The World Bank Social Assistance Modernization Project (P122233) REPORT NO.: RES45262 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF SOCIAL ASSISTANCE MODERNIZATION PROJECT APPROVED ON APRIL 3, 2012 TO GOVERNMENT OF ALBANIA SOCIAL PROTECTION & JOBS EUROPE AND CENTRAL ASIA Regional Vice President: Anna M. Bjerde Country Director: Linda Van Gelder Regional Director: Fadia M. Saadah Practice Manager/Manager: Cem Mete Task Team Leader(s): Vlad Alexandru Grigoras, Lorena Kostallari The World Bank Social Assistance Modernization Project (P122233) I. BASIC DATA Product Information Project ID Financing Instrument P122233 Investment Project Financing Original EA Category Current EA Category Not Required (C) Not Required (C) Approval Date Current Closing Date 03-Apr-2012 30-Jun-2021 Organizations Borrower Responsible Agency Government of Albania Ministry of Health and Social Protection Project Development Objective (PDO) Original PDO The project would support the Albania's implementation of reforms to improve the equity and efficiency of its social assistance programs. Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-88410 04-May-2018 05-Jun-2018 16-Oct-2018 30-Jun-2021 11.00 2.77 8.23 IBRD-81410 03-Apr-2012 06-Jun-2012 31-Oct-2012 31-Dec-2018 48.98 43.89 0 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Social Assistance Modernization Project (P122233) I. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES This request is to extend the closing date of the Additional Loan for the Albania Social Assistance Modernization Project (SAMP). The Additional Loan was approved by the World Bank on May 4, 2018. As part of the process of preparing the Additional Loan, the Original Loan, which was approved on April 3, 2012, was closed on December 31, 2018, and thus is not considered in this request. This is, therefore, the first request for an extension of the closing date for the Additional Loan, which would result in a total extension by 18 months from June 30, 2021, to December 31, 2022. The Additional Loan provided a scaling-up to the project without changing its original Project Development Objective (PDO) ‘to support Albania’s implementation of reforms to improve the equity and efficiency of its social assistance programs. It added four disbursement linked indicators (DLIs) to the project to scale-up the equity goal in the PDO. These additional four DLIs focused on: (a) scaling up the application of the new eligibility criteria for Disability Assistance (DA) based on the Social Model, to three regions representing half of the country’s population; (b) improving the accessibility of people with disabilities to state social services (SSS) regional centers where final eligibility decisions are determined; (c) promoting the economic inclusion of Ndihma Ekonomike in the transition period of exiting the NE cash assistance program; and (d) improving oversight and control of DA benefits. Since effectiveness in November 2018, progress towards the PDO achievement and progress on implementation have been consistently rated as moderately satisfactory. There are no outstanding FM compliance or environmental/social safeguard issues. Based on this progress, until the onset of the COVID-19 pandemic in early 2020, the Additional Loan was well positioned to achieve the four DLIs. The performance of the project with regards to Financial Management and Procurement is satisfactory. FM reports and audits are fully submitted, with the exception of overdue audited financial statements for the Ndihma Ekonomike for the years ended December 31, 2019 and 2018. As detailed in the accompanying memo, the draft audit report for the Ndihma Ekonomike (the eligible expenditure program) was submitted to the Ministry for review and feedback on December 24, 2020, following completion of audit fieldwork. Draft audit opinions for both years are unqualified (clean) with no notable audit findings. Final audit reports are expected to be issued in February 2021. However, the COVID-19 pandemic negatively affected progress as follows: (i) Country-wide lockdowns imposed by the Government of Albania (GoA) to contain the spread of COVID-19 resulted in physical and social constraints (especially for persons with disabilities) which led to delays in project implementation, (ii) the GoA experienced significant budgetary constraints due to both the earthquake in November 2019 and the Covid-19 pandemic, which resulted in an under allocation of funds to the budget lines that would contribute to achieving the DLIs; and, (iii) the GoA raised concerns regarding the reputational risks associated with pushing complex institutional reforms in such a volatile environment. The section that follows presents the status of each of the four DLIs, starting with (i) an overview of progress prior to the COVID-19 pandemic; (ii) progress since March 2020, when the COVID-19 pandemic took hold in Albania and the Government declared a state of emergency; and (iii) the assessment on the achievement of the DLI by the proposed new closing date of December 31, 2022s: DLI #17: (a) At least 66 percent of the new applications and recertification requests received in all administrative units in Tirana, Durres, and Elbasan, have been registered using automated DA MIS; (b) the DA program MIS is expanded to cover second-stage functions, including integrating data from the revised eligibility assessment based on the Social Model (current deadline: March 2021) The World Bank Social Assistance Modernization Project (P122233) Progress before the Covid-19 Pandemic: The MoHSP team had already scaled up the new disability assessment instruments and procedures in the Tirana region. Specifically, the following activities had been carried out: (i) the Ministry assigned six health centers for the assessments and carried out rehabilitation works in all of them to ensure their accessibility; (ii) training materials have been developed, and all the relevant staff from Tirana (State Social Services, Regional Directories, MoHSP staff, family and specialist doctors) have been trained; (iii) the Decision of the Council of Ministers regarding the scale-up of the disability assessment was approved in November 2019, and the new disability assessment system was expanded to the whole region of Tirana starting December 1, 2019; (iv) two local experts were hired to monitor and assess the progress of the reform in Tirana and indicate any possible shortcomings of the reform, and they produced their first M&E Report; (v) a consultancy company was also hired to carry out communication campaigns in all three regions. Progress after March 2020: Since the start of the Covid-19 pandemic, the MoHSP has continued to take essential steps towards completing the disability assessment reform. Through an order of the deputy ministers, dated August 5, 2020, MoHSP prepared an action plan that is now under implementation and includes all the necessary activities for preparing the infrastructure and human resources to implement the reform in these two regions. In line with the plan, the Ministry: (i) identified the health centers for carrying out the assessments in Durres and Elbasan and carried out their rehabilitation; (ii) carried out training sessions with all the staff that would be involved in the evaluations in Durres and Elbasan; (ii) prepared detailed grievance redress procedures for the disability assessment. However, the reform has also been significantly affected by the Covid-19 related constraints. First, because of the physical and social restrictions imposed by the Covid-19 for the general population and specifically for the persons with disabilities, the Ministry had to halt the scale-up in Tirana region until September 9, 2020. Second, due to budgetary constraints, the members of the evaluation teams in Durres and Elbasan that were supposed to be in place already could not be hired, and the Ministry estimates that they will be employed only starting in mid-July 2021. Expected delays and justification for extension: Under these circumstances and considering the complexity of the reform affecting a large share of the population with such significant vulnerabilities, it is impossible to compress the time to complete the reform in Durres and Elbasan. Considering the timing of when the resources for staffing can be allocated and the individuals can be hired, the time required to scale-up the reform in the two regions, and the final step planned under the Project to measure the impact of the reform on beneficiaries through a dedicated survey, the DLI is estimated to be met only at the end of November 2020. DLI #18: Three SSS Regional offices in Tirana, Elbasan, and Durres are rehabilitated according to official regulations on accessibility for disabled persons in public buildings, spaces, and service Progress before the Pandemic: The Ministry agreed with the Bank on a checklist to ensure that the rehabilitated centers are accessible for people with disabilities. In November 2019, the MoHSP contracted the TA to ensure the quality of the rehabilitation works in Tirana. The other two regional offices to be rehabilitated had also been identified. However, the earthquake destroyed last parts of the center in Durres, and it was unclear whether it would be possible to rehabilitate it or if it would have to be rebuilt. Progress after March 2020: The works for the Tirana Regional Office's rehabilitation were completed in July 2020, and the checklist was approved by the Bank. The MoHSP has prepared the project designs of the SSS regional offices in Durres and Elbasan. The designs have been reviewed and approved by the Bank. In August 2020, the MoHSP requested the Ministry of Finance and Economy to support funds to finance both offices' rehabilitation. Currently, the contract for the rehabilitation of both offices is in the process of being signed. The MoHSP expects to meet the DLI in the course FY21. DLI #19: An Exit Strategy and an action plan for NE beneficiaries are developed, consulted, approved and disseminated. The Ministry met the DLI in January 2020: The TA for supporting the strategy and action plan's preparation started in August 2019 and was finalized in November 2019. The Government prepared and approved all The World Bank Social Assistance Modernization Project (P122233) the necessary legislation and sent all the documentation needed for checking the compliance with the DLI protocol to the Bank for confirmation and verification on January 30, 2020. DLI #20: At least 55 percent of suspected fraud and error cases in the DA program in Tirana are investigated by social inspectors in accordance with the verification protocol Progress before the Pandemic: The Ministry approved the guidelines for carrying out social inspection campaigns on disability assessment in October 2019. The Ministry prepared Terms of Reference for a consultancy to improve the methodology and train the inspectors. The MoHSP requested the budget and approval to hire the social inspection staff in December 2019. Progress after March 2020: Between September-November 2020, a consultant firm improved the control methodology and delivered social inspectors training. The social inspection team (with only two vacancies that still need to be filled) was also hired in 2020. In June 2020, the National Agency for Information Systems (NAIS) developed the technical specifications for an MIS module for social inspections, but no budget has been allocated as of yet, due to budget constraints caused by the COVID-19 pandemic. Expected delays and justification for extension: Due to budget constraints caused by the Covid-19 pandemic, the Ministry could not secure the funds for the development of the module (the cost of the module is estimated at 300,000 euros). The current estimate is that the money will be available only by October 2021. The MIS module is critical for ensuring transparency and standar dized procedures in planning the work of the social inspection team, and for generating regular reports on the campaigns’ results that could be used both by the higher-level management and general public. Production and use of automated Management Information System (MIS) reports for DA performance management; and (b) improved oversight and control of DA benefits. After the MIS module is developed, a social inspection campaign must be carried out for six months for the DLI to be met. For these reasons, the deadline for completing the DLI should be postponed to September 2022. As a result, the GoA has requested to extend the Project from June 30, 2021 to December 31, 2022. An assessment of the current progress towards each of the DLIs, and the plans set out by the Ministry to achieve each of these DLIs (as detailed above) has confirmed that, with an 18-month extension, the Project's development objective remains achievable. II. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications 31-Dec-2018, 28-Jun- IBRD-81410 Closed 30-Jun-2017 2019 IBRD-88410 Effective 30-Jun-2021 31-Dec-2022 30-Apr-2023 The World Bank Social Assistance Modernization Project (P122233)