The World Bank Unleashing Productive Innovation Project (P106752) REPORT NO.: RES26677 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF UNLEASHING PRODUCTIVE INNOVATION PROJECT APPROVED ON SEPTEMBER 25, 2008 TO THE ARGENTINE REPUBLIC FINANCE, COMPETITIVENESS AND INNOVATION LATIN AMERICA AND CARIBBEAN Regional Vice President: Jorge Familiar Calderon Country Director: Jesko S. Hentschel Senior Global Practice Director: Ceyla Pazarbasioglu-Dutz Practice Manager/Manager: Marialisa Motta Task Team Leader: Cristian Quijada Torres The World Bank Unleashing Productive Innovation Project (P106752) I. BASIC DATA Product Information Project ID Financing Instrument P106752 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 25-Sep-2008 25-Sep-2019 Organizations Borrower Responsible Agency The Argentine Republic Agencia Nacional de Promocion Cientifica y Tecnologica Project Development Objective (PDO) Original PDO The Objective of the Project is to expand the Borrower's capacity to generate productive innovation in knowledge-based areas by: (a) facilitating the creation of new knowledge-based companies; (b) developing specialized human capital; (c) supporting productive research innovation activities and their technology commercialization in the areas of biotechnology, nanotechnology and information and communication technology; (d) upgrading the research infrastructure in the areas of science, technology and productive innovation; and (e) strengthening the policy framework governing science, technology, and productive innovation. Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-86340 08-Jul-2016 28-Dec-2016 12-Jan-2017 25-Sep-2019 45.00 22.64 22.36 IBRD-75990 25-Sep-2008 06-Aug-2009 21-Aug-2009 31-Dec-2016 150.00 150.00 0 The World Bank Unleashing Productive Innovation Project (P106752) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No II. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES Project Status: Progress toward achieving the PDO is currently rated as Satisfactory and Implementation Progress is currently rated as Moderately Satisfactory. Overall, the implementation of the Additional Financing (AF) loan has been satisfactory, and disbursements to date amount to 22.64 million (50% of the loan). The original loan is fully disbursed and closed. Activities related to studies, training and capacity building have either been finalized or have been contracted and are under implementation. All new calls for proposals for this AF have been issued, and subprojects that involve companies, universities and research centers supported by the loan are now all under implementation. No new calls for proposals are planned under the project. However, the AF loan has been implemented under a challenging macroeconomic context for the country, and during the supervision mission of April 2018, the Ministry for Science, Technology and Productive Innovation (MINCYT) presented the need to extend the loan closing date to allow several important subprojects and initiatives to be fully and successfully completed. Changes Proposed: This restructuring proposes the extension of the loan closing date by 12 months. Rational for Changes: The PDO level indicator related to CONICET disclosures will not be achieved by the current closing date. This indicator has been improving over time but more slowly than originally expected, going from 0 when the AF loan was approved, to 8 in June 2017 and 10 in December 2017. The final target is 25 disclosures. More time than initially predicted is needed so that the training and capacity building activities with CONICET researchers supported by the project can translate into increases in the disclosures being brought forward by these researchers, as they learn how to commercialize the technologies they develop. Delays in the effectiveness of the AF loan and the effects of the efforts by the National Government to reduce the fiscal deficit also led to significant delays in the disbursement of project funds to the beneficiaries. This led to the delay in the signing of agreements with beneficiaries for the implementation of many subprojects, specifically private-public research consortia subprojects, subprojects to enhance innovation among SMEs, and subprojects to support the creation of technology based start-ups. In addition, new requirements by the Ministry of Modernization for the hiring of individual consultants by line ministries also led to significant delays in implementing technical consultancies supported by the project. These delays are having a direct impact in the achievement of the following intermediate results indicators, which would also benefit from additional time so that expected results can be achieved: - Intermediate Result Indicator: Percentage of Research Centers who implement tool to monitor and facilitate usage of shared research equipment (Of Centers that receive training) The World Bank Unleashing Productive Innovation Project (P106752) - Intermediate Result Indicator: Overall additional investment catalyzed/leveraged through project activities (USD million) Additional time would allow for consultancies related to the implementation of the tool to monitor and facilitate usage of shared research equipment to be completed, and would therefore lead to improvement of the percentage of Research Centers that implement this tool. Given that all contracts are in place and subprojects are under implementation, additional implementation time would also ensure that more of the subprojects that involve companies, universities and research centers will reach completion and therefore will mean an increase in the amount of additional investment catalyzed by the loan. This restructuring fully complies with the Bank Directive for Investment Project Financing, in that: (a) the Project’s Development Objectives remain achievable; (b) the performance of the Borrower remains satisfactory; (c) the Bank and the Borrower have agreed on actions that will be undertaken by the Borrower to complete the Project; (d) the Project is not subject to suspension of disbursements; and (e) the Borrower does not have any outstanding audit reports nor there are audit reports which are not satisfactory to the Bank. III. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications 30-Sep-2015, 30-Jul- IBRD-75990 Closed 30-Sep-2014 2016, 31-Dec-2016, 30-Jun-2017 30-Oct-2017 26-Jun-2017 IBRD-86340 Effective 25-Sep-2018 25-Sep-2019 25-Sep-2019 25-Jan-2020