CO Prog Fiscal and Institutional Adj II

closed

The government's fiscal and institutional reform agenda is supported by the Bank through the series of four single-tranche Fiscal and Institutional Adjustment Loans (FIAL). The objectives of this series of loans are two: first, to promote reforms addressing fiscal rigidities necessary to attain the substantial fiscal adjustment underlying sustainable macroeconomic stability; and second, to improve the provision of public services and establish the institutional basis for higher efficiency and accountability in public expenditure. The specific objectives of the FIAL program are to: (i) increase tax revenue and reduce distortions in the tax system; (ii) modernize the tax administration; (iii) promote the development of a sound fiscal responsibility legal framework; (iv) reduce losses and generate revenues through improved asset management; (v) prevent massive losses to the State from judicial claims; (vi) improve budget management with modem tools and legal reforms; (vii) develop incentives for efficiency gains in subnational entities; (viii) strengthen the public sector procurement system; (ix) improve performance through management contracts for agencies; and (x) support a coherent and comprehensive reform implementation process. This Second Programmatic Fiscal and Institutional Structural Adjustment Loan Project focuses on the following elements: (i) issuance of all legislation to regulate the application of the tax reform law; (ii) further improvements in tax administration, including specific audit targets and the implementation of integrated tax-customs audits; (iii) approval of an official budget reform strategy; (iv) Congressional approval of an improved 2004 Annual Budget Law; (v) presentation to popular vote of the Constitutional referendum; (vi) issuance of a new policy for legal defense of the state; (vii) presentation to Congress of reforms to the public procurement law; (viii) approval of an official asset management policy and the achievement of specific revenue targets; (ix) signature of management contracts with two government agencies; and (x) enactment of a Fiscal Responsibility Law.