The World Bank Conditional Cash Transfers Project (P103974) REPORT NO.: RES29372 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF CONDITIONAL CASH TRANSFERS PROJECT APPROVED ON JUNE 16, 2009 TO MINISTRY OF FINANCE SOCIAL PROTECTION & LABOR EUROPE AND CENTRAL ASIA Regional Vice President: Cyril E Muller Country Director: Linda Van Gelder Senior Global Practice Director: Michal J. Rutkowski Practice Manager/Manager: Andrew D. Mason Task Team Leader: Bojana Naceva The World Bank Conditional Cash Transfers Project (P103974) ABBREVIATIONS AND ACRONYMS CCT Conditional Cash Transfers MLSP Ministry of Labor and Social Policy SWCs Social Welfare Centers CBMIS Cash Benefits Management Information System SFA Social Financial Assistance SSN Social Safety Net PDO Project Development Objective PMU Project Management Unit The World Bank Conditional Cash Transfers Project (P103974) BASIC DATA Product Information Project ID Financing Instrument P103974 Specific Investment Loan Original EA Category Current EA Category Not Required (C) Not Required (C) Approval Date Current Closing Date 16-Jun-2009 31-Dec-2017 Organizations Borrower Responsible Agency Ministry of Finance Ministry of Labor and Social Policy Project Development Objective (PDO) Original PDO The project development objective is to strengthen the effectiveness and efficiency of the Government of Macedonia's (GoM) social safety net through (a) the introduction of conditional cash transfers; and (b) improvements in the administration, oversight, monitoring, and evaluation of social assistance transfers. The project would contribute to the GoM's ultimate objectives of alleviating current poverty and enhancing human capital, thereby reducing the inter- generational transmission of poverty over the long-run. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-77350 16-Jun-2009 02-Sep-2009 28-Oct-2009 31-Dec-2017 25.00 18.43 5.91 The World Bank Conditional Cash Transfers Project (P103974) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. This restructuring comprises: 1) an extension of the loan closing date for eight months, from December 31, 2017 to August 31, 2018, resulting in a cumulative extension of the closing dates of 54 months.; 2) cancellation of funds in the amount of 1.6m Euros; and 3) reallocation of 2.6m Euros of loan proceeds. Specifically, the restructuring will allow the Client to continue providing CCT benefits, further upgrade the IT systems and to carry out further analytical work vital for reforming the planned social safety net system. Furthermore, the proposed extension will support the continuation of the CCT institutional and implementation arrangements. The continuation of these arrangements will be important for an effective and productive Bank engagement with the new Government in preparing the new follow-on operation. 2. The overall project implementation is currently rated satisfactory. The project has performed well throughout its implementation, and has already achieved its PDO indicator targets. Impressive results have been achieved in the increase of the secondary school enrollment rate of social assistance beneficiaries aged 15-19 -from 60.80 % to 73.50%. Since the project inception, 16,613 children from poor families attended secondary schools due to the CCT secondary education program. The CCT subsidized employment program take-up was significantly increased due to the improvement of the program design, informed by the monitoring and evaluation reports. This program helped 230 young underprivileged persons to get “on the job training” and their first job. 3. In addition, social benefit administration has improved considerably, allowing more streamlined access and reduced leakage. Administration of the cash benefits through the Cash Benefits Management and information System (CBMIS) simplified the registration procedures, reduced the administrative costs for benefit claims and decreased the time spent for processing payments of the cash benefits. The number of social assistance recipients has also declined since the CBMIS was introduced, as oversight of the system improved and possibilities for abuse of the system were considerably curtailed. The project has helped with development and application of the internal oversight and control mechanisms, such as cross-checks and spot–checks, and external mechanisms such as operational and performance audits. 4. Overall disbursement is currently at 76.36 percent. The relatively low overall disbursement rate at this stage of implementation is largely due to two reasons: i) a lower number of CCT secondary education beneficiaries than originally estimated, and ii) insufficient government budget allocations for project implementation. The originally projected number of CCT secondary education beneficiaries was 18,000 per school year. The benefit administration system became more efficient with the introduction of the project-funded CBMIS, which helped reduce inclusion errors and subsequently improved overall safety nets’ targeting accuracy. Thus, instead of the initially estimated 18,000 beneficiaries per school year, the CCT for secondary education is currently benefiting 5,900 students yearly, resulting in major project savings. In terms of budget allocation for the project, the previous Government has been imposing a budget ceiling for all loan-based projects since 2013, due to overall budget constraints. 5. Nevertheless, the new Government has committed to make funds available for project implementation, reflected in the recently approved supplementary budget. In its request for extension of the project closing date the Government pledged to ensure adequate budget allocations if the requested extension is approved. The World Bank team is confident about the commitment of the government to the project implementation and the achievement of its The World Bank Conditional Cash Transfers Project (P103974) outcomes. This commitment is also supported by the Government’s request to cancel the loan proceeds which cannot be utilized by the suggested new closing date of August 31, 2018 (further details below). 6. In terms of financial management arrangements, the project is currently rated satisfactory. The client is in compliance with the audit covenants and there are no outstanding audits under the project. The financial project audit for 2016 had an unmodified (clean) opinion and no internal controls issues have been mentioned in the related management letter. 7. All legal covenants have been complied with. 8. The country experienced a long political crisis and the crisis was resolved recently with formation of the new Government. The prolonged political crisis resulted in shortcomings in the budget execution which would affect continuation of the CCT programs in 2018, should the project close on December 31, 2017, which is the current closing date. The proposed project extension would mitigate this risk, and allow continued provision of CCT benefits to about 7,000 families. The Ministry plans to use 2.6 million EUR out of the remaining undisbursed balance of 4.2 million EUR for continued provision of CCT benefits, upgrading the computer hardware in the MLSP and SWCs and for analytical assessments vital for reforming the social safety net system and improving social and child care services. The analytical work will include: (i) an assessment of the efficiency, adequacy and appropriateness of the social protection system; and (ii) an assessment of the access to, and quality of, the early childhood education and care services. Furthermore, the proposed extension will allow for maintaining the CCT institutional and implementation arrangements, which are important for effective and productive Bank engagement with the new Government on the follow-up operation which is under preparation for FY19. II. DESCRIPTION OF PROPOSED CHANGES 1. The Government has requested an extension of the project closing date by eight months, from December 31, 2017 to August 31, 2018. The proposed extension would allow the continued provision of CCT benefits to about 7,000 families, as well as upgrading the computer hardware in the MLSP and SWCs and for analytical underpinnings vital for reforming the social safety net system. Currently, there is 4,563,034.60 EUR uncommitted loan proceeds, and given the time available for project implementation, the Government requested a partial cancelation of the loan proceeds allocated for the CCT employment program in amount of EUR 1.6 million, as these cannot be utilized by the suggested new closing date of August 31, 2018. 2. This restructuring also includes reallocation of the proceeds from the first and fifth disbursement categories to the second and third. Namely, the Government estimated that given the available time for project implementation and the number of potential beneficiaries, less funds will be needed for CCT programs implementation and civil works, while more funds than currently allocated will be needed for operating costs, goods, services and training. 3. The proposed partial cancelation and reallocation of the proceeds between disbursement categories also affects the current allocation per project components. The proposed change in allocations per component is provided below. 4. Finally, this restructuring includes a change of the end target value of the PDO indicator “Number of direct project beneficiaries”, aimed at reflecting the expected increase of beneficiaries in the extended period for project implementation. The new target value is 19 500. The World Bank Conditional Cash Transfers Project (P103974) I. SUMMARY OF CHANGES Changed Not Changed Change in Results Framework ✔ Change in Components and Cost ✔ Change in Loan Closing Date(s) ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Change in Disbursement Estimates ✔ Change in Implementing Agency ✔ Change in DDO Status ✔ Change in Project's Development Objectives ✔ Change in Disbursements Arrangements ✔ Change in Systematic Operations Risk-Rating Tool ✔ (SORT) Change in Safeguard Policies Triggered ✔ Change of EA category ✔ Change in Legal Covenants ✔ Change in Institutional Arrangements ✔ Change in Financial Management ✔ Change in Procurement ✔ Change in Implementation Schedule ✔ Other Change(s) ✔ Change in Economic and Financial Analysis ✔ Change in Technical Analysis ✔ Change in Social Analysis ✔ Change in Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_RESULTS_TABLE RESULTS FRAMEWORK Project Development Objective Indicators The World Bank Conditional Cash Transfers Project (P103974) PDO_IND_TABLE Direct project beneficiaries Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 16613.00 19500.00 Revised Date 30-Sep-2010 05-Jun-2017 30-Nov-2017 Female beneficiaries Unit of Measure: Percentage Indicator Type: Custom Supplement Baseline Actual (Current) End Target Action Value 0.00 48.30 47.00 No Change Administration of Safety Nets strengthened, especially with the use of MIS Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action Value No Yes Yes No Change Date 15-Apr-2010 29-May-2017 30-Nov-2017 At least 85 % attendance rates of children ages 15-18 in CCT beneficiary households Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 85.00 89.74 85.00 No Change Date 09-Jan-2015 26-May-2016 30-Nov-2017 Enrollment rates of children ages 15-18 in CCT beneficiary households Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 54.90 75.90 60.00 No Change Date 15-Apr-2010 29-May-2017 30-Nov-2017 The World Bank Conditional Cash Transfers Project (P103974) % of SFA beneficiary children aged 15-18 that have been registered with CCT Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 80.00 65.00 No Change Date 15-Apr-2010 29-May-2017 30-Nov-2017 Overall safety nets' targeting accuracy Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 60.80 73.50 65.00 No Change Date 28-Feb-2014 29-May-2017 30-Nov-2017 Intermediate Indicators IO_IND_TABLE Number of MLSP and SWC staff trained Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 355.00 30.00 No Change Date 30-Sep-2010 30-Dec-2015 30-Nov-2017 CCTIU staffed and 1 staff member in each SWC assigned to CCT program Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 100.00 100.00 No Change Date 15-Apr-2010 29-May-2017 30-Nov-2017 Functional analysis of SWCs completed Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action Value No Yes Yes No Change The World Bank Conditional Cash Transfers Project (P103974) Date 15-Apr-2010 07-Nov-2013 28-Feb-2014 Assessment of targeting mechanisms, eligibility, and registry systems of different CBs completed. Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action Value No Yes Yes No Change Date 15-Apr-2010 30-Dec-2015 30-Nov-2017 Awareness of the beneficiaries Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 58.37 75.90 80.00 No Change Date 10-May-2011 05-Dec-2016 28-Feb-2014 Impact evaluation for education CCT program Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action Value No Yes Yes No Change Date 15-Apr-2010 09-Jan-2015 28-Feb-2014 Processing time per SFA applications reduced Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 69.00 12.00 30.00 No Change Date 14-Apr-2010 29-May-2017 28-Feb-2014 Operations and performance Audit Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action Value No Yes Yes No Change Date 15-Apr-2010 29-May-2017 30-Nov-2017 The World Bank Conditional Cash Transfers Project (P103974) Algorithm for MIS cross-checking Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action Value No Yes Yes No Change Date 15-Apr-2010 05-Dec-2016 30-Dec-2015 Cash benefit programs administered in the MIS Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 100.00 90.00 No Change Date 15-Apr-2010 05-Dec-2016 30-Dec-2015 CCT extensions Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action Value No Yes Yes No Change Date 15-Apr-2010 21-May-2014 30-Dec-2014 Random spot check of schools Unit of Measure: Yes/No Indicator Type: Custom Baseline Actual (Current) End Target Action Value No Yes Yes No Change Date 01-Sep-2011 29-May-2017 30-Nov-2017 Time frame SWCs answer to CCT complaints Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 50.00 100.00 100.00 No Change Date 01-Sep-2011 29-May-2017 30-Nov-2017 Transfer payments on time Unit of Measure: Percentage The World Bank Conditional Cash Transfers Project (P103974) Indicator Type: Custom Baseline Actual (Current) End Target Action Value 50.00 63.00 80.00 No Change Date 10-Apr-2012 29-May-2017 30-Nov-2017 Education conditionalities are monitored in MIS Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 100.00 90.00 No Change Date 01-Sep-2011 29-May-2017 30-Nov-2017 PMU fully staffed and operational Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 100.00 100.00 100.00 No Change Date 15-Apr-2010 29-May-2017 30-Nov-2017 OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Enhancing the Human Capital Enhancing the Human Capital 16.03 Revised 10.54 Links to Cash Assistance Links to Cash Assistance Strengthening Safety Net Strengthening Safety Net 7.37 Revised 8.60 Administration Administration Project Management and Project Management and 2.40 Revised 1.75 Monitoring & Evaluation Monitoring & Evaluation TOTAL 25.80 20.89 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE The World Bank Conditional Cash Transfers Project (P103974) LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications 31-Dec-2015, 31- IBRD-77350 Effective 28-Feb-2014 31-Aug-2018 31-Dec-2018 Dec-2017 OPS_DETAILEDCHANGES_CANCELLATIONS_TABLE CANCELLATIONS Value Reason Current Cancellation New Ln/Cr/Tf Status Currency Date of for Amount Amount Amount Cancellation Cancellation LOAN Disburs IBRD- RESTRUCTUR ing&Re EUR 19,300,000.00 1,600,000.00 01-Sep-2017 17,700,000.00 77350-001 ING, COST paying SAVINGS OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IBRD-77350-001 | Currency: EUR iLap Category Sequence No: 1(A) I. Current Expenditure Category: Ed.gr.under A.1,sch.year 2010/11 1,476,765.00 1,476,764.39 1,476,765.00 100.00 100.00 iLap Category Sequence No: 1(A) II. Current Expenditure Category: Ed.gr.under A.1,sch.year 2011/12 7,400,000.00 5,366,837.87 6,894,649.00 100.00 100.00 iLap Category Sequence No: 1(B) Current Expenditure Category: CCT prog.grants under A.2b 3,000,000.00 214,165.58 488,421.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: Goods,serv.and training 5,304,985.00 4,746,818.32 7,430,985.00 100.00 100.00 The World Bank Conditional Cash Transfers Project (P103974) iLap Category Sequence No: 3 Current Expenditure Category: Operating costs 70,000.00 62,655.87 85,000.00 100.00 100.00 iLap Category Sequence No: 5 Current Expenditure Category: CW for Part B.6 2,000,000.00 821,145.27 1,275,930.00 100.00 100.00 Total 19,251,750.00 12,688,387.30 17,651,750.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2009 0.00 0.00 2010 3,500,000.00 3,500,000.00 2011 4,000,000.00 4,000,000.00 2012 3,700,000.00 4,500,000.00 2013 2,700,000.00 4,000,000.00 2014 3,200,000.00 3,500,000.00 2015 1,400,000.00 1,600,000.00 2016 1,200,000.00 1,400,000.00 2017 2,100,000.00 1,900,000.00 2018 3,200,000.00 600,000.00