REPUBLIKA E SHQIPËRISË Donor Round Table IPS Implementation: 2006-08 May 6 2006 HOTEL SHERATON Department of Strategy & Donor Coordination

Purpose of Presentation to brief the Roundtable on: Government Actions on IPS implementation IPS 2006-08 Implementation Plan Government-Donor Collaboration

What is IPS? IPS constitutes a broad planning and monitoring framework designed to ensure that the Government of Albania’s core policy and financial processes function in a coherent, efficient and integrated manner Not a new or separate process

IPS Implementation Time Frame 2006: Process design, establishing central IPS structures, capacity building of central institutions, oversight structures in ministries, expanding awareness of IPS, extending the basic IPS methodologies across all ministries, and assessing each ministry’s needs . 2007: Full implementation IPS processes in ministries, secure necessary technical assistance, organizational development, and increasing ministry planning capacity. 2008: Quality of implementation, strengthening accountability mechanisms and increasing ministry service delivery capacity.

Core IPS Processes National Strategy for Socio-Economic Development (NSSED) Mid Term Budget Planning (MTBP) European Integration (EI) Government Programme (GP) Public Investment (PI) External Assistance (EA)

Initial Government Decisions Initial decisions by Government have paved the way for IPS implementation approved IPS proposal in Nov. 2005 created new department (DSDC) established Strategic Planning Committee (SPC - chaired by PM) established Government Modernization Committee (GMC - chaired by DPM) transferred public investment management/external assistance administration to MoF

IPS Oversight Core IPS Processes Council of Ministers Core IPS Processes NSSED MTBP European Integration Government Programme Public Investment External Assistance Inter-Ministerial Committee chaired by the Prime Minister Strategic Planning Committee Government Modernization Committee Inter-Ministerial Committee chaired by the Deputy Prime Minister DSDC, with MoF and MEI, to provide central coordination Minister/ Ministry Working Groups on Strategy, Budget & Integration chaired by the Minister with senior Dept. Directors IPS Support Group to facilitate donor coordination with the government Sector/Programme Working Groups

IPS Accountability LEVEL Centre Ministries Decision-Making Steering Council of Ministers Strategic Planning Committee Government Modernization Committee Minister Steering IPS Coordination Group Standing Committee on Strategy, Budget & Integration Working DSDC, MoF, MEI staff joint working groups Ministry Working Groups (established by GSBI)

DSDC Mandate Oversee and coordinate the development and implementation of the Integrated Planning Strategy (IPS) as part of a broader government modernization program Develop the National Strategy for Development and Integration (NSDI) and ensure the quality, coherence and effective coordination of the NSDI; Maximize the contribution of external assistance towards achieving national policy priorities

Recent SPC Decisions SPC has met 3 times and approved: Framework for a new National Strategy IPS Coordinating Mechanisms MTBP Methodology IPS Calendar Macroeconomic Framework MTBP Preparation Ceilings

1 - Framework for New National Strategy Before IPS, the strategic planning process was: not comprehensive; for example, it did not address fundamental priorities such as European and Euro-Atlantic integration lacking direction by the Council of Ministers disconnected from medium-term budgeting

1 - Framework for New National Strategy Under IPS, the following changes are being made: the new national strategy (NSDI) will be a coherent synthesis of a full set of sector strategies; European and Euro-Atlantic integration planning processes will be fully incorporated line ministries will prepare sector strategies that meet minimum standards; the Council of Ministers will be provided with necessary information to set strategic directions within a sound fiscal framework strategic and budget planning will be components of a single public expenditure management system

1 - Framework for New National Strategy Name: National Strategy for Development and Integration (NSDI) 7-year planning horizon – parallels EC foundation will be 23 sector strategies, plus a limited number of cross-cutting strategies a phased approach will be adopted; the NSDI document will be approved by February 2007 (including new set of high-level indicators and basic sector strategies) but an update is envisaged in 2008 to include sectors that did not initially meet the new standards sector strategies will fully reflect European and NATO Integration commitments the sectors to develop a medium- to long-term strategy document have been designated annual progress reports for 2005 and 2006 will continue, but in a streamlined format

1 - National Strategy for Development and Integration Instruction for development of NSDI issued in May 2006 Line ministries submit basic or full sector and crosscutting strategies by October 2006 Final draft of NSDI approved by February 2007 ahead of the beginning of the 2008-10 MTBP preparation cycle assess sector strategy status for each ministry/ major agency all ministries complete basic sector strategy all ministries complete full sector strategy following in-depth work Updated NSDI document approved Annual Progress Report (2007 results) NSDI document approved 2006 2008 2007

2 - IPS Coordinating Mechanisms Pre-IPS Post-IPS several ministry steering/working groups were established for various core programs 1. each ministry will have a single Standing Committee on Strategy, Budgeting and Integration (all senior management) each core program issued its own planning calendar, deadlines and instructions 2. an Integrated Planning Calendar will be issued to ministries at the beginning of each year separate training programs were provided for each core program 3. combined training programs will be delivered wherever feasible ministry TA needs identified by individual donors; 4. joint assessment by DSDC, MoF, MEI to determine combined needs (including TA); coherent IPS TA program to be developed for each ministry

2 - IPS Coordinating Mechanisms Pre-IPS Post-IPS ministry plans developed separately (NSSED, EUI) 5. key commitments from all programs incorporated in Ministry Integrated Plan each core program established its own monitoring criteria, measures and reporting systems 6. a single Ministry Monitoring Plan will be negotiated annually with each ministry several databases and tracking systems were established 7. an IPS Information System (IPSIS) will serve as the primary system for reporting on achieving the Ministry Monitoring Plan progress reports for different programs (e.g., NSSED and European Integration) were prepared separately 8. Ministry Annual Reports will present the results achieved vs. the targets set for all programs

Core Programs: MTBP 4 ministries, with previous experience, will do full MTBP in 2006 All other ministries will do basic MTBP All ministries will do good quality, full MTBP by 2008 4 ministries do full MTBPs; others do basic MTBPs assess ministry capacity & TA needs all ministries complete satisfactory full MTBPs all ministries attempt full MTBPs 2006 2008 2007

Core Programs:EU Integration SAA/Legal Approximation Plan/Acquis establishes a far-reaching policy and legal agenda with significant fiscal implications Administrative capacity will need to be raised EU will increasingly be source of external assistance IPS ensures that EUI is fully reflected in every relevant sector strategy and its initiatives are costed and funded through MTBP EU commitments will be included and tracked in overall IPS Information System

Core Programs: Government Programme Government Programme was an extensive document covering most sectors to 2009 NSDI and MTBP processes will take GP into account policy directions will be reflected in sector strategies program changes in MTBP action plan tracked in MIS

Core Programs:Public Investment New unit in Ministry of Finance is being established, trained New process for identifying, approving and monitoring domestic and foreign-financed public investments to be approved in late 2006 New process introduced and tested in 2007 (driven by sector strategies) IT system to be designed in 2007 for implementation in 2008 External assistance to be incorporated interim process in MTBP; build staff capacity design and approve new public investment process test new process; reflect in 2007 MTBP design, test and implement IT system for PI new, PI process, including external assistance, reflected in 2008 MTBP 2006 2008 2007

Core Programs: External Assistance Donor coordination process to be designed in 2006 IPS funding mechanism by end 2006 New public investment process to include foreign-financed projects Full integration with public investment IT system in 2008 implement IPS Funding Mechanism integrate EA into PI IT system design donor coordination process produce basic EA strategy establish EA unit produce full EA strategy 2006 2008 2007

IPS Donor Support 2006 Donor Assistance: Immediate Support to the IPS – UNDP Mechanism: full establishment of DSDC’s functions and linkages with key counterparts. IPS Information System. Assessment of needs and set up of a workable IPS Information System (IPSIS) that identifies macro and sector indicators Workshops, round able and other advisory & support services to DSDC, including assisting the DSDC develop 3-year IPS communications and training strategies to be implemented by the WB Trust Fund. 2007 - 2008: This TA will compliment current TA already in place supported by DFID and the WB in the Department for Strategy and Donor Co-ordination (DSDC).

Costing of IPS implementation plan 2007-2008 2007 – 2008 Donor Assistance The aim of the report is to provide an initial indicative cost of technical assistance (TA) needed to support Integrated Planning System (IPS) implementation over the period 2007-2008.

IPS Basket Fund – Methodology Step 1: Grouping of Ministries according to their TA needs based on capacities to implement IPS: low need (4); medium need (4); and high need (8) and and identification of central level institutions: DSDC, MoF, MEI, INSTAT. Step 2: Identification of a list of IPS support TA packages to support central institutions and line ministries - 11 packages Step 3: Costing Assumptions: e.g., average monthly cost of 30,800 Euro (1400 x 22) international TA, average monthly cost of 6,600 Euro (300 x 22) of local experts. Step 4: Determination for each TA package of output, activities, and input needed Step 5: Identification of costs for each group of institutions and TA package Step 6: Identification of overall cost TA packages needed to support implementation of IPS Step 1 - Grouping based on following assumptions: existence/or not of a sector strategy existence/or not of a policy department, staffing issues experience with policy analysis/impact assessments previous participation/or not in MTBP process strengths/or weakness of budget department The area of IPS for which each ministry is responsible Step 2 - The following cost items are identified and used for costing TA packages: International Experts Cost Local Experts Cost Miscellaneous Costs Capital Requirements international experts - A daily rate/cost of 1400 Euro/day 22 working days per months - average monthly cost of 30,800 Euro (1400 x 22): experts direct fee overheads of the company travel expenses accommodation allowances secretarial support communication expenses Cost of local experts - Daily rate 300 Euro/day, 22 working days per month, - average monthly cost of 6,600 Euro (300 x 22) of local experts. Miscellaneous cost - different activities associated with delivery of TA training, public events, conferences, workshops, study tours, publications, etc.

IPS Basket Fund – Methodology The total cost of the 10 packages is approximately 10 million euros. This cost is an initial and is still under consideration and subject to further approval process called Joint Assessment: detailed work will be undertaken during 2006 to identify the more detailed needs of the line ministries with regards strategic planning, budgeting and EU integration. Step 1 - Grouping based on following assumptions: existence/or not of a sector strategy existence/or not of a policy department, staffing issues experience with policy analysis/impact assessments previous participation/or not in MTBP process strengths/or weakness of budget department The area of IPS for which each ministry is responsible Step 2 - The following cost items are identified and used for costing TA packages: International Experts Cost Local Experts Cost Miscellaneous Costs Capital Requirements international experts - A daily rate/cost of 1400 Euro/day 22 working days per months - average monthly cost of 30,800 Euro (1400 x 22): experts direct fee overheads of the company travel expenses accommodation allowances secretarial support communication expenses Cost of local experts - Daily rate 300 Euro/day, 22 working days per month, - average monthly cost of 6,600 Euro (300 x 22) of local experts. Miscellaneous cost - different activities associated with delivery of TA training, public events, conferences, workshops, study tours, publications, etc.

IPS Basket Fund – Methodology Key issues: when, how and who - When: we need TA active by January 2007 in order to ensure there is an overlap with the current Technical Assistance already in place in DSDC funded by WB and DFID. - How: some of the packages should be merged together for ease of implementation. - Who: The Government will have the main control on the quality of TA. Step 1 - Grouping based on following assumptions: existence/or not of a sector strategy existence/or not of a policy department, staffing issues experience with policy analysis/impact assessments previous participation/or not in MTBP process strengths/or weakness of budget department The area of IPS for which each ministry is responsible Step 2 - The following cost items are identified and used for costing TA packages: International Experts Cost Local Experts Cost Miscellaneous Costs Capital Requirements international experts - A daily rate/cost of 1400 Euro/day 22 working days per months - average monthly cost of 30,800 Euro (1400 x 22): experts direct fee overheads of the company travel expenses accommodation allowances secretarial support communication expenses Cost of local experts - Daily rate 300 Euro/day, 22 working days per month, - average monthly cost of 6,600 Euro (300 x 22) of local experts. Miscellaneous cost - different activities associated with delivery of TA training, public events, conferences, workshops, study tours, publications, etc.

Challenges Coordination process Capacity Building IPS has not yet been communicated to ministries; this is the next challenge Coordination process Capacity Building

2006 – Transition Year 2006 will be a transition year for IPS establishment of new organizations implementation of new ministry structures design and approval of new methodologies new Organic Budget Law major training/IT/capacity building programs establishment of IPS external assistance funds although full implementation will occur over three years, concrete progress can and must be made in 2006

Key Goals for 2006 all ministries/major agencies produce a full or basic MTBP (serves as framework for 2007-09 Ministry Integrated Plan) all ministries produce a full or basic sector strategy all ministries establish a standing committee, led by senior management, to provide leadership for all core processes all Ministers present their 2007-09 Ministry Integrated Plans (June) and sector strategies (Fall) to the Strategic Planning Committee