Lac Ipresentation
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Transcript of Lac Ipresentation
Loan Administration Change Initiative (LACI)
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Loan Administration Change Initiative (LACI):
Improving Development Effectivenessthrough
Better Financial Management
Presentation to Agencies Implementing World Bank Financed Projects
Loan Administration Change Initiative (LACI)
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PurposeTo describe:
– The Loan Administration Change Initiative (LACI)
– LACI Implementation Procedures– LACI Disbursement Procedures
Loan Administration Change Initiative (LACI)
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Agenda
1. Presentation2. Questions and answers
Loan Administration Change Initiative (LACI)
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What is LACI?What is LACI?
Procurement& Contract
Management
•Improved project management & monitoring •Improved development effectiveness. •Simplified Disbursement procedures.
Project Financial Management
Physical Progress
Disbursement
Loan Administration Change Initiative (LACI)
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Background
Fundamentally re-examining whether the Disbursement/Repayment Process makes sense in today’s changing environment
Responding to client needs (Borrowers, Task Managers)
Recognition that the Disbursement Function can add value throughout the Lending Process rather than only at the back end
Recognition that project financial accountability needs strengthening
Why was this initiative started?
Loan Administration Change Initiative (LACI)
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LACI Project Overview
Phase I
Phase II
Phase III
StakeholderAnalysisStakeholderAnalysis
Current StateAnalysisCurrent StateAnalysis
VisionCreationVisionCreation
ProcessDesignProcessDesign
Phase IV
Pilot Testing& EvaluationPilot Testing& Evaluation
APR ‘96 MAY JUN JUL AUG SEP OCT NOV DEC JAN..……...…….. DEC ‘97
Phase V
Transition and ImplementationTransition and Implementation
Loan Administration Change Initiative (LACI)
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Ensure that projects have proper financial management systems, improve project implementation, ensure best use of resources
Eliminate detailed disbursement document preparation and review to reduce processing time
Link project progress and physical performance to quarterly disbursements to ensure effective project monitoring and funding
LACI Guiding Principles
Loan Administration Change Initiative (LACI)
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LACI Process Overview
Assess Borrower/Project Financial Management System
as required:• agree on technical assistance• hire financial management staff
Review Borrower Financial Management
System (FMS) and Reporting/Monitoring
Mechanisms
Assess Borrower’s
Project FMSA
Determine strength of
FMS
Understand Project
Develop plan to ensure Borrower creates FMS for
the project
projects with strong financial management systems
projects with weaker financial management systems
Project Design
Loan Administration Change Initiative (LACI)
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LACI Process Overview
Monitor Project Financial & Physical Implementation
Disburse to Special Account
A
Quarterly Borrower submission and Bank
review of Project Management Report
Determine Reporting/Monitoring
Requirements are met
Borrower and Bank coordinate to
resolve impediment
projects with strong financial management systems
Yes
Project Implementation
no
Loan Administration Change Initiative (LACI)
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Quarterly Project Management Report
(to support withdrawal application)
The Bank will provide example reporting modules and create an enabling environment for receipt of electronic transactions
minimum requirements: -sources and uses of funds statement -expenditures by category and project activity statements - special account reconciliation -expenditure forecast
-contract commitment/expenditure report, including source of supply data for contracts above the prior review threshold, as well as post-review contracts above $100,000.
Project Progress Report
FinancialStatements
ProcurementManagement
Report
comparison of actual physical and financial progress vs. forecasts
-procurement status report
Loan Administration Change Initiative (LACI)
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LACI Implementation Procedures
Implementation Approach Sound financial accounting and reporting requirements are
absolutely necessary before project implementation.
LACI will be implemented in a flexible manner, taking into
account the borrower’s accounting, financial management
and reporting capability.
The Bank will seek agreement of the country when applying
the new disbursement methodology.
Strong partnership between Borrowers and the Bank
Loan Administration Change Initiative (LACI)
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LACI Implementation Procedures
Selection of LACI Projects
All new projects appraised from July 1, 1998
All existing projects under three years old as of July 1, 1998, and any other projects requested by the borrower
Loan Administration Change Initiative (LACI)
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LACI Implementation Procedures
Role of the Borrower Maintain appropriate level of staffing and project organizational
structure
Maintain appropriate financial management and reporting
– to generate timely Project Management Reports (PMRs)
– to produce acceptable annual audited financial statements Ensure timely disbursement of counterpart funding to
implementing agencies
Arrange timely appointment of an independent auditor under
appropriate TOR.
Loan Administration Change Initiative (LACI)
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LACI Implementation Procedures
Role of Bank
Role of Bank Departments Project Certification Process for Board
Presentations Conversion of Existing Projects PMR Disbursement Procedures Special Account Procedures under LACI Payment Approval Process under LACI
Loan Administration Change Initiative (LACI)
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Role of the Bank Departments
The fiduciary responsibilities for LACI implementation in the Bank are shared as follows:
Regional Operations will ensure that projects have the required financial management systems and staff in place before Board approval and throughout implementation.
Loan Department will ensure consistent project financial management and required LACI documentation exist across the regions.
The Legal Department will ensure the inclusion of necessary provisions in the legal agreements regarding financial management.
Loan Administration Change Initiative (LACI)
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Project Certification Process for Board Presentation
FMS-OPR assesses and certifies the adequacy of the project financial management system.
Procurement Specialist assesses and certifies the adequacy of procurement management capacity
TTL endorses the assessment of FMS and PS and certifies project for LACI compliance.
PMR format is agreed upon during appraisal and recorded in the minutes of negotiation.
LACI requirements are reflected in the Legal Document. Loan Department staff review and sign off.
Loan Administration Change Initiative (LACI)
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Conversion of Existing Projects
In consultation with the borrower, each Country Department will have the primary responsibility for the portfolio review to determine projects that will be convertedThe certification procedure for new projects will be followedThe Task Team Leader will initiate an amendment
Loan Administration Change Initiative (LACI)
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PMR Disbursement Procedures
PMR-based disbursement procedures will be adopted for
implementation of LACI compliant projects
Submission of Quarterly PMRs of the quarter within 45 days after the
end of the quarter
Disbursement will be made exclusively via the project Special Account
Direct payment and special commitment procedures may be used in
certain cases
For non-LACI projects, existing disbursement procedures will continue
to apply
Loan Administration Change Initiative (LACI)
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Special Account Procedures under LACI
A ceiling of 20 percent of the loan amount will normally be
specified in the Special Account Schedule to the loan
agreement
The first advance will reflect the physical work program
and cash flow forecast of actual project needs normally for
the first six months
Application for subsequent payment to the Special Account
will be supported by PMRs, reflecting actual project progress
and cash forecast
Loan Administration Change Initiative (LACI)
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Payment Approval Process under LACI
The Withdrawal Application and the supporting PMRs will be reviewed by the Task Team FMS-OPR will recommend the amount to be paid to the Special Account; Procurement Specialist and Task Team Leader will endorse the recommendation Final approval and release of payment will be made by FMS-LOA/ DOLOA will advise the borrower reasons for not approving or reducing the amount applied for and request remedial actionOn an exceptional basis, the Bank will consider releasing payment monthly or bi-monthly
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