The World Bank Third Sustainable Livelihoods Project (P125232) REPORT NO.: RES39881 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF THIRD SUSTAINABLE LIVELIHOODS PROJECT APPROVED ON JUNE 6, 2014 TO MINISTRY OF FINANCE SOCIAL EAST ASIA AND PACIFIC Regional Vice President: Victoria Kwakwa Country Director: Martin Raiser Regional Director: Benoit Bosquet Practice Manager/Manager: Susan S. Shen Task Team Leader(s): Ingo Wiederhofer, Badamchimeg Dondog The World Bank Third Sustainable Livelihoods Project (P125232) I. BASIC DATA Product Information Project ID Financing Instrument P125232 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 06-Jun-2014 31-Oct-2020 Organizations Borrower Responsible Agency Ministry of Finance Ministry of Finance Project Development Objective (PDO) Original PDO The PDO is to improve governance and community participation for the planning and delivery of priority investments in rural areas of Mongolia. Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-54870 06-Jun-2014 30-Jan-2015 31-Jul-2015 31-Oct-2020 24.80 16.91 5.48 TF-A0794 31-Jul-2015 31-Jul-2015 31-Jul-2015 31-Dec-2019 5.67 4.28 1.38 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES The World Bank Third Sustainable Livelihoods Project (P125232) In response to a request from the Government dated October 11, 2019, the team requests an extension of the closing date of this grant from December 31, 2019 to June 30, 2020. The project authorizing environment and implementation have continued to improve with the progress towards the project development objective (PDO) rated Moderately Satisfactory and the overall implementation progress rated Satisfactory in the latest ISR, dated November 2019. The cumulative disbursement of the grant has also increased. To date, US$ 3.95 million (70% of the total grant of US$ 5.67 million) has been disbursed. Key project activities financed by the grant are also on track for completion, including: (a) Local level capacity building activities under Part 1 of SLP3. Accomplishments in the past two years included technical assistance for the revision of the Local Development Fund (LDF) regulation; development of the associated LDF guideline modules; as well as the provision of training on the operationalization of the guidelines for specific target audiences within the local governments and communities. In support of Project communications, stakeholder engagement and transparency, a new LDF website is now functional (http://tusuv-oronnutag.mof.gov.mn) and the project maintains an active Facebook page (Орон нутгийн хөгжлийн сан @LDFMongolia) where SLP3/LDF-related local news and videos (e.g. from the community participation pilots) are shared, attracting over 100,000 post views. (b) Annual performance assessments activities under Part 2 of SLP3. The Annual Performance Assessments (APAs) are external reviews conducted to assess the performance of soum (village) authorities in terms of managing LDFs in relation to a range of governance, technical and fiduciary criteria. The APA processes were completed in a timely manner in 2016-2019, and the average soum score increased to 59% in 2019 from the baseline of 32% in 2016, and from the 50% score achieved in 2018. This provides confidence that the Project is on track to meet its PDO target of 60% for this score in 2020. Based on the APA results, the Project has been providing Performance Based Grants (PBGs) from the IDA credit financing to the qualifying soums. Feedback from provincial and local officials confirms that both the APA scoring and the PBG mechanisms are fostering a sense of competitiveness and learning related to the soum LDF. (c) Project Monitoring and Evaluation activities under Part 3 of SLP3. The Project baseline study was conducted in 2017 and the result provided key reference points for a number of indicators in the Project Results Framework. While the main IDA source of funding for the Project has a closing date of October 31, 2020, the SDC co-financing of the Project is currently scheduled to close on December 31, 2019. As the co-financing grant is needed for achievement of the PDO and considering the good progress of the Project, at the request of Government, the donor has agreed to an extension of the closing date of the grant by further six (6) months to June 30, 2020. Therefore, through this proposed restructuring, the team requests an amendment to the Grant Agreement with the Government to extend the closing date of the Grant from December 31, 2019, until June 30, 2020. No other changes are being requested. The project is up to date on its reporting and audit obligations stipulated in the relevant legal agreements. The FY18 financial audit of the Project, with an unqualified opinion, was received and accepted by the Bank. II. DETAILED CHANGES The World Bank Third Sustainable Livelihoods Project (P125232) LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IDA-54870 Effective 31-Dec-2018 31-Oct-2020 30-Jun-2019, 31-Dec- TF-A0794 Effective 30-Jun-2018 30-Jun-2020 30-Oct-2020 2019