Moldova - General Education Project

Document of The World Bank Report No. 15967 MD STAFF APPRAISAL REPORT REPUBLIC OF MOLDOVA General Education Project March 21, 1997 Municipal and Social Services Division Country Department IV Europe and Central Asia Region  CURRENCY EOUIVALENTS I US$ = Moldovan Lei 4.57 (as of October 1996) WEIGHTS AND MEASURES Metric System MOLDOVAN FISCAL YEAR January I - December 31 ABBREVIATIONS AND ACRONYMS AEWG - Working Group for Assessment and Evaluation BEC - Bid Evaluation Committee CAS - Country Assistance Strategy CCEAC - Coordinating Commission for Curriculum and Assessment Evaluation CPAR - Country Procurement Assessment Report DAL - Department of Didactic Materials and Library Assistance DEE - Department for Evaluation and Examinations EC - Expert Commission GDP - Gross Domestic Product GPN - General Procurement Notice GTZ - Deutsche Gesellschaft fur Technische Zusammenarbeit ICB - International Competitive Bidding IDF - Institutional Development Fund INPCD - National Institute for Teacher Training IPPS - Institute for Psychological and Pedagogical Studies MEC - Manuscript Evaluation Committee MoF - Ministry of Finance MEYS - Ministry of Education, Youth, and Sports NCAC - National Curriculum and Assessment Council NCB - National Competitive Bidding NS - National Shopping OECD - Organization for Economic Cooperation and Development PMU - Project Management Unit PPF - Project Preparation Facility SA - Special Account SOE - Statement of Expenditures TOR - Terms of Reference UNICEF - United Nations Children's Fund VAT - Value Added Tax WG - Working Group Vice President Mr. Johannes Linn, ECAVP Director Mr. Basil G. Kavalsky, EC4DR Division Chief/Manager Mr. Thomas A. Blinkhorn, EC4MS Staff Member Ms. Monika Huppi, Task Manager  STAFF APPRAISAL REPORT REPUBLIC OF MOLDOVA General Education Project CONTENTS Loan and Project Summary..... 1. BACKGROUND AND RATIONALE ................................................1 A. Country Context ..................................................1I B. The Education Sector ....................................................2 C. Main Issues and Constraints .6 D. Government Strategy ..............................................8 E. Rationale for Bank Involvement ..............................................8 2. THE PROJECT .................................................. 10 A. Project Background ................................................... 10 B. Project Objectives ................................................... 10 C. Project Description .................................................. 10 D. Impact on Women, Environment, Poverty and Participation ..................................... 14 3. PROJECT COSTS, FINANCING AND PROCUREMENT . .......................................... 15 A. Project Costs and Financing ................................................... 15 B. Procurement ................................................... 17 C. Disbursement ................................................... 21 D. Accounts and Audits ................................................... 22 4. PROJECT IMPLEMENTATION .................................................... 23 A. Project Management and Implementation ................................................... 23 B. Monitoring and Evaluation ................................................... 24 C. Supervision ................................................... 25 This report is based on the findings of an appraisal mission which visited Moldova from October 15 to 31, 1996. Appraisal team members included: Ms. Monika Huppi (Task Manager, EC4CH), Mr. Antonio Lim (Project Assistant, EC4MS), Ms. Marlaine Lockheed (Principal Education Specialist, HDD), Mr. Lloyd Briggs (Teacher Training Specialist, Consultant), Mr. Gert van den Brink (Curriculum Development Specialist, Consultant), and Mr. James McCall (Textbook Specialist, Consultant). Peer reviewers for the project were: Mr. Indermit Gill (PSP), Mr. Bruno Laporte (HDD), Mr. Michael Mertaugh (EC 1/2HR), and Ms. Terrice Bassler (EC2HU).  5. BENEFITS AND RISKS ................................................. 26 A. Benefits and Justification ................................................. 26 B. Sustainability and Risks ................................................. 26 6. AGREEMENTS REACHED AND RECOMMENDATIONS ......................................... 28 ANNEXES Moldova at a Glance I Current and Reformed Structure of Moldova Education System II The Curriculum Development Component III The Learning Assessment Component IV The Teacher Retraining Component V The Textbook Component VI Project Management Unit VII Summary List of Technical Assistance VIII Project Cost Summary IX Estimated Loan Disbursement Schedule X Project Implementation Plan XI Project Monitoring Indicators XII Supervision Plan XIII Procurement Packages and Schedules XIV List of Documents in Project File MAP IBRD No. 28265 TABLES Table 1.1 Sunimary of Enrollments, Teachers and Schools Table 1.2 Education Expenditures in Moldova Table 1.3 Allocation of Total Public Education Expenditures by Education Level Table 3.1 Summary of Project Cost Estimates by Component Table 3.2 Summary of Project Cost Estimates by Expenditure Category Table 3.3 Project Financing Plan Table 3.4 Procurement Arrangements Table 3.5 Disbursement Summary  - i - REPUBLIC OF MOLDOVA General Education Project LOAN AND PROJECT SUMMARY Borrower: Republic of Moldova Implementing Agency: Ministry of Education, Youth, and Sports Beneficiary: About 636,000 students and 45,000 teachers Poverty Category: Not Applicable Amount: US$16.8 million Terms: Payable in twenty years, including five years of grace period at the rate for variable LIBOR-based US Dollar single currency loans. Commitment Fee: 0.75% on undisbursed loan balances, beginning 60 days after signing, less any waiver. Financing Plan: IBRD - US$16.8 million or 84% of project costs net of taxes; Government of Moldova - US$3.2 million or 16% of project costs, plus taxes and duties. Economic Rate of Return: Not Applicable Staff Appraisal Report: No. 15967 MD Map: IBRD No. 28265 Project ID Number: MD-PA-8558   MOLDOVA GENERAL EDUCATION PROJECT STAFF APPRAISAL REPORT 1. BACKGROUND AND RATIONALE A. Country Context 1.1 Situated between Ukraine and Romania, Moldova is the second smallest country in the Former Soviet Union. Over 50% of its ethnically diverse population of 4.4 million live in rural areas. Agriculture and agro-processing continue to dominate the national economy, accounting for nearly 60% of GDP. 1.2 CounLry Context. Serious terms of trade shocks, armed conflict and a series of natural calamities caused a precipitous decline in national production and living standards in Moldova during the first half of the 1990s. Between 1991 and 1994 output and real wages fell by 60 percent, while employment decreased from over 2 million in 1991 to around 1.7 million in 1994. 1.3 In 1993, the Government of Moldova initiated a vigorous and quite successful macro-economic stabilization program. Tight monetary policy, the introduction of a new, convertible currency and significant reductions in the budget deficit resulted in a sharp decline in inflation (from almost 2000% in 1992 to 15.1% in 1996). Coupled with recently introduced structural reforms, particularly in the enterprise sector, the Government's stabilization program appears to have led to a slowdown in the precipitous decline in national production during 1995. Preliminary figures for 1996, however, suggest a renewed downturn in GDP growth. To strengthen the gains achieved through the macro-economic stabilization program, significant further structural reforms are needed in the years to come, both in the productive and social sectors. 1.4 Sectoral Background. Although education has traditionally been a national priority, the education system left behind by more than four decades of central planning is largely inadequate to effectively prepare the future work force for the demands of a market economy. Curricula, the approach to teaching and learning, and didactic materials need to be substantially upgraded to ensure that the education system meets the demands posed by new social and economic realities. 1.5 The need to curb public expenditures resulted in a significant reduction in public expenditures allocated to education over the past few years. As a result, education spending has been largely limited to salaries and utilities, with minimal, if any, amounts left for textbooks, pedagogical materials, teacher training and often badly needed capital repairs. The lack of resources has thus prevented the Government from effectively implementing education reforms needed to adapt the system to new social and economic realities.  - 2 - B. The Education Sector 1.6 With the adoption of a new education law in 19951, Moldova has set the stage to reform its education system -- bringing it more in line with the European systems -- and to revise the approach to education in response to the new demands on the system. 1.7 Structure. The new system provides for one year of mandatory pre-school, followed by four years of primary and five years of gymnasium schooling. Upon completion of this mandatory 10-year general education program, students will have the option to continue in an upper secondary track for another three years or a flexible 1.5 - to 5-year vocational education track with three completion levels or exit points (Annex I). Full implementation of this new structure is planned over the next 10 years. 1.8 During the transition period, the new system will gradually gain importance, as the old system will be phased out. Mandatory general education will occur along the lines outlined above, but voluntary upper secondary education will be ensured through various alternatives: (i) general secondary school with the new lyceums covering grades 10-12 and terninating with the baccalaureate examinations and with the traditional 11-year comprehensive schools; (ii) vocational secondary education ensured by technical/vocational secondary schools (lasting 2-3 years), technical secondary colleges (lasting 3 years) and apprentice schools (Annex I). 1.9 Higher education is ensured through a combination of public and private universities, politechnicums and colleges. The overall level of education in Moldova is quite high by international standards. According to the last population census (1989), about 10% of the population aged 14 or more had enjoyed a higher education and 45% had completed upper secondary school. 1.10 Enrollments, Moldova's current education system (excluding Transnistria 2) consists of over 3,300 educational establishments and 77,500 teaching staff serving almost 922,000 students. Eighteen percent of the student body is enrolled in pre-school, 29% in primary school, 34% in lower secondary school (gyrnnasium), 6% in upper secondary school, 4% in vocational training schools, 3% in colleges and technical schools and 5% in higher education establishments. About 75% of general education students study in Romanian language schools, while the remainder study in minority schools (Russian, Ukrainian, Gagauzian and Bulgarian), of which the Russian language schools are by far the most important (accounting for over 50% of the minority student body). 1.11 Like in many other transition economies, there has been a continuous shift away from vocational/technical and towards general education at the upper secondary level. The number of students per 10,000 inhabitants enrolled in vocational/technical schools and colleges has decreased by over one third over the past ten years. Over the past three years alone, the number of new enrollments in vocational technical schools declined by over 14%, while that of students continuing with upper general education increased by almost 10 percent. The Education Law adopted in 1995 sets the stage for education reformn in Moldova and defines the new structure of the education system (see para. 1.33). 2 The status of Transnistira within Moldova has not yet been settled. The mainly Russian speaking Transnistria region has set up its own Government which does not report to the Moldovan Central Government. Consequently, the education system in Transnistria does not fall under the control of the Moldovan Ministry of Education, Youth, and Sports (MEYS) with the exception of a small number of Romanian speaking schools which are supported by the Moldovan MEYS.  - 3 - Table 1.1 Summary of Enrollments, Teachers and Schools, 1995/1996 Total Number of Education Level Students Teachers Schools Pre-school 166,600 18,000 1,725 General Education * 636,790 49,100 1,469 Vocational schools 35,060 3,800 76 Colleges 33,800 2,600 47 Higher Education 49,500 4,000 18 Total 921,750 77,500 3,335 Note: *General Education includes grades 1-12; distribution of student enrollment by level is as follows: primary (gr 1-4), 42%, lower secondary (gr. 5-9) 49%, and upper secondary (gr 10- 12) 9 percent. Source: Ministry of Education (presently renamed the Ministry of Education, Youth, and Sports) 1.12 Performance Indicators. Repetition rates appear to be low in Moldova, with over 95% of pupils in all grades of compulsory and secondary education reported to be in that grade for the first time. Dropout rates are reported as being equally low. Virtually 100% of the age cohort complete mandatory general education (grade 9), while somewhat below 50% of the age cohort continue upper secondary education and 35% continue with technical education. Participation in higher (university) education is still relatively low (about 10%), though increasing. No reliable data exist on the overall effectiveness of the Moldovan education system and on student achievement. 1.13 Teachers and Teacher Training. Pre-service teacher training is currently ensured through two avenues: pre-school and primary school teachers follow a 4-5 year course at a specialized teacher training college after completing 9th grade. Secondary school teachers follow a 4-5 year course at one of several higher education establishments where they specialize in one or two subject matters and also follow some pedagogical training. Most teachers of 'practical' subjects graduated from vocational/technical schools have no subject-based higher education or pedagogical training. The Ministry is reconsidering the organization of pre-service teacher training to bring the system more in line with most OECD countries, where specialized upper secondary school training for primary school teachers has been replaced with higher education training. 1.14 The National Institute for Teacher Training (INPCD) is in charge of in-service teacher training. In principle, all teachers are obliged to follow an in-service refresher course every five years. However, resource and capacity constraints have prevented full realization of this requirement. Because neither pre-service nor in-service teachers training has provided teachers with exposure to alternative methodologies and approaches to learning now predominant in most developed countries, in-service training will need to be adjusted and reformed accordingly to help improve educational quality in the years to come. 1.15 The need to allocate resources more efficiently will require increases in the currently low student/teacher ratio, particularly at the secondary and vocational training level and to increase the currently low teaching load. At the same time efforts will need to be made to bring teacher salaries, which currently average only 55% of salaries in industry, more in line with those in other sectors, so as to stem the drain of teachers in high demand areas (e.g. foreign languages) into other occupations.  -4 - 1.16 Education Sector Management. Education management is still very centralized in Moldova. The Ministry of Education, Youth, and Sports (MEYS)3 is responsible for all major aspects of education. Its organizational structure includes departments for specific aspects/levels of education (e.g. pre-school, general education, vocational education, higher education, post-university education) and a network of semi-autonomous institutes, such as the Institute for Psychological and Pedagogical Studies (IPPS) or the National Institute for Teacher Training (INPCD). The Ministry develops education policy, manages the preparation of new curricula and approves the latter, prepares and approves all assessment and examination materials, and manages the production of all textbooks. 1.17 The Ministry directly manages only a limited number of educational institutions. Although it oversees all pre-school and general education establishments, the latter are financially and administratively the responsibility of local governments and fall under the auspices of rayon education directorates. The latter, however, are dependent on the Ministry of Education, Youth, and Sports and their flexibility is thus limited. The Ministry also oversees all vocational training schools, 35% of colleges and 45% of higher education establishments and a limited number of special education establishments and boarding schools. The remainder of colleges and higher education establishments are under the administrative and financial responsibility of various sectoral ministries. 1.18 Education Sector Financing. The high priority which Moldova accords to education is reflected in the important share of public expenditures and of GDP which go to education. Over the last three years, education expenditures have averaged almost 22% of total public expenditures and 6.7% of GDP (8.9% of GDP excluding Transnistria)4, compared to 4.8% of GDP and 12% of total expenditures in OECD countries. Despite efforts to protect education sector expenditures during the time of necessary budget cuts, real expenditures in the education sector dropped significantly during the transition period (17% between 1993 and 1995 alone). 1.19 Over two-thirds of public expenditures for education are covered by the budgets of local governments. While the state budget covers vocational, technical and higher education, local governments are responsible for pre-school and general education, except for boarding schools and other institutions for children with special needs. The central government also covers the development cost of curriculum and teaching materials, including textbook production, for all education levels (these expenditures have become minimal over the past few years). Capital investments must be approved by the central government on a case by case basis. Only upon approval of a particular project are funds transferred from the central to the local government. The share of local governments' contribution to education expenditures has increased by almost 20% since 1992, mainly because of the declining importance of central government-financed vocational training expenditures. After January 15, 1997. the Ministry of Education was merged with two other ministries and is now officially called the Ministry of Education, Youth, and Sports. Education expenditures and other public expenditures exclude Transnistria. Transnistria should also be excluded from GDP when education expenditures are compared to GDP.  -5- Table 1.2. Education Expenditures in Moldova 1993 1994 1995 1996 Actual Actual Actual Budget Education Expenditure (thousand lei based on 1993 prices) 124,927 97,726 101,394 110,043 Share of Education Expenditure in Total Government Expenditure 21% 21% 22% 23% Education Expenditure as % of GDP 5.8% 7.2% 7.0% 6.4% Local Government Education Exp./Total Education Exp. 69% 69% 69% 69% Source: Ministry of Finance, Ministry of Economy 1.20 Resource constraints have led to a situation where salaries, school maintenance (essentially utilities), and food expenditures account for close to 90% of education expenditures, leaving minimal, if any amounts for textbooks, pedagogical materials, in-service teacher training and often badly needed capital repairs. As a result, there has been a considerable shortage of textbooks and other pedagogical materials in schools over the past few years and even minimal capital repairs which would have allowed energy efficiency improvements that can cut down on utility costs. Perpetuation of this situation is likely to weaken the educational system's effectiveness and severely damage the capital stock. Table 1.3. Allocation of Total Public Education Expenditure by Education Level Planned Level 1992 1993 1994 1995 1996 % of total education expenditure Pre-school 19.8% 21.1% 21.7% 21.7% 20.1% General Education 46.4% 54.7% 53.4% 54.9% 54.8% Vocational Schools 15.3% 9.5% 8.7% 7.8% 7.8% Colleges 6.5% 5.9% 6.8% 6.3% 6.3% Higher Education 11.3% 8.0% 8.9% 8.6% 10.4% Staff training 0.7% 0.8% 0.5% 0.7% 0.6% Source: Staff calculations, based on data from Ministry of Finance 1.21 Over the past four years Moldova has increasingly shifted the focus of its educational expenditures away from technical and vocational towards general education. This is a sensible strategy, given that resources are severely constrained and returns to general education (particularly lower grades) have traditionally been higher than those to technical and higher education. General education (grades 1-12) now accounts for almost 60% of education expenditures, pre-school accounts for a high 20 percent. Vocational, college and higher education account for 7%, 5%, and 10% of total expenditures, respectively.  - 6 - C. Main Issues and Constraints 1.22 Approach to Teaching and Learning. The approach to teaching and learning currently predominant in Moldova's classrooms and also reflected in the current curricula and teacher training courses is a legacy of the past and differs significantly from that in most developed countries. Curricula as well as examinations are mainly content- and knowledge-based; students are expected to learn and recite facts rather than build up learning and critical thinking skills. The teaching process is mainly authoritarian and frontal. The teacher-centered approach, whereby a teacher "lectures" students, is the traditional teaching method, while little attention is paid to discovery and group work, problem-solving, discussion or project work which would further student initiative, interaction and critical thinking. To effectively prepare the future labor force to enter an increasingly flexible but demanding labor market, it is critical that the education system teaches students more cognitive and social skills such as creative thinking, problem solving, decision making and responding to unanticipated problems. 1.23 The knowledge-based approach also strongly affects teacher training. The curriculum for teacher training is very content- and knowledge-based and taught at a highly theoretical level, while more practical applications such as classroom management and organization, differential pedagogy, group work, and conflict resolution are left out completely. The content of academic subjects is essentially limited to a study of the subject itself, while little attention is paid to issues related to teaching and learning the subject. 1.24 Curriculum. The curriculum inherited from the past no longer corresponds to Moldova's social and economic realities and needs substantial revision, both in terms of content and in terms of approaches to teaching and learning. The Institute for Pedagogical and Psychological Studies (IPPS) has started to revise the curricula for general education. However, the new curricula developed so far suffer from a lack of vertical and horizontal coherence because there is no structure that would allow coordination among individual curriculum developers, nor any review which would ensure inter-and trans-disciplinary coherence. In addition, curriculum development remains a very closed process with little, if any, input or feedback from key stakeholders, such as teachers, school inspectors, parents or the academic community. Thus, there is a pressing need to revise the approach to and processes for curriculum development to allow for improved coherence and increased stakeholder participation. 1.25 Learning Assessment. Although Moldovan students are currently administered a battery of control, promotion and graduation tests throughout their education, there is essentially no valid information generated on student achievement and the performance of the education system as a whole. This is due to a number of key shortcomings of the current learning assessment system, such as: (i) students are over-tested but under-assessed in terms of formative information and acquisition of flexible skills; (ii) examinations and classroom tests are heavily content- and knowledge-based; (iii) centrally- set written examinations are of low technical quality, lacking face validity, reliability and comparability in terms of difficulty levels; (iv) testing and scoring are not developed to modern standards, as delivery of hand-written and oral examinations create uneven testing conditions for candidates; (v) examination results are not collected and analyzed; (vi) there is no identifiable "cadre" of trained specialists with adequate time and resources to develop modern assessment types; and (vii) there are no clear lines of accountability for examination quality within the Ministry of Education, Youth, and Sports. 1.26 Substantial revision of the assessment and examination system is needed to develop a mechanism which not only certifies students, but also provides a valid assessment of their acquired knowledge and skills and at the same time provides feedback on the overall quality of the education system. Emphasis should be placed on limiting the number and improving the quality and validity of national examinations. Assessment objectives should be integrated into the new curriculum. A small  - 7 - cadre of specialists capable of developing, administering and subsequently analyzing results of examinations which objectively assess student achievement must be developed. 1.27 Textbooks. The profound political changes in the early 1990s left the Moldovan education system confronted with the need to replace previous, often ideologized, textbooks. Mainly due to resource constraints, these replacements have so far taken place on a piecemeal basis, with the result that there remains a significant shortage of textbooks in schools and those textbooks which are currently in use often do not correspond to the new needs of the education system. The introduction of new curricula will require the parallel introduction of new textbooks, in sufficient quantities to allow for effective teaching and learning. 1.28 Development of new textbooks, which has been extremely limited due to resource constraints, occurs under a rather closed system. Authors are hand picked by the Ministry of Education, Youth, and Sports and are largely limited to staff at the Institute for Pedagogical and Psychological Studies. In most cases, the same people who write the curriculum also write the textbook. Publication is largely ensured by the State Textbook Publisher, which is financially and managerially autonomous and does not obtain any subsidies. Although there is a growing number of local private publishers, their experience in textbook publishing remains extremely limited, as they have not had access to Ministry of Education, Youth, and Sports contracts. 1.29 A fundamental problem in the supply of textbooks is the lack of a sustainable textbook financing mechanism. The Ministry of Education, Youth, and Sports no longer has the budgetary resources to guarantee adequate annual supplies nor development of new materials needed for a modern education system. While external funding can help mitigate the immediate crisis by supporting the development of new textbooks, it will be necessary to introduce a cost recovery mechanism that permits books to be regularly reprinted as the need arises. 1.30 Resource Allocation. While the Moldovan education system is affected by significant resource constraints, there is also a clear need to improve the efficiency of sectoral resource allocation. Student/teacher ratios (national average of 13) and teachers' working hours are low, the ratio of non- teaching staff to teaching staff is relatively high, vocational training students get free meals or stipends irrespective of performance or income. Day care at early ages is provided free of charge, except for some cost recovery for meals. To date practically no efforts have been made to introduce significant cost recovery measures and, hence, increase private sector participation in education finance. The Government is aiming to tackle these issues through efficiency enhancing measures such as a gradual increase of the student-teacher ratio, a continued reallocation of resources away from vocational and higher education towards general education, and increased involvement of the private sector in education finance. 1.31 The proposed project is designed to help the Government implement the reforms needed in the areas of curriculum and teaching materials development, learning assessment and in-service teacher training, so as to help bring the Moldovan education system more in line with those in market economies. It will also support the establishment and implementation of a cost recovery system for textbooks. The resource allocation issue is being tackled through a continuous policy dialogue with the Government, including work carried out in preparation of the proposed project and the Public Expenditure Review. The sectoral development policy letter which the Ministry of Education, Youth, and Sports provided to the Bank during negotiations outlined the Government plans to tackle resource allocation issues. In addition, resources have been allocated under the proposed project to carry out studies in the area of education sector management and resource allocation in view of a possible future project which would support reforms in this area.  - 8 - D. Government Strategy 1.32 The Government is fully aware of the need to reform the education system to bring it more in line with those in market economies. The Government has already developed an overall education reform strategy which has been adapted by the Parliament. Three key documents reflect the anchor points of the new strategy: a concept paper, adopted by Parliament in December 1994; the new Education Law, adopted by Parliament in July 1995; and the National Program for Education Development (1995-2000) which is currently being revised. 1.33 The core components of education reform, as reflected in these documents, are: * reform of the education system structure as described in para. 1.7; * a major overhaul of the education program (curricula, teaching materials, textbooks, and teaching methodology) at all levels to adjust the approach to teaching and its contents to new demands on the education system, with particular focus on formnative education; * reform of teacher training and re-training to equip teachers with the necessary skills to implement new approaches to learning and teaching and to expose them to modern methodologies used around the world; - introduction of new education standards and modem mechanisms to assess student learning; * development of a modern educational management system, allowing for increased flexibility and more efficient use of resources; - increased role of private educational establishments; and * an increase in the resources allocated to education to improve conditions of service for teachers and raise sectoral investments needed to implement the reforms. 1.34 Although these points present a good basis for the reforms necessary to upgrade the education system, detailed formulation and actual implementation of the reforms still lie ahead in many areas. The proposed project would help to further define detailed reforms and establish some of the institutional frameworks and processes necessary for successful implementation of the reform program. E. Rationale for Bank Involvement 1.35 The Bank's assistance strategy to Moldova initially focused on a response to the drought of 1992 (US$26 million - Ln. No. 3569), followed by a Rehabilitation Loan (US$60 million - Ln. No. 3653), a Structural Adjustrnent Loan (US$60 million - Ln. No. 3815) and a Pre-Export Guarantee Facility (US$30 million - Ln. No. 3851) in the period 1993-95. While the Bank's 1996 Country Assistance Strategy (CAS) has identified a further need for structural adjustment support, it has also pointed out that the Bank's focus over the years to come will increasingly need to shift towards investment operations in key areas such as agriculture, energy and the social sectors to help broaden the reform effort. Consequently, recently approved Bank projects include an Agriculture Project (US$10 million - Ln. No. 40110), an Energy Sector Project (US$10 million - Ln. No. 40200) and a Private Sector Development Project (US$35 million - Ln. Nos. 39770/39771). 1.36 Although reforms are planned in all social sectors, the degree to which these changes are embedded in a well-defined long-termn strategy varies. Strategic reform plans are furthest advanced in the education sector; while reforms in health and social protection still remain to be formulated. Taking into account the degree of preparation of reform plans and foreign assistance already in place in other  9 parts of the social sectors, the CAS highlights the education sector as the most suitable choice for Bank support at this stage. 1.37 Reforming Moldova's education system so that it can adequately respond to the demands of the new social, political and economic environment will be key to helping Moldova successfully complete the transition to a market economy. Yet, it is virtually impossible to finance the required education sector reforms with the limited budgetary resources available. To date, external support to the sector has been very limited and piecemeal, preventing Moldova from successfully carrying out the necessary reforms. The proposed project emerged as a priority during discussions with the Government in October 1995, when a Bank mission examined priorities in social sectors. 1.38 Until preparation of the proposed project was initiated in January 1996, the Bank's involvement in the sector had been limited to a sectoral analysis carried out in the framework of an overall assessment of social sector needs in 1993. Since project preparation has been initiated, the Bank has been involved in a continuous dialogue with the Ministry of Education, Youth, and Sports and other key Ministries (Economy and Finance) on education reform issues. This dialogue was further supported and expanded during the recently completed Public Expenditure Review, which included a detailed analysis of education sector resource allocation issues. 1.39 As the CAS points out, the Bank's strategy in the education sector in Moldova is to use the preparation and subsequent implementation of this proposed first project to initiate a long-term dialogue and to reach agreement on comprehensive sector reform focusing on a medium term human resource development strategy to support private sector development and to improve the sector's performance. The proposed project will thus support the first phase of the Government's education reform efforts and focus on reforms which largely need to be initiated by the center, such as national curriculum, assessment and textbook reforms. It is expected that the dialogue and cooperation will continue beyond the implementation of this proposed project, possibly with later support for reforms at the upper secondary and/or vocational training levels and with the implementation of a comprehensive education sector management reform. The proposed project would thus allocate resources for studies to help define the reform program in these areas in detail so that its implementation could be supported by future Bank assisted projects. 1.40 The proposed project has been prepared with financial assistance provided through a Policy and Human Resources Development (PHRD) Fund from the Japanese Government and through the Netherlands Trust Fund for the Social Sectors in Moldova. Project preparation focused heavily on participation by staff of the Ministry of Education, Youth, and Sports, as well as those in the community associated with definition and subsequent implementation of education sector reforms. Throughout project preparation, the Bank maintained close coordination with other donors supporting the sector. UNICEF is supporting pre-school reforms, the Soros Foundation is providing limited support with textbooks in the humanities and foreign languages, particularly at the lyceum level, while the European Union and GTZ are providing some assistance in the areas of vocational training, labor market and higher education.  - 10- 2. THE PROJECT A. Project Background 2.1 The proposed project is the first Bank-supported operation in Moldova's social sectors and in the education sector. Project design has deliberately been kept simple; project interventions are limited to supporting reforms in mandatory general education through four closely interlinked components. The choice of supporting reforms in general education is motivated by three main factors: (i) the Government's decision to initiate reform at this level because curriculum reform has already been started, but slowed down due to fiscal constraints; (ii) economic returns from investments in general education have always been significantly higher than those at other education levels5; and, (iii) general education reform is less dependent on the pace of reform in other sectors. B. Project Objectives 2.2 The project aims at supporting the first phase of Moldova's education sector reforms, focusing on mandatory general education. The project's key objective is to modernize and improve the quality of primary and lower secondary education through improved curricula, new textbooks, in-service teacher training, and a modern assessment system. While the project will introduce innovative approaches in each of these areas and involve some institutional changes in the Ministry of Education, Youth, and Sports, it is deliberately designed to build on the sector's existing labor force and not expand employment in or outside the Ministry of Education, Youth, and Sports. It largely builds on existing institutions and the achievements of Moldova's education system to date. C. Project Description 2.3 The proposed General Education Project comprises four components: curriculum development, textbook production and financing, learning assessment, and in-service teacher training. 2.4 Curriculum Development Component (US$0.64 million, net of taxes, or 4% of base costs). This component aims at supporting the Government's efforts to revise the entire curriculum for mandatory general education, so as to ensure that the curricula correspond to new demands on the education system and espouse a modern and methodologically improved approach to teaching and learning. 2.5 The component comprises (i) the establishment of an integrated institutional structure for curriculum development and assessmentlevaluation so as to promote cohesion in policy and activities (Annex II), (ii) the development and establishment of updated subject curricula for grades 1 - 9, and (iii) support to teachers with the implementation of the new curriculum. 2.6 The main innovation under this component is that the curriculum development process would become significantly more broad based and participatory than it currently is and would, thus, ensure increased stakeholder participation. Curricula would be drafted by working groups consisting of curriculum development specialists from the Institute of Pedagogical and Psychological Studies, subject matter specialists from academia, classroom teachers and rayon education inspectors/methodologists. Draft curricula would be reviewed by a coordination and curriculum evaluation committee, composed 5See for examnple, George Psacharopoulos, "Returns to Investment in Education: A Global Update," Working Paper No. 1067, (Washington, D.C.: The World Bank, 1993).  - I1 - of a combination of subject matter specialists and teachers. Besides reviewing curricula for their methodological, pedagogical and subject matter adequacy, coordination committees would be responsible for ensuring vertical and horizontal coherence in the curricula. Before negotiations, the Borrower submitted satisfactory evidence to the Bank that the new institutional structure for curriculum development and learning assessment had been established 2.7 Each draft curriculum would undergo a broad based consultation process, so as to obtain feedback from rayon education directorate subject matter specialists, teachers, schools administrators and other interested parties. Feedback from the consultation process would be integrated in subsequent drafts of the curriculum. Once adopted by the coordination and curriculum evaluation committee, the new curriculum would be submitted to the newly established National Curriculum and Assessment Council (NCAC) for further review. The latter would either send the curriculum back for further revision or recommend its adoption to the Minister of Education, Youth, and Sports. At the end of the project, a total of about 134 subject grade curricula would have been developed, adopted, and introduced in schools. 2.8 The revised curricula would espouse modern approaches to teaching and learning and contain revised contents, and key learning and assessment objectives. Together with the re-training of teachers and new textbooks, they would be key to transforming Moldova's education system so that it can provide students with the basic skills needed to function effectively in a modern market economy. 2.9 The component would also support introduction of the new curricula through the production of supporting materials for teachers by the curriculum development working groups, contribution of the curriculum development working groups to in-service teacher training, and participation of curriculum development working group and coordination committee members in the textbook manuscript evaluation committees. The project would also provide technology and science related equipment relevant to the introduction of the new curricula in a number of pilot schools. The detailed list of equipment would be drawn up by the curriculum development working groups with concurrence by the World Bank. This pilot activity would test and establish the basis of minimum equipment necessary to teach effectively those subjects requiring equipment before embarking on large scale investments across the country. Bank approval of the proposed equipment list and the selection criteria for pilot schools would be a condition of disbursement of the funds for these equipment. 2.10 The project would finance training and technical assistance for all bodies involved in curriculum development, equipment, materials, development costs, including stakeholder consultations, production of supporting materials for teachers, interim and final publication and dissemination of new curricula, and, science and technology equipment in pilot schools. 2.11 Learning Assessment Component (US$0.82 million, net of taxes, or 5% of base costs). This component aims at upgrading Moldova's assessment and examinations system into a national system of assessment and evaluation capable of monitoring and providing feedback on the quality of the education system. 2.12 The component would support the development of an improved assessment and examinations system in five key areas: (i) integrating assessment objectives into the new curriculum; (ii) improving key national examinations at grades 4 and 9 to monitor student performance and the impact of the new curriculum and textbooks on learning outcomes; (iii) developing and disseminating to teachers packages of exemplary assessment materials for key subjects in grades 1-9; (iv) training central trainers in the use of these materials; and (v) conducting a sample based survey of student achievements under the current system against which student performance under the new curriculum could be compared towards the end of the project.  - 12 - 2.13 The new integrated institutional structure for curriculum and assessment development will ensure integration and close coordination of curriculum and learning assessment development. In particular, the new structure would ensure that learning assessment standards for each subject and level are in line with standards of the national curriculum, and that there is coherence of assessment packages and formats across subjects and educational levels. 2.14 Improvement of the system of examinations and assessment would occur at two levels: (i) streamlining and upgrading of key national examinations6; and (ii) strengthening of classroom based diagnostic and formative testing. The overall goal for national examinations would be to ensure that by the end of the project every student in Moldova would be given his/her own copy of an examination paper which is carefully designed and constructed, linked to national standards and curriculum objectives, and composed of questions which ask for more than recall of factual knowledge. Improved school based assessment would be achieved by providing teachers with supporting materials which outline alternative ways of assessment and by including a module on modern school based assessment in the project supported in-service teacher training component. 2.15 To improve the national system of examinations, the Ministry of Education, Youth, and Sports would set up a small but specialized Department for Examinations and Evaluation (DEE) in charge of development, administration and evaluation of national examinations. The unit would also contribute to the development of materials for and support teacher training in assessment under the project's teacher training component. The unit would be staffed through redeployment and training of existing ministerial staff. 2.16 The project would finance specialized local and international training for staff of the DEE and those members of the curriculum development structure in charge of learning assessment, technical assistance, equipment and materials for production of new examinations and supporting materials, development and dissemination of supporting materials for the new assessment system, and the actual production and administration of new national examinations for grades 4 and 9 during the initial years. 2.17 Teacher Training Component (US$3.34 million, net of taxes, or 20% of base costs). The new curricula and teaching materials to be introduced will also require significant changes in the approach to teaching and learning. In order for the new curricula to succeed, it will be necessary to provide all teachers and school inspectors in charge of mandatory general education with specialized training. At the same time it will be necessary to strengthen the rayon level support system for teachers. A total of about 45,000 teachers would have to be trained over a period of five years. 2.18 The project would ensure that the training would draw on existing in- and pre-service teacher training institutions to provide intensive residential training to selected inspectors, methodologists, school directors and teachers from each rayon. Upon completion of their training, the latter would serve as trainers for teachers in their respective rayons. Rather than attending residential centralized training courses, teachers would thus attend courses at the rayon level. This approach would not only allow for the most cost-effective use of resources, it would also ensure that rayon inspectors and methodologists establish the necessary rapport with teachers to subsequently serve as resource persons 6 Under the new system of national examinations the number of national examinations would be reduced to cover only key exit points: at the end of grade 4 achievements upon completion of primary school would be tested; at the end of grade 9 achievements upon completion of mandatory general education would be tested. The baccalaureate at the end of grade 12 would measure student achievement after voluntary higher secondary education.  - 13 - for questions related to the new curriculum and learning assessment system. Each teacher would attend an initial training course and a refresher course after two years. 2.19 The project would finance technical assistance, development and dissemination of training materials, development and implementation of centralized courses for trainers and decentralized courses for teachers, equipment necessary to develop and hold training courses for key central training institutions and rayon education directorates. 2.20 Textbook Development and Financing (US$11.50 million, net of taxes or 69% of base costs). The objective of this component is twofold: (i) to facilitate the introduction of the new curricula by providing schools with an adequate number of textbooks in line with the new curricula for core subjects and (ii) to help develop a sustainable system of textbook financing that would help guarantee availability of textbooks upon project completion. 2.21 The project would finance the production of new textbooks and, where appropriate, teacher guides, in the mother tongue for core subjects for grades 3-9. Books for the first two grades of primary education are being financed by Government and other donor funds prior to the project start-up. Textbooks would be procured through a system of competitive bidding which would combine competition for authorship with competition for publication, thus requiring potential authors to work directly with publishers and substantially increasing the pool of authors from the current system where authors are hand picked in a rather non-transparent system. Book manuscripts would be evaluated by a Manuscript Evaluation Committee (MEC), comprising representatives from curriculum development, teacher training and teachers (Annex V). The project would provide training for publishers, Ministry of Education, Youth, and Sports staff and Manuscript and Bid Evaluation Committees' members in competitive bidding for textbook publishing and in principles of publishing textbooks in a competitive environment. 2.22 To avoid a serious shortfall of textbooks in mandatory general education upon project completion, the project would also support the introduction of a cost recovery system for textbooks (Annex V). Under the system, students would be charged a book rental fee for a set of textbooks. The latter would be structured to allow cost recovery over the life of a textbook (four years for primary school books and five years for secondary school books). Fees would be collected by each school and then transferred through a local bank to a centrally managed book fund. Rayon education directorates would keep detailed records of the amounts collected and paid into the fund by school by grade and ensure that each school is informed about the amounts to be collected by grade prior to the start of each school year. The fund would then be used to finance reprints and re-editions as books would need to be replaced. At current prices, the proposed annual rental fee for a set of primary school textbooks would be between 17 and 20 lei per student per year and between 22 and 29 lei per student per year for secondary school textbooks. Poor families with several school aged children would be provided with a budget financed voucher entitling them to a discounted book rental fee. Because of targeting difficulties and moral hazard problems, the budget ceiling for vouchers would initially be established based on the number of families with several children currently entitled to a state benefit under the existing child compensation system, but the actual identification of children to receive assistance would be left to rayons and individual schools. Before negotiations, the Borrower submitted to the Bank for review and comments a detailed description of the operations of the textbook rental scheme agreed upon by the Ministries of Finance, Economy, and Education, Youth, and Sports including the draft 7 Grades 3 and 5 manuscripts are already well advanced. Therefore competitive bidding would only be applied to publication of textbooks for these grades, but for all other grades competition would also involve author selection.  - 14- Government decree and implementing regulations for the establishment and operation of the rental scheme. As a condition of loan effectiveness, the Borrower would provide satisfactory evidence to the Bank that the textbook financing mechanism has been adopted by the Government after Bank review and comments. During negotiations, assurances were obtained from the Government that the textbook financing scheme would be implemented and the textbook fund account maintained in a commercial bank satisfactory to the Bank throughout the project implementation period, and that the Bank would be provided within six months after the end of each fiscal year a copy of the yearly audit report of the textbookfund carried out by independent auditors. 2.23 The project would finance development, evaluation, production and distribution of new textbooks and training and technical assistance for Ministry staff, textbook evaluation committees and publishers in competitive bidding procedures. It would also finance technical assistance, training, computer equipment and public information campaign expenditures necessary for the introduction of the new textbook financing scheme. 2.24 Project Management and Implementation (US$0.37 million, net of taxes, or 2% of base costs). To manage and coordinate overall project implementation, a project management unit (PMU), consisting of a Project Director, a procurement officer, a translator/administrative assistant and a part- time accountant would be established in the Ministry of Education, Youth, and Sports. The project would finance technical assistance (a project implementation adviser for one year with possibility of an additional year's extension if needed), equipment and incremental operating costs necessary for project management, as well as studies required for the preparation of a possible future project. D. Impact on Women, Environment, Poverty and Participation 2.25 Environmental Aspects. The proposed project's focus is on curriculum, learning assessment and instructional materials development and does not involve any construction nor use of environmentally hazardous materials. New curricula and teaching materials will include education in environmental awareness. The project has therefore been assigned an environmental category C. 2.26 Impact on Women. Education access in Moldova is equitable. The reform would enhance equitable educational access to women and new curricula are expected to promote equality of rights. 2.27 Poverty Alleviation. Although the proposed project does not directly focus on poverty alleviation, it is expected to indirectly contribute to poverty alleviation by helping to improve the country's human capital stock, necessary for sustainable long-term growth in the future. 2.28 Participation, Project preparation involved a wide range of stakeholders through participatory workshops which sought feedback from the academic community, rayon education directorates, school administrators and teachers on proposed project activities. Feedback from these workshops was integrated into project design. During its implementation, the project will further broaden stakeholder participation in the education reform process, particularly through a more participatory process for curriculum development and open competition for textbook production.  - 15 - 3. PROJECT COSTS, FINANCING AND PROCUREMENT A. Project Costs and Financing 3.1 Project Costs. Total project costs are estimated at US$21.6 million equivalent, including contingencies and taxes. Detailed cost estimates are presented in Annex VIII. A summary of the cost estimates by component and by expenditure category are provided below in Tables 3.1 and 3.2, respectively. Table 3.1 SUMMARY OF PROJECT COST ESTIMATES BY COMPONENT %/, % Total (US$ Million) Foreign Base Component Local Foreign Total Exchange Costs 1. Curriculum Development 0.24 0.40 0.64 62 4 2. Teacher Retraining 2.62 0.72 3.34 22 20 3. Learning Assessment 0.10 0.72 0.82 88 5 4. Textbook Development 6.45 5.04 11.50 44 69 5. Project Management Unit 0.13 0.24 0.37 65 2 Total BASELINE COSTS 9.54 7.12 16.67 43 100 Physical Contingencies 0.92 0.82 1.74 46 10 Price Contingencies 0.95 0.60 1.55 38 9 Total PROJECT COSTS excluding taxes 11.42 8.54 19.96 43 119 Taxes 1.70 1.70 1 0 Total PROJECT COSTS including taxes 13.12 8.54 21.66 Note: Totals may not be exact due to rounding errors. 3.2 Project cost estimates are based on October 1996 prices. Due to the evolving nature of the Moldovan economy, all estimated costs are based on the US dollar. Physical contingencies of 10 percent were applied to the base costs except for the PMU. The following estimated world inflation rates were used to adjust the costs during project implementation: 2.0% for 1997, 2.1% for 1998, 2.3% for 1999, 2.4% for 2000, and 2.3% for 2001. The estimated total foreign cost is US$8.5 million. Recurrent costs amount to US$0.27 million over the five year implementation period. Project expenditures other than textbooks and technical assistance will be subject to VAT, customs duties and fees, and social fund contributions, estimated at US$1.7 million over the five year period. These expenses will be covered by the Government. 3.3 Prpject Financig. The proposed loan of US$16.8 million equivalent would finance about 84% of the estimated total project cost (net of taxes) including 100% of foreign and 72% of local costs (see Table 3.3 for details). The Government counterpart financing is US$4.9 million, including US$1.7 million for taxes and social fund contributions. Bilateral donors have been approached to provide grant financing for the foreign technical assistance requirements. However, if no grant financing can be secured, the technical assistance requirements would be financed from the loan proceeds. As a condition of loan effectiveness, the Borrower would provide evidence to the Bank that a project account for counterpartfunding has been opened and an initial deposit equivalent to at least 3 months worth of counterpart contributions including tax contributions has been deposited  - 16- Table 3.2 SUMMARY OF PROJECT COST ESTIMATES BY EXPENDITURE CATEGORY % % Total (IS$ Million) Foreign Base Expenditure Category Local Foreign Total Exchange Costs I. Investment Costs A. Equipment 0.0 0.95 0.95 100 6 B. Textbooks and Didactic Materials Textbooks 4,45 4.45 8.90 50 53 Teachers'Guide and Didactic Materials 0.14 0.15 0.29 52 2 Textbook Distribution 1.82 - 1.82 - 1 1 Subtotal Textbooks and Didactic Materials 6.41 4.60 11.01 42 65 C. Training and Fellowships Training 2.58 0.15 2.74 6 16 Fellowships - 0.17 0.17 100 I Subtotal Training and Fellowships 2.58 0.32 2.90 11 17 D. Technical Assistance Specialists 0.01 0.83 0.84 99 5 Studies - 0.33 0.33 100 2 Subtotal Technical Assistance 0.01 1.16 1.17 99 7 E. Development Expenditures /a Development Fees 0.09 - 0.09 - I Supplies and Operation Expenditures /b 0.07 0.03 0.10 33 1 Subtotal Development Expenditures 0.16 0.03 0.19 17 1 F. Public Dissemination Programs 0.14 0.04 0.18 21 1 Total Investment Costs 9.30 7.10 16.40 43 98 11. Recurrent Costs A. Incremental Salaries 0.09 - 0.09 - I B. Incremental Operating Expenditures 0.09 0.03 0.12 24 1 C. Repair and Maintenance 0.06 - 0.06 - - Total Recurrent Costs 0.24 0.03 0.27 11 2 Total BASELINE COSTS 9.54 7.12 16.67 43 100 Physical Contingencies 0.92 0.82 1.74 47 10 Price Contingencies 0.95 0.60 1.55 39 9 Total PROJECT COSTS excluding taxes 11.42 8.54 19.96 43 119 Taxes 1.70 - 1.70 10 Total PROJECT COSTS including taxes 13.12 8.54 21.66 Note: Totals may not be exact due to rounding errors. \a For curriculum development activities including fees, materials, and stakeholders consultations \b Includes materials, travels, and other operating expenses to carry out development activities  - 17- Table 3.3 PROJECT FINANCING PLAN The Government of Moldova IBRD Total Expenditure Category Amount % Amount % Amount % A. Equipment 0.14 13.7 0.91 86.3 1.05 5.3 B. Textbooks Production and Distribution Textbooks - - 10.67 100.0 10.67 53.4 Teachers Guide and Didactic Materials - - 0.35 100.0 0.35 1.8 Distribution Expenditures 2.20 100.0 - - 2.20 11.0 Subtotal Textbooks Production and Distribution 2.20 16.7 11.02 83.3 13.22 66.2 C. Training and Fellowships Fellowships - - 0.11 100.0 0.11 0.6 Training 0.51 17.1 2.50 82.9 3.01 15.1 Subtotal Training and Fellowships 0.51 16.5 2.61 83.5 3.13 15.7 D. Technical Assistance Specialists - - 1.17 100.0 1.17 5.8 Studies - - 0.33 100.0 0.33 1.7 Subtotal Technical Assistance - - 1.50 100.0 1.50 7.5 E. Development Expenditures /a Development Fees 0.10 100.0 - - 0.10 0.5 Supplies and operating expenditures /b 0.07 13.2 0.46 86.8 0.53 2.7 Subtotal Development Expenditures 0.18 27.5 0.46 72.5 0.64 3.2 F. Public Dissemination Campaigns - - 0.11 100.0 0.11 0.6 G. Incremental Staff Salaries 0.00 7.3 0.10 92.7 0.10 0.5 H. Incremental Operating Expenditures 0.09 62.3 0.06 37.7 0.15 0.7 1. Repair and Maintenance 0.07 100.0 - - 0.07 0.3 Total (Excluding Taxes) 3.20 16.0 16.76 84.0 19.96 100.0 Taxes 1.70 100.0 1.70 Total (Including Taxes) 4.90 22.6 16.76 77.4 21.66 100.0 Note: Totals may not be exact due to rounding errors. \a Curriculum, training, and learning assessment processes \b Operation: Subsistence and travels B. Procurement 3.4 Procurement Arrangements. All procurement would follow World Bank procurement guidelines. Procurement of goods financed with Bank loan funds would be carried out in accordance with the Bank's Guidelines, Procurement under IBRD Loans and IDA Credits dated January 1995 as revised in January 1996 and August 1996. Consulting Services would be procured in accordance with the Guidelines for Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency (August 1981). Standard Bank Bidding Documents would be used for ICB, integral or amended as approved by the Bank. For national competitive bidding (NCB), bidding documents based on the Bank's standard bidding documents, amended as necessary to local conditions and approved by the Bank, would be used. The GPN was published in Development Business, No. 452, December 16, 1996. 3.5 Country Procurement Assessment Report (CPAR). A Country Procurement Assessment Report has not yet been carried out due to the lack of a clear legal and institutional framework for public procurement in Moldova. A Country Procurement Strategy Paper is under preparation. A draft national procurement law is being prepared with World Bank IDF grant assistance; the aim is to stimulate more competition and transparency of the process, and to help establish sustainable institutions to institutionalize this process.  - 18 - 3.6 The major procurement under this project would be textbooks and teacher guides. Because individual contracts are expected to be small and the limited Moldovan textbook market is not likely to be of interest to many international bidders, NCB procedures, acceptable to the Bank, would be used to procure these items. These procedures will allow for a widely published and open competitive bidding process in which domestic and foreign publishers will be eligible to participate on an equal basis after pre-qualification. Bidding documents to be used for the procurement of textbooks and teacher guides are based on the Bank's standard bidding document for the procurement of textbooks. For minority schools, minority language editions will be published by translating Romanian language originals. If a winning bidder for a book does not have the capacity to also provide the solicited language edition, the Ministry of Education, Youth, and Sports will buy the translation right and award the contract for the corresponding language publication to another capable publisher. Since these contracts will be small (about $42,000 per contract), contracts for publication of translated books would be awarded through International Shopping procedures. 3.7 Implementing Agency. The PMU would be responsible for all procurement required under the project. Local counterparts involved in project implementation have attended Bank procurement training in the neighboring countries. In order to improve procurement effectiveness, standard bidding documents acceptable to the Bank for the procurement of textbooks and teacher guides have been prepared prior to project effectiveness. Furthermore, to augment the PMU's procurement capabilities, the foreign project advisor would assist the procurement officer during the initial implementation period. 3.8 Goods (US$11.8 million). Goods to be procured include computer systems, office and training equipment, sundries, and textbooks and teaching materials. Procurement of office and training equipment for the rayon education directorates in the aggregate amount of approximately US$ 350,000 would follow the Bank's ICB procedures using the Bank's standard bidding document for goods. There would be approximately seven packages, with up to 95 contracts for textbooks and other didactic materials following NCB procedures (aggregate total amount of US$11.0 million), using a Bank approved standard bidding document. 3.9 International Shopping (IS) procedures (aggregate total amount of US$2.6 million) would be used for the procurement of the technical equipment in pilot schools, rayon's training equipment including computers, training materials and supplies, and for translated editions of Romanian textbooks based on the comparison of price quotations from at least three different suppliers in at least two different qualified countries. National shopping (NS) procedures (aggregate total amount of US$0.8 million) would be used for contracts less than US$50,000 per contract based on price quotations from at least three suppliers for computer, office and audio-visual equipment, office supplies and other consumables. Procurement of proprietary items (specialized software for learning assessment and subscriptions to technical joumals) would be based on direct contracting (aggregate total amount of no more than US$20,000). 3.10 Training, Technical Assistance. and Studies (aggregate total amount of US$4.0 million). Consultant services under the project would be required to assist with the implementation of all project 8 Russian translations of certain Romanian textbooks would be subject to bidding. If a winning bidder for a particular textbook is not capable of producing a minority language translation, the Ministry of Education, Youth, and Sports would buy the translation right and award the contract for the publication of the translated book through International Shopping. At the maximum this would involve about 42 separate contracts at $ 42,000 each (base costs). However, as it is expected that a large number of winning bidders for textbooks will also be able to produce minority language versions, the number of contracts awarded through International Shopping is likely to be significantly lower than the maximum here indicated.  - 19- components, including project management (see Annex VII for a description of technical assistance required), and for studies in view of preparing a possible follow-up project. The majority of technical assistance assignments for each component, other than the curriculum development component (which will only require very specific, highly specialized, short term TA inputs) would be contracted through component specific shortlisted TA contracts. Consultant services would be contracted in accordance with Bank procurement procedures, including shortlisting for contracts with firms for the learning assessment, teacher training, and textbook development components. There will be numerous local training at different times of the year for trainers and teachers to be financed from the proceeds of the loan. A detailed description of the type and duration of training courses is in Annex IV. Several fellowships and study visits would also be financed under the loan proceeds. Participants and study locations, including the institutions, would be selected on a competitive basis with criteria acceptable to the Bank. 3.11 Miscellaneous Expenditures (aggregate total amount of US$0.2 million). The project would introduce new processes of curriculum development and textbook financing in the country. In order to solicit public support, a series of public participation consultations and public education campaigns to gain feedback and explain the new systems and procedures would be carried out. Expenditures for public consultations will include publication and distribution of draft curricula and holding of consultation meetings. Since this will be an integral part of the curriculum development process and involve small individual expenditures at various points in time, they will be based on direct purchasing. The project would also finance incremental operating costs incurred by the PMU. 3.12 Prior Review. Procurement Monitoring and Reporting. Contracts for goods of US$200,000 equivalent or more and all consulting services would be subject to prior review. In addition, prior Bank review would be required for the first five NCB procurement packages for textbooks and teaching guides regardless of value. All procurement would be monitored closely and would be part of the regular project progress report of the PMU. The procurement milestones are summarized in the procurement plan in Annex XIII.  - 20 - Table 3.4 Procurement Arrangements (US$ Million) Procurement Method Project Element ICB NCB Other N.B.F. Total A. Goods Computers Systems /a - - 0.3 - 0.3 (0.2) (0.2) Office and Training Equipment /b 0.4 - 0.1 - 0.5 (0.4) (0.1) (0.4) Textbooks & Didactic Materials - 10.5 0.0 - 10.5 (10.5) (0.0) (10.5) Office supplies & consumables /c - - 0.6 - 0.6 (0.5) (0.5) Technical Equipment /d - - 0.2 - 0.2 (0.2) (0.2) B. Service Contracts Textbooks & Teaching Materials Distribution - - - 2.2 2.2 C. Consultancies Training and Fellowships /e - - 2.6 0.5 3.1 (2.6) (2.6) Technical Assistance Services - - 1.1 - 1.1 (1.1) (1.1) Studies 0.3 0.3 (0.3) (0.3) D. Miscellaneous Recurrent Expenditures - - 0.1 0.2 0.3 (0.1) (0.1) Curriculum Dev't. Fees & Consultations 0.1 0.1 0.2 (0.1) (0.1) Refund to PPF Advance - 0.5 0.2 - 0.7 (0.5) (0.2) (0.7) Total 0.4 11.0 5.6 3.0 20.0 of which to be financed by the Bank (0.4) (11.0) (5.4) - (16.8) Note: Figures in parenthesis are the respective amounts financed by IBRD N.B.F. - Not Bank Financed Totals may not be exact due to rounding errors. "Other" method include International Shopping (IS) -US$2.6 million; National Shopping (NS)-US$0.8 million; Direct Contracting (DC)-US$0.02 million; Training & Fellowships-USS2.6 million; Shortlisting & Individuals TA- US$1.1 million; and Studies-US$0.3 million. \a Includes printers, monitors, and UPS \b Photocopiers, FAX machines, and audio-visual equipment \c Includes training materials and supplies \d Technical equipment for the pilot schools will be determined after the curricula have been developed. \e Includes workshops and seminars  - 21 - C. Disbursement 3.13 The proposed Bank loan of US$16.8 million equivalent would be disbursed over a period of five years with an estimated completion date of June 30, 2002 and a closing date of December 31, 2002. A detailed semester disbursement profile is in Annex IX. Disbursement of the loan proceeds would be as follows: Table 3.5 Disbursement Summary Amount Disbursement Category (US$ million) Expenditures to be Financed 1. Equipment, Supplies, and Other 1.0 100% of foreign expenditures, consumables 100% of local expenditures (ex factory) and 80% of local expenditures for other items procured locally 2. Textbooks and Didactic Materials 9.5 100% of foreign expenditures, 100% of local expenditures (ex factory) and 80% of local expenditures for other items procured locally 3. Training, Fellowships, Consultant 3.7 100% Services and Studies 4. Incremental Recurrent Expenditures 0.1 100% for Project Management 4. Refund to PPF Advance 0.7 5. Unallocated 1.8 Total 16.8 3.14 Statements of expenditures (SOEs). The Bank may require disbursements to be made on the basis of SOE for contracts for equipment, supplies, and training related expenditures not exceeding US$ 200,000 or equivalent. Complete documentation supporting the SOEs would be retained by the PMU and made available for review by the Bank and auditors. The minimum size of application for direct payment from the Loan Account and issuance of a Special Commitrnent would be 20 percent of the amount of authorized allocation to the Special Account. 3.15 Special Account (SA). A Special Account (SA) with an authorized allocation of US$300,000 based on four month average expenditures would be established in a commercial Bank on terms and conditions satisfactory to the Bank. The Bank would make the deposit(s) into the Special Account up to the amount of the authorized allocation. During the early stage of the project, the initial allocation to  - 22 - the Special Account would be limited to US$150,000. However, when the aggregate disbursements under the loan have reached the level of US$3,000,000, the initial allocation may be increased up to the authorized allocation of US$300,000 by submitting relevant applications for withdrawal. Applications for replenishment of the Special Account would be submitted monthly or when one-third of the amount has been withdrawn, whichever occurs earlier. Documentation requirements for replenishment would follow the standard Bank procedure. Monthly bank statements of the Special Account which have been reconciled by the Borrower would accompany all replenishment requests. A Special Account has been opened by the Borrower in an acceptable local bank to facilitate disbursement. 3.16 Project Preparation Facility (PPF). The Borrower requested a Project Preparation Facility advance of US$700,000 to complete project preparation. The advance is being used to finance consultant services to complete the design of the curriculum development process, teacher training program, learning assessment, and textbook production. A limited amount is being used to finance office and training equipment. The advance is also being used to test the efficiency and effectiveness of the new textbook procurement scheme. The PPF advance would be refunded by December 31, 1997 or if earlier, upon loan effectiveness. D. Accounts and Audits 3.17 The PMU would be responsible for maintaining project accounts, in a format acceptable to the Bank. Project accounts would show expenditures by project component, source of funds and by expenditure category. The PMU would hold a separate account showing amounts expended under the SOEs for each fiscal year and would maintain the Special Account. Project accounts would be audited by a reputable auditing firm acceptable to the Bank in accordance with International Accounting and Auditing Standards. The audits would include a separate opinion on the SOEs and SA to be submitted to the Bank and the MOF. During negotiations, assurances were obtainedfrom the Government that (i) the Project Account shall be maintained and replenished it promptly with sufficient funds to finance the Borrower's contribution to project expenditures; and (ii) within six months after the end of each fiscal year, an annual audit report of the project accounts, by independent auditors acceptable to the Bank including an audit of the Special Account and a separate opinion on the SOEs and SA would be submitted to the Bank.  - 23 - 4. PROJECT IMPLEMENTATION A. Project Management and Implementation 4.1 The Ministry of Education, Youth, and Sports will be responsible for overall direction, coordination and oversight of project implementation. To this effect, the Ministry has designated three distinct implementation agents: (i) a Project Steering Committee will provide overall guidance and oversight, (ii) a project management unit (PMU) within the Ministry of Education, Youth, and Sports will be in charge of overall project administration and logistical support to technical departments, and (iii) technical departments and institutes under the Ministry will be in charge of implementing individual project components. 4.2 Project Steering Committee. The steering committee, to be chaired by the First Deputy Minister of Education, Youth, and Sports, would include the heads of key technical departments and institutions in charge of implementing the various project components and representatives from the Ministries of Finance, Economy and Education, Youth, and Sports. The Committee will be responsible for providing overall guidance and project oversight and for monitoring performance progress. A Government Decision No. 469-d dated November 11, 1996 was adopted that establishes the Project Steering Committee with duly appointed members and with terms of reference satisfactory to the Bank. 4.3 The Project Management Unit will be staffed by a project director, a deputy director in charge of procurement, a part time accountant and an English speaking translator/administrative secretary. The PMU will be responsible for day to day project management including preparation of work plans, budgets and progress reports, all procurement, administration of and accounting for loan and counterpart funds, and overall coordination of project implementation activities. The PMU will not itself implement any project activities, but act as coordinator and administrator. The PMU will report to the First Deputy Minister of Education, Youth, and Sports who has been designated by the Ministry as the person responsible for overall preparation and implementation of the project. Before negotiations, the Borrower provided evidence to the Bank that a Project Director had been appointed after Bank concurrence. During negotiations, assurances were obtainedfrom the Government that the Project Steering Committe (PSC), Project Management Unit (PML9, and Department for Evaluation and Examinations (DEE) would be maintained, with membership and staffing, functions, and responsibilities acceptable to the Bank throughout the project period The staff of the Project Management Unit have been appointed to the satisfaction of the Bank. 4.4 Because this is the first Bank investment project in the sector, there is a marked lack of management and planning skills in the Ministry of Education, Youth, and Sports, no one in Moldova has prior experience with the Bank's complex textbook procurement procedures and because project implementation must adhere to a tight implementation schedule to concur with the school year, the PMU would be assisted by a foreign project advisor, familiar with implementation of World Bank financed projects, during the first project year and possibly extended the following year if needed. During negotiations, assurances were obtained from the Government that the foreign project advisor would be appointed and employed with qualifications satisfactory to the Bank. As a condition of loan effectiveness, the Borrower would provide evidence to the Bank that a Project Advisor, satisfactory to the Bank, has been appointed 4.5 Technical Departments and Ministerial Institutes. Implementation of actual project activities will be the responsibility of relevant technical departments and institutions of the Ministry of Education, Youth, and Sports. Their responsibilities will include (i) overall organization and monitoring of implementation of particular project components; (ii) preparation of detailed work plans, budgets, physical requirements, and progress reports for submission to the PMU; (iii) finalization of  - 24 - technical specifications for equipment and materials to be purchased for implementation of their component; and (iv) finalization of terms of reference for technical assistance and training required in their respective parts of the project and, in cooperation with the PMU, evaluation of TA proposals received. The following Ministerial Departments and Institutes will be in charge of implementing individual components: (i) Curriculum Development. While the new institutional structure for curriculum and assessment development will be in charge of actually developing and subsequently monitoring the performance of the new curricula, the MEYS's Pre-University Education Department, in coordination with the Institute of Pedagogical and Psychological Studies will be responsible for overseeing overall implementation of this component. (ii) Learning Assessment. The learning assessment component will be implemented by the newly created Department of Evaluation and Examinations of the Ministry of Education, Youth, and Sports. (iii) Teacher Training. Overall coordination and implementation of the in-service teacher training component will be the responsibility of the National Institute for Teacher Training, in coordination with the Ministry of Education, Youth, and Sports' Department of Accreditation and Staff Training (iv) Textbook Development. Implementation of this component will be the responsibility of the Ministry of Education, Youth, and Sports' Pre-University Education Department in collaboration with the Department for Didactic Materials and Library Assistance, although procurement of textbooks will be handled by the PMU. The textbook fund will be managed by the Ministry of Education, Youth, and Sports' Finance and Accounting department- under the direct supervision of the Inter-ministerial Supervisory Committee. 4.6 Each technical department and/or Ministerial Institute in charge of a particular component will be responsible for ensuring that project activities are carried out in accordance with the agreed upon project objectives. The Project Implementation Manual and other detailed project preparation documents for each component, together with the project implementation schedule (Annex X) will serve as guidelines for the implementation of each component. B. Project Monitoring and Evaluation 4.7 Implementation Schedule. The proposed project would be implemented over a five-year period with an additional six months for payment of financial obligations committed after the project completion date of June 30, 2002 and full withdrawal of Loan proceeds. The PMU would submit an Implementation Completion Report (ICR) to the Bank within six months of the closing date. A summary of the project implementation schedule by component is in Annex X. 4.8 Monitoring and Reporting. To monitor project progress and evaluate project outcome, a set of project performance indicators has been developed (Annex XI). The indicators provide a framework for systematic monitoring of project implementation progress and will serve as basis for the format of a routine progress report to be completed by the PMU. Based on inputs from individual implementation agencies, the PMU would be responsible for preparing quarterly progress reports for submission to the steering committee. Using agreed upon monitoring indicators as a basis, the PMU would also submit semi-annual progress reports to the Bank covering each component's standing with respect to status and issues; deviations from project targets and implementation plan; plans for the following six months;  - 25 - recommendations; and actual and planned expenditures. During negotiations, assurances were obtainedfrom the Government that the PMU, representing the MEYS, would prepare andfurnish to the Bank semi-annual progress reports on all project activities in accordance with performance indicators as agreed with the Bank. 4.9 Project Evaluation. Evaluation of project progress and adoption of necessary corrective actions are important to the project, particularly in view of the fact that this is the Bank's first education project in Moldova. Therefore, in addition to the regular project progress evaluation activities, a mid-term evaluation would be carried out jointly by the Borrower and the Bank, after two years of project implementation. During negotiations, assurances were obtainedfrom the Government that a mid-term evaluation report will be submitted to the Bank, no later than one and three quarter years after loan effectiveness and will serve as basis for the joint Bank - Borrower mid-term review. This report would indicate the project progress from inception and propose additional measures and changes as necessary to ensure achievement ofproject objectives. C. Supervision 4.10 Project Supervision. Periodic supervision of project implementation would be a joint responsibility of the MEYS and the Bank. The Project Steering Committee and the First Deputy Minister of Education, Youth, and Sports would be responsible for supervision on the Borrower's side. The Bank would carry out regular, semi-annual supervision missions. Because this is the first social sector project in Moldova, Bank supervision requirements are expected to be higher than the Bank's average. A supervision plan is presented in Annex XII.  - 26 - 5. BENEFITS AND RISKS A. Benefits and Justification 5.1 The project is expected to result in a series of reformed institutional structures and processes which will contribute to ongoing improvements and changes in the education system beyond project completion. In particular, the project will establish a framework for curriculum development which allows for greater transparency, stakeholder participation and feedback, increased curricula coherence and integration of assessment and curriculum development. The project will also set the stage for more reliable and valid national examinations and monitoring of sectoral performance, thus increasing public accountability in education. It will introduce a system of open competition for textbook authorship and publication which is expected to result in higher quality textbooks. The project will provide for sufficient textbooks in classrooms to allow for more effective instruction and learning to more than 600,000 pupils. It will support the establishment of a cost recovery system for textbooks which will help ensure that funds are available to reprint or republish books introduced under the project upon project completion. It will introduce a system of in-service teacher training benefiting approximately 45,000 educators which is significantly more cost-effective than the current system and which is expected to lead to closer collaboration between staff of the rayon education directorates and teachers, thus facilitating the introduction of new teaching and learning methods in general and the new subject curricula in particular. 5.2 While the immediate project beneficiaries will be general education students, the project is expected to benefit the entire education system over time, as new institutional setups and procedures will be expanded to cover other areas of education. By improving the quality of education, the project will contribute to an improved human capital base and hence benefit the labor market and the economy as a whole. B. Sustainability and Risks 5.3 There are three major risks in this project. First, the country's tight fiscal situation may prevent the Government from making the necessary counterpart funds available on a timely basis, thus preventing important project activities from being carried out effectively. Similarly, shortage of funds may prevent key project activities to be carried out beyond project completion. The former risk is being minimized by limiting Government counterpart contributions to a critical minimum. 5.4 Care was taken during project design to minimize incremental recurrent costs of a permanent nature, so as to not endanger sustainability of project achievements beyond project completion. Cost effectiveness considerations were a critical aspect of project design and the least cost option has been chosen where ever this option was not expected to result in significant quality loss. The cost recovery system for textbooks will help to introduce a system which should allow for supply of new textbooks on a regular basis upon project completion. Given that textbooks account for almost 70% of project costs, this will be a key aspect of guaranteeing sustainability beyond project completion. 5.5 The second risk is that changes in the political and administrative leadership in the education sector may hamper future actions necessary to implement the systemic reforms underlying the project. This risk has been minimized by significantly involving working level persons of the Ministry of Education, Youth, and Sports, educational institutions and other key Ministries in project design through participatory workshops and through close collaboration between key staff and the project preparation team. During appraisal, the preparation team agreed with the implementing agencies on a detailed project implementation plan with monitorable indicators.  - 27 - 5.6 The risk of resistance to change at the local level will be minimized through a series of informational workshops throughout the country prior to project implementation and subsequent stakeholder participation and consultation processes, particularly in the area of curriculum development. 5.7 The third and possibly most important risk is that the Ministry of Education, Youth, and Sports' inexperience with project management in general, and Bank-assisted projects in particular, will hamper smooth project implementation. A limited number of project components and close involvement of key Ministry of Education, Youth, and Sports staff at all stages of project development should help reduce this risk. However, despite limiting project activities to four closely inter-related components and to mandatory general education, project implementation is based on an ambitious implementation schedule which can only be adhered to if the project is well managed and monitored. Procurement of textbooks and equipment will put particularly high demands on the PMU during the initial two project years. Given the lack of management and planning skills in the Ministry of Education, Youth, and Sports and the unfamiliarity with complex Bank procurement procedures, it will therefore be essential that the PMU be assisted by an internationally experienced project advisor during the first project year and possibly to be extended for another year if needed.  - 28 - 6. AGREEMENTS REACHED AND RECOMMENDATIONS 6.1 Prior to Negotiations, the Borrower submitted the following: a) Ministerial Order No. 32.4.1, dated October 29, 1996, establishing the new institutional structure for curriculum development and learning assessment; (para. 2.6) b) Government Decision No. 742, dated December 30, 1996, establishing the fee levels and mechanisms for payments to those involved in curriculum development; (Annex II) c) Ministerial Order No. 418, dated December 12, 1996, appointing the Project Director after the Bank's concurrence; (para. 4.3) d) a sectoral development policy letter to the Bank; and (para. 1.31) e) a detailed description of the operation of the textbook rental scheme including a draft Government decree and implementing regulations for the establishment and operation of the rental scheme agreed upon between the Ministries of Finance, Economy, and Education, Youth, and Sports to the Bank. (para. 2.22) 6.2 During Loan Negotiations, assurances were received that the Government would: a) implement the agreed upon textbook financing scheme and maintain the textbook fund account in a commercial bank satisfactory to the Bank throughout the project implementation period; (para. 2.22) b) submit to the Bank within six months after the end of each fiscal year a copy of the yearly audit report of the text book fund, carried out by independent auditors; (para. 2.22) c) maintain the Project Account and replenish it promptly with sufficient funds to finance the Borrower's contribution to project expenditures; (para. 3.17) d) submit to the Bank within six months after the end of each fiscal year (i) an audit report of the project accounts, by independent auditors acceptable to the Bank including an audit of the Special Account and (ii) a separate opinion of the SOEs; (para. 3.17) e) maintain the Project Steering Committee, Project Management Unit, and Department for Evaluation and Examinations with membership and staffing, functions, and responsibilities acceptable to the Bank throughout the project implementation period; (para. 4.3) f) appoint and employ a foreign project advisor with qualifications satisfactory to the Bank; (para. 4.4) g) prepare and furnish to the Bank semi-annual progress reports on all project activities in accordance with performance indicators as agreed with the Bank; and (para. 4.8)no later than one and three quarter years after loan effectiveness, submit to the Bank a project mid- term evaluation report to serve as basis for the joint Bank-Government mid-term review. The report would indicate the project's progress from inception and propose additional measures and changes as necessary to ensure achievement of project objectives. (para. 4.9) 6.3 As Conditions of Effectiveness, the Borrower would: a) provide evidence satisfactory to the Bank that the textbook financing mechanism, satisfactory to the Bank, has been adopted by the Government after Bank review and comments; (para. 2.22)  - 29 - b) provide evidence to the Bank that a project account for counterpart funding has been opened and an initial deposit equivalent to at least 3 months worth of counterpart contributions (including tax contributions) has been deposited in the account; and (para. 3.3) c) provide evidence to the Bank that a Project Advisor, satisfactory to the Bank, has been appointed. (para. 4.4) 6.4 As Conditions for disbursement of funds for the equipment for pilot schools, the Borrower would submit to the Bank for review and approval: a) the list of proposed equipment; and (para. 2.9) b) selection criteria for pilot schools. (para. 2.9) 6.5 Subject to the above agreements, the proposed project is suitable for a Bank loan of US$16.8 million at the standard LIBOR-based variable interest rate for US dollar single currency loans with a maturity of 20 years, including five years grace. The Borrower would be the Republic of Moldova.  - 30 - Moldova at a Glance Europe & Lower- POVERTY and SOCIAL Central middle- Moldova Asia Income Development diamond' Population mki-1995 (ml7ions) 4.3 488 1,154 GNP per capita 1995 (USS) 920 2,240 1 700 Life expectancy GNP 1995 (buons USS) 4.0 1,093 1,962 Average annual growth, 1990-95 1 Population (%) -0.1 0.4 1.4 GNP Gross Labor force (e) 0.5 0.6 1.8 per primary Most recent estImate (latest year available since 1989) capita enrollment Poverty: headcount index (% of population) Urban population (% of total populaton) 52 66 56 Life expectancy at bIrth (years) 69 68 67 Infant mortality (per 1, 000 live births) 22 23 36 Access to safe water Child malnutrItIon (% of children under 5) Acceas to safe water (% of population) .. .. 78 IllKeracy (% ofpopulaton age 15+) 4 Moldova Gross primary enrollment (% of school-age population) 77 97 104 Lowddn g Male 78 97 105 Lowar-middle-ncone group Female 77 97 101 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1975 1985 1994 1995 Economic ratios GDP (billions US$) .. .. 3.9 4.0 Gross domestc hnvestmentVGDP .. .. 8.0 8.3 Openness of economy Exports of goods and non-factor servlceslGDP .. .. 45.2 39.4 Gross domestic savings/GDP .. .. 0.6 2.8 Gross national savingslGDP .. .. 1.1 2.3 Cument account balancelGDP .. .. -2.5 -2.7 Interest paymentWlGDP .. .. 0.2 0.7 Savings Investment Total debt/GDP .. .. 12.9 17.9 Total debt servce/exports .. .. 2.4 10.2 Present value of debtWGDP .. .. 11.2 Present value of debt/exports .. .. 70.5 Indebtedness 1975-84 1985-95 1994 1995 199644 (awverge annual growth) Moldova GDP 4.4 -5.5 -23.3 -3.0 5.7 Lower-middle-income group GNP per capia 3.5 -5.9 -23.8 -1.0 5.6 Exports of goods and nfs .. .. 36.6 3.6 6.7 STRUCTURE of the ECONOMY 1975 1985 1994 1995 (% of GDP) Growth rates of output and Investment %) Agriculture .. .. 48.8 45.8 20 Industry .. .. 28.1 21.0 Manufacuring .. .. 25.9 42.0 0 es Services .. .. 23.1 33.2 -20 Private consumption .. .. 79.0 80.2 401 General govemment consumption .. .. 20.4 17.1 GDI --*-GDP Imports of goods and non-factor services .. .. 52.6 44.9 197544 1985-95 1994 1995 (average annual growth) Growth rates of exports and imports (% Agricufture .. .. -18.4 4.0 40 Industry .. .. -34.2 -6.5 Manufacturing .. .. -30.6 -6.0 20 Services .. .. -23.8 -11.1 Private consumption .. .. -24.1 -0.8 0 90 91 92 93 General govemment consumption .. .. -40.2 -18.2 1 2 Gross domestic Investment .. .. -18.8 14.0 -20 Imports of goods and non-factor services .. .. -8.9 5.9 - Exots Impors Gross national product 4.4 -5.6 -24.0 -3.5 Note: 1995 data are preliminary estimates. The dlamonds show four key indicators in the country (in bold) compared with its income-roup average. If data are missing, the diamond will be incomplete.  - 31 - Moldova PRICES and GOVERNMENT FINANCE Dome pc1 18 19N4 1998 Inflation (%) (% change) 1.00 Consumer prices 330.0 30.6 Implit GDP deflator 253.6 43.0 S01 Govwnment finance (% of GDP) Current revenue 25.4 23.8 90 91 92 93 94 as Current budget balance -3.0 -34 - GDP def. CPI Overall surplustdeficlt -4.9 -5.5 TRADE (mftlions USS) 19 1U5 19S4 1995 Export and import levels (mill. USS) Total exports (fob) 617 672 sooo Commodiy 1 175 197 Commodty 2 49 55 4,000 Manufactures 189 179 3000 Total Imports (cin) 6723672 693 X Food . .. 140 150 Fuel and energy 287 294 1000 Capital goods 79 83 o- _ Export price index (1994U100) .. .. 100 102 B9 90 91 92 93 94 ss Import pre Idex (194-100) 100 101 E Export Import Terms of trade (1994-100) 100 101 BALANCE of PAYMENTS 1976 19865 1994 1998 (millions US$) Current account baiance to GDP ratio ) Exports of goods and non-factor sevioes 643 703 2 Imports of goods and non-factor service 749 802 Resource balance -106 -99 Net factor income * *. -15 -28 so go 91 L.]93 9-4~ Net current transfers 23 20 -2 Cunwnt account balance, before offlcial transfers -98 -107 -4 Financing Items (net) 129 120 Changes in net reserves -31 -13 ^ fen1e: Reserves Including gold (mM/l. US$) 179 257 Converson rate pocaUUS5) 4.1 4.5 EXTERNAL DEBT and RESOURCE FLOWS 1975 1985 '194 1995 (mflions USS) ComiposIion of total debt, 19B6 (mill. USS) Total debt outstanding and dibursed 504 723 IBRD 99 152 F G IDA 0 0 15 9 A 152 Total debt service 15 69 IBRD . . 4 8 IDA . . 0 0E Compositon of net rsource flows 252 Offical grants 32 33 Offical credlors 130 106 Private credkors 0 15 C Forelgn dect Investment 23 32 D 230 Portfoilio equly 0 0 6s World Bank prgram Commitmnents 60 30 A - $BRO E - s aeI Disbursements 67 50 B - IDA D - Otr mulabter.i F - Pdvate Principal repayments 0 0 C - IMF G - Short-tamr Not fows 67 50 Interest payments 4 8 Ndotranrsfs 63 42 International Economics Departnent 10t23t96 Note: Estimates for economie of the former Soviet UnIon are subed to more than the usual range of uncertainty.  The Current Moldovan Education System Doctorate Level IV 00 j ~~~~~~~~~U N I V E R S I T Y Age Grade 20 POST-SECONDARY 19 TECH. COLLEGIUM3 * 16 X SECEE _ SCHOOL COMPREHENSIVECO SECONDARY SCHOOLt COLLEGIUM2 * 15 IX 14 Vill GYMNASIUM 13 VIl V-IX 12 VI 11 V 10 IV 9 III PRIMARY 8 I - IV 6 * EXAM. POINTS 5 PRESCHOOL EDUCATION 4 23 ................. Note: 'Two or three years after Gr. 9 2 years after Gr. 9