Document of The World Bank Group FOR OFFICIAL USE ONLY Report No. 71885-HT INTERNATIONAL DEVELOPMENT ASSOCIATION AND INTERNATIONAL FINANCE CORPORATION INTERIM STRATEGY NOTE FOR THE REPUBLIC OF HAITI FOR FY13-FY14 September 27, 2012 Haiti Country Management Unit Latin America and the Caribbean Region The International Finance Corporation Latin America and the Caribbean Region This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank's Policy on Access to Information. Board discussion date of last strategy, Interim Strategy Note CY2012: December 1, 2011 CURRENCY EQUIVALENTS (Exchange Rate Effective September 12, 2012) Currency Unit = Haitian Gourde US$1 = HTG 42.05 FISCAL YEAR October 1 - September 30 ABBREVIATIONS AND ACRONYMS AAA Analytical and Advisory Services IHRC Interim Haiti Recovery Commission AF Additional Financing JJERP Infrastructure and Institutions AGI Adolescent Girls Initiative Emergency Recovery Program CAS Country Assistance Strategy JOM International Organization for Migration CDD Community-Driven Development ISN Interim Strategy Note CPPR Country Portfolio Performance Review IT Information Technology CRW IDA Crisis Response Window JSDF Japan Social Development Fund CY Calendar Year MDG Millennium Development Goals DPC Development Policy Credit MDRI Multilateral Debt Relief Initiative DPO Development Policy Operation Mou Memorandum of Understanding DRM Disaster Risk Management NDRMS National Disaster Risk Management System ECVMAS Post-Earthquake Living Conditions NGO Non-Governmental Organization Survey NLTA Non-Lending Technical Assistance EEICM Survey on Employment and the ODA Official Development Assistance Informal Economy ORAF Operational Risk Assessment Framework EGRO Economic Governance Reform Plu Project Implementation Unit Operation PFM Public Financial Management FDI Foreign Direct Investment PPP Purchasing Power Parity FM Financial Management Public-Private Partnership FY Fiscal year PRSP Poverty Reduction Strategy Paper GAFSP Global Agriculture and Food Security PSD Private Sector Development Program SDR Special Drawing Rights GBV Gender-Based Violence SFLAC Spanish Fund for Latin America and the GDP Gross Domestic Product Caribbean GFDRR Global Fund for Disaster Risk SME Small and Medium Enterprise Reduction TA Technical Assistance GoH Government of Haiti UN United Nations GPF Governance Partnership Facility UNDP United Nations Development Program HIPC Highly Indebted Poor Countries UNESCO United Nations Educational, Scientific and HOPE Haitian Hemispheric Opportunity Cultural Organization through Partnership Encouragement Act US United States HELP Haiti Economic Lift Program Act USAID United States Agency for International HRF Haiti Reconstruction Fund Development IDA International Development Agency WB World Bank IDB Inter-American Development Bank WBG World Bank Group IDP Internally Displaced Person WDR World Development Report IEZ Integrated Economic Zone WFP World Food Program IFC International Finance Corporation WHO World Health Organization WORLD BANK IFC Vice President Hasan A. Tuluy Bernie Sheahan (acting) Director Alexandre V. Abrantes Jean-Philippe Prosper Task Team Leader Michelle Keane Ary Naim Acknowledgements: The following World Bank Group staff contributed to this Interim Strategy Note: Kanae Watanabe (co- author), Pedro Tarrisse Fontoura, Ali Alwahti, Ana Bellver, Antoine Deroide, Armando Heilbron, Aude- Sophie Rodella, Barbara Coello, Caroline Cerruti, Colum Garrity, David Warren, Diego Arias, Eli Weiss, Elizabeth Bulmer, Emmanuel Pinto Moreira, Facundo Cuevas, Federica Marzo, Francesca Lamanna, Franck Bessette, Frederic Verdol, Gaetano Vivo, Galina Sotirova, Jorge Araujo, Josef Leitmann, Juan Buchenau, Karen Bazex, Katheleen Krackenberger, Lisa Bhansali, Luc Razafimandimby, Maria Angelica Sotomayor, Maria Lopez, Maryanne Sharp, Michel Matera, Noah Yarrow, Pascal Jaupart, Patrick Ramanantoanina, Pierre Bonneau, Pierre Nadji, Rebecca Schutte, Roland Clarke, Sarah Haddock, Snezana Mitrovic, Sylvie Debomy, Deo Ndikumana, Alexandre Abrantes. In addition the Team is grateful to the following for their comments: Bruce Courtney, David Satola, Edith Mwenda, Elizabeth Adu, Georgia Wallen, Hoon Sahib Soh, Jasmine Griner, Jeni Klugman, Joel Reyes, Julius Thaler, Lawrence Bouton, Marcelo Fabre, Marialisa Motta, Mukesh Chawla, Nyaneba Nkrumah, Peter Moll, Reynaldo Pastor, Roberto Tarallo, Rodrigo Chavez, Sally Burningham, Snjez Plevko, Steven Burgess, Ursula Casabonne, Jun Zhang, Boileau Loko (IMF).  TABLE OF CONTENTS I. EXECUTIVE SUMMARY ............................................................... 5 II. COUNTRY CONTEXT AND DEVELOPMENT AGENDA ...............8................8 A. Country Context ................................................... 8 B. Poverty......................................................... 10 C. Recent Economic Developments........................................ 10 D. Economic Outlook over the ISN Period............................. 12 E. Development Challenges............................................ 14 F. Government Priorities and Medium-Term Strategy. ..................... ..... 18 III. WORLD BANK GROUP ASSISTANCE STRATEGY ........................................ 19 A. Use of IDA Crisis Response Window in Haiti ..................... ......... 19 B. Early Earthquake Response and ISNI - Results and lessons ...................... 21 C. Proposed FY13-14 Interim Program ............................... ..... 26 D. Implementing the FY13-14 Program ............................... ..... 37 IV. MANAGING RISKS .................................................................. 40 VI. ANNEXES 1. Results Framework Matrix 2. ISN 1 Results 3. Selected Results since the Earthquake 4. Haiti at a Glance 5. Selected Indicators of Bank Portfolio Performance and Management 6. Haiti Social Indicators 7. Haiti - Key Economic Indicators 8. Haiti - Key Exposure Indicators 9. Operations Portfolio (IBRD/IDA and Grants) 10. IFC Committed and Disbursed Outstanding Investment Portfolio 11. Donor Mapping Annex 12. Haiti Active Trust Funds 13. Progress on MDGs 14. Governance Annex 15. Gender Annex 16. Map  INTERIM STRATEGY NOTE REPUBLIC OF HAITI FY13-FY14 I. EXECUTIVE SUMMARY 1. This Interim Strategy Note (ISN2) proposes a World Bank Group (WBG) Program for Haiti for FY2013 and FY2014. It programs US$245 million of the US$500 million allocated to Haiti by the International Development Association (IDA) from its Crisis Response Window for FY12-14. The proposed program builds on the US$255 million program discussed by Executive Directors on December 1, 2011 for calendar year 2012 under ISN 1. 2. A second ISN rather than a full Country Partnership Strategy (CPS) is proposed for the remainder of the IDA 16 period for several reasons. First, the ISN2 preparation period coincided with a period of political transition in Haiti. Second, the IDA 16 allocation is exceptional and is expected to be frontloaded and fully committed during the remaining IDA 16 period. The allocation was exceptionally provided by IDA deputies from the IDA Crisis Response Window for the country's broad reconstruction, which remains urgent. Third, more time is needed for dialogue with Government around its medium term priorities, in the absence of a current Poverty Reduction Strategy Paper for Haiti. 3. It is expected that preparation of a CPS would likely begin in the last year of this ISN on the basis of a revised PRSP or another form of strategy paper prepared by the Government, a Completion Report outlining results under the 2009 CAS, ISN 1 and ISN2 , and a deeper dialogue on the role of IDA resources for Haiti going forward. The proposed strategy draws upon the WBG's longstanding efforts to support Haiti's development results (as articulated in the 2009 WBG Country Assistance Strategy), the WBG's response to the January 2010 earthquake, and the implementation of the CY2012 program, approved under ISNI. Context 4. Two and a half years after a massive earthquake ravaged Haiti, reconstruction remains urgent to address the impacts of the disaster. The earthquake killed 230,000 people and displaced 1.5 million. It resulted in damages and losses of US$7.9 billion (120% of GDP) and in US$11.3 billion in estimated reconstruction needs. The disaster compounded Haiti's many preexisting development challenges, increasing poverty and vulnerability, threatening livelihoods, and hampering already very weak service delivery and human development outcomes. The disaster revealed and exacerbated Haiti's underlying socio-economic challenges, such as social fracture and inequity, the fragility of political mechanisms in the country, Government's weak capacity, risks of political instability, and persistent volatility. Progress 5. Despite these difficult conditions, progress has been made since January 2010. Donors have committed US$8.7 billion in humanitarian and project investments, of which US$5.8 billion have been disbursed, and have provided US$1 billion in debt relief. Rubble has been cleared, the number of displaced people has been cut by two thirds, exceptional efforts have 5 been made to combat and contain cholera, and free access to education has been expanded with donor and government funds. Government has taken the initiative to launch a social safety net program, to step up agriculture investments, to consider electricity sector reform, and to attract foreign investors. 6. However, much remains to be done to achieve rapid growth, see a significant improvement in the daily lives of Haitians, address vulnerability, achieve better human development outcomes, especially for women, and reduce very high poverty rates. Although growth prospects look positive, improved policies are needed for Haiti to begin achieving its economic potential and increase private sector investment. Resources and public private partnerships are required to rebuild important infrastructure and provide significantly expanded access to basic services. The generation of larger domestic revenues is also urgent to help prepare for the expected post-crisis drop in international financing over the coming years. World Bank Group Contribution and Strategy 7. The World Bank Group (WBG) has contributed substantially to the achievement of these results, making new IDA commitments of US$310 million and disbursing a total of US$253 million from IDA. Building on pre-earthquake interventions, the WBG provided critical early emergency support to repair infrastructure, get food and supplements to vulnerable populations, and help Government re-establish basic functions. Bank-financed cholera prevention and treatment activities have reached over 1 million people. With IDA 16 financing, tuition waivers reach 100,000 school age children yearly, disaster risk management support is provided to all vulnerable communes in the country, and a national agriculture extension program has been put in place. IFC invested in a plant, which now provides 18% of Port au Prince's electricity, and has protected 5000 jobs and created another 5000 through its investments in special economic zones. Analytical and advisory activities as well as trust funds (from GFDRR and others) played an important role in complementing IDA activities. Over the period, WBG has evolved into a significant platform for the delivery of aid to Haiti. IDA has piloted approaches being scaled up by other donors, serves as a convener in Budget Support, Neighborhood Reconstruction, Private Sector Development and Doing Business, and continues to play coordinating role in reconstruction finance through its trusteeship of the Haiti Reconstruction Fund (HRF). 8. ISN2 broadly retains the same objectives as ISNI: to (i) reduce vulnerability and increase resilience, (ii) support sustainable reconstruction, (iii) build human capital, and (iv) promote inclusive growth. The strategy also aims to strengthen governance, by supporting public financial management and strengthening government capacity. Objective 3 has been broadened to include increasing access to health and social protection services and Objective 4 has been expanded to include regional development. Results obtained under ISN1 are found in Annex 2. Under ISN 2, emergency activities would be completed, reconstruction in the electricity sector and critical health and social protection services financed, and the foundations laid for long term regional development outside of Port-au-Prince in the North and the Center. Knowledge sharing, as well as, analytical work on key issues related to poverty and reconstruction would underpin these programs. Outcomes expected under ISN2 are set out in the results framework in Annex 1. 6 9. Governance. Governance weaknesses and corruption remain critical challenges for Haiti's development. ISN2 will step up its attention to improving governance through transparency and capacity building measures. Transparency and accountability will be promoted in public financial management and procurement, through reviews and audits and in the electricity sector. Capacity will be built in key Ministries where IDA has substantial investments. IDA will support the elaboration of a Government Public Financial Management Plan to implement the recommendations of the recent Haiti Expenditure and Financial Accountability Report, financed by the EU. The programming of a Public Expenditure Review for two specific sectors is under discussion. Accountability measures and demand driven measures for better governance will be explored during the ISN period and support will be provided to strengthen the Government's anti-corruption unit. Annex 14 further details these measures, which aim to build trust in institutions in a fragile environment. 10. Implementation. To address the tripling of size of IDA's portfolio for Haiti in the next three years, the WBG will strengthen its implementation support for the program by increasing its technical, fiduciary and safeguard capacity and presence on the ground, and focusing on capacity building of counterpart agencies in these areas. Where appropriate and with due consideration for fiduciary and operational risk, the team will seek to utilize the flexibility allowed by IDA rules and practiced by fragile states to facilitate implementation. 11. Risks to the program remain substantial. They include (i) high risk of natural disasters such as hurricanes, storms and earthquakes with a limited but improving capacity to prepare and react; (ii) a risk that socio-political volatility could threaten current political stabilization and slow reconstruction efforts; (iii) a risk of insufficient government and institutional capacity to implement policies that favor growth and promote transparent and efficient implementation of programs financed by IDA and (iv) a risk of corruption. Though they cannot be fully eliminated, these risks are mitigated by country dialogue; flexibility in implementation, including emergency components in new projects; continued and sustained attention to and effectiveness in building Government and local capacity; and appropriate vigilance with regard to the implementation of fiduciary and safeguard standards. The ISN takes a two-pronged approach to capacity. It proposes certain short-term activities to support the Government's efforts to meet essential needs of the population and strengthen trust in Government, while increasingly focusing on long-term capacity and institution building. 7 II. COUNTRY CONTEXT AND DEVELOPMENT AGENDA A. COUNTRY CONTEXT 1. Two and a half years after a massive earthquake ravaged Haiti, reconstruction remains urgent to address the impacts of the disaster. The earthquake killed 230,000 people, injured 300,000, and displaced 1.5 million. It resulted in damages and losses of US$7.9 billion (120% of GDP) and in US$11.3 billion in estimated reconstruction needs. Massive efforts have been made by individuals, communities, Government and donors to respond, but much remains to be done to improve living conditions and effect sustainable change. Experience of the reconstruction process has also made clear that increasing the capacity of Haitian institutions and improving overall governance are critical to achieving sustainable results. Striking a balance between speed and sustainability remains a considerable political, economic, financial and organizational tour deforce for Government and donors alike. 2. The earthquake struck a country already facing major development challenges and further weakened the ability of the Haitian State to respond. With a GDP per capita of US$656 in 2009, one of the lowest in the World, Haiti is also one of the most unequal countries in the World (Gini coefficient of 0.59). Over half of its population of 10 million was estimated to live on less than US$1 per day, and 78% on less than US$2 per day in 2001 (last available data). Any poverty gains from the country's average real growth of 2.2 % p.a. from 2004 to 2009 are likely to have been eradicated by the earthquake. The country ranks 158th out of 187 in the 2011 Human Development Index, and has suffered from repeated exogenous and political shocks. In 2008, rising food and fuel price hikes led to riots and the fall of the Government and multiple tropical storms and a hurricane year caused losses estimated at $900 million (or 15% of GDP) the same year. With the disappearance of one third of the civil service, the collapse of all but one Ministry, and the destruction of much of the service delivery infrastructure in and around Port au Prince, the earthquake further weakened the Government's ability to respond. 3. In addition to facing high poverty levels, Haiti's development has historically been hampered by fragility and characterized by social fracture. Over many years, deep social and economic inequities, intense concentration of wealth and power in the hands of a few, and a lack of social justice and of the rule of law have repeatedly led to spikes of political and non- politically motivated violence. Longstanding lack of transparency and the absence of service delivery have led to citizens' low trust in government and severely damaged the credibility of the State. Governance challenges - including rule of law, the absence of clear rules for market- based competition and corruption- are major constraints on growth and investment and have hampered Haiti's development. While this historical context presents substantial challenges for reconstruction and medium-term goals, Gallup's most recent yearly perception poll shows Haitians' trust in Government at its highest level since polling began in 2006 and on the rise by 30% compared to 2010. 4. This increase in confidence is encouraging in the wake of political uncertainty in 2010 and 2011. Presidential and legislative elections launched in November 2010, were concluded in May 2011, with the swearing in of President Michel Joseph Martelly. He was the first opposition candidate in Haiti's history to accede to the post by democratic transition. 8 However, while the President received a strong majority of votes cast, the opposition retained control of Parliament and it took five months to confirm the first Prime Minister, who resigned five months into his term in February 2012. In 2012, although contained a movement to re- establish the Haitian Army (disbanded in 1995) caused tensions. The movement appears to have abated and the idea abandoned under Government pressure. Four months were needed to build consensus around the current Prime Minister, Laurent Lamothe. Mr. Lamothe's Government and program were approved in May 2012 and appear to benefit from broader political and popular support. 5. Despite these difficult conditions, much progress has been made since January 2010. Donors have committed US$8.7 billion in humanitarian and project investments of which US$5.8 billion have been disbursed, and have provided US$1 billion in debt relief. On the ground, progress is visible. Most earthquake affected areas have been cleared of rubble, of 1.5 million internally displaced people (IDPs) about 910,000 have left the camps and relocated. Government, which first struggled to resume its critical functions, is taking initiative to address longstanding service delivery gaps. Many schools have been reconstructed and during the 2011/2012 school year, Government has undertaken to pay fees for 900,000 children while donors financed free access to education for 230,000 children. Cholera is being combated effectively, social safety net programs are being initiated, agriculture investments are being stepped up, electricity sector reform has been launched, and substantial efforts are being made to attract foreign investors. The World Bank Group has contributed substantially to the achievement of these results, as set out below, and made significant IDA investments for the years to come. 6. Nevertheless, much remains to be done. Important infrastructure in earthquake affected areas is still being rebuilt, including public buildings, schools, hospitals, housing, electricity, and water systems. Access to basic services and private sector investment, already very limited before the earthquake, need to be substantially expanded, if Haiti is to achieve and sustain productive growth rates and see social conditions improve and poverty levels drop. Haitian institutions need to be substantially strengthened to ensure that poor governance and corruption do not stand in the way of the achievement of Haiti's medium-term objectives. 7. The Government aims for Haiti to become an "emerging country" by 2030. To set the country on this path, it will have to make use of the country's competitive advantages: geographic proximity to and trade agreements with major consumer markets, a low-cost workforce, historic, cultural and geographic assets for tourism development, agricultural land, and current political visibility. To spur growth will mean following through on improving the climate for private investment and investing in roads, power, ports and airport infrastructure. As external financing is likely to drop in the coming years, continuing to grow domestic resources, using donor resources effectively, and improving the quality and transparency of all spending under strong government stewardship will be a key objective. The present Strategy aims to support the Government's efforts in achieving these objectives. 8. In recent months, President Martelly's Government has taken action on pending items. The President has nominated key officials to long-vacant positions, such as the Head of the Supreme Court. Government coordination and communication with the public and donors 9 have been strengthened, and the Cabinet is taking initiative on critical policies. A time frame for (delayed) elections to replenish one third of the Senate has been set and long awaited amendments to the Constitution, have been published. These allow dual nationality, a measure expected to facilitate diaspora participation in reconstruction. The Government has adopted a pro-active private sector development agenda, highlighted by a "Haiti is open for business" campaign and an innovative "business diplomacy" aimed at promoting foreign investment and links with the diaspora. Mr. Lamothe has underlined his intention to accelerate government-led efforts for reconstruction and to work "vite et bien" (quickly and well). B. POVERTY 9. Although current poverty data is not available, the earthquake is likely to have negatively impacted poverty gains of the last decade. The last Poverty Assessment is from 2001. Based on international poverty lines and the income aggregate as indicator of welfare, it found a 90% poverty rate at 4 dollars/day PPP and concluded that 78% lived in extreme poverty at 2 dollars/day PPP. Poverty and vulnerability have likely increased in recent years, as a result of the severe shocks of 2008 and 2010, severe loss of life, destruction of physical, economic, and social infrastructure and displacement. It is not possible however, today, to draw any conclusions as to the distribution of poverty impacts or their severity for various groups. 10. Data from the ongoing Post-Earthquake Living Conditions Survey (ECVMAS) conducted by the Institut Hatien de la Statistique de l'Informatique (IHSI) and supported by the World Bank, will help to better understand poverty and the earthquake's impact on living conditions. It will provide data by end CY2012 for a Poverty Assessment. The ECVMAS will enable Government to define vulnerability, and update poverty rates using international and national poverty lines. It will also provide critical data on employment, a top priority for Haitians over housing and education in recent surveys. Accurate analysis of labor related data will help Government and donors including the World Bank Group, support job creation and access and promote opportunity, in particular for the numerous youth. 11. A lot remains to be done to improve statistics and social indicators, build the IHSI's capacity, and enhance Government's ability to use the information in policy making. Government and donors aim to finance a census in 2013. C. RECENT ECONOMIC DEVELOPMENTS 12. Overall, the Haitian economy is recovering after the earthquake however growth has been weaker than anticipated. After contracting by 5.4% in FY2009/10, economic activity expanded by 5.6% in FY2010/11 and is projected to grow by 4.5% in FY2011/121. Growth has resumed driven by agriculture, manufacturing, commerce, and services, however results remain modest and construction, a key driver of reconstruction, has been weaker than expected. Exports rose sharply by 36.3% in FY2010/11 but are anticipated to remain flat in FY2011/12. The pace of implementation of public investment has been significantly slower than expected, due to the protracted political transition between November 2010 and May 2012, the cholera epidemic and the adverse global environment. IMF Fourth Review under the ECF, August 2012 10 13. The Government is taking action to accelerate public investment, facilitate private investment, and reconstruction projects conducive to growth. Domestic output is projected to grow stronger in the short-run, driven by construction (housing and urban development), agriculture (the main source of income for over 60% of Haitians and 25% of GDP), tourism and textile manufacturing, a major source of foreign exchange. While a positive economic outlook is envisaged, uncertainty remains as Haiti is vulnerable to global downside risks, including lower demand for its exports and diminishing external assistance. 14. A prudent monetary policy, a rebound in domestic agricultural production, and lower international commodity prices have contributed to keeping inflation within single digits. Consumer price inflation receded from a high of 10.4% in September 2011 to 5.2% in May 2012. Although the future evolution of prices remains uncertain, as international commodity and food markets remain subject to extreme volatility, it is expected that this trend will persist with inflation averaging 6% over the ISN period. 15. The Government of Haiti's fiscal position was better than programmed over the 2010/2011 Haitian fiscal year. Improved tax administration led to significant increases in revenue collection, 13.5% of GDP by end of FY2011, an increase of 1.6% of GDP over the last two years. Over the same period fiscal deficits were narrower than anticipated due to reasonable management of current expenditures and the under-execution of domestic investment plans. Domestic revenues are expected to continue to rise if reforms undertaken by the Customs and Fiscal Authorities are sustained. However, the short term fiscal outlook will depend on the rate of acceleration of capital spending. It is expected that an acceleration of reconstruction could widen the fiscal deficit to 4.7% of GDP in FY2012/13. 16. Overall, Haiti's external position has improved with a somewhat stable current account balance. After having resumed quickly following the earthquake, exports stagnated as a result of weakening external demand and falling commodity prices. Flat export performance was offset by limited capital goods imports, resulting from the low execution of investment plans. Current official transfers have also slightly declined - although they remain at an exceptionally high 15-16% of GDP on average- but remittances have been on an upward trend. The current account deficit is expected to remain almost stable at 4.3% of GDP in FY2011/12. Export growth is expected to resume as several industries start operating at full capacity and imports increase to bring in their capital equipment. Although other factors also contribute, the level of grants provided by development partners is likely to play an important role in Haiti's external position over the ISN period. Net official transfers are expected to amount to US$1.3billion in both FY2011/12 and FY2012/13. 17. A small overall balance of payment surplus allowed for a $0.167 billion increase in gross international reserves, to $2.0 billion (5.8 months of imports) in FY2010/11. Gross liquid international reserves are expected to remain above 5 months of imports for the next two years and the local currency is projected to follow a gradual depreciation trend given the growing dollarization of the economy, which might complicate monetary policy. 11 18. Year-on-year credit to the private sector grew by 30% through end-March, fueled by a rising demand for credits. Particularly in 2010 and 2011, the perception of political uncertainty continued to adversely affect long-term private sector investment. At the same time, nonperforming loans are low, and key stability indicators suggest that the financial sector is relatively liquid and profitable. On a 12-month basis, the Gourde depreciated slightly against the dollar (4.1 percent through end-May 2012) despite the fact that deposit and credit dollarization remain high. 19. The February 2012 joint Bank-Fund Debt Sustainability Analysis (DSA) assessed Haiti's risk of debt distress as high. In the aftermath of the earthquake, the HIPC and MDRI debt relief initiatives were complemented by additional debt relief, which substantially reduced Haiti's external debt burden. In nominal terms, external public debt stood at US$657 million at end 2011, down from US$1.2 billion in 2009. However, Haiti's debt situation remains vulnerable, due to the rapid debt build-up expected in the near to medium-term based on the current accumulation of PetroCaribe credits. Key exposure indicators are in Annex 8. 20. The level of international support for post-earthquake reconstruction will have a significant impact on the evolution of Haiti's growth. External support has played an important role in economic and reconstruction outcomes, helped attenuate the fiscal deficit, and strengthened the external position, underlining both the need for its continuation and the vulnerability of the Haitian economy to fluctuations in aid. Over the last two years, domestically financed public investment has stood at 5.7% of GDP. In comparison, external assistance has amounted to 16.6% of GDP for the same period (vs. 6.7% of GDP before the earthquake). Although the evolution of external financing levels is uncertain, it is likely that the bulk of exceptional ODA for Haiti has been committed and that Government should plan to see the levels of reconstruction funding taper off gradually over the coming years. This trend could be offset by increases in donor support for long term investments, if strong improvements were made to strengthen accountability, transparency and the quality of spending. 21. In light of the above, the sustainability of growth and investment will in great part depend on Haiti's ability to tap into other sources of growth. In particular, it is urgent that Haiti (i) adopt an aggressive export policy to achieve higher exports revenues, (ii) mobilize more revenue to finance a larger share of public investment, and (iii) improve the quality and efficiency of public spending from all sources, through vigorous efforts in public financial management and economic governance. D. ECONOMIC OUTLOOK OVER THE ISN PERIOD 22. Haiti has relatively good growth prospects fueled by the reconstruction, potential for manufacturing activities and free trade zone exports, and a limited debt burden. Whether Haiti's economy can sustain strong growth rates in the next five years and over the next decade will largely depend on the policies, governance, and actions of the authorities, as well as on the quality and levels of public and private investment. 23. The outlook for the two-year ISN period is positive and the economy is likely to sustain annual GDP growth rates over 6 percent during 2013-2014, one of the highest 12 projected growth rates in the Latin America and Caribbean Region over the period. Haiti has a number of concrete competitive advantages the Government is seeking to transform into growth opportunities: geographic proximity and preferential trade agreements with large consumer markets (such as the US thanks to the HOPE/HELP acts), a low-cost workforce, historical, cultural, and geographic assets for tourism development, agricultural land, and current political visibility. If managed well, post-earthquake reconstruction could continue to mobilize high levels of financing from donors, crowd in more private investment, and improve public investment efficiency to stimulate growth. Efforts are being made to revive of traditional sectors such as agriculture, textiles, and tourism, and spur the emergence of new economic activities, such as gold mining, light manufacturing, new agricultural products and agro-industry, to support strong growth performance. To maintain buoyant GDP growth and foster job creation over the medium term, Government is also encouraging major reconstruction and infrastructure projects, the development of the export sector, and increased domestic and foreign private investment, including foreign direct investment (FDI). 24. The quality of institutions and policies will, however, be vital to sustain growth. To achieve dynamic growth, Government will need support to deepen and accelerate the public sector reforms it has launched. These reforms include: (a) rationalizing and modernizing budget management and (b) improving public investment efficiency. In addition, improving transparency and efficiency in the award of contracts, will be critical to set accelerate reconstruction. Government aims to enhance the impact of investments and increase investor confidence by decentralizing the economy, preparing local/regional development plans, and creating synergies between public and private investments. By encouraging increased participation of the private sector Government can help scale up investment in infrastructure and improve its efficiency. The strengthening of State planning, regulation and coordination and the development of a framework conducive to public-private partnerships will be needed. Fostering sustainable private investment will also require significant efforts to improve the business environment, with a view to continue creating jobs in export-oriented activities (for example through the Framework for Integrated Economic Zones being considered by Government) and to foster local investment, in particular in SMEs (through ongoing initiatives such as Doing Business Reform, Access to Finance, and Access to Skills and Markets). Closer economic ties and cooperation with the Dominican Republic could also have positive impacts on Haiti's development. 25. The policy reforms mentioned above are inter-related. To obtain tangible results, Government will need to identify the most binding constraints and ensure adequate sequencing and prioritization of reforms. Sustained political commitment to reform will be needed to achieve better public financial management, greater participation of stakeholders in monitoring and implementation of public programs, improved governance, effectiveness, efficiency and quality of policies in critical sectors. Lack of progress on the institutional and economic governance fronts or on any of the factors discussed above would lead to less favorable results in private investment and job creation and a less favorable growth trajectory. 26. There are various downside risks to the current growth outlook. As a small, open island economy, Haiti is vulnerable to a range of external shocks that could affect growth and 13 incomes. If, for example, the global economic environment deteriorates further as a result of contagion from the Euro zone crisis, Haiti would feel the effects through lower export revenues, remittances and donor assistance, translating into fiscal pressure and lower household incomes. And given the reliance on imported food, and the fact that an estimated 4.5 million people are currently food insecure, recent volatility in international prices could potentially raise food prices in particular, increasing the burden on already vulnerable and stressed populations. Beans, corn and rice are the main traded food products in Haiti. While rice prices have been somewhat stable in recent months, the price of corn has been under rising pressure. Diversifying economic activity away from dependence on food and fuel imports, inter alia, will help reduce the economy's external vulnerability in the medium term. Haiti is also highly vulnerable to natural disasters. 27. Even in the absence of external shocks, renewed socio-political volatility and delays in governance reforms could translate into sluggish reconstruction and a lethargic economic recovery, with insufficient progress registered in terms of revenue collection and capital spending execution. This would further delay Haiti's transition out of low-income status and complicate the financing of the country's development. E. DEVELOPMENT CHALLENGES i) Vulnerability to Natural Disasters 28. Haiti's exposure to multiple natural hazards such as flooding, hurricanes, earthquakes and landslides is extremely high, with 96 % of the population living at risk. Haiti's recent economy has been severely impacted by catastrophic events: losses of 7% of GDP for Hurricane Jeanne (2004), 15% of GDP for Hurricane Fay and Tropical Storms Gustav, Hannah and Ike (2008), and 120% of GDP in the 2010 earthquake. Although natural hazards are unpredictable in time and space, their future occurrence in Haiti is certain. Vulnerability reduction and disaster preparedness are therefore core elements not only of a disaster risk policy aimed at protecting lives, but of all investment and service delivery decision-making and policies in Haiti. 29. Although Haiti's early warning and disaster preparedness capacity has improved considerably over the last 8 years, its capacity remains insufficient. For example, hydro- meteorological hazards and fatalities caused by Fay, Gustav, Hannah, Ike in 2008 were nearly five times lower than those caused by Hurricane Jeanne in 2004. However, the National Disaster Risk Management System's (NDRMS) still suffers from a lack of capacity, resources, and institutional support. Addressing this high level of exposure to natural hazard shocks, which renders all Haitians more vulnerable, is particularly important for the poor, who have limited resources to rebound from severe shocks. ii) Fragility and Governance 30. Haiti shows many of the classic signs of fragility discussed by the 2011 World Development Report. Over the years observers have underlined deep social and economic inequities (most recent Gini coefficient of 0.59 in 2001), a strong concentration of wealth and 14 power, lack of participation in economic and political life, the lack of social justice, and the absence of the rule of law. These have led to spikes in both political and non-politically motivated violence. The resulting instability and volatility combined with weak government capacity have been critical obstacles to investment and, more generally, to Haiti's development. Lack of transparency and inefficiency in the Public sector, including in service delivery, have undermined the credibility of the State leading to a deep-seated lack of trust in Government. The Bank's World Wide Governance Indicators rank Haiti in the bottom quartile in all measures of governance. 31. Governance shortfalls pose considerable challenges to Haiti's overall development. Achievements in the past few years include strengthening the regulatory framework for budget preparation and execution, improved consultation during the preparation of the budget, the creation and operationalization of an internal auditing body (Inspectorate of Finance, IGF) and the timely submission of Government accounts by the Treasury to the Court of Accounts (CSC/CA). An anticorruption unit (ULCC) has been established, and new laws for procurement and asset declaration have been enacted. However, much remains to be done to ensure effective use of the budget as a tool for development, to gear it toward medium-term results, improving Government effectiveness and efficiency and to strengthen information systems and reporting with regard to budget execution and monitoring of investment outcomes. 32. Better information on public spending and stronger control institutions are needed to reduce the scope for discretionary behavior and the risk and perception of corruption. Transparency International's Corruption Perceptions Indicators (2011) places Haiti 175th out of 183 countries and the country ranks in the seventh percentile of all countries in the control of corruption in the World Wide Governance Indicators. According to the 2012 Doing Business Report, it takes 105 days to start a business, 301 days to register a property and 530 days to enforce a contract and there are substantial weaknesses in the legal, institutional and regulatory framework governing and supporting private sector activity. Haiti's key Governance challenge is to transform the State to one whose institutions work for the benefit of the nation as a whole and deliver quality services to citizens. 33. Perceptions of government institutions, leadership and levels of corruption appear to be improving. According to a January 2012 Gallup Poll, confidence in Haiti's national Government has risen threefold from 16 percent in 2010 to 46 percent in 2011 and perceptions of government corruption have dropped from 72 percent in 2006-2010 to 57 percent in 2011. The current Government's emphasis on delivering results presents a window of opportunity. Steps to increase access to education, combat extreme poverty, and begin providing social protection to the most vulnerable are encouraging, as are the filling of the post of Chief Justice and, continued enhancement of the police force. Future efforts should focus on supporting Government's ability to enforce procurement and anticorruption laws, reinforce budget formulation and execution, strengthen internal and external controls, build audit capacity, and encourage accountability through civil society participation. 15 iii) MDGs 34. Haiti ranks 158 out of 187 in the 2011 Human Development Index and close to 40% of the population remains food insecure. Human development indicators are likely to have deteriorated post-earthquake. Compounding already low enrollment rates (an estimated half a million children aged 6-12 do not attend school), the earthquake destroyed 4,200 schools, killed 1,200 teachers and staff at the Ministry of Education, and further weakened the Government's capacity to expand access and improve the quality of education services. In the Health sector, 30 of the country's 49 hospitals were destroyed or severely damaged. In addition, the cholera epidemic, which sprung up in the fall of 2010, has killed around 7000 since its inception and put considerable pressure on already faltering health service delivery systems. Box 1 - Haiti Key Human Development Indicators About 4.5 million Haitians do not have access to sufficient quantities of nutritious food on a regular basis (food insecure). Food insecurity is acerbated by food price increases, an additional burden for a population still trying to get back on its feet. Child malnutrition rates have stagnated since 2000 and rates of under-nutrition among children remain among the highest in the Latin America and Caribbean region. One quarter of children is bom with a low birth weight (double the World's average). Nearly one-third of all children under-five suffer from stunted growth and three-quarters of children 6-24 months are anemic. One out of three children is vitamin A deficient and almost 60 percent of school-aged children iodine deficient due to lack of availability of iodized salt and appropriate supplementation programs. A recent household survey in part of the Central Plateau highlighted that only 24 % of households have food security and 38 % have access to safe water, while only 20.8 % have latrines. Education access is expanding but an estimated 500,000 children remain out of school. Although Haiti had nearly eliminated overall gender disparities in primary and secondary education by 2009, school enrollment rates remained low (est. 76 percent at primary level, 22 percent at secondary level, and 23 percent for preschool). The cost of education is cited most often as the most important barrier to access and school fees can represent over 50% of income for the very poor. Many schools have been reconstructed and temporary schools set up, teacher training been accelerated, and donor resources have financed tuition for 230,000 children this school year, under a mechanism supervised by the World Bank, of which 100,000 financed by IDA. Each child in a financed cohort will be supported over 6 years. Government has committed to fund tuition for 900,000 children from a National Education Fund which levies a contribution on telephone calls and international financial transfers. To further expand the tuition waiver system, more places in schools and trained teachers are needed, together with a sustainable financing plan to secure access to cohorts over the six year period. Lowering tuition is critical to achieve this objective. Donor efforts also aim at improving quality and learning outcomes, the ultimate objective of school attendance, and linking quality improvements to tuition waiver eligibility. Under 5 mortality has decreased over the last 30 years but remained high at 87 per 1,000 live births in 2005 (three times the average for Latin America and the Caribbean), with children from the poorest households facing a mortality rate more than double that of children from the richest households. These rates are not improving rapidly enough to achieve MDG-4. Children under five have a high morbidity risk from preventable illnesses, with six out of ten Haitian children (12-23 months old) not fully vaccinated, and one in ten receiving no vaccine at all. Maternal mortality is the highest in the region at 630 per 100,000 live births (six times the regional average), due to large unmet demand for contraception, inadequate access to skilled staff at delivery, poor post-natal care, and an inadequate referral system. Only one in four women gave birth with qualified assistance from 2000 to 2005, 10% among the poorest. Over 60 % of women who gave birth in a health center and more than 80 % of those who did not give birth in a health center did not receive post-natal care. 16 35. Lack of physical and financial access to services undermines Haiti's ability to achieve the MDGs and State capacity to provide basic services has been weakened since the earthquake. Cost is the most important barrier to service utilization, particularly in rural areas, across socio-economic quintiles. Public spending on social services is low and State institutions mostly do not reach beyond major urban centers, hindering the Government's capacity to provide services to large parts of the population. Social sector spending remains largely dependent on aid provided by a diverse, non-state sector whose efforts are largely unregulated and of uneven quality. The resulting patchwork of uncoordinated, small-scale interventions have failed to improve social indicators and left significant gaps in services for many of Haiti's most vulnerable populations. Around 40 % of the population is estimated not to have a birth certificate, further hindering access to services that require identification. Some key indicators are discussed in Box 1, an overview of progress on MDGs is provided in Annex 13. Haiti's long- term capacity to broaden access to services and social programs remains linked to its ability to generate sustained economic growth and collect revenues. iv) Gender 36. Progress towards gender equality in Haiti has been difficult to assess due to lack of recent data. The ECVMAS survey and the WB-financed Poverty Assessment will provide new data in the coming 12-18 months. The work of other agencies suggests the earthquake has made women more vulnerable and increased the proportion of female-headed households, which are likelier to be poor. 37. Haiti is close to achieving gender equality in primary and secondary education, but challenges remain in access to justice, economic opportunity, maternal health, and gender based violence (GBV). The 2010 Gender Shadow Report2 cites poverty, forced or voluntary prostitution, violence and sexual abuse, teenage pregnancy, domestic responsibilities, and inadequate hygiene supplies as factors for dropping out of school. Skilled attendance at births remains low and high maternal mortality rates persist. Unmet demand for contraception, reports of high frequency sexual and physical violence, as well as, an increase in the incidence of high risk sex since the earthquake, all point to the importance of maximizing the safety of women by improving infrastructure, access to sexual and reproductive services, and ensuring pre- and post- natal care. 38. Most Haitian women work in the informal sector, where they face greater economic insecurity, lower remuneration, minimal job security, lack of social benefits and significant gender inequality in pay. Their ability to work outside the home appears to have been hampered by the earthquake, due to the increased time required for domestic activities. Nevertheless, 40% of the 30,000 jobs in the industrial zone are occupied by women and HOPE/HELP agreements have been geared towards improving labor standards, including women's employment. 39. The WBG program addresses the key challenges of economic opportunity, maternal health and GBV, while ensuring that infrastructure projects include measures to enhance safety of women such as street lighting. In partnership with the Nike Foundation, the Bank's 2"The Haiti Gender Shadow Report: Ensuring Haitian Women's Participation and Leadership in All Stages of National Relief and Reconstruction" A Coalition Gender Shadow Report of the 2012 Haiti PDNA 17 Adolescent Girls Initiative is training 1,000 adolescent girls in reconstruction related fields and placing them with private sector firms to facilitate their transition into the work force. A large program for the delivery of a basic package of reproductive, maternal and child health services and social protection services is supported by IDA under this ISN. Through a Rapid Social Response Trust Fund, the World Bank also provides safety kits for women in IDP camps, in partnership with the Ministry of Women's Affairs and a well established NGO. 40. The WBG will continue to support the economic participation of women in its training, private sector promotion, and agricultural activities. Joint Bank-IFC efforts through investment generation and Better Work projects and IFC investment in the Codevi Special Economic Zone have already helped improve labor standards. Under RESEPAG II, the ongoing agriculture project, specific measures are taken to enhance female participation and benefits flowing to women. In addition, the Jobs Creation and Growth Project will set disaggregated objectives for the participation of women in training and SME support. Insights from the planned gender-centered Poverty Assessment will help guide further work on gender and employment. Annex 15 contains further gender findings, while the Results Framework (Annex 1) reflects gender disaggregated outcome indicators where appropriate. F. GOVERNMENT PRIORITIES AND MEDIUM-TERM STRATEGY 41. IDA's program is closely aligned with Government's priorities and medium term strategy. The Government's pre-earthquake 2008-2010 Growth and Poverty Reduction Strategy Paper was based on three pillars: growth (agriculture, tourism, infrastructure, science & technology); human development (basic services); and democratic governance (justice & security). Following the earthquake, the 2010 Action Plan for National Recovery and Development of Haiti organized reconstruction into four dimensions: territorial (reconstruction, transport, DRM, regional development, watershed management); economic (agriculture, finance, PSD, electricity, engaging the Diaspora); social (housing, jobs, social protection, education, health), and institutional (democratic institutions, central administration, justice & security). A new Government Development Strategy is under discussion. 42. The "Five E's" encapsulate President Martelly's strategy for improving the lives of Haitians living in extreme poverty and were further elaborated by Prime Minister Lamothe in his Government Program, approved by Parliament in May 2012. They are: 1. Rule of Law (Etat de Droit): provide citizens with access to an impartial and strengthened judiciary and equip the National Police with the means it requires to ensure security; 2. Economy & Employment: improve the business environment with the goal of making Haiti an "emerging country" by 2030 and promote the necessary investments to put Haiti back in the map of world tourism, with an emphasis on mobilizing domestic resources and generating external capital flows, including from the Diaspora; 3. Environment: stop the expansion of slums and reorganize the use of the national territory, including through decentralization, to promote more balanced growth and reduce vulnerabilities inherent in climate change; 4. Energy: enact long-term energy policy to meet Haiti's projected needs and underpin growth; 18 5. Education, Human & Social Development: increase school access, quality education and improve the governance of the system while aiming to progressively expand free education through a fee waiver program to school age children. 43. Better balanced spatial development is a key objective, with a focus on supporting regional development and investing in high potential areas, with high, rapid and sustainable impact. The Government's approach consists of providing planned infrastructure and related investments combined with locally identified and community-managed investments. 44. Recent Government initiatives include efforts to increase Government's fiscal space, by controlling contraband, reforming customs and other tax management, and improving the financial sustainability of Electricit6 d'Ha1ti (EDH) to reduce Government subsidies. Government is also collecting dedicated resources for the expansion of primary school tuition waivers. It has launched a national program to fight hunger and malnutrition, "Aba Grangou" and a family based social protection program for the most vulnerable entitled "Kore Fanmi". Sustainability and equitable allocation of resources under these programs present a key challenge for the coming years and Government has requested donor support after launching them independently, under Government financing. III. WORLD BANK GROUP ASSISTANCE STRATEGY A. USE OF IDA CRISIS RESPONSE WINDOW IN HAITI 45. The nature of operations financed by IDA has evolved since the January 2010 earthquake. Under an urgent phase, 2010-2011, IDA financed emergency and recovery activities from IDA 15. In the immediate aftermath of the earthquake, IDA 15 resources were provided (US$65M equivalent) in emergency funding and funds from existing projects to: (i) provide urgent support to vulnerable populations, including School Feeding through WFP and nutritional supplements for young children through WHO, and continued tuition waivers as soon as schools were reopened, (ii) channel additional resources for recovery to communities through the existing Urban and Rural CDD projects, (iii) set up an environmentally sound debris management facility and rebuild damaged road and bridge infrastructure, and (iv) restore Government functions, including the re-housing and equipping the Ministry of Finance and the office of Tax Administration, and staffing the Office of the Prime Minister's National Disaster Response Group. In 2010, IDA 15 also provided budget support (US$ 42.5M equivalent) and financed urgent treatment and prevention activities to combat the Cholera epidemic (US$15M equivalent). 46. IDA 16 resources came on stream 18 months after the earthquake and were entirely drawn from the IDA 16 Crisis Response Window. The US$500M exceptional allocation is being frontloaded to respond to the urgency of Haiti's needs and provide a response commensurate with the magnitude of the crisis caused by the earthquake. Three projects for $170M, approved in December 2011, became effective in April 2012 and five operations for $260M are expected to be presented to the Board by end FY13. Of these, $125M are being considered by Executive Directors with this ISN. The IDA 16 allocation is expected to be fully committed by FY14. 19 47. Under ISNI (CY2012), US$255M was allocated to the restoration of capacity in critical sectors, including education, disaster risk management and agriculture, where the WB was already present. Resources were allocated on the basis of Government priorities, urgency, opportunity, WBG comparative advantage, and synergy with activities of other donors. Investments in Jobs and Private Sector Growth in the North of the country and resources to support a Development Policy Operation aimed at supporting growth and policy reform in procurement and electricity are scheduled later in 2012, to allow flexibility in the face of Government instability and provide adequate time for preparation and dialogue. 48. This ISN proposes to use the remaining IDA 16 resources to wind down emergency activities and continue with reconstruction, while aiming at selected long term impacts. Under ISN2, IDA will (i) provide additional financing to emergency activities in infrastructure (including debris management and the rehabilitation of roads in the North in support of Job Creation and Growth Project), (ii) finance basic health and social services for women and young children with expectations of high and rapid impact, and (iii) invest substantially in the improvement of the electricity services and the financial viability of the sector, concurrently with investments of other donors such as IFC, IDB and USAID, and (iv) provide budget support in FY13 and FY14. In addition to delivering services or infrastructure in the short term, operations focus on the strengthening Government capacity and stewardship and on improving transparency and sector governance. Attention to the building of statistical data and the transmission of knowledge from international experience helps ensure high quality advice to Government on best practice models, while flexibility in the implementation and approach of the program allows for the tailoring of such advice to the specific conditions of Haiti. However, efforts to further consolidate the portfolio, reduce the number of operations and increase their size will continue, to respond to Government's concern with lowering management costs and increasing impact. 49. In addition to achieving results on the ground, building capacity and providing knowledge support, the WBG has evolved into a significant platform for the delivery of aid since the earthquake. * IDA has a strong track record in piloting approaches being scaled up by others in rural water (being taken to scale by IDB), primary education (where tuition waivers are also supported by the Education For All Trust Fund and Canada, IDB and others), and Public Health (where the development of contracting capacity at MSPP will benefit all donors). * The WBG serves as a convener for Budget Support and Neighborhood Reconstruction and, jointly with other donors, Education, Disaster Risk Management, and Electricity for IDA, and Private Sector Development and Doing Business for IFC. * The WB serves as the trustee of the Haiti Reconstruction Fund(HRF) providing secretariat and fiduciary services. The HRF is the largest source of discretionary financing at the disposal of Government for reconstruction. 20 Box 2 - The Haiti Reconstruction Fund The HRF has emerged as the largest source of flexible finance for the reconstruction. The World Bank serves as Secretariat and Trustee for the multi-donor fund (HRF). Since its inception in June 2010, the HRF has mobilized 16% of all reconstruction finance for Haiti ($396M), of which $274 million has been allocated for 17 activities requested by the Government. HRF-financed projects are appraised and supervised by one of four Partner Entities (IDB, IFC, UN, and WB) and 89% of allocations to date are implemented by GOH agencies. The total size of the HRF portfolio is $551 million, i.e. every dollar of HRF investment has leveraged another dollar in co-financing. HRF-supported activities have begun to generate significant results, e.g. 5000 families have been supported to leave camps and return to neighborhoods, 527,000 cubic meters of debris have been removed from hard-to-access areas, 105,000 students have received scholarship subsidies, 13,500 jobs have been created in affected communities, and 14 emergency evacuation shelters have been built or restored. B. EARLY EARTHQUAKE RESPONSE AND ISNI - RESULTS AND LESSONS i) Early Earthquake Response 50. The FYO9-FY11 Country Assistance Strategy discussed by Executive Directors on May 4th, 2009, laid the foundations for emergency response capacity to natural disasters, which proved critical to responding to the Earthquake. Commitments under the CAS exceeded the initial IDA allocation (US$249M compared to US$114M) which was supplemented to respond to food price spikes, four successive hurricanes in 2008, and the 2010 earthquake. The CAS program (i) laid the foundations for disaster risk management capacity which was heavily used by Government in response to the earthquake, (ii) developed an effective mechanism to channel resources to communities, also used effectively post-earthquake, (iii) developed the tuition waiver program now essential to the national education program, and (iv) established a system of rural water delivery being taken to scale today by IDB. Although the CAS developed effective channels for the delivery of resources, many of its institutional objectives proved too ambitious to tackle in a volatile environment with a modest IDA envelope. The portfolio was also too fragmented and projects too small to achieve substantial institutional change in any sector. As a result, outcomes for sector reform and services delivered remained modest. 51. The WBG's emergency response to the earthquake worked well and IDA emergency resources were delivered in record time (50-60 days from request to delivery). Moving rapidly and flexibly, the WBG used existing and new instruments to help restart critical Government activities, deliver emergency services, and support donor coordination. IDA made use of the delivery mechanisms of UNDP, WFP and NGOs while providing global post-crisis experience, knowledge and capacity to Government, with strong support from the Global Facility for Disaster Reduction and Recovery (GFDRR). Existing programs were used to rapidly channel meals to school age children, transfer resources to communities, and repair critical transport infrastructure. Emergency funding helped re-house and equip the Ministry of Finance and the tax administration and provide critical support to the coordination and functioning of Government. (See Annex 3 for selected results since the earthquake). 21 52. IFC's interventions to stimulate private sector job creation and capacity achieved quick results during this period and complemented WB efforts. Combined investment and advisory projects have helped create 5,000 new jobs and safeguarded 5,000 existing jobs, of which close to 4,000 are for women. IFC funding and technical support helped improve conditions for economic recovery and increased access to infrastructure. In energy, IFC structured and financed the thermoelectric power plant, E-Power, which provides 18% of installed capacity and saves the state-owned utility an estimated US$20 million per year. IFC advisory services also structured the partial privatization of NATCOM, which led to a US$100 million in foreign investment for acquisition and expansion of the network. IFC's FY09 investment in the capital of Sogebank strengthened the bank's governance and supported an SME finance unit, which has played an important role in financing small businesses since the earthquake. Immediately following the earthquake, IFC approved an emergency package to support its existing clients and committed new investments. While Eurasian Minerals supports 800 jobs, the CODEVI textile zone created 4,000 new jobs. A new business hotel, Oasis, is being built with IFC financing. IFC also ramped up its advisory services, including a strategic study of the port sector, in-depth work on investment promotion and integrated economic zones, and SME capacity-building activities through its Business Edge product. ii) ISN 1 Portfolio Implementation 53. With commitments growing rapidly due to large IDA amounts and frontloading of the Crisis Response Window resources, the portfolio is being consolidated to reduce fragmentation and increase impact. Average project size will double to approximately US$45M by end FY13 and there will be fewer projects, as illustrated in Figure 1 below. IFC's portfolio has also increased significantly in the past 2 years, with a total of 7 projects, approved since the disaster in energy, trade finance, SME finance, industrial zones (textiles), mining, hospitality, and water. As of June 30, 2012, the disbursed and committed portfolio totaled US$23 million and US$41 million respectively. Syndicated loans outstanding (B loans), where IFC is lender of record, amounted to US$14 million. Figure 1: Projected growth ofHaiti portfolio by number ofprojects and average size 20 18 16 1 project m o m mm 1l4 L.rIE U E 12* $10m m * ** ***a 1., 1 II MM NEI SEENI 10 -i m m mm agm a 4 _ H I I II E U E I Sg Eg 4 mi m m mi am El ammel M EI I I IN I 11 HII M M M I 0 I I I I I SEEN FYO5 FYO6 FYO7 FY08 FYO9 FY10 FY11 FY12 FY13* FY14* FY15* Average Project Size, Historical and Projected 22 54. IDA's current investment portfolio for Haiti consists of 12 projects for $423.7M, of which $178M have been disbursed. The portfolio disbursement ratio for FY12 was 33.8%, well above the Bank and the LCR Regional averages at 20.7% and 21.9% percent respectively. High disbursements are supported by recurrent expenditures such as tuition waivers and large contracts coming on stream under emergency operations. However, in light of the rapid growth of commitments and limited capacity of counterparts, considerable efforts will need to be made to maintain or accelerate disbursements in the short and medium term. Due to the challenging country environment and weak country record, 78% of IDA commitments in Haiti are considered at risk, although indicators point to a robust actual performance, with only two problem projects (15% of commitments). Progress towards the achievement of Development Objective remains moderately satisfactory given the youth of the portfolio (average project age 2.6 yrs). 55. The May 2012 project review and subsequent CPPR identified the following challenges for implementation: weak project management capacity of implementing agencies, delays in disbursement despite high rates, substantial delays in the hiring of Financial Management staff and in audit delivery due to lack of in country capacity for both, complex and sometimes lengthy procurement processes, which need to be better adapted to the low capacity environment, and weak monitoring and evaluation frameworks (with some exceptions). The Bank has increased its implementation support and is encouraging pro-activity and accountability in project oversight on the part of the client. iii) Results under ISN 1 56. During CY2012, the World Bank Group's program aimed at 4 strategic objectives and began to focus on one cross cutting issue, governance. Progress under Objective 1- reducing vulnerability and increasing resilience has been palpable: IDA supported increased Government's capacity to protect people from weather related risks. With IDA support, Government built three regional and 18 municipal emergency operation centers/shelters in high- risk areas. It established 76 municipal DRM committees in half of the 144 municipalities, and implemented and 130 small disaster mitigation works. IDA also supported the development by the Ministry of Public Works of a new Building Code with earthquake- and hurricane-resistant standards and post-earthquake reconstruction guidelines. IDA has also helped improve Haiti's capacity to combat cholera by supporting the training and deployment of 5,000 community health workers and financing the delivery of targeted health and hygiene education, water treatment, and cholera prevention measures to over 1 million people. Since its approval in December of 2010 the Cholera Emergency Response Project, implemented by the Government, has disbursed 60% of its funds and supported 200 cholera treatment points and 800 medical staff (doctors, nurses, etc.) and 300 support staff ensure proper treatment of patients across these sites, and rehabilitated latrines and water pumps in endemic areas. 57. There were greater difficulties in achieving the ambitious objectives set by ISN1 under Objective 2 - Sustainable Reconstruction - which focused chiefly on Housing and Electricity. The WB Housing program financed by IDA (US$30M equivalent) and the HRF (US$65M) aimed to upgrade neighborhoods, facilitate the sustainable return of displaced persons, and rehabilitate housing to grow the housing stock. The post-earthquake structural assessment of 400,000 buildings (financed in by the WB and other donors) served to identify housing in need 23 of repair and reconstruction and hazard mapping work (jointly supported by the WB and the UN) made it possible to evaluate weather related-risks street by street. However, many constraints hampered reconstruction. Most displaced persons were renters before the earthquake, and rental housing stock was very limited because (a) much of the stock was damaged and unsafe, and located in dilapidated areas, (b) owners' incentives to reconstruct were not strong, and (c) new construction has been hard to organize because of lack of safe and available land on which to build. In addition, Government did not begin setting a housing reconstruction policy until mid- 2012, which led to delays in defining eligibility and the level of reconstruction subsidies. The implementing agency had a good track record but was overwhelmed by a large volume of donor resources and had no technical experience in reconstruction. Over the ISN 1 period the program reached about 1/5th of the beneficiaries originally projected for end 2012. 58. With the strengthening of Governmental policies under the newly formed Unitj de Construction de Logements et de Bdtiments Publics (UCLBP), the WB program is accelerating. The IDA project has committed 70% of its resources and 30% have been disbursed. Contracts for US$20M have been signed under the HRF Project, for work in two additional neighborhoods and a camp to neighborhood program for one of Port au Prince's largest remaining camps is being launched. The Bank provides capacity to the UCLBP under an Institutional Development Grant for housing policy and housing finance. The development of a broader range of housing finance options for Haitian owners is also supported by IFC. In a broader context, much of the reduction in the number of IDPs in Haiti has come from the UN- implemented "Six by sixteen" initiative, a large program launched in the spring of 2012, which provides monetary incentives for families to leave camps and one-year rental subsidies for relocation. Beyond the provision of rental subsidies, UN- and USAID-financed programs have also faced difficulties in implementing in situ reconstruction. 59. Electricity for its part saw clear improvements in the motivation of Government to provide a better environment, notably with the signing of a USAID-financed operations improvement contract with an outside firm in the spring of 2012 and the recent recognition by Government of the need for far-reaching sector reform. However, EDH's Cash Recovery Index, which currently stands at 23%, has not improved as rapidly as expected under the above- mentioned contract, in part due to difficulties in the establishment of new billing and collection systems and delays in the implementation EDH's loss reduction plan. Key governance steps, including the installation of new meters critical to billing and collection, are now being taken and are critical to underpin IDA's large ISN2 investment in the sector. 60. Indicators for Objective 3 - Building Human Capital - were broadly met. Targets were achieved for education. Despite very difficult reconstruction conditions, IDA has provided and continues to provide tuition waivers to 100,000 poor children per year (financing about 40% of the children supported through the donor funded tuition waiver mechanism for the duration of primary school - 6 years). The WB continues to supervise this mechanism on behalf of donors. Government's program has committed to support schools for the cost of an additional 900,000 students through its own mechanism. Half of the women and girls identified to receive training and jobs under the AGI have been reached. The other half will be enrolled by the end of the ISNI period, meeting expectations. Gender Based Violence activities have reached all targeted beneficiaries. Social transfers to earthquake victims through cash for work have exceeded targets 24 by almost 50%, but did not reach as many women as expected, and social protection policy is still being developed. Efforts are being made and will continue under ISN2 to enhance the capacity of project teams to target women and young men under new operations, especially in areas related to employment. 61. Results under Objective 4 - Revitalizing the economy - were mixed. Access to capital has been improved and legislation regulating Integrated Economic Zones, which are critical to FDI and to exports, has been adopted. This progress is significant. Important steps are being taken in order to ease the process to start a business in Haiti such as computerization of the company registry, standardization of the status of businesses. Also, achieving targets of increased productivity in agriculture has been slower than expected, due to institutional instability and delays. However the CDD has exceeded the number of subprojects it planned for rural communities. ISN2 work will focus on broader targets related to IDA investments in the area of private sector development and tourism. 62. Progress on Governance accountability and transparency across sectors and for PFM has been mixed and, in some cases, limited. Capacity improvement targets for cholera, infrastructure, and procurement were met. Partial achievement of results in Housing and Electricity and lack of progress in DRM and Agriculture result both from changes of leadership (DRM and Agriculture) and policy challenges (Housing and Electricity), although recent developments on the latter two sectors are encouraging going into ISN2. A results table for ISN1 is included as Annex 2. It shows ISN1 results to date and targets for end 2012. To illustrate the continuity between ISN 1 and ISN2, the ISN2 results framework in Annex 1 lists the targets achieved to date where relevant. a) Lessons from ISN 1 implementation 63. This ISN incorporates lessons from the 2011 World Development Report (WDR) on Conflict Security and Development. The WB program (i) focuses building of institutional legitimacy and public confidence, (ii) invests in job creation and private sector growth, including in economic opportunities for women and (iii) puts in place tools to respond with agility and speed to emergencies and volatility, such as project contingency financing that will allow resources to be available immediately when new crises arise. The WBG program, projects and implementation mechanisms take into account key drivers of fragility in Haiti, such as the lack of opportunities for social mobility, society's exposure to and expectation of violence, and citizens' mistrust of public institutions, by aiming to build consensus between key stakeholders, to build trust in institutions through transparency and better institutional outcomes, and by providing concrete benefits in the form of services for the poor. 64. The key lessons drawn from ISN1 for ISN2 are: (i) to design programs assuming fragility, flux, and low capacity for the foreseeable future, and (ii) to strengthen implementation support to Government while building WBG capacity in Haiti to handle portfolio growth and riskiness. In light of these lessons, WBG implementation support is being strengthened and emphasizes continuous assistance to the Government in fulfilling its responsibilities under the program. While supplementing Government capacity in the short term, the program aims to simultaneously build sustainable institutions. 25 65. In order to maximize IDA's ability to respond in Haiti's fragile environment, the Bank proposes to make use of the flexibility afforded under IDA operational, fiduciary and safeguard rules pertaining to fragile states, to the extent allowed by those rules and where appropriate. Finally, institutional capacity and project implementation support will be strengthened across the entire program, namely in the areas of fiduciary standards and environmental and social safeguards. C. PROPOSED FY13-14 INTERIM PROGRAM i) World Bank Group Assistance Strategy Overview 66. The World Bank Group program of support for Haiti for FY13-14 builds upon the CY2012 Interim Strategy (ISNI) discussed in December 2011. Though Strategic Objectives and Outcomes remain the same, these have been adjusted to reflect Haiti's transition toward longer term development. ISNI and ISN2 aim to (i) deliver services and other concrete results in the short term to help build public trust and (2) support Government transition from emergency response to reconstruction and longer-term development by making catalytic investments, strengthening governance, and building institutional capacity. 67. Commitment of ISN 1 resources has progressed faster than planned, despite some delay in the preparation of the Jobs Creation and Growth Project and the Development Policy Operation (DPO) (see table below). ISN 1 programmed US$255 million to be committed by end CY2012, of which US$170M have been approved. The Jobs Creation and Growth Project (US$65M equivalent) and the DPO (US$20M equivalent), which has been reduced by US$5M to allow for a better spread of DPO resources over FY13 and FY14, are scheduled to be approved by March 2013. Over the last half of CY2012, implementation of ISNI and ISN 2 overlap, and commitments are programmed under both. ISN2 programs the remaining US$245 million made available under IDA16. Budget support will represent US$40 million delivered in two terms, or 16.7% of the total ISN 2 resources. 68. Strategic Objectives and Outcomes: The framework for ISN2 builds on that of ISNI and reflects the transition of the country program from emergency response to reconstruction and longer term development, with some modifications in Strategic Objectives 3 and 4 and under the Cross-cutting Theme of Governance. * Strategic Objective 1, Reducing Vulnerability and Increasing Resilience, aims at enhanced disaster response capacity, the rehabilitation of select public transport and infrastructure, and more effective prevention and treatment of cholera. * Strategic Objective 2, Sustainable Reconstruction, aims to upgrade neighborhoods, repair housing, and improve services in those neighborhoods; and to improve access to electricity and the commercial viability of the sector. * Strategic Objective 3, Building Human Capital, continues to aim at increasing access to schools and providing school feeding, reducing the vulnerability of women, and will also increase access to health and social protection services. 26 * Strategic Objective 4 has been revised to Promoting Inclusive Growth, reflecting transition from "Revitalizing the Economy" after the earthquake to building a base for longer term economic development. Enhancement of Regional Economic Development Potential has been added to the existing outcomes of improved business environment, broadened access to finance, and enhanced agricultural services to farmers. * To incorporate the renewed emphasis on supporting the building of Government systems and institutions, the Cross-cutting Theme of Strengthening Governance has been expanded from transparency and accountability, specifically in public financial management, to include the Strengthening Government Capacity. (See Figure 2.) Table 1 - WBG IDA Grant and AAA Program for FY13-FY14 Delivery Amount US$ 1. Resilience No new IDA or AAA activities are planned under Strategic Objective 1 2. Reconstruction IDA Infrastructure and Institutions Emergency Recovery AF 09/27/2012 35m Rebuilding Energy Infrastructure and Access 09/27/2012 90m AAA TA Household and Other Energy Sector 10/30/2012 150k Energy Access Expansion SFLAC 12/17/2012 51k Social Dimensions of Reconstruction 12/31/2013 83k 3. Human Capital IDA Ensuring Health, Nutrition and Social Services for the Vulnerable 3/14/2013 50m AAA Safety Nets Phase 2 NLTA 12/10/2013 50k Poverty Assessment FY14 150k Adolescent Girls Initiative 4/30/2014 2m 4. Inclusive Growth IDA Jobs Creation and Growth FY13 Q3 65m Centre and Artibonite Loop Economic and Spatial Development FY14 Q1 50m AAA Diagnostic Trade Integration Study 10/10/2012 400k Strengthening Insurance Regulation 1/31/2013 340k Agr. Index Insurance Capacity Building 6/17/2013 275k Governance IDA Economic Reconstruction and Growth DPC I3 12/31/2012 20m Economic Reconstruction and Growth DPC II FY14 Q2 20m AAA Enhancing Political Leadership 4/30/2013 500k Strengthening Accounting & Audit Practices 12/28/2012 290k Poverty Measurement and Household Survey 4/30/2013 500k Public Expenditure Review FY14 100k 69. This ISN's Results Framework aims to be realistic in light of the context of fragility. It is based on that of ISN1, with the addition of FY2014 targets for existing and new activities. The consolidated results framework in Annex 1, will serve as the basis for evaluating progress of the 2009 CAS, ISN1 and ISN2. Co-financing of US$20 M from the Haiti Reconstruction Fund under discussion, from contributions of US$13M and US$7M from the Governments of Spain and France respectively (amounts to be confirmed). 27 ii) Program and Expected Results of Lending and Non-Lending Activities 70. In line with the World Bank's regional strategy, ISN2 brings the World Bank Group's comparative advantages to its partnership with Haiti. A combination of IDA, Trust Fund, and IFC resources will be provided in sectors strategic for reconstruction and for longer term development. A suite of financial and knowledge services will be provided to implement the program, including IDA grants, guarantees, analytical work, just-in-time advice, short-term technical assistance, IFC investments and advisory services, as well as investment climate support. The program will ensure that regional economic development projects benefit from a range of services and investments from across the WBG portfolio in the chosen geographical areas. The Bank's support will be leveraged and synergies with other donors maximized. The WBG will continue to make use of its convening power to coordinate the Budget Support Group and the Housing Sector, provide leadership in Disaster Risk Management, and support donor coordination and quality policies in Education, Electricity and Health and Social Protection. Finally, the World Bank will continue to administer the Haiti Reconstruction Fund. a) Strategic Objective 1 - Reducing Vulnerability and Increasing Resilience 71. The Strategy aims to strengthen Haiti's national capacity to respond, manage, and prevent disaster-related crises by implementing existing programs and by providing additional financing. IDA will continue its longstanding support to the Government's Disaster Risk Management System, directly and through the Global Facility for Disaster Reduction and Recovery (GFDRR). Four projects for US$140 million are under implementation in this area. With the Disaster Risk Management and Reconstruction Project (US$60M equivalent) beginning implementation, substantial resources are devoted to reducing the physical vulnerability of communities (e.g. flood prevention, emergency shelter, soil consolidation), strengthening civil protection units nationwide, preparing the public for disasters (evacuation drills), and supporting the incorporation of disaster risk into the policy decisions of key line ministries. 72. New climate change adaptation activities will also be added to the portfolio. Financed by the Climate Investment Fund, the US$20 million Strategic Program for Climate Resilience will support climate resilient investments and pay special attention to improving climate and hydro-meteorological information and services. IDA will also increase its support to repairing critical infrastructure, through the proposed additional financing for the Infrastructure and Institutions Emergency Recovery Project (US$35M equivalent). The infrastructure components of this project (US$15M equivalent) will finance the rehabilitation of selected public infrastructure and improve the air safety navigation system at Port au Prince Airport. The project will also rehabilitate two road segments in the North to lift bottlenecks on tourism and local economic development, and complement tourism investments under the Jobs Creation and Growth Project. 73. Implementation of the Cholera Emergency Response Project (US$15M equivalent) will continue to help reduce Haiti's vulnerability to the epidemic. The project supports prevention training and education, treatment, monitoring of the epidemic, and builds capacity in the Ministry of Health. 28 Figure 2: Haiti ISN FY13-14 Strategic Objectives and Outcomes Strategic Objective 1 Strategic Objective 3StaeiObciv4 Reducing Vulnerability Building HumanPrmtnIclsv and Increasing Resilience Capital Got Neighborhoods upgraded Access to schools Business environment Disaster response capacity and housing repaired increased improved enhanced Services in upgraded School feeding continued Access to finance neighborhoods improved broadened Select public Access to electricity infrastructurerehabilitated Regional economic - Crticl tansort mprved'ci] Vlnerbilty f wmendevelopment potential Commercial viability of reduced infrastructure resilience tor increase MoreeffectivepreventAe Access to health and social Agricultural services to Traspaeocvad cutblyaswlasg Vernetrapaity oftwoenReionleconmi C m ri viability of Cho rroted ice enhanced sectoriincrease strengthenede S re gt e in G ve na c SAccess; to helhadscaI Moreeffetiv preenton Ariclturl srvics2t 74. Results - Activities supported by the ISN over the next 24 months will reduce the vulnerability of Haiti's population to disasters by improving civil protection presence and Government's capacity to manage disasters, rehabilitate 168 kms of roads and bridges, and improve knowledge of and provide treatment for 1.5 million people for cholera. b) Strategic Objective 2 - Sustainable Reconstruction 75. The WB will continue to focus on sustainable reconstruction in post-earthquake Haiti. Activities under the Urban Community Driven Development Additional Financing (US$30M equivalent) and the Port au Prince Neighborhood Housing Reconstruction (US$65M), funded by the HRF, will support repairing and rebuilding of urban and housing infrastructure destroyed by the earthquake, upgrade neighborhoods, and provide basic services to communities. Analytical and technical assistance work on the Social Dimensions of Reconstruction will train specialists in social safeguards. Building on the ongoing Electricity Loss Reduction Project (US$1IM equivalent), the proposed Rebuilding Energy Infrastructure and Access Project will put significant resources (US$90M equivalent) toward increasing access to quality electricity services, including developing renewable energy sources outside of Port-au-Prince, and improving the sector's governance and the energy utility's commercial viability. 76. The World Bank Group will continue to upgrade several neighborhoods, repair housing, and provide basic services through existing IDA and HRF-financed housing projects. A camp to neighborhood program for two of Port au Prince's remaining camps is being launched. The Housing program is complemented by an urban road paving component of the DRM project (US$1 OM equivalent), and by joint IDA/IFC/USAID support to the Government in the area of housing finance. 77. The proposed electricity project will build on the existing electricity project and substantially add resources (US$90M equivalent) toward improving access to quality electricity services and commercial viability of the sector. The lack of reliable electricity is a fundamental constraint on living conditions and economic growth. The national electrification rate is 15%. The sector urgently requires greater transparency, improved management of the utility and substantial investments in the distribution system. IDA's investment aims to restore and expand access to reliable electricity services, improve the sustainability and resilience of the sector, and strengthen the Government's energy policy and planning capacity. Two trust funds will strengthen the Government's capacity to implement the proposed project, while DPOs will support sector reform. In addition, IFC is supporting increased capacity and access through private sector investment in E-Power, an independent power producer, which currently provides 18% of Port au Prince's electricity supply. 78. Results - During the ISN2 period, the Housing projects aims to return 20,000 people to improved housing in neighborhoods and benefit 125,000 people in neighborhoods, through community wide upgrading. Fifty percent of beneficiaries will be women. Work will continue on enumeration (determining who is eligible) and the moving of health and education services from camps into neighborhoods. The project will support the return of 70,000 IDPs from camps to neighborhoods, including through rental subsidies. Analytical work on housing finance will also be provided. From the electricity projects, 600,000 people will gain new and/or improved access 30 to electricity, including through street lighting, the commercial viability of the electricity public utility will be improved, and Government's oversight capacity and transparency in sector financial flows will be strengthened. c) Strategic Objective 3 - Building Human Capital 79. Developing human capital is critical to addressing widespread poverty and is a crucial building block for economic growth. Improvement in services outside of Port au Prince is also important to slow migration to congested urban areas and decrease social tensions. Supporting Haiti in a virtuous cycle of improved human development, increased productivity, and accelerated poverty reduction requires substantial investment in basic social services. During the ISN period, the World Bank-managed portfolio in support of education, health and social protection will represent over US$140 million in IDA 16 and Trust Fund resources. 80. The Government has developed a national strategy to rebuild the education system, which IDA and other donors are co-financing. The strategy aims to improve access to and the quality of primary education, strengthen the Government's institutional capacity and reinforce its stewardship. The Education for All Adaptable Program Grant II (US$70M equivalent), which is beginning implementation, expands a tuition waiver program originally set up by the World Bank and now co-financed by other donors and improves education quality, supports education services in rural communities, and finances the government's school feeding program. A Public Expenditure Review of the sector will underpin work towards a medium term expenditure framework and help develop a model for the long-term financial sustainability of the sector and the integration of donor and government supported tuition waiver systems. The WBG program will also support improvements in Governance for education, including enhancing the capacity of decentralized education directorates to improve school supervision and teacher attendance. 81. IFC advisory and investment services will support training. IFC is helping build management skills of SME entrepreneurs and supporting training at the Codevi industrial zone. IFC is also working with a Haitian private development finance corporation to provide Business Edge training on a large scale, including for a large number of women. Business Edge will also have a new training program focused on tourism, which will complement IDA's investment in tourism in the Jobs Creation and Growth Project. 82. Two trust funds will reduce the vulnerability of women through vocational training and GBV prevention. The pilot Adolescent Girls Initiative trains 1000 young women in IT and non-traditional reconstruction professions and supports their insertion into the labor market. A Rapid Social Response Grant finances a Gender Based Violence program which reaches 6000 women in IDP camps, provides prevention education, support to victims, and prevention kits. 83. With physical and financial barriers to access and poor quality of services, Haiti is not on track to achieve the health-related MDGs. IDA's new investment operation for Health and Social Protection is in line with the World Bank's Reproductive Health Action Plan 2010- 2015 (Haiti is a target country). The proposed Ensuring Heath, Nutrition and Social Services for the Vulnerable Populations Project (US$50M equivalent) will increase access of the poor and vulnerable to health and social protection services and strengthen Government's capacity to 31 manage and monitor service delivery. The Project will provide reproductive health services and deliver cost-effective services to pregnant women and children under five to reduce preventable mortality. The Project will also provide nutrition, health and food security services to the most vulnerable, including identifying and serving people with disabilities. Government will contract NGOs to deliver services under a performance-based model and build its capacity to manage policy and larger scale delivery mechanisms. Non-lending technical assistance will strengthen Government's capacity to combat extreme hunger. The Bank's investment in improving agriculture extension services will also contribute to reducing food insecurity and malnutrition for the poor in rural areas. 84. Results - Over the ISN period, IDA will continue to support tuition waivers to cover 100,000 children per year, qualify 3,300 additional teachers, and feed 100,000 children. A cohort of 1000 girls, including from camps, will be trained and supported in their transition into the workplace. Support will be provided for services to around half a million pregnant women, 1.5 million children under five and 100,000 vulnerable households in four departments. d) Strategic Objective 4 - Promoting Inclusive Growth 85. The WBG will support the creation of a favorable environment for private sector development, invest in developing sectors that can drive growth, and decentralize economic development in support of the Government's objective of moving from emergency response to long term economic growth. With this in mind, the Strategic Objective from the last ISN has been modified from Revitalizing the Economy to Promoting Inclusive Growth. 86. IDA and IFC will work synergistically, with due regard to managing conflicts of interest, to improve the business environment, increase access to finance, and enhance regional economic development potential in support of the Government's job creation and decentralization strategy. Under the Jobs Creation and Growth Project (US$65M equivalent) IDA and IFC will work together on national level reforms to improve the business environment, increase access to finance, and support SMEs in business development. IFC will continue to support the establishment of Integrated Economic Zones and consider investments in such zones. Analytical work will help reduce the cost of credit (Strengthening Insurance Regulation). IDA will support investments in tourism in the North of the Country by supporting the setup of an authority to manage the National Historic Park, a UNESCO World Heritage Site, and investing in the city of Cap HaItien. IDA, IFC and IDB will coordinate closely to promote investments in the Region, finance a Business Development program there, and ensure their respective investments are complementary. Additionally, a new regional development project which would aim provide better transport connectivity, networked cities, and investments to support productive areas in the Artibonite and Centre regions is under discussion with Government. 87. IFC will continue to support investments that directly create jobs and income opportunities, improve access to infrastructure services, and leverage core advisory products that are most relevant for fragile states. Priority areas will include manufacturing, hospitality, housing development, construction materials, logistics, and energy generation, in parallel with sector improvements achieved through the IDA work on electricity. Investment Climate advisory activities, including Doing Business Reform, will be implemented in close 32 coordination with the IDA Jobs Creation and Growth Project. Access to finance for SMEs will be increased through ongoing SME Banking activities. There will be a new Leasing Development program, and possible support to catastrophic risk insurance for the microfinance sector. New partnerships will be implemented to scale-up the delivery of Business Edge SME Management program. IFC will also seek to implement new PPP transactions to continue optimizing the use of public resources to provide logistics and basic services in areas such as airports, energy, and water distribution. Finally, in synergy with its investment activities, IFC will also roll-out Corporate Governance programs aimed at improving the long term sustainability of Haitian companies. 88. IDA will also continue to enhance agricultural services to farmers. In line with the National Agriculture Investment Plan, the Re-launching Agriculture Project (US$40M equivalent from IDA and US$1OM from GAFSP) and Strengthening the Management of Agriculture Public Services (US$5M equivalent) will continue to develop capacity in the Ministry of Agriculture and increase small farmers' access to extension services and training on animal and plant health in priority regions. 89. The WBG program takes into account that Haiti is highly vulnerable to food price shocks, with rice as the main staple and driver of food and overall inflation. Rice price increases led to food riots in 2008. Food price swings disproportionately affect the poor and the vulnerable, further emphasizing the importance of emergency preparedness. Although Haiti's ability to mitigate food price risk is limited due to the lack of efficient social safety nets, the continued presence of food aid and humanitarian organizations provides delivery channels for emergency assistance to the most vulnerable. The World Bank Program uses several entry points to support and improve food security in the short and medium term. First, in the short term, several IDA 16 projects support monitoring of food price related data. Projects have also been designed to include contingency financing for shocks, making financing immediately available in the case of a crisis and RESPAG II is flexibly structured to respond to food price shocks in coordination with other donors. In the medium term, analytical work and IDA financing support (i) improvements in agricultural productivity and resilience and strengthen (ongoing) and (ii) the improvement of the investment climate for agriculture and the expansion the coverage of social safety nets beyond the pilot currently in place (planned). When a new CPS is discussed, it is expected that discussions will also include the development of hedging and risk management tools, such as commodity derivative products. 90. Results. Over the ISN period, IFC and IDA will support the Government in reducing the cost of starting a business, increasing lending to SMEs, designing a collateral registry, conducting emergency repairs at the National Historic Park, and operationalizing the park management authority. More farmers will receive improved agriculture information, technologies, inputs, material, and services. IFC operations will help increase job creation in IEZs, the number of trained SME entrepreneurs, access to electricity and water. 33 e) Strengthening Governance 91. The cross cutting objective of the ISN is to strengthen Governance by promoting transparency and accountability in economic governance and developing capacity in key Ministries. The Government's expressed commitment to strengthening the Rule of Law now provides a window of opportunity to help Government improve its stewardship, oversight, and service provision, and to improve transparency and accountability. These activities aim to contribute to building citizens' trust in the State. 92. In this context, the World Bank program will aim to strengthen institutional capacity where IDA has critical investments. Entry points to improve governance across the portfolio are set out in Table 2. Through a combination of budget support, technical assistance at the level of the Ministry of Finance, capacity building, and broadened dialogue, the World Bank will continue to support improvements in Public Financial Management, including in the implementation of procurement reform and transparency measures, particularly with regard to the energy sector. Anti-corruption measures, notably in the area of procurement, are being discussed, building on IDA's earlier support to this agenda under previous DPOs. (See Results Framework, Annex 1, for capacity building activities planned under various operations). 93. A key instrument to support improvements in Public Financial Management (PFM) will be the Institutional Component of the Additional Financing to the Infrastructure and Institutions Emergency Recovery Project (US$12M equivalent). This financing will provide equipment, buildings, and technical assistance to key governance institutions, including the Ministry of Finance, the procurement regulatory body, and the Court of Accounts, with the objective of helping to restore and strengthen economic and financial oversight. The Project will also finance support for public expenditure reporting and monitoring and budget execution, technical assistance for the modernization of public procurement, and updates of the legal and regulatory frameworks in electricity and mining (gold). An ongoing grant from the Governance Partnership Facility has been restructured to supplement longer term objectives with short-term strengthening of the auditing and procurement bodies, to train the Inspector General, and improve the quality of internal audit standards. Furthermore, support to Parliament and the development of demand side Governance measures such as civil society monitoring of service delivery are under consideration. See Annex 14 for entry-points for governance. 94. Two Budget Support Operations are envisaged for the ISN2 time frame for a total of US$40 million equivalent or 16.7% of total resources. It is expected that these operations will be linked and will provide incentives for continuity in PFM reform efforts and to support energy sector reform measures aimed at transparency, the reduction of corruption, and financial viability of the sector. IDA-supported DPOs will build on the Economic Governance Reform Operation (EGRO) series (2006-2009) and the Emergency Budget Support DPO (2010), which focused mainly on economic governance and public finance management. They will also complement the Energy Sector Investments. The Government has requested that the Bank continue to provide leadership in this area and help develop a comprehensive approach to the strengthening of the public sector. 34 Table 2. Governance Entry Points Private Sector Public Management Demand-side: Oversight Objectives Objectives Institutions, Civil Society * Competitive investment climate, 0 Effective, efficient PFM and Objectives business environment procurement systems 0 Enhance oversight of Government (Parliament, * Responsible private sector 0 Integrate and improve planning and Court of Accounts) * Equal access to finance & secure reporting of financial information, 0 Improve transparency and participation (access lending budget and investments to information, user participation) Activities Activities 0 Engage beneficiaries and civil society * Business environment reform; Revenue/tax reporting, budget Activities investment generation, one-stop- planning and execution; public financial 0 Capacity building of external audit institution; shop; investment regulations management system, integrated Parliament access to information; public (Jobs Creation & Growth) budget and Treasury accounting; * Public investment planning; internal audit; Procurement (IIERP) 0 goermt websie anIerV procurement processes (IIERP) Budget Support (DPO) Beneficiary and CSO engagement (Sector Projects) Equitable Geographic Distribution Governance in Sectors and Community Development Objectives Objectives E Quality of policies * Decentralization; transfer of resources & resources at i Transparency, accountability & participation in service provision local levels o Curtail scope for sector level corruption A Territorial development Activities Activities a Improving sectoral planning, procurement processes & institutional capacity * Strengthen Regional development & investment in s Education: school inspection visits, Public Expenditure Tracking Surveys regions outside PAP (Jobs Creation & Growth/North, 0 Health: Capacity building to manage & monitor service delivery Artibonite/Centre) 0 Agriculture: Improve access to services & information by farmers * Strengthening community planning & investment 0 Electricity: improve transparency of financial flows in electricity sector & capacity (Urban & Rural CDD) reduce opportunities for corruption, improve service delivery SCommunity participation & engagement (DRMVI, DRM: integrate disaster risk in policy decision making & investment Electricity, Housing, Jobs Creation & Growth) decisions 35 95. Results. Greater transparency and accountability will be achieved by the completion of a procurement review for the past two Haitian fiscal years and of audits of financial transfers to the electricity sector. Also, capacity to manage damaged public infrastructure will be strengthened in Ministry of Public Works and the capacity to manage disasters increased at the Ministry of Interior; capacity to manage the electricity sector will be built in the appropriate Ministry (institutional arrangements currently in flux); inspection capacity will be reinforced in the Education sector as will medium term expenditure planning covering external and domestic resources. Capacity will be built in the Ministry of Health to manage and monitor service delivery and in the Ministry of Agriculture, to deliver agriculture extension services. In addition, several communities will strengthen their capacity by developing community based plans for urban development in under existing IDA and HRF Housing projects. The approach and activities related to Governance are further detailed in Annex 14. 96. The WBG program will mainstream gender in design and implementation. In the absence of a Bank-financed Gender Assessment, the Bank has drawn on assessments prepared by other donors to develop a gender approach for the ISN. New projects will be designed to respond to the specific needs of women, as appropriate, and enable them to benefit fully from IDA financed activities. They will also generate gender disaggregated data and their overall impact on women will be assessed. Activities under the Gender program are further detailed in Annex 15. Box 3 - Gender Mainstreaming in Agriculture Both agriculture projects support activities that strengthen gender equality while addressing the challenges of female farmers. These efforts enable the Ministry to better support women's productive involvement in the sector, through social capital formation, by targeting women in its co-financing facility for technological innovation, and by providing skill-building and gender sensitivity training. The projects also support a Gender Focal Point in the ministry, facilitating collaboration with the Ministry of Women's Affairs and building co-ministerial ownership over the operations. Gender empowerment achievements from these projects include: * Improved inclusion in project's co-financing facility. Eligibility criteria were developed considering the unique characteristics of women farmers (e,g. amount of land women owned). Deterrents to women's participation were considered in planning informational meetings and required trainings. * Increased ability to monitor gender inclusion. Introduction of gender-relevant project indicators in the monitoring and evaluation system. Number of women receiving extension service and level of adoption of new technologies is tracked with a target of at least 20% female heads of households. * Addressing capacity constraints among female farmers. Low financial literacy is a major constraint. A comprehensive financial literacy program has been developed and teaches basic market, economic, and financial skills to enhance competence in agri-business management. 97. The WBG program pays special attention to the vulnerability of women. Projects emphasize women's inclusion and voice in neighborhood reconstruction, including safety aspects (street lighting, safe spaces), improved access to education and vocational training, provision of prevention education and gender based violence kits, broader access to maternal and child health and social protection services, increased access to finance and business development training, as well as, enhanced access to agriculture extension services. 36 D. IMPLEMENTING THE FY13-14 PROGRAM i) Program Implementation in a Fragile Environment 98. Despite sustained results and high disbursement rates (33.8%), implementation has been challenging, with Bank-supported operations often perceived as complex and too slow. The Government of Prime Minister Lamothe has shown resolve to address bottlenecks to reconstruction and accelerate implementation. This determination has substantially improved the working environment. Processes for decision-making are in place and attempts are made to show Government in a collective light and to bring it closer to the people (e.g. holding Council of Ministers meetings in secondary cities and broadcasting its deliberations). The new organization has improved communication between Government and donors, clarifying Government objectives and policy decisions. However, the challenge of building the capacity of Haitian institutions to turn policy guidance into planning, organization, and implementation of activities to achieve concrete results remains. 99. Greater candor in the dialogue with Government is expected to help accelerate implementation. A partnership based on mutual responsibility will help define common objectives and results and enable the effective provision of external capacity to support Government objectives. A better understanding by Government of donor expectations with regard to fiduciary integrity and results and greater efficiency in the coordination of donor resources could improve Government accountability for outcomes and speed up implementation of urgent activities. 100. Given the tripling in size of the IDA Portfolio from US$208M in FY09 to US$607M expected in FY14 and the shifting of the program from emergency relief to sustainable reconstruction and institutional strengthening, Bank capacity is being strengthened to sustain the pace of execution of the portfolio. As shown in other fragile states, results will require injecting financial management and procurement capacities into Government's core systems, strengthening World Bank field presence for implementation, reducing fiduciary and transactional burdens by placing additional financial management and procurement personnel in the field, strengthening safeguards capacity, and stepping up the training of counterparts. In addition, the program will draw upon lessons from other Fragile States and make use of the existing implementation flexibility currently afforded under IDA rules. 101. The procurement enabling environment in Haiti remains challenging. Institutional strengthening and capacity building for public procurement will continue to be a priority and an essential building block for successful project implementation. During the ISN period, Bank support will be expanded and a number of the flexible approaches will be scaled-up. As in all countries, it is IDA's preference to work with and through Government channels and ensure ownership. However, where Government capacity needs support under ongoing projects, and where appropriate, Government has contracted qualified entities to implement IDA-financed activities. Such approaches, combined with short-term increases in the Bank's field presence have worked well in the post-earthquake period. The Bank will continue to evaluate the best-fit model for Haiti, balancing the need for speed in delivery and supplementation of the building of lasting Government capacity for the management and implementation of IDA resources. 37 102. The financial management operating environment in Haiti also remains challenging. Developing country institutions and systems is a priority to facilitate project implementation and adequately manage fiduciary risk. Harmonized financial management arrangements across projects (e.g. a unit in the Ministry of Finance to handle common project financial management functions) is under consideration to make more optimal use of existing country capacity, develop institutional capacity and systems, and ensure their sustainability. The Bank will continue to provide implementation support to key public financial management/accountability institutions (e.g. Ministry of Finance, internal and external audit institutions, sector ministries, and other entities implementing Bank-financed projects). Proposed measures to improve timeliness of audits include establishing accountability arrangements between the Ministry of Finance and project agencies and enhancing monitoring and follow-up by the Ministry of Finance, including on adherence to timelines by project agencies for the various stages in the audit. Growing the limited country audit capacity is also a pressing issue and the Bank will continue to support the development of the country's accountancy profession, building on work under the recently completed Haiti Strengthening Accounting and Audit Practices Project. The bundling of audit contracts across projects, and the integration of project financial statements audits with regular entity audits will also be explored. 103. These arrangements are intended to improve Government and WB capacity for implementation and provide greater flexibility in a complex and changing environment. Operational teams will prepare implementation support plans and proactively facilitate the support required by low capacity government units to resolve implementation challenges. Teams are focusing on implementation support and are the building the client's capacity to implement the program to lower risks, including fiduciary risk, and achieve better outcomes. Existing resources are being supplemented to achieve these objectives. Additional procurement capacity will be posted to the field and staff with extensive experience in fragile environments have joined the team. Financial management capacity has been in place on the ground for the last year, with a positive impact on the management of the portfolio. 104. An analysis of safeguard approaches and capacity will be explored across the portfolio. Internal resources have been provided for adequate safeguard support to the portfolio. However capacity in country is very low and supplemental skills difficult to find. A JSDF trust fund is being implemented to build social safeguard capacity in country and support immediate safeguard capacity needs. A more systematic use of the Overall Risk Assessment Framework tool (ORAF) will support informed risk management. ii) Partnerships and Donor Coordination 105. When compared with other countries, a multiplicity of development partners and actors are present in Haiti with very substantial resources. Most of Haiti's public capital investments are externally financed. In addition, NGOs were active in large numbers the country after the earthquake. To help coordinate reconstruction, the Government created an Interim Haiti Recovery Commission (IHRC) composed of key national and international stakeholders and co-chaired by the Prime Minister of Haiti and former US President Bill Clinton (also UN Special Envoy for Haiti). The IHRC served as the locus for a high level dialogue with 38 the objective of providing strategic direction for reconstruction and ensuring that reconstruction projects were consistent with Government priorities. The IHRC mandate expired October 2011. 106. The current Government has launched a concerted effort to improve donor coordination, which remains a substantial challenge for the Government and the international community. Donors and NGOs involved in the humanitarian relief have begun to scale down operations as the global economic crisis reduces aid budgets and other humanitarian crises arise on the globe. In light of Haiti's dependency on external finance, it is important that the IHRC's former coordinating function, now run by the Minister of Planning and External Cooperation, succeed in keeping donors engaged and resources for longer term development flowing. Better coordination of Government decisions with regard to aid orientation and its commensurateness with Government priorities is already visible as the Council of Ministers has become responsible for approving externally-financed projects. Annex 11 summarizes major development partner support by subsector and by amount (as reported to the Office of the UN Special Envoy to Haiti). 107. The level of coordination between Government and major donors varies per sector. In Education, Finance and Private Sector Development, Social Protection, and Budget Support, major donors are fairly well coordinated. In Education, Government and major donors (Canada, IDB, US, WB) are ready to sign a partnership agreement. However, a joint strategy for capacity- building is needed to strengthen scarce human resources. Coordination in Social Protection has been framed around Government's Aba Grangou program for food security, however, ensuring that such initiatives involve the relevant line ministries and are sustainable remains a challenge. In Budget Support, led by the Bank, donors have signed an MOU, have an active Working Group (Canada, EU, France, IDB, IMF, Spain, US, WB), and conduct joint missions on the basis of a common matrix of Government policy actions. HRF co-financing of US$20M (amount to be confirmed) is under discussion for the proposed FY13 IDA DPO, thanks to contributions from the Governments of France and Spain. Information-sharing among major donors is strong in Energy sector (US, Canada, IDB, WB), and the reinstatement of monthly meetings with Government will help sustain coordinated policy dialogue. The Agriculture Ministry would benefit from greater resources for planning and disseminating information, and all major donors should align themselves with the sector strategy. The newly formed housing authority is beginning to set Housing policy that donors (Canada, EU, IDB, UN, US, WB) can support. Recent progress in coordination in Health is encouraging (Canada, IDB, UN, US, WB), with the objective of pooling funds into one mechanism within reach. Strengthening Government's stewardship role in Health and adopting a sector-wide approach would improve access to services and sustainability. The DRM sector would benefit from a formal Working Group and an annual action plan. 39 IV. MANAGING RISKS 108. This Interim Strategy is implemented in an environment of considerable risk. Risks to the proposed program include, (i) natural disasters such as hurricanes, storms and earthquakes and other shocks; (ii) socio- political volatility that could threaten current political stabilization and slow reconstruction efforts and other growth policies, (iii) insufficient government capacity to implement policies that favor growth and development, including for programs financed by IDA, and (iv) corruption. It is important to note that these risks have not materialized into unsatisfactory performance of the IDA portfolio in Haiti. There are only two unsatisfactory projects for 15 % of commitments and disbursements rates remain high. 109. Natural disaster risk mitigation is central to the proposed WBG program financed by IDA 16. The IDA program mitigates this risk by providing substantial investments to reduce the vulnerability of the population and of public investments to natural disasters and by strengthening government capacity to prevent, plan for and protect against natural disasters at the level of policy making. Advocacy for the inclusion of vulnerability prevention and the building of resilience in all policy areas of importance to Haiti is included in existing and new DRM activities and is beginning to play a role in other sectors (e.geg. seismically safe school and health center construction guidelines are being issued). The flexible structure of new projects provides for contingent financing components and allows emergency activities and resources to be brought on stream rapidly with minimal administrative processes for all new operations. Other mitigation measures include the implementation of the Pilot Program on Climate Resilience, for which Haiti is a pilot country. This program will strengthen information on natural disaster risk and provide support for climate related policy changes to mitigate climate related risk. Beyond Haiti's participation in the World Bank sponsored Caribbean Catastrophe Risk Insurance Facility, the WB is exploring the provision to Haiti of other weather related risk management products. 110. Despite recent progress, the risk of socio-political volatility stemming from Haiti's poor social and economic performance remains. Mitigating this risk starts with acknowledging the fragility of the existing stability and its dependence on continued Government efforts to achieve concrete results, as a likely constant during ISN implementation. To prepare for unforeseen shocks, the program provides flexibility and projects include contingency funding and options for third party execution to facilitate a rapid response, while always giving priority to national systems and institutions. In parallel, the portfolio aims to contribute to political stabilization by delivering quick, visible results contributing to the improvement of living conditions. 111. In the past, lack of Government capacity has posed a risk to investments and to the achievement of project and program objectives, particularly in the areas of Housing and Neighborhood Reconstruction. In addition, Government capacity has been insufficient to promote and implement sound policies. The proposed program takes a dual approach to capacity building: (i) it provides capacity supplementation to achieve short term objectives and (ii) it aims to strengthen institutional capacity in the longer term by building information systems, strengthening technical capacity, helping to improve policies and decision making, and supporting improvements service delivery to the public. However, these efforts may fail to lead 40 to a substantial strengthening of Haitian Institutions. A palpable improvement in institutional capacity will likely depend on the alignment of political, economic, policy, social and other factors and continued efforts beyond the time frame and scope of this program. Over time, it is hoped that the short term capacity provided by project implementation units will become less necessary and that implementation by Ministries, as is already in the case in the Agriculture and Health sectors, will become the rule. 112. Given the high risk environment, strong and comprehensive implementation support will be needed under this ISN, particularly in the areas of financial management, procurement, safeguards and program management. As recommended by the May 2012 CPPR, additional capacity is being put in place and may need to be strengthened further as program implementation progresses. WBG teams will provide implementation support working hand in hand with Government to solve implementation problems and implement the program. 113. To mitigate corruption risks ISN activities will aim to strengthen transparency, accountability across the portfolio and support demands for good governance. The Bank will facilitate disclosure of project procurement information; strengthen partnerships with beneficiaries in project design and monitoring; undertake regular risk assessments and enhance supervision where needed; address the continuity of project staffing; and continue to strengthen the Bank's Porte-Au-Prince office, including through training and staffing (as appropriate) in procurement, financial management, safeguards and operational skills. 114. Mitigating corruption risks in Bank-financed projects includes effective reliance on the use of Project Implementation Units (PIUs). Ongoing projects are implemented by PIUs staffed by financial management and procurement specialists, many of whom have a strong track-record of managing Bank, IDB and other donor-funded projects. Bank technical and fiduciary support focuses on project implementation, procurement and financial management controls and records. During the prior ISN period financial management and procurement quality was generally rates as satisfactory. 115. Finally, Haiti will need to manage the risk of external financing flows declining over the coming years. With official development assistance (ODA) at 17% as a share of Haiti's GDP and financing 52% of the 2010-2011 budget the country remains highly vulnerable to such a slowdown. In planning a growth path for its domestic resources and managing its relationship with donors, the Government will have to take into account that ODA and remittances may reduce sharply, in light of a possible Eurozone crisis and the overall adverse global economic environment. Medium term mitigation measures in the portfolio, such as the development of medium term financing plans for critical sectors, can only partially shield the WBG investments and outcome objectives against this risk. However, Government pro-activity in continuing to raise domestic resources and in taking key steps toward better governance and transparency would build donor confidence in positive change for the country and convince donors to stay the course of the last couple of years. 41 Annex 1: Results Framework Matrix STRATEGIC OBJECTIVE 1: REDUCING VULNERABILITY AND INCREASING RESILIENCE Country Development Goals Key Issues Outcomes Bank Programs Haiti's Vulnerability To Existing IDA Grants Natural Disasters and Cholera is Reduced e Infrastructure and Institutions 1) Extreme vulnerability to 1) Disaster Risk Management Emergency Recovery P120895 Disaster Risk Management natural disasters and weak Disaster response capacity enhanced ($65m) 30-Jun-2015 EmergencyiBrdge Rec.he ulnerlbilit Vulnerability of the population response capacity at the 9 % population living in municipality with a certified rgecon dg P11429 &$m V0unrablit living in risk zones reduced; national and local level CCPC (Comit Communal de Protection Civile) Rediatisk Managem an remaining Baseline: 20% (2011); Achieved: 20% (2012); Reconstruction P126346 ($60m) private and public Target : 35% (2014) e Transport & Territorial Dev. P095523 infrastructure safeguarded ($28m) 30-Jul-2013 (PARDH) 2) Damages from natural 2) Infrastructure e Emg. Recovery & Disaster Mgt P090159 disasters have isolated Select public infrastructure rehabilitated and e Cholera Emergency Response Increase the capacity of the several regions, with severe resilience of critical transport infrastructure P120110 ($15m) 30-Jun-13 central and regional civil effects on their economies. strengthened protection agencies. 9 Additional km of roads rehabilitated or repaired to Existing Trust Funds 1) Structural Assessment Program (DSNRP)agred sandrdsTF096218 ($1.3m) 10-Feb-2012 Baseline: 0 (2011); Achieved: 30kms (2012); e Multi-hazard Assessment TF096220 Target: 168kmn (2014) ($1m) 10-Feb-2012 n Reducing Disaster Risk in Haiti's Health 3) Ongoing cholera 3) Cholera Infrastructure TF099459 ($1.4m) 31-Dec- epidemic More effective prevention and treatment of Cholera 2012 Additional people benefiting from targeted health eNational Cholera Prevention Program in and hygiene education, water treatment and cholera Post-Earthquake Haiti TF098259 ($0.2m) prevntio meaures31-Oct-2011 prNatal Disasres ndiotChoglaefoiliatRedsilend Baseline: 1m (2012); Target: 1.5 million (2013) eltFo grmfoOliae1eilec ePoverty Measurement & Household 4) Lack of basic water and 4) Water and sanitation Survey P123160 sanitation infrastructure * People in rural areas provided with access to i Rural Water & Sanitation P114936 improved water sources under the projects New IDA Grants Baseline: 33,680 (2011); Achieved: 33,680; Infrastructure and Institutions Target: 51,000 (2013) Emergency Recovery AF P130749 ($35m) 30-Iun-2016 42 STRATEGIC OBJECTIVE 2: SUSTAINABLE RECONSTRUCTION Country Development Goals Key Issues Outcomes Bank Programs Housing Physi infrastructure, including housina an Existing IDA Grants Damaged housing repaired and neiahborhood repair and reconstruction and access * Urban CDDAF: Housing new permanent neighborhoods to electricity, improved Reconstruction P106699 ($30 m) 31- constructed with sustainable 1) Housing Mar-2014 infrastructure and basic 1a) Over 390,000 people 1a) Neighborhoods upgraded and housing repaired * Port au Prince Neighborhood services remain in camps and many 9 # of displaced households that have returned to Housing Reconstruction (HRF), (PARDH) lack permanent housing neighborhoods P125805 ($65m) 30-Jun-2015 Baseline: 0 (2011); Achieved: 778 HHs, 3.9k pp1 * Electricity Loss Reduction Project Contribute to sustainable urban (2012); Target: 9k HHs, 22.5k ppl, 50% women (2014) P098531 ($11m) 28-Feb-2013 development and poverty Existing Trust Funds reduction through the design 1b) Services in project neighborhoods improved 9 JSDF Emergency Cash for Work and implementation of 1b) Significant lack of 9 # of households benefitting from community-wide P123205 ($2.8m) 31-Mar-2012 development plans and services in neighborhoods upgrading *Sustainable Housing Policy and neighborhood rehabilitation damaged by the Baseline: 0 (2011); Achieved: N/A (2012); Finance Framework TF099445 (DSNCRP) earthquake Target: 25k HHs, 125k ppl, 50% women (2014) ($0.3m) 30-Dec-2012 ' Housing Reconstruction Support Electricity TF098974 ($0.5m) 18-Mar-2014 Electricity infrastructure *Energy Sector Mgt Program - ESMAP restored, generation increased, 2) Electricity TA P125192 ($0.5m) 30-Oct-2012 the national transmission and Access to electricity improved and commercial *Household and Other Energy Sector distribution network improved viability of sector increased *Energy Access Expansion SFLAC (PARDH) 2a) Limited and unreliable 2a) Access to electricity improved access to energy services ' Average daily services availability (metro PaP) AAA Strengthen electricity Baseline: 14hrs/day(2011); Achieved: 15h/day (2012) * Housing Finance AAA P127497 infrastructure. Target: 16hrs/day (2014) ($0.6m) 8-May-2012 (DSNCRP) 2b) Lack of financial viability in the electricity sector 2b) Commercial viability of the sector increased New IDA Grants P EDH Cash Recovery Index * Rebuilding Energy Infrastructure Baseline: 22% ( 2011); Achieved: 23% (2012) and Access Project P127203 ($90m) Target: 27% (2014) 30-Dec-2017 * Development Policy Operation ($20m) energy policy measures under discussion 43 STRATEGIC OBJECTIVE 3: BUILDING HUMAN CAPITAL Country Development Goals Key Issues Outcomes Bank Programs Education and Training Increase access to social services and reduce the Existing IDA Grants ($116m) Restart school activities, vulnerability of women * Education for All APG1 P099918 support school canteens, and ($60m) 31-May-2012 advance towards the long-term 1) Lack of educated work 1) Access to schools increased, school feeding * Education For All APG2 P124134 goal of free universal access to force. Investment in human continued ($70m) primary education capital is a critical factor for 9 # of children receiving enrollment subsidies * School Reconstruction P115261 (PARDH) economic recovery and (cumulative) * Meeting Teacher Needs P106621 growth in Haiti. Baseline: 80,000 (2011); Achieved: 180,000, 52% girls Existing Trust Fund Improve education access and (2012); Target: 280,000, 50% girls (2014) 9 EFA Multi-Donor Trust Fund quality and strengthen the 9 Additional qualified primary teachers TF097009 ($22m) 31-Oct-2015 governance of the education Baseline: 0(2011); Achieved: 900 (2012) *Adolescent Girls Initiative P123483 system. Target: 3,300 (2014) ($2.0) 30-Apr-2014 (DSNCRP) *Preventing Gender Based Violence 2) Lack of training and 2) Vulnerability of women reduced P125150 ($0.5m) 30-Sep-2012 Reduce the vulnerability of education opportunities, 9 # of girls that received training, life skills and * JSDF Emergency Cash for Work women particularly women; placement services P123205 ($2.8m) 31-Mar-2011 Implement basic social widespread gender based Baseline: 0 (2011); Achieved: 500 (2012); 9 Household Development Agent protection taking into account violence, particularly in Target: 1,000 (2014) Pilot TF097211 ($1.5m) increased vulnerability of camps * Camp residents are equipped with Gender Based * Nutritional Security TF097257 women (PARDH) Violence prevention kits and receive training in GBV ($0.2m) 30-Jun-2012 prevention. New Trust Fund Social Protection Baseline: 0 (2011); Achieved: 6.000 (2012) * EFA Multi-Donor Trust Fund 11 $24m Reduce social exclusion and AAA implement basic social 3) Lack of adequate health 3) Access to health and social protection services * Social Dimensions of protection system services and social increased Reconstruction (DSNCRP) protection mechanism % of people in targeted areas with access to a basic * Safety Nets Phase 2 NLTA package of health, nutrition and population services *Poverty Measurement & Household Health Baseline: TBD (2012); Target: 10% improvement Survey P123160 Ensure better, more equitable New IDA Grant access to basic services and * Ensuring Health, Nutrition and provide MSPP with the Social Services for the Vulnerable resources to effectively Populations P123706 ($50m) regulate the system (PARDH) servicesands 44 STRATEGIC OBJECTIVE 4: PROMOTING INCLUSIVE GROWTH Country Development Goals Key Issues Outcomes Bank Programs Enhancing Economic Revitalize the economy improving conditions for Existing IDA & IFC Grants & Investments Opportunity investment, improving the productivity and Infrastructure and Institutions sustainability of agriculture, and promoting Emergency Recovery P120895 Investment and Credit Ensure regional economic development ($65m) 30-Jun-2015 thePost-Disaster Partial Credit economic and financial 1) Private Sector Development: P121n91 Pom Support channels crucial for funding e IFC investments: manufacturing, reconstruction and relaunching la) Need for more la) Business environment improved and access to agribusiness, financial institutions, growth (PARDH) hospitable business finance broadened housing, infrastructure, construction, environment and improved *Increased total volume of outstanding loan tourism Improve the legal and access to finance to portfolio at end of each year (gender data being Existing Trust Funds regulatory framework, improve increase private investment collected) eBusiness Edge (IFC and CDB) TF094597 the competitiveness of the Baseline:HTG28.5b(2011); Achieved: HTG 46.2b ($0.4m) 29-Feb-2003 textile and agro-industrial (2012): Target: 55b (2014) SmaCl and Medim Eneprise sectors, improve quality *Approval of regulatory texts for IEZs (signed by ( Business Envirom Imroement control, promote domestic and Executive or submitted to Parliament) (Doing Business TF) foreign investment, increase Baseline: No (2011); Achieved: Signed (2012) e Investment Generation (IFC) exports, re-launch light TF098706 ($0.9m) 28-Feb-2013 industry and crafts, improve 1b) Economy overly 1b) Regional economic development potential e IFC Caribbean Credit Bureau the business environment centralized in Port au enhanced e Financial Sector Reform and (DSNCRP) Prince, underutilized Operationalization of the Park Authority to mange Strengthening Initiative TF095115 regional potential for National Historic Park e Strengthening Insurance Regulation Regional Development: economic growth Baseline: none (2012) NwI0 Gat Consolidate Cabaret, Cap Target: Hiring of key staff in Park Authority (2014) N Ifr and t Haitien, Les Gonaives, St-Marc, Emergency Recovery AF P130749 Hinche, and Les Cayes as ($35m) 30-Jun-2016 regional development e Jobs Creation and Growth Centers (PARDH) P123974, WB&IFC, ($65m) New Trust Fund eAgriculture Insurance Capacity Building P131111 eTrade Facilitation in Haiti TF012767 G Transaction Support for IFC InfraVentures Investment TF012496 45 STRATEGIC OBJECTIVE 4: PROMOTING INCLUSIVE GROWTH Country Development Goals Key Issues Outcomes Bank Programs Agriculture and Rural 2) Low productivity in 2) Agriculture services to farmers enhanced, rural Existing IDA Grants Development agriculture, food insecurity access to basic socio-economic infrastructure * Strengthening Management Promote a modern agriculture and entrenched rural improved of Agriculture Public Services that creates wealth, respects poverty; weak local P113623 ($5m) 30-Jun-2014 the environment, provides food government and high * # of farmers that have access to improved * Community Driven Development security and improves the living unemployment in rural agriculture information, technologies, inputs, PRODEP P093640 standards of farmers. areas material, and services (also disaggregated by gender) ($61m) 30-Jun-2013 (DSNCRP) Baseline: 1,000 (2011); Achieved: 1,000, 28% (2012) * Re-launching Agriculture P126744 Target: 6,000, 20% (2014) ($40m IDA + $10m GAFSP) Decentralization Bring government closer to the Existing Trust Funds people through * Strengthening Agriculture Public deconcentration and Services TF092088 ($0.8m) 31-Dec- decentralization. 2016 (DSNCRP) AAA *Diagnostic Trade Integration Study P116035 ($0.4m) June 2012 *Poverty Measurement & Household Survey P123160 *Public Expenditure Review 46 CROSSCUTTING THEME: STRENGTHENING GOVERNANCE and CAPACITY Country Development Goals Key Issues Outcomes Bank Programs Governance in Reconstruction Transparency and accountability as wel as Disaster Risk Management P126346 ($60m) and Revitalization Weak capacity of govenment capacitV strencthened 31-Dec-2016 key ministries * Emergency Bridge Reconstruction and Institutional Rebuilding to deliver quality 1) Disaster response capacity enhanced Vulnerability Reduction P114292 ($20m) 30- Make state institutions policy decisions, * # of Disaster Risk Management Units in line Ministries Jun-2013 operational public spending, able to incorporate hazard risk analysis into their * Infrastructure and Institution Emergency again, redefine the legal and and service programs. Baseline: 0 (2011); Achieved: 0 (2012) Recovery Project P120895 ($65m) 30-Jun-2013 regulatory framework, delivery is Target: 3 (2014) * Infrastructure and Institutions Emergency implement a hampering *MTPTC bridge management unit operational (2014) Recovery AF P130749 ($35m) 30-Jun-2016 structure to manage reconstruction; Baseline: No (2011); Achieved: Yes (2012) 9 Cholera Emergency Response P120110 reconstruction and revitalization * Five cholera management departmental plans ($15m) 30-Jun-2013 (PARDH) of the economy approved and under implementation Achieved: 4 approved, 2 under implementation (2012) *Urban CDD: Housing Reconstruction P106699 Central Administration Target: 5 under implementation (2013) ($30m) 31-Mar-2014 Reconstruct key government * Port au Prince Neighborhood Housing buildings and reconstitute the 2) Institutional capacity for housing repair and Reconstruction (HRF) P125805 ($65m) civil service(PARDH) reconstruction strengthened (urban planning + community based approach) * Community urban development plan completed and *Electricity Loss Reduction Project P098531 approved by targeted communities ($m) 28-Feb-2013 Baseline: 0 (2001); Achieved: 1 (2012) Target: 6 (2014) q Rebuilding Energy Infrastructure and Access Project P127203 ($90m) 30-Dec-2017 3) MTPTC's energy policy and planning capacity d Education for All APG1 P099918 ($60m) 31- strengthened May-2012 *Energy Sector master plan completed (2012) * Education For All APG2 P124134 ($70m) 30- Achieved: No (2012); Target: Yes (2012) Jun-2015 * Ensuring Health, Nutrition and Social Services 4) Education institutional capacity strengthened for the Vulnerable Populations P123706 ($50m) # of schools w/ at least 1 inspector visit per year *Accountability for Effective Poverty Reduction Baseline: N/A (2011); Achieved: N/A (2012) in Haiti TF098709 Target: 75% (2014) 47 CROSSCUTTING THEME: STRENGTHENING GOVERNANCE and CAPACITY 5) Strengthen Government's capacity to manage and 9 Business Environment Improvement (Doing monitor service delivery Business TF) *% of targeted population covered by health providers 9 Investment Generation (IFC) TF095092 contracted by Ministry of Health ($0.3m) and TF098706 ($0.9m) Baseline: TBD; Target: 10% improvement 9 Strengthening the Management of Agriculture Public Services P113623 ($5m) 30-Jun-2014 6) Business Environment Reform 9 Re-launching Agriculture P126744 ($40m IDA Permanent public-private committee to define + $10m GAFSP) priorities for business environment reforms created (2014) 7) Agriculture * MARNDR annual investment plan (PIP) reflects prioritization of investment as described in the National Agriculture Investment Plan (2011-2016) (2014) Economic Governance and Transparency and Improved Transparency And Accountability In Public Existing IDA Grants Public Sector Accountability accountability Financial Management 9 Infrastructure and Institution of public sector * Audits of public transfers to electricity sector (2014) Emergency Recovery Project Capacity-Building management * Quality and timeliness of annual financial statements P120895 ($65m) 30-un-2013 Strengthen State capacity by remains weak (PI-25). Baseline: D+ (2011); Target: C (2014) modernizing public * Scope, nature, and follow-up of external audit (PR-26) Existing Trust Funds administration and improving Baseline: D+ (2007); Target C (2014) 9 Strengthening Accounting and financial management *Legislative scrutiny of the annual budget law (P-27) Auditing Practices TF095115 (DSNCRP) Baseline: C+ (2011); Target: B (2014) ($0.28m) 30-Jun-2012 * Legislative scrutiny of external audit reports (PI-28) AAA Institutional Rebuilding Baseline: D (2011); Target: C (2014) *Enhancing Leadership P117508 Establish a culture of transparency and New IDA Grants accountability * Development Policy Operation (PARDH) ($20m) o Infrastructure and Institutions Emergency Recovery AF P130749 ($35m) 30-un-2015 48 Annex 2: Results ISN 1 Results Strategic Objectives, Outcomes and Indicators Baseline Target Current 2011 2012 2012 Strategic Objective 1. Targets to reduce vulnerability and increase resilience for natural disasters have been achieved; targets for cholera are still to be measured 1) DRM: Share of population living in a municipality with a certified CCPC has increased 20% 20% 25% 2) Infrastructure: Targets for additional kms of roads rehabilitated and critical bridges and road sections 0km, 0 30kms, 4 30km, 15 repaired are met 3) Cholera: Percentage of population in project intervention areas who know the cholera early warning 81.7% 87.6% N/A symptoms will be measured by December Strategic Objective 2. Sustainable Reconstruction objectives partially met with slow progress in housing and electricity la) Housing the number of of displaced households that have returned to neighborhoods upon completion of 4.5k HH 778 HH housing repair or reconstruction works is lower than expected 0 22.5k ppl 3.9k ppl 50% wom wom 15k HH 3k HH 1b) Housing: Urban plans completed for 1 neighborhood + 3 ongoing, access to services in project 05k pp 1k pp neighborhoods increased, but # of households benefitting from upgrading lower than projected. 5k wom 50% wom womn 2a) Electricity: Access is increasing with System Interruption Duration Index (SAIDI) diminishing 10h/day 8h/day 9h/day 2b) Electricity: Commercial viability of sector not yet improving per EDH Cash Recovery Index 22% 30% 23% Strategic Objective 3. Building Human Capital targets in education have been achieved, half of the women and girls targeted for training and jobs have been reached, social transfers to earthquake victims have been met, but have not reached as many women as expected and social protection policy is still being developed. 1) Education: # of children receiving enrollment subsidies (cumulative) achieved 80k 180k 180k Additional qualified primary teachers achieved 0 900 900 # of children participating in integrated nutrition/health program (cumulative) achieved 28,000 100,000 100,000 2) Gender: # of girls having received training, life skills, and placement services partially achieved 0 1,000 500 # of camp residents having received GBV prevention kits and training achieved 0 6,000 6,000 3) SP: cash transfer targets to earthquake affected in work days achieved, female beneficiaries targeted 0 450k 602k partially achieved 0 50% w 38%w 4) SP: Government has better understanding of options and models for social protection but a roundtable on options with key officials and stakeholders has not yet taken place No Yes No 49 Results Strategic Objectives, Outcomes and Indicators (cont'd) Baseline Target Current 2011 2012 2012 Strategic Objective 4. Some conditions for improving investment have been met, progress to increase productivity of agriculture is slower than expected but rural development work through CDD has achieved targets 1) PSD: access to finance for SMEs has improved though other indicators are not yet achieved. Legislative progress is slow * % reduction in cost of starting a business (as a percentage of GDP/capita) 0 -15% +25% * Increased volume of lending to SMEs through PCGs at the end of each calendar year (including HTG 28.5b HTG 33.Ob HTG 46.2b disaggregated reporting on lending to SMEs run by women) No Est. Baseline No * Insurance law submitted to Parliament No Yes In progress * Approval of regulatory texts for IEZs (signed by Executive or submitted to Parliament) No Yes In progress * Amendment of Feb 2009 Secured Lending Law submitted No Yes No 2) Agriculture: access to improved agriculture information , technologies, inputs, materials, and services has 1,000 3,000 1,000 taken more time than expected, but program is reaching more women than planned. 20% 28% Number of residents in the CDD project area with improved access to basic social and economic infrastructure and/or benefit from productive subprojects has been achieved 1,160,000 1,180,000 1,180,000 Crosscutting Theme: Results that indicate progress in Government's capacity to make and implement decisions that drive reconstruction have been mixed. Results on transparency and accountability (6) and 7)) have been mixed. 1) DRM: neither of the two units in line ministries that were expected to be able to incorporate hazard risk analysis into their programs, can do so yet. 0 2 0 5 approved 4 approved Capacity to combat cholera is improved thanks to implementation of departmental plans 0 +mlmne mlmne 0 +implemented 2 implemented The MTPTC bridge management unit is operational No Yes Yes 2) Housing: institutional capacity for housing repair and reconstruction has been strengthened through approved community development plans 0 4 1 3) Electricity: An Energy sector master plan has not yet been completed, but a letter of sector policy has Partially been developed and a plan is underway. No Yes achieved 4) Education: # of schools receiving at least one inspector visit per year cannot yet be measured 0 TBD N/A School Management Committees do not yet report on use of funds to NEPO N/A >80% Unknown 5) Agriculture: Adoption of National Agriculture Extension Strategy expected December 2012 No Yes No 6) PFM: CNMP has completed procurement review for 2008/09 and 2009/10 No Yes Yes 7) PFM: Audits of subsidies on textbooks and uniforms for 2011 have been completed, audits of electricity transfers still to be completed No Yes Partially 50 Annex 3 Selected Results since the 2010 Earthquake * Over 1 million people reached with targeted cholera and health/sanitation education and prevention training. * Since the earthquake, the Bank has financed school fees for 290,000 children, school meals for 70,000 every day and compensation grants for 2,824 schools in affected areas. * Replaced distorting subsidies with "smart subsidies" to farmers to promote technology innovation and development of the private sector (input suppliers and service providers). Over 1,000 farmers benefit from input vouchers in the 2012 pilot program. * IFC projects support close to 10,000 jobs, of which 4,000 for women. 5,000 new jobs were created or preserved by IFC investment and advisory activities since January 2010. E-Power generates electricity for 3.3 million customers. * 500 families (2,750 people) relocated from camps to their neighborhoods. 65 houses have been repaired/retrofitted and repair works for an additional 154 houses under way. * Conducted building assessments of Port au Prince (400,000 buildings); developed and disseminated building guidelines for housing reconstruction. * Set up the first environmentally and socially sound debris management site in Haiti, with capacity sufficient to treat bulk of debris from Port au Prince. * Provided short-term employment for 1,700 people through IDA programs (cash- for-work, debris sorting, canal clearing). * Completed six water supply systems, benefitting 37,000 people in rural communities. * Housed and equipped the Ministry of Economy and Finance and Tax Office (500 staff) following the earthquake, allowing salaries to be paid, revenues to be collected and economic governance efforts to continue. 51 Annex 4 Haiti at a glance 3/29/12 Latin POVERTY and SOCIAL America Low- Haiti & Carib. income P1010 Population, mid-year (millions) 10.0 583 796 GNI per capita (Atlas method, US 650 7,733 528 GNI (Atlas method, US$ billions) 6.46 4,505 421 Average annual growth, 2004-10 Population (%) 1.4 1.2 2.1 Laborforce (%) 2.4 2.0 2.6 GNI Gross per primary Most recent estimate (latest year available, 2004-10) capita enrollment Poverty (%ofpopulation belownationalpo .. Urban population (%of totalpopi 50 79 28 Life expectancy at birth (years) 62 74 59 Infant mortality (per 1,000live birti 70 18 70 Child malnutrition (%of children L 1 3 23 Access to improved watersource Access to an improved water soi 69 94 65 Literacy (%of population age 15+) 49 91 61 Gross primary enrollment (%ofschool-age 117 104 Male 119 ID8 Haiti - Low-income grotpJ Female 115 18 KEY ECONOMIC RATIOS and LONG-TERM TRENDS F 1990 2000 2009 2010 Economicratiote GOP (US$ billions) 3.7 6.5 6.7 Gross capital formation/GDP 27.3 27.4 25.0 Exports of goods and services/C 12.7 14.2 12. Trade Gross domestic savings/GDP 6.6 -2.3 -20.2 Gross national savings/GDP 23.2 22.9 T Current account balance/GP -2.2 -3.6 -21.7 Interest paymeintss/GDP 0.6 0.2 0.1 Domestic Capital Total debt/GDP 32.0 20.5 7.3 savings formation Total debt service/exp 11.1 4.0 4.6 15.7 Present value of debt/GDP 4.2 Present value of debt/exports 33.7 Indebtedness 1990-00 2000-10 2009 F 2010 2010-14 (average annual growth) GDP 0.5 0.6 2.9 -5.1 GDP per ci -1.4 -0.9 1.6 -6.3 Haiti - Low-income grotp Exports of 10.1 4.1 9.9 -7.3 1 STRUCTURE of the ECONOMY ( f 1990 2000 2009 F 2010 Growth of capital and GDP(%) (%of GDP) Agriculture 26.2 23.6 24.9 2 Industry 15.3 16.1 16.2 0 Manufacturing -2 05 06 07 08 09 Services 50.8 52.7 51.3 -4 -6 Household final consumption ex 85.6 General gov't final consumption, 7.8 11.7 11.3 GCF GDP Imports of goods and services 33.4 43.9 57.3 1990-00 2000-10 2009 Pr 2010 Growth ofexports and imports(%) (average annual growth) Agriculture -0.5 5.2 0.0 30 Industry 1.1 4.1 -4.8 20 Manufacturing 0.1 3.7 -14.7 10 Services 0.9 1.4 -7.2 0 Household final consumption expenditure -1o o5 o6 o7 08 o9 1o General gov't final consumption, 17.8 13.8 0.3 Gross capital formatic 9.0 1.2 3.2 -6.5 Exports r Imports Imports of goods and 19.4 3.1 5.8 19.7 Note: 2010 data are preliminary estimates. This table was produced from the Development Economics LDB database. *The diamonds showfour key indicators in the country (in bold) compared with its income-group average. If data are missing, be incomplete. Haiti PRICES and GOVERNMENT FINANCE Domestic prices P 1990 2000 2009 F 2010 Inflation (%) (% change) 25 Consumer prices 20.6 13.8 -4.7 4. 20 Implicit GDP deflator 111 3.5 5.4 15 10 Government finance 5 (%ofGDP,includes currentgrants) o II I I I Current revenue 112 11.9 05 06 07 08 09 10 Current budget balance 2.4 0.6 Overall surplus/deficit -4.6 2.4 GoPdeflator CPI TRADE (US$ millions) Pr 1990 2000 2009 F 2010 Exportandimportlevels(US$mill.) Total exports (fob) 164 331 550 560 2,500 Coffee 7 3 1 Sisal and sisal strings 2 0 0 2,000 Manufactures 292 496 196 1,500 Total imports (cif) 332 1,091 2,143 2,810 1000 Food 248 484 579 Fuel and energy 147 385 545 soo Capital goods 172 197 483 o 04 05 06 07 08 09 10 Exportpriceindex(2000=00) 50.0 100 181 182 Import price index (2000=100) 32.0 100 205 304 *Export NImports Terms of trade (2000-00) 100 72 55 BALANCE of PAYMENTS (US$ millions) 1990 2000 2009 2010 Current account balancetoGDP(%) Exports ofgoods and services 504 933 802 5 Imports ofgoods and services 1367 2,813 4,076 0 Resource balance -863 -1880 -3,273 T as 10 Net income 20 13 25 -1o Net current transfers 578 1635 3,097 -15 Current account balance -82 -232 -1,458 -20 Financing items (net) 25 478 613 -25 Changes in net reserves 57 -246 845 Memo: I Reserves including gold (US$ millions) 4 182 948 1,792 Conversion rate (DEC, local/US$) 5.0 212 412 39.8 EXTERNAL DEBT and RESOURCE FLOWS (US$millions) r 1990 2000 2009 F 2010 Compositionof2010debt(US$mill.) Total debt outstanding and disbursed 917 1,173 1325 492 IBRD 0 0 0 0 13 IDA 324 480 39 0 71 Total debt service 36 44 45 131 IBRD 0 0 0 0 IDA 3 10 13 36 Composition of net resource flows Official grants 65 91 1,681 3,496 Official creditors 30 33 185 164 Private creditors 0 0 0 0 Foreign direct investment (net inflows) 8 13 38 150 Portfolio equity(net inflows) 0 0 0 0 World Bank program Commitments 41 0 0 0 Disbursements 14 8 0 0 A- IBRD E - Bilateral Principal repayments 1 7 11 36 B - IDA D - Other multilateral F - Private Net flows 13 1 -11 -36 C - IMF G - Short-term Interest payments 2 4 2 0 Net transfers 10 -2 -13 -36 Note: This table was produced from the Development Economics LDB database. 3/29/12 53 Annex 5 CAS Annex B2 - Haiti Selected Indicators* of Bank Portfolio Performance and Management As Of Date 8/8/2012 Indicator 2010 2011 2012 2013 Portfolio Assessment Number of Projects Under Implementation a 15 15 12 12 Average Implementation Period (years) b 2.9 3.3 3.1 3.2 Percent of Problem Projects by Number a, c 20.0 20.0 8.3 8.3 Percent of Problem Projects by Amount a, c 4.3 5.4 2.6 2.6 Percent of Projects at Risk by Number a, d 33.3 60.0 83.3 83.3 Percent of Projects at Risk by Amount a, d 17.9 58.6 74.0 74.0 Disbursement Ratio (%) e 40.3 33.1 44.2 8.3 Portfolio Management CPPR during the year (yes/no) No Yes Yes Supervision Resources (total US$) 2,675 2,667 2,275 2,369 Average Supervision (US$/project) 178 178 190 197 Memorandum Item Since FY 80 Last Five FYs Proj Eval by OED by Number 38 5 Proj Eval by OED by Amt (US$ millions) 587.1 48.1 % of OED Projects Rated U or HU by Number 57.1 60.0 % of OED Projects Rated U or HU by Amt 53.1 77.0 a. As shown in the Annual Report on Portfolio Performance (except for current FY). b. Average age of projects in the Bank's country portfolio. c. Percent of projects rated U or HU on development objectives (DO) and/or implementation progress (IP d. As defined under the Portfolio Improvement Program. e. Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the beginning of the year: Investment projects only. * All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio, which includes all active projects as well as projects which exited during the fiscal year. 54 Annex 6 Haiti Social Indicators Latest single year Same regionlincome group Latin America Low- 1980-85 1990-95 2004-10 & Carib. income POPULATION Total population, rrid-year (millions) 6.4 7.9 10.0 582.6 796.3 Grow th rate (% annual average for period) 2.3 2.0 1.4 1.2 2.1 Urban population (% of population) 23.3 32.6 49.6 79.3 28.3 Total fertility rate (births per woman) 6.0 4.9 3.3 2.2 4.1 POVERTY (% of population) National headcount index Urban headcount index Rural headcount index INCOM E GNI per capita (US$) .. .. 670 7,741 530 Consumer price index (2005=100) 5 20 150 126 151 INCOM E/CONSUM PTION DISTRIBUTION Gini index Low est quintile (% of income or consumption) Highest quintile (% of income or consumption) SOCIAL INDICATORS Public expenditure Health (% of GDP) .. 2.7 1.4 3.9 2.1 Education (% of GDP) 1.0 1.5 .. 4.4 3.8 Net primary school enrollment rate (% of age group) Total 49 21 .. 94 80 Male 51 21 .. 94 81 Female 47 22 .. 94 78 Access to an improved water source (% of population) Total .. 60 69 94 65 Urban .. 84 85 98 86 Rural .. 49 51 81 57 Immunization rate (% of children ages 12-23 months) Measles 21 49 59 93 78 DPT 19 42 59 93 80 Child malnutrition (% under 5 years) .. 24 19 3 23 Life expectancy at birth (years) Total 53 57 62 74 59 Male 52 56 61 71 58 Female 54 58 63 77 60 Mortality Infant (per 1,000 live births) 116 90 70 18 70 Under 5 (per 1,000) 171 129 165 23 108 Adult (15-59) Male (per 1,000 population) .. .. 264 181 297 Female (per 1,000 population) .. .. 236 98 260 Maternal (modeled, per 100,000 live births) .. 620 300 86 590 Births attended by skilled health staff (%) .. 21 26 90 44 Note: 0 or 0.0 means zero or less than half the unit show n. Net enrollment rate: break in series between 1997 and 1998 due to change from ISCED76 to ISCED97. Immunization: refers to children ages 12-23 months w ho received vaccinations before one year of age or at any time before the survey. World Development Indicators database, World Bank - 17 April 2012. 55 Annex 7 Haiti - Key Economic Indicators Actual Estimate Prmjected Indicator 2007 2008 2009 2010 2011 2012 2013 2014 2015 National accounts (as % of GDP) Gross domestic product 100 100 100 100 100 100 100 100 100 Agriculture 25 23 24 25 24 Industry 16 16 16 16 17 Services 52 54 53 51 51 Total Consumption 95 103 101 125 113 Gross domestic fixed investment .. 27 25 28 27 29 Government investment 11 15 22 20 21 Private investment .. 17 11 6 7 8 Exports (GNFS)b 13 13 14 12 14 Imports (GNFS) 39 44 43 62 55 Gross domestic savings 5 -3 -1 -25 -13 Gross nationalsavingsc .. .. 24 23 24 23 24 Memorandum items Gross domestic product 5971 6408 6552 6551 7388 7895 8526 (US$ million at current prices) GNI per capita (US$, Atlas method) 560 620 670 650 700 Real annual growth rates (%, calculated from 76 prices) Gross domestic product at market prices 3.3 0.8 2.9 -5.4 5.6 4.5 6.5 Gross Domestic Income 5.9 -6.1 7.4 -13.9 6.5 Real annual per capita growth rates (%, calculated from 76 prices) Gross domestic product at market prices 2.0 -0.5 1.5 -6.6 Total consumption 0.9 0.4 2.5 13.9 Private consumption .. Balance of Payments (US$ millions) Exports (GNFS)b 779 833 933 802 768 768 943 Merchandise FOB 522 490 551 565 714 716 885 Imports (GNFS)b 2384 2854 2813 4076 3014 3014 3376 Merchandise FOB 1704 2108 2032 2809 770 815 871 Resource balance -1605 -2021 -1880 -3273 -2246 -2246 -2433 Net current transfers .. .. .. .. 2757 2700 2753 Current account balance -86 -289 -232 -1458 -339 -341 -453 Net private foreign direct investment 75 30 38 150 181 101 112 Long-term loans (net) 52 284 760 -145 Official .. 322 186 Private .. -37 574 Other capital (net, incl. errors & ommissions) 168 146 -320 608 -16 -46 -88 Change in reservesd -208 -171 -246 845 -211 -60 90 Memorandum items Resource balance (% ofGDP) -26.9 -31.5 -28.7 -50.0 -30.4 -28.4 -28.5 Real annual growth rates ( YR76 prices) Merchandise exports (FOB) Primary Manufactures Merchandise imports (CIF) (Continued) Haiti - Key Economic Indicators (Continued) Actual Estimate Projected Idicator 2007 "2007 'p2009 p2010 " 2011 " 2012 ' 2013 "2014 2015 Public finance (as % of GDP at market prices)e Current revenues 15.8 15.1 11.2 11.9 13.1 13.5 13.9 Current expenditures 8.6 10.7 11.7 11.3 11.8 11.3 10.5 Current account surplus (+) or deficit (-) 7.2 4.4 -0.5 0.6 1.3 2.2 3.4 Capital expenditure 7.0 7.5 10.8 14.7 21.7 20.3 21.2 Foreign financing 0.4 3.1 3.7 3.4 4.6 4.5 4.1 Monetary indicators M2/GDP 20.3 20.1 20.6 25.0 Growth ofM2(%) .. .. 9.1 20.4 7.2 11.0 11.4 Private sector credit growth / .. .. 15 -5.6 24.5 18.6 18.0 total credit growth (%) 'Price indices(YR76 =100) Merchandise export price index Merchandise import price index Merchandise terms oftrade index Real exchange rate (US$/LCU)f 122.6 125.9 122.8 129.9 130.6 0.0 0.0 Real interest rates Consumer price index (% change) 8.5 15.5 4.7 9.1 10.4 6.0 5.0 GDP deflator (% change) 8.0 12.9 3.4 4.7 5.9 5.7 5.3 a. GDP at factor cost b. "GNFS" denotes "goods and nonfactor services." c. Includes net unrequited transfers excluding official capital grants. d. Includes use of IMF resources. e. Consolidated central government. f. "LCU" denotes "local currency units." An increase in US$/LCU denotes appreciation. 57 Annex 7a Haiti: Selected Economic and Financial Indicators, 2008/09 - 2012/13 (Fiscal year ending September 30) Nominal GDP (2011): US$7.4 billion Population (2009): 9.9 million 2008/09 2009/10 2010/11 2011/12 2012/13 Act. Act. Rev. Proj. Proj. Rev. Proj. (Change over previous year; unless otherwise indicated) National income and prices GDP at constant prices 2.9 -5.4 5.6 4.5 6.5 GDP deflator 3.4 4.7 5.9 5.7 5.3 Consumer prices (period average) 3.4 4.1 7.4 6.8 5.9 Consumer prices (end-of-period) -4.7 4.7 10.4 6.0 5.0 External sector Exports (f.o.b.) 12.4 2.2 36.3 0.0 22.8 Imports (f.o.b.) -3.6 38.3 7.3 0.0 12.0 Real effective exchange rate (end of period; + appreciation) 2.1 0.8 1.6 n.a. n.a. Money and credit Credit to the nonfinancial public sector (net) 24.5 -122.7 229.4 -0.2 -6.3 Of which: Net credit to the central government 35.7 -104.3 930.9 8.0 -5.2 Credit to private sector 14.7 -5.6 24.5 18.6 18.0 Base money 9.5 31.2 6.0 9.0 10.9 Broad money (incl. foreign currency deposits) 11.0 22.7 10.4 11.2 13.0 (In percent of GDP; unless otherwise indicated) Central government Overall balance -4.6 2.4 -3.7 -3.6 -4.7 Overall balance (excluding grants and externally-financed projects) -4.6 -5.0 -4.7 -4.1 -5.4 Domestic revenue 11.2 11.9 13.1 13.5 13.9 Grants 6.7 16.5 16.8 14.4 13.0 Expenditures 22.5 26.0 33.5 31.5 31.7 Current expenditures 11.7 11.3 11.8 11.3 10.5 Capital expenditures 10.8 14.7 21.7 20.3 21.2 Savings and investment Gross investment 27.4 25.4 28.0 27.0 29.0 Of which: public investment 10.8 14.7 21.7 20.3 21.2 Gross national savings 24.0 22.9 23.8 22.7 23.7 Of which: central government savings 1.0 4.0 2.4 3.0 4.4 External current account balance (including official grants) -3.5 -2.5 -4.6 -4.3 -5.3 External current account balance (excluding official grants) -9.5 -29.8 -24.2 -21.2 -21.0 Public Debt External public debt (end-of-period) 19.0 13.2 8.9 13.1 16.4 Total government debt (end-of-period) 27.7 17.3 11.7 16.6 20.1 External public debt service 3.9 1.6 0.6 0.8 1.4 (In millions of U.S. dollars; unless otherwise indicated) Overall balance of payments -109 1,028 167 38 -105 Net international reserves (program) 21 416 1,095 1,177 1,221 1,057 Liquid gross reserves 948 1,792 2,000 2,060 1,970 In months of imports of the following year 2.8 5.2 5.8 5.5 5.0 Nominal GDP (millions of Gourdes) 266,559 264,039 297,687 328,807 368,630 Nominal GDP 6,552 6,551 7,388 7,895 8,529 Sources: Ministry of Economy and Finance; Bank of the Republic of Haiti; Fund staff estimates and projections; and World Bank estimates. 1/ In percent of exports of goods and nonfactor services. Includes HIPC, MDRI, and PCDR debt relief. 2/ SDR allocation (liability) is not netted out of NIR. 58 Annex 7b Table 2. Haiti: Medium Term Outlook (Fiscal year ending September 30) 2011/12 2012/13 - 2013/14 Average (Change over previous year; unless otherwise indicated) National income and prices GDP at constant prices 4.5 6.4 GDP deflator 5.7 4.5 Consumer prices (end-of-period) 6.0 4.8 External sector Exports (f.o.b.) 0.0 17.3 Imports (f.b.) 0.0 8.0 Money and credit Credit to the nonfinancial public sector (net) -0.2 -36.6 Of which: Net credit to the central government 8.0 -47.6 Credit to private sector 18.6 17.6 (In percent of GDP; unless otherwise indicated) Central government Overall balance -3.6 -5.0 Overall balance (excluding grants and externally-financed projects) -4.1 -5.2 Domestic revenue 13.5 14.5 Grants 14.4 12.5 Expenditures 31.5 32.0 Current expenditures 11.3 10.4 Capital expenditures 20.3 21.6 Savings and investment Gross investment 27.0 29.9 Of which: public investment 20.3 21.6 External current account balance (including official grants) -4.3 -5.2 External current account balance (excluding official grants) -21.2 -20.0 Public Debt External public debt (end-of-period) 13.1 17.6 Total government debt (end-of-period) 16.6 21.8 External public debt service 0.8 1.9 (In millions of U.S. dollars; unless otherwise indicated) Overall balance of payments 38 -52.5 Liquid gross reserves 2,060 1,970.0 In months of imports of the following year 5.5 5.0 Nominal GDP (millions of Gourdes) 328,807 387,731.4 Nominal GDP 7,895 8,887.6 Sources: Ministry of Economy and Finance; Bank of the Republic of Haiti; Fund staff estimates and projections; and World Bank estimates. 1/ In percent of exports of goods and nonfactor services. Includes HIPC, MDRI, and PCDR debt relief. 59 Annex 8 Haiti - Key Exposure Indicators Actual Estimated Projected Indicator 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total debt outstanding and 1580 1946 1245 1326 1377 1399 1381 1339 1277 disbursed (TDO) (US$m)a Net disbursements (US$m)a 0 0 0 0 0 0 0 0 0 Totaldebtservice(TDS) 26 24 15 8 10 12 11 11 11 (US$m)a Debt and debt service indicators (%) TDO/XGSb TDO/GDP 26.5 30.4 19.5 13.2 9.7 .. TDS/XGS .. .. .. .. .. .. Concessional/TDO 94.2 93.1 93.1 36.1 38.6 42.2 43.8 45.4 47.1 IBRD exposure indicators (%) IBRD DS/public DS .. .. *. .. Preferred creditor DS/public .. .. .. .. .. .. DS (%) IBRD DS/XGS .. .. .. .. .. .. IBRD TDO (US$m)d Of which present value of guarantees (US$m) Share of IBRD portfolio (%) .. .. .. .. .. .. IDA TDO (US$m)d 518 507 39 0 0 0 0 0 0 IFC (US$m) Loans Equity and quasi-equity /c MIGA MIGA guarantees (US$m) a. Includes public and publicly guaranteed debt, private nonguaranteed, use of IMF credits and net short- termcapital. b. "XGS" denotes exports of goods and services, including workers'remittances. c. Preferred creditors are defined as IBRD, IDA, the regional multilateral development banks, the IMF, and the Bank for International Settlements. d. Includes present value of guarantees. e. Includes equity and quasi-equity types ofboth loan and equity instruments. 60 Annex 9 CAS Annex B8 - Haiti Operations Portfolio (IBRD/IDA and Grants) As Of Date 8/8/2012 Closed Projects 52 IBRD/IDA* Total Disbursed (Active) 163.72 of which has been repaid 0.00 Total Disbursed (Closed) 212.78 of which has been repaid 139.28 Total Disbursed (Active + Closed) 376.50 of which has been repaid 139.28 Total Undisbursed (Active) 232.91 Total Undisbursed (Closed) 0.00 Total Undisbursed (Active + Closed) 232.91 Active Projects Difference Between Last PSR Expected and Actual Supervision Rating Original Amount in US$ Millions Disbursements' Project ID Project Name Development Implementation Fiscal Year IBRD IDA GRANT Cancel. Undisb. Orig. Frm Revd Objectives Progress P093640 HT CDD Project (PRODEP S MS - 2006 61 4.206618 -20.63509 -12.7351 P120110 HT Cholera Emergency ReMS MS ' 2011 15 6.236941 4.1685721 P126346 HT Disaster Risk Mngmt & S S ' 2012 60 57.83557 P124134 HT Education for All Projec S S ' 2012 70 59.25045 P098531 HT Electricity Project MS MU ' 2007 11 3.554448 -1.819741 3.009527 P114292 HT Emerg Bridge Reconst . MS MS ' 2009 20 9.046627 8.6831296 P120895 HT Infra. & Instit. Emerg RES S 2010 65 18.97259 16.051023 P121391 HT Post-Disaster Part Crec S S ' 2011 3 0.71882 P126744 HT Relaunching Agriculture S S ' 2012 40 33.87439 P113623 HT Strength. Mgmt of Agr F MS MS ' 2009 5 4.003959 2.7731612 P095523 HT Transport and Territorial S MS ' 2006 28 6.815182 -6.163857 P106699 HT Urban CDD / PRODEPLMS MS ' 2008 45.7 28.39569 4.242547 7.6916 Overall Result 423.7 232.9113 -14.58535 -2.03396 61 Annex 10 B8 (IFC) for Haiti Haiti Committed and Disbursed Outstanding Investment Portfolio As of 7/31/2012 (In USD Millions) Committed Disbursed Outstanding **Quasi Partici **Quasi Partici FYApproval Company Loan Equity Equity *GT/RM pant Loan Equity Equity *GT/RM pant 0 Dlohaitiinc 0 0 0.82 0 0 0 0 0 0 0 0/11 E-power 16.24 0 0 0 11.21 16.24 0 0 0 11.21 0/10 Grupo m 2.75 0 0 0 2.75 2.75 0 0 0 2.75 2012 Leopard haiti 0 10 0 0 0 0 0 0 0 0 2010 Sciop sa 5 0 2.5 0 0 0 0 0 0 0 2009 Sogebank 0 2.99 0 0 0 0 2.99 0 0 0 Total Portfolio: 23.99 12.99 3.32 0 13.96 18.99 2.99 0 0 13.96 * Denotes Guarantee and Risk Management Products. ** Quasi Equity includes both loan and equity types. 62 Annex 11a Major Development Partners - Subsectors Health & Budget DRM Scalt Energy Agriculture Education Housing Suppot Finance & PSD Social Prot. Support - Preparednes & - North, Sud, - Distribution - Hillside - Primary - Permanent - Tax & customs -Infrastructure 0 response Northeast - Household agriculture literacy housing - Budget - Guarantees training - Surveillance energy - Market - Transitional execution - Housing - HIV/AIDS/TB & - Technical linkages - Technical - Governance finance malaria assistance assistance - Insurance -Preparedness& - Permanent - Budget -Infrastructure response housing execution W - Urban area - Public awareness buildings - Artibonite - Distribution - Watershed - Co-financing - Permanent - Debt mgt. -Infrastructure - Capacity- rehabilitation management WB projects, housing - Tax & customs building - Agriculture among others - Transitional - Budget finance - Technical execution Assistance UNDP WFP: nutrition UNDP - lary, 3ary UNDP -Donor & NGO & food security - Technical - School health - Permanent coordination TA & supplies assistance on - Teacher housing - Capacity- UNICEF: TA biomass - Curriculum - Technical building nutrition & in - School meals Assistance kind support UNDP: CCTTA - North - Generation - General - Primary - Permanent - Debt mgt -Infrastructure - Cholera - Distribution - Teacher housing - Tax & customs - PSD policy - Child health rehabilitation training - Procurement - Social dev. - ICT fund - Budgeting - Housing - Schools finance - Capacity- - Cholera - Electricity loss -Public Serv. - Primary - Permanent All of the above -Infrastructure building - Capacity- reduction - Institutional -Teacher housing - PSD policy building strengthening training - Housing policy - Housing - Rural - Capacity- finance development building - SME finance 63 Annex 1lb Projected Donor Investments (undisbursed amounts as of March 2012) 800 700 600 500 - a USA* c VEN E 400 - EU *CAN m IDB 300 -WB 200 4 100 - 0 Agro DRM Edu Energy Health Housing Admin Transp WASH PSD * 2010-2011 disbursement 64 Annex 12 Haiti Active Trust Funds US$000 1. Reducing vulnerability and increasing resilience TF099459 Reducing Disaster Risk in Haiti's Health Infrastrucutre 1,425 TF010119 Haiti Pilot Program for Climate Resilience 450 TF096218 Haiti: Structural Assessment Program 1,705 TF096220 Haiti: Multi-hazard Assessment 1,249 TF099663 Haiti Cholera Response Project - HRBF K&L Grant 125 2. Sustainable Reconstruction TF098676 TA Household and Other Energy Sector 250 TF098974 Haiti Housing Community Reconstruction Support 498 TF099467 Energy Access Expansion in Haiti 100 TF099644 HRF Port au Prince Neighborhood Reconstruction Project 65,000 TF099445 Support To The Development of a Sustainable Housing Policy and Housing Finance 300 3. Building Human Capital TF093527 Haiti Rural Water and Sanitation SPF 5,000 TF097009 Haiti Education for All Multi-donor Trust Fund 22,000 TF098780 RSR Gender Based Violence Supervision 81 TFO96726 Haiti-Household Development Agent Preparation 189 TF097257 Haiti Nutritional Security 200 TF097742 Emergency Community Cash for Work Project 2,840 TFO97743 Emergency Community Cash for Work Supervision 160 TF097793 Haiti-Household Development Agent Pilot 1,500 TF097965 Haiti Education for All Multi-donor Trust Fund SPN 281 TF097966 Supervision and TA to Education for All 110 TF011862 Adolescent Girls Initiative 980 TF012774 Regional Initiative on Impact Evaluation to Bridge Knowledge Gaps on Gender Issues 614 TF010631 Addressing and Preventing Gender-Based Violence 500 4. Promoting Inclusive Growth TF098706 NIPP: Haiti Investment Generation 1,352 TF098033 NIPP: MSME Haiti 295 TF098088 Strengthening Agriculture Public Services II 800 TF095092 Haiti Investment Generation Strategy 241 TF012496 PPIAF Transaction Support for IFC InfraVentures Investment in DIoHaiti 75 TF012767 Trade Facilitation in Haiti: Diagnostic and Policies 1,200 TF012131 GAFSP Impact Evaluation 270 TF011074 Haiti Diagnostic Trade Integrated Study 380 TF011396 Relaunching Agriculture GAFSP 10,000 TFO 11716 Strengthening Insurance Regulation and Supervision 339 Strengthening Governance TF094822 Enhancing Leadership to Improve Governance & Public Sector Performance 500 TF095115 FIRST: Strengthining Accounting and Auditing Practices 275 TF098709 Accountability for Effective Poverty Reduction 400 65 Annex 13 Changes in a number of MDGs (1990 - 2008-2009) Goal Indicator 1990 1995 2000 2005 2000- 2015 Progress Gap to be 2009 bridged Goal 1: Eluninate extremepovery *Employment/population ratio, 15 years or older, Slow Significant and hunger total (percent) 78 56 54 55.0 55.0 560 Percentage of children displaying low birthweight 26.8 275 173 222 13.4 Goal 2: Ensure universal primary Net primaryenrollnent ratio Slow Significant edution 221 543 49.6 100.0 Literacy rate to the 15-24 age group 851u 100.0 Rapid 548 644 82.4 Goal 3: Promote gender equality Ratio of women to me uin primary education Rapid Insignificant and the enpowermnent ofwomen 1.0 .. 0,95 0,95 Proportion of seats in the national parliament Slow Insignificant occupied by women 50 4 40 40 40 Proportion of ehildren 12 to 23 years of age Slow Significant vaccinated against measles 31 . 9 55.0 5B.0 580 Goal 4: Reduce child mortality Infant mortality rate* per 1,000 live births Slow Significant among duldren under 5 years of age 36.7 105 98 780 620 570 Child mortality rate per 1,000 live births 60.0 152 98 109.0 84.0 76.0 Maternal mortality rate per 100,000 live births 114.0 Decline Very 457.0 474.0 520.0 630.0 significant Goal 5: Improve maternal health Prenatal care coverage (percent) 71 68 79.0 85.0 05.0 Prevalence of contraception (percentage of women 15 to 49 years of age) 10 18 28.0 32.0 32.0 Goal 6 Combat IV/AIDS, Proportion of tuberculesis cases detected and malaria and other diseases treated12 2.0 19.0 44.0 49.0 Prevalence rate of HIV in the population Rapid Insignificant 5.0 5.5 2.2 2,2 1.5 Goal 7. Ensure environmental Percentage of the urban populatian with access to an Slow Significant sustainability improved source ofwater 94.0 52.0 54.0 56.0 5B.0 580 Percentage of the population use improved sanitation 2401 infrastructure 29.0 297 240 190 290 Goal 8: Establish a worldwide Per capita aid (current US dollars) partnership for development 24 92 24.0 54.0 73.0 24 Subscribers to a mobile telephony service, per 100 inhabitants 0 0 1.0 5.0 33.0 0 Source: EMMUS II (1994-95); EMITS ILI (2000): EAMS IV (2005-06); RNPD (2006); IMIF (2008): FAFO (2009) 66 Annex 14 Governance Annex A. Governance Context 1. Over the years, before and after the devastating 2010 earthquake, Haiti has faced multiple public sector, governance and corruption challenges. Improvements in governance are essential if Haiti is to accelerate growth and Figure 1 make sustained progress in reconstruction and Overall Governance long-term poverty-reduction. 4 As Figure 1 6 illustrates, governance concerns - particularly in terms of transparency, corruption, rule of law and - clear rules for market-based competition - are important constraints on growth and investments 4 4 and pose risks to achieving development 34 objectives. Various indicators illustrate the 3 2.8 governance and corruption challenges of the country: Haiti had an overall 2011 CPIA score of 2 2.9 out of 6.0 and Haiti ranks in the bottom quartile in all measures of governance in the World 1 Bank's World Wide Governance Indicators.5 2. Still, since the last ISN period, Haiti LAC LIC perceptions of government institutions, 7 Market Organization (1=lowest, 1 O=highest) leadership and levels of corruption appear to be improving. According to a January 2012 Gallup ansparen Aubiity Poll, confidence in Haiti's national government (Data made available only for... has risen threefold from 16 percent in 2010 to 46 3. Rule of law (1=lowest, percent in 2011 and perceptions of government 10=highest) corruption have dropped from 72 percent in 2006- 20 10 to 57 percent in 2011 L' Notable achievements in the past few years include strengthening the regulatory framework for budget preparation and execution, improved consultation during the preparation of the budget including with civil society and the private sector, the creation and operationalization of an internal auditing body (Inspectorate of Finance, IGF). Treasury now submits Government accounts to the Court of Accounts (CSC/CA) within the legal timeframe and the Court of Accounts has significantly reduced its backlog of audits of government accounts. In terms of broader governance activities, an anticorruption unit (ULCC) has been established, and new laws for procurement and asset declaration have been enacted. Governance refers to the manner in which Haiti's public institutions acquire and exercise their authority to shape public policy and provide public goods and services. Governance systems include three parts: how Haiti's public institutions 'make things happen'; how 'checks and balances' hold Government accountable; and how citizens are engaged with Goverment to hold Govement accountable as beneficiaries of public services. o See the World Bank's website at: http://info.worldbank.org/govecrance/wgiF. 6 "Haitians' Confidence in Government Rebounds," by Linda Lyons, January 31, 2012. Results of Gallup Poll in Haiti. Results are based on face-to-face interviews with 504 adults, aged 15 and older, conducted Oct. 23-28, 2011, in Haiti. See: http://www.gallup.com/poll 52357/haitians-confidence-government-rebounds.aspx 3. While Haiti has made steady progress in strengthening elements of its governance institutions in recent years, much remains to be done and the overall framework requires considerable strengthening. Although, since the earthquake, civil society has become increasingly vocal on governance issues, including the need for improvements in transparency and accountability of the State, the need to stop corruption and violence and the call for improving governance systems to enhance overall service delivery and engagement with beneficiaries. B. Objectives, Entry Points and Activities 4. During the two year ISN period (FY13-14) the program aims to achieve concrete improvements in governance with the following three objectives: 1) Strengthen Haiti's governance systems and enhancing public sector capacity for reconstruction and longer term economic development; 2) build Haiti's institutions and their accountability and transparency, particularly at the sector level; and 3) improve the quality of service delivery and directly engage beneficiaries. 5. To achieve these objectives, the cross-cutting theme of governance targets five entry points. Areas identified as critical for improved governance in the medium and long-term are: 1) Core public sector management and procurement systems; 2) private sector, including improving the overall investment climate in Haiti; 3) demand- side - oversight institutions and engaging with Box 2: Governance Related AAA during the beneficiaries; 4) geographic distribution and local ISN period community development; and 5) governance in sectors. The main objectives and activities in each Poverty assesn (gender coPeT) of these areas is listed in Table 1 below. to improve accountability and transparency V'Strengthening Accounting & Audit Practices 6. During the ISN period, the Bank aims to Poverty Measurement and household Survey aims to strengthen the Government's capacity v Public Financial Management Plan to monitor and reduce corruption risks in Haiti, as Table 2 below illustrates. 68 Table 1: Governance Entry Points, Objectives and FY13-14 Activities Five Main Governance Objectives ISN FY13-14 Activities and Supporting Projects 'Entry Points' in Haiti 1. Core Public Sector * Effective, efficient PFM and * Revenue/tax reporting; budget planning and execution; Management and procurement systems public financial management system (SYSDEP); integrate Procurement Systems * Integrate and improve planning budget and Treasury accounting; internal audit; and reporting of financial eProcurement (IIERP) information, budget and * Budget Support (DPO) investments 2. Private Sector * Competitive investment climate * Business environment reform; investment generation; * Responsible private sector one-stop shop; investment regulations (Jobs Creation and * Equal access to finance and Growth) secure lending * Public investment planning; procurement processes (IIERP) 3. Equitable * Decentralization; transfer of * Strengthen regional development and investment in Geographic resources and level of regions outside Porte-au-Prince (Jobs & Growth Distribution & resources at local levels Project/North/Artibonite/Center) Community * Territorial development * Strengthening community planning and investment Development capacity (Urban and Rural CDD) * Community participation and engagement (DRM, Electricity, Housing, INF, Jobs & Growth) 4. Demand-side: * Enhance oversight of * Capacity building of external audit (CSCCA); Parliamentary Oversight Institutions, Government (Parliament, Court access to information; public government websites (IIERP) Civil Society, of Accounts) * Statistics, information and records (ECVMAS) Transparency * Improve transparency and * Beneficiary and CSO engagement (Sectors) participation (access to information, user participation) * Engage beneficiaries and civil society 5. Governance in 0 Transparency, accountability * Institutional capacity and planning capacity (all projects) Sectors and participation in service * Improve sector planning, procurement processes and provision institutional capacity (All projects) * Sector level corruption * Education: School inspection visits, Public expenditure tracking * Health: Capacity to manage and monitor service delivery * Agriculture: Improve investment planning; access to services and information to farmers * Electricity: Improve transparency of financial flows in electricity sector and reduce opportunities for corruption to improve service delivery * DRM: Integrate disaster risk in policy decision making and investment decisions 69 Table 2: Key Cross-Cutting Governance and Corruption Issues: Status and ISN Period Mitigation Measures Objective Examples of the Challenges Corruption Mitigation Measures Ongoing or Planned in FY13-14 Strengthen Despite improvements in the last ISN 0 Strengthen the capacity for external (CSCCA) and internal capacity of period, internal and external control control (IGF), by organizing,, "on-the-job" training of control and and public accounting need to be finance inspectors in similar institutions (IGF-France) oversight and strengthened. 0 Support the Government's program for training of reduce 'off- trainers in procurement and project monitoring and budget' evaluation, so that they can impart their knowledge to accounts government officials and project and/or program officers in other institutions. * Support the development of public accounting standards and capacity. * Implement a single treasury account to reduce risk that funds are managed outside standard government policies. Enhance There is still a significant number of off 0 Revamp the CNMP's website including information on transparency & budget operations, including contract awards to make it fully operational, up-to-date procurement investments financed through the and accessible to the general public. proceeds of the Petrocaribe Fund. 0 Launch a communication program to broaden The delay to publish data on public understanding of the mission and objectives of the procurement, especially on the use of CNMP as well as the new procedures for public restrictive bidding, does not allow procurement. monitoring of public procurement. The 0 Enact of the implementation decrees to ensure full force information published on the CNMP's and effect of the Procurement Law and compliance by website on the contracts awarded, sector ministries. providers, and suppliers is not updated. . Work toward disclosure of off budget operations, including in Energy. Reduce Incidence and perceptions of Anticorruption Agency (ULCC) to implement its strategy, incidence and corruption remain at high levels including creation of indicators related to the incidence perceptions of and perception of corruption. corruption 0 Continue to implement and broaden the anticorruption information campaign amongst public servants (ULCC). * Continue to implement and broaden the anticorruption campaign with the general public, including CSoCs, Youth and the Private Sector (ULCC). * Improve overall corruption case management; link the procurement agency database to anticorruption agency. i Reduce opportunities for corruption at Customs through enhanced equipment, IT and personnel capacity and sensitivity training. Strengthen The process of formulation of * Complete the legal, regulatory, and institutional Governance in investment and recurrent budget is not framework of procurement by the adoption of the other sectors and the fully integrated even if there is a ministerial orders initially foreseen by the 2009 Law. regulatory satisfactory level of coordination and Operationalize the planning units (UPE) in key line framework to consultation between the Ministry of ministries to facilitate the execution of investment reduce Economy and Finance and the Ministry expenditures and deployment of the Information System corruption of Planning and External Cooperation. for Management of Programs and Projects (SYSGEP) and coordination between the Ministry of Planning (MPCE) reduce______ Economy______and___Finance______and ____the and Ministry of Economy and Finance (MEP). 70 Annex 15 Gender Issues in Haiti 1. Haiti has achieved near gender equality in education, but significant challenges remain in health outcomes, economic opportunity, political participation, and gender-based violence. Progress towards gender equality has been difficult to assess given the lack of recent data available. In 2007, 40% of the households in Haiti were headed by females (46% in Port-au- Prince - EEICM). Also, female headed households were 11% more likely to be poor than households headed by men (WB 2006). Although the 1987 Constitution allows for gender equality and the country signed several international agreements on women's rights, women in Haiti generally have low access to legal aid and the justice system, due to barriers such as low literacy and education rates, lack of disposable income, as well as, lack of access to public transportation (Gender Shadow Report7(GSR 2010)). 2. By 2007, Haiti had nearly achieved the goal of eliminating gender disparities in primary and secondary education, but school attendance rates were not universal, especially across income levels and at higher levels of education. By the tertiary level female attendance is lower than male attendance (38% vs. 52% in rural areas). A number of factors can cause females to drop out of school including poverty, forced or voluntary prostitution, violence and sexual abuse, teenage pregnancy, household responsibilities, and inadequate hygiene supplies (GSR 2010). However, a World Bank consultation with girls in 2011 revealed that literacy and education are highly valued in Haitian society and given the choice, girls would rather return to school than prematurely enter the labor market. The IDA-financed education program supports the broadening of primary school access through tuition waivers for nearly 50,000 girls (out of a total of 100,000 children) per year. Each cohort is supported for six years. 3. The state of maternal health was in crisis before the earthquake and remains a major challenge. Only 26% of births were attended by skilled health staff in 2006 (15% in rural areas). Maternal mortality is high: 630 maternal deaths per 100,000 live births (DHS 2005-2006). Only 54% of women have at least 4 visits with skilled health staff before delivering a baby (WHO 2006). The average woman gives birth to 3.3 children in her lifetime. However, there has been a steady decline in the fertility rate over the past few decades, mostly due to women's increased participation in the labor market (WB 2006). Abortion is illegal in Haiti and obtaining the procedure is punishable by imprisonment of up to 9 years. According to a 1999 Ministry of Public Health report, 8% of maternal mortality cases resulted from underground abortions. The proposed FY13 Health and Social Protection Project will finance health services for 500,000 pregnant women. 4. For young women, sexual activity appears to begin early. An estimated 17% of girls ages 15-19 are married or in union and 15% of women age 20-24 gave birth before the age of 18 (UNICEF), although the adolescent fertility rate is much lower than the regional average (43 vs. 75 per 100,000). Men tend to have their first sexual encounter around the age of 17 but enter into a first marriage at 26. The legal framework supports this age gap, as the legal age for a woman to get married is 15, as compared to 18 for men (GSR 2010). Anecdotally, Haitian adolescent girls 7 "The Haiti Gender Shadow Report: Ensuring Haitian Women's Participation and Leadership in All Stages of National Relief and Reconstruction" A Coalition Gender Shadow Report of the 2012 Haiti PDNA report that the incidence of high risk sex has increased since the earthquake. Girls report that the trade of sex for food or other resources is common in IDP camps, yet only 34% of young women and 40% of young men have correct knowledge of how to prevent sexual HIV transmission. According to a survey, 55% of young women had engaged in high risk sex in the year preceding the survey, but only 29% of these young women had used a condom (respectively 95% and 43% for young men). Contraceptive use is only 32% (Gender Stats 2005), and less than half of women in relationships reported being able to independently make decisions about contraceptive use (HRW 2011). Adolescent women have higher rates of HIV infection than men (1.3% vs. 0.6%). Reproductive health services will be provided of the basic package of services financed by IDA under the proposed health project. 5. Haiti registers a higher proportion of economically active women than most developing countries (50%), yet 75% of these mostly work in the informal sector (GSR 2010), which offers lower remuneration, minimal job security, a lack of benefits and significant gender inequality in pay. Women are the primary market agents in Haitian society but they are concentrated at the lower profit end of the industry, where the sector is relatively open, skills and capital requirements are low, and work hours are flexible to accommodate child-rearing and other domestic responsibilities. The proposed Jobs and Growth Project finances business development support as well as micro-financing for small businesses, many of which are operated by women. Agriculture is the most important sector for female employment after commerce. Women are also located at the lowest earning points of agricultural value chains, often performing support activities not connected to profit. Development institutions have historically under-invested in women-dominated agricultural activities. Women are also largely absent from leadership roles in agriculture organizations, due to low educational achievement, domestic responsibilities, and resistance by male colleagues. IDA-financed Agriculture projects pay particular attention to delivering extension services to women farmers, have set up a co- financing facility for technology that will benefit women, and provide a financial literacy program that will enable women farmers to better manage their business. 6. For those between 20-35 years of age, the growth rate for labor participation is slower for women than men. There is anecdotal evidence that the earthquake has limited women's ability to work outside the home. Male heads of household tend to be more active in the economy than their wives or than female heads of household (87% vs. 62% and 60%). The World Bank and the Nike foundation are co-financing job training, life skills, and job placement support for 1000 disadvantaged young women, through the Adolescent Girls' Initiative. 7. Projects often do not take gender into consideration. According to the Gender Shadow Report, infrastructure investments have traditionally ignored the specific needs of women, with men accruing most of the benefits in training and income opportunities. Many aid projects proceed without consultations with women's groups, resulting in indirect negative consequences for women and girls including insecure means of transportation, poor sanitation systems, and impediments to education, training, or income generation. Gender has been mainstreamed into all recent World Bank projects, including by specifically targeting female beneficiaries and incorporating targeted services where possible. The program also aims to take into account the challenges faced by young men in the context of its Jobs Creation and Growth Project. 72 8. Female leadership and political representation remains a challenge at both the national and local level. Women only hold 4% of seats in the national parliament, lower than the LAC regional average of 12% (Gender Stats 2010). Haiti does better at the Ministerial level where there are currently 7 female Ministers out of 18. There are very few female legal professionals in the country. CEDAW also reports that women make up less than 20% of civil servants and only 7% of the diplomatic service (2009). The Ministry of Women's Status and Rights was a champion for gender inclusion and women's equality and rights within the Haitian government, but the earthquake destroyed much of the Ministry's physical infrastructure and killed many strong advocates for Haitian women's rights. Women also tend to have a lower voter turnout rate than men on account of domestic duties, lower literacy and education rates, child care responsibilities, and lower income to cover travel expenses (SGR 2010). 9. Although the incidence of GBV and domestic violence was already high in Haiti prior to the 2010 earthquake, the violence has since increased. The Lancet reported in 2006 that 2.5% of girls under 18 are sexually assaulted in Port au Prince each year. In the 2005-2006 DHS, 27% of women ages 15-49 reported experiencing physical violence at some point in their lives and 16% within the last year (32% of whom from their partners). Among adolescent girls ages 15-24, 24% reported that their first sexual experience was forced and 19% reported that they had experienced physical violence since the age of 15. Also, 35% of women over the age of 15 said they had been victims of physical violence (WB 2006). In a survey produced by the Haitian Ministry of Health, 11% of the 10,757 women surveyed (ages 15-49) said they had experienced sexual violence from an intimate partner (Doubossarskaia 2010). Thirty-six percent of adolescent girls felt that wife beating was justified under certain conditions. Rape comes with a large social stigma and a lack of resources and support available to victims along with a distrust of the police and judicial system complicates the situation. Displacement caused by the earthquake can make women more susceptible to sexual exploitation, sometimes by men in positions of authority such as the police, the military and humanitarian aid workers. Under the World Bank Gender Based Violence Project, 6000 women have received kits and prevention training to protect themselves against gender based violence. The project also provides counseling. In IDP camps, a large percentage of sexual attacks occur around bathrooms due to poor lighting (GSR 2010). The World Bank housing program incorporates improved public lighting in its neighborhood upgrading activities. 73 H A T ATLA NTIC OC E A N 72°This map was produced by the Map Design unit F The word Bak. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank o SELECTED CITIES AND TOWNS ile de la Tortve Group, anyu dgme on thelegalstaus ofany teitory, orony nnidarsemnent or occeptane of such houndarie. 0 DEPARTMENT CAPITALS 20°N Palmiste a 20'N ® NATIONAL CAPITAL Port-de-Paix RIVERS MAIN ROADS 0 MleSt.-Niol NORD - OUEST MAIN ROA. Cap-Haitien RAILROADS DEPARTMENT BOUNDARIES Gros-Morne For Librte Bae e'NO RD Sat°g - - INTERNATIONAL BOUNDARIES BedeT Santiago Grande RiU e du-Nor 7l Gona s Eannery d r Saint- NOR D -ESnT . GonivesRaphaél Saint Michel de l'Atta laye - - Golfe de la Gonäve X ARTBO ITE -,Ma'issade HAITI .Hinche Verrettes DOM INICAN CENTRE 19°N\ Locdce REPUBLIC ...a ÎedoLCayenne Péfigre," 0la 1ne 3 Ans -à-Galets M l Gonåve 0 Mirebalais CSSane Jan Pointe-à-Raquettea\ Grande Jeremie Cayemite Roseaux Goxde PORT-AU-PRINCE Biotkiets GRANDE- Anse d'Hainault/ A NS ELéogåne ttane Lao7 orngr c19nT M c, d e \a H o t t N IP PE S .iaoäe OU E ST F,mtr nriquillo, Barahona Goett Chaine de la Selle Cm-ein S UD ...."... les AnglaisCapPriA Vieux Bourg S UD -E ST Be||,e- d'Aquin .Jacmnel Anse Thiotte Côes-de-fer Marigot Les Cayes Port-Saluf P3e à Vache 18°N 18°N 0 10 20 30 40 Kilometers TO z l Caribbean Sea Oweo 0 10 20 30 Miles 74°W 73'W 72°W 0,1