Document of The World Bank FOR OFFICIAL USE ONLY Report No. 110546-AR INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL FINANCE CORPORATION AND MULTILATERAL INVESTMENT GUARANTEE AGENCY PERFORMANCE AND LEARNING REVIEW OF THE COUNTRY PARTNERSHIP STRATEGY FOR THE ARGENTINE REPUBLIC FOR THE PERIOD FY15-FY18 January 13, 2017 Argentina, Paraguay, and Uruguay Country Management Unit Latin America and Caribbean Region The International Finance Corporation Latin America and Caribbean Department Multilateral Investment Guarantee Agency This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank Group authorization. The date of the last Country Partnership Strategy was August 7, 2014 FISCAL YEAR January 1 – December 31 CURRENCY EQUIVALENTS (Exchange Rate Effective December 30, 2016) Currency Unit = Argentine Peso (ARS) ARS 1.00 = USD 0.06 USD 1.00 = ARS 15.89 ABBREVIATIONS AND ACRONYMS ANSES Social Security Agency (Agencia Nacional de Seguridad Social) ASA Advisory Services and Analytics AF Additional Financing AR Argentina AUH Universal Child Allowance (Asignación Universal por Hijo) National Commission for Defense of Competition (Comisión Nacional de Defensa para la CNDC Competencia) COP Conference of the Parties of the UN Framework Convention on Climate Change CPF Country Partnership Framework CPS Country Partnership Strategy EPH Household Survey (Encuesta Permanente de Hogares) FY Fiscal Year G20 Group of Twenty GDP Gross Domestic Product IBRD International Bank for Reconstruction and Development ICSID International Centre for the Settlement of Investment Disputes IFC International Finance Corporation IMF International Monetary Fund INDEC National Statistics Institute (Instituto Nacional de Estadísticas y Censo) IP Implementation Progress IPF Investment Project Financing MDES Multi-Dimensional Economic Survey MIGA Multilateral Investment Guarantee Agency OECD Organization for Economic Cooperation and Development PA Programmatic Approach PDO Project Development Objective PIU Project Implementation Unit PLR Performance and Learning Review PPP Public-Private Partnership PROSAP Provincial Agricultural Development Project ii SAI Supreme Audit Institutions SCD Systematic Country Diagnostic SME Small and Medium Enterprise SORT Systematic Operation Risk-Rating Tool TA Technical Assistance VAT Value Added Tax WBG World Bank Group WTO World Trade Organization IBRD IFC MIGA Vice President: Jorge Familiar Dimitris Tsitsiragos Keiko Honda Director: Jesko S. Hentschel Irene Arias Merli Margaret Baroudi Task Team Leader: Renato Nardello Frank Sader Gianfilippo Carboni iii ARGENTINA PERFORMANCE AND LEARNING REVIEW OF THE COUNTRY PARTNERSHIP STRATEGY Table of Contents I.  INTRODUCTION................................................................................................. 1  II.  MAIN CHANGES IN COUNTRY CONTEXT ................................................. 2  RECENT POLITICAL DEVELOPMENTS AND OUTLOOK............................. 2  CHANGES TO POVERTY REDUCTION AND SHARED PROSPERITY. ....... 5  RECENT REFORMS AND KEY MACROECONOMIC DEVELOPMENTS..... 7  III.  SUMMARY OF WBG PROGRAM IMPLEMENTATION........................... 10  SUMMARY OF PROGRESS............................................................................... 10  PORTFOLIO OVERVIEW .................................................................................. 12  IV.  EMERGING LESSONS ..................................................................................... 13  V.  ADJUSTMENTS TO THE CPS AND FUTURE ENGAGEMENT............... 14  VI.  RISKS TO CPF PROGRAM ............................................................................. 17  Annex 1. Updated CPS Results Matrix............................................................................. 19  Annex 2. Matrix of Changes to Original CPS Results Matrix.......................................... 24  Annex 3. Matrix summarizing Progress towards CPS Results ......................................... 30  Annex 4. Monitoring and Evaluation (M&E) of the CPS FY14-18 Results Framework . 39  Annex 5. Argentina Portfolio (as of December 30, 2016) ................................................ 45  Annex 6. Statistics ............................................................................................................ 49  Annex 7. Gender Equality and Changes in Argentina ...................................................... 51  Annex 8: Selected Analytical and Advisory Services ...................................................... 55  iv Acknowledgements This PLR was prepared by a Task Team lead by Renato Nardello (Country Operations Adviser, LCC7C, TTL), Frank Sader (Principal Strategy Officer, CBCCF, co-TTL), and Gianfilippo Carboni (Risk Management Officer, MIGEC, co-TTL), under the overall guidance of Jesko Hentschel (Country Director, LCC7C) and David Tinel (Country Manager, CLAAR). The Task Team comprises a dedicated group of WBG staff, including: Andrea Coppola (Acting Program Leader, LCC7C), Anibal Lopez (Senior Country Officer, LCC7C), Carla Pantanali (Operations Analyst, LCC7C), Carole Megevand (Program Leader, LCC7C), Eugenia Marinova (Senior Country Officer, LCC7A), Felipe Saez (Consultant, LCC7C), Fernando Giuliano (Economist, GMF04), Jennifer Marie Arias (Operations Analyst, CLAAR), Julian Folgar (Consultant, LCC7C), Maria Ana Lugo (Senior Economist, GPV04), Maria Emilia Sparks (Program Assistant, LCC7C), Rafael Rofman (Program Leader, LCC7C), and Zafer Mustafaoglu (Practice Manager, GFM04). The team would like to thank the peer reviewers Carter Brandon (Lead Economist, GENDR), and David Rosenblatt (Economic Advisor, DECOS). v I. INTRODUCTION 1. This Performance and Learning Review (PLR) summarizes progress in the implementation of the World Bank Group (WBG) Country Partnership Strategy (CPS) for the Argentine Republic for the period FY15-FY18 (Report No. 81361-AR), discussed by the WBG Executive Directors on September 9, 2014. The CPS is built upon nine WBG result areas set within three broad pillars: (a) employment creation in firms and farms; (b) availability of assets for people and households; and (c) reduction of environmental risks and safeguarding natural resources. 2. After a three-year lending hiatus (FY12-FY14), the CPS defined a new framework for WBG’s assistance focused on financing activities that directly support the most vulnerable at the household level and meet wide consensus across the political spectrum. The CPS result areas, selected for their relevance in achieving the WBG twin goals of poverty reduction and shared prosperity, responded to expressed demands from our counterparts at the federal, provincial, and firm level, as well as in sectors and areas with a favorable policy environment for sustained impact. Political consensus on the CPS program was considered critical on the eve of an electoral year that could bring about changes in the country´s policy orientation. The IFC focused its immediate support on meeting the most pressing financing needs of existing portfolio clients and on export-oriented industries (agribusiness and oil & gas). 3. The elections in late 2015 resulted in a major shift in the country’s policy orientation and, for the WBG, in a substantial broadening of the policy dialogue and a gradual shift in program activities. The new Administration has reoriented policy priorities towards unlocking long-term productivity growth in tandem with a strong focus on poverty alleviation and improved governance. For the IBRD, this has implied a substantial expansion of the analytical and technical assistance work, particularly in the areas of private sector led growth, trade and competitiveness and financial sector reform. It has also generated new financing opportunities. The new Administration´s emphasis on a territorial approach to poverty reduction has led to new operations in urban slum upgrading and in social infrastructure and services in the northern provinces and in areas with high prevalence of poverty. It has also implied increased support to private investment, including support for SMEs and in renewable energy. For IFC, it has led to a proactive collaboration with the Government to catalyze private sector investments, in parallel with substantial direct new investments into private sector-led projects and businesses. The shifting focus and demand from Argentina to boost private investment has also implied a significant increase in joint IFC/IBRD provision of just-in-time technical advice. Likewise, after a fifteen-year hiatus, MIGA has reinitiated its dialogue with the Administration and is ready to support Argentina, beginning with short-tenure guarantees. 4. The current CPS remains a valid instrument for framing the collaboration between Argentina and the WBG. The choice of strategic themes of the CPS has proved instrumental in engaging with the new Administration, allowing the WBG to respond effectively to the changes in policy outlook and priorities. Within the context of a more complex global environment and the current transition in Argentina, this PLR provides the opportunity to revisit the CPS program priorities and reflects discussions between the new Administration and the WBG in a portfolio review and programming exercise conducted in October 2016. During the remainder of the CPS period, the WBG will start the preparation of a Systematic Country Diagnostic as the basis for a Country Partnership Framework for the period starting in FY19. 1 II. MAIN CHANGES IN COUNTRY CONTEXT RECENT POLITICAL DEVELOPMENTS AND OUTLOOK 5. Mauricio Macri´s inauguration as the President of Argentina for a four-year term starting in December 2015 has marked a major change in the Argentine political landscape. The current administration is seeking to introduce market-oriented policies in tandem with a strong focus on poverty alleviation and improved governance. The new Administration moved expeditiously to implement core reforms to address key economic imbalances with the objective of creating an environment conducive to economic growth and renewed investment. The new Administration is also actively pursuing a closer integration with international political and financial institutions and fostering transparency of government affairs. While progress in all these fronts is visible, a significant agenda remains going forward. 6. With a minority in Congress, the new Administration needs to build consensus with a fragmented opposition to obtain passage of critical economic reforms and at the same time maintain the population’s support. During the first year in office, the Administration has been able to pass 70 laws while maintaining good approval ratings and keeping the Index on Government Confidence1 at its maximum levels since 2011. However, the future political situation is expected to evolve in close correlation with the economy: the level of economic recovery and inflation control delivered by the Administration is expected to have a significant impact on the outcome of key mid-term parliamentary elections in October 2017. 7. The new Administration´s medium term strategic framework focuses on four critical priorities: poverty eradication, economic reforms to boost longer-term productivity growth, improved governance, and global integration.2 a. Poverty Eradication. The new Administration has made poverty eradication a central focus of its policy priorities. Poverty Zero, the Administration´s poverty eradication program, is focused on the following key areas: (i) achieving universal social protection for children, youth and the elderly, (ii) ensuring universal access and improved quality to basic education, (iii) fostering employment growth and reducing job informality, and (iv) improving access to housing for the vulnerable through low income housing finance and slum upgrading. Poverty Zero is complemented by Plan Belgrano, a program focused on developing social infrastructure and services for the vulnerable in Argentina´s northern provinces that present the highest levels of poverty concentration. b. Economic Reforms to Boost longer-term productivity growth. Beyond the initial efforts aimed at reducing macroeconomic imbalances, the Government has embarked on a medium-term economic reform agenda driven by productivity increases and private sector investment as the engines of sustainable growth (see Box 1). To this end, it is planning and implementing policies designed to lure private investments, enhance competition, revamp international trade, and foster innovation. This agenda includes deep structural reforms to open the economy to international competition, promotion of public-private partnerships (PPP) investment for much needed infrastructure projects, introduction of reforms to domestic capital markets to enable the long-term financing of businesses and households, reducing the costs of doing business, and improving the authorities legal and organizational 1 Since 2002, the index has been calculated by the Torcuato Di Tella University, based on a monthly survey, to measure the public perception of the national government´s performance. 2 The Government has recently established eight priority objectives: Macroeconomic stability, National Productivity, Infrastructure Development, Fight to drug trafficking and improved security, Sustainable Human Development, Smart World Integration, State Modernization, and Institutional Strengthening. 2 capacity to sanction anti-competitive behavior. Box 1: Argentina’s Structural Reforms and Major Policy Initiatives, 2016  The  Government  embarked  rapidly  on  an  ambitious  structural  reform  agenda.  While  several  significant  ones  are  still  outstanding,  many  others  have  been  completed  or  are  underway.  Below,  a  list  of  the  most  important  structural  reforms  implemented.   Foreign exchange controls lifted, exchange rate unified (December 2015). Exporters and importers, as well as the public,  are now able to buy foreign currency freely at a single exchange rate without requiring an authorization from the Federal  Tax Agency;   Holdout  lawsuits  settled  and  access  to  international  credit  markets  regained  (April  2016).  After  a  long  legal  battle,  Argentina settled the lawsuits initiated with holdout creditors, which allowed the country to access international credit  markets  after  15  years.  This  has  allowed  Argentina  to  postpone  fiscal  consolidation  in  a  year  of  economic  contraction,  and to gradually reduce the Treasury’s dependence on the Central Bank to finance the fiscal deficit.   Credibility of statistics reestablished. The Government declared a “statistical emergency” in December 2015 and INDEC  was allowed to temporarily suspend the publication of statistics until the existing methodologies were revised. One year  later,  INDEC  has  resumed  publishing  inflation,  balance  of  payment,  poverty,  employment  and  new  GDP  figures.  In  November 2016, the IMF lifted its censure over Argentine official statistics.    Inflation targeting regime adopted by the Central Bank. In September, the Central Bank moved to an inflation targeting  regime, and announced a target range of 12‐17 percent in 2017, 8‐12 percent in 2018 and 5 percent in 2019. The Central  Bank achieved its target to reduce monthly inflation to 1.5 % in the last quarter of 2016.    Reduction of export taxes. Export taxes on agricultural goods including beef, wheat and corn were eliminated while the  tax  on  soybeans  was  reduced  by  5  percentage  points  (now  at  30  percent)  in  December  2015.  The  administration  also  lifted export taxes on almost all industrial manufacturing exports, including autos, textiles, and chemicals;   Energy  and  transport  subsidies  reduced  while  social  tariff  for  low‐income  users  maintained.  Despite  legal  challenges  to  subsidy reduction, electricity prices increased by about 340 percent for residential users and about 600 percent for firms.  Gas  tariffs  increased  by  200  percent,  on  average.  Subway,  train  and  bus  tickets  increased  66  percent,  100  percent  and  70 percent, respectively. The new scheme included price incentives to reduce energy consumption and a social tariff for  every public service destined to low income users. Drinking water subsidies were also adjusted. The overall fiscal saving  of these measures are expected to be close to 0.7 percent of GDP.   Pension  system  adjusted.  Outstanding  debts  to  retirees  settled;  pension  benefits  adjusted;  and  new  universal  old  age  pension  introduced  (replacing  the  current  moratorium  scheme)  for  citizens  65  years  or  older  not  qualifying  for  a  contributory pension. Overall, the fiscal impact of the reform could reach 1.4% of GDP in additional expenditures, starting  in  2017.  The  reform,  will  be  financed  with  resources  from  the  “Fondo  de  Garantía  de  Sostenibilidad”  (administered  by  the Social Security Agency, ANSES) and the resources collected through the tax amnesty.    Core transparency measures taken. An Access to Public Information Law was passed in September 2016 that also creates  an  autonomous  Public  Information  Access  Agency.  President  Macri  also  signed  a  decree  that  makes  the  disclosure  of  information  on  assets  owned  by  public  officials  mandatory  (and  now  easily  accessible  online).  To  strengthen  the  fight  against corruption, Congress passed a law that reduces prison sentences related to corruption charges, in exchange for  valuable information on higher‐level agents. Moreover, a bill was sent to Congress holding businesses and organizations  criminally liable on corruption‐related cases. A bill on transparency of public works that incorporates best procurement  practices is in the making.    Competition authority empowered. The new Administration empowered the Competition Authority (Comisión Nacional  de Defensa para la Competencia ‐CNDC), and sponsored a law to prevent and punish anti‐competitive behavior. CNDC is  conducting studies on several sensitive sectors that are suspected of anti‐competitive practices, and has sued the main  player in the credit card sector for abuse of its dominant position in the market.   Public  Private  Partnership  Law  enacted.  In  November  2016,  Congress  passed  a  landmark  Law  on  Public  Private  Partnerships which is geared to significantly increase private financing of, especially, infrastructure projects. 3 c. Governance reforms. The Administration is actively promoting measures to enhance public transparency and accountability. A transparency law that eases access to public information and creates an autonomous Public Information Access Agency was approved in September 2016 and information on public officials’ assets is now easily accessible online. A law that reduces prison sentences related to corruption charges in exchange for valuable information on higher-level agents was approved in October 2016. The Government is drafting a bill on transparency of public works that incorporates best procurement practices and a new guideline on transparency in public procurement has been issued. d. Global Integration. The new Administration has taken decisive actions to normalize its international relations by, inter alia, resolving the stand-off with holdouts creditors, regularizing relations with the IMF, by restoring the credibility of public statistics and bringing import regulations in line with WTO procedures. It is also moving forward with a proactive agenda to contribute to the global dialogue and promote Global Public Goods, including by engaging in trade talks on various fronts, playing an active role in the G20, establishing the eradication of extreme poverty as a key domestic priority, and being among the first countries to ratify the 2015 Paris Agreement on Climate Change. Argentina will preside the G20 in 2018 and it is actively pursuing accession to the OECD (see Box 2). Box 2: Argentina’s Renewed International Orientation    Settling  outstanding  negotiation  with  holdout  creditors.  A  landmark  deal  was  reached  in  April  2016  enabling  the  country  to  make  international  payments  servicing  its  debt  and  move  out  of  selective  default  status.  For  the  first  time  in  15  years,  Argentina returned to international capital markets in 2016 with the biggest sovereign bond issuance in its history ($16.5bn)  to close the deal with the holdouts.   Bringing  import  licenses  in  line  with  WTO  procedures.  These  actions  resolved  the  dispute  that  led  to  a  judgment  against  Argentina in January 2015 for imposing undue import restrictions. The new Administration has replaced the import licensing  system by a simpler import monitoring system.  Normalizing  relations  with  the  IMF.  Article  IV  consultations  resumed  after  ten  years.  An  IMF  team  visited  Argentina  in  September  2016  to  evaluate  the  revision  of  Argentina’s  inflation  and  national  accounts  statistics.  The  IMF  praised  the  authorities’  “extraordinary  effort  and  important  progress  in  strengthening  the  accuracy  of  Argentina’s  statistics”  and  on  November 8, 2016, lifted the censure, declared in 2013, regarding the poor quality of Argentina´s public statistics.  Re‐opening  trade  talks  on  several  fronts.  As  member  of  Mercosur,  Argentina  has  opened  negotiations  with  the  European  Union  on  a  trade  agreement  and  a  portion  of  a  general  Association  Agreement  on  trade,  cooperation,  and  procurement.  Argentina was also welcomed as an observer at the Pacific Alliance, indicating its intention to strengthen trade and integration  with the Alliance. Finally, Argentina was considered instrumental in the agreement reached on agricultural export subsidies  at a WTO Conference in December 2015.    Ratifying  the  2015  Paris  Agreement  on  climate  change  and  improving  its  contributions  under  COP22.  Argentina  ratified  the  21st Conference of the Parties (CoP21) through a law that Congress enacted in September 2016. Argentina presented more  ambitious targets for its Nationally Determined Contributions during the CoP22 held in Marrakech in November 2016.     Assuming the presidency of the G20 in 2018. The thirteenth G20 summit in Buenos Aires would be the first‐ever G20 meeting  to be hosted in South America, following member countries’ unanimous selection of Argentina.   Embarking on OECD accession. The Administration has developed a comprehensive Action Plan to align its national systems  to  OECD  standards.  The  Action  Plan  comprises  17  areas  of  government  including  a  wide  range  of  topics  from  statistics  to  environment.     Hosting  the  next  WTO  Ministerial  Conference.  The  Conference  will  take  place  in  Buenos  Aires  in  December  2017.  The  Ministerial Conference meets every two years and is the top decision‐making body of the WTO.   4 CHANGES TO POVERTY REDUCTION AND SHARED PROSPERITY. 8. A decade of falling poverty and inequality trends started to slow down in 2012 and eventually reversed in the last four years. While the poverty rate (measured at $4.00 a day) had more than halved between 2006 and 2013 –from 24 to 10.8 percent, by the second quarter of 2016 13.2 percent of Argentines were poor. Similarly, extreme poverty (measured at $2.50 a day) had fallen to 4.4 percent in 2013 but then reached 5.1 percent of the total population in 2016. Income inequality, which had fallen from a high level of 0.48 of the Gini coefficient to 0.42 by 2012, also increased, albeit mildly, and now stands at 0.43. These recent trends are the result of a decline in real income of the bottom forty percent of the population (and to a larger extent than for the rest of the population). Until 2012, incomes of the bottom forty percent grew twice as fast as for the population as a whole. After having suspended poverty measurement in 2014, Argentina’s National Statistics Office (INDEC) resumed measuring and publishing poverty data in September 2016 (see Box 3). According to the new national poverty line, 32.2 percent of Argentina’s population lives in poverty today.3 Figure 1: Poverty and Shared Prosperity (a) Evolution of poverty and inequality in urban (b) Shared prosperity in Argentina since 2006 Argentina (second quarter) Extreme poor ($2.5 a day) Poor ($4.0 a day) Gini 12 Overall population 35 0.50 10 Bottom 40 0.48 0.48 30 Annualized growth rate (%) 0.46 8 25 23.9 0.44 0.43 0.42 6 0.42 20 Poverty rate (%) Gini coefficient 0.40 4 15 13.0 13.2 12.7 0.38 2 10 0.36 5.5 5.1 0.34 0 5 0.32 (2) 0 0.30 2006-2008 2008-2012 2012-2016 2006 2008 2010 2012 2014 2016** Source: SEDLAC (CEDLAS and the World Bank), based on second quarter EPH – 31 urban agglomerates. Note: estimates for 2016 are based on preliminary harmonization exercises. 9. Employment outcomes, previously the drivers of poverty reduction, are no longer the engine of household income growth. The poverty increase experienced between 2012/13 and 2016 has been the result of both labor earnings and employment opportunities shrinking for vulnerable households. Labor incomes alone, in the absence of non-labor and other incomes, would have led to a poverty rate in 2016 more than one point higher than observed. This is in sharp contrast with the 2004-2012 period in which labor incomes (primarily, earnings) accounted for nearly 71 percent of the fall in poverty, while non-labor incomes played a smaller, though increasing role in poverty reduction. 3 Both national and international poverty estimates rely on the same household survey (Encuesta Permanente de Hogares, EPH). However, the international poverty rates use a harmonized version of the survey to allow for comparability with other countries in Latin America and the Caribbean. Therefore, both the thresholds (poverty lines) as well as the household income aggregate used to compute poverty rates differ from the national estimates. See Annex 5 for a detailed description. 5 Box 3: Reestablishing Credibility in Statistics    Government  interference  with  INDEC’s  autonomy  dates  back  to  2007,  starting  with  the  removal  of  the  Director  of  Price  Statistics  and  her  replacement  by  a  political  appointee.  The  until  then  highly  reputable  public  statistics  agency  was  since  subject to a gradual erosion of its professional capacity and credibility, culminating with the International Monetary Fund  (IMF)  issuing  a  rare  motion  of  censure  to  Argentina  in  2013  for  the  poor  quality  of  the  country’s  official  statistics.  The  process of readjusting price and GDP data had started in 2014 with IMF technical support. The new Administration declared  a  “statistical  emergency”  at  the end  of  2015,  whereby  INDEC  was  allowed  to  temporarily  suspend  the  publication  of  core  statistics pending revision of the existing methodologies. In March 2016, the revised external accounts for the period 2009‐ 2015 were issued showing lower trade surpluses than previously published by INDEC. Inflation and revised national income  accounts were released in June 2016. According to the new figures, the real GDP (in 2004 prices) was 23 percent lower in  2014 compared to the previous series. INDEC also published an unemployment rate of 9.3 percent for the first semester of  2016,  revealing a  challenging  labor  market  situation  that  was  not  reflected  in  prior  official  figures.  Finally,  poverty  figures  published in September 2016 showed a marked difference with the official figures prevailing in 2014. The IMF praised the  Government’s efforts to strengthen its statistics and lifted its Censure on Argentina on November 8, 2016.   10. Employment growth has been stagnating since 2012, particularly for wage employees in large firms. Until 2012, most of the new job opportunities came from the higher-paying large private firms. Employment in this sector grew 20 percent between 2006 and 2011, compared to less than 10 percent in smaller firms and negligible growth in the public sector (see Figure 2(a)). Since 2012, however, employment and wage growth outside the public sector have weakened: private employment has virtually stagnated and real earnings have declined 10 percent for all types of employment and for both skilled and unskilled workers (see Figure 2(b)). Administrative data for formal employment show a similar pattern: of the almost 1 million formal jobs added between August 2012 and August 2016, 50 percent came from public employment and only 17 percent from new net private wage employees. Figure 2: Employment and Earnings (a) Employment Growth, by type of employment (b) Earnings Growth, by type of employment (base = 2006) (base = 2006, average monthly) Wage (Large firm) Wage (Small firm) Wage (Large firm) Wage (Small firm) Public sector Self-employment Public sector Self-employment 125 Grwoth montly labor income (2006 = 100) 150 120 140 115 Growth index (2006 = 100) 130 110 105 120 100 110 95 100 90 90 2006 2008 2010 2012 2014 2016 2006 2008 2010 2012 2014 2016 Source: SEDLAC (CEDLAS and the World Bank), based on EPH, 2006-16 second quarters. Figures are based on main employment for individuals between the ages of 16 and 65. Note that employers and unpaid workers (accounting for 5 percent of employment) are not reported in the figures above. Earnings for 2016 based on preliminary harmonization and 2015 to be added. 11. Non-labor income (including pensions and private and public transfers), became more relevant for household’s welfare since the end of the 2000s and continues to play an important protection against the fall in labor incomes. With the expansion of the flagship conditional cash transfer program Asignación Universal por Hijo (AUH) and the moratoria of pensioners, public transfers became 6 an increasing factor behind poverty reduction. In 2016, 15 percent of households receive a direct government transfer such as the AUH, unemployment benefit or scholarship. RECENT REFORMS AND KEY MACROECONOMIC DEVELOPMENTS. 12. The first year of the CPS was an electoral year and saw an exacerbation of already significant macroeconomic imbalances. Expansionary fiscal policies helped to support consumption, bringing the fiscal deficit to record levels in 2015. According to private estimates, inflation hovered around 25-30 percent, twice the official figure. In addition, there was a significant amount of repressed inflation in the form of an artificially overvalued Argentine peso and very low prices for public utility services. With inflation running high, the Argentine peso kept appreciating in real terms, decreasing the competitiveness of exports. Growing discretionary regulations and record-high fiscal pressure were also viewed by firms as major obstacles and exports lost dynamism. Despite capital controls, international reserves at the Central Bank continued to fall, raising vulnerability questions. Low prices for public utility services were sustained with large energy and transport subsidies, which accounted for a large part of the fiscal deficit and led to under-investment (see Figure 3). With its holdout creditors demanding to pay the country’s defaulted obligations in full and de facto blocking its access to international capital markets, Argentina relied increasingly on Central Bank advances to finance expenditures. Figure 3: Exports & Investments, Fiscal Deficit & Subsidies Exports and Investment Dynamics, Fiscal Deficit and Economic Subsidies, as % of GDP as % of GDP 26% 6% 5% 24% 4% 22% 3% 20% 2% 18% 1% 15.6% 0% 16% ‐1% 14% ‐2% 12% ‐3% 11.1% 10% ‐4% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Investment Exports Primary Fiscal Deficit Economic Subsidies Source: WBG based on Central Bank of the Argentine Republic. 13. The new Administration unified the exchange rate, removed capital and currency controls, and regained access to international credit markets. The black market exchange rate premium of about 50 percent became negligible in a matter of days and firms and individuals can now buy foreign currency freely at market-determined rates without the need for any authorization. The Government also moved from a system of discretionary to automatically provided import licenses in line with WTO procedures, and eliminated or reduced export taxes for major crops, beef, and manufacturing exports. In March 2016, after 15 years, the Administration resolved the dispute with the debt holdouts, allowing Argentina to restore access to international capital markets with the largest issuance ever for an emerging country ($16.5bn). The resolution of the dispute with holdouts and the ongoing macroeconomic reforms also led to a rapid decline of Argentina’s borrowing premium and a normalization of its yield curve (see Figure 4). 7 Figure 4: Sovereign Yields, Debt Issuance ARG sovereign yields curve, Argentina: New debt issuance, USD bonds US$ bn. 9 40 US$ bn. 8 32.412 35 7 30 4.3  Private Sector 6 25 6.1  5 YTM % Provinces 4 20 3 15 Federal Government 2 10 22.1  Dec‐15 1 5 Today 0 0 0 5 10 15 20 25 30 35 2016 Years Source: WBG based on Ministry of Treasury and Public Finance 14. Despite legal challenges, electricity, gas and transport tariffs were increased. The Government implemented tariff increases that were challenged in the court system. In particular, the Supreme Court suspended gas tariff hikes arguing that the Government had not conducted mandatory public hearings. Following the Court’s ruling, the Government conducted public hearings and settled for a more gradual tariff increase path. In the end, gas tariffs increased on average 200 percent. Electricity prices increased, from very low levels, about 340 percent for residential users and about 600 percent for firms. The new scheme includes price incentives to reduce energy consumption and a social tariff for low-income users albeit the reach of the policy should be evaluated. Subway, train and bus tickets increased 66 percent, 100 percent, and 70 percent, respectively. Drinking water subsidies were also adjusted in some regions, such as the Buenos Aires Metropolitan Area. Overall, subsidy cuts led to important fiscal savings, estimated at close to 0.7 percent of GDP in 2016. 15. While substantial and important reforms have advanced, important challenges remain, particularly on the fiscal side. The fiscal deficit remains high, as the Administration avoided abrupt fiscal consolidation to limit the negative short-run effects of economic reforms. The primary deficits for 2014 and 2015 were 3.4 percent and 5.0 percent of GDP, respectively, the largest since 1983. In this context, the Government enacted reforms that are expected to have a marginal positive effect on the fiscal Federal Government Primary Fiscal Deficit, balance for 2016 due to a successful tax amnesty 1961/2016 as % GDP 6.0% The reestablished access to international capital 4.0% markets enables a gradual adjustment while the Government puts much emphasis on a credible 2.0% fiscal consolidation path. 0.0% ‐2.0% 16. Meeting fiscal targets and closing the ‐4.0% ‐4.8%* primary deficit over the next years will be key ‐6.0% ‐ 5.0% ‐ 6.7% to ensure fiscal sustainability and avoid a ‐8.0% negative impact on the costs of financing and ‐ 10.0% on investors’ confidence. The Administration ‐ 12.0% adopted a strategy of gradual fiscal ‐ 14.0% 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016 consolidation. According to the Budget Law, the fiscal deficit will be reduced from 4.8 percent of Source: WBG based on Ministry of Treasury and Public Finances. Figure GDP in 2016 to 4.2 percent of GDP in 2017. This for 2016: estimate from 2017 Budget Law is an ambitious target, given the expected fiscal 8 impact of the 2016 pension reform (which adjusted benefits and created an old age universal pension), the income tax reform recently passed in Congress, and the expansion of social programs to protect the most vulnerable households from the correction of macroeconomic imbalances. Fiscal savings resulting from the subsidy reduction discussed above and the tax amnesty program are key to achieve the 2016 fiscal targets but an additional consolidation effort might be needed to meet the fiscal targets for 2017. While access to capital markets provides space to make the adjustment more gradual, reducing the deficit is essential to avoid a fast growth of debt levels and ensure fiscal sustainability. 17. Argentina is currently in recession but the outlook for 2017 is positive. GDP growth for 2015 was 2.4 percent and it was supported mostly by consumption, especially public consumption. 2016 has been a year of transition. Official indicators show that economic activity contracted up to the third quarter of 2016, for domestic and external reasons. On the domestic front, the effects of the temporary spike in inflation fueled by the exchange rate depreciation and increase in energy tariffs dampened economic activity. On the external front, the protracted recession in Brazil (Argentina’s main trading partner) and weak global demand in a politically uncertain environment have limited the potential of exports as a driver of growth. Overall, real GDP is projected to have contracted in 2016 by 2.3 percent. Economic activity is projected to have hit bottom in the last quarter of 2016, and growth is expected to recover in 2017 and 2018, assuming that a stable macroeconomic framework and ongoing structural reforms will promote private consumption and investment and facilitate access to capital markets. Some external factors might affect the country’s growth path as well, including the possible appreciation of the dollar, the evolution of prices of Argentina’s commodity exports, growth prospects in key trading partners, and the risk of rising protectionism. Also, the difficult challenge of balancing competing objectives such as lower inflation and fiscal deficits with expanded social protection and other poverty eradication measures may create additional tensions in 2017 and 2018. Table 1. Argentina – Main Macroeconomic Indicators 9 III. SUMMARY OF WBG PROGRAM IMPLEMENTATION SUMMARY OF PROGRESS 18. Over the first two years of the CPS, the World Bank Group has delivered a strong and diversified program. Total IBRD approvals under the CPS amount to $2.4bn until December 31, 2016 (of which about $1.1bn was approved under the new Administration), corresponding to 10 new investment loans and 2 trust-funded projects. This is fully in line with the CPS envisaged $1.0bn to $1.2bn of IBRD investment project financing per fiscal year and brings the active portfolio to US$5.85bn at end 2016. During the same period, IFC’s committed investment portfolio has reached over $2.6bn, largely surpassing the expected CPS level of $1.7 for the full CPS period. In terms of knowledge products, the WBG presented to Government and the public a number of flagship reports and is supporting reform efforts through technical assistance in a significant number of sectors. A set of in-depth policy notes were prepared for the incoming Administration that helped to guide the policy dialogue at the very beginning of its time in office. 19. The CPS program has been making progress, with about two thirds of the objective indicators on track to be achieved and one-third experiencing delays. Of the fourteen original CPS outcomes, nine are broadly on track to be achieved within the remainder of the CPS period. Delays in implementation or approval of projects have led to delays in progress in four of the CPS outcomes and for these adjustments to CPS outcomes are being introduced. The remaining indicator (labor market insertion for young people) is no longer measured by the authorities and will be replaced (see section V: Adjustments to the CPS). A review of major achievements and highlights of the CPS program implementation, by pillar, is presented in the following paragraphs, while Annex 3 presents more details on progress towards achieving the CPS results. Pillar I: Sustaining employment creation in firms and farms. 20. To foster private investment and strengthen its enabling environment, the Bank, through an IBRD-financed project, has assisted the country to reduce by 17 percent the cost of freight transport in selected corridors in the northern provinces of Argentina and is on track to achieve the CPS target of 20 percent reduction by 2018 (Outcome 1). Given the new Administration’s focus on the private sector, this area has seen a substantial expansion of collaboration between the Government and the WBG. The IFC and the IBRD teams have jointly provided targeted advisory services to the Government, including Capital Markets Deep Dive Diagnostic, a collateral asset review and recommendations, a telecom sector diagnostic to the Ministry of Science and Technology, just-in-time advisory to the Government in reviewing the PPP Law approved by Congress in November 2016, preparation of bidding documents for the recent renewable energy auctions, and support for the Investment & Business Forum of September 2016. Following its substantial technical assistance in drafting the renewable energy auction documents that created the basis for the very successful tendering process that was launched by the Government in mid-2016, IFC is currently discussing possible debt financing with three of the winners. Civil works needed to achieve the outcome to support agglomeration economies reach low income area have suffered delays but are now on track to attain the revised goals (Outcome 3). Finally, there are no results yet regarding the increase in agricultural productivity of small- and medium-size farms in low-income regions as the evaluation of the large agricultural investment program PROSAP is ongoing. Pillar II: Asset availability of households and people. 21. Overall progress under this pillar varies. Under this pillar, the objective of achieving universal health coverage has shown considerable progress: the share of eligible people benefitting from effective health care (Outcome 8) has risen from 28 percent to 36 percent and is on track to achieve the proposed 50 percent target by 2018. On the other hand, the objective of increasing access to electricity, water and sanitation services for the bottom 40 percent of the population, supported through a series of IBRD- 10 financed infrastructure projects, has suffered from delays in the implementation of said projects. However, all outcomes (Outcome 5, Outcome 6, and Outcome 7) are on track to be achieved by 2018, including through extension of the projects’ closing dates. It is not yet possible to measure progress for the objective of improving employability of Argentina’s youth even though the prospects for increasing the completion rate of students in rural secondary schools (Outcome 9) by 2018 are good, as project implementation is on track. Pillar III: Reducing environmental risks and safeguarding natural resources. 22. A major achievement under this pillar has been in improving natural forest cover in the Chaco ecological region. The annual deforestation rate of natural forest in critical areas of Chaco, Salta and Santiago de Estero has been reduced by 75 percent (from 0.56 percent at the beginning of the CPS period to 0.15 percent) exceeding the proposed target of reducing it by 50 percent (Outcome 14). The proposed reduction of exposure to extreme flooding in Chaco, Corrientes, and Buenos Aires has not yet materialized, mostly because of implementation delays in three infrastructure projects, one of which was only recently approved. However, Outcome 11 related to flood risk protection is expected to be substantially achieved by mid-2018. Finally, reducing household exposure to environmental health hazard in the Greater Buenos Aires has seen little progress on the reduction of sewage discharge and increase in sewerage coverage (Outcomes 12 and 13) because of the important delays in the implementation of the Matanza Riachuelo Project. However, the major civil works contracts are finally under execution and form the basis of a reformulated outcome of infrastructure provision. Cross-Cutting Themes. 23. The CPS proposed a number of gradual shifts in the way, locations, and areas in which the WBG would work on a series of cross-cutting issues. Broadly, these are on track and remain valid. In terms of content, and as stipulated in the CPS, our engagement in road maintenance management programs is winding down. Additionally, IBRD has scaled up support for the employability of young people through the Second Rural Education Improvement Project and the Youth Employment Support Project, as well as the inclusion of a specific result area in the CPS results framework. The CPS also aimed at shifting the Bank program out of direct income support for the poor unless an urgent need were to arise. Given the strong recession in the country in 2016, as well as increasing poverty since 2014, IBRD postponed such phasing out through the approval of the FY16 Children and Youth Support Project, albeit for a limited period. 24. Several structural goals are on target. In terms of structural themes, the increased use of results- or output-based modalities has been a major guiding principle in the design of operations: currently 36 percent of the current commitments use these modalities, which have shown faster disbursements and accelerated achievement of results. Similarly, the portfolio of impact evaluations is increasing strongly and outside of the human development sectors to include renewable energy, forestry and communities, and urban upgrading. The new Administration has shown a keen interest in working with the WBG to develop a more strategic and programmatic approach to IEs. Also, increasing project financing to northern provinces and low-income municipalities in largest metropolitan areas is on track with more than 55 percent of FY17 new commitments expected to directly benefit northern provinces and poor municipalities in the largest metropolitan areas. 25. Stipulated governance reforms related to the implementation of the World Bank portfolio are similarly showing good progress. The proportion of WB-financed projects in Argentina audited by supreme audit institutions (SAI) increased from 73 percent in FY14 to 80 percent in FY16. Likewise, the use of concurrent audits to enhance projects fiduciary controls and verify outputs delivery doubled, increasing from four projects before the CPS to eight now. Additionally, with Bank support, the Ministry 11 of Modernization is implementing an e-procurement system throughout the national administration, replicating a model that was implemented in the City of Buenos Aires. PORTFOLIO OVERVIEW 26. The current IBRD portfolio consists of 25 projects, including 22 investment loans and 3 trust- funded grants, with total commitments of $5.85bn, of which $2.76bn remains undisbursed.4 The overall quality of the portfolio is moderately satisfactory or better and has improved significantly since the approval of the CPS. As of end-FY16, the number of problem5 projects was reduced by half and currently there are three such projects, all expected to be out of problem status by end of FY17 (one closing, two restructuring). 27. The portfolio is younger and better performing than at the beginning of the CPS. The Bank’s portfolio currently includes four overage projects,6 all expected to close by the end of FY17. With their closing and proposed approvals, the average age of the portfolio at the end of FY17 is projected to be 40 months/project, a strong reduction from the average 68 months/project at the start of the CPS period. The disbursement ratio has improved since FY12, reaching a high of 29.8 percent in FY15, while declining to 20.4 in FY16, affected by the political transition of end 2015. However, FY17 shows signs of a strong recovery, with a disbursement ratio of 17.8 percent for the period from July to December 2016. 28. Country portfolio reviews conducted by the Administration and the Bank have enabled a consensus on the actions to improve portfolio performance. The new Administration indicated the overall alignment of the portfolio with their objectives and priorities and their strong interest in accelerating the pace of both approval and implementation of projects. Strong improvements have been achieved in reducing preparation time and effectiveness delays. The effectiveness lag has been reduced by approximately 30 percent during 2016 (from an average 6.4 months to 4.5 months) while the average time between concept and approval is projected to be 6.7 months at the end of FY17, strongly reduced from 10.4 months in FY11 (the last year of project approvals before the CPS). 29. Analytical and advisory services have seen a major expansion under the CPS. Five major analytical pieces were delivered during the first part of the CPS period: Argentina Policy Notes; Country Environmental Assessment; Agriculture Sector Review; Urbanization Review; and Logistics Review. This body of analytical work has provided a strong foundation in our dialogue with the new Administration and as proven instrumental in defining the strategic focus of the Bank’s support and in the design of proposed operations. Over the year, the Bank and IFC have teamed up to provide the Administration targeted advisory services in a number of areas, including capital markets diagnostic, collateral asset analysis, a review of the new PPP proposed legislation, and a telecom sector diagnostic for the Ministry of Science and Technology. Major new analytical, knowledge and advisory services have commenced (see section V). 30. IFC’s Portfolio has expanded strongly over the last two years. Since its re-engagement with Argentina under the CPS, the IFC has significantly ramped up its private sector support. As of November 2016, IFC committed investment portfolio has reached over $2.6bn (including $734m in short-term trade finance) from a level of about $500m just before the start of the current CPS. In terms of long-term finance, IFC committed $1.3bn from its own account, including $71m in equity investments, and mobilized another $1.3bn from third parties to benefit 39 client companies and banks. The rebound in investments reflects 4 Data as of December 30, 2016. 5 Project in problem status: rated moderately unsatisfactory or lower for the development objective (DO) and/or the implementation progress (IP) in a published implementation and status report. (for ratings, see Table 5.1, Annex 5). 6 Overage projects: with age (from approval) greater than eight years (ten years for project with additional financing). 12 IFC’s ability to create a “demonstration effect” to encourage investments in key sectors, including manufacturing and agribusiness ($880m), trade finance and financial intermediaries that support SMEs ($788m), oil and gas ($530m), and telecommunications and financial technology ($404m). Although IFC finds itself only mid-way through the CPS period, it has more than doubled its own-account commitments, compared to the previous CPS period (FY10-FY12). Today, Argentina represents approximately 1.7 percent of IFC’s global portfolio, or 8 percent of IFC’s committed portfolio for the Latin American and Caribbean region7. IFC’s re-engagement with Argentina reflects its longstanding relationship with the country. Back in FY2000 Argentina was IFC’s largest exposure globally with $1.3 billion, proportionally even more significant than today, as IFC´s commitments and global portfolio were considerably smaller at the time. 31. MIGA is re-engaging and exploring opportunities. While it does not currently have an active portfolio in the country, MIGA has reinitiated its dialogue with the Government after a fifteen-year absence and has fielded a high-level mission to Argentina in September 2016. The Agency is ready to reengage and initially plans to support the country with short tenures (until December 2019) guarantees, pending an assessment of reinsurance possibilities for longer tenures. IV. EMERGING LESSONS 32. Focusing the CPS on areas characterized by a favorable policy environment and wide consensus across the political spectrum was instrumental in overcoming the dialogue constraints that prevailed during FY12-FY14. It enabled the WBG to provide continued support in sectors where there had been significant engagement experience and productive dialogue. In the case of the Bank, it ensured continuity and new lending to support long-standing efforts in health, social protection, and rural development. In the case of IFC, it focused its immediate support on existing portfolio clients by meeting their most pressing financing needs and initiated the buildup of its portfolio by supporting large, export- oriented investments less affected by macroeconomic distortions. It has also enabled the new Administration and the WBG to broaden the scope of the initial strategic framework as the shift in policy orientation has led to a substantial improvement in the scope and quality of the dialogue, resulting in a gradual shift to support the Administration in its productivity growth and job creation priorities. 33. The WBG effort to implement an ambitious ASA agenda during the CPS paid off in our dialogue with the new Administration and has proven instrumental in refining the strategic focus of our support. By the time of the presidential elections, the WBG had already undertaken a strong set of analytical works including the Argentina Policy Notes and strategic assessments on environment, agriculture, urbanization, and logistics. This body of analytical work has provided a strong foundation for the dialogue with the new authorities at an early stage. It has also enabled the WBG to develop an even stronger program of analytical activities to support the wide variety of challenges facing the Administration as seeks to implement its medium-term strategic framework. 34. The overlap of the CPS period across two political cycles proved a valuable instrument to engage in dialogue with the new Administration immediately after the elections. The CPS provided an authorizing environment to initiate the dialogue with the new Government since its early days, allowing the WBG to show support to areas of importance for the Administration and to define and start delivering both advisory and financial support in a timely fashion. It also allowed for the IFC and IBRD teams to scale-up jointly provided assistance to support the administration’s shift to promote an enabling business climate and ability to create markets within an environment of limited budgetary resources and challenging 7 Portfolio as of October 31, 2016. 13 macroeconomic risks. In the case of the Bank, for instance, the Youth and Children Protection Project was approved by the Board less than seven months from the inauguration of the new Administration, providing timely support to a specific Government request. Likewise, the IFC provided $713m in short-term trade finance at the early stages of the Administration, thus, helping alleviate severe financing constraints faced by the private sector. At the same time, the PLR exercise one year into the new Administration’s term provides a good basis to jointly reassess the program and prepare for the coming CPF cycle. 35. The result-oriented approach in the design of operations in a broad variety of fields such as health, social protection, and education has proven an effective way of reaching vulnerable groups and ensuring faster results on the ground. In these operations, the use of flexible framework agreements between the central government and provinces has proven more efficient than subsidiary loan agreements with the provinces, where the central government on-lends Bank loan resources to the provinces. While the use of subsidiary loan agreements is a prerogative of the Borrower, in Argentina the experience has shown that, whenever feasible, the use of flexible implementation agreements reduces implementation delays and can contribute to a healthy and agile portfolio. 36. Delays in the implementation readiness of infrastructure projects have led to slower than anticipated progress in the delivery of some of the proposed CPS objectives, which calls for an enhanced agenda to address implementation challenges. The Bank´s infrastructure portfolio has shown strong variations in implementation readiness. While works under the Matanza-Riachuelo Project took almost five years to start, works under the Buenos Aires Flood Management Project are ready to commence six months after Board approval. While the former was a framework project at the time of Board approval, the latter – admittedly helped during a long preparation phase due to delays in prioritization of the operation – counts on a robust project design, systematic use of advanced procurement, and strategic use of retroactive financing. This experience has led, for instance, to structuring a new water and sanitation program for the Plan Belgrano provinces in two phases, rather than a single phase with a long startup period. Likewise, the experience shows the importance of taking into account project-specific implementation readiness and risks to development outcomes at the time of incorporating project-specific outcomes into the CPS results matrix. V. ADJUSTMENTS TO THE CPS AND FUTURE ENGAGEMENT 37. The CPS remains an effective framework for collaboration and engagement with the new Administration. All CPS areas of focus remain relevant for the engagement with the Administration and are expected to allow further strengthening of the collaboration between Argentina and the WBG. The structure of the CPS will allow the WBG to broaden both its financial support and policy dialogue in response to the shift in policy orientations introduced by the new Administration. In particular, Pillar I, originally focused in sustaining employment at the firm and farm level, will widen its focus to encompass long-term productivity growth and job creation. This will be realized through new investment lending accompanied with an ambitious and growing ASA agenda and reflected in the incorporation of new indicators under Objective 18 -Fostering Private Investment and Strengthening its Enabling Environment. Likewise, Pillar II, originally focused on direct assistance to the poor at the household level, will widen its focus to incorporate a specific urban approach towards poverty eradication, reflected in the addition of one indicator on housing. Additionally, the strong priority assigned by the new Administration to transparency and improved governance has set the stage for Bank financing of a stand-alone State Modernization and Innovation Project, going beyond the cross-portfolio approach envisaged under the CPS. Following is a detailed description of adjustments made to the CPS pillars. 8 In this PLR and for the remainder of the CPS period, we will use the new terminology used for Country Partnership Frameworks. Accordingly, the CPS “Result Areas” will become “Objectives” and the CPS “Outcomes” will become “Objective Indicators”. Detailed changes are described in Section V. 14 38. Pillar I. The WBG will support the Administration’s focus on growth and unleashing the country´s productive potential by deepening the support to foster private investment and strengthening its enabling environment. Across the WBG, this will become the main area of engagement, given the country’s needs during the current recession as well as the explicit reform goals to spur private investment and job growth, including through public-private partnerships. New projects will focus on facilitating access to longer-term credit and the expansion of online platforms and electronic processing tools to increase the productivity and the job-creation potential of Argentine SMEs. A project-based guarantee will support private investment in the generation of renewable energy as part of the Government´s ambitious agenda for the energy sector. Two investment projects will support the reforms promoted by the new Administration regarding improved public statistics and the modernization of the public administration, especially regarding improved access and accessibility of public services. The IFC expects to increasingly focus its expansion on private sector investments geared towards improving the domestic market, including stepping up its engagement in lending to SMEs. In addition, infrastructure investments, especially in the areas of renewable energy, telecommunications and transport, are expected to become another axis of growth for IFC’s investment financing. 39. Pillar II. The WBG is expanding its collaboration on poverty alleviation in line with the Administration’s territorial focus on poverty and its commitment to eradicate extreme poverty. The expansion will include a set of IBRD investment project financing supporting: (i) substantial investments in the improvement of slums and poor neighborhoods under the proposed National Neighborhood Improvement and the Urban Slum Transformation Projects; (ii) the development of a nationwide demand- driven housing financing program for low-income families; and (iii) a further expansion of the water and sanitation investments foreseen under the CPS for the Plan Belgrano provinces. The new emphasis on this Pillar is also reflected by the inclusion of a new indicator on housing. Moreover, the scope of Objective 6 (Improving employability of youth) will include increasing effective social protection for children and youth, reflected by the inclusion of an indicator to measure the increase in the number of beneficiaries of Safety Nets programs financed by the FY16 Children and Youth Protection Project. 40. Pillar III. No major changes are proposed to the three objectives of this pillar, apart from adjustment of one objective indicator. Due to delays in implementation of the Matanza-Riachuelo Project and given the time remaining under the current CPS, two revised indicators measuring physical progress of sewerage collectors and of subaquatic outfall will replace the two original outcomes (75 percent treatment of sewage discharges to the Matanza River and a 39 percent increase in sewerage coverage in the Matanza- Riachuelo Basin). 41. Advisory Services and Analytics. The broader policy dialogue established with the new Administration has translated into a substantial broadening of our analytical and advisory work program. The Government has actively sought advice on a variety of areas responding to its highest policy priorities. On the transparency agenda, the Bank will be assisting the Administration to introduce key reforms in public procurement and in improving the quality and access of public administration services to citizens and businesses. A large work program on supporting the analysis of public expenditures is under way. Further, a flagship report on the role of investment, trade and competition policies is being prepared which will provide the overall framework for the WBG engagement on private sector development in Argentina. The preparation of the report will be complemented by an IBRD-IFC advisory project on competition policy, trade and integration into global value chains, investment climate reforms, and facilitating Argentina’s engagement on the OECD agenda as well as joint key technical assistance in supporting Argentina PPP agenda (for which a new specific indicator has been included under Pillar 1). Under Pillar 2, access to asset availability by the poor, a study to improve service delivery is underway to increase access and improve the quality of water, sanitation, and electricity services for the most vulnerable populations as well continued support for the Government’s overall poverty reduction drive. Table 2 provides a summary of the several of the main knowledge activities the Bank will be undertaking in the remainder of the CPS 15 period. Annex 8 provides a list of selected advisory services and analytics undertaken or planned. 42. The IBRD pipeline for the remainder of the CPS period is strong and diversified. The overall pipeline for FY17 includes seven investment project financing (two already approved) and one project- based guarantee for a total indicative amount of $1.6bn (of which $480m as guarantee). The FY17 pipeline includes two urban development operations (one for the Province of Buenos Aires and the Metropolitan Area of Buenos Aires and one nationwide), a Bank guarantee for the renewable energy sector, a State Modernization Project, an additional financing for the Metropolitan Urban Transport Project, a project to strengthening INDEC’s capacity, an additional financing to strengthen water and sanitation services in the Plan Belgrano area, and an Integrated River Basin Management Project. Table 5.2 in Annex 5 presents more info on the FY17 pipeline and the projects’ fit with the CPS’ objectives. In general, the new operations are not expected to influence the CPS outcomes within the remainder of the CPS period. With $2.4bn lending in the first two years of the CPS, and $1.6bn (of which $480m as guarantee) expected for FY17, the total lending amount for the whole CPS period is expected to remain broadly within the financing parameters outlined in the original CPS. Table 2. Portfolio of Core Knowledge Activities for FY17-FY18 Knowledge Area Description CPS Pillars and Objective Analysis, technical assistance and policy options for (i) doing Competitiveness and Pillar I business reforms; (ii) investment climate; (iii) competition policy; Trade Program Objective 1 and (iv) gradual trade policy reforms Analysis, technical assistance and policy options for (i) capital Financial Sector Pillar I market development; (ii) financial inclusion; (iii) housing Assessment Objective 1 finance; and (iv) infrastructure finance (PPP) Public Expenditures At the subnational level (Buenos Aires Province) as well as, Pillar II Reviews focused, at national level Objective 2 Poverty and Social Technical assistance in support of (i) household survey design Pillar II Statistics and reach; (ii) development of new and reliable social statistics. Objectives 4 & 5 Analysis, technical assistance, and policy reform options Transparency and including: (i) benchmarking key governance and transparency Cross-cutting in all Anti-Corruption practices, including information access and use; (ii) assessment of pillars/objectives Program public procurement processes in three key ministries; and (iii) open contracting assessment. 43. Looking forward, a core activity for the remainder of the CPS is the preparation of a Systematic Country Diagnostic (SCD) for Argentina. During the first half of 2017, the WBG will start the Argentina Systematic Country Diagnostic (SCD) aimed at assessing the most critical constraints and opportunities the country faces toward the goals of eradicating poverty and promoting shared prosperity in a sustainable manner. 16 VI. RISKS TO CPF PROGRAM 44. The overall risk to the program proposed for the remainder of the CPS period is Moderate as assessed using the Systematic Operations Risk-Rating Tool (SORT, see Table 3 below). The risks included are those that may affect the CPF objectives or contribute to unintended adverse consequences associated with the program. Most of the major risks identified in the original CPS have considerably receded. About two-thirds of the CPS objectives show satisfactory progress while the remaining ones, mostly related to infrastructure financing, present delays that do not compromise their achievement, although belatedly. Most of the delayed objectives are expected to be on track to achieve significant milestones by the end of the CPS period. Table 3. Revised SORT: Risks to the CPS Objectives in Argentina Risk Categories Rating (H, S, M, or L)* 1. Political and governance M 2. Macroeconomic S 3. Sector strategies and policies M 4. Technical design of project or program M 5. Institutional capacity for implementation and sustainability S 6. Fiduciary M 7. Environment and social M 8. Stakeholders L 9. Other: Portfolio Implementation M Overall M *(H: High; S: Substantial; M: Moderate; L: Low) 45. Macroeconomic Risk. At the time of the CPS presentation, several international credit rating agencies had just downgraded to ‘selective default’ Argentina’s credit rating on its foreign currency debt. With the new Administration’s rapid resolution of the debt situation and efforts to resolve a wide range of matters affecting the country´s credibility and international relations, effectively restoring Argentina’s access to international financial markets, those risks have receded. However, redressing the significant macroeconomic imbalances inherited from the previous administrations will require some additional time. Reducing the deficit is essential to avoid a fast growth of debt levels and ensure fiscal sustainability. While the reestablishment of international credit enables the Administration to follow the gradualist approach it has chosen towards fiscal balance, restoring growth and establishing a credible path towards fiscal sustainability constitute an important challenge along a narrow path, given the external environment and expected need to protect the most vulnerable households during the transition time. Missing those targets might have a negative impact on investor confidence, which could impact the achievement of some of the indicators of Objectives 1 of the CPs. The macroeconomic risk is rated substantial. 46. Political risks. At the time of CPS preparation, the country was engulfed in a strong political debate between different economic models. The Bank’s program focused, hence, on areas which had broad support across the political spectrum. Also, while the transition did cause some inevitable slowdown in implementation, its effects have now been fully discounted. The risk of a divisive political context has emerged since the new Government does not hold a majority in either chambers of the legislative branch and support from trade unions and other relevant social actors may prove volatile. The Administration needs to play a careful balancing act to proceed with economic reforms and at the same time maintain the population’s support. The mid-term political elections scheduled for October 2017 will be an important test for the Administration. However, their impact, if any, would be felt only at the end of the CPS period and 17 are not likely to constitute a major risk to achieving the CPS objectives. Likewise, at the decentralized level, the political cycle of 21 of the 23 provinces9 and the City of Buenos Aires coincide with the presidential mandate and is not expected to be impacted by the outcome the mid-term elections. Based on this, the political risk is rated moderate. 47. IBRD Portfolio Risks. The CPS identified possible project implementation issues related to effectiveness delays, challenges in retaining highly-skilled staff in the PIUs, and possible fiduciary and procurement issues. While the administrative transition after the elections has caused some inevitable delays, the Administration and the IBRD have strengthened their portfolio reviews and have organized implementation workshops to strengthen knowledge and capacity of the implementation teams and provide solutions to possible implementation bottlenecks. Effectiveness delays for all operations approved during the CPS have been strongly reduced with respect to previous projects, thanks to simpler design in operations, stronger engagement of central authorities, and increased joint follow-up in the framework of strengthened coordination and dialogue between the Government and the World Bank. For the operations approved under the CPS there has been a deliberate effort towards simplifying project design and increasing the results focus, even at provincial level. The risks to implementation remains mostly linked to older projects for which corrective actions are being taken. With the quality of the portfolio overall in satisfactory range and an improved relationship with the Administration on portfolio reviews, the risk to portfolio implementation is rated moderate. 48. IFC Portfolio Risks. Despite the significant volume of investments achieved thus far, the success of future IFC financing is demand-driven and depends on market conditions. In this regard, IFC notes that the outlook for Argentina should reflect cautious optimism as there remain both internal and external factors which may affect IFC’s ability to attract investments and achieve CPS objectives. The main internal challenges include the cost of doing business – related to weak competition policies, heavy burden of red tape and restrictive price controls – as well as the Macri administration’s ability to build support to deep structural reforms and control inflation, which together, impact investor confidence. The main external challenges in the remaining CPS period include the growth prospects of its northern neighbor and largest trading partner, Brazil, as well as rising protectionist trends in other important global trading partners and investors, such as the United States. Argentina’s exposure to these adverse economic shocks, in turn reduce IFC’s reach in direct employment generation and earnings opportunities. Here, the Bank will complement the IFC’s mobilization efforts with knowledge products and continued work with the government on deeper reform strategies in order to counter these potential risks. 9 With the exception of Santiago del Estero (2016) and Corrientes (2017) 18 Annex 1. Updated CPS Results Matrix CPS Indicators Key WBG Activities PILLAR I: Unlocking long-term productivity growth and job creation Objective #1: Fostering Private Investment and Strengthening its Enabling Environment Indicator #1. Reduction in cost of freight transport in selected corridors of Financial Services Northern Argentina by 20 percent. Ongoing: Baseline 2014: average cost in selected corridors: $/tn.km 0.233 - AR$/tn.km 1.861. • Provincial Roads Infrastructure Project & AF (P070628) – FY06 & FY10 Target 2018: average cost in selected corridors: $/tn.km 0.185 - AR$/tn.km 1.476. • Norte Grande Road Infrastructure (P120198) – FY11 • Argentina Access to Finance for MSMEs (P159515) -- FY16 Indicator #2. Ratio of the average portfolio maturity of MSME sub-loans under the credit line over the average portfolio maturity of PFI’s MSME lending portfolio not Pipeline: financed by the credit line • Renewable Energy Fund Guarantee – FODER (P159901) FY17 Baseline 2016: 0 Target 2018: >1 Knowledge Services Delivered: • AR Development Policies for Growth PA (FY15) P154802 Indicator #3: At least one new public-private partnership transaction under the new PPP framework by 2018 • Financial sector policy notes (P156048) Baseline 2016: 0 Target 2018: 1 Ongoing: • Argentina Development Policies for Growth PA (P154802) • State of Transparency in Argentina (P161697) Indicator #4.: Volume of energy efficiency loans of financial institutions • Capital Markets, Infrastructure and Housing Finance Advisory (P161487) supported by IFC • Strengthening Argentina’s integration in the global economy. The role of Baseline 2016: 0 investment, trade and competition policies (P161698) Target 2018: $15m • Strengthening PPP agendas (P161168) • Argentina Public Expenditure Review - (P161695) 19 Objective #2: Supporting agglomeration economies’ reach low-income areas Indicator #5: 8 percent reduction in average transit time in the Metrobus of La Financial Services Matanza and Rosario Ongoing: Baseline 2014: La Matanza: 59.3 minute/trip; Rosario: 38.4minutes/trip • Provincial Roads Infrastructure Project & AF (P070628) – FY06 & FY10 Target 2018: Eight percent reduction from baseline • Urban Transport in Metropolitan Areas -PTUMA (P095485) – FY10 • AR Buenos Aires Infrastructure Development (P088032) –FY07- FY15 (closed) • Infrastructure financing (Global Infrastructure Facility) (GIF MU ID.0015) Pipeline: • AR: National Habitat and Housing Project (P159929) FY17 • Metropolitan Buenos Aires Urban Transformation Project (P159843) FY17 • Urban Transport in Metropolitan Areas AF -PTUMA –FY17 Knowledge Services Ongoing: • Agglomeration economies and resilience (P153198) • AR Transport Engagement Strategy (P161716) Delivered: • AR Development Policies for Growth PA (FY15) P154802 Objective #3 Raising agricultural productivity of small- and medium-size farms in low income regions 20 Indicator #6: Increase the gross value of agricultural production ($/ha) of 30,000 Financial Services small- and medium-size farms by 12 percent on average by 2018. Ongoing: • AR PROSAP2 –Provincial Agricultural Development (P106684) • Socio Economic Inclusion in Rural Areas (P106685) Knowledge Services Delivered • Programmatic Farm to Markets Study (AR, PY, and UY) (P145360) FY16 • AR Development Policies for Growth P154802 FY16 • Prospects for Agricultural Competitiveness in Argentina (P155040) – FY16 PILLAR II: Increase access and quality of social infrastructure & services for the poor Objective #4 Increasing access to electricity, safe drinking water, housing and sanitation services for the bottom 40 percent in low-income provinces and areas Indicator # 7: 365,000 people from rural areas of all provinces of Argentina Financial Services receive electricity services (out of 725,000 without in 2010); Ongoing: Baseline 2014: 0 • AR Norte Grande Water Infrastructure (P120211) – FY11 Target 2018: 365.000 (40% of which female beneficiaries) • AR Second Norte Grande Water Infrastructure (P125151) – FY11 • Public Sector Strengthening Program, La Rioja SWAP (P121836) – FY11 Indicator #8: Increased access to safe drinking water increases in Plan Belgrano • Developing Renewable Energy and Energy Efficiency Markets -PERMER provinces (P133288) Baseline 2014: 83 percent Pipeline: Target 2018: 92 percent • Water and Sanitation AF Plan Belgrano (P159928) FY17 • Argentina National Habitat and Housing Project (P159929) FY17 Indicator #9: Increased access to sanitation services in Plan Belgrano provinces Baseline 2014: 41 percent Target 2018: 55 percent Knowledge Services Indicator # 10: Implementation of pilot intervention for a nation-wide demand- Ongoing: driven housing subsidy program • Improving Service Delivery for the most vulnerable (P156133) Baseline 2016: no pilot Delivered: Target 2018: pilot implemented • AR Development Policies for Growth PA (FY15) P154802 21 Objective #5: Achieving Universal Health Coverage with focus on the poorest provinces Indicator #11: Proportion of eligible people benefiting from effective healthcare Financial Services rises. Ongoing: • Essential Public Health Functions Program, FESP (P110599) – FY11 Baseline 2014: 28 percent • Provincial Public Health Insurance Development Project, SUMAR and AF Target 2018: 50 percent (P106735 & P154431) – FY11 & FY15 • Support to the Integral Strategy for the Prevention and Control of Chronic Conditions and Injuries Project (P133193) FY15 Knowledge Services Ongoing: • Impact Evaluation of Maternal and Child Health Interventions (P095515) - FY15 Delivered:  • Argentina Aging Country Study (P133190)- FY15 • AR Health Strategy Sustainability TA (P147424) FY16 • Analysis of Fiscal and Health Expenditure Trends and Opportunities in the Province of Buenos Aires FY16 Objective #6 Improving employability of Argentina’s youth and increasing effective social protection for children and youth Indicator #12: Percentage of JMyMT [youth with more and better work] program Financial Services participants who have left the program and are employed in the formal market. Ongoing: Baseline Dec 2014: 25.2 percent. • Argentina Second Rural Education Improvement Project- PROMER(P133195) Target 2018: 27 percent. FY15 • Youth Employment Support (P133129) FY15 • Children and Youth Protection Project (P158791) FY16 Indicator #13: Increase by 500.000 in the number of children and youth covered by child allowances managed by ANSES Knowledge Services Baseline 2016: 7.897.000 Ongoing: Target 2018: 8.397.000 (or which 50% female) • Provincial Education Impact Evaluation (P147562) – FY14 • AR Development Policies for Growth PA P154802 – FY15 22 PILLAR III: Reducing Environmental Risks and Safeguarding Natural Resources Objective #7 Reducing exposure to extreme flooding in Chaco, Corrientes, and Buenos Aires Indicator #14: Flood risk protection reaches 2.3 million people in the provinces of Financial Services: Buenos Aires, Chaco and Corrientes Ongoing: Baseline 2014: 200,000 people. • AR Norte Grande Water Infrastructure (P120211) – FY11 Target 2018: 2.300.000 people • AR Second Norte Grande Water Infrastructure (P125151) – FY11 • AR Vega Flood Prevention and Drainage Project (P145686) – FY16 Pipeline: • Salado Integrated River Basin Management Support Project (P161798) FY17 Knowledge Services • Strengthening Disaster Risk Management (P156197) Objective #8 Reducing household exposure to environmental health hazards in Greater Buenos Aires Indicator #15  Linear kilometers of sewerage collectors built under the Riachuelo Financial Services System: Ongoing: Baseline 2016= 0 km • Matanza-Riachuelo Basin (MRB) Sustainable Development Adaptable Lending Target 2018= 29.7 km (87.3% of the total) Program (P105680) – FY09 • Reduction of Ozone Project, Montreal Protocol (P005920) – FY07 Indicator #16: Linear kilometers of subaquatic outfall: Knowledge Services Baseline 2016= 0 km Delivered: Target 2018= 7.5 km (62.5% of the total • Country Environmental Analysis (P147282) FY16 Objective #9 Improving natural forest cover in the Chaco Eco Region Indicator #17: Financial Services Reduction of annual deforestation rate of natural forest in critical areas of Chaco, Ongoing: Salta and Santiago de Estero (Category I or red according to the National Forest • Forests and Communities FY15 (P132846) Law 26331) • Biodiversity Conservation in Productive Forestry Landscapes (P094425) – Baseline 2011: 0.56 percent FY09 Target 2018: 0.28 percent (achieved) • Forest Carbon Partnership Facility (FCPF) Readiness Grant (P120414) Closed: • Third National Communication UNFCCC (P116974) • AR Sustainable Natural Resources Management (P100806) Knowledge Services Ongoing: • Agriculture Risk Management and El Niño (ENSO) Preparedness (P159720)   23 Annex 2. Matrix of Changes to Original CPS Results Matrix The structure of the CPS has remained unchanged. The revised results framework continues to be structured under the original 3 CPS Strategic Themes/ Pillars. The number of intermediate indicators has been reduced Original Objectives and Indicators Revised indicators Rationale for change PILLAR I: Sustaining Employment Creation in Firms and PILLAR I: Unlocking long-term productivity growth and job creation Farms Objective #1: Fostering Private Investment and Strengthening its Enabling Environment Reduction in cost of freight transport in selected corridors of Unchanged Northern Argentina by 20 percent. Baseline 2014: average cost in selected corridors: $/tn.km 0.233 - AR$/tn.km 1.861. Target 2018: average cost in selected corridors: $/tn.km 0.185 - AR$/tn.km 1.476. IFC: Increased number of direct jobs supported through IFC Dropped Indicator dropped due to marginal clients. improvement in relation to total volume of Baseline 2014: 56,000. investment. Target 2018: 61,000.   New indicator: Indicator added in the area of SMEs to Ratio of the average portfolio maturity of MSME reflect progress under new SMEs Support sub-loans under the credit line over the average Project(FY17) aimed to improve access to portfolio maturity of PFI’s MSME lending portfolio longer-term finance for micro, small and not financed by the credit line medium enterprises, through strengthening Baseline 2016: 0 BICE’s second-tier lending capacity and establishing the foundation for an improved Target 2018: >1 enabling environment for access to finance. IFC new indicator Indicator added to reflect new IFC business Volume of energy efficiency loans of financial institutions supported by IFC ($15 Million target) New indicator Indicator added to reflect continued WBG At least one public-private partnership transaction support on PPP regulatory and institutional by 2018 frameworks across several infrastructure Baseline 2014: 0 sectors Target 2018: 1 24 Original Objectives and Indicators Revised indicators Rationale for change Milestone: Implementation of risk-based supervision and Dropped This milestone/Intermediate indicator is no risk-based capital management. longer required in the remainder of the CPS period Objective #2: Supporting agglomeration economies’ Objective #2: Promoting urban development with focus on low income areas reach to low-income areas Reduction in average transit time for bottom 40 percent in 2 Reduction in average transit time in the Metrobus of The target has been reduced to adjust to metropolitan areas (Buenos Aires, Rosario). La Matanza and Rosario delays in the completion of works. Also, the area where the indicator will be measured Baseline 2014: Buenos Aires: 51.92 minutes per transit trip Baseline 2014: La Matanza: 59.35 average minutes has been corrected (La Matanza and + Rosario: 36.78 minutes per transit trip // Weighted average: per transit trip; Rosario: 38.4 average minutes per Rosario) 51 minutes. transit trip) Target 2018: 15 percent reduction from baseline Target 2018: 8% reduction from baseline Milestone: Contribute to rehabilitation and upgrading of Dropped This milestone/Intermediate indicator is no provincial roads. longer required in the remainder of the CPS period Milestone: Decline in road accident injuries. Dropped This milestone/Intermediate indicator is no longer required in the remainder of the CPS period Objective #3 Raising agricultural productivity of small- and medium-size farms in low income regions Increase the gross value of agricultural production ($/ha) of Increase the gross value of agricultural production Given delays in the implementation of the 80,000 small- and medium-size farms by 12 percent on ($/ha) of 30,000 small- and medium-size farms by 12 project and in the measuring of results, the average by 2018. percent on average by 2018. target was revised downwards. Milestone: Increased productive area resulting from Dropped This milestone/Intermediate indicator is no investments in irrigation, roads, energy, and extension longer required in the remainder of the CPS services. period. 25 Original Objectives and Indicators Revised indicators Rationale for change Milestone: Small and medium sized farms with improved Dropped This milestone/Intermediate indicator is no access to productive infrastructure and service through longer required in the remainder of the CPS demand-driven community subprojects period. PILLAR II: Asset Availability of Households and People PILLAR II: Increase access and quality of social infrastructure & services for the poor Objective #4 Increasing access to electricity, safe drinking water, and sanitation services for the bottom 40 percent in low-income provinces and areas 365,000 people receive electricity services (out of 725,000 Revised Specificity has been added to the definition without in 2010) 365,000 people from rural areas of all provinces of of the indicator. The indicator now includes Baseline (2014): 0 Argentina receive electricity services (out of gender disaggregation. Target (2018): 365.000 (40% of which female beneficiaries) 725,000 without in 2010); Baseline (2014): 0 Target (2018): 365.000 (40% of which female beneficiaries) Access in the Norte Grande provinces to safe drinking water Unchanged increases from 83 to 92 percent Baseline: 83% Target: 92% Access in the Norte Grande provinces to sanitation increases Unchanged from 41 to 55 percent. Baseline: 41% Target: 55% Milestone: Increase in number of consumers benefiting from Dropped Milestone/intermediate indicator no longer improved access to water and sanitation. required in the remainder of the CPS period Milestone Increase in number of schools, health centers, and Dropped This milestone/Intermediate indicator is no other public buildings electrified longer required in the remainder of the CPS period New indicator added: An indicator for access to housing area has Implementation of pilot intervention for a nation- been included to reflect two new Projects wide demand-driven housing subsidy program projected to be delivered in FY17. Baseline: no pilot Target 2018: pilot implemented  26 Original Objectives and Indicators Revised indicators Rationale for change Result Area #5: Achieving Universal Health Coverage with focus on the nine poorest provinces Proportion of eligible people benefiting from effective Unchanged healthcare rises. Baseline 2014: 28 percent Target 2018: 50 percent Milestone: % of provinces that have implemented a minimum Dropped This will no longer be required in the set of actions to regulate sodium consumption and tobacco remainder of the CPS period. control. Milestone Increased proportion of eligible women between 25 Dropped This milestone has been achieved (Annex 3) and 64 with at least one cervical cancer screening every two and will no longer be required in the years. remainder of the CPS period. Milestone: Subnational governments put in operation planning Dropped This milestone has been achieved (Annex 3) and monitoring instruments aimed to introduce performance in and will no longer be required in the public expenditures financing key services. remainder of the CPS period. Milestone: Planning, financial management, procurement, Dropped This milestone has been achieved and will investment, and tax collection administrative processes no longer be required in the remainder of the required to deliver outputs for the provision of health, CPS period. education, and/or water & sanitation services are improved and have an impact in the coverage and/or quality of the services. 27 Objective #6 Improving Objective #6 Improving employability of Argentina’s youth and increasing effective social employability of Argentina’s youth protection for children and youth Increase in secondary school completion rate in rural areas. Dropped This indicator is dropped. A new indicator Baseline 2010*: 61.5% *Census 2010 will be included under objective 6 to reflect Target 2018: 65.5% new engagement under Children and Youth Protection Project.   Milestone: Increase in enrollment rate into upper secondary Dropped This milestone will no longer be required school in rural areas. in the remainder of the CPS period. Relative chance of labor market insertion rate for 400,000 Replaced by: The old indicator is dropped because the young people doubles. Percentage of JMyMT program participants who Ministry no longer collects the data needed Baseline 2014: 9 percent. have left the program and are employed in the for its measuring. The indicator is replaced Target 2018: 25 percent. formal market. by the PDO of Youth Project.  Baseline Dec 2014: 25.2 percent.  Target 2018: 27 percent. Percentage of JMyMT program participants who have left the program and are employed in the formal market - Female. (Percentage - Sub-Type: Breakdown) Baseline Dec 2014: 16 percent. Target 2018: 20 percent New indicator: A new indicator related to effective social Increase by 500.000 in the number of children and protection coverage added, based on youth covered by child allowances managed by approval of Children and Youth Protection ANSES Project (FY16), not originally foreseen Baseline 2016: 7.897.000 under the CPS. Target 2018: 8.397.000 (or which 50% female)   PILLAR III: Reducing Environmental Risks and Safeguarding Natural Resources Objective #7 Reducing exposure to extreme flooding in Chaco, Corrientes, and Buenos Aires Flood risk protection reaches 2.3 million people in the three Revised Specificity has been added to the definition provinces Flood risk protection reaches 2.3 million people in of the indicator. Baseline 2014: 200,000 people. the Provinces of Buenos Aires, Corrientes and Target 2018: 2.3m people Chaco Baseline 2014: 200,000 people. 28 Milestone: Square kilometers of area protected from flooding Dropped This milestone will no longer be required in in the Northern provinces and the city of Buenos Aires. the remainder of the CPS period. #8 Reducing household exposure to environmental health hazards in Greater Buenos Aires 75 percent of sewage discharges from AySA Waste Water Dropped, replaced by: Delays in the implementation of the Treatment Plants, WWTP (Laferrere, El Jaguel, Sudoeste, Linear kilometers of sewerage collectors (Lot 1): Matanza-Riachuelo Project and new Lanus, Fiorito) to Rio Matanza-Riachuelo will be treated Baseline 2016= 0 km timeline for works led to replace the according to a regional standard on water quality. Target 2018= 29.7 km (87.3% of the total) original CPS indicators. Baseline: zero. Target: 75% Linear kilometers of subaquatic outfall: Baseline 2016= 0 km Increase in sewerage coverage from 33 percent to 72 percent Target 2018= 7.5 km (62.5% of the total)  in the Province of Buenos Aires’ 14 municipalities of the Matanza-Riachuelo Basin. Baseline: 33% Target: 72% Milestone: Linear kilometers of sewerage collectors Dropped This milestone will be used as an indicator completed. for objective 8. Milestone Linear kilometers of subaquatic outfall completed Dropped This milestone will be used as an indicator for objective 8. #9 Improving natural forest cover in the Chaco Eco Region Annual deforestation rate of natural forest in critical areas of Unchanged Chaco, Salta and Santiago de Estero (Category I or red according to the National Forest Law 26331) falls from 0.56 percent (Baseline 2011) to 0.28. (50 percent decline in deforestation in critical areas in targeted provinces) Milestone: Development of forestry and conservation Dropped This milestone has been achieved and will strategies. no longer be required in the remainder of the CPS period. Milestone: Develop a multi-sectoral policy framework for Dropped This milestone has been achieved and will reduction of emissions of carbon from deforestation and forest no longer be required in the remainder of degradation. the CPS period. Milestone: Develop an agriculture and climate change Dropped This milestone has been achieved and will information system that facilitates producers’ access to no longer be required in the remainder of climate-related data. the CPS period. 29 Annex 3. Matrix summarizing Progress towards CPS Results CPS Outcomes CPS Intermediate Progress during FY15-16: intermediate Key WBG Activities Milestones data on CPS outcomes and milestones PILLAR I: Sustaining Employment Creation in Firms and Farms Result Area #1: Fostering Private Investment and Strengthening its Enabling Environment Issues and Obstacles: OUTCOME 1: 1.1 Implementation of risk- Progress: Financial Services Reduction in cost of based supervision and risk- Outcome 1: The outcome indicator shows Ongoing: freight transport in based capital management. progress. As of December 2015, there has been a • Provincial Roads Infrastructure Project & selected corridors of reduction of 17% in the cost of freight transport AF (P070628) – FY06 & FY10 Northern Argentina by in selected corridors ($/tn.km 0.192). • Norte Grande Road Infrastructure (P120198) 20 percent. ON TRACK – FY11 Baseline 2014: average • Argentina Access to Finance for MSMEs cost in selected corridors: (P159515) (FY16) $/tn.km 0.233 - Outcome 2: Actual baseline for 2014 was 48,742. Current data for 2015 is 53,339. Moreover, female Pipeline: AR$/tn.km 1.861. • Renewable Energy Fund Guarantee – Target 2018: average employment increased from 9,504 in 2014 to 10,909 in 2015, which represents a fifth of total FODER (P159901) cost in selected corridors: direct employment supported by IFC clients. • Modernization and Innovation for Better $/tn.km 0.185 - PARTIALLY ACHIEVED. Public Services in Argentina (P157136) AR$/tn.km 1.476. Milestone Progress 1.1.: This indicator has not Knowledge Services OUTCOME 2: been tracked. Delivered: IFC: Increased number of • AR Development Policies for Growth PA direct jobs supported (FY15) P154802 through IFC clients. • Financial sector policy notes (P156048) Baseline 2014: 56,000. Ongoing: Target 2018: 61,000. • Argentina Development Policies for Growth PA (P154802) • State of Transparency in Argentina (P161697) • Capital Markets, Infrastructure and Housing Finance Advisory (P161487) 30 CPS Outcomes CPS Intermediate Progress during FY15-16: intermediate Key WBG Activities Milestones data on CPS outcomes and milestones • Strengthening Argentina’s integration in the global economy. The role of investment, trade and competition policies (P161698) • Strengthening PPP agendas (P161168) • Argentina PER (P161695) Result Area #2: Supporting agglomeration economies’ reach low-income areas OUTCOME 3: 15 2.1 Contribute to Outcome 3: Although there is no data available Financial Services percent reduction in rehabilitation and yet, the contracts for the construction of Ongoing: average transit time for upgrading of provincial segregated bus lanes in Santa Fe and Rosario • Provincial Roads Infrastructure Project & bottom 40 percent in 2 roads. (2.5km & $4.5 million) are under construction AF (P070628) – FY06 & FY10 metropolitan areas and the works for the construction of the Bus • Urban Transport in Metropolitan Areas - (Buenos Aires, Rosario). 2.2 Decline in road accident Rapid Transit (BRT) in La Matanza have started PTUMA (P095485) – FY10 injuries. and are progressing at good speed. . The • AR Buenos Aires Infrastructure Baseline 2014: Buenos completion of these works will lead to the Development (P088032) –FY07 closed Aires: 51.92 minutes per attainment of the end target. ON TRACK FY15 transit trip + Rosario: • Infrastructure financing (Global 36.78 minutes per transit Milestone Progress: Infrastructure Facility) (GIF MU ID.0015) trip // Weighted average: 2.1 The Bank contributed to rehabilitate and Pipeline: 51 minutes. maintain about 1,273 Km under a performance • AR: National Habitat and Housing Project based road-contracting methodology, which has (P159929) FY17 Target 2018: Baseline - led to more sustainable management of parts of • Metropolitan Buenos Aires Urban 15 percent the road networks in the Provinces that Transformation Project (P159843) FY17 implemented CREMA contracts. Under Specific • Urban Transport in Metropolitan Areas AF - Civil Works component, about 207 Km of roads PTUMA –FY17 have been rehabilitated and additional 30 Km have paved. The works already performed have benefited mobility of about 14,395 vehicles per Knowledge Services day and 482,000 inhabitants living on the project Ongoing: influence area. • Agglomeration economies and resilience ON TRACK (P153198) • AR Transport Engagement Strategy 2.2 There has been a reduction of 45% in the (P161716) death rate (number per 1 million vehicles/km) Delivered: along demonstration corridors (NR 2, NE 9 • AR Development Policies for Growth PA Buenos Aires- Rosario, RN 9 Rosario – (FY15) P154802 31 CPS Outcomes CPS Intermediate Progress during FY15-16: intermediate Key WBG Activities Milestones data on CPS outcomes and milestones Cordoba) in 2016 with respect to baseline 2011. Moreover, there has been a reduction of 10.94% of total non-fatal injuries with respect to baseline in selected corridors. Finally, the institutional role of the Agency is widely recognized with a strong management capacity for road safety throughout the national territory. ON TRACK #3 Raising agricultural productivity of small- and medium-size farms in low income regions OUTCOME 4: Increase 3.1 Increased productive area Outcome 4: Financial Services the gross value of resulting from investments in No results yet about the increase in the gross Ongoing: agricultural production irrigation, roads, energy, and value of agricultural production as there have • AR PROSAP2 –Provincial Agricultural ($/ha) of 80,000 small- extension services. been delays in developing the M&E system. An Development (P106684) and medium-size farms impact evaluation will be carried out in the • Socio Economic Inclusion in Rural Areas by 12 percent on average 3.2 Small and medium sized upcoming months. NOT ON TRACK (P106685) by 2018. farms with improved access Pipeline: to productive infrastructure MILESTONE PROGRESS: • Integrated Management of Agricultural and service through demand- 3.1 There has been an increase of 12% of Risks FY18 (P106684) driven community land productivity measured in completed subprojects. irrigation subprojects in the provinces of San Juan and Mendoza. Moreover, because of improved Knowledge Services infrastructure, there are 2300 additional Delivered productive hectares. PARTIALLY ACHIEVED • Programmatic Farm to Markets Study (AR, 3.2 The Project has reached 45,710 PY, and UY) (P145360) beneficiaries, of whom about 31,000 are small and • AR Development Policies for Growth PA medium-sized farms and 14,000 are rural youth (FY15) P154802 engaged in an entrepreneurship program. • Prospects for Agricultural Competitiveness ON TRACK in Argentina (P155040) 32 PILLAR II: Asset Availability of Households and People Result Area #4 Increasing access to electricity, safe drinking water, and sanitation services for the bottom 40 percent in low-income provinces and areas OUTCOME 5: 365,000 4.1 Increase in number Progress: Financial Services people receive electricity of consumers benefiting Outcome 5: There are no results yet as the Ongoing: services (out of 725,000 from improved access to project became effective in May 2016. The first • AR Norte Grande Water Infrastructure without in 2010); water and sanitation. tender process for the provision of 6500 solar (P120211) – FY11 home systems has already been launched. • AR Second Norte Grande Water OUTCOME 6: Access ON TRACK (given recent Project Infrastructure (P125151) – FY11 in the Norte Grande 4.2 Increase in number effectiveness) • Public Sector Strengthening Program, La provinces to safe of schools, health centers, Rioja SWAP (P121836) – FY11 drinking water increases and other public buildings Outcome 6: There are no direct results yet • Developing Renewable Energy and Energy from 83 to 92 percent electrified. regarding access to safe drinking water due to Efficiency Markets -PERMER (P133288) previous delays in procurement process caused Pipeline: OUTCOME 7: Access by lack of counterpart funding. However, in the Norte Grande implementation has now resumed and target are • Water and Sanitation AF Plan Belgrano provinces to sanitation expected t be achieved, even though delayed. (P159928) FY17 increases from 41 to 55 ON TRACK • Argentina National Habitat and Housing percent. Project (P159929) FY17 Outcome 7: There are no direct results yet regarding access to safe drinking water due to Knowledge Services delays in procurement process caused by lack of Ongoing: counterpart funding. These delays have now been • Improving Service Delivery for the most solved. vulnerable in 10 Poor Argentinean Provinces ON TRACK (P156133) MILESTONE PROGRESS: Delivered: 4.1 There are no results yet measuring an increase • AR Development Policies for Growth PA in the number of consumers benefitting from (FY15) P154802 improved access to water and sanitation. However, works are progressing at good pace. The construction of the water treatment plant and distribution lines for the Pampa del Indio - Presidencia Roca, Chaco and other 5 localities; the Canal 9 de Julio drainage project and the San Luis urban drainage works, both in Yerbabuena Tucumán and the construction of two water treatment plants and an aqueduct for the communities of Wichi, Nueva Pompeya, and 33 Fuerte Esperanza in the Chaco Province show progress. ON TRACK 4.2 There are no results yet as PERMER II became effective in May 2016. ON TRACK (given recent Project effectiveness). Result Area #5: Achieving Universal Health Coverage with focus on the nine poorest provinces OUTCOME 8: Proportion of 5.1 % of provinces that have Outcome 8: Proportion of eligible people benefiting Financial Services eligible people benefiting from implemented a minimum set from effective healthcare rises: 36% ON TRACK Ongoing: effective healthcare rises. of actions to regulate • Essential Public Health Functions sodium consumption and Milestones: Program, FESP (P110599) – FY11 Baseline 2014: 28 percent tobacco control 5.1 Four provinces have implemented actions to • Provincial Public Health Insurance Target 2018: 50 percent 5.2 Increased proportion of regulate sodium consumption. 21 provinces have Development Project, SUMAR and AF eligible women between 25 signed Umbrella agreements to participate in the (P106735 & P154431) – FY11 & FY15 and 64 with at least one Prevention and Control of Chronic Conditions and • Support to the Integral Strategy for the cervical cancer screening Injuries Project. ON TRACK Prevention and Control of Chronic every two years. Conditions and Injuries Project 5.3 Subnational 5.2 In the province of Misiones, there has been (P133193) FY15 governments put in increase from 10% in 2010 to 76.3% in 2015 of operation planning and women between 35 and 64 years benefiting from at Knowledge Services monitoring instruments least one PHV and/or citology test provided by the Ongoing: aimed to introduce health system, surpassing the target of 60% for 2016. • Impact Evaluation of Maternal and performance in public In the province of Tucuman, there has been also an Child Health Interventions (P095515) - expenditures financing key increase from 10% in 2010 to 55.8% in 2015, FY15 services. surpassing the target of 60% for 2016. These are the • Delivered: 5.4 Planning, financial two provinces where the pilot has taken place. • Argentina Aging Country Study management, procurement, ACHIEVED (P133190)- FY15 investment, and tax • AR Health Strategy Sustainability TA collection administrative 5.3 and 5.4. Diagnostics carried out in the (P147424) FY16 processes required to province of Chaco (P153175) and municipality of deliver outputs for the Cordoba (P146832) under the PA P147285 • Analysis of Fiscal and Health provision of health, successfully delivered service delivery chain Expenditure Trends and Opportunities education, and/or water & analysis exercises targeting the improvement of in the Province of Buenos Aires FY16 sanitation services are sector services and the performance orientation of improved and have an public expenditures. In Chaco, the analysis impact in the coverage supported the identification of the parts of the and/or quality of the population lacking access to health care services, services. pinpointed administrative areas with a major impact 34 in adolescent pregnancy treatment and hospital post- labor care, and proposed solutions in planning and budgeting, information systems, public procurement, and supply and logistics. In Cordoba, the work identified challenges in the stages of planning and public investment management and served as input for the conceptualization of a new public investment system.In La Rioja, the subnational implementation of planning and monitoring instruments to introduce performance in public expenditures financing key services is underway (P121836). Ten agencies have already prepared annual operating plans, four have prepared annual procurement plans for 2016, and an additional six have received training in procurement planning. Also, the task has contributed to strengthen the planning and procurement processes of the Provincial Water Institute ACHIEVED. Result Area #6 Improving employability of Argentina’s youth OUTCOME 9: Increase in 6.1 Increase in enrollment Outcome 9: There has been an increase in Financial Services secondary school completion rate into upper completion rate of secondary school in rural areas Ongoing: rate in rural areas. secondary school in (63.3% in 2016), however, this cannot be • Argentina Second Rural Education Baseline 2010*: 61.5 percent. rural areas. attributed to the WBG intervention since the 2015 Improvement Project- PROMER (P133195) Target 2018: 65.5 percent. Census established that the completion rate was at FY15 *From the 2010 Census. 6.2 Increase in number of the time 63.3%. There has been no increase • Youth Employment Support (P133129) youth that have gone reflected since 2015 that could be attributed to the FY15 OUTCOME 10: through the training WBG intervention. NOT ON TRACK. • Children and Youth Protection Project Relative chance of labor and employment (P158791) FY16 market insertion rate for services system Outcome 10: The Ministry of Labor has 400,000 young people discontinued the use of the indicator and therefore Knowledge Services doubles. no data is available. NOT ON TRACK. Ongoing: Baseline 2014: 9 percent. DROPPED AND REPLACED. • Provincial Education Impact Evaluation Target 2018: 25 percent. (P147562) FY14 • AR Development Policies for Growth PA (FY15) P154802 Milestones: 35 6.1 There has not been an increase in enrollment rate in upper secondary school in rural areas (92.1% in 2012 and 92% in March 2016 (target: 96% in 2018). NOT ON TRACK. 6.2 The number of labor market participants in training programs have increased from 660.000 in Dec 2014 to 772.114 as of May 2016. ON TRACK PILLAR III: Reducing Environmental Risks and Safeguarding Natural Resources Result Area #7 Reducing exposure to extreme flooding in Chaco, Corrientes, and Buenos Aires OUTCOME 11: Flood risk 7.1 Square kilometers of Outcome 11: The works in the northern provinces Financial Services: protection reaches 2.3 million area protected from have suffered delays. Regarding the city of Ongoing: people in the three flooding in the Buenos Aires, the project has been approved only • AR Norte Grande Water Infrastructure provinces Northern provinces and in July 2016. ON TRACK. (P120211) – FY11 Baseline 2014: 200,000 the city of Buenos • AR Second Norte Grande Water people. Aires. Milestones: Infrastructure (P125151) – FY11 Target 2018: 2.3m people 7.1 Vega Flood Prevention and Drainage Project • AR Vega Flood Prevention and Drainage has been approved in July 2016. The execution of Project (P145686) – FY16 the Project will contribute to risk protection in the Pipeline: City of Buenos Aires. For Chaco, the construction • Salado Integrated River Basin of the water treatment plant and distribution lines Management Support Project (P161798) have started in March 2013 and physical progress FY17 is estimated at around 85%. ON TRACK Knowledge Services • Strengthening Disaster Risk Management (P156197) 36 #8 Reducing household exposure to environmental health hazards in Greater Buenos Aires OUTCOME 12: 8.1 Linear kilometers of Outcome 12 and 13: As the execution of works Financial Services 75 percent of sewage sewerage collectors has just started, there is yet no progress on Ongoing: discharges from AySA Waste completed. treatment of sewage discharges or increase in • Matanza-Riachuelo Basin (MRB) Water Treatment Plants, sewerage coverage. NOT ON TRACK. Sustainable Development Adaptable WWTP (Laferrere, El 8.2 Linear kilometers of DROPPED AND REPLACED. Lending Program (P105680) – FY09 Jaguel, Sudoeste, Lanus, subaquatic outfall • Reduction of Ozone Project, Montreal Fiorito) to Rio Matanza- completed. Milestones: Protocol (P005920) – FY07 Riachuelo will be treated 8.1 As the execution of works has just started, according to a regional there is no progress to show. NOT ON TRACK. Knowledge Services standard on water quality. Delivered: Baseline is zero. 8.2 As the execution of works has just started, • Country Environmental Analysis (P147282) there is no progress to show. NOT ON TRACK FY16 OUTCOME 13: Increase in sewerage coverage from 33 percent to 72 percent in the Province of Buenos Aires’ 14 municipalities of the Matanza- Riachuelo Basin. 37 #9 Improving natural forest cover in the Chaco Eco Region OUTCOME 14: 9.1 Development of Outcome 14: Annual deforestation rate of natural Financial Services Annual deforestation rate of forestry and conservation forest in critical areas of Chaco, Salta and Santiago Ongoing: natural forest in critical areas strategies. de Estero has fallen from 0.56% (Baseline 2011) to • Forests and Communities FY15 of Chaco, Salta and Santiago 0.15%. ACHIEVED. (P132846) de Estero 9.2 Develop a multi- • Biodiversity Conservation in Productive (Category I or red according to sectoral policy framework Milestones: Forestry Landscapes (P094425) – FY09 the National Forest Law for reduction of emissions • Forest Carbon Partnership Facility 26331) falls from 0.56 percent of carbon from 9.2 Intended nationally determined (FCPF) Readiness Grant (P120414) (Baseline 2011:) to 0.28. deforestation and forest contributions were presented at the U.N. Framework Closed: This would represent a 50 degradation. Convention of Climate Change Conference of the • Third National Communication percent decline in deforestation Parties CoP-21 in Paris in December 2015. The UNFCCC (P116974) in critical areas in targeted 9.3 Develop an agriculture Bank provided inputs to the design of the strategy • AR Sustainable Natural Resources provinces. and climate change through the Third National Communication Management (P100806) information system that UNFCCC (P116974). ACHIEVED facilitates producers’ Knowledge Services access to climate-related 9.3 In order to develop an agriculture and climate Ongoing: data. change information system that facilitates producers’ • Agriculture Risk Management and El access to climate-related data, the National Niño (ENSO) Preparedness (P159720) Meteorology Service was hired under the NLTA “Agriculture Risk Management and ENSO Prevention to strengthen spatial and temporal resolution of meteorological information and to consolidate the agro-climatic information systems. This will enable the standardization of data which will be available to producers and agro sector. ON TRACK     38 Annex 4. Monitoring and Evaluation (M&E) of the CPS FY14-18 Results Framework Indicator name Description Data source PILLAR I: Unlocking long-term productivity growth and job creation Objective #1: Fostering Private Investment and Strengthening its Enabling Environment Reduction in cost of freight transport in selected corridors of Cost of freight transport is defined per DNV Baseline data source: Unidad de Northern Argentina by 20 percent. methodology to calculate the overall cost of Redeterminación de precios de Vialidad  Baseline 2014: average cost in selected corridors: transported ton per km, in heavy vehicles, at a given Nacional. $/tn.km 0.233 - AR$/tn.km 1.861. circulation speed. In 2018 the information will be provided by  Target 2018: average cost in selected corridors: the same source. $/tn.km 0.185 - AR$/tn.km 1.476. Ratio of the average portfolio maturity of MSME sub-loans Ratio of the average portfolio maturity of MSME Data will come from the reports of each under the credit line over the average portfolio maturity of sub-loans under the project, over the average eligible PFI and will be collected by the PFI’s MSME lending portfolio not financed by the credit line portfolio maturity of eligible PFI’s MSME lending implementing unit of the SMEs Project at Baseline 2016: 0 portfolio not financed under the project is higher than BICE. Target 2018: >1 1. Volume of energy efficiency loans of financial institutions Number and volume of energy efficiency loans in IFC standard indicators: Annual reports, supported by IFC ($15 Million target) the portfolio of a financial intermediary at the end of other documents from the company agree to its fiscal year in legal agreements with IFC At least one public-private partnership transaction by 2018 Number of public-private partnership transactions Data will come from regular portfolio (2014 baseline: 0). with participation of IBRD or IFC completed by monitoring Baseline 2014: 0 2018 Target 2018: 1 39 Objective #2: Supporting agglomeration economies’ Objective #2: Promoting urban development with focus on low income areas reach to low-income areas Reduction in average transit time in the Metrobus of La Average transit time for the bottom 40 percent of the Baseline data sources are O/D Surveys in Matanza and Rosario population in the metropolitan areas of Matanza and Metropolitan Areas of Argentina financed Rosario is defined as the average travel times for through PTUMA operation, processed and Baseline 2014: La Matanza: 59.35 average minutes per public transport plus the average travel time for published by the Ministry of Interior and transit trip; Rosario: 38.4 average minutes per transit trip) multimodal trips. Transport. 2018 information will also be Target 2018: 8% reduction from baseline provided by PTUMA. Objective #3 Raising agricultural productivity of small- and medium-size farms in low income regions Increase the gross value of agricultural production ($/ha) of Gross Value of Production is compiled by Baseline values: GVAP baseline is 30,000 small- and medium-size farms by 12 percent on multiplying gross production in physical terms by calculated on the actual without-project average by 2018. output prices at farm gate. Thus, value of production data for PROSAP1 (closed) and PROSAP2 measures (ongoing). The expected GVAP increase production in monetary terms at the farm-gate level. (12 percent) of future beneficiaries is based Since intermediate uses within the agricultural sector on the average difference between the (seed and feed) have not been subtracted from actual with-project results from 94 production data, this value of production aggregate PROSAP1 and estimated with-project refers to the notion of “gross production.” results for PROSAP2. The evaluation of GVAP will exceed constant prices (i.e., same price for with and without project). Sources: PROSAP1, PROSAP2, FAO/PROSAP: Potential of irrigation in Argentina ongoing (2014). Producers: Sources: Sheinkerman de Obschatko, family farms in Argentina, IICA/PROINDER, 2009. PILLAR II: Increase access and quality of social infrastructure & services for the poor Objective #4 Increasing access to electricity, safe drinking water, and sanitation services for the bottom 40 percent in low-income provinces and areas 365,000 people from rural areas of all provinces of Argentina People receiving electricity is defined as off-grid Baseline data for 2010 comes from the receive electricity services (out of 725,000 without in 2010) population, in households, that can access electricity National Census. Information for 2018 (40% of which female beneficiaries) via individual renewable systems or mini grids, not will be provided by the PIU at the National connected to the Interconnected Energy Secretariat. National System. 40 Access in the Norte Grande provinces to safe drinking water Safe drinking water access is defined as: access to Baseline data for water and sanitation increases from 83 to 92 percent drinking water means that the source is less than 1 comes from 2010 National Census. In 2018 Baseline: 83% kilometer away from its place of use and that it is water utilities from the involved provinces Target: 92% possible to reliably obtain at least 20 liters per will provide updated access data. member of a household per day; safe drinking water is water with microbial, chemical, and physical characteristics that meet WHO guidelines or national standards on drinking water quality. Access to safe drinking water is the proportion of people using improved drinking water sources: household connection; public standpipe; borehole; protected dug well; protected spring; or rainwater. In Argentina piped water should be available at least 18 hours a day. Access in the Norte Grande provinces to sanitation increases Definition of access to improved sanitation services: Baseline data for water and sanitation from 41 to 55 percent. basic sanitation is the lowest-cost technology comes from 2010 National Census. In 2018 Baseline: 41% ensuring hygienic excreta and sewage disposal and a water utilities from the involved provinces Target: 55% clean and healthy living environment both at home will provide updated access data. and in the neighborhood of users. Access to basic sanitation includes safety and privacy in the use of these services. Coverage is the proportion of people using improved sanitation facilities: public sewer connection; septic system connection; pour-flush latrine; simple pit latrine; or ventilated improved pit latrine. Implementation of pilot intervention to support a nation-wide Implementation of the pilot intervention is defined as Data will come from regular monitoring of demand-driven housing subsidy program in Argentina. the implementation of the first nation-wide demand- upcoming IBRD urban projects driven housing subsidy program in Argentina, the SCPP. The SCPP finances an up-front subsidy for eligible households earning between 2 and 4 Minimum Wages (MW)10, to improve affordability for the purchase of a new or existing house. 41 Result Area #5: Achieving Universal Health Coverage with focus on the nine poorest provinces Proportion of eligible people benefiting from effective The indicator is defined as “Eligible people enrolled The numerator is measured by healthcare rises. in Programa Sumar that received a health service in a administrative data of Programa Sumar. The given period of time according to each defined age denominator is based on an estimation of Baseline 2014: 28 percent group”/ “Eligible people: uninsured children under eligible population (Massa, 2013) that Target 2018: 50 percent 10, youth 10-19, and women 20-64 years of age.” The draws on census data as well as period considered to receive health services varies by administrative data on uninsured age group, as defined in the Operational Manual of population. the project. Objective #6 Improving employability of Argentina’s youth and increasing effective social protection for children and youth Percentage of JMyMT program participants who have left the This indicator measures the percentage of participants This indicator is reported in the MTESS program and are employed in the formal market. that have left the program at least one year before and quarterly report. Baseline Dec 2014: 25.2 percent. joined the formal labor market since then. The gender Target 2018: 27 percent. indicator measures the percentage of female participants that have left the program at least one Percentage of JMyMT program participants who have left the year before and joined the formal labor market since program and are employed in the formal market - Female. then. (Percentage - Sub-Type: Breakdown) Baseline Dec 2014: 16 percent. Target 2018: 20 percent. Increase by 500.000 in the number of children and youth This indicator measures the number of individual The indicator is measured biannually by the covered by child allowances managed by ANSES beneficiaries covered by safety nets programs Administration of the Social Security Baseline 2016: 7.897.000 supported by the Bank. Safety nets programs intend Administration and published in the Target 2018: 8.397.000 (or which 50% female) to provide social assistance (kind or cash) to poor and ANSES’ Statistical Report. vulnerable individuals or families, including those to help cope with consequences of economic or other shock. Unit of measure: Millions of children under 18 years of age. The disaggregation measures female participation in SSN programs. It has the same definition as the "Beneficiaries of Safety Nets programs" but applies only to female. This indicator will yield a measure of coverage of SSN projects disaggregate d by gender. Unit of measure: Millions of children under 18 years of age. 42 PILLAR III: Reducing Environmental Risks and Safeguarding Natural Resources Objective #7 Reducing exposure to extreme flooding in Chaco, Corrientes, and Buenos Aires Flood risk protection reaches 2.3 million people in the three Flood risk protection is defined as the reduction of Baseline information comes from flood provinces of Chaco, Corrientes and Buenos Aires. flood impacts from structural measures controlling hazards maps and 2010 national census data. Baseline 2014: 200,000 people. the flood of water and nonstructural measures Information for 2018 will reflect the updated intended to keep people safe from flooding through flood hazard maps of the involved provinces planning and management. The estimation of the and the implemented works. If available, beneficiaries was derived using two approaches. First survey data from flood events will be taken to calculate the resident beneficiaries, flood maps into consideration. were used to compare with and without works scenarios (the area affected by floods is considered to have more than 20 cm of water height above street, and using the design storm (e.g., in the case of the Autonomous City of Buenos Aires this is 10 years). Thus, resident beneficiaries = (area affected by floods without works - Area affected by floods with works) * population density. The second group of direct beneficiaries includes 1.7 million people that commute daily through the target basins; this number derives from two studies: According to the ENMODO Encuesta de Movilidad Domiciliaria, 2010 (financed by the World Bank under the PTUBA project study), 1.1 million people commute daily between the Autonomous City of Buenos Aires (CABA) and the greater metropolitan area of Buenos Aires, and two million people commute within CABA limits. According to the INTRUPUBA Investigación de Transporte Urbano Público de Buenos Aires, 2009 (financed by the World Bank), 47 percent of the trips within the CABA start, end, and/or traverse the Maldonado, Vega, and Cildáñez watersheds, and 69 percent of the trips starting or ending in the provinces traverse the same watersheds. 43 #8 Reducing household exposure to environmental health hazards in Greater Buenos Aires Linear kilometers of sewerage collectors (Lot 1): Number of km of sewerage collectors built under Lot Information on target population will be Baseline 2016= 0 km 1 of Matanza- Riachuelo Project provided by AySA and ABSA. Target 2018= 29.7 km (87.3% of the total) Linear kilometers of subaquatic outfall: Number of km of subaquatic outfall built under Information on target population will be Baseline 2016= 0 km Matanza- Riachuelo Project  provided by AySA and ABSA  Target 2018= 7.5 km (62.5% of the total)   #9 Improving natural forest cover in the Chaco Eco Region Annual deforestation rate of natural forest in critical areas of Deforestation rate in critical areas is defined as: Data on deforestation in 2011 come from Chaco, Salta and Santiago de Estero (Category I or red Category I forest area lost / total Category I Forest the 2014 Auditor General’s report on according to the National Forest Law 26331) falls from 0.56 area in the targeted provinces. implementation of the National Forest Law. percent (Baseline 2011:) to 0.28. (50 percent decline in The baseline and target values for deforestation of Information for 2018 will be obtained from deforestation in critical areas in targeted provinces) natural forests in critical areas were calculated the Forest Evaluation System Management focusing on the three provinces with the largest area Unit, inside the Forests Directorate of the of natural forest cover (Santiago del Estero, Salta, and National Secretariat of Environment and Chaco). Approximately 85 percent of the total Sustainable Development. country deforestation in natural forest takes place in these provinces. These three provinces also accounted for more than 90 percent of total national critical area forest losses in 2011. The baseline rate was calculated as the sum of deforestation in critical areas for conservation across the three provinces and divided by the total deforested area in these three provinces (RED, YELLOW, and GREEN as indicated in the National Forest Law).   44 Annex 5. Argentina Portfolio (as of December 30, 2016) Overall features 1. The Bank´s portfolio in Argentina consists exclusively of investment projects with half of them approved in the last two years (FY15 and FY16) under the current CPS and the other half approved under the previous two CPS´s (spanning from FY05 to FY12). Given the relationship between Argentina and key shareholders of the WBG, no operations were presented for Board consideration between FY12 and FY14. 2. The current portfolio consists of 25 projects, including 22 investment loans and 3 trust-fund grants (two from the Global Environment Fund and one from the Montreal Protocol), with a total commitment of $5.85bn, of which $2.76bn undisbursed. Under the current CPS, ten IPFs11 and two trust fund grants have been approved for a total commitment of $2.4bn ($1.7bn undisbursed) until December 30, 2016. 3. The pipeline for Q3 and Q4 of FY17 includes seven investment project financing and one $480m project-based guarantee for a total amount of $1.5bn. The projects currently under preparation are two urban development operations, a Bank guarantee for the renewable energy sector, a State Modernization Project, an Additional Financing for the Metropolitan Urban Transport Project, a Project for Strengthening of INDEC and a water and sanitation project in the Plan Belgrano area. Total commitment at the end of FY17 is projected to be $3.7bn (of which $0.48bn as Bank guarantee). Quality of the portfolio 4. The overall quality of the portfolio is moderately satisfactory or better and has improved significantly since the approval of the CPS. The number of problem projects was reduced by half as of end-FY16 and currently there are three projects in problem status. The three of them are expected to be out of problem status by end of FY17 (one Graph 1: AR Portfolio Age (FY10‐FY17*) closing, two restructuring). Six other projects (in months) are considered at risk, two of which are 80 expected to close in FY17. 70 68.0 60 58.9 5. The portfolio currently includes four 48.0 54.0 50 54.6 50.7 Months  42.9 overage projects, all expected to close by the 40 40.0 end of FY17. With the closing of those projects 30 and the approval of FY17 proposed projects, 20 10 the average age of the portfolio at the end of 0 FY17 is projected to be 40 months, a strong FY10 FY11 FY12 FY13 FY14 FY15 FY16 2017* rejuvenation from 68 months at the start of the CPS period (see Graph #1). 11 This includes two additional financing Operations: Unleashing Productive Innovation (P106752) and Provincial Public Health Insurance (P106735) 45 6. The disbursement ratio has improved since FY12, reaching a high of 29.8 percent in FY15, while declining back to 20.4 in FY16, Graph 2: AR‐ Disbursement ratio and commitment  affected by the political transition of end amout    2015 (see Graph # 2) (FY10‐FY17) 8.0 7.3 7.2 35.00% 5.8 7.0 6.4 7. The following tables present the 6.0 5.8 5.9 30.00% 5.0 25.00% current status of the portfolio (Table 5.1) 5.0 23.0% 23.6% 23.0% 29.8% 20.00% 4.0 and the preliminary IBRD pipeline for FY17 3.0 19.7% 17.6% 20.4% 15.00% (Table 5.2). 2.0 10.00% 1.0 5.00% 0.0 0.00% FY10 FY11 FY12 FY13 FY14 FY15 FY16 Commitment ($ M) Disbursement ratio 46 Table 5.1: Argentina IBRD Portfolio Net Comm. Project Approval Len. Inst. Undisb. Age No. of Project Ratings Project Name GPVP Prod. Line Closing Date Amt. ($M) Overall Risk ID FY Type Bal. ($M) (Months) AF IBRD DO IP P070628 AR-Provincial Road InfrastructureProject Transport & ICT 2005 PE IPF 30-Jun-2017 325.00 76.23 139.2 1 MS MU M Energy & P090119 AR Energy Efficiency Project 2008 GE IPF 31-May-2017 15.16 7.50 102.5 0 S MS M Extractives P095485 AR Metropolitan Areas Urban Transport Transport & ICT 2010 PE IPF 31-Jan-2017 149.68 36.91 86.7 0 MS MS M Environment & P105680 AR(APL1) Matanza-Riachuelo Development 2009 PE IPF 31-Mar-2017 718.03 466.29 91.1 0 MU MS H Natural P106684 AR PROSAP2 2nd Prov Agric Dev Agriculture 2009 PE IPF 15-Mar-2017 300.00 25.74 99.6 0 MS MS M P106685 AR Rural Inclusion Agriculture 2015 PE IPF 28-Feb-2021 52.50 50.37 19.1 0 S MS M Health, Nutrition & P106735 AR Provincial Public Health Insurance 2011 PE IPF 30-Sep-2017 600.00 135.27 68.5 1 MS MS M Population Trade & P106752 AR Unleashing Productive Innovation 2009 PE IPF 25-Sep-2108 195.00 45.00 1 S S M Competitiveness Environment & P110462 AR Mining Environmental Restoration Proj 2009 PE IPF 27-Jun-2017 30.00 2.09 101.4 0 MS MU S Natural Health, Nutrition & P110599 AR Essential Public Health Functions II 2011 PE IPF 30-Apr-2018 461.00 41.19 72.7 0 MS MS M Population Environment & P114294 AR GEF Rural Corridors and Biodiversity 2015 GE IPF 30-Nov-2020 6.29 5.79 21.2 0 MS MS S Natural P116989 AR-Road Safety Transport & ICT 2010 PE IPF 28-Feb-2017 30.00 4.45 81.2 0 S S M P120198 AR Norte Grande Road Infrastructure Transport & ICT 2011 PE IPF 31-May-2018 400.00 91.50 72.7 0 MS MS S P120211 AR Norte Grande Water Infrastructure Water 2011 PE IPF 30-Apr-2017 200.00 76.19 72.7 0 S MS M P121836 AR La Rioja Public Sect Streng Prog-APL1 Governance 2011 PE IPF 31-Dec-2017 30.00 5.95 70.6 0 MS S S P125151 AR 2nd Norte Grande Water Infrastr. Water 2011 PE IPF 30-Apr-2017 200.00 83.25 69.3 0 MS S M Environment & P129397 Montreal Protocol HCFC Phase-out Project 2014 MT IPF 30-Apr-2021 1.91 0.83 41.4 0 S S M Natural Environment & P132846 Forests and Community 2015 PE IPF 30-Nov-2020 58.76 54.22 21.2 0 S MS S Natural Social Protection P133129 AR - Youth Employment Support Project 2015 PE IPF 31-May-2018 425.00 230.27 23.9 0 S MS S & Labor Health, Nutrition & P133193 AR Chronic Conditions and Injuries 2015 PE IPF 31-Dec-2020 350.00 272.92 19.1 0 MS MS S Population P133195 AR Second Rural Education Improvement Education 2015 PE IPF 31-Dec-2019 250.50 203.73 25.3 0 S MS M Energy & P133288 AR Renewable Energy 2015 PE IPF 31-Oct-2020 200.00 179.50 21.2 0 MS MS M Extractives P145686 AR Buenos Aires Flood risk management Water 2016 PE IPF 1-Mar-2022 200.00 159.50 6.7 0 S S H Social Protection P158791 Children and Youth Protection Project 2016 PE IPF 31-Dec-2020 600.00 338.50 6.4 0 S S M & Labor Finance & P159515 Argentina Access to Finance for MSMEs 2017 PE IPF 30-Nov-2021 50.00 50.00 1.8 0 S Markets 47   Table 5.2: Expected FY17 Board Presentations CPS Pillars and Project Description Result Areas Supporting strategies to build a digital public State Modernization and Pillar I administration and services, and develop open Innovation P157136 Result Area 1 government initiatives, including e-procurement. Statistical Capacity Support INDEC on revamping and improving Pillar I Building social statistics. Result Area 1 P158443 Pillar I Renewable Energy Fund To support the Government in attracting private Result Area 1 Guarantee FODER investors to develop renewable energy generation Pillar III P159901 capacity. Result Area 8 Metropolitan Areas Urban To improve the quality and sustainability of urban Transport transport systems in Buenos Aires Metropolitan Pillar I Additional Financing Areas, reducing transit time for medium/low Result Area 2 P161393 income residents. Water and Sanitation Improving access to and quality of water & Project – Plan Belgrano sanitation services in the Plan Belgrano provinces Pillar II Additional Financing supporting improved efficiency of provincial Result Area 4 (P162712) W&S utilities. Pillar II National Neighborhood Nationwide program to reform affordable housing Result Area 4 Improvement finance and improve housing security in poorest Pillar I, P159929 urban agglomerations. Result Area 2 Pillar II AMBA Urban Slum Transforming some of the most critical slum areas Result Area 4 Transformation in the City and Metropolitan Areas of Buenos Pillar I P159843 Aires (AMBA). Result Area 2 Salado Integrated River To reduce the risks and impacts of floods and Pillar III Basin Management droughts in the Province of Buenos Aires. Result Area 7 P161798 Notes: This list is limited to project expected to be presented for approval in FY17. 48 Annex 6. Statistics 1. Upon assuming office, the new Administration declared a “statistical emergency” to improve official statistics and their credibility. Starting in January 2007, official figures diverged significantly from private estimates, especially on inflation, but later also on GDP, exports and social indicators (unemployment and poverty). This process led to a growing divergence between official statistics and alternative figures (both private and public –some provincial statistics department-). For instance, while official inflation averaged 11.5 percent per year during 2007-2015, alternative sources registered a 25.6 percent annual inflation. In 2013, the IMF issued a Declaration of Censure questioning official statistics. On December 2015, a few days after taking office, the new Administration declared the “statistical emergency” which allowed INDEC to temporarily suspend the publication of inflation, economic activity, international trade, and unemployment figures until a revision of existing methodologies was made. 2. The Government has gradually resumed its regular statistics publishing during 2016, which in some cases included a revision of historical data. External accounts publications were resumed in March 2016, while GDP and inflation statistics were re-launched in June 2016. Unemployment and poverty indicators were published again in August and September 2016, respectively. External accounts and GDP statistics also included a revised version of historical data, showing large differences with previous figures. The new figures were in line with private estimates. After several technical missions and an Article IV consultation lifted the Declaration of Censure on November 2016. 3. According to revised figures, GDP was 24 percent lower in 2014 than in previously published figures. INDEC published new GDP figures for 2004-2015 and also preliminary figures for the first half of 2016. The revised version of real GDP in constant prices (2004 AR$) for 2014 is 24 percent lower than the one published by the former Administration. Revised figures were also 15 percent lower on average for 2004-2014 period. While the new real GDP is lower, the new nominal GDP is higher than the previous series due to correction of GDP deflator which is considerably higher in the new series. In 2014 the new GDP deflator grew 40.7 percent while the old record was 29.3 percent. Furthermore, some changes on historical annual growth rates are worth mentioning. Revised figures show considerable GDP contractions in 2009, 2012 and 2014, while previous data indicated small growth. In particular, new data shows a 6 percent contraction in 2009 compared to a 0.1 percent growth previously reported. 49 4. The revision of external accounts showed lower current account balance compared to previous data. Balance of payment figures for the period 2009-2015 were revised by INDEC, showing a worse current account balances on each year. For instance, the current account deficits for 2013 and 2014 were, 2 percent and 1.5 percent of GDP higher, respectively, than previously published. Finally, for 2015, the current account deficit reached 2.5 percent of GDP, the highest since 2000. 5. INDEC’s inflation statistics were resumed in May and gained strong credibility since then. During the revision of official inflation figures, INDEC published two alternative measures: estimates from the City of Buenos Aires and the Province of San Luis. Starting in May, INDEC resumed the publication of its CPI. These figures were highly realigned with the former “alternative” sources, helping grow INDEC’s credibility. Past inflation figures were not revised. 6. Finally, unemployment and poverty figures did not include a historical revision either, but revealed a challenging macroeconomic situation. On August 2016, INDEC published an unemployment rate of 9.3 percent for the first semester of 2016 (recently down to 8.5 percent in the third quarter), revealing a challenging labor market situation that was not reflected in prior official figures. Box A1. Harmonization of poverty data and price deflator used    All of this document’s data attributed to “SEDLAC (CEDLAS and the World Bank)” rely on a harmonized version of the urban‐ only household survey data from the Encuesta Permanente de Hogares‐Continua (EPHC). The EPHC is collected quarterly by  Argentina’s Instituto Nacional de Estadística y Censos (INDEC). The survey is representative of 61 percent of the population,  living in the 31 largest urban areas in the country.  The  harmonization  undertaken  by  CEDLAS  and  the  World  Bank  increases  the  comparability  of  household  surveys  among  various LAC countries, allowing for internationally comparable indicators. While the majority of the population in Argentina  is urban, previous analysis suggests that urban‐only household surveys may underestimate national poverty: the 2001 census  showed  the  rural  population  and  those  living  in  small  towns  were  significantly  more  likely  to  have  at  least  one  unsatisfied  basic need (at 36 and 24 percent, respectively) than the rest of the population (at 16 percent).  Poverty  rates  are  estimated  using  a  US$4  per  day  minimum,  adjusted  to  USD  in  2005  purchasing  power  parity  using  partly  private estimates of inflation, which differ from official estimates. As a result, poverty is reported using international poverty  lines.  Official  poverty  estimates  were  not  released  in  Argentina  since  2013,  and  had  been  under  criticism  since  2007.  As  INDEC relaunched the publication of this indicator for the second quarter of 2016, it indicated that its value is not comparable  with previous numbers, particularly those between 2007 and 2015, due to changes in poverty line calculations and treatment  of missing information on income.   50 Annex 7. Gender Equality and Changes in Argentina 1. The 2015-2018 CPS described Argentina as “among the leaders in Latin America in some gender indicators”, although it also noted that “the country compares less favorably to its upper-middle-income countries cohort in key areas”. The focus of the analysis was on endowments (education, sexual and reproductive health, and health outcomes); equality in economic opportunities (labor force participation and gender wage gap) and equality in agency (political participation, gender-biased violence and teenage pregnancy). 2. Several of these indicators have evolved favorably since the information was collected for the CPS (around 2012-2013). Education enrollment rates, particularly in secondary and higher education, continue to favor women. Health indicators have been stable or improved, as in the case of the maternal mortality ratio, that continued to decrease (from 69 per 100,000 in 2013 to 52 in 2015) and the percentage of births attended by skilled health staff has been stable around 98 percent. On economic opportunities, labor force participation continues to be significantly lower for women than men, and unemployment is higher (10.5 percent for women and 8.5 percent for men as of the second quarter of 2016). Political participation of women continued growing, and in 2016 39 percent of Congress members are women (and a new Law to move this to 50 percent is under consideration). 3. All World Bank projects approved under the current CPS are gender-informed, and the teams have actively supported the Bank’s commitment to have a more gender-sensitive portfolio. All operations collect gender specific indicators to assess their performance, efforts to develop and implement impact evaluation strategies that consider gender issues are underway (in particular, the health impact evaluation agenda implemented as part of the SUMAR project has continued to develop) and the new Youth Employment Project includes specific actions and indicators aimed at reducing the gap in unemployment and informality between young men and women. New initiatives in the portfolio 4. Addressing gender disparities in employment. As part of the ongoing engagement with the Ministry of Labor, an UFGE grant was recently approved by the Bank to test evidence, at country level, on gender interventions in the provision of employment services, paying special attention to discriminated groups (LGBTI). The objective is to enhance their participation in employment programs and job opportunities across genders through capacity building and compensatory/complementary interventions. The Ministry of Labor, through the network of employment offices, will pilot those approaches and will generate operationally relevant lessons on how to effectively translate new evidence into results on the ground. 5. Empowering women. The ‘Qom Culture Route’ is an initiative, designed as part of the Indigenous People’s Plan under the Norte Grande Road and Water Infrastructure Projects, to promote the Provincial Route 3 and its surroundings in the Province of Chaco as a tourist and cultural corridor, centered on valuing the Qom culture with a focus on women’s economic empowerment. Main activities under the initiative included: (i) the construction and/or rehabilitation of 4 craftswomen community centers, (ii) training of Qom women in technical, organizational, productive, and life skills; (iii) mentorship and group formation to enhance women’s agency through the creation of a network of indigenous women associations; (iv) access to Internet and ICT equipment and training. A qualitative analysis published in 2015 showed that these activities were effective at enhancing women’s agency through promoting 51 income generation for women through sale of handicrafts, as well as at promoting the Qom cultural identity and protection of cultural heritage through the development of artistic productions that increased women’s role in the development of their community. The intervention proved also successful in increasing women’s self-esteem and aspirations.12 6. Promoting gender equality in access to finance. The Access to Long-term Finance for Micro, Small and Medium Enterprises (MSMEs) Project, approved by the Board in November, aims to improve access and strengthen the framework for provision of longer-term finance for eligible MSMEs. The project will allocate additional funds, as an incentive, to PFIs that can lend to MSMEs that promote gender equality13 by, inter alia, supporting work-life balance and social shared responsibility by men and women in providing daycare to their dependents, ensuring equal treatment for men and women in terms of income, having women as part of their management team, and other criteria as defined in the Project documents. The project will also monitor an indicator on gender for analytical purposes and to inform the design of future projects for the financial sector. 12 Casabonne, Ursula; Jimenez Mota, Bexi Francina; Muller, Miriam. 2015. Roads to agency: effects of enhancing women’s participation in rural roads projects on women’s agency - a comparative assessment of rural transport projects in Argentina, Nicaragua, and Peru. Washington, D.C.: World Bank Group. 13 As well as to those that lend to indigenous groups or are first time borrowers 52   53 54 Annex 8: Selected Analytical and Advisory Services State of Transparency in Argentina (P161697) The Bank has been supporting efforts to improve transparency and prevent corruption in Argentina. Initial steps included identification of key agenda for transparency through working together with a group of Argentine institutions including Anti-Corruption Agency, Jefatura, Ministry of Modernization, Hacienda and Ministry of Interior. Ongoing activities will focus on carrying out a stocktaking of the country’s current transparency and integrity policies and practices, and proposing recommendations for advancing this agenda. Capital Markets, Infrastructure and Housing Finance Advisory (P161487) The Bank has been providing advice to the Argentine Government on global best practices for designing an optimal regulatory framework to promote domestic capital markets, a framework to implement bond and credit instruments for infrastructure finance, and regulations to jump start the mortgage finance market. In the first stage of this work, a comprehensive diagnostic of the Argentine capital markets with policy reform options were completed. Similarly, various technical and analytical pieces were shared on housing and infrastructure finance including Public-Private Participation (PPP). Ongoing work will support further efforts in all these three areas with various report, workshop and TA activities. Province of Buenos Aires Public Expenditure Review (PBA PER) The PBA PER assessed fiscal trends and public financial management in the Province of Buenos Aires, and dedicated specific attention to the analysis of the health sector. The PBA PER was key to strengthen the engagement with the Province of Buenos Aires. Following the delivery of the PER, the Province asked the Bank to assess the provincial tax structure, analyze possible ways to reform system of transfers from the Province to Municipalities and also expand the analysis to the education sector. Strengthening Argentina’s integration in the global economy. The role of investment, trade and competition policies (P161698) The flagship report on “Strengthening Argentina’s Integration in the Global Economy: The Role of Investment, Trade and Competition Policies,” will provide the overall framework for the WBG engagement on private sector development in Argentina. It will provide an integrated assessment, of competition policy, trade and integration into global value chains, investment climate reforms and investment policy and promotion, and facilitating Argentina’s engagement on the OECD agenda. Argentina Development Policies for Growth PA (P154802) The Development Policies for Growth PA provided analytical inputs and recommendations for reinforcing the policy dialogue with the Argentine Administration, especially during a year of presidential election and with the incoming administration after elections. The program of activities focused on both urgent issues related to macro stability (i.e., exchange rate misalignment) and long term development challenges. The Argentina Development Discussion 55 Notes (Policy Notes) were prepared under this PA, covering nine specific themes and a stand- alone overview report reflecting both the findings of those policy notes and the studies carried out under this PA as well as within the broader country analytical work program. Prospects for Agricultural Competitiveness in Argentina (P155040) The key objective of this programmatic approach is to identify opportunities for and limitations to an increase in agricultural competitiveness and resilience in Argentina, with a particular focus on development outcomes for small- and medium-size farms. This will be pursued through a programmatic, sequenced series of analytical and advisory products meant to inform the dialogue with Argentine authorities during FY15 to FY17. Infrastructure financing (Global Infrastructure Facility GIF-TF) The objective of this activity is to assess opportunities and challenges for private to finance across a range of priority sectors. Activities will be supported through the GIF. Engagement will be in two stages: (i) supporting the Government at a strategic/ prioritization level, and (ii) providing the resources for detailed project preparation for a few projects (which would be reimbursable). Argentina Policy Notes (P156046) The Argentina Policy Notes were prepared for the new administration and included options for short-term policy actions to address macroeconomic imbalanced and a structural reform agenda for revitalizing growth with poverty reduction. Individual and in-depth notes focused on (i) Making the Most of Argentina’s Comparative Advantages in Agriculture; (ii) Investing in Argentina’s Aging Infrastructure; (iii) Logistics in Argentina: Moving Forward; (iv) Unlocking the Potential of Argentine Cities; (v) Subsidies; (vi) Improving Public Service Delivery through Enhanced Public Sector Institutions; (vii) Supporting Long-Term Finance; (xiii) Social Protection and Labor in Argentina; and (ix) Improving Education Quality. AR Improving Service Delivery (P156133) The activities analyze the provision of water and electricity in 10 provinces with some of the worst service delivery rates and highest concentration of poor people in the country. A series of reforms and actions at national, provincial, and service providers level are envisaged to increase access and improve the quality of water, sanitation and electricity delivery for the most vulnerable populations in the provinces of Misiones, Corrientes, Chaco, Formosa, Salta, Jujuy, Santiago del Estero, Tucuman, Catamarca, and Buenos Aires. The analysis will be used to inform a potential operation to improve water, sanitation and electricity services for the most vulnerable population in the selected provinces or in a specific area of a given province. Agglomeration Economies and Resilience (P153198) The objective of the program was to: (i) improve the understanding of opportunities and challenges associated with urban agglomerations; and (ii) strengthen capacity to formulate 56 policies and implement programs that improve the performance of urban agglomerations at the national, provincial and local level. The main outcomes were 1. Development of Metropolitan transit tariff for the Province of BA and accompanying fiscal framework for public transport in greater Buenos Aires, and 2. Developing clean and inclusive strategy implementing a model for provision of waste disposal services. Agriculture Risk Management and El Niño (P159720) The objectives of this technical assistance were to: (i) reform the agriculture disaster emergency facility mechanism from an ex-post to an ex-ante; (ii) establish a public-private partnership to consolidate the public and private agro-climatic network data; and (iii) develop a proposal to introduce agro-climatic zoning to support risk management decision making for farmers, financial institutions, and public sector programs. Country Environmental Analysis (P153169) The Country Environmental Analysis is a systematic, country-level diagnostic of the state of the environment and natural resource use. It serves as an environmental quality baseline against which future trends and changes in environmental quality and associated drivers can be analyzed. It provides a financing and budget analysis for the sector and assesses the policy and institutional framework readiness for addressing environmental and natural resources issues. The main objective is to support the Government in analyzing critical environmental constraints to sustainable growth and shared prosperity and propose broad policy actions to address them. 57