Document of The World Bank Report No: ICR1324 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-H2980) ON A GRANT OF SDR 22.1 MILLION (US$ 33.4 MILLION EQUIVALENT) TO THE ISLAMIC REPUBLIC OF AFGHANISTAN FOR A PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT January 31, 2012 South Asia Region Financial Management Unit Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
67
Embed
Document of The World Bank - Documents & Reports - All ... · Assessment of Outcomes ... PDO Indicator(s) Indicator Baseline Value Original Target Values (from ... (EVs) in AFMIS
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Document of
The World Bank
Report No: ICR1324
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IDA-H2980)
ON A
GRANT
OF SDR 22.1 MILLION
(US$ 33.4 MILLION EQUIVALENT)
TO
THE ISLAMIC REPUBLIC OF AFGHANISTAN
FOR A
PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT
January 31, 2012
South Asia Region Financial Management Unit
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
CURRENCY EQUIVALENTS
(Exchange Rate Effective December 2011)
Currency Unit = Afghani (AFN)
AFN 1.00 = US$ [0.21]
US$ 1.00 = [48.33] AFN
FISCAL YEAR
March 21 - March 20
ABBREVIATIONS AND ACRONYMS
AFMIS Afghanistan Financial Management Information System
ANDS Afghanistan National Development Strategy
ARDS Afghanistan Reconstruction and Development Services
ARTF Afghanistan Reconstruction Trust Fund
APR Annual Performance Review
CAO Control and Audit Office
CSR Civil Service Reform
DFID Department for International Development (UK)
EPAP Emergency Public Administration Project
FBS Fixed Budget Selection
FM Financial Management
GOA Government of Afghanistan
HRM Human Resources Management
IARCSC Independent Administrative Reform and Civil Service Commission
I-ANDS Interim – Afghanistan National Development Strategy
IDA International Development Association
ISA International Standards of Auditing
MIS Management Information System
M&EU Monitoring and Evaluation Unit
MOE Ministry of Economy
MOF Ministry of Finance
MTFF Medium Term Financing Framework
NGO Non Governmental Organization
PACB Public Administration Capacity Building
PAR Public Administration Reform
PEFA Public Expenditure and Financial Accountability
PFEM Public Finance and Expenditure Management
PFM Public Financial Management
PFMR Public Financial Management Reform
PMIS Procurement Management Information System
PPU Procurement Policy Unit
PRGF Poverty Reduction and Growth Facility
PRR Priority Reform and Restructuring
PSIB Programmatic Support for Institutional Building
RIMU Reform Implementation Management Unit
SBD Standard Bidding Documents
Vice President: Isabel M. Guerrero
Country Director: Nicholas J. Krafft
Sector Manager: Jennifer K. Thomson
Project Team Leader: Paul Edwin Sisk
ICR Team Leader: Paul Edwin Sisk
THE ISLAMIC REPUBLIC OF AFGHANISTAN
PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT
CONTENTS
Data Sheet
A. Basic Information ............................................................................................................ 1
B. Key Dates......................................................................................................................... 1
C. Ratings Summary............................................................................................................. 1 D. Sector and Theme Codes ................................................................................................. 2
E. Bank Staff ........................................................................................................................ 2
F. Results Framework Analysis ............................................................................................ 2 G. Ratings of Project Performance in ISRs .......................................................................... 6
H. Restructuring ................................................................................................................... 7
I. Disbursement Profile ........................................................................................................ 7
1. Project Context, Development Objectives and Design ...................................................... 8
2. Key Factors Affecting Implementation and Outcomes ........................................................... 13
3. Assessment of Outcomes ........................................................................................................ 17 4. Assessment of Risk to Development Outcome ....................................................................... 23
5. Assessment of Bank and Borrower Performance ................................................................... 24
In 1390 new technical audit manuals were prepared by IAD international advisors in
consultation and involvement of the senior auditors:
1.4 Supports for External Audit:
External audit Report has been submitted every 6 months to the President and Ministry
of Parliamentary Affairs for onward transmission to Parliament.
II. HUMAN RESOURCES CAPACITY DEVELOPMENT
2. 1 H.R. Capacity Development in Procurement:
3532 staff of line ministries and mustofiats has been trained in basic, intermediate, CIPS
and advanced and special courses during 1387-1390, indicating an average of 883 staff
trained per year.
2.2 H.R. Capacity Development in Financial Management:
In 1387, more than 500 and in 1388, more than 1300 staff of all central and provincial
budgetary units and Treasury interns were trained in the following areas.
AFMIS (Afghanistan Financial Management Information System)
Second Phase of AFMIS
New Charts of Accounts Training
Financial Reporting
Payment/Disbursement Procedures
Financial Planning and Commitment Control
Introduction to Treasury
Qatia
SDU Procedures
Results-based Management
Anti Corruption
Overview of Procurement
Taxes Relevant to Government Suppliers & Wage Withholding Tax
Training on the Computerized Payroll System CPS has been provided for 50 accounting
offices and 3 Provincial Mustofiats
In 1389, more than 700 staff and in 1390, 900 staff of Line Ministries, Provincial
Mustofiats, Line Ministries’ Controllers, Financial Officers of Mustofiats, Budget Dept
and Kabul Mustofiat were trained in the following areas:
COA, Data Entry
AFMIS Rollout Training
Problem Solving & Coordination W/Shop
COA and Budget Execution Presentation.
Financial Mgmt Framework
Workshop of ARTF , Procurement
Development Budget AFMIS Rollout training
2.3 H.R. Capacity Development in Audit:
Internal Audit:
33
In 1388, 74 staff including 27 from IAD, 37 from Treasury and 10 from other
departments received English Language training during this period. Additionally, a total
of 25 staff, 24 from IAD and 1 from another department were trained in IT.
In 1389, 10 IT Auditors and 5 other auditors were given preliminary ASYCUDA training.
Also, twenty five newly recruited auditors were given basic trainings in auditing by the
senior auditor. Furthermore, International Audit Advisor provided one month classroom
training to 20 newly recruited auditors on basic internal auditing, usage of toolkits,
introduction to Revenue, Customs, PFEM, and procurement & performance auditing.
In 1390, also 14 auditors were given on the job training by US Treasury Technical
Advisors in techniques for accomplishing an assessment, procedures for auditing revenue
processes & conducting risk assessment in line ministries. They were also provided with
comprehensive training of two weeks on process auditing and internal audit toolkits
effectiveness & usage.
81 internal auditors were trained in a three-month program in the following areas.
a) Customs, Revenue & Civil Service Law,
b) Procurement law & regulations,
c) Financial Mathematics,
d) Toolkits proper usage
External Audit:
In 1389, 120 staff (30 in English, 30 in IT courses, 15 on use of excel sheet for grants
audit, 15 on enterprise audit, 15 on frauds and corruption concepts, 15 on INTOSAI
Auditing Standards) were trained. In 1390, 75 (30 in English, 45 in IT courses) were
trained. All these training programs were conducted by the international consultants and
were appreciated by the participants and were useful to the auditors in carrying out their
work.
III. REFORM MANAGEMENT
3.1.1 Targeted Restructuring of Internal MOF Business Arrangements:
The re-structuring of all MOF Departments and re-grading and revision of job
descriptions for all staff, 6100, started at the end of 1387 in line with new Civil Servants
Law and pay and grading system. A proposal was developed and submitted to IARCSC
which was approved at the beginning of 1388 and was implemented then. Also, a further
review of the MOF taskheel took place in 1388 and an addition of 680 new positions was
added.
In 1389 the MOF taskheel was reviewed and as per the need of MOF, a number of 256
more positions with job descriptions were created. All the positions had approved
functions and reporting line. The new taskheel also included the newly established
Office of the Deputy Minister for Policy under which there are two General Directorates
(Policy Execution and Strategy Implementation)
3.1.2 Staff Re-grading under the GOA Pay/Grading Policy:
About 6740 MOF employees have been hired under the Pay and Grading System
accounting for 88% of the MOF total tashkeel. Progress is 88% at Headquarter, 87% at
Mustofiats and 89% at Provincial Customs. As mentioned above ongoing staff turnover
34
and security issue in some provinces has made it difficult to achieve 100% of the target.
To date, 95% of the HRMD staff has been hired under the Pay and Grading System.
3.1.3 Support for the HRM Department:
Indicator: 25. Number of human resource management staff completing duty-specific training in
their respective specialties (specialties approved and training conducted with IARCSC)
In 1387, totally 30 staff of HRMD were trained with assistance of IARCSC ( 20 staff on
pay and grading policy implementation here at MOF in a one-week workshop, 6 staff on
communications in a one-week workshop and 4 staff on recruitment in a four-day
workshop at IARCSC Training Center). In 1388, all staff of the HRMD received a one-
month general training on HRM with assistance of IARCSC.
In 1389, with assistance of RIMU, a two- month duty specific training was conducted for
all staff of HRMD in the areas of organization development, recruitment, performance
appraisal and record keeping, training and development and employees relations.
In 1390, all staff of HRMD were trained under different duty specific trainings. We have
also had trainings for sub-national level HR staff and staff of other MOF departments.
3.1.4 Preparation of New Human Resources Management Initiatives:
A PFM staff incentive program was drafted under PFMR II project, which would have
assisted in the reduction of the reliance on TA directly. However, the scheme was
removed from PFMR II project later and linked to PAR project of the IARCSC.
There is a reduction of 30% in the number of international TA consultants in the MOF. In
July 2008, there were 80 international TA, whereas in June 2011, it declined to 56.
3.156 Monitoring and Evaluation of Results:
MOF strategic plan was reviewed and updated, which went approved by HE Finance
Minister. As part of the MOF strategic plan, monitoring and evaluation (M&E)
framework was developed in line with MOF strategic goals and objectives. Baseline,
indicators and annual benchmarks were set and performance monitoring plan was
developed.
Annual performance review events were organized in 1388, 1389 and 1390.
IV DIRECT OPERATIONAL SUPPORT FOR PFM FUNCTIONS:
4.1 Direct Operations Support for Procurement:
The facilities for announcement of bidding opportunity, registered bidders and award of
contracts processed through ARDS were created and publications of bidding and job
opportunity as well as outcome of awarded contracts are now made on this site.
4.2 Direct Operations Support to Treasury Operations:
Bank reconciliations are completed within 20 days from month end for operating budget.
Monthly financial statements are posted on Treasury website within 25 days from end of
each month and the annual budget (Qatia) statements are submitted to National Assembly
by 22nd Sep. The WB grant and loan financial statements are submitted to the WB on
35
22nd Sep. Monthly cash plans are provided to stakeholders with accuracy of 85% on
monthly projections.
4.3 Direct Operations Support to External Audit:
Bank Project audit reports were submitted within 6 months of year-end, except for SY
1387, and are done to International Standards on Auditing and the financial statements
are IPS - compliant.
36
Annex 3. Economic and Financial Analysis
(including assumptions in the analysis)
N/A
37
Annex 4. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Names Title Unit Responsibility/
Specialty
Lending
Robert W. Crown Consultant EASPR
Deepal Fernando Senior Procurement Specialist SARPS
Shawkat M.Q. Hasan Senior Procurement Specialist AFTPC
Ali Hashim Consultant SARFM
Michael John Jacobs Consultant SARFM
Michael G. Jacobson Consultant CICRS
Ronald Points Consultant EASPR
Paul Edwin Sisk Lead Financial Management Spec SARFM
Donna Thompson Sr Financial Management Specia CTRLP
Peter-Armin Trepte Consultant OPCPR
Supervision/ICR
Robert W. Crown Consultant EASPR
Deepal Fernando Senior Procurement Specialist SARPS
Shawkat M.Q. Hasan Senior Procurement Specialist AFTPC
Michael John Jacobs Consultant SARFM
Leslie Isao Kojima Sr Financial Management Specia SARFM
Kenneth O. Okpara Sr Financial Management Specia SARFM
Ronald Points Consultant EASPR
Donna Thompson Sr Financial Management Specia CTRLP
(b) Staff Time and Cost
Stage of Project Cycle
Staff Time and Cost (Bank Budget Only)
No. of staff weeks USD Thousands (including
travel and consultant costs)
Lending
FY06 18.25
FY07 134.69
FY08 0.00
Total: 152.94
Supervision/ICR
FY06 0.00
FY07 0.00
FY08 73.20
Total: 73.20
38
Annex 5. Beneficiary Survey Results (if any)
N/A
Annex 6. Stakeholder Workshop Report and Results (if any)
N/A
Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR
Islamic Republic of Afghanistan
Ministry of Finance
Office of the Deputy Minister for Administration
Reform Implementation and Management Unit
Public Finance Management Reform Project
Borrower’s Evaluation Report
Project Name Public Finance Management Reform
Project
Region South Asia
Country/Area Afghanistan
Project ID P099980
Bank Team Lead Paul Edwin Sisk
Approval Date 29 May 2007
Effectiveness Date 15 Sep 2007
Closing Date 31 Dec 2011
Borrower Islamic Republic of Afghanistan
Implementing Agency Ministry of Finance
Main Loan/Credit # H-298
Total Project Cost US$ 33.4 Million
IDA Commitment US$ 33.4 Million
39
Amount Disbursed tbd After the Grace Period
I. Assessment of Operation’s Objective, Design, Implementation and Operational
Experience
The Public Finance Management Reform (PFMR) Project was launched in Sep 2007 subsequent
to the three other investment operations of the World Bank (WB), the Emergency Public
Administration Project (EPAP), US$ 10.0 million, GRTD-H 0060; the Second Emergency Public
Administration Project (SEPAP), US$8.4 million, GRTD-H 0550; and the Public Administration
Capacity Building project (PACB), US$27.0 million, GRTD-H 1440 to support the functioning
of a sound Public Finance Management (PFM) system in Afghanistan . The main objective of
these projects was to assist the Government of Afghanistan (GOA) to make good and transparent
use of public sector resources in the post conflict environment.
The PFMR project was for a period of three years. It was effective in Sep 2007 and was
supposed to end in Dec 2010; however, as per the recommendation of the WB January 2010
supervision mission to allow for completion of activity under two contracts which were
mobilized late i.e. Control and Audit Office (CAO) Advisor (PKF) contract, closing September
2011 and Treasury Advisor (Deloittes) contract closing March 2011 and request of Ministry of
Finance (MOF) to the WB so that the benchmarks under the project could be achieved, the
closing date was extended to Dec 2011.
The objectives of the PFMR Project were to: (i) develop an efficient and effective public financial
management system; and (ii) develop the human resource capacity of the MOF and CAO to
ensure better operation of public financial management. The objective of the project was well set
and continued to provide support for good progress made under the PACB project. To realize the
objective, the project had four well designed components: (i) Institutional Development, (ii)
Human Resources Capacity Development, (iii) Reform Management and (iv) Direct Operation
Support. The Reform Management Component was a new important activity that contributed a
great deal to a sound function of the PFM system through establishing and implementation of the
administrative reform in MOF, helping the MOF in strategic planning and monitoring &
evaluation of the reforms and achievements in line with the strategic plan.
The Project’s objectives and design were very supportive of the MOF/government goals for an
effective and functioning public finance management system in the country. The design of the
project and the activities and strategies determined therein were the key to an effective public
finance management system. As MOF intends to maintain both the effective public finance
management system both at central and provincial and a sound expenditure management system
to ensure fiscal sustainability, the Project directly addressed this issue and enabled MOF to
effectively manage public resources and bring reforms in the system.
The highlights of these four planned components as assessed are as below:
COMPONENTS
I. INSTITUTIONAL DEVELOPMENT
The Institutional Development Component included assistance to each of the major departments
within MOF and the CAO to develop and implement the structures, procedures and systems
required to carry out their mandates under the new Public Finance Management (PFM) legal
40
framework. Within MOF, the project assisted the Treasury Department with systems
development, assisted Procurement Policy Unit (PPU) to finish the procedures for procurement,
and assisted Internal Audit Department to develop work practice tools for government internal
audit. For the CAO, it provided them advisory services of external audit.
This component had the following sub-components.
1.1 Procurement Institutional Development and Social Accountability: This sub-component included institutional support for the newly created regulatory body, PPU.
The PPU required direct assistance to carry out its functions as per the Procurement Law. The
sub-component assisted PPU to develop an information website and a Procurement Management
Information System (PMIS). Under this sub-component, PPU was also assisted to develop SBDs,
RFPs and RFQs. The project also intended to assist PPU to develop procurement manual and
guidance notes; and to publish, analyze and disseminate review panel procedures, documentation
and decisions. About procurement accountability and disclosure, the project under this sub-
component intended to assist PPU to design an effective and strategic communication and
procurement disclosure strategy, taking into account the specific circumstances that prevail in the
country to raise awareness of the reform agenda and its implications within (i) the government
(politicians, parliamentarians, and public officials), (ii) the private sector (bidders, consultants
suppliers, etc) , and (iii) civil society at large (academia, NGOs, civilians, etc).
1.2 Treasury Systems Development and Roll-out: This sub-component included support for enhancement of the Afghanistan Financial Management
Information System (AFMIS) to meet the increasing demands on the Treasury as well as line
ministries and Mustofiats that would include purchasing, fixed asset and accounts receivable
modules as well as Human Resources Management Information System (HRMIS). It also
included support for the roll out of the AFMIS so that transaction processing and payment
authorization may be decentralized but that payment processing would remain centralized within
Treasury and the Mustofiats. The target for the roll out was five or six line ministries that
accounted for the majority of public sector non-military and non-policing functions and six
Mustofiats.
1.3 Internal Audit Work Practices: As the control of internal audit was transferred from CAO to MOF under the article# 61 of the
Public Finance and Expenditure Management (PFEM) Law and its financial regulations, the sub-
component included support for the development of the Internal Audit Department (IAD) of the
MOF. This consisted of development of improved audit methodology, further development and
roll-out of internal audit procedures and plans to the line ministries and provinces, and
improvement of the capacities of the internal audit staff through on the job training. The sub-
component also assisted with establishing a fraud investigation unit in the MOF, IAD, developing
and launching its basic operational skills and preparing a road map for developing specialist fraud
investigation processes in Afghanistan.
1.4 Supports for External Audit:
This sub-component included advisory services for the CAO to improve the skills of the audit
staff taking into consideration the reforms taking place in CAO and support in implementation of
the new audit law. It also included on the job trainings. The project would also finance improved
physical infrastructure including information & communication technology (ITC), office
furnishings and on line access to AFMIS. This sub-component also consisted of support to
establish the Parliamentary Oversight Committee (PAC) function, and reinforce and reinvigorate
the accountability of the Executive in the management of public finances to the Legislature
through a timely, comprehensive, and methodical review of audit reports and audited accounts of
the government. The CAO would provide management assistance, training, and operating support
to build the capacity of members of the parliamentary committee in their oversight function as
41
well as in supporting secretariat and technical assistance aimed at strengthening the
administrative support to the PAC.
II. HUMAN RESOURCES CAPACITY DEVELOPMENT
This component consisted of providing consultants, training opportunities and materials for the
development of skills of MOF staff, of line ministry staff in procurement and financial
management and of staff of the CAO. By MOF, it is considered to be one of the most important
strategies under the project which helped in attainment of a sustainable PFM system in the
country. This included the following sub-components.
2. 1 H.R. Capacity Development in Procurement:
In particular at sub-national level, more private sector workshops specific training programs for
the PPU staff and a training program for dispute panels
2.2 H.R. Capacity Development in Financial Management:
This sub-component would assist the MOF Treasury Department and the Administration
Departments of selected line ministries in developing staff capacity in financial management
functions. In addition to providing trainers and materials for duty specific training, for developing
a pool of staff with higher accounting skills, the project would also provide funds to reimburse
Treasury staff for attending classes conducted by private entities such as the ACCA.
2.3 H.R. Capacity Development in Audit: The project would complete the classroom training in introductory accounting and auditing that
began under the PACB project for the first batch of internal auditors of the MOF and staff of the
CAO. Additionally, a stream of internal auditors and CAO auditors intended to provide
leadership and more expert skills would be financed for advanced training. The ACCA
professional accountant training now available in Kabul could be used for this purpose for the
staff who would become senior leaders in the IAD and CAO
III. REFORM MANAGEMENT
This component consisted of the support to the Reform Implementation & Management Unit
(RIMU) of MOF in developing annual work plans which would assure the coordination of
actions proposed in various departments, monitoring implementation of these actions so that the
overall results of the project and the MOF Strategic Plan are achieved. It also included support for
RIMU in assuring that new personnel policies for the civil service being developed and supported
by the Independent Administrative Reform & Civil Service Commission (IARCSC) are properly
integrated into the MOF’s own Human Resources Management Department (HRMD). The key
sub-components under this were:
3.1.1 Targeted Restructuring of Internal MOF Business Arrangements:
The RIMU would assure that the various functions and relationships between targeted MOF
departments were organized to be mutually supporting in providing efficient PFM. It included
working of RIMU with Department Heads and staff to implement any restructuring that is
recommended and pursuing a “change management “methodology.
3.1.2 Staff Re-grading under the GOA Pay/Grading Policy:
It included support for RIMU to arrange with the IARCSC for applying the new grade and pay
policy of the government with support provided through the Civil Service Reform Project. Staff
of the MOF HRMD would be trained in creating and grading job descriptions as part of the
process.
3.1.3 Support for the HRM Department:
42
The RIMU would facilitate the strengthening the HRMD to position it to perform new personnel
management functions being developed under the GOA civil service reform strategy.
3.1.4 Preparation of New Human Resources Management Initiatives:
The MOF would be expected to make three major strategic decisions to sustain the effects of
training, pay reform, improved personnel management : (1) Initiation of “schemes of service” to
permit the MOF to be competitive in recruiting and retaining professionals; (2) Reducing the
reliance on internationally recruited technical assistance in line functions ; (3) Introducing
Gender-Sensitive Personnel Practices..
3.1.5 PFMR Project Coordination and Administration:
The RIMU would coordinate the implementation of the components of the project. It would also
coordinate through the use of the annual work plan for MOF, the implementation of the PFMR
project with the projects being financed in parallel, for example, the DFID support to the Budget
Department.
3.1.6 Monitoring and Evaluation of Results:
The RIMU would temporarily incorporate the MOF Monitoring and Evaluation Unit to assure
coherence between monitoring and evaluation of results and the development and re-development
of reform work programs.
IV DIRECT OPERATIONAL SUPPORT FOR PFM FUNCTIONS
This component consisted of assistance in providing direct operation support to PFM Functions.
Because of the limited progress in capacity building of civil service skills in PFM, there was a
need for continuing the direct operations support under a new PFM Technical Assistance
operation. It was projected that by the end of the project the nature of support needed to
procurement, treasury and audit would have evolved to that of supervision, policy advice and
assistance for reform rather for the execution of the day to day operations.
Contribution to building the skills for Afghanistan public sector was planned by two means: (i)
on the job training for civil servants, who will be acquiring basic knowledge under the HR
Development component of this project, with the direct operations consultant firms and (ii) by
including in the technical assistance teams under the direct operations support contracts a larger
share of local advisors with concrete deliverables for the transfer of knowledge and skills for the
operation of the PFM systems. It included the following sub-components:
4.1 Direct Operations Support for Procurement:
The services of a central procurement facilitation consultant at Afghanistan Reconstruction and
Development Services (ARDS) and operation support for the PPU: A different approach was
planned to be envisaged to be followed under the current proposed project, whereby the Team
Leader of the consultants’ team would be located at the ARDS and all other key staff would be
located at the line ministries. Through this modified approach, the procurement facilitating
consultant would not only be able have better interaction with the line ministries, but would also
be able to mentor the line ministries’ procurement staff. For the PPU, it included receiving
direct support through the funding of its director (an international consultant) and core staff who
were tasked with setting up the PPU and making it operational. This short term support was
planned to continue under this component to enable the PPU to begin its functions while a full
complement of local staff were being recruited and trained in all the required functions.
4.2 Direct Operations Support to Treasury Operations:
The project would continue to provide operational support for the Treasury functions through the
services of internationally recruited firms. Activities under this sub-component included:
operational support and on the job training in accounting and reporting, cash management,
43
payroll processing, grant management, payment processing operation and maintenance and
operation of AFMIS.
4.3 Direct Operations Support to External Audit:
This sub component included financing the consultant services to conduct with the CAO the
external audit of donor projects. An important objective was achieving compliance with
international standards of financial management including the use of the International Standards
of Auditing (ISAs). CAO would also make greater use of the advisor in audit of government
financial statements.
II. Assessment of Outcome of the Operation against Agreed Objectives
The objectives of the PFMR Project were to: (i) to develop an efficient and effective public
financial management system; and (ii) develop the human resource capacity of the MOF and
CAO to ensure better operation of public financial management.
The Project results were measured against 6 outcome and 34 output indicators associated with the
project objectives and components activities. Actual performance against the project indicators
and annual benchmarks under each component is satisfactory. This has resulted in significant
improvement and positive impact on MOF performance enabling it to move towards attainment
of its strategic goals and creating an enabling environment for the donor’s assistance to be
channeled through government.
Outcome Indicators
1. Coherence of treasury and revenue estimates with ANDS priorities and MTFF, 2. Timeliness
and predictability of treasury and revenue preparation and execution, 3. Number of ministries
managing some PFM functions independently with ex post control, 4 Percentage of GOA Core
Budget under improved line ministry and Mustofiat units, 5. Percentage of national payroll with
automated payroll processing, 6. Level and perception of good governance in PFM operations
Overall, the performance against the outcome indicators was satisfactory and most of the
benchmarks have been achieved except for line ministries to manage PFM functions
independently, the benchmark for which was 6 line ministries by the end of 1390.
Monthly cash plans are provided to stakeholders with accuracy of 85% on monthly projections.
The capacity of line ministries to manage independently with accountability the PFM functions
remains weak to delegate them additional PFM functions for independent implementation. Line
ministries cannot yet conduct comprehensive financial management. High rejection rate,
outsourcing of core functions to consultants, and lack of adequate internal audit in line ministries
are examples of this. All line ministries currently have access to prepare operating budget
Expense vouchers (EVs) in AFMIS (temp save). Allotments, commitments, and payments are
posted in a centralized manner in the Treasury and provincial Mustofiats.
Concerning indicator no 4, it is worth mentioning that hundred percent of operating budget
execution is captured in AFMIS on real-time transaction processing, including provincial budget
execution. For development budget transactions are recorded on real time basis in the center.
About automated payroll system, as of end of 2nd quarter 1390, more than 622,000 government
employees have been covered, out of whom 406,000 government employees receive their salaries
through direct deposit in their bank accounts, which is fifty percent of the payroll. Payrolls for the
staff having bank deposit are calculated mostly using specific systems or Excel, which comprise
over 50 percent of tashkeel.
44
Related to level and perception of donors of the good governance in PFM operations, regular
PFM assessment is going on. PFM capacity assessment in 14 line ministries has been launched to
prepare for the next steps in PFM capacity building. The PFM systems have been evolving and
new procedures implemented through capacity building and training. The donors have sponsored
PEFA assessment, which places Afghanistan higher than some other middle-income countries.
Output Indicators
1. INSTITUTIONAL DEVELOPMENT
1.1 Procurement Institutional Development & Social Accountability:
Indicators: 7.Number of line ministries and provincial offices of line ministries conducting
stand-alone procurement, 8. Volume of contracting under line ministries and provincial offices of
line ministries conducting stand-alone procurement, 9. Reviews of feedback from public
awareness campaign completed.
Performance under these indicators is rather satisfactory to MOF. End of the project benchmark
was 13 line ministries to conduct stand alone procurement. While the benchmark has yet to be
achieved, efforts are underway to realize the target. Most of the targeted line ministries couldn’t
meet the criteria for standalone procurement due to different factors such as lack of retention of
the qualified staff, lack of support of the ministries’ leadership to the procurement departments
and involvement of different actors in the procurement activities. At provincial level, six
provinces are targeted for institutional development. However, the main issues are ambiguity in
the procurement thresholds for the provinces, lack of provincial budget and inconsistency
between recent cabinet decision and procurement law regarding thresholds for the ministers and
governors.
Regarding volume of contracting, the PPU website and PMIS are developed and operationalized,
which will capture the data and provide the results. However, due to lack of cooperation, only
few ministries have started to feed data into the system. The main challenge is retention of the
trained staff in PMIS. About public awareness campaign, PPU has conducted three workshops
for the private sector. Details are as below:
Institutional development and capacity assessment for standalone procurement of six line
ministries; (Public Health, Rural Rehabilitation and Development, Agriculture, Education,
Energy & Water, Public Works and Finance) was done out of which Ministries of Education,
Agriculture and Public Health only in Consultancy Services were certified for standalone
procurement. During 3rd Quarter of 1390, Ministry of Agriculture was re-assessed for capacity
certification and report is under process. It is worth mentioning that for the institutional
development of the line ministries a Joint Advisory Committee (JAC) comprised of
representatives of PPU, IARCSC and line ministries has been constituted.
Also, the institutional development of seven more line ministries (Transportation,
Communication and IT, Counter-Narcotics, Higher Education, Urban Development, Mines and
Commerce) is under process. All seven line ministries have submitted their report on current
procurement structures with proposed procurement structure and budgetary information as was
required. PPU has worked and finalized Institutional Development report for Ministry of
Communication and IT and the rest are under finalization stage. Furthermore, capacity
45
assessment of these ministries will be done for standalone procurement after their institutional
development in addition to those which were not certified as mentioned in the first paragraph.
At provincial level, for the institutional development, six provinces (Kandahar, Herat, Balkh,
Bamyan, Nangarhar and Kunduz) are targeted for finalization of a unified Procurement structure.
PPU website (www.ppu.gov.af) and PMIS have been developed and operationalized. The
website contains important information as Public Procurement Law, Rules of Procedures,
Circulars, SBDs, RFPs, RFQs and other documents issued by PPU from time to time and it is
properly functional. Line ministries staff are trained on the usage PMIS and user name and
password have been created for them, through which they can enter the data (awarded contracts,
bidding opportunities and job announcement). However, due to lack of cooperation, only few
ministries have started to feed data into the system. Therefore, PPU technical staff are visiting
each line ministry in order to ensure that the trained staff of line ministries in PMIS are entering
data into PPU website properly and resolve any problem occurred.
Regarding public awareness campaigns, it is worth mentioning that three workshops on appeal
and review mechanism, bidding process, public procurement law, rules of procedures and
preparation of SBDs were held at Civil Service Institute, Ministry of Finance and Afghan
Builders Associations during the life of the project. In these workshops, around 150 businessmen,
suppliers and contractors participated.
1.2 Treasury Systems Development and Roll-out:
Indicators: 10. Number of ministries managing some PFM functions independently with ex post
control, 11.Number of PFM units in mustofiats which have implemented restructuring and new
processes of ADB study
Performance in line with above indicators is satisfactory, in particular the second one. The first
indicator is also part of the project agreed outcome indicator and has been redundantly used as
output indicator in the project. Additional AFMIS functions have not been added during the time-
span of the project not allowing delegating additional tasks to line ministries. The systems
development has been mostly limited to expanding the functions that could be completed by the
staff of the Treasury, while the additional functionality offered for line ministries has not been
adopted as practicable. Details of the AFMIS and progress of the 11th indicator are as below:
AFMIS connectivity, which was established for the last of 34 provinces during the early part of
FY 1389, continues to be the backbone for ensuring sound budgetary and payment controls
countrywide. These provinces have been provided with full functionality of AFMIS, including
real time posting (budget execution) and check generation for operating budget. All line
ministries in the centre have been connected to AFMIS and are performing temp save for
operating budget execution. AFMIS coverage at the centre caters to all active budget entities,
which are on the AFMIS network. The central ministries in Kabul have also been provided with
online connection with report retrieval and transaction processing capabilities. AFMIS currently
caters to capturing all the budget execution on real-time basis. The plan is to start roll out of
AFMIS to the secondary budgetary units. The initiative has been taken to begin the process in
providing AFMIS nodes to MoI in the provincial centers and the required equipment have been
setup for delivery.
Based on the assessment of the current IT environment and the envisaged improvements
necessary for supporting AFMIS setup and other treasury initiatives including Electronic
Payment systems, online revenue collections, auto reconciliation etc., the Treasury has
undertaken a program to establish a world class data center. An IT advisor under the project has