Eritrea - PFM and Statistics Technical assistance and Capacity Building Project - IPR June 2024

Implementation progress and results report ipr a. report summary and proposed actions report data project name: pfm and statistics technical assistance and capacity building projectproject code: p-er-kf0-003 country eritrea sector: institutional support environmental categorization 3-category 3 report type: date of report: 26.06.2024 mission: field mission 7 from: 10.06.2024 to: 14.06.2024 prepared by task manager: mosllem ahmed alamir ahmed alternate task manager : division manager : gebre -selassie kalayu ecgf2 project data project financing in uac financing sourceinstrument foreign currency local currency totalfragile states facility tsf - pillar 3 0.00 4,500,.00 4,500,.00t o t a l 0.00 4,500,.00 4,500,.00processing milestones bank approved financing only loan number date approved date signed date of entry into force date effective for first disbursement disbursement deadline 5900155010251 04.07.2016 10.10.2016 10.10.2016 25.11.2016 30.12.2025 loan amount in uac loan number net loan approved uac signed uac cancelled uac net loan uac 5900155010251 4,500,.00 4,500,.00 4,500,.00 0.00 4,500,.00 t o t a l 4,500,.00 4,500,.00 0.00 4,500,.00 disbursment status at supervision date in uac loan number disbursed to date disbursed to date uac disbursed to date undisbursed to date in uac undisbursed to date 5900155010251 2,182,644.70 2,182,644.70 48.50 2,317,355.30 51.50 t o t a l 2,182,644.70 48.50 2,317,355.30 51.50 executing and implementation agencies borrower government of eritreaguarantor government of eritreaexecuting agency government of eritreaperformance status progress towards development objective rating on development objective do performance rating summary of key findings current previous the project is rated unsatisfactory. both project's outcomes and outputs are rated unsatisfactory. the project implementation is on track towards achieving its development objective build and enhance transparency and accountability in the use of public re sources through better public financial management systems and institutional capacity building in national statistics satisfactory satisfactory implementation progress rating on implementation progress ip performance rating summary of key findings current previous the project's implementation progress is rated as unsatisfactory. the project remains red flagged for slow disbursement after over 7 years of implementation, although it has slightly picked up to 48.50 by 15 june 2024 compared to the 33.11 in april 2024. the slow implementation of activities is attributed to delayed completion of the ifmis readiness study due to covid -19 pandemic and recruitment of it expert consultancy firm to support and monitor ifmis implementation. due to covid 19 shocks during the fi rst quarter of 2021, the consultant was unable to travel for his onsite mission as planned. the project has made progress in the debt management reform component which include: i installation and operationalization of a new software ii data migration fr om legacy system to the new software, data management and reporting iv development of a public debt user manual; v staff training, vi public debt data reports in line with good international practices; and vii acquisition of it equipment for the m of. the national statistics office nso was also equipped with enhanced it infrastructure system supported by end -user training of 16 staff 45 of professional staff. with the project' support, the nso is now in a better capacity to address the statist ical challenges that the eritrea is facing. it is expected that the project implementation progress will improve following the engagement of the qualisys consulting ltd who will provide technical assistance services for the implementation, monitoring, and quality assurance of the introductionroll out of a new integrated financial management information systems ifmis including support for the selection of ifmis system integrator. a contract was signed on 09 november 2023 with a firm to conduct the design , supply, installation, configuration, and training of integrated financial management information system ifmis software and it infrastructure. the payment for ifmis implementation constitutes the bulk of the project, which is expected to raise the overa ll disbursement rate to 99 once fully executed and paid. the firm made a site visit to eritrea from 27 november - 01 december 2023 to observe the infrastructure hold discussions with moct regarding the connectivity issue. an inception report was submitted and validated in january 2024. two disbursement application requests received and paid usd 708,350. the disbursement rate is projected to reach 100 by q4 2025. the project was granted an extension for one year in august 2020 from 31122020 to 3112 2021, and subsequently extended for additional two year in june 2021 from 31122021 to 31122023. the project was extended for a third time for two years from 31122023 to 31122025. satisfactory satisfactory overall project performance classification overall project performance pp, or n performance rating summary of key findings current previous the project's do and ip are rated unsatisfactory therefore, the project is classified a . the project is flagged in the bank systems for low disbursements. the disbursement rate has remained unsatisfactory given that the project has disbursed only ua 2, 182,644.70 48.50 of the tsf grant financing since approval in july 2016 and has no commitments in the system. however, the process for the recruitment of an it consultant to unlock the implementation of the ifmis has been completed. the procurement of the ifmis was completed and contract signed in november 2023, which has a budget allocation of 2,648,210 over 60 of the grant. non potentialy problematic project non potentialy problematic project issues, risks and actions for management consideration issues affecting project implementation key issues corrective actions responsible deadline status difficulty in attracting quality tas to work in eritrea. identification of suitable, affordable and committed personnel to work in eritrea is continuing to be a challenge, largely due to covid, security and personal reasons. continue conducting an aggressive image building campaign for eritrea especially in the foreign press executing agency mof 31.12.2024ongoing in progressmain risks and mitigation risks mitigation measures applied or proposed responsible deadline delay and slow implementatio delay and slow implementation of project activities partly due to slow initiation of procurement activities, covid -19, weak project piu experience, and badslow connection internet service. expedite execution of procurement activities to ensure timely submission of quality of bidding request for proposal documents, evaluation reports and contracts. build contingency plan to provide intensive training for the project's piu staff including fid uciary clinic. executing agency mof and afdb 31.12.2024 complete low disbursement status low disbursement status - the disbursement rate has remained unsatisfactory given that the project has disbursed only ua 2,182,644.70 48.50 of the tsf grant financing since approval in july 2016 and has no commitments in the system. a number of actions are agreed to improve the disbursement rate, to 100 at end of the project in december 2025. the project plans to absorb the pending procurement activities, which their completion will enable the project to reach 100 disbursement rate. the procurement of ict hardware, acquisition of cots software, configuration, and training program, and install any other office equipment, which will absorb ua 2 ,648,210 and improve the disbursement by 60 . executing agency mof and afdb 31.12.2024 ongoing inadequate financing for the procurement of it consultan inadequate financing for the procurement of it consultant - the recruitment of an it consultant is crucial to the acquisition of the ifmis. the mission was informed that the financial proposal for the best evaluated it consultant is higher than the budget allocation of usd120,. moreover, the estimated cost for the cots and the associated ict equipment is more than the total funding available for the project. the exchange rate usdua has deteriorated from 1.4 usdua at appraisal to 1.34 usdua as of apri l 2022, further worsening the funding shortfall. aware of the critical importance of engaging the it consultant in the implementation process of the ifmis, a total of usd165, has been re -allocated from study tours, operating costs, and maintenance budget lines to bridge the financing gap. a revised de tailed cost table is presented. the piu will adopt and follow the revised cost allocations and will prepare a revised work plan and budget for the approval of the bank. executing agency mof and afdb 31.12.2024 ongoing outstanding justifications on the project special account outstanding justifications on the project special account - the project special account has usd 23,451.26 unjustified. the unjustified amount was part of the advance made on 13022020. the bank's disbursement guidelines require that funds disbursed throug h the special account are to be utilized and justified within a maximum period of 12 months. the justifications are therefore long overdue. the project's piu should submit overdue justification documents to the bank for the amounts spent with no further delays. justification for expenditures under the special account need not to be accompanied with a request for replenishment. executing agency mof 31.12.2024 ongoing b. results reporting and assessment progress towards development objective project purpose state the project development objective usually the project purpose as set out in the results -based logframe and assess progress the project's overarching objective is to build and enhance transparency and accountability in the use of public resources through better public financial management systems and institutional capacity building in national statistics. project implementation pace has recently picked up. key activities have been accomplished including the implementation of the debt management software program demfas and training aspects, as well as acquisition of it equipment for the ministry of finance and the national stat istics office nso. procurement activity is expected to be accelerated during 2020, notably the acquisition of an ifmi, which will enhance progress towards development objective. outcome reporting outcome indicators as per rlf baseline value most recent value end target progress toward endtarget assesment improved fiscal planning and expenditure control reconciled financial reports not generated in real time because of using bespoke systems 0. 55. 100. 55.00 likely to be achieved with correctives actions on track. a consultancy firm the qualisys consulting ltd has been recruited to provide technical assistance services for the imple mentation, monitoring, and quality assurance of the introductionroll out of a new integrated financial management informat ion systems ifmis including support for the selection of ifmis system integrator. a contract was also signed on 09 november 2023 with a firm focal point general trading pfm smart to conduct the design, supply, installation, configuration, and training of integrated financial management information system ifmis software and it infrastructure. the firm made a site visit to eritrea from 27 november - 01 december 2023 to observe the infrastructure hold discussions with moct regarding the connectivity issue. the ifmis project management plan pmp and the inception report was submitted and validated in january 2024. the firm conducted a second on-site visit from february 26 -march 1, 2 -24 for a study phase of the project. on their stay they met and held extensive discussions with treasury, budget and it department of the ministry on the existing modules of the on-going system and the new modules to be included on the new ifmi s system. the end user's equipment for office use has also been supplied and delivered. inspection of the equipment done by the technical team of the project.public debt data recorded manually in a stand -alone system not connected to main treasury and fiscal planning systems. 0. 100. 100. 100.00 achievedlikely to be achieved achieved. quarterly and annual debt reports are being generated from one integrated source since 2019. installation of the debt management software demfas, staff training, data migration has been completed. foreign, and domestic public debt was also upda ted and recorded automatically in a debt management software. but according to the information received from the beneficiaries' department to get complete and clear report the dmfas needs full completion of ifmis process.annual gdp estimates not based on reliable macroeconomic data. 0. 100. 100. 100.00 achievedlikely to be achieved achieved - the national statistics office is equipped with enhanced it infrastructure system and the training program was completed. macroeconomic statistics and indicators generated from the upgraded system. outcome rating rating on project outcomes performance rating summary of key findings current previous the overall project outcomes rating is unsatisfactory. overall, 2 66.7 of the 3 program's outcomes were fully achieved. however, the project is expected to achieve the end -targets set for all its outcomes provided corrective actions are identified and implemented in a timely manner. 3 3 output reporting output indicators most recent value annual target end target progress towards annual target progress towards end of project target assessment strengthened capacity for public financial management foreign and domestic public debt is updated and recorded 75. 100.00 100. 75.00 75.00 on track achieved. dmfas software that is required for debt management has been installed and it equipment needed for dmfas program has been fully delivered. data migration has been done; quarterly and annual debt reports are being generated from one integrated source since 2019. a number of it personnel of treasury department and pdid members have received different training related to dmfas program by unctad. five it personnel from treasury department have been trained on oracle database in relation to dmfas progr am. ict statistical infrastructure installed in national statistics office. ict statistical infrastructure 100. 100.00 100. 100.00 100.00 on track achieved. the national statistics office has been equipped with enhanced it infrastructure system and the training program was completed output rating rating on project outputs performance rating summary of key findings current previous the overall project outputs rating is unsatisfactory. overall, 2 of the 5 project's outputs were fully achieved or on -track notably in debt management reforms, acquisition of it equipment, training, and study tours, while one output is on track to be achi eved. in addition, based on the recommended actions, it is expected that implementation of remaining project activities will be accelerated and be completed ahead of project closure in december 2025. 4 4 development objective do rating progress towards development objective rating on development objective do performance rating summary of key findings current previous the project is rated unsatisfactory. both project's outcomes and outputs are rated unsatisfactory. the project implementation is on track towards achieving its development objective build and enhance transparency and accountability in the satisfactory satisfactory use of public resources through better public financial management systems and institutional capacity building in national statistics additional andor unanticipated outcomesoutputs optional indicator baseline end target most recent value

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