Document of The World Bank Report No: 22597-CHA PROJECT APPRAISAL DOCUMENT ON A PROPOSED LOAN IN THE AMOUNT OF US$104 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR A TUBERCULOSIS CONTROL PROJECT February 28, 2002 Human Development Sector Unit East Asia and Pacific Region CURRENCY EQUIVALENTS (Exchange Rate Effective February 14, 2002) Currency Unit = Renminbi (RMB) RMB 1.0 = US$0.12 US$1 = RMB 8.3 FISCAL YEAR January 1 -- December 31 ABBREVIATIONS AND ACRONYMS AIDS - Acquired Immune Deficiency Syndrome CAPM - Chinese Academy for Preventive Medicine CAS - Country Assistance Strategy DDC - Department of Disease Control, of MOH DFID - Department for Intemational Development, United Kingdom DHLY - Discounted Healthy Life Year DOTS - Directly Observed Treatment, Short-Course DRS - Drug Resistance Surveillance FLO - Foreign Loan Office, of MOH HIV - Human Immunodeficiency Virus IBRD - International Bank for Reconstruction and Development ICB - International Competitive Bidding IDA - Intemational Development Association IEC - Information, Education and Communication IMR - Infant Mortality Rate MCH - Maternal and Child Health MDR - Multidrug-resistance MIS - Management Information System MMR - Maternal Mortality Ratio MOF - Ministry of Finance MOH - Ministry of Health NCB - National Competitive Bidding NTP - National Tuberculosis Control Program PIP - Project Implementation Plan SDPC - State Development and Planning Commission SOE - Statement of Expenditure STD - Sexually Transmitted Disease U5MR - Under Five Mortality Rate UNICEF - United Nations Children's Fund WBOB - World Bank Country Office, Beijing WHO - World Health Organization Vice President: Jemal-ud-din Kassum, EAPVP Country Manager/Director: Yukon Huang, EACCF Sector Manager/Director: Emmanuel Jimenez, EASHD Task Team Leader/Task Manager: Jagadish Upadhyay, EASHD CHINA TUBERCULOSIS CONTROL PROJECT CONTENTS A. Project Development Objective Page 1. Project development objective 3 2. Key perfornance indicators 3 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 3 2. Main sector issues and Governnent strategy 3 3. Sector issues to be addressed by the project and strategic choices 5 C. Project Description Summnary 1. Project components 5 2. Key policy and institutional reforms supported by the project 6 3. Benefits and target population 8 4. Institutional and implementation arrangements 8 D. Project Rationale 1. Project alternatives considered and reasons for rejection 10 2. Major related projects financed by the Bank and other development agencies 11 3. Lessons learned and reflected in the project design 11 4. Indications of borrower commitment and ownership 13 5. Value added of Bank support in this project 13 E. Summary Project Analysis I. Economic 14 2. Financial 14 3. Technical 15 4. Institutional 16 5. Environmental 17 6. Social 18 7. Safeguard Policies 19 F. Sustainability and Risks 1. Sustainability 20 2. Critical risks 21 3. Possible controversial aspects 22 G. Main Loan Conditions 1. Effectiveness Condition 22 2. Other 22 H. Readiness for Implementation 24 I. Compliance with Bank Policies 24 Annexes Annex 1: Project Design Summary 25 Annex 2: Detailed Project Description 29 Annex 3: Estimated Project Costs 33 Annex 4: Cost-Effectiveness Analysis Summary 34 Annex 5: Financial Summary 39 Annex 6: Procurement and Disbursement Arrangements 40 Annex 7: Project Processing Schedule 50 Annex 8: Documents in the Project File 52 Annex 9: Statement of Loans and Credits 53 Annex 10: Country at a Glance 57 Annex 11: Social Assessment 59 Annex 12: Summary of Blending Mechanism 72 MAP(S) IBRD Map. No. 31620 CHINA Tuberculosis Control Project Project Appraisal Document East Asia and Pacific Region Human Development Sector Unit Date: February 28, 2002 Team Leader: Jagadish P. Upadhyay Country Manager/Director: Yukon Huang Sector Manager: Enimanuel Jimenez Project ID: P071147 Sector(s): HC - Primary Health, Including Reproductive Health, Chi Lending Instrument: Specific Investment Loan (SIL) Theme(s): Health/Nutrition/Population Poverty Targeted Intervention: Y Program Financing Data [X] Loan [ ] Credit [ ] Grant [ ] Guarantee [ Other: For Loans/Credits/Others: Loan Currency: United States Dollar Amount (US$m): US$104.00 Note: The United Kingdom's Department for International Development (DFID) has agreed to provide to the PRC a grant of about US$37 million to be blended with an IBRD Loan of US$104.0 million to reduce the effective interest rate to the PRC. Borrower Rationale for Choice of Loan Terms Available on File: 3 Yes Proposed Terms (IBRD): Fixed-Spread Loan (FSL) Grace period (years): 8 Years to maturity: 20 Commitment fee: 0.85% per annum from the date the Front end fee (FEF) on Bank loan: 1.00% charge accrues to, but not including Payment for FEF: Capitalize from Loan Proceeds the 4th anniversary of such date; and 0.75% per annum thereafter. Initial choice of Interest-rate basis: Auto. Rate Fixing by period 6 months Type of repayment schedule: [X] Fixed at Commitment, with the following repayment method (choose one): level [ I Linked to Disbursement Conversion options: [X]Currency [Xjlnterest Rate [X]Caps/Collars: Financing Plan (US$m): Source Local Foreign Total BORROWER 138.33 0.00 138.33 IBRD 65.88 38.12 104.00 Total: 204.21 38.12 242.33 Borrower: CHINA Responsible agency: MINISTRY OF HEALTH Ministry of Health Address: 154 GuLou XiDa Jie, Xi Cheng District, Beijing 100009, China Contact Person: Dr. Cai Jiming, Deputy Director, Foreign Loan Office, Ministry of Health Tel: (86-10) 8404-5750 Fax: (86-10) 8404-5749 Email: flomoh@public.bta.net.cn Estimated disbursements ( Bank FY/US$m): FY 2002 2003 2004 2005 2006 2007 2008s 200 Annual 10.15 19.56 17.78 14.61 11.04 11.13 13.03 6.70 Cumulative 10.15 29.71 47.49 62.10 73.14 84.27 97.30 104.00 Project implementation period: Seven Years Expected effectiveness date: 06/24/2002 Expected closing date: 03/15/2010 OCS PAD FPn A. MR . d, 2WO -2 - A. Project Development Objective 1. Project development objective: (see Annex 1) The objective of this project is to reduce tuberculosis morbidity and mortality through an effective and sustainable National TB Control Program, especially among the poor. 2. Key performance indicators: (see Annex 1) The final outcome of the national program will be measured by the reduction of tuberculosis prevalence rate and the decrease in mortality from tuberculosis in China. The project's main performance indicators during the project life will be to achieve in the project area: (a) 70% case detection rate of new smear-positive cases; (b) at least 85% cure rate of smear-positive TB cases; (c) full funding of critical program components, including free treatment for all smear-positive TB cases; and (d) establishment of adequate and effective institutions to control TB at all governmental levels. B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: 16321-CHA Date of latest CAS discussion: 03/18/1997 -- PR - 5/28/1998 The project advances the World Bank's assistance strategy for China as expressed in the following three documents: (a) It responds to the emphasis in the Bank's Country Assistance Strategy for China's health sector, namely, the prevention and control of infectious diseases, such as tuberculosis, with particular efforts to benefit the poorest areas; (b) It expands public funding for disease prevention as recommended by the Bank's most recent health sector report on China: Issues and Options in Health Financing, August 1996; and (c) It forms an integral part of the World Bank Strategy for Health, Nutrition, and Population in the East Asia and Pacific Region, June 2000, which cites tuberculosis as an infectious disease that remains one of the important public health problems for the region, particularly affecting poorer populations. 2. Main sector issues and Government strategy: Main Sector Issues Unfinished Agenda. Despite remarkable improvements in overall health status in the past decades, China's health services remain inadequate and regional disparities are very wide. A significant proportion of the country's population still lacks satisfactory provision of basic health care, and access to health care is inequitable and often unaffordable for many poor conmmunities. Consequently, health status varies greatly among geographical areas and income groups. For example, while the national maternal mortality ratio was 56 per 100,000 live births in 1999, it was 38 in urban areas and 80 in rural areas. Similarly, while the national under-five mortality ratio was 25 per 1,000 births in 1999, it was 16 in urban areas and 49 in rural areas. China's per capita total public and private health spending was RMB 332 in 1993, ranging from RMB 92 in Guizhou to RMB 490 in Guangdong. -3 - Tuberculosis tops the list of infectious causes of death in China, with over 400 million persons estimated to be infected, including five million persons with the active disease, and 150,000 persons dying from the disease. Each year, 1.3 million additional persons develop active TB. The rate of TB in impoverished rural areas is nearly three times higher than in economically developed urban areas. This is attributed to poor living conditions, insufficient financial resources to pay for health care, reduced access to health services, and lack of knowledge about TB. As poverty facilitates the spread of TB, it also contributes to the cycle of poverty for many in China. Physical disease and economic hardship fonn a self-perpetuating vicious cycle. Financing Health Care. Health financing in China has shifted from a collective or centralized system to a more decentralized approach. The percentage of government funds used for public health services has decreased, while charges and user fees have become increasingly common as sources of income for health care workers and facilities. For example, the ratio of public to private health expenditures has markedly declined, from 1.7:1 in 1990 to 0.75:1 in 1997. The impact of this shift has been especially problematic for TB control as market i.. i IrWC lead to increased public health risks. Tuberculosis, which disproportionately affects the poorest populations, rh,.1!1ir. poverty reduction goals. In areas without special funding programs, cost recovery and user charges have led to disincentives for patients to seek care and to continue treatment to completion, *hcreh\ increasing risks of transmission and death and development of drug resistance. Public health facilities lack equipment or resources to perform activities like sputum microscopy, and supervision of village doctors, along with training or surveillance activities, are poorly conducted, if at all. Preliminary reports suggest that parts of China may be already facing some of the highest rates of multidrug-resistant (MDR) TB in the world because of poorly managed TB control programs, as either patients do not take their drugs rTO - ll.IrIr. or the drug supply is interrupted. MDR-TB poses one of the gravest risk-s to the control of TB. It can cost more than 100 times to treat in some settings and, even then, only 60 percenit of patients are cured as compared to 95 percent with non-drug-resistant TB under proper patient management. New Challenges. Rapid economic growth, reform measures, growing openness, and the country's epidemiological transitions have brought new health problems, includirwu a major increase in chronic diseases, the emergence of infections from the human immunodeficiency virus (HIV), and reemergence of sexually transmitted diseases. Currently, more than 600,000 persons are estimated to be infected with HIV and this number will increase. Overall, one-third of those with HIV/AIDS will die from TB. By pursuing HIV prevention and by implemrenting an effective TB conitrol program, China can minimize the impact of HlIV-associated TB and improve the care of those with HIV/AIDS. Government Strategy The Govemrnment has made efforts to complete the unfinished tasks and respond to newer challenges. Practically, all ten World Bank assisted health projects in China address these old and new challenges. Recent emphasis on accelerated development of poorest inland provinces is expected to provide a further boost toward these goals. To control tuberculosis, the government has taket si LIi ficaLin steps since 1990. Their efforts have included the implementation of two large TB control projects utilizing the WHO-advocated directly observed treatment, short-course (DOTS) strategy. The first major project was the Baank-financed Infri'ous and Endemic Disease Control (IEDC) Project (Cr. 2317-CHA), which was approved in December 1991 and covers 13 of China's current 31 provinces. The second project, the S tiOnmilieriinc and Promoting TB Control Project (1993), was jointly funded by the Ministry of flealth and the provinces, and was implemented in 15 provinces not covered by the IEDC Project. In addition, the province-level cities of Beijino. Tianjin, and Slianghai have their own well-organized TB control programs -4 - with well trained personnel and sufficient equipment. More recently, the Government has announced major initiatives to control TB nationally, including a pledge to significantly increase Central funding. In March 2000, China announced its support for the global Stop TB campaign at the Amsterdam conference. This has translated into a sustained political commitment, as evidenced by the video conference held by the State Council with high-level government leaders and the development of the State Council plan to control TB in China. The TB Control program under the IEDC Project has become very successful in its coverage and remarkable cure rates, and was cited by WHO as one of the most successful TB control interventions in the world. However, many of achieved gains will be lost if the government does not provide adequate resources to continue the program after Bank financing concludes in mid-2002. The Government initiated TB control program has also achieved a very high level of patient cure rates. However, the coverage tends to be much lower than under the IEDC Project, mainly because patients are charged for all diagnostic services, only a small percentage of patients receive free treatment, and there are no special incentives provided to health workers for case identification and case management. The preparation of the proposed project would build on the lessons leamed from the IEDC Project as well as from other programs. 3. Sector issues to be addressed by the project and strategic choices: This project will address three sets of issues related to tuberculosis control in China that represent critical elements of China's health sector issues: (a) expanding free access to high quality tuberculosis care focusing on the poorest regions of China; (b) expanding the domestic resource base to ensure sustainability of the program; and (c) laying the institutional foundation to implement a uniform nationwide approach to tuberculosis control in China. Focusing on the poorest areas is essential as they have the highest rate of tuberculosis and the greatest need for assistance. Experience has demonstrated that providing free access is critical to achieving an effective control program for the infectious smear positive type of tuberculosis. Recovering costs from the patients reduced the demand for services and resulted in incomplete treatment and increased risk of development of drug resistance. The proposed project would fully finance the implementation of a comprehensive TB control program in sixteen provinces focussing primarily on poor provinces. In addition, the project recognizes that a national approach to TB control is essential to ensure that no provinces are left out of an effective program. Therefore, the project will assist the Government in its efforts to formulate and implement a national strategy, approach, and framework, which will encompass all TB control activities in the country. The project will also assist the Govemment with institutional strengthening at all levels of the health sector. The importance of establishing a sustainable financing mechanism has been well demonstrated by the experience of the IEDC Project, which has proved very successful but faces the risks of inadequate funding in some provinces to sustain the program. Therefore, participation by different levels of govemnment as part of their regular budgetary activities is considered the only effective path to ensure the adequate funding necessary for a sustainable TB control program. This will also be consistent with the strategy of increasing public funding for this important public health program. C. Project Description Summary 1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown): The project will have three broad components, one at the National level and two at the provincial - 5 - level, as described below: Component 1. Strengthened National TB Policies and Programming 1.1 Institutional Development 1.2 Policy and Program Development 1.3 Coordination and Management Component 2. Improved Access to and Quality of TB Services at Province Level 2.1 Prograrn Management 2.2 Service Delivery 2.3 Patient-focused Innovations Component 3. Strengthened Institutions and Financing to Deliver TB Program at Province Level 3.1 Institutional Strengthening 3.2 Expanded Financing for Sustainable TB Control Indicative Bank- % of Component Sector Costs % of financing Bank- (US$M) Total (US$M) financing 1. Strengthened National TB Policies Institutional 0.0 0.0 and Programming Development 1.1 Institutional Development 0.66 0.3 0.59 0.6 1.2 Policy and Program Development 1.66 0.7 0.32 0.3 1.3 Coordination and Management 2.17 0.9 0.67 0.6 2. Improved Access to and Quality of Specific Diseases, 0.0 0.0 TB Services at Province Level including Malaria, TB, Others 2.1 Program Management 50.62 20.9 27.78 26.7 2.2 Service Delivery 121.80 50.3 45.47 43.7 2.3 Patient-focused Innovations 24.34 10.0 15.14 14.6 3. Strengthened Institutions and Specific Diseases, 0.0 0.0 Financing to Deliver TB Program at including Malaria, Province Level TB, Others 3.1 Institutional Strengthening 35.14 14.5 12.31 11.8 3.2 Expanded Financing for 4.90 2.0 0.68 0.7 Sustainable TB Control Total Project Costs 241.29 99.6 102.96 99.0 Front-end fee 1.04 0.4 1.04 1.0 Total Financing Required 242.33 100.0 104.00 100.0 2. Key policy and institutional reforms supported by the project: The proposed project includes the following policy and institutional reforms: Increasing resources for a sustainable tuberculosis control program. China has demonstrated its - 6 - capacity to implement a very successful TB control program. However, as experienced under the Bank-financed IEDC Project, local commitments can be inadequate for post-project sustainability. This issue has received considerable attention under the proposed project and a number of steps have been taken. First, there is a significantly higher level of financial inputs from the Central and provincial Governments to support TB control program at the county level. These inputs will be primarily targeted to poorer areas which under the IEDC Project had greater difficulty implementing the project effectively and were least able to sustain the program because of financial constraints. Many provinces have committed to meet all or parts of their counties' counterpart funding responsibilities. Second, the project will require the Government to take a number of steps during the implementation period, including: (a) the commitment from all provinces to assume the counterpart funding obligations of at least the nationally and provincially designated poverty counties; (b) the commitment from all provinces to allocate the project's funding as part of their five-year plans and regular budgets instead of ad hoc allocations; (c) commitment by each province to submit its plan to improve the program's sustainability in the concerned province; and (d) commitment by the Ministry of Health to give the Bank an opportunity to discuss and comment on the provincial sustainability plans (see Section G). Free access to TB diagnosis and treatment. TB results in the highest number of deaths among infectious diseases in China. It is a public good and a most cost effective health investment. Experience has shown that a fee-for-service system can seriously hamper the control of this infection and adversely affect the poorest families most. The project would seek national and provincial agreement to ensure full access of services to all TB patients, free diagnosis for all patients, and free treatment to at least smear positive and seriously ill smear negative cases. Pilot programs will test the feasibility and the technical and social benefits against the costs of extending free treatment to all smear negative cases. Implementing a consistent national TB control program. The project would help the Government to prepare a national TB control program and develop an implementation plan for the national program. Restricting unauthorized treatment. Chinese patients often face incorrect or expensive treatments from unqualified practitioners. They also face expensive fee-for-service treatment from hospitals or clinics. Both have had undesirable financial consequences and also helped create multidrug-resistant TB. The project will seek assurances to strengthen measures to prevent unauthorized treatments from the public facilities as well as from private practitioners and to refer all cases to designated clinics. In addition, laws and regulations to restrict the over-the-counter sale of TB drugs will be developed. Strengthening of implementation capacitv. Project implementation capacity needs to be strengthened at the national as well as at the provincial levels. At the national level, the need for planning, coordination and monitoring will become greater as China embarks upon a national program covering the whole country instead of the project approach. At the provincial level, the demand for management of TB control will be much greater especially in those areas where the DOTS strategy will be first introduced with comprehensive coverage province wide. Program implementation will be carefully phased so that provinces with experience in DOTS under the Bank-supported IEDC Project can provide technical assistance to other provinces. Improved information, education and communication (IEC) through social assessments. To maximize case finding and to reach the neediest populations, all provinces will design more effective IEC programs based on more deliberate and better funded social assessments. Special attention will be provided to ensure that benefits are reached to ethnic minorities, floating migrant populations and those living in remote areas. To be responsible for social assessments, the central program office will recruit one full-time social scientist and each project province will designate one official. -7 - 3. Benefits and target population: Benefits. The project will directly benefit 688 million people living in sixteen provinces of China. It is expected to treat two million TB patients, which is over 70% of the national target during the project period. It would save at least 100,000 people from death due to tuberculosis during their most productive years, and decrease the number of prevalent cases through enhanced case detection and effective treatment. The poorest families are expected to benefit most as they have a disproportionately higher disease burden, and face more severe economic consequences. Patients, their families and communities will directly benefit from the avoidance of illness costs, disability and death, and from the preservation of productive capacity. The project will assist in China's efforts to establish and implement a national TB control policy plan. It will help strengthen the institutional capacity of the Central and provincial governments to design and manage effective and financially sustainable TB control programs. Target Populations. The project would cover sixteen provinces which were selected based on their low per capita income, high epidemic situation of TB, and commitment to implement the program involving substantial additional resources. Because of the infectious nature of the disease, the project will cover the entire populations of the sixteen selected provinces, which totaled 688 million in 1999. The project's benefits will be greater on poorer populations who tend to be disproportionately more affected by TB than the average populations. The project will include special measures to benefit vulnerable populations like ethnic minorities, poor women, and older people who tend to have inadequate access to TB control programs. 4. Institutional and implementation arrangements: Project Implementation. The project implementation period starts January 1, 2002 and it will be implemented over seven years. The Ministry of Health (MOH) will have the overall responsibility for coordination of project implementation and conduct of national level activities. The National TB Control Program Coordination Committee will oversee this project as part of China's National TB control program and mobilize official commitment at the highest levels at the Center and in the provinces. This Committee will be chaired by a Vice Minister of MOH and will include representatives of other key Ministries, including the Ministry of Health, Ministry of Finance, and the State Development and Planning Commission. MOH's Department of Disease Control (DDC) will be responsible for policy and program development, planning, and overall technical guidance. DDC will carry out most of these functions through the National TB Prevention and Control Center, established within the Center for Disease Control (CDC), and through the National TB Control Expert Committee. CDC is the recent successor of the Chinese Academy of Preventive Medicine (CAPM). The Tuberculosis Control Program Office, under the supervision of the National TB Prevention and Control Center, will carry out day-to-day activities, coordinate with other projects and link with the National TB Control Expert Committee. The TB Control Program Office will also assist DDC to implement the national level activities of the project. The National TB Control Center will take the lead on training, health education, operational research, and technical guidance under this project. The Foreign Loan Office (FLO) of MOH, which is fully experienced to implement Bank-assisted projects, will ensure the compliance of the project related commitments and requirements, including project management and coordination, procurement, accounting, monitoring and reporting, financial, and auditing. The project will require significant management, coordination, and implementation support from both the TB Control Program Office and FLO. By the end of June 2002, there will be a full-time social scientist at the National TB Prevention and Control Center. Practically all of the tuberculosis control activities, which are the bulk of this project, will be - 8 - implemented in the provinces with most activities falling under the counties. The management and coordination of these activities will be the responsibility of the concemed provincial government. Each project province will establish a leading group following the central model and each will also maintain a foreign loan office, under the direction of a project director, to handle the logistics of project implementation. The project will strengthen the TB program implementation capacity at the provincial, prefecture/city and county levels. DFID Financing. (Annex 12 provides fuither details of the blending mechanism.) This project is also designed as a pioneering effort to combine grant funds with regular IBRD loans to soften the terms for high priority social sector projects with the overwhelming objective of poverty reduction. The United Kingdom's Department for International Development (DFID) has agreed to provide to the PRC a grant of US$37.44 million to be blended with an IBRD Loan of US$104.0 million to reduce the effective interest rate to the PRC. The DFID grant will be used to prepay 36 percent of IBRD disbursements at regular intervals in order to reduce the effective interest rate on the total Bank Loan to about two percent per annum over the 20 year period. MOF will pass the proceeds of the Loan to the project provinces at the guaranteed interest rate of two percent per annum. The DFID grant includes an additional cushion to mitigate the interest risk bome by MOF. DFID has played a very active role during project development and will also be fully involved during the project implementation. In addition to this IBRD/DFID financing, the PRC also expects to receive assistance from other external sources, including a grant from Japan, to help reduce its share of financing of the TB control program in the provinces. Monitoring and Supernsion. A project implementation plan (PIP) was prepared by MOH's technical experts and the provinces through an iterative process based on discussions with successive Bank/DFID missions and technical assistance from WHO. The final PIP, discussed and agreed during negotiations, will provide the basis for project implementation, monitoring, and supervision. The project's implementation progress will be monitored through semi-annual progress reports, containing essential data on the implementation of the project components and sub-components, and through field supervision visits. Results of a detailed baseline survey will be available by December 31, 2002 against which the project's impact will be measured. Progress in the improvement of the project's sustainability will be measured against each province's sustainability plan to be provided by December 31, 2002. Achievement of project objectives will be assessed through a Mid-term Evaluation to be carried out by May 31, 2005, and through a project completion review jointly produced by the Borrower and the Bank at the end of the project. Regular surveillance data will allow impact assessment among various population groups including the reduction in vulnerabilities associated with program delivery. Financial Management. (See Annex 6 for detailed description. The detailed Financial Management Assessment is located in the Project File). As for other Bank supported health projects, financial management will be the responsibility of the project units, the FLO in MOH and bureaus of finance (BOFs) at each level, and the Ministry of Finance (MOF). There will be a Special Account for the project located in a commercial bank acceptable to the Bank, and managed by MOF. A second generation special account will also be established and managed by the provincial financial bureau of each of the sixteen project provinces. The internal disbursement procedures will involve the project management offices and financial bureaus of each level. Separate project accounts will be kept in the project units and offices at each level. Each project unit will prepare regular financial reports to submit to higher level project office. FLO/MOH will consolidate provincial reports and prepare the final financial report for the whole project. MOH/FLO has the experience and ability to handle financial management of Bank-assisted projects at the Central level. The project accounts and financial statements will be audited by the China National Audit Office or its local offices, in accordance with standard practice in China, which has been found satisfactory by the Bank. -9- Procurement and disbursement. (See Annex 6 for detailed description). FLO/MOH will oversee project procurement and will be responsible to ensure that the Bank Guidelines are followed. FLO is highly experienced to manage the Bank's procurement procedures. FLO will closely manage all international competitive bidding (ICB). ICB procurement will be carried out by one of the certified trading companies that is knowledgeable about the Bank's procurement rules and procedures. Most non-ICB procurement will be decentralized to the provinces and, to manage such procurement, project offices will be established at the provincial level with adequate trained staff. The project will use the same arrangements as in other health projects for submission and validation of claims through the project office at each level, with review by BOF at each level before being passed to the level above. The funds are transferred from level to level through commercial banks nominated by the BOF at each level. During project implementation, the World Bank Country Office Beijing (WBOB) procurement team will be responsible for all review and communications with the Government regarding ICB and national competitive bidding, except when alternative arrangements are made. D. Project Rationale 1. Project alternatives considered and reasons for rejection: Justification for the Tuberculosis Control Project. Tuberculosis is the largest killer among infectious diseases in China. Nearly a third of the country's population is considered infected, and five million persons carry the active (contagious) disease. Each year 1.3 million additional persons develop the active disease and 150,000 die as a result. Over 75% of China's TB patients are 15-54 years old, affecting prime working life. This disease disproportionately hurts the poorest families. Not only are the poor more vulnerable to this active disease, but TB has also been the single most important health reason of impoverishment. Therefore, controlling TB has been considered a top priority health task in China at this time. An approach of system reform was discussed but rejected in favor of targeted approach because the system approach would not be appropriate at this time given: (a) the overall scale of the problem; (b) the substantial technical and management challenge still ahead to adopt safer and more effective TB control methods throughout the country; and (c) the need to develop commitment to sustain them financially and institutionally. This approach would be pursued within the clear context of overall priorities and health system reform measures adopted by the Government. Consideration of a sector approach was also rejected given the need for focused attention on methods to best improve and sustain access and service quality targeted for the poor. Adoption of DOTS Approach. The project follows the well-proven DOTS strategy (the WHO-recomnmended strategy to control TB) in its design. This approach has been very successfully implemented under the IEDC Project. Alternative methods of treatment, which were prevalent in the past, were considered and rejected as too lengthy, less effective, and too risky to avoid multidrug-resistant TB, which appears to be a growing problem in China. National TB Control Program. The DFID/Bank project team had discussed the options of either implementing the project throughout China or restricting it exclusively in the specific provinces selected by the Government under a set of agreed criteria leaving the rest of the country completely outside the project. Neither option was considered appropriate. Trying to cover the whole of China was considered unrealistic at this time because it would be inappropriate to delay the project everywhere until all provinces were ready to make their commitment for substantially increased resource allocations. Covering the whole country - 10- would also have meant spreading the central and external resources too thin and hurting particularly the poorer regions of China. On the other hand, confining the project exclusively to selected provinces would leave many provinces outside of the improved TB control system. Therefore, in addition to implementing an intensive program in the selected sixteen provinces, the project team decided to include activities that would assist with the finalization of the National TB Control Program, development of an irnplementation plan, and formulation of improved policies and programs. 2. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned). Latest Supervision Sector Issue Project (PSR) Ratings ______________________________ _____________(Bank-financed projects only) Implementation Development Bank-financed Progress (IP) Objective (DO) Implementation of short-course China: Infectious and Endemic HS HS chemotherapy for tuberculosis control Disease Control Project (Cr. in thirteen provinces of China. 2317-CHA) Basic health services, including TB China: Basic Health Services S S control, as part of poverty alleviation. Project (Cr. 3075-CHA) Assist in the prevention and control of China: Health Nine Project S S HIV/AIDS. (Cr. 3201/Ln. 4462-CHA) Improvement of quality and access of China: Comprehensive HS HS MCH care in China's poorest Maternal and Child Health Care provinces, with poverty alleviation Project (Cr. 2655-CHA) focus. Other development agencies Implementation of TB control strategy Strengthening and Promoting using DOTS strategy in fifteen TB Control Project provinces in China. IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory) 3. Lessons learned and reflected in the project design: Valuable lessons have been leamed from the design and implementation of the Bank-assisted IEDC Project (Cr. 2317-CHA), as well as from the experience of the MOH-assisted Strengthening and Promoting TB Control Project. Lessons from TB control activities in other countries have also been considered. The most important lessons from activities in China can be summarized as follows: Technical Design. Both the IEDC and the MOH-assisted projects clearly illustrated that DOTS can be a well appreciated and very successful method of TB control in China. The projects showed that Chinese officials were fully capable of implementing a very successful DOTS program. Also, China has the basic health infrastructure well-suited to mounting successful TB control program and achieve very high public health impact. However, the extent of success depends upon substantial additional resources, which are not easily available without strong commitment and the strengthening of management and implementation capacity at provincial levels and below. - 11 - Political Commitment. It is very clear that a successful TB control program requires a high level of commitment from provincial and local levels, mainly because many officials consider free access to TB service too expensive and even unnecessary in China's cost recovery system based on fee-for-services. In the IEDC Project, it was clear from inception that senior officials of some project provinces were not inclined to spend significantly increased resources and, as a result, the project could not attain 100 percent coverage in all provinces. The lesson is clear that the project should not expect the required additional financial allocations from provincial and local levels unless they are fully discussed and agreed beforehand. Resistance from within Health Sector. Free TB service removes potential income from those who would benefit from fees, including local hospitals. Therefore, determined actions are required to ensure intemal cooperation for full compliance with the referral program. Furthermore, while the provision of case management incentives to health workers can significantly improve TB control, this can also create dissatisfaction among other health staff who do not receive such incentives for their other activities. On the other hand, in order to motivate staff to continue working in TB control programs, case management incentives must be comparable to compensation missed by not charging the patients. Sustaining the Success. The IEDC Project also demonstrated that program sustainability would be extremely difficult unless the program can be implemented as part of the regular budget and financing system rather than from ad hoc, off-budget, allocations. Provision of Quality Drugs and Equipment. High quality, low priced anti-TB drugs were procured and supplied through competitive procedures with excellent effects on the project. On the other hand, equipment procured through ICB did not always meet required standard or expectations due to incomplete technical specifications and/or insufficient attention paid to quality. This caused dissatisfaction at provincial and lower levels. The lesson is that procurement procedures should carefully build the quality requirements and after sales service. Increasing Coverage and Cure Rates amongst Vulnerable Groups. With free and more accessible diagnosis and treatment services and with improved information, education and communication (IEC), the IEDC Project reached DOTS coverage to over 95 percent of population and cure rate to over 90 percent in the project provinces. However, even after seven years' full implementation, the IEDC Project has been able to identify only about 55 percent of the TB cases in the project areas. The project's lesson has been clear that, to reach the project's goal of 70 percent case identification, much more extensive and more innovative IEC programs will be required to raise awareness amongst the population and health service providers and to reduce any stigma associated with the disease. Hence the project includes programs to improve the effectiveness of IEC campaigns through the use of social assessments, by involving village committees, women's groups, traditional heath workers and patient support groups and others as appropriate, and through targeting of IEC at specific groups based on needs identified by the social assessment techniques. - 12 - 4. Indications of borrower commitment and ownership: There is a high degree of commitment from the Central level. The Central Government has allocated a significant amount of its own resources for TB control for the first time and has indicated its willingness to continue at increasing rates. As one of the world's top 22 high-burden countries, China has made an international commitment to control TB and has played an active role in formulating plans under the global Stop TB initiative. Toward this objective and to improve extemal cooperation, the Government intends to establish an Inter-agency Coordinating Committee to Stop TB to ensure that programs funded by all partners are fully consistent with the National Policy. A National TB Control Program Coordination Committee, under the chairrnanship of a MOH Vice Minister, will oversee the project as well as the National TB control program. It will also mobilize support for TB control at the Central as well as the provincial levels. The National Committee will include membership from MOH, State Development Planning Commission, Ministry of Finance, and the Ministry of Foreign Trade and Cooperation, and will invite others as relevant. A central TB Control Program Office has been established to ensure inter-sectoral cooperation and to oversee the implementation of the proposed project as well as of the National TB control program. MOH surveyed the provinces to ensure that they fully understood the costs and benefits of the program before they applied for assistance under the project. Each project province prepared its own project proposal, which was amalgamated into a single project implementation plan (PIP). The provinces were required to involve all counties to prepare the county-level programs. Workshops were held with all project provinces by MOH and also by the BanktDFID/WHO mission to discuss the project's benefits as well as the provinces' obligations. The provinces indicated a high level of enthusiasm to participate in the project and demonstrated full knowledge of the financial and other obligations. Despite these significantly favorable signs and some concrete actions, the future of the TB program in general and of the project in particular will depend on continuous efforts to raise awareness of the senior officials and to maintain the commitment at high level. A number of steps have already been taken to raise the awareness and others have been planned. Most notable actions include the Nationwide video conference of 2000 to launch TB control campaign, and the National Meeting in November 2001, to launch the State Council endorsed National Plan for TB Control and to review and further improve the provincial commitmnent since the December 2000 video conference to launch of the TB control campaign. Sustaining the project activities will require even more efforts so that local resources fully fund the activities financed under the project. A key role for the National TB Control Program Office will be to advocate effectively for support in the project provinces and in other provinces. 5. Value added of Bank support in this project: The achievements of the IEDC Project are well known and well documented in reports. It would be impossible to achieve its results on such a large scale without the Bank's active involvement. While the project is exceptionally successful from technical and implementation viewpoints, it suffers from uncertainties of future adequate financing, to continue the results before the program becomes a regular activity in the provincial and local levels. The role of the Bank will be critical to design a substantive project that will create a significant impact in reducing TB in a large country like China, and at the same time help increase the sustainability of TB control program in China. The Bank has the unique ability to raise the political commitment so essential for a successful TB program in China for two reasons. First, the Bank has the experience and the capacity for large scale involvement, which would help attain favorable attention from various levels of governments in China. Second, helping raise the country's commitment to public health programs like TB control is one of the - 13- Bank's most important health sector strategies in China and an important recommendation of the last health sector study. Finally, this large project could not have materialized without the joint involvement of the Bank and UK's Department for International Development (DFID). It is also the wish of DFID and other international partners that the Bank should play this important role in effecting a major joint intemational effort for a substantive TB control project in China. DFID's high priority for poverty reduction programs fits extremely well in this case because of the strong cause and effect relationship between TB and poverty. E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8) 1. Economic (see Annex 4): o Cost benefit NPV=US$ million; ERR = % (see Annex 4) * Cost effectiveness O Other (specify) The project supports the effort of the Ministry of Health (MOH) to reduce tuberculosis morbidity and mortality amongst the poorest populations through increased access to diagnosis and treatment as part of an effective and sustainable Tuberculosis Control Program in China. The economic analysis of the project covers the following: (a) rationale for public sector involvement and poverty impact of the project; (b) cost effectiveness analysis of project interventions; (c) risk-sensitivity analysis; and (d) financial sustainability of project interventions. Economic benefits of project interventions are analyzed in terms of lives saved and smear positive TB cases averted. It must be noted however, that this is an underestimate of the actual economic impact of project interventions. Other benefits not quantified here include cost savings from lower health care treatment costs, psychological benefits of a healthy population, poverty reduction (over 25 percent of the population covered are from poverty stricken counties) and improved productivity and efficiency among current and future workers (nearly 75 percent of TB patients in China are between the ages of 15 and 54). The project would under modest assumptions, avert 529,208 smear positive TB cases and 128,421 deaths. Over the seven year lifetime of the project, the effect will be a gain of 2,996,940 Discounted Healthy Life Years (DHLY) at a cost of US$63.23 per DHLY gained. Results of risk-sensitivity analysis show that a 30 percent reduction in project benefits, would result in 2,101,248 DHLY gained at a cost of US$90.20 per DHLY gained. A 50 percent reduction in project benefits, would result in 1,442,167 DHLY gained at a cost of US$131.40 per DHLY gained. 2. Financial (see Annex 4 and Annex 5): NPV=US$ million; FRR = % (see Annex 4) From the experience of the IEDC Project, two issues arise regarding the financing of the proposed project and its sustainability: (a) can provincial and local governments afford counterpart financing during implementation especially in the poor provinces; and (b) can provincial and local governments continue to sustain the TB Control Program in China's decentralized system beyond project implementation? These were given particular attention during project preparation. The overall investment of this project is estimated at US$242.33 million. Of this, US$104.0 million, making up 43 percent of the project total, will be provided by the World Bank loan blended with the DFID grant; US$99.8 million, making up 41 percent of the total, will be provided by local - 14 - governments; and US$38.5 million, about 16 percent of the total, will be provided by central government including any external resources which the government may mobilize. Under the project, central and provincial government will provide special assistance to poverty areas. Central Government's funds will primarily be directed to assist western and poor non-western provinces and will mainly be used for drugs, injection syringes and water. Each province has developed similar approaches to assist poverty areas in their own province and each expects to further increase such assistance. The financial sustainability of the project beyond implementation would require that the recurrent costs of TB control met by the project can be incorporated into provincial budgets after 2008. The recurrent expenditures funded under the project are costs of diagnosis, treatment, case management and supervision and are expected to remain beyond project implementation. Assuming that case detection rates after the project remain unchanged and that health budgets as a percentage of GDP are maintained at current levels, the recurrent expenditures of the TB program would represent between 0.06 percent and 0.09 percent of the total health spending in these sixteen provinces. If the counterpart funds as well as the grant funds provided by the central and provincial governments under the project can be earmarked for the TB program beyond project implementation, the expected recurrent costs of the TB program could be sustained. While China can easily afford to sustain its National TB program, the main problem has been commitment on the part of the provinces. However, it is expected that provincial commitment to support TB control will significantly increase given the pace of China's economic development, ongoing National and international campaigns to raise awareness and advocacy, the anticipated success of the TB program, and the future decline in TB cases. Fiscal Impact: See Annex 4 3. Technical: China is very well exposed to tuberculosis related technical issues, and has over ten years experience in implementing the DOTS approach proposed for this project. Nevertheless, the following issues have been revisited during project design: (a) Diverse needs. The project provinces have diverse characteristics: some are well experienced in successfully implementing DOTS while others are new to this approach and to a comprehensive TB control program; some project counties are far poorer than others. The project design has taken these points into consideration and built in targeted and need-based technical and financial assistance. (b) Operational research. The project addresses mechanism for planning, implementation and dissemination of operational research. A number of high-priority topics have been identified, including: refining DOTS in hard to reach communities; approaches to and costs and benefits from free diagnosis and treatment of all patients (smear positives and negatives); integration of TB in general health services; and relationships with private non-health sector providers. (c) Innovations. The project will mainstream social development objectives throughout the program to deliver services that meet peoples' needs. The will contribute to global evidence base on effective TB control and prevention. Data on gender, residency, ethnicity, age, economic status will be regularly collected and analyzed alongside indicators of case finding - 15 - and cure rates to monitor and measure the program's impact. It will improve design of targeted IEC, which will also test and utilize media and communications approaches which are relatively new to TB control program. (d) Technical policy. To reduce risk of multidrug-resistant TB (MDR-TB) the use of fixed-dose combination.TB drugs will be piloted and then incorporated into the project during the project period. Drug resistance surveillance studies will be carried out in every province to monitor the impact of this policy and, based on results, pilot studies on the treatment of MDR-TB may be conducted. Important technical policy changes over the IEDC Project include: the preference to use auto-disable syringes to improve injection safety; and the removal of fluoroscopy from diagnostic algorithm to enhance patient safety. (e) Emerging health threats. Since the project includes several provinces with higher rates of HIV infection, it will consider the best ways of preventing and treating HIV associated TB before HIV turns into a generalized population epidemic. This is expected to generate a policy on whether and how to implement preventive treatment for TB infection among HlV-infected persons. 4. Institutional: 4.1 Executing agencies: MOH's Department of Disease Control (DDC) will have the overall responsibility for coordinating the project implementation and management of the project as well as of the National TB program. A high-level National Tuberculosis Control Program Coordination Committee will ensure leadership and coordination at the central level. The Committee will have the representation of SDPC, MOF, MOH, MOFTEC and other agencies as required. The Tuberculosis Control Program Office, under the supervision of the National TB Prevention and Control Center, will oversee day-to-day implementation of the National TB control program with this project as an important part. The Center will provide specialized technical support. MOH's Foreign Loan Office (FLO) will be responsible for the project's management, progress monitoring, for providing operational support, and for ensuring the compliance with the Bank's requirements. Most project activities will be implemented within the provinces, especially at county level. There will be similar organizations at both provincial and county levels. The provincial and county level bureaus of health (BOHs) will work closely with their counterpart bureaus of finance (BOFs). 4.2 Project management: MOH has a long and successful track record of coordinating and overseeing the preparation and implementation of this type of project. FLO is very well experienced to comply with the Bank's requirements, including reporting, procurement, financial, and auditing. The central TB Control Program Office, supported by the resources of the TB Prevention and Control Center, will have strong technical capacity to implement this project. It can draw on special skills from other agencies for specialized tasks like IEC. Similarly, the provinces will have access to a wide range of provincial agencies and, through the TB Control Program Office, can also benefit from expertise from outside the concemed province. There is an adequate level of experience in the country and the newer jurisdictions are expected to learn from the more experienced ones. These institutional arrangements are considered fully satisfactory to implement and manage the project and the National TB control program. 4.3 Procurement issues: - 16- Procurement arrangements under the project are discussed in Annex 6. All procurement under the project will be coordinated and overseen by MOH's Foreign Loan Office. FLO is highly experienced to manage the procurement process under the Bank-assisted projects, as this will be the tenth health project under their direct management. An assessment of the procurement capacity of the central project management office (CPMO) and provincial project management office (PPMO) was carried out with the help of questionnaires, visits to three sample provinces and through participation in workshops with all provinces. The assessment has determined that the CPMO and the PPMOs should be capable to manage all procurement activities satisfactorily. Most PPMOs have staff experienced in other Bank-assisted projects. However, the assessment found a few country-wide procurement issues (as discussed in Annex 6, Appendix 6-1) as well as project-specific needs. The country-wide issues are being taken up separately as part of ongoing dialogue between the Government of China and the Bank. The project-specific needs will be addressed by an action plan that was prepared and discussed with the Government. The action plan includes the preparation and dissemination of a project procurement manual, seminars on preparation of bidding specifications, and training of PPMO staff on NCB and National Shopping procurement procedures. 4.4 Financial management issues: The task team has conducted an assessment of the adequacy of the project financial management system of the CN-Tuberculosis Control Project (see Annex 6; The detailed Financial Management Assessment is located in the Project File). The assessment, based on guidelines issued by the Financial Management Sector Board on June 30, 2001, has concluded that the project meets minimum Bank financial management requirements, as stipulated in BP/OP 10.02. In the project team's opinion, the project will have in place an adequate project financial management system that can provide, with reasonable assurance, accurate and timely information on the status of the project in the reporting format agreed with the project and as required by the Bank. Funding sources for the project include a Bank loan blended with the DFID grant, the Central government grant to provinces, and local counterpart funds. The Bank loan will flow from the Bank to the Ministry of Finance (MOF), finance bureau at provincial/municipal/county levels, county project management offices, to contractors or suppliers. The Bank loan will be signed between the Bank and MOF, and onlending arrangement for the Bank loans will be signed between MOF and the above finance bureau at different levels. DFID will provide grants to soften the terms of the loan. The counterpart funds will come from central as well as local government. In terms of disbursement technique, the project will be disbursing based on the traditional disbursement techniques and will not be using PMR-based disbursements, in accordance with the agreement between the Bank and MOF. No outstanding audits or audit issues exist with any of the implementing agencies involved in the proposed project. The task team will continue to be attentive to financial management matters and audit covenants during project supervision. 5. Environmental: Environmental Category: C (Not Required) 5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including consultation and disclosure) and the significant issues and their treatment emerging from this analysis. The project is expected to have no adverse environmental impact, because the project involves the establishment of a better managed and more effective program to control tuberculosis by significantly increasing access to better quality care. Civil works are expected to be limited to minor repairs and renovations of the existing clinics. - 17- 5.2 What are the main features of the EMP and are they adequate? Not Applicable 5.3 For Category A and B projects, timeline and status of EA: Date of receipt of final draft: Not Applicable 5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EA report on the environmental impacts and proposed enviromnent management plan? Describe mechanisms of consultation that were used and which groups were consulted? Not Applicable 5.5 What mechanisms have been established to monitor and evaluate the impact of the project on the environment? Do the indicators reflect the objectives and results of the EMP? Not Applicable 6. Social: 6.1 Summarize key social issues relevant to the project objectives, and specify the project's social development outcomes. Tuberculosis is a social as well as a medical problem and it is both a cause and consequence of poverty. TB disproportionately impacts the poorest populations the most and is among the leading causes of poverty. In China, it affects poor rural populations three times greater than the wealthier urban populations, it makes China's growing numbers of floating (migrant) populations much more vulnerable, and it retards the poor's ability to elevate themselves out of poverty. Some 75 percent of China's TB patients belong to the eaming age of between 15 and 54 years. The control of infectious tuberculosis through this project should have significant social effects on the most vulnerable sections of the society including the poorest populations, the floating populations and the ethnic minorities. The project includes specific measures to ensure that it reaches full benefits to vulnerable groups including ethnic minorities, floating populations and those living in hard to reach areas (see Annex I 1). 6.2 Participatory Approach: How are key stakeholders participating in the project? MOH has prepared the Project Implementation Plan (PIP) based on a proposal from each participating province, and each province has, in turn, received inputs from its counties. During preparation, the project received a high degree of participation from other Government departments, including planning and finance bureaus, at every level. More importantly, consultations were initiated with former TB patients and their social, economic, and cultural barriers investigated and findings used in the project preparation. Emphasis will be placed upon making such multi-sectoral participation and consultation with vulnerable population groups a continuous feature during annual programming and project implementation. The proposed baseline survey and comprehensive social assessments are expected to facilitate the process. 6.3 How does the project involve consultations or collaboration with NGOs or other civil society organizations? A number of local NGOs and civil society organizations were identified based upon the experience under the IEDC project and during the preparation of this project. They are village committees, Women's Federation and their network, and labor unions. The project will explore the possibility and advantages of involving them during implementation period and future assessment work. - 18 - 6.4 What institutional arrangements have been provided to ensure the project achieves its social development outcomes? The Government is commnitted to provide necessary resources to the National TB Control Program Office that is responsible for planning and managing the TB control program. This will include the recruitment of a full time social scientist to be responsible for social development outcomes. MOH is planning to establish an expert panel at the central level, comprising TB experts, social scientists, and experts in IEC and other relevant disciplines. Selected health workers and program managers at provincial and county levels will be trained with skills to enable them to undertake and analyze social assessment research to ensure that they meet the needs of the poorest. Operational research will test innovative ways of implementing DOTS for remote rural areas, equity of access, and innovative IEC for the general and vulnerable populations. To ensure that the project addresses the needs of the poorest, its progress will be monitored regularly and reported through semi-annual progress reports. Arrangements will be made for systematic social assessment to provide inputs to annual plans. Technical assistance will be available to assist in the design of this assessment and the methods will be piloted in selected counties before wider applications. It is expected that a sentinel approach will be adopted whereby assessments in selected counties should be sufficient to inform wider programming. A Mid-term Review will be carried out to assess the project's achievements and take any needed corrective measures. Measurement of the project's development impact will be conducted as part of the national TB prevalence survey, which is next scheduled for 2010. 6.5 How will the project monitor performance in terms of social development outcomes? Regular progress monitoring is expected to measure and report case finding and cure rates in all areas including the poorest areas included in the project. 7. Safeguard Policies: 7.1 Do any of the following safeguard policies apply to the project? Policy Applicability Environmental Assessment (OP 4.01, BP 4.01, GP 4.01) 0 Yes 0 No Natural Habitats (OP 4.04, BP 4.04, GP 4.04) 0 Yes * No Forestry (OP 4.36, GP 4.36) 0 Yes * No Pest Management (OP 4.09) 0 Yes 0 No Cultural Property (OPN 11.03) 0 Yes * No Indigenous Peoples (OD 4.20) * Yes 0 No Involuntary Resettlement (OP/BP 4.12) 0 Yes * No Safety of Dams (OP 4.37, BP 4.37) 0 Yes 0 No Projects in International Waters (OP 7.50, BP 7.50, GP 7.50) 0 Yes * No Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60)* 0 Yes * No 7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies. The previous Bank-assisted TB control project, the IEDC Project, reached over 90 percent of the population of the project provinces but still could only identify about 55 percent of TB patients. For an effective TB control, and consistent with WHO recommendation, the Government's policy and the proposed project's goal is to identify at least 70 percent of TB patients in the project. The Governnent is, therefore, fully aware that the project's objective can only be met by covering close to 100 percent of the population of each project province which, in turn, can only be achieved through very strong efforts to reach the provinces' vulnerable populations, including all ethnic minorities, the migrant "floating" populations, and - 19- those living in hard-to-reach areas. Therefore, the pi oject includes a strong program of information, education, and communication (IEC) based on scienrtifically carried out comprehensive social assessments and client involvement. An initial social assessment, based on the 2000 National TB Prevalence Survey, was carried out by the provinces to prepare their project proposals. The results have been incorporated into the project implementation plan (PIP). Under the project, each of the sixteen project provinces will carry out more comprehensive and scientifically-designed social aslessment studies during the first year of the project, again before the mid-term evaluation and, again, before the project's completion. This is expected to help each province to develop new approaches to IEC, including using local languages and local media, to inforn patients, the community, and the health providers about tuberculosis symptoms, treatment, and care. Each project province will prepare plans to improvel access and benefits to minorities and to monitor progress regularly as part of the project's progress mnonitoring program. In addition, to assess progress in achieving social development and TB control objectives and to make improvements in access and affordability covering all patients, operational resea4ch programs have been integrated into project design. To implement these programs, specific funding has ibeen allocated for capacity building at central, provincial, prefecture, and county levels, and the participation of project staff in conducting the social assessments will ensure efficient incorporation of fitidings into TB control practices. See Annex 11 for a detailed discussion of social assessments under the oroject. See Appendix 11-1 to Annex II for the ethnic minorities development strategy. Resettlement. Civil works under the project will be confined to minor repairs of existing buildings, and installation of x-ray protection barriers. Consequently, the activities will not require new land acquisition or involuntary resettlement. F. Sustainability and Risks 1. Sustainability: The project will require significantly increalsed budgetary resources to implement as well as sustain the program after its completion. There is always the risk that the provinces will not allocate sufficient funds for these purposes. The following measures are expected to minimize the risks to an acceptable level: * The project starts with a larger proportion of domestic resources than its predecessor projects, notably the IEDC Project, and thus the transition to the post-project phase should be relatively easier; * The Central Government will also participate with grant funds mainly directed toward poorer and needy provinces; * There is a greater awareness among thd provinces and, because of the experience with the IEDC Project, they are aware of the costs involved; * Each province was selected only after dbtaining a clear indication of its commitment and a firm assurance to provide the required resoUrces; * China has high rates of economic growth but very low current resource allocations for the health sector. The issue is not one of affordability as much as one of political will. The Central Govenmment is taking determinWd actions to raise allocations for preventive health and, in fact, has issued guidelines to provinies to significantly raise the allocations; * The project's benefits are expected to ehcourage the provinces to continue the program; and * Once the State Council's National TB C2ontrol Plan is disseminated to all provinces, provincial governments will be required to meet sbecific targets to control TB. This will put pressure on 20 - the provinces to continue the program. 2. Critical Risks (reflecting the failure of critical assumptions found in the fourth column of Annex 1): Risk Risk Rating Risk Mitigation Measure From Outputs to Objective 1. Commitment at provincial and lower S Undertaking to be obtained from each province levels may not be enough to provide as a condition of their participation in the adequate resources for free and universal project access to patients that will be required to control contagious TB. 2. Inadequate donor coordination to M Financing for this project will come jointly from realize maximum benefits from the the Bank and UK's DFID, which have fully project. coordinated their approach. Serious efforts to coordinate with other donors have already started and should continue throughout the project implementation. 3. Rapid increases of HIV/AIDS cases M The Government is committed to use the project could add complexities to implement the to test and develop policy to address this issues. TB control program. Intensive efforts will be included in high risk areas. Health workers will be trained to address this issue. 4. Inability to cover China's large and S The Central and the provincial governments growing migrants, called "floating have indicated their strong commitments to population," can seriously affect equity in service provision. People will be realization of the project objectives offered a package of care based on their needs, satisfactorily. irrespective of their residential status. This will be regularly monitored. From Components to Outputs 4. Inadequate counterpart funding may S This risk is substantial based on the experience hamper successful implementation. of the related previous project. This will require regular monitoring by central Government as well as by DFID and the Bank's Beijing offices or their representatives. 5. Difficulty in adopting DOTS in some M Direct observed treatment, short course may be remote areas. difficult in some remote areas. The project will pilot and implement altemative service arrangements appropriate for remote populations. Overall Risk Rating M Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk) - 21 - 3. Possible Controversial Aspects: None expected. G. Main Loan Conditions 1. Effectiveness Condition The following events are additional conditions of Loan Effectiveness: (a) Execution of Implementation Agreements by the Borrower and at least eight Project Provinces; (b) Execution of Tripartite Arrangements by DFID and the Borrower; and (c) Completion of the First DFID deposit into the Trust Fund. 2. Other [classify according to covenant types used in the Legal Agreements.] Borrower's Undertakings (a) Institutional The Borrower shall maintain throughout the project period: (a) the National TB Control Program Coordination Committee; (b) the National TB Prevention and Control Center, established within the Borrower's Center for Disease Control, to be responsible for provision of technical guidance for the carrying out of the national TB control program, including the activities under this project; and (c) the National TB Control Program Office, to be responsible for daily planning, implementation and technical coordination of the national tuberculosis control program, including the activities under this project. The Borrower shall ensure that the TB Control Program Office is provided with sufficient staff and resources to oversee all central level TB control activities, especially those relating to the management of the project. The Borrower shall recruit, by June 30, 2002, a full-time social scientist in the TB Control Program Office who would be responsible to assist in the attainment of the project's social development objectives including inter alia to oversee the implementation of social assessments and the IEC campaigns in project provinces. (b) Reporting and Monitoring The Borrower shall prepare and furnish to the Bank in the format and details satisfactory to the Bank: (a) by each October 31, the project's annual implementation plans covering the central and the province-level activities; (b) by each March 31 and September 30, the project's semi-annual progress reports covering the central and province-level activities in a manner satisfactory to the Bank; and (c) by December 31, 2002, its plan to implement the TB control program nationally. The Borrower shall, no later than May 31, 2005, carry out a mid-term evaluation of the project in accordance with mutually agreed terms of reference and arrangements, and provide the report to the Bank and DFID within six months thereafter. - 22 - (c) Financial Sustainability The Borrower shall require each province to submit, by May 31, 2003, its plan to improve the sustainability of the TB control in the participating provinces including the financial, legislative and institutional strengthening measures following the best practices in China. The Borrower shall allow the Bank, no later than June 30, 2003, an opportunity to review and discuss the national as well as the provincial plan to improve the sustainability of the TB program in the project areas. (d) Other The Borrower shall carry out a comprehensive baseline social assessment survey in project provinces not later than December 31, 2002. The Borrower shall also carry out two additional social assessment surveys using social science tcchniques, one before the project's mid-term review and the other just prior to project completion. The Borrower shall initiate operational research, not later than December 31, 2002, on: (a) the benefits of providing free treatment for all smear positive and smear negative TB patients; and (b) approaches to prevent and treat HIV-associated TB. The Borrower shall afford the Bank an opportunity to discuss the findings of the research, at the time of the project's mid-term review, including the research's policy implications and the plans to implement the recommendations. To limit drug-resistance, the Borrower shall: (a) by December 31, 2005, assess the level of TB drug-resistance in at least twelve project provinces, and by December 31, 2007 in the remaining project provinces; and (b) carry out pilot studies on the use of fixed-dose combination TB drugs in the project, not later than December 31, 2003, and discuss with the Bank by June 30, 2004 the plan for widespread use of the fixed-dose combination drugs. The Borrower shall ensure that each participating province shall carry out its part in accordance with the Program Management and Technical Guidelines satisfactory to the Bank. Additional Provincial Undertakings To improve the project's sustainability, each participating province shall: (a) furnish to the Bank a time-bound action plan for the provision of the counterpart funding responsibility of at least the nationally and provincially designated poverty counties in the province, and begin implementing the plan by January 1, 2004; (b) ensure that the following services will be provided free: (i) diagnosis for all persons suspected of having TB; (ii) treatment in its entirety for all newly-diagnosed smear positive TB patients; (iii) first treatment for smear positive re-treatment TB patients; and (iv) treatment of newly diagnosed new smear negative patients with miliary or cavitary on chest X-ray; (c) by December 31, 2003, furnish to the Bank a time-bound action plan to limit the sale of over-the-counter TB drugs within their jurisdiction; and (d) by May 31, 2003, submit its plan to improve the sustainability of the TB control program in the province. - 23 - H. Readiness for Implementation a 1. a) The engineering design documents for the first yea's activities are complete and ready for the start of project implementation. 1 1. b) Not applicable. 0 2. The procurement documents for the first year's activities are complete and ready for the start of project implementation. C1 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality. QI 4. The following items are lacking and are discussed under loan conditions (Section G): 1. Compliance with Bank Policies 1 1. This project complies with all applicable Bank policies. EU 2. The following exceptions to Bank policies are recommended for approval. The project complies with all other applicable Bank policies. Jagadish P. Upadhyay E n el Jimenez ukoHa Team Leader Sector Manager Country Manager/Director - 24- Annex 1: Project Design Summary CHINA: CN-Tuberculos s Control Project Key Performance Data Collection Strategy Hierarchy of Objectives Indicators Critical Assumptions Sector-related CAS Goal: Sector Indicators: Sector/ country reports: (from Goal to Bank Mission) Promote human development Public expenditure review. through meeting the basic Annual yearbook of health health needs of the rural poor. statistics. Project Development Outcome / Impact Project reports: (from Objective to Goal) Objective: Indicators: 1. To reduce TB morbidity 1.1 Achieve 70% * Baseline national TB * High and sustainable and mortality through an case-detection rate of new prevalence survey political commitment at effective and sustainable smear-positive male and (2000) and repeat survey all levels of government. National TB Control Program female TB cases, including in 2010. * Effective social (NTP), especially among poor among poor and vulnerable * TB mortality data. mobilization and social and vulnerable men and groups. * Mid-term review and involvement. women. 1.2 Achieve and maintain at project completion * Coordinated, least 85% cure rate of report. multi-sectoral smear-positive male and * Impact assessments. involvement with female TB cases. * Social assessments. implementation of the 1.3 Full funding of critical DOTS strategy. program components, * Financial commitment including treatment of all at all levels of smear-positive TB cases, from government available regular governmental budget. from regular budget. 1.4 Institutions at all * The epidemics of governmental levels adequate multidrug-resistant TB to implement an effective TB and HIV-associated TB control program. are kept under control. Output from each Output Indicators: Project reports: (from Outputs to Objective) Component: 1. NTP policies developed, 1. I National plan for TB * Review of project * Establishment of central implemented, and monitored. Control (2001-2010) adopted. research. unit is not delayed. 1.2 Central TB control unit * Review of National TB * Central capacity is established with clear policy and guidelines. strengthened from responsibilities and roles to * Specific research and political or technical implement and monitor surveys. perspective. DOTS in all sectors and * Annual national TB * Provinces have the provinces. control report. implementation 1.3 Legislations and policy * Policy document. capacity, especially in statements on key issues non-project areas. related to TB control adopted * Lessons from policy or disseminated. piloted in project 1.4 All project provinces provinces are effectively - 25 - implementing NTP policy. disseminated to 1.5 Financing and non-project areas. implementation plan to * Involvement of multiple deliver DOTS expansion sectors at all levels by nationally developed by 2003. mid-2002 and operational by 2003. 1.6 Effective multi-sectoral consultation processes adopted and used at all level by 2003. 1.7 Recommendations from research and reviews on improving access and quality of care used to inform policy making. 1.8 Full funding of required central level activities by government. 1.9 Funding necessary to fully support critical program components provided by central and provincial budget in a poverty-adjusted manner. 2. High case detection and 2.1 Expansion of a TB * Mid-term review and * Coverage of different cure in project provinces control program using the end project report. population and achieved through DOTS strategy to at least 95% * Annual supervision geographic areas reaches DOTS-based services that of the country's population by report. set target. meet the needs of patients. 2008. * DOTS coverage survey. * There is no shortfall of 2.2 Find at least 2 million * Accessibility survey on quality TB drugs. smear-positive cases by 2008. TB services. * All areas are 2.3 Achieve new smear- * Report on free treatment implementing the DOTS positive notification rate of 30 of smear negative strategy according to per 100,000 population by patients. established guidelines. 2008, with high case rates for * Impact assessment * Sufficient cooperation all gender, poor, and studies of IEC work. between NTP and other vulnerable groups. institutions handling TB 2.4 Maintain cure rate of at suspects/cases. least 85% for new * The IEC materials are smear-positive cases. well prepared. 2.5 Results from social * DOTS is expanded to assessments incorporated into sufficient areas in project design of TB services. provinces. 2.6 Pilot scheme for free * Other projects willing to treatment of smear negative cooperate and coordinate. patients carried out in two provinces. 2.7 Increased awareness of TB and a reduction in the stigma associated with TB as a result of IEC work. 3. Institutions and financing 3.1 Recommended number of * Training courses with list * The available local funds to deliver NTP strengthened. health workers trained of participants. are not used for activities - 26 - according to NTP guidelines * Institutional survey on unrelated to TB. at all governmental levels. staff and equipment * Tumover of staffing for 3.2 All TB control status. TB control is kept to a institutions at and below the * Annual report on rate of minimum. provincial level with counterpart fund * There are sufficient recommended staffing and available. experts experienced in TB equipment to implement NTP. * Budget for TB control at control to provide 3.3 An increasing percentage county and provincial training and technical of funding for required level. assistance to others. program activities are * The 3-tier rural health provided by central and network is functioning provincial governments over effectively in all areas. time. 3.4 Funding necessary to fully support critical program components provided by central and provincial budget in a poverty-adjusted manner. Project Components / Inputs: (budget for each Project reports: (from Components to Sub-components: component) Outputs) 1. Strengthened National US$4.49 million * Progress reports. * Timely and adequate TB Policies and counterpart funds. Programmin2 1.1 Institutional Development 1.2 Policy and Program Development 1.3 Coordination and Management 2. Improved Access to and US$196.76 million * Progress reports. * Timely and adequate Ouality of TB Services at counterpart funds. Province Level 2.1 Program Management 2.2 Service Delivery 2.3 Patient-focused Innovations 3. Strengthened Institutions US$40.04 million * Progress reports. * Timely and adequate and Financing to Deliver TB counterpart funds. Program at Province Level - 27 - 3.1 Institutional Strengthening 3.2 Expanded Financing for Sustainable TB Control Fee US$1.04 million - 28 - Annex 2: Detailed Project Description CHINA: CN-Tuberculosis Control Project 1. The project has three main components. Component 1, Strengthened National TB Policies and Programming, will be implemented by the central level. Component 2, Improved Access to and Quality of TB Services at Province Level, and Component 3, Strengthened Institutions and Financing to Deliver TB Program at Province Level, will be implemented in sixteen provinces with 1,663 counties and a total population of 688 million. The project provinces are: Chongqing, Fujian, Gansu, Guangxi, Guizhou; Hebei, Henan, Hubei, Hunan, Jiangxi, Jilin, Liaoning, Neimongol, Shaanxi, Xinjiang, and Yunnan. Detailed descriptions of each component are available in the project files, and in the Project Implementation Plan. By Component: Project Component 1 - US$4.49 million 2. Strengthened National TB Policies and Programming comprises three sub-components, including institutional development, policy and program development, and program coordination and management at the national level. 1.1 Institutional Development 3. This sub-component will strengthen institutions at the national level, including: (a) the establishment of a central project coordination group; (b) the strengthening of a central management unit with sufficient resources to carry out national TB control program; and (c) the strengthening of a central TB reference laboratory with required staff and resources. 4. To better ensure the success of the project, a project coordinating group consisting of central governmental leaders from different sectors including health, finance, and planning will be established to oversee the progress of the project and resolve major problems when implementing the project. Resources will be provided through the project to strengthen the central TB management unit and the central TB reference laboratory. The project will ensure that the necessary staff, training, equipment, and funds are provided to these central level institutions. 1.2 Policy and Program Development 5. This sub-component will assist the Government at the central level to develop policy guidelines and specific components of the national program needed to control TB. The development will be based upon the experiences with implementation of the DOTS strategy and on consultations. This would include: (a) development of detailed implementation plan for the national TB control program (NTP); (b) review of existing and development of new NTP policies, and disseminate them; (c) development of a national health education plan; and (d) coordination and implementation of program-oriented operations research activities. 6. Although the overall plan for the national TB control programme (2001-2010) has been developed, a detailed implementation plan for expanding the DOTS programme throughout the country has not been developed. This implementation plan will be developed during the first year of this project. As part of the national programme implementation, existing policies for TB control need to be reviewed and revised in order to improve on the current programme. In addition, the programme will face new challenges, and new policies will need to be developed and implemented in order to address these difficulties. For example, - 29 - control of `1B in the floating population, the emerging HIV and TB co-epidemics, use of combination drugs, and the rising drug-resistant TB epidemic all require new policy and programme development. A national he4lth education plan and a plan to carry out programme-oriented research activities will be developed and implemented; research activities will focus mainly on operational research and social assessment. The central unit is responsible for coordinating the national research activities and to build the capacity for research. The formulation of various policies will utilize results from operational research activities. 1.3 Coordination and Management 7. This sub-component will help ensure the coordination and management of the implementation of the project activities in the project provinces and develop system for adoption under NTP. The activities will consist of: (a) development and implementation of evidence-based program management methods; (b) improvement of provincial capacity to implement projects in line with NTP; and (c) procurement and distribution of quality drugs and equipment. 8. To improve the management of the national TB control programme, the project will develop and implement an evidence-based programme management method. The "evidence-based" aspect will be linked to the implementation of a national TB recording and reporting system that will provide TB data from every province, prefecture/city, and county. Additional information on the programme will be collected during field visits, through periodic surveys or assessments, and from drug-resistance surveillance studies and other research projects. All information will be analyzed and used to guide the implementation of the national programme. The central unit will use all available data during regular supervision visits to the provinces to monitor programme implementation. To improve provincial capacity, the central TB unit will provide technical assistance to provincial TB control units programme in all aspects of the national programme. The mechanism to procure quality TB drugs and equipment will be developed and implemented. A management system to distribute TB drugs will also be developed and implemented. Project Component 2 - US$196.76 million 9. Improved Access to and Quality of TB Services at Province Level represents the bulk of activities under this project and focuses on the improvement of access and quality of TB control services in the project provinces. This component comprises the following three sub-components: 2.1 Program Management 10. This sub-component will consist of: (a) implementation of evidence-based program management, and (b) improved management and usage of drugs and equipment. 11. In all project provinces, prefectures/cities and counties, the national TB recording and reporting system will be implemented. Periodic assessments and surveys will be carried out to provide additional information on the programme. In addition, supervision of various aspects of the programme will be carried out from the provincial to prefectural/city level, from the prefectural/city to the county level, from the county to the township level, and from the township to the village level. The evidence-based programme management method will be used by all provincial TB institutions. All provinces will carry out drug-resistance surveillance studies to monitor the level of drug-resistant TB. The provinces will manage the distribution of TB drugs as well as oversee the proper maintenance of essential equipment. 2.2 Service Delivery - 30 - 12. This sub-component consist of: (a) improved case detection; and (b) improved cure rate. 13. A uniform approach to diagnose TB will be used in all project provinces using chest x-ray and sputum microscopy as the principle means to evaluate patients when they present with symptoms. To improve case detection, linkages between the TB dispensary and various medical institutions will be strengthened. All identified smear-positive TB patients and smear-negative TB patients with cavitary or miliary findings on chest x-ray will be treated free of charge using standardized TB treatment regimens. In most cases, the village doctors will be responsible for observing a patient's intake of medications. A reporting fee and a case management fee will be provided to those who report and manage TB patients, respectively, in order to improve the reporting and the management of TB patients. New strategies to improve case detection and cure rate will be evaluated and then implemented. 2.3 Patient-focused Innovations 14. This sub-component will consist of: (a) implementation of program-oriented research activities, (b) development and implementation of an action plan for IEC; (c) development and implementation of programs to deliver DOTS to hard-to-reach populations; (d) pilot programs to prevent and treat HIV-associated TB; and (e) pilot free treatment of smear-negative TB patients. 15. To better meet the needs of patients in specific populations, social assessment activities will be carried out in all project provinces. In addition, depending on the needs in specific provinces, other types of operational research projects will be carried out. The national plan for health education will be implemented in all project provinces, but the plan and the IEC materials may be modified by provinces following social assessment activities. Several pilot projects to tackle difficult or emerging problems in TB control will be implemented in the provinces, including DOTS implementation in hard-to-reach populations, prevention and treatment of HIV-associated TB, and free treatment of smear-negative TB patients. Project Component 3 - US$ 40.04 million 16. Strengthened Institutions and Financing to Deliver TB Program at Province Level will include province level activities required to implement the project consistent with NTP. This component will have the following two sub-components: 3.1 Institutional Strengthening 17. The activities will include: (a) establishment of leading groups and project offices at provincial and lower levels; (b) strengthening TB control institutions with sufficient financial resources, infrastructure and equipment to carry out NTP activities; and (c) improvement of human resource capacity. The institutions will continue their effectiveness during the ongoing health reform but the goal will be the eventual integration of TB services into county health services. 18. To strengthen the implementation of the project, government at the provincial and lower levels will establish leading groups consisting of governmental leaders from different sectors. These groups will oversee the progress of the project and resolve major problems that might arise during project implementation. Resources will be provided through the project to strengthen the provincial, prefectural/city, and county TB control institution, including the TB laboratory. The project will ensure that the necessary staff, training, equipment, and funds are provided to these institutions. The project will help ensure the presence or establishment of effective TB control institutions during a period of health sector reform. To improve human resource capacity, training will be provided to staff at all levels and technical assistance will be provided from higher to lower levels of the programme. A pilot project will be - 31 - carried out to determine the feasibility of integrating TB control services into the county TB health services, e.g., into the hospital system. If the pilot is successful, this integration will be implemented in other areas. 3.2 Expanded Financing for Sustainable TB Control 19. Under this sub-component, the provinces will: (a) develop plans for long-term sustainability of the TB control program in their respective provinces; and (b) implement plans to assist poorer areas to participate in the program, including facilitating government grants to poorer areas in order to support critical program components like TB treatment. 20. To better ensure the sustainability of the national TB control programme after project completion, each province will develop a sustainability plan to control TB, including a financing plan to support critical programme components such as free TB diagnosis and treatment at the end of the project. Each project province will also develop and implement a plan to provide special assistance to poorer areas within the province so that they can effectively implement the programme. Special emphasis will be placed on the use of grants from central and provincial level to assist lower level of government, especially to support funding of critical programme components. - 32 - Annex 3: Estimated Project Costs CHINA: CN-Tuberculosis Control Project Local Foreign Total Project Cost By Component US $million US $million US $million 1. Strengthened National TB Policies and Programming 0.00 0.00 0.00 1.1 Institutional Strengthening 0.57 0.03 0.60 1.2 Policy and Program Development 1.45 0.08 1.53 1.3 Coordination and Management 2.00 0.00 2.00 2. Improved Access to and Quality of TB Services at Province 0.00 0.00 0.00 Level 2.1 Program Management 44.13 2.32 46.45 2.2 Service Delivery 83.85 27.95 111.80 2.3 Patient-focused Innovations 21.22 1.12 22.34 3. Strengthened Institutions and Financing to Deliver TB 0.00 0.00 0.00 Program at Province Level 3.1 Institutional Strengthening 30.64 1.61 32.25 3.2 Expanded Financing for Sustainable TB Control 4.49 0.00 4.49 Total Baseline Cost 188.35 33.11 221.46 Physical Contingencies 3.55 0.89 4.44 Price Contingencies 12.31 3.08 15.39 Total Project Costs' 204.21 37.08 241.29 Front-end fee 1.04 1.04 Total Financing Required 204.21 38.12 242.33 Local Foreign Total Project Cost By Category US $million US $million US $million Equipment, Vehicles and Medical Supplies 37.46 13.46 50.92 Works 2.73 0.00 2.73 Training 17.77 1.97 19.74 Consultant Services 5.61 0.62 6.23 Drugs 28.70 19.13 47.83 Health Education 14.33 1.59 15.92 Program Support 91.88 0.00 91.88 Operations and Maintenance 5.73 0.30 6.03 Total Project Costs 1 204.21 37.07 241.28 Front-end fee 1.04 1.04 Total Financing Required 204.21 38.11 242.32 Note: Differences due to rounding. Identifiable taxes and duties are 0 (US$m) and the total project cost, net of taxes, is 242.33 (US$m). Therefore, the project cost sharing ratio is 42.92% of total project cost net of taxes. - 33 - Annex 4: Cost Effectiveness Analysis Summary CHINA: CN-Tuberculosis Control Project Introduction 1. This annex presents the economic analysis of the China Tuberculosis (TB) Control Project. The project supports the effort of the Ministry of Health (MOH) to reduce tuberculosis morbidity and mortality amongst the poorest populations through increased access to diagnosis and treatment as part of an effective and sustainable Tuberculosis Control Program in China. The economic analysis of the project covers the following: (a) rationale for public sector involvement and poverty impact of the project; (b) cost effectiveness analysis of project interventions; (c) risk-sensitivity analysis; and (d) financial sustainability of project interventions. Rationale for Public Sector Involvement 2. TB is major public health problem in China, with prevalence rates of active pulmonary TB of 367 per 100,000 population, bacteriological-positive pulmonary TB of 160 per 100,000 population, smear positive pulmonary TB of 122 per 100,000 population (a decrease of 21 percent since 1990), and the TB mortality rate was 9.8/100,000 persons (a reduction of 53 percent since 1989). It is estimated that there are approximately five million people with infectious active pulmonary TB and over two million are smear-positive cases. TB is the leading cause of deaths from infectious diseased in China with 150,000 people dying from TB each year. With the lack of an effective TB control program in nearly half of China, there could be an epidemic of drug-resistant TB in the country. Although high levels of drug-resistant TB have been reported in some areas, there are few well-conducted studies of drug-resistant TB. The Ministry of Health, in collaboration with WHO, is currently conducting studies in several provinces to assess the magnitude of this problem. 3. The TB epidemic is worse in the twelve westem provinces (autonomous regions, municipality) where the prevalence of infectious TB is 199/100,000 persons. With the industrialization of China over recent years, there has been a steady migration of the rural population into cities and towns, leading to a worsening of the TB epidemic situation in urban areas, and consequently a spread of the TB epidemic in the country. 4. Jack (2001) argues that there are strong reasons to favor public intervention in TB control due to the special characteristics of the disease. First, there are contemporaneous extemalities associated with detection and treatment because of its contagious nature. Second, especially early in the course of the disease, individuals may not feel the need to seek diagnosis of TB because the symptoms associated with TB (e.g., cough) are similar to those for other diseases. Third, because full treatment requires extended drug therapy over 6-8 months, incomplete treatment is common and this contributes to drug resistant disease. Finally, tuberculosis is a disease of the poor and public intervention in its detection and treatment could be an effective part of a poverty reduction program. 5. The Fourth National Epidemiological Survey 2000, estimates that 80 percent of TB patients surveyed are agricultural workers, herders, forestry or fishery workers and have per capita household incomes below the average per capita household incomes of those in their communities. In addition, it was found that lack of knowledge about the disease and financial problems were the two main reasons why TB patients did not seek care. Symptomatic TB patients who did not seek medical assistance because they lacked knowledge about TB totaled 53.3 percent, and those who did not seek assistance because they had - 34 - financial difficulties made up 36.9 percent of those surveyed. 6. The project covers sixteen provinces with a population of 688 million (53 percent of the country's population) - covering 82.22 million minorities (11.9 percent of project population) and 31.12 million that is part of floating population (4.5 percent of project population). The following criteria were used in the selection of project provinces: * Provinces with a more serious TB epidemic. * Provinces in the Western and other poverty-stricken parts of China. * Provinces where the DOTS strategy is just being implemented or will be implemented but the necessary financing is lacking. Provinces that have made a commitment to and have the ability to take a loan, repay a loan, provide counterpart funds, and sustain the project. Social and Economical Status in Each Project Provinces in 1999 Province Per capita Poverty-stricken counties GDP National level Provincial level Population of of each poverty-stricken province counties (in (in RMB million) _yuan*) Xinjiang 6470 25 5 4.64 Gansu 3668 41 12 16.73 Shaanxi 4101 50 19 2.78 Chongqing 4826 12 8 16.12 Yunnan 4452 73 0 22.51 Guizhou 2475 48 0 19.83 Inner 5350 31 19 11.90 Mongolia Guangxi 4148 28 22 8.50 Henan 4894 28 5 23.45 Hubei 6514 20 13 17.83 Hunan 5227 10 21 15.20 Hebei 6932 40 6 15.72 Liaoning 10086 9 2 5.23 Fujian 10797 8 11 7.18 Jiangxi 4661 18 26 19.23 Jilin 6341 5 5 3.31 Total 446 174 210.16 * I US$=8.3 RMB Yuan. Summary of benefits and costs: 7. Economic benefits of project interventions are analyzed in terms of lives saved and smear positive TB cases averted. It must be noted however, that this is an underestimate of the actual economic impact of project interventions. Other benefits not quantified here include cost savings from lower health care - 35 - treatment costs, psychological benefits of a healthy population, poverty reduction (nearly 25.4 percent of the population covered are from poverty stricken counties) and improved productivity and efficiency among current and future workers (nearly 75 percent of TB patients in China are between the ages of 15 and 54). 8. The project would, under modest assumptions, avert 529,208 smear positive TB cases and 128,421 deaths. Over the seven year lifetime of the project, the effect will be a gain of 2,996,940 Discounted Healthy Life Years (DHLY) at a cost of US$53.43 per DHLY gained. Results of risk-sensitivity analysis show that a 30 percent reduction in project benefits, would result in 2,101,248 DHLY gained at a cost of US$76.21 per DHLY gained. A 50 percent reduction in project benefits, would result in 1,442,167 DHLY gained at a cost of US$111.04 per DHLY gained. Main Assumptions: 9. This section compares the costs of the program with the measurable economic benefits that arise from the implementation of the project. The project targets a population of 688.34 million in 16 provinces in China. Of these, seven provinces were covered under the earlier World Bank project (IEDC project) which was successful in reducing smear positive TB prevalence to 90 per 100,000 population in the project provinces. Between 1992 to 1999, more than 1.1 million smear-positive cases were detected and, because case management was strengthened, the project achieved an overall cure rate of 93.6%. 10. The projected evolution of smear positive TB prevalence in the base case is one where there is no project intervention. It is assumed that in this case the smear positive TB prevalence will reduce by the same extent as it did in the non-IEDC project provinces (i.e., by 3.2 percent) between 1990 and 2000 and TB mortality rates per 100,000 population will reduce by one percent during the ten year period of 2000-2010. Under the project intervention, it is assumed that the smear positive TB prevalence rates will fall by about three-quarters of the rate as it did in IEDC provinces between 1990 and 2000 (i.e., by 27.5 percent). TB mortality rate is assumed to decline by 53 percent from 9.8 per 100,000 population to 4.6 per 100,000 by 2010 as it did between 1990 and 2000. Cost-effectiveness indicators: 11. The cost of the project at the provincial level amounts to US$160.14 million. Compared to the base case scenario, 529,208 smear positive TB cases and 128,421 deaths are averted by the project's interventions. Suppose the number of discounted healthy life years (DHLYs) gained per smear positive TB case averted is two months' of a healthy life and per death averted is 22.65 years respectively. Over the seven year lifetime of the project, the effect will be a gain of 2,996,940 DHLYs at a cost of US$53.43 per DHLY gained,' which compares with US$30 for the expanded program of immunization (EPI) usually considered one of the most cost-effective interventions in the health sector. Risk/Sensitivity Analysis: 12. It is assumed here that project could face the risk of a direct reduction in expected benefits due to lower than expected reductions in the number of cases averted and reduced mortality. This would result due to a lower than expected effectiveness in the TB program. A 30 percent reduction in project benefits due to lower than expected reductions in the number of cases averted and reduced mortality, would result in 2,101,248 DHLYs gained at a cost of US$76.21 per DHLY gained. A 50 percent reduction in project benefits, would result in 1,442,167 DHLYs gained at a cost of US$111.04 per DHLY gained. - 36 - Financial Sustainability: 13. The Government of China began implementing the DOTS strategy in 1992 financed mainly through two projects - the IEDC Project (Cr. 2317-CHA) funded partly by the World Bank which covered 560 million in 13 provinces, and the Ministry of Health TB Strengthening Project, which covered 160 million approximately in twelve counties each in 15 provinces. 14. The financing of the IEDC project came from three sources - loan, local government funds and patient fess. Approximately 55 percent of the IEDC project's costs were financed through local government recurrent budget (for salaries and TB infrastructure) or local government counterpart funds (for diagnosis, case management and project management) earmarked for this purpose. The loan (used mainly to procure anti-TB drugs, medical equipment, foreign technical assistance, training and part of patient management fee) only accounted for 25 percent of the total project costs - the balance was paid by patients either through direct payments or insurance payments (primarily for treatment of the less serious smear-negative TB cases). However, in a quarter of the project counties less than 80 percent of the counterpart funds needed were actually allocated. In some others, the counterpart fund was not allocated on time, thus negatively impacting the normal operation of the project. 15. The MOH funded project has a budget of three million RMB and requires matching counterpart funds from provinces and counties. In this project, central, provincial and county level governments each provide 10,000 RMB respectively for TB control. In addition, the municipalities of Beijing, Tianjin and Shanghai have allocated specific funds for TB control, including a certain amount for provision of free drugs for patients with economic difficulties. 16. For the remaining 480 million population in the counties not covered by these projects, there are no special expenditures earmarked for TB control in their provincial budgets. 17. Two issues regarding financial sustainability of the project that arise from the experience of the IEDC project are: (a) can provincial and local governments afford counterpart financing during implementation especially in the poor provinces?; and (b) can provincial and local governments continue to sustain the TB Control Program in China's decentralized system beyond project implementation? These were given particular attention during project preparation. 18. The overall investment of this project is estimated at US$242.33 million. Of this, US$104.0 million, making up 43 percent of the project total, will be provided by the World Bank loan blended with the DFID grant; US$99.8 million, making up 41 percent of the total, will be provided by local governments; and US$38.5 million, about 16 percent of the total, will be provided by central government including any external resources which the government may mobilize. Under the project, central and provincial government will provide special assistance to poverty areas. Central Government's funds will primarily be directed to assist western and poor non-western provinces and will mainly be used for drugs, injection syringes and water. Each province has developed similar approaches to assist poverty areas in their own province and each expects to further increase such assistance. The following commitments have already been received from various provinces to provide the counterpart funds for their national or provincial designated poverty counties: (a) Xinjiang, Chongqing, Hunan, Fujian, Inner Mongolia (Neimenggu), Henan, Liaoning, Gansu, and Guangxi: 100 percent of counterpart funding for all poverty counties provided by provincial or prefecture governments, or both; ratio of provincial to prefectural - 37 - contributions vary (Xinjiang, Chongqing, Hunan, Gansu, Guangxi and Fujian, all 100 percent provided by province; Inner Mongolia, 70:30; Henan, 55:45; and Liaoning, 50:50); (b) Yunnan, Guizhou, Hebei, Shaanxi: 64-99 percent of counterpart funding for all poverty counties provided by provincial or prefectural government, or both (Yunnan, 64 percent; Guizhou, 75 percent; Hebei, 81 percent; and Shaanxi, 95.5 percent); and (c) Jiangxi, Hubei, Jilin: 30-50 percent of counterpart funding for all poverty counties provided by provincial or prefectural government (Jiangxi, 30 percent; Hubei, 47 percent; and Jilin, 50 percent). In addition, eight provinces also provided some counterpart funding for counties not designated as poverty counties. 19. The financial sustainability of the project beyond implementation would require that the recurrent costs of TB control met by the project can be incorporated into provincial budgets after 2008. The recurrent expenditures funded under the project are costs of diagnosis, treatment, case management, and supervision, and are expected to remain beyond project implementation. Assuming that case detection rates after the project remain unchanged and that health budgets as a percentage of GDP are maintained at current levels, the recurrent expenditures of the TB program would represent between 0.06 percent and 0.09 percent of the total health spending in these sixteen provinces. If the counterpart funds as well as the grant funds provided by the central and provincial governments under the project can be earmarked for the TB program beyond project implementation, the expected recurrent costs of the TB program could be sustained. 20. While China can easily afford to sustain its National TB program, the main problem has been commitment on the part of the provinces. However, it is expected that given the pace of China's economic development, anticipated success of the TB program, and the future decline in TB cases, provincial commitment to support TB control will significantly increase. End Notes: 1. Fourth National Epidemiological Survey, 2000. 2. William Jack (February 2001) "The public economics of tuberculosis control," to be published in Health Policy. 3. Implicit in the prevalence rate is the cure rate. The cure rate for the IEDC project provinces was approximately 93.6 percent. It is assumed here that the proposed project's interventions will result in a cure rate of around 85 percent. 4. Assumed is equivalent to the intensive phase of TB treatment under DOTS. 5. Calculated using current life expectancy at 34.5 years of 70 years for TB patients and assuming TB patents live at least two years after the onset of the disease, discounted at a rate of 3 percent. Based on these assumptions, averting a adult death would result in gaining 22.65 DHLYs. 6. This result is calculated as US$160.14 divided by 2,996,940 (=529,208*2/12 + 128421*22.65). - 38 - Annex 5: Financial Summary CHINA: CN-Tuberculosis Control Project Years Ending December 31 IMPLEMENTATION PERIOD Year 1 | Year 2 | Year 3 | Year 4 Year 5 | Year 6 | Year 7 Total Financing Required Project Costs Investment Costs 24.3 23.3 21.1 16.9 12.6 12.6 12.7 Recurrent Costs 12.1 15.0 16.7 17.2 18.2 18.9 19.7 Total Project Costs 36.4 38.3 37.8 34.1 30.8 31.5 32.4 Front-end fee 1.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Financing 37.4 38.3 37.8 34.1 30.8 31.5 32.4 Financing IBRD/IDA 20.3 18.8 16.7 12.5 9.6 12.7 13.4 Government 17.1 19.5 21.0 21.7 21.2 18.8 19.0 Central 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Provincial 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Co-financiers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 User Fees/Beneficiaries 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Others 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Project Financing 37.4 38.3 37.7 34.2 30.8 31.5 32.4 Main assumptions: - 39- Annex 6: Procurement and Disbursement Arrangements CHINA: CN-Tuberculosis Control Project Procurement Summary of the Assessment of Agencies' Procurement Capacity 1. This project will be the tenth health project financed by Bank in China. The project provinces have implemented at least one of the previous nine projects. Under the project, a Central Procurement Management Office (CPMO), in the Ministry of Health, will be responsible for overall coordination of all procurement under the project and in particular will handle all ICB procurement. A Provincial Procurement Management Office (PPMO), established under the health bureau of each project provinces/autonomous region, will be responsible to carry out NCB and National Shopping for its respective project activities. 2. Assessment of the procurement capacity of the CPMO and PPMOs was carried out by sending questionnaires to all of the sixteen project provinces, and by assessing their written feedback. In addition, field assessments were done for three project provinces. The assessment found that CPMO and PPMOs should be capable of managing all procurement activities satisfactorily. Staff members who were involved in previous Bank-financed health projects are familiar with the Bank's procurement procedures. The need for strengthening the agencies' procurement capacity has been identified and an action plan was prepared during the assessment. The action plan includes the preparation and dissemination of a project procurement manual, seminars on preparation of bidding specifications, and training of PPMO staff on NCB and National Shopping procurement procedures. 3. The assessment identified some shortcomings in the general procurement framework in China, including some aspects of the bidding law for construction projects that became effective January 1, 2000. The shortcomings are summarized in Appendix 6-1 to this annex. These are country-wide issues that are being addressed in an ongoing dialogue between the Government of China (GOC) and the Bank. The bidding law does make an exception for procurement financed by loans, or aid from intemational institutions, or foreign governments that require different procedures. Accordingly, MOH and the project provinces have agreed to follow Bank guidelines wherever there are differences between these and national procedures. 4. Another concem identified during the assessment is the weak capacity of the implementing agencies in preparation of the technical specifications for bidding documents. Specifications should be prepared according to the objectives of the project, the detailed needs of the end users, and the products of prospective sources, and ensure fair competition to have an economical procurement. Some PMOs do not have adequate information of the products in the market when they prepare specifications. Specifications are often prepared solely on the basis of a certain manufacturer's catalogue, or the end user's needs without proper assessment. End users' needs for goods should be assessed cautiously, particularly in cases where end users lack sufficient motivation to conduct an economical procurement. Inadequate bidding specifications can result in rejection of all bids and cause serious delays by lengthy disputes during bid evaluation. In some cases, specifications are prepared to target one manufacturer and exclude other manufacturers. Competitive procurement is spoiled by such bidding specifications. CPMO would be required to submit proposals to strengthen the capacity of preparation of bidding specifications. -40 - Procurement Arrangements 5. Procurement Plan. Detailed procurement plans for CPMO and PPMOs will be prepared and included in the Project Implementation Plan (PIP), including procurement packaging and progress schedule. 6. Procurement Procedures. The following Bank guidelines will govern all Bank-financed procurement under the project: For Works and Goods. Procurement under IBRD Loans and IDA Credits (dated January 1995 and revised in January and August 1996, September 1997 and January 1999). For the Selection of Consultants. Selection and Employment of Consultants by World Bank Borrowers (dated January 1997 and revised September 1997 and January 1999). 7. Format of the Documentation. The following formats will apply: Evaluation reports. The Bank's Standard Bid Evaluation Form, Procurement of Goods or Works (dated April 1996, translated into Chinese by MOF May 1997), and Sample Form of Evaluation Report for Selection of Consultants (dated October 1999). Model Bidding Documents. The Bank-approved Chinese Model Bidding Documents (MBD) (dated May 1997, prepared by MOF based on the Bank's Standard Bidding Documents [SBDs]) will be adopted for all ICB and NCB activities for goods. Standard Bidding Documents. The Bank's Standard Bidding Documents for Procurement of Health Sector Goods (dated May 2000) will be used for procurement of drugs. Project-Specific Document. A model procurement document for goods and works using National Shopping procedures will be prepared CPMO for use by PPMOs. Revisions to Model Bidding Documents. The amendments included in the Bank's updated SBD for Procurement of Goods (dated January 1995 and revised March 2000 and January 2001), which have not yet been included in the MBD, dated May 1997, will be incorporated into the bidding documents used for works and goods contracts. 8. Domestic Preference. For goods contracts, qualified domestic bidders will be eligible for a preference equal to 15 percent of the cost, insurance and freight (CIF) price, or the sum of the customs duties and import tax payable by a non-exempt importer, whichever is less. 9. Advertisement. The General Procurement Notice will be published in United Nations Development Business and will be updated every year until all major ICB procurement activities and major consultant assignments have been completed. 10. Specific Procurement Notices for all ICB and NCB procurement activities, as well as invitations for expressions of interest for consulting contracts, will be published in at least one newspaper with a national circulation. 11. The Government will provide part of the TB drugs to some of the project provinces. This portion - 41 - of the drugs will be financed by a special grant of GOC under the National TB Program. It will be centrally procured and distributed to the provinces following the GOC govemment procurement procedures. Procurement Methods (Table A) 12. The China NCB procedures for goods and works have been reviewed by the Bank and some deviations were found in the intemal procurement procedures, such as bracketing and merit point system used in prequalification and bid evaluation. The Implementation Agencies are fully committed to strictly comply with the Bank's procurement procedures/policies for the Bank-financed contracts. In case there are any discrepancies between local policy and the Bank's requirement, the Bank policy and guidelines will prevail. 13. Civil Works (US$2.7 million including contingencies) will be confined to minor repairs of existing buildings, and installation of x-ray protection barriers. As the civil works are spread across sixteen provinces, many of the facilities are in remote locations, and as construction will be spread over time due to factors such as planning procedures and climate, the work is unlikely to be of interest to foreign bidders, and is not amenable to consolidation for larger procurement packages. Therefore, the value of work on any individual health facility is expected to be less than US$100,000. Small works contracts, each costing less than US$100,000, not to exceed US$2.73 million in the aggregate, will be procured under lump-sum, fixed-price contracts awarded on the basis of quotations obtained from three qualified contractors, in response to a written invitation. 14. Goods (US$102.8 million including contingencies). Goods including equipment, vehicles, medical supplies, drugs, materials, and radio and television spots to be financed by the project will be procured under the following procedures: ICB. About US$57.6 million of goods (including US$13.7 million for drugs) will be procured using ICB procedures. This represents about 56 percent of total goods procurement. NCB. Items (excluding drugs) estimated to cost between US$30,000 and US$300,000 per contract will be procured using NCB procedures, not to exceed US$8.3 million in the aggregate. National Shopping. It is expected that some goods will not be procured in large packages given that the project covers sixteen provinces, each with diverse requirements in terms of timing and specifications. This is coupled with central and provincial government requests to decentralize some procurement to provincial level to increase administrative control and efficiency. Therefore, certain goods (excluding drugs) such as some office equipment, heaters, and refrigerators, etc., would be procured by each of the provinces by National Shopping. Other items or groups of items estimated to cost less than US$30,000 per contract, not to exceed US$2.77 million in the aggregate, will be procured by National Shopping as stated in Articles 3.5 and 3.6 of the guidelines. National Shopping will be conducted on the basis of a comparison of at least three written price quotations. Consultant Services and Training (US$29.9 million including contingencies). 15. Consultant Services. Contracts for consultant services will be packaged to combine related skills and services, in order to make them attractive and expand competition. Consultant services consist of short- and long-term assignments to be contracted to firms and/or individuals (local and/or foreign or - 42 - jointly) depending on the nature and duration of the assignments. The procurement of consultant services contracts will be in accordance with the provisions of the Bank Consultant Guidelines. Most consultant services will be for contracts less than US$ 100,000, and notices for contracts will be published in the national press following issuance of annual GPNs. For consulting assignments exceeding US$200,000, expressions of interest will be obtained by advertisement in the Development Business, supplemented with notices issued in the national press. The following procurement procedures will be used for Bank-financed consultant services: (a) Quality-Based Selection (QBS) for complex or highly specialized assignments; (b) ,Least-Cost Selection (LCS) for assignments of a standard or routine nature, estimated to cost less than US$200,000; (c) Selection Based on Consultants' Qualifications (SBCQ) for very small assignments for which the need for preparing and evaluating competitive proposals is not justified, estimated to cost less than US$200,000; (d) Individual Consultants (IC) for specialized activities under the project to assist the implementing units, particularly with decentralized interventions, through the recruitment of individual consultants (both foreign and Chinese nationals), estimated to cost less than US$100,000; and (e) Single-Source Selection (SSS), for the National TB Reference Laboratory, to carry out TB drug-resistance surveillance (DRS) studies in each project province, up to an aggregate limit of US$100,000. This SSS is justified on the basis that, as part of the World Health Organization's global network for TB DRS, and to ensure the quality of data from the network, WHO has designated the National TB Reference Laboratory to carry out TB DRS in China. The Bank will review progress reports and annual plans for consulting services for central and provincial levels. 16. Training (US$19.7 million). Training is an integral element of the project's institutional capacity building objectives. The Loan will finance training programs including short-term fellowships, domestic and international study tours, and local training of health sector and other eligible personnel through periodic seminars, workshops and conferences. Such training programs would be organized by MOH's National TB Program Office, MOH's National TB Control Center, and other relevant institutions. The topics covered under these training programs and the participants/target audience are widely varied. Expenditures related to local training programs include: (a) trainer fees, transportation cost to city where training is held, per diems of training participants (local transportation, lodging and subsistence); (b) organizational costs of training; and (c) training materials and handouts. The local training venues could be selected from major health facilities (e.g., district hospitals) or training/conference centers. Trainees are expected to converge in these training loci coming from their localities and would be lodged for the duration of the workshops/seminars. For fellowships and study tours, expenditures include training fees and costs charged by the training institution, leaming/course materials, domestic or international travel and visa costs (if applicable), per diems (local transportation, lodging and subsistence costs), and course-related tours. Specifically, for training programs: (a) Seminars and Workshops. MOH would develop and submit for the Bank's prior review an initial program for carrying out the in-country training workshops, seminars and conferences. Each county's annual training program would be reviewed at the provincial level; each province's training plan will be submitted to the MOH and to the Bank for review. This training plan would include: the content, identification of the training participants/audience, cost estimates of the inputs, and the training schedule/timing. Expenditure items for carrying out the in-country workshops would be supported by Statements of Expenditures (SOE). The status of the training plan would be included as part of the quarterly progress reports, and would be updated or modified as may be mutually agreed between the MOH and the Bank. (b) Fellowships and Study Tours. MOH would develop an initial plan for fellowships and study tours (domestic and international) and submit this to the Bank for prior review. The - 43 - training plan for Study Tours will include: the purpose, names and titles/positions of the participants, itinerary and estimated costs. For Fellowships Training, information would include: names and qualifications of the candidates, course of study and duration, proposed training institution, and the costs. Fellowships and Study Tours would normally be limited to short-term training programs and tours (about four weeks for study tours and three months for fellowships). Expenditure items for tours and training abroad would be supported by SOEs. The status of the training plan would be included as part of the quarterly progress reports, and would be updated and/or modified as may be mutually agreed between the MOH and the Bank. 17. Program Support (US$99.8 million including contingencies) will include: surveillance and monitoring activities, logistical support, information collection and reporting, workshops (excluding training materials), non-medical supplies and materials, transportation and accommodations (excluding training-related expenses), and consumable materials, but excluding staff salaries. Program support is critical to reverse the recent decline in availability of funds for the management and maintenance of preventive health care programs. In addition, by demonstrating the benefits of adequate program support, the project would increase internal support for such expenditures in the Government. For these reasons, financing of program support will be on a fixed rather than declining basis. Thresholds for Prior Review (Table B) 18. Prior review by the Bank of all stages of the bidding process will be required for: (a) the first two contracts for goods to be procured by each province using NCB; (b) the first two small works contracts to be procured by each province; and (c) all contracts for goods and works under the project procured using ICB. 19. For consultant services, contracts with firrns of US$100,000 equivalent or more and contracts with individuals of US$50,000 equivalent or more will require the Bank's prior review. For training, the following would be subject to the Bank's prior review: (a) initial program for carrying out the in-country training workshops, seminars and conferences; and (b) initial plan for fellowships and study tours (domestic and international). Post Review 20. It is expected that post review of documents related to 25 percent of contracts and direct purchases will be conducted according to Bank guidelines. This arrangement will be assessed during the Mid-term Evaluation, and if indicated the percentage may be reviewed. -44 - Procurement methods (Table A) Table A: Project Costs by Procurement Arrangements (US$ million equivalent) Procurement Method Expenditure Category ICB NCB Other' N.B.F. Total Cost 1. Works 0.00 0.00 2.73 0.00 2.73 (0.00) (0.00) (2.73) (0.00) (2.73) 2. Goods 43.93 8.24 2.75 0.00 54.92 (34.15) (6.40) (2.13) (0.00) (42.69) 3. Services, Training, 0.00 0.00 29.95 0.00 29.95 T. A., and Operational Research (0.00) (0.00) (17.80) (0.00) (17.80) 4. Program Support 0.00 0.00 99.82 0.00 99.82 (0.00) (0.00) (26.02) (0.00) (26.02) 5. Drugs 3/ 13.74 0.00 0.00 34.11 47.84 (13.74) (0.00) (0.00) (0.00) (13.74) 6. Operation & Maintenance 0.00 0.00 0.00 6.03 6.03 (0.00) (0.00) (0.00) (0.00) (0.00) 7. Fee 0.00 0.00 1.04 0.00 1.04 (0.00) (0.00) (1.04) (0.00) (1.04) Total 57.67 8.24 136.28 40.14 242.33 (47.89) (6.40) (49.71) (0.00) (104.00) 1/ Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies. 2/ Includes civil works and goods to be procured through National Shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) relending project funds to local government units. 3/ Drugs not financed by the Bank will be provided as an in-kind contribution by the government. Note: Differences due to rounding. - 45 - Prior review thresholds (Table B) Table B: Thresholds for Procurement Methods and Prior Review' Contract Value Contracts Subject to Threshold Procurement Prior Review Expenditure Category (US$ thousands) Method (US$ millions) 1. Works > US$100,000 ICB All ICB contracts; and the < US$ 100,000 Small Works first two works contracts from each province. 2. Goods > US$300,000 ICB All ICB contracts; and < US$300,000 NCB the first two contracts for < US$30,000 National Shopping goods to be procured using NCB from each province. 3. Services > US$200,000 QBS US$100,000 for firms; and Firms < US$200,000 QBS, LCS, SBCQ US$50,000 for individuals Individuals < US$100,000 QBS, LCS, SBCQ, IC < US$100,000 SSS 4. Training N/A Other Initial program for carrying out the in-country training workshops, seminars and conferences; and initial plan for fellowships and study tours (domestic and international). 5. Miscellaneous 6. Miscellaneous Total value of contracts subject to prior review: US$57.6 million Overall Procurement Risk Assessment Average Frequency of procurement supervision missions proposed: One every 6 months (includes special procurement supervision for post-review/audits) Procurement activities will be managed out of the Beijing Office by procurement specialists. Thresholds generally differ by country and project. Consult OD 11.04 "Review of Procurement Documentation" and contact the Regional Procurement Adviser for guidance. - 46 - Disbursement Allocation of loan proceeds (Table C) I . It is expected that the proposed loan of US$104.0 million would be disbursed over a period of approximately seven years. The closing date is March 15, 2010. The allocation of loan proceeds according to expenditure category is outlined in Table C. 2. To ensure timely start-up of the project, retroactive financing of up to US$ 10.0 million would be available for payments made for eligible expenditures incurred after September 1, 2001. Table C: Allocation of Loan Proceeds Expenditure Category Amount in US$million Financing Percentage Works 2.49 80% Goods: 100% of foreign expenditures, 100% of local expenditures (ex-factory cost), and 75% of local expenditures for other items procured locally. (a) Drugs 12.60 (b) Goods under Direct Payment 1.00 Contract (c) Others (excluding supplies under 38.17 Program Support) Consutlants' Services for: (b) Operational Studies 4.08 90% (b) Others 2.49 100% Training: 9.73 (a) International 100% (b) Domestic 60% Program Support 23.90 60% Unallocated 8.50 Total Project Costs 102.96 Front-end fee 1.04 Total 104.00 Use of statements of expenditures (SOEs): 3. Reimbursement will be made on the basis of Statement of Expenditures for the following: * Works under contracts, each costing less than US$300,000 equivalent; * Goods (including drugs) under contracts, each costing less than US$300,000 equivalent; * Consulting services under contracts awarded to consulting firms, each costing less than US$100,000 equivalent; * Consulting services under contracts awarded to individual consultants, each costing less than US$50,000 equivalent; * Training regardless of the cost; and - 47 - * Program support regardless of the cost. 4. The documentation will be made available for the required audits as well as to the Bank supervision mission, and will be retained by FLO in MOH and the Project Management Offices for at least one year after receipt by the Bank of the audit report for the year in which the last disbursement was made. All other disbursements from the loan would be against full documentation. The processing, disbursement and monitoring of the allocations of the proceeds of the Loan and Borrower counterpart financing would be managed by FLO in coordination and consultation with MOF. Special account: 5. To facilitate disbursement under this project, one Special Account will be established and MOF will be directly responsible for the management, monitoring, maintenance and reconciliation of the Special Account activities of the project. A second-generation Special Account will be also established at and managed by the provincial finance bureau of each project province. The Special Account would be established in US dollars, in a commercial bank acceptable to the Bank and on terms and conditions satisfactory to the Bank. The Special Account would be used for all eligible foreign and local expenditures. Applications for replenishment of the Special Account would be submitted every six months or whenever the Account has been drawn down by about 50 percent of the initial deposit, whichever occurs first. The aggregate initial deposit for the Special Account is US$10.0 million. - 48 - Appendix 6-1 Summary of Deviations of the Chinese Bidding Law from Bank Guidelines in Respect of ICB Goods Procurement Funds for procurement. The Bidding Law requires that the purchaser possess or secure sources for the funds required for the procurement before carrying out bidding for the procurement and that he clearly specify such information in the bidding documents. The Bank has no such requirement. Advertisement. The Bidding Law allows the invitation for bids to be announced in newspapers and other media, including information networks or others. The Bank requires advertisement in a national daily newspaper. Time for bid preparation and submission. The Bidding Law sets the minimum time for bid preparation and submission as 20 days. The Bank generally requires 45 days for ICB contracts and 30 days for NCB contracts. Minimum number of bids. The Bidding Law requires rebidding if fewer than three bids are received. The Bank allows evaluation of a single bid. Bid evaluation. The Bidding Law allows bids to be evaluated by scoring method and stipulates that a bid of less than cost must be rejected. However, the Bidding Law does not have provisions for determining the cost. This approach is unacceptable to the Bank. Evaluation must be on the basis of price. -49- Annex 7: Project Processing Schedule CHINA: CN-Tuberculosis Control Project Project Schedule Planned Actual Time taken to prepare the project (months) 16 20 First Bank mission (identification) 07/15/2000 07/12/2000 Appraisal mission departure 09/05/2001 09/21/2001 Negotiations 10/23/2001 01/28/2002 Planned Date of Effectiveness 06/24/2002 Prepared by: Foreign Loan Office, Ministry of Health Preparation assistance: PHRD TF026428; PHRD TF026607. Bank staff who worked on the project included: Name Speciality Jagadish Upadhyay Task Team Leader Enis Baris Senior Public Health Specialist Darren Dorkin Operations Analyst Rekha Menon Economist Wang Shiyong Health Specialist Chau-Ching Shen Senior Financial Management Specialist Wang Haiyan Disbursement Specialist Li Xiaoping Procurement Specialist Joan Morgan-Nicholson Administrative Support Richard Skolnik Peer Reviewer Diana Weil Peer Reviewer Jean-Jacques de St. Antoine Peer Reviewer Carlos Escudero Chief Counsel Margaret Png Senior Counsel Nina Eejima Counsel Akihiko Nishio China Country Program Coordinator Hsiao-Yun Elaine Sun Chief, LOAG3 Simon Bradbury Lead Financial Management Specialist Jose Molina Senior Financial Officer DFID staff who worked on the project included: John Gordon, former China Programme Manager and currently Senior Health Adviser (Asia), DFID London; Jane Haycock, Health Adviser, DFID Office Beijing; Graeme Buckley, Economic Adviser for China, DFID London; Stephen Kidd, Social Development Adviser for China, DFID London; and Susan Roberts, Deputy Programme Manager, China. - 50 - Other specialists who worked on the project included: Dr. Daniel P. Chin, Country Adviser in Tuberculosis, World Health Organization, Beijing; Dr. Peter Gondrie, Tuberculosis Specialist, KNCV, Netherlands; and Jessica Ogden, Senior Lecturer, Social Anthropology, London School of Hygiene & Tropical Medicine. - 51 - Annex 8: Documents in the Project File* CHINA: CN-Tuberculosis Control Project A. Project Implementation Plan 1. Project Implementation Plan for the China TB Control Project. January 9, 2002. 2. Provincial Project Proposals. Revised for Appraisal. August 2001. B. Bank Staff Assessments 1. Identification, Preparation, Pre-appraisal, and Appraisal aide memoires and back-to-office reports. 2. Financial Management Assessment, August 30, 2001. 3. Procurement Assessment, September 12, 2001. C. Other 1. Joint Technical Review, January 29, 2001. 2. Program Management and Technical Guidelines, February 1, 2002. 3. Ethnic Minorities Development Strategy, February 1, 2002. *Including electronic files - 52 - Annex 9: Statement of Loans and Credits CHINA: CN-Tuberculosis Control Project 06-Feb-2002 Difference between expected and actual Original Amount in US$ Millions disbursements' Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig_ Frm Rev'd P058846 2002 National Railway Project 1e0.00 0.00 0.00 0.00 160.00 0.00 0.00 P045915 2001 Urumqi Urban Transport 100.00 0.00 0.00 0.00 86.04 20.34 0.00 P058845 2001 Jiangxi II Hw 200.00 0.00 0.00 0.00 200.00 2.67 0.00 P047345 2001 CH-HUAI RIVER POLLUTION CONTROL 105.50 0.00 0.00 0.00 1 05.50 0.00 0.00 P056596 2001 Shijiazhuarig Urban Transport 100.00 0.00 0.00 0.00 99.00 21.57 0.00 P056516 2001 WATER CONSERVATION 74.00 0.00 0.00 0.00 68.57 5.15 0.00 P056199 2001 Third Inland Waterways 100.00 0.00 0.00 0.00 100.00 1.25 0.00 P051859 2001 CH-LIAO RIVER BASIN 1100.00 0.00 0.00 0.00 100.00 0.00 0.00 P058844 2000 3rd Henan Prov Hwy 150.00 0.00 0.00 0.00 133.22 5.22 0.00 P058843 2000 Guangxi Highway 200.00 0.00 0.00 0.00 182.03 33.70 0.00 P056424 2000 TONGBAI PUMPED STORA 320.00 0.00 0.00 0.00 318.00 41.07 0.00 P084730 2000 Yangtze Dike Strengthening Project 210.00 0.00 0.00 0.00 196.63 69.55 0.00 P049436 2000 CN-CHONGOING URBAN ENVIRONMENT 200.00 0.00 0.00 0.00 194.00 15.97 0.00 P042109 2000 CH-BEIJING ENVIRONMENT It 349.00 0.00 25.00 0.00 357.72 69.69 0.00 P045264 2000 SMALLHLDR CATTLE DEV 93.50 0.00 0.00 0.00 63.23 22.50 0.00 P045910 2000 CH-HEBEI URBAN ENVIRONMENT 150.00 0.00 0.00 0.00 142.06 15.73 0.00 P036953 1999 CN-HEALTH IX 10.00 50.00 0.00 0.00 44.91 8.08 0.00 P049665 1999 ANNING VALLEY AG.DEV 90.00 30.00 0.00 0.00 60.10 5.77 0.00 P051705 1999 Fujiang 11 Highway 200.00 0.00 0.00 0.00 149.57 77.32 0.00 P050036 1999 Anhui Provincial Hwy 200.00 0.00 0.00 0.00 118.75 28.09 0.00 P003653 1999 Container Transport 71.00 0.00 0.00 3.13 43.22 45.89 0.00 P043933 1999 CH-SICHUAN URBAN ENVIRONMENT 150.00 2.00 0.00 0.00 100.90 26.92 3.70 P046051 1999 CN-HIGHER EDUC. REFORM 20.00 50.00 0.00 0.00 32.07 27.69 0.00 P042299 1999 TEC COOP CREDIT IV 10.00 35.00 0.00 0.00 39.18 -3.43 0.00 P946564 1999 Gansu & Inner Mongolia Poverty Reduction 80.00 100.00 0.00 0.00 107.97 33.43 0.00 P046829 1999 RENEWABLE ENERGY DEVELOPMENT 100.00 0.00 0.00 0.00 12.87 64.87 0.00 P041890 1999 Liaoning Urban Transport 150.00 0.00 0.00 0.00 79.31 39.78 0.00 P051856 1999 ACCOUNTING REFORM & DEVELOPMENT 27.40 5.60 0.00 0.00 22.77 21.08 0.00 P057352 1999 CN-RURAL WATER SUPPLY IV 16.00 30.00 0.00 0.00 37.69 14.38 0.00 P058308 1999 CN-PENSION REFORM PJT 0.00 5.00 0.00 0.00 3.98 4.02 0.00 P060270 1999 CN-ENTERPRISE REFORM LN 0.00 5.00 0.00 0.00 4.68 6.66 0.00 P063123 1999 YANGTZE FLOOD EMERGY 40.00 40.00 0.00 0.00 0.47 1.19 1.19 P038121 1999 RENEWABLE ENERGY DEVELOPMENT 0.00 0.00 35.00 0.00 26.46 10.56 0.00 P041268 1999 Nat Hwy4lHubei-Hunran 350.00 0.00 0.00 0.00 230.74 59.41 0.00 P051888 1999 GUANZHONG IRRIGATION 80.00 20.00 0.00 0.00 70.00 27.82 0.00 P056216 1999 LOESS PLATEAU 11 100.00 50.00 0.00 0.00 103.30 53.84 0.00 P035698 1998 HUNAN POWER DEVELOP. 300.00 0.00 0.00 100.00 179.92 203.67 1.77 P040185 1998 CH-SHANDONG ENVIRONMENT 95.00 0.00 0.00 0.00 37.56 28.46 0.00 P051736 1998 E. CHINA/JIANGSU PWR 250.00 0.00 0.00 0.00 172.79 170.29 155.41 P036414 1998 CH-GUANGXI URBAN ENVIRONMENT 72.00 20.00 0.00 0.00 80.71 42.26 0.00 P003566 1998 CN-BASIC HEALTH (HLTH8) 0.00 85.00 0.00 0.00 46.48 20.39 0.00 P036949 1998 Not Hwy3-Hubei 250.00 0.00 0.00 0.00 80.33 -0.50 0.00 P003539 1998 SUSTAINABLE COASTAL RESOURCES DEV. 100.00 0.00 0.00 2.31 57.79 31.77 0.00 P045788 1998 Tui-Provincial Hwy 230.00 0.00 0.00 0.00 100.40 50.44 0.00 P046563 1998 TARIM BASIN 11 90.00 60.00 0.00 2.67 76.08 47.14 0.00 P003619 1998 2nd Inland Waterways 123.00 0.00 0.00 0.00 89.84 62.44 0.00 P003614 1998 Guangzhrou City Transport 200.00 0.00 0.00 0.00 130.81 122.03 0.00 P046952 1998 FOREST. DEV. POOR AR 100.00 100.00 0.00 0.00 106.31 -19.24 51.13 P003606 1998 ENERGY CONSERVATION 83.00 0.00 22.00 0.00 51.29 11.49 0.00 P049700 1998 IAIL-2 300.00 0.00 0.00 0.00 82.95 12.14 0.00 P037859 1998 EGY CONSERVATION PRO 0.00 0.00 22.00 0.00 6.30 20.93 0.00 P003591 1998 STATE FARMS COMMERCI 150.00 0.00 0.00 80.91 8.45 70.29 8.24 P04448S 1997 SHANGHAI WAIGAOQIAO 400.00 0.00 0.00 0.00 266.97 127.42 31.52 - 53 - Difference between expected and actual Original Amount in US$ Millions disbursements Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev'd P038968 1997 HEILONGJIANG ADP 120.00 0.00 0.00 0.00 29.95 24.67 0.00 P003654 1997 NatHwy2/Hunan-Guangdong 400.00 0.00 0.00 0.00 144.11 127.45 0.00 P003650 1997 TUOKETUO POWER/INNER 400.00 0.00 0.00 102.50 171.82 233.25 -4.54 P003643 1997 Xinjiang Hwy ll 300.00 0.00 0.00 60.00 64.06 119.73 14.06 P003637 1997 CH-NATIONAL RURAL WATER III 0.00 70.00 0.00 0.00 25.98 20.83 18.34 P003635 1997 CN-VOC. ED. REFORM PROJ 10.00 20.00 0.00 0.00 2.88 4.01 0.00 P003590 1997 QINBA MOUNTAINS POVERTY REDUCTION 30.00 150.00 0.00 0.00 76.31 76.40 0.00 P034081 1997 XIAOLANGDI MULTI. II 430.00 0.00 0.00 0.00 92.10 122.09 0.00 P036952 1997 CN-BASIC ED. IV 0.00 85.00 0.00 0.00 2.56 5.45 0.00 P036405 1997 WANJIAZHAI WATER TRA 400.00 0.00 0.00 75.00 54.52 100.69 37.19 P035693 1997 FUEL EFFICIENT IND. 0.00 0.00 32.80 0.00 8.87 32.81 0.00 P040513 1996 2nd Henan Prov Hwy 210.00 0.00 0.00 0.00 91.94 87.61 -16.39 P003594 1996 GANSU HEXI CORRIDOR 60.00 90.00 0.00 0.00 95.43 59.08 0.00 P003599 1996 CH-YUNNAN ENVIRONMENT PROJECT 125.00 25.00 0.00 0.00 105.70 90.63 39.11 P003638 1996 SEEDS SECTOR COMMER. 80.00 20.00 0.00 9.40 19.89 26.18 0.00 P003602 1996 CH-HUBEI URBAN ENVIRONMENT 125.00 25.00 0.00 28.32 59.00 88.69 31.22 P034618 1996 CN-LABOR MARKET DEV. 10.00 20.00 0.00 0.00 10.68 12.99 0.00 P003652 1996 2nd Shaanxi Prov Hwy 210.00 0.00 0.00 0.00 47.58 47.58 0.00 P003649 1996 SHANXI POVERTY ALLEV 0.00 100.00 0.00 0.00 8.85 14.38 0.00 P003648 1996 CH-SHANGHAI SEWERAGE II 250.00 0.00 0.00 0.00 96.98 94.81 0.00 P003646 1996 CN-CHONGQING IND POL CT 170.00 0.00 0.00 164.82 3.00 165.74 2.74 P003589 1996 CN-DISEASE PREVENTION (HLTH7) 0.00 100.00 0.00 0.00 17.16 28.16 0.00 P003571 1995 RAILWAYS VII 400.00 0.00 0.00 29.00 165.96 180.46 130.21 P003585 1995 SHENYANG IND. REFORM 175.00 0.00 0.00 0.00 41.52 41.52 0.00 P003603 1995 CH-ENTERPRISE HOUSING & SOC SEC REF 275.00 75.00 0.00 20.00 102.11 120.69 23.59 P003598 1995 CH-LIAONING ENVIRONMENT 110.00 0.00 0.00 0.00 19.70 19.70 2.29 P003600 1995 CN-TECHNOLOGY DEVELOPMENT 200.00 0.00 0.00 3.02 32.12 35.14 0.00 P036947 1995 SICHUAN TRANSMISSION 270.00 0.00 0.00 95.00 15.35 110.35 13.33 P003639 1995 SOUTHWEST POV. REDUC 47.50 200.00 0.00 0.00 17.82 42.83 11.04 P003642 1995 ZHEJIANG POWER DEVT 400.00 0.00 0.00 0.00 63.60 65.02 0.00 P036041 1995 FISCAL & TAX REF. & 25.00 25.00 0.00 0.00 3.06 5.55 5.02 P003647 1995 ECONOMIC LAW REFORM 0.00 10.00 0.00 0.00 4.57 5.41 0.00 P003634 1995 CN-MATERNAL CHILD HEALT(HLTH6) 0.00 90.00 0.00 0.00 4.46 7.76 0.00 P003402 1995 NATURE RESERVE MGMT 0.00 0.00 0.00 0.00 0.94 2.41 0.00 P003593 1994 SONGLIAO PLAIN ADP 0.00 205.00 0.00 0.00 6.70 1.42 -5.15 P003626 1994 Fujian Prov Highway 140.00 0.00 0.00 0.00 35.02 35.02 35.00 P003644 1994 XIAOLANGDI RESETTLEMENT 0.00 110.00 0.00 0.00 6.15 4.43 0.00 P003540 1994 LOESS PLATEAU 0.00 150.00 0.00 0.00 2.79 -2.27 0.00 P003404 1994 SICHUAN GAS DEV. CON 0.00 0.00 10.00 0.00 0.02 0.78 0.00 P003595 1994 RED SOILS II DEVELOP 0.00 150.00 0.00 0.00 7.41 3.27 -3.43 P003641 1994 YANGZHOU THERMAL POW 350.00 0.00 0.00 11.50 3.37 14.57 -1.08 P003609 1994 SICHUAN GAS DEV & CONSERVATION 255.00 0.00 10.00 0.00 56.81 56.81 0.00 P003632 1993 CN-ENVIRONMENT TECH ASS 0.00 50.00 0.00 0.00 6.67 7.62 7.30 P003627 1993 GRAIN DISTRIBUTION P 325.00 165.00 0.00 0.00 45.20 46.03 34.37 P003623 1993 FINANCIAL SECTOR T.A 0.00 60.00 0.00 0.00 8.93 3.42 3.42 P003S92 1993 REF. INSTL& PREINV 0.00 50.00 0.00 0.00 4.24 4.87 0.62 P003616 1993 TIANHUANGPING HYDRO 300.00 0.00 0.00 17.00 21.87 38.87 0.00 P003624 1992 CN-INFECTIOUS DISEASES (HLTH5) 0.00 129.60 0.00 0.00 3.82 0.26 0.22 Total: 13611.90 2862.20 156.80 804.57 7279.45 4314.36 631.43 - 54 - CHINA STATEMENT OF IFC's Held and Disbursed Portfolio OCT-2001 In Millions US Dollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1999/00 Bank of Shanghai 0.00 3.84 0.00 0.00 0.00 3.84 0.00 0.00 1996 Beijing Hormel 2.86 0.50 0.00 2.20 2.86 0.50 0.00 2.20 1998/00 CIG Holdings PLC 0.00 3.00 0.00 0.00 0.00 0.00 0.00 0.00 1996 Caltex Ocean 21.00 0.00 0.00 36.82 21.00 0.00 0.00 36.82 1998 Chengdu Huarong 7.40 3.20 0.00 8.60 2.31 3.20 0.00 4.91 1998 Chengxin-IBCA 0.00 0.36 0.00 0.00 0.00 0.36 0.00 0.00 1987/92/94 China Bicycles 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1994 China Walden Mgt 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.00 1994 China Walden Ven 0.00 0.77 0.00 0.00 0.00 0.77 0.00 0.00 1994 Dalian Glass 0.00 2.40 0.00 0.00 0.00 2.40 0.00 0.00 1999 Dujiangyan 25.59 0.00 0.00 30.00 11.51 0.00 0.00 13.49 1995 Dupont Suzhou 15.58 4.15 0.00 20.80 15.58 4.15 0.00 20.80 1994 Dynamic Fund 0.00 9.90 0.00 0.00 0.00 8.24 0.00 0.00 1999 Hansom 0.00 16.10 0.00 0.00 0.00 16.10 0.00 0.00 1996 Jingyang 35.00 0.00 0.00 76.92 35.00 0.00 0.00 76.92 1998 Leshan Scana 6.10 1.35 0.00 0.00 4.50 1.35 0.00 0.00 1996 Nanjing Kumho 7.79 3.81 0.00 22.14 7.79 3.81 0.00 22.14 2001 New China Life 0.00 30.70 0.00 0.00 0.00 23.32 0.00 0.00 1995 Newbridge Inv. 0.00 2.13 0.00 0.00 0.00 2.13 0.00 0.00 1997 Orient Finance 0.00 0.00 11.43 14.29 0.00 0.00 11.43 14.29 1997/00 PTP Holdings 0.00 0.03 0.00 0.00 0.00 0.03 0.00 0.00 1997 PTP Hubei 12.63 0.00 0.00 25.38 12.63 0.00 0.00 25.38 1996 Pacific Ports 0.00 2.54 0.00 0.00 0.00 2.54 0.00 0.00 2001 Peak Pacific 0.00 0.00 25.00 0.00 0.00 0.00 13.53 0.00 1998 Rabobank SHFC 1.35 0.00 0.00 1.35 1.35 0.00 0.00 1.35 2000 SSIF 0.00 6.00 0.00 0.00 0.00 0.45 0.00 0.00 1998 Shanghai Krupp 30.00 0.00 0.00 68.80 10.63 0.00 0.00 24.37 1999 Shanxi 19.00 0.00 0.00 0.00 16.45 0.00 0.00 0.00 1993 Shenzhen PCCP 3.76 0.99 0.00 0.00 3.76 0.99 0.00 0.00 2001 Sino-Forest 25.00 0.00 0.00 0.00 10.00 0.00 0.00 0.00 1995 Suzhou PVC 14.67 2.48 0.00 14.80 14.67 2.48 0.00 14.80 1998 WIT 5.00 0.00 0.00 5.00 0.00 0.00 0.00 0.00 1996 Weihai Weidongri 2.20 0.00 0.00 0.00 2.20 0.00 0.00 0.00 1993 Yantai Cement 8.30 1.95 0.00 4.43 8.30 1.95 0.00 4.43 1998 Zhen Jing 0.00 2.00 0.00 0.00 0.00 2.00 0.00 0.00 Total Portfolio: 243.23 98.21 36.43 331.53 180.54 80.62 24.96 261.90 - 55 - Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic 2001 AACI 0.00 0.00 2.00 0.00 2000 CIG Zhapu 6.00 5.00 0.00 0.00 2000 CIMIC Tile 15.00 5.00 0.00 15.00 2001 Daning Coal 0.00 0.00 0.00 15.00 2002 Darong 10.00 0.00 1.50 8.00 2001 Maanshan Carbon 9.00 0.00 2.00 5.00 2000 Meijing 9.00 0.00 0.00 7.30 2001 Minsheng 0.00 23.50 0.00 0.00 2001 NCCB 0.00 0.00 26.58 0.00 1998 PTP Hubei BLINC 0.00 0.00 0.00 1.50 2000 Wan Jie Hospital 15.00 0.00 0.00 0.00 Total Pending Commitment: 64.00 33.50 32.08 51.80 -56 - Annex 10: Country at a Glance CHINA: CN-Tuberculosis Control Project East Lower- POVERTY and SOCIAL Asia & middle- China Pacific Income Development diamond' 2000 Population, mid-year (millions) 1,262.5 1,853 2,046 Life expectancy GNI per capita (Atlas method. US$) 840 1.060 1,140 GNI (Atlas method, US$ billions) 1,061.2 1,964 2,327 Average annual growth, 1994-00 PoPulation (%) 1.0 1.1 1.0 Labor force (%) 1.2 1.4 1.3 GNI I Gross per primary Most recent estimate (latest year available, 1994-00) capita enrollment Poverty (% of Population below national povertv line) 5 Urban Population (% of total population) 36 35 42 Life expectancy at birth (years) 70 69 69 Infant mortalitv (per 1.000 live births) 30 35 32 Child malnutrition (% of children under 5) 9 13 11 Access to improved water source Access to an Improved water source (% of population) 75 75 80 Illiteracy (% ofpopulation age 15+) 16 14 15 Gross primarv enrollment /Xof school-age population) 123 119 114 Chia Male 123 121 116 --- Lower-middle-income group Female 123 121 114 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1980 1990 1999 2000 Economic ratlos GDP (USS billions) 216.2 363.0 997.5 1,076.9 Gross domestic investmentlGDP 35.2 34.7 37.2 37.3 Exports of goods and services/GDP 7.6 17.5 22.0 25.9 Trade Gross domestic savings/GDP 34.9 37.9 40.1 39.9 Gross national savinas/GDP 34.9 38.3 38.7 39.2 Current account balance/GDP -0.4 3.8 1.6 1.9 Domestic Ie n Interest Pavments/GDP 0.2 0.7 0.6 0.7 stl_ Investment Total debt/GDP .. 15.2 15.5 13.9 sains Total debt service/exports 8.0 9.9 9.O 7.4 Present value of debUGDP .. .. 13.5 Present value of debUexports .. .. 58.7 Indebtedness 1980-90 1990-00 1999 2000 2000-04 (average annual growth) GDP 10.1 10.3 7.1 7.9 7.4 China GDP per capita 8.5 9.2 6.1 7.2 6.7 -Lower-middle-income group Exports of goods and services 11.0 16.5 13.9 32.0 11.1 STRUCTURE of the ECONOMY 1980 1990 1999 2000 Growth of investment and GDP (%i (% of GDP) 20 Aariculture 30.1 27.0 17.6 15.9 Industry 48.5 41.6 49.4 50.9 Manufacturing 40.5 32.9 33.6 34.5 r0 _ Services 21.4 31.3 32.9 33.2 o Private consumption 50.5 49.9 47.4 47.0 95 9s 97 98 99 00 General government consumption 14.6 12.1 12.5 13.1 -G DI 11 GDP Imports of aoods and services 7.9 14.3 19.1 23.2 1980-90 1990-00 1999 2000 Growth of exports and Imports (%) (avera,qe annual orowth) Agriculture 5.9 4.1 2.8 2.4 40 Industrv 11.1 13.7 8.1 9.6 30 _ _ Manufaclurina 11.1 13.4 8.3 9.7 20 Services 13.5 9.0 7.5 7.8 1*o 7 Private consumption 9.4 8.8 2.6 6.0 General government consumDtion 9.8 9.4 8.4 12.0 -10 97 98 99 00 Gross domestic investment 10.8 11.6 3.2 7.9 Exports O lmports Imports of goods and services 9.1 16.1 22.3 24.8 Note: 2000 data are preliminary estimates. The diamonds show four kev indicators in the countrv (in bold) compared with its income-group average. If data are missing. the diamond will be incomplete. - 57 - China PRICES and GOVERNMENT FINANCE 1980 1990 1999 2000 Inflation (%) Domestic prices (% chanqe) 30 Consumer prices 6.0 3.1 -1.4 0.4 25 Implicit GDP deflator 5.6 5.5 -2.2 0.9 Government finance (% of GDP. includes current grants) 97 98 9 o Current revenue 25.7 19.7 15.0 15.3 -10 Current budget balance ,. 3.0 1.3 0.6 - GDP deflator O CP Overall surplus/deficit -1.5 -0.8 -4.0 -3.6 TRADE (USS millions) 1980 1990 1999 2000 Export and Import levels (USS mill.) Total exports (fob) 18,270 62,091 194,931 249,210 30000 Food 2,985 6,609 10,458 12,282 Fuel 4,280 5,237 4,659 7,851 DO Manufactures 9,005 46,205 174,990 223.752 Total imports (cif) 20,017 53,345 165,699 225,097 Food 2,927 3,335 3,619 4,758 100,000 Fuel and energy 203 1,272 8,912 26,037 Capital goods 5,119 16,845 69,469 91,934 o 3 38 Export price index (1995=100) 25 78 69 67 Import price index (1995=100) 22 80 71 75 * Exports * Imports Terms of trade (1995=100) 116 97 98 90 BALANCE of PAYMENTS (US$ millions) 1980 1990 1999 2000 Current account balance to GDP (%) Exports of goods and services 20,167 67,971 218,496 279,561 s- Imports of goods and services 20,859 55,537 189,799 250,688 Resource balance -692 12,433 28,697 28,873 Net income -100 1,055 -17,973 -14,666 3 Net current transfers .. 274 4,943 6,311 2 Current account balance -792 13,762 15,668 20,519 1 * I *i Financing items (net) ,, -7,673 -7,163 -9,971 0 Changes in net reserves .. -6,089 -8,505 -10,548 94 90 06 97 98 99 00 Memo: Reserves including gold (US$ millions) .. 16,963 161,404 171,753 Conversion rate (DEC, locallUSS) 2.1 5.1 8.2 8.3 EXTERNAL DEBT and RESOURCE FLOWS 1980 1990 1999 2000 (US$ millions) Composition of 2000 debt (USS mill.) Total debt outstanding and disbursed .. 55,301 154,223 149,800 IBRD . 2.865 10,400 11,118 IDA 3,016 8,907 8,771 G: 17,174 A: 11,118 Total debt service -~~~~~~~~~~~~~~~~~~~~~~~~~ ~8: 8.771 Total debt service 1,652 7,057 20,655 21,728 D: 2.556 IBRD .. 416 1,142 1,291 IDA ,, 19 117 131 A- Composition of net resource flows E: 28,510 Official grants 7 143 201 147 Official creditors .. 1,727 1,706 1,928 Private creditors .. .. -1,854 1,985 Foreign direct investment 57 3,487 41,015 42,096 Portfolio equity 0 0 1,808 7,814 F:81,671 World Bank program Commitments .. 953 2,097 1,536 A - IBRD E - Bilateral Disbursements .. 1,098 1,756 1,907 B - IDA D - Other mululateral F - Private Principal repayments .. 216 558 644 C-IMF G - Short-term Netflows .. 882 1,198 1,263 Interest payments .. 219 701 778 Net transfers .. 663 497 485 Development Economics 9/6/01 - 58 - Additional Annex 11 Social Assessment CHINA: CN- Tuberculosis Control Project A. Summary of Key Social Issues, and Social Development Outcomes 1. Tuberculosis is a social, as much as a medical, problem. It is both a cause and consequence of poverty. By tackling TB in some of China's poorest provinces, this project will improve the health and well-being of individuals, families and communities, and in so doing will contribute to the economic development of the country as a whole. Specific efforts are made in the design of the current project to target the most vulnerable who, according to current knowledge, include those from the poorer provinces, people from ethnic minority groups and the 'floating population'. Financing arrangements have been made between the various funding bodies (GOC, the World Bank, DFID and the Government of Japan) and provincial govermments to enable free diagnosis and treatment for all infectious TB patients. In order to increase case-finding and expand the project to the most remote areas, some provinces are creating additional diagnostic centers, and many will work with the general health services and other providers of health care to ensure smooth and effective referral of patients from those facilities into the project. Further institutional and civil society partnerships to facilitate treatment supervision, case management and tuberculosis education will also be pursued in many provinces. In addition the project will develop new approaches to Information, Education and Communication (IEC) to inforn patients, the community and health providers about tuberculosis symptoms, treatment and care. In order to assess progress in achieving social development and TB control objectives, social assessment and operational research have been integrated into project design. A.1 Stakeholders: interests and participation 2. The primary stakeholders of the project are the beneficiaries - individuals, families and communities affected by tuberculosis. In addition to the broader community, the Project is designed to identify and meet the special needs of the poorer provinces, people from floating populations, those from minority ethnic groups and others. Difficulties experienced by others, e.g., women, the elderly and HIV/AIDS patients, in accessing treatment and care, will also be assessed. As noted above, civil society organizations such as village health committees, women's groups and labor cadres will be contacted and their help in delivering IEC, and supporting patients to complete treatment will be sought. Other key stakeholders include frontline providers of TB treatment and care. Health care providers in the project areas working at the county and provincial hospitals, township and village clinics that currently charge for treatment, are important stakeholders to bring into the project. They are currently the most important points of first resort for patients, and they have explicit interests in keeping patients under their care in order to benefit financially from their treatment. Great care will be taken to work with these providers to enlist their support in referring patients into the project and/or to act as treatment supervisors. TB Programmers, policy makers and donors (the World Bank, DFID, the Japanese government, WHO, and possibly other bilateral donors at a later date) are others with important interests in the project, and who have much to gain from its success. Chinese and international researchers and academics are a further stakeholder group. The international policy community is also a stakeholder in the project - evidence and knowledge gained from this project can usefully inform international tuberculosis policy. - 59 - B. Concepts and Examples B.1 Learning from past experience 3. The new project builds on the findings of the last ten years of the Bank-financed IEDC (Health V) Project and Government of China TB control projects. Within Health V, the Joint Research and Management Committee conducted a number of small studies to assess the impact of the project and to determine barriers to care. Further work on the social development aspects of the project includes the Joint Review of Tuberculosis Control Programs undertaken in August/September 2000, a second mission undertaken in October of the same year, a social development consultancy carried out by Professor Xueshan Feng (Fudan University) in April/May 2001, and a DFID-funded social development consultancy in June 2001. In addition, both the 1990 and 2000 National Epidemiological Surveys on Tuberculosis in China included sociological components, and relevant findings of which have been incorporated into the project design. Key findings of this work were that, while the previous projects achieved cure-rates surpassing 90 percent in most areas, the percentage of patients treated by the project was low - below 50 percent overall. In addition, the prevalence of TB among the poor and those from ethnic minority groups remain higher than in the general population. It was found that roughly half of the suspected TB cases do not present to the TB dispensaries for diagnosis and treatment but remain at the general health services where they may obtain less than optimal care, sometimes leading to the development of multidrug-resistant disease. Many patients also delay or avoid care-seeking due to the anticipated costs of treatment. Thus key priorities of the current project are to increase case-finding, diagnosis and successful treatment, particularly among those who are most vulnerable to infection, and most likely to encounter barriers to appropriate diagnosis and treatment. B.2 Accounting for social issues in project design 4. Based on these findings, the technical and financial design of the project accounts for the following issues: * Ensuring universal access through free diagnosis and treatment for all infectious TB patients presenting to TB facilities in the project areas; * Making provision for providing treatment to people coming from 'floating populations' who have TB and special attention to those from ethnic minorities and other vulnerable groups such as women, older people and HIV/AIDS patients; * Increasing the priority and attention given to IEC activities and their quality; * Dissemination of information to the community about TB symptoms and the availability of free and effective care; * Identification and incorporation into the program of providers to whom the community go to first for health care; and * Heightening the index of suspicion for TB of these providers. Specific activities planned by the provinces to address these issues are outlined below. B.3. Summary from PIPs here outlining the following issues B.3. 1. Provincial plans to overcome barriers to access 5. The barriers to access are of two categories: financial and nonfinancial barriers. To mitigate - 60 - impacts of financial barrier, plans have been made by every province on how to facilitate poor counties, as well as ethnic minority autonomous areas, to plan and implement a successful TB control program. Financial support from central and provincial governments has never been higher. Within the project, free diagnosis will be provided to all TB suspects and free treatment will be ensured for infectious TB patients. Some provinces are committed to providing transportation subsidies to poor patients. 6. The project will make sure that fully functioning TB institutions or dispensaries are set up at provincial, prefecture and county level in the project provinces, and outreach TB services in remote or mountainous areas. TB case referral will be strengthened in the project. According to the Methods on TB referral Management issued by MOH, all the TB suspects and patients encountered for the first time by general hospitals and other health providers must be referred to local TB institutions after their initial diagnosis. Logbooks and records from all health providers in the catchment area will be checked monthly by local TB institutions. All TB suspects will be reported and home visits will be made to those who fail to show up for proper follow-up. Incentives will be given to the staff for referral. 7. A multi-pronged approach will be employed to improve knowledge, attitude and practices toward TB services among different audience groups including general population, health providers and policy makers. A consultancy for developing a comprehensive IEC strategy is planned in the project by the end of 2001 if possible. He or she will work with domestic expertise in health IEC to look at following issues: * Existing media use and preferences and the potential for change; * Identification of target groups; * Capacity of MOH to deliver IEC; * Extent of support and cross-ministry involvement; Organizational and institutional arrangements for IEC on TB prevention; and * Resources for IEC. 8. The following principles on IEC for TB prevention have been developed: * It will be innovative and informed by the best international and domestic practice; * IEC strategy will be culturally appropriate * A broad-based collaboration including media, NGO, private sector, affected communities and other agencies such as Ministry of Education, National Bureau of Radio and TB Broadcasting will be maximized; * IEC will be a continual process and will not be restricted to focusing on World TB Day; * IEC campaigns will be timed to respond to improvements in the overall capacity of the TB services; and * The IEC strategy will be continually revised based on the results of impact monitoring and operational research. B.3.2. Participatory Approach: how are key stakeholders participating in the project? 9. MOH has prepared the Project Implementation Plan (PIP) base on a proposal from each participating province, and each province, in turn, is expected to compile its own proposal based on inputs from every project county. During preparation, the project received a high degree of participation from other Govermmental departments, including planning and finance bureaus, at every level. More importantly, consultations were initiated with former TB patients and their social, economic, and cultural barriers investigated and findings used in the project preparation. - 61 - 10. Some local NGOs and civil society organizations were identified based upon the experience under the IEDC project and during the preparation of this project. These include village committees, the Women's Federation and their network, and labor unions. This list will be revised based on the findings from the baseline social assessment in 2002. Stakeholders, including primary beneficiaries, community organization, NGOs and police makers will be consulted on the findings from social assessments through stakeholder consultation workshops. Their advice and recommendations will be reflected in the project planning and implementation. Such multi-sectoral participation and consultation with vulnerable population groups will be a continuous feature during annual programming and project implementation. 11. A key element of the social assessment process will be the use of participatory research which will provide primary beneficiaries with the opportunity to influence the project. In addition, the MOH will experiment with participatory monitoring. C. Monitoring Progress on Meeting Social Development Goals: The Social Assessment 'Problem Solving' Cycle 12. The aim of the social assessments is to enable the project to be responsive to the specific and changing needs of those most vulnerable to infection and those most likely to experience barriers to care and adherence: the poor, those from the 'floating' population, women, and the elderly. Rather than a one-time social assessment conducted at the outset, the project incorporates existing knowledge with a social assessment process to be conducted throughout the project period. While some capacity exists in China to conduct these assessments, specific funding has been allocated for capacity building at central, provincial, prefecture and county levels. The participation of project staff in conducting the social assessments will ensure efficient incorporation of findings into TB control practice. 13. A full time post of social,assessment coordinator (an experienced social scientist) will be set up at the Tuberculosis Control Program Office, which is responsible day-to-day planning and implementation of China's national TB control program including this project. He or she will be fully integrated into the project management and supervisory arrangement. The same arrangement will be made at provincial level. The provincial social assessment coordinator should at least receive two months of training in relevant social science theory and methodologies and gender equity. The provincial social assessment coordinators should work together as a team under the overall coordination of the national social assessment coordinator, including regular meetings and sharing of information. They will be responsible for the following tasks: * Ensuring the equity of the TB program so that its impact on the poor and vulnerable groups is maximized; * Designing a program of operational researches and supervising, monitoring and evaluating the operational researches; * Organizing the baseline social assessment survey for each province as well as the large scale impact assessments prior to the mid term review and project completion; * Participating in project supervision missions; * Ensuring that the quarterly monitoring reports are produced and analyzed and that results are incorporated into project programming; * Coordinating the work of social assessment experts contracted to undertake operational research, monitoring and impact assessment; and * Organizing training in social assessment techniques for staff at lower levels of the project. - 62 - 14. Social assessment methods will be both participatory and non-participatory and will include routine data collection and analysis by relevant socio-demographic categories, participatory rural appraisal, focus group discussion, key informant interviews, case studies, participant observation and household sampling surveys. Analysis will be undertaken by a project team that will include specific social development expertise. In addition, this work will be supported by longer-term, rigorously designed operational research studies to be conducted through partnerships between the National TB Program, local and intemational research institutions. One such collaboration has already been established between the NTP, Fudan University School of Public Health, and the DFID TB Knowledge Program based at the Liverpool School of Tropical Medicine (UK). 15. Routine data will be disaggregated by gender and key socio-demographic indicators, and progress against the following indicators will be reported quarterly together with other epidemiological data in the selected sentinels: * Number of men and women with knowledge of TB and the TB project; * Degree of stigma associated with TB; * Change in case-detection rates among poor and vulnerable groups such as ethnic minorities, women, migrants, older people, etc.; * Treatment adherence rate of male and female TB patients among different groups; * Cure rates of smear positive male and female TB patients among different population groups; and * Change in referral rates from other providers. 16. Analysis of this data in quarterly reports will lead to the development of action plans to refine program practice according to identified needs/problems. Where no solution presents itself readily, operational research studies will be commissioned. 17. More detailed social assessment studies will be carried out at the beginning of the project, mid-term review and before project completion by those working within the project where capacity exists or can be established, or by relevant outside 'experts.' These investigations will explore the following aspects impinging on access and adherence, which were identified in the social development work to date: * The extent to which a person believes he or she is susceptible to TB; * The subjective interpretation of severity of symptoms; * The benefits to be accrued through taking action (including knowledge and perceived quality of services); * The actual and perceived social, financial and opportunity costs of treatment; * Has awareness and understanding about TB improved in the community?; and * Who is in particular need of support for completing treatment, what type of support might be most appropriate, and how and by whom that support can best be delivered? 18. This project is unique in its commitment to using social assessment technologies and processes in TB control design and management. It is believed that the process created and tested in the context of this project will be a model for other countries to follow in the deivelopment of sustainable and effective TB control, which is responsive to the needs of the populations served. - 63 - Appendix 11-1 Ethnic Minorities Development Strategy Introduction 1. Tuberculosis is one of the main causes of death in China, often affecting people during their most productive years. In China, it is estimated that there are about two million infectious TB cases, and that TB claims 150,000 lives annually. TB is both a cause and consequence of poverty. 2. The Government of China (GOC) has developed a National Mid- and Long-Term TB Prevention and Control Plan (2001-2010). A Five-Year Action Plan for TB Prevention and Control has also been developed. The plan aims to cure two million TB cases in the next five years by implementing a Directly Observed Therapy, Short-Course (DOTS) Strategy as recommended by the World Health Organization. 3. The World Bank and the United Kingdom's Department for International Development (DFID) are collaborating in preparation of a China Tuberculosis Control Project. The project will assist GOC in implementing its National TB Prevention and Control Plan in sixteen selected provinces where TB prevalence and household poverty is high. The project aims to reduce is aiming at reducing TB morbidity and mortality, especially among those living in the poverty. 4. The project area incorporates an overall population of 688 million, including 82.22 million members of ethnic minorities. Of these, about 70 million live in officially designated autonomous minority areas, including the counties, prefectures, or regions. 5. Research demonstrates that TB prevalence is higher among some ethnic minorities, and that they may face greater barriers in getting access to TB services (Figure 1). Because members of ethnic minorities also are more likely to live in poverty in many areas, project design must pay due attention to the minorities if project objectives are to be achieved. - 64 - Figure 1. Smear Positive TB Prevalence Rates Among Selected Ethnic Minorities, 1990 (TB Prevalence Rate Unit: I in 10 thousand) 600 - - - - - l… 400 -… 300 -… 200 - 6. This Ethnic Minorities Development Strategy describes project arrangements for ensuring that members of ethnic minorities within the project area are provided sufficient opportunities to benefit from the project. Specifically, it describes arrangements for consulting with members of the ethnic minorities, with the objectives of identifying and alleviating any barriers to TB case finding and treatment, and to ensure that service methods and procedures are provided in a culturally appropriate manner. The Strategy also ensures consistency with the requirements of World Bank OD 4.20 with regards to projects affecting ethnic minorities. Basic Information on Ethnic Minorities in China 7. There are 55 identified ethnic minorities in China. Throughout China, one hundred and fifty-five ethnic autonomous administration areas had been established by the end of 1998. Forty-four ethnic minorities live in autonomous areas designated for them. The project will cover sixteen provinces, including three officially designated autonomous regions, sixteen autonomous prefectures and 99 autonomous counties. Legal Framework and Policies 8. China has established a comprehensive legal framework for the protection and development of the ethnic minorities. This legal framework consists of o The Constitution of the People's Republic of China; o Law on Autonomy in Ethnic Minority Regions; o Administration Regulation in Ethnic Minority Townships; and o Law on Villager Committee Organization. 9. The Constitution, as passed in 1982k provides that all nationalities in the people's Republic of China are equal. The State guarantees the equality, unity and helping relations of all ethnic minorities. The State forbids discrimination and oppression against any ethnic minorities. The States forbids any - 65 - activities against the unity of all minorities and of racial separation. 10. The Constitution also states that the State supports all ethnic minorities in their economic and cultural development according to their needs and characteristics. Areas of minority concentration will practice autonomous administration with the establishment of their autonomous administration bodies and the right of autonomous administration. All autonomous minority areas are an inseparable part of People's Republic of China. 11. All ethnic minorities have the freedom to use and develop their own oral and written language, maintain or reform their traditions and customs. The Constitution also provides clear stipulations for the establishment of the regional autonomous governments. 12. The Law on Autonomy in Ethnic Minority Regions, passed by the second session of the sixth National People's Congress in May 1984, provides for the establishment of minority autonomous areas. The Law stipulates that, apart from the same responsibilities accorded to the same level of local governments, the authorities of the Autonomous Areas have the following responsibilities for autonomous administration: (i) autonomous legislative powers; (ii) autonomy in management of local political affairs, (iii) autonomy in management of local economic development; (iv) autonomy in management of local financial affairs; (v) autonomy in the management of local affairs in science, education, and culture; (vi) autonomy in organizing local public security forces; (vii) autonomy in using and developing minority languages; and (viii) autonomy in training and employing ethnic minority cadres. 13. The Law stipulates that the chairman of the people's government of an autonomous region, or prefecture or county, must by law be a member of the minority or one of the minorities for whom the autonomous area is established. Other leadership and administrative posts ought to be filled by members of that minority or other ethnic minorities living in the area to the greatest extent possible. The Law also gives autonomous area govemments a wide range of economic rights and responsibilities. The law also provides a guarantee of religious freedom and of freedom not to believe. The law also stipulates that "the autonomous administration should support other minority groups living in the autonomous region to establish their local autonomous administration or minority townships. The autonomous administration should support all ethnic minorities in the autonomous regions in their economic, education, cultural and health development." 14. The Administration Regulation in Minority Townships, issued in 1993, stipulates that autonomous township administration should be set up in areas where minority population live in concentration and that the township autonomous administration, in consideration of local needs and the minority characteristics, govem according relevant laws and regulations. 15. Law on Village Committee Organization also issued stipulations regarding the organization of villager committees in minority villages. 16. Governments at various levels also have instituted preferential policies favoring members of ethnic minorities. These include preferences in obtaining employment or admission to universities, and relaxed restrictions on child birth, among others. Ethnic Minorities and Access to Public Health Services 17. However, despite relatively favorable policies and legislative framework, some ethnic minority groups remain among the poorest in China leading to disparities in health status between them and Han - 66 - majority. The reasons for this poverty and poor health indicators are various and include: o Members of ethnic minorities are more likely to live in poverty; o They typically live in mountainous or otherwise remote areas, which limits their physical access to health services; o Lower population densities in these areas also make health services more expensive to operate, and service quality in such areas is likely to be poor because skilled health workers are scarce; o Health services often are not affordable because the health system increasingly relies on fee-for-service because of inadequate public health funding; and o Insufficient attention has been given to the distinct cultural and social norms of minority peoples to ensure a responsive health services. 18. The high incidence of TB among many ethnic minority peoples means that they will be among the major beneficiaries of this project. By reducing the incidence of TB, many ethnic minority peoples will be able to move out of poverty or, at least, be protected from falling further into poverty. However, the Government of China recognizes that it is insufficient to deal with TB in isolation and, for this reason, is developing a wide range of programs to improve the economic situation of ethnic minority peoples. For instance, the Western Region Development Plan should be a significant generator of economic growth in many ethnic minority areas, while the State Council Leading Group for Poverty Reduction targets a large proportion of its resources at ethnic minority regions. More recently, Ministry of Health has worked out a plan how to strengthen health development in Western Region. Ethnic Minorities and Project-Related Impacts 19. The project poses virtually no potential for adverse impacts. Based on international best practice and experience with TB prevention in thirteen provinces in China under the Health V project, few bio-medical adverse effects might be generated from use of TB drugs and vaccines. The project involves no have no land acquisition, restriction on use of physical assets, or resettlement. 20. A well-planned TB control program will both reduce infectious TB prevalence rate and MDR-TB. In the Health V Project, for example, the smear positive TB prevalence rate has been reduced by 36.7 percent in project areas, compared to a 3.2 percent reduction in non-project areas. The proposed Since TB control project will deliver sirmilar substantial benefits to minorities spread across sixteen provinces. 21. A project spanning sixteen provinces presents complexities in terms of informing, and targeting project services for ethnic minorities. Because the incidence of TB is proportionally higher in officially designated poverty counties and autonomous areas, the project prioritizes operations in those areas. While all individuals regardless of ethnic status are, in principle, equally eligible for assistance, the project targets delivery to those who previously were less likely to have access to services and hence were most susceptible to risk. This, of course, means that members of ethnic minorities living within designated poverty counties and autonomous areas are more likely to be project beneficiaries. Efforts will be undertaken, however, to ensure that project information and services are delivered to all ethnic minority communities, regardless of whether they reside within priority program areas, in a culturally appropriate manner. Strategy to Assist Ethnic Minorities 22. This Strategy has been developed to promote culturally appropriate TB control, especially in the - 67 - minority autonomous areas. The framework includes: o Initial social assessment, in which ethnic minorities will be consulted regarding their culture, religion, beliefs on illness, treatment-seeking behaviors, and gender relations, so that a plan can be developed to remove or substantially reduce potential barriers to access; o Extensive IEC and disclosure of project information in local languages and delivered in a culturally accessible manner; o Participation from ethnic minority representatives in project design and implementation; o Strengthening the capacity of local institutions to plan, implement and manage TB control activities; o Favorable policies to targeting the poorest, and most vulnerable ethnic minorities to ensure maximized project benefits; and o Use of traditional medical systems to provide support to patients within the context of DOTS. Social Assessment and Ethnic Minorities 23. Much valuable information from primary beneficiaries on TB service and its barriers have been gathered from the two National TB Prevalence Surveys in 1990 and 2000, plus home visits in Guangxi, Guizhou, and Inner Mongolia during earlier phases of project preparation. But such information needs to be updated and expanded. Three large-scale social assessment activities are planned: an initial social assessment at the beginning of the project; another at a mid-term review assessment; and a final assessment at project completion. The initial assessment is to feed into project design. The mid-term assessment will contribute to program design changes as warranted. The final assessment will primarily be evaluative. 24. The initial social assessment will be implemented in two selected provinces in the early 2002, and in the remaining fourteen provinces later in the same year. Qualified social scientists will utilize appropriate quantitative and qualitative techniques to: o Map local demography of ethnic minorities: distribution and composition (age, gender, education, and migration pattems); o Understand local beliefs and practices on illness and diseases, and norms and behaviors for seeking TB services among men and women; o Identify local existing health facilities and providers, including traditional healers, and their roles in providing services; o Investigate financial and non-financial barriers to access for TB services, especially those barriers specific to women; o Understand local decision making and consultation systems by identifying any local social organizations, groups, and individuals, and assessing their role and capacity how they can contribute to in decision making for project planning, implementation, monitoring and evaluation; and o Map the channels and means for public information dissemination, and identify the local opinion leaders. 25. Initial and mid-term social assessment findings will be used in developing: o Annual implementation plans, including strategies and methods to remove all the barriers or mitigate their adverse effects; - 68 - o Methods to increase or improve participation of ethnic minorities and civil society organizations in project planning and implementation; o Methods to improve IEC strategies; and o A training and institutional strengthening plan for local medical facilities and social organizations that may be engaged in project implementation. 26. Terms of reference (including personnel qualifications) for all three social assessments will be subject to prior Bank review and approval. The capacity to manage social assessments will be established within the Program Office at national level and Project Offices at provincial level. Extensive training in social assessment techniques and analysis will be provided to key project personnel, links will be developed with key research institutes so that their expertise can be integrated into the project, and adequate funding will be provided by each province to conduct appropriate social assessment activities. Two more points will be added at the ethnic minority areas: (a) Anthropologists should be involved in social assessment at least at provincial or regional level; and (b) for any local investigation team, at least one team member should be from local Ethnic Minority. He or she will be trained in basic social science methodology. Project Information Disclosure and IEC Campaigns 27. In collaboration with the Bank and DFID, the project will develop an IEC strategy in early 2002. The strategy will is aimed to increase the TB case detection rate and cure rate by addressing misconceptions and information gaps, and by promoting appropriate behavior changes. 28. With regard to ethnic minorities, the IEC campaign will pay close attention to: (i) segmentation of audience groups; (ii) dissemination of culturally appropriate messages in locally understandable languages; (iii) a good mix of mass media, local media as well as inter-personal communication strategies; (iv) encouraging local social organization(s), opinion leaders and ex-TB patients to be involved in information dissemination and promotion of behavior change among TB suspects and patients; and (v) changing attitudes and behaviors among TB service providers. 29. In autonomous areas, members of ethnic minorities are likely to be involved in project management and implementation, including representation in local project leading groups, project management offices, project expert panels, and TB institutions or dispensaries. 30. Consultation with local community members began during has been started since project preparation, and will be continued during the project implementation through home visitation and periodic stakeholder consultation workshops. Minority communities will be briefed about project progress through various media, such as newsletters, flyers, or radio/TV broadcasting. Information to be disseminated will include contact information or hotlines for receiving suggestions, complaints and recommendations. 31. Two independent project impact assessments have been planned before mid-term review and project completion. They will be supplemented by quarterly routine data collection and analysis. The following information on the social outcomes of the project will be collected and reviewed, together with other data in selected sentinels: o Number of men and women with knowledge of TB and the TB project and services; o Felt and observed stigma associated with TB; o Change in case detection rate and uptake of TB service from male and female members of ethnic minorities; - 69 - o Cure rate of smear positive minority males and females, especially those living in poverty poor ones; o Change in referral rate from other providers to TB institutions/dispensaries; and o Improvement in livelihood and reduction in vulnerability of minority male and female program beneficiaries. 32. Initial findings from the project impact assessments will be disseminated to local minority community leaders or representatives, and discussed in stakeholder consultation workshops before being finalized. The results of these assessments and workshops will inform project design which will be continually refined to better overcome barriers to access. Institutional and Capacity Building 33. Project leading groups, project management offices, project expert panels and TB institutions/dispensaries will be set up at provincial, prefecture and county levels, including in all autonomous areas. Preference has been and will be given to autonomous areas for financial support, equipment supply, technical assistance/supervision and training. Support and assistance will also be extended to local social organizations to prepare them for active participation in the project. 34. Technical assistance and training on social science methodology and IEC have been budgeted in the project and will be implemented in the project. These initiatives will increase the responsiveness of the project to beneficiaries' demands, especially those of vulnerable groups. Initial intemational technical assistance and the first two national workshops on social science methodology and IEC for TB prevention respectively will be held before the end of 2001. Based upon the experience from Health V Project, training on other aspects to support a full functioning TB control program is also planned and revised. 35. The project will also promote experience exchange among Health V project provinces and non-Health V project provinces through domestic study tours and workshops, etc. Targeting Assistance to Ethnic Minorities 36. During project province selection, priority has been given to provinces and regions where poverty and TB are prevalent, and where ethnic minorities constitute a sizable proportion of the population. 37. Governments in Xinjiang, Chongqing, Inner Mongolia, Hunan, Liaoning, Gansu and Guangxi have committed all the counterpart funds necessary for the project, including for all autonomous prefectures and counties. Other provinces intend to provide partial subsidization for designated poverty counties. Each province shall submit its plan to improve the sustainability of the TB control program in the province to the Ministry of Health, not later than December 31, 2002. The project will explore the possibility to make the ad hoc counterpart funds into govemment's normal budget. The plan will be reviewed by World Bank not later than June 30, 2003. At mid term review, project sustainability will be evaluated. 38. The project will provide free diagnosis to all TB suspects, and free treatment to all infectious TB patients. Based on results of the social assessment activities, steps will be taken to ensure that project services are provided in a manner accessible and affordable to, and culturally appropriate for, the members of ethnic minorities. 39. From 2001 to 2005, Central Government has committed 40 million Yuan (US$4.8 million) - 70 - annually for the National TB Program, most of the central fund will go to the twelve western provinces where majority of ethnic minorities live. The funds are expected to be supplemented by the grants from international donors such as Government of Japan. - 71 - Additional Annex 12: Summary of Blending Mechanism CHINA: CN-Tuberculosis Control Project Introduction 1. This Annex describes the operational arrangements for the implementation of what has been called the blending mechanism, to blend an IBRD Loan with a DFID grant to finance the Tuberculosis Control Project in China. The goal of the blending instrument is to try and achieve a net effect of providing to the People's Republic of China ("China") a concessionary loan of about 2 percent interest per annum, under agreed assumptions. China will bear the interest rate risk in the event that the net effect of 2 percent per annum does not materialize. The Ministry of Finance is guaranteeing an interest rate of 2 percent per annum when passing on the loan to the provinces. The mechanism 2. Commitments and agreements. China will enter into a Loan Agreement with the Bank for a Loan of US$104 million ("the Loan"), and DFID will provide a grant to China in the amount of US$37 million ( rounded for illustrative purposes) ("the DFID Grant"), based on the agreed grant/loan ratio of 36/100. The DFID grant will be used to prepay part of the principal amount of the Loan over the implementation period of the project, which is expected to be 7 years. The Bank will administer the DFID Grant on behalf of DFID. 3. Purpose of arrangement. The DFID funds will be used to prepay, at regular intervals, 36 percent of the principal amount of the Loan that is disbursed and outstanding in order to reduce the principal amount owing from China to IBRD from US$104 million to US$67 million by the end the implementation period. The intended effect of this arrangement over the life of the Loan (twenty years) is to provide to China a US$104 million Loan, with an effective interest rate of about 2 percent per annum under agreed assumptions. 4. DFID transfer of funds. DFID will transfer the grant monies, which are to be administered by the Bank, on fixed dates basically at the beginning of every six months into a trust fund ("Trust Fund"). Well before each date of the DFID grant transfer, China and the Bank's task team will estimate the amount of Loan disbursements projected to take place over the coming six months and notify DFID about the estimated disbursement amount. At the beginning of the six-month period, DFID will transfer to the trust fund 36 percent of the estimated Loan disbursement amount. At the end of the six-month period, the funds will be used to prepay 36 percent of the actual Loan disbursement made during the six-month period. 5. Front-end fee. On the date of Loan Agreement effectiveness ("Effectiveness Date"), the first disbursement under the Loan will be made to finance the front-end fee. The front-end fee, equal to one percent of the US$104 million, will accrue on the Effectiveness Date, but on that date the Bank will collect only US$665,600, which is one percent applied to the Loan net of the DFID grant. The balance US$374,400 of the front-end fee, or part of it, will be collected only if DFID is unable to fulfill its commitments under the Tripartite Arrangement and the Bank agrees to continue financing of the project under standard IBRD terms. 6. Commitment charges. The standard Bank commitment charge will accrue on the undisbursed amount of the Loan. However, at the standard times for payment of commitment charges, the Bank will collect commitment charge calculated on 64 percent of the undisbursed amount of the Loan. The Bank will - 72 - begin collecting commitment charge calculated on the entire undisbursed amount of the Loan only if DFID fails to fulfill its commitments under the Tripartite Arrangement (or any other donor or China does not assume DFID's commitments) and the Bank agrees to continue financing of the project under standard IBRD terms. 7. First DFID transfer. DFID's first transfer into the trust fund will be made within thirty days following the date of the Tripartite Arrangement. The transfer will be in an amount equal to 36 percent of the portion of the front-end fee that is due, plus the amount of disbursements and Special Commitments expected to take place during the period leading up to the next prepayment date. On or shortly after the Effectiveness Date, the DFID monies will be used to make the first prepayment, to prepay 36 percent of the front-end fee that was financed by the Loan. On the next prepayment date, the remainder of the DFID monies will be used to prepay 36 percent of the actual Loan disbursements made during the period leading up to that date. 8. Loan disbursement. To limit the Bank's net exposure, disbursement of the loan will be made only if DFID has transferred into the trust fund an amount equal to 36 percent of the amount requested to be disbursed. 9. Suspension of Loan disbursement. The Loan may be suspended in the unlikely event that DFID fails to carry out its comnitments under the Tripartite Arrangement or decides to terminate the Arrangement. In that event, the Borrower will have the option to find altemative sources of funds in place of DFID's commitment for purposes of continuing the blending on the same terms and conditions agreed under the Tripartite Arrangement. Otherwise, the undisbursed amount of the Loan will be cancelled. 10. Waiver or amendment. Any waiver or amendment of provisions in the Loan Agreement that affects the Bank's ability to limit its exposure through the disbursement mechanism described in paragraph 8 may be made only with Board approval to be requested on a no-objection basis. Otherwise, the Bank's net exposure may exceed US$67 million. - 73 - 70, 800 90° 1 ooo 1 i o 1 20' 1 30 ,J,t, ~~~~~~~~F E IE iP T iON 2x'9 KL'7 KHW;T4N . ,',fri , ' k. .~~~~~~ t' } vS~ N' s 1 F 1 L I A _ - r . ~~{ }- t; _ _ _ f tttre Fi: C.- j t . A, _' < ,_ o ./ S L00 i0 2 '. {< > F gi 'e . ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~n .,.r, w_vV |! @ 0_> 15 111 i 5, ) _ tt ' F F r C.ll-~~~~'.Z IANJF T - n L .. 4 s x, r t t S bJ r 4 ^; H S - S g. heplof The, Word fM,nk QINGHAI ! w 0 i1 7 Grop -ny 1,dg-fn onhe ~_ kg.f sihWsjf -ny t-ri"Y' y Vrf - Q t c-Px-nc of -uh/ I rit , Ar -SU _300 ~XIZANG g ~\{ |-. \ % _= i}A-4#5I tv lr2 44; < ~~LHASA SI5CHUAN F -t CHINA rI AfGA I4Ht ;j ll(}r TUBERCULOSIS CONTROL PROJECT TUArs: Hbd AxI~l(UjN--St-I ProjectlProvinces 'TirflN~> /S ;} AIWAN National Capital L.' Province Bioundaries ;kx K_t< ^?S/4 j4ll oNG rn ---~~~~~ {~nternational Boundaries 7 AA EI _l-A- ACAO_ D ~ ~~~~~~~ 0 I 200 400 600 Kilometers (., .S , ic 7 Ir I I I1 l . t_HAIIVAN kHiL isivNEL 8 O 100 200 300 400 Miles ,, , ,_ . r-,126 r