Argentina - Public Sector Management Technical Assistance Project

Document of The World Bank Fo OMCUL USE ONLY Rept No. 12124 PROJECT COMLETION REPORT ARGENTINA PUBLIC SECTOR MANAGEMENT TECHNICAL ASSISTANCE PROJECT (LOAN 2712-AR) JUNE 30, 1993 MICROGRAPHICS Report No: 12124 Type: PCR Public Sector Management Division Technical Department Latin America and The Caribbean Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. LIST OF ACRONYMS ANA Administracidn Nacional do Aduanas (Customs Department) BCRA Banco Central de la Repdblica Argentina (Central Bank) CECRA Comit4 Ejecutivo de Contralor de la Reforma Administrativa (Executive Committee of the Comptroller of Administrative Reform) CEDES Centro de Estudios de Estado y Sociedad (Center for the Study of State and Society) CEPAL Comisidn Econdmica para Amdrica Latina y el Caribe (Economic Commission for Latin America and the Caribbean) CIET Centro Interamericano de Estudlos Trbutarios (InterAmerican Center for Tax Study) DEP Directorlo de Empresas Pdblicas (Directorate of Public Enterprises) DGI Direccidn General Impositiva (General Tax Office) DNI Direccidn Nacional do Impuestos (National Tax Office) DNIAF Direccidn Nacional de Investigaciones y Anglisis Fiscales (National Office for Fiscal Investigation and Analysis) DNPP Direccidn Nacional de Programacidn y Presupuesto (National Office of Programming and Budgeting) INDEC Instituto Nacional de Estadfsticas y Censo (National Institute of Statistics and the Census) ME Ministerio de Economfa (Ministry of Economy) MEOSP Ministerio de Economfa y de Obras y Servidios Pdblicos (Ministry of Economy and Public Works) MOSP Ministerio de Obras y Servicios Pdblicos (Ministry of Public Works and Service) MREC Ministerio de Relaciones Exteriores y Culto (Ministry of Foreign Relations and Culture) PE Public Enterprise PERAL Public Enterprise Reform Adjustment Loan PEREL Public Enterprise Reform Execution Loan PPF Project Preparation Facility PSMTAL Public Sector Management Technical Assistance Loan PSRTAL Public Sector Reform Technical Assistance Loan SAGP Secretarla de Agricultura, Ganaderfa, y Pesca (Secretariat of Agriculture, Livestock, and Fisheries) SCAT Secretarfa de Coordinaci6n Administrativa y TdEcnica (Secretariat for Technical and Administrative Coordination) SCE Secretarfa de Coordinaci6n Econ6mica (Secretariat for Economic Coordination) SCGEP Secretarfa de Control y Gestid6n de Empresas Pdblicas (Secretariat for Control and Management of Public Enterprises) SE Secretarfa de Economfa (Secretariat of Economy) SEF Superintendencia de Entidades Financieras (Superintendancy of Financial Entities) SFP Secretarfa de la Funcidn Pdblica (Secretariat of Public Functions) SH Secretarfa de Hacienda (Secretariat of the Treasury) SIC Secretarfa de Industria y Comercio (Secretariat of Industry and Commerce) SICE Secretarfa de Industria y Comercio Exterior (Secretariat of Industry and External Trade) SIGEP Sindicatura General de Empresas Pdblicas (General Union of Public Enterprises) SP Secretarfa de Planificacidn (Secretariat of Planning) SPE Secretarfa de Programaci6n Econ6mica (Secretariat of Economic Planning) SSEE SubSecretarfa de Estudios Econdmicos (Undersecretariat of Economic Studios) SSFP SubSecretarfa de Finanzas Pdblicas (Undersecretariat of Public Finance) UNDP United Nations Development Programme FOR OFFICIAL USE ONLY THE WORLD BANK Washington, D.C. 24433 U.S.A. Office of Diretor-Geeral Operaons Evaluaon June 30, 1993 MRAD=M.TO THEXCVlYB_DIRECTORS.ANID.THE.PRESIDEn SUBJECT: Project Completion Report on Argentina - Public Sector NM ment Technical Assistance Proect (Loan 2712AR) Attached is the Project Completion Report on Argentina - Public Sector Management Technicat Assistance Project (Loan 2712-AR) prepared by the Latin America and the Caribbean Regional Office, with Part H prepared by the Borrower. This was a large and complex Technical Assistance project, and the PCR revisits its origin, design and implementation issues in a highly professional manner. With some fifteen (15) major compo ents ranging from $500,000 to $1,700 million it is not easy to draw general conclusions on the project performance as a whole. Strictly speaking, components amcanting to $9.7 million receive an unsatisfactory rating by the PCR, against a total of $7 million considered satisfactory. However, many of the project's relevant objectives vere achieved. In particular. the project succeeded in strengthening the public sector information base, implementing and monitoring the economic reform program, improving tax policy, improving budget programming and control system and strengthening institutional capacity for agricultural planning. The main reasons given for the unsatisfactory performance of several components of this project are familiar, i.e., disregard of effective demand by the client, excessive reliance on outside consultants (some 800) with little participation of Government officials, and overall overestimation of the absorptive capacity of the institutional machinery. On balance, considering the extraordinary circumstances faced by the newly installed Government, the project is rated satisfactory. The institutional impact of the project is rated as substantial, and its sustainability as likely if one takes into account the fact that a number of activities carried out under the project with less than satisfactory performance became the seeds of subsequent operations and better focused technical assistance projects. The PCR correctly states that the main lessons of experience to be drawn from this project are: (i) Public Sector Management reforms should be more limited in scope and in areas where political, managerial and technical commitment is strong; (i) too heavy a reliance on consultants is detrimental to Borrower ownership; and (iii) reallocation of funds during project implementation should be transparent and linked to well justified changes in project scope. No audit of this project is planned. Attachment This document has aestricted distribution and may be used by recipients only in the performance of their oficial duties. Its contents may not otherwise be disclosed without World Bank authorization. FOR OFFICIAL USE ONLY ARGENTWIA MQa 0KnQN REPOR PUBLIC SECTOR MANAGMENT TECNIAL ASSISTANCE PROJECT (LOAN 2712-AR TABLE OF CONTENTS PE No. PREFACE ................................................. i EVALUATIONSSUM ARY ...................................... iii EAU'I: PROJECT REVIEW FROM THE BANK'S PERSPECTE/E . 1 A. ProjectIdentity 1........................ B. Background .......................... ... .. . 1 C. Project Objectives and Description ............................. 2 D. Project Design and Organization ............................... 3 E. Project Implementation..................................... 4 F. Results............................................... 5 G. Sustainability ........................................... 6 H. Assessment by Component .................................. 7 I. Bank and Borrower Performance............................... 17 J. Lessons to be Drawn for Future PSM Technical Assistance Projects.............................................. 18 K. Project Relationships ...................................... 19 L. Consulting Services ....................................... 20 M. Project Documentation and Data ............................... 21 PART I: PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE ........ 22 A. lntroductionand Conclusions ................................. 22 B. Impact ............................................... 24 C. World Bank Performance ................................... 24 D. Government Performance ................................... 25 B. Relationship between the Government and the Bank ................... . 26 F. UNDP/OPS Performance ................................... 27 G. Coordinating Unit Performance ............................... 28 H. SpecificProblems ........................................ 28 I. Lessons of Experience ..................................... 29 J. Recommendations ........................................ 31 PART II: STATISTICAL INFORMATION ............................ 34 Table 1: Project Timetable................................... 34 Table 2: Loan Disbursements: Cumulative Estimated and Actual Disbursements ............... ..35 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. TABLE OF CONTENTS (contd.) 88g..N.. Table3A: Project Financing ................................... 36 Table 3B: Project Cost Breakdown by Component ..................... . 37 Table 4: Status of Covenants ................................. 38 Table 5A: Use of Bank Resources ............................... 40 Table 5B: Mission Supervision by Year ............. .............. ....41 Table6: RehtedBankProjects ................................ 42 *I* PROJECT COMPLETIO REPORT ARGENINA PUBLIC SECTOR MANAGEMENT TECHNICAL ASSISTANCE PROJECT (LOAN 2712-R) PREFACE (i) This is the Project Completion Report (PCR) for the Public Sector Management Technical Ass'stan!x Project in Argentina, for which Loan 2712-AR in the amount of US$18.5 million was approved on September 12, 1986. The Loan was closed on December 31, 1991 (the original loan closing date was February 28, 1991). The loan was fully disbursed on May 14, 1991. (ii) Parts I and M of this PCR were prepared by the Public Sector Management Division of the LAC Technical Department (on behalf of the LA4 Country Department). This report is based upon an examination of Appraisal Reports, Loan Agreement and Supplementary Amendments, Supervision Reports, Implementation Reviews, Project Correspondence Reports, Financial Statements and Audit Reports. In addition, interviews were conducted during the final suprvision mission with personnel in the Project Coordinating Unit and with key personnel involved in the various project components. Finally, this report benefitted from the examination of the Final Report prepared by the Project Coordinating Unit and an Executive Summary of that report. Part II of the PCR was prepared by the Government of Argentina. - iii - PROJECT COMPLEIO REPORT ARGENINA PUBLIC SECR MANAGEM T NIAL ASSSTAN (LOAN 2712-AR) EVALUATI SUMMARY Introduction 1. The Public Sector Management Technical Assistance Project was conceived as a means for recouping badly deteriorated administrative capabilities; for introducing modern information, analytical, and procedural techniques to the public sector; and for improving sectoral and global capabilities for planning, programming, and monitoring, such that effective capture of available resources might be accomplished. The extremely weak institutional framework of Government and the paucity of technical personnel provided strong impetus for pursuing a strategy that would bring immediate skills to Government for the longer term institutionalization of sustainable reforms. It is within this context that the conceptualization of the need for support of reform on multiple fronts and for an effort to provide for the integration of information systems, resource mobilization capabilities, the development of analytical policy making capabilities, and the strengthening of the policy climate for investment activities in industry and trade evolved. The loan was ambitious and complex in terms of the numbers of component activities and the number of consultant activities under each component. It was intended as a funding structure for activities that would assist the GOA in the arduous task of strengthening management and analytcal capabilities in the face of an economic and political climate of increasing uncertainty. While a number of achievements under the loan made important short term contibutions to the management of principal functions of Central Government, and longer term contributions to the development of information bases and policy-making capabilities, some long term contributions of the loan were circumscribed by volatility in the climate of reform in the 1980s, by some initial changes in the managerial responsibility in the Bank, changes in the authorities in charge on the side of GOA throughout project implementation, and by weaknesses in the design and implementation of some activities under the loan. 2. The Project's principal objective was to improve the Government's capacity to manage the economy through the strengthening of economic and public sector management in key agencies involved in policy determination. This was to be accomplished through the improvement of effective and integrated policy development, particularly Government efforts to develop tools necessary .r coherent economic policy and decision making, to increase domestic resource mobilization, to improve public sector investment efficiency, to strengthen the performance of public sector enterprises including the restructuring of enterprises, and to improve export and ind.s-ial policies. - iv - Imoemnentation Exience 3. In presenting the loan to the Executive Directors, the Bank correctly identified the main risks of the lending operation as the multiplicity of institutions involved, the ambitious and complex nature of the tasks, and the lack of human resources in Government at the time. However, with hindsight these risks were underestimated and the absorptive capacity of Government overestimated. In particular, the Project experienced extreme delays and difficulties during the first three years of implementation. This was a result of the precarious nature of the Argentine economy; volatility in Bank personnel supervising the Project; a changing commitment on the part of the GOA to reform; the sheer number of individual consultants involved in the Project; delays in procurements; and weaknesses in counterpart personnel and continuity in the Executing Agencies. 4. The Project passed through three fairly clearly demarcated phases during Its life. The first year of project implementation resulted in a flurry of activity, when there was a great deal of fund disbursemeat. In this initial period all components legged behind schedule, and in the first year nine components had not begun. The Project moved into a period of Intense re-examination ("pausa de reflexi6n") of the intent and direction of a number of the components, and indeed of the Project as a whole (mid-1987 through mid-1988). In addition, concern was expressed with regard to excessive delays in initiation of activities and the poor use of consultants. During this second period, the level of activity under the loan was reduced dramatically. Finally, the last three years have seen an effort to provide continuity to the Project from the Bank's side, to redefine the overall scope of the Project, and to restructure some components and to reallocate funds from others to different components in an effort to provide a more Integrated scope to the Project and to link it to other technical assistance activities. The su.tainability of activities initiated under the Project is a result of this redefinition and recommitment, evident in the current administrative reform efforts and associated Bank loans. Sustainahbt 5. Sustainability under the conditions of Argentina in the 1980s would have been difficult in the best of all possible circumstances. In a positive sense, much of the informatics developed under the loan are in use, at the point of becoming available for use, or may need to be strengthened in the context of current technical assistance activities under new loans. A number of component activities have become inputs into ongoing loans and technical assistance operations. However, a small but meaningful portion of the consultant activity under the loan was stop-gap management and technical advice, serving more for immediate activities than for the longer term. In some cases, this short-term strategy was warranted given the needs of the time. In others, it was driven by the availability of talent. One significant result has been the development of a pool of talent where some consultants under the Project have become key actors in the current Government. 6. In one sense, the Project served to provide for the very real need for continuity in the face of turbulent administrative, economic, and political times. The provision of large numbers of individual consultants can be seen in two lights: (a) as a short term solution and a weak strategy for assuring institutional transfer of skills, structure, and processes; or (b) as a means for maintaining line functions and direction in a time of turbulence and a possible means for strengthening initial institutional efforts that require further institutional support over the longer iun. This project is a mixture of both of these realities. On the positive side, the Project did produce much needed information systems, valuable short term policy advice, and served as the initiative for a number of current technical assistance and policy-based operations. On the other hand, some consultant activity -v- provided only stop-gap management and technical advice; there is evidence in the early years that some individual consultant activities encouraged government personnel to become active consultants to the Project outside government, and some of the ambitious informatics were weakly connected to extant demand or capacity. Findings and Lessons Learned 7. While the incredible economic, administrative, and tiitical turbulence of the 1980s may not characterize current Argentine conditions, there is still dramatic change occurring and the need to consider issues of project dAg8, implmentation. and superIsion during such times. Several key lessons emerge from this project. Attempts at PSM reform need to be limited in scope and well- focused in areas where there is strong commitment at all levels (political, managerial, and technical), particularly in weak and/or uncertain political and economic environments. Clearly identified outputs and expected impact must be incorporated in design. Succezaes can then serve as the basis for future assistance and reforms. Supervision by the Bank and the Borrower on a continuous and intensive basis is paramount in public sector technical assistance efforts. There needs to be a careful balance between short term exigencies (eg., maintaining line functions) and the long term needs of strategic institution building. The heavy reliance on consultants throughout the Project created difficulties in supervision, in maintaining government personnel, in transferring technologies and skills to institutions. In addition, transferring skills and talent to government in the absence of a viable wage structure is not likely; there is a need to focus human resource development programs on the prior need for incentives to performance. Finally, while flexibility in the allocation of funds served the Project well in some cases, and allowed for the reallocation of fiuds to rapidly changing circumstances, there is the potential that flexibility may lead to slippage and to the failure to define adequately the scope of changing use of funds. PR OJECT COMPEIOM REPORT ARGENINA PUBLI SETO MANAGEMNT TECHNICAL ASSISANCE PROJEC (LOAN 2712-AR) PART I:R= UWEATEBNSPSp E A. oect Ident4it Project Name: Public Sector Management Technical Assistance Project Loan Number: 2712-AR Regional Unit: Latin America and Caribbean Region Country: Argentina Sector: Public Sector Management B. Background 1. Any public sector reform effort in Argentina during the extremely turbulent times of the 1980s would likely encounter dramatic difficulties in implementation and would be required to respond to changing economic, administrative, and political circumstances. Five stabilization programs in the period from 1984-1989 failed, due largely to difficulties in adjustments to the public sector. The Public Sector Management Technical Assistance Project was conceived as a means for recouping badly deteriorated administrative capabilities; for introducing modern information, analytical, and procedural techniques to the public sector; and for improving sectoral and global capabilities for planning, programming, and monitoring, such that effective capture of available resources might be accomplished. The Project had its origins in the efforts of the Alfonsin Government to respond to the severe economic crisis it inherited upon assuming office in 1983. Facing spiralling inflation and deteriorating balance of payments difficulties, initial reforms of the Alfonsfn Administration attempted to introduce orthodox demand management with the assistance of a 15 month IMF stand-by agreement. However, failure to adhere to the initial reform program resulted in suspension of the stand-by agreement in 1984. 2. The ascendance of a new economic team in early 1985 and the introduction of the Plan Austral, the shift from gradualism to "shock treatment," and the initial success of reform efforts provided a positive backdrop to the initiation of administrative reform efforts and for the provision of technical assistance to strengthen and deepen the ongoing reform program. The extremely weak institutional framework of Government and the paucity of technical personnel provided strong impetus for pursuing a strategy that would bring immediate skills to Government for the longer term institutionalization of sustainable reforms. It is within this context that the conceptualization of the need for management support on multiple fronts and for an effort to provide for the integration of information systems, resource mobilization capabilities, the development of analytical policy making capabilities, and the strengthening of the policy climate for investment activities in industry and trade evolved. 3. Substantial effort preceded the implementation of the Loan. Beginning with initial discussions in 1984, Bank-Government negotiations led to the development of a UNDP-financed, Bank-executed project to identify components and to prepare a proposed Public Sector Manaement Technical Assistance Loan. A Pre-Appraisal Mission in July 1985 assisted in the identification of initial activities that might be pursued under a Public Sector Management TAL. Subsequent approval of a .2- Project Preparation Facility (PPF) in early 1986 furthered the identification and diagnostic work, with the resuiting tocus on a number of critical areas including: public enterprise reform, public sector Investment, the development of analytical tools for economic decision-making, and the strengthening of an integrated information base for planning, programming, and monitoring in several key sectors of the economy. In addition, work conducted under the PPF developed implementation plans, Annual Action Programs, counterpart arrangements, and some terms of reference for major assignments. Appraisal in March 1986 and subsequent negotiations in May 1986 led to Bank and Government signing of the Loan Agreement in September 1986. In addition, UNDP provided bridge financing to ensure continuity betweec. the PPF and loan effectiveness. C. Project Obectives and Descridt 4. The Project's principal objective wa to improve the Government's capacity to manage the economy through the strengthening of economic and public sector management in key agencies involved in policy determination. This was to be accomplished through the improvement of effective and integrated policy development, particularly Government efforts to develop tools necessary for coherent economic policy and decision making, to increase domestic resource mobilization, to improve public sector investment efficiency, to strengthening he performance of public sector enterprises including the restructuring of enterprises, and to improve export and industrial policies. These efforts were intended to reduce the public sector deficit as well. 5. The Project, as originally designed, consisted of: (a) technical assistance to the Ministry of Economy for the development of enalytical tools for decision-making through (i) the building of forecasting models; (ii) improving macroeconomic and sectoral data through the development of input/output matrices; (iii) the establishment of integrated information systems; (iv) the development of reliable national accounts; and (v) the improvement of economic statistics and the strengthening of INDEC's resource capabilities; (b) a central resource mobilization and use component to (I) strengthen SP's capacity for global planning and for project and program evaluation; (ii) strengthen SH's capabilities in programming and budgeting through improvements in tax policy and administration, criteria for determining public expenditures, computerization of the budget process, and the provision of appropriate and timely information; (iii) strengthen MOSP's capabilities in investment programming, policy formulation, and monitoring of the public enterprises and other public agencies under its purview; and (iv) strengthen SAGP's institutional capacity and the coordination among entities in the agricultural sector; (c) a public enterprise management component to define the institutional relationship of public enterprises (PEs) with Government to (I) improve systems of control, information, and performance incentives; (ii) conduct in-depth analyses of restructuring requirements for major PEs; (iii) training of public enterprise managers and central government officials to facilitate institutional reforms; and (d) an industry and trade component to (i) simplify trade and customs procedures; (ii) improve the capture of taxes from indirect exporters; (iii) reorganize SICE's external -3- trade capabilities; (v) strengthen the ANA; (v) strengthen the design and implementation of export promotion policies and services to exporters; and (vi) conduct studies to improve export and industrial policies and the capability to analyze world market trends. 6. Three components were added during the life of the Project, which were financed through unallocated and reallocated funds. In 0)87, amendment to the original loan reallocated funds to support the effort to privatize the petrocLmical sector. The component to support the design, implementation, and monitoring of the new Economic Reform Program was initiated in July, 1990, and expanded in 1991. This was an effort to strengthen the coordination and integration of activities within the Ministry of Economy in support of the new economic program, with particular emphasis on administrative reforui. The component to strengthen the Superintendancy of Financial Entities (SEF) thr,. the purchase of computer equipment and seftware resulted from the reallocation of funds in July, 1990. The purpose of this component was to enhance the physical capacity of SEF to improve financial control and information of the banking sector. In addition, several original components were modified, discontinued, and/or combined for more effective use of project funds. D. Project Design and Organization 7. The design and attribution of responsibility for various activities under the loan was driven by several factors: (i) an image that the institutional needs of Argentina were great; (ii) that the Initial enthusiasm on the part of Government would carry the Project; (iiI) that the existence of a newly created coordinating agency in Government (the Secretariat for Economic Coordination in ME) and the Project Coordinating Unit (PCU) could provide effective integration among components; and (iv) that the answer to institutional shortcomings was technical assistance to individual agencies within Government. No fewer than seventeen distinct entities were to implement the various components of the Project. The staff appraisal report correctly identifies the potential problems of project complexity and multiplicity of consultants: "The relatively large size of the proposed project and the number of activities and consultants involved entail some risk of delayed or incomplete implementation." However, the number of components and the complexity of relationships among components, consultants, and the coordinating unit proved more onerous than perceived, and the presumption that the supply of technical assistance could resolve institutional issues was overly optimistic. Problems in design complexity affected implementation throughout the Project, from early delays in implementation of individual components to inadequate Integration among components. 8. The limited absorptive capacity of Government was not fully recognized at design stage. Given the recent restructuring of much of the administrative apparatus of Government under the Alfonsfn Administration, and given the relative organizational ambiguity that existed for much of the Project, it is not surprising that complexity should lead to delays, shortfalls in some component goals, and weak integration and transfer for other components. As a result, for some components (eg., Bl, Cl) various Government reorganizations during the life of the Project resulted in shifts in the siting of components. Further, this shifting of institutional settings also resulted In a limited transfer of some of the systems developed as well as weaknesses in institutional memory. 9. While relative continuity existed within the PCU over the life of the Project, the same was not true of either the organizational framework of Government nor of counterpart personnel within Government or in the Bank. Given the complexity of project design, the absence of this continuity has meant obstacles to the transfer of technologies and skills. -4- 10. Furthermore, design complexity also implies the need for intensive supervision, which was not fuily recognized at the design stage yet was very evident within the first year of project impliementation. No fewer than thirty staff weeks of supervision were invested in the Project in the first year - and another 38 weeks in the second year - and still there were significant delays in the implementation of most components. Finally, complexity is evident in the number of consultants; even at the design stage, some 800 consultants for some 4,000 work months of consulting services were envisaged. The internal weakness of Government staff skills was a major reason for the inclusion of large amounts of consulting activities in the hope that high level expatriate technical personnel could be drawn back to Argentina through the Project to strengthen national level expertise. Yet, to presume the need to draw on this expertise and not recognize the limits of absorptive capacity became a contradiction evident in various activities of the Project. In some cases, consultant experts became de facto line personnel involved in fire fighting activities (eg., B4, D12356). In other cases, consultant advice and products became technical products not easily absorbed nor easily transferred to weak organizational entities (eg., A3, B2al). 11. There was a heavy Investment of staff preparation time allocated for the Project. Project preparation began in late 1984. The utilization of the UNDP-financed project in 1985, as well as the PPF financed by the Bank and "bridge" financing by UNDP, meant that some US$ 1.2 million was expended at the preparation stage of the technical assistance loan. Yet, in spite of the intensive preparation, problems that resulted from design plagued the Project throughout. While multiple institutional problems and the enormity of the task were identified correctly, project design suffered from the lack of an integrated vision, the absence of an understanding of the need to sequence institutional interventions, and the assumption that the provision of technical assistance would create institutional stability. With hindsight these risks were underestimated and the absorptive capacity of Government overestimated. E. Project I mentio 12. The Project passed through three fairly clearly demarcated phases during its life. The first year of project implementation resulted in a flurry of activity, when there was a great deal of fund disbursement and component initiatics. In this initial period all components lagged behind schedule, and in the first year nine components had not begun. The Project moved into a period of intense re-examination ("pausa de reflexidn") of the intent and direction of a number of the components, of the excessive delays in component start-up and of the use of individual consultants, indeed of the Project as a whole (mid-1987 through mid-1988). During this second period, the level of activity under the loan was reduced dramatically. Finally, the last three years have seen an effort to provide continuity to the Project from the Bank's side, to redefine the overall scope of the Project, and to restructure some components and to reallocate funds from others to different components in an effort to provide a more integrated scope to the Project and to link it to other technical assistance activities. 13. In part, this tremendous volatility can be accounted for by volatility in national circumstances, as Argentina was going through precarious political and economic shifts continuously. In part, this volatility is the result of reorganization in the Bank and changes in Bank personnel supervising the Project. In the first three years of the Project there were four project managers or co- managers; in the last three years project management was continuous. Finally, during the first three years of the Project this volatility resulted from inadequate linking of individual consultant activities and components to a consistent overall vision and institutional framework for the purpose of the -5- technical assistance loan itself. In some components the assistance was seen (and used) as a temporary maintenance program for technical personnel, a stop-gap measure to retain skills needed during "transition." In other cases, components became Insulated from the day to day supervision that may have been necessary within the executing agencies, due in part the Incapacity of executing agencies to supervise. In yet other cases, volatility was the result of changing visions of the appropriate role of Government in the economy, affecting how particular component activities (eg., global planning, strengthening central control over PEs) were to be carried out. Implementation in more recent times has benefitted from (a) strong and continuous leadership of the reform program from within the Government and the ME in particular; (b) continued supervision and with a single direction from the Bank; and (c) improved interaction between the Bank and the PCU. F. RAsults 14. Judging the rtults of many activities under the loan is made difficult because the Project is directly related to continued activity under the PSRTAL, and the impact of this project needs to be viewed in terms of the reformulation of the Government's reform program in the post- 1989 period. Recent efforts by the PCU to create an archive of data/studies produced under the Project and the decision to produce 15 volumes of the studies will provide useful bases for further institution strengthening in Government. Generally, while the Project has produced a massive amount of studies, has developed a series of information systems, and has strengthened a cadre of personnel (primarily outsile of Government), the shortfalls in results are attributable to the weakness in linking the supply of technical expertise to practical demand in the short term, and the failure to integrate much of the information and to incorporate in institutions much of the work conducted. What does seem apparent is that the areas of greatest success under the Project are those components that aimed at relatively focused outcomes that linked performance to accountability (eg., A5: strengthening capacity and information base in INDEC; A6: support for the current economic reform program; A7:support for the Superintendancy of Banks; the subcomponent under B2 to strengthen capabilities in the Subsecretariat of Public Finance; C4: individual privatizations of petrochemical companies; and D12356 and D7 which focused on specific activities to be achieved in the trade and industry sector). The weakest components and subcomponents were those where the supply of technical assistance was not in tune with the extant demand for the use of TA. This applies to those components that either: (a) became contrary to the reformulated vision of the State (eg., Bl: global planning; C3: strengthening human resource capacity in an entity aimed at controlling PEs); (b) those that were driven more by the availability of technologies rather than the demand for the use of these technologies (A2,4: national accounts and input/output matrices; a number of the components aimed at Integrating sophisticated information systems and hardware; A3: integration of computerization of ME); or (c) did not reflect clear demand and consensus from leadership (eg., B2a: Tax Policy and Administration). 15. There are a number of components that must be seen in continuity. The outputs of these components provide strong potential inputs to ongoing TA projects and serve as foundations for further institutional strengthening (eg., Al and A4: forecasting tools and the national accounts; parts of B2: Tax Policy; B2bd: budgeting and programming improvements and links to the new Financial Administration Law). G. Sustainabilty 16. Sustainability under the conditions of Argentina In the 1980s would have been difficult in the best of all possible circumstances. In this loan, the lack of sustainability of some elements is directly related to this economic, political and institutional ambience. However, in some cases the lack of sustainability can be traced to weaknesses in the design of components and difficulties in incorporating consultant activities into the existing institutional structure. The sustainability of several of the components should be seen in light of the comments in par. 14. In a positive sense, much of the informatics developed under the loan are in use, at the point of becoming available for use, or may need to be strengthened in the context of current technical assistance activities under new loans. However, demand for some data and systems remains limited, and use is circumscribed. The lack of integration across entities within the ME and across secretariats is a major challenge to be overcome. A number of component activities have become inputs into ongoing loans and technical assistance operations. For example, some of the studies generated under the tax policy subcomponent served the current Tax Administration TAL; however, the same appears not to be true of much of the activity under the tax administration subcomponent of this loan. Activities in the area of reformulation of the administrative strategy have fed directly as inputs into the current PSRTAL. Similarly, some of the activities focusing on PEs (component undee C) have been useful in the development and activity of the current PERAL and PEREL. However, a small but meaningful portion of the consultant activity under the loan was stop-gap management and technical advice, serving more for immediate activities than for the longer term. In some cases, this short-term strategy was warranted given the needs of the time. In others, it was driven by the availability of talent. One significant result has been the development of a pool of talent where some consultants under the Project have become key actors in the current Government. 17. This use of consultants was not true for most components under the loan, but can be seen to varying degrees in: components focusing on resource mobilization (Bl, B2a2, B3, and B4); In the human resource development component (C3), and to a minor degree in the component focusing on industrial and export policies and procedures (D12356). 18. In one sense, the Project served to provide for the very real need for continuity in the face of turbulent administrative, economic, and political times. The provision of large numbers of individual consultants can be seen in two lights: (a) as a short term solution and a weak strategy for assuring institutional transfer of skills, structure, and processes; or (b) as a means for maintaining line functions and direction in a time of turbulence and a possible means for strengthening initial institutional efforts that require further institutional support over the longer run. This project is a mixture of both of these realities. On the positive side, the Project did produce much needed information systems, valuable short term policy advice, and served as the initiative for a number of current technical assistance and policy-based operations. On the other hand, some consultant activity provided only stop-gap management and technical advice; there is evidence in the early years that some individual consultant activities encouraged government personnel to become active consultants to the Project outai government, and some of the ambitious informatics were weakly connected to extant demand or capacity. 19. One of the weakest aspects of the sustainability of activities under the Project was the design decision to limit the amount of training that would take place under the Project. Virtually no training was contemplated in project design, and very little funding was allocated to training during the life of the Project (US$506,000). In one sense, this limited training is the result of the high degree of movement of personnel at mid-level technical positions out of Government and the .7- perception of the need to bring personnel (expatriate Argentine In particular) into Government activities. However, the transfer of skills to line personnel remained weak in many components, resulting in greater difficulty in the maintenance of modernized systems. This became important in some of the informatics components in particular, where in-house expertise Is only now beginning to take effect. H. Assessment by Com The complexity of the Project and the differences in performance among components warrant individual attention to each component. 20. Com onents Under A: Economic Policy Tools. One of the principal thrusts of the Project was intended to respond to the dearth of analytical information for the development of effective policy responses in the country. The absence of clear and reliable indicators or analytical capacity within Government was viewed (correctly) as a critical gap that needed to be filled in order to respond to the major macroeconomic crises of the time. Fully 19% of the original total project funds- and over 16% of Bank funds - were to be devoted to the development and integration of information and analytical capacity, particularly within the Ministry of Economy. However, the early period of implementation exemplified the conflict between the desire to =mAkld quality information and sophisticated analysis and the ail for short-term advice and analysis for decision-making In response to immediate exigencies. 21. Al: Development of Macroeconomic Tools (USS935.881). Within this component the conflict between supply-driven technical assistance and the demand for policy decisions is clearly evident. The objectives were to develop both partial and general equilibrium models for use by decision-makers and the integration of these capabilities within the ME. Two identifiable stages are evident here, the first of which (through 1989) focused on the creation and supply of information without much integration. The contracting of CEDES for the development of equilibrium models was based upon that institution's experience with macroeconomic modeling and analysis in Argentina. While numerous relevant studies and the development of economic models resulted, little capacity was developed for responding to short term exigencies within the ME and little integration with line functions of the ME resulted. Even the choice of computer technologies to acquire (i.e., a Digital PDP 11-70 as opposed to smaller capacity PCs within the ME) suggests the conflict between the decision to opt for relatively high powered available technologies adequate for computer modelling exercises and the immediate needs within the Ministry. It is only with the much later (1989) shift in strategies for this component that effective policy-relevant activities can be seen. In part, this shift is the result of yet another set of external shocks and the even clearer perception of the need for policy response. In this second stage there was great reliance on individual consultants, an effort to recoup much of the information generated under the earlier activities, and the reallocation of additional funds (some $250,000). It is only recently that the outputs of this component can begin to be felt. While on the job training was not strong in this component, and only limited integration of this informational component with other information technologies developed has yet occurred, some progress and potential can be observed: (I) the development and consolidation in a specialized policy analysis unit (SSEE); (ii) the beginning of integration of information with other components (Component A2,4) is now underway; and (iii) studies generated during the two stages of the activity have proved useful in recent negotiations (eg., Brady Plan, Uruguay Round). -8- 22. A2.4 Revision of National Accont and Develaopmn of Inpt/Otum atie (W1.440.835). Among the most Important analytical tools for effective macroeconomic and intersectoral policy analysis are reliable and timely national accounts and input/output tables. Deficiencies In Argentina meant that at project outset the extant data bases were antiquated, in fact unusable: the latest Input/output matrices relied upon 1963 data and the national accounts data relied upon 1970 estimates. Again, underestimates of the requirements for development of these systems, of the volatility of the environmental and institutional context of Argentina, and of the institutional capacity needed to carry out these activities led to unwarranted optimism in design, both in terms of time needed and cost. While the original design conceived of two separate components, the clear need for their integration led to redesign. In spite of the participation of CEPAL and of a technically competent team contracted within BCRA, the results at project end have been less than anticipated at the design stage. The development of the input/output matrices was abandoned as a main priority because of difficulties in the industrial census that was to serve as a basis. The development of the national accounts data has consumed enormous effort, but has resulted in a sophisticated and inclusive methodology that is complete, and the development of the national accounts based upon a new reference year (1986) is now available for use and is to be updated regularly within BCRA through the system for administering economic time series (SASTE). However, to date there remains a need to improve effective interaction among institutional actors, especially between BCRA and the ME. The lack of integration of systems with personnel trained in their use has meant the development of a data base that has future potential but has had little immediate Impact. Efforts to Improve current use of information systems made under the Project merit mention, Including the development of a monthly statistical bulletin and a mid-project seminar on the use of national accounts. There appears to be a sense of asynchronism in the development of the information systems, with the creation of data and the acquisition of hardware, within and among key institutions, not linked. 23. A3: Interation of CMUIzatO inin the ME (T82589 In an effort to provide for the integration and management of economic information within the ME and with other key institutional actors (eg., BCRA), this component envisioned the development of information systems within the ME for monitoring, planning, and managing data, including the development of an integrated network of computers within ME. However, this component re-emphasizes the absence of a conceptualization of the "why" and the "who" of the development of such a system, a grounded perception of the demand and the users of the system. Once again, the prVislon of technical assistance and equipment was driven by the capacity to supply said inputs rather than by demand or capacity to use the information generated. As is noted in the Informe Final of the PCU, hardware and software were installed, even though the definitive end users have not been defined. 24. Weak institutional capacity, weak counterpart support, the absence of clear internalization of the use of the intended system, and reliance on external consultant expertise to define the objectives and the activities under the component plagued it from the beginning. In the first several years, little was accomplished. Component reformulation and the movement of the component from SCAT to SCE in 1988 were intended to respond to initial design and implementation shortcomings. However, the component appears to have continued to have been supply-driven. As a result, a data series with some 5,000 variables was initiated, major sophisticated hardware (HP 9000/825) and software were purchased, and the budget for the component more than doubled from initial appraisal estimates. Yet, as of early 1992: (i) only 8% of the data series are completed; (ii) little use of the data series for decision-making or integrating information has been accomplished; -9- (il) the failure of the counterpart to provide for maintenance of equipment has resulted in breakdowns; (iv) the initial goal of networking users in and across ministries has only begun; and (v) there is weak capacity among personnel within ME to utilize the system. 25. During the early period of implementation of this component (which was delayed by at least a year) there appears to have been a concerted effort to acquIt technical inputs and assistance (equipment and consultant expertise) while it was available, rather than view the need for the integration and consolidation of Information systems for institution building. The component experienced a constant lack of counterpart commitment and, as a result, the preparation of technical expertise for the use of systems has lagged the development of systems. In addition, interviews suggested that one serious problem with the integration and utw of available information stems from both a *lack of marketing" and bureaucratic rivalries that see the control of information providing more power than the sharing of information. In a real sense, commitment to integrated information systems did not precede the development of information bases. 26. Very recent efforts to capture the potential of information systems have begun to yield results. This component has become a focus under the recent Administrative Reform efforts of Government to institutionalize Information systems. Clear resetting of goals is apparent in current efforts to consolidate the information systems rather than expand capacity still further. While some use of information has begun within the ME, the current effort is to Integrate ministerial personnel more fully into the system. In addition, efforts to provide for greater funding for maintenance suggests a positive change in commitment. 27. AS: Strengthening Public Sector Information Base (US1.275.751). In addition to strengthening the economic information base and system within the ME, a concurrent component aimed at strengthening specific information series and databases within INDEC. Reasonable success was achieved under this component, a result no doubt of the relative specificity of the information supply and use to be obtained. Seven principal information-focused activities were envisioned under the component, including: (i) the generation of data on external trade; (ii) the development and use of data generated from the 1986 agricultural census; (ii) the completion and use of the industrial census; (iv) strengthening of the technical capacity of Provincial Directorates; (v) incorporation and training in the use of statistical packages within INDEC; (vi) the automation of a cartography program; and (vii) a study of poverty in Argentina. 28. Practically all outputs under this component were achieved, information was generated for use, and the activities were incorporated institutionally. One major exception has been the development of the data series from the industrial census, where the relative insulation of INDEC from users, and problems in the quality of the series, have made the data less useful. Since these data were intended to be used in the development of the input/output series, the consequences. of the lack of effective sequential development of information has been felt in other institutions and across other components. 29. A6: Sunoort for the Design. Implementation and Monitoring of the Economic Reform PrograM (US$715M.774. With the reformulation of national strategies for reform in 1989-1990, funds under the loan were reallocated to this additional component, agreed to under amendment to the original Loan Agreement. The intent of this component was to support the emerging economic reform initiatives of the Menem Government, and particularly to strengthen the institutional framework for the carrying out of reform of the public sector. Objectives of the component were to: (1) support the - 10- administrative activities of several units, and most especially the SCAT, In the face of the changing reform agenda to aid in the design and monitoring of the reform plan; (2) assist reform of the National Administration; (3) support reform of the Bancos Oficiales through diagnostic work; (4) assist in the restructuring of the rail system (transport sector) related to pricing, debt, and equipment sales; and (5) assist In development of norms and procedures for channeling external technical assistance. 30. This was a cost effective add-on to the original project, providing for a means of continuity in the reform program and for a sense of insthitional ownership of the program. A series of norms and decrees have resulted directly from this component. Of greatest significance have been decrees implementing the new administrative reform program (435/90; 470/90; 1482/90; 2476/90; and 1887/91) as well as several decrees altering the functional structure of the administration (1991) and decrees affecting the labor code (with particular attention on a new regime for executives within the administration in 1991). In addition, an executive committee for the reform program (CECRA) has been created as a direct result of loan activities. In fact, this component provided an important backdrop to three new loans: the Public Enterprise Reform Adjustment and Execution Loans (PERAL/PEREL) and the PSRTAL. To some extent, the component also served as a PPF for these new loans. Other achievements that have resulted from initial activities under this component include: the development of profiles of new personnel; a functional review of the central administrative structure; the reorganization of lines of authority and responsibility in the Central Administration procedural simplification; the strengthening of central coordination for carrying out reform initiatives. In addition, it provided for continuity in leadership and a vision of reform initiatives. 31. A7: Sugport for the Suerintendancy of Financial Entities (USS148.330). The addition of this component came as the result of Bank supervision mission interaction with Government in mid-1990, and was intended to provide rapid support to the SEF to strengthen its capacity to monitor financial sector policy. Seen as an effort to provide early support to the larger reform initiative supported under the PSRTAL, this component provided for hardware and software development. The existence within the SEF of technical expertise meant that the provision of this equipment found immediate and continued use. Specificity of purpose and transparency of use of funds has made this component a successful activity, assisting the ongoing strengthening activities of SEF. 32. Components Under B: Central Resource Mobilization. A second major thrust in the design of the Public Sector Management Technical Assistance Project was the strengthening of the capacity of the public sector to capture and mobilize resources effectively. Woeful inadequacies in both the revenue capture capabilities of government and in the capacity of the Central Government, provincial governments, and public enterprises to link resource generation, resource use, and the planning and programming functions had led to increasing public sector deficits and irrational use of public sector investment planning and programming activities. Approximately 30% of total project costs and of Bank lending were to be allocated to the components under this activity. The six components under this major direction of technical assistance were intended to improve the functioning of these systems. 33. Bl: Strenethenina Global and Sectoral Investment Plannin, (USS991.270. This component initially was intended to strengthen the Secretarfa de Planificacidn's capacity to prepare medium- and long-term global and sectoral investment financing programs and to improve the capacity of the SP to evaluate and monitor investment projects and programs. The relevance of this component was substantially modified as a result of the shift in Government (Alfonsfn to Menem) and the changed perception of the role of planning that occurred in 1989. With the declining emphasis on - 11 - State planning, both the SP and the planning function became less viable, and the sustainability of some activities under this component is in doubt.In spite of early implementation delays, a number of activities under the component were completed: (I) a number of diagnostic studies and guides were carried out informing the process of a national system of investments; (i) a methodology for investment programming, evaluation, and prioritization was developed and sectoral guides for evaluating investment projects were generated, including specific evaluations; (iii) an inventory and methodology for following the project cycle was developed at the national and provincial levels, and personnel within SP were trained in the usage of the technology; and (iv) a number of training courses (5) were conducted and some 125 functionaries were trained from various entities of Government, albeit at substantial unit costs. 34. However, the shift in emphasis away from a planning model, the volatility of the economic climate, and the absence of resources for public sector investment have resulted in questionable sustainability of some of these activities; in particular, failure to maintain the project inventory has rendered it obsolete, while the design and methodology for project selection remain. The end result is: the existence of methodologies; diagnostic studies in sectors and on specific projects; some trained personnel in a much reduced SP (politically and in terms of numbers) now located as the Secretarfa de Programacidn Econdmica within MEOSP; and a methodology and equipment for Investment programming in the absence of an institutional setting which has weakened the relevance and weight of such activities, at twice the original cost estimate. 35. Iam: ptVEqyJzg Tax Poliy MSQAAI,1. roving resource mobilization directly targets the improvement in tax policy and administration. While originally part of the same component (B2a) these two activities were separated during implementation and became somewhat autonomous from each other, and from other project activities. The tax policy subcomponent was intended to produce a series of diagnostic and analytical studies of the existing taxes and the impacts of the tax system. These studies were coordinated by the DNIAP, and conducted with the contractual assistance of CIET. As a result of these activities there were a series of reasonably well designed and conducted studies of a number of specific tax policy issues such as an analysis of the current tax system and structure, studies of incidence, burden, and distributional impact, estimates of evasion, etc. While a number of the studies conducted under this component were of high quality, there was little strengthening of tax policy capabilities within DNIAF. CIET consultants carried out their individual research activities, but the weakness of counterpart personnel in Government left these studies without an audience in DNIAF. There was a very strong research focus to the component (some 90% of funds) with little transfer or training: four junior professionals did receive training but they did not remain in DNIAF. Many of the studies produced are excellent but had little direct policy focus, partially because of the nature of the studies and partially because activities were unabsorbable in the public sector. Weak counterpart supervision existed; few qualified personnel in DNIAF existed; there was little monitoring of activities by the Bank or by the Project Coordinating Unit; and there were no links to the Administration component at DGI. However, some of the products and personnel (investigators) now form part of the new (consultant) tax team for the current Tax Administration TAL I. Several of the studies have provided input more recently for legislation and decrees, and a data bank project developed useful time series data on collections for the 1970-1986 period. The studies have also provided substantial input into Bank-produced analyses of tax policy and systems, which have been circulated within Argentina. - 12 - 36. B2a2: Strngthening Tax Administraton (USS1.387.691). From early appraisal this component was an overly ambitious undertaking within the context of the loan. While initial efforts to develop a comprehensive reform of the chaotic state of tax administration was pared down during appraisal, the design of the component remained unwieldy. Activities hatended under the component included redesign of collection and fiscalization systems, reorganization and training in the DGI, creation of coding system of contributors by economic activity for monitoring and projetions, and the development of an information planning system and a strategic Information management system for control within DO. Delays in Implementation occurred from the outset, in part a function of the number of individual consultants involved in the component, as well as difficulties in the effective management of consultant resources by the PCU. 37. While a number of individual activities were carried out by consultants, the increasing centralization of control over the component activities by leadership within DOI led to little transferability of systems developed and of activities carried out by consultancies. One of the major achievements under this component was the development of a system for identifying tax contributions (CUIT). In addition, a set of data bases, a number of tax forms, the identification and systematization of information on various classes of contributors, and an information system for monitoring key economic transactions (SITER) were developed when the decision to alter the scope and intent of this component occurred in late 1988. The decision to adopt a different tax information and administration model from the Spanish Government, coupled with deteriorating control over the transfer and sustainability of elements of this component led to decisions to suspend activities in 1989. Activities suffered from strong strategy differences among key actors, differences that were resolved in favor of a highly centralizing strategy of tax information. However, the strategy to utilize a centralized system with large computer capabilities and sophistication came to overwhelm the extant technical capabilities of staff, and the capacity of the system was never utilized and ultimately left behind. 38. Little transfer to line personnel within DOI, little implementation of activities conducted, the decisions to centralize tax administration information through highly sophisticated hardware and software, and the loss of much analysis developed by disparate consultants meant little sustainable activity at a rather steep cost, even with suspension. One might question why this component continued to receive attention in the face of clear signals that sustainable institutional activity was not to be accomplished. There is some evidence that the component continued in spite of efforts by the PCU to terminate activity, in part an inertia that resulted from the realization on the part of both Bank and Government that this activity was critical for the longer run. It would appear that monitoring capabilities within the Bank and the PCU were inadequate to judge the quality or viability of activities under the component. Highly technical criteria that may have guided the initial design and enthusiasm for inclusion of this component did not generate highly technical and enthusiastic demand for specific implementation of activities conducted. 39. One of the more immediately successful activities under this component was the effort to strengthen the information processing and technical computer capabilities within the Subsecretariat of Public Finance. A brief nine-month activity with careful and discrete focus was planned utilizing funds ($78,000) from the original component (as amended). Substantial hardware and appropriate software were supported, and initial training in their use for staff members occurred. A tax data base was developed and is currently operational as the source of fiscal information for the Government. 40. B2bd: Improving Budget ProMgmming and Control Systems (USS86l.926). This component focused on improvements in general control over the expenditure allocation system, - 13 - including improvements in and computerization of the budget process, strengthening the general accounting system, diagnostic studies, and improvements In the timely provision of information on public expenditures and linkages among the budget, accounting, and treasury functions. In spite of the critical need for improvement in these functions, work under this component did not begin effectively until 1990, the result of a lack of consistent leadership, weak internal capacity for incorporation of activities within the Direccida Nacional de Presupuesto, an early focus on budget conditions under inflation which became less relevant In later years, and the lack of a legal framework for carrying out reform. 41. A second stage of activity under the component began in 1990, with the assistance provided by CEPAL as well as individual consultants. This second stage has resulted in the achievement of a number of objectives in the 1990-1991 period, including technically sound analyses of budgetary implications of inflation, the development of systems for monitoring and projecting flows of funds, the creation of a monthly bulletin and a technically proficient redesign of the accountir of public debt, and the preparation of early drafts of the new Law on Financial Managem-at and Performance Control. It is only recently that the provision of an integrated information system for accomplishing the budget, accounting, and flow of funds functions has come to possible fruition. However, weaknesses in technical capacity within the entities involved continue to threaten the sustainability of activities under this component. Because of weaknesses in staff skills and incentives to performance during much of the period in question, there was little internalization of technical advances and certain activities of some consultants were consumed in short-term firefighting exercises and in the performance of routine line functions. Longer term benefits were initiated under the loan, but the implementation process has not reached full fruition. It is important to stress that the consolidation of these achievements and the deepening of the process of integration of these key financial management and control functions are critical foci of the new PSRTAL. 42. B3: Strengthening InvMent Programnming and PolievlFormulat Canabilities of MOSP (MSS723.957 This component in many ways symbolizes the impact of the rapidly changing environment external to the loan and the dramatic change in philosophical vision with regard to the State's role in investment programming. The objectives of this component were to strengthen MOSP capacity in investment programming and evaluation, in policy formulation and monitoring, in developing pricing and tariff criteria for MOSP-controlled PEs, and the strengthening of specific Secretariat's within MOSP (Water and Communications). Most of the early activity involved diagnostic work of a rather academic nature which was removed from implementation, with the development of implementable activity occurring only beginning in 1989. A shift in focus led to a change in the thrust of activities. Early work focused on increasing the capacity of MOSP to control PEs under its jurisdiction. While much information about particular PEs was gathered during the early phase of the component, and a methodology for prioritizing projects was developed, these proved of little use to MOSP as the emphasis shifted from central control and regulation to privatization. In the later phase of the project (post-1989) the diagnostic work on specific enterprises and the inventory of projects served as inputs under component C12 in an effort to strengthen the privatization process. - 14- 43. B4: Stre&Wthenigtiutina Canacty for AgrleituA Planning (USS1.350.9-77). This component also symbolizes the shift In perceptions of the appropriate planning functions of the State, and suffered from the shift In the external environment and the vision of the role the State should play. The logic of the inclusion of this component would seem to stem from the early high expectations of agro-export development and the concomitant aggressive role of the State in agricultural planning, parallel to the efforts under the Agricultural Sector Loan and the National Agriculture Program (PRONAGRO). As such, the Initial objectives were to (I) design and implement an information system for agricultural policy and project development; (ii) strengthen SAGP's capabilities for investment programming and project identification, including training; and (iii) install a system for project monitoring and evaluation. The component generated a large number of diagnostic studies of various subsectors, each with sets of recommendations for action. Virtually all of these studies, howt. :, were conducted by a very large number of consultants with little development of absorptive capacity within SAGP. Almost $1.2 million of the $1.35 million expended under this component was absorbed by more than 90 individuals external to SAGP, albeit primarily local consultants. A substantial portion of the activity of consultants was absorbed in line functions on a regular basis, firefighting exercises performed by external personnel in the absence of qualified permanent staff. One interview suggested that as much as one third of consultant labor was dedicated to these line activities. 44. During the life of the loan there were four different counterparts and significant changes in agricultural strategy, resulting in an uncertain (at best) institutional environment for the conduct of the activities under the component. In spite of the difficulties imposed by the changing external environment and the very high dependence on consultant services, a number of meaningful results from this component have occurred. As a result of work conducted under this component, an inventory of potential projects was developed, many diagnoses of specific subsectors and policies were carried out that have played a role in developing policy direction, a strengthening of the information base on projects at the decentralized level was achieved, a sector level workshop in 1990 was held to disseminate information on the sector, and a sector level report on the use and availability of information was produced. However, heavy reliance on personnel external to the SAGP, changes in the mandate of the role of SAGP, and consequent downsizing of the Secretariat has resulted in the lack of applicability and the failure to incorporate much of the information gathered. 45. Cl.2: Strengthening Public Enterrise Management (US$1.720863). Activities under this component suffered serious delays from the inception of the loan and were subjected to multiple organizational changes and counterpart changes during project activity. While originally conceived as separate components, as the result of amendment to the original loan agreement, activities under these two components were combined - and remaining activities under B3 were redirected toward enterprise reform as well - as the change in emphasis occurred from strengthening central governmental performance in relation to the public enterprise sector to a focus on restructuring the enterprise sector itself. In the early phases of the project, the emphasis was on restraining the cost burden of PEs to the central government and to increase central control through the SCEP. Objectives included diagnoses of changes needed in the system of central control, information and performance incentives; the implementation of institutional reforms in PE management based on the diagnoses; and diagnoses of the restructuring requirements of major PEs. However, this emphasis on improving central control proved difficult due to (i) the limited capacity of the SEP (and the SCEP within it) to absorb the activity; (ii) the rapidly changing institutional environment as the newly created DEP was to assume new functions and to absorb any residually acceptable functions of the SCEP, and subsequently activities were transferred successively from DEP to MOSP to SEP in ME, and then back to OSyP in - 15 - ME; (iii) the shift away from concern with strengthening the investment role of DEP; and (iv) the effort to create budgetary control and consolidated accounts for the PEs which resulted in improving the quality of data on PEs, but not the capacity of DEP to exercise effective control. 46. During the first two years of the project, activity (and disbursements) was minimal due to the absence of a clear work program of technical assistance. Through 1988, less than $100,000 was expended under the component(s). It is not until mid-1988 that the presentation of a work program became reality, and it is not until 1989 that substantive activity under the compinent was begun. However, by 1989 the emphasis had shifted to privatization of a number of major enterprises (railroads and communications In particular) and to the restructuring of labor relations within enterprises undergoing transformation. As a result of the changing organizational context and the changing perception of the role of the State in relation to public enterprises, what is sustained is difficult to measure in an organizational sense. Due to the initial lack of clear design criteria that were responsive to the reality of Argentina, the component became reactive to changing environments throughout the life of the loan. What is clear is that activities provided substantial input during the process of privatization of some enterprises and served as inputs in discussions and negotiations of the current Public Enterprise Reform Adjustment and Execution Loans. Systems for project evaluation and for monitoring enterprise performance were developed; studies of specific PEs were conducted; time series datE on prices and tariffs for specific enterprises were developed and an administrative system for main. uning the series (SAST) was developed; a set of labor regulation proposals was developed, including proposals for early retirement and assistance in the negotiation of collective contracts. In addition, at the level of some individual enterprises there was assistance in the elaboration of monitoring flows of funds, budget, and investments. 47. C3: Strengthening Human and Institutional Resource Capacity for Public Administradion (US1.592). As described in the original loan agreement, this component was intended to provide training for senior personnel within public enterprises and central governmental personnel dealing with enterprises. The component was reformulated in 1987 with two objectives: training and institution strengthening in the SFP; and strengthening of specific entities in the Central Government on a pilot basis. It is not until 1988 that any funds were expended under this component. Decisions to reformulate the component -yet again- at the end of 1988 resulted in sets of studies conducted by individual consultants that attempted to provide direction for the restructuring of the non-enterprise public sector. This reformulation of the objectives of the component was directed toward providing a diagnostic framework for the reform of Public Administration, including such studies as the structure of the public sector, normative studies of the public sector, labor market studies, an examination of decentralization, relations between the central administration and the enterprise sector. However, unclear terms of reference and the failure on the part of a number of individual consultants to provide satisfactory products resulted in less than satisfactory outputs in this newly reformulated component. Monitoring of contracts and activities of individual consultants appears to have been weak, a function in part of the sheer number of individual studies to be performed. A second stage of this component began in 1989 with yet another formulation of objectives: to provide analyses of how to implement administrative reform (eg., draft decrees, constitutional analysis). Again, products were of mixed quality and weak supervision of individual consultants plagued this stage as well. While numerous studies were produced, the effectiveness of this component was extremely limited. Not only did virtually no training or transfer occur, but the average quality and applicability of the numerous studies conducted under the component seems not to have merited the expense. - 16 - 48. C4: Privatization ofPetrochemical Eterprises (US$93.41' .The addition of this component in 1987 (through amendment to the loan agreement) was a narrowly focused effort aimed at assisting the Government in privatizing the petrochemical sector. The objectives of the component were to provide valuations of specific enterprises under the Ministry of Defense for possible sAle and to develop a methodology for estimating enterprise value. As a result, one enterprise has been transferred to the private sector and three others are in various stages of privatization. In addition, activities under this component have been continued under the current PEREL. 49. 01.2.3,5.6: Improving Industrial and Export Policies and Procedures (USS1.20.3D. Activities under this component aimed at strengthening foreign trade, particularly in the industrial sector. Key objectives were to simplify export procedures; expand the reach of export facilities; reorganize the SICE's external trade area; improve services to exporters; and conduct sub- sector studies to support growth-orieated policies. A number of major studies and recommendations were developed focusing on five areas: (i) studies of Argentina's relative competitiveness within the context of regional integration; (ii) diagnostic studies and recommendations on the automobile sector; (Iii) sectoral analyses of capital goods to support trade protocol with Brazil; (iv) diagnostic studies aimed at strengthening the promotion of small and medium scale industries; and (v) the development of methodologies for the analysis of the behavior of productive sectors in the economy. While a number of studies developed under the component proved useful in later developments of economic relations In the region (eg., protocols on economic integration with Brazil, negotiations for Mercosur), much of the activity under this component was supply driven, relatively self-contained development of information bases with little transfer to the supposed client (SICE). While some of the consultants involved under this component have interacted under other components (eg., Al), interviews suggest some consultant frustration with the lack of demand for the information bases developed. In the words of one of the principal consultants, the information generation that occurred under objective (v) was a "relatively autonomous, technical, and academic exercise" with limited applicability and counterpart interaction, or interaction with related exercises under other components of the loan. 50. The objectives of this component as designed were overly ambitious and the level of commitment to real reform of the customs system was not apparent at the time. As a result, this component suffered from attempts to accomplish a great deal with extremely limited financial support and without a clear mandate in Government to carry out profound reform. The objectives aimed at strengthening the capacity of the National Customs Administration to collect import duties and export taxes, to simplify export procedures, and to provide a statistical base for monitoring exports. While originally envisioned as a relatively ambitious undertaking and major component (US$900,000) of the loan, little was accomplished. What is most apparent is that as a result of the limited commitment on the part of Government at the time, the component lacked a sense of realism. It is worth noting that the original design called for expenditures for major reform that amount to less than one-tenth of the current level of effort in the new modernization of customs project. While the current level of effort in the French Government supported MARIA project may be somewhat overestimated (US$7.92 million, together with the Bank support of US$4.65 million), the evident commitment today contrasts sharply with the earlier effort. Lack of clarity in initial proposals for activities, substantive disagreements as to the appropriate direction for activities, and early decisions to attempt to model the Argentine Customs Administration after the French model (SOFI II) met with serious resistance from within the project (from the Coordinating Unit) for lack of careful preparation of the proposed project and costs. Lack of real movement through 1990 resulted in decisions to limit dramatically the scope of the component to diagnostic activities and the preparation of a new program on the modernization and reorganization -17- of Customs. A majority of the hnds were reallocated. A detailed program for customs administration reform and several technical studies were produced, and customs reform has become a major component under the 1991 PSRL and PSRTAL. 51. D7: Stronathening of International Relations and Economic Policy Analysis SS2.856). The objective of this component was to strengthen the analytical capabilities in the Ministry of Foreign Affairs and Culture (MREC) through the creation of a data base and training in its use in the examination of international economic relations. While the activities under this component suffered from delays In the early portion of the loan (through 1989), it appears that long term sustainability of Improved analytical capacity and information bases has been achieved. The development of the information system and the installation of both hardware and software has been accomplished. The information bases include reference data on imports and exports, reference studies and data on key trade negotiations, archival materials on other external trade issues. More Importantly, the use of the system by personnel in the MREC has resulted; in addition, the development of several significant reports on current issues of bilateral and multilateral trade based upon the use of the system has resulted. Finally, the institutionalization of the computerized information system (PRIPE) has resulted in linking the Ministry to important information systems. I. Bank and BR u m 52. Given the ambitious agenda established by the loan, the number of components, the extremely large number of individual consultants, and the flexibility of the loan in terms of the initial allocation of funds and the subsequent reallocation of funds to existing and new components, there was a premium on the need for supervision of the Project. While the amount of Bank staff time devoted to supervision was high (a total of 195 staff weeks), the large number of personnel involved in supervision and the high turnover in project management from the Bank side (5 different project managers) meant that close scrutiny of behavior of components and consultants was not present in the early years of the project. 53. Similarly, Bank discussions with the PCU also pointed to the need for closer supervision and reporting on consultant scopes of work and final outputs. Decisions in 1987 to delegate greater responsibility to the PCU to supervise administrative activities of the Project resulted in a reduction of the administrative supervisory responsibilities of Bank Task Managers. The adaptability introduced during the third year of the Loan (through Bank -Government agreement) led to better substantive focus in Bank-Government exchanges and an improved productivity of the Loan. This is clear in the effective reallocation of funds to the new component -A6- in anticipation of the PSRTAL. However this same flexibility placed a greater premium on effective PCU monitoring and contiuous supervision by counterparts within executing agencies. While the efficiency and effectiveness of supervision improved in the final stages of the Project, the lack of continuous counterparts in some executing agencies of various components resulted in some consultancies, especially Individual consultancies, without clear work programs. 54. The second and third years of the project were marked by a clear lack of consensus between the Bank and the Government as to the role of TA and of consultant activities, and the willingness of Government to commit resources for counterpart activities. There was a marked deterioration of the Bank/Coordinating Unit relationship during the "pausa de reflexidn" and for months afterward that affected coordinated action, led to Implementation delays, and resulted in the changed scope of several components. In part, this was the result of the changing vision of the role of - 18 - TA and the role of the State, and therefore the role of the project. Later years show a marked improvement as stability to Bank supervision and to the Government program has been more evident. J. Lessons to be Drawn for Future PSM Technical Assistance Projects 55. There are a number of lessons to be learned both for the broader issues of the role of TAL/PSMLs, as well as for the continuing role of technical assistance, especially PSM assistance in Argentina during continuing difficult times. While the incredible economic and political turbulence of the 1980s may not characterize current conditions, there is still dramatic change occurring and the need to consider issues of project ggn, implementation. and WMiion during such times. 56. PSMaUI uld not be overl ambitions, particularly in turbulent administrative and political environments. Size of loan, complexity of operation, and the number of component activities all tax the capabilities of borrowers as well as the Bank. A smaller, more focused, loan with fewer components is more likely to succeed. In this case, overly ambitious design did not respond to the existing climate of the country. Furthermore, the design of technical assistance must take into account the absorptive capacity of Government. Portions of this project were supply driven in the sense that the assumption was that if enough technology was thrown at the project, It would stick, even in the absence of carefully cultivated demand for the TA or capacity to absorb. In addition, while the design laid out a comprehensive scope, insufficient attention was paid to the specific activities to occur within components in spite of the requirement that Annual Action Plans be maintained. Another difficulty with this "comprehensiveness" was that too many agencies under too many components were included, further exacerbating the coordination and supervision dilemmas. 57. Supervision by the Bank and the Borrower on a continuous and intensive basis is paramount. Bank supervision coefficients should take into account that TAL/PSMs frequently address politically sensitive issues and complex Government structures, and are inherently more staff intensive than most projects. In addition, multiple objective TALs, involving several sectors and complex sectoral issues, may require special expert supervision. In the case of 2712, efforts to strengthen tax policy/administration, customs, informatics, and the overlap with some sectoral ministries and activities (industry, agriculture) meant that there was a need for special technical expertise to guide the institution building exercise. The participation of this technical expertise in tax and agriculture in particular represented some ten to fifteen percent of total Bank supervision in the critical years of 1988-1989. The implications, however, should not be that high Bank supervision coefficients alone are enough. Rather, the implication is that adequate delegation of administrative responsibility to PCUs that are committed and competent and adequate counterpart supervision within executing agencies are critical. 58. There was a conflict between short term exiLencies and the long term needs of strategic institution building in the Project. There is a need to build credibility for the project (and often for consultants) and legitimacy for Government in the short term, while there is also a need to build toward longer term solutions. In this project the use of consultants to assist in some routine functions may have been necessary to maintain Government at all. However, short-term exigencies sometimes overwhelmed component objectives and highly paid consultants (by the Project) became day-to-day operations managers. - 19 - 59. The hav iance on individual consultants throughout the Project demanded extra supervisory efforts on the part of the Bank and the PCU to assure that quality personnel were being utilized for clearly agreed upon goals, that do not entail operational activities better financed as recurrent costs by Government. Also, at the early stages of the Project in particular, there was concern expressed by Bank staff, by the PCU, and by sources outside the Project that the Project had become a virtual employment service for expatriate Argentines who were utilized at all levels. While the high numbers of individuals may have been affected by UNDP preferences for individual expertise, the clear concern of Government to "bring Argentineans back in" was a driving force. While affecting decisions to hire individual consultants, this did not Imply, however, that the project in any way relaxed the requirements for selection of consultants. As noted earlier, the high use of consultants may have been necessary to maintain Government at all. The effort to utilize the Project to draw talent to Government in the absence of viable wage structure in Government meant that a parallel Government was created through the project, but one that became dependent on the project for sustainability. Long term viability under these circumstances is nonexistent. Instead of building a talent base and institutional strength millin Government, there was evidence in the first three years especially that the Project was drawing talented personnel out of and to the Project as consultants. While the January 1988 decision to require that no hiring of former Government personnel within a month of service was one in the right direction, it was insufficient to stem the flow of personnel from Government to the Project. Finally, the heavy reliance on consultants without effectively incorporating staff in their activities meant that some activities under the Project became enclaves of activity, sometimes residing in the institution and sometimes residing in external consulting institutions. 60. While flexibility in the allocation of funds served the Project well in some cases, allowing for the reallocation of funds to rapidly changing circumstances, there is the potential that flexibility may lead to slippage and to the failure to adequately define the scope of changing use of funds. K. Proiect Relationships 61. Bank relationships with Government began very well as the enthusiasm for the endeavor was shared generally. However, implementation delays and problems that often resulted from weaknesses in design and supervision continuity led to increasing tension between Bank and Government. The "pausa de reflexi6n" from mid-1987 through part of 1988 marked a low point in relationships. However, improved continuity on the Bank side (subsequent to a settling out of its own reorganization) and improved supervision performance by the PCU led to a strengthening of the coordination. However, lack of continuity and commitment within some executing agencies remained a problem. 62. It is worth noting that under 2712 the administrative role of UNDP/OPS was satisfactory. Early in the project, delays in procurement and some contracting supervision difficulties were experienced as a result of UNDP/OPS administration of these activities. However, the decision to utilize UNDP as the procurement agent at that time was a correct one given the limited likely accountability that might have resulted from Government assumption of these administrative roles. In addition, UNDP flexibility during the maturation of the project benefitted the project; this is evident in the 1987 decisicn (agreed to by UNDP) to delegate increasing responsibility to the PCU over administrative activities. The end result was greater accountability, reduced delays, and a more efficient use of supervision time. -20- 63. One important aspect of project relationships is that between 2712 and several subsequent technical assistance activities. It is clear that while a number of activities originally envisaged as part of the Project were ambitious and not in tune with the times, subsequent input into other projects and the evolution of several of these gained both from the groundwork done in 2712 and from the learning experiences gained from the Project. This is the case, for example, in the development of the Tax Administration TAL I in relation to B2a, and in the development of the PSRTAL with input and support from A6. L. Consulting Seices 64. A number of the issues related to consultant services have been noted in individual component discussions and in para. 58. From the records available it appears that in most cases the consultant services were of high quality and consultants were recruited in accordance with Bank norms. However, several key issues need to be reiterated briefly: * Simply put, the Project relied too heavily on individual consultants for the performance of Project activities; * The further reliance on large numbers of local consultants, while by hatent an admirable endeavor, led to problems of parallel operational personnel, a tendency in some cases to use consultants as line personnel, and difficulties in the evaluation of the credentials of some consultants; * Selection of a number of consultants by implementing agencies was based on the existence of a prior "working relationship" with the consultant, oftep because the consultant had been employed within Government prior to contracting as a consultant; * In some cases vague terms of references and weak recruitment practices allowed for slippage in both the quality and the content of consultant reports. In other cases, the TOR for specific activities seem not to have reflected the ultimate goal of user and institution strengthening. In yet other cases, the Borrower was unable (and on occasion unwilling) to incorporate the results of consultant outputs because the outputs were overly sophisticated and not absorbable, and at times the outputs demanded skill levels not extant within Government. Finally, in some cases consultant activities were enclaves somewhat removed from the institutions they were intended to serve; * The use of sole-source consultancles in some cases may have weakened the ties of consultancies to Project-defined objectives and the absence of competitive bidding may have allowed consultancies to develop products more in tune with their own agenda; * The number of consultants, the reliance on implementing agencies for initial recruitment, and the use of local consultants as opposed to international consultants with prior "track records" all required the need for intensive supervision by Bank staff, a burden that was compounded by the frequent changes in the early years in Bank task managers. -21- M. oect Documentation and Dta 65. Documentation for the project is generally very good, and improved greatly during the life of the project. In particular, early and continuous concern with the documentation in support of individual consultant terms of reference and outputs led to steady improvement in this regard. Similar improvements In the timing of audit reports are evident. While some problems of consultant TORS remained throughout the project, improvements were steady and reflective of Bank- Government dialogue. 66. The main documents governing project implementation were the Staff Appraisal Report and the Loan Agreement and Amendments. A comprehensive First Year Evaluation (12/87) offered important insights into the relative strengths and weaknesses of ongoing activities and served in the redefinition of some activities. Most initial project documents were carefully prepared, although the complexity of design may have contributed to difficulties In implementation. 67. The preparation of the PCR was facilitated by the quality of the documentation throughout the project's life, and most particularly by the quality of supervision reports and the updates on projecticomponent status, finance, and activities maintained by the PCU. In addition, a final report prepared by the PCU and access to project files and personnel facilitated greatly the preparation of the PCR. -22 - PROECTCOMPLETION REPORT AROBNTINA PULIAECO MANAGEEN TECHICA ASSISTANCEPRJC (LON 2712-AR PART U: PROJECT RUVIEROM THE BORROWER'S PERSPECTIVE a A. Introduction and Conclnaions 1. The project helped strengthen or substitute scarce administrative capacity in key policy areas involved in adjustment, stabilization and reform. It also helped identify and establish institutional conditions and policies necessary for the mobilization, design and start-up of new projects and initiatives. Although there was a concern over the large number of project components, it became clear during project implementation that all components were thematically consistent, and most of these have in fact established activities that have already become institutionalized and supported by national budgets or other sources. The principal project objectives provided continuity and supported the short-term actions of both Administrations in such areas as emergency fiscal and stabilization policies and public sector reform. The project helped generate subsequent projects in tax administration, provincial management, privatization, and public enterprise reform. Other projects generated by this operation include activities of the Central Bank, Secretariat of the Treasury, Customs Department, Secretariat of Public Functions, and those relating to external debt management, regional and bilateral integration, and external economic negotiations (GATT, among others). 2. In spite of the institutional weaknesses that prevailed at the time of project start-up and the deteriorating absorptive capacity of the public sector during adjustment, the project evolved favorably. This may be measured by the continuity of, and growing commitment to, fiscal and public sector reform - administrative reform and privatization. Both objectives, together with others aimed at strengthening analytical capabilities and supporting or developing policies, tackled short-, medium-, and long-term constraints, including structural ones, by strengthening or substituting weak institutional capabilities during the adjustment and transition periods in order to reach the ongoing reform. They provided continuity and stability to the project, overcoming policy shifts and institutional changes and, in some cases, anticipating possible failures due to discontinuity, lack of commitment, insufficient funds, or inadequate strategies, by canceling certain components and reallocating funds. 3. Project design underestimated Institutional, administrative, managerial and financial difficulties, and this caused demands and tensions that affected the length and transfer of the technical assistance. There was also a lack of commitment on the part of some counterparts, thus threatening project sustainability. However, there were several factors that contributed to ease institutional pressures and to avoid an oversupply of services. These include the following: The project (a) incorporated flexible yet coherent approaches; (b) had the political backing and commitment of the LI This is a free translation of the unedited text of the Borrower's PCR from which we excluded the comments to the Bank's Part I and III. These comments have been taken into account. The full Spanish version is available in LAC files. - 23 - National Project Director; (c) was equipped with the managerial and administrative capabilities of the Coordinating Unit; (d) had the Bank's growing and permanent support; and (e) benefitted from UNDP's input during the preparatory phase. Although the Secretariat for Economic Coordination had a relevant function and was subject to permanent pressures, it was also in charge of coordinating the design and implementation of policies, and was able to distance itself from sectoral disputes. Thanks to this situation, helped with the presence of both the Bank and the UNDP, a "protection zone" was created between the Coordinating Unit, the governmental organizations, the counterparts, and the various sectors involved, which helped avoid pressures from, or preferences to, any one organization. Although the enormous work carried out by the Coordinating Unit and the World Bank in providing technical assistance, monitoring, and evaluation activities could have been reduced through appropriate mechanisms, the results achieved were in large part due to this effort. Finally, the growing effectiveness and efficiency of the Coordinating Unit in coordinating and disseminating results, and developing a project institutional memory, were part of the overall success of the project. Among the Unit's most important contributions were those of complementing activities, enhancing absorptive capacities, and providing sustainability. The combination of local talent complemented by international experts proved to be adequate, as evidenced by the fact that part of the critical mass of experts drawn to the project still play an important role in designing and implementing policies, or are working with other organizations or in the private sector. A more detailed project design during the preparatory phase, however, would have improved the quality of the experts' terms of reference, the criteria for evaluating performance, and the payment terms, and this would have improved the selectior, monitoring, and evaluation criteria of contracts. 4. As a result of the Bank's reorganization in 1986 [sic], the Bank went through some organizational changes and staff rotations. This involved some adjustments in administration, management, procurement, and contracts in accordance with the specific conditions of the new context and the project. During the project's preparatory phase and throughout the first part of its implementation, the Bank did not provide timely expertise in areas of fiscal and budgetary reform, customs administration, institutional development and computerization. Better coordination between the project, its sectoral activities and new projects would have increased the project's quality, impact, and transfer of results. UNDP contributed to resource mobilization and provided substantial support during the preparatory phase. The OPS, however, lacked the appropriate mechanisms and capabilities for purchasing computer equipment and managerial and administrative information systems. Although these problems were overcome by decentralizing these functions to the UNDP's field office and then on to the Coordinating Unit, this demanded extensive training to the Coordinating Unit, and this capacity has not yet been fully transferred to other projects or to other organizations concerned. There are several possibilities of improving administration, management, costs, benefits and impacts of projects under consideration. Experience indicates that guidelines should be developed to help identify key problems, evaluate performance, identify, monitor, and develop impact and management indicators, verify project lists, and determine cycles and alternative approaches for the reform process. 5. Technical assistance under the project supported but could not promote nor create the adequate political conditions for the reform process. Unfortunately, the circumstances that prompted the implementation of these policies were structural, political and economic. In effect, the lengthy adjustment process plus the two hyperinflationary periods of 1989 and 1990, created a climate of strong economic pressures and, in turn, sufficient capacity to face and overcome previous sactoral resistance. -24- 6. The project: (a) may be considered successful In most of its components, given the economic and institutional context In which it was implemented and the continuity of many of its components and activities; (b) played an Important role In promoting and designing new loans, and in laying the foundation for improved technical relations with the Bank; (c) tackled most of the key problems during its implementation; and (d) contributed to the liberalization, privatization, stabilization, integration, deregulation, resource mobilization, and development of information capacity, economic management and policy formulation. B. 18108 7. It is difficult to evaluate the project's profound impact, due to the convergence of internal and external factors and to the external shocks that afflicted the country at the tit . Notwithstanding, the project was instrumental in carrying out reform and adjustment policies, and has become the analytical, conceptual and Information basis for policy design and decision-making. The main project areas were the diagnostics work, information systems, policy analysis and proposals for fiscal reform and management, as well as the design of sectoral policies in trade, industry, agriculture, public enterprises and public sector reform. The diagnostics and structural proposals have a permanent impact in terms of policy formulation and reform, since they take into account the profound political and economic restrictions faced by the different sectors, and because they require dissemination. Support for policy management, administration and short-term management, however, albeit important and deserve to be maintained, do not need to be disseminated since the supporting studies and analysis are rapidly outdated after being implemented. The project has contributed in increasing the analytical capacity for design and management of macroeconomic and sectorai policies; expanded the information base and enhanced decision-making by strengthening technical and professional capacities; increased confidence, coverage and timeliness in sectoral information and data on national accounts, income distribution, and social and poverty indicators; and developed computer capacity at the provincial level. In addition to the results mentioned in Part I as well as in this section of the report, the provision of computer capacity is an important technological impact of the project. Although subject to improvements, this appropriate, portable, compatible and flexible technology has probably introduced a permanent institutional and cultural transformation. C. World Bank Performance 8. Proect. rationale. perception of the need for adjustment, reform, and expertise: This project provided timely and appropriate management strengthening support. During the preparatory phase, however, the Bank shared the Government's view of focusing its approach on those activities aimed at developing analytical instruments, improving the information base, and promoting sectoral development and investment rather than on fiscal reform and adjustment, institutional development and improving capacity for policy generation and management. The need for adjustment and profound public sector reform was missing. Also missing was the Bank's experience in the areas of tax policy and administration, budgeting, programming and control, customs administration, institutional strengthening and development, and managerial computer tools. Tax and fiscal areas were partially covered with the participation of specialists and staff from the International Monetary Fund, while the Bank's experts and their analysis and evaluation capabilities were only provided mid- way through project implementation. -25 - 9. Proect design. administration and manalement: This large and diverse project posed a challenge for both the Government and the Bank. The Bank's reorganization in 1986 [sic] and the transition from a Bank-executed UNDP-financed project, created a gray area in which the norms of the various institutions overlapped with regard to the criteria for approving contractual services and procurement, retroactivities, and the hiring of local experts. This, added to changes in task managers, discussions over criteria used for monitoring and evaluation mechanisms, and some doubts with regard to political biases in selecting and hiring consultants and consulting firms, resulted in a period of intense re-examination ("pausa de retlexidn"). This period lasted from the onset of the project Lilf the first quarter of 1988. It was not until after staff from the Coordinating Unit visited Washington, D.C., that it was agreed to: (a) make hiring, procurement and expenditures mechanisms more flexible; (b) allow modifications in performance-in terms of results and Impact; and (c) delegate most of the functions to the Coordinating Unit, for their ex-post evaluation by the World Bank. In retrospect, this was an appropriate decision given the circumstances and capacity level of local management. This is evidenced by the continuity of the project and its components, its objectives, its results and its few and favorable reallocation of funds. Since the Bank's task managers were constantly rotated and the institutional memory was inadequate, there were some losses in time and effort during the first years of project implementation. It is important to stress these facts, since Part I of the report offers a different interpretation with regard to the implementation pace, the different project stages, and the quality of the design. 10. Coordination. and expenditure allocation and control: A better coordination between the Bank's sectoral divisions and the Coordinating Unit in the field in articulating the development of methodologies, information systems, and analysis of sector policies and investments would have been very useful to evaluate results, improve their impact and sustainability, avoid overlapping with other loans, and improve the design and generation of new projects. The absence of these factors contributed to the lack of inter- and intra-sectoral coordination that normally exists among most organizations. An example would be the evaluation in Part I of this report of the little usefulness of the activities linked to methodologies, training, investment systems, and project inventory in the changing role of the State. Even now, after stabilization, this situation poses serious bottlenecks to the new sectoral and regional loans under implementation or negotiations in their efforts of recovery after the adjustment and reform processes. Local counterparts and coordinators of certain components had expressed concern over the Bank's request that project funds in a few cases be used to effect payments of some international consultants whose missions were not directly related to project objectives.2 No doubt the need for coordination and prior justification should be emphasized. D. Government Perfrmance 11. Direction. coordination and management: The fact that the project was under the direction of the Secretariat for Economic Coordination and that the Secretary was the National Director of the project gave strength to the project vis-a-vis the executing agencies and the local LZ This statement may be misleading. In fact, in very few cases, the Bank felt, after reaching agreement with the concerned Government agency, that it would be appropriate for the Public Sector Management Technical Assistance Loan (PSMTAL) to finance consultant services that were considered critical to the strengthening/reform of a particular agency that was also a beneficiary under the PSMTAL. -26- counterparts. The Secretary's responsibility for policy coordination and the physical independence of the Coordinating Unit provided a relative autonomy with regard to the components and executing agencies, thus avoiding internal fights and conflict of interest with respect to certain organizations. The letters of commitment signed by all organizations involved in the project were useful, although they should have contained certain triggering or conditional clauses. The initial phase of implementation not only required a lengthy period of training in design, management, contractual and procurement procedures, but also called for very tight controls to avoid diversion of funds. This created tensions and pressures on the National Project Director and on the Coordinating Unit, but since these were shared with the Bank, the proposed action plans were able to be fulfilled. Nevertheless, this situation could adversely affect the performance of the Coordinating Unit since the Unit needs to confront these problems directly. 12. Design and implementation: Most of the components that aimed at strengthening the information base or at developing analytical instruments had very detailed working/action plans, stable counterparts and were subject to very few pressures. Conversely, the sectoral components, given the need for short-term "crisis management," changes in policy orientation, institutional shifts, and sectoral pressures and interests, required political negotiations in order to overcome technical weaknesses and changes in the level of institutional/political commitment and ownership. Probably the components linked to fiscal resource mobilization could have evolved faster if some of the political and Institutional problems had been addressed on time. The immediate development objectives were too broad and open-ended to allow for an adequate convergence and prioritization of components, activities and results. This, in turn, required more efforts from the Coordinating Unit and the Bank during project implementation. 13. Sustainabiliy andtransfer: Generally, the Ministry of the Economy and the executing agencies must increase their managerial and administrative c jacity, as well as their institutional capacity to coordinate, design, and increase the impact and absorptive capacity of the projects under implementation. Certain activities linked to privatization, fiscal and administrative reform, debt management and other key problems are still being implemented under new projects with various sources of financing. Information systems required special attention. They had to be carefully designed, taking into account the quality, continuity and coverage, as well as the institutional commitment and coordination. The managerial, administrative and policy reforms required different criteria for conducting ex-ante, institutional, political and technical evaluations. The reduced investment capacity and the prevailing macroeconomic conditions at the time of project start-up did not entail much effort in programming investment and "project cycle" vis-a-vis other priorities. The formal task of developing methodologies, systems and training is useless when there is neither financial capacity nor a need for formulating concrete projects. However, an efficient task was the design of the Agricultural Credit Monitoring and Evaluation Unit. Formal training produces low results during periods of adjustment and expenditure restrictions. Prior knowledge of information bases, sector policy frameworks, macroeconomic conditions or various scenarios would have increased the effectiveness and impact of sectoral analysis and studies, as was the case with tax policy. In many of the works and systems developed, no attention was given to cost-effectiveness, cost recovery and user charges. In addition, consideration was not given to alternative approaches of examining institutional and managerial restrictions, the degree of human resources needs, and other aspects. This will be further analyzed in the section devoted to lessons of experience. -27 - E. Relationship between the Government and the Bank 14. Adjustments were required during the transition from project preparation to full project implementation, due to the institutional changes in the Bank, government and counterparts, and the transition from one Government administration to the other. Notwithstanding, the relationships between the National Project Director, the Coordinating Unit, the counterpart organizations, and the Bank were smooth, consistent and appropriately channeled. However, a better coordination at the sectoral level, through the Bank's task managers, would have improved effectiveness, efficiency, and impact of activities under way. This was the case with public and sectoral investments under several components, agricultural sector loans and other tasks, since it served both to evaluate results and to coordinate activities. F. UNDP/OPS Performance 15. Proiect gr tio: UNDP made an important contribution toward project preparation, by financing a Principal Technical Advisor-PTA- with experience in Bank operations. The PTA participated in project preparation and negotiations. Interregional and specialized agencies also collaborated in their areas of expertise. The UNDP field office facilitated the coordination with other projects under execution, and provided the necessary infrastructure and administrative support for this initiative. This enabled project design and negotiations to be carried out within a reasonable time frame, giver the project's complexity and size. 16. The Management Services Agreement -MSA-with UNDP's Office for Project Services-OPS--constituted a learning process for OPS. Consequently, there were many inconveniences during this period which resulted in delays in procurement, contracting of services and project implementation. As in the case of the Government and the World Bank, there was insufficient internal capacity for administering and evaluating the acquisition of computer equipment. Acquisitions, therefore, were slow and lacked efficacy and, at times, even efficiency. There were frequent claims, revisions in terms of reference and purchase orders, and delays which had negative consequences in project activities and operations. This continued until procurement was decentralized and many of the activities were delegated to the UNDP field office who, in turn, passed many of them over to the Coordinating Unit. 17. Contracting, bidding, provision of financial statements, as well as other elements should be reviewed to improve coordination, timeliness and consistency of actions. The administrative staff of the Coordinating Unit, financed by OPS, and the external comptroller of the project ("Tribunal de Cuentas de la Naci6n") spent too much time reviewing statement of expenses and procedures. Undoubtedly, there are many ways that procedures and coordination of norms for which both OPS and the World Bank are working, could be simplified. An example where OPS made a substantial and cost-effective contribution was in the evaluation of the terms of reference for DGI bidding, where the main problems were identified by hiring short-term consultants to make specific evaluations. 18. As planned, the input of the UNDP field office was reduced during project implementation as a consequence of the capacity developed in the Coordinating Unit. Actions to compensate for differences in the exchange rate, conciliations, allocations and other expenditures were encouraged, and this led to a significant resource recovery for the project, thus increasing its - 28- implementation capacity. Unfortunately, the wage policy established by the Ministry of Foreign Relations and Culture conditioned UNDP's policy in this regard, negatively affecting the project in various Instances during lengthy periods of time. This had negative consequences on the performance of certain activities because of substantial differences with salaries of the private sector. G. CoordiMnn U1nit Performnce 19. Location and role of the Coordinating Unit: The activities of the Coordinating Unit were concentrated in the areas of technical assistance, administration, procurement, management, coordination, institutional development, dissemination and publication. It had a relevant role during all the phases of the project. Its direct dependence on the Secretariat for Economic Coordination and independence from any specific organization gave It flexibility, relative autonomy and helped it avoid biases toward any particular organization. As part of Its technical assistance activities and responsibilities, the Coordinating Unit provided assistance in preparing workinglaction plans, and performed supervision, monitoring, coordination, control, and evaluation, of all which demanded a great deal of dedication and stressed its working capacity. The Coordinating Unit was also in charge of reviewing inputs-consultants, consulting firms, equipment, etc.-and outputs, which required substantial analysis due to the diversity of subjects involved in the project. 20. Pro t manaemet: The complexity and diversity of the components, the institutional and technical weaknesses of the counterparts and the need for a timely preparation of the project, surpassed, in some cases, the technical and managerial capacity of the Coordinating Unit. Hence, the Unit was unable to adequately evaluate and anticipate some sectoral and Institutional problems observed during implementation. Administrative, managerial, coordinating, and dissemination systems improved during implementation, although they could have been further improved had they been incorporated during preparation so as to provide for better performance, analytical, monitoring, and management capacity. The computer advisory capacity in the Coordinating Unit allowed the Unit to evaluate computer demands, in terms of effectiveness, efficiency, compatibility and portability; analyze, supervise and evaluate systems, and provide the capacity for necessary coordination, portability and transfers; and analyze sustainability and training. This capacity was developed over project implementation and served as a teaching process. The coordination and dissemination of results demanded specific activities, in terms of seminars, workshops, document and time series databases, creation of a library that operates in the Secretariat for Economic Planning, and publication of a compilation or individual reports. The administrative tasks involved contracting, "procurement cycle," accounting, reviewing and adjustment of interests and discrepancies over the exchange rate, audit reports and entry, as well as periodic financial reports and statements for different organizations and users. It also worked as a liaison with UNDP, OPS, the World Bank, and the external comptroller of the project ("Tribunal de Cuentas de la Nacidn"). H. Specific Probems 21. Development of instruments for economic decision-making: The analytical instruments that were developed were scarcely used or disseminated in the public sector and, due to a lack of counterpart staff, were difficult to transfer. The input of the National Institute for Statistics and Census was important, although this participation declined during the final stage when its absorptive capacity and sustainability weakened. Technical assistance, aimed at strengthening institutional development, requires availability of ex-ante absorptive capacity through human resources -29 - and counterpart budgets. Sustainability and institutional pressures still represent a problem with most of the components. 22. M ilkain an utiliaion of central administration resources: Due to the weak political presence and inadequate economic management capacity of the Secretariat for Planning, sustainability was scarce, except in the areas of methodology advice and information equipment. The results of the work in the area of tax policy were used to formulate policies, although their design and conceptualization lacked the adequate macroeconomic and sectoral framework for the analysis of sectoral scenarios. The excessively ambitious, centralized and overly broad focus of the tax administration, in conjunction with the handling of various fiscal emergency packages affected the timely availability of terms of refWence for the development of tax collection and fiscalization .-ystems for a measure that had already exhausted its political capacity. Likewise, the centralized strategy, administration and coordination of too many individual consultants were the result of errors in the design that affected efficacy and efficiency and created a negative external image on the existing administration. However, the emergency packages, the taxpayers registry-CUIT-and the tax inspection were important outputs of this component. The role of the Ministry for Public Works and Services vis-a-vis the public enterprises, the institutional setup, and consultants difficulties in accessing the companies, significantly delayed obtaining reliable information. In addition to the technical and institutional problems mentioned in the above paragraph, attention should be given to the development of a coherent macroeconomic and sectoral framework, identification of tax, financial and investment restrictions and priorities, taking into account the available economic and political cycle and horizon. Although this comment may seem obvious and redundant, the effectiveness and impact of many activities were impaired by these factors or by lack of feedback. 23. Public enterises manaeMet and central administrative rrM: In those cases where consultants had inadequate counterpart participation, such as in labor production, consultants' output became no more than work guidelines of scarce application and specificity. While many of the tasks were inputs to the reform process, there was an insufficient management, selection, monitoring and implementation capacity of the Secretariat of Public Functions since it does not have much expertise in designing and implementing policies. The privatization policy was implemented after many policy and institutional changes, and after the government faced insurmountable fiscal problems. The pace of the privatization process has implicit risks in the regulatory capacity medium-term socioeconomic impacts that should be considered. The administrative reform is a lengthy process that requires permanent policies and support to avoid the loss of administrative and management capacity necessary for the structural reforms and the new role of the State. Attention should be given to the effectiveness of training within this particular global and institutional framework. 24. Industrial and external trade development: The support and line substitution task for designing and administering policies in the Secretariat for Industry and Commerce was successful and important, even though it was not totally transferred and lacked absorptive capacity and sustainability. The customs component was never started up due to the lack of adequate technical, political, institutional and managerial conditions. The services project-advisory and information system-for the Ministry of Foreign Affairs and Culture was very useful in streamlining the Ministry's activities and procedures, and it has been integrated into the administrative network of this entity, and made possible the transformation of the analytical capacity and working instruments. -30- I. LOS of E ne 25. (a) A project of such size, complexity and scope requires a solid administration capacity, commitment and clearly defined responsible actors. It would be prudent to concentrate efforts in fewer objectives and components to improve project administration and impact. However, the size, "critical mass." and the inertia of some projects produce economies of scale that should be evaluated on a case-by-case basis and in light of alternative strategies. A clear definition of strategies and immediate objectives could contribute in reducing the components and activities, and prioritizing them for a better allocation of thnds. (b) Sectoral components that are subject to institutional and policy changes are more difficult to administer than information systems, studies and methodologies. (c) The commitment from the Government and some counterparts was insufficient in certain -ases, and should be subject to triggering or conditional clauses to avoid freezing of funds during lengthy periods. Sustainability of some components is still a major problem, demanding commitment of counterpart funds to guarantee project transfers. The Ministry of Economy and Public Works and Services should develop administration capacity to improve coordination, selection, formulation, commitment, impact, transparency and transfer of projects. (d) The decision to hire local and international experts, consultants, consulting firms and institutions depends on the activities they perform and their relationship with the conte- of the project. However, given differences in cost and the need to guarantee sustainability, international consultants should be hired when there is a lack of local expertise, and there are economies of scale, time savings and possibilities of technology transfer to reach the desired political impact on time. Active counterparts, action plans, overall activities and on-the-job training to allow transfer of knowledge should be identified in each case. Local experts are better able to perform in cases where politically sensitive problems exist, where potential conflicts with personnel may arise, or when there are delays in obtaining statistical, legal or other types of information. This is particularly true when the objective is to manage policies. Local experts could, however, be provided with timely assistance from international consultants. (e) The start-up of projects should be based on training workshops in the areas of administration, operations and management that provide very precise guidelines for formulating workinglaction plans, criteria for eligibility, procedures, norms for contracting and procurement, administrative information systems, audit rules, information and report dissemination systems, publishing and other aspects intrinsic to project activities and results. The coordination of components or local counterparts requires technical and administrative capacity to carry out the projects in order to guarantee adequate implementation, sustainability and transfer. (f) Managing too many individual consultants could affect the administrative capacity of the organizations involved and represent a fixed cost independently from the results, -31- with consequences on efficiency and performance. These problems should be addressed and evaluated promptly. (g) The administrative, supervisory and dissemination systems Involve economies of scale, increase coordination, reduce operational costs, develop institutional memory, allow more time for analysis and more important tasks, and could be conveyed within and among projects. Performance and management indicators and reports should be adjusted to the different users, such as the Coordinating Unit, the World Bank, the Government, executing agencies, Services Agency, and auditing. The ex-ante definition of impact indicators and their follow-up could prioritize activities, determine project's cost-effectiveness and cost-efficiency and evaluate the results more accurately. (h) Computerization represents an important factor that requires adequate approaches and capacities due to the terms, costs and excess demand of incorporating it. Guidelines to increase effectiveness, cost-efficiency, impact and transfer should consider the institutional and political capacity; the conceptual framework for its development, design, pilot tests, and development and implementation environment; hardware and software transferability; plans that involve pilot tests: hardware and software maintenance and required management and operational staff. (i) Dissemination of results could be achieved through seminars, workshops, coordinatior, information systems, databases, libraries and publication of works. With regard to the transfer of technology and products, there should be a difference between product technologies-incorporated-and process technology-disincorporated- to later determine the appropriate mechanisms. Formal training is important and should be adequately conditioned to developing the institutional absorptive capacity. (j) Given the different time frame between sectoral and adjustment process, on one hand, and institutional development and reform process, on the other, necessary conditions should be established to avoid changes in the short term, and thus develop the critical mass to achieve the foreseen institutional policies and impact. The equilibrium should be established during the preparatory phase, with appropriate conditions, "trigger" clauses, and management indicators. These activities will require a permanent supervision and the necessary flexibility to adapt to changes. J. Rdo 26. Due to the economic and social costs of adjustment and the institutional conflicts it involves, the aspects of legitimacy, participation, and representation should be taken into account. Even though they bear a greater political bias than those related to public and economic management, such as transfer, predictability and auditing, the relationship among the different government branches, during the reform process, is important and contributes to the institutional strengthening and stability of Ahe system. Notwithstanding, they constitute new challenges and they are essential to guarantee s bility. - 32- 27. These conditions also exist in the decentralization process that is responsible for addressing social policies, social investment programs and funds, and social emergency networks. 28. The recurrent failures of the economic policy have had economic, social and political consequences, in terms of exclusion, weakness of the productive web, political indifference and abstentionism that provokes rapid political deterioration. Integrating adjustment, reform and growth represents a challenge, but also shows that fiscal restrictions could be overcome through coercion or growth. 29. The defense and sustainability of this democratic stabilization and transition period demand a greater participation, representation and legitimacy from the different powers, and a decentralization process. 30. The factors that make up governance, linked to the institutional and organizational structures of the policy management process are subject to conditions, restrictions and diversity, and are related internally and with their context. 31. The policy formulation process has two dimensions that characterize the State: autonomy and capacity. The reform processes have been gradual, partial, with various impacts, and based on administrative approaches. The severe structural restrictions-fiscal, monetary and external- have caused abrupt changes in direction, pace, terms and coverage. At times, economic coercion has substituted political power. 32. The reform process may follow different paths and stages, depending on the economic, political and social restrictions, and the political, financial and technical capacity. The conventional administrative reform should be extended in the medium- and long-term, and cover institutional, managerial and administrative changes focussed on the structures, functions, employment, flexibility, and simplification of procedures. The reform of the "policy cycle" is more selective, of short- and medium-term, policy-based, of inter-institutional nature, and focussed on the policy management areas. It is oriented towards the processes and deals with the analysis, coordination and control of results, consequences and impact of policies at different levels and scales. 33. The timeliness, suitability and strategy of reform will depend on the evaluation of the political, social and institutional factors involved. This situation could determine the possibilities of confrontation, negotiations, consensus or establishment of fronts or coalitions, and possible overlapping or sequence among processes and changes from one phase to the other. 34. The different State functions should be differentiated from the management and administrative approach as well as from the economist's focus, in order to form a three-level structure: policy design and implementation, administration, and management. Each with its own particular analytical base, instruments, and time frame, but complementary among them. Notwithstanding, the reform must be systematic, sustained, have ample coverage, and be subject to lengthy trial periods that normally go beyond an administration, this process should possess an strategic, selective and flexible framework comprising the three levels of action and the different stages determined by the reform strategies. -33 - 35. Due to the growing complexity of the State functions, it could be argued that change from administrative to management reforms, characteristic of the recent reforms, does not adequately address the institutional base on which policy management lies. Public and private sector managements have different analytical basis and instruments that could be complemented but not substituted among them. It is difficult to determine public sector productivity, even more when formulating and executing policies. 36. The evolution of the role of an interventionist and developing State to a more open and competitive structure, in which the "engine of growth" is based on private initiative, is necessary. In this context, the State acts as a promoter and guarantor of the public and private Interests, increasing public and political participation, representation, legitimacy, transparency, efficiency and control. Aspects all linked to stable democracies, as well as growth and equity. -34- PROJEC COMPLIN REPORT ARGENTNA PUBLIC SECTOR MANAGEMENT TECHNIA ASISANCE PROJEC (LOAN 2712R) PART III: STA3TT L INFOMION TAbill: Project Timetabl Activity Original Loan Dates Actual Initiating Activities December, 1984 Project Identification December 1984 Pre-Appraisal Mission July-August 1985 Approval of Project Preparation Facility December 1985 Appraisal Mission March 1986 Negotiations May 1986 Staff Appraisal Report May 13, 1986 Board Approval June 1986 Loan Agreement September 12, 1986 Effectiveness August 1986 February 9, 1987 First Amendment to Loan November 17, 1987 Second Amendment to Loan February 27, 1991 Loan Closing February 28, 1991 December 31, 1991 Project Completion August 30, 1990 April 30, 1992 -35 - lable2: Loa Disbursements Cuumlatve Estimated and Actual Disbursements (US$ millions) Bank FY 1985-86 1987 1988 1989 1990 1991 Appraisal Estimate .5 5.2 10.9 15.5 18.5 00 Actual .4 4.9 8.9 11.9 14.4 18.5 Actual as % of Estimate 84 94 82 77 78 100 Execution of Loan .5 2.8 6.7 10.9 15.4 18.1 Execution as % of Disburse- ment 100 57 75 92 100 982 Date of Final Disbursement: May 14, 1991 L Approximately US$ 400,000 was executed during the period from January -April, 1992. -36- ale 3A: Poect Einancing Category Original Actual (elliogas) (millions (1) Consultant services: 12.300 14.141 Consultant firms 3.096 National consultants 10.885 International consultants .160 (2) Training .506 (3) Goods 3.700 2.365 (4) Refunding of Project Preparation Advance .500 (5) Other expenses* .619 (6) Commission for UNDP/OPS Administration 1.026 (7) Unallocated funds 2,000 .024 TOTAL 18.500 18.682** * The amount listed in this category is presented as the sum of "various expenses" under each component. The principal identified expenditures included approximately $220,000 in editing expenses by the Coordinating Unit (PCU) and an additional $343,000 of various expenditures by the PCU. ** Disbursements by the Bank to the UNDP/OPS account generated interest income of $195,024 which were assigned to the Project, yielding a total of funds utilized under the Project of $18,695,024. *37- Table 3B: Prost Cost Breakdown by Commonent ($000) Allocation in Project Components President's Report Actual FORESEEN IN ORIGINaL PROJECT DSI Al. Models, Scenario Building 700 936 A2. National Accounted 670 1,441 A3. Economic Information Systems (ME) 370 826 A4 Input-Output Matrices 350 A5 Information Base (INDEC) 900 1,276 Bl. Global Planning 510 991 82a. Tax Policy and Administration 2,570 1,840 1. Policy 424 2. Administration 1,388 B2bd.Programming and Budgeting 770 862 83. MOSP Investment Programming 650 724 B4. Agricultural Planning 1,090 1,351 C12. System/Firm Level Improvements 1,380 1,721 C3. Improving Management Skills 600 452 D12356. industrial/Export Policies/Procedures 2,190 1,621 Export structure 220 information Systems 970 industrial Policy 1,000 D4. Custom Administration 900 78 D7. Trade Negotiations 650 724 Coordinating Unit 700 1,861 Contingencies, Fees (UNDP) 1,000 1,026 Unallocated 2,000 16 Repayment of PP 500 NOT POMSEEN IN ORIGINAL PROJECT DESIGN A6. Implementation of ReP --- 716 A7. Support for SEt --- 148 C4. Privatization of Petrochemic*a 18 TOTALS 18,500 1,61 4 Components A2 and A4 were combined in accordance with amendment to loan. Ul PPF funds have been allocated to the component for which funds were used. Lfi Actual expenditures are equal to US$ 18,657,826, with an additional US$23,512 in unallocated funds for a total of US$18,681,338. The actual funds available to the program were US$ 18,695,024 due to interest of $195,024 earned on Bank transfers to UNDP accounts applied to the Project. -38- Table 41 Status of Loan Covenantas Section Brief Description of Covenant Compliance and Remarks carry out Project through Complied 3.01a Executing Agencies as described in Annex to Schedule 2, and shall provide funds, facilities, services, and other resources required for the Project. 3.01b Establish and maintain in E a Complied project coordinating unit. 3.01c Ensure PCU is headed by a Project Complied Director, assisted by project coordinator and staff. 3.02a Enter into contractual agreement Complied with BCRA and INDEC for carrying out Parts of Project assigned to them. 3.02b Enter into contractual arrangement Complied with by for handling contracting of estakUishment of consultants, procurement of goods, Management Services and arranging training activities Agreement with under the Project. UNDP/OPs. 3.03 Shall cause eac. Executing Agency Compliance during to furnish Bank by December 30 of first year, but with each year the Annual Action subsequent years Program for following year. experiencing delays in submissions. 3.04 Carry out all studies through Compliance, although Executing Agencies in accordance TORs for some with terms of reference acceptable studies unclear and to Bank. outputs for some consultancies not clearly defined. 3.05 Procurement of goods purchased for Complied Project shall be in compliance with standard Bank guidelines. -39 - 3.06 Employ, or cause Executing Complied with, and Agencies to employ, consultants by subsequent Bank- satisfactory to Bank and in GOA agreement, accordance with Bank principles increased and procedures. responsibility delegated to PCU to facilitate and simplify administrative actions. 3.07 Borrower and Bank shall exchange Complied views semi-annually on progress achieved by each Executing Agency, and PCU shall provide progress reports on each component fifteen days prior to said exchanges. 4.01 Maintain separate records and Audit reports accounts to be audited on an consistently delayed annual basis and provide to the beyond four month Bank a certified copy of audit period, and final reports no later than four months audit for project after the end of each year. closing has not been received. -40- Table 5As UL of Bank Resouces (Staff Weeks) Stage of Project Cycle Actual Staff Weeks Pro-Appraisal 17.6 Appraisal 16.7 Negotiations 2.8 Supervision 158.2 TOTAL 195.3 Project Completion Report 6.0 -41 - Table 58: Missions Stage of Project Fiscal No. of Total Cycle Year Persons Days Preparation 1985/ 1986 7 88 Appraisal 1986 11 84 Negotiations 1986 3 14 Supervision 1987 9 146 Supervision 1988 10 188 Supervision 1989 10 202 supervision 1990 4 111 Supervision 1991 9 84 Supervision 1992 5 59 PCR 1992 2 30 TOTAL 1,006 -42- Table 6: Related Projects Project/Loan Purpose Year of Status No. and Title Approval 2920s Municipal Project is intended to assist 1988 Completed Development provincial and municipal level Loan ($120M) governments through improvements in financial mechanisms for municipal investments. 3015: Tax Project is intended to 1989 Currently in Administration strengthen DOI structural operation TAL I ($6.5M) reform program through assistance in computerization, tax inspection, training, auditing and control. 3280: Project's objective is to 1991 Currently in Provincial provide financial support and operation Development incentives for provinces to Project ($200M) undertake their own adjustment programs consistent with national adjustment program, principally through physical investments. In addition, 10% of project costs are devoted to Institutional Development. 3291: Public Loan is part of a program of 1991 Currently in Enterprise Bank support to GOA objectives operation Reform of stabilizing the economy and Adjustment resuming growth. Loan aims to Loan-PERAL support efforts to privatize ($300M) PEs in several sectors and to assist in management improvements in other sectors. 3292: Public Project is part of a program 1991 Currently in Enterprise of Bank support to GOA in operation Reform efforts to achieve PE reform Execution Loan- program. The focus of the loan PEREL ($23M) is to finance costs of services and equipment contemplated under the accompanying PERAL and to extend activities to additional sectors. -43- 3362: Public Project supports GOA efforts 1991 Currently in Sector Reform to modernize Customs operation Technical Department, to strengthen Assistance administrative reform in the Loan- PSRTAL Central Government, to ($23M) establish an integrated financial management system, to modernize the Central Bank, and to implement a complete restructuring of 8?. 3394 1 Public Loan is part of a broader Bank 1991 Currently in sector Reform program to help restructure operation Loan- PSRL and reduce the size of ($325 Million) Argentina's public sector, and supports fundamental reforms of the Federal Government and Monetary Authority to mobilize resources, rationalize expenditures and strengthen the Central Bank in relation to the Treasury.