essential to achievement of the PDO and program’s outcomes.

68. Modernization projects should be designed based on the achievement of specific goals and align with the Government’s reform agenda. In the case of this project, even

though the rationale behind having basic and advanced modules was technically sound,

the conditions to move to the advanced module had to be relaxed in order to engage the

provinces and allow them to move forward on their modernization agenda.

69. It is crucial to anticipate the additional complexities of working not only with different branches of government at the subnational level but also of getting local laws

approved for project implementation. In this case, based on the expected coverage of the

loan as anticipated in the PAD, the Ministry of the Interior at the federal level needed to

coordinate with several counterparts. Considering the independence of these institutions

and the political nature of some of them, performance targets related to their participation

needed to consider the possibility that some of these institutions could revise their

decisions.

70. Stronger monitoring and evaluation processes would have allowed for proactive execution and mid-course adjustments, as well as learning from peers. As mentioned,

the Project did not establish a proper M&E plan whereby provinces could share

experiences and provide feedback. It has been proven, in other projects, that it is better to

have “technical” level meetings quarterly or bi-annually where subnational governments

can share their experiences amongst them and with the CEU and the Bank.

71. Additional procurement support should be considered for projects that involve relatively large and complex procurement processes, such as the ICT investments within

this Project. For this Project, the change in the procurement processes and need for

additional support should have been anticipated at the beginning of project

implementation, while capacities at the CEU and at the provincial level were adequately

19

strengthened. Once the Bank assigned a Procurement Specialist on a more full time basis

to the Project and strengthened the supervision team, the pace of implementation of the

Project increased greatly and contracting dates were met.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners

(a) Borrower/implementing agencies

72. The ICR was discussed with the CEU and their comments were incorporated. In particular, they wanted to emphasize that the 2009 change in the procurement strategy

impacted the processing of contracts whose total amount was equivalent to approximately

50 percent of the loan.

(b) Cofinanciers

Not applicable

(c) Other partners and stakeholders Not applicable

20

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

Component 1 34.02 11.61 34.13

Component 2 12.29 24.72 201.14

Component 3 8.59 3.18 37.02

Total Baseline Cost 54.90 39.51 71.97

Physical Contingencies

0.00

0.00

0.00

Price Contingencies

0.00

0.00

0.00

Total Project Costs 0.00 0.00

Front-end fee PPF 0.00 0.00 .00

Front-end fee IBRD 0.10 0.10 100.00

Total Financing Required 55.00 39.61 72.02

(b) Financing

Source of Funds Type of

Cofinancing

Appraisal

Estimate

(USD millions)

Actual/Latest

Estimate

(USD millions)

Percentage of

Appraisal

Borrower 15.00 2.30 15.3%

International Bank for

Reconstruction and Development 40.00 37.31 93.28.%

Allocation by Province

as of March 31, 2013

USD

Loan

Resources

Provincial

Resources

Chubut 1,499,984 319,458

Formosa 2,782,783 273,248

Mendoza 6,557,627 295,516

Neuquén 4,638,873 0

Rio Negro 1,717,616 181,795

Salta 5,674,339 2,468

Santa Fe 11,160,308 1,227,294

Total Provincial 34,031,530 2,299,779

Initial Fee 100,000

Supervision UEC 3,175,964

Total Disbursed 37,307,495 2,299,779

21

Annex 2. Outputs by Component

Results by Province and by Sector

Province Sector Output Contributes to

Achievement of which

Outcome

Basic

Module

Chubut

Human Resources

Administration System

Implementation of the

Provincial Personnel

Administration System

Prototype (Prototipo del

Sistema de Administration de

Personal Provincial, SIAPP)

In at least one province, the

percentage of provincial staff

operating under integrated

payroll information systems

in human resources has

increased from 0% to 30%.

Tax Administration

System

Information System for Tax

Management for the Revenue

Direction


ratio of collected provincial

taxes has increased in 15%

by the end of the project

period.

Cadaster System Management Modernization

of the General Directorate of

Cadaster and Territorial

Information


exchange of information

between property registries

and cadaster systems is done

on a regular basis.

Formosa

Tax Administration

System

Technological Upgrade of the

Tax Administration System


ratio of collected provincial

taxes has increased in 15%

by the end of the project

period.

Property Registry Property Registry

Information System





on a regular basis.

Cadaster System Technological Upgrade of the

Territorial Information –

Cadaster System





on a regular basis.

22

Advanced

Module

Mendoza

Cadaster System Modernization of the

Provincial Cadaster Direction





on a regular basis.

Judicial Branch

Strengthening

Management modernization

of the Judicial Branch

(intermediate) In at least one

province five or more

organizational units (i.e.

courts, tribunals) of their

judiciary system are

integrated through an on-line

management system

Civil Registries Modernization of the Civil

Registry System and Training

public officials





on a regular basis.

Property Registry Property Registry

Modernization and

Integration with other entities





on a regular basis.

E-Procurement

Systems

Management Modernization

of Public Procurement

(intermediate) Number of

provinces which improved

Data Center service capacity

and reduced administration

costs

Strengthening of the

Internal Control

Entities

Management modernization

of the Tribunal de Cuentas





on a regular basis

Neuquén

E-Government Technological Support for E-

Government

(intermediate) Number of

provinces which improved

Data Center service capacity

in at least 25%

Rio Negro

Financial Management

System

Improved Management in the

Ministry of Health –

PROGESA (Program

“Efficient Management of

Health Expenditure,

Programa “Gestión Eficiente

del Gasto en Salud”)





on a regular basis

23

Salta

Financial Management

Sys