Second MDTF for Capacity Building Support to the Implementation of the INTEGRATED PLANNING SYSTEM (IPS 2).
Grant No TF013972
PROJECT DEVELOPMENT OBJECTIVES
The objective of the IPS 2 is to “Strengthen the implementation of the Integrated Planning System, by creating the conditions for introducing a performance orientation in the policy planning and budgetary processes and by improving institutional capacity to monitor results at the strategy and program levels”.
The project contributes to strengthening macroeconomic and public financial management, which is one of the main priorities of the World Bank’s current Country Partnership Strategy. This priority contributes to the CPS strategic objective of accelerating the recovery of Albania’s economic growth through improved competitiveness.
More specifically, the project is expected to consolidate the achievements of the first IPS project, notably in terms of improved orderliness, coordination, and medium-term perspective of the policy planning and budget formulation processes, which make up the IPS; overall IPS framework, NSDI, sector and cross-cutting sector strategies, PIA, external assistance, donor coordination, public awareness and communications, and increased budget credibility (reduced deviation in outturns from approved MTBP and budgets, especially on the expenditure side). To this end, the project is expected to raise the quality of public financial management, particularly in terms of budgetary inputs by key line ministries by introducing benchmarks on inputs (unit costs) and linking them to outputs (service delivery results) at the program level.
The project is also expected to raise the transparency and reliability of PFM controls by establishing an integrated Albania Financial Management Information System (AFMIS). This will facilitate the regular monitoring of budget execution and tracking of program results based on data from the automated Treasury with reference to the MTBP, the annual budget, and approved targets for program-level indicators. The AFMIS will also improve capacity to track commitments and help prevent the accumulation arrears, which are currently a significant problem.
Finally, the project is also expected to enable the Government’s effectiveness in tracking the implementation status of policies and strategies by strengthening of the current results-based monitoring mechanism. This will be done by establishing a clear hierarchy of key results indicators at the strategy and policy levels, grounded in program-level output indicators reflected in the MTBP and the budget. These results indicators should be supported by appropriate data collection and reporting mechanisms and be integrated in ministries’ PAM reports. The project will also support reform leaders, especially in the MoF and the DSDC, in broadening ownership of the IPS process among line ministries and fostering a management culture of performance orientation, whereby ministries would increasingly pursue efficiency gains and management innovations to deliver higher results within a given resource envelope.
The Ministry of Finance (MoF) and the Department of Strategy and Donor Coordination (DSDC) are the main agencies responsible for project implementation. The MoF leads components one, three and four (CFCU) and the DSDC leads component two. Other beneficiaries includes selected line ministries under components one and two (Ministry of Education, Ministry of Health, Ministry of Public Works and Transport, Ministry of Agriculture, Ministry of Justice, and other line ministries as needed); and the Ministry of Innovation and ICT and the National Agency for Information Society under component three.
PDO LEVEL RESULTS INDICATORS
The achievement of the PDO will be measured with reference to the following indicators:
(a) Improved consistency in budget execution evidenced by reduced divergence in budget outturns from the approved budget (revenues and expenditures); baseline: PEFA assessment 2011;
Selected line ministries develop prioritized and costed sector strategies and regularly report on program-level results indicators (included in PAM reports); and annual NSDI progress reports update values of key results indicators; and
The AFMIS system is operational and enables tracking of commitments and (through linkage to the IPSIS) monitoring of performance
1. Design rationale and linkage among project components: The project will consist of three substantive components and a fourth component for project management: Component One – Strengthening Public Financial Management (PFM); Component Two – Improving Policy Coordination and Aid Management; and Component Three – IPS Management Information Systems. The first and second components are mutually complementary, as the concern the two aspects that the IPS process seeks to integrate, namely public expenditure management, on the one hand, and strategic planning and policy coordination, on the other. In both these aspects the upstream preparation of budget and strategies has so far been the more advanced element, while monitoring of results has lagged behind – both at the program level (outputs) and the strategy level (outcomes and impacts). The proposed project aims to address this weakness on the monitoring side by establishing a coherent results chain between the budget programs’ results (outputs) and higher-level indicators (e.g. impact indicators at the level of the NSDI) though the development of policy/ strategy-level intermediate outcomes, which have so far a missing essential link. Finally component three is also expected to support the integration of the PFM and policy processes. This will be facilitated through the integrated AFMIS that will link the MTBP to Treasury, thereby enabling the regular tracking of results at the program level (outputs) and their linkage to budgetary inputs. In parallel, the IPSIS system, which will be linked to the AFMIS, will facilitate the monitoring of program-level outputs as well as policy implementation and strategy-level intermediate outcomes.
2. Component One – Public Financial Management (PFM), including management of donor funds: This component will finance technical assistance and training for strengthening PFM performance, primarily targeting weaknesses identified by the PEFA 2011 assessment. The following activities are envisaged and rated in terms of priority based on their contribution to the achievement of the PDO in order to ensure the attainability of the PDO under different funding scenarios (see risk assessment):
3. Component Two – Policy Coordination and Aid Management: This component will finance technical assistance and training for policy planning, coordination, and monitoring and evaluation of the IPS both in the center of government and in line ministries. The following activities are envisaged:
(a) Optimizing the IPS process, including through better alignment with the EU agenda: This activity will provide technical assistance for the process of updating the NSDI (currently covering the period up to 2013) and sectoral strategies with a focus on realistic prioritization and costing of activities under the strategies; stronger alignment of sector priorities with the EU accession agenda and programming of IPA funds at the center of government and line ministry levels. This activity will aim to streamline the current process, which is proving rather cumbersome, including by merging some of the strategies. This is a high priority activity, which is essential for achieving the PDO, as the NSDI and sectoral strategies are key elements of the IPS process.
(b) Monitoring policy implementation: This activity will support the implementation of the recently introduced Performance Assessment Matrix– PAM (results frameworks with intermediate outcomes, linked to the NSDI high-level indicators and program-level indicators) for sector strategies. The aim will be to focus on using appropriate performance indicators that can be regularly monitored and provide actionable information for policy makers. The activity will include training/ awareness-building for public sector managers in monitoring policy implementation, including tracking the implementation status of recently adopted legislation, and using performance indicators for evidence-based decision making about policies and resource allocation within the sectors. This is also a high priority activity, which is essential to achieve the PDO by contributing to more robust results monitoring.
(c) Applying policy impact assessment: Under the first IPS project a new methodology for ex ante Policy Impact Assessment (PIA) was adopted, but its application remains in its infancy. This activity will provide technical assistance and training for the Council of Ministers and line ministries in conducting PIA for major new policy and regulatory initiatives, including by supporting the practice of stakeholder consultation. This is a desirable activity, which would enhance policy planning capacity and the quality of policy coordination.
(d) Aid management: This activity will provide technical assistance and training to support the staff at the DSDC, the CoM and line ministries to decrease the use of internal donor rules, better align and reinforce inter-donor operational dialogue, and transfer related experience and good practices. Assistance will also be needed to support future Monitoring of the Paris Declaration and for reaching the Paris Declaration indicators in Albania as set by the IV High Level Forum in Busan, Korea held in December 2011, under the Busan Partnership for Effective Development Cooperation’s Declaration. Subject to available financing, this activity would include technical assistance and training for developing regional development programming to ensure the effective combination of state budget funding under the Regional Development Fund and upcoming programs under IPA pillar 3. This is an important activity, which would enhance the Government’s capacity to efficiently use donor funds but is not critical to the achievement of the PDO.
(e) Strengthening Capacities for DM management: Compliance Assessment for IPA II, III, IV. The consultancy (auditing) will provide support in the completion of the compliance assessment audit of the Albanian decentralized management structures, in accordance with IPA Implementing Regulation (IPA IR), aiming at obtaining the conferral of management of powers for DM, with ex-ante controls by EUD, for IPA Component II, III, IV. The aim of the TA consists in ascertaining the preparedness of Albanian DIS Institutions in the receipt, use, control and implementation of community assistance.
4. Component Three – Developing IPS Management Information Systems: This component will finance investment in the development of the Albania Financial Management Information System (AFMIS), and technical assistance for the preparation and implementation of the AFMIS system. The design and implementation of External Assistance Management Information System (EAMIS) and Integrated Planning Information System (IPSIS) are also included in this component.
(a) Design of AFMIS and IPSIS solutions: This activity will provide support to the MoF (from a consulting firm) in preparing the functional and technical specifications for a full package AFMIS and IPSIS solutions, as well as complete tender documents for the International Competitive Bidding (ICB). AFMIS will be developed or adjusted from an existing set of specifications prepared under the first IPS project. The specifications will include also the necessary changes of the existing Treasury System in order to have a fully integrated AFMIS system. Furthermore the technical specifications will include the interfaces that will allow data exchange between the AFMIS and the EAMIS and the IPSIS modules that will be developed by the DSDC. The consulting firm selected for this activity is expected to provide independent verification and validation (IVV) support during the implementation of AFMIS and IPSIS ICT solutions, as well.
(b) Design of EAMIS module: EAMIS functional and technical requirements will be developed through a parallel activity, due to the urgency of implementing this module. This activity is expected to provide advisory support (from an individual consultant) to the DSDC for the development of EAMIS requirements, as well as the bidding documents for the implementation of relevant information and communication technology (ICT) solutions. The consultant selected for this activity is also expected to provide independent verification and validation (IVV) support during the implementation of EAMIS ICT solutions.
(c) Implementation of AFMIS and IPSIS solutions: The activation of the automated Treasury in 2010 created a firm basis for integrating the different systems of the budget and IPS processes and expanding their functionalities. The AFMIS will include modules on Medium-Term Budget Planning and Public Investment Management, as well as linkages with the EAMIS and the IPSIS to track performance information (outputs and outcomes) at the sector, program, and agency levels and integrate them with budget data. The AFMIS would also include additional configurations in the Treasury System to ensure information flow and integrity in all AFMIS modules (including treasury modules). This would create an integrated centralized platform to support decentralized operations by providing access to authorized users at all levels of government through a secure network (GovNet and Treasury network). Finally, the system would include a web portal to provide free access to line ministries and budget units to support PFM operations and capture relevant information on a daily basis. Implementation of IPSIS module is also included in this activity. The AFMIS and IPSIS ICT solutions are expected to be implemented through ICB process.
(d) Implementation of EAMIS module: The EAMIS ICT solutions will be implemented in parallel to AFMIS and IPSIS, due to the need for urgent completion of this module to inform DSDC and the donors about the main External Assistance indicators (commitment, disbursement and other indicators) benefiting from a relatively simple solution (expected to be developed by a local ICT firm or consultant).
(e) Support for Open Government Program: This activity will support the Government (Ministry of Innovation and Information Communication Technology or MITIK) initiatives for identifying and publishing data on budget and public sector performance in a regular, cost-effective, and user-friendly manner, through advisory support and workshops. Expected results include the establishment of the Chief Information Officer (CIO) Forum to collect, share and discuss on best practices, development of draft Open Government Program, and workshops on ICT project management international good practices. This activity will take place in the overall framework of Albania’s Open Government Program. It will aim to identify suitable data for public dissemination and develop appropriate formats for the data to be published through the Government web portal. This activity will also include training and transfer of best practices inICT project management with a focus on improving public access to information.
5. Component Four – Project Management: This component will support CFCU in strengthen their capacity in a better project implementation, focusing on procurement, financial management and monitoring. This component also will include necessary incremental operating costs related to project management, including the overall management and coordination, and project-related fiduciary activities (procurement and financial management).