Argentina - Second Maternal and Child Health and Nutrition Project

Document of The World Bank Report No.: 16419 AR PROJECT APPRAISAL DOCUMENT FOR A PROPOSED LOAN IN THE AMOUNT OF US$100.0 MILLION TO THE ARGENTINE REPUBLIC FORA SECOND MATERNAL AND CHILD HEALTH AND NUTRITION PROJECT April 24, 1997 Human and Social Development Group Country Department I Latin America and the Caribbean Region  CURRENCY EQUIVALENTS (Exchange Rate Effective January 1997) Currency Unit = Peso US$1.00 = $1.00 Peso FISCAL YEAR January 1 to December 31 ABREVIATIONS AND ACRONYMS AFIS Administrative and Finance Information Subsystem CAS Country Assistance Strategy CDC Child Development Centers CNMN National Maternal and Child Program ECD Early Childhood development FSC Federal Steering Committee GDP Gross Domestic Product GNP Gross National Product 11S Federal Health Secretariat IBRD International Bank for Reconstruction and Development ICB International Competitive Bidding IDB Inter-American Development Bank IERR Internal Economic Rate of Return INDEC National Institute of Statistics and Census MCH Maternal and Child Health MCHN Maternal and Child Health and Nutrition Services MIS Management Information System MOH Ministry of Health NCB National Competitive Bidding (Licitaci6n Publica Nacional) NGO Non-Governmental Organization NPV Net Present Value OECD Organization for Economnic Cooperation and Development OS Social Insurance Funds PAHO/WHO Pan American Health Organization/World Health Organization PAN National Food Program PCU Project Coordination Unit PIU Provincial Implementation Unit PMH Provincial Ministries of Health SAMICS Integrated Autonomous Public Health Area Services SDMIS Service Delivery Monitoring and Information Subsystem SDS Secretariat of Social Development SSMTAL Social Sector Management Technical Assistant Loan UCAPPAN Central Unit to Analyze and Plan Food and Nutrition Policies UEM Municipal Executing Unit UEP Provincial Executing Unit UNDP United Nations Development Fund UNICEF United Nations Children's Fund WHO World Health Organization Vice President S.J. Burki Director G.T. Nankani Country Sector Leader Alain Colliou Task Manager J.J. de St. Antoine  Argentina Second Maternal and Child Health and Nutrition Project (PROMIN II) Table of Contents Project Financing Data .............................................................. 1 Block 1: Project Description ............................................................................2 1. Project Development Objectives ...........................................................................2 2. Project Components ............................................................................2 3. Benefits and Target Population .......................................................................... 2 4. Institutional and Implementation Arrangements ..................................................................... 3 Block 2: Project Rationale ............................................................................4 5. CAS Objectives Supported by the Project ............................................................................4 6. Main Sector Issues and Governm ent Strategy .......................................................................... 4 7. Sector Issues to be Addressed by the Project and Strategic Choices . . 5 8. Project Alternatives Considered and Reasons for Rejection .............................................. 6 9. Major Related Projects Financed by the Bank and/or Other Development Agencies .. 6 10. Lessons Learned and Reflected in the Project Design . . .......................................................... 7 11. Indications of Borrower Commitment and Ownership . . ......................................................... 7 12. Value Added of Bank Support ............................................................................7 Block 3: Summary Project Assessments ...........................................................................8 13. Economic Assessment ..........................8 14. Financial Assessment ............................................................................8 15. Technical Assessment ............................................................................8 16. Institutional Assessment ............................................................................9 17. Social Assessment ............................................................................9 18. Envirommental Assessment ............................................................................9 19. Participatory Approach ............................................................................9 20. Sustainability ........................................................................... 10 21. Critical Risks ........................................................................... 10 22. Possible Controversial Aspects ........................................................................... 10 Block 4: Main Loan Conditions ........................................................................... 11 23. Effectiveness Conditions ........................................................................... 11 24. Other ........................................................................... 11 Block 5: Compliance with Bank Policies .............................. 11 List of Annexes Annex 1: Project Design Summary ........................................................................... 12 Annex 2a: Detailed Project Description ............................................................................ 14 Annex 2b: Subproject Cycle and Eligibility Criteria ........................................................................... 18 Annex 3: Estimated Project Costs ........................................................................... 21 Annex 4: Cost-Benefit Analysis Summary ............................... ............................................. 22 Annex 5: Financial Summary and Financial Summary for Revenue Earning Project Entities .................. 24 Annex 6: Procurement and Disbursement Arrangements (Tables A through F) ...................................... 25 Annex 7: Project Processing Budget and Schedule ........................................................................... 29 Annex 8: Documents in the Project File ........................................................................... 30 Annex 9: Argentina: Status of Bank Lending Operations in Argentina .................................................. 31 Annex 10: Argentina: Country at a Glance ................................................... 35   INTERNATnoNAL BANK FoR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Latin America and the Caribbean Regional Office LASHD Project Appraisal Document Argentina Maternal and Child Health and Nutrition II (PROMIN II) Date: April 24, 1997 [ Draft 0 Final Task Manager: Jean-Jacques de St. Antoine Country Manager: Gobind T. Nankani Project ID: AR-PA-6059 Sector: Health POC: EA Lending Instrument: Investment Loan PTI: 0 Yes [JNo Project Financing Data 0 Loan l Credit O Guarantee El Other [Specify] Amount: US$100 million Proposed Terms: O To be defined El Multicurrency 0 Single currency Grace period (years): 5 r1 Standard Variable El Fixed 0 LIBOR-based Years to maturity: 15 Commitment fee: 0.75 % Service charge: 0.0 % Financing plan (USSmillion): Source Local Foreign Total Govermnent (central) 54.0 54.0 Government (provincial) 17.0 17.0 IBRD 87.9 12.1 100.0 Total 158.9 12.1 171.0 Borrower: Argentine Republic Guarantor: N/A Responsible agency: Ministry of Health Estimated Bank disbursements (US$M): 1998 1999 2000 2001 2002 2003 Annual 7.0 12.0 18.0 24.0 19.0 20.0 Cumulative 7:0 19.0 37.0 61.0 80.0 100.0 Expected Effectiveness Date: October 15, 1997 Closing Date: December 31, 2003  Project Concept Document Page 2 Country: Argentina Maternal & Child Healh & Nutrition 11 Block 1: Project Description 1. Project development objectives (see Annex 1 for key performance indicators): This project is a follow-up of the PROMIN I project, a successful on-going operation. Currently under implementation in ten provinces, PROMIN I has started to introduce significant modifications and improvements in the primary health care model in Argentina. It is well-targeted to poor women and children, the most vulnerable group, especially in a period of economic adjustment. The proposed PROMIN II project would help extend the coverage of the PROMIN program and would have the same objective of improving maternal and child health status. The project would help the Government: (i) increase coverage of maternal and prenatal care services to 60 percent; (ii) increase pediatric coverage of children aged 0-6 to 60 percent; (iii) transform 40 percent of existing child feeding centers and kindergartens into early childhood development centers; and (iv) decentralize and strengthen social service management. PROMIN II would also have the demand-driven nature of PROM1N I in the sense that provinces would request subprojects, and those implementing a subproject more efficiently would have access to more funds out of a common unallocated pool. An important change in the design of the second project is the introduction of a mid-term review for all subprojects. This is included in the Operational Manual and will be carried out by the PCU. Disbursements for the second part of subprojects will be contingent upon performance under the first part. In case of poor performance, undisbursed balances would be transferred to a 'conunon fund" to which better-performing provinces would have access. This modality has already proved instrumental in the turnaround of Norheast Basic Health Services I and II projects in Brazil and their accelerated implementation after this change was introduced. 2. Project components (see Annex 2 for a detailed description , Annex 3 for a detailed cost breakdown, and Annex 5 for financing plan): Component Cateeory Costs (inc. % of Total Contineencies) (USSM) SUBPROJECTS. They would be sponsored by provinces or municipalities using 160.9 94.1 PROMIN's eligibility criteria (Annex 2b). Subprojects would include: (i) maternal, child health and nutrition activities to reinforce the capacity of maternal and child health and nutrition programs to provide appropriate and timely care to low- income mothers and children, on an ambulatory basis and in maternity wards and Physical, neonatal units of local hospitals; (ii) early childhood development and nutrition policy, activities to support the mental and social development of children below 6 years institution- old; and (iii) institutional strengthening to enhance the capacity of provinces and building municipalities to plan, manage, and implement mother and child-related activities. Subprojects would finance rehabilitation and construction of infrastructure, equipment, training, technical assistance, and incremental recurrent costs (the latter to be financed by the Government). As part of institutional strengthening, each province would present a technical assistance subproject to help improve the implementation of on-going nutrition programs ('Daci6n de Leche') sponsored by the Ministry of Health (MOH), and when appropriate, other nutrition programs, in the provinces. The project would require all participating provinces to implement the same basic health, nutrition, and early childhood development package. STRENGTHENING OF MOH STATISTICAL SYSTEM Institution- 4.8 2.8 building PROJECT ADMINISTRATION. Management and administration of Project 5.3 3.1 overall project by national, provincial, and municipal PCUs. Management Total 171.0 100.0 3. Benefits and Taret Population The project would increase the effectiveness and efficiency of the health sector by improving: (i) primary health care infrscture and equipment; and (ii) management of primary health care facilities, that would result in an improved referral system and a better problem-solving capacity at the local level. The project would also produce benefits to the population in terms of improved productivity resulting from a healthier, more capable and reliable work force, and reflected in lower absenteeism. Infrastructure improvements in ambulatory services would lead to significant improvements in the quality of care provided to the population of  Project Concept Document Page 3 Country: Argentina Maternal & Child Healfth & Nutrition 11 the participating provinces. The project would also improve the growth and development of children under six years old, thereby reducing the consequences of disadvantaged conditions that are associated with student failure. The total beneficiary population is estimated at 1,790,000, including 70,000 pregnant women, 55,000 children below one year of age and 250,000 children aged 2 to 5. The project would be implemented in at least 20 poor municipalities in 17 provinces, including notably Buenos Aires, Catamarca, Chaco, Chubut, Cordoba, Corrientes, Entre Rios, Formosa, Jujuy, La Rioja, Mendoza, Misiones, Neuquen, Rio Negro, Salta, Sante Fe, Santiago del Estero, and Tucuman. The PROMIN II project would be implemented in provinces with eligible subprojects, including those provinces already participating in PROMIN I. In the latter case, the project would be implemented in new municipalities with a large number of poor as well as unsatisfactory quality and supply of primary health care and early childhood development. The project would be implemented principally in urban areas where there is the highest concentration of poor. Some pilot programs in rural areas may be considered in later years. -- - - _ 4. Institutional and implementation arrangements: Implementation period: 6 years Executing agencies. The project would be executed by the MOH through a Project Coordinating Unit (PCU) assisted by provincial and municipal executing units. The same PCU that has been effective in coordinating the implementation of PROMIN I would be responsible for PROMIN II. The General Coordinator of PROMIN is directly responsible to the Vice-Minister of Health. The Minister himself closely monitors PROMIN, which is one of the flagship programs of the Ministry. The PCU would: (i) guide and coordinate project implementation; (ii) provide technical assistance to the provincial and municipal subproject units, (iii) monitor and supervise the implementation of subprojects; and (iv) help design and approve technical proposals for the institutional strengthening component. Coordinators of provincial units and their staff (UEPs) are appointed by the provincial Governments and have their full confidence. PROMIN is consulted in the process. UEPs' offices are usually located within the premises of the ministries. About 75 percent of the staff are paid by the provinces and the balance by PROMIN. The latter usually finances the procurement and administrative staff who need not be maintained once the project is completed. Provinces pay the medical and educational staff whose capacity will significantly increase under the project, and who will remain valuable assets for the provinces in the long-run. Operational Manual. Conditions for project implementation are included in the Operational Manual which was reviewed and found satisfactory. Accounting, financial reporting, and auditing arrangements. The financial administration of the project (including contracting and disbursement) would be coordinated by the PCU, which would disburse funds directly to provinces or municipalities or through a third party (e.g. UNDP). To facilitate disbursements, a Special Account with a 90-day advance will be established. The project will be audited annually by independent auditing agencies acceptable to the Bank. Monitoring and Evaluation Arrangements. The PCU would be responsible for project monitoring and analysis. The technical supervision of the subprojects would be carried out by provinces or municipalities supported, when necessary, by consultants. Progress reports, including monitoring indicators, will be sent by the PCU to the Bank every six months.  Project Concept Document Page 4 Country: Argentina Maternal & Child Heafth & Nutrition 11 Block 2: Project Rationale 5. CAS objective(s) supported by the project: Document number and date of latest CAS discussion: Coutntry Assistance Strategyfor the Argentine Republic, Report No. 14278-AR discussed by the Board on May 4, 1995, with Progress Report discussed on April 25, 1996. The proposed project would directly support the CAS' objectives of reducing poverty and improving the efficiency and targeting of social services. By addressing primary health care, the project is a centerpiece of the Bank's strategy in the health sector in Argentina. As envisaged in the CAS, the project would complement the Provincial Health Development project (Ln. 3931-AR) which is helping improve the organization and management of hospitals, and the Health Insurance Reform project (Ln. 4002/3-AR), which is helping improve the financing of the sector. The project is especially important because it is directly targeted to the poorest 30 percent of the population who do not benefit from health insurance or cannot afford private health care. It is part of the Government's overall safety net program and helps cushion the effects of unemployment and economic adjustment. In the April 25, 1996 CAS Progress Report discussion at the Board, the Executive Directors expressed their concern over the level of unemployment and urged the Bank to continue supporting Government efforts to improve labor markets and strengthen the delivery of social services in health and education to the poorer segments of society. 6. Main sector issues and Government strategy: Health and Early Childhood Development Issues. In many respects, Argentina already possesses a highly developed health system, particularly by developing country standards. The country has one of the highest doctor-to-population ratios in Latin America (nearly three doctors per thousand inhabitants), while the number of hospital beds (4.5 per thousand inhabitants) is similar to that of many OECD countries. As in most middle-income countries, Argentina shows two coexisting epidemiological profiles: (i) a high incidence of non-communicable and degenerative diseases (including cardiovascular diseases, cancer, and diabetes), and a rapid increase in accidents, corresponding to the profile of industrial countries; and (ii), a high incidence of infectious and parasitic diseases, reflecting conditions usually prevailing in developing countries. Despite its achievements, the health system still faces significant problems. The infant mortality rate (IMR) of 22 per 1000 live births is higher than in Chile, Colombia, Costa Rica, and Uruguay, which have lower per-capita incomes and spend less on health. There are major variations in the IMR across regions: the IMR is 1.1-1.3 times higher in the large, poor, periurban areas than the national average. Three-fourths of neonatal deaths and 60 percent of post-neonatal deaths are concentrated among the poor. Neonatal deaths result from poor quality obstetric care and maternal undernutrition. Post-neonatal deaths are caused by immunopreventable and acute respiratory diseases. They could be prevented through opportune health care interventions and better nutrition. The same applies to mortality for children aged 1-4 (where some of the main causes of death are infectious and parasitic diseases, influenza, and pneumonia) and maternal mortality, where two-thirds of deaths (related to induced abortion, hemorrhage, and toxemia) could be prevented by opportune, good quality care. At present, prenatal care coverage remains low. When deliveries take place in the hospital, they still often occur far from the mother's residence (this represents 30 percent of the cases in Buenos Aires). Health care has deteriorated over the last two decades. With the exception of incipient progress in the areas covered by PROMIIN I, public services are overburdened and poorly equipped to handle the volume of demand, especially in the poor provinces of the North and Northwest, and in densely populated periurban areas. In some areas, there is increasing pressure on health services resulting from immigrants in provinces bordering Paraguay, Bolivia, and Chile. Lack of priorities, operating standards, incentives, and accountability affect most provincial services. Poorly trained and utilized health personnel are major causes of inefficiency. As a result of economic recession and unemployment, many families have lost their social benefits and have to be assisted by the public sector. Mothers and children have suffered the effects of the economic crisis more than other members of poor households. This is because: (i) poor households contain on average more than twice as many children as other households; and (ii) undernourishment tends to affect mothers and children disproportionately. As a result of the deterioration in the quality of primary health care, many patients go directly to hospitals, creating congestion in these services. However, treating simple ailments in hospitals is not cost-effective as it involves the use of specialists, and sophisticated infrastructure and equipment. To help solve this problem, it is important to continue improving the quality of care at the primary level, through the implementation of a more efficient delivery model, complemented by a strengthening of maternal and child care in hospitals. The number of pre-school-age children with unsatisfied basic needs (related to housing, hygiene, access to safe water, and health care) is estimated at 1.5 million. Of these, about one-third receive nutrition supplementation through provincial  Project Concept Document Page 5 Country: Argentina Maternal & Child Health & Nutriton 11 and municipal kindergartens, mothers' clubs, and other public and private channels. Even this limited assistance is often not well planned or supervised. The widely differing organizational arrangements and jurisdictions responsible for this age group in provinces and municipalities, together with low private sector participation, hinder efforts to rationalize and expand services. With the exception of those who have started to be covered by PROMIN I, very few preschoolers from poor families receive psycho-social stimulation. This makes entry in schools more difficult and increases the rates of repetition and dropout. Health Sector Strategv. As described in its policy letter of March 26, 1996 (linked to the Health Insurance Reform project), the Government's general objectives for the health sector are: (i) to ensure full exercise of the population's right to health care; (ii) to improve the accessibility, efficiency and quality of medical attention; (iii) to reduce avoidable morbidity and mortality risks; and (iv) to rethink and redirect the role of the State in the health sector. To reach those objectives, the following sector strategies were defined: (i) give priority to mother and infant care; (ii) modernize the public hospital system; and (iii) improve the financing of the system. With regard to the first strategy, already being implemented under PROMIN I, the more detailed objectives are: lowering infant mortality and morbidity rates, strengthening the primary care system, stimulating psychosocial development in children, redefining nutritional strategies associated with the health of the general population, establishing indicators to monitor the population covered by the program, increasing the number of checkups during pregnancy, and significantly lowering adverse outcomes such as low birth-weight. Nutrition Issues. Information about nutrition status in Argentina is not up to date. The MOH has estimated that, by the mid-1990s, 25 percent of children under 5 years of age were below the tenth percentile in terms of height-for-age. A household survey performed by the National Institute for Statistics and Census (INDEC) during 1995 shows that in the Greater Buenos Aires area 17 percent of children of poor households were below the tenth percentile in terms of height-for-age. In the early 1990s, a small sample survey of pregnant women in a poor area of the province of Buenos Aires indicated that in the first and second trimesters of pregnancy about 20 percent of the women were under weight, and at the third trimester about 30 percent, according to weight/height criteria. Under 'PROMIN I, a National Nutrition Survey will be undertaken. Nutrition Strategy. There are currently nine nutrition programs costing US$332 million per year'. Two of these programs (Milk for pregnant women and malnourished infants - "Daci6n de Leche"; and PROMIN) come under the MOH. The seven other programs depend on SDS and are by far the largest, representing 90 percent of total funds. These programs do cover the most vulnerable groups in Argentina: pregnant and lactating women, infants, and young children, and the elderly. They are implemented in a decentralized way in the provinces and food is purchased locally. However, they do face significant implementation problems: (i) there is a lack of clear targeting criteria; (ii) there is an absence of monitoring indicators and program evaluation; and (iii) there is a lack of regularity in the transfer of funds to the provinces. In the context of its dialogue with Argentina on social programs, the Bank has already started, through the Social Protection Project (Ln. 3957-AR), to discuss the need to improve the implementation of the nutrition programs under the responsibility of SDS. In 1995, the Government created a Central Unit to Analyze and Plan Food and Nutrition Policies (UCAPPAN) within the Secretariat of Social Development (SDS). This institution is receiving technical assistance from IDB. Under the project, each province would benefit from a technical assistance subproject to help improve the implementation of on-going MOH-sponsored nutrition programs ("Daci6n de Leche") in the provinces. 7. Sector issues to be addressed by the project and strategic choices: The project would help improve maternal and child health care and early childhood development by helping the provinces deliver better-quality health and nutrition services. The project would help expand the scope of the PROMIIN program to vulnerable groups in areas in which the greater concentration of poor exists. The project would build upon the Govermnent's decentralized demand- driven approach, which provides the necessary flexibility to adjust interventions to local needs and conditions while maintaining targeting and financial control mechanisms to ensure efficient use of resources. Given its public goods nature, as well as for equity reasons, basic health, nutrition, and early childhood development services under the project would be delivered by provincial and municipal Governments. The rehabilitation and construction of facilities would be contracted to the private sector. Linkages would continue to be developed with NGOs and local associations. The proposed project would support the Government's decentralization efforts through the implementation of subprojects by local governments. ' based on "Programas Alimentario-Nutricionales en Argentina", Fernando Vio, May 13 1995 (report to the IDB)  Project Concept Document Page 6 Country: Argentina Maternal & Child Health & Nutriton 11 8. Project alternatives considered and reasons for rejection: * Fund Approach. One alternative design would have been a top-down, filly-detailed blueprint design. However, in the context of this project, a blueprint project for each province would have been too rigid. It could have resulted in non-performance by some provinces or municipalities on account of changes in the fiscal and political situation, causing changes in priorities and rotation of key personnel. Instead, the project is designed as a broad common fund to finance a basic program of services (already demonstrated to be effective under PROMIN I) according to an agreed set of criteria and procedures. This allows better- performing provinces to move faster in project implementation and have access to additional resources, which introduces an element of competition and makes implementation more efficient. Technical assistance will be provided to help weaker provinces. * Size. The second alternative would have been a larger project. However, this may have put excessive pressure on the institutional capacity in Argentina and would have increased project risk. A size considered reasonable is that of a project that will approximately double the scope of the PROMIN program. This will allow the program to be present in more than 75 percent of the provinces and allow it to have a significant impact on the primary health care system. It responds directly to the request of the MOH. As the program is highly decentralized and implemented directly by the provinces and municipalities, the experience under PROMIN I shows that such an expansion is feasible. Project management is strong, and there is now significant decentralization of decision-making to the provinces. During the initial 12-18 months, the Federal PCU will be implementing both the PROMIN I and PROMIN II projects. This is considered feasible as the PCU's productivity has improved and a 'horizontal cooperation" system has been introduced whereby more advanced provinces and municipalities provide technical assistance to poorer ones, i.e. those which usually have less institutional capacity. As some provinces will be weaker and will need more assistance, entrance of new provinces would be phased under PROMIN II. An important part of the evaluation of a subproject is an assessment of the design of its provincial or municipal executing unit and the quality of its staffing. In addition, the project benefits from a strong element of social participation. In all PROMIN subprojects, health workers, beneficiaries, NGOs, government institutions, and other actors are closely involved in the project design and implementation. This allows PROMIN coordinating and executing units to leverage themselves. It also ensures better sustainability. Thus, doubling the PROMIN program is considered feasible. --------------------------------------------------------__-------------- 9. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned). S.ect.or. i . s su.e. P.r.ojecLt Latest FormQn 590 Ratings IP DO Bank-financed Poor Maternal and Child Health Maternal Child Health and Nutrition (Ln. 3643-AR) S S (PROMIN II) Poor public hospital performance & inefficient Provincial Health Development Project (Ln. 3931-AR) S S provider reimbursement system Unsustainable/Inefficient Social Insurance Health Insurance Reform Project (Ln. 4002/3 -AR) HS HS Health Care Financing Health Insurance Technical Assistance Project (Ln. 4004-AR) HS HS Poverty Social Protection Project (Ln. 3957-AR) HS S PROMIN I has been helping the health system to evolve from a passive to a managed system in which efforts are made to find out who the clients are, what services they need, and what numerical targets can be used to stimulate performance. Visits to health facilities show strong attendance by patients, availability of drugs and medical supplies, and a motivated health staff delivering integrated services. The program focuses on cost-effective intenrentions, and is already starting to have a significant impact. For example, in Florencio Varela (a very poor area of Buenos Aires), in only one year, obstetric and pediatric coverages have increased by 50 and 41 percent respectively. This is being achieved by: (i) reinforcing the concept of integrated health care and changing the focus from treatment of the most apparent illness to overall assessment of the mothers and children's health; (ii) strengthening the primary health care level, and improving its capacity to resolve the most frequent problems affecting mothers' and children's health; (in) improving equity in access to health care; and (iv) strengthening community participation through health education and social communication. Project management is strong and there is now significant decentralization of decision-making to the provinces, process times have been reduced, and the Project Coordinating Unit's (PCU) preparation and evaluation functions have been separated to improve efficiency. A number of supervision tasks are now being contracted out. Administrative costs are currently on the high side, but are expected to decline significantly. Accumulated administrative costs (PCU and provincial units) currently represent 18 percent of total disbursements. However, as disbursements progress and  Project Concept Document Page 7 Country: Argentina Maternal & Child Health & Nutriton 11 PROMIN II starts to be implemented in late 1997, fixed and semi-variable costs will be spread over a larger volume of disbursements. They are projected to reach 12 percent by the end of PROMIN I (1999) and 6 percent by the end of PROMIN II (2001). There will be a 1-2 year overlap between PROMIN I and 11 (1997-1999), a period during which the administrative costs will be spread over two projects. Disbursements have significantly improved over the past 12 months and had reached US$47.1 million as of March 31, 1997. But why start PROMIN II if PROMIN I is not yet fully disbursed? This is because more than 80 percent of the funds have been committed through subproject agreements with provinces. PROMIN is a very popular program in Argentina. It is well regarded by the public and the press, and there is strong pressure from other provinces to participate in this technically-sound program. An amendment was made to PROMIN I to allow new provinces to enter, and subprojects have started in Jujuy, Misiones, and Formosa, but new commitments cannot be made until there is reasonable assurance that the PROMIN II project will go forward. By the time PROMIN II becomes effective, a large portion of the PROMIN I loan will have been disbursed. There will be a relatively short period (12-18 months) of overlap of PROMIN I and II. Moreover, PROMIN II will start and duplicate the same program in other provinces (not included in the first) so there will be room for expansion and use of the new funds from the start. 10. Lessons learned and reflected in proposed project design: The lessons learned from PROMIN I are: (i) The degree of targeting was about right. PROMIN I covered municipalities in which the number of poor represent at least 30 percent. This is a floor, and actual numbers vary across the provinces (e.g., 56 percent of Formosa's population is classified as poor). This level of targeting allows a significant number of poor to benefit from a subproject, and covers a critical mass of health facilities (e.g., one hospital and 25 health centers). Yet, it ensures that project funds benefit the poorest who are the most affected during a period of economic adjustment. PROMIN II aims at the same degree of targeting. The project design also contemplates a pilot program to improve maternal and child health care in rural areas. (ii) The design was flexible. PROMIN I follows a demand-driven, fund-type approach whereby funds are allocated to different provinces on the basis of agreed criteria, and subprojects are presented in a participatory approach by the beneficiaries themselves. This transfers the burden of subproject preparation from the centralized state bureaucracy, which often has limited capacity, to beneficiaries, and ensures their ownership. Technical assistance is provided to less-advanced provinces. This fund-type mechanism will also be used for PROMIN II. (iii) Project implementation arrangements have been successful. Provinces manage the subprojects directly through a provincial implementation unit. An overall Project Coordinating Unit (PCU) at the Federal level coordinates project implementation and ensures the link with overall policy objectives of the Ministry. For the proposed project, implementation would continue to follow the PROMIN I arrangements. (iv) The proper technical model has been applied. Since inception, the PROMIN program has been applying a delivery model that follows the concept of the integrated management of childhood illness (IMCI), which is widely recommended by the Bank and the World Health Organization (WHO) (details in section 15). 11. Indications of borrower commitment and ownership: The main indications are: (i) satisfactory implementation of PROMIN I; (ii) the Borrower taking the lead in project preparation n and implementation planning; and (iii) the Government's repeated requests for a follow-up project stemming from (a) the demonstrated success of the first operation, (b) pressure on the MOH from the provinces not participating in PROMIN I, and (c) the PROMIN program being seen as an essential tool to improve service delivery at the primary level, thus complementing reforms to modernize the financing of the sector and make hospitals more efficient. 12. Value added of Bank support: Bank support: * has helped transfer the experience from similar projects worldwide, both in the technical design of the project and in the introduction of implementation arrangements that ensure a successful operation; * would provide stronger oversight on the use of funds, consistent with Bank procurement and disbursement guidelines; * would permit on-going evaluation of the project during project implementation. and adjustments, if necessary; and * would facilitate coordination with other health and poverty reduction programs. * Expected continuity of Task Manager and team members with appropriate skill mix will help project implementation.  Project Concept Document Page 8 Country: Argentina Maternal & Child Health & Nutrition 11 Block 3: Summary Project Assessments (Detaled aessnments are in Uthe project Me. See Annex 8) 13. Economic Assessment (see Annex 4) Z Cost-Benefit Analysis: ] Cost-Effectiveness Analysis [I] Other NPV=US$271 million; IERR=40 percent The project has an estimated net present value (NPV) of US$271 million and an internal economic rate of return (IERR) of 40 percent. The rate of return would be even higher if additional project benefits not amenable to quantification in monetary terms could have been included. Results of risk/sensitivity analysis show that a two-year delay in the start-up of project implementation would reduce the NPV to US$94 million and the IERR to 28 percent. A 20 percent reduction in benefits combined with a two-year delay would reduce the NPV to US$53 million and the IERR to 15 percent. Under both scenarios, benefits would remain strong. The fiscal impact of the project would be negative because in the purely public sector (22 percent of total spending), in which PROMIN operates, there are no charges for services in basic health centers and hospitals. In the context of the present economic difficulties, the introduction of fees at the primary level would not make sense because: (i) it would certainly reduce the demand for health services by the poor; and (ii) it appears politically infeasible. However, the fiscal impact would be reduced because there is a high degree of voluntarism in early childhood development centers, in which about half the staff (representing about 30 percent of total operating costs) is expected to be voluntary as has been the case under PROMIN I. More than three quarters of health spending in Argentina involves cost recovery: (i) private sector spending, which represents 42 percent of total spending; and (ii) health insurance funds in which employee and employers' contributions total 36 percent of health spending. 14. Financial Assessment: PROMIN's financial management (including accounting and auditing) capacity has been reviewed and found satisfactory. The total recurrent expenditures of the PROMIN II project (an average of about US$3 million per year as shown in Annex 5) would not account for a significant percentage of either total or health spending at the provincial level. As a share of existing health expenditure levels, the recurrent costs would range from under 0.6 percent to just over 3 percent of provincial health spending. In terms of total provincial spending, recurrent expenditures would not exceed 0.4 percent in any of the project's provinces. The availability of counterpart funds has not been a problem under PROMiIN I and is not expected to be one under PROMIN II. Given that provinces do cofinance subprojects for personnel, drugs, and supplies, the institutional and fiscal capacity of participating provinces is reviewed as part of the evaluation of subprojects. In an extreme case, should a province experience unforeseen financial problems, project funds could be reassigned to other provinces, which would allow the overall implementation of the program to proceed. 15. Technical Assessment: Within a broader spectrum of activities, the PROMIN program applies the concept of the integrated management of childhood illness (IMCI). This intervention is widely recommended by the Bank and WHO as one of the most cost-effective public health interventions and clinical services. IMCI is a strategy to provide universal access to the population to basic health services for children. It includes health promotion and prevention as well as individual control and treatment of the major health problems and diseases affecting children. IMCI's objective is to focus on the most prevalent health problems affecting children: acute respiratory infections (ARI), acute diarrheal diseases (ADD), malnutrition, malaria and diseases preventable by vaccination (notably measles). The implementation of the IMCI strategy would help to: (i) reinforce the concept of integrated health care and change the focus from treatment of the most apparent illness to overall assessment of the child's health; (ii) strengthen the primary health care level, improving its capacity to resolve the most frequent problems affecting the child's health; (iii) improve equity in access to health care; and (iv) strengthen community participation through health education and social conununication. All of the above have represented the core objectives of the PROMIN program since its inception in November 1993. The specific objectives of IMCI (reduce mortality of children under 5, reduce occurrence and seriousness of ARI, ADD and measles, and  Project Concept Document Page 9 Country: Argentina Maternal & Child Health & Nutrition 11 improve quality of health care services provided to children in health facilities) are the same as the objectives of PROMIN. PROMIN goes beyond IMCI. In addition to the above objectives, PROMIN addresses the health of mothers, pregnant women, nutritional problems of mothers and children both at the health center and hospital levels, as well as aspects of childhood development through Early Childhood Development Centers (ECDC). The quality of these preventive measures has been strengthened through in-service training and social communication. An analysis of the most prevalent diseases in Argentina shows that the main problem is ARI. There is a low prevalence of measles which is concentrated in a few rural areas, a low level of acute diarrheal disease, and there is no malaria. Malnutrition figures are not up to date, which is why a National Nutrition Survey will be carried out in 1997. As Argentina's epidemiological profile varies across provinces, PROMIN has adapted its strategy to local needs. Different country experiences have demonstrated that the effective early childhood development programs are those that combine early learning with nutrition programs in early childhood development centers, and operate in close coordination with health centers. This is precisely the model followed by the PROMIN program. 16. Institutional Assessment: Project management capacity both at the Federal and provincial level has been developed during PROMIN I, and is adequate. The capability of the Federal PCU to coordinate an expanded PROMIN program has been assessed. and found adequate. Institutional capacity of new participating provinces and municipalities is reviewed as part of subproject preparation and a technical assistance program is designed and included as part of each subproject to strengthen their institutional capacity during subproject implementation. PROMIN's procurement staff is strong and well-recognized by the Bank. PROMIN staff is regularly asked to participate in procurement courses given to staff of other Bank-financed projects in Argentina. The first-year program has been prepared and is ready for implementation (a detailed procurement schedule is presented in Annex 6). Supervision of civil works construction is well organized. The quality of infrastructure financed under PROMIN I is good. The monitoring and evaluation system is being improved. During the past 18 months, PROMIN has been installing a system of progress, implementation, and impact indicators (for details of indicators used, see Annex 1; for examples of actual indicators measured, see "Documents in Project File - PROMIN I at-a-glance). 17. Social Assessment The project involves a high degree of conununity participation, which will help improve the quality and sustainability of subprojects. More details are provided in 'Community Participation in PROMIN' (Documents in Project File). The project has a very clear gender focus: about 75% of beneficiaries are women and girls. 18. Environmental Assessment Environmental Category - - A - B -l C It is expected that the execution of the components of the project will not cause any substantial environmental impact and therefore will be classified within Category 'B." For the purpose of controlling and preventing any particular situation, the wastes of the health centers, regional health centers (CRRs), hospitals and early childhood development centers (CDCs) will be collected and disposed of in an adequate manner. The infrastructure and equipment components consider elements of environmental health which will be taken into consideration in the formulation of the subprojects (e.g. construction of incinerators, crematory ovens, septic tanks, etc.). A guide for the formulation and evaluation of environmental aspects with sections on diagnosis, interpretation and prevention of situations will form part of the Operational Manual. 19. Participatory Approach Identification/Preparation Implementation Operation Beneficiaries/community groups IS, CON, COL IS, CON, COL IS, CON, COL Intermediary NGOs IS, CON, COL IS, CON, COL IS, CON, COL Academic institutions IS, CON IS, CON IS, CON Local government IS, CON, COL IS, CON, COL IS, CON, COL Other donors IS, CON, IS, CON IS, CON Note: information sharing (IS); consultation (CON); and collaboration (COL)  Project Concept Document Page 10 Country: Argentina Matemal & Child Health & Nutrition II The PROMIN program is highly participatory. Community participants are usually involved through all the steps of the subproject cycle from identification to evaluation. During subproject preparation, PROMIN promotes the involvement of subproject beneficiaries, local representatives, NGOs, subproject workers, and the community-at-large in the diagnosis of problems and in the design of solutions. Beneficiaries are formally involved in the planning and evaluation of subproject activities at the local level through community organizations, such as groups of mothers and parents, and groups of children and adolescents. These groups work closely with health, education, and social action institutions. Training is provided by PROMIN for the management of the subproject. At the start of a subproject, an Advisory Council is usually established, composed of representative leaders from the community who have participated in workshops during subproject identification. At the end of a subproject, beneficiaries participate in the evaluation of subproject performance compared to its objectives. 20. Sustainability Incremental recurrent expenditures would be incurred to provide health facilities and child development centers with the necessary inputs in personnel as well as goods and materials. Redeployment of personnel rather than hiring of additional staff is emphasized under the project. The hiring of additional staff, when redeployment of personnel is not feasible, and the development of support services would be based on a gradual phase-in of project activities. Provincial and municipal incremental recurrent expenditures would be financed by the federal government on a declining basis. Specifically, incremental recurrent purchases of food, drugs, and other materials, and incremental recurrent salaries would be financed as follows: 100 percent, 70 percent, and 30 percent during the first, second, and third year of implementation by the federal government, and the balance, as well as all incremental costs beginning in year four, out of provincial and municipal budgets. This would be specified in the subsidiary agreements between the MOH and the provinces. 21. Critical Risks (see fourth column of Annex 1) Risk Risk Rating Risk Minimization Measure Project outputs to development objectives Frequent political and administrative changes at the Medium Involving the major stakeholders (lawmakers in provincial level that may affect ownership and provinces and municipalities and beneficiaries) management capacity; at an early stage of project preparation Project components to outputs Number and variety of actors involved (federal level, Low Assigning clear project management provinces, and municipalities); responsibilities to be coordinated by the PCU. Flexible project design, and clear definition and during project preparation of major participants' roles in the project Lack of funds to finance recurrent costs. Low Financing of recurrent costs on a declining basis Approval of poor-quality subprojects on the basis of Low Using transparent eligibility and evaluation political patronage criteria for the selection of subprojects; independent monitoring and financial audit Overall project risk rating LOW