Document of The World Bank FOR OFFICIAL USE ONLY Report No: RES23587 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF SWAP FOR PARANA MULTI-SECTOR DEVELOPMENT PROJECT LOAN No. 82010 November 6, 2012 TO THE STATE OF PARANÁ WITH THE GUARANTEE OF THE FEDERATIVE REPUBLIC OF BRAZIL April 12, 2017 Governance Global Practice Latin America and the Caribbean Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. ABBREVIATIONS AND ACRONYMS DRM Disaster Risk Management EEP Eligible Expenditure Program PAD Project Appraisal Document PDO Project Development Objective SEED State Secretariat of Education (Secretaria de Estado de Educação) TA Technical Assistance Regional Vice President: Jorge Familiar Country Director: Martin Raiser Senior Global Practice Director: Deborah L. Wetzel Practice Manager/Manager: Arturo Herrera Gutiérrez Task Team Leader: Davide Zucchini 2 BRAZIL SWAp for Parana Multi-Sector Development Project CONTENTS A. SUMMARY 5 B. PROJECT STATUS 6 C. PROPOSED CHANGES 6 D. APPRAISAL SUMMARY 9 ANNEX 1: RESULTS FRAMEWORK AND MONITORING 11 3 DATA SHEET Brazil SWAp for Parana Multi-sector Development Project (P126343) LATIN AMERICA AND CARIBBEAN Governance Report No: RES23587 Basic Information Investment Project Project ID: P126343 Lending Instrument: Financing Regional Vice President: Jorge Familiar Original EA Category: Partial Assessment (B) Country Director: Martin Raiser Current EA Category: Partial Assessment (B) Senior Global Practice Deborah L. Wetzel Original Approval Date: 06-Nov-2012 Director: Practice Arturo Herrera Gutierrez Current Closing Date: 30-Nov-2017 Manager/Manager: Team Leader(s): Davide Zucchini Borrower: State of Parana Responsible State Secretariat of Planning Agency: Restructuring Type Form Type: Full Restructuring Paper Decision Authority: Board/AOB Decision Restructuring Level: Level 1 Financing ( as of 08-Dec-2016 ) Key Dates Approval Effectiveness Original Revised Project Ln/Cr/TF Status Signing Date Date Date Closing Date Closing Date P126343 IBRD-82010 Effective 06-Nov-2012 12-Dec-2013 13-Jan-2014 30-Nov-2017 30-Nov-2017 Disbursements (in Millions) % Cancelle Disburse Undisbur Project Ln/Cr/TF Status Currency Original Revised Disburse d d sed d P126343 IBRD-82010 Effective USD 350.00 350.00 0.00 221.72 128.28 63 Policy Waivers Does the project depart from the CAS/CPF in content or in other significant Yes [ ] No [ X ] 4 respects? Does the project require any policy waiver(s)? Yes [ ] No [ X ] A. Summary of Proposed Changes The proposed restructuring would include: (i) a reformulation of the PDO and PDO indicators to better capture the expected development outcomes of the project and facilitate their measurement; (ii) an extension of the closing date by 24 months to allow for implementation of Component 2 (Technical Assistance for More Efficient and Effective Public Management) and expand the disbursement withdrawal schedule for Component 1 (Fostering Equitable and Environmental Sustainable Economic and Human Development) that disburses against disbursement linked indicators (DLIs); (iii) revision of the results framework to reflect adjustments in project activities and implementation schedule including moving some DLI targets to future dates to reflect a more realistic achievement schedule as well as adjustments to the relevant eligible expenditure programs; (iv) modifications to activities under Sub-Components 2.2. (Institutional Modernization), 2.3. (More Strategic and Efficient Human Resources Management), and 2.4. (Mitigating the Environmental Impact of the Agricultural sector) to reflect changes in government priorities; and (v) change the due date for the audited financial statements from six months (June 30) to eight months (August 31) after the fiscal year under review. Change in Implementing Agency Yes [ ] No [ X ] Change in Project's Development Objectives Yes [ X ] No [ ] Change in Results Framework Yes [ X ] No [ ] Change in Safeguard Policies Triggered Yes [ ] No [ X ] Change of EA category Yes [ ] No [ X ] Other Changes to Safeguards Yes [ ] No [ X ] Change in Legal Covenants Yes [ ] No [ X ] Change in Loan Closing Date(s) Yes [ X ] No [ ] Cancellations Proposed Yes [ ] No [ X ] Change to Financing Plan Yes [ ] No [ X ] Change in Disbursement Arrangements Yes [ ] No [ X ] Reallocation between Disbursement Categories Yes [ ] No [ X ] Change in Disbursement Estimates Yes [ X ] No [ ] Change to Components and Cost Yes [ X ] No [ ] Change in Institutional Arrangements Yes [ ] No [ X ] Change in Financial Management Yes [ ] No [ X ] Change in Procurement Yes [ ] No [ X ] Change in Implementation Schedule Yes [ X ] No [ ] Other Change(s) Yes [ X ] No [ ] Appraisal Summary Change in Economic and Financial Analysis Yes [ X ] No [ ] Appraisal Summary Change in Technical Analysis Yes [ ] No [ X ] Appraisal Summary Change in Social Analysis Yes [ ] No [ X ] 5 Appraisal Summary Change in Environmental Analysis Yes [ ] No [ X ] Appraisal Summary Change in Risk Assessment Yes [ ] No [ X ] B. Project Status Despite lagging disbursements and delays in the preparation of the activities under the technical assistance component, significant advances on results have been observed particularly in the health and education sectors. The Maternal Mortality ratio decreased from 65.1% in 2010 to 39.2% in 2016; the percentage of women with high risk pregnancies referred to hospitals of the State Health Network increased drastically from 5.5% in 2012 to 100% in 2016; the survival rate in the final cycle of fundamental education in state schools has increased from 78% in 2012 to 85% in 2016; and over 328 state schools have been rehabilitated and/or expanded in 2016. The implementation progress of Component 1 has been satisfactory and remained largely on track. However, fiscal constraints in the second half of 2014 and during 2015 had an impact on the execution rate of the project's EEPs, resulting in a decrease of the disbursement amounts and slowdown in the achievement of some indicators. During the first half of 2016, execution rates picked up. After an initial slow start, the preparation of the TA activities under Component 2 has picked up and implementation of the first contracts has started. The flexibility of Component 2 has allowed to respond to the changing environment and government priorities and to include activities, among which: (i) two regional development plans; and (ii) the implementation of an integrated tax administration system. Based on the continuous commitment of the government to the areas covered by the project and the overall satisfactory progress towards the objectives of the components, no major adjustments in the design of the project are required. The proposed restructuring would allow the project to adjust to the fiscal environment that the State and the country are facing, and to shifted priorities in the technical assistance activities. C. Proposed Changes Development Objectives/Results Project Development Objectives Original PDO The objective of the Project is to make access to economic and human development opportunities more equitable and environmentally sustainable in the Borrower s territory through the modernization of the Borrower’s public sector and revenue management. Change in Project's Development Objectives Explanation The original PDO is broad and rather difficult to measure, and does not properly reflect the expected results from the programs supported under the project. Similarly, the PDO is not very well aligned with the PDO indicators. Given that the project components remain relevant and will not be changed, it is suggested to re-formulate the PDO to better capture the expected development results of the project and ensure alignment with the results indicators. Proposed New PDO The objectives of the Project are to: (i) increase the survival rate in the final cycle of fundamental education; (ii) improve maternal and emergency health care services; (iii) promote business initiatives and improve natural resources management in rural areas; and (iv) contribute to building capacity in public administration, and environmental and disaster risk management. 6 Change in Results Framework Explanation: Based on the delayed implementation and lagging disbursements, it was agreed to create two additional scheduled disbursements for Component 1 (August 2017 and February 2018) and moving some DLI targets to future dates to reflect a more realistic achievement schedule. The PDO indicator related to Disaster Risk Management has been moved to an intermediate indicator. A new PDO indicator has been added to better measure the support provided to the agriculture sector through the Pro-Rural program. Similarly, a second PDO indicator was added to measure the impact of the project in the health sector, specifically the emergency care program, which was not reflected properly in the previous results framework. Other intermediate indicators have been clarified in line with the revised PDO and adjusted due to delays or replaced by new ones to better reflect changes in project activities. Additional targets for all indicators for 2018 and 2019 would be added to continue monitoring the progress of the project activities and their impact. In summary, a PDO indicator was deleted, two existing PDO indicators were modified, and two PDO indicators were added. Seven new Intermediate indicators have also been added to better monitor the progress of activities toward the PDO. Financing Change in Loan Closing Date(s) Explanation: An extension of 24 months, from November 30, 2017 to November 30, 2019, is suggested to allow for additional scheduled disbursements under Component 1 and for the implementation of TA activities under Component 2. After a one-year effectiveness delay, implementation of Component 1 performed satisfactory until fiscal constraints in the State (and the country) reduced funding for budgeted programs, resulting in a disbursement slow-down during 2015. Similarly, Component 2 (TA) is delayed as the preparation of terms of reference and technical specification and the related procurement processes of a number of highly specialized activities required a longer time frame. The project has no overdue or unsatisfactory audit reports. Proposed Ln/Cr/T Original Current Proposed Previous Closing Status Application F Closing Date Closing Date Closing Date Date(s) Deadline Date IBRD- Effective 30-Nov-2017 30-Nov-2017 30-Nov-2019 30-Nov-2017 30-Mar-2020 82010 Disbursement Estimates Change in Disbursement Estimates Explanation: A one-year effectiveness delay and low execution of eligible expenditure programs due to fiscal constraints have led to a disbursement lag. The changes in the disbursement estimates is to correct for this lag. Fiscal Year Current (USD) Proposed (USD) 2013 0.00 0.00 7 2014 50,000,000.00 51,000,000.00 2015 105,000,000.00 87,000,000.00 2016 135,000,000.00 63,000,000.00 2017 40,000,000.00 72,000,000.00 2018 20,000,000.00 77,000,000.00 Total 350,000,000.00 350,000,000.00 Components Change to Components and Cost Explanation: Activities under TA subcomponents 2.2., 2.3 and 2.4 were revised as follows: Sub-component 2.2: Institutional Modernization: (a) review of organizational structures and procedures for the modernization of the Borrower's public administration; (b) strengthening of internal control procedures; and (c) supporting the preparation of regional development plans. Sub-component 2.3: More Strategic and Efficient Human Resources Management: (a) developing of a strategic workforce plan for the Borrower's administration (b) modernization of the Borrower's occupational health service; and (c) strengthening of the Borrower's School of Government and providing support to the capacity building and training programs for civil servants Sub-component 2.4: Measuring the impact of land titling activities: Carrying out an impact evaluation on land titling activities Current Component Proposed Component Current Cost Proposed Action Name Name (US$M) Cost (US$M) Component 1: Fostering equitable and environmentally 315.00 315.00 No change sustainable economic and human development Component 2: Technical Sub-components Assistance for more 35.00 35.00 2.2,2.3,and 2.4 efficient and effective Revised public management Total: 350.00 350.00 Other Change(s) Change in Implementation Schedule Explanation: The proposed extension of 24 months would imply the need for additional supervision, and the alteration 8 of the implementation schedule due to the modification of indicator targets and additional scheduled disbursements. Other Change(s) Explanation: It was agreed to change the due date for the annual audit report from June 30 to August 31. The reason for this change is that in order for the State Audit Tribunal to initiate the audit, all project documentation for the previous year is required, including supporting documentation for disbursement against EEPs for the second semester of the previous year. As this disbursement usually takes place in March or April, it leaves insufficient time for the auditors to meet the current deadline of June 30. Appraisal Summary Appraisal Summary Change in Economic and Financial Analysis Explanation: As part of the Mid-Term Review, a comprehensive updated economic and financial analysis was prepared for the project, which sets an adequate baseline for measuring the efficacy and efficiency of project after its closure. Results of the analysis showed that the project has been a worthwhile investment as it will have a positive impact on the development of the State of Parana. All sub-components are economically viable with returns higher than 6%. The overall project yields a 15% return and about US$226 million in net benefits. Total benefits are 73% higher than the costs, giving ample room for uncertainties along the life- cycle of the interventions. Public financing showed to be the best instrument for implementing and sustaining the already implemented interventions. All the sectors selected to be financed under the project have significant social and economic impact allowing a more inclusive and equitable development in the State. 9 ANNEX 1 RESULTS FRAMEWORK Project SWAp for Parana Multi-sector Development Project Project Restructuring Status: DRAFT Name: (P126343) Stage: Team Requesting Leader(s) Davide Zucchini LCC5C Created by: Angela Nieves Marques Porto on 06-May-2016 Unit: : Product Responsible IBRD/IDA GGO16 Modified by: Angela Nieves Marques Porto on 17-Mar-2017 Line: Unit: Country: Brazil Approval FY: 2013 LATIN AMERICA AND Lending Region: Investment Project Financing CARIBBEAN Instrument: Project Development Objectives Original Project Development Objective: The objective of the Project is to make access to economic and human development opportunities more equitable and environmentally sustainable in the Borrower s territory through the modernization of the Borrower s public sector and revenue management. Proposed Project Development Objective (from Restructuring Paper): The objectives of the Project are to: (i) increase the survival rate in the final cycle of fundamental education; (ii) improve maternal and emergency health care services; (iii) promote business initiatives and improve natural resources management in rural areas; and (iv) contribute to building capacity in public administration, and environmental and disaster risk management. Results Core sector indicators are considered: Yes Results reporting level: Project Level Project Development Objective Indicators Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target Revised Revenue from tax arrears as a Percentage Value 1.99 2.22 5.00 10 share of the stock of tax arrears Date 30-Aug-2013 15-Apr-2016 30-Aug-2019 Comment This indicator is measured once a year. Revised Producer groups supported Percentage Value 0.00 0.00 75.00 through the project with Date 15-Jun-2012 15-Sep-2015 30-Aug-2019 improved access and integration to output markets Comment This indicator will be measured starting in 2017. Marked for Improved Identification of Percentage Value 5.00 4.96 100.00 Deletion Disaster Risks Date 15-Jun-2012 15-Sep-2015 22-Aug-2017 Comment New Hectares supported by the Number Value 0.00 284000.00 750000.00 Micro-catchment Action Plans' Date 15-Jun-2012 15-Nov-2016 30-Aug-2019 interventions Comment Revised Survival rate in the final cycle Percentage Value 78.40 85.00 85.50 of fundamental education in Date 15-Jun-2012 15-Nov-2016 30-Aug-2019 State Schools Comment Marked for Decrease in Maternal Mortality Percentage Value 65.11 39.20 37.00 Deletion Ratio Date 31-Dec-2010 15-Nov-2016 22-Aug-2017 Comment New Decrease in Maternal Mortality Number Value 65.11 37.58 47.18 Ratio Date 30-Aug-2010 15-Nov-2016 30-Aug-2019 Comment This was a preliminary number at the 11 time of the mission. New Decrease in Mortality Rate for Number Value 51.48 48.57 deaths through external causes, Date 30-Aug-2011 30-Aug-2019 except violence Comment Intermediate Results Indicators Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target Revised Number of Farmers trained or Number Value 0.00 17840.00 21000.00 receiving technical assistance Date 15-Jun-2012 15-Nov-2016 30-Aug-2019 Comment Revised Number of business proposals Number Value 0.00 0.00 75.00 approved and to be financed Date 15-Jun-2012 15-Nov-2016 30-Aug-2019 Comment New Beneficiaries of legally Number Value 0.00 1539.00 6000.00 concluded land regularization Date 15-Jun-2012 15-Nov-2016 30-Aug-2019 processes Comment New Management Plans for rural Number Value 0.00 0.00 60.00 roads prepared Date 15-Jun-2012 15-Nov-2016 30-Aug-2019 Comment Revised Number of Micro-catchment Number Value 0.00 170.00 250.00 actions plans elaborated Date 15-Jun-2012 15-Nov-2016 30-Aug-2019 Comment New Number of people in rural areas Number Value 0.00 10700.00 28000.00 provided with access to Date 15-Jun-2012 15-Nov-2016 30-Aug-2019 12 Improved Water Sources under Comment the project Revised Strengthening of the Disaster Text Value None Model for Increased Risk Monitoring capacity and simulation capacity Warning System for Hydro- projects of hydro- (qualitative and meteorological events meteorological quantitative) of events in the State the Warning concluded. System, i.e. equipment, models, processes, among others Date 15-Jun-2012 15-Nov-2016 30-Aug-2019 Comment Revised Implementation of a water Text Value No integrated In process of Average resources subsystem of an environmental request for processing time Integrated Environmental and and water proposals for issuing of Water Resources Management resource water rights has System management been reduced to system in 90 days (from place 180 in 2016) Date 27-Mar-2015 15-Sep-2015 30-Aug-2019 Comment The targets for this indicator are being altered with the restructuring, and will only begin to be measured in 2017. Revised Student Learning Assessment Text Value None One pilot and two Fifth System operational assessments Assessment carried out and carried out. 13 results published and disseminated Date 15-Jun-2012 15-Apr-2016 31-Aug-2018 Comment The targets for this indicator are being altered with the restructuring, and will only begin to be measured in 2017. Revised Teachers participating in Peer- Percentage Value 57.00 89.00 85.00 to-peer in-service Teacher Date 15-Jun-2012 15-Nov-2016 30-Aug-2019 Training Comment Revised University-based in-service Number Value 2351.00 5640.00 7650.00 Teacher Training, Education Date 15-Jun-2012 15-Nov-2016 30-Aug-2019 Development Plan (EDP) Comment Revised State Schools Rehabilitated Number Value 92.00 328.00 450.00 and/or Expanded Date 15-Jun-2012 15-Nov-2016 30-Aug-2019 Comment Marked for Percentage Increase in the Percentage Value 0.00 31.95 59.10 Deletion Number of ICU beds in the Date 15-Jun-2012 15-Sep-2015 22-Aug-2017 State of Paraná Comment Revised Percentage of pregnant women Percentage Value 5.50 100.00 90.00 identified with high risk of Date 15-Jun-2012 15-Nov-2016 30-Aug-2019 complications referred by primary care units to a hospital Comment The result of that is part of the Borrower's 100% is directly 14 Infant and Maternal Healthcare related to the Network calculation method used, as well as the initial estimate of the number of visits performed for high-risk pregnant women, based on the expectation that we would have 15% pregnant women and their dependents identified as “high risk” in Paraná. Such a calculation methodology uses the estimated number of AIH for obstetric procedures performed in high-risk pregnant women in reference hospitals for this risk category / Estimated number of high-risk pregnant women. The safest and most reliable source for 15 obtaining the numerator is through the consultations performed, that is, the number of AHI by the hospitals related to to high-risk pregnancies. In 2016, for the first semester, the forecast was 9,608 visits for high-risk pregnant women, according to the initial estimate of 15% of pregnant women whose mothers stratified as high risk in Paraná, but the number of visits performed was higher than planned, impacting in the numerator for the calculation. Revised Proportion of live births to Percentage Value 80.00 100.00 90.00 pregnant women who attended Date 15-Jun-2012 15-Nov-2016 30-Aug-2019 more than 7 ante-natal check- ups Comment New Decrease in Infant Mortality Number Value 12.17 10.27 10.50 16 Ratio Date 30-Aug-2010 15-Nov-2016 30-Aug-2019 Comment This was a preliminary number at the time of the mission. New Decrease in Mortality Rate for Number Value 80.39 76.34 76.20 Cardiovascular Diseases (by Date 30-Aug-2011 30-Dec-2015 30-Aug-2019 age group) Comment At the time of the last mission, the numbers for 2016 were not yet available. Marked for Development and Text Value The State has Implementation Report on Deletion implementation of an started to of occupational reduction of occupational health policy define an health policy in number of occupational the education and medical health policy citizen security examinations sectors and sick leaves/absences due to illness or injury. Date 10-Feb-2014 15-Nov-2016 22-Aug-2017 Comment New Percentage of the population Percentage Value 43.83 80.19 100.00 with access to Urgent and Date 30-Aug-2013 30-Dec-2015 30-Aug-2019 Emergency Health services Comment Final numbers for 2016 were not available at the time of the mission. 17 Revised Enhancing core competencies Text Value No online Competencies Competencies of of civil servants training Development civil servants platform in Plan prepared, have increased place and need including (as reported in for additional timelines, the final report training for activities, and of the civil servants methodology. consultancy) Date 27-Mar-2015 15-Nov-2016 30-Aug-2019 Comment Revised Strengthening of Internal Text Value Internal Contract expected Internal control Control Systems Control Unit to be signed information recently shortly system created and implemented lacking formal and operational methods and in 50 procedures government entities Date 15-Jun-2012 15-Nov-2016 30-Aug-2019 Comment New Strengthening State Capacity to Text Value Weak capacity Report on the Report with monitor and evaluate public to monitor and achievement of recommendation policies evaluate public the performance s on the policies indicators from sustainability the log frames for and continuation all EEPs. of the land regularization activities. Date 15-Jun-2012 15-Apr-2016 22-Aug-2017 Comment The next measurement would be in 2017. Marked for Strengthening State Capacity Text Value Weak capacity Report with 18 Deletion for Evidence-based Policy- to monitor and recommendation making evaluate public s on the policies sustainability and continuation of the land regularization activities. Date 15-Jun-2012 15-Apr-2016 22-Aug-2017 Comment New Reduction of sick leave and Text Value The State has Reduction of absenteeism due to work- started to sick related illness or injury define an leaves/absences occupational due to work- health policy related illness or injury by 20% Date 10-Feb-2014 30-Aug-2019 Comment Marked for Impact assessment of the Text Value Rapid antigen Preliminary report Final report on Deletion reduction of premature births in detection on the study's the study's pregnant women with testing during results delivered results delivered chlamydia, by applying rapid prenatal care antigen detection test during not being prenatal care applied Date 27-Mar-2015 15-Nov-2016 22-Aug-2017 Comment New Improvement of the Borrower’s Text Value Lack of Revision of tax Evaluation, tax management system enforcement in collection declaration and tax arrears processes are collection of collection and done in-house ITCMD is 90% adequate automated resources to administer tax 19 receipts Date 15-Jun-2015 15-Sep-2015 30-Aug-2019 Comment The next measurement would be in 2017. Marked for Revision of tax management Text Value Lack of Revision of tax Progress Report Deletion processes enforcement in collection on Action Plan tax arrears processes are acceptable to the collection and done in-house Bank adequate resources to administer tax receipts Date 15-Jun-2012 15-Sep-2015 22-Aug-2017 Comment Revised Establishment of State Disaster Text Value Publication of State Civil State Plan for Risk Management (DRM) State Decree Defense and Protection and Policy Framework establishing Protection Civil Defense is the DRM Committee under working group legally implementation. established Date 15-Jun-2012 15-Nov-2016 30-Aug-2019 Comment Revised Number of Municipalities with Number Value 0.00 27.00 25.00 a Decentralized Environmental Date 15-Jun-2012 15-Nov-2016 30-Aug-2019 Licensing and Monitoring System Comment No Change Improved Management of Text Value The Piloting of the Monitoring Physical Infrastructures is management system 2 NREs System for schools for SEED of physical (regional Physical infrastructure educational Infrastructures is 20 in the centers) operational education (implemented in sector is SEED and the inadequate NREs) Date 15-Jun-2012 15-Nov-2016 22-Aug-2017 Comment Revised Capacity strengthening of Text Value The capacity Contracting for Evaluation SEED to evaluate teacher for teacher the evaluation is report on the training programs. training currently at the implementation evaluation is request for of the inadequate proposals stage pedagogical intervention project (third dimension of the Educational Development Plan - PDE) Date 15-Jun-2012 15-Nov-2016 30-Aug-2019 Comment Revised Number of teachers who work Number Value 437.00 598.00 750.00 in indigenous schools trained Date 10-Feb-2014 15-Nov-2016 30-Aug-2019 Comment Revised Indigenous lands with Number Value 0.00 1.00 8.00 productive projects supported Date 10-Feb-2014 15-Nov-2016 30-Aug-2019 Comment 21