The World Bank FOR OFFICIAL USE O-LY crja /q o 3.ce Reper No. P-4783-CE MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF StIR 12.9 MILLION TO THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA FOR A HEALTH AND FAMILY PLANNING PROJECT March 25, 1988 This document ha" a restricted distribution nd may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorizatn. CU DCY EQVIVALSuTS Sri Lanka Rupe (Rs) - 100 cents Us$1.00 (at appraisal, September/October 1987) - R#30 (Official Rate) a Rs (Free Karket Rate) FISCAL YEAR January 1 - December 31 ASUlEVIATIONS ABD - Asian Development Bank CMSD - Central Medical Supplies Department Cn - Contraceptive Prevalence Late CDS - Community Development Services DDC - Deputy Director-General DUC - Divisional Health Center DHS - Demographic and Health Survey FHB - Family Health Bureau FP - Family Planning FPASL - Family Planning Association of Sri Lanka GHC - Granodaya (village) Health Center HUM - Humau Resources KanagvAent IEC - Information, Education and Comunication IRDP - Integrated Rural Development Project IUD - Intra-uterine device MDPU - Management Development and Planning Unit mm - Ministry of Health MLGHC - Ministry of Local Government, Housing and Construction MO- - Medical Officer of Health MOPI - Ministry of Plan Implementation MWATH - Ministry of Women's Affairs and Teaching Hospitals NCO - Non-government Meganization NHDA - National Housinox Development Authority NIHS - National InstitA.e of Health Sciences PHC - Primury Health Care PPF - Project Preparation Facility 3DMS - Regional Directorate of Health Services SDHC - Sub-Divisional Health Center TFR - Total Fertility Rate UNFPA - United Nations Population Fund UNICEF - United Nations Children's Fund USAID - Un.ted States Agency for International Development WHO - World Health Organization FM ema0L uK ONLY SRI LANKA HEALTH AND FAMILY PLANNING PROJECT Credit and Project Summary Borrotier: Democratic Socialist Republic of Sri Lanka Beneficiaries: Ministry of Health, Ministry of Women's Affairs and Teaching Hospitals, and Ministry of Plan Implementation. Amount: SDR 12.9 million (US$17.5 million equivalent). Terms: Standard with 40 years' maturity. Onlending Terms: Not applicable. Financing Plan: Government US$3.89 million IDA US$17.50 million Total US$21.39 million Economic Rate of Return: Not applicable Staff Appraisal Report: ReDort No. 7050-CE maps: IBRD 19985 IBRD 21017 This document has a restricted distribution and may be used by recipients only in the performit-. of their official duties. Its contents may not otherwise be disclosed without World Bank author .,~ 'r mEmORADUM AND RECOmmENDATION OF THs PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO SRI LANKA FOR A HE&ILTH AND FAMILY PLANINGC PROJECT 1. The following mmorandum and rvco mndation on a proposed develop- ment credit to The Democratic Socialist Republic of Sri Lanka for SDR 12.9 million (US$17.5 million equivalent) is submitted for approval. The proposed credit would be on standard IDA terms with 40 years' maturity and would help finance a health and family planning project. 2. Background. Sri Lanka's health and family planning indicators rival those of many middle-income countries. Life expectancy is 67 years for males and 71 years for females. The crude death rate is 6 per 1,000 population. Infant mortality is estimated at 32 per 1,000 live births. Over the past 27 years, total fertility has fallen by more than 40% from 5.4 to an estimated 3.0. Since 1980 the country also has embarked on an ambitious Primary Health Care (PHC) program emphasizing preventive care. However, the pace of improvement has begun to slow as emerging constraints threaten the achievement of national health and population goals. 3. Four main problems namper health sector development: (a) weak management and declining efficiency of p.Ablic health services; (b) difficul- ties in implementing the new PHC system as an effective vehicle to address health problems and priorities; (c) the need for both explicit community health objectives and strategies to deliver the appropriate mix of services; and (d) how to modify the health financing system for proper targetting of costs and subsidies. 4. Current manifestations of these problems include an absence of strategic and organizational planning for the sector, overly centralized management and budgetary controls, and difficulties in recruiting and deploying professional staff in the absence of manpower and career development planning. Skew _ service delivery patterns lead to bypassing of underused lower-level facilities and overcrowding at expensive, specialized hospitals; access to PHC remains uneven and inadequate. Annual drug and supplies losses are estimated at 10-15% of stocks and arrangements for vehicle and equipment maintenance are also weak. 5. Family planning performance is well below its potential as evidenced by extensive unmet demand and scope for generating more demand for spacing methods. Considerable additional effort will be needed for Sri Lanka to maintain its estimated 60X level of contraceptive prevalence in the face of declining demand for sterilization and a projected net increase of 100,000 women of reproductive age annually, 1988-93. Improvements are needed in three key areas: program management and coordination, program strategy and service mix and demand generation. -2- 6. Rationale for IDA Involvement. The Association's role in the sector is to assist Sri Lanka's efforts to: (a) develop and carry out policies, strategies and programs to deal efficiently and effectively with main health problems; and (b) reduce fertility to economically and socially sustainable levels. The Association's strategy involves a blend of sector work. policy dialogue and lending. Other health donors currently focus on development of physical infrastructure, family planaing r_earch and operations, technical assistance for PHC, child i unization, diarrhoeal diseases management and development of a health research network. The project would be the Bank's first Sri Lanka operation in the sector. It derives from the fank health and population sector report (No. 5218-CE) of April 1986, and subsequent discussions with Covernment on its findings. Support to the project would position the Government to increase future donor responsiveness to identified sector issues and would promote both concerted Government-donor approaches to major health and family planning problems and better donor coordination. 7. Project Objectives. The project seeks to: (a) strengthen management of the Government heaith system at central and regional levels; (b) increase the efficiency and cost-effectiveness of the health logistics system; and (c) promote lower fertility and increased maternal-child health through increased and more effective use of modern and traditional child- spacing m.ethods. 8. Project Description. The project would strengthen management irt the Ministries of Health and Women's Affairs and Teaching Hospitals by assisting the establishment of Human Resource Management, Financial Management and Management Development and Planning Units. It also would support: (a) health policy development through a health strategy and financing study and opera- tional research; and (b) improved service delivery in two health regions where management improvements would be tested and adapted for wider replication. In logistics, the project would improve storage facilities and management systems for drug and medical supplies distribution and would strengthen systems for vehicle and equipment maintenance and repair. In family planning, the project would assist strategic and service delivery planning and monitoring, as well as communications efforts to generate additIonal demand for spacing methods complementing a major service delivery effort financed by the United Nations Fund for Population Activities. The project would be carried out over five years. It provides funds for civil works; vehicles, furniture, equipment and supplies; training and technical assistance; studies; special service delivery programs in two health regions; family planning grants to non-government orga- nizations; production and dissemination of family planning messsages through mass media, project coordination and incremental operating costs. The total project cost is estimated at US$21.39 million equivalent, with a foreign ex- change component of US$5.74 million (271). It includes US$260,000 in Project Preparation Facility financing and US$100,000 equivalent in retroactive fi- nancing of pre-project costs incurred after September 30, 1987, principally for preparation of site plans and surveys, working drawings, fixtures and fitting lists and detailed cost estimates for construction of drug storage warehourses. A breakdown of costs and the financing plan appear in Schedule A. Amounts and methods of procurement and disbursement, and the disbursement sch tdule are shown in Schedule B. A timetable of key project processing events appears in Schedule C. Two maps are attached. The Staff Appraisal Report, No. 7050-CE dated March 25, 1988, is distributed separately. - 3- 9. Actions Completed as Conditions of Negotiations--(a) Government establishment of nev units and posts in both health ministries for human resources and financial management, for Management Development and Planning Units and creating of two comunications posts in the Population Division of the Ministry of Plan Implementation (MOPI); (b) Ministry of Health possession of 30 sites for community health center construction; (c) Government prepera- tion of site surveys and plans, preliminary floor plans, fixture and fittings lists and construction cost estimates for major logistics facilities to be funded by the project; and (d) Government agreement to maintain Inter- ministerial Steering Conittee for the project under terms of reference satisfactory to IDA. Conditions of Effectiveness--Staffing of (a) Deputy Dire:tor-General and Director posts in project-funded health management units, (b) two communications and one research post in MOPI's Population Division and (c) project coordinator's post in MOPI. Assurances Received at Negotiations-- (a) by September 30 of each year, Government furnishing of work plans for pro- ject-funded tcaining and health policy research for subsequent calendar year; (b) by August 31, 1992, Government to complete health strategy and financing study under terms of reference satisfactory to IDA, discuss results with IDA and implement recommendations on which it and IDA agree; (c) by August 1, 1989, Government to prepare terms of reference satisfactory to IDA fo- special service delivery programs in two health regions; (d) Government would enter into agreements with non-government organizations satisfactory to IDA govern- ing the use of grant family planning funds under the project, and (e) Govern- ment to carry out project reviews under terms of reference satisfactory to IDA in third and fifth project years, discuss results with IDA and develop and carry out an action plan to implement agreed changes in project design and operations. 10. Benefits. The project would develop increased capab:lities for health management and planning; increased absorptive capacity in the sector; more cost-effective, efficient and equitable use of resources for health care, and reduced fertility. These changes would in turn lead to improved health status. Through reduced wastage and losses, the logistics comvonenc alone would produce annual savings estimated at Rs3O million or more from the third year of the project. Reduced fertility would benefit both individuals and society. Low-fertility couples would enjoy lower risk of maternal and infant morbidity and mortality. A 0 4 reduction in total fertility, to which the project would contribute, would enable Sri Lanka to reach replacement fer- tility five years earlier than currently anticipated. 11. Risks. The project faces two main risks: possible faltering Govern- ment commitment to implementing management reform once the initial staffing effort is completed and possible Population Division difficulties in forging effective collaboration among concerned Government actors and voluntary agencies for integrated family planning service delivery and communications. To help counter the first risk, the project provides a combination of tech- nical assistance and in-service training, for which details have been worked out, at all critical levels of the health management system. Annual training plans will be prepared and reviewed with IDA well in advance of execution. The establishment of Management Development and Planning Units in both health ministries also will help stabilize management processes and provide mecha- nisms to adjust them as required. Strengthening the Population Division's - 4 - capacity for planning and iupleMntotion will *nable it to coordinate more effectively with concerned agencies on population matters. The use of work- shops as a principal mechaniss to develop family planning and communications strategies will promote inter-agency consensus on goals and agency roles. Woreover, the aid-term project review will serve as a vehicle to identify shortcomings in initial project assumptions and operations and make appropriate course corrections. 12. Rocomendation. I am satisfied that the proposed credit would co_- ply with the Articles of Agreement of the Association and recomend that the Executive Diractors approve the proposed credit. Barber B. Conable President Attachments Washington, D.C. April 11, 1988 - 5 - Schedule A SRI LANKA HEALTH AND FAMILY PLANNING PROJECT Estimated Costs and Financing Plan E3timated Costs Proj-ct Component Local Foreign Total ----- (USS million) ----- Health management tmprovement management development Human resources development 0.12 0.25 0.37 Financial management and budgetary control 0.07 Oi2 0.19 Management development and planning units 0.09 0.27 0.36 Health sector policy development 0.27 0.69 0.96 Jncremental recurrent costs 1.05 0.00 1.05 Service delivery Infrastructure 0.95 0.57 1.52 In-service training 0.30 0.17 0.47 Strengthening RDHS management 0.62 0.05 0.67 Special programs 0.77 0.33 1.10 Incremental recurrent costs 0.45 0.04 0.49 Sublotal 4.69 2.49 7.18 Logistics Drug and supplies management 1.93 1.35 3.28 Vehicle and equipment maintenance and repair 0.33 0.39 0.72 Incremental recurrent costs 0.88 0.00 0.88 Subtotal 3.14 1.74 4.88 Family pianning Strategy development 0.15 0.12 0.27 Service delivery 0.34 0.16 0.5C Information, education and communication 3.30 U.09 3.39 Incremental recurrent coats 0.13 0.00 0.13 Subtotal 3.92 0.37 4.29 Project implementation and coordination /a 0.36 0.00 0.36 Base Cost 11.91 4.52 16.43 Physical contingencies 1.16 0.48 1.64 Price contingencies 2.58 0.74 3.32 Total Project Cost /b 15.65 5.74 21.39 Financing plan Amount Financier Local Foreign Total U(USS million) ----- Gove.7nment 3.87 U.06, 3.93 IDA 11.78 5.68 17.46 Total 1,-h5 5.74 21.39 /a Includes US$260,000 Project Preparation Facility. 7 The total cost riet of duties and taxes (US$0.26 million) is US$21.13 million. SRI LANKA HIALTH AND FAMILY PLANNING PRWfICT Procuremnt Method and Disbursements Procurement method Project element Ica LCS Other LA. Total ------ -- (US$ million) Civil works - 4.61 0.94 - 5.55 (4.41) (0.89) (5.30) Vehicles, furniure, equipment, supplies 1.57 0.81 - 0.31 2.69 (1.57) (0.70) (2.27) Family planning grants to nongovernment organizations - - 2.09 - 2.09 (2.09) IEC materials production and dissemination - - 1.90 - .90 (1.90) (1.90) Studies and surveys - - 1.59 - 1.59 (1.59) (1.59) Special service delivery programs - - 1.47 - 1.47 (1.47) (1.47) Training, fellowships and workshops - - 1.31 - 1.31 (1.31) (1.31) Consultant Services - - 1.21 - 1.21 (1.21) (1.21) Project preparation facility and project coordination /a - - 0.36 - 3.60 (0.36) (3.60) Incremental operating costs - - 3.22 - 3.22 Total 1.57 5.42 14.09 0.31 21.39 (157) ( (5.11 10.82) (17.50) /a Includes $260,000 Project Preparation Facility. Note: Figures in parentheses are the respective amounts financed by the Association. Disburs-eant Amount Proportion Category (USS mdllion) (t) Civil works 4.15 95Z of expenditures Vehicles, equipment, furniture, 2.16 100X of foreign and ox- supplies factory local expenditure, 802 of local expenditure if procured locally Training, fellowships, consulting 2.52 1002 of expenditures services and workshops Grauts to nongovernuent organiza- 2.21 100% of expenditures tions Studies and surveys 1.29 100' of expenditures Production and dissemination of 1.45 100Z of expenditures IEC materials Special service delivery programs 1.42 100% of expenditures Project implementation and 0.10 100% of experditures coordination Refunding of PPF advance 0.26 100% of expenditures Unallocated 1.94 Total 17.50 Estimated IDA disbursements Bank/IDA Fiscal Year FY89 FY90 FY91 PY92 FY93 FY94 FY95 Annual 2.0 5.1 4.8 2.5 1.9 1.0 0.2 Cumulative 2.0 7.1 11.9 14.4 16.3 17.3 17.5 Schedule C SRI LANKA REALTH AND FAMILY PLANNING PROJECT Timetable for Key Project ProcessinAg Events (a) Time taken to prepare 21 months (b) Prepared by Govern-eat wlth Project Preparation Facility and IDA assistance (c) First IDA mission December 1985 (d) Appraisal mission departure September 1997 (e) Negotiations March 1988 (f) Planning date of effectiveness September 3, 1988 (g) List of relevant PCRs and PPARs None. First operation in sector. Schedule D Page 1 of 2 TIRE STATUS 07 SA GROUP OPERATIONS IN SRI LANA A. STAT3W?T OP ANK LOANS AMS IDA CREDITS (a. of Sept. 30. 1987) USS Million Loan or Amount Credit (net of cancellations) No. Yoes Borrower Purvoce lank IDA Undixbursed/. Nine *alo and twcety four credits iully disb4rs*d 107.1 314'a6 1017 1986 Sri Lanka Smallholder Rubber Rehabilitation 16.0 3.18 1048 1960 Sri Lanka Sixth Pover 19.5 4.6 1079 1961 Sri Lanka Second Rural Development 33.5 9.35 1160 1981 Sri Lanka Village Irrigation Rehabilitation 30.0 15.42 1166 1951 Sri Lanka Mahaveli Ganga Development III 90.0 40.57 1182 1982 Sri Lanka SMI 1I 30.0 7.89 1210 1982 Sri Lanka Seventh Power 36.0 6.85 1317 1982 Sri Lanka Forestry 1 9.0 8.14 1363 1983 Sri Lanka Third Rural Development 23.0 24.42 1401 1983 Sri Lanka Industrial Development Project 25.0 3.59 1494 1984 Sri Lanks Mahaweli Gasga Development IV 30.0 36.21 2437 /b 1984 Sri Lanka Mahaveli Gangs Development rV 12.i 12.10 1537 1985 Sri Lanka Major Irrigation Rehabilitation 17.0 14.53 2517 1985 Sri Lanka Second Roads 24.0 14.88 1562 1985 Sri Lanka Fourth Treo Crop. 55.0 49.33 2576 /b 1985 Sri Lanka Dairy Development rr 38.0 38.C 1692 1986 Sri Lanka Industrial Development II 20.0 13.86 1697 1986 Sri Lanka Municipal Management 13.0 .2.61 1698 1986 Sri Lanka Second Vocational Training 15.0 14.9C 1700 1986 Sri Lank Water Supply and Sanitation 37.0 39.79 1736 1987 Sri LaT.a& Ninth Power 52.0 :964 1776 /b 1987 Sri Lanka Agriculture Research 18.6 19.71 TOTAL 181.2 884. 6 438.52 of which has been repaid 57.69 7.44 - Tctal now outstanding 123.51 876.62 Amount sold 3.6 of which has been repaid 3.6 Total now held by Bank and DA 123.51 876.62 Total Undisbursed 64.98 373.54 438.52 /a As credits are denosinated in SDRm (since IDA Replenishaent VI). undisbursed SDR credit balances are converted to dollars at the current exchange rate between the dollar and the SDR. In some cases, therefore. the urdisbursed balance indicates a dollar amount greater than the original principal credit amount expressed in dollars. /b Not yet effective. -10- Schedule D Page 2 of 2 B. STATEQNT o0 rtic iN!snmws (as of Sept. 30. 1987) Year Obligor TYpe of Business Amount (USS Million) Loan Ecuitv Total 1970 Pearl rextile Teztiles 2.50 0.75 3.25 1978/RO/83 -.e Development Finance Corporation of Ceylon Development Banking - 0.45 0.45 1978/81 Bank of Ceylon Development Banking 7.00 - 7.00 1979/81 Cyntex Textiles 3.15 0.54 3.69 1979 Mikechris Industries Polypropylene Bag 0.89 0.10 .99 1980/84/85 LOLC Leasing 3.00 0.34 3.3 1981 Taj Lanka Hctels Hotel 19.30 .70 20.00 Total Gross Commitments 35.84 2.88 38.72 Less: Cancellations. T*rminations. Repayments, and Sales 21.03 1.38 22.41 Total Commitments now held by IFC 14.81 1.50 16.31 IBRO 19986 @ * 8^1~~SR LAWA HEALTH AND FAMILY PLANNING PROJECT Service OlNvory ,~~~~~~~~~~~~N At Ah Ft o - 100 100 - 6O0 KALAMU t _OC - 8000 Over 6000 * Ms ~~~~~~~~~~~~~0 District Capitals Cptals OWNatkonal Capital Bundaries Boundarlo- HA A S HRIV Battlealoa COLOMBO CLQD £4/ES rERN 2~~~~~~~~~~~~~~~~MLE cw~~~~ AMV - tAA , 3y ,rt'e.. I,.,. C V . .'l flra it:0~~~~~~~~~~~~L 20 C\3AS0 QALLE .- 0 10 to 80 40 so at aatara KLOMETIM DECEMBER 1987 SRI LANKA HEALTH AND FAMILY PLANNING PROJECT AREAS FOR PRIMARY HEALTH CARE (PHC) COMPLEXES TRINCO LEE ////g< PHC Areas _ Prolet District Soundaries Di___ Ostrict Subdivisions - Dristrict Boundaries s 0 National Capitl10 KILOEERS ATNAPURA ANURADHAPURA HINGURAKGODA ANKAPURA \ < \ ~~~~~~~~~NELUWA / / ) TAMANKADUWA 7 IN 1AG A M A ~~~~~~~~~~~~~DAMIBULLA /;/,,, ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ IAO _^Q^,~ ~ ~ ~ ~ ~ ~ ~~~V e A i N!Ag ,,.TW'AA _ wAWELAf MATARA A' LEPOL; / YAKKALAMUL-^-- GAwNG A1ALE LAGGALA Arabian Sea 0 5 10 55 20 O KUWELA O LOMElRS, v ei Ks-S' ~~~~~~~~~~~~^ ~~~~\ 853° ' J80130 eo;^s ) | \ et;ls A@ll 198~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~PRL 98