Document of The World Bank Report No: 21239-RU PROJECT APPRAISAL DOCUMENT ONA PROPOSED LOAN IN THE AMOUNT OF US$150 MILLION TO THE RUSSIAN FEDERATION FOR A TUBERCULOSIS AND AIDS CONTROL PROJECT March 10, 2003 Human Development Sector Unit Europe and Central Asia Region CURRENCY EQUIVALENTS (Exchange Rate Effective March 10, 2003) Currency Unit = Ruble (RUR) RUR I = US$0.03171 US$1 = RUR 31.53 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS ACF Action contre la Faim (Action against Hunger) MOF Ministry of Finance AIDS Acquired Immunodeficiency Syndrome MOH Ministry of Health BCG Bacille Calmette-Guerin immunization MO1 Ministry of Justice CAS Country Assistance Strategy MSF M6decins sans Fronti6res (Doctors without CDC Centers for Disease Control and Prevention, USA Borders) CPPR Country Portfolio Performance Review MSM Men having sex with men CSW Commercial Sex Workers NHLA National Lung Health Association DALY Disability-adjusted life year NPV Net present value DFID Department for International Development (United PHC Primary Health Care Kingdom) DOTS Directly observed treatment, short course PHRI Public Health Research Institute ECHO European Community Humanitarian Office PIP Project Implementation Plan EPI Expanded Program of Immunization PPP Project Procurement Plan FILHA Finnish Lung and Health Association PIU Project Implementation Unit FMR Financial Monitoring Report PLWHA People Living with HlV/AIDS GTZ Gesellschaft flr Technische Zusammenarbeit PMTCT Prevention of Mother-to-Child Transmission (German Development Agency) POM Project Operational Manual HAART Highly Active Anti-Retroviral Therapy RFP Request for proposal HIV Human Immunodeficiency Virus RHCF Russian Health Care Foundation HLWG High Level Working Group SIDA Swedish International Development Agency IDU Intravenous drug user(s) STD Sexually-trasmitted disease IEC Information, education, and communication STI Sexually-transmitted infection IFRC International Federation of Red Cross and Red TB Tuberculosis Crescent Societies TOR Terms of Reference IRR Internal rate of return TWGs Thematic Working Groups ISA International Standards on Auditing UNAIDS Joint United Nations Program on HIV/AIDS IUATLD Intemational Union Against TB and Lung Diseases USAID United States Agency for International LEC Local Executive Committee Development MDR-TB Multidrug-resistant tuberculosis USSR Union of Soviet Socialist Republics Merlin Medical Emergency Relief Intemational WHO World Health Organization MEDT Ministry of Economic Development and Trade WG Working Group Vice President: Johannes F. Linn Country Director: Julian F. Schweitzer Sector Director: Annette Dixon Sector Manager: Arnin H.Fidler Team Leader: Olusoji 0. Adeyi RUSSIAN FEDERATION TUBERCULOSIS AND AIDS CONTROL PROJECT CONTENTS A. Project Development Objective Page 1. Project development objective 2 2. Key performance indicators 2 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 4 2. Main sector issues and Government strategy 4 3. Sector issues to be addressed by the project and strategic choices 18 C. Project Description Summary 1. Project components 18 2. Key policy and institutional reforms supported by the project 20 3. Benefits and target population 20 4. Institutional and implementation arrangements 21 D. Project Rationale 1. Project alternatives considered and reasons for rejection 24 2. Major related projects financed by the Bank and/or other development agencies 25 3. Lessons learned and reflected in the project design 25 4. Indications of borrower commitment and ownership 27 5. Value added of Bank support in this project: 28 E. Summary Project Analysis 1. Economic 29 2. Financial 29 3. Technical 30 4. Institutional 31 5. Environmental 33 6. Social 33 7. Safeguard Policies 36 F. Sustainability and Risks 1. Sustainability 37 2. Critical risks 38 3. Possible controversial aspects 39 G. Main Loan Conditions 1. Effectiveness Condition 40 2. Other Conditions for Board/Disbursement and Other 40 H. Readiness forl mplementation 42 I. Compliance with Bank Policies 42 Annexes Annex 1: Project Design Summary 43 Annex 2: Detailed Project Description 50 Annex 3: Estimated Project Costs 58 Annex 4: Cost Benefit Analysis Summary 59 Annex 5: Financial Summary 63 Annex 6: Procurement and Disbursement Arrangements 64 Annex 7: Project Processing Schedule 78 Annex 8: Documents in the Project File 79 Annex 9: Statement of Loans and Credits 80 Annex 10: Country at a Glance 83 Annex I 1: Procurement Plan 85 MAP(S) IBRD 27188R RUSSIAN FEDERATION TUBERCULOSIS AND AIDS CONTROL PROJECT Project Appraisal Document Europe and Central Asia Region ECSHD Date: March 10, 2003 Team Leader: Olusoji 0. Adeyi Sector Manager/Director: Armnin H. Fidler, Annette Sector(s): Health (100%) Dixon Theme(s): Fighting communicable diseases (P), Health Country Director: Julian F. Schweitzer system performance (S), Population and reproductive Project ID: P064237 health (S) Lending Instrument: Specific Investrnent Loan (SIL) Project Financing Data . [X] Loan []Credit [ ] Grant [ ] Guarantee [ ] Other: For Loans/Credits/Others: Amount (US$m): 150 million Borrower Rationale for Choice of Loan Terms Available on File: Z Yes Proposed Terms (IBRD): Varable-Spread Loan (VSL) Grace period (years): 5 Years to maturity: 17 Commitment fee: 0.75% Front end fee (FEF) on Bank loan: 1.00% Payment for FEF: Borrower to Pay from Own Resources Financing Plan (US$m): Source Local Freign J-:Total - i J BORROWER 108.66 25.45 134.11 IBRD 37.13 112.87 150.00 WORLD HEALTH ORGANIZATION 0.79 1.29 2.07 Total: 146.58 139.61 286.18 Borrower: RUSSIAN FEDERATION Responsible agency: MINISTRY OF HEALTH AND MINISTRY OF JUSTICE Contact Person: Mr. Vladimir Grechukha, Project Director Tel: 7-095-257-2508 Fax: 7-095-787-2439 Email: grechukha(rhcf.ru Estimated Disbursements ( Bank FYIUS$m): FY 2004 2005 . - 2006 - 2007 2008- , --2009 Annual 5.50 17.50 42.00 43.00 25.00 17.00 Cumulative 5.50 23.00 65.00 | 108.00 133.00 | 150.00 Project implementation period: 5 years Expected effectiveness date: 09/01/2003 Expected closing date: 12/31/2008 A. Project Development Objective 1. Project development objective: (see Annex 1) The project objectives are to (i) contain the growth of the epidemics of tuberculosis (TB) and HIV/AIDS in the short term and (ii) halt and reverse the courses of these epidemics in the medium term. The achievement of these objectives will protect the Russian population and economy from uncontrolled epidemics of TB, HIV/AIDS and other epidemiologically important sexually transmitted infections (STIs). The project will enable the Russian Federation to achieve these objectives in the context of the larger Federal Target Project Program, "Prevention and Control of Social Diseases, 2002-2006", by using evidence-based approaches to support the following on a large-scale: (i) the control of TB through enhanced policies, surveillance, diagnosis, treatment and effective management; (ii) the control of HIV/AIDS through effective policies, surveillance, program development and interventions for prevention and care; and (iii) the surveillance, diagnosis and treatment of STIs. Russia has a unique combination of characteristics that render decision making in the health system very complex. On the one hand, it is a global power, being a member of the Group of Eight highly industrialized countries and a permanent member of the United Nations Security Council. On the other hand, it has a fast-growing epidemic of HIV/AIDS, a large burden of TB as in some countries that are much poorer, and a strong legacy of health services in the Soviet model, which is often at odds with contemporary approaches to evidence-based control of infectious diseases. These factors have contributed to a tension between a need for evidence-based disease control and traditional practices of doubtful effectiveness or potential harmfulness. This tension resulted in delays in project preparation. More details of the difficult history of the project and the political economy of TB and AIDS control are presented in Section B.2 (Main Sector Issues and Government Strategy) and Section D (Project Rationale). As a result of this context, the project concept and design stress the local development of Russian strategies and programs, not pre-packaged protocols, with the understanding that those Russian strategies and standards will be based on credible scientific evidence as documented in the international literature and WHO guidelines. This combination of substance and process will help to ensure project effectiveness while securing Russian ownership of the process. The project will support the Government's Federal Target Program, "Prevention and Control of Social Diseases, 2002-2006". With reference to the control of TB, the technical aspects of components to be supported by this Project will be based on the outcomes of ongoing consultations between the Ministry of Health (MOH) of the Russian Federation and the World Health Organization (WHO) on a set of evidence-based guidelines for diagnosis, treatment and surveillance. The main elements of the Government's Program are outlined in Section on "Strategic Context" 2.2.3, on "Federal level response." The project objectives are designed specifically for Russia. In a broader context, they are also consistent with the Millennium Development Goals Target Number 7 whose goal is to have halted and begun to reverse the spread of HIV/AlDS by 2015 (http://sima.worldbank.org/mdg/NewFrame/goal-6.htm). 2. Key performance indicators: (see Annex 1) The indicators below will be used to assess project performance. The achievement of each project performance indicator will be assessed against baseline indicators as derived from pre-implementation baseline assessments. These assessments will be carried out at the start of implementation of each -2 - project component. These will be followed by post-implementation assessments. The approaches to pre- and post-implementation assessments are specified in Annex I and Annex 2. The performance indicators outlined below were selected on the basis of relevance and sensitivity to planned interventions, and were agreed on during the Negotiations. A more elaborate set of indicators, including input/output indicators, is contained in Annex 1. These indicators will be regularly monitored and tracked under a management information system (MIS) set up as a condition for project Board presentation. (see Section G for Main Loan Conditions). The status of the performance indicators will be covered in the project status reports and will be assessed during Bank supervision missions and during the Mid-term Review. For TB control: a) Approval by MOH of protocols for TB diagnosis, treatment and surveillance, consistent with evidence-based approaches that are agreed with the World Bank and the WHO. b) Improvements in effectiveness and efficiency of TB diagnosis and treatment over baseline values in eligible oblasts and reference centers, as measured by the following criteria: - Leveling off or decrease by 5 percent or more in new TB cases; - Leveling off or decrease in new Multidrug-resistant tuberculosis (MDRTB) cases; - Decrease in the TB case fatality rate among new cases by at least 10 percent. For HIV/AIDS and STIs control: a) Approval by MOH of protocols for diagnostics, treatment, epidemiological and behavioral surveillance in line with Russian legislation, and consistent with evidence-based approaches that are endorsed by the WHO and the Joint United Nations Program on HIV/AIDS (UNAIDS). [Generally, surveillance is a methodical collection of data for the purpose of generating information to detect changes in disease patterns and to formulate effective control programs. Under the auspices of WHO and UNAIDS, "second generation surveillance systems" were developed to yield information that is most useful in reducing the spread of HI Vand in providing care for those affected. They are intended to: (i) be appropriate to the state of the epidemic in each setting; (ii) be dynamic, changing with the epidemic; (iii) use resources where they generate the most useful information; (iv) combine and compare biological and behavioral data to give more useful information; (v) integrate information from other sources; and (vi) use data produced to increase and improve the country's response to HIV/AIDS. Further details are available in "Guidelines for Second Generation HIV Surveillance': UNAIDS/00.03E/WHO, 2000. Geneva.]. b) Reduction in the rate of increase of HIV prevalence (or reduction in the prevalence rate) among vulnerable population sub-groups, including among Intravenous Drug Users (IDUs), Commercial Sex Workers (CSWs), Men having sex with Men (MSM), prisoners, high risk youth, members of the armed forces, newborns of HIV-infected mothers, as measured against baseline values. [The epidemiological label for new infections is "incidence". Incidence rate per 1,000 = (Number of new cases of a disease occurring in the population during a specified period of time! Number of persons exposed to risk of developing the disease during that period of time) x 1,000. A reduction of the rate at which new infections occur is also referred to as a reduction in the rate of increase of HIV prevalence. Prevalence rate per 1,000 = (Total number of cases of a disease present in the population at a specified time/Number ofpersons in the population at that specified time) x 1, 000]. c) Reduction in the prevalence rate of other specified STIs among vulnerable population sub-groups, measured against baseline values. - 3 - B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: Full CAS: Report No: 24127-RU Date of latest CAS discussion: June 6, 2002 The proposed project is consistent with the recent CAS, which emphasizes the importance of health sector reform, the improvement of health status of the population and, in particular, the need to urgently address the threat of communicable diseases, specifically TB and HIV/AIDS/STIs. The CAS notes that the principal health threats arise from preventable illnesses and premature deaths., The genieral trend in demographics and human health over the past decade has been downward. Increased alcoholism, smoking and other factors have caused an increase in the mortality rates of adult males. Life expectancy at birth in 2000 was 59 years for males, compared to 72 years for females - the highest such difference in the world. At 1.2 live births per woman, Russia has one of the lowest fertility rates in the world. Deaths considerably exceed births and by some forecasts the Russian population will decline from the present 144 million to 127 million by mid-century. While death rates remain high from chronic non-communicable diseases, they are projected to grow even further from infectious diseases, due to the dual epidemic of TB and HIV/AIDS. There were 342,000 cases of TB reported in 2001, of which 133,000 were new. Although the annual rate of new infections dropped by 3 percent, the cumulative burden of TB is still large. As a result of the resurgence of TB, the standardized death' rate for TB has become significantly higher in Russia (19.7 per 100,000 persons per year in 2000), compared to 6.3 in the EU. There has been nearly a six-fold increase in the incidence of HIV infections in two years alone, with over 200,000 persons registered as HIV positive in the Russian Federation by December 2002. The Russian AIDS Center's epidemiologists estimate that approximately 1 million people are now HIV positive. Unless the epidemic is quickly and effectively contained, millions of people in Russia could be HIV positive by the end of the decade, at huge human and economic cost. The control of infectious diseases is a crucial part of the CAS strategy and the proposed Project will support the CAS objective through the development and implementation of improved policies, diagnosis, treatment, surveillance and prevention programs aimed at controlling the TB and HIV/AIDS/STIs epidemics. 2. Main sector issues and Government strategy: Summary The main sector issue is the gap between needs and current practices regarding the control of TB and HIV/AIDS/STIs. The factors contributing to this gap include the following: (i) inadequate response, both in scale and in technical quality, to tackle the large burden of TB and HIV/AIDS/STIs; (ii) the need for stronger management and institutional capacity for rapid implementation of large-scale programs, based on scientific evidence, across the vast expanse of Russia; and (iii) financial constraints. The Russian Government is addressing this range of issues with increasing commitment. However, there is room for substantial improvement in the technical content, geographic scale and population coverage, beyond the current pilot efforts. This need is particularly urgent, in view of the potential for human and economic devastation due to HIV/AIDS in the Russian Federation. In May 2002, a study of the potential economic effects of an unchecked epidemic in the Russian Federation suggested that, under a plausible scenario (see technical report by Christof Ruehl et al., "The Economic Consequences of HIV in Russia" 2002, available athttp://www.worldbank.orgru/eng/group/hiv/; see also June 3, 2002 article in Moscow Times by ChristofRuehl, "Not Too Late to Halt the AIDS Epidemic"): - 4 - a) GDP in 2010 could be as much as 4.15 percent lower, and without intervention, this figure could likely be as high as 10.5 percent by 2020. Perhaps more significant for long term development, the uninhibited spread of HIV would diminish the economy's long term growth rate, taking off half a percentage point annually by 2010 and a full percentage point annually by 2020. b) Investment would decline by more than production. In a more pessimistic scenario, its level would decline by 5.5 percent in 2010 and 14.5 percent in 2020, indicating more of a stumbling block for future growth. c) Similarly, the effective, i.e. quality adjusted labor supply would decrease over time. However, a breakdown reveals that the overall decline would be due more to a decline in the number of workers ("total labor supply") than to the productivity losses associated with those parts of the work force that would be HIV infected. This reflects the assumption that HIV lowers productivity only by a moderate 13 percent. A detailed description of main sector issues follows. 2.1. Tuberculosis The Greeks called this disease phthisis [pronounced TEE-sis, and probably derivedfrom the Greek word for wasting or decay]. Tuberculosis (TB) is a bacterial infection caused by Mycobacterium tuberculosis transmitted from infected to uninfected persons through the air. The initial infection usually goes unnoticed. Approximately 95 percent of those initially infected enter this latent phase (about a third of the world's population has latent tuberculosis), from which there is lifelong risk of reactivation. In about 5 percent of cases, the initial infection may progress directly to pulmonary tuberculosis (affecting the lungs), the usual site of the disease, but other organs may be involved in extrapulmonary TB. Serious outcome of the initial infection is more frequent in infants, adolescents and young adults. In the absence of effective treatment for active disease, a chronic wasting course is usual and death ultimately supervenes. (Daniel., T. Mycobactrial diseases. In Harrison's Principles of Internal Medicine. 12th Edition. 1991). Tuberculosis (TB) is one of the most common opportunistic infections in AIDS. In the context of AIDS, "opportunistic" means that the bacteria that cause TB take advantage of the weakening of the body's defenses, which occurs due to HIV infection. Certain sexually transmitted infections (STIs) facilitate the transmission of HIVfrom one person to another during unprotected sexual encounters. As such, there is a complex of three epidemics: TB, HIV and other STIs. 2.1.1. TB epidemiological situation in Russia According to the WHO, Russia is one of the 22 high-burden countries for TB in the world (WHO, Global Tuberculosis Control: Surveillance, Planning, Financing. Geneva, 2002). The reported incidence of TB increased throughout the 1990's (Figure 1). This was due to a combination of factors, including: (i) increased poverty, (ii) underfunding of the TB services and health services in general, (iii) diagnostic and therapeutic approaches that were designed for a very centralized command-and-control system but unable to cope with the social mobility and relative freedoms of the post-Soviet era, as well as (iv) technical inadequacies and outdated equipment. In addition, migration of populations from ex-Soviet Republics with high TB burdens to the Russian Federation also increased the problem. Prevalence rates were many times higher in the prison system than in the general population. A shrinking health budget resulted in an erratic supply of anti-TB drugs and laboratory supplies, reduced quality control in TB dispensaries and laboratories, and has resulted in inadequate treatment and increasing drug resistance. The social conditions favoring the spread of TB, combined with inadequate systems for diagnosis, treatment and surveillance, produce a serious public health problem. - 5 - Figure I: Reported incidence of TB in the Russian Federation, 1990-2001 Reported incidence of TB in the Russian Federation, 1990-2001 i 140000 | aZ120000 - ' ~ !X100000 -j 'i/ '" "'', 0 80000 0 60000 D 40000 ________-' :. . 3 20000 z 0 Year Sources: WHO and Federal Ministiy of Health. Data on TB incidence and prevalence during the Soviet era are not considered reliable either by local or intemational experts. However, it is evident that after a gradual decline in the TB incidence rate in the decades before 1990, the trend has reversed and the TB incidence rate more than doubled from 34.2 (in 1990) to 90.7 (in 2000) per 100,000 population, with more than 130,000 new cases in 2001. There has been a major increase in the TB mortality rate, which has nearly tripled to reach 20.4 per 100,000 in 2000. At the present time, the Russian Federation has one of the highest TB mortality rates in Europe. TB is first among causes of death from infectious diseases in Russia. The incidence rate of TB among children has also doubled in the past ten years, from 7.9 (in 1990) to 17.8 (in 2000) per 100,000 population, with more than 4,500 children with TB in 2001. The TB situation is even more complex in correctional institutions and in prisons, where case rates and death rates among prisoners are ten times higher than in the civilian sector. The case-notification rate in the penitentiary system in 2000 was 3,118 per 100,000 convicts and persons under criminal investigation. This is a potential problem for TB control in the civilian sector as there is a growing number of prisoners with TB that are being released. The prison system serves as one of the epidemiological pumps for the TB epidemic; the prisons help to breed a pool of infected persons who are then released into the general population without a guarantee of follow-up and adequate treatment by the health facilities that serve the main, non-prison population. In addition, the incidence of Multi-Drug Resistant TB (MDR-TB) is also increasing and is of great concern to the Russian Government. High rates of MDR-TB have been observed in many oblasts, in both the civilian and prison sectors. MDR-TB converts a disease that can be reliably cured into one which is often fatal and costly to treat. Lastly, it is essential to note that the current increase in TB and drug resistance could become significantly worse if HIV becomes much more prevalent in the society. 2.1.2. Government response The approach taken by Government is characterized by increasing commitment (but with persistent resource gaps), increasing technical collaboration with WHO and other partner agencies (but with -6 - persistent absence of a definitive agreement on evidence-based technical guidelines for diagnosis, treatment and surveillance to be used across the country). The Government's five-year plan on "Prevention and Control of Social Diseases, 2002-2006" has the following main components: (i) Development of documents defining the strategy and tactics of TB control at the federal level (ii) Monitoring and control at the federal level (iii) Training and education at the federal level (iv) Improvement of TB case detection and diagnosis (v) Improvement of TB patient treatment Important steps taken by the Government include the approval of the Federal Law (#77 ) on June 18, 2001 "On Preventing TB Dissemination in the Russian Federation", increased Federal budget to address TB, and ongoing work to revise, in consultation with WHO, the current regulations for TB control. However, there is still much work to be done for reaching consensus in the main principles of TB control, i.e. the role of case-finding, distribution of anti-TB drugs, setting priorities, etc. Before addressing in more detail the status of work to update the policy and strategy for TB control in Russia (see below in Section 2.1.3.), it is important to recall, briefly, the traditional Soviet-era practices and the main features of WHO's internationally recognized modem guidelines. This is crucial for an understanding of the dynamics of change and the tensions between the pressing needs for evidence-based practices on the one hand and a reluctance to part with traditional practices on the other hand. A lengthier review is beyond the scope of this document and is readily available in the international literature. [See, for example, Reichman, L. B., Timebomb: The Global Epidemic of Multi-drug Resistant Tuberculosis. McGraw-Hill. 2002]. TB control in the former USSR and in most of Russia in the 1990s The approach to TB control was heavily centralized, with separate hospitals, research institutes and phthisiologists (TB specialists). Case detection relied strongly on active, mass screening by X-ray. The specificity, sensitivity, predictive values and cost-effectiveness considerations were not features of this approach, but there was a belief that X-rays picked up TB unfailingly. Bacille Calmette-Guerin (BCG) immunization was a key feature of the TB control system and widely practiced, based on a belief that it offered effective protection. It was given at birth, with repeat doses in childhood, adolescence and, in some instances, adulthood. Unfortunately, the protective efficacy of BCG varies from 0 percent to 80 percent. BCG gives good protection against disseminated TB, including tuberculous meningitis (affecting the envelope around the brain). However, the impact of BCG on TB transmission is probably minimal. Although the duration of protection is uncertain, there is no credible evidence that it gives effective protection against pulmonary TB, which occurs mainly in adults. The WHO includes BCG in its childhood immunization program. In Russia, children are vaccinated with BCG at birth and booster doses are given at age 6 or 7, followed by another at age 14 or 15. Besides being of questionable effectiveness (other than against disseminated TB as noted earlier), BCG makes it difficult for doctors to diagnose active TB or latent TB infection. For example, doctors often use a "tuberculin skin test" to check for TB; they inject a specific substance into the skin and watch for a skin reaction. However, if a person had a cough, weight loss, does not feel well and came from a place where BCG was routinely used, it would be difficult to interpret a positive tuberculin skin test. Whether the person had active TB or was simply showing the effect of prior BCG would be unclear. Treatment included lengthy hospitalizations, sometimes including sanatoria, variations among clinicians and patients in the therapeutic regimen, and frequent recourse to surgery. The presence of scar tissues on -7- X-ray was often regarded as proof of disease (instead of evidence of healing) and an indication for more surgery. With the sharp declines in resources for health services in the early-to-mid 1990s, drug supplies and consumables became erratic and equipment deteriorated. Incomplete and/or inappropriate treatments set the stage for emergence of Multi-Drug Resistant TB. Internationally recognized guidelines for TB control from the WHO What is the WHO recommendation? DOTS is the acronym for Directly Observed Treatrnent, Short-course. It is a WHO-recommended strategy for TB control and includes 5 main elements: * Political commitment to effective TB control; * Case detection among symptomatic patients self-reporting to health services, using sputum smear microscopy; * Standardized treatment regimen of 6-8 months of short-course chemotherapy with first-line anti-TB drugs, administered under proper case management conditions, including direct observation; * Uninterrupted supply of all essential anti-TB drugs; and * Establishment and maintenance of a standardized recording and reporting system, allowing assessment of treatment results. It is internationally acknowledged that DOTS is a highly effective strategy. * With proper implementation, it could produce cure rates of up to 95 percent, but this level of cure has not been recorded in the pilot efforts in the Russian Federation; * It prevents new infections by curing infectious patients; and * It prevents the development of MDR-TB by ensuring that the full course of treatment is followed. The number of countries implementing the DOTS strategy reached 148 (out of 210) in 2000. The targets for global TB control ratified by the World Health Assembly are: (i) to detect 70 percent of all new infections, and (ii) to treat successfully 85 percent of detected smear-positive cases. Since those targets were not reached by the end of 2000 as originally planned, the target year has been reset to 2005 (WHO, Global Tuberculosis Control: Surveillance, Strategy and Planning, 2002). What is MDR-TB? MDR-TB is a specific form of drug-resistant TB that is resistant to at least isoniazid and rifampicin, the two most powerful first-line drugs for treating TB. MDR-TB is far more difficult and expensive to treat than drug-sensitive TB. Emerging drug resistance is most often a result of poor TB control in general. From a public health perspective, poorly supervised or incomplete TB treatment is worse than no treatment at all, since inaccurate treatment can cause serious harm in the form of drug resistance. When patients fail to complete the standard treatment regimens or are given the wrong treatment regimen they may remain infectious. The bacilli in their lungs may develop resistance to anti-TB drugs. People they infect will have the same drug-resistant strain. In areas with minimal levels of MDR-TB, DOTS will effectively manage the TB epidemic. In areas with significant levels of MDR-TB, however, the DOTS strategy needs to be modified to include the proper administration of second-line TB drugs. MDR-TB is a big problem that arises from a failure to manage a smaller problem effectively. It is the result of one or more of multiple failures in the disease control or broader health care system. These - 8 - include the use of incorrect drugs or incorrect doses of the right drugs to treat TB; discontinuation of treatment before the bacteria that cause TB have been killed off, which makes it possible for them to develop into stronger versions of the same bacteria; and breakdowns in the drug supply chain, which makes it difficult for doctors, nurses and other health care workers to give the right treatment. What is DOTS-Plus? DOTS-Plus for MDR-TB is a management initiative under development that is built upon the five elements of the DOTS strategy. The goal of DOTS-Plus is to prevent the further development and spread of MDR-TB; it is not intended as a universal option and is not required in all settings. It is not possible to conduct DOTS-Plus in an area without having an effective DOTS-based TB control program in place. Increasing access to essential anti-TB drugs by lowering costs: The Green Light Committee The WHO and its international partners have established the Working Group on DOTS-Plus for MDR-TB in order to address MDR-TB effectively. The Working Group has worked with the pharmaceutical industry to form partnerships against TB. As part of this collaboration, members of the pharmaceutical industry have agreed to provide preferential prices to DOTS-Plus pilot projects. In order for projects to benefit from any pricing arrangements by the Working Group, the Green Light Committee must validate those projects. The Green Light Committee is a subgroup of the Working Group. WHO is a permanent member of the Green Light Committee and houses the Secretariat. It is the task of the Green Light Committee to review project applications and to determine whether projects are in compliance with the established Guidelines. DOTS-Plus pilot projects adhering to these Guidelines carry the greatest chance of programmatic success and the least chance of creating resistance to second-line anti-TB drugs, the last line of defense against TB. Some members of the pharmnaceutical industry have already refused to sell second-line anti-TB drugs to projects that are not validated by the Green Light Committee. The importance of the Green Light Committee is not just about accessing second-line drugs at lower prices. Since the effective management of MDR-TB is more complex than merely buying second-line drugs, the Green-Light Committee's requirements are fundamentally about good practice in disease control, to minimize the risk that inappropriate use of second-line drugs will result in super-resistant strains of the TB bacteria. This scenario would be a public health disaster. As such, even if a country had the resources to purchase the drugs on the international market, or to manufacture them locally, it is crucial for the country to hold itself to the same standards required by the Green Light Committee in terms of diagnosis, laboratory support, monitoring and adherence to guidelines. The important divide, therefore, is not between richer countries (who may be able to pay for expensive drugs on the open market) and poorer ones. The important divide is between countries that choose to follow a rigorous approach to the control of TB and those that do not. The challenge of establishing a Russian approach that is consistent with WHO guidelines In summary, while Russia has embarked on a transition from the Soviet era to an open society, with great economic turmoil, its TB control system remains Soviet in its approach, with understandable reluctance to change. These complex dynamics of change and institutional inertia are not unique to the Russian health sector, as anyone familiar with the acrimonious debates around health sector reforms in other G-8 countries knows. Russia's counterparts in the West went though similar transformations from the large TB hospitals and sanatoriums to a modem system. What makes the situation in Russia particularly serious is the potential for a public health disaster within the country itself (if TB remains uncontrolled) and the potential for dissemination of MDR-TB beyond Russia. -9- The Soviet TB control system had its successes. At the same time, the approach was costly, being overly reliant on mass screening by X-rays for diagnosis and on lengthy hospitalizations for treatment. Nonetheless, the system was held in high esteem by the Russian health establishment, partly because the TB burden in the late Soviet era was not the big problem that it became in the 1990s, according to official Soviet data. (An exception was the Ministry of Justice which, for-years, has expressed a willingness to use internationally recognized guidelines to manage the huge TB problem among prisoners. Although the MOH runs a parallel system of TB control services, its desire for change could not be implemented on a large scale without MOH endorsement). In addition, the incentives for financing of the TB service favored strongly the maintenance of large TB hospitals, since they were based on the number of beds; an input-driven incentive system does not help to improve performance onw the basis of outcomes. Furthermore, at least one generation of practitioners, distinguished in the Soviet era, had much to lose from a rapid change of approaches from the familiar to the new. Nevertheless, small-scale pilot efforts to introduce WHO guidelines began in the 1990s. 2.1.3. Status of work - - and processes to update the policy and strategy for TB control in Russia DOTS Pilots. By the end of 2001, DOTS had been implemented in 19 demonstration projects in civilian and prison populations. This translates into a population coverage of 12 percent. According to data reported from 10 territories of Russia for quarters 1 and 2 of 2000, the treatment success rate was 68 percent. This suboptimal rate can be explained by high death rate (8 percent), treatment failures (13 percent) and interruptions (17 percent). The high death rate is related to delayed TB diagnosis and advanced forms of the disease. Failures are mainly caused by high MDR prevalence and treatment interruption. The high default rate is caused by social and economic problems such as alcoholism, homelessness and unemployment. (WHO. Global Tuberculosis Control. Country Profile for the Russian Federation.) DOTS-Plus Pilot. From 1994-1999, DOTS was implemented in the prison and civilian sections of Tomsk. In late 2000, DOTS-Plus was implemented in the prison sector and, subsequently, in the civilian sector in early 2001. In 2001, MDR-TB among new cases in the civilian and prison sectors was 10.2 percent and 15.6 percent, respectively. As of April 2002, 177 patients were enrolled of which 160 (90.4 percent) were still on treatment. Culture conversion rate is 71 percent for patients on treatment. Constraints include lack of drug supply due to the limited number of suppliers registered in the Russian Federation. (Source: WHO. "DOTS-Plus: Preliminary Results and Emerging Issues'" Proceedings of the Meeting of the STOP TB Working Group on DOTS-Plus for MDR-TB. Tallin, Estonia. 10-April 2002. WHO/CDS/TB/2002.307). Large-scale implementation. The major policy constraints on progression from small-scale pilots to large-scale implementation of TB control, based on WHO guidelines, is the absence, thus far, of a decision by the Russian Government. There remain uncertainties about the timing and conclusions of ongoing work involving the Government and WHO officials on the subject of TB control. Some of the outputs from a High Level Working Group on TB are reflected in a draft Order on TB control system in the Russian Federation, which includes a diagnostic algorithm, treatment protocols and laboratory requirements. Also, a Thematic Group on Radiological Methods of Detection and Diagnosis of TB has been established, with a scope of work that includes reviews of approaches to TB diagnosis, active case finding and fluorography. The completion of work on the Russian Strategy for TB control, in collaboration with WHO and the official approval of the Government Order to enable country-wide implementation of TB control program is a condition of disbursement for sub-components 3 and 4 of the TB component. (See Section G for Main Loan Conditions). -1 - The High Level Working Group (HLWG) In order to reach a consensus on modem, evidence-based approaches to TB control in Russia, with reference to WHO guidelines, it was important to work with WHO, its allied institutions, as well as other concerned Ministries and agencies. One of the approaches to this was through the establishment in 1999 of the HLWG on TB control by the Ministry of Health, Ministry of Justice, the Russian Academy of Medical Sciences and WHO. The objectives of the HLWG were to develop a mechanism for effective dialogue between Russian and international experts on epidemiology of tuberculosis in the Russian Federation and to propose policy guidelines for effective control of TB in Russia. Different Thematic Working Groups (TWGs) were created under the umbrella of the HLWG to revise the major components of the national TB control strategy in order to make the national TB control program more cost-effective and accessible to the entire population. The TWGs consist of Russian and international experts who work on the technical issues of TB control in Russia which include: (i) surveillance; (ii) laboratory and quality control; (iii) diagnosis, treatment and drug resistance; (iv) policies and regulations in the Russian Federation; (v) TB in prisons; (vi) drug procurement and supply; (vii) TB in children, marginalized populations; and (viii) training and health education. The establishment of the HLWG and its Secretariat composed of key-players in the field of TB control has significantly contributed to this commitment. Regular meetings of the HLWG, the Secretariat and TWGs, as well as discussions with the management of TB research institutes and participation in sessions of Scientific Councils facilitated more effective interactions at the high level, better planning, coordination, and follow-up on activities. Interagency Coordination The WHO Moscow Office is playing a key role in interagency coordination for TB control in Russia. Monthly interagency TB coordination meetings are hosted by the WHO Moscow Office to exchange information and coordinate activities among agencies. In addition to the World Bank, major WHO donors and partners include USAID, CDC, DFID, GTZ, IFRC, Soros Foundation, Gates Foundation, Merlin, FILHA, EPOS, PHRI, NLHA, KIL TB Consortium, Gorgas/University of Alabama and CARE Austria. These agencies and NGOs support the government in the restructuring of the health system, revising the TB control policies and strategies, and implementing DOTS, including financial support for drugs, equipment, and social support to TB patients. A proposal was made to set up an Interagency Coordinating Committee, bringing together all agencies involved in TB control in Russia and donors to unify approaches of different donors, institutions, agencies and NGOs to set up goals, objectives and tactics, improve coordination, facilitate the elaboration and implementation of the 5-year expansion plan of TB control strategy in cooperation with the MOH. International TB Control Projects in Russia The first TB control projects implemented on the basis of the WHO-recommended strategy started in 1994 in Tomsk and in 1995 in Ivanovo. The pilot project in Ivanovo was implemented through a grant from the Department for International Development of the United Kingdom (DFID), and continued with funding from the United States Agency for International Development (USAID). The USAID grant also allowed WHO and the Centers for Disease Control and Prevention, USA, to implement the revised TB control strategy in the Orel and Vladimir oblasts. In April 2000, the revised TB control strategy was expanded to the Novgorod oblast, with funding from the Finnish government. International agencies, such as Medecins sans Frontieres, Medical Emergency Relief International, the Finnish Lung Health - 11 - Association, the Norwegian Heart and Lung Association, the International Federation of the Red Cross/Russian Red Cross Society, and the Public Health Research Institute of New York City, are all actively working in both the civilian and prison sectors of the Russian Federation. Even though Russia began implementing the WHO recommended TB control strategy more than five years ago, only 12 percent of the population is currently covered according to the WHO recommendations. Currently, there are seven major Intemational Donors involved in TB projects in the Russian Federation. These include the British Govemment, the Finnish Government, the Soros Foundation, the Norwegian Government, the German Government, European Community Humanitarian Office (ECHO) and the United States Governnent. Recently, Sweden also became a donor for TB control activities in Kaliningrad Oblast. Current funding has been designated for the support of TB control in nineteen territories. Cost-Effectiveness The choice of interventions under the project is based on cost-effective approaches to the control of TB and HIV/AIDS as documented in the international literature. For example, Borgdoff et al. examined, through a literature review, the impact of tuberculosis control measures on TB mortality and transmission, and constraints to scaling-up. They concluded that treatment of smear-positive TB, using the WHO recommendation of directly observed treatment, has by far the highest impact, with a cost-effectiveness ranging from US$5 per disability-adjusted life year (DALY) gained to US$40 per DALY gained. Treatment of smear-negative cases has a cost per DALY gained of up to US$100 in low-income countries and up to US$400 in middle-income settings. (Borgdoff M.W., Interventions to reduce tuberculosis mortality and transmission in low- and middle-income countries". Bulletin of the World Health Organization 2002; 80:217-227.) WHO is currently carrying out a comparative cost analysis of existing practice and a cost-effectiveness analysis of altemative approaches to the precise configuration of the WHO TB control strategy in the Russian Federation. These analyses are being funded through a DFID grant. Preliminary indications are that large-scale, active case finding and prolonged hospitalization drive up the cost per patient. Training and education WHO also assists the Russian Federation in capacity building. Training courses are organized at both national and regional levels and are aimed at improving skills in management of TB control programs at different levels, including improved laboratory and clinical techniques. In 1996, the Central TB Research Institute, Russian Academy of Medical Sciences, was designated the WHO Collaborating Center. The Institute became the national training center for TB control. The WHO office in Moscow also focuses on the development of guidelines for TB control for national TB programs. 2.2 HIV/AIDS Acquired Immunodeficiency Syndrome (AIDS) is a severe, life-threatening condition, first recognized as a distinct syndrome in 1981. It represents the late clinical stage of infection with the Human Immunodeficiency Virus (HIV), which weakens the body's immune system and, in the absence of effective treatment, allows opportunistic infections that lead to wasting and death. (Benenson, A.. Control of Communicable Diseases in Man, 15th Edition, 1990). TB is one of the most common opportunistic infections, increasing the possibility of a dual epidemic of HIVIAIDS and TB. Certain sexually transmitted infections (STIs) facilitate the transmission of HIV from one person to another during unprotected sexual encounters. - 12 - 2.2.1. Level and trends Russia is experiencing one of the fastest-growing epidemics of HIV/AIDS in the world. The cumulative total of HIV infections reported was more than 200,000 at the end of 2000, up from the 10,993 reported at the end of 1998. The estimated number of persons now living with HIV/AIDS in Russia is thought to be around four times higher than these reported figures and, according to the Russian AIDS Center, it could be even higher (see Figure 2). As of November, 2001, most of the HIV cases were registered in the Moscow region (15,803), Moscow city (13,727), St.Petersburg (13,566), Sverdlovsk (12,981), Irkutsk (11,115) and Samara (11,109) regions. The Moscow health-care committee reported a 20 percent increase in the number of HIV infected persons in one year in Moscow city, from August 2001 (12,992) to July 2002 (15,656). The prevalence rate of infection (number of infected persons per 100,000 population) is highest in the Irkutsk region (407/100,000), Khanty-Mansy autonomous district (394/100,000), Kaliningrad region (373/100,000) and Samara region (339/100,000). Figure 2: Trends in HIV infections in selected ECA countries Cumulative reported HIV infections per million population in Eastern European countries: 1993-2001 1,800 _ ___ ___ __ 1,500 *1,200 - ---- .fRu iinFdrj,t 900 -Ukrnion r 600 x 300 *./ ' lf oS Rep,Iblic of 0 ~~~~~~~~~~~~~~~ ~~~~Lirhr,~ir,i. 1993 1994 1995 1996 1997 1998 1999 2000 2001 Projected *actuat2001 year-enddata So.rcn W N .tlonI AIDS Progrant,.rcs (2001) HIVIAIDS s.rv0iltonO. in E.rope. MId yearopor. Dat A' co-pilkd by Ihc E-ropo-n C-nlre for Ih Epid-nrlotlogorl Monitoring of AIDS .- Ai.- Source: UNAIDS. Report on the global HIVIAIDS epidemic. July 2002. Efforts to address HIV/AIDS by the Russian Government have been patchy for several reasons. First, despite the steep increase, HIV/AIDS prevalence rates remain very low, below 1 percent of the adult population, compared to the worst affected regions in Saharan Africa, Asia and the Caribbean. Second, the epidemic is driven mainly by transmission among the high-risk core group of injecting drug users (IDUs), hence there is a perception that HIV/AIDS is a problem of "social deviants". Third, political advocacy has not been linked to the evidence base, with limited results from exhortations and rights-based advocacy. As such, it has been politically difficult to mobilize effective programs on a large scale for a problem that is perceived to be confined to a group with limited political clout. - 13- The predorninant view of HIV/AIDS is not of an epidemic that is spreading fast among "normal" youths who experiment with drugs and sex. Yet, HIV/AIDS affects disproportionately the younger cohorts who, without the disease, would continue to stay in the labor force for a long time, and/or would have continued to build up human capital and expertise. By December 2001, 62 percent of the male HIV+ and 57 percent of female HIV+ individuals in Russia were between 20 and 30 years of age. Most of the diagnosed cases are among males who represent 78 percent of all registered cases (see Figure 3), although the female to male ratio is steadily growing. The pattem remains essentially unchanged as of September 2002, with 76.1 percent of reported cases among males and the rest among females, according to the Federal AIDS Center in Moscow. Figure 3: Age Distribution of HIV in Russia (end 2001), Male and Female Male (78% of all registered cases) Fem ale 30-40 Over 40 0-14 15-20 12% 4% 1% 21% over 40 30-40 3% 0-14 >~~~~~~~~~~~~~~~9 _j5{20 20-30 57% 20-30 62% Source: Russian Federal AIDS Center, Moscow. 2002. 2.2.2. Principal Risk Factors Russia demonstrates the features of an epidemic that was initially concentrated among the high-risk, core transmitters (IDUs and commercial sex workers (CSWs)) and is now starting to spread into the bridge population (such as the sex partners of the high-risk core transmitters). Although precise predictions are impossible, it is reasonable to expect that, without effective efforts to control the trend, the epidemic will likely spread from this bridge population into the general population. Interrupting HIV transmission among the high-risk core transmitters and the bridge populations is central to effective prevention of a generalized epidemic. Drug use and sharing of injection equipment among drug users. There are documented studies that provide reason for significant concem in Russia. For example, between September and October 2001, 426 IDUs were tested to establish the prevalence of antibodies to HIV (anti-HIV) and associated risk factors among IDUs in Togliatti City, Samara Oblast. Anti-HIV prevalence was 56 percent, and 74 percent of these were unaware of their positive status. The high prevalence of HIV and a recent increase in HIV detected through routine tests since 2000 suggest that an explosive epidemic occurred among IDUs in Togliatti. In the face of currently inadequate HIV prevention coverage among IDUs, this has urgent implications for maximizing the distribution of sterile injecting equipment as well as for enhancing sexual risk reduction practices. Recognizing that similar explosive epidemics could take place in other Russian cities, the authors recommended community-wide HIV prevention coverage supported by city and state policies oriented to harm reduction (Source: Rhodes, T. et al., "Explosive spread and high prevalence of HIV infection among injecting drug users in Togliatti City, Russia". AIDS. 2002, 16: F25-F31). - 14- Estimates vary, but most indicate that IDUs account for 70 percent to 95 percent of all HIV infected persons. During the last five years the number of young people using drugs rose by 2.7 times and alcoholism by 7.0 times, with the proportion of girls and young women gradually increasing. The prevalence of injecting drug use has been estimated at 1-2 percent countrywide, with rates as high as 5 percent in some cities. Furthermore, the age at which young people start injecting drugs is falling. For example, in St. Petersburg, over 40 percent of IDUs attending an HIV prevention center in 1999 were young people under the age of 20 years, compared with only 13 percent in 1997. Also, sharing of injecting equipment between injecting drug users is common. The latter is confirmed by the high rate of hepatitis B and C in the population of matching age. More than half-a-million new cases of B and/or C hepatitis were registered in the country in 2000, whereas the total number of virus carriers in Russia is estimated to be close to 3.5 million. Sexual behaviors and the potential for heterosexual spread of HIV. Data from the report entitled "Monitoring Sexual Behavior in the Russian Federation, April 2002", which is based on the October 2001 Russia Longitudinal Monitoring Survey, indicates a strong potential for rapid heterosexual spread of HIV in Russia. For example: * One third of all 14-20 year old respondents reported being sexually active during the past year, with a higher proportion of young men than of young women so reporting. The average age at first intercourse has declined over the years. * 75 percent of sexually active respondents in the 14-20 year age group reported a friend or casual acquaintance as their current partner. 44 percent of all sexually active 15-20 year olds did not use a condom the last time they had sex. * Among those who had sex with a casual acquaintance, 48 percent of 14-20 year olds, 36.5 percent of 21-30 year olds, 61.3 percent of 31-40 year olds, and 69 percent of 41-49 year olds did not use a condom during the most recent sexual act. Among those who had sex in exchange for money or gifts, 35.6 percent of the 21-30 year olds and 43.5 percent of the 41-49 year olds had not used a condom. * The male to female ratio among the newly detected HIV cases has gradually changed from 4:1 in the late 1990's to 2:1 (2001), indicating that girls and young women are increasingly at risk of HiIV infection. The increasing levels of prostitution and the common practice of unprotected casual sex are the preconditions for the spread of HIV beyond the drug-user subpopulation. Commercial sex In the past five years, the sex work industry has expanded dramatically as a consequence of increasing unemployment, poverty, population mobility, family disruption and other factors associated with a transition to a market economy. The 1998 financial crisis also had a significant impact on the number of CSWs. For example, prior to 1998, according to data provided by police and journalist sources, there were an estimated 13,000 to 30,000 CSWs in the Moscow region. Immediately following the crisis, the number of CSWs grew to an estimated 70,000 and continues to rise, with the current number estimated to be as high as 130,000 CSWs. Generally, data on the nature and size of the sex industry, or the social and behavioral characteristics of CSWs is limited. Nevertheless, it has been estimated that in the year 2000 there were approximately 10,000 CSWs in St. Petersburg city, 3,000 CSWs in Kaliningrad region, 4,000 in the Altai Territory, about 1,500 in Volgograd region, and up to 1,000 in the Rostov and Tver regions. (Estimates provided by UNAIDS Moscow office). Random surveys in some cities suggest that the majority of sex workers are 17 - 23 years old and that the prevalence of HIV infections among CSWs is at least 10 percent of all CSWs. There is evidence that in different regions sex work and injecting drug use are closely associated, with some injecting drug users involved in sex work to support the addiction. - 15- Sexually transmitted infections are common among sex workers due to their frequent exposure. Sexually transmitted infections (STIs) Another important risk factor that relates to the HIV epidemic is a high prevalence of STIs in the country. Certain STIs are co-factors for IlV transmission; simply put, they increase the probability of IIV transmission for each sexual act that is done without effective protection. The rates of STIs in Russia have remained at an epidemic level for the last decade even taking into account considerable under-reporting and self-treatment. In 1999, the average rates of new syphilis and gonorrhea cases in Russia were 188 and 176 per 100,000 population, respectively, which is 128 and 24 times higher than the corresponding figures in EU countries. In fact, in many regions of Russia the rates are even more striking. Furthermore, the number of STI cases among adolescents is continuing to escalate in many Russian regions. 2.2.3. Federal level response In 1995, the Russian Government adopted the Federal Law on the "Prevention of the Spread of Disease caused by the Human Immunodeficiency Virus (HIV)" in Russia. The law has been implemented through the Federal Anti-HIV/AIDS Program, which ran from 1996 to 2001. The Federal Anti-HIV/AIDS Program is funded directly from the Federal budget and by MOH. The main actors implementing the Federal anti-HIV/AIDS Program are federal, territorial and regional AIDS Centers, which are the public health institutions under the authority of the HIV/AIDS Prevention Division of the MOH of the Russian Federation. Building on the 1996-2001 Program, the Federal Government has introduced another Anti-HIY/AIDS Program which will last from 2002-2007. Its main components include the following: * Development and enforcement of legal and nonnative acts necessary for the implementation of the Program; * Expanded provision of information on HIV prevention; * Development of the surveillance system; * Safety of medical/surgical procedures, blood and blood products, bodily fluids and tissues; * Development of HIV diagnosis and treatment services; * Human resource development in HIV diagnostics, clinical management, care, epidemiology and prevention; o Social protection of lIlV-infected individuals and their families; and * Social protection of personnel exposed to risk of contracting HIV. According to the Federal Ministry of Health, the budget for the Federal Targeted Anti-HIV/AIDS Program increased from RUR123 million in 2001 to RUR162 million in 2002. Recent official decisions indicate a shift in thinking about IHIV/AIDS in the MOH, per Ordinance # 28, dated September 9, 2002, entitled "Re: Intensified HIV control action in the Russian Federation". It is the first high-level document to emphasize the need to concentrate on the high-risk groups of IDUs, sex workers and prisoners, promoting harm reduction as effective interventions. Specifically, the Ordinance summarizes the current situation as follows: * Russia has now defined the relationships with nongovernmental organizations and cooperates with both Russian and international ones; * Particular attention is paid to the establishment of HIV prevention among high-risk groups, primarily injecting drug users, and this already with success in some regions; * The predominantly affected group remains to be the IDU population, youths and sex workers; - 16- * HIV prevalence, however, continues to rise, largely due to inadequate prevention among youth and risk groups (especially IDU, sex worker and prison inmates); * Large-scale testing is still conducted, but is inappropriate; * The scarce resources available for medical treatment of HIV infected individuals are not efficiently managed; and * Inadequate education of health care workers leads to stigmatization of WHV positive individuals. Furthermore, the Ordinance recommends, inter alia, the following to both Federal and Regional authorities: * that the Ministries of Interior, Justice and Health implement WIV prevention activities among high-risk groups; * that public awareness be increased; * that more funds from the Federal level be allocated; and * that the Regions focus on large scale prevention among youth, IDU and sex workers, and especially to expand, in cooperation with the Federal Ministry of Interior, the existing harm reduction programs. 2.2.4. Context of HIV/AIDS prevention and care in the regions In addition to Federal programs, regions can develop their own programs. There are major variations among the regions in this regard. Some, especially those that have conducted situation analysis with technical assistance from UNAIDS, have modified their programs in light of the findings. On average, though, prevention is still very weak. Weak surveillance, limited technical expertise and resources have limited the effectiveness of such programs. Prevention efforts have often relied on mass media approaches and have been rarely evaluated. Few programs have experience providing outreach services and working with marginalized populations. Pre- and post-test counselling is not consistently available where HIV testing occurs. Limited financial resources mean that sometimes public health facilities cannot afford basic items such as disposable gloves, needles and syringes. Testing on a wide scale is being used to identify HIV infected individuals, with contact tracing conducted by follow-up. Testing purposes include surveillance, early identification of HWV+ individuals for counseling and treatment referrals, and blood safety. Federal law requires mandatory testing of two groups, that is: donors (of blood and organs) and professionals likely to be in contact with HIV- infected materials. In everyday practice, however, some groups are still being tested against national policy, such as patients undergoing operations, pregnant women, army conscripts, prisoners and sometimes employees. Efforts are being made to reorient WHV testing to target those who are at greatest risk. A combination of epidemiological and behavioral surveillance, focusing mainly on the high-risk core transmitters and bridge populations will provide useful information as a basis for preventive interventions with the highest epidemiological impact. This is of utmost priority at the current stage of Russia's WHV/AIDS epidemic. A broader set of interventions could be included for the general population but it is unlikely to have as much epidemiological impact as the former. The rapidly increasing numbers of people infected with HIV pose considerable challenges to the health care system and social development in the country. Currently, care and support for people living with HIV/AIDS are not widely available across Russia. Access to drugs for the treatment of opportunistic infections is limited and the use of specific antiviral therapy is an exception rather than a rule. - 17 - 3. Sector issues to be addressed by the project and strategic choices: For both TB and HIV/AIDS/STIs, the sector issues fall into several categories, albeit with differences in details as laid out in Section 2 above. They include: * The need for clarity in the strategy for disease control, with strong emphasis on up-to-date scientific evidence; * The need to ensure good surveillance as a basis for program design as necessary; and * The need to ensure adequate resources, both financial and in terms of management capacity, for large-scale programs. Following lengthy consultations with a range of stakeholders, which culminated in a series of Technical Discussions in 2002 with the Russian Government, the main strategic choices are the following: * The project will support the overall direction of the Govermnent program, with emphasis on ensuring the use of scientific evidence for the design and management of those aspects of TB and HIV/AIDS/STIs control on a large scale, to be financed in part from the proceeds of the EBRD loan. * For TB control, the technical aspects of components to be supported by this project will be based on the outcomes of ongoing consultations between the Ministry of Health (MOH) of the Russian Federation and the World Health Organization (WHO) on a set of evidence-based guidelines for diagnosis, treatment and surveillance. * For any procurement of second-line anti-TB drugs from international sources, the use of loan proceeds will be based on procedures and terms acceptable to the Bank and the Borrower. Procurement of second-line drugs for health facilities will not be initiated unless the health facility is in full compliance with the requirements of both the MOH and the WHO for the use of these drugs. * Strong monitoring and evaluation will be undertaken, in line with good management practices and consistent with up-to-date international practices for TB and HIV/AIDS/STIs control, per guidelines from WHO and UNAIDS. 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 support the development and large-scale implementation of interventions that are based on up-to-date scientific evidence. In that context, the major project inputs will be directed at (i) updating and/or dissemination of strategies, guidelines and protocols; (ii) assessment of needs as a basis for effective planning, design, implementation, monitoring and evaluation; (iii) training and on-the-job learning to improve the local capacity for effective implementation; (iv) supply of equipment and consumables required to improve the technical quality of diagnostic and therapeutic activities, based on explicit needs assessments carried out prior to any procurement actions; (v) procurement of drugs; and (vi) close attention to project monitoring and evaluation. Specifically, the Project will include three main components. * Component I, "Control of Tuberculosis", will (i) improve policies, strategies and protocols, (ii) strengthen surveillance, monitoring, quality control and quality assurance, (iii) improve the detection of TB cases, and (iv) improve the treatment of TB. Annex 2 includes eligibility criteria for Russian regions to participate in this project. * Component II, "Control of HIV/AIDS", will (i) improve policies, strategies and public information for HIV/AIDS control, (ii) strengthen surveillance and monitoring, (iii) improve - 18- laboratory service and blood safety, (iv) prevent and control STIs, (v) deliver preventive services against HIV/AIDS, with emphasis on high-risk groups, and (vi) prevent the transmission of HIV from mothers to children. o Component 1H1, "Project Management, Monitoring and Evaluation", will (i) support the operation of the project implementation unit (Russian Health Care Foundation (RHCF)), (ii) provide training and study tours for staff of the RHCF, (iii) ensure that project audits are carried out, and (iv) ensure that monitoring and evaluation are carried out as appropriate. The project indicative costs are as follows: ,Indjcative - Bank- %,of Component. Control_--Component Costs - of financing Bank- ' 'T _____________________________,'__-_'__. _ ...... . ...US$u, i,Total (US$M ) financlng Component I. Control of Tuberculosis 217.30 75.9 100.00 66.7 1.1.) Policies, Strategies and Protocols for TB Control 1.2.) Strengthening Surveillance, Monitoring, Quality Control and Quality Assurance 1.3.) Improvement of TB Case Detection and Diagnosis 1.4.) Improvement of TB Treatment Component II. Control of HIV/AIDS 65.32 22.8 46.88 31.3 2.1.) Policies, Strategies and Public Information for HIV/AIDS Control 2.2.) Strengthening Surveillance & Monitoring 2.3.) Laboratory Service and Blood Safety Improvement 2.4.) Prevention and Control of STIs 2.5.) Targeted Prevention of HIV/AIDS and STIs in High Risk Groups 2.6.) Prevention of Mother-to-Child Transmission Component Im. Project Management, Monitoring and 3.56 1.2 3.12 2.1 Evaluation 3.1.) RHCF Operation 3.2.) Training and Study Tours for RHCF Staff 3.3.) Project Audits 3.4.) Monitoring and Evaluation Total Project Costs 286.18 100.0 150.00 100.0 Front-end fee 0.0 0.0 Total Financing Required 286.18 100.0 150.00 100.0 The total cost of the project is estimated at US$286.18 million, of which IBRD will finance US$150 million. US$2.07 million will be made available by the WHO through parallel financing for Component I. The remaining US$135.11 million will be counterpart financing provided by the Russian Federation, of which roughly: US$77.39 million will finance medical supplies and consumables for MOH and MOJ laboratories and diagnostic centers, other equipment and publication of recording and reporting forms; US$22.30 million will finance operation and maintenance for equipment financed under the IBRD loan as well as surveillance and monitoring expenses and distribution of drugs; US$6.13 million will finance small scale civil works in select MOH and MOJ facilities to ensure that medical equipment and supplies will be adequately housed; and estimated US$28.29 million of taxes and duties which may be levied during the course of the project. - 19- 2. Key policy and institutional reforms supported by the project: The principal reform supported by the project is the large-scale development and implementation of TB and HIV/AIDS/STIs control programs based on up-to-date scientific evidence. More specifically, the project will support the following: (i) the control of TB through enhanced policies, surveillance, diagnosis, treatment and effective management; (ii) HTV/AIDS surveillance, policies, program development and interventions for prevention and care; and (iii) the surveillance, diagnosis and treatment of STIs. The institutional scope is multi-sectoral, including but not limited to the MOH and the MOJ. The levels of work are multiple, including the Federal, regional and local levels, the latter being the focus of implementation. Policy and institutional reforms supported by this project will require continued commitment from the Russian Government which will need to adopt a series of legislative and administrative reform measures during the course of the project in order for this operation to succeed fully. One of the main initial documents requiring Government agreement and approval is to enable country-wide implementation of the TB control program, which is a disbursement condition for sub-components 3 and 4 of the TB Component. (see Section G for Main Loan Conditions). One of the fundamental problems is the high incarceration rate, compounded by poor prison living conditions. This, combined with deterioration in the health service system, only fuels the TB and HIV/AIDS epidemics. The subject of judicial reform is beyond the scope of this project. However, this issue is extremely important and needs to be addressed in order to reduce the roles that prisons play as disease pumnps which puts the larger society at risk. These issues are best addressed under the leadership of the Russian Govermnent, with the World Bank and partner agencies in an advisory capacity, including the use of expertise in judicial reforms, social protection, public administration and health-systems. The Bank is working actively with the MOH, Russian research institutions and partner agencies on modern approaches to public health through a series of public health policy seminars in the Russian Federation. Further details are available at http://www.worldbank.org.ru/eng/news/seminars/health_policy.htm. A multi-year, multi-sectoral work program of analytical and advisory services on disease control in prisons was initiated by the Bank in early 2003. 3. Benefits and target population: The project will benefit the Russian population in several ways. First, it will reduce premature mortality, avoidable morbidity and disability from TB, HIV/AIDS/STIs. It will reduce human misery and suffering. According to the results of epidemiological and economic projection models, the project will potentially save over 150,000 lives as a result of strengthening the Russian Government control of TB and HIV/AIDS/STIs epidemics. Second, the project will help to reduce lost productivity and avert a potential economic disaster, which is plausible in the event of sharp increases in HLV prevalence (see technical report by Christof Ruehl et al., "Economic Consequences of HIV in Russia", 2002). Third, through the TB component, the project will benefit the poor since TB is linked to poor living conditions and is a factor that contributes to low labor productivity. Thus, the project will help save lives, reduce rnorbidity, disability, and absenteeism from work. It will also improve the cost-effectiveness of the TB system, which will free resources to improve the access of services to the population. The quantification of these benefits and their comparison to investment costs constitute the basis of the economic analysis (See Section E and Annex 4). - 20 - Health workers, managers and institutions directly involved in the control of TB and HIV/AIDS/STIs will benefit from improved and stable availability of diagnostic equipment and essential supplies and consumables, upgraded skills and morale. The institutional benefits of the project will also be important. By supporting the implementation of a new paradigm for TB control, the project will strengthen the institutional capacity of health facilities to properly diagnose and effectively treat TB. This will help reverse the trend of several years of sub-optimal results which has led to a high incidence of TB and the increase of drug resistance. In addition, the health care system will benefit from cost savings resulting from the reduced number of unnecessary hospitalizations and mass x-ray testing. For HIV/AIDS, the project's harm reduction and outreach programs will increase the collaboration between the public sector and NGOs in working with high-risk groups of the population, such as the IDUs, MSM, CSWs, and vulnerable youth. The project will also support new protocols for prevention of HIV and vertical transmission, developed in Russia and based on up-to-date scientific evidence. 4. Institutional and implementation arrangements: The project will be implemented over a five year period and all implementation arrangements will be governed by the guidelines and procedures set out in the Project Operational Manual (POM) and in accordance with the Project Implementation Plan (PIP). Given the intentional and inherent flexibility of project design, the PIP will be an evolving document aimed at supporting the overall achievement of project objectives. Any major changes to either the POM or the PIP will be preceded by technical consultations between the project implementing agencies and the Bank and will require Bank final review and approval. The overall responsibility for project implementation will reside in two Ministries, the MOH and MOJ. It. is, therefore, critical that the project receives strong and continuous technical, operational and logistical support throughout the project implementation period from both Ministries as well as from the Ministry of Finance (MOF) and Ministry of Economic Development and Trade (MEDT) and other relevant agencies in the Russian Government, and particularly at the regional and local levels. To ensure overall interagency coordination, the project will be supported by a technical team within a Working Group (WG). The WG will meet regularly to review project progress against agreed timetables and stated project objectives, take necessary decisions with respect to pending implementation issues, and report to both ministries and to the Russian Government at large on the overall project implementation. (detailed responsibilities of WG are found in Annex 2) The responsibility for day-to-day proiect implementation, particularly with respect to procurement, disbursement and financial management functions will rest with the project implementation unit - the Russian Health Care Foundation (RHCF) - which currently supports implementation of two on-going Bank financed health projects. The RHCF will sign a Project Implementation Agreement with the MOF, MOH and the MOJ, as a condition of Loan Effectiveness, to enable it to act on behalf of these ministries in the daily implementation of the project. The RHCF has the status of an autonomous non-commercial organization, founded by the Federal Center for Project Finance, Clinical Hospital #1, and the National Foundation for Housing Reform with the participation of MOF, MOH and the MEDT. The status and structure of the RHCF provides an appropriate balance between its independence in terms of daily work and its monitoring by key ministries (Health, Finance, and Economy) whose representatives sit on the Foundation's Trustee Council. The Minister of Health is the President of the Foundation. In accordance with its Charter, the main objective of the Foundation is to assist the government to identify, prepare and implement projects in the field of health care, medical - 21 - industry and the social sector, financed by international financial organizations, in the most expeditious and efficient manner. The RHCF has acquired significant experience in assisting in the implementation of Bank-financed projects, including the Health Reform Pilot Project (currently under implementation-expected closing date is October 31, 2003) and the Medical Equipment Project (closed June 30, 2001). The RHCF has also participated in the preparation of the Health Reform Implementation Project (scheduled to be presented to the Bank Board of Directors on March 18, 2003) and in the preparation of the proposed project from November 1999 - June 2001, and again starting in the fall of 2002 and continuing at present. In early 2000, the Foundation underwent a major restructuring of its functional and project departments to achieve maximum efficiency while implementing several projects. During 2001, the RHCF has strengthened its accounting and financial management systems, and has improved its project management reports. To help prepare and implement the proposed project, efficiently, the conditions of Negotiations included the establishment of the Project Implementation Unit (PIU) and selection of key PIU staff as well as the preparation of the draft Project Operational Manual (POM), including a Project Implementation Plan (PIP) and the Project Procurement Plan (PPP). All of these conditions were met prior to Negotiations. The staff of the RHCF who will work on a full-time basis will include a Project Director, tWo coordinators for the TB Component, four coordinators for the HIV/AIDS Component, and 2 Procurement Officers, one for each of the components given the complexity of the operation. The RHCF will be supported by a Disbursement Officer, a Financial Specialist, Project Accountant, a Translator and an Administrative Assistant. Other staff of the RHCF will also work on the implementation of the project but on a part-time basis and will include the General Director of the RHCF, the head of the Financial Department, Chief Accountant, Lawyer, and other support staff who currently work at the RHCF. The Project Director will report regularly to the WG, and if/when necessary directly to the MOH and MOJ Ministers and senior staff, on the progress of implementation and will to alert them of any project management, procurement, financial and other issues that arise during the course of implementation so that these issues could be resolved speedily and efficiently. Likewise, Project Component Coordinators will maintain continuous contact with MOH and MOJ Ministry staff on the federal and regional levels and will report to the Project Director regarding any implementation issues. In view of the large and growing number of local and international institutions working on TB and HIV/AIDS/STIs in the Russian Federation, the RHCF will coordinate all of its activities with other actors (donors, institutions, NGOs, etc) and particularly with WHO (providing parallel financing to the project), to avoid wasteful overlaps and gaps. The RHCF will ensure that regular donor consultations and meetings take place and will report to the Government and to the Bank on any new developments and proposals. While overall project coordination and implementation will be handled by the RHCF (through component coordinators), day-to-day implementation at the regional and local levels will be carried out mainly by local MOH and MOJ staff, with support and coordination from the RHCF. In order;t6 participate in the project, each region will need to sign a Regional Participation Agreement with the RHCF and to designate staff who will coordinate project activities on a local level as part, of the basic selection criteria for that region's participation in the project. (see Section G for Other Loan Conditions) Other selection criteria for participation include: (i) ensuring that facilities, receiving equipment under the project are in good operating order and adequate in terms of their ability to support new equipment; if the needs assessments find that facilities need mild or substantial refurbishment, the region will be required to finance such refurbushment from its budget prior to the delivery of the equipment; and (ii) adequate financial resources will be made available for operation and maintenance of facilities and equipment, including financing supplies and consumables essential for efficient functioning of equipment to support the key project objective of timely diagnosis and treatment of disease. As regions will differ in their implementation capacity and performance, the RHCF has designed a strategy - 22 - whereby, together with the MOH and MOJ, it could provide additional assistance to improve the capacity of weaker regions. Project funds will flow from: (i) the Bank, either via a single Special Account which will be replenished on the basis of SOEs or by direct payments on the basis of direct payment withdrawal applications; and (ii) the Government, via, the co-financing account opened by RHCF in one of the commercial banks. After the banking crisis of 1998, the Bank and the Government of the Russian Federation have agreed that all project Special Accounts will be held in three state owned commercial banks. The RHCF will open a separate project Special Account in one of the these banks. 5. Monitoring and Evaluation. Baseline assessments, monitoring and evaluation are core elements of each component in the project design (see Annex 1 for Project Design Summary and Annex 2 for Detailed Project Description). The Project Management, Monitoring and Evaluation Component includes an overall provision for monitoring and evaluation of the project, including the setting up of the MIS system which was a condition of Board presentation of the proposed project. This component will be administered through the RHCF which will be responsible for producing an annual report integrating the results of the monitoring and evaluation activities of the project progress. This is seen as an essential part of implementation which will provide information on the progress of each component and sub-component as well as on a broader impact of the project and the effect on the overall control of TB and HIV/AIDS/STIs epidemics in Russia. The technical criteria for monitoring and evaluating the TB component are based on WHO guidelines. The technical criteria for monitoring and evaluating the HIV/AIDS and STI component are based on guidelines endorsed by WHO and UNAIDS. (See, for example; (i) UNAIDS. National AIDS Programs: A Guide to Monitoring and Evaluation. June 2000. (ii) UNAIDS and WHO. Evaluation of a national AIDS program: a methods package. Prevention of HIV Infection. 1999). Technical monitoring of the TB component will be supervised and guided by WHO. The assistance of WHO is important because of the need to monitor the performance of participating oblasts and ensuring that the proper diagnosis and treatment regimens are used both for the basic and enhanced TB packages. The monitoring of drug use is particularly important to reduce the risk of drug resistance. - 23 - D. Project Rationale 1. Project alternatives considered and reasons for rejection: The project design is the result of extensive technical discussions among representatives of various Russian ministries, technical specialists, international development partners (among which the WHO played a prominent role) and World Bank specialists. The technical choices were based on the best available local and intemational literature on the epidemiology, diagnosis, treatment and surveillance of TB and HIV/AIDS/STIs. Several options were rejected early during project preparation because they would not meet -the Government's need to avert the serious crises of T]3 and HIV/AIDS. For the TB component, the options rejected included (i) no project, (ii) provision of drugs and medical equipment without additional inputs, (iii) provision of care only in prisons, and (iv) provision of care only in civilian facilities. For the HIV/AIDS component, the options rejected included (i) no project, (ii) emphasis on general awareness campaigns for the general population without strong efforts on the high-risk core transmitter sub-populations, (iii) avoidance of effective interventions (such as harm reduction for IDUs) that mgight be more challenging to implement than general awareness campaigns, which are useful but have relatively little documented impact in terms of averting new infections. During technical discussions in March 2002, the Russian Government, through its Working Group, expressed its commitment to controlling TB and HIIV/AIDS/STIs but full agreement on the TB component was not reached mainly because large quantities of equipment for radiology were proposed to be included in the loan. The Bank suggested that Government consider project options which included only equipment that was really essential for effective control of TB and HIV/AIDS/STIs. The options proposed were: Option A. To maintain the total loan amount of US$150 million, proceed with HIV/AIDS component and with those TB sub-components on which there was agreement, and to reserve a portion of the loan in a contingency fund to be used for selected aspects of TB control as soon as there were agreements on these. Option B. To proceed with the HIV/AIDS component and with those TB sub-components on which there was agreement, and reduce the total loan amount to exclude equipment on which there was no agreement. Option C. To proceed only with HIV/AlDS cornponent, reduce the total loan amount to exclude the entire TB component, and continue discussions regarding TB control with a potential for a separate project if and when there would be agreement on the most effective way to control TB in Russia. After considering these options, the Russian Government expressed its desire to continue the work on the project in accordance with the plan as presented in Option A. During subsequent technical discussions in June 2002, full agreement was reached with the Government to include only the essential radiology equipment. As a result of these detailed discussions, the current project design reflects the best possible combination of effective means to control the TB and HIV/AIDS/STIs epidemics in accordance with the latest internationally accepted best practices. - 24 - 2. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned). 17- ; : : . - ; -; : Latest Supervision Setor Issue : Project - (PSR) Ratings -_______________________________ -__-_.__._._=__._._-__. _. (Bank-financed projects on1)A Implementation Development Bank-financed Progress (IP) Objective (DO) Deteriorated condition of essential Medical Equipment Project S S medical equipment Inefficient and poor quality care at the regional level Provider payment system lacks Health Reform Pilot Project S S incentives to improve efficiency Poor outcomes Financially sustainability of health Health Reform Implementation care system Project (scheduled for Board presentation on March 18, 2003) Weaknesses in management unclear Community Social S S governance relationships within sector Infrastructure Project Prevention of deterioration of health Community Social S S sector infrastructure Infrastructure Project Other development agencies 22 pilot projects on TB control based Various agencies, including on WHO guidelines bilateral organizations and NGOs. A number of small-scale pilot projects Various agencies, including in harm reduction and LEC for bilateral organizations and HIV/AIDS control NGOs. IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory) 3. Lessons learned and reflected in the project design: Scientific evidence and principles to guide infectious disease control underpin the design of this project. A full review of the published literature is beyond the scope of this section. TB. There is a large and growing body of literature on the most effective methods for TB control. The - 25 - literature covers bacteriology, epidemiology, surveillance and screening, diagnosis and treatment. The published evidence forms the basis for the WHO-recommended strategy for drug-sensitive TB and for MDR-TB. HIV/AIDS/STIs. For epidemics at a relatively early stage (such as that seen in Russia), the published evidence from OECD countries and others such as Thailand, Brazil, Uganda and Senegal strongly favors a combination of (i) preventing generalized epidemics through targeted interventions for high-risk and bridge-populations, based on good virological, epidemiological and behavioral surveillance, and (ii) broader public information efforts to enable a supportive social environment, making it possible to develop and implement effective programs.. For treatment with antiretroviral drugs, the global experience shows that adherence to treatment protocols and good laboratory support are crucial for success, both in terms of keeping infected persons alive and in terms of minimizing the development of drug-resistant strains.of HlV. A number of international organizations have been working alongside Russian colleagues to encourage policy-makers and health practitioners to implement harm reduction strategies to curtail high-risk injection practices among IDUs. Central to this has been the championing of needle and syringe-exchange programs. International evidence points to the positive role of needle and syringe-exchange programs in reducing and stabilizing the prevalence and incidence of HIV and in reducing high-risk injecting practices. Results from Sverdiovsk Oblast, situated in the Urals, show similar findings from three pilot projects among a closely knit social network of IDUs. The results show that needle and syringe exchange program attenders are likely to report less HTV risk than those not attending such programs. (Power and Nozhkina, The value of process evaluaiton in sustaining harm reduction in the Russian Federation, AIDS, 2002, Vol. 16 No. 2, 303-304). There are few systematic reviews of the global evidence on preventive interventions in the published literature. Merson et al. reviewed the effectiveness of projects and programs in developing countries that aim to reduce sexual transmission of H1V infection or transmission related to injection drug use ("Effectiveness of HIV Prevention Interventions in Developing Countries." AIDS. 14 (suppl. 2): S68-S84, 2000). They found that behavioral change interventions are effective when targeted to populations at high risk, particularly female sex workers and their clients. Few studies have evaluated harm reduction interventions in injecting drug users. Evidence on the effectiveness of voluntary counselling and testing programs was mixed, and results varied according to the population being studied. STI treatment appeared highly effective in reducing HIV/STI transmission, particularly in the earlier stages of the epidemic. Structural and environmental interventions show great promise, although more evaluation is needed. Merson et al. concluded that: * HIV prevention interventions can be effective in changing risk behaviors and preventing transmission in low- and middle-income countries; * When the appropriate mix of interventions is applied, they can lead to significant reductions in the prevalence of HIV at the national level; and * Additional research is needed to identify effective interventions, particularly in men who have sex with men, youth, IDUs and HIV-infected persons. In practice, countries need to strike a pragmatic balance, based on the capacity for program implementation, the expected effects of interventions, their political feasibility and the availability of financial resources. More details and guidance are contained in, inter alia, Report On The Global HIVIAIDS Epidemic, UNAIDS, 2002 (available at http://www.unaids.org/ba rcelona/presskit/barcelona°/2Oreport/contents.html). - 26 - A critical lesson incorporated in the design of all project components is support to be provided for surveillance, monitoring and evaluation, all of which are essential elements for a successful disease control program. The above-mentioned key elements of an effective operation will be largely dependent on continued high commiiment to TB and HIV/AIDS/STIs control at the different levels of the Russian Government, both at the federal and regional levels, including the representatives of the MOH and the MOJ, but also other related sectors which will need to be involved to achieve a comprehensive response to the control of the epidemics. In addition, it is critical that NGOs and other members of the civil society, as well as the main stakeholders, are involved in all aspects of policy, design and implementation of effective programs, particularly at the regional and local levels. These are both important lessons from similar operations which have proven successful in other countries. For TB control, there is a global body of experience, of which the World Bank-supported activities constitute a part. In Latvia, DOTS was introduced in 1995 and is now available throughout the country. DOTS-Plus was introduced in 1997. There are relevant lessons from large countries such as China, which combined local commitment with international cooperation to expand DOTS coverage - - particularly during the early 1990s, and India, where DOTS coverge doubled during 2000, reaching 30 percent by the end of that year. In South Africa, DOTS coverage was extended to 77 percent of the country by the end of 2000, and two-thirds of estimated smear positive cases were detected under DOTS, bringing South Africa close to the WHO target of 70 percent. 4. Indications of borrower commitment and ownership: This project has a high priority for the Russian Government. All along, during project preparation, the Government has given strong indications of its commitment to the project as follows: (i) The Prime Minister's Cabinet, the State Duma, and the Ministries of Finance, Economy and Science and Technology have closely followed project preparation; (ii) In 1999, an Inter-Ministerial Committee was created to oversee project preparation and implementation; (iii) Working groups created by the MOH and MOJ to prepare the project have been strongly committed to the task; and (iv) Meetings were organized with more than 30 oblasts to inform them about the project and discuss eligibility criteria for their potential participation in the project. It must be acknowledged that there was a period during which project preparation slowed down because of unresolved issues with respect to the TB component. This lasted from mid-2001 to early 2002 and was resolved at the request of the Government. Technical Discussions were held in March 2002 and June 2002 in response to an invitation by the Minister of Health, Dr. Yuri Schevchenko in his letter of March 14, 2002 to the World Bank. Minister Shevchenko wrote that the Chairman of the Russian Government, M.M. Kasyanov, had issued an instruction on February 13, directing the Ministries of Health, Justice, Economic Development and Trade to undertake this task. Following the first round of Technical Discussions in March 2002, which broke the previous impasse, an agreement was reached to hold a second round of Technical Discussions in June 2002. Those discussions were very successful and resulted in technical agreements and an overall agreement on a modified final design of the project. - 27 - The Government chose to continue with the project and to maintain the loan amount at US$150 million. Based on these agreements, the Government expressed eagerness to start project negotiations as soon as possible, and met the necessary conditions of negotiations which included: (i) the establishment of a Project Implementation Unit (PIU) with structure, responsibilities and staffing agreeable to the Bank, and (ii) an updated Project Operational Manual (POM), including a Project Implementation Plan (PIP) and a Project Procurement Plan (PPP). 5. Value added of Bank support in this project: Together with WHO and large bilateral organizations such as DFID and USAID, the Bank serves as a co-convenor of major discussions on sustainable approaches to the control of TB and HIV/AIDS/STIs in Russia. In addition to facilitating these discussions on program contents, the World Bank will provide the proposed Loan of US$150 million to ensure a major progression from small-scale pilots to a large-scale program. This scaling up is crucial to ensure measurable progress towards the objectives of TB and HIV/AIDS/STIs control at the general population level. The Bank brings to the proposed project an unusually strong combination of international experience as an institution, substantive policy dialogue with many of the sectors involved in the TB and HIV/AIDS/STIs control, knowledge of Russia's health system from three earlier projects, as well as know-how in designing and supporting the implementation of large-scale programs. The Bank's portfolio includes over 50 projects throughout the world-aimed at prevention and control of HIV/AIDS and other infectious diseases. In Russia, the relevant aspects of the World Bank's work extend beyond the immediate scope of this project, to include policy dialogue and strategic partnerships that influence medium- to long-term policies and strategies. Since the Russian Federation began reforms of its health system a decade ago, the Government has stated an intention to modernize the public health and disease control services. The main elements of the health reform specifically include "development of advanced forms and methods of state sanitation and epidemiological supervision, hygienic and epidemiological analysis, and monitoring of health." Among the issues under Federal jurisdiction are "the organization of the State Sanitary-Epidemiological Surveillance - SSES, development and approval of federal sanitary regulations, norms and hygienic standards, sanitary-epidemiological surveillance and organization of the system for sanitary protection". The Government also approved in August 2000 "The Concept of Health Protection of the Russian Population for the period till 2005". However, real progress has been limited in the areas of institutional development and modernization of the approaches to surveillance, health promotion and disease control. The Ministry of Health has identified a need to develop opportunities for better defined strategies and programs to achieve a modern system of public health and disease control. As part of its ongoing dialogue with the Government of the Russian Federation, the World Bank agreed to collaborate with the MOH in support of a series of senior policy seminars on public health in 2002 - 2003. The seminars involve representatives of the Government, relevant public institutions and Russian scientists, with support from external resource persons and partner agencies (for example, WHO, DFID, USAID, CIDA, Soros Foundation, and SIDA). Similarly, the Bank is working with the MOH, MOE, other local institutions .and international partners to develop a more robust health finance regime, which is linked to the objectives of the proposed Health Reformn Implementation Project. Improvements arising from this aspect of Russia-World Bank collaboration will augur well for a sustainable health system, in turn improving the chances of controlling the epidemics of TB and HIV/AIDS. - 28 - E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8) 1. Economic (see Annex 4): * Cost benefit NPV=US$380 million; ERR = 143 % (see Annex 4) 0 Cost effectiveness O Other (specify) The cost-benefit analysis distributes the benefits over the project's time horizon into direct and indirect benefits. The direct benefits are the expected tangible benefits accruable to the project from the reduced hospital stays, reduced diagnostic expenses, eliminating unnecessary discharges and reducing consultations. Indirect benefits are related to the potential life years saved by the project and the economic and financial value of increasing productivity. The project will yield a present value of net benefits, after investment and recurrent costs, of US$380 million over five years and US$1.4 billion over ten years. The internal rate of return (IRR) will be 143 percent. In the case of the TB component, it is estimated that 14.7 healthy life years are gained for each death averted. The cost per life year saved is in line with other cost-effective interventions that are part of the basic package of services. The project obtains a year of healthy life for US$69, which compares with US$30 for expanded programs of immunizations (EPI), usually considered as one of the most cost-effective interventions in the health sector. The ratio of benefits to costs of the HIV/AID)S and STDs component will yield 4.2 dollars of benefits (direct and indirect) for each dollar invested. If only investment costs for preventive actions with IDUs, CSWs and mother-to-child- transrnission are used for the sake of simplicity in the calculation of the IRR, no return is assumed from other investments with broader impact such as education of the general population, surveillance etc., the benefit to cost ratio will increase to 6.5 dollars of benefits for each dollar invested. The cost per disability-adjusted life year (DALY) gained will be US$23, implying that the project will buy a healthy year of life for US$23. 2. Financial (see Annex 4 and Annex 5): NPV=US$ million; FRR = % (see Annex 4) No detailed financial analysis was undertaken since this project is not a revenue generating project. In terms of the project's financial sustainability, it is assessed as moderately high. In the case of TB, in terns of the incremental expenditures, the project will not significantly increase existing TB spending since a shift will be made from current practice of reliance on mass x-ray screenings and lengthy hospitalizations to less costly and more efficient outpatient care involving targeted clinical laboratory diagnosis for symptomatic patients and timely outpatient treatment. Therefore, the overall impact on government finances will be low in the medium term. The epidemiological modeling results demonstrate that a sustained moderate investment will be required for nearly 10 years to fully contain the TB epidemic. After that period, with TB incidence significantly reduced, government expenditures on TB treatment will decline. The ability of the Russian Government to sustain spending on HIV/AIDS prevention, control and treatment largely depends on the potential size of the future epidemic and on the current and continued response to the epidemic. In order to reduce medium-term and long-term expenditures on costly treatment, it is essential to begin targeted preventive interventions as early as possible in order to contain the increasing numbers of infections. Without such interventions, as detailed earlier in this report, it is plausible that by 2010 GDP could be as much as 4.15 percent lower, and as much as 10.5 percent lower by 2020 then current figures, with the overall economic growth potentially diminishing by a full percentage point by 2020 as a result of an unchecked HIV/AIDS epidemic. - 29 - Fiscal Impact: The aim of this project is not to increase costs for the Russian health care system but instead to ensure that future costs associated with controlling the TB and HIV/AIDS/STIs epidemics are reduced as a result of interventions made under this project. Therefore, the main fiscal impact of the project will be the counterpart funding required from the Government, estimated at US$134.11 million. This includes an estimated US$77.39 million of medical supplies and consumables and other equipment and publication of recording and reporting forms, US$22.30 million for operation and maintenance of equipment as well as surveillance and monitoring expenses and drug distribution, US$6.13 million for small scale civil works in those facilities requiring upgrades to make them operationally sound, and US$28.29 million of estimated taxes and duties. This is a substantial contribution without which the project could not be implemented. 3. Technical: Tuberculosis. The project will implement a Russian Strategy that is fully compatible with WHO guidelines and acceptable to the Bank, and will benefit from lessons learned worldwide in TB control programs. In addition, the design of the project applies the lessons learned from the pilot projects already implemented in Russia. Some of the key elements of success are: (i) a regular supply of drugs and laboratory supplies; (ii) incentives to patients to complete their treatment; and (iii) direct observation by health personnel to ensure that this happens. These elements have all been incorporated in the project design. Under the project, equipment will be provided to MOH and MOJ to upgrade reference, microbiological and clinical laboratories as well as some X-ray equipment. In addition, training will be provided through regional and local activities, seminar and other initiatives, including visits to other regions that have implemented pilot projects based on the WHO guidelines. Technical support will be provided to regions through consultant services in improved TB management which will support the transition to an enhanced TB system for diagnosis and treatment. The vertical structure of the TB program is likely to change gradually, as evidenced in pilot experiences, and the project will support this transition by developing a strong policy, operational and legal environment in which the Russian Strategy for TB control will be supported. The project will use an intensive system of monitoring and evaluation that meets WHO standards. This system will follow the epidemic closely, providing valuable information and inputs so that timely adjustment implementation methods and inputs can be made. The system will track the latest trends in incidence, treatment outcomes, availability of drugs, and other key aspects. The project will benefit from this flexibility as it will allow to better link project investments with required inputs. For example, should the occurrence of MDRTB be less than estimated, fewer expensive drugs will need to be procured and the savings could then be transferred to other parts of the project. HIV/AIDS and STDs. The project focuses on proven cost-effective preventive interventions targeted at high-risk groups, including harm reduction for IDUs, together with blood safety improvement, prevention of vertical transmission and broader actions of public education at the national level. Targeted interventions.are more cost-efficient to implement since individuals with the riskiest behavior are most likely to contract and spread HIV and STIs. As a result, the indirect-benefits are much larger when infections are prevented in higher-risk groups rather than in low-risk populations. STI prevention and control also constitutes an essential element of the project design both to reduce the burden of STIs themselves and to reduce the risk of HIV infection and transmission by those infected with STIs. The project will also provide support for the development of laboratory capacity to ensure effective - 30 - surveillance, diagnosis and treatment for HIV-infected persons. Such laboratory capacity is necessary for Highly Active Antiretroviral Therapy (HAART), monitoring viral load, CD4/CD8 cell counts, as well as drug resistance and toxicity. 4. Institutional: Organization of the Health Sector. As a result of reforms started in the early 1990s, the Russian health system is a decentralized one. In broad terms, financing comes from payroll contributions in the regions complemented by regional budgets for the non-working population. The principal financing sources are managed by Regional Health Authorities (RHAs) or Territorial Insurance Funds. Most providers are managed by RHAs. The number and capacity of healthcare facilities are not only adequate, but excessive, relative to needs. A critical issue remains the gap between the needs of a modem health system and the legacy of the Sovet era. Only about 10 percent of the public budget for health is managed by federal agencies, i.e. by the MOH and the Federal Health Insurance Fund. The MOH has been shifting its role towards policy-making, reform initiating, and monitoring. A very extensive account of the institutional context is available in project files. Sources include the report by the TACIS Project, entitled "Russian Federation: Support to Public Health Management", 2001. 4.1 Executing agencies: At the Federal level, the overall responsibility for the project will reside in two Ministries, the MOH and the MOJ. Their main responsibilities will be to: (i) set national policy and strategy; (ii) coordinate with the regions; (iii) manage national reference laboratories; and (iv) monitor and supervise the overall program. The MOH and MOJ will be supported by a Working Group (WG) in charge of ensuring interninisterial coordination, monitoring project progress against project development objectives and indicators as well as overall project management and operation. In the case of the TB component, the MOH and MOJ will coordinate their actions both through the WG, as well as through informal regular contacts between ministry staff, and through continuous collaboration with the WHO. The MOH, MOJ and the WG will be supported by the RHCF for all day-to-day implementation activities. The key to successful project implementation lies at the regional level which will be the main beneficiary of this project. The regions will coordinate policies closely with the Federal level and the RHCF which will coordinate project implementation issues on a daily basis with the regions. Regional and local staff will be designated to manage the project and to ensure that all project inputs are coordinated and timely. They will also coordinate all training events and will also participate in Federally held training conferences and seminars to keep better informed regarding project progress, regarding examples of best practices from other regions regarding prevention programs, diagnosis and treatment. Lastly, local staff will be in charge of project monitoring and evaluation and report to the RHCF and the IWG on the results and impact of the project on the regional level. The regional staff will also maintain close contacts with local and national NGOs and involve them in those activities for which these non-government groups will be better suited, i.e. for harm reduction and outreach programs for HIV/AIDS and STIs. 4.2 Project management: This will be the fourth Bank-financed health project and it will be managed by the RHCF which currently supports the implementation of the other health projects. The RHCF will have the day-to-day responsibility for project implementation and will report to the WG and directly to the MOH and MOJ Ministers and senior staff, on the progress of implementation. The staff of the RHCF who will work on a full-time basis will include a Project Director, two coordinators for the TB Component, four coordinators for the HIV/AIDS Component, and 2 Procurement Officers, one for each of the technical - 31 - components. In addition, the RHCF will be supported by a Disbursement Officer, a Financial Specialist, Project Accountant, a Translator and an Administrative Assistant. Those contracted for the coordination of the proposed project will have the necessary background and experience and will be supported by international consultants as required, and by WHO for the technical monitoring of TB. Other staff of the RHCF will support the implementation of the project on a part-time basis and include a General Director, the Head of the Financial Department, Chief Accountant, Lawyer and other support staff who currently work at the RHCF. A critical additional responsibility of the RHCF staff will be to coordinate project activities with other actors (donors, institutions, NGOs, etc) and particularly with WHO in order to maximize project effectiveness. Regular donor consultations and meetings will be organized and reports on these meetings provided to the WG and to the Bank for information. Through its coordinators, the RHCF will work closely with regional staff on all project management and implementation issues, including training events, the timely provision of consultant services, goods, and on monitoring of project outcomes. The RHCF will also provide continuous technical support to the regions on procurement, financial and other technical issues that arise during the course of implementation. 4.3 Procurement issues: Prior to the start of procurement procedures for goods, services and training to support the implementation of key project sub-components, a needs assessment will be carried out and include information on the system design, structure, staff, requirements and facility, equipment and training needs. The results of such a needs assessment will be incorporated into an implementation plan for that sub-component, which will be presented to the Bank for review and approval. The project is financing an estimated US$22 million of pharmaceuticals. With the exception of second-line drugs, drugs will be procured under normal Bank guidelines for the procurement of pharmaceuticals. The procurement of second-line anti-TB drugs will be carried out on terms and procedures acceptable to the Bank and the Borrower. The RHCF will not initiate any procurement of such drugs for any health facility unless this health facility is in full compliance with the requirements of both the MOH and the WHO for the use of such drugs. The procurement documents for the first year's project activities will be completed by Loan Effectiveness. 4.4 Financial management issues: The -financial management capacity assessment was performed by the Bank's financial management specialist on November 18-22, 2002, and was updated between the Negotiations and Board presentation. The financial management arrangements of the project are acceptable to the Bank and the entity has the necessary capacity to implement a Bank-financed project. As of the date of the assessment, the RHCF is in compliance with its audit covenants of existing Bank-financed projects. The RHCF's previous and current project financial statements and auditing arrangements are satisfactory and it has been agreed that these will be replicated for the TB/AIDS Control Project. The annual audited project and entity financial statements will be provided to the Bank within six months of the end of each fiscal year and also at the closing of the project. In accordance with WB audit policy the first and final audits can cover the period up,to 18 months. The RHCF will also prepare semi-annual FMRs and submit them to the Bank within 45 days after the end of each reporting period. However, due to the fact that project beneficiaries - recipients of drugs and equipment - may be located - 32 - in all 89 territories of the Russian Federation, it can become difficult to ensure the proper safeguard of the project assets and proper distribution of drugs. Therefore, it is recommended that requirement for the semi-annual submission of the information on equipment and drugs receipt and distribution becomes the part of the Regional Participation Agreements with the regions. The RHCF prepared and agreed with the Bank on the formats of the equipment and drugs registers, which will be attached to these agreements, thereby meeting one of the conditions of Board presentation. Furthermore, due to the project size and large number of accounting transactions, it is also recommended that the RHCF hire an additional financial specialist - project accountant - for this project by the end of first year of project implementation. Although, current FM staff of the Foundation is experienced and highly qualified, it will be useful for them to get training on new WB financial management requirements before project effectiveness. 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 will not present any significant environmental concerns and will not finance rehabilitation or civil works. The project does not deal with disposal of medical waste. 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 environment 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. The project aims to control TB and HIV/AIDS/STIs epidemics through policy and institutional reformn and through improved prevention, outreach, diagnosis and treatment programs. People who suffer from TB and HIV/AIDS/STIs are generally subject to exclusion by both the public and health workers (especially HIV/AIDS patients who suffer most from stigmatization by society at large). Infected individuals, patients and the general public alike have limited access both to adequate or accurate information about these diseases and their treatment. The diseases take a huge toll on the economic and social status of families of those infected. The aim of this project is to avert the potential for this enormous human and economic devastation which will result if these epidemics are not properly and timely controlled. The major social groups affected by HIV/AIDS and STIs are the IDUs, CSWs, MSM and vulnerable youths. With regard to the TB epidemic the most affected groups are prisoners and young adults. The - 33 - latter are usually poor, homeless, or tenants in overcrowded housing units. These groups are clearly identified, although individual members of the groups are not necessarily identifiable. While the pilot experience in Tomsk provides good examples regarding TB in prisons, very little is known about the motivation and behavior and even less about effective ways to reach patients or those at risk to change their behavior, such as to get released prisoners to continue treatment. This is particularly true in the case of HIV/AIDS, but it applies to TB as well. However, in both cases, the interface between patients and those at risk with health care workers is known to be a critical point for both learning and action. That is, the flow of information and the nature of relationships between health care workers and TB, HIV/AIDS and STD patients must be understood better and modified significantly in order to reverse the epidemics. Some work is underway to close knowledge gaps, and much will be done under the project as well. One of the ways the project will help to address this knowledge gap in terms of reaching the high-risk groups, such as IDUs, CSWs and MSM, will be to involve the non-government sector to participate in project implementation. The results of a recent Conference on Cooperation between the Government and Civil Society Organizations on National HIV/AIDS Control Strategy, which was held in Moscow in April 2002, demonstrate that the non-govemment sector is often better placed than the govermnent agencies to carry out prevention and outreach programs. While there is considerable regional variation in terms of these organizations' abilities and their number and effectiveness, the conference revealed that there are over 100 registered organizations and associations involved in HIV prevention and control in Russia. These organizations have already gained substantial experience in prevention and outreach programs, psychological counceling, dissemination of information and protection of human rights. The design of the project recognizes the potential important role that NGOs can play in the control of the epidemics, particularly when combined and coordinated with improved diagnostic and treatment options which can only be provided by govermment agencies in Russia. Therefore, the project will support a collaborative effort by both govemment and non-government sectors to find their respective strengths to fight this epidemic. The project also benefits from some experiences gained and documented (sponsored by UNAIDS and NGOs) regarding the HIV/AIDS epidemic. As part of its strategic planning process, UNAIDS has carried out a situation analysis in 17 regions to identify general and specific factors influencing the development of the epidemic, and to make an inventory of existing local HIV prevention activities. Focusing primarily on major urban areas in the regions, the main conclusions of the study are summarized below: * HIV/AIDS is generally perceived to belong to the public health area exclusively. The epidemic is not understood as being a complex social issue threatening national security; * Drug use has become an element of the youth subculture. Curiosity, desire to become an adult, and an unsatisfied need in understanding, acceptance and respect on the part of adults and peers, are reported to be the main motives for drug use by youth; * Multiple sexual relationships, starting at 14-15 years old, are another recent development in the adolescent culture; * Young people lack information and have a poor understanding of HIV, its transmission and measures of protections; * Withdrawal and fear is what adults and non AIDS-related medical personnel feel towards HIV/AIDS. Up to 50 percent of young people share this attitude; * Isolation of HIV-infected people is still seen by health care professionals and the public as one of the most effective measures to prevent further spread of HIV; * Drug addicts are usually perceived by adults to be the scum of society, but youths see them as weak people; - 34 - * Commercial sex workers (the non-drug users) are viewed with compassion by many adults. They are perceived as disgraced by many educators. Young people find them to be girls and women improving their earnings to have a better life. Officials in the regions often deny that CSW exist; * Given the lack of reliable infornation, many oblast-level decisions on HIV prevention are based on stereotypes, to a significant extent. For example, the risks of HIV, drug use, and prostitution are attributed to so-called disadvantaged families; * While the formnation or change of individual behavior is best achieved through an individualistic approach, H1V and drug abuse prevention measures are often limited to mass actions, to which young people ascribe a low value; and * Mass media are one of the most important sources of information for both adults and young people. Nonetheless, the media are not well informed and thus often play a confusing role in shaping their audience's understanding of the epidemic. These conclusions illustrate the impact of social exclusion associated with HIV/AIDS and STIs, as well as the role that poor information plays in misguiding individuals. The project includes this information and experience in its design and will ensure that activities financed by the project will incorporate these lessons. The project will also finance additional studies during the project to ensure continuous and updated information based on which new interventions will be implemented. 6.2 Participatory Approach: How are key stakeholders participating in the project? Participatory Approach and Stakeholders. Project preparation has followed a participatory approach with beneficiaries and other stakeholders. These include notably the federal MOH and MOJ, oblasts' health and prison authorities, other donors, and NGOs (see reference to NGO Conference above). There is a need to develop further partnership activities with at-risk and vulnerable groups, especially for HI1V/AIDS. This will provide additional information about these groups, and strengthen their ownership of project activities. The preparation of subprojects (e.g., for AIDS prevention) will help continue this participatory approach. Information Consultation Partnerships Beneficiaries Groups at risk: Social Assessment Public Social Assessment Basic and enhanced TB IDU, CSW, MSM communication campaigns Baseline studies programs; Outreach programs; Harm reduction programs Vulnerable groups: Social Assessment Public Social Assessment Outreach programs Army, truck drivers, youth communication campaigns Baseline studies Russian Population Public communication Baseline studies Oureach programs campaigns Design of sub-projects Stakeholders _ Federal Government, Meetings, Project Meetings Project preparation & Regional Governments Documents Institutional Assessment implementation activities Baseline studies International organizations Meetings, Project Donors Meetings Project preparation & Documents Institutional Assessment implementation activities Local organizations Meetings, Project Donors Meetings Project preparation & Documents Institutional Assessment implementation activities 6.3 How does the project involve consultations or collaboration with NGOs or other civil society organizations? - 35 - Collaboration with NGOs. To address the difficulty of working with high-risk groups, the project will support partnerships with NGOs to undertake more systematic investigation, of the needs and motivations of different groups, and develop outreach and harm-reduction programs as well as targeted public information activities. The project will support the development of NGO/civil society coalitions on TB and HIV/AIDS that will foster the civil society collaboration and coordination at the regional levels. Support from the international donor community will be coordinated and the synergy between institutions will increase. Civil society involvement, started during project preparation, will continue during the implementation, monitoring and evaluation of the project. Each regional program of work, including the detailed assessment of needs at the local level, will involve NGOs. 6.4 What institutional arrangements have been provided to ensure the project achieves its social development outcomes? Institutional Arrangements. The social development outcomes of the project are intrinsic to it, namely to reduce the incidence of TB and HIV/AlDS and STIs by improving information flows, contacts and treatment, through a variety of measures ranging from general and targeted public information campaigns, outreach activities and treatment programs to institutional reforms at various levels. They are described in various parts of this document and will be refined based on experience, the results of commissioned studies and the participation of various stakeholders. 6.5 How will the project monitor performance in terms of social development outcomes? Monitoring and Evaluation. The project monitoring and evaluation program will be used to assess the achievement of social development outcomes. Reduction of social exclusion, for example, will be monitored from the point of view of those infected and at risk and that of the general public and health care workers. Access will also be assessed in terms of objective conditions and perceptions, as will be concrete results, such as changes in the incidence of the diseases and the affected populations. 7. Safeguard Policies: 7.1 Are any of the following safeguard policies triggered by the pro ect? Policy - -_ - - -i Triggered Environmental Assessment (OP 4.01, BP 4.01, GP 4.01) ( Yes * No Natural Habitats (OP 4.04, BP 4.04, GP 4.04) ( Yes * No Forestry (OP 436, GP 4.36) ( Yes * No Pest Management (OP 4.09) (9 Yes * No Cultural Property (OPN 11.03) (9 Yes * No Indigenous Peoples (OD 4.20) ( Yes S No Involuntary Resettlement (OP/BP 4.12) (U Yes * No Safety of Dams (OP 4.37, BP 4.37) ( Yes * No Projects in International Waters (OP 7.50, BP 7.50, GP 7.50) ( Yes * No Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60)* ()Yes * No 7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies. - 36 - F. Sustainability and Risks 1. Sustainability: The project hinges on three main elements without which its sustainability would be in jeopardy, including: (i) continued strong and broad political commitment to control the TB and HIV/AIDS/STIs epidemics, both on federal and regional levels; (ii) the provision of adequate financial resources, on federal and regional levels, for prevention, diagnostics and treatment of these diseases, including allocating sufficient resources for consumables, operation and maintenance of diagnostic centers and laboratories as well as adequate and stable supply of drugs; and (iii) strong capacity, both in government and non-government sectors, to continue to implement measures to control the epidemics after project completion. With respect to the first issue, existing strong Government commitment to control the TB and HIV/AIDS/STIs is likely to remain high and even to increase if the epidemics continue to pose a significant threat to the general population. During the course of the project, policies, guidelines, protocols and regulations will be developed as part of the legal and policy basis for interventions to control the epidemics. In this way, the project will greatly facilitate the environment in which the federal and regional govemments could operate when responding to the control of the epidemics. In addition, the project is designed in a way which envisions strong participation by the civil society in project implementation, particularly with respect to prevention and outreach activities for high-risk groups. These activities will complement government efforts and will provide additional support, information and feedback on the effectiveness of interventions and regarding the future growth of these epidemics. This collaboration will be essential and will strengthen the Government's ability and commitment to deal effectively with these epidemics. The provision of adequate financial resources at the federal and regional levels, both during and after the project, is essential and may require a reallocation of current government expenditure items in order to ensure that investments made under this project will be sustained. This is not perceived to be a high risk given that two/thirds of this project is aimed at improving TB control through a shift away from current reliance on expensive mass x-ray screenings and hospitalizations to less costly outpatient care with laboratory diagnostic services aimed at high-risk groups and symptomatic individuals. In the long-term, sustainability will be ensured in this respect. However, the ability of the Russian Government to provide adequate necessary drugs to treat a growing number of infected patients is viewed as a higher risk. A key project objective to mitigate this risk is to target preventive and outreach measures at the main high-risk groups of the population and to strengthen surveillance and monitoring, which will significantly reduce the number of newly infected, thereby decreasing the need for expensive drugs. The third element which will likely affect project sustainability is the implementation capacity required at all levels to effectively respond to the challenge of these epidemics. As mentioned above, one of the key project outputs will be the creation of an enabling legal and policy environment to support the implementation of the necessary measures to control the epidemics. The project will also provide support and training to staff of government and non-government institutions, during the five year implementation period, on all elements involved in the control of these epidemics, including strengthened surveillance, monitoring, quality assurance, prevention services, diagnosis, treatment and evaluation. - 37 - 2. Critical Risks (reflecting the failure of critical assumptions found in the fourth column of Annex 1): The following risks have been identified. Risk Risk Rating Risk Mitigation Measure From Outputs to Objective Large number of stakeholders M All stakeholders involved in project preparation and implementation. Participation of regional govemments in project preparation. Implementation arrangements strengthened at central and regional levels. Limited intersectoral cooperation M Inter-ministerial committee created at the between MOH, MOJ, and MOF could federal level and to be created at regional level delay project implementation. as part of project implementation. Significant improvement in collaboration already noted during project preparation. Difficulty of implementing project H Project implementation arrangements, activities in a large number of oblasts. implementation plans, and procurement logistics planned in advance. Strong political commitment of oblast govemors is one of the key eligibility criteria. RHCF to provide assistance and training to weaker oblasts. Flexibility in project design will allow to adapt to changing circumstances. Updated policies not adopted nationally M Project design includes strengthening of supervision, advocacy and dissemination of strategies. Political and public reaction to harm M Project to start implementation in oblasts where reduction activities for high-risk groups authorities already support harm reduction. In such as IDUs and CSWs may be addition, stakeholders workshops, public controversial. communication and mass media campaigns to be carried out as part of project implementation. Implementation of project activities through NGOs. High rates of treatment failure (See S This will be minimized through strong definition in Annex la) could result in technical supervision and by withdrawing significant numbers of patients resistant second-line drugs from any oblast or prison to all anti-TB drugs, which could have with more than a 10 percent rate of default. major consequences for the rest of the world. From Components to Outputs Limited experience with implementation M Government fully involved in all project of new protocols of treatment of TB and preparation activities. Experience from pilot MDRTB on a large scale. oblasts to be transferred to new participating oblasts. Training and assistance will strengthen institutional capacity. Because of uncertainty about the size of M Procurement plans will allow for buffer stock the epidemic in prisons and the incidence to take into consideration potential - 38 - of MDRTB, cost estimates for first- and underestimates. Close monthly monitoring will second-line drugs may be incorrect and allow to track the evolution of the epidemic could lead to potential shortages. and readjust procurement as necessary. Slow and inadequate counterpart M Emphasis will be placed on selecting those financing, particularly at the regional regions on the basis of their ability to finance levels. the necessary laboratory consumables, maintenance costs and the refurbishment of facilities. This will be closely supervised by the RHCF. Overall Risk Rating S The project combines a strategic use of evidence-based approaches with flexibility in the process of selecting project oblasts, consultations among stakeholders and attention to public information. Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk) 3. Possible Controversial Aspects: One set of controversies could arise from attempts to promote ideology instead of scientific evidence as the basis for effective control of TB and HIV/AIDS. For example, some groups may be uncomfortable with large-scale programs targeting high-risk core transmitters such as IDUs and CSWs. Yet, this approach is what makes strategic sense in Russia's situation. It is politically easier to advocate general information messages for the broad population on the basis that "we are all at risk", but there is no evidence that this generalized information campaign alone is an effective way to control HIV/AIDS epidemic with the profile seen in Russia. Indeed, a major problem is that targeted interventions for high-risk and bridge populations have been done on a scale that is far too small to have a significant impact in Russia, hence the need to scale up these interventions. For TB control, there could be controversies over the pace of adoption of a Russian strategy that is compatible with evidence-based guidelines from WHO. While some of these controversies are inevitable, their number will be reduced and their negative effects mitigated by employing the following measures: (i) a national program of press and public relations to be implemented by the government to gain public support. This will include press conferences, interviews with journalists of the broadcast and print media, distribution of easy-to-use fact sheets, regional meetings to conduct advocacy for local policy makers and NGOs; (ii) implementation of campaigns for the general population to raise awareness of TB and HIV/AIDS/STIs in order to foster a more supportive climate of public opinion; (iii) requirement in the Project Operational Manual that the project will be implemented in accordance with World Health Assembly guidelines on ethical issues in AIDS; (iv) establishment of a mechanism to receive and address complaints; (v) setting-up of a national technical advisory committee to provide advice on technical, social, ethical and legal issues; and (vi) intensive supervision, including regular meetings with donors and NGOs to be organized by Bank missions (which will be the natural continuation of a practice already started during project preparation). - 39 - G. Main Loan Conditions 1. Effectiveness Condition * The Project Implementation Agreement has been executed between the MOF, MOH, MOJ and the RHCF. * RHCF is fully operational with structures, functions and staffing necessary to start project implementation, satisfactory to the Bank. * An independent auditor, acceptable to the Bank, has been selected. * The Project Operational Manual, satisfactory to the Bank, has been adopted by the Working Group. 2. Other [classify according to covenant types used in the Legal Agreements.] Conditions for Board Presentation * The Management Information System (MIS) has been set up and is operational. * Formats of the reports by the regions, participating in the project, on the receipt and distribution equipment, have been agreed with the Bank, to be attached to the Regional Participation Agreements with the participating regions. Conditions of Disbursement * Payment of the Front-end-fee (US$1.5 million) by the Borrower to be made prior to any disbursement under the proposed loan. * Before the disbursement of loan proceeds for equipment and supplies under Component 1.3 (Improvement of TB Case Detection and Diagnosis) and Component 1.4 and (Improvement of TB Treatment), relevant parts of a federal strategy for TB control, acceptable to the Bank, have been developed in collaboration with WHO and officially approved by the Borrower for country-wide implementation. Other Conditions: * The procurement documents for the first year's activities will be completed by project effectiveness. The delay in preparing these documents is a result of delays in preparing the project, the lack of a local project preparation unit until project negotiations and substantial changes made to the project structure and content during technical discussions in June 2002. * The RHCF shall enter into Regional Participation Agreements with each participating region prior to initiating any procurement actions for health facilities in such a region. * Regions participating in the project will be required to meet specified criteria, as detailed in the POM, including (i) designating local staff to coordinate project activities on the local level, (ii) facilities receiving equipment financed by the project must be (made) operational and sound in terms of their structure, (iii) adequate financial resources must be made available to maintain newly equipped facilities and equipment in terms of necessary consumables and supplies as well as basic operation and maintenance. -40 - Procurement of anti-TB drugs: * Use of Government budget for drug procurement: The Government will procure as large a proportion of the required first-line anti-TB drugs as it can afford from domestic sources, using its own funds. As part of due diligence, the MOH and MOJ will ensure that these drugs comply with quality standards endorsed by WHO. The Bank will be guided by WHO assurances on this subject. * Use of loan proceeds to procure second-line drugs from international sources: Second-line drugs will be procured on terms and procedures acceptable to the Borrower and Bank. The RHCF will not initiate any procurement actions with respect to such drugs for any health facility unless this health facility is in full compliance with the requirements of both the MOH and the WHO for the use of such drugs. * Other use of loan proceeds to procure pharmaceuticals: the guidelines for procurement of pharmaceuticals under Bank procurement guidelines will apply. Project Management: * For the duration of the project, the Borrower shall maintain the RHCF with staff, facilities, structure and other resources satisfactory to the Bank. * For the duration of the project, the Borrower shall maintain a Working Group to support project implementation. * The Borrower shall maintain the Project Operational Manual in form and content satisfactory to the Bank and shall ensure that Project implementation is carried out in accordance with the procedures, as detailed in the POM. Financial Management: * The Borrower shall maintain a financial management system, including records and accounts, and prepare financial statements in a format acceptable to the Bank. * The Borrower shall prepare and furnish to the Bank quarterly Financial Monitoring Reports. * The Borrower shall maintain an inventory of records and conduct an annual check of the equipment acquired with project funds. * The Borrower shall have all records, accounts and financial statements for each fiscal year audited, in accordance with auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank. * The Borrower shall furnish to the Bank, not later than six months after the end of each fiscal year, certified copies of the financial statements for the year audited and an opinion on such statements and an audit report, acceptable to the Bank. -41 - Monltoring/Reportdng: * Pre and post monitoring and evaluation will be carried out to assess the effectiveness of particular programs throughout the project period. * The Borrower shall maintain policies and procedures adequate to enable it to monitor and evaluate on a ongoing basis the implementation of the project and the achievement of project objectives. * The Borrower shall submit to the Bank a Mid-term report integrating the results of the monitoring and evaluation activities on the progress achieved during project implementation and setting out recommendations to ensure efficient project implementation and achievement of project objectives. This report should be furnished to the Bank for review by May 1, 2006. * The Borrower shall review with the Bank, by June 1, 2006, or such later date as the Bank shall request, a Mid-term Review Report, and agree on measures required to ensure efficient completion of the project. * The Borrower shall cause the RHCF to submit to the Bank on annual and on semi-annual basis project progress reports for its review and approval. H. Readiness for Implementation E0 1. a) The engineering design documents for the first year's activities are complete and ready for the start of project implementation. O 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. 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality. 1 4. The following items are lacking and are discussed under loan conditions (Section G): The procurement documentation for the first year's activities will be completed by Project effectiveness. 1. Compliance with Bank Policies 1 1. This project complies with all applicable Bank policies. ] 2. The following exceptions to Bank policies are recommended for approval. The project complies with all other applicable Bank policies. Olusoji 0. Adeyi Armini H. Fidler; Annette Dixon Julian F. Schweitzer Team Leader Sector Manager/Director Country Dlmctor -42 - Annex 1: Project Design Summary RUSSIAN FEDERATION: TUBERCULOSIS AND AIDS 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) Large-scale use of Project reports Government adopts and Improve health status, services evidence-based approaches to maintains a commitement to and finance (Annex B9 of the control of (i) HIV/AIDS & large-scale implementation of CAS dated June 6, 2002). STIs and (ii) TB in areas disease control programs covered by the project. based on up-to-date scientific evidence. Reduce the rate of increase of Special studies, e.g., Project design updates as HIV prevalence among virological, epidemiological appropriate high-risk groups in areas and behavioral surveillance. covered by the project. Reduce the prevalence of TB disease and the incidence of HIV infection. Project Development Outcome / Impact Project reports: (from Objective to Goal) Objective: Indicators: The development objective of the project is to protect the TB and MDRTB National statistics provided in Strategies adopted nationwide Russian population and their formats agreed with WHO, economy from uncontrolled a) Approval by MOH of including cohort analysis. Good intersectoral epidemics of HIV/AIDS and protocols for TB diagnosis, cooperation tuberculosis (TB). treatment and surveillance, Project Baseline Studies consistent with evidence-based Project activities implemented approaches that are agreed Project Evaluation countrywide or in a significant with the World Health number of Oblasts. Organization. b) Improvements in effectiveness and efficiency ofTB diagnosis and treatment over baseline values in eligible oblasts and reference centers, as measured by the following criteria: * Leveling off or decrease by 5% or more in new TB cases; * Leveling off or decrease in new MDRTB cases; Decrease in the tuberculosis case fatality rate among new cases by at least I0%. HIV/AIDS and STDs a) Approval by MOH of Epidemiological and Updated procotols of - 43 - protocols for diagnostics, behavioral surveillance [See diagnostics, treatment, treatment, epidemiological and WHI-I/UNAIDS. Guidelines epidemiological and behavioral surveillance, in line for Second Generation behavioral surveillance and with Russian legislation and Surveillance. 2000.] care will be nationally consistent with evidence-based approved approaches that are endorsed by the WHO and UNAIDS. Support for harm reduction b) Reduction in the rate activities at the Government of increase of HIV prevalence level (or reduction in the prevalence rate) among vulnerable population sub-groups, such as IDUs, CSWs, and newborns of HIV-infected mothers, measured against baseline values. c) Reduction in the prevalence rate of other specified STIs among vulnerable population sub-groups, measured against baseline values. -44- Key Performance Data Collection Strategy Hierarchy of Objectives Indicators I I Critical Assumptions'- Output from each Output Indicators: Project reports: (from Outputs to Objective) Component: TB Component Approval by MOH of New protocols on TB TB National Strategy Government approves and protocols for TB diagnosis, diagnosis, treatment and implements Strategy treatment and surveillance, surveillance, produced and National and WHO health consistent with evidence-based disseminated countrywide. statistics Component implemented as approaches endorsed by the agreed World Health Organization. Staff trained in the Project Baseline Studies implementation of the updated Component design updated as Improvement in effectiveness national protocols. Project Evaluation approrpiate and efficiency of TB diagnosis and treatment over baseline Special studies values in eligible oblasts and Project activities expanded to reference centers, as measured cover population of 50 million Project Reports by the following criteria: in 89 oblasts by the end of the project; * Leveling off or decrease by 5% or more in new TB cases; * Leveling off or decrease in new MDRTB cases; Decrease in the TB case Improvement in effectiveness fatality rate by at least 10%. and efficiency of laboratory confirmation (microscopy and/or culture) of tuberculosis disease, as shown by its use in at least 50% of new pulmonary tuberculosis cases in the project area; Treatment initiation and registration of standardized treatment categories given by direct observation for at least 95% of patients; Treatment success among new cases confirmed by microscopy (as per WHO recommended definitions) increased to at least 75% in the project area; Stabilization in the proportion of primary drug resistance based on systematic drug resistance surveillance in areas of program operation; Strengthening of the system - 45 - for procurement and distribution of anti-tuberculosis drugs to ensure continuous supply of good quality drugs in the project area; Introduction of quality control system in all laboratories; Establishment of at least 6 centers for training health workers with revised protocols of diagnosis, treatment, monitoring and reporting; Establishment of guidelines for staff training in effective supervision of the implementation of revised protocols for diagnosis, treatment, monitoring, and reporting. HIV/AIDS and STDs a) Approval by MOH of Updated protocols for AIDS National Strategy Government approves and protocols for diagnostics, diagnostics, treatment, implements Strategy treatment, epidemiological and epidemiological and National and WHO health behavioral surveillance, in line behavioral surveillance of statistics Component implemented as with Russian legislation and HIV/AIDS/STIs formulated, agreed consistent with evidence-based produced, and disseminated Project Baseline Studies approaches that are endorsed countrywide; Component design updated as by the WHO and UNAIDS. Project Evaluation appropriate Staff trained in the b) Reduction in the rate of implementation of the updated Special studies increase of HIV prevalence (or protocols for diagnostics, reduction in the prevalence treatment, epidemiological Project Reports rate) among vulnerable and behavioral surveillance of population sub-groups, such as HIV/AIDS/STIs, with IDUs, CSWs, and newborns of reporting as per standardized HIV-infected mothers, definitions on revised formats measured against baseline from all areas of the country; values. Improved co-ordination c) Reduction in the among health facilities, prevalence rate of other HIV/AIDS control centers, specified STIs among STI services, narcology and vulnerable population TB services; sub-groups, measured against baseline values. Project activities implemented in eligible oblasts as agreed at Negotiations. Updated epidemiological -46 - surveillance data on HIV and STIs. Establishment of national coordination centers as planned under the project. Strengthening of National Coordination Center that conducts special studies. Strengthening the laboratory capacity for HIV related testing to do the following: - distinguish HIV subtypes - HIV PCR - CD4/CD8 -viral load - detect HIV resistance to antiretroviral drugs; Improvement of the national quality control system for HIV related laboratory tests; Establishment and/or expansion of at least 30 harm reduction programs. Establishment and implementation of anti-drugs and HIV prevention programs in 100% of prisons in eligible regions; Preventive treatment for at least 90% of HIV positive pregnant women and their newborns according to approved protocols; % women giving birth who were tested for HIV; % HIV-seropositive women giving birth who received prenatal prophylactic antiretroviral drugs; % HlV-exposed neonates who received prophylactic antiretroviral drugs. Improvement of the quality - 47 - and cost-effectiveness of care provided to people living with HIV/AIDS, including diagnosis and treatment of opportunistic infections and palliative care. Contribute to a supportive environment for people living with HIV/AIDS. Project Management, Monitoring and Evaluation Establish and maintain RHCF. Project Reports Train staff. Ensure a functioning MIS. Ensure auditing in accordance with Loan Agreement. Carry out project evaluation and monitoring. Carry out special studies -48 - | Key Performance 1 Data Collection-Strategy | Hierarchy of Objectives | Indicators - - J J I - - Critical Assumptions Project Components / Inputs: (budget for each Project reports: (from Components to Sub-components: component) Outputs) TB Component $217.30 million Project Reports Project implemented as agreed (1) Policies, strategies and Surveillance reports Government maintains a protocols for TB control commitment to large-scale implementation of programs (2) Strengthening surveillance, based on scientific evidence, monitoring, quality control as recognized by the and quality assurance intemational community through WHO (3) Improvment of TB case detection and diagnosis Project design updated as appropriate (4) Improvement of TB treatment HIV/AIDS Control $65.32 million Project Reports Project implemented as agreed (1) Policies, strategies and Surveillance reports Government maintains a public information for commitment to large-scale HIV/AIDS control implementation of programs based on scientific evidence (2) Strengthen surveillance and monitoring Project design updated as appropriate (3) Laboratory service and blood safety improvement (4) Prevention and control of STIs (5) Targeted prevention of HIV/AIDS and STIs in high risk groups (6) Prevention of Mother-to-Child Transmision Project Management, $3.56 million Project Reports Implementing agencies Monitoring & Evaluation establish and maintain full (I.) RHCF operations range of staff with skills (2.) Training and Study Tours required for the work for RHCF Staff (3.) Project Audits (4.) Monitoring and Evaluation -49 - Annex 2: Detailed Project Description RUSSIAN FEDERATION: TUBERCULOSIS AND AIDS CONTROL PROJECT Overview: The project will support the development and large-scale implementation of interventions that are based on up-to-date scientific evidence. In that context, the major project inputs will be directed at updating and/or dissemination of strategies, guidelines and protocols; assessment of needs as a basis for effective planning, monitoring and evaluation; training and on-the-job learning to improve the local capacity for effective implementation; supply of equipment and consumables required to improve the technical quality of diagnostic and therapeutic activities; and close attention to project monitoring and evaluation. By Component: Project Component I - US$217.30 million Component I - Control of Tuberculosis 1.1. Policies, Strategies and Protocolsfor TB ControL This sub-component will support the development and/or revision of legislation and regulations, their publication, and training of personnel in the programmatic implications of the regulations. It will support the next phase of work of the Technical Working Group and the High Level Working Group in developing, publishing and disseminating evidence-based protocols and guidelines for the control of TB. The sub-component will include a Plan for Restructuring of TB services in line with the legislation and regulations developed and revised under the first sub-component. This work will cover an assessment of needs (including what is specifically financed by the loan), development of strategy for restructuring, the preparation of a plan to implement the strategy and training (including annual conferences on TB Strategy and Services for officials from the Federal, Okrug and Oblast levels). It will also support a Public Information Campaign on the problem of TB and the efforts to control TB. The main activities will include the design and production of materials, implementation support and evaluation (pre-and post-). 1.2. Strengthening Surveillance, Monitoring, Quality Control and Quality Assurance This sub-component will support an assessment of needs (for design of TB surveillance, monitoring, quality control and quality assurance); the preparation of a workplan and the implementation of that workplan at each level of the system. The specific inputs into implementation will include training; implementation support (local and foreign consulting services); logistics expenses for supervision and monitoring; equipment, software and vehicles, as well as the publication of forms for recording and reporting. The sub-component will include pre-and post-evaluation of the system for surveillance, monitoring, quality control and quality assurance. 1.3. Improvement of TB Case Detection and Diagnosis This sub-component will include an assessment of needs and a specification of the selection criteria for - 50 - facilities, staff and equipment. It will provide implementation support in the form of local and foreign consulting services. It will include training for staff in bacteriology and radiology in line with the evidence-based guidelines and protocols. Equipment and supplies will be provided for bacteriology and diagnosis, including the MOH and MOJ facilities and external quality control. A total of approximately 200 stationary x-ray equipment will be provided for eligible MOH and MOJ facilities. The sub-component will include pre-and post-evaluation of the system for TB case detection and diagnosis. 1.4. Improvement of TB Treatment This sub-component will support efforts to improve TB treatment outcomes. Accordingly, it will include an assessment of needs (for the system, facilities and staff); training in clinical management of TB patients under the new guidelines and protocols; implementation support through local and foreign consulting services, as well as logistic expenses for monitoring and supervision. This sub-component includes a US$10 million specifically for second-line anti-TB drugs for the MOJ facilities. It also includes a reserve fund of US$8 million for first-line drugs and/or second-line anti-TB drugs, for the MOH and the MOJ service delivery systems. There is some flexibility in the potential use of these funds for drug procurement. Nevertheless, it is important to note the guiding principles: (a) Use of Government budget apart from the loan: Government will procure as large a proportion of the required first-line anti-TB drugs as it can afford from domestic sources, using its own funds. As part of due diligence, the MOH and the MOJ will ensure that these drugs comply with quality standards as endorsed by the WHO. The World Bank will be guided by WHO assurances on this subject. (b) Use of loan proceeds to procure second-line drugs from international sources: Second-line drugs will be procured on terms and procedures acceptable to the Borrower and Bank. The RHCF will not initiate any procurement actions with respect to such drugs for any health facility unless this health facility is in full compliance with the requirements of both the MOH and the WHO for the use of such drugs. (c) Other use of loan proceeds to procure pharmaceuticals: In general, the normal guidelines for procurement of pharmaceuticals under Bank procurement guidelines will be applicable. Eligibilitv Criteria for Regions to participate in the TB Control Component There are two sets of criteria for the eligibility of regions to participate in this component of the project, using the proceeds of the loan. The first set covers financial eligibility of each region and is beyond the scope of this annex. For those regions that meet the criteria for financial eligibility, the second set of criteria consist of Technical Guidelines. These are outlined below. More details are contained in the Project Operational Manual. a. For the control of drug-sensitive TB: Willingness to implement a TB control program in accordance with Federal guidelines for surveillance, diagnosis and treatment, provided that such guidelines are agreed with or endorsed by WHO. b. For the control of multi-drug resistance TB: All the conditions for drug-sensitive TB shall apply, as outlined in paragraphs (a), (c) and subsequent sections of these criteria. In addition, the following conditions shall apply: b. 1. No proceeds of the World Bank loan will be used for treatment of MDR-TB in any region without the prior establishment of an effective TB control system in line with WHO guidelines. b.2. Willingness of the region to implement treatment of MDR-TB, to be verified through an official letter from the regional administration. c. Willingness to implement a TB-control program: This will be verified by an official letter of commitment from the regional administration, specifying a commitment to: (a) the appointment of a regional coordinator to be paid from the regional budget, (b) the participation of local health care staff, epidemiological and social services in project implementation, and (c) full introduction of a monitoring and evaluation system, including cohort analysis, in compliance with WHO guidelines. d. Accessibility: Reasonable access for monitoring and supervision, to be determined jointly by the regional administration and the RHCF, in consultation with WHO. e. Coordination: Plan for coordination between the prison and civilian systems, including laboratory services and post-discharge follow up, as much as feasible in the local context. f. Social Support: Provision by the regional government of social support to patients (such as food, free bus pass, social services), either from the government budget, NGOs or other grant-financed sources. g. Drug supply and management system: The existence of/or plans to establish, an effective system of drug supply, distribution and management for TB control, satisfactory to the WHO. Project Component 2 - US$65.32 million Component II - Control of HIV/AIDS 2.1. Policies, Strategies and Public Inform ation for HIVIAIDS Control This sub-component will support further updates of policies and the development of strategies for HIV/AIDS control in the Russian Federation, including the establishment of a Coordination Center, the preparation of technical proposals to support legislation and the formulation of regulations to ensure a more supportive policy environment for effective programs. A public information campaign will include formative research for the design and production of appropriate materials and messages; the implementation of the campaign and its pre-and post-evaluation. The sub-component will cover an assessment of the availability of commodities for prevention vis-a-vis projected needs, as well as the procurement of such commodities as may be essential. This sub-component will support the early phase of technical work on a concept and baseline studies for the development of vaccines against HIV in the Russian Federation. In view of the highly technical nature of this task, Russian specialists will work with their counterparts in reputable international research institutions and in consultation with multilateral agencies working on vaccine development. Initial work will include the preparation of terms of reference, protocols for virological surveillance and - 52 - institutional requirements for vaccine preparedness. During negotiations, at the request of the Russian Delegation, the Bank agreed to help convene a scientific consultation among Russian and international experts on HIV vaccines. The purpose of the consultation is two-fold: (i) to review the status of work on HIV vaccine in Russia and (ii) to increase the chances that a Russian proposal for HIV vaccine development, to be prepared with support from the Project, will attract international grant financing. 2.2. Strengthening Surveillance & Monitoring This sub-component will include the establishment of a Coordination Center for Treatment, Diagnosis and Psychosocial Support. It will support an assessment of needs and a workplan, focusing on gaps in epidemiological surveillance, behavioral surveillance and virological surveillance (to include sensitivity and resistance to anti-retroviral drugs). This sub-component will also cover the actual conduct of surveillance each level of the system, including training, implementation support (local and foreign consulting services) and logistics expenses for supervision and monitoring, equipment and software, as well as the publication of forms for recording and reporting. The sub-component will include pre-and post-evaluation of the system for surveillance and monitoring. 2.3. Laboratory Service and Blood Safety Improvement Laboratorv services: This component will support an assessment of needs and specify the selection criteria (including facilities and equipment) for laboratories in immunology, hematology and virology. The essential functions will include laboratory diagnosis of HIV infection; viral loads, immune status (CD4/CD8 cell counts) and resistance to antiretroviral drugs. Blood safety: The component will also cover needs assessment, system design and inputs for safe blood banks to prevent HIV transmission through donated blood. It will include the development and publication of guidelines, provision of blood banking equipment and supplies, as well as training. 2.4. Prevention and Control of STIs This sub-component will support the establishment of a Coordination Center and an assessment of needs in the dermato-venereological service. It will include the development of evidence-based guidelines and protocols for STI control. Training will be provided for the staff of the dermato-venereological services, the AIDS Centers, Family Planning and Reproduction Centers, Narcologists and Infectionists. All training will be focused on the application of evidence-based guidelines. Twenty (20) diagnostic and treatment centers will be established and/or upgraded, to provide services for Injection Drug Users (IDUs) and Commericial Sex Workers (CSWs). The main activities will include: an assessment of the incidence and prevalence of STIs and HIV among IDUs; implementation support (local and foreign consulting services); provision of equipment and furniture, as well as training on the basis of needs assessment. The component will also support the establishment and/or upgrading of three (3) specialized youth-friendly centers for children and teenagers with STIs. The main activities will include: implementation support (local and foreign consulting services, equipment, furniture and training on the - 53 - basis of needs assessment). The sub-component will include pre-and post-evaluation of the system for the prevention and control of STIs. 2.5. Targeted Prevention of HIV/AIDS and STIs in High Risk Groups This sub-component will include an assessment of needs. It will support the establishment of a Coordination Center for Training in High-Risk Group Activities; development and implementation of training activities, as well as implementation support (local and foreign consulting services). It will support the design and implementation of targeted interventions, including: a) harm reduction for IDUs ( needs assessment, establishment of a Coordination Center, printing of special education materials, development of a training program, training of staff, development and implementation of approximately 30 harm reduction programs for IDUs, testing of new treatment methods for IDUs); b) prisoners; c) commercial sex workers; d) men having sex with men (MSM); e) vulnerable youth; f) members of the armed forces (Ministry of Defense, MOD); g) health workers; and h) mobile populations and other vulnerable, at-risk groups. The sub-component will include pre- and post-evaluation of targeted preventions of HIV/AIDS and STIs in high-risk groups. 2.6. Prevention of Mother-to-Child Transmission (pMTCT) This sub-component will support an assessment of needs for pMTCT. It will cover the development and publication of protocols in line with current scientific evidence; implementation support (local and foreign consulting services); training; procurement of drugs for pMTCT in line with the evidence-based protocols; and strengthening of two (2) reference treatment centers for HIV-infected children (to include training, equipment and supply of drugs). Project Component 3 - US$ 3.56 million Component III - Project Management, Monitoring and Evaluation 3.1. Project Implementation (RHJCF Operation) The project will be implemented over a five year period and all implementation arrangements will be governed by the guidelines and procedures set out in the Project Operational Manual (POM) an,d in accordance with the Project Implementation Plan (PIP). Given the intentional and inherent flexibility of project design, the PIP will be an evolving document aimed at supporting the overall achievement of project objectives. Any major changes to either the POM or the PIP will be preceded by technical consultations between the project implementing agencies and the Bank and will require Bank final review and approval. The overall responsibility for project implementation will reside in two Ministries, the MOH and MOJ. To ensure project oversight and interagency coordination, the project will be supported by an advisory - 54 - committee - a Working Group (WG). The WG will meet regularly to review project progress against agreed timetables and stated project objectives, take necessary decisions with respect to pending implementation issues, and report to both ministries and to the Russian Government at large on the overall project implementation. Detailed WG responsibilities will include: (a) manage the RHCF activities connected with implementation of the Project; (b) introduce to the Government of the Russia Federation proposals and document drafts required for project implementation; (c) coordinate the Government draft decisions connected with the Project implementation; (d) approve membership of Evaluation Committee(s); (e) approve lists and quantities of goods to be procured under the Project; (f) study local supervisory board reports regarding compliance with the loan terms; (g) study audit reports; (h) make alterations and amendments to the Project control procedure; and (i) solve any other problems connected with the Project implementation excluding problems of the other Project management. The responsibility for day-to-day proiect implementation, particularly with respect to procurement, disbursement and financial management functions will rest with the project implementation unit - the Russian Health Care Foundation (RHCF) - which currently supports implementation of two on-going Bank financed health projects. The RHCF will sign a Project Implementation Agreement with the MOF, MOH and the MOJ, as a condition of Loan Effectiveness, to enable it to act on behalf of these ministries in the daily implementation of the project. The RHCF has the status of an autonomous non-commercial organization, founded by the Federal Center for Project Finance, Clinical Hospital #1, and the National Foundation for Housing Reform with the participation of MOF, MOH and the MEDT. The status and structure of the RHCF provides an appropriate balance between its independence in terms of daily work and its monitoring by key ministries (Health, Finance, and Economy) whose representatives sit on the Foundation's Trustee Council. The Minister of Health is the President of the Foundation. In accordance with its Charter, the main objective of the Foundation is to assist the government to identify, prepare and implement projects in the field of health care, medical industry and the social sector, financed by intemational financial organizations, in the most expeditious and efficient manner. The RHCF has acquired significant experience in assisting in the implementation of Bank-financed projects, including the Health Reform Pilot Project (currently under implementation-expected closing date is October 31, 2003) and the Medical Equipment Project (closed June 30, 2001). The RHCF has also participated in the preparation of the Health Reform Implementation Project (scheduled to be presented to the Bank Board of Directors on March 18, 2003) and in the preparation of the proposed project from November 1999 - June 2001, and again starting in the fall of 2002 and continuing at present. In early 2000, the Foundation underwent a major restructuring of its functional and project departments to achieve maximum efficiency while implementing several projects. During 2001, the RHCF has strengthened its accounting and financial management systems, and has improved its project management reports. To help prepare and implement the proposed project efficiently, the conditions of Negotiations included the establishment of the Project Implementation Unit (PIU) and selection of key PIU staff as well as the preparation of the draft Project Operational Manual (POM), including a Project Implementation Plan (PIP) and the Project Procurement Plan (PPP). All of these conditions were met prior to Negotiations. The staff of the RHCF who will work on a full-time basis will include a Project Director, two coordinators for the TB Component, four coordinators for the HIV/AIDS Component, and 2 Procurement Officers, one for each of the components given the complexity of the operation. The - 55 - RHCF will be supported by a Disbursement Officer, a Financial Specialist, Project Accountant, a Translator and an Administrative Assistant. Other staff of the RHCF will also work on the implementation of the project but on a part-time basis and will include the General Director of the RHCF, the head of the Financial Department, Chief Accountant, Lawyer, and other support staff who currently work at the RHCF. The Project Director will report regularly to the WG, and if/when necessary directly to the MOH and MOJ Ministers and senior staff, on the progress of implementation and will to alert them of any project management, procurement, financial and other issues that arise during the course of implementation so that these issues could be resolved speedily and efficiently. Likewise, Project Component Coordinators will maintain continuous contact with MOH and MOJ Ministry staff on the federal and regional levels and will report to the Project Director regarding any implementation issues. In view of the large and growing number of local and international institutions working on TB and HlV/AIDS/STIs in the Russian Federation, the RHCF will coordinate all of its activities with other actors (donors, institutions, NGOs, etc) and particularly with WHO (providing parallel financing to the project), to avoid wasteful overlaps and gaps. The RHCF will ensure that regular donor consultations and meetings take place and will report to the Government and to the Bank on any new developments and proposals. While overall project coordination and implementation will be handled by the RHCF (through component coordinators), day-to-day implementation at the regional and local levels will be carried out mainly by local MOH and MOJ staff, with support and coordination from the RHCF. In order to participate in the project, each region will need to sign a Regional Participation Agreement with the RHCF and to designate staff who will coordinate project activities on a local level as part of the basic selection criteria for that region's participation in the project. (see Section G for Other Loan Conditions) Other selection criteria for participation include: (i) ensuring that facilities receiving equipment under the project are in good operating order and adequate in terms of their ability to support new equipment; if the needs assessments find that facilities need mild or substantial refurbishment, the region will be required to finance such refurbushment from its budget prior to the delivery of the equipment; and (ii) adequate financial resources will be made available for operation and maintenance of facilities and equipment, including financing supplies and consumables essential for efficient functioning of equipment to support the key project objective of timely diagnosis and treatment of disease. As regions will differ in their implementation capacity and performance, the RHCF has designed a strategy whereby, together with the MOH and MOJ, it could provide additional assistance to improve the capacity of weaker regions. 3.2. Training and Study Toursfor RHCF Staff The RHCF staff will receive necessary training on procurement and disbursement in accordance with bank guidelines. RHCF staff working on the implementation of the project (component coordinators) will participate in select training activities during the course of the project in order to improve their knowledge and skills. Project management training will be provided to the RHCF management, if necessary and as desired. All training activities for the RHCF staff will be part of the Project Training Plan which will need to be reviewed and approved by both the MOH and MOJ and the Bank. Any proposed changes to this plan will need to be communicated and approved prior to actual training events and seminars. The RHCF project team will also be responsible for the coordination of training under the project in general and will be assisted by a logistics firm in this regard. Staff will keep continuous contact with those institutes and or agencies providing the necessary training and will provide additional support and liaison to ensure that training events run smoothly. - 56 - 3.3. Project Audits The RHCF will be responsible for ensuring full compliance with financial management standards acceptable to the Bank and for maintaining a financial management system, including records and accounts, and to prepare quarterly financial monitoring reports. The project's records, accounts and financial statements will be audited on an annual basis, in accordance with acceptable International Standards on Auditing (ISA) by independent auditors and an audit report will be submitted to the Bank for review not later than six months after the end of each fiscal year. 3.4. Monitoring and Evaluation Baseline assessments and monitoring and evaluation are core elements of each component in the project design (see Annex I for Project Design Summary and Annex 2 for Detailed Project Description). The Project Management, Monitoring and Evaluation Component includes an overall provision for monitoring and evaluation, incluing the establishment of an effective MIS system to support this objective. The MIS system was set up as a condition of Board presentation. This component will be administered through the RHCF which will be responsible for producing an annual report integrating the results of the monitoring and evaluation activities of the project progress. This is seen as an essential part of implementation which will provide information on the progress of each component and sub-component as well as on a broader impact of the project and the effect on the overall control of TB and HlV/AIDS/STIs epidemics in Russia. The technical criteria for monitoring and evaluating the TB component are based on WHO guidelines. The technical criteria for monitoring and evaluating the HIV/AIDS and STI component are based on guidelines endorsed by WHO and UNAIDS. (See, for example; (i) UNAIDS. National AIDS Programs: A Guide to Monitoring and Evaluation. June 2000. (ii) UNAIDS and WHO. Evaluation of a national AIDS program: a methods package. Prevention of HIV Infection. 1999). Technical monitoring of the TB component will be supervised and guided by WHO. The assistance of WHO is important because of the need to monitor the performance of participating oblasts and ensuring that the proper diagnosis and treatment regimens are used both for the basic and enhanced TB packages. The monitoring of drug use is particularly important to reduce the risk of drug resistance. - 57 - Annex 3: Estimated Project Costs RUSSIAN FEDERATION: TUBERCULOSIS AND AIDS CONTROL PROJECT Local Foreign Total Project Cost By Component US $million US $million US $million Control of Tuberculosis 97.47 108.41 205.88 Control of HIV/AIDS 41.51 23.81 65.32 Project Management, Monitoring and Evaluation 3.49 0.07 3.56 Total Baseline Cost 142.47 132.29 274.76 Physical Contingencies 1.94 4.12 6.06 Price Contingencies 2.17 3.19 5.36 Total Project Costs' 146.58 139.60 286.18 Front-end fee 0.00 Total Financing Required 146.58 139.60 286.18 Local Foreign Total Project Cost By Category US $million US $million US $million Goods 82.81 136.82 219.63 Works 6.13 0.00 6.13 Consultant Services 16.93 2.41 19.34 Training and Study Tours 15.10 0.37 15.47 Operating Costs, Operation & Maintenance 25.61 0.00 25.61 Total Project Costs 146.58 139.60 286.18 Front-end fee . 0.00 Total Financing Required 146.58 139.60 286.18 Identifiable taxes and duties are 28.29 (US5m) and the total project cost, net of taxes. is 257.9 (US5m). Therefore, the project cost sharing ratio is 58.16% of total project cost net of taxes. - 58 - Annex 4: Cost Benefit Analysis Summary RUSSIAN FEDERATION: TUBERCULOSIS AND AIDS CONTROL PROJECT Background: choice of interventions Tuberculosis. The choice of interventions under the project is based on cost-effective approaches to the control of TB and HIV/AIDS as documented in the international literature. For example, Borgdoff et al. examined the impact of TB control measures on mortality, transmission and constraints to scaling-up. They concluded that treatment of smear-positive TB, using the WHO recommended DOTS, has by far the highest impact, with a cost-effectiveness ranging from US$5 per disability-adjusted life year (DALY) gained to US$40 per DALY gained. Treatment of smear-negative cases has a cost per DALY gained of up to US$100 in low-income countries and up to US$400 in middle-income settings (Borgdoff, M. W., Interventions to reduce TB mortality and transmission in low- and middle-income countries ". Bulletin of WHO 2002; 80:217-227.) In terns of public interventions in TB, there is compelling case on grounds of supply-side market failures, the concentration of disease among the poor, public good attributes of TB control. (Jack, W. The public economics of TB control. Health Policy, 57 (2001), 79-96.) HlV/AIDS/STIs. The choice of interventions is based on the best available published analyses on what works in the control of HIV/AIDS and STIs, as well as the cost-effectiveness of specific interventions. The published literature includes a compendium of materials available from UNAIDS (see "Economics in HIV/AIDS planning: Getting priorities right", June 2002, available at www.unaids.ork), as well as separate publications that are readily available in the international literature. The project includes both HIV prevention and treatment. Summary of Benefits and Costs: Economic Analysis This annex presents a summary of the results of the cost-benefit analysis of the project, based on the program's costs and the measurable economic benefits expected to flow from the implementation of the program. Benefits are analyzed in terms of the lives saved, cases averted, disability avoided or diminished, work absenteeism avoided, and health care costs saved (e.g., from reductions in inpatient care of changing protocols for TB patients). The project will also contribute to decreasing poverty, as TB is linked to poor living conditions and is a factor that contributes to low labor productivity. According to the results of epidemiological and economnic projection models, the project will potentially save over 150,000 lives by strengthening the government's TB and AIDS programs and reducing the demand for healthcare services, thereby freeing resources for other programs. The ratio of benefits to costs, considering the full cost of the project will yield 7.3 dollars of benefits (direct and indirect) for each dollar invested. The project will yield a present value of net benefits, after investment and recurrent costs, of US$377 million over five years and about US$1.4 billion over ten years and produce an internal rate of return (IRR) of 143 percent (Table 1). Table 1: Summary of Estimated Costs and Benefits NPV Benefits (US$) = Components 5 years 10 years IRR Benefit/Cost TB Component 360,583,077 1,205,484,446 215% 13.0 HlV/AIDS Component 16,564,484 172,591,399 77% 4.2 Total 377,147,560 1,378,075,845 143% 7.29 NPV Benefit is equal to the direct and indirect benefits, minus total project costs. IRR is based on net benefits over 10 years. - 59 - The cost-benefit analysis (CBA) distributes the benefits over the project's time horizon into two major groups: direct and indirect benefits. The direct benefits are the expected tangible benefits accruable to the project from the reduced hospital stays, eliminating umnecessary discharges and reducing consultations. Indirect benefits are related to the potential life years saved by the project and the economic and financial value of increasing productivity. The CBA is provided for each of the two project components. Cost Benefit Analysis: TB Component. The cost-benefit analysis of the project attempts to analyze the project according to financial indicators that allow policymakers to ascertain whether the project should be pursued on economic and financial grounds alone. From this perspective, the two critical indicators that are evaluated include the net present value of all benefit and investment flows and the internal rate of return (IRR). While this involves a greater degree of complexity, it allows policymakers to compare the monetary value of the benefits from the project with the benefits from alternative investments, in either the same sector or in other sectors. Table 2 shows the flow of direct and indirect benefits during the life of the project (5 years) and over a ten-year period. Over the 5 years of the project, the total benefits will reach nearly US$370 million, representing a benefit cost ratio of 3.6:1. If a ten year horizon is analyzed, the low recurrent costs and consistent returns to investment increase the total benefits to US$1.3 billion. Under this scenario the ratio of benefits to costs will increase to 12.5:1. Table 2: Summary Results: TB ComD onent US$ |Benefit Cost Ratio PV of Total Benefits (10 years) 1,308,333,660 l 12.9 PV of Total Benefits (5 years) 363,113,044 3.6 The full summary results of the economic analysis show that the net present value of benefits, net of investment and recurrent costs, will increase to over US$1.3 billion. The component will have an IRR of 215 percent, reflecting the high level of benefits that wrill accrue as a result of project execution. In order to contrast the results from this project with alternative projects, a cost-effectiveness analysis was carried out using the results from the life years gained and the total number of deaths averted. The investment costs of the project are compared with the number of deaths averted and the total number of DALYs saved to determine the overall cost-effectiveness of the proposed project. It is estimated that 14.7 healthy life years are gained for each death averted. This compares with the figure of 22.7 for the AIDS component; the reduction is due to the lower age at death of AIDS patients. The results of several alternative interventions are then compared with the proposed interventions for the Russia TB program. The cost per life year saved is in line with other cost-effective interventions that are part of the basic package of services. The project obtains a year of healthy life for US$69, which compares with US$30 for expanded programs of immunizations (EPI), usually considered as one of the most cost-effective interventions in the health sector. - 60 - Cost Benefit Analysis: AIDS Component. The overall investment in AIDS prevention and treatment should be determined in the context of the relative cost effectiveness of the proposed project in light of altemative investments. The present analysis uses conservative estimates on the reduction in mortality and morbidity over a 5 and 10 year period. Using the conservative estimates of the first scenario, the stream of benefits yields a net present value of $172 million with an intemal rate of return of 76.5 percent. Table I displays the summary results of the quantitative retums of the project. Returns are presented by estimating a ten year stream of benefits and costs and thereby calculating the net present value and the intemal rate of return of the project. The stream of benefits and costs takes into account the recurrent costs of maintaining the specific programs that will produce the savings. The ratio of benefits to costs, considering the full cost of the project will yield 4.2 dollars of benefits (direct and indirect) for each dollar invested. The cost per DALY gained will be US$23, implying that the project will buy a healthy year of life for US$23. This is in line with results in India and Brazil AIDS project that yield results of US$18 and US$21 per healthy life year gained, respectively. The cost per case averted will be US$477. Main Assumptions: The following parameters were considered relevant in estimating the economic benefits of the project: the length of the project horizon and the time to impact the health of the population, the size of the target population, the existing pattems of morbidity and mortality, the number of years of productive life added as a result of the percentage decrease in mortality, and the existing cost structure in the health sector. Given the medium-to-long-term effect of the changes, the estimates presented in terms of reduced morbidity, which assume a project horizon of only 10 years, are conservative. Sensitivity analysis / Switching values of critical items: This section evaluates the impact of risk on the project's benefits. The proposed project will face two types of risks: (a) a delay in project implementation, and thus deferring estimated benefits to the future; and (b) a direct reduction in estimated benefits. Each of these risks will translate into lower benefits and less favorable conditions for investment. Delays in project implementation could come from the following: (i) political and administrative instability, that may affect ownership and management capacity; (ii) number and variety of actors involved (Ministry of Health, Ministry of Justice, oblasts, and NGOs); (iii) lack of counterpart funds; and (iv) lack of funds to finance recurrent costs. The project design attempts to take these risks into consideration in order to mitigate the potential impact of the above mentioned risks. Risk (i) will be addressed by ensuring political support for the project and involving the major stakeholders (church, lawmakers, major NGOs, and beneficiaries) at an early stage of project preparation. Risk (ii) is relatively low given the presence of a highly experienced project implementation unit for the Russia health sector projects. Risk (iii) will be partly addressed through the design of a project-financing scheme. Risk (iv) is relatively low as already discussed. Should it materialize, it will lead to a delay in operating the investments financed, thus resulting in a lag in benefit stream. - 61 - The second type of risk, direct reduction in benefits, will come from lower than expected reductions in the number of cases averted, and reduced mortality. Evidence regarding the impact of interventions similar to those proposed in the project is limited to studies carried out in specific oblasts. The project will be sustainable under diverse scenarios of reductions in benefits and delayed project implementation. The principal risk will be associated with a failure to implement a second phase of the TB interventions, thereby lowering the probable success of controlling the epidemic. The following table provides the summary results for the sensitivity analysis. Table 3: Summary of Sensitivity Analysis ._______ _ Tuberculosis AIDS TB & AIDS US$ Millions NPV IERR NPV IERR NPV IERR Type of Sensitivity Analysi _____ (%) (%) ( Base Case 1,205.5 215% 172.6 77% 1,378.1 143% 2-year delay 557.9 136% 86.4 72% 643.0 111% 3-year delay 339.2 107% 50.7 40% 392.2 91% 30% reduction in benefits 813.7 156% 104.7 51% 918.5 105% 50% reduction in benefits 552.6 116% 59.5 35% 612.0 79% Under the above scenarios, the total impact of the project will be significantly affected by a reduction in expected benefits or a delay in project implementation but all indicators remain positive. TB Component Sensitivity Analysis. The CBA results remain robust even as the number of cases averted is reduced by 30 and 50 percent, or in the case of project delays. Lower benefits could result from lower than expected effectiveness in the TB program. All alternatives are evaluated by considering a reduction in benefits of 30 percent, 50 percent and 80 percent. With a 2 year delay, project benefits would be reduced by over US$700 million and the rate of return would be reduced from 217 to 137 percent, under the limited coverage of the prison population. An additional one-year delay (3 years in total) would further reduce benefits by an additional US$220 million and lower the IRR from 217 to 107 percent. Under both cases, the project will still be an excellent investment as reflected by the high NPV and favorable rates of return. AIDS Component Sensitivity Analysis. Assuming total savings were 30 percent lower than expected, the net present value of the savings over a 10 year period will be reduced to just over US$104 million, with a rate of return of around 51 percent; while in the extreme case of 50 percent fewer benefits than expected, the rate of return will be lowered to 65 percent, with a net present value of nearly US$60 million. A 80 percent reduction in benefits would generate a negative net present value of the project. The table also displays the impact of a delay in project implementation. A two and three year delay in project implementation would lower the NPV from US$169 million in the base case scenario to US$86 million and US$50 million, respectively. The project's return would also decrease from 144 percent to 134 percent with a two year delay and 75 percent with a three year delay. Delays beyond three years would produce a negative rate of return and PV. - 62 - Annex 5: Financial Summary RUSSIAN FEDERATION: TUBERCULOSIS AND AIDS CONTROL PROJECT Years Ending December 31 I Year1 7 Year2 r Year3 Year4 Year5 | Year6 Year7 Total Financing Required Project Costs Investment Costs 10.6 35.2 77.6 65.5 45.4 29.6 0.0 Recurrent Costs 0.8 1.8 2.0 6.0 6.0 5.7 0.0 Total Project Costs 11.4 37.0 79.6 71.5 51.4 35.3 0.0 Front-end fee 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Financing 11.4 37.0 79.6 71.5 51.4 35.3 0.0 Financing IBRD/IDA 5.5 17.5 42.0 43.0 25.0 17.0 0.0 Govemment 5.6 19.1 37.2 28.1 26.1 18.1 0.0 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 WHO 0.3 0.4 0.4 0.4 0.3 0.2 0.0 Total Project Financing 11.4 37.0 79.6 71.5 51.4 35.3 0.0 Main assumptions: - 63 - Annex 6: Procurement and Disbursement Arrangements RUSSIAN FEDERATION: TUBERCULOSIS AND AIDS CONTROL PROJECT Procurement Procurement. Goods and related technical services under the IBRD financed components of this project will be procured in accordance with the Bank's Guidelines: "Procurement under IBRD Loans and IDA Credits", dated January 1995, revised January 1996, August 1996, September 1997 and January 1999. Contracts for Consulting Services required for the Project will be awarded following the Bank's Guidelines: "Selection and Employment of Consultants by World Bank Borrowers", dated January 1997, revised September 1997, January 1999 and May 2002. The project elements, their estimated cost and procurement methods, are summarized in Table A. For procurement under the Loan, the Borrower will use (i) the Bank's latest standard bidding documents for goods procurement (including procurement of health sector goods), and (ii) the Bank's standard request for proposal for selection of consultants. Implementation. The Russian Health Care Foundation (RHCF) has successfully implemented the Medical Equipment Project (US$270 million; closed in October 2001) and is presently implementing the Health Reform Pilot Project (US$66 million; closing in April 2004). The RHCF will also be responsible for the day-to-day implementation of the Health Reform Implementation Project (US$30 million) which will be presented to the Board on March 18, 2003. A Working Group (WG) will coordinate the activities of the rninistries and departments involved in the project and will be assisted by the RHCF as regards functions of procurement, disbursement and financial management. A procurement capacity assessment was carried out and found the procurement capacity of RHCF to be satisfactory with the following recommendations which may need to be implemented to mitigate procurement risks: * Hiring of two procurement officers on a competitive basis; and * RHCF staff responsible for procurement should receive intensive training in procurement of goods (including Health Sector Goods) and consulting services in Turin ILO courses in 2003. In summary, RHCF will prepare bidding documents, carry out bidding procedures, sign contracts and disburse funds against acceptance certificates. Procurement support will be engaged to provide technical support with respect to equipment specifications and bid evaluation. The Expert Council will review TORs and technical specifications, review reports and proposals prepared under the project and review project plans and progress reports. Advertisement. A General Procurement Notice (GPN) will be published in the UN "Development Business in December 2002. The GPN (which will be updated annually) will describe the requirements for goods and consultant services and will invite interested eligible suppliers and consultants to express interest and to request any complementary information from RHCF. Specific Procurement Notices (SPN) for goods and Requests or Expression of Interest (REI) for consulting assignments will be published at later dates, as the corresponding bidding documents and requests for proposals become available. GOODS AND TECHNICAL SERVICES Goods and related technical services estimated at total value of US$140.72 million (US$116.72 million) comprising medical equipment, including equipment, supplies and consumables for laboratories, vehicles, drugs for TB and HIV/AIDS treatment, AIDS promotion and control supplies (condoms, etc.), - 64 - office equipment and computers with software, publications, and technical logistical services of drug storage, handling and distribution would be grouped to the extent possible and considering project objectives, in package sizes that would encourage competitive bidding. For firms wishing to participate in bidding for drugs for TB and HIV/AIDS treatment a pre-qualification process would be used to identify qualified bidders, up-dated every two years. The following methods of procurement will be used: (i) International Competitive Bidding (ICB) procedures will be used for contracts which are estimated to cost US$100,000 equivalent per contract or more for the procurement of medical equipment, computers and office equipment, drugs, publications and supplies for a total aggregate amount of US$ 118.61 million equivalent (US$98.45 million). (ii) National Competitive Bidding (NCB) will be used for contracts estimated to cost less than US$300,000 for the purchase of medical equipment and supplies, telecommunication systems equipment, hot line equipment, surveillance and monitoring equipment, office equipment, vehicles, furniture, comminication link, educational equipment and publishing of training and information materials up to an aggregate of US$3.50 million equivalent (US$2.75 million). (iii) International Shopping (IS) procedures will be used for procurement of readily available, off-the-shelf items of small value (computer for coordination center and medical equipment and supplies), estimated to cost less than US$100,000 equivalent per contract up to an aggregate limit of US$ 0.20 million equivalent (US$0.16 million). IS procedures will be based on comparing substantially responsive price quotations obtained from at least three suppliers from at least two different countries, in accordance with the Bank's Guidelines. The Borrower may create short lists of firms for procurement of standard off-the-shelf computer equipment that have the automatic no-objection by the Bank. Such firms are listed on the new IT shopping web site at the following address: http://www.worldbank.org/htmlopr/shop-IT/ . (iv) National Shopping (NS) procedures will be used for contracts estimated at less than US$50,000 equivalent per contract with an aggregate amount estimated at US$0.45 million equivalent (US$0.36 million), for the purchase of computer equipment, software, office equipment, furniture and communication links. NS contracts will be awarded after comparing substantially responsive price quotations obtained from at least three local suppliers. The Borrower may create short lists of firms for procurement of standard off-the-shelf computer equipment that have the automatic no-objection by the Bank. Such firms are listed on the new IT shopping web site at the following address: http://www.worldbank.org/html/opr/shop_jT/. (v) Direct contracting (DC). Goods which are of proprietary nature and costing US$100,000 equivalent or less in the aggregate, may be procured using these procedures, with the Bank's prior agreement. (vi) Procurement of Second-line anti-TB drugs. The procurement of second line drugs up to an aggregate of US$18.0 million equivalent (US$15.0 million), may be procured on terms and procedures acceptable to the Borrower and the Bank. The RHCF will not initiate any procurement actions with respect to such drugs for any health facility unless this health facility is in full compliance with the requirements of both the MOH and the WHO for the use of such drugs. The WHO will ensure the proper use of these drugs so as to reduce the risk of drug resistance. - 65 - CIVIL WORKS Civil works will be financed by the Borrower using Borrower procedures. Estimated value of rehabilitation to be completed under the Project is US$6.13 million equivalent and will be financed by the participating institutions at the federal and regional levels. No Bank financing for works is envisaged. CONSULTING SERVICES Contracts for consulting services for an amount estimated to cost US$18.79 million equivalent (US$14.89 million) will be packaged, whenever possible, to combine related skills in order to make them attractive and increase competition as well as to reduce the number of contracts to be managed by the RHCF. The following selection methods will be used: (i) Quality and Cost-based Selection (QCBS) procedures will be used for contracting consultant services related to TB and HIV/AIDS strategy development, laboratory quality control, surveillance, civilian and prison treatment programs, training, public awareness programs and STI prevention and control, totally up to an estimated aggregate amount of US$9.43 million equivalent (US$7.45 million). (ii) Least-Cost Selection (LCS) procedures will be used for auditing services contracts of the RHCF accounts estimated to cost in the aggregate US$0.25 million equivalent (US$0.20 million), for a period over five years. (iii) Selection Based on Consultants' Qualification (CQS) procedures will be used for contracting consulting services related to PR campaigns, evaluations, assessments, assistance in establishing coordination centers, development of work plans, guidelines, strategies, other programs, setting up information network not exceeding US$100,000 equivalent per contract for an aggregate amount of US$6.71 million equivalent (US$5.30 million). (iv) Individual Consultants (IC) procedures will be used for small assignments of short-term duration such as services for development of legislations, regulations, guidelines, work plans, protocols, strategies, etc. for an aggregate amount of US$0.80 million equivalent (US$0.68 million). Consultants will be selected in accordance with Section V of the Guidelines on the basis of individual -qualifications after comparison of not less than three suitable CVs. HIRING OF GOVERNMENT-OWNED ORGANIZATIONS The selection and hiring of ineligible Govermnent-owned Public Health, Training and Research Institutes and Centers which have unique qualifications and experience for the proposed assignments to be carried out under the Loan would be considered by the Bank on the case by case basis. The RHCF would prepare and present to the Bank (i) a list of such assignments and (ii) a list of institutes under consideration. The availability of private sector alternatives will be tested by the publication of the General Procurement Notice, inviting Expressions of Interest for all assignments to be financed under the loan. Where advetrising establishes that no private-sector provision of these services is available, the need to hire government-owned institutions will be examined on a case-by-case basis during implementation of the project and, where such hiring is essential to the success of the project, it will be done using one of the following selection methods: Single-Source Selection, Quality-Based Selection or Selection Based on Consultants' Qualifications. All such contracts shall be subject to the approval of the Regional Procurement Advisor. The procurement plan currently identifies certain possible candidate contracts under this category and this will be further reviewed during implementation (see Annex 11 for details). - 66 - TRAINING Training in an aggregate amount of US$15.47 million equivalent (US$15.47 million) will be provided through training courses, study tours, seminars, workshops, conferences and other training activities not included under a goods or service provider's contract. Bank financing will cover costs of travel, accommodation and subsistence for the participants, including travel and per diem costs for the ministries, administrations, and other relevant bodies on the federal and/or regional levels involved in the implementation of the Project. Training costs will also comprise tuition fees, rent of premises, office supplies and training materials. When appropriate a firm will be selected to provide logistical services upon comparison of three price quotations presented by suitably qualified local contractors under s c agreed procedures (AP). The procedures for selecting training candidates, the training course or study tour, proposed training institutions and budgets will be subject to prior review by the Bank. Candidates will be selected on the basis of criteria to be prepared by the project beneficiares with assistance from the RHCF and to be agreed upon with the Bank. The RHCF will administer all overseas training and study tours and assist project beneficiares in arranging in-country training. Individual contract values will normally not exceed US$100,000 equivalent. Larger contracts estimated to cost more than US$100,000 will be advertised nationally or intemationally and bids will be invited. Project Management, Administration and Operating Costs Project operating costs are estimated at US$3.31 million equivalent (US$2.92 million) and include: (i) RHCF staff salaries, estimated at US$1.85 million (US$1.61 million), financed at 87% under the Loan. The selection of RHCF staff will be carried out in accordance with the Consultant Guidelines on the basis of individual qualifications and after comparison of not less than three CVs: (ii) RHCF operating costs, estimated at US$0.91 million (US$0.76 million), financed at 84% under the Loan, including office rent and materials, office supplies, communication costs, translation expenses, costs for travel, accomodation and subsistence of RHCF staff directly associated with supervision and planning of project activities, and subject to annual detailed itemized appovals by the Borrower and the Bank; (iii) social charges for RHCF staff, estimated at US$0.33 million (US$0.33 million); and (iv) training expenses for RHCF staff, estimated at US$0.22 million (US$0.22 million). Social charges and training expenses will be financed at 100% under the Loan for the duration of the project. Procurement Plan Procurement of goods and consultant services for the project will be carried out in accordance with the agreed procurement plan, which is to be updated annually, included in the progress report, and reviewed by the Bank. The procurement plan in Annex 11 presents all items to be procured during the life of the project. - 67 - Procurement methods (Table A) Table A: Project Costs by Procurement Arrangements (US$ million equivalent) Procurement Method Expenditure Category ICB - :NCB ^ Other , N.B.F. *Total.Cost 1. Works 0.00 0.00 0.00 6.13 6.13 (0.00) (0.00) (0.00) (0.00) (0.00) 2. Goods 118.61 3.50 18.61 78.91 219.63 (98.45) (2.75) (15.52) (0.00) (116.72) 3. Services 0.00 0.00 18.79 0.55 19.34 (0.00) (0.00) (14.89) (0.00) (14.89) 4. Training and Study Tours 0.00 0.00 15.47 0.00 15.47 (0.00) (0.00) (15.47) (0.00) (15.47) 5. RHCF Salaries 0.00 0.00 1.85 0.00 1.85 (0.00) (0.00) (1.61) (0.00) (1.61) 6. RHCF Operating Costs 0.00 0.00 0.91 22.30 23.21 (0.00) (0.00) (0.76) (0.00) (0.76) 7. RHCF Social Charges 0.00 0.00 0.33 0.00 0.33 (0.00) (0.00) (0.33) (0.00) (0.33) 8. RHCF Training Expenses 0.00 0.00 0.22 0.00 0.22 (0.00) (0.00) (0.22) (0.00) (0.22) Total 118.61 3.50 56.18 107.89 286.18 (98.45) (2.75) (48.80) (0.00) (150.00) "Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies. 2' Column "Other" includes: 2. Goods to be procured through IS, NS and procurement of second-line drugs under established procedures of the WHO and Green Light Committee or through [CB. 3. Consulting Services 4. Training under Agreed Procedures (AP) 5. RHCF salaries 6. RHCF Operating Costs 7. RHCF Social Charges 8. RHCF Training expenses Column N.B.F. includes: 1. Works to be financed by the Government. 2. Goods estimated to cost US$78.91 million (equipment, publications and supplies) to be financed by the Government and goods estimated to cost US$1.52 million would be financed by WHO. 3. Consultant services to be financed by WHO. 6. Recurrent operating and maintenance costs, associated surveillance and monitoring expenses and distribution of drugs to be financed by the Government. - 68 - Table Al: Consultant Selection Arrangements (optional) (US$ million equivalent) A. Firms 9.43 0.0 000 0.25 6.71 1.60 0.55 18.54 (7.45) (.0 (.00) (0.20) (5.30) (1.26) (0.00) (14.21) B. Individuals 0.00 00 0.00 0.00 0.00 0.80 0.00 0.80 (0.00) (0.00) (0.00) (0.00) (0.00) (0.68) (0.00) (0.68) Total 9.43 0.00 0.00 0.25 6.71 2.40 0.55 19.34 (7.45) (0.00) (0.00) (0.20) (5.30) (1.94) (0.00) (14.89) 1\ Including contingencies Note: QCBS = Quality- and Cost-Based Selection QBS = Quality-based Selection SFB = Selection under a Fixed Budget LCS = Least-Cost Selection CQ = Selection Based on Consultants' Qualifications Other = Hiring of Government-Owned Organizations and Selection of individual consultants (per Section V of Consultants Guidelines) N.B.F. = Not Bank-financed Figures in parenthesis are the amounts to be financed by the Bank Loan. - 69 - Prior review thresholds (Table B) Table B: Thresholds for Procurement Methods and Prior Review 1. Works n.a. n.a. n.a. 2. Goods Above US$1I00,000 ICB Est. US$140.30 mln. (all Below US$300,000 NCB ICB, NCB, DC contracts Below US$100,000 IS and contract for Below US$50,000 NS second-line drugs, the first DC two IS contracts, first three proc. of second-line drugs NS contracts) 3. Services Above US$100,000 See Table 1 Est. US$18 mln. (Firms: Above US$50,000 all contracts US$0.1 mln and above, all contracts with Government-Owned Organizations; IC: all contracts US$ 0.05 mln and above) 4. Training n.a. AP Est. US$15.47 mln. (All activities will be subject to prior review) Total value of contracts subject to prior review: est. US$173.77 mln. Overall Procurement Risk Assessment High Frequency of procurement supervision missions proposed: One every 6 months (includes special procurement supervision for post-review/audits) The agreed percentage of contracts subject to post review is 20%. Special procurement supervision for post-review/audits will be carried out by the Moscow Office as necessary to fulfill institutional requirements. Thresholds generally differ by country and project. Consult OD 11.04 "Review of Procurement Documentation" and contact the Regional Procurement Adviser for guidance. - 70 - Disbursement Allocation of loan proceeds (Table C) The proceeds of the Loan would be disbursed in accordance with the guidelines in the "Disbursement Handbook". The project has been designed to be carried out over a period of five years and is expected to be completed by June 30, 2008. A period of six months would be allowed to complete disbursements, with the Loan Closing Date of December 31, 2008. Disbursement categories and percentages to be financed under each category are presented in Table C, as follows: Table C: Allocation of Loan Proceeds 1. Goods, including technical services, 30.44 1 00%of foreign expenditures; 100% of but excluding goods under local expenditures (ex-factory cost); sub-components 1.3 and 1.4 81% of local expenditures for other non-medical items procured locally; and 98% of local expenditures for medical items procured locally (cost net of VAT) 2. Goods for sub-component 1.3 68.27 100%of foreign expenditures; 100% of local expenditures (ex-factory cost); 81% of local expenditures for other non-medical items procured locally; and 98% of local expenditures for medical items procured locally (cost net of VAT) 3. Goods for sub-component 1.4 18.00 100%of foreign expenditures; 100% of local expenditures (ex-factory cost); 81 % of local expenditures for other non-medical items procured locally; and 98% of local expenditures for medical items procured locally (cost net of VAT) 4. Consultant Services 14.90 79% of services of foreign and local firms; 87% of services of individual foreign and local consultants; 100% of social charges. 5. Training 15.47 100% 6. Operating Costs 2.92 87% for RHCF salaries; 100% of RHCF training expenses; 100% of RHCF social charges; 84% of other costs. Total Project Costs 150.00 Front-end fee Total 150.00 Disbursement Procedures. A Special Account would be opened in a commercial bank acceptable to the Bank, and managed by the RHCF. The Authorized Allocation would be equivalent to US$2 million. However, the Authorized Allocation would be limited to an amount equivalent to US$1 million until the aggregate amount of withdrawals from the Loan Account, plus the total amount of all outstanding special - 71 - comnmitments equals or exceeds US$3 million. Payments made from the Special Account would cover eligible expenditures under the project. Applications for replenishment of the Special Account will be submitted monthly (or earlier as desired) or at least quarterly. The replenishment applications will be supported by the necessary documentation, the SA bank statement, and a reconciliation of the bank statement. The SA will be audited annually by independent auditors, acceptable to the Bank. Statement of Expenditure (SOE) procedures would be used for the following expenditures: (a) goods under contracts costing less than US$100,000 equivalent each; (b) services of consulting firms under contracts costing less than US$100,000 equivalent each; (c) services of individual consultants under contracts costing less than US$50,000 each; (d) all training related expenditures; and (e) operating costs, under such terms and conditions as the Bank shall specify by notice to the Borrower. Financial Management The financial management capacity assessment was performed by the Bank's financial management specialist before Negotiations and updated prior to Board presentation. Below is the summary report of the assessment. Executive Summary. The financial management arrangements of the project are acceptable to the Bank and the entity has in general the necessary capacity to implement the Bank-financed project. As of the date of this report, the RHCF is in compliance with its audit covenants of existing Bank-financed projects. RHCF's previous and current project financial statements and auditing arrangements are satisfactory and it has been agreed that these will be replicated for TB/AIDS Control Project. The annual audited project and entity financial statements will be provided to the Bank within six months of the end of each fiscal year and also at the closing of the project. In accordance with WB audit policy the first and final audits can cover the period up to 18 months. RHCF would also prepare quarterly FMRs and submit them to the Bank within 45 days after the end of each reporting period. Annual audited financial statement as well as FMRs would include only the expenditures financed by the Loan and corresponding parts paid by the Borrower, including but not limited to taxes and duties. The information on activities, financed by the Federal Targeted Program, will be provided by the MOH and MOJ to the RHCF annually in a format, acceptable to RHCF and the Bank, before the competion of annual project audit. Such information will be for information purposes only and will be submitted to the Bank together with the annual audit report. However, due to the fact that project beneficiaries - recipients of drugs and equipment - may be located in all 89 territories of the Russian Federation, it can become difficult to ensure the proper safeguard of the project assets and proper distribution of drugs. Therefore, it was recommended that requirement for the quarterly submission of the information on equipment and drugs receipt and distribution becomes the part of the agreements with the regions. RHCF prepared and agreed with the Bank draft format of the equipment and drugs registers, which would then be attached to the agreements. This was one of the Board conditions. Furthertnore, due to the project size and large number of accounting transactions, it was also recommended that RHCF hire an additional financial specialist for this project. Although, current FM staff of the Foundation is experienced and highly qualified, it may be useful for them to get a training on new WB financial management requirements. Such training was provided to two project FM staff on February 11-13, 2003. Country Issues. The financial management capacity within the Russian Federation is currently the subject of a Country Financial Accountability Assessment, which was completed in FY2001 but has not yet been finalized. CFAA focused on the public sector, while the private sector was assessed by other - 72 - studies. Pending the graduation of the government's financial management and procurement capacity and infrastructure to a level of performance that would allow the World Bank to rely on those systems, the CFAA recommended that fiduciary functions (disbursement, procurement, accounting and reporting, and operational reviews) continue to be outsourced to specialized agencies. Such agencies (possibly the successors of today's Foundations) present the advantage of utilizing skilled consultants and reliable, suitable, and stand-alone computerized information systems. Primarily because of other implementation considerations, any weaknesses that may exist in the financial management capacity in Russia have been mitigated for this project, by the use of an existing RHCF for project implementation. A Project Implementation Agreement is going to be signed by the Borrower and the RHCF, assigning the RHCF the role and responsibility for financial management. Based on the Bank's current audit policy, the CFAA recommends maintaining current arrangements for the annual audit of Bank-assisted projects, which involve audit by private sector audit firms competitively appointed among those preselected by the Bank, in consultation with the MOF (9 firms at present). In addition, the work performed by the Accounts Chamber should also be reviewed by the Bank on a regular basis and taken into consideration in project preparation and supervision. The Accounts Chamber routinely performs documentary reviews of Bank projects because they involve international borrowing and the use of budget funds in the form of counterpart financing. These reviews are geared mostly towards assessing the efficiency and cost-effectiveness of project expenditure and the prevention and/or detection of possible waste of resources and abuses. This recommendation is taken into account for the current project. TB/AIDS Control Project would be regularly audited by a private firm, acceptable to the Bank. All audit reports, prepared by the Accounts Chamber in respect of this project, would also be reviewed by the auditors and the Bank. All valuable recommendations would be taken into account. Risk Analysis. (Note: The project's financial management risks are not considered to be significant enough to warrant inclusion in section F2 of the PAD). Risk Risk Mitigation Measures Rating Inherent Risk Banking sector S Special account is going to be opened in a state owned bank, acceptable to the Bank Changes in legislation S Changes in legislation are observed Lack of co-financing from the Federal S N/a budget funds Project inherent risk S (i) Appropriate procedures for equipment inventory; (ii) quarterly FMRs; (iii) signed agreement with each participating region. Country inherent risk S (i) use of RHCF; (ii) use of acceptable auditors Overall Inherent Risk S Control Risk 1. Implementing Entity M N/A 2. Funds Flow M N/A 3. Staffing M N/A 4. Accounting Policies and Procedures M N/A 5. Intemal Audit N/A N/A 6. Extemal Audit M N/A 7. Reporting and Monitoring M N/A 8. Information Systems M N/A Overall Control Risk M N/A - 73 - Strengths and Weaknesses. The significant strengths that provide a basis of reliance on the project financial management system include: (i) the experience of RHCF and its financial management staff of implementing Bank-financed projects and satisfying Bank financial management requirements; (ii) the project was prepared by the same team that is going to implement the project; (iii) the unqualified audit reports and positive management letters issued by auditors during the last three years; (iv) sound internal control system within the RHCF; and (v) the familiarity -of the RHCF specialists with the similar projects. There are no obvious weaknesses in the financial management system of proposed project. However, due to the fact that project beneficiaries - recipients of drugs and equipment - may be located in all 89 territories of the Russian Federation, it can become difficult to ensure the proper safeguard of the project assets and proper distribution of drugs. Therefore, it Nvas recommended that requirement for the annual submission of the information on equipment and drugs receipt and distribution becomes the part of the agreements with the regions. RHCF has already prepared and agreed with the Bank draft format of the equipment and drugs registers, which would then be attached to the agreements with the regions. Furthermore, due to the project size and large number of accounting transactions, it was also recommended that RHCF hire an additional financial specialist for this project by the end of first year of project implementation. Although, current FM staff of the Foundation is experienced and highly qualified, it may be useful for them to get a training on new WB financial management requirements. Such training was provided to two project FM staff on February 11-13, 2003. Flow of funds. Project funds will flow from: (i) the Bank, either via a single Special Account which will be replenished on the basis of SOE or by direct payment on the basis of direct payment withdrawal applications; or (ii) the Government, via the co-financing account opened by RHCF in one of the commercial banks. In addition, the participating regions will contribute tc project directly from the regional budget, without transfer to the project co-financing account, by paying for (i) supplies and operation and maintenance of the project equipment; (ii) some other services; and (iii) civil works. This funds are the part of Federal Targeted Program, and would not be reflected in project documents or the financial statements. After the banking crisis of 1998 the Bank and the Government of the Russian Federation have agreed that all project SA will be held in three state owned commercial banks. The RHCF will open a separate project Special Account in one of the these banks by project effectiveness. Staffing. RHCF financial department staffing is described in the RHCF Project Operational Manual. At the time of the assessment all financial positions were occupied, and there were no current need in hiring additional staff. The Financial Department is headed by the Department Head - Ms. Elena Yudina who is in charge of IAS and project reporting. It also includes Chief Accountant - Ms. Tamara Milyokhina, who is responsible for statutory and tax accounting and reporting; two project accountants, who are in charge for the project reporting for HRPP and HRIP, and a disbursement officer shared by two current projects. However, paying attention to the project size and number of transactions, as well as the fact that financial departments staff is gong to be shared by three projects, the RHCF should hire one more financial specialist who will be in charge of the new project by the end of first year of project implementation. In addition, the current financial staff needs the training in financial management requirements of the Bank for the new projects. Accounting Policies and Procedures. The detailed description of Foundation accounting policies and procedures is included in the Foundation Operating Manual Section 4.3.2. "Component II. Accounting - 74- and Reporting". RHCF is using accrual method of accounting with division of transactions by projects, sub-projects, components and categories. RHCF uses computerized accounting system that allows to use a single accounting database for compilation of all kinds of reports, and keep accounting records both in accordance with Russian and International Accounting Standards, in RUR and USD. The FMR Guidelines Financial Monitoring Reports: Guidelines to Staff issued by the Financial Management, Operating Services, and Procurement Sector Board (November 30, 2001). Page 6. suggests that in case the project is implemented by the nonprofit-oriented entity, the project financial statements should be prepared using the cash method. The RHCF used the accrual method for the annual reporting under the MEP and HRPP projects, and PDL grant for the preparation of HRIP, and therefore, will use the accrual method for annual project reporting as well as preparation of the financial part of periodic FMRs under the proposed project as well. Internal Audit. There is no Internal Audit Department within the current structure of the RHCF. External Audit. Current auditor of the RHCF is the Bank-approved firm FBK, that has an extensive experience with WB projects. Auditors had issued unqualified opinion on RHCF 2000 and 2001 IAS financial statements. All project audits for the last four years were also unqualified, except for the closing audit of Medical Equipment Project, that had a qualification due to limitation on scope of the audit (auditors were unable to audit the expenditures incurred during the last months of the grace period, as the deadline for audit report submission was before the end of grace period). The project would be subject to annual audits in accordance with International Standards on Auditing of Project financial statements, Statement of Expenditure and Special Account procedures. Audited financial statements should be submitted to the Bank not later than six months after the end of reporting period. Furthermore, as agreed with the Bank in 1999, multiproject PIUs are required to submit entity audits to the Bank not later than six month after the end of reporting period. Therefore, RHCF would also submit audited financial statements, prepared in accordance with international Accounting Standards by the same date. Draft TOR for the annual project audit have to be prepared by the RHCF and was approved by the Bank after some changes. The auditor need to be appointed before commencement of disbursement. The following chart identifies the audit reports that will be required to be submitted by the project implementation agency together with the due date for submission. Audit Report Due Date Entity Within six months of the end of each fiscal year Project Within six months of the end of each reporting period; the first and the final audit can cover the period up to 18 months SOE Within six months of the end of each reporting period; the first and the final audit can cover the period up to 18 months Special Account Within six months of the end of each reporting period; the first and the final audit can cover the period up to 18 months In addition, the Accounts Chamber, the country's supreme audit institution, performs ad hoc external audits of RHCF and the projects under its implementation. - 75 - Reporting and Monitoring. RHCF produces all financial reports for the Bank with the accounting software, Innotec. RHCF has demonstrated in its previous projects that it is able to report on project expenditures with this system. Project management-oriented Financial Monitoring Reports (FMR) will be used for project monitoring and supervision and the indicative formats of these would be included in the Project Operational Manual. RHCF will produce a full set of FMR every full quarter throughout the life of the project. Draft formats of these FMR were agreed upon after negotiations and prior to Board presentation. The medical equipment and drugs procured under the project would be delivered to the beneficiaries in 89 territories of the Russian Federation. Therefore, each region, participating in the project, would submit to the RHCF financial department on an annual basis the equipment and drugs registers showing receipt and distribution of the equipment and drugs. The aggregated equipment and drug registers would also become the part of the annual financial statements subject to the independent external audit. In addition, the infornation on activities, financed by the Federal Targeted Program, will be provided by the MOH and MOJ to the RHCF annually in a format, acceptable to RHCF and the Bank, before the completion of annual project audit. Such reports would be for informnation purposes only, would not be subject for annual audit, and would be submitted to the Bank together with the annual audited financial statements. Information Systems. RHCF's informnation systems comprises the accounting software: Innotec which allow the RHCF (i) to keep the statutory and project record both in RR and in USD; (ii) produce both statutory and IAS reports, and (iii) produce financial reports on the project. After the formnats of the financial part of the FMR and annual financial statements will be agreed with the Bank, RHCF will request the provider to incorporate the formats into the system. Impact of Procurement Arrangements. A procurement assessment of RHCF was not completed at the time of the financial management capacity assessment. However, the project would involve a significant amount of medical equipment procurement, and distribution of the drugs and equipment to the beneficiaries in great number of locations within the Russian Federation. Therefore, the RHCF will have to submit to the Bank on the annual basis audited project equipment and drugs registers. Furthermore, regions would be required (in the regional project agreements) to conduct annual inventory of the project equipment as at December 31, and submit the inventory acts to the RHCF within three months after the reporting period. Disbursement Arrangements. Bank funds will be disbursed under the Bank's traditional procedures including SOE and direct payments; FMR will only be used for the monitoring purposes. Supporting documentation for SOE, including completion reports and certificates, will be retained by the Borrower and made available to the Bank during project supervision. Disbursements for expenditures above the SOE thresholds will be made against presentation of full documentation relating to those expenditures. There is no plan to move to periodic disbursements. After the financial crisis of 1998, the Bank and the Government of the Russian Federation have agreed that all project SA will be held in three state owned commercial banks. Therefore, RHCF will open and manage a separate SA for this project, in one of the approved banks, and will ensure it's compliance with - 76 - Bank requirements, including appropriate protection against set-off, seizure and attachment. Withdrawal applications for the replenishments of the SA will be sent to the Bank monthly (or earlier as desired) or at least every three months. Financial Covenants. RHCF will maintain a financial management system acceptable to the Bank. The RHCF financial statements, project financial statements, SOE and Special Account will be audited by independent auditors acceptable to the Bank and on terms of reference acceptable to the Bank. The annual audited statements and audit report will be provided to the Bank within six months of the end of each fiscal year. In addition, the FCPF will prepare the periodic quarterly FMR, and submit them to the Bank within 45 days after the end of the reporting period. The reliability of such FMR will be audited during the annual audit, and a separate paragraph will be included in the project audit opinion. Supervision Plan. During project implementation, the Bank will supervise the project's financial management arrangements in two main ways: (i) review the financial part of project's FMRs as well as the project's annual audited financial statements and auditor's management letter; and (ii) during the Bank's supervision missions, review the project's financial management and disbursement arrangements (including a review of a sample of SOE together with the disbursement specialist and movements on the Special Account) as well as conduct sample equipment checks to ensure compliance with the Bank's minimurn requirements. Bank-accredited Moscow-based Financial Management Specialist will visit the project at least twice a year. - 77 - Annex 7: Project Processing Schedule RUSSIAN FEDERATION: TUBERCULOSIS AND AIDS CONTROL PROJECT Time taken to prepare the project (months) 10 43 First Bank mission (identification) 05/01/1999 05/01/1999 Appraisal mission departure 12/01/1999 06/12/2000 Technical Discussion 03/29/2002 Technical Discussion 06/28/2002 Negotiations 02/15/2000 12/23/2002 Planned Date of Effectiveness 06/30/2000 Prepared by: Ministry of Health; Ministry of Justice Preparation assistance: The project was prepared with the assistance of a PHRD grant, a grant from DFID in the amount of US$ 173,000 (of which only $75,184 was used) and Bank project preparation budget. Bank staff who worked on the project included: Olusoji Adeyi Program and Task Team Leader, Lead Health Specialist Maria Gracheva Operations Officer Tatyana Loginova Operations Officer Karl Skansing Senior Procurement Specialist Alexander Balakov Procurement Specialist Sunil Bhattacharya Regional Procurement Advisor Jean J. De St. Antoine Lead Operations Officer Joana Godinho Senior Health Specialist Miroslav Ruzica Senior Social Scientist Lydia Petrashova Financial Management Specialist Alexander Tretyakov Operations Analyst Julian Schweitzer Country Director Teresa Ho Lead Human Development Specialist Anahit Poghosyan Program Assistant Shaun Moss Senior Procurement Specialist Armin Fidler Health Sector Manager Nikolai Soubbotin Legal Counsel David Freese Senior Finance Officer Anna Jouravleva Financial Management Specialist Annette Dixon Human Development Sector Director James C. Lovelace Former Human Development Sector Director - 78 - Annex 8: Documents in the Project File* RUSSIAN FEDERATION: TUBERCULOSIS AND AIDS CONTROL PROJECT A. Project Implementation Plan This plan was completed as a condition of Negotiations. B. Bank Staff Assessments * Financial Management Assessment * Procurement Assessment * Project Economic Analysis C. Other * The TB and HIV/AIDS Epidemics in the Russian Federation, May 2001 (World Bank Technical Paper #510) * Social and Institutional Assessment * Monitoring Sexual Behavior in the Russian Federation, The Russia Longitudinal Monitoring Survey 2001, University of North Carolina at Chapel Hill, April 2002 * Monitoring Health Conditions in the Russian Federation, The Russia Longitudinal Monitoring Survey 2001, University of North Carolina at Chapel Hill, April 2002 * Monitoring Economic Conditions in the Russian Federation, The Russia Longitudinal Monitoring Survey 2001, University of North Carolina at Chapel Hill, April 2002 * PHRI/SOROS Russian TB Program, Report by Alex Goldfarb and Michael Kimerling, March'1999 * UNAIDS: Conclusions of the High Level Working Meeting, Moscow, April 2000 * Report on Conference on Cooperation between Government and Civil Society Organizations in Implementing the National HIV/AIDS Control Strategy in the Russian Federation, Moscow, April 2002 * Draft USAID/Russia HIV/AIDS Strategy 2002-2005 * TACIS report on "Russian Federation: Support to Public Health Management", 2001. *Including electronic files - 79 - Annex 9: Statement of Loans and Credits RUSSIAN FEDERATION:.TUBERCULOSIS AND AIDS CONTROL PROJECT March 10, 2003 Difference between expected and actual Original Amount in USS Millions disbursements Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Fnn Revd P066155 2003 TAX ADM2 100.00 000 000 000 100.00 0.00 000 P064508 2002 TREASURY OEVT 231 00 0.00 0.00 0.00 228.19 .0.41 0.00 P050489 2002 FISC FED & REG FISC REF 120.00 0.00 0.00 0.00 80.80 27.47 0.00 P046061 2001 MOSC URB TRFANS 60.00 0.00 0.00 0 00 51.77 27 04 0.00 P008832 2001 MUN WATER & WW 122.50 0.00 0.00 0.00 119.28 49.86 0.00 P038551 2001 MUN HEATING 85.00 0.00 0.00 0.00 82.15 13.31 18.18 P064238 2001 N RESTRUCT 80.00 0.00 0.00 0.00 78.48 16.65 0.00 P050474 2001 EDUC REFORM 50.00 0.00 0.00 000 48.50 16.10 0.00 P058587 2000 REG FISC TA 30.00 0.00 0.00 0.00 22.22 17.72 6.00 P053830 2000 SUST FORESTRY PILOT 60.00 0.00 0.00 0.00 59.10 24.60 0.00 P050487 1999 STATE STATS SYST 30.00 0.00 0.00 0.00 22.15 13.49 2 82 P046496 1998 SOC PROT IMPL 28.60 0.00 0.00 0.61 7.67 8.28 0.00 P044200 1997 BUREAU OF ECON POL 22.60 0.00 0.00 0.00 3.07 3.07 1.37 P050891 1997 ELEC SECTR REF 40.00 0.00 0.00 000 35.81 35.81 35.61 P008825 1997 EDUCINNOV 71.00 0.00 0.00 3.00 34.41 26.27 0.00 P008814 1997 HEALTH REFORM PILOT 66.00 0.00 0.00 0.00 34.87 3211 0.00 P045622 1996 COAL IAP 25.00 0.00 0.00 0.00 5.76 5 76 5 76 P0088 1996 ODS CONSMP PHASEOUT (GEF) 0.00 0.00 60.00 0.00 6.10 12.19 12.25 P008801 1996 BIODIV CONSV (GEF) 0.00 0.00 20.10 0.00 0.69 2 57 -3.88 P008831 1996 LEGAL REFORM 58,00 0.00 0.00 0.50 22 58 23.08 23.08 P035761 1996 COMMUNITY SOC INF 200.00 0.00 0.00 56 50 8.07 64.57 21.07 P035764 1996 BRIDGEREHAB 35000 000 0.00 195.33 805 203.38 4538 P036973 1996 ENT HOUSING DIVST 300.00 0.00 0.00 165.74 67.14 232.88 129 84 P042622 1996 CAP MRKT DEV 89.00 0.00 0.00 33.75 28.66 6241 24.11 P008821 1995 ENV MGMT 110.00 0.00 0.00 0.00 4542 45.42 45.42 P008823 1995 PORTFOLIO DEVT 40.00 0.00 0.00 8.79 3.86 12.65 570 P008827 1995 HOUSING 400.00 0.00 0.00 185 73 7 30 193.02 42.30 P008828 1994 FININSTS 200.00 000 0.00 59.50 63.61 12311 51.20 P008839 1994 ENTERPRISE SUPPORT 200.00 0.00 0.00 50.00 89.54 139.54 48.53 P034579 1994 LAND REF IMPL SUPPORT 80.00 0.00 0.00 0.00 17.45 17.45 4.84 Total: 3248.70 0.00 8010 759.44 1382.50 144919 519 57 - 8C) - RUSSIAN FEDERATION STATEMENT OF IFC's Held and Disbursed Portfolio Jun 30 - 2002 In Millions US Dollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1996/98 Alpha Cement 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1997/99 Aminex 0.00 0.12 0.00 0.00 0.00 0.12 0.00 0.00 2001 BVF 0.00 14.91 0.00 0.00 0.00 5.55 0.00 0.00 2002 Baltiski Leasing 2.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1998 Borsteklo 0.00 15.00 0.00 0.00 0.00 15.00 0.00 0.00 1999 Campina 6.20 0.00 0.00 0.00 6.20 0.00 0.00 0.00 2002 Center-Invest 2.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1999 DLV 0.00 0.60 0.00 0.00 0.00 0.60 0.00 0.00 2002 Delta Credit 20.00 0.00 0.00 0.00 10.00 0.00 0.00 0.00 2002 Delta Leasing 10.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1998 DreVo 0.00 0.90 0.00 0.00 0.00 0.89 0.00 0.00 2002 Egar Technology 0.00 1.50 0.00 0.00 0.00 0.00 0.00 0.00 1995 First NIS Fund 0.00 1.80 0.00 0.00 0.00 1.80 0.00 0.00 1994 Frarnlington Fund 0.00 7.80 0.00 0.00 0.00 7.80 0.00 0.00 2002 ICB 10.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2000 Ikea MOS 15.00 0.00 0.00 0.00 15.00 0.00 0.00 0.00 2002 KMB Bank 7.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1998 Mosenergo 16.86 0.00 0.00 0.00 16.86 0.00 0.00 0.00 2002 NBD 2.50 0.00 0.00 0.00 2.50 0.00 0.00 0.00 2001 NMC 2.10 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2001 OMGC 10.00 0.00 0.00 0.00 10.00 0.00 0.00 0.00 1996 Pioneer First 0.00 4.00 0.00 0.00 0.00 4.00 0.00 0.00 2001 Probusiness Bank 0.00 0.00 5.00 0.00 0.00 0.00 5.00 0.00 1994 RTDC 0.00 7.50 0.00 0.00 0.00 7.50 0.00 0.00 1998/01 Rarnstore 30.00 0.00 0.00 0.00 30.00 0.00 0.00 0.00 2001 Ruscam 13.00 0.00 0.00 0.00 6.50 0.00 0.00 0.00 Russ Stndard Bnk 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2002 Russ Tech Fnd 0.00 1.00 0.00 0.00 0.00 1.00 0.00 0.00 1995 Russia Registry 0.00 1.50 0.00 0.00 0.00 1.50 0.00 0.00 1994 SCF Restructured 0.00 1.10 0.00 0.00 0.00 1.10 0.00 0.00 0 Sonic Duo 24.00 0.00 6.00 10.00 12.71 0.00 6.00 5.29 2002 Swedwood Tichvin 6.45 0.00 0.00 0.00 6.45 0.00 0.00 0.00 2002 Toribank 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1998 UNEXIM Bank 5.28 0.00 0.00 0.00 5.28 0.00 0.00 0.00 1996 Volga-Dnepr 16.90 0.00 0.00 13.00 0.00 0.00 0.00 0.00 2001 ZAO Storaenso 7.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1998/02 Total Portfolio: 206.29 57.73 11.00 23.00 121.50 46.86 11.00 5.29 Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic 1999 DLV 3.00 0.00 0.00 0.00 2001 Bema Gold 0.00 0.00 1.00 0.00 2001 Pakenso- RI 0.00 0.00 0.20 0.00 2001 Ford Russia 55.00 0.00 0.00 55.00 2002 Borsteklo IV 25.00 0.00 0.00 0.00 - 81 - 2002 Welor 12.00 2.00 0.00 0.00 2002 Rarnstore IN 30.00 10.00 0.00 30.00 2002 KMB Bank 0.00 0.00 3.00 0.00 2002 IBS 0.00 0.00 12.00 0.00 2002 AFC 5.00 0.00 0.50 10.00 2002 Pfleiderer 12.41 0.00 0.00 0.00 Total Pending Comniitnent: 142.41 12.00 16.70 95.00 - 82 - Annex 10: Country at a Glance RUSSIAN FEDERATION: TUBERCULOSIS AND AIDS CONTROL PROJECT POVERTCYand SOCIAL --Rusia C *--< , . { Fedenatlon Asila_ Income, nDevelopment dlamond 2001i§~ -'l rl .- '' -PIt-drn',tr^d-year (millins) - .1447 45 2,84 ife expectancy t^nl pa (A4tlas method,' 1750 U960 1,4'' GN1:taWsmehod, USSbltlons) 2534 930' 277r-- Aver'ae'annuaI growth, 1995-01 La ) .0.41-. . ." GNI Gross *-.1--.> .... - s ... ... ;per ,primary 'Most reent'aestmate (iatoit r awlab,4-1901) "" "'capita enrollment wPoverty ( of population belwnatonalpovertywIine) 28 'Urtonp-opulatlon(oftolpOi aJ -' 73 ' '_',3- 4- pLifee daitncy at birti (yearsJ 65 69 .-9_. Infant nioAallty (per 1,OO0 i0 bis) 1: .-6 2- ;Childmanutlon ( chll t ,nnd er' 5) o , " -.' 3i1i d11 Access to an Improved water source inn rve water source ({X'of pophidaln) -:- 99 - t 9A.............................. ,,r 80 ,',., Iltecy( opuation age .,',,-: ' 0:' . 15Russlan iGross'pnimary enrollment ('ofschbol-age populatIon) 1 117 102 107 -Russlan Federation Ma:flaet 1 ' -:-. 17' - . = 10,3,__ * '*:107-i;-'f t Lower-middl e-income group ' Fe;male ^$-*-- i'116 ~ 101 ,.-.l07 f-........ ._.... .... EY- ECONOMIC RATIOS and.LONG-TERM TR.DS - .. - . _ . ,, . - :-1981- 199 200 - 2i0.01'_Eonfc>*ls :GDP~~~~~~~~~~~(US$ ~~~~~~~~~Econornic ratlos- GOP (US$ billions) _,- 5421 2596 3100. Gr d t ;rInvestment/GDPade Gr6 restlc"savings/G *. _..l... 36. §7:0- : iii l svngsiGDP . - - -- 36.3 '-Pv z'. Currentcnbalance/GP; 163 ~ ' 'e- stvin gs