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Seminannual Report on Project Administration and Technical Assistance Implementation for the Period Ending 30 June 1999 : Country Implementation Highlights
BhutanThe number of ongoing loans remained at five as no loans were approved or closed during the period. All five loans were rated satisfactory in terms of both implementation progress and achievement of development objectives. One loan, which was approved during the second half of 1998, was declared effective during the period. None was awaiting effectiveness. No loans underwent any changes in scope or implementation arrangements. The Bank's 1998 CPRM agreed with the Government on a time-bound action plan to address issues impeding project implementation. Common implementation issues were (i) inadequate budget allocation and staffing (numbers and staff competencies); (ii) frequent changes of project staff; (iii) weak procurement and contracting capabilities and regulations; (iv) insufficient delegation of authority; (v) weak monitoring and coordination; and (vi) delays in consultant recruitment. Satisfactory progress was made to comply with the agreed-upon actions. The next CPRM is planned for November 1999 and will possibly be joined by the World Bank to further enhance efforts to improve project implementation. A portfolio performance assessment is currently under way as a background study for the new country operational strategy. The Bank's first policy-based lending to the country in 1997 was to establish the necessary policy environment in the financial sector to facilitate private sector development. The first tranche was released in 1998 and the second tranche is due in October 1999. Good progress was made in complying with the second tranche conditions. The credit line of $4.0 million was not utilized by the eligible financial intermediaries since it became effective in early 1998. Lack of viable industrial projects requiring additional credit facilities from the Bank was cited as the reason. A list of pipeline projects, however, was submitted to the Bank and, possibly, 75 percent of the credit line ($3.0 million) will be utilized within this year. A TA to assist the Government in implementing the national contractor registration and classification system (defined under an earlier TA) and increasing the Government's capacity to enforce accountability among contractors is under implementation. This will be accomplished by the creation of a management information system (MIS) that will assist in the collection and administration of contractor data. The core of the MIS will be a computerized database that stores details on each contractor, including a history of previous work and an evaluation of performance. This will be accompanied by targeted training and the creation of a simplified arbitration system. Contract awards reached $1.0 million, or 125 percent of the semiannual projection of $0.8 million and 37 percent of the annual projection of $2.7 million. This was due to earlier than expected contract awards under the Urban Infrastructure Development Project. Contract awards from the Rural Electrification Project also helped to exceed the target. Disbursements were $0.9 million, or 123 percent of the semiannual projection of $0.7 million and 48 percent of the annual projection of $1.9 million. Due to the decrease in disbursements and an increase in the amount of the undisbursed loan balance the disbursement ratio drastically declined from 40.2 percent as of 30 June 1998 to 6 percent at the end of the period against the annual projection of 12.6 percent and the Bankwide average of 11.9 percent. There were no disbursements from program loans. Net resource transfer also decreased from $3.2 million as of 30 June 1998 to $0.4 million as of 30 June 1999 due to the decrease in disbursements and an increase in loan service payments. Audited project accounts and financial statements were due for two loans and compliance was met in both cases. Three of the five ongoing loans complied with the environmental covenants, while compliance was ongoing for one and was not applicable to the remaining one. Social covenants were met by one of the five loans, and were not applicable to the four others. Tables 21 and 22 summarize the data for Bhutan.  
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