crisis recovery support program · ii. evaluation of design and implementation a. relevance of...

Completion Report

Project Number: 43098 Grant Number: 0152 December 2010

Tajikistan: Crisis Recovery Support Program

CURRENCY EQUIVALENTS

Currency Unit – somoni (TJS)

At Appraisal At Program Completion 31 May 2009 17 June 2010

TJS1.00 = $0.24 $0.28 $1.00 = TJS4.09 TJS4.38

ABBREVIATIONS ADB – Asian Development Bank DEAP – Disaster and Emergency Assistance Policy GDP – gross domestic product IMF – International Monetary Fund MOF – Ministry of Finance NBT – National Bank of Tajikistan PRGF – poverty reduction and growth facility

NOTES

(i) The fiscal year (FY) of the government and its agencies ends on 31 December.

(ii) In this report, "$" refers to US dollars.

Vice-President X. Zhao, Operations 1 Director General J. Miranda, Central and West Asia Department (CWRD) Country Director J. Tokeshi, Tajikistan Resident Mission, CWRD Sector Director D. Kertzman, Financial Sector, Public Management and Trade, CWRD Team leader J. A. Tan III, Economist (Public Finance), CWRD Team members K. Aminov, Economics Officer, CWRD

J. Farinha, Economist (Financial Sector), CWRD M. Mamadsafoeva, Project Assistant, CWRD M. Marcelino, Assistant Project Analyst, CWRD

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 BASIC DATA i

I. PROGRAM DESCRIPTION 1

II. EVALUATION OF DESIGN AND IMPLEMENTATION 1

A. Relevance of Design and Formulation 1 B. Program Outputs 2 C. Program Costs 4 D. Disbursements and Program Schedule 5 E. Implementation Arrangements 5 F. Conditions and Covenants 6 G. Performance of the Borrower and the Executing Agency 7 H. Performance of the Asian Development Bank 7

III. EVALUATION OF PERFORMANCE 7

A. Relevance 7 B. Effectiveness in Achieving Outcome 8 C. Efficiency in Achieving Outcome and Outputs 9 D. Preliminary Assessment of Sustainability 9 E. Impact 10

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 10

A. Overall Assessment 10 B. Lessons 10 C. Recommendations 11

APPENDIXES

1. Design and Monitoring Framework 14 2. Status of Compliance with Grant Covenants 16 3. Assessment of Program Performance 22

BASIC DATA A. Grant Identification 1. Country 2. Grant Number 3. Program Title 4. Borrower 5. Executing Agency 6. Amount of Grant 7. Program Completion Report Number

Tajikistan 0152 Crisis Recovery Support Program Republic of Tajikistan Ministry of Finance $40 million PCR: TAJ 1226

B. Grant Data 1. Appraisal – Date Started – Date Completed 2. Grant Negotiations – Date Started – Date Completed 3. Date of Board Approval 4. Date of Grant Agreement 5. Date of Grant Effectiveness – In Grant Agreement – Actual – Number of Extensions 6. Closing Date – In Grant Agreement – Actual – Number of Extensions 7. Terms of Grant – Interest Rate – Maturity (number of years) – Grace Period (number of years) 8. Terms of Relending (if any) – Interest Rate – Maturity (number of years) – Grace Period (number of years) – Second-Step Borrower

waived waived 8 June 2009 8 June 2009 6 July 2009 7 July 2009 6 August 2009 9 July 2009 none 31 December 2009 17 June 2010 none Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable

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9. Disbursements a. Dates Initial Disbursement

10 July 2009

Final Disbursement

10 July 2009

Time Interval 0

Effective Date

9 July 2009

Original Closing Date

31 December 2009

Time Interval

6 months

b. Amount ($ million)

Category or Subloan

Original

Allocation

Last Revised

Allocation

Amount

Canceled

Net Amount

Available

Amount

Disbursed

Undisbursed

Balance 4801 40.0 40.0 0.0 40.0 40.0 0.0

Total 40.0 40.0 0.0 40.0 40.0 0.0

C. Program Data

1. Program Cost ($ million)

Cost Appraisal Estimate Actual

Foreign Exchange Cost 40.0 40.0 Local Currency Cost 0.0 0.0 Total 40.0 40.0

2. Financing Plan ($ million)

Cost Appraisal Estimate Actual

Implementation Costs Borrower Financed 0.0 0.0 ADB Financed 40.0 40.0 Other External Financing 0.0 0.0

Total 40.0 40.0

IDC Costs Borrower Financed 0.0 0.0 ADB Financed 0.0 0.0 Other External Financing 0.0 0.0

Total 40.0 40.0

ADB = Asian Development Bank, IDC = interest during construction.

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3. Program Performance Report Ratings

Implementation Period

Ratings

Development Objectives

Implementation Progress

From 31 July 2009 to 31 December 2009

Satisfactory

Satisfactory

From 1 January 2010 to 30 August 2010 Satisfactory Satisfactory D. Data on Asian Development Bank Missions

Name of Mission

Date

No. of Persons

No. of Person-Days

Specialization of Members1

Fact Finding 12–25 March 2009 2 28 a, b Program Completion Review (desk review)

b, c, d, e

1 a = senior economist, b = economist, c = economics officer, d = project analyst, e = project assistant.

I. PROGRAM DESCRIPTION

1. The global financial crisis had serious consequences for the Republic of Tajikistan (Tajikistan) given the country’s dependence on remittances from Tajik workers in other countries within the Commonwealth of Independent States. In years preceding the crisis, remittances from migrant workers supported the economy. In 2008, remittances from more than 1 million migrant workers made up about 50% of gross domestic product (GDP). As economies of host countries, such as the Russian Federation and the Republic of Kazakhstan, weakened, retrenchment of many migrant workers was unavoidable. In the first quarter of 2009, the government estimated that at least 100,000 migrant workers returned to Tajikistan, adding to the unemployed. Weak export markets for aluminum and cotton compounded the situation. Economic growth was expected to slow to 2% in 2009. The crisis also adversely impacted the country’s fiscal position. More than half of tax revenues were linked to remittance-fueled imports. With remittances expected to contract by 35%, a large revenue shortfall equivalent to 3% of GDP was expected. Additional spending was also necessary to meet the needs of returning migrant workers and the effect of the crisis on vulnerable people. Faced with this challenge, the government sought support from the Asian Development Bank (ADB) to help finance countercyclical fiscal policy and social safety net measures. 2. On 6 July 2009, ADB’s Board of Directors approved a $40 million grant for the Crisis Recovery Support Program.1 The intended impact of the program was accelerated recovery from the economic and social impacts of the global financial crisis. Its outcome was provision of fiscal support and social safety nets. The outputs were (i) implementation of employment programs for returned and unemployed migrants; (ii) provision of social assistance to vulnerable groups; and (iii) uninterrupted service delivery by health, education, and social protection institutions. The grant was signed on 7 July 2009 and made effective on 9 July 2009. ADB released $40 million for the grant on 10 July 2009. The grant closed on 17 June 2010.

II. EVALUATION OF DESIGN AND IMPLEMENTATION

A. Relevance of Design and Formulation

3. The program design was found to be highly relevant and sound at appraisal. First, the need for urgent crisis recovery support was clear. ADB assessed the fiscal conditions and found significant revenue shortfalls due to the impact of the global financial crisis. The program was not a planned operation under ADB’s country strategy and program given the sudden crisis faced by Tajikistan, although it was fully in line with the government’s crisis mitigation program. Second, the approach was quick-disbursing and provided timely response to mitigate the crisis impact. The program incorporated few but meaningful actions anchored on the Poverty Reduction and Growth Facility (PRGF) of the International Monetary Fund (IMF) and the government’s anti-crisis measures. The PRGF aimed to help Tajikistan attain macroeconomic stability. Support for the government’s anti-crisis measures ensured strong government ownership of the countercyclical stimulus. In short, the program’s prior actions comprised elements needed to mitigate the financial crisis. Third, the program was designed as part of the financing plan for the crisis budget, which prioritized social and reform-related spending and cut nonessential expenditures. The program allocated counterpart funds generated from grant proceeds for identified budget items, which included expenditures on social safety nets and social services. The program also provided the government with sufficient spending space for

1 ADB. 2009. Report and Recommendation of the President to the Board of Directors: Proposed Grant to the

Republic of Tajikistan for the Crisis Recovery Support Program. Manila (Grant 0152-TAJ).

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counterpart funds with (i) eligible expenditures of TJS437 million (about $107 million), of which 70% remained to be spent during program implementation, and (ii) strict earmarking limited to TJS65 million (about $16 million) for local budget expenditures on food and utilities in education, health, and social protection. Fourth, a monitoring mechanism was established to ensure stronger fiduciary control of counterpart funds generated from grant proceeds. This was intended to address concerns about weak public financial management systems in Tajikistan. The design remained relevant throughout implementation. B. Program Outputs

4. Implementation of employment programs for returned and unemployed migrants. The anti-crisis action plan2 included employment creation for returning migrant workers. The government had increased the allocation for the employment program from TJS7.3 million in the original 2009 budget to TJS9.8 million in the crisis budget. The government fully executed the budget. The government also fully executed the budget of TJS0.7 million for the adult training center (which helped returning migrant workers seeking domestic employment). 5. In spite of full budget execution, the increase in beneficiaries has been muted. The number of beneficiaries increased from 21,416 in 2008 to 21,515 in 2009, equivalent to 0.5%. The number of beneficiaries increased in skills training (9%) and microcredit (8%), but beneficiaries of unemployment benefits declined by 25% and the public works program by 1% (Table 1). These were significantly below the government’s projected increase in beneficiaries made during appraisal. A weakness in the program output is that while providing for the additional financial resources for the program, it did not contemplate adjusting the existing employment program (e.g., improving target mechanisms and access rules) to suit returning migrant workers. Except for the adult training center, the existing program was designed for domestically unemployed workers. This output is rated less successful.

Table 1: Employment Program: Number of Beneficiaries Program 2008 2009 % Difference Unemployment benefits 3,022 2,252 -25.5 Skills training 8,080 8,815 9.1 Microcredit 2,827 3,052 8.0 Public works 7,488 7,396 -1.2 Source: Ministry of Labor and Social Protection of the Population. 6. Provision of social assistance to vulnerable groups. The program leveraged the government’s commitment to maintain social assistance to vulnerable groups during the crisis. The crisis budget allocated TJS144.5 million for social assistance to vulnerable groups. Budget execution reached TJS120.2 million, of which TJS105.1 million was spent from July to December 2009. The number of beneficiaries increased, particularly for cash compensation. Such support augmented incomes and helped cushion the crisis impact. However, more vulnerable people would have benefited from full execution of the budget (Table 2). This output is rated less successful.

2 Government of Tajikistan. 2008. Action Plan on Prevention of Financial Crisis in the Republic of Tajikistan,

Government Resolution No. 12.1–10, 31 December. Dushanbe.

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Table 2: Social Assistance Programs Category or Program

Number of

Beneficiaries in 2008

Number of

Beneficiaries in 2009

Number of Beneficiaries

in 2010 (1st quarter)

Cash Compensation Program Minimum transfer payment for people without social

insurance 97,502 114,823 100,103

For the disabled (16 years of age or below) 18,612 19,771 21,782 For the disabled (above 16 years of age) 28,961 29,178 31,018 For children belonging to households without an

income-earner, or who have a lost parent(s) 118,524 119,523 121,554

For the elderly 3,111 3,316 3,441 For school children from poor households 223,354 216,087 206,519 Energy subsidies for poor households 240,500 241,000 241,000

Compensation in Kind Orthopedic products 19,974 19,000 16,985 Payment for sanatorium treatments

1,633 1,600 2,200

Center and Home-Based Services Nursing homes 685 685 909 Boarding schools 205 205 205 Support for the elderly at home 3,418 3,580 5,124

Source: Ministry of Labor and Social Protection of the Population.

7. Uninterrupted service delivery by health, education, and social protection institutions. The program ensured that sufficient financial resources were available to operate education, health, and social protection institutions. Overall, most budget outturns for the social sectors were below budget, no significant underspending was noted (Table 3).

Table 3: Budget Execution of Social Sector Expenditures, 2009 (TJS million)

Item Budget Outturn % Difference

Education

State budget 929.7 849.7 91.4

Republican budget 246.6 237.4 96.3

Local budget 683.1 609.2 89.2

Health

State budget 308.3 287.8 93.4


Local budget 250.2 233.7 93.4

Social Protection and Social Insurance

State budget 698.8 711.4 101.8


Local budget 22.7 22.9 100.9 Source: Ministry of Finance. 2009. Budget Performance Report, January–December. Dushanbe. 8. Expenditures on food and utilities in the social sectors, which were supported under the program, did not experience significant cuts during budget execution (Table 4). Most of these social sector expenditures, particularly in education and health, were funded by local budgets. Actual local budget expenditures on food were higher by 5% than budget allocations. Actual

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local budget utility expenditures were 11% lower than budgeted, due to lower consumption of utilities. No arrears are noted for utility payments. Utility payments by health and social protection institutions funded from the republican budget were not cut during budget execution. Poorer budget outturns in the republican budget were registered in food expenditures across all social institutions and utility expenditures by educational institutions.

Table 4: Food and Utilities Expenditures in Social Sectors (TJS million)

Republican Local Budget

Item Budget Actual % Difference Budget Actual % Difference

Food

Education 3,815 1,765 46.3 12,198.6 12,942.0 106.1

Health 1,915 883 46.1 7,842.2 8,041.2 102.5

Social Protection 3,683 2,103 57.1 776.5 845.4 108.9

Total 9,413 4,751 50.5 20,817.3 21,828.5 104.9

Utilities

Education 4,542 3,062 67.4 32,377.8 28,416.9 87.8

Health 1,804 2,068 114.6 11,448.8 10,505.0 91.8

Social Protection 467 760 163.0 382.2 362.4 94.8

Total 6,813 5,890 86.5 44,208.8 39,284.3 88.9 Source: Ministry of Finance. 9. With the satisfactory budget performance in each social sector, and generally good budget outturns in food and utility expenditures, the output is rated successful. C. Program Costs

10. The program was financed by $40 million equivalent from the ADB’s Special Funds resources. The government agreed to utilize the counterpart funds generated from program proceeds to partly finance the program-supported budgetary expenditures (Table 5). To give the government sufficient spending space, the aggregate amount of identified expenditure lines exceeded $40 million equivalent. Expenditures on subventions to local budgets were conditional on full coverage of food and utility expenses in education, health, and social protection.

Table 5: Utilization of Counterpart Funds Generated from Grant Proceeds (TJS million)

Expenditure Item

Jul–Dec 2009

Jan–Mar 2010

Total

1. Employment programa 5.8 1.6 7.4 2. Social assistance to vulnerable groups Utilities (including telecommunications), food and medicine

expenditures in education, health, and social protection under the republican budget

41.0 11.5 52.5

3. Support for poor regions (subventions) 109.1 5.5 114.6

Total 155.9 18.6 174.6 a Program for Facilitation of Employment of Population for Republic of Tajikistan. Source: Ministry of Finance.

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D. Disbursements and Program Schedule

11. At the time of ADB Board approval of the program grant, the government met all required actions indicated in the letter of commitment. The government acted swiftly to complete all documents and procedures needed for the declaration of effectiveness. ADB declared the grant agreement effective within 2 days after signing of the grant agreement and disbursed the single tranche the next day. Grant proceeds were credited in the government’s foreign currency account in the National Bank of Tajikistan (NBT) on 13 July 2009. Disbursement of grant proceeds followed ADB’s simplification of disbursement procedures and related requirements for program grants.3 Unlike other program grants and loans, additional arrangements were designed for the disbursement of counterpart funds generated from grant proceeds. The grant was efficiently designed and its proceeds expeditiously disbursed to meet the expenses under the government’s crisis budget. E. Implementation Arrangements

12. The Ministry of Finance (MOF) was the executing agency for the program; MOF and the Ministry of Labor and Social Protection of the Population were the implementing agencies. These assignments were maintained during program implementation. Since the program was designed as a single tranche operation and all program actions were achieved prior to ADB Board approval, implementation arrangements focused on monitoring the use of counterpart funds generated from grant proceeds. 13. During appraisal, ADB identified weaknesses in fiduciary controls. As such, in addition to implementing arrangements typical for program loans and grants, the program required the government to establish a special account4 for counterpart funds generated from grant proceeds. As part of the monitoring mechanism, ADB required the government to report, on a monthly basis, withdrawals made with information on expenditures financed by the counterpart funds. ADB also required the government to undertake an independent audit of the special account funds. The government regularly submitted the monitoring reports to ADB. Compliance with the audit requirement was partial (para. 17). Through a retrospective assessment, the implementing arrangements, as designed, were found to be adequate to monitor the use of financial resources (i.e., counterpart funds), although these could have been improved. 14. The government was not able to utilize the counterpart funds generated from the grant proceeds as originally envisaged. The program limited the use of counterpart funds to public expenditures incurred on or after grant effectiveness until 31 December 2009. On 29 December 2009, the government informed ADB that it would only be able to utilize $37 million equivalent of the counterpart funds by 31 December 2009. Since the impact of the global financial crisis continued to affect the country, the government asked that the remaining $3 million equivalent be used to finance similar expenditures in the first quarter of 2010. ADB agreed. All counterpart funds were utilized by 30 March 2010. Monitoring of the special account and utilization of the counterpart funds continued until March 2010. 15. Although the grant proceeds were fully disbursed on 9 July 2009, the grant account of the program was closed on 17 June 2010 to wait for the auditing processes.5

3 ADB. 1998. Simplification of Disbursement Procedures and Related Requirements for Program Loans. Manila. 4 The special account is a subaccount of the treasury single account with NBT. 5 The ADB operational department overseeing grant implementation did not prepare a memorandum to extend the

closing date (i.e., 31 December 2009) because of para. 58 of the report and recommendation of the President for

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F. Conditions and Covenants

16. The government fully complied with 26 of 28 covenants (Appendix 2). These include eight program actions required for grant effectiveness, which were met prior to ADB Board approval. Two covenants are assessed as partially complied with. These relate to (i) incomplete coverage of independent audit of the special account; and (iii) no submission of the audit opinion of the Agency on State Financial Control and Combating Corruption on the budget execution report. 17. The independent auditors completed their audit of the special account on 16 July 2010, and the government submitted the audit report to ADB on 13 August 2010. The audit found no significant findings warranting attention.6 However, ADB found deficiencies in the audit scope, and shared these with the government. First, the audit report only examined and certified the (i) currency conversion and transfer of funds from the foreign currency deposit account in NBT to the special account; and (ii) withdrawals from the special account. It did not audit expenditures financed by the counterpart funds. Second, the independent audit only covered the period ending 31 December 2009. No audit was conducted for the extension period of 1 January to 31 March 2010. The government has taken steps to engage the independent auditor to undertake the audit of the extension period. The status of this covenant can be changed to “complied with” once the January–March 2010 audit is submitted. 18. The 2009 and January-June 2010 budget execution reports and their English translation are publicly available in the MOF website. However, the government informed ADB that the Agency on State Financial Control and Combating Corruption cannot issue the audit opinion of the budget execution report because the audit of the budget execution reports is not part of its mandate. 19. The covenants were relevant but they could be improved for similar future operations. First, requiring the submission of the external audit of NBT was not needed. The objective of the covenant was to determine if NBT’s external auditors would have audit findings on the use of the special account held at NBT. However, such detail is not covered by the audit report. Second, strict earmarking should only be done for expenditures that can be tracked. The program required that part of the counterpart fund financing subvention be strictly allocated for food and utilities in social sectors. However, this could not be assessed since subventions are comingled with local governments’ own-sourced revenues, and the government has no expenditure tracking mechanism for local government expenditures funded by intergovernmental fiscal transfers. Assessment can only be done by inference, i.e., by examining local budget execution as done in the program. Third, strict allocation of counterpart funds should only cover the remaining portion of the fiscal year for programs that do not allow retroactive financing. Since the program could only be implemented prospectively and effectiveness was achieved in July 2009, the covenant requiring coverage of the full-year budget allocation was flawed since the local budget had already funded January–June 2009 expenses. Fourth, the covenant on the independent audit of the special account needed to be more detailed in terms of specifying the scope of the audit, i.e., the audit of expenditures financed by counterpart funds.

the program (footnote 1), which states that “Financial closure is expected in June 2010 or earlier (as soon as the audited statements of all public expenditures are available).”

6 Grant Thornton Amyot LLC (Armenia) conducted the independent audit of the special account.

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G. Performance of the Borrower and the Executing Agency

20. The performance of the borrower and MOF is rated satisfactory. At the onset of the crisis, the government designed its anti-crisis action plan in consultation with various stakeholders, including development partners. Parliament approved the crisis budget in May 2009, prior to program approval. The government acted swiftly to achieve grant effectiveness to allow disbursement of grant proceeds within 4 days after grant approval. The government provided the required monitoring reports to ADB, although the independent audit of the special account did not cover the extension period for the utilization of counterpart funds. 21. Providing social safety nets to returning migrant workers was a prime consideration in the program design. Yet, the number of beneficiaries of the employment program did not increase significantly even with the full execution of the budget. Also, while the government had sufficient spending space for 2009,7 it was unable to fully utilize the counterpart funds within 2009, and had to request an extension. The government submitted its program completion report. The government will be submitting the independent audit of the January–March 2010 utilization of counterpart funds once it is completed. H. Performance of the Asian Development Bank

22. ADB’s performance is assessed as satisfactory. ADB acted swiftly in preparing the program to be part of the financing plan for the government’s crisis budget. This was achieved notwithstanding the use of the program lending modality. Also, ADB exhibited flexibility in program design by incorporating crisis mitigation measures (e.g., anti-crisis action plan and the crisis budget) as program actions rather than medium- and long-term reform actions. Anchoring on the PRGF was also pragmatic since attaining macroeconomic stability is fundamental during crisis episodes. ADB was only able to provide limited resources to support program monitoring.8 This was done through short-term staff consultancy at the start of program implementation to help the government prepare the expenditure monitoring templates. 9 More resources for program monitoring would have been desirable.

III. EVALUATION OF PERFORMANCE

A. Relevance

23. The program design is rated relevant. With worker remittances contributing 50% of GDP, and most migrant workers deployed in the Russian Federation and the Republic of Kazakhstan, the spillover effects of the global financial crisis on Tajikistan was quite large. Actual remittances in 2009 fell by 31.3% from $2.8 billion in 2008 to $1.7 billion in 2009. From average growth of 7.4% in 2005–2008, growth was expected to slow to 0%–2% in 2009. 10 The government responded swiftly by putting in place its anti-crisis action plan and the crisis budget, which helped attain 3.4% growth in 2009. The program was fully aligned with the government’s crisis mitigation measures, i.e., the anti-crisis action plan and the crisis budget. It addressed the government’s immediate need for fiscal stimulus by being part of the financing plan for the crisis budget, which prioritized social and safety net spending, and scaled back nonessential

7 Only 30.2% of program-supported expenditures were executed during January–June 2009. This left a spending

space of 70% during program implementation. 8 The regional technical assistance envisaged during program preparation to help in monitoring budget execution

and addressing public financial management matters did not materialize. 9 The staff consultant was fielded in Tajikistan from 23 July to 6 August 2009. 10 In 2009, the government expected zero GDP growth, while the IMF forecast 2%.

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expenditures. Counterpart funds generated from the grant proceeds financed social spending and social safety nets. Rather than including medium- to long-term policy reforms, the program actions focused on measures to bring the economy out of the crisis. The few but meaningful actions helped facilitate the quick and timely disbursement of the grant. Further, by anchoring on PRGF prior actions, the program supported macroeconomic stability. However, design weaknesses manifested during implementation. Better results for the employment program would have been achieved if the program had pushed for adjustments in the employment program to address migrant worker needs. B. Effectiveness in Achieving Outcome

24. The program is rated effective. The program outcome was to provide greater fiscal support and social safety nets in 2009. The government was effective in achieving the fiscal stimulus. In 2009, the government attained its fiscal deficit target of 0.5% of GDP. The 2009 fiscal stimulus was 3.4% of GDP compared with no fiscal stimulus in 2008.11 The government was able to increase its social protection spending to TJS711.4 million in 2009, 46.9% higher than in 2008. Overall, the government had a good aggregate budget outturn for the program-supported items at 93.1%. The government achieved full execution of the subventions to poor regions and the employment program, but did not fully spend allocations for social assistance and social sector expenditures. Expenditures on social assistance to vulnerable groups only achieved an 83.2% budget outturn. Republican budget spending on food, medicines, telecommunications, and utilities in the social sectors only reached 72.6% of the budget allocation due to significant underspending for all items for the education sector and food for the health sector.

Table 6: Budget Execution of Program-Supported Expenditures (TJS million)

Expenditure Item

Budget

Actual

% Difference

1. Employment programa 9.8 9.8 100.0

2. Social assistance to vulnerable groups, includes 144.5 120.2 83.2

(i) Compensation for social support to population

(ii) Social protection institutions for disabled, elderly,

and children

(iii) Other social protection expensesb

3. Support for poor regions (subventions) 261.8 261.8 100.0

4. Utility,c food, and medicine expenditures in education, health, and social protection under the republican budget

21.3 15.5 72.6

Total 437.4 407.3 93.1 a Program for Facilitation of Employment of Population for Republic of Tajikistan. b Ministry of Finance. 2009. Compensation to Groups Entitled to Special Benefits. Dushanbe. c Including telecommunications. Source: Ministry of Finance, Republic of Tajikistan; Asian Development Bank estimates. 25. In terms of providing social safety nets, the government was less effective. The employment program as a social safety net was not that effective since the number of

11 Fiscal stimulus is measured as the primary deficit, excluding grants and public investment program, expressed as

percentage of GDP. Statistical information calculated from International Monetary Fund. 2010. First and Second Review Under the Three-Year Arrangement Under the Extended Credit Facility, Request for Waiver of Performance Criteria, and Request for Augmentation of the Arrangement—Staff Report. Table 3. Washington, D.C.

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beneficiaries did not increase significantly in spite of the higher budget allocation. While the number of beneficiaries increased in most social assistance schemes, particularly in the cash compensation program; unutilized budgetary allocations could have benefited more vulnerable people. C. Efficiency in Achieving Outcome and Outputs

26. The program is rated less efficient. Program preparation was done very efficiently. Although the program was based on the program lending modality, program preparation necessitated less time compared with a usual program loan or grant. The program design ensured that actions to be taken were fully aligned with the government’s anti-crisis program and crisis budget. As such, the processing team was able to prepare the program in a short time without sacrificing the needed dialogue between ADB and the government. Both the government and ADB fast-tracked their respective business processes to allow quick disbursement.12 27. The program grant provided the most cost-effective financing option to the government for crisis mitigation. No additional costs were incurred in achieving program actions since these were fully aligned with the government’s own anti-crisis measures. 28. However, the efficiencies gained during program preparation and cost-effectiveness were offset by less-efficient program implementation. Utilization of counterpart funds generated from grant proceeds had a slow start, considering the urgent need for financing. Only 10% of the counterpart funds were utilized in the third quarter. Utilization only picked up in the last quarter of 2009. At scheduled program closure (i.e., 31 December 2009), 10% of the counterpart funds had not been utilized. Thus, the government requested an extension to utilize counterpart funds in the first quarter of 2010. D. Preliminary Assessment of Sustainability

29. The program is rated likely sustainable. It was designed to be a short-term response to an economic slowdown arising from an external shock (i.e., the global economic crisis). As such, it is a one-off and quick-disbursing operation to support anti-crisis measures. Instead of having a matrix of reform measures, program actions focused on the crisis interventions to bring the economy out of the crisis. As a short-term crisis-response intervention, the program was never meant to be sustained (i.e., repeated) as a long-term operation. Likewise, the need for fiscal support and social safety nets (the program’s outcome) depends on future economic conditions. However, the program’s primary goal is to provide fiscal resources to the government for it to quickly arrest the economic slowdown and restore economic growth. Sustainability is assessed based on this caveat. By supporting the fiscal stimulus, the program helped increase economic growth. By being part of the financing plan of the crisis budget, it helped achieve 3.4% growth in 2009, higher than the earlier forecast of 0%–2% growth. The momentum has continued in 2010. The program contributed to the economic recovery, and helped Tajikistan return to a higher growth path. 30. As follow-up to the anti-crisis action plan, and to strengthen the recovery, the government prepared a post-crisis action plan in February 2010 to support macroeconomic stability, improve public administration, modernize and diversify the economy, support the

12 ADB conducted joint management review meetings for all crisis recovery support programs for Armenia, Georgia,

and Tajikistan; and waived the appraisal missions.

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private sector and improve the investment climate, and ensure effective protection for labor market stability and human capital development.13 Moreover, the government faces binding fiscal constraints. The government depends significantly on budget support from development partners, in the form of grants or highly concessional loans so as not to worsen its debt sustainability and impair economic recovery. Thus far, development partners have been providing the needed support. E. Impact

31. The intended impact of the program was accelerated recovery from the global financial crisis. The economy expanded 3.4% in 2009, exceeding earlier expectations of 0%–2%. In 2010, the economy maintained its momentum with January–September growth at 6.2%. The government expects full-year growth at 5.8%. Tajikistan appears to be gradually returning to its pre-crisis average GDP growth of 7.4%.

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS

A. Overall Assessment

32. The program is rated successful (Appendix 3). Although the program was prepared as a standard program grant, it was able to provide quick-disbursing support to stop the economic slowdown. Program actions were in line with the government’s crisis mitigation measures, and anchored on the IMF’s PRGF. This made policy dialogue much quicker, while retaining government ownership essential for policy lending. Being part of the financing plan for the crisis budget, complex implementation arrangements were not necessary. The program also addressed fiduciary concerns through the establishment of a special account for counterpart funds generated from grant proceeds and its related reporting mechanism. This made the design of the program relevant. The program was effective in achieving its outcome of providing fiscal support. The target budget deficit was achieved with significant fiscal stimulus. The budget outturn for program-supported expenditures was 93%. However, the program was less effective in implementing social safety nets. The design of the employment program could be improved to allow it to cater to the needs of returning migrants. Also, more vulnerable people would have benefited if the social assistance allocation for 2009 was fully utilized. A high degree of efficiency is evident in the preparation of the program and disbursement of proceeds, which occurred 4 days after ADB Board approval. The most cost-effective financing option was provided for the crisis budget. But the government was unable to execute the program-supported expenditures, quickly causing delays in the utilization of counterpart funds. The program helped achieve higher than expected growth in 2009. Growth remained strong in the first 9 months of 2010. B. Lessons

33. The program provides several lessons on structuring a crisis response operation. First, ADB has no modality for a financial crisis response operation for Asian Development Fund countries. The special program loan in the Program Lending Policy is limited to ordinary capital resources countries and can only used to address balance of payment crises. 14 Likewise, emergency assistance under the Disaster and Emergency Assistance Policy (DEAP) does not 13 Government of Tajikistan. 2010. Resolution No. 106: The Concept and Main Directions for Post-Crisis Actions for

2010. Dushanbe. 14 ADB. 2010. Program Lending. Operations Manual. D4/BP: Bank Policies and OM D4/OP: Operational Procedures.

Manila.

11

include financial crisis response.15 As such, the program had to use the standard program grant modality and develop the design of program actions to allow quick processing and disbursement. While program preparation was shorter than for typical program grants and loans, preparation would have benefited from streamlined and abbreviated procedures similar to the countercyclical support facility and the DEAP, and would have been able to provide the support much earlier. 34. Second, during crisis episodes, while policy reforms are important, the government has urgent needs to quickly stabilize the economy, such as, providing urgent fiscal support to counteract the financial crisis. As such, crisis response operations should focus more on immediate responses to the financial crisis, such as maintaining critical social and safety net expenditures. However, as crises open opportunities for reforms, policy dialogue can be initiated for follow-up operations. But this should not delay the financial crisis recovery support. 35. Third, success of a financial crisis response operation is highly contingent on the government’s ability to quickly put together its own anti-crisis plan, which could be financed by ADB after exercising due diligence. In the case of Tajikistan, the government had an anti-crisis action plan and a crisis budget. Readiness to implement is also important. 36. Fourth, since the crisis response operations support government’s crisis mitigation measures, program monitoring could also benefit from technical assistance where country systems are weak, as in Tajikistan. The technical assistance could focus on expenditure tracking mechanisms, internal controls, and external audits; and be conducted in two stages. At the first stage, when monitoring capacity is still weak, experts could be engaged to monitor program-supported expenditures rather than relying on the government to submit monitoring reports. The second stage would focus on improving country systems to help transition monitoring tasks from external experts to government staff. 37. Fifth, the program provided lessons in allocating counterpart funds generated from program proceeds. Budget earmarking should only be considered if the government has adequate mechanisms to track expenditures. Otherwise, technical assistance is important to provide this capacity. Programs should also rethink strict budget earmarking. While placing strict conditions on how a government spends the funds seems desirable, implementation could be difficult when budget precision is low. In the case of the program, the government could not fully execute the strictly allocated utility expenditures because it had already maximized its spending below the budget allocation. A better solution might be to provide governments with sufficient flexibility in spending across several identified items. Also, the scope and coverage of independent audits of special accounts to fund specific items should be very clear and precise if they are to be useful. C. Recommendations

1. Program Related

38. Covenants. Most of the grant covenants of the program, as a crisis response operation, are appropriate and should be maintained in their existing form. However, some covenants need to be removed or improved for similar future operations: (i) requiring submission of external audits of central bank financial statements is not necessary unless detailed audits of accounts are available; (ii) strict budget earmarking should only be required if a good

15 ADB. 2004. Disaster and Emergency Assistance Policy. Manila.

12

expenditure tracking system is in place; (iii) strict earmarking of expenditures should only cover the unexpended portion of the identified budget line; (iv) the covenant on the independent audit for special accounts to funds for identified expenditure items should be more detailed in scope and extent; and (v) an audit of the budget execution report by the Agency on State Financial Control and Combating Corruption should not be required since this is not part of its functions and responsibilities. On (v), taking into consideration that such audit is not within the agency’s mandate, it is recommended that compliance with the said covenant in the grant agreement be waived. 39. Further action or follow-up. While the program is complete, the government needs to submit to ADB the independent audit of the special account for 1 January to 31 March 2010. 40. Additional assistance. In Tajikistan, sustaining recovery is highly contingent on the fiscal situation. Over the short-term, more budget support may be needed, particularly if the government is serious with its post-crisis action plan. However, future budget support should leverage important structural reforms that strengthen the country’s resilience against external shocks and reinforce fiscal soundness. Policy-based operations in Tajikistan can also benefit if technical assistance is provided to address governance and public financial management issues. ADB is currently preparing regional technical assistance to improve public management to achieve better development results. Tajikistan can participate in this regional technical assistance to supplement future reform programs. 41. Timing of the program performance evaluation report. The full evaluation report of the program can be undertaken within 1 year.

2. General

42. Allocation of Resources: At the start of 2009, the global economic crisis had started to hurt developing member countries. Urgent requests for support were received, including from countries in Central and West Asia. In response, ADB allowed Asian Development Fund-eligible countries to front-load up to 100% of their 2009-2010 biennial allocation in 2009. Further, in June 2009, ADB approved the allocation of an additional $400 million Asian Development Fund commitment authority for countries with no access to ordinary capital resources. Although the resources were allocated after the program approval, the additionality helped Tajikistan by expanding its resource envelope. Making such additional resources available for low-income countries during financial crises is an appropriate response, and would be a guiding point for ADB response to future crises. If such additional resources were to be made available in the future, greater consideration may be given to crisis-affected countries instead of allocating to all countries including those not affected by the crisis. 43. Modality: Responding to the crisis in Tajikistan has also highlighted a key constraint, that ADB has no appropriate financial crisis response modality to provide quick support for Asian Development Fund countries. However, as shown by the program, crisis mitigation support can be structured under the program lending policy. This, though, required adapting the requirements for program loans, such as, having a policy matrix with actions pertaining largely to maintenance of critical social and safety net expenditures. Further, this and other crisis-support programs approved in the Central and West Asian region in 2009 had taken the IMF program in the respective countries as the overall macroeconomic anchor. However, while support was provided faster compared to other program loans, it is not the most efficient manner since a considerable amount of time was spent on determining the appropriate modality, due to concerns that program loans may not provide budget support.

13

44. Another possible modality is the use of the DEAP, which would have provided streamlined processing procedures to allow a faster delivery of crisis recovery support. However, the DEAP precludes its use for financial crises. Many countries have requested ADB missions to consider providing crisis-mitigation support by invoking the DEAP. Should ADB decide to establish a modality or guidelines to respond to future financial crises in ADF countries, lessons learned from the program can be useful inputs. 45. Need to Ensure that Crisis-Support is Short-Term: A key lesson learnt is that this and similar programs should be targeted solely to meet urgent public expenditure requirements. The programs approved by ADB for Armenia, Georgia and Tajikistan in 2009 all follow this approach. Hence, it is recommended that ADB should ensure that any requirements for fiscal support over a prolonged period of time will be supported only through properly structured reforms. This recommendation is already being followed in the case of Tajikistan, where the government has sought follow-up fiscal support in 2011, for which staff are formulating a policy reform program as has been done in the case of the Georgia Social Services Delivery Program in 2010.16

16 ADB. 2010. Report and Recommendation of the President to the Board of Directors: Proposed Loan to Georgia for

the Social Services Delivery Program. Manila. (Loan 2664-GEO).

14 Appendix 1

DESIGN AND MONITORING FRAMEWORK

Design Summary

Performance Indicators/Targets

Monitoring Mechanisms Assumptions And Risks

Impact Accelerated recovery from the global financial crisis

Gradual restoration of growth to pre-crisis levels (average of 7.4% during 2005– 2009) Status: January-September 2009 Gross domestic product growth at 6.2% Increase in poverty incidence minimized (currently 53% of the population live in poverty) Status: No information

Official statistics Poverty reduction strategy papers

Risk Global slowdown is more protracted than anticipated

Outcome Provision of fiscal support and social safety nets

Budget execution for program-supported expenditures in line with the crisis budget Status: 93.1% executed Government social protection spending increased by at least 20% (TJS484 million in 2008) Status: 2009 social sector spending at TJS711.4 million (46.9% higher than 2008)

Budget execution reports Ministry of Labor and Social Protection of the Population reports Other development partner reports

Assumption Timely and adequate budget support and technical assistance from development partners Risk Delays in implementing crisis mitigation measures

Outputs Employment programs for returned and unemployed migrants implemented Social assistance to vulnerable groups increased

Increase in number of people covered by employment programs (21,455 in 2008) Status: 21,515 beneficiaries in 2009 Increase in number of households receiving social allowance and services (18,000 in 2008)

Revised 2009 budget Ministry of Labor and Social Protection of the Population reports Ministry of Education reports Ministry of Health reports Other development partner reports

Assumption Effective implementation of social protection programs Risk Weak fiduciary controls

Appendix 1 15

Design Summary

Performance Indicators/Targets

Monitoring Mechanisms Assumptions And Risks

Basic service delivery by health, education, and social protection institutions maintained

Status: See Table 2 Utility expenditures of social institutions kept current and at least TJS51 million in 2009 (TJS6.8 million and TJS44.2 million allocated under the original 2009 republican and local budgets, respectively) Status: TJS45.2 million in 2009 (TJS5.9 million and TJS39.3 million executed under the 2009 republican and local budgets, respectively) Food expenditures of social institutions kept current and at least TJS30.2 million in 2009 (TJS9.4 million and TJS 20.8 million allocated under the original 2009 republican and local budgets, respectively) Status: TJS26.6 million in 2009 (TJS4.8 million and TJS21.8 million executed under the 2009 republican and local budgets, respectively)

Activities with Milestones Macroeconomic and poverty impact of crisis fully assessed in coordination with key stakeholders (April 2009) Financing gap and financing sources identified (April 2009) 2009 budget revised to reflect crisis impact and needs (May 2009)

Inputs Asian Development Bank program grant: $40 million

16 Appendix 2

STATUS OF COMPLIANCE WITH GRANT COVENANTS

Covenant

Reference in Grant

Agreement

Status of Compliance

1. The Recipient shall maintain, or cause to be

maintained, records and documents adequate to identify the Eligible Items financed out of the proceeds of the Grant and to record the progress of the Program.

Article IV Section 4.02 (a)

Complied with.

2. The Recipient shall enable ADB's

representatives to inspect any relevant records and documents referred to in paragraph (a) above.

Article IV Section 4.02 (b)

Complied with.

3. As part of the reports and information referred to

in Section 6.04 of the Grant Regulations, the Recipient shall furnish, or cause to be furnished, to ADB all such reports and information as ADB shall reasonably request concerning (i) the Counterpart Funds and the use thereof; and (ii) the implementation of the Program, including the accomplishment of the targets and carrying out of the actions set out in the Policy Letter.

Article IV Section 4.03 (a)

Complied with.

4. Without limiting the generality of the foregoing or

Section 6.04 of the Grant Regulations, the Recipient shall furnish, or cause to be furnished, to ADB quarterly reports on the carrying out of the Program and on the accomplishment of the targets and carrying out of the actions set out in the Policy Letter.

Article IV Section 4.03 (b)

Complied with.

Program Actions indicated in the Development Policy Letter 5. The Recipient shall have established the Inter-

ministerial Crisis Committee responsible for formulating and implementing crisis mitigation response.

6. The Recipient shall have adopted the crisis mitigation action plan covering monetary, fiscal and financial sector policies and social protection.

7. The Recipient shall have revised its 2009 budget to

prioritize social spending and scaling back non-critical expenditures (i.e., the "crisis-budget").

8. The Recipient shall have adopted a

comprehensive and time-bound action plan to implement all recommendations of the special

Attachment 2 to Schedule 2

Complied with. Complied with. Complied with. Complied with.

Appendix 2 17

Covenant

Reference in Grant

Agreement


audit of the NBT.

9. The executive summary of the NBT's special audit shall have been published.

10. The external audit of NBT's net international

reserves as of 31 December 2008 shall have been completed.

11. The external auditor of NBT shall have been

selected among the reputable international auditing firms, satisfactory to ADB, and appointed.

12. Amendments to the NBT Law and the Commercial

Banking Law to enhance central bank autonomy, disclosure of beneficial owners of companies, minimize conflict of interest, in form and substance satisfactory to ADB shall have been submitted to the Recipient's Parliament.

Complied with. Complied with. Complied with. Complied with.

13. Immediately after the Effective Date, the Recipient

shall establish, in a manner satisfactory to ADB, a sub-account of the Treasury Single Account at the NBT for the specific purpose of depositing and utilizing the Counterpart Funds (the "Special Account").

Schedule 4, Section 1 (a)

Complied with

14. Whenever the Recipient withdraws proceeds of the

Grant from the Grant Account, the Recipient shall promptly, but not later than within five (5) days of the withdrawal, deposit into the Special Account the Somoni amounts equivalent to the amount of the proceeds so withdrawn. Promptly after the deposit of the Counterpart Funds into the Special Account, the Recipient shall furnish to ADB an official notification confirming the amount of the Grant proceeds deposited into the Deposit Account, their conversion into a Somoni equivalent, and its deposit into the Special Account, specifying the date of such transactions and the exchange rate applied.

Schedule 4, Section 1 (b)

Complied with. Proceeds were withdrawn from the grant account in a single tranche and transferred to the foreign currency deposit account in NBT. MOF opted to keep the grant proceeds in the foreign currency deposit account in NBT, and withdraw in tranches. Conversion to somoni and transfer to the special account were done on the same day. The government’s decision to withdraw the grant proceeds in tranches does not affect the funds flow as envisaged under the program.

18 Appendix 2

Covenant

Reference in Grant

Agreement


The independent audit of the special account indicates that $4.2 million was not transferred to the special account but transferred directly to the MOF account for reimbursement of project expenses. The government clarified that this reimbursement was done on 13 November 2009 for expenditures on subventions to local budgets made in October 2009.

15. Except as ADB may otherwise agree, the Counterpart

Funds shall be utilized not later than 31 December 2009, to meet the expenditures to be incurred pursuant to the provisions of paragraph 18 below.

Schedule 4, Section 1 (c)

Complied with. The government asked ADB to utilize the remaining counterpart funds until the first quarter of 2010. ADB granted the request.

16. The Recipient shall ensure that NBT furnishes to ADB,

on a monthly basis, the Special Account's statements of account, which include the following information: (i) the dates and amounts withdrawn; (ii) Ministry of Finance's official certification on the purpose of the withdrawals identifying the specific budget expenditure categories to be funded. Such monthly statements shall be furnished to ADB not later than by the fifteenth (15th) of the succeeding month.

Schedule 4, Section 1 (d)

Complied with.

17. Separate accounts and records in respect of the

Special Account shall be maintained in accordance with consistently maintained sound accounting principles and shall be audited annually by independent auditors acceptable to ADB in accordance with sound auditing standards. Certified copies of such audited accounts and records shall be furnished to ADB promptly after their preparation but in any event not later than six (6) months after the close of the fiscal year to which they relate, or not later than six (6) months after the date of the closing of the Grant Account, as the case may be.

Schedule 4, Section 1 (e)

Partially complied with. The audit report was completed on 16 July 2010 and submitted on 13 August 2010. The audit did not cover the extension period (1 January–31 March 2010). The government has taken steps to engage the independent auditor to undertake the audit of the extension period.

Appendix 2 19

Covenant

Reference in Grant

Agreement


18. The Recipient shall ensure that the Counterpart

Funds shall be used to finance, in accordance with Recipient's public finance management procedures and reporting arrangements, satisfactory to ADB, immediate budgetary expenditures arising from the impact of the global financial crisis and essential public expenditures incurred to sustain delivery of core publicly-funded measures and activities under the Program and shall, in particular, provide necessary budget appropriations to allow withdrawals from the Special Account in support of (a) subventions to poor regions (local governments), (b) employment program, (c) social assistance, (d) utility, food, medicine and telecommunications expenditures in education, health and social protection under the republican budget, and (e) other priority social safety net measures and activities of the crisis mitigation plan implemented by the Recipient satisfactory to ADB in terms of the support for the subventions to poor regions mentioned above, the relevant utility expenses and food expenditures in education, health and social protection shall be fully covered.

Schedule 4, Section 2

Complied with. The government submitted monthly reports on utilization during August–December 2009. A quarterly report for 2010 utilization was submitted on 30 March 2010. The grant agreement requires that the utility expenditures in education, health, and social protection under the local budget be fully covered by the counterpart funds generated from the grant proceeds. Since subventions are single-line expenditure items and are, upon transfer to the local budgets, comingled with the local government’s own resources, the expenditures they directly fund cannot be tracked. As such, the only way to assess full coverage is to determine if such expenditures are fully executed. In the case of utility expenditures, actual spending was below budget (89% budget outturn). However, the government explained that this was not due to any cutback in expenditures but rather to lower utility consumption in these sectors. Utility payments from local budgets showed no arrears.

19. The Recipient shall: (a) ensure that the policies

adopted and actions taken as described in the Policy


Complied with.

20 Appendix 2

Covenant

Reference in Grant

Agreement


Letter, prior to the date of this Grant Agreement continue in effect during the Program period and thereafter; and (b) implement other policies and take other actions consistent with those specified in the Policy Letter, and ensure that all policy actions specified in Attachment 2 to Schedule 2 will continue in effect during the Program period and, as appropriate, thereafter.

20. The Recipient shall update ADB on the

implementation of the Program and shall ensure that necessary support is provided to ADB to review and monitor the status of key indicators agreed to with ADB.


Complied with.

21. The Recipient shall furnish to ADB a certified

copy of the state budget execution report for 2009 as submitted to the Parliament of the Recipient by 30 June 2010, with a certified English translation of the relevant parts thereof, providing specifically information on: (a) intergovernmental fiscal transfers from the republican to the local budget accounts; (b) expenditures by education, health and social protection institutions; and (c) financial flows on bank accounts related to regular and special safety net programs. The Recipient shall furnish to ADB a certified copy of the opinion of the Recipient's auditor general on such report by 30 November 2010, with a certified English translation of the relevant parts thereof.


Partially complied with. The English translation of the 2009 and January-June 2010 budget performance reports have been submitted. However, the government has informed ADB that the submission of the audit opinion by the Agency on State Financial Control and Combating Corruption cannot be complied with because the audit of the budget execution report is not part of the agency’s mandate.

22. The Recipient shall furnish to ADB a certified copy, in

the English language of the externally audited annual report of the NBT in accordance with International Financial Reporting Standards for the fiscal year 2009 by 30 June 2010.


Complied with. The externally audited annual report of NBT is available at the NBT website.

23. The Recipient shall ensure that the Grant proceeds

are not used to finance expenditures other than the Eligible Items.


Complied with.

24. As the Program Executing Agency, the Ministry of

Finance shall have the overall responsibility for implementing the Program, including, but not


Complied with.

Appendix 2 21

Covenant

Reference in Grant

Agreement


limited to, the maintenance of all Program records, reporting to ADB and administering the Grant withdrawals and the allocation and appropriation of the Counterpart Funds.

25. The Recipient shall keep ADB informed of, and the

Recipient and ADB shall from time to time exchange views on, (a) the implementation of the various anti-crisis measures adopted under the Program and (b) additional reforms arising during the Program period that may be considered necessary or desirable.


Complied with.

26. The Recipient shall promptly discuss with ADB

problems and constraints encountered during implementation of the Program, and appropriate measures to overcome or mitigate such problems and constraints.


Complied with.

27. The Recipient shall ensure that necessary support

is provided to ADB to review and monitor the status of key indicators under the Program. The Recipient shall keep ADB informed of its policy discussions with other multilateral or bilateral agencies that have implications for implementation of the Program, and shall provide ADB with an opportunity to comment on any resulting policy proposals. The Recipient shall take ADB's view into consideration before finalizing and implementing any such proposals.


Complied with.

28. The Recipient shall comply with ADB's

Anticorruption Policy (1998, as amended to date). The Recipient, consistent with its commitment to good governance, accountability and transparency, agrees (a) that ADB reserves the right to investigate, directly or through its agents, any alleged corrupt, fraudulent, collusive or coercive practices relating to the Program, and (b) to cooperate fully with any such investigation and to extend all necessary assistance, including providing access to all relevant books and records, as such relate to Program and may be necessary for the satisfactory completion of any such investigation.


Complied with.

ADB = Asian Development Bank; MOF = Ministry of Finance; NBT = National Bank of Tajikistan. Source: Asian Development Bank.

22 Appendix 3

ASSESSMENT OF PROGRAM PERFORMANCE

Criterion Weight Performance Details Rating Description

Rating Value

Weighted Rating

Relevance 20% The program provided quick-disbursing support to address the government’s fiscal needs arising from the crisis.

The program design was fully aligned with government crisis mitigation measures.

The program was anchored on an IMF program to promote macroeconomic stability.

Design weaknesses related to terms of support for the employment program.

Relevant 2 0.4

Effectiveness 30% Effective fiscal stimulus in 2009 was due to (i) the government meeting its budget deficit target; (ii) the primary deficit, excluding grants and PIPs, estimated at 3.4% of GDP, and (iii) 93% budget outturn for program-supported items.

Less effective social safety nets were due to (i) even with the 100% budget outturn for the employment program, no significant increase in beneficiaries and (ii) beneficiaries for social assistance program broadly increased, but would have increased more if the budget allocation was fully utilized.

Effective 2 0.6

Efficiency 30% The program was prepared and grant proceeds disbursed quickly.

The government was less efficient in utilizing counterpart funds generated from program proceeds. Utilization of counterpart funds had to be extended until March 2010.

The program grant provided the most cost-effective option for financing the crisis mitigation measures.

Less efficient 1 0.3

Sustainability 20% The program helped cushion the economic slowdown in 2009.

Momentum continues in 2010, allowing the government to work on a post-crisis plan.

Recovery depends on how development partners help to ease fiscal constraints. Thus far, development partners have been supportive.

Likely sustainable

2 0.4

Overall Rating

Successful 1.7

GDP = gross domestic product; IMF = International Monetary Fund; PIP = public investment program. Source: Asian Development Bank.

crisis recovery support program · ii. evaluation of design and implementation a. relevance of...

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