China - Reform, Institutional, and Pre-investment Support

 ICRR 11920 Report Number : ICRR11920 ICR Review Operations Evaluation Department 1. Project Data: Date Posted : 08/11/2004 PROJ ID : P003592 Appraisal Actual Project Name : Reform, Institutional, and Project Costs 60 57.9 Pre-investment Support US$M ) (US$M) Country : China Loan/ Loan US$M ) 50 /Credit (US$M) 48.2 Sector (s): Board: PS - General Cofinancing industry and trade sector US$M ) (US$M) (71%), Central government administration (29%) L/C Number : C2447 Board Approval 93 FY) (FY) Partners involved : Closing Date 06/30/1998 12/31/2003 Prepared by : Reviewed by : Group Manager : Group : Elliott Hurwitz Fareed M. A. Hassan Kyle Peters OEDCR 2. Project Objectives and Components a. Objectives The objective was to support China's overall economic reform and modernization effort, and help strengthen selected key institutions responsible for policy research, training and implementation . It was also designed to help prepare selected public investments and projects, in particular those potentially suitable for external, including IDA, financing. b. Components The project had two components : Component A, for reform and institutional development support , with IDA support of US$23.7 million, comprised TA subprojects executed by selected institutions involved in policy and research, training, and other activities related to economic reform . Funds allocated to this component were committed for the following agencies: (a) State Statistical Bureau, to strengthen capability for national accounting and statistical analysis; (b) Academy of Social Sciences, to improve capability to undertake quantitative analysis of the economy; (c) System Reform Commission, to support studies and research including enterprise reform; (d) State Tax Bureau, to strengthen capacity to formulate and implement tax policy; (e) Ministry of Materials and Equipment, to support reform of the distribution system for major goods; (f) Ministry of Finance, to carry out economic and sector analysis in support of economic reforms; and (g) training networks in health and transport . In addition to the 7 sub-projects approved at the time of appraisal, 26 additional sub-projects were approved during implementation . Component B, for pre-investment and project preparation , with IDA support of US$24.5 million, consisted of a credit line available to finance feasibility studies, pre -investment and other technical assistance needed to prepare projects for external, specifically IDA, financing . Pre-investment and project preparation subprojects under this component were approved on a case-by-case basis in accordance with agreed criteria and procedures acceptable to IDA . It should be noted that the rationale for IDA support of project preparation funding was that there were many instances where other funding sources were unavailable (in some cases earmarked for other sectors ). c. Comments on Project Cost, Financing and Dates In addition to the IDA credit of US$ 50 million, the government committed to contribute US$ 10 million to the project. The project was extended 4 times; originally intended as a 5-year project, it closed after 10½ years. The ICR attributes the delays to the longer time required to implement some tasks, compared to what was envisioned, as well as the evolving demands for reform support in China . 3. Achievement of Relevant Objectives: --Reform and Institutional Development Part A --Reform Achievement was satisfactory. Fifteen government agencies benefited from work performed under this component . Thirty-four sub-projects were initiated, with significant benefits realized from around 30. Examples of positive achievement included: --Strengthened economic and technical capability of State Statistical Bureau in accounting systems and sampling techniques. --Enhanced capacity of the State System Reform Commission to implement State -Owned Enterprise reform through study tours and international workshops . --Stronger capacity of the Public Health Administration; 6 medical schools received training, attended international workshops, and participated in distance learning . This resulted in stronger linkage of Chinese health institutions with foreign ones. --Upgraded quality management and certification through consulting services, foreign trips, and international workshops. Less progress seemed to be made in the area of SOE reform, with two projects in this area canceled . Projects to reform the materials distribution system and to build capacity in small and medium -sized banks yielded less impact than envisioned. --Pre- Pre -investment and Project Preparation Part B --Pre Achievement was satisfactory. Outputs of this component included : feasibility studies; project designs; procurement plans and bidding documents; environmental impact assessments; and resettlement reports . Twenty-two sub-projects were approved and implemented under this component, which led to 18 IDA follow-up investments. Three projects were identified that were funded by the government . The largest number of projects was in the Power Sector (9), water and irrigation (4), and other infrastructure areas . 4. Significant Outcomes/Impacts: Thirty sub-projects were completed that provided support to China ’s reform program across a broad range of areas. All of the 22 sub-projects under the project preparation component were completed, resulting in 18 IDA follow-up investments and 3 additional investments that were funded by the government . 5. Significant Shortcomings (including non-compliance with safeguard policies): Some of the benefits realized by the project occurred much later than expected 6. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev .: Substantial Substantial Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Four different Task Teams supervised the project, which modestly slowed progress . Borrower Perf .: Satisfactory Satisfactory Quality of ICR : Satisfactory NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13.55, but are listed for completeness. NOTE: 7. Lessons of Broad Applicability: A relatively small project can have a large impact on a Borrower that is highly motivated to achieve reform . In China, final beneficiaries usually have responsibility for repayment of IDA credits . In some cases, however, where the benefits might be substantial but the beneficiary might not have sufficient resources, it would be highly desirable, e.g., for the Ministry of Finance to assume repayment responsibility 8. Assessment Recommended? Yes No 9. Comments on Quality of ICR: The ICR is satisfactory. In some cases the presentation is hard to follow, as the bulk of pertinent information relating to project achievement is presented in Annex 1. Also, the report would benefit from a final editing, as pagination is incorrect and some pages are repeated .