Rapport de fin d'exécution et de résultats - Deuxième projet d'assistance technique à la gouvernance économique

Document of The World Bank Report No: ICR00002074 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-H2370) ON A GRANT IN THE AMOUNT OF SDR 1.4 MILLION (US$ 2 MILLION EQUIVALENT) TO THE REPUBLIC OF HAITI FOR A SECOND ECONOMIC GOVERNANCE TECHNICAL ASSISTANCE PROJECT December 30 2011 Poverty Reduction and Economic Management Haiti Country Management Unit Latin American and the Caribbean Region Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized CURRENCY EQUIVALENTS (Exchange Rate Effective November 15, 2011) Currency Unit = Haitian Gourde US$ 1.00 = 40.35 [HTG] October 1 – September 30 AECI Agencia Española de Cooperación Internacional (Spanish International Cooperation Agency) BPM Bureau du Premier Ministre (Prime Minister‟s Office) CAS Country Assistance Strategy CEFOPAFOP Centre d‟Education et de Perfectionnement des Agents de la Fonction Publique (Training Center for Public Administration) CIDA Canadian International Development Agency CNMP Commission Nationale des Marchés Publics (National Public Procurement Commiss ion) CSC/CA Cour Supérieure des Comptes et du Contentieux Administratif (Supreme Audit Institution) CY Calendar Year DEE Direction des Etudes Economiques ( Directorate of Economic Studies) DGB Direction Générale du Budget (General Budget Directorate) DGT Direction Générale du Trésor (General Directorate of the Treasury) DSNCRP Document de Stratégie Nationale pour la Croissance et pour la Réduction de la Pauvreté (Growth and Poverty Reduction Strategy Paper) EGRO Economic Governance Reform Operation EGTAG Economic Governance Technical Assistance Grant EU European Union GDP Gross Domestic Product GOH Government of Haiti ICF Interim Cooperation Framework ICR Implementation Completion Report IDA International Development Association IADB` Inter - American Development Bank IFI International Financial Institutions IFR Interim Financial Report IMF International Monetary Fund IGF Inspection Générale des Finances( General Finance Inspectorate) ISR Implementation Status Report LICUS Low Income Countries Under Stress M&E Monitoring and Evaluation MEF Ministry of Economy and Finance MPCE Ministère de la Planification et de la Coopération Externe (Ministry of Planning and External Cooperation) OMRH Office de Management et des Ressources Humaines (Management and Human Resource Office) PAD Project Appraisal Document PCU Project Coordination Unit PDO Project Development Objective PEFA Public Expenditure and Financial Accountability PEMFAR Public E xpenditure Management and Financial Accountability Review PRUII Projet de Reconstruction d‟Urgence des Infrastructures et des Institutions (Infrastructure and Institutional Emergency Recovery Project) PRSP Poverty Reduction Strategy Paper QAG Quality Assurance Group SYGADE Système d‟Informatisation des Dépenses (Expenditure Information System) TOR Terms of Reference TTL Task Team Leader UCP Unité de Coopération Projet (UCP) ULCC Unité de Lutte contre la Corruption (Anti - Corruption Unit) USAID United States Agency for International Development Vice President: Pamela Cox Country Director: Alexandre Abrantes Sector Manager: Arturo Herrera Gutierrez Project Team Leader: Alexandre Arrobbio ICR Team Leader: Alexandre Arrobbio ICR Primary Author: Hélène Torresan HAITI Economic Governance Technical Assistance Grant II CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph 1. Project Context, Development Objectives and Design ............................................... 1 2. Key Factors Affecting Implementation and Outcomes .............................................. 8 3. Assessment of Outcomes .......................................................................................... 15 4. Assessment of Risk to Development Outcome ......................................................... 20 5. Assessment of Bank and Borrower Performance ..................................................... 21 6. Lessons Learned........................................................................................................ 24 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners........... 26 Annex 1. Project Costs and Financing .......................................................................... 28 Annex 2. Outputs by Component.................................................................................. 29 Annex 3. Economic and Financial Analysis ................................................................. 32 Annex 4. Bank Lending and Implementation Support/Supervision Processes............. 33 Annex 5. Beneficiary Survey Results ........................................................................... 35 Annex 6. Stakeholder Workshop Report and Results ................................................... 36 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 37 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 42 Annex 9. List of Supporting Documents ...................................................................... 43 MAP A. Basic Information Country: Haiti Project Name: HT Economic Governance TAG II Project ID: P095371 L/C/TF Number(s): IDA - H2370 ICR Date: 12/30/2011 ICR Type: Core ICR Lending Instrument: TAL Borrower: THE REPUBLIC OF HAITI Original Total Commitment: XDR 1.40M Disbursed Amount: XDR 0.42M Revised Amount: XDR 1.40M Environmental Category: C Implementing Agencies: Unit¿ de Coordination du Projet (UCP) at the Ministry of Economy and Finance Cofinanciers and Other External Partners: B. Key Dates Process Date Process Original Date Revised / Actual Date(s) Concept Review: 02/27/2006 Effectiveness: 08/16/2007 08/16/2007 Appraisal: 04/17/2006 Restructuring(s): 10/30/2009 Approval: 06/20/2006 Mid - term Review: 10/01/2010 05/19/2010 Closing: 06/30/2009 06/30/2011 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Unsatisfactory Risk to Development Outcome: High Bank Performance: Moderately Unsatisfactory Borrower Performance: Moderately Unsatisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Unsatisfactory Government: Moderately Satisfactory Quality of Supervision: Moderately Unsatisfactory Implementing Agency/Agencies: Moderately Unsatisfactory Overall Bank Performance: Moderately Unsatisfactory Overall Borrower Performan ce: Moderately Unsatisfactory C.3 Quality at Entry and Implementation Performance Indicators Implementation Indicators QAG Assessments (if Rating Performance any) Potential Problem Project at any time (Yes/No): Yes Quality at Entry (QEA): None Problem Project at any time (Yes/No): Yes Quality of Supervision (QSA): None DO rating before Closing/Inactive status: Unsatisfactory D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 100 100 Theme Code (as % of total Bank financing) Administrative and civil service reform 25 25 Law reform 13 13 Other accountability/anti - corruption 25 25 Participation and civic engagement 13 13 Public expenditure, financial management and procurement 24 24 E. Bank Staff Positions At ICR At Approval Vice President: Pamela Cox Pamela Cox Country Director: Alexandre V. Abrantes Caroline D. Anstey Sector Manager: Arturo Herrera Gutierrez Ronald E. Myers Project Team Leader: Alexandre Arrobbio Linn A. Hammergren ICR Team Leader: Alexandre Arrobbio ICR Primary Author: Helene Torresan F. Results Framework Analysis Project Development Objectives ( from Project Appraisal Document ) The objective of the Second Economic Governance Technical Assistance Grant (EGTAG II) was to further assist the Government in strengthening its institutional capacity in the areas of public sector resource management and achieving improved responsiveness to citizen needs and demands. It was designed to advance changes begun with the EGRO, the LICUS Trust Fund grant, and EGTAG I to overcome the weaknesses undermining the planning and implementation of Haiti's current and investment budget; the efficacy of donor assistance, and public trust in public sector institutions. Specifically, EGTAG II's development objectives were to support additional activities required to meet the basic goals of EGTAG I and to move beyond them. This was expected to: (i) improve operation of the budgetary, control and procurement systems; (ii) build a central human resources unit, and within that to develop and improve procedural rules and organizational capacity to implement them; (iii) advance other elements of the plan to modernize the distribution, upgrade the quality, and improve the incentives of public sector employees; (iv) work with the MEF and one or two sector ministries to create, on an experimental basis, capacity for strategic monitoring of sector policies and service delivery; and (v) improve the effectiveness and sustainability of the Government's anti-corruption, transparency and public participation programs. Revised Project Development Objectives (as approved by original approving authority) The PDO was revised in October 2009, in order to (i) realign the project with the Bank strategy for governance reform in Haiti, (ii) narrow the project scope and (iii) incorporate findings of recent analytical work. The revised development objective of the Project was to assist the Recipient in strengthening its institutional capacity in the area of: (a) budget formulation and execution; and (b) budget monitoring and control. (a) PDO Indicator(s) Indicator Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years Indicator 1 : PEFA indicator 6: comprehensiveness of information included in budget documentation Value quantitative or Qualitative) C: recent budget documentation fulfills 3 - 4 of the 9 information benchmarks C+: Improvement in information benchmarks fulfilled by budget documentation Not achieved C: The budget documents meet three out of the nine information benchmarks. Date achieved 10/01/2007 06/30/2011 11/08/2011 Comments (incl. % achievement) Source: 2011 assessment of PEFA indicators by the Bank team Indicator 2 : PEFA indicator 19(i): use of competition in award of contracts (% of public contracts awarded on a competitive basis) Value quantitative or Qualitative) Not rated C: Available data shows that less than 50% of contracts above the threshold are awarded on an open competitive basis, but the Not achieved D:Insufficient data exists to a ssess the method used to award public contracts data may not be accurate. Date achieved 10/01/2007 06/30/2011 11/08/2011 Comments (incl. % achievement) Source: 2011 assessment of PEFA indicators by the Bank team Indicator 3 : PEFA indicator 26(ii): timeliness of submission of audit reports to legislature Value quantitative or Qualitative) D+: Audit reports are submitted to Parliament beyond the 12 - month period after the end of the fiscal period under review. C : Audit reports are submitted to the legislature within 12 months of the end of the period covered (for audit of financial statements from their receipt by the auditors). Not rated Date achieved 10/01/2007 06/30/2011 06/30/2011 Comments (incl. % achievement) This indicator cannot be rated: the 08/09 audit report could not be transmitted to Parliament with the budget, as is the norm, since the FY10 - 11 budget was adopted by decree due to the earthquake. Source: assessment of PEFA indicators by the Bank team. Indicator 4 : Increased understanding of corruption practices, as measured by studies' dissemination seminars exit surveys. Value quantitative or Qualitative) No available survey data Opinion surveys Not achieved: No survey undertaken Date achieved 12/10/2009 06/30/2011 06/30/2011 Comments (incl. % achievement) Source: Bank's assessment (b) Intermediate Outcome Indicator(s) Indicator Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years Indicator 1 : Reports prepared by DGB on debt levels (debt stock) in order to inform the preparation of the annual budget (between 2009 and 2011) Value No regular reporting on At least one Last debt data (quantitative or Qualitative) debt levels report per Haitian fiscal year (between 2009 and 2011) published on the MEF website dated November 2010. Reports are produced manually by the Debt Directorate. Date achieved 01/01/2008 06/30/2011 11/08/2011 Comments (incl. % achievement) Source: Bank team assessment and MEF's website Indicator 2 : Number of Ministries using the human resource's registry Value (quantitative or Qualitative) 0.00 9 out of 17 Ministries at least use the human resource registry The central HR registry exists but is not operational. Ministries are not able to make use of it. Date achieved 07/08/2008 06/30/2011 06/30/2011 Comments (incl. % achievement) Source: Bank's assessment Indicator 3 : Public Finance Reform Agenda Value (quantitative or Qualitative) No Finance Reform Agenda Reform Agenda in place for Public Finance Existence of a joint government - IFI matrix of Public Finance reforms. Institutional diagnosis and perspective of reform of the MEF drafted. Date achieved 12/10/2009 06/30/2011 06/30/2011 Comments (incl. % achievement) Source: Bank's assessment Indicator 4 : Organic Law on the Organization of the CSC/ CA Value (quantitative or Qualitative) Current Legal Framework for the CSC/CA is incomplete New Law sent to Parliament for Approval. Law exists in draft form but has not been sent to Parliament. Date achieved 12/10/2009 06/30/2011 06/30/2011 Comments (incl. % achievement) Source: Bank's assessment Indicator 5 : 2 studies on corruption in 2 key sectors published by ULCC Value (quantitative or Qualitative) No studies on corruption in these sectors 2 studies published One study completed at the end of June 2011, not yet published Date achieved 12/10/2009 06/30/2011 06/30/2011 Comments (incl. % achievement) Source: Bank's assessment G. Ratings of Project Performance in ISRs No. Date ISR Archived DO IP Actual Disbursements (USD millions) 1 09/29/2006 Satisfactory Satisfactory 0.00 2 12/27/2006 Moderately Satisfactory Moderately Satisfactory 0.00 3 06/19/2007 Unsatisfactory Unsatisfactory 0.00 4 12/19/2007 Satisfactory Satisfactory 0.00 5 06/23/2008 Moderately Unsatisfactory Moderately Unsatisfactory 0.00 6 12/11/2008 Moderately Satisfactory Moderately Unsatisfactory 0.30 7 06/24/2009 Moderately Satisfactory Moderately Satisfactory 0.30 8 07/29/2009 Moderately Satisfactory Moderately Satisfactory 0.30 9 12/20/2009 Moderately Satisfactory Moderately Satisfactory 0.47 10 04/13/2010 Moderately Satisfactory Moderately Satisfactory 0.47 11 11/23/2010 Unsatisfactory Unsatisfactory 0.47 12 07/05/2011 Unsatisfactory Unsatisfactory 0.73 H. Restructuring (if any) Restructuring Date(s) Board Approved PDO Change ISR Ratings at Restructuring Amount Disbursed at Restructuring in USD millions Reason for Restructuring & Key Changes Made DO IP 10/30/2009 Y MS MS 0.30 If PDO and/or Key Outcome Targets were formally revised (approved by the original approving body) enter ratings below: Outcome Ratings Against Original PDO/Targets Unsatisfactory Against Formally Revised PDO/Targets Unsatisfactory Overall (weighted) rating Unsatisfactory I. Disbursement Profile 1 1. Project Context, Development Objectives and Design 1.1 Context at Appraisal 1. At the time of the project appraisal (mid-2006), Haiti was one of the most disadvantaged countries in the world and the poorest country in the Western hemisphere. It was also one of the most unequal, with a Gini coefficient of 0.65. The country lagged in social indicators, ranking 153 out of 172 in the Human Development Index at the time of the project‟s appraisal. 2. After a long period of political instability, constitutional order was restored in 2006. Haiti‟s history has been marked by chronic political instability. Since the mid -20 th century, the country has endured a 30-year dictatorship characterized by corruption, repression and the pillage of wealth. This was followed by a series of short-lived governments, also plagued by corruption; and the election, overthrow, reinstatement and ultimate resignation in February 2004 of President Jean Bertrand Aristide. A Transitional Government was established in 2004 with a mandate to create the conditions necessary to hold democratic elections and to hand over power to a new government in early 2006. Elections were organized in February 2006. Following the election and the instatement of a new National Assembly, Mr René Preval took office in May 2006. 3. In the spring of 2004, the Transition Government, in collaboration with the donor community, prepared an Interim Cooperation Framework (ICF), in order to guide future reforms, with a specific focus on economic governance. The ICF aimed to identify the coun try‟s priority development interventions and related funding within a donor coordinated framework. It was also the foundation upon which the medium-term National Growth and Poverty Reduction Strategy Paper (DSNCRP, 2008-2010) would be prepared. The ICF comprised four pillars: (i) strengthening political governance and promoting national dialogue; (ii) strengthening economic governance and contributing to institutional development; (iii) promoting economic recovery; and (iv) improving access to basic service s. At the time of EGTAG2‟s project appraisal in mid-2006, newly elected President Preval was committed to continuing the ICF focus on economic governance as a key priority. 4. Since 2004, the Transition Government, with the support of the donor community has made significant advances in economic governance reforms. In an effort to fight corruption; build links with civil society; and increase the transparency and efficiency of public resources, the government launched an economic governance reform program. The Government created an Anti-corruption Unit and established mechanisms for civil society monitoring. Following the adoption of a new Organic Budget Law in 2004, it strengthened budget preparation processes and increased the transparency of budget information through the dissemination of key budgetary data. The Government enhanced the budgetary oversight of the Supreme Audit Institution and adopted a new Procurement Decree that set up a permanent procurement commission with a revised mandate. It also improved the transparency of procurement processes. Finally, the 2 Government started a review of human resource policy, as a first step toward modernizing Human Resources Management. 5. In line with the Government’s priorities, the 2004 Bank Transitional Support Strategy (TSS) included a specific focus on institutional strengthening. The long-term strategy for Bank support in Haiti, as articulated in the TSS was “inclusive growth and poverty reduction through local development, institutional strengthening and support of productive sectors”, with an emphasis on restoring the credibility of institutions. EGTAG2 contributed to institutional strengthening by concentrating on economic governance. The assumption was that successful growth, poverty, emergency relief and recovery programs required effective and transparent public resources management. The operation also addressed the need to foment broader participation in governance reforms and support thereof. Civil society monitoring mechanisms; access to information; and communication on reforms and programs enabled this. 6. EGTAG2 was part of a broader program of institutional strengthening in Haiti. Since 2004, IDA support for economic management and for a governance reform program has included: (i) a total of US$96.5 million of development policy loans under the three Economic Governance Reform Operations (EGROs, P089873, P100564, P117944 ); and (ii) the LICUS Trust Fund Grant (TF053366) , approved in 2004 and amounting to US$6 million, of which US$1.5 million supported economic governance reforms, and two Economic Governance Technical Assistance Grants (EGTAG 1, P093936 and EGTAG2, P095371 ) amounting to US$4 million, to underpin the reforms of the development policy operations . These grants complemented other donors‟ s upport for Haiti in the area of economic governance (including IADB, USAID, CIDA, AECI, EU and IMF) 7. EGTAG2 was designed to continue the work started with EGTAG1, with greater attention to ICF priorities which were not covered by the former operation . The Bank technical assistance took the form of two back-to-back US$2.0 million grants - EGTAG 1 ( P093936) and EGTAG2 (P095371 ) - which were presented to the Board within one year of each other. 1.2 Original Project Development Objectives (PDO) and Key Indicators 8. The original objective of EGTAG2 was to assist the Government in strengthening its institutional capacity in the area of public sector resource management and achieving improved respons iveness to its citizens’ needs and demands. It was designed to advance changes begun with the EGROs ( P089873, P100564, P117944 ), the LICUS Trust Fund grant (TF053366) and EGTAG1 ( P093936) It was also intended to (i) overcome the weaknesses undermining Haiti's planning and implementation of its current and investment budget and (ii) improve the efficacy of donor assistance, and public trust in public sector institutions. Specifically, EGTAG2's development objectives were to: support additional activities required to meet the basic goals of EGTAG1 and to move beyond them in order to: (i) improve operation of the budgetary, control and procurement systems; (ii) build a central human resources unit, 3 and within that to develop and improve procedural rules and organizational capacity to implement them; and (iii) advance other elements of the plan to modernize the distribution, upgrade the quality, and improve the incentives for public sector employees; (iv) work with the Ministry of Economy and Finance (MEF) and one or two sector ministries to create, on an experimental basis, capacity for strategic monitoring of sector policies and service delivery; and (v) to improve the effectiveness and sustainability of the Government's anti-corruption, transparency and public participation programs. 9. The indicators defined to measure progress with the project development objective were defined as follows:  Percentage of non- salary current public expenditures going through „ comptes courants ‟ (discretionary ministerial accounts).  Inclusion of external financing (disbursements and expenditures) in the national budget.  Number of ministries developing budgets in program and results format. 1.3 Revised PDO (as approved by original approving authority), Key Indicators, and reasons/justification 10. In 2009, the project was restructured and the PDO was modified . The revised PDO was to assist the Republic of Haiti in strengthening its institutional capacity in the areas of: (a) budget formulation and execution, and (b) budget monitoring and control. 11. The outcome indicators to measure progress with the revised development objectives were defined as follows:  PEFA indicator 6: comprehensiveness of information included in budget documentation (Baseline: C and Target: C+)  PEFA indicator 19(i): use of competition in award of contracts (Baseline: Not rated, Target: C)  PEFA indicator 26(ii): timeliness of submission of audit reports to legislature (Baseline: D+, Target: C)  Increased understanding of corruption practices, as measured by exit surveys at studies' dissemination seminars. (Baseline: No Current Survey Data, Target: Opinion Surveys). 12. The revision of the PDO and associated indicators aimed to:  Realign the project with the priorities of the May 2009 Country Assistance Strategy (CAS) and those of the New Government. The scope of the project needed to be realigned with the priorities expressed in the National Growth and Poverty Reduction Strategy Paper (DSNCRP) and in the CAS FY09-12 (Report No 48284 HT). The CAS took note of the recent improvements achieved by the Government since 2006. It also adapted the World Bank‟s program to the country's 2007 National Growth and Poverty Reduction Strategy Paper. The CAS sought to respond to a series of important shocks faced in 2008 that led to a loss equivalent to 15 percent of the GDP and further weakened the Government capacity. The CAS 4 was structured into three pillars: (i) promoting growth and local development; (ii) investing in human capital and (iii) reducing vulnerability to disasters, with a cross- cutting emphasis on economic governance reforms. The CAS stressed that Bank interventions would be determined by government priorities and would address areas where Bank projects have already achieved progress, where it has a comparative advantage and where Bank resources can fill gaps or leverage instruments by other donors or the private sector.  Narrow the project’s scope building on lessons learned from previous operations and the Bank ’s comparative advantage . Building on lessons learned from former operations, and considering the factors that led to a delay in project implementation, EGTAG2 ‟s scope was narrowed down to two strategic areas: (i) budget formulation and execution and (ii) budget monitoring and controls. These were areas where the Bank had a comparative advantage, given its long term engagement with beneficiaries. The limitation of the scope of the project took into account the limited lending envelope and was expected to simplify project supervision.  Incorporate the findings of recent analytical work. By revealing specific weaknesses in the management of public resources, the Public Expenditure and Financial Accountability Report (PEMFAR) analysis, which was completed in 2008, helped the Bank team refine the PDO and determine appropriate outcome indicators. 1.4 Main Beneficiaries 13. The original beneficiaries comprised the main institutions responsible for Public Financial Management, Human Resources and accountability institutions. These include: (i) the Ministry of Economy and Finance (MEF), including: the General Directorate of the Budget (DGB), the General Directorate of the Treasury (DGT), the Office of Economic Studies (DEE) and the General Directorate of the Ministry (DGM); (ii) the Ministry of Planning and External Cooperation (MPCE), (iii) the National Procurement Commission (CNMP); (iv) the Supreme Audit Institution (CSC/CA); (v) the Anti-Corruption Unit (ULCC); (vi) the Human Resources Unit within the Prime Minister‟s Office (OMRH); (vi i ) the MEF‟s Executive Secretary and Oversight Committee for the civil society and (viii) one or two sector ministries to be selected. 14. Further to the 2009 restructuring, the revised beneficiaries also included Parliamentarians and Inspection Générale des Finances (IGF). The revised beneficiaries include: (i) the Ministry of Economy and Finance (MEF), including the General Directorate of the Budget (DGB), and the Directorate of Economic Studies (DEE); (ii) The Ministry of Planning and External Cooperation (MPCE); (iii) the National Procurement Commission (Commission Nationale des Marchés Publics, CNMP); (iv) the Supreme Audit Institution (Cour Supérieure des Comptes et du Contentieux Administratif (CSC/CA); (v) the Anti-Corruption Unit (Unité de Lutte Contre la Corruption, (ULCC); (vi) the Human Resources Unit within the Pr ime‟s 5 Minister Office (OMRH); (vii) the Government Training Center (CEFOPAFOP); (viii) the General Inspectorate of Finance (IGF); (xix) Civil Society and Parliamentarians. 1.5 Original Components ( as approved ) 15. Originally, the project included five components. These components were: (i) financial resource management; (ii) human resources development; (iii) monitoring of service delivery; (iv) anti-corruption and civil society engagement; and (v) communication, coordination, and project management. Below is a detailed description of each project component, as inferred from the Financing Agreement (No H237-0-HA). Component 1 - Financial Resource Management (US$700,000) 16. This component aimed at strengthening financial resource management with the following :  The carrying out, through the provision of technical advisory services, equipment and training programs for selected staff of MEF and the Executing Agencies of:(a) follow up activities in respect of the design and implementation of basic budgetary procedures and functions, including in a program-oriented and results linked format; and (b) an evaluation of the initial results of the new budgetary procedures.  The implementation of, and further adjustment to, the plan to improve CSCCA‟s performance as an ex-post public auditing body.  The provision of support for the operation of the CNMP, including through reinforced institution-building, the development of training programs in standardized procurement procedures for sector procurement staff and the subsequent elaboration of related standardized documents. Component 2 – Human Resource Development (US$500,000) 17. This component aimed at further advancing the Recipient’s capacity to develop its human resource base through the provision of technical advisory services and training and the acquisition of equipment for:  The assessment and continued implementation of the Recipient‟s legal framework on civil service and central administration organization and the development of procedures and incentives for personnel selection and, performance evaluation.  The building of capacity in information and data management for the Human Resources Unit to enable it to monitor human resource needs policy and programs.  The development of working relations between the central Human Resources Unit and sector human resources departments; and the provision of assistance by the Human Resources Unit to other agencies in developing plans to meet current and future personnel requirements. This included the use of information and communication technology tools for, inter alia , the creation of a single public employees‟ database and a uniform set of personnel records.  The building of institutional capacity for human resources management in the Prime Minister‟s Office (BPM) and in human resources offices of other selected Recipient‟s 6 public agencies with a view to assist in the design and spearheading of a longer-term civil service reform. Component 3 – Development of MEF Capacity for Strategic Monitoring of Sector Policy through Sector Ministries’ Tracking of Service Delivery (US$300,000) 18. This component aimed at developing MEF and MPCE’s capacity for strategic monitoring of sector outputs and policy using:  Support which was specifically intended for MEF‟s office of economic studies to assist in creating methodologies to link current and investment budgets to streamline government priorities.  Identify Selected Agencies to participate in pilot assessments. These assessments will consider current practices in terms of needs and capabilities in monitoring civil service delivery.  Provide technical advisory services and equipment to develop procedures for tracking service delivery in the Selected Agencies. Component 4 – Anti-corruption and Civil Society Engagement (US$250,000) 19. The objective of this component was to strengthen transparency of all public transactions and operations by:  The further enhancement of ULCC‟s capacity for anti -corruption programming, detection and sanctioning, including through the continuance of the preparation of a modernized legal framework in relation thereto.  The provision of training to improve the performance of the mechanisms for monitoring economic governance by civil society. Component 5 – Communication, Donor Coordination, and Project Management (US$190,000) 20. The aim of this component was to ensure optimal efficiency of Project implementation. This was done by providing continued support to UCP for further implementation of the following:  Communication mechanisms and strategies needed to disseminate the contents of the Recipient‟s reform program and to ensure wider ownership thereof among the public.  Donor coordination activities in the area of economic governance.  Management, coordination and monitoring activities related to the Project. These activities include organizing meetings for staff members responsible for the project from different Executing Agencies. 1.6 Revised Components 21. The original five components were reorganized into three components . Within these three components, resources were reallocated to two new critical beneficiaries: the General Inspectorate of Finance, and the key Parliamentary committees (see table 1 for 7 an overview of the changes). Below is a detailed description of each revised component, as stated in the amendment to the Financing Agreement ((No H237-0-HA).. Component 1: Strengthening Budget Formulation and Execution (US$1,320,000) 22. The objective of this component was to continue strengthening budget formulation and execution by:  Executing: (a) capacity building activities related to the design and implementation of the budget reform, including activities to develop strategies at the sector level and a framework to manage externally funded expenditures; and (b) activities related to the debt management system for the debt management unit of MEF.  Building capacity in Human Resources Management information for the Human Resources Unit. This was intended to enable it to monitor human resource needs via: (a) the implementation of a single public employees' database and a standardized set of personnel records; and (b) the execution of a study on non-permanent employees to better understand the budget implications, thereby providing support to MEF to refine the preparation of the budget law.  Further developing MEF and MPCE's capacity for strategic monitoring of sector outputs and policy. This would be achieved by: (a) providing support specifically for MEF‟s office of economic studies to assist in creating methodologies to link current and investment budgets in order to streamline government priorities; (b) identifying Selected Agencies to participate in pilot assessments. These assessments would consider their current practices in terms of needs and capabilities in monitoring civil service delivery; and (c) developing procedures for tracking service delivery in said Selected Agencies.  Providing support for operation of the CNMP. This support was to help develop training programs in standardized procurement procedures for sector procurement staff in partnership with CEFOPAFOP. The training program would also involve execution of a dissemination and communication strategy, all of which was expected to reinforce institution-building. Component 2: Strengthening Budget Monitoring and Control (US$480,000) 23. The objective of this component was to continue to strengthen budget monitoring and control by:  Designing and implementing the strategic plan for the improvement of CSCCA's performance as an ex-post public auditing body. This would include continued adjustments to the strategic plan and finalization of the institutional framework.  Strengthening the General Finance Inspectorate by enhancing the capacity of selected staff to monitor and control public expenditures.  Further enhancement of ULCC's capacity to detect and sanction anti-corruption programs; preparation of a youth forum on corruption; execution of analysis on governance issues pertaining to the customs, fiscal, judicial and private sector areas.  Execution of a study on civil society mechanisms and capacity building activities for parliamentarians. 8 Component 3: Communication and Project Management (US$200,000) 24. This component aimed to ensure optimal efficiency of Project implementation by providing continued support to UCP to further implement the following :  Communication mechanisms and strategies needed to disseminate the contents of the Recipient's reform program and to ensure wider ownership thereof among the public.  Activities on management, coordination, monitoring and evaluation and fiduciary issues to build capacity of UCP staff, and hiring a deputy accountant for the Project. Table 1: Original and Revised Costs by Component Original Project Components as in initial PAD (Report No: 35909 - HT) Original Allocation (USD) as in initial PAD Revised Project Components Proposed Reallocation (USD) Difference in Costs by Component (I) Financial Resource Management 700,000 (I) Improvement of Budget Formulation and Execution 1,320,000 +620,000 (II) Human Resource Development 500,000 Scope reduced and included in Component I - 500,000 (III) Improved capacity of MEF and selected sector agencies to monitor service delivery and sector policy 300,000 This component has been transferred to Component I - 300,000 (IV) Anti - corruption and Civil Society Engagement 250,000 (II) Strengthening Budget Monitoring and Control 480,000 +230,000 (V) Communication, Donor Coordination, and Project Management 190,000 (III) Communication and Project Management 200,000 +10,000 (VI) To be programmed 60,000 1.7 Other significant changes 25. In 2009, the project’s closing date was extended from 30 June 2009 to 30 June 2011 in two steps. The project was granted a four-month bridging extension until 31 October 2009 while the Board approved restructuring was being processed and was then extended until 30 June 2011, as part of the restructuring. The two-year extension was justified by delays in the Grant Agreement‟s ratification by the Recipient. This was due to difficulties in reaching an agreement regarding conditions for the ratification of IDA grants more broadly. An agreement was reached in 2007 by the Government and National Assembly that exempted such grants from the requirement of the ratification by the Assembly. 26. Proceeds were re-allocated . Disbursement categories were consolidated into a single category for: consulting services, works, goods and operating costs in order to facilitate the implementation of the activities. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry 9 27. The present ICR finds the EGTAG2 quality of entry to be Unsatisfactory . Despite the overall relevance of its objectives, the design of the project was too complex and overly ambitious given the limited financing available and the implementation challenges in a fragile state. Strengths of the program at entry 28. The overall development objectives of the project were appropriate, albeit very broad, as noted by the Quality Assurance Group (QAG) panel’s report, conducted in 2008 1 . The objectives of the project were aligned with the 2004 Bank Transitional Support Strategy ( Report No 30541-HT ), which emphasized the need to strengthen institutions and restore their credibility. They also reflected the Government‟s own priorities, as articulated in the economic governance pillar of the ICF. Some components of the project included innovative features, such as the introduction of elements of civil society monitoring. 29. EGTAG2 ’s objectives and activities were aligned with the reform agenda supported by Bank budget support operations (the EGRO series). While the Bank provided budget support to Haiti through the EGRO series, the strengthening of government capacity in the areas addressed by budget support operations was important to ensure an adequate pace of implementation of the reform program. 30. The project sought to incorporate lessons learned from previous operations (LICUS and EGTAG1). Lessons learned included: (i) the need to work incrementally; (ii) the importance of constant communication and coordination among and within governmental agencies and among donors; (iii) the key role played by the counterpart agency and the PCU in effecting this coordinating function; and (iv) the need to assist the authorities in implementing existing legislation before supporting the adoption of new legislation or systems. EGTAG2 therefore incorporated technical assistance to support the implementation of the new budget law, the procurement decree, and the decree defining the CSCCA‟s operations. It also emphasized the importance of working through donor coordination mechanisms. 31. As noted by the 2008 QAG panel report, donor collaboration was strong in the preparation of the operation. It was undertaken in close collaboration with other donor agencies active in the area of economic governance (IADB, USAID, AECI, EU, IMF and the French collaboration agency). An economic governance group led by GoH helped coordinate donor work and ensure that it met Government priorities. The panel noted that the focus on this collaboration ensured that the direction of donor support was consistent with the priorities in the Interim Cooperation Framework. Nonetheless, the panel also 1 This 2008 QAG report rated the risks of EGTAG2. It did not rate the quality at entry and the quality of supervision, but included some comments on both aspects. Regarding the PDO, the QAG panel‟s report noted: “The current statement of development objective, while appropriate, is very broad and not supported by measurable and monitorable indicators to enable monitoring of progress and defining of success.” 10 noted that the coordination of all donors needed to be strengthened particularly with the IADB in order to maintain the momentum of economic governance reforms and that a joint institutional capacity building strategy needed to be prepared. Weaknesses of the project at entry 32. The project design was too complex and overly ambitious, with regard to capacity constraints and the limited amount of financing available (US$2,000,000). The development objectives covered exhaustively all aspects of economic governance (budgetary, control and procurement systems, human resources management, monitoring of service delivery, anti-corruption, transparency and public participation programs). To support these broad objectives, the project comprised more than 30 activities in five different sectors involving UCP and over ten different direct counterparts. These internal implementation arrangements, as well as the high number of activities, limited the Government‟s ability to implement the project in an efficient way , further stretching weak Government‟s capacity . 33. The overlap between the implementation of EGTAG1 and EGTAG2 has introduced further complexity. To ensure that IDA13 resources allocated to Haiti were fully used, EGTAG2 was presented to the Board only one year after EGTAG1; at this point the implementation of EGTAG1 was still in its early stages. The overlap between the implementation periods, the objectives, activities and indicators of both projects further increased the complexity of the supervision and monitoring of their respective progress. Pooling funding could have eased supervision for the Bank team as well as for the counterparts, especially given the previous comments on capacity. Moreover, the overlap significantly delayed disbursements under EGTAG2, which began only after EGTAG1 closed on September 30, 2009. 34. The risk related to the capacity of the PCU to handle several projects should have been rated high instead of medium . The PCU supervised the implementation of EGTAG2, IADB-financed projects, the Bank Infrastructure and, after the earthquake, the Institutional Emergency Recovery Project (PRUII, P120895). Although staff were adequately qualified, managing all these projects simultaneously was challenging, especially in 2010, when the PCU experienced a high turnover. Stronger mitigation measures would have included, for example, systematic training for newly hired staff, who were not familiar with bank procedures, and an appropriate incentive system to retain PCU staff. 35. Weak government support and sustainability of reforms, identified as two additional risks by the 2008 QAG report, had not been emphasized during project preparation. The QAG panel report noted that reforms do not appear to have government ownership, although the GoH understands them and supports them. It indicated that: “reforms are driven by international pressures and are strongly encouraged by the resource transfer carrot. Their implementation requires intensive donor coordination to ensure that the GoH clearly understands that all aid is tied to economic governance reforms. (…). Furthermore, it noted that “to be sustainable, the project will 11 require donor coordination to back up the reforms on a permanent basis. Follow-on projects would also ensure the sustainability of reforms.” 36. Finally, the project lacked an appropriate Monitoring and Evaluation system. As noted by the 2008 QAG panel report, the PDO objective was too broad and the project lacked an appropriate set of realistic performance indicators and baseline data. 2.2 Implementation ‘Force majeure’ factors 37. Between 2008 and 2010, the project experienced a series of external shocks that disrupted project implementation:  Haiti was hit by four back-to – back hurricanes (Fay, Gustav, Hanna and Ike) and by tropical storms in August-September 2008. These natural disasters caused damages and losses estimated at nearly a billion dollars, or about 15 percent of GDP. They threatened macro-economic stability and diverted resources away from government priorities, and weakened Government capacity.  Project implementation was affected by the 2010 earthquake, which significantly decreased the capacity of the Haitian administration. It caused massive human and material damages to the beneficiaries of the project. In particular, the following buildings collapsed or were severely damaged: the National Public Procurement Commission, the Supreme Audit Institution, the Office of Human Resources Management, and the Government Capacity‟s Building Institute . Some data were lost, and unfortunately some critical staff members lost their lives. In this context, some activities envisaged under EGTAG2 could not been carried out or were no longer identif ied as priorities. In the aftermath of the earthquake, most of EGTAG2‟s procurement processes were interrupted for several months (at least until May 2010), to give priority to the urgent reconstruction needs.  The earthquake created substantial political uncertainty . Presidential and municipal elections, previously scheduled to be held in 2010 stalled. A new Prime Minister was appointed only in October 2011, months after the presidential elections of March 2011 and the new Government only took office at the end of October 2011.  Project supervision was disrupted due to several unexpected events in 2010. Project supervision was particularly affected by a serious accident involving the Bank TTL in May 2010 and the murder of the project Coordinator a few weeks later. The PCU also lost the assistant Accountant during the 2010 earthquake, and had to renew its team members almost entirely in 2010, including: the Coordinator, the Procurement Specialist, the Financial Specialist and the assistant Accountant. These difficult circumstances obliged the PCU to replace and quickly train new critical staff, which led to implementation delays. On the Bank side, the TTL position remained vacant from May to September 2010, after the accident, and there were a total of four TTLs over the lifetime of the project. 12 Other factors subject to Recipient and/or Bank Control 38. In addition to these external shocks, some factors were more directly subject to Recipient and/or Bank control:  EGTAG2 became effective on August 16, 2007, 14 months after the Bank Board’s approval on June 20, 2006. The grant became effective following an agreement by the Government and the National Assembly that exempted such grants from the requirement for ratification by the Assembly.  The implementation of EGTAG1's activities impacted on the timely implementation of EGTAG2 . EGTAG2‟s activities were closely tied to advances made under the former operation. Also, there was an overlap between the implementation of EGTAG1 and EGTAG2, which contributed to slowing down implementation. Priority was given to continuing to execute the funds in EGTAG1, which was extended twice and closed in September 30, 2009, instead of December 31, 2007, as originally planned. Until the closing date of EGTAG1 in September 2009, there was almost no disbursement from EGTAG2.  The 2009 restructuring did not succeed in streamlining the complex project’s design. Although the components were reduced from five to three