Bolivia - Second Emergency Social Fund Project

Docuntentof The World Bank FOR OFFIClAL USE ONLY Rpwat No. 11471 PROJECT COMPLETION REPORT BOLIVIA SECOND EMERGENCY SOCIAL FUND PROJECT (CREDIT 1882-BO) DECEMBER 22, 1992 MICROFICHE COPY Report No.:11471 BO Type: (PCR) Title: SECOND EMERGENCY SOCIAL FUND Pt Author: BARQUERO, P Ext.:31757 Room:T9017 Dept.:OEDD1 Population and Human Resources Division Country De.partment III Latin America and the Caribbean Regional Office This document bas a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit - Peso Boliviano Avetaze Exchanae Rates 1988 Bs. 2.35 - US$ 1.0 1989 Bs. 2.69 - US$ 1.0 1990 Bs. 3.17 - US$ 1.0 1991 Bs. 3.58 - US$ 1.0 FISCAL YEAR January 1 - December 31 PRINCIPAL ABBREVIATIONS AND ACRONYMS USED ESF - Emergency Social Fund NGO - Non-Governmental Organization PCR - Project Completion Report PVO - Private Voluntary Organization SDR - Special Drawing Rights SIF - Social Investment Fund UDAPE - lUnidad de Anilisis de Politica Econ6mica (Unit for Economic Policy Analysis)  FOR OMICIAL USE ONLY THE WORLD BANK Wairngto D.G 20433 USA Opw EVWUon December 22,1992 MEDIORANDIIkl TO EXIECl)"lV PnZOM)R AND TH;IEN SUBJECT: Project Completion Report on Bolivia Second Emerfency Social Fund Project (Credit 1882-BC) Attached is a copy of the above-named report, prepared by the Latin America Regional Oice. Part II was prepared by the Borrower. It is comprehensive and informative. The goal of the Emergency Social Fund was to help alleviate the social costs of economic adjustment by prviding short-term, temporay employment to those adverely affected and by bolstering basic social services that deteriorated duing the economic crsis. It exceeded most of its tagts, including the employment goals, in part because it attracted other external funds to xan the program. Although designed to provide short-term relief, the projec can be considered sustainable in that (a) 80%o of social assistance and 95% of social infrastructure sub-projects were operating 1-2 years beyond their completion; and (b) the Government has adopted the general concept and incorporated it into its Social Investment Fund, which the Bank is now supporting. No audit is planned since the first project was aucited when the second was two-thirds completed, and evaluated the implementation of both projects Attachment Thi domm has a ted dt l and y be ud by o * Ithe fw tw d:ial duO _ X contrf may not rgwbe be dbcbsed wMlhWaW Baft auB - t  FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT BOLIVIA SECOND EMERGENCY SOCIAL FUND PROJECT (CREDIT 1882-B0) TABLE O CONTEMS EVALUTION SOIARY .i. ... .. . . . . .. . . . .. . . . . . . .. .. iii PART I. PROJECTREVIEW FRnomT BANK'S-PSPECT= .......... . 1 A. Project Identity . . . . . . . . . . . . . . . . . . . . . . . 1 B. Background . *. * * * * * * * * .. . .... * * * * * * * * * * .... 1 Econo ic Background . . . . . . . . . . . . . . . . . 1 The Social Costs of the Economic Crsis ......... .. 1 The Emergency Social Fund: Origin and Background . . . . . . 2 C. Project Objectives and Description . . . . . . . . . . . . . 2 D. Project Design and Organization ............... 2 Project A&niistration .................... 3 E. Project Implementation . ................ .. . 3 Variation in Project Implementation . . . . . . . . . .. . . 3 Procurement . s J 9 9 9 9 * # * * * * * 9 * * * * * * * * * * 4 Project Risks . . . . . * . . . * * * . * . . . a . ... . 5 F. Project Results 9 * * * * * * * * * . . * . . . . . . . * * * 5 Impact on the Adjustment Process: Macroeconomic Impact . . . 5 Employment and Targeting ......... .......... 6 Infrastructure 9 * * * * * * * * . . * * * * * . . . . . * * 7 Social Services ... * * . * * * * * * * * * * * * * 9 * * 7 Institutional Impact . . . . . . . ............. ...... . 8 Poverty Alleviation . . . . . . . . . 9. . 9. 9 9 9 . 9 * 9 9 8 Ixpact on Women . . .*. .9. .9 . . . . .9. . .9 . .9 . .9 . .9 . . 9 Enviromental Impact . * a ... ... ........................... 10 G. Project Sustainability ................... . 10 N1. IDA's Performance I.. 9 * * 9 9 9 9 9 9 * * 11 Lessons Learned .1....**. . . . 9 9 9 9 9 9 9 9 9 9 9 9 9 9 11 I. Borrower's Performance .................... 14 J. Project Relationships .... . . . . . .................. . 14 R. Consulting Services . .*. * * 0 0 * * * e 0 ... * * * * * * * 14 L. Project Documentation and Data ............... . 14 PART II. PROJECT REVIEW FROM TEE BORROWER'S PERSPECTIVE . . . . . . . . 17 A. Comments on Parts I and II ................. 17 B. IDA Performance 9 o * * * * * * * * 9 9 9 9 9 17 C. Borrower Performance .......... ............ 17 D. IDA - Borroer Relationship . ................ 18 S. Relationship with Co-financiers .... ... .. . .. ... 19 F. Relationship with other Relevant Parties . . . . . . . . . . . . 19 This document has a restricted distribution and may be used by recipients only in the performance of their official duties Its contents may not otherwise be disclosed without World Bank authorization.  PARTIZI. STAXISTICAL. WO1'MTIO ............ ...... . 21 1. Related Credtts .*. . . . . . . . . . . . . .*. . . . . . . . . 21 2. Project Timetable . . . . . . . . . . . . . . . . . . . . . . . 22 3. Credit Disbursements . .. . . . .. . . . . . . . . ... . 24 4. Project Implementation: Indicators . . . . . . . . . . . . . . 25 5. Project Costs and Financing . . . . . . . . . . . . . . . . . . 25 A. Project Costs . . . . . . . . . . . . . . . . . . . . .. 25 B. Project Financing .. . .. . . . .9.. ........ 26 C. K8F Program--Sources of Funding . . . .......... 27 6. Project Results . . . . . . . . 28 A. Direct Benefits ................... 28 B. Studies . . . . . . . . . . . . . . . . . . . 9 . . . . . . 29 C. Sub-projects Approved by Type of Requesating Agency . . . . 31 7. Status of Covenants . .. . . . . . * * .. .* . . . 32 8. Use of IDA Resources . . . . . . . . . . . . 32 A. Staff Inputs . . . . . . . . . . . . . . . . . . . . . .32 B. Use of IDA Resources: Missions 4 . . . . . . . . . 33 BIBLIOGRAPHY . . . . . . . . . . . . . . . . . * . . . . . . . . . 35  PROJECT COMPLETION REPORT BOLIVIA SECOND EMEROENCY S0CIAL FUND PROJECT (CREDIT 1882-BO) MRPACE This is the Project Completion Report (PCR) for the Second Emergency Social Fund Project in Bolivia, for which Credit 1882-BO in the amount of SDR 19.0 million (US$27 million equivalent) wa approved on March 1, 1988. The Credit was closed on October 31, 1991, eleven months beyond the original schedule. The last disbursement was made on April 19, 1991, and a final undisbursed balance of SDR 89,792.38 waa canceled effective October 31, 1991. The PCR was prepared by the Population and 2-man Resources Division of the Latin America and the Caribbean Regional Office (Preface, Evaluation Summary, Parts I and III) and the Borrower (Part II, with significant contributions to Part III). The PCR was sent for comment to co-financiers; no substantive comments were received. Preparation of this PCR was started during the Association's final Supervision mission of the project in May 1991, and is based, inter alia, on the Staff Appraisal Report; the Development Credit Agreement; supervision reports; mid-project review; correspondence between the Association and the Borrower; and internal Bank memoranda.  - iii. - PROJECT COFFETION REPORT BOLIVIA SECOND EMERGENCY SOCIAL FUMD PROJECT (CREDIT 1882-BO) EVALUATION SUMMARY Objegtives 1. The goal of the Emergency Social Fund (ESP) was to help alleviate the social costs of economic crisis an4 adjustment by providing short-term temporary employment to the groups most adversely affected, and by bolstering bas4.c social services, which had deteriorated during five years of economic crisis. ISP was designed as a quick and effective mechanism for financing small-scale, employment- and income-generating sub-projects designed and carried out by a variety of entities. Credit 1882-BO was the second credit approved to support the program. Imnlementation- Eerience 2. The implementation of Credit 1882-BO complied with the Credit Agreement in its fundamental aspects, with the largest variance between actual and planned implementation relating to the disbursement schedule. Given the emergency nature of the program, procurement procedures were permitted to depart from the standard guidelines established by the Association. While unorthodox, the procedures applied were simple and efficient and proved to vork satisfactorily. 3. ESF vsa very successful in mobilizing international support from a large number of bilateral donors and international agencies. Three donors (Sweden, the Netherlands, and Switzerland) and the OPEC Fund provided financing under co-financing arrangements with the World Bank. Several donors began or resumed programs in Bolivia because 1SP was able to ensure speedy and effective implementation. Results 4. Results of the program can be assessed by focusing on the following areas: macroeconomic impact, employment and targeting, infrastructure, social services, institutional impact, poverty alleviation, impact on women, and environmental impact (par"s. 18-35). 1SF had a favorable impact on Bolivia's macroeconomic Indicators, generating a positive capital Inflow of over U8$170 million during the life of the program, thus contributing to a reduction of the current account deficit. Total 1SP investments substantially increased public sector and gross domestic investment (Table, pars. 19). 1SF sub- projects generated about 731,000 man-months of employment, surpassing the original goal set for the program; this result corresponded to the expansion of the program. While ex-miners, the original target group, represented between 15S and 201 of those hired under 1SF-financed contracts, the majority of workers employed under 1SF contracts were in fact needier than the  - iv - originally intended beneficiaries. Workers under ESF-financed sub-projects were generally less educated, poorer, and spent less on food per capita than the average Bolivian. Relatively few women were employed under civil-works sub-projects. In addition to the direct employment generated, some 818,000 man-months of work are estimated to have been generated owing to a multiplier effect. 5. ESF invested a total of US$167.2 million in social and economic infrastructure sub-projects, consisting of water supply and sewerage, housing, health posts, schools, toads, and urban improvement, which directly benefitted about 1.7 million people. During execution of the program, ESF committed about US$17.0 million in funding for social assistance sub-projects, which benefitted nearly 230,000 people, mainly low-income women and children. These sub-projects were mainly focused on food and nutrition, basic health services, vocational training and support to education. Virtually all beneficiaries of ESF sub-projects were poor. ESF was successful in addressing women's needs through its social assistance sub-projects, which focused on the health and nutrition of pregnant women, lactating mothers, and their infants. ESF helped to enhance Government credibility and the role of many national and local institutions, and had a positive impact on the Government's working relationships with NGOs. The program had a favorable environmental impact by supporting erosion control and sanitation sub-projects. Sustainabilitv 6. ESF was designed as a temporary institution, not to be sustained over the medium term. As ESP neared its closing date, however, the Government wished to sustain aspects of ESF, such as its ability to channel funds quickly to small projects. It, therefore, established the Social Investment Fund with the mandate to finance investments and sustainable service programs in health and education. By building on the achievements of 3SF, the Social Investment Fund's goal is to contribute to Bolivia's long-term growth through human capital formation. 7. ESP sought to assure sustainability of all sub-projects by requiring evidence of availability of financing for operating costs prior to sub-project approval. The results vary by sub-project type, location, and executing agency. A survey of sub-projects in health and education carried out by ESF in 1990 showed that about 80% of social assistance sub-projects and about 951 of social infrastructure sub-projects were operating after one to two years beyond sub-project completion. Factors shown to be important to sub-project sustainability, such as active beneficiary participation, sufficient experience of the requesting agency, and prior identification of source of financing for recurrent costs, have been incorporated into SIFs' criteria for selection of sub-projects.  -Y v Findints and Lessons Learned 8. The ESP program experienced both successes and shortcomings, and its successes entailed trade-offe.1 The main lessons learned and factors which contributed to the sL=cess of the program can be summarized as followss (a) Intestrgion With Macroeconomic Proftrsm. An essential part of ESF's success was that it became a central tart of the Government's economic policy and was designed to help alleviate problems stemming from the economic crisis and adjustment. (b) Leadership. Political Backing and Operational Autonomy. ESF had strong leadership and unflagging governmental support at the highest level, combined with a deliberate restraint from political intervention in its daily operations. (c) IDA SuDervision. The ESF demonstrated the need ,or, and benefits of, assigning substantial supervision resources to projects of this type. IDA contributed to the evolution of the program through its intensive supervision work. Nevertheless, the burden of supervision was several times the average. (d) Employment Generation vs. Poverty Alleviation. The economic and social impact of ESF sub-projects demonstrated that income transfers to workers and their households can be effected through public works programs, as a transitional emergency measure during adjustment. However, the ESP did not substantially alleviate the unemployment caused specifically by the adjustment program. Moreover the ESF did not have a substantial impact in alleviating structural poverty, which requires a more systematic approach than the demand-driven framework used by ESF. (e) Speed vs. Efficiency of Resource Allocation. There are trade-offs between the speed of disbursement and size of portfolio on the one hand, and the quality of sub-projects and most efficient allocation of resources on the other. ESF sought a balance between the conflicting objectives, but examples can be found of projects that did not meet social return criteria and of works of inadequate quality that slipped through its selection process an.. project supervision controls. (f) Macroeconomic Impact. Although the project was designed to address the emergency, macroeconomic analysis demonstrated that it fostered GDP growth in both the short run and the long run. 1/ A detailed discussion of the ESF's successes and shortcomings, focussed with a view to providing helpful guidance for those considering applying a similar model in other countries, is provided in "Easing the Poor through Economic Crisis and Adjustment: The Story of Bolivia's Emergency Social Fund," edited by S. Jorgensen, M. Grosh, and M. Schachter, World Bank, May 1991.  - vi - (g) 8peod vs. Poverty Tar;etina. Bf forts to reach the very poor require more than geographic targeting, since there are wide variations of income even within geographic jurisdictions. However, unless sufficient information is readily available, achievement of greater refinement in targeting resources to the poor vill require time-- which represents a significant trade-off in an emergency program. While ISF generally benefited the poor, it did not, in most cases, reach the poorest of the poor. In spite of constant pressure to speed execution, however, it enhanced its ability to reach the poor by assuring that the type and design o^ t-roject selected focused on provision of basic services. It also laid the groundwork for more precise targeting under the Social Investment Fund. (h) Imoortance of Promotion. Promotion was necessary in order to disseminate information on the ESP, its goals and procedures. It was also important in developing ESF's ability to deal promptly and effectively with requesting agencies, and in building confidence among these agencies in its intentions and capacity. (i) Imnortance of CooDeration. Through the ESP project, cooperation between the World Bank and NGOs has been enhanced, and relations have improved between NGOs and the Governiment. (j) Coordination with National and Regional Plannina Processes. ISF was established in part to help address, on an interim basis, the lack of planning and project execution capacity of national and regional institutions weakened by the economic crisis of the early 1980s. Nevertheless, ESF was not intended to undertake planning of investments systematically, and its limited integration with national and regional planning processes led to some cases of inefficient investments. (k) Sustainabilitv of Sub-groiects. M!iile ESP sought to verify availability of financing for operating costs of sub-projects, results varied considerably by project type, location, and executing agency. Nevertheless, the results have provided valuable lessons concerning key factors in assuring sustainability of sub-projects, which are being employed by the SIF (pare. 37).  PROJECT COMPLETION REPORT BOLTV SECOND EMERGENCY SOCIAL FUND PROJECT 1CREDIT 1882-BO) PART I. PROJECT REVIEW FROM IBE BANS'S PERSPECTIVE A. Prolect Identitl Names Second Emergency Social Fund Project Number: Credit 1882-BO RVP Units LAC Borrower: Republic of Bolivia Executing Agency: Emergency Social Fund Sector: Multiple Amount: SDR 19.0 million Approval Date: March 1, 1988 Signature: March 4, 1988 Effectiveness: July 13, 1988 Closing Date: Originals November 30, 1990 Revised: March 31, 1991 Revised: October 31, 1991 B. Backaround 1. This report presents data corresponding to Credit 1882-BO, the Second Emergency Social Fund Project (ESP II), which closed October 31, 1991. However, since the Emergency Social Fund (ISP) closed operations on March 31, 1991, the report also provides information on the NSF program as a whole. The findings reported in the earlier Project Completion Report and the Project Performance Audit Report regarding Credit 1829-BO (Emergency Social Fund Project) are found to still be substantially valid and have been incorporated here. 2. Economic Dacktround. In 1985 the new democratically elected Government of Bolivia faced a severe economic crisis. With inflation running at 24,0002 a year, public revenues amounting to less than 12 of GDP, and widespread scarcities, the Government acted decisively to implement its new economic stabilization, adjustment and reactivation program. Within eight weeks, inflation decreased to 102 per annum, and by 1988 the economic stabilization program had achieved considerable success, halting the economic decline of the preceding years. However, structural adjustment had not yet taken place, and the situation was still criticals after years of decline, GDP had finally begun to grow but still lagged behind population growth; real per capita income was therefore still falling. 3. The Social Costs of the Economic Crisis. It is difficult to distinguish the social costs of economic adjustment from the social consequences of the economic crisis of 1980-1985. Key indicators of social welfare, such as infant and maternal mortality, malnutrition, and incidence of diarrhea had worsened during the period 1978-85 and began to recover  - 2 - afterwards. Malnutrition was widespread, and the infant mortality rate, at 124 per 1,000 live births (and twice as high in some poor communities), was double the average of the region. Miners and civil servants were severely hit by the layoffs affecting over 25,000 jobs between 1985 and 1986 alone. Farmers in the surrounding mining communities also suffered indirectly as local economies declined in the mining areas. 4. The Emertencv Social Funds Origin and Background. In this critical economic and social context, the Government established the Emergency Social Fund (ESP) in 1985 to bolster social iuvestments and services and generate employment during the stabilization and adjustment period. In December 1986, the Association accepted the lead role in helping to restructure ESP and coordinate fund-raising efforts and undertook the preparation of the Emergency Social Fund Project (ESF T) (Cr. 1829-BO), its first project designed to alleviate the social costs of economic adjustment. This first credit, for a total of SDR 7.8 million (about US$ 10.0 million at the exchange rate prevailing at appraisal), was prepared, appraised and approved extremely quickly: four months elapsed between the identification mission and Board approval in June 1987. The credit was designed as a pilot operation and was intended to finance about one fifth of the ESF's total expected program, provide institutional support, and help the Government mobilize international assistance. Implementation was rapid and effective, prompting the Government to expand its original target from US$ 50 million to US$ 140 million and request additional support from IDA. Four supervision missions between July and December 1987 judged that ESF's performance warranted the Association's continued support. Consequently, ESF II was appraised in December 1987, negotiated in January 1988, and approved on March 1, 1988. C. Project Ob4ectives and DescriDtion 5. ESP was established as a temporary emergency program, with legal autonomy and under the direct oversight of the President of the Republic. Its goal was to provide short-term temporary employment to those groups most adversely affected by the austerity measures, and to shore up basic social services after years of erosion of Government spending in the social sectors. ES! was designed as a quick and effective mechanism for financing small sub- projects designed and carried out by a variety of entities. Eligible sub- projects included small-scale, employment- and income-generating projects such ass water supply, sewerage, health posts, schools, basic shelter, road improvement, irrigation, and erosion control. Sub-projects also included "social assistance" programs in health, nutrition and training. Overall, the ESP expenditure plan called for allocation of 75Z of funding to support employment- and income- generating sub-projects, and 252 to social assistance sub-projects. D. Prolect Desian and Ornanization 6. ESF's sub-projects were prepared, requested and carried out by local governments, regional development corporations, government ministries, non- governmental or