For Official Use Only CPSCR Review Independent Evaluation Group 67368 1. CPS Data Country: Peru CPS Year: FY06 CPS Period: FY07 – FY11 CPSCR Review Period: FY07 – FY11 Date of this review: March 6, 2012 2. Executive Summary i. This review examines implementation of the FY07-11 Peru Country Partnership Strategy (CPS) and the FY09 CPS Progress Report (CPSPR), and evaluates the CPS Completion Report (CPSCR). The review covers the joint program of IBRD, IFC and MIGA. The review complements the Country Program Evaluation (CPE) on Peru discussed by CODE in July of 2010 (Peru: Country Program Evaluation for the World Bank Group, 2003-09). The two reviews, however, cover different periods (2007-11 in the CPSCR Review vs. 2003-09 in the CPE) as well as a somewhat different set of objectives. These two aspects explain the differences in the evaluations, such as the upgrading in rating of a pillar and the downgrading of another. ii. The WBG strategy was organized around three pillars: (i) accelerating economic growth; (ii) enhancing social development; and (iii) modernizing institutions. Pillar 1, on growth, focused on maintaining macro stability and reducing macro vulnerabilities, accelerating growth and broadening its sources, as well as making growth environmentally sustainable. Pillar 2, on social development, aimed at meeting basic needs, and promoting and developing a new social contract on education, health and nutrition. Pillar 3 supported furthering decentralization and access to public services, strengthening public sector management, and improving the justice system and reducing corruption. iii. IEG rates the overall outcome of the WBG strategy in Peru as moderately satisfactory. IEG notes that Peru’s own accomplishments in many areas, particularly on growth, macroeconomic stability, de-dollarizing the monetary system, and addressing some basic needs are remarkable — these achievements are mostly attributable to Peru’s own efforts. IEG also highlights the timeliness of the WBG’s support to Peru at the time of the global financial crisis, which was instrumental in helping the country access world bond markets, as well as the additionality of IFC’s intervention in supporting municipalities use their royalties to benefit poor communities. With WBG support, Peru has improved public expenditure efficiency, some rural infrastructure as noted in the Peru CPE, and environmental frameworks and regulations, as well as increased access to water, sanitation and electricity, also highlighted in the Peru CPE. Peru made progress in strengthening public sector management and, with support from the WBG, established a unified treasury account, and is making headway in results- based budgeting at the national level, participatory investment budgeting at the local level, and mainstreaming an integrated financial administration system also at the sub-national level. Spending of royalties by some local governments is also benefiting local communities. With mixed results, Peru worked on improving the quality of education, the coverage of health services, and nutrition, and continues to work on improving its justice system and abating corruption, albeit slowly and with uneven outcomes. There is no information about progress on housing and property rights, and on how health services have been adapted to the evolving epidemiological profile. The WBG made little progress in helping Peru reduce informality or promote non-traditional labor intensive sectors of the Peruvian economy, and came late in the CPS period with assistance on disaster preparedness and mitigation. The country’s decentralization process came to a halt for political reasons early in the CPS period, making immaterial the WBG’s objective of supporting it. CPSCR Reviewed by: Peer Reviewed by: CASCR Review Coordinator Juan José Fernández-Ansola Jorge Garcἰa-Garcἰa Consultant, IEGCC Consultant, IEGCC Jaime Jaramillo-Vallejo, Lead Economist, IEGCR Surajit Goswami, Steve F. Pirozzi Consultant, IEGCC Senior Evaluator, IEGCC For Official Use Only CPSCR Review 2 Independent Evaluation Group iv. IEG underscores four lessons stemming from this review. First, the WBG has greater development effectiveness when it aligns its strategy with the government’s own program, as evidenced by the highly effective intervention supporting Pe ru’s actions to deal with the effects of the global financial crisis. By contrast, the WBG had less effective interventions in areas with little country buy in, such as the decentralization in social sectors and rural education. Second, the development effectiveness of the WBG can only be demonstrated where there are interventions that can help the country deliver the expected results. By contrast, strategy objectives that are beyond the purview of the WBG, although achieved by the country, are not a demonstration of the WBG’s development effectiveness. Third, WBG strategies gain efficacy when they have a monitoring and evaluation framework that is based on available and verified data, and that can actually be used by the WBG to actively play out its strategy. Within this review, those objectives that were better monitored were the ones that showed the best development results. Fourth, the WBG could find ways of improving coordination within the Group itself to take advantage of good initiatives that can be scaled up for the benefit of the country, as could have been the case with IFC’s work with the municipalities that were receiving the royalties of its investees. 3. CPS Summary Overview of CAS Relevance: Country Context 1. A sound policy framework, prudent macroeconomic policies and strong commodity prices helped Peru achieve cumulative GDP real growth of over 31 percent between 2007 and 2010, which led to a fall in poverty from 46 percent in 2006 to 31 percent in 2010, the latest measure. The strong cumulative growth includes a decline in the rate of growth to about 1 percent in 2009 due to the global financial crisis, as well as a rebound of 9 percent in 2010. Notwithstanding the crisis and in its midst, the international rating agencies granted Peru investment grade-- Fitch (2008), Standard and Poor’s (2008), and Moody’s (2009), which the country still maintains. Peru also had to face two major earthquakes, one in 2007 (magnitude 8.0, Richter scale) and another one in 2011 (magnitude 6.9), as well as the impact of ―El Niño‖ (and the subsequent ―La Niña‖) in 2010. Despite its strong macroeconomic and poverty reduction performance, Peru still faces challenges, including in reducing poverty further with a more equal distribution of income, developing infrastructure, and improving the quality of social services. 2. Peru’s priorities—expressed in the Prime Minister’s presentation of the government plan to the Peruvian Congress in August of 2006—were to sustain and accelerate economic growth to ensure a rapid reduction of poverty. Emphasis would be put on promoting economic and human development, bolstering social inclusion, and improving living standards. The transition from President Toledo (2001- 06) to President Garcia (2006-11) brought changes in the overall country strategy. While in some areas, such as macroeconomic policy, the country’s own priorities remained unchanged (as is discussed in the Peru CPE), in others, notably decentralization, there were significant changes. Objectives of WBG Strategy 3. The WBG strategy was organized around three pillars: (i) accelerating economic growth; (ii) enhancing social development; and (iii) modernizing institutions. Pillar 1, on growth, focused on maintaining macro stability and reducing macro vulnerabilities, accelerating growth and broadening its sources, as well as making growth environmentally sustainable. Pillar 2, on social development, aimed at meeting basic needs, and promoting and developing a new social contract on education, health and nutrition. Pillar 3 supported furthering decentralization and access to public services, strengthening public sector management, and improving the justice system and reducing corruption. Relevance of the WBG Strategy 4. The WBG strategy addressed some of the key challenges facing Peru, particularly on growth, For Official Use Only CPSCR Review 3 Independent Evaluation Group inclusion, and social services, and responded flexibly to the evolving global financial crisis. The strategy was aligned with Peru’s government plan, and the WBG’s response was flexible on size and timing of key operations. At the same time, feedback from former Ministry of Finance officials suggests that the initial reform platform developed under the CPS was short on detail, lacked agreement on specific reform interventions expected from the WBG, and could have given the wrong impression that Peru was going to use WBG services extensively in its implementation of policies. In the event, Peru went its own way on reform, and the dialogue with the authorities was not as fluid as needed for the WBG to bring into its own projects and programs the country’s changing policy intentions. As a result, projects such as the decentralization in social sectors and rural education performed poorly. Nevertheless, the WBG responded flexibly and diligently to the requests for assistance from the Peruvian authorities at the time of the global financial crisis. 5. The WBG strategy was weakly relevant in its design. Some outcomes were not supported by appropriate WBG interventions, while there were loose links between WBG strategy objectives and its interventions for other outcomes. Under Pillar 1 in particular, the WBG targeted high-order macro outcomes with interventions of a fairly circumscribed scope. For example, the outcomes on informality and tourism development under this pillar were not plausibly linked to the interventions. Some of the macro outcomes in Pillar I (for example on inflation and de-dollarization) were outside the WBG’s purview and capacity to influence, and there were no WBG interventions in the strategy that could have had an impact on them. Moreover, on program design, the monitoring of the results framework was made difficult by some indicators that were not measurable or did not have proper baselines, limiting their use for the WBG’s monitoring and evaluation, as well as subsequent decision-making. 6. Both IFC and MIGA interventions were congruent with market demand. IFC invested in natural resources, electricity generation and transmission, toll roads, and improving Lima’s airport, while supporting SMEs through its investee financial institutions —the bulk of these investments were in Peru’s traditional sectors. MIGA participated by extending guarantees for the transportation, mining, and financial sectors. IFC’s additionality at the country program level was particularly high in its investment in a private natural resource company whose royalties helped strengthen the administration of recipient poor municipalities with support from IFC. These activities were conducted in one of Peru’s poorest regions with IFC support. The municipalities—after being strengthened—utilized the royalties obtained to invest in local schools, roads, and other infrastructure, lifting the quality of services for the poor. Risk Identification and Mitigation 7. The CPS indicated that the main risks to the program were possible social conflict, vulnerability to external shocks, particularly a global economic downturn or natural disasters, and delays in the US approval of the Free Trade Agreement (FTA). The social conflict and the FTA risks had mitigating measures, but did not materialize. The strategy did not identify mitigating measures to address the impact of the external shocks, which indeed happened—major earthquakes, ―El Niño‖ and the global financial crisis. Outside of the original strategy framework, the WBG moved swiftly to provide support to Peru to help it cope with the first earthquake and the global financial crisis. Overview of CAS Implementation: Lending and Investments 8. IBRD lending amounted to US$2.7 billion over the CPS period—lower than the US3.5 billion indicated in the CPS. The reduced lending responded to an explicit government decision to minimize For Official Use Only CPSCR Review 4 Independent Evaluation Group borrowing from international financial institutions in view of the rapid growth of international reserves and fiscal revenues. Moreover, about US$1.4 billion of the funds borrowed were in the form of deferred drawdown options (DDOs), which were largely not exercised by Peru (only US$350 million were used by the country). The elleven policy loans made during the CPS period—which include the DDOs—amounted to US$2.2 billion, and fourteen projects—of which six were not programmed—amounted to about US$500 million. Nine programmed projects were dropped or postponed. The main development policy loan operations were on fiscal management and competitiveness (a programmatic series of four), the environment (a programmatic series of two), dealing with catastrophes, and results and accountability in social sectors. Investment projects focused on agriculture, water and sanitation, rural development, rural electrification, transport infrastructure, health reform, property rights, and water resources management. 9. Thirty-two IFC investment projects, with 24 partners, were in operation at inception of the review period, for US$309 million of net commitment. IFC had developed a sizeable investment portfolio in the pre-CPS period in a variety of activities and most of the projects related to agriculture were closed in the review period. During the review period, IFC committed another US$952 million for 47 projects, with 29 partners in a variety of sectors. The largest IFC interventions were for developing Peru’s natural resource exports: a US$ 36 million investment and US$340 million in loans for gas liquefaction and gas and oil field development. MIGA guarantees totaling $65 million helped investments in the transportation (US$7 million), mining (US$40 million), and financial (US$18 million) sectors. 10. Performance of IBRD projects was adequate and the portfolio remained healthy. The proportion of commitments at risk represented about 1 percent of the portfolio in FY11, better than the average for the Latin America and Caribbean Region (9.9 percent). Implementation of most projects was rated moderately satisfactory or satisfactory, with exception of the Sierra Rural Development Project and the Vilcanota Valley Rehabilitation and Management Project which were rated moderately unsatisfactory. Slow implementation of the latter two projects reflects delays in approving sub-components of the projects by the central government, and inexperience of the Cusco local government in implementing IBRD-financed projects. 11. Except for one project with a negative evaluation, IEG has rated IFC’s investment projects positively for development effectiveness. However, IFC’s portfolio approved during the CPS period is relatively new, and there are no IEG evaluations for the new projects. The average riskiness of the IFC portfolio appears to have gone up as IFC invested in equity in many projects in Peru, and ventured into areas that are more risky financially but have significant social returns. Advisory and Analytical Activities and Services 12. IBRD delivered 45 analytical and advisory activities (AAA), 15 of which were not planned. The areas covered by AAA included a Country Economic Memorandum (CEM), a Public Expenditure Review (PER), an FSAP update, as well as topics such as informality, anti-poverty strategy in Lima, effectiveness of anti-poverty intervention, skills and labor policies for the poor, rural electrification, capital markets development, national gas development strategy, governance and governability, national procurement system and strategy, decentralization in social sectors, municipal services assessment, social and distributional impact analysis of participatory budgeting, natural resources, land use, and the environment. In addition, there was non-lending technical assistance on poverty, education, nutrition, health, and governance. 13. During the CPS period, IFC continued to implement six advisory services in the pipeline. Through one of these, National Plan Peru, IFC provided investment climate support to eight municipalities and participated (along with USAID, CIDA, DIFID, USAID and more than 20 other entities) in Peru’s Tramifacil program, a program to reduce red tape and increase formalization. In addition, IFC began another 23 advisory services. Two of these were approved in FY11 but are in the pre-implementation stage. The major themes have been linking SMEs with large entities where IFC has invested, and strengthening municipalities in their use of natural resource based royalties to address the needs of the communities. The four finalized IEG advisory service project evaluations found the projects successful. For Official Use Only CPSCR Review 5 Independent Evaluation Group 14. The Peru CPE discussed in detail the effectiveness of the advisory and analytical activities of the WBG until FY09, finding that their impact was generally good but varied across sectors. Partnerships and Development Partner Cooperation 15. Within the WBG, cooperation at the strategy stage was positive between IBRD, IFC, and MIGA, but less so at the operational level, as noted in the Peru CPE. In some cases, such as IFC’s engagement in capacity development in the municipalities receiving royalties, closer IBRD-IFC engagement might have helped enhance the program and its scaling up. Beyond the WBG itself, cooperation with the IMF, the Inter American Development Bank (IADB), the Corporacion Andina de Fomento (CAF), the Fondo Latino Americano de Reservas (FLAR), and other external development partners was good, and framed within a strong leadership by the government. As noted above, IFC collaborated with CIDA, DFID, USAID and 20 other entities in one of its advisory services. Safeguards and Fiduciary Issues 16. There were no significant safeguards issues or fiduciary complaints that IEG is aware of. Overview of Achievement by Objective: Pillar 1: Promoting Economic Growth 17. Under this pillar the WBG’s support was to focus on (i) maintaining macroeconomic stability and reducing vulnerabilities; (ii) accelerating growth and widening the base of growth; and (ii) making growth environmentally sustainable. 18. Maintaining macro stability and reducing vulnerabilities. The WBG’s strategy’s understanding of Peru’s policy challenges to face its vulnerabilities included increasing tax collections while curtailing expenditures, reducing dollarization in the economy, especially dollar-denominated outstanding bank loans, and adopting hazard and risk management practices that mitigate the impact of natural disasters. The government’s own strategy in this area focused on continuing to implement a strong macro-framework that would deliver a sound fiscal policy, low inflation, and de-dollarize the economy. Indeed Peru had adopted a fiscal responsibility law in 1999, setting a limit of 1.0 percent of GDP on the structural fiscal deficit, which has been observed since. Peru’s tax revenues increased from 15.3 percent of GDP in 2006 to 16 percent in 2008, the CPS’s benchmark, but then declined to 15.2 percent in 2010, the latest year for which data is available. The government increased spending temporarily to counter the economic slowdown of 2009, using part of the resources saved under the fiscal rule, while maintaining the structural deficit below the statutory limit. The de-dollarization of the monetary system continued the trend of recent decades, with dollar-denominated bank loans declining from 50.8 percent of total loans in 2006 to 38.5 percent in 2011. The de-dollarization reflects many years of monetary prudence that have brought Peru’s inflation rate from hyperinflation levels in the late 1980s to one of the lowest in Latin America. On natural disaster preparedness and mitigation, the Ministry of Finance has created a risk management directorate and is adjusting investment standards and regulations. However, most of these accomplishments were in areas outside the purview, or capacity to influence of the WBG. 19. IBRD supported fiscal performance through a programmatic series of Fiscal Management and Competitiveness DPLs (FY07-FY10). On the tax revenue side the lead agency was the IMF, while IBRD and IADB played supporting roles. On the expenditure side IBRD’s support focused on institutional issues (reviewed under Pillar 3) and on expenditure priorities at the time of the global financial crisis. These interventions were well inside the framework of the fiscal responsibility law. As for de- dollarization, the WBG had no bearing on the Central Bank’s policy of maintaining a stable and convertible currency, which is the driver behind the gradual shift from dollars into soles in the Peruvian monetary system observed in recent decades. On natural disaster preparedness and mitigation, IBRD provided support through a Catastrophe DPL Deferred Drawdown Option approved in late 2010 (US$100 million), in the wake of ―El Niño‖ and ―La Niña‖. This intervention supplements the US$ 300 For Official Use Only CPSCR Review 6 Independent Evaluation Group million support provided by the Corporacion Andina de Fomento (CAF) in 2009, after Peru recovered from the 2007 earthquake. As for analytical work, IBRD delivered a Public Expenditure Review, a series of policy notes, and a brief comparative note on the cost of tax compliance for taxpayers based on surveys carried out in several countries. 20. IBRD also contributed to this general objective by providing contingent financing to help manage financial risk and mitigate the impact of the global financial crisis. Peru drew on its own reserves in 2008 and, for 2009, put together an external financial package that included US$ 2 billion in bond placements in international financial markets, US$ 1.4 million in DPL DDOs from IBRD, US$400 million from CAF, and additional financing from IADB. Even though Peru did not draw the bulk of the resources from IBRD’s DPL DDOs, these operations provided financing assurances, easing Peru’s return to the international bond market. Some of these operations are highlighted in the Peru CPE. 21. Accelerating growth and widening the base of growth. The WBG strategy had a broad focus in this objective. Its scope covered international market access and trade, the business environment, physical infrastructure, technological capacity, extractive industries, rural infrastructure, access to microfinance, informality, and expanding labor intensive sectors. Growth in Peru continues to be resource based, with some diversification as evidenced by the gradual decline in the share of the mining sector’s contribution to Peru’s GDP. Moreover, indicators such as the World Economic Forum (WEF) global competitive index show an improving trend from 3.9 over 7.0 in 2006-07 to 4.2 in 2011-12. There is little or incomplete information on the other sub-objectives, such as a decrease of informality. Yet the share of non-traditional exports in total exports declined from 25 to 22 percent from 2006 to 2011. 22. IBRD supported infrastructure investment through the Regional Transport Infrastructure Decentralization (FY06, still active), Peru Decentralized Rural Transport (FY07), and Second Rural Electrification (FY11) projects. The DPL series on Fiscal Management and Competitiveness (FY07- FY10) contributed to improved expenditure management, stressing the importance of the public investment program at the time of fiscal restraint. A more detailed discussion of the WBG activities in infrastructure can be found in the Peru CPE. Most of the lending designed to achieve the other sub- objectives were either dropped or postponed. Analytical work supporting this objective comprised Recent Economic Developments in Infrastructure (FY10), the National Gas Strategy (FY10), and the Small Hydropower non-lending technical assistance (FY08), as well as economic sector work on informality, labor, capital markets, and an FSAP update. 23. IFC’s contribution to this objective was mainly through investments and advisory services in mining, energy, and transportation. The pre-FY07 equity investments in gold and copper mining continued, and new equity investments were made in copper mining—these are the ―traditional‖ sectors of the Peruvian economy. Investments in the energy sector were extensive, with the largest investment in a natural gas liquefaction plant and transmission of the liquefied gas —mainly for exports—and distribution of gas (in Lima and Callao). In addition, in FY11, a hydroelectric project was approved and is under construction. On a different front, IFC interventions in the financial sector helped upgrade its investees—often with support from IFC advisory projects, supporting services such as life-insurance for the poor, residential mortgages, and penetration into geographically remote areas. In addition, IFC helped establish a secondary mortgage market company. IFC also provided loan guarantees for improvement of transportation services in Lima and Arequipa municipalities. 24. Early in the CPS period, IFC made a large investment (both loan and equity) to develop a gas and oil field, which seems to have fallen short of financial expectations. This investment, however, left an important footprint in terms of social and institutional development. IFC provided advisory support to the municipalities benefiting from the royalties paid by this particular investment, which are located in one of the poorest regions of the country. With IFC’s support, the municipalities used those resources to invest in local schools, roads, and other infrastructure. 25. MIGA’s largest guarantee was for a mining project. On transportation, MIGA provided a guarantee to facilitate the upgrading of Lima’s airport. MIGA also guaranteed an investment of an Ecuadoran bank in Peru. For Official Use Only CPSCR Review 7 Independent Evaluation Group 26. Making growth environmentally sustainable. The strategy focused on improving regulations, institutional frameworks, and developing awareness in the public and the government as a whole about the importance of environment conservation. To the extent that frameworks and regulations are pre- conditions for environmental sustainability, indeed Peru appears to be moving towards a more environmentally-conscious approach to development. But there is yet no concrete evidence of environmental improvement in Peru. Between 2006 and 2009, CO2 emissions appear unchanged, the marine protected areas have only increased slightly from 2.8 percent of total territorial waters to 3.0 percent, while the forest area has declined from 53.7 percent of Peru’s territory to 53.1 percent. Moreover, the Ministry of Health reports and remains concerned about the high levels of air pollution in the Lima-Callao area, which it monitors regularly. Nevertheless, the Ministry of the Environment is now monitoring the implementation of commitments of licensed businesses, has contingency plans on air quality for the most polluted cities, and is following up on mining legacies that pose a health and environmental threat to neighboring communities. 27. The most significant WBG intervention was a programmatic series of two Environmental DPLs (FY09, FY10), and the main piece of analytical work was a Country Environmental Assessment (FY06). The interventions also included support through five Global Environment Facility (GEF) trust fund AAAs. 28. IEG rates the outcome of the WBG strategy in Pillar 1 as moderately satisfactory. IEG notes that Peru’s own accomplishments in these areas, particularly on growth and macroeconomic stability are noteworthy. IEG also highlights the timeliness of the WBG’s support to Peru at the time of the global financial crisis, which was instrumental in helping the country access world bond markets, as well as the additionality of IFC’s intervention in supporting municipalities use their royalties benefiting their poor communities. With WBG support, Peru has improved public expenditure efficiency, some rural infrastructure, as noted in the Peru CPE, and environmental frameworks and regulations. The WBG made little progress in helping Peru reduce informality or promote non-traditional labor intensive sectors of the Peruvian economy, and came late in the CPS period with assistance on disaster preparedness and mitigation. IEG does not consider as satisfactory outcomes of the WBG strategy those that are fully achieved by the country without a clear contribution from the WBG, as was the case with de- dollarization or the fiscal responsibility rule. Pillar 2: Enhancing Social Development 29. Under this pillar the WBG’s support was to focus on (i) meeting basic needs; and (ii) promoting and developing a new social contract in education, health, and nutrition. 30. Meeting Basic Needs. The WBG’s strategy covered as basic needs water and sanitation, electricity, and housing and property rights. Between 2006 and 2010, strong economic growth and a pro-active government strategy led to a decrease in Peru’s index of unmet basic needs from 34 to 26 percent for the whole population and from 62 to 47 percent for the rural population. The share of Peruvian’s with access to treated water sources increased from 71.6 percent in 2006 to 74.1 percent in 2009, while that with access to sanitation increased from 72.4 percent to 74.8 percent in the same period. A significant improvement took place in the share of rural households with access to electricity, which increased from 28.9 percent in 2006 to 55.0 percent in 2010. There is no information, however, on progress on housing and property rights. 31. Main IBRD interventions to support this objective were the National Rural Water Supply and Sanitation Project (FY05), and the Rural Electrification Project (FY06). In addition, the WBG delivered two pieces of AAA: Poverty Monitoring and Information Systems (FY08), and Extreme Poverty— Effectiveness of Antipoverty Intervention I (FY10). An update of the latter was delivered in FY11, late in the CPS period. The impact of the WBG interventions on the infrastructure aspects of meeting basic needs are discussed in detail in the Peru CPE. 32. Promoting and developing a new social contract in education, health, and nutrition. The focus of the WBG strategy was on quality of education, on improving health indicators and organizing health care more in line with the evolving epidemiological profile, and on reducing malnutrition, especially of children. Outcomes were mixed. On education, for the period 2007 to 2010, the For Official Use Only CPSCR Review 8 Independent Evaluation Group standardized test used by Peru to measure progress in reading and mathematics of second grade students show that, at the national level, the proportion of students in the highest of three achievement levels increased from 15.9 to 28.7 percent and from 7.2 to 13.8 percent, respectively. The general improvement, however, hides troublesome developments, such as an increase of the proportion of rural students in the lowest achievement group in mathematics from 66.1 to 72.9 percent in 2007-10, and decline in performance, especially in mathematics, between 2009 and 2010. As noted in the Peru CPE, the WBG’s ―contribution in education was undermined by limited progress in in stitutional reform as well as its difficult relationship with the Ministry of Education.‖ On health, a reform of the health insurance system resulted in higher affiliation rates all over the country, as well as in an increase of over 40 percent in the health insurance budget. Births under institutional coverage increased from 63 percent (2007) to over 73 percent (2010) in the ten poorest regions, below the 75 percent target in the CPS. There is no information on how the health care has evolved to adapt to the changing epidemiological profile. Peru also made progress in reducing national chronic malnutrition, but seemingly short of the CPS target. 33. The WBG’s main lending was through the Results and Accountability in Social Sectors (REACT) DPL series (FY07-11), and the Health Reform APL II (FY09). In addition, the WBG provided the following technical assistance and economic sector work to support this objective: Juntos for Nutrition non-lending technical assistance (FY10), Results in Nutrition for Juntos SWAp (FY11), Health Reform Program (FY09), technical assistance in the Education Sector (FY10) and Universal Insurance Health Reform (FY11), as well as several pieces of economic sector work on the effectiveness of anti- poverty intervention in extreme poverty cases. The bulk of the WBG interventions focused on defining standards that families could expect from social services, developing monitoring systems, and providing individualized data for parents on the learning, health and nutrition status of their children. 34. In line with IFC’s approach in the health sector, IFC—with Peru Fund, an IFC investee—has recently approved investment in a hospital providing cutting edge oncology and cardiology services that will benefit mostly the middle-income groups. 35. IEG rates the outcome of the WBG strategy in Pillar 2 as moderately satisfactory. Peru made some progress in bringing down the index of unmet needs, and, with WBG support, in increasing access to water, sanitation and electricity. Peru also made progress, with mixed results in some cases, in improving the quality of education, the coverage of health services, and nutrition. There is no information on progress on housing and property rights, and on how health services have been adapted to the evolving epidemiological profile . Pillar 3: Modernizing Institutions 36. Under this pillar the WBG’s strategy aimed at supporting continuing progress on decentralization and public service access, strengthening public sector management, and improving the justice system and reducing corruption. 37. Furthering decentralization and access to public services. The movement toward decentralization, which had gained force under President Toledo, slowed down under President Garcia and is still, under President Humala, in the process of defining its objectives and modalities, particularly regarding the transfer of resources and responsibilities. Peru, nonetheless, has worked on strengthening local governments, as reviewed below. These efforts, however, have yet to bear fruit in terms of a stronger role for local governments and communities, as well as improved public service delivery at that level. Indeed, public service delivery outcomes show mixed progress, with a gradual improvement in some cases. Over the period of 2007-2009, net pre-primary school enrollment increased from 65 to 76 percent, while net primary school enrollment declined from 97 to 95 percent, and net secondary enrollment improved from 75 to 78 percent. In the health sector, between 2007 and 2010, the immunization for measles and DPT of children ages 12-23 months decreased from 95 and 97 percent, respectively, to 94 and 93 percent. Meanwhile, the share births attended by skilled health staff increased from 71 in 2006 to 83 in 2009. For Official Use Only CPSCR Review 9 Independent Evaluation Group 38. The WBG supported efforts in this area through the early DPLs of the programmatic series. 39. Strengthening public sector management. During the CPS period Peru made some progress in strengthening its public sector management. The World Bank Institute (WBI) indicator for Governance Effectiveness, which reflects perceptions of the quality of public services, the quality of the civil service, the degree of its independence from political pressures, the quality of policy formulation and implementation, and the credibility of the government's commitment to such policies, albeit still in the negatives, improved from -0.53 in 2006 to -0.21 in 2010, within a range that goes from -2.50 (weak) to 2.50 (strong). Similarly, the Wastefulness of Government Spending sub-index of the Global Competitive Index of the World Economic Forum improved from 2.9 over 7.0 in 2006-2007 to 3.8 in 2011-2012. In terms of specific policy actions, the Ministry of Finance adopted a unified treasury account, and introduced results-based budgeting for five strategic pilot programs in 2008, expanding the scope of the program to twenty four programs in 2011. In addition, as a result of the implementation of the Participatory Budget Law, many sub-national governments follow participatory budget norms in the preparation of the investment budget, but the system still needs mainstreaming and refining, as only 36 percent of the budgets rely on a participatory process. Also, most local governments are using an integrated financial administration system introduced during the CPS period. Moreover, many municipalities are now better equipped to gain access and use their royalties from the extractive sector. Many of these efforts took place after the Peru CPE period, and explain the higher rating in this review. 40. IBRD provided support in strengthening public sector management as part of the DPL programmatic series, especially the Results and Accountability in Social Sectors DPL series (FY07, FY09, and FY11). The main analytical work in support of better fiscal management was a Public Financial Management Performance Report (jointly with the EU and IADB). Additional AAA included Municipal Debt (FY07), Government and Governability Enhancement (FY09), Social and Distributional Impact Analysis of the Participatory Budget in Peru (FY10), and, late in the CPS period, Decentralization and Quality of Education (FY11) and Public Expenditure Sub-national Pilots (FY11). 41. IFC, aside from the support provided to the municipalities that benefited from the royalties from its investment, joined efforts with CIDA, DFID and USAID to implement the Canon (royalty) Management and the Improving Municipal Investment projects in five regions. 42. Improving the justice system and reducing corruption . Overall, there was a slight improvement in the justice system indicators and no significant change in the corruption indicators. The WBI indicator for Rule of Law, which reflects perceptions of the extent to which agents have confidence in and abide by the rules of society, and in particular the quality of contract enforcement, property rights, the police, and the courts, as well as the likelihood of crime and violence, albeit still in the negatives, improved from -0.75 in 2006 to -0.61 in 2010, within a range that goes from -2.50 (weak) to 2.50 (strong). Also, Latinobarómetro’s surveys shows that the approval rating of the judicial system increased from 13 percent in 2006 to 20 percent in 2012, while the disapproval rating declined from 76 percent to 69 percent in the same period. Moreover, a 2009 Social Assessment of a judicial project found that only 35 percent of surveyed case attorneys expressed satisfaction with the courts and their operation in Peru. In regard to corruption indicators, the WBI indicator for Control of Corruption, reflecting perceptions of the extent to which public power is exercised for private gain, including both petty and grand forms of corruption as well as "capture" of the state by elites and private interests, remained in the negatives and barely moved from -0.22 in 2006 to -0.23 in 2010, within a range that goes from -2.50 (weak) to 2.50 (strong). In terms of specific policy actions, the government introduced a program to provide legal assistance and alternative dispute resolution mechanisms to the poor and marginalized groups (Centros de Asistencia Legal Gratuita, ALEGRA). 43. The main interventions by the WBG were the Justice Services Improvement Project I and II (FY04, FY11). The latter is just beginning its implementation, while the former propped justice services in selected districts, worked on human resource management and supported some of the legal aid clinics that ALEGRA has. 44. IEG rates the outcome of the WBG strategy in Pillar 3 as moderately satisfactory. Peru made progress in strengthening public sector management and, with support from the WBG, established a For Official Use Only CPSCR Review 10 Independent Evaluation Group unified treasury account, and is making headway in results-based budgeting at the national level, participatory investment budgeting at the local level, and mainstreaming an integrated financial administration system at the sub-national level. Spending of royalties by some local governments is also benefiting local communities. Peru continues to work on improving its justice system and abating corruption, but progress has been slow and not entirely successful, despite having established an effective mechanism to aid the poor and marginalized in their dealings with the justice system. The decentralization process came to a halt for political reasons early in the CPS period, making the WBG’s objective of supporting it immaterial. Pillars IEG Rating Pillar 1: Promoting Economic Growth and Reducing Moderately Satisfactory Vulnerabilities Pillar 2: Enhancing Social Development Moderately Satisfactory Pillar 3: Modernizing Institutions Moderately Satisfactory 4. Overall IEG Assessment Outcome: Moderately Satisfactory IBRD Performance: Moderately Satisfactory IFC Performance: Satisfactory MIGA Performance: Moderately Satisfactory Overall outcome: 45. IEG rates the overall outcome of the WBG strategy in Peru as moderately satisfactory. IEG notes that Peru’s own accomplishments in many areas, particularly on growth, macroeconomic stability, de- dollarizing the monetary system, and addressing some basic needs are remarkable—these achievements are mostly attributable to Peru’s own efforts. IEG also highlights the timeliness of the WBG’s s upport to Peru at the time of the global financial crisis, which was instrumental in helping the country access world bond markets, as well as the additionality of IFC’s intervention in supporting municipalities use their royalties to benefit poor communities. With WBG support, Peru has improved public expenditure efficiency, some rural infrastructure as noted in the Peru CPE, and environmental frameworks and regulations, as well as increased access to water, sanitation and electricity, also highlighted in the Peru CPE. Peru made progress in strengthening public sector management and, with support from the WBG, established a unified treasury account, and is making headway in results-based budgeting at the national level, participatory investment budgeting at the local level, and mainstreaming an integrated financial administration system also at the sub-national level. Spending of royalties by some local governments is also benefiting local communities. With mixed results, Peru worked on improving the quality of education, the coverage of health services, and nutrition, and continues to work on improving its justice system and abating corruption, albeit slowly and with uneven outcomes. There is no information about progress on housing and property rights, and on how health services have been adapted to the evolving epidemiological profile. The WBG made little progress in helping Peru reduce informality or promote non-traditional labor intensive sectors of the Peruvian economy, and came late in the CPS period with assistance on disaster preparedness and mitigation. The country’s decentralization process came to a halt for political reasons early in the CPS period, making immaterial the WBG’s objective of supporting it. IBRD Performance: 46. IBRD performance is rated moderately satisfactory. IBRD reacted quickly and promptly to support Peru when it requested assistance to face the global financial crisis, and demonstrated flexibility in its AAA program. The WBG’s strategy and program were generally aligned with Peru’s development strategy. However, authorities’ feedback suggests that the initial policy platform developed under the CPS was short on detail, lacked agreement on specific interventions expected from the WBG, and could have given the wrong impression that Peru was going to use WBG services extensively in its For Official Use Only CPSCR Review 11 Independent Evaluation Group implementation of policies. In the event, Peru went its own way on developing its policies, and the dialogue with the authorities was not as fluid as needed for IBRD to adapt its own projects and programs to the government’s changing policy intentions. As a result, projects such as the decentralization in social sectors and rural education performed poorly. Moreover, the strategy lacked relevance of design, by including objectives that were not supported by appropriate IBRD interventions, or by having loose links between the objectives and the interventions. This was the case particularly under Pillar 1, where IBRD interventions, which were micro in scope, could not be expected to deliver the anticipated higher-order macro-objectives. The tourism and informality objectives were not supported by adequate interventions. In addition, some of the macro objectives in Pillar I (on inflation and de-dollarization for example) were outside the WBG’s purview, and capacity to influence. On a different dimension, the monitoring and evaluation framework of the strategy was weak, sometimes based on inexistent indicators or wrong baselines. The strategy was well-coordinated between IBRD, IFC and MIGA, but operations were poorly coordinated, especially between IBRD and IFC. IFC Performance: 47. IEG rates performance of IFC as satisfactory. IFC had an extensive program providing risk capital to private sector activities and services to the poor. IFC’s role to improve services to the poor came mostly through an opportune intervention with demonstrated additionality, by helping the neighboring municipalities of one of its investees use the royalties of the investment in new schools, health services, and road infrastructure. This intervention could have been scaled up had IFC and IBRD coordinated better their activities in Peru. MIGA Performance: 48. IEG rates performance of MIGA as moderately satisfactory. MIGA has developed a diversified portfolio with demand coming from developed and emerging market countries. However, using IFC investments and the growth enjoyed by the country as proxies for the opportunity for new MIGA business, the volume of MIGA guarantees appears to be modest. 5. Assessment of CPS Completion Report 49. This is a well-written CPSCR. It is detailed and comprehensive on the activities undertaken by the WBG. However, the CPSCR could have covered some of the country outcomes that correspond to the strategy objectives. It could also have been more forthcoming and dealt more in-depth with those areas of the program where things did not go well, to find out the reasons and draw lessons. The CPSCR could have also offered more information on the role of the government and other development partners in the achievement of the objectives of the WBG strategy. 6. Findings and Lessons 50. IEG underscores four lessons stemming from this review. First, the WBG has greater development effectiveness when it aligns its strategy with the government’s own program, as evidenced by the highly effective intervention supporting Peru’s actions to deal with the effects of the global financial crisis. By contrast, the WBG had less effective interventions in areas with little country buy in, such as the decentralization in social sectors and rural education. Second, the development effectiveness of the WBG can only be demonstrated where there are interventions that can help the country deliver the expected results. By contrast, strategy objectives that are beyond the purview of the WBG, although achieved by the country, are not a demonstration of the WBG ’s development effectiveness. Third, WBG strategies gain efficacy when they have a monitoring and evaluation framework that is based on available and verified data, and that can actually be used by the WBG to actively play out its strategy. Within this review, those objectives that were better monitored were the ones that showed the best development results. Fourth, the WBG could find ways of improving coordination within the Group itself to take advantage of good initiatives that can be scaled up for the benefit of the country, as could have been the case with IFC’s work with the municipalities that were receiving the royalties of its investees. Annexes CASCR Review 13 Independent Evaluation Group Annex Table 1a: Actual vs. Planned Lending, FY07-11 Annex Table 1b: Trust Funds, FY07-11 Annex Table 2: Analytical and Advisory Work, FY07-11 Annex Table 3a: IEG Project Ratings for Peru, FY07-FY11 Annex Table 3a: IEG Project Ratings for Peru and Comparators, FY07-FY11 Annex Table 4: Portfolio Status for Peru and Comparators, FY07-11 Annex Table 5: IBRD / IDA Net Disbursements and Charges Summary Report for Peru Annex Table 6: Total Net Disbursements of Official Development Assistance and Official Aid, 2007-2010 Annex Table 7: Economic and Social Indicators for Peru and Comparators, 2007-2010 Annex Table 8: Millennium Development Goals Annex Table 9: List of IFC’s investments in Peru that were active during FY07-11 (US$’000) Annex Table 10: List of IFC’s Advisory Services in Peru, FY07-11 Annex Table 11: List of MIGA’s Operations in Peru, FY07-11 (US$ ‘000) Annex Table 12: Summary of Achievements of the CPS Objectives Annexes CASCR Review 15 Independent Evaluation Group Annex Table 1.a: Planned and Actual Lending, FY07-11 Approve Project Proposed Proposed Project Approval FY d ID FY Amount Amount Programmed projects (CPS FY07-11) P10133 Fiscal Management and Competitiveness DPL 2007 2007 - 200.0 5 P10159 Second Programmatic Fiscal Management and Competitiveness DPL 2008 2009 - 700.0 0 (including Supplemental Financing) P10672 Third Programmatic Fiscal Management & Comp. DPL 2009 2010 - 150.0 0 P11621 Fourth Programmatic Fiscal Management DPL 2010 2011 - 100.0 4 P10147 Peru First Programmatic Environmental DPL/DDO 2008 2009 - 330.0 1 P11615 Second Programmatic Environmental DPL 2010 2010 - 50.0 2 P12086 Catastrophe Development Policy Loan DDO (CAT DDO) 2011 - 100.0 0 P07881 Regional Transport Infrastructure Decentralization 2007 2006 - 50.0 3 P07916 PE Sierra Rural Development Project 2007 2007 - 20.0 5 P11731 Results in Nutrition for Juntos SWAp 2007 2011 - 25.0 0 P09556 PE- (APL2) Health Reform Program 2007 2009 - 15.0 3 P10108 Results and Accountability in Social Sectors (REACT) DPL 2007 2007 - 150.0 6 P10117 Second Results and Accountability in Social Sectors (REACT) DPL- 2009 2009 - 330.0 7 Deferred Drawdown Option P11626 Third Results & Accountability in Social Sectors (REACT) Programmatic 2011 2011 - 50.0 4 DPL P10766 Water Resources Management Modernization (PRONASAR II) 2008 2010 - 10.0 6 Governance Enhancement Program Dropped - Fifth Programmatic Fiscal Management Development Policy Loan - Dropped - Infrastructure for Sustainable Tourism - Dropped - PE Sierra Rural Development Project II - Slipped to FY14 - PE- (APL3) Health Reform Program (III) - Slipped to FY14 - Low Income Housing - Dropped - Doing Business Enhancement Program - Dropped - Quality Assurance in Tertiary Education (previous Higher Education) - Slipped to FY13 - Supplemental Fiscal Management and Competitiveness DPL II - Dropped - Total Programmed projects CPS FY07-11 2280.0 Non-programmed projects P09557 Peru Decentralized Rural Transport Project - 2007 - 50.0 0 P11786 Second Rural Electrification - 2011 - 50.0 4 P11871 Peru Third Programmatic Environmental DPL - 2011 - 75.0 3 P11729 Optimization of Lima Water and Sewerage Systems (previous Water - 2011 - 54.5 3 Resources Management) P11075 Justice Services Improvement Project II - 2011 - 20.0 2 P10476 Sierra Irrigation Subsector - 2011 - 20.0 0 P11692 Peru Safe and Sustainable Transport Project (previous Additional - 2010 - 150.0 9 Financing Lima Transport Project) P11733 Agriculture, research and extension project III (Incagro III) - Slipped to FY14 - 6 Total non programmed projects CAS FY07-11 419.5 Annexes CPSCR Review 16 Independent Evaluation Group Approve Project Proposed Proposed Project Approval FY d ID FY Amount Amount Total projects CAS FY07-11 3500.01 2700.0 Project Project Approval FY Closed FY Approved Amount ID Ongoing projects P06525 National Rural Water Supply and Sanitation Project - 2003 Ongoing 80.0 6 P00805 Lima Water Rehabilitation and Management Project - 1995 2008 149.7 1 P05523 Rural Education Project - 2003 2008 28.9 2 P07343 Justice Services Improvement - 2004 2010 11.8 8 P00803 Irrigation Subsector Project - 1997 2009 94.7 7 P08880 Institutional Capacity for Sustainable Fiscal Decentralization TAL - 2005 2011 6.5 9 P07778 Trade Facilitation and Productivity Improvement Technical Assistance - 2003 2009 17.9 8 Project P04460 Second Rural Roads Project - 2001 2007 48.1 1 P08258 Agricultural Research and Extension APL Phase 2 - 2005 2011 23.2 8 P03574 Lima Urban Transport Project - 2004 2011 45.0 0 P08262 Vilcanota Valley Rehabilitation and Management Project - 2005 2011 4.1 5 P07889 Real Property Rights Consolidation Project - 2006 Ongoing 25.0 4 P09011 PE Rural Electrification - 2006 Ongoing 50.0 6 P07895 Accountability for Decentralization in the Social Sectors (previous - 2005 2009 6.6 3 Programmatic Social Reform TAL) P08183 Additional Financing - Lima Water Rehabilitation and Management Project 2003 2009 20.0 4 P07402 Lima Transport Project - 2004 2010 45.0 1 P07881 Regional Transport Decentralization - 2006 Ongoing 50.0 3 Source: Peru FY07-11 CPS/CASPR and WB Business Warehouse Table 2a.1, 2a.4 and 2a.7 as of 01/18/2012 . 1 The CPS planned an IBRD lending envelope of up to US$3.5 billion or up to US$700 million per annum during FY07-FY11. But it was not explicit about a breakdown of lending by operation, except to say that fast disbursing policy loans were expected to average US$400 million per year, reaching a maximum of US$2 billion over the CPS period. Annexes CPSCR Review 17 Independent Evaluation Group Annex Table 1.b: Trust Funds, FY07-11 Approved Approv Closin Project ID Project TF ID Amount al g GEF Strengthening Biodiversity Conservation through the National P095424 TF91166 0.2 2008 2009 Protected Areas GEF Strengthening Biodiversity Conservation through the National P095424 TF97155 8.9 2011 Active Protected Areas P120888 Peru Participatory intervention model to improve child nutrition TF96419 1.58 2011 Active GEF Saving Glaciers: Artisanal Industry Aims to Stop the Melt and Save P121012 TF97026 0.20 2011 Active Water P115008 Peru National Results Based Monitoring, Evaluation and Information TF96843 0.30 2011 Active P120124 Peru capacity building for sub-national public investment TF96018 0.40 2011 Active Peru-Strengthening the National System for Evaluation and Quality P117834 TF96586 0.40 2011 Active Assurance of Education P090110 PE Rural Electrification TF56023 10.00 2007 Active P065256 National Rural Water Supply and Sanitation Project TF54288 0.85 2005 2009 P068250 GEF Participatory Management of Protected Areas TF51285 14.80 2003 2011 P074021 Lima Transport TF52856 7.93 2005 2010 P073438 Justice Services Improvement TF54758 0.71 2006 2009 P073817 PE-Programmatic Social Reform Loan II TF51333 0.80 2004 2008 P079165 PE Sierra Rural Development Project TF51888 1.10 2004 2008 P081954 Poechos Hydropower Project TF54342 1.29 2004 Active P082291 Lima City Poverty Strategy IDF Grant TF52499 0.46 2004 2007 P082709 (CIDA) Small Towns Water and Sanitation Project TF51968 1.67 2006 2008 P090116 PE Rural Electrification TF54624 0.33 2005 2007 P092834 PE Santa Rosa Hydro Carbon Finance TF54010 0.44 2005 Active P094739 PE Huaycoloro Landfill Gas Recovery TF55184 3.84 2006 Active P095570 Peru Decentralized Rural Transport Project TF56582 0.76 2007 2007 P098846 Peru-Extractive Industries Transparency Initiative TF57870 0.30 2008 2011 Second Results and Accountability (REACT) Development Policy Loan- P101177 TF90644 1.00 2008 2010 Deferred Drawdown Option P104407 Strengthening Congressional Budget Oversight Capacity TF91818 0.49 2008 2011 P109786 Peru CONAM Institutional Capacity Strengthening TF92745 0.22 2009 Active P110920 Peru CDM Project Portfolio Consolidation Project - CF Assist TF91358 0.17 2008 2010 P115993 Improving the Quality and Efficiency of Public Expenditure Management TF95180 0.15 2010 Active GEF Indigenous Wisdom and Biomathematics: Amazonians Tackle P121006 TF96715 0.20 2010 Active Climate Change Adapting Native Andean Crops for Food Security in the Face of Climate P121136 TF96863 0.17 2011 Active Change P118713 Peru Third Programmatic Environmental DPL na 0.03 2011 Active P074021 Lima transport TF52856 7.4 2005 2010 P065256 National rural water supply and sanitation project TF54228 0.9 2005 2009 P104760 Sierra Irrigation Subsector na 0.3 2011 Active P125551 Round 23 - Peru - Enhancing Integrated Legal Strategies for the Poor TF099277 1.1 2010 Active P117310 Results in Nutrition for Juntos SWAp na 0.03 2011 Active P079165 PE Sierra Rural Development Project. na 0.3 2007 Active P008037 Irrigation Subsector Project na 0.02 1997 2009 P107666 Water Resources Management Modernization na 0.06 2010 Active P117318 Peru Vilcanota II Project Preparation TF096160 0.6 2012 Active P082588 Agricultural Research and Extension APL Phase 2 na 0.04 2005 2011 P116264 Third Results & Accountability (REACT) Programmatic DPL na 0.08 2011 Active P121854 Integration of Disaster Risk Information in Peru's Planning System TF099051 0.31 2010 Active P082625 Vilcanota Valley Rehabilitation and Management Project na 0.2 2005 2011 Source: Peru FY07-11 CPS/CASPR and WB Business Warehouse Table 2a.1, 2a.4 and 2a.7 as of 01/24/2012. Annexes CPSCR Review 18 Independent Evaluation Group Annex Table 2: Planned and Actual Analytical and Advisory Work, FY07-11 AAA ID Proposed Delivered to Client Output Type FY FY Economic and Sector Work Planned (CPS FY07-11) PE Informality Study P101334 na 2007 Report PE Informality Study II P106731 na 2008 Report PE-Recurso II P104262 na 2007 Report PE-Recurso III P106943 2009 2008 Report Review of Progress with FTAs na Dropped Justice Sector Access and Standards na Dropped PE-Recurso I 2006 PEFA I na 2009 PEFA II na Dropped Review of PPP na na 2009 Income, Poverty and Inequality Review na Dropped Financial Sector Assessment Program (FSAP) Update Peru P122390 2007 2011 Report Skills and Access to Urban Labor Markets in Peru P106406 2010 2011 Report PE Recurso IV P103644 2010 2010 Report PE Recurso V P117375 2011 2012 Report PE Policy Notes - Labor Market Review P113248 2010 2010 Policy Note PE Extreme Poverty-Effectiveness of Antipoverty Intervention P113917 2010 2011 Client Document Review PE Extreme Poverty-Effectiveness of Antipoverty Intervention II P122834 2010 2011 Client Document Review Social and Distributional Impact Analysis of the Participatory P112072 2010 2010 Policy Note Budget in Peru Peru - Recent Economic Development in Infrastructure (REDI) P106687 2009 2011 Report PERU Government and Governability Enhancement P106739 2009 2009 Report Peru Rural Electrification P093486 2007 Model/Survey Peru Natural Gas Study (National Gas Development Strategy) P111012 2010 2010 Report Overcoming Barriers to Hydropower Investment in Peru P109969 2009 2009 Report PE Public Expenditure Review (PER) P113889 2009 2011 Report Tax Compliance Cost Surveys 2009 2010 Non-planned Peru Small Hydropower P103422 2008 Client Document Review Peru Corporate Governance SOE Assessment P100333 2007 Report Peru - Insolvency & Creditor Rights ROSC P122177 2012 Report PE Policy Notes - AAA Decentralization (Decentralization in P103161 2010 Policy Note Social Sectors) Peru Capital Markets for Growth P106743 2008 Report Peru II Corporate Governance ROSC Assessment P126022 2012 Report Peru Policy Notes P121721 2012 Policy Note PE Municipal Debt P094276 2007 Report Technical Assistance Planned (CPS FY07-11) PE Education Sector P111529 2011 2010 "How-To" Guidance CEM (Country Economic Memorandum) P106728 2007 Forwarded to 2012 PE Universal Insurance Health Reform P101500 2011 2011 Client Document Review Natural Resources Land Use Change and Environment P117337 2011 2011 "How-To" Guidance Peru: Financial Crisis Simulation Program FIRST # 8086 P117351 na 2011 "How-To" Guidance PE Sub-national Pilots P110925 2010 2011 Client Document Review PE Juntos for Nutrition-NLTA P111717 2011 2011 "How-To" Guidance Decentralization and Quality of Education (previous P117589 2010 2011 "How-To" Guidance Decentralization and Public Expenditure Efficiency) FIRST: Peru Improving SME access to capital markets P105450 2009 2009 "How-To" Guidance Poverty monitoring and information systems P103116 2009 2009 Client Document Review Non-planned Peru - Technical Assistance on Ministry of Finance Public P110749 2009 "How-To" Guidance Private Partnerships (PPP) Law Drafting FIRST Peru: TA for strengthening private sector accounting P110336 2011 "How-To" Guidance and auditing Assessment of climate Impact on Peru's hydrology. P110305 2011 Knowledge-Sharing Development of a methodology Forum CA: Lima (Peru) City Poverty Strategy P081481 2008 Institutional Development Plan Annexes CPSCR Review 19 Independent Evaluation Group AAA ID Proposed Delivered to Client Output Type FY FY Peru Strategic Plan for the Telecommunications Investment P116789 2010 Client Document Review Fund Opportunities for the Information Technology and Information P117650 2010 Client Document Review Technology Enabled Services (IT/ITES) Off shoring Industry in Peru PE Poverty monitoring and information systems II P113841 2009 Client Document Review Source: Peru FY07-11 CPS/CASPR and WB Business Warehouse Table ESW/TA 8.1.4 as of 01/18/2012. Annexes CPSCR Review 20 Independent Evaluation Group Annex Table 3a: IEG Project Ratings for Peru, FY07-FY11 Total IEG Risk to Exit FY Project ID Project Name Evaluated IEG Outcome Development (US$M) Outcome * 2007 P044601 PE Second Rural Roads Project 48.1 Satisfactory Moderate PE GEF Indigenous Management 2007 P065200 0.0 Moderate Protection Areas. Satisfactory PE LIMA Water Rehabilitation and 2008 P008051 149.7 Negligible to low Management Project. Satisfactory Moderately 2008 P055232 PE- Rural Education 29.0 Significant unsatisfactory 2009 P008037 PE Irrigation Subsector Project 92.7 Satisfactory NA 2009 P077788 PE Trade Facil. and Prod. Improv. T. A. 16.0 Satisfactory Moderate 2009 P081834 PE Lima Water Rehab Additional Financing 14.5 Satisfactory Negligible to low 2010 P073438 PE Justice Services Improvement 7.1 Satisfactory Moderate PE-(CRL1) Accountability for 2010 P078953 Decentralization in the Social Sectors 4.1 Moderately Moderate unsatisfactory Moderately 2011 P088809 PE Inst. Capacity for Decent. TAL 1.8 Moderate satisfactory Source: WB Business Warehouse Table 4a.6 as of as of 01/23/2012. * With IEG new methodology for evaluating projects, institutional development impact and sustainability are no longer rated separately. Annex Table 3b: IEG Project Ratings for Peru and Comparators, FY07-11 Total Total Outcome Outcome RDO % Moderate RDO % Moderate Region Evaluated Evaluated % Sat ($) % Sat (No) or Lower ($) * or Lower (No) * ($M) (No) Peru 362.9 10 90.9 80.0 89.3 88.9 Uruguay 244.1 6 62.5 83.3 100.0 100.0 Colombia 1,189.8 15 94.1 78.6 92.7 84.6 LAC 9,312.3 194 81.6 77.8 80.2 74.2 World Bank 48,888.9 897 82.3 74.7 68.2 59.3 Source: WB Business Warehouse Table 4a.5 as of as of 01/23/2012. * With IEG new methodology for evaluating projects, institutional development impact and sustainability are no longer rated separately. Annexes CPSCR Review 21 Independent Evaluation Group Annex Table 4: Portfolio Status for Peru and Comparators, FY07-11 Fiscal year 2007 2008 2009 2010 2011 Peru # Proj 19 16 17 18 18 # Proj At Risk 6 4 4 1 1 % At Risk 31.6 25.0 23.5 5.6 5.6 Net Comm Amt 908.6 505.2 1743.3 1895.3 1948.4 Comm At Risk 299.1 83.8 56.6 10.0 20.0 % Commit at Risk 32.9 16.6 3.2 0.5 1.0 Uruguay # Proj 10 10 9 8 8 # Proj At Risk 0 0 0 0 1 % At Risk 0.0 0.0 0.0 0.0 12.5 Net Comm Amt 375.0 375.5 294.3 299.2 299.2 Comm At Risk 0.0 0.0 0.0 0.0 25.3 % Commit at Risk 0.0 0.0 0.0 0.0 8.5 Colombia # Proj 20 22 17 21 21 # Proj At Risk 0 2 2 2 3 % At Risk 0.0 9.1 11.8 9.5 14.3 Net Comm Amt 1,935.1 2,886.5 1,877.9 2,516.7 1,967.3 Comm At Risk 0.0 170.0 130.0 120.0 147.7 % Commit at Risk 0.0 5.9 6.9 4.8 7.5 LCR # Proj 280 291 294 302 291 # Proj At Risk 61 63 69 64 59 % At Risk 21.8 21.6 23.5 21.2 20.3 Net Comm Amt 16,874.7 18,277.4 26,127.9 32,044.9 32,353.1 Comm At Risk 3,606.6 3,722.7 3,296.1 5,314.7 3,194.8 % Commit at Risk 21.4 20.4 12.6 16.6 9.9 World # Proj 1,485 1,525 1,552 1,590 1,595 # Proj At Risk 243 276 344 366 337 % At Risk 16.4 18.1 22.2 23.0 21.1 Net Comm Amt 100,357.1 106,761.7 131,076.4 158,287.4 168,248.7 Comm At Risk 15,354.3 18,428.2 19,929.9 28,186.1 22,978.5 % Commit at Risk 15.3 17.3 15.2 17.8 13.7 Source: WB Business Warehouse Table 3a.4 as of 01/23/2012. Annexes CPSCR Review 22 Independent Evaluation Group Annex Table 5: IBRD/IDA Net Disbursements and Charges Summary Report for Peru (in US$ million) FY Disb. Amt. Repay Amt. Net Amt. Charges Fees Net Transfer 2007 38.1 243.4 -205.3 144.5 1.2 -350.9 2008 267.2 222.2 44.9 151.0 1.0 -107.1 2009 298.4 236.9 61.5 118.9 2.9 -60.3 2010 473.3 252.0 221.3 73.3 2.7 145.3 2011 262.9 266.2 -3.2 60.7 1.5 -65.0 Total (07-11) 1,339.9 1,220.7 119,259.9 548.5 9.3 -438.5 Source: WB Loan Kiosk, Net Disbursement and Charges Report as of 01/23/2012 Annexes CPSCR Review 23 Independent Evaluation Group Annex Table 6: Total Net Disbursements of Official Development Assistance and Official Aid, 2007- 2010 (in US$ million) Development Partner 2007 2008 2009 2010 2007-2010 Bilaterals Australia 0.24 0.03 0.07 1.9 2.24 Austria 1.01 0.89 0.81 0.93 3.64 Belgium 15.44 29.81 21.79 15.63 82.67 Canada 20.09 15.58 17.91 22.15 75.73 Denmark -0.44 0.3 0.54 1.4 1.8 Finland 2.34 2.93 2.63 3.26 11.16 France 6.21 9.27 9.03 10.1 34.61 Germany 7.58 93.55 79.8 51.85 232.78 Greece 0.22 0.13 0.13 0.1 0.58 Ireland 2.13 1.22 1 0.45 4.8 Italy 4.19 10.62 9.27 5.27 29.35 Japan 39.81 -17.91 -36.77 -711.61 -726.48 Korea 10.22 8.73 6.99 6.4 32.34 Luxembourg 4.1 2.1 1.69 1.49 9.38 Netherlands -0.09 -1.37 0.28 0.32 -0.86 New Zealand 1.16 0.01 0.05 0.24 1.46 Norway 143.03 0.29 -7.27 3.78 139.83 Portugal 0.06 .. 0.04 0.02 0.12 Spain 109.35 131.48 100.17 118.05 459.05 Sweden 5.77 3 2.85 1.02 12.64 Switzerland 14.57 17.8 22.23 21.35 75.95 United Kingdom -250.97 -11.61 1.07 1.27 -260.24 United States 94.08 94 104.39 130.64 423.11 DAC Countries, Total 230.1 390.85 338.7 -313.99 645.66 Czech Republic 0.92 0.72 0.59 0.35 2.58 Hungary 0.01 .. .. .. 0.01 Israel 0.67 1.07 0.88 0.87 3.49 Poland 0.13 0.09 0.11 .. 0.33 Slovak Republic 0.3 .. 0.04 .. 0.34 Thailand 0.01 0.03 0.02 0.04 0.1 Turkey 0.12 .. 0.16 0.03 0.31 United Arab Emirates .. .. .. 0.02 0.02 Other development partners 1.55 .. .. 0.01 1.56 Non-DAC Countries, Total 3.71 1.91 1.8 1.32 8.74 Multilaterals EU Institutions 65.2 52.43 73.8 25.76 217.19 GEF .. 0.67 8.78 3.48 12.93 Global Fund 12.23 17.73 22.06 22.95 74.97 IAEA 0.46 0.42 0.28 0.34 1.5 IDB Sp. Fund -6.77 -5.98 -5.2 2.58 -15.37 IFAD -2.01 -1.72 -3.66 -1.98 -9.37 UNAIDS 0.31 0.44 0.52 0.55 1.82 UNDP 0.81 1.1 1.83 0.83 4.57 UNFPA 1.49 1.98 2.15 3.8 9.42 UNICEF 1.37 0.93 0.87 1.15 4.32 UNTA 2.09 0.75 .. .. 2.84 WFP 0.71 2.68 0.41 -0.06 3.74 Multilateral, Total 74.72 70.26 100.67 58.33 303.98 All Development Partners, Total 308.53 463.02 441.17 -254.34 958.38 Source: OECD DAC Online database, Table 2a. Destination of Official Development Assistance and Official Aid - Disbursements, as of 01/24/2012 Annexes CASCR Review 24 Independent Evaluation Group Annex Table 7: Economic and Social Indicators for Peru and Comparators, 2007- 2010 Peru Peru Uruguay Colombia LCR World Series Name 2007 2008 2009 2010 Average 2007-2010 Growth and Inflation GDP growth (annual %) 8.9 9.8 0.8 8.8 6.5 6.7 4.1 3.6 1.8 GDP per capita growth (annual %) 7.7 8.7 -0.2 7.6 5.4 6.4 2.6 2.5 0.7 GNI per capita, PPP (current international $) 7170.0 8080.0 8270.0 8930.0 8426.7 12625.0 8665.0 10584.8 10683.6 GNI, Atlas method (billions current US$) 95.0 114.2 120.5 136.7 123.8 28.5 218.8 4062.7 58439.5 Inflation, consumer prices (annual %) 1.8 5.8 2.9 1.5 3.4 7.4 4.8 .. .. Composition of GDP (%) Agriculture, value added (% of GDP) 7.0 7.4 7.5 8.3 7.7 10.3 7.5 6.1 2.9 Industry, value added (% of GDP) 37.1 36.9 35.1 34.3 35.4 26.5 34.7 31.8 26.7 Services, etc., value added (% of GDP) 55.9 55.7 57.4 57.5 56.8 63.2 57.8 62.1 70.4 Gross fixed capital formation (% of GDP) 21.5 25.9 22.9 24.5 24.4 19.2 21.6 20.3 20.5 Gross domestic savings (% of GDP) 29.5 27.1 24.3 27.3 26.2 18.6 20.4 22.2 20.7 External Accounts Exports of goods and services (% of GDP) 29.1 27.3 24.0 25.1 25.5 27.5 16.6 22.9 27.9 Imports of goods and services (% of GDP) 22.4 27.1 20.4 22.2 23.2 28.5 19.1 22.6 28.0 Current account balance (% of GDP) 1.4 -4.2 0.2 -1.5 -1.8 -1.4 -2.7 .. .. External debt, total (% of GNI) 32.4 28.8 29.7 24.6 27.7 34.8 21.9 .. .. Total debt service (% of GNI) 9.2 4.4 3.7 4.6 4.2 4.1 3.8 3.6 .. Total reserves in months of imports 9.8 8.4 11.5 11.5 10.5 7.8 5.5 8.1 12.9 Fiscal Accounts /1 /2 Revenue and Grants (% of GDP) 20.7 20.9 18.5 19.2 19.5 27.5 26.1 .. .. Total Expenditure (and net lending, % of GDP) 16.0 17.3 19.5 18.9 18.6 25.8 27.8 .. .. Overall Balance (% of GDP) 3.3 2.2 -2.0 -1.5 -0.4 -1.1 -1.7 .. .. Public Sector Gross Debt (% of GDP) 30.9 25.7 27.4 26.7 26.6 59.9 34.1 .. .. Social Indicators Health Life expectancy at birth, total (years) 73.1 73.3 73.5 .. 73.4 76.0 73.0 73.6 69.1 Immunization, DPT (% of children ages 12-23 months) 97.0 99.0 93.0 93.0 95.0 94.5 91.3 92.6 83.8 Improved sanitation facilities (% of population with access) .. 68.0 .. .. 68.0 100.0 74.0 79.4 60.6 Improved water source (% of population with access) .. 82.0 .. .. 82.0 100.0 92.0 93.4 86.8 Mortality rate, infant (per 1,000 live births) 18.7 17.4 16.1 14.9 16.1 10.0 17.4 19.2 42.5 Population Population, total (in millions) 28.2 28.5 28.8 29.1 28.8 3.3 45.3 579.2 6725.2 Population growth (annual %) 1.1 1.0 1.1 1.1 1.1 0.3 1.4 1.1 1.2 Urban population (% of total) 71.3 71.4 71.5 71.6 71.5 92.4 74.7 78.7 50.2 Education School enrollment, preprimary (% gross) 68.6 72.9 77.5 .. 75.2 85.2 47.4 71.4 47.3 School enrollment, primary (% gross) 113.8 110.2 108.5 .. 109.3 114.0 119.0 116.0 106.6 School enrollment, secondary (% gross) 89.7 89.8 91.6 .. 90.7 88.3 92.6 88.6 67.4 Source: WB World Development Indicators (01/23/2012) for all indicators excluding those noted. 1/ IMF 2010. Republic of Peru: Article IV. 2/ 2010 data are IMF's projections. Annexes CASCR Review 17 Independent Evaluation Group Annex Table 8: Peru - Millennium Development Goals 1990 1995 2000 2009 Goal 1: Eradicate extreme poverty and hunger Employment to population ratio, 15+, total (%) 53 61 64 69 Employment to population ratio, ages 15-24, total (%) 34 48 50 53 Income share held by lowest 20% 5.6 4.4 3.2 3.6 Malnutrition prevalence, weight for age (% of children under 5) 8.8 5.7 5.2 .. Poverty gap at $1.25 a day (PPP) (%) 1 3 5 2 Poverty headcount ratio at $1.25 a day (PPP) (% of population) 2 9 15 8 Prevalence of undernourishment (% of population) 27 21 18 15 Vulnerable employment, total (% of total employment) 36 36 44 40 Goal 2: Achieve universal primary education Literacy rate, youth female (% of females ages 15-24) .. .. .. 97 Literacy rate, youth male (% of males ages 15-24) .. .. .. 98 Persistence to last grade of primary, total (% of cohort) .. .. 81 83 Primary completion rate, total (% of relevant age group) .. 89 102 101 Total enrollment, primary (% net) .. 90 100 97 Goal 3: Promote gender equality and empower women Proportion of seats held by women in national parliaments (%) 6 11 11 28 Ratio of female to male primary enrollment (%) 97 97 99 100 Ratio of female to male secondary enrollment (%) 94 94 93 99 Ratio of female to male tertiary enrollment (%) .. .. 98 .. Share of women employed in the nonagricultural sector (% of total nonagricultural employment) 37.2 38.9 41.3 42.9 Goal 4: Reduce child mortality Immunization, measles (% of children ages 12-23 months) 64 98 97 91 Mortality rate, infant (per 1,000 live births) 62 51 35 19 Mortality rate, under-5 (per 1,000) 78 62 40 21 Goal 5: Improve maternal health Adolescent fertility rate (births per 1,000 women ages 15-19) .. .. 66 54 Births attended by skilled health staff (% of total) 80 56 59 83 Contraceptive prevalence (% of women ages 15-49) 59 64 69 73 Maternal mortality ratio (modeled estimate, per 100,000 live births) 250 220 160 98 Pregnant women receiving prenatal care (%) 64 67 84 94 Unmet need for contraception (% of married women ages 15-49) 16 12 10 .. Goal 6: Combat HIV/AIDS, malaria, and other diseases Children with fever receiving antimalarial drugs (% of children under age 5 with fever) .. .. .. .. Condom use, population ages 15-24, female (% of females ages 15-24) .. .. 9 .. Condom use, population ages 15-24, male (% of males ages 15-24) .. .. .. .. Incidence of tuberculosis (per 100,000 people) 320 240 180 120 Prevalence of HIV, female (% ages 15-24) .. .. .. 0.3 Prevalence of HIV, male (% ages 15-24) .. .. .. 1 Prevalence of HIV, total (% of population ages 15-49) 0.1 0.2 0.4 0.5 Tuberculosis case detection rate (all forms) 55 78 81 94 Goal 7: Ensure environmental sustainability CO2 emissions (kg per PPP $ of GDP) 0.3 0.2 0.2 0.2 CO2 emissions (metric tons per capita) 1.0 1.0 1.2 1.5 Forest area (% of land area) 55 54 54 54 Improved sanitation facilities (% of population with access) 54 59 62 68 Improved water source (% of population with access) 75 77 79 82 Marine protected areas (% of total surface area) .. .. .. 3 Terrestrial protected areas (% of total surface area) .. .. .. 13.8 Goal 8: Develop a global partnership for development Debt service (PPG and IMF only, % of exports, excluding workers' remittances) 7 13 24 10 Internet users (per 100 people) 0.0 0.0 3.1 24.7 Mobile cellular subscriptions (per 100 people) 0 0 5 73 Net ODA received per capita (current US$) 18 15 15 16 Telephone lines (per 100 people) 3 5 7 10 Other Fertility rate, total (births per woman) 3.8 3.3 2.9 2.6 GNI per capita, Atlas method (current US$) 720 1,990 2,050 4,200 GNI, Atlas method (current US$) (billions) 15.7 47.8 53.3 122.4 Gross capital formation (% of GDP) 16.5 24.8 20.2 22.5 Life expectancy at birth, total (years) 66 68 71 73 Literacy rate, adult total (% of people ages 15 and above) .. 87 .. 90 Population, total (millions) 21.8 23.9 26.0 29.2 Trade (% of GDP) 29.6 30.8 34.2 43.3 Source: World Development Indicators database as of 01/24/2012. Annexes CASCR Review 18 Independent Evaluation Group Annex Table 9: List of IFC’s investments in Peru that were active during FY07-11 (US$’000) IFC Total Net Closure Project IFC Sector Project Net Project ID Cmt. FY Sector Net Equity Commitme FY Status Primary Size Loans Explntry nt Investments approved pre-FY07, but active during FY07-11 2983 Gold 1993 Active IINR 24,674 12,343 332 12,675 (equity active) mining 3823, 7447, 1993,96, Copper Active IINR 159,792 12,870 12,870 10170,10837 2000,01 mining 4498, Financial 1995, 96 2008 Closed Fund 20,010 13,890 13,890 4618 Markets 8279 1998 2008 Closed MAS Sugar 83,300 14,178 14,178 Financial 8484 1998 2008 Closed Leasing 13,000 10,000 2,500 12,500 Markets Inactive 8267 2000 after MAS Dairy 15,000 7,000 7,000 11/08 9180 2000 2010 Closed MAS Flour mill 158,588 40,000 40,000 9248, Agri. 2000, 05 2010 Closed MAS 40,260 20,000 20,000 22033 Storage 9615, 2000, 05 Active MAS Sugar 59,426 15,000 300 15,300 22477 9874 2001 (2012) Active MAS Hotel 22,400 6,000 6,000 10651 2001 2008 Closed MAS Tour Op. 8,000 5,000 5,000 10024 2002 (2012) Active IINR Railways 41,900 9,000 9,000 Financial Life 10730, 20480 2002, 03 2009 Closed 4,593 4,593 4,593 Markets Insurance Industrial 10894 2002 2010 Closed MAS 20,200 5,400 2,000 7,400 Products Electricity 11026, 20535 2002, 03 Active IINR 30,200 18,000 200 18,200 Dstrbtn. Financial 11108 2002 2007 Closed Microfin. 5,000 3,000 3,000 Markets Toll Road 20050 2003 Active IINR 90,878 18,000 18,000 Oprtn. 11007 2004 2009 Closed MAS Dairy 25,000 19,000 19,000 Financial 22412 2004 (2012) Closed Microfin. 4,000 4,000 4,000 Markets Ag. & Ind. 23010 2005 2009 Closed MAS 59,000 7,500 7,500 Cnglmrate 23545 2005 Active MAS University 20,000 4,500 4,500 23878 2005 Active MAS Hotel 10,000 10,000 10,000 Financial 24759 2006 Active Microfin. 69,000 29,000 29,000 Markets Fruits and 24873 2006 Active MAS 36,341 15,000 15,000 Veg. Subtotal 1,020,502 271,921 36,685 308,606 Source: IFC, June 2011- The list does not cover the regional projects. MAS: Manufacturing, Agriculture, and Services: IINR: Industry, Infrastructure, and Natural Resources Annexes CPSCR Review 27 Independent Evaluation Group Annex Table 9 (Continued): List of IFC’s investments in Peru that were active during FY07-11 (US$’000) IFC Closure Project IFC Sector Project Total Net Project ID Cmt. FY Sector Net Loans Net Equity FY Status Primary Size Commitment Explntry Investments approved in FY07-11 24051 2007, 08 Active MAS Sugar 43,704 18,300 18,300 26953 24346 26963 2007, 08, 28093 Active IINR Oil & Gas 216,599 40,438 36,099 76,537 09, 09 28615 29526 24366 28007 2007, Financial Secondry Active 51,420 329 961 1,290 29669 09,10,11 Markets Mrtg. Fin. 30567 24489 2007 Active IINR Airport 20,000 20,000 20,000 Financial 24892 2007 Closed Microfin. 2,480 2,480 2,480 Markets Financial Housing 25360 2007 Active 130,000 88,000 88,000 Markets Energy Financial 25374 2007 Active Microfin. 14,000 7,000 7,000 14,000 Markets 25717 Financial 2007, 11 Active SME 48,000 33,000 33,000 29540 Markets 25931 2007 Active MAS Hotel 29,000 13,000 13,000 Liquifctn. 25390 2008 Active IINR Plant + 3,971,709 300,000 300,000 Pipeline Financial 27762 2008 Active Microfin. 12,762 6,616 6,616 Markets 26076 2008 Active MAS Agri. 32,800 12,000 12,000 Financial 26100 2008 Active Leasing 10,000 10,000 10,000 Markets Diversfd. 26110 2008 Active IINR 66,000 10,000 10,000 Energy Financial B-Loan & 26456 2008 Active 190,000 0 Markets 25360disb Financial 25964 2009 Active Trade 21,133 21,133 Markets 26130 Copper 2009 Active MAS 17,000 17,000 17,000 30734 mining 26150 29183 2009, 29686 Financial Life 10,10,11, Active 31,315 1,994 1,994 30356 Markets Insurance 11,11 30776 30959 27292 2009, Financial 29693 Active Microfin. 13,627 11,706 11,706 11,11 Markets 31178 28215 Copper 2009, 11 2011 Closed IINR 27,799 17,799 17,799 29660 mining 28302 2009 Active MAS Paper 400 400 400 Annexes CPSCR Review 28 Independent Evaluation Group IFC Closure Project IFC Sector Project Total Net Project ID Cmt. FY Sector Net Loans Net Equity FY Status Primary Size Commitment Explntry Financial Mid-cap 26918 2010 Active 15,000 15,000 15,000 Markets Fund Financial 27715 2010 Active Muni Fin 32,000 31,685 31,685 Markets Nat. Gas 28031 2010 Active IINR 235,800 50,000 50,000 Dstbtn. 28741 2010 2010 Closed IINR Water 424,500 44,180 44,180 Financial 27727 2011 Active Muni Fin 5,500 5,345 5,345 Markets Financial 28971 2011 Active Trade 36,000 36,000 Markets Electricity 29405 2011 Active IINR 290,000 70,000 70,000 Generatn 29595 2011 Active MAS Hospital 70,000 25,000 25,000 Subtotal 6,001,415 814,506 137,959 952,465 Grand total 7,021,977 1,086,427 174,644 1,261071 Source: IFC, June 2011- The list does not cover the regional projects. MAS: Manufacturing, Agriculture, and Services; IINR: Industry, Infrastructure, and Natural Resources Annexes CPSCR Review 29 Independent Evaluation Group Annex Table 10: List of IFC’s Advisory Services in Peru, FY07-11: Project Primary Business Total Project ID Project Name Start FY End FY Status Line Funds, US$ Advisory Services operations approved pre-FY07, but active during FY07-11 533764 LK:Edyficar TA Dec-06 Jul-07 Closed Access to Finance 73,000 539023 Yanacocha Cjamarca Oct-05 Aug-07 Closed SBA 550,000 542364 LK: Yanacocha III May-06 Feb-09 Closed SBA 371,204 542665 Government Best Practice Apr-06 Jul-07 Closed Inv. Climate 150,000 543944 National Plan Peru Feb-06 May-10 Closed Inv. Climate 1,152,150 544284 Nesst Peru Sep-06 Jun-09 Closed SBA 127,150 Subtotal: 2,423,504 Advisory Services operations approved in FY07-11 506050 BDGEF Inka Terra (Biodiversity) Mar-04 Dec-08 Closed SBA 480,000 506393 GEF BD Poison Dart Frog Nov-04 May-07 Closed SBA 687,308 523361 GEF SE Biofuels Transportation Jul-04 Dec-08 Closed SBA 1,054,800 542324 VCA/CSR Apparel Aug-06 Jun-07 Closed Inv. Climate 176,550 Canon Monitoring (social 549485 accountability) Peru Dec-06 Dec-10 Closed SBA 1,782,430 549865 Canon Management Peru May-07 Dec-10 Closed SBA 900,000 Access to Finance 550267 EBGEF Continental Peru Oct-06 Nov-10 Closed (EE) 530,000 556865 Edyficar Upgrade Oct-07 Active Access to Finance 403,980 557026 Edpyme Confianza Transformation Apr-08 Jun-11 Closed Access to Finance 257,400 559447 MSME AmerLeasing Aug-07 Hold Access to Finance 125,000 Promoting Eff use of Oil Royalties 561317 (Tumbes/BPZ) Apr-08 Jan-10 Closed SBA 45,651 561489 CT R – Viru SA Oct-07 Jul-08 Closed SBA 127,500 566909 Peru LNG Linkages Oct-08 Active SBA 1,462,434 566947 Peru LNG Community (E&S). Mntrng. Oct-08 Feb-10 Closed SBA 120,000 567347 Rio Tinto – Enhancing Royalties Inv. Feb-09 Jan-11 Closed SBA 146,098 567387 Peru LNG Enhancing Royalties Inv. Nov-08 Jun-11 Closed SBA 980,000 568547 Opp for dev of IT/ITES ind in Peru May-09 Jun-10 Closed Inv. Climate 100,000 568467 Inspections Peru Jul-10 Hold Inv. Climate 614,382 Rio Tinto II -Imp. Inv. Mgmt. of a 572627 Social Fund Dec-09 Jan-11 Closed SBA 65,347 574927 BPZ II Enhancing Royalties Feb-10 May-11 Terminated SBA 49,240 579128 Rural Fin. Peru - Micro Nov-10 Active Access to Finance 1,200,000 581028 Strengthening Local Govt. Feb-11 Active SBA 4,073,540 583008 Municipality Royalty Inv. Feb-11 Active SBA 3,840,000 Subtotal: 19,221,660 Grand Total 21,645,164 Source: Source: IFC, January 2012 SBA: Sustainable Business Advisory Annexes CPSCR Review 30 Independent Evaluation Group Annex Table 11: List of MIGA’s Operations in Peru, FY07-11 (US$ ‘000) Project Max. Gross Project ID Contract Enterprise FY Status Sector Investor Issuance 732 Compania Minera Antamina S.A. 2007 Active Mining Japan 39,960 3960 Mitsui del Peru S.A. 2007 Active Transportation USA 600 Banco Universal S.A. Unibanco; 8204 ORCA Credit Holdings LLC 2010 Active Financial Markets Ecuador 18,000 4006 Lima Airport Partners S.R.L. 2011 Active Transportation Germany 6,464 Grand Total: 65,024 Source: MIGA, January 2012 Annexes CPSCR Review 31 Independent Evaluation Group Annex Table 12: Summary of Achievements of the CAS/CPS Objectives CPS 07-11: Pillar 1 Actual Results Comments Promoting Economic Growth (as of current month year) Objectives 1. Maintaining macro stability and reducing vulnerabilities 2. Accelerating growth and widening the base of growth 3. Making growth environmentally sustainable Major 1. Maintaining macro stability and reducing Outcome vulnerabilities Measures Achievement of rating of Investment Grade Peru achieved Investment Grade by Fitch, (upgrade from current grade BB+ to investment Standard & Poor’s and Moody’s by 2010. Source: Fitch, Standard & Poor’s grade BBB). Notes in 2011: Fitch: BBB, Standard & and Moody’s. Poor’s: BBB Moody’s: Baa3. All three ratings are above the “investment grade”. Accumulated inflation (excluding food and fuels) of Cumulative inflation, excluding food and 12.5 percent or below from 2007 to 2011. fuels reached 11.3 percent between Source: Central Bank of Peru January 2007 and December 2011. (BCRP) Reduce public debt from 38 to 26 percent of GDP if Outstanding public debt as a percent of no adverse external shocks or 32 percent of GDP if GDP was 34.4 in 2006. This percentage Source. BCRP some external shocks. decreased to 23.9 in 2010 and to an average of 21.7 for the first three quarters of 2011. Reduce dollarization of the financial system from 65 The share of dollar denominated liabilities in to 52 percent. broad money of the banking system Source. BCRP decreased from 50.8 percent in 2006 to 38.5 percent in December 2011. 2. Accelerating growth and widening the base of growth Improve business environment Peru improved its score of overall competitiveness from 3.94 (position 74 over Source: Global Competitiveness 125 countries) in 2006-07 to 4.21 (position Reports (World Economic Forum). 67 over 142 countries) in 2011-12. Peru improved the most in factors that enhanced efficiency and in the basic requirements category. Nevertheless, it has shown a decrease on the measure accounting for innovative factors during this period. Increase public investment in infrastructure to from No data available This indicator was not monitorable less than 1 percent to 3 percent of GDP. directly, nor monitored. Available data refers to the investment budget of sectors that are considered having a high infrastructure component. Increase enrolment and graduation rates in science, No data available technology, innovation and related disciplines at the tertiary level. Increase in non-traditional exports from 25 percent The share of non-traditional exports in total to 40 percent of total exports. exports fell from 25 percent to 22 percent in Source: CPSCR 2011. Increase the number of new exporting firms located The number of new exporting firms located in developing regions2 from 24 to 39. in developing regions was 31 as of Source: CPSCR February 2011. Reduce informality rate from 60 to 51 percent. The informality rate targeted in the CAS is based on the Schneider methodology. The latest information of this measure gives a rate of 57 for 2006. There is not data available after 2006. Increase in the number of tourists that visit Peru Annual tourist visitors to Peru increased annually from 1.3 million to 2 million. from 1.72 million in 2006 to 2.3 million in Data for 2011 are not yet available. 2010. Source: Mincetur (Ministry of Trade and Tourism) 2 The included regions were Puno, San Martin, Madre de Dios, Huancavelica, Amazonas, Ayacucho and Apurimac. Annexes CPSCR Review 32 Independent Evaluation Group CPS 07-11: Pillar 1 Actual Results Comments Promoting Economic Growth (as of current month year) 3. Making growth environmentally sustainable Implementation of post-license monitoring system In 2008, Government established the by the Ministry of Environment. “Organismo de Evaluacion y Fiscalizacion Ambiental (OEFA)” with responsibility for Source: Ministry of Environment continuously monitoring the implementation of environmental commitments of licensed businesses. Publish and disseminate widely air quality data for Daily air quality monitoring data for the the Lima-Callao Metropolitan Region. cities of Lima and La Oroya is published and disseminated through SENAMHI’s Source: SENAMHI (Peruvian National Service of Meteorology and Hydrology) and DIGESA’s (Office of Health Management) websites. Ongoing pre CPS 07-11 P008037 Irrigation Subsector Project Approved FY97. Closed FY09. IEG outcome rating: Satisfactory Support P088809 Institutional Capacity for Sustainable Approved FY05. Closed FY11. IEG outcome rating: Moderately Fiscal Decentralization TAL. Satisfactory P077788 Trade Facilitation and Productivity Approved FY03. Closed FY09. IEG outcome rating: Satisfactory Improvement Technical Assistance Project. P044601 Second Rural Roads Project. Approved FY01. Closed FY07. IEG outcome rating: Satisfactory P082588 Agricultural Research and Extension APL Approved FY05. Closed FY11. Latest Internal Rating Phase 2. (IR):Satisfactory P035740 Lima Urban Transport Project. Approved FY04. Closed FY11. Latest IR: Satisfactory P082625 Vilcanota Valley Rehabilitation and Approved FY05. Closed FY11. Latest IR: Moderately Unsatisfactory Management Project. P078894 Real Property Rights Consolidation Approved FY06. Active. Latest IR: Satisfactory Project. P090116 PE Rural Electrification. Approved FY06. Active. Latest IR: Satisfactory P078953 Accountability for Decentralization in the Approved FY05. Closed FY09. IEG outcome rating: Moderately Social Sectors (Previous Programmatic Social unsatisfactory Reform TAL). P074021 Lima Transport Project Approved FY04, Closed FY10 P078813 Regional Transport Decentralization Approved FY06. Active. Latest IR: Satisfactory New P101335 Fiscal Management and Competitiveness Approved FY07. Closed FY08. Lending DPL. Support P101590 Second Programmatic Fiscal Approved FY09. Active. Latest IR: Satisfactory Management and Competitiveness DPL (including Supplemental Financing) P106720 Third Programmatic Fiscal Management & Approved FY10. Active. Latest IR: Satisfactory Comp. DPL. P116214 Fourth Programmatic Fiscal Management Approved FY10. Closed FY12. Latest IR: Satisfactory DPL. P101471 Peru First Programmatic Environmental Approved FY09. Active. Latest IR: Satisfactory DPL/DDO. P116152 Second Programmatic Environmental Approved FY10. Active. Latest IR: Satisfactory DPL. P120860 Catastrophe Development Policy Loan Approved FY11. Active. Latest IR: Satisfactory DDO. P079165 PE Sierra Rural Development Project. Approved FY07. Active. Latest IR: Satisfactory P104760 Sierra Irrigation Subsector. Approved FY11. Active. Latest IR: Moderately Satisfactory P107666 Water Resources Management Approved FY10. Active. Latest IR: Satisfactory Modernization (PRONASAR II). P095570 Peru Decentralized Rural Transport Approved FY07. Active. Latest IR: Satisfactory Project. P117864 Second Rural Electrification. Approved FY11. Active. Latest IR: Satisfactory P118713 Peru Third Programmatic Environmental Approved FY11. Active. Latest IR: Satisfactory DPL. P116929 Peru Safe and Sustainable Transport Approved FY10. Active. Project (Additional Financing Lima Transport Project). P078813 Regional Transport Infrastructure Approved FY06. Active. Latest IR: Satisfactory Decentralization. Annexes CPSCR Review 33 Independent Evaluation Group CPS 07-11: Pillar 1 Actual Results Comments Promoting Economic Growth (as of current month year) Planned P113889 (ESW) PE Public Expenditure Review Delivered FY11. AAA (PER) P122390 (ESW) Financial Sector Assessment Delivered FY11. Program (FSAP) Update Peru. Review of PPP. Delivered FY09. P101334 (ESW) PE Informality Study. Delivered FY07. P106731 (ESW) PE Informality Study II. Delivered FY08. Tax Compliance Cost Surveys. Delivered FY10. P111012 (ESW) Peru Natural Gas Study (National Delivered FY10. Gas Development Strategy). P106687 (ESW) Peru - Recent Economic Delivered FY11. Development in Infrastructure (REDI). P106406 (ESW) Skills and Access to Urban Labor Delivered FY11. Markets in Peru. P093486 (ESW) Peru Rural Electrification. Delivered FY07. P117337 (TA) Natural Resources Land Use Delivered FY11. Change & Environment. P109969 (ESW) Overcoming Barriers to Delivered FY09. Hydropower Investment in Peru. P105450 (ESW) FIRST: Peru Improving SME Delivered FY09. access to capital markets. P117351 (TA) Peru: Financial Crisis Simulation Delivered FY11. Program FIRST # 8086. Additional P106743 (ESW) Peru Capital Markets for Growth Delivered FY08. AAA P103422 (ESW) Peru Small Hydropower. Delivered FY08. P121721 (ESW) Peru Policy Notes. Delivered FY12. P113248 (ESW) PE Policy Notes - Labor Market Delivered FY10. Review. P110305 (ESW) Assessment of climate Impact on Delivered FY11. Peru's hydrology. Development of a methodology. P116789 (ESW) Peru Strategic Plan for the Delivered FY10. Telecommunications Investment Fund. P117650 (ESW) Opportunities for the Information Delivered FY10. Technology and Information Technology Enabled Services (IT/ITES) Off shoring Industry in Peru. P110749 (TA) Peru - Technical Assistance on Delivered FY09. Ministry of Finance Public Private Partnerships (PPP) Law Drafting. P110336 (TA) FIRST Peru: TA for strengthening Delivered FY11. private sector accounting and auditing. P100333 (ESW) Peru Corporate Governance SOE Delivered FY07. Assessment. P126022 (ESW) Peru II Corporate Governance Delivered FY12. ROSC Assessment. P122177 (ESW) Peru - Insolvency & Creditor Delivered FY12. Rights ROSC. Annexes CPSCR Review 34 Independent Evaluation Group CPS 07-11: Pillar 2 Actual Results Comments Enhancing Social Development (as of current month year) Objectives 1. Meeting Basic Needs 2. Promoting and developing a new social contract in education, health and nutrition 1. Meeting Basic Needs Major Reduction in the Unmet Basic Needs Index from 42 The Unmet Basic Needs Index The baseline information indicated in the Outcome to 36 percent for the entire population and from 72 to (Indice de necesidades básicas outcome for the Unmet Basic Needs for the Measures 62 percent for the rural areas. insatisfechas) decreased from 34 entire population in 2006 (42 percent) is in 2006 to 26 percent in 2010 for wrong, because it accounts only for the the entire population and from 62 Unmet Basic Needs for the entire population percent in 2006 to 47 percent for excluding the agglomeration of Lima and the rural population in 2010. Callao. The baseline information indicated in the outcome for the Unmet Basic Needs for the rural areas does not match our baseline information. No data available for 2011. Source: Peru National Office of Statistics (INEI) Increase in the percentage of households with The proportion of population with adequate water from 76 to 85 percent and sanitation improved access to water sources The baseline information indicated in the services from 57 to 65 percent. has increased from 71.6 in 2006 to outcome does not match our baseline 74.1 in 2009. Furthermore, the information. proportion of population with improved sanitation services has No data available either for 2010 or 2011. risen from 72.4 in 2006 to 74.8 in 2009. Sources : INEI Increase in the access to electricity in rural areas The percentage of rural from 30 to 42 percent. households with access to The baseline information indicated in the electricity increased from 28.9 in outcome does not match our baseline 2006 to 55 percent in 2010. information. No data available for 2011. Source: Ministry of Energy and Mines. 2. Promoting and developing a new social contract in education, health and nutrition Reduction on the proportion of students in “level 0” No data available. of national student census evaluation from 46 In 2010, the proportion of students lagging percent to 25 percent and increase on the proportion “below level 1” decreased from 30 in 2007 to of students in “levels 2 or 3” from 39 percent to 60 24 percent in reading and from 57 in 2007 to percent between 2004 and 2011. 53 percent in math. The proportion of students reaching “Level 2” increased from 16 in 2007 to 29 percent in reading and from 7 in 2007 to 14 percent in math. No data available either for 2006 or 2011. Source: Unidad de Medition de la Calidad Educativa (Ministry of Education) Increase in the Health Insurance System (SIS) No data available for the Health affiliation rate for women of childbearing age in the Insurance System (SIS) affiliation SIS affiliation rose to 5.22 million (2008) in ten poorest regions by 10 percentage points and SIS rate for women of childbearing age the ten poorest regions3; and to 10.5 million expenditure on services in these 10 regions by 20 in the ten poorest regions. nationwide. Both figures increased by 50 percent in real terms in 2006-2008. percent since 2007. The SIS budget increased from Source: CPSCR S/.267 million in 2006 to S/.420 million in 2008. This represented an increase of 42 percent in real terms. 3 The included regions were Amazonas, Apurimac, Ayacucho, Cajamarca, Huancavelica, Huánuco, Loreto, Piura, Puno and Tacna. Annexes CPSCR Review 35 Independent Evaluation Group CPS 07-11: Pillar 2 Actual Results Comments Enhancing Social Development (as of current month year) Increase coverage of institutional births (IB) in the 10 2007 and 2010 surveys (Encuesta poorest regions to reach 75 percent and nationwide demográfica y de salud familial) No data available for 2011. rural coverage to reach 58 percent. show that IB coverage increased from 49.4 in 2007 to 58.4 percent Source: INEI in 2010 for rural areas. Moreover, surveys show a rise from 62.7 to 73.3 percent in IB coverage in the 10 poorest regions. Reduction in national chronic malnutrition from 24 to National chronic malnutrition 15 percent in 5 years. reached 23 percent in 2010. As a result of the adoption of new WHO standards, the baseline of 24 percent in 2006 was adjusted to 28 percent; and, the government adopted a new national target of 23 percent by 2010. This new target has been achieved. However, the 23 percent figure is estimated to be equivalent to about 18 percent under the old standard, implying that progress fell somewhat short of the 15 percent originally targeted in the CPS. Source: INEI Ongoing P008051 Lima Water Rehabilitation and Approved FY95. Closed FY08. IEG outcome rating: Satisfactory pre CPS 07- Management Project. 11 Support P055232 Rural Education Project. Approved FY03. Closed FY08. IEG outcome rating: Moderately Unsatisfactory P065256 National Rural Water Supply and Approved FY05. Closed FY09. Latest IR: Moderately Satisfactory Sanitation Project. P081834 Additional Financing - Lima Water Approved FY03. Closed FY09. IEG outcome rating: Satisfactory Rehabilitation and Management Project. New P117310 Results in Nutrition for Juntos SWAp Approved FY11. Active. Latest IR: Satisfactory Lending P095563 PE- (APL2) Health Reform Program. Approved FY09. Active. Latest IR: Satisfactory Support P117293 Optimization of Lima Water and Sewerage Approved FY11. Active. Latest IR: Satisfactory Systems (Water Resources Management). P101086 Results and Accountability in Social Approved FY07. Closed FY10. Sectors (REACT) DPL. P101177 Second Results and Accountability in Approved FY09. Active. Latest IR: Satisfactory Social Sectors (REACT) DPL-Deferred Drawdown Option. P116264 Third Results & Accountability in Social Approved FY11. Active. Latest IR: Satisfactory Sectors (REACT) Programmatic DPL. Planned P104262 (ESW) PE-Recurso II Delivered FY07. AAA P106943 (ESW) PE-Recurso III Delivered FY08. P111529 (TA) PE Education Sector Delivered FY10. P113917 (ESW) PE Extreme Poverty-Effectiveness Delivered FY11. of Antipoverty Intervention. P122834 (ESW) PE Extreme Poverty-Effectiveness Delivered FY11. of Antipoverty Intervention II. P103644 (ESW) PE Recurso IV Delivered FY10. P117375 (ESW) PE Recurso V Delivered FY12. P111717 (TA) PE Juntos for Nutrition-NLTA. Delivered FY11. P101500 (TA) PE Universal Insurance Health Delivered FY11. Reform. P103116 (TA) Poverty monitoring and information Delivered FY09. systems. P103161 (ESW) PE Policy Notes - AAA Delivered FY10. Decentralization (Decentralization in Social Sectors). Additional P081481 (TA) CA: Lima (Peru) City Poverty Delivered FY07. AAA Strategy. P121721 (ESW) Peru Policy Notes. Delivered FY12. Annexes CPSCR Review 36 Independent Evaluation Group CPS 07-11: Pillar 3 Actual Results Comments Modernizing Institutions (as of current month year) Objectives 1. Decentralization and access to public services 2. Strengthening public sector management 3. Improving the justice system and reducing corruption Major 1. Decentralization and access to public Outcome services Measures Increase in number of local and regional No data available. governments accredited from 310 to 600. The Government of Peru changed the framework of decentralization. Theaccreditation of regional and local governments became irrelevant. Source: P078953 Accountability for Decentralization in the Social Sectors ICR. 2. Strengthening public sector management Introduction of Results-Based Budgeting (RBB) MEF established the results- as a tool to improve the efficiency of public based budget (RBB) for five Source: MEF and CPSCR spending. strategic pilot programs in 2008, expanding to 24 in 2011. RBB is now an integral part of the budget cycle. Increase in the number of regional and local As a result of the implementation governments preparing budgets following of the Participatory Budget Law, Source: MEF and CPSCR participatory budgeting norms from 425 to 725. currently 100 percent of sub- national governments follow participatory budget norms in the preparation of the investment budget. 3. Improving the justice system and reducing corruption Reach a 55 percent of satisfaction of the clients No data available. within the jurisdictional institutions that are According to a 2009 evaluation, 78 percent implementing management improvements. of users evaluated the project service delivery model, ALEGRA (Asistencia Legal Gratuita), favourably with respect to the adjudication and conflict resolution services provided by the vonciliators. 77 percent of respondents also provided a favourable evaluation of aspects related to the physical environment and physical access to ALEGRA. Source: CPSCR Ongoing pre P073438 Justice Services Improvement Approved FY04. Closed FY09. IEG outcome rating: Satisfactory CPS 07-11 Support New P110752 Justice Services Improvement Project Approved FY11. Active. Latest ISR: Satisfactory Lending II. Support Planned P106739 (ESW) PERU Government and Delivered FY09. AAA Governability Enhancement. P117589 (TA) Decentralization and Quality of Delivered FY11. Education (Decentralization and public expenditure efficiency). P110925 (TA) PE Sub-national Pilots. Delivered FY11. P112072 (ESW) Social and Distributional Delivered FY10. Impact Analysis of the Participatory Budget in Peru. Additional P094276 (ESW) PE Municipal Debt. Delivered FY07. AAA