PROGRESS REPORT 5 DECEMBER 2011

SPEMP Secretariat

Contents
Summary A Closer Look at Project Details Deepening MTBF and Strengthening Financial Accountability Strengthening the Office of Comptroller and Auditor General Strengthening Parliamentary Oversight Glimpses of Just-in-time Technical and Analytical Assistance Citizens Component Regional Conference on Public Investment Management Public Expenditure Tracking Survey (PETS) Review of MTBF (draft) New PFM Initiatives within and beyond SPEMP Strengthening Statregic Planning and Public Investment Management Revenue Administration Refom SPEMP Knowledge Exchange Visits Financial Updates Annex 1: Restructured Implementation Arrangement for DMTBF Project Annex 2: Revised Monitoring and Evaluation Framework for DMTBF Project 20 14 1 5

22 24 25 26

SUMMARY:Implementing to raise accountability to citizens

SPEMP has seen some very busy months during the second half of 2011. The range of activities has stretched from major decisions on expediting implementation through more coordinated work on achievable outcomes, and subsequently, regular working level meetings, workshops on ways forward, conferences with regional affiliations, exposures into international experiences of public financial management (PFM), showcasing country systems and updates and many more. DMTBF Project restructured to three components from nine; finalization on way: The DMTBF Project that has come across a number of significant achievements including complete roll out of the MTBF across government, support to Budget FY 2012, and Sixth Five Year Plan, stabilization and maintenance of iBAS, a significant number of training programs having trained close to 2,000 officials across government, and valuable diagnostic work in the areas of debt management, PFM regulations, payroll and pensions was also facing rather slow or stunted progress in many of its nine components. The problems were identified to be overambitious and complicated project design, difficult implementation arrangements that hampered coordinated teamwork of a very large number of stakeholders, reform champions and consultants. Following comprehensive workshops for restructure with participation of all stakeholders within government, donors and consultants in July 2011 and in September 2011, the DMTBF Project was proposed to be restructured into three components from the original nine to coincide with the governments three broad areas of focus: MTBF, iBAS, and human resource capacity building. No major work area was eliminated, but repackaged to promote better coordination and synergy. Currently, administrative and legal procedures to finalize restructure of the project on behalf of the Bank and Government are being worked upon. Public Finance Foundation (PFF) decided to be built into an institute with changed governance structure and broadened focuswith effect from July 2012: As part of the DMTBF Project, steps on reorganizing and strengthening PFF have been identified. In order to explore the options and actionplan further with ideas from key stakeholders, a workshop titled Restructuring of Public Finance Foundation was arranged in October 2011. The workshop recommended broadening PFFs focus to include the entire cycle of PFM and simplifying the governance structure with effect from July 2012, and actually taking an institutional form by the time DMTBF Project ends. Improving implementation pace of Strengthening Parliamentary Oversight (SPO) Project despite initial slow progress fueled by insufficient reform exposure of Parliament Secretariat: The implementation status so far has been quite slow due to limited previous experience of Parliament Secretariat to reform. Progress however is picking up including establishing client connection e-submission of IFR based withdrawal application.

...SUMMARY
Commendable start up pace of Strengthening the Office of Comptroller and Auditor General (SOCAG) Project in contracting Management and Implementation Support Consultancy (MISC): Despite long preparation time, the SOCAG has picked up pace in starting up to begin implementation. Office of the Comptroller and Auditor General (OCAG) negotiated a contract with the winning bidder PKF (UK) LLP just within a period of 93 days from the project effectiveness and well directed efforts are in place to have the consultant in place by January 1, 2012. Shifted focus of SPEMPs Citizens Component has yielded greater communication activities for and between projects, including preparation of a citizens budget in collaboration with DMTBF Project: The SPEMP communication team has been actively engaged with the three projects in order to come up with practical outreach activities for each. The team is currently helping Finance Division to develop a Citizen's Guide to Budget Pamphlet for FY11-12. Along with this, various other communication plans have been arranged which are going to roll out throughout the coming year. Regional Public Investment Management (PIM) experience explored through regional PIM Conference in Dhaka: SPEMP in collaboration with the Planning Commission held a regional conference on Public Investment Management (PIM) in Dhaka on September 14-15, 2011. The conference yielded findings on enhancing public investment management. Completion of the review of the first phase of Public Expenditure Tracking Survey (PETS) on Roads and Highways: The SPEMP led a study to review on road and highway department (RHD) through Ernst and Young, who is a contractor for this survey. The study reviews various business processes of RHD. After completion of the initial phase, a review of the methodology was carried out by the Bank. Increased support for enhanced and unified understanding of Monitoring and Evaluation (M&E): In order to create greater awareness and understanding among the officials and consultants of the three PMCUs of SPEMP on the function of Monitoring and Evaluation (M&E) frameworks, a training session on M&E was held at the Bank in August, 2011. Increased support for enhanced and unified understanding of Monitoring and Evaluation (M&E): In order to create greater awareness and understanding among the officials and consultants of the three PMCUs of SPEMP on the function of Monitoring and Evaluation (M&E) frameworks, a training session on M&E was held at the Bank in August, 2011. Exposure to international experience on PFM through knowledge exchange with relevant PFM authorities in South Africa, Malaysia and Korea and participation in International Consortium of Government Financial Management (ICGFM): A team from the Finance Division visited National Treasury of the Government of South Africa in July 2011 to discuss and share PFM reform experiences with related South African National Treasury Counterparts.

...SUMMARY
From this knowledge exchange visit, the delegates have gained an important understanding of the role of performance management in the improvement of returns to resource allocation. It created a great possibility to develop a continuous experience sharing relationship and to bring in some of the reform issues into the Bangladesh PFM reform process, that are successfully implemented in South Africa. A team composed of officials from Ministry of Planning, Planning Commission. Implementation Monitoring and Evaluation Division (IMED) and Finance Division visited Malaysia and Korea in August 2011 to gain exposure in the area of regional public investment management (PIM). During this knowledge exchange visit, delegates gained insight on all stages on investment project management cycle starting with screen and selection with respect to national priorities, appraisal, approval, implementation, maintenance and impact evaluation. Authorities visited in Malaysia were Ministry of Economic Planning Unit, Ministry of Finance, Implementation Coordination Unit and Ministry of Works that controls six agencies; Ministry of Finance and Strategy and Korea Development Institutes Public Infrastructure Management Center (PIMAC). Finally during December 5-7, 2011, DMTBF and SPO Project representatives participated in the ICGFM Conference in Washington DC and besides presenting an innovative approach to improving accountability in PFM, also comprehensively and candidly presented the case of Bangladesh on the current state and reform history in the area of PFM and financial accountability.

A Closer Look at Project Details

Deepening MTBF and Strengthening Financial Accountability (DMTBF) Project

Progress/Achievements
Complete roll out of MTBF across government to 57 ministries and divisions, ahead of schedule

Support to preparation of Annual Budget FY2012

Support to completion of Sixth Five Year Plan

Stabilization and maintenance of iBAS

Training in relevant PFM areas to over 1,500 officials across government

Valuable diagnostics in the areas of debt management, treasury and cash management, payroll and pensions 5

...DMTBF Project
Changes/Decisions
i. Restructured Components

C1: Strategic Budget Management in Finance Division C2: Developing Capacities for Debt Policy and Management C3: Capacity Development in Line Ministries C4: Developing Planning Commission Capacity in line with the MTBF approach C5: Accounting and Financial Reporting C6: Strengthening Treasury and Cash Management Systems C7: PFM Legislation and Regulations C8: Payroll, Pensions, GPF, Loans & Advances, and Assets C9: Training & Human Resources Development
Note: The subcomponent on Planning Commission has been narrowed down within the DMTBF Project and most analytical activities have been included under a separate work program under SPEMP. A transitional arrangement however has been set up through which the new work program and DMTBF Project will coordinate at least at the initial stage.

C1: Strategic Policy and Budget Management

C2: Public Financial Systems

C3: Capacity Building and Training

Strengthening Strategic Planning and Public Investment Management

...DMTBF Project
Changes/Decisions
DMTBF Project has had significant achievements in ways of complete MTBF roll out, support to completion of 6th Five Year Plan and annual Budget 2012, stabilization and maintenance of iBAS, unified presentation of development and non-development budgets in FY12 and significant training. Considerable diagnostics also have been completed in key PFM areas in all components of the project. Nevertheless, the project has been facing slow progress in many areas of its scope despite completion of diagnostics either because of shifted priority of government, uncoordinated components, complicated implementation arrangements, limited scope of involvement government reform champions etc. Consequently, the project has been rearranged in three main broad categories of government priority i.e. MTBF, iBAS, human resource capacity building. Other components and subcomponents have been placed according to relevance with each of the broad components. The Planning Commission (PC) component under DMTBF Project was focused mostly on the General Economic work of PC, leaving out a crucial area of PFM i.e. public investment management. In addition, implementation of the PC component has faced considerable institutional differences and therefore, progress has been slow, albeit DMTBF Projects contribution in finalizing the sixth Five Year Plan by General Economics Division (GED) of PC. Recognizing PCs importance as the national institute of strategic planning and public investment management, came the idea of a separate project (described later) in line with PCs unique priorities, expected to start in early 2012, under SPEMP. However, in order to maintain consistency with MTBF, DMTBF Project will continue to support PCs results based monitoring of the 6th Five Year Plan till July 2012 after which the new project will take on this initiative as well. ii. Special measures were taken to speed up finalization of project restructure details on an urgent basis, as a results of Restructuring Workshop held in September September 2011: a. Committee for finalizing Implementation Arrangement: Finance Division formed a Committee on September 15, 2011 consisting of Mr. Md. Najmus Sakib and Mr. Md. Zahidul Haque (Finance Division), Mr. Muslim Chowdhury and Dr. Ziaul Abedin (MISC), Ms. Suraiya Zannath, Ms. Dilshad Dossani (World Bank), Mr. Syed Abu Yousuf and Mr. Ataur Rahman (DMTBF PMCU).

...DMTBF Project
Changes/Decisions
Mr. Shahabuddin Ahmed, Joint Secretary, Finance Division will be Chairing the committee. The committee has been assigned to review and finalize the restructured implementation that was proposed by the Bank and agreed in principle by FD. The Committee has held several meetings, analyzed the proposed management structure very cautiously and discussed different issues related to the implementation arrangement. The committee also talked to a number of project stakeholders and incorporated the views in the revised structure (attached as Annex 1). b. Progress on results framework revision and Committee assigned for the revision Results Framework of DMTBF Project: Finance Division formed a second committee as a result of the restructure workshop held on September 10, 2011. This committee was assigned to finalize the Monitoring and Evaluation framework of DMTBF Project. The committee consists of Dr. Ahsan Mansur and Mr. Md. Muslim Chowdhury (MISC), Ms. Dilshad Dossani (World Bank), Mr. Md. Habibur Rahman and Mr. Md. Saiful Islam (Finance Division), and Dr. Golam Morshed and Muhammad Ali (DMTBF PMCU). Mr. Najmus Sakib, Joint Secretary, Finance Division has been assigned as Chair of the committee. This committee too has held several meetings in the month of September and October 2011 through which the draft M&E framework developed by the Bank was discussed and suggestions and inputs provided in the forms of targets from Component Directors for each of their respective components. It was agreed that there will be two sets of formats: for overall project progress monitoring periodically, a summary version that will be shared every quarter with the Bank and Donors and a tracking table with a higher number of indicators and detailed information, which will be used at the implementation level for regular monitoring by FD, PMCU and MISC. The final Monitoring and Evaluation table will be discussed and approved in the next joint GovernmentDonor meeting, planned to be held in January 2012. The revised M&E format is provided in Annex 2.

...DMTBF Project

Events
iii. Workshops on DMTBF Restructuring: Subsequent to the initial restructure workshop in July 2011, stakeholders of DMTBF project agreed on the restructuring outline for the project in a workshop on September 10, 2011 at Hotel Westin, Dhaka. It was a follow-up action of the first workshop on restructuring held in July in Coxs Bazar. Officials from the Finance Division and MTBF line ministries, CGA Office, representatives from the development partners and the Management and Implementation Support Consultants Team participated in the workshop. The Finance Secretary joined the Program as the Chief Guest. The purpose of the Retreat Workshop was to provide response to the diagnostic exercise carried out by the SPEMP-A Team (PDP Australia) and to work out a sensible way forward to achieve the ultimate objectives of the DMTBF Project. Another important purpose of the workshop was to review the current components structure of the Project, to work out a restructuring proposal to maximize cohesion among the project components and to ensure measurable time-bound outputs. Also, based on the Implementation support and project restructuring mission findings, Suraiya Zannath, Sr. Financial Management Specialist of World Bank, presented component-wise current status along with recommendations for way forward, restructured implementation arrangement and challenges for the project. The development partners emphasized on well documentation of restructuring need, identification of the priority issues, risk analysis to avoid further restructuring and developing a comprehensive set of monitoring tools. iv. Project Steering Committee Meeting: The third meeting of the Project Steering Committee (PSC) of the DMTBF project was held on November 16, 2011 with the Finance Secretary as the Chair. The Finance Secretary highlighted the background of Public Financial Management (PFM) reform initiatives in Bangladesh and shed light on the probable course of current and future PFM reform initiatives acknowledging that there are certain limitations and challenges against those initiatives. The Country Director of World Bank was also present and stressed on the importance of SPEMP to realize the targeted reform initiatives and expressed satisfaction to the fact that the Government wholeheartedly owned the initiatives. She highlighted that it was important to have a good harmonious relationship among all the stakeholders of the project to attain the outputs and outcomes agreed on.

...DMTBF Project
Events

During the meeting, five presentations were made on areas of restructuring the project; implementation arrangements and resource planning; and work plans of the three components. At the end, the restructuring report was approved by the Finance Secretary. It may be mentioned that in July and September, two workshops were held to discuss the diagnostic report and restructuring plans. v. Workshop on Restructuring of Public Finance Foundation held: A workshop on Restructuring of Public Finance Foundation was held under the auspices of DMBTF project on October 8, 2011 at the conference room of PMCU in Dhaka. To make Public Finance Foundation (PFF) operational, a few options were reviewed and steps taken for reorganizing and strengthening PFF and hence the workshop was a part of that initiative through which ideas were drawn from the key stakeholders. Dr. Mohammad Tareque, Secretary of Finance Division chaired the workshop and it was well participated by executive committee members of PFF, senior officials of FD, relevant ministries and also representatives from the development partners besides PMCU and MISC. The discussants highlighted the importance of institutions like PFF for the government and mentioned that in spite of significant achievements attained through various PFM reform initiatives in Bangladesh, institutional reforms are highly required. Mr. Iqbal Abdullah Harun, Component Director, Component 3 (restructured) of DMTBF Project, laid out proposals for PFF including its governance structure, plan for diversifying the institution, institutional objectives & activities, funding arrangement and a time-bound action plan necessary for restructuring and making PFF operational. The legal instrument, organizational structure and financial arrangements were crucial areas needing decision. Major decisions taken were that PFF would have streamlines governance arrangements and actually turn into a PFM research and training institute with a broadened scope of work of what currently is little more than limited training to officials. It was also decided that PFF would begin operating under revised arrangements with effect from July 2012.

10

...DMTBF Project
Events
vi. SPEMP Restructuring Meeting with Heads of SPEMP Donor Agencies: A meeting was held with the SPEMP Heads of Agencies on September 8, 2011 at IFC to stocktake SPEMPs progress and explore ideas and opinions on way forward. Besides the Donor Heads, the World Bank Country Director, Ms. Ellen Goldstein and the entire SPEMP Team participated in the meeting. The meeting strongly endorsed the proposed restructuring option for the DMTBF Project and agreed to stay engaged in the Planning Commission for public investment reform through modest size Bankexecuted SPEMP resources. On revenue administration reform, the importance of NBR reform was agreed upon but no consensus was reached as to whether revenue reform can be supported under the SPEMP umbrella. Later however, through supporting information requested at the meeting and following further discussion, the revenue administration component was decided to be worked upon beyond the scope of SPEMP. vii. Certificate Giving Ceremony of FEEM course under DMTBF Project held: A Certificate giving ceremony for the participants of 8th course on Fiscal Economics and Financial Management was held in October 2011 at DMTBF Project in Dhaka. Finance Secretary Dr. Mohammad Tareque was the Chief Guest and handed over the certificates. A total of 28 officials from different cadres of Bangladesh Civil Service participated in this ten weeks course. PFF organized the course under the auspices of DMTBF Project. viii. Monitoring and Evaluation Training: A training session on Monitoring and Evaluation was held on August 24, 2011 at World Bank Office. The training was conducted by Mr. William Eckert, Consultant. The participants were officials and consultants from the three PMCUs of SPEMP. The main objective of the training was to create an awareness and understanding of how the Monitoring & Evaluation framework actually works. As a follow up to the training, Dilshad Dossani tried to clarify some confusion between outputs and outcomes and explained the basic system of M&E throughout the week, especially to the project staff and the M&E specialist working in the DMTBF project.

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...DMTBF Project
Way Forward
With refocused design of project in line with defined government priorities and renewed ownership shown by FD, DMTBF Project aims to realistically work towards many of the PFM reform goals of the government with renewed vigor. Revised TAPP for the project is soon to be finalized whilst on the other hand, paper of restructure and necessary amendments are being worked upon by the Bank. Nevertheless, the project is not being delayed due to restructure related formalities and has already begun operating under the restructured mode with Component Directors appointed. The Component Directors, who have been nominated by FD itself in recognition of their roles as reform champions are being counted upon to spearhead the project, linking technical expertise of the MISC to actual country context and priorities, whilst the Project Director oversees the project as a whole in terms of substantive and fiduciary arrangements. With refocused accountability and clear lines of authority, implementation of the project is likely to be more effective under restructured arrangements.

Project Financial Updates (US$)

Actual Disbursements (DMTBF Project) FY2010 FY2011 FY2012 ( till Dec 2011) FY2013 FY2014 Total 7,366,996.35 6,782,690.53 5,427,333.49

Planned Disbursements (DMTBF Project) 5,032,000.00 14,585,000.00 16,523,000.00

19,577,020.37

17,018,000.00 13,090,000.00 66,248,000.00

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Strengthening Parliamentary Oversight (SPO) Project

Implementation status so far has been slow with respect to starting up time. The project being the first ever donor funded program implemented directly by the Parliament Secretariat (PS) its limited exposure to Governments and Donors policies and procedures associated with development project poised a great concern about its ability to implement and monitor project activities in a timely manner. Despite the limitation, the project moved reasonably well within a short period of project implementation in following areas (i) formation of a full-fledged task team consisting of serving government officials as well as externally hired personnel (ii) opening of projects Designated Account for the first time in any PS managed program in accordance with existing rules (iii) formation of project Steering committee including procurement evaluation committees and holding of regular meetings (iv) initiation of all major procurement processes and (v) a full-fledged project office, a competing demand that PS has been finding great difficulty in meeting with other donor funded projects. The project also performed well in quickly establishing client connection including e-submission of IFR based withdrawal application. On the technical contents, significant progress has been seen on reducing audit backlog though the projects contribution in this regard is limited to lessons learnt from various regional seminars and study tours. A major portion of audit backlog was done. A number of other initiatives undertaken under the project include (i) Creation of Asia Regional Association of PACs (ARAPAC) network and (ii) Formulation of a restructure plan for PS Support system to finance committees.

Project Financial Updates (US$)

Actual Disbursements (SPO Project)

FY2011 FY2012 ( till Dec 2011) FY2013 FY2014 Total

150,998 52,881

Planned Disbursements (SPO Project)

1,250,000 500,000 5,000,000

1,750,000 1,500,000

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Glimpses of SPEMPs

Just-in-time Technical and Analytical Assistance

Citizens Component
The SPEMP communication team has been engaged with the three projects in order to come up with practical outreach activities for each. In cooperation with and following request of FD a Citizens Guide to Budget Pamphlet for FY11-12 is being developed. The pamphlet is expected to make national budget simple and easy for citizens, promoting greater access to reader friendly information, enhancing transparency and accountability in PFM. The draft is near completion, format has been approved by Finance Secretary and the Pamphlet is expected to be published soon. An SMS Campaign is being executed with two blasts sent till date for C&AG, to familiarize citizens with the functions of C&AG and Parliament. These are likely to sensitize Government-to-citizen communication enabling better dissemination of information already available through government websites but not used due to lack of information of citizens about the availability.

Highest count of visitors 3689 on 30 November, 2011, the following day of 1st sms f launch. Average hits per day without sms - 1556 Average Hits per day with SMS 2067

After completion of the sms campaign, on 13 December, 12:00am, the number of f ft visitors to the website has reached a cumulative total of 64,302

Before sending out of any sms, the total number of visitors to www.cag.org.bd on 29 f fo November, 2011, 9:40pm was 39,625.

A national debate competition among university students has been held to sensitize the youth about PFM related issues. The competition was carried out in cooperation with Dhaka University Debating Society (DUDS) in participation of Dhaka University, Bangladesh University of Engineering and Technology (BUET), North South University and United International University. The final debate was held on December 22, 2011, at the Business Studies Faculty of the University of Dhaka. The Champion team was Dhaka University against United International University on the topic of Lack of coordination between the concerned parliamentary standing committees and ministries is the key impediment towards peoples welfare. The debates are expected to be aired on Bangla Vision television channel tentatively in mid January 2012.

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...Citizens Component
Only the concerned parliamentary standing committees can make the government obligated to eradicate corruption; bring transparency, accountability and ensure cost-effectiveness in public financial management. Audit reports should be published through mass media

Only playing roles of the concerned parliamentary standing committees in accordance with rules of business can ensure the ultimate welfare of the citizens of this country Meticulous and accountable auditing procedure can guarantee the transparent and strong public financial management system. A coordination workshop among the three public finance committees of Parliament is being planned to be organized for better understanding of their respective roles and coordination. SPEMP Citizens Component also plans to produce documentary films as well as other communication materials such as Posters, Stickers, Brochures, Leaflets for disseminating previous experiences, present status and ongoing activities of the projects, and future strategies of both SOCAG and SPO Projects. In order to better coordinate and supervise communication activities and taking account of the fact that communication needs of projects may not be anticipated well in advance and there may not be regular activities, the SPEMP Citizens Component contract that is being implemented by Mott MacDonald and Bitopi Advertising Ltd. has been revised. The revision includes changes in terms of payment mode from time based to deliverable based. In this way, the Joint Venture will be paid for only those activities that are delivered.

Regional Conference on Public Investment Management (PIM)

SPEMP in collaboration with the Planning Commission held a regional conference on Public Investment Management (PIM) in Dhaka on September 14-15, 2011. The Conference was inaugurated by the Honorable Ministers of Planning and Finance, Bangladesh, and was attended by senior officials responsible for PIM, representatives of development partners and local media. The conference yielded some common findings and recommendations through presentations by each participant from Malaysia, Korea, Philippines, India, Turkey, Vietnam, and Bangladesh.

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...Regional Conference on Public Investment Manage ment (PIM)

Findings from this Conference are that closing infrastructure gaps is a critical factor of growth and development and that in this, public investment has a key role to play provided the right projects are selected, and that they are implemented well nd the completed assets are effectively operated and maintained. Common challenges identified in the region were strengthening quality of technical appraisal of projects, ensuring onsistency between the development goals, priorities and project selection, adequate funding for ti n an capital projects, efficient and transparent procurement and contracting process, efficient management of Public Private Partnership (PPP) and effective monitoring and evaluation. Key areas for improving PIM in Bangladesh include improving the quality of spending; strengthening capacity to identify, appraise, and select the best projects through standard appraisal guideline; rationalizing the number of projects; improving coordination between the development and revenue budgets; development spending should be fully aligned with Five Year Plan and the Medium Term Budget Framework; strengthening project implementation, including furthering procurement reform; strengthening partnership with civil society and NGOs; and ensuring sufficient operations and maintenance funding. The conference ended with valuable exposure of Bangladesh at the regional level with useful insights on regional experiences. It may be useful to further pursue the network affiliations created to facilitate further knowledge exchange on PIM and strategic planning. The conference built up further on the PIM review carried out by SPEMP on Bangladesh on May 2011 and supplemented the knowledge exchange visit to Korea and Malaysia (details provided later) carried out by officials from Ministry of Planning, Planning Commission and Ministry of Finance of Bangladesh. Together, these activities have contribued towards developing the poposed workplan for Planning Commission for further intervention by SPEMP.

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Public Expenditure Tracking Survey

As the SPEMP-funded and transport team-led study to review on Roads and Highways Department (RHD) was out, a presentation from the Ernst and Young, the consultant for this survey, was held on August 24, 2011 for World Bank Officials. The study reviews various business processes of RHD. It addresses issues such as planning, programming, and execution of RHD for making road conditions better in Bangladesh. The presentation was prepared to make a broad dissemination of these findings, to probe their methodology and to seek comments from the Bank audience before it was presented to the Development Partners and eventually to the Government.

Review of MTBF in Draft phase

A review of the MTBF being implemented in Bangladesh since FY2006 was carried out under SPEMP during the August implementation support mission for DMTBF Project, and subsequent thorough analytical reviews and information from FD. The findings are still at draft phase, yet to be shared with the government. Nevertheless, so far, deviations of annual budget from the outer years of the MTBF projections are seen to have declined significantly since FY2006 to FY2012, especially taking account of the larger number of ministries and division under MTBF every year. However, alignment of budget allocation to policy so far indicates scope of improvement. Detailed findings are expected to be formally shared with FD in early 2012.

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New Initiatives

Proposed Project for the Planning Commission:

The Planning Commission (PC), since its inception in early 1970s, continues to be a pivotal institute in the development of the country. PCs strategic planning, development project management and overseeing of the development budget through administration of the Annual Development Programme (ADP) have been indispensible. However, these are some of the imperative areas that need support for strengthening. The PC component under DMTBF Project as described above has not been sufficient and therefore, a separate set of activities is being prepared under SPEMP, to be implemented by the Bank in cooperation with PC. A mission was fielded to design this workplan in close consultation with PC during November 13-17, 2011. The mission met relevant stakeholders including officials from the Planning Commission and the Planning Division of the Ministry of Planning as well as from the Finance Division and Economic Relations Division of the Ministry of Finance. Relevant officials from a number of line ministries and agencies were also consulted to complete the cycle of project management. Based on the findings at the three tiers i.e. agency, ministry and Planning Commission, and PIM review, knowledge exchange visit and PIM regional conference, a project to strengthen PIM, strategic planning and macroeconomic modeling has been proposed. Given the PCs lack of exposure to reform projects so far and unfamiliarity with the Banks implementation and disbursement policies, the proposed project is planned to be executed by the Bank in consultation with the PC. Under such circumstances, the regular documentation requirements of government executed projects (TAPP-Technical Assistance Project Pro-forma) will not be binding (though PC may prepare them if preferred) and most of the documentation will be prepared and maintained by the Bank, using PC inputs. The workplan now awaits comments and finalization by PC after which the Bank executed project may begin immediately. Coordinated steps are being taken to ensure seamless transition arrangements of ongoing PC activities (so far focused mostly on General Economics Division - GED) from DMTBF Project to this new project. SPEMP particularly acknowledges the invaluable inputs of DANIDA representative (Programme Officer), Mr. Md. Ashrafuzzaman in the PC mission and constant ongoing advice on next steps of the proposed project through his technical experience in this area as well as close affiliation with PC. Component 1: Strengthening Strategic Planning & Monitoring for Results (SPM) 1.1 Establish Macro-economic framework/ models for strategic planning(MEF) 1.2 Formulate sector-specific operational plan for implementing FYP(SOP) 1.3 Develop and institutionalize framework for monitoring development results(DRF) Component 2: Improving Public Investment Management for delivering Results (PIM) 2.1 Prepare Multi-Year Rolling Public Investment Program (PIP) for linking Annual Development Program (ADP) with FYP 2.2 Develop and operationalize guidelines for selection, formulation, appraisal and approval for improving quality of public investment(GPIM) 2.3 Qualitative Improvement of ADP Implementation (QADP)

20

Knowledge Exchange Visits

South Arican Treasury DMTBF Project

Bangladesh has been trying to improve its PIM owing to its consistent shortcoming in fully utilizing its development budget. There have been various reviews including a most recent one by SPEMP done by consultants Murray Petrie and Mohammad Mesbahuddin. This review used an eight- phased, should have features of PIM framework recently developed by the World Bank and used in various countries across the world to assess the PIM situation in Bangladesh. In light of that review and the Planning Commissions own insights, further concrete steps on supporting PIM are being considered. In doing so, the need for hands on insights from the region were deemed necessary and thus, a knowledge exchange visit of a high level delegation of the Ministry of Planning and Planning Commission with representation from Ministry of Finance, supported by SPEMP took place during August 7-12, 2011. Lessons learned for Bangladesh are that there should be close monitoring of implementation, strategic business plans for line ministries should be developed, and an independent institute for project appraisal, beyond political influence should be set up. These lessons laid the base for the regional conference in September 2011 and have created a momentum of reform that has fed into the proposed project workplan developed in close consultation with Planning Commission officials.

International Consortium for Government Financial Management (ICGFM) - DMTBF and SPO
Projects
The ICGFM Winter Conference was held in Washington DC during December 5-7, 2011. The ICGFM called for proposals on enhancing accountability in PFM and the idea proposed from Bangladesh was a citizens poll on public service delivery performance before every annual budget and subsequent inclusion of the results in the overall evaluation of each relevant ministrys central performance evaluation. For this however, the idea stressed that the existence of measurable and specific Key Performance Indicators (KPIs) are required which at this point are being strengthened for Bangladesh. Moving on to the Bangladesh scenario, a complete description of the PFM cycle in Bangladesh was given followed by an account of Bangladeshs attempts to promote accountability and transparency in public finance. It was noted that the PFM system capacity in Bangladesh including improvement of the quality of KPIs before such an open measure of accountability by involving citizens could be implemented. SPEMP Projects that represented Bangladesh and gave comprehensive presentations at this conference were DMTBF and SPO.

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Investment and Planning Institutes in Korea and Malaysia

Bangladesh has been trying to improve its PIM owing to its consistent shortcoming in fully utilizing its development budget. There have been various reviews including a most recent one by SPEMP done by consultants Murray Petrie and Mohammad Mesbahuddin. This review used an eight- phased, should have features of PIM framework recently developed by the World Bank and used in various countries across the world to assess the PIM situation in Bangladesh. In light of that review and the Planning Commissions own insights, further concrete steps on supporting PIM are being considered. In doing so, the need for hands on insights from the region were deemed necessary and thus, a knowledge exchange visit of a high level delegation of the Ministry of Planning and Planning Commission with representation from Ministry of Finance, supported by SPEMP took place during August 7-12, 2011. Lessons learned for Bangladesh are that there should be close monitoring of implementation, strategic business plans for line ministries should be developed, and an independent institute for project appraisal, beyond political influence should be set up. These lessons laid the base for the regional conference in September 2011 and have created a momentum of reform that has fed into the proposed project workplan developed in close consultation with Planning Commission officials.

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Financial Updates of SPEMP (US$)

December 28, 2011
Investment Income Contributions (Cash + unpaid contributions) Cash Contributions Unpaid contributions Activities Deepening MTBF and Strengthening Financial Accountability Project Strengthening Office of Comptroller and Auditor General Project Strengthening Parliamentary Oversight Project Citizens Component iBAS Review Public Expenditure Tracking Survey Public Expenditure and Financial Accountability (PEFA), 2010 Review of MTBF and PIM Proposed Strengthening Strategic Planning and Public Investment Management Public Sector Wagebill Review Problems and prospects of public sector audit Survey of Public Perception of PFM Total for projects Project supervision and operational expenses Trust Funds Administrative fees (0.61% of total pledge and management fees) Total for non-project items TOTAL DISBURSEMENTS Balance Available for Disbursement Beginning Of Period End of period 3,327,707 25,265,440 24,569,153 29,146,892 24,569,153 21,937,733 2,642,050 685,657 45,412,536 Disbursements 19,577,020 1,316,656 203,879 601,501 25,186 26,394 70,147 116,950 Remaining Commitments 30,422,980 8,658,344 4,796,121 1,284,075 143,055 99,853 8,108 2,500,000 120,000 50,000 100,000 26,565,000 412,886 112,402,712 47,709,857 64,692,856 Expected Commitments 17,170,000 6,625,000 -

24

ANNEX 1:

DEEPENING MTBF AND STRENGTHENING FINANCIAL ACCOUNTABILITY PROJECT

Restructured Implementation Arrangement of DMTBF Project .

Steering Committee Donor

Finance Division

Project Executive Committee (headed by Additional Secretary,

Policy

Project Coordinator, MISC-with direct links to consultants (markedMacro in green)

Project Director/PMCU

Line Ministry

Director, Component-1

Director, Component-2 IT Manager

Director, Component-3

MTFF
FD Tech. Advisor

Legislation
FD Int. & (related National wings) Consultan FD

Budget/ Tech. Advisor

Debt Mgt.
FD Tech. Advisor

Planning Comm. PC Tech. Advisor FD

FSMU/ Tech. Advisor

IBAS++/ Tech. i

GFMIS
FD Tech. Advisor FD

PFF/ Tech. Advisor

Macro Eco Wing (MEW)

Int. & National Consultants

Int. & National Budget wing Consultants

Debt Mgt. Wing

Int. & National Consultants

Relevant wings of PC

Int. & National Consultants

CGA Sta

Int. & National Consultants

Int. & National Consultants

CGA Sta

Int. & National Consultants

PFF

Int. & National Consultants

25

DEEPENING MTBF AND STRENGTHENING FINANCIAL ACCOUNTABILITY PROJECT

A.

ANNEX 2: Results Framework and Monitoring

Overall assessments of the project ( Outcome / higher level output )

Component no.

Baseline 200910

Actual in FY 2010-11

Indicator

2011-12
Target Actual

2012-13
Target Actual

2013-14
Target Actual

2014-15 Source
Target Actual

Component no. 1

1. Macroeconomic stability Deviation between forecasts in the original MTMF and actual numbers for: o Budget deficit to GDP (as % of GDP ) o Current Account Balance (as % of GDP ) 2. Fiscal sustainability Change in the ratio of total interest payments/total government expenditure as compared to the baseline ratio

1.3 3.5

1.0 -2.7

0.9 -1.5

0.8 -1.0

0.7 -0.5

0.5 0.2

FD FD

0.146

16.7 %

24.8 %

29.5 %

28.1 %

30.3 %

FD

3. Improving accountability & transparency in budget process Percentage variance between the original budget and actual 8.1% 8.1% 7% budget out-turn for the previous FY 4. Strengthening linkage between planning and budgeting Budget documents are presented No No Yes in the unified format of revenue and capital(Y/N) No of LM prepared Medium Nil Nil 1 Term Strategic and Business Plans 5. Improving accounting and financial reporting Enhanced iBAS system No developed No New budget classification No system introduced No Identify instant cash position of the government through enhanced iBAS system No No No

6%

5%

5%

FD

Component no. 1

Yes 4

Yes 5

Yes

FD FD, LM

Component no. 2

No No

Yes (Parti al) -

Yes (Parti al) -

Yes (Parti al) Yes

FD FD FD

No

No

Yes

26

DEEPENING MTBF AND STRENGTHENING FINANCIAL ACCOUNTABILITY PROJECT

A.

ANNEX 2: Results Framework and Monitoring

Overall assessments of the project ( Outcome / higher level output )

Component no.

Baseline 200910

Actual in FY 2010-11

Indicator

2011-12
Target Actual

2012-13
Target Actual

2013-14
Target Actual

2014-15 Source
Target Actual

Component no. 2

o o

Submission and reappropriation of budget electronically from any pay point level Consolidated financial /fiscal reports produced from enhanced iBAS system: within deadline Consistent with GFS 2001 and COFOG

No No No No No No No No No

Yes (Parti al)

Yes

FD

Yes (LM) No

Yes No Yes

FD FD

6. Sustainable capacity building in Public Finance Management PFF becomes Center of Excellence in PFM related Trainings, research, publications and Capacity Building Post course evaluation provide evidence that skills and knowledge of the GoB in PFM increased substantially Yes (Parti al) Yes (Parti al) Yes (Parti al) Yes (Parti al) Yes (Parti al) Yes (Parti al)

Component no. 3

No

No

Yes

FD

Yes (Parti al)

Yes

FD

Acronyms *FD - Finance Division BB Bangladesh Bank NSD - National Savings Directorate

ERD - Economic Relations Division LM - Line Ministry PFF - Public Finance Foundation

27

DEEPENING MTBF AND STRENGTHENING FINANCIAL ACCOUNTABILITY PROJECT

.

ANNEX 2: Results Framework and Monitoring

B. Assessments of the project components (Output level)

Component 1: Strategic Policy, Planning and Budget Management

Baseline 2009-10

Indicator

Actual in FY 2010-11

2011-12
Target Actual

2012-13
Target Actual

2013-14
Target Actual

2014-15 Source
Target Actual

Multi-sector Macro-economic/ Forecasting Model with user guide developed (Y/N) Multi-sector Macro-economic/ Forecasting Model used for MTMF (Y/N) DMFAS 6 installed, integrated and implemented in all related debt management entities (FABA, TDMW, and BB) DMFAS 6 connected to the Government Financial Management Information System (GFMIS) (Y/N) Debt Policy Strategy Paper completed (Y/N) Cash plan showing monthly cash inflows and cash outflows and borrowing requirements prepared (Y/N) Improved system for maintaining systematic record of government investment in shares and equities established (Y/N) Lending database updated and interfaced with iBAS (Y/N)

No No

No No

Yes Yes

Yes

Yes

FD FD ERD,B B & FD ERD,B B, NSD & FD FD FD

No

No

Yes

No No No

No No No

Yes -

Yes -

Yes

Yes

No

No

Yes

FD

No

No

Yes

FD

28

DEEPENING MTBF AND STRENGTHENING FINANCIAL ACCOUNTABILITY PROJECT

.

ANNEX 1: Results Framework and Monitoring

Component 1: Strategic Policy, Planning and Budget Management

Baseline 2009-10

Indicator Program Budget structure and guidelines with identification and costing of outputs developed (Y/N) No of LM piloted Program Budget Guidelines on poverty and gender budgeting revised/enhanced (Y/N) No of ministries/divisions and other institutions under MTBF No. of ministries/divisions and other institutions prepared and submitted performance reporting No of LM prepared Medium Term Strategic and Business Plans No of LM & other institutions with dedicated budget wing/branch Internal Audit Manual developed and published (Y/N)

Actual in FY 2010-11

2011-12 -

2012-13 -

2013-14 Yes Yes

2014-15 -

Source FD FD

No No

No No

No

No

Yes

FD

33

57

59

All

All

All

Nil

Nil

FD FD, LM FD FD

Nil

Nil 36*

1 59 Yes

4 -

5 -

No

No

Secondary legislation (rules and guidelines) under the Public Moneys and Financial management Act 2009 drafted and adopted (Y/N) GFR and Treasury Rules reviewed, revised and adopted (Y/N)

No No

No No

Yes Yes

FD FD

* Not fully dedicated yet

29

DEEPENING MTBF AND STRENGTHENING FINANCIAL ACCOUNTABILITY PROJECT

.

ANNEX 2: Results Framework and Monitoring

Component 2: Public Financial Systems

Baseline 2009-10

Indicator

Actual in FY 2010-11

2011-12
Target Actual

2012-13
Target Actual

2013-14
Target Actual

2014-15 Source
Target Actual

Develop design and architecture of the enhanced iBAS Technical specification of enhanced iBAS Develop an interim system for treasury and cash management as designed by component 1 Electronic fund transfers system for: Pay & Allowances Pension & GPF Other Transfers Develop a web-based module for incorporating monthly accounts of self-accounting entities within iBAS

No No

No No

No No

Yes Yes (Parti al) Yes Yes

FD FD

o o o

No

No

No

FD

No No No No

No No No No

No No No No

Yes (Parti al) Yes (Parti al) Yes (Parti al) Yes (Parti al)

Yes Yes Yes Yes (Parti al) Yes (Parti al)

FD FD FD FD

30

DEEPENING MTBF AND STRENGTHENING FINANCIAL ACCOUNTABILITY PROJECT

.

ANNEX 2: Results Framework and Monitoring

Component 2: Public Financial Systems

Baseline 2009-10

Indicator

Actual in FY 2010-11

2011-12
Target Actual

2012-13
Target Actual

2013-14
Target Actual

2014-15 Source
Target Actual

Public Account Balances for all CAOs, DCAs and DAOs recorded in iBAS Automated reconciliation of bank balances between Bangladesh Bank and the Controller General of Account implemented Enhanced budget classification and codes with a view to introducing program budgeting

No

No

No

Yes (Parti al)

Yes (Parti al)

Yes

FD

No

No

No

Yes (Parti al)

Yes (Parti al)

Yes

FD

No

No

No

Yes (Parti al) Yes (Parti al) Yes (Parti al) Yes (Parti

Yes

FD

Rolling out iBAS connectivity to remaining LMs and field office levels FSMU strengthened and institutionalized

No

19* LM

Yes** ( all LM) Yes (Parti al) No

Yes

FD

No No

No No

Yes Yes

FD FD

Coverage of budget operationally

* Partial in 19 Line Ministries

** Centrally in all 59 Line Ministries

31

DEEPENING MTBF AND STRENGTHENING FINANCIAL ACCOUNTABILITY PROJECT

.

ANNEX 2: Results Framework and Monitoring

Component 3: Training and Capacity Building in PFM

Baseline 2009-10

Indicator

Actual in FY 2010-11

2011-12
Target Actual

2012-13
Target Actual

2013-14
Target Actual

2014-15 Source
Target Actual

PFF is self-sustaining administratively and Functionally offering demand based learning strategies Training Management Information System developed to support a structured approach to training management, M & E Conduct PFM and poli cy related research inaugurated through publication of PFF Journal Comprehensive PFM related Training Need Assessed Consolidated Training plans developed Modularised curriculum developed and delivered for important technical areas of PFM All courses maintain approved PFF standards for effective pedagogy Framework for M&E developed and Implemented

No

No

0%

0%

Yes (Parti al) 100%

Yes (Parti al)

Yes (Parti al)

Yes

PFF , FD PFF , FD PFF , FD PFF , FD PFF , FD

N Yes (Parti al) No No No No

N Yes (Parti al) Yes (Parti al) No No No

N Yes Yes Yes (Parti al) Yes (Parti al) Yes (Parti al)

Yes

Yes (Parti al) Yes (Parti al) Yes

Yes Yes (Parti al) Yes

PFF , FD PFF , FD PFF , FD

32

The World Bank Office, Dhaka Plot E-32, Agargaon, Sher-e-Bangla Nagar Dhaka, Bangladesh. Website: www.spemp.com Email: spemp@worldbank.org Phone: 8159001-14 Fax: 8159029-30