Document ofInternational Development Association

acting as Administrator of the Interim Trust Fund

Report No: 16854 BO

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED INTERIM FUND CREDIT

1N THE AMOUNT OF SDR 10 8 MILLION

TO THE

REPUBLIC OF BOLIVIA

FORA

FINANCIAL DECENTRALIZATION AND ACCOUNTABILITY PROJECT

July 14, 1997

Finance, Private Sector and InfrastructureCountry Management Unit 6Latin America and the Caribbean Region

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CURRENCY EQUJIVALENTS(Exchange Rate Effective July 11, 1997)

Currency Unit = Bolivianos (B$)US$ 1 00 = B$ 5.24B$ I 00 = US$ 0.19

FISCAL YEARJanuary 1 to December 31

ABBREVIATIONS AND ACRONYMS

CAS - Country Assistance StrategyCENCAP - Centro Nacional de Capacitaci6n (National Training Center)CGO - Comptroller General's OfficeFEPS - Final Executive Project SummaryICB - International Competitive BiddingIDA - International Development AgencyIDB - Inter-American Development BankIFMS - Integrated Financial Management SystemIMF - International Monetary FundLIB - Limited International BiddingMOF - Ministry of FinanceNGO - Non-Governmental OrganizationPAS - Project Accounting SystemPCD - Project Concept DocumentPPF - Project Preparation FacilityPSM - Public Sector ManagementPSP - Poverty and Social Policy DepartmentPV - Present ValueSAFCO - Sistemas Administrativos de Informaci6n Financiera y Control

Gubernamental (Financial Administration and Control Systems)SDR - Special Drawing RightsSOE - Statement of Expenses

Vice President S J. BurkiDirector, Country Management Unit I. GuerreroDirector, Sector Management Unit S. AiyerTask Manager J. Pollner

BoliviaFinancial Decentralization and Accountability Project

TABLE OF CONTENTSPage

PROJECT FINANCING DATA ........................................................................... 1

BLOCK 1: PROJECT DESCRIPTION ........................................................................... 21. PROJECT DEVELOPMENT OBJECTIVES ............................................................................ 22. PROJECT COMPONENTS ........................................................................... 23. BENEFITS AND TARGET POPULATION ........................................................................... 34. INSTITUTIONAL AND IMPLEMENTATION ARRANGEMENTS ........................................................................ 3

BLOCK 2: PROJECT RATIONALE ........................................................................... 45. CAS OBJECTIVE(S) SUPPORTED BY PROJECT .......................................................................... 46. MAIN SECTOR ISSUES AND GOVERNMENT STRATEGY ............................................................................47. SECTOR ISSUES TO BE ADDRESSED BY THE PROJECT AND STRATEGIC CHOICES ..........................................48. PROJECT ALTERNATIVES CONSIDERED AND REASONS FOR REJECTION ..................... .................................59. MAJOR RELATED PROJECTS FINANCED BY THE BANK AND/OR OTHER DEVELOPMENT AGENCIES ........ 5.......510. LESSONS LEARNED AND REFLECTED IN THE PROJECT DESIGN ...................................................................511. INDICATIONS OF BORROWER COMMITMENT AND OWNERSHIP .................................................................... 612. VALUE ADDED OF BANK SUPPORT ............................................................................ 6

BLOCK 3: SUMMARY PROJECT ASSESSMENTS ............................................................................ 613. ECONOMIC ASSESSMENT .......................................................................... 614. FINANCIAL ASSESSMENT ........................................................................... 715. TECHNICAL ASSESSMENT .......................................................................... 716. INSTITUTiONAL ASSESSMENT ........................................................................... 717. SOcIAL ASSESSMENT ............................................................................ 818. ENVIRONMENTAL ASSESSMENT .......................................................................... 819. PARTICIPATORY APPROACH ........................................................................... 820. SUSTAINABILITY .......................................................................... 82 1. CRITICAL RiSKS .......................................................................... 822. POSSIBLE CONTROvERSIAL ASPECTS ........................................................................... 9

BLOCK 4: MAIN LOAN CONDITIONS .......................................................................... 923. EFFECTIVENESS CONDITIONS .......................................................................... 923. NEGOTIATION CONDITIONS ............................................................................ 924. OTHER ..................................................................... 9...................................... .... 9

BLOCK 5: COMPLIANCE WITH BANK POLICIES ....................................... 10

LIST OF ANNEXESANNEX 1: PROJECT DESIGN SUMMARY

ANNEX 2: DETAILED PROJECT DESCRIPTION

ANNEX 3: ESTIMATED PROJECT COSTS

ANNEX 4: COST EFFECTIVENESS ANALYSIS SUMMARY

ANNEx 4A: CREDIT BUDGET AND COST TABLES

ANNEX 5: FINANCIAL SUMMARYANNEX 6: PROCUREMENT AND DISBURSEMENT ARRANGEMENTS

ANNEX 7: PROJECT PROCESSING BUDGET AND SCHEDULE

ANNEX 8: ATTACHED ANNEXES AND DOCUMENTS IN THE PROJECT FILE

ANNEX 9: STATEMENT OF LOANS AND CREDITS

ANNEX 10: COUNTRY AT A GLANCE

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENTINTERNATIONAL DEVELOPMENT ASSOCIATION

Latin America and the Caribbean RegionCountry Department Ill

Project Appraisal Document

BoliviaFinancial Decentralization and Accountability Project

Date: July 14, 1997 l I Draft XI FinalTask Manager: John D. Polhner Country Director: Isabel GuerreroProject ID: BO-PE-401 10 Sector: Financial / Public Sector ManagementLending Instrument: Investment Technical Assistance PTI: I I Yes I xl No

Project Financing Data fl Loan x Credit E Guarantee E Other [Specify]

For Loans/Credits/Others: IDA Credit - IDA Interim Trust Fund

Amount (US$m/SDRm): $15.0 million / SDR 10.8 million

.............................................................................................................................................................. .............-............................................... .................................Proposed Terms: [ Multicurrency [] Single currency I x j IDA Credit

Grace period (years): 10 0 Standard a Fixed Fl LIBOR-basedVariable

Years to maturity: 40Commitment fee: Standard (variable rate between 0% and 0.5% of the undisbursed credit balance

set annually by the Executive Directors of IDA).Service charge: 0.75 %

..... .......... ~ ......................................................................................................... ....................................................... ............. ...........................Financing plan (US$m) 3 $17.3 m 1

Source Local Foreign TotalGovernment" 2.1 0.2 2.3Cofiaciers 1 ' 0.0 0.0 0.0IBRD/IDA 8.3 6.7 15.0Bi-lateral Grants1 ' 0.0 0.0 0.0

TOTAL 10.6 6.7 17.3

' Given the ineligibility of U.S. based goods or services under the Interim Trust Fund Credit, the Government has agreed to finance those equipment and softwarecomponents which are proprietary of U.S. companies and which would otherwise be purchased under sole source arrangements (e.g specialized software operting systms).The goods required to be purchased from U.S. ources anoant to $0.7 mnn and are included in the counterpart funding commitment, given that they cannot be financed viathe Credit. Oher computer equipment purchases under the Cedit are available from European and Asian suppliers and include the requisite compatibility with UNIX andIBM based equipment No U.S. consultant ervices are anticipated under the project given the identification of potentially qualified candidates from Europe and SouthAmerica.

21 A number of donors and cofinanciers including the Belgian Government which is supporting this project particularly for the Comptroller General's component, albeit, as aparallel cofinancier with independent budget programns from IDA's (approx. $1.7 inn from Belgium). In addition, a number of other programs amounting to a total of $33nmu are in place to support institution building efforts (including financial management) for sub-national governments in Bolivia Sources of fnding for these othercomplementary efforts include other IDA projects, IDB funds, German, Danish, Dutch, and other donor facilities. Ilese activities cover support to prefectures, municipalgovernments, and administrative strengthening in confornance with the new structures mandated by the Decentralization and Popular Participation Laws. Additionalgovernment counterpart funds not lsted but anticipated under the project, are those equipment contributions from regional and municipal goverments to support the IFMSystn implemeatedforthemunderth projec Total counterpart value ofthese are roughly estimadat $.S0 million.

Borrower: Republic of BoliviaGuarantor: N/AResponsible agencies: Comptroller General and Ministry of Firmnce

Project Appraisal Document Page 2Country: BolhMa Project Title: Financial Decentralbiation and Accountability Projed

Estimated disbursements (IDA FYIUS$M): FY98 FY99 FY00 FY01 FY02

Annual 2.5 4.4 4.1 3.0 1.0

Cumulative 2.5 6.9 11.0 14.0 15.0

Expected effectiveness date: December 1, 1997 Closing date: July 31, 2002

Block 1: Project Description1. Project development objectives (see Annex 1 for key performance indicators):

(a) Implementing a sustainable process of self-management in financial administration while instituting sound financialmanagement standards and systems in a critical mass of public entities. This will enable Bolivia to perpetuate institutionalstrengthening procedures covering newly decentralized sectors and municipalities, and aim to incorporate at least 90% oftotal public funds administered in the country. This will be supported by implementation of integrated financialmanagement systems (IFMS) under the decentralized Prefectures, decentralized agencies, and municipalities, which will linkinto the national budget via the central IFMS network and operated by the Ministry of Finance. The private sector bankingnetwork will be deployed in providing the financial infrastructure for budget payments via electronic transfer;

(b) Building up a strong public auditing function able to, in collaboration with private sector auditing firms,continuously review and evaluate financial performance and integrity of operations conducted by public sector entities.This shall include implementation of uniform, professional accounting and auditing standards across the public sector,auditing operations of the recently decentralized regional governments and municipalities, development & execution of anti-corruption forensic audits covering large public outlays and contracts, and quality control of private sector audit standards.

...................................................... I.................................... ................................................ I............. ....................................................................................................2. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown):

Component Category Cost Incl. Contingencies % of Total(US$M)

1. Implementation of Decentralized Integrated Institution-building, Physical 3.9 22Financial Mgmt. Systems (IFMS)

2. IFMS Public Sector-Wide Integration via Physical 0.4 2installation of telecom links

3. Budget Transactions Payment Systems Physical 0.2 1Modernization via Banking Network

4. Dissemination of integrated financial mgmt. Institution-building, Policy 2.0 12operations, & public financial regulations

5. Project Operating Costs Project Management 1.4 86. Government Auditing Strengthening & Institution-building 3.7 21

Decentralized Sector Evaluations7. Implementing Audit Capability for Institution-building 1.5 9

Operational and Special Audits8. Anti-corruption auditing techniques and Institution-building, Policy 1.2 7

public sector ethics dissemination9. Training in Accounting, Auditing, and Institution-building 1.4 8

Financial Management10. Contingencies and PPF Various 1.7 10

Total Total 17.3 100............................................................................................................................ I.........................................................................................................................

Projct Appraisal Document Pag 3Country: Bolivia Project Title: Financial Decentralization and Accountability Project

3. Benefits and target population:Institutionalization and self-generating capacity to modernize the Government's financial management infrastructure

and public sector auditing capability during its transition towards a decentralized government structure, covering the newregional governments, the increasingly autonomous municipalities, and remaining autonomous entities. Target populationwould include regional prefecture administrations, municipal administrations, decentralized entities, and the generalpopulation in terms of improved/modernized systems to account for and audit the use of tax-based, and externally financedpublic funds. Improved management of government debt (including notes and bonds) would lead to more efficient capitalmarket development. Supreme Audit oversight will improve the quality of performance of private sector audit firms.

....................................................... ..................I............................... ................................................................................................ ................................4. Institutional and implementation arrangements:

Implementation period: January 1998 to December 2001

Executing agencies: (a) Ministry of Finance (MOF) and (b) Comptroller General's Office (CGO)

Project coordination: Project Implementation Unit established in the Ministry of Finance, and a Comptroller General'sProject Unit (represented by the Comptroller General's technical direction and financial/contracting tasks by the CGO'sfinancial administration office).

Project Implementation: 'Technical Cooperation' agreements with public entities (e.g.: prefectures) will be entered intowith the project unit's technical team in the Ministry of Finance, in order to implement integrated financial managementsystems (IFMS) in those entities. Under such agreements, the recipient entities would commit resources for the operationand maintenance of the IFMS, including specified equipment and long term staffing needs (technical capacity of recipientinstitutions will have been evaluated by the MOF's project unit prior to engaging in such agreements). The project unit willprovide technical consultant support administered by the project (in the Finance Ministry) to be deployed at the client fieldsites during the systems implementation stage. Under such agreements, the project unit will also arrange hands-on trainingsessions as well as 'trainer-training' for staff in each entity which would further disseminate operational requirements of theIFMS within their institutions.

An IFMS module would be developed and piloted for each specific type of institution including pilot modules forprefectures, municipalities, central agencies, and decentralized entities, tailored to their specific requirements. Once theproduct by type of entity is designed and developed, it would then be replicated and implemented in other similar entities(under technical cooperation agreements). The sequencing and priority of implementation would cover: (a) the prefectures(9 entities), (b) decentralized agencies (12 representative entities), (c) central gov't. administrative units (30 representativeunits), and (d) municipalities (10 representative local governments). On the Comptroller's component, the regional officesof the Comptroller would receive professional audit training, assistance to coordinate institution-building activities with itsregional offices, and set up equipment in order to develop a 'decentralized' capacity to audit public institutions andmunicipalities in Bolivia's nine regions, and conduct comprehensive audit coverage in all public sector entities.

Project oversight (policy guidance. etc.): Agreements between the Comptroller General and the Ministry of Finance willbe negotiated and put in place with IDA's no objection, to review project progress and coordinate /set up external qualitycontrol and oversight mechanisms for the respective components, including participation of senior representatives from theprefectures, municipalities, and other entities to verify product deliverables under the technical cooperation agreements.The respective executing agencies' project units will be primarily accountable for the project's technical progress toimplement IFMS and Auditing systems, having the government's commitment to ensure that these units are headed bytechnical directors assisted by professional staff in adequate numbers and with appropriate qualifications.

Accounting. financial repOrtinQ and auditinz arrangements: Multi-year contract to be set up with a qualified audit firmwhich audited prior projects in the same sector; or other qualified auditing firms. Project accounting system satisfactory toIDA, to be in place (see para. 23).

Monitoring and evaluation arrangements: Bi-annual technical reviews by IDA team composed of (i) audit/accountingspecialist, (ii) budget/treasury specialist, (iii) systems and controls specialist, and (iv) financial consultant. Output

Project Appraisal Document Pae 4Country: Bolivia Project Title: Financial Decentralization and Accountability Projed

performance on IFMS implementation to be monitored in field based Prefectures & municipalities. Mid-term review ofproject to be conducted during year 2000, and evaluation based on targets met in the project implementation plan.

Block 2: Project Rationale5. CAS objectives supported by project - Document number/date of latest CAS discussion: P-6095-BO, February 8, 1994

IDA support in assisting the Govermnent in its public sector reform program, in particular, the administrative reformsmandated under the Popular Participation and Decentralization Laws, which distribute and provide for moreregional/localized public services management and financial accountability in the country's 9 Prefectures and 311municipalities. Monitoring indicators will include verifiable financial reporting systems for administering public budgetresources and timely submission of public expenditure outcomes and associated deliverables (these will also be reviewedand verified via financial and operational audit oversight as part of the standard functions of the Comptroller General'sOffice). These objectives will in addition, support the increased efficiency of public institutions and ensure more effectiveuse of the country's tax and other financial resources, to attain more monitorable impacts in poverty reduction and otherdevelopment investments.

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

6. Main sector issues and Govermment strategy:Under the Government's decentralization strategy, the key priority is the modernization of public financial and budget

reporting systems to ensure accountability at the decentralized level and transparency in the use and expenditure of publicfunds. For this purpose, the institutionalization of controls as mandated under the SAFCO Law (Law on FinancialAdministration and Control) and monitored by the Comptroller General, is a key 'guaranteeing' factor in this process.IDA's PSP Department (PSM Unit) has addressed these issues in its sector report titled 'Public Management Lessons forDeveloping Countries'.

With respect to financial management, main issues addressed include the decentralization of budget managemnentincluding timely/informative financial reporting against operating results, and measurement of performance based onmodernized financial management systems with budgeting and accounting controls. Another report, 'The Budget andPublic Sector Performance in Developing Countries' by Syracuse University in collaboration with IDA, emphasizes theneed to develop basic financial information needed for financial accountability in the public sector, as the first step inbudget and public management reform. Such systems including accounting reporting can be designed to ensure the captureof public program outputs so as to combine financial and results-oriented monitoring of public programs.

~o. ................................................................................................................................................................................................................................................7. Sector issues to be addressed by the project and strategic choices:

The project is intended to address the basic public financial infrastructure, in particular as it is being decentralized toBolivia's regional government bodies, decentralized entities, and municipalities. The approach taken seeks to modernizeboth the financial-administrative tools for proper national financial/budgetary monitoring and accounting, as well as thetechnology used to implement these (which include linkages at all levels of government through telecom networks, in orderto allow for timely reporting and full consolidation of public sector national financial information). As per the above-referenced sector work, the strategic choice in this approach focuses on the recommendations that any widespreadsuccessful public sector reform must be preceded by the implementation of financial management and reporting tools whichwill allow the flow of transparent and auditable public sector financial performance information. Lack of such systems donot provide the common "currency" of information necessary for the government to make strategic policy choices and costeffective decisions in monitoring and evaluating reforms and program costs.

Within this context, the governnent is also undertaking a comprehensive civil service reform program supported byanother IDA Credit, recently negotiated. In order to support the civil service reform objectives, the project will ensure thatall human resources deployed during project implementation, conform to the new civil service guidelines, in particular toavoid the utilization of consultants as line positions. To prevent the latter, the Borrower has agreed that under the Ministryof Finance, all project consultants will report directly to the project unit and not to any line units. All consultants, with theexception of the project unit's administrative staff, will be reviewed on technical grounds in their ability to imnplementobjectives and outputs specified under the project. The project unit has for this purpose, instituted pre-qualifying tests ofpotential candidates, to ensure their technical competence prior to hiring. Administrative staff in the project unit will besubject to the civil service reform guidelines, in particular those which apply to government staff working in externally

Project Appraisal Document Page 5Country: Bolivia Project Title: Financial Decentralization and Accountability Project

funded project units. Besides these personnel, and internationally qualified technical consultants (whose fees will be basedon market rates, as per the new civil service guidelines for such positions), no line staff are to be financed from the project.

................................................................................................ .................................................... .................... .................... .................... .........................................8. Project alternatives considered and reasons for rejection:

The main alternatives considered (which now comprise part of, but not the only component of the project) were (a)designing the project by solely emphasizing the oversight and public audit function (as conducted by the ComptrollerGeneral's Office) as an "insurance" factor in enforcing Bolivia's SAFCO Law (Law on Financial Administration andControl), but without the requisite implementation and institutional capacity building measures to modernize publicfinancial management systems in the central and decentralized public sector. While this alternative would have built up thecapacity for oversight and to some extent ensured compliance with financial management regulations, the effort might nothave been sustainable without further support to implement financial management systems across the public sector,including the characteristic of these systems to be integrated and linked under a modernized technology platform to assureadequate and timely public financial reporting capabilities.

The second alternative considered was (b) development of a solely budget based & cash flow system as the basis for thefinancial management systems to be implemented in the decentralized sectors. While budget-based systems serve the needsof many financial management systems implemented in the public sector, it was deemed preferable that this project's designbe based on a comprehensive accounting framework, i.e., including budget expenditure transactions but also asset andliability accounts for the public sector. While budget expenditure monitoring systems generally capture much of theinformation needed for public sector management of funds, they do not capture the assets of public sector entities whichmight need replacement after specified life-times. Ignoring such accounts does not allow local and decentralizedgovernments to plan for needed public investments and/or maintenance of public infrastructure based on expecteddepreciation of assets.

In addition, with the decentralized government structure in Bolivia, prudent tracking of debt liabilities (to fund publicinvestments) need to be included in the IFMS systems as well. While debt service flows are captured by budget basedsystems (via annual allocations to fund these), a complete accounting framework includes all debt balances and contingentliabilities, thus allowing decentralized governments to gain a better understanding of their net asset positions, which isparticularly crucial under more autonomous governance structures. This will assist in mitigating the generation of internaldebt liabilities of sub-national level government entities, and allow the Borrower to better track and monitor such debtgeneration.

..........................................................................- ......... . ..........I ................... .... .................. ......... ..................... ..... .............. . ... ............................9. Major related projects financed by IDA and/or other development agencies (completed, ongoing and planned).

a. Public Financial Management Operation - Credit 1809-0 (completed) - Implemented SAFCO Law, and DraftedRegulations.

b. Second Public Financial Management Operation -Credit 2279-0 (ongoing) - Implemented financial managementsystems in Central Government and finalized administrative and financial management regulations. Built up thegovernment's capability of its Supreme Audit Office.

c. Municipal Sector Development Project - Credit 2565-0 (ongoing) - Includes strengthening of various administrative-institutional aspects of selected municipalities, including capacity building in municipal financial mgmt. functions.

d. Rural Communities Development Project - Credit 2772-0 (ongoing) - Includes strengthening of rural municipalpublic service functions including institutional training in tax admninistration as part of the municipal fin. mgmt. role.

10 Lssons leared and reflected i the project design:Given the participation of two key agencies (Ministry of Finance and Comptroller General), prior projects might have

improved their execution by separating the respective components under two implementation agencies. This is particularlyimportant given the Comptroller General's audit/oversight role in various public financial management processes includingthose systems to be implemented by the Ministry of Finance. Thus, the funding of these two functions (audit oversight andimplementation of financial systems), while meeting common objectives, should legally be kept separate under the twoproject subsidiary agreements between the Borrower and the executing agencies. In terms of other project design elements,it was deterrnined in the latter part of prior projects, that any timely and efficient financial management reporting systemrequires advanced technology to allow for consolidation of public sector data at a central level. Thus, the use of low-cost

Project Appraisal Document Page 6Country: BdoMa Project Title: Financial Decentralization and Accountability Prolect

telecommunication networks with adequate security controls, is endorsed as a means to further modernize and allow timelyintegration of data across the country's public sector agencies, especially at the decentralized regional levels. Finally,ensuring appropriate technical leaders on the Borrower's end (to be endorsed by IDA) has made the difference betweenproject progress or setbacks.

In terms of similar Bank/IDA projects in the Region, the Argentina project serves as a good model for lessons learned,since it is the only other regional project at a more advanced stage. Key lessons in this regard, which have been applied tothe design of this project include: (a) the need to automate early on, the Governmental accounting system under anintegrated information technology platform; (b) the need for the project unit to actively involve the commitment and supportof the executives heading the Treasury, Budget, External Debt, and Accounting Units; (c) the need to ensure a methodologyof piloting newly developed IFMS systems in selected central government agencies before generalizing the design for theentire public sector; and (d) once the IFMS is designed under the Ministry of Finance, utilizing one common governmentcash account with an electronic book-entry record-keeping methodology for public sector agency sub-accounts.

.. ............................................................................................................................................................................................................................. ..........................11. Indications of borrower commitment and ownership:

The Minister of Finance and the Comptroller General have officially requested IDA support for the above project. Bothagencies have begun preparation of the activities under the proposed project, and have discussed with the project team, theactivities proposed to be financed as reflected in the components above.

~~~~~~~~~~~......................................................................................................I...............................................................................................................................12. Value added of IDA support:

Given IDA's assistance under two prior projects, which supported the development of Bolivia's SAFCO Law, theissuance of related regulations, and implementation of financial management systems in the central government, IDA'sadded value contribution and support in catalyzing this final stage covering field implementation, is key for completing suchreforms and expanding them to the newly decentralized sector.

IDA's project team consists of specialists in budgetary, treasury management, accounting, and implementation ofintegrated financial information systems. Such expertise has assisted in guiding the design of the prior project at the centralgovernment level (Cr. 2279-0) so that it meets the requirements of automation, timeliness in financial reporting, andadequate integration of cash, debt, accounting, and budgeting functions. IDA has also invested in Bolivia's public financialmanagement modernization efforts, and has advised the Government on regulatory matters related to reforms beingundertaken in the public sector, as well as in the financial markets including the securities and pension reforms, and theimplementation of Popular Participation Law initiatives in the municipal sectors.

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

Block 3: Summary Project Assessments (Detailed assessments are in the project file. See Annex 8)13. Economic Ix Cost-Benefit Analysis: x Cost Effectiveness x Other.Assessment (see Cost Analysis: The overall TechnicalBenefit Analysis): The project is mostly a T.A. operation and does cost of the financial assessment

not generate revenues directly. Financial management systems conductedopportunity cost reductions due to better development module in onmanagement of public funds, are expected as the project (approx. $7 Borrowerindirect benefits from the implementation of mn. over 4 years), is institutions,modernized financial management systems, but significantly below the based onthese would be positive by-products rather than cost-of-living adjusted earliertargeted monetary objectives. Incremental price of similar systems financiallong-term recurrent costs are expected to be on developed in the U.S. mgmt.the order of $0.5 mn. annually following and Europe's public programsimplementation, which would be offset by sector and corporate undertaken.lower budget management costs (see 'benefits' industry.below). Efficiencies achieved by the projectwould conservatively generate an estimated $27mn. in real savings in the long term (Annex 4).

Project Appraisal Document Pop 7CounOty: BolMa Project Title: Financial Decentralization and Accountability Project

Fiscal impact: Due to the T.A. and institutional strengthening nature of project, a calculated fiscal impact is not directlyquantifiable. Nevertheless, expected real financial costs and benefits include: Costs: (i) Upgrading of automated financialmanagement equipment due to technology change in the long-term ($0.7 mn. every four years), (ii) change in skills mix andtechnical qualifications of staff trained in integrated financial management systems: $0.1 mn./yr. for eight years, (iii)potential net severance payment costs for existing unskilled personnel or redundancies identified once IFMS systems becomefully automated/computerized ($0.3 mn. per annum, over nine years).

Benefits: Improved investment management of idle budget funds, improved cash management and cash flow netting to reduceborrowing costs for financing the budget (e.g.: savings on 4% of the budget financed with short term borrowing) . Thesebenefits as well as the anticipated reduction in misused/diverted public funds (via improved public audit oversight), coupledwith lower requirements for administrative-type government staffing for manual bookkeeping and paper transactions, wouldoffset the IDA debt service incurred from the Credit and result in net savings to the public sector in present value terms.

....... k .................. ...................................................................................................I....................................................................................................................14. Financial Assessment - see above

and Annex 4.............................................................................................................................................................................................................................................................15. Technical Assessment: Assessment of the accounting and financial management integration module (for cash, debt,budget and accounting consistency) was conducted by the project team and found to meet financial managementrequirements and standards. Technological platform design and linkages to dedicated telecommunications lines for inter-agency integration of financial information, was considered of high quality and advanced technical design. The proposeddesign has incorporated additional financial and system controls to ensure compliance and timeliness in financialmanagement reporting.

16. I ion Assessment This consisted of two parts covering both key institutions (a) the Miustry of Finance, and (b)the Comptroller General's Office.

(a) The current managers and project units responsible for the technical direction of the project have technical know-howof the accounting and budgetary systems, and are backed by a cadre of staff and consultants with adequate systemsdevelopment skills to implement and apply the integrated systems in all public sector areas. The Bolivian Treasury recentlyreceived, via a twinning arrangement, assistance from the U.S. Treasury in developing appropriate accounting methods fordebt management and setting out Treasury norms and implementing financialcash planning models to minimize borrowingcosts. Overall, the Ministry is well-positioned technically to implement such systems in the decentralized public sector, viacorresponding cooperation arrangements among the relevant public sector entities.

(b) The Comptroller General's Office has undergone substantial upgrading of skills in auditing standards (utilizinginternational consultants) and is now one of the more highly rated agencies of this type in Latin America. Due to its recentpractice of perforning qualitative assessment of private sector audit firms conducting work in public agencies, it is wellpositioned to extend quality control over financial management practices in the decentralized public agencies.

Incentives for adopting these new systems, procedures and training, are strong in the regional prefectures andmunicipalities. With the decentralization of a large share of public resources, many of these entities have a high demand forimplementing organized and efficient financial management structures to administer newly acquired funds, particularly sincethe political/administrative functions are subject to the public's review given their newly awarded autonomous status. Thesheer number of potential 'competitors' (i.e.: 9 prefectures and 311 municipalities) provides strong disincentives for sub-optimal governance given the potential high visibility and likely emulation of newly successful regional governments andmunicipalities.

a. Executing agencies: (i) Ministry of Finance, and (ii) Comptroller Generalb. Project management: (i) Technical Project Implementation Unit in the Ministry of Finance covering project

coordination, procurement, accounting, and audit contracting (Unit to be financed under the project).(ii) Project Unit in the Comptroller General's office covering technical direction, contracting for the Comptroller'scomponent, and project accounting (Unit represented by the Comptroller General's technical direction and the CGO'sfinancial administration office, financed by the CGO's own budget).

Project Appraisal Document Page 8County: BolMva Project Title: Financial Decentralization and Accountability Project

17. Social Assessment:Assessment not applicable, given that the project itself aims to make participation and decentralization work more

efficiently. However, the participatory approach with regional prefectures and municipal representatives utilized to developthe project, includes representative beneficiary assessments on the design and execution. For the purposes of beneficiaryparticipation in the project's development, the IDA team conducted interviews/meetings with Prefecture representatives, alarge Municipality, two small Municipalities, the Secretariat for Popular Participation, the Central Bank, the Ministry ofFinance, and the Comptroller General's Office.

18. Environental Assessment: Environmental A B Ixj CCategory

No environmental impact expected. Comptroller General's component will include environmental audit training whichshould improve management of natural resource projects and other public investmnents with environmental impacts.

....... .... ....... .............................. ............ ................................................... ............ .................................................................. .......... I.............................................19. Participatory Approach: Identification/Prepara- Implementation Operation

tionBeneficiaries/community groups

Intermediary NGOsAcademic institutions - Universidad CON CON CON

Cat6licaMunicipalities - Local Governments IS, CON IS, CON COL

Regional Prefectures IS, CON, COL IS, COL COLOther Donors)

.................................. ......................... ........................................................I.................... ............ ......................... ................................................................20.Sustainability:

Project will incorporate extensive training in the decentralized sector to ensure both dissemination of financial managementskills as well as operation of technology based systems used to implement these. With the further professionalization of thecivil service in Bolivia, and increased regional career opportunities following decentralization, future public employees willlikely be hired (or kept on board) based on their expertise in financial management, for which the project will supporttraining and exposure. The Comptroller General's audit oversight function will also provide a form of "insurance" toenforce compliance with requisite financial management procedures and practices in conformance with the SAFCO Law.This central and regional presence will provide incentives for public sector agencies to develop positive track records in themanagement of public funds, which will be subject to increased transparency and public scrutiny, as well as ad hoc anti-corruption and forensic audits.

In addition, the new skills mix for public employees operating IFMS systems as well as upgrading technology in the longterm, will require advance planning of budgetary allocations for these costs, to ensure the sustainability of ongoingoperations and institutionalized procedures. The improved management of public monies and minimization of idle fundsand/or nmisuse, will generate net savings and lower debt service interest. Therefore an early demonstration of such benefits isessential, so that Bolivia's regional and local governments assure their commitment to such processes and systems in termsof an on-going incremental investment in public financial infrastructure.

.......................................................................................................... ............- 1.................................... ............ I.........................I............ ............ I............I............21. Critical Risks (see fourth column of Annex 1):

Risk Risk Rating Risk Mmumzation MeasureProject outputs to development Failure to enforce compliance Low The independent component of

objectives with proper decentralized the project, i.e., the Comptrollerfinancial management norms & General's audit oversight willaccountability. include continuous evaluation of

public financial managementcompliance to meet developmentobjectives, and will document

Project Appmisal Document Page 9County BolMa Project Title: Financial Decentralization and Accountability Project

and follow the proper course ofaction under the SAFCO Law.

Project components to outputs Failure to maintain adequate Medium Credit conditionality willtechnical project and political emphasize IDA monitoring ofleadership to integrate country- unanticipated changes in projectwide financial reporting as a technical leadership (e.g.: due topolicy priority; and failure to political change). Sanctionsprovide sufficient counterpart related to project disbursementfunding. would be applied if IDA

requirements are overridden.Presence of other cofinanciers'funds will provide additionalleverage to ensure programintegrity and gov't. comnutment.

Overall project risk rating Low+

22. Possible Controversial Aspects: No major opposition anticipated, however, effectiveness of the program will depend oncollaboration and feedback from prefectures and municipalities to ensure that the objective of implementing nationwidepublic financial standards, is achieved. For this purpose, the project will include a dedicated training component, to ensurethat implementation of integrated financial management systems in the prefectures and municipalities has ownership fromlocal governments. Changes in public sector staffing composition and potential lay-offs, though not required by the project,may be necessary in the medium-term, to ensure technical competence for sustaining the modernized & automated IFMSs.

Block 4: Main Loan Conditions23. Effectiveness Conditions

(i) Approval of Credit by Bolivian Congress (following signing), (ii) Execution of Implementing Agency Agreementsfor transfer of project funds from the Borrower to the Comptroller General's budget and to the Ministry of Finance's budget,and (iii) At least four Technical Cooperation agreements entered into, between the Ministry of Finance as executing agency,and the Prefectures, for IFMS implementation.

Negotiation Conditions(i) Working prototype of Integrated Financial Management System (IFMS) at Central Government level, (ii) working

prototype of telecommunications linked network at central level for subsequent application in decentralized public sector,(iii) documented project operating and management procedures via an operations manual, and (iv) comprehensive projectaccounting system in place to meet IDA requirements.

The Borrower already has a satisfactory project accounting system (PAS) which meets audit reporting requirements.However, during negotiations, and in line with the project's plans to develop a PAS for other Bolivia IDA projects, it wasensured that this project's system has integrated links for the automated production of reports already being generated semi-manually. These include reports on budget execution by component and disbursement category, project financial statements,statements of SOEs and other disbursements, Special Account reconciliation, statement of sources and uses of funds, andstatement of fixed asset investments.

24. Other(A) Financial: (i) Project audit arrangements with multi-year contract (ii) Project accounting system in place;

(B) Execution: Project Units and Operational Procedures set up;

(C) Remedies: Conditionality on maintaining suitably qualified technical leadership in the project, satisfactory to IDA.

Projet Appraisal Document Page 10Country: BolMa Project Title: Financial Decentralization and Accountability Project

Block 5: Compliance with Bank/IDA Policies

x This project complies with all applicable Bank/IDA policies.

anagerJ D. Pollner C D abelGuerrero

Annex 1

Project Design Summary

Narrative Summary Key Performance Indicators Monitoring and Supervision Critical Assumptions and_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ~~~~~~~~~~Risks

CAS Objectives (CAS Objective to Banka. Strengthening and By Year 2004 Mission)focusing public institutions; -Full implementation of -Macro-level assessment of -Assumptions: that theb. Rationalizing the role of the government's national public investment Government's reform effortsthe State; administrative and public program execution by in terms of Administrativec. Decetralization and financial decentralizated regional governments and Decentralization andPopular Participation infrastructure, and popular where applicable (schools, delegation to thereform; and (municipal) participation hospitals) by municipal municipalities throughd. Municipal Sector reforms. governments. Popular Participation is aStrengthening. permanent structural change

- Institutionalized fiscal -Via IMF and World Bank in the organization of themanagement capability in country economic State.the country at the regional monitoring, the performancedecentralized level and at of the decentralized fiscal -Risks: (i) Political unrestlocal municipal levels. and investment management causing a re-centralization of

would be assessed to the governnent process, and- Public expenditure determine the success of the (ii) a fiscal crisis caused by

evaluation capability in government's reform effort. systemic mis-management ofpublic agencies supporting a public funds due to themodernized investment above unsuccessful reforms.programming/monitoringprocess. - Probability: Low, in

general due to increased- An increase in public/community

availability of budgetary participation in thefunds through improved management of previouslybudget liquidity, debt centralized public resources.management, and publicexpenditure reporting.

- Full tracking andmanagement of internal debtassumed by sub-nationalgovernments, andminimization of excessiveinternal debt generationthrough implementation ofadministrative/technicalcapacities for monitoringand controlling suchliabilities.

... continued

Project Development (DevelopmentObjectives Objectives to CAS- Institutionalizing sound By Year 1998 - Field reviews of municipal Objective) - Assumptions:integrated financial - Process initiated to ensure level implementation of Regional and municipalmanagement standards and continued strengthening of financial infrastructure govermnents have the willsystems across the public institutional financial supporting the budgetary and interest in modernizingsector and solidifying the management procedures in a management process and their financial managementprocess of self management critical mass of public public investment infrastructure and be subjectin financial administration of entities, and covering at least progranming. to public scrutiny viapublic institutions. This will 75% of the national Representative urban and modernized auditbe based on demand from budgeted funds in all the rural municipalities would enforcement in this regard.new decentralized non-financial public sector. be visited to review the Incentives will begovernments to implement administrative capacity for competitive to encourageefficient systems for By Year 1999 managing local level projects local governments tomanaging and accounting for - Completion of integrated as anticipated under the modernize and sustain newtheir new public resource financial management Popular Participation Law's processes in order toendowments. Bringing this to systems modernization in the mandate. maintain public support,a critical mass will enable centralized public sector and given parallel developmentsBolivia to achieve a self- dissemination of such - Success of Prefecture in other newly decentrlizedgenerating process of systems in the decentralized governments i managing local govts.ongoing institutional reform, sector. external multilateral fundsparticularly to include the would provide evidence of -Risks: Lack of anew players in the By Year 2000 implementation of an supporting training anddecentralized public sector. - Recognition by adequated decentralized educational program on the

international accounting & public financial management benefits of the above, may- Assuring sustainability via auditing institutions of structure. Project experience not sufficiently raise thea strong public audit Bolivia's Comptroller of the Bank with now "split" sense of priority of publicfunction to monitor financial General as meeting int'l. projects following financial managementas well as accepted standards in Decentralization, would systems in smaller localoperational/investment financial, anti-corruption, & provide an overall gauge of governments, particularlyperformance and their operational auditing in the the robustness and efficiency rural municipalities. Thisintegrity, and public sector, and standards of systems recently might result in a lopsidedimplementation of uniform for private sector audits. implemented to manage and non-homogenousprofessional auditing and external funds and public development effort in thisaccounting standards across By Year 2001 investment. This would be area. In addition, somethe public and private sector. - Institutionalization of an monitored via the Country Prefecture governments may

integrated financial Portfolio Performance not be adequately organized- Implementation of management infrastructure Reviews. to ensure a smooth transitionmodernized public sector with supporting regulatory to an autonomous financialfinancial management sanctions, covering the -The Comptroller General management environment.practices in the areas of budgeting, accounting, cash, would provide independentbudgeting, cash and debt management audit reviews of operational - Probability: Medium:management, debt functions, in the and financial performance of While the envisaged trainingmanagement, and decentralized public sector, local/regional governments program will cover allaccounting, in the and covering at least 90% of serviced under the project. sectors including ruraldecentralized prefectures and public funds defined above. municipalities, aselected municipalities. dissemination & public info.

- Adoption and enforcement campaign will be required toof prudential accounting and raise consciousness on theauditing standards in the nature of and need forcountry's regional gov'ts. proper financial managementand municipalities. systems at all public levels.

Narrative Summary Key Performance Indicators Monitonng and Supervision Critical Assumptions and____________ _ _Risks

Project Outputs (Outputs to DevelopmentBy Year 2000 Objectives)

- Development and - istallation of prototype - Supervision mission teamsinstallation of integrated integrated financial would review the technical - Assumptions: thefinancial management management systems integration (according to government team of financialsystems in the regional (budget, accounting, debt, accepted accounting and technology specialistsprefectures and selected cash management) developed principles) of budgetary, will remain throughout themunicipalities, with for the central government, cash management, debt course of the project,interconnectivity at the in each of the 9 regional management, and particularly the Accountingnational level through the governments. expenditure transactions on Undersecretary who providesuse of wide area-network the IFMS systems technical and politicaltelecom links. - Institutionalization of developed. In particular the leadership.

annual auditing and audit 9 regional prefecture- Implementation of review process of public systems would require full - Risks: A politicalprudential procedures for entities' performance integration of such functions reshuffling may result in abudgetary management, (financial, operational & and capability for change in the project'saccounting, treasury anti-corruption auditing) by consolidating financial government team and itsoperations, and debt the Comptroller General's reporting information of technical leadership.management, with office, both at the central public entities within their Particularly on the latter,appropriate controls and level and the decentralized jurisdiction. this could result in a lack ofcheckpoints at the systems level (the latter via the coordination and potentiallevel. regional sub-Comptroller -At the municipal level, project failure, especially in

offices). supervision would include the municipal sector- Implementation of field assessments of implementation whichinstitutional capability and By Year 2001 reporting systems and requires 'non-standardized'regular audit cycles by the - Installation of wide-area regulatory compliance models due to differences inComptroller General, telecommunications network sanctions to ensure that scope and size.including review of public linking the prefecture national budgetary data cansector audit work in the regional govermnent systems be consolidated from the -Probability: Medium/Low:areas of with the central decentralized up to the The current Project Directoroperational/performance government's reporting centralized level. was recently appointed andauditing, financial auditing, process. has moved such initiativesenvironmental auditing, and - Evidence of audit reporting forward successfully in theforensic auditing. By Year 2001 and auditing capability at the centralized sector. As a risk

- Implementation of regional sub-Comptroller- minimization measure, the- Building institutional budgetary & accounting ship level would be required Government is committed tocapability of regional sub- reporting procedures in the based on published audits ensure that the project'sComptroller offices in the number of municipalities produced therein, and the implementation team isareas of audit training, and with IFMS systems Bank conducting a quality maintained based on itsin subsequent implemented by the project, check on such audits. technical merits & strategy.implementation of with quarterly consolidationgovernment auditing of of financial data at thepublic enterprises in regional national level.and municipal governmentagencies.

Project Components (Components to Outputs)[See Annex 2 for a detailed By Year 1998description.] - Central Sector IFMS - Installation of IFMS - Assumptions: Based on

prototype set up in systems at the Prefecture pilots implemented at cental1. Implementation of Prefectures via twinning level would be verified based level, the integrated budget,decentralized integrated agreements with Ministry of on regional on-line capability acctg., debt, and cash mgmt.financial management Finance. to transfer data to the central systems will be installedsystems. level and obtain data from regionally & linked via wide-2. IFMS public sector-wide By Year 1999 the decentralized level, via area telecom networks. Theintegration with installation - Completion of city-area installed telecommunication transfer of audit know-how,of telecom links. telecom network for IFMS links. Implementation of to regional sub-Comptrollers3. Budget transaction on-line integration, and such would be verified will replicate technical auditpayment systems moderni- installation in Prefectures. during supervision missions. approaches implemented atzation via banking network. central government levels.4. Dissemination of IFMS - Installation of banking - Operational/financial - Risks: Technical snagsoperations, and public network-linked budget performance audit reports could occur in installation offinancial regulations. payments transfer produced by the Comptroller telecom lines to integrate5. Operating Expenses. mechanisms to prefectures General's Office would be financial systems nationally.6. Government audit streng- and municipalities. utilized to monitor degree of Integration of financialthening & decentralized implementation of public mgmt. functions at thesector evaluation. - Institutionalization of financial management prefecture levels might get7. Implementing auditing performance and financial systems, along with overall mired in region-specific fundcapability for special and auditing capability at public investment / management problems due tooperational audits. Central level. operational performance of partitioning of national-level8. Anti-corruption auditing public entities. investments. The technical& ethics principles By Year 2000 capacity of regional sub-dissemination. - Institutionalization of - Training in financial Comptrollers' staff may be9. Training in accounting, financial auditing capability management, accounting and insufficient to implement anauditing, and financial at decentralized level, auditing would be monitored effective decentralized-levelmanagement. coordinated at the via number and level of audit oversight program.

Prefectures, and installation certified trainees having - Probability: Low. Priorof supporting control undergone such programs, experience at the centralsystems. and increase in public level has already

professional employment in demonstrated that technicalBy Year 2001 such areas (normalized for proficiency and technology- Institutionalization of skills/personnel transfers used in pilot systems isfinancial and operational from the private sector). robust and tested, ensuringauditing capability for that it can be adapted todecentralized and municipal decentralized regionallevels. governments. Telecom- Sustainable institutionali- technology experts arezation & professionalization widely available, and givenof anti-corruption auditing the 'wireless' design forfunction and completion of wide-areas, this is notspecial works contracts, dependent on cableprocurement, and infrastructure. In the auditembezzlement audits. area, the Comptroller- Completion of nationwide General will conduct trainingpublic sector training in for professional levels toaccounting, budgeting, ensure that regional officesauditing, & financial mgmt. build up to maximum

capability.

Annex 2

Detailed Project Description

1. Project Component 1: Implementation of Decentralized Integrated Financial Mgmt. Systems (IFMS)US$ 3.9 million (base cost): The first 5 components listed, will be executed by the Ministry of Finance incollaboration with regional governments. This component would include the development of modernized andautomated integrated financial management systems for the 9 regional prefecture governments, the decentralizedentities and municipalities. The component would assist in the adaptation of budget regulations to theadministrative procedures in those public entities, as well as the institutionalization of operating procedures fortreasury transactions and full implementation of financial accounting norms as required under the SAFCO law.The systems sub-component will apply these in order to modernize and computerize such operating proceduresin the treasury area (including cash, debt management, and capital market operations), implementation ofaccounting systems and procedures, and budget execution and reporting systems. The major financial functionalareas would be designed under information technology platforms assuring their functional integration so that thefinal product systems would provide government executives and technical staff with the ability to monitor allphases of public financial management from upstream budget formulation, through cash, liquidity, and debtmanagement, to accounting and expenditure monitoring. At the municipal levels such integrated systems wouldbe adapted for large city municipalities, while for small municipalities, a system of administrative budget andaccounting reporting would be disseminated and implemented within a regulatory framework, to assure thatfinancial data from small municipalities meets the requirements for national public sector reporting purposes.This component would, in addition, implement automated systems under the Prefectures and central entities, totrack goods & services inventory, procurement processes, project accounting, the personnel count, budget, fixedassets, public investment monitoring, and debt. This component of the project will also finance the development,structure, and dissemination of a generalized project accounting system for application to projects and theirexpenditure tracking under multilateral development credits, and for meeting requisite reporting and auditingrequirements. This latter module will support the improvement in the country's project accounting andadministration capacity for IDA projects as well as for the management of other multilateral and bilateralcreditors and grantors. The modules will eventually be linked into the overall IFMS system for integration intothe national public investment and external credit systems at the central government level.

2. Project Component 2: IFMS Public Sector-Wide Integration via Installation of Telecom LinksUS$ 0.4 million (base cost): This component would link both the decentralized and centralized financial andbudget reporting systems as implemented in the above component, for the purposes of national accountingreporting and comprehensive public expenditure monitoring at the aggregate national level. Within the regionalprefecture governments and large urban municipalities, the IFMS systems would first be aggregated viametropolitan area telecom networks, to ensure aggregation of prefecture/municipal level financial reporting tocover all public entities in such jurisdictions. At the wider national or regional-to-central level aggregation offinancial reporting, wide-area wireless telecom networks would be installed in order to allow consolidation ofdata and/or distribution of budgets on a real-time (overnight) basis. This component would also allow forremote entry of expenditure transactions to record budget movements on an on-line basis. The architecture forimplementation of the above would be based on that implemented in the La Paz area for the central governmentsector.

3. Project Component 3: Budget Transaction and Payment Systems Modernization via Banking NetworkUS$ 0.2 million (base cost): This component would involve linking the public budgetary funds transferprocedure via the private sector banking system, to allow more efficient budget distributions to the prefectures(general budget funds), to municipalities (public participation investment funds), and to central governmentagencies. The component would include the requisite development of regulatory and control norms to ensureappropriate application and accounting of funds, and would include the elaboration of automated voucher entrysystems to expedite budget expenditure transactions and reporting. The architecture would utilize the privatebanking electronic funds transfer network which will be linked via the central bank cash accounts to the

Ministry of Finance (MOF). The MOF would be the initial executor/receiver of resource transfers, and anysuch transactions will be captured by the central IFMS.

4. Project Component 4: Dissemination of Financial Management/IFMS Operations, andOperationalizing Public Financial Regulations - US$ 2.0 million (base cost): This component comprises theimplementation in a sustainable fashion, of the central and decentralized IFMS systems designed under theproject. Given the complexity involved in the computerization of the integrated accounting structure, coveringthe other financial and administrative regulations in the public sector, this component reflects the practicalhands-on training in the information technology based financial systems, and their specific method of applicationand administrative support in each agency. Supporting this hands-on technical assistance, to be provided by theproject unit in the Finance Ministry, would be the organizing of workshops at regional and national levels todisseminate the proper applications, controls, regulations, disclosure requirements, and financial procedures tobe utilized under the automated financial management systems. Such workshops would be earmarked forspecific managers and employees of public institutions responsible for the financial management functions.Such applied training would be complemented at a broader public sector level under project component 9(below) which would cover all public sector employees but focus more broadly on SAFCO law regulations, andfinancial/administrative procedures to ensure proper execution of the law.

5. Project Component 5: Project operating costs - US$ 1.4 million (base cost): This component covers theproject unit's operating costs including administrative and project management staff, requisite intra-countrytravel, cost of dissemination materials/publications, and equipment support for the project unit. The componentalso covers the costs of the project unit's financial administrator, the technical Director/coordinator, a legalspecialist (to review inter-agency technical cooperation agreements, consulting and equipment contractualprovisions), an accountant, and project auditing contracts.

6. Project Component 6: Government Audit Function - Strengthening Institutional Capacity for Centraland Regional Comptrollers' Offices, and evaluation of decentralized and municipal sector operationsUS$ 3.7 million (base cost): Components 6-9 will be executed by the Office of the Comptroller General.This first component will build up the institutional capacity as well as scope and type of public audits to beundertaken by the Comptroller General's Office (CGO). Currently the CGO has significant capacity forundertaking financial audits of public sector entities in the central, decentralized, and municipal sectors, as wellas evaluating audits undertaken by private sector audit firms. This has greatly improved the country's quality ofaudit services, and has established an effective oversight audit body which will help ensure the enforcement ofthe SAFCO Law in the public sector. This component would provide technical assistance to further build up theCGO's capacity in the areas of (a) evaluation of private sector audit operations conducted for public agencyoperations, (b) setting up and institutionalizing procedures for auditing public sector procurement andpurchasing systems, (c) building up professional auditing skills and organizational sustainability to ensure longterm auditing capability for evaluating compliance with SAFCO Law implementation. This would include theinstitutionalization of periodic audits of public sector IFMS systems, budgeting procedures, treasury & cashmanagement operations, and compliance with accounting norms, as well as the institutional strengthening of theregional sub-Comptroller offices to undertake these tasks. This component is a key area in the project in that itwould disseminate and institutionalize the country's public auditing capability in the decentralized sectors. Thedesign of this component would involve the participation of the regional sub-Comptroller Offices so that thesemay build up their capacity to conduct the public audit and oversight function at the decentralized level,including the review of municipalities' financial management procedures as well as the 9 prefecturegovernments. The technical assistance required for this component would involve international expertise inaudit operations combined with the existing capacity-building to be provided by the central CGO's office in LaPaz. This effort would be complemented by installation of modernized information technology systems in orderfor the central CGO's office to share and transfer procedural and audit information to the regional offices, andvice versa, thus improving the quality of the audit operations and review process at the decentralized level. At aminimum, the project would seek to implement sustainable government audit capacity in the 9 decentralizedregions and potentially in additional areas where there are concentrations of small municipalities. Thiscomponent would provide a key control framework and "insurance" function to stimulate the successful

implementation of financial management systems in the decentralized sector, and assuring their compliance withprudential financial procedures/regulations.

7. Project Component 7: Implementing Audit Capability for Conducting Operational and other Non-Financial Audit / Evaluation Techniques - US$ 1.5 million (base cost): This component focuses onoperational type audits which include the ex-post and in-process evaluations of the execution of investmentprograms, large public works, environmental operations, and other special audit areas. This area supplementsthe traditional financial audits by focusing on operational execution and performance including the evaluation ofoutput results for given operations. This is particularly critical under the decentralized govemment structuresince it provides tools for monitoring investmnent programs and real sector project execution under prefecturesand municipalities which now utilize funds provided via the Decentralization and Popular Participation Laws. Italso reinforces the prudential execution of environmental operations including clean-up works orenvironmentally-preventive industrial operations. Complementing the above, the program would also includethe development and implementation of other sector/industry-specific audit techniques which would interfaceboth with financial and operational audits. This component would also include special audits of privatizationand/or capitalization procedures followed under the government's reform program. To complement themodemization of financial administration procedures, the development of information technology system audit'swould also assist in ensuring that traditional audit techniques are adapted to take into account features ofautomated financial transactions processing. The main focus would, as mentioned, be on operational audittechniques which assist in the impact/performance evaluation of publicly funded programs and investments.

8. Project Component 8: Development - Anti-Corruption Audit Techniques / Ethics PrinciplesDissemination - US$ 1.2 million (base cost): This component will include development and implementation offorensic audit techniques (anti-corruption, detection methods) which would interface both with financial andoperational audits. The objective would be to institutionalize professional capacity within the ComptrollerGeneral and its regional offices, to conduct anti-corruption forensic audits for selected and substantial publicexpenditure contracts and financial management procedures. In addition to this capacity building, thecomponent will finance the execution of a number of public investment audits, bidding process audits, and otherinterventions within the course of the Comptroller General's audit reviews, to determine any potentialembezzlement of public funds. The component would incorporate six separate sub-components covering thefollowing outputs: (a) long term on-the-job capacity-building in anti-corruption audit techniques for publicauditors, (b) executing specific audits on bidding, selection, and contracting procedures of large public works,(c) audit exercises in detection of possible embezzlement actions and wrongful use of public funds, (d)conducting special audits on large purchases and procurement actions in the public sector, (e) developing andconducting anti-corruption and forensic auditing seminars and workshops for auditors in the ComptrollerGeneral's office and in the public sector at large, and (f) dissemination of ethics and transparency principles forpublic administration, including coverage of the effects of corruption on civil society and public services, andtargeting executives in the branches of the Judiciary, Legislative, Executive, Municipalities, and ComptrollerGeneral's Offices.

9. Project Component 9: Public Sector Training in Accounting, Auditing & Financial ManagementUS$ 1.4 million (base cost): The above eight components will be supported by this component in order toensure wide-spread dissemination and sustainability of modernized financial management proceduresincorporating proper accounting and auditing norms. This component, to be carried out via the ComptrollerGeneral's National Training Center (CENCAP), will finance both continuing professional/technical educationand training to build up the public sector's skills base and organizational effectiveness, as well as furtherdevelopment and coverage of the national training program to disseminate the application of financialmanagement, auditing and accounting systems to the country's legal requirements and procedures. The trainingwill cover both the normative operational understanding of budget, accounting, and treasury procedures asadapted to the decentralized government level, as well as training in the application of financial controls underfinancial management and auditing systems. The audit portion of the training will assist in the build-up ofpublic agencies' internal auditing capability as well as complementing the institutionalization of state-of-the-artaccounting practices in the public sector.

Annex 3

Estimated Project Costs

(US$ millions)

Proiect ComDonent Local Foreign TotalIDA Gov't. Total IDA Gov't. Total IDA Govt. Total

Ministry of Finance Component

1 Implem. of decentralized integrated 3.00 0.62 3.62 0.20 0.03 0.23 3.20 0.65 3.85financial mgmt. systems (IFMS)

2. IFMS public sector-wide integration 0.20 0.03 0.23 0.10 0.02 0.12 0.30 0.05 0.35with installation of telecom links

3. Budget transactions payment systems 0.20 0.03 0.23 0.00 0.00 0.00 0.20 0.03 0.23modernization via banking network

4. Dissemination of IFMS operations, 1.40 0.21 1.61 0.34 0.05 0.39 1.74 0.26 2.00operationalizing public fin. regulations

5. Projectoperatingexpenses 1.20 0.18 1.38 0.00 0.00 0.00 1.20 0.18 1.38

Sub-total 6.00 1.07 7.07 0.64 0.10 0.73 6.64 1.16 7.80

Comptroller General Component

6. Government auditing strengthening & 0.00 0.48 0.48 3.20 0.00 3.20 3.20 0.48 3.68decentr. municipal sector evaluation

7. Implementing audit capability for 0.00 0.20 0.20 1.30 0.00 1.30 1.30 0.20 1.50operational & non-fin. special audits

8. Development ofanti-corruption audit 0.70 0.11 0.81 0.30 0.05 0.35 1.00 0.15 1.15techniques and ethics dissemination

9. Traiming in accounting, auditing, and 0.84 0.13 0.97 0.40 0.06 0.46 1.24 0.19 1.43financial management

Sub-total 1.54 0.91 2.45 5.20 0.11 5.31 6.74 1.01 7.75

Total 7.54 1.97 9.51 5.84 0.20 6.04 13.38 2.17 15.55

Total Baseline Cost 7.54 1.97 9.51 5.84 0.20 6.04 13.38 2.17 15.55Physical Contingencies 0.21 0.03 0.24 0.23 0.00 0.23 0.44 0.03 0.47Price Contingencies 0.23 0.03 0.25 0.22 0.00 0.22 0.45 0.03 0.47

PPF Refinancing 0.33 0.10 0.43 0.40 0.00 0.40 0.73 0.10 0.83

Total Project Cost 8.31 2.12 10.43 6.69 0.20 6.89 14.99 2.32 17.31

Annex 4

Cost Effectiveness Analysis Summary

$US Millions

Credit FinancingCash Flows and Present Value Other Fiscal Impacts and Medium Term Costs

Note: Given that this project is for the most part, a technical assistance operation, the parameters listedreflect reasonable (but not targeted) estimates of potential financial and fiscal impacts. These are not meantto reflect a full analysis of all indirect costs and alternative scenarios. The primary objective is the improvementof central, regional, and local financial management through institution building and technical modernization.

Present Value of Credit Disburse- Present Value of financial management savings from investingments of $15 mn. based on idle budget funds, reducing short term budget borrowing, andestimated disbursement improved tax collection (yrs. 8-17) = $17.1 mn.profile (yrs. 1-5) = $11.3 mn.

Present Value of equipment upgrading costs (computer platform,Present Value of repayments on software) starting every 4 years after end of project (yrs. 9 - 37

Credit (40 yr. maturity), and every 4 years) = -$0.9 inn.service charges (yrs. 10-40) al

= -$0.8 mn. Present Value of savings from government staff reductions due toimplementation of automated financial management systems

a/ (service charges for yrs. 6-40). (yrs. 6-8) = $1.2 mn.

Present Value of severance costs payable to terminated govern-Net PV of Credit = $10.5 mn. ment staff following irnplementation of integrated financial

at long-term gov't cost of management systems (yrs. 6-14) = -$1.0 mn.capital (c.o.c.) discounting

Present Value of incremental costs of new technical personnelNet PV of Credit using cost of to match skills mix for computerized financial management

IDA funds as c.o.c. = $0.0 mn. systems requirements (yrs. 6-13) = -$0.3 mn.

Net PV of fiscal costs and savings = $16.1 mn.

a. Aggregate Net PV of project assuming long-term gov't. cost of capital = $26.6 mn.b. Excluding IDA concessional funding subsidy = $16.1 mn.c. PV at concessional rate as cost of capital = $48.0 mn.

Assumptionsa. Discounting rate used for PV =12%. This reflects the government's cost of capital (dollar adjusted) for

long term bonds, market-rated cost of external debt (assuming that over a 40 year period, Bolivia willno longer rely on concessional financing as a major source of funding), and projected investment returns.

b. IDA commitment fee assumed waived as at present. Service charge continues at 0.75%. Maturity is40 yrs. with 10 yrs. grace.

c. Adjustment for inflation on price of foreign procured equipment (informatics) = 3.5% annually.d. Short-term dollar savings rate on government funds invested due to financial management efficiencies and

less dependence on short term borrowing for budget financing = 5% annually. This is applied to 4% ofthe total government budget assumed to be invested pending disbursement (i.e., previously idle funds).

e. Total government budget (central & decentralized) assumed to be reduced by 67% following privatizationand capitalization of public enterprises. After that, government budget growth assumed at 3% per year.

Bolivia: Financial Decentralization and Accountability ProjectCredit Budget and Cost Tables including PPF (SUS) Page I of 3

Consultants Goods Operating Exp. Training TotalMinistry of Finance Component

I Implcmentation of Decentralized Financial Management Systems $3,194,640 $90,872 $0 $3,285,512

i. Integrated financial management systems covering $3,084,990 $85,100 $3,170,090budget, accounting, cash. debt management, fixed assets,and inventory/procurement systems; for prefectures,decentralized entities, central gov't. agencies, and municipalities

ii. Development of project accounting system for $109,650 $5,772 $115,422adaptation to multilateral credit project monitoringand requisite audit reporting norms

2. Public Sector-Wide IFMS integration of entities via installation of $285,345 $44,400 $0 $329,745telecommunications links for city-area and wider-area networks

i. Decentralized entities: IFMS national telecom network $142,673 $22,200 $164,873integration (for on-line financial reporting)

il. Development of on-line telecom electronic processing $142,673 $22,200 $164,x73at central level for remote entry of budget transactions

3. Budget Transactions Payment Systems Modernization via $214,200 $0 so $0 $214,200Tranfers through Commercial Banking Network

i. Banking system electronic budget transfer mechanism, $107,100 $107.100from Gov't. to central agencies & decentralized sectors

ii. Integration of funds transfer execution record from $107,100 $107,100Treasury to Central Bank, on the central IFMS system

4. Dissemination of IFMS Operations, and financial regulations $1,750,804 $9,250 $1,760,054

5. Project Operating Expenses $35,170 $1,211,940 $1,247,110

Physical and Price Contingencies $563,379

Sub-Total Ministry of Finance Component S5,444,989 $179,692 S1,211,940 so S7,400,000

Bolivia: Financial Decentralization and Accountability ProjectCredit Budget and Cost Tables including PPF ($US) Page 2 of

Consultants Goods Operating Exp. Training Total

Comptroller General's Component

6. Gov't. Audit Function - Strengthening institutional capacity $2,931,162 $331,914 $0 $0 $3,263,076for central & regional Comptrollers' offices, and evaluation ofdecentralized and municipal sector operations

i. Strengthening Financial Auditing Capacity $897,220 $331,914 $1,229,134

ii. Evaluation of private sector audits of public agencies $208,656 $208,656

iii. Long term auditing capability of admin. & control systems $208,656 $208,656established under SAFCO Law, incl. public IFMS systemsfor budgeting, treasury, cash mgmt., & accounting,administrative systems, procurement, and internal control

iv. Updating audit norms and regulations $226,800 $226,800

v. Follow-up of audit actions/recommendations $187,790 $187,790

vi Auditing of financial management capability and $430,920 $430,920administrative systems in Prefectures & Municipalities

vii. Evaluation of compliance with decentralized budget $113,400 $113,400distributions assigned under the Popular Participationand Administrative Decentralization Programs

viii. Evaluation of public sector internal auditing units' $657,720 $657,720performance

7. Implementing Audit Capability for conducting operational $1,491,436 $0 $0 $0 $1,491,436and other non-financial audit / evaluation techniques

i. Information technology/information system auditing $226,800 $226,800

ii. Audit capability to evaluate environmental operations $113,400 $113,400

iii. Development and implementation of special audits $697,636 $697,636including public entity privatizations and capitalizations

Bolivia: Financial Decentralization and Accountability ProjectCredit Budget and Cost Tables including PPF ($US) Annex 4a

Page 3 of 3

Consultants Goods Operating Ex.p Training Totaliv. Develop techniques for operational audits $226,800 $226,800

v. Operational audits on execution of public investments $226,800 $226,800by central, decentralized, and local public entities

8. Development of Anti-Corruption Audit techniques, forensic $1,075,248 $0 $0 $60,000 $1,135,248auditing (embezzlement detection), & ethics code dissemination

i. Capacity building in forensic and anti-corruption $111,902 $60,000 $171,902audit techniques

ii. Audits of bid & selection procedures for public works $520,086 $520,086

iii. Embezzlement detection and misuse of public resources $208,034 $208,034

iv. Audits of large public sector procurements/purchases $156,026 $156,026

v. Public sector dissemination of ethics code $79,200 $79,200

9. Public Sector Training in Acctg., Auditing, & Financial Mgmt. $0 $0 $0 $1,410,240 $1,410,240

i. Basic Training in Financial and Administrative systems $196,560 $196,560under SAFCO Law

ii. Audit training for public regional sub-comptrollers' offices $196,560 $196,560

iii. Strengthening Senior Level Financial and Audit $624,000 $624,000Management in the Public Sector

iv. Applied training in operation of automated/computerized $393,120 $393,120financial management systems

Physical and Price Contingencies $300,000

Sub-Total Comptroller General Component $5,497,846 $331,914 $0 $1,470,240 $7,600,000

Total Physical and Price Contingencies $863,379

TOTAL CREDIT $10,942,835 $511,606 $1,211,940 $1,470,240 $15,000,000

Annex 5

Bolivia: Financial Decentralizationand Accountability Project

Financial Summary

Years Ending June 30 ($US mn.)(Indicate currency, units and base year)

implementation Period Operational Period1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Proiect CostsInvestment Costs 3.0 4.2 5.3 5.0 3.0 0.4 0.4 0.4 0.4 0.4Recurrent Costs 0.1 0.1 0.1 0.1 0.1 0.3 0.2 0.1 0.1 0.1

Total 3.1 4.3 5.4 5.1 3.1 0.7 0.6 0.5 0.5 0.5

Financing Sources (SUS mn.)IBRDIIDA 2.0 3.2 4.0 4.0 1.8Co-financiers (Belgium, Other) 0.5 0.7 0.8 0.6 0.3Govemment

Central 0.4 0.4 0.4 0.3 0.5 0.54 0.44 0.34 0.34 0.34Local (Decentralized & Municipal) 0.1 0.2 0.2 0.2 0.2 0.16 0.16 0.16 0.16 0.16

User Fees/BeneficiariesOthers

Total 3.1 4.3 5.4 5.1 3.1 0.70 0.60 0.50 0.50 0.50

Annex 6

Bolivia: Financial Decentralizationand Accountability Project

Procurement and Disbursement Arrangements

Procurement

Procurement methods (Table A)

LIB and Local Shopping (3 price quotations)

Prior review thresholds (Table B)

Consultants > ($25,000), Firms > ($50,000), Goods > ($40,000)

Disbursement

Allocation of loan proceeds (Table C)

Consultants & Training, Goods, Operating Expenses

Use of statements of expenses (SOEs):

Individual Consultants < $25,000, Consultant Firms < $50,000, Goods < $40,000,Training < $25,000 (Cons.), < $40,000 (Goods)

Special account (2 accounts):

Ministry of Finance: Initial ($300,000), Maximum Authorized ($600,000)Comptroller General: Initial ($250,000), Maximum Authorized ($500,000)

Table A: Project Costs by Procurement Arrangements

(in US$million equivalent)

Expenditure Category Procurement Method Total Cost(including

contingencies)Goods: ICB Goods: LIB Goods: Int'l. & Other

local shopping (Consult.)

1. Consultants' Services 12.255 12.255(10.960) (10.960)

2. Goods 1.400 0.700 2.100(0.800) (0.560) (1.360)

3. Training Services t' 0.300 1.320 1.620(0.200) (1.270) (1.470)

4. Operating Expenses k' 0.250 1.075 1.325(0.200) (1.010) (1.210)

Total 1.400 1.250 14.650 17.300(0.800) (0.960) (13.240) (15.000)

Note: Figures in parenthesis are the amounts to be financed by the Bank loan/IDA credit. Other figures include government counterpartfunds.

a/ Given the ineligibility of U.S. based goods or services under the Interim Trust Fund Credit, the Govemment has agreed to finance thoseequipment and software components which are proprietary of U.S. companies and which would otherwise be purchased under sole sourcearrangements (e.g.: specialized software operating systems). The goods required to be purchased from U.S. sources amount to $0.7 mn. andare included in the counterpart funding commitment, given that they cannot be financed via the Credit. Other computer equipment purchasesunder the Credit are available from European and Asian suppliers and include the requisite compatibility with UNIX and IBM based equipment.No U.S. consultant services are earmarked under the project given the identification of qualified candidates from Europe and South America.Goods financed under the project include, for the Ministry of Finance component, computer equipment, software, telecommunicationsequipment, office supplies/equipment, and training equipment/materials (e.g.: projectors, printed material, brochures). For the ComptrollerGeneral's component, goods under the project include computer equipment, rough terrain vehicles for accessing rural municipalities to conducton-site audits, and training materials.

b/ For training and operating expenses, procurement methods for goods and consultants apply, as for similar items specified under thosecategories. For Training Costs, LIB and Int'l. short list procedures would be used for 39% of goods & consultant expenditures respectively, withthe remaining 61 % utilizing local shopping and national short list procedures. For Operating Expenses, LIB and Int'l. short list procedures wouldbe used for 16% of goods & consultant expenditures respectively, with the remaining 84% utilizing local shopping and national short listprocedures.

Table B: Thresholds for Procurement Methods and Prior Review

Expenditure Contract Value Procurement Contracts Sublect toCategory (Threshold) Method Prior Review

1. Consultant Services$25,000 (ind.), $50,000 (firms) a. QCBS a. All fbreign & local ndtvidual

b. Indidual Consultants consultants/firms abovecontract thresholds and 1 stcontract each year (for below).

c. Single source b. All contracts

2. Goods a/Above $140,000 a. ICB a. All ICBBelow $140,000 b. LIB b. LIB above $40,000Below $40,000 c. Shopping c. 1st contract each year.

3. Trainina Services $25,000 (cons.), $50,000(firms) a. Fixed Budget All contracts above threshold$40,000 (goods) b. Individual Consultants 1st contract each year

For contracts below threshold,review of each annual work plan

4. Operatina Expenses $25,000 (cons.), $50,000(firms) a. Least Cost Selection All contracts, purchases aboveb. IndMdual Consultants threshold

$40,000 (goods) 1 st contract each year

For contracts below threshold,review of each annual work plan

Table C: Allocation of Credit Proceeds

Ministry of Finance Comptroller General Total FinancingExpenditure Category US$million US$million US$million Percentage

Consulting Services & Training 4.915 6.668 $11.583 100% foreign85% local

of which:Consultant Services (4.915) (5.198) (10.113)Training (-) (1.470) (1.470)

Goods 0.165 0.332 $0.497 100% foreign85% local

Operating Expenditures 1.227 $1.227 85% local

Unallocated 0.563 0.300 $0.863

PPF Refinancing 0.530 0.300 0.830

Total 7.400 7.600 $15.000

Annex 7Financial Decentralization & Accountability Project

Project Processing Budget and Schedule

A. Project Budget (US$000) Planned Actual(At final PCD stage)

$76,300 $68,000

B. Project Schedule Planned Actual(At final PCD stage)

Time taken to prepare the project (months) 18 10First Bank mission (identification) 4130196 4/30/96Preparation & Pre-appraisal mission 10/01/96 9/30/96Appraisal mission departure 1/20/97 2/17/97Negotiations 3/10/97 6/16/97Estimated Board Approval 5/10/97 8/01/97Planned Date of Effectiveness 1/01/97

Prepared by: Ministry of Finance and Comptroller General

Preparation assistance: PPF was put in place in June 1997.

Bank staff who worked on the project included: John Pollner (LCSFP), Jim Wesberry (LCOAA),Carmen Machicado (LCSPR), Ricardo Valderrama (ACTCO), David Varela (LEGLA)

Annex 8

Bolivia: Financial Decentralizationand Accountability Project

Attached Annexes and Documents in the Project File

A. Project Implementation Plan and Performance Indicators (attached)

B. Training Plan (attached)

C. Environmental Assessment Data Sheet (attached)

D. Bank Staff Assessments (in Files)

a. Insfitutional Assessment of the Ministry of Financeb. Technical Assessment of the Ministry of Financec. Insfttutional & Technical Assessment of the

Comptroller General's Officed. Assessment of Project Accounting System

E. Project FEPS (in Files)

Annex 8APage I of 5

BOLIVIA - FINANCIAL DECENTRALIZATION AND ACCOUNTABILITY PROJECT

IMPLEMENTATION PLAN & PROJECT PERFORMANCE INDICATORS

Target Dates for Delivery of Products & Completion of ActivitiesProject Components /Activities Performance Indicators and

1997 r __998_ 1999 _ 2000_ 2001 Expected Results/Outcomes

L MINISTRY OF FINANCE _

1. Implement. decentralized IFMS

1.1 Implementation in 9 Prefectures: Verification of installed and

a. Adapted IFMS system. End 4th quarter operating IFMS & sub-systems

b. Sub-systems to IFMS End 4th quarter _ in 9 Prefectural regional offices.

1.2 I-MS and sub-systems implementa- Implementation in decentralized

tion in 12 autonomous decent. entities: enties (e.g.: nat. roads service):

a. Budget, Treasuxy, Acctg. IFMS End 4th quarter Sub-systems implemented in 6(100% of entities) by end-2000 & 6 by end-2001.

b. lnventory, goods/ser., fixed assets End 4th quarter End 4th quarter(500/% of entities) (50% of entities) l

.3 Implementation of lFMS End 4th-quarter End 4th-quarter Operating adapted IFMS systems

(budget, acctg. & treasuy functions (5 municip.) (5 municip.) in 10 representative municipalities.in 10 representative municipalities) l

1.4 Design, adaptation and dissem., End 4th-quarter End 2nd-quarter A standardized project accountingof multilateral project acctg. system (prototype) (adapt./dissem.) system to be implemented in Bolivia

IFM public sector-wide integrationXXXl.I Adaptafion of DiMS feature to: Working prototype models of

a. Al entities in central govt. End 2nd quarter IFMS systems piloted in (i) a

b. Decentralized regional gov'ts. End 2nd quarter centml govt entity, (ii) a class C

c. Large & medium municipalities End 1st quarter mumicip., and (iii) class D munic.

-2 Designin sub-systems on the Sub-sytems for inventory, goods lIFMS to cover the accounting for: & so-vices, and fixed assets,

a. Inventories (e.g.: equipment) End 1st quarta automated on IFMS in the Ministry

b. Goods & Services Contracts End 2nd quarter of Finance and in I Prefecture.

c. FixedAssets End October

Annex 8APage 2 of 5

BOLIVIA - FINANCIAL DECENTRALIZATION AND ACCOUNTABILITY PROJECT

IMPLEMENTATION PLAN & PROJECT PERFORMANCE INDICATORS

Target Dates for Deliveav of Products & Completion of ActivitiesProject Components lActivities Performance Indicators and

1997 1998 1999 2000 2001 Expected Results/Outcomes2.3 IFMS implementation in admi- At least 30 representative central

nistrative units in the central govt.: govt. adm. units with stand-alonea. Budget, Treasury, Acctg. IFMS End 4th-quarter End 4th-quarter End 4th-quarter financial mgmt. systems and sup-

(10 Units) (10 Units) (10 Units) porting sub-systems, fully installed,

b. Inventory, goods/ser., fixed assets End 4th-quarter End 4th-quarter End 4th-quarter functionally integrated, andcomplementary subsystems (10 Units) (10 Units) (10 Units) computerized by dates shown.

3 Budget trans./payment moderniz

I. Automation and electronic transfer Electronic transfers via telecom

of government budget payments via End 2nd quarter End 2nd quarter lines installed and operating in

the central bank and the commercial (central govt.) (decent. govt.) the 25 central govt. agencies and

banking system network. selected regional prefectures.

4. Dissemination IFMS operations

4.1 Dissemination to public sector profes- 40 project 40 trainers 40 specialized Train the This component would reflect

sionals, of financial sub-systems and technical con- in coordinating dissem.-trainers trainers program operational on-the-job dissemina-norms of IFMS, and related regulations. sultants trained & executing trained for completed. tion in the financial, mechanical,

Subject Matters: Budgeting, Integrated in IFMS and agencies, trained further disse- 24 dissemination and computerized aspects ofAccounting on the IFMS, Treasury, SAFCO systems mination of workshops operating, maintaining, and properly

Investnent Planning, Administrative IFMSISAFCO completed. applying the IFMS as an accounting,Norms, Control Systems, and Pop. Partic., End 4th-quarter End 4th-quarter End 4th-quarter End 4th-quarter and financial planning tool.Decetralization, & SAFCO Laws. l l

* Project Operating Expenses l

5.1 Fully qualified staffing of tech- Appointment Costs for Cost of Cost of The project unit compostion will

nical project director and supporting of Technical meeting and processing workshop and ensure full compliance with

consutants in line with civil service Coordinator coordinating procurement, dissemination staffing and consultant norms

reform program norms. with regional bidding, and materials for under the civil service program.End 4th-quarter prefectures and contract docu- public sector All project consultants will be

municipalities ments for equip- distribution centralized under the project unitI and services. I_Ito avoid any line fumction duties.

Annex 8APage 3 of 5

BOLIVIA - FINANCIAL DECENTRALIZATION AND ACCOUNTABILITY PROJECT

IMPLEMENTATION PLAN & PROJECT PERFORMANCE INDICATORS

Target Dates for Deliverv of Products & Completion ofActivihesProject Components lActivities Performance Indicators and

1997 1998 1999 2000 2001 Expected Results/Outcomes

IL COMPTROLLER GENERAL

. Government audit strengtheningand decent./municipal sector evaluation on .. _ _.

The regional breakdown of the

.1 CGR # external audits by region End 4th-quarter End 4thguarter End 4th-guarter End 4th-uuarter End 4th-ouarter external audits conducted by the

. La Paz Region 182 188 194 198 Municipal and CG would be completed according

. Santa Cruz Region 80 89 100 108 Prefecture to the targets shown. In addition,

. Cochabamba Region 66 77 88 94 governments by end-2000, the 9 regional offices

. Tarija Region 48 53 57 64 meeting interna- of the CG would have the capacity

. Chuquisaca Region 35 39 44 49 tional accounting to conduct their own extenal

* Potosi Region 33 37 41 44 and auditing financial and performance audits

. Onuro Region 48 49 54 58 standards in within their sub-regions, and

. Beni Region Region 31 32 34 37 their operational the central CG office would be

. Pando Region Region 22 23 24 25 and financial connected via a computerizedTotal Regions 545 587 636 677 reporting. network to all regional offices.

.2 Strengthening of Internal End 4th-quarter End 4th-uarter End 4th-ouater End 4th-guarter

Audit Units in the public sector Completion of the targets listed. Evaluations of intern. audit reviews 2096 2201 2311 2427 and related actions/recommenda-

. Evaluations of internal audit units 47 52 55 61 tions to strengthen capacity andquality of internal auditing units.

.3 Evaluation of internal audit End 4th-uarter End 4th-auarter 4th-q uarter 4thuarter End 4th-uarter

reviews to be conducted by region:. La Paz Region 1000 1050 1103 1158 Municipal and Reviews of internal audits and

. Santa Cruz Region 270 284 298 313 Prefecture implementation of institution

. Cochabamba Region 200 210 220 231 governments building actions based on such

Tarija Region 130 137 144 151 meeting interna- reviews would be completed as

. Chuquisaca Region 120 126 132 139 tional accounting per the targets shown. The

Potosi Region 140 147 155 163 and auditing reviews of internal audit units

. Oruo Region 150 158 166 174 standards in themselves in each region, would

Annex 8APage 4 of 5

BOLIVIA - FINANCIAL DECENTRALIZATION AND ACCOUNTABILITY PROJECT

IMPLEMENTATION PLAN & PROJECT PERFORMANCE INDICATORS

Target Dates for Deliverv of Products & Comnletion ofActivitiesProject Components /Activities _erfonnace Indicators and

1997 1998 1999 2000 2001 Expected Results/Outcomes. Beni Region Region 66 69 72 76 their operational be verified to ensure that technical. Pando Region Region 20 20 21 22 and financial institution-building measure were

Total Regions 2096 2201 2311 2427 reporting. being implemented with follow-up.

7. Implementing audit capability foroperational & non-financal audits

.1 Development of audit work and #of audits of public sector entitiesto be completed by type of audit: End 4th-guarter End 403:g End 4thEnd uarer End 4thE guarter End 4th-ouarter

. Financial audits & management 42 51 55 52 Bolivianletters on accounting controls Comptroller External audits conducted by the

. Privatization, Capitalization, 176 181 186 191 General and its Comptroller General in each ofand other Special audits regional offices the specialized areas below would

. Administrative/control systems 150 164 178 184 fully equipped be completed. In addition, by& income/expend. registry audits and trained to end-2000, the CG would also be

. Info. record-keeping evaluations 16 17 18 19 conduct fully trained to conduct forensic

. Reviews of private audit firm work 36 46 54 67 financial oper- (anti-embezzlement/corruption)* Operational/Performance audits 25 32 38 48 ational and auditing, as well as enviromnental. Follow-ups on audit recommendations 100 96 107 116 anti-corruption auditing.

audits on aTotal Audits 545 587 636 677 regular basis.

Y. Development of anti-corruptionaudit techniques and ethics dissem.

.I Anti-corruption & forensic audit 10 CGR audit 70 CGR auditors 70 CGR auditors CGR staff, and The anti-corruption componenttechnique capacity building specialists 10 CGR lawyers 10 CGR lawyers public sector would proceed along three basic(Number trained) 35 gener. auditors 120 public auditing and strategies: (i) to initially develop

5 CGR lawyers sector employees accounting staff institutional capacity at the CGRmclud. internal and national public sector level

.2 Audits of bidding & selection of 2 major projects 2 major projects 2 major projects auditors, fully to conduct forensic audits, (ii) tolarge public works projects audited audited audited trained in foren- execute a number of specified

Annex 8APage 5 of 5

BOLIVIA - FINANCIAL DECENTRALIZATION AND ACCOUNTABILITY PROJECT

IMPLEMENTATION PLAN & PROJECT PERFORMANCE INDICATORS

.argetDates forDeliverv of Products & Completion ofActivibiesProject Components /Activities Performance Indicators and

1997 1998 1999 2000 2001 Expected Results/Outcomessic, anti-corrup- auaits to detect potentual corrup-

.3 Audits of large purchases (goods) 4 contracts 4 contracts 4 contracts tion audit tech- tion in large public contracts, andniques. Anti- (iii) to develop and disseminate

.4 Embezzlement detection audits I fund(s) I fund(s) I fund(s) corruption audit a public administration ethicsprogram fully program for key executives in agen-

8.5 Public ethics and transparency Devel. of public Dissemination Dissemination instituted in cies primarily responsible for legal,program & dissemination ethics/transpa- to 40 executives to 80 executives CGR core work legislative, financial, executive,

rency program . program. and other governance activities.

. Training in accounting, auditingand financial management

9.1 Govemment auditing/accounting 55 staff trained 85 staff trained 85 staff trained Public sector This professional program would.2 Public financial administration 55 staff trained 85 staff trained 85 staff trained cadre of profes- be complemented by 'overvieW

(also see Training Plan) I I I sionals trained training for 20,000 public staff.

BOLIVIA - FINANCIAL DECENTRALIZATION AND ACCOUNTABILITY PROJECTAnnex SB

TRAING PLAN

Tarnet Dates for Deliver of Products & Completion ofActivities

Training Components lActivities 1997_ . ___ .2 Expected Results/Outcomes1__________ 1997 1 1998 1999 2000 2001

1. COMPTROLLER GENERAL lTraining in 8 hgh level courses m

* Intensive Professional Technical each of the two areas, given to publictraining provided (# trained): employees in leadership positions.. Governmental Auditing 55 85 85 Expected outcome: 200-240 people. Public Financial Administration 55 85 85 trained in each of the two areas.

Program duration: 96 full days.

. General Public Sector Training in By the end of the project, 21,550the SAFCO financial and administrative public sector employees will havesub-systems, and SAFCO Law been trained in SAFCO financial. Number of persons trained 6620 7190 7740 and adminstrative systems.. Number of courses offered 228 245 261

m. Anti-corruption audit training and 50 CGR staff Ethics Seminars 160 CGR staff 120 other public The project will institutionalize re-public admin. ethics dissemination trained 120 Executives trained ernpl. trained gular forensic audits & ethics issues.

2. MINSTRY OF FINANCE

L Evaluation workshops for entities By end of the project, all public sec-having had adapted IFMS/admin. systems tor entities will have conducted workinstalled -No. of workshops to be held 4 4 4 4 shops to evaluate IFMS operations.

H. Dissemination of operating The SAFCO administrative normsaspects for implement administ. norms: of goods/services, personnel, organi-. Training materials produced End I st-quarter zational mgmt., and operations pro-. Plan implem. of dissemination pro- End 1st-quarter gramming would be systematically

grams with apex-coordinating agencies disseminated to all central, decentra-c. Set up 24 Dissemination Workshops _ _8 8 8 lized, prefecture & municipal entities

m. Dissemination to public sector profes- 40 project 40 trainers 40 specialized This training component wouldionals, of financial sub-systems and technical con- in coordinating dissem.-trainers Train the reflect operational on-the-job

norms of IFMS, and related regulations. sultants trained & executing trained for trainers program training in the financial, mechanical,ubject Matters: Budgeting, Integrated in IFMS and agencies,trained further disse- completed and computerized aspects of

Accounting on the IFMS, Treasury, SAFCO systems mination of operating, maintaining, and properlyIvestment Planning, Administrative IFMS/SAFCO applying the IFMS as an accounting,Norms, Control Systems, & Pop. Partic., End 4th-quarter End 4th-quarter End 4th-quarter End 4th-quarter and financial planning tool.Decentralization, & SAFCO Laws. I......

ENVIRONMENTAL DATA SHEET FOR PROJECTS ANMEX 8CIN THE IBRD/IDA LENDING PROGRAM

Country: Bolivia Project ID No.: BO-PA-40 O10Project: Public Financial Decentralization & Accountability ProjectAppraisal Date: November 1996 IBRD Amount (Sm): -Board Date: June 1998 IDA Amount (Sm): $12.0 mn.Managing Division: LA3PS Sector: Financial / Public Sector ManagementLending Instrument: lnvestment Loan or Guarantee Status: ADate (est.) for receipt of EA by Bank: Not applicableEA Category: C Date Assigned: April 1996

Date Data Sheet Preuared/Updated: April 1996

Major Project Components:1. Inplnentation of integrated financial management systems (budgeting, accounting, treasury, cashmanagement, debt managemt) throughout the decentralized public sector based on the implementedcentralized sector model.2. Strugthening of independent and internal auditing fimctions in the Comptroller General's officeand in the decentralized audit offices,

Major Environmental Issues: (Identified or suspected in project)No identified envirometal issues or impacts. The Comptroller General's office will be

strengthenedlto allow it the capacity to conduct audits of environmental operations carried out by the publicseor. ____

Other Envirownental Issues: (of lesser scope associated with project)See above.

Proposed Actions: (to mitigate issues described above)Not apUlicable.

Justification/Rationale for Environmental Category: (presents reasons for environmental categoryselected and explanation of any changes from initial classification)

No activities financed by the proposed project have any environmental impact, as they pertain tofinancial nanaganent products, services, training in public sector institutions. Some beneficial results mayoccur in the environmental area with the strengthening of the Comptroller's capabilities to evaluate suchwork.

Reporting Schedule:Category A Environmental Assessment: Start-up date, date for first draft, and current status.Category B: Is there a separate environmental analysis? Not applicable.

Remarks: (gives status of any other environmental studies, lists local groups and local NGOs consulted,tells whether borrower has given permission to release EA, etc.)N/A

t__________ Signedby: //ZJt4 7

Signed by: .peiations Division Chief Rqglonal Environmnent-vii el, fAxxesMev%J M a"jkr

ANNEX 9

BoliviaStatement of Bank Loans and IDA Credits

As of June 30, 1997(in Millions of US Dollars)

Amount in US$ millions (less cancellations)Fiscal ClosingYear Purpose IBRD IDA Undisbursed Date

Credits 38 Credits closed 584.49

21190 1990 Eastern Lowlands 30.38 6.07 12/31/9721340 1990 Private Enterprise Development 16.10 4.72 6/30/9820920 1990 Integrated Health Development 20.00 5.03 12/31/9722160 1991 Technology Development 21.00 1.72 10/31/9821870 1991 Water Supply and Sewerage 35.00 4.51 12/31/9722790 1991 Public Financial Management II 11.30 2.78 12/31/9723950 1992 Road Maintenance II 80.00 42.02 6/30/9823220 1992 Agro Export Development Project 22.50 9.49 12/31/9725320 1993 Social Investment Fund II 40.00 9.38 12/31/9725310 1993 Integrated Child Development 50.70 42.24 12/31/0025650 1994 Municipal Development 42.00 25.67 12/31/9926470 1995 Regulatory Reform & Capitalization 14.70 2.12 6/30/9827050 1995 Judicial Reform 11.00 8.89 9/30/9926500 1995 Education Reform 40.00 21.19 1/31/0227420 1995 Land Administration 20.40 15.96 12/31/0127610 1996 Capitalization Program 50.00 28.40 7/31/9728060 1996 Rural Water and Sanitation 20.00 16.72 12/31/0027620 1996 Hydrocarbons Sector Reform & Capital. 10.64 2.72 12/31/9827890 1996 Financial Markets and Pension Reform 9.00 3.84 12/31/9827720 1996 Rural Comnunities Development 15.00 9.58 6/30/9927900 1996 Power Sector Reform TA & Capital. 5.10 3.07 12/31/9828050 1996 Environment, Mining and Industry 11.00 9.61 6/30/0327611 1997 Capitalization Program 5.40 5.30 12/19/97

Total Number of Credits 23 581.22 281.02

Loans 16 Loans closed 274.78 0.00

Total 274.78 1,165.70of which repaid 243.44 24.92

Total held by Bank and IDA 31.35 1,140.78Amount sold 0.05

of which repaid 0.05Total Undisbursed 281.28

BoliviaStatement of IFC's

Committed and Disbursed Portfolio

As of June 30, 1997In Millions of US Dollars

Committed Disbursed- - IFC--- -- IFC-

FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic

1973 Plasmar 0.00 .10 0.00 0.00 0.00 .10 0.00 0.001976/88/90/91/95 BISA 15.71 2.70 0.00 4.50 15.71 2.7 0.00 0.001987 Concepcion 0.00 .40 0.00 0.00 0.00 .40 0.00 0.001989/92/94/96 COMSUR 16.93 3.00 2.14 4.50 16.93 3.00 2.14 4.501991 Bermejo 0.00 5.90 0.00 0.00 0.00 2.27 0.00 0.001991 Central Aguirre 1.22 .35 0.00 0.00 1.22 .35 0.00 0.001991 Miniproc Bolivia 0.00 .68 0.00 0.00 0.00 .68 0.00 0.001992 Inti Raymi 17.50 0.00 5.00 0.00 17.50 0.00 5.00 0.001993 GENEX 1.33 0.00 1.19 0.00 .89 0.00 .90 0.001996 Mercantil-BOL 10.00 0.00 0.00 0.00 .28 0.00 0.00 0.001996 Telecel Bolivia 10.00 0.00 5.00 0.00 0.00 0.00 0.00 0.00

Total Portfolio: 72.69 13.13 13.33 9.00 52.53 9.50 8.04 4.50

Approvals Pending Commitmnt

Loan Equitv Ouasi ParticTotal Pending Conmmitment: 0.00 0.00 0.00 0.00

Annex 1 0

Bolivia at a glance 7/14/97

POVERTY and SOCIAL Amnerica rntddeBol Via & Cuib. hcomne Development diamond'

Population mid-1996 (milions) 7.6 478 1,153GNP per capita 1996 (USS) 930 3,320 1,670 Life expectancyGNP 1996 (bHons US$) 71 1,686 1,93D

Average annual growth, 1990-96

Population (%) 2.3 1.7 14 GNP GrossLaborforce86) 2.6 2.3 1.7 per primary

Most recent estimate (latest yearavaiabb s6nce 1909) capita enrollment

Poverlt headcount Index (% cfpopubhon)Urban populalion (%ofotalpopuIaffon) 58 74 56Ute expectancy at birth (ya)- 60 69 67Infant mortality (per 1,000 lIhv baths) 69 37 41 Access to safe waterChild malnutrition (% olchldren under5) 13Acoess to safe water (% orpopulalon) 6s 80 73Illtec (% orpopuahon age 15+) 17 13 BoliviaGross pfiry enrollment (%ofschooJ- poprliation) 95 110 104

Mwe 9 .. 1as Lower-rkklle-income groupFemale 95 O11

KEY ECONOMIC RATIOS and LONG-TERM TRENDS

1976 1908 1995 1996 1S97PrtL PrF4. Economic ratios

GOP (b#ljoo US$I) 1.9 3.6 608 7.5 8.0Oross domestic inves60VtQQP 245 16.8 14.8 16.1 18.5 Openness of economyexporls of goods and sSroicoioP 261 14.3 1 8.3 117., 17.5Gross domostlc s*via#s/GDP 0 85 -9 10.1 11.0Gto" natifoal savitqW0DP 163 11,3 96 11.t 11.0

Qrnot eaount balanf*IGQP -4. - t, S -5,2 4,1 -75 SIteresl pAymeid lP t5W 5 3 2 Savngs i InvestmentTotal d0b1loP 5-8. 161.6 77.t 71,5 64.0Total 4dbt arvicelexport 17.5 49.6 29.7 26.7 25.0Prset vhlue of dsebt/P - , s550 47.DPressnt vlue of deWexpotts . 3035 278.0 Indebtedness

107-t85 16S869 1i96 1006 1117 8746(aweope nnuat growth) Pro]. Pwi Prj. Bo-livia

GNPporceplt 4,1 1.9 1;9 42 20 s -Lower-nik/le-tncorne groupExporte of s, and seONIces 4.2 6Z 11.2 Z9 5.7 6.3

STRUCTURE of the ECONOMY1976 1986 1906 1996 1997

(X or GOP) Prel. Proj. ro rats o output end Investment (%)Agriculture 20.3 36.9 17.7 17.5 17.2 20Industry 32.2 36.3 25.6 25.7 25.9

Manufacturing 12.3 15.3 15.0 15.1 15.2 10-Services 47.5 26.8 56.7 56.8 56.9 o

91 92 03 94 95 9oPrivate consumption 58.7 73.8 77,6 76.5 76.9 -10General govemment consumption 10.5 10.6 13.4 13.4 13.5 GDI GDPImports of goods and services 32.1 22.8 23.5 23.6 24.9

197646 1966-96 1995 189 1907(average annual growth) Prel. Pwj Growth rates of exports end Import (16Agriculture 1.4 20Industry -3.2 1. ..

Manufacturing -1.8 Services 1.4 10

Private consumption 2.8 3.9 4.1 4.2 4.2 sGeneral govemment consumption -0.9 2.5 1.2 1.3 1.3Gross domestic investment -15.7 8.3 9.2 9.1 15.8 91 92 93 94 95 9e

Imports of goods and services -6.3 5.2 8.3 15.7 17.2 Expof importsGross national product -1.0 4.1 3.9 5.0 4.6

The diamonds show four key indicators in the country (in bold) compared with Its income-group average. f data are missing, the diamond willbe incomplete.

Annex 1 0

Bolivia

PRICES and GOVERNMENT FINANCE1976 1988 1906 1996 1907

Domestipdc s Prel. Proj; Inflaton(%)(X chnge) 30Consumer pres (DocJDec.) 7.8 11,749.6 12.6 8.0 7.0 .Implicit GDP deflator (DecjDec.) 6.5 11,289.1 12.9 12.7 6.8 10

overnment finance(X of GDP) 0Current revenue .. .. 23.2 22.6 20.6 91 92 93 94 95 9s

Current budget balance .. . 5.6 5.9 2.4 - GDP det. O cPIOverall surplustdefiet .. .. -1.8 -1.8 -3.3

TRADE

1S76 1985 1995 1996 1997 E(millons USS) Prel. Proj. Expor and Import levels (mil. US$)Total exports (fob) .. 628 1.075 1,131 1198 2,000

Tin .. 187 89 88 88.7Fuel .. 376 142 138 132.3 1500.Manufactures

Total Imports (ott) .. 691 1,394 1,568 1776 1 gfljJlJFood FllL-lIFuel and energy . .. 500Capital goods 253 566 702 872 10S0 _____ _______ __ L :

Export price index (1987.100) .. 93 70 .. 90 91 92 93 94 95 9s

lmportpriceindex(1987.100) .. 120 194 . .. EjExports DmportsTerms of trade (1987-100) .. 78 36

BALANCE of PAYMENTS

1975 1908 t996 1996 1097(rn9ilons USS) Prol Proj. Current account balance to GOP ratIo (%)Expofls of goods and services 486 721 1,252 1,328 1397 olnlpoulsofgoodsandservices 618 807 1.594 1,772 1989 90 9 92 93 94 9 9+

Resource balance -132 -86 -342 -444 -592

Net factor income -41 -423 -221 -169 -201 -sNet current transfems 33 15 209 229 192

Current account balance, -10before official capital transfers -140 -494 -354 -384 -601

Financing items (net) 100 523 477 720 651Changes In net reserves 40 -29 -123 -336 -50 1s

.'eino:

Reserves Including gold (mYIl. USS) 197 492 737 1,132 1217Conversion rate (toeaWSS) 2.8E-05 0.8 4.8 5.1 5.3

EXTERNAL DEBT and RESOURCE FLOWS1976 1986 1996 1996 1997

(nvflias US$) Prel Proj. ComposItton of total debt, 1096 (mIll. USS)Total debt outstanding and disbursed 1,013 4,805 5.266 5124 4910

IBRD 21 207 95 68 45 G A

IDA 50 94 770 884 996 F 0 e

Total debt service 87 366 372 355 358IBRD 2 27 36 31 26 CIDA 1 2 8 10 8 259

Composition of net resourcefows fElOfficial grannt 8 71 202 221 180 E170Olcial credHors 38 -1 271 256 192 1705Prtvate credItor 78 -36 41 -5 -1Foreign direct investment 53 10 177 426 457 DPortfolloequity 0 0 0 0 0 1643

World Bank programCommitments 40 0 116 25 85 A -IBRD ED-n Flateral

OWburswnWs 10 12 113 100 126 ~~~~~~~~~~B -IDA D -Other multilateral F - PrivateDsburemnt 10 12 113 100 126 0 -M -Short-temm Principal repayment 1 13 29 29 23 C - IMFNeotflow 9 -1 84 71 103 _ _

Interes payments 1 16 15 12 10Net transfea 8 -17 69 59 93

Interntional Economics Department and LA3C1 7114197

IMAGING

Report No.: l6854 BOType: PAD