BRAZIL
PROFISCO TOCANTINS
FISCAL MODERNIZATION PROGRAM OF THE STATE OF
TOCANTINS (PMF/TO)
(PROFISCO/TO BR-L1255)
LOAN PROPOSAL
This document was prepared by the project team consisting of Mara Cristina MacDowell
(FMM/CBR), Project Team Leader; Luiz Villela (IFD/FMM), Project Team Co-leader;
Ftima Cartaxo (FMM/CBR); Bernadete Buchsbaum (LEG/SGO); Fernando Glasman and
Carlos Lago (CSC/CBR); Adriana Sobral Coelho and Daniela do Nascimento (FMM/CBR);
Flvio Galvo, Eugenio Lira, and Rodrigo Lenzi (consultants); and Marina Massini
(IFD/FMM)
Under the Access to Information Policy, this document is subject to Public Disclosure
CONTENTS
PROJECT SUMMARY
I.
II.
III.
- ii -
ANNEXES
Annex I: Development Effectiveness Matrix (DEM) (summary)
Annex II: Results Matrix
Annex III: Fiduciary Agreements and Requirements
ELECTRONIC LINKS
REQUIRED
Link
1.
Plan of Action and Investment Plan 4 years, and Annual Work Plan (AWP) 18 months
IDBDocs35181395
2.
IDBDocs35181396
3.
IDBDocs35181397
OPTIONAL
Link
1.
Economic analysis
IDBDocs37041816
2.
Financial analysis
IDBDocs35183413
3.
IDBDocs35181399
4.
IDBDocs35181400
5.
IDBDocs35183400
6.
IDBDocs35183435
7.
IDBDocs35183484
8.
IDBDocs35186374
9.
Indicators table
IDBDocs35186376
- iii -
ABBREVIATIONS
AWP
CadSin
CCLIP
CGE/TO
CNPJ
COGEF
ComprasNet
CT-e
DARE
ECD
ECF
EFD
EGEFAZ
ESAF
GDP
GNRE
IBGE
ICMS
ICT
IPVA
IT
ITCD
LRF
NCD
NCI
NF-e
PAF
PCU
PGE/TO
PNAFE
- iv -
PROFISCO
RFB
SEFAZ/TO
SEINFRA/TO
SIAFEM
SIAT
SPED
UNDP
PROJECT SUMMARY
BRAZIL
FISCAL MODERNIZATION PROGRAM OF THE STATE OF TOCANTINS (PMF/TO)
(PROFISCO/TO BR-L1255)
INDIVIDUAL OPERATION UNDER THE CONDITIONAL CREDIT LINE FOR INVESTMENT
PROJECTS (CCLIP) FOR THE PROGRAM TO SUPPORT THE MANAGEMENT AND
INTEGRATION OF TAX ADMINISTRATIONS IN BRAZIL
(PROFISCO BR-X1005)
Financial terms and conditions
Borrower: State of Tocantins
Amortization period
Guarantor: Federative Republic of Brazil
Grace period:
Executing agency: The State of Tocantins, through its
Inspection and
Finance Department (SEFAZ/TO), in coordination with the
supervision fee:
State of Tocantins Infrastructure Department (SEINFRA/TO).
Source
Amount (US$)
20 years
5 years
*
Disbursement period:
5 years
LIBOR
*
US dollars from the Single
Currency Facility of the
Ordinary Capital
40,431,000
4,581,000
90
10
Interest rate:
Credit fee:
Total
45,012,000
100
Currency:
Project at a Glance
Objectives and description: The projects general objective is to make fiscal management in the State of Tocantins
more efficient and transparent, in order to: (i) increase the states own revenue; (ii) enhance the efficiency,
effectiveness, and control of public expenditure; and (iii) provide better services to citizens. Activities will be
financed under the following components and subcomponents:
1. Integrated strategic management: (i) organizational strengthening and integration of fiscal management; and
(ii) national and international interagency cooperation.
2. Tax administration and litigation: (i) more efficient and effective tax administration; (ii) better management of
the taxpayer registry and installation of the public digital accounting system; (iii) more efficient and effective
management of tax litigation.
3. Financial and property management, and internal control of fiscal management: (i) more efficient and
effective financial and accounting management; (ii) more efficient and effective management of Tocantins public
materials and property; and (iii) improved internal control, audit, and fiscal management mechanisms.
4. Management of strategic resources: (i) strengthening of mechanisms for fiscal management transparency and
communication with society; (ii) modernization of management and enhancement of information and
communication technology services in the finance area; and (iii) strengthening of knowledge management in the
finance area.
Special contractual condition precedent to the first disbursement of the loan proceeds. The borrower will provide
evidence, to the Banks satisfaction, that the special tendering commission has been created in SEFAZ (paragraph
2.12c).
Special execution condition. Procurement of consulting services for the development of information systems under the
project will be contingent upon the borrower presenting, to the Banks satisfaction, an independent consultancy report
with a diagnostic assessment of the current Integrated Tax Administration System (SIAT) and with the respective
indication of the best options for modernizing and integrating such information systems (see paragraph 3.6).
Exceptions to Bank policies: The borrower requests authorization to use Brazilian federal legislation on procurement
and contracting, as described in paragraph 2.4.
Project qualifies as:
SEQ [ ] PTI [ Sector [ ] Geographic [ ]
Headcount [ ]
]
* The credit fee and inspection and supervision fee will be established periodically by the Board of Executive Directors as part of its review of the
Banks lending charges, in accordance with the applicable provisions of the Banks policy on lending rate methodology for Ordinary Capital loans.
In no case will the credit fee exceed 0.75% or the inspection and supervision fee exceed, in a given six-month period, the amount that would result
from applying 1% to the loan amount divided by the number of six-month periods included in the original disbursement period.
1.1
This project is an operation under the Conditional Credit Line for Investment
Projects (CCLIP) BR-X1005, Program to Support the Management and
Integration of Tax Administrations in Brazil (PROFISCO), which was approved
by the Banks Board of Executive Directors on 5 November 2008 pursuant to
Resolution DE-132/08.
1.2
PROFISCOs main objectives are to: (i) raise potential tax revenue levels;
(ii) control tax evasion, fraud, and concealment; (iii) harmonize fiscal concepts,
conduct, and procedures, and expedite the identification and suppression of
unlawful practices; (iv) form intergovernmental cooperation networks and promote
continuous sharing of tax information, databases, and good practices; (v) raise the
productivity and effectiveness of finance administration, with positive
repercussions on revenue, financial results, public borrowing, and fiscal balance;
and (vi) expand and update support systems for public expenditure administration
and the decentralization of financial management.
1.3
1.4
In 2010 the State of Tocantins contributed about 0.5% of Brazils gross domestic
product (GDP), with growth of about 5%.1 The state economy is approximately
structured as follows: 17% agriculture, 24% manufacturing industry, and 59%
services, in which public administration accounts for 25%. Tocantins social
indicators fall below the national average.2 In 2010, 26.09% of the population of
Tocantins was considered poor,3 while the Brazilian average was 21.42%. The
states illiteracy rate in 2010 was 11.88% while the one for the country as a whole
was 9%.
1.5
Fiscal context. In 2010 the State of Tocantins collected own tax revenue of
R$1.6 billion, income from assets of R$252 million, and current federal transfers of
R$2.2 billion. That same year, own revenue accounted for 39.8% of total current
revenue, while the national average was 62.3%. Tax collection inefficiency was
2
3
Figures obtained from the Brazilian Institute of Geography and Statistics (IBGE).
IBGE data.
Percentage of people out of the total population with per capita household income below the poverty line.
-2-
calculated at 17.4% of potential revenue.4 Revenue from the goods and services
sales tax (ICMS) grew 110% in real terms, and revenue from the Motor Vehicle
Ownership Tax (IPVA) rose 450% between 1997 and 2010, thus helping to reduce
the states reliance on federal transfers.
1.6
1.7
The State of Tocantins has fulfilled all of the requirements of the Fiscal
Responsibility Law (LRF). As it is a new state that did not have bond debts in 1997,
it did not need to refinance its debt with the federal government, or adhere to the
Fiscal Adjustment Program (PAF) for the Brazilian States.
1.8
1.9
To fulfill its mission, SEFAZ/TO employs 608 state tax auditors and another
616 staff to carry out administrative tasks. The tax administration also has
426 temporary staff, all of whom are hired on a contract basis.
1.10
1.11
Progress and previous work with the Bank. In the last 10 years, SEFAZ/TO
pursued a process of institutional strengthening, largely financed by the Bank under
For more information, see: Miranda, B. et al. Eficincia Tributria dos Estados Brasileiros Mensurada com
um Modelo de Fronteira Estocstica Geograficamente Ponderada [Tax efficiency of Brazilian states
measured with a geographically weighted stochastic frontier model]. IPEA, Vol 42, No. 4 2011.
-3-
the National Fiscal Administration Program for Brazilian States (PNAFE) (loan
980/OC-BR), executed between 1997 and 2001. In the last decade, fiscal, taxation,
and financial management has achieved the following: (i) modernization of the
states taxpayer registry; (ii) creation of the School of Finance Management
(EGEFAZ); (iii) creation of the state fiscal education program; (iv) implementation
of the integrated financial administration system (SIAFEM); (v) implementation of
the electronic ICMS tax return; (vi) creation of the SEFAZ/TO Internet portal,
offering taxpayer assistance; and (vii) development of computerized systems for
control of tax revenues.
1.12
Challenges in the fiscal area for the State of Tocantins.5 Despite the good results
achieved to date with support from the PNAFE, Tocantins still faces major
challenges to promote the sustainability of its fiscal targets. The two most important
of these in relation to SEFAZ/TO are: (i) to increase its tax revenue levels; and
(ii) to strengthen its financial administration and public debt management capacity.
1.13
These challenges stem from the following constraints on state fiscal management:
(i) the tax collection potential is not tapped, and there is little information to support
tax administration efforts; (ii) difficulties in cross-referencing economic and fiscal
data, to support fiscal management; (iii) deficient services to taxpayers and the
internal public; (iv) shortcomings in the administrative collection of tax claims;
(v) failure to implement the National Synchronized Taxpayer Registry (CadSin);
(vi) lack of computerized tools to generate economic and tax information;
(vii) inefficient and ineffective generation of data and information for decisionmaking (budget, financial, assets) and accountability purposes; (viii) deficient
public debt management system; (ix) poor material and asset administration
performance; (x) deficient fiscal education program management; and (xi) lack of
computerized tax and financial administration systems, mainly as a result of
ineffective response to demand for information and communication technology
(ICT).
1.14
Country strategy and GCI-9. The Government of Brazil and the Bank have
recognized the importance of strengthening subnational fiscal management to the
success of social policies and economic development. Under these terms, one of the
six sectors given priority in the 2012-2014 country strategy with Brazil (document
GN-2662-1) is to improve the institutional capacity of public entities, with efforts in
the areas of public management and fiscal management. The main sector objectives
of the strategy in terms of fiscal management are: (i) to reduce institutional
disparities and inequalities between Brazilian tax administrations and promote
cooperation and integration among tax administrations at the three government
levels; (ii) to promote sustainable fiscal balance subnationally; and (iii) to improve
tax education and citizenship programs, as well as transparency initiatives and
dialogue with society. Moreover, this operation is aligned with the Banks
institutional priorities (Institutions for growth and welfare: municipal and other
See problems, solutions, and outcomes matrix at electronic link Matriz de Problemas, Soluciones y Resultados.
-4-
1.15
1.16
1.17
In general, implementing the model entails: (i) making a diagnostic assessment of the current situation;
(ii) proposing alternative processes to the business model being addressed; (iii) developing a computerized
system to support the management of business processes; and (iv) effectively implementing the model,
including the necessary infrastructure.
-5-
electronic tax invoice (NF-e), digital accounting record (ECD), digital tax
record (EFD), electronic bill of lading (CT-e), and the fraud-proof tax voucher
generator (ECF).
c. More efficient and effective management of tax litigation. This
subcomponent will finance improvements to the model for controlling the
management of tax litigation processes (collection of tax claims in the
administrative domain and in judicial processes).
1.18
1.19
-6-
1.20
The borrower will procure the following goods and services for the abovementioned components and subcomponents (paragraphs 1.16 and 1.19): (i) training
(contracting of courses, seminars, or other forms of training, as well as national and
international technical visits); (ii) consulting (individual consultants or consulting
firms, either national or international, to support or conduct project activities,
including computerized systems); (iii) computer hardware and ICT systems
(procurement and installation of hardware, computer networks, basic software, and
applications); (iv) equipment, materials, and operational support services
(procurement and installation of hardware, computer networks, basic software, and
applications); and (v) physical premises (construction, remodeling, and physical
improvement of operational and citizen/taxpayer service facilities).
Table 1.1: Overall budget by source (in U.S. dollars)
Categories
IDB
Local
Total
1. Project administration
1,262,000
109,000
1,371,000
848,000
109,000
957,000
414,000
--
414,000
39,016,000
4,399,000
43,415,000
2. Direct costs
2.1 Integration of fiscal management
2.2 Tax administration and litigation
2.3 Financial and property management, and
internal control of fiscal management
2.4 Strategic resources management
3. Contingencies
Total
Percentage
%
30.05
96.45
2,425,000
2,694,000
5,119,000
15,800,000
1,543,000
17,343,000
2,534,000
--
2,534,000
18,257,000
162,000
18,419,000
153,000
73,000
226,000
00.50
40,431,000
90%
4,581,000
10%
45,012,000
100%
100%
Note: Interest and financial charges will be paid by the borrower using own resources, and are not included
in the project.
1.21
The required electronic link Project Plan of Action and Investment Plan (Plan de accin y de inversiones
(PAI) del proyecto) provides detailed estimates of the costs of all project activities, which jointly make up the
total cost.
The Flexible Financing Facility for Ordinary Capital sovereign-guaranteed loans (document FN-655-1)
became effective on 1 January 2012. Pursuant to paragraph 3.2 of document FN-655-1, individual loan
operations would continue to be processed and approved under the Single Currency Facility (SCF/LCF) up
to that date. This has been interpreted to mean that any operation with a draft loan proposal that had already
been through the Operations Policy Committee (OPC) prior to 1 January 2012 (this one was approved by
OPC on 14 July 2011), had been processed in the context of the Single Currency Facility.
-7-
Source
IDB
LOCAL
TOTAL
%
TOTAL
40,431,000
4,581,000
45,012,000
100%
1.23
Financial analysis. Given the small scale of the operation, the project team made a
comparative analysis of the incremental financial costs and benefits arising from
implementation of the three outputs of greatest impact for the project. The analysis
considered the following: (i) the new ICMS inspection model (goods in transit and
business establishments) and measurement of auditor productivity; (ii) the new tax
claim recovery and administrative collection model; and (iii) redesign of the
inspection model for other revenue (IPVA, ITCD, and rates). The calculation
parameters used were as follows: (i) a 10-year horizon; (ii) 12.5% annual discount
rate; and (iii) average annual interest rate of 5.6%.
1.24
C.
1.25
The most important outcomes expected by the end of project execution are as
follows: (i) increase in tax revenue; (ii) increase in IPVA revenue adjusted for
expansion of the vehicle fleet; (iii) increase in registration as adjudicated tax debt of
ICMS values declared and not collected; (iv) increase in the recovery of recorded
tax claims; (v) reduction in the average amount of processing time in tax litigation
cases; (vi) increase in the system-based control of public debt contracts;
(vii) reduction in the average amount of time for audits and inspections; and
(viii) improvement in the quality of customer service. The expected outputs are:
9
10
The amounts shown in this table include direct costs and project management costs only.
The project's results matrix (see Annex II) shows output and outcome indicators for all of its actions, which
will be monitored by the Project Coordination Unit (PCU). For Bank purposes, only a representative set of
project indicators will be considered.
-8-
(i) a new computerized tax management model with capacity to issue all
management reports automatically; (ii) a new ICMS inspection model with
electronic monitoring of 100% of large firms, taxpayers with payment agreements,
and special tax regimes or substitutes; (iii) generation of the collection notice and
automatic registration as adjudicated tax debt (overdue) of 100% of declared but
unpaid ICMS within 48 hours; (iv) introduction of the new model for recovering
tax claims allowing for online submission of 70% of requests to pay in installments,
rather than in person as is the case today; (v) a new management system for the
IPVA, which generates a report indicating cases of failure to pay the tax;
(vi) integration of the SPED and NF-e databases, making it possible to generate at
least one management report based on cross-referenced data from the different
sources; (vii) a guarantee that 100% of taxpayers required to use the NF-e and CT-e
actually do so; (viii) introduction of a new financial accounting management system
allowing for the 21 types of reports specified in the LRF to be issued automatically;
(ix) 100% of public debt contracts monitored by the system; and (x) a new taxpayer
assistance model with at least 10 new services on line.
II. FINANCING STRUCTURE AND MAIN RISKS
A.
2.1
2.2
Financial execution. The project will use the state treasury system. The
expenditure will be subject to the budgetary and financial execution process, with
data related to its formalization being recorded in the SIAFEM pursuant to the legal
provisions applicable at each of its stages: commitment, liquidation, authorization,
and payment. The State of Tocantins treasury system will use the unified treasury
account system to manage its financial obligations.
2.3
2.4
National legislation. As an exception to Bank policies and as with all the other
PROFISCO operations, it is requested that the borrower be allowed to use
Brazilian federal legislation for procurement processes in the case of works for
amounts under US$25 million per contract, and in the case of goods and services
for amounts under US$5 million per contract, provided that the requirements of
section III of the Banks procurement policies are satisfied, particularly as they
-9-
Direct contracting. The borrower may directly contract the School of Tax
Administration (ESAF) to provide training to state government personnel. Before
funding is transferred to that entity, however, the borrower will submit an
appropriate legal instrument to the Bank in which ESAF undertakes to: (i) use the
procurement and contracting policies set out in the respective loan contract between
the borrower and the Bank, if it procures goods or subcontracts consulting services
to provide the services in question; and (ii) make documentation supporting such
procurement and contracting processes available to the Bank and the projects
auditors.
2.6
Direct contracting of this institution is justified by the specific nature of the services
it provides (training and knowledge management), which will contribute to project
sustainability, the sharing of knowledge and experience, and, in particular, the
continued availability of such products and services once the project has ended. A
program on the scale of PROFISCO requires an institutional mechanism that
integrates and harmonizes the knowledge generated in its activities, for the
coordinated development of skills and competencies.
2.7
Review by the Bank. All contracts arising from the projects first three selection
processes for the contracting of services or the execution of works will be subject to
prior review (ex ante) by the Bank, regardless of the amount or whether Bank
procurement policies or national legislation are applied. Thereafter, all direct
contracting and procurements in amounts above US$250,000 for consulting firms,
and US$200,000 for individual consultants, will be subject to the same method of
review.
2.8
2.9
- 10 -
(iii) consulting services will not be contracted for routine project execution
activities; and (iv) in the event that the specialized agency is the United Nations
Development Programme (UNDP), the contract will comply with the provisions of
the letter of agreement signed between the Bank and UNDP on 20 June 2003.
2.10
B.
2.11
C.
Fiduciary risks
2.12
A specialized team from the Banks Country Office in Brazil applied project risk
management methodology to assess the projects fiduciary risk. The main fiduciary
risks are:
a. Lack of communication between the business and information technology
areas. To mitigate this risk, it was decided to set up a commission with high
ranking staff from the functional and information technology areas, directed
and coordinated by the PCU, with responsibility for deciding on the technical
specifications and evaluations of activities and contracting.
b. Possibility of changes in SEFAZ/TO or in the projects priorities as a result of
changes in the state government following the 2010 state elections.11 To
mitigate this risk, the PCU is staffed by permanent state government staff,
intensive work will be carried out over the next few months to disseminate the
project inside SEFAZ/TO, and the Bank will contact members of the new
administration as soon as the borrower provides their names to the Bank.
c. Insufficient experience of the executing agency in the use of Bank
procurement policies. This risk will be mitigated through training of the
SEFAZ/TO team in those policies, adoption of standardized models, and the
use of Brazilian national legislation for the procurement of works, goods, and
services as described above (paragraphs 2.3 and 2.4). To mitigate this risk, a
condition precedent to the first disbursement of the loan proceeds will be
established whereby the borrower will present, to the Banks satisfaction,
evidence that the special tendering commission has been set up in
SEFAZ.
11
This risk was identified in 2010 and the new state government was slow to recognize the importance of this
operation, causing the delay in the negotiation (25 April 2012).
- 11 -
3.1
The borrower in this operation will be the State of Tocantins, with the Federative
Republic of Brazil as guarantor of the financial obligations under the loan. The
projects executing agency will be the State of Tocantins, acting through
SEFAZ/TO, in coordination with the State Infrastructure Department
(SEINFRA/TO).
3.2
3.3
The PCU will: (i) submit disbursement requests to the Bank with the relevant
supporting documentation; (ii) supervise bidding and procurement processes for
project goods, works, and services, in accordance with the loan contract, the
procurement plan, and applicable Bank policies; (iii) maintain an effective financial
accounting system for the project, in accordance with applicable Bank policies;
(iv) deliver program status reports; (v) deliver work plans and update the
procurement plan; (vi) retain the respective invoices, contracts, and payment orders
and provide them to the Bank and program auditors upon request; and (vii) ensure
that the works and goods purchased with project resources are maintained in
accordance with generally applicable technical standards and present reports on
such maintenance for the five years following conclusion of the first works and for
the three years following the first procurement of goods under the project. The PCU
will have a system for monitoring and following up on project activities.
3.4
3.5
If goods and services acquired using project funding are to be transferred to other
state agencies, such as the PGE/TO the beneficiary agencies will make a prior
commitment to adequately operate and maintain the goods in question.
3.6
- 12 -
The borrower may participate in national and international fiscal integration and
cooperation activities, particularly in the areas of sharing technical solutions,
information exchange, knowledge transfer, formation of thematic networks, and
interagency cooperation.
3.8
B.
3.9
Project monitoring will be based on the programming of activities and the physical
and financial itemization of outputs in the annual work plan (AWP) and in the
procurement plan.
C.
Evaluation
3.10
The borrower will deliver semiannual status reports to the Bank, with copies to the
Executive Secretariat of the Ministry of Finance of the Federative Republic of
Brazil. These reports will provide information on the current status of
implementation of national integration activities, regardless of the source of the
resources that financed them, namely the National Synchronized Taxpayer Registry
(CadSin), or any system that replaces it, and Public Digital Accounting System
(SPED), comprised of the NF-e, the ECD, and the EFD.
3.11
AWP for the first 18 months. The borrower has submitted and the Bank has
validated the AWP for the first 18 months of project execution, counted from the
date the loan contract is signed.
3.12
Procurement plan for the first 18 months. The borrower has also presented and
the Bank has validated the procurement plan for the first 18 months of project
execution, counted from the same date mentioned in the preceding paragraph.
3.13
Audited financial statements. Within 120 days of the end of each fiscal year, the
borrower will send the Bank annual project financial statements, audited by an
independent firm of certified public accountants accepted by the Bank. The last of
these reports will be presented to the Bank within 120 days following the date
stipulated in the loan contract for the last disbursement of the loan proceeds.
Annex I - BR-L1255
Page 1 of 1
Aligned
Lendingtosupportregionalcooperationandintegration.
LendingProgram
RegionalDevelopmentGoals
Institutionsforgrowthandsocialwelfare:Ratioofactualtopotentialtaxrevenues.
BankOutputContribution(asdefinedinResultsFrameworkofIDB9)
Institutionsforgrowthandsocialwelfare:Municipalandothersubnationalgovernmentssupported.
Aligned
2.CountryStrategyDevelopmentObjectives
CountryStrategyResultsMatrix
GN26621
(i)ReduceinstitutionaldisparitiesandinequalitiesbetweenBraziliantax
administrationsandpromotecooperationandintegrationoffinanceadministrationsin
threelevelsofgovernment,(ii)Promotesustainablefiscalbalanceatthesubnational
level,and(iii)Improvetaxeducationandcitizenshipprogramsandinitiativeson
transparencyanddialoguewithsociety.
CountryProgramResultsMatrix
GN26614
Theinterventionisincludedinthe2012CountryProgramDocument.
Relevanceofthisprojecttocountrydevelopmentchallenges(Ifnotalignedtocountry
strategyorcountryprogram)
Highly Evaluable
3.EvidencebasedAssessment&Solution
4.ExanteEconomicAnalysis
5.MonitoringandEvaluation
6.Risks&MitigationMonitoringMatrix
Overall risks rate = magnitude of risks*likelihood
Environmental & social risk classification
III. IDBs Role - Additionality
Theprojectreliesontheuseofcountrysystems(VPC/PDPcriteria)
7.4
5.8
10.0
6.4
7.5
Yes
Weight
Maximum Score
10
25%
25%
25%
25%
Low
B.13
10
10
10
10
FinancialManagement:Budget,Treasury,AccountingandReporting.
Procurement:NationalPublicBidding.
Theprojectusesanothercountrysystemdifferentfromtheonesaboveforimplementing
theprogram
TheIDBsinvolvementpromotesimprovementsoftheintendedbeneficiariesand/orpublic
sectorentityinthefollowingdimensions:
GenderEquality
Labor
Environment
Additional(toprojectpreparation)technicalassistancewasprovidedtothepublicsector
entitypriortoapprovaltoincreasethelikelihoodofsuccessoftheproject
Theexpostimpactevaluationoftheprojectwillproduceevidencetocloseknowledge
gapsinthesectorthatwereidentifiedintheprojectdocumentand/orintheevaluation
plan.
The objective of the project is to improve efficiency and transparency in fiscal management of the State of Tocantins, in particular: (i) increase the state's own revenues, (ii) increase the efficiency and effectiveness
and improve the control of public expenditure; and (iii) provide better services to citizens.
The problem the project seeks to address, and the factors contributing to it are well-defined, though not in all cases shows the magnitude of them. Lessons learned from similar programs in Brazil (PNAFE in
particular) and other PROFISCOS design are included. The vertical logic of the project is clear, the indicators for monitoring products and expected results are SMART, but some of them require the definition of
baselines. The project has an economic analysis with sensitivity analysis. It also provides a monitoring and evaluation plan that proposes an ex post Cost-Benefit Analysis methodology.
The risk matrix identifies all the risks and appropriate mitigation measures, but it has no indicators to track them.
Annex II
Page 1 of 6
RESULTS MATRIX
Project objective
Impact indicator
The projects general objective is to make fiscal management in the State of Tocantins more efficient and transparent, in order to:
(i) increase the states own revenue; (ii) enhance the efficiency, effectiveness, and control of public expenditure; and (iii) provide better
services to citizens.
Unit of measures
Baseline (2009)
R$
7.1
2015 7.5
Unit of measure
Baseline
R$
R$ 61.7 million
R$ 70.0 million
50
100
1.16%
2.5%
Outcome indicators
R1. Increase in IPVA revenue
adjusted for expansion of the
vehicle fleet
R2. Increase in registration as
adjudicated tax debt of ICMS
values declared and not collected
R3. Increase in recovery of
recorded tax claims.
R4. Reduction in the average
processing time in tax litigation
cases.
days
600
300
100
days
10
55
80
Annex II
Page 2 of 6
Targets
Output
Indicators
Unit of
Measure
Baseline
(2009)
Year 1
Year 2
Year
3
Year
4
Year 5
Target
(end of
year 5)
Means of verification
Number of SEFAZ
representatives
participating in meetings
of COGEF, CONFAZ,
COTEPE, ENCAT,
GDFAZ.
Participants
10
10
20
20
Strategic management
report of tax
administration areas.
Report on participation
in forums and working
groups.
General report
SEFAZ units
Number of large
taxpayers monitored
automatically based on
the agreed terms of the
special tax regimes and
substitutes.
Large
taxpayers
10
10
20
Management report
from the special regimes
division.
0
25
25
50
Annex II
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P3.5 Implementation of
system (procedures,
technology, and training)
for assisting the internal and
external public in the
interpretation and
application of tax
legislation.
P3.6 Systematization and
implementation of new tax
claim recovery and
administrative collection
model, including special
collection modalities.
P3.7 Redesign and
implementation of the
inspection model for other
revenue (IPVA, inheritance
and gift tax (ITCD), and
rates).
Number of taxpayers
included in the
management report on
reconciliation of data
from bank accounts of all
taxpayers issued by the
system
Number of management
reports (i) processing and
cross-referencing of data
and (ii) NFe and SPED
issued by the system to
backstop strategic tax
revenue decisions.
Number of taxes
available in the customer
service system.
Taxpayers
included in
the report
Management
reports
System-generated
management report
indicating nonpayment.
15,000
20,000
35,000
WEB SEFAZ
Taxes
available
Bank account
management report
Subdivisions
requested by
large
taxpayers
Taxes covered
25
25
50
Report on subdivision
requests from the Office
of Tax Claim
Management.
Management report on
tax delinquents from
ICMS, IPVA and ITCM
systems.
Annex II
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Subcomponent 2.2. Better management of the taxpayer registry and implementation of the Public Digital Accounting System (SPED)
P4.1 Implementation of the
National Synchronized
Taxpayer Registry
Levels of government
with synchronized data.
Levels of
government
synchronized
P4.2 Implementation of
System-generated
digital tax record (EFD),
management report
digital accounting record
covering different
Government
0
(ECD), NF-e, CTe, fraudsources of electronic
databases
proof tax voucher (ECF),
information on taxpayers.
and additional information.
Subcomponent 2.3. More efficient and effective management of tax litigation
P5.1 Systematization and
implementation of the
model for controlling the
management of tax
litigation processes.
Monitoring report on
phases of tax litigation
processes
Phases
Integrated Tax
Administration System
report.
Integrated Tax
Administration System
report.
Management report on
phases involved in
processing tax litigation
cases.
COMPONENT 3 - FINANCIAL AND PROPERTY MANAGEMENT AND INTERNAL CONTROL OF FISCAL MANAGEMENT
Subcomponent 3.1. More efficient and effective financial administration
P6.1 Redesign of the
financial and accounting
administration model and
alignment with the cost
accounting system
LRF reports
Reports
10
11
21
Subcomponent 3.2. More efficient and effective administration of materials and property in the finance area
P7.1 Implementation of new
computerized materials and
property management
model.
Management and
monitoring reports issued
by the system, with fuel
consumption as one
benchmark.
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Subcomponent 3.3. Improved mechanisms for audit and internal control of fiscal management
P8.1 Implementation of
computerized internal
control and audit
management system.
P8.2 Implementation of new
internal disciplinary control
model (corregedoria, an
organ of the Department of
Finance)
System-issued process
report.
Number of preventive
correction and inspection
actions.
Functions
included
Actions
20
30
50
10
Number of
ombudsperson reports
issued by the system with
information broken down
by area.
WEB SEFAZ
Services
Manuals
Institutional
areas
Ombudsperson
management report.
Subcomponent 4.2. Modernization of management and upgrading of information and communication technology services in the finance area
P10.1 Development of new
finance management system
based on new business
models.
Number of taxpayer
profile reports generated
from a single query
(CNPJ or state registry).
Number of IT
management reports
indicating that 80% of
requests were addressed
within the period agreed
upon with clients
Units
10
10
20
Report on taxpayer
profile generated from a
single query (CNPJ or
state registry)
Information technology
coordination
management report.
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Categories
evaluated
P11.3 Strengthening of
School of Finance
Management (EGEFAZ)
Number of students
participating in classes
offered on the distancelearning platform.
Participants
20
20
40
1,000
1,000
2,000
Management report on
personnel management
coordination.
Management report on
personnel management
coordination.
EGEFAZ management
report.
Annex III
Page 1 of 6
Country:
Brazil
Project number:
BR-L1255
Name:
Executing agency:
Prepared by:
1.1
The fiduciary assessment was based on the institutional capacity analysis performed
on the executing agency, the risk analysis workshop held with participating entities,
and several meetings the project team held with key Finance Department staff.
Account has also has been taken of the Banks experience working with the
PROFISCO umbrella project, since several projects with similar objectives and
processes have now been designed and negotiated.
1.2
2.1
Brazil has robust country fiduciary systems allowing for sound management of
administrative, financial, control, and procurement processes, adhering to principles
of transparency, economy, and efficiency. The Bank recognizes that using country
systems generally involves a number of initial risks, until the systems in question
are fully adjusted to international standards. The Bank is also continuing to support
the performance of those systems so they improve and attain higher levels of
efficiency and economy to meet the countrys needs.
III. FIDUCIARY CONTEXT OF THE EXECUTING AGENCY
3.1
The executing unit has been set up with permanent staff within the State Finance
Department and is comprised of a general coordinator for the project and four direct
employees, together with support from other Department units. The executing
agencys fiduciary systems have the oversight elements needed for effective project
management. As this is a state-level project, it is subject to the national laws that
govern public administration, including the Fiscal Responsibility Law. The Finance
Department uses an accounting and financial record-keeping system that makes it
Annex III
Page 2 of 6
4.1
The risk assessment exercise undertaken during the design stage identified high
risks in the evaluation and redesign of processes, and also in the technical
specifications of the computer system. No risks were identified on fiduciary matters
(link to Table 1: Fiduciary risks).
V. AGREEMENTS AND REQUIREMENTS FOR PROCUREMENT EXECUTION
5.1
A.
5.2
The project will be implemented through an executing unit set up within the
Finance Department, which will be responsible for administrative tasks, as well as
for monitoring and evaluation, legal matters, communications, and computer
support. It will also have a technical-operational coordination unit, which will
undertake operational and liaison activities with the different units involved with
the program.
5.3
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Page 3 of 6
5.4
Goods2
International National
Shopping
competitive competitive
bidding
bidding
> 5,000,000
< 5,000,000 < 100,000
and
> 100,000
Consulting services
International Shortlist
publicity
100%
National
> 200,000
< 1,000,000
Works
Processes valued at more than
US$10 million; the first process
under each method, regardless of
the amount, as well as all direct
contracting
2
3
Goods 4
Processes valued at more than
US$500,000, if e-procurement was
not used for goods, and all direct
contracting
Consulting services
Processes valued at more than US$1 million;
the first process under each selection
method, regardless of the amount, as well as
all direct contracting
Annex III
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5.5
Recurrent costs: These consist of the operating and maintenance expenses needed
to implement the project during its useful life, covering everything relating to:
public utilities and communications, translations, office supplies, photocopying,
mail and other expenses needed for proper project management. These expenses are
expected to be financed out of the loan proceeds within the annual budget approved
by the Bank, and will be implemented following the executing units administrative
procedures, which will be reviewed and accepted by the Bank provided they do not
violate the basic principles of competency, efficiency, and economy.
5.6
Recurrent costs include the costs of the consultants hired to assist the executing unit
throughout the loans useful life. Nonetheless, operating costs do not include the
salaries of civil servants currently in service.
5.7
B.
C.
Supervision of procurement
5.8
D.
Records and files. The files will be located at the executing units offices under
appropriate security conditions.
E.
5.9
The State Planning Department will prepare the annual programming and budget
for external and counterpart funding. The budget is operated under the Integrated
Financial Management System for States and Municpios (SIAFEM). The budget
assigned to the program will be approved by the State Planning Department and
recorded in the SIAFEM, and the activities committed to under the project will be
carried out. The Bank will reimburse eligible project expenses under the budget
lines defined and implemented by the program.
2. Accounting and information systems
5.10
The project will use the project execution module integrated into SIAFEM, which
offers transparency and specific controls in budget execution. This module makes it
possible to record the projects accounts and issue financial reports, including
Annex III
Page 5 of 6
5.12
The project will use the states treasury system. Expenditure are subject to the
budget and financial execution process and will be recorded in SIAFEMwith data
relating to its formalization under laws applicable to each of its stages: obligated,
accrued, drawn, and paid. The Tocantins state treasury system uses the single
account system for managing its financial obligations.
5.13
At the start of the program, the Finance Department will operate without an
advance of funds, using the payments reimbursement modality or direct payments
to suppliers. This will continue throughout the program if the Department has the
cash flow needed during program execution.
5.14
5.15
The Department will submit to the Bank the projects initial financial plan,
containing the disbursement schedule for the whole project, which can be updated
annually.
5.16
If necessary, the executing unit will open a bank account exclusively to manage the
IDB loan proceeds.
5.17
5.18
The exchange rate to be used, if there is a revolving fund, will be the conversion
rate, in other words, the exchange rate prevailing on the day the U.S. dollars are
converted to reais. In the case of retroactive expenses, reimbursement of expenses
and counterpart, the exchange rate prevailing on the day before presentation of the
disbursement request to the Bank will be used. Expenses that are not eligible for
Bank funding will be reimbursed from the counterpart or from other funds,
depending on the nature of the ineligibility.
Annex III
Page 6 of 6
5.20
The internal audit function in the Finance Department is performed by the SEFAZ
Internal Control Sector Unit, which has a staff of 10 and reports directly to the
Office of the Comptroller General of the State of Tocantins.
5.21
The executing unit will be required to specify the main internal control processes in
the Operating Manual, to ensure that controls are functioning adequately.
5. External oversight and reports
5.22
As the State of Tocantins Audit Office does not have sufficient capacity to exercise
external control over loan-financed projects, the Finance Department will contract
independent audit firms acceptable to the Bank to perform external audits on the
projects. Such firms are evaluated periodically by the Bank to ensure that they are
of high quality.
Given the nature of the project, the following is required:
a. The selection of an independent audit firm of eligibility level I (International
audit firms operating in the country).
b. Filing of annual audited financial statements.
c. The cost of the external audits will be covered out of loan proceeds.
6. Financial supervision plan
(link to table 4: Financial supervision plan)
7. Execution mechanism