Argentina - Year Two Thousand Technical Assistance Loan Project

Report No. PID6955 Project Name Argentina - Year Two Thousand Technical... Assistance Loan Region Latin America and the Caribbean Sector Public Sector Management Project ID ARPE57449 Borrower Republic of Argentina Implementing Agency Secretariat for Public Function, Office of the Chief of Cabinet of Ministers Av. Julio A. Roca 782, 1067 Capital Federal. Telephone/fax: 54.1.343.0181/89 Financing Plan: IBRD US$50.0 million Government of Argentina US$22.0 million Total Project Cost US$ 72.0 million Date this PID prepared October 1998 Appraisal Date November 1998 Date of Board Presentation December 1998 1. Country and Sector Background. A crisis has arisen in Argentina (as elsewhere globally) over the fact that computer software and computer chips were programmed using only the last two digits of any given year, in order to use the then scarce memory space more efficiently. This means that on January 1st, 2000, they will interpret "00" as "1900", which could cause all date- based automated processes to malfunction (the "Y2K problem"). Beginning in 2000, effective computer systems will need to differentiate between respective dates in the 20th and 21st centuries. This will require information systems to have eight-digit date coding, instead of the six-digit format which has been in common use since the 1960s. 2. Argentina's economy and society are dependent on computers. They are accordingly vulnerable to the "Y2K" problem, which would affect hardware, embedded chips, languages and compilers, operating and security systems, database management and transaction-processing systems and more. Huge amounts of records and statistics could be compromised if they fail or come to a halt. Any enterprise with time-sensitive data from nuclear reactors and hospitals to financial institutions and retail businesses could be harmed. Essential services, such as benefit payments, transport functions or emergency services (hospitals, fire, police), could be severely disrupted. Therefore, companies and Government agencies must work to ensure that their systems, along with those of their customers and vendors, are made millennium- compliant---- or face severe consequences. Action will be needed to repair, update or replace these systems. 3. Government has been addressing the Y2K issue directly at the Federal level through active diagnostics and plans for remediation activities financed  through this project and directing Federal entities to ensure Y2K substantively compliance by September 1999 ; at the Provincial level through coordination, information dissemination and limited technical assistance from the central level while relying on the Provincial Development II Project (AR- 3860) for financing help; and the private sector through information dissemination 4. Project Objectives. To assist the Government of Argentina on an urgent basis to contain the disruption in the country's social and economic infrastructure that would be caused by the failure of critical central government systems' inability to process dates after December 31, 1999. 5. Project Description. (a) Support Activities - Strengthening of the Project Coordination Unit (PCU) to assist the Federal Government in general and more selectively the Provincial Governments and the Private Sector, including initial studies, information dissemination, technical and impact evaluations of non-Y2K-compliance by agencies, acquisition of common tools and methodologies; and development of certain common systems; (b) Remediation and Rescue. Agencies selected for priority attention will implement their remediation subprojects financed from this fund (remediation activities need to be taken before Year 2000 to prevent problems). Technical Assistance would be provided by the PCU to carry out Y2K diagnostics, technical and impact analyses, preparing implementation plans, preparing terms of reference and supervision of consulting firms; preparing equipment specifications; etc; (c) Project Coordination and Administration, including project and subproject quality assurance and monitoring, external administration and procurement, and external quality assurance and audit 6. Project Financing. The total project costs will be U$ 72.0 million, of which the IBRD would contribute U$ 50.0 million. 7. Project Implementation. The executing agency will be the Secretariat of Public Function in the Office of the Chief of Cabinet of Ministers. 8. Sustainability. The subprojects in and of themselves are inherently irreversible. Further, if the "Y2K" damage is severe enough and the affected infrastructure is sufficiently valuable, the stakeholders would have an economic incentive to maintain the remedial measures. There are no requirements for government budgetary support beyond the implementation of the project's investment phase. The amount of such support is unknown at this time but, without continuing maintenance, some infrastructure will be exposed to continuing damage in the future. 9. Lessons Learned from Past Operations. There is no past experience to draw on or lessons to be reported. However, the design of this project follows the lessons of successful "emergency" activities. The objective is focused and its activity would be demand-driven. The plan for managing the operation and for its close, independent surveillance draws on the demonstrated need for sufficient flexibility to react to unforeseeable circumstances. Also in line with "emergency" projects, decision-making authority and project implementation are highly centralized so as to reduce the chances for bottlenecks Furthermore, the project does not pursue any sector policy objectives and has no conditionality in this respect. The approach for monitoring and evaluation emphasizes adaptable action plans and work programs. - 2 -  10. Poverty Category. N. A. 11. Environmental Aspects. This project has no environmental impact. 12. Program Objective Categories. The primary category is Public Sector Management (BY). Contact Point: The InfoShop The World Bank 1818 H Street, N.W. Washington, D.C. 20433 Telephone No. (202)458 5454 Fax No. (202) 522 1500 Note: This is information on an evolving project. Certain activities and/or components may not be included in the final project. Processed by the InfoShop week ending October 16, 1998. - 3 -