The World Bank Third Sustainable Livelihoods Project (P125232) REPORT NO.: RES37811 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF THIRD SUSTAINABLE LIVELIHOODS PROJECT APPROVED ON JUNE 6, 2014 TO MINISTRY OF FINANCE SOCIAL, URBAN, RURAL AND RESILIENCE GLOBAL PRACTICE EAST ASIA AND PACIFIC Regional Vice President: Victoria Kwakwa Country Director: Martin Raiser Senior Global Practice Director: Ede Jorge Ijjasz-Vasquez Practice Manager/Manager: Susan S. Shen Task Team Leader: Ingo Wiederhofer, Badamchimeg Dondog The World Bank Third Sustainable Livelihoods Project (P125232) I. BASIC DATA Product Information Project ID Financing Instrument P125232 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 06-Jun-2014 31-Oct-2020 Organizations Borrower Responsible Agency Ministry of Finance Ministry of Finance Project Development Objective (PDO) Original PDO The PDO is to improve governance and community participation for the planning and delivery of priority investments in rural areas of Mongolia. Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-54870 06-Jun-2014 30-Jan-2015 31-Jul-2015 31-Oct-2020 24.80 16.77 5.61 TF-A0794 31-Jul-2015 31-Jul-2015 31-Jul-2015 30-Jun-2019 5.67 3.95 1.71 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES The World Bank Third Sustainable Livelihoods Project (P125232) In response to a request from the Government dated June 19, 2019, the team requests an extension of the closing date of this grant from June 30, 2019, to December 31, 2019. As reported in the recently filed Implementation Status and Results Report (ISR), the project authorizing environment and implementation have continued to improve and remain on track, with the ratings for PDO and implementation progress as Moderately Satisfactory (MS). The Local Development Fund (LDF) has financed around 7,000 infrastructure sub-projects in rural districts (soums) in 2017 and 2018, including the rehabilitation and expansion of child care facilities, road improvements and maintenance, and urban/soum center beautification. In 2019, the project has provided around US$4.3 million in the form of top-up financing to the overall soum LDF allocations, and nearly US$1.9 million in Performance Based Grants (PBGs) to 222 well-performing soums to supplement their regular LDF allocations. LDF performance is assessed through external Annual Performance Assessments (APA) which review the performance of soum authorities in relation to a range of governance, technical and fiduciary criteria. The APA process for 2018 was completed in a timely fashion, and the average soum score increased to 50% from 37% in 2017, well on the way to meeting the 60% end target. The 2019 APA is currently ongoing. Efforts are also underway to develop a more refined Management Information System for the LDF to help monitor, report and manage some key LDF processes with support of an appropriate IT platform. The co-financing Trust Fund finances capacity-building measures in support of the LDF. Activities in the past two years have included technical assistance for the revision of the LDF regulation and development of the associated LDF guideline modules, as well as the provision of training on the operationalization of the guidelines for specific target audiences within the local governments and communities. In addition, based lessons learned from 30 community participation pilot initiatives in planning and M&E undertaken with the support of the project in 2018, scale-up efforts of the community participation good practices for the LDF are being carried out around the country. In support of LDF and project communications, stakeholder engagement and transparency, a new LDF website is now functional (http://tusuv-oronnutag.mof.gov.mn) and the project maintains an active Facebook page (Орон нутгийн хөгжлийн сан @LDFMongolia) where SLP3/LDF-related local news and videos (e.g. from the community participation pilots) are shared, attracting over 100,000 post views. The PIU has also hired a firm for development of further LDF communication materials and dissemination activities through TV and newspapers. These activities will continue to be critical in the remainder of 2019, especially to support the rollout and operational adoption of the new regulation and guideline. While the main IDA source of funding for the Project has a closing date of October 31, 2020, the SDC co-financing of the Project is currently scheduled to close on June 30, 2019. As the co-financing grant is needed for achievement of the PDO, at the request of Government, the donor has agreed to an extension of the closing date of the grant to December 31, 2019 (hence, extended the closing date of the Administrative Agreement to June 30, 2020). Therefore, through this proposed restructuring, the team requests an amendment to the Grant Agreement with the Government to extend the closing date of the Grant from June 30, 2019, until December 31, 2019. No other changes are being requested. The project is up to date on its reporting and audit obligations stipulated in the relevant legal agreements. The FY19 financial audit of the project, due by June 30, 2019, has already been received by the Bank and is currently under review. The World Bank Third Sustainable Livelihoods Project (P125232) II. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IDA-54870 Effective 31-Dec-2018 31-Oct-2020 TF-A0794 Effective 30-Jun-2018 30-Jun-2019 31-Dec-2019 30-Apr-2020