Uganda - Economic and Financial Management Project

The World Bank FOR OFFICIAL USE ONLY Report No. 19543 IMPLEMENTATION COMPLETION REPORT REPUBLIC OF UGANDA ECONOMIC AND FINANCIAL MANAGEMENT PROJECT (Credit 2418-UG) June 30, 1999 Private Sector and Finance Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its content may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit Uganda Shillings (U Sh) US$1.0 Uganda Shillings 1455 FISCAL YEAR OF BORROWER July 1-June 30 ABBREVIATIONS AND ACRONYMS BOU Bank of Uganda CPI Consumer Price Index DO Development Objective(s) EFMP Economic and Financial Management Project EFMP II Second Economic and Financial Management Project ICB International Competitive Bidding ICBP Institutional Capacity Building Project IDA International Development Association IP Implementation Progress iS Information Systems IT Information Technology GOU Government of Uganda GDP Gross Domestic Product FSAC Financial Sector Adjustment Credit FY Fiscal Year MoF Ministry of Finance MFEP Ministry of Finance and Economic Planning MoFPED Ministry of Finance, Planning and Economic Development MoLG Ministry of Local Government MPS Ministry of Public Service OAG Office of the Auditor General PPAs Priority Program Areas SAC I First Structural Adjustment Credit TA Technical Assistance UCS Uganda Computer Services URA Uganda Revenue Authority Vice President Callisto Madavo Director James W. Adams Acting Sector Manager David Cook Team Leader Gaiv Tata Team Members Nelson Ofwono, Joseph Kizito  FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT REPUBLIC OF UGANDA ECONOMIC AND FINANCIAL MANAGEMENT PROJECT (Credit 2418-UG) TABLE OF CONTENTS Preface i Evaluation summary ii Part I: Project implementation assessment A. Introduction 1 B. Background 1 C. Statement/evaluation of objectives 1 D. Achievement of objectives 3 E. Major factors affecting the project 11 F. Project sustainability 12 G. Bank performance 12 H. Borrower performance 13 I. Assessment of outcome 14 J. Future operation 14 K. Key lessons learned 14 Part HI: Statistical annexes Appendices A. Mission's aide-memoire B. Borrower contribution to the ICR C. Borrower's comments on the ICR 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.   i IMPLEMENTATION COMPLETION REPORT REPUBLIC OF UGANDA ECONOMIC AND FINANCIAL MANAGEMENT PROJECT (Credit 2418-UG) Preface This is the Implementation Completion Report (ICR) for the Economic and Financial Management Project in Uganda, for which Credit 2418-UG in the amount of SDR 22 million (US$29 million equivalent) was approved on August 4, 1992 and made effective on October 26, 1992. The credit will close on June 30, 1999 which is the original closing date. The credit is almost fully disbursed'. Co-financing for the project was provided by Austria; Denmark; Sweden; the Netherlands; Norway and the United Kingdom. The ICR was prepared by a team consisting of Gaiv Tata, AFTPI and Nelson Ofvwono and Joseph Kizito, AFMUG. Preparation of this ICR was begun during the Bank's final supervision/completion mission in November 1998. The borrower contributed to preparation of the ICR by preparing its own evaluation of the project and commenting on the draft ICR. SDR 6, 116.63 remains to be disbursed and will be disbursed against eligible expenditures incurred prior to June 30, 1999.   ii IMPLEMENTATION COMPLETION REPORT REPUBLIC OF UGANDA ECONOMIC AND FINANCIAL MANAGEMENT PROJECT (Credit 2418-UG) Evaluation Summary Introduction i. With a per capita income of US$330 (FY1997), Uganda remains one of the poorest countries in the world. Over the thirteen years that the National Resistance Movement Government has been in power there has, however, been a significant improvement in the country's economic and financial management as compared to the chaotic period prior to 1986. The improvements in economic performance began to be particularly notable during the period after 1992 during which time the Bank continued its support through the First, Second and Third Structural Adjustment Credits. Technical assistance support was provided through the Economic and Financial Management Project (FY1993), the Institutional Capacity Building Project (FY1996 onwards) and preparation of a Second Economic and Financial Management Project (proposed FY2000). Project Objectives ii. The objectives of the Project were to: assist the Borrower to further enhance institutional capacity building in key governmental ministries and agencies; deepen and extend financial work in the financial and economic areas; and support the Borrower to attain the key objectives of its structural adjustment efforts. Given that the project provided Technical Assistance support for the implementation of the policy objectives stated in the First Structural Adjustment Credit, the project can be considered as important for the Bank's Country Strategy at the time. iii. There are two fundamental problems with the statement of development outcomes: imprecise statement of objectives and difficulty in translating the stated objectives into development outcome indicators. Given these problems with the stated objectives, it was considered necessary to construct outcome indicators against which to judge the project's development impact. The outcome indicators - not necessarily in order of priority - which would have been utilized would have been: (a) increased budgetary allocations to sectors/themes identified as priority sectors for the Government; (b) improved financial management including more timely preparation and auditing of Government accounts; (c) improved quality and timeliness in macro economic and poverty data; (d) increased levels of Government revenues; (e) improved functioning of Bank of Uganda (BOU) especially with regard to capabilities for Government cash management functions; and (f) improved service delivery resulting from civil service reform. Implementation Experience and Results iv. Approximately US$ 33.9 million was expended during project implementation; of this US$30.3 million was provided from the IDA credit and US$3.6 million was provided from Government counterpart funds. IDA funds were utilized for Technical Assistance and training  iii (US$17.90 million), office equipment and vehicles (US$6.33 million), civil works (US$4.61 million) and operating costs (US$1.48 million). The project has been implemented within the timeframe expected with funds having been disbursed slightly ahead of schedule. v. The assessment is that project satisfactorily achieved its development objectives. The Table below compares actual achievements as compared to the restated objectives. Development Objectives (DO) and Indicator: start Indicator: end Components % of IP DO Rating Indicators (I) project project contributing to DO project Rating cost DO: Increased budgets for priority Central Budget 11% U Satisfactory sectors Local Budget 3% S I: Budget allocations to Priority I: 20.9%2 I:25.4%0 Economic 8% S Program Areas (PPAs) including Recovery Program salaries for primary school teachers Building 4 3% S Subtotal 30 DO: Improved financial management Treasury 5% U Satisfactory including more timely preparation Auditor General 5% S and auditing of Government UCS 11% U accounts I: Backlog of 4 I: Audited Building 8%/O S I: Audited Government accounts years accounts upto Subtotal 29% previous FY DO: Improved quality and timeliness Statistics 11% S Satisfactory in macro economic and poverty data Il: Scope and coverage of national Il: Limnited (e.g. Il: Increased economic statistics CPI only Kampala scope and I2: Household surveys based) frequency (e.g. I2: Last survey CPI for 5 towns) conducted in I2: Surveys 1988/89 conducted annually from 1992/93 onwards for 4 years DO: Increased levels of Government URA 8% 5 Satisfactory revenues I: Percentage of GDP I:6.8% of GDP I: 11.4% of GDP5 DO: Improved capabilities for BOU 6% U Unsatisfactory Goverinment cash management functions I: Reduced float of cheques I: Unknown I: Unknown DO: Improved service delivery MPS 9% S Satisfactory resulting from civil service reform6 FY1992/93 FY 1997/98 II: Number of civil servants 11:214,232 II: 124,664 12: Wage bill I2: US$52.2 i2: US$222.4 million million___________________ 2Measured as a proportion of total recurrent and GOU-flnded development expenditures. Base year is FY 95/96 which is the first year for which data on primary teacher salaries is separately available. The PPA concept was first used in FY94/95. 3Budget for FY 98/99. 4The refurbished building houses the Ministry of Finance, Planning and Economic Development and the office of the Auditor General. The costs of the building component have been split 50:50 between the two development objectives on an arbitrary basis 5 Provisional estimate for FY 97/98.  iv vi. The project's sustainability is uncertain. The Government continues to receive support from various donors for its core economic and financial management functions. However, the sustainability of human resources/capacities built up in the civil service is dependent on: the Govemnment continuing to increase general wage levels to take into account the inflation which has occurred since the establishment of the "living wage" calculations; and providing better compensation for key technical skills (primarily accountants and information system specialists). On the latter issue, after several years of delay, the Government is making a credible attempt at reviewing the pay structure. However, until this key action is implemented, sustainability while probable remains uncertain. vii. Key factors affecting project implementation. There were three central factors: staffing policies, information systems changes and decentralization. First, the design of the project - especially with regard to training and other forms of capacity building - assumed the presence of staff (either those already on board or to be recruited). In fact, the implementation of civil service reform substantially impacted on this assumption since there was considerable retrenchment which reduced existing numbers of staff and since salaries for qualified professionals remained well below market levels, staff continued to leave the civil service and could not be easily replaced due to a broad hiring freeze. Second, the Government did not have an implementable information systems/ information technology strategy or standards and did not have institutional structures for managing the formulation and monitoring of such standards. As a consequence, there was both a strategic error (the Government attempting to develop its own information systems with scarce in-house expertise instead of purchasing from the market) and a tactical/sequencing error (i.e. purchasing hardware and operating system software before the specifications for the application software were developed and the software selected). Third, decentralization resulted in considerable changes in central and local government responsibilities and, hence, had fundamental implications on the nature of administrative systems (especially information systems) which were to be designed under the project. viii.Bank's Performance. The Bank's performance was satisfactory during project identification and preparation. During appraisal, the Bank's performance was unsatisfactory as the team did not reduce the size and scope of the Government proposals. Further, the team was lacking skills in information systems development, architecture/construction and fiscal management - all of these were areas of major expenditure under the project. During supervision the Bank's performance was only marginally satisfactory. While the Bank did supervise the project with sufficient frequency, specialist staff were lacking especially in information systems and construction supervision during key phases of the project. Further, the Bank used three different Task Managers for project supervision and changed supervision responsibilities among these Task Managers four times. 6 No direct measurements of Govemment service delivery have yet been made in Uganda; improved efficiency imputed from lower level of civil servants and higher levels of wage bill. These were the two outcome indicators which were commonly utilized in Uganda at the time. 7 As of December 1997.  v ix. Borrower's Performance. Performance of the Borrower during identification, preparation and appraisal was unsatisfactory. The project was largely prepared by consultants which, in some cases (e.g. URA business plan and civil service reform program) took into account the input of their counterparts. However, in the early stages of development, there was clearly no "ownership" of the project by senior Ministry of Finance officials. Negotiations were delayed because the borrower raised concems at that late stage regarding the substantial levels of Technical Assistance incorporated into the project. Borrower perfonmance and ownership of the project post- negotiation significantly improved. This resulted from a new management team which took over in the core implementing agency - the Ministry of Finance and Planning (MFEP) - after project negotiations had occurred. The ministry's technical leadership became the "champion" of the economic reform program and saw the central role that the project would have in its implementation. This leadership and ownership of the project lasted despite constant changes in the institutional structure at the MFEP. The Govemment's performance in implementing the project was satisfactory. However, the Government did not institute institutional arrangements to co-ordinate the linkages between the various reforms until November 1997. x. Overall, based on the project's development outcomes and sustainability ratings, the project is assessed as having satisfactorily achieved its development objectives. Summary of Findings, Future Operations, and Key Lessons Learned xi. Most importantfindings. The findings relating to technical assistance/long-term advisory support are that it was extremely difficult to ensure consistent quality of advisory support and that the work of technically skilled advisors was "owned" by the counterparts. Where these two conditions were met and counterparts were available, there was a credible capacity built (e.g. in the budget and macro-economic policy departments) and the functions are largely carried out today by Ugandans. Where counterparts were not available (e.g. in Treasury), there was a propensity for advisors to get drawn into the operational work due to absence of staff. Finally, it is questionable whether for some key positions requiring professional qualifications, there will be a sufficient number of counterparts until the current pay structure is substantially changed. In recognition of this fact, the MoFPED took the pragmatic step of appointing two of the consultants - who are professionally qualified accountants - into line positions. The approach is a practical stop-gap measure but if the pay structure is not improved, this contracting out arrangement will have to be continued for extended periods of time with cost and financing implications. The other important finding relates to information systems and technology, where in the absence of an information systems/technology strategy and active management and monitoring of standards, rapid changes in information technology are rendering current equipment obsolete. Given the old nature of the existing information systems, the Government's investments in systems and technology have a limited life span and substantial new investments are needed fairly soon. xii. Lessons. First, in the absence of significant pay reform which will allow the Government to hire and retain professionals (accountants and information systems staff) into the civil service, it is questionable whether sustainable capacity building efforts can be undertaken or whether staff in whom capacity has been built will remain with the civil service. Second, an information systems/technology strategy and standards and institutional arrangements for continuous management and monitoring are necessary. Given the substantial decentralization program, these institutional arrangements need to ensure consistency across both central and local governments. The strategy formulated needs to deal realistically with existing constraints (e.g. making  vi substantial use of outsourcing if there are problems with hiring professionals within the Government), ensure that appropriate sequencing of actions is undertaken (e.g. developing general systems architecture before specific system requirements are developed) and instituting appropriate safeguards (e.g. separating system design/supervision contracts from software/ hardware acquisition contracts. The Government has taken this lesson into account in the design of the Second Economic and Financial Management Project. Third, the management of complex programs and co-ordination of several reform programs (civil service reform, decentralization and expenditure management reform) should be institutionalized within the existing Government structure. Utilizing projects as the fora for such co-ordination may not be the optimal solution. Further, appropriate sequencing of activities across the various reforms are required to be managed in a co-ordinated manner. The Government has incorporated this lesson into the design of institutional arrangements for the Public Service Reform 1997-2002 Programme. Fourth, in the case of capacity building projects, a much closer linkage needs to be made between the availability/recruitment of counterpart staff within the Government, the recruitment of advisors and the acquisition of office equipment to get full productivity out of the advisor/counterpart teams. xiii. Future Operations. The activities which commenced under EFMP are being continued under different projects. Civil Service Reform is being continued under the Central Government Capacity Building component of the Institutional Capacity Building Project since August 1995. Support to the Bank of Uganda is continuing through the Financial Markets Assistance Project which has been recently approved by IDA's Board. Finally, key areas in expenditure management reform are expected to be supported by the follow-on operation - the Second Economic and Financial Management Project.   PART I: PROJECT IMPLEMENTATION ASSESSMENT A. Introduction 1. With a per capita income of US$330 (FY1997), 8Uganda remains one of the poorest countries in the world. Over the thirteen years that the National Resistance Movement Government has been in power there has, however, been a significant improvement in the country's economic and financial management as compared to the chaotic period prior to 1986. Between 1987-91, the World Bank provided support through two structural adjustment credits (First and Second Economic Recovery Credits) and two technical assistance credits (Second and Third Technical Assistance Projects). The improvements in economic performance began to be particularly notable during the period after 1992 during which time the Bank continued its support through the First, Second and Third Structural Adjustment Credits. Technical assistance support was provided through the Economic and Financial Management Project (FY1993), the Institutional Capacity Building Project (FY1996 onwards) and preparation of a Second Economic and Financial Management Project (proposed FY2000). B. Background 2. In the early 1990s, macro economic stabilization had not yet been fully achieved as high inflation prevailed and sustaining the supply response was still a challenge. The Government sought the World Bank's assistance - through the First Structural Adjustment Credit (SAC I) - in deepening the structural adjustment program by stimulating private sector-led growth and improving the effectiveness of the Government. In parallel, and to support the aims of SAC I, the Government began preparing the Economic and Financial Management Project. Initially, EFMP and SAC I processing were closely related. SAC I was appraised in April 1991 while EFMP was appraised in April 1991 with a post-appraisal in July/August 1991. 9 However, while SAC I was negotiated in October 1991, negotiations for EFMP which were scheduled for November 1991 were delayed. SAC I went on to be approved by the Board in November 1991 and became effective in January 1992 before EFMP negotiations were held in March 1992. EFMP Board approval was obtained on August 4, 1992 and the credit became effective on October 26, 1992. C. Statement/Evaluation of Objectives 3. Statement of Objectives and Importance to the Bank's Country Strategy. The objectives of the Project were to: assist the Borrower to further enhance institutional capacity building in key governmental ministries and agencies; deepen and extend financial work in the financial and economic areas; and support the Borrower to attain the key objectives of its structural adjustment efforts. 10 Given that the project provided Technical Assistance support for the implementation of the policy objectives stated in SAC I, the project can be considered as important for the Bank's Country Strategy at the time. 8 Per Annex D of OP3.10 dated June 1998. 9 Earlier steps in the EFMP project cycle consisted of the project concept which was identified in July 1990 and pre-appraisal in Nov-Dec, 1990. 10 From Development Credit Agreement dated September 22, 1992.  2 4. Clarity and Realism. There are two fundamental problems with the statement of development outcomes: imprecise statement of objectives and difficulty in translating the stated objectives into development outcome indicators. 5. Imprecise Statement of Objectives. The objective is a general statement that project outputs (deepening and extending financial work in the financial and economic areas) would lead to both achievement of short-term development objectives (supporting the Borrower to attain the key benchmarks under SAC I) and long-term development objectives (assisting the Borrower to further enhance institutional capacity building). There is no precise definition of expected outcomes in the main programs supported (i.e. expenditure management, revenue management and civil service reform). 6. Stated objectives are not readily translatable into development outcome indicators. It is unclear from the project preparation documentation whether SAC I benchmarks were expected to be the measure for progress on short-term objectives. Further, the indicators defined in project documentation focused largely on achievement of project outputs or process improvementsl . Only one out of all the indicators relates to achieving development outcomes. 7. Given the above problems with the stated objectives, it was considered necessary to identify the types of outcome indicators against which to judge the project's development impact. However, to prevent a retrospective bias from creeping into the assessment, no specific qualitative or quantitative targets were established and the evaluation compared changes in the indicators between the start and completion of the project. The outcome indicators - not necessarily in order of priority - which have been identified include: (i) increased budgetary allocations to sectors/themes designated as priority sectors for the Government; (ii) improved financial management including more timely preparation and auditing of Government accounts; (iii) improved quality and timeliness in macro economic and poverty data; (iv) increased levels of Government revenues 12; (v) improved functioning of BOU especially with regard to capabilities for Government cash management functions; (vi) improved service delivery resulting from civil service reform. 8. Evaluation of Project Complexity. To achieve the wide range of development outcomes discussed above, the project included twelve components which were implemented by seven institutions - Ministry of Finance and Economic Planning; Ministry of Public Service; Ministry of Local Government; Ministry of Defence; Auditor General; Uganda Revenue Authority; and Bank of Uganda. During preparation, the complexity of the project was assumed as necessary given the complexity of the processes which were being reformed and the need for co-ordination across the reforms. However, this evaluation has concluded that this rationale was only partially correct. While it was necessary (and critical) to co-ordinate the reforms of the various different processes (revenue management; expenditure management; planning and budgeting; economic/social statistics; and payroll/personnel management) included under the project, it was not necessary as a corollary to include all of these reforms within the same project. The evaluation is that the " Anmex 9 to the Technical Annex which accompanied the Memorandum of the President for the project. 12 This is the only outcome indicator provided in Annex 9. It reads "revenues raised increased to 12% GDPby 1993/94 and 15% by 1996/97"  3 expectation that the project would become the forum for the policy and implementation co- ordination to occur did not materialize. The establishment of institutional arrangements which would co-ordinate the various reforms (and projects supporting the reforms) began to occur only half-way through the implementation of the successor project to the EFMP (i.e. the Institutional Capacity Building Project) and during the preparation of the Second Economic and Financial Management Project. 9. Implementation complexity was further increased during project implementation by the addition of six co-financiers (Austria, Denmark, Netherlands, Norway, Sweden and the United Kingdom). However, all six co-financed only the civil service reform component and provided retrenchment funds to the Government which paralleled the technical assistance funding provided through the credit. Despite the complexity, the project remained fairly responsive to changes in borrower circumstances and development priorities. 10. Risks. Even during the design and project preparation phase, the project had been identified as a complex and risky project. These concems were raised during intemal Bank review meetings held at the time of project preparation. There were two principal risks identified in the project's Appraisal Report and in the intemal review meetings: inability of the Government to manage a complex project and inability of the Bank to supervise such a complex project. Assessment of both of these issues is covered under relevant sections below; in summary, the Government managed implementation risks well but its co-ordination of activities across reform programs was poor and the Bank's performance during supervision was only marginally satisfactory. D. Achievement of Objectives D]. Assessment of Outcomes 11. The assessment is that project satisfactorily achieved its development objectives. This assessment incorporates earlier assessments made in the Implementation Completion Report for SAC 1 13. The evaluation in the Table below compares the actual achievements under various components as compared to the restated objectives. 13 Report No: 16797 dated June 23, 1997. The report assesses that there were satisfactory outcomes on three of the proposed outcome indicators for EFMP i.e. on revenue management, on expenditure management and on civil service refornL The caveats are that: the SAC I assessment does not isolate EFMP contributions to the achievement of development objectives and the assessment applies only to the early phases of EFMP since SAC I became effective in December 1991 and was closed in July 1994.  4 Development Objectives (DO) and Indicator: start Indicator: end Components % of IP DO Rating Indicators (1) project project contributing to DO project Rating cost DO: Increased budgets for priority Central Budget 11% U Satisfactory sectors Local Budget 3% S 1: Budget allocations to Priority I: 20.9%14 I:25.4%0s Economic 8% S Program Areas (PPAs) including Recovery Program salaries for primary school teachers Building 16 Subtotal 8% S 30% DO: Improved fnancial management Treasury 5% U Satisfactory including more timely preparation Auditor General 5% S and auditing of Government UCS 11% U accounts I: Backlog of 4 I: Audited Building 8% S I: Audited Government accourts years accounts upto Subtotal 29% previous FY DO: Improved quality and timeliness Statistics 11% S Satisfactory in macro economic and poverty data Il: Scope and coverage of national II: Limited (e.g. I1: Increased economic statistics CPI only Kampala scope and based) frequency (e.g. CPI for 5 towns) 12: Household surveys I2: Last survey I2: Surveys conducted in conducted 1988/89 annually from 1992/93 onwards for 4 years DO: Increased levels of Government URA 8% S Satisfactory revenues I: Percentage of GDP I: 6.8% of GDP I: 11. 4% of GDP17 DO: Improved capabilities for BOU 6% U Unsatisfactory Government cash management functions I: Reduced float of cheques I: Unknown I: Unknown DO: Improved service delivery MPS 9% S Satisfactory resulting from civil service reform ,s FY1992/93 FY 1997/98 Il: Number ofcivil servants I1:214,232 II: 124,664 I2: Wage bill I2: US$52.2 I2: US$222.4 milhon million 14 Measured as a proportion of total recurrent and GOU-funded development expenditures. Base year is FY 95/96 which is the first year for which data on primary teacher salaries is separately available. The PPA concept was first used in FY94/95. '5 Budget for FY 98/99. 16 The refurbished building houses the Ministry of Finance, Planning and Economic Development and the Office of the Auditor General. The costs of the building component have been split 50:50 between the two development objectives on an arbitrary basis 17 Provision estimate for FY 97/98. 18 No direct measurements of Government service delivery have yet been made in Uganda; improved efficiency imputed from lower level of civil servants and higher levels of wage bill. These were the two outcome indicators which were commonly utilized in Uganda at the time. 19 As of December 1997.  5 12. There were two difficulties in making the above assessment which relate to segregating the impact of EFMP and identifying how changes in project outputs affected development impact. 13. Segregating Impact of EFMP. EFMP financing was often provided to the same ministries and departments concurrently with other predecessor and successor IDA projects 20 and other donor projects (principally UNDP funded and IDA executed projects, other UNDP projects and projects funded by the UK Government). While this extremely rational and co- operative behavior among donors did support the Government's programs, it makes evaluation very difficult. As an example, the Chief Technical Advisor for Civil Service Reform was funded by the UK Government but key operating costs of his office support arrangements were funded by IDA. The evaluation has not attempted to segregate the impact of EFMP and as long as it contributed even partially to a particular activity, the development outcome (or lack thereof) has been attributed to EFMP. 14. Improvements Achieved Despite Unsatisfactory Implementation Progress. The evaluation above shows some instances where Development Objectives have been satisfactorily achieved despite Unsatisfactory Implementation Progress at the component level. This is a reflection of the reality that over the period of the project Uganda's macro performance, increasing allocations to priority sectors and improved timeliness in preparation of accounts point to a satisfactory development outcome which has made Uganda the subject of much "best practice" discussion in Bank and other donor led fora. However, these improvements occurred despite non- accomplishment of some key budget and financial management process and information system deliverables as a consequence of which those components have been rated as unsatisfactory on implementation progress. What should be noted is that when systemic changes did not materialize, the Government responded by making better use of existing information systems and changing existing processes to use enhanced participation as a method of addressing information constraints - utilizing inputs provided by EFMP. This shift allowed for positive progress in outcomes although to a lesser degree than would have occurred if the original project outputs had been delivered. D2. Implementation Experience 15. Implementation experience with the twelve components under parts A through D of the project is described below linking the development objectives and the components. D2. 1 Components associated with Budgeting Development Objective 16. Central Budget Component (US$5.1 million). The objective was to strengthen MFEP's central planning and budgeting capability through a pilot program to introduce conceptual reforms in five ministries including greater policy orientation and improvements in the budget cycle and linkages. In addition, a budgetary/logistical systems reform program for the Ministry of Defence was to be developed and implemented. Implementation experience has been unsatisfactory. A combined pilot program for budget/treasury reform was designed but never implemented due to 20 Third Technical Assistance Project, Institutional Capacity Building Project and the proposed Second Economic and Financial Management Project  6 problems in the procurement process. Instead individual consultants were hired as macro and planning advisors and improvements focused largely on incremental improvements to budget process and strengthening budget activities in MFEP. Comprehensive improvements in budget procedures and budget codification/ classification did not occur. The Ministry of Defence study was undertaken but the report has not been provided to IDA. Status of its implementation therefore is unknown. 17. Local Budget Component (US$0.9 million). The objective was to implement a pilot program for budget reform in six selected local authorities. As the Government's decentralization program advanced substantially, the Government began designing a Local Government Capacity Building component under the IDA Institutional Capacity Building Project. The EFMP local budget component was, hence, refocused on key activities in expediting the adoption of new organizational structures by local governments; and meeting immediate training needs to improve financial and operational management. Implementation experience with the redesigned component was satisfactory. 18. Support to the Economic Recovery Program (US$2.6 million). The objective was to strengthen Govemnment's capability to conduct studies and undertake policy analysis and improve implementation capacity in support of its economic recovery program. This was to be achieved through a program of studies, policy analysis, and technical assistance and through funding the return of qualified Ugandans working overseas. As in prior projects (Third Technical Assistance Project), this component was left undesigned in content but with clear ground rules on the process to be followed in approving activities to be funded during implementation. Implementation experience has been satisfactory. Several Technical Assistance activities were funded and substantial amounts of ad hoc overseas training was funded mainly for organizations other than MFEP (with the President's Office and Ministry of Justice benefiting the most). 19. Refurbishment of the MFEP and Treasury buildings (US$5. 0 million). The original objective was to have secure premises and to ensure that the old Ministry of Finance building would be made ready for the introduction of technology at the desks of civil servants. However, after the two Ministries were merged into the Ministry of Finance and Economic Planning and the total number of staff to be accommodated increased substantially, favorable consideration was given to refurbishing the old Treasury building which was adjacent to the MoF building but not being utilized since it had been seriously damaged during the civil war. This substantially increased the expenditures over the appraisal budget. Implementation experience was satisfactory with civil works procured in accordance with IDA procurement procedures. The building was completed at a slight (less than 10 per cent) overrun and a slight delay in completion time. D2. 2 Components Associated with Financial Management Development Objective 20. Treasury Department (US$1.5 million). The objective was to strengthen the Treasury Department's accounting, inspectorate and internal audit functions by introducing new accounting systems and procedures and improving staff performance through training. Implementation experience has been unsatisfactory. As noted earlier, the comprehensive budget/treasury reform was not implemented. Instead individual long-term advisors were hired for accounting, internal audit, external debt and treasury inspectorate functions. There was some success in establishing new positions for internal auditors, improving external debt management, introducing a treasury inspectorate manual and designing an accounting training program. The key problem was that the  7 changes in accounting processes did not happen and very few staff were trained since substantial retrenchment took place in the accounting functions as part of the civil service reform program between project design and implementation. 21. Office of the Auditor General (OAG) (US$1.8 million). The objective was to strengthen the capability of the OAG in audit-planning, documentation and techniques and improving its training program. The activities to be implemented included comprehensive training, improvement in audit documentation and support to regional offices. Implementation experience has been satisfactory. Two advisors were hired: for training and preparation of an audit manual. Several training courses were held for the audit staff; these were assessed as having improved the skills of staff. The training program also built up capacity in the audit department to conduct future training. Study tours undertaken through the project with another government have resulted in continuing Government to Government support. Upcountry auditors were assisted in undertaking their assignments with vehicles, office equipment and allowances. 22. Uganda Computer Services (UCS) (US$4.] million). The objective was to strengthen MFEP's financial information system. This was to be achieved by increasing the number of computer specialists at UCS; developing an in-house training course for new and current staff, introducing competitive tenns of service to attract and retain staff; developing and modifying computer software; and providing Ugandan consulting firms access to training for an appropriate fee, if necessary, to enhance local skills. Implementation experience has been mixed and overall is judged unsatisfactory. On the positive side, new hardware and relational database management software were purchased and the current operating costs of the system (i.e. lease/maintenance costs and computer paper) were funded. However, the number of staff employed at UCS decreased due to the retrenchment which occurred under the Civil Service Reform program and attrition which resulted as the terms of service offered to staff continued to remain substantially below market. Some training was provided to UCS staff but the new database management software acquired has not been utilized for developing new application software since in-house capabilities to program in this software are extremely limited. UCS did provide substantial training in basic computing skills (on personal computers) to users in the Ministry of Finance, BOU and URA. D2. 3 Statistical Development Objective 23. Statistics Department Component (US$3.7 million). The objective of this component was to improve the Statistics Department's survey and analytical work. This was to be achieved through improvements to the consumer price index, national accounts, extemal trade, immigration and tourism, statistical data base and business surveys. Implementation experience has been satisfactory. D2. 4 Revenue Development Objective 24. Uganda Revenue Authority Component (US$2.5 million). The objective of this component was to strengthen URA in accordance with an organizational structure and financial plan and improve its revenue and trade monitoring system. Implementation experience has been satisfactory. The project financed the expatriate Commissioner General of the URA, the Customs and Value Added Tax information systems and overseas and local training for several URA staff in key skills. Two key activities were not funded. First, civil works expenditures were not financed as planned because URA rented space instead. Second, several key Technical  8 Assistance positions were funded by the UK Government which provided substantial parallel financing to this component. D2.5 Cash Management Development Objective 25. Bank of Uganda (US$2.0 million). The objective of the component was to strengthen BOU's: management and information and accounting systems; debt monitoring and foreign exchange management systems; analytical capacity in its research department; and general management and human resources skills. The component was designed prior to the availability of US$ 10 million of Technical Assistance funds under the Financial Sector Adjustment Credit (FSAC). As the FSAC commenced implementation, Part C of the project funded principally three things: the restructuring study, improvements in MIS including the Integrated Accounting System and repatriation of returning expatriate Ugandans to the Bank. Implementation experience has been unsatisfactory. While the BOU restructufing has been implemented and most of the returning expatriate Ugandans continue to work in the central bank providing it with much needed skills, the key objective of improving flow of financial information (especially with regard to cash management) from the Bank of Uganda to the Treasury, has not been achieved since the Integrated Accounting System software funded under the component has not been put into operation. D2. 6 Civil Service Reform Development Objective 26. Ministry of Public Service (US$3.0 million). The objective wasto assist MPS in implementing the civil service reform program. Implementation has been satisfactory. Ministerial and district institutional structures were developed; a personnel information system was developed and remains in operation for civil service payroll management; the office of the Chief Technical Advisor for Civil Service Reform was supported; administrative arrangements were set up and run successfully for a substantial retrenchment program (US$19 million) which was fimded by six donors and administered by IDA. D2.7 ProjectManagement 27. Project Administration Component (US$1.7 million). The objective of this component was to manage procurement, disbursement and financial management for the project. The implementation experience has been satisfactory. Procurement of high cost items and ICB requirements was largely sub-contracted to UN OPS. A full-time management/ financial advisor provided support during the first two years of project implementation. An assessment of financial management procedures during the preparation of the ICR indicated that this aspect of project management was well managed during implementation. D2.8 Reallocations across components 28. There were significant re-allocations across components to meet emerging needs which were discussed and agreed between the Government and IDA especially in the context of the project's Mid-Term Review. Given that the project expenditure categories were specified not by component but mainly by expenditure items, it was not necessary for the Government and IDA to agree to formal changes in the Development Credit Agreement.  9 29. Component budgets increased due to: actual expenditures exceeding appraisal estimates (Uganda Computer Services and Central Budget component); increased scope of work (Ministry of Finance building component); and activities being supported for much longer time horizons than initially planned (Statistics and Ministry of Public Service components). Reallocations occurred largely from those components which were experiencing implementation delays (Treasury comp6nent) or where alternative sources of funding (in the case of Bank of Uganda from the Financial Sector Adjustment Credit and in the case of the Uganda Revenue Authority from the UK Government) had become available. This, however, meant that these latter components often did not achieve outputs in line with the Project Implementation Plan. This is less of an issue given the evaluation approach than would have been the case if the assessment had been comparing expected component outputs with actual outputs. D3. Cost Analysis 30. Approximately US$ 33.9 million was expended during project implementation; of this US$30.3 million was provided from the IDA credit and US$3.6 million was provided from Government counterpart funds. IDA funds were utilized for Technical Assistance and training (US$17.90 million), office equipment and vehicles (US$6.33 million), civil works (US$4.61 million) and operating costs (US$1.48 million). The project has been implemented within the timeframe expected with funds having been disbursed slightly ahead of schedule. 31. Technical Assistance and consultants. Approximately US$8.0 million (or 45%) ofthe TA is associated with turnkey contracts managed by an UN implementing agency; these contracts resulted in the financing of long-term foreign and local consultants but also resulted in purchase of equipment and financing of operating costs and the totals for TA need to be understood with this caveat. An additional $4.68 million (or 26%) of the TA was for funding long-term advisory contracts - primarily expatriates but also including returning expatriate Ugandans and local consultants. A further US$1.8 million (or 10%) was for consultant assigmnents with specific outputs (e.g. contract for Bank of Uganda management information system, design/supervision consultants for the Ministry of Finance building rehabilitation and preparation of ministerial restructuring reports in MPS). 32. The key evaluation issue relates to the extent to which the long-term advisors built capacity. The performance was mixed and there are several lessons to be learned. First, it was extremely difficult to ensure consistent quality of advisory support. This occurred despite the Government formally interviewing the highest evaluated candidates. Second, even where the advisory support was technically skilled, there was a question of "ownership" of the advisors; the counterparts had to believe that their management perceived the advisors to be an integral part of the institution. Where these two conditions were met (i.e. skilled advisors and ownership) and counterparts were available, there was a credible capacity built (e.g. in the budget and macro- economic policy departments) and the functions are largely carried out today by Ugandans. Where counterparts were not available (e.g. in Treasury), there was a propensity for advisors to get drawn into the operational work due to absence of staff. Also, it is questionable, whether for some key positions requiring professional qualifications, there will be a sufficient number of counterparts until the current pay structure is substantially changed. In recognition of this fact, the MoFPED took the pragmatic step of appointing two of the consultants - who are professionally qualified accountants - into line positions. The evaluation endorses this approach as a practical stop-gap measure but highlights the risks that if the pay structure is not improved,  10 this contracting out arrangement will have to be continued for extended periods of time with cost and financing implications. 33. Office Equipment and vehicles. Approximately US$2.6 million (or 41%) ofthe expenditures undertaken from this category were in the Uganda Computer Services. The bulk of the expenditure incurred under the UCS component consists of: (i) during the initial phase of the project financing leasing of mainframe equipment which was technologically obsolete but required until the Government transitioned to new equipment; and (ii) subsequently, purchasing new client server equipment at a cost of around US$1 million in 1994. This equipment too while probably appropriate at the time of its purchase, is now technologically obsolete given rapid increases in capabilities which have occurred in the last five years. 21 The evaluation is that the investments in technology - while necessary at the time - will need to be repeated again given the rapid shift in technology. 34. Civil Works. All of the expenditures were on one civil works contract which has been discussed under the Ministry of Finance building rehabilitation component. The evaluation indicates that the construction is functional and that the building is technology capable. Consideration needs to be given to leveraging this resource base by looking more broadly at the technology needs of the MoFPED and increasing use of basic capabilities (email, etc.). 35. Training. Almost US$2.3 million (or 66%) of the training was undertaken overseas. The only two components which had significant levels of local training was the local government component and the Auditor General's office; both components were successful in training larger numbers of participants due to the lower per capita costs. Almost US$1 million was for funding overseas training in the context of the ERP component. While the courses supported were within the subject areas of economic and financial management, the contribution of this training to the core objectives of the EFM Project is questionable since there was no coherent strategy behind the training program adopted, overseas training was largely approved on an ad hoc basis and key beneficiaries included the Office of the President and the Ministry of Justice. 36. In general, it is important to note that overseas training - in addition to its obvious benefits in enhancing staff skills - has increasingly become a motivational tool and a way to allow staff to supplement their meager wages. This propensity has increased with the abolition of payment of staff salary supplements and sitting allowances by IDA as of July 1995 on the grounds that the Government had reached a "living" wage for civil servants by that date. In reality, the "living" wage calculations are dated by several years and even with the relatively low inflation in Uganda are inadequate for middle level civil servants living in Kampala. Hence, the only way whereby managers in the civil service can provide additional income to their staff is either by staff travelling to the field (and collecting day or ovemight travel allowances) or by going overseas (and collecting per diems). The perverse nature of these incentives is that in order to adequately pay staff, the staff need to be away from their desks. This is not just an EFMP specific problem 21 As an example, the 1994 servers' capabilities are (hard disk) storage capacity of 4 gigabytes, memory (RAM) of 64 megabytes and processing (clock) speed of 40 MHz. In 1999, these storage and memory capabilities are available in a personal computer with a processing speed greater by 7-10 times (300-400 MHz). Further, prices are dramatically lower with PCs of these specifications available for less than US$1,000 in the US.  11 but is pervasive across the IDA portfolio 22and, possibly, affects all donor funded activities. Pay reform which will address general pay levels - in addition to the issues of paying for professionals raised earlier - needs to address this issue as well. 37. Operating Costs. IDA's contribution towards operating costs was only US$1.48 million at a ratio of 20%. One of the key expenditures financed was payment of salary supplements to Ministry of Finance staff until June 1995 when, as discussed earlier, such payments were discontinued. It is the view of the senior management of the Ministry of Finance that such payments were central to the improvements in the core economic and financial functions of the Government. The evaluation team endorses this finding based on its own review but it is also clear that the payments caused other problems such as behavior of ministries participating in the process whose staff did not receive such supplements, affordability problems, exit strategy problems, etc. Once again, this points to pay reform issues as a central part of the agenda if the behavioral improvements initiated under this project are to remain sustainable. E. Major Factors Affecting the Project E. I Factors not generally subject to government control 38. Performance of the Bank. As noted earlier, the Bank's performance is rated as satisfactory during identification and preparation, unsatisfactory during appraisal and marginally satisfactory during supervision and is discussed in the section on Bank Performance (Section E). E 2 Factors generally subject to government control 39. Staffing policies. The design under Part A of the project - especially with regard to training and other forms of capacity building - assumed the presence of staff (either those already on board or to be recruited). In fact, the implementation of Part D of the project i.e. civil service reform substantially impacted on this assumption. First, there was considerable retrenchment which reduced existing numbers of staff. Second, despite rapid increases in overall salary levels, salaries for qualified professionals remained well below market levels and staff continued to leave the civil service. Third, a broad hiring freeze was put into place until the ministerial restructuring process would be completed. This meant that it was extremely difficult to either replace staff who left the civil service or to hire new staff to meet agreed program levels. This inconsistency between the civil service and economic/financial management reforms had a substantial detrimental impact on the latter. 40. Information systems/technology management. During the implementation of EFMP, the Government faced the shortcoming that it did not have an underlying information systems and technology implementation strategy on the basis of which the EFMP acquisitions were made. There was also no institutional arrangement in place to manage the IS/IT acquisitions across the Government or to become the locus for Government-wide thinking and agreement on these critical issues. This problem was exacerbated by: the revolution in information technology - steep decreases in prices and sharp increases in performance as discussed earlier required active management on the Government's part; and decentralization which necessitated consistent approaches in central and local governments. In the absence ofthese pre-requisites, a project 22 Assessment of Capacity Building Activities in the IDA Portfolio in Uganda - December 1998.  12 committee (Computer and Information Systems Advisory Committee) was set up to manage this process but it did not function effectively. This committee become moribund and a User Group was established with a narrow focus on existing financial management systems. In the absence of a managed strategy, new hardware and new database management software were purchased but these have not led to new software applications. This resulted from both a strategic error (the Government attempting to develop its own information systems with scarce in-house expertise instead of purchasing from the market) and a tactical/sequencing error (i.e. purchasing hardware and operating system software before the specifications for the application software were developed and the software selected). 41. Impact of decentralization ofservice delivery to local governments. While decentralization was an evolving agenda at the time of project preparation - and hence a small component on local government budgeting included under EFMP - the considerable changes in central and local government responsibilities which came into effect as a result of the December 1993 Local Govermment Statute, the October 1995 Constitution and the March 1997 Local Government Statute were not foreseen during project preparation. The decentralization program has had fundamental implications on the nature of administrative systems (especially information systems) which were to be designed under the project. F. Project Sustainability 42. A key factor in assessing sustainability is the continued support which the Government continues to receive from various donors for its core economic and financial management functions. It is clear that without the substantial and continued donor support, these functions would not be financially sustainable. However, given the firm availability of financing or Technical Assistance support provided by donors, financial sustainability is ensured. With regard to the sustainability of human resources/capacities built up in the civil service, the assessment is that this is dependent on: (i) the Government continuing to increase general wage levels to take into account the inflation which has occurred since the establishment of the "living wage" calculations; and (ii) providing better compensation for key technical skills (primarily accountants and information system specialists). If these issues are not addressed, it is likely that this in-house capacity may dissipate reducing project sustainability. On the latter issue, after several years of delay, the Government is making a credible attempt at reviewing the pay structure. However, there will continue to be difficulties in implementing the new pay structure. Hence, while there is a reasonable probability of project sustainability until suitable changes in compensation have actually been implemented, the project's sustainability rating has to be shown as uncertain. G. Bank Performance 43. Identification, Preparation and Appraisal. During the initial phases of project identification, the Bank's performance was satisfactory. The project was closely linked with the preparation of the First Structural Adjustment Credit and team composition consisted largely of macro economists. During the preparation phase, the Bank's performance continued to remain satisfactory as the team composition and leadership was expanded to include institutional development expertise, financial sector staff and accounting training expertise. During appraisal, the Bank's performance was unsatisfactory. The appraisal team did not reduce the size and scope of the Government proposals. Further, it was lacking skills in information systems development, architecture/construction and fiscal management - all of these were areas of major expenditure  13 under the project. Finally, the team depended largely upon the evaluation of the advisors in place in the Govermnent under earlier Bank/donor funded projects which did not result in an arrns length appraisal of the project. 44. Supervision. The Bank's ability to supervise this complex project - both from the perspective of supervision resource requirements and skills - was an issue identified during project preparation. Consequently, specific staff were identified as being responsible for supervising each components. Despite this the Bank's supervision performance can be rated as only marginally satisfactory. On the positive side, the Bank did supervise the project with sufficient frequency. On the negative side, the Bank's supervision was undertaken largely by the Task Manager without much specialist inputs and with three notable deficiencies. First, specialist staff who had been identified for supervision rotated to other assignments and replacements were not identified. Second, a key specialization - information systems specialist - was only introduced into project supervision almost two years into implementation having not been present during preparation; by this stage, major acquisitions of both systems and hardware were completed and the specialist focused on supervising these contracts. Third, while the Task Manager supervised the building construction intensively, architectural/design supervision skills were brought in only for an ex-post evaluation when the construction was completed. These problems were further exacerbated by the Bank using three different Task Managers for project supervision and changing supervision responsibilities among these Task Managers four times. H. Borrower Performance 45. Identification, Preparation and Appraisal. Performance of the Borrower during identification, preparation and appraisal was unsatisfactory. The project was largely prepared by consultants which, in some cases (e.g. URA business plan and civil service reform program) reflected the input of their counterparts. However, there was clearly no "ownership" of the project by senior Ministry of Finance officials. Negotiations were actually delayed because the borrower raised concerns regarding the substantial levels of Technical Assistance incorporated into the project. Borrower perfonnance and ownership of the project post-negotiation improved significantly. This resulted from a new management team which took over the core implementing agency - the Ministry of Finance and Planning (MFEP) - which was formed out of a merger of two separate ministries i.e. the Ministry of Finance and the Ministry of Economic Planning . The ministry's technical leadership became the "champion" of the economic reform program and saw the central role that the project would have in its implementation. This leadership and ownership of the project lasted despite constant changes in the institutional structure as the MFEP was divided into two ministries (Ministry of Finance and Ministry of Planning and Economic Development) in July 1996 and re-merged into the Ministry of Finance, Planning and Economic Development in May 1998. 46. Borrower Performance During Implementation. The risk identified during preparation was that the project was complex for the Government to manage due to the number of components, the linkages across components and the limited capacity within the Government. The Government's performance in implementing the project was satisfactory; project management remained unchanged throughout although there was a substantial number of changes in Government managers implementing specific components. The key deficiency was that, as noted earlier the Government did not institute institutional arrangements to co-ordinate the linkages between the various reforms which were being supported under the project until  14 November 1997. At that time, when the Government commenced its Public Service Reform 1997-2002 program, it finally institutionalized the management of the three reforms (i.e. civil service reform, financial management reform and decentralization) into a coherent public service reform agenda. I. Assessment of Outcome 47. Overall, based on the project's development outcomes and sustainability ratings, the project is assessed as having achieved its development objectives. J. Future Operation 48. The activities which commenced under EFMP are being continued under different projects. Specifically, Part D of the project (i.e. Civil Service Reform) is being continued under the Central Government Capacity Building component of the Institutional Capacity Building Project since August 1995. Part C of the project (Bank of Uganda) has been operating in parallel with the technical assistance component of the Financial Sector Adjustment credit - which is now closed. With the completion of FSAC, a follow-on operation (Financial Markets Assistance Project) has been approved by IDA's Board. Part B of the project (Uganda Revenue Authority) is no longer receiving direct support from IDA but is receiving support from the UK Government and, given that URA is substantially funded from the Government budget, continues to receive funding from the Government. Finally, key areas funded under Part A of the project (specifically Statistics, Treasury, Budget and UCS) are expected to be supported by the follow-on operation - the Second Economic and Financial Management Project. 49. Given the above circumstances, it was not considered appropriate to prepare a separate operational plan for the entire EFMP project. It was agreed with the Government that the Project Implementation Plan for the Second Economic and Financial Management Project which is to be appraised in the first semester of FY2000 would constitute the operational plan. With regard to the other parts of the project, it can be noted that various follow-on activities are already under implementation or project implementation plans for follow-on projects would constitute the operational plan for those parts of EFMP. K. Key Lessons Learned 50. In the absence of significant pay reform which will allow the Government to hire and retain professionals (accountants and information systems staff) into the civil service, it is questionable whether sustainable capacity building efforts can be undertaken or whether staff in whom capacity has been built will remain with the civil service. The Government is currently addressing pay reform issues as part of a broader job evaluation study. Until this is successfully completed, under EFMP II, a transition strategy is being adopted which will inter alia, include financing of Ugandan professionals in line positions on a contract basis as local consultants. This would be a stop gap arrangement and is not expected to be sustainable in the long-term; it should be treated as a complementary measure and is a not a substitute for fundamental pay reform. 51. Information systems and technology initiatives need to be implemented within the context of a Government-wide Information Systems/Information Technology Strategy. There also need to be institutional arrangements in place which are involved with strategy formulation, standard setting and ensuring consistency. Given the substantial decentralization program, these  15 institutional arrangements need to ensure consistency across both central and local governments. The strategy formulated needs to deal realistically with existing constraints (e.g. making substantial use of outsourcing if there are problems with hiring professionals within the Govenmment), to ensure that appropriate sequencing of actions is undertaken (e.g. developing general systems architecture before specific system requirements are developed) and instituting appropriate safeguards (e.g. separating system design/supervision contracts from software/ hardware acquisition contracts). The Government has incorporated the above lesson into the design of EFMP II. A study is expected to commence shortly which will address Government wide IS/IT standards (in the context of Fiscal Management Systems); develop a common classification system for central and local government fiscal management; and assist the Government in purchasing a budgeting/accounting system. 52. Complex multi-component projects do not increase the likelihood that inter-linked reform programs will be better co-ordinated as a result. The management of complex programs and co- ordination of several reform programs (in the case of Uganda these were civil service reform, decentralization and expenditure management reform) should be institutionalized within the existing Government structure. Such a structure should be utilized not only for policy co- ordination but to ensure that prioritized list of activities are developed within each project (or program) and, where the program is linked with other programs, to ensure that the prioritization/sequencing is consistent across all programs (e.g. pay reform issues in the Civil Service Reform are resolved before an expenditure reform program requiring skilled financial professionals commences). The Government has established such a co-ordination mechanism in November 1997 as part of its Public Service Reform 1997-2002 Programme. The mechanism consists of a Cabinet-level Subcommittee; a Permanent Secretary level group and a co-ordinating committee of project managers. The Permanent Secretary level group meets on a quarterly basis to brief interested donors on progress. 53. In the case of capacity building projects, a much closer linkage needs to be made between the availability/recruitment of counterpart staff within the Government, the recruitment of advisors and the acquisition of office equipment to get full productivity out of the advisor/counterpart teams. If advisors are hired in the absence of counterparts, they are likely to undertake operational work and little or no capacity building occurs. Hence, recruitment of advisors should occur in parallel with or after the recruitment of the counterparts. Similarly, acquisition of office equipment (especially computers which are subject to rapid technological obsolescence) and vehicles should be undertaken on a piecemeal basis so that equipment is acquired as needed. While bulk purchase may result in significant price gains (especially from Intemational Competitive Bidding), these are offset if the equipment arrives but is not optimally utilized due to lack of counterpart staff or advisors.  PART I: STATISTICAL ANNEXES Table 1: Summary of Assessments Substantial Partial Negligible Not applicable A. Achievement of objectives Macro policies X Sector policies X Financial objectives X Institutional development X Physical objectives X Poverty reduction X Gender issues _ X Other social objectives X Environmental objectives X Public sector management X Private sector development X Other (specify) X Unlikely Uncertain B. Project sustainbility X Highly satisfactory Satisfactory Deficient ______ (~~~~~~~~~~~~~L) (U) C. Bank performance Identification X Preparation assistance X Appraisal X Supervision .__ X Highly satisfactory Satisfactory Deficient (X) D. Borrower performance Preparation X Implementation X Covenant compliance X Operation (if applicable) Highly Satisfactory Unsatisfactory Hily satisfactory Unsatisfactory __ m ) .X m E. Assessment of outcome X  17 Table IA: Summary of Assessments for Part A: Ministry of Finance, Planning and Economic Development Substantial Partial Negligible Not applicable A. Achievement of objectives Macro policies X Sector policies X Financial objectives X Institutional development X Physical objectives X Poverty reduction X Gender issues X Other social objectives X Environmental objectives X Public sector management X Private sector development X Other (specify) X Likely U_i Uncertain B. Project sustaility X Highly satisfactory Satisfactory Deficient (X)~~~~~~~~~ C. Bank performiance Identification X Preparation assistance X Appraisal X Supervision X Highly satisfactory Satisfactory Deficient (X) (X-) D. Borrower performance Preparation X Implementation X Covenant compliance X Operation (if applicable) Highly Satisfactory Unsatisfactory Highly satisfactory Unsatisfactory m_____ (X X m I E. Assessment of outcome X  18 Table 1B: Summary of Assessments for Part B: Uganda Revenue Authority Substantial Partial Negligible Not applicable A. Achievement of objectives Macro policies X Sector policies X Financial objectives X Institutional development X Physical objectives X Poverty reduction X Gender issues X Other social objectives X Enviromnental objectives X Public sector management X Private sector development X Other (specify) X =Unlikely Uncertain | B. Project sustainability = elX e _ Highly satisfactory Satisfactory Deficient (X) C. Bank perfon-nance__________ Identification X Preparation assistance X Appraisal X Supervision x Highly satisfactory Satisfactory Deficient (X) x _ _ _ _ _ _ D. Borrower performanee Preparation x Inmplemnentation X Covenant compliance X Operation (if applicable) Highly Satisfactory Unsatisfactory Highly satisfactory Unsatisfactory E. Assessment of outcome X  19 Table IC: Summary of Assessments for Part C: Bank of Uganda Substantial Partial Negligible Not applicable mXJ mX) m-19 m() A. Achievemetnt of objectives Macro policies _ X Sector policies x Financial objectives X Institutional development , X Physical objectives X Poverty reduction X Gender issues X Other social objectives X Environmental objectives X Public sector management X Private sector development X Other (specify) X Likely Unlikely Uncertain B. Project sustainability X Highly satisfactory Satisfactory Deficient (X)~~~~~ C. Bank performance Identification X Preparation assistance X Appraisal X Supervision x ____ Highly satisfactory Satisfactory Deficient D. Borrower performance Preparation X Implementation X Covenant compliance X Operation (if applicable) Highly Satisfactory Unsatisfactory Highly satisfacto y Unsatisfactory E. AsmXe f X m E. Assessment of outcome X  20 Table ID: Summary of Assessments for Part D: Ministry of Public Service Substantial Partial Negligible Not applicable mX) m) m X) A. Achievement of objectivesX _ Macro policies X Sector policies X Financial objectives X Institutional development X Physical objectives X Poverty reduction X Gender issues X Other social objectives X Environmental objectives X Public sector management X Private sector development X Other (specify) X * | Likely | ~~~~~~~~~Unlikel Uncertain l I I (X) I ~~~~~~~~~~~(X)9 I (X) B. Project sustainability | f UnerXai Highly satisfactory Satisfactory Deficient !_ (X)) (x) C. Bank perforance Identification X _ Preparation assistance X Appraisal X Supervision X _ Highly satisfactory Satisfactory Deficient (X)~~~~~~~~~ D. Bor-rower performance Preparation x Inmplemnentation x Covenant compliance X Operation (if applicable) . . Highly Satisfactory Unsatisfactory Hgly satisfactory Unsatisfactory __ _ m__ X (Pm E. Assessment of outcome X  21 Table 2: Related Bank Loans/Credits 1 Loan/credit title Purpose Year of Status approval Preceding operations Third Technical Assistance Technical Assistance 1988 Closed Project First Structural Adjustment Adjustment 1991 Closed Credit Following operations Second Structural Adjustment Adjustment 1994 Closed Credit Institutional Capacity Building Technical Assistance 1995 Ongoing Project Third Structural Adjustment Adjustment 1997 Ongoing Credit Second Economic and Technical Assistance NA Under preparation Financial Management Project I _I_I_I 1 Includes projects in the same sector/subsector as this project and adjustment operations with related objectives.  22 Table 3: Project Timetable Steps in project cycle Date planned Date actual/ latest estimate Identification (Executive July 1990 Project Summary) Preparation Appraisal April 1991 Negotiations March 1992 Board presentation August 1992 Signing September 1992 Effectiveness September 1992 October 1992 Midterm review May 1995 Project completion December 1998 December 1998 Loan closing June 1999 June 1999  23 Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual (US$ thousands) FY93 FY94 FY95 FY96 FY97 FY98 FY99 Appraisal estimate 1800 4100 9910 14500 21500 26700 29000 Actual 3713 11469 18899 23071 26534 29153 30332 Actual as % of estimate 206% 280% 191% 159% 123% 109% 105% Trust Fund Disbursements (US$ thousands) Donor TF No Original Actual Date of final Amount Amount disbursement Austria 26145 2970 3268 May 23, 96 DANIDA 26146 2542 2826 Nov 3, 98 Netherlands 26147 3986 4760 May 10, 96 SIDA 26148 3102 3276 June 8, 95 UK 26149 3189 2893 July 7, 94  24 Table 5: Key Indicators for Project Implementation Key implementation indicators in SAR/President's Report SAR Completed Est. (Yes/No) Component Al. Statistics Department 1. Introduction of price index based in 5 towns 12/92 Yes 2. Revision of GDP 1993 Yes 3. Production of I10 table 1993 Yes 4. Introduction of harmonized classification system 1993 Yes 5. Publication of business surveys 1994 Yes 6. Department fully operational under Ugandan management 9/95 Yes Component A2. Uganda Computer Services 1. Full complement of staff hired and retained No 2. Development of appropriate training 6/93 Yes 3. Procurementlinstallation of new equipment 12/93 Yes 4. Development/refinement and operation of payroll and general No accounting systems 5. Development and operation of system linking budget plan and budget No expenditure with revenue raising/availability Component B2. Budget Reform (a) Central Agencies 1. Use of new program classifications 5/94 Yes; partial 2. Classifications computerized 5/94 Yes; partial 3. EAU absorbed into Budget Department 12/92 Yes 4. Line ministry personnel have attended training 12/93 Yes 5. Improved budget cycle 12/94 Yes 6. Improved budget document Yes 7. Improved expenditure prioritization in line with PER 5/93 Yes recommendations (b) Local Authorities 1. Completed analysis of current capabilities in selected sites 6/93 Yes 2. Development of appropriate training for staff 12/93 Yes; modified 3. Staff attendance at training 1994 Yes 4. Refinement of current system 1994 No 5. Use of refined system 5/95 No B3. Civil Works 1. Development of detailed contract documents leading to refurbishment 1995 Yes activities and completion by 1995 2. Installation of secured and fully operational computing equipment 6/93 Yes 3. Reorganization of physical staff layouts 6/93 Yes B4. Treasury Department 1. Completed review of departmental functions leading to development 3/93 Yes  25 Key implementation indicators in SAR/President's Report SAR Completed Est. (Yes/No) of customized training courses 2. Reformulated debt monitoring operation, fully operational 6/93 Yes 3. Local trainers trained 9/93 No 4. Courses run for approximately 500 staff 9/93- No 9/95 5. Use of performance based evaluations and training in promotion 6/93 No criteria 6. Revised manual for accounting procedures, reflecting new budget 6/94 No classification 7. Staffed regional offices 6/94 Yes B5. Auditor General's Office 1. Complete view of OAG internal processes leading to development of 3/93 Yes customized training course 2. Established link with overseas training institution 3/93 No 3. Production of audit manual 4/93 Yes 4. Training completed for OAG staff 9/94 Yes 5. Regions staffed and operating 9/94 Yes B6. Project Office 1. Timely execution of project activities related to accounts, procurement, Yes component implementation 2. Provision of quarterly reports/yearly work plans to PCC/IDA Yes 3. Timely replenishment of SA and project accounts Yes B7. Uganda Revenue Authority 1. Fully staffed organization 12/92 Yes 2. Revenues raised increased to 12% GDP by 1993/94, 15% by 1996/97 Yes; partial 3. Fully operational computerized revenue systems linked to UCS and 12/97 Yes BOU B8. Bank of Uganda 1. New organization structure effected 12/92 Yes 2. Procurement/installation of new computing hardware 12/93 No 3. Accounts produced quarterly and yearly within 3 months of end FY 12/93 No 4. Use of uniform general ledger system 12/93 No 5. Use of computerized systems producing management information 12/94 No Cl. Ministry of Public Service 1. Development of detailed 5 year plan for Civil Service Reform 12/92 Yes 2. Yearly training programs managed centrally for key skills 6/94 Yes 3. Development and use of computerized personnel records system 6/94 Yes 4. Promotions linked to performance based assessments 6/94 No 5. Skilled personnel able to undertake key elements of the reform 6/93 Yes programs  26 Table 6: Key Indicators for Project Operation Not Applicable Table 7: Studies Included in Project Not Applicable Project funds expended for short- and long-term Technical Assistance contributed towards implementation of project activities and did not finance stand-alone studies.  27 Table 8A: Project Costs Appraisal estimate Actual/latest (US$M) estimate(US$M) Item Local Foreign Total Local Foreign Total costs costs costs costs Part A. Ministry of Finance, Planning and Economic Development (i) Statistics Department 1.0 0.9 1.9 0.5 3.2 3.7 (ii) Implementation of ERP 1.4 2.1 3.5 0.3 2.3 2.6 (iii) Government Computing 2.2 0.3 2.5 1.8 2.3 4.1 and UCS (iv) Central budgeting and 1.5 0.9 2.4 2.8 2.3 5.1 planning (v) Local Administration 0.4 0.7 1.1 0.6 0.3 0.9 budgeting (vi) Building Refurbishment 1.4 0.6 2.0 0.0 5.0 5.0 (vii) Treasury Department 1.9 2.4 4.3 0.9 0.6 1.5 (viii)AuditorGenerals 0.5 0.8 1.3 0.7 1.1 1.8 Office (ix) Project Office 0.4 0.2 0.6 1.0 0.7 1.7 SubtotalPartA 10.7 8.9 19.6 8.6 17.8 26.4 Part B - Uganda Revenue 1.7 3.1 4.8 0.0 2.5 2.5 Authority____ _ _ _ _ ____ PartC-BankofUganda 1.3 2.8 4.1 0.3 1.7 2.0 Part D - Ministry of Public 0.9 0.8 1.7 1.3 1.7 3.0 Service CONTINGENCIES 1.7 1.1 2.8 NA TOTAL 16.3 16.7 33.0 10.2 23.7 33. 9 Table 8B: Project Financing Appraisal estimate (US$M) Actual/latest estimate(US$M) Item Local costs Foreign Total Local Foreign Total costs costs costs IDA 12.3 16.7 29.0 6.6 23.7 30.3 Domestic 4.0 0.0 4.0 3.6 0.0 3.6 contribution TOTAL 16.3 16.7 33.0 10.2 23.7 33.9  28 Table 9: Economic Costs and Benefits Not Applicable  29 Table 10: Status of Legal Covenants UGANDA Economic and Financial Management Project Agreement Section Covenant Present Original Revised Description of covenant Comments type status fulfillment fulfillment date date DCA 5.01(a) 4 C Effectiveness US$200,000 by end of first I_________ two FYs 5.01(b) 5 CD Effectiveness Appointment of CISAC, services manager and systems manager 5.01 (c) 5 C Effectiveness Chairman and members of Project Coordination Committee and Project Administrator appointed 3.01(b) 4 CP Total of US$4 million by end of project 4.01 1 CD Audited accounts and SOEs (a), (b) and (c) Covenant types: 1 = Accounts/audits; 2 = Financial performance/ revenue generation from beneficiaries; 3 = Flow and utilization of project funds; 4 = Counterpart funding; 5 = management aspects of the project or executing agency ; 6 = Enviromnental covenants; 7 = Involuntary resettlement; 8 = Indigenous people; 9 = Monitoring, review, and reporting; 10 = Project implementation not covered by categories 1-9; 11 = Sectoral or cross-sectoral budgetary or other resource allocation; 12 = Sectoral or cross-sectoral policy/ regulatory/ institutional action; 13 = Other Present status: C = covenant complied with; CD = complied with after delay; CP = complied with partially; NC = not complied with  30 Table 11: Compliance with Operational Manual Statements Indicate any significant lack of compliance with an applicable Bank Operational Manual statement (OD or OP/BP): Not applicable.  31 Table 12: Bank Resources: Staff Inputs Planned Revised Actual Stage of project cycle Weeks US$ Weeks US$ Weeks US$000 Preparation to appraisal _ 31.9 77.6 Appraisal 31.0 80.3 Negotiations through 19.4 50.0 Board approval Supervision 109.4 333.2 Completion 5.5 25.6 TOTAL 197.2 566.7 For comparison purposes, all Bank resources have been consistently estimated on direct cost basis.  32 Table 13: Bank Resources: Mssions Stage of Month Number Days Specialized Performance Types of problems project cycle /year of in staff skills rating' persons field represented 2 IP DO Through N/A N/A N/A appraisal Appraisal N/A N/A N/A through Board approval Supervision 3/93 1 NA E, F S S _ 7/93 1 NA P S S 2/94 1 NA P HS HS 7/94 1 NA P S HS 11/94 1 NA P HS HS X 5/95 4 NA A, I, F, P HS HS 11/95 4 NA A, F, I, P HS HS 2/96 1 NA P HS HS 5/96 1 NA P S HS _ 10/96 1 NA P S HS 2/98 1 7 P S S Completion 11/98 3 10 A, 0, F S S NA: Not available. Number of days in field not available for missions prior to the new supervision information system. N/A: Not applicable. 2 Specialized staff skldls: A= Accounting & Accounting Training; E= Economist; F= Financial Analyst; 1= Information Systems; O= Operations Officer, P= Public Sector Management 3 Ratings: HS = Highly Satisfactory; S= Satisfactory; U= Unsatisfactory; HU= Highly Unsatisfactory 4 Implementation problems:  APPENDIX A ICR MISSION'S AIDE MEMOIRE  UGANDA Economic and Financial Management Project Final Supervision and Implementation Completion Report Mission AIDE MEMOIRE 1. An IDA mission consisting of Joseph Kizito, Nelson Ofwono and Gaiv Tata undertook the final supervision of the above project and initiated preparation of an Implementation Completion Report (ICR) between November 9-20, 1998. Discussions were held with the Permanent Secretary/Secretary to the Treasury and other representatives of the Ministry of Finance, Planning and Economic Development; Ministry of Public Service; Ministry of Local Government; Ministry of Defence; Uganda Revenue Authority; Office of the Auditor General; and Bank of Uganda. Several co- financiers of the project (Austria, Norway, Sweden and the United Kingdom) were also separately briefed. The mission would like to thank the EFMP Project Office for the support provided especially for the detailed financial information which was provided in a quick and timely manner for the mission's review. This Aide Memoire provides an initial review of the achievement of project objectives, actions necessary for project closure and completion of the ICR. Background 2. The EFM Project had two overall objectives: (i) to increase and improve the quantity, quality and timeliness of key financial data underpinning decision making through the introduction of new systems, procedures, equipment and skill levels at the then Ministry of Finance and Economic Planning, URA and BOU; and (ii) to assist the Ministry of Public Service in implementing important elements of the civil service reform program. 3. The project consisted of twelve components (i) strengthening of the Statistics Department; (ii) support to the Economic Recovery Program; (iii) strengthening of Uganda Computer Services (UCS); (iv) Central Government budget reform; (v) Local Government budget reform; (vi) support to the Treasury; (vii) refurbishment of the Ministry of Finance headquarters; (viii) support to the Auditor General; (ix) support to the Uganda Revenue Authority (URA); (x) support to the Bank of Uganda (BOU); (xi) support to the project office; (xii) support to the Ministry of Public Service. 4. The project plan of US$33 million was expected to be financed from an IDA credit of SDR 21.2 million (US$29 million equivalent) and Government of Uganda (GOU) contributions of US$4 million. Preliminary Assessment 5. Development Outcomes. The project outcomes were satisfactory. Between the start of the project in late 1992 and its close in late 1998, the Government's ability to manage the economy on the basis of available economic and financial information has improved significantly and the first phase of the Civil Service Reform program has been implemented. However, this positive assessment has not led to a higher preliminary  -2- rating because the project did not deliver key outputs in the budget, treasury, UCS and Bank of Uganda components identified in the project appraisal documents. These outputs related to substantial improvements in processes and information systems. The improvements which have been accomplished have, therefore, been achieved within the context of current procedures and information systems and are more limited. 6. Sustainability. The activities financed under the project focused largely on improving the existing planning, budgeting, financial management and monitoring and evaluation activities within the Government. Support provided under the project has led to improvements in planning (monthly Consumer Price Indexes, macro-economic modeling, Budget Framework Paper preparation and the Public Investment Plan preparation), cash flow management (institution of a monthly release system) and revenue collection (introduction of Value Added Tax and Customs systems). These improvements are expected to be sustainable. The financial sustainability of these activities is expected to come from Government funding and continued donor support. The donor support includes current and planned IDA support (the Institutional Capacity Building project and the proposed Second Economic and Financial Management Project) and other donor support (including support from the Department for International Development - United Kingdom to the Auditor General and a proposed DFID project on accountability). 7. Financing Plan. As of November 1998, IDA financing provided was US$30.3 12 million and GOU counterpart fund contributions stood at US$3.3 million. In addition, IDA also administered grants provided by donors (Austria, Denmark, the Netherlands, Norway, Sweden and the United Kingdom) amounting to US$19.0 million for retrenchment funds. 8. Component- Wise Preliminary Assessments. Achievement of Sustainability Development Objectives Yes No Yes No Statistics Department Economic Recovery Programme Uganda Computer Services i Central Budget Local Budget  -3- Achievement of Sustainability Development Objectives Yes No Yes No Building Refurbishment Treasury Auditor General Project Office not rated Uganda Revenue Authority T1 Bank of Uganda T T Ministry of Public Service i The preliminary assessment that the four components rated as not having achieved development objectives will be sustainable is based on the fact that these activities are expected to continue receiving donor support as noted earlier in para 6. Similarly, the project office's sustainability is not rated since it was established specifically for the purpose of co-ordinating project implementation. Next Steps: Project Closing and Preparation of the ICR 9. The mission agreed with the Government that: (a) The Government will prepare its own evaluation (borrower assessment) as specified in the General Conditions of the project. The borrower's assessment would evaluate: (i) whether and how the project achieved its objectives; (ii) factors that affected project implementation; (iii) the overall project outcome and sustainability; (iv) evaluate IDA perforrnance; (v) evaluate Government and counterpart's own performance; and (vi) review key lessons learned. Government agreed to submit its Completion Report to IDA for review by December 15, 1998; (b) IDA will begin preparing an ICR which will assess whether and how the objectives of the project have been achieved as well as review project design and implementation. IDA will send its draft ICR for Government review by December 31, 1998;  -4- (c) Government will provide its comments on IDA's draft ICR by January 30, 1998. 10. During the completion mission, an assessment of the financial management procedures under the project commenced. This review is expected to be completed by December 15, 1998 and its findings will be included in the draft ICR provided for Government's comments. 11. Operational Plan. Given the capacity building nature of the project and the proposed follow-on operation (the Second Economic and Financial Management Project EFMP II), the mission agreed with the Government that the Project Implementation Plan for EFMP II would be utilized in lieu of the Operational Plan. A draft of the Project Implementation Plan was provided to the mission and comments thereon will be provided to the Government by December 15, 1998. 12. Project Closing. Given the small amount of funds left under the IDA credit (SDR 14,651.35), the Government and IDA agreed to initiate actions to close the credit account by December 31, 1998. Signed on behalf of the mission Gaiv Tata Team Leader, EFMP November 20, 1998  -5- Distribution: Permanent Secretary/Secretary to the Treasury, Ministry of Finance, Planning and Economic Development Permanent Secretary, Ministry of Local Government Permanent Secretary, Ministry of Public Service Permanent Secretary, Ministry of Defence Office of the Auditor General Governor, Bank of Uganda Austrian Regional Bureau for Development Co-operation British High Commission Embassy of Denmark Embassy of the Netherlands Embassy of Norway Embassy of Sweden IDA Resident Representative IDA Task Team  APPENDIX B BORROWER'S CONTRIBUTION TO THE ICR   1 PROJECT EVALUATION BY THE BORROWER ECONOMIC AND FINANCIAL MANAGEMENT PROJECT 1.0. INTRODUCTION This report outlines an assessment of the project objectives, design and implementation and operational experience. It also outlines an evaluation of the borrower's own performance during the implementation of the project and an evaluation of the World Bank's performance during project implementation. 2.0. PROJECT OBJECTIVES The objectives of the project were:- (a) to assist the borrower to further enhance institutional capacity building in key government ministries and agencies; (b) deepen and extend financial and economic analysis in the agencies that manage the economy and (c) support the borrower to attain the key objectives of the Structural Adjustment efforts. The project consisted of the following parts, which were subject to such modifications as the Borrower and the Association agreed from time to time:- PART A: MINISTRY OF FINANCE AND ECONOMIC PLANNING 1. Improvement of the Statistics Department's Survey and analytical work through training and the acquisition of vehicles and equipment. 2. Strengthening the borrower's capability to conduct studies and undertake policy analysis and improve implementation Capacity in Support of the Borrower's Economic Recovery Program. 3. Strengthening the financial information system of the MFEP through (a) acquisition, installation and maintenance of computers; (b) acquisition, implementation and maintenance of computer software packages; (c) training; and (d) acquisition of vehicles and office equipment and (e) Civil works and refurbishment of existing facilities.  2 4. Strengthening MPED's central planning and budgeting capacity through training and the acquisition of vehicles and office equipment. 5. Implementation of a pilot program for budget reform in selected local administrations through training and acquisition of equipment and vehicles. 6. Strengthening the Treasury Department's accounting, inspectorate and internal audit functions through training and the acquisition of computer equipment, vehicles and office supplies. 7. Strengthening the capability of the Office of the Auditor General in audit-planning, documentation and training through the acquisition of computers and vehicles. 8. Strengthening MFEP's project management capability. PART B: UGANDA REVENUE AUTHORITY Strengthening URA, including its revenue and trade monitoring system, through civil works, training and acquisition of equipment. PART C: BANK OF UGANDA Strengthening BOU's (i) management and information and accounting systems; (ii) debt monitoring and foreign exchange management systems; (iii) analytical capacity in its research department; and (iv) general management and human resources through training and the acquisition of office equipment. PART D: MINISTRY OF PUBLIC SERVICE Strengthening the MPS's capability to implement the borrower's Civil Service reform program through training and the acquisition of equipment. 3.0. STRATEGIES FOR ACHIEVING THE OBJECTIVES In order to achieve the objectives of the project, a Project Co-ordination Committee (PCC) chaired by the Pennanent Secretary/Secretary to the Treasury and comprising of representatives of BOU, MPS, UTRA and other MFEP officials was formed. This PCC co-ordinated the implementation of all components of the Project. The PCC met regularly to approve the work program of each project component and to review, co-ordinate and take appropriate measures concerning the implementation of all components of the project. In addition to the PCC, a Central Information Systems Advisory Committee (CISA) was formed with the  3 responsibility for the Borrower's overall approach to computerization and guidance on and view of financial information systems. The two committees PCC and CISAC made policy decisions relating to the implementation of various activities under the project but actually left the actual implementation to the various component managers. 4.0. PROJECT ACHIEVEMENTS The project has by and large achieved its major objectives. The following is a summary of achievements by component. PART A: MINISTRY OF FINANCE AND ECONOMIC PLANNING COMPONENT:- 1. Improvement of the Statistics Department's survey and analytical work through training and acquisition of vehicles and equipment; On the whole, the project lead to improvements in the availability of data for planning purposes particularly over the life time of the project. Also a number of staff have been trained in various statistical techniques. What is not clear is whether or not the improvements so far made are sustainable. A number of high quality supervisory staff have left the Department lately [some retired while others found "better" employment]. This recent occurrence is likely to undermine the Department if its status as a Bureau is not instituted in a timely fashion. 2. Strengthening the Borrower's capability to conduct studies and undertake policy analysis and improve project implementation capacity in support of the borrower's economic recovery program:- This particular sub-component was very useful. It provided resources necessary for financing unforeseen needs at the time of project preparation. It provided funding for returning expatriate Ugandans, training, and technical assistance. This component achieved sustainable objectives. 3. Strengthening MFEP's financial information systems through (a) acquisition, implementation and maintenance of computer software packages; (b) training and (c) acquisition of vehicles and office equipment and (d) civil works and refurbishing of existing facilities:- Some of the sub-components of this component were highly successful while others were not. For example the refurbishment of the MFED's building is a great achievement but the acquisition of new computer equipment and software has not been put to optimal use. The continuous exodus of trained staff because  4 of poor remuneration in the UCS has eroded the possible success of this component the availability of equipment and software notwithstanding. 4. Strengthening MFEP's central planning and budgeting capability through training and the acquisition of equipment and vehicles. This component was not a success. Maybe this is why a successor project [EFMP II] should provide financing because the planning and budgeting processes are still fragile. Moreover, even the recently introduced decentralization necessitates changes to the planning and budgeting systems and procedures:- 5. Implementation of a pilot program for budget reform in selected local administrations through training and the acquisition of equipment and vehicles:- This sub-component also failed to achieve its objectives in the same way planning and budgeting reforms at the level of Central Government failed. 6. Strengthening the Treasury Department's accounting, inspectorate and internal audit functions through training and the acquisition of computer equipment, vehicles and office supplies:- The Department has had some of its sections strengthened over the project life but it is not clear of the achievements are sustainable because of lack of qualified accountants to take over the role of current Advisors. Also, there has been a problem caused by the "freeze" on Civil Servant recruitment. The recruitment freeze was imposed by the Ministry of Public Service some years back. The provision of computers and computer software has improved the accounting functions especially in debt management using the DMFAS. 7. Strengthening the capability of the office of the Auditor General in audit- planning, documentation and training plus the acquisition of computers and vehicles: - The office of the Auditor General benefited immensely from its training programmes and preparation of the audit manual. 8. Strengthening the MFEP's project management capability:- This sub-component provided the financing for the project management structures such as the project office, the project Co-ordination Committee (PCC) and the Central Information Systems Advisory Committee (CISAC). The funding was for both training (local and foreign) as well as equipment and recurrent expenses. Project management ability has been achieve.  5 PART B: UGANDA REVENUE AUTHORITY COMPONENT:- By far, the Uganda Revenue Authority (URA) benefited most from the EFMP. First, it had just been created when the EFMP becomes effective. The project helped the URA through its teething problems by providing technical assistance, equipment, vehicles, computer hardware and software etc. The VAT system was funded, initially, under the project and so was the ASYCUDA System for customs. The sustainability of these systems is possible because the URA has well-qualified and fairly well remunerated staff. The equipment is also fairly new. No wonder the URA has year after year collected bigger revenues as a percentage of GDP. PART C: BANK OF UGANDA COMPONENT The Bank of Uganda Component has not achieved its objectives. A lot of funds have been expended on out-souring a software package that is still wanting in several respects. As if this was not bad enough, the Bank of Uganda intends to procure another software package off the shelf and ignore the IAS software on which it has already expended about US$760,000.00. PART D: MINSTRY OF PUBLIC SERVICE COMPONENT This component has achieved the objectives it was intended to. The Ministry was able to carry out a number of short-term studies and implement the on-going Civil Service reform in conformity with the agreed time-tables. Donor funds provided for financing of retrenchment costs were also utilized in a timely fashion which means that the provision of necessary equipment and technical assistance directly and indirectly helped the reform. The Civil Service reform program will be a sustainable program because of the Government commitment to Civil Service reform. 5.0. PROJECT COST/ACTUAL EXPENDITURE The project was estimated to cost US$52 million financed as follows:- IDA US$30 million; Uganda Government US$4 million; ODA #Stg.2 million, Netherlands NLG7,500,000, Austria ATS 35,000,000, Denmark DKK 16,750,000, Sweden SEK 25,000,000 and Norway NOK 13,000,000. Actual expenditure to-date has been contributed as follows: IDA 30.312 million and Government of Uganda US$3.3 million. The other donor contributions have been provided as pledged. The actual expenditure differs from the estimated expenditure because, one, in the case of IDA the exchange rate between the US$ and the SDR fovoured the borrower [i.e. IDA credits are denominated in Special  6 Drawing Rights (SDR)] and two, in the case of Uganda Government, Government failed to provide all resources necessary as Government contribution. The detailed costs of the project by component is attached in ANNEX I. 6.0. BANK PERFORMANCE On the whole, IDA's performance, in providing advice and guidance on project implementation, was excellent. However, this particular project has had at least four (4) different Task Managers. The changes in Task Management required each of those Task Managers to study and understand the conceptual framework of the project which sometimes gave rise to delays in providing "no objections" or other actions that were required from the Bank side. The turnover of Task Managers notwithstanding, the frequent visits by the Task Managers provided opportunities for Government and IDA to discuss any difficulties that were hindering project implementation and provide needed solutions. The supervision missions also provided assistance at component level. Component Managers were able to interact with the supervision missions and get their components moving. 7.0. BORROWER'S PERFORMANCE Being a fourth IDA Technical Assistance project in Uganda since the early 1980'S, Implementation was not so much complex of demanding. The earlier Technical Assistance programmes had provided the experiences necessary, for managing a typical technical assistance project. Nevertheless, lack of knowledge about procedural matters in the use of funds caused temporary impasse between some component managers and the project office, at least initially. Over the time, particularly with the helped of the Task Managers, everyone got to understand their role and project implementation was smooth. A few more problems need mention. The central budget component was not successfully implemented because of lack of knowledge of procurement procedures in some Government Departments [IGG's office]. There was delay in the procurement of civil works for the MoFED buildings because Ministry of Housing did not know the applicable procurement procedures. The Ministry of Defence Sub-component was not fully implemented because of confidentiality of the consultant's report. The use of UNOPS, though efficient in the procurement of goods and services, provided little information for accounting purposes. This was largely because UINOP kept information at the headquarters in New York. These shortcomings are few and did not cause serious project implementation. Therefore the borrower's performance was, in the borrowers view, satisfactory.  7 8.0. LESSONS LEARNED 8.1.. It is clear that in order or sustain achievements of the project further assistance is required especially in budgeting, accounting and statistics. 8.2. Knowledge of IDA procedures in the use of project funds is very necessary for accelerating project implementation. 8.3. Changing Task Managers too often jeopardizes project implementation. It should be avoided were possible. 8.4. The issue of ownership addressed through the early involvement of Stakeholders/beneficiaries can help accelerate project implementation. Stakeholders should be involved in project preparation. This helps some implementation aspects. 8.5. The use of technical assistance does not necessarily lead to capacity building. This is true in some of the Government agencies where Advisors were used. 9.0. CONCLUSIONS The Economic and Financial Management Project [EFMP] has considerably enhanced the capacities of the Government Agencies that manage the economy viz. Ministry of Finance, Planning and Economic Development, Bank of Uganda and Uganda Revenue Authority. In order to sustain the achievements made in these institutions, further assistance will need to be provided in selected areas. In addition, the Civil Service Reform programme has benefited immensely from the project. Without donor assistance the reform would not have been possible, particularly the financing of the retrenchment packages. In view if the foregoing, Government is grateful to the donors who provided funding for the project.   APPENDIX C BORROWER'S COMMENTS ON THE ICR   f.iupI"ono: MJnI l . .Minitfry of Finanfce. 232.370W Jp Pltnning & Ecoflon .K=pa 234tOW9 (10 lInu) DevOlopmonW , D. cof.. l P .0. Box 8147, In cW cornmpdepLondann In uz.wb ru5b ef1 qu __o_ - _ - ,ganda. nEREPUBUC OF UGANDA *Apr' 2.0. 1999- ' 4r.J;itrne W, *AcTmins *c O;inhy 'dr iii r t r g:suil:t , lic Wforl'd iRank' Ltr,4j.: . Fe.., N -ari -Ri -' Dcar Mr. Adams RE1T' - lUGANDA C,ONOMICANb Ir1NANCQAL LIANA'1 :Mm Nr Pi}OJIr,CI liR, AI"T tMPLENATION COMPLETT()N REPQLOT (TC. I havcjustreccived yours ofMarh 19, 1999 in which vtyu rcqucstcui.ror my crvninicnLs cn ili,cud,t (CR andl for t6ovemrn'cnts contribution to the ICR. - J-l? t., Hiav no prruticul;ar conincnis on thic dr.il as it pr:entits a rair view proI mict implrenicrntaLion ind achicvcnmcnt n rilc projcct ohjectivcs. Sccrmidly. I lnlvc- altacitPcG."(ovcrnnicisltj coritnintiioft'-o -tIC trd ivh0 Nc dr.rfl I taiderTsfd ndy ssi1ti.:c sIi;in..d with 1k* I ;n,k. ;Ittirfl;'. I iIwIrnzuiaf lj of today. contributed US$ 357 mnillioti and will continue to co11filiIutc ftir fic nc.t thre.e-moniths. 'iluis mcans that Govcrnniicrt contribuLion will l-: vcry ncm-r tlhc ; Cgreccd-U. 31.73 niillirnn k' lhc tc!Ri orllc prujectl nit (e nd oiune i 1t). Lahly- we are unable to gct thle reFurbishment's cost pcr square fibot fironm th.' C'rtnullnts-hasc the Quanlily Surveyor camnoL be reacihcd ininicdlatcly. rlhc Consultant has proniiscd t1- rfiiiW65is wvithh th ' irrormation nonethcless. We slmil red.y iTe iniormiation ct dte Task Ma.n iger= Sooiqn- it is rnadc avaislable for thc purpose of completing paragerap1h 19. It cwould aiso lhc ILscriAu tsl si this raragroph 19 that ttic Civil Works wcre prrocured in accuixtancc It DA 1i)Ai pnxurcnitnt proccdures. 'Yours:rsinc'rely F. luntusirme-N4utebile l'c1112fc111 $fiicrel y/S;cectcaryj lolhc re.Turcty: