Fiduciary Issues for Emergencies & Crisis

1. FM Fiduciary Issues for Emergencies & Crisis Case-study: Pioneering FM work in Northern Sudan By Nestor Coffi, Cluster Leader AFTFM

2. FM Overview • Background • Key Country FM Features • Project Preparation: arrangements & challenges • Project Implementation: arrangements & challenges • Experiences with UN Agencies • Findings of recent reviews & way forward

3. FM Background • 2004 Naivasha CPA Ending 21-Year Civil War • Oslo Donors Conference/Pledges • Interim Constitution: 1 Country, 2 Systems • MDTFs Set up / WB Administrator • WB Office re-opened is Sudan as MDTF TS • 2004 Darfur Crisis broke up & polarized IC attention

4. FM Key Country FM Features in Sudan • Lack of exposure to Bank Operational Policies & Procedures since 1993 • Poor Country Knowledge available/ No in-depth PFM Diagnostic • 2 Separate MDTF Programs (N & S) to Deliver Quick Peace Dividends • JAM established 8 Sector Clusters and FM Baseline Status: - North: existence of systems but need to be revamped - South: no system in place; start from scratch

5. FM Project Preparation: Arrangements • General Framework allowing Special Procedures: • Board Memorandum; Administrative Arrangements WB/Donors; Operational Manual; • Fast track procedures: from IPP to FPP; • One-Stop-Shop: OC standing as Board; • Standardized framework/format of project preparation docs; • Limited FM Assessment required; • Focus on the Basics Vs State-of-the Art Arrangements

6. FM Project Preparation: Challenges • Resources constrains: • weak PP Unit (Followers Vs Drivers); • No PPF available; • lack of familiarity to Bank jargon/procedures… • Time constrains: • time needed to engage counterparts • but impossible b/c Fast-track requirements;

7. FM Challenges Continue … • Difficult Balance Quality Vs Speed under Conflicting Pressures • Fast-Track, Standardization & One-Fit-All Approaches result in: • No chance to experiment Innovative & Creative Solutions (e.g. New Currency: OBD considered but rejected); • Impossible to hold lengthy consultations to develop “Best Practices”

8. FM Project Implementation: Arrangements • Continuous Implementation Support • Field-based WB FMS interacting w/projects daily • Monitoring Agent Team pre-screen all WA, provide Assistance under FMS supervision; • Quarterly Supervision Mission for every project • Familiarization & CB Training Session every Quarter (xxx Wshops & clinics; xxxx staff participants)

9. FM Project Implementation: Challenges • US Sanctions affect MDTF-N despite OFAC License • Weak National Institutions but Reluctant to Outsource with Private Auditors • Counterpart Funding: a Sensitive Political Issue • Moving from Manual to Computerized Accounting Systems • Shift from Review/Clearance Mode to Assistance Mode

10. FM Experiences with UN Agencies • Politically Charged Terrain; • UN Agencies claim/advocate to Administer MDTFs; • Good interactions w/ UN AI: - Open to collaborate under FMFA though field-based staff not aware of its provisions & implications - Submit IFR regularly; - Cooperate fully during SPN; - highly value FM contributions

11. FM Experiences Continue … • Gray areas: diffuse accountability for projects implemented by several UN Agencies • audit?, • Government ownership undermined; • Disbursement Modalities & OP.8:00 - 100% upfront release is mostly preferred by UN IA but LOA staff reluctant; - 6-Month Forecast requested for 1-Year Start-up project while an annual budget exists !

12. Achievements • Donors Review confirmed Existence of Sound FM arrangements in place for MDTF program • RETF Reviews also Positive for FM arrangements • 1st Biannual Audit (Sept 05 to Sept 07) • Good Financial Performance but Controversy over Disbursement rate: • $585M paid-in by Donors Vs $550M pledged • $177M committed into 12 projects in the North; $219M committed for South • $73M disbursed by 10 active projects in the North; $110M disbursed in the South;