Documento f The World Bank FOR OFFICIAL USEONLY ReportNo: 28851 PROJECTAPPRAISAL DOCUMENT ONA PROPOSEDGRANT INTHEAMOUNT OF SDR4.0 MILLION (US$5.77 MILLIONEQUIVALENT) TO THE KINGDOMOF BHUTAN FOR AN HIV/AIDSAND STI PREVENTIONAND CONTROL PROJECT May 9,2004 HumanDevelopmentSectorUnit SouthAsia RegionalOffice 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 disclosedwithout World Bank authorization. CURRENCY EQUIVALENTS (Exchange RateEffective {March 31,2004 >) Currency Unit = Ngultrums Ng43.45 = US$1 US$1.4704 = SDR 1 FISCAL YEAR July 1 - June30 ABBREVIATIONS AND ACRONYMS AFD Administration andFinance Department AIDS Acquired I"uno-Deficiency Syndrome ART Anti-retroviral therapy BAS BudgetandAccounting System BCC Behavioral Change Communications BSS Behavioral Sentinel Surveillance CBOs csw Community Based Organizations Commercial Sex Work DADM Department o f Aid andDebt Management DANIDA DanishInternationalDevelopment Agency DBA Department of Budget andAccounting DGA Development Grant Agreement DVED Drugs, Vaccines, andEquipmentDivision FMR Financial Monitoring& Reporting GBFA Governrnent BudgetFundAccount HCWM HealthCare Waste Management HIDP Health Infrastructure Development Project HMIS HealthManagement InformationSystem HIV HumanImmunodeficiency Virus IA Implementing Agency IBRD InternationalBank for Reconstruction and Development ICB Information and Communication Bureau ICB International Competitive Bidding ICT Infection Control Team IDA InternationalDevelopmentAssociation IEC Information, Education, and Communications IGA Innovative grant agreement IP ImplementationPlan ISDS Integrated SafeguardsData Sheet LC Letter o f Credit LIS Laboratory Information System M&E Monitoring & Evaluation MOF MinistryofFinance M O H MinistryofHealth 11 FOROFFICIALUSEONLY MSTF Multisectoral Task Force NACP NationalSTD/AIDS Control Program NHAC NationalHIV/AIDS Commission NCB NationalCompetitive Bidding NICC NationalInfectionControl Committee NIFM NationalInstitute ofFinancial Management NGO Non-Governmental Organization 01 Opportunistic Infection O M Operational Manual PBM Planning andBudget Monitoring PHL Public Health Laboratory PIP Project Implementation Plan PLC Project Letter of Credit PLWHA Peopleliving with HIV/AIDS PMT Project Management Team PPD Policy andPlanningDivision RGOB Royal Government ofBhutan R I H S Royal Institute of Health Sciences RMA Royal Monetary Authority of Bhutan RBP Royal Bhutan Police SA Special Account SBD StandardBiddingDocument SOE Statement ofExpenses STI Sexually Transmitted Infections TA Technical assistance UNDP UnitedNations Development Programme UNFPA UnitedNations PopulationFund UNICEF UnitedNations International Children's Fund VCT Voluntary Counseling and Testing WHO World Health Organization Vice President: Praful Pate1 Country ManagerDirector: Alastair Mckechnie Sector Manager: Anabela Abreu Task Team Leader: HninHninPyne This document hasa restricted distributionandmay be used by recipients only in the performanceof their official duties. I t s contents may not be otherwise disclosed without World Bank authorization. BHUTAN HIV/AIDS and STI Preventionand ControlProject CONTENTS Page A. STRATEGIC CONTEXT AND RATIONALE ...................................................................... 1 1. Country and sector issues.......................................................................................................................... 1 2. Rationale for Bank involvement................................................................................................................ 3 3. Higherlevel objectives to which the project contributes........................................................................... 3 B. PROJECTDESCRIPTION ...................................................................................................... 3 1. Lending instrument.................................................................................................................................... . . 3 2. Program objective and phases ................................................................................................................... 3 3. Project development objective and key indicators .................................................................................... 4 4. Project components.................................................................................................................................... 4 5. Lessons learned and reflectedinthe project design .................................................................................. 4 6. Alternatives considered andreasons for rejection..................................................................................... 5 C .IMPLEMENTATION ............................................................................................................... 5 1. Partnership arrangements :n/a .................................................................................................................. 5 2. Institutional and implementation arrangements......................................................................................... 5 3. Monitoringand evaluationof outcomes/results ........................................................................................ 8 4. Sustainability............................................................................................................................................. 9 5. Critical risks and possible controversial aspects ....................................................................................... 9 6. Loadcredit conditions and covenants ..................................................................................................... 11 D .APPRAISAL SUMMARY ...................................................................................................... 11 1. Economic and financial analyses............................................................................................................. 11 2. Technical ................................................................................................................................................. 12 3. Fiduciary.................................................................................................................................................. 12 4. Environment ............................................................................................................................................ 14 5. Safeguard policies.................................................................................................................................... 15 6. Policy exceptions andreadiness .............................................................................................................. 15 Therewere nopolicy exceptions ..................................................................................................... 15 Annex 1: Country and Sector or ProgramBackground .............................................................. 16 iv Annex 2: Major RelatedProjects Financedby the Bank and/or other Agencies ...................... 21 Annex 3: Results Framework and Monitoring ............................................................................. 22 Annex 4: DetailedProjectDescription ........................................................................................... 29 Annex 5: Project Costs.................................................................................................................... 35 Annex 6: ImplementationArrangements ...................................................................................... 36 Annex 7: FinancialManagement and DisbursementArrangements .......................................... 45 Annex 8: Procurement ..................................................................................................................... 53 Annex 9: Economic and Financial Analysis .................................................................................. 62 Annex 10: Safeguard Policy Issues ................................................................................................. 73 Annex 11: Project Preparation and Supervision .......................................................................... 74 Annex 12: Documents inthe Project File ...................................................................................... 75 Annex 13 A: Terms of Reference (TOR) for Audit by RAA ........................................................ 76 Annex 13 B Terms of Reference (TOR) for Internal Auditors .................................................... 80 Annex 14: FinancialMonitoring and Reporting ........................................................................... 82 Annex 15: Supervision Strategy ..................................................................................................... 85 Annex 16: Statement of Loans and Credits ................................................................................... 87 Annex 17: Country at a Glance ...................................................................................................... 88 V BHUTAN HIV/AIDS AND STI PREVENTIONAND CONTROL PROJECTAPPRAISALDOCUMENT SOUTHASIA SASHD Date: M a y 9,2003 Team Leader: HninHninPyne Countrv Director: Alastair McKechnie Sectors: Health (100%) Sector ManagerIDirector: Anabela Abreu Themes: Other communicable diseases (P) ~ Project ID: PO83169 Environmental screening category: Partial Assessment Lending Instrument: Specific Investment Loan ProjectFinancingDate [ 1 I." [ ] Credit [XI Grant [ ] Other: Source Local Foreign Total RGoB 0.14 0.03 0.17 IDA Grant 2.62 3.15 5.77 Total 2.76 3.18 5.94 Borrower/Recipient: RoyalGovernment o fBhutan FY FY05 FY06 FY07 FY08 FYo9 Annual 0.69 2.02 1.44 1.04 0.57 Cumulative 0.69 2.71 4.15 5.20 5.77 Project implementationperiod: 5 Years Expectedeffectiveness date: August 1,2004 Expected Closing date: December 31,2009 vi Does the project depart from the CAS incontent or other significant respects Re$ PAD A.3 [ ]Yes[X]No Does the project require any exceptions from BankPolicies [ ] Yes [XINo Have these been approvedby Bank Management [ ]Yes[ IN0 Critical risks rated as substantial or high? Yes Regional criteria for readiness: Yes ProjectDev. Objective: The proposed project aims to reduce the risk o f HIV and STI transmission among the general population, in particular among groups with high risk sexual behaviors. Key outcome indicators include: 0 Percentage o f persons reporting condom use with last non regular sex partner increased from <20% at project start to 60% among priority groups and 30% among the general population at project end. 0 Percentage o f patients with selected STIs at health care facilities who are appropriately treated accordingly to the updatednational guidelines increased from <20% inbaseline (Yr2) to 60% at project end. PROJECTDESCRIPTION Component 1 - Prevention o f HIV/AIDS and STIs will promote political and societal leadership in the fight against HIV/AIDS, improve community knowledge and attitudes about HIV prevention, promote risk-reducing behaviours amongst priority groups, and increase access to condoms. Component 2 - Institutional strengthening and building capacity will enhance the ability o f national institutions to lead the fight against HIV through training and technical assistance, andwill strengthen laboratory andbloodtransfusion services. Component 3 - Care, support and treatment o f AIDS and STIs will establish VCT services, strengthen management o f STIs and HIV/AIDS (comprehensive care and treatment approach, including introduction o f ART), and improve infection control and waste management inhealth facilities. Component 4 - Strategic information for HIV/AIDS and STIs will promote evidence based decision making by improving health information management, strengthening operation research capacity, institutingM&E and second generation surveillance systems. Which safeguardspoliciesare triggered? Environment No conditions vii A. STRATEGIC CONTEXT AND RATIONALE 1. Countryandsector issues Though isolated geographically, increasing cross-border migration and international travel is creating a situation where the Himalayan Kingdom o f Bhutan i s no longer impervious to HIV/AIDS. Bhutan appears to be at the early stages o f a low-grade HIV epidemic. UNAIDS estimates that about 100 Bhutanese were living with HIV/AIDS at the end o f 2001, which amounts to a prevalence rate o f less than 0.01%. Only 45 cases have been detected through a combination o f sentinel surveillance, contact tracing, and clinical screening, since 1993 when the first case was reported. However, there are mounting concerns because the number o f new infections reported each year appears to be rising. The majority of these infections were acquired through unprotectedsex. Bhutanhas several risk factors and conditions that could fuel the spread o f the virus: neighboring countries experiencing generalized or concentrated epidemics, high mobility across borders and within the country, high levels of STIs, relaxed sexual norms, existence of sex work, limited access to condoms, and an emerging problem o f substance abuse. It is important to note that Bhutan does not appear to conform to the typical pattern o f the HIV epidemic inAsia where the spread o f HIV is initially driven by commercial sex and injecting drug use (IDU).Commercial sex work in Bhutan appears limited and i s focused in border towns. Injecting drug use i s also believed to be limited. However, non-paid casual sex i s common among long distance drivers, armed forces, migrant workers and drug users.' These behaviors tend to occur in specific locations (e.g. bars, restaurants, vegetable markets) and events (e.g. festivals). The nature o f casual sex behaviors in Bhutan requires more extensive examination to provide critical information for improving HIV and STIprevention interventions. National Response. In 1988, five years before the first HIV infection was detected, RGOB established a National STD/AIDS Control Program (NACP). The program is situated in the Ministry o f Health (MOH), under the Department o f Public Health, and has two fbll time staff members. Information, Communications Bureau (ICB), which i s responsible for IEC, and the Royal Institute o f Health Sciences (RIHS), which provides basic training to mid-level health workers, also provide input into the national program. In 2002, multisectoral task forces (MSTFs), composed o f government officials and individuals from the private sector and civil society, were established in all Dzongkhags with the mandate to carry out health promotion and HIV/AIDS awareness. They serve as an important mechanism to ensure involvement of key sectors beyond health and the public sector inHIV/AIDS prevention efforts. The donors, including DANIDA andUNagencies such as WHO, UNICEF, UNDP, andUNFPA, have worked closely with the government over the past decade insupporting the health sector in general, including HIV/AIDS prevention and control efforts. DANIDA has strengthened the health infrastructure and information systems, and WHO has provided both technical and 'Ariskand vulnerability study using qualitative methods was carried out inthe project preparationphase among five priority groups identified prior to the data collection as follows: long distance drivers, migrant workers, commercial sex workers, drug users and armed forces. The study also identified other groups that are potentially at highrisk for HIV, suchas marketvendors, young women working inrestaurants andbars, andcivil servants who receive training abroad. 1 financial assistance to the country's HIV/AIDS prevention program that included short-term consultants in the areas o f sentinel surveillance and health education as well as financing travel to conferences and to global and regional events. UNFPA has supported development and distribution o f national guidelines for contraceptive services to field staff, and condom procurement. UNDP provided US$200,000 to strengthen the capacity o f the MSTFs inplanning and managingDzongkhag-based HIV prevention and advocacy activities. RGOB recognizes that at this epidemiological juncture, the country has a unique opportunity to act vigorously, tackling the abovementioned challenges, and effectively scaling up and accelerating the national response to ensure that the level o f infection inthe country remains low. Key Challenges. The national response o f RGOB has been commendable, especially given the low level o f HIV prevalence. However, Bhutan faces several issues and challenges inscaling up the HIV/AIDS response: (i) to date have been hampered by lack o f a national HIV/AIDS efforts strategy; (ii) there i s inadequate information on the nature o f the epidemic and risk factors; (iii) NACP has staffing shortages and weak capacity; (iv) the stigma attached to HIV/AIDS, especially people living with HIV/AIDS (PLWHA) is widespread; (v) the response lies solely within MOH. The following areas wouldneedto be addressed and supported: (i) Instituting a strategic response and focused prevention. The project would support development o f a national HIV/AIDS policy, strengthening o f existing institutions for sustainability, and interventions that will have the highest impact inreducing the spread o f HIV. In a low prevalence setting, such as Bhutan, this entails HIV/AIDS prevention interventions reaching subpopulations that have higher rates o f sexual partner exchange or needle sharing, in addition to targeting geographicalhot spots. (ii) Gaining better understanding of the epidemic through improved strategic information systems. There are little or no systematic data to accurately describe risk behaviors in the Bhutanese population or assess the potential for HIV spread inthe country. A strong behavioral and sero-surveillance system and monitoring and evaluation strategy will be financed by the proposedproject. (iii) Strengthening institutions. The proposed project would strengthen NACP in its technical capacity (a program manager has been recruited), andput inplace a project management team to facilitate NACP and other implementing agencies, which include divisions and programs within MOH, NGOs/CBOs, dzongkhag authorities, and other line ministries. Considering human resource constraints in Bhutan, the project would institutionalize a well-planned and sustained technical assistance andtrainingprogram. (iv) Reducing stigma. PLWHA in Bhutan report a high degree o f stigma associated with HIV/AIDS and fear o f disclosure of their status. Care and support is limited with little or no medical treatment available for HIV/AIDS related diagnoses. The project would support efforts to reduce stigma and discrimination by: (i) advocacy by opinion leaders to promote positive attitudes towards PLWHA; (ii) providing care and treatment for PLWHA, including ART; and (iii)involvingPLWHA inpreventionprograms. 2 (v) Engaging in a multisectoral approach through involvement of key line ministries other than health and civil society. The project would promote multisectoral involvement, among key sectors, such as education, labor, and the armed forces, NGOs and community based organizations, by setting aside funds for the multisectoral agencies to implement prevention programs. In addition, the project would support and strengthen technical and implementation capacity and increase advocacy to heighten high-level political commitment in other sectors as well as at central andDzongkhag levels. 2. Rationalefor Bank involvement The Bank is presently financing HIV/AIDS programs in India, Bangladesh, Sri Lanka, and Pakistan through both IDA credit and grant. As one o f the largest financiers o f HIV/AIDS control programs in the world, the Bank brings to the fore global and regional expertise and experience in assisting Bhutan. In addition, the Bank's unique experience in Bhutan, from analytical work and previous and ongoing investments inmany sectors (i.e. education), enriches the project design and implementation strategy. The Bank's involvement creates a higher visibility politically and socially to the issue o f HIV/AIDS and underscores the cross-sectoral development dimension o f HIV/AIDS. Moreover, the Bank emphasizes improving the national program to produce the greatest impact, strengthening the capacity o f local institutions in the public and private sectors, and providing regular and sustained implementation support required for scaling up, enhancing, and accelerating Bhutan's fight against HIV/AIDS and STIs. Bank assistance would represent the largest source o f funds for HIV/AIDS and STI prevention and control inBhutan, complementing the financial and technical support from other donors. 3. Higherlevel objectivesto which the projectcontributes The Bank's Country Assistance Strategy (CAS) for Bhutan reflects the importance o f tackling HIV at an early stage andnotes that the issue is highon the agenda ofthe government. Investing inHIV andSTIpreventionnow inBhutanwill not only save lives andimprove the health status o f the population, but also mitigate the potentially devastating impact o f AIDS on the economy and the social fabric which would reverse any gains made in poverty alleviation and human development. Recognizing this potential threat, RGOB has identified inits NinthFive Year Plan preventing HIV/AIDS and STIs as a key health sector priority. Inline with this Plan, the proposed project's development objective of reduction in risk o f HIV and STI transmission would contribute to an overall goal o f maintaining Bhutan's low level HIV/AIDS epidemic status, as defined by HIV prevalence o f less than 5% among the highly vulnerable populations andless than 1%amongthe general population. B. PROJECTDESCRIPTION 1. Lendinginstrument Specific Investment Loan/Grant was selected for the following reasons: (i) majority o f the the expenditures can be broadly identified ex-ante; (ii)the scope o f the project is narrow and focused; (iii) the grant would support physical and social infrastructure; and (iv) the operation requires sustained capacity buildingwith Bank support. 2. Programobjective andphases n/a 3 3. Projectdevelopmentobjective andkey indicators The project aims to reduce the risk o f HIV and STI transmission among the general population, inparticular among groups engaginginHIV risk behaviors, such as unsafe sex. Key outcome indicators include: 0 Percentage o f persons reporting condom use with last non regular sex partner increased from <20% at project start to 60% among priority groups and 30% among the general population at project end. 0 Percentage o f patients with selected STIs (Le. urethral discharge in men and genital ulcers) at health care facilities who are appropriately treated accordingly to the updated national guidelines increased from <20% inbaseline (Yr2) to 60% at project end. 4. Projectcomponents The project has four components. Component 1 - Prevention of HIV/AIDS and STIs will promote political and societal leadership in the fight against HIV/AIDS, improve community knowledge and attitudes about HIV prevention, promote risk-reducing behaviors amongst priority groups, and increase access to condoms. Component 2 - Institutionalstrengthening and buildingcapacity will enhance the ability o f national institutions to lead the fight against HIV through training and technical assistance, and will strengthen laboratory and blood transfusion services. Component 3 - Care, support and treatment of AIDS and STIs will establish VCT services, strengthen management o f STIs and HIV/AIDS (comprehensive care and treatment approach, including introduction of ART), and improve infection control and waste management in health facilities. Component 4 - Strategic information for HIV/AIDS and STIs will promote evidence based decision making by improving health information management, strengthening operations research capacity, and instituting M&E and second generation surveillance systems. Details are described inAnnex 4. 5. Lessonslearnedand reflectedinthe projectdesign This project builds on key lessons learned in designing and implementing HIV/AIDS projects in theregion and around the world: Key stakeholders from the public and private sectors, civil society, and donor agencies, have been involved in project preparation and will continue their involvement throughout implementationto ensure the country's ownership and reduce political and social risks. Emphasis i s placed on improving strategic information systems for planning and policy decisions, given the lack o f data on risk behaviors andconditions. Prevention o f HIV and STIs remains the core o f the response, inparticular at this early stage o f the epidemic. However, the increasing numbers o f PLWHA make the development and implementationo f a comprehensive care andtreatment package essential. Prevention and treatment are synergistic, both biologically (by reducing infectivity) and socially (by encouraging use of VCT services and increasing involvement o f PLWHA in advocacy). The BCC strategy will address the potential increase in risk behaviors due to a perceivedmitigation o f the effects of HIV infection as a result o f ART availability. Respecting rights, specifically in HIV/AIDS testing and treatment o f PLWHA and highly vulnerable populations, is a critical aspect o f prevention and control. This effort would prevent the epidemic from goingunderground, and thereby, hrther fueling the HIV spread. 4 6. Alternatives consideredand reasonsfor rejection Instrument. Integrate HIV/AIDS into ongoing projects in Bhutan (e.g. education), rather than a self-standing HIV/AIDSproject. HIV/AIDS is an emerging issue for Bhutan, bringingto the fore new challenges-novel approaches to behavioral change, addressing taboo topics, working with marginalized communities, creating strategic partnerships with NGOs and the private sector- which are best tackled by a self standing operation that would enable a quicker response, greater attention, andhgher visibility. Implementation Strategy. Rely exclusively on the government and the health ministry to implement HIV prevention. Tackling HIV/AIDS requires a multisectoral approach and involvement o f the private sector. Other ministries, such as armed forces and education, along with civil society organizations (such as women's groups and the monk body), and the private sector are better positioned to reach vulnerable populations. MOH would continue to play a central role in coordinating and providing technical and management support, as well as implementing components such as surveillance. Create an independent agency tofight HIVAIDS. To ensure sustainability, the proposedproject aims to bolster and strengthen existing institutions to scale up effective interventions. However, the proposed project would put inplace an institutional arrangement that raises the visibility of the program to ensure better coordination and management o f multisectoral agencies, increases human resources interms o f staffing and capacity o f the national program, and strengthens MOH planning,procurement and financial management capacity. C. IMPLEMENTATION 1. Partnershiparrangements:n/a 2. Institutionaland implementationarrangements Estimated Period o f Implementation: 5 years Institutionalarrangement. The brief description o f roles and responsibilities o f the MOH and other key implementing agencies are as follows (see Annex 6 for detailed description): National HIV/AIDS Commission. The NHAC, chaired by the Minister o f Health, includes high level policy makers from key ministries, representatives o f MSTFs and civil society (i.e. National Women's Association o f Bhutan, Bhutanese national newspaper). N H A C i s responsible for overseeing the overall national effort on HIV/AIDS and STI prevention, care and treatment, formulating HIV/AIDS policies (Le. treatment and blood safety), coordinating the response across the many sectors, and mobilizing resources, commitment and collaboration from the public andprivate sectors, andcivil society. Ministry of Health. MOH would continue to assume the technical leadership and management of NACP and the proposed project. The Policy and PlanningDivision, Departments o f Public Health, and Medical Services, through central andDzongkhag level medical staff, healthworkers andtechnicians, would be responsible for implementingmany o f the activities across the project components, in particular laboratory support, HIV/AIDS care and STI management. MOH would provide technical support to other agencies-other line ministries and Dzongkhags-in implementing HIV/AIDS and STIprevention. 5 National STD/AIDS Control Program (NACP), situated in the Ministry o f Health under the Directorate o f Public Health, i s headedby a ProgramManager. NACP will (i) provide technical leadership on HIV/AIDS and support to all implementing agencies consistent with national policy directives; (ii)monitor and ensure technical quality o f interventions; (iii)identify HIV/AIDStraining needs and coordinate with Master Plan for HRD; and (iv) in collaboration with PPD, manage HIV/AIDS information generated from surveillance and M&E system. NACP will collaborate with and receive management and administrative support from the Project Management Team. Other Line Ministries. Reaching at risk populations with HIV and STIpreventionwould also be achieved through involvement o f line ministries other than health. Each selected line ministry, with a designated individual/team responsible for initiating and coordinating HIV/AIDS activities, would prepare an annual workplan to be reviewed and approved by the PMT and Technical Committee. Each Ministry would implement HIV/AIDS related activities consistent with the components of the national program appropriate to their constituencies and target populations. The workplan exercise would be incorporated into the existing RGOBplanningand budgeting process. The first year would focus on developing the workplans with technical input on best practices from MOH. Annex 6 and OM detail the annual workplan process, including eligible expenditures, results monitoring, andreporting. Dzongkhags. The support at the Dzongkhag level would be two-fold: (i)facilitating the implementation o f centrally managed activities (i.e. surveillance, training) and (ii) Dzongkhag initiated and managed activities. Dzongkhags would be responsible for developing an annual workplan for Dzongkhag-managed activities, which would be submitted to and approved by PMT and the Technical Committee, to ensure that proposed activities are in line with national objectives, are o f sound quality, and follow procedures and eligible expenditures that are detailed inthe OM. The Dzongkhagworkplan wouldconsist oftwo parts-oneto beimplementedbythe Dzongkhaghealth authorities and the other by MSTF. The Dzongkhag Medical Officer (DMO), who presently is the leading health official at the dzongkhag level, would be responsible for managing and coordinating prevention activities through a network of outreach workerdpeer educators andhealth workers. Multisectoral Task Force. MSTFs, chaired by the Dzongdag (Governor), are set up to (i) oversee prevention activities at the Dzongkhag level; and (ii) undertake advocacy to mobilize local authorities and civil society to increase support for HIV/AIDS prevention and to reduce stigma. The task forces include Dzongkhag health authorities and representatives from other ministries, such as education, and armed forces, as well as opinion leaders and key NGOs/CBOs within the Dzongkhags. MSTFwouldreceive funds through the Dzongkhag. NGOdCBOs andprivate sector. InBhutan, emerging local NGOs and CBOs, although limited at the present time, provide an opportunity for the program to expand access to prevention services to the grassroots level, including highly vulnerable populations. The role o f both NGOs/CBOs and the private sector in the project would be two-fold: (i) undertaking prevention activities for priority populations; and (ii) engaging in advocacy among target groups, including civil society, the private firms andbusiness leaders. 6 Consultants, Contractors and Suppliers: Consultants, contractors, and suppliers, including NGOs/CBOs and private organizations, operating across the country and the region may be contracted to support program activities. Project Management. With an objective of building in-house capacity o f MOH, a Project Management Team will be established to provide management and administrative support to implementing agencies. Situated in the Secretariat and under the overall responsibility o f the Secretary MOH, the PMT would have the following role and responsibilities: (i) coordinate and manage implementation o f project activities with IAs (e.g., MOH departments and divisions, other sectors, Dzongkags, MSTFs, and NGOs); (ii) regularly supervise, monitor, evaluate, and report on project activities to relevant government agencies and the Bank; (iii) oversee financial management and overall procurement o f goods, civil works, and consultancies; and (iv) liaise with the Bank on a regular basis regarding all project-related activities, including planning and preparation of missions. Technical Committee: The Technical Committee would ensure that preparation and implementationbyNACP, PMT staff, and consultants i s inconformity with the objectives o f the project and is carried out according to the terms o f reference for specific components/activities. The Technical Committee will be chaired by the Director o f the Department o f Public Health and would comprise staff from PMT, PPD, andNACP, and invitees from representatives o f relevant institutions andprograms, including donors andUNagencies. Implementation mechanisms. The project would employ three types o f implementation mechanisms: workplans, subprojects, and contracts. The type o f implementing agency and type o f intervention would determine the mechanisms (see Annex 6 for further details). Workplan. MOH divisions and programs, other line ministries, Dzongkhag-level health authorities, and MSTFs would prepare an annual workplan for project activities, following the existing annual planning and budgeting mechanism (determined by MOF) and according to the cycle and criteria established in the OM. Funds would be disbursed in tranches, based on utilization certificates andthe results achieved. Subprojects. NGOs/CBOs andprivate organizations would be eligible for small grants, awarded as subprojects, primarily to undertake HIV/AIDS prevention activities. Interested organizations would develop a proposal and financing plan for a subproject and, upon approval by PMT and the Technical Committee according to selection criteria detailed in the OM, would sign a innovative grant agreement (IGA) with the Ministry o f Health. Funds would be disbursed in tranches, based on utilization certificates and reporting on progress andresults. Contracting. I A s (e.g., suppliers, contractors, private firms) would be recruited and hiredbased on IDA Guidelines and Standard Bidding Documents and, upon selection, I A s would sign a contract with the Ministry o f Health. Payment would then be released upon meeting the specified indicators and deliverables. Operational Manual. The OM consists o f project implementation plan (activities, indicators, costs, time frame for implementation, and responsible agency), implementation strategies for each subcomponent, financial management and procurement guidelines, monitoring and 7 evaluation strategy, TORS for implementing agencies and PMT, and training plan. It will increase transparency and reduce implementation delays, as roles and responsibilities, mechanisms, schedules, and reporting arrangements are clearly described. In addition, it will facilitate review/supervision o f the project by the Bank. The OM was reviewed and revised at appraisal and found to be in satisfactory condition. The OM will be updated as needed with approval from MOH and clearance from IDA. 3. Monitoring and evaluationof outcomedresults The fourth component o f the project would support establishing a Monitoring and Evaluation System for the national program for the measurement of national level indicators described inthe Results Framework and M&E o f subcomponents o f the project (Annex 3). PMT, in collaboration with PPD, with technical inputs from Technical Committee, including NACP, will be responsible for managingthe overall M&Eo f the project. M&E strategies are as follows: (i) General population surveys: Three national surveys of the general population will be undertaken to provide data on key project indicators and to provide information on knowledge o f HN/AIDS/STIs and risk behaviors for use in the development and assessment o f program activities. The first survey, in Year 1 o f the project, will also provide information required for designing behavioral surveillance and will include transport workers and armed forces personnel to provide a baseline for project evaluation. A midline survey will be conducted in Year 3 for measurement of progress and revision o f program strategies. Finally, an endline survey (Year 5) will measure overall progress in achieving key project indicators. Wherever possible, these surveys would be coordinatedwith other national level surveys (e.g. Annual Health Surveys). (ii) Second Generation Surveillance: The national HIV and STI surveillance will be upgraded to adopt the second generation surveillance approach. This will provide both behavioral and serological (HN and STI) data for the general population and priority groups. The Behavioral Sentinel Surveillance (BSS) will provide national level data on key indicators inpriority groups. (iii) Health Facility Surveys: Two health facility surveys will be carried out to measure health care provider knowledge and practice o f STI and HIV/AIDS clinical management. The first survey will be carried out in Year 2 after training health care providers in the newly developed HIV management guidelines and the revised STI management guidelines. The health facility survey will be repeated in Year 4 after continuing supervision and training o f additional providers. The final survey should be nationally representative to measure overall impact o f the project. Other aspects o f the project such as STI drug supply and pharmacists' STI knowledge may be assessedduringthe health facility surveys. wouldTargeted (iv) assessments: Evaluation o f the effectiveness o f specific intervention activities be carried out in targeted assessments using qualitative and quantitative techniques. The activities to be evaluated and the timeframe will be determined during detailed project planning and ongoing project monitoring. Evaluation may be indicated to assess innovative approaches, when routine monitoring shows unexpected results, or when evaluating the appropriateness of scaling up projects. (v) Information systems: Enhancement of the BhutanHealth Management Information System (BHMIS) and introduction of the Laboratory Information System (LIS) through the Public 8 Health Laboratory will provide data for measurement o f key project indicators. In addition, information from the BHMIS will include case reporting o f STIs by facility and the LIS will provide information on HIV and syphilis screening o f blood donors, antenatal syphilis screening, andHIVrates at VCT centers. (vi) PBM tool andprogress reports: The Planning, Budgeting and Monitoring (PBM) tool has been developed by M O H (i) to facilitate planning, budgeting and monitoring by M o H officers; (ii) aidincompilationofwork-plansandbudgetsforPPDandAFD,respectively; (iii)link to to the budget to each individual activity that appears inthe work-plan; and (iv) to link financial and physical monitoring activities. The proposed project would strengthen this system. Output indicators and progress o f program activities would be monitored by PBM tool and by project progress reports on an annual and semi-annual basis. RGOBSustainabilitystrong commitment to fightingHIV/AIDS. It responded to the HIV/AIDS 4. has indicated threat early, recognizing the dangers o f inaction that frequently accompany a low prevalence setting. The National Assembly has addressed HIV/AIDS issues during each of the past four sessions. The Ninth Five-Year Plan has also identified HIV/AIDS and STD prevention and control as one o f the country's most important programs, inthe context o f addressing emerging health issues for the Bhutanese population and promoting the health o f women and adolescents. In addition, Her Majesty Queen Ashi Sangay Choden Wangchuck is the UNFPA Goodwill Ambassador and an outspoken advocate for HIV/AIDS and STI prevention. A National HIV/AIDS Commission, with expanded membership to include civil society and the private sector, has been reconstituted to strengthen multisectoral involvement. Although commitment from sectors other than health and at the Dzongkhag level varies, the project would support advocacy andtraining to increase awareness o f HIV/AIDS as a multisectoral, development issue. To ensure implementation sustainability, the project design and strategy utilizes and builds the capacity o f existing institutions to manage and implement the project and relies on leadership andchampions withinMOH. Although MOHis expected to take leadership inHIV/AIDS, given that the epidemic remains invisible to many other sectors, the project would strengthen engagement o f other line ministries and civil society, cultivating leadership from all sectors. 5. Critical risks and possible controversialaspects Many key agencies and organizations participated during project preparation, including the media, religious body, youth groups, and women's associations. Unlike many of other countries, Bhutan appears to be more open to discussing sexual behaviors and sexuality. To mitigate possible resistance to the efforts o f the National AIDS program, the project would continue to involve key stakeholders inimplementation and review of project activities and progress. Risks relatedto political, social, and implementation factors are highlighted below. Risks Risk Riskmitigationmeasures rating Political risks: . Low visibility andpriority for HIV/AIDSin M Strong support for National HIV/AIDS low prevalence epidemic setting. Commission. Advocacy would be directed at high level officials, royalty and other community leaders. Social risks: 9 Risks Risk Riskmitigationmeasures rating Behavioral change communications (BCC) program BCC messages promoting condoms as M .. would coordinate with family life education encouraging sexual activity among adolescents. (UNICEF) andpromote delayed onset o f sexual activity and fewer sexual partners among youth. Availability o f ART may increase highrisk M BCC messageswould be targeted to prevent behaviors. possible negative behavioral consequences. Stigma and discrimination may discourage S BCC strategy to include component on reducing PLWHA's participation inproject activities and stigma and discrimination at community level. . care-seeking behavior, as well as acceptanceo f Availability o f care and treatment would encourage VCT services. disclosure and use o fVCT. Low visibility o f PLWHA may lead people S Providing care and treatment for PLWHA would to believe that HIV/AIDS is not a real encourage themto become involved inHIV/AIDS problem, negatively affecting the adoption o f prevention. .. safer behaviors. Implementationrisks: Lack o f humanresource capacity inMOH. S Recruitment o fProgramManager for NACP, and establishment o f Project Management Team. Lack o f experience inHIV/AIDS activities in S Training, both in-country and out-of-country, o fkey MOH, other line ministries, andNGOslCBOs. personnel. Appropriate use o f consultants with careful selection and clear and specific TORS. Coordination andtechnical support o fproject .. activities byNACP and PMT. Ongoing long term collaboration with regional institution for selected components. Large number o f implementing agencies S Ensure adequate and qualified staffing andprovide (MOH, other line ministries, dzongkags, CBOs, training intechnical, financial, andmanagement NGOs, private sector). skills o f P M T andNACP. Large component o f training outside Bhutan M Work closely with RCSC for identification and may lead to problems o f identification o f posting o f training candidates. Humanresource plan appropriate candidates for training, delay in would include backup plans for filling vacancies implementation o f activities while staff are out created by training. Coordinate timing o f trainings o f country, andplacement o f trained people in with workplan implementationactivities. M Strengthen monitoring and evaluationby improving weak; thus, information systems on HIVIAIDS management information systems, and training in has not beena priority. researchlevaluation methodology anduse o f data for management. There is no staff currently available with Bank S RGOBhas approvedthe positions ofFinance project experience to manage the Financial Officer (FO) and Accountant. The Accountant will Management o f the project inthe PMT. be identifiedby negotiations and appointed inMay 2004. FO will be identifiedby December and posted inJanuary 2005. The M O HDCFO will oversee the project untilthe positiono fFO has been filled. The training plan has beenprepared and will be included inthe National Finance Service (NFS) Annual HumanResource Development Plan, following RGOB's policy. Fundsreleasedfor project activities to be S PMT will request for release o f funds from DBA implementedbyDzongkhags into the General according to the approved annual workplan. Fund L C account, will be prioritized for Dzongkhags releases will be based on timely reporting o f own activities expenditure (utilization certificate) for intended purpose and o fprogress on achieving the results indicators, as indicated inthe Dzongkhag HIViAIDS workdan. 10 Risks . Risk Riskmitigation measures rating MOH& DBA are notfamiliar withthe concept M IGAwill be signedandpaymentswill be made of advancingfunds to NGOs/ CBOs andother- basedon SOEs/utilizationcertificatespreparedby stakeholders for implementingproject activities NGOs/CBOs. A guideline for implementationand usingInnovativeGrantagreement (IGA). disbursementsof funds will be detailedinthe OM andadequate training programscarriedout. 6. Loadcredit conditions and covenants Maintain a PMT within M o H for the overall coordination and management o f the Project, . and ensure that the PMT i s adequately staffed with individuals having qualifications and experience satisfactory to the Association throughout the implementationo f the Project Implement the environmental mitigation, monitoring and other measures set forth in the Infection Control and Health Care Waste Management Plan D. APPRAISAL SUMMARY 1. Economic and financial analyses The economic analysis addressed (i)whether the HIV/AIDS prevention project would be a worthwhile investment, as shown by a positive Net Present Value (NPV), (ii) economic the justification for government financing (subsidization) o f the project, and (iii) poverty aspects. Despite limited data, information from the Risk & Vulnerability study and from key informants was used to builda three-scenario model (base case, medium & worst case) to predict the rate o f new infections for the economic analysis. RGOB counterparts considered the medium case scenario to be the most appropriate for Bhutan. Details o f the model are inAnnex 9. (i)TheestimatedNPVoftheprojectwaspositive($20.2million)forthemediumcasescenario, usinga 10%discount rate and extending project benefits and costs until2022 (to allow 15 years of ART) as benefits will continue to accrue after the end o f Bank funding. Under the medium case scenario, the project was estimated to prevent about 13,700 infections until 2022, which represents a 60% reduction in infections estimated without the project. The NPV for the base case scenario was negative (-$3.1 million), but represented a conservative analysis based only on the number o f seropositive people identified in2004 as index cases and a low estimate o f sexual activity. A sensitivity analysis was undertaken using the medium case scenario and varying the condom coverage assumptions. The NPV was robust, turning negative at a 68% reduction inthe project's target condom use prevalence. ART was addressed by adding the cost o f the ART component, projecteduntil2022, to total costs without including the benefits from ART. This is a conservative analysis. Based on these analyses (further details in Annex 9), it was concluded that the NPV for the project was likely to be positive. (ii)The economicjustification for government financing ofthe HIVproject depends upon whether the.project would be financed by the private sector in the absence o f government financing. As the private sector in Bhutan is small and lacks the incentives and capacity to address HIV o f its own accord, there i s no alternative to government leadership in financing and controlling the epidemic. It i s possible that some private financing may become available inthe future for prevention activities from firms concerned about protecting employees against HIV. However, the government will always have the critical role in addressing most priority groups (CSWs, youth) andinproviding treatment through the national health system. 11 (iii)WhilethereisnoevidencetosuggestthatHIV/AIDSinfectionratesaredisproportionately higher for the poor, clearly poor households are least able to bear the costs o f care and treatment or the loss o fincome resulting from sickness and death. 2. Technical The proposed project adheres to internationally accepted best practices for HIV/AIDS response in low prevalence settings, as advanced by UNAIDS, WHO, and other technical and research experts. The main thrust o f the project lies with interventions that have been proven cost effective inpreventing the spread o f HIV, providing care and support for PLWHA, and reducing stigma and discrimination against PLWHA. The project would support interventions that include behavioral change communications, condom social marketing, targeted advocacy for opinion leaders, voluntary counseling and testing, improvement o f STI management (inaccordance with WHO guidelines), prevention o f mother-to-child transmission, and promotion of safe blood through expansion o f voluntary donor recruitment and rational use o f blood and blood products. Since the risk o f HIV transmission in Bhutan i s largely attributable to casual sex encounters, prevention activities will focus largely on populations with highrates o f casual sex (e.g. mobile populations, armed forces) and specific geographical locations (e.g. bars, restaurants, vegetable markets, festivals) identified as "hotspots" where casual sex is most likely to occur. The project also places great emphasis on improving the information base upon which HIV/AIDS policy andprogrammatic decisions are made. Second generation surveillance systems - which entail upgradingof sero-surveillance and introduction of behavioral surveillance - would be developed. In addition, general population surveys, health facility surveys, routine monitoring ofproject activities (inputs and outputs) through M I S (modification o f existing health M I S and addition o f laboratory information system), and targeted assessments would assess the impact o f interventions. While prevention is the crux o f the project, it strengthens the institutional capacity to provide AIDS care through better screening and diagnostic services, improving counseling infrastructure, and training o f medical and health personnel in managing HIVIAIDS cases, including provision o f ART. 3. Fiduciary Financial Management. The project will have a satisfactory financial management system. Financial management and disbursement arrangements have been streamlined, to the extent possible, to use the existing government system. The Administration and Finance Division (AFD) in MOH, has experience in implementing Bank financed projects when Health and Education were under the same ministry. The PMT inMOH will have the overall responsibility for execution and financial management o f the project. All project disbursements will follow the traditional transaction based system. Project grant hnds will be deposited into the special accounts to be opened inthe Royal Monetary Authority and will be operated according to terms and conditions acceptable to the IDA by DADM. Disbursements from the special accounts will be following the normal government procedure for making payments, as described in the Financial and Accounting Manual. Project accounts will be kept on a cash basis o f accounting. Annual external auditing of project accounts will be carried out by the Royal Audit Authority, which i s the supreme audit institution in Bhutan. Annex 13 details the TORS,which have been agreed to RAA and Internal Audit. 12 Staffing. To manage the Financial Management o f the project, RGOB has approved the positions of Finance Officer (FO) and Accountant for PMT. The Accountant will be identified by negotiations and appointed in May 2004. FO will be identified by December 2004 upon return o f a batch o f Finance officers from overseas training and posted in January 2005. As an interimmeasure, AFD DCFO would assume the responsibilities of the project FO. RGOB has agreed that an adequately qualified and experienced Finance Officer will be available on a full- time basis, throughout the entire implementation period o f the project. Prior to any transfer o f such dedicated personnel, RGoB will ensure that there i s sufficient transitional time for the succeeding candidate to be trained on-the-job. The training plan for FO and accountant, as well as other accounting staff involved inimplementation o f the project, has been incorporated inthe Project Implementation Plan and will be included in the NFS Annual Human Resource Development Plan, following RGOB's policy. Fund Flow. Project funds will be deposited by IDA into a Special Account inDollars (SA), to be opened at the Royal Monetary Authority (RMA). SA will be used for all expenditures of the project and managed by Department of Aid and Debt Management (DADM) in the Ministryo f Finance. On authorization from DADM, the RMA will convert the requested dollar amount to local currency and transfer the same into a Government Budget Fund Account (GBFA) in the Bank o f Bhutan (BOB)for Department o f Budget and Accounts (DBA). With clearance from DADM, DBA will issue a Project Letter of Credit (PLC) in favor of Accounting and Finance Department (AFD) o f MOH. A PLC is DBA's authorization to the bank to honor payment instructions from AFD up to the specified limit. PLC will serve the implementing agencies with MOH and other line Ministries, as well as NGOs, whereas General Letter o f Credit (the existing Dzongkhag Account) will be used for funds released to the Dzongkhags. Annex 7 includes fund flowheporting chart, as well as fund flowh-eportingmechanisms for each implementing agency. Financial Monitoring Reports. Consolidated financial and physical progress reports will be generated by PMT on a quarterly basis, with input from DBA (actual expenditure data), from PPD (for physical progress o f activities implemented by MOH and regrouping o f expenditures into categories defined in the DGA), and from Dzongkhags and other line ministries (physical progress data). FMRs are attached inAnnex 14. Retroactive Financing. Payments made for expenditure before the date o f the Grant Agreement but after January 1, 2004, inrespect o f categories 1through 6, can be claimed under the grant subject to an aggregate maximumo f US$500,000. Procurement. The Grant will finance goods, civil works, consultant services, and training. Procurement will be in accordance with IDA guidelines for "Procurement under IBRD Loans and IDA Credits", January 1995 (revised in January and August 1996, September 1997, and January 1999); as well as those for "Selection and Employment of Consultants by World Bank Borrowers ", January 1997 (revised September 1997, January 1999 and May 2002). The Bank's Standard Bidding Documents have been used as a basis for preparation o f the package specific biddingand Request for Proposal documents. The project procurement plan for the project, a detailed 18 monthprocurement plan, andthe majority o f the biddingdocuments are complete. IDA has provided no objection to the procurement plans, the TORS for major consultancies, and technical specifications for goods. The MOH will submit the two remaining 13 bidding documents, for procurement o f ARV drugs and equipment and goods for infection control andhealth care waste management. Procurement will be carried out by existing staff o f Drugs, Vaccines, Equipment Division (DVED) for goods, Health Infiastructure Development Project (HIDP) for works, and PPD for consultancies. The Ministry will designate a focal person within each division who would be responsible for carrying out the procurement. Duringthe first year, the Project Coordinator will assume the responsibility o f the procurement officer, and assist in coordinating all the procurement activities andcommunicatingwith the Bank. The effectiveness o f this arrangement will be reviewed and assessedafter the first year ofproject implementation. A capacity assessment ofMOHto implementprocurementactions for the project was carried out during project preparation. The issues/ risks concerning the procurement component for implementation o f the project indicate the need for training o f the staff o f DVED, PPD, HIDP, andAFD to apprise them about the procedures o fprocurements underIDA-financedProjects. Social. The social assessment included (1) a study o f risk behaviors and vulnerability and (2) stigma, discrimination and needs of PLWHA. In addition, political and social risks associated with this project were identified during consultations with key stakeholders during project preparation-MOH, line ministries, MSTFs, and civil society. Assessment of the current situation of HIV risk and vulnerability of priority groups and needs of PLWHA:Five population subgroups previously identified as being vulnerable to HIV were investigated: commercial sex workers (CSW), long distance drivers, migrant workers, armed forces, and drugusers. The study found that commercial sex i s not yet an organized industry inBhutan. However, almost all male respondents inthe study reported multiple non-commercial sexual partners. Identified "hotspots" for casual sex include vegetable markets, labor camps, bars and restaurants intown and along the highway, and festivals. Drug users reported sharing needles and syringes but fewer sexual partners than other priority groups. The number o f injecting drug users in Bhutan i s believed to be low, although drug use offences in Thimphu are increasing steadily. Several factors were identified as constraining HIV/AIDS prevention among vulnerable groups. These are (1) inadequate knowledge and misconceptions regarding HIV/AIDS, (2) lack of personal risk perception and interest inpracticing safer sex owing to low public visibility o f AIDS cases, (3) lack o f knowledge about importance/use o f condoms, (4) low coverage o f STI/HIV/AIDS prevention programs. The project would tackle these obstacles through the national prevention strategy. Participatory Approach: To foster a sense o f ownership and commitment, key stakeholder representatives from public and private sector, civil society, and donor agencies actively participated in project preparation workshops. Results from a study o f PLWHA contributed directly to designing interventions for PLWHA. The participatory approach will be adopted throughout project implementation. 4. Environment The RGOB, with the cooperation and support o f DANIDA, i s in process o f developing a National Infection Control and Healthcare Waste Management Program, based on an assessment o f a representative sample o f health facilities and stakeholder consultations. Under the HIV/AIDS project, an Infection Control and Healthcare Waste Management Plan has been developed, which will be a component o f the national program when finalized. This Plan supports the HIV/AIDS prevention and control project by ensuringthat the transmission o f HIV, 14 and other nosocomial infections, inhealth facilities is minimized. The objective is to support two main activities o f the overall program: (i) establish an Infection Control and waste management system for infectious waste that is a direct result o f project financed activities; (ii) establish a system to treat and dispose o f healthcare waste from key facilities in an environmentally acceptable manner. Infection control procedures will be strengthened to improve occupational health conditions and reduce disease transmission. Environmentally sound treatment and disposal o f health care waste will be instituted in key facilities, along with good practices for management o f waste from source of generation. The Planwill support the establishment o f appropriate institutions, training of healthcare staff, procurement o f protective supplies and equipment and monitoring and evaluation, IEC material on the correct handling and disposal o f health care waste will be developed and disseminated in appropriate places to enhance awareness and knowledge o f hazards of inadequate waste management and infection control practices. A National Infection Control Committee (NICC) will be established inthe Ministryo f Health (MOH), Department of Medical Services for implementation and monitoring & evaluation o f the national program. The NICC will have the Director of Department of Medical Services as chairman and will include senior officers from MOH (Public Health, Health Care, Drugs Vaccines Equipment Division, Quality Assurance & Standard Division, Health Engineering, Institute of Traditional Medicine Service, Royal Institute o f Health Services, senior medical and nursing staff), National Environment Commission, and City Corporation. The NICC will set up working groups to work on specific tasks as needed. At each o f the referral hospitals there will be Infection Control Teams (ICT), comprising two link nurses and a doctor. At the BHUlevel, the Health Assistant will be responsible for infection control and waste management activities and reporting to the Dzongkhag ICT. The NICC and the ICTs at the respective health facilities will undertake monitoring o f infection control and health care waste management. Standardized reporting formats will be developed centrally and staff at Dzongkhag and central levels will be trained in undertaking monitoring and reporting for the program. 5. Safeguard policies Safeguard Policies Triggered by the Project Yes N o Environmental Assessment (OP/BP/GP 4.01) [XI [ I Natural Habitats (OP/BP 4.04) [ I [XI Pest Management (OP 4.09) [ I [XI Cultural Property (OPN 11.03, being revised as OP 4.11) 11 [XI Involuntary Resettlement (OP/BP 4.12) [I [XI Indigenous Peoples (OD 4.20, being revised as OP 4.10) [I [XI Forests (OP/BP 4.36) [ I [XI Safety o f Dams (OP/BP 4.37) [I [XI Projects inDisputed Areas (OP/BP/GP 7.60)* [ I [XI Projects on InternationalWaterways (OP/BP/GP 7.50) [ I [XI 6. Policy exceptions and readiness There were no policy exceptions. * By supporting theproposedproject, the Bank does not intend toprejudice theJina1determination of theparties' claims on the disputed areas 15 Annex 1: Country and Sector or ProgramBackground BHUTAN: HIV/AIDS and STI Preventionand ControlProject Descriptionof HIV/AIDS and STIs SituationinBhutan HIV/AIDS has undoubtedly taken root inthe South Asia region and, as has been well documented in many countries around the world, denial o f the epidemic can lead to devastating economic and social consequences. It is critical, therefore, that countries act vigorously to halt further HIV spread while the problem remains largely invisible. In Bhutan,HIV prevalence is currently low, withUNAIDS estimatingthat about 100Bhutanese lived with HIV/AIDS at the end o f 2001, which amounts to a prevalence rate o f less than 0.01%. However, there are mounting concerns, because of an increasing rate in detection o f HIVcases. Themajority oftheseinfectionswere acquired throughunprotectedsex. The estimated low prevalence and small number of reported cases indicate that Bhutan is at an early stage o f the epidemic. However, there are several risk factors and conditions in the country that could help fuel further spread o f the virus. Bhutan i s a landlocked country, situated in the Himalayas bordering the Northeast states o f India, West Bengal, and China. The country's borders are porous, increasingly so, with thriving commerce and trade. Neighboring northeastern Indian states and Nepal are already experiencing generalized or concentrated epidemics. InManipur, 56% of injecting drug users, 10.5% o f STD clinic attendees, and already 1.8% o f women attending antenatal clinics are infected with HIV. In Nepal, 50% o f injecting drug users and 36% o f sex workers are infected with HIV. Other states nearby, such as Sikkim and Meghalaya, however, maintain a relatively low prevalence. A high level o f mobility across these borders indicates an urgent need for sharinginformationand collaboration on HIV/AIDS prevention efforts. HIV PrevalenceinNeighborin- I D U S Sex STD Antenatal Workers clinic -Clinic India' Assam - - 1.5 0.0 West Bengal 0.6 0.1 Sikkim -- -- 0.0 0.0 Arunachal - - 0.0 0.0 Pradesh Manipur 56.3 - 10.5 1.8 Meghalaya 1.4 - 0.0 0.0 Mizoram 2.0 - 2.2 0.3 N a aland 5.5 - 7.4 1.3 NeDal H 50.0" 36.2" - 0.5 - No data 1. National AIDS Control Organization, India, HIV Sentinel surveillance, 2001 2. Serosurveys 16 Inaddition, Bhutan has a significant level of sexually transmitted infections (STIs), which increase the likelihood o f acquiring and transmitting HIV. Although the existing sentinel surveillance system has problems with irregularities in sampling procedures and reporting leading to inconsistency in findings, it serves as the best available data source for tracking the progression o f the HIV/AIDS epidemic. Authoritative and consistent anecdotal reports from clinicians also suggest that both gonorrhea and chlamydia are very common, with cases frequently being reportedinthe southern regions as well as the central and eastern regions. The presence of antibiotic resistant strains has beenreported, but not investigated. Furthermore, unpublished results from the national blood bank in Thimphu provide evidence o f an elevated rate o f syphilis inBhutan.Among 4,206 replacement donors in2002, 2.4% tested positive for syphilis. A small number o f observational studies have been conducted with high-risk subpopulations in Bhutan but unfortunately this body o f research suffers from incomplete reporting, making an assessment o f the data quality problematic. One o f these studies (frequently cited inthe existent literature) reported an astonishingly high 72% prevalence o f syphilis among of 60 commercial sex workers tested positive for syphilis. Results from the 2000 sentinel surveillance system reported that 17.7% o f the 79 members of a high-risk subpopulation (primarily commercial sex workers) were positive for syphilis, suggesting a more reasonable yet still elevated prevalence rate for this risk group. Other FactorsThat CouldInfluenceEpidemicGrowth It is important to note that Bhutandoes not appear to conform to the typical pattern o f the HNepidemic inAsia where the spread o fHIV i s driven by commercial sex and injecting druguse, at least inits initial stages. Commercial sex work appears to be limitedinscale and primarilyfocused inborder towns andinjecting druguse is also believedto be limited. Less rigid sexual norms and relations. Bhutanese society i s perceived to have less stringent norms and views about sexuality for both men and women; multiple concurrent relationships and casual sexual encounters are presumed to be common among the general population, as well as premarital sex as virginity i s not overly emphasized. Casual sex is reported to be prevalent among both males and females, suggesting that a large-scale epidemic i s possible, depending on the frequency and degree o f sexual mixing inthe country. Results from a risk and vulnerability stud? carried out during project preparation suggest that non-paid casual sex with strangers and other non-regular partners i s common among long distance drivers, armed forces, migrantworkers and drug users. These behaviors tend to occur inspecific geographical locations (e.g. bars, restaurants, vegetable markets) and events (e.g. festivals). Respondents in the study also identified several additional risk groups, including businessmen and civil servants who travel frequently; village girls who live near highways, engage in seasonal work or travel to sell farm produce; girldwomen employed as The riskand vulnerability studyusedqualitative methods and interviewed key informants and member o f five priority groups identified prior to the data collection as follows: long distance drivers, migrant workers, commercial sex workers, drug users and armed forces. 17 temporary help in offices, singers inbars, or maids; and schoolgirls and unemployed youth. Although this initial study begins to define risk groups, the nature of casual sex behaviors requires more extensive examination (Le., who i s more likely to engage in casual sex, where i s this prevalent (geographical variation-urbdrural, westedeastern regions; and what conditions and situations promote these behaviors (e.g, festivals, events, and travel). Understanding the overlapping o f sexual behaviors andnetworks-i.e., buyingsex inBhutan or elsewhere and engaging in multiple partners, in casual and primary partnerships-would provide critical information for improving HIV and STI prevention interventions. Low condom use. N o information i s available on the use o f condoms among high- risk subpopulations, such as sex workers and clients, or on the demand for condoms among youth and the adult population. As seen elsewhere, family planning data indicate low condom use among contraceptive users. The contraceptive prevalence rate inBhutan in2000 is 30.7%; fertility level i s high, with an average o f 4.7 children per woman. The Annual Health Bulletin 2000 indicates that the 13% o f contraceptive users are currently using condoms. To date no studies have been carried out on people's attitudes towards condoms and it can be assumed that generally there is a big gap between knowledge and use. With regard to condom use, accessibility i s a factor since they are available only at health facilities andsome extent with village healthworkers. HighMobilitv. Mobility associated withwork oftenresults inanunbalancedratio of women to men, leading to sharing o f sex partners, engaging in sex work, and conditions o f lesser social control and stronger peer influences. There are four groups o f mobile populations that have captured the attention o f HIV prevention efforts: (i)those traveling abroad for studies or business; (ii) armed forces-army, Royal Body Guard, and Police; (iii) migrant workers from neighboring countries; and (iv) mobile professionals, such as truck drivers and traders. Youthful population. Global attention has increased markedly on youth, with a rise in HIV infection and AIDS among those under the age of 25, and in documentation of their heightened vulnerability. Young people in the world often lack information about HIV/AIDSandharbor a great number o f misconceptions, particularly among girls. It is also at this age when experimentation with drugs and alcohol begins. The vulnerability o f girls also i s increased, because of sexual mixing (when older men have sex with young girls), prostitution andtrafficking. About 45% o f Bhutan's population i s under 15 years o f age and about 79.2% is under 45 years (2000 national health survey). A survey o f Punakha HighSchool students, which was carried out by RIHS in 2002, found that, although awareness o f HIV was high, misconceptions abound. Ninety six percent o f them knew that HIV is sexually transmitted and 88.4% believed that condoms prevent HIV/AIDS. However, misconceptions persisted. 48% believed that HIV could be transmitted by mosquitoes, 69% believed that HIV/AIDS is curable iftreated early, and 76% opined that people livingwith HIV/AIDS should be isolated to the prevent spread of infection. Increasing knowledge and access to information through youth friendly and youth driven services are necessary. 18 NationalResponse to HIV/AIDS RGOB acted early to initiate HIV/AIDS prevention activities inthe country. In1988, five years before the first HIV infection was detected RGOB established a National HIV/AIDS and STD Control Program (NAP). The program i s situated in the Ministry o f Health, under the Department o f Public Health. Its responsibilities include development o f strategies, planning, providing technical assistance, and monitoring o f implementation, which takes place largely at the Dzongkhag level through the Dzongkhag medical officers and health workers. The program has two full time staff members, one overseeing infection control and the other HIV/AIDS and STI prevention activities. Information, Education, and Communications Health Division (IECH) and the Royal Institute o f Health Services (RIHS) are key institutions inthe Ministrythat also are involved inHIV/AIDS prevention. IECHhas developed education materials and planned communications activities for the program, and RIHS has provided training to mid-level health workers, nurses, and lab technicians prior to beginning their services. Recently, after a successful pilot inPhuntsoling, multisectoral task forces have been established in all Dzongkhags with the mandate to carry out HIV/AIDS awareness and prevention activities. With the establishment o f MSTFs, HIV/AIDS prevention activities will be well decentralized with backup support from the national program. External Support. Unlike many other aid-dependent countries, Bhutanhas a strong sense o f development priorities and of the comparative advantage o f various donors. The donors, including DANIDA and UNagencies such as WHO, UNICEF, UNDP, and UNFPA, have worked closely with the government over the past decade insupporting the health sector ingeneral, including HIVIAIDSpreventionandcontrol efforts. 1999 2000 2001 DANIDA 325,000 212,000 262,000 WHO 35,000 35,000 35,000 RGOB 1,000 6,400 5,400 Total 361,000 253,400 302,400 DANIDA was the one o f the largest financial supporter for Bhutan's National HIV/AIDS program. Total budget for 2001-2002 was about US$290,000, o f which 60% (or US$180,500) came from DANIDA. The funding level is expected to be about the same for each year o f the 9thFive Year Plan, which totals about US$1.45 million for 2002 to 2007. WHOhasprovidedbothtechnicalandfinancialassistancetothecountry's HN/AIDS prevention program that included short-term consultants in the areas o f sentinel surveillance andhealth educationand finances to travel to conferences andto global andregional events. UNFPA-support commenced in 1981. Total UNFPA contribution for the Third Country Program (CP) (1988-2002) was US$4.9 million. Previous UNFPA support included the development and distribution o f national standards and guidelines for contraceptive services (counseling & prevention o f STIs) to field staff, while proposed UNFPA assistance 19 for its fourth five-year program (2002-2006) i s US$ 5.0 million and will focus on reproductive health and among other things, prevention of STIs andHIV/AIDS. In2002, UNDP fimded a project of about US$200,000 to strengthen the capacity of the Multisectoral Task Force (MSTF) in planning and managing Dzongkhag-based HIV prevention and advocacy activities. 20 a, m .3m L !4E 0 R 0 .. c.' m M f i B8 0 3 8c H a .3a 0 3 r3 0 M Y 5- .3 a m z a 4-( cu 0 *0 0 c .3 x x I @ a a a a a x X x x x d z .3 c H n 2 a a a a a X 4 X 4 X 4 X 4 X 4 Annex 4: DetailedProjectDescription BHUTAN: HIV/AIDS and STI Preventionand ControlProject Component1:PreventionofHIV/AIDS and STIs ($2.00 million) 1.1Increasing access to and use of condoms. Responsible agency: Information and Communications Bureau. The feasibility o f condom social marketing will be assessed by consultancy firm in the first year o f the project and if recommended, a national condom social marketing program will be launched by a social marketing organization. Condom distribution through the public sector would be strengthened by procurement o f condoms to increase the available supply and improvement o f logistics and information systems and purchase o f vehicles to improve distribution to MOH facilities and all other implementing agencies, including NGOs. Condom demand generation will be generated through social marketing and the BCC strategy (see 1.2). 1.2 Increasing knowledge and commitment. Responsible agency: Information and Communications Bureau. A comprehensive BCC strategy will be developed with international technical assistance and support (four months TA spread over the first 18 months). The strategy will focus on boththe general population and identified priority groups and hotspots and will support interventions by MOH, other line ministries (see priority ministries listed in 1.3), private sector and NGOdCBOs with an aim to increase knowledge andpositive attitudes towards HIV/AIDS and STIprevention, promote safer sexual behaviors and VCT, and reduce stigma and discrimination for PLWHA. In addition, a high level advocacy component will be promoted through publicized statements and media events by government officials andthe royal family. Planned activities include media campaigns; advocacy events at national, Dzongkhag and geog levels; study tours for key leaders and implementers; training o f health workers, voluntary health workers, community leaders and peer educators; production o f provider reference and patient education materials for STI management; and production o f IEC materials and dissemination o f information through other channels such as festivals, sporting events, debates, etc. 1.3 Changingattitudes and behaviorsamongprioritygroups. Responsible agencies: Project Management Team andNational AIDS Control Program. This component will work through both the public sector (MOH including Dzongkhag hospital staff, other line ministries, and Dzongkhag administration) and the non-governmental sector (NGOs, CBOs, and private sector) to promote prevention activities at Dzongkhag level with identified priority groups (including sex workers, long distance drivers, migrant workers, armed forces, drugusers and out-of-school youth) and at "hotspots" where high risk sexual behavior frequently occurs (such as vegetable markets, bars and teashops along the highway, hotels and pool halls, festivals, etc). Eight priority ministries have been identified: (i) Ministry o f Education to work with youth in and out o f school; (ii) Ministry o f Information and Communications (Road Safety & Transport Authority) to work with transport workers (including truck drivers); (iii) Ministry 29 o f Labor and Human Resources to work with formal and informal employees, including migrant workers; (iv) Ministry o f Home and Cultural Affairs (Religion and Cultural Affairs Department) to work with the religious community; (v) Ministryo f Trade and Industry (in collaboration with Tourism Authority o f Bhutan and Bhutan Chamber o f Commerce) with business communities including, among others, hotel and bar owners and pharmacies; (vi) Ministryo f Works andHumanSettlement (Department of Roads) with nationalroadworker labor force; (vii) Royal Civil Service Commission to work with civil servants; (viii) Armed Forces with the personneland families o f the Army, Police, and Royal Body Guard as well as health care workers for Armed Forces facilities. Each selected line ministry will designate a focal person for HIV/AIDS activities. Within MOH, implementing this strategy will rely on leadership at the Dzongkhag level. Health authorities, presently led by the Dzongkhag Medical Officer, will be responsible for managing and coordinating prevention activities by establishing a network o f outreach workerdpeer educators to provide core prevention services, including condom distribution, referral for VCT and STI treatment, and increased knowledge about HIV transmission and prevention. The health authorities will also establish and manage an HIV care team to provide treatment andmedical support to HIV positive individuals. Multisectoral Task Force (MSTF) members will provide advocacy (e.g., reducing stigma), political and social support for prevention activities, and community mobilization. Although all twenty Dzongkhags will be involved in implementation, those with higher level o f risk (Le. greater number o f "hotspots" and high risk populations), will receive greater resources and management and technical input. In addition, monitoring by PMT and NACP will ensure that Dzongkhags which can demonstrate results as plannedwill receive more funds. NGOs and CBOs, such as women's and youth groups, would be encouraged to undertake prevention activities for priority populations, to increase knowledge about prevention and access to condoms and information about services on VCT and STI treatment. Mobilizing PLWHAs and other priority groups to form CBOs would also be supported. Innovative grants would be provided to line ministries, Dzongkhags, andNGOs/CBOs. Line Ministries and Dzongkhags would prepare an annual workplan, and NGOs/CBOs a subproject proposal, which would be reviewed and submitted to the Technical Committee by PMT. Technical Committee will provide recommendations for approval by Ministry o f Health. Support will be provided by NACP through orientation workshops and staff training, as well as provision o f IEC materials and strategies as part o f the overall BCC strategy (see 1.2). 30 Component2: InstitutionalStrengtheningandBuildingCapacity($1.66 million) 2.1.Strengtheningand expandinglaboratoryservices and bloodbank. Responsible agency: Public Health Laboratory and Blood Bank, Jigme Dorji Wangchuk National Refierral Hospital. Laboratory services will be strengthened through staff training, procurement o f equipment and reagents, development and implementation o f a national quality assurance program, and development o f an information system. International training o f laboratory technicians will include three undergraduate degrees in medical technology (one per region) to upgrade capacity at regional and Dzongkhag hospital laboratories and four additional laboratory technicians will be trained in intemational short courses (3-6 months duration) in HIV/STI diagnostics, quality assurance, and therapeutic drug monitoring for ART. The HIV/STI testing capacity o f the PHL, two regional STI reference laboratories, and all Dzongkhag hospitals will be upgraded to improve performance o f existing diagnostic tests and expand the range o f tests available (e.g. CD4 counts, dark-field microscopy, HIV tests at VCT centers). Equipment and reagents will be procured and all laboratory technicians will be trained in newly introduced diagnostic tests, including a review o f procedures for existing STI andHIVtests. A national quality assurance program will be developed and implemented in all laboratories and VCT centers. A laboratory information system will be developed for collection o f laboratory data and monitoring o f quality assurance and implemented at the central and Dzongkhag levels (including training o f laboratory technicians and procurement o f computers) with assistance from an IT firm. The national blood bank will be strengthened through development o f a National Blood Safety Policy and standard operating procedures for blood transfusion services with technical assistance from WHO, purchase o f equipment and reagents, in-country training o f laboratory technicians and health care providers on safe blood transfusion and the rational use of blood and blood products, out-of-country training in quality management of blood transfusion services (diploma courses for 6-10 persons) and media campaigns and camps for voluntary blood donation. 2.2.Enhancing technical, management, and implementation capacity, strategic planning and policy development. Responsible agencies: Project Management Team and National AIDS Control Program. A National HIV/AIDS Policy will be developed and widely disseminated through a participatory process involving the National HIV/AIDS Commission, NACP, key ministries and stakeholders with technical assistance o f an international consultant. N H A C meetings and annual meetings of Dzongkhag level and central health authorities will be supported bythe project. The RGOB and NACP capacity for managing STI and HIV/AIDS control activities will be strengthened through study tours, regional and intemational workshops and conferences, procurement o f office equipment, computers and vehicles. 2.3.Establishmentof Project Management Team. Responsible agency: Project Management Team. The establishment o f a Project Management Team (PMT) will support the activities o f the NACP, other sections of MOH, other line ministries, and non-governmental partners in 31 implementation, coordination and reporting of the project. Project financial support will include office rental, recurrent costs, vehicle, and office equipment. Component3: Care, SupportandTreatment of AIDS and STIs ($1.0 million) 3.1 Increaseaccess to and use ofVCT. Responsible agency: National AIDS Control Program. The Ministryof Health will work inpartnership with institutions inthe region to strengthen VCT services, particularly indevelopment o f VCT implementation guidelines and intraining counselors. A VCT team, composed o f one medical doctor and two allied health personnel, will attend a six-month counselingtraining course inThailand and a regional consultant will visit Bhutan to work with the team in developing training curriculum and materials for Bhutanese counselors. The consultant and the VCT team will train 58 counselors in-country (two per hospital) who will provide counseling for VCT and PLWHA care and support. The VCT team will retum to the regional institution for a two month refresher course after gaining field experience inBhutan. Five VCT centers will be established in a phased manner. Initially, two freestanding centers will be constructed (in Thimphu and Phuntsoling), primarily targeting priority groups/hotspots. They will be conveniently located with late evening hours and offer a range o f services in addition to VCT including STI management, STb'HIV prevention education, counseling, condom distribution, and general medical services. Three additional centers will be developed (may include minor construction) within Dzongkhag hospitals. VCT will be available at the remaining Dzongkhag hospitals but no construction or refurbishing is planned at these sites. Demand for VCT will be generated though the BCC strategy and interventions with priority groups. Laboratory support and quality assurance will be provided through PHL. 3.2 Strengtheningmanagementof AIDS and opportunistic infections. Responsible agency: National AIDS Control Program. National guidelines will be developed for the management of HIV/AIDS and opportunistic infections, and will include guidelines for ART, opportunistic infection prophylaxis and treatment, prevention o f mother-to-child transmission, and a comprehensive care and support approach. The guidelines will be developed incollaboration with institutions inThailand and will be peer reviewed by a WHO 3x5 team. A clinical team will be established in each dzongkhag based at the Dzongkhag hospital to provide comprehensive care and treatment. A regional consultant will be recruited to prepare training materials and provide the training for Dzongkhag-level clinical teams, in collaboration with MOH. CD4 cell count monitoring will be available in Thimphu at the Public Health Laboratory. Three pharmacists will attend a diploma course in Drug Information Systems and a drug information system for ART and 01drugs will be developed andimplemented. 3.3 Strengthening management of STIs. Responsible agencies: National AIDS Control Program and Quality Assurance and Standardization Division. The National Essential Drug Committee will review and guide the NACP in the planning and implementation o f the STI prevention and management program. The existing STI syndromic management guidelines will be revised in the first year to bring antibiotic treatments in line with international best 32 practice as defined by the 2003 WHO Guidelines for the Management o f Sexually Transmitted Infections and all first line drugs will be made readily available at all levels o f the health care system. Training manuals for health care providers, ANC staff and pharmacists will be developed, training will be conducted, and the RIHS curriculum on STI management will be reflect the new national guidelines. Inaddition, 20 clinicians will attend diploma courses inSTI management outside the country. Antibiotic susceptibility monitoring for N. gonorrhea will be undertaken at three regional sites every 1-2 years and Bhutanwill participate in the regional Gonococcal Antimicrobial Susceptibility Programme (GASP) coordinated by WHOBEAR. Antenatal syphilis screening will be implemented to the level o f Dzongkhag hospitals. At project mid-term, after experience with Dzongkhag level syphilis screening activities and availability o f additional prevalence data, the feasibility and cost-effectiveness o f extending the ANC syphilis screening to BHUlevel will be assessedand appropriate interventionsundertaken. The Quality Assurance and Standardization Division will be strengthened for regulation and testing o f HIV and STI drugs through a study tour to Ministry o f Public Health drug testing laboratory in Thailand, short-term trainings (3 persons) outside the country on registration andregulation o fHIVETIdrugs and QA for STI and infection control. 3.4 Universal precautions and Health Care Waste Management. Responsible agency: Department o f Medical Services. An Infection Control and Waste Management Plan has been developed and will be implemented in all healthcare facilities through (i) development o f national guidelines; (ii) training o f health care workers; (iii) production and distribution o f IEC materials for health care workers; (iv) procurement o f equipment for treatment and disposal o f infectious medical waste and sharps (e.g. needle cutters, bags, bins, protective gear, and autoclaves); (v) digging needle disposal pits at key facilities; and (vi) regular reporting, monitoring and evaluation. A strategy for post-exposure prophylaxis (PEP) will be considered at mid-term review once the national HIV/AIDS treatment policy and guidelines have been developed and antiretroviral procurement has been established. A National Infection Control Committee will be established in the Ministry o f Health (Department o f Medical Services) for implementation and monitoring & evaluation o f the National Infection Control and Healthcare Waste Management program and Infection Control Teams will be established for Dzongkhag-level implementation. Component4: Strategic informationfor HIV/AIDS and STIs ($1.1million) 4.1 Enhancingmanagement informationsystems and use of IT. Responsible agency: Policy and PlanningDivision. IDA and RGOB agreed to utilize the existing Planning, Budgeting, and Monitoring (PBM) Tool, which has been initiated and developed by MOH, to provide physical and financial progress reports for the project. The P B M tool will be adjusted and updated to fulfill IDA requirements, and the link between the Ministry o f Finance BAS and the PBM tool will be strengthened. Training manuals will be developed and relevant staff 33 will be trained in the use o f the PBM tool. To strength the IT infrastructure o f MOH, computers and software will be procured and LAN's will be installed. The existing BhutanHealth Management Information System (BHMIS) will be adjusted to improve its capacity to provide monitoring information required by the project and the changes will be reflected in updated software, reporting forms, user manuals and reports. Training materials will be developed for improving evidence-based decision-making and policy review at all levels o f the healthcare system, and key planners will be trained. 4.2 Strengthened operational research capacity and use of research data. Responsible agencies: Policy and Planning Department (Health Research Section) and Indigenous and Traditional Medicine Service. To strengthen the research capacity o f MOH, a ten-day course on health services research methodology for 4 key MOH research staff will be conducted with technical assistance from WHO to design and deliver the course. Four M O H staff will attend a short course in advanced methods of research in health outside the country. Subscriptions to international journals, purchase of reference materials, publication o f national research journal and dissemination o f important research findings and other information updates through various media (e.g., newsletters, website) will be supported by the project. Inaddition, Bhutanese traditional medicine will be incorporated into the care and support o f PLWA through improved analyses o f traditional compounds and dissemination o f results. 4.3 Surveillance, monitoring and evaluation. Responsible agency: National AIDS Control Program. The following strategies were identified to measure and monitor progress: (i) general population survey; (ii) behavioral and sero-surveillance; (iii) facility survey; health (iv) targetedmicro evaluations; (v) BHMIS; and (iv) progress reports from PBM tool, LIS andsupervisory visits. The monitoring and evaluation strategy is described infurther detail in Section C.3. The NACP, with technical input from the Health Research Section, National Statistical Bureau o f Bhutan and international TA, will be responsible for managing the overall M&E strategy o f the project. Local research firms will be sub-contracted for implementation o f the general population and health facility surveys and priority group surveillance. The current HIV surveillance system will be strengthened according to principles o f second- generation surveillance to concentrate data collection in the populations that are most at risk ofbecomingnewlyinfected with HIV. 34 Annex 5: ProjectCosts BHUTAN: HIV/AIDS and STI PreventionandControlProject Project CostBy Component and/or Activity Local Foreign Total U S $million U S $million US $million 1. PreventionofHIV/AIDSand STIs 1.106 0.892 1.998 2. Institutional strengthening and capacity building 0.514 1.145 1.659 3. Care and treatment of HIV/AIDSand STIs 0.486 0.537 1.023 4. Strategic Information for HIV/AIDSand STIs 0.655 0.450 1.105 Total Baseline Cost 2.761 3.024 5.785 Physical Contingencies Price Contingencies 0.070 0.090 0.160 TotalProjectCosts' 2.831 3.114 5.945 Interest duringconstruction Front-endFee TotalFinancingRequired 2.83 1 3.114 5.945 35 Annex 6: ImplementationArrangements BHUTAN: HIV/AIDS and STI Preventionand ControlProject Institutional arrangement. The main institution involved in overseeing and implementing HIV/AIDS and STI prevention and care and its relatedpolicies i s the Ministryo f Health (Project Management Team (PMT), the National AIDS Control Program, various divisions and programs o f MOH, such as Public Health Laboratory, Research & Epidemiology Division, Information & Communication Bureau, Medical Services Department), other line ministries, civil society including NGOs and CBOs, and private for-profit sector. Their roles and responsibilities are described below: National HZV/AZDS Commission. In February 2004, the Council o f Ministers called for revitalization o f the National HIV/AIDS Commission (formerly Committee). The NHAC, chaired by the Minister o f Health, includes members from various key ministries, representing Labor, Home Affairs, Finance, Civil Service, Armed Forces, Education, as well as representatives from MSTFs and civil society (i.e. National Women's Association o f Bhutan, and Kuensel (Bhutanese newspaper). The project would buildthe capacity o f NHAC to oversee the overall national effort on HIV/AIDS and STI prevention, care and treatment, formulate policies, coordinating the national response, and mobilizing resources, commitment and collaboration from the public andprivate sectors, and civil society. Ministry of Health. M O H would continue to assume the technical leadership and management of NACP and the proposed project. The Policy and Planning Division, the Departments o f Public Health, and Medical Services, through central and Dzongkhag level medical staff, health workers and technicians, would be responsible for implementingmany o f the activities across the project components, inparticular laboratory support, HIV/AIDS care and STImanagement. National STD/AIDSControl Program, situated inthe Ministryo fHealth under the Directorate o f Public Health, is headed by a Program Manager. NACP will (i) provide technical leadership on HIV/AIDS and support to all implementing agencies consistent with national policy directives; (ii) andensuretechnicalqualityofinterventions;(iii) HIV/AIDStrainingneeds monitor identify and coordinate with Master Plan for HRD; and (iv) in collaboration with PPD, manage HIV/AIDS information generated from surveillance and M&E system. NACP will collaborate with andreceivemanagement and administrative support from the Project Management Team. Other Line Ministries. Reaching at riskpopulations with HIV and STI preventionwould also be achieved through involvement o f line ministries other than health. Eight priority ministries have been identified: (i) Ministryo f Education to work with youth inandout o f school; (ii) Ministry of Information and Communications (Road Safety & Transport Authority) to work with transport workers (including truck drivers); (iii)Ministry of Labor and Human Resources to work with formal and informal employees, including migrant workers; (iv) Ministry o f Home and Cultural Affairs (Religion and Cultural Affairs Department) to work with the religious community; (v) Ministry o f Trade and Industry (in collaboration with Tourism Authority o f Bhutan and Bhutan Chamber o f Commerce) with business communities including, among others, hotel and bar owners and pharmacies; (vi) Ministry o f Works and Human Settlement (Department o f Roads) with national road worker labor force; (vii) Royal Civil Service Commission to work with civil 36 servants; (viii) Armed Forces with the personnel and families o f the Army, Police, and Royal Body Guard as well as health care workers for Armed Forces facilities. Each selected line ministry, with a designated individualheam responsible for initiating and coordinating HIV/AIDS activities, would prepare an annual workplan to be reviewed and approved by the PMT and Technical Committee. Each Ministry would implement HIV/AIDS related activities consistent with the components o f the national program appropriate to their constituencies and target populations. The workplan exercise would be incorporated into the existing RGOB planning and budgeting process. The first year would focus on developing the workplans with technical input on best practices from MOH. The OM and Annex 6 detail the annual workplan process, includingeligible expenditures, results monitoring, and reporting. Dzongkhags. The support at the Dzongkhag level would be two-fold: (i)facilitating the implementation of centrally managed activities (e.g. surveillance, training); and (ii) Dzongkhag initiated and managed activities. Dzongkhags would be responsible for developing an annual workplan for Dzongkhag managed activities, which would be submitted to and approved by PMT and the Technical Committee, including NACP, to ensure that proposed activities are in line with national objectives, are o f sound quality, and follow procedures and eligible expenditures that are detailed inthe OM. The Dzongkhag workplan would consist o f two parts-oneto be implemented by the Dzongkhag health authorities and the other by MSTF. The Dzongkhag Medical Officer (DMO), who presently i s the leadinghealth official at the dzongkhag level, would be responsible for managing andcoordinating prevention activities through anetwork o f outreach workerdpeer educators and healthworkers. Multisectoral Task Force. MSTFs, chaired by the Dzongdag (Governor), are set up to (i) oversee prevention activities at the Dzongkhag level; and (ii) undertake advocacy to mobilize local authorities and civil society to increase support for HIV/AIDS prevention and to reduce stigma. The task forces include Dzongkhag health authorities and representatives from other ministries, such as education, and armed forces, as well as opinion leaders and key NGOs/CBOs withinthe Dzongkhags. MSTF would receive funds through the Dzongkhag. Although all twenty Dzongkhags would be involvedinimplementation, those with a higher level o f risk would require greater resources, management and technical input. Monitoring of results by PMT and NACP would ensure that the Dzongkhags which demonstrate results as planned would receive more funds inthe future. NGOs/CBOsandprivate sector. InBhutan, emerginglocal NGOs and CBOs, although limited at the present time, provide an opportunity for the program to expand access to prevention services to the grassroots level, including highly vulnerable populations. The role o f both NGOdCBOs and the private sector in the project would be two-fold: (i)undertaking prevention activities for priority populations; and (ii) engaging in advocacy among target groups, including civil society, the private firms andbusiness leaders. 37 Consultants, Contractors and Suppliers: Consultants, contractors, and suppliers, including NGOs/CBOs and private organizations, operating across the country and the region may be contracted to support program activities. ProjectManagement The Project Management Team (PMT) under the authority o f the Ministry o f Health i s in-charge o f the fiduciary management (procurement and financial/accounting management) and overall coordination. The PMT would: 1. Ensure fiduciary compliance with the Program Operations Manual; 2. Ensure the executing agencies comply with IDA, and Government procurement guidelines; 3. Undertakethe financial management o fthe project; 4. Operate a management information system (MIS) to track project processing; 5. Ensure the auditing o f the project accounts and other audits required by IDA and other Donors; 6. Procure and manage independent firms (providers, consultants) to carry out project activities; 7. Ensure coordination of project activities between MoH, other line ministries, Dzongkhags (includingMSTFs), andNGOs/CBOs; 8. Call for workplans and subproject 9. Prepare halfyearly progress reports 10. Coordinate Bank and other donors' supervision mission to carry out the midterm review o fthe project. Responsibilitiesby PMT member: 1. ProiectCoordinator Project Coordinator will be responsible for: 1. Representing the M o H at IDA concerning general arrangements established in the Development Grant Agreement (DGA); 2. Ensuring timely workplan submission from other line ministries, Dzongkhags, and departments/divisions withinMOH. 3. Providing DBA with Dzongkhag-wise annual budget allocation for Innovation Grants. 4. Maintainingproject records and prepare regular implementation progress reports; 5. Authorizing and signing contracts for the supply o f goods and services required by the Program, procured using IDA or Government funds; 6. SigningDisbursement Applications as one o f two authorized signatories; 7. Requesting DADM to make amendments to the DGA on behalf o f the Government o f Bhutan,wherenecessary; 8. Signing tender documents and evaluation reports and authorize advertisements for procurement o f goods and services inaccordance with agreedprocurement plans; 9. Revising and approving FMRsandother reports for public dissemination; 10 Evaluating and replacingPMT staff whenever will be necessary. 8. 11.Ensuringthat the Project Operational Manual and Plan (OM and PIP) are maintained and updated; 38 12. Ensuring that the hiring of the technical assistance and all training activities are timely prepared and organized and will also ensure that communications and coordination and reporting links with the related stakeholders are established andwell conducted. 2. FinanceOfficer The Finance Officer (FO) will be responsible for: 1. Organizingthe financial and accounting systems andprocedures 2. Preparing all related financial statements and FinanceManagement Reports (FMR); 3. Supervising the maintenance practice o f all accounts and records according to Government regulations; 4. Revising and authorizing project disbursements; 5. Preparing withdrawal applications and Special Account replenishment requests for the project; 6. Supervising the maintenance o f local commercial Bank accounts; 7. Supervising the maintenance o f archives o f Program documents collected and produced duringall phases o fthe Project (preparation andimplementation). 3. Accountant The accountant will be responsible for: 1. Performing accounting transactions and procedures according to local government and donor policies; 2. Supporting the Finance Officer inpreparing all related financial statements andFinancial MonitoringReports (FMR); 3. Maintaining all accounts and records according to local Government regulations; 4. Preparing project disbursement, withdrawal applications and Special Account replenishment requests; 5. Maintaining local commercial Bank accounts; 6. Maintaining personnel payroll and fixed assets inventory; 7. Maintaining archives and documents collected and produced during all phases o f the Project (preparation and implementation). 4. ProcurementOfficer The Procurement Officer (PO) will be responsible for: 1. Coordinatingprocurement betweenDVED, PPDand other implementingagencies; 2. Ensuringthe integrity o f the procurement processes o f all goods and services required for the project; 3. Assisting intermediaries inpreparing biddingdocuments and bidevaluations; 4. Reviewing finding agreements and other contracts with intermediaries, contractors and consultants; 5. Participatinginevaluation o f all bids; 6. Ensuringthat the BiddingCommittee does its work inaccordance with procurement rules established inthe Project Operations Manual; 7. Prepare procurement plans andprogress reports; and 8. Monitoring the performance of contractors and consultants, and the delivery and completion o f contracted works, goods and services. 39 As an interim measure, the designated agencies (DVED, PPD, and HIDP) appointed focal points will be responsible for undertaking (2) - (7). The project coordinator will be responsible for overall coordination, as well as overseeing preparation o f procurement plans and progress report and monitoring. This effectiveness o f this arrangement will be reviewed and assessed after the first year o f implementation. 5. Technical Officer The Technical Officer (TO) i s responsible to guide and assist the ministries and other public institutions to design and implement HIV/AIDS work-plans directed toward their personnel and their families and clients. The TO i s also responsible to guide and assist NGOs, CBOs, FBOs, Private sector and other civil organizations to design and implement HIV/AIDS subprojects directed toward Bhutanese communities, especially to risk groups. Hehhe will be in-charge also to supervise and coordinate activities o f the public and civil society entities. Inadditionto the above responsibilities, he/shewillberesponsible to: 1. Help the PMT to develop an overall M&E coordination plan, with manuals, systems, procedures, tools, a database, flowcharts for data and clearly specified institutional roles andresponsibilities and animplementationplan andbudget; and 2. Strengthen PMT's monitoring systems, to ensure sound output andprocess monitoring. As an interim measure, the Program Manager for NACP will assume the responsibilities o f the Technical Officer. The effectiveness o f this arrangement will be reviewed and assessedafter the first year o f implementation. 40 InstitutionalArrangement Other Ministries Ministry ofHealth HIVFocal f \ Programs I Technical Committee T ~~- NationalAIDS Control Other MOH programs 41 ImplementationMechanisms The project would employ three types o f implementationmechanisms: workplans, subprojects, and contracts. The type o f implementing agency andtype o f interventionwould determine the mechanisms. 1Mechanisms-Relationsh Q toProject Management ImplementationAgency I WorkPlan I Subcontract I Subproject rDepartments/divisions (MOH) I + I - I - I Other sectors/line ministries + - - Dzongkhags (including MSTFs) + - - NGOs/CBOs/Private Sector - + + Organizations Process of Implementation for Work-Plans, Subprojects, and Contract Stepsfor Work-Plan Mechanism include (i) orientation workshop which explains the structure and content o f the work plan, sets workplan criteria and fixes deadlines; (ii) PMT calls for workplans, (iii) submit workplans to PMT; (iv) PMT compiles and submits workplans to be IA's reviewed by TC; (v) T C reviews and makes recommendations to MOH; (vi) MOH approves workplans; (vii) implementation, monitoring andreporting; and (viii) the cycle recommences. Stepsfor Subproject Mechanism include (i) will pre-allocate resources annually; (ii) MOH call for expressions o f interest through local media and invitation letters; (iii) orientation workshops to explain the structure and content o f subprojects, to provide general guidance on HIV/AIDS advocacy activities, to set criteria, and to fix deadlines; (iv) submission o f subproject proposals to PMT; (v) TC reviews and makes recommendations to MOH; (vi) signing o f Innovation Grant Agreement betweenNGO/CBO andMOH; (vii) implementation, monitoring and reporting; (viii) submission o f completion report and financial statement; and (ix) the cycle recommences. Steps for Subcontracting Mechanism will include (i) for expressions o f interest through calls advertisement in the local media; (ii)orientation workshop to explain the contracting mechanism, to set criteria and to fix deadlines; (iii) submission o f proposals; (iv) review o f proposals by implementing agency and award of contract; (v) signing of the contract; (vi) implementation and reporting o fprogress; (vii) follow up and approval o fpayments. Criteria for Workplans and Subprojects for Sectors, Dzongkhags and NGOs/CBOs (Innovation Grant) A workplan or subproject is a structured instrument containing (i)justification for an intervention; (ii)identified outputs, indicators and beneficiaries o f the plan or project; (iii) cost breakdown; and (iv) implementation plan. These two instruments allow a range of implementing agencies to use project funds to benefit the community and defined community subgroups 42 through targetedinterventions. Funds for workplans and subprojects arejustified on the basis o f proposals which use pre-defined formats to facilitate preparation andreview. Workplans EligibleActivitiesfor Workplans The types o f eligible activities to be financed by workplans will be broad, with the main criteria being their ability to contribute to the prevention and control o f transmission o f HIV and STIs among priority populations and to the medical care and support o f HIV positive individuals. Eligible activities include: 0 HIV/AIDS events and campaigns throughout the year. 0 Information, Education and Communication materials on HIV/AIDS and STIs (consistent withnational BCC strategy). 0 Dzongkhag specific communications activities (in congruent with National BCC strategy) 0 Safer sex education. 0 Community mobilization and advocacy 0 Training and support for Peer Educators. 0 Outreachprograms for at risk populations. 0 Establishing education programs on HN at the workplace - reducing stigma and discrimination therefore encouraging more persons to come forward for testing, counseling andtreatment. 0 Providing psychosocial support to persons living with HIV andtheir families. 0 Training incare and support for healthworkers. Eligible Expenditures Workplans will be funded between $3,000 and $10,000 per annum. Reimbursement o f additional expenditure will be capped at 5% o f the originally approved annual budget. Eligible expenditures will be consistent with RGOB practice. Project funds will finance the following types o f activities only: 0 Fees for trainers. 0 Per diem for trainers andtrainees. 0 Allowances for peer educators. 0 Transportation 0 Rental o f training equipment, hmiture and booths for exhibitions (projector, screens, speakers, etc.). 0 Reproduction o f IEC material (videos, guidelines, manuals, posters, handbooks, newsletters, others). 0 Translators. 0 Translation o f documents 0 Coffee-break and meals intraining events andworkshops. 0 Mass mediaservices (local radio messages or programs). 43 Subprojects Eligible Activitiesfor Subprojects Under the subproject mechanism, NGOs, CBOs and private organizations can apply for finds to implement a small number o f activities to improve the project's communication with priority groups and the general community. Eligible activities include: 0 HIV/AIDS events and campaigns throughout the year. 0 Information, Education and Communication materials on HIV/AIDS and STIs (consistent with nationalBCC strategy). 0 Dzongkhag specific communications activities (in congruent with National BCC strategy) 0 Safer sex education. 0 Community mobilization and advocacy. 0 Training and support for Peer Educators. 0 Outreachprograms for at risk populations. 0 Establishing education programs on HIV at the workplace - reducing stigma and discrimination therefore encouraging more persons to come forward for testing, counseling and treatment. 0 Providing psychosocial support to persons livingwith HIV and their families. Eligible Expendituresfor Subprojects Subprojects will be finded between $1,000 and $5,000 per annum and should be limited to a small number (as a guide, less than 5) activities per organization. Project finds will finance the following types o f expenditures for subprojects only: 0 Fees for trainers. 0 Per diem for sector workers, trainers andtrainees. 0 Allowances for peer educators. 0 Transportation. 0 Rental o f training equipment, furniture and booths for exhibitions (projector, screens, speakers, etc.). 0 Reproduction o f IEC material (videos, guidelines, manuals, posters, handbooks, newsletters, others). 0 Translators. 0 Translation o f documents. 0 Coffee-break andmeals intraining events andworkshops. 0 Mass media services (local radio messages or programs). Eligible Criteriafor NGOsKBOs submitting subproject requests NGO's or CBOs which meet the following criteria will be eligible for subproject funding: 0 Two or more years' experience incommunity development, health, and/or HIV/AIDS. 0 Experiencewith community participation and/or mobilization o fkey population groups. 0 Track record o f sound financial management andhumanresource management. 44 Annex 7: FinancialManagementandDisbursementArrangements BHUTAN: HIV/AIDS andSTI PreventionandControlProject CountryIssues Overall, Bhutan has a record o f satisfactory financial management system in Bank financed projects. Financial management system o f the government is prescribed in the Financial Management Manual, dated 2001. RGOB plans to computerize the entire public sector accounting and reporting system, using the Budget and Accounting System (BAS). Implementation o f BAS has been initiated inall the ministries since July 1, 2003. A country level issue that could have an impact on the project is the accounting and reporting relationships between the dzongkhags and the central line ministries. The RGoB encourages greater decentralization and increased ownership by the dzongkhags, and prefers that for activities to be carried out by them, budget appropriations and expenditures are shown in the records of the dzongkhags, rather than in the records o f central line ministries. Ln several donor fimded programs, although dzongkhags had executed a part of the program, budgeting and recording o f such expenditure were in the books o f the central line ministries. This approach diminished the ownership and motivation o f the dzongkhags as such programs were seen to be driven by central line ministries. However, with funds directed to the dzongkhags has raised an issue with respect to reporting. The dzongkhags are not accountable to the line ministries, and as such, line ministries have had difficulties inreceiving accounts and reports on time. StrengthsandWeaknesses The project has the following strengths: (i) key implementingagency, i.e. Ministryof Health the (MOH) Administration andFinance Division (AFD), has experience inmanaging Bank financed projects while Health and Education were under one ministry; and (ii) the use o f existing RGoB system for accounting, reporting, and disbursing funds. The project has the following weaknesses: Signijkant weaknesses Risk Risk Mitigation Rating 1. There is no staff currently available H RGOB has approved the positions o f with the Bank project experience Finance Officer (FO) andAccountant. identified to manage the Financial The Accountant will be identifiedby Management o f the project inthe negotiations andappointedinAugust. FO PMT. willbeidentifiedbyDecember andposted inJanuary 2005. MOHFOwould assume the responsibility o f the project FO inthe interim. The trainingplanhas been preparedandwillbe included inthe National Finance Service (NFS) Annual 45 HumanResource Development Plan, following RGOB's policy. 2. Fundsreleased for project activities H PMT will request for release o f funds to be implementedby Dzongkhags from DBA according to the approved into the General L C account, will annual workplan. Fundreleases will be be prioritized for Dzongkhags own based on timely reporting o f expenditure activities (utilization certificate) for intended purpose and o fprogress on achieving the results indicators, as indicatedinthe Dzongkhag HIV/AIDS workplan. 3. MOH & DBA are not familiar M IGAswill be signed andpayments will be with the concept o fadvancing made based on SOEs/utilization funds to NGOslCBOs andother certificates prepared byNGOs/CBOs and stakeholders for implementing other implementing agencies. A guideline project activities using IGAs. for implementation and disbursements o f funds is detailed inthe OMandadequate traininn prom-ams will be carried out. ImplementingAgency. MOHwill be the key implementing agency for the project. All project activities, including expenditure undertaken by the MOH divisions and program, other line ministries, and dzongkhags, will be coordinated by the PMT. Financial management and disbursements for the project activities will be the responsibility o f the PMT inthe MOH. Fund FZow. Project funds will be deposited by IDA into Special Account inDollars (SA), to be opened at the Royal Monetary Authority (RMA). SA will be used for all expenditures o f the project andmanaged by Dept o f Aid andDebt Management (DADM) inthe Ministry o f Finance. On authorization from DADM, the RMA will convert the requested dollar amount to local currency and transfer the same into a Government Budget FundAccount (GBFA) inthe Bank o f Bhutan (BOB)for Department o f Budget and Accounts (DBA). With clearance from DADM, DBA will issue a Project Letter o f Credit (PLC) in favor of AFD of MOH. A PLC is DBA's authorization to the bank to honor payment instructions from AFD up to the specified limit. PLC will serve the implementing agencies with MOH and other line Ministries, as well as NGOs, whereas General Letter of Credit (the existing Dzongkhag Account) will be used for funds released to the Dzongkhags. The following details the funds flow mechanisms for each implementing agency: Ministn, of Health (Divisions, departments and Droarams): PMT, through AFD, will request DBA for release o f funds. DBA disburses the required fimd along with the counterpart funds into the PLC account. Thereafier, the AFD will issue payment requests against the PLC for meeting eligible project expenditure. Periodically, PMT through AFD will advise the DADMo f the IDA share o f eligible project expenditure incurred for the period, for which PMT will prepare withdrawal claims and submit applications to IDA through DADMfor replenishments. Other Line Ministries: For expenditures to be incurred by other line ministries, PMT, through AFD, will request DBA for release o f funds to PLC, based on the approved annual workplan. 46 Funds for Innovation Grant will be disbursed intranches by PMT to the line ministries. The line ministries will provide utilization certificate to PMT on the use o f funds, as well as progress on achieving the indicators defined inthe approved workplan. Releases made to other Line Ministries under the Innovation Grant will be treated as final expenditures for the purpose of replenishment from IDA. The next tranche o f fund release will be made on receipt o f utilization certificate o fthe previous tranche. NGOs/CBOs. A separate fund has been set aside to provide small grants to NGOdCBOs. PMT, through AFD, will request DBA for release o f funds to PLC, based on approved proposals (IGA will be signed between MOH and the NGO/CBOs). Funds will be disbursed in tranches by PMT. NGOs and CBOs will provide utilization certification to PMT on the use o f funds, as well as progress on achieving the results defined inthe proposal. Releases made to NGOs/CBOs under the Innovation Grant will be treated as final expenditures for the purpose o f replenishment from IDA. The next tranche o f fund release will be made on receipt o f utilization certificate o f the previous tranche. Dzonnkhans: For expenditures to be incurred by the Dzongkhags (including MSTFs and - Dzongkhag health authorities), DBA will make the budget release following the normal government procedure, based on the request from the PMT through AFD. (The fbnd request from PMT to DBA, rather than from Dzongkhag to DBA, would facilitate reportingo f financial and physical progress o f HIV/AIDS prevention activities by the Dzongkhag to PMT). Funds will be released to the general L C account maintained by the Dzongkhags. A separate budget head and expenditure financing item code will be created for tracking expenditure under the sub- component to be managed by Dzongkhags and funds will be released against these (DBA will provide PMT a copy o f budget releases made to the Dzongkhags). In addition to reporting to DBA following the normal RGoB reporting procedures, Dzongkhags will provide a utilization certificate to PMT on the use o f these funds according to the approved annual workplan, as well as progress on achieving the indicators identified inthe workplan. Releases made to Dzongkhags implementing units under the Innovation Grant will be treated as final expenditures for the purpose o f replenishment from IDA. For the withdrawal application, the letter o f advance to the implementing units will be used as a supporting document for replenishment. The next tranche o f fund release will be made on receipt o f utilization certificate o f the previous tranche. PMT will (i) consolidate the expenditure inthe accounts o f the project and produce consolidated FMRs; and (ii) advise the DADM to get IDA share replenished to the SA for the reported expenditure. Staffing. To manage the Financial Management o f the project, RGOB has approved the positions o f Finance Officer (FO) and Accountant. The Accountant will be in place by May 2004. FO will be identified by December 2004 upon return o f a batch o f Finance officers from overseas training and posted in January 2005. In the interim, MOH DCFO will assume the responsibility o f the project FO. RGOBhas agreed that an adequately qualified and experienced 47 Finance Officer will be available on a full-time basis, throughout the entire implementation period o f the project. Prior to any transfer o f such dedicated personnel, RGoB will ensure that there is sufficient transitional time for the succeeding candidate to be trained on-the-job. The training plan for FO and accountant, as well as other accounting staff involved in implementation o fthe project, has been incorporatedinthe Project ImplementationPlanand will be included in the NFS Annual Human Resource Development Plan, following by RGOB's policy. AccountingPoliciesandProcedures. Project accounts andbooks o frecords will be maintained according to the prevailing rules o f the RGoB, i.e. Financial Rules and Regulations (July 2001). The cash basis o f accounting will be followed. In order to facilitate reporting by project components, PMT, in consultation with AFD, will ensure that at the time o f budget requisition, budget activity and sub-activity codes (which are decided at the time o f budget preparation) coincide with the component and sub-component classifications in the PAD. Funds to Dzongkhags will be budgeted and released under "Current Grant" object code, and activity will be identified as "Innovation Grant." PMT will provide DBA with Dzongkhag-wise budget allocation for the Innovation Grant, based on the annual approved workplans. Reportingand Accountability. Information flow duringthe project implementation phase will be from bottom-up and in principle, the reverse o f fund flow apply to flow o f informationheporting o f financial transactions, financial positions, and physical progress. Each implementing agency will have reporting obligations--the details, content and frequency o f which will be fully described in the Project Implementation Plan. In addition to self reporting, monitoring andreporting will also take place at two levels, byDzongkags and by PMT staff. Consolidated financial and physical progress reports will be generated by PMT on a quarterly basis (in the agreed FMR formats), with input from DBA (actual expenditure data), from PPD (for physical progress o f activities implemented by MOH and regrouping o f expenditures into categories defined in the DGA), and from Dzongkhags and other line ministries (physical progress data). PMT will submitthe consolidatedFMRs to the Bank on a quarterly basis. Contents o fFMRs has been discussed and will be confirmed at negotiation. It will consist of (i) sources and uses of funds for quarter and cumulative, by source and by category o f disbursement; (ii) financial progress by component; and (iii) physical vs. financial progress. Formatof FinancialStatements FMR formats have been finalized and will be agreed at negotiations. The formats will be in accordance with the guidelines issued by the Bank on November 30, 2002. The formats are attached inAnnex 14. 48 InformationSystems M O F has developed the Budget and Accounting System (BAS), which i s being implemented in all ministries and Dzongkhags. MOH has developed a tool (PBM tool) allowing linkage o f financial andphysical monitoring o f activities. The two systems are complementary. At present, data from PBMtool has been transferred to BAS (e.g. MOH budget proposal 2004-2005), and a working group has been set up to reinforce the linkage between the two systems. At this stage, PBM tool is only used within the MOH. As other implementing agencies are involved in the project, PMT will be responsible for compilation o f data from these other entities-Dzongkhags, other line ministries, and CBOs. InternalAudit. The Internal Audit Unitinthe M O Hwill also review activities o ftheproject. In order to enable the Internal Audit Unit to carryout this function, the MOH will provide all relevant and necessary documentation so that activities o f the project can be included in the annual internal audit work plan. InternalAudit Unitreports directly to the Minister o f the MOH. ExternalAudit. Audit Reports: Consolidated project accounts will be audited each year by the Royal Audit Authority, which is the supreme audit institution inBhutan andis acceptable to IDA for auditing Bank financed projects. The format of the financial statements to be audited will be confirmed at negotiations. This will consist o f the Financial Monitoring Reports (FMRs) o f the project along with a statement reconciling credit disbursements, as per IDA records, and IDA share o f expenditure and balances available inthe SAs, as reported inthe FMRs. The PMT will be responsible for preparing the consolidated project financial statements and forwarding them for DADM's review and submission to RAA by September 1 o f each financial year. The certified audited financial statement will be sent to IDA within 6 months o f the FY end (December 31o f each year). Responsible agencies for auditreport o f the project and due date each year: IMPLEMENTINGAGENCY AUDIT AUDITOR DUEBY I Ministrv o f Health Proiect/SOE DADM/Ministry of Finance. I Special Account Royal Audit Authority Dec 31 I Roval Audit Authoritv Dec 31 I 1 To ensure reliability o f information, monitoring and regular audit are crucial for this type o f project. Inparticular, a quarterly review and audit o f a sample o f sub-projects and work-plans will be required in order to obtain reasonable assurance o f reliability o f expenditures and compliance o f the communities and civil society with the terms of agreements. These reviews and audits would be carried out in collaboration between the PMT and internal and external auditors. TORSfor RAA and internal auditors are attached in Annex 13 and have been agreed upon. RAA audit should cover one Dzongkhag and one line ministry at least once, and one third of subprojects implemented byNGOs/CBOs duringthe implementation period. 49 DisbursementArrangements The project will follow the transaction based disbursements. As mentioned above, centralized and decentralized expenditure will be maintained and expended separately. SA will be opened for the project and maintained by DADM and disbursement categories will be given inthe grant agreement. Statement of Expenditure (SOE): Withdrawals under the grant may be made on the basis o f Statement o f Expenditure (SOE) procedure for: Contracts for civil works costing less than US$ 150,000 Contracts for goods and equipment costing less thanUS$ 150,000 Contracts for consultancy services with individuals costing less than US$ 50,000 (single source less than US$25,000) Contracts for consultancy services with firms costing less than US$ 100,000 Contracts for non-consultancy services costing less than US$30,000 Alltraining expenses All innovativeblock grant disbursements Retroactive Financing. Payments made for expenditure before the date o f the Grant Agreement but after January 1,2004, inrespect of expenditure categories 1through 6, canbe claimed under the grant subject to an aggregate maximum o fUS$ 500,000. Special Account: Project funds will be deposited inthe SA to be opened inthe Royal Monetary Authority and will be operated according to terms and conditions acceptable to the IDA. The authorized allocation for SA will be $ 500,000 . Allocation o f Grant Proceeds Expenditure Category Amount inUS$ million FinancingPercentage 1.CivilWorks 0.10 97% 2. Goods 1.oo 1.80 100%(foreign) and 95% (local) 3. Consultancies 97% 4. N o n Consultancy Services 0.17 97% 5. Training 1.57 100% 6. Innovationgrants 0.82 100% 7. Incremental operating costs 0.15 50% 8. Unallocated 0.16 Total Grant Costs 5.77 Interest during construction Front-end Fee Total 5.77 50 Action Plan I Action 1Responsible ITargetDate Person Finalize Financial MonitoringReports IDA/RGoB Completed (FMR) Detailed guidelines for disbursements IDA/DBA/MOH- Completed under the Innovation Grants PMT Training on Bank's Financial M O H Ongoing Management and Disbursement Procedures SupervisionPlans The project will require periodic financial management supervision. After project launch, it will be necessary to provide training on the Bank's financial management and disbursement guidelines to staff inthe MOF, MOH, DBA andDADM. 51 Annex 8: Procurement BHUTAN: HIV/AIDS andSTI PreventionandControlProject Procurement. The Grant will finance goods, civil works, consultant services, and training. Procurement will be in accordance with IDA guidelines for "Procurement under IBRD Loans and IDA Credits", January 1995 (revised in January and August 1996, September 1997, and January 1999); as well as those for "Selection and Employment of Consultants by World Bank Borrowers", January 1997 (revised September 1997, January 1999 and May 2002). The Bank's Standard Bidding and Request for Proposals documents will be used as a basis for preparation o f the package specific bidding andRequest for Proposal documents. Procurement will be carried out by existing staff o f Drugs, Vaccines, Equipment Division (DVED) for goods, Health Infrastructure Development Project (HIDP) for works, and PPD for consultancies. The Ministry will designate a focal person within each division who would be responsible for canying out the procurement. Duringthe first year, the Project Coordinator will assume the responsibility o f the procurement officer, and assist in coordinating all the procurement activities and communicating with the Bank. The effectiveness o fthis arrangement will be reviewed and assessedafter the first year o fproject implementation. A capacity assessment o fMOHto implement procurement actions for the project was carried out during project preparation. The issues/ risks concerning the procurement component for implementation o f the project include need for training o f the staff o f DVED and PPD to apprise them about the procedures o f procurements under the World Bank financed Projects. One staff from DVED and one from PPD have recently received training in NIFM, Faridabad and this training will also be imparted to other staff members in DVED, PPD, and HIDP who will be handling procurement for this project. AFD staff will also be trained to facilitate efficient implementationo fprocurement procedures. Procurementmethods (TableA) Procurement arrangements are described below and summarized in Table A. A detailed procurement plan for the first eighteen months has been prepared. A consolidated procurement planfor the complete life o fthe project indicating the package name, estimated value, method o f procurement and the year in which procurement will be carried out has also been prepared. However, after effectiveness, this procurement plan will be updated to reflect eventual changes to the plan, The Procurement plan will be updated at least annually or as required to reflect the actualproject implementation needs. 53 Works (US$ 0.10 million) Works procured under this project would include construction o f 2 stand alone Voluntary Counseling Testing (VCT) centers and refurbishment/conversion o f three existing facilities into VCT centers. The procurementwill bedone usingSBD agreedwith the Bank. As the works to be procured will be o f small.value, all works contracts estimated to cost USD 30,000 equivalent or more per contract, would be awarded following NCB procedures in accordance with paragraph 3.3 and 3.4 o f the Guidelines. Works estimated to cost less than US$30,000 equivalent per contract may be procured, with the Bank's prior agreement, bydirect contract, without competition (sole source) inaccordance withparagraph 3.7 ofthe Guidelines under lump-sum, fixed-price contracts awarded on the basis o f quotations obtained from at least three (3) qualified domestic contractors in response to a written invitation. The invitation shall include a detailed description o f the works, including basic specification, the required completion date, a basic form o f agreement and relevant drawing where applicable. The award shall be made to the contractor who offers the lowest price quotation for the required work and who has the experience andresources to complete the contract successfully. by communities carrying out the works themselves and taking up technical/managerial assistance from government agencies, NGOs or individual experts. Works estimated to cost less than the equivalent o f US$ 5,000, as a last resort ,may be carried out following Force Accounts procedures inaccordance withparagraph3.8 o f the Guidelines. Goods (US$1.83 million) Goods procured under this project would include condoms, IEC materials, office equipments, computer hardware and software, laboratory equipment and supplies for testing, such as test kits, equipment for Public Health Laboratory and Blood Bank, reagents/chemicals, Flow Cell Cytometer, equipment for Immune protective and Immune modulating activities, furniture for VCT centers, audio-visual equipments, Anti Retroviral drugs, autoclaves, needles cutters, and protective attires. The procurement will be done usingSBDs agreed with the Bank. These goods will be procured through the following procedures: International Competitive Bidding (US$ 0.73 million ). Contracts estimated at US$150,000 or more would be awarded according to ICB procedures. This will cover computers and IT hardware and software for Ministry o f Health. I C B procedures will also be followed for those items which are estimated to cost less than US$l50,000 but for which there i s only a limited local capacity. These will cover condoms, equipment for Blood Bank and Public Health Laboratory, Immune protective and Immune modulating equipment, flow cell cytometer, autoclaves, and protective attires. 54 National Competitive Bidding (US$ 0.31 million). Goods, such as computers, audio visual equipments, IEC materials, estimated to cost less than US$150,000 equivalent per contract will be procured following NCB procedures in accordance with provisions o f paragraph 3.3 and3.4 o fthe Guidelines. Nationall International Shopping (US$ 0.49 million): Goods and activities related to, among other things: (a) installation o f local area network (LAN), including implementing network linkage between information systems; (b) communications activities, all estimated to cost less than $30,000 equivalent per contract; and (c) HIV test kits, may all be procured under contracts awarded on the basis o f international or national shopping procedures in accordance with the provisions o fparagraphs 3.5 and 3.6 o f the Guidelines. Direct Contracting (DC) (US$ 0.30 million). (a) Goods, among other things, software, books, journals costing US$lOOO equivalent or less per contract financed under Innovation Grants; (b) communications activities, estimated to cost less than US$ 5000 equivalent per contract; and (c) vehicles and ARV drugs, may be procured following direct contracting methods inaccordance with the provisions ofparagraph 3.7 o f the Guidelines National CompetitiveBidding [NCB] Provisions : Inorder to ensure economy, efficiency, transparency andbroad consistency with the provisions o f Section 1o f the Guidelines: (i)invitationstobidshallbeadvertisedinatleastonewidelycirculatednationaldaily newspaper, at least 30 days prior to the deadline for the submission o fbids; (ii) documentsshallbemadeavailable,bymailorinperson,toallwhoarewillingto bid pay the required fee; (iii)evaluation o f bids shall be made in strict adherence to the criteria disclosed in the biddingdocuments, ina format andspecifiedperiod agreedwiththe Association; (iv)bids shall be opened in public in one place, immediately after the deadline for submission ofbids; (v) foreign bidders shall not be precluded from bidding and no preference o f any kind shall be given to national bidders; (vi)qualification criteria (incase pre-qualifications were not carried out) shall be stated in the bidding documents, and if a registration process is required, a foreign firm declared as the lowest evaluated bidder shall be given a reasonable opportunity o f registering, without let or hindrance; (vii)contracts shall be awarded to the lowest evaluated bidders; 55 (viii)post-bidding negotiations shall not be allowed with the lowest evaluated bidders or any other bidders; (ix)bids shall not be rejected merely on the basis o f a comparison with an official estimate without the prior concurrence o fthe Association; (x)contracts shall not be awarded on the basis o fnationally negotiatedrates; (xi)re-bidding shall not be carriedout without the prior concurrence o fthe Association; (xii)all bidders/contractors shall provide bidperformance security as indicated in the biddinghontract documents; (xiii)a bidder's bid security shall apply only to a specific bid, and a contractor's performance security shall apply only to the specific contract under which it was furnished; (xiv)split award or lottery in award o f contracts shall not be carried out. When two or more bidders quote the same lowest price, an investigation shall be made to determine any evidence o fcollusion, following which: A. ifcollusionis determined, the parties involved shallbe disqualifiedandthe award shall then be made to the next lowest evaluated and qualified bidder; and B. if no evidence of collusion can be confirmed, then fresh bids shall be invited after receivingthe concurrence o f the Association. (xv)extension o f bid validity shall not be allowed without the prior concurrence of the Association (i) the first request for extension if it is longer than eight weeks, and for (ii) allsubsequentrequestsforextensionirrespectiveoftheperiod; for (xvi)bids shall not be invited on the basis o f percentage premium or discount over the estimated cost; and (xvii)there shall not be any restrictions on the means o f delivery ofthe bids. Services (Non-Consultancy) (US$ 0.18 million) The project would support non-consultancy services, such as installation of LAN, and implementing the linkage between two information systems, based on MOH design, and disseminating communications messages developed by Information and Communications Bureau. These services other than consultancies will be procured following shoppingprocedures inaccordance withprovisions ofparagraph3.5 and3.6 ofthe Guidelines. 56 InnovationGrant(US$0.82 million) Under component 1, innovation grants will be provided to line ministries other than health, dzongkhags, and NGOs/CBOs. Line ministries and dzongkhags will obtain grant through preparation o f annual workplans, and will not exceed US$lO,OOO. NGO/CBOs will receive innovative grant through subproject proposal to be submitted and approved by MOH. Procurement under innovation grants including subprojects, will be limited to small purchases o f supplies, video tapes, materials that are available in the local market through local shopping, training, and payment of per diem costs payable to outreach workers and peer educators. Condoms will be procured centrally by DVED and provided to line ministries, Dzongkhags, and NGOs, who will distributeto target populations. Selectionof Consultants(US$1.02 million) The consultancy services to be procured under this project would include, services for Assessment Study on feasibility o f condom social marketing; services for development o f BCC advocacy and communication strategy, media campaigns and training among general population; services for development of Laboratory Information system (LIS); services to formulate a national HIV/ AIDS policy/Guidelines; services to strengthen Voluntary Counseling Testing ( VCT); service to set up information system on ART and 01drugs; and services for Surveillance, Monitoring andEvaluation o f the Project. The biddingdocuments for consultancies will be prepared usingthe Bank's Standard RFP and as agreed with the Bank. RFPs for the consultancies that are taking place in the first 18 months have beenprepared. For consultancy contracts estimated to US$lOO,OOO and less, the short list may comprise entirely national consultants (firms registered or incorporated in the country). These services will be procured under the following procedures according to Bank guidelines: Quality- and Cost-based Selection (QCBS). Contracts for development o f LIS and surveillance and M&E, estimated at US$lOO,OOO or more, will be procured according to QCBS procedures stipulated inSection I1o f the Guidelines. Consultant Qualification (CQ). Contracts for assessment study on feasibility o f condom social marketing estimated to cost less than US$lOO,OOO would be awarded in accordance withparagraph 3.7 o fthe Guidelines. Sole Source (SS). Contract for services to strengthen VCT services, less thanUSD 100,000, will be awarded inaccordance with paragraph3.8 through3.11ofthe Guidelines. Individual Consultants. Services to develop BCC advocacy and communication strategy and services to formulate a national HIVI AIDS policy/guidelines will be procured under contracts awarded to individual consultants in accordance with paragraph 5.1 through 5.4 o f the Guidelines. 57 TrainingandWorkshop(US$1.57 million) The project would support many training activities through workshops, meetings, foreign and local courses, scholarships, which can be categorized into five themes: (i) undertakingadvocacy to increase political commitment among policy makers; (ii) improving technical capacity in areas, such as surveillance, VCT, laboratory, communications, and STI and AIDS case management, for implementing agencies; (iii)strengthening implementation capacity, particularly financial management, procurement, and M&E; (iv) conducting meeting for annual review o f project progress and consultations with key stakeholders; and (v) supporting foreign long term training (post graduate diploma). There i s no procurement activity linked to these training programs, as training will be providedby in-house or identified institutions abroad. OperationalCosts (US$0.26 million) The project would fund the operating costs, which cover supervision, including transportation costs, rental o f office space and other recurrent costs, such as telephone, electricity, vehicle maintenance, per diem, allowances, introduction o f changes in software, forms, reports and the users manuals o fHMIS. The financing share for operating costs will be 50%. Reviewby the Associationof ProcurementDecisions 1.Procurement Planning Prior to the issuance o f any invitations to pre-qualify for bidding or to bid for contracts, the proposed procurement plan for the Project shall be furnished to the Association for its review and approval, inaccordance with the provisions o fparagraph 1o f Appendix 1to the Guidelines, Procurement of all goods and works shall be undertaken in accordance with such procurement plan as shall have been approvedby the Association, andwith the provisions o f said paragraph 1. Annual procurement plans will be reviewed by IDA. 2. Prior Review With respect to (i) contract for civil works irrespective o f the value; (ii) subsequent first each contract for civil works estimated to cost the equivalent o f $150,000 or more; (iii) each contract for goods procured following I C B procedures irrespective o f the estimated value; (iv) first contract for goods procured following N C B provision. List o f bidders for HIV test kits and ARV will be submittedto IDAfor review. 3. Post Review Withrespect to eachcontract not governedbyparagraph 2 ofthis Part, the procedures set forth in paragraph 4 o f Appendix 1to the Guidelines shall apply. 58 ConsultancyContracts Prior review 1, With respect to: (i) each contract for employment o f consulting firmshstitutions estimated to cost the equivalent o f $100,000, or more, and (ii) first contract irrespective o f the value, the procedures set forth inparagraphs 1,2 3 and 5 o f Appendix 1to the Consultant Guidelines shall apply; and 2. With respect to each contract for the employment o f individual consultants estimated to cost the equivalent o f $50,000 or more and the first contract irrespective o f the value, the qualifications, experience, terms o f reference, and terms o f employment o f the consultants shall be furnished to IDA for its prior review and approval. 3. With respect to each contract for the employment o f individual consultants to be selected on a sole source basis, the qualifications, experience, terms of reference and terms of employment o f the consultants shall be fumished to the Association for its prior review and approval. The contracts shall be awarded only after said approval shall have been given. With respect to each contract not govemed by above, the procedures set forth inparagraph 4 o f Appendix 1 to the Guidelines shall apply provided that the generic TORSand shortlists for critical assignments have been cleared by the Bank. ProcurementInformation Procurement informationwill be collected and recorded as follows: (a) Prompt reporting of contract award information byPMT (b) Comprehensive periodic reports indicating: 1. revisedcosts estimates for individualcontracts andtotal cost; and 2. revised timings o f procurement actions including advertising, bidding, contracts award and completion time for individual contracts 3. compliance with aggregate limits on the specified methods o fprocurement (c) The Recipient's completion report to be received by the Bank within three months o f the Grant's closing date. 59 Table A: Project Costs by Procurement Arrangements (US$ million equivalent) ~~ Procurement Method' ExpenditureCategory ICB NCB Other' N.B.F. Total Cost 1. CivilWorks 0.00 0.00 0.10 0.00 0.10 (0.00) (0.00) (0.10) (0.00) (0.10) 2. Goods 0.73 0.3 1 0.79 0.00 1.83 (0.73) (0.30) (0.78) (0.00) (1.80) 3. Consultant 0.00 0.00 1.02 0.00 1.02 (0.00) (0.00) (1.OO) (0.00) (1.OO) 4. Non-consultant services 0.00 0.00 0.18 0.00 0.18 (0.00) (0.00) (0.17) (0.00) (0.17) 4. Training 0.00 0.00 1.57 0.00 1.57 (0.00) (0.00) (1.57) (0.00) (1.57) 5. Incremental Operating 0.00 0.00 0.26 0.00 0.26 costs (0.00) (0.00) (0.14) (0.00) (0.14) 6. InnovationGrants 0.00 0.00 0.82 0.00 0.82 (0.00) (0.00) (0.82) (0.00) (0.82) 7. Unallocated 0.00 0.00 0.16 0.00 0.16 (0.00) (0.00) (0.16) (0.00) (0.16) Total 0.73 0.3 1 4.90 0.00 5.94 ~~ (0.73) (0.30) (4.74) (0.00) (5.77) Table A1: Consultant SelectionArrangements (optional) (US$ million equivalent) Consultant Services Selection Method Other Total Expenditure Category QCBS QBS SFB Lcs CQ N.B.F. "Includingcontingencies Note: QCBS = Quality- and Cost-Based Selection QBS = Quality-based Selection SFB = Selectionunder a Fixed Budget LCS =Least-Cost Selection CQ = SelectionBased on Consultants' Qualifications Other = Selection of individual consultants (per Section V of Consultants Guidelines), Commercial Practices, etc. N.B.F.=NotBank-financed Figures inparentheses are the amounts to be financed by the Bank Grant. 60 Thresholds for procurement methods and Bank prior review are shown in Table B. These were confirmed at appraisal. I s andPrior Review' ExpenditureCategory ContractValue Procurement ContractsSubjectto Threshold Method Prior Review All contracts NCB Grst contract, irrespective o f the value 2. Goods US$150,000 or more ICB All contracts US$30,000 andmore but NCB Firstcontract less than US$150,000 less than US$30,000 Shopping Post Review 3. Services Consultant: Firms US$lOO,OOO or more QCBS All contracts Less than US$lOO,OOO CQ Firstcontract. However, TORSfor all contracts shall be furnishedto IDA for its prior review and no objection. The contract shall be awarded after the no objection i s given Consultant: Individuals US$50,000 or more Inaccordance withparagraph All contracts 5.1 through 5.4 o f the Guidelines Less than US$50,000 Inaccordance withparagraph TORSfor all contracts shall 5.1 through 5.4 o f the be furnished to IDAfor its Guidelines prior review andno objection. The contract shall I be awarded after no I objection i s given Non-consultancy Services Less than US$30,000 Shopping Post Review Direct Contracting Post Review (financing subprojects and Shopping workplans by line ministries and Total value o f contracts subject to prior review: US$ 1.49 million Overall Procurement Risk Assessment: Average Frequencyo fprocurement supervision missions One every 6 months (includes special proposed: procurement supervision for post- review/audits) 61 Annex 9: Economicand FinancialAnalysis BHUTAN: HIV/AIDS and STI PreventionandControlProject I.EstimatingnumberofHIVincidenceandprevalence At thisjuncture, data on HIVprevalence and sexual behaviors are very limitedinBhutanposing a significant challenge to the estimation o f number o f HIV cases and the economic and financial analysis o f the project. Inorder to facilitate an accurate estimation o f the number o f PLWHA in 2004 andprojected HIV incidence, data on sexual behavior are very important for the modeling. Inparticular, the number of sex partners (both regular and casual among males and females), condom use rates, estimated number o f commercial sex workers, seasonality o f CSW services, number of infected sex workers, number o f clients o f sex workers, number of annual sex acts among clients o f CSW, andprevalence o f STIs inthe populationwould improve the accuracy o f the model. Due to the lack o f such information, the estimates were generated based on discussions with several key informants. Despite the lack o f data, there is still a need to estimate the number o f new HIV infections. The estimates for number o f new HIV infections and HIV prevalence were generated based on the followingthree major routes o fheterosexual transmission: 4 Infected male to uninfected female spouse and casual partners 4 Infectedfemale to uninfected male spouse and casual partners 4 Infectedfemale CSW to uninfectedmale Data are limited to facilitate the modeling o f other routes o f transmission such as vertical transmission (two vertical transmission cases have been reported to date), intravenous drugusers, blood transfusion, and homosexual transmission. Inthe future, when more data from behavioral andsero-sentinel surveillance are available, a more sophisticated modeling o fthe number o fnew HIVinfections can bemade. Based on the profile of 36 identified PLWHA who are living at the beginning o f 2004 (22 male, 8 female, 6 CSW), three projections were made for 2004-22 -- the base case, the medium case andBaseworst case. the casual partners. . case relies on the currently identified cases in Bhutan and a low number o f estimated Medium case assumes that the number o f infected males is 2.5 times the base case, infected females i s 5 times the base case and the number o f infected CSWs i s 5 times the base case and a medium number of casual partners. Worst case assumes a higher o f number o f index cases with the number o f infected males is set at 5 times the base case, infected females at 10 times the base case and infected CSWs at 10 times the base case andthe highest number o f casual partners. 62 Table 1Infection probability Probability o f infectionper sex act without STI 0.193% Probabilityo f infectionper sex act with STI 0.41% ... Probabilityo f infectionper annum among spouse 0.182 Probabilityo f infectionper client o f CSW Base case 0.002581 Mediumcase 0.002798 Worst case 0.003449 Probabilityo f infectionper annum among casual partners . Best case (18 sex acts per annum) 0.034 Mediumcase(24 sex acts perannum) 0.045 worst case (36 sex acts per annum) 0.067 1.Scenariowithout preventionprogram The cohort model was applied based on infection probability and no condom protection. O f the 36 PLWA who were living at the beginning o f 2004, 22 infected males would transmit HIV to their spouse and casual partners, 8 infected females would transmit to their male spouse and casual partners, 6 CSW would transmit to their clients served. The number o f new infections estimatedby the end of 2004 was calculated andthis cohort was assumed to start transmitting the virus in 2005. Similarly, the cohort o f new cases infected in 2005 would start transmitting the virus in 2006. Based on the cohort model, 19 worksheets were constructed for the period of 2004-22. For CSW, an annual 5% increase in the number o f infected CSWs was assumed to take into account transmission from infected male clients to nai've female CSWs. It was assumedthat each cohort would transmit the virus for a full five year period during their asymptomatic phase and stop transmitting the virus from year six onwards, when they become symptomatic. A survival probability among PLWHA was applied for each cohort of new infection, assuming everyonewould survive for five full years and start to die due to 01from year six onward and all would dieby year 10. This survival probability was appliedto each cohort ofnew infection. 63 Table2 Survivalprobability amongPLWHA Year 1 2 3 4 5 6 7 8 9 1 0 1 1 1 1 1 0.8 0.6 0.4 0.2 0 2. Scenario with preventionurogram The model covers the period from 2005 to 2022 -- the World Bank project would be in place from 2005 to 2009 and prevention and treatment activities are expected to be continued by the RGOB from 2010-22. One important input parameter for the model is the percentage of condom use with casual sex partners and CSW. Condom use with casual sex partner is assumed to be lower than with CSW in the model. By the end o f the World Bank funded project in 2009, condom coverage i s assumed to be 40% with casual sex partners and 60% with CSW. Table 3 Model inputparameter for intervention-condom coverage With casualsex partners Reportedby CSW 2004 0.15 0.30 2005 0.15 0.30 2006 0.20 0.40 2007 0.25 0.40 2008 0.35 0.60 2009 0.40 0.60 2010 0.40 0.70 2011 0.40 0.70 2012 0.40 0.70 2013 0.45 0.70 2014 0.45 0.80 2015 0.45 0.80 2016 0.50 0.80 2017 0.50 0.80 2018 0.50 0.90 2019 0.50 0.90 2020 0.50 0.90 2021 0.50 0.90 2022 0.50 0.90 Based on condom coverage in each year, a similar cohort modeling to estimate the number of new HIV infections for 2005-22 was conducted. Assumptions were similar to those made inthe first model for no prevention program and were applied for all three scenarios (base case, 64 medium and worst case). Similar survival probability was applied. The result is the number o f surviving PLWHA in2004-2022. The prevalence o f HIV infections is the sum o fthe number o fHIV infections at the beginningof the year and the total number o f new infections generated fkom each cohort in that year divided by the total population. The adult prevalence is number o f living HIV cases divided by the adult population age 15-49 (assumed to be 60% o f 650,000 total population, census data not available). 11.Resultsof modeling 1.Scenario withoutpreventionprogram Figure 1depicts the evolution over time o f the number o fHIV cases when adjusted for survival (01deaths) and no condom protection. Discussion with Key Informants indicates that the medium case produces the most realistic model for Bhutan. The number o f living PLWHA would be approximately 1900 when the epidemic becomes mature in 2019. Throughout this analysis, the medium case scenario is taken as a benchmark o f analysis. Fig 1Projected numberof cumulative HIV cases, scenariowithout condom 2004-2020 8000 6000 4000 2000 I 0 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2. Scenario withpreventionprogram Figure 2 demonstrates the impact of condom prevention. It brings down the number o f HIV cases to less than 700 in 2012 when the epidemic reaches its peak and starts to level o f f thereafter. 65 I Fig 2 Projected number of new HIV cases, scenariowith condom, 2004- 2020 3000 Q S 2000 8 .-S $ u- 1000 z 0 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 3. Comparison o fproiectedHIV cases with and without preventionprograms Figure 3 demonstrates HIV prevalence comparing with and without condom intervention, using the medium case scenario. With a preventionprogram, the epidemic peaks seven years earlier (in 2012 with a preventionprogram and in2019 without a program), as indicated inthe gap between the two lines. Fig 3 Projectednumberof new HIV cases, with and without condom use, 2004-22, Medium case scenario 2000 1832 1500 VI { .-2r zE 1000 500 I 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 66 4. Adult HIVprevalence comparisons Figure 4 depicts adult HIV prevalence (age 15-49) for the medium case scenario. It would be 0.17% at its peak in 2019 if no prevention program i s in place. In the setting o f a successful prevention program, the adult prevalence peaks at a lower prevalence o f 0.06% in 2012. If the condom coverage were increased higher than the levels assumed in the model, the adult HIV prevalence would be further reduced and even more HIV infections would be averted. This model suggests that Bhutan will maintain a low level epidemic (adult general population prevalence less than 0.5%) even without a prevention program. Fig 4 Adult prevalence rate, 2004-22, medium case scenario 0.18% 0.12% O.0bo/o 0.00% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 111.Preventionprogramcost andoutcome Several assumptions were made for program costs as follows: (i) discount rate o f lo%, (ii) RGOB continues to finance the prevention program during the period of 2010 to 2022 at the annual recurrent cost o f 30% of that o f during the World Bank project3, (iii) annual cost o f 01 treatment i s 390 USD (60% that 650 USD quoted inan Indianstudy), (iv) 01treatment continues for two years prior to death; first year at 70% o f 390 USD and the second year at 100% o f 390 USD. The total 01treatment cost was multiplied by the total number o f deaths from 01that would be averted due to the program. Cost savings from 01 averted were deducted from the program cost to calculate a net program cost. The total gross program cost would be 9.7 million USD over 18 years, giving a net present value o f 6.13 million USD. The present value of 01savings are 0.95 million USD resulting in a net The reduction inrecurrent costs is assumed since the programstart-up costs, including capital investment, training o f health workers and other capacity building were covered bythe World Bank project. 67 program cost 5.2 million USD. The program outcome yields 13,769 infections averted, 5,431 deaths averted, and 190,092 life years gained. The net program cost per infection averted is 377 USD and per life year gained is 27 USD. The gross program cost per infection averted and life year gained i s 445 USDand 32 USDrespectively. Table 4 Summary ofprogram cost andoutcome analysis USD 18years (2005- 2022) I. cost 11.Programoutcome ..Program Total program cost for prevention (less ART) 9,701,000 Presentvalue o fprogram cost 6,13 1,655 Presentvalue of 01savings, mediumcase .. scenario 946,632 Net program cost 5,185,024 No of infectionaverted, mediumcase scenario 13,769 No o fdeaths averted, mediumcase scenario 5,43 1 Number oflife year gained 190,092 111.Cost andoutcome analysis . Net program cost per HIV infectionaverted 377 . Net program cost per life year saved 27 Gross program cost per HIV infection averted 445 Gross program cost per life year saved 32 The prevention program averted HIV infections and consequently averted deaths from 01. The total deaths averted in the medium case scenario (5,431) over 18 years would significantly contribute to economic activity. Based on a per capita income of 540 USD, several assumptions were made regarding the proportion o f national income paid out to labor, the proportion o f the population inthe labor force, the employment chance for PLWHA hadthey not become infected. The average daily earning per worker was estimated at 1.94 USD.A 3% annual increase indaily wage over the 18 years was assumed. Based on a retirement age of 65 years, an average age at HIV infection of 20 years, five years of asymptomatic infection and adjustment for 65% full employment, 23 years o f lost earnings were estimated due to pre-mature deaths from 01. Table5 Assumptionson lost earnings avoided Per capita income, USD 540 Proportion o fnational income paidout to labor 0.80 Proportion o fpopulation inlabor force 0.60 Employment chance o fPLWA 0.70 Average earning per worker per day 1.94 Annual growth of income 3% No o f year o f earning 23 68 Table 6 Summary o f economic analyses Base case Medium case Worst case Program cost 6,13 1,655 6,13 1,655 6,13 1,655 01cost savings 107,663 946,632 3,936,042 Life time lost income avoided 2,877,964 25,346,372 105,484,766 Total benefit 2,985,627 26,293,003 109,420,808 Net benefit (3,146,028) 20,161,348 103,289,153 Benefit cost ratio 0.49 4.29 17.85 Based on these assumptions, the total present value o f lost eamings avoided as a result o f the prevention program was estimated in three scenarios. When 01cost savings and lifetime lost income avoided were deducted from the program cost, the net benefit is negative (minus 3.1 million USD) for base case with an unfavorable Benefit Cost (B/C) Ratio o f 0.49. In the two other scenarios, the net benefits are positive and B/C ratio is greater than 1. The medium case yields a positive net benefit o f 20.2 million USD and 4.29 B/C ratio. An even higher gain i s observed for the worst case scenario with a net benefit o f 109.4 million and 17.85 B/C ratio. More benefits would be gained from the program if the condom coverage is higher than input parameters in the model (Table 3). Life years accrued from infections averted were also not valued but would increase the estimated NPVs inall scenarios. IV. Anti-retroviral Therapy program cost Not all PLWHA will require ART immediately after seroconversion. UNAIDS recommends starting ART inthe later stages o f the disease as s measured by CD4 count less than 200. Based on the new infection cohorts produced over the 18 year period o f the Medium Case Scenario, several assumptions were made: (i) ART would be indicated six years after seroconversion, (ii) only 85% o f those eligible would enroll in ART treatment due to social stigmatization and adverse drug effects, and (iii)the retention rate, taking into account drop out from the program owing to non-compliance and treatment failure, and deaths due to 01, i s shown in Table 7. All ART enrollees are assumed to die inyear 11. Table 7 Retentionratio o fART enrollees Year 1 2 3 4 5 6 7 8 9 10 1 0.8 0.8 0.8 0.6 0.6 0.4 0.4 0.2 0.2 69 Table 8 Total net PLWA on ART, 2005-09 by the Project, and2010-28 by the RGOB Net PLWA on Net PLWA on Net PLWA on Year ART Year ART Year ART 2005 6 2015 367 2025 241 2006 10 2016 399 2026 213 2007 13 2017 410 2027 180 2008 16 2018 400 2028 141 2009 18 2019 380 2010 46 2020 352 2011 91 2021 326 2012 154 2022 303 2013 231 2023 284 2014 314 2024 265 Five Ten year 899 Ten year 3486 year 775 When adjusted by the retention ratio, by 2005, there would be 6 PLWA eligible for ART (CD4<200) and willing (0.85) to enroll in ART. The number o f PLWA under in ART slowly increased to under 100 by 2011, rapidly increased to its peak o f 410 cases in 2017, then fell to 141by2028. Figure 5 depicts the total net number o f PLWA adjusted for drop outs, treatment failure and deaths during 2005 to 2028. It is likely that the first group o f patients, having been infected in 1999, would start ART in2005. Fig 5. Total net number of PLWAon ART adj for drop out and deaths 2005-28 70 Cost o f ART was assumed as followed. Annual cost per patient year for the first line regimen was 350 USD and second line was 4 times the first line at 1400USD. It was assumed that 0.85 o f PLWA would tolerate the first line regimen and 0.15 would be enrolled inthe second line. The weighted cost o f ART was estimated at 508 USD per patient year. Recurrent cost for CD4 count monitoring was estimated at 10 USD per test, twice a year, 20 USDper patient year. The overall average cost o f ART was estimated at 528 USD per patient year. Drug costs were a significant part o f ART program cost, representing 96% of 528 USD. Changes in drug cost (either up or down) would have a major impact on government's operating costs when the program becomes mature. Table 9 Average cost o fART perpatient year USD per patient Proportion o f year patients Regimen 1, first line drug 350 0.85 Regimen 2, second line drug 1400 0.15 Weighted cost per patient year 508 Recurrent cost for CD4 monitoring4 20 Total recurrent cost excl routine lab 528 Percent drug cost 96% The average cost o f ART per patient year was multiplied by the net number o f PLWA on ART. This results in total resource requirement for ART both in the project (2005-09) and in the portion to be financed by the RGOB (2010-28). Table 10 indicates an annual cost of less than 100,000 USD during the period o f 2005-12, which is less than the annual cost o f 200,000 USD per annum duringthe period o f 2013-2015. The budget peak o f 220,000 USD would be observed in2017 andthenwould leveloffsteadily, similar to the netnumber ofPLWAonART. This excludes other laboratory tests e.g. routine kidney and liver function tests. This is expected to be absorbed by the routine services by the RGOB. 71 Table 10Annual recurrent costs for ART 2005-09by the Project, and 2010-28 bythe RGOB Recurrent cost, Recurrent cost, Recurrent cost, Year USD Year USD Year USD 2005 3,228 2015 193,710 2025 127,084 2006 5,294 2016 210,511 2026 112,421 2007 6,844 2017 216,356 2027 94,839 2008 8,394 2018 210,847 2028 74,514 2009 9,298 2019 200,486 2010 24,005 2020 185,811 2011 48,255 2021 172,061 2012 81,025 2022 159,781 2013 121,673 2023 149,749 2014 165,461 2024 139,574 Five Ten year 473,477 Ten year 1,838,886 year 408,858 Figure 6 indicates total annual recurrent cost for the ART program, excluding capital investment. This highlights how muchwould the government would shoulder after the project end. The key policy message is to foster prevention. It would reduce the number o f new HIV infections and consequently the requirement for ART. Fig 6. Total recurrentcost for ART and CD4 ( USD) basedon number of net PLWA on ART, 2005-28 72 Annex 10: SafeguardPolicyIssues BHUTAN: HIV/AIDS and STI PreventionandControlProject Background Provision o f preventative and treatment services under the HIV AIDS project will generate hazardous medical wastes which, if not managed and disposed properly, can have direct environmental and public health implications. However, the negative impacts are reversible and easily mitigated through systematic management o f such clinical waste from source to disposal. The wastes o f highest concern expected to be generated by project activities are sharps (infected needles and syringes, surgical equipment, IV sets) infected blood, HIV test kits used in VCT centers, blood banks and laboratories and pharmaceuticalwastes. There i s no construction waste envisaged, as there are no major civil works, other than the establishment o f a small-scale waste management system andrefurbishment and minor works relatedto VCT. While there is no national legislationon healthcare waste management inBhutan, the RGOB has taken different initiatives for enforcing good practices and measures for handling general biomedical waste. There are Infection Control Guidelines and Environmental Codes o f Practices for Hazardous Waste Management which provides some basic guidelines for segregation and disposal o f biomedical waste. Waste management and infection control is also a part o f the curricula offered by the Royal Institute o f Health Services. Additionally there are new guidelines with regard to solid waste management includingbiomedical waste generated from healthcare facilities. An assessment o f waste management and infection control in the country carried out in2002 noted that health workers have a reasonably good knowledge o f occupational safety and good practices but these are not always practiced often because o f lack o f resources andproper equipment. The project envisages the establishment o f proper management system for the treatment and disposal o f the waste related to the treatment and prevention of HIVIAIDS and STI. Once these systems are put in place and efficiently implemented, the negative environmental and environmental health impacts will be controlled. Proper training o f healthcare workers i s also planned under the project to ensure that good infection control and waste management practices are sustained over time. The above will be implemented as defined in an Infection Control and Healthcare Waste Management Plan, which has been developed by the RGOB. The detailed Plan has been disclosed and a copy is inthe Documents File. 73 Annex 11:ProjectPreparationand Supervision BHUTAN: HIV/AIDS and STI Preventionand ControlProject Planned Actual PCNreview 7/30/2003 08/21/2003 InitialPID 8/06/2003 9/23/2003 Initial ISDS 8/06/2003 9/23/2003 Appraisal 3/31/2004 4/20/2004 Negotiations 5/10/2004 4/26/2004 BoardiRVP approval 6/17/2004 Planned date of effectiveness 8/15/2004 Planned date o fmid-termreview 01/15/2007 Planned closing date 12/31/2009 Key institutions responsiblefor preparationofthe project: . Core project preparation team (MOH) Department of Debt andAid Management (MOF) Department of Budget andAccounting (MOF) Bankstaffandconsultantswho worked onthe project included: Name Title Unit HninHninPyne Sr. HealthSpec. SASHD DaleHuntington Sr. Health Spec. HDNHE DavidEvans Health Spec. SASES Madhavan Balachandran Financial Management Spec. SARFM RumaTavorath Environment Spec. SASES Sushi1Bahl Sr. Procurement Spec. SARPS Sara M.McKinley Junior Professional Assoc. SASHD Ali Awais Counsel LEGMS Elfreda Vincent Program Assistant SASHD Alejandro Welch Program Assistant SASHD Rajat Narula Sr. DisbursementOfficer LOAG2 Christian Hurtado Proj Management Specialist Consultant Celine Daly STIand M&E specialist Consultant Viroj Tangcharoensathien HealtWAIDS Economist Consultant Tobi Saidel Epidemiologist (surveillance) Consultant UgenDoma Social andBehavioral Spec. Consultant Richard Pollard Communications Specialist Consultant Ghazali Raheem Information Systems/ Consultant Implementation specialist Bank funds expendedonproject preparation: 1. Bankresources: US$180,000 2. Trust funds: US$30,000 3. Total: US$ 210,000 EstimatedApproval and Supervision costs: 1. Estimatedannual supervision cost: US$ 85,000 74 Annex 12: Documentsinthe ProjectFile BHUTAN: HIV/AIDS andSTI PreventionandControlProject HIVrisk andvulnerability study Study o fPeople Livingwith HIV/AIDSinBhutan ... ...Strengthening STIprimary prevention and HIV diagnostics Surveillance assessment : Next Steps Infection Control and Health Care Waste Management Implementation Plan HIV/AIDS Treatment: Economic Analysis OperationalManual (April 27,2004), including Project Implementation Plan 75 Annex 13A: Terms of Reference(TOR) for Audit by RAA I. INTRODUCTION 1. The Royal Government o f Bhutan has received the World Bank grant financing to scale up the national response to fight HIV/AIDS. The project i s expected to start from about August 2004 for about 5 years. The main implementing and coordinating agency for the project would be the Ministry of Health (MOH). MOH intends to appoint Royal Audit Authority to carry out the financial audit o f the project. 2 ProjectDescription: The project supports the Kingdom o f Bhutanto help finance the national HIV/AIDS and STI Preventionand Control Project proposed. The total project cost inthe amount o f SDR 8.60 million (USD 5.77 million equivalent) is given to RGoB as an IDA Grant. This project will assist the Royal Government o fBhutanto reduce the spread o f HIV infection by strengthening political and societal commitment to HIV/AIDS prevention, by improving the national capacity to plan, implement andmonitor a response to the epidemic, by establishing prevention programmes for priority groups and the general populationusing a multisectoralapproach, and by supporting efforts to improve infection control andhealthcare waste management inhealth facilities. The project will also builduponexistingcapacity to establish a system of care and treatment for HIVpositive individuals and will reinforce national behavioral and serological surveillance o f the epidemic. The project has four components. Component 1 - Prevention of HIV/AIDS and STIs will promote political and societal leadership in the fight against HIV/AIDS, improve community knowledge and attitudes about HIV prevention, promote risk-reducing behaviors amongst priority groups, and increase access to condoms. Component 2 - Institutionalstrengthening and building capacity will enhance the ability o f national institutions to lead the fight against HIV through training and technical assistance, and will strengthen laboratory and blood transfusion services. Component 3 - Care, support and treatment of AIDS and STIs will establish VCT services, strengthen management o f STIs and HIV/AIDS (comprehensive care and treatment approach, including introduction o f ART, and improve infection control and waste management in health facilities. Component 4 - Strategic information for HIV/AIDS and STIs will promote evidence based decision making by improving health information management, strengthening operation research capacity, and instituting M&E and second generation surveillance systems. 76 11. Objective 3. The overall objectives o f the audit are to: (i)enable the auditor to express a professional opinion on the project financial statements5, o f HIV/Aids project as at the end of each fiscal year i.e fiscal years starting from August 2004 upto the project closing date. (ii) the operation o f the overall financial management system including internal controls, and compliance with financing agreements; (iii) financial Statements fairly present the financial transactions associated with the implementation o f the project. (iv) whether the expenditures financed by the grant were incurred for the purpose o f the project and are eligible for bank financing. 4. Coverage of the Audit: The audit would cover the entire project Le., covering all sources and applicationo f funds by all implementing agencies. The auditor would visit the various field offices o f project and other agencies as considered necessary for the audit. The audit would also cover all cost-based consultancy or other contracts for which no supporting documentation i s provided to the implementingagencies6. 5. Period:The audit would be for each fiscal year from commencement o f the project (expected to be August 2003) upto the project closing date. The audit for the first year would also cover transactions, which occurred before the commencement o f the project (if any financed as retroactive). 111. Scope 6. The audit should be carried out inaccordance with Generally Accepted Auditing Standards, and as per the General Auditing Rules and Regulations (GARR) o f Bhutan, financial Manual 1988 and also as per the International Standards on Auditing (ISA)7,and will include such tests andcontrols as the auditor considers necessaryunder the circumstances. Inconducting the audit, special attention should be paid to the following: a) an assessment o f whether the project financial statements have been prepared in accordance with consistently applied International Accounting Standards (IAS) and give a true and fair view o f the operations of the project during the year and the financial position o f the project at the close o f the fiscal year. Any material deviations from IAS, and the impact o f such departures on the project financial statements as presented would be stated; 5 The ProjectFinancial Statements are expected to include the following: Summary o f Sources andUses o fFunds. Sources o f funds would include [ 1, World Bank and beneficiaries. Appropriate schedules summarizing uses of fimds by mainproject components, expenditure accounts, disbursement categories and implementingagencies would be included; (a) Statement o f Credit Withdrawals, indicating details o f amounts withdrawn from the World Bank Loadcredit; and (b) Special Account Statement summarizing the operation ofthe World Bank Special Account for the project. 6 Currently no such contracts are envisaged to be entered into. Inthe unlikely event that such contracts are entered into, the audit would cover such contracts also. 7 publishedby the InternationalFederation o f Accountants 77 b) an assessment o f the adequacy o f the project financial management systems', including internal controls. The first such review o f project financial management systems would be done within six months from the end o f the fiscal year o f project implementation. Thereafter this would be done continuously, and a specific report on this aspect would be provided at least annually. This would include aspects such as adequacy and effectiveness of accounting, financial and operational controls, and any needs for revision; level o f compliance with established policies, plans and proceduresg; reliability o f accounting systems, data and financial reports; methods ofremedyingweak controls or creating them where there are none; verification o f assets and liabilities; and integrity, controls, security and effectiveness o f the operation o f the computerized system; and c) an assessment o f compliance with provisions o f financing agreements (Development Credit Agreement, Loan Agreement and Project Agreement with the World Bank), especially those relating to accounting and financial matters. This would interalia include verification that: i)allexternalfundsreceivedundertheproject havebeenusedinaccordancewiththe financing agreements, with due attention to economy, efficiency and effectiveness, andonly for the purposes for whichthe financing was provided; ii)counterpart funds havebeenprovided andusedinaccordance with the relevant financing agreements, with due regard to economy, efficiency and effectiveness, and only for the purposes for which they were provided; iii)expenditureschargedtotheprojectareeligibleexpendituresandhavebeencorrectly classified' O ; iv) goods and services financed have been procured in accordance with the financing agreements; v) all necessary supporting documents, records, and accounts have been kept inrespect o f all project activities; vi) clear linkages exist betweenthe accountingrecords including accounts books, andthe Project Financial Statements. vii)Special Accounts have been maintained in accordance with the provisions o f the relevant financing agreements; and 8 The financial management system would include methods and records established to identify, assemble, analyze, classify, record and report on transactions and to maintain accountability for the related assets and 9 liabilities.including the Financial Management Manual, and Memorandumo f Understandings between implementing agencies. 10 these would be determined with reference to internal policies, and with reference to documents such as the Development Credit Agreement, Loan Agreement, and Project Agreement with the World Bank, Project ImplementationPlanand IDA Project Appraisal Document. 78 viii) all Statements of Expenditures (S0Es)lProj ect Management Reports (PMRs) used as the basis for the submission o f withdrawal applications accurately reflect expenditures andactivities on the project. 7. The auditor is expected to obtain and satisfactorily document sufficient audit evidence to support audit conclusions. IV Management Letter: 8. Royal Audit authority should prepare a management letter in which significant weaknesses not reflected in the audit opinion will be recorded. The following may be included in the management letter: a) Where ineligible expenditures are identified as having been included in the withdrawal applications andreimbursed against, these should be separately reportedby the auditor; b) The degree o fthe compliancewith financial covenants o fthe financing agreement; c) Matters that have come to attention during the audit which might have a significant impact on the implementation o f the project; and any other matters that the auditors consider pertinent. 9. Timing: The PMT will be responsible for preparing the consolidated project financial statements and forwarding them for DADM's review and submission to RAA by September 1o f each financial year. The certified audited financial statement will be sent to IDA within 6 months o f the FY end (December 31o f each year). General 10. General: The auditor should be given accessto all legal documents, correspondence andany other information associatedwith the project and deemed necessary by the auditor. Confirmation should also be obtained o f amounts disbursed and claims pendingwith the Bank. Itis highlydesirable that the auditors becomefamiliar withBank's Guidelines on Disbursements, Procurement and financial Reporting. All these documents will be provided to the auditor by the Project Staff. 79 Annex 13 B Terms of Reference(TOR) for InternalAuditors I Objectives: 1. The objectives o f intemal audit to review of operations by specially assigned staff to ensure that implementing agencies intemal control system are operating satisfactorily. Internal audit provides project management with timely information, on the financial management aspects to enable the management to take corrective actions, wherever necessary. I1 Coverage: 2. The intemal auditor will cover the PMT and various field offices as considered necessary. 3. Specific areas of coverage o f the intemal audit will include the following: An assessment of the adequacy o f the project financial management system including intemal controls. This would include aspects such as whether appropriate controls as specified by the RGOB financial rules and other relevant Government (RGOB) notifications and the Project Financial Management Manual are operating satisfactorily. The auditor should also look at effectiveness o f computer controls o f the software used at PMT-MOHfor consolidating data submittedbyImplementingAgencies. The auditor should suggest methods for improvingweak controls or creating them where there are none. An assessment o f compliance with provisions o f the financing agreement (IDAGrantAgreement) particularlythose relating to financial matters. That yearly work plans are prepared and expenditures are incurred as per approved plans andvariances ifany are analyzed andmonitored. That adequate records are maintained to record assets created under the project including details o f cost, location and that the physical verification o f assets are being done by the management periodically. The internal auditor will conduct physical verification o f assets on a test basis. That an appropriate system o f accounting and financial reporting exists by which expenditures are properly classified and eligible expenditures are claimed for reimbursement. That an adequate system is in place to ensure that goods, works and services are being procuredinaccordance with relevant financing agreements. That proper books of account and adequate documentation i s being maintained for all project activities. Timing: 4. The intemal audit may review activities and conduct test checks as andwhennecessary. 80 IV Reporting: 5. The Internal Auditor will provide a report to the Minister and to the PMT, highlighting findings to enable the management to take timely corrective action. Any such report shall be made available to the RAA and to the Bank mission, when requested. 81 Annex 14: Financial Monitoring and Reporting HIVIAIDS and STI Prevention Project Sources & Uses o f Funds for the Quarter ended XX/XX/XXXX (FY xxxx-xx) World Bank IDA Grant # xxxxx Cumulative Previous Qtr Current Previous Current Qtr Years Year Total 4. Sources of Funds I I I I I I rota1Source of Funds 2. Goods 3. Consultants' Services 4. Non-consultant Services II II II II II II 5. Training and Workshops 6. InnovationGrants 7. Recurrent Costs Total Fund Use I I I I I I 2. Net Change (A-B) D. Opening Balance 1. Special Account 2. PLC (PMT-MOH) Cash Bank 3. Dzongkhag L C Cash Bank 4. Advances BIF 4dd: Net change (C) E. Net Cash Available P. Closing Balance 1. Special Account 2. PLC (PMT-MOH) Cash Bank 3. Dzongkhag L C Cash Bank 4. Advances CIF Total Closing Cash 82 I I - .. u! v1 2M e, 2 Annex 15: SupervisionStrategy The project will require intensive supervisioninthe first two years, given the range o f implementing agencies with different capacities and the large procurementwhich will take place inthe first 18months. Despitegoodcapacity inplanningat the centrallevelandacommitment to fightingHIV/AIDS, MOH andPMT will require assistanceinimplementingthe project's workplan mechanism at the Dzongkhag levels. Inparticular, support will be necessary inthe first year prior to the MOH's plannedroll out o f the PBMtool to the Dzongkhags. NGOs/CBOs andthe private sector are very small inBhutanandthe PMTwill benefit from guidance from Bankteams inestablishing thenon-government sector's participationinthe project inthe first two years. This period i s also the critical time for establishing a multisectoralresponse to HIV/AIDS through supporting line ministries other than Health inthe development and implementation o fworkplans for advocacy andprevention activities. Procurement inthe first two years is large andthe PMT will benefit from Bank supervisioninensuring that the preparations for procurementunder way at appraisal are followed through on time to avoid project implementationdelays. To the extent possible, supervisionmissions will beplannedto coincide with the MOH's budget preparation cycle (February-March). This will maximize the impact of Bank support, since mission findings will be able to link directly into the MOH's annual planning. Supervision missions will also be heldclose to the health sector review to leverage work undertakenas part o fthe broader review process. Areas o f overlap betweenthe health sector review andBank supervision ofthe project include planningmechanisms (workplans/PBM tool/BAS), human resources development, and monitoring & evaluation (HMIS, LIS) as well as progress in implementation inI C & HCWM, laboratory services (including quality assurance), andblood supply. Additional supervision missions will be undertaken as required. It was agreed with UN agencies and donors ina meeting convened by MOHthat mission planning o f all groups would be shared through MOHto minimize the impact o funcoordinated supervision from multiple agencies on M O Hwork. The Bank supervision teams will participate inmeetings with donors. The core supervisionteam inBank missions will include: (i) Task Team Leader, with experience inHIV/AIDS operations; (ii)Jinancial management specialist who will review the project's adherence to fiduciary requirements; (iii) procurement specialist who will review and advise on issues relatedto procurement; (iv) implementation specialist who will focus on smooth implementationby other sectors, NGOs and contractors; and (v) environmental specialist to review implementationo f the I C & H C W Mplan. The team will also rely uponselected experts, including WHO staff, for technical assistance on monitoring & evaluation, surveillance, strategic communications, andthe medical care and support component. Supervisionmissions inthe first year will focus on progress on (i) establishment o f the planned institutional structure, (ii) progressindevelopingpolicies and guidelines specified inthe project (ART & 01treatment, syndromic management o f STIs, BCC, I C & HCWM), (iii) trainings; (iv) monitoring & evaluation arrangements; (v) initiation o fprocurement o f goods and works; (vi) financial management capacity development; (vii) readiness to initiate workplans and subprojects for MOH, other line ministries, NGOdCBOs andthe private sector; and (vii) development o f the second-generation surveillance system so that first round o f surveys will be 85 done duringthe first year o f the project. Fieldtrips will be undertaken to three Dzongkhags, including meetings with Dzongkhag officials, DMOs and other health authorities, and MSTFs. Visits to VCT services, hospitals for review o f I C & HCWM, laboratories and blood supply, and to BHUs to review infection control procedures, STImanagement andthe use o fHMIS will also be undertaken. 86 Annex 16: Statementof LoansandCredits BHUTAN: HIV/AIDS andSTI PreventionandControlProject Difference between expected and actual Original Amount in US$ Millions disbursements Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev'd PO74114 2004 EDUCATION DEVELOPMENT 0.00 31.00 0.00 0.00 0.00 31.16 0.10 0.00 PROJECT PO59481 2000 RURAL ACCESS ROADS 0.00 11.60 0.00 0.00 0.00 6.91 4.75 0.00 PO57570 2000 URBAN DEVELOPMENT PROJECT 0.00 10.80 0.00 0.00 0.00 6.58 5.22 2.22 PO09574 1998 EDUCATION I1 0.00 13.70 0.00 0.00 0.00 3.45 3.43 0.77 Total: 0.00 67.10 0.00 0.00 0.00 48.10 13.50 2.99 BHUTAN STATEMENT OF IFC's HeldandDisbursedPortfolio InMillions ofUS Dollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. Total portfilio: 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 ApprovalsPendingCommitment FY Approval Company Loan Equity Quasi Partic. Total pendingcommittment: 0.00 0.00 0.00 0.00 87 Annex 17: Countryat a Glance BHUTAN: HIV/AIDS and STIPreventionandControlProject POVERTY and SOCIAL South Low- Bhutan Asia income Development diamond' 2002 Population. mid-year(miilions) 0.85 1401 2,495 Lifeexpectancy GNIper capita (Atlas method, US$) 590 460 430 GNI(Afiasmethod, US$ billions) 0.50 640 1072 Average annual growth, 1996-02 Population (%J 2.9 18 1.9 Labor force (%) 2.6 2.3 2.3 Gross primary M o s t recent estimate (latest year available, 1996-02) capita enrollment Poverty (%of populationbelownationalpoveftyline) Urbanpopulation (%of totalpopulation) 8 28 30 Life expectancyat birth (years) 83 63 59 1 Infant mortality(per {OOOiive births) 54 71 81 Childmalnutrition (%ofchildrenunder5) 19 Access to improvedwatersource Access to an improvedwater source (%of population) 62 84 76 llliteracy(%ofpopuiationage a+) l - 44 37 Gross primaryenrollment (%ofschool-agepopulation) 97 95 Bhutan Male x18 x13 Lowincome group Female 89 87 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1982 1992 2001 2002 Economic ratios' GDP (US$billions) 0.6 0.25 0.53 0.59 Gross domestic investmentiGDP 40.7 50.0 48.1 ~C,i Exportsofgoodsandservices/GDP 11.0 32.7 23.2 Trade Gross domestic savingsiGDP 9.5 25.6 27.9 Gross national savingslGDP -116 14.0 33.0 Current account balanceiGDP -43.7 -n.1 -20.5 InterestpaymentsiGDP 0.0 0.7 0.3 0.3 savings Domestic Investment Total debtiGDP 0.7 36.4 50.3 63.4 Total debt service/exports 0.0 6.9 4.2 4.6 1 Present value of debtlGDP 46.4 Present value ofdebtfexports 64.6 Indebtedness 1982-92 1992-02 2001 2002 2002-06 (average annualgrowth) GDP 7.0 7.0 7.0 7.7 Bhutan GDP percapita 4.7 3.9 4.0 4.8 -Low-incomegroup STRUCTURE o f the ECONOMY I982 1992 2001 [Growth o f investment and GDP (%of GDP) ( O h ) 1 Agriculture 53.7 39.8 35.4 33.9 industry 8.3 28.9 36.2 37.4 Manufacturing 4.7 x1.5 8.1 8.1 Services 28.0 313 28.4 28.8 Privateconsumption 69.0 55.3 518 97 98 99 00 01 02 Generalgovernment consumption 21.5 8.1 20.5 Imports ofgoodsand services 45.2 57.2 43.4 GDI -GDP 1982-92 1992-02 2001 2002 (average annualgrowth) Agriculture 3.8 4.1 3.2 2.5 Industry 11.0 9.0 13.4 P.0 Manufacturing 11.3 4.3 7.3 4.8 Services 9.2 7.3 4.2 8.8 Privateconsumption Generalgovernmentconsumption Gross domestic investment 5.4 5.1 Imports of goods and services 88 Bhutan PRICES and GOVERNMENT FINANCE 1982 1992 2001 2002 Inflation (%) Domestic prices I (%change) Consumer prices E O 2.4 ImplicitGDP deflator lil 0.7 7.0 6.8 Government finance (%of GDP,includescurrent grants) Current revenue 18.9 34.9 30.7 I 97 98 99 00 01 02) Currentbudget balance 0.8 l7.1 14.4 Overallsurplusldeficit -8.3 -0.0 -4.9 I GDPdeflator -CPI I I TRADE 1982 1992 2001 2002 (US$ millions) Export and import levels (US$ mill.) Total exports (fob) B 63 0 0 98 ma. -- ma. 200 Manufactures Total imports (cif) 65 83 196 8 8 Food Fueland energy Capitalgoods Exportprice index(1995=WO) 96 97 98 99 00 Import price index(895=WO) 0Exports lprports Terms of trade (895=x)O) BALANCE o f PAYMENTS 1982 1992 2001 2002 (US$ mi//ions) Current account balance to GDP Exports of goods and sewices 30 86 0 3 00 0 Imports of goods andservices 0 1 1D 239 228 Resource balance -70 -25 -06 -99 -5 Net income 0 0 -18 -25 -10 Net currenttransfers 0 0 64 82 -!5 Current account balance -70 -25 -08 -20 Financingitems (net) 68 51 84 -25 Changes in netreserves 2 -26 24 -20 -30 Memo: Reserves includinggold (US$ millions) 294 317 Conversion rate (DEC, /oca//US$) 9.5 25.9 47.2 48.2 I EXTERNAL DEBT and RESOURCE FLOWS 1982 1992 2001 2002 (US$ millions) Composltion of 2002 debt (US$ mill.) Total debt outstanding anddisbursed 1 89 265 377 IBRD 0 0 0 0 IDA 0 8 31 39 0 :39 Total debt service 0 6 6 6 IBRD 0 0 0 0 IDA 0 0 1 1 Compositionof net resource flows Official grants 4 D 102 32 29 0 Official creditors 1 9 75 93 E 236 Private creditors 0 -2 0 0 Foreigndirect investment 0 0 0 0 Portfolio equity 0 0 0 0 World Bank program Commitments 0 0 0 0 I Disbursements - 0 1 6 6 A IBRD E- Ellateal D-Othernultilateral F - Rivate Principalrepayments 0 0 0 0 G- Short-ter 89