Completion Report

Project Number: 38356-013 Loan Number: 2624 Technical Assistance Number: 7515 December 2020

Sri Lanka: Fiscal Management Efficiency Project

This document is being disclosed to the public in accordance with ADB’s Access to Information Policy.

CURRENCY EQUIVALENTS Currency unit – Sri Lanka rupees (SLRe/SLRs)

At Appraisal At Project Completion

(15 February 2010) (31 October 2018) SLRe1.00 = $0.0088 $0.0057

$1.00 = SLRs113.06 SLRs174.38

ABBREVIATIONS

ADB – Asian Development Bank CPS – country partnership strategy EIRR – economic internal rate of return FIRR – financial internal rate of return GDP – gross domestic product ICT – information and communication technology IT – Information technology IMF – International Monetary Fund IRD – Inland Revenue Department ITMIS – Integrated Treasury Management Information System MOF – Ministry of Finance, Economic and Policy Development PFM – public financial management PRM – public resource management PMU – project management unit RAMIS – Revenue Administration Management Information System TA – technical assistance

NOTES

(i) The fiscal year (FY) of the Government of the Democratic Socialist Republic of Sri

Lanka ends on 31 December.

(ii) In this report, “$” refers to United States dollars unless otherwise stated.

Vice-President Shixin Chen, Operations 1 Director General Kenichi Yokoyama, South Asia Department (SARD) Director Chen Chen, Country Director, Sri Lanka Resident Mission (SLRM),

SARD Team leader Savindi Jayakody, Associate Economic Officer, SLRM, SARD

Team members Navodhini Amarasekera, Associate Project Officer, SLRM, SARD

Manjula Amerasinghe, Principal Environment Specialist, EARD Nazeema Buhar, Project Analyst, SLRM, SARD Aruna Nanayakkara, Senior Project Officer (Transport), SLRM, SARD Yasodarran Narayanatheva, Procurement Officer, SLRM, SARD Indunil K. Ranatunge, Associate Financial Management Officer, SLRM, SARD

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS

Page

BASIC DATA i

I. PROJECT DESCRIPTION 1

II. DESIGN AND IMPLEMENTATION 1

Project Design and Formulation 1 Project Outputs 3 Project Costs and Financing 5 Disbursements 6 Project Schedule 6 Implementation Arrangements 8 Technical Assistance 8 Consultant Recruitment and Procurement 9

Gender Equity 10 Safeguards 10 Monitoring and Reporting 10

III. EVALUATION OF PERFORMANCE 11

Relevance 11 Effectiveness 11 Efficiency 12 Sustainability 12 Development Impact 13 Performance of the Borrower and the Executing Agency 13 Performance of the Asian Development Bank 14 Overall Assessment 14

IV. ISSUES, LESSONS, AND RECOMMENDATIONS 14

Issues and Lessons 14 Recommendations 15

APPENDIXES

1. Design and Monitoring Framework 16

2. Project Cost at Appraisal and Actual 24

3. Project Cost by Financier 26

4. Disbursement of ADB Loan Proceeds 28

5. Contract Awards of ADB Loan Proceeds 29

6. Chronology of Main Events 30

7. Status of Compliance with Loan Covenants 31

8. Technical Assistance Completion Report 35

9. Project Financial Analysis 40

10. Key Reasons for Delayed Implementation of Integrated Treasury Management Information System 46

11. Capacity Building Training Programs 48

12. Contribution of Project to ADB Strategy 2030 Operational Priorities 51

BASIC DATA A. Loan Identification

1. Country Sri Lanka 2. Loan number and financing source 2624: Ordinary Capital Resources 3. Project title Fiscal Management Efficiency Project 4. Borrower Government of Sri Lanka 5. Executing agency Ministry of Finance, Economic and Policy

Development1 6. Amount of loan $50,000,0002 8. Financing modality Project Loan

B. Loan Data

1. Appraisal – Date started – Date completed

8 February 2010 15 February 2010

2. Loan negotiations – Date started – Date completed

1 March 2010 2 March 2010

3. Date of Board approval 15 April 2010 4. Date of loan agreement 7 June 2010 5. Date of loan effectiveness – In loan agreement – Actual – Number of extensions

5 September 2010 5 July 2010

6. Project completion date – Appraisal – Actual

31 October 2013 31 October 2018

7. Loan closing date – In loan agreement – Actual – Number of extensions

30 April 2014 31 October 2018 3

8. Financial closing date – Actual

5 November 2020

9. Terms of loan – Interest rate – Maturity (number of years) – Grace period (number of years)

LIBOR, a commitment charge of 0.15% per year 25 Years 5 Years

10. Terms of relending (if any) – Interest rate

Not applicable

– Maturity (number of years) – Grace period (number of years) – Second-step borrower

1 At the time of project approval, the executing agency was named “Ministry of Finance and Planning.” 2 The loan was partially canceled in 2013 by the amount of $19,200,000 and loan amount was reduced to $30,800,000.

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11. Disbursements

a. Dates

Initial Disbursement 6 December 2010

Final Disbursement 21 December 2018

Time Interval 97.90 months

Effective Date 5 July 2010

Actual Closing Date 5 November 2020

Time Interval 124 months

b. Amount ($)

Category

Original Allocation

(1)

Increased during

Implementation (2)

Canceled during

Implementation (3)

Last Revised

Allocation (4=1+2–3)

Amount Disbursed

(5)

Undisbursed Balance (6 = 4–5)

RAMIS 19,200,000 0 (19,200,000)a 0 0 0 ITMIS 14,300,000 3,730,000 0 18,030,000 15,987,189.99 2,042,810.01 Equipment 3,714,000 1,566,000 0 5,280,000 5,119,587.25 160,412.75 Consulting services

3,616,000 (33,000) 0 3,583,000 2,918,961.44 664,038.56

Workshop, external training, and conferences

2,443,000 774,000 0 3,217,000 3,021,422.37 195,577.63

Interest and commitment charge

690,000 0 0 690,000 690,000 0

Unallocated 6,037,000 (6,037,000) 0 0 0 0 Advance account

0 0 0 0 0 0

Total 50,000,000 0 (19,200,000) 30,800,000 27,737,161.05 3,062,838.95

RAMIS = Revenue Administration Management Information System, ITMIS = Integrated Treasury Management Information System. a ADB canceled $19,200,000.00 because the executing agency did not adhere to Procurement Regulations for ADB Borrowers (2013, as amended from time to time).

C. Project Data

1. Project cost ($ million)

Cost Appraisal Estimate Actual

Foreign exchange cost 60.00 60.03 Local currency cost Total 60.00 60.03

2. Financing plan ($ million)

Cost Appraisal Estimate Actual

Implementation cost Borrower financed 10.00 32.29 ADB financed 49.31 27.05 Other external financing Total implementation cost 59.31 59.34

Interest during construction costs Borrower financed 0.00 0.00 ADB financed 0.69 0.69 Other external financing Total interest during construction cost 0.69 0.69

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3. Cost breakdown by project component ($ million)

Component Appraisal Estimate Actual

A. Base Cost 1. Output1: Completion of RAMIS 19.20 27.70 2. Output 2: Completion of ITMIS 14.30 16.20 3. Output 3: Institutional strengthening of fiscal management institutions including capacity development for Western Province revenue administration staff

9.77 11.31

4. Local taxes and duties 4.47 3.25 5. Recurrent costs (government in-kind financing) 5.04 0.88

Subtotal (A) 52.78 59.34 B. Contingencies 6.53 0.00 C. Financing Charges During Implementation 0.69 0.69 Total 60.00 60.03

4. Project schedule

Item Appraisal Estimate

Actual Remarks (if any)

Outputs and Activities

Preparatory Actions

Establish PMU

Q1 2010 Q1 2010

Fiscal Management Efficiency Project PMU was established within the MOF in March 2010. However, the IRD established its own core group and the RAMIS Project Office to steer the project in 2014 after RAMIS implementation was canceled from ADB financing and taken over by the government.

Establish PSC

Q1 2010 Q1 2014

The first PSC meeting was held on 25 August 2014. For ITMIS implementation, instead of a PSC meeting, a regular management review meeting was held.

Recruitment of consulting firm

Q1 2010–Q2 2010 Q3 2010

Output 1: Full implementation of RAMIS

1.1. Prepare functional required document comprising all the functions that are to be IT-enabled

Q2 2010–Q4 2010 Q4 2010

1.2. Conduct as-is analysis of IT infrastructure and other applications currently running in the department.

Q2 2010–Q4 2010 Q4 2010

1.3. Conduct requirement gathering for additional IT infrastructure needed.

Q2 2010–Q4 2010 Q4 2010

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1.4. Prepare bidding documents for procurement of RAMIS, system software, and other IT infrastructure.

Q1 2011 Q4 2010

1.5. Select a vendor to provide RAMIS and related IT infrastructure.

Q1 2011–Q3 2013 Q2 2014

1.6. Conduct functional study for process understanding by the selected vendor

Q4 2013–Q1 2014 Q3 2014–Q4 2014

1.7. Develop and/or customize RAMIS application software to suit the requirement of the IRD.

Q2 2014–Q4 2015 Q4 2014–Q2 2017

1.8. Install all the IT infrastructure for implementation of RAMIS.

Q4 2013–Q3 2014 Q3 2014–Q1 2016

1.9. Test and pilot RAMIS in select locations.

Q2 2015–Q4 2015 Q3 2015–Q1 2016

1.10. Train users on RAMIS.

Q1 2015–Q4 2015 Q4 2015–Q2 2017

Output 2: Full implementation of ITMIS

2.1 Prepare functional requirement document comprising all functions that are to be IT-enabled.

Q2 2010–Q4 2010 Q4 2010

2.2 Conduct as-is analysis of IT infrastructure and other applications currently running in the department.

Q2 2010–Q4 2010 Q4 2010

2.3 Conduct requirement gathering for additional IT infrastructure in view of the ITMIS infrastructure.

Q2 2010–Q4 2010 Q4 2010

2.4 Prepare bidding documents for procurement of ITMIS, system software, and other IT infrastructure.

Q1 2011 Q1 2011

2.5 Select a vendor to provide ITMIS and related IT infrastructure (by July 2011).

Q1 2011–Q4 2013 Q3 2013

2.6 Conduct functional study for process understanding by the selected vendor.

Q3 2013–Q1 2014 Q1 2014

2.7 Develop and/or customize ITMIS application software to suit requirements of relevant departments.

Q2 2014–Q2 2015 Q3 2018

2.8 Install all the IT infrastructure for implementation of ITMIS

Q3 2013–Q4 2014 Q3 2016

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2.9 Test and pilot ITMIS in select locations.

Q3 2015 Ongoing The MOF portal went online in April 2016. The budget planning module rolled out in October 2016. Pilot operations were conducted for ITMIS core modules from November to December 2017 in the Treasury Department and again in 2019 in the Ministry of Foreign Affairs.

2.10 Train users on ITMIS Q3 2015–Q1 2016 Ongoing The users of National Budget Department were initially trained on ITMIS in 2016 on budget planning module. Users of ITMIS budget planning module from all government spending agencies were trained in 2018.

2.11 Roll out ITMIS to all user departments

Q4 2015–Q2 2016 Ongoing The budget planning module rolled out for all spending agencies in 2018 and the budget appropriation module rolled out for all spending agencies in 2019. Gradual deployment of other modules to all spending agencies will begin from early 2021.

Output 3: Capacity building of relevant staff

3.1 Identify training requirement for officials.

Q2 2010–Q3 2010 2011

3.2 Identify mode and location of training.

Q3 2010 2011

3.3 Engage a computer training institute for imparting training.

Q3 2010–Q4 2010 Q1 2013

3.4 Complete basic computer training needs analysis for ITMIS and RAMIS users.

Q1 2011 Q1 2011

3.5 Implement capacity building and training workshops.

Q2 2010–Q3 2013 Q3 2018

3.6 Procure and install desktop computers, workstations and other necessary goods for ITMIS.

Q2 2014–Q3 2015 Q1 2016

Output 4: Improved project management

4.1 Establish PMU (see preparatory actions).

Q1 2010 Q1 2010

4.2 Establish PSC (see preparatory actions).

Q1 2010 Q3 2014

4.3 Initiate recruitment and engagement of relevant consultants for project activities.

Q1 2010–Q2 2010 Q3 2010

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4.4 Conduct reviews:

(i) by PSC (up to four times a year); and

Q2 2010–Q3 2013 The number of meetings held vary based on other regular management review meetings conducted.

(ii) by ADB and the government (yearly).

Q3 2011–Q3 2013 Annually during the loan period until 31 October 2018

Additional review meetings were conducted by ADB depending on the requirements, particularly in 2017 and 2018.

4.5 Prepare and submit:

(i) project loan and TA project inception reports;

Q4 2010 Q4 2010

(ii) first interim reports;

Q2 2011 Q4 2010 and Q1 2011

(iii) subsequent interim reports;

Q3 2012–Q2 2013 2013-2017 These are PMU progress report submissions.

(iv) draft project and TA final reports; and

Q4 2013 Q3 2018 Q1 2017 for TA project closure.

(v) project loan and TA project tripartite and final reports.

Q2 2014 Q2 2019

ADB = Asian Development Bank; IT = information technology; IRD = Inland Revenue Department; ITMIS = Integrated Treasury Management Information System; MOF = Ministry of Finance, Economic and Policy Development; PMU = project management unit; PSC = project steering committee; RAMIS = Revenue Administration Management Information System; TA = technical assistance. Note: RAMIS was taken out of the project in February 2013, transferred to the Government of Sri Lanka, and implemented through a government to government agreement with the Singaporean government. RAMIS was developed and implemented and was launched gradually since 2016 and was fully implemented by December 2017 (Outputs and activities from 1.7 to 1.10 were financed using government funding). Sources: Asian Development Bank; Government of Sri Lanka, Fiscal Management Efficiency Project PMU.

5. Project performance report ratings

Implementation Period

Ratings

Development Objectives Implementation Progress

From 20 April 2010 to 31 December 2010 Satisfactory Satisfactory

Single Project Rating

From 1 January 2011 to 30 June 2011 On track From 1 July 2011 to 30 June 2013 Actual problem From 1 July 2013 to 30 June 2014 On track From 1 July 2014 to 30 September 2015 Potential problem From 1 October 2015 to 31 December 2016 Actual problem From 1 January 2017 to 30 September 2018 Potential problem From 1 October 2018 to 30 September 2019 On track

Note: the Asian Development Bank performance rating system changed on 1 January 2011.

D. Data on Asian Development Bank Missions

Name of Mission Date No. of

Persons No. of

Person-Days Specialization of Members

Loan inception 25–26 May 2010 1 2 a Loan review 2–3 February 2011 1 2 a Loan review 16–18 January 2012 2 6 a,b Consultation 6–7 June 2012 1 2 c Loan review 2–3 May 2013 2 4 b, d Midterm project review 12–13 August 2013 1 2 d Loan review 26 November 2015 1 1 e Loan review 28 January–3 February 2016 6 30 f, g, h, i, j

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Loan review 4–5 October 2016 6 12 f, g, h, i, j Loan review 30 March 2017 3 3 f, h, j Loan review 16 May 2017 4 4 f, h, i. j Loan review 26 July–13 September 2017 3 9 f, i. j Loan review 18–19 September 2018 2 4 f, i

a = senior economist (financial sector) and mission leader, b = project analyst, c = principal portfolio management specialist, d = director, South Asia Public Financial Management Division, e = principal portfolio management specialist, f = project management specialist and mission leader, g = portfolio management specialist/procurement specialist, h = senior finance and administration officer, i = associate economic analyst, j = associate project analyst (procurement).

I. PROJECT DESCRIPTION 1. In 2009, post-conflict Sri Lanka needed to foster sustainable and equitable development by increasing investment for reconstruction and infrastructure. However, key factors constrained its fiscal space: poor revenue generation, inadequately planned and monitored public expenditure, and lack of capacity in the key public resource management (PRM) agencies. The Fiscal Management Efficiency Project aimed to help ease these constraints by automating and modernizing tax administration and public financial management (PFM). Automation, combined with capacity building of key PRM staff, would lead to a higher and more efficient investment in social and physical infrastructure, higher economic growth and social development, and higher revenues. The project aimed to address PFM functions including aggregate fiscal planning, budget preparation, budget allocation, budget and commitment control, payment control, cash flow management, debt management, accounting, fiscal reporting, and revenue department interfacing. 2. On 15 April 2010, the Asian Development Bank (ADB) approved a loan of $50.0 million to the Government of Sri Lanka for the project. A technical assistance (TA) grant of $2.0 million (TA 7515) was also approved to help the project management unit (PMU) mitigate risks from insufficient capacity in relevant agencies.1 The project was to be implemented from 1 May 2010 to 31 October 2013 and the loan to be closed by 30 April 2014. 3. The envisaged impact was greater sustainability of public investments, particularly in the less developed regions, through more effective PRM. The envisaged outcome was enhanced fiscal space for social and economic development resulting from improved tax administration and compliance and efficient PFM. To achieve the impact and outcome, the project would finance (i) the establishment of the Revenue Administration Management Information System (RAMIS) and the Integrated Treasury Management Information System (ITMIS) and (ii) capacity building in the Inland Revenue Department (IRD); Ministry of Finance, Economic and Policy Development (MOF); and other ministries and departments.

II. DESIGN AND IMPLEMENTATION

Project Design and Formulation

4. The project was formulated when the government urgently needed to increase its fiscal space. The design reflected well that increased revenues and improved expenditure management would be jointly necessary and singly insufficient. The design also identified that automation would be necessary, but not sufficient: it would need the complement of appropriate sequencing of reforms, capacity development of staff, and support for project management. The project design was built on the achievements of the Fiscal Management Reform Program, which ADB had financed during 2004–2008.2 To enhance the sustainability of achievements under the previous project, ADB designed the Fiscal Management Efficiency Project in coordination with other development partners, such as the International Monetary Fund (IMF) and the World Bank. In

1 ADB. 2010. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Technical

Assistance Grant to the Democratic Socialist Republic of Sri Lanka for the Fiscal Management Efficiency Project. Manila.

2 ADB. 2012. Completion Report on the Sri Lanka Fiscal Management Reform Program. Manila. The program, which was rated successful, achieved the following: (i) a more effective tax administration, (ii) an improved budget framework, (iii) improved public expenditure management and control, (iv) strengthened fiscal discipline, and (v) improved fiscal coordination.

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particular, the project scope is in line with Government of Sri Lanka’s 2009–2011 standby arrangement with the IMF, which aimed to achieve fiscal consolidation while providing for post-conflict reconstruction.3 ADB also consulted other stakeholders such as various government agencies during project formulation. 5. The design also drew on recommendations from the Independent Evaluation Department review of ADB support for PRM projects: (i) sound political economy analysis, (ii) appropriate sequencing of reforms, (iii) development of human resources to sustain reforms, (iv) provision of long-term TA, and (v) reliance on existing institutions for effective implementation.4 For Sri Lanka, the Independent Evaluation Department recommended project lending as the funding modality for capacity development because of the success with the previous project, and warned against ADB exiting from sectors where capacity had been effectively established (the previous project’s accomplishment) because capacity would erode. The study recommended placing end-users at the center of capacity development.5 6. Alignment and design. The project aimed to enhance fiscal space and enable targeted investment in productive sectors. The project was aligned with the government’s development policy framework at the time, Mahinda Chintana.6 The project, therefore, conformed with the two pillars of ADB’s country partnership strategy for Sri Lanka, 2009–2011, (i) strengthening the investment climate, and (ii) achieving socially inclusive development, as well as the scope of subsequent country partnership strategies. 7 The project is likewise still aligned with ADB’s Strategy 2030, particularly with the strategic operational priority on strengthening governance and institutional capacity.8 7. The project objective and rationale remained valid throughout the project implementation. In line with the project, under Sri Lanka’s three-year extended financing facility arrangement with the IMF from 2016 to 2019, fiscal consolidation remains an objective through rebuilding tax revenues and improving control over public expenditure.9 8. The project was innovative and transformative in strengthening accountability and efficiency in PFM. However, the project design had several weaknesses in implementation arrangements that contributed to the multiple extensions of the implementation period. Among others, the complexity within RAMIS and ITMIS components—involving information and communication technology (ICT) in the system design and development and about 190 user government agencies (for ITMIS) in system deployment—was underestimated at appraisal.

3 The IMF’s Fiscal Affairs Department had been continuously providing TA in public financial management: (i)

analyzing the income tax and value added tax systems; (ii) improving value added tax compliance and implementing the Inland Revenue Act; and (iii) strengthening public expenditure and financial management through improving spending commitment controls, assessing public investments, reforming energy pricing, and drafting statements of intent for major state-owned enterprises.

4 ADB. 2007. A Comparative Assessment of the Asian Development Bank’s Public Resource Management Reform Programs. Manila.

5 ADB. 2007. Lessons in Capacity Development: Sectoral Studies in Sri Lanka. Manila. 6 Government of Sri Lanka. 2006. Mahinda Chintana: Vision for a New Sri Lanka. Colombo. 7 ADB. 2008. Country Partnership Strategy: Sri Lanka, 2009–2011. Manila; ADB. 2011. Sri Lanka: Country Partnership

Strategy, 2012–2016. Manila; ADB 2015. Sri Lanka: Interim Country Partnership Strategy, 2015–2016. Manila; ADB. 2017. Country Partnership Strategy: Sri Lanka, 2018–2022—Transition to Upper Middle-Income Country Status. Manila.

8 ADB. 2018. Strategy 2030: Achieving a Prosperous, Inclusive, Resilient, and Sustainable Asia and the Pacific. Manila.

9 IMF. 2016. Staff Report for the 2016 Article IV Consultation and Request for a Three-Year Extended Arrangement Under the Extended Fund Facility. Washington, DC.

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Considering the novelty of the systems, scale and complexity of the project, these challenges were unanticipated at project design.

9. Quality of the design and monitoring framework. Overall, the results chain in the design and monitoring framework was logical: improving revenue and expenditure management and strengthening related capacities will enhance fiscal space for social and economic development. While indicators and targets at the output level were appropriate, outcome indicators could have been better selected or clearly defined to ensure that their achievement (or non-achievement) could be reasonably linked to the project. Since the indicators were related to the macroeconomy, certain factors outside the control of the project could also affect the outcome targets. For example, “halving interest payments” to gross domestic product (GDP) (Appendix 1) depends on government spending decisions, interest rates on government debt, exchange rate fluctuations, and the level of nominal GDP (which is subject to statistical revisions). 10. Minor changes in project design. As a result of $19.2 million loan proceeds canceled because of a declaration of misprocurement for the RAMIS component (para. 31), ADB approved a minor change in scope in February 2012, whereby the government would assume the cost of RAMIS, with implementation of the component continuing to adhere to the project’s technical specifications as agreed with ADB. Furthermore, the project used the unallocated funds to purchase Oracle software, firewalls, servers, and staff training for the Department of Customs to facilitate RAMIS and ITMIS system interfacing.

Project Outputs

11. The project had three outputs: (i) more accountable revenue management, to be achieved by establishing and implementing RAMIS in the IRD; (ii) more efficient expenditure management, to be achieved by establishing ITMIS in 190 spending agencies, including ministries and departments; and (iii) more capable public resource managers, to be achieved by providing training in RAMIS, ITMIS, and other related PFM aspects of capacity building for key PRM staff.10

1. Output 1: More Accountable Revenue Management 12. Output 1 aimed to address tax administration inefficiencies. By enabling timely information, accurate tracking, and efficient outreach to taxpayers, RAMIS would improve compliance, increase the efficiency of tax collection, increase IRD work productivity, enhance accountability and governance, and improve taxpayer services and encourage voluntary compliance. When fully operational, RAMIS would (i) facilitate electronic filing, (ii) create a central database for all tax payers with a unique identification number, (iii) facilitate web-based services for taxpayers, (iv) introduce a risk-based module, (v) enable an efficient interface between the IRD and Department of Customs, (vi) establish a common import and export registration scheme and value-added tax registration between the IRD and Department of Customs; and (vii) provide capacity development support in the IRD and Department of Customs. 13. RAMIS has been fully operational since December 2017. It was aligned with the Inland Revenue Act of 2006 and will be fully aligned with the new Internal Revenue Act of 2017 once the revisions proposed in the 2017 Act are fully incorporated into RAMIS. As of November 2020,

10 Basic Data Table C.4 lists the activities related to the project outputs.

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RAMIS roll out has been completed for five out of 29 revenue agencies.11 The IRD is satisfied with its performance. RAMIS has enabled the automation of core functions, including registration, returns, tax payments, appeals, collections, cancellations, directions, clearances, and electronic filing. After RAMIS was installed, the number of tax filers increased by 53% in two years, from 986,684 at the end of 2018 to 1,505,552 at the end of 2019. Electronic filing of tax returns was introduced in March 2016, and laws and regulations are being prepared to require corporations to file electronically by end-December 2020. Each taxpayer is now provided with a unique tax identification number. The computerized risk-based audit selection tool was implemented through RAMIS in 2017. All five performance targets under output 1 were achieved.

2. Output 2: More Efficient Expenditure Management

14. Output 2 aimed to address inadequacies in expenditure management, targeting, and tracking by establishing ITMIS, an integrated software application to facilitate budget preparation and commitment control, payment control, cash flow management, debt management, fiscal planning and reporting, and interfacing with revenue administration. 15. When fully operational, ITMIS would: (i) lead to more efficient treasury operations; (ii) enable more informed decision-making on public resource use and allocation by reducing time lags in budget preparation, execution, and evaluation; and (iii) aid in better planning and targeting of operations and maintenance spending for new assets created through public investments. It was also envisaged that ITMIS would help make available gender-disaggregated data and gender-targeted allocations.12

16. The performance targets under output 2 required the rollout of ITMIS, comprising 13 modules, to all 190 spending agencies by October 2013. However, substantial delays have been encountered (paras. 34-35). By July 2016, the contractor had delivered and configured the hard infrastructure for ITMIS application, then rollout of ITMIS started. In 2018, the budget planning module was rolled out to all 190 spending agencies. In 2019, budget appropriation was rolled out to all spending agencies. As of November 2020, only those two modules have completed full roll out to all 190 spending agencies. The Vote on Account for 2020 which was followed by 2020 Budget and the 2021 Budget were fully executed entirely on ITMIS for the first time in 2020. 17. As of November 2020, of 13 modules, four more modules (receipt management, treasury management, revenue management, and expenditure management) were rolled out to 16 departments within the MOF and 30 spending agencies under other ministries and departments; these four modules will be rolled out to the remaining spending agencies through December 2021, along with the asset management, internal audit and general ledger. The court case management and system administration modules intended for the MOF has been on full operation since 2019. Appendix 10 summarizes the key reasons for delayed implementation of ITMIS. At the time of a review mission in December 2019, the PMU expected that rollout would be 60% completed by the end of 2020 and 100% completed by the end of 2021.

11 RAMIS is operating satisfactorily and as of November 2020, interface has been completed in the following institutions:

Bank of Ceylon, MOF, People’s Bank, Registrar of Companies and Sri Lanka Customs. 12 The October 2016 review mission deemed unfeasible the performance target on producing detailed expenditure

information on budget allocations that primarily benefit women. Such data cannot be collected unless each of the spending agencies has special allocations for women. Although the Ministry of Women’s Affairs has spending allocations, even its spending does not necessarily target only women. However, there was no change in scope processed and the design and monitoring framework was not revised.

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18. As of November 2020, the project achieved none of the five targets under output 2, although it completed most ADB-loan financed activities. One of the 13 modules remains to be finalized. Most targets are likely to be achieved only by December 2021.

3. Output 3: More Capable Public Resource Managers 19. Output 3 aimed to: (i) undertake basic training for key personnel in installing and operating RAMIS and ITMIS; (ii) initiate advanced training for selected personnel; (iii) strengthen institutional links with international training organizations; (iv) ensure knowledge enhancement, including gender analysis and gender-aware budgeting; and (v) procure facilities to strengthen routine in-house training. 20. By 2011, the PMU had identified training requirements and modalities and engaged training institutes. The PMU selected capacity development training programs based on the needs assessments and the subsequent approval from the MOF. Various training institutes and universities (Appendix 11) provided executive training for the middle to senior level staff of the MOF and related agencies on e-governance and change management, public finance, strategic management, investment and procurement, economics and public policy, leadership and decision making, macroeconomic policies, strategic human resource management, negotiation and conflict resolution, strengthening public policy making process, behavioral economics, and business English language. The PMU organized a total of 39 training programs for MOF officials and related agencies, including 32 international programs with about 660 participants and seven local programs with about 855 participants. Ultimately, 660 staff received training in 32 international programs and 855 more in seven national programs. In total, 800 government users received training in ITMIS and 1,500 in RAMIS. Basic computerized training was provided to about 1,200 officials at the IRD and 650 officials at the MOF. 21. All four targets under output 3 were achieved. Oracle University in Malaysia conducted additional staff training for the Department of Customs to improve RAMIS and ITMIS interfacing, financed from unallocated funds of the loan. Key officials received training in the skills needed to operate RAMIS and ITMIS. RAMIS implementation has been proceeding satisfactorily, indicating that the training has been put into use. For ITMIS, evaluation of the substantive effect of output 3 still awaits full implementation.

Project Costs and Financing

22. Project costs were estimated at $60.0 million equivalent, to be financed by a $50.0 million loan from the ADB and $10.0 million from the government. The actual costs at closure were $60.03 million. 23. On 11 February 2013, ADB canceled the loan proceeds of $19.2 million following the declaration of misprocurement for the RAMIS component (para. 31 and Appendix 2). A minor change in scope was approved in 2012, whereby RAMIS would thereon be funded by the Government of Sri Lanka. In 2014, the government entered into an agreement with the Government of Singapore to establish RAMIS, which was fully funded by Government of Sri Lanka. At completion, ADB funded $27.8 million (46%) of the total project costs, and the Government of Sri Lanka financed $32.29 million (54%). 24. Project costs are summarized by outputs in Appendix 2 and by financier in Appendix 3. ADB reallocated loan proceeds between cost categories twice: $3.73 million in October 2013 and $774,000 in May 2017 were reallocated from unallocated cost category to equipment and

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workshop, external training, and conference. Apart from the RAMIS, actual costs were generally in line with the appraisal estimates and varied slightly because of exchange rate fluctuations.

Disbursements

25. An advance account (formally known as an imprest account) was opened at the Central Bank of Sri Lanka, followed by a subaccount (formally known as second generation imprest account) in 2010, enabling timely disbursement of funds. A statement of expenditure procedure was used to replenish funds. The replenishment procedure was effective for processing payments for local training programs and participants’ per diem expenditure under output 3. 26. It was envisaged that disbursements would be completed by 30 April 2014. However, delayed project implementation caused a lag in the disbursement progress compared to projections. For instance, in 2014 actual disbursement was $8 million against a projection of $50 million because of cancellation of output 1 (para. 31) and slow progress in ITMIS contract award. Overall disbursement projections were not realistic because the expectation was for a significant share of disbursement to occur immediately after contracts were awarded (Appendix 4). With the loan extension, disbursement was completed by 31 October 2018. The loan account was closed on 5 November 2020 when the government refunded the imprest balance of $30,880.39 to ADB (para. 37). With the cancellation of $19.2 million loan proceeds, the loan decreased from $50.0 million to $30.8 million. The disbursements of ADB funds totaled $27.8 million.

Project Schedule

27. The loan became effective on 5 July 2010. It was envisaged that the project would be completed in 3.5 years with a closing date of 30 April 2014. Because of various delays, the project was extended thrice to 30 April 2016, 31 October 2017, and finally to 31 October 2018. The project completed on 31 October 2018 when the development of 12 of the 13 ITMIS modules, funded under the loan, was completed. However, the government was still finalizing the remaining module and rolling out ITMIS to spending agencies and RAMIS interfacing with external agencies. As of November 2020, the government is still conducting activities to fully achieve project outcome (para. 18). 28. A chronology of main events is in Appendix 6. To lead project implementation, a PMU was established in the MOF in the first quarter of 2010. By May 2013, project implementation experienced substantial delays and PMU through MOF requested an extension. Selection of the vendors for equipment and software of RAMIS and ITMIS had been originally envisaged for July 2011; by May 2013, no progress had been made on either component, and misprocurement was eventually declared for the RAMIS contract on 11 February 2013. A review of project schedule by output follows. 29. Output 1. The project implementation plan envisaged the design of RAMIS in 2010, the selection of a vendor by July 2011, the development of RAMIS software by March 2012, and the rollout of RAMIS to all revenue agencies by October 2013. 30. The TA consultants in consultation with the IRD team developed (i) specifications for the request for proposals for the design of the infrastructure and (ii) system functional requirements for RAMIS. MOF issued an invitation for bids in February 2011.

31. Upon submission of bids and ADB’s clearance of the technical evaluation of bids in June 2012, after opening of price bid, the executing agency decided to reject the technically responsive

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bidder, citing lack of competition and the bidders’ qualification. On 11 February 2013, ADB declared misprocurement because the procurement decision violated ADB’s procurement guidelines. The Government of Sri Lanka entered into an agreement with the Government of Singapore to implement RAMIS, signed in May 2014 between the IRD and Infocom Development Authority International of Singapore, which is the government body of Singapore that collaborates with foreign governments for system implementation activities. This contract was fully funded by the Government of Sri Lanka. 32. Output 2. For output 2, the project implementation plan envisaged a similar schedule to output 1: the design of ITMIS in 2010, the selection of a vendor by July 2011, the development of ITMIS software by March 2012, and the rollout of ITMIS to all 190 government spending agencies by October 2013.

33. The TA consultants, in close coordination with the MOF domain experts, drafted the request for proposal including the specifications for the development of infrastructure and software for ITMIS. MOF issued an invitation for bids in May 2011. However, because of the time for technical evaluation, vendor selection was delayed until August 2013 (the original target was July 2011). The overall contract execution responsibility and ICT infrastructure implementation rested with the contractor as the consortium lead, while the subcontractor was responsible for ITMIS application software development, implementation including supporting the rollout to spending agencies, and maintenance.

34. Delays continued in implementing ITMIS contract because of several factors. On the part of the vendor, (i) the contractor underestimated the time required; (ii) the contractor did not expect the level of customization required for its off-the-shelf package; (iii) the subcontractor, who was responsible for the software development, lacked familiarity with local standards, such as Sri Lankan budget terminology; (iv) staff turnover of the subcontractor was high, disrupting continuity, and the time between its in country visits was too long; and (v) the subcontractor’s staff experienced language barriers. On the part of the executing agency, it was unable to (i) provide sufficient staff with expertise and commitment; (ii) clearly articulate its requirements, resulting in several changes as the product was developed; and (iii) ensure that participating staff would have incentives to contribute time, insights, and cooperation. 35. While the development and installation of ITMIS was mostly completed with a 42-month delay, the main contractor, in agreement with the government, withdrew from the operation and maintenance and the government entered into an agreement with the subcontractor in December 2017 to undertake operations and maintenance. This contract is ongoing under government financing. 36. Output 3. The project implementation schedule for output 3 was envisaged to be during 2010–2013. However, this output was completed in 2018; delays resulted from (i) the delayed completion of system development; (ii) delays in selecting appropriate staff to undertake training because the selection was ad-hoc and no human resource committee was in place to screen the nominations; and (iii) training schedules overlapping with several elections, which often disrupted administrative processes in Sri Lanka. Key officials were trained in the skills for operating RAMIS and ITMIS. RAMIS implementation has been proceeding satisfactorily, indicating that the training has been put into use. For ITMIS, however, evaluation of the substantive effect of output 3 still awaits full implementation. 37. Financial closing. Financial closing was delayed until the imprest advance was refunded on 23 September 2020. Political disruption in 2018, presidential and parliamentary elections in

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2019, the absence of full year budget, and the reliance on vote on accounts for 2020 resulted in the executing agency taking nearly 2 years since project closure to refund the imprest advance to ADB. As a result, the government budgetary provision for the imprest advance was only reflected in the 2020 quarter three vote on account. The loan account was finally closed on 5 November 2020.

Implementation Arrangements

38. As the executing agency, the MOF was responsible for overseeing, coordinating, and reporting on project implementation. A PMU was established at the MOF in 2010. In 2016, to strengthen the PMU, the deputy secretary to the treasury appointed a full-time deputy project director, and the director general of the Information Technology Management Department served in this capacity for most of the project duration from 2017 to 2019. Although it was envisaged that the PMU would have four cells for ITMIS, RAMIS, accounting, information technology (IT) and procurement with three to five members per cell, in reality the PMU had three permanent staff from MOF, three contractual staff, three permanent part time staff, two cabinet appointed full-time staff, and one externally recruited staff managing the entire project. For managing ITMIS implementation and other procurement conducted under the project, the PMU was also staffed by individual consultants, a project manager, a senior IT consultant, and a procurement and infrastructure specialist supported by a consulting firm. Third party functional testing of ITMIS was undertaken by TA consultants and non-functional testing of ITMIS by the University of Moratuwa. For RAMIS, a total 63 IRD staff were deployed throughout project implementation. The University of Moratuwa carried out third-party quality assurance of functional and non-functional testing for RAMIS. 39. A project steering committee was established in 2014, chaired by the secretary to the treasury and comprising the director generals of all key departments involved in ITMIS development, such as Treasury Operations Department, National Budget Department, and State Accounts Department, to provide overall guidance. However, the steering committee did not meet regularly, and in some years it never met because of the difficulty in convening high level government officials. In lieu of the steering committee meetings, PMU conducted management review meetings chaired by the deputy secretary to the treasury and attended by PMU officials and senior management of the contractor. Their function was mainly to monitor progress of product development and rollout. For smooth ITMIS implementation, the MOF designated teams or working groups comprising users from various departments and levels within the MOF: (i) a subject matter expert group to define business requirements and provide clarity to contractor on critical business requirements; (ii) a core user group to support various project stages and ITMIS rollout activities; (iii) a user acceptance testing team to test the system before acceptance; (iv) a task force team to implement and adopt new Chart of Account which is a critical element in PFM framework for classifying, recording and reporting information on financial plans, transactions systematically; and (v) a data migration task force team responsible for data migration activities from the old system, Computerized Integrated Government Accounting System, to ITMIS. Overall, implementation arrangements were generally adequate to deliver project outputs and achieve outcome. Other than the designation of working groups comprising users from various departments, which was commendable, there were no other changes to implementation arrangements.

Technical Assistance

40. The associated TA was implemented from 2010 to 2017. The TA was provided to help the PMU (i) reengineer business processes to align with the applications for RAMIS and ITMIS;

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(ii) prepare the requests for proposals, including specifications for selecting the applications and vendors; and (iii) adhere to the project timeline through technical backstopping and support in the procurement process and project implementation. The TA’s expected outcome was a capable PMU that would be able to promptly complete project-related actions, including (i) effectively selecting the applications and vendors for RAMIS and ITMIS and (ii) reengineering existing applications to suit RAMIS and ITMIS. However, after ADB removed the RAMIS component from the project scope in 2012, the TA consultants also removed support for implementing RAMIS from the TA. 41. The TA achieved the following outputs on time: (i) as-is study and functionality analysis for introducing internationally acceptable RAMIS and ITMIS; (ii) architecture definition and design for RAMIS and ITMIS, and improvement of ICT environment from legal, regulatory, and institutional perspectives; (iii) selection of vendors for RAMIS and ITMIS; and (iv) quality control for adequate and timely service deliverables to be met by contractors. However, the fifth output—which was testing, rollout and post-implementation review of the capacity development of institutions and implementation officials—was partly achieved, but with major delays because of the delays in selecting the contractor to implement ITMIS. 42. Consequently, the TA achieved its outputs. It achieved the outcome of an effective PMU and helped develop ITMIS, despite delays due to issues in contractor performance and delays on sign off by the executing agency. Hence, the TA completion report rated the TA successful (Appendix 8).

Consultant Recruitment and Procurement

43. Under the project, international competitive bidding, national competitive bidding, and shopping for goods were adopted for procurement of goods and quality-and cost-based selection and single source selection were adopted for selection of consultancy services. The major procurements under the project were the development of RAMIS and ITMIS and installation of local area network and wide area network at the MOF. 44. Revenue Administration Management Information System package. Selection of a vendor for RAMIS hardware, system software, and other IT infrastructure was scheduled for July 2011. The invitation for bids was published on 27 February 2011. ADB cleared the technical evaluation of bids on 1 June 2012. On 11 February 2013, ADB declared misprocurement because the procurement decision violated ADB’s procurement guidelines (para 31). Upon further consultation, the government and ADB agreed on the following: (i) the Government of Sri Lanka would finance the $19.2 million cost of RAMIS; (ii) implementation of RAMIS would continue to be consistent with the project’s technical specifications; and (iii) the executing agency would be responsible for selection of the vendor. Based on the agreement, ADB canceled the $19.2 million of loan proceeds allocated to output 1. After the selection of the vendor in May 2014, implementation of the RAMIS component proceeded at a steady pace. The rollout of RAMIS was finally completed in December 2017. 45. Integrated Treasury Management Information System package. The ITMIS contract was awarded under international competitive bidding for an original contract price of $17.7 million. Disbursement under the ITMIS contract totaled about $15.99 million, or 57.6% of the total disbursement under the loan. The scope of ITMIS implementation covers 190 government spending agencies, revenue agencies, and interfacing with banking and other related IT systems in PFM. The contractor’s original contract stipulated to implement ITMIS in a two-phased approach. However, considering the complexities and risks associated with system

10

implementation for many spending agencies, related users and their geographical spread, and delays in system implementation, the contract was amended in 2016 to include a five-phased approach for ITMIS implementation. Later in October 2017, the contract was further revised so that main contractor relinquished all rights and benefits and was released from all obligations under the original contract for operations and maintenance. The MOF contracted this work scope to the subcontractor from October 2018 onwards. As per the original contract, the government would fund operations and maintenance, and this continued under the revised contract agreement. Other items procured under the loan for the MOF and Department of Customs included computer equipment, upgrade of servers, upgrade of existing software, and wireless local area network. 46. As the TA funds were insufficient to cover expenses of consultancy to provide project management support up until project closure, the government requested ADB to continue funding the two consultancies under the loan savings. In January 2017, ADB approved recruiting the consultants on a single source selection basis. Thereafter, loan funds were used to finance PricewaterhouseCoopers from April 2017 to June 2018 and the national IT consultant from April 2017 to October 2018. Overall, the performance of consultants was generally satisfactory.

47. Contract award projections at appraisal were realistic with sufficient time assigned to award contracts from approval. The discrepancy between projected and actual contract awards resulted mainly from the procurement issues in relation to RAMIS contract. 48. Around 20 consulting services contracts were awarded according to ADB’s Guidelines on the Use of Consultants (2013, as amended from time to time) under output 3, to undertake training. Consultancy contracts were awarded following single source selection procedure to implement output 3: capacity building of various staff of RAMIS and ITMIS related agencies.

Gender Equity

49. The project was classified under some gender elements theme. The project design envisaged a performance target under output 2 that countrywide detailed expenditure information would include sex-disaggregated data. However, the ADB review mission of October 2016 deemed the target to be unfeasible as the ministry accounting systems were not designed to obtain this information.13

Safeguards

50. The project was classified as Category C for environment, involuntary resettlement, and on indigenous people. No safeguard issues arose during implementation.

Monitoring and Reporting

51. Out of 24 loan covenants, the project complied with 16, partially complied with 5, and did not comply with 2. One covenant was not applicable (Appendix 7). The project did not comply with covenants related to the (i) development of a comprehensive set of indicators for project performance monitoring and evaluation, and (ii) retention of trained staff for project implementation. Submission of quarterly and annual progress reports was not regular, and reports

13 Aide-mémoire; and ADB (South Asia Department). 2016. Loan Review Mission: Fiscal Management Efficiency

Project. Back-to-office report. 3 November (internal).

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were often submitted only after repeated reminders from ADB. The PMU did not give a clear reason for not being able to develop indicators for project performance monitoring and evaluation. Retaining all staff who attended specialized training programs for RAMIS and ITMIS implementation was not feasible because the government circular requires staff to be rotated.14 The executing agency created a project website, however it lacks information on procurement and training programs and was not regularly updated. The Human Resource Development Committee was not established, instead the executing agency conducted a needs assessment to identify external training courses before submitting training requests for ADB financing. The absence of regular project steering committee meetings attended by heads of key departments resulted in working level staff not released for ITMIS implementation; also, obtaining timely cooperation from these key user departments contributed to delayed implementation. 52. Audited project financial statements from loan effective date to closing date were received but delayed by an average of six months after the due date of 30 June of the following fiscal year. The national audit office gave a qualified audit opinion during initial implementation years from 2010 to 2013, and an unqualified audit opinion from 2014 to 2018. As of November 2020, the detailed loan financial information system reconciliation is pending from the project management unit. No serious unresolved weaknesses were noted in financial management.

III. EVALUATION OF PERFORMANCE Relevance

53. The project was aligned with government and ADB strategies and plans at appraisal and at completion (paras. 6-7). The financing modality was appropriate as deliverables were well-defined and straightforward, focusing on the establishment of the IT systems and capacity building; however, there were weaknesses identified in the design and monitoring framework (para. 9). The minor change in scope was done timely without revising the original targets of the project. Adjustments were only made in funding arrangements for the RAMIS and for purchase of IT equipment and staff training for the Department of Customs to facilitate RAMIS and ITMIS system interfacing (para. 10). Investments in automation in government transactions have been long overdue. Throughout implementation, the project’s overall rationale of easing fiscal constraints through automation to increase revenues and improve public finance management remained valid. The government’s commitment to continue with the project using its own funds demonstrated the priority given to system modernization because of its benefits towards more efficient operations and public expenditure management. Due to the innovative and complex nature of the project, unanticipated issues surfaced during implementation. But overall, the introduction of new technologies which would have transformational effects in fiscal planning, budget preparation and allocation, revenue management and other government processes once ITMIS is fully rolled out, outweighs the design weaknesses and implementation delays in the project. Therefore, the project is rated relevant.

Effectiveness

54. Out of 14 output targets, 9 have been achieved, and 5 not achieved. Significant outputs have been delivered in improving revenue management through the operationalization of RAMIS (paras. 13) and capacity building (paras. 20–21). As of November 2020, rolling out 11 out of 13 modules to 190 government spending agencies needs to be completed. At the outcome level, out

14 All IRD staff who attended specialized training programs were retained for RAMIS implementation, but only 52% of

MOF officials who attended specialized training programs were retained for ITMIS implementation.

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of six performance indicators, only two were achieved. The fully operational RAMIS contributed to the decrease in revenue deficit and increase in tax-to-GDP ratio. Revenue deficit was reduced from 3.7% of GDP in 2009 to 1.2% of GDP in 2018. In addition, the average growth rate in tax revenue between 2009 to 2018 was 11.6% with highest growth recorded in 2015 at 29.1%. Targets for reducing budget deficits and halving interest payments to GDP ratio were partly achieved (Appendix 1). However, progress on all outcome indicators could not be fully attributed to the project because RAMIS and ITMIS are still being rolled out and other external factors may have influenced the results. Therefore, the project is rated less than effective.

Efficiency

55. The economic internal rate of return (EIRR) was not calculated in the original report and

recommendation of the President and during reevaluation because of extreme difficulty in estimating direct and indirect project benefits with limited data available. As a proxy, the project’s financial internal rate of return (FIRR) of 85.3% has been taken as the lower bound of the project’s EIRR. The reason is that the project is unlikely to have negative external effects, whereas it is likely to have positive (but hard to quantify) external effects, such as higher economic growth, reduced corruption, and increased pro-poor spending enabled by the augmented fiscal space. However, although the assumed EIRR is well beyond the economic opportunity cost, the time overrun is 100% for RAMIS and at least 150% for ITMIS (which is still incomplete). Overall, the project is rated less than efficient because of process efficiency considerations.15

Sustainability

56. The project’s FIRR was recalculated based on the actual dates and amounts of project expenditures, revised dates for project benefits given the delayed implementation, and revised parameters for the macroeconomic assumptions underlying the forecast project benefits. Assuming that ITMIS is fully rolled out by December 2021, the project’s FIRR is estimated to be 85.3%, compared to the estimate in the report and recommendation of the President of 162%. The downward revision is due to delayed project benefits, more accurate macroeconomic data, and more realistic assumptions regarding ITMIS benefits. 57. For both RAMIS and ITMIS, the startup infrastructure has been built. Technically and environmentally, RAMIS and ITMIS are routine automation projects and can be continued with minimal outlays for operations and maintenance. RAMIS, in particular, is functioning smoothly, with strong institutional support from the top. IRD management has committed sufficient staff and funding for sustaining its operations, and therefore RAMIS is considered likely sustainable. ITMIS is also rated likely sustainable. Despite three changes in government during implementation, and cessation of ADB funding since October 2018, the respective governments have continued the finalization of ITMIS, funding the completion through its own sources. The MOF has taken measures to ensure the smooth functioning and sustainability of ITMIS once it is implemented. The contractor for ITMIS operation and maintenance has been managing the help desk and has been retained for the ITMIS rollout. When the contractor eventually leaves, (i) the PMU will manage overall ITMIS administration and end-user training to be funded by government; (ii) 13 personnel released from various departments in the MOF and two cabinet appointed staff will provide full-time assistance; and (iii) the IT department of the MOF will be responsible for

15 The Independent Evaluation Department’s guidelines state, “If time or cost overruns are significant (say, above 20%)

and no EIRR can be calculated, nor a least cost analysis be done, there may be a justification for downgrading the efficiency.” Independent Evaluation Department. 2016. Guidelines for the Evaluation of Public Sector Operations. Manila: ADB

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maintaining infrastructure. Nevertheless, there remain continuing concerns regarding staff continuity, capability, and incentives for performance. The decision to continue the development and rollout of ITMIS beyond project closure, release of full time personnel dedicated for ITMIS rollout, clear assignment of the departments responsible for various ITMIS rollout functions, and use of government funding to retain the former subcontractor until end of December 2021 indicate the government’s commitment to eventually establish this system. The project is rated likely sustainable on the grounds of very high investment returns and government’s commitment to ensure development of the implemented systems and provide operation and maintenance outlays beyond project closure.

Development Impact

58. None of the targets under impact were achieved. The attributional issues apply to the project’s impact and outcome targets. Also, because of the data limitation, proxy indicators were used to assess the impact indicators (Appendix 1). Although no significant development impact can be attributed to ITMIS, there have been some positive impacts through outputs 1 and 3. Raising of tax revenues, which was partly achieved through RAMIS, could enable channeling the funds to foster sustainable and equitable development once ITMIS is fully operational. A substantial number of MOF, IRD, and Department of Customs staff were trained in modern PFM under output 3, which was demonstrated in RAMIS implementation. Regardless of delays, RAMIS was implemented and is in operation. From the perspective of Strategy 2030 operational priorities,

the project helped strengthen governance and institutional capacity (Appendix 12). However, with ITMIS yet to be fully rolled out, the development impact is considered less than satisfactory.

Performance of the Borrower and the Executing Agency

59. Within the MOF, the IRD provided continued leadership, despite the change of funding arrangements, as well as several changes of commissioner general. The IRD formed a core team for implementation and assigned sufficient staff to work with the systems implementation partner. The IRD also provided sufficient funding with its own resources to ensure the implementation of RAMIS. These accounted for the implementation of RAMIS in December 2017. 60. Although the executing agency was challenged during implementation, after cessation of ADB funding and despite the difficulties related to the COVID-19 pandemic, the MOF remains committed to fully implement ITMIS. This demonstrates the MOF’s ownership of achieving the eventual financial and developmental benefits of ITMIS and its commitment to fiscal reform. The executing agency was instrumental in introducing automation to tax administration and PFM, which is commendable. Throughout the project implementation, the PMU was adequately staffed, and two PMU officials were always involved in the project from the inception. Discontinuities in leadership arising from political changes impacted project progress. Delays in the MOF’s signing off on key activities (including the contract variation for the contractor which took 10 months, and the systems requirement specifications, which took more than a year to be approved) increased delays in implementation. Although the delayed signoffs partly resulted from problems with the quality of the contractors’ output, these problems also arose from the executing agency’s inability to allocate staff with sufficient time, commitment, and expertise to provide feedback to the contractor in fine-tuning the specifications. In 2016, with an aim to expedite system development and implementation, MOF established a core group to engage fulltime in system configuration, user acceptance testing, change management, and training activities. Although getting staff to commit time was challenging, such a setup eventually assisted the near completion of ITMIS system development in 2018. The performance of the borrower and the MOF as executing agency are rated less than satisfactory because of issues and delays in project implementation.

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Performance of the Asian Development Bank

61. ADB’s performance is rated less than satisfactory. Through the course of implementation, ADB had six mission leaders, but review missions were not fielded sufficiently. During the first two years, only one mission was fielded per year and in 2014, the year the project was re-delegated to the resident mission, there was no review mission. Given the challenges the project faced in procurement and implementation, closer monitoring by ADB would have helped identify problems earlier. Also, the performance targets in the design and monitoring framework had not been modified to reflect the reality on the ground during project implementation. The lack of ICT capacity in ADB teams also hampered the prompt identification and correction of problems. From 2016 onwards, ADB fielded biannual missions and held regular meetings with the government, consultants, and contractors to improve the project performance.

Overall Assessment

62. Overall, the project was less than successful. The project was relevant. At inception and completion, the project is aligned with the need to increase revenue collection and improve PFM to increase fiscal space and promote economic growth and social development. The project was innovative and established automated systems to improve government processes. The project was less than effective. The project achieved nine out of 14 output targets. Two of six outcome targets were achieved but may not be fully attributed to the project. The project was less than efficient. Although the variance in actual total project cost was minimal, the project was completed with a significant time overrun. The project is likely sustainable with an estimated FIRR of 85%. RAMIS is operating smoothly and IRD management has committed to funding and staffing for its continued operations. The MOF continues to fund ITMIS and has assigned resources and staffing for completing the roll out.

Overall Ratings Criteria Rating

Relevance Relevant Effectiveness Less than effective Efficiency Less than efficient Sustainability Likely sustainable Overall Assessment Less than successful Development impact Less than satisfactory Borrower and executing agency Less than satisfactory Performance of ADB Less than satisfactory

ADB = Asian Development Bank. Source: Asian Development Bank.

IV. ISSUES, LESSONS, AND RECOMMENDATIONS

Issues and Lessons

63. Sustained ownership of and commitment to tax administration-related activities. Tax administration modernization typically has one key stakeholder and one key objective of increasing tax revenues, which is a tangible gain. In contrast, PFM modernization has many key players and the benefits of more efficient PFM, in the form of reduced administrative costs, are less tangible. In this project, the RAMIS component demonstrated better performance than the ITMIS component.

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64. Extra attention needed for project implementation involving large-scale activities for information and communication technology. A distinct feature of the project is the implementation of two large-scale ICT-related components, RAMIS and ITMIS. Compared to hard infrastructure projects, the project involved less well-defined activities for system customization, configuration, re-development and testing, which usually require adequate implementation time to ensure the quality of final products. When such activities are carried out in a development context, the implementation period needs to provide extra allowance to respond to potential political and policy changes. 65. Due consideration to realistic timeline and risk mitigation. The project was designed to be completed in 4 years but after 10 years, it is still incomplete. The timeline of 4 years at appraisal seems over-optimistic. In particular, the following factors should also be considered in this type of projects: (i) bridging language barriers, (ii) knowledge of local accounting regulations, and (iii) adequacy of locally based technical staff. Assessment of these factors and incorporation of corresponding risk-mitigation measures could help minimize delays in project implementation. 66. Modular approach. Instead of implementing 13 modules sequentially across all government spending agencies, it could be more suitable to do it in a phased manner: implement each module, test and finalize for one agency, and then replicate to others. The demand on staff time and efforts in a modular approach would have been more manageable, and quick successes would have helped sustain morale and commitment. 67. Project management and supervision key to success. When a project includes components with high level of implementation uncertainties, adequate provision for project management and supervision could help to mitigate the risks. While beyond the control of the project, the frequent turnover of key officials in the PRM agencies and national political changes affected continuity of the project implementation. 68. Expertise in information and communication technology key for public financial management projects. On support from ADB during loan processing and administration, a strong One-ADB team could provide timely advice to the government, the consultants, and the contractors on implementation. Such a team should comprise members with expertise in key subjects. In this project, an ICT expert could help the executing agency’s project preparation and implementation at the early stage.

Recommendations

69. Further action or follow-up. Although the project was closed in October 2018 and the loan account closed on 5 November 2020, ITMIS-related activities are still ongoing to fully roll out the system in spending agencies. It is recommended that ADB continues to monitor the implementation of pending output and to be engaged with the executing agency to ensure that the rollout is completed by December 2021, as well as to verify that assurances regarding ITMIS sustainability have been met. 70. Timing of the project performance evaluation report. It is recommended that the performance evaluation for the project be conducted any time after 2022, when the pending rollout of ITMIS has been fully completed.

16 Appendix 1

DESIGN AND MONITORING FRAMEWORK

Design Summary

Performance Indicators and Targets

Project Achievements Details and Issues

Impact Greater sustainability of public investments, particularly in the less-developed regions, achieved through more effective public resource management

Year-on-year increase in budgetary allocations for public investment (2009 baseline: 6.5% of gross domestic product (GDP)

Not achieved The budgetary allocation for public investment has been on a declining trend since 2009. For year 2018 was 4.4% of GDP. The actual expenditure on public investment increased by 89.1% from 2009 to 2018 (increase in public investment spending by Sri Lankan Rupees 294.5 billion). During 2009 to 2018, annual average growth rate of public investment was 9.4%, and compounded annual growth rate was 7.3%. (Source: Central Bank of Sri Lanka Annual Report, various years)

General note: The performance indicators and targets are for end-2018, which was when the project officially closed. However, because Integrated Treasury Management Information System (ITMIS) had still not been fully implemented at end-2018, the indicators associated with public expenditure management cannot be reasonably attributed to Output 2, as noted in the main text.

Year-on-year increase in budgetary allocation for social and economic infrastructure in the less-developed provinces (2008 baseline: 7.1% of GDP)

No data available This information is not available in the public domain and is also not readily available with Ministry of Finance (MOF). Proxy indicator: Central government transfers to provincial councils for province-specific development projects and special projects grew at an annual average of 10.9% from 2009 to 2018. But this is unlikely to capture all central government capital expenditure allocation for province specific projects. This captures allocation for projects handled by the provincial councils only, which had been on average 4.5% of public Investment by the central government in the period. (Source: Central Bank of Sri Lanka Annual Report, various years)

Appendix 1 17

Design Summary

Performance Indicators and Targets

Project Achievements Details and Issues

Year-on-year increase in budgetary allocation for social protection (2008 baseline: 1.6% of GDP)

No data available This information is not available in the public domain and is also not readily available with MOF. Proxy indicator: On average the actual expenditure for welfare payments and subsidies from year 2009 to 2018 was approximately 3.3% of GDP. The subsidies and transfers amount to Sri Lankan Rupees 472.6 billion for year 2018. This figure includes household transfers such as pension, samurdhi, fertilizer subsidy as well as transfers to non-financial public enterprises and other public institutions. The subsidies and transfers to households alone was 2.6% of GDP. (Source: Central Bank of Sri Lanka Annual Report, various years)

Year-on-year increase in budgetary allocation for welfare payments and subsidies for the poor (2008 baseline: 1.9% of GDP)

No data available Proxy indicator: On an average the actual expenditure for welfare payments and subsidies from year 2014 to 2018 is approximately 3.5% of GDP. The subsidies and transfers amounts to Sri Lankan Rupees 458 billion for year 2018. (Source: Central Bank of Sri Lanka Annual Report, various years)

Outcome Enhanced fiscal space for social and economic development resulting from improved tax administration and compliance as well as efficient public financial management system

Decrease in revenue deficit to GDP ratio (2009 baseline: 3.8%)

Achieved (attribution issues) Revenue deficit reduced significantly from year 2009 (3.7% of GDP) to 2018 (1.2% of GDP). (Source: Central Bank of Sri Lanka Annual Report, various years)

General note: The performance indicators and targets are for end-2018, which was when the project officially closed. However, because ITMIS had still not been fully implemented at end-2018, the indicators associated with public expenditure

18 Appendix 1

Design Summary

Performance Indicators and Targets

Project Achievements Details and Issues

Budget deficits are progressively reduced to remain within the 5.0% prescribed limit of the Fiscal Management Act (2009 baseline: 9.7% of GDP)

Partly achieved (attribution issues) Budget deficit consistently improved from 9.9% in 2009, to 6.2% in 2011, 5.6% in 2012 and 5.4% in 2013 (as a percentage of GDP). However, it increased to 7.6% of GDP in 2015, before reducing again to 5.3% in 2016 and 5.5% in 2017. (Source: Central Bank of Sri Lanka Annual Report, various years)

management cannot be reasonably attributed to Output 2, as noted in the main text.

Year-on-year increase in tax to GDP ratio (2009 baseline: 12.9% of GDP)

Achieved (attribution issues) For year 2018, tax revenue was at Sri Lankan Rupees 1712.3 billion and accounted for 11.9% of GDP. The average growth rate in tax revenue between 2009 to 2018 was 11.6% with highest of 29.1% in 2015. (Source: Central Bank of Sri Lanka Annual Report, various years)

The interest payments to GDP ratio halved (2009 baseline: 6.4%)

Partly achieved (attribution issues) Interest payment reduced from 6.4% in 2009 to 5.9% of GDP in 2018. In absolute terms, the interest payments increased from Sri Lankan Rupees 309.7 billion in 2009 to Sri Lankan Rupees 852.2 billion in 2018. (Source: Central Bank of Sri Lanka Annual Report, various years)

Year-on-year decrease in total outstanding public debt stock to GDP ratio (2009 baseline: 86.3%)

Not achieved (attribution issues) Total outstanding public debt (including publicly guaranteed debt) stock to GDP ratio reduced from 89.5% in year 2009 to 89.0% in year 2018. The lowest was recorded in year 2012 at 73.1%.

Appendix 1 19

Design Summary

Performance Indicators and Targets

Project Achievements Details and Issues

(Source: Central Bank of Sri Lanka Annual Report, various years)

Year-on-year improvement in fiscal markmanship in total expenditure (2008 estimated baseline: 3.0%)

Not achieved

Outputs 1. More accountable revenue management

Revenue Administration Management Information System (RAMIS) fully operational (2009 baseline: RAMIS not in place)

Achieved with delay RAMIS became fully operational in December 2017, a delay of 50 months. RAMIS was implemented in a phased manner. Operations related to all major tax types including corporate income tax, pay as you earn, nation building tax, simplified value added tax, value added tax, withholding tax, and VAT on financial services have been automated since 2016/2017. (Source: ITMIS Project Management Unit staff)

RAMIS is operating satisfactorily in the following institutions: People’s Bank, Bank of Ceylon, Sri Lanka Ministry Customs, Ministry of Finance, and Registrar of Companies.

The number of tax filers to increase by at least 15% (2009 baseline: approximately 150,000 tax filers)

Achieved The number of income tax filers increased from 729,101 in 2009 to 986,684 by end-2018. This was an increase of 35%. (Source: Inland Revenue Department Performance Report)

Electronic filing of tax returns to be introduced (2009 baseline: no e-filing facility)

Achieved E-filing was introduced in March-July 2016 for corporate income tax, pay as you earn, nation-building tax, value-added tax, simplified value-added tax, and withholding tax, a delay of 29 months. (Source: RAMIS and ITMIS Project Management Unit staff)

This component is operating satisfactorily. The Government now plans to require all corporations to e-file by December 2020.

Unique identification number system for taxpayers (2009 baseline: unique identification number system not present)

Achieved. Unique identification number system for taxpayers was operationalized in 2016.

20 Appendix 1

Design Summary

Performance Indicators and Targets

Project Achievements Details and Issues

(Source: RAMIS Project Management Unit staff)

Computerized risk-based selection of audit files to be introduced (2009 baseline: manual selection of files for audit)

Achieved. RAMIS has an audit module under which audit rules are automated, and it has several audit criteria configurable with thresholds. The computerized risk-based audit selection tool was implemented through RAMIS in 2017. The system automatically selects cases for risk audits and detailed audits according to the given audit criteria. (Source: RAMIS Project Management Unit staff)

2. More efficient expenditure management

Integrated Treasury Management Information System (ITMIS) fully operational (2009 baseline: ad hoc and separate systems in place)

Not achieved 12 out of 13 modules for ITMIS were developed in 2018. The rollout of ITMIS only started in the same year and is still ongoing. The earliest feasible date for full operation is December 2021. (Source: ITMIS Project Management Unit staff)

Out of 13 modules, the following have been rolled out:

• Budget planning (2018) for all 190 spending agencies (roll out completed)

• Budget appropriation (2019) for all 190 spending agencies (roll out completed)

• Court case management module (started in 2019, still ongoing)

• Receipt management (2020) for selected spending agencies (rollout is incomplete as of November 2020)

• Treasury management (2020) for selected spending agencies (rollout is incomplete as of November 2020)

• Revenue management (2020) for selected spending agencies (rollout is incomplete as of November 2020)

Appendix 1 21

Design Summary

Performance Indicators and Targets

Project Achievements Details and Issues

• Expenditure management (2020) for selected spending agencies (rollout is incomplete as of November 2020)

Countrywide detailed expenditure information available on a daily basis, including on a sex-disaggregated basis (2009 baseline: on a monthly basis with time lag)

Not achieved The target for data collection on a sex-disaggregated basis was deemed to be unfeasible during a review mission in October 2016. (Source: ITMIS Project Management Unit staff)

Such data cannot be collected unless each of the spending agencies has special allocations for women. Although the Ministry of Women’s Affairs has spending allocations, even its spending does not necessarily target only women.

Daily reconciliation of expenditure and bank accounts (2009 baseline: monthly reconciliation)

Not achieved Achievement requires full operation of ITMIS, which is not feasible until December 2021, at the earliest. (Source: ITMIS Project Management Unit staff)

Centralized physical asset database (2009 baseline: no centralized database)

Not achieved MOF has set up a centralized asset database but using the old Computerized Integrated Government Accounting System (CIGAS) system, rather than ITMIS. The data will need to be migrated from CIGAS to ITMIS, and this process is still pending. Afterwards, the asset management module under ITMIS cannot be operated until ITMIS is fully operational, but this is not feasible until December 2021, at the earliest. (Source: ITMIS Project Management Unit staff)

Detailed expenditure information on budget allocations that primarily benefit women (2009 baseline: currently no expenditure information database)

Not achieved Achievement requires full operation of ITMIS, which is not feasible until December 2021, at the earliest.

Such data cannot be collected unless each of the spending agencies has special allocations for women. Although the Ministry of Women’s Affairs has spending allocations,

22 Appendix 1

Design Summary

Performance Indicators and Targets

Project Achievements Details and Issues

The target for data collection on a sex-disaggregated basis was deemed to be unfeasible during a review mission in October 2016. (Source: ITMIS Project Management Unit staff, ADB staff)

even its spending does not necessarily target only women.

3. More capable public resource managers

At least 300 government officials to complete the specialized training courses by early 2014 (2009 baseline: no specialized training courses given)

Achieved, with delay 660 staff were trained in 32 international training programs, and 855 were trained in national training programs, covering: macroeconomic policies, e-governance and change management, strengthening public policymaking, public sector leadership and decision making, negotiation and conflict resolution, sustainable e-government. (Source: ITMIS Project Management Unit staff)

Revenue and treasury training programs for up to 2,000 users of RAMIS and ITMIS (2009 baseline: no program yet; RAMIS and ITMIS not yet in place)

Achieved with delay. 800 users were trained on the use of the budget planning module of ITMIS and the pilot run of the core modules. 1,500 users from the Inland Revenue Department(IRD) were trained in RAMIS. (Source: ITMIS Project Management Unit staff)

Basic computerized training programs for up to 1,500 officials at tax offices and spending units (2009 baseline: no training program in place)

Achieved. 1,200 staff of the IRD and 650 officials in the Treasury Department received basic computerized training. (Source: ITMIS Project Management Unit staff)

At least 50% of the trained technical staff members are retained for the project period (2009 baseline: no officers trained yet on RAMIS and ITMIS)

Achieved 100% of IRD training attendees were retained for RAMIS. More than 50% of MOF training attendees were retained for ITMIS.

Appendix 1 23

Design Summary

Performance Indicators and Targets

Project Achievements Details and Issues

(Source: RAMIS and ITMIS Project Management Unit staff)

Source: Asian Development Bank.

24 Appendix 2

PROJECT COST AT APPRAISAL AND ACTUAL ($'000)

Appraisal Estimate Revised Cost Actual

Item ADB Government Total Cost ADBa Governmentb

Total Cost ADB Government

Total Cost

A. Baseline Costs 1. Component A. Completion of RAMIS

a. License (RAMIS, database, and application server)

4.560 0.000 4.560 0.000 4.560 4.560 0.000 6.580 6.580

b. Customization, implementation, and training

9.400 0.000 9.400 0.000 9.400 9.400 0.000 13.563 13.563

c. Annual technical support for RAMIS, database, and application server

1.820 0.000 1.820 0.000 1.820 1.820 0.000 2.626 2.626

d. IT infrastructure 3.420 0.000 3.420 0.000 3.420 3.420 0.000 4.935 4.935 Subtotal component A 19.200 0.000 19.200 0.000 19.200 19.200 0.000 27.704 27.704

2. Component B. Completion of ITMIS

a. License (ITMIS, database, and application server)

2.760 0.000 2.760 2.760 0.000 2.760 3.086 0.000 3.086

b. Customization, implementation, and training

6.200 0.000 6.200 6.200 0.000 6.200 6.931 0.214 7.146

c. Annual technical support for ITMIS, database, and application server

1.020 0.000 1.020 1.020 0.000 1.020 1.140 0.000 1.140

d. IT infrastructure 4.320 0.000 4.320 4.320 0.000 4.320 4.830 0.000 4.830 Subtotal component B 14.300 0.000 14.300 14.300 0.000 14.300 15.987 0.214 16.201

3. Equipment 3.714 0.000 3.714 3.714 0.000 3.714 5.120 0.000 5.120 4. Consulting service 3.616 0.000 3.616 3.616 0.000 3.616 2.919 0.000 2.919 5. Workshop, external training, and conferences

2.443 0.000 2.443 2.443 0.000 2.443 3.021 0.252 3.273

6. Local Taxes and Duties 0.000 4.466 4.466 0.000 4.466 4.466 0.000 3.245 3.245 7. Recurrent Costs

i. Salaries and per diem of counterpart staff

0.000 1.499 1.499 0.000 1.499 1.499 0.000 0.261 0.261

ii. Office accommodation

0.000 2.045 2.045 0.000 2.045 2.045 0.356 0.356

iii. Equipment operation and maintenance

0.000 1.500 1.500 0.000 1.500 1.500 0.261 0.261

Subtotal (A) 43.273 9.510 52.783 24.073 28.710 52.783 27.047 32.292 59.339 B. Contingencies

1. Price 5.582 0.225 5.807 5.582 0.225 5.807 0.000 0.000 0.000

Appendix 2 25

2. Physical 0.454 0.266 0.720 0.454 0.266 0.720 0.000 0.000 0.000 Subtotal (B) 6.036 0.491 6.527 6.036 0.491 6.527 0.000 0.000 0.000

C. Financing Charges During Implementation

1. Interest during implementation 0.592 0.000 0.592 0.592 0.000 0.592 0.690 0.000 0.690 2. Commitment charges 0.099 0.000 0.099 0.099 0.000 0.099 0.000 0.000 0.000

Subtotal (C) 0.691 0.000 0.691 0.691 0.000 0.691 0.690 0.000 0.690 Total (A+B+C) 50.000 10.001 60.001 30.800 29.201 60.001 27.737 32.292 60.029

IT = information technology, ITMIS = Integrated Treasury Management Information System, RAMIS = Revenue Administration Management Information System

a Component A was cancelled by ADB due to mis procurement. Therefore $19.2million was cancelled on 11 February 2013. b There are no local cost indicated at the approval stage. Therefore, LC column is omitted. Source: Asian Development Bank estimates.

26 Appendix 3

PROJECT COST BY FINANCIER

Table A3.1: Project Cost at Appraisal by Financier ($ million)

ADB

Government Total Cost

Amount % of Cost Category Amount

% of Cost Category Amount

Taxes and Duties

Item {A} {A/D} {B} {B/D} {D} {E}

A. Investment Costs

1. Component A. Completion of RAMIS 19.20 100.00% 0.00 0.00% 19.20 2.30 2. Component B. Completion of ITMIS 14.30 100.00% 0.00 0.00% 14.30 1.72 3. Equipment 3.71 100.00% 0.00 0.00% 3.71 0.45 4. Consulting service 3.62 100.00% 0.00 0.00% 3.62 0.00

5. Workshop, external training, and conferences

2.44 100.00% 0.00 2.44 0.00

Subtotal (A) 43.27 0.00% 0.00 0.00% 43.27 4.47

B. Recurrent Costs

1 Salaries and per diem of counterpart

staff 0.00 0.00% 1.50 100.00% 1.50 0.00

2 Office accommodation 0.00 0.00% 2.05 100.00% 2.05 0.00 3 Equipment operation and

maintenance 0.00 0.00% 1.50 100.00% 1.50 0.00

Subtotal (B) 0.00 0.00% 5.04 100.00% 5.04 0.00 Total Base Cost (A+B) 43.27 0.00% 5.04 0.00% 48.31 4.47

C. Contingencies 6.04 0.00% 0.49 0.00% 6.53 0.00 D. Financial Charges During

Implementation 0.69 0.00% 0.00 0.00% 0.69 0.00

Total Project Cost (A+B+C+D) 50.00 0.00% 5.54 0.00% 55.53 4.47 % Total Project Cost

90.03%

9.97%

100%

ITMIS = Integrated Treasury Management Information System, RAMIS = Revenue Administration Management Information System Note: Numbers may not sum precisely because of rounding.

Source: Asian Development Bank estimates.

Appendix 3 27

Table A3.2: Project Cost at Completion by Financier ($ million) ADB

Government Total Cost

Amount % of Cost Category Amount

% of Cost Category Amount

Taxes and Duties

Item {A} {A/D} {B} {B/D} {D} {E}

A. Investment Costs

1. Component A. Completion of RAMIS 0.00 0.00% 27.70 0.00% 27.70 0.00 2. Component B. Completion of ITMIS 15.99 98.68% 0.21 0.00% 16.20 3.25 3. Equipment 5.120 100.00% 0.00 0.00% 5.12 0.00 4. Consulting service 2.919 100.00% 0.00 0.00% 2.92 0.00

5. Workshop, external training, and conferences

3.021 92.30% 0.25 0.00% 3.27 0.00

Subtotal (A) 27.05 0.00% 28.17 0.00% 55.22 3.25

B. Recurrent Costs

1 Salaries and per diem of counterpart

staff 0.00 0.00% 0.261 100.00% 0.26 0.00

2 Office accommodation 0.00 0.00% 0.356 100.00% 0.36 0.00 3 Equipment operation and

maintenance 0.00 0.00% 0.261 100.00% 0.26 0.00

Subtotal (B) 0.00 0.00% 0.88 100.00% 0.88 0.00 Total Base Cost (A+B) 27.05 0.00% 29.05 0.00% 56.09 3.25

C. Contingencies 0.00 0.00% 0.00 0.00% 0.00 0.00 D. Financial Charges During

Implementation 0.69 0.00% 0.00 0.00% 0.69 0.00

Total Project Cost (A+B+C+D) 27.74 0.00% 29.05 0.00% 56.79 3.25 % Total Project Cost

48.85%

51.15%

100%

ITMIS = Integrated Treasury Management Information System, RAMIS = Revenue Administration Management Information System Notes: Numbers may not sum precisely because of rounding. Source: Asian Development Bank estimates.

28 Appendix 4

DISBURSEMENT OF ADB LOAN PROCEEDS

Table 4.1: Annual and Cumulative Disbursement of ADB Loan Proceedsa ($ million)

Annual Disbursement Cumulative Disbursement

Year Amount

($ million) % of Total Amount

($ million) % of Total

2010 1.32 4.8% 1.32 4.8% 2011 0.36 1.3% 1.68 6.1% 2012 0.12 0.4% 1.80 6.5% 2013 3.31 11.9% 5.11 18.4% 2014 2.17 7.8% 7.28 26.2% 2015 0.31 1.1% 7.59 27.3% 2016 4.03 14.5% 11.62 41.8% 2017 9.17 33.0% 20.79 74.9% 2018 6.98 25.1% 27.77 100.0% Total 27.77b 100.0%

ADB = Asian Development Bank. a Includes disbursements to advance accounts. b The actual contract awards were $29.49m and disbursements were $27.77 due to foreign exchange differences and

price differences in the original bill of quantities and actual cost. Source: Asian Development Bank.

Figure 4.1: Projected and Cumulative Disbursement of ADB Loan Proceeds ($ million)

0

5

10

15

20

25

30

35

40

45

50

55

2010 2011 2012 2013 2014 2015 2016 2017 2018

Projections Actual Log. (Actual)Year

$' m

illio

n

Source: ADB databasesNotes: Partial cancellation of the original loan reduced project amount from $50 million to $30.8 million.

Appendix 5 29

CONTRACT AWARDS OF ADB LOAN PROCEEDS

Table 5.1: Annual and Cumulative Contract Awards of ADB Loan Proceeds ($ million)

Annual Contract Awards Cumulative Contract Awards

Yeara Amount

($ million) % of Total Amount

($ million) % of Total

2010 0.00 0.0% 0.00 0.0% 2011 0.31 1.1% 0.31 1.1% 2012 0.00 0.0% 0.31 1.1% 2013 19.74 66.9% 20.05 68.0% 2014 0.88 3.0% 20.93 71.0% 2015 0.64 2.2% 21.57 73.1% 2016 1.93 6.6% 23.51 79.7% 2017 3.46 11.7% 26.96 91.4% 2018 2.41 8.2% 29.37 99.6% 2019 0.12 0.4% 29.49 100% Total 29.49b 100.0%

ADB = Asian Development Bank. a Classified by contract signing dates. b The actual contract awards were $29.49m and disbursements were $27.77 due to foreign exchange differences and

price differences in the original bill of quantities and actual cost. Source: Asian Development Bank.

Figure 5.1: Projected and Cumulative Contract Awards of ADB Loan Proceeds ($ million)

0

5

10

15

20

25

30

35

40

45

50

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Projections Actual Log. (Actual)

Year

$' m

illio

n

Source: ADB databasesNotes: In 2013 there was partial cancellation and based on cancellation the original loan amount of $50million was reduced to $30.8million.

30 Appendix 6

CHRONOLOGY OF MAIN EVENTS

Date Event

15 April 2010 ADB Board approved the loan and TA 12 May 2010 TA signed 7 June 2010 Loan agreement signed 5 July 2010 Loan made effective 15 January 2011 Bidding documents prepared for procurement of ITMIS, system software, and

other ICT infrastructure 7 February 2011 ADB approved ITMIS bidding document 27 February 2011 Invitation for RAMIS. Bids published on local media 3 February 2011 RAMIS bidding documents approved by TEC 1 April 2011 Invitation for RAMIS bids published on ADB business opportunities website 21 April 2011 RAMIS pre-bid meeting held 10 May 2011 Invitation for ITMIS bids published 15 August 2011 ITMIS bids closing date 9 December 2011 Project administration transferred to SLRM 11 September 2012 ITMIS technical evaluation completed by TEC 22 October 2012 ITMIS bid financial opening 11 February 2013 RAMIS misprocurement declared effective 3 May 2013 SAPF took over project administration from SLRM 28 June 2013 ADB provided no-objection to Samsung for ITMIS contract 14 August 2013 Contract signed with selected ITMIS bidder to procure ITMIS and related IT

infrastructure; contract implementation started in September 1 October 2013 Loan closing date extended to 30 April 2016; TA closing date extended to

31 October 2014 27 May 2014 Singaporean vendor selected by government to procure RAMIS and related

infrastructure 26 April 2016 Project closing date extended from 30 April 2016 to 31 October 2017, TA7515

closing date extended from 30 April 2016 to 30 April 2017 4 October 2016 TA 75715 closing extended to 31 August 2017 24 October 2016 ITMIS contract extended to 31 August 2017 signed

ADB = Asian Development Bank, ICT = information communication technology, ITMIS = Integrated Treasury Management Information System, RAMIS = Revenue Administration Management Information System, SAPF = South Asia Public Management, Financial Sector and Trade Division, SLRM = Sri Lanka Resident Mission, TA = technical assistance, TEC = technical evaluation committee Source: Asian Development Bank.

Appendix 7 31

STATUS OF COMPLIANCE WITH LOAN COVENANTS

Status of Compliances with Covenants Reference in Loan Agreement Status of Compliance

(a) The Borrower shall cause the Project to be carried out with due diligence and efficiency and in conformity with sound applicable technical, financial, business, and development practices.

Article IV, Section 4.01 (a) Partially complied with.

(b) In the carrying out of the Project and operation of the Project facilities, the Borrower shall perform, or cause to be performed, all obligations set forth in Schedule 5 to this Loan Agreement.

Article IV, Section 4.01 (b) Partially complied with.

The Borrower shall make available, promptly as needed and on terms and conditions acceptable to Asian Development Bank (ADB), the funds, facilities, services, and other resources, as required, in addition to the proceeds of the Loan, for the carrying out of the Project and for the operation and maintenance of the Project facilities.

Article IV, Section 4.02 Complied with.

(a) In the carrying out of the Project, the Borrower shall cause competent and qualified consultants and contractors, acceptable to ADB, to be employed to an extent and upon terms and conditions satisfactory to the Borrower and ADB.

Article IV, Section 4.03 (a) Complied with.

(b) The Borrower shall cause the Project to be carried out in accordance with plans, design standards, specifications, work schedules and construction methods acceptable to ADB. The Borrower shall furnish, or cause to be furnished, to ADB, promptly after their preparation, such plans, design standards, specifications and work schedules, and any material modifications subsequently made therein, in such detail as ADB shall reasonably request.

Article IV, Section 4.03 (b) Partially complied with.

The Borrower shall ensure that the activities of its departments and agencies with respect to the carrying out of the Project and operation of the Project facilities are conducted and coordinated in accordance with sound administrative policies and procedures.

Article IV, Section 4.04 Complied with.

(a) The Borrower shall (i) maintain, or cause to be maintained, separate accounts for the Project; (ii) have such accounts and related financial statements audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB; (iii) furnish to ADB, as soon as available but in any event not later than 6 months after the end of each related fiscal year, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors' opinion on the use of the Loan proceeds and compliance with the financial covenants of this Loan Agreement as well as on the use of the procedures for imprest account and statement of expenditures), all in the English language; and (iv) furnish to ADB such other information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request.

Article IV, Section 4.05 (a) Complied with except for delays in the submission of Audited Project Financial Statements (APFS). All annual APFS from effective date to closing were received but delayed by an average of 6 months after the deadline. Specific opinion on use of funds, advance fund and statement of expenditure were issued and the Audit observations formed part of

32 Appendix 7

Status of Compliances with Covenants Reference in Loan Agreement Status of Compliance

the long form audit report.

(b) The Borrower shall enable ADB, upon ADB's request, to discuss the Borrower's financial statements for the Project and its financial affairs related to the Project from time to time with the auditors appointed by the Borrower pursuant to Section 4.05(a) hereabove, and shall authorize and require any representative of such auditors to participate in any such discussions requested by ADB, provided that any such discussion shall be conducted only in the presence of an authorized officer of the Borrower unless the Borrower shall otherwise agree.

Article IV, Section 4.05 (b) ‘Not applicable

The Borrower shall enable ADB's representatives to inspect the Project, the Goods, and any relevant records and documents.

Article IV, Section 4.06 Complied With

The Borrower shall ensure that the Project facilities are operated, maintained and repaired in accordance with sound applicable technical, financial, business, development, operational and maintenance practices.

Article IV, Section 4.07 Complied With.

Compliance with Loan Covenants (Schedule 5)

Paragraph No.

Covenant Compliance

1 Project Executing Agency Ministry of Finance (MOF) shall be the Project Executing Agency and shall be responsible for the overall execution of the Project.

Complied with. MOF is the Executing Agency.

2 Project Steering Committee A Project Steering Committee (PSC) shall be established within MOF to provide policy guidance to the project management unit (PMU) and to oversee the overall implementation of the Project. The PSC shall be chaired by the Secretary to the Treasury and shall comprise of heads of key departments within MOF, including Department of External Resources, Department of Customs, Department of Fiscal Policy, Department of Inland Revenue, Department of Management Audit, Department of National Budget, Department of Public Enterprise, Department of State Accounts, Department of Treasury Operations, and Department of Public Finance. The Chair of the PSC may increase membership of the PSC to include other departments within MOF, as deemed necessary. The PSC shall meet as and when required, but at least once every quarter. The first meeting shall be held within 3 months of the effective date.

Partially complied with. PSC meetings were not held regularly. With the change in government in early 2015, the PSC was not chaired by the Secretary to the Treasury, but by the Deputy Secretary to the Treasury who was also the Project Director. Monthly Management Review Meetings chaired by the Deputy Secretary to the Treasury were held.

3 Project Management Unit A PMU shall be established at MOF to manage and implement the Project. The PMU shall be headed by a dedicated Project Director and assisted by a Deputy Project Director and 3 to 5 support staff. The PMU shall have four cells and each cell shall have about 3 to 5 staff. The four cells are the Revenue Administration Management Information System (RAMIS) cell, the Integrated Treasury Management Information System (ITMIS) cell, the administration and accounting cell, and the IT and procurement cell. The PMU shall be responsible for (i) implementing and coordinating the

Complied with. A PMU was established at MOF to manage and implement the Project. The PMU was headed by a dedicated Project Director and assisted by 3 to 5 support staff (Procurement Specialist, IT Specialist, Project Officer, Finance Manager and Support Staff). The PMU also has an IT cell to support the implementation. The PMU is

Appendix 7 33

Paragraph No.

Covenant Compliance

Project; (ii) selecting, engaging, and managing the consultants; (iii) carrying out procurement activities, (iv) providing necessary data to the auditor and submitting the audited financial statement to ADB on time; (v) monitoring and evaluating the Project; and (vi) preparing and submitting all reports, including quarterly reports, annual reports, and project completion report to the PSC and ADB. The PMU shall receive support from the international and national consultants.

actively engaged in ITMIS implementation. The PMU also provides technical inputs for RAMIS implementation.

4 Counterpart Funds The Borrower shall provide counterpart funds for Project implementation on time. MOF shall make timely submission of annual budgetary appropriation request and ensure prompt disbursement of appropriated funds during each year of Project implementation.

Complied with.

5 Cooperation among the Relevant Departments The Borrower is fully committed to Project and shall ensure that MOF and all departments within MOF that are involved in the implementation of the Project give their full cooperation to ensure the smooth implementation of the Project.

Partially complied with. Obtaining timely support and cooperation from the user departments was a challenge. Partly the reason for the delayed implementation.

6 Project Website Within 9 months of the Effective Date, MOF shall create a project website to disclose information about various matters of the Project, including procurement and training. With regard to procurement, the website shall include information on the list of participating bidders, the name of the winning bidder, basic details on bidding procedures adopted, amount of contract awarded, and the list of goods/services procured. With regard to training, the website shall include information on, among others, the selection criteria, list of training and list of external training institutions.

Partially complied with (delay). MOF created a project website, but the site is not regularly updated by the PMU nor by the MOF. The existing website does not disclose information on training programs.

7 Anticorruption The Borrower and MOF shall comply with ADB's Anticorruption Policy (1998, as amended to date), and cooperate fully with any investigation by ADB and extend all necessary assistance, including providing access to all relevant books and records for the satisfactory completion of such investigation.

Complied with.

8 Anticorruption The Borrower shall cause MOF to (i) ensure that all contracts financed by ADB in connection with the Project include provisions specifying the right of ADB to audit and examine the records and accounts of MOF and all contractors, suppliers, consultants, and other service providers as they relate to the Project; and (ii) periodically inspect contractors’ activities, particularly fund withdrawals and settlements.

Complied with.

9 Project Performance Monitoring and Evaluation Within 9 months from the effective date, the MOF shall develop a comprehensive set of indicators for the purposes of Project Performance Monitoring and Evaluation (PPME), which shall be submitted to ADB for review and concurrence. The PPME shall include indicators in order to (i) examine the Project’s technical performance, (ii) evaluate the delivery of the planned procurement facilities, and (iii) assess the achievement of the project’s objectives. MOF shall be responsible for implementing the PPME and shall review the

Not complied with. PPME does not exist.

34 Appendix 7

Paragraph No.

Covenant Compliance

targets every 3 months to determine progress and identify constraints.

10 Human Resources MOF shall ensure that all necessary staff and facilities for the PMU shall be maintained throughout the period of Project implementation.

Complied with.

11 Human Resources MOF shall ensure that equal opportunity shall be given to men and women staff from each of the departments within MOF to avail the various training opportunities provided under the Project and the technical assistance (TA). Further, MOF shall include a list of the training participants in the quarterly report, to show the number of women staff who participated in the various training programs.

Partially complied with (delay) Quarterly progress reports submitted with delays.

12 Human Resources MOF shall ensure that the Borrower’s policy on bonding trained personnel shall be firmly applied to all RAMIS and ITMIS specialized training and external training recipients to ensure smooth implementation and continuation of the Project.

Not complied with. This is not a feasible covenant. The government circular requires staff to be regularly rotated within a couple of years. Hence, retention of those staff who attended RAMIS and ITMIS training programs is beyond the control of the Project Director and the PMU.

13 Human Resources MOF shall establish a Human Resource Development Committee (HRDC) to provide selection criteria for selecting candidates for external training courses, proposed curriculum, and propose to the Secretary to the Treasury a list of candidates to receive the external training program for his approval. Within 6 months of effective date, HRDC shall develop the general selection criteria, acceptable to ADB.

Partially complied with. HRDC was not established. Initially ADB received ad-hoc training requests to finance under the Project. Following ADB’s instructions, the PMU conducted a needs assessment within the MOF before submitting training requests to ADB for financing.

14 Operation and Maintenance MOF shall ensure the maintenance and sustainability of RAMIS and ITMIS by providing sufficient funds annually for their operation and maintenance throughout the Project implementation and after the Project implementation period.

Complied with.

Appendix 8 35

TECHNICAL ASSISTANCE COMPLETION REPORT

TA Number, Country, and Name: TA 7515-SRI: Supporting the Fiscal Management Efficiency Project

Amount Approved: $2,000,000

Revised Amount: Not applicable

Executing Agency: Ministry of Finance, Economic and Policy Development1

(MOF)

Source of Funding: $2.0 million: Japan Special Fund

Amount Undisbursed: $190,977

Amount Used: $1,809,023

TA Approval Date: 15 April 2010

TA Signing Date: 12 May 2010

TA Completion Date

Original Date: 31 October 2013

Latest Revised Date: 30 April 2017

Financial Closing Date: 21 July 2017

Number of Extensions: 3

TA Type: Capacity development TA

TA Arrangement: Not applicable

Description

The technical assistance (TA) was to support the project management unit (PMU) in the implementation of Loan 2624-SRI: Fiscal Management Efficiency Project. Specifically, the TA was to support the PMU in (i) reengineering business processes to align with the applications for the Revenue Administration Management Information System (RAMIS) and the Integrated Treasury Management Information System (ITMIS), (ii) preparing the request for proposals for selecting the application and vendor for RAMIS and ITMIS, and (iii) adhering to the project timelines through technical backstopping and support in the procurement process and project implementation. The TA was expected to mitigate the risks associated with insufficient capacity in relevant agencies. The project conformed with ADB’s Country Partnership Strategy (CPS) for 2009–2011, focusing on two pillars: (i) strengthening the investment climate, and (ii) achieving socially inclusive development. The project was aligned with Sri Lanka’s development framework Mahinda Chintana.

Expected Impact, Outcome, and Outputs

The expected impact of the project was an effective and efficient management of the loan. The outcome, originally stated as the project’s impact, was a capable PMU that would be able to effectively: (i) select the applications and vendors for RAMIS and ITMIS, and (ii) reengineer the applications to suit RAMIS and ITMIS. With the help of the TA, the PMU would be able to fulfill its mandate better as evident in the timely completion of all project-related actions, such as procurement, disbursement, and reporting. Accordingly, the TA envisaged that there would be: (i) minimum delays in communication between the Project Steering Committee and the PMU; (ii) minimum variance between the proposed and actual schedules for consultant selection and placement; and (iii) minimum delays in reporting. The TA’s outputs “(which were originally listed as the TA’s activities) were the following: (i) as-is study and functionality analysis for introducing internationally acceptable RAMIS and ITMIS; (ii) architecture definition and design for RAMIS and ITMIS, and improvement of information and communication technology (ICT) environment from legal, regulatory, and institutional perspectives; (iii) selection of vendors for RAMIS and ITMIS; (iv) quality control for adequate and timely service deliverables to be met by contractors; and (v) testing, rollout and post-implementation review of the capacity development of institutions and implementation officials. As there is no separate design and monitoring framework for the TA, the impact, outcome and outputs were derived from the RRP.

Implementation Arrangements

The MOF was the executing agency for the TA. The TA was implemented almost 7 years concurrently with the loan. The TA was approved on 15 April 2010 and was originally expected to be completed by 31 October 2013. The TA was later extended to 31 October 2014, 30 April 2016 and finally to 30 April 2017.2 The total extension is 42 months. The

1 At the time of project approval, the executing agency was named “Ministry of Finance and Planning”. 2 The TA was extended three times (a cumulative extension of 3 years and 6 months) to enable the continuation of

consultancy services of PricewaterhouseCoopers (PwC) and national IT consultant to ensure smooth functioning of the PMU for ITMIS development.

36 Appendix 8

government provided in-kind support in the form of counterpart staff, office accommodation, and logistical support, such as workshop arrangements for $0.4 million. The contract with PricewaterhouseCoopers (PwC) Private Limited to support the PMU plan and implement the two systems, i.e., RAMIS and ITMIS was signed on 13 September 2010. PwC’s original contract period was from 13 September 2010 to 20 September 2013 and was extended to 30 April 2017 under the TA, and thereafter loan funds under the consultancy category were used to provide project management support to MOF until 31 October 2017. PwC’s support in the implementation of RAMIS was discontinued when the RAMIS component was removed from the project scope. ADB engaged the firm under the quality-based selection method. The selection method was chosen at appraisal since (i) the assignment was complex and highly specialized; (ii) the outputs of RAMIS constituted a basic pillar of the government's revenue administration architecture to generate revenue, and was to be upgraded in the following generations of reforms; (iii) the need for greater expertise in areas which were still being piloted posed risks to the effective achievement of RAMIS and ITMIS tasks; and (iv) there was a risk of project failure if the best consultant

was not selected. There were nine international and two national consultants engaged at the start. There were frequent

changes to the team composition due to staff unavailability and the need to mobilize more staff for project backstopping tasks in view of the extension in the implementation period. At closing, one international firm and three national consultants were fielded. The national individual consultants were recruited for procurement and IT specialized areas. The national IT consultant was engaged from 28 February 2011 to 31 October 2012 to provide support to the PMU for automation of Inland Revenue Department (IRD) and its related Projects (data center and data recovery center), RAMIS and ITMIS. Another national IT consultant was recruited from 31 October 2013 until 31 October 2018 (loan funds were used beyond the TA closing date) to (i) provide quality control ensuring adequate and timely deliverables by the system implementation partner); (ii) support testing rollout and post implementation review of the capacity development of institutions and implementation officials. The national procurement consultant was engaged from 16 August 2010 to 31 May 2012 for RAMIS and ITMIS related procurement. The TA was intended to provide a total of 44 person-months of international consulting services and 140 person-months of national consulting services. During the implementation, PwC provided a total of 141 person-months of international consulting services and 75 person-months of national consulting services. The reason for the considerable variance between original and actual consultancy inputs were due to the delayed project implementation which necessitated the consultants’ continuous involvement to support the PMU. In addition, 80 person-months of national consultants were mobilized as individual consultants.

Conduct of Activities

The scope of work for PwC was categorized into two phases i.e. pre-implementation and implementation phases. Pre- implementation focused on scoping, conceptualization, requirements definition, bid document preparation and vendor selection support for RAMIS and ITMIS. Implementation focused on providing project management support to the project’s PMU during system design, development, and implementation of RAMIS and ITMIS. PwC mobilized the team leader in September 2010 and submitted the inception report and pursuant reports on time. The following activities were conducted under the TA. Output 1. Study and functionality analysis for introducing internally acceptable RAMIS and ITMIS prepared. The consultancy firm (i) identified detailed activities and milestones, (ii) enforced project timeliness through tracking of milestones and targets in consultation with MOF for ITMIS and IRD for RAMIS, (iii) prepared the bill of material and specification for the additional IT Infrastructure and (iv) prepared the Functional Requirement Document and deployment plan. Output 2. Architecture definition and design for the RAMIS and ITMIS developed and ICT environment from regulatory and institutional perspectives improved. Consultants reviewed the as-is functionality related documents; obtaining an understanding of the processes and ensuring capture of all the functions in the as-is document in discussion with system users from the government. Output 3. Selection of vendors for the RAMIS and ITMIS supported. The consulting firm and individual consultants supported MOF in (i) preparing the request for proposal for procuring ITMIS, RAMIS, and related IT infrastructure (ii) evaluating Commercial off-the-shelf products for ITMIS and RAMIS and (iii) evaluating proposals for both contracts. Output 4. Quality control ensuring adequate and timely deliverables by vendors implemented. The firm and individual consultants (i) reviewed and validated the strategy for data migration to quality and production server, (ii) ensured completeness of the configuration/system design document to be prepared by the implementation partner; (iii) reviewed the User Acceptance Test plans and scenario/test scripts to test configuration through an integrative

Appendix 8 37

approach; (iv) supported the conduct of steering committee meetings organized by the PMU to assess project risks and containment action, and (v) performed sample quality audit of document deliverables as part of the review. Output 5. Rollout, post-implementation review, and capacity development under change management. PwC and individual consultants conducted (i) functional testing of Phase I comprising of Budget Planning and System Administration (partial) modules, (ii) functional testing of Phase II comprising of Budget Appropriation, Purchasing, Revenue, Expenditure, Treasury, General Ledger and System Administration (partial) modules, to the extent delivered for testing (Retesting of fixed defects, as and when they are provided), (iii) functional testing of Phase III comprising of Court cases, Cadre, Internal Audit, Asset modules, to the extent delivered for testing and (iv) functional testing of Phase IV comprising of Cash Planning, eServices, interfaces, and remaining functionality from other phases. Further, retesting of fixed defects, as and when they are provided were conducted for all four phases.

Technical Assistance Assessment Ratings

Criterion Assessment Rating

Relevance The project was envisaged to enhance fiscal space and enable targeted investment in productive sectors. The project is consistent with the country partnership strategy for Sri Lanka, 2009–2011 which aims to strengthen the investment climate and achieve socially inclusive development. The TA was also aligned with Sri Lanka’s development framework Mahinda Chintana. The project’s overall rationale that the project would help ease fiscal constraints remained valid all throughout. The loan and TA correctly noted that capacity constraints and procedural barriers in the MOF could lead to delays in procurement, establishment and customization of the IT infrastructure, and capacity building of relevant staff. Accordingly, the TA was provided to mitigate these obstacles. However, a more realistic timeline could have been adopted in view of the challenging nature of implementing public financial management reforms.

Relevant

Effectiveness The TA achieved all five outputs despite delays. The TA’s primary objective of establishing a PMU that would be able to execute the project, was achieved. The delays experienced in the project, were beyond the control of the PMU, as sign off at various stages in implementation were the responsibility of several user units. The consultancy inputs provided under the TA helped MOF to achieve the project outputs.

Effective

Efficiency The TA was extended to retain the TA facility consultancy inputs available for ITMIS development. Delays were mainly due to issues in contractor performance and delays in sign off by the executing agency. The TA was reasonably budgeted. The utilization rate was about 90% with an unutilized TA amount of $190,977. The TA supported the PMU in developing the ITMIS and provided adequate support in the planning and monitoring of activities. The TA was extended beyond 3 years and 6 months to retain the TA facility consultancy inputs available for PMU to help develop ITMIS.

Less than Efficient

Overall Assessment

The TA achieved the objectives of providing technical support to the government in evaluating the software applications, undertaking negotiations with vendors of the software, preparing and vetting the system requirement specifications for the application, and monitoring the implementation to ensure that service delivery agreements are being met and supporting the project management unit to establish ITMIS systems. Thus, it is assessed as relevant, effective and less than efficient, hence, successful.

Successful

Sustainability Although severely delayed, the overall project ultimately succeeded in establishing the main IT infrastructure and capacity. Given its high financial internal rate of return and recent assurances from stakeholders regarding continuing support, the project and the outputs

of the supporting TA are likely sustainable.

Likely sustainable

38 Appendix 8

Lessons Learned and Recommendations

Design and/or planning PFM projects require a more realistic timeframe that anticipates potential technical complexities and bottlenecks on the side of the executing agencies. The PFM project was designed to be completed in 4 years but after 10 years, it is still incomplete. The timeline of 4 years at appraisal seems over-optimistic.

Stakeholder participation The continuity of key officials in the executing agency is a serious issue that creates potentially severe delays in implementation. ADB project officers will need to continuously monitor stakeholders’ participation, especially key officials in the executing agency to ensure continuing commitment and ownership.

Replication and/or scaling up TA projects in PFM may only work under certain circumstances or contexts. PFM projects are more challenging with less tangible and immediate gains, and more stakeholders to manage affecting ownership, continuity, and commitment. On the other hand, project loans and attached TAs in tax administration modernization can be feasibly replicated in other developing member countries or scaled up. Tax administration modernization typically has one key stakeholder and one key objective of increasing tax revenues, which is a tangible gain.

Follow-up Actions

No follow-up actions are recommended.

Prepared by: Savindi Jayakody

Designation and Division: Associate Economic Officer Sri Lanka Resident Mission South Asia Department

Appendix 8 39

A. Technical Assistance Cost

Table A8.1: Technical Assistance Cost by Activity ($’000)

Amounta

Item Originalb Revisedc Actualc

1. Consultants 1,480.0 1,998.2 1,808.9

2. Equipment 100.0 0.0 0.0

3. Workshops, training, and conferences 60.0 0.0 0.0

4. Miscellaneous administrative and support costs (reports and communications, recruiting supporting consultants, etc.)

60.0 0.5 0.1

5. Contingency 300.0 1.3 0.0

Total 2,000.0 2,000.0 1,809.0 a Includes ADB-financed funds (Japan Special Fund). b Original estimated cost in the TA report. c The government provided in-kind support in the form of counterpart staff, office accommodation, and logistical

support, such as workshop arrangements and is not reflected in this table. Source: Asian Development Bank estimates.

40 Appendix 9

PROJECT FINANCIAL ANALYSIS A. Introduction

1. This Appendix updates and revises Supplementary Appendix F of the original RRP.1 2. The original analysis did not undertake a calculation of the projected economic internal rate of return (EIRR), which therefore cannot be replicated in this Appendix. This Appendix therefore also follows the model of the similar ADB investment project to modernize tax administration in the Kyrgyz Republic. The project is unlikely to have indirect social costs, but is likely to have indirect (but hard to quantify) social benefits, such as higher economic growth, reduced corruption, and social benefits due to increased pro-poor spending. 2 Hence, the calculated financial internal rate of return (FIRR) (which remains high after reevaluation, as can be seen below) would be the lower bound for the EIRR. B. Overview of Original Estimation of FIRR

3. Table A9.1 summarizes the original financial cost-benefit analysis. The Project was envisaged to have a financial internal rate of return of 162% and a net present value of $1.20 billion, based on the opportunity cost of 16.63%. 4. The Project’s benefits were expected to come from three sources:

(i) Increased efficiency of tax administration enabled by Revenue Administration Management Information System (RAMIS) would lead to increases in tax revenues during 2013-2018.

(ii) It was originally projected that public investment would increase by 15% annually

during 2013-2018. With Integrated Treasury Management Information System (ITMIS) implemented, increased efficiency of expenditure administration would lead to cost savings on public investment. Meanwhile, improved allocative and technical efficiency of spending, as well as increased human capital and productivity (which were not directly quantified) would also lead to cost savings in public investment.

(iii) Indirectly, improved tax administration and public financial management (PFM)

through RAMIS and ITMIS would improve the business environment and reduce the cost of doing business in Sri Lanka, leading to cost savings for private investment. The following indirect benefits were considered for this analysis: (a) demonstration effect of improved productivity of the Inland Revenue Department and central treasuries on other government departments—this was not separately quantified but the benefits were subsumed partly in the lower cost of doing business (as compliance cost requirement of other departments will also be lower)

1 ADB 2010. Report and Recommendation of the President to the Board of Directors on a Proposed Loan and

Technical Assistance Grant to the Democratic Socialist Republic of Sri Lanka for the Fiscal Management Efficiency Project. Manila.

2 As the Independent Evaluation Department (IED) Evaluation Guidelines recognize, “applying the traditional EIRR approach may not always be feasible, for instance for some social sector projects, or for other projects where benefits are not easy to quantify comprehensively.” ADB. 2016. Guidelines for the Evaluation of Public Sector Operations. Manila.

Appendix 9 41

and partly in savings in public investment (as there will be efficiency gains in the other departments too); and (b) reduced cost of doing business in Sri Lanka.

Table A9.1: Original Financial Cost-Benefit Analysis

Investment Costs ($ Million)

2010 2011 2012 2013 2014 2015 2016 2017 2018

TOTAL COST 12.25 16.70 14.37 6.69 3.02 2.94 2.87 2.82 2.77

Investment for RAMIS/1 6.51 7.91 7.07 3.54

Investment for ITMIS/2 3.74 4.79 4.30 2.15

Capacity building 2.00 4.00 3.00 1.00

Post-Implementation support including product ATS, maintenance support from implementation agency and Hardware support for RAMIS and ITMIS/3 2.50 2.50 2.50 2.50 2.50

Depreciation/4 0.51 0.44 0.37 0.32 0.27

Depreciated/Residual Value of Hardware 3.43 2.91 2.48 2.11 1.79 1.52

Returns ($ Million)

2010 2011 2012 2013 2014 2015 2016 2017 2018

TOTAL RETURN 0.00 0.00 0.00 121.40 315.30 560.42 638.15 726.66 823.01

Increase in Revenue due to implementation of RAMIS/5 77.71 265.29 503.16 572.60 651.62 741.54

Saving in Public Capital Expenditure through rationalization, reorientation of expenditure, efficient fund and cash management/6 24.50 28.17 32.40 37.26 42.85 49.28

Reduction in Cost of Doing Business with ITMIS implementation (Indirect Benefit)/7 19.19 21.84 24.86 28.29 32.19 32.19

NET RETURN ($ Million) -

12.25 -16.70 -14.37 114.71 312.29 557.48 635.27 723.84 820.24

FIRR of Project Scenario 161.9

8%

Worst Case Scenario

NET RETURN ($ Million) 0.00 -18.39 -25.05 -11.95 67.65 184.77 325.84 371.88 422.06

FIRR under Worst Case Scenario

103.17%

Yield Rate on Treasury Bills (1 year maturity)

16.63%

ATS = after service, FIRR = Financial Internal Rate of Return, GDP = gross domestic product, IT = information technology, ITMIS = Integrated Treasury Management Information System, PCE = public capital expenditure, PPTA = project preparatory technical assistance, RAMIS = Revenue Administration Management Information System. 1/ Includes cost of RAMIS License, Database License, Application Server License, Customization, Implementation

and Training Charges, annual technical support and IT Infrastructure cost. The year wise investment assumptions take the total cost of project including contingencies, interest cost and commitment charges. The break up is based on the PPTA consultant's estimates of likely year wise expenditure. Thus, these year wise numbers have a slight variation over the year wise investment numbers considered for calculation of Interest During Construction charges that has been done on a pro-rata basis. However, this minor variation does not have any impact on the financial analysis outputs.

2/ Includes cost of ITMIS License, Database License, Application Server License, Customization, Implementation and Training Charges, annual technical support and IT Infrastructure cost. See also assumption as listed in 1/.

3/ Assumed Infrastructure maintenance cost of 10% of hardware cost, Annual Maintenance support cost of $0.53mn and ATS @ 22.4% of the license fee as per standard industry practice.

42 Appendix 9

4/ Depreciation rate of 15% pa assumed 5/ Assuming 0.1% point, 0.2% point, and 0.2% point increase in Tax/GDP ratio in Year 4, Year 5 and Year 6 due to

RAMIS Implementation and 12.9% as baseline Tax/GDP ratio

6/ Assuming 0.5% point reduction in PCE due to cost rationalization through ITMIS and 15% pa growth in PCE 7/ Assuming 0.1% point (of per capita income) decline in cost of starting business in Sri Lanka and 24.70% as the

investment/GDP ratio. Thus reduction in cost of doing business will be (24.7*0.1)% of GDP 8/ Worst Case Scenario Assumptions: (i) Assuming 0.05% point, 0.1% point, and 0.1% point increase in Tax/GDP

ratio in Year 4, Year 5 and Year 6 due to RAMIS Implementation and 12.9% as baseline Tax/GDP ratio; (ii) Assuming 0.25% point reduction in PCE due to cost rationalization through ITMIS and 15% pa growth in PCE; (iii) Assuming Cost escalation of 50% more than project scenario; and (iv) assumes 1 year delay in project implementation.

Source: Asian Development Bank

5. Following are the salient features from the original (appraisal) projections:

(i) The projected direct benefits from RAMIS depend on assumptions regarding (i) gross domestic product (GDP) growth, which increases the tax base; and (ii) the efficiency gains of RAMIS. The projected efficiency gains are plausible, but actual GDP growth has been much lower than the project forecast.

(ii) The projected direct benefits from ITMIS depend on these assumptions: (i) public

investment would increase by 15% every year during 2013-2018; and (ii) ITMIS would enable cost savings amounting to 0.50% of total public investment. As with GDP, actual public investment has been much lower than the project forecast. Moreover, the projected cost savings seem implausibly high. In the re-estimation of FIRR in this Appendix, therefore, the projected gains from ITMIS are scaled down by half, to 0.25%.

(iii) The projected indirect benefits from RAMIS and ITMIS depend on these

assumptions: (i) private investment would amount to 24.7% of GDP; and (ii) cost savings would amount to 0.1% of private investment, or 0.0247% of GDP. Assumption (ii) is plausible and conservative. However, as with GDP and public investment, private investment has been much lower than the project forecast.

(iv) If the projected benefits from (ii) and (iii) (which seem implausibly high) were

reduced to zero and the other numerical projections taken as given, the project’s FIRR would still be a very high 147%. This indicates that the project could have focused solely on modernizing tax administration and would still have had a very high return.

Reevaluation of FIRR

6. In evaluating the project’s FIRR now that RAMIS has been completed and ITMIS seems likely to be completed not until December 2021, the following preliminary steps were made:

(i) The base year was kept at 2010 for comparability with the original analysis, but the project benefits period was extended through 2024. The opportunity cost was kept at 16.63%, for comparability with the original analysis. Although the global tendency for low interest rates would argue against keeping the original 16.63%, it was retained to maintain a conservative assessment of project returns.

(ii) Direct benefits from RAMIS were projected to start from 2018 and projected

through 2025. Actual and projected GDP figures were obtained from International

Appendix 9 43

Monetary Fund (IMF) staff reports. The original projections for tax increases as proportions of GDP were considered reasonable and were maintained and applied to 2018-2022.

(iii) Direct benefits from ITMIS were projected to start from 2022 and projected through

2025, given that ITMIS is likely to be operational from January 2022. Projected public investment figures were obtained from IMF staff reports. The original assumption of cost savings of 0.5% of total public investment was scaled down to a more realistic 0.25%.

(iv) Indirect benefits in the form of reduced costs of doing business were projected to

start from 2022 and projected through 2025. Projected private investment figures were obtained from IMF staff reports. The original assumption of cost savings amounting to 0.1% of total private investment was retained.

(v) Actual figures for spending on the activities under Outputs 1-3 are used, given the

ADB disbursement schedules and audited financial reports. Updated figures for spending on operations and maintenance for RAMIS and ITMIS are used.

7. Using the above assumptions and methodology, the Project’s revised FIRR is 85.3% (Table A9.2). The FIRR is still very comfortably above any reasonable opportunity cost: the original of 16.63%, the weighted average cost of capital of about 7%, or the ADB cutoff rate of 12%. Even if the benefits, both direct and indirect, of ITMIS were to be taken out, the FIRR would still be 85.06%, indicating that ITMIS was contributing little to the project, and could have been taken out with close to zero loss.

44 Appendix 9

Table A9.2: Updated Cost Benefit Analysis ($ Million)

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

TOTAL COST 1.32 0.36 0.12 3.31 8.26 11.42 11.46 15.77 9.78 2.70 5.65 5.00 5.00 5.00 5.00 6.00

RAMIS 1/ 6.10 11.11 7.43 6.32 1.70 1.56 0.64 1.25 1.25 1.25 1.25 2.25

ITMIS 2/ 1.32 0.36 0.12 3.31 2.17 0.31 4.03 9.45 8.08 1.14 2.51 1.25 1.25 1.25 1.25 1.25

Post-implementation 3/

2.50 2.50 2.50 2.50 2.50 2.50

TOTAL RETURN

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 88.95 260.03 457.46 490.79 565.44 609.27 657.38 706.68

RAMIS 4/ 88.95 260.03 457.46 490.79 528.40 568.51 613.05 659.03

ITMIS 5/ 11.89 13.36 14.41 15.49

Indirect 6/ 25.15 27.40 29.92 32.16

NET RETURN -1.32 -0.36 -0.12 -3.31 -8.26 -11.42 -11.46 -15.77 79.17 257.33 451.81 485.79 560.45 604.27 652.38 700.68

FIRR 85.31%

Assuming ITMIS is never implemented: 7/

FIRR 84.98%

Original projection at project preparation 8/

FIRR 162%

Memorandum items:

Nominal GDP 9/

67,402 79,926 79,433 80,560 88,000 88,946 86,677 91,493 98,157 105,680 113,701 122,610 131,806

Tax/GDP 9/ 12.4 12.2 12.4 11.9 11.4 12.4 13.3 13.9 14.1 14.1 14.1

Public investment/GDP 9/

4.8 4.8 4.2 3.9 4.4 4.4 4.5 4.7 4.7 4.7

Appendix 9 45

Private investment/GDP 9/

22.2 22.7 23.1 23.1 23.1 23.6 23.8 24.1 24.4 24.4

FIRR = financial internal rate of return, GDP= gross domestic product, ITMIS = Integrated Treasury Management Information System, RAMIS = Revenue Administration Management Information System 1/ Includes cost of RAMIS License, Database License, Application Server License, Customization, Implementation and Training Charges, annual technical support and IT Infrastructure cost. 2/ Includes cost of ITMIS License, Database License, Application Server License, Customization, Implementation and Training Charges, annual technical support and IT Infrastructure cost. See also 1/.

3/ Infrastructure maintenance cost of 10% of hardware cost, Annual Maintenance support cost of $0.53mn and ATS @ 22.4% of the license fee as per standard industry practice. 4/Direct benefits from RAMIS were projected to start from 2018 and projected through 2025. Actual and projected GDP figures were obtained from IMF staff reports. The original projections for tax increases as proportions of GDP were maintained and applied to 2018-2022. 5/ Indirect benefits from ITMIS were projected to start from 2022 and projected through 2025, given that ITMIS is likely to be operational from January 2022. Projected public investment figures were obtained from IMF staff reports. The original assumption of cost savings of 0.5% of total public investment was scaled down to a more realistic 0.25%. 6/ Indirect benefits in the form of reduced costs of doing business were projected to start from 2022 and projected through 2025. Projected private investment figures were obtained from IMF staff reports. The original assumption of cost savings amounting to 0.1% of total private investment was retained. 7/ This calculation assumes zero in the rows for ITMIS and Indirect Benefits. 8/ ADB 2010. Report and Recommendation of the President to the Board of Directors on a Proposed Loan and Technical Assistance Grant to the Democratic Socialist Republic of Sri Lanka for the Fiscal Management Efficiency Project. Manila.

9/ IMF staff reports

Source: Asian Development Bank estimates.

46 Appendix 10

KEY REASONS FOR DELAYED IMPLEMENTATION OF INTEGRATED TREASURY MANAGEMENT INFORMATION SYSTEM

Milestone Key reasons for delay

Go Live of Ministry of Finance (MOF) Portal

• Inadequate preparedness and understanding of the portal requirements

by System Implementation Partner (SIP)

• Gaps in the quality of the documentation (Design Document) submitted

by SIP

• Delays in finalizing the design with frequent design changes by MOF

• Delay in providing content to the SIP by the respective departments of

MOF

• Delay in confirmation of Portal layout by MOF

• High number of defects found during testing phase of the portal which

resulted in delays in completing of testing and defect fixing

• Delay in upgrading internet bandwidth for public go-live of portal

• Delay in providing the translated content by MOF thereby delaying the

incorporation of this content in the portal for verification and go-live

Finalization of Software Requirement Specification

• Inadequate deployment of domain experts having adequate experience

of FreeBalance product by SIP

• Not having a dedicated fulltime core group of Treasury officials to execute Integrated Treasury Management Information System (ITMIS) planning and implementation activities was a major problem encountered throughout the Project period. This resulted in severe delays particularly during requirements finalization and system testing phases.

• Gaps in understanding the MOF’s expectations and requirements by

SIP

• Inadequate preparation and delays of SIP in conducting the product

demos

• Unavailability of key users of MOF and line ministries due to work

commitments

• Gaps in documentation with inadequate details resulting in multiple

revisions of the document

Supply, installation, configuration and operationalisation of IT and support infrastructure for MOF Local Area Network (LAN)

• MOF LAN installation was severely delayed due to refurbishment work

carried out in MOF building during the project implementation period.

The constant layout changes of MOF department premises delayed the

start of infrastructure work at MOF. This led to MOF considering

alternative wireless LAN instead of the wired LAN proposed in the

original work scope and eventually horizontal LAN component was

entirely removed from project scope.

• Delay in provisioning a suitable location in MOF premises to establish

the power room was another major concern.

• Dependency on Inland Revenue Department managed data centers in

establishing ITMIS infrastructure.

Submission of system design/customisations documents and testing approach and plan documents

• Gaps in understanding MOF’s expectation by SIP

• Gaps in documentation with no adequate details resulting in multiple

revisions of the document submitted by SIP

Development/customization of application software and submission of solution for third party acceptance testing and user acceptance testing (UAT)

• Delay by SIP in delivering the system for testing as per system

requirement specification (SRS) signed-off by MOF. The system initially

delivered for testing was found to be of very poor quality with many

defects and gaps compared to SRS.

Appendix 10 47

Milestone Key reasons for delay

• Extensive customizations requested by MOF in-line with current

business processes. Off-the shelf products such as FreeBalance

software are generally used with only limited level of customization.

• A high rate of defects was found both by MOF testers and third-party

testers during UAT and had to be conducted by MOF and 3rd party

testers in ensuring software quality assurance. This was one of the

biggest delays encountered during the Project.

• Unavailability of Treasury officials to conduct ITMIS SRS and testing

related work due to their regular work commitments also caused delays.

• The building of the new Unified Chart of Accounts by the Task Force of

Treasury officials took longer than expected.

• ITMIS system also connects to several other Government agencies and

state banks through interfaces. Delays were occurred both from SIP and

from these interfacing agencies in developing respective interfaces. Source: Government of Sri Lanka

48 Appendix 11

CAPACITY BUILDING TRAINING PROGRAMS

Capacity Development Training Training Institute

Number of Staff

Trained

Foreign Training

Executive Training for the Staff of Ministry of Finance and Planning in Public Finance and Strategic Management Participants: Ministry of Finance Course 1: 11 – 15 July 2011 Course 2: 01 – 05 August 2011

Lee Kuan Yew School of Public Policy, National University of Singapore

40

Executive Training for the Staff of Ministry of Finance and Planning in Public Finance and Strategic Management Participants: Ministry of Finance, Department of Census and Statistics, Import and Export Control Board, Inland Revenue Department Course 1: Strategic Management: 18 – 22 March 2013 Course 2: Investment and Procurement: 6 - 10 May 2013 Course 3: Economics and Public Policy: 1 - 5 July 2013 Course 4: Public Finance: 27 July – 2 August 2013

Lee Kuan Yew School of Public Policy, National University of Singapore

88

Training Program on e-Governance and Change Management for the Senior Staff of the Inland Revenue Department and the Ministry of Finance and Planning Participants: Ministry of Finance, Inland Revenue Department Course 1: 25 February - 01 March 2013 Course 2: 22 - 26 April 2013 Course 3: 15 – 19 July 2013 Course 4: 19 – 23 August 2013 Course 5: 09 - 13 September 2013 Course 6: 4 October – 8 October 2013 Course 7: 25 October – 29 October 2013 Course 8: 29 November – 03 December 2013

e-Government Leadership Centre, National University of Singapore

179

Executive Program on Cultivating Effective Performance Management Systems - Best Practices Participants: Public Services Commission, Ministry of Finance, Ministry of Health 23 – 25 September 2013

Lee Kuan Yew School of Public Policy, National University of Singapore

5

Standard Courses – Course 01 – Driving Government Performance: Leadership strategies that produce results 20-25 September 2015

Harvard Kennedy School

5

Standard Courses – Course 02 – Public Financial Management in a Changing World 10-15 January 2016

Harvard Kennedy School

4

Standard Courses – Course 03 – Leadership Decision Making 21-26 February 2016

Harvard Kennedy School

5

Standard Courses – Course 04 – Innovation for Economic Development 25-30 April 2016

Harvard Kennedy School

3

International Malaysian Training Centre (IMTC) 29 August – 07 September 2015 12 – 22 September, 2015

IMTC 60

Debt Management Facility Stakeholders Forum 2015 03 – 04 June 2015

Asian Development Bank, Headquarters, Manila, Philippines

2

Executive Training Program on Macroeconomic Polices 12th – 15th July 2016 01st – 05th August 2016

The University of Hong Kong

70

Appendix 11 49

Capacity Development Training Training Institute

Number of Staff

Trained

Executive Training Program on Public Sector Leadership and Decision Making 23 - 27 January 2017

Lee Kuan Yew School of Public Policy, National University of Singapore

30

Executive Training Program on Strategic Human Resource Management 13 – 17 February 2017

Lee Kuan Yew School of Public Policy, National University of Singapore

29

Executive Training Program on Negotiation and Conflict Resolution 20 – 24 February 2017

Lee Kuan Yew School of Public Policy, National University of Singapore

31

Training Program on Strengthening Public Policy Making Process 20 – 24 March 2017

Crawford School of Public Policy, Australian National University

25

Training Program on E-Governance and IT System Management for Staff of the Inland Revenue Department and Ministry of Finance 17 – 21 July 2017

eGovernment Leadership Centre, National University of Singapore

25

Training Program on Sustainable E-Government Solutions for Staff of Ministry of Finance and Inland Revenue Department

Singapore Cooperation Enterprise

35

Oracle Database 12 C Administration Training for Staff of Sri Lanka Customs (Phase I) Q1, 2018

Oracle University , Malaysia

14

Oracle Database 12 C Administration Training for Staff of Sri Lanka Customs (Phase II) Q3, 2018

Oracle University , Malaysia

10

Local Training

Business English Language Training for Staff of Ministry of Finance and Planning for better understanding of tax and treasury business terminology Participants: Ministry of Finance 1st Cohort: July – September 2011 2nd Cohort: October – December 2011

British Council, Colombo

320

Advanced Management Development Program for the Staff of Ministry of Finance and Planning and Auditor General’s Department conducted by the Lee Kuan Yew School of Public Policy, National University of Singapore at Miloda- Academy of Financial Studies

Lee Kuan Yew School of Public Policy, National University of Singapore

35

Executive Training in Excellence in Public Policy and Management Participants: 200 Staff of Ministry of Finance and related agencies, Inland Revenue Department, Department of Customs, Department of Census and Statistics, Import and Export Control Board, Valuation Department Session 1:25-26 February 2015 Session 2: 19, 20, 26, 27 March 2015 Venue: Miloda - Academy of Financial Studies

Lee Kuan Yew School of Public Policy, National University of Singapore

200

Training Program on E-Governance and Change Management for the staff of the Ministry of Finance Session 1: 30 November – 4 December 2015 Session 2: 25 – 30 April 2016 Venue: Miloda - Academy of Financial Studies

E-Government Leadership Centre, National University of Singapore

200

50 Appendix 11

Capacity Development Training Training Institute

Number of Staff

Trained

Training Programme on Behavioral Economics, Ethics and Public Policy for Staff of the Ministry of Finance and related agencies (5 days per participant)

Lee Kuan Yew School of Public Policy

100

Source: ITMIS Project Management Unit

Appendix 12 51

CONTRIBUTION OF PROJECT TO ADB STRATEGY 2030 OPERATIONAL PRIORITIES

OP Number OP Indicator Achievement

OP 6.1.

Entities with improved management functions and financial stability (number)

As of November 2020, five government agencies are using RAMIS (Bank of Ceylon, Ministry of Finance, People’s Bank, Registrar of Companies, and Sri Lanka Customs)

OP 6.1.1 Government officials with increased capacity to design, implement, monitor and evaluate relevant measures (number)

660 staff were trained in 32 international training programs, and 855 were trained in national training programs, covering: macroeconomic policies, e-governance and change management, strengthening public policymaking, public sector leadership and decision making, negotiation and conflict resolution, sustainable e-government. 800 users were trained in the use of the budget planning module of ITMIS and the pilot run of the core modules. 1,500 users from the IRD were trained in RAMIS. 1,200 staff of the IRD and 650 officials in the Treasury Department received basic computerized training.

OP 6.2.

Entities with improved service delivery (number)

Five government agencies are using RAMIS (see list in OP 6.1)

OP 6.2.1.

Service delivery standards adopted and/or supported in implementation by government and/or private entities (number)

As of November 2020, two ITMIS modules (budget planning and budget appropriation) were fully rolled out to all 190 spending agencies. As of November 2020, four more ITMIS modules (receipt management, treasury management, revenue management, and expenditure management) were rolled out to a selected number of spending agencies.

OP 6.2.2 Measures supported in implementation to strengthen subnational entities’ ability to better manage their public finances (number)

As of November 2020, two ITMIS modules (budget planning and budget appropriation) were fully rolled out to all 190 spending agencies. As of November 2020, four more ITMIS modules (receipt management, treasury management, revenue management, and expenditure management) were rolled out to a selected number of spending agencies.

ADB = Asian Development Bank; IRD = Inland Revenue Department; OP = operational priority; RAMIS = Revenue Administration Management Information System; ITMIS = Integrated Treasury Management Information System Source: RAMIS and ITMIS Project Management Unit