World Bank Document

Document of The World Bank

FOR OFFICIAL USE ONLY Public Disclosure Authorized

Report No: 35957-TJ

PROJECT APPRAISAL DOCUMENT

Public Disclosure Authorized ON A

PROPOSED GRANT

IN THE AMOUNT OF SDR 0.7 MILLION (US$l MILLION EQUIVALENT)

TO THE

REPUBLIC OF TAJIKISTAN

FOR A Public Disclosure Authorized STRENGTHENING THE NATIONAL STATISTICAL SYSTEM PROJECT

lN SUPPORT OF THE MULTIPLE COUNTRY STATISTICAL CAPACITY BUILDING (STATCAP) PROGRAM

May 1,2006

Poverty ReductiodEconomic Management (ECSPE)

Public Disclosure Authorized This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS

(Exchange Rate Effective 1.10.2006)

CurrencyUnit = US$ Tajikistan Somoni (TJS) 3.20 = US$1 US$1 = SDR0.7

FISCAL YEAR January 1 - December 31

ABBREVIATIONS AND ACRONYMS TA Technical assistance TACIS Technical Assistance for CIS TFSCB Trust Fund for Statistical Capacity Building TIKA Turkish International Cooperation Agency TOR Terms ofReference TTL Task Team Leader UNDP United Nations Development Program UNSD United Nations Statistical Division WB World Bank

REPUBLIC OF TAJIKISTAN Strengthening the National Statistical System

CONTENTS

Page

A . STRATEGIC CONTEXT AND RATIONALE ...... 1 1. Country and sector issues...... 1 2 . Rationale for Bank involvement ...... 2 3 . Higher level objectives to which the project contributes ...... 3 B. PROJECT DESCRIPTION...... 4 1. Lending instrument ...... 4 2 . Project development objective and key indicators ...... 4 3 . Project components ...... 5 4 . Lessons learned and reflected in the project design ...... 7 5. Alternatives considered and reasons for rejection ...... 8 C. IMPLEMENTATION ...... 8 1. Partnership arrangements (if applicable) ...... 8 2 . Institutional and implementation arrangements ...... 9 3 . Monitoring and evaluation of outcomeshesults ...... 9 4 . Sustainability...... 10 5 . Critical risks and possible controversial aspects ...... 11 6 . Loadcredit conditions and covenants ...... 12 D. APPRAISAL SUMMARY ...... 12 1. Economic and financial analyses ...... 12 2 . Technical ...... 13 3 . Fiduciary ...... 13 4 . Social ...... 14 5 . Environment ...... 15 6 . Safeguard policies ...... 15 7 . Policy Exceptions and Readiness.,...... 15 Annex 1: Country and Sector or Program Background ...... 16 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ...... 20 Annex 3: Results Framework and Monitoring ...... 21 Annex 4: Detailed Project Description...... 32 Annex 5: Project Costs ...... 52 Annex 6: Implementation Arrangements ...... 53 Annex 7: Financial Management and Disbursement Arrangements ...... 55 Annex 8: Procurement Arrangements ...... 64 Annex 9: Economic and Financial Analysis ...... 70 Annex 10: Safeguard Policy Issues ...... 71 Annex 11: Project Preparation and Supervision ...... 72 Annex 12: Documents in the Project File ...... 74 Annex 13: Statement of Loans and Credits ...... 75 Annex 14: Country at a Glance ...... 76 Annex 15: Governance and Accountability Issues...... 78 Annex 16: Map (IBRD#33493) ...... 85 REPUBLIC OF TAJIKISTAN

STRENGTHENING THE NATIONAL STATISTICAL SYSTEM

PROJECT APPRAISAL DOCUMENT

EUROPE AND CENTRAL ASIA

DECDG

Date: May 1,2006 Team Leader: Mustafa Dinc Country Director: Annette Dixon Sectors: Central government administration Sector ManagedDirector: Carlos Felipe Jaramillo (1 00%) Themes: Economic statistics, modeling and forecasting (P);Poverty strategy, analysis and monitoring @);Other economic management (S) Project ID: PO98410 Environmentalscreening category: Not Required Lending Instrument: Specific Investment Loan

Project Financing Data [ ] Loan [ICredit [XI Grant [ ] Guarantee [ ] Other:

Source Local Foreign Total BORROWEWRECIPIENT 0.87 0.00 0.87 INTERNATIONAL DEVELOPMENT 0.00 1.oo 1.oo ASSOCIATION UK: BRITISH DEPARTMENT FOR 0.00 1.10 1.10 INTERNATIONAL DEVELOPMENT (DFID) SWEDEN: SWEDISH INTL. DEV. 0.00 2.10 2.10 COOPERATION AGENCY (SIDA) Total: 0.87 4.20 5.07

Borrower: Government of Republic of Tajikistan Dushanbe, Republic of Tajikistan

Responsible Agency: State Statistical Committee 17 Bokhtar Dushanbe Tajikistan Tel: +992372 232553 [email protected] http://www.stat.tj/english/home.htm

1 Project implementation period: 5 Years Start May 3 1,2006 End: June 30,201 1 Expected effectiveness date: May 3 1, 2006 Expected closing date: June 30, 201 1 Does the project depart from the CAS in content or other significant respects? [ ]Yes [XINO Re$ PAD A.3 Does the project require any exceptions from Bank policies? Re$ PAD D. 7 [ ]Yes [XINO Have these been approved by Bank management? [ ]Yes [ IN0 Is approval for any policy exception sought from the Board? [ ]Yes [XINO Does the project include any critical risks rated “substantial” or “high”? [ ]Yes [XINO Re$ PAD C.5 Does the project meet the Regional criteria for readiness for implementation? [XIYes [ ]No Re$ PAD D. 7 Project development objective Re$ PAD B.2, Technical Annex 3 The main objective ofthe project is to modernize the national statistical system and improve its efficiency and effectiveness to provide relevant, timely and reliable statistical data for evidence- based policy making in support of Government’s poverty reduction strategies and the process of economic development.

Project description [one-sentence summary of each component] Re$ PAD B.3.a, Technical Annex 4 Institutional Development component will support the improvement ofthe institutional capacity to carry out the formulation, coordination, and implementation of appropriate statistical policies and programs that will address to the needs of Tajikistan. Human Resource Development component targets to improve the qualifications ofthe personnel in all statistical offices ofthe national statistical system. Development of Statistical Infrastructure component addresses the improvement of the basic elements of the statistical infrastructure: statistical registers, sample frames, classifications and methodologies, statistical computer packages for analysis of survey data, and Geographical Information System (GIS) for statistical mapping. Data Development component will support the adaptation ofinternationally accepted standards and methodologies in data collection, compilation, and validation by GKS and other relevant agencies. Physical Infrastructure and Equipment component will support upgrading existing information technology (IT), transportation and other equipment that is essential to carry out existing and project activities. Project Management component will finance the project coordination unit that will manage the implementation ofthe project under GKS.

2 Which safeguard policies are triggered, if any? Re$ PAD D. 6, Technical Annex 10 There is no safeguard issue triggered by the project.

Significant, non-standard conditions, if any, for: Re$ PAD C. 7 There is no significant, non-standard condition.

Board presentation: This is a STATCAP project, which is approved by the regional Vice-president. No Board presentation required.

Grant effectiveness: May 3 1,2006

Covenants applicable to project implementation: Negotiations Condition

The Project Operational Manual (POM) and Financial Management Action plan, all acceptable to IDA has been developed by the Recipient.

Management approval condition

The project counterpart account has been opened. The Financial Management system acceptable to IDA has been established.

Effectiveness condition

The Grant Agreement between the Republic of Tajikistan and IDA acting as the administrator of the funds provided by DFID and Sida has been executed. Project Coordination Team (PCT) with terms of reference, staff and resources, all acceptable to the Association has been established by the Recipient.

Other covenants

The Recipient shall maintain the project counterpart account in a commercial bank acceptable to IDA and regularly deposit to this account amounts sufficient to finance its counterpart contribution to the project.

A. STRATEGIC CONTEXT AND RATIONALE 1. Country and sector issues

Country background. Tajikistan, a small economy with a population of 6.8 million and a GDP of US$2.1 billion, gained its independence in 1991. Shortly after independence, a civil war brought extensive physical damage and heavy human losses to the country. After reaching a peace accord in mid-1997 the Government turned its attention to governing and economic and social reforms. In fact, since the end of civil war Tajikistan has done remarkably well. Within the first few years after the war the Government established its control over the country and started concentrating on political consolidation and security. After achieving these, it focused on repairing and developing a war torn country that, even before the war, was among the poorest in the CIS.

The cumulative growth of almost 60 percent of the economy over the last five years is quite impressive and demonstrates the Government’s success, even though the growth started from a very low base. The postwar recovery in productivity, especially in agriculture and expansion of services and construction fuelled by remittances from migrant workers significantly contributed to the economic growth in this period. This growth in economy has significantly helped the reduction of poverty, from 81% in 1999 to 64% in 2003. Tajikistan, however, still remains the poorest country in the ECA region and differences in poverty rate between oblasts (province) are still significant, ranging from 84% in Gorno-Badakhshan to 45% in Rayons under Republican Jurisdiction.

National and sectoral strategies. The first PRSP ofthe country for 2003-2005 approved in June 2002 had focused primarily on: (i)encouraging equitable, labor-intensive and export-oriented economic growth, (ii)supporting efficient and fair provision of basic social services, (iii) targeting support to the poor, and (iv) improving governance and security.

Currently the government is in the process of finalizing its long- and mid-term development strategies, National Development Strategy (NDS) for 2006-2015 and second PRSP for 2006- 2008. The draft NDS, presented to the donor community in UN head-quarters in December 2005, identifies country’s national goal as “strengthening of political structures and achieving economic well-being and social welfare for the population of Tajikistan based on the principles of freedom, human dignity and equal opportunity for the realization of human potential”. NDS and PRSP2 priorities are stated as: (i)public administration reform, (ii)development of private sector and attracting new investments, and (iii)development ofhuman potential.

The program envisioned in the NDS/PRSP2 is information intensive and requires continuous monitoring of poverty and performances of various sub-sectors of the economy for developing policy measures to reduce poverty. These documents clearly state the importance of relevant and reliable statistical data and institutional and methodological framework of statistical system (especially in the social protection sphere) for the successful implementation, monitoring and evaluation of strategies. This is fully in line with recommendations of the first PRSP progress and joint staff assessment reports, which have emphasized the importance of improving statistical data, in particular related to poverty estimation, and monitoring and evaluation process.

1 Sector issues and strategy. Statistical issues in Tajikistan are governed by the Law on State Statistics, where the State Statistical Committee and its divisions at the local level are the public agencies in charge carrying out compilation, control, processing, analysis, aggregation, dissemination and storage of the statistical information. In March 2005 the Government approved the Multi-Year Integrated Statistical Plan (MISP)’, whose major strategic objectives are: (i)to upgrade Goskomstat’s methodological skills, (ii)automate its work across the board, (iii)meet the basic requirements for monitoring the macroeconomic situation and poverty, and (iv) fulfill other objectives required to meet the criteria of the IMF General Data Dissemination System (GDDS).

Even though since the independence GKS has been trying to adopt standard international statistical methodologies and to remove old management structures, this transition has posed major challenges for GKS. For many decades prior to independence, GKS simply operated to trace the implementation of the government’s economic plan. The dramatic changes in the economic environment and the necessary adoption of techniques and procedures to monitor economic movements have exceeded the adaptation capability of the agency. As a result, there is now an increasing pressure on the national statistical system to produce and disseminate relevant statistics that meet internationally accepted standards.

The critical issues to be addressed can be clustered in: (i)weak institutional capacity and inefficient organizational structure of the statistical system, (ii) ineffective institutional coordination between various statistical agencies and the GKS, (iii)lack of well developed human resources framework, (iv) inadequate analytical capability and qualifications of personnel of the statistical system, (v) weak statistical infrastructure, and (vi) poor physical and IT infrastructure.

The GKS recently received funding from the Trust Fund for Statistical Capacity Building (TFSCB) for technical assistance to upgrade its capabilities. The project was successfully completed in 2005 and the MISP was developed for the whole national statistical system including relevant line ministries and agencies. The MISP provides a road map for the next five years. The Government has approved the MISP and been very supportive of its implementation which will significantly improve the capacity of GKS and other agencies that deal with data collection and dissemination. The results of the project will include a better legislative framework for statistical work, and better human skills, better equipment, and better data to monitor progress. These, in turn, will be ofbenefit to the government and people, but will also be of use to the Bank and other regional and international agencies in maintaining a policy dialogue with the government and in planning and implementing other projects and programs.

2. Rationale for Bank involvement

The Bank possesses unique global expertise and necessary resources in developing and guiding comprehensive, integrated, and targeted projects on statistical capacity building. The Bank also

’ Resolution of the Government of Tajikistan from March 4, 2005, #90. Actually selection of MISP priority tasks was largely based on the three goals specified in the Paris 21 framework, namely on macroeconomic monitoring, monitoring ofpoverty, and other data priorities in the framework of the IMF’s GDDS.

2 has broad knowledge of the country’s development situation. Another important issue worth mentioning is that the Bank considers economy-wide perspective in its assistance to countries in their statistical capacity building activities, which involve almost all aspects of institutional development, infrastructure improvement, reorganization and human resource development.

Further, the Bank has significant experience and knowledge in building country monitoring and evaluation systems, for which improvement of state statistical system is essential. Other donors and investors, without the same economy-wide perspective, are often unable to provide support for all aspects of institutional development, such as infrastructure costs and costs associated with reorganization and human resource development.

In addition, the current Country Partnership Strategy (CPS) follows the results-based approach, thus this project will also help build national monitoring and evaluation capacity to assess the effectiveness of the country’s donor assistance strategies, poverty impact of the donor-funded Public Investment Program. Given that the limited IDA resources allocated for the country and enormous financial gap needed in dealing with the development challenges Tajikistan faces, the CPS emphasizes the catalytic role of the Bank in maximizing the overall impact. In this regard the Bank has a strong commitment and experience in such partnerships with other donors. In this project, the Bank plays a leading role in strengthening donor efforts in building statistical capacity in Tajikistan within the framework ofthe MISP.

The CPS defines governance reform and state capacity building as the cross-cutting area of assistance to Tajikistan for fiscal years 2006-2009. In this regard the Government and Bank are now finalizing preparation ofthe Public Sector Reform Project (PSRP) and Policy Based Credit. PSRP will focus on supporting implementation of the Public Administration Reform Strategy, while PBC and the upcoming Poverty Reduction Strategy Credit (PRSC) will provide budget support to move the government structural reform agenda, mainly in public administration and social service delivery improvement, forward. Hence, the Bank’s support (through a long-term new instrument - STATCAP) to improve state statistics framework will significantly and effectively increase the development impact of the whole IDA assistance package to the public administration reform.

3. Higher level objectives to which the project contributes

The project is in full conformity with the CPS and Government’s NDS/PRSP2 where priorities are set to ensure the achievement of the overall development goals and ranked in the order of importance, as: 0 public administration reform; 0 development ofprivate sector and attracting investments; 0 development ofhuman potential.

The project will directly contribute to these priority areas by building an effective national statistical system that ensure timely and quality measurement of the progress and provides reliable statistical data that for the decision-making process. This is particularly important for the purpose of tracking progress ofNDS/PSRP2 implementation as well as a number of MDG-based quantitative macroeconomic and social indicators selected by the Government. The project will

3 also directly contribute to the purpose of ensuring proper tracking and assessment of the county’s progress towards achievement of MDGs, which also influences the size of the donor assistance to Tajikistan.

This work requires reliable and good quality social, demographic and economic data, hence a wide variety of information should be collected to provide a holistic view of poverty in the country. This will include: (i)qualitative and quantitative indicators; (ii)income/expenditure and access to services; and (iii)household, communityhegion and intra-household data. It should be noted that the data to be collected will not be limited with just poverty data, some other data will also be required such as labor force, growth, trade and prices. The quality of the monitoring exercise will depend vitally on the ability ofthe national statistical system, where GKS is the key player, to provide information. It should be noted that data collection, dissemination and use need to be on-going and regular activities that will allow evaluation of changes over time, but should not overly burden the capacity ofthe government to implement it.

B. PROJECT DESCRIPTION 1. Lending instrument

This project will be a Specific Investment Loan, under the umbrella of the STATCAP Adaptable Program Lending to improve statistical capacity through a sector-wide approach, using the MISP as the basis for investments. STATCAP is designed to support a medium to long-term approach. To enter the STATCAP lending program borrowers need to fulfill certain eligibility criteria. The cornerstone of a STATCAP project is the development of a comprehensive and integrated national action plan for statistical capacity building, MISP, prior to the project. The MISP identifies strengths and weaknesses of the system, and contains necessary components to improve the system.

Tajikistan has met all requirements of STATCAP and the project components are designed to support the implementation of the MISP, and will be implemented in a coherent, consistent and well-sequenced manner.

2. Project development objective and key indicators

The main objective of the project is to improve efficiency and effectiveness of the National Statistical System to enable it to provide relevant, timely and reliable data for evidence-based policy making in support of Government’s poverty reduction strategies and the process of economic development.

The principal outcome of this project will be a well functioning national statistical system that will significantly improve Government’s decision-making process by providing timely and accurate economic and social data. It will also help Government monitor progress towards national development goals, including the PRSP goals and the MDGs. The specific outputs of the project are: 0 improved legal and institutional framework that will encourage statistical development; 0 improved physical and IT infrastructure; 0 strengthened human resources through training in statistical operations;

4 0 improved statistical infrastructure through application of internationally accepted methodologies and data quality standards; 0 developed statistical production system that continuously adapts to evolving needs ofthe society and economy through user-producer dialogues; 0 institutionalized core statistical activities, including poverty monitoring; 0 increased output ofreliable statistics by consolidating and strengthening existing surveys and administrative sources, and by designing and conducting new data-generating activities; and 0 timely dissemination, information-sharing, and the use of data for policy decisions.

Achievement of the specific objectives of the project will support the overall goal by reducing the cost of information supply, increasing the demand, and making coordination of statistical activities, financing, and execution more effective. It will also help statistical agencies in line ministries through improved institutional interaction between statistical agencies and training of their relevant staff. These objectives are in full agreement with the MISP. Key performance indicators include the following:

0 Increased user satisfaction relative to a baseline (including consultations, usefulness of products, etc). 0 Greater use and interpretation of statistical information by economic actors; 0 Increased use of statistical information in government’s plans and programs; 0 Improved quality of statistics disseminated through various publications; 0 Improved quality of progress reports indicating increased availability and quality of required statistical data; 0 The National statistical system increasingly conforms to the international standards with regular updating and publication of the GDDS metadata in line with its recommendations.

Baseline data will be based on existing surveys and the surveys to be conducted in the first 6 months of the project.

3. Project components

The project components are designed to support the implementation of the MISP, and will be implemented in a coherent, consistent and well-sequenced manner. The major components ofthe project are planned as:

A. Institutional Development ($180,000) This component will support the improvement of the institutional capacity to carry out the formulation, coordination, and implementation of appropriate statistical policies and programs that will address to the needs of Tajikistan. It will support the review and improvement of existing legal framework and development of an institutional framework that will clearly define the interaction and dialog between GKS and relevant line ministries and statistical agencies. This component will also support the improvement of organizational structure of the national statistical system. Expected outputs will be improved statistical legislation and regulations that promote the effective production and use of data while guaranteeing the confidentiality of

5 individual records, as well as a better functioning organizational structure for the national statistical system.

B. Human Resource Development ($530,000) The target is to improve the qualifications ofthe personnel in all statistical offices of the national statistical system. Training will be provided in basic and advanced methodologies and techniques, particularly those that support the priority indicators for MISP. Training should be in the form of seminars abroad and in the country, consultancies, and on the job training. There will also be substantial opportunity for staff to go on study tours, mostly to CIS countries, and to participate in international seminars.

C. Development of Statistical Infrastructure ($1,040,000) In general, GKS inherited weak methodological skills from the Soviet period; inasmuch as sampling methods were not well developed under Soviet statistics and nearly all methodological decisions were made in Moscow. GKS therefore needs to build up the skills from a very low level in many respects. For each new area GKS needs to acquire necessary skills (classifications, sampling, seasonal adjustment, data quality) and will create a working group, which would include staff members from the methodology division but also from subject matter divisions that would be involve in this issues. Because of the risk of future staff turnover, these working groups will need to prepare methodological materials in writing and post them on the LAN, for use by other staff members as needed.

Therefore, this component addresses the improvement of the basic elements of the statistical infrastructure: statistical registers, sample frames, classifications and methodologies, statistical computer packages for analysis of survey data, and Geographical Information System (GIS) for statistical mapping.

D. Data Development ($1,290,000) This component will support the adaptation of internationally accepted standards and methodologies in data collection, compilation, and validation by GKS and other relevant agencies. It will also support further development of sectoral statistics on issues such as national accounts, price statistics, vital registration, health, education, poverty and living standards, employment, public finance, agriculture and transportation.

E. Physical Infrastructure and Equipment ($1,725,000) This component will support upgrading existing IT, transportation and other equipment that is essential to carry out existing and project activities. Equipment to be financed includes transportation vehicles, computers and networking equipment, IT accessories, survey equipment and accessories, and office furniture and supplies used by GKS as well as line ministries.

F. Project Management ($250,000) GKS will be the main executing agency of the project and will be responsible for its management. To effectively carry out the implementation and daily project administrative work, a project coordinator who is an expert in project management, a financial management specialist, a procurement specialist and an assistant will be hired by the executing agency. Specifically, this unit will coordinate project activities, manage reporting and auditing activities and ensure

6 compliance with the procurement, disbursement and financial management policies and procedures.

Technical Annex 4 contains detailed descriptions of each component.

4. Lessons learned and reflected in the project design

The most important lesson learned from previous assistance is the need for a more systematic approach, as in the MISP, instead of the piecemeal approach that was the case earlier. Statistical capacity building requires integrated and coordinated support that could take a long-term commitment. Previous experience from Tajikistan and other countries demonstrated that fragmented and uncoordinated capacity building activities do not result in sustainable improvements in statistical production and dissemination. Given that this project is based on MISP, it ensures that support will be provided to the whole national statistical system in a coordinated way. The project will also support specific measures to strengthen coordination, collaboration, networking, and information sharing among stakeholders.

Another important lesson learned from previous capacity building project is that projects are often not sustainable once external support stops. This project emphasizes the ownership by the government and close coordination between all stakeholders. The Government contributes around 17 percent of the total cost of the project and included it in the NDS of Tajikistan, which will ensure its sustainability after the end of the project. Further, this project focuses on strengthening legal and institutional frameworks, improving human resources, and building necessary physical and statistical infrastructure. This will ensure that appropriate allocation from the budget and investments will be provided for the statistical system with the active involvement of a wide range of users and producers. As a result, new demand for high-quality data, stimulated by training, producer-user dialogue, and data dissemination, will provide an additional impetus for sustainability.

The experience from the implementation of the previous statistical capacity building project funded by the TFSCB demonstrated that projects in Tajikistan can be implemented without creating a stand-alone project implementation unit. In the case of current project, the implementing agency, GKS, is very much committed and motivated that allows going for the “no-formal-PIU” option. However, given the still existing capacity constraints a small project coordination team consisting of local consultants will help relevant GKS staff in such project implementation issues as procurement, financial management and disbursements, monitoring and evaluation.

Another important lesson worth mentioning is the twinning issue. Experience from various statistical capacity building projects implemented in other countries showed that a twinning arrangement between GKS and a western statistical office could be a better approach instead of hiring several consulting firms or individual consultants. In the long-term this could allow building lasting partnership that can go beyond the project life. The MAPS (Marrakech Action

7 Plan for Statistics) Advisory Board2 recommended greater use of statistical offices of developed countries through a twinning mechanism to help reduce the risk of implementation of capacity building projects that could be constrained by the lack of expertise and technical assistance. The Board also recommended raising this issue within the context of the OECD Statistics Committee and through EU within European statistical offices.

5. Alternatives considered and reasons for rejection

There are three likely alternatives to the project that were considered during preparation. These are:

0 Providing support through a series of interventions aimed at improving specific areas of statistics funded by various donors and international organizations. This was rejected because as discussed above piecemeal approaches do not provide sustainable solutions. Instead, all areas of the NSS need to be improved in a systematic and coordinated way. Supporting the implementation of the MISP ensures that the approach is country owned and country driven, and that activities are well coordinated and well sequenced. 0 Providing support for only GKS instead of whole statistical system is another approach that was rejected because improvements are needed in all parts of the system, including line ministries and other producers and users of statistics. 0 Another approach considered during the preparation is to provide support through existing projects and programs such as the PRS, PSRP or PBC. This was rejected because creating statistical capacity and providing necessary data will be the foundation for better programs and projects as well as for monitoring and evaluation. Otherwise, improvement of the national statistical system would be delayed.

C. IMPLEMENTATION 1. Partnership arrangements (if applicable)

IDA has formed partnerships with donors to help the State Statistical Committee of Tajikistan implement the project. DFID and SIDA are main partners in this project and providing support in the mount of E600,OOO and US$ 17.1 million Swedish Kroner, respectively. Both donors agreed on putting their contributions into a Bank managed trust fund for the implementation of the project. The Trust Fund for Strengthening the National Statistical System of Tajikistan (TF0703 86) has already been established. The Turkish International Cooperation Agency (TIKA) is also interested in supporting the project through providing training in various areas of statistics in Turkey as well as providing short and long-term experts. The implementation of the project will also be coordinated and monitored by all partners through joint mid-term reviews that were already included in the administration agreements with donor partners.

EUROSTAT is another partner in the implementation of the project, although it does not make a direct contribution. EUROSTAT has allocated €3 00,000 for various activities to be implemented in 2006 that are closely linked to the activities of the project. Further, it will also allocate the

Marrakech Action Plan for Statistics, Minutes of the first meeting of the Advisory Board, October 26 and 27,2005, Washington, D.C. Chaired by Jim Adams, Vice President, Operations and Country Services, World Bank. Document is in the project file.

8 same amount for 2007. The TTL has been closely coordinating all activities of the project from the very beginning with EUROSTAT.

Further, the project team has also been coordinating project components with IMF, FAO, UNICEF and ADB to avoid duplication and increase effectiveness of the implementation. The TTL had meetings with all relevant partners from the beginning both in the field and here at the headquarters.

2. Institutional and implementation arrangements

Given the fact that the project is aimed at improving the statistical system of the country it will be required to ensure appropriate level of commitment and support of various government agencies and ministries. In order to ensure this, a Project Steering Committee (PSC) will be established by the Government, It is assumed that PSC will be a high level body that would meet twice a year and perform the following key functions: . Ensure efficient interdepartmental (inter-ministerial) interaction & resolving interdepartmental (inter-ministerial) issues; . Endorse project implementation plans; . Exercise monitoring and evaluation ofproject progress on a semi-annual basis; Twice a year report to the Government on project implementation status and, if necessary, propose improvement recommendations.

GKS will be the main executing agency of the project and will be responsible for its overall management and implementation. To effectively carry out the implementation and daily project administrative work, there will be a project coordination team (PCT) of up to 5 persons. A project coordinator who is an expert in project management, a financial management specialist, a procurement specialist and an assistant will be hired by the GKS. Specifically, this unit will coordinate project activities, manage reporting and auditing activities and ensure compliance with the procurement, disbursement and financial management policies and procedures. All other aspects of the project would be implemented by relevant GKS staff with the assistance of local and international consultants.

It is important to note that the project coordination team will not be a stand-alone PIU as it is the case in many other donor-funded projects. The PCT will be assisting GKS staff in implementing the project, but it will not implement the project itself. This is in line with the directions provided in the Paris donor conference on harmonization, Bank’s policy on project implementation arrangements and the joint GoT/WB/ADB CPPR recommendations.

3. Monitoring and evaluation of outcomes/results

To track progress towards the desired outcomes, the project coordination team will assist GKS to regularly monitor a set of intermediate results indicators in accordance with the results framework specified in Annex 3. The benchmarks for these indicators will be obtained from the results of a baseline survey to be undertaken during the first year ofthe project implementation. GKS will monitor implementation of the project through quarterly financial management reports and annual audits and other reports on semi-annual basis. A joint midterm review will be carried

9 out by the government and development partners about two and a half years after the project becomes effective. This will provide an in-depth assessment of progress towards desired project outcomes and will recommend measures to reorient the project if needed to ensure that it will achieve its objectives. No later than four months after the grant closing date, the project coordination unit will prepare and provide to IDA a report on the execution of the project, its costs and the current and future benefits to be derived from it, to be attached to IDA’S Implementation Completion Memorandum (ICM) in accordance with IDA guidelines.

A set of indicators of statistical capacity building developed by the PARIS21 consortium will be used to develop a monitoring baseline and for regular project monitoring. These indicators will be supplemented by information from the baseline survey mentioned above and other sources, including IMF Reports on the Observance of Standards and Codes, IMF multi-sector statistical mission reports, surveys of users of statistical products, an independent assessment of statistical products against the master plan, audits of management, staff, facilities, human resource training and records and GDDS metadata. The evaluation will be carried out by an independent agency appointed by the implementing agency.

Given the magnitude of spending associated with IT under the project, GKS agreed that the PCT would monitor progress ofthe IT investments in terms of cost and schedule. These are two key indicators of statistical agencies with regard to implementing IT. Variances in cost and schedules of ITwill be reviewed at mid-term of the project.

4. Sustainability

The recipient has shown a strong commitment to strengthening the capacity of national statistical system and has demonstrated its readiness to work on the project by preparing the MISP that was cleared and endorsed by the Government in March, 2005. The project is built on the foundations that have been laid with the grant the Bank has extended to GKS and there is strong ownership of it. The Government agreed on providing around 17 percent of the total project cost, which demonstrates its ownership of the project. Further, the government has also subscribed to the IMF’s General Data Dissemination System (GDDS) in late 2004, which provides guidelines for the production and release of statistical data. This is another indicator that the Government is committed to improving the national statistical system.

The proposed twinning arrangement could also become an important factor in ensuring project sustainability . The twinning partner, a well established statistical agency from the developed countries, can provide a systematic and programmatic assistance to GKS in capacity building. In the long-run, GKS could become a twining partner (possibly in tandem) for other statistical offices ofthe region.

Another important indicator that will ensure sustainability is the development of better user producer dialogue. By developing the users/producers dialogue and through the improvement of the data quality in the PRS and MDG context, the project will also increase the demand for statistics within the Government and the civil society.

10 Sustainability of this project would largely depend on the Government’s future commitment to provide budgetary support to supporting the statistical system. In approving the MISP and including the project in the National Strategy of Development of Tajikistan the Government committed to allocate necessary budget to support the national statistical system over a period that would go beyond the lifetime of this project.

Sustainability of IT investments depends on adequate operation and maintenance of hardware, systems and software. It should initially be noted that, at whatever its level of funding in the past decade, GKS has with limited resources skillfully and efficiently maintained its existing base of 239 computers, 110 printers and a network at headquarters serving 52 computers. This equipment has lasted to the end of its depreciation cycle and far beyond. Sustainability of the IT investments will be promoted by trying to keep down projected operation and maintenance costs.. Detailed design and procurement specifications will take into account future operation and maintenance costs (possibly 5 years for servers, 3 years for workstations, and software licenses that will keep GKS’s software up to date with the latest upgrades).

5. Critical risks and possible controversial aspects

Risk Rating Rkks Risk Mitigation Measures with Mitigation To project development objective Insufficientpolitical will to change Constant tracking of situation on the ground and M statistical system’s institutional maintaining of dialogue with the Government through framework currently fitting the overall the Country Office and field-based Task Team status-quo of the government. members. Training to high-level government officials on the need for evidence-based decision making and the need for ensuring of impartiality of statistical system.

Close supervision and tracking of situation on the Attitude/commitment change towards ground and maintaining of dialogue with the the project in case of GKS Government through the Country Office and field- M management change. based Task Team members. Timely training to GKS management and mid-level staff on project implementation, Bank-Government role, statistical system reform.

Training of officials and data users in the use of Commitment of other government statistics; improving data quality to promote value of agencies to support statistical work statistics in monitoring and evaluating programs and M projects.

Revising the legal framework in order to enhance Capacity of GKS to sustain the GKS’ central role development of the statistical system N

To component results Absorption capacity of GKS and other Increase in the number and capacity of staff; creation M statistical offices in line ministries is of a project management unit. insufficient to implement the project

Key, recruited or newly trained staff

11 Risk Rating Risks Risk Mitigation Measures with Mitigation are not retained in the statistical Improvement in the incentive structure and a M remuneration scheme that better reflects staff performance and qualification. Establishment of a special carrier path for Government statisticians.

Activities and responsibilities of different statistical agencies are not Improved institutional framework that will ensure M coordinated increased coordination and communication between statistical agencies.

I I M Overall risk rating I Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligib1e or Low Risk)

6. Loadcredit conditions and covenants

Negotiations Condition

The Project Operational Manual (POM) and Financial Management Action plan, all acceptable to IDA has been developed by the Recipient.

Management approval condition

The project counterpart account has been opened. The Financial Management system acceptable to IDA has been established.

Effectiveness condition

Other covenants

D. APPRAISAL SUMMARY 1. Economic and financial analyses

Economic. The Project is not amenable to a cost-benefit analysis as national statistical offices have hardly any significant cost recovery. The economic benefits from the project will derive from three main sources. First, improvements in the efficiency of statistical operations and agencies will result in broader coverage of and higher-quality data from given levels of

12 expenditure. Second, better data will enhance the potential for evidence-based decision making, at policy, program and project levels. Third, the project would help address the significant costs of missing or inaccurate data.

Financial. National statistics are a public good and generally financed from tax revenue. There is only very limited potential for cost recovery, mainly through data dissemination. Therefore, only marginal financial returns are expected from this project. However, there can be a fiscal impact contributing to a better budgeting process and a potential increase in revenues due to better information and coverage, as well as a possible increase in recurrent costs to cover enhanced operations ofthe national statistical system.

2. Technical

The technical design of the project is based on a detailed analysis of the strengths and weaknesses of the national statistical system as provided in the MISP developed under the Bank’s assistance. The proposed developments in management of statistical agencies, statistical infrastructure, and statistical operations and the choice of technology are appropriate to the borrower’s needs and capabilities, as well as international good practice and standards. The specifications for equipment, including computing, communications and transportation equipment, will be reviewed by technical specialists and will be in line with the World Bank procurement practices and local requirements.

3. Fiduciary

3. I Financial Management Issues. In December 2005 financial management arrangements for the proposed Strengthening the National Statistical System Project were assessed to determine whether the financial management arrangements put in place by the implementing agency, GKS, are acceptable to the Bank, and to monitor the process of strengthening the financial management system (FMS) in readiness for the proposed project. These financial management arrangements include systems of budgeting, accounting, financial reporting, auditing, and internal controls.

GKS will have a computerized accounting system in place before the Bank approval of the proposed project. Chief Accountant of the GKS will take overall responsibility over proposed project Financial Management arrangements. However, GKS will hire a financial management specialist who will be responsible for the project related technical financial issues. Terms of reference for the consultant will be developed by the GKS and agreed with World Bank before launching the recruitment process.

A Financial Management Action Plan has been developed, and will be agreed with GKS for establishment of a financial management system that meets requirements of the World Bank. Annual audits for the project accounts will be carried out in accordance with the Guidelines for Financial Reporting and Auditing of Projects Financed by the World Bank (June 2003). The guidelines require a single audit opinion on the project financial statements as a whole, which will include the Designated account Statement and the Statement of Expenditures used as the basis of withdrawing funds from the Grant Account.

13 3.2 Procurement Issues.

General: Procurement for the proposed project will be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004, and the provisions stipulated in the Grant Agreement. The various items under different expenditure categories are described below. For each contract to be financed by the Grant, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame are agreed between the Recipient and the Bank in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect actual project implementation needs and improvements in institutional capacity.

Procurement of Goods: Goods procured under this project would include: hardware and software to modernize the pilot ministries; equipment for electronic document system management information centre. For procurement of goods under the project, the following methods will be used: ICB, NCB, Shopping and Direct Contracting, when justified. The Bank's Standard Bidding Documents (SBD) for ICB contracts will be used.

Selection of Consultants: Consulting services from firms and individuals will be required. The following methods will be used for selecting firms and individuals whose services will be required for the project: Quality and Cost Based Selection (QCBS); Least Cost Selection (LCS); Selection Based on Consultants' Qualifications (CQ), Individual Consultants (IC), and, where justified, Single Source Selection (SSS). Shortlist of consulting firms for services estimated to cost less than US$lOO,OOO equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 ofthe Guidelines.

Training: Training is an important part of the project and will include project-related study tours, training courses, seminars, workshops and other training activities not included under goods or service providers' contracts, including costs of training materials, space and equipment rental, travel and per diem costs oftrainees and trainers.

Operating Costs: Operating costs will include equipment for operation and maintenance, communications (e.g. email, telephone and fax), utilities, and office space rental costs. Operating costs will be incurred according to an annual budget satisfactory to the Bank and using procedures to be described in the Pr0.j ect Operational Manual.

4. Social

It is expected that improved national statistical system will lead to improved social services delivery to the population, in particular to the poor in such areas as health, education and social protection. This is also underlined in the Government's NDS. The project will also provide assistance to the relevant structures of the Ministry of Labor and Social Protection in both statistical issues and evidence-based decision making in the determining government policy and spending for social protection, such unemployment benefits, pensions, transfers, etc.

14 5. Environment

The project focuses on institutional reforms and capacity building of the national statistical system within the broad context of the in the governance system reform. It doesn’t have any direct environmental impact, and the project does not include any civil works. The project is therefore rated as ‘C’. Any minor refurbishments of office space required for the installation of equipment that are foreseen under the project will be executed in line with prevailing national legislation and all bidding documents will make reference to the need to carry out any works in line with prevailing environmental standards and safety regulations.

6. Safeguard policies

Safeguard Policies Triggered by the Project Yes No Eiivironinental Assessment (OP/BP/GP 4.0 1) [I [XI Natural Habitats (OP/BP 4.04) [I [XI Pest Management (OP 4.09) [I [XI Cultural Property (OPN 11.03, being revised as OP 4.11) [I [XI Involuntary Resettlement (OP/BP 4.12) [I [XI Indigenous Peoples (OD 4.20, being revised as OP 4.10) 11 [XI Forests (OP/BP 4.36) [I [XI Safety of Dams (OP/BP 4.37) [I [XI Projects in Disputed Areas (OP/BP/GP 7.60)* [I [XI Projects on International Waterways (OP/BP/GP 7.50) [I [XI

7. Policy Exceptions and Readiness

This project complies with all applicable Bank policies. The Project is entirely consistent with Bank Policy and no exceptions are requested.

* By supporting the proposedproject, the Bank does not intend to prejudice the final determination of the parties‘ claims on the disputed areas

15 Annex 1: Country and Sector or Program Background TAJIKISTAN: Strengthening the National Statistical System

The cumulative growth of almost 60 percent of the economy over the last five years is quite impressive and demonstrates the Government’s success, even though the growth started from a very low base. The postwar recovery in productivity, especially in agriculture and expansion of services and construction fuelled by remittances from migrant workers significantly contributed to the economic growth in this period. This growth in economy has significantly helped the reduction of poverty, from 81% in 1999 to 64% in 2003. Tajikistan, however, still remains the poorest country in the ECA region and differences in poverty rate between oblasts (province) are still significant, ranging from 84% in Gorno- Badakhshan to 45% in Rayons under Republican Jurisdiction.

Sector issues. The transition from a centrally planned to a market oriented economy has brought rapid changes in all areas of economic and social life of Tajikistan. The social and economic reforms of recent years have changed the environment in which the statistics must function. A system is now needed for collecting economic information based on structured methods that are used in countries with a market economy. As a result, statistical offices at all levels have been obliged to reform the system of collecting and processing data and delivering it to users. Therefore since independence, the nature of the tasks of the GKS had to undergo significant changes. The legal basis for the collection, compilation and dissemination of the statistical information is the Law on State Statistics ofthe Republic of Tajikistan, adopted in May 1997 and amended in April 2003, to reflect the new status of the GKS as an independent state statistics committee. The law includes provisions for all statistical agencies of Tajikistan but assigns GKS the leading role in production and dissemination of statistical information. The upgraded status of GKS to a statistical committee as well as its composition and responsibilities were spelled out also in the Government Decision ofFebruary 200 1.

In recent years, a number of government-led processes have had a major impact on statistical requirements for Tajikistan. First, on March 24, 2000, the President of Tajikistan established a working group to prepare a Poverty Reduction Strategy Paper (PRSP), in conjunction with government efforts to improve the living standards of the population and to solve social/economic problems. A draft PRSP was prepared by October 2000. This document was discussed with international organization and further elaborated during 2000-03. International organizations that participated in the process included the International Monetary Fund (IMF), World Bank (WB), Asian Development Bank (ADB) and UN Development Program (UNDP),

16 among others. The PRSP was approved on 21 May 2003 by Presidential decree #1080, which laid down the main elements of the country’s transition strategy to a fully market-based economy and to reduce poverty by accelerating economic growth.

The strategy envisioned in the PRSP is information intensive and requires continuous monitoring of poverty and performances of various sub-sectors of the economy for developing policy measures to reduce poverty. The document mentions the importance of obtaining relevant and reliable statistical data for the monitoring and assessment of the strategy, and for providing a basis for the successful implementation. Sub-sequent PRSP progress reports and joint staff assessment reports emphasize the importance of statistical data in the poverty reduction and monitoring and evaluation of results. Monitoring and evaluation, based primarily on statistical data, were to constitute key elements ofthe strategy, which will enable policymakers to:

0 Follow the progress ofthe strategy and measure the extent to which objectives are being met during implementation; 0 Identify current problems and ways to solve them; 0 Update objectives at each stage of implementation.

Second major initiative led by the Government is the monitoring of Millennium Development Goals, which gave additional responsibilities to GKS. In order to provide a basis for the monitoring of MDGs the GKS has been cooperating with all relevant public institutions, as well as with international agencies (UNDP, UN, and WB). The first MDG progress report was prepared in cooperation with GKS in 2003.

Third activity that GKS involved in and played a major role on was the preparatory work to participate in the General Data Dissemination System (GDDS) of the IMF. This activity started in 2004 after the IMF reviewed GKS data and prepared the Report on Observing the Standards and Codes (ROSC). Authorized agencies that are responsible for the corresponding GDDS indicators were GKS (system coordinator in the Republic of Tajikistan), Ministry of Finance and the National Bank of Tajikistan. These agencies prepared metadata for the GDDS indicators and in August 2004 delivered a draft ofthe metadata to the IMF Statistics Department, together with an application for Tajikistan to join the GDDS and on November 17, 2004 formally participated in the GDDS.

In the light of above discussion, it was obvious that the first step towards preparing a medium- term macroeconomic framework and poverty reduction strategy would be to strengthen the national statistical system with a view of transforming it into a tool that can generate reliable statistical data. As a first step towards modernization in 2000, GKS announced a 3-year “Integrated Reform Program” for statistics, which was coincided with the Government’s 3 -year plan of economic reform. The Government approved the Program that included such aspirations, including: 0 Raising staff qualifications 0 Application ofmodem technology in the collection and processing of data. 0 Application ofmodem sampling methods 0 Broad use of scientifically-based statistical methodologies for estimates and calculations 0 Documentation ofmetadata for the public

17 Many of the tasks described in the plan were fulfilled or partially fulfilled. Some of them were not completed due to lack of funding.

Fourth, in May 2005 the President has established a Coordination Committee chaired by the Prime-minister to develop and monitor implementation of Government’s new long- and mid- term strategies, the National Development Plan for 2006-201 5 and the second Poverty Reduction Strategy Paper. The NDS identifies country’s national goal as “strengthening of political structures and achieving economic well-being and social welfare for the population of Tajikistan based on the principles of freedom, human dignity and equal opportunity for the realization of human potential”. NDS and PRSP2 priorities are (1) public administration reform, (2) development of private sector and attracting investments, and (3) development of human potential. The draft NDS was presented in New York at UN head-quarters in December last year and the Government is about to finalize both strategic documents. Given the obvious need for statistical data and capacity to process and analyze it GKS was given the responsibility of the secretariat of the Coordination Committee. The NDS implementation tracking is based on the range of quantitative indicators, for whose management GKS will be made responsible.

Even though since the independence GKS has been trying to adopt standard international statistical methodologies and to remove old management structures, this transition has posed major challenges for GKS. For many decades prior to independence, statistics simply operated to trace the implementation of the government’s economic plan. The dramatic changes in the economic environment and the necessary adoption of techniques and procedures to monitor economic movements have exceeded the adaptation capability ofthe agency.

As a result, there is now an increasing pressure on the national statistical system to produce and disseminate relevant statistics that meet internationally accepted standards. The critical issues to be addressed are: Weak institutional capacity and inefficient organizational structure ofthe statistical system hinder undertaking efficient statistical operations. Ineffective institutional coordination between various statistical agencies and the GKS and lack of an effective dialog between data users and producers create discrepancies between data supply and data needs. Lack ofwell developed human resources framework and proper job definitions prevent upward mobility and hence reduce the incentives for the staff. Inadequate analytical capability and qualifications ofpersonnel ofthe statistical system prevent adaptation of advance methodologies and techniques for collection, analysis and dissemination ofdata as well as the use of existing economic and social data Weak statistical infrastructure hinders institutionalizing the core statistics the national statistical system produces, such as censuses and surveys. Weak physical and IT infrastructure reduces efficiency ofthe system and creates significant time lag between data collection and dissemination.

18 This project will strengthen the capacity of the national statistical system to generate reliable, timely, and relevant statistical data to support and monitor development and poverty reduction. The results of the project will include a better legislative framework for statistical work, and better human skills, better equipment, and better data to monitor progress. The data will be of benefit to the government and people, but will also be of use to the Bank and other regional and international agencies in maintaining a policy dialogue with the government and in planning and implementing other projects and programs.

19 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies TAJIKISTAN: Strengthening the National Statistical System

Project Sector Issue Latest ISR rating or OED Evaluation Rating for closed Projects; Implementation Status for non-Bank Projects

1999 Survey of A survey at sample of 2000 households was conducted Done jointly with UNDP. Living Standards ($150,000) focusing on: Implemented successfully. Capacity building of GKS in preparing, conducting and analyzing the survey results, and Provision of technical equipment (PCs). 2003 Survey of Second survey of living standards at 4 160 households Implemented successfully. Results Living Standards ($132,000) focusing on: Capacity building of GKS in used by the Bank, GOTand the preparing, conducting and analyzing the survey results, donor community. and Provision of technical equipment (PCs). Strengthening of Multi-donor trust fund ($353,000) focusing on: Closed in time and implemented national statistics Institutional and statistical diagnoses, successfully. program

Equipment- $69,000, including 2 risographs, 2 servers, 20 computers and several hubs. Donors TACIS Technical assistance and education support (200,000 Implemented by EUROSTAT. ECU) to GKS in 1993- 1994 focused register of enterprise statistics of enterprises statistics of external trade. Program Reforms in the Sector of Official Statistics of Implemented by EUROSTAT. the Republic of Tajikistan (EUR250,OOO) in 1999. The program focused: Register of enterprises Enterprise statistics Statistics of external trade Publication and dissemination of statistical data Price index for construction Statistics-8 program (300,000 Euro) focusing on Will be implemented by agricultural statistics, business registers, classifications EUROSTAT. and information, communications and transportation statistics ADB In 2002 survey of poverty indicators ($360,000) on Implemented successfully. sample of 6000 households. The initiative focused on: focusing on: capacity building of GKS in preparing, conducting and analyzing the survey results, and provision of technical equipment and software.

20 Annex 3: Results Framework and Monitoring TAJIKISTAN: Strengthening the National Statistical System

Results Framework PDO Project Outcome Indicators Use of Project Outcome Information

The development objective is to Access to information/ Years 1-5: GKS management and improve efficiency and effectiveness dissemination Project Coordinator will monitor of the National Statistical System to 1. Rate ofuser satisfaction progress in establishing intermediate enable it to provide relevant, timely significantly increases by EOP indicators and take action if these and reliable data for evidence-based 2. Targeted Statistical products are are not being satisfactorily policy making. easily accessible in relevant implemented. media with metadata and interpretation offindings. Progress towards project outcomes will be reported twice a year and Coverage/ Accuracy / Reliability: compared with baseline data. Data sources are sound and relate to the targeted coverage. There will be joint mid-term reviews Increase in survey response with participation ofall donors that rates will be carried out in the third year Regular validations are carried possibly in November. out for data sources and statistical products; acceptable Year 4: No improvement in these statistical techniques in the outcomes may indicate that the process of data collection, project components and the compilation and authenticity implementation strategy need to be verification are efficiently and re-examined. effectively applied. Some key statistical indicators, such as the estimation ofthe shadow economy, number of labor migrants and remittances, real estate inflation, birth and death statistics became more reliable, timely, precise and compatible with internationally accepted standards.

Timeliness: 7. Time lag between data collection and dissemination was reduced significantly. 8. Statistical outputs are released within the time limits and with frequency meeting GDDS requirements

Intermediate Outcomes Intermediate Outcome Indicators Use of Intermediate Outcome Monitoring 1. Adequate policy, legal and 1.1 Statist ical legislation and regulatory framework as well as regulations are in place for Years 1-5: Action will be taken to effective institutional framework, institutional, legal and either ensure that these are put into management and human resources regulatory framework and place or to redesign the project to

21 for statistics are in place safeguarding confidentiality of .orrect deficiencies. source data 1.2 Mechan isms for effective inter- (ear 5: These results are compared agency coordination are vith baseline data to evaluate the established and operational. roject outcome. Duplication of data collection among agencies is eliminated at national and regional level. Increased volume of data received through administrative channels. 1.3 Mechan isms for effective dialogue with the data users and providers are operational. 1.4 M anagement Information Systems (MIS) are used for strategy planning, work programs, accounting. MIS are used for proper maintenance and use of computer and communication systems. 1.5 S taff use and upkeep acquired skills. 1.6 GKS central a nd local level structure optimized and staff trained. 1.7 Staff of statistic related units of ME, MH, MoJ, MSLP, MET, MF trained.

2.1 Busi ness register compiled and developed and made operational being maintained and used. Years 1-5: Action will be taken to 2.2 Required international :ither ensure that these are put into economic and social place or to redesign the project to classifications adapted. correct deficiencies. 2.3 Cost effective and efficient methods used for statistical Year 5: These results are compared operation. with baseline data to evaluate the 2.4 Standard question naire for project outcome. survey conducting developed and applied.

3. Main statistical agencies have 3.1 Intematio nally accepted developedupgraded and put into standards and methodologies are Years 1-5: Action will be taken to operation their core statistical used in data production either ensure that these are put into programs including surveys. 3.2 Targeted surve ys conducted, place or to redesign the project to thematic statistical data are correct deficiencies. developed and results disseminated Year 5: These results are compared with baseline data to evaluate the project outcome. 4.1 Capacit y for physical operations infrastructure and equipment to is adequate and well maintained Years 1-5: Action will be taken to facilitate the production and 4.2 At lea st 75% ofstaff at each either ensure that these are put into dissemination ofdata by statistical unit at GKS headquarters have place or to redesign the project to I agencies are undertaken and workstations with direct access correct deficiencies.

22 I adequately maintained. to databases for analysis and tabulation, and 60% of field Year 5: These results are compared staff have workstations with baseline data to evaluate the 4.3 Cost or schedu le variances in IT project outcome. do not exceed 10%.

I I I

23 in b LO I

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13M

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+ i x Annex 4: Detailed Project Description TAJIKISTAN: Strengthening the National Statistical System

This project will be a Specific Investment Loan, under the umbrella of the STATCAP Adaptable Program Loan to improve statistical capacity through a sector-wide approach, using the MISP as the basis for investments. STATCAP is designed to support a medium to long-term approach. To enter the STATCAP lending program borrowers need to fulfill the following certain eligibility criteria. Tajikistan has met all requirements of STATCAP and the project components are designed to support the implementation of the MISP, and will be implemented in a coherent, consistent and well-sequenced manner. The major components of the project are planned as (a) Institutional Development, (b) Human Resource Development, (c) Development of Statistical Infrastructure, (d) Data Development, (e) Physical Infrastructure and Equipment and (0 Project Management.

A Institutional Development: $180,000

This component will support the improvement of the institutional capacity to carry out the formulation, coordination, and implementation of appropriate statistical policies and programs that will address to the needs of Tajikistan. It will support the review and improvement of existing legal framework and development of an institutional framework that will clearly define the interaction and dialog between GKS and relevant line ministries and statistical agencies. This component will also support the improvement of organizational structure of the national statistical system. Expected outputs will be improved statistical legislation and regulations that promote the effective production and use of data while guaranteeing the confidentiality of individual records, as well as a better functioning organizational structure for the national statistical system.

Al. Legal framework Official statistics in Tajikistan are governed by the law "About State Statistics," passed on May 15, 1997, and amendment on April 22, 2003 containing modifications and additions to the 1997 Law. Further, on January 11, 2001 the President of the Republic signed the Decree "About the Formation of the State Statistical Committee of the Republic of Tajikistan" and on February 14, 2001 the Regulation No 74 "Questions about the State Statistical Committee of the Republic of Tajikistan." Besides the above- mentioned Law, State Statistical Committee (GKS) is also guided by the laws "About population census" and "About the State Registers" as well as by the Constitution of the Republic.

The Law defines legal and economic basis of the GKS and regulates legal relations connected with the collection, processing, analysis, distribution, use and storage of statistical information. The Law further stipulates that the state creates a uniform system of primary account and statistics, carries out a management of them, and defines the maintenance and nature of statistical activity throughout the Republic.

32 This sub-component focuses on the review and possible improvements of the existing legal framework. It also addresses the establishment of a mechanism to monitor the enforcement ofthe following legal aspects: 0 the role of the staff in fulfilling their obligations defined by law; 0 the use of internationally accepted methodologies and procedures defined by the law; 0 keeping the statistical data production and dissemination in line with the norms and standards defined by law; 0 responsibilities of GKS and relevant line ministries and other agencies in interaction with each other as well as in data collection, processing and sharing within the system; 0 keeping the respondents’ data strictly confidential; 0 encouraging responses to surveys and censuses; 0 encouraging the dialog between data users and producers; and 0 Simultaneous release of data to all users.

The project will also finance a study to formulate a strategy to pursue legal reform in the areas encompassing the legal status of GKS, its financial autonomy, the organization and operations of GKS, the standardization of official statistics production and dissemination, census and sample survey program.

A2. Institutional framework The statistical system of Tajikistan is centralized and is made up of GKS as the leading agency, responsible for the organization of official statistics, as well as of other agencies within line ministries that produce statistical information, which they send to the Main Computing Center (MCC) of GKS. The National Bank has a special status as an agency which publishes its own statistical information. Within the statistical system GKS has two roles in statistics: as user of statistical and administrative data produced and presented by other institutions and provider of statistical information. Given that compulsory reporting forms account for the bulk of information collected and processed by GKS, coordination and consultations between GKS and other statistical agencies become very important.

This sub-component will improve technical cooperation and collaboration between GKS and other statistical agencies within various line ministries and strengthen institutional framework through increased guidance for statistical operations and inter-agency cooperation. This will lay the foundation to create a well functioning statistical system at sectoral and regional levels and to make statistical outputs more relevant to users’ needs and for the monitoring ofdevelopment goals.

The objectives and functions ofthe statistical system will be to: 0 Raise public awareness about the importance and role ofstatistical information in the society; 0 collect, process, analyze and disseminate quality statistical information in a coordinated and timely manner; 0 promote the use of “best practice” in statistical production and dissemination;

33 0 promote the use of statistical information at individual, institutional, national, regional and international level; 0 build sustainable capacity for the production and use of statistical information in the country; and 0 undertake cooperative and collaborative survey and research activities between the GKS, research and academic institutions.

In lights of these objectives the role of the GKS will be reviewed and redefined to clarify its responsibility in setting goals, formulating statistical policies, adopting annual and long-term statistical programs, coordinating statistical operations, and ensuring data quality. Where necessary specialized commissions will be created consisting of members from relevant ministerial agencies to arrange the activities defined by the Multi-year Integrated Statistical Plan (MISP) in their respective sectors.

Further, the existing work program will be reviewed in order to reduce the workload in some areas and make room for new activities. A working group will be appointed to prepare an annual plan for reducing the burden of unneeded data collection, in terms of questions, forms, frequency and sample size.

A3. Organizational Structure The development of official statistics in Tajikistan requires an in-depth review of the organizational structure ofthe statistical system in general and GKS in particular, as well as building up certain divisions that play a leading role in collecting priority data such as the divisions for national accounts, the business registry, prices and household incomes, methodology and economic analysis. It may be necessary to gradually transfer personnel from some divisions to others by increasing productivity through automation and by cutting back on unneeded activities.

Reallocation can be made in the following ways: 0 To add to the personnel ofthe six leading divisions at GKS (national accounts, prices, household budget survey, registry, methodology, and economic analysis) at least 20 persons, as a basis for expanding and upgrading their activities. This in turn would require moving staff gradually from other activities. As the transfer from other activities would proceed slowly, the government would need to ‘lend’ GKS the required number of persons early in the MISP, with the expectation of being able to compensate for the extra staff later in the plan. 0 Gradually restructure the work of preparing the monthly report so that it would absorb less staff time than at present. This could be done by using the LAN to automate the preparation of tables and graphics, and by emphasizing the tabular presentation of data and limiting analysis to main variables at least for the monthly report. 0 Cutback on low-priority data collection activities. In support of this, GKS needs to develop skills in evaluating the usefulness of each data item, as a basis for making decisions as to which reports or data items could be omitted or collected less often.

34 0 By means of automation, reduce the number of staff needed to do the job in the MCC and in the regions, thus freeing up staff for new tasks. In this way, total staff on the MCC and the regions could be gradually reduced by 20 workers through retirements, to compensate for the increase in the leading divisions.

In compliance with the Law “On State Statistics” the salaries of the staff of regional statistical departments are funded from local budgets while expected to follow GKS policies and guidance. The current system in Tajikistan creates the so called dual subordination of the government agencies at the local level, which complicates the implementation of technical and personnel policy by the GKS. This also allows for the influence of local authorities on the accuracy of statistical data. This sub-component will also address this issue by reviewing the existing structure and making recommendations on how to improve the administrative framework of the national statistics system. Based on the recommendations of the review the project will finance relevant activities directed at implementation of the recommendations. These activities will be closely coordinated with the Public Administration Reform strategy of Tajikistan.

B. Human Resource Development: $530,000 The target is to improve the qualifications of the personnel in statistical offices. Training will be provided in basic and advanced methodologies and techniques, particularly those that support the priority indicators for MISP. Training should be in the form of seminars abroad and in the country, consultancies, and on the job training. There will also be substantial opportunity for staff to go on study tours, mostly to CIS countries, and to participate in international seminars.

B1. Human resources framework The GKS and the national statistical system need high caliber, well-qualified and trained staff to carry out the new and challenging responsibilities. A well defined human resources framework will help upgrading personnel selection and training, introducing staff performance incentives. It also helps improving the remuneration system by linking it to performance and developing job specifications for career development of managers and regular statistical staff of the system. Retention of well motivated and qualified staff in the national statistical system will eventually contribute to the objective of providing timely, reliable and quality data by increasing productivity through improved human resource management. There will be close coordination with planned and ongoing activities related to public administration reforms in Tajikistan.

Therefore, this sub-component ofthe project will aim to develop a human resource management framework with an incentive structure to retain and attract qualified professionals and managers in the national statistical system. It will consist of: development and implementation ofa strategy for human resource management; 0 establishment ofjob profiles by function and corresponding salary scales and standard career paths for each profile; and

35 0 defining and setting up of a system of internal promotion and merit based remuneration.

B2. Training of statistical producers This sub-component will develop and implement a training program that contributes to human resource capacity building in the national statistical system. The objective of this activity is to increase the percentage of managers, trainers, data producers, disseminators and IT staff who have acquired required skills to put into effective use for statistical operations. This will require that comprehensive training be undertaken, not on an ad hoc and intermittent basis, but on an ongoing and priority basis so that statistical personnel can acquire knowledge and strategic skills that will help the core functions to deliver desired statistical products more effectively and efficiently.

The following activities will be put in place as part of a continuous program to train staff in statistical planning, statistical methods, data analysis, data management and information technology: 0 using the Institute of Improving the Qualification Civil Servants for the statistical training of all relevant staff from GKS and other agencies; 0 organizing study trips to renowned statistical agencies to bring statisticians up to international standards; 0 encouraging staff exchange between GKS and other statistical agencies; 0 training the trainers, including university lecturers from selected universities, who will provide in-house training within GKS and at local universities, 0 ensuring knowledge transfer within the national statistical system through hands-on-training, methodological publications and technical workshops and; 0 improving data collection, processing and analysis through workshops and seminars to be organized for each sector involved in the project.

Managers of GKS and other agencies need to use appropriate management principles in their work especially in planning, preparing work programs and budgeting, writing proposal. All staff with management responsibilities will be given training in modern management principles. Most of the training programs in management will be tailor- made and conducted in-house. There are many national organizations that can be approached to provide training in management

There will also be induction courses for all new staff recruited into the GKS that may cover such topics as the vision, mission and linkages within the national statistical system; the role and structures ofthe GKS and how its departments and divisions interact with each other. The course will also be useful for statistical personnel outside the GKS.

B3. Training of statistical users The project views data users as an integral part of the statistical system, which is crucial to improvement of collection, processing and dissemination of quality data. Hence, it is important to take account of users’ perspectives in the training program. Further, it is a known fact that existing data are not being used effectively due to lack of information about available data series and lack of empowerment and knowledge of how to effectively use

36 them. In order to promote the use of existing data, workshops will be held for main data users that will aim at informing and empowering them in the use of existing data. These workshops will address various topics such as importance and value ofdata; main sources of data; data quality; and data use in planning, decision-making, monitoring, evaluation and forecasting.

The following activities will help identify users’ needs, promote the use of statistics in decision-making and improve users’ analytical capabilities: 0 setting up of a panel oftarget users and develop training or awareness programs in the use of statistics for each sector (target users include Government policy makers, journalists, businesshon-profit organizations, NGOs, trade unions); 0 organization ofworkshops, upon publishing statistical publications, to explain the results and the use ofprincipal indicators; and 0 training of staff in line ministries in data analysis.

Further, to improve the understanding of the role of official statistics and to ensure support for GKS and its work program, meetings and seminars for government officials will be arranged.

C. Development of Statistical Infrastructure: $1,040,000 In general, GKS inherited weak methodological skills from the Soviet period; inasmuch as sampling methods were not well developed under Soviet statistics and nearly all methodological decisions were made in Moscow. GKS therefore needs to build up the skills from a very low level in many respects. For each new area GKS needs to acquire necessary skills (classifications, sampling, seasonal adjustment, data quality) and will create a working group, which would include staff members from the methodology division but also from subject matter divisions that would be involve in this issues. Because of the risk of future staff turnover, these working groups will need to prepare methodological materials in writing and post them on the LAN, for use by other staff members as needed.

C1. Central Business Register of Establishments The registry of enterprises constitutes the basic instrument for the organization of statistical surveys of the economy. Enterprises and individual proprietors are included. The main source for the updating of the registry is the legal obligation to register with GKS (among other agencies) when setting up a new enterprise or establishment. This registry should be the basis for the systematic monitoring of response and non-response for the annual, monthly and quarterly statistical surveys in the economy.

The improvement ofthe registry will be based on:

37 A census for updating registry data, which will provide a systematic way to identify unregistered units that have been missed in annual updating, to update the economic activity of each unit, and to clarify the activity status of units that may no longer be active. A review and, if necessary, upgrading of the methodology for annual updating, based on census findings. Installation on a pilot basis of a new system for updating the registry in one oblast, based on the use of the registry for recording which establishments havelhave not responded to each obligatory report and/or survey. Linkage of the registry at Main Computing Center to the databases for various establishment surveys that will be created during the project. This would provide a basis for non-response adjustment (for the first time) as well as for identification of chronic non-reporting establishments, which could then be systematically checked for possible closure.

The business census will check on the activity status and the activity code of each unit, and add unregistered businesses. On the basis of a more systematic procedure for post- census updating, at least annually if not more often, it is expected when the next business census takes place; it will not require so many corrections to the registry.

The activities proposed under this sub-component will be coordinated with TACIS that will carry out the following the activities in calendar year 2006. 0 Assistance in the Inventory of the present situation concerning the register: quality of the information, inter-departmental coordination within the GKS, coordination with other institutions holding administrative registers, etc 0 Elaboration of a plan for improving the statistical business register 0 Training on sampling techniques 0 Assessment ofcomputer and software needs for the register

C2. Sampling Frames GKS has virtually no experience with modern sampling methods. When taking a sample is needed, the standard method is to apply a fixed percent - such as 10 percent of the population to be surveyed. There is not yet much understanding of how to design cost- effective samples. The main objective is to develop and maintain an updated National Master Sample Frames to be used for all relevant sample surveys.

During the project, GKS will set up a working group to master sampling skills. Basic skills would be learned in training sessions with consultants, study tours, and on-the-job training. The group would apply the methods to selecting samples in various sectors, thereby improving their practical understanding ofthe subject.

C3. Statistical Methodologies and Classifications Harmonization of national classifications with international standards is a requirement to ensure improved quality of the national statistics system and especially to provide comparability with international statistics. For example, the national accounts division

38 needs to receive data using the international classifications from other divisions in order to be able to process the data as required by SNA standards.

With external support, GKS adopted a General Classification of Types of Economic Activities of Tajikistan harmonized with European standards (NACE). Beginning in 2000, this system was implemented for registry updating. However, the new classification has not yet been implemented by various divisions that collect data from enterprises and establishments.

This sub-component will deal with the preparation of compendiums on statistical definitions, concepts and methodologies to be compiled on the basis of best international standards and manuals and sound international practices applicable to Tajikistan. It also aims to revise classifications and codes currently in use on the basis of standardized international classifications and codes and get them implemented effectively throughout the entire statistical system. This will improve the harmonization and consistency among various data sets as well as international comparability.

The preparations may take a year or two, after which the system would be implemented across the board, perhaps in 2007. GKS will appoint a working group to supervise the implementation while acquiring related methodological skills by way of seminars and on the job training.

There will be some activities identified by TACIS, which will be undertaken in 2006 that requires close coordination. These activities are: 0 Presentation of internationally accepted classifications, concepts, structures, revisions, problems for its implementation to GKS; 0 Development of a program for the introduction of the above mentioned classifications in Tajikistan: institutional arrangements, practical implementation;

0 Assessment of equipment needs.

C4. Master Questionnaire design This sub-component will address the problems in questionnaire design will fund development of a Master Questionnaire that will cover surveys and censuses in all sectors.

Many questionnaires were inherited from Soviet times; the majority of them have been published in Moscow. When questionnaires are designed, there is no central working group responsible for standardizing them or ensuring that they are well designed. A team will be established to design a Master Questionnaire with modules for all relevant sectors and to ensure consistency across surveys that will facilitate comprehension, legibility of answers, ease of editing and ease of data entry. This will require extensive coordination between this group and all relevant statistical agencies ofthe national statistical system

C5. Data Dissemination This sub-component will address the problems in data dissemination. Paying more attention to dissemination of statistical information is very important to demonstrate the

39 value of public statistics and at the same time to contribute to the development of social, economical and political life of the country. It is necessary to study users’ needs according to discussions with individual focus groups in certain oblasts and the creation of one or more users’ groups, which gathered periodically to review the demand for data. GKS will provide easy access to statistics for users, by improving publications and the web site. Main goals will be: 0 To develop efficiently productive system for tables in publications and web-sites; 0 To promote wider use of new, advanced methods of data dissemination through e- mail, CD-ROM and web-site; 0 To provide constant and efficient publication of general statistics publications, including marketing ofthese publications; 0 To improve methodological explanations (meta data) and present it on Internet, in publications and on the web site.

C6. Geographical Information Systems (GIS) Recently the GKS completed the development of the Socio-Economic Atlas of Tajikistan funded by DFID that introduced GIS into the statistical system. The aim of this sub- component is to build on and improve the GIS capability. It also aims to increase the use of GIS for statistical mapping by areas, as recommended by GDDS, within GKS as well as other line ministries for population, poverty, health, education, crime, police and labor statistics. Work on the extension of the socio-economic atlas of Tajikistan will be falling into a number of distinct but inter-related areas: Improving the accessibility (and thus the ability to analyze) census data 0 Extending the range ofindicators 0 Development of an interactive atlas

0 Multivariate spatial analysis

C7. Seasonal adjustment Although long monthly time series are available for some variables, GKS has no experience with seasonal adjustment. Seasonal adjustment is greatly needed for production and prices of fresh produce, which vary sharply by season. Seasonal adjustment is especially needed to prepare data for use in quarterly national accounts. To improve the underlying sub-annual data, GKS needs to convert all sub-annual data preparation to discrete periods (months, quarters) instead of publishing cumulative estimates, as has often been the case.

A working group is also needed to learn new methods. Two visits by an international consultant are planned to introduce seasonal adjustment software and to train the working group in its use. The second visit would take place 12 or more months after the first, to enable the consultant to address problems rose by staff after a year of experience in the use ofthe program.

D. Data Development: $1,290,000 This component will support the adaptation of internationally accepted standards and methodologies in data collection, compilation, and validation. by GKS and other relevant agencies. It will also support further development of sectoral statistics on issues such as

40 national accounts, price statistics, vital registration, health, education, poverty and living standards, employment, public finance, agriculture and transportation.

D1. Data quality GKS has very little experience in dealing with data quality issues. No attention has yet been paid to the problem of non-response and how to adjust for it. Validation procedures are minimal and rudimentary. The creation of databases in place of stepwise summaries will open new possibilities for evaluating and upgrading data quality in the following ways : 0 Validation of the data during data entry. This will require the preparation and adjustment of validation rules to catch outliers while not imposing an excessive burden on rayon staff. Written instructions will also be needed for each survey to guide survey workers as far as how to manage outliers - and what to do if the data still fails the validation test after checking with the respondent. 0 Non-response adjustment. GKS has never even systematically measured non- response; much less adjusted the data for non-response. 0 Preparation of technical notes for each data series, describing methods and documenting quality issues like non-response adjustment.

A basic problem inhibiting improvements in data quality is that the field staff is still very close to the administrative functions of local government, as a result of which they find it difficult to separate their own statistical duties from the administrative duties of general government. To deal with this problem, GKS will need to provide training and guidance to local officials.

D2. Data capture, validation, processing and documentation, and storage This sub-component will address the problems in data capture, validation, processing and documentation, and storage.

The present system for data captures also dates from the Soviet period. Few data are entered into databases; most are summarized at rayon and oblast levels, so that data for individual respondents never reaches the central office. This urgently needs to be converted to a database standard, with data for individual respondents entered in the rayon. As this is accomplished, links need to be developed at the central office between each database and the registry. MCC will select one or several databases for a pilot test of data entry in the rayon, ones that lend themselves to validation and perhaps ones that do not include much data from remote rayon. Standardization in the use of databases for data entry would make it easier for programmers to exchange knowledge. In the long run, the capture of data by means of databases is expected to shorten the time lag between data collection and publication, although in the short run delays may be experienced as staff learns how to utilize the validation procedures efficiently.

There are several measures that should be taken to improve processing, documentation and dissemination such as standardizing tools for analysis and tabulations; providing direct access to databases from the work stations of all statisticians for analysis and tabulations; and using a database program resides on the LAN for entering data from

41 various divisions of GK, and then for automatically producing well-formatted tables and graphics for the monthly report.

By means of re-engineering, this sub-component will review the current statistical forms (237) with a view to reducing the number of forms, prior to making progress in automating the work. It will also aim to support increased data entry of forms at oblasts.

D3. System of National Accounts This sub-component will aim to produce national accounts that are timely, reliable and in line with internationally accepted methodologies. The proposed actions are: Upgrading the classification system in close coordination with sub-component c3; Computerization ofNA compilation; Preparation of quarterly national accounts (QNA), using both production and expenditure approaches, in current and constant prices, with and without seasonal adjustment; Improvement of the coordination with balance ofpayments (BOP) Improvement of the assessment of gross national income (GNI), including labour migration and remittances; Introduction of commodity-flow techniques Improvement of constant-price estimation, particularly for gross domestic product (GDP) by expenditure Preparation of the first input-output (IO) table a step that will only be feasible once GKS has implemented international classifications for activities and commodities; Preparation of a work plan for the creation of GDP measures at the oblast level, including a list of data requirements

D4. Non-observed economy This sub-component will support activities that will improve methodologies and estimations for the non-observed economy, including illegal economic activity.

In this area a special survey will be conducted. It should be noted that the Government of Tajikistan by its Resolution #37 as ofJanuary 3 1, 2004 (section 19) instructed the GKS in collaboration with the Ministry of Economy and Trade, the Ministry of Finance, the Ministry of State Revenues and Duties, and other relevant agencies to address the issue of estimating non-observed economy and to take measures to produce comprehensive data for the non-observed economy. To comply with this on June 30, 2004, the Goscomstat held a meeting attended by the representatives of the above ministries including the Ministry of Interior. The GKS has already received comments from a number of ministries and other agencies confirming their support of the idea to conduct the survey proposed by GKS. A survey will be conducted to estimate the level of non-observed economy including the volume ofretail trade in the non-organized trade sector.

D5. Price Statistics The aims of this sub-component are:

42 0 To improve the calculation of Consumer Price Index, by enlarging the basket of goods covered and by upgrading methodology, 0 To improve the calculation ofthe Producer Price Index by enlarging the basket of goods covered and by upgrading methodology; 0 To use seasonal adjustment for selected components ofboth indexes 0 To prepare comparative measures of living costs under the International Comparisons Program (ICP). 0 To prepare an index of agricultural prices.

D6. Industrial statistics Industry accounts for approximately 23 percent of GDP. Thus there is urgent need to carry out a census for benchmarking industrial output and updating the data used for revising quantum indices ofproduction. The objectives of this sub-component are: 0 to implement the Tajikistan adaptation ofthe NACE classification system for economic activities and a consistent system for commodities, which will serve as a basis for the development ofthe main indicators in Industry Statistics; 0 to improve monthly calculations of the Index of Industrial Production with value added weights, methodological upgrading, and seasonal adjustments; 0 to implement on a sample basis surveys on small industrial enterprises, particularly informal producing simple commodities like bread and vegetable oil.

This sub-component will also support an industrial census to provide baseline data on Industrial Structure and to provide key macro economic indicators like GDP, output, capacity utilisation of industrial sector.

D7. Investment and construction statistics The aim is to improve the system ofindicators and statistical surveys, and especially: 0 to improve methodology for construction investments data following international norms and standards; 0 to conduct a survey on investments in construction including foreign investments, private companies and individuals; 0 to develop methodology for estimating investments in construction by economic sector; 0 To develop a workable price index for construction (this activity is planned to be included in the TACIS statistics 9 and will be closely coordinated)

D8. Domestic Trade Statistics on Goods and Services trade statistics The main objective ofthis sub-component will be: 0 To survey expenditures by traders (up to now, only sales measured) 0 To carry out a survey ofenergy use by establishments.

D.9. External Trade Statistics on Goods and Services trade statistics 0 To develop quarterly unit-price indexes for exports and imports and quarterly constant prices measures of imports and exports;

43 0 To develop a more comprehensive database for imported and exported goods including data on the values, number or volume ofunits.

D10. Information Communication and Transportation Statistics Given the privatization of transportation facilities, which was previously under the jurisdiction of the Ministry of Transportation. In 2005 there is only a small portion of those under the Ministry. The problem here is that private transportation services are no not covered by official statistics.

Transportation sector has traditionally received little attention in the area of statistics. This sub-component provides support to GKS and Ministry of Transportation and will redress this data gap through: implementation of surveys on the use ofroad freight vehicles and on passenger transport, its costs and prices; updating ofthe central database for automobiles and road traffic; development of a methodology of the collection oftraffic accident data; carrying out a survey of automobile owners to capture the informal provision oftransportation services; Conducting surveys on users of transportation services to capture the expenditures for services provided by the informal economy; Conducting comprehensive survey throughout the country covering a large number ofprivate entrepreneurs; (Note: a pilot survey is included in the TACIS program (statistics 8) Further activities in collaboration with the Ministry oftransport to introduce waybills and to analyzing them to obtain reliable statistical data

The telecommunications sector is one of the important and growing segments of the economy and covers a large portion of the national infrastructure. Currently the market for telecommunication services is in the making and a number of operators are already in place. These recent developments require development of proper methodologies for statistical data collection and further improvement of existing reporting system covering all internationally accepted indicators. Some ofthe activities are: 0 Conducting a sample survey on IT used by the population. Maintaining data collection from legal entities by using the following reports developed in collaboration with the Ministry of Telecommunications o Report on Information and Telecommunication Technologies and the Use ofthose in Different Sectors; o Report of Licensed Operators Providing Telecommunication Services.

D11. Environmental statistics The main goal is to establish a plan for developing environmental statistics based on a study of user requirements and existing methodologies and data sources. Some specific activities will include: to revitalize and continue maintaining the Water Cadastre (The cadastre has not been maintained since 1999 due to financial constraints); 0 to develop classification for waste to obtain waste data;

44 0 to develop unified reporting format on environmental protection investments.

D12. Agriculture Statistics Agriculture accounts for a high proportion of the Tajikistan economy. Consequently, producing reliable and timely agricultural statistics becomes critical for policy making and compiling other statistics such as national accounts. The current program of data collection for agriculture is based on questionnaires from Soviet times for collective farms, and has not yet been reoriented toward individual farmers. The National Economic Development Program of Tajikistan (for the period though 201 5) emphasizes that statistical data on the size of agricultural lands is not accurate. So the main task is to rationalize the program of surveys by eliminating unnecessary questions and forms and developing new forms that are more suitable for individual farmers.

This sub-component will strengthen agricultural statistics through: revision of the survey methodology including use of an updated sampling frame and developing the Agricultural Survey into an instrument enabling harvest forecast, estimation of inventory and post-harvest production; carrying out a sample survey of the 18,000 registered farmers (with permanent workers), now covered by an obligatory report; development of a manual of general methodology that describes survey design, data collection and analysis ofresults; reorganization of data collection aiming to reduce operation costs; improvement of data processing by developing a manual describing data-entry, data-cleaning, and tabulation methods and procedures; improve the sample surveys on small unregistered producers in agriculture, especially by redesigning the sample, now excessively large (75,000), and by reviewing the questionnaire; archiving of data to disseminate and publish results; and applying seasonal adjustments to quarterly and monthly production data.

The privatization and restructuring of state owned farms is about to be completed. After the restructuring process finalized, this sub-component will also support the preparation of an agricultural survey to be conducted later when funding would be available.

TACIS has identified a number of specific activities to be carried out in 2006, which will require close coordination. Where possible, activities should be undertaken in sequence to maximize the number ofactivities possible. TACIS activities are: Assessment ofneeds for data in agriculture; 0 Assessment of existing sources (administrative and statistical) for the Agricultural Register; 0 Creation ofthe basis of an Agricultural Register, following international standards; 0 Development ofmethodologies for agricultural surveying; 0 Design of a system ofsurveys in agriculture; 0 Preparation ofpilot surveys in selected areas.

45 Further, FA0 and EU Food Security Program will also conduct a food security study in coordination with both the present project and TACIS activities.

D13. Demographic Statistics The objective of this sub-component is to provide support to improve the quality of vital registration and statistics, especially at the municipality level. The Vital Registration Offices at the local level report to local executive bodies rather than to the Ministry of Justice. The latter provides methodological support through the General Vital Register Office (GVRO), which reports to the Ministry. The project will also support a promotional campaign to encourage vital registration in areas where registration rates are low. It will also support: 0 To master the methodology for measuring infant and maternal mortality by way of household interviews, and to test out the chosen method in a single rayon; 0 To carry out a nationwide survey of infant and maternal mortality in a sample of rayon based on the method tested in the pilots. Results to be used for adjusting administrative measures of mortality demonstrate that data on infant mortality is underestimated.

This sub-component will provide support to the GVRO in terms of expertise and equipment. To strengthen the VROs and GVRO which are vital registration bodies and therefore directly deal with statistics the following is needed:

strengthen capacity of VROs and Jamoat staff by conducting a number of on-site seminars with the involvement of the GVRO staff to provide assistance to local level offices; equip 68 VROs, the GVRO and Jamoats (if possible) with computers, copying machines, and typewriters; conduct a 2-day seminar with involvement of the bodies dealing with statistical data (Ministry of Justice, Ministry of Health and GKS) to identify single policy to address current issues to allow for producing reliable statistical data; assist in developing laws and regulations in statistics and vital and mortality registration to consequently publish them as a collected book in Russian, Tajik and English, and disseminate them among the parties concerned; arrange a study tour for the staff of GVRO and GKS to the neighboring countries; to provide support to the Institute of Professional Development for Law Officers under the Ministry through training courses for the staff of vital registration offices; support activities of the republican archival depository of the GVRO; provide GKS with special equipment to speed up processing of the data provided by the VROs.

D14.2010 Census of Population This sub-component will focus n the main preparatory tasks identified in the framework of the run-up to the 20 10 Census and will address the following tasks: 0 Develop a work plan for census preparations that takes account of new technologies especially for data capture and the production ofcensus maps.

46 0 Develop a specific plan for the IT side ofthe census. 0 Provide equipment, software and training for the preparation of census maps using the Global Positioning System (GPS) and a Geographic Information System (GIs). 0 Provide equipment and training for experimental data entry by use of a scanner and OCR during the pilot census, to test feasibility for full census. 0 Support the preparation oftabulation routines for producing tables for the country and for regions in a suitable program such as CS Pro.

D15. Labor Force Statistics This sub-component provides support to: improve data quality through technical assistance to increase the observance of ILO recommendations and to prepare documentations ofmethodologies for labor market statistics and; Reorganize and strengthen the institutional data collection system (surveys to collect employment, informal sector employment, and unemployment and external labor migration statistics). To continue the Labor Force Survey (LFS) for the four quarters of 2006, as a follow up to the first such survey in 2004 (it is anticipated that routine Government funding would become available for continuing the survey after 2005); To establish a new sample frame for the current LFS; To use the data to analyze labor migration outside Tajikistan and to prepare measurements oftime spent in informal economic activity.

D16. Social Statistics, Poverty and living conditions monitoring statistics This sub-component attempts to reduce the information gap in poverty and social statistics by conducting a household survey and promote the use of collected information by improving data access and the analytical capacity of data producers. Planned activities include: 0 implementation ofa national Integrated Survey, representative at the regional level, containing modules on household characteristics, employment, education, utilization of social services, housing conditions, consumption, and expenditure; 0 carrying out analysis on survey results to provide a general pattern of food and non-food consumption and expenditures; 0 carrying out specific analyses on poverty (quantitative and qualitative determinants ofpoverty, poverty mapping, poverty line, incidence and depth of poverty by geographic area, poverty characteristics), employment by occupation and geographical location, education (access and expenditure), demography (updating ofpopulation and demographic parameters), nutrition and diet (nutritional study and diet pattern), consumption (budgetary elasticity and coefficient); 0 collecting data on orphans and children without parents’ custodial care and developing a consolidated reporting process for this purpose; and 0 development ofa database for dissemination.

47 A Table for Social statistics containing key social and poverty monitoring indicators and concise analysis on the development of indicators will be created and published annually by GKS. The purpose of this sub-component is to give a tool for monitoring social indicators through time, but it will also allow determining data needs and weakness that would in turn help determine a data collection program.

D17. Education Statistics This sub-component aims to increase the availability of education data required in PRSP and MDG monitoring. The project will provide support to GKS and the Ministry of Education: 0 technical assistance to identify data needs and improve data collection methods; and 0 IT equipment to enable efficient data processing and electronic data dissemination.

The main task will be to adapt and implement the International Standard Classification of Education (ISCE). An inter-agency working group will be set up with the Ministries of Labor and of Education, and other interested agencies. A national version of ISCE would be prepared and implemented by common agreement.

D18. Health statistics This sub-component will foster the national health information system administered by the Ministry of Health and ensure the availability of health information necessary for policy formulation, planning and evaluation of health programs and services as well as for monitoring PRSP and MDGs. The project will support: 0 modernization ofthe IT infrastructure; improvement of data collection methodologies and operations at various data production levels; 0 update the classifications that will be in line with internationally accepted norms and standards; and 0 regular dissemination ofhealth data in publications. D19. Gender statistics This project will support the development of gender statistics to reflect women’s and men’s situation in all social and economic spheres. Over the last years statistical data reflecting gender equality has been in greater demand; the number of the data users has increased. Currently data on social statistics are not broken up by sex. This project will emphasize distinguishing all relevant social statistics by sex.

D20. Financial Statistics This sub-component aims to provide support to GKS and National Bank of Tajikistan in the following activities that are consistent with the national policy on financial sector development and reforms. 0 To develop methodology for the estimation ofcash income and expenses ofthe population based on the international standards and best practices; 0 To revise all current forms for statistical reporting on the finance of enterprises and institutions given the process of switching to the International Financial

48 Reporting Standards based financial reporting to meet the NAS requirements and to comply with the international practices; 0 Integrated Database on Macro-economic and Financial statistics at the National Bank of Tajikistan; 0 Private debt statistics

D21. Government Finance and Public Debt Statistics This sub-component aims to improve the coverage, timeliness and quality of local government expenditure statistics within the Financial Management System to provide data for fiscal monitoring.

E. Physical Infrastructure and Equipment: $1,725,000 This sub-component will support upgrading existing information technology (IT), transportation and other equipment that is essential to carry out existing and project activities. Equipment to be financed includes transportation vehicles, computers and networking equipment, IT accessories, survey equipment and accessories, and office furniture and supplies used by GKS as well as line ministries.

El, Development of Computerization Plan This sub-component will support the development of a detailed computerization plan for the national statistical system that will address a thorough upgrading of the IT solutions and IT competences in all data producing agencies including the GKS (headquarters, and district offices), statistical units in line ministries and statistical units in state-owned enterprises.

E2. Transport Equipment: The project is expected to make provisions for a number ofurgently and critically needed new motor vehicles and other transport equipment particularly for rayons that do not have vehicles at present. Only about half the rayon offices at present have vehicles. In rural areas, public transport is minimal or absent. Given the scope of the GKS work and other survey activities in the pipeline as well as the high maintenance cost of the existing transportation vehicles, procurement ofnew vehicles is urgently needed.

E3. Office and Survey Equipment Good infrastructure and equipment are essential for effective delivery of statistical products and services in the national statistical system. Indeed, one of the weaknesses of the national statistical system is that the statistical infrastructure is weak and the equipment is inadequate. This component of the project will assist to rebuild the infrastructure and to equip data producing-agencies to a level where they can be able to produce good data efficiently and in a sustainable manner.

E4. Information Technology This component will support GKS’s strategic goal of improving data survey development, data gathering, data analysis, and data dissemination processes through the use of information technology. In most agencies that collect, process and store data, IT infrastructure (hardware, software, networking and peripheral equipment) are outdated

49 and will need to be replaced. The objectives of Bank support will be to support GKS in: developing a detailed program for improving the IT infrastructure, ensuring improved efficiency and quality of statistical processing, accessibility and availability of databases for handling the preparation of tables; providing a major upgrading of the IT infrastructure for data collection, processing, storage and transfer of raw data, combined with increased skills in the use of IT tools throughout the organization; putting in place adequate mechanisms for data protection and backup of data; and organizing training courses both for IT specialists and non-IT specialists.

A thorough upgrading of the IT infrastructure and IT competences is needed to improve efficiency and ensure staff learn the new technologies and adapt to the new methods. Several investments in IT, licensed software, and technical assistance will be provided to data producing agencies including the GKS (headquarters, and district offices), statistical units in line ministries and statistical units in state-owned enterprises. The procurement of equipment will include: 0 high performance servers to support the data processing processes and provide additional data storage capacity; 0 installation of a local area network (LAN) at headquarters, workstations, printers and related peripheral equipment, internet switch, UPS and spare parts; 0 installation ofLANs in oblast offices, UPS, and disk backup media; 0 upgraded methods for faster and more reliable data transfer and communication between the central and regional offices, where feasible by email connection, and otherwise by fax, CD and diskette; 0 provision ofnew software systems and limited custom application software; and 0 modern printing equipment, including risographs and sheet cutters for the oblasts and MCC;

Technical assistance is essential to help develop a Computerization Plan that will meet both planning requirements for IT investments and become an instrument that will guide GKS in ensuring that the core system allows for expansion, accommodates development and implementation of other Government databases, networks, architecture (e.g., under the Public Sector Reform Program), and can be monitored for cost and schedule variances. Separate TA will develop a specific plan for the IT census (D14). Limited application development programming support will also be provided to assist in customizing tables and reports.

The lack of high-level IT personnel (due to weak staff motivation) is causing problems in the development and maintenance of IT at the MCC. With the transition to new systems for data collection, processing and dissemination there is a strong need for training of all staff. A training program will be implemented to provide end users, program engineers and electronic engineers with a minimum oftwo-weeks oftraining and thereafter on an as needed basis within the timeframe of the project. Courses will enable staff to install, manage access and data used on LANs, implement security measures, transfer and migrate data into databases, and perform routine data administration tasks. Part of this program will include training trainers at central and oblast levels to conduct follow-on training.

50 F. Project Management: $250,000 GKS will be the main executing agency of the project and will be responsible for its management. To effectively carry out the implementation and daily project administrative work, a project coordinator who is an expert in project management, a financial management specialist, a procurement specialist and an assistant will be hired by the executing agency. Specifically, this unit will coordinate project activities, manage reporting and auditing activities and ensure compliance with the procurement, disbursement and financial management policies and procedures.

The project will support: 0 salaries for the unit; 0 consultants services for monitoring and evaluation studies, audits, project reviews and the production ofthe Procedure and Project Implementation Manuals; 0 furniture and equipment for the unit.

51 Annex 5: Project Costs TAJIKISTAN: Strengthening the National Statistical System

Local Foreign Total Project Cost By Component and/or Activity . US us us $million $million $million Institutional Development 0.180 0.180 Human Resource Development 0.530 0.530 Development of Statistical Infrastructure 1.040 1.040 Data Development 1.290 1.290 Physical Infrastructure and Equipment 0.405 1.320 1.725 Project Management 0.250 0.250

Total Baseline Cost 0.655 4.360 5.015 Contingencies 0.055 0.055 Total Proiect Costs' 0.655 4.41 5 5.070 Total Financing Required 0.655 4.415 5.070

'Identifiable taxes and duties are US$0.085 million and the total project cost, net of taxes, is US$4.985 million. Therefore, the share ofproject cost net oftaxes is 98%.

52 Annex 6: Implementation Arrangements TAJIKISTAN: Strengthening the National Statistical System

Taking into account of the fact that the project is aimed at improving the statistical system of the country it will be required to ensure appropriate level of commitment and support of various government agencies and ministries. In order to ensure this a Project Steering Committee (PSC) will be established by the Government. The PSC will include the Presidential State Advisor on Economic Policy (chairman), the Chairman of GKS, Deputy Ministers from Ministry of Finance and Ministry of Justice who are familiar with the project and the Head of ACU. The PSC will meet twice a year to perform the following key functions:

I Ensure efficient interdepartmental (inter-ministerial) interaction and resolve interdepartmental (inter-ministerial) issues; . Endorse project implementation plans; Exercise monitoring and evaluation of project progress on a bi-annual basis; . On annual basis report to the Government on project implementation status and, if necessary propose improvements.

GKS will be the main executing agency of the project and will be responsible for its overall management and implementation. To effectively carry out the implementation and daily project administrative work, there will be a Project Coordination Team (PCT) of up to 5 persons. A project coordinator who is an expert in project management, a financial management specialist, a procurement specialist and an assistant (probably a driver, too) will be hired by the GKS. Specifically, this unit will coordinate day-to-day project activities, manage reporting and auditing activities and ensure compliance with the procurement, disbursement and financial management policies and procedures. PCT will report to the chairman of GKS or other delegated person and will fulfill the following key functions:

a. Interact with the Bank and other donors; b. Interact with relevant government bodies at central and local levels on project implementation issues; c. Interact with relevant GKS departments both at the central and local levels on project and MISP implementation issues; d. Manage a program of monitoring and evaluation for the project; e. Prepare draft progress reports for review and finalization by the GKS and further submission to the Project Steering Committee; f. Ensure communication and publication ofthe project results, in particular at the GKS web-site.

All other aspects of the project would be implemented by relevant GKS staff with the assistance of local and international consultants. Please also refer to Figure 1 below for project implementation arrangements.

53 It is the Bank’s policy to gradually discontinue the use of stand-alone entities created for the purposes of project implementation. This policy has found its full reflection and support during the last CPPR conducted jointly with the Government, the Bank and ADB. After internal consultations and discussions with GKS and the Government it was agreed to use the previous implementation set-up utilized by the Strengthening the National Statistical System project funded by a TFSCB grant. Given the good implementation capacity experienced during the previous project and high commitment of GKS, it will be possible to effectively carry out the implementation and daily project administrative work.

A project implementation manual will be prepared to set the framework of rules by which the project coordination team will manage the project, under the World Bank regulations for financial management and procurement. The manual will also include written job descriptions for each member of the team that clearly define responsibilities, lines of supervision, and limits of authority. An appropriate training program which will include World Bank financial and procurement management procedures will be designed for staff and will start prior to project effectiveness to ensure that the project team is active and ready to operate at project effectiveness. The allocation of responsibilities should enable the appropriate separation of duties to ensure proper accountability. The team will produce all necessary reports on financial and procurement activities as requested by the World Bank and described in the manual ofprocedures.

The project will support salaries for the unit; consultants services for monitoring and evaluation studies, audits, project reviews and the production of the Procedure and Project Implementation Manuals; and furniture and equipment for the unit.

Figure 1. Proposed Implementation Set-Up.

Project Steering Committee

54 Annex 7: Financial Management and Disbursement Arrangements TAJIKISTAN: Strengthening the National Statistical System

1. Executive Summary.

In December 2005 financial management arrangements for the proposed Strengthening the National Statistical System Project were assessed to determine whether the financial management capacity of the implementing agency, State Statistics Committee (SSC- GKS), are acceptable to the Bank. The assessment also evaluated GKS financial management system (FMS) in terms of its readiness for the implementation of the proposed project. These financial management arrangements include systems of budgeting, accounting, financial reporting, auditing, and internal controls. GKS will have a computerized accounting system in place before the Bank approval of the proposed project. Chief Accountant of the GKS will take overall responsibility over proposed project Financial Management arrangements. However, GKS will hire a financial management specialist who will be responsible for the project related technical financial issues. Terms of reference for the consultant will be developed by the GKS and agreed with World Bank before launching the recruitment process. Terms of reference for the consultant will be developed by the GKS and agreed with World Bank before launching the recruitment process.

Conclusion. Although GKS has reliable accounting system operating according to local accounting and legislation requirements, further actions are needed for the financial management arrangements to fully meet the requirements of the World Bank. The operating manual documenting the financial procedures should be developed in accordance with World Bank guidelines and a computerized accounting system should be installed and implemented to facilitate project financial management process. A financial management action plan has been discussed with the Borrower, and will be finalized before negotiations for establishment of a financial management system that meets requirements ofthe World Bank.

Taking into consideration the assessment of the financial management systems and processes and the assessment of risks and mitigating measures, the financial management arrangements for the proposed Strengthening National Statistics System Project, when fully implemented, will be capable of satisfactorily recording all transactions and balances, supporting the preparation of regular and reliable financial statements, safeguarding the GKS assets, and are subject to auditing arrangements acceptable to the Bank.

A detailed financial management assessment questionnaire is included in the project files. A summary of the ratings is as follows:

55 Summary Table: Financial Management Assessment and Conclusions.

Financial Rating CommentdRisk Mitigation measures. Management Assessment 1. Implementing M GKS has satisfactorily implemented the Capacity Building Trust Fund grant. Entity Existing strict controls by the Government agencies over the activities of the Committee and relatively responsible management of the GKS minimizes the risk associated with entity. 2. Flow of Funds S The funds flow arrangements are initially planned to follow transaction- based disbursement procedures, with Designated accounts held by GKS on behalf of Ministry of Finance. Withdrawal applications are to be signed by I GKS Chairman and Chief Accountant. 3. Staffmg M (Finance function consists of 9 employees - Chief Accountant (CA) and two deputy CAS, 6 ordinary accountants. Though Chief Accountant will assume overall responsibility over financial arrangements of the project, one consultant will be hired to assist Finance department in managing Project related specific issues. 4. Accounting S GKS does not have formal accounting policies and procedures manual. Policies and However, instructions of the Ministry of Finance are used as a basis for day- Procedures to-day financial operations recording. Detailed Operational Manual (including description of the FM issues) should be developed in order to improve the internal control environment of the project. 5. Internal Audit NA There is no Internal Audit function. 6. External Audit M Project Audit will be part of the block audit which is organized by ACU. The block audit results were satisfactory except few insignificant issues with few projects. 7. Reporting and S Regular Financial reports, including Balance Sheet, planned and actual Monitoring spending analysis are submitted to Government agencies. FMR formats acceptable to World Bank will be generated using automated accounting system. Project accounting records for interim period, from project effectiveness until completion of accounting software installation and customization, will be maintained in Excel spreadsheets as very few activities will be undertaken during that period. Accounting records for interim period will be re-entered into system after completion of the I computerization, 8. Information S I Accounting Records, based on Tajik Standards of Accounting and Systems Instructions of Ministry of Finance are maintained manually with limited use of excel spreadsheets. Chief Accountant and Financial Management Specialist check all transactions prepared by accountants before they posted to GL, which minimizes the risk ofmanual record keeping. Overall S Action Plan for implementation of the remaining actions required to ensure Financial establishment of fmancial management system acceptable to the Bank has Management been prepared and will be discussed and agreed with the borrower during Rating negotiations Legend: H - High S - Substantial M - Moderate L - Low N/A -Not applicable

2. Assessment of current Financial Management arrangements of the GKS. The GKS is an independent government agency responsible for state statistics and reporting to the Government of Tajikistan. GKS is headed by the chairman appointed by the Government. GKS consists of two major departments: the Statistics Department and the Main Computing Center, heads of which report directly to GKS chairman.

56 Current accounting system of the GKS is maintained in accordance with local accounting regulations and legislation documents. The following are main characteristics of the GKS accounting function:

0 Accounting records are maintained manually with limited use ofExcel spreadsheets. 0 There are no formal accounting policies and procedure manual. Ministry of Finance instructions and other financial legislation documents are used as a base for record keeping and reporting of GKS financial activities. 0 Standard quarterly and annual financial reports are submitted to the relevant Government agencies. There is limited use of financial data by GKS management for day-to-day management of GKS activities. 0 Financial statements of GKS are audited by State Financial Control Committee (SFCC) every two years. Audit reports prepared by SFCC are not reliable because of its low capacity. 0 Chief accountant’s experience with Bank financed projects is limited to overall supervision of previous grant financial management aspects with finance consultant who left the project after its closure in 2005.

3. Implementation Arrangements.

GKS will be the main executing agency of the project and will be responsible for its overall management and implementation. To effectively carry out the implementation and daily project-related administrative work, there will be a project coordination team of up to 5 persons: a project coordinator, who is an expert in project management, a financial management specialist, a procurement specialist and an assistant (probably a driver, too) will be hired by GKS. Specifically, this unit will coordinate project activities, manage reporting and auditing activities and ensure compliance with the procurement, disbursement and financial management policies and procedures. All other aspects of the project would be implemented by relevant GKS staff with the assistance of local and international consultants.

The GKS will be responsible for (i)developing and updating the consolidated Project Implementation Plan, (ii)ensuring that project activities are implemented according to the legal documents, procurement plan and Project Operations Manual, (iii)reporting on project progress to the Government and the World Bank, (iv) ensuring that procurement of goods and services is done in a timely manner and in accordance with World Bank guidelines, (v) managing project funds and maintaining accounts, including the Designated accounts, (vi) getting the accounts audited, (vii) ensuring adequate budget provisions for the project, (viii) facilitating the work of consultants, and reviewing their outputs.

4. Strengths and Weaknesses.

Although GKS was an implementing agency for previous small capacity building grant, it does not have experience in implementing comprehensive World Bank projects with significant financial resources involved. Therefore, relevant GKS staff will require

57 considerable training and guidance during the initial phase of the project implementation. A full time project FM specialist will be hired for the duration ofthe project to help GKS staff managing project related financial activities. It is expected that successful implementation of the financial management action plan will ensure establishment of financial management arrangements that satisfy Bank requirements.

5. Country Issues and linkage to the current project

Country Financial Accountability Assessment (CFAA) for Tajikistan was completed in 2003. The conclusion of the CFAA is that there is a high risk to public funds due to extremely weak public sector financial management including budgeting accounting and auditing. CFAA notes that the system of public accountability functions poorly and there is a lack of transparency at all levels of government. While legislative reforms have been introduced in the Treasury, budget processes and control agencies are undermined due to human and technological capacity constraints. Some of the main risks include fragmented budgets, poor cash management and execution control, lack of transparency in the operations of State Owned Enterprises and inadequate checks and balances in the Executive and Legislature. These risks affect the overall quality and credibility of governance in Tajikistan.

The implementation environment for the proposed project is expected to be more reliable than average due to highly committed management of GKS and their past experience in a similar project.

6. Staffing of the Accountingrninance Function

Finance function consists of nine employees - Chief Accountant, two deputy Chief Accountants and six ordinary accountants. Three out of six ordinary accountants are responsible for payroll calculations and the remaining three are responsible for accounting of inventories and Fixed Assets. The activities ofaccounting function of GKS are limited to payroll and inventory accounting, regular reporting to Government agencies.

Implementation of accounting software, which is planned to be completed at the beginning of project effectiveness according to initial agreements with GKS, will help to restructure accounting department that is highly inefficient due to manual accounting and duplications. Although Chief Accountant will have overall responsibility over project financial management arrangements, including financial reporting, a FM specialist will be hired during project preparation period. The financial management specialist will be responsible for technical aspects of the project implementation, including preparation of withdrawal applications, maintaining project records in the system, preparation of various reconciliations under the supervision of the Project Director who will be Chairman of GKS.

58 Operational Manual to be developed for the Project will clearly define the roles and responsibilities of each individual, including GKS permanent and temporary staff involved in the project implementation

7. Accounting policies and procedures.

The GKS will develop a Project Operational Manual which will include the financial procedures, key internal control mechanisms to be followed by the GKS in the application and use of funds. The manual reflects the structure as well as the flow of funds to support project activities. Accounts and records for the project will be maintained by the GKS which will operate and maintain a financial management system (FMS) capable of generating Financial Monitoring Reports (FMR) in accordance with formats to be agreed with the World Bank. The Chief Accountant will be responsible for overall project financial management, maintenance of books and accounts for the project, preparation and dissemination of financial statements and FMR, and timely audits of the project. The GKS will generate and maintain accounting vouchers and supporting documentation for expenditures on all activities of the project, and will document the accounting transaction information flow. Funds will be transferred from the Designated accounts to pay for eligible expenditures in accordance with instructions contained in the Disbursement letter to be issued upon loan approval. The GKS will also maintain appropriate financial records and reports in accordance with existing government financial regulations and project specific procedures established in the Project Implementation Plan.

8. Auditing Arrangements.

Internal audit. There is no internal audit department within GKS and none is planned for the near future.

External audit. GKS Financial Statements have not been audited by independent auditors except State Financial Control Committee (SFCC) which audits the activities of GKS every two years.

Annual audits for the project accounts will be carried out in accordance with the Guidelines for Financial Reporting and Auditing of Projects Financed by the World Bank (June 2003). The guidelines require a single audit opinion on the project financial statements as a whole, which will include the Designated account Statement and the Statement of Expenditures used as the basis of withdrawing funds from the Project Account. The project will adopt these guidelines and submit a single audit opinion on the annual project financial statements within six (6) months following the end of the projects fiscal year end. Terms of reference (TORS) for the audit as well as a shortlist of audit firms to be invited to tender for the audit contract will be cleared with the Bank prior to the end ofthe fiscal year to be audited.

The external audit will be carried out by independent auditors in accordance with International Standards on Auditing (ISA) and terms of reference acceptable to the Bank.

59 The TORS will stipulate both the audit of financial transactions and an assessment of the operation of the financial management system (FMS), including a review of the internal control mechanisms.

9. Reporting and Monitoring.

Project management-oriented Financial Monitoring Reports (FMR’s) will be used for project monitoring and supervision. The project will prepare and submit Financial Monitoring Reports (FMR) in a form and frequency agreed with the Bank (sample forms will be included in the Project Operational Manual). These FMRs will be customized to reflect the specific characteristics of the project, including the number of sources of funds, while meeting the Bank’s minimum information requirements for the financial monitoring of the Project. The FMR will include, but not be limited to: (a) Sources and Uses of Funds, (b) Uses of Funds by Project Activity, (c) Output Monitoring Reports, (including written summary of project progress, and explanations for significant budget variances); and (d) Procurement Reports. The GKS will submit quarterly FMRs for the Project to the Bank starting with the first quarter ended in which disbursements will commence and quarterly thereafter, no later than 45 days after the end of the relevant quarter. The project accounting software will generate FMRs, incorporating all components, categories and performance indicators which are acceptable to the World Bank. Review of actual results against budgets will be a key managerial tool for monitoring performance ofthe project.

10. Internal Controls

Process of invoice handling and Payments will be described in detail in the Accounting and Finance section of Operational Manual. It should include the following basic invoice and payment processing steps:

a) All project related invoices will be received by Project Coordinator for initial review. b) Invoice is checked and verified for consistency with contract and TOR output details by Project Coordinator. c) Invoice is then sent to Accounting department for processing the payment. d) GKS Chief Accountant checks invoice for consistency with local legislation and legal agreements with World Bank and Government. e) Chief Accountant prepares payment order to the Bank where SAs are opened f, Payment order is signed by GKS Chairman and Chief Accountant. g) Necessary Accounting transactions posted to General Ledger

Fixed Assets register will be developed to keep records ofall assets bought from the project funds. The following rules will be applied to safeguard the assets: 0 All Fixed Asset Purchase documents, including Contracts, invoices are approved by GKS Chairman. 0 All Fixed Assets transfers and Write offs are approved by GKS Chairman. 0 Regular stock taking by GKS finance team.

60 0 Scrutinizing fixed asset related transactions by FMS during FM supervisions. 0 Regular Reconciliation of Fixed Assets Register to Trial Balance.

11. Information systems.

The implementation of Computerized accounting software will be completed and the system will be in place before the Bank approval of the project. Time-bound action plan has been developed, implementation of which will be monitored by World Bank staff closely. Consultancy firm and software selection process will be conducted in accordance with World Bank Guidelines and procedures. Selected software system should have capacity to generate FMRs, annual financial statements and other reports required by the Government.

12. Impact of procurement arrangements.

The GKS will hire procurement specialist who is experienced with World Bank guidelines or who will be trained to gain familiarity with the WB procurement guidelines. The GKS will prepare annual budgets in line with the Procurement Plans, and these budgets will form the basis for spending and requesting funds for counterpart contributions, if any. Budgets, prepared in accordance with the FMR format (disbursement categories, components and activities, financial sources, account codes, and by quarter), will establish physical targets to ensure linkage between expenditures and physical progress, and proper comparison between actual and budgeted performance. A detailed budget for the first full year of project implementation, broken down by quarter, will be prepared before the loan becomes effective.

13. Disbursements arrangements.

The proceeds of the grant will be disbursed over a period of five years, or for such longer period as will be agreed with the Bank. Grant funds will initially flow to the project via disbursements to the Designated accounts (DA) opened by the Borrower. Three sources of funds - IDA Grant, TF Grant and Government Co-financing - will be used to finance the project activities. Disbursements will follow the transaction-based method, i.e. reimbursements with full documentation, Statements of Expenditure (SOEs), direct payments and special commitments). Withdrawals from the Loan Account will be requested in accordance with the guidance provided in the Disbursement Letter. Withdrawal applications may be signed by an authorized representative of the Borrower, and the GKS Chairman. The Chief Accountant will ensure completeness and accuracy of all withdrawal applications and will append her/his signature as part of the internal control procedures. SOEs would be used for contracts for goods less than US$lOO,OOO, services for consulting firms less than US$lOO,OOO and for individuals less than us$20,000.

No withdrawals shall be made from the Grant Account for payments made for expenditures prior to the date of signature of this Letter Agreement by the Association, except that withdrawals, in an aggregate amount not exceeding $50,000, may be made on account of

61 payments made for for eligible Expenditures under Operating Costs Category before that date but on or after April 15,2006 .

Amount of the Grant Allocated (g % of Expenditures to Catenow Dollars) be Financed

(1) Goods and Consultants’ 100% [$2,998,000] services including training

100% (2) Operating Costs [$90,000] [$3,088,000] TOTAL

Allocation of the proceeds of the IDA Financing Percentage of Amount ofthe Financing Category Expenditures to be Allocated (expressed in SDR) Financed

(1) Goods, works and consultants’ services for the [$840,000 equiv.] 100% Project

(2) Operating Costs [$160,000 equiv] 100%

TOTAL AMOUNT [$1,000,000 equiv.]

Designated account (DA) : To facilitate project implementation, the Recipient will open a Designated accounts (DA) in a commercial bank acceptable to the Bank, and on terms and conditions acceptable to the Bank. Individual Designated accounts will be opened for each source of funds to avoid pooling and related with it complications. IDA will make an initial deposit to the Designated account upon the request by the Ministry of Finance (MOF) after Loan effectiveness. The total Authorized Allocation of the grant will be specified in the legal documents. Replenishment of the Designated account from the project accounts will be made against withdrawal applications, supported by appropriate documentation or statements of expenditure prepared by the GKS, signed by the authorized officials of GKS and submitted to the Bank for approval.

14. FM Action Plan to be agreed with GKS Given that the financial management arrangements are currently not fully satisfactory to the Bank, a draft time-bound action plan has been discussed with GKS and will be agreed with the Borrower during negotiations. Successful implementation of the action plan will ensure the establishment of a financial management system that meets requirements of the World Bank.

62 ACTION PLAN FINANCIAL MANAGEMENT SYSTEM

Action Responsibility Due Date/Remarks

Financial Management Procedures described in GKS Revised Manual should be Operating Manual: ready by Negotiations. e Fully documenting the following procedures: budgeting, accounting and internal control, including description of the accounting system and books of accounts, disbursement and flow of funds (including chart), financial reporting, including FMR, annual reports and audit, job descriptions for finance staff. e Present the final draft Manual to the Bank for review. Finalize the Manual incorporating Bank comments. I Establish Project Accounting and Financial GKS In place before management Reporting System approval. e Develop project accounting system, including design of Chart of Accounts, capable of generating FMR. e Provide appropriate training to the GKS Chief Accountant, deputy Chief Accountants and procurement specialist on application and maintenance of the installed system. Test the accounting and financial reporting system. Produce Draft FMR, for submission to the Bank for review and comments. I

Recruitment of FM consultant GKS Hired before management TOR agreed with Bank approval. e Transparent Recruitment process has to be achieved

Supervision Plan

The reports of the progress of the project implementation will be monitored in detail during supervision missions. The FMRs will be reviewed on a regular basis by the field- based FMS and the results or issues followed up during supervision missions. Annual audited project financial statements and management letters will be reviewed and issues identified will be followed up with GKS.

The FM supervision missions will include a review of the project's financial management and disbursement arrangements (and may include a review of a sample of SOEs and movements on the Designated accounts for each funding source) to ensure compliance with the Bank's minimum requirements. It is envisaged that the FM supervision missions will be carried out every six months.

63 Annex 8: Procurement Arrangements TAJIKISTAN: Strengthening the National Statistical System

A. General

Procurement for the proposed project will be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004, and the provisions stipulated in the Financing Agreement, the SIDA and DFID Grant letters. The various items under different expenditure categories are described below. For each contract to be financed by the Grant, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame are agreed between the Recipient and the IDA in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect actual project implementation needs and improvements in institutional capacity.

The planned procurement would initially be advertised in a General Procurement Notice, and Specific Procurement Notices to be issued thereafter as needed. After its clearance, the IDA will publish the GPN online in the UNDB in the Development Gateway's dghfarket. The individual SPN for goods and consulting services will be advertised in the national newspaper of wide circulation and GKS external web-site of free excess the negotiations. Specific Procurement Notices (SPN) for ICB Goods packages and Expression of Interest (EOI) for consultant's contracts above US$100,000 equivalent as well as the results of the contract awards would be advertise on-line in UNDB, dgMarket and on the GKS website.

The GKS would follow the World Bank anti-corruption measures and would not engage services of firms and individuals debarred by the IDA. The listing of such debarred firms and individuals is located at: http://www. worldbank.orn/htmWopr/procure/debarr. html

Procurement of Goods: Goods procured under this project would include: hardware and software, IT equipment for electronic document system management information centre, transportation vehicles, and minor furniture items for the implementation unit. For procurement of goods under the project, the following methods will be used: ICB, Shopping and Direct Contracting, when justified. The procurement will be done using the Bank's SBDs for all ICB packages. Contracts for goods will be grouped in bid packages as much as feasible. Detailed equipment packages would be prepared based on the annual procurement plans.

International Competitive Bidding (ICB). Goods packages estimated to cost US$100,000 equivalent and above per contract would be procured through ICB. IT equipment and software would be procured as separate packages and using a single- stage procurement procedure, because these hardware and software items are basidstandard information technology goods that do not require critical compatibility characteristics.

64 Shopping: Goods estimated to cost less than $100,000 equivalent per contract can be procured under Shopping procedure on the basis of three written price quotations obtained from qualified suppliers. In case ofprocurement of IT hardware and software by Shopping, when soliciting price quotations, the firms (authorized dealers) in the country registered at the Bank’s web-site for IT procurement should be solicited in addition to the other available firms.

Procurement of Works: only one minor works contract (not exceeding $5,000 equivalent, including the VAT) for renovation of the office of the Project Coordination Team is planned under the Project with the financing under the Operating costs. Shopping procedure would apply with three written quotations requested and compared from at least three qualified contractors. Contract shall be on a lump sum basis for clearly defined scope of work.

Selection of Consultants: Consulting services from firms and individuals will be required (both local and international) to assist in implementation of all project components. Shortlist of consulting firms for services estimated to cost less than US$lOO,OOO equivalent per contract may be composed entirely of national consultants in accordance with the provisions ofparagraph 2.7 ofthe Guidelines.

The applicable selection methods will be as follows:

Quality and Cost Based Selection (QCBS) method will be a preferred method for a consulting assignments exceeding $100,000 equivalent per contract. Currently, only one contract for Twinning Partner is planned under this method;

Consultants QualiJications (CQ) will be used for contracts estimated to cost less than US$lOO,OOO equivalent in cases when the above method does not apply;

Least Cost Selection (LCS) method will be used for assignment of standard or routine nature such as Project audit, etc.

Single Source Selection (SS) may be used in exceptional cases as per provisions of the Guidelines and with IDA’S approval in all cases and irrespective of the contract amount.

Contracts with individual consultants (IC) may be used for services where teams of personnel are not required and where the qualification and experience of the individual consultant are the paramount requirements. Sole source contracting of individuals that may be required for some ad hoc training activities shall be done on prior review basis irrespective ofthe contract amount.

Training: Training is an important part of the project and will include project-related study tours, training courses, seminars, workshops and other training activities. It is planned that all Training will be included in the Twinning Partnership consultant’s contract. However, if during later project implementation there is a need for additional training activities outside ofthe Twinning Partnership these will be planned and procured

65 separately. Such costs may include costs of training materials, space and equipment rental, travel and per diem costs of trainees and trainers. Selection of consultants (lectures, facilitators, etc) required for preparation and conducting training activities would follow procedures set up for Selection of Consultants.

Operating Costs: Operating costs will include equipment for operation and maintenance, communications (e.g. email, telephone and fax), utilities, and minor office renovation costs. Operating costs will be incurred according to an annual budget satisfactory to the IDA and using procedures to be described in the Project Operational Manual.

B. Assessment of the agency’s capacity to implement procurement

An assessment of the capacity of the GKS to implement procurement actions for the project has been carried out by the IDA’Sprocurement specialist in December 2005. The assessment reviewed the possibility of undertaking of procurement functions by the organization being considered to be responsible for project procurement activities.

The GKS will be the main executing agency of the project and will be responsible for its overall management and implementation. To effectively carry out the implementation and daily project administrative work, there will be a project coordination team (PCT) of up to 5 staff. Specifically, this unit will coordinate project activities, manage reporting and auditing activities and ensure compliance with the procurement, disbursement and financial management policies and procedures. A procurement specialist will be hired by the GKS to conduct the procurement activities under the project. All other aspects of the project would be implemented by relevant GKS staff with the assistance of local and international consultants.

C. Procurement Considerations

The Country Procurement Assessment Review (CPAR) and the experience of other IDA- and IFI-funded projects indicate that project procurement could face the following challenges:

(i) There is lack of transparency in conducting the procurement in accordance with the current procurement regulations which creates possibilities for corruption, collusion and fraud; (ii) Government officials, who would be involved in project procurement through Tender Committees, may not be familiar with procurement procedures; (iii) The bureaucratic system creates opportunities for informal interference in the procurement process by senior officials;

The following strategy has been devised to mitigate the above project implementation risks: 0 To provide higher transparency of the project implementation it is recommended to publish relevant project implementation data on GKS website - advertisement, contract awards, and the progress reports from the implementing entities. All the

66 consulting contracts costing above US$lOO,OOO, ICB and NCB contracts for goods and services shall be published in the UNDB and DgMarket also in accordance with the IDA Guidelines. 0 Following the project effectiveness, a half day project launch workshop will be conducted by IDA staff for the GKS and PCT staff, including representatives of other concerned institutions involved in the project implementation; 0 For all procurement, the POM, to be adopted by effectiveness, would include procurement methods to be used in the project along with their step by step explanation as well as the standard sample documents to be used for each method; 0 GKS would create a data base of suppliers of the required goods and consultants (firms and individuals). The data base would also include information on current prices of goods. For this purpose, the GKS and PCT Procurement consultant would use all available internet resources, including the UN websites; and 0 GKS and the Procurement consultant should be trained on the Bank’s Procurement procedures during the first year ofimplementation.

D. Procurement Plan

GKS has developed a procurement plan (PP) for project implementation which provides the basis for the procurement methods to be used during project implementation. This plan will be approved by the Recipient and the IDA Project Team at the negotiations. The plan will be available in the project’s database and on the Bank’s external website when the project becomes effective. The Procurement Plan will be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. The procurement plan shall indicate the contracts subject to IDA’Sprior review.

Procurement Monitoring/Reporting

The GKS will maintain complete procurement files which IDA would review during supervision missions. Prior to the issuance of any invitation for bidding or request for proposals, the GKS will consult with the approved procurement plan and will follow respective procedures agreed with the IDA for such contracts. Monitoring reports on procurement progress would be submitted together with the FMRs.

E. Frequency of Procurement Supervision

In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment of the Implementing Agency has recommended two supervision missions per year to visit the field to carry out post review ofprocurement actions.

67 a, f

00 W Prior Review Threshold: The project procurement plan indicates which contracts will be subject to prior or ex-post review. As a guidance, the following thresholds will be used for the Bank’s prior review: a. All contracts under ICB procedure; b. All TORS for consulting services, irrespective ofthe contract value; c. Contracts with consulting firms under QCBS procedure and contracts with individual consultants estimated to cost US$20,000 or more each; d. All single source (with consulting firms), sole source (with individual consultants) or direct contracting (for goods contracts) irrespective of the contract amount.

The above thresholds can be subject to revision as the project implementation progresses and the implementation agency has acquired higher procurement capacity.

69 Annex 9: Economic and Financial Analysis TAJIKISTAN: Strengthening the National Statistical System

Economic The characteristics of this project do not lend themselves to the standard calculation of economic rate of return. As the main objective of this project is to enable national statistical agencies to provide reliable, timely and accurate statistics required for policy making, the benefits from the project can not easily be measured in monetary terms. However, investment in physical infrastructure and human resources associated with this project is expected to generate tangible economic benefits. First, improvements in the efficiency of statistical operations and agencies will result in efficiency gains through wider coverage of higher quality statistical outputs for given levels of resources. Second, improved data availability will enhance the potential for evidence-based decision making, at policy, program and project levels. Third, the project will help address the significant costs of missing or inaccurate data. In addition, the public goods nature of national statistics provides a strong rationale for public involvement in the statistical sector and the financing of statistical operations.

Financial The project is not amenable to standard financial analysis as national statistical offices have very limited opportunities for significant cost recovery. Therefore, only marginal financial returns are expected from this project. However, there can be several fiscal impacts through the Government’s increased ability to generate fiscal savings. First, improvement in fiscal and financial statistics should result in a more efficient budgeting process and public expenditure management. Second, streamlining of statistical operations would produce less labor-intensive statistical operations and potential savings in recurrent costs. Finally, although marginally, there would be an increase in Government revenue generated from data dissemination and through reduction in costs.

70 Annex 10: Safeguard Policy Issues TAJIKISTAN: Strengthening the National Statistical System

No safeguard policies are triggered by this project.

The safeguard screening category is S2 (no safeguard issues).

The environmental screening category is C (no adverse environmental

71 Annex 11: Project Preparation and Supervision TAJIKISTAN: Strengthening the National Statistical System

Planned Actual PCN review 10/2 1/2005 10/27/2005 Initial PID to PIC 10/2 1/2005 10/21/2005 Initial ISDS to PIC 10/2 1/2005 10/21/2005 Decision Meeting 02/07/2006 Appraisal 02/14/2006 02/14/2006 Negotiations 03 /2 0/2 00 6 04/18/2006 Board/RVP approval 04/10/2006 05/01/2006 Planned date of effectiveness 05/3 1/2006 05/3 1/2006 Planned date ofmid-term review 06/01/2008 06/01/2008 Planned closing date 06/30/2011

Key institutions responsible for preparation of the project: State Statistical Committee ofRepublic of Tajikistan Executive Administration ofthe President of the Republic of Tajikistan Aid Coordination Unit Ministry of Justice Ministry of Finance National Bank of Tajikistan Ministry of Labor and Social Protection ofPopulation Ministry of Health Ministry ofAgriculture Ministry of State Revenues and Duties

Bank staff and consultants who worked on the project included:

Name Title Unit Mustafa Dinc Economist/Statistician - TTL WB-DECDG Misha Belkindas Manager-Technical Advisor WB-DECDG Robert Schware Lead Informatics Specialist WB-CITPO Aziz Khaidarov Country Officer WB Dushanbe Office Fasliddin Rakhimov Procurement Specialist WB - ECSPS Norpulat Daniyarov Financial Management Specialist WB-ECSPS Nikolai Soubbotin Sr. Counsel WB-LEGEC Emily George External Reviewer DFID-UK Lucas A. Ojiambo Peer Reviewer WB-AFTP2 Neil Fantom Peer Reviewer WB-DECDG Mohammed Omar Hadi Sr. Program Assistant WB-DECDG

Bank funds expended to date on project preparation: 1. Bank resources: $45,000 2. Trust funds: 3. Total: $45,000

72 Estimated Approval and Supervision costs: 1. Remaining costs to approval: $65,000 2. Estimated annual supervision cost: $80,000

73 Annex 12: Documents in the Project File TAJIKISTAN: Strengthening the National Statistical System

Multi-year Integrated Statistical Plan (MISP), Republic ofTajikistan, March 16, 2005 Strengthening National Accounts: Action Plan for Tajikistan, June 2005 Project Concept Note Project Information Document Integrated Safeguard Data Sheet Marrakech Action Plan for Statistics, Minutes of the first meeting ofthe Advisory Board, October 26 and 27,2005, Washington, D.C. Chaired by Jim Adams, Vice President, Operations and Country Services, World Bank

74 Annex 13: Statement of Loans and Credits TAJIKISTAN: Strengthening the National Statistical System

Difference between expected and actual Original Amount in US$ Millions disbursements ProiectID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev’d PO84035 2006 FERGHANA VALLEY WATER RES 0.00 0.00 0.00 0.00 0.00 12.73 0.00 0.00 PO89566 2005 LAND REGIS & CADASTRE 0.00 0.00 0.00 0.00 0.00 9.81 0.35 0.00 PO89244 2005 ENERGY LOSS REDUCTION 0.00 15.00 0.00 0.00 0.00 17.78 0.00 0.00 PO81159 2004 COMMTY AGRIC & WATERSHED 0.00 0.00 0.00 4.50 0.00 4.30 0.09 0.00 MGMT (GEF) PO77454 2004 COMMTY AGRIC & WATERSHED 0.00 5.00 0.00 0.00 0.00 9.81 -0.56 0.00 MGMT PO69055 2003 EDUC MOD 0.00 13.00 0.00 0.00 0.00 16.88 0.55 0.00 PO75256 2002 PAMIR PRIV POWER 0.00 10.00 0.00 0.00 0.00 2.09 0.42 0.00 PO57883 2002 DUSHANBE WS 0.00 17.00 0.00 0.00 0.00 7.70 0.56 0.00 PO08860 2002 POV ALLV 2 0.00 13.80 0.00 0.00 0.00 7.70 0.57 0.00 PO67610 2000 LAKE SAREZ RISK MITIGATION 0.00 0.47 0.00 0.00 0.00 0.31 0.21 0.21 PO58898 2000 RURAL INFRA REHAB 0.00 20.00 0.00 0.00 0.00 4.71 1.66 -5.41 PO49718 1999 FARM PRIV SUPPORT 0.00 20.00 0.00 0.00 0.00 0.25 -3.38 -0.08 Total: 0.00 114.27 0.00 4.50 0.00 94.07 0.47 - 5.28

TAJIKISTAN STATEMENT OF IFC’s Held and Disbursed Portfolio In Millions ofUS Dollars

Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. Eskhata Bank 1.oo 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2003 Giavoni 0.00 3.00 0.00 0.00 0.00 3.00 0.00 0.00 2002 Pamir Energy 4.50 0.61 0.00 0.00 0.00 0.61 0.00 0.00 2005 SEF AKFED MB Taj 0.00 0.67 0.00 0.00 0.00 0.67 0.00 0.00 2002 SEF FOM 0.22 0.00 0.00 0.00 0.22 0.00 0.00 0.00 2004 SEF FOM 0.50 0.00 0.00 0.00 0.25 0.00 0.00 0.00 2002 SEF Telecom Tech 0.17 0.00 0.00 0.00 0.17 0.00 0.00 0.00 Total portfolio: 6.39 4.28 0.00 0.00 0.64 4.28 0.00 0.00

Approvals Pending Commitment

~ FY Approval Company Loan Equity Quasi Partic.

Total pending commitment: 0.00 0.00 0.00 0.00

75 Annex 14: Country at a Glance TAJIKISTAN: Strengthening the National Statistical System

Europe 8 POVERTY and SOCIAL Central Low- development diamond" Tajikistan Asia income 2004 I Population, mid-year (millions) 6.4 472 2,338 Life expectancy GNIpercapita (Atlasmethod, US$) 280 3,290 5M GNI(Atlasmethod, US$ billions) 1.8 1,553 1,184 Average annual growth, 1998-04 Population (%) 0.8 -0.1 1.8 GNI Gross Labor force (%) 2.4 -0.5 2.1 per - primary Most recent estimate (latest year available, 1998-04) capita enrollment Poverty (%of populatio n belo wnatio nalpo verty line) Urban population (Omoftotalpopulation) 25 64 31 Life expectancyat birth (years) 66 68 58 infant mortality(per lOOOlive births) 76 29 79 I Chiid malnutrition (%ofchildren under5) 44 Access to improved watersource Access to an improved watersource (%ofpopulation) 58 91 75 Literacy(Xofpopu1ation age 15+) 99 97 61 Gross primaryenroiiment (%ofschool-age population) 111 MI 94 -Tajikistan Male ID x13 x11 Lo w-income gro up Female x18 a1 68

KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1984 1994 2003 2004 Economic ratios' GDP (US$ billions) 1.3 1.6 2.1 Gross capital formation1GDP 36.5 18 .O 9 .. .o Trade Exports of goods and serviceslGDP .. 41.6 53.2 54.9 Gross domestic savingsiGDP .. 25.0 4.3 -1.0 Gross national savingslGDP .. 26.7 29.7 -4 .O

Current account baiance1GDP -11.1 1.7 -1.9 Domestic Capital Interest paymentslGDP .. 0.0 0.9 savings formation Total debtlGDP .. 43.1 75.1 Total debt serviceiexports 0.1 8.4 Present value of debtlGDP 60.4 Present value of debtlexports 88.8 Indebtedness 1984-94 1994-04 2003 2004 2004-08 (average annuaigrovdh) -Tajikistan GDP -7.5 3.8 a.2 x1.6 6.1 GDP percapita -9.9 2.7 9.0 9.4 5.3 ~ Lo wincome group

STRUCTURE of the ECONOMY 1984 1994 2003 *Oo4 Growth of capital and GDP (Oh) (%of GDP) Agriculture .. 24.0 23.4 100 - Industry .. 41.0 23.6 Manufacturing .. 25.6 18.7 Services .. 35.0 53.0

Household final consumption expenditure .. 55.3 67.4 .. , -50 General gov't final consumption expenditure .. 29.7 6.3 imports of goods and services .. 53.1 66.9 64.9 -GCF -GDP - I 1484.94 1994-04 2003 2004 Growth of exports and imports (%) (average annualgtuvdh) Agriculture -7.6 4.2 9.6 Industry -4.2 2.8 x1.2 Manufacturing -2.2 2.7 a.2 Services -4.0 4.6 11.0 Household final consumption expenditure .. 7.3 General gov't final consumption expenditure .. -7.6 Gross capital formation -7.3 -4.6 11.0 " ~ -Exports -Inports Imports of goods and services .. 0.8 2.9 - I

76 Tai ikistan

PRICES and GOVERNMENT FINANCE 1984 1994 2003 2004 Inflation (Oh) Domestic prlces (%change) Consumer prices 1.1 16.4 7.3 Implicit GDP deflator 22i.O 27.9 77 .O Government finance (%of GDP,includes current grants) lo Current revenue 53.9 77.3 15.6 99 00 01 02 03 04I I Current budget balance 9.1 4.8 3.3 Overall surplusldeficit -5.2 -1.8 -3.2

TRADE 2003 1984 1994 2004 Export and import levels (US$ mill.) (US$ millions) 798 1,x)8 Total eqorts (fob) 559 11.500 1 Aluminum 213 430 484 I Cotton fiber 155 193 202 11 000 Manufactures 45 54 75 Total imports (cif) 686 1,004 1,307 Food 99 81 x)6 500 Fuel and energy B2 159 207 Capital goods 67 82 w7 0 98 99 00 01 02 Eqort price index(2000=WO) 97 Import price index(2000=WO) w2 IExports e Imports Terms of trade (2000=WO) 95

BALANCE of PAYMENTS 1984 1994 2003 2004 Current account balance to GDP (Oh) (US$ millions) Eqorts of goods and Services 560 827 1,140 5: Imports of goods and services 715 1,040 1,348 I Resource balance -155 -20 -292 Net income -29 -90 -92 Net current transfers 25 329 Current account balance -149 26 -40 Financing items (net) M8 0 79 Changes in net reserves 1 -39 -39 Memo: Reserves including gold (US$ millions) 1 t38 184 Conversion rate (DEC.iocai/US$j 1.33E-2 3.1 3.0

EXTERNAL DEBT and RESOURCE FLOWS 1984 1994 2003 2004 Composition of 2003 debt (US$ mill.) (US$ millions) Total debt outstanding and disbursed 580 1,166 0 0 IBRD G 82 I IDA 0 228 Total debt service 0 89 IBRD 0 0 IDA 0 2 Composition of net resource flows Official grants 63 78 Official creditors 777 0 Private creditors 0 -28 Foreign direct investment (net inflows) f2 32 E Portfolio equity(net inflows) 0 0 World Bank program 0 t3 l Commitments A - IBRD E- Bilateral Disbursements 0 0 B -IDA D - Otkmltiiatwal F - Fnvate Principal repayments 0 0 C-IMF G- Short-ter

77 Annex 15: Governance and Accountability Issues TAJIKISTAN: STRENGTHENING NATIONAL STATISTICAL SYSTEM

Overview

The project aims to improve efficiency and effectiveness of the National Statistical System to enable it to provide relevant, timely and reliable data for evidence-based policy making in support of Government's poverty reduction strategies and the process of economic development. Though GKS will be the implementing agency, the weak country governance and accountability systems still pose substantial fiduciary risks for the project implementation.

0 bj e'ctive

The objective of this annex is to present mechanisms that will strengthen the control over the project implementation, mitigate the risk of corruption, collusion and fraud and will ensure that project objectives are achieved. The annex identifies potential risks arising from the fragile governance and accountability environment and presents mechanisms to be integrated into the Project Operation Manual (POM) to address these risks. This annex was discussed with GKS and ACU, which are committed to the issue of strengthening public investment efficiency, transparency and integrity.

Strategy

GKS recognizes the inherent risks of project implementation in such a high-risk environment as Tajikistan. The project proposes to limit the potential risks related to governance issue in a systematic manner by actively promoting greater transparency, accountability and integrity through proper project design and implementation. These actions can be summarized as follows:

1. Twinning Arrangement: It is envisaged that a twinning (partnership) relationship will be established between GKS and one of the well-established statistical offices from developed countries. Under this arrangement, the GKS will prepare detailed TOR acceptable to IDA for each consulting and training activity and sign one contract for all activities that the twining partner will carry out. It is anticipated that this will cover most of the consulting and training activities that the project will finance. This approach will significantly reduce the transaction time and cost of implementation, as well as the risk of improper management ofproject funds. 2. Project Implementation Arrangements: Under the proposed project implementation set- up, the relevant GKS staff will take all responsibility for the project implementation. Local consultants who are experts in procurement and financial management issues will assist GKS to administer day to day activities of project implementation. This arrangement, where no stand-alone PIU is established and the whole responsibility lies with the relevant government agency will foster efficient, effective and accountable procurement execution, contract management and monitoring of project outcomes. Local consultants will be selected based on merit and provided with the necessary training in the relevant areas ofproj ect implementation.

78 3. Results-Oriented Monitoring and Evaluation (M&E) Framework: A results-oriented M&E framework has been developed under the MISP and was used as the basis for the project’s M&E plan to track progress and demonstrate the impact ofproject activities and implementation arrangements. 4. Enhanced disclosure and transparency: A proactive attitude and approach has been adopted relating to transparency and public dissemination of project-related information, including through assistance of the Country Office’s Public Information Assistance and use ofthe Bank’s PIC to be soon established in Tajikistan. All project related information (such as the information on the twinning partner, suppliers and contractors, progress reports, etc.) will be regularly posted at the GKS website to eliminate unqualified firms and/or individuals from participating in the project activities as consultants or suppliers. 5. Strict Adherence to the Bank’s Procurement Guidelines and Procedures: Detailed procurement guidelines will be implemented to promote efficient and timely procurement, and minimize procurement-associated risks. In addition, external presence by civil society and donors at bid opening is strongly encouraged. 6. Strengthened Financial Management Guidelines and Procedures: Detailed procedures for strengthened financial controls, including payment validation procedures, have been designed for all project activities to mitigate fiduciary risks. 7. Complaints Handling Mechanisms: Mechanisms for effective and transparent handling of complaints by the project Steering Committee are included in the Project Operational Manual. 8. Sanctions and Remedies: The project has zero tolerance for corruption, collusion and fraud. Any suspicion of such practices shall warrant immediate investigation with severe penalties for any party found culpable of such practices.

Critical Success Factors

Ownership and Support. The success of the project depends on continued support from GKS and selected line-ministries, such as Ministry of Justice and Ministry of Finance. In light of the twinning arrangement twinning partner’s role will also be very important for the successful implementation ofthe project.

Intensive Supervision. Even strengthened project implementation procedures and guidelines may not be enough to completely eliminate potentially corrupt and fraudulent activities. It is highly conceivable that some vested interests will seek to adapt and discover new methods to maintain their position. Therefore, given the weak capacity environment the task team will pay particular attention to the governance issue in its intensive supervision efforts, which will be reflected in the Implementation Summary Reports and Aide-Memoires.

79 PART 11: MITIGATION MEASURES

Twinning Arrangement

The Marrakech Action Plan for Statistics (MAPS) Advisory Board3 recommended greater use of statistical offices of developed countries through a twinning mechanism to help reduce the risk of implementation of capacity building projects that could be constrained by the lack of expertise and technical assistance.

Following this recommendation the project will help GKS to establish a twinning relationship with one ofthe well-established statistical offices from developed countries. It is possible to have a twinning arrangement with a consortium formed by two or more statistical offices from developed countries. The twining partner will carry out most of the consulting and training activities based on the detailed TORs prepared by GKS that are acceptable to IDA. Under such an arrangement, the number of contracts to be signed will be significantly reduced that will, in turn, reduce the risk of any wrongdoing and improper management of project funds. Another important aspect ofthis approach is that the transaction time and cost ofimplementation will also be reduced.

Project Implementation Arrangements

Project implementation will be carried out by GKS with assistance in fiduciary and coordination aspects of the Project Coordination Team comprising of local consultants. Overall project supervision and evaluation responsibility will lie with the Project Steering Committee that will consist of high-level representatives from the Government. Terms of Reference (TORs) describing the roles and responsibilities for all key project personnel have been prepared by the GKS, agreed with the IDA, and included in the Project Operational Manual (POM). These TORs and POM will form the basis for annual reviews of the project governance and accountability arrangements.

GKS shall prepare appropriate procedures and guidelines related to all project activities such as procurement, financial management and reporting, record keeping, complaints handling and M&E. These guidelines and procedures shall be included in the POM and be periodically reviewed by GKS.

Project Steering Committee (PSC) will be established by the Government to ensure appropriate level of commitment and support from various government agencies and ministries. The PSC will be chaired the Presidential State Advisor on Economic Policy and will include the chairman of GKS, deputy Ministers of Finance, Justice who are familiar with the project, and Head of Aid Coordination Unit. PSC will meet twice a year and perform mainly the function of ensuring interdepartmental interaction, and exercising monitoring and evaluation ofproject progress.

80 GKS will be the main executing agency of the project and will be responsible for its overall management and implementation. If needed, it will be assisted in substantive issues by local and international consultants to be selected on merit basis and in accordance with the Bank’s guidelines.

Project Coordination Team (PCT) of up to 5 persons will be in charge of efficiently carrying out the implementation and administrative work. A project coordinator who is an expert in project management, a financial management specialist, a procurement specialist and an assistant will be hired by the GKS. Specifically, this unit will coordinate day-to-day project activities, manage reporting and auditing activities and ensure compliance with the procurement, disbursement and financial management policies and procedures. PCT will report to the chairman ofGKS.

In order to build capacity and reduce governance risks the project will pay particular attention to fiduciary training for GKS and PCT staff. In particular it is envisaged that GKS and PCT procurement staff will undergo in-country training prior to project effectiveness and, if necessary, thereafter abroad in World Bank procurement guidelines and Government procurement regulations to ensure compliance with such processes.

The financial management staff of GKS and PCT will also be trained in-country and, if needed, abroad on financial management and reporting, including the preparation and utilization of World Bank Financial Monitoring Reports (FMRs). The FMR will provide an opportunity to strengthen fiduciary oversight by integrating procurement, implementation and financial management;

Results-Oriented Monitoring and Evaluation (M&E) Framework and Action Plan

The Project Steering Committee (PCS) will play an important role in monitoring and evaluation of the project implementation and its expected outputs and outcomes. PCS shall endorse and monitor the implementation ofthe project and results-oriented M&E indicators.

GKS with technical assistance of the Project Coordination Team (PCT) shall develop, monitor and review the results-oriented M&E indicators and when necessary revise and update them. GKS shall also review M&E reports prepared by PCT, particularly in relation to tracking progress and demonstrating the impact of proj ect activities and implementation arrangements.

GKS will be responsible for the submission of the M&E reports to the Government and the Project Steering Committee.

Enhanced Disclosure and Transparency

PCT will make the below activities publicly available within 20 days through the GKS website:

0 All annual procurement plans and schedules, including all updates thereof; 0 All short-lists of consultant firms and contractors/suppliers together with the names and dates ofall expressions ofinterests received;

81 In the case of pre-qualification, all lists of pre-qualified contractors and suppliers together with the names and dates ofproposals received; Summaries of all bidding documents as well as all requests for proposals issued in accordance with the procurement provisions of this agreement;

PCT will also make the activities listed below publicly available within 1 month through the GKS website;

All annual audit reports (financial or otherwise, and including qualified audit reports) and audit management letters prepared in accordance with the financing agreements for this project, and all formal responses and follow-up actions of the government; the disclosure of audit reports will be completed not later than 30 days after receipt of these reports by project management; All World Bank mid-term review reports prepared for this purpose, in accordance with the legal agreement;

Strict Adherence to Procurement Guidelines and Procedures

PCT shall:

Place Specific Procurement Notices (SPN) in local media as outlined in the POM and, where necessary, on the UNDB and DgMarket websites; Specify within any SPN/Invitations to Bid, the requirement for all proposals to include clear and detailed specifications and cost breakdowns for all proposals NOT impose any restrictions (geographic or otherwise) to limit the participation of consultants/bidders; If needed, invite representatives of end-users, NGOs and CSOs to attend bid openings; Prepare and maintain reports of bid openings for all contracts subject to prior-review by the World Bank; Seek at least three quotations in cases of shopping; File and maintain procurement documents in accordance with POM guidelines. Ensure that all SPN and information on bid opening are placed on GKS website; Maintain, and annually publish on GKS website, a project price data-base of commonly procured items (including office supplies) from previous competitively tendered contracts; Ensure Due Diligence and Disclosure by Bidders. Explicitly state in all SPNs for all procurements valued at or more than US$lOO,OOO the requirement for all firms to submit as part of their proposal their full particulars including: o The postal and email address, telephone and fax numbers, URL of the registered office, and address of the principal place of business if different from the registered office; o The names, addresses and telephone and fax numbers of all partners and shareholders who hold a 10 percent or greater share in the firm; o The names, addresses and telephone and fax numbers of all principal officers of the firm;

82 o A banker’s opinion statement ofthe firm; e Have the right to reject a firm’s proposal if any of the above information is not disclosed; e Require all individual consultants to disclose a signed statement of any relationship up to the third degree with any gradellevel Head of Department official from the agencies involved in project implementation, as the case may be; e Be responsible for conducting adequate checks and due diligence on any information and/or signed statements provided by firms and individual consultants.

Strengthened Financial Management and Payment Validation

PCT shall require:

Verification of satisfactory completion of any workshops and training activities prior to reimbursement ofany expenses incurred by the participants or the Project; Signature of at least 2 authorized individuals outlined in the POM for any withdrawals of funds from the project designated account; Minimal document requirements for payment authorization, to be retained at the GKS and attached to the relevant payment voucher for audit purposes, even if not required to be submitted to the treasury paymentkeld office; Formal invoices on company letterheads, with complete contract addresses and tax registration number; For individual consultants, copies of ID cards to be appended to invoices; For claims for reimbursable expenses as specified in the contract, original third party invoices and receipts (including travel tickets, hotel bills, contracts for rental of office equipment, receipts for operating expenses); For goods, warrant cards, evidence of delivery (packing list or transportation documents and acceptance, and certificate of origin if imported); For training, workshops and seminars, signed list of attendees and photographs from events.

GKS with assistance of the PCT shall be responsible for:

Preparation and submission of consolidated monthly, quarterly, semi-annual and annual progress and financial report to the Government, PSC and ACU.

Complaints Handling Mechanisms

All complaints received will be properly registered, reviewed and submitted to the PSC for consideration. PSC will serve as the complaint handling body for the project. Detailed procedures for complaints handling are set out in the POM and will be reviewed on a semi- annual basis. The Project Coordination Team shall periodically review the results of complaints handling mechanism for the project, particularly provisions for follow-up investigations of serious and unresolved complaints by the internal auditors, and/or third party audit to ensure independency and reliability ofthe system.

83 Sanctions & Remedies

0 Upon decision of the PSC, the GKS requires the concerned ministry/institution to take action, including prosecution, against staff involved in corruption, collusion, nepotism.

0 GKS, in coordination with ACU, will put in place by project effectiveness a system of blacklisting for companies and individuals that engage in collusion or have produced outputs ofunacceptably poor quality.

0 Upon decision of the PSC the GKS shall apply a 'one-strike' policy to all contractors and consultants - any case of complicity in corruption, collusion, nepotism and/or fraud will lead to dismissal, disqualification from all further project activities and possible prosecution.

PSC may drop/discontinue an entire sub-component if it fails to properly deal with issues of corruption, collusion, nepotism, fraud and/or persistent procurement irregularities.

84 IBRD 33493 N ° 38 60 Miles 80 Kilometers CHINA 40 60

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NOVEMBER 2004