RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING THE MULTI DONOR TRUST FUND FO THE INSTITUTIONAL REFORM AND CAPACITY BUILDING PROJECT TO THE

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF Report No: THE MULTI DONOR TRUST FUND FO THE INSTITUTIONAL REFORM AND CAPACITY BUILDING PROJECT TO THE REPUBLIC OF SIERRA LEONE GRANT NO. TF JUNE 30, 2011

2 CURRENCY EQUIVALENTS (Exchange Rate effective April 6, 2011) Currency Unit = EUR US$ = EUR Fiscal Year January 1 December 31 ABBREVIATIONS AND ACRONYMS IRCBP PDO MDTF DFID GoSL EC EUR US$ Institutional Reform and Capacity Building Project Project Development Objective Multi Donor Trust Fund UK Department for International Development Government of Sierra Leone European Community Euros United States Dollars Regional Vice President: Country Director: Sector Manager / Director: Task Team Leader: Obiageli Katryn Ezekwesili Ishac Diwan Anand Rajaram/Marcelo Giugale Roberto O. Panzardi 2

3 SIERRA LEONE INSTITUTIONAL REFORM AND CAPACITY BUILDING PROJECT P CONTENTS Page A. SUMMARY... 4 B. PROJECT STATUS... 4 C. PROPOSED CHANGES

4 RESTRUCTURING PAPER SUMMARY 1. This Restructuring Paper (RP) seeks your approval to amend the Grant Agreement (Multi Donor Trust Fund- MDTF-TF No. TF056653) co-financing the Sierra Leone Institutional Reform and Capacity Building Project. 2. The disbursement under the Sierra Leone Institutional Reform and Capacity Building Project (IRCBP) closed on March 31, The proposed changes do not affect the IRCBP Project Development Objective and involve scaling up support for Sierra Leone s successful decentralization program under the Grant Agreement. 3. Specifically, we are requesting: (i) (ii) (iii) the amendment of the Grant Agreement to reflect additional funds to be administrated by the Bank based on last call of funds; the amendment of the Grant Agreement to accommodate additional resources approved by the Administrative Agreement signed by EC on May 30, The total amount of the additional resources are EUR 400,000 million; and the amendment of the Grant Agreement to reflect the reallocation of funds to be administrated by the Bank. 4. The additional financing to support this scaling up of the IRCBP Project is provided by EC through the MDTF with an estimated value of EUR 1,310,000 million (US$1,915,875 million equivalents). 5. The project implementing entities are in full compliance with the Bank s financial management requirements, and there are no overdue audit reports and interim financial report from these entities. PROJECT STATUS 6. An IDA grant (of SDR 16.8 million - $25.12 million) for ICRBP was approved on May 11, It became effective on July 6, The PDO is to support the postconflict Government of Sierra Leone (GoSL) to establish a functioning local government system and improve inclusiveness, transparency and accountability of overall public financial management at all levels of government. The original Project had four components: (1) Decentralization and Capacity Building Component to support the detailed design and implementation of the GoSL decentralization program, (2) Public Financial Management (PFM) Reform Component to support implementation of the 4

5 GoSL PFM reform program, (3) Development Learning Center (DLC) Component to establish an information, communications and training center, combining a Global Development Learning Network site and a Development Information Center, and (4) IRCBP Coordination Component to ensure that IRCBP implementation complies with the World Bank s fiduciary guidelines and to ensure effective implementation of the first three components. The original closing date of June was amended to March 31, 2009 in January A Grant Agreement (MDTF) was established in March 2006 to provide cofinancing for Components 1 and 4 of IRCBP until January 31, The MDTF is funded by the European Commission (EC) and UK Department for International Development (DFID) which committed Euro 9.10 million and GBP 7.95 million respectively, and has a current estimated total value of about US$ 23.7 million. Disbursement from the MDTF commenced in October The MDTF was amended in March 14, 2011 to reflect changes in the original result framework and extensions of the Closing Date up to June 30, 2011 and the administrative agreements signed with EC and DFID. As of April 6, 2011, the Project has disbursed about US$ 21,476, million which represents about 97 per cent of the original amount committed. The Project has committed an additional amount of US$1,639,894 million equivalent, which will be disbursed before the project closes on June 30, The disbursement of the IDA credit of SDR 16.8m was effectively completed by March 31, 2009 with a total of US$ million disbursed as at IDA Grant closure on November 4, The Project has been rated Satisfactory in terms of achievement of the PDO as almost all the targets with respect to the PDO indicators were achieved. Key achievements include: Decentralization Successful completion of two rounds of democratic local elections. 19 functioning local councils established, with participatory planning operating in all councils, and financial management standards met in most councils. Maintenance of service delivery levels in five key services following devolution, in most councils. Establishment and operation of an intergovernmental fiscal transfer system on an equitable and transparent basis which is universally accepted. Public Financial Management Establishment of a modern regulatory framework for public finance through adoption of the Government Budget and Accountability Act 2005 and Public Procurement Act Implementation of the Integrated Financial Management Information System (IFMIS) as the Accountant General s core accounting system, and roll out to 11 ministries, departments and agencies (MDAs). 5

6 Removal of the substantial backlog in submission of annual financial statements to the Auditor- General, and achievement of timely in-year accounting and financial reporting. Establishment and operationalization of two procurement oversight bodies 1, integration of procurement planning into the budgeting process, and completion of training and certification of procurement staff in central and local government. PROPOSED CHANGES Amendment of the Grant Agreement (MDTF) 10. On May, 2011, the GoSL asked for the last call of funds und the Grant Agreement, final tranche of EUR 910, On March 7 th, 2011, the GoSL requested EC the reallocation of contingency reserves of EUR 400,000 foreseen in the Grant Agreement between the GoSL and EC (see Attachment 1). The GOSL letter explained the 2010 Annual Work Plan had included a provision of US$500,000 for the supply and installation of solar power system for the office complexes of each of the six (6) Local Councils in the more remote parts of the country. The Local Councils identified are Bonthe Municipality, Bonthe District, Kailahun District, Pujehun District, Koinadugy District and Hambia District. Also, the letter informed that the GoSL has carried out a survey to determine power needs and costing of the supply and the installation and estimated unit cost of US$163,865 for each solar equipment at a total cost of US$1,083,190 resulting in a cost overrun. 12. On April 5, 2011, the EC concurred with the GoSL s proposal to the use of the contingency funds of EUR 400,000 to fully cover the cost of US$ 1,083,190 for the 6 Local Councils. The GoSL subsequently requested the amendment to the Administrative Agreement with the Bank. Bank response accepting to administer the resources is attached. 13. On May 16, 2011, the GoSL requested the reallocation of funds within the Grant Agreement. The reallocation of proceeds will result in the increase of funds in the category of goods and operating costs of the project. 14. The Bank team considers the proposed reallocation: (i) as a Project change within the meaning of OP/BP (Project Supervision); (ii) does not involve the use of cost of Project savings, specifically as per footnote 3 to OP 13.25; and (iii) does not involve any new change to the original project description. Further, the team considers the proposed reallocation to be a minor one within the meaning of OP/PB (Para. 21 of the BP). Finally, the proposed reallocation will not result in significant changes to the Project's description, objectives, or associated outcome targets 6

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8 Table 1: Proposed Allocation of Grant Proceeds Expenditure Category Amount of the Grant Allocated (In U.S. Dollars) as per 4 th Amendment Amount Disbursed Proposed Allocation of Grant Process (in US$ Dollars) Percentage of Expenditures to be Financed Civil Works 5,467,157 4,937, ,821, % Goods 1,188,512 1,353, ,426, % Consultant Services including Audit, and Training 8,794,992 8,773, ,847, % Local Government Development Grants 6,417,967 5,501, ,907, % Operating cost 1,901,620 1,926, ,054, % TOTAL 23,770,248 23,651, ,057,398 8