Document of The World Bank FOR OFFICIAL USE ONLY Report No. 12167-CO STAFF APPRAISAL REPORT COLOMBIA PUBLIC FINANCIAL MANAGEMENT PROJECT OCTOBER 21, 1993 Country Department III Technical Department Public Sector Management Division Latin America and the Caribbean Region TIis document has a restricted distribution and may be used by redpients only in the performance of their official duties. Its contents may not otherwise be dislosed without World Bank authorization. Currency Equivalent Currency Unit = Colombian Peso (Col $) Col$1.00 = 0.0012674 (May 1993) US$1.00 = Col$ 789 (May 1993) List of Acronyms and Abbreviations Used CGR Comptroller of the Republic COCOR Coordination Committee (MOF, DNP, CGR) CONFIS Fiscal Council (MOF, DNP, and Central Bank) DANE National Statistical Department DIAN Internal Revenue and Custom Directorate DNP National Planning Department ESAP National Public Administration School GOC Government of Colombia ICB International Competitive Bidding IGAC Colombian Institute of Geography and Statistics LCP Local Competitive Bidding MSA Management Service Agreement MOF Ministry of Finance ODP Department (Regional) Planning Office OPS Office for Project Services POA Annual Operational Program PIU Project Implementation Unit SFP State Financial Plan SISC Internal Control System SOE Statement of Expenditures UNDP United Nations Development Program FISCAL YEAR January 1 - December 31 FOR OFFICLAL USE ONLY Staff Appraisal Report 1COLOMB1A Public Financial Management Project Table of Contents Page No. Project Summary ...............................i I. The Public Sector ..... ........................... 1 A. Macroeconomic Environment ...... ............. 1 B. Structure of the Public Sector ...... ............. 2 C. Reform Measures . ......................... 4 D. Remaining Constraints ........ ............... 6 E. Rationale for Bank Involvement ...... ............ 12 F. Lessons Learned ............................ 12 H. The Project ............................... 13 A. Project Objectives ........................... 13 B. Project Description ................ ... .... . . 13 C. Project Costs ............................ . 20 D. Financing Plan ........................... . 21 E. Procurement ............................ . 21 F. Project Implementation ............ ... .. ... .. . 23 III. Project Justification ............................. . 24 A. Project Benefits ....................... ... . 24 B. Project Risks ............................ . 25 IV. Agreements to be Reached ....... . ................. 25 This report is based on the findings of preparation. presppraiual/appmiul misions that visited Colombia during April, May, and June 1993, comprising Mmesr/Messrs. Alin Tobelem (Mission Leader, LATPS), Jaime Vazquez-Caro (Co-Task Manager, PSD), Eduardo Talero (ENTI), William Mayville (ConsultAnt LA4DR), Antel Gonz lez-Malaxechewrr(a, and Carmen Machicado (Consultants LATPS). William Mayville further helped edit the report. In Colombia, inter-ministerial groups from the Ministry of Fuunce and the National Ptanning Depatment, as well as a group from the Comptroller's Office greatly helped prepare the project with a group of international consultanu, including Patricio Castro. Carlos Viso, Renato Botaro, Hugo Hanish, Bnulio de Guzmnn, Juan Jose Vicente Lopez, Vanderlci Saldanha, Gaces Rickli, and Mauro Brusa. The peer reviewer for this report was Mr. Luca Barbone (EC2CO). Mmes./Messrs. Shahid Chaudhry, Marie Garcia-Zamor, and Yoshiaki Abe were, respectively, the managing Division Chief, Project Adviser, and Depertment Director. 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. ANNEXES 1. Project Implementation, Inputs, and Costs per component per year 2. Detailed Project Inputs and Costs 3. Account Summary by Project Component 4. Disbursement Schedule 5. Organization Charts of MOF, DNP, CGR, and Interinstitutional Relationships Map 6. Matrix of Performance Indicators 7. Proposed Integrated Information System 8. Training Activities 9. Assessment of Tax Administration in Colombia 10. Public Financial Management: Treasury, Public Credit, Budgeting and Accounting 11. Modernization of Monitoring and Public Policy Evaluation 12. Lessons Learned. MaW: No. IBRD 18370R1 COLOMBIA PUBLIC FINANCIAL MANAGEMENT PROJECT Loan and Proiect Summary Borrower: Republic of Colombia Benfcianri: Ministry of Finance National Planning Department Comptroller General's Office Amount: US$30.0 Million Terms: 20 years, including 5 years of grace, at the Bank's standard variable interest rate Project Objectives and Description: The project comprises five major components: (a) Resource Mobilization; (b) Macroprogramming; (c) Expenditures Management; (d) Government Management Control and Public Policy Evaluation; and (e) Institutional Strengthening. Within these five components, the proposed project aims at designing an integrated information system, preparing norms and regulations that would result from both existing legislation and the information system to be designed, and installing the system and operationalizing it in selected entities at the national level. Total project cost is US$58.0 million, 52% to be financed by the Bank (100% of foreign costs), while the GOC would finance the remaining 48% or 100% of local costs. Benefits: Improvement of the public financial management is a sine qua non to modernize all other aspects of the public administration in Colombia. Overall, public revenues could be increased by as much as 30% by the year 2000 through both increased tax collection and enhanced efficiency of public resource programming and spending. Rigor in public financial management would also help create procedures and ultimately a new accountability culture that should reestablish public confidence in government as well as public administration credibility. This would contribute to creating an overall institutional environment conducive to private sector initiatives and development. Risks include the inherent instability of the civil service, the weak capacity of institutions and human resources, especially at local levels, as well as political changes (August 1994) that could affect ii current national commitment. These risks will be ameliorated through the envisaged training and capacity building which is an inherent part of the project. Moreover, there are incentive systems, well-trained personnel, as well a competitive salary scale within several of the agencies targeted for assistance under the project (DIAN, DNP, and increasingly in the Ministry of Finance). Also, greater public awareness and pressure indicate that the next administration would find it difficult to reduce significantly the level of commitment that prevailed at the time GOC designed this proposed project. Moreover, all of the interventions are in support of changes in public financial management embodied in the 1991 Constitution and would be vital to the credibility of any subsequent government. Estimated Costs and Financing Plan Estimated Cost: a/ caKlI Foreign Total ----IUS $ million---- Resource Mobilization 16.1 18.7 34.8 Macroeconomic Modelling 0.9 0.4 1.3 Expenditures Management 4.3 5.0 9.3 Control and Public Policy Evaluation 3.0 1.6 4.6 Institutional Strengthening 2.4 2.8 5.2 Physical Contingencies 113 14 7 Price Contingencies Total Project Costs 28.0 a8 Financing Plan: Local Foreign Total ----US $ million---- Government 28.0 -0- 28.0 IBRD .& 30L 0 Q0. Total 28. 30 0 a/ The project is exempted from taxes and duties Note: Due to rounding, totals may not always add. COLOMBIA Public Financial Management Project I. The Public Sector A. The Macroeconomic Environment. 1. Between 1988 and 1990, increased inflation and a slowdown in economic growth rate caused Colombia's overall economic performance to deteriorate. Annual inflation accelerated from 21 % at the end of 1986 to 28% in 1988, and 32% in 1990; GDP growth declined from a 5.6% average in 1986/87 to 3.5% in the 1988-92 period. This growth downturn mainly reflected disappointing performances in manufacturing production and services and a contraction in public investment--although this was offset by stronger growth in mining and agriculture. Moreover, lackluster performance in the domestic market was balanced by encouraging growth in nontraditional exports and a rise in both the price and volume of oil exports, although oil production dropped in 1991. Thus, the external sector recently has become the engine of growth in aggregate demand, with export-oriented subsectors the strongest contributors. 2. Internal and external shocks still significantly affect fiscal and external balances, generating a requirement for stabilizing measures. Weak overall economic performance is attributed to: the demise of the International Coffee Agreement and a concomitant upsurge in the drug war in 1989; a petroleum price decline in 1988 and continuing guerrilla attacks on oil pipelines; and a slowdown in global economic growth. Another major influence on fiscal balances was that growth activities intended to correct macroeconomic imbalances in the mid-1980s could not be sustained given the lack of structural reforms to address microeconomic efficiencies. To stimulate long-term economic growth, the Government of Colombia (GOC) implemented a comprehensive structural reform program in early 1990 aimed at significantly improving resource allocation and use. In 1992, economic growth accelerated despite a stagnant agricultural sector, a crisis in the power sector, and increased insecurity due to political and drug- related violence. GDP growth for 1992 is estimated at 3.6%, although inflation remained at about 25 %. A major new oil discovery in 1992 promises to have an important impact over the medium-term. 3. Even though the size of the fiscal deficit has shrunk--given the 1984-86 adjustment program and the near elimination of the fiscal deficit in 1990--a large part of the fiscal adjustment was due to transient episodes like higher international prices for oil and coffee, the latter one of the primary causes of the current deficit. The composition of fiscal revenues and expenditures remains fundamentally unchanged; in this regard, the public sector savings rate has been generally constant since 1988. Although progress has been made as a result of a tax administration reform, there has been relative stability in the fiscal accounts, which suggests the Government has yet to launch any compelling initiatives to improve the basic structure of fiscal policy in place since the mid-1980s. B. Structure of the Public Sector. 4. The Colombian public sector comprises the executive, judicial, and legislative branches of government. The executive branch is divided into: (a) central ministries (14) and administrative departments (5); and (b) first-tier decentralized agencies, which can be either decentralized entities or public enterprises. In addition, these agencies can create, by association, second-tier decentralized entities or public enterprises which they have. 5. Twenty years after the administrative reform of 1968 the network of interrelated public agencies has evolved into entities of unmanageable proportions requiring fundamental change. Furthermore, significant earmarking has led to inefficiency and inequity that prevent distributing more evenly the benefits from recent adjustment policies as well as those contemplated by the current Administration. Reforms now affected by this bottleneck include health, education, privatization, and decentralization. 6. Education and health as well as the departments and municipalities "share" national revenues redistributed on the basis of demographic criteria. In 1987, a major effort was undertaken to reduce the "exclusiveness" of earmarked funds by changing the rationale for these funds from an "entity' to a "sectoral" concept. A second initiative tried to reduce the absolute size of the government through a privatization strategy. 7. Another major initiative, begun in 1987, attempted to control the proliferation of the myriad decentralized entities as well as to rationalize their administration. The Government has concentrated on devising various legal frameworks to provide a generalizing scheme, for example, the promulgation of an Organic Budgetary Law; however, it has been unsuccessful to date in an institutional environment characterized by operational incapacity and paralysis. A contributing factor is the lack of an adequate information system to deal with widespread managerial problem the Government confronts. In 1992, the current Administration began to streamline the complex organizational structure endemic to all public sector bureaus. Subnational Governments 8. Colombia's three tiers of government are national, departmental, and municipal. Each of the 1,009 "municipios" is governed by an elected mayor, and in the larger cities by a range of municipal agencies and enterprises. Municipal government has been the main beneficiary of the decentralization process that began in 1983. This has included a reform of local taxation (law 14 of 1983), revision of the legal status of local governments (Law 11 of 1986), the allocation to them of increasing shares of the national valued-added tax (Law 12 of 1986), transfer of responsibilities for the provision of local services (Decrees 77, 78, and 80 of 1987), and the popular election of mayors beginning in 1988. These measures were meant to strengthen the democratic process at the local level, foster community participation in local development, and eliminate inefficiencies associated the central government providing services that are essentially local in nature and better handled at that level. 9. The problem with provision of municipal services locally is the dearth of administrative and technical skills available within subnational govemments. There is 3 virtually no notion of career civil service, and functional job profiles are seldom developed or used. With local elections held every other year, political interference in the management and staffing of local institutions has prevented continuity. Departmental governments through their planning offices (ODPs) are responsible for providing technical support and guidance to local governments. With exceptions in a few departments-- Antioquia, Valle, and Cundinamarca--most ODPs lack the skills and authority needed to provide effective support to their local governments. 10. On the other hand, Colombian local governments have considerable revenue authority. Own-source local revenues include taxes on real estate and business, betterment levies and service charges. Fiscal performance correlates with city size: own-source revenues in Bogota and other large cities historically have increased in real terms. Small municipalities, in contrast, have failed to maintain local revenue flows at a pace with inflation, and thus have become more dependent on central government transfers. Formerly, the property tax was the largest single source of municipal revenue. High inflation rates, slippage from cadaster registration targets, and the failure of many municipal governments to enforce timely payments of the tax, caused property tax proceeds to decline in real terms. This tax funded 27% of aggregate municipal expenditure in 1973, but a declining 17% in 1983, and only 12% in 1988. Law 14 of 1983 introduced annual across-the-board revaluations of the property tax base, required the cadaster registration authority (Instituto Geografico Agustin Codazzi--IGAC) to update property assessments nationwide on a five-year cycle, and transferred to mayors the legal authority to set tax rates within a wide band. However, the annual revaluations have been made at rates lower than inflation; and a large number of new properties are not registered on tax roles. Training for Public Administration 11. Training for public administrators is carried out at the national, departmental and local levels by the national School for Public Administration (EASP), a higher education institution that is run by the Civil Service Commission. After a reorganization in 1987, in response to decentralization initiatives, EASP introduced programs specifically designed to strengthen municipal administration. EASP's ability to respond to municipal needs remains limited, since most of its teaching staff have little experience in local government, and programs have an overly legalistic orientation, and are generally considered weak. Moreover, there currently are no other undergraduate programs or graduate programs available in public administration in the country. The Tax School within the Tax Directorate and a similar although much smaller school within the Custom Department (now being merged within the new National Directorate for Customs and Taxation, DIAN) offer comprehensive programs for professional and technical personnel in their respective areas and will be strengthened under the proposed project during the process of fusing their respective programs. Additionally, the CGR has a Training Department that offers professional, technical, and support-level courses, which also will be strengthened under the project (see Annex 8 for training proposed under the project). 4 C. Reform Measures. 12. Recognizing that macroeconomic measures alone will be insufficient to raise productivity and output growth in the long run, in early 1990 GOC launched an economic modernization program to improve the efficiency of resource allocation and use. The plan included a set of structural reforms and supporting macro policies designed to raise economic growth to 5 % per year, bring inflation to below 20%, and reduce poverty. The centerpiece of the plan was a trade reform program intended to increase the competitiveness of the tradeable goods sector. Complementary policies were designed to improve resource mobilization as well as ensure an adequate supply-side response of the productive sectors and improve efficiency and effectiveness in the public sector. These structural reforms were to be undergirded by fiscal and exchange rate policies that were geared to maintain internal and external balance. The new government reaffirmed these objectives in mid-1990 and vowed to accelerate reforms, with special emphasis given to strengthening public sector institutional capacity. This renewed emphasis began with a performance planning and evaluation system to promote the modernization of management practices in selected public enterprises, prepare the framework for restructuring the power sector, and introduce substantial reforms in key sectors (railways, ports, shipping, and low-income-housing). The object was to eliminate public monopolies and provide incentive structures to promote private sector entry and competition. In addition, many public assets in the industrial and financial sectors were to be privatized where continued public ownership was not justified on strategic or policy grounds. Furthermore, public sector employment would be reduced. 13. Constitutional Basis for Reforms. The new Constitution (1991) is actually a mandate for reform aimed at improving the management of public resources based on national consensus. Six major aspects constitute the framework for improving public financial management. Eii the central government will allocate a larger share of overall public resources to subnational levels based on their performance in delivering services for which they are responsible as well as their ability to self-generate resources locally. Second, the office of the General Accountant must be established within MOF with responsibility for consolidating the national budget. and establishing state financial statements based on an accounting plan for all government levels (responsibilities carried out before by the Comptroller General's Office). Third, a modern financial administration would be established based on principles of efficiency and effectiveness, in line with new legal mandates. Fourth, the obligation of the Executive would include two new factors in resource allocation decisions: equity and environmental impact. Fifth, the Comptroller General of the Republic (CGR) has been reorganized with new functions, namely the control of accounting and ex post external audit on a selected basis. CGR also becomes responsible for ensuring that equity principles and environment protection policies are enforced when auditing government-financed activities. Internal control is now the responsibility of the sectoral entities themselves. And, sixth, new control entities are to be created to scrutinize the effective use of public funds, i.e., the "Fiscal General" and 'Veedor' (ombusdman) in the Ministry of Finance. 14. Public Financial Management. In consonance with its overall modernization and development plans, GOC is convinced that no attempt to strengthen the capacity of the public sector and to restore public confidence would be successful without building capacity in public financial management from resource mobilization to government control, 5 inciuding public policy evaluation. In general, this is rightly seen as a critical factor in improving overall public management. If resources are well managed and controlled, they will, by definition, increase public sector financial capacity. In addition, the quality of the management of these funds is an important element of GOC's policy. Toward achieving this efficiency objective, GOC would build analytical tools that would facilitate achieving a more effective macro decision-making process as well as sectoral levels of govemment. 15. Decentralization. In 1986, GOC began to transfer resources to subnational levels. And since 1987, as mandated by law and 1991 Constitution, subnational transfer amounts became earmarked, and thus are mandatory. In early 1993, local tax administrations are to receive 14% of the national current income or about 1.5-2% of GDP. However, departmental and municipal administrations have much less institutional capacity than the national bureaus, despite transfers earmarked for training local officialse. Capacity strengthening requirements go beyond simple additional skills. For instanoe, administrative norms are unclear and information processing is ill-defined and mostly done manually. In fact, the structure of GOC at national level is not sufficient to facilitate decentralized functions precisely because it was designed to support an essentially highly centralized administration. GOC has begun to address these issues. A reorganization process of central administrations will begin in 1993, in particular in the social sectors and infrastructure, shifting from national to subnational responsibilities to deliver the corresponding services. This includes an ambitious program of management skill development for all personnel at subnational levels. Similarly, the Ministry of Finance has established a training program to address the need for upgrading resource mobilization/tax administration-related skills subnationally. 16. Resource Mobilization. GOC has found it necessary to consolidate improvements to the management of its revenue mobilization processes so as to: (a) boost public revenues, which is required to comply with equity principles and policies; (b) contribute to macroeconomic stability; (c) ensure a successful trade liberalization through tax system reform; and (d) enhance public sector efficiency and credibility. A long list of actions at the policy level has occurred to strengthen the system over the years to a point where an investment in technological development is crucial. As recently defined, the new Directorate for Taxes and Customs is now responsible for collecting nearly 80% of total public revenues as well as for implementing the liberalization reform. Administrative processes and levels of taxation generally are now straightforward for the public, thus easier to understand and comply with. Initial results are encouraging. However, MOF believes that much remains to be done to sustain an adequate level of performance in tax collection without shifting to a more modern and comprehensive information system. It is expected that administrative enhancement of this important subsector of public financial management would modify substantially the tax compliance environment and the public revenue profile. 17. Information Policy. Eager to modernize their information systems, many ministries and other public entities in Colombia generally over the last decade or so have developed their own microsystems that are typically not compatible and not interconnected. No systematic attempt has been made to develop an integrated and comprehensive system- ' A fraction of the value-added tax is carmarked and transferred to the Public Administration School (ESAP) to train local officials. 6 even though in principle it would still be possible to have many independent subsystems to coexist. DNP is now developing and expanding six subsystems: (a) a "Project Bank" for GOC's projects; (b) a "Project Bank" to include all investment proposals for the national and subnational levels; (c) a municipal information system; (d) a social indicators system with planning jurisdictions; (e) a development plan monitoring system; and (f) various small systems operated with laptops. CGR also has a data base for public procurement but a weak system for financial management and accounting. Parallel to this, the National Statistical Department (DANE) operates a reliable and comprehensive data base to handle national accounts, and to some extent, population, economic, and social development indicators per sector. The related information is sophisticated but hardly useful for financial management decisions because of considerable delays in making data available. Finally, GOC now intends to integrate all social indicators in a single data base so as to monitor the implementation of social programs, in particular those with critical equity objectives. Notwithstanding these efforts, a global information system policy is still required in Colombia (see Annex 7). The objective should be to integrate existing systems and facilitate a flow of information that would be reliable and timely so as to efficiently service monitoring and evaluation activities and promote a more effective decision-maldng process. D. Remaining Constraints. Tax Administration. 18. For over a decade, GOC tried to strengthen its institutional capacity for a more effective tax administration in general and revenue increase in particular. However, it still lacks an adequate integrated information system including adequate consideration given to strategic planning and more productive use of informatics in the day-to-day operation of tax administration. Tax administration modernization--as measured by the intensity of computerization in the different areas of administration--has been considered mainly as setting up the taxpayers current account (see Annex 9). This strategy disregarded evasion control and internal management, resulting in poor overall results of the improvement efforts. Tax revenues have been elastic with respect to GDP since 1986 (tax revenues amounted for 10% of GDP in 1988 to 12% in 1992 for the central government, and 14% of GDP, consistently during same period, for total public sector). This result does not necessarily mean administrative and procedural efficiency, as it combines exogenous factors with economic variables and tax policy. Modernization has not kept pace with the dynamics and creativity in the development of the tax structure and its accompanying organizational developments. GOC now hopes to define such a global tax administration strategy in the short term to turn it into a modern and efficient administration. 19. Taxpayer Compliance. Tax system efficiency is the result of tax-payer compliance and the relative cost of enforcing compliance. In Colombia, there is a built-in expectation that taxpayers will not only comply and pay their taxes, but also fill in their forms correctly, thus facilitating the entire tax administration. However, estimates suggest that collection is currently less than 70% of what it should be because: (a) an entirely 'voluntary" compliance system exists given that all collection administration is through the banking network, and of this about half corresponds to withholding by third parties; (b) for 10 years evasion control was almost nonexistent; it was not until 1990 that the DIAN 7 reassumed its enforcement role; and (c) although substantially simplified and strengthened, procedural legislation remains tolerant of tax evaders due to a short statute of limitations by which to control tax evasion. Progress that has occurred has been slow, and mainly due to mass communication campaigns to stimulate compliance. Furthermore, taxpayer current accounts do not allow for consistency (about 40% of transactions are categorized as inconsistent) and the different registry steps are cumbersome and do not conform to current administrative simplification requirements. Finally, administrative control related to tax payment compliance is erratic, not based on objective information, and not fairly enforced. 20. Internal Administration. Administrative logistics is also weak. The Directorate of Internal Revenue and Customs (DIAN)'s capacity is not commensurate with handling modem concepts and procedures. In addition, the operational growth leads to bottlenecks given the absence of adequate management instruments and lack of information hardware. There is also insufficient planning and programming capacity and inadequate information systems. 21. Assessment of Economic and Administrative Impact. Decision-making processes in tax administration do not currently include strategic planning capacity, including critical analysis of the economic impact of taxation levels and the interpretation of tax legislation. Capacity to perform economic simulations with meaningful indicators by which to reorient taxation levels globally or by sector is either weak or nonexistent. As a result, when serious problems arise they can only be resolved partially a posteriori-- e.g., taxes increased randomly or when tax amnesties are granted by the Congress--without being able to assess the impact of such measures. Treasury and Public Credit. 22. There is no satisfactory cash management for short- or long-term fund requirements to meet payments regularly as approved in the budget; yet, when there is an excess of cash in the Treasury, there is no policy, system, or simple procedures to facilitate its optimal use (see Annex 10). On the other hand, the debt management system is not satisfactory because generally it is not based on sound principles or organized procedures. To some extent, these shortcomings are caused by lack of financial management capacity rather than by lack of adequate legislation. Indeed, Law 38 of 1989 (currently under review) requires the application of modem cash management and public credit policies and procedures. This current situation is aggravated by the lack of capacity in private banks with which the public sector operates, including Treasury operations, which results in high service costs. In addition, there is no direct communication linkage between the Treasury and the banking network. Far too often during a budget implementation cycle Treasury lacks cash, makes delayed payments, and occasionally is unable to provide routine office supplies to MOF. In reality, there is no systematic relationship between financial commitments and cash availability, which raises final costs when acquiring goods and services with public money. There are also no established norms and procedures for Treasury specifying how to determine daily cash amounts to be transferred to banks where public sector entities maintain their accounts. And there is no system for controlling fund transfers, in particular to match them with what entities have actually spent. All this is widely believed to have led to corrupt practices, which 8 constantly threaten public sector credibility and legitimacy. This is why GOC considers improving cash management and public credit a vital concern. Financial Macroplanning. 23. MOF and DNP believe that many public sector efficiency issues originate in ad hoc or imprecise macroplanning of public expenditures--largely due to both lack of systematic policies and inadequate information systems (see Annex 10). Law 38 now provides for the preparation of systematic public budgets to be preceded by a "State Financial Plan" (SFP) to ensure a realistic and feasible budget. The coordination between SFP and cash programming is expected to produce smooth budget execution, with no restrictions imposed by monetary or foreign currency policies. However, it has not worked this way in the absence of an integrated information system at the macrolevel and at the sectoral level as well, which is vital when attempting to solve short-term financial issues. Hence, it is now virtually impossible to develop simulation models that can support decision-making processes in MOF, DNP, and the Central Bank that include the Fiscal Council (CONFIS), which is now in charge of macroplanning. Sectoral Program-based Budgeting. 24. The public budget ultimately incorporates sectoral spending programs that should be efficiently generated by the sectoral administrations themselves (see Annex 10). However, this should be done in accordance with norms, procedures, formats, and schedules that are uniform over the entire list of public sector entities, included in the nationial budget. The process of assessing financial requirements in the different sectors in Colombia is inadequate, partly because of a lack of sufficient and relevant information flows. Estimates are routinely based upon the previous year's budget. Even this inadequate approach is further exacerbated by ad hoc, last-minute cuts made by either the DNP Public Investment Unit or MOF's General Budget Directorate. This engenders lack of confidence and calls for a more professional approach to expenditures programming by the various sectors. As a result, estimates indicate that as much as 40% of public expenditures are not considered part of the formal Budget presentation process. 25. Furthermore, at subnational levels, which are supposed to receive 40% of the Government's current revenues by year 2001 (or about 5% of GDP), no system exists to ensure a uniform approach to financial programming and budget presentation, which is compounded by the same lack of integrated accounting procedures (see para. 27 below). In addition, there is a lack of subnational capacity to generate investment projects based on priority needs identified with local community participation. A project bank exists to register and organize the evaluation of projects, taking into account the need for regional integration and multilevel synergy; however, improvement is needed if project information is to be shared and follow-up of project implementation is to become a routine function for government managers. These are also impediments to private sector participation. Finally, in part because of the above institutional capacity gaps, the public sector is unable to hire, retain, and motivate professionals of the level needed to reform this situation in the short term. This is particularly acute at the subnational level, where the political system promotes instability of civil servants. Currently, there are still disruptive processes in project management and financing that must be addressed to avoid interruptions in project implementation as well as financial inefficiency. 9 26. The new financial management practices are expected to give more emphasis to monitoring program outcomes and accountability for inputs. The 1989 Budget Reform Law has brought about some progress in tracking public expenditures through an integrated information system. However, it will not meet the Government's objective of defining and enforcing a modern integrated public financial management system. For this a more comprehensive, multiuser system will be required. The system in use, which is managed by the National Statistical Department (DANE), is largely supply-driven and does not provide the timely inputs needed at any level of government for planning, program, and policy evaluation (several months' delay is not unusual). As a result, many ad hoc information systems have evolved without coordination, harmonized norms, or uniform definitions. A serious effort is now required to define a new architecture for a truly integrated information system to track public finances so as to ensure that their use is optimized and results oriented. Applied at subnational levels this should bring about better allocation of financial resources among the three administrative branches of government, in line with new constitutional requirements. Budget Execution: Accounting. 27. Installing a modem integrated accounting system is seen as the keystone to effectively modernizing of public financial management in Colombia--not only to help the public sector control how its financial resources are spent and used but also to facilitate the macroprogramming process, including the preparation of sectoral and national budgets (see Annex 10). The Constitution specifies a minimum level of information to be obtained in managing public expenditures. The only way to achieve this mandate is to build an acceptable integrated accounting system. Although GOC has begun to implement elements of an accounting system, there is yet no unified accounting plan that can be applied both nationally and subnationally. Moreover, there is no serious effort to integrate all accounting information received from the various sectors and public entities into a consolidated account in MOF. MOF only recently (1989) has been assigned the accounting responsibility (which is the function of the Accountant General), a function transferred from CGR (which retains its control function for external audits). However, the Constitution and existing legislation are still unclear as to this responsibility, stipulating that "government accounting" is MOF's responsibility, but that "budgetary accounting" is CGR's. CGR sees no incompatibility in this dichotomy. While budgetary accounting is conventionally accepted as a responsibility of MOF, the Comptroller's office maintains that its responsibility is based on the constitutional mandate. In addition, CGR managers argue that there is nothing inherently contradictory with the budget being the responsibility of the Executive through MOF on the one hand and Congress through CGR on the other. This dual internal jurisdictional approach between MOF and CGR as embodied in the Constitution creates the potential for conflict when carrying out responsibilities. Government Control. 28. A major hurdle for the implementation of GOC's development program is the generally weak management in the public sector, resulting in part from the capacity gaps described above. Until 1991, public financial management was based on freezing expenditures, which was exercised by vested interest groups in the Comptroller's General's Office, affecting nearly every entity. As a result, internal control systems and procedures 10 began to atrophy. In addition, controls were imposed merely to verify that expenditures had been made against budget items rather than providing judgment on their efficiency and effectiveness. Ex-post auditing was carried out on a sample basis only to control entities receiving external funds to ensure that agreed covenants were met. Thus, public sector financial management emphasized inputs rather than outputs based on prescribed policies and action programs. In this way, control was stressed over achievement which blurred the lines of managerial accountability. Improving accountability for results in the public sector is high on GOC's agenda, with reforms of public financial management is now underway in Colombia. The July 1991 Constitution banned prior controls and mandated a shift to modern public financial management--based on principles of accountability for results--supported by internal controls and comprehensive (value-for-money) external audits. Legislation is being drafted to: (a) establish the function of a General Accountant, responsible for the preparation of consolidated government budgets and financial statements based on an integrated plan of accounts for all government levels; and (b) redefine the function and reform the organization of the Comptroller General's Office. In parallel, GOC is preparing--and intends to adopt and carry out in 1993--plans to restructure its line agencies, giving priority to the social sectors and infrastructure, as required by the decentralization process. However, little has been done so far to design and implement modem management systems, which require considerable preparatory work on organization, procedures, information technology, and skills development. 29. An effective central control system would be an important step towards modem and efficient public financial management to achieve the optimal use of public resources. In Colombia, efficiency and effectiveness receive equal emphasis, which does not necessarily lead to government priority in containing corruption. It is axiomatic that public financial resources should be controlled by addressing four issues: (a) whether the allocation of funds is adequate and based on sound policy principles; (b) whether public money is well spent, i.e., obtaining the best possible goods and services at the lowest possible cost; (c) whether it has been possible to achieve the expected results with these goods and services; and (d) whether the public policy that originated this spending structure was sound, yielding the best possible results. Today, there is no definitive control over the capacity of entities to efficiently program and spend public resources, nor is there any system to perform a comprehensive analysis of economic value and impact of proposed investments. Moreover, environmental protection, although it has become extremely important to most decision-makers in Colombia, is subject to the same lack of control mechanisms. Experience with government control in Colombia has occurred in tax administration, which may explain the progress made in this area over the last decade or so. Other government control efforts have been sporadic, with little, if any, real impact on improving the management of public resources. CGR and DNP are still in the process of formulating an integrated system, with uniform principles, procedures, and norms. They are primarily trying to define a system that will eliminate current redundancies and inadequacies. MOF still needs to clarify its own role in contributing to overall government control and grow in capacity to perform its functions adequately. Finally, there is no internal control sufficiently organized at the public entity level that can supply the central levels with critical or even basic information and data. 30. GOC has recently created the "Fiscal General" within the Judiciary, and the "Veedor de la Hacienda" and "Convenience Control" within the Congress. This should 11 not have much impact on control efficiency and effectiveness. The constitution includes a transitional provision stating that the President of the Republic will designate, within a week after approving the Constitution, and for a period of three years, a citizen who would be responsible for the objection ex officio, or based on outside requests, to review utilization of treasury funds of whatever origin during political campaigns. This citizen would be able to request support from CGR or from the fiscal general. At the time of implementing this temporary constitutional provision, the citizen in question was designated as 'Veedor" (overseer), a special kind of auditor that existed in colonial times, and his office would be the "Veeduria." Since this is limited to the use of public funds in political campaigns during the period 1991-94, its impact in the overall assessment of internal control is meaningless. It has also proven to be controversial; the Veedor has been the subject of public criticism and his work even subject to official investigation. Public Polici Evaluation. 31. Public policy evaluation generally is the final step in the series of activities inherent in an adequate and integrated public financial management cycle (see Annex 11). Indeed, appropriately done, this will verify that public resources have been well programmed and honestly and efficiently spent, and that public policies generating resource mobilization and use were sound and represent the best possible use of public resources for development--including special interests such as equity and environmental protection. In Colombia, there is neither an adequate information system about projects generated at the national or subnational levels ("project bank") or an evaluation system that could lead to the type of information required to improve the decision-making process. 32. DNP already manages a data base that includes projects generated at the national and subnational levels, which is normally used to carry out global and sectoral macroplanning and related resource allocation. Filing the corresponding information in this system is a requirement before any investment proposal will be considered for approval--even in the cases of co-financing or financing by sources external to the public sector. This has been a welcome innovation in budget administration in Colombia. However, the system is only at an early stage of implementation and is thus not sufficiently developed and lacks comprehensiveness, procedures, and a format that would result from a common understanding with project-generating entities throughout the public sector- in addition to linking information and data profiles with budgeting and integrated accounting requirements. Furthermore, DNP's role may not be sufficiently established and accepted. 33. There is no process in Colombia that facilitates evaluating public policies on a systematic basis. If the proposed GOC plan to improve public financial management is to succeed, GOC must be able to answer the question as to whether its investment decisions are sound--not simply whether they yielded the expected results at the lowest possible cost. Typically, project-generating sources do not question whether the projects they proposed are sound either economically or in other important respects (e.g., using equity and environmental protection criteria). They pay little attention to compatibility with other spending proposals within or across sectors. They rarely assess recurrent cost implications, and when they do, the concern is limited to internal implications precisely because the sectors, as special interest groups, usually do not take a comprehensive, public sector viewpoint. Recurrent costs are seldom taken into account operationally, which 12 contributes, for instance, to facilities being built years before financial capacity makes it possible to operate them at a profit. Currently, no benchmarks exist that would permit assessing quality and continuity of key public services, especially at subnational levels. Finally, there is no system for risk/catastrophe evaluation in a country where such events are common. E. Rationale for Bank Involvement. 34. The proposed operation was included in the February 1993 Country Assistance Strategy (CAS) as part of the Bank's program for Colombia and will be reaffirmed in the CAS to be presented to the Board this Calendar Year. The main thrust of Bank assistance to Colombia from the mid-1980s has been to help establish a policy environment supportive of growth led by the private sector. Consolidating the reforms of trade and finance remains a key objective, but the acceleration of structural reforms in 1990/91 has called for a shift in the Bank's agenda. As long-standing policy impediments are lifted, GOC should increasingly address other constraints that are binding Colombia's development: an obsolete regulatory environment, weak financial markets, infrastructure bottlenecks, human resource gaps, threats to the natural resource base, and persistent inequity and risk of social disintegration. Furthermore, restoring confidence in public sector capacity to handle the country's critical issues by better management of public finances-from revenue generation to the evaluation of public policies--is an urgent need and a vital ingredient to all reforms undertaken. GOC has a clear sense of these priorities and has outlined a coherent set of sectoral policies and programs to address them, as well as changes to the constitution and legislation. Making these changes operational will be a major challenge for GOC. Success will hinge on GOC's ability to overhaul its weak line agencies, manage the ongoing decentralization process, and enlist private participation in the delivery of public services. Improved resource allocation and the abundance of foreign exchange stemming from capital inflows and higher oil revenues offer Colombia the means to reach a higher growth path than in the past. In parallel, GOC's development program aims at ensuring that the poor participate in the benefits of a growing economy. F. Lessons Learned 35. Technical assistance components have been included in the majority of recent investment loans in Colombia; however, they have received low priority compared to other project components. In some cases inadequate attention was given to preparation and supervision. And where TA was provided to improve financial management, it often failed to take sufficient account of the overall framework for public financial management, and therefore proved unsustainable (e.g., the Barranquilla Water Supply Project. Ln. 2637- CO). Central Operations Department suggests TA design should be preceded by careful analysis of all institutional factors, including Borrower commitment. The proposed project concept was developed jointly by the Bank and Borrower and objectives enjoy full support of GOC at the highest levels. Other Bank experience shows the need for simplicity in project design, again with full Borrower involvement, with verifiable indicators of performance (Annex 12). All of the above was incorporated in the proposed project. Additionally, lessons from public expenditure reviews suggest that institutional and procedural reforms and the approach taken should be addressed more systematically. A recent operation in Bolivia (Public Financial Management I (completed) and II (under implementation) confirm that well defined and enforceable processes are critical to sustain improvements in public expenditures. Elements of this design were built into the proposed loan as well. i 3S 11. The Project. A. Project Objectives. 36. The project objective is to initiate a process to help improve the management of public finances in Colombia, including a spectrum of functions, from revenue generation to the evaluation of public policies. This would be done through the definition, installation, and deployment of accountability principles and procedures within selected national entities, in the short to medium term (six years), as a preliminary step before implementation throughout the public administration in the longer term. B. Project Description. 37. The project comprises five components: (a) Resource Mobilization; (b) Macroprogramming; (c) Expenditure Control Management; (d) Public Policy Control, Monitoring and Evaluation; and (e) Institutional Strengthening. Within these five components, the proposed project would design an integrated information system, preparing norms and regulations that result from both existing legislation and the information system to be designed, and installing and operationalizing the system in selected entities at the national level principally. The specific objectives and content of components and subcomponents are described below. Total cost of the project is US$58 million, of which 52% (or 100% of foreign costs) would be financed by the Bank and 48% (or 100% of local costs) by the Government of Colombia. A. Resource Mobilization. 38. A.1. Tax Administration. This component is targeted to improve the current operation by the implementation an information subsystem (Subsystem One) based on implementation of tax administration as an integrated system. The component comprises the simultaneous evolution of operations, administration, and control through the development of 11 interdependent computer applications. In the area of operations, major emphasis is given to development of taxpayers welfare as well as improvement of evasion control capacities. In addition, the project contemplates the completion of the single taxpayer current account to help monitor withholding agents, tax administration payment offices, and late payments. Subsystem One would generate the required computerized information to implement simulation models (to be generated by the component) aimed at simulating various tax evasion hypotheses--shadow returns--for all tax bases. This component would help develop computerized support for ongoing collective--sectoral/formal/informal--targeting strategies recently developed in Colombia as a result of the lack of individualized information and/or restrictive legal capacity for audit. This should facilitate more deliberate and organized tax policies and would provide a basis to format the entire public financial management information subsystems. Furthermore, the subsystem would provide information flows to facilitate an analysis of the economic impact of different tax policy alternatives, including modifications in tariffs, temporary or permanent exonerations, fiscal incentives, and other variables caused by changing interpretation of tax legislation. Additionally, decentralized modules of the subsystem would further service the computerization needs of other critical management functions such as budget, personnel and administrative careers, procurement of goods and services with public resources, internal control, control of efficiency, and the management 14 of fiscal assets. Related software packages will permit linking this subsystem to custom revenues information and would support the selection process and auditing procedures in the field. Comprehensive office automation tools would help enhance administrative logistics to increase productivity. Improved communication capabilities would support deconcentration efforts, linking the central administration more effectively with regional and local entities, and improving information flows. The project would provide for the preparation of related norms and publishing of manuals based on existing legislation and the technical features of this information subsystem. In this regard, it was agreed at negotiations that GOC would: (a) complete the short-term evasion control program during the first year and develop, in parallel, the different computer applications to enable tax administrators to test and use them as they evolve; to begin implementation of the fiscalization strategy as defined during appraisal, with the financial support of the Public Sector Reform Loan; and (b) as a result, by June, 1994, a 1 % increase of total collections in real terms during 1993, due to improved tax administration, would be achieved. MOF designated the National Director of Tax Administration as component coordinator. 39. Subcomponent Inputs and Activities (US$28.6 million). Above objectives would be achieved through the establishment of an integrated information subsystem to produce a largely new set of information based on open computing technology for the entire tax collection and customs functions. This would include hardware, software, and related training, amounting to: (a) US$12.0 million for direct investments; (b) US$15.3 million for the use of 1,616 person/months of local and 200 person/months of international consultants for software design, installation, and dissemination; and (c) US$0.7 million for related training. 40. A.2. Treasury and Public Credit. The proposed project would assist GOC in: (a) making the legal framework for consolidating the cash management system under Treasury work, by drafting procedures and regulations and undertaking the necessary organizational changes in MOF; (b) designing a related information subsystem (Subsystem TWQ) to help define and monitor financial instruments, including specific computer software programs aimed at control and management of all public funds available within Colombia and abroad; (c) designing software packages aimed at keeping track of flows of public funds for each entity using public funds; (d) designing a system to continuously evaluate financial instruments markets; and (e) defining linkages between these subsystems, on the one hand, and the entire cash management and public credit subsystem relative to the other computerized subsystems in the public financial management information network. Subsystem Two would integrate information related to budget, treasury, public credit, open market operations, and implementation. Overall, this should result in improving Treasury's income and payment projection capacity through the provision of a computer-based system to track tax revenue information, cash disbursement, and public debt payment schedules. Eventually, Treasury would become the public sector's banker. The Directorate of Public Credit would carry out specific activities aimed at: (a) training human resources in debt portfolio, financial management, and debt policies; (b) updating administrative procedures, functions and job responsibilities including the implementation of internal control rules and their corresponding manuals; and (c) the designing and implementation of the Public Information Subsystem 2. 41. The single national account, which MOF intends to achieve as an important outcome of the proposed project, would reduce bank accounts and balances that exist today 15 under the name of virtually all public entities in every public resource expenditure category. It would give the status of global public spending and thus provide benchmarks for levels of spending in every public entity. Furthermore, it would become an important element of control, providing key data to the Budget Directorate and to others in the Central Government. Payment system would thus become less cumbersome, facilitating all operations with the public sector. It is also expected that overall costs of operating the system would diminish substantially. Finally, because of the competition created in the banking system, private banks would be stimulated in the mid-term to become more efficient. It was agreed at negotiations that GOC would: (a) by end 1994, norms will have been defined in related manuals in accordance with information subsystem features, and Treasury staff will have been trained in the new norms and procedures accordingly; (b) by end 1995, all the above processes would be in place in the Treasury; (c) by end 1995, all errors in reporting assets would have been rectified; (d) by end of 1995 internal control would be fully operational showing adequate level of performance for the entire Treasury administration; (e) by end 1996 all flows of information originated by the Treasury would be reliable, timely, and feeding the macroprogramming function adequately, in particular for making new investment decisions; and (f) by end 1996 cash flows will have been improved so as to completely eliminate dormant Treasury bank accounts. 42. Subcomponent Inputs and Activities. (US$6.2 million). Treasury/Public Credit modernization objectives include the following inputs: (a) the installation of a computer network for management of information flows by the center and by users (280) (US$2.6 million); (b) 260 man/months of local consultants and 35 man/months of international specialists in debt analysis, design of information structure and of related data bases, preparation of norms and procedures, and management training in public credit management, negotiating skills, open market regulations, and payment procedures (US$2.6 million); (c) training activities including tutorial training by consultants, study tours, and formal courses for about 300 staff members (US$1.0 million). B. Macroeconomic Modelling. 43. B. 1. Macroprogramming. This component would help GOC establish clear links between all information subsystems within the overall public financial management system to improve substantially its current macroplanning of public expenditures. A software package would be designed to enable DNP to use all macroeconomic variables that have implications and an effect on State financial programming, not limited only to priority criteria of the current Administration. Computerized models should help determine adjustment requirements as financial programs are implemented, and enable DNP and MOF to understand early on the operational implications of these adjustments, especially relative to other government spending programs (Subsystem Three!. This should also help consolidate relationships within CONFIS between DNP, MOF, and the Central Bank, in particular, to accommodate monetary and exchange policy implications of any changes in the approved expenditure program. Studies would also help modernize and improve macroeconomic financial programming and the GOC's financial plan itself. In this regard, during negotiations it was agreed that: (a) coordination would be in place and enforced by end 1995; (b) the generation of information and the corresponding manuals would be ready by end 1995; (c) GOC-selected entities would be able to enforce the corresponding norms by end 1996; and (d) by end 1996, macroeconomic information would reach user entities with no delay. 16 44. Subcomponent Inputs and Activities (US$1.3 million). This subcomponent would include: (a) 49 person/months of local specialists to help develop the required information system, including software programs, to design alternative approaches to programming and macroeconomic analysis, and to prepare related norms in manuals (US$0.4 million); and (b) acquisition of hardware and related equipment (US$0.37 million); (c) training for about 30 participants in how to use the information system and in macroeconomic analysis for macroprogramming of public expenditures (US$0.46 million); and (d) a technical library (US$0.08 million). C. Expenditures Management 45. C. 1.: Program-Based and Current Expenditures Budgeting. This subcomponent is aimed at generating program-based and current expenditures budgets (Subsystem Four) for the major public entities at all administrative levels, as well as providing these entities with evaluation information to progressively improve their own budgeting practices, from investment requirements definition to project generation. The budget subsystem would provide the information base to monitor and evaluate initial and modified investment proposals made by the sectors and the spending entities in general, from the initial stages, so as to limit arbitrary decisions in preparing the budget. This would also contribute to supporting the cash programming for public sector spending. The subsystem would further record any new national investment initiative and automatically inform subnational authorities. At the subnational level, this subcomponent would help DNP's authorities gain institutional capacity to strengthen subnational entities' capacity as a consequence of the new rules of the game in generating and implementing investment projects so as to improve the delivery and quality of public services under their jurisdiction. 46. In that respect, it was agreed at negotiations with the Government that: (a) sectoral programs of activities would be delineated by end 1994 through the use of program-based sectoral budgets; (b) a budgeting information system would be installed and functioning, and budgeting subsystems would be interconnected by end 1995; (c) a parallel subsystem would be designed and installed in DNP for budgeting transfers to subnational levels by end 1995; (d) a system would be defined and installed to determine accumulated budgetary deficits at the subnational level by end 1995; (e) a first consolidated budget on new basis would be presented for 1997 (by end of 1996); (f) the same system would be applied to public enterprises by end 1997; and (g) most managerial, professional, and technical staff of the Budget Directorate would have been trained by end 1995, and those of sectoral budget offices by end 1996. 47. Subcomponent Inputs and Activities. (US$5.5 million). This subcomponent would include: (a) 287 person/months of local consultants and 3 international specialists in budget preparation, analysis, and approaches to decentralization (US$2.3 million); (b) equipment (computer hardware and software) (US$2.3 million); and (c) training workshops (for about 1,500 participants) and study tours (for 10 participants) to enhance staff skills in budget preparation and analysis (US$ 0.9 million). 48. C.2. Budget Expenditures Accounting. The objective of this subcomponent is to develop a comprehensive accounting system (Subsystem Five) throughout the public sector, consistent with the accounting guidelines to be enforced in 1]7 Colombia, to ensure uniformity of accounting procedures anld classifications. It should help entities understand their accounting requirements and basic relationship to budgeting. A study would be carried out to ensure an integrated concept of wlhat the overall accounting system should be, including budgeting and management of the government accounting system and procedures. This would then be defined in manuals that would help facilitate and ensure enforcement throughout the public administration. A unified accounting plan would thus be prepared using an information subsystem connected to the above-defined subsystems. In this regard, it was agreed with GOC at negotiations that: (a) the Accountant General would be selected and his/her Office would be organized and completely staffed by mid- 1994; (b) all related documentation, files, and registries would be transferred from the Comptroller's Office by end of 1994; (c) the accounting information system would be designed and installed by end 1994; (c) accounting norms and procedures manuals would be ready by end 1994; (d) connections would be established with other subsystems such as Treasury, Public Credit, and Budgeting by mid-1995; (e) accounting offices would be structured and begin operation in all the central administration by end 1995; and (f) a general opening balance would be prepared by mid-1996. 49. Subcomponent Inputs and Activities (US$3.8 million). This subcomponent would include: (a) 180 person/months of local consultants and 12 person/months of international specialists to organize and launch operation of the General Accountant's functions in MOF and operationalize the transfer of accounts and of responsibilities from CGR, including the revision of related norms and procedures (US$1.7 million); (b) acquisition of related computing equipment (US$ 2.0 million); and (c) training of staff and study tours for managers (US$0.1 million). D. Public Policy Control and Evaluation 50. D_.,1 Monitoring and and Evaluation of Public Policies. GOC has made much progress in defining government control procedures, including accommodating constitutional provisions that have redistributed responsibilities, in particular between MOF and CGR; hence, this subcomponent has a limited but important objective. The system design for integrated financial management would improve substantially the definition of "government control" and in particular DNP would take over the responsibility of organizing and coordinating the monitoring and evaluation of public policies, programs and projects. In addition, a study would review procurement procedures to help determine a standard cost system for the acquisition of goods and services by the public sector. A computer system would be designed to help keep all administrative procedures under close monitoring control through specific indicators. 51. This subcomponent would finance the design of an evaluation system that would help establish monitoring indicators to: (a) design and development of an annual program of public policy evaluation to be presented to the Borrower's Executive Branch; (b) setting up the institutional and legal framework necessary for Subsystem Six inlcuidng the organizationl procedures and information requirements necessary to fit the evaluation process; (c) putting into effect guidelines on sectoral programs, and projects performance and public policy evaluation; (d) execution of a pilot program to promote and consolidate evaluation units in selected Administrative Agencies which could be easily replicated throughout the remainder of the Administrative Agencies; (e) on the basis of the experience thus with own funds gained organization of evaluation units in the 18 Administrative Agencies which perform the evaluation of sectoral policies and program and project performance. This subcomponent would also help enhance GOC's capacity to ensure that decisions are sound and that it becomes possible to learn from experience systematically to improve overall public sector performance, including determining the objectivity and efficiency of spending, in addition to confirming through implementation experience that decisions to spend were sound and the best option. Software packages to enhance the capacity of the current DNP's project data bank would be provided. In addition to being connected to the other public financial management subsystems, such an enhanced information subsystem would ensure comprehensiveness of information and centralized data in DNP from all public entities entered into the budget, including subnational levels. The information would then flow downwards to ensure better decision- making processes throughout the public sector. The subsystem would also include the information required to continuously feed monitoring and evaluation functions within and outside the scope of DNP's specific responsibilities. 52. Evaluation indicators would thus be provided for assessing the quality and effectiveness of financial administration and public management, including public funds used directly by the public sector as well as those transferred to subnational levels and private sector entities. Computer models would be developed to assess whether the economic impact of investment decisions, including a verification that priority criteria such as poverty alleviation, protection of disadvantaged groups, environmental protection, and welfare has been complied with throughout budget implementation. The subsystem would provide data disaggregated to the level of specific projects. Tailored features would be added to enhance the above subsystem capacity, including: (a) long-term credit impact; (b) public sector performance in planning for preventing disasters or efficient reaction when they occur; (c) assessment of longer-term costs of delivering key public services; and (d) assessment of operational costs of new investment proposals. Overall, the subsystem would be well integrated in the financial management system. 53. It was agreed with the Government at negotiations that: (a) the monitoring and evaluation of public policies resolution would be approved as a condition of disbursement; (b) monitoring and evaluation of public policies units would be established in public entities in accordance with a plan set forth in successive POAs; (c) the monitoring and evaluation of results unit would be fully staffed in DNP as a condition of disbursement for this component; (d) methodologies and manuals would be approved and ready for distribution by end of 1995; (e) related information system would have been designed and in operation by end 1995 included DNP capacity to validate information; (f) first evaluation of results in a consolidated report would be available to the Presidency of the Republic by end of 1995; (g) first sectoral comprehensive evaluations (public policy evaluation) by end 1995; (h) two to three such comprehensive evaluations would be produced yearly beginning in 1996; and (i) DNP would thus become able to guide the macroprogramming process by end of 1996. 54. Subcomponent Inputs and Activities. (US$2.4 million). This subcomponent would include: (a) 130 person/months of local consultants and 20 person/months of international consultants to prepare the structure, procedures, and regulations of the proposed internal control system, define new internal audit standards, and draft the corresponding manuals (US$1.3 million); (b) basic and advanced training activities for about 900 participants to ensure understanding of the new procedures and skills to 19 implement them adequately throughout in selected public administration entities (US$0.4 million); (c) informatics equipment to establish required links (US$0.6 million); and (d) financing for printing and disseminating related manuals (US$0.08 million). 55. D.2. External Control. The modemization of external control of public entities in Colombia is well underway with the assistance of Canada and the US, including the objective of making the new CGR a "center of excellence" in the area of fiscal control. This modernization program will need to be complemented by a comprehensive training program to ensure long-term sustainability of improvements underway. This subcomponent would provide advanced (Master-level) training for CGR staff to develop the necessary advanced skills in audit procedures, fiscal performance reviews and analysis of results in the areas of environmental audit, economic analysis, and review of internal audit quality. 56. Subcomponent Inputs and Activities (US$2.14 million). This subcomponent would provide financing for training activities as follows: (a) basic program for 48 nonfinancial, advanced students (US$0.2 million); (b) advanced audit program for 120 participants mainly responsible for international audits of World Bank and other international financing sources (US$0.59 million); (c) master degrees in auditing and financial management related to technical specialties for 26 participants (US$0.96 million); (d) seminar on fiscal perfornance and control of results for 120 participants (US$0.12 million); (e) seminar on environmental audit for 120 participants (US$0.12 million); (f) seminar on analytical audit and financial analysis for 120 participants (US$0.12 million); and (g) seminar on quality control of state public auditors for 40 participants (US$0.02 million). A subsidy will also be provided for 6 outstanding auditing students to intern at either the GAO in the US (3 students) or the OAG in Canada (3 students) (US$0.03 million). E. Institutional Development. 57. E. 1. Strengthening Govemment Informatics. As a result of the many subsystems that will become operational under the project, the Government's current informatics capacity will need to be strengthened, including the Informatics Unit in MOF. The project would support a government-wide effort to achieve in the short term (1994- 1997) an integrated software engineering to facilitate the integration of the public financial management subsystems, and ensure information flows are accurate, timely, and increasingly credible and useful. The resulting network would service subsystems within MOF and DNP as well as in sectors where functions are interrelated. MOF's Informatics Unit would contribute to the strengthening of its counterpart units in every MOF's Directorate involved in project implementation (See Annex 5). Interinstitutional relationships would be defined and enforced to establish that this central unit would have a quality control function to ensure consistency and economy in the engineering of the corresponding integrated system within MOF, thus establishing norms and standards to be used by the public sector. This would include project management and control systems, informatics security regulations and devices, related training activities, and internal control for system management. Finally, this would also include procurement norms, standards, and regulations when acquiring software and hardware with public money. 20 58. Subcomponent Inputs and Activities (US$1.97 million). This subcomponent would include: (a) 10 person/months of an international consultant for initial design of software engineering and system integration, and 74 person/months of local consultants for carrying out the above described responsibilities (US$0.74 million); (b) training for 175 engineers and about 100 other users (US$0.39 million); and equipment (US$0.77 million). 59. E.2. Project Administration. Project implementation would be the responsibility of DNP for the subcomponents of macroprogramming and public policy evaluation, CGR for external control, and MOF for the remaining subcomponents. MOF, and DNP would establish a small administrative unit with one organization specialist and an executive secretary each. CGR would assign to its training school the responsibility for implementing its component but would also set up a small implementation. These units to be formally established as a condition of effectiveness, would be aimed at: (a) providing professional advice in organizational and institutional development; (b) facilitating administrative procedures; (b) preparing annual work programs and biannual progress reports; and (c) acting as technical secretariat to the Coordination Committee (COCOR). COCOR would include representatives of the three implementing entities (levels one or two of management) and the coordination staff, would meet regularly (e.g., monthly) to review status of implementation and of integration of the different subsystems, and would formulate recommendations for improvement. COCOR would also be responsible for approving annual work programs and biannual progress reports (see below) before they are sent to the Bank for approval. The creation of COCOR and its terms of reference would be forwarded to the Bank as condition of effectiveness. The subcomponent would include inputs (described below) to help provide organizational assistance to themselves and to public entities selected to be part of the installation program. Indeed, these selected entities would be almost completely restructured to accommodate financial management norms and procedures, in addition to what would be required as a result of absorbing new information systems, including interinstitutional network arrangements. 60. Subcomponent Inputs and Activities (US$3.3 million). The project would provide financing for four years of assistance to implement units as follows: (a) 8 person/months of international consultants who are specialists in organization and institutional development to be used during project implementation (US$0.12 million); (b) 144 person/months of local specialists in organization with experience in public financial management (DNP and MOF) and training (CGR) (US$1.15 million); (c) 144 person/ months of support staff (US$0.29 million); and (d) office equipment, including a computer and a fax machine in each of the three entities (US$0.09 million). Finally, the project would finance a management service fee of 4.5% applied to two-thirds of the total cost of the project, since only part of the procurement process would be done through this arrangement (US$1.71 million). C. Project Costs. 61. Total project costs are estimated at US$58.0 million with a foreign exchange component of US$30.0 million, or 52% of total cost. Details by project component are provided below, with detailed costs in Annexes 1-4. 21 Estimated Costs Components Local Foreign Total %For.Exch. A. Resource Mobilization Al Tax Administration 13,651 14,945 28,596 52% A2 Treasury and Public Credit 2,430 3,765 6,195 61% B. Macroeconomic Modellin2 Bi Macroprogramming 870 434 1,304 339% C. ExRenditures Mana2ement C1 Program-based Budgeting 2,710 2,757 5,467 50% C2 Budget Spending Accounting 1,602 2,230 3,832 58% D. Control and Public Policy Evaluation DI Intemal Control 1,348 1,040 2,388 44% D2 External Control 1,597 550 2,147 26% E. Institutional Strenethenine El Government Infornatics 977 992 1,969 50% E2 Project Administration 1,440 1,816 3,256 56% Total Base Costs 26,625 28,529 55,154 52% Physical Contingencies (5%) 1,331 1,426 2,757 3% Total Proiect Costs 27,961 29,950 57,912 52% D. Financing Plan. 62. The proposed IBRD loan of US$30.0 million would finance approximately 52% of total project costs net of duties and taxes. This would cover 100% of foreign costs. GOC will finance the remaining US$28.0 million with its own budget and 100% of local costs. GOC would also provide evidence of budgetary allocation for every annual operational plan (POA). The financing plan is set out below: Proposed Project Financing IBRD % GOC TOTAL -------US$ million--------- Foreign Consultants 4.2 100 0 4.2 Local Consultants 0 0 20.4 20.4 Training 2.5 100 3.6 6.1 Equipment 20.9 100 0.3 21.2 Project Administration 1.8 100 1.5 3.3 Project Total(Base Costs) 29.4 100 25.8 55.2 E. Procurement 63. There are no civil works envisioned under the Credit; hence, procurement would be limited to the purchase of goods and employment of consultants. The goods and services to be financed under the project, summarized in the Table on the following page, 22 would be procured in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits," published by the Bank in May 1992. Most of the equipment to be financed by the Project would consist of mini-computer systems for different agencies (about US$22 million), and would be procured through ICB using mainly a 2-step bidding procedure and Bank standard bidding documents modified as appropriate. If applicable, a margin of preference would be applied in bid evaluation in accordance with Bank Guidelines. Such systems would be procured in packages valued at not less than US$250,000, which is the normal maximum ICB threshold for goods authorized for Colombia. Miscellaneous office equipment and supplies aggregating about US$300,000 and computers which cannot be packaged as described above, all estimated to cost below US$50,000 per contract, would be procured through shopping procedures acceptable to the Bank. Purchase of computing equipment would be subject to prior review by the Bank and the remaining goods would be subject to ex-post review by supervision missions. Specific procurement provisions will be included in the Loan Agreement in order to address areas of incompatibility between Colombia's procurement regulations and Bank Procurement Guidelines and Practices. All procurement will be coordinated through PIUs within MOF, DNP and CGR that have the capability to implement procurement. However the project includes financing for the cost of service agreement that would be used on a selective bases for certain contracts. In this respect, service agreement costing would be based on actual time spent rather than a flat percentage of purchasing contracts. The finalization of standard bidding documents for goods, acceptable to the Bank, will be a condition of effectiveness. 64. A plan for hiring consultants would be submitted to the Bank for review and approval as part of the annual operational program (POA) before the consultants can be hired. Consultants would be selected and employed in accordance with the World Bank: 'Guidelines: Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency." Consulting contracts estimated to cost above US$20,000 will require the Bank to conduct a prior review and to comment on each step in the process by which the Borrower selects the consulting firms. These steps include: (a) preparation of the terms of reference and budget; (b) choice of selection procedure; (c) preparation of the shortlist (if not single source) and the Letter of Invitation;. (d) submission of the winning proposal of the evaluation report; and (e) negotiation of the draft contract, i.e., conditions of employment. Below the prior review threshold, Bank will review ex-ante, the corresponding terms of reference, and ex-post the supporting procurement documentation on a selective basis. The consulting services contracts valued at below US$20,000 would not exceed US$5.0 million in aggregate. However, this exception to Bank's review shall not apply to the terms of reference, for all assignments, to the employment of individuals, to single source selection of firms, to assignments of a critical nature as reasonably determined by the Bank or to amendments of contracts raising the contract value to US$20,000 equivalent or above. 23 Summary of Procurement Arraneements Project Input Procurement Methods ICB LCB OTHER N.B.F. TOTAL COST USS Millions Consultants Services - 4.2 20.4 24.6 (4.2) ( 0.0) (4.2) Trmining - 2.5 3.6 6.1 (2.5)" ( 0.0) (2.5) Equipment 21.2 - 0.3 - 21.5 (21.2) (0.3) (21.5) Procurement Agent/ Arrangements - 1.8 3.9 5.7 (1.8) ( 0.0) (1.8) Tota: (Including contingencies) 21.2 - 8.8 27.9 57.9 (21.2) (8.8) ( 0.0) (30.0) Notes: Figures in parenthesis Bank Financing N.B.F.: Not Bank Financed * Scholarship and relevant expenditures (estimated at USS0.96 million) not subject to procurement. 65. Disbursements. The disbursement schedule reflects a phasing of activities, based on the needs to build institutional capacity related to the financial management functions. The proceeds of the Loan would be disbursed against 100% of foreign expenditures on consultants, training, equipment and materials. GOC expects that most of the Bank Loan would be disbursed at the end of the sixth year of implementation. Except for contracts requiring prior review, that is all ICB, disbursement would be made against statements of expenditures (SOEs), for all contracts for goods and for consulting services valued at below US$50,000 and US$20,000, respectively, for which detailed documentation evidencing expenditures would be reviewed by the PMUs and made available for the required audit as well as for review by Bank supervision missions. Minimum value for SOEs to be presented to the Bank would be US$250,000 equivalent. To expedite disbursements, a Special Account would be opened in the Central Bank, or in a commercial bank satisfactory to the Bank, with an initial deposit of up to US$700,000 to cover four months average of disbursements. 66. Accounts and Audits. Separate accounts, maintained in a central location, would be kept for all expenditures made under the project. The PIU would maintain records and accounts for all project activities for which the DNP, MOF, and CGR would maintain records and accounts. The project accounts would be audited annually by independent auditors acceptable to the Bank in accordance with the Bank's Auditing Guidelines, including the MSA contract. The audit reports would be submitted to the Bank no later than six months after the close of the financial year. F. Project Implementation. 67. Project Management. The proposed project would be organized in three separate subprojects with complementary objectives but independent implementing arrangements and budgets. MOF would be responsible for the Resource Mobilization (para. 38-41), Expenditures Management in close coordination with CGR for budgeting and accounting and with DNP for budgeting (para. 44-47), and partly for Macroprogramming (para. 43-44) and the Institutional Development (para. 57-60) Components. DNP would be responsible for Macroeconomic Modelling (para. 43-44) and 24 Public Management Monitoring and Evaluation of Public Policies (para. 50-54), except External Control (para. 55-56) that would be the responsibility of CGR. Every entity would have a small project implementation unit (PIU) staffed with an organization specialist and an executive secretary, and a coordination committee would be set up to ensure coordination, and supervision of overall implementation (para. 59-60). Service Agreements (SA) would be signed with specialized agencies including a clause that would allow anyone of the three implementing entities, to contract directly out of such an agreement and use direct payment option as allowed by the Bank, whenever this is deemed more convenient by the authorities. It is estimated that about two-thirds of total project proceeds would be administered by a MSA agency. 68. Annual Work Program and Reporting. The project would be implemented on the basis of an annual work program called "Programa Operativo Anual" (POA). The format was agreed at appraisal. A first POA for a 15-month period was prepared during appraisal, reviewed by GOC and submitted at negotiations. As the CGR's POA was still missing at negotiation, it was agreed with GOC that the presentation to the Bank of a complete POA for 1994 would be a condition of effectiveness. Subsequently, the POA would be submitted to the Bank by October 31 of every year for an exchange of views on what is programmed as compared to what was effectively achieved. Bank satisfaction in that respect will determine whether the following year's POA would be approved for Bank financing. POAs would include the following: Partl: Evaluation of the previous POA to September 30. The first POA approved during negotiations has used a format that is going to be used throughout implementation; and Paart2:Annual objectives for each implementing entity or administrative unit (Form A of the POA). Related resources and activities would be described in Form B, using the same disaggregation of expenses categories as the ones used in formal public accounting. Form C would include individual tasks describing what would be done during the POA period to: (a) acquire goods and services described in Form B; (b) use them efficiently; and (c) ensure satisfactory conditions of sustainability. The task Form would also include measurable performance indicators for every task wherever possible and the name of the implementer. MOF's Tax Administration, Treasury, Public Credit, Accounting, and Informatic Directorates, DNP's Public Investments, and Public Policy Evaluation Units, and CGR's Training Unit would have to present separate specific POAs that would be consolidated by COCOR before they are sent to the Bank. 69. POAs would then be implemented separately by the different entities in charge but under the supervision of the three Project Management Units in their respective entities. These would consolidate the POAs at MOF, DNP, and CGR before COCOR consolidates them into one document to be forwarded to the Bank. The consolidated POA would also include a project-wide budget and procurement plan (a proposed implementation schedule in included in Annexes 1 and 4). The information included in biannual reports would be reviewed on the occasion of Bank supervision missions before the POA of the following year can be approved. The first such review would take place in November 1994. The second review (November 1995) would be more in-depth, in the form of a mid-term review, to analyze achievements against the measurable performance indicators included in Annex 6. Project design would be modified if deemed necessary by such a formal bipartite review to improve implementation and outputs. If implementation 25 thus far is satisfactory to both parties; the Bank and GOC would prepare a possible second similar project to help install the different subsystems and the related norms and procedures throughout the public sector, which is GOC's long-term objective. III. Project Justification A. Project Benefits. 70. It is expected that improvement of the public financial management is a sine qua non to modemizing all aspects of public administration in Colombia. Overall, public revenues could be increased by as much as 30%, a conservative estimate, by the year 2000, through both increasing tax collection and enhanced efficiency of public resources programming and actual spending. Rigor in public financial management would also help create procedures and ultimately a new accountability culture, which should reestablish public confidence and government and public administration credibility. This would be beneficial to creating an overall institutional environment conducive to private sector initiatives and development. B. Proiect Risks 71. Risks include the inherent instability of the civil service, the weak capacity of institutions and human resources, especially at local levels, as well as political changes (August 1994) that could affect current national commitment. These risks will be ameliorated through the envisaged training and capacity building which is an inherent part of the project. Moreover, there are incentive systems, well-trained personnel, as well competitive salary scales within several of the agencies targeted for assistance under the project (DIAN, DNP, and increasingly in the Ministry of Finance). Also, greater public awareness and pressure are clear indications that the next administration would find it difficult to reduce the level of commitment that prevailed at the time GOC designed this proposed project. Moreover, all of the interventions are in support of changes in public financial management embodied in the 1991 Constitution and would be vital to the credibility of any subsequent government. IV. Agreements Reached And Recommendation 72. The following agreements were reached during negotiations: (a) project management units in MOF, DNP and CGR, which already have been organized to participate actively in the project preparation process would be formalized as condition of effectiveness (para. 67); and a coordinating committee would be created and it terms of reference made available to the Bank also as a condition of effectiveness (para. 59); (b) an annual work program (POA) for review by the Bank, completed and put into effect, inclusive of project activities through the end of 1994 would be forwarded to the Bank as a condition of effectiveness; (para. 68-69) 26 (c) the Accountant General law will have been passed by Congress and his office would be organized and completely staffed as a condition of disbursement for the relevant component; (para.48-49) (d) a mid-term review would be conducted to assess progress and to make necessary adjustments to complete successfully the remaining phases of the program; (para.69) (e) a two-step bidding procedure will be used; (para.63-64) (f) the resolution of the National Council for Economic and Social Policy would have been signed to allow DNP prepare monitoring and public policy evaluation norms as a condition of disbursement for this component (para. 53); and (g) annual reviews will take place to allow the Bank, inter ali, to approve the following years's POA (para. 68-69). 73. Recommendation. Given to the above assurances and conditions, the proposed project would constitute a suitable basis for a Bank loan of US$30 million equivalent to the Government of Colombia, for a period of twenty years, including 5 years of grace, at the Bank's standard variable interest rate. Colmbia Public Fiancial Managemnent project Annex I Activitks, Cost Table, and Schedule of Implementation Page 1 of 12 ._____ _ - nvhlmentnv ion Schedul' (semesters) :_-_.-_-::_; Activies/ - i99 19 - 19 J997 -n O---ers Projec Cosi ....-,. ,..-:.-,- .:. :::-.-.:: : '--. - .: ::- :. .-.- . Man'Monost 'o_e ,-: .tUS Cs) - - - Ist| 2nd lsl | d t j 2d W- is: 2nd: 199 1999 Lo| I Ii Desr. For. Local Total Code D - ... - | - - : | --.| - - A. RESOURCE MOBILIZATION Al. TAX ADMDuTRATION Operational Subsystems AIOI SAT: Taxpayers Services x x x x x 195 25 372 1,560 1,932 Equipmnent 2,400 2,400 ____ ~~Tmaining 6 6 A102 SIP: Fiwalization x x x x x 316 140 2,100 2,528 4,628 Equipment 4,294 4,294 Tmaining 357 357 A103 SIR: Compliance x x x x x 586 4,688 4,688 Collection Equipment 2,950 2,950 Tmaining ____ 203 203 A104 SIC: Enforcement x* x 72 576 576 Collection Equipment 460 460 Training 66 66 A____tdministralive Sub3stdems - - - - - - -- - - - AIO5 | SIB: Inventories and x x x x 41 | 1 1 3281 328 ___________ ~~~~~~~~ ~ ~~~ ~~~~~~~~~~~~~~~~~Training 2> II I1I Colombia Public Funancial Management Project Annex I Activities, Cost Table, and Sehedule of Implementation Page 2 of 12 |_________ J hnDlemenlation Schedule (semestersi _____________ Activitiesflinpitas 1994 1995 19960 J997 19809 Consultants others Project Costs Man/Months ________ $US 'ooi) -________ ) jgl;: i::Ist 2nd ist 2nd Ist 2nd Ist 2nd 1998 199 Loa ml. Deser. For. Local Total Code Dec-piion - - - - - - i- - - - - - - A106 SAP: Financial x x 29 232 232 Managemcnt __ Equipment 21 21 Training I I I1 A107 SAP: Personnel x x 61 488 488 Managemnent Equipment 258 258 ______ _______________ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~Training 17 17 AIOB SAO: Office Management x x x x x 21 168 168 Equipment 1,160 1,1604 ______ ___________ __ _ _Training 3 3 A109 SGI: Informatics x x x 158 1 1,264 1,264 Managemcnt Equipment 397 397 ________ - - - - _____ - - - - _____ ~~~~~~~~~~~~~ ~~~~~~~~Trainipg 28 28 Control Subsystems Al10 SAI: Performance and x x x x 79 29 432 632 1,064 Intenal Audit Trining 8 8 Aill SAE: Fiscal Analysis and x x x x 58 5 72 464 536 tudi ____ __s_ ___ Training __ __13 13 SUB TOrAL CoMPONENr Al 1,616 199 14,945 13,651 2R,596 Colombia Public Fmancial Management Project Annex I Activities, Cost Table, and Schedule of Impkmentation Page 3 of 12 __________ Irplem qainSchedul (semeisterti-____- ____ AcllfeIn,s )994 1995 19d197 *f99 Cnutants. Others Poet ot Man/Monuhs: ____ ___(us '01) . .. O n --2nd lii-` 2 - I 1 -LOC Intl Dew.:. For. Local Total A2. TRea8uRV AND PUtBUC CREDIT Public Cnai A201 Andis of Hild - s _ - PubOc Debt Praile Def6ntion of debt s x 6 2 48 30 78 guiei*puanid an.. A203 |Pubb Debt BuL p=metir an 4 32 32 A204 Rcvisioa of ntmal x x x x x 4 32 32 procedures, functions and ______ rcponslbilkies ____ __ . A205 iompl nof x x x x Intemal Control Procedures A206 Implementation of human x x Special 6 6 resources organization coures 2 p. A207 Revision of exenal x x x x 6 48 48 ________procedures A208 Revis and complete |s x x x 64 3 45 512 557 infomuation mganent procedures ~~~~~~~~~~~~ ~~~~~~~~~~~~~~~~Training: 4 4 _ _ _ _ _ _ _ _ ~~~~~~~~ ~ ~ ~ ~~ ~~~~~~~~~~~~~~~~5,00 p/h _ _ _ A209 DeverAopmof I s s x x I x s 64 64 mana|eme infonation | | ~sydan|- | | | ---- | | A210 Infonatio manageme_ t x K i I s Equipmt 200 200 1toos for rAnancial 2 |Satio | 0 SpeiaHW t00 to0 Cobmbi Pubflc neacial M ua_ment projet Anne% I Aedlvies, Cost Table, and ScwedWe of Implep aatdoi P-ge 4 of 12 Man/oth(us WO) ________ -t 2- ndtt ; i-;-''",;- 0' -!;' f ' '' ,''''00 f9 .a .n .t nd .a .n 199 199 -Loca ln For. Loca .To Cnd Descr*,tfa ..- - - -..... - - - - - .v . - - .- X-' -' A211 Upgrde StaffSkillsin I x x x x x x x x x 10 80 80 Public Credit Mamgeawt Tnraing: 108 108 9,000 pib Study Tour 60 60 20 ek Schohuhips 400 400 MBA (10) Trmining: 10 10 _ _ _ _ _ _ _ _ _ _ _ 300~~~~~~~~~~~~~~~~~~~~a p/h_ _ A212 Revision ud x x 2 3 4S 16 61 rationalization of adIIAaU~I~?Cpn)cess Study Tours la is 6 weebs A213 Revision and 4du*mcnt x x 2 2 30 16 46 of the financial and opcativeleal nd ic_._ Study Tounr 12 1 2 4 weeks A214 Dcopincnt oflitenal x x x x 2 6 90 16 106 Coalz~1Sysem 6 Coltrol system ~~~~~~~~~~~~~~~Study Tours is 18 6 weeks A215 Development of Manuals x x I 4 2 30 32 62 A216 Deof one bank x x 36 12 180 218 468 aoeount sbm |Study Toen 24 24 a w.ek1 Cobmbia Publi FinanJial Masagemt Project Annex I Aditil, Cost Table, and Schedule Of Impkementation Page 5 of 12 .__-_____ Imolemenvti on Scheda i (seme tersl . ............-.-.-.:-: Act.~~4ties/Inpa1* 1994 195 j~ 97 99 Conshit Oters.:,: Project Costs ,.,-.:. .... - :., . - ''.'.'- 1' .E h s - ' -'1' 7''--'"' - an/Mohs --'''t''''$US '0- ) lit 2n 1t 2d la n 2nd 2d 99 199 Local Int. Dw ot oa oa - - -: - - - --. . ..... . 0 I - - ---- - - Ttal A217 D jv;kpsent of x x is 144 144 infornation systen for financial planning Tr667png Sh Equipmnat 330 330 (33 sutions) SW 200 200 A21S Devclopment of x x x x x x x 75 600 600 Integrmted F mnaial Training: 26 26 Management System 2,167p/h Equipcnat 1,300 1,800 180 stations A219 Dcvckopmentof x x x x _ 64 64 Mangement Inforrnation systan A220 Staff Tmining x x x x x x x x x x 10 5 75 s0 155 Advanced 200 200 Training (Sp) Study Tours 60 60 20 wccks Training: 6 6 5S0 p/b__ __ Sus TCrAL CowpoNrsr A2 260 35 3,765 2,430 6.195 Colombia Public Financial Managemtent Project Anne" I Activities, Cost Table, and Schedule of Impkmentation Page 6 of 12 :__:_::_ :__ ImDkmplt2Iion Schkedul (semesters) ___ : :::_____ Activtidesl7nputz 1994 19095 I :997 98 ga/99 Conaftants Olher* Project Costs I { { Man/Month* _______ ($~~~US MO) .:; ~ ~ ~ ~ ~ 1 -, T -; -0:0 ;0)i:;;:0 t t 2 1(0 IST - -I r0S I i00 - istj2d : 2nd 1st j 2nd 1st 2nod 198 99 Lcl Ia. Dwr Fo j Local Total Ctde Des ' - ......I......-1 - "- - ..................J..:.... B. MACROECONOMIC MODEL Bl. MAcUopRooRtAUMNo BIO Estabish nwdhodology for x x 6 48 48 maropgrmmng Libryty 80 80 Training: 5 5 B102 D oveoxncnt of x I x s x x x 43 344 344 Infonnation System Equot 300 300 30 stations Training 5 5 SW purchaw 72 72 B103 Dcvelopmnt of analytcal x x x x x x x x x x Scminars 150 150 and modeling toob for Study Toun 300 300 ni propvgramming . _ _ 100 weeks SUB TOrAL COmpoNDrr Bl 49 0 370 434 1,304 C. EXPENDITURES MANAGEMENT Cl. PRoURAM-BASED BUDafIlNO C1o0 to |tgration of budgeting x x x x x x x x x x 34 272 272 07 proces: Eumn 0t - edsabisbh nonna, |dution 1 1 0 pamameta and pfocedures Spoc 9 9 Tnining Colombia Public Ftnancial Management Project Annex I Activities, Cost Table, and Schedule of Implementation Page 7 of 12 :_._--_._:_-_ - emDemclaio n Schedul (semesters- __....:::.-. Activtii esin .t 1 99 199 1996 197 .8- Consuli..antr Orhe Project Csts ManlMondu hs__ ($us ~ ._--.-.15rIs: 2nd 1st 2 t 22id 1st- 2nd -1998. 19 LA . -Dcr,. For. Local Total Code - - - - - - - - - - Training: 410 410 _________ ______ ~~~~~~~~~~~~~~~~~~~~~~~~34,167 p/h____ Clog to Budget Execution x x x x x 150 3 45 1,200 1,245 12 Consoldation and Evaluation: Study Tours 120 120 - rystmtization of infotmation Equipment 1,950 1,950 - vcrification and analysis 195 stios of information Training: 216 216 _________ _______________________ ~~~~~~~~~~ ~ ~ ~~~~~18,000 p/h _ _ _ ___ _ _ _ C113 to Upgrading sytem x x x x x x x 48 384 384 w 17 capacity for trnsfer and execution of territorial finances: Equipnt 6 60 60 -stablish norms and sation procedures -devclop infomation Training: 36 36 system 2,967h Cite Cash Programming x x x x 14 112. 112 Subsystem Equipment 4 40 40 C119 Invedment nExution x x x x 41 328 328 Monioring Subsydan 260 260 26 satio __________Co__ l_2t7_3 2,77Publiion s1 15 Sum TOrAL COwPOuiMT Cl 287 3 2,757 2,710 5,467 Colomnbi Public Financial Managemet Project Annex I Adiies, Cost Table, and Schedule of Impimenntsain Page 3 of 12 lmotemeiotn &clr(uMeiteri ______ Actividesllnputs 1994 199S )~~~~996 19 89 osatar Ohr Project Costs Man/Months __ _ ____ US 'O) 1st 2nd 1st 2nd 2nd 1998 Local laL ~~~~~~~ ~ ~~Desor Fr. Local Total C.2 BuDGEr SPEnha AaxnuNTNo C201 Organize and Plbe in x x 4 2 30 32 62 Opeastion the Offiee of the Geral Accour l t C20,2 lhmfer of Punedions to x x _office 5 0 50 the Gaml Aeooudnt euipet ow l Cm0 Reviveuld Fjtb&Eh x x 9 - IS 72 87 Norms and ProedumI for Finucial Reposting in PubHio Entikies C204 OrpniazeadPlaein x x x K 60 2 | 30 480 510 Operatica Centrl Moounting Offices for a*l 48 48 Centd Govaument 4.000 p4h Lcvel_ 4,000 plh C205 Pepae an Opening x x x x x 24 3 45 192 237 Balance Sheet C206to Developmentof x x I x x k x x x x 89 4 60 712 772 09 integated informtion equipment 2,000 2,000 system in the public20stio sector entities nectwk Training 30 30 2,500 p/h _ __ C210 StaffTraining x K x x x x x x Tnining 36 36 ________ ___________ _I I___ _ 3,000 p/h I I _ _ SuB TwrAL CowoNEr C2 186 12 2,230 1,602 3,132 Colombia Public Fiancial Management Project Annex I Activities, Cost Table, and Schedule of Implementation Page 9 of 12 Imoleme ration Schedul (semesters) [ Activitiesllnputs 1994 1995 1996 . 1997 98W Consulants Others Project Costs Man/lonth s . ..._. ($US '0(X) CI de Desc' . IT 2nd Jss 2nd 1st 2nd 1 2d 1998 1999 Local In| . Descr. For. Local Total D. CONTROL AND PUBLIC POLICY EVALUATION Dl INTRRNAL CONTROL AND PUBUC PoLicY EVALUATioN DIOI Organization and x x x x x 12 180 180 strengthening of the 36 36 Special Division for Tr ining: Performance Evaluation 3.000 plh (DEER) at DNP: Serninar 60 60 - Set norns and procedures and standards Scholarships 80 80 for internal control and public policy evaluation Training 86 86 p 7.200 p/h Library 50 s0 D102 Devclopment of x x x x x x x 18 144 144 Information System to support National Systen Equipment 200 200 of Ex-Pbst Evaluation 20 sations Publication 10 10 Training: 5 5 400 p/h _ _ _ _ _ _ _ D103 Systematization of x x x x x x x x x x 40 8 120 320 440 primary and comprehnsive evaluations of policies, plans, programs and projects D104 Creation of the blneni I x x I x s 36 288 288 Control and Evauation division in th public Taining: 95 9S edor entities nt7k90 ph Publishing 10 10 CAbabla Pbic Fimae Mnagmemi Project Annex I AdMka, Cot Taler, and Shetdle of Imleuemtion Page 10 or 12 4ctlviikiTh~~~~U 1994 199$ 2996 1997 C'o a~~~~~~u ban's OzAers Pw~~~jec: Coist :7000f0tAt;; O,0000b -- W--00 t- if ti00 C:Sit0-iM n --' ______'__1"'US - 00) _______________ ll Ix 2nd Isu 2Md Is 2n s n 919999 La m. Desr For, Local Total Code0$0 Duscu,odo t;V E--li$ ; - - - - - l- --0 -j - -] - - - - DIOS Integmtion of infonnation x x x x x 12 96 96 sytan ntlLrk Publishing 10 10 E-quipenot 400 400 40 stations Training: 6 6 1 1 1 1 1 1 ~ ~~~~~~~~~533 p/h _ _ _ _ _ _ _ _ _ _ _ _ D106 Sysanatizaion of x x x x x x x x x x 24 192 192 inteanl ewhatios in publi sector enikies 0~ Stu TVrAL COMPONENT Dl 130 20 1,040 1,348 2,388 D2. ExrERNAL CONROL Tnainine D201 Basic Financial Auditing x x x x x Training: 202 202 _____ _____ ______ 16,800 p/h D202 Advanced Financial x x x x x x Training: 576 576 Auditing ____48,000 p/h D203 Specializd Training x x x x x x x x x x 550 410 960 D204 Fiscal Management x x x x x x Training: 121 121 10,080 p/h____ ____ D205 Envirnmnental Auditing x x x x x TTaining: 121 121 10,OS p h __ _ _ _ _ _ _ D206 Finnncial-Economic x x x x x Training: 121 121 Analysis 10,080 p/h _ _ Colombia Public Financial Management Project Annex I Activities, Cost Table, and Schedule of Implementation Page II of 12 lmpkmetalion Schedule (sem.sters) ._-_-_ | Activities/Inpuls 1994 1995 1996. 1997 98/99 Consultants Others Project Costs Man/Months ($US (X)O) .1sr 2nd 1st 2nd Ist 2nd Ist .2nd 1998 1999 Local Int. Descr. For. Local Total Code Deswr@tion ____ D207 Public Sector Quality x x x x Training: 20 20 Assura e _ 1,680p/h D208 Auditing Study - Canada x x x x x x x x x x 26 26 SuB TOrAL CompoNENT D2 0 0 550 1,597 2,147 El. STRENOTHENIN THE INFORMATIC UNTr IN PUBLIC FINANCIAL MANAGEMENT ______ __ EIOIto SyCotrManagemnt and x x x x x x 25 3 45 200 245 05 Conttol: softwareconstruction| Equipmcnt 4 40 40 - software acquisition swtions - supervision of software dewWpmad ~~~~~~~~~ ~~~~~~~~~Training: 82 82 6,800 p/h ___82 __8 E106to Staftraining: x x x x x x x x x x 12 96 96 09 -human rcesource planning -annual training progam Training: 227 227 -job evaluation and 18,940 p/h assessment Equipment I 10 10 EllOto Ativiiesto: x x x x x x x x x x 7 56 56 12 -prmote infonnatio cukm ~~~~~~~~~ ~~~~~~~~~~~Training: 60 60 -imzoveut dna yl 5,000 p/h -unprowe technology Equipmnait 6 60 60 stations SW so 50 Colombia Pubrc Finasncial Management ProJeet Annex I Actities, Cost Table, and Schedule of Implementation Page 12 of 12 ___________ hnplemeuta,iton S&hedul (s1emestrsi A(4vkiesIh*vpa 1994 1995 199 )5r 7 98199 Consultants Other5 Project Costs Man/MontiLt_______ sSm))_ - _____________________ 1;-- <st 2nd 1t n n Dcpr. For. Local Total El13 to System Integmtion and x x x x x x x x x x 30 7 105 240 345 16 Telccommunications S1~Nti~k Tmiing 16 1 Neiviork: ~~~~~~~~~~~~~~~~~~~~~~~~~~1,334 plh E-quipment 450 450 45 stations Nctw,rk 160 160 equipment _________ ~~~~~~~~~~~ ~ ~~~~~~~~~~~~~~~~~~~~~Study Tours 72 72 SuB TOTAL COMPONENT El 74 10 992 977 1,969 | w _ _ _ _ _ _ _ ~~~~~~~00 E2. PROIcr ADMINISTRTION E201 Establish administrative x x x x x x x x x x 144 8 120 1,152 1,272 unitu in DNPand MOP l l l l l l l l | | Support Staff 288 288 Management 1,606 1,606 Service Fee Office 90 90 ________________________ _______ ~~~~~~~ ~~ ~~Equipment _ _ _ _ _ _ _ _ SuB TrrAL COMPONENr E2 144 8 1,316 1,440 3,256 TOTAL BASELINE COSTS 2,746 287 28,529 26,625 55,154 COLOMBIA PUBUC FINANCIAL MANAGEMENT PRoJEcT Annex 2 (Fec r fUss) Local Foreign Total % Foreign % Total Local Foreign Total % Foreign % Total Exchange Basecoeta Exchange Baescoata A. RESOURCE MOS1.1ZATION Al. Tax Ad_muiiau 10,770,639,000 11.791.605.000 22,52,244,000 52S 52% 13,651,000 14,945,000 28,596,000 52% 52% A2. Treewy d Pubic Crdk 1,917,270,000 2.970.5S5.000 4.187.155.000 61% II% 2.430.000 3.765.000 6315.000 61% 13% Sub-TOW 12.687.909.000 14.762,190,000 27.450.099.000 54% 63% 1608l1,000 16,710,000 34,791,000 54% 63% D. MACROBCONOI.C MODEL al. mampu 686.430,000 342,426,000 I,028,56,000 33% 2% 870,000 434.000 1,364.000 33% 2% Sub-TI 686,430,000 342,426,000 i,e28,856,000 33% 2% 870,000 434,000 1,304.000 33% 2% C. ICPENDrfRES MANAGEMENT Cl. PregrmB Bhdgetdi 2.133.190,000 2.175.273.000 4,313,463.0 50% 10% 2.710,000 2,757.000 5.467.000 50% 10% C2. D SP-dift AcountingA 1.263,97,000 1,759,470.000 3.023.448,000 5% 7% 1,602,000 2,230,000 3.832,000 58% 7% Sub-TOe 3.4023168,000 ,934.743.000 7.334,911.000 54% 17% 4,312,000 4.987.000 9.299,000 54% 17% '.0 D. CONTROL AND nBUC POruCY EVALUATON DI I. I ae Commal 1,063.572,000 120.560.000 I.4I.132.000 44% 4% 1.348,000 1.040.000 2,388.000 44% 4% D2. ExSaua Col 936.543,0D0 757.440.000 1.693.983.000 45% 4% 1,317,000 960.000 2.147,000 45% 4% Sub.Toli 2,000.115.000 1,578.000.000 3,57,115,000 44% 8% 2.535.000 2,000,000 4.535,000 44% 8% . INsTrunONAL DEVELO
Группа Всемирного банка · Staff Appraisal Report
Colombia - Public Financial Management Project
Открыть оригинал документа
Полный текст размещён на сайте публикующей организации. lawenc.com индексирует метаданные и ведёт на официальный источник.
Полный текст
Основные сведения
Организация
Группа Всемирного банка
Тип документа
Staff Appraisal Report
Страна
Колумбия
Источник
Всемирный банк