Document of The World Bank

FOR OFFICIAL USE ONLY

PROJECT PAPER

ON A

PROPOSED RESTRUCTURING

OF THE

ECONOMIC MANAGEMENT TECHNICAL ASSISTANCE PROJECT

FOR THE

REPUBLIC OF ANGOLA

MAY 8,2007

Southern Africa Country Department 2 Africa Region

This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. I t s contents may not otherwise be disclosed without Wor ld Bank’s authorization.

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DATA SHEET FOR

PROJECT PAPER

Date: May 8,2007 Country: REPUBLIC OF ANGOLA

Task Team Leader: Olivier Lambert Sector Manager: Helga Mul ler Country Director: Michael Baxter Environmental category: C

Project Name: Economic Management TA (EMTA) Project I D : PO72205 Borrower: Republic o f Angola Responsible agency: Ministry o f Planning Revised actual & estimated disbursements (Bank FY/US$m) FY F Y 0 4 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 Annual 1.91 3.40 0.98 3.43 8.80 3.42 0.26 Cumulative 1.91 5.3 1 6.29 9.72 18.52 21.94 22.20

Does the restructured project require any exceptions to Bank policies? o Yes X N o Have these been approved by Bank management? oYes o N o I s approval for any policy exception sought f rom the Board? o Y e s XNo

Revised project development objective.

EMTA supports GOA’S efforts to improve efficiency and transparency o f public resource management, by improving the institutional framework and building capacity in relevant public institutions to articulate and implement public investment and financial policies and processes.

Does the restructured project trigger any new safeguard policies? N o

Board/Effectiveness conditions: none Dated covenant: Operations Manual updated before June 30, 2007

Revised Financine Plan (US$m.\ Source Local I Foreign I Total

I

Borrower IDA Others Total

3.19 2.77

5.96 --_

0.55 15.69

16.24 ---

3.74 18.46

Republic o f Angola Economic Management Technical Assistance Project

(Cr . 3744-ANG)

TABLE OF CONTENTS

I . I 1 . I11 .

INTRODUCTORY STATEMENT ...................................................................... 1 BACKGROUND AND REASONS FOR RESTRUCTURING ......................... 1

PROPOSED CHANGES ....................................................................................... 4 I V . ANALYSIS ............................................................................................................. 9 V . EXPECTED OUTCOMES ................................................................................... 9 V I . BENEFITS AND RISKS ..................................................................................... 10

Annexes

Annex 1 : Status o f Implementation as o f March 3 1. 2007 ............................................ 12 Annex 2 : Results Framework and Monitoring .............................................................. 15 Annex 3A: Initial Performance Indicators and Status ...................................................... 20 Annex 3B: Proposed New Performance Indicators .......................................................... 21 Annex 4A: Activities Dropped ......................................................................................... 22 Annex 4B: New Activities ................................................................................................ 23 Annex 4C: Adjusted Activities ......................................................................................... 24 Annex 5: Detailed Description o f Restructured Components ....................................... 25 Annex 6A: Impact o f Proposed Changes on Components ............................................... 29 Annex 6B: Impact o f Proposed Changes on Disbursement Categories ........................... 29 Annex 7 : Implementation Plan 2007-2009 .................................................................... 30 Annex 8: Project Procurement Planning 2007-2009 ..................................................... 38

Vice President: Obiageli K . Ezekwesili Country Director: Michael Baxter

Sector Manager: Helga Muller Team Leader: Olivier Lambert

CURRENCY EQUIVALENTS (As o f February 28,2007)

US$1 .OO = Ango lan kwanza 80.06 1 Ango lan kwanza = US$0.0124

AfDB AML AUPEC BNA DFID DMFAS DNI DNPE D S I D O E C ECP EMTA FINSEC FY GAI GOA IDA IEG IFBA IFMS M F INE INF I S N MDGs M&E Minfin Minplan PAD PDO PIP PIU PRSP RTGS SADC SIGFE S IGIP/ S IPIP

SDR SNA93 UNDP USAID US$

Fiscal Year January 1 to December 3 1

ACRONYMS AND ABBREVIATIONS

African Development Bank Anti Money Laundering and related prevention measures Aberdeen University Petroleum Economic Consultancy Banco Nacional de Angola (Angola Central Bank) UK's Department for International Development Debt Management Financial and Accounting System DirecqZo Nacional dos Impostos (National Tax Directorate) DireGLio Nacional do Patrimdnio do Estado (National N o n Financial Assets Directorate) DirecqZo da SupewisZo das Institucoes Financeiras (Bank Supervision Department) Development Objective European Commission Estratkgia de Combate a Pobreza (Poverty Reduction Strategy) Economic Management Technical Assistance Project Financial Institutions Modernization Project Fiscal Year Gabinete de Auditoria Interna (Internal Audit Department) Government o f Angola International Development Association Independent Evaluation Group Instituto de FormaqGo Bancaria de Angola (Banking Training Institute o f Angola) Integrated financial management system International Monetary Fund Instituto Nacional de Estatistica (National Institute o f Statistics) InspecCEO Nacional das Finanqas (Finance Inspection Department) Interim Strategy Note Millennium Development Goals Monitoring and Evaluation Ministry o f Finance Ministry o f Planning Project Appraisal Document Project Development Objective Public Investment Program Project Implementation Unit Poverty Reduction Strategy Paper Real Time Gross Settlement System Southern Afr ica Development Community Sistema Integrado de GestZo Financeira do Estado (State IFMS) Sistema Integrado de GestZo dos Investimentos PGblicos (Public Investments Integrated Management System) Special Drawing Rights United Nations system o f national accounts United Nations Development Program United States Agency for International Development United States Dollar

I. INTRODUCTORY STATEMENT

1. following changes in the Angola, Economic Management Technical Assistance Project (EMTA), Cr. No. 37440-ANG (P072205) including accompanying amendments to the project’s legal documents.

This Project Paper seeks the approval o f the Executive Directors to introduce the

2. changes are meant to: (a) clarify the D O and results that EMTA i s supporting, (b) modify the project performance indicators to ensure alignment with results by dropping some and adding new performance indicators, (c) adapt activities planned to the current situation by dropping activities and adding a few ones, (d) reallocate the Credit, and (e) provide an adequate time frame for seeking clearly defined sustainable results by extending the closing date by 24 months from December 3 1,2007 to December 3 1,2009.

With a reformulation o f the project development objectives (DO), the proposed

11. BACKGROUND AND REASONS FOR RESTRUCTURING

3. The SDR 12.3 mi l l ion (US$16.6 mi l l ion equivalent) Credit was approved by the Board on March 27,2003 and became effective on December 4,2003. The key objective o f this technical assistance (TA) project was to strengthen the government’s capacity to formulate sound analysis and to implement sound policies which are critical to the management o f public resources. In addition, the project was meant to follow up on the successful Financial Institutions Modernization Project by helping complete the work on the establishment o f the Angola payment system at the Central Bank o f Angola (BNA), as well as on other key areas for greater transparency and efficiency o f central banking operations. EMTA was not designed to tackle every public resource management issue in Angola, but was focused on key initiatives, the success o f which remains highly dependent on the success o f parallel efforts undertaken by the Government o f Angola (GOA). EMTA i s meant to complement ongoing reforms initiated by GOA. As o f April 25,2007, disbursements amounted to SDR 5.7 mi l l ion (US$8.5 mi l l ion equivalent), o f which SDR 1.2 mi l l ion (US$l.8 mi l l ion equivalent) i s the advance to the Special Account.

4. (Minplan), Ministry o f Finance (Minfin), Central Bank o f Angola (BNA) and was expected to last four years from the date o f effectiveness. Each o f the four components was designed in 2002 to support efforts by the Government which had started or were about to start.

EMTA focuses on the key economic policy agencies such as Ministry o f Planning

i) The planning component (Minplan) was supporting efforts to establish methodologies for the preparation, execution and monitoring o f sectoral and provincial plans and public investment programs (PIP).

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ii)

iii)

iv)

The statistics component (National Statistical Institute - INE/Minplan) was designed to support the implementation o f the Five Year National Statistics Plan. The public finance component (Minfin) was designed to support the Public Finance Modernization Program. The Central Bank component (BNA) was supporting the improvement o f BNA operations and the implementation o f Angola’s national payment system.

5. became effective in 2003, Implementation pace was also slower than originally anticipated largely because o f the country’s post-conflict situation. During 2004, only the Central Bank component moved forward as planned while the Minfin component made only modest progress. In the f i rst quarter o f 2005, strong efforts were made to bring the project back on track. Both Minplan and INE components started to show some progress while the BNA component had already reached a key performance indicator in November, almost as planned. By mid-2005 about 30% o f project funds were committed evidencing that many activities mainly consulting contracts were ongoing. However, by mid 2006, despite sustained efforts, the disbursement lag was almost 23 months when compared with initial clearly over-optimistic disbursement forecasts. At that time, a decision was made to prepare a restructuring.

The project started later than anticipated: i t took six months before the project

6. Between 2005 and 2006, the rating for “Public Sector Management and Institutions,” improved. The project development objective (PDO) was rated satisfactory (S) as the Bank concluded that the likelihood to reach PDOs was high mainly because implementation had seriously picked up demonstrating ownership and some modest progress as measured by the post conflict performance indicators (PCPI).’ However, the overall implementation progress was rated moderately unsatisfactory (MU). (See Table 1 : PCPI Summary Scores.)

At year end 2006, disbursements stood at 35% and committed funds at 50%.

Table 1: PCPI Summary Scores

2005 4.0 1 2o06 4.2 I Post Conflict Performance Indicator .......... .) .......................... ................................................. ~ ...... ” ............................ ...................................... ........................................................................................ i. 1 Securitv and reconciliation

7. The main reasons for restructuring are the following.

a) Accords to ensure Bank’s support through this operation would be swiftly available. At that time, the need to speed up preparation led to some design

Design. Project preparation was accelerated after the April 2002 Peace

As mentioned earlier, EMTA i s not supporting al l reforms but key Public Sector ones and has clearly contributed to supporting their improvement.

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issues, essentially an over-ambitious project in scope with very optimistic disbursements projections, a large number o f activities and l o w cost estimates.

b) both the Bank’s and Government side. This situation led to a slowdown in the first months and low initial disbursement. This initial delay makes it necessary to adjust the timeline. (See Annex 1 : Status o f Implementation as o f March 3 1, 2007.)

Implementation. The project suffered from a lack o f stable leadership on

i> Between Board presentation, effectiveness and February 2005, four different TLs were appointed and at the same time some o f the r isks identified did materialize to a certain extent. The main mitigation measure identified was “a close continuous dialogue” which could not take place at that time as the turnover o f TLs made it difficult to establish and pursue such a dialogue. But such close continuous dialogue was restored in March 2005 and i s ongoing.

ii) a Vice Ministerial position was cancelled within the Ministry o f Planning. As a result, the coordinator o f EMTA changed from the Vice Minister to the National Director o f Studies. This change took place after project launch and slowed down project implementation.

A government reshuffling o f positions took place early 2004, e.g.,

iii) FY06,2 and specifically as a “problem project” since June 2006.

As a result, the project has been rated “project at r i sk ” since

c) supported by EMTA were not implemented as scheduled. The ambitious Five Year Statistical Plan i s partially being implemented with much delays and the Public Finance Modernization Program i s behind the init ial clearly over- optimistic schedule. Several postponements o f election dates created uncertainties which impacted some statistical activities that could not be carried out in the middle o f an election period. The GOA focused on successive two-year Programs (2004-2005,2005-2006, and 2007-2008) and has not yet adopted a medium-term program beyond the elections. Moreover, the increase o f o i l prices provided the GOA with means to fund some planned activities itself. For instance, within the fiscal revenue sub-component, the Minfin decided to contract directly a consultant to provide technical assistance in the o i l revenue management area.3

Changing environment. The various governmental programs meant to be

’ EMTA, l i k e every project in the Angola portfolio-was given two automatic flags when it became effective: a country record flag and a country environment flag. The current TL raised an M&E flag during FY06. When disbursements reached the 24 months mark behind schedule, the slow disbursement flag was raised. Finally, on June 30, the TL raised the implementation flag. I t should be noted that the consulting firm had been introduced by the Bank to the GOA in the context o f

the 2001 Oil Diagnostic Study and had performed satisfactorily; however, EMTA did not fund the contract.

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d) the clearest indication o f GOA’S commitment to reforms to be supported by EMTA was the fact that GOA had articulated and initiated a number o f related or requisite reforms well before project effectiveness, such as INE’s Five Year Statistical Plan, Minfin’s Program for the Modernization o f Public Finance Management Process, and BNA’s Payment Systems Strategy. Today, these programs are s t i l l moving ahead, albeit in most cases much slower than originally anticipated, generally for lack o f capacity, a consequence o f almost 40 years o f conflict. Recently, political support to these reforms has been re-affirmed publicly at the highest levels o f the State: the President in his N e w Year’s speech detailed priority actions for the Government in 2007, and specifically stated that “to identify, l i s t and register State non-financial assets and manage those more efficiently i s a priority.” In 2006, the Prime Minister announced in Parliament, Government efforts to modernize the public procurement Law and regulations. These are two areas where EMTA support has been and s t i l l i s instrumental. Over the last 24 months, at the technical level, ownership i s being demonstrated by steady progress in all activities as well as drive for achieving quality results. To a large extent, reasons for delays at the same time reflect strong ownership, since technical groups in charge o f a specific task discuss terms o f reference in- depth and by seeking consensus. Finally, throughout the project period, counterpart funds have consistently been made available in a timely manner.

Demonstrated commitment and ownership. Initially, at the design stage,

111. PROPOSED CHANGES

Restatement of the Project Development Objectives

8. The project objectives in the P A D were initially articulated as follows: “ to strengthen the Government’s capacity to formulate sound analysis and to implement sound policies in areas which are critical to the management ofpublic resources, including: poverty analysis; the setting-up of a monitoring and evaluation (M&E) system; the formulation and monitoring of a sound public investment program; and the establishment of a more transparent and eficient public finance framework.”.

9. The PDO would be reformulated as follows: “EMTA supports GoA’s efforts to improve eficiency and transparency ofpublic resource management, by improving the institutional framework and building capacity in relevant public institutions to articulate and implement public investment and financial policies and processes. ”

10. the means (how). It keeps “public resource management” at the center and the improvement o f “public resource management” remains the overall objective. The proposed formulation l i n k s the overall objective more closely with “transparency and efficiency”. It recognizes that E M T A i s only one o f many instruments, which therefore needs to be adapted to GoA’s pace o f implementation o f i t s reform program and eventually shifting emphasis. It clarifies what i s meant by a “public finance framework”

The proposed new formulation separates more clearly the objective (what) from

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that i s “institutional framework and capacity”. Finally, the proposed formulation remains focused at the level o f the objective since the l i s t o f “including items” in the init ial formulation i s not exhaustive nor reflects the breadth o f the project with four rather independent components.

1 1. Support Strategy, the f i rs t Interim Strategy and the May 2007 Interim Strategy , where improving Governance was and remains a strategic ~ i l l a r . ~ This objective i s also consistent with IEG recommendations articulated in the recent Angola Country Assistance Evaluation Report (February 27, 2007) in which it i s stated that “the Bank can make a difference in the extent to which Angola uses i t s resource boom effectively by supporting.. .the creation o f institutions and capacity to ensure judicious use o f public resources.”

This restated objective remains fully consistent with the init ial Transitional

Articulation of a results framework, clarijication of outcomes sought

12. articulate a results framework that is robust and which identifies results for which EMTA can be held accountable. It identifies six clear outcomes and related indicators, based on the revised outputs, which are in turn based on a revised activity plan. (See Annex 2: Results Framework and Monitoring.)

The process o f restating the Development Objectives provides an opportunity to

13. Credit Agreement (DCA) and provides a snapshot o f current achievements. Except for one performance indicator linked to the Central Bank and the payment system, no performance indicator has been reached so far although progress has been made including in areas not measured by those indicators such as the Finance Inspection Department and the Non-Financial Assets Department.

Annex 3A details initial indicators which were included in the Development

14. oriented as opposed to output oriented; hence, EMTA supports the Government in becoming more results oriented. Some indicators are dropped (e.g. establishment o f routines, institutionalization o f the o i l financial model, training programs implemented at BNA); some indicators are being adapted and articulated more precisely allowing objective follow-up (new methodologies used in monitoring the 2007-2008 GOA program in a number o f provinces and sectors). New indicators are introduced for the Finance Inspection Department o f Minfin and Internal Audit Department at BNA with precise numbers o f audits with follow-up actions. Annex 3B details the proposed new performance indicators, drawn from the Results Framework.

We propose some new performance indicators that are to a larger extent outcome

“The objectives o f the proposed interim strategy for Angola are to (a) help strengthen public sector management and institutional capacity; (b) rebuild critical infrastructure and support delivery o f publ ic services for poverty reduction; and (c) promote growth o f non-mineral sectors.” F rom the Interim Strategy Note M a y 2007, paragraph viii, page iii.

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Reduction in the number of activities and reallocation of Credit proceeds to focus on main outcomes

15. First, it i s proposed to drop 19 initially-planned activities totaling approximately US$3.7 million. Initially, this project included more than 1 10 activities to be procured. During the course o f implementation, some activities were combined and others dropped as they were either (i) implemented directly b y the Ministry concerned (for instance “monitoring o i l revenues” in the Ministry o f Finance), (iij or dropped as they became a lower priority for the institution in charge (“legal framework o f the tax system”), (iii) became part o f an over-ambitious plan that was only partially implemented, and (iv) or were implemented with other donors’ support (“sectoral statistics” in INE component). The overall reduction in activities, do not result in changing the PDO. (See Annex 4A: Activities Dropped.)

16. million. These support two objectives (ij to complement planned actions with additional needed T A and capacity building activities and (iij to respond to the government’s requests by supporting current priorities with three main new activities. First, support will be provided to the National Statistics Institute in articulating a strategic IT plan helping INE to rationalize i t s essential I T system which up to now has grown in an ad hoc fashion. Second, support will be provided to the Central Bank in the area o f Anti Money Laundering and related prevention measures (AML) hence supporting BNA in i ts efforts to continuously improve the quality o f Angola’s financial system by ensuring that it has the means to fight money laundering. Third, support will be provided to BNA to implement the final stage o f the establishment o f the Angolan accounting and auditing profession, an essential building block o f the financial system infrastructure. (See Annex 4B: New Activities.)

Second, i t i s proposed to add 1 1 new activities, totaling approximately US$2.1

17. Third, for 19 activities, it i s proposed to adjust the budget with the real known costs and/or better estimates: these adjustments lead to an additional cost o f approximately US$4.2 mill ion. Some activities had been significantly underestimated initially (essentially implementation o f the new National Accounts with INE, and RTGS with BNA); in some cases, the scope o f the consultants work was broadened to better align support with needs and ensure results (non-financial assets in Minfin). (See Annex 4C: Adjusted Activities.)

18. The coherence o f the proposed changes has been ensured by applying the following principles: simplification, stronger focus on sustainable results, strong ownership. The proposed changes would increase total project costs to US$22.2 mi l l ion once contingencies are allocated, from an initial total cost o f US$20 mill ion. However, the IDA credit would remain unchanged in SDRs. The cost increase would be financed by about 1.9 mi l l ion additional U S $ linked to the SDR-US$ exchange rate variation and the remainder with counterpart funds to maintain agreed financing percentages. These changes would result in the reallocation among disbursement categories o f 36% o f the Credit. But this percentage overstates the extent o f the changes as the share o f

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Information Technology (IT) i s substantial in the Project5. Annex 5 provides a detailed description o f the four components. Annex 6 A summarizes the impact o f the proposed changes o n each o f the four components and Annex 6B on the disbursement categories.

Extension of the Closing Date by 24 month

19. obtain results. After approximately 15 months o f close implementation support, i t became clear that it would not be possible to catch up on init ial delays. For this reason, it i s proposed to extend the Closing Date from December 3 1,2007 to December 3 1 , 2009.

An adequate timeframe i s necessary to implement the proposed activities and

20. concur that Project objectives continue to be achievable within the proposed new timeframe. The implementation arrangements remain satisfactory and will be strengthened. The Borrower and the Bank have agreed in writing on a specific Action Plan and Schedule to complete the Project within the extension period (see also the letter from the Minister o f Planning dated November 20, 2006.) Finally, a l l audits are current for this and other ongoing projects being implemented in the country (see Annex 7: Implementation Plan 2007-2009).

In compliance with Operational Policy (OP) 13.30, the Borrower and the Bank

Implementation Arrangements

2 1. The implementation arrangements have not changed but are being strengthened. These arrangements i.e. Ministry o f Planning with overall responsibility, implementing agencies in charge o f technical coordination for each component, and the P IU providing administrative support, remain adequate. The clarified PDO combined with the new Results Framework with detailed arrangements for results monitoring will facilitate monitoring o f the project (see Annex 2). This monitoring task, based on P I U reports, i s the responsibility o f the Steering Committee (SC) which i s headed by the Project Coordinator (PC) and includes technical coordinators f rom all components. But the SC has not functioned as initially planned: the monitoring arrangements were not detailed enough and each component was managed rather independently. In this context, the PC did not convene regularly the SC as initially planned. It i s now recognized that a functioning SC that meets regularly (e.g. quarterly) i s important to monitor progress and achieve planned objectives.

22. PC and i s in charge o f procurement, financial management and administrative support; it produces a quarterly implementation report for the PC and the SC. The P I U i s headed by an Administrator and comprises a procurement officer, a project accountant and support staff. EMTA’s P I U i s well organized and efficient; it has provided technical and administrative support to all other recently established PIUs in the Bank’s portfolio.

Integrated in the Ministry o f Planning, the semi-autonomous P I U reports to the

IT can be included in the “goods” disbursement category or in the “consulting services” disbursement 5

category depending on the exact balance between software & equipment and associated consulting services. A modest change can trigger a change in the category. (See Annex 6B.)

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23. The auditors have issued unqualified opinions on the 2004 and 2005 project financial statements. The 2004 management letter pointed out that the accounting system for the project was inadequate. In the management letter for fiscal year 2005, the auditors reiterated their previous assessment o f the accounting system and did not identify any major deficiencies in the project system o f internal control or any other accountability issues, except for weaknesses in contract management and the registration o f fixed assets. However, appropriate corrective actions have been taken by the project financial management team to address identified issues.

24. once substantively vetted by the implementing agencies. The P I U Administrator i s proficient in Bank procurement procedures and has ensured adequate quality control over those processes. E M T A procurement unit does have a Contract Monitoring System, which has been improved after 2005 Audit report and since then was found to be adequate for recording implementation o f the various contracts signed. The system i s updated once a payment i s effected and reviewed weekly by the P IU Administrator.

Procurement processes have generally moved swiftly through the various phases

25. an Excel spreadsheet which had been agreed to at the time. Nevertheless, the auditors have noted that this method caused delays in the recording and preparation o f financial information and le f t the project vulnerable to the risk o f loss o f data.6 However, these r isks were deemed low considering the l o w level o f disbursement at that time. In late 2005, the PIU identified and purchased an accounting software package. I t s installation and customization (accounting plan and financial management reports) started in 2006. Changes in the project accounting staff affected the implementation schedule; but it i s noted as o f April 2007 that the new software i s fully operational in parallel with the Excel system that it replaces during a transitional period that ends in June 2007. All accounting data for 2005 and 2006 have now been transferred into the new system. The financial statements for the year ended 3 1 December 2006 will be prepared using data generated from the new system, and the audit will assess the adequacy o f these accounts and o f the new system on the ability to maintain accounting transactions, to record fixed assets and to record information necessary for proper contract management.

Since the project was declared effective, accounting transactions were recorded in

Coordination with other Donors

26. Recently, more donors have become involved in supporting the Government in the area o f Public Finance Management. Today, this Group o f Donors includes DFID, EC, Norway, UNDP, USAID and the Bank. This Group i s coordinating through regular meetings but i s s t i l l seeking the best way to coordinate efficiently with the GOA. With a 24-month TNcapacity building project, USAID focuses on supporting a Fiscal Programming Unit in the Ministry o f Finance, which i s meant to collect in a timely way quality data to measure impact o f the macroeconomic programs. Currently there i s no IMF program, but should there be an agreement with the IMF, this unit would be in

In addition and more specifically weaknesses included: (i) susceptibility o f financial management information to unauthorized alterations; (ii) lack o f capacity to produce exception reports; (iii) inaccurate and incomplete contract control sheets; and (iv) lack o f adequate control and security o f fixed assets.

6

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charge o f producing the needed data. It was broadened recently to include support to the elaboration o f Medium Term Fiscal Scenarios. The EC has been involved with the National Statistics Institute (INE) supporting the production o f the Consumer Price Index, an enterprise census and a Core Welfare Indicators survey which should be available in May 2007. In addition, the EC i s preparing a US$17 mi l l ion TNcapacity building project, scheduled for effective start in 2008, for both the Ministr ies o f Planning and Finance. The EC project complements well the EMTA project since the EC’s TA focuses on coordination o f both Ministries during budget process and at the provincial level in six pilot provinces. DFID has provided input into the EC preparatory work. Norway has focused i ts support on INE in the past and i s assessing exactly in what form assistance would be pursed. UNDP focuses on fiscal decentralization issues.

IV. ANALYSIS

27. financial, technical, institutional or social aspects o f the project as init ially appraised. EMTA remains a project dealing with public sector management issues. It continues to be the main lending instrument o f the Bank to support GOA in its effort to improve “governance infrastructure,” i.e. i t s institutional framework, systems and capacity for financial management o f public resources. It i s therefore essential to adapt this instrument to the current situation, to align it with GOA priorities in order to remain synchronized and fully engaged in those areas that would lead to sustainable results. Governance was at the core o f the March 2003 Transition Support Strategy, again in the January 2005 Interim Strategy and continues to remain so in the M a y 2007 Interim Strategy; EMTA remains the instrument to operationalize this strategic pillar.

The proposed changes do not have a major effect on the original economic,

28. specific goals and outcomes that are core to the development o f effective states and engaged societies in Africa, as recognized in the “Capacity Development for Africa: Management Action Plan” (report no. SecM2006-0323 dated July 14,2006): EMTA directly supports more reliable and accountable public financial management systems and better assessments in poverty reduction progress. Furthermore, this proposed restructuring recognizes the new capacity development paradigm insofar as it i s more focused and results-oriented.

EMTA continues to be a capacity-building project which supports one o f the five

29. remains a category “C” project and it does not trigger any safeguard policies. N o exception to Bank policies i s being sought.

The proposed changes do not change the environmental category o f this project: it

V. EXPECTED OUTCOMES

30. “improved monitoring and preparation o f sectoral and provincial investment plans and programs”; the related indicators are linked to the ongoing 2-year program and the upcoming 5-year program. For INE, the outcome i s “regular production and dissemination o f socio-economic data”; the related indicators are l inked to publication o f

There are six clear outcomes and related indicators. For Minplan, the .outcome i s

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national accounts and household surveys. For Minfin, the outcomes are “transparent and efficient management o f State non-financial assets”, and, “improved internal accountability”; the related indicators are linked to the publication o f General State Accounts, to large public contracts being procured under the new Law, and to a number o f internal audits. For BNA, the outcomes are “an efficient and safe settlement mechanism for large amounts” and “an improved internal accountability”; related indicators are linked to smooth running o f the Real Time Gross Settlement (RTGS) system, and a number o f internal audits.

VI. BENEFITS AND R I S K S

3 1. The benefits o f restructuring this project are linked to the outcomes o f the Project. EMTA remains the major instrument o f the GOA to strengthen i t s financial governance in many important areas. It i s now broadly recognized that lack o f governance in this area has been a key constraint to development o f resource-rich countries such as Angola. Indeed, if Angola i s to harness i t s current windfall accruing from both higher level o f o i l production and higher prices for sustained growth, better accountability with checks and balances in public spending i s probably the main element. EMTA builds on current GOA willingness to modernize and adapt such “governance infrastructure.”

32. track and increases the likelihood o f the project achieving i t s development objectives.

With the proposed restructuring, the project’s implementation i s expected to be on

3 3 . There are three categories o f identified risks.

- Risk linked to GOA overall attitude towards reforms. Legislative election i s likely to take place in late 2008 and Presidential election in 2009. This project straddles a sensitive period when some reforms may remain on hold. But this risk i s rated medium given the fact that political will appears to be behind EMTA’s work as reflected, inter alia, in the Minister o f Planning’s letter announcing i t s desire to restructure EMTA and by timely provision o f counterpart funding.

- Specific risks linked to each component. Risk linked to implementation capacity i s rated high in the case o f Minplan and INE. Risk linked to coordination o f various interrelated TA by different providers is rated substantial in the case o f Minfin. Risk linked to delay in implementation i s rated l o w in the case o f BNA.

- Risk linked to insuficient coordination among various institutions. Institutional coordination amongst different public entities i s weak in Angola. Risk linked to insufficient coordination among various institutions i s rated medium.

34. Mitigation measures include essentially a well-functioning project Steering Committee and continuous close dialogue between government counterparts and the Bank. The SC would mitigate r isks linked to lack o f coordination among components but also risks linked to implementation capacity to some extent, as experience i s better shared among components. Quality dialogue can only be achieved through Bank staff (TL)

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stability and an adequately-staffed Country Office, leading to close implementation support. The Bank has been involved in these areas for some time, longer than any development partner, and has a clear and recognized comparative advantage.

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ANGOLA: Economic Management Technical Assistance Project

Annex 1: Status of Implementation as o f March 31,2007

As o f March 3 1,2007, about 60 contracts have been signed. The project disbursed about US$8 mi l l ion o f which US$6.5 mi l l ion are from IDA funds and US$1.5 mi l l ion are from GOA, representing about 40% o f available funds; more than U S $ l O mi l l ion have been committed.

Component 1: Ministry o f Planning

- Program Planning Methodologies A set o f methodologies, articulating sectoral and provincial programs remains an essential building-block o f the Ministry o f Planning’s capacity to produce a meaningful public investment program at national level. The methodological framework has been discussed late 2006 among sectoral ministr ies and provincial governments, and approved by Minplan. Training within Min is t r ies i s ongoing.

- Actualization of “Estrategia de Combate a Pobreza ” The ECP, which i s expected to become Angola’s version o f a PRSP, i s being updated to include a macroframework in l ine with the most recent financial developments in the country. A second draft has been submitted to the Minister o f Planning.

Component 2: National Institute o f Statistics

- Conclusion of the first Household survey The consultant’s final draft o f the 2000-2001 survey has been reviewed and finalized by INE. The objective i s to publish the report during the f i rs t semester o f 2007. This survey will support the establishment o f a base line. Init ial graphic work i s being reviewed.

- Preparation of the second Household survey In procurement phase: INE i s currently in the process o f selecting the best technical partners for technical support before during and after the realization o f the survey, which i s scheduled to start mid 2007. Negotiations with the I C B winner are likely to take place in May/June 2007.

- National Accounts Technical Assistance has been ongoing for more than a year. Currently the consultant and INE are working on finalizing accounts for the 2002 base year. Then the accounts o f the four years from 2002 to 2005 will be revised; the current objective i s to obtain a robust result (i.e., revised 2002,2003,2004 and 2005 accounts) before June 2007. Subsequently, TA will focus on building capacity to use the successfully-applied methodology for future updates.

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- Other support provided Satellite images and related equipment i s necessary to design and prepare adequate samples in surveys and for the population and housing census scheduled for 2009 (the census i s not part o f EMTA). It i s estimated that by July 2007, INE would have received images covering the 52 main cities.

INE i s developing a master plan for IT integration. I t s init ial report was delivered to INE in February 2007.

Component 3: Ministry o f Finance

- State non-financial assets The diagnostic phase and second phase have been completed insofar as the institutional and regulatory recommendations have now been produced. These are being discussed more broadly inside Minfin before approval and submission to the Council o f Min is ters for final approval expected during the third quarter o f 2007, and implementation thereafter.

- Finance Inspection Department The Technical Assistance provided, resulted in recommendation for a new legal and institutional framework. These recommendations are being discussed more broadly inside Minfin before approval. Minfin’s objective i s to submit a proposal to the Council o f Ministers for final approval before the end o f 2007.

- External Debt Management The database was updated, and training was successfully provided in the Ministry o f Finance, Central Bank and Ministry o f Planning to produce and use reports that can be generated by the Debt Management Financial and Accounting System (DMFAS). Guidelines to analyze and provide quality control have also been established.

- Public Procurement Reform A technical working group with a secretariat has been established to lead this technical work. The initial TA provided by the consortium o f consultants winner o f the ICB i s not satisfactory. Changes are taking place and negotiations with a new firm have been tentatively scheduled for May/June 2007.

- Comprehensive Capacity Building Plan Li t t le progress has been achieved after an init ial analysis because o f a lack o f collaboration from various Departments. But an init ial draft final report including diagnostic work, a program outline and detailed modules, was submitted in November 2006 to al l Department Directors o f Minfin. This report i s s t i l l being analyzed, in light o f other complementary on-going activities such as generic training activities to further develop Minfin’s capacity to carry out i t s hnctions.

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Component 4: Central Bank

- Payment system: Real Time Gross Settlement system RTGS has been functioning satisfactorily since November 18, 2005. Additional capacity-building activities are being contemplated in the broad area o f payment systems. BNA i s preparing Terms o f reference to that effect.

- Internal Audit The Technical Assistance provided produced a draft version o f a new regulatory and institutional setting for the Audit Department. But the technical assistance provided by the consultant has to be coordinated more closely than anticipated with TA provided by Bank o f Portugal. Adjustments are being contemplated and will be finalized in June 2007.

- Other Capacity-building took place in the area o f project management with an emphasis on strategy and results. BNA i s preparing terms o f reference for TA and capacity-building in various other areas: accounting, bank supervision, non bank financial institutions, anti- money laundering legislation, training programs in strategic planning and management processes.

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ANGOLA: Economic Management Technical Assistance Project

Annex 2: Results Framework and Monitoring

Use o f Outcome Information Outcome Indicators PDQ Outcomes

PDO: “EMTA supports GOA’S efforts to improve efficiency and transparency ofpublic resource management, by improving the institutional framework and building capacity in relevant public institutions to articulate and implement public investment and financial policies and processes. ’’

1. Ministry of Planning.

Improved monitoring and preparation o f sectoral and provincial investment plans and programs 2. National Institute of Statistics.

Socio economic data regularly produced and disseminated

3. Ministry of Finance.

3.1. Improved transparency and efficiency in the management o f State non financial assets

3.2. Improved internal accountability

o 2009-2013 Con program prepared: number of sectoral and provincial plans prepared with ncw methodology

o National accounts prepared and published according to SNA93

o ECP/MDGs data produced and published annually

o Produced and published General State Accounts and budget including l ion financial assets

contracts procured under the new public procurement Law

o Number o f audits by INF with follow up actions

o Number of large

The indicator information i s being used to monitor that a methodology has been developed and i s being actually used to improve monitoring and preparation o f public investment programs at sectoral and provincial levels.

Assess that the country GDP computation methodology i s f inal ly in line with best practice and recommended international norms

Assess the availability and dissemination o f poverty monitoring data

Assess the ability o f Minfin to collect information on non financial assets and broadly shares that information.

Monitor that the new public procurement legal, regulatory and institutional framework i s effectively implemented

Assess ability o f Minfin to conduct audits and implement recommendations to improve

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4. Central Bunk.

4.1. Efficient, and safe settlement mechanisms for large amounts consistent with SADC systems to facilitate cross border payments

4.2. Improved internal accountability

Intermediate 14esults For each Component

Component One: Ministry Articulated and harmonized methodology to monitor and plan provincial and sectoral investments

Q Number o f errors for two consecutive yews

o Ntimbcr o f audits by lnternal Audit (CAI) with follow-up actions

Itesults Indicators for Each Component

' Planning 2 Q ~ 7 ~ 2 0 0 8 GOA I

Will be able to demonstrate that the system works smoothly

BNA conducts audits and implement recommendation to improve

Use o f Results Monitoring

A consensus has been reached on an adapted methodology

program monitored: number o f sectoral and p r ~ v ~ ~ ~ ~ ~ a ~ plans monitored with new methodalagy

D New Public Procurement system

State non financial assets: regulatory framework, processes and systems established to allow recording

The on-going program will be monitored with the new methodology

Component Two: National Institute o f Statistics I

Poverty Monitoring * 2 0 ~ ~ - 2 ~ ~ 1 I-louschoId siiwey published

* Publication o f first nab'iond Household survey draft report

* Publication o f final report

Component Three: Ministr o f Finance * New draft law presented

to National Assembly New public procwenient ~ ~ s t i i u t ~ ~ ~ ~ l fraxcwork presented to Council o f Ministers

New draft law presented to the Council o f Ministers

The main surveys providing poverty data will have been completed and disseminated

These indicators o f intermediate results allow to monitor that a modern and adapted public procurement system i s being established

Allows to monitor that a consensus within Minfin and beyond i s being reached.

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Public debt management: Improved public external debt management system. developed Newadapted institutional framework for public liabilities management

National Inspection of Finance;

N e w adapted framework Component Four: Central

0 Real Time Gross Settlement system (RTGS) fully functional with adequate capacity New institutional organization o f Internal Audit Department (GAI) with new manuals and norms for internal controls

Laundering and related prevention measures:

- New adapted framework - Capacity built to implement

* Ant iMoney

* MIS for PubIic dcbt management includes updated infomiation

* New debt management framework approved by Council of Ministers

Adapted frmework approved by Council o f Ministers

lank

* Dawntime for 2 consecutive years

* New organization o f Central Bank Audit Department approved by BNA Board,

New AML framework approved by Council o f Mini st ers

Al lows to monitor the fact that Minfin i s able to better manage public liabilities.

An adequate framework i s established consistent with various Gvt institutions main responsibilities (Minfin, BNA and Minplan).

Allows to monitor that a consensus i s reached that ensures that internal accountability improves in a sustainable way

Al lows to monitor that long term sustainability o f this crucial part o f the Angolan payment system i s achieved.

Adapts the audit department with i t s new functions

Monitors the process and ensures a consensus is reached for the establishment o f the legal and regulatory framework to fight money laundering.

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ANGOLA: Economic Management Technical Assistance Project

Annex 3A: Ini t ia l Performance Indicators and Status

(March 2007)

Performance Indicator ....................................................................................................................................................................... ~ Completion o f Methodologies for the -

elaboration o f provincial and sectoral plans and programs Establishment o f routines and criteria for the monitoring o f SIGIP (Public Investment Management Programming System)

............................................... " .............................................................................................................................................

Regular production o f annual National Accounts Reports based on United Nations Systems o f National

....................... Accounts (SNA 93) Regular Production o f Annual Poverty and PRSP monitoring reports

.................. " ......................................................................................

................................................................................................................................... " .................................................. Establishment o f the necessary institutional framework at the Ministry o f Finance for the regular utilization o f the o i l sector financial model as a tool for fiscal policy formulation.

.................................................................................................................................................................................. Establishment o f the legal and regulatory framework for public procurement reform

.......................... ........................................................................................ Full implementation o f the Real Time Gross Settlement " (RTGS) System ..........................................

Full implementation o f the training program designed to support BNA's restructuring Drocess.

Timeframe ..................................................................................

December 3 1 2005

December 3 1 2005

From July 1 2006

From July 1 2005

December 3 1 2003

........... ~ ........... ...........................................

December 3 1 2004

July 1 2005

December 3 1 2006

Status .......................................................................................................................................................

Consultant hired,. assignment ongoing ..............................................................................................................................................

Minplan has decided not to seek EMTA support. Consultant hired, assignment ongoing ...............................................................................................................................................

Consultant hired, assignment ( going. Init ial report approved

First household survey: report being published Second household survey: selection process on going for T A PRSP: assignment to update macroframework, on going: report being finalized

Minfin decided to implement this activity outside o f EMTA and contracted directly Aberdeen University Petroleui Economic Consultancy (AUPEC). Ongoing ............................ assignment. Consulting assignment on going: f i rs t draft o f procurement Law produced bi was considered unsatisfactory by Technical Working Group; new consultant i s beinn hired

........................................................................................................... .............

.........................................

Implementation completed since November 18 2005.

N o progress

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ANGOLA: Economic Management Technical Assistance Project

Annex 3B: Proposed New Performance Indicators

Component Responsibility

Ministry o f Planning ...............................................................................................

............................................................................................ National Institute o f

Performance Indicators

with new methodology to monitor and prepare programs - 2007-2008 GOA program monitored: 3 provincial programs and 3 sectors programs

- 2009-20 13 GOA program prepared: 5 provincial programs and 5 sector programs - Preliminary set o f National Accounts prepared and published according to United Nations system o f national accounts (SNA93)

........................................................................... ............................................................................................ ...........................

- Complete set o f National Accounts prepared and published according to SNA93 Estratkgia de Combate a Pobreza Millennium Development Goals data produced and published: - Final report on the First household survey - Preliminary report on Second household survey - Final report on Second household survey

Starting with 2007 accounts, produced and published General State Accounts and budget, including non financial assets - N e w draft Public Procurement L a w presented to the National Assembly - 3 large contracts for public works procured following the new Law. - N e w Adapted framework for Finance Inspection Dept. approved by Council o f Ministers - In 2008, minimum o f 4 audits conducted by Finance Inspection Dept. with follow up actions - In 2009, minimum o f 10 audits with fo l low up actions New public debt management institutional framework approved by Council o f Ministers - Two years o f transactions in RTGS system without errors

- New institutional organization o f BNA Internal Audit Department approved by BNA Board. - Minimum o f 10 audits conducted by Internal Audit Department with fol low up actions - Minimum o f 12 audits with fol low up actions - N e w legal and regulatory framework for Anti Money Laundering and related prevention measures articulated - N e w AML framework approved by Council o f Min is te rs

.......................................................................................................................................................................................................................................................

.............................................................................................................................. ...........................................................................................................................

.................................................................................................................................................................... ...................................

..................................... ..........................................................................................................................................................................................................

................................................................................................................................................................................................................... .” ............................................

.......................................................................................................................................................... ” ................................................... ......................................

............................................................................................................................................................................................................ .............................

............................................................................................................................................................................................. ......................................

Timeframe

Dec. 31 2008

June 30 2008

June 30 2008 .............................................................................

June 30 2009

June 30 2007 June 30 2008 June 30 2009

June 30 2009

June 30 2008

June 30 2009

Dec. 31 2007

Dec. 31 2008 Dec. 31 2009

June 30 2008 Dec. 31 2006 Dec. 31 2007 Dec. 31 2007

Dec. 31 2008

Dec. 31 2009

June 30 2008 Dec. 31 2008

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ANGOLA: Economic Management Technical Assistance Project

Annex 4A: Activities Dropped

................................................. j .............. Statistics Component B. 1.1 . External trade statistics: evaluation coverage, quality and

i mesentation.

.................................................................................................................................................................................................................................................... ...................................... .................................... ~

172,94 1 B. : " j

j

......................................................................................................................... i Harmonization o f financial .................................. and monetary " .............................................................................................................................. statistics B. 1.3 .(. I ................................................. 24,706 ..

B.2.1 Central and local Government (Public) finance statistics I 49.412 B.2.2 ~ Industrial Statistics I 98,824 ................................................................................................................................................................................................................................................................B� ........................... ............................................................ B.2.3 1 Wage and employment statistics, Informal sector survey I 74,118

148,23 5 49 412

B.2.4 ./ j Education and health statistics j

B.2.5 ~ Judicial statistics ~ j

B.5.3 Reprographic equipment "

............................................................................................................................................ " ........................................................................................................................................................................................... ..j. ........................................................................

..................................................... ............................................................................................................................................................................... ........................................................................................... .................................................................................

.................................................................. .................................................................................................................. ..................................................................................................................... ................................................

................................................................................................................................................................................................................................................................(� ............................. .............................

: Public Finance Component ................................................................................................................................................................................................................................................................�� ........................................................................... C. "

.................................................................................................................................................................................................................................... C.4.2 : Institutionalization o f the Financial .................. '1"""""""""' .............................................................. S I

352,941 ..................................... ......................................... ......... .* .............................................................. C.5.1 ~ Intergovernmental fiscal relations 1 17,647 C.6.1 176,47 1

............................................................................................................................. ............................... ....................... ., ............................. .................................. I Assessment o f the conditions and steps required for the

............................................................................................................................................................................................................. ................. .... " .................... ...L... ........................................................................ ! implementation o f a MTFS ~ C. 10.2 ' IT Eauipment for the financial model 1 57,500 ............................ ................................................ ................................................................................... ................................. .j .......................................................................

.................................................................................................................................................. .................................................................................... ....................................................................................... .................................................. 41 1.765

D. Central Bank Component .<

D. 1.3 ~ BNA Human Resources Restructurinrr D.2.3 : Macroeconomic models: design and implementation o f 148,235

D.2.4 148,23 5 i training program : Improving the timeliness and regularity o f documents ~ produced by BNA Studies and Statistics Department

.......................................................................................................................................................................................................... .......................................................................................................................................................

......................................................................................................................................

........................................ ........................................................................................................................... - f BNA pro

....................................... : ! ....................................................... Project Implementation Unit ................................................ ! ...................... " ............... N o change 0

.................................................................................................. ....................................... " ................... TOTAL 3.69 1.707

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ANGOLA: Economic Management Technical Assistance Project

Annex 4B: New Activities

......................................................................................................... ............................................................. (. ...................................................................................

............................................... A. 1.6 j.. ECP: TA to update the macroeconomic framework

..................................... A. 1.7 ., ! Methodologies: IT equipment and one car 28,000 50,000

....................................................................................... ~ .............................................................................................................................................................. ~ ................................................. ~ ...................................................................................

............................................................................................... .............. ....................................... ~ ................................................................................................. ~ ..................................................................................... I ............................................................................... ................................................................................

B. I Statistics ComDonent - INE ........................................... 3 ...... : ............................................................... I .......................................................................................................................................................................................................... .....\ .............................................................

..................................................... B.5.6 ' : Staff Training 2006-2009 f 200,000

................................................................................................................................................................................................................................................................•� B.5.1 Information Technology: Strategic Plan- 250,000 ................................................................................................................................................................................................................... ................................................................. i. ..............................................................................

i I ................................................................................................................................................................................................................................................................ " .......................................... ' ..............................................................................

.................................................. C. ~ : ................................................................................................................................................................................................................................................... Public Finance Component ....................... !" ~

I ..............................................................................

50,000 ......................................... ......................................... ............................................................................................................................................................................ ................................................................................ (2.10.6 . : Equipme "

1 ................................................................................................................................................................................................................................................................}� ........................................................................................ D. Central Bank Component ............................................................................................................................................................................................................................................. .............................................. ............ 152,000 ................................ ............................................................................................................................................................................................ ..................................................................................... ........................................................ D. " 1.4 j Training in strategic mapping with balanced ^. scorecard "......I

D.2.6 I TA to improve the legal and regulatory framework for non I 150,000 ~ bank financial institutions

260,000 D.3.4 i Training in payment systems ...j.

............................................... ........................................................... .......................................................................................................................................................................... 420,000 D.4.3 i : TA to establish an adequate AML framework :

D.4.4 I TA to finalize creation o f the Angolan accounting and 3 80,000 ......... ". auditing professions ...................................

D.4.5 200,000

................................................................................................................................................................................................................................................................D� ..........................................................................

.............................................................................

.............................................................................. .............................................................................................. : TA to IFBA to articulate a capacity development plan to

....................................................................................................................... ............................................................................................................................................ ................................................................... improve HR in the financial system

.............................................. ................................................................................................................................................................................................................................................ ...................................................... ". 0

E. i : Project Implementation Unit I N o change

T O T A L 2,140,000

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ANGOLA: Economic Management Technical Assistance Project

r A. A.1.1

B. B.1.2

B.3.1

B.4.1

B.4.2 .................. "" ................

.................................... C. c.2.1

.....................................

.......................... C.3.1 C.4.1 c.4.4 ........................ (2.7.1 C.7.2 (2.7.4

C.8.1

...................................

........................................

...............................

.................................... C.9.1

D. D.l. l D.2.1 D.3.2

..............................

..................................

....................

.................................

..........................

..................................... D.4.1

E.

....................................

...................................

.......................................

.......................................

.................................

Annex 4C: Adjusted Activities

I Initial Budget I Proposed ......................... ~ Budget Planning Component Methodologies for sectoral/provincial programs 230000 : 475,025

" ................................................................................................................................................................................................ ^ ......... ...........................................,.................................. ....................................... ....,........ ..........................................

................................................................................................................................................................................................................................................................̂�

................................................................................................................................................................................................................................................ ? ..................................................................................................

..................................................................................................................................................................................................................................... ............................................... .......................................................... Statistics Component Implementation o f UN system o f national accounts (SNA 93) i 222,353 i 932,347 including trade accounts: Poverty and PRSP Monitoring, Analysis and Studies: Conclusion ................................................................................................................................................................................................................................................................%� / ........................................................................

148,235 I 55,000 ~ .......................................................................................................................................................................................................................................................... ............................. ............................................... ............................. .............................................................. o f the report on f i rs t income & expend. Survey

Cartographic Update Individual consultant, Equipment, Satellite j 1,414,500 ~ 1,233,682 Imagery

3,152,941 3,400,000 Implementation o f the second household income and expenditure survey

Public Finance Component ~ 736000 ~ 1,101,079 Non-financial assets: strengthening DNPE

339,250 440,500 Improving public debt management, con 235,294 350,000 Improving non oi l tax forecasts and monitoring

Strengthening tax assessment and taxpayers' coinpliance ................................................................... 352,941 ................... 350,000 .................. 287500 i 578,400 .................................................................................................................................... ..................................................................................................... i... ................................................... ...! .................... ....................... Public procurement reform: legal and regulatory framework

70,588 1 350,000 Public Procurement reform. Institutional strengthening Public procurement reform: capacity building within three pilot i 690,000 I 500,000 ministries Strengthening Minfin overall capacity: Designing and 450,000 350,000 Implementing a coherent training Program for all executive

Compatibility o f reforms at INF, SIPIP with SIGFE

................................................................................................................................................................................................................................................................�� .......................................................................... .............................................................. ~

............................................................................ ............................................................ .............. . . ~ . ............................................. .....................................

........................................................................................................................................................................................................................... , ....................................................... ,. ......................................................

....................................................................................................................................................................................................................... .~ ............................................................ ,...,. ................................................

................................................................................................................................................................................................................................................................�� ; .......................................................... ? .................... * .........................................................................

.......................................... .......................................... ................... 1. ..... .......................................................................... .......................................................................

................................................................................................................................................................................................................................................................�� " ..................................................................................... " ...........................................................................

............................................................................................................................................................................................................................................

......................................................................................................................................................................... ............................................................................. ....................................................................... " .........................................................

................................................................................................................................................................................................................................................................�� ......... " ..................................................................... ...l ............................................................................

Departments i ........................................ ........................................................................................................................................................................................................... ............................................................................. ......... ...* ...................................................................... 882,353 i 1,300,000 ........................................................................................................................................................................................................... ........................................................................................

................................................................................................................................................................................................................................................................�� ~ ~ ............... j.. ..................................................................... Central Bank ComDonent ............................................................................... L ................................................................................................................................................................................................ .4.. ................................................................................. " ....................................... ......................

.................................................................................................................................................................. Improving BNA's internal controls

Acquisition and installation of, and technical assistance for RTGS i

......................................................................... .................................................................................... 141,176 7.. .......................................................................... 24 1,500

3,027,600 Bank supervision: design and implementation o f training program 148235 1 200,000 .......................................................................................................................................................................................................................... ?' ................... ? ................. j.. .............................. " ...............................

1,725,000 software

144,90 304,620

Project Implementation Unit 952,500 1,357,045 ......................................................................................................................................................................................................................................... ..............,. ............................................................................... " ...................................................................... Additional 24 months o f implementation (incl. audits)

TOTAL 12.323.766 ' 16.546.798

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ANGOLA: Economic Management Technical Assistance Project

Annex 5: Detailed Description o f Restructured Components

Each o f the four components o f the project supports the Government’s ongoing reform efforts which are expected to have a positive impact in the design and implementation o f macroeconomic and fiscal policies. The assistance provided by the project focuses on five specific types o f activities: (a) consultancy for technical assistance and studies; (b) dissemination o f information through publications and workshops; (c) equipment; (d) local training; and (e) training on-the-job.

Project Component 1 - PLANNING (Assistance to MINPLAN): the goal o f this component remains to strengthen the process o f Angola’s public investment formulation, execution and monitoring, and supporting the work underway at MINPLAN. This component provides assistance in the preparation o f harmonized methodologies to articulate, monitor and evaluate sectoral and provincial plans and programs, and to build capacity.

(i) Preparation of Methodologies for Harmonization of SectoraUProvincial Plans and programs - this subcomponent assists on the development o f methodologies to harmonize sectoral and provincial plans and programs hence supporting the Government’s medium-term planning process, and supports training, including on PIP methodologies, for staff at Planning, sector ministries and provincial governments. (A. 1.1 ; A. 1.4 ; A. 1 .7)7

(io Update of Macroeconomic framework for the poverty reduction strategy document (ECP). This sub-component supports Minplan in hiring a local consultant already involved in the articulation o f the strategy, with the objective to update the forward looking macro economic framework as the country financial conditions have changed substantially, inter alia, linked to the r ise o f o i l prices. (A. 1.6)

Project Component 2 - STATISTICS (Support to INE): This component has been redesigned so as to finance a set o f complementary actions in support o f INE. The 5 year Statistical Plan was over-ambitious and was not implemented, hence this component needs to be scaled down. I t continues to focus on strengthening INE as an institution while producing the most important statistical data.

The main goals remain: (a) strengthening o f INE through the provision o f training, technical assistance, and other capacity building activities, thereby improving the human resource base of INE; and (b) improvement o f collection, analysis and dissemination o f data by providing technical assistance in the generation o f macroeconomic and poverty statistics, as well as by

These references link to the activities in the project (Annexes 4A, 4 B and 4C). The f r s t let ter refers to the component: A for Component 1, B to Component 2.. . ; the first figure refers to the sub-component within the component; the second figure refers to the activity wi th in each sub-component. Activities are organized by componentisub-component and also by their nature i.e. TA/consulting services, capacity building, goods or operational costs. In order to provide a comprehensive overview, references to the project activities that remain “unchanged” are also included and are shown in italics (see also the Project Appraisal Document, IDA/R2003- 0036, dated March 6, 2003).

7

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updating the sampling frame and cartographic base. Support to INE will be through three sub-components :

(i) National Accounts and Trade Statistics. This sub-component aims to assist in setting up modern systems o f generating national accounts (the implementation o f National Accounts statistics in Angola will be based on the international framework SNA93, System of National Accounts 1993). (B.1.2)

(ii) Second Income and expenditure survey. This sub-component wil l (1) support the updating o f the sampling frame and cartographic base for selected provinces in Angola. The updated base will be used to create a sampling program which will also support the creation o f a future “General Census o f the Population”; and to increase technology transfer for INE; and (2) the second Income and Expenditure Survey which will cover all provinces. (B.4.1 ; B.4.2;BS.l ; B.5.2;B.5.5;B.5.6)

(iii) Poverty Monitoring. This sub-component finances to conclusion and dissemination o f the report o f the f i rs t Household Income and Expenditure survey (2000-2001) which will serve as a baseline to monitor poverty. (B.3.1)

Project Component 3 - PUBLIC FINANCE (support to MINFIN): This component supports MINFIN’s Public Finance Modernization Program. Bank assistance through EMTA focuses on areas complementary to the ongoing assistance contracted out by MINFIN (mainly from Brazil) and provided by other donors essentially USAID. The Public Finance component will comprise the following sub-components:

(i) Internal Control (INF) - This sub-component helps the Finance Inspection Department to become an effective internal control agency, by supporting i t s legal and administrative reform process and strengthening i t s capacity to implement i t s work program. (C. I. I)

(ii) The State Non-Financial Assets Management (DNPE) - The chief objective o f this subcomponent i s to help the National Directorate for the Management o f State Non-Financial Assets (DNPE) ensure that quality information on the non-financial assets o f the State i s generated in order to increase coverage and accuracy o f the General State Accounts (Conta Geral do Estado, CGE). (C.2.1 ; C.10.6)

(iii) Public Debt Management (DNT) - This sub-component has supported the improvement o f the reliability o f information on external debt and capacity building to produce and in analyze debt reports. It also supports the clarification o f the institutional framework for debt management i.e. most likely the process though which the main responsibility for public debt management will be transferred from BNA to MINFIN. (C.3.1 ; C. I O . I )

(iv) Procurement Reform - Following the CPAR, this sub-component supports the implementation o f a new adapted legal regulatory and institutional framework. I t will mainly finance technical assistance, consultancy services and training workshops/study tours. (C.7.1 ; C.7.2 ; C.7.3 ; C.7.4 ; C.I0.4)

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(v) Fiscal Revenues (DNI) - This sub-component will help increase the reliability o f revenue projections and non o i l tax collection. IDA assistance to DNI through the E M T A credit will provide support to the ongoing tax reform process* by focusing on two key policy objectives: (i) to help increase reliability o f non-oil revenue projectionsg, thereby strengthening the Government’s capacity to produce the revenue side o f an eventual Medium-Term Fiscal Scenario; and (ii) to help reduce dependency on o i l taxes by strengthening the Government’s capacity to collect non-oil tax revenues, through punctual interventions geared towards improving tax administration. (C.4.1 ; C.4.4) I

(vi) Training (INFORSEF‘) - This sub-component supports the design and delivery o f a training program for MINFIN, in conjunction with i t s various National Directorates and the National Inspectorate o f Finance, and in coordination with complementary activities initiated by Minfin. (C.8.1 ; C.10.3)

Project Component 4 - CENTRAL BANK OPERATIONS (support to BNA): This component aims to help the Government increase the efficiency o f Central Bank Operations, by following-up on the results o f the FINSEC project and on the recommendations o f the 1999 audit o f BNA accounts.

(i) Supporting BNA s Restructuring Process - Improving BNA’s internal controls - Ernst and Young completed the f irst audit ever o f BNA on their 1999 accounts. However, the accounts are s t i l l published relatively late. Further, BNA does not yet have an independent internal audit and control unit. This sub-component aims at addressing these two issues, by further strengthening BNA’s accounting capabilities and to establish an internal audit and control unit. The component will mainly build internal capacity by training BNA staff in accounting sk i l ls and by establishing and training staff for the internal audit and control unit. (D.l.l ; 0.1.2 ; D.1.4)

(ii) Strengthening of BNA staff banking skills - This sub-component will support selected training initiatives for strengthening BNA staff technical sk i l ls in two domains: (i) BNA’s Supervision Department (Direcqtio de Supervistio das InstituiqGes Financeiras- DSI), and, (ii) payment systems. The training includes both, the traditional tasks, new challenges o f the financial sector and organizational issues (e.g. payment systems, anti-money laundering, reserves management, strategic management and benchmarking). The training will also be performed by specialized consultants. (D.2.1 ; 0. 2.2 ; D. 2.5 ; D. 5.6)

(iii) Payments System - This sub-component has provided assistance in the implementation o f the Real Time Gross Settlement System, by supporting the acquisition and installation o f the

The Tax Reform Committee was appointed in August 2006. The Committee i s currently working on the broad 8

principles that the reform should follow. These principles would be submitted to the Parliament for approval before June 2007. At the same time the Committee i s involved in the strengthening o f both Departments o f Customs (DNA) and National Tax (DNI).

support. Oi l revenue tax projection and collection: as mentioned earlier this i s done directly by Minfm outside EMTA 9

- 27 -

RTGS equipment and software. Amongst i t s potential benefits, this component has facilitated the adoption o f adequate risk control measures, settlement mechanisms and processes, which allows cross border l i n k s with other settlement systems namely with SADC countries; the provision o f services and payment instruments adapted to important sectors o f the Angolan economy, with an incentive to use electronic funds transfer from the payer; and provision o f simple payment services to all, even in less economically attractive regions. (0.3.1 ; D.3.2 ; D.3.4)

(iv) Anti Money Laundering and related prevention measures (AML). This sub component would support BNA to (a) organize an awareness raising seminar for relevant AML stakeholders; (b) articulate and establish the supervisory framework; (c) establish a financial intelligence unit; and (d) build capacity for BNA staff to implement financial sector compliance with AML measures. (D.4.3)

(v) Establishment of the Angolan accounting and auditing professions. This sub-component i s meant to support GOA to finalize the establishment o f both accounting and auditing professions building on work already done and a new dynamic. Currently, there are no recognized Angolan professionals trained in Angola. The development o f such Angolan professionals contributes directly to economic efficiency and governance. This sub component would support the init ial recognition exam for Angolan examiners, articulation o f adequate academic curriculum and the establishment o f the Order o f Accountants in charge o f disciplining the profession. (D.4.4)

(vi) Preparation of a Plan to upgrade banking skills. The Banking Institute IFBA, jointly owned by BNA and commercial banks, was established with Bank support in an earlier project (Finsec). IFBA needs to adapt i t s training quality and capacity to the rapid evolution and growth o f the financial system. This sub component would support the analysis that would underpin any future restructuring o f IFBA and banking academic curriculum. (D.4.5)

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ANGOLA: Economic Management Technical Assistance Project Annex 6A: Impact of Proposed Changes on Components

, ........................................................................................................ i ............................................................. ; .........................................................................................................................................................................

Total 1 3.40 ~ 16.60 ~ 20.00

. j GOA 1 IDA / T O T A L ! ......... ...................................... .... GOA ! IDA TOTAL I " I " ........................................................ ; ................................................................. 1 .............................................................

Proposed Changes (US$ million) " * i Current _ Allocation ~ " " ......................................................................... ..................... ................................................................................ .............................................. ......................................................... ............... ...........................................................................................................................

......................................... 0.07 0 48 055 1 0.11 i 0.61 i 0.72 Planning .i .I :.. !... " : .i + i

0.88 1 4.92 1 5.80 1-27 j 5-06 1 6.33 Statistics * ~ ~

.................................................................................................. ...... ............................................ .............. ..... ....................... ................ .............................................................. ............................................................... ................................................................

........................................................................................... .............................................................. .......

, " .......... ......... i .................................. " .............................

3.74 i 22.19

Public ....... Finance i 5.10 I 6.22 ........... i 0.64 I 5.77 I 6.41 Central Bank 0.73 ~ 4.21 I 4.94 1 5.59 j 6.21

~ ............................................................. * ............................................................ ...............................................................

0.44 1 1.35 I 1.79 1 1 0 . i I 1.42 j 2.52 ................................................................................................. ~ ............................................................................................................................... I ..................................................... * ........................................................... i ....................................................................................... Unallocated 0.16 'i 0.54 ! 0.70 I 0

NB: IDA commitment i s in SDRs. Due the foreign exchange fluctuations, the amount available in U S $ has increased by about 2 mill ion.

ANGOLA: Economic Management Technical Assistance Project Annex 6B: Impact o f Proposed Changes on Disbursement Categories

.......................................................................................................................... ~ ................................................... ....................................................................................................... : .................................................... t""""""""" ................................ * ........................................... ................................................

............................ 0.15 I 0.04 i 0.19 1 0.03 ~ 0.05 0.00 j 0.05 0.00 4-87 1 3.47 j 1.02 8.04 9.06 5.36

................................. ...................... ............................................... .................................................... .................................................... ............................................... ..................... .......... ....... ....................................... .................... Civil Works * i > ' f < " " ~ !.

Goods 0.19 j 4.68 i

0.00 I 1.38 1-38 ' 1.02 ~ 0.08 : 1.95 2.03 : 1.30 Training 0.71 I 0.11 0.82 j 0.08 ~ 0.87 ~ 0.22 ; 1.09 i 0.15 Operating Costs + .................................................. j...

Unallocated 0.16 ~ O i 0 0 0

...................................................

.. ,. .................................

...................................................... ........................................................................ ..................... ..........I ................................................................................................... ..: .................................................................................................. .......... ........................ ................................................ ...:

................................................................................................................................................................. ................................... ................... ............................................. ........... ................................... ............................................................................... ........................ .....,.. .......,

................................................................................................. ........................................................................ .............................................................................................................................................................................................. ......,...... ........................ ............... i ...................................... I

Notes: IT can be included in the "goods" category or "consulting services" category depending on the exact balance between software and equipment and associated consulting services. A modest change can trigger a change in category.

- Initially, the BNA RTGS software was included in consulting services. I t should have been in goods. Similarly, for the Second Household Income and Expenditure survey, the software, equipment and logistical costs were included in consulting services initially; it i s now proposed to include them in "goods".

-

As amended June 22,2004. Exchange rate used: 1 SDR for US$1.35 10

'I Exchange rate used: 1 SDR for US$1.5 (current).

- 29 -

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ANGOLA: Economic Management Technical Assistance Project

Annex 8: Project Procurement Planning 2007-2009

1. 2. 3. 4. 5. 6.

I. General

1. Project information:

(US$) ICB and LIB (Goods) >100,000 All NCB (Goods) >50,000 and <100,000 Ha l f by WB Shopping - 3 Quotations (Goods) <50,000 None

ICB (Works) >100,000 All NCB (Works) >50,000 and <100,000 Ha l f by WB Shopping (Works) <50,000 None

~

................................................................................................................................................................................................................................................................%� I I Country: 1 Republic of Angola i Borrower: /""Government o f Angola ! Responsible Agency: 1 Ministry o f Planning Project Name: 1 Economic Management Technical Ass ect .................................

I I

................................................................................................................................................................................................................................................................d�

........................................................................................................... ! .................................................................................................................................................................................................

I ...................................................................................................... .......... ........................................................................................................................... i Credit: 11 I

2. Bank's approval Date o f the original procurement plan: November 27,2003.

3. Date o f General Procurement Notice: April 16,2003 at Development Business, Issue No. 604.

4. Period covered by th i s procurement plan: January 2007 to December 2009.

11. Goods and Works and non-consulting services.

1. Pr io r Review Threshold: Procurement Decisions subject to Prior Review by the Bank as stated in Appendix 1 to the Guidelines for Procurement:

Procurement Method I Prior Review Threshold I Comments 1

2. Prequalification. N/A.

3. Proposed Procedures fo r CDD Components (as p e r paragraph. 3.17 o f the Guidelines: N/A.

4. Reference to (if any) Project OperationaVProcurement Manual: The Operational Project Manual (including administrative, procurement and financial arrangements and procedures) exists and was approved in November 27, 2003. This manual will be further updated to reflect all changes set out in this Project Paper no later than June 30,2007.

5. Any Other Special Procurement Arrangements: Retroactive financing up to SDR 180,000 made on account o f payments made for eligible expenditures under Cat. 3, and, up

- 38 -

to SDR 20,000 made on account o f payments made for eligible expenditures under Cat. 5, before June 22,2004, date o f the Amendment to the DCA, but after June 1,2002.

1

6. Procurement Packages with Methods and T i m e Schedule

2 3 4 7 8 9

PF 007 N E NE - Logistical support to Income and Expenditure Survey IDR - 2. MINFIN - Equipment for procurement reform. MINFIN - Interface SIPIPISIGFE.

PF 004 MWFN

PF 007 M N F N

PF 008 ImJFIN Interface SIGFEIINF.

Ref. No.

2,400,000

130,000

650,000

650,000

Contract (Description)

N C B

Estimated cost

(US$)

Prior May-2007

PF 003 BNA

PF 013 PIU

Procurement Review Expected Method by Bank Bid-Opening 1 (Prior/ 1 Date

equipment for DMFAS.

the Order o f accountants P I U - Acquisition o f 25,000 Shopping Post Apr-2007

BNA - IT equipment for 30,000 Shopping Post Aug-2007

PF 014 PIU

PF 015 PIU

Prior Feb-2008

computers. PIU - Acquisition o f 25,000 Shopping Post May-2007 office Equipment.

furniture PIU - Acquisition o f 25,000 Shopping Post Oct-2007

Comments

1.

201-3 contracts

Selection Method Prior Review Comments Threshold (US$)

QCBS (Firms Consultant Services) >100,000 All.

I PF 006 M N F N I MINFIN - Hardware I 45,000 I N C B I Post I Feb-2008 I

2. 3. 4. 5.

CQ (Firms Consultant Services) <100,000 ha l f by WB. I C (Individual Consultant Services) >50,000 All (TOR, contract, CV). I C (Individual Consultant Services) <50,000 None sss All.

111. Selection o f Consultants

1. P r i o r R e v i e w Threshold: Selection decisions subject to Prior Review by Bank as stated in Appendix 1 to the Guidelines Selection and Employment o f Consultants:

2. Short l i s t comprising entirely o f nat ional consultants: Short l i s t o f consultants for services, estimated to cost less than US$lOO,OOO equivalent per contract, may comprise entirely o f national consultants in accordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines.

3. Any O t h e r Special Selection Arrangements: N/A.

- 3 9 -

4. Consultancy Assignments with Selection Methods and Time Schedule

6 2

1 7

Ref. No.

3

Estimated cost (US$)

300,000

350,000

200,000

350,000

Description of Assignment

4 5

Selection Review Method by Bank

(Prior I Post)

QCB S Prior

QCBS Prior

QCBS Prior

QCBS Prior

PC 012 BNA

PC 014 BNA

PC 015 BNA

I HR in the fkancial system PC 009 MINFIl-4 I MINFIN - Procurement

BNA - Anti Money Laundering Issues.

TA to fmalize the creation o f Angolan accounting and auditing profession TA to BNMBA to articulate a plan to improve

I I reform: design operational

300,000

250,000

350,000

350,000

I arrangements. PC 003 MINFIN I INF - Institutional QCBS Prior

QCBS Prior

QCBS Prior

QCBS Prior

Framework and legislation, Manuals and Guidelines and training curriculum -

Jul-2007

Aug-2007

Oct-2007

NOV-2007

NR

NR

NR

Dec-2007

NR

I Phase11 PC 0 16 MINFIN 1 MINFIN - Procurement

UNCTAD

reform: Introduction Manuals and Procedures in

monitoring o f taxes

200,000

82,800

26,480

150,000

80,000

I revenues in general. PC 021 MWFm I DNI - TA for the

sss Prior

I C s Prior

LCS Prior

QCBS Prior

I C s Prior

strengthening revenue assessment and taxpayers’

PC 001 PIU

PC 01 1 BNA

PC 015 MIbJFIN

I compliance. PC 023 MINFIN I DNT - New version o f

Administrator. Audit (Project accounts).

TA for modernizing regulations o f the Financial Institutions Law. D N T - Institutional Arrangement o f Debt

I DMFAS. I PIU - Project PC 007 PIU

PC 002 PIU PC 013 PIU

Management. P IU - Procurement Officer. P IU - Proiect Accountant.

38,400 1 ICs Post 38.400 I I C s Post

Expected Comments Proposals

Submission

Dec-2007 Date 1

July-2007 t Sept-2007

Jul-2007 I

NR NR

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5. Training Assignments with Selection Methods and Time Schedule

1 2 3 4 5 6 7

PC 013 BNA

Expected outcome / Activity Description

BNA - Training in Money Laundering issues.

BNA - Training on Bank Supervision DSI.

Estimated Selection Estimated cost M e t h o d Duration

100,000 Actual 6 months (US$)

200,000 QCBS 6months

Start Date

Jm-2007

PC 012 INE

pc 019 MINFIN

pc 022 MINFm

Pc 015 PIU

PC 016 PIU

PC 018 PIU

Comments

About 3 contracts

INE - Training program. 200,000 SSS 18 months Jul-2007 3 o r 4 contracts

INFORSERFE 200,000 CQS 12 months Jul-2007 4 or 5 Annual implementation o f contracts training program - 2007. INFORSERFE 100,000 CQS 12 months Jun-2007 3 o r 4 Annual implementation o f contracts training program - 2008.

P IU - Training in 20,300 Actual 2 weeks May-2007 Performance Indicators.

P IU - Training in Project 25,000 Actual 3 weeks Jul-2007 Management ILI 2007.

P IU - Training in Financial 15,000 Actual 2 weeks Jul-2008 Disbursement ILI 2008.

1

IV. Implementinp Agency Capacity BuildinP Activities with Time Schedule

2 3 4 5 6 7

1. I n this section the agreed Capacity'Building Activities (some items could be from CPAR recommendation) are listed with time schedule

Estimated cost

(US$)

70,000

Estimated Selection Duration M e t h o d

6 months Actual

No. Start Date

Jul-2007

Dec-2007

PC 018 MINFIN

Comments

recommandations o f CPAR

recommandations o f CPAR

PC 020 MINFIN

PC 017 PIU

Expected outcome / Activity Description

MINFIN - Procurement reform dep. Study tours and workshop MINFIN - Training staff in procurement practices - 5 Ministr ies. P IU - Training Procurement Seminar ILI 2008

450,000 ~ 12months ~ QCBS

25,000 3 weeks Actual I

Jun-2008 I

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