Document of The World Bank Report No: 72376-MD RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF SOCIAL INVESTMENT FUND 2 PROJECT FIRST ADDITIONAL FINANCING CREDIT TO THE REPUBLIC OF MOLDOVA September 24, 2012 Human Development Sector Unit Europe and Central Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. ABBREVIATIONS AND ACRONYMS EA Environment Assessment MSIF Moldova Social Investment Fund GoM Government of Moldova Regional Vice President: Philippe Le Houerou Country Director: Qimiao Fan Sector Manager / Director: Kathy Lindert/Ana Revenga Task Team Leader: Yuliya Smolyar 2 Restructuring Status: Submitted for CD Approval Restructuring Type: Level two Last modified on date : 09/10/2012 1. Basic Information Project ID & Name P079314: SIF 2 Country Moldova Task Team Leader Yuliya Smolyar Sector Manager/Director Kathy A. Lindert Country Director Qimiao Fan Original Board Approval Date 06/17/2004 Original Closing Date: 03/31/2010 Current Closing Date 03/31/2013 Proposed Closing Date [if applicable] EA Category F-Financial Intermediary Assessment Revised EA Category F-Financial Intermediary Assessment EA Completion Date Revised EA Completion Date 2. Revised Financing Plan (US$M) Source Original Revised BORR 1.53 1.53 COMM 3.74 3.74 IDA 20.00 45.00 SIDA 3.70 3.70 SORO 0.20 0.20 Total 29.17 54.17 3. Borrower Organization Department Location Ministry of Finance Moldova 4. Implementing Agency Organization Department Location Moldova Social Investment Fund Moldova 3 5. Disbursement Estimates (US$ M) Actual amount disbursed as of 09/13/2012 41.88 Fiscal Year Annual Cumulative 2012 7.90 49.78 2013 4.39 54.17 Total 54.17 6. Policy Exceptions and Safeguard Policies Does the restructured project require any exceptions to Bank policies? N Does the restructured project trigger any new safeguard policies? If yes, please select from N the checklist below and update ISDS accordingly before submitting the package. 7a. Project Development Objectives/Outcomes Original/Current Project Development Objectives/Outcomes The revised project development objective is to support the implementation of the National Development Strategy by empowering poor communities and vulnerable population groups to manage their priority needs, and to contribute to employment and wage incomes in selected poor rural communities during the current economic contraction and during the recovery. 7b. Revised Project Development Objectives/Outcomes [if applicable] 4 MOLDOVA SOCIAL INVESTMENT FUND 2 PROJECT P079314 CONTENTS Page A. SUMMARY ............................................................................................................... 6 B. PROJECT STATUS ................................................................................................. 6 C. PROPOSED CHANGES .......................................................................................... 6 5 SOCIAL INVESTMENT FUND II PROJECT (P079314) FIRST ADDITIONAL FINANCING RESTRUCTURING PAPER A. SUMMARY 1. The proposed changes concern reallocation of proceeds of the First Additional Financing for the Social Investment Fund II Project (Credit No. 4555-MD), which are required to allow the Moldova Social Investment Fund (MSIF) to invest reallocated proceeds into small-scale community infrastructure and, thus, deliver more sub-projects than originally planned. The proposed reallocation reflects the fact that the impact assessment was not undertaken under the First Additional Financing and will instead be financed from the Second Additional Financing. Furthermore, the Project achieved some real cost savings from consulting services, goods and operating costs. The First Additional Financing Agreement will be amended to reflect this. The changes do not affect the Project Development Objective. B. PROJECT STATUS 2. The MSIF II Project performance is rated Satisfactory because of well-advanced project implementation and good progress made in achieving project outputs and outcomes. 3. The First Additional Financing Credit (No. 4555-MD) of USD5 million supports the rehabilitation of small-scale community infrastructure in villages and small towns, which suffered from 2008 floods on the Prut and Dniester Rivers, and the preparation of community development plans. Under the First Additional Financing, MSIF has invested in a total of 74 sub-projects, surpassing the target output of 45 sub-projects. MSIF has disbursed 100 percent of the First Additional Financing Credit, which will close in September 2012. 4. In terms of outcomes, MSIF continues helping more communities to manage their development needs. It keeps expanding its already impressive country-wide coverage by engaging communities that have never previously benefited from the Project. C. PROPOSED CHANGES Reallocation of proceeds 5. Savings amounting to SDR440,000 have arisen in the disbursement category of Goods, Consulting Services and Operating Costs. These savings can be attributed to the fact that the impact assessment envisaged was not undertaken, some consulting services were re-grouped and/or required less effort than originally planned, and project 6 management and operating costs appeared lower than estimated at the credit preparation stage. 6. The proceeds for the Moldova Social Investment Fund 2 Project, First Additional Financing, Credit No 4555-MD, would be reallocated as follows: Amount of the % of Expenditures to Category of Expenditure Financing Allocated be Financed (expressed in SDR) (inclusive of Taxes) Current Revised Current Revised Current Revised Goods, consultants` Goods, consultants` 532,800 92,800 100% 100% services, services, incremental incremental operating costs for operating costs for the Project the Project Grants under Grant Grants under Grant 2,867,200 3,307,200 100% 100% Agreements for Agreements for Sub-projects Sub-projects Changes to Project description 7. The proposed reallocation of proceeds requires a modification to the Project description in the Financing Agreement. 8. Under the First Additional Financing, the Project envisaged an impact assessment, among other monitoring and evaluation activities (paragraph 3, Part B, Schedule 1 to the Financing Agreement). However, MSIF has not carried out this assessment. Therefore, the Project description in the Financing Agreement should be changed accordingly. The impact of the First Additional Financing Credit will instead be conducted using funds from the Second Additional Financing. 7