Document of The World Bank Report No: ICR00004111 IMPLEMENTATION COMPLETION AND RESULTS REPORT (TF-92582 - P111849) ON A SPECIAL FINANCING GRANT IN THE AMOUNT OF US$6.00 MILLION TO THE LEBANESE REPUBLIC FOR A SECOND EMERGENCY SOCIAL PROTECTION IMPLEMENTATION SUPPORT PROJECT JUNE 30, 2017 Social Protection and Labor Global Practice Middle East and North Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective December 2016) Currency Unit = Lebanese Pound (LBP) LBP 1.00 = US$0.00066 US$1.00 = LBP 1,506.50 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS ACS Admission Criteria Standards CAS Country Assistance Strategy CIDA Canadian International Development Agency CMI Case Mix Index CMU Central Management Unit ECRD Educational Center for Research and Development EMIS Education Management Information System EMS Exam Management System EPP Emergency Project Paper ESDP Education Sector Development Plan ESDS Education Sector Development Secretariat ESIA Economic and Social Impact Assessment ESPISP I First Emergency Social Protection Implementation Support Project ESPISP II Second Emergency Social Protection Implementation Support Project FOT Fiduciary Operations Team GDP Gross Domestic Product GEP General Education Project GOL Government of Lebanon HD Human Development HH Household ICR Implementation Completion and Results Report IEG Internal Evaluation Group ISN Interim Strategy Note ISR Implementation Status and Results Report IT Information Technology M&E Monitoring and Evaluation MEHE Ministry of Education and Higher Education MOF Ministry of Finance MOL Ministry of Labor MOPH Ministry of Public Health MOSA Ministry of Social Affairs MTEF Medium-Term Expenditure Framework NEO National Employment Office NGO Nongovernmental Organization NEW New Entrants to Work NPTP National Poverty Targeting Program NSSF National Social Security Fund OJT On-the-Job Training OM Operational Manual PCM Presidency of the Council of Ministers PDO Project Development Objective PMT Proxy Means Test QBS Question Bank System RACE Reaching All Children with Education RIDPL Reform Implementation Development Policy Loan SAP Social Action Plan TFL Trust Fund for Lebanon TIMSS Trends in International Mathematics and Science Study Senior Global Practice Director: Michal J. Rutkowski Practice Manager: Hana Brixi Project Team Leader: Haneen Ismail Sayed ICR Team Leader: Carole Abi Nahed Chartouni LEBANON SECOND EMERGENCY SOCIAL PROTECTION IMPLEMENTATION SUPPORT PROJECT CONTENTS A. Basic Information........................................................................................................ i B. Key Dates .................................................................................................................... i C. Ratings Summary ........................................................................................................ i D. Sector and Theme Codes ........................................................................................... ii E. Bank Staff ................................................................................................................... ii F. Results Framework Analysis ..................................................................................... iii G. Ratings of Project Performance in ISRs ................................................................. xiii H. Restructuring (if any) .............................................................................................. xiii I. Disbursement Profile ................................................................................................ xiv 1. Project Context, Development Objectives and Design ............................................... 1 2. Key Factors Affecting Implementation and Outcomes .............................................. 9 3. Assessment of Outcomes .......................................................................................... 16 4. Assessment of Risk to Development Outcome......................................................... 26 5. Assessment of Bank and Borrower Performance ..................................................... 27 6. Lessons Learned ....................................................................................................... 29 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 31 Annex 1. Project Costs and Financing .......................................................................... 32 Annex 2. Outputs by Component ................................................................................. 32 Annex 3. Economic and Financial Analysis ................................................................. 42 Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 43 Annex 5. World Bank-financed Projects in Human Development related to ESPISP II45 Annex 6. Timeline of Activities Relevant to ESPISP II During Implementation ........ 47 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 49 Annex 8. List of Supporting Documents ...................................................................... 51 Annex 9. Political/Project Timeline.............................................................................. 52 Annex 10. Efficacy Rating by Project Objectives ........................................................ 54 Annex 11. Country Map ............................................................................................... 55 A. Basic Information Second Emergency Social Protection Country: Lebanon Project Name: Implementation Support Project Project ID: P111849 L/C/TF Number(s): TF-92582-TF-97692 ICR Date: 03/30/2017 ICR Type: Core ICR Emergency Recovery Lending Instrument: Borrower: Government of Lebanon Loan Original Total US$6.00 million Disbursed Amount: US$5.45 million Commitment: Revised Amount: US$6.00 million Environmental Category: C Implementing Agencies: Presidency of the Council of Ministers (PCM), Ministry of Labor (MOL), National Social Security Fund (NSSF), Ministry of Social Affairs (MOSA), Ministry of Public Health (MOPH), and Ministry of Education and Higher Education (MEHE) Cofinanciers and Other External Partners: Italian Cooperation, Canadian International Development Agency (CIDA) Trust Fund, Hospitals in Lebanon B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 06/13/2008 Effectiveness: — 01/27/2009 09/30/2011 Appraisal: — Restructuring(s): — 03/27/2013 07/14/2014 Approval: 09/05/2008 Mid-term Review: 09/30/2014 11/10/2014 Closing: 03/31/2012 12/31/2016 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Moderately Satisfactory Risk to Development Outcome: Substantial Bank Performance: Moderately Satisfactory Borrower Performance: Moderately Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory i Implementing Quality of Supervision: Satisfactory Moderately Satisfactory Agency/Agencies: Overall Bank Overall Borrower Moderately Satisfactory Moderately Satisfactory Performance: Performance: C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments (if Indicators Rating Performance any) Potential Problem Project Quality at Entry Yes None at any time (Yes/No): (QEA): Problem Project at any Quality of Supervision Yes None time (Yes/No): (QSA): DO rating before Moderately Closing/Inactive status: Satisfactory D. Sector and Theme Codes Original Actual Major Sector/Sector Education Public Administration - Education 17 17 Health Public Administration - Health 12 12 Social Protection Public Administration - Social Protection 71 71 Major Theme/Theme/Sub Theme Human Development and Gender Education 9 9 Access to Education 9 9 Education Financing 9 9 Health Systems and Policies 12 12 Health System Strengthening 12 12 Social Development and Protection Social Protection 71 71 Social Safety Nets 71 71 E. Bank Staff Positions At ICR At Approval Vice President: Hafez M. H. Ghanem Daniela Gressani ii Country Director: Ferid Belhaj Hedi Larbi Practice Manager/Manager: Hana Brixi Roberta V. Gatti Project Team Leader: Haneen Ismail Sayed Haneen Ismail Sayed ICR Team Leader: Carole Abi Nahed Chartouni Suzana Abbott/Carole Abi Nahed ICR Primary Authors: Chartouni F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The objective of ESPISP II was to improve the administration, delivery, financial sustainability, and targeting of social insurance, social safety net, health and public education services.1 Revised Project Development Objectives (as approved by original approving authority) The Project Development Objective (PDO) was revised to read as follows: to (i) strengthen the capacity of the Ministry of Labor to promote youth employment; (ii) rationalize public health expenditure; (iii) establish a national poverty targeting system for social safety net programs; and (iv) increase availability of education data for decision making in the Ministry of Education and Higher Education. (a) PDO Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years At Appraisal No further arrears accumulate in NSSF and current arrears are being refinanced Indicator 1 with full repayment expected by year 2017 Value (Quantitative or No Yes — No Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 12/31/2016 Comments (including % This indicator was not achieved. achievement) Individual claims processed and paid within two weeks in 90% of claims in NSSF Indicator 2 and MOPH Value (Quantitative or No Yes — Yes Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 12/31/2016 1 This was the wording of the PDO in the Grant Agreement. The wording of the PDO in the Project Paper was as follows: to improve the administration, delivery, financial sustainability, and targeting of social services through implementation of new systems and the adoption of new policies in the NSSF, MOL, MOPH, MOSA/ PCM, and the MEHE. These systems and policies would improve access to and the quality of social insurance, social safety net, health and public education services, to the Lebanese middle class, and poor and vulnerable populations. iii Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Comments (including % This indicator was achieved following a Level 1 restructuring. achievement) The National Poverty Targeting Program (NPTP) is fully operational and the Indicator 3 Government uses it to target programs aimed at improving living standards of the population Value (Quantitative or No Yes — Yes Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 12/31/2016 Comments (including % This indicator was achieved following a Level 1 restructuring. achievement) The 2011 education budget implemented based on performance-based budgeting Indicator 4 and quality enhancing initiatives major focus of new budget Value (Quantitative or No Yes — Yes Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 12/31/2016 Comments This indicator was achieved following a Level 1 restructuring. The MEHE opted for (including % adopting a medium-term expenditure framework (MTEF). achievement) After Level 1 Restructuring Number of direct project beneficiaries of (a) of the National Poverty Targeting Indicator 1 Program (NPTP), (b) of the new Entrants to Work (NEW) Program, (c) total of which (%) female Direct project beneficiaries (Number, Core) Value 0 (Quantitative or n.a. 101,600 235,500 Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 08/31/2014 Comments This indicator was fully achieved and exceeded the target with a 132% achievement. (including % 52% of beneficiaries were women. achievement) Of the New Entrants to Work (NEW) Program (Number, Custom Breakdown Value (Quantitative or 0 n.a. 1,600 0 Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 12/31/2016 Comments (including % Not achieved. achievement) Of the National Poverty Targeting Program (Number, Custom Breakdown) iv Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Value (Quantitative or 0 n.a. 100.000 235,500 Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 08/31/2014 Comments (including % This indicator was fully achieved and exceeded the target. achievement) Female beneficiaries (Percentage, Core Supplement) Value (Quantitative or 0 n.a. 50 52 Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 12/31/2016 Comments (including % This indicator was fully achieved and exceeded the target. achievement) Increase percentage of admissions according to Admission Criteria Standards Indicator 2 (ACS) by medical controllers Value (Quantitative or 0 n.a. 75% 83% Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 08/31/2014 Comments (including % This indicator was fully achieved and exceeded the target. achievement) The NPTP has been adopted and used by the Government to target social Indicator 3 assistance to the extreme poor Policy statement issued by the Government formally establishing the NPTP as a means to target social assistance benefits Value (Quantitative or No n.a. Yes Yes Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 08/31/2014 Comments (including % Achieved. achievement) Basket of benefits approved by the Government and budget allocated Value (Quantitative or No n.a. Yes Yes Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 08/31/2014 Comments (including % Achieved. achievement) v Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Distribution of benefits to the first batch (18,801 HH) of beneficiaries through NPTP Value (Quantitative or No n.a. Yes Yes Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 08/31/2014 Comments (including % Achieved. achievement) Second round of benefit distribution to additional batches completed Value (Quantitative or No n.a. Yes Yes Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 08/31/2014 Comments (including % Achieved. achievement) Outputs from the Education Management Information System (EMIS) are being Indicator 4 used for evidence based policy formulation and decision making Use EMIS to take decisions Use EMIS to take Value related to the decisions related to (Quantitative or No systems n.a. transfer of the transfer of teachers Qualitative) teachers in all in all cycle cycle Date achieved 09/01/2008 09/01/2008 03/27/2013 08/31/2014 Comments (including % Achieved. achievement) (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised Target approval Completion or Values documents) Target Years Component 1 Indicator 1 Positive cash-balance of the NSSF by year 2010 Value (Quantitative or No Yes — Not achieved Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 12/31/2016 Comments This indicator was dropped following a Level 1 restructuring. (including % vi achievement) Indicator 2 Flat rates implemented Value (Quantitative or No Yes — Not achieved Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 12/31/2016 Comments (including % This indicator was dropped following a Level 1 restructuring. achievement) Indicator 3 New outpatient claims processing system implemented Value (Quantitative or No Yes — Not achieved Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 12/31/2016 Comments (including % This indicator was dropped following a Level 1 restructuring. achievement) Indicator 4 New contribution collection and tracking system implemented Value (Quantitative or No Yes — Not achieved Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 12/31/2016 Comments (including % This indicator was dropped following a Level 1 restructuring. achievement) Indicator 5 New IT unit staffed and functional Value (Quantitative or No Yes — Not achieved Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 12/31/2016 Comments (including % This indicator was dropped following a Level 1 restructuring. achievement) Reduce time it takes to process and pay individual claims to a maximum of two Indicator 6 weeks for 90% of claims Value (Quantitative or No Yes — Not achieved Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 12/31/2016 Comments (including % This indicator was dropped following a Level 1 restructuring. achievement) Indicator 7 Reduce the average time that branches remain idle to 1 day per month Value (Quantitative or No Yes — Not achieved Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 12/31/2016 Comments This indicator was dropped following a Level 1 restructuring. vii (including % achievement) Indicator 8 Number of youth enrolled in training (Number, Custom) Value (Quantitative or 0.0 n.a. 1,600.00 0.0 Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 12/31/2016 Comments This indicator was introduced with a Level 1 restructuring. This indicator was not (including % achieved. achievement) of which women (Percentage, Custom Supplement) Value (Quantitative or 0.0 n.a. 50.00 0.0 Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 12/31/2016 Comments This indicator was introduced with a Level 1 restructuring. This indicator was not (including % achieved. achievement) Of which have secondary education or below Value (Quantitative or 0.0 n.a. 30.00 0.0 Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 12/31/2016 Comments This indicator was introduced with a Level 1 restructuring. This indicator was not (including % achieved. achievement) Number of youth successfully completing training component 1 (life skills, Indicator 9 coaching, placement training) Value 0.0 n.a. 650 0.0 (Quantitative or Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 12/31/2016 Comments This indicator was introduced with a Level 1 restructuring. This indicator was not (including % achieved. achievement) Of which women Value (Quantitative 0.0 n.a. 50.00 0.0 or Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 12/31/2016 Comments This indicator was introduced with a Level 1 restructuring. This indicator was not (including % achieved. achievement) Of which have secondary degree or below Value (Quantitative 0.0 n.a. 20.00 0.0 or Qualitative) viii Date achieved 09/01/2008 09/01/2008 03/27/2013 12/31/2016 Comments This indicator was introduced with a Level 1 restructuring. This indicator was not (including % achieved. achievement) Indicator 10 Number of youth completing on the jobs training Value 0.0 n.a. 500 0.0 (Quantitative or Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 12/31/2016 Comments This indicator was introduced with a Level 1 restructuring. This indicator was not (including % achieved. achievement) Of which women Value 0.0 n.a 50.00 0.0 (Quantitative or Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 12/31/2016 Comments This indicator was introduced with a Level 1 restructuring. This indicator was not (including % achieved. achievement) Of which have secondary degree or below Value 0.0 n.a. 20.00 0.0 (Quantitative or Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 12/31/2016 Comments This indicator was introduced with a Level 1 restructuring. This indicator was not (including % achieved. achievement) Component 2 Indicator 1 Admission Criteria Standards (ACS developed by MOPH) Value 0.0 Review (Quantitative n.a. Review completed completed or Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 06/01/2015 Comments This indicator was introduced with a Level 1 restructuring. This indicator was fully (including % achieved. achievement) Phase 1: Review hospitals’ records and select high volume, high cost admissions Value 0.0 40.0 40.0 (Quantitative n.a. or Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 06/01/2015 Comments This indicator was introduced with a Level 1 restructuring. This indicator was fully (including % achieved. achievement) Phase 2: Develop ACS by expert groups Value 0.0 40.0 40.0 n.a. (Quantitative ix or Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 06/01/2015 Comments This indicator was introduced with a Level 1 restructuring. This indicator was fully (including % achieved. achievement) Phase 3: Approve ACS by MOPH Value 0.0 (Quantitative n.a. 40.0 40.0 or Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 06/01/2015 Comments This indicator was introduced with a Level 1 restructuring. This indicator was fully (including % achieved. achievement) Phase 4: Workshops to disseminate ACS Value 0.0 (Quantitative n.a. 7.0 8.0 or Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 06/01/2015 Comments This indicator was introduced with a Level 1 restructuring. This indicator was fully (including % achieved and exceeded its target. achievement) Indicator 2 Number of hospitals using the new billing system Value (Quantitative 0.0 n.a. 136.0 136.0 or Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 06/01/2015 Comments This indicator was introduced with a Level 1 restructuring. This indicator was fully (including % achieved. achievement) Indicator 3 Number of processing days of claims reduced Value 35.0 (Quantitative n.a. 5.0 5.0 or Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 08/31/2014 Comments This indicator was introduced with a Level 1 restructuring. This indicator was fully (including % achieved. achievement) Percentage of hospitals contracted according to a revised performance-based Indicator 4 contracts using key hospital performance indicators and accreditation Value (Quantitative 0.0 n.a. 100.0 100.0 or Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 06/01/2015 Comments This indicator was introduced with a Level 1 restructuring. This indicator was fully (including % achieved. achievement) Component 3 x A baseline and first monitoring survey implemented and results made publicly Indicator 1 available Value Analysis of baseline (Quantitative Survey Data files Household Budget — — or Qualitative) Survey Date achieved 01/27/2009 01/27/2009 03/27/2013 12/31/2016 Comments (including % This indicator was dropped following a Level 1 restructuring. achievement) The NPTP Central Management Unit established, staffed, equipped, and budgeted and performs its functions as per NPTP operations manual, Designated social Indicator 2 development centers at MOSA staffed, equipped and resourced adequately and perform NPTP related functions as per Operations Manual The NPTP CMU performs its functions as per NPTP OM Operational Manual (OM) Value designated social not developed and Central (Quantitative development centers — — Management Unit (CMU) or Qualitative) resourced unstaffed adequately and perform NPTP related functions according to OM Date achieved 01/27/2009 01/27/2009 03/27/2013 12/31/2016 Comments (including % This indicator was dropped following a Level 1 restructuring. achievement) Indicator 3 Households formally informed of their Proxy Means Test (PMT) score Value 0.0 At least 150,000 60,000 102,400 (Quantitative prior to restructuring or Qualitative) Date achieved 01/27/2009 01/27/2009 03/27/2013 08/31/2014 Comments (including % This indicator was fully achieved and exceeded its target. achievement) Indicator 4 Individuals benefiting from the basket of benefits provided through the NPTP Value 0.0 (Quantitative — 100,000 235,500 or Qualitative) Date achieved 01/27/2009 01/27/2009 03/27/2013 08/31/2014 Comments (including % This indicator was fully achieved and exceeded its target. achievement) Progress reports generated by the Monitoring and Evaluation (M&E) system to Indicator 5 monitor the performance of NPTP Value Progress M&E system in place (Quantitative No M&E has been set up — Reports are in Prime Ministry. or Qualitative) generated Reports being xi through the generated. Also, a Management major impact Information evaluation is System conducted. Date achieved 01/27/2009 01/27/2009 03/27/2013 12/31/2015 Comments (including % This indicator was fully achieved. achievement) Component 4 Question Bank System (QBS) and Exam Management System (EMS) are fully Indicator 1 operational/QBS is providing increased levels of transparency in student learning assessment Value (Quantitative No Yes n.a. Yes or Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 03/31/2012 Comments (including % This indicator was fully achieved. achievement) International learning assessment tests have been analyzed/Results from the Indicator 2 analysis of international learning assessment studies are being used to guide quality Team of researchers from Education Center for Research Team of researchers Draft Report on Lebanon’s and Development from ECRD Value performance on Trends in (ECRD) participating in the (Quantitative International Mathematics participating in the n.a. Regional Network of or Qualitative) and Science Study (TIMSS) Regional Network Education Research 2007 received of Education which focuses on Research which TIMSS results focuses on TIMSS results Date achieved 09/01/2008 09/01/2008 03/27/2013 03/31/2012 Comments (including % This indicator was fully achieved. achievement) Assessment of pilot project outcomes is guiding the design of system-wide Indicator 3 initiatives for school based quality enhancement School School improvement Preparation of Terms of improvement plans plans designed in Value References for technical designed in schools schools where (Quantitative assistance (TA) required for where principals principals have or Qualitative) the implementation of this have participated in n.a. participated in the objective the leadership leadership program program Date achieved 09/01/2008 09/01/2008 03/27/2013 03/31/2012 Comments This indicator was fully achieved. (including % xii achievement) The NES (national education framework) framework is guiding operational Indicator 4 planning and the deployment of internal and external resources Value (Quantitative No Yes n.a. Yes or Qualitative) Date achieved 09/01/2008 09/01/2008 03/27/2013 03/31/2012 Comments (including % This indicator was fully achieved. achievement) G. Ratings of Project Performance in ISRs Date ISR Actual Disbursements No. DO IP Archived (US$, millions) 1 07/28/2009 Moderately Satisfactory Moderately Satisfactory 0.40 2 05/14/2010 Moderately Unsatisfactory Moderately Unsatisfactory 0.50 3 01/11/2011 Moderately Unsatisfactory Moderately Unsatisfactory 1.62 4 08/13/2011 Moderately Unsatisfactory Moderately Unsatisfactory 2.77 5 07/11/2012 Moderately Unsatisfactory Moderately Satisfactory 4.00 6 04/03/2013 Moderately Satisfactory Moderately Satisfactory 4.21 7 02/19/2014 Moderately Satisfactory Satisfactory 4.84 8 06/28/2014 Moderately Satisfactory Satisfactory 5.04 9 06/10/2015 Moderately Satisfactory Moderately Satisfactory 5.10 10 01/06/2016 Moderately Unsatisfactory Moderately Unsatisfactory 5.10 11 07/07/2016 Unsatisfactory Unsatisfactory 5.10 12 01/15/2017 Moderately Satisfactory Moderately Satisfactory 5.45 H. Restructuring (if any) ISR Ratings at Amount Board Restructuring Restructuring Disbursed at Reason for Restructuring & Key Approved PDO Date(s) Restructuring Changes Made Change DO IP in US$, millions An extension of the Project closing date was processed to complete 09/30/2011 No MU MU 2.87 activities due to initial implementation delays. A Level 1 restructuring which included a revision of the PDO 03/27/2013 Yes MU MS 4.21 and activities under Component 1 and an extension of the closing date. An extension of the closing date 07/14/2014 No MS S 5.04 was processed to complete xiii activities under Component 1 due to project delays. I. Disbursement Profile xiv 1. Project Context, Development Objectives and Design 1.1 Context at Appraisal 1. Country background. Lebanon is a small middle-income country with a population of around 4.2 million. At the time of project preparation, in 2008, gross domestic product (GDP) growth was estimated to average around 9 percent. The country was also heavily indebted with present value of debt to GDP at 108.8 percent in 2006. In 2004, around 28 percent of the Lebanese population was considered poor and 8 percent extremely poor. 2. Lebanon has undergone numerous conflicts over the years. In 2006, two years before appraisal of the Second Emergency Social Protection Implementation Support Project (ESPISP II, the Project), hostilities broke out between Lebanon and Israel which took a devastating toll on the population and economy, plunging the country into prolonged political, economic, social, and security difficulties. On the political front, the conflict accentuated longstanding political disagreement among the various Lebanese political factions. On the economic front, the conflict had a tragic human impact and made achieving growth in the medium term even more challenging. Direct damages as a result of the conflict amounted to an estimated US$2.8 billion with an additional US$700 million to US$800 million in indirect damages. More than 100,000 housing units were damaged or destroyed, and approximately 30,000 jobs were permanently lost 2. Overall economic performance was affected negatively, and indications were that the economy had experienced a surge in prices, further exacerbating the precarious situation for the poor and vulnerable. 3. Emergency support. The deterioration in fiscal performance resulting from the hostilities and an extended political impasse (see paragraph 5) precluded further World Bank lending to Lebanon, as proposed in the Country Assistance Strategy. 3 To provide emergency support to respond to unforeseen circumstances, the World Bank approved the creation of the Trust Fund for Lebanon (TFL) with a transfer of US$70 million from IBRD surplus in September 2006. The objective of the TFL was to assist in the reconstruction of essential infrastructure, jump-start the economy, and bring the country back on a sustainable fiscal and debt path, while providing capacity building to advance critical components of the reform program of the Government of Lebanon (the GOL, the Government) across several fronts, including social protection. 4. Building upon its efforts to launch a reform program even before the 2006 hostilities, and informed by the findings of a multisector Economic and Social Impact Assessment (ESIA) carried out by the World Bank in coordination with local counterparts and key donors shortly after the hostilities, the GOL presented a comprehensive Reconstruction, Recovery, and Reform Program (the Program) to the donor community at the ‘International Conference for Support to Lebanon’ held in Paris on January 25, 2007 (Paris III). For the first time, at Paris III, the GOL presented a social reform program (Social Action Plan [SAP]) as an integral part of its overall Program. 5. Political background. Recovery from the hostilities had been overshadowed by a prolonged political turmoil that involved the resignation of opposition members from the Cabinet 2 ESPISP II Emergency Project Paper. 3 World Bank, Country Assistance Strategy for the Republic of Lebanon, Report No. 34463-LB (November 22, 2005). 1 and demonstrations. Political tensions increased with the failure of legislators to agree on a new President following the expiry of the former President’s term in November 2007. The Doha Agreement concluded in May 2008 to put an end to this prolonged political turmoil, and paved the way for the election of a new President and the formation of a new Government. After more than six months of legislative lockout, during which the GOL focused on implementing reforms not requiring legislative action, the country was poised to advance much needed reforms. Nevertheless, the country still faced a transitional period until after the parliamentary elections held in early 2009, after which a new Government was formed. 6. Sector background. Even before the 2006 hostilities, Lebanon had a costly and inefficient social insurance system with multiple fragmented health insurance schemes, and limited, poorly targeted, social safety net programs. The social security system was inadequate in its coverage, and had high fiscal costs. The health insurance schemes were fragmented and operated without a consistent framework. More than 40 percent of the population had no formal health insurance and relied on the Ministry of Public Health (MOPH) as an insurer of last resort, generating high fiscal costs. Hospital-based coverage (in public and private hospitals) was almost fully subsidized by the Government and not means tested. Social safety nets were small, fragmented, and inadequate to help the poor and vulnerable. The few programs that existed such as social funds, subsidies on certain products, and transfers to very poor families with children were poorly targeted and implemented. In addition, the quality of public education and completion rates, especially for primary education were low, relative to cost. The lack of adequate social protection and basic social services did not help mitigate the effect of shocks in a country that faced political and security turmoil. 7. The Government Program. The objectives of the GOL’s Program presented at Paris III were to reduce fiscal imbalances, stimulate growth, and reduce poverty and income disparities. The SAP, an integral part of the GOL’s Program, was comprehensive, ranging from expanding the coverage of the social insurance system (pensions and health insurance) to the population outside the formal sector through reforms to the National Social Security Fund (NSSF), to strengthening the poverty focus of the social safety net programs and public health services, and improving the quality of public education. The SAP was formalized in commitments to the Prime Minister, signed in January 2008 by the Ministers of Social Affairs, Health, and Education and the NSSF. The SAP’s objective was to help the poor and vulnerable cope with social and economic difficulties and strengthen the ability of the middle-class segments of the population to better manage negative shocks while at the same time ensuring improvement in health- and education- related indicators. An equally important objective was to advance toward the goal of creating unity among the diverse Lebanese confessional and political groups. 8. One of the key priorities within social safety net reform was the creation of a targeting mechanism for delivery of social transfers and services that would strengthen the focus on poverty and vulnerability. An objective, well-implemented targeting mechanism would enable the GOL to deliver transfers and services, including health and other subsidies, more equitably, based on the needs of the target population, not their confessional affiliation. Poor and middle-class segments of the population would also benefit from the social insurance reforms through the introduction of a pension system and more efficient and effective health insurance. Further, the NSSF reforms would gradually lead to the elimination of the Government’s implicit liabilities, after adoption and implementation of a pending pension law. 2 9. World Bank emergency support. The World Bank provided both financial and technical assistance (TA) to the GOL after the 2006 hostilities, initially in securing approval for the TFL and also in carrying out the ESIA. The ESIA analyzed macroeconomic and sector challenges in the aftermath of the hostilities, with an extensive social assessment, in particular of the health, education, social insurance, safety nets, and unemployment/labor market sectors, and presented short- and medium-term strategies for each. An Interim Strategy Note (ISN) was approved in August 2007 outlining the World Bank’s transitional framework for technical and financial assistance through the end of 2008. The ISN responded to the GOL’s Program and emphasized support for its medium-term public expenditure and social reform agendas, particularly social protection reforms. The Government had requested the World Bank to play a leading role in assisting in the development of the elements of the social protection reform program, and World Bank support was anchored within Pillar 2 of the ISN (Developing Human Capital and Mitigating the Poverty Effects of Transition). The Project was fully consistent with the ISN, which envisaged a continuing significant role for the World Bank Group in social sector reform through support in the implementation of the SAP and the subsequent medium-term reform program. 10. Rationale for World Bank Involvement. The Project was complementary to several ongoing operations both in the portfolio and the ISN. The Reform Implementation Development Policy Loan (RIDPL),4 approved on August 2, 2007, was the World Bank’s initial contribution to the Paris III reform program, with emphasis on the energy, social, and telecommunications sectors. The RIDPL was to be a two-phase programmatic policy instrument. While the first operation supported specific actions for social protection reform, the Program Document also mentions that it aimed to monitor progress in the areas of social insurance, social protection, health, and education (that could be supported under the second operation). The Internal Evaluation Group (IEG) reported the outcome of social reforms under the RIDPL as negligible (this review was concluded after ESPISP II appraisal). The second RIDPL did not move forward. 11. The World Bank had approved a US$1.0 million First Emergency Social Protection Implementation Support Project (ESPISP I) Grant under the TFL in September 2007. The objective of ESPISP I was to accelerate and improve the quality of the implementation of the social sector reforms package presented by the GOL at Paris III in the areas of social insurance, safety nets, and health expenditures, through provision of implementation support and capacity building for the NSSF, Ministry of Labor (MOL), Ministry of Social Affairs (MOSA), and MOPH. ESPISP I was providing critical support to key social protection initiatives under the RIDPL (see paragraph 10). At the time of appraisal of ESPISP II, ESPISP I was progressing well, with 75 percent of grant funds committed and 55 percent disbursed. ESPISP II was designed to provide a necessary bridge and continuity in the implementation of needed reforms under the SAP until such time as the World Bank could resume activities under the framework of a longer-term Country Assistance Strategy. 12. At the time, a new Country Assistance Strategy (CAS) could not be prepared, and therefore, Lebanon could not resume its normal lending under a new CAS. Further, the only project in the Human Development (HD) portfolio was the General Education Project (GEP), 5 approved in March 2000 and in the final stages of implementation. The process that had begun with ESPISP I 4 World Bank, Republic of Lebanon, Reform Implementation Development Policy Loan (P094288), Report No. 39773, dated July 9, 2007 5 World Bank, Republic of Lebanon, General Education Project (P045174), Report No. 20152-LE, dated March 7, 2000. 3 and ESPISP II helped prepare the ground for building the HD program at a time when donors were limited, and facilitated the dialogue with the Government on HD issues. The Government had requested the World Bank to play a leading role in its social protection reform program (see paragraph 9). Despite what was seen as a suboptimal country environment, proceeding with the Project was a deliberate decision to help lay the groundwork for future cross-sectoral HD budget support operations that would provide assistance in support of Lebanon’s social reforms, as outlined in the SAP. The World Bank, at the time, understood the risks both of proceeding with the Project in a sub-optimal environment, and, more importantly, of not moving forward with the Project that would help build a pipeline of future assistance and would bridge support that had been provided under ESPISP I. The Bank understood what was needed to help build a pipeline of future sectoral assistance—the destination was clear, but the process to get there was not. As a result, the World Bank proceeded with the Project, with the knowledge that its implementation support would need to be tailored and flexible and responsive to emerging circumstances to be successful. Table 1. Timeline of Activities Relevant to ESPISP II during Preparation Activity Date GEP (P045174) Approved - March 2000 Closed - December 2009 Preparation of SAP initiated June 2006 Hostilities with Israel July–August 2006 TFL established September 2006 ESIA concluded December 2006 Paris III January 2007 ISN approved by the Board July 2007 ESPISP I (P106489) Approved - September 2007 Closed - April 2009 RIDPL (P094288) Approved - August 2007 Closed - January 2009 ESPISP II (P111849) Approved - September 2008 1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) 13. The objective of ESPISP II was to improve the administration, delivery, financial sustainability, and targeting of social insurance, social safety net, health, and public education services.6 14. The following key indicators were defined to track progress toward the PDO:  No further arrears accumulate in NSSF and current arrears are being refinanced with full repayment expected by year 2017. 6 This was the wording of the PDO in the Grant Agreement. The wording of the PDO in the Project Paper was as follows: to improve the administration, delivery, financial sustainability, and targeting of social services through implementation of new systems and the adoption of new policies in the NSSF, MOL, MOPH, MOSA/Presidency of the Council of Ministers (PCM), and Ministry of Education and Higher Education. These systems and policies would improve access to and the quality of social insurance, social safety net, health, and public education services, to the Lebanese middle class and poor and vulnerable populations. 4  Individual claims processed and paid within two weeks in 90 percent of claims in the NSSF and MOPH.  The National Poverty Targeting Program (NPTP) is fully operational and the Government uses it to target programs aimed at improving living standards of the population.  The 2011 education budget implemented based on performance-based budgeting and quality enhancing initiatives major focus of new budget. 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification 15. The PDO and the Results Framework were revised in a Level 1 Project restructuring in March 2013. As had been contemplated during appraisal, not all of the Project’s components proceeded at the same pace, and Component 1 especially ran into roadblocks. This restructuring was in response to the GOL’s request in February 2011 to restructure Component 1 (Modernization of the Social Insurance System), as planned reforms to the NSSF were not progressing (section 2.2). The Project was restructured to instead focus on activities that were relevant and realistic in the country context, namely replacing the NSSF reform by the New Entrants to Work (NEW) program. Therefore, it was a corrective restructuring. 16. The PDO was revised to read as follows: to (i) strengthen the capacity of the Ministry of Labor to promote youth employment; (ii) rationalize public health expenditure; (iii) establish a national poverty targeting system for social safety net programs; and (iv) increase availability of Education data for decision making in Ministry of Education and Higher Education. 17. The revised PDO indicators were defined as the following7  Direct project beneficiaries (i) of the National Poverty Targeting Program (NPTP), (ii) of the New Entrants to Work (NEW) Program, and (iii) total, of which (%) female.  Increased percentage of admissions according to Admission Criteria Standards (ACS) by medical controllers.  The NPTP has been adopted and used by the Government to target social assistance to the extreme poor: (i) Policy statement issued by the Government formally establishing the NPTP as a means to target social assistance benefits, (ii) Basket of benefits approved by the Government and budget allocated, (iii) Distribution of benefits to the first batch (18,801 households [HHs]) of beneficiaries through NPTP, and (iv) Second round of benefit distribution to additional batches completed.  Outputs from the Education Management Information System (EMIS) are being used for evidence-based policy formulation and decision making. 7 The Intermediate Results Indicators were also revised. 5 18. The Project underwent a Level 2 Restructuring in July 2014, which further adjusted the Results Framework by deleting the Intermediate Indicator “Develop a technical feasibility study to automate the MOL” related to activities under Component 1 and adjusting target dates for achieving expected results. 1.4 Main Beneficiaries 19. The Project’s direct beneficiaries were the agencies receiving assistance to better fulfill their mandates such as the following:  NSSF, by improving its (a) financial sustainability, by ensuring its convergence to financial equilibrium by 2010 and (b) efficiency, by optimizing its business and administrative processes  MOL, by improving its capacity to implement NSSF reforms  MOPH, by enhancing its performance and efficiency through consolidation of the utilization management function and implementation of performance-based contracts with hospitals  MOSA, by establishing better targeted social safety nets programs (the NPTP) and a database of the poor and vulnerable  Ministry of Education and Higher Education (MEHE), by improving its efficiency and performance through implementation of performance-based budgeting, the EMIS, and quality enhancement of learning outcomes 20. Ultimately, when the efficiency and service delivery of these institutions were improved through project-supported activities, the main beneficiaries would be the uninsured; the poor and vulnerable population, who were expected to benefit from better quality and more timely health services from both the NSSF and the MOPH, about 100,000 poor and vulnerable who would benefit from better targeted public subsidies through the application of the NPTP in MOSA; and students at all levels, whose learning outcomes would be improved as a result of quality enhancement. After the March 2013 Project restructuring and the revision of the PDO, about 1,600 young, first-time job seekers were expected to benefit from training under the NEW program. 1.5 Original Components 21. The Project consisted of five components, as summarized in this section. A full description of the Project’s components is presented in annex 2. Component 1: Modernization of the Social Insurance System (total cost US$2.25 million, financed by the World Bank) 22. The objectives of this component were to consolidate and expand the reforms that had started under ESPISP I, in the context of the NSSF’s multiyear Master Plan that aimed to (a) ensure that the NSSF converges to financial equilibrium by 2010 and (b) initiate institutional changes to improve administration/governance and the quality of services. Promising progress had been made 6 in various activities under ESPISP I (including a new inpatient claims processing and utilization control systems, the preparation of a policy note outlining short- and medium-term reforms options aimed at financial equilibrium of the health insurance branch by 2010, and the creation of an Actuarial Department to conduct financial projections for the health insurance branch). New activities were proposed under three subcomponents: Subcomponent 1.A: Improve Financial Sustainability to further develop policies and systems that would increase revenues for the NSSF, control the expenditures of the health insurance branch, and improve financial management; Subcomponent 1.B: Improving the Administrative Efficiency and the Quality of Services would initiate reforms that would enable the NSSF to optimize business and administrative processes, adapt its institutional organization, and develop and implement a strategy to respond to new needs in terms of human resources; and Subcomponent 1.C: Advisory Services to the Ministry of Labor as custodian of the NSSF to follow up on the implementation of the NSSF’s reform plan and related social insurance policies and programs. Component 2: Rationalizing Public Sector Health Expenditures (total cost US$1.55 million, of which US$0.74 million financed by the World Bank ESPISP II, US$0.2 million by the GOL, and US$0.6 million by hospitals) 23. Activities under this component also aimed to deepen and expand the reforms initiated under ESPISP I that included creation of a modern utilization management function and the design of modern hospital contracts based on key performance indicators. The objective of this component was to improve the efficiency of the MOPH expenditures. The Project would consolidate the utilization management and performance-based contracting work, supported by the required information technology (IT) and human resources investments. Component 3: National Poverty Targeting Program for Social Safety Nets (NPTP) (total cost US$9.34 million, of which US$1.25 million was financed by the World Bank ESPISP II, US$2.6 million by other donors,8 and US$5.5 million by the GOL) 24. This component, continuing and building upon the results of the NPTP pilot that was being implemented by MOSA and financed under ESPISP I, aimed to support the establishment of the national targeting system that would be used by the GOL in the delivery of social transfers and services. A national rollout of the NPTP would be implemented through activities under the following four subcomponents: Subcomponent 3.A: Establishment of the NPTP Database on the Poor and Vulnerable Population; Subcomponent 3.B: Preparation and Implementation of Public Information Campaign; Subcomponent 3.C: Capacity Building for Monitoring and Evidence- Based Policy Making to ensure that the targeting mechanism performs an objective and reliable assessment of household welfare; and Subcomponent 3.D: Support the Management of the NPTP national rollout by setting up an institutional structure to manage NPTP in the PCM. 8 Other donors included Canadian International Development Agency (CIDA) Grant, Italian Cooperation, and hospitals. 7 Component 4: Education Sector Performance and Quality Enhancement (total cost US$2.05 million, of which US$1.0 million financed by the World Bank ESPISP, US$1.05 million by the GOL) 25. The objective of this component was to institutionalize the performance-based and quality- focused approaches in the MEHE and at the school level. Outcomes of this component were expected to include the furtherance of an efficient and quality-oriented approach to sector development, together with the associated accountability mechanisms upon which the next phase of education sector reform in Lebanon could be designed and implemented. This was to be achieved through three subcomponents: Subcomponent 4.A: Development of an Education SWAP Framework to formulate a sector wide approach for support of the second phase of education sector reform, including the development of a medium-term expenditure framework (MTEF) and key performance indicators based on the completed National Education Sector Strategy; Subcomponent 4.B: Education Sector Performance Enhancement to support the adoption of performance based principles and practices in the general education system; and Subcomponent 4.C: Quality Enhancement of Learning Outcomes to ensure the implementation of quality-oriented tools in the MEHE and initiate the introduction of school-based quality management practices. Component 5: Fiduciary Operations (total cost US$ 0.77 million financed by the Word Bank) 26. This component supported the Fiduciary Operations Team (FOT) that was responsible for managing the procurement and financial management of project activities. 1.6 Revised Components 27. Component 1 of the Project was revised as a result of the Level 1 Project restructuring in March 2013 (section 1.3) since it was not progressing well. Component 1 was reoriented to support the NEW program, a pilot program designed to improve the employability of Lebanese youth ages 16 and 30. All activities pertaining to the NSSF were therefore dropped. The NEW program that was to be implemented by the MOL through the National Employment Office (NEO), was approved under a decree by the Council of Ministers in November 2011 and officially launched under the auspices of the Prime Ministry. The program consisted of the following four interrelated interventions: (a) life skills training to provide participants with life skills, (b) job search techniques and counseling to empower job seekers and encourage them to actively seek employment, (c) practical on-the-job training (OJT) in a private sector firm, and (d) social security voucher and wage subsidy for unemployed youth to allow employers to be reimbursed for the cost of contribution to the NSSF on behalf of program participants. The pilot was estimated to cost US$2.2 million, of which over half—US$1.3 million—was to be financed by the GOL, demonstrating its clear commitment to the NEW program. This component also supported (a) the Strategic Planning Unit within the MOL and (b) the development of a technical feasibility study to automate the MOL. 1.7 Other Significant Changes 28. Closing date extensions. The Project was restructured three times and included extension of the Project’s closing date as follows: 8  Level 2 restructuring (September 30, 2011): The closing date was extended by one year, from March 31, 2012, to March 31, 2013. The extension was required to adjust implementation to initial delays caused by the political impasse and the time lost during the caretaker status of two previous governments, which resulted in delays in key decisions requiring Cabinet approval, and ultimately delayed effectiveness of the TFL and CIDA Grants. The CIDA Grant was extended by 15 months to December 31, 2012.  Level 1 restructuring (March 27, 2013): The closing date was again extended by 17 months from March 31, 2013, to August 31, 2014, due to the delays in implementation of the NSSF reforms. This restructuring entailed a revision of the PDO and Component 1 and took over one year to materialize (section 1.3).  Level 2 restructuring (July 14, 2014): The closing date was extended for the last time, by 16 months from August 31, 2014, to December 31, 2016. This extension was required to adjust the implementation plans and schedule due to delays caused by the political stalemate in Lebanon, whereby, activities under Component 1 were not initiated until November 2013 and also to reflect a required two-year implementation period as stated by the Government’s decree approving the program and not six months as originally contemplated in the Project’s first restructuring. 29. Changes in funding allocations. Funds were reallocated in both the March 2013 and July 2014 Project restructurings. Original and revised grant allocations are presented in annex 2. These reallocations were required to adjust grant funding to the revisions in the PDO and Component 1, in particular, as well as to reflect actual project expenditures. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry 30. ESPISP II responded to the Government’s request for emergency funds to assist the NSSF, MOSA, and MOPH to implement the GOL’s SAP reform agenda. ESPISP I had been supporting the design and initial implementation of those reforms, and ESPISP II would further support their implementation, eventually building a stronger pipeline of stand-alone projects in each of the HD sectors. At the time of preparation, there were few avenues for engagement in the Human Development sectors. It was therefore considered appropriate that the Project serves as the platform to start advancing the entire HD agenda if the World Bank was to effectively assist in the development of the reform program especially after the 2006 hostilities and the findings of the ESIA. ESPISP II also presented an opportunity for bridging earlier projects, while helping develop a pipeline of stand-alone projects. As such, ESPISP II achieved it overall, overarching objective of continuing and expanding on the HD dialogue which had begun under ESPISP I while establishing a significantly large portfolio of HD projects. 31. Emergency response. The Project was financed by a grant from the TFL, which according to the Board resolution establishing the TFL, stipulated that all projects be prepared under OP/BP 9 8.50.9 The Project met the criteria of OP/BP 8.00, as follows (a) preserving or restoring essential services; (b) establishing and/or preserving human, institutional, and/or social capital; and (c) supporting measures to mitigate potential effects of imminent emergencies or future emergencies or crises in countries at high risk. Yet, the Project was not a typical emergency operation, especially because it was supporting significant reforms that would address difficult aspects of the GOL’s SAP. The GOL had already carried out important reforms supported by ESPISP I and, despite major challenges in some areas, required further grant funding to sustain its functions and maintain its reform efforts. With further support, the Government was expected to return to a more conventional borrowing mode in the future, under the framework of a medium-term Country Partnership Strategy. Thus, ESPSIP II was seen as a bridge to lending for subsequent sectoral projects (section 2.5). Although the Parliament had resumed operation, the political situation was still uncertain, especially since parliamentary elections were scheduled for spring 2009, and a new Government was to be subsequently formed. Grant funding was thus seen as the preferred mode of financing because it would not require parliamentary approval. 32. Prior experience. At the time of preparation, the World Bank had acquired considerable experience working with the MEHE under the GEP and limited experience working with the NSSF and MOSA under ESPISP I and RIDPL, both of which had been approved only one year earlier. There had been significant positive achievements under ESPISP I, although several implementation challenges also existed, which led the team to propose proceeding with ESPISP II. The NSSF had completed and submitted to its Board an assessment of reform options to restore financial sustainability of the health insurance branch, and Phase I of the patient claims management system had been put in place and tested. The GOL and NSSF had agreed upon an amount of arrears and established an installment plan to clear those arrears and even paid in 2007 its current obligation to the NSSF and an additional LBP 80 billion. Further, implementation of reform activities by MOSA, supported under ESPISP I was progressing well —the Proxy Means Test (PMT) formula had been developed, procedures for distribution of benefits to the poor and vulnerable had been documented in an Operational Manual (OM), an information system to support implementation of the targeting mechanism was in place, and a piloting exercise had been carried out. 33. It was therefore important to implement a second phase to ensure the continuation of support to the NPTP and allow for its consolidation and expansion. It was also equally important to ensure the financial sustainability of the NSSF, which, based on a study completed under ESPISP I, was at risk of future insolvency. The risk of not proceeding with ESPISP II overshadowed the risks of facing implementation challenges similar to the ones faced under ESPISP I (including the political environment and commitment level of NSSF). The World Bank thus took a calculated risk to proceed with the next, interim phase in support of reforms to put Lebanon on sound footing toward setting up efficient and effective systems for delivering health, education, and social protection services that could ultimately be supported by conventional sectoral operations in the future. 34. Lessons learned from previous operations. ESPISP I was still under implementation when ESPISP II was approved. Therefore, ESPISP II’s Emergency Project Paper (EPP) could not benefit from the lessons learned under the first project, and only referenced three lessons from the 9 OP/BP 8.00 (Rapid Response to Crisis and Emergencies) issued in March 2007 now replaces OP/BP 8.50. 10 experience of ESPISP I’s implementation, including the need for (a) continuous engagement with the beneficiary agencies and intensive on-the-ground supervision of the project; (b) developing a communication strategy for the World Bank with the public and media, given the high visibility of the issues involved and for the NSSF in particular, for regular reporting and communication with the Board of the NSSF and other stakeholders; and (c) tying project activities to existing reform plans, such as is the case in the NSSF where the project is based on the NSSF’s Master Plan already submitted to its Board. The EPP also highlighted lessons from international experience with respect to implementation of PMT mechanisms and the importance of information and communication technology for these mechanisms to be successful. These lessons suggested caution in the design of the project, per se, including in the design of activities that would have required parliamentary approval, and especially, in incorporating activities to be implemented by agencies that had previously shown less-than-satisfactory implementation records, namely the NSSF. But, the risks of the World Bank not providing continued support for the implementation of reforms for which important background design activities had already been carried out would, in retrospect, have been greater than proceeding with ESPISP II as designed. 35. Relevance of the risks identified at appraisal and effectiveness of mitigation measures. The Project Paper identified the following seven key risks, in addition to those relating to procurement and financial management: (a) the envisaged reforms could upset the status quo enjoyed by certain groups of stakeholders, especially because a change in MOSA’s targeting formula would lead to a change in the way and in the amount of funding to key stakeholders, including nongovernmental organizations (NGOs) (rated High); (b) those associated with the NPTP, especially those related to inadequate staffing and funding, need for strengthening and capacity building, and associated with ‘splitting’ implementation of the NPTP between the PCM and MOSA; (c) the uncertain political and geopolitical environment in Lebanon, especially in the lead-up to the parliamentary elections scheduled for Spring 2009 (rated High); (d) the lack of implementation capacity among beneficiary agencies in general (rated Moderate); (e) the potential resistance from some representatives at the Board of the NSSF (rated Moderate-to-High); (f) capacity risks for the MOPH as some of their key staff had taken other positions in and outside Lebanon; and (g) for the MEHE, the acceptance of the new practices of performance-based planning and budgeting within the ministry. Mitigating measures were described for each of these risks. Further, not all individual risks were rated, an overall project risk rating was not provided, and the Project’s data sheet in the EPP specifically checked off that there were no critical risks rated as either Substantial or High. In retrospect, it is not clear that the main risks that materialized could have been mitigated, but there is no doubt that the Project should have been rated as High risk, and appropriately flagged as such. 36. Results Framework. The Project’s original Results Framework was ambitious and broad so as to incorporate the results in multiple sectors. The four original indicators by which progress toward PDO achievement would be measured were the outcome indicators that would be achieved once all of the activities under the Project were completed and their results converged. The outcome indicators were appropriate to measure progress toward the Project’s objectives. 37. Fiduciary arrangements. With six implementing agencies, some with no previous experience in implementing World Bank-financed operations (ESPISP I was World Bank- executed), the World Bank elected to support the establishment of an independent FOT to handle the Project’s fiduciary aspects. This proved to be an effective way of centralizing financial 11 management and procurement and also of minimizing the emergence of issues with financial management and procurement (section 2.4). 2.2 Major Factor Affecting Implementation 38. The project, estimated at appraisal to cost US$16 million equivalent, was to be financed by a US$6.0 million grant approved under the TFL Grant,10 US$0.6 million from Italian Development Cooperation, US$2.0 million from the CIDA Trust Fund, US$6.8 million by the GOL, and US$0.6 million from hospitals. The World Bank’s US$6.0 million Grant was approved under the TFL on September 5, 2008, signed on November 5, 2008, and became effective on January 27, 2009. 39. All activities except for those under Component 1 were achieved by mid-2014. Component 4 was the first one to be completed, in July 2012. It was then followed by Component 3 (December 2013) and Component 2 (June 2014). The project was therefore rated MS in 2013 as most components were progressing well and were completed by 2014, except for component 1. From mid-2014, implementation support focused solely on Component 1. As a result, the Project’s Implementation Status and Results Reports (ISRs), during this period, rated the Project’s performance as Unsatisfactory, since only Component 1 was under implementation, and, it was not progressing well. The subsequent ISR, however, redressed this situation by rating the Project’s performance to encompass the significant achievements under each of its components, , in support of its PDOs. Since, most objectives were achieved by Project closing date and project implementation was managed proactively so as to respond to the evolving situation in country, the ISR was rated as MS. A table presenting a timeline of the Project’s implementation and of other key milestones it affected is presented in annex 6. 40. The Project was implemented under a challenging country context, especially given its strong reform orientation and an expected four-year implementation period. The Project’s complexity, with five components implemented by five different agencies would have been difficult to implement in an otherwise more stable environment (and in the absence of the FOT). In fact, and in retrospect, it is a tribute to the GOL’s commitment to its SAP that the Project was able to accomplish as much as it did in such a difficult environment. In particular, the Project’s implementation was slow, as it was affected by the following: (a) the difficult political environment over the implementation period; (b) the limited commitment of the NSSF, particularly its Board; (c) slow implementation of the NEW program, mostly the result of an unintentional problem in the original decree approving the Grant (section 2.4); and (d) the Syrian refugee crisis. 41. On the positive side, the Project’s streamlined fiduciary arrangements (section 2.1) and the World Bank’s on-the-ground implementation support had a positive impact on its complexity. During preparation, the World Bank had anticipated that not all components would progress at the same pace or as planned (see paragraph 12), given the changing political and social environment and particularly, because the Project covered multi-sectoral activities in the HD sector given its goal to build a strong pipeline of projects in each of these sectors. In response, implementation support was hands-on and in-country and, above all, tailored and flexible. This flexibility was 10 The US$6.0 million Grant approved under the TFL was financed from the interest that had accrued on the Trust Fund. 12 exercised through the Project’s several restructurings (sections 1.3, 1.6, and 1.7) and continuous just-in-time implementation support. 42. Difficult political environment. The project was implemented in a complex political environment. This was contemplated during preparation, and the risk of the complexity of the political environment impacting the Project was rated High. The political polarization in Lebanon remains the principal source of political tensions even today. Further, the Syrian conflict that began in 2011 is still destabilizing the political/confessional, security, economic, and social conditions in Lebanon, and it has led to an escalation of tension between political coalitions in the country. Severe polarization has led to political deadlock, in which different groups, even within coalitions have regularly exercised veto power to block decisions (administrative, economic, or political). Between 2005 and early 2015, caretaker governments were in place for different periods (annex 9). This has constrained reform efforts and the ability to pass important legislation and regulations and to confirm key appointments. The stalemate in the executive and legislative branches has led to difficulties in carrying out basic functions (for example, approval of a national budget—with the last budget approved in 2005), and it affected the overall World Bank portfolio, through the lack of decision making, the changes and vacancies at the cabinet level, and the lack of continuity in staffing at the lower levels. As an example, the GOL’s submission of the Level 1 project restructuring request (section 1.3) was delayed by 17 months due to the resignation of the Minister of Labor at the time. Similarly, implementation of activities for the NEW under Component 1, as restructured in March 2013, was not initiated until November 2013 due to the political stalemate (section 2.4). Finally, the CIDA Grant was only declared effective in September 2011 due to the political impasse after the collapse of the National Unity Government in January 2011 and the caretaker status of the Government until June 2011. 43. Limited commitment of the NSSF. Despite the strong support by the GOL at project appraisal, activities under Component 1 did not progress as a result of resistance from the NSSF’s Board. The Implementation Completion and Results Report (ICR) for ESPISP I recounts that during project implementation, there was resistance “to the ESPISP-supported reforms, particularly from the NSSF Board of Directors.” When it became clear that activities under Component 1 would not move forward, the GOL and the World Bank in February 2011 began discussing the Project restructuring that was eventually approved in March 2013 (sections 1.3 and 1.6). 44. Issues affecting implementation of the NEW program. Implementation of the activities for the NEW program under Component 1 of the restructured project was approved under the March 2013 project restructuring. Supporting the NEW program was considered a proactive measure by both the World Bank and the GOL, whereby, the identified risks in supporting the NSSF had materialized, and a pragmatic action was required toward identifying equally important priority measures and activities that would help address the social consequences of the earlier conflict. The NEW program met this criterion by addressing another of the GOL’s priorities: tackling unemployment, especially youth unemployment for first-time job seekers. 45. The program had stemmed from a 2012 World Bank labor markets report entitled ‘Lebanon: Good Jobs Needed - The Role of Macro, Investment, Labor, Education, and Social Protection Policies’ that found high unemployment spells and rates among first-time job seekers in Lebanon. Even though the program was considered a high priority, the MOL was unable to 13 utilize the grant resources despite the fact that: (a) preparatory activities were completed, (b) counterpart funds for the program had been allocated since December 2014, and (c) the amendment to the Grant Agreement for restructuring the Project was countersigned by the Minister of Finance. The MOL was not able to count upon grant resources to finance activities for the NEW program due to an unintentional problem with the GOL’s original decree approving the grant in 2008. A subsequent decree approving amendment to the Grant Agreement was thus needed (section 2.4). By the time this issue was resolved, the project only had eight months of implementation remaining. As a result of this delay and the subsequent delay in disbursements, the World Bank declined a request by the GOL to further extend the project’s closing date. Nevertheless, the GOL and the World Bank are discussing possible ways to leverage the preparatory work carried out under the NEW for a new possible lending operation, focusing on improving job opportunities for youth (section 3.1). 46. Impact of the Syrian refugee crisis. The conflict in Syria has resulted in Lebanon accepting close to 1.5 million refugees (nearly one in every three people in Lebanon now is a person displaced from Syria or a Palestine refugee). The Syrian refugee crisis has challenged the GOL to provide greater access, quality, and efficiency in services. This has required increased attention by an already strained Government, facing the particular political challenges described earlier. The project has indirectly helped the GOL in mitigating the impact of the crisis and has, thereby, provided greater incentives to and greater commitment by the GOL to its PDO. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 47. By design, M&E for each component would be conducted by a designated project implementation team within each of the beneficiary agencies. Monitoring would follow the outcome, intermediate, and results indicator in the Project’s Results Framework presented in annex 2 of the EPP (as revised in the Project Papers for Project restructurings). ESPISP I had adopted a fairly basic Results Framework, with monitoring indicators consisting of recording completed actions and milestones. The Project followed this pragmatic approach. Nevertheless, the outcome indicators selected to measure progress would reflect actual outcomes that would be achieved once progress had been made toward all of the intermediate results and outputs. Further, the Project funded a Household Budget Survey, implemented in 2011 to serve as a baseline for the Emergency National Poverty Targeting Project (section 2.5) and also to update the PMT formula. Upon conclusion, an NPTP evaluation was carried out.11 48. The PDO was complex as it essentially presented its objective in a matrix format. There were two ways to structure the sub-objectives: (a) by looking at each sub-objective on its own (improve administration, improve delivery, improve financial sustainability, and so on) and explaining how each sub-objective was relevant to each institution/sector or (b) by looking at each sub-objective by institution/sector (the NSSF and MOL/social insurance, MOPH/health, MOSA, and PCM/social protection, and MEHE/education). This distinction is important because, by the activities that the Project financed, not all sub-objectives were relevant to all institutions/sectors. 11 Consultation and Research Institute, Program Evaluation for the National Poverty Targeting Program Project, Deliverable 7 Final Report, August 2016. 14 This, in fact, is apparent in the key indicators selected and used to monitor progress toward the PDO throughout implementation. 2.4 Safeguard and Fiduciary Compliance 49. Safeguards. ESPISP II was rated as environmental category C and, hence, no safeguard policies were triggered. 50. Fiduciary. An FOT, hosted at the PCM and composed of a Coordinator, two Procurement Specialists, one Financial Management Specialist, and one Project Assistant, carried out the procurement and financial management functions of the project. The FOT provided support to the Project’s implementing agencies, and, in general, fiduciary compliance was found to be adequate and satisfactory. The following issues were highlighted: (a) the GOL’s original decree approving the grant delayed the issuance of a decree approving the amendment to the Grant Agreement to reflect the March 2013 restructuring (section 2.4). When the Grant Agreement was first submitted for approval, it erroneously noted that the US$6.0 million grant was funded under the TFL, when in fact, it was funded by the interest accrued under the TFL. This error therefore needed to be corrected before obtaining approval of the amendment to the Grant Agreement. The issue was ultimately resolved in April 2016 through the issuance of a decree approving the original grant, but resulted in halting implementation from February 2015 to April 2016 because funding from the grant was not available; (b) occasional changes in staffing in the FOT and the need to provide training on World Bank procedures; (c) delays in contracting auditors in 2014 since the decree was pending cabinet approval (an audit waiver was issued to submit the audit for 2014 together with that of 2015 expenses); and (d) minor recommendations resulting from procurement post reviews, such as those relating to the need to publish contract awards. Audit reports were submitted regularly and contained minor recommendations (for example, upgrading cash controls from their manual systems, performing monthly bank reconciliations, segregating duties for payments, and validating time sheets). The audit for the last three years was combined, given the low levels of disbursements as all activities except those under Component 1 had been completed, and the issue with the decree described above precluded further disbursements. Financial management ratings were occasionally less than satisfactory, reflecting the resignation of the FOT’s Financial Officer in September 2015 and the delays this created in submitting interim financial reports. 2.5 Post-completion Operation/Next Phase 51. As had been the intention by providing bridge funding for social reforms, several sectoral projects have entered the World Bank portfolio, building upon the important activities and reforms that ESPISP II established. These include (a) the Second Education Development Project (P118187), (b) the Social Promotion and Protection Project (P124761), (c) the Emergency National Poverty Targeting Project (and Additional Financing) (P149242 and P158950), (d) the Emergency Education System Stabilization Project (P152898), (e) the Emergency Primary Healthcare Restoration Project (P152646), and (f) Reaching all Children with Education (RACE) in Lebanon Project (P159470). Details of each of these projects and how they build upon activities completed under ESPISP II, are provided in annex 6. 15 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation 52. Relevance of objectives. Overall, relevance of objectives, both before and after restructuring is rated High. The project’s original objectives were relevant at the time of appraisal and are even more relevant today given the impact of the Syrian conflict on Lebanon (section 2.2). The GOL today needs to provide services to a greater number of people, more efficiently. When it became clear that despite the best efforts to provide support for the NSSF to build upon the activities financed under ESPISP I, activities under Component 1 were not implemented, the World Bank responded directly to accommodate by working with the Government to identify an equally important objective and program. The March 2013 project restructuring adjusted the PDO and the Project description, and by supporting the objective of strengthening the MOL’s capacity to promote youth employment, maintained the high relevance of its objectives. The Systematic Country Diagnostic reports that, at 34 percent, youth unemployment in Lebanon is high even by regional standards and that current unemployment rates are likely to be significantly higher given the impact of the Syrian conflict and slow growth. Because of this, an additional 220,000 Lebanese, mostly unskilled youth, are expected to become unemployed. The revised PDO supported efforts to address this situation by promoting employability of first-time job seekers. 53. The Project’s objectives, both before and after restructuring, were also consistent with the ambitious Lebanon Crisis Response Plan presented by the GOL at the London Conference in February 2016, specifically in its priorities, as follows: (a) education, in particular large-scale, multiyear financing for education investments to support the RACE 2 framework; (b) priority investments in infrastructure and public services in sectors most affected by the Syria crisis; and (c) economic opportunities and jobs. They are also consistent with Focus Area 2 (Expand Economic Opportunities and Increase Human Capital) of the World Bank Group’s Lebanon Country Partnership Framework for FY17–22, especially its (a) Objective 2c, Improved delivery of education services and skills development, that highlights supporting improved teaching quality and learning environment and improved governance and managerial capacity in the sector; (b) Objective 2d, Improved delivery of health services, to support provision of essential health care services to the Lebanese identified by the NPTP as living below the poverty line, and building capacity in the sector; (c) Objective 2e, Strengthened safety net for the poorest Lebanese, through support to the NPTP; and (d) a Cross-cutting theme, Government and renewing the social contract, that aims to promote governance reforms to address institutional challenges in service delivery agencies. 54. Relevance of design and implementation. The project’s original design was relevant and continues to be relevant as it focused on measures that would have a clear impact on achieving the original PDO, which were designed specifically to provide continuing support to the then ongoing reforms in each of the HD sectors. It was relevant in helping build the HD program in Lebanon at a time when donors were limited, thereby, facilitating dialogue with the Government. The project’s comprehensive design, spanning several sectors, was instrumental in building a strong program (section 2.5) while recognizing that inevitably, components would move forward at different paces. The risk of not providing support that would provide continuity to all activities that had been concluded under ESPISP I was seen as higher than that of proceeding with an ambitious project. As such, its design was equally ambitious, especially the Results Framework at approval (sections 16 2.1 and 2.3). MOSA, the MOPH, and the MEHE were all able to absorb project funding and implement activities as planned except for the NSSF, which failed to move forward with implementation. Even though Component 1 was relevant to the Government, it was apparent that it was not relevant to its implementing agency. The World Bank’s willingness to restructure the Project in March 2013 to finance an equally important objective and priority, together with a thorough restructuring of the Project’s Results Framework was designed to ensure relevance of design during implementation. As a result, relevance of design is rated Substantial both before and after the restructuring. 55. Overall relevance is rated Substantial. Despite a high relevance of the Project’s objectives, its relevance of design, especially for activities under Component 1, and the delay in securing approval for the restructuring reduced its overall relevance of design and implementation. 3.2 Achievement of Project Development Objectives 56. Progress toward the achievement of the PDO was Substantial. ESPISP II had very significant achievements through implementation of its various activities (annex 2). The Project successfully provided continued support to most reform activities initially financed under ESPISP I, and it is clear in retrospect that without ESPISP II, the reform momentum initiated under ESPISP I could well have faltered. As an innovative and risky project, ESPISP II achieved significant benefits. As described in detail in the following paragraphs, the Project succeeded in reforming and implementing a robust hospital contracting mechanism. The NPTP has been established and a database for the poor that follows a clear and objective targeting methodology (the first in the country) is in place, distributing benefits to an ever increasing number of beneficiaries. The MOE counts on an EMIS upon which it can make evidence-based policy decisions. The Project promoted a change in behavior in terms of communications between communities and government ministries. It also succeeded in the overarching goal of strengthening the World Bank’s policy dialogue with the Government in the HD sectors and generating follow-on World Bank-financed projects in each of the health, social protection, and education sectors, all of which are sustaining and furthering the Government’s social reform objectives. All of these achievements have become ever more relevant to strengthen the GOL’s ability to respond to the Syrian refugee crisis. As a restructured project, this section evaluates the achievement of its PDOs both before and after restructuring. 57. The PDO before restructuring was to improve the administration, delivery, financial sustainability, and targeting of social insurance, social safety net, health, and public education services. The revised PDO was to (i) strengthen the capacity of the MOL to promote youth employment; (ii) rationalize public health expenditure; (iii) establish a national poverty targeting system for social safety net programs; and (iv) increase availability of Education data for decision making in the Ministry of Education and Higher Education. Progress toward the achievement of these objectives, as measured by the original and formally revised key outcome indicators, is described in the following paragraphs, by each institution/sector and relevant sub-objectives within the Project’s original PDO and then, by the revised PDO. 17 Improve the administration, delivery, financial sustainability, and targeting of social insurance/Strengthen the capacity of the MOL to promote youth employment 58. Original objective. To improve the administration, delivery, financial sustainability, and targeting of social insurance. 59. Original key outcome indicator. No further arrears accumulate in NSSF and current arrears are being refinanced with full-repayment expected by year 2017. 60. Not achieved. The MOL began preparing a package of reforms to increase contribution rates, to refinance arrears to the NSSF and to summarize the NSSF’s obligations in terms of upgrading IT and administrative systems, and expected gains in efficiency and savings. Despite some efforts to clear the Government’s commitments to the NSSF and pay part of past arrears, very few initiatives and activities were carried out toward this objective. 61. Revised objective. Strengthen the capacity of the MOL to promote youth employment. 62. Revised key outcome indicator. Direct project beneficiaries of the New Entrants to Work Program. 63. Not achieved. The March 2013 Project restructuring redirected all funding under Component 1 to support the GOL’s efforts to promote youth employment. Managed by the MOL, through the NEO, the NEW program, aimed at improving the employability and prospects for employment of first-time job seekers was launched in September 2012. Following the appointment of a Program Coordinator, the MOL focused on developing a competitive selection progress to finance NGOs under a performance-based contract, identifying participants based on eligibility criteria, designing a Management Information System to track and monitor participants, and designing and launching a communications campaign to raise participant and NGO awareness of the NEW program. Delays in obtaining approval of a decree approving the Project restructuring by the Cabinet resulted in lack of funding for these activities. Ultimately, only some activities were initiated: (a) a competitive selection process that was implemented and reached the negotiations phase with five selected NGOs that would conduct training, placement, and monitoring of first- time job seekers; (b) a competitive selection process that was implemented and reached the negotiations phase with the firm that would conduct a baseline survey; (c) hiring of a Project Coordinator; (d) design of a television and radio communication campaign; (e) design and programming of the IT system used for registration and tracking of beneficiaries through the Project (including a module to reimburse employers for the social security contribution and wage subsidies, a module for selected NGOs to record attendance of beneficiaries in each interventions and placement, a module for beneficiaries, and so on); and (f) drafting of an OM. Improve the administration, delivery, financial sustainability, and targeting of health services/Rationalize public health expenditure 64. Original objective. To improve the administration, delivery, financial sustainability, and targeting of health services. 65. Original key outcome indicator. Individual claims processed and paid within two weeks in 90 percent of claims in NSSF and MOPH. 18 66. Revised objective. Rationalize public health expenditure. 67. Revised key outcome indicator. Increased percentage of admissions according to Admission Criteria Standards (ACS) by medical controllers. 68. Achieved. The original and revised objectives were relatively similar, and discussion of progress toward these objectives is described jointly as both were achieved. The Project focused on three main goals, to improve the appropriateness and fairness of contracting between the MOPH and hospitals, improve the efficiency of the MOPH spending, and promote good provider practices and discourage miss-use or abuse of services. Activities under the Project focused on improving the administration of the MOPH’s health care systems, and the improvements will, by increasing efficiency, result in financial sustainability and better targeting and delivery of health services. 69. The Project improved efficiency by reducing the number of days for processing a hospital bill from 35 days in 2008 to only 5 days in 2014. This was done through the development and introduction of an automated billing system, which simplified hospital billing procedures and expedited the reimbursement process. The project also developed admission criteria for 40 high- cost, high-volume, and/or misuse and abuse prone conditions. 70. The Project helped achieve cost savings in health expenditures and improved efficiency of spending by supporting the implementation of a new mixed-model hospital contracting system in November 2014. Before the Project, a three-tier accreditation system adopted in 2001 determined a hospitals’ reimbursement rates. A hospital classified in a higher tier translated into larger reimbursement rates (10–30 percent differences between tiers). However, the Project demonstrated that the linking of reimbursement rate solely to accreditation was not appropriate and led to an unfair, inefficient reimbursement system. Building on information gained through a utilization review, the new mixed-model reclassified hospitals based on their hospital case mix index (CMI) which accounted for the nature and number of cases they receive (the more complex cases receive a higher weight), patient satisfaction, and three select policy indicators intended to incentivize increased intensive care unit capacity, decrease in unnecessary admissions, and inappropriate billing. An evaluation of the model a year following implementation shows that the new system incentivized hospitals to admit less inappropriate cases and more cases that are more complex/serious (average CMI increased from 1.14 to 1.18 indicating more complex cases). Further, in the seven months following implementation (December 2014–June 2015), both the average number of cases per month and the average cost per case decreased by 22.7 percent and 5.1 percent respectively, compared to the period before implementation. 71. The MOPH is continuing the work to strengthen further the contracting system. This includes the development of more precise weights to increase the accuracy of the hospital CMI, increase in the use of hospitalization data for utilization review in medical auditing, and developing of performance indicators that reflect actual patient outcomes. 19 Improve the administration, delivery, financial sustainability, and targeting of social safety net services/Establish a national poverty targeting system for social safety net programs 72. Original objective. To improve the administration, delivery, financial sustainability, and targeting of social services through implementation of new systems and the adoption of new policies in the MOSA/PCM. 73. Original key outcome indicator. The NPTP is fully operational and the Government uses it to target programs aimed at improving living standards of the population. 74. Revised objective. Establish a national poverty targeting system for social safety net programs. 75. Revised key outcome indicator. (a) Direct project beneficiaries of the NPTP and (b) the NPTP has been adopted and used by the Government to target social assistance to the extreme poor: (i) Policy statement issued by the Government formally establishing the NPTP as a means to target social assistance benefits, (ii) Basket of benefits approved by the Government and budget allocated, (iii) Distribution of benefits to the first batch (18,801 HH) of beneficiaries through the NPTP, and (iv) Second round of benefit distribution to additional batches completed. 76. Achieved. The original and revised objectives were achieved. Lebanon’s safety net programs were limited in coverage and poorly targeted. The Project improved the administration, delivery, and targeting of social services by establishing the NPTP (launched in November 2011) that is based on a PMT targeting methodology. Targeting of social services was improved as there was no targeting methodology at all and the Project established an objective and transparent methodology. Information from a survey targeting 1,540 beneficiaries and non-beneficiary HHs12 in the NPTP database, conducted between September 2015 and October 2016, showed that the targeting of the NPTP appeared to be relevant to the distribution of the poor at the national level. The random sample selection from the NPTP had a high concentration of beneficiaries and non- beneficiaries located in the northern governorate (31.4 percent), which, according to a 2008 United Nations Development Programme poverty report, also had the highest concentration of poverty pockets nationally (38 percent). Further, the survey evidence revealed the effectiveness in the selection process of beneficiaries at least as it relates to medical and educational assistance, the main benefit packages of the NPTP under ESPISP II. Comparison between beneficiary and non- beneficiary HHs showed that 82 percent of the NPTP beneficiaries lacked any health coverage compared to 66 percent of non-beneficiaries, and 55 percent of beneficiary HHs had children at the age of schooling compared to 28 percent of non-beneficiary HHs. The number of NPTP beneficiaries under ESPISP II (235,500) exceeded the targeted number of individuals stated in the intermediate indicators (100,000). 77. In terms of adequacy of benefits, the NPTP could have achieved better outcomes if the basket of benefits had been different. Under ESPISP II, the NPTP provided the following benefits to beneficiary HHs: comprehensive health coverage for beneficiaries in public and private hospitals through the waiver of 10–15 percent copayments for hospitalization and registration fee waivers and free books for students in primary and secondary public schools. During program 12 Non-beneficiary HHs are those who registered with NPTP but did not get the required score. 20 preparation and design, key decisions on the benefits to be distributed through the NPTP were held up by the caretaker status of the Government in 2011 and by the political challenge of offering benefits in the form of cash assistance, which were not deemed feasible. Assessment of HHs’ situations revealed that the health issues that members require most were medicines and primary healthcare services rather than hospital entries. Further, a qualitative assessment showed that there are a limited number of hospitals that are accepting the NPTP cardholders for medical assistance and admission of beneficiaries to hospitals is often at the discretion of the doctor on duty. Education services were also not perceived to be the most needed benefit, and indeed, the sample shows 10 percent of HHs had at least one child out of school during the 2014–2015 academic year. Further, the education subsidy is not high enough to incentivize extremely poor families to enroll their children in school and is lower than the opportunity cost of registering the students in school. Extremely poor individuals often expressed a need for primary support such as food assistance. That being said, around 73 percent of beneficiaries in the survey agreed that the services provided by the program did improve their overall living conditions. 78. One of the activities of ESPISP II was to implement a public information campaign to ensure that the public is adequately informed about the objectives and purpose of the NPTP. The campaign however was not very effective. Survey results showed that only 2 percent of sample respondents knew about the NPTP through the media campaign. The majority heard about it through word of mouth. One of the reasons that the media campaign was not successful was that it was mostly targeted to individuals in urban areas, whereas, most of the poor and program beneficiaries were in poor communities such as the northern region. Another reason is that the images used and some of the messages were not appropriate to the Lebanese context, and the poor themselves did not associate themselves to those messages. 79. ESPISP II supported the development of a reliable, credible, and accurate database of poor HHs in Lebanon, which proved essential when the Syrian conflict started increasing the incidence of poverty. The effectiveness of the targeting methodology was further reinforced when the analysis showed that the Syrian refugees hosted by the Lebanese communities were largely located in the poor regions targeted by the NPTP. Therefore, the database was used to expand coverage and provide a social assistance package to the Lebanese affected by the Syrian crisis, which included electronic food vouchers since November 2014 (Emergency National Poverty Targeting Project [P149242]). The impact of the e-voucher card was very positive on the poor; the monitoring tool indicated that beneficiary HHs were consuming 30 percent more food after six months from receiving the food, and significantly adopted less negative coping strategies as a result of the impact of Syrian refuges on their living conditions. In short, the NPTP now plays a central role for donors, United Nations agencies, and other ministries in reaching the poor and vulnerable affected by the Syrian conflict. Improve the administration, delivery, financial sustainability, and targeting of public education services/Increase availability of Education data for decision making in the MEHE 80. Original objective. To improve the administration, delivery, financial sustainability, and targeting of public education services. 21 81. Original key outcome indicator. The 2011 education budget implemented based on performance-based budgeting and quality enhancing initiative feature as major focus of new budget. 82. Revised objective. Outputs from the EMIS are being used for evidence-based policy formulation and decision-making. 83. Revised key outcome indicator. Outputs from the EMIS are being used for evidence- based policy formulation and decision-making. 84. Achieved. The original and revised objectives were achieved. The Project’s activities focused on improving the administration of public education services, mainly through improvements in budgetary planning and management and the provision of a comprehensive EMIS. While activities did not directly affect financial sustainability, delivery, and targeting, their implementation will assist in achieving these goals (for example, efficiency through school consolidation made possible with the EMIS, an MTEF that aims to improve both access and quality, and better service delivery and targeting). The project was expected to provide a bridge in funding between the GEP approved on March 30, 2000, and the follow-on Second Education Development Project approved on November 30, 2010. As a result, some of the activities that led to the achievement of these objectives were financed originally under the GEP, with bridge funding under ESPISP II, and then continued funding under the Second Education Project. The Government’s Education Sector Development Plan (ESDP), endorsed by the Cabinet of Ministers in April 2010, aims at modernizing the public education sector, thus leveling the playing field between the private and public sectors, and building the capacity of the MEHE to effectively manage the whole education system and to make evidence-based policy decisions. The Education Sector Development Secretariat (ESDS) was formally established as a unit of the MEHE by ministerial decree, and fully staffed and has fully taken on the policy, planning, and information function within the MEHE. The approval and Cabinet endorsement of the ESDP and the mainstreaming of the ESDS in the MEHE have led to a tighter alignment of all international donor programs and projects, thus strengthening the capacity of the MEHE to coordinate better with donors and to take full ownership of the ESDP. All donor-supported programs, including those supported by the World Bank, are supporting specific sections and actions of the ESDP. 85. The EMIS and all other IT-related systems, applications, and facilities are now in place within the MEHE, and efforts are being made to ensure staff and sustainable financing for these systems. More specifically, the EMIS is being used to carry out the yearly teacher transfer operation, which until now had been extremely labor intensive for the MEHE. The Geographic Information System of the EMIS has been used to guide decision making on school consolidation and school mergers. The Question Bank System (QBS), a repertoire of confidential questions for official examinations, is in place, bringing greater efficiency to the question selection process. 86. Specific legislation establishing qualification standards, professional profiles, and recruitment procedures for teachers at all levels was prepared, which is a tangible result of efforts to introduce school-based development and improvement that was initiated under the GEP. To support this school-based development and improvement, selection of new school principals and induction training programs are being conducted in accordance with procedures and regulations established under the GEP. The MEHE developed specific regulations on the ‘new school vision’ 22 and on the ‘Réglement de Régime Intérieur’ that entail more autonomy for schools and principals, establishment of school councils, introduction of performance evaluation, and establishment or expansion of new education professions such as counselors and school support staff. 87. Finally, a first national round table on the results of Trends in International Mathematics and Science Study (TIMSS) 2007 was held in the MEHE in December 2010 supported by a technical report prepared as background for the discussion. Although still below international benchmarks, Lebanon’s TIMSS results revealed that the quality of education outcomes is improving. Results revealed that while student performance in private schools was on average superior to public schools, controlling for other factors, between 2003 and the 2007 TIMSS, a 5 percent improvement in science and a 4 percent improvement in math scores of 8th graders were achieved. Staff of the MEHE have attended training on analyzing results, including participating in the Regional Initiative for Education Policy Analysis financed by an Institutional Development Fund Grant and coordinated by the World Bank, among others. 88. It was not possible to introduce performance-based budgeting, per se, even though the background work was carried out and the necessary collaboration with the Ministry of Finance (MOF) had taken place as planned. As an alternative, the GOL decided to adopt an MTEF and use the Education Budget as a pilot. Difficulties in adopting performance-based budgeting resulted from (a) the lack of a clear counterpart in the MOF specifically in charge of education matters, (b) the fact that no state budget had been approved in Lebanon since 2005, and (c) legal issues with adopting performance-based budgeting. The Government’s RACE program, initiated in 2013, sought to improve access to formal education for Syrian refugee children and underprivileged Lebanese children in the country. In view of the success with RACE, and the clear need for additional support, the MEHE and donor partners are supporting a longer-term, system-level strategy (RACE 2), in the form of an MTEF, to increase both access and quality. The World Bank is supporting this program with a Program-for-Results operation (section 2.5). 3.3 Efficiency 89. As an operation that mostly supported TA under emergency procedures, no estimate of the Project’s efficiency was done at appraisal, and data are extremely limited. Several of the outcomes described in section 3.2 are efficiency enhancing and together with other measures being supported under follow-on operations will promote further progress toward the Project’s objectives, including those related to efficiency and sustainability. 90. Specifically, for health, the Project improved efficiency by reducing the number of days for processing a hospital bill from 35 days in 2008 to only 5 days in 2014. The Project also developed admission criteria for 40 high-cost, high-volume, and/or misuse and abuse prone conditions. An evaluation of the new mixed-model, that reclassified hospitals based on their hospital CMI a year following implementation, shows that the new system incentivized hospitals to admit less inappropriate cases and more cases that are more complex/serious (average CMI increased from 1.14 to 1.18 indicating more complex cases). Further, in the seven months following implementation (December 2014–June 2015), both the average number of cases per month and the average cost per case decreased by 22.7 percent and 5.1 percent, respectively, compared to the period before implementation. 23 91. For social protection, the NPTP (launched in November 2011) based on a PMT targeting methodology has resulted in targeting of the NPTP that is more relevant to the distribution of poverty pockets at the national level, thereby improving the efficiency of benefit distribution. The effectiveness in the selection process of beneficiaries has become efficiency enhancing, at least as it relates to medical and educational assistance, the main benefit packages of the NPTP under ESPISP II. The economic analysis conducted in preparation for the Emergency National Poverty Targeting Program Project, while recognizing the difficulties of estimating ex ante benefits, justifies its rationale to increase public involvement in social safety net provision through the NPTP to (a) ensure horizontal equity so that two individuals with the same standard of living have access to the same basket of benefits, and (b) to obtain efficiency gains through consolidation of safety net provision and targeting resources to the neediest members of society. At the individual level, safety net programs can build human capital, improve health leading to higher productivity, empower and support poor individuals to invest and accumulate productive assets conducive to growth, and provide HHs with an income that would help them diversify their investment decisions and adopt higher return activities, potentially increasing their income levels. Results from an NPTP monitoring tool indicate that beneficiary HHs (a) were consuming 30 percent more food after six months of receiving a food card, (b) were benefiting from a more diversified diet, and (c) are significantly adopting less negative coping strategies. At the national level, safety net programs, among other things, improve resource allocation and availability, promote social cohesion, and enable growth-enhancing reforms. 92. For education, the EMIS and the Geographic Information System have been used to guide decision making on school consolidation and school mergers, with the aim of improving the efficiency in usage of scarce resources. The QBS is in place, bringing greater efficiency to the question selection process. Specific legislation establishing qualification standards, professional profiles, and recruitment procedures for teachers at all levels was prepared, a tangible result of efforts to introduce school-based development and improvement that was initiated under the GEP, an effort to improve quality and efficiency. 93. The original and restructured project costs and grant funding to the Project’s various components are presented in annex 1. Three components were implemented efficiently—in fact, activities under these components had been mostly completed at the time of the second and third closing date extensions. The Project was extended three times but only to accommodate activities under Component 1. As such, resources for all but Component 1 were used efficiently to achieve objectives. Overall efficiency is rated Moderate, both before and after the restructuring. 3.4 Justification of Overall Outcome Rating Rating: Moderately Satisfactory 94. The combined outcome rating is determined by weighting the percentage of the loan that was disbursed before and after restructuring. As a restructured project, the Project’s outcome rating has been guided by the analysis in Table 2. Table 2. Project Rating Weighted by Disbursements Achievement of PDO Project Relevance Efficiency Overall Rating (Efficacy) Original Project - January 2009–March 2013 Disbursements: US$4.12 million 24 Achievement of PDO Project Relevance Efficiency Overall Rating (Efficacy) Substantial Substantial Modest Moderately Satisfactory Restructured Project - March 2013–December 2016 Disbursements: US$1.33 million Substantial Substantial Modest Moderately Satisfactory Overall Project Rating Substantial Substantial Modest Moderately Satisfactory Note: (0.76_x 4) + (0.24 x 4) = 4.00. 95. Overall outcome is rated Moderately Satisfactory based on the Project’s Substantial relevance, both before and after the restructuring; its Substantial efficacy based on the key indicators defined for both the original the restructured project; and its Modest efficiency, especially for Component 1. Performance for each of its sub-objectives was rated both before and after the restructuring for purposes of arriving at an efficacy rating, as provided in annex 10. 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 96. Although not its immediate objective, the Project had a clear focus on poverty alleviation. It aimed to put in place the institutional and other reforms to improve the framework for delivering poverty programs (for example, the NPTP) and other social programs that benefit mainly the poor (for example, the MOPH). The Project had an impact on poverty indirectly by mitigating the effect of the Syrian conflict on the Lebanese population. Further, in terms of its impact on gender, 52 percent of the NPTP’s beneficiaries were women. (b) Institutional Change/Strengthening Not applicable. (c) Other Unintended Outcomes and Impacts (positive or negative) Indirect Impact 97. The Project helped support the GOL in slowly and gradually advancing toward creating unity among the diverse Lebanese confessional and political groups by implementing a new model which linked private hospitals’ performance to reimbursement, a model not based on the hospital’s affiliation to political and confessional/religious factions. It did so by presenting the MOPH policy makers with scientific evidence, which cannot be refuted to serve political goals. The PMT formula used to identify beneficiaries under the NPTP is also based on clear, objective criteria. 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops Not applicable. 25 4. Assessment of Risk to Development Outcome Rating: Significant 98. The risk to development outcome is rated Significant. Risks in Lebanon are mostly systemic, countrywide, and include mostly political (given the ‘consociational’ nature of the Government requiring consensus among divided political actors), macroeconomic (given its service orientation that is sensitive to political instability and the ongoing conflict in neighboring countries), and institutional capacity risks. But, these risks are difficult to mitigate. Nevertheless, the reforms and improvements that the Project achieved have been instituted and are being utilized. Therefore, the risk is not so much that what the Project financed will be discontinued, but rather, that additional reforms that further progress toward its PDO will be pursued. Several factors bode well for sustaining the Project’s achievements, as described in the following paragraphs. Further, the World Bank and other donors continue to provide financial and TA to Lebanon in the health, social protection, and education sectors (section 2.5). 99. Health. The Project would potentially and indirectly increase health insurance coverage by using the cost savings generated from the implementation of the new and more efficient model to finance coverage for uninsured citizens. In particular, in July 2016, the Minister of Public Health announced a new policy that provides full hospital coverage to all uninsured citizens above the age of 64 years and publicly stated that “[this] will be funded through savings [expected to be] achieved from utilization review and auditing reforms” implemented in 2014. Also, a US$150 million World Bank-financed health project providing for a continuation of reforms supported by ESPISP II is scheduled for consideration by the Board of Executive Directors in late FY17. 100. NPTP. In 2012, the Council of Ministers allocated US$28 million for the financing of the basket of benefits consisting of health and education benefits, demonstrating its commitment to the NPTP. As of January 2014, more than 76,000 HHs (298,000 individuals) had applied to the program, and approximately 43,000 HHs (195,000 individuals) were deemed eligible to receive the benefits. As a sign of success of the NPTP, it has attracted additional donor funding, including the approved US$10 million from the Lebanon Syria Crisis Trust Fund as additional financing. In addition, contributions have been received from the United Nations High Commissioner for Refugees (approximately US$6.1 million), the German Cooperation (approximately US$1.8 million), and the United Nations Central Emergency Response Fund (US$0.9 million). At the same time, MOSA has requested additional funding from the budget of US$40 million to finance the expansion of the social assistance to a larger number of poor Lebanese HHs. For the medium and long term, the GOL is looking to institutionalize the NPTP through a law that would establish a program to provide conditional cash transfers to poor Lebanese building on and incorporating the NPTP. 101. NSSF. Although reforms to the NSSF envisaged under the Project were not successful, the European Union has provided the agency with €10 million to help further reforms initiated under ESPISP I, including accessing the program developed for the hospital claims system. 102. Education. The GOL is pursuing further reforms to education at all levels through the RACE 2 program (section 3.2). 26 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Satisfactory 103. The Project was prepared on an emergency basis to provide a bridge in financing and continuity in implementation of reforms that were under way with support under the RIDPL and ESPISP I and the GEP until such time as the World Bank could resume its normal program of lending and non-lending in the context of a new Country Assistance Strategy. Within this context, the World Bank responded expeditiously to the GOL’s request for assistance and designed a program of assistance that responded to the Government’s priorities as presented in its SAP at Paris III and that had been grounded in sector work through the ESIA. The Project was not without risks, but the risks of inaction were greater than those of proceeding with the Project, especially since the risk of losing momentum in the GOL’s reform effort would have been greater (section 2.1). The Project’s Results Framework was ambitious but well defined, with outcome and intermediate outcome indicators that could reasonably have been expected to produce results by completion if all project activities were completed in their entirety. The Project was prepared not only in a post conflict environment but also, more importantly, in a politically fragile one. In this respect, the preparation team was optimistic by (a) implying that if a project did not require legislative action, implementation could progress smoothly despite the difficult political context— difficulty in securing legislative action was only one aspect of the difficult political context; and (b) not acknowledging that both ESPISP I and RIDPL were already facing implementation issues, most unrelated to the need for legislative action. The preparation team opted to support an ambitious project but one that would help sustain previous efforts until such time as the World Bank could put a medium-term assistance strategy in place. (b) Quality of Supervision Rating: Satisfactory 104. World Bank implementation support was continuous and hands-on by a single country office-based Task Manager supported by a team of specialists. The team rapidly identified the need for project restructurings and acted expeditiously to secure approval of the respective proposals. It was proactive and very responsive in using the opportunity of the March 13 restructuring to adjust the Project’s components and activities and its Results Framework to provide a more responsive project, a concise PDO, and streamlined outcome indicators that would measure progress toward their achievement. ISRs and detailed time-bound Aide Memoires were prepared following formal supervision missions. The project’s ISRs did not always reflect performance in its entirety, but this was redressed in the final ISR (section 2.2). (c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory 105. Overall bank performance is rated Moderately Satisfactory, based on the Moderately Satisfactory rating for ensuring quality at entry (QEA), the Satisfactory rating for supervision, and the Project’s Moderately Satisfactory outcome rating. 27 5.2 Borrower Performance (a) Government Performance Rating: Moderately Satisfactory 106. The PCM and the MOF demonstrated commitment to the Project throughout preparation and implementation. In the absence of a planning ministry, both of these agencies helped ensure coordination among the various implementing agencies and sought to keep them engaged and their respective activities under implementation despite the political deadlocks that affected its progress. The PCM was responsible for submitting and following up on the need for issuance of a Cabinet decree amending the original decree—delays in issuance of this decree resulted in the stalling of activities under the restructured Component 1. (b) Implementing Agency or Agencies Performance Rating: Moderately Satisfactory 107. The Project’s implementing agencies had a mixed performance. The strong performance by most of the implementing agencies was even stronger in view of the added burden and responsibility in delivering quality services to an ever-increasing number of beneficiaries as a result of the Syrian refugee crisis. With the exception of the NSSF, all other implementing agencies carried out the Project in a satisfactory or moderately satisfactory manner. Table 3 provides the basis for ratings of each of the implementing agencies. Table 3. Implementing Agencies’ Performance Implementing Rating Comment Agency The NSSF was unable to complete any activities under the Project due NSSF Unsatisfactory mostly to resistance from its Board. Under the original project, the MOL was committed to preparing a package of reforms to the NSSF, and sought World Bank assistance in Moderately putting this together. Under the restructured project, the MOL MOL Satisfactory performed less satisfactorily, although delays were mostly due to the lack of ability to disburse resulting from the issue in the approval of the original grant (section 2.4) The NPTP has progressed well and has continued to expand to provide social assistance and social services (through MOSA’s social development centers, based on strong commitment and capacity building). Social workers adhered mostly to the Program OM. Around MOSA/PCM Satisfactory 69 percent of the survey respondents assured that social workers did not direct their answers. However, results also show that in 30 percent of the cases, the social worker at MOSA did not conduct the necessary household visit. Despite capacity constraints, the MOPH satisfactorily implemented all Satisfactory MOPH of the activities under its responsibility. The MEHE implemented activities expeditiously and demonstrated its commitment to the Project objectives, which have led to the adoption of MEHE Satisfactory its ESDP that is now being supported by a World Bank Program-for- Results. 28 Implementing Rating Comment Agency The FOT, despite occasional staffing and other minor issues, was able Satisfactory to perform its fiduciary functions for the Project expeditiously and FOT effectively. (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Satisfactory 108. The Government’s Moderately Satisfactory performance, together with Unsatisfactory performance by the NSSF and Moderately Satisfactory or stronger performance by each of the other implementing agencies, results in an overall Moderately Satisfactory performance. 6. Lessons Learned 109. Emergency projects include a wide spectrum of responses to crises, but political uncertainty adds to the complexity of emergency assistance. Emergency assistance, as provided for under OP/BP 8.00, is meant to comprise speed, flexibility, and simplicity. Normally, in emergency situations, governments are united in their commitment to the objectives of emergency assistance. An environment of political uncertainty adds a further dimension to responding to emergency situations and can have a potentially detrimental impact on the components of emergency assistance. This was evident under the Project, as the NSSF lost commitment to the reforms it was to implement. 110. Institution building in weak, stressed environments is needed and, possibly, requires time and careful analysis. When emergency projects are prepared in countries where political impasses and weak institutions can well be expected to impact implementation, detailed analysis by component and by agency is required, in addition to a broader Government-level analysis. This would ensure that potential bottlenecks and risks are identified before a decision to include support to those activities/agencies is made. 111. In complex situations, with a difficult political context, a fragile environment, and low capacity, having the World Bank’s implementation support team in the country office helps tremendously. The World Bank’s implementation team, including the Task Team Leader, the sector specialists, and fiduciary staff were based in the country office. This facilitated the World Bank’s implementation support by allowing the provision of hands-on support on an almost daily, just-in-time basis and ensuring coordination among the task team on key implementation issues. 112. Multi-sectoral projects, with several implementing agencies, are notoriously complex, all the more so in an emergency mode. For this, detailed procedural manuals and guidelines along with regular training can enhance the efficiency and quality of a project’s implementation. Further, having a separate unit to handle fiduciary matters may well be the most efficient way of handling aspects that could otherwise stall implementation. While this Project was unconventional in that it had a higher-level objective of building a pipeline of subsequent HD projects in support of the Government’s SAP, normally, in emergency situations, it would be preferable to have more simply structured projects, with fewer implementing agencies and sectors. 29 113. Nevertheless, in some cases, especially in the case of multi-sectoral projects providing a continuation of assistance for multiple, complementary reforms that are under way, it may make sense to proceed with interim, bridging support despite identified risks. In the case of the Project, the team opted to proceed despite identified risks with the NSSF, as the adverse impact of not sustaining the reform effort (for example, financial solvency of the NSSF, establishment of the NPTP, and so on) was considered more detrimental than the risk of implementation problems. In reality, support to the NSSF under Component 1 was but one area of continued support to reforms in health, education, and social protection. Had the Project not proceeded to provide a bridge sustaining reforms in multiple areas, which are now more targeted projects in support of each of these sectors (social protection, health, and education), providing continuing assistance for reforms would likely not have materialized. 114. With the basics in place, it makes more sense to start with a program and improve it based on implementation rather than waiting for the ‘perfect’ program. The Project supported the initial implementation of the NPTP, based on the PMT that had been earlier developed with support under ESPISP I. While presumably targeting could have been better, as could the initial basket of benefits, the fact is that the program is in place, is expanding, and part and parcel of that expansion is the gradual and constant improvement to its beneficiary base and benefits. The NPTP’s initial and ongoing operations that now count upon different sources of financing, including from the World Bank, have permitted the GOL to learn from experience, seek feedback from stakeholders, monitor progress, and eventually adjust and adapt to continuously the NPTP. This would not have been possible had project design opted for perfection in the beneficiary/benefit model before beginning implementation of the NPTP. 115. A functioning safety net program provides an effective vehicle for tackling poverty in response to crises. Having the NPTP in place has provided the GOL with an instrument to tackle poverty in response to the Syrian refugee crisis —a crisis that had not been contemplated at appraisal. 116. The use of scientific evidence, linked with the potential for cost savings and financing, can counter the prevailing challenges of political and confessional favoritism. Both the new model which linked private hospitals’ performance to reimbursement—a model not based on the hospital’s affiliation to different political and confessional/religious factions but to scientific evidence—and the PMT formula that identifies beneficiaries based on clear, objective criteria supported the goal of creating unity among the diverse Lebanese confessional and political groups. In this sense, Government commitment to this evidence-based financing is fundamental, because in its absence, reforms cannot progress (for example, NSSF). 117. Multi-sectoral projects generally require expertise in different areas on both the Government and donor sides. For health reforms, the formation of three committees (Utilization Review Committee, Admission Criteria Committee, and Performance Contracting Committee), tasked with discussing and identifying objectives and activities to be undertaken in the new reform, was instrumental in achieving the Project’s goals. This was mainly due to the multidisciplinary nature of these committees, which included a mix of medical, public health, and IT professionals affiliated to the MOPH, universities, and hospitals. The active involvement of the MOPH policy makers was similarly crucial in providing the guidance, resources, and institutional commitment toward achieving the Project goals. 30 118. It is possible, in a post-conflict environment, to achieve concrete institutional reforms. The Project was successful in achieving significant institutional reforms in health, education, and social protection. Most of these are notable and can be considered difficult even in more stable environments. Reforming the hospital contracting system, establishing a comprehensive safety net program relying on a single data base of the poor, and objective targeting mechanism are institutional reforms that many countries struggle to achieve. 119. Behavioral changes are possible, even in small operations. With a small, US$6.0 million investment, ESPISP II successfully effected behavioral change. It helped support the GOL in slowly and gradually advancing toward creating unity among the diverse Lebanese confessional and political groups by implementing a new model which linked private hospitals’ performance to reimbursement, a model not based on the hospital’s affiliation to political and confessional/religious factions. It did so by presenting the MOPH policy makers with scientific evidence, which cannot be refuted to serve political goals. The PMT formula used to identify beneficiaries under the NPTP is also based on clear, objective criteria. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies See Annex 7 for the Borrower’s contribution to the ICR. Meanwhile, no comments were received on the draft ICR from the Borrower. (b) Cofinanciers Non received. (c) Other partners and stakeholders None received. 31 Annex 1. Project Costs and Financing (a) Project Cost by Component (in US$, millions equivalent) Appraisal Actual/Latest Estimates at Level Percentage of Components Estimate (US$, Estimate (US$, 1 Restructuring Appraisal millions) millions) Component 1: Modernization of the Social Insurance System/Supporting the 2. 25 1.55 — — Development of Labor Market Reforms in the MOL Component 2: Rationalizing Public Sector 0.74 0.69 — — Health Expenditures Component 3: National Poverty Targeting 1.25 1.69 — — Program for Social Safety Nets Component 4: Education Sector 0.99 1.0 — — Performance and Quality Enhancement Component 5: Fiduciary Operations 0.77 1.07 — — Total baseline cost 6.00 6.00 5.45 90.8 Physical contingencies n.a. — n.a. n.a. Price contingencies n.a. — n.a. n.a. Total project costs — Front-end fee PPF n.a. — n.a. n.a. Front-end fee IBRD n.a. — n.a. n.a. Total financing required 6.00 — — — (b) Financing Appraisal Actual/Latest Type of Percentage of Source of Funds Estimate Estimate Cofinancing Appraisal (US$, millions) (US$, millions) World Bank Grant — 6.00 5.45 90.8 CIDA — 2.00 — — Italian Cooperation — 0.60 — — Hospitals — 0.60 — — Government — 6.75 — — 32 Annex 2. Outputs by Component A. Project Components, Subcomponents and Activities, Before and After Restructurings 1. The Project consisted of five components, as summarized in the following paragraphs. Component 1: Modernization of the Social Insurance System (total cost US$2.25 million, financed by the World Bank) 2. The objectives of this component were to consolidate and expand the reforms that had started under ESPISP I, in the context of the NSSF’s multiyear Master Plan that aimed to (a) ensure that the NSSF converges to financial equilibrium by 2010, and (b) initiate institutional changes to improve administration/governance and the quality of services. Promising progress had been made in various activities under ESPISP I (including a new inpatient claims processing and utilization control systems, the preparation of a policy note outlining short- and medium-term reforms options aimed at financial equilibrium of the health insurance branch by 2010, and the creation of an Actuarial Department to conduct financial projections for the health insurance branch). New activities were proposed under three subcomponents as follows: Subcomponent 1.A: Improve the Financial Sustainability to further develop policies and systems that would increase revenues for the NSSF, control the expenditures of the health insurance branch, and improve financial management; Subcomponent 1.B: Improving the Administrative Efficiency and the Quality of Services would initiate reforms that would enable the NSSF to optimize business and administrative processes, adapt its institutional organization, and develop and implement a strategy to respond to new needs in terms of human resources; and Subcomponent 1.C: Advisory Services to the Ministry of Labor as custodian of the NSSF to follow up on the implementation of the NSSF’s reform plan and related social insurance policies and programs. 3. Subcomponent 1.A: Improve the Financial Sustainability to further develop policies and systems that would increase revenues for the NSSF, control the expenditures of the health insurance branch, and improve financial management. The following four activities were to be conducted: (a) implementation of Phase 2 of the NSSF outpatient claims management system, aimed at improving processing and utilization control systems; (b) reforming the contracting and payment system; (c) reforming the family allowance branch; and (d) implementation of Phase 2 of the NSSF reform related to contributions management, financial reporting, and management of receivables. 4. Subcomponent 1.B: Improving the Administrative Efficiency and the Quality of Services would initiate reforms that would enable the NSSF to optimize business and administrative processes, adapt its institutional organization, and develop and implement a strategy to respond to new needs in terms of human resources. The following activities were to be conducted: (a) strengthening and reinforcing the IT department, (b) training medical controllers and key personnel in the use of the new systems that were being developed, (c) preparing and starting the implementation of an action plan for the institutional reorganization and staffing of the NSSF, (d) designing a new web portal to enhance client services, and (e) ensuring that IT systems in all offices are able to function without interruption. 33 5. Subcomponent 1.C: Advisory Services to the Ministry of Labor as custodian of the NSSF to follow up on the implementation of the NSSF’s reform plan and related social insurance policies and programs. Component 2: Rationalizing Public Sector Health Expenditures (total cost US$1.55 million, of which US$0.74 million financed by the World Bank ESPISP II, US$0.2 million by the GOL, and US$0.6 million by hospitals) 6. Activities under this component also aimed to deepen and expand the reforms initiated under ESPISP I that included creation of a modern utilization management function and the design of modern hospital contracts based on key performance indicators. The objective of this component was to improve the efficiency of the MOPH expenditures. The Project would consolidate the utilization management and performance-based contracting work, supported by the required IT and human resources investments. Work on utilization management would focus on (a) establishing a unit within the MOPH’s organizational structure for the utilization management function and identifying the required human resources; (b) assisting in completing the automation of the pre-certification and claims processing system, including the incorporation of a modern rules engine; and (c) setting up a utilization management system covering the areas of pre-certification, concurrent review and post-discharge review and using accepted clinical management criteria. Work on performance-based contracting would (a) finalize the key performance indicators to assess hospital performance and the hospital performance report template, (b) generate individual performance indicator reports and a comprehensive performance indicator report for hospitals under contract with the MOPH, and (c) implement new performance contracts with the hospitals. Component 3: National Poverty Targeting Program for Social Safety Nets (NPTP) (total cost US$9.34 million, of which US$1.25 million financed by the World Bank ESPISP II, US$2.6 million by other donors,13 and US$5.5 million by the GOL) 7. This component, continuing and building upon the results of the NPTP pilot that was being implemented by MOSA and financed under ESPISP I, aimed to support the establishment of the national targeting system that would be used by the GOL in the delivery of social transfers and services. A national rollout of the NPTP would be implemented through activities under four subcomponents. 8. Subcomponent 3.A: Establishment of the NPTP Database on the Poor and Vulnerable Population, including design of database; provision of software, hardware, communication technology and hiring of human resources; decentralized data collection on poor and vulnerable HH’ social and economic status; and centralized verification, cross-checking, and processing of information and ranking of HH according to their welfare, using an objective method. 9. Subcomponent 3.B: Preparation and Implementation of Public Information Campaign to ensure that the public is adequately informed about the objectives and purpose of the NPTP, as well as about the administrative processes related to application, collection of information on HH, data verification, and assessment and ranking of household welfare. 13 Other donors included CIDA Grant, Italian Cooperation, and hospitals. 34 10. Subcomponent 3.C: Capacity Building for Monitoring and Evidence-Based Policy Making to ensure that the targeting mechanism performs an objective and reliable assessment of household welfare. The project would support the building of technical capacity to regularly carry out monitoring surveys and to revise the PMT targeting method by administering a nationwide baseline survey to define the final version of the PMT formula and follow up monitoring surveys to assess the performance of the targeting method after the first year of implementation and beyond. 11. Subcomponent 3.D: Support the Management of the NPTP national rollout by setting up an institutional structure to manage the NPTP. The NPTP database and the NPTP CMU would be established in the PCM. Component 4: Education Sector Performance and Quality Enhancement (total cost US$2.05 million, of which US$1.0 million financed by the World Bank ESPISP, US$1.05 million by the GOL) 12. The objective of this component was to institutionalize the performance-based and quality- focused approaches in the MEHE and at the school level. Outcomes of this component were expected to include the furtherance of an efficient and quality-oriented approach to sector development, together with the associated accountability mechanisms upon which the next phase of education sector reform in Lebanon could be designed and implemented. This was to be achieved through three subcomponents. 13. Subcomponent 4.A: Development of an Education SWAP Framework to formulate a sector wide approach for support of the second phase of education sector reform, including the development of an MTEF and key performance indicators based on the completed National Education Sector Strategy. 14. Subcomponent 4.B: Education Sector Performance Enhancement to support the adoption of performance-based principles and practices in the general education system, including (a) implementation of a policy planning and information management function in the MEHE, (b) implementation and monitoring of the performance-based budgeting initiative launched between the MEHE and the MOF, and (c) implementation of the EMIS in the MEHE. 15. Subcomponent 4.C: Quality Enhancement of Learning Outcomes to ensure the implementation of quality-oriented tools in the MEHE and initiate the introduction of school-based quality management practices, including (a) support to Lebanon’s participation in and analysis of international and national learning assessments (TIMSS, Programme for International Student Assessment [PISA], Progress in International Reading Literacy Study [PIRLS]) to inform quality enhancement initiatives; (b) implementation of pilot projects at school district level related to devolution of empowerment to principals and teachers, staff development, and formulation of incentive and accountability measures; and (c) further support to the QBS and exam management system (EMS) that were successfully piloted under the GEP. Component 5: Fiduciary Operations (total cost US$0.77 million financed by the World Bank) 16. The objective of this component was to support the FOT that would be responsible for managing the procurement and financial management of project activities. The FOT would be recruited and hosted by the President of the Council of Ministers; would be composed of a Lead 35 Coordinator, assisted by (a) two Procurement Specialists, (b) one Financial Management Specialist, and (c) one Project Assistant; and would play a critical role not only in coordinating the Project’s fiduciary aspects but also in building other implementing agencies’ capacity in procurement and financial management. Revised Components 17. The Project’s components were revised in the Level 1 Project restructuring in March 2013 (section 1.3). Component 1 was reoriented to support the NEW program, a pilot program designed to improve the employability of Lebanese youth ages 16–30. All activities pertaining to the NSSF were dropped. The NEW program that was to be implemented by the MOL, through the NEO, was approved under a decree by the Council of Ministers in November 2011, and it was officially launched under the auspices of the Prime Ministry. The program consists of the following four interrelated interventions: (a) life skills training to provide participants not only with technical skills but also life skills, (b) job search techniques and counseling to empower job seekers and encourage them to actively seek employment, (c) practical OJT, and (d) social security voucher for unemployed youth to allow employers to be reimbursed for the cost of contribution to the NSSF on behalf of program participants. The pilot was estimated to cost US$2.2 million, of which over half—US$1.3 million—was to be financed by the GOL, demonstrating its clear commitment to the NEW program. This component was also to support (a) the Strategic Planning Unit within the MOL and (b) development of a technical feasibility study to automate the MOL. 18. A third Project restructuring in July 2014 (a) extended the grant’s closing date from August 31, 2014, to December 31, 2016; (b) canceled two activities under Component 1 and reallocated the remaining funds to the NEW program under the same component; and (c) reallocated grant proceeds from Components 2 and 4 to Component 3 (Categories II, IV, and III of the Grant Agreement, respectively). The restructuring also adjusted the Results Framework slightly (section 1.3). 19. Table 2.1 presents a description of the Project’s components before and after restructuring. Table 2.1. Project Components before and after Restructurings Project Components After Project Components at Project Components After Level 1 Level 2 Restructuring (July Appraisal Restructuring (March 2013) 2014) Component 1: All the NSSF related activities were dropped Removal of the following Modernization of Social and Component 1 was replaced with activities under Component 1: Insurance System  Support the Strategic Supporting the Development of Labor Planning Unit within the Market Reforms in the MOL MOL  Support the NEW program under auspices  Develop technical feasibility of the MOL and NEO (the training, study to automate the MOL placement, and monitoring of the 1,600 Addition of the following youth participants) activities under Component 1:  Support Strategic Planning Unit within the  Development of the IT MOL system at the NEO  Develop technical feasibility study to  Financing the fees of the automate the MOL Program Coordinator for the remainder of the implementation period 36 Project Components After Project Components at Project Components After Level 1 Level 2 Restructuring (July Appraisal Restructuring (March 2013) 2014) Component 2: No change No change Rationalizing Public Sector Health Expenditures Component 3: National Additional activities to be carried out No change Poverty Targeting  Continued rollout of the NPTP and ensure Program for Social timely and efficient delivery of basket of Safety Nets benefits to the beneficiaries  Setting up a M&E system  Initiating institutionalizing of the program and  Updating the PMT Component 4: Education No change. Activities were completed except No change Sector Performance and the implementation and monitoring of the Quality Enhancement education sector performance-based budgeting initiative under Subcomponent 4.B. Component 5: Fiduciary No change No change Operations Table 2.2. Funding Allocations before and after Restructuring (US$) After Level 1 After Level 2 At Appraisal Components Restructuring Restructuring (2008) (March 2013) (July 2014) Component 1: Modernization of Social Insurance 2,250,000 1,550,000 1,550,000 System Component 2: Rationalizing Public Sector Health 740,000 690,000 685,931 Expenditures Component 3: National Poverty Targeting Program for 1,250,000 1,688,860 1,702, 483 Social Safety Nets Component 4: Education Sector Performance and 1,000,000 1,000,000 990,446 Quality Enhancement Component 5: Fiduciary Operations 770,000 1,071,140 1,071,140 B. Results and Rating of Major Activities of ESPISP II Table 2.3. Results and Ratings of Major Activities of ESPISP II Original Project Formally Revised Project Activity Result ICR Rating Activity Result ICR Rating PDO: To improve the administration, delivery, financial PDO: (i) strengthen the capacity of the MOL to sustainability, and targeting of social services through promote youth employment; (ii) rationalize public implementation of new systems and the adoption of new health expenditure; (iii) establish a national poverty policies in the NSSF, MOL, MOPH, MOSA/PCM and targeting system for social safety net programs; and the MEHE. (iv) increase availability of Education data for decision making in the MEHE. Component 1: Modernization of the Social Insurance Component 1: Supporting the Development of System Labor Market Reforms in the MOL Component objective: Ensure that the NSSF converges Revised component objective: Strengthen the capacity to financial equilibrium by year 2010 and initiate of the MOL to promote youth employment. 37 Original Project Formally Revised Project Activity Result ICR Rating Activity Result ICR Rating institutional changes to improve administration/governance and the quality of services. Key outcome indicator: No further arrears accumulate Key (Outcome) Indicator: Direct project beneficiaries in NSSF and current arrears are being refinanced with of the New Entrants to Work program. full-repayment expected by year 2017 Implementation of — Dropped in Implementation — — Phase 2 of the NSSF March 2013 of the NEW out-patient claims restructuring program management system Reforming — Dropped in Support the Dropped in July — contracting and March 2013 Strategic 2014 restructuring payment system restructuring Planning Unit within the MOL Reforming the family — Dropped in Develop a Dropped in July — allowance branch March 2013 technical 2014 restructuring restructuring feasibility study to automate the MOL Implementation of — Dropped in Development of Added in July 2014 — Phase 2 of the NSSF March 2013 the IT-system at restructuring reform related to restructuring the NEO contributions management, financial reporting, and management of long-term receivables Strengthening and — Dropped in Finance fees of Added in July 2014 — reinforcing the March 2013 the Program restructuring current IT restructuring Coordinator for department the extension period Training medical — Dropped in Training of Added in July 2014 — controllers and key March 2013 beneficiaries by restructuring personnel in the use restructuring selected of the new systems organizations Preparing and With the Dropped in — Dropped in March — starting the support of the March 2013 2013 restructuring implementation of an French restructuring action plan for the Government, institutional the NSSF reorganization and defined a staffing of the NSSF new organizationa l structure Designing a new web — Dropped in — — — portal to enhance March 2013 client services restructuring Ensuring that IT — Dropped in — — — systems in all offices March 2013 are able to function restructuring without interruption 38 Original Project Formally Revised Project Activity Result ICR Rating Activity Result ICR Rating Program — Dropped in — — — coordination and March 2013 evaluation restructuring Advisory services for — Dropped in — — — MOL March 2013 restructuring Component 2: Rationalizing Public Sector Health No change Expenditures Component objective: Improve the efficiency of the Revised component objective: Rationalize public MOPH expenditures. health expenditure Key outcome indicator: Individual claims processed and Revised key outcome indicator: Increased percentage paid within two weeks in 90 percent of claims in the of admissions according to Admission Criteria NSSF and MOPH. Standards (ACS) by medical controllers Establishment of a — — — — — utilization management function in the MOPH Institutionalization of — — — — — performance-based contracting Component 3: National Poverty Targeting Program No change to description, but additional activities for Social Safety Nets included as described below Component objective: Establish the national targeting Revised component objective: Establish a national system to be used by the GOL in the delivery of social poverty targeting system for social safety net transfers and services aimed at improving living programs. standards of the population, and in particular, of the poor and vulnerable. Key outcome indicator: The NPTP is fully operational Revised key outcome indicator: (a) Direct project and the Government uses it to target programs aimed at beneficiaries of the NPTP, and (b) the NPTP has been improving the living standards of the population. adopted and used by the Government to target social assistance to the extreme poor: (a) policy statement issued by the Government formally establishing the NPTP as a means to target social assistance benefits, (b) basket of benefits approved by the Government and budget allocated, (c) distribution of benefits to the first batch (18,801 HH) of beneficiaries through NPTP, and (d) second round of benefit distribution to additional batches completed. Establishment of the — — — — — NPTP database on poor and vulnerable population Implementation of — — — — — public information campaigns Capacity building for — — — — — monitoring and evidence-based policy making TA for the — — — — — management of the 39 Original Project Formally Revised Project Activity Result ICR Rating Activity Result ICR Rating NPTP national rollout — — — Continued Added in March — rollout of the 2013 restructuring NPTP and ensure the timely and efficient delivery of the basket of benefits to the beneficiaries — — — Setting up of a Added in March — M&E system 2013 restructuring — — — Initiating the Added in March — institutionalizatio 2013 restructuring n of the program — — — Updating the Added in March — PMT 2013 restructuring Component 4: Education Sector Performance and No change Quality Enhancement Component objective: Institutionalize the performance- Revised component objective: Increase availability of based and quality-focused approaches in the MEHE and education data for decision-making in the MEHE. at the school level. Key outcome indicator: The 2011 education budget Revised key outcome indicator: Outputs from the implemented based on performance-based budgeting EMIS are being used for evidence-based policy and quality-enhancing initiative feature as major focus formulation and decision-making. of new budget. Development of — — — — — Education SWAP framework Implementation of — — — — — policy, planning, and information management function in the MEHE Implementation and — — — — — monitoring of education sector performance-based budgeting Implementation of — — — — — EMIS Introduction of — — — — — school-based management for quality improvement Support to the QBS — — — — — and EMS Analysis of national — — — — — and international learning assessment studies to inform 40 Original Project Formally Revised Project Activity Result ICR Rating Activity Result ICR Rating quality enhancement initiatives Component 5: Fiduciary Operations No change Component objective: Coordinate fiduciary operations Revised component objective: None specified for the Project and build beneficiary agencies’ capacity in procurement and financial management. Key outcome indicator: None specified Revised key outcome indicator: None specified Manage the — — — — — procurement process/handle Handle financial — — — — — management issues 41 Annex 3. Economic and Financial Analysis Not applicable. 42 Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team Members Responsibility/ Names Title Unit Specialty Lending Haneen Ismail Sayed Lead Operations Officer MNSHD Team Leader Ghassan N. Alkhoja Sr. Operations Officer MNSHD Team Member Celine Gavach Operations Analyst MNSHD Team Member Firas Raad Health Specialist MNSHD Team Member Aleksandra Posarac Lead Economist ECSHD Team Member Bjorn Olof Ekman Senior Economist (Health) MNSHH Team Member Lina Fares Senior Procurement Specialist MNAPR Team Member Robert Bou Jaoude Senior Financial Management Specialist MNAFM Team Member David A. Robalino Senior Economist HDNSP Team Member Hyacinth Brown Senior Finance Officer LOAFC Team Member Dominique Bichara Senior Counsel LEGEM Team Member Jean-Charles de Daruvar Senior Counsel LEGEM Team Member Amy Champion Operations Analyst MNSHD Team Member Hala Ballout Operations Analyst MNCLB Team Member Afifa Alia Achsien Senior Program Assistant MNSHD Team Member Claudine Kader Senior Program Assistant MNSHD Team Member Roger Pearson Consultant, Education MNSHD Team Member MNSSP - May W. Wazzan Junior Professional Associate Team Member HIS Supervision/ICR Haneen Ismail Sayed Program Leader MNC02 Team Leader David A. Robalino Manager GPSJB Team Member Michael M. Lokshin Manager DECDG Team Member Carole Abi Nahed Chartouni Economist GSP05 ICR Team Leader Lina Fares Senior Procurement Specialist GGO05 Team Member Rima Abdul-Amir Koteiche Senior Financial Management Specialist GGO23 Team Member Hala Ballout Operations Analyst OPSPF Team Member Rock Jabbour Financial Management Analyst GG023 Team Member Mona El-Chami Senior Financial Management Specialist GGO23 Team Member Friederike Uta Rother Senior Social Protection Specialist GSP05 Team Member Angela Elzir Social Protection Specialist GSP05 Team Member Mirvat Haddad Program Assistant MNCLB Team Member Jocelyne Jabbour Program Assistant MNCLB Team Member Suzana Abbott Consultant GSP05 ICR Co-Author Soraya El Khalil Consultant GSP05 Team Member (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle US$, thousands (including travel No. of staff weeks and consultant costs) Lending FY08 0.00 30.37 43 Staff Time and Cost (Bank Budget Only) Stage of Project Cycle US$, thousands (including travel No. of staff weeks and consultant costs) FY09 26.55 175,433.45 FY10 7.27 24,439.27 FY11 3.00 16,107.60 FY12 0.00 6,250.77 Total 36.82 222,261.46 Supervision/ICR FY09 6.28 71,039.12 FY10 15.36 83,808.13 FY11 22.99 149,822.22 FY12 38.26 205,895.81 FY13 36.49 205,124.85 FY14 20.77 136,358.68 FY15 18.20 68,255.34 FY16 6.84 21,096.25 FY17 8.26 44,230.63 Total 173.45 985,631.03 44 Annex 5. World Bank-financed Projects in Human Development related to ESPISP II 1. The project was complementary to several ongoing and proposed operations both in the portfolio and proposed in the ISN. The World Bank had approved a US$1.0 million ESPISP I Grant under the TFL in September 2007. The objective of ESPISP I was to accelerate and improve the quality of the implementation of the package of social sector reforms presented by the GOL at Paris III in the areas of social insurance, safety nets, and health expenditures, through provision of implementation support and capacity building for the NSSF, MOL, MOSA, and MOPH. ESPISP I was providing critical support to key social protection initiatives under the RIDPL. At the time of appraisal of ESPISP II, ESPISP I was progressing well, with 75 percent of grant funds committed and 55 percent disbursed. ESPISP II was designed to provide a necessary bridge and continuity in implementation of needed reforms under the SAP until such time as the World Bank could resume activities under the framework of a longer-term country assistance strategy. 2. The RIDPL, approved on August 2, 2007, was the World Bank’s initial contribution to the Paris III reform program, with particular emphasis on the energy, social, and telecommunications sectors. The RIDPL was to be a two-phase programmatic policy instrument. While the first operation supported specific actions for social protection reform, the Program Document also mentions that it aimed to monitor progress in the areas of social insurance, social protection, health, and education (that could be supported under the second operation), as follows: (a) reform of the NSSF to improve its financial sustainability, contain the accumulation of unfunded liabilities, and reduce Government transfers; (b) reform of social safety nets to strengthen their poverty focus through the introduction of indicator-based targeting or PMT targeting mechanism, build institutional capacity in MOSA, and improve social service delivery arrangements of MOSA; (c) reform of the services of the MOPH to improve efficiency and enable the MOPH to focus its attention on developing health policy and playing its stewardship role through reforms in the short term that would include the implementation of an enhanced electronic claims system, preparation and use of 30 admission protocols for expensive procedures and the enforcement of an administrative cap on the monthly ceiling amounts for contracts with private hospitals; and (d) implementation of the national education sector strategy and reforms of the education that would include education finance and reorganization of the management of the public education system. The IEG reported the outcome of the social reforms under the RIDPL as negligible (but this review was concluded after ESPISP II was appraised). The second RIDPL did not move forward. 3. The GEP,14 approved in March 2000 and in the final stages of implementation when the Project was approved, was aimed at enhancing the capacity of the MEHE (previously the Ministry of National Education, Youth and Sport) in an effort to manage education effectively and restore credibility in the public education system, by improving the quality of and access to education. It supported, among others, management and institutional development, including the introduction of an EMIS to support and document decision-making practices, development of a national education strategy, and quality enhancements to upgrade public education facilities. The IEG 14 World Bank, Republic of Lebanon, General Education Project (P045174), Report No. 20152-LE, dated March 7, 2000. 45 reported the outcome of the GEP as Moderately Unsatisfactory (but this review was also concluded after ESPISP II was appraised). 4. As had been the intention in providing bridge funding under ESPISP II, several sectoral projects have entered the World Bank portfolio building upon the important activities and reforms that ESPISP II put in place. These include (a) the Second Education Development Project, (b) the Social Promotion and Protection Project, (c) the Emergency National Poverty Targeting Project (and Additional Financing), (d) the Emergency Education System Stabilization Project, (e) the Emergency Primary Healthcare Restoration Project, and (f) RACE in Lebanon Project. 5. The Second Education Development Project is providing support that will build upon ESPISP II’s results in increasing governance and managerial capacity in the MEHE and improving the environment for learning in general education. 6. The Social Promotion and Protection Project, approved on May 17, 2013, was designed to increase access to social development services, improve the coverage and targeting of the NPTP (established under ESPISP II), and strengthen the capacity of MOSA. The funding for this project was cancelled, however, as the GOL was unable to secure approval to sign the loan by the August 2015 deadline. The funding for the NPTP, both for strengthening the program’s administration and providing social assistance that had been allocated under this project, which was then urgently needed to address the large and growing influx of Syrian refugees into Lebanon, was fast-tracked and financed from grant resources under the Emergency National Poverty Targeting Project, approved in June 2014. Additional financing for this project in the amount of US$10 million was approved on June 30, 2016. 7. The Emergency Education System Stabilization Project, approved on March 9, 2015, aims to continue to improve the learning environment in schools in response to the continued influx of Syrian refugee children. 8. The Emergency Primary Healthcare Restoration Project, approved on March 19, 2015, subsidizes a package of essential healthcare services for poor Lebanese identified by the NPTP. It will also contribute to strengthening government systems and lay the foundation to launch a number of initiatives recommended by the National Health Strategy, namely, providing primary and ambulatory care coverage to the uninsured and poor. 9. Finally, the RACE in Lebanon Project, approved on September 27, 2016, aims to promote equitable access to education services, enhance quality of student learning, and strengthen the education systems in Lebanon’s education sector to the protracted refugee crisis. Thus, it continues to support efforts to improve the learning environment and outcomes. As the financial instrument for this project is a Program-for-Results, its design builds upon the initial activities to develop an education sector MTEF and key performance indicators that were developed under Component 4.A of ESPISP II. 46 Annex 6. Timeline of Activities Relevant to ESPISP II During Implementation ESPISP II Key Status of Implementation of Other Key Milestones Date Milestones ESPISP II Components Approval — — 09/05/2008 Signing — — 11/05/2008 Effectiveness — — 01/27/2009 Second Education — — Development Project 11/30/2010 approved First project restructuring approved (closing date — — 09/30/2011 extension) PDO Restructuring 1st — — 02/2011 discussed Component 4 (Education) — — 07/2012 completed Second Project Restructuring approved — — 03/27/2013 (PDO, key indicators, and closing date extension) Social promotion and — — 05/17/2013 protection project approved — Component 3 (NPTP) completed — 12/2013 Third project restructuring (key indicators and closing — — 07/14/2014 date extension) Emergency National Poverty — — 06/06/2014 Targeting Project approved — Component 2 (Health) completed — 06/2014 Emergency Education System — — Stabilization Project 03/09/2015 approved Emergency Primary — — Healthcare Restoration 03/19/2015 Project approved Deadline for Signature of Social Promotion and — — 08/17/2015 Protection Project lapses and loan financing cancelled Cabinet decree for the Grant Agreement issued, permitting — — 04/18/2016 implementation of restructured Component 1 (NEW program) Additional Financing for — — Emergency National Poverty 06/30/2016 Targeting Project approved RACE in Lebanon Project — — approved 09/27/2016 The MOL requested closing date extension, but — — 10/2016 it was not approved 47 ESPISP II Key Status of Implementation of Other Key Milestones Date Milestones ESPISP II Components Grant closing — — 12/31/2016 48 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR The Borrower’s ICR relates to the Fiduciary Operations Component (Component 5): Assessment of the outcomes achieved by the project against agreed objectives and against the country’s developmental objectives; The components objective which tallies with the country’s developmental objectives is to coordinate fiduciary operations for the Project and build beneficiary agencies’ capacity in procurement and financial management. The FOT provided support to the Project’s implementing agencies and according to the World Bank’s assessment “fiduciary compliance was found to be adequate and satisfactory”. Factors affecting the project including preparation, implementation, and design challenges and success factors; Originally, the Project design stated that the FOT will be composed of a Lead Coordinator, assisted by: (i) two Procurement Specialists (one to take a lead role for NSSF and MOPH, the other for MEHE and MOSA); (ii) one Financial Management Specialist; and (iii) one Project Assistant. At the implementation start, this composition was revised to include a Lead Coordinator, assisted by: (i) one Procurement Specialist responsible for the procurement activities in the four components, (ii) one Procurement assistant; (iii) one Financial Management Specialist; and (iv) one Project Assistant. A second revision took place in 2010. The procurement team composition within FOT was revised to consist of (i) one Procurement Specialist, (ii) one Procurement Officer, and (iii) one Junior Procurement Officer. This new composition was mainly due to the addition of extra tasks to the project namely the survey conducted by CAS which entailed the preparation and management of surveyors, data collection staff, team supervisors and the acquisition of goods, all this to be managed by the FOT. This new composition needed extra budget to be reallocated to component 5. In the absence of such budget, the FOT staff was put on part time contracts beginning 2012 with an interruption of services for the Project assistant. The contract of the Lead Coordinator was terminated as of June 30, 2012. Faced with the challenge of Part time contracts, the FOT staff performed their work diligently without any default leading to a Satisfactory Performance of the implementing agency. Assessment of the Government’s own performance; The PCM demonstrated commitment to the project by hosting the FOT and facilitating its operations. Given the project complexity, it would have been very difficult to implement it successfully in the absence of the FOT and the provided support of the PCM. 49 Assessment of the World Bank’s performance; During the life cycle of the Project, The Bank was providing prompt and continuous support to the project. For FOT, the support was provided by the specialists in the Country’s office. Assessment of project sustainability beyond the implementation period; The sustainability of the project can be assessed by the beneficiaries’ agencies. However, for the FOT, its sustainability is supported and justified with the need for such unit whenever multiple beneficiaries’ agencies are involved. This kind of units is composed from long-term consultants that can be recruited on need basis. In case of a project with one agency, such agency should work on the capacity building of its own staff in the fiduciary aspects. Lessons learnt for future human development projects. As indicated before, the FOT scenario proved to be very efficient and effective in the successful implementation of a project consisting of 5 beneficiaries’ agencies. Should this design be repeated, the adoption of the FOT’s scenario is highly recommended. 50 Annex 8. List of Supporting Documents Ekman, B., F. El-Jardali, G. Hamadeh, J. Khalife, J. Makouk, N. Kronfol, N. Rafeh, and W. Ammar. 2016. Hospital Contracting Reforms: The Lebanese Ministry of Public Health Experience. The Consultation and National Research Institute. 2014. Program Evaluation for the National Poverty Targeting Program, Quantitative Report. World Bank. Multiple years. Lebanon Second Emergency Social Protection Implementation Support Project Implementation Status and Results Report, Sequence 01–12. Project number P111849. ———. Multiple years. Lebanon Second Emergency Social Protection Implementation Support Project Aide Memoires. Project number P111849. ———. 2008. Emergency Project Paper (EPP): Lebanon Second Emergency Social Protection Implementation Support Project. Project number P111849. ———. 2013. Restructuring Paper on a Proposed Project Restructuring of Lebanon Second Emergency Social Protection Implementation Support Project. Project number P111849. ———. 2014. Restructuring Paper on a Proposed Project Restructuring of Lebanon Second Emergency Social Protection Implementation Support Project. Project number P111849. 51 Annex 9. Political/Project Timeline Date Political Timeline Project Timeline November 24, 2007 President Lahoud’s term ends. Political — deadlock begins and lasts for 6 months. May 2008 Parliament elects army chief Michel — Suleiman as President. Gen. Suleiman reappoints Fouad Siniora as the Prime Minister of National Unity Government. New cabinet is formed under Siniora and governs for one year until parliamentary elections. November 5, 2008 Michel Suleiman President/Fouad Siniora Grant Agreement Prime Minister January 27, 2009 Michel Suleiman President/Fouad Siniora Effectiveness Date Prime Minister June 2009 The pro-Western March 14 alliance wins — parliamentary elections and it takes Saad Hariri around 5 months to form a government. November 2009 Saad Hariri forms a unity government — January 2011 Government collapses after Hizbollah and — allied ministers resign. It takes 6 months to form new cabinet. May 2011 Caretaker Government The MOL requests reallocation of funds from the NSSF to the MOL March 2011 Syrian conflict begins — June 2011 Najib Mikati forms new cabinet. Endorsement of the NPTP by Council of Ministers September 2011 Michel Suleiman President/Najib Mikati Government requests extension of Prime Minister Project for a period of one year from March 31, 2012, until March 31, 2013 (Level 2 restructuring) February 2012 Resignation of the Minister of Labor—Peter — Butrous July 26, 2012 Michel Suleiman President/Najib Mikati Formal request from the MOL is sent Prime Minister to the World Bank on Level 1 restructuring. March 2013 Najib Mikati Government resigns World Bank sends approval to the Government on Level 1 restructuring April 2013 Tamam Salam is tasked with forming a new Exceptional approval from Cabinet to government; it takes him almost 10 months the MOF on Level 1 restructuring to do so. February 2014 Tamam Salam forms new Government — April 2014 United Nations announces that the number The MOF requests extension of of Syrian refugees in Lebanon had project for a period of 28 months surpassed 1 million. (Level 2 restructuring) from August 31, 2014, until December 31, 2016. Component 4: Education Component fully disbursed May 2014 President Suleiman’s term ends, leaving a — power vacuum for almost two and a half years. 52 Date Political Timeline Project Timeline June 2014 No President/Tamam Salam Prime Word Bank sends approval to Minister/Caretaker Government Government on Level 2 restructuring October 2014 No President/Tamam Salam Prime Restructuring package approved by Minister/Caretaker Government Cabinet February 2015 No President/Tamam Salam Prime MOF signs Restructuring Package Minister/Caretaker Government February 2015–April No President/Tamam Salam Prime No disbursement is possible given a 2016 Minister/Caretaker Government glitch in the original Cabinet approval 6 years ago. New amendment decree needed by the Cabinet. June and December No President/Tamam Salam Prime World Bank transmits two letters 2015 Minister/Caretaker Government recommending cancelation of project due to inability to disburse funds. April 2016 No President/Tamam Salam Prime New amended decree issued Minister/Caretaker Government October 2016 Parliament elects Michel Aoun as President. Government requests fourth extension Aoun reappoints Saad Hariri as Prime to the Project. Minister. November 2016 — World Bank does not approve fourth request for project extension. December 2016 Saad Hariri forms new Cabinet 53 Annex 10. Efficacy Rating by Project Objectives Efficacy Ratings by Objectivea Rating % Objective Original Restructured Overall Improve the administration, delivery, financial sustainability, and targeting of Negligible Modest Negligible 25 Social Insurance/Strengthen the capacity of the MOL to promote youth employment Improve the administration, delivery, Substantial Substantial Substantial 25 financial sustainability, and targeting of health services/Rationalize Public Sector Health Expenditures Improve the administration, delivery, Substantial Substantial Substantial 25 financial sustainability, and targeting of social safety net services/Establish a national poverty targeting system for social safety net programs Improve the administration, delivery, Substantial Substantial Substantial 25 financial sustainability, and targeting of public education services/Increase availability of Education data for decision making in the MEHE Project Efficacy Rating Substantial Substantial Substantial — Note: Original: (0.25 x 1) + (0.25 x 3) + (0.25 x 3) + (0.25 x 3) = 2.5 = S (rounded up); Restructured: (0.25 x 2) + (0.25 x 3) + (0.25 x 3) + (0.25 x 3) = 2.75 = S (rounded up); a. Overall efficacy rating was derived following a project cost weighted rating by objective and the four-point scale for high, substantial, modest, and negligible ratings. 54 Annex 11. Country Map 55