Enhancing Collection of Revenue and Expenditure Management Project

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The DRC ENCORE Project (Enhancing Collection of Revenue and Expenditure Management) aims to strengthen the institutional capacity, and improve or establish basic budget systems management at central and decentralized levels in the Democratic Republic of Congo (DRC), with the ultimate goal to improve service delivery to citizens.The proposed project is a Technical Assistance Project, including Performance Based Conditions (PBCs), to increase domestic resource mobilization and the management, transparency, and accountability of public resources at the central and provincial levels in the DRC. Based on the SCD recommendations, and draft CPF objective and strategic approach, the project will work in three areas at central and provincial level: (i) increasing revenues with focus on tax administration reforms in the mining sector; (ii) strengthening expenditure management through support to initiatives such as transfer of budget commitment authority to line ministries, establishment of a treasury single account and deployment of an accounting system network throughout the territory, and roll out of e-procurement and establishment of the civil service staff database , and (iii) improving accountability and oversight through strengthening capacity of the Supreme Audit Institution (SAI) and expanding participatory budgeting at provincial levels. The project aims to improve service delivery to all citizens, with particular focus on the poor and most vulnerable, as well as build resilience in the public sector by building back better in the COVID-19 aftermath. The project was prepared in response to a request from the Government of the DRC dated August 2019 and the design was updated based on subsequent discussions with the authorities regarding the COVID-19 crisis unfolding during 2020 and 2021. In addition, the project builds on past discussions with the government for World Bank’s support in the areas of public financial management (PFM) including procurement, State Owned Enterprises (SOE) management, domestic resource mobilization (DRM) and risk management, and poverty data collection.The proposed project is for five years, with a budget of US$250 million, utilizing an IPF with PBCs. The use of PBCs will be explored to incentivize central and provincial government commitment to politically sensitive PFM and procurement reforms and promote results achievement and sustainability in some difficult reform areas: (i) operationalizing a transparent and effective fiscal transfers mechanism to provinces; (ii) facilitating the effective release of allocations to service delivery units, especially in Health and Education; (iii) increasing efficiency in big expenditure items through introduction of e-procurement, and establishment of a civil service database, etc.; and (iv) bringing more transparency in mining revenue management with support to EITI Action Plan activities. The project also will support improvement in revenue collection and budget management at provincial level.It will be implemented by the Ministry of Finance, in collaboration with line ministries, agencies, local authorities in the targeted provinces and civil society. The majority of the activities will take place at the central level, while others are geared towards four provinces (Kasai, Kasai Central, Kasai Oriental et Lomami) selected among the geographic focus for the Bank CPF 2022-2025.The project is conceived as a vehicle to address in a targeted manner the fundamental governance challenges to development of DRC, as identified by the SCD and the Resilience and Risk Assessment (RRA). The project design is in accordance with the Africa’s Region Framework for Operational Response to the COVID-19 Pandemic and Global Crisis, which identifies the protection of key government functions and services as a priority. The project supports the Government’s efforts to set up basic budget and financial management entities, processes, and systems at central and decentralized levels. It also will help the government to strengthen the Statistical Institute capacity and to undertake the long overdue poverty survey. In the medium term, the project is expected to shore up and help to sustain new public programs which attract additional government funding as well as donor flows, especially in the priority social sectors and i nfrastructure programs. Specifically, the project supports concrete and practical policy and reforms measures that the central government and provinces can take to ensure public sector operational continuity and delivery of services, with due attention to transparency and accountability, during the COVID19 response, recovery, and resilience phases.Based on past and ongoing governance operations lessons, this project will use a simplified design- two TA components- but with sufficient width and depth of selected engagements enabling the government to tackle issues in Domestic Revenue Mobilization, and PFM reforms including payroll, procurement and poverty data collection at central level (Component 1) and decentralized level (Component 2) so to better deliver services and respond to citizen needs. These two TA components are both reinforcing and will be underpinned by five PBCs that are expected to better incentivize and foster PFM reforms, with the ultimate goal to reduce corruption and waste in public resource management, and improve overall governance.