Building Climate Resilience in the Pyanj River Basin

A thorough assessment of the financial management capacity of executing agencies (EAs) is required to mitigate the risk of financial issues disrupting project implementation or leading to non-compliance to loan covenants/grant agreements. The Agency for Land Reclamation and Irrigation (ALRI), the EA for 2 of this project’s 4 intended outputs, did not monitor the commercial bank that held the advance accounts for said outputs. When the bank became insolvent, part of the advance accounts was frozen, and was refunded only after government intervention albeit with significant delay. The experience indicates weaknesses in fiduciary oversight and financial management practices in the ALRI, which could have been mitigated if proper assessment was made of ALRI’s financial management at appraisal. For another output, the EA has not shared information about compliance with the financial management action plan or internal control although external consultants were retained to help address this matter.