PFM MDTF Monitoring and Evaluation Report1 As of April 2008

BACKGROUND The Public Financial Management Multi Donor Trust Fund (PFM MDTF) was established to support and enhance GFMRAP. Currently, the European Commission and the Government of the Netherlands have made commitments to the trust fund totaling $18M over a period of six years. PFM MDTF provides funding for complementary and flexible support to all stages of GFMRAP, primarily through key technical and advisory assistance and institutional capacity-building support. The trust fund also supports closer and more effective coordination among development partners that are active in public financial management. Seven program areas are used to allocate funds across the various PFM reform areas. These program areas are used as the basis for planning, budgeting and reporting under the trust fund. To finance and administer activities under the various program areas, six Child Trust Funds (CTFs) have so far been established. Two of the CTFs are executed either by the Government, four by World Bank. Additional CTFs are expected to be created as new activities are identified. The two GOI-executed CTFs are also providing support two relatively new MOF units: Pushaka (Center for Policy Study and Harmonization) and Pusintek (ICT Center), both of which are under the MOF Secretariat General. The GOI-executed Child Trust Funds are administered through the GFMRAP Project Support Services Unit. The proposed three areas of emphasis in the 2008 PFM MDTF strategy note are: (a) revenue administration reforms to increase tax revenue, (b) modernization of budget preparation, budget execution and treasury management processes and systems, and (c) civil service reforms and organizational reforms under the Ministry of Finance.

PFM MDTF FUNDING SOURCES 1. 2.

IBRD Loan for GFMRAP IDA Credit for GFMRAP

3. 4. 5.

PHRD Japan Grant for GFMRAP Child Trust Fund 2 (Note 1) Child Trust Fund 6 PHRD Grant for the Preparation of Second Government Financial Management and Revenue Administration Project WB-executed Child Trust Funds (1,3,4 and 5)

6. 7

Loan/Grant No. 4762-IND 4026-IND

Register No. 10694001 10695701

TF053556 TF090047 TF091414 TF058019

70547101 70707101 70708801

Date Signed Amount 22-Dec-04 USD 55,000,000 22-Dec-04 USD 5,000,000 (SRD 3,410,000) 22-Dec-04 USD 5,000,000 17-Apr-07 USD 3,848,100 USD 1,350,000 12-Apr-07 USD 1,000,000

USD 4,987,650

1

The evaluation of this program’s contribution to the performance/outcome indicators of GFMRAP will be incorporated into the May 2008 (semi-annual) M&E report for GFMRAP.

PFM MDTF M&E (as of April 2008)

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CHILD TRUST FUNDS UNDER PFM MDTF 1. 2. 3. 4. 5. 6.

CTF1 - Advisory Services to Support PFM&RA Reforms CTF2 - Public Financial Management & Revenue Administration Reform Support CTF3 - Visibility CTF4 - Human Resource Management Reform and Communications CTF5 - Expenditure and Revenue Policy CTF6 - TA to National Single Window Total

Executed by Bank GOI Bank Bank Bank GOI

Date Approved Budget in USD Feb '07 & June '07 2,577,500 Feb '07 & June '07 Feb '07 June '07 June '07 Nov '07

5,370,700 180,150 760,000 1,470,000 1,350,000 11,708,350

TRUST FUND ALLOCATION BY PROGRAM AREA PROGRAM AREAS

1 - WB

Budget preparation and A execution B Revenue administration C Legislative oversight D

G

CHILD TRUST FUNDS 3 - WB 4 - WB

5 - WB

6 - GOI

Total

1,032,500

1,626,100

970,000

3,628,600

601,500

939,300

400,000

200,500

606,000

806,500

383,500

649,767

1,033,267

195,500

649,767

164,000

899,767

1,350,000

3,290,800

Procurement and audit reforms

E Policy capacity development F

2 - GOI

100,000

945,267

Change management and HRM Management strategy and visibility

760,000

1,823,767

180,150 Total

2,577,500

5,370,701

180,150

180,150 760,000

1,470,000

1,350,000

11,708,351

PROGRAM AREA A: BUDGET PREPARATION AND EXECUTION Expected Outcomes: Improved budget planning and development in selected ministries, improved budget implementation, better control over resources

CTFs: 1, 2, 5

Key Clients: DG Treasury, DG Budget, BAPPENAS 2007 Activities:

Results:

• Strategic, technical and analytical consultancies (e.g., PBB, MTEF) • Ongoing technical advise on the treasury system (SPAN)

• Substantive moves toward policy oriented budget • Programmatic MTEF was piloted for MOF for 2008 budget

• Public expenditure and financial accountability assessment (PEFA) • Learning events, workshops and trainings (250 government officials)

• PEFA has established a reliable baseline assessment on PFM • Informal task force between DGB, DGT and BAPPENAS formed to lead budget reform implementation

• Coordination of units involved in the budget reforms

Authorized Budget: $3,728,600 Budget realization: 15% ($561,004)

PFM MDTF M&E (as of April 2008)

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A.3 – Treasury Modernization (DG Treasury)

A.2a - Budget Planning and Development (Bappenas) A.2b – Budget Planning and Development (DG Budget)

Objective: Strengthening of capacity, international comparative knowledge, and intra- and inter-agency cooperation in the full budget cycle, leading to: (a) improved budget planning and development in selected line ministries, (b) improved budget implementation, and (c) better control over and improved utilization of resources Component Activity Status Supported Advisory services on Consultancies are being provided to support development and introducing elements of PBB implementation of a PBB system, including enhancing of (WB-executed) performance information contained in budget request forms (RKA-KL). Reports on institutionalizing program assessments and on program design and structure were submitted to Bappenas. Advisory services to implement MTEF

Consultancy has been completed and a technical report submitted on piloting of programmatic MTEF in the MOF.

Capacity-building to advance understanding on PBB and MTEF (WB-executed)

Public expenditure and financial accountability (PEFA) survey (WB-executed)

Seminars and workshops held: (a) international experience in budget reforms; (b) US experience in performance management; (c) PBB pilot implementation; (d) development of performance indicators for MOF; (e) MTEF and PBB design and implementation experience in South Africa, and (f) budget reform strategy for Indonesia. Altogether, up to 250 officials participated in these training and workshops. Report for this TA was completed in Dec 2007 and is under review rd by WB and MOF. Report is to be finalized in 3 quarter of 2008. The PEFA assessment has established a reliable baseline of the present state of PFM performance in Indonesia.

Analytical input to the 2007 Report on Millennium Development Goals (WB-executed)

TA team provided TA on quality control and checking of preliminary outputs by Bappenas. First-stage preparation for longer term TA roadmap to support central budget monitoring and evaluation has been started.

Analysis of reconstruction finance and disaster budgeting (WB-executed)

The report has been formally approved for WB-publication.

Deepening fiscal reform in other core areas (ad hoc analytical activities) (WB-executed)

Health sector PER is undergoing review. A detailed note on the expenditure and revenue implications of movements in international crude oil prices is being finalized.

Provision of equipment for DB Budget (GOI-executed)

TOR for $100,000 worth of computer equipment is to be prepared.

Advisory services on SPAN (WB-executed)

A senior budget adviser has been assigned to work with the DG Treasury on SPAN.

Overseas Training for officials from DG Treasury (also from DG Budget, BAPPENAS, and pilot ministries) (GOI-executed)

Under preliminary planning.

PFM MDTF M&E (as of April 2008)

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Support to the IVV consultancy assisting DG Treasury in connection with SPAN (GOI-executed) Capacity building program on accounting standards (GOI-executed) Provision of equipment for DG Treasury (GOI-executed)

A fifth contract addendum is currently in effect until July 31, 2008. $1,000,000 additional budget is available from the MDTF child trust fund #2.

DG Treasury has expressed preference for this activity to be focused on training rather than consultancy. TOR for $100,000 worth of computer equipment is to be prepared.

PROGRAM AREA B: REVENUE ADMINISTRATION Expected Outcomes: Improved tax administration, improved investment climate by reducing tax compliance costs of businesses

CTFs: 1, 2, 5, 6

Key Clients: DG Tax, DG Customs, NSW Task Force 2007 Activities:

Results:

• Consultancy packages on VAT administration, NSW design, IT strategy for DG Tax • International comparison study on tax audit arrangements • Advisory support to the NSW Team • TA package to develop NSW operational model (being procured)

• Conceptualization of next phase of tax administration reforms • Helped resolve issue of access of supreme auditor to tax records

• TA package for tax reform roadmap (shelved)

Authorized Budget: $3,290,800 Budget realization: 6% ($201,643) Objective: Improving base-line knowledge on the state of modernization & reform at DG Tax and thus a foundation for embarking at reforms aiming at: (a) improved tax administration; (b) better control over and improved utilization of resources, and (c) improved investment climate by reducing tax compliance costs of businesses (large and small). Component Supported

Status

Simplification of VAT administration system (WB-executed) Advisory services to DG Tax to assist in the design and implementation of ICT strategy (WB-executed)

Implementation of the TOR for this follow-up to the Jan 2007 IMF mission is underway.

B.2 – Tax Administration Modernization (DG Tax ) (also supporting Menko EKUIN)

Activity

PFM MDTF M&E (as of April 2008)

Consultant started assignment in Oct 2007.

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Advisory services on National Single Window (NSW) implementation (WB-executed) Consultancy to prepare comprehensive work program on future analytical support (WB-executed) Analytical support related to revenue policy on rapid response basis (WB-executed)

An international NSW expert is providing TA on international practices on service level agreements and single window fee arrangements. A national trade expert is providing assistance on review of agency regulations and cost/fee structures affecting NSW. Program manager was hired in Oct 2007.

Modeling and analysis of the fiscal impact of movements in international oil prices has been conducted. Larger work program is awaiting GOI counterpart inputs.

Consultancy to develop a transformation roadmap to support tax administration reform (GOI-executed) Provision of equipment for DG Tax (GOI-executed)

Four proposals were received in 19 Dec 2007, and the technical evaluation report was scheduled to be completed by end of Feb 2008. However, DG Tax decided not to push through with the TA, and the PHRD grant funding will be used to finance PINTAR instead. TOR for $100,000 worth of computer equipment is to be prepared.

Technical assistance to support Indonesia’s National Single Window (GOI-executed)

Five proposals were received in Dec 2007. Technical Evaluation Report has been revised in response to WB’s comments.

PROGRAM AREA C: LEGISLATIVE OVERSIGHT Expected Outcomes: Improved parliamentary budget analysis and oversight

CTFs: 1, 2 Key Client: DPR

2007 Activities:

Results:

• Work program re-alignment (on capacity building activities and consultancies) • Course on international experiences in legislative budget oversight

• Completed learning activities on parliamentary budget oversight

• Video conference on organizational aspects of the Legislative Budget Office

Authorized Budget: $806,500

Budget realization: 3% ($26,000)

PFM MDTF M&E (as of April 2008)

Page 5

Objective: Improving parliamentary budget analysis and oversight

C.1 Legislative Oversight (Secretary-General of DPR)

Component Supported

Activity

Status

Consultancy on Parliamentary Budget Oversight (PBO) (WB-executed)

This consultancy was initiated in November 2007.

Consultancy to adopt handbook on Parliament (WB-executed)

TOR is being drafted, and input is being solicited from the DPR Performance Enhancement Teams and Secretariat

Rapid response consultancies to support budget reform team (WB-executed) Seminar on legislative budget oversight (WB-executed)

Scheduled in 2008.

One-day seminar on PBO and international experience in budget process management (WB-executed) Study mission for Commission XI members on budget oversight and accountability (WB-executed)

Completed. The seminar on Parliamentary Budget Oversight (PBO) was held on 6 November 2007. Related seminars on administration and financing of Parliament were also held on 4-5 March 2008 (for Secretariat staff) and on 6 March 2008 (for Parliament members) Conducted in February 2008 in Australia. Attended by the chairman of budget committee, vice-chairman of the Performance Enhancement Team on Budget, and one member of the budget committee. Two members of the DPR secretariat attended a separate but related course on Effective Parliamentary Committee Inquiries, also in Australia. Reference books worth $19,112 were procured in December 2007.

Procurement of reference books related to economics, management and budget issues (WB-executed) Two PBO study tours for members of the Budget Committee (GOI-executed) Study visit of Secretariat General staff to New Zealand for feasibility study on Hansard System (GOI-executed) Study visit of Committee Secretariat to South Korea to study the Parliament broadcasting system (GOI-executed) WBI seminar in South Korea (GOI-executed) International Parliamentary Governance Course (GOI-executed)

PFM MDTF M&E (as of April 2008)

Video conference on the legislative budget office was held on 23 January 2008 with 15 participants including the head of the Budget Committee

TOR submitted to WB. No confirmed departure schedule yet. SG DPR finding it difficult to set date due to busy schedules of both Indonesian and South African parliament members. 9 members of Parliament and 2 staff expected to participate. PIU now intends to re-program the activity to a seminar in the United Kingdom.

The schedule was moved from May 2008 to August 2008. Four Secretariat staff members are expected to attend. DPR is making arrangements with South Korean counterpart.

This was originally scheduled for South Korea in mid-April 2008m but the seminar venue has now been changed to California, USA. One member of Parliament and 2 staff are expected to attend. Scheduled for fourth quarter 2008. To be held in Canada and Australia.

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Budget oversight study tours (GOI-executed)

This has been re-scheduled for 2009, possibly after the election.

World Bank Institute-CDI La Trobe University course on Parliamentary oversight of the budget (GOI-executed) International training/short course on financial management (GOI-executed) Technical and administrative consultant (GOI-executed)

Completed in February 2008. The course was attended by 2 members of Parliament and 1 Secretariat staff .

Administrative support staff (GOI-executed)

Candidate has been selected. The technical evaluation report for the selection is being reviewed by PSSU.

Publishing of books (GOI-executed)

A draft manuscript of book on Parliament oversight functions has been completed. The PIU is making arrangements with PSSU for book publication.

This course for members of Parliament is being re-scheduled for 2009 at Harvard University (it was earlier planned for July 2008). TOR to be prepared. NOL on the TOR has been issued. PIU is procuring the consultant service and expects to sign contract in July 2008.

PROGRAM AREA D: PROCUREMENT, ASSET MANAGEMENT AND AUDIT REFORMS Expected Outcome: Enhanced effectiveness and efficiency of the institutional set-up for audit and procurement

CTFs: 1, 2

Key Client: BAPPENAS 2007 Activities:

Results:

• Program development for analytical and capacity building activities, e.g., compliance with new audit standards • Comprehensive policy analysis to address weaknesses in procurement framework

• Work program development

Authorized Budget: $1,033,267 Budget realization: 4% ($41,419) Objective: Enhanced effectiveness and efficiency of the institutional set-up for procurement, audit and asset management Component Supported A.4 Procurement Reforms (BAPPENAS)

Activity Building capacity for measurement of procurement performance (WB-executed)

PFM MDTF M&E (as of April 2008)

Status Discussion with NPPO held to plan collection of data on public procurement compliance performance, and selection of pilot ministries. Consultant started work in November 2007 with follow up mission in Feb 2008. Data collection is in progress.

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PROGRAM AREA E: POLICY CAPACITY DEVELOPMENT Expected Outcome: Strengthened Fiscal Policy Office to improve decision making on major fiscal (revenue and expenditure) policies

CTFs: 1, 2, 5 Key Client: MOF Fiscal Policy Office 2007 Activities:

Results:

• Consultancy to support the newly established risk management unit in the Fiscal Policy Office, including preparation of fiscal risk statement

• Fiscal risk statement for 2008 budget (a major advancement in terms of fiscal transparency)

Authorized Budget: $845,257 Budget realization: 5% ($39,629) Objective: Strengthened Fiscal Policy Office to improve decision making on major fiscal (revenue and expenditure) policies Component Supported A.1 Policy Capacity Development (BKF)

Activity Consultancy on contingent liabilities and fiscal risk statement (WB-executed)

Status Completed. Fiscal risk statement was included in 2008 budget submitted to Parliament in August 2007.

PROGRAM AREAS F AND G: CHANGE MANAGEMENT, HRM AND COMMUNICATIONS; AND MANAGEMENT STRATEGY AND VISIBILITY Expected Outcome: improved organizational planning and strategic management of reform program, including change management and communications

CTFs: 1, 2, 3, 5 Key Client: MOF Sec-Gen (PUSHAKA and PUSINTEK)

2007 Activities:

Results:

• Advisory services on civil service reform, communications and change management • Process facilitation to develop roadmap for MOF re-structuring • Benchmarking study mission (UK) for PUSHAKA

• Triggering of strategy process within MOF to address organizational set-up

Authorized Budget: $2,003,917

Budget realization: 3.4% ($68,047)

PFM MDTF M&E (as of April 2008)

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Objectives: Improved organizational planning and strategic management of reform program, including change management, human resources management, and communications

These two program areas are indirectly supporting all the GFMRAP subcomponents

Component Supported

Activity

Status

Analytical and advisory assistance to MOF’s Civil Service Reform Team (WB-executed) Policy briefs and adhoc guidance and recommendations as requested by MOF (WB-executed) In-country workshop (WB-executed)

Consultant hired since November 2007. This activity is being delivered through a resident advisor located in the WB office in Jakarta. Consultant is also providing guidance on development of long term civil service reform road map for MOF. Consultant hired since November 2007.

Consultancy services on program management and reform strategy 4 TORs for PUSINTEK 1 TOR for program coordination (GOI-executed)

Two of the consultants developed a knowledge management portal using Alfresco (an open-source document management system) which was completed in January 2008. Simulations of the portal’s application to QCBS procurement was done in May 2008. A third PUSINTEK consultant (senior IT adviser) has resigned, and the fourth consultant is currently providing administrative support up to September 2008. Consultant for program coordination of GOI-executed trust funds based at PSSU was hired in Oct 2007 for five man-months up to July 31, 2008. No TOR yet. PUSHAKA intends to combine this TA with the proposed TOR on establishing a “nerve center”. Proposal needs approval by the PFM MDTF Management Committee.

Consultancy services to develop Monitoring & Reporting framework to assist PUSHAKA monitor and report on the progress of PFM reforms (GOI-executed) Consultancy services to develop policies & strategy to establish PUSINTEK as a shared ICT services group for the Ministry of Finance (GOI-executed) Consultancy services on the organizational design of the Ministry of Finance including an update of the existing road map for organizational development of the ministry (GOI-executed) Benchmarking study mission for PUSHAKA (GOI-executed) Overseas training on human resource management for selected officials from Echelon 1 units of MOF (GOI-executed)

PFM MDTF M&E (as of April 2008)

Seminar held on architecture of a modern Ministry of Finance.

Request for proposals were sent out to bidders on 14 Jan 2008. Two proposals were submitted by the deadline set on 25 Feb 2008 (Multipolar and Ernst&Young). The Technical Evaluation Report on the bids has been completed and submitted to WB for NOL. The TOR for the consultancy is to be prepared after completion of WB-executed international workshops.

Completed. The study mission visited UK

No TOR yet. SG-PIU has asked SG human resource management unit to draft the TOR.

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Joint in-country training on strategy change management for Echelon 1 and 2 officials (GOI-executed) Tours to two countries to study trade facilitation (GOI-executed)

No TOR yet. SG-PIU will ask SG office to identify activities and participants.

Provision of equipment (GOI-executed)

TOR for $100,000 worth of equipment for PUSINTEK is being prepared. Procurement of $49,500 worth of equipment for PUSHAKA is underway. This initial batch of basic office equipment to support “back office” operations for envisioned future MOF nerve center which will require additional equipment worth $300,500. CTF-2 Procurement plan has been updated to include these procurements and the NOL received from WB.

PFM MDTF M&E (as of April 2008)

No TOR yet.

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DISBURSEMENTS OF GOI-EXECUTED TRUST FUNDS (AS OF MARCH 31, 2008) Project Activities (Component)

A.

Enhancing Policy Research Capacity Goods Consultants Services Trainings and Workshops Incr Ops A.2a Budget, Planning & Development - Bappenas Goods Consultants Services Trainings and Workshops Incr Ops A.2b Budget, Planning & Development - DG Budget Goods Consultants Services Trainings and Workshops Incr Ops A.3 Budget Execution and Treasury Modernization Goods Goods span part A3 Consultants Services Trainings and Workshops Incr Ops A.4 Public Procurement Reform Goods Consultants Services Trainings and Workshops Incr Ops

B

Revenue Administration

B.1

Customs Modernization Goods Consultants Services Trainings and Workshops Incr Ops Tax Modernization Goods Consultants Services Trainings and Workshops Incr Ops

C.

Governance and Accountability

C.1

Legislative Oversight Goods Consultants Services Trainings and Workshops Incr Ops Resolution of Tax Dispute Goods Consultants Services Trainings and Workshops Incr Ops Internal Accountability Goods Consultants Services Trainings and Workshops Incr Ops

C.2

C.3

D.

Project Governance and Implementation

D.1

Project Governance and Implementation Goods Consultants Services Trainings and Workshops Incr Ops Front-end Fee

E.

Additional under PFM-MDTF

E.1

Secretariat General MOF Goods Goods span part A3 Consultants Services Consultants Services Part C1 Trainings and Workshops Incr Ops Minister Coordinator,EKUIN (c/o Sekjen MOF) Goods Goods span part A3 Consultants Services Consultants Services Part C1 Trainings and Workshops Incr Ops Total Allocated Total Funding Available

E.2

CHILD TRUST FUND 6 - TF091414 Budget Disbursed Balance

Public Financial Management

A.1

B.2

CHILD TRUST FUND 2 - TF090047 Budget Disbursed Balance

PFM MDTF M&E (as of April 2008)

-

-

-

-

100,000 100,000

-

1,510,000 100,000

-

1,160,000 250,000 -

-

-

-

879,300 100,000 600,000 170,000 9,300

-

606,000

19,112

506,000 100,000 -

19,112 -

-

-

146,100

26,099

130,000

26,099

16,100

2,069,300 450,000

36,348

1,400,000

8,400

200,000 19,300 60,000

27,948 -

60,000 5,370,700 5,370,700

81,559

100,000 100,000 1,510,000 100,000 1,160,000 250,000 879,300 100,000 600,000 170,000 9,300 586,888 506,000 80,888 -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

120,001 103,901 16,100 -

-

-

2,032,952 450,000 1,391,600 172,052 19,300 60,000 60,000 5,289,141

-

-

1,350,000

-

1,200,000 150,000 1,350,000 1,350,000

-

1,350,000 1,200,000 150,000 1,350,000

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