Indonesia - Support for Poor and Disadvantaged Areas (SPADA) Project : restructuring (Vol. 1 of 2) : Main report

 64657 v1 Document of The World Bank Report No: RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF LOAN AND CREDIT 9 JUNE 2005 TO THE REPUBLIC OF INDONESIA 18 SEPTEMBER 2011  Regional Vice President: James W. Adams Country Director: Stefan G. Koeberle Sector Manager / Director: Franz R. Drees-Gross Task Team Leader: Natasha Hayward 2  INDONESIA — SUPPORT FOR POOR AND DISADVANTAGED AREAS PROJECT P078070 CREDIT NO. 4076-ID AND LOAN NO. 7776-ID (FORMERLY LOAN NO. 4788-ID) Restructuring Paper 1. The closing date for the Indonesia, Support for Poor and Disadvantaged Areas Project (SPADA), Credit No. 4076-ID and Loan No. 7776-ID (formerly Loan No. 4788-ID), P078070 will be extended from December 31, 2011 to June 30, 2012. 2. Project Performance: Project performance has been moderately satisfactory to date. While the project was initially delayed and has encountered implementation challenges, owing to low capacity in the implementing agency (PIU) and target districts compounded by complexity in design, recent implementation support missions by the task team have found demonstrated improvement in implementation progress, as documented in the most recent Aide Memoires and as reflected in the fact that the project has met and, in many cases, exceeded its results framework indicator targets. With this in mind, the task team confirms that the project development objective remains achievable. 3. Extension request: The Ministry of Finance formally submitted project extension requests to the Bank on June 28th and July 14th, 2011. The extension is to enable an additional round of block grants utilizing unused funds of USD1.9 million, saved as a result of the project’s initial delayed start and owing to cost-savings on the part of the Project Implementing Unit (PIU). The round would be implemented in seven districts in West Kalimantan and Central Sulawesi, selected based on the PIU’s evaluation of their good performance during the prior three cycles of implementation and offered as a performance reward. Additional activities would include extension of the National Management Consultant contracts to March 2011 and finalization of the borrower’s study on project results, to contribute to their project completion report. 4. The Borrower has an action plan to complete all activities that has been reviewed by and is satisfactory to the task team. Based on a meeting with MoF and Bappenas in July 2011 and as confirmed with KPDT in August 2011, it has been agreed that no reallocation of budget categories would be required. No new planning would be undertaken at field level with the inputs for the block grant process based on the plans prepared during the most recent cycle, started in June 2011. It is expected that sub- project implementation would be finalized by January 2012, with the administration of project closure in the period immediately following. 5. If approved, this would be the first extension to the project closing date. 3