Regional: Strengthening Public Sector Management in the North Pacific

Sovereign Project | 47264-001

Summary

The TA will help (i) strengthen public financial management policies and processes; (ii) improve public service delivery through reforming government machinery; (iii) improve economic management through strengthening analytical capacities to support decision-making; and (iv) promote structural reforms of state-owned enterprises.

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Project Name Strengthening Public Sector Management in the North Pacific
Project Number 47264-001
Country Regional
Project Status Approved
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 8581-REG: Strengthening Public Sector Management in the North Pacific
Technical Assistance Special Fund US$ 1.50 million
Strategic Agendas Inclusive economic growth
Regional integration
Drivers of Change Governance and capacity development
Partnerships
Sector / Subsector

Public sector management - Economic affairs management

Gender Equity and Mainstreaming Gender equity
Description

The TA will help (i) strengthen public financial management policies and processes; (ii) improve public service delivery through reforming government machinery; (iii) improve economic management through strengthening analytical capacities to support decision-making; and (iv) promote structural reforms of state-owned enterprises.

ADB's Pacific Approach 2010-2014 aims to achieve sustained and resilient standards of living. It sets out an agenda to foster connectivity, consensus and a greater sense of Pacific community through (i) inclusive and environmentally sustainable growth; (ii) good governance; and (iii) regional cooperation and integration. The Pacific Approach provides the strategic framework for ADB operations in the Pacific and will serve as the country partnership strategy for the 3 north Pacific DMCs. The Pacific regional operations business plan (ROBP) 2014-2016 aligns with the goal of the Pacific Approach. The proposed TA is in the ROBP's 2013 pipeline of assistance. The Pacific Approach, the ROBP and the respective country operations business plans align with the aims of the national plans of FSM, Palau and RMI. The TA will support the three countries in conducting the necessary reforms to strengthen their public financial management policies and processes; improve their public service delivery; enhance their economic management; and make necessary structural reforms to ensure fiscal sustainability post-compact.

Project Rationale and Linkage to Country/Regional Strategy

The three north Pacific developing member countries (DMCs) the Federated States of Micronesia (FSM), Palau and the Republic of the Marshall Islands (RMI) are former US trust territories. FSM and RMI entered into Compact of Free Association with the US since 1986 and Palau since 1994. The current compacts will run out in 2023; hence, the three Pacific DMCs are undergoing a program of reforms to ensure fiscal sustainability once the compacts expire. It is estimated that 70% of the national budget of RMI and 45% of FSM comprised budget transfers from the United States under the compacts. In addition, they also have access to other Federal government agency programs for specific purposes. Two major concerns for both countries at the moment are: (i) the planned decrement of the compact budget over the next decade and possible impacts on service delivery; and (ii) the performance of the Compact Trust Fund, which has been set up and is expected to become an alternative funding source post-2023.

Strengthening public sector management has been identified as a critical priority for all three countries, aiming at better managing their limited resources, while ensuring an acceptable standard of delivery of goods and services to the public. Individually, the countries have identified critical reform areas of public sector management requiring support from ADB and other development partners. These include (i) strengthening public financial management policies and processes; (ii) improving service delivery through public service reforms; (iii) strengthening economic management; and (iv) structural reforms.

Impact Increase self-reliance and achieve fiscal sustainability
Project Outcome
Description of Outcome More efficient macroeconomic and fiscal management
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

1. Improved public financial management

2. Improved public administration systems

3. Strengthened economic analytical capacities

4. Strengthened planning capacities

5. Improved SOE performance

6. Enhance regional sharing of experiences and best practices

Status of Implementation Progress (Outputs, Activities, and Issues)

- A macroeconomist and public financial management specialist are supporting the government of FSM in developing the Action 2023 Plan. The Plan aims to help the government develop necessary policies aiming towards long term fiscal sustainability beyond the expiration of the Compact Funds.

-On 2 June 2014, VPO2 approved a request for change in scope and implementation arrangements and increase in TA amount ($562,000 from the Government of Australia through DFAT)

-On 30 September 2014, TA Letter of Agreement between ADB and the Government of Palau was signed for the conduct of a Household Income and Expenditure Survey in Palau in 2014.

-TA is currently in process of engaging a Human Resource Specialist for Palau to assist the government develop a plan for civil service reforms; The specialist will also help a newly merged Palau Public Utilities Corporation manage changes in its HR brought about by the merger;

- TA is supporting the government of RMI activate HR module of its current financial management information system (FMIS) to develop an HRMIS.

- TA is recruting a poverty assessment specialist for FSM to prepare a poverty assessment based on the recent census;

- TA is awaiting endorsement of the RMI PFM roadmap and will provide support to implementation.

Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design Initial consultations on the country specific components of the TA were held during respective country programming missions in Palau (April 2013), RMI (April 2013) and FSM (August 2013). It was subsequently decided for the individual support to be delivered through a RETA, hence, further discussions were held with the respective governments during consultation missions by the Director PAUS and new country teams leaders for Palau (Septembr 2013), FSM and RMI (October 2013). The consultation missions firmed up the priority areas of support for each country and how support can be sequenced within resource envelope. The project team with support from ADB development coordination officers will liaise closely with the governments when finalizing TA design particularly terms of references for consultants.
During Project Implementation Participation of the three governments will start from developing implementation arrangements for the TA. Palau has expressed its support to a TA modality which develops the skills of national consultants who will eventually be absorped into the public service as they see this as another form of capacity development. All three governments have shown commitment to implementing the TAs through the leadership of the respective CEOs of implementing agencies as well as making available appropriate counterpart staff to ensure ownership and transfer of knowledge.
Business Opportunities
Consulting Services The TA will finance an estimated 35 person-months of international and 15 person-months of national consulting services. The consultants will be engaged individually in accordance with ADB's Guidelines on the Use of Consultants by ADB and its Borrowers (2013, as amended from time to time).
Procurement The proceeds of the TA will be disbursed in accordance with the ADB's TA Disbursement Handbook dated May 2010 (as amended from time to time).
Responsible ADB Officer Maria Melei
Responsible ADB Department Pacific Department
Responsible ADB Division Urban, Social Development & Public Management Division, PARD
Executing Agencies
Asian Development Bank6 ADB Avenue, Mandaluyong
Metro Manila, Philippines
P.O. Box 789, 1099 Manila,
Philippines
Timetable
Concept Clearance 14 Nov 2013
Fact Finding -
MRM -
Approval 16 Dec 2013
Last Review Mission -
Last PDS Update 19 Feb 2015

TA 8581-REG

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
16 Dec 2013 - 16 Dec 2013 31 Dec 2016 - -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
1,500,000.00 0.00 170,000.00 0.00 0.00 0.00 1,670,000.00 16 Dec 2013 418,826.17
Title Document Type Document Date
Strengthening Public Sector Management in the North Pacific Technical Assistance Reports Dec 2013

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