Description
In economics and political science, fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy
SUBSTANTIVE BUDGET REVISION for PROJECT EGY/01/002
"Fiscal Policy Decision Support Unit (FPDSU) for the Ministry of Finance"
April 2007
Acronyms and Abbreviations
C.A EFT e-gov EISI EU FPDSU GAGS G-POS M/SME MCIT MCNC MCTC MoF MYFF OUDA PC PPP SME SRF TA UNDP WTO
Certificate Authority (for e-payments) Electronic Funds Transfer Electronic Government Egyptian Information Society Initiative European Union Fiscal Policy Decision Support Unit General Authority for Government Services Government Payment of Service Medium and Small and Micro Enterprises Ministry of Communication and Information Technology Main Computer Networks Center Model Customs and Tax Center Ministry of Finance Multi Year Funding Framework Operational Unite for Development Assistance Personal Computer Public Private Partnership Small & Medium Enterprises / or / Small & Micro Enterprises Strategic Results Framework Technical Assistance United Nations Development Programme World Trade Organization
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Contents:
Page No: 1: Introduction 1.1 Requirement for Substantive Budget Revision for UNDP/MoF project number EGY/01/002 1.2 National Context 1.3 Project Background, including summary of achievements to date Overview of project Relationship of UNDAF, UNDP Country Programmes and Project activities Description of output and activities Output: FPDSU upgrade Activity A: PPP Central Unit enhancement Activity B: Macro Fiscal Policy Unit enhancement Activity C: Technical Support Unit for Minister’s Office Activity D: Support to SMEs Activity E: Automation & e-payment deployment & training 4: Implementation arrangements 4.1 Management Arrangements 4.2 Monitoring & Evaluation AWP: Annual Work Plan for 2007 10 1
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1: Introduction
1.1 Requirement for Substantive Revision for UNDP/MOF project number EGY/01/002
In accordance with UNDP Programming Manual clause 6.6.2, a Substantive Revision is required for this project because an additional one point two million dollars ($1.2M) is being put into the project by MOF for additional activities related to project objectives and UNDP is contributing an additional $125,000, in addition to what is carried forward from 2006. The project period is being extended by 2 years to accomplish the expanded activities.
1.2
National Context
Egypt has completed most of the reforms of the Economic Reform and Structural Adjustment Program (ERSAP) begun in 1991 which aimed at dismantling restrictive price control mechanisms, relaxing unwieldy industrial investment licensing procedures, promoting private sector investment, both domestically and internationally, fostering economic growth and facilitating Egypt’s accelerated integration into the world economy. To complete these reforms project EGY/01/002 commenced in 2001 with the Ministry of Finance, which is mandated to develop fiscal policies, including a comprehensive tax program which addresses income and sales taxes, restructuring customs and tariffs, design performance measures for efficient public expenditure, corporatization of economic authorities, integration of the informal sector within the formal economy, and efficient management of public debt. Project EGY/01/002 was developed to assist with these tasks under the title: “Fiscal Decision Support Unit, Ministry of Finance”.
1.3 Project Background
UNDP has been supporting MOF since 2000 with a Preparatory Assistance phase and then the development of the full-scale project for the establishment of the Fiscal Policy Decision Support Unit (FPDSU). A substantive revision in 2004 added an activity for automation. It is estimated that 2 years (2007/8) will see the completion of the Fiscal Policy support requirements of the Ministry of Finance, thus enabling successful implementation of the Government of Egypt’s National Strategy for Economic Development. The table on the following page summarizes the achievements of the project to date.
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Objective in UNDP/MOF project No Egy/01/002 1 Capacity building for the Fiscal Policy Decision Support Unit
Status During the project period a number of advisors were hired: legal, fiscal policy, debt management, micro & macro economic policy, & PPP. Extensive staff training including 250 persons at AUC’s Banking Institution (staff from MoF’s real estate, customs, sales tax and auditing departments) on various aspects of e-commerce, and 30 Staff trained in Risk Management, Problem Solving, Project Monitoring & Evaluation. MOF’s transparency policy was given effect through publication of monthly financial reports and reviews of public sector finance. Recently MOF established a unit for public-private partnerships (PPP) for public utilities. Capacity building continues during the extension period.
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Analyzing revenuegenerating fiscal policies to build a competitive business environment.
Customs tariff restructured; Presidential Decree 300/2004 reduced the number of tariff bands from 27 to 6. Egypt’s customs and tariffs systems are now consistent with the GATT valuation agreement; MOF issued Executive Manual for Customs Law No 66. Workshops were held to introduce the changes to customs procedures, a new organizational structure was developed for the Customs Authority and senior managers at the Authority participated in an executive development programme. New Tax Law issued 2005 conducive to a competitive business environment and a private-sector economy, and an Executive Manual was developed and published. MCTC: The Model Customs and Tax Center was inaugurated on a trial basis in 2004 for experimental electronic payment of taxes. It subsequently became the “VIP Tax Center” for large tax payers. Integrating the informal sector within the formal economy. MOF commissioned and published a report ‘Streamlining the Egyptian Laws, Regulations and Procedures Governing SME Establishment, Growth, Export and Exit” which was adopted by the government as its SME development strategy. A Formalization Committee (to guide the integration of the informal sector) was established by Ministerial Decree 125/2005, This activity continuing during the extension period as ‘support for SMEs”.
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Effective and accountable managerial and technical capacities developed for effective financial management of public resources.
Concept of Performance Based Budgeting (PBB) introduced to 4 ministries (Health, Education, Transport, and Water) via training of 900 employees on financial management, including budget preparation, accounting, reporting, internal control, internal audit and public procurement. Other ministries will be introduced to PBB when operations of the first 4 ministries are assessed to see if any adjustments are needed.
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Corporatization of public economic authorities.
Corporatization of water and sanitation authorities in 12 governorates by Presidential Decree 135/2004, forming the Water & Sewerage Holding Company. Other corporatizations: Tourism Development Organization, Sinai Development Holding Co., Airports Authority; Red Sea Ports Organization (Ein Sukhna Port). Corporatization moved to Ministry of Investment early in 2006.
Efficient management of government inventories.
More than 100,000 inventory items coded. Workshops in 17 governorates on managing and monitory govt. inventory and purchasing techniques. (300 trainees) and training in the field for 600 on encoding and monitoring. This activity continues but without specific input from this project.
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Public debt managed efficiently (to finance the gap between revenues and expenditures at the lowest possible cost and at a prudent degree of risk over the long-run).
Government Bonds issued total 10 billion LE. The latest issue is a Petrol Bond for 1.5 billion (securitized note maturing in 2011). Training for 25 staff in Washington and London on cash flow projection. Public debt management transferred to another project (USAIDfunded) within MoF. Ministerial advisors monitor impact of public debt management.
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Automation of the government sectors (this activity was added in 1st project revision)
Issued budgeting guidelines based on GFS 2001. Developed customized reports for general ledger (GL) application. New components being added to this component in the present revision: "Automation & e-payment deployment & training".
The present Substantive Budget Revision seeks to add upgrading of the Macro Fiscal Unit and the PPP Central Unit (Public Private Partnerships) as well as reshaping ‘integration of the informal sector’ into an action line that provides support for SMEs and to add activities related to deployment of electronic funds transfer (EFT) for governmental financial transactions.
UNDP requirements in terms of project management structure changed at the beginning of 2007. These changes are also incorporated in the present document. The following pages describe the main activities to be undertaken during the proposed two-year extension (2007-2008). All other sections of the original project document EGY/01/002 remain in force (under new numbering system Project ID 00012349).
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Fig. 1: Project relationships to UNDAF and UNDP Country Programme UNDAF Outcome 1 By 2011 State's performance and accountability in programming, implementing and coordinating actions, especially those that reduce exclusion, vulnerabilities and gender disparities are improved. CP Outcome
CP Outcome 1: Improved national capacity to design, apply and monitor pro-poor policies with addressing geographical disparities.
2005 CP Output: Regulatory environment including policy mechanisms facilitating the development of M/SMEs and addressing employment improved.
Proposed 2007 CP Output: National economic policy and governmental financial management upgraded to improve the standard of living for Egyptian people.
CP Outputs
A PPP Central Unit enhancement
B Macro Fiscal Policy Unit enhancement
C Technical support unit for the Minister’s Office. C1: Assistance to Minister’s office; long-term & short term consultants
D SME’s support
E Automation & e-payment deployment & training E1: Automated budgeting training for MoF staff D2: e-finance deployment & training - EFT for govt. - Public e-payment - ATM expansion - Activate CA - Activate MCNC - Legal aspects - Training.
Project Outputs
A1: Capacity building A2: External marketing A3: Legislative framework for implementing PPP A4 Pilot PPP projects.
B1: Hire additional staff
B2: Prepare studies and analyses to follow up on C2: Support for international & legislative changes regional events. B3: Make policy recommendations based on research. C3: Consultancy Pool C4 Project management, monitoring and evaluations.
D1: Training for Committee personnel D2: Studies & field research D3: Stakeholder workshops D4: Secretariat support for Committees.
Indicative Activities
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3. OUTPUT AND PROPOSED ACTIVITIES
Output:
“National economic policy improves the standard of living for Egyptian people (through upgrade of FPDSU at MOF)”. The project logic is that standard of living is intimately linked with economic policies and the MOF is the body responsible for recommending those policies to the Cabinet and for implementing the agreed strategies. The quality of the policy work of MOF depends on the skills and experience of people staffing the FPDSU. Hence supporting the hiring and training of people in key units, and assisting them with pilot implementations of matters that have policy relevance, will benefit the nation as a whole because good economic policies give the best chance of improved standard of living for all. Furthermore, good financial management requires capacity building of other entities that contribute to the budgeting process and management of governmental financial transactions. The project incorporates such outreach capacity building in relation to the annual budgeting process and to epayment. The project also incorporates specific pro-poor measures such as the development of
special plastic e-payment cards for people who do not have bank accounts and the installation of 1,000 ATMs in locations that are not serviced by the commercial sector so that e-payment (receipt of government salaries and pension entitlements, payment of taxes and fees etc) is convenient for the poorer and locationally disadvantaged sections of Egyptian society.
Activities
The attached annual work plan (AWP) shows the timing of proposed activities during 2007 and the project operations plan, also attached, (POP) shows the indicators and deliverables for the two-year project extension period. The following paragraphs give an overview of the key activities.
A. PPP Central Unit
In line with the Government's strategy to promote and increase private sector involvement in the country's economic and social development plan, particularly in the area of public utility services, the Government has introduced the Public Private Partnership program (PPP). A “centre of expertise” in this regard is vested with the MOF to introduce and communicate the Public Private Partnership policy, to develop practice and to take a vital role in the delivery of the initial projects. The Public Private Partnership Unit was established at the Ministry of Finance in June 2006 and is expanding. The Unit needs to build up its own staff and capabilities as well as offering training support to its partners.
The PPP Central Unit will be working closely with the Ministry of Planning and the Ministry of Investments to ensure a controlled roll-out of a series of significant infrastructure and public services projects. Initially, PPP’s will concentrate on schools, healthcare, sanitation, social housing and
transport. During the second year of the extension specialized units will be established in the line
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ministries who have plans to implement projects under the PPP program. An essential task of the unit is to ensure that PPP project proposals are supported by sound analysis as to needs and value, receive the necessary budget approvals and that partner selection takes place as a result of a rigorous and fair competition. The Unit is developing guidelines on project selection, appraisal and tendering. The guidelines are developed by a process of consultation with relevant stakeholder groups at seminars at MoF, and draft guidelines are discussed at workshops to ensure accuracy and clarity. Lead responsibilities • Articulating a single national PPP policy so that its objectives and mechanisms are understood by Ministries and State agencies, funders, contractors, the press and the general public. (A central PPP policy statement). • • Developing and sponsoring new legislation and regulation for PPP procurement and practice which must be observed by all ministries submitting PPP proposals. Importing experience from other countries and developing guidance and methodologies that is appropriate to Egypt. The centre should be the recognized authority on the PPP process developing a “tool kit” to standardize PPP practice across Government. • Assisting Ministries/public bodies develop/vetting PPP proposals (Business Cases). The MOF must agree that these cases are sound before procurement can proceed and BUDGET be allocated. • • • • Communicating the process to the professional private sector participants (banks, lawyers etc) Helping devise the structure of PPP funding and security packages Identifying issues that may impede the programme and orchestrating their resolution Shepherding and advising on project tenders, being a watchdog for good practice, learning the lessons from pilot exercises. This should involve active participation in all aspects of early projects tenders (process, documentation, negotiation, evaluation and review) • • To develop and enforce the use of generic commercial terms for PPP contracts (standardized contract model) Being the “intelligence gatherer” to appreciate the development of concession/PPP practice in other countries, and build up its own databank and to access the wealth of PPP material available on the WEB. • • • Being a “public face” to the initiative with a newsletter and a website Promoting the development of concession/PPP/Project finance advisory skills for export to the Eastern Mediterranean and Gulf regions. It must be the guardian and promoter of the new methods and a proactive agent for change. In short, in matters of PPP development and practice, it has to be both originator and final arbiter. In order to deliver consistent messages and to gather and focus views and concerns, the PPP Central Unit is establishing a small number of panels that meet periodically on a consultative basis to discuss and take forward current issues that affect the various groups of PPP participants.
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B. Macro Fiscal Policy Unit (MFPU)
The Macro Fiscal Policy Unit supports the Minister of Finance in his efforts to make economically sound and socially beneficial decisions on matters falling within his mandate. The Macro Fiscal Policy Unit has defined its functions as follows: • • • • • • • • • • Supporting the Minister of Finance in fiscal policy formulation. Monitoring fiscal situation including the developments in revenues, expenditure, and financing, including the national debt; and advising the Minister on the fiscal situation. Producing medium term budget projection scenarios, including their impact on the general population. Ensuring consistency of the fiscal policy with macroeconomic framework. Analyzing macroeconomic framework and main variables. Monitoring the budget execution to identify important developments and advise the Minister on appropriate action. Developing fiscal targets and other key aggregates of the budget to lead the budget formulation process. Monitoring international economic developments to determine their impact on the economy of Egypt. Preparing policy statements and, particularly, the Minister’s speeches to the Parliament, giving due regard to wider implications of policies when appropriate. Leading the Ministry’s side in the technical consultations with the International Financial Institutions (IFIs) on the macroeconomic and fiscal policies; and serving as a focal point for coordination of activities of the MoF with the IFIs. Facilitating surveillance by IFIs. Explaining to bilateral and multilateral donors the government’s fiscal and macroeconomic policies and participating in negotiations with the donors as instructed by the Minister of Finance. Recommending structural reforms to facilitate the implementation of the fiscal and macroeconomic policies. Producing the Financial Monthly publication. Producing, and participating in producing, analytical fiscal and economic internal reports. Serving as Secretary for the Ministerial Economic Committee (head of the MFP Unit) and participating in the discussions covering economic policy. Coordinating the work of consultants hired for specific research assignments.
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• • • • •
The Macro Fiscal Unit was established in the Ministry of Finance in 2005 on the recommendation of the International Monetary Fund (IMF) and the above list of functions is explicit about technical aspects, Macro-Fiscal policy units also have a central role in ensuring that negotiations between different ministry sectors, international organizations and sovereign evaluation bodies are mindful of the economic welfare of all the nation.
C: Technical Support Unit for the Minister’s Office
The Minister of MOF is responsible both for policy development and for devising plans on how to get to those policy goals: “Where to go and how to get there” and that involves considerable negotiation with other ministries and with international bodies. Policy support to the Minister’s office is provided under this heading via long-term consultants (advisors). These advisors also accompany the Minister
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to negotiations with World Bank, IMF and Euromoney meetings. When MOF engages in international activities to present Egypt’s vision and programmes and to attract funding and expertise to support the implementation of national plans the representation may be undertaken by advisors if the Minister is otherwise engages. Key monitoring activities concern the impact of the customs and tax legislative changes made recently by the Ministry. Specifically the project will continue capacity building for the customs authority, enabling them to keep track of the effect of changes made in phase 1 of the project. All MOF policies are monitored by advisors, who then report the impacts to the Minister of Finance, and making recommendations for adjustments and further actions.
D: Support to SMEs
Egypt has over 2 million SMEs and they account for a very large majority of business enterprises and for the bulk of employment opportunities and therefore they play a big role in the national economy and standard of living for most people. Egyptian SMEs are very difficult to influence because they are very diverse in their interests and outputs, small by definition, and many are informal i.e. not registered, not paying taxes, not members of industry associations. Numerous projects over the last 20 years have offered business advice, training, and financial assistance to Egyptian SMEs but still there is a vast need to improve the productivity of Egyptian SMEs and to integrate the informal ones into the formal economy. Some ministries are tackling SME development in their own industry (e.g. MCIT with SMEs in the ICT industry). The overall objective of the Small, Medium and Micro Enterprise Policy Unit at MOF is to have an improved M/SME policy environment resulting in reduced financial and non-financial constraints and increased opportunities for M/SME development. MOF published and distributed a policy general framework “Enhancing Competitiveness for SMEs in Egypt: General Framework and Action Plan” in November 2004. This policy framework was approved by the Prime Minister and adopted by the Government. MoF has been directed to coordinate cross government efforts for its implementation. Three committees have been established under the Ministry of Finance: 1. SME Policy Committee which provides a forum for senior representatives from key government agencies, non-governmental organizations and SME representatives to discuss and push forward with the implementation of the Action Plan of the Competitiveness Strategy. A working group on formalization of the informal sector was established. 2. Venture Capital Committee, which is tackling barriers preventing leasing and equity finance providers from reaching SMEs in Egypt. The committee is working on developing 3 sets of terms of reference for the creation of a) private equity fund, b) turnaround fund and c) venture capital fund. 3. Government Procurement Committee. This committee is working with the General Authority for Government Services (GAGS) reforming access to Government Procurement. Simpler access to government contracts for SMEs will facilitate implementation of the Small and Micro Enterprise
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Law 141/2004 which states that a minimum of 10% of all government contracts are awarded to SMEs. This access will be a major tool for encouraging informal SMEs to register.
E. Automation and e-payment deployment and training
In addition to the ongoing efforts of the MOF in automating systems, especially all budgeting departments in the center and the governorates and other ministries that deal with budgeting, (Performance Based Budgeting) within the framework of the government's Egypt Information Society Initiative EISI), the Ministry of Finance is now ready to transfer operational procedures to electronic payment, starting with the e-government payment activities added to this project. E-payment will
mean that all payments to suppliers and receipt of income by the Egyptian government will be by electronic funds transfer by the end of the decade. G-POS forms part of the integrated national financial network that is currently evolving and being deployed around the nation. MOF is taking the lead in this major initiative, aiming to automate 1,600 financial units nationwide by 2010, and connect major financial units with their affiliates.
EFT (Electronic Funds Transfer) for Government transactions MoF is involved in developing and deploying mechanisms for large transfers between government entities and suppliers, and also in the deployment of mechanisms for the public to make payments to government, commercial establishments, and to and from banks. The main interfaces for the public are smart cards (used at Point of Sale devices and for internet payments) and ATMs. By switching to e-payment systems, government will be released from labour-intensive handling of cash and the number of cheques that need to be issued by Government authorities will be substantially reduced.
Payments to all government employees and pension payments are being converted to payment through Magnetic Plastic Cards and/or Smart Cards. This requires a massive number of cards to be issued:- 7 million for pension entitlements and 7.8 million for governmental and formal sector employees. A quarter of a million cards were issued last year as a pilot exercise. Now there is an agreement between MOF and two Egyptian banks to issue another 5.8 million cards in three years. Staff are being hired and trained at MOF during Q1 this year, ready to lead a marketing and training initiative aimed at accounting units in bank branches. During Q2 and Q3 the marketing team will work in Cairo and Alexandria governorates so that the systems are functional for the half a million cards that will be issued in Q3 and Q4. Other governorates will be brought in to the system over the course of the next two years.
ATMs. The massive increase of people receiving their monthly income electronically rather than in cash means that the percentage of the formal workforce with bank accounts will rise from the current 10% to perhaps 40% over the two years of the project. Consequently there also needs to be an increase in the number of bank branches and Automatic Teller Machines (ATMs) so that people can draw out the money paid to them by EFT. Agreements have been signed to install an additional 1,000 ATMs around the country.
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Payments to suppliers: Amounts due will be paid to suppliers by electronic funds transfer to their bank accounts.
Incoming funds: From 2008, large payments will only be accepted through electronic funds transfer and small payments will be channeled through the G-POS, the Government Payment of Service network. Public access to the G-POS will be at post offices, departmental POS stations, and through the internet. The G-POS system will accept international credit cards although the Egyptian Smart Card and utilities’ Magnetic Plastic Cards will be the preferred method because they will be much cheaper to use. The percentage charged by international credit cards is about 2.5% of all
transactions, which would represent an unacceptable burden on the mass of the Egyptian population, who would prefer the inconvenience of personal payment rather than additional charges. However, the MOF is currently negotiating with banks that the Egyptian Smart Card should have a transaction charge of just 1.5 LE. For those people who do not want a Smart Card tied to a bank account, the Banks will issue a magnetic plastic card to be known as a Utility card, which is an ‘electronic purse’ where the customer puts in an amount of money which can then be used to pay fees electronically to government entities, e.g. school and university tuition fees, traffic fines, car and driving licenses, legal registrations. This year, 2007, is a transition year in which government entities are accepting mixed payments but by the end of 2008 all values greater than 5,000 L.E. will have to be by EFT. Smaller amounts will continue to be accepted in cash or by card for a further year, but by end of 2009 all government income will be received electronically. A welcome side benefit of the change from cash to card payments is the impact on traffic. Two million people go to a tax office every year; 10 million go to traffic authorities to renew driving licenses. These and other reasons for traveling to government offices to make or collect payments will be removed.
Ministerial decrees:
It is necessary to make some amendments to Law 127/1981 to enable the new
payment and collection methods to be fully operational, with necessary controls and audit functions. This may not occur till 2008 as modifications will not be completed until after the pilot exercise that will be conducted using the 30 access points of the Customs Authority. When completed, banks and government accounting units will sign an agreement (a paper document) and data will be sent electronically to update all the relevant ledgers in the government entities and banks, and a selection of summary data will go to the MCNC to facilitate calculation of cash flows, analyzing trends, and speedily extracting information about the state’s financial situation and national accounts balance sheets.
E-payment certification: The Ministry of Finance is making preparations to house the governmental Certificate Authority. The Root CA Trust Center is at ITIDA, which proves or denies the validity of digital certificates of the licensed Certificate Authorities. MoF is using a sub-set of digital signatures with preparatory encryption, in collaboration with National Defense Council for the transition period till the Government CA is activated.
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Training:
MOF's budgeting department is currently working partially electronically and partially
manually. On-the-job training will continue until all staff are competent in electronic procedures, and all processes have been integrated in the new systems. All other ministries and their governoratelevel branches will gradually be brought into the system with initially training beginning in the middle of 2007.
4: IMPLEMENTATION ARRANGEMENTS
4.1 Management Arrangements
The management arrangements ensure the quality and timeliness of all project deliverables and are illustrated in the figure on the next page. The Project Board is the decision-making entity. It replaces the Joint Steering Committee (alternatively called the Joint Management Committee) but has a more direct role than the JSC/JMC, as reflected in its composition and duties. The Project Manager is equivalent to the National Project Director in the former UNDP terminology and is responsible for implementation of the agreed activities and for delivery of the specified results. The change is a shift in the scope of responsibilities. The NPD had relatively wide decision-making powers, i.e. before he/she had to refer decisions to the JSC/JMC. In the present set-up all variations from the annually agreed AWP have to be made by the Project Board. The Project Assurance role is what was previously called the ‘Monitoring and evaluation and reporting Unit’. The functions are essentially the same, with the significant difference that previously the M&E unit reported to the NPD whereas now the project assurance role reports to the Board (see diagram next page) The Project Board consists of three roles, each of which may comprise several persons. It is also permitted for the Executive role to double as the supplier role or the user role, i.e. the minimum size for the Board is two persons.
The Executive role is the chairperson and is appointed by the Ministry of Finance; the senior supplier represents the group of development partners funding the project, which in this case is also the Ministry of Finance, and the users’ representative is also from the Ministry of Finance as the project is primarily capacity building for the Ministry of Finance. UNDP will always be invited to attend all Board meetings.
The Project Board meets annually at the beginning of each year to consider and approve the Annual Work Plan as presented by the Project Manager. Both the Project Manager and the Project
Assurance role attend the meetings of the Project Board (unless there is a specific reason for this not to be the case on a particular occasion, as decided by the Project Board). At any time in the project cycle, individual members of the Project Board can request an extraordinary Project Board meeting when ad-hoc direction of the project is required.
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Figure 2: Project Structure
PROJECT BOARD
Senior Supplier: Amin El Sharkawi UNDP Executive: Manal Hussein Senior User: Ahab Eyada & Mohamed Abu Taleb
Project Assurance Role Project Manager
Team Leader Macro-Fiscal Unit
Team Leader SME support
Team Leader Automation & E-payment
Team Leader PPP
The Project Assurance role for this project is a part-time function preformed by an external consultant approved by UNDP (TOR based on UNDP requirements for the role). Normal quarterly reporting on progress against the workplan will be done internally and will form part of the input for reports to the Board by the Project Assurance Role.
The Project Manager is responsible for the day-to-day implementation of the project. This includes ensuring the quality and timeliness of all project outputs and activities; requesting ad-hoc directions from the Project Board when required; liaising with the Project Assurance role; requesting the advancement of project funds; and preparing Quarterly and Annual Progress Reports. In the present situation, the National Project Director of the project takes the role of Project Manager for the duration of the extension period.
The financial management arrangements of the project are through OUDA.
4.2 Monitoring & Evaluation The monitoring and evaluation of the project is based on dialogue and regular meetings between the Project Manager, Team Leaders, and the Project Assurance role. The monitoring tools are the
documents listed below, with the primary mechanism being the detailed management annual work plan and the quarterly progress reports which detail actual activities. The Quality Assurance Reports
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to the Board compare the actual activities to what was stated in the annual workplan and provides and update the risk log for each of the teams. The Project Manager is responsible for producing the
following documentation to be submitted to UNDP:
? ? ? ? ? ? ? ? ? ?
Signature annual work plan Detailed management annual work plan Annual budget Quarterly detailed workplan/budget requests Quarterly progress reports Annual progress report Annual financial report Six-monthly Quality Assurance Reports, including risk log updates, for Board meetings Minutes of Board meetings TORs for contracts to be funded from the project.
All other parts of the original project document for Project 00012349 (EGY/01/002) are the same and remain in force.
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doc_709629871.pdf
In economics and political science, fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy
SUBSTANTIVE BUDGET REVISION for PROJECT EGY/01/002
"Fiscal Policy Decision Support Unit (FPDSU) for the Ministry of Finance"
April 2007
Acronyms and Abbreviations
C.A EFT e-gov EISI EU FPDSU GAGS G-POS M/SME MCIT MCNC MCTC MoF MYFF OUDA PC PPP SME SRF TA UNDP WTO
Certificate Authority (for e-payments) Electronic Funds Transfer Electronic Government Egyptian Information Society Initiative European Union Fiscal Policy Decision Support Unit General Authority for Government Services Government Payment of Service Medium and Small and Micro Enterprises Ministry of Communication and Information Technology Main Computer Networks Center Model Customs and Tax Center Ministry of Finance Multi Year Funding Framework Operational Unite for Development Assistance Personal Computer Public Private Partnership Small & Medium Enterprises / or / Small & Micro Enterprises Strategic Results Framework Technical Assistance United Nations Development Programme World Trade Organization
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Contents:
Page No: 1: Introduction 1.1 Requirement for Substantive Budget Revision for UNDP/MoF project number EGY/01/002 1.2 National Context 1.3 Project Background, including summary of achievements to date Overview of project Relationship of UNDAF, UNDP Country Programmes and Project activities Description of output and activities Output: FPDSU upgrade Activity A: PPP Central Unit enhancement Activity B: Macro Fiscal Policy Unit enhancement Activity C: Technical Support Unit for Minister’s Office Activity D: Support to SMEs Activity E: Automation & e-payment deployment & training 4: Implementation arrangements 4.1 Management Arrangements 4.2 Monitoring & Evaluation AWP: Annual Work Plan for 2007 10 1
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1: Introduction
1.1 Requirement for Substantive Revision for UNDP/MOF project number EGY/01/002
In accordance with UNDP Programming Manual clause 6.6.2, a Substantive Revision is required for this project because an additional one point two million dollars ($1.2M) is being put into the project by MOF for additional activities related to project objectives and UNDP is contributing an additional $125,000, in addition to what is carried forward from 2006. The project period is being extended by 2 years to accomplish the expanded activities.
1.2
National Context
Egypt has completed most of the reforms of the Economic Reform and Structural Adjustment Program (ERSAP) begun in 1991 which aimed at dismantling restrictive price control mechanisms, relaxing unwieldy industrial investment licensing procedures, promoting private sector investment, both domestically and internationally, fostering economic growth and facilitating Egypt’s accelerated integration into the world economy. To complete these reforms project EGY/01/002 commenced in 2001 with the Ministry of Finance, which is mandated to develop fiscal policies, including a comprehensive tax program which addresses income and sales taxes, restructuring customs and tariffs, design performance measures for efficient public expenditure, corporatization of economic authorities, integration of the informal sector within the formal economy, and efficient management of public debt. Project EGY/01/002 was developed to assist with these tasks under the title: “Fiscal Decision Support Unit, Ministry of Finance”.
1.3 Project Background
UNDP has been supporting MOF since 2000 with a Preparatory Assistance phase and then the development of the full-scale project for the establishment of the Fiscal Policy Decision Support Unit (FPDSU). A substantive revision in 2004 added an activity for automation. It is estimated that 2 years (2007/8) will see the completion of the Fiscal Policy support requirements of the Ministry of Finance, thus enabling successful implementation of the Government of Egypt’s National Strategy for Economic Development. The table on the following page summarizes the achievements of the project to date.
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Objective in UNDP/MOF project No Egy/01/002 1 Capacity building for the Fiscal Policy Decision Support Unit
Status During the project period a number of advisors were hired: legal, fiscal policy, debt management, micro & macro economic policy, & PPP. Extensive staff training including 250 persons at AUC’s Banking Institution (staff from MoF’s real estate, customs, sales tax and auditing departments) on various aspects of e-commerce, and 30 Staff trained in Risk Management, Problem Solving, Project Monitoring & Evaluation. MOF’s transparency policy was given effect through publication of monthly financial reports and reviews of public sector finance. Recently MOF established a unit for public-private partnerships (PPP) for public utilities. Capacity building continues during the extension period.
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Analyzing revenuegenerating fiscal policies to build a competitive business environment.
Customs tariff restructured; Presidential Decree 300/2004 reduced the number of tariff bands from 27 to 6. Egypt’s customs and tariffs systems are now consistent with the GATT valuation agreement; MOF issued Executive Manual for Customs Law No 66. Workshops were held to introduce the changes to customs procedures, a new organizational structure was developed for the Customs Authority and senior managers at the Authority participated in an executive development programme. New Tax Law issued 2005 conducive to a competitive business environment and a private-sector economy, and an Executive Manual was developed and published. MCTC: The Model Customs and Tax Center was inaugurated on a trial basis in 2004 for experimental electronic payment of taxes. It subsequently became the “VIP Tax Center” for large tax payers. Integrating the informal sector within the formal economy. MOF commissioned and published a report ‘Streamlining the Egyptian Laws, Regulations and Procedures Governing SME Establishment, Growth, Export and Exit” which was adopted by the government as its SME development strategy. A Formalization Committee (to guide the integration of the informal sector) was established by Ministerial Decree 125/2005, This activity continuing during the extension period as ‘support for SMEs”.
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Effective and accountable managerial and technical capacities developed for effective financial management of public resources.
Concept of Performance Based Budgeting (PBB) introduced to 4 ministries (Health, Education, Transport, and Water) via training of 900 employees on financial management, including budget preparation, accounting, reporting, internal control, internal audit and public procurement. Other ministries will be introduced to PBB when operations of the first 4 ministries are assessed to see if any adjustments are needed.
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Corporatization of public economic authorities.
Corporatization of water and sanitation authorities in 12 governorates by Presidential Decree 135/2004, forming the Water & Sewerage Holding Company. Other corporatizations: Tourism Development Organization, Sinai Development Holding Co., Airports Authority; Red Sea Ports Organization (Ein Sukhna Port). Corporatization moved to Ministry of Investment early in 2006.
Efficient management of government inventories.
More than 100,000 inventory items coded. Workshops in 17 governorates on managing and monitory govt. inventory and purchasing techniques. (300 trainees) and training in the field for 600 on encoding and monitoring. This activity continues but without specific input from this project.
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Public debt managed efficiently (to finance the gap between revenues and expenditures at the lowest possible cost and at a prudent degree of risk over the long-run).
Government Bonds issued total 10 billion LE. The latest issue is a Petrol Bond for 1.5 billion (securitized note maturing in 2011). Training for 25 staff in Washington and London on cash flow projection. Public debt management transferred to another project (USAIDfunded) within MoF. Ministerial advisors monitor impact of public debt management.
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Automation of the government sectors (this activity was added in 1st project revision)
Issued budgeting guidelines based on GFS 2001. Developed customized reports for general ledger (GL) application. New components being added to this component in the present revision: "Automation & e-payment deployment & training".
The present Substantive Budget Revision seeks to add upgrading of the Macro Fiscal Unit and the PPP Central Unit (Public Private Partnerships) as well as reshaping ‘integration of the informal sector’ into an action line that provides support for SMEs and to add activities related to deployment of electronic funds transfer (EFT) for governmental financial transactions.
UNDP requirements in terms of project management structure changed at the beginning of 2007. These changes are also incorporated in the present document. The following pages describe the main activities to be undertaken during the proposed two-year extension (2007-2008). All other sections of the original project document EGY/01/002 remain in force (under new numbering system Project ID 00012349).
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Fig. 1: Project relationships to UNDAF and UNDP Country Programme UNDAF Outcome 1 By 2011 State's performance and accountability in programming, implementing and coordinating actions, especially those that reduce exclusion, vulnerabilities and gender disparities are improved. CP Outcome
CP Outcome 1: Improved national capacity to design, apply and monitor pro-poor policies with addressing geographical disparities.
2005 CP Output: Regulatory environment including policy mechanisms facilitating the development of M/SMEs and addressing employment improved.
Proposed 2007 CP Output: National economic policy and governmental financial management upgraded to improve the standard of living for Egyptian people.
CP Outputs
A PPP Central Unit enhancement
B Macro Fiscal Policy Unit enhancement
C Technical support unit for the Minister’s Office. C1: Assistance to Minister’s office; long-term & short term consultants
D SME’s support
E Automation & e-payment deployment & training E1: Automated budgeting training for MoF staff D2: e-finance deployment & training - EFT for govt. - Public e-payment - ATM expansion - Activate CA - Activate MCNC - Legal aspects - Training.
Project Outputs
A1: Capacity building A2: External marketing A3: Legislative framework for implementing PPP A4 Pilot PPP projects.
B1: Hire additional staff
B2: Prepare studies and analyses to follow up on C2: Support for international & legislative changes regional events. B3: Make policy recommendations based on research. C3: Consultancy Pool C4 Project management, monitoring and evaluations.
D1: Training for Committee personnel D2: Studies & field research D3: Stakeholder workshops D4: Secretariat support for Committees.
Indicative Activities
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3. OUTPUT AND PROPOSED ACTIVITIES
Output:
“National economic policy improves the standard of living for Egyptian people (through upgrade of FPDSU at MOF)”. The project logic is that standard of living is intimately linked with economic policies and the MOF is the body responsible for recommending those policies to the Cabinet and for implementing the agreed strategies. The quality of the policy work of MOF depends on the skills and experience of people staffing the FPDSU. Hence supporting the hiring and training of people in key units, and assisting them with pilot implementations of matters that have policy relevance, will benefit the nation as a whole because good economic policies give the best chance of improved standard of living for all. Furthermore, good financial management requires capacity building of other entities that contribute to the budgeting process and management of governmental financial transactions. The project incorporates such outreach capacity building in relation to the annual budgeting process and to epayment. The project also incorporates specific pro-poor measures such as the development of
special plastic e-payment cards for people who do not have bank accounts and the installation of 1,000 ATMs in locations that are not serviced by the commercial sector so that e-payment (receipt of government salaries and pension entitlements, payment of taxes and fees etc) is convenient for the poorer and locationally disadvantaged sections of Egyptian society.
Activities
The attached annual work plan (AWP) shows the timing of proposed activities during 2007 and the project operations plan, also attached, (POP) shows the indicators and deliverables for the two-year project extension period. The following paragraphs give an overview of the key activities.
A. PPP Central Unit
In line with the Government's strategy to promote and increase private sector involvement in the country's economic and social development plan, particularly in the area of public utility services, the Government has introduced the Public Private Partnership program (PPP). A “centre of expertise” in this regard is vested with the MOF to introduce and communicate the Public Private Partnership policy, to develop practice and to take a vital role in the delivery of the initial projects. The Public Private Partnership Unit was established at the Ministry of Finance in June 2006 and is expanding. The Unit needs to build up its own staff and capabilities as well as offering training support to its partners.
The PPP Central Unit will be working closely with the Ministry of Planning and the Ministry of Investments to ensure a controlled roll-out of a series of significant infrastructure and public services projects. Initially, PPP’s will concentrate on schools, healthcare, sanitation, social housing and
transport. During the second year of the extension specialized units will be established in the line
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ministries who have plans to implement projects under the PPP program. An essential task of the unit is to ensure that PPP project proposals are supported by sound analysis as to needs and value, receive the necessary budget approvals and that partner selection takes place as a result of a rigorous and fair competition. The Unit is developing guidelines on project selection, appraisal and tendering. The guidelines are developed by a process of consultation with relevant stakeholder groups at seminars at MoF, and draft guidelines are discussed at workshops to ensure accuracy and clarity. Lead responsibilities • Articulating a single national PPP policy so that its objectives and mechanisms are understood by Ministries and State agencies, funders, contractors, the press and the general public. (A central PPP policy statement). • • Developing and sponsoring new legislation and regulation for PPP procurement and practice which must be observed by all ministries submitting PPP proposals. Importing experience from other countries and developing guidance and methodologies that is appropriate to Egypt. The centre should be the recognized authority on the PPP process developing a “tool kit” to standardize PPP practice across Government. • Assisting Ministries/public bodies develop/vetting PPP proposals (Business Cases). The MOF must agree that these cases are sound before procurement can proceed and BUDGET be allocated. • • • • Communicating the process to the professional private sector participants (banks, lawyers etc) Helping devise the structure of PPP funding and security packages Identifying issues that may impede the programme and orchestrating their resolution Shepherding and advising on project tenders, being a watchdog for good practice, learning the lessons from pilot exercises. This should involve active participation in all aspects of early projects tenders (process, documentation, negotiation, evaluation and review) • • To develop and enforce the use of generic commercial terms for PPP contracts (standardized contract model) Being the “intelligence gatherer” to appreciate the development of concession/PPP practice in other countries, and build up its own databank and to access the wealth of PPP material available on the WEB. • • • Being a “public face” to the initiative with a newsletter and a website Promoting the development of concession/PPP/Project finance advisory skills for export to the Eastern Mediterranean and Gulf regions. It must be the guardian and promoter of the new methods and a proactive agent for change. In short, in matters of PPP development and practice, it has to be both originator and final arbiter. In order to deliver consistent messages and to gather and focus views and concerns, the PPP Central Unit is establishing a small number of panels that meet periodically on a consultative basis to discuss and take forward current issues that affect the various groups of PPP participants.
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B. Macro Fiscal Policy Unit (MFPU)
The Macro Fiscal Policy Unit supports the Minister of Finance in his efforts to make economically sound and socially beneficial decisions on matters falling within his mandate. The Macro Fiscal Policy Unit has defined its functions as follows: • • • • • • • • • • Supporting the Minister of Finance in fiscal policy formulation. Monitoring fiscal situation including the developments in revenues, expenditure, and financing, including the national debt; and advising the Minister on the fiscal situation. Producing medium term budget projection scenarios, including their impact on the general population. Ensuring consistency of the fiscal policy with macroeconomic framework. Analyzing macroeconomic framework and main variables. Monitoring the budget execution to identify important developments and advise the Minister on appropriate action. Developing fiscal targets and other key aggregates of the budget to lead the budget formulation process. Monitoring international economic developments to determine their impact on the economy of Egypt. Preparing policy statements and, particularly, the Minister’s speeches to the Parliament, giving due regard to wider implications of policies when appropriate. Leading the Ministry’s side in the technical consultations with the International Financial Institutions (IFIs) on the macroeconomic and fiscal policies; and serving as a focal point for coordination of activities of the MoF with the IFIs. Facilitating surveillance by IFIs. Explaining to bilateral and multilateral donors the government’s fiscal and macroeconomic policies and participating in negotiations with the donors as instructed by the Minister of Finance. Recommending structural reforms to facilitate the implementation of the fiscal and macroeconomic policies. Producing the Financial Monthly publication. Producing, and participating in producing, analytical fiscal and economic internal reports. Serving as Secretary for the Ministerial Economic Committee (head of the MFP Unit) and participating in the discussions covering economic policy. Coordinating the work of consultants hired for specific research assignments.
• •
• • • • •
The Macro Fiscal Unit was established in the Ministry of Finance in 2005 on the recommendation of the International Monetary Fund (IMF) and the above list of functions is explicit about technical aspects, Macro-Fiscal policy units also have a central role in ensuring that negotiations between different ministry sectors, international organizations and sovereign evaluation bodies are mindful of the economic welfare of all the nation.
C: Technical Support Unit for the Minister’s Office
The Minister of MOF is responsible both for policy development and for devising plans on how to get to those policy goals: “Where to go and how to get there” and that involves considerable negotiation with other ministries and with international bodies. Policy support to the Minister’s office is provided under this heading via long-term consultants (advisors). These advisors also accompany the Minister
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to negotiations with World Bank, IMF and Euromoney meetings. When MOF engages in international activities to present Egypt’s vision and programmes and to attract funding and expertise to support the implementation of national plans the representation may be undertaken by advisors if the Minister is otherwise engages. Key monitoring activities concern the impact of the customs and tax legislative changes made recently by the Ministry. Specifically the project will continue capacity building for the customs authority, enabling them to keep track of the effect of changes made in phase 1 of the project. All MOF policies are monitored by advisors, who then report the impacts to the Minister of Finance, and making recommendations for adjustments and further actions.
D: Support to SMEs
Egypt has over 2 million SMEs and they account for a very large majority of business enterprises and for the bulk of employment opportunities and therefore they play a big role in the national economy and standard of living for most people. Egyptian SMEs are very difficult to influence because they are very diverse in their interests and outputs, small by definition, and many are informal i.e. not registered, not paying taxes, not members of industry associations. Numerous projects over the last 20 years have offered business advice, training, and financial assistance to Egyptian SMEs but still there is a vast need to improve the productivity of Egyptian SMEs and to integrate the informal ones into the formal economy. Some ministries are tackling SME development in their own industry (e.g. MCIT with SMEs in the ICT industry). The overall objective of the Small, Medium and Micro Enterprise Policy Unit at MOF is to have an improved M/SME policy environment resulting in reduced financial and non-financial constraints and increased opportunities for M/SME development. MOF published and distributed a policy general framework “Enhancing Competitiveness for SMEs in Egypt: General Framework and Action Plan” in November 2004. This policy framework was approved by the Prime Minister and adopted by the Government. MoF has been directed to coordinate cross government efforts for its implementation. Three committees have been established under the Ministry of Finance: 1. SME Policy Committee which provides a forum for senior representatives from key government agencies, non-governmental organizations and SME representatives to discuss and push forward with the implementation of the Action Plan of the Competitiveness Strategy. A working group on formalization of the informal sector was established. 2. Venture Capital Committee, which is tackling barriers preventing leasing and equity finance providers from reaching SMEs in Egypt. The committee is working on developing 3 sets of terms of reference for the creation of a) private equity fund, b) turnaround fund and c) venture capital fund. 3. Government Procurement Committee. This committee is working with the General Authority for Government Services (GAGS) reforming access to Government Procurement. Simpler access to government contracts for SMEs will facilitate implementation of the Small and Micro Enterprise
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Law 141/2004 which states that a minimum of 10% of all government contracts are awarded to SMEs. This access will be a major tool for encouraging informal SMEs to register.
E. Automation and e-payment deployment and training
In addition to the ongoing efforts of the MOF in automating systems, especially all budgeting departments in the center and the governorates and other ministries that deal with budgeting, (Performance Based Budgeting) within the framework of the government's Egypt Information Society Initiative EISI), the Ministry of Finance is now ready to transfer operational procedures to electronic payment, starting with the e-government payment activities added to this project. E-payment will
mean that all payments to suppliers and receipt of income by the Egyptian government will be by electronic funds transfer by the end of the decade. G-POS forms part of the integrated national financial network that is currently evolving and being deployed around the nation. MOF is taking the lead in this major initiative, aiming to automate 1,600 financial units nationwide by 2010, and connect major financial units with their affiliates.
EFT (Electronic Funds Transfer) for Government transactions MoF is involved in developing and deploying mechanisms for large transfers between government entities and suppliers, and also in the deployment of mechanisms for the public to make payments to government, commercial establishments, and to and from banks. The main interfaces for the public are smart cards (used at Point of Sale devices and for internet payments) and ATMs. By switching to e-payment systems, government will be released from labour-intensive handling of cash and the number of cheques that need to be issued by Government authorities will be substantially reduced.
Payments to all government employees and pension payments are being converted to payment through Magnetic Plastic Cards and/or Smart Cards. This requires a massive number of cards to be issued:- 7 million for pension entitlements and 7.8 million for governmental and formal sector employees. A quarter of a million cards were issued last year as a pilot exercise. Now there is an agreement between MOF and two Egyptian banks to issue another 5.8 million cards in three years. Staff are being hired and trained at MOF during Q1 this year, ready to lead a marketing and training initiative aimed at accounting units in bank branches. During Q2 and Q3 the marketing team will work in Cairo and Alexandria governorates so that the systems are functional for the half a million cards that will be issued in Q3 and Q4. Other governorates will be brought in to the system over the course of the next two years.
ATMs. The massive increase of people receiving their monthly income electronically rather than in cash means that the percentage of the formal workforce with bank accounts will rise from the current 10% to perhaps 40% over the two years of the project. Consequently there also needs to be an increase in the number of bank branches and Automatic Teller Machines (ATMs) so that people can draw out the money paid to them by EFT. Agreements have been signed to install an additional 1,000 ATMs around the country.
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Payments to suppliers: Amounts due will be paid to suppliers by electronic funds transfer to their bank accounts.
Incoming funds: From 2008, large payments will only be accepted through electronic funds transfer and small payments will be channeled through the G-POS, the Government Payment of Service network. Public access to the G-POS will be at post offices, departmental POS stations, and through the internet. The G-POS system will accept international credit cards although the Egyptian Smart Card and utilities’ Magnetic Plastic Cards will be the preferred method because they will be much cheaper to use. The percentage charged by international credit cards is about 2.5% of all
transactions, which would represent an unacceptable burden on the mass of the Egyptian population, who would prefer the inconvenience of personal payment rather than additional charges. However, the MOF is currently negotiating with banks that the Egyptian Smart Card should have a transaction charge of just 1.5 LE. For those people who do not want a Smart Card tied to a bank account, the Banks will issue a magnetic plastic card to be known as a Utility card, which is an ‘electronic purse’ where the customer puts in an amount of money which can then be used to pay fees electronically to government entities, e.g. school and university tuition fees, traffic fines, car and driving licenses, legal registrations. This year, 2007, is a transition year in which government entities are accepting mixed payments but by the end of 2008 all values greater than 5,000 L.E. will have to be by EFT. Smaller amounts will continue to be accepted in cash or by card for a further year, but by end of 2009 all government income will be received electronically. A welcome side benefit of the change from cash to card payments is the impact on traffic. Two million people go to a tax office every year; 10 million go to traffic authorities to renew driving licenses. These and other reasons for traveling to government offices to make or collect payments will be removed.
Ministerial decrees:
It is necessary to make some amendments to Law 127/1981 to enable the new
payment and collection methods to be fully operational, with necessary controls and audit functions. This may not occur till 2008 as modifications will not be completed until after the pilot exercise that will be conducted using the 30 access points of the Customs Authority. When completed, banks and government accounting units will sign an agreement (a paper document) and data will be sent electronically to update all the relevant ledgers in the government entities and banks, and a selection of summary data will go to the MCNC to facilitate calculation of cash flows, analyzing trends, and speedily extracting information about the state’s financial situation and national accounts balance sheets.
E-payment certification: The Ministry of Finance is making preparations to house the governmental Certificate Authority. The Root CA Trust Center is at ITIDA, which proves or denies the validity of digital certificates of the licensed Certificate Authorities. MoF is using a sub-set of digital signatures with preparatory encryption, in collaboration with National Defense Council for the transition period till the Government CA is activated.
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Training:
MOF's budgeting department is currently working partially electronically and partially
manually. On-the-job training will continue until all staff are competent in electronic procedures, and all processes have been integrated in the new systems. All other ministries and their governoratelevel branches will gradually be brought into the system with initially training beginning in the middle of 2007.
4: IMPLEMENTATION ARRANGEMENTS
4.1 Management Arrangements
The management arrangements ensure the quality and timeliness of all project deliverables and are illustrated in the figure on the next page. The Project Board is the decision-making entity. It replaces the Joint Steering Committee (alternatively called the Joint Management Committee) but has a more direct role than the JSC/JMC, as reflected in its composition and duties. The Project Manager is equivalent to the National Project Director in the former UNDP terminology and is responsible for implementation of the agreed activities and for delivery of the specified results. The change is a shift in the scope of responsibilities. The NPD had relatively wide decision-making powers, i.e. before he/she had to refer decisions to the JSC/JMC. In the present set-up all variations from the annually agreed AWP have to be made by the Project Board. The Project Assurance role is what was previously called the ‘Monitoring and evaluation and reporting Unit’. The functions are essentially the same, with the significant difference that previously the M&E unit reported to the NPD whereas now the project assurance role reports to the Board (see diagram next page) The Project Board consists of three roles, each of which may comprise several persons. It is also permitted for the Executive role to double as the supplier role or the user role, i.e. the minimum size for the Board is two persons.
The Executive role is the chairperson and is appointed by the Ministry of Finance; the senior supplier represents the group of development partners funding the project, which in this case is also the Ministry of Finance, and the users’ representative is also from the Ministry of Finance as the project is primarily capacity building for the Ministry of Finance. UNDP will always be invited to attend all Board meetings.
The Project Board meets annually at the beginning of each year to consider and approve the Annual Work Plan as presented by the Project Manager. Both the Project Manager and the Project
Assurance role attend the meetings of the Project Board (unless there is a specific reason for this not to be the case on a particular occasion, as decided by the Project Board). At any time in the project cycle, individual members of the Project Board can request an extraordinary Project Board meeting when ad-hoc direction of the project is required.
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Figure 2: Project Structure
PROJECT BOARD
Senior Supplier: Amin El Sharkawi UNDP Executive: Manal Hussein Senior User: Ahab Eyada & Mohamed Abu Taleb
Project Assurance Role Project Manager
Team Leader Macro-Fiscal Unit
Team Leader SME support
Team Leader Automation & E-payment
Team Leader PPP
The Project Assurance role for this project is a part-time function preformed by an external consultant approved by UNDP (TOR based on UNDP requirements for the role). Normal quarterly reporting on progress against the workplan will be done internally and will form part of the input for reports to the Board by the Project Assurance Role.
The Project Manager is responsible for the day-to-day implementation of the project. This includes ensuring the quality and timeliness of all project outputs and activities; requesting ad-hoc directions from the Project Board when required; liaising with the Project Assurance role; requesting the advancement of project funds; and preparing Quarterly and Annual Progress Reports. In the present situation, the National Project Director of the project takes the role of Project Manager for the duration of the extension period.
The financial management arrangements of the project are through OUDA.
4.2 Monitoring & Evaluation The monitoring and evaluation of the project is based on dialogue and regular meetings between the Project Manager, Team Leaders, and the Project Assurance role. The monitoring tools are the
documents listed below, with the primary mechanism being the detailed management annual work plan and the quarterly progress reports which detail actual activities. The Quality Assurance Reports
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to the Board compare the actual activities to what was stated in the annual workplan and provides and update the risk log for each of the teams. The Project Manager is responsible for producing the
following documentation to be submitted to UNDP:
? ? ? ? ? ? ? ? ? ?
Signature annual work plan Detailed management annual work plan Annual budget Quarterly detailed workplan/budget requests Quarterly progress reports Annual progress report Annual financial report Six-monthly Quality Assurance Reports, including risk log updates, for Board meetings Minutes of Board meetings TORs for contracts to be funded from the project.
All other parts of the original project document for Project 00012349 (EGY/01/002) are the same and remain in force.
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doc_709629871.pdf