Nicaragua - Second Social Investment Fund Project

Document of The World Bank FOR OFFICIAL USE ONLY Repon No. P-6569-NI MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT IN THE AMOUNT EQUIVALENT TO SDR 19.1 MILLION TO THE REPUBLIC OF NICARAGUA FOR A SECOND SOCIAL INVESTMENT FUND PROJECT JUNE 1, 1995 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.  CURRENCY AND EQUIVALENCY UNITS US$1.0 = 7.3 Nicaragua Cordoba (C$) (April 1995) SDR1.0 = US$1.5758 FISCAL YEAR July 1 - June 30 ACRONYMS AND ABBREVIATIONS ERC Economic Recovery Credit FISE Emergency Social Investment Fund GDP Gross Domestic Product GON Government of Nicaragua ICB International Competitive Bidding IDB Inter-American Development Bank INAA National Water Institute INEC National Institute of Statistics and Census KfW German Credit Institute for Reconstruction LIB Limited International Bidding LSMS Living Standards Measurement Survey MED Ministry of Education MEDE Ministry of Economy and Development MINSA Ministry of Health MOP Memorandum and Recommendation of the President of the International Development Association NCB National Competitive Bidding NGO Non-Government Organization RUTA Regional Unit for Technical Assistance in the Social Sectors SAR Staff Appraisal Report SIDA Swedish International Development Agency USAID U. S. Agency for International Development  FOR OFFICIAL USE ONLY NICARAGUA SECOND SOCIAL INVESTMENT FUND PROJECT CREDIT AND PROJECT SUMMARY Borrower: The Republic of Nicaragua. Executing Agencies: The Social Investment Fund (FISE) and the Ministry of Economy and Development (MEDE). Beneficiaries: Low-income persons in areas of urban and rural poverty. Poverty: Program of Targeted Interventions. Resources are allocated to subprojects by geographic and sector targets. Geographic targets are set by utilizing a poverty index that increases per capita allocations as the level of poverty increases. About 80 percent of project resources are targeted at the education, health, and water and sanitation sectors, with the remaining resources targeted at economic infrastructure in poverty areas and for environmental subprojects Amotint: SDR 19.1 million (US$30 million equivalent). Terms: Standard IDA terms with 40 years maturity, including 10 years of grace. Commitment Fee: 0.50 percent on undisbursed credit balance, beginning 60 days after signing, less any waiver. Financing Plan: See Schedule A. Economic Rate of Not applicable. Return: Staff Appraisal Report: IDB's Project Document PR-201 1, dated November 15, 1994 - in lieu of IDA SAR. Map: IBRD- 26980. Project Identification 38916 Number: 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.   MEMOIAANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF NICARAGUA FOR A SECOND SOCIAL INVESTMENT FUND PROJECT 1. I submit for your approval the following memorandum and recommendation on a proposed credit to the Republic of Nicaragua (GON) for SDR 19.1 million (US$30 million equivalent) to help finance a Second Social Investment Fund Project. The proposed credit would be repayable on standard IDA terms, with a maturity of 40 years, including 10 years of grace. The project would be cofinanced by the Inter-American Development Bank (IDB), which approved a loan in December 1994 in an amount equivalent to US$40 million for its third operation to support the Nicaraguan Emergency Social Investment Fund (FISE). Additional cofinancing of the equivalent of about US$20 million would be provided by other donors. IDA staff has worked with the IDB in the preparation and appraisal of the project and the IDB's Project Document PR2011 of November 15, 1994, has been distributed to you in lieu of the Bank's staff appraisal report.' 2. Background. Nicaragua is one of Latin America's poorest countries, with a per cG pita GDP estimated at US$422 in 1992. The recent Poverty Profile, based on the data developed by the Living Standards Measurement Survey (LSMS) financed by the Social Investment Fund Project (Credit 2434-NI), found that slightly over half the population is poor, and close to one-fifth of the population falls below the extreme poverty line. Education, health, and basic services indicators reflect the country's poverty and its deep penetration in rural areas. Nationally, 23 percent of the population age ten and older is illiterate. Among the extremely poor in rural areas this figure is 51 percent. The use of health services among the poor is low, malnutrition widespread, and prenatal and birth care limited. Approximately one-half of all poor women receive no prenatal care during pregnancy and 23 percent of extremely poor women in rural areas give birth without benefit of any health care personnel. Only about 20 percent of the rural poor are connected to running water and virtually none are served by sewers, septic tanks, or cesspools. 3. When the current Government took office in April 1990 after a decade of civil strife, it had to transform a centrally planned economy into a market oriented system. In 1991-1992, the Government implemented a comprehensive stabilization and adjustment program supported by the IMF and an IDA Economic Recovery Credit approved in September 1991. The program was successful in reducing inflation to single digit rates and GDP recorded modest growth in 1992. However, it also caused social disruption in terms of lost jobs and reduced Government expenditures. There was a major downsizing of the of the public sector through reductions in current expenditures and a severe The IDB project appraisal mission took place in September 1994. IDA's project appraisal mission took place in January/February 1995 As a result, the MOP contains updated financial and project information which may be at variance with the information contained in the IDB project document. An Annex is attached to the MOP which describes activities financed by the proposed IDA credit that have not been described in the IDB project document and the special terms and conditions of the proposed credit.  2 curtailment of public investment. The number of military employees was reduced by 80 percent and the number of Government employees by 12 percent. The divestiture of 233 out of 351 state-owned enterprises led to further unemployment. The increase in unemployment, the reduction in social services, and the deterioration of social infrastructure resulting from a decade of neglect, aggravated the already precarious position of the poor and provided a basis for popular discontent. When the Government attempted fiscal adjustment measures in the second half of 1992, it met with strong political opposition, accompanied by violent strikes and demonstrations. The turbulent political environment, adverse weather conditions, unfavorable commodity prices, and a suspension of bilateral aid flows resulted in further economic deterioration. During 1993, the donor community signaled that further assistance to Nicaragua would depend on the Government's ability to continue economic reforms and forge a political consensus to support the effort. As a result of this, and a growing national awareness that confrontational politics, if continued, would lead to chaos, the political situation stabilized and provided the basis for IDA's continued support of the adjustment program through the extension of a Second IDA Economic Recovery Credit (ERC II) in June 1994. However, to reinforce the political consensus that has been achieved and sustain social cohesiveness and support for the adjustment program, the Government has recognized that it must move to strengthen its social sector programs to provide basic services such as health, nutrition, and education, increase the earnings capacity of the poor, and to expand and improve its social safety net. 4. FISE was established by the Government in November 1990, as a temporary program to help protect and improve the standard of living of marginal social groups during the period of economic adjustment through the provision of employment and social and economic infrastructure and services. Although originally scheduled to terminate in December 1995, the Government has extended FISE's life for an additional two years, to help meet Nicaragua's persisting social and economic problems. A study to determine whether or not to continue FISE beyond 1997 will be financed by IDB with non-reimbursable technical cooperation funding as part of the project. 5. FISE is a financing agency and does not itself execute projects. It finances: i) social infrastructure subprojects such as the rehabilitation of schools and health posts and the installation of small water and sewerage systems in peri-urban and rural areas; ii) economic infrastructure subprojects such as road improvements, drainage works, and public markets; iii) environmental projects, which have thus far only been for reforestation; and iv) social service subprojects, such as those for health, nutrition and pre-primary education. (FISE's targeted sectoral distribution of resources for the 1995-1997 period is contained in Attachment I to the Annex.) Projects are executed by subproject sponsors, which may be GON ministries and agencies, local governments, or NGOs. FISE aims at nationwide coverage, but more funds are allocated on a per capita basis to poorer municipalities based on a poverty index composed of displaced population, child malnutrition, and water supply indicators. In addition to its regular activities of financing subprojects, FISE is providing services to the Ministry of Education (MED) under the IDA financed Basic Education Project (approved by the Executive Directors on March 16, 1995) for implementing the infrastructure rehabilitation component of that project, which will rehabilitate, or replace, about 1,000 primary school classrooms. The criteria used for  3 the selection of schools under the Basic Education Project are based on physical condition, density of population, and poverty. Unlike the Basic Education Project, subprojects under the proposed credit would be demand driven and their selection would take into account employment generation and give greater weight to poverty criteria. All school rehabilitation subprojects under the proposed credit would require the approval of MED. 6. In addition to selecting subprojects that meet its poverty, geographic, and sectoral targets, FISE has established appraisal criteria that evaluate the economic impact of subprojects, their cost effectiveness, labor and local material content, technical viability, and effect on health and learning. Water, sewerage, and drainage subprojects are required to have an economic rate of return of at least 12 percent in areas where it is feasible to establish adequate tariffs. In areas where this cannot be done, such subprojects may be financed within maximum unit cost guidelines. Unit cost guidelines have also been established for other subproject areas. To the extent possible, subprojects with a high local and labor content are favored. Other local factors taken into consideration include infant mortality rates, prevalence of infectious diseases, and the percentage of children who do not attend school 7. FISE received financial support from the US$25 million equivalent IDA Credit for the Social Investment Fund Project approved in November 1992, which helped mobilize US$33.6 million of other donor financing. During the January 1, 1993 to December 31, 1994 period, FISE substantially met the targeting goals agreed with IDA. (FISE's Key Performance Indicators for 1993-1994 appear in Attachment 2 to the Annex.) It approved, during this period, 2,448 subprojects, having a total estimated cost of US$50 million; began 2,127 projects having a total estimated cost of US$42 million; and completed 1,302 projects having a cost of US$28 million. The remainder of the approved projects are expected to be completed by December 31, 1995. About 80 percent of the cost of subprojects approved have been for municipalities2 designated as those of extreme, or high poverty. The IDA mid-term review of the project, which took place in April 1994, concluded that FISE has had a significant development impact as a result of its capacity to act quickly and provide infrastructure and equipment of good quality, particularly for the health and education sectors, where it has repaired, or rebuilt, 602 primary and pre-schools and 148 health posts. Since commencing operations, FISE has entered into contracts with over 800 domestic contracting firms and has generated about 60,000 direct employment months and 70,000 indirect employment months of work. 8. Government Strategv. The Government strategy for alleviating poverty and improving living standards focuses on creating the conditions for a resUmption of economic growth, strengthening the provision of basic social infrastructure and services to the poor, and maintaining safety net and temporary employment programs while the economy continues to adjust. The Government has initiated programs to reorganize and strengthen the Health and Education Ministries to improve the provision of basic health and primary education services through increased community involvement and administrative decentralization. It has also endeavored to protect social spending from 2 AMfunicipalities in Nicaragua encompass rural and urban areas and are governed by a mayor and municipal council.  4 fiscal austerity and has actively sought and received donor financing and support. Social sector spending in the central Government budget increased from 36 percent in 1992 to about 44 percent in both 1993 and 1994. The Government is also completing a Social Sector Strategy and Action Plan, which should lay the basis for better coordination and improved targeting of Government and donor efforts. The poverty data and profile generated by the Living Standards Measurement Survey, financed under the first Social Investment Fund project, will provide the necessary information to the Government for the further development of its poverty strategy. IDA will have an additional input into the Government's work through the Poverty Assessment Report that it currently has under preparation. 9. Rationale for IDA Involvement. In addition to assisting the Government in establishing the conditions for reactivating economic growth, a key priority of IDA's country assistance strategy, which was discussed at the Board on June 23, 1994 in connection with the ERC II operation, is to help alleviate poverty in Nicaragua. As a result, IDA has built a lending program directed at the social sectors and targeted at the poor. In addition to the ongoing first FISE Credit, which is expected to be fully disbursed by the December 31, 1995 closing date, there are ongoing IDA operations supporting health care to the population who cannot afford private services and the transfer of technology to small and medium-sized agricultural producers. These will be complemented by the newly approved IDA project for basic education (Cr. 2689-NI, March 1995) and a water and sanitation operation now in preparation. IDA's support of FISE is consistent with its strategy of helping alleviate poverty in Nicaragua and would complement other IDA financed projects directed at poverty alleviation. IDA financing of a second project would help assure that FISE has the necessary financial resources to meet subproject demand, help improve FISE's operational performance, and complement other donor assistance for FISE. The IDB Board approved on December 7, 1994 the US$40 million loan and two accompanying non-reimbursable technical cooperation projects for US$3.6 million to support FISE that are described in the IDB Board document. The IDB loan was signed on December 11, 1994, and became effective on - May 22, 1995. Both the IDB and IDA financing would help FISE attract other external donor financing, presently estimated at US$20.0 million. Additional financing of the equivalent of about US$15 million is also under consideration by external donors, and would, if approved, reduce FISE's estimated administrative overhead from 10.4 percent to about 9 percent. 10. Proiect Obiectives and Description. The objectives of the proposed project are to help the Government sustain its poverty alleviation efforts and maintain social cohesion during the economic adjustment period. Additionally, the project would help support the Government's decentralization strategy, strengthen the local contracting industry, broaden the menu of projects that FISE finances, support the targeting of resources to more depressed areas, and help meet the special needs of the indigenous population. 11. The project would have four components: i) investment subprojects (US$100.0 million, of which US$10.4 million would be for FISE's operating costs); ii) institutional strengthening (US$1.0 million); iii) a Living Standards Measurement Survey (US$.0.5 million); and iv) a maintenance fund (US$0.9 million). The first two components would  5 be financed by both IDB and IDA, while the third and fourth components would be firanced by IDA and IDB, respectively. The investment subproject component would receive financing from all of the donors and would continue to finance the small-scale social ard economic infrastructure and social service subprojects financed under the first FISE project, as well as such other categories of subprojects as may be identified and agreed to with the donors. FISE is currently studying a new subproject category which would provide technical assistance to local governments and communities in planning and implementing subprojects. (IDB has provided funds in its loan to study subprojects financed by social investment funds in other countries for their applicability for financing by FISE.) FISE currently has an inventory of 1,800 subprojects with an estimated cost of US$47 million awaiting approval. The institutional strengthening component would be financed by IDA and IDB to strengthen FISE's internal management and extend and improve its project promotion work. IDA financing would help FISE increase its capacity to help prepare water and sanitation subprojects and improve its environmental assessment procedures. IDB financing would help FISE strengthen its operations in the Atlantic coast region3, update the poverty map upon which it bases its allocation of resources, improve its internal auditing procedures, and strengthen its subproject monitoring and evaluation. The Livii g Standarcs Measurement Survey component. financed by IDA, would assist the GON in implementing a second round of the survey conducted under the first project. Data would be collected and analyzed at both the household and community level which would pi ovide information on the economic condition of the population and its access to and use of social services and infrastructure. The maintenance fund component would be financed by IDB and would provide resources for preventive maintenance of health and education subprojects. FISE would use the proceeds of the credit and funds from other donors and the National Treasury, to finance subprojects, its administrative costs, and the technical assistance provided for in the project. FISE's financing of subprojects will be in the form of grants to municipalities, NGOs, and sponsoring Government agencies. Subproject sponsors will be responsible, with FISE's assistance and supervision, for the contracting, implementation, and supervision of projects. A description of the IDA credit and how it will operate is contained in the Annex to this Memorandum. The proceeds of the IDA credit would be lent to the GON, which would pass all of the credit on to FISE, except for US$300,000, which would be passed on to the Ministry of the Economy and Development (MEDE), which would carry out the LSMS component of the project. 12. Proiect Costs and Financing Plan. The project is estimated to cost about US$102.4 million. The sources of financing are as follows: a) the Government, US$18.2 million, of which US$7.9 million is from USAID P.L. 480 generated funds; b) beneficiaries, US$3.9 million. which may be in the form of cash, land, materials, or labor; c) IDB, US$40 million, of which US$1.7 million represents finance charges; d) the Government of Germany (KfW), US$10 million; e) the Government of Sweden (SIDA), US$2 million; and f) IDA, US$30 million. IDA would not finance any contract, or 3 FISE is planning to establish two small regional offices in the Atlantic Autonomous Region to attend to the needs of this poor isolated area, whose inhabitants are out of the country's ethnic, linguistic, and cultural mainstream. Indigenous people represent about half of the estimated 200,000 persons living in the region. The remainder are principally persons of African and mixed ethnic origins.  6 subproject, that would be financed by any other donor. The Project Cost Summary and Financing Plan are shown in Schedule A. 13. Proiect Implementation and Sustainability. The credit would be committed over a two year period and disbursed over a two and a half year period. The principal executing agency would be FISE for subproject financing. MEDE would be the executing agency for the LSMS component of the project. FISE has demonstrated its capacity to process a large number of subprojects and rapidly disburse funds. There will be continued close cooperation in project implementation with the Ministries of Health and Education, and with the Institute for Water and Sewerage (INAA), as well as with the newly established Ministry of Natural Resources and the Environment. Coordination with the ministries and INAA is required to assure that FISE's subprojects fit into their long-term plans, that technical and environmental norms and standards are followed, and that subproject recurrent costs will be met by the responsible ministry or agency. The mechanisms for achieving coordination have been, and will be, through agreements between FISE and the responsible ministry and agency, which delineate their respective responsibilities. Amounts and methods of procurement and disbursement and the disbursement schedule are contained in Schedule B. 14. A number of features have been incorporated in project design to help assure the sustainability of subprojects. First, FISE limits investments in schools and health facilities to rehabilitation, or expansion of existing facilities, and road investment to rehabilitation. This policy limits the future recurrent cost burden of subprojects. Second, the Ministries of Education and Health are required to confirm that they will provide budget for the salaries of teachers and health care promoters and other recurrent expenditures, such as teaching materials and medicines, for the subprojects financed by FISE. Third, subproject beneficiaries are required to make a contribution of five percent of the subproject cost in cash, land, materials, or labor. The beneficiary contribution is often evidence of the interest and willingness of the community to maintain subprojects. Fourth, FISE requires the establishment of local committees to maintain and help run schools and health centers, finances the training of committee members, and has financed the preparation of maintenance manuals to assist the committees. Fifth, water and sewerage projects require that the final owner of the subproject commit itself to recovering the cost of the subproject and to maintain it. Sixth, the IDB loan provides for the financing of a maintenance fund which would help finance preventive maintenance for health and education subprojects. In addition, maintenance components have been included in the IDA financed Basic Education and Health Sector Reform projects. 15. Lessons Learned. The design of the proposed project has taken into account the lessons learned from the first Social Investment Fund Project in Nicaragua and from the social investment funds in other countries. First, freedom from normal Government salary. personnel recruiting. budgeting. procurement, and disbursement restrictions has promoted efficiency. FISE has been able to hire and retain sufficient high quality professional personnel who have been able to carry out FISE's program efficiently. Under the proposed project and GON decree extending FISE, FISE will continue to be exempt from normal Government restrictions. Second, well-defined and transparent targeting and allocation of resources reduce political risks, and help assure that high social return  7 subprojects are directed at the poor. The proposed project will provide for the updating of poverty mapping and the assignment of project resources based on poverty level. Poverty and population data will continue to be generated through the proposed project's support of a national census and the LSMS work. Third, a standardized menu of subprojects promotes efficiency by limiting the range of specialists to be recruited, providing standard parameters and specifications used by sponsors in subproject preparation, and facilitating subproject appraisal and supervision. Although additional categories will probably be added to FISE's menu of subprojects, the number will be kept small enough to assure tnat FISE's operations remain well-focused. Fourth, oversight by external donors has promoted efficiency and limited political risks by requiring annual and quarterly audits, the maintenance of internal auditing and control systems, semi-annual progress reporting, donor mid-terms reviews, and donor project supervision. These requirements will be continued and strengthened in the proposed project. Fifth, coordination with social sector ministries has been critical for the effective delivery of social services to beneficiaries. FISE has had agreements with these institutions which have provided an effective framework for coordination. These agreements have recently been extended through the life of the proposed project and should continue to be able to provide such a framework. 16. Agreed Actions. During negotiations, the following matters were discussed and agreements reached: a) Counterpartfunds. The GON would provide funds as indicated in the project financing plan and as needed to cover the operating costs of FISE. b) Changes in FISE 's Operations Manual. FISE would not make substantive changes in its Operations Manual without IDA's approval. c) Changes in FISE management. FISE would not appoint a new Chairman of its Board, executive director, or operational directors without IDA's approval. d) Default in other agreements. A default in the IDB or KfW loans, or SIDA grant for FISE may be considered by IDA to be a default in its credit. e) Performance indicators. FISE and MEDE would comply with the performance indicators agreed to in a supplemental letter. f) Targeting. Unless IDA otherwise would agree, FISE would not commit more than 16 percent of funds to Managua and 7 percent to othet "medium poverty" municipalities and would not modify the mechanism for targeting poor municipalities. g) Failure to appoint a successor to FISE. IDA may consider it to be an event of default if the GON fails to appoint a successor to FISE, in the event FISE ceases to exist, or in the event that actions have been taken for FISE's dissolution, disestablishment, or suspension, prior to the completion of those parts of the project relating to FISE.  8 h) Other. Requirements and procedures with respect to Project Reporting, Mid- Term Review, Procurement, Disbursements, and Accounts and Audits are contained in the appropriately designated paragraphs in the Annex. 17. Conditions of effectiveness would be: i) adoption by FISE of an Operations Manual satisfactory to IDA, incorporating revised procedures to evaluate the environmental impact of FISE subprojects, revised procurement procedures reflecting Bank/IDA procurement guidelines, and increased maximum permissible levels for financing subproject preinvestment costs; and ii) a subsidiary agreement between the GON and FISE making the fiinds in the credit available to FISE. 18. Environmental ImDact. The proposed project would have no significant environmental risks. FISE currently asks a standard series of questions regarding environmental impact for subprojects that it finances in accordance with the Operational Manual approved by IDA. However, the present system would be improved by expanding the coverage of subprojects requiring environmental assessments and simplifying procedures. In order to implement new environmental procedures and expand the menu of environmental subprojects financed by FISE, the proposed credit would finance the hiring of an internationally recruited consultant. The project has been given an environmental rating of category "B". 19. Promram Obiectives and Poverty Categorv. The proposed project, in the poverty reduction category, is a program of targeted interventions. Resources are allocated to subprojects by geographic and sector targets. Geographic targets are set by utilizing a poverty index that increases per capita allocations as the level of poverty increases. About 80 percent of project resources are targeted at the education, health, and water and sanitation sectors, with the remaining resources targeted at economic infrastructure in poverty areas and for environmental subprojects. 20. Participatory Approach. Communities are heavily involved in identifying and implementing the subprojects financed by FISE. There are nine "promoters" on FISE's staff who are responsible for visiting all of the municipalities in Nicaragua and for meeting with community groups in identifying projects. FISE's Operations Manual requires that a subproject may only be considered for financing if there are 50 signatures from direct beneficiaries in support of the subproject. The IDB loan will finance the establishment of a Communication Unit in FISE that would publicize FISE's activities and encourage even greater community involvement. Subproject beneficiaries are also, as noted above, required to make a contribution of five percent of the cost of the subproject and to contribute to subproject sustainability through participation in maintenance committees. 21. Proiect Benefits. The proposed project would help reduce poverty through providing economic and social infrastructure and improved social services in poor areas. It would also generate employment in the same areas and, consistent with the Government's decentralization strategy, increase the involvement of communities and municipalities in identifying, planning and implementing development projects. The project would have a particularly favorable impact on women. It is estimated that about  9 65 percent of the persons attended to by FISE financed health posts are women. The establishment of offices in the Atlantic coast region for the purpose of promoting and implementing subprojects, is also likely to direct a larger percentage of FISE resources to indigenouis people. 22. Proiect Risks. The elections scheduled for 1996 could put pressure on FISE to finance subprojects based on political considerations. This risk is limited by the transparent targeting and resource allocation procedures that FISE has developed and the well-defined subproject promotion, selection, evaluation, and supervision procedures followed by FISE and contained in its Operations Manual. An additional risk is the failure to maintain the infrastructure financed by FISE. The measures that have been taken to reduce this risk are described in par4graph 14 above. 24. Recommendation. I am satisfied that the proposed credit would comply with the Articlcs of Agreement of the Association and recommend that the Executive Directors approve it. James D. Wolfensohn President Attachments Washington, D.C. June 1, 1995   Schedule A NICARAGUA - SECOND SOCIAL INVESTMENT FUND PROJECT Project Cost Summary Local Foreign Total US$ million I. FISE A. Subprojects 67.2 22.4 89.6 B. Operating Costs 9.4 1.0 10.4 Subtotal FISE 76.6 23.4 100.0 II. Maintenance Fund 0.7 0.2 0.9 III. LSMS 0.4 0.1 0.5 IV. Institutional Strengthening 0.4 0.6 1.0 TOTAL PROJECT COST' 78.1 24.3 102.4 Financing Plan Local Foreign Total US$ million Covernment of Nicaragua 10.3 0.0 10.3 USAID (P.L. 480) 6.0 1.9 7.9 Beneficiaries2 3.9 0.0 3.9 IDA 22.0 8.0 30.0 IDB 26.9 11.4 38.3 Government of Germany (KfW) 7.5 2.5 10.0 Government of Sweden (SIDA) 1.5 0.5 2.0 TOTAL FINANCING 78.1 24.3 102.4 Net of taxes and duties. ! May be in form of cash, land, materials, or labor.  Schedule B Page 1 of3 NICARAGUA - SECOND SOCIAL INVESTMENT FUND PROJECT Procurement Arrangements (US$ million) Category ICB NCB Other' NIF2 Total Works, Goods, and 1.5 21.2 9.5 57.4 89.6 Training Under FISE (1.5) (19.0) (8.5) (29.0) Subprojects Vehicles, Computer 0.3 0.2 0.5 Equipment, and Office (0.2) (0.2) Furniture and Equipment for FISE Consultants, Technical 0.8 1.1 1.9 Assistance, and Auditor (0.8) (0.8) Services for FISE and MEDE Salaries, Allowances, and 10.4 10.4 Operating Costs of FISE Totals 1.5 21.2 10.6 69.1 102.4 (1.5) (19.0) (9.5) (30.0) Note: Amounts in parenthesis are amounts estimated to be financed by IDA. Includes local shopping and dircct contracting 2 NIF - Not-IDA-Financed  Schedule B Page 2 of 3 NICARAGUA - SECOND SOCIAL INVESTMENT FUND PROJECT Amount of the Category Credit Allocated % of Expenditures to be (in US$ million Financed equivalent) 1. FISE Investment Subprojects Expenditures for subprojects for which a subproject agreement has been signed on or before June 30, 1997, in the following amounts: a) Civil Works 23.76 a) 90% b) Goods 3.63 b) 100% of foreign expenditures, 100% of local expenditures (ex factory cost), and 75% of local expenditures for imported items procured locally c) Training .71 c) 100% Subtotal 28.10 2. FISE - Institutional Support a) Goods (Vehicles, .19 a) 100% of foreign computer equipment, and expenditures, 100% of local furniture) expenditures (ex factory cost), and 75% of local expenditures for imported items procured locally b) Audit Services .15 b) 100% c) Consultant Services .36 c) 100% Subtotal 0.70 3. LSMS .30 100% 4. Unallocated .90 Total 30.0  Schedule B Page 3 of 3 ESTIMATED DISBURSEMENTS TIMETABLE (in US$ million) IDA Fiscal Year 1996 1997 1998 Annual 10.0 15.0 5.0 Cumulative 10.0 25.0 30.0  Schedule C NICARAGUA - SECOND SOCIAL INVESTMENT FUND PROJECT Timetable of Key Project Processing Events (a) Time taken to prepare Three months (b) Prepared by FISE and MEDE (c) First IDA Mission November 1994 (d) Appraisal Mission Departure January 1995 (e) Ne0otiations May 1995 (f) Planned Date of Effectiveness July 1995 (g) LisL of Relevant PPR and PPARs Not applicable  SCHEDULE D Page 1 of 2 STATUS OF BANK GROUP OPERATIONS IN NICARAGUA A. STATEMENT OF BANK LOANS AND IDA CREDITS (As of March 31, 19951 28 loans and 9 credits fully disbursed 229.01 197.00 Of which SECALs, SALs, and Program Loans Cr 2302-NIC 1992 Nicaragua Economic Recovery Credit 110.00 Cr 2302 -1NIC 1992 Nicaragua Economic Recovery Credit 10.30 Subtotal 120.30 Cr. 2434-NIC 1993 Nicaragua Social Investment Fund 25.00 8.73 Cr. 2536-NIC 1994 Nicaragua Agric. Technology & Land Mgmnt. 44.00 41.80 Cr. 2556-NIC 1994 Nicaragua Health Sector Project 15.00 15.06 * Cr. 2031-NIC' 1994 Nicaragua Economic Recovery Credit II 80.00 33.00 * Cr. 2831-2-NIC a> 1995 Nicaragua Economic Recovery Credit II 6.30 e.85 - Cr. 2689-NIC a> 1995 Nicaragua Education 34.00 35.94 * Cr. 2690-NIC a> 1995 Nicaragua Institutional Development Credit 23.00 24.43 * Sub-total 207.30 165.87 Total 229.61 404.30 Of which has been repaid 185.13 6.82 Total now held by Bank and IDA 44.48 397.48 Amount sold: 5.82 Of which has been repaid: 5.e2 Total Undhsburned 0.00 1e5.87 165.87 * SAL. SECAL. or Program Loan. Difference due to exchange rate fluctuations between SOR and US$. Md.S: LA2CO Fi: N:\Mde&lvetdisburu*sncaragu\NI-03.95.xds Apg. 17. 1995  SCHEDULE D Page 2 of 2 STA'r: or rrc fllVZS=rrs AA oa Karch 311. 1995 (a XilliLoE UJS Dollars) . - rigil cross Cocm aflt - Bold H-ld tbi4. Fiscal yaa:s Prc rrc by by iclI. C~.i:tOd Cb l2.i Type of Business Loan Equity partic ToCAls Hrc Partic Pasr^ ls63 &/ axtiles Fbricato de ic Ttiles ,n50 .64 .53 2.0a 1976 a1 Nicsragua Sugar Eatate *: Food an &-ri-",5i5Lg 6C50 - i650 l276 a/ Poseda del Sol S.A. Tourim .70 .20 .90 Total gBroas C-4=mts bi 7.70 .84 .93 5.47 Less Cne.cllA,teioms. tesi-rctiO.a repayM=t r SA*-1 7.70 .S4 .53 S.47 T'ortal etz w e a held i/ - 0.00 _ - Total C-i4-ats hol.d ausd p;edlm coic tA Total undisbursed co'--4MA= _2 0.00 a/ Zs=nrs wlieh have been fully casnelled. tearezated, writtn-off, sold, redeened. or repaid. bi Graen C-i.eetts co=sist of approved and signed projcts. c/ b-ld Cin