Bolivia - Integrated Health Development Project

Document of The World Bank FORt OFFlCIAL USE ONLY Repor No. P-5113-BO MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT IN AN AMOUNT EQUIVALENT TO SDR 15.7 MILLION TO THE REPUBLIC OF BOLIVIA FOR AN INTEGRATED HEALTH DEVELOPMENT PROJECT DECEMBER 20, 1989 This document has a restricted distribution and may be used by recipients only in the performance of their offkial duties. Its contens may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENCY UNITS Currency Unit = Boliviano B$l.0 - US$0.35 US$1.0 = B82.86 ABBREVIATIONS CDS Consejo Departamental de Salud (Departmental Health Council) PSE Fondo Social de Emergencia (Emergency Social Fund) IDA International Development Association IDB Inter-American Development Bank IHCM Integrated Health Care Model IER Instituto Nacional de Estadisticas (National Institute of Statistics) MPSSP Ministerlo de Previsi6n Social y Salud P(Lblica (Ministry of Social Welfare and Public Health) NGO Non-Governmental Organization PAHO Pan-American Health Organization PU Project Unit FIS Fondo de Inversion Social (Social Investment Fund) UNICEF United Nations Children's Fund USAID United States Agency for International Development WHO World Health Organization FISCAL YEAR January 1 - December 31  FOR OMCIAL USE ONLY BOLIVIA INTEGRATED HEALTH DEVELOPMENT PROJECT Credit and Proiect Summar Borrowers Republic of Bolivia Beneficiaryv Ministry of Social Welfare and Public Health Amount: SDR 15.7 million (US$20.0 million equivalent) Terms: Standard IDA terms, with 40 years maturity inancingt Plan: IDA US$20.0 million Government of Bolivia USS 9.5 million Public Regional Entities USS 2.9 million Government of the Netherlands US$ 6.2 million Total US$38.6 million Economic Rate of Returns Not applicable Staff Appraisal Reports Report No. 8001-B0 IBRD 21669, 21670, 21671, 21672 This document has a restrictd distuibution and may be used by recipients only in the performance of their officia duties. Its contents may not otherwise be disclsed without World Bank authorization.  MEMORANDUM AND RECOMMENDASION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF BOLIVIA FOR AN INTEGRATED HEALTH DEVELOPMENT PROJECT 1. The following merorandum and recommuendation on a proposed development credit to the Republic of Bolivia for SDR 15.7 million (US$20.0 million equivalent) is submitted for approval. The proposed credit would be on standard IDA terms with 40 years maturity and would help finance an Integrated Health Development Project. The project would be cofinanced by the Government of the Netherlands for US$6.2 million equivalent. The national counterpart would include funds from UNICEF for US$1.3 million equivalent, and WHO/PAHO for US$0.8 million equivalent. 2. Background. Poverty has deep roots in Bolivia, and economic and social development in that country faces major challenges. Bolivia remains one of the poorest countries in Latin America, with GNP per capita of US$570 in 1987, and large segments of the urban and rural population surviving on subsistence income. These conditions are not only a consequence of historical factors, but also of poor economic performance since the early 1970s. which culminated in the collapse of 1985. Faced with an acute economic crisis, the Government which took office in August 1985 launched a comprehensive series of adjustment measures. These actions have stabilized the economy and arrested several years of decline in national income. A major public initiative, the Bolivian Emergency Social Fund (FSE), implemented with participation of community and non- governmental organizations (NGOs), and supported by IDA and other external agencies, has helped cushion the population from the worst aspects of poverty. But continuing social dislocation coupled with the backlog of investment requirements for human resources development have now placed measures to alleviate poverty, based on sound principles of management and finance, at the center of the Government's development plans. 3. The demographic and social conditions of Bolivia remain grave. The current population of 7.1 million, growing at 2.71 annually, has the worst health indicators in South America. Life expectancy averages only 51 years for men and 55 for women. Infant mortality is twice the average for the region, at 110 per 1,000 live births, and reaches 277 per 1,000 live births in some poor communities. Maternal mortality, at 48 per 10,000 live births, is almost twice the average for the region. It is associated with high fertility, poor health conditions of mothers and an alarming incidence of induced abortion. Malnutrition is widespread, particularly in marginal urban zones and in low-income rural areas. Recent surveys show daily caloric intake averaging only 60 to 65Z of requirements in peripheral urban districts and 59? in depressed rural areas. 4. Responsibility for public health is carried by the Ministry of Social Welfare and Public Health (MPSSP) which allocates 32 of the national budget or about US$3 per capita (1988). Public capital expenditure on health, however limited in recent years, has relied almost exclusively on international aid. In addition to MPSSP services, the social security system, encompassing numerous funds for both public and private employees, with considerable differentiation in benefits, covers about 20? of the population. The fee-charging private sector provides attention mostly to urban households with sufficient income to finance their health care, representing no more than 5? of the population. More than 300 local and foreign-based NGOs play a substantial role in the Bolivian health sector,  serving about 202 of the population. The majority of them have programs for the poor. Community-based groups in Bolivia are also instrumental in fostering participation in health education campaigns and in channelling food aid. MPSSP programs, notably vertical vaccination and disease control campaigns, have had some success in reducing prevalence rates of infectious diseases. In general, however, the effectiveness of public health expenditure is low. This is due, in part, to the over-centralization of MPSSP, which retains operational functions at the central level, while neglecting its normative and coordinating responsibility. But other factors also play a role. Inadequate organization and management have allowed the MPSSP to dissipate its resources, both financial and technical, in a variety of poorly planned and monitored programs. Coordination with NGOs and other private health care providers is weak. MPSSP lacks sufficient qualified technical and management personnel. Physical infrastructure is in poor condition. Pharmaceutical stocks and medical supplies are underfinanced and are inefficiently procured, stored and distributed. S. Rationale for IDA Involvement. IDA country assistance strategy has focused on: (a) continued support for the ongoing program of economic adjustment; (b) selected investments in key economic and social sectors, combined with policies to ensure the efficient use of resources and combat the worst effects of poverty; and (c) assistance to the Government in securing the external financing needed for its development program. IDA has embarked on a substantial lending program, a portion of which is aimed at rehabilitating essential parts of the public sector (Economic Management Strengthening Operation, Credit 1977-30; and Public Financial Management Operation, Credit 1809-BO). Within the adjustment process, it has also supported emergency social and income generating programs through the FSE (Credits 1829 and 1882-BO). A third operation is being prepared to support broadening the FSE from an emergency fund to a development institution, the Social Investment Fund (FIS). In extending financing to the health sector, IDA seeks to promote the policy actions and institutional changes necessary to improve the coverage, quality and efficiency of health services in Bolivia. As chair of the Consultative Group for Bolivia, IDA is also in a strong position to assist fund-raising efforts for the sector. In this first IDA project for the health sector in Bolivia, we would address only the major constraints of the sector while laying the ground for further improvement through future projects. 6. Proiect Obiectives. The principal objective is to improve maternal and child health in Bolivia, through the implementation of the Integrated Health Care Model (IHCM), encompassing both public and NGO activities in the sector. MPSSP would delegate the administration of health districts and the operation of health facilities to municipalities, NGOs or other providers of health care. Specifically, the project would: (i) support the extension of the basic health services, with priority for the most vulnerable groups of pregnant and lactating women and of children under five years of age, in the four most populated urban and peri-urban areas of the country; (ii) improve the effectiveness of these services through the development of appropriately trained personnel in health institutions; and (iii) strengthen central policy making and coordination within a more coherent institutional framework and a national health sector development program. 7. Project Description. The project would include: (i) a service delivery component (US$29.6 million) consisting of implementing the IHCM in the marginal and low-income areas of La Paz, El Alto, Cochabamba and Santa Cruz. The credit would finance the extension of basic health care services, including pre- and post-natal care, reproductive health care,  - 3 - child development and nutritional control, prevention and control of diarrheal and respiratory diseases. The credit would finanee construction, rehabilitation and equipping of 166 ambulatory centers, and supply and management of stocks of essential drugs, equipment, vehicles, logistic and maintenance systems, and on a declining basis, selected incremental salaries. The construction of one maternal and child health facility of up to 50 beds would also be financed. MPSSP would contract the operation and maintenance of this facility, according to the cost recovery policy to be defined during the project. The FIS would be used for review of unit COMb and administration of the civil works contracts, thereby providing assurance of efficient disbursements; (ii) a human resources development component (US$1.0 million) consisting of the training and supervision of selected staff from MPSSP, municipalities and NGOs. The project would also support the training of midwives and health education campaigns, particularly for community leaders; (iii) an institutional development component (US$6.5 million) covering the phased reorganization of MPSSP. It would include strengthening the Planning, Human Resources, Administration and General directorates, and the regional units involved in the project. It would establish a system for planning, budgeting and control for MPSSP, and participating municipalities and NGOs. It would also support the development of a management information system including monitoring and evaluation of project impact based on the National Institute of Statistics' (INE) annual household survey (the survey is partially financed by Credit 1977-BO). A Plan of Action, laid out in a schedule of the Credit Agreement, would reinforce the policy actions and institutional changes of the project, and specify agreed targets and service delivery indicators. A Project Unit (PU) has been formed, financed by a Project Preparation Facility advance approved in April 1988 (US$1.5 million), and a Project Manager has been appointed. Department Health Councils (CDSs), with MPSSP, local government and private sector representatives, would be set up in the project areas to coordinate regional investment and financing for the sector. 8. The total project cost is estimated at US$38.6 million over eight and a half years. The Government's contribution would amount to US$9.5 million. Except for the US$2.1 million from UNICEF and WHO/PAHO, this contribution would consist mostly of salaries and is in line with the Country Economic Memorandum budget projections (Report No. 7645-BO); local and regional entities would contribute US$2.9 million; and cofinancing would amount to US$6.2 million. Retroactive financing for an amount not to exceed 1OZ of the credit would be permitted for selected expenditures made after February 1, 1989. A breakdown of costs and the financing plan are shown in Schedule A. Amounts and methods of procurement and of disbursements, and the disbursement schedule are shown in Schedule B. The timetable of key project events and the status of Bank Group operations in Bolivia are given in Schedules C and D, respectively. Maps of the project area are attached. The Staff Appraisal Report. No. 8001-BO dated December 20, 1989, is also attached. 9. Actions to be Agreed. Agreements were reached at negotiations that: (i) an annual review of the Plan of Action would be conducted jointly by IDA and the Government, the project investment program for the following year would be approved by IDA, and the Ministry's program of expenditures, including the expansion of the basic health care services nationwide, would be reviewed by IDA. The Plan of Action would include a schedule for increasing the share and improving the distribution of resources for basic health care, and for organizational change and management development. Under this Plan, the percentage of national budget allocated to health grows from 32 to about 42, and the share of MPSSP expenditures on basic health in the project areas grows from between 20 to 30% to at least its  - 4 - highest historical level of 351I the percentage of budget administered at departmental lavel grows from about 201 to no less than 90?; the financial reporting by local management units is to be in place by 1991 and the management information system by 19921 and the status of basic health doctors is to be improved by March 1991: and (it) any replacement of the project manager and technical director would be approved by IDA, and IDA would be informed of any proposed replacement of the PU staff and would be given the opportunity to exchange views on the appropriateness of the qualifications of proposed new staff. Substantial coordination has already been achieved during project preparation with IDB, WHO/PAKO, UNICEF and bilateral donors and would be sustained during implementation via a joint government-donor coutittee. Cofinancing arrangements are being finalized with the Government of the Netherlands. WHO/PAHO and UNICEF would assist in the execution of the institutional and human resources development components, and would partially finance them. Additional support for the sector would be obtained through the activities of the FIS. An event of default would be that the Government fails to finalize the cofinancing arrangements or make alternative arrangements, by June 30, 1990 (all cofinancing essential to the project has been substantially secured). As conditions of effectiveness, ?IS would be established with a mandate satisfactory to IDA, the FIS procedure manuals satisfactory to IDA would be finalized, and an agreement satisfactory to IDA would be signed between MPSSP and PIS. A condition of disbursement for expenditures in each department would be the establishment of the CDS. Prior to IDA disbursements for incremental salary expenditures, the Government would provide IDA with its plan for assuming the cost of these salaries after June 1991. 10. Proiect Benefits. The project would benefit about 790,000 women and children, currently without access to basic health services in the low- income neighborhoods of the four largest cities. It would reorient public health expenditure in favor of basic health care and improve the efficiency of resource use through improved coordination -ith NGOs and among donors. About 80Z of the total project expenditures would benefit the poor, and 60? the extreme poor. The project would address directly the precarious health condition of women in Bolivia. About 831 of the basic care services provided through the project would be targeted to women and children. The project seeks to reduce infant mortality to 70 per 1,000 live births and maternal mortality to 33 per 10,000 live births in the project area. The project would also have a positive social impact on women through the social services provided in the integrated centers where outreach health activities are performed. The project would include training on environment issues and protection, and the preparation and promotion of a sanitation project for which financing would be available through the FIS. 11. Project Risks. The risks include lack of full commitment and follow through of the Government and/or the municipalities to carrying out administrative reforms and introducing effective management systems. Annual reviews of the Plan of Action, carefully planned technical assistance and donor coordination would help minimize these risks. 12. Recommendation. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association and recommend that the Executive Directors approve the proposed credit. Barber B. Conable President Attachments Washington, D. C. 1212011989  -5- Schedule A BOLIVIA INTEGRATED HEALTH DEVELOPMENT PROJECT Estimated Costs and Financing Plan Estimated Costs: a/ Local Foreign Total -_--------- USS million ---------- Total PPF 1.05 0.45 1.50 Service Delivery Infrastructure & Maintenance 6.65 1.85 8.50 Drugs and Supplies 1.92 3.41 5.33 Vehicles & Equipment 2.76 1.79 4.55 Salaries 7.63 0.00 7.63 Subtotal 18.96 7.05 26.01 Human Resources Development Training 0.65 0.16 0.81 Subtotal 0.65 0.16 0.81 Institutional Development Contracts, Material & Equipment 1.53 0.03 1.56 Commission and Supervision 1.05 0.82 1.87 Technical Assistance 0.33 1.11 1.44 Studies, Monitoring & Evaluation 0.57 0.18 0.75 Subtotal 3.48 2.14 5.62 Total Base Cost 24.14 9.80 33.94 Physical Contingencies 1.18 0.48 1.66 Price Escalation 2.13 0.87 3.00 Subtotal 3.31 1.35 4.66 Total Project Costs 27.45 11.15 38.60 a/ Amount of taxes and duties is negligible. Financing Plan: Local Foreign Total -------- (US$ million) ------ IDA 15.1 4.9 20.0 Government 9.4 0.1 9.5 Public Regional Entities 2.9 0.0 2.9 Government of the Netherlands 0.0 6.2 6.2 Total 27.4 11.2 38.6  Schedule B Page I of 2 BOLIVIA TITEGRATED HEALTH DVIELOPMENT PROJECT Methods of Procurement (Us$ Million) Procurement Procedures Total Catexory of Exzenditure iSC LCB Other NA Cost Civil Works 1.20 1.69 6.04 8.93 (1.20) bI (1.18) (3.85) (6.23) Furniture, Vehicle 2.23 3.57 1.30 7.10 & Equipment (2.23) (2.24) (0.83) (5.30) Drugs & Supplies 1.92 4.10 6.02 (1.53) (1.53) Studies & 5.43 5.43 Technical Assistance (3.32) (3.32) Commission & 2.24 2.24 Supervision (2.24) (2.24) Salaries and contracts 8.88 8.88 within MPSSP (1.38) (1.38) TOTAL PROJECT COSTS 3.43 7.18 19.11 8.88 38.60 (3.43) (4.95) (10.24) (1.38)(20.00) a/ Totals represent total estimated costs per category including price and physical contingencies. b/ Numbers between brackets reflect IDA financing.  Schedule 8 Page 2 of 2 $OLIVIA INtECRAlED HEALTH OEVELOPMENT PROJECT Disbursments (US$ million) Catesory Amount Pereentane 1. Civil IWorks 6.2 1Ot of foreign expenditures and 801 of local expenditures for contractv procured locally 2. Equipment, Furniture a 5.8 1001 of CIF cost of foreign *xpenditures; 60X of Medical Supplies, and ex-factory cost of locally manufactured goods Vebiclso or other items procured locally 8. Technical Asslatance, Training 3.@ 1001 of expenditures and Studies, Comelssionn and Supervision 4. ProJect Management Unlt a Contracte within LPSSP a) operating cost and fees 1.0 1OOX of *xpenditure b) directors & nurse salaries 0.1 1001 up to the time the aggreate amount of disbursemnt under this category reaches the equivalent of US884,000 and 601 thereafter. 5. PPF Refinancing 1.5 1OX of funds 6. Una lloated 2.6 TOTAL 20.0 Estimated IDA Dlsbursoments: IDA FY 1990 1901 1802 1993 1994 1995 1996 1997 - US2 mlliton -_ Annual 1.6 2.4 8.0 8.4 B.2 2.8 2.4 1.0 Cumulative 1.8 4.2 7.2 10.6 1J8. 16.6 19.0 20.0  Schedule C BOLIVIA INTGRATED HEALTH DEVELOPMENT PROJECT Timetable of Key Proiect Processing Evento (a) Time taken to preparet 14 months (b) Prepared bys MPSSP, with assistance of consultants and IDA, including US$1.49 million IDA PPP-financed advance to) First IDA missions March 1988 3d) Appraisal Mission departure: May 1989 (e) Negotiationes November 1989 Cf) Planned date of effectivenesst April 1990 (g) List of relevant PCRs and PPARs --_-  fLIVA - STFAS OF MAt)R P UMtP OFSRATIONS 1. Statement of World Bank Leeo an IDA Credilts. of September 80. 1Low Loan or Amount (lIm euamallatieae) Credit Fical Disbur-ed Number YA r Borroer Parm. _ank IDA UdIbursed Total ain mlI Ilow of US dolferal 16 Loans and 15 credits fully disbursed 274.9 110.7 -- 891.6 1703 1086 Iolivia Reconstruction Import Credit - 40.2 13.0 62.2 st 1719 1906 Sot lv1. Vuelta Crands 16.8 0.8 16.6 1809 1987 Sl ltvis Public Financial Mgt. 8.8 8.4 11.6 / 1818 1987 Bolivia Power Sector RehabilI- tation -- 2.5 4.8 6.8 } 1826 1987 Bolivia Roconstruction Dp. Cr.f -- 19.8 20.9 46.2 y 1829 198? Bolivia Emergency Social Furd I 10.5 0.01 10.5 y 1842 1968 Bolivin La Pax Municipal Dovt. -- 9.0 6.8 15.3 zJ 1882 1988 Bolivia Emergency Social Fund fI 21.8 2.9 24.7 , 1025 1988 Bolivia Financlal Sector Adjust. - 66.? 0.1 60.8 9/ 1977 1989 Bolivia Econ. Mbt. Strenth. Op. - 1.0 7.4 9.2 I 2012 1980 Bolivia Export Corridor -- 0 86.1 as I 2018 1989 Bolivia Mining Sector 0 38.8 88 Total 274.9 822.1 184.5 781.5 Of which has bon repaid 120.6 8.8 - 128.9 Total now outstanding 154.8 818.8 184.5 602.6 Amount sold 0.05 0.05 Of which has boen repaid (0.05) (0.05) Total now held bY BSnk and IDA 154.8 818.8 1.4.5 602.6 Total undisbursod 184.6 184.6 / eocause of variations In SOR exchange rate, present amount Is different from origlnal mount. 2. Statement of IFC lnwovewsnt (ae o September gO. 1989) Lon Ewlty Totl (lm mille" of U.S. dollore) Total prose commitments 19.6 0.9 20.5 Loss cancellations, terminations, repsymente, and sles 8.8 0.8 9.6 Total commitments now hold by IFC 10.8 0.1 10.9 Total undi4bursed 8.8 - 8.8  IIIRD 21^66 I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~A 615 \', .. \' BfAZUL FE], .:A A V A <LVIA 6~~~~~~~~~~~~~~~~~~~~~1~~~~~~~~ ~. INTEGRATED HEALTH DEVELOPMENT PROJECT SANIfARY UNIT OF LA PAZ CffYtOF EL AL10 d.' * Mother and Child Hospital * Hbbh Centersvvith Beds 5 | .~ A A H Fith Ls L Instithtion responsibleforoperation: NGO Are o Boundaries Distric Boundaries sr.,n e~e .*ee.~o InternatiDnal Boundories ri_net) L1Y J1989  IBRD 2167( BOLIVIA INTEGRATED HEALTH DEVELOPMENT PROJECT SANITARY UNIT OF COCHABAMBA M* other and Child Hospital Health Centers vAth Beds + + + Heath Centers \ ~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Hy + "' hA Prst N > 0 N O R t A D< =istsict BOndaries - _ --- Iternational Boundaries (insel) A~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ A Ai< A URSAZIL sI 8t BOtLVIA _..~w w.. say ,a. n.aa.,.. a..cta..e~m.s...a C' 1.j Pen C Anata.aa 2 =, = n. - Mm e t mn ' .,, alf, h1... m..da.t.,.,a O t_ BXs~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~aV n$,mam b n.a .w - C t. m t ne .  BOLIVIA PERU INTEGRATED HEALTH DEVELOPMENT PROJECT BOLIVIA SANITARY UNIT OF SANTA CRUZ BO.IVIA 044 \ A~~~~~~~~A U +~~~~~~~~~~~XAX P~ HealIth Ceiflersith Beds + +HealthCentr A Halt Pt Institutons reWsi"nsbe (w operabon II XMPSSP LZ NGO UN /0V LI i * Muniipalty \la m/. - *0,* LII Church -Aream Boundaries .,.., /,doIy IseiConCl e forbS (ins .,n,.,. / ,c0.fl w f I NGO~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~,  laRD 216t BOLIVIA INTEGRATED HEALTH DEVELOPMENT PROJECT SANITARY UNff OF LA PAZ MCY OF LA PAZ A na~~~~~~~~~~~~~~~Vl wtvd C.,t -At U& * Ins_tlutions oponsible fr openotnon PERU MPWP ~~~~~~~~~~OLIVIA` - A 31.Boundores ' lnemoridal Boundaies (inss) eL --- Iniernalionl BounrSuries {nX| t v-%* JaYIRee