81276723-Good Financial Governance for green and inclusive economic recovery in the countries of the Central American Integration System (SICA)

Description

Before the pandemic, the member states of the Central American integration system were characterized by continuous economic growth, but the economic potential was only used to a limited extent to promote sustainable development. In international comparison, the member states had a low tax rate of 14% on average, high public debt (in some countries almost 90% of GDP) and limited fiscal leeway for social spending (5% to 12% of GDP). There are also structural challenges, such as insufficient access for all population groups to social security systems, a high level of corruption (Corruption Perception Index 2019 below 40 points for all member states with the exception of Costa Rica), inefficient budget execution, insufficiently developed infrastructure and a high degree of vulnerability of states to natural disasters; with the crisis resulting from the COVID-19 pandemic, these structural weaknesses and challenges in the region have intensified. The economic and social effects of the Covid pandemic in Central America require an effective, transparent and sustainable fiscal policy response from the SICA states at regional and national level, which ensures sufficient public investments and social spending to overcome the consequences of the pandemic and ensure sustainable funding. To address these challenges, the GIZ project "Good Financial Governance for a green and inclusive economic recovery in the countries of the Central American Integration System (Sistema de la Integración Centroamericana, SICA)" aims at strengthening Good Financial Governance in order to improve crisis resilience in the states of the Central American integration system, especially with regard to the impacts of the Covid pandemic. The GIZ project focuses on strengthening regional cooperation between the SICA member states through the organizational structures of the Council of Finance Ministers of Central America, Panama and the Dominican Republic (COSEFIN), the Executive Secretariat of COSEFIN (SE-COSEFIN) and the respective regional working groups. In order to strengthen the implementation capacities of the member states for the implementation of regional recommendations and approaches, the project supports all member states with advisory services on the national implementation of fiscal reforms and ensures that the results of these are incorporated into the regional exchange. The strategy of the project builds on the effects achieved in the previous project, which developed approaches and recommendations with SE-COSEFIN to strengthen regional cooperation mechanisms and supported the strengthening of the budget and tax systems of COSEFIN member states. The GIZ project is structured alongside the following 4 outputs: Output 1 aims to strengthen the mobilization of own source revenue for sustainable financing of the inclusive, green economic recovery. Output 2 aims to build regional and national government capacities to plan, implement and evaluate spending policies geared towards inclusion, green economic recovery and crisis resilience. Output 3 aims to improve the management of fiscal risks in the region affected by crises and (natural) disasters. Output 4 aims to increase the transparency and accountability of government action in the context of the Covid-19 measures and to fight corruption. Lot 1: The contract is for the provision of a pool of short-term experts to contribute to all four outputs of the project covering various issues related to Good Financial Governance within the countries of SICA in general and programme objectives in particular. The services to be provided under the contract include measures for human capacity development and organizational and strategy advice in the following thematic areas: - Increase domestic revenue mobilization for the sustainable financing of a green and inclusive economic recovery, including design and evaluation of (green) tax policy measures as well as the strengthening of national tax administration authorities in their ability to collect revenues - Assistance in the introduction of performance budgeting, including budget preparation, implementation and evaluation as well as the linkage of the budget to strategic national priorities - Strengthening of the public investment systems, including their orientation towards mitigation and adaption to climate change and the need for disaster-resilient infrastructure. - Improvement of fiscal risk management, with special consideration of climate-related risks, including a comprehensive assessment of potential shocks for public budgets as well as the introduction of an innovative set of instruments for fiscal risk management - Strengthening of control mechanisms of public finances by the legislature and supreme audit institutions, especially concerning the improvement of follow-up mechanisms for audit recommendations, as well as supporting the creation of a network of civil society actors to strengthen the accountability of the government especially with regard to pandemic-related increased government spending The contractor shall contribute to the implementation of the following work packages. The outlined activities have exemplary character and can be subject to modification during programme implementation. Work package 1: Mobilization of own income for the sustainable financing of inclusive, green economic recovery Key activities: - Technical and process advice to improve the efficiency and digitization of tax administrations (e.g. through digital tools for electronic invoicing, data analysis, etc.) - Expert advice on the development and implementation of tax policy reforms in the areas of taxation of the digital economy, taxation of multinational enterprises and implementing OECD BEPS standards, green taxation strategies, - Promotion of regional and international exchange formats on international taxation (transfer prices, taxation of the digital economy), green tax incentives and the exchange of information Work package 2: The capacities of the member states to implement an inclusive, green and resilient public spending policy have been strengthened Key activities: - Technical advice and training for finance ministries and sectoral ministries in developing and applying a methodology for monitoring and evaluating expenditure in the areas of social affairs, education, health, the environment, taking into account impact on gender equality. - Technical advice, training and strengthening of regional exchange for the formulation and evaluation of public investment projects in areas such as water and general climate resilience (infrastructure, agriculture, energy). - Technical and process-oriented advice to national governments to strengthen the link between strategic planning and budgeting for inclusive digital government and / or recovery strategies Work package 3: Member states have improved their regional capacities to mitigate fiscal risks associated with crises and disasters Key activities: - Technical and process advice to the member states in the implementation of measures to reduce fiscal risks from natural disasters. - Promotion of regional exchange formats of knowledge about good examples in the prevention and reduction of fiscal risks. - Promotion of the dialogue on innovative financing mechanisms (with the Central American Bank for Economic Integration, KfW, etc.). - Technical advice to the Executive Secretariat and COSEFIN for the development and maintenance of a virtual platform for the exchange and analysis of macro-fiscal data on a regional level Work package 4: Corruption prevention mechanisms, transparency and accountability in the context of the Covid-19 response have been strengthened in the member states Key activities: - Technical support and training for various finance ministries and tax administrations in the implementation of internal and external control or compliance measures and the promotion of exchange of experiences at regional level. - Technical advice to the regional audit office of the Central American Integration System (CFR-SICA) on the implementation of performance audits in cooperation with the International Organization of Supreme Audit Institutions (OCCEFS) and on institutional strengthening. - Strengthening the capacities of regional civil society organizations with regard to fiscal transparency and technical advice when establishing a civil society network to evaluate the crisis management of the SICA member states in the COVID-19 crisis In addition, the contractor's service is expected to be included in the following key activities during program implementation: - STE identification and management. - Provide relevant data and results for project monitoring and reporting (on individual assignments and GIZ progress reporting, contribution to program indicators) in cooperation with GIZ staff. - Participation in follow-up and evaluation meetings. - Contribution to the communication strategy of the project.