Strengthening Project Readiness, Procurement and Financial Management in Southeast Asia – Governance Risk Assessment for Lao PDR (TA 9923 REG)

Sector: Governance and Public Finance

Country: Lao PDR

PRIMEX fielded an International Governance and Institutional Development Specialist who was responsible for the following tasks:
A. Assessment of governance risks. The assessment must be evidence-based and anchored in reliable and timely information and tailored to the contextual realities in LAO. The preparation of the GRA will comprise the following steps: (i) Literature review of existing studies and other secondary sources of information. For overall institutional and governance aspects, international and national governance surveys should be consulted, and existing assessments––including those carried out for the ADB-supported projects approved during 2016–2019––be reviewed to establish the historical, political and economic context, governance and institutional arrangements, and country development strategies. Also, studies on investment climate may be relevant to review country performance. For PFM, the key diagnostic is the PFM performance report using the Public Expenditure and Financial Accountability (PEFA) performance measurement framework; (ii) Updating and triangulation through consultations with stakeholders and site visits. Updating PFM and anticorruption performance information is required. This can be done by key informants directing assessors to major changes in policies and practices since earlier studies were completed. Stakeholders include government officials, development partners, academia, civil society organizations, and the private sector. Findings must be triangulated among informants at different levels and in different branches. Site visits can include government departments, provinces and districts, development partners, and projects, as required; (iii) Conversion of governance weaknesses or problems into potential risks. Converting an identified governance weakness or problem into a potential risk is an exercise of sound, well-informed judgment. The weakness (vulnerability) and the resulting risk (potential negative impact) should be described separately so that it is clear how a weakness could impact on development effectiveness; (iv) Analysis of current and planned governance reforms in LAO based on the [government plans and strategies]. The reform plans and actions of the government are to be mapped and an assessment made of the extent to which reforms are likely to affect governance risks over the life of the CPS; and (v) Analysis of the use of country systems. The use of country systems—for budgeting, treasury operations, accounting, and external audit—in ADB operations are to be described. Recommendations should be made on the possibilities in the future to expand the use of country systems based on their current quality and taking into account credible reform plans.
B. Preparation of the risk management plan. This involves: (i) determining which identified governance risks are high risks; and (ii) formulating practical, implementable, and evaluable actions to mitigate the high risks.