Transcript Slide 0
Economic IMC:
Ministry of Finance Commitment
Document
Beirut, Lebanon
July 16, 2015
0
Ministry of Finance Commitment Document
The Minister of Finance commits to the timely implementation of the following programs:
– Program FIN-001: Rationalize expenditures (Aug. 2001 – Dec. 2011): the program objectives are to
reduce waste and increase the effectiveness and productivity of spending, and to rationalize non-interest
expenditures, contain the wage bill, and reform public sector enterprises
– Program FIN-002: Enhance revenues (Oct. 2006 – Dec. 2011): the program objectives are to undertake
revenue enhancing measures through improving tax structure and collection, guided by the need to
minimize distortions and enhancing equity and fairness in the distribution of tax burden and enhance
revenue collection from government properties
– Program FIN-003: Undertake budget and financial management reform (Oct. 2006 – Dec. 2011): the
program objectives are to develop a modern Budget System Law (BSL) which will be the anchor for all
reform measures, enhance public expenditure management with more accountability and transparency,
enhance institutional capacity, improve regulatory framework, and improve fiscal reporting
– Program FIN-004: Undertake revenue management and administrative reform toward a functionbased structure (Jan. 2006 – Dec. 2010): the program objectives are to improve formulation and
implementation of fiscal policy, enhance equity and fairness in the distribution of the tax burden,
implement good governance, undertake structural measures aimed at modernizing the revenue
administration towards function based structure with full strong headquarters, fully automated business
processes, risk based compliance programs and skilled and professional staff
– Program FIN-005: Strengthen Debt Management with the aim to reduce the costs and risks of the
government's debt portfolio (Jul. 2003 – Dec. 2011): the program objectives are to strengthen debt
management with the aim to reduce the costs and risks of the government's debt portfolio
1
Ministry of Finance Commitment Document … (Cont’d)
– Program FIN-006: Reform capital markets (Jan. 2008 – Dec. 2008): the program objectives are to
develop Lebanon's capital markets
– Program FIN-007: Improve the business environment (Apr. 2005 – Dec. 2011): the program
objectives are to improve the business environment and reduce the cost of doing business in Lebanon,
improve the competitiveness and employment creation, and encourage the recovery of the private sector
in the aftermath of the Israeli war
– Program FIN-008: Facilitate trade (Jan. 2008 – Dec. 2008): the program objectives are to facilitate
imports, lower related costs, and automate operations at Beirut port
Note: Detailed supporting documents are attached in the appendix
Signature:
Signature:
H.E. PRESIDENT OF
COUNCIL OF MINISTERS
Date:
2007
H.E. MINISTER OF
FINANCE
Date:
2007
2
Ministry of Finance – Program Charter 1
Program Title
Rationalize expenditures
Program Owner
Minister of Finance
Program Number
FIN-001
Key Stakeholders
Ministry of Energy and Water, CDR, Higher
Relief Council, PCM
Program Objectives/Description
High Level Work Plan
Reduce waste and increase the effectiveness and productivity of spending
Rationalize non-interest expenditures, containing the wage bill, and
reforming public sector enterprises, especially EDL.
Revise the salary and benefits structure for some public officials
Extend the working hours in the public sector from 32 hours a week to at
least 36
Reduce travel and communication expenses
Work on phasing out the “Council of the South” and the “Fund for the
Displaced”
Contain the wage bill in the medium term through reducing the size of the
public sector by attrition and by limited hiring
Reduce the budgetary cash transfer to EDL through adoption of the
Power Sector Reform Plan.
Maintain the quality of infrastructure and invest in high-value projects
while reducing the cost of funding.
Key Risks
Requires Parliament approval for some measures
Security issues (potential increase in military spending)
Any further increase in fuel prices
Milestones
Requirements
Description
Technical
Assistance
Budget
Ministry
Team
Available Budget: Complementary Budget: TOTAL BUDGET: -
(i) Wages and salary dynamics controlled by restricting recruitment to
essential position;
(ii) Decision not to replace one for one civil servants that retire and
replaced by more junior, less expensive staff;
(iii) Transfer of $500 million from 2007 to 2009 to the COS & DF after
which they are assumed to be closed
KPIs
Level of spending versus EPCA target
Target
Primary expenditures to
meet EPCA targets for all
quarters
3
Ministry of Finance – Paris III Program 1 Initiatives
List of Programs and Initiatives
Sector Programs and Initiatives-
Stakeholders
1. Rationalize expenditures
1a. Revise the salary and benefits structure for some public MoF
officials
1b. Save on transportation allowances through extending the MoF
working hours in the public sector from 32 hours a week
to at least 36
1c. Reduce travel and communication expenses
MoF
1d. Work on terminating the “Council of the South” and the
“Fund for the Displaced”
1e. Contain the wage bill in the medium term through
reducing the size of the public sector by attrition and by
limited hiring
1f. Reduce the budgetary cash transfer to EDL through
adoption of the Power Sector Reform Plan
1g. Submit to Parliament a draft 2007 budget law consistent
with the targeted primary balance of the central
government and including detailed HRC operations and
CDR foreign-financed expenditures (EPCA)
1h. Maintain the quality of infrastructure and invest in highvalue projects, while reducing the cost of funding
XXX
Natural Owner
MoF
Implementation
Priority
Timeline
16/8/2001
30/12/2011
1/1/2008
30/12/2011
M
1/1/2008
30/12/2011
M
1/5/2007
31/12/2007
S
16/8/2001
31/12/2009
S
16/2/2004
31/12/2010
S
1/1/2008
30/12/2011
M
1/1/2008
2/4/2008
L
1/1/2008
30/12/2011
L
MoF
MoF, MoEW, PCM
MoF, CDR, HRC
MoF, CDR
IMPLEMENTATION:
S: Short term
M: Medium Term
L: Long Term
4
Ministry of Finance – Program Charter 2
Program Title
Enhance revenues
Program Owner
Program Number
FIN-002
Key Stakeholders
High Level Work Plan
Program Objectives/Description
Undertake revenue enhancing measures through improving tax structure
and collection, guided by the need to minimize distortions and enhancing
equity and fairness in the distribution of tax burden and enhance revenue
collection from government properties
Key Risks
Council of Ministers’ decisions and Parliament’s approval
Minister of Finance
Settle the seashore violation issue and start collecting rent on infringed
properties
Lift the cap on domestic car gasoline prices
Enhance revenue collection from public properties namely “Casino du
Liban”
Increase the VAT rate from 10% to 12% in 2008 and from 12% to 15% in
2010
Collect the 5 percentage points additional VAT on water, electricity and
telecom
Adopt monthly VAT filing for large corporations for improved cash
management
Increase the tax on interest income from 5 percent to 7 percent
Introduce the Global Income Tax
Strengthen the Built Property Tax administration
Milestones
Requirements
Description
Technical
Assistance
Budget
Ministry
Team
Available Budget: Complementary Budget: TOTAL BUDGET: -
(i) Settlement of seashore violations
(ii) Uncapping mechanism proposed and approved by Council of Ministers
and hence came into effect
(iii) VAT increased from 10% to 12% in 2008 and then from 12% to 15% in
2010
(iv) Interest income increased from 5 % to 7%
(v) GIT introduced
(vi) Comprehensive database on build properties built and updated
KPIs
Tax and non-tax revenues versus
EPCA projections
Target
Revenues to meet EPCA
targets for all quarters
5
Ministry of Finance – Paris III Program 2 Initiatives
List of Programs and Initiatives
Sector Programs and Initiatives-
Stakeholders
2. Enhance revenues
2a. Settle the seashore violation issue and start collecting
rent on infringed properties
2b. Lift the cap on domestic car gasoline prices (EPCA),
through issuing a Council of Ministers resolution/decree
setting a specific floor on gasoline excise of LL 300 per
liter of gasoline and gradually increase excise tax rate
2c. Enhance revenue collection from public properties
namely “Casino du Liban”
2d. Increase the VAT rate from 10% to 12% in 2008 and
from 12% to 15% in 2010.
2e. Collect the 5 percentage points additional VAT on water,
electricity and telecommunication.
2f. Adopt monthly VAT filing for large corporations for
improved cash management
2g. Increase the tax on interest income from 5 percent to 7
percent
2h. Introduce the Global Income Tax to replace the current
scheduler income tax system
2i. Strengthen the Built Property Tax administration through
building a comprehensive database on built properties
XXX
Natural Owner
MoF
Timeline
Implementation
Priority
2/10/2006
31/12/2011
1/10/2008
31/12/2008
M
1/1/2008
31/12/2011
L
1/1/2007
31/12/2011
S
1/1/2008
31/12/2010
M
1/1/2008
31/12/2010
L
1/1/2008
31/12/2010
M
1/1/2008
31/12/2008
M
1/10/2009
31/12/2009
L
2/10/2006
31/12/2007
S
MoF
MoF
MoF
MoF
MoF
MoF
MoF
MoF
IMPLEMENTATION:
S: Short term
M: Medium Term
L: Long Term
6
Ministry of Finance – Program Charter 3
Program Title
Undertake budget and financial management
reform
Program Owner
Minister of Finance
Program Number
FIN-003
Key Stakeholders
Spending agencies, Concerned ministries
High Level Work Plan
Program Objectives/Description
Develop a modern Budget System Law (BSL) which will be the anchor for
all reform measures;
Enhance public expenditure management with more accountability and
transparency
Enhance institutional capacity
Improve regulatory framework
Improve fiscal reporting
Reform the budget preparation process and linking it to Macro fiscal
framework
Increase budget coverage
Reform Treasury Operations
Prepare a “Budget System Law” to encompass all the reform measures
Adopt fiscal accountability law
Build capacity within the different directorates involved in the expenditure
cycle
Key Risks
Requires Parliament approval for some measures
Political risks
Cooperation of spending agencies
Requirements
Description
Technical
Assistance
Budget
Ministry
Team
Milestones
(i) Top-down approach to reform the budget preparation process adopted
(ii) Budget laws issued with medium term expenditure frameworks
(MTEF) attached
(iii) Budget ceilings set per ministry in accordance with sector
priorities
(iv) Budget coverage extended and CDR & other extra budgetary
spending consolidated within the budget
(v) Performance budgeting introduced
KPIs
Available Budget: Complementary Budget: TOTAL BUDGET: -
Budget preparation
linked to a medium
term expenditure
framework (MTEF)
Number of line
ministries adopting new
budget approach
Target
Budget that reflects sector priorities and done
within 3 year-framework, calculates cost of
producing outcomes, and solves issues of
appropriations and carryovers,
complementary period and treasury advances
All line ministries
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Ministry of Finance – Paris III Program 3 Initiatives
List of Programs and Initiatives
Sector Programs and Initiatives-
Stakeholders
3. Undertake budget and financial management reform
3a. Adopt a top-down approach to reform the budget
preparation process
3b. Link the budget preparation to a medium-term
expenditure framework (MTEF) prepared by MoF
3c. Prepare MTEF in coordination with spending agencies
MoF
3d. Submit to Parliament a draft 2007 budget law consistent
with the targeted primary balance of the central
government and including detailed HRC operations and
CDR foreign-financed expenditures (EPCA)
3e. Extend the budget coverage and consolidate CDR
spending and other extra budgetary entities within the
budget
3f. Prepare for introduction of performance budgeting
MoF
3g. Improve cash management through establishing cash
management unit, upgrade the IT system to
accommodate this reform, restructure the treasury
functions and link debt to cash management
MoF
XXX
Natural Owner
MoF
MoF, Spending agencies
Timeline
Implementation
Priority
01/01/2007
31/12/2011
1/1/2007
31/12/2001
S
1/1/2007
31/12/2001
S
1/1/2007
31/12/2001
S
1/6/2007
30/6/2007
S
1/6/2007
27/2/2009
S
1/1/2008
31/12/2011
S
1/1/2008
31/12/2008
M
MoF
MoF, Concerned ministries
IMPLEMENTATION:
S: Short term
M: Medium Term
L: Long Term
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Ministry of Finance – Paris III Program 3 Initiatives
List of Programs and Initiatives
Sector Programs and Initiatives-
Stakeholders
3h. Prepare the introduction of a Treasury Single Account
MoF
(TSA) through working on the necessary legislations and
decrees required for managing the TSA (awaiting
enactment as the draft is already in Parliament)
3i. Prepare a “Budget System Law” to encompass all the
MoF
reform measures
3j. Adopt a fiscal accountability law
MoF
3k. Build the capacity within the different directorates
MoF
involved in the expenditure cycle: 1) improving the
analytical capacity of the budget directorate to meet the
requirements of the new budget preparation approach.2)
Improve the cash management skills of the treasury
directorate
XXX
Natural Owner
IMPLEMENTATION:
S: Short term
Timeline
Implementation
Priority
1/1/2008
30/12/2008
M
1/1/2008
31/12/2011
M
1/1/2008
30/12/2008
L
1/1/2008
30/12/2011
L
M: Medium Term
L: Long Term
9
Ministry of Finance – Program Charter 4
Program Title
Undertake revenue mgt and administrative
reform toward a function-based structure
Program Owner
Program Number
FIN-004
Key Stakeholders
High Level Work Plan
Program Objectives/Description
Improve formulation and implementation of fiscal policy
Enhance equity and fairness in the distribution of the tax burden
Implement good governance
Undertake Structural measures aimed at modernizing the revenue
administration towards function based structure with full strong
headquarters, fully automated business processes, risk based compliance
programs and skilled and professional staff
Key Risks
Political environment
Minister of Finance
Reorganize regional tax offices along function based operations
Establish taxpayer services in satellite offices
Introduce the "Tax Procedure Code" that unifies and harmonizes the
various tax procedures
Finalize the draft law for introducing a Global Income Tax (GIT) to replace
the current schedular income tax system , and work in progress for the
development of related regulations and procedures
Introduce electronic registration of taxpayers
Put in place a new audit strategy based on risk selection criteria, new
audit techniques and procedures, and develop an audit manual
Integrate built property data systems between Land registry at Cadastre
and Built Property Administration
Provide tax incentives for affected enterprises
Milestones
Requirements
Description
Tax reform project team-UNDP
Technical
Assistance
Budget
Ministry
Team
Available Budget: Complementary Budget: TOTAL BUDGET: All the Revenue Directorate employees
Regional tax offices reorganized
Taxpayer services in satellite offices established
Tax Procedure Code introduced
Draft law for introducing the Global Income Tax finalized
E-registration introduced
New audit strategy developed
Comprehensive database on built properties developed and updated
Tax incentives for affected enterprises provided
KPIs
Higher compliance rate
Improved services
Increased revenues collection
Target
Increased
Improved
Increased
10
Ministry of Finance – Paris III Program 4 Initiatives
List of Programs and Initiatives
Sector Programs and Initiatives-
Stakeholders
4. Undertake revenue management and administrative
reform toward a function-based structure
4a. Reorganize revenue administration along a function
based structure with strong headquarters
4b. Reorganize regional tax offices along function based
operations
4c. Establish taxpayer services in satellite offices
MoF
MoF
MoF
4d. Expand large taxpayers’ office (LTO) coverage to include MoF
other taxes and fees
4e. Reinforce the large taxpayers’ office (LTO) with new
automated procedures.
4f. Establish a unit for medium taxpayers (MTO) and
potentially develop a simplified scheme for the small
taxpayers
4g. Finalize the development of the comprehensive database
of employees, and extend the reformed operations to
regional offices within DASS reform context of wages
and salaries tax department
4h. Reinforce the newly established Tax roll department
4i. Introduce the "Tax Procedure Code" that unifies and
harmonizes the various tax procedures
4j. Update "Stamp Fees" law to increase its fairness and
facilitate its application
XXX
Natural Owner
MoF
Timeline
Implementation
Priority
2/1/2006
31/12/2010
1/1/2008
31/12/2008
M
2/1/2006
31/12/2007
S
2/7/2007
31/12/2007
S
1/1/2008
31/12/2010
M
1/1/2008
31/12/2010
M
1/1/2008
31/12/2010
M
1/1/2008
31/12/2010
M
1/1/2008
31/12/2010
M
3/4/2006
31/12/2007
S
1/1/2008
31/12/2010
L
MoF
MoF
MoF
MoF
MoF
IMPLEMENTATION:
S: Short term
M: Medium Term
L: Long Term
11
Ministry of Finance – Paris III Program 4 Initiatives
List of Programs and Initiatives
Sector Programs and Initiatives-
Stakeholders
4k. Finalize the draft law for introducing a Global Income Tax MoF
(GIT) to replace the current schedular income tax system
, and work in progress for the development of related
regulations and procedures
4l. Introduce electronic registration of taxpayers
MoF
4m. Launch electronic filing (e-filing) and electronic payment
(e-payment through commercial banks)
4n. Rely on mail services to simplify taxpayers filing
obligations
4o. Modernize and streamline operations and automate the
various processes and procedures
4p. Put in place a new audit strategy based on risk selection
criteria, new audit techniques and procedures, and
develop an audit manual
4q. Integrate built property data systems between Land
registry at Cadastre and Built Property Administration
4r. Improve collections of receivables so as to reduce
accumulation of revenue arrears
4s. Implement Tax Procedure Code
- Prepare executive regulations and procedures
- Prepare and disseminate new audit manual
- Create independent appeal/ review body with public
and private sector participation for appeals of tax audits
XXX
Natural Owner
MoF
MoF
MoF
Implementation
Priority
Timeline
2/10/2006
30/9/2008
S
3/4/2006
30/12/2007
S
1/1/2008
30/12/10
M
1/1/2008
30/12/2008
M
1/1/2008
30/12/2008
L
2/1/2007
31/12/2007
S
2/10/2006
31/12/2007
S
1/1/2008
0/12/2008
L
1/1/2008
31/12/2008
M
MoF
MoF
MoF
MoF
IMPLEMENTATION:
S: Short term
M: Medium Term
L: Long Term
12
Ministry of Finance – Paris III Program 4 Initiatives
List of Programs and Initiatives
Sector Programs and Initiatives-
Stakeholders
4t. Simplify stamp tax compliance and limit application to
major revenue sources
Extend declaration period
4u. Determine alternative and more efficient sources of
revenue to stamp tax
4v. Eliminate stamp tax
MoF
Timeline
Implementation
Priority
1/1/2008
31/12/2008
L
1/1/2008
31/12/2008
M
MoF
1/1/2009
31/12/2009
L
4w. Reduce tax penalties for small irregularities
MoF
1/1/2008
31/12/2008
M
4x. Simplify further the tax procedures and reduce the
number of separate taxes and fees while preserving
neutral fiscal impact
4y. Provide tax incentives for affected enterprises
MoF
1/1/2008
31/12/2008
M
MoF
3/7/2006
31/12/2007
S
4z. Harmonize tax treatment of SARL and SALs
MoF
1/1/2008
31/12/2008
M
1/1/2008
31/12/2008
M
1/1/2008
30/12/2011
L
4aa. Continue to strengthen, follow-up on complaint
mechanism for VAT
4ab. Enhance Revenue Collection through improved
communication with taxpayers and improved taxpayers'
services
XXX
Natural Owner
MoF
MoF
MoF
IMPLEMENTATION:
S: Short term
M: Medium Term
L: Long Term
13
Ministry of Finance – Program Charter 5
Program Title
Strengthen debt management
Program Owner
Minister of Finance
Program Number
FIN-005
Key Stakeholders
BDL, Parliament
High Level Work Plan
Program Objectives/Description
Strengthen Debt Management with the aim to reduce the costs and risks
of the government's debt portfolio
Key Risks
Economic environment risk
Political risk
Institutional risk
Improve debt reporting and transparency and publish quarterly debt
publications
Formalize and enhance coordination between MoF and BDL by creating a
“Higher Council for debt Management””
Enact the currently existing draft law in Parliament to modernize debt
management
Develop a formal debt management strategy
Develop secondary market liquidity in LL by introducing longer maturity
instruments
Star modifying T-bill auction frequency and procedures
Milestones
Requirements
Description
(i) Specialized Regular Debt Reporting that supplements Public Finance
Monitor and provides timely detailed debt information
(ii) Creation of a “Higher Council for Debt Management”
(iii) Debt Management Strategy
Technical
Assistance
Budget
Ministry
Team
Available Budget: Complementary Budget: TOTAL BUDGET: -
KPIs
Improved debt reporting
Creation of “Higher Council for Debt
Management.
Background analysis for the formal debt
management strategy
Target
Report on debt and debt
markets published on
quarterly base
Higher Council for Debt
Management created
Debt management
strategy completed
14
Ministry of Finance – Paris III Program 5 Initiatives
List of Programs and Initiatives
Sector Programs and Initiatives-
Stakeholders
5. Strengthen debt management
Timeline
Implementation
Priority
10/07/2003
30/12/2011
1/1/2007
30/12/2011
S
5b. Formalize and enhance coordination between MoF and
MoF, BDL
BDL by creating a “Higher Council for debt management”
1/1/2008
31/12/2008
M
5c. Enact the currently existing draft law in Parliament to
modernize debt management
MoF, Parliament
1/1/2008
31/12/2008
L
5d. Develop a formal debt management strategy
MoF
1/1/2008
31/12/2008
M
5e. Develop secondary market liquidity in LL by introducing
longer maturity instruments
MoF
10/7/2003
30/12/2011
S
5f. Start modifying T-bill auction frequency and procedures
MoF
1/1/2008
30/6/2009
L
5a. Improve debt reporting and transparency and publish
quarterly debt publications
XXX
Natural Owner
MoF
IMPLEMENTATION:
S: Short term
M: Medium Term
L: Long Term
15
Ministry of Finance – Program Charter 6
Program Title
Reform capital markets
Program Owner
Minister of Finance
Program Number
FIN-006
Key Stakeholders
BSE, Parliament
Program Objectives/Description
Develop Lebanon's capital markets
Key Risks
Political risk
Institutional risk
Requirements
Description
High Level Work Plan
Enhance the functioning of BSE, launch a new website for the BSE and
introduce E-trading
Enhance trading of share of unlisted companies on BSE’s trading floor
Setup the Capital Market Authority organizational structure
Issue detailed regulations under the “Capital Markets” law by the Capital
Markets authority
Set up the “Capital Markets Commission” including specialized financial
court
Enact the following draft laws: The “Dematerialization of Securities” law,
the “Securities Lending” law and the “Insider Trading” law and the “capital
Markets” law.
Transfer regulatory responsibilities for the BSE from MoF to capital
markets commission
Transfer regulatory responsibility for listing securities on stock exchanges
from the BSE to capital markets commission
Address aspects of policy and Capital Market development such as
privatization of the BSE
Develop an Official Stock Market Index
Technical
Assistance
Budget
Milestones
Available Budget: Complementary Budget: TOTAL BUDGET: -
Passage of Capital Markets Law and other laws listed above by
Parliament
Setting up the Capital Markets Authority
Drafting the Regulations for the Capital Markets Authority
KPIs
Ministry
Team
Passage of Capital Markets Law
Target
Completed
(Dec. 2007)
16
Ministry of Finance – Paris III Program 6 Initiatives
List of Programs and Initiatives
Sector Programs and Initiatives-
Stakeholders
6. Reform capital markets
6a. Enhance the functioning of BSE, launch a new website
for the BSE and introduce E- trading
MoF, BSE
6b. Enhance trading of shares of unlisted companies on
BSE's trading floor
MoF, BSE
6c. Setup the Capital Market Authority organizational
structure
MoF
6d. Issue detailed regulations under the "Capital Markets"
law by the Capital Market authority
MoF
6e. Setup the "Capital Markets Commission", including a
specialized financial court
MoF
6f. Enact the following draft laws: The "Dematerialization of MoF, Parliament
Securities" law, the "Securities Lending" law, the "Insider
Trading" law and the "Capital Markets” law
6g. Transfer regulatory responsibilities for the BSE from MoF MoF
to capital markets commission
6h. Transfer regulatory responsibility for listing securities on
stock exchanges from the BSE to capital markets
commission
6i. Address aspects of policy and Capital Market
development such as privatization of the BSE
6j. Develop an Official Stock Market Index
XXX
Natural Owner
Timeline
Implementation
Priority
1/1/2008
31/12/2008
1/1/2008
31/12/2008
M
1/1/2008
31/12/2008
M
1/1/2008
31/12/2008
L
1/1/2008
31/12/2008
L
1/1/2008
31/12/2008
L
1/1/2008
31/12/2008
L
1/1/2008
31/12/2008
L
1/1/2008
31/12/2008
L
1/1/2008
31/12/2008
L
1/1/2008
31/12/2008
L
MoF
MoF
MoF
IMPLEMENTATION:
S: Short term
M: Medium Term
L: Long Term
17
Ministry of Finance – Program Charter 7
Program Title
Improve the business environment
Program Owner
Minister of Finance
Program Number
FIN-007
Key Stakeholders
Ministry of Economy and Trade, Kafalat, BDL
Program Objectives/Description
Improve the business environment and reduce the cost of doing business
in Lebanon
Improve the competitiveness and creating employment;
Encourage the recovery of the private sector in the aftermath of the Israeli
war
High Level Work Plan
Remove mandatory stamping of books and require international
accounting standards
Expand the role of Kafalat to encompass more economic sectors and
raise the ceiling of guaranteed loans to LL 600 million
Promote the creation of venture capital funds to facilitate financing
Key Risks
Milestones
(i) Measures to facilitate access to Kafalat loans identified
(ii) Ceiling of guaranteed loan raised to LL 600 million
(iii) Previous loans for SMEs affected by the war rescheduled and
additional grace period granted
(iv) Implementation of capital re-injection to replace damaged equipment
(v) BADER investments initiated
Requirements
Description
Technical
Assistance
Budget
KPIs
Available Budget: Complementary Budget: TOTAL BUDGET: -
Relation facilitation between MoF and business
community
Target
Laws and
decisions
clarifying fiscal
procedures set
and enacted
Ministry
Team
18
Ministry of Finance – Paris III Program 7 Initiatives
List of Programs and Initiatives
Sector Programs and Initiatives-
Stakeholders
7. Improve the business environment
7a. Remove mandatory stamping of books, and require
international accounting standards
XXX
Natural Owner
Implementation
Priority
1/4/2005
31/12/2011
1/1/2008
31/12/2008
M
1/4/2005
31/12/2007
S
2/10/2006
31/12/2011
S
MoF, MoET
7b. Expand the role of Kafalat to encompass more economic MoF, Kafalat, BDL, MoET
sectors, and raise the ceiling of guaranteed loans to LL
600 million
7c. Promote the creation of venture capital funds to facilitate
financing
Timeline
MoF, MoET
IMPLEMENTATION:
S: Short term
M: Medium Term
L: Long Term
19
Ministry of Finance – Program Charter 8
Program Title
Facilitate trade
Program Owner
Minister of Finance
Program Number
FIN-008
Key Stakeholders
Ministry of Economy and Trade
High Level Work Plan
Program Objectives/Description
Expedite the clearance of imports, by increasing automation at the port,
and lowering the related cost. A one-stop-shop at the Port of Beirut will
provide better services to trade and export
Facilitate imports
Automate operations at Beirut port
Lower import costs
Key Risks
Milestones
Requirements
Description
Revised import processes implemented
One stop shop created at the Port of Beirut
Technical
Assistance
Budget
Available Budget: Complementary Budget: TOTAL BUDGET: -
KPIs
N/A
Target
N/A
Ministry
Team
20
Ministry of Finance – Paris III Program 8 Initiatives
List of Programs and Initiatives
Sector Programs and Initiatives-
Stakeholders
8. Facilitate trade
8a. Expedite the clearance of imports, by increasing
automation at the port, and lowering the related cost. A
one-stop-shop at the Port of Beirut will provide better
services to trade and export
XXX
Natural Owner
Timeline
1/1/2008
31/12/2008
1/1/2008
31/12/2008
Implementation
Priority
MoF (Customs), MoET
IMPLEMENTATION:
S: Short term
M: Medium Term
M
L: Long Term
21
Appendix
Detailed Work Plan
KPIs
22
Appendix
Detailed Work Plan
KPIs
23
Rationalize expenditures – KPI FIN 001-01
Rationalize expenditures
Program
Name
Current primary expenditures
Formula
Capital expenditures
Parameters
Treasury Expenditures
Definition
KPI FIN-001-01
KPI Code
MOF
Data Source
Output
Quarterly
Reporting
Frequency
KPI Type
Level of spending versus EPCA target
KPI Name
EPCA projections (dated March 16th, 2007)
Baseline
Primary expenditures to meet EPCA targets
for all quarters
KPI
Description
EPCA projections- actual spending≈0
Formula
Target
LBP billion
Unit
Wages and salaries frozen in real terms
Reduction of the size of public sector by
attrition
Savings on transportation allowance
Decline in Government transfer to EDL as a
result of power sector reform plan
Planned phasing out of some extrabudgetary funds (Namely: COS & DF)
24
Enhance revenues – KPI FIN 002-01
Tax revenues
Non-tax revenues
Enhance revenues
Program
Name
KPI FIN-002-01
Formula
Parameters
Definition
KPI Code
Output
MOF
KPI Type
KPI Name
Tax and non-tax revenues versus EPCA
projections
Data Source
Quarterly
KPI
Description
Reporting
Frequency
Actual revenues- EPCA projections≈0
Formula
EPCA projections (dated March 16th,2007)
Baseline
LBP billion
Unit
Target
Revenues to meet EPCA targets for all
quarters
25
Undertake budget and financial management reform –
KPI FIN 003-01
Program
Name
Undertake budget and financial management
reform
Formula
Parameters
Definition
KPI FIN-003-01
KPI Code
Data Source
Outcome
MOF
Line ministries
Quarterly
Reporting
Frequency
KPI Type
KPI Name
N/A
Budget preparation linked to a medium term
expenditure framework (MTEF)
Budgets currently prepared on a incremental
basis, within 1 year framework and with little
planning
Baseline
KPI
Description
N/A
Formula
Unit
Completed
In-progress
Delayed
Target
Budget that reflects sector priorities and
done within 3 year-framework
Budget that calculates the true cost of
producing outcomes
Budget
that
solves
the
issue
of
appropriations
and
carryovers,
complementary
period
and
treasury
advances
26
Undertake budget and financial management reform –
KPI FIN 003-02
Program
Name
N/A
Undertake budget and financial management
reform
KPI FIN-003-02
Formula
Parameters
Definition
KPI Code
Outcome
KPI Type
KPI Name
Data Source
Number of line ministries adopting new
budget approach where budget preparation
is linked to medium term expenditure
framework (MTEF)
KPI
Description
Reporting
Frequency
Baseline
N/A
Formula
Unit
Completed
In-progress
Delayed
Target
MOF
Line ministries
Quarterly
Ministries prepare their budgets on an
incremental base and within 1 year
framework
Line ministries preparing their budgets to
reflect sector priorities and within 3 yearframework
Strategies and policies of the spending
agencies translated into financial framework
27
Undertake revenue management and administrative reform toward
a function-based structure – KPI FIN-004-01
Program
Name
KPI Code
KPI Type
KPI Name
Undertake revenue mgmt and administrative reform
toward a function-based structure
KPI FIN-004-01
Outcome
Higher compliance rate
“Compliance rate” enables the MoF to evaluate the
KPI
effectiveness of its new strategies and reorganization
Description
measures
Formula
Unit
Voluntary compliance rate
– (Number of filers *100 ) / (Number of taxpayers
required to file) per fiscal period
– (Number of payers *100)/(Number of filers who
declared an amount >0) per fiscal period
– Growth rate of the number of registered taxpayers
per fiscal period = [(Number of registered
taxpayers for fiscal period n) -(Number of
registered taxpayers for fiscal period n-1)]*100/
(Number of registered taxpayers for fiscal period
n-1)
Enforcement
– Number of filers after follow-up *100 ) / (Total
number of non filers before follow-up) per fiscal
period
– (Number of payers after follow-up *100)/(Number
of non payers before follow-up) per fiscal period
Decreasing rate of discrepancies=
– [(Number of taxpayers having discrepancies for
fiscal period n-1) - (Number of taxpayers having
discrepancies for fiscal period n)]*100/ (Number of
taxpayers having discrepancies for fiscal period n1)
%
Formula
Parameters
Definition
“Number of filers” is the number of taxpayers who filed
a tax return
“Number of taxpayers required to file” is the number of
taxpayers who are required to submit a tax return
“Number of payers” is the total number of taxpayers
who paid their tax due liability
“Number of non payers” is the number of taxpayers
who did not pay their tax due liability
“Number of filers who declared an amount >0” is the
total number of taxpayers who have a tax due liability
“Number of non filers” is the number of taxpayers who
did not file their tax return
“Number of registered taxpayers” is the total number of
registered taxpayers in the Taxroll
“Number of taxpayers having discrepancies ” is the
total number of taxpayers having inaccurate
information in their tax returns
Data Source SIGTAS: the system of the Ministry of Finance
Reporting
Frequency
Annually
Quarterly
Voluntary compliance rate
– % of filers=95% (VAT Q4 2006)
– % of payers=96% (VAT Q4 2006)
– Growth rate of the nb of registered
taxpayers=2.5% (VAT Q3-Q4 2006)
Baseline
Target
Enforcement
– % of filers after follow-up=4.5% (VAT Q4 2006)
– % of payers after follow-up=36% (VAT Q4 2005)
Decreasing rate of discrepancies= 34% (VAT Q1-Q2
2006)
2007: xx %
2008: xx %
2009: xx %
28
Undertake revenue management and administrative reform toward
a function-based structure – KPI FIN-004-02
Program
Name
Undertake revenue mgmt and administrative reform
toward a function-based structure
KPI Code
KPI FIN-004-02
KPI Type
Output
KPI Name
KPI
Description
Formula
Unit
Formula
Parameters
Definition
Ministry of Finance
Data Source INFOPRO
Reporting
Frequency
Annually
Periodically
2006: Transactions’ processing time = 3 days
(Starting business – acquittance…)
Improved services
2006: Inquiries’ processing time = 1 day
“Improved services” allows the MoF to evaluate the
efficiency of the services provided by the tax
administration
Baseline
April 2007: satisfied taxpayers=40%
2006: 0 % taxpayers registered in the e-services
Transactions’ processing time
Inquiries’ processing time
Ratio of satisfied taxpayers = Number of taxpayers
satisfied/population
(Number of registered taxpayers in the e-services*100) /
Total number of registered taxpayers
Dec. 2007
Days
%
Dec. 2008
“Transactions’ processing time” is the time needed by the
tax administration to accomplish any transaction
“Inquiries’ processing time” is the time needed by the tax
administration to respond to inquiry
“Taxpayers satisfied ” are the taxpayers pleased with the
tax adm. services according to surveys undertaken
periodically
population : sample taken from the taxpayers requesting
services
“Number of registered taxpayers in the e-services” is the
total number of registrations in e-services
– Transactions’ processing time = x days
– Inquiries’ processing time = x days
– x% satisfied taxpayers
– x% taxpayers registered in the e-services
– Transactions’ processing time = x days
Target
– Inquiries’ processing time = x days
– x % satisfied taxpayers
– x % taxpayers registered in the e-services
Dec. 2009
– Transactions’ processing time = x days
– Inquiries’ processing time = x days
– x % satisfied taxpayers
– x % taxpayers registered in the e-services
29
Undertake revenue management and administrative reform toward
a function-based structure – KPI FIN-004-03
Program
Name
KPI Code
KPI Type
Undertake revenue mgmt and administrative reform
toward a function-based structure
KPI FIN-004-03
Formula
Parameters
Definition
Outcome
Increased revenues collection
KPI Name
KPI
Description
Formula
Unit
“Amount recovered from the tax returns” is the total
amount of money collected from taxpayers filing their
tax returns
“Amount recovered from audit activities ” is the total
amount collected following a tax audit
“Amount of arrears recovered” is the total amount
collected of tax liabilities that was not paid by the
deadline
SIGTAS: the system of the Ministry of Finance
Data Source
“Increased revenues collection” enables the MoF to
evaluate the effectiveness of its new strategies and
reorganization measures
Growth rate of the amount recovered from the tax returns
per fiscal period = [(amount recovered from the tax
returns for fiscal period n) -(amount recovered from the
tax returns for fiscal period n-1)]*100/ (amount recovered
from the tax returns for fiscal period n-1)
Growth rate of the amount recovered from audit activities
per fiscal period = [(amount recovered from audit
activities for fiscal period n) -(amount recovered from
audit activities for fiscal period n-1)]*100/ (amount
recovered from audit activities for fiscal period n-1)
Decreasing rate of arrears per fiscal period=
[(Amount of arrears recovered) *100 / (total arrears at the
beginning of the fiscal period) per fiscal period
Reporting
Frequency
Baseline
Annually
Quarterly
Growth rate of the amount recovered from the tax
returns=8% (VAT Q3-Q4 2006)
Growth rate of the amount recovered from audit
activities per fiscal period= 54% (VAT 2005-2006)
Decreasing rate of arrears = 18% (VAT 2006)
2007:x%
2008:x%
2009:x%
Target
%
30
Strengthen debt management – KPI FIN-005-01
Strengthen debt management
Program
Name
KPI FIN-005-01
Formula
Parameters
Definition
KPI Code
Output: Quarterly and monthly debt reports
KPI Type
MOF
Data Source
Improve debt reporting
Reporting
Frequency
KPI Name
Publish, first on a quarterly basis, then on a
monthly basis, a report on Lebanon debt and
KPI
debt markets
Description
Baseline
Q II 2007 report on debt and debt markets
being finalized and to be published by end of
August 2007.
Report on debt and debt markets published
on quarterly base
Formula
Unit
Quarterly, then monthly
Completed
In progress
Delayed
Target
31
Strengthen debt management – KPI FIN-005-02
Strengthen debt management
Program
Name
KPI FIN-005-02
Formula
Parameters
Definition
KPI Code
Outcome
KPI Type
KPI Name
KPI
Description
Data Source
Creation of “Higher Council for Debt
Management”
Reporting
Frequency
Prepare for the creation of the “Higher Council
for Debt Management”
Baseline
MOF
BDL
Annually
Draft law to establish integrated debt
management unit at MOF and to create
Higher Council for Debt Management to
formalize and enhance coordination between
MOF & BDL awaits parliamentary approval.
Higher Council for Debt Management
created
Formula
Meetings among stakeholders
Target
Unit
32
Strengthen debt management – KPI FIN-005-03
Strengthen debt management
Program
Name
KPI FIN-005-03
Formula
Parameters
Definition
KPI Code
Outcome
KPI Type
KPI Name
Data Source
Background analysis for a formal debt
management strategy
Conduct background analysis for preparation of
a formal debt management strategy paper
KPI
Description Develop a formal debt strategy
Reporting
Frequency
Baseline
MOF
Parliament
Annually
Preparations for developing a formal debt
management strategy have been completed
with the circulation of a quarterly internal
financing strategy report.
Debt management strategy completed
Formula
Unit
Completed
In progress
Delayed
Target
33
Reform Capital Markets – KPI FIN-006-01
Reform capital markets
Program
Name
KPI FIN-006-01
Formula
Parameters
Definition
KPI Code
Output
KPI Type
Data Source
Passage of Capital Markets Law
Reporting
Frequency
KPI Name
Monthly
July 2007: Delayed
KPI
Description
Baseline
Capital market law passed (Completed by
Dec. 2007)
Formula
Unit
Completed
In progress
Delayed
Target
34
Improve the business environment – KPI FIN-007-01
Improve the business environment
Program
Name
KPI FIN-007-01
Formula
Parameters
Definition
KPI Code
Output
KPI Type
KPI Name
Data Source
Relation facilitation between MoF and
business community
Clarify fiscal control procedures
Accelerate public payment for supplies
KPI
Improve declaration procedures
Description Review tax levels and procedures
Improve access to information
Reporting
Frequency
Quarterly
Need to have well defined fiscal procedures
Baseline
Laws and decisions clarifying fiscal
procedures set and enacted
Formula
Unit
MOF
Business unions
Meetings with representatives of business
unions, heads of departments at MOF
Meetings to prepare decisions, laws and
procedures
Target
35