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Performance audit on the management of funds by the Sustainable Development Fund of Moldova

April 02, 2019 views 902

 

On April 2, the Court of Accounts examined the Performance Audit Report "Are the investments of the “Transition to Agricultural Performance” Project effectively and efficient managed by applying the existing mechanisms?”.

The purpose of this mission was to evaluate the efficiency and effectiveness of applying the existing mechanisms by the parties responsible for the exercise of the asset management process and ensuring the sustainability of the Project, as well as identifying the impediments that influence performance in this area, removing them. The audited period covered the period 2016-2018, the value of the evaluated financial assets amounting to 125 million USD.

In order to support the findings and formulate recommendations, the audit collected adequate evidence from the Ministry of Regional Development and Environment (MRDE), Agency "Apele Moldovei", Sustainable Development Fund of Moldova, Credit Line Directorate, State Hydrometeorological Service, Implementation Unit and Project Management Increase of Food Production (2KR), Water Users' Associations for Irrigation as well as some beneficiaries of the Project. The "Transition to Agricultural Performance" project, amounted of 129.4 million US, was one of the two projects implemented under the “Compact” Program for five years with the signing of the Implementation Agreement in 2010 between the Government of the Republic of Moldova and the Government of the United States of America through the Millennium Challenge Corporation. Within the Project, 4 activities were developed to promote the transition to efficient agriculture through the reconstruction of irrigation systems, the reforming of the irrigation sector, the facilitation of access to financing in agriculture and the increase of sales of high value products.

The audit mission objective was to respond to the following general question: "Does the existing mechanisms and methods ensure efficient and effective management of the investments made under the “Transition to Agricultural Performance” Project?".

 

In this regard, the audit team formulated 2 specific questions:

1. Did the measures implemented by the actors involved in the implementation of the irrigation activities have led to efficient and effective use of the centralized irrigation and drainage systems built and rehabilitated within the Project?

The lack of control procedures between MRDE and the subordinated institutions, the irresponsibility of the Apele Moldovei Agency's specialists, delays in designing the Cahul drainage system by the Sustainable Development Fund of Moldova highlighted some issues, expressed by:

  • Not ensuring the efficiency of the national irrigation system, constrained to increase the agricultural yield by the state authorities responsible for attributions in the aspect of the development of the domain priorities;
  • the non-registration by the Agency "Apele Moldovei" of the property right for the rehabilitated assets in the amount of 49.8 million lei does not fully ensure the state patrimonial availability;
  • Non-insurance by the Monitoring and Surveillance Unit of the necessary support to the Associations of Water Users for Irrigation in order to achieve the performance of the operation of the Rehabilitated Centralized Irrigation Systems, despite the amount of 0.5 million lei made for the establishment and organization of the Unit ;
  • the non-use of the goods in the amount of 61.8 thousand lei in order to obtain the expected results in terms of the irrigation infrastructure rehabilitation;
  • The lack of full use of irrigation land by agricultural producers results in insufficient use of centralized irrigation systems as well as the non-profit as a result of the investment made;
  • The low degree of irrigation of agricultural land condition the amount of irrigation payment, which influences the efficiency of the operation of centralized systems for irrigation and indirectly affects the cost of agricultural production;
  • The inefficiency of control by the Monitoring and Surveillance Unit and the Censors Committees of the Water Users' Associations for Irrigation has attested to the lack of effective record of the amount of water consumed for irrigation by the Associations, which directly conditioned the increase in water payments and the reduction the number of irrigation applicants;
  • Not fully ensuring by the Sustainable Development Fund of Moldova the efficiency of the drainage infrastructure by delaying the design terms of the Cahul drainage system, as well as the full use of Chircani-Zărneşti constructions.

2: Have the institutional capacities been effectively fortified to achieve high performance in terms of the functioning of the goods procured under the Project and to monitor the quality and quantity of available water resources?

In order to respond to the second sub-objective, the audit assessed the existing institutional capacities to ensure the operation of the assets invested in the Project. Thus, for the efficient and effective use of Donor-funded goods for the exploitation of the rehabilitated irrigation infrastructure, the involved structures include the Ministry of Regional Development and Environment, Sustainable Development Fund of Moldova, the Credit Line Directorate, the Implementation and Project Management Unit Food Production 2 KR were to ensure consistent actions related to their monitoring and operation.

As a result, the inefficiency of the involvement of those responsible in the irrigation equipment sales process, the insufficiency of including decision-makers by perpetuating inefficient management have highlighted some issues:

  • The inefficiency of the monitoring activities by the unit's officers influenced the implementation of the 2KR Sales Program;
  • The inefficient monitoring of the water quantity in real time, as well as the inefficient operation of the Water Resources Information System (4.8 million lei invested), have led to a complete failure to complete data on water resources available for the development of the agricultural sector, irrigation;
  • the failure of the State Hydrometeorological Service to ensure the efficiency and effectiveness of the invested assets amounting to 2.0 million lei as a result of carrying out the activities of the Project, by failing to fulfill the assumed attributions.

As a result of this, it is concluded that achieving efficiency and effectiveness through the application of the existing mechanisms for ensuring the sustainability of the investments made under the Project requires the continuous strengthening of the processes for their sustainable management, despite the achievement of some activities under the Project, namely: on the rehabilitation of the Centralized Irrigation Systems, the elaboration of the legal framework for the establishment and functioning of the Water Users' Associations for Irrigation, as well as the treatment of the competitiveness by crediting the agricultural producers.