Honduras - Social Investment Fund Project

Docnment of The World Bank FOR OmCIAL USE ONLY Report No. 13573 PROJECT COMPLETION REPORT HONDURAS SOCIAL INVESTMENT FUND PROJECT (CREDIT 2212-HO) SEPTEMBER 30, 1994 Human Resources Operations Division Country Department II Latin America and the Caribbean Regional Office 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.  CURRENCY AND EQUIVALENT UNITS Currency Unit = Lempira Average Exchange Rates 1991 L 5.31 = US$ 1.00 1992 L. 5.53 = US$ 1.00 1993 L. 6.30 = US$ 1.00 1991 SDR 1.0 = US$ 1.43 FISCAL YEAR January I - December 31 PRINCIPAL ABBREVIATIONS AND ACRONYMS USED BMI Maternal Child Coupon Program BMJF Women Head of Household Coupon Program CBH Central Bank of Honduras EEC European Economic Community FHIS Honduran Social Investment Fund FHIS-I First Honduran Social Investment Fund Project FHIS-II Second Honduran Social Investment Fund Project FINCA Foundation for International Community Assistance GDP Gross Domestic Product GNP Gross National Product GECO General Statistical and Census Office GOH Government of Honduras IDA International Development Association LCB Local Competitive Bidding LSMS Living Standards Measurement Survey LWSB Local Water and Sanitation Board MHS Multiple Purpose Permanent Household Survey MOE Ministry of Education MOH Ministry of Health NGO Nongovernmental Organization PRAF Family Assistance Program RUTA Regional Unit for Technical Assistance SECPLAN National Planning Secretariat UNDP United Nations Development Programme UNICEF United Nations International Children's Emergency Fund USAID U.S. Agency for International Development  FOR OFFICLAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office of Director-General Operations Evaluation September 30, 1994 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Honduras Social Investment Fund Project (Credit 2212-HO' Attached is the Project Completion Report on Honduras -Social Investment Fund Project (Credit 2212-HO) prepared by the Latin America and the Caribbean Regional Office. Part II was prepared by the Borrower. This project developed and funded a social fund to mitigate the social costs of adjustment by financing a large number of small-scale subprojects providing social and economic infrastructure. Nearly all indicators of outcome -employment, focus on poorest areas, gender, etc. -were positive, and the early success of the project attracted additional funds to expand its scope. The project outcome is rated as satisfactory; sustainability as likely; and institutional development is rated as substantial. The PCR is of good quality. As an innovative project and the first of its kind in the country, an audit is planned. Robert Picciotto by H. Eberhard Kopp Attachment This documernt has a restricted distribution and may be used by recipients only in the performance of their officlal duties. Its contents may not otherwise be disclosed without Wordd Bank authorizatlon.   FOR OFFICIAL USE ONLY PROJIECT CONIPLETION REPORT HONDURAS SOCIAL INVESTMENT FUND PROJECT (CREDIT 2212-HO) TABLE OF CONTENTS PREFACE ....................... ....................... EVALUATION SUMMARY ..................................... ii PART 1: PROJECT REVIEW FROM THE BANK'S PERSPECTIVE ... ......- 1 - A. Project Identity ......................................- . - B. Project Background ................................... - I - C. Project Objectives and Description .......................... -2- D. Project Design and Organization ............................ - 3 - E. Project Implementation .... _ _ .......................- 4 - Variations in Project Implementation . ..................... - 4 - Parallel financing ....-. .. ...... ..... .... ......... - Procurement ..................................... .- 5 - Subprojects Preparation .. ....................... - 6 - Project Risks ......................... - 7 - F. Project Results ......................... - 8 - Approved Subprojects .......................... 8 - Infrastructure Subprojects .......................... - 8 - Basic Needs Subprojects .......................... - 8 - Informal Sector Subprojects ......................... - 9 - The Family Assistance Program (PRAF) . ................... - 9 - Living Standards Management Survey (LSMS) . ............... - 9 - FHIS' Macroeconomic Impact . ......................... - 10 - Employment ........... I ...................... . 10 - Institutional Impact ................ - 11 - Poverty Alleviation ....... ......................... - 11 - Impact on Women .............. - 12 - The Family Assistance Program (PRAF). -.................. . 12 - Environmental Impact . ............................. - 12 - G. Project Sustainability .................................. - 12 - H. IDA Performance ................................... - 13 - This report is based on the recommendations of an evaluation study of PRAF food coupons program undertaken in November 1991 (Report No. 10488-HO) and on the findings of a project completion mission, which visited Honduras in March 1994. The mission was composed of Messrs./Mmes. A.M. Sant'Anna, Mission Leader, and M. Romero (CONS). Messrs./Mmes.Messrs. de St. Antoine, Vinh Nguyen and B. Hyatt-Allen contributed to the report at headquarters. Edilberto L. Segura (LA2DR) and Kye Woo Lee (LA2HR) are the Department Director and Division Chief, respectively. 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.  I. Borrower Performance . . . . .- 1 3 - J. Project Relationship . . . . - 13 - K. Project Documentation and Data .. . . . . . . ... - 13 - L. Lessons Learned . . ... - 14 - PART II: PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE - 17 - A. Comments on Parts I and III . . ......... .. - 17 - B. IDA Performance .-....... ...... 17 - C. Borrower Performance ..... .... ..... .. ....... - 18 - D. IDA - Borrower Relationships . I......... .-I . . . .. . 19 - PART III: STATISTICAL INFORMATION . . ............. ... . . . - 20 - 1. Related Credits ..... . .... . . . -20 - 2. Project Timetable ...................... ... .- 21 - 3. Credit Disbursements . - 22 - 4. Project Implementation: Indicators for FHIS Programs .... 23 - 5. Project Costs and Financing . . . ......... .- 23 - A. Project Costs .....-.. 23 - B. Project Financing .. ..... - 24 - C. FHIS Financing ... .... - 24 - D. Credit 2212-HO by Methods of Procurement . ...... - 24 - E. Allocation of FHIS Investments by Type of Subproject (1990- 1993) ..... . .......................... - 25 - F. Allocation of the Proceeds of Credit 2212-HO by Type of FHIS Subproject ..... - 25 - G. FHIS Investment by Municipal Poverty Index . . .. - 26 - 6. Project Results ... . ... .......... . 27 - A. Direct Benefits .... ..................... - 27 - B. Studies . e. .. .,... - 28 - C. Audit Recommendations ... ... . . - 29 - 7. Status of Covenants .................. - 30 - 8. Use of Bank Resources ................................ - 30 - A. Staff Inputs ............................ ..... - 30 - B. Use of IDA Resources: Missions .. - 31 - BIBLIOGRAPHY .. - 32 -  PROJECT COMPLETION REPORT HONDURAS SOCIAL INVESTMENT FUND PROJECT (CREDIT 2212-HO) PREFACE This is the Project Completion Report (PCR) for the Social Investment Fund Project in Honduras, for which Credit 2212-HO in the amount of SDR 14.3 million (US$20 million equivalent) was approved on February 28, 1991. The Credit was closed on March 31, 1994, three months beyond the original schedule. The last disbursement was made on June 13, 1994. The PCR was prepared by the Human Resources Operations Division of Department II of the Latin America and the Caribbean Regional Office (Preface, Evaluation Summary, Parts I and III) and the Borrower (Part 11, with significant contributions to Part III). Preparation of this PCR was started during the Association's final supervision mission of the project in February 1994, and is based, inter alia, on the Staff Appraisal Report; the Development Credit Agreement; supervision reports; mid-term project review; evaluation studies prepared by the Borrower; correspondence between the Association and the Borrower; and internal Bank memoranda.   ii PROJECT COMPLETION REPORT HONDURAS SOCIAL INVESTMENT FUND PROJECT (CREDIT 2212-HO) EVALUATION SUMMARY Introduction I . This project was the first social sector project that supported the Government of Honduras' economic stabilization and adjustment program which started in March 1990. This program was designed to correct distortions resulting from past macroeconomic mismanagement, and to lay the foundation for sustained economic growth over the medium term. 2. The Social Investment Fund Project was appraised in October 1990, approved by the Board in February 1991, signed on March 14, 1991, and became effective on June 25, 1991. At appraisal, total costs were estimated at US$68 million, of which US$20 million would be financed by an IDA credit. Other contributions included US$33 million from donors, US$8 million from the Government of Honduras, and US$7 million from the project beneficiaries. The credit was closed on March 31, 1994, three months beyond the original schedule, the last disbursement was made on July 29, 1994, and the undisbursed balance of SDR 17,767 was canceled in August 1, 1994. Project Objectives 3. The objectives of the project were to mitigate the social costs of adjustment, establish the basis for a decentralized program of direct support for the poor and malnourished, and support improvements of service delivery in the social ministries. The project was to meet these objectives through implementation of four components: (a) financing of the Honduran Social Investment Fund (FHIS); (b) supporting a pilot targeted nutrition assistance program carried out by the Family Assistance Program (PRAF); (c) providing technical assistance to help design a program for improving the efficiency and equity of the services of the Ministry of Health (MOH) and the Ministry of Education (MOE); and (d) establishing a monitoring and evaluation system of the government's social policy interventions by using a Living Standards Measurement Survey (LSMS), administered by the Ministry of Planning (SECPLAN). The FHIS, which accounted for 98.3 percent of total project cost, was established as a short-term mechanism to transfer resources to poor urban and rural communities to: [i] create employment and income among the poor segment of the population whose living conditions would be more severely affected by the macroeconomic adjustment; [ii] improve social infrastructure, satisfy basic needs such as water supply and sanitation, and promote microenterprises. Implementation Experience 4. The implementation of Credit 2212-HO complied with the Credit Agreement in its fundamental aspects. FHIS exceeded appraisal expectations in mobilizing international support  iii from 16 bilateral donors and international agencies. Combined with national funds, the additional external resources permitted a 65 percent expansion of the program as appraised. 5. Minor variations were observed between actual and planned implementation: (i) the average size of subprojects financed by FHIS was smaller than planned (US$18,600 instead of US$20,000); (ii) the average time required for subproject appraisal and execution was shorter than expected, leading to faster credit disbursement; (iii) single-source contracting was the most used method of procurement, reaching 68 percent of the total rather than 30 percent as anticipated at appraisal. Single-source contracting followed transparent albeit simplified procurement guidelines, supported by a computerized cost control system and quarterly concurrent audits which ensured least cost solutions and competitive subproject contract awards; (iv) the contribution of beneficiaries to project financing was estimated at appraisal at US$7 million, or about 10 percent of the original project cost; actual contribution of beneficiaries was made mostly in kind, and has not been monetized as part of the total project cost. Nevertheless, it is estimated to account for an additional 12 percent of the cost of FHIS subprojects, and (v) FHIS administrative costs, estimated at appraisal at 6.5 percent of total FHIS financed, averaged 8.1 percent during the 1990-1993 period, which is not excessive given the size and diversity of its portfolio. 6. Project implementation successfully overcame the risks identified at appraisal. Through its subproject menu and resource allocation procedures, FHIS subprojects were well targeted, benefitting more than proportionally the poorest communities. Over time, subproject sustainability improved through the creation of local water boards for operations and maintenance of water supply and sanitation subprojects, local education and health committees for the maintenance of schools and health centers, and community training for the use of latrines. These programs were carried out by specialized non-government agencies (NGOs) working under contract with FHIS. The risks of inadequate targeting and misuse of resources by the PRAF pilot nutrition assistance program were also avoided; PRAF achieved the planned coverage and complied with targeting criteria for the Maternal Child Food Coupon Program (BMI), with positive impact on the nutrition status of the most vulnerable groups consisting of pregnant and nursing women and children under five. Project Results 7. The results of the project can be assessed by focusing on the following aspects: macroeconomic impact, employment and targeting, infrastructure, social services, institutional impact, poverty alleviation, impact on women, and environmental impact. FHIS activities during the 1990-1993 period resulted in the execution of 5,474 subprojects providing social and economic infrastructure, basic needs and informal sector credit at a total cost of about US$97.2 million including administrative costs, compared with about US$66.8 million estimated at appraisal. FHIS had a favorable impact on Honduras' macroeconomic indicators by contributing to Government investment and direct employment. Following the economic crisis of the late 1980s, when investment in social infrastructure practically came to a halt, FHIS was able to channel investments to small economic and social infrastructure which in 1992, amounted to 18 pe;cent of total Government's capital expenditures and 28.3 percent of direct government investments. Direct employment generated by FHIS subprojects reached 59,000 job-years during the 1990-1993 period, corresponding approximately to 12 percent of the estimated unemployed and underemployed workers in 1991. Over 85 percent of the created employment related to the construction of community facilities such as roads; education facilities such as repair of schools; and health and sanitation facilities such as expansion of health centers and construction of water  iv supply, latrines and sewage systems. Average wages paid under FHIS contracts ranged between 94 percent and 104 percent of the minimum construction wage. Because FHIS was able to gradually increase its activities in areas of high incidence of poverty, tiere has been an increase in the percentage of jobs in the poorer municipalities from 65 percent to 80 percent during the 1990-1993 period. 8. The impact of FHIS subprojects has been significant, especially in meeting long neglected social infrastructure needs. In the education sector, FHIS rehabilitated and/or expanded 2,708 schools, or 30 percent all primary and pre-primary school in the country and provided 360,836 school desks serving approximately 80 percent of all students enrolled in primary schools. In the health sector, FHIS rehabilitated and/or expanded of 303 health centers, thus improving 32 percent of national health centers network, provided health services to about 37,121 persons, and trained 14,788 community health providers, including most of the country's traditional midwives. FHIS raised the coverage of safe water supply by 16 percent in rural and urban areas, and practically eliminated basic sanitation deficit in urban and peri-urban (slum) areas through the construction of 57,507 latrines and septic tanks, and 244 water and sewerage subprojects. Through financing of 6,112 family gardens, 3,635 small livestock subprojects, and over 100 maternal enterprises, FHIS contributed to improving food security and child nutrition in rural areas. FHIS informal sector credit program supported the creation of 254 community banks, benefitting 7,219 persons without access to credit and financed about 3,753 micro- enterprises. 9. The PRAF pilot nutrition assistance program tested the feasibility of distributing food coupons targeted to groups at risk of malnutrition through primary health care centers and primary schools. The pilot program was successfully implemented, benefitting 56,000 poor pregnant and nursing women and children under five in 3 of 16 departments nationwide. it provided the basis for an expanded nutrition assistance program which IDA is now supporting under Credit 2452-HO (Nutrition and Health Project). 10. The project has contributed to alleviating poverty and to improving the social and economic conditions of women. Through FHIS subprojects and the pilot nutrition assistance program of PRAF in particular, the project led to the creation of an effective safety-net for the most vulnerable groups with insufficient incomes to buy the basic food basket. An important aspect of the project impact on women has been the improvement of their access to credit and productive activities, through participation in the FHIS informal sector credit program. Women represent 53 percent of the beneficiaries of this program, accounting for 79 percent of community banks' members and 63 percent of training program participants. Six of 21 NGOs providing micro-credit with FHIS financing catered exclusively to women. 11. The majority of FHIS subprojects have had neutral impact on the environment. Some subprojects were designed to have a positive impact on the environment. These innovative subprojects focused on restoration of historic monuments and support to indigenous communities. FHIS water supply and sanitation subprojects improved environmental conditions in many rural and poor urban areas, by reducing soil and water contamination through improved disposal of waste water and human excreta, appropriate watershed management practices and provision of sanitary land-fills, latrines and septic tanks. 12. The FHIS program had a strong institutional impact. The high visibility, efficiency and credibility of the program helped strengthen the government's capacity at both the central and local levels. FHIS fostered inter-agency collaboration and instituted an effective mechanism for  v coordination with the line ministries for investment planning and subprojects implementation. FHIS also brought innovation to the style of governance and contributed to the process of decentralizing government decision-making, by responding effectively to local demand for small scale investments in several sectors, and by relying largely on the private sector for subprojects implementation. As a result, FHIS strengthened the capacity of municipalities to promote, prepare, supervise, execute and maintain small-scale investment projects. FHIS contributed to the development of the private sector and NGOs, by actively engaging their participation in subproject preparation, execution and supervision, thereby achieving excellent working relations with NGOs and over 1,800 small private contractors. Through FHIS contracts, many individuals were able to grow and form private construction and consulting companies, and many NGOs expanded the scope of their activities and improved service quality. Thus, FHIS succeeded in mobilizing additional private resources in aid of community development. 13. The Living Standards Measurement Survey was developed, tested and incorporated as a module of the multi-purpose annual household surveys conducted by SECPLAN; three such surveys have been conducted, leading to improved data collection of social indicators and providing useful statistics to measure the impact of the FHIS program. However, data analysis is still less than satisfactory, and SECPLAN plans to strengthen its social indicators analysis unit, to achieve the intended project objective of systematically monitoring the impact of targeted government social programs. The social sectors restructuring component, financed by a Japanese Grant to Honduras, contributed to the preparation of the nutrition and health project currently under implementation with IDA financing (Cr. 2452-HO). 14. FHIS's operational policies ensured the sustainability of the subprojects it financed. In the case of the expansion of schools and health centers, the assurances of staff appointments by line ministries (Ministries of Education and Health) was a condition for approval of the expansion subprojects. Similarly, in the case of water supply and sanitation subprojects, FHIS required the creation of local water boards or special municipal units in charge of collection of user fees and system operation and maintenance, as a condition for subproject approval. To complement the construction of latrines, FHIS introduced an innovative program to train every beneficiary household on how they should use and maintain the latrine to ensure sustainability. To maintain continued efforts in this area, IDA recommended that FHIS, in cooperation with line ministries and municipalities, carry out an operations and maintenance census of all completed subprojects. The results of this census would serve to identify additional measures in support of subproject sustainability. Summary of Findings and Key Lessons Learned 15. Integration with Macroeconomic Program. An important aspect of FHIS' success was that it became an integral part of the Government's high priority economic policy; i.e., a social program to cushion the social costs of the economic adjustment program. This policy framework provided FHIS with sustained, high level political support and the budgetary resources to start the program even before external financing could be mobilized. Strong governmental support was combined with restraint from political intervention in the FHIS daily operations. 16. Management Autonomy and Operational Efficiency. Its semi-autonomous institutional form allowed FHIS to adopt more efficient management and operational procedures than those used in line ministries. Combined with a strong manager's leadership, usually coming from the private sector, streamlined management procedures resulted in rapid disbursements and good  vi quality subprojects. Implementation experience has shown that management efficiency could be further strengthened, by enhancing the existing management information system (MIS) and improving inter-departmental coordination within FHIS. 17. Exception from Central Government Procurement and Salary Regulations. The special Presidential Decree allowed FHIS to use simplified procurement procedures and to pay its staff at competitive market rates. These two factors were instrumental in ensuring the efficiency of FHIS, leading to a high volume of operations and accelerated disbursements without compromising the quality of subprojects. These positive features need to be reinforced by periodic reviews of the salary scale, integration of management information systems, continuous attention to supervision of subprojects under execution, and improved evaluation of completed subprojects. 18. Simple and Effective Targeting and Promotion. FHIS allocated its funds transparently, according to a poverty map and a set menu of subprojects which received ample publicity. This system represents a significant improvement over traditional revenue-sharing formulas based exclusively on population, since it allows for allocating additional resources proportionally to the level of poverty in each municipality. For this targeting system to work effectively, FHIS had to promote subproject proposals actively in the poorest municipalities where spontaneous demand has been shown to be the lowest, due to its weaker organization and subprojects preparation capacity compared with less poor communities. These special promotion efforts, covering the 80 poorest municipalities, resulted in increases in the share of resources channeled to the poorest communities, from 25 percent in 1990 to 45 percent in 1993. 19. Coordination with Line Ministries. FHIS was established at a time when social sector planning and implementation capacity was lacking in line ministries, and there was a large backlog of schools and health clinics in disrepair throughout the country. Coordination between FHIS and the line ministries ensured that appropriate staff (principally teachers and nurses) and recurrent budgets would be available for the social infrastructure that FHIS would finance. FHIS also ensured that the proposed subproject would fit within the overall priorities of the line ministries. This level of coordination was appropriate, given FHIS' policy of not engaging in new construction, but only in the rehabilitation or expansion of existing facilities. Closer coordination would be required if FHIS evolves into a longer-term agency responsible for social investments, including construction of new health and education facilities. Line ministries would exercise their normative role in establishing sector policy priorities, and standards for new infrastructure. Their construction departments would be redefined as smaller technical units responsible for management of large scale projects, development of prototype designs, norms and standards, supervision and support for local maintenance of school buildings and clinics constructed with FHIS financing. 20. Innovative Micro-Credit Pro2ram. With the intermediation of NGOs, FHIS has been successful in using a small share of its resources (6.5 %) to finance innovative short-term credits that benefitted small scale artisans and microentrepeneurs, without previous access to credit. The design of the program takes advantage of FHIS' financing capacity and the NGOs knowledge of the market, minimizing operating costs. FHIS lends to a few, highly experienced NGOs, and these in turn screen potential borrowers and make small loans at market interest rates, assuming the credit risks. The participating NGOs were gradually strengthened by clearly established lending guidelines and technical assistance provided by FHIS. The loan recovery rate exceeded 98 percent. The future development of this program is being analyzed with the goal  vii of enlisting the support of commercial banks, and establishing the basis for a sustainable revolving credit program without FHIS' continuous financial support. 21. Importance of Technical Assistance. Technical assistance provided by UNDP and IDA during project preparation and implementation, have contributed to the development of FHIS operational procedures and helped sustain a process of continuous improvements in the program during implementation. 22. The Pilot Nutrition Assistance Program. The pilot nutrition program demonstrated that distribution of food coupons is a more cost-effective means of providing nutrition assistance than distribution of food in kind; that specific interventions should integrate into a broader nutritional assistance policy, which includes periodic monitoring of the health/nutritional status of the participants, and education and training of the beneficiaries in sound health and nutrition behaviors and attitudes. By distributing food coupons through primary health care and education facilities, the program generated greater demand for quality education and health services, and more efficient use of health and education service facilities available at the local level, resulting in broader and longer term health and education benefits to the beneficiaries.  - 1 - HONDURAS SOCIAL INVESTMENT FUND PROJECT (CREDIT 2212-HO) PART I: PROJECT REVIEW FROM THE BANK'S PERSPECTIVE A. Project Identity Name: Social Investment Fund Project (FHIS-I) Number: Credit 2212-HO RVP Unit: LAC Borrower: Republic of Honduras Executing Agencies: Honduran Social Investment Fund (FHIS), Family Assistance Program (PRAF) and National Planning Ministry (SECPLAN) Sector: Multiple Amount: SDR 14.3 million (US$20 million equivalent) Approval Date: February 28, 1991 Signing Date: March 14, 1991 Effectiveness Date: June 25, 1991 Closing Date: Original: December 31, 1993 Revised: March 31, 1994 B. Project Background 1. This report provides information on the Honduran Social Investment Fund Project, Credit 2212-HO (FHIS-I), which was closed on March 31, 1994. Since the original FHIS project was significantly expanded as a result of additional financial contributions from various sources, this report considers the FHIS operations as a whole during the 1990-1993 period, rather than only the subprojects financed under Credit 2212-HO. 2. In March 1990, the Government of Honduras adopted a package of stabilization and adjustment measures which were expected to produce an uneven impact on various sectors of the economy, urban and rural and richer and poorer populations. These measures, including the liberalization of the exchange rate and agricultural prices, increase in public service rates, and reduction of public sector employment, were expected to have short-term negative impact on the real income of the country's poorest families, risking a deterioration of health and nutrition indicators, especially among poor pregnant and nursing women and among children under age five. Recognizing these short term effects of adjustment and the need to reduce the country's chronic poverty levels, the Government adopted in the early 1990s, a social safety net strategy consisting of two programs: the FHIS, to finance small scale, labor-intensive economic and social infrastructure, social services and informal sector subprojects; and the PRAF, to provide nutritional assistance through food coupons to the country's most vulnerable groups. Recognizing the efforts of the Honduran government to undertake a bold program of economic  - 2 - reforms, the Bank released the second tranche of the Structural Adjustment Loan 1. In June 1990, a financial package of US$250 million to clear multilateral arrears was negotiated. Lending was resumed in September 1990, initially on IBRD terms andi subsequently exclusively on IDA terms. A Second Structural Adjustment Loan (SAL-II) of US$20 million was approved in September 1990, and the first tranche was disbursed in November 1990. In light of the impact of higher oil prices and export earnings loss resulting from a strike of banana workers in July 1990, IDA approved a US$20 million equivalent Structural Adjustment Credit (SAC) to supplement the financing provided under SAL II. Sector Adjustment Credits include one for the energy sector in the amount of US$50.6 million, approved in October 1991, and one for the agricultural sector in the amount of US$1 10 million, approved in August 1993. C. Project Objectives and Description 3. To support the Government's social sector strategy, IDA approved Credit 2212-HO in February 1991, for the equivalent of US$20 million to finance the Social Investment Fund Project. The project's objectives were to mitigate the social costs of adjustment, establish the foundation for a decentralized program to directly assist poor groups at risk of malnutrition, and to support the improvement of services provided by social ministries. 4. The above objectives were to be achieved through the implementation of four project components: (a) financing of FHIS subprojects (98.3 percent of total project cost); (b) support for a targeted nutritional assistance pilot program, to be implemented by PRAF (0.6 percent of total project cost); (c) technical assistance to improve the services provided by the Ministries of Health and Education (0.6 percent of total project cost); and (d) the setting up of a monitoring and evaluation system of the government's social policy interventions through the use of a Living Standards Measurement Survey, to be implemented by SECPLAN (0.5 percent of total project cost). (a) The Honduran Social Investment Fund (FHIS). FHIS was established as a temporary autonomous entity under the Presidency, by Congressional Decree No. 12-90 on February 22, 1990. Its objective was to provide temporary employment for the poorest group of society most adversely affected by the economic crisis and adjustment process, and improve the delivery of basic social services at the community level. FHIS was designed to rapidly and effectively finance poverty alleviation-oriented small-scale subprojects designed and carried out by a variety of entities at local levels. The menu of eligible subprojects consisted of small scale economic and social infrastructure works, such as construction, expansion and rehabilitation of water supply, sewerage, health posts, schools, drainages and roads; basic needs subprojects, such as provision of health, nutrition and training services, support to the elderly and street children, construction of school desks, establishment of family vegetable gardens and small livestock farms; and small-scale credits to informal sector workers and microenterprises. In its expenditure plan, FHIS expected to allocate approximately 65 percent of its funds to support infrastructure subprojects, 20 percent to social services, 6 percent to informal sector credit, 2 percent for institutional strengthening, and 7 percent for administrative costs. (b) The Nutritional Assistance Pilot Program. This pilot nutrition assistance program designed to test a Maternal Child Coupon Program (BMI), aimed at ensuring a minimum level of nutrition to poor pregnant and nursing mothers and  - 3 - children under age five who were at risk of malnutrition. This program would complement and improve the PRAF Women Head of Household Coupon Program (BMJF) created in March 1990, to assist pooi primary school children in the seven departments. The BMI food coupons would be distributed monthly to poor mothers and children attending health checkups at health posts and centers in specified selected poor areas in two departments. Thus, the program would be self-targeted and would combine nutrition assistance with maternal and child health care. (c) Social Sector Restructuring Program. This component would provide technical assistance financed by a grant from the Government of Japan, to help the Government prepare a social sector restructuring program. The program would improve the allocation and use of resources in the social sectors, strengthen the implementation capacity of the line ministries, and design a sector project for eventual IDA and IDB financing. (d) Living Standards Measurement Survey. Technical assistance provided under this component, would help the Government develop a system to monitor and evaluate its social policy interventions, through the use of a Living Standards Measurement Survey (LSMS). It would also help to evaluate the operations of FHIS through a survey of communities and individuals benefitted by FHIS subprojects, that would serve as a basis for an impact study of the program. The component would be implemented by SECPLAN's General Statistical Office (DGE), in conjunction with its Multiple Purpose Permanent Household Survey (MHS). D. Proiect Desi2n and Oreanization 5. FHIS subprojects were prepared and requested by a variety of agencies, including municipal governments, line ministries and agencies, NGOs, local associations, and community groups. Evaluation of subproject proposals by FHIS was based on sectoral programming priorities, target population, labor and materials content, counterpart financing, unit costs, technical viability, estimated social and economic benefits, and assurances of sustainability based on satisfactory operations and maintenance provisions. Using these criteria, FHIS's Operations Committee evaluated and approved subproject proposals, publicized the list of approved subprojects, and signed tripartite contracts for subproject execution with the contractor and the sponsoring agency. Subprojects were executed by private contractors or NGOs supervised by FHIS or externally contracted supervisors. FHIS disbursements against contracts were contingent on satisfactory reports from field inspections of each subproject. 6. Procurement regulations approved for FHIS departed both from standard IDA procedures and Honduran Government procedures, allowing non-competitive contracting for contracts under US$35,000, on the basis of unit prices controlled by FHIS and approved by IDA. Contracts of US$35,000 to US$70,000, were awarded on the basis of comparison of price quotations from at least three qualified contractors. Competitive bidding, advertised locally, was used for civil works contracts of $70,000 to US$500,000, and for goods contracts of $250,000 or less. Civil works contracts above US$500,000 and goods contracts in excess of US$250,000 would have been procured through international competitive bidding (ICB), but there were no such large contracts.  - 4 - 7. FHIS staff gradually increased in response to the program's growth requirements, starting with 65 people in 1990 and reaching 230 managerial, technical and administrative personnel in 1993. Annual staff increases are considered reasonable for the work performed. On average, administrative costs represented about 8.1 percent of FHIS's subprojects's disbursements, which is also sound, given the volume and diversity of its operations. All staff were based in Tegucigalpa, which is sound, given the good quality of roads and ease of access to most subprojects. FHIS' internal organization is led by an Executive Director with Ministerial rank, and consists of five departments: projects, supervision, administration, data processing, and external financing. In addition, there are legal and internal audit units. The FHIS has a Board which approves general policies and rules of operation, approves the annual budget, and authorizes FHIS to contract external financing. The Board meets quarterly, and is composed of nine members including the President of the Republic (Chairman), the President of Congress, the Ministers of Planning, Finance and Labor, and representatives of the private sector cooperatives and NGOs, and FHIS Executive Director. FHIS subprojects are approved by its Operations Committee which includes the Directors of Projects, Administration, External Financing, Supervision Departments, and Legal Counsel. 8. The implementation of the LSMS was the responsibility of SECPLAN and the FHIS worked in close collaboration with that agency to prepare its impact study. The social sector restructuring program was executed by the Social Cabinet Executive Secretariat (SCES) with financing from a Japanese Government grant, and its activities contributed to the preparation of a Nutrition and Health Project, partly financed by IDA Credit 2452-HO. E. Project Implementation 9. Variations in Project Implementation. The implementation of Credit 2212-HO complied with the Credit Agreement in its fundamental aspects. The largest variations between actual implementation and the plan presented in the President's Memorandum comprised: (a) the target for external funding, (b) total project cost, (c) methods of procurement used, (d) financial contribution from project beneficiaries, (e) the closing date. FHIS was able to mobilize significantly more external funds than anticipated. At appraisal, the target for external funding for the FHIS program was set at US$48.7 million, including IDA financing, a figure considered ambitious at the time (Table 5.C.). By December 1993, total external funding approved for the FHIS program reached US$84.3 million, an increase of 73.1 percent over appraisal estimates. As a result, the share of project cost financed by Credit 2212-HO declined from 29.4 percent to 20.3 percent. The principal sources of additional external financing for the FHIS program included a second IDA credit (Credit 2401-HO) of US$7.4 million equivalent, a loan from the IDB of US$24 million and loans and grants from the Government of Germany in the amount of US$16.5 million equivalent. Actual project cost at US$98.4 million (see Table 5.A.), exceeded appraisal estimates of US$68.0 million by about 45 percent. Cost increases are primarily due to the 73 percent expansion of FHIS subprojects coupled with an 80 percent increase in FHIS administrative costs, which were incurred as a result of the larger and more complex portfolio administered by the Fund. No significant changes were observed in the cost of the other components compared to appraisal estimates, except that costs incurred for monitoring and evaluation were not registered by FHIS separately from administrative costs. The rate of credit disbursement was faster than expected, especially during the second year of project implementation (FY92), justifying the preparation of a second IDA operation to support the expansion of the program (Table 3). Higher than expected use of single-source contracting by FHIS, resulted in a four-fold increase in the planned aggregated amount financed by Credit 2212-HO under this method of procurement (Table 5.D.). Project supervision reports and  quarterly external audits confirm that funds were used properly by FHIS and that the contracting process was efficient and competitive. The financial contribution by project beneficiaries, expected at appraisal to reach US$6.6 million, or 9.8 percent of the cust of the FHIS program, are estimated at 12 percent of FHIS subproject cost. However, as the beneficiaries contributed mostly in kind and their contribution was not monetized, FHIS financial records do not show the financial participation of beneficiaries. Finally, the closing date was extended by three months, from December 31, 1993 to March 31, 1994, to compensate for delays in completing subproject disbursements which had been interrupted during the period of transition to a new national administration. 10. Other variations between actual implementation and the plan include 7 percent lower average size of FHIS subprojects (US$18,650) compared to appraisal estimates (US$20,000). This is actually a small difference. One reason is that few contract revisions were required to cover additional work or cost overruns: actual contract revisions averaged only about 4 percent of the amounts originally approved. Lower average subproject cost also resulted from quicker subproject processing and execution by FHIS. By the end of December 1993, the time required for project approval was reduced to one month and the average execution period was about five months. 11. FHIS administrative costs excluding technical assistance, exceeded appraisal estimates by approximately 1.6 percent totalling US$7.9 million (Table 5.A.) or 8.1 percent of program disbursements as of December 31, 1993, compared with 6.5 percent estimated at appraisal for a smaller size program. The slight increase was mainly due to the fact that, as the program grew in scope and complexity, more resources were needed for quality control and subproject promotion and supervision than had been anticipated. The operating cost of 8.1 percent is comparable with the range of 7-10 percent which is the actual administrative costs of other social investment funds in Latin America. 12. IDA and the UNDP played a decisive role in supporting the start-up of the FHIS by helping establish methodologies, procedures and management systems for resource allocation, subproject evaluation, approval and monitoring, and procurement. These contributed to the positive results and credibility achieved by FHIS early on in project implementation, and facilitated the participation of other multilateral and bilateral donors in financing the FHIS program. 13. Parallel financing. FHIS mobilized external financing from 16 sources, as well as from the Honduran Government, totalling US$97.2 million (Table 5.C.) during the 1990-1993 period, well beyond original expectations (para. 9). The main sources of financing were IDA (26.6 percent), the IDB (24.7 percent), the Government of Germany (17.0 percent), and the Honduran Government (13.3 percent). Approximately 18.4 percent of the cost of FHIS operations was financed by other donors. The contribution from beneficiaries is estimated at about 12 percent of total subproject costs, but has not been computed since, in many cases, it was made in kind. 14. Procurement. For civil works contracts below US$35,000, FHIS used simplified contracting procedures agreed on with IDA. Small contracts were negotiated between FHIS and a private contractor based on a unit price costing system consisting of a schedule of standard prices for completion of different tasks in various types of subprojects. These prices were periodically adjusted by region. On the basis of the standard cost determined as a function of unit prices, plus an additional 15 percent for overhead and profit, FHIS fixed a non-negotiable price for awarding small contracts. This system permitted the agency to use procurement  - 6 - procedures that were simpler than those of the Honduran Government, and ensured transparent and cost-effective administration of direct contracting procedures. Contracts over US$35,000 and up to US$500,000 for civil works and $250,000 for goods, were awarded on the basis of competitive bidding, advertised locally (LCB). There were no larger contracts that would have been awarded by international competitive bidding (ICB). The procurement practices approved for FHIS were simple and efficient and proved to work satisfactorily. 15. A total of 5,474 contracts were financed by FHIS during the 1990-1993 period, one for each subproject. Civil works and service contracts were awarded to 1,864 private contractors and 406 other executors, including municipalities and NGOs (para. 32). Only a few non- infrastructure subprojects were executed directly by government agencies. The incidence of problem contracts was minimal, and very few (4 percent of the amount financed) experienced adjustment to the original amount during execution. Considering subprojects financed under Credit 2212-HO, LCB contracts totalled about US$5.4 million or 27 percent of the total, single- source contracting accounted for US$13.5 million or 67.5 percent of the total, and consultants, training and auditing contracts accounted for US$1.1 million or 5.5 percent of the total. The distribution of the proceeds of the credit by method of procurement was estimated at appraisal to be: 4 percent under ICB, 53.5 percent under LCB, 28 percent under other forms of procurement (local shopping and single-source contracting), and 14.5 percent under consulting and training contracts (Table 5.D.). The larger variation from appraisal estimates observed under single-source contracting is counterbalanced by the fact that FHIS procurement performance satisfactorily ensured least cost solutions under no-bidding contracts through its systems of unit cost controls and concurrent quarterly audits. 16. As a result of much more frequent use of direct contracting method of procurement than originally planned, project implementation deviated markedly from the norms established in the Development Credit Agreement (Schedule 3, Part C, Para. 2), which provided for a maximum aggregated amount of US$4 million in direct contracting to be financed from the proceeds of the credit. In fact, approximately US$13.5 million of the credit proceeds was used to finance direct contracting. 17. Subproiects Preparation. FHIS' operating scheme is clearly established with manuals for all of its activities. These manuals are made up of several parts covering the functions of administration, promotion, appraisal, and supervision in the various sectors financed by the FHIS. All manuals were reviewed extensively and found satisfactory to IDA. These manuals are used regularly in all operational aspects of the subprojects, and are amended where necessary to fit changing conditions. Resource allocation criteria, based on a poverty map using population and a poverty index, were used to target projects that were evaluated using social, technical, and economic criteria. Although more resources went to the poorer communities, the middle class communities also received a sizeable share of the Fund, because there were poor people in these areas. A one percent increase in the poverty index implied a US$0.14 increase in the allocation of funds. It was sometimes difficult to achieve this target, particularly in the early phase of FHIS, since poorer municipalities had less capacity to prepare subprojects. 18. Subproject execution was thoroughly monitored, and subprojects were inspected by FHIS supervisors before and during execution, as well as at completion. FHIS was audited quarterly by external independent auditors who found that exceptions decreased over the life of subprojects. These audits combined financial reviews as well as physical inspection of works in the field. FHIS's success in fully implementing corrective actions to audit exceptions resulted in a sharp decline of audit exceptions in 1993 compared to the 1991-1992 period (Table 6.C.).  Subproject execution was enhanced by a good working relationship between FHIS, line ministries and other agencies, resulting from its coordinated efforts to follow their technical norms and standards in its projects, informing the relevant ministry or agency by fax of their proposal to appraise a project and giving them limited time to comment, then proceeding if no comment was received in the stated timeframe; and meeting with them periodically to review their respective pipeline of projects. The line ministries and agencies were satisfied that FHIS operated within their overall objectives and plans, achieving a high level of interagency coordination which did not delay subproject implementation. 19. Project Risks. One of the risks identified at appraisal relates to effectiveness of FHIS in targeting resources to the poorest localities and eventual loss in subproject quality due to excessively rapid execution. Implementation experience demonstrated that FHIS targeting performance was good and improved over time. Expenditures in subprojects located in municipalities classified as being "poor and very poor" increased from 26 percent of the total in 1990 to 40 percent in 1993. About 68 percent of the amount financing subprojects located in the capital district and San Pedro Sula, proved to benefit groups classified as being "poor and very poor." Project quality remained satisfactory albeit the rapid pace of implementation, as indicated by quarterly audit reports, and field inspection of completed projects by FHIS and IDA supervision mission. FHIS targeting performance was enhanced by its efficient information system to monitor that subproject approvals complied with poverty guidelines, prompt response to recommendations made in the mid-term review and external audits; close supervision of subproject execution; and FHIS's special efforts to promote subproject preparation in extremely poor communities. 20. The additional risk raised at appraisal was the possible lack of sustainability of FHIS- financed subprojects. FHIS succeeded in reducing this risk by establishing adequate operations and maintenance arrangements, such as local water boards to administer water and sewerage subprojects, community maintenance committees to care for schools and health facilities, and training programs to teach families how to use and maintain latrines. Specialized NGOs were contracted by FHIS to provide required technical assistance and training to local groups. While more efforts need to be made both by FHIS and the Government in this respect, measures taken by FHIS to ensure sustainability, notably of water and sanitation subprojects, have served as a good example in the design of other social investment fund projects financed by the Bank/IDA. In order to improve subproject sustainability, more attention must be given to strengthening the financial capacity of the municipalities, to enable their taking-over of maintenance and operation functions of completed FHIS subprojects. 21. The risks of eventual poor design, targeting and implementation performance of the pilot nutritional assistance program did not materialize. The pilot program succeeded in reaching the target population of mothers and children most at risk of malnutrition. Also, the administrative costs were substantially lower than those of nutrition assistance programs distributing food in kind (administrative costs were 7 percent, compared with 25 percent to 40 percent overhead for food in kind). The design of the pilot program provided for the distribution of food coupons through health centers. This proved to be efficient as it was a self-targeted program, since only poor mothers and children attend health centers. The program had a positive impact on the income levels of beneficiary families who were able to purchase more food and improve their nutrition. The program also produced a significant increase in the use of health services by the beneficiaries, which contributed to improving their health status.  F. Project Results 22. The allocation of FHIS resources by subproject type differed from the allocations estimated at appraisal as follows: infrastructure subproject absorbed 76 percent of the funds compared to 71 percent anticipated at appraisal; basic needs subprojects 18 percent of compared to 22 percent; and the informal sector credit program 6 percent compared to 7 percent expected at appraisal. These differences are small and reflect actual demand trends expressed by subproject proposals submitted to FHIS. They also show that good estimates were made at appraisal. 23. Approved Subproiects. As of December 31, 1993, 5,474 projects had been approved, totalling the equivalent of US$97.2 million, including administrative costs, and 4,482 of these projects (82 percent) are already completed (see Table 4). They helped create over 140,000 jobs in the 3-year period. The proceeds of Credit 2212-HO (FHIS-1) were used to finance 1,377 subprojects totalling the equivalent of US$18.6 million, which created 36,415 direct jobs, representing 25 percent of all subprojects approved, and 25 percent of total jobs created. All projects financed under Credit 2210-HO were completed by March 31, 1994, and the last disbursement is expected to take place by June 20, 1994. Between 1990-1993, approvals increased by 66.1 percent per year, and disbursements by 173.2 percent. Half of all disbursements for this period were made in 1993. The economic and financial impact of these subprojects have not been calculated, nevertheless, the largest impact (76 percent) represents improved community infrastructure. Overall, approximately one-third of basic community services have been improved, including expanded access to nutrition, water and sewerage. 24. Infrastructure Subproiects. FHIS disbursed US$67.6 million equivalent (see Table 5.E.) between 1990-1993 in 4,480 economic and social infrastructure projects which created 120,771 direct jobs. The allocation of resources from various donors followed the established FHIS operational guidelines. However, some donors restricted funding to some types of subprojects. For example, KfW financed only infrastructure subprojects. Credit 2212-HO helped finance 19.3 percent of infrastructure investment, accounting for 25.3 percent of the jobs created. IDA- financed subprojects included construction, expansion and repair of schools and health centers, roads and streets, irrigation and drainage works, water supply and sewer systems, community facilities and maintenance of historic ruins and monuments. The results obtained on FHIS infrastructure subprojects are summarized as follows: (a) in education, 2,708 schools and child care centers (36 percent of the total) were rehabilitated or expanded; (b) in health, 303 health centers (30 percent of the total) were rehabilitated or expanded; 244 water supply and sewer systems were built, as were 57,507 latrines and septic tanks (see Table 6.A.). Sample results from quarterly audits and Bank supervision mission indicated that most subprojects were in good operating and maintenance condition, one or two years after completion. However, FHIS will undertake a census of completed projects with assistance from RUTA Social, to quantify this important aspect of its operations. 25. Basic Needs Subprojects. During the review period, 936 basic needs projects were approved, totalling disbursements of US$16.4 million (see Table 5.E.), and creating 7,777 temporary and permanent jobs. Credit 2212-HO financed 255 basic needs subprojects, representing 17 percent of total financing, and 19.5 percent of the jobs created. The funds invested allowed 6,112 family and community gardens and 3,635 small-scale family and community farms to be implemented, provided 37,021 people with health programs, 14,788 people with health training programs, and financed the production of 360,836 double school  desks, serving the requirements of about 82 percent of Honduras' primary students. This program has been well-focused, since the country's 118 poorest municipalities have received 100 percent of planned financing. Relatively little is known about the impact and sustainability of these basic needs subprojects, and that will be a matter of special attention in the planned subproject census (para 24). 26. Informal Sector Subprojects. Between 1990-1993, FHIS approved 56 projects to support the informal sector, totalling US$5.10 million in disbursement, and creating 12,950 jobs. Credit 2212-HO financed 11 informal credit subprojects representing 23.8 percent of the amount disbursed and 33 percent of the jobs created. The reimbursable credit system, was administered with the assistance of NGOs. Its implementation resulted in the establishment of 254 community banks with 7,219 direct participants and the financing of 3,753 small businesses in the areas of production, commerce and services, The informal sector support program has had the greatest relative effect on the creation of permanent jobs and has had numerous, positive socioeconomic effects on beneficiaries, including increased investments in fixed assets, increased levels of savings, replacement of part of the credit provided by traditional money lenders at usurious rates, improved living conditions for families, and strengthening of grassroots organizations. Also positive was the institutional strengthening of NGOs achieved through non-reimbursable technical assistance grants, the training programs that were implemented, and the close supervision of the NGOs' efficiency. 27. The Family Assistance Program (PRAF). The distribution of food coupons to poor mothers and children under age five (BMI), administered by PRAF, was a success. At the end of the first year of project operations, the BMI had reached its established goal of 56,000 mothers and children under age five; 40 percent of beneficiaries lived in rural areas, 6 percent more than planned; the BMI, which distributed food coupons through the network of health centers, served an estimated 13 percent of nutritionally disadvantaged poor children under age five and pregnant and nursing mothers nation-wide by financing an estimated 20 percent of the cost of their minimum nutritional requirements. It brought about an increase in preventive care visits to health centers of over 150 percent in the annual growth rate registered between 1990-1993. Based on the success with this pilot nutrition assistance program, IDA financed the expansion of the program under the Nutrition and Health project with Credit 2452-HO for $25 million equivalent. In addition to the BMI pilot program, the PRAF's BMJF program, which distributed food coupons through primary schools, has also tested an effective method for transferring income to poor families, and has served 120,899 beneficiaries, 57 percent of whom live in rural areas. Enrollments increased by over 25 percent in schools in which these benefits were distributed. The BMJF also served 57 percent of nutritionally disadvantaged children between grades one and three by financing 17 percent of the cost of their minimum nutritional requirements. 28. Living Standards Management Survey (LSMS). To meet the objectives of this component, the General Office of Statistics and Census (DGEC) included a living standards survey, consisting basically of a household consumption module and questions pertaining to access to basic health and education services, in its ongoing household survey. By December 1993, this survey had been conducted three times, and was used in a sampling of FHIS beneficiaries. Funds from Credit 2212-HO were used for staff training, consultants and purchase of computer equipment. FHIS' impact measurement unit has completed a study on the program's impact, which concludes that Honduras' public sector has been modernized by efficiently managed social investments, although it is difficult to distinguish FHIS' contributions from other institutions, since some of the projects occurred simultaneously. The results of a public opinion poll showed that FHIS had distinguished itself from the governmental system, and that people  - 10 - considered it to be bipartisan, and would like its continued operation regardless of the political party in power. Approximately 82.4 percent of those surveyed said they would like to be involved in future projects, and 62.6 percent said they would volunteer. The study also showed that FHIS' primary emphasis was to support education and health, with secondary emphasis on training and microenterprises. The FHIS had compensated against the adverse effects of economic adjustment and helped to identify priorities and increase community participation, thereby increasing the participation of the municipalities who formulated and executed the projects. Finally, the study recommended an improvement in the promotion, execution and supervision of projects, a redesign of the poverty map at the local level to target social investment which will identify community needs still unmet, and an increase in support to reinforce institutions at the local level, and to provide training for better management of resources. SECPLAN will continue to measure the living conditions of the population by means of household surveys and through its social indicators unit. 29. FHIS has contributed to enhancing public support for government's adjustment programs at the local level. The perception of FHIS was gauged by a public opinion survey conducted in May 1993, which found that 72 percent of the population nationwide had a favorable opinion of the FHIS, and only 10 percent expressed a negative opinion. The approval rating of the FHIS was higher in the poorest departments than the national average, as, for example, 80 percent in El Parafso and 79 percent in Copan. The March 1993 national household survey, reported that 40.7 percent of the households surveyed had directly participated in FHIS subprojects; 22 percent of households reported had at least one member who received training in connection with a FHIS subproject; this figure increased to 37 percent among the poorest households. Among those who participated as paid workers, the majority worked as laborers (65 percent). Overall, 82 percent of the hotiseholds surveyed indicated that they would be willing to participate in future FHIS subprojects . 30. FHIS' Macroeconomic Impact. FHIS had a favorable impact on Honduras' macroeconomic indicators by contributing to Government investment and direct employment. The volume of investments channelled by FHIS during the period has been significant. After the economic crisis of the late 1980s, when investments in social infrastructure virtually stopped, FHIS was able to channel investments to small economic and social infrastructure which represented 4.6 percent of public sector FIBCF in 1990, and 11.2 percent in 1992, and accounted for 4.9 percent of Central Government capital expenditures in 1990, and 18 percent in 1992. At constant prices of 1978, FHIS contributed to raising Honduras's total gross domestic fixed capital formation (FIBCF) from 1.2 percent to 5.2 percent between 1990 and 1992. 31. Employment. Although project design did not establish targets for employment creation by FHIS, subprojects generated a total of 141,519 jobs of approximately 5-month duration, or the equivalent of 59,000 job-years between 1990-1993 (paras. 24, 25 and 26 indicate the number of jobs created by each type of subproject). This may be modest in relation to the size of the labor force in Honduras, but represents approximately 12 percent of the unemployed and underemployed workers affected by the economic crisis in the early 1990s. Over 85% of the employment created by FHIS was in construction. Some of these jobs can be considered permanent in so far as workers trained in one subproject reported continuing to work with the same contractor on additional subprojects. Assuming an indirect employment impact equivalent of 112 times the direct employment, the multiplier effect of FHIS subprojects has been significant.  - 11 - 32. Institutional Impact. The institutional impact of the FHIS program between 1990-1993 is evidenced by the growing credibility of the Government, FHIS has also attained increasing international prestige and credibility, as evidenced by contributions and loans received from other governments and multilateral agencies and visits from other countries to observe FHIS' experience and the operating systems it has created. Also, FHIS contributed to institutional development and strengthening of local organizations. This was achieved by mobilizing about 2,270 executors, including 1,864 (82A1 percent) private contractors (890 professional contractors, 370 foremen, 54 local consultants, and 550 private executors of different types, such as local organizations); 291 (12.8 percent) municipalities; 90 (4.0 percent) NGO's; and 25 (1.1 percent) government agencies. 33. A second significant institutional impact is the achievement of mechanisms for active coordination and joint planning with line ministries and other government agencies. These mechanisms have allowed FHIS to execute a large share of the Government's overall budget for small investments in various sectors, especially in health and education sectors, where coordination was timely, ensuring sustainability and maintenance, provision of inputs, and preparation of criteria for subproject evaluation and monitoring. Coordination with line ministries was very timely in the case of the Ministry of Education, where the existence of teachers was required in the case of school repairs or expansion. Coordination with the Ministry of Health was more extensive, especially with respect to the midwife and latrine projects in which FHIS worked closely with the Ministry of Health. By providing continuous support and service to municipal mayors, through approval of municipality sponsored, implemented or supervised subprojects, FHIS helped strengthen the institutional capacity of municipalities. For example, some 80 of a total of 291 municipalities nation-wide now have engineers as permanent staff to plan and supervise small investment projects. 34. In addition, FHIS has developed excellent working and cooperative relationships with NGOs which implement subprojects using FHIS' clear operational manuals and transparent procurement system. The effective strengthening of these organizations was supported through non-reimbursable contributions for operating expenses, provision of training, technical assistance, direct contracting for specific research, and monitoring of various FHIS programs. Private enterprises in the construction industry and general consulting also benefitted significantly from FHIS programs, many of them growing from a one-person operation to a small firm, as a result of their participation in FHIS subprojects. 35. Poverty Alleviation. The project made a significant contribution to poverty alleviation, as shown in the employment impact, and in the improved access to basic social services in poor areas. In addition, as indicated in paragraph 19, FHIS has been improving the focus of its activities in the poorest areas. Attention paid to the poorest quintile (index of extreme poverty) increased each year; relative attention in terms of the number of subprojects approved was highest in 1993, doubling that of 1990 (Table 5.G.). Efforts have also been made to meet the needs of those living in extreme poverty in metropolitan areas. 36. The success of the coverage and effects of the nutritional assistance program (PRAF), as indicated in paragraph 4, are important achievements in the fight against poverty. Also, the informal sector small credit program helped reduce the poverty levels, by increasing assets and earnings capacity among informal sector works. More studies will be necessary to gauge the program's long-term impact and to make a comprehensive assessment of its effects. Similarly, the living standards study should be repeated; this study should make systematic, annual measurements of changes in living standards brought about by the Government's social programs.  - 12 - 37. Impact on Women. FHIS' basic needs program has assigned priority attention to subprojects for midwife training, small-scale farms and family gardens, maternal-child care, which basically focussed on women in general and particularly on female heads of households (37 percent of heads of households living in poverty), to improve their personal welfare as well as that of their families and the community. Twenty-nine (29) midwife training subprojects were financed, benefitting 4,632 midwives, 700 auxiliary nurses and 100 nurses, 7 basic health training subprojects had 14,788 beneficiaries, primarily women; and 8 community health projects benefitted 40,489 persons, primarily women. 38. Under the Informal Sector Subproject Program (PASI), 53 percent of all small business credits granted by NGOs were for women, while in the case of community banks, 79 percent of beneficiaries were women. Community banks are established and operated by women who are already self-employed or are interested in starting a new business, in which they have at least one year of experience. Under the guidance of a FINCA (NGO) representative, the women elect officers, learn bookkeeping and banking procedures, and are entirely responsible for their banking operations. The capital of a community bank consists of a loan from FINCA at market rates, and savings from the participating women. Members of the community bank must repay their loan and add to their savings, on a weekly basis. rThe average loan is US$60 and repayment rates averaged 98 percent. As a result of the operation of community banks, some 1,480 women (20 percent of all members) experienced a 40 percent increase in sales in less than two years, and a 42 percent increase in earnings, which they used to increase their working capital and improve their families' living conditions. These women have generated significant savings that are expected to allow them access to commercial banking services. Six of the 21 NGOs participating in the PASI program had the exclusive objective of assisting women. Finally, 63 percent of participants in training programs are women. 39. The Family Assistance Program (PRAF). To assist with the risk of malnutrition, PRAF is aimed at assisting women and children under age five, as well as poor school children in grades I to 3, and has served the population indicated in paragraph 27. 40. Environmental Impact. FHIS ensured that subprojects financed did not cause adverse environmental impacts or affect indigenous cultures negatively. Subprojects on restoration of historic monuments; support to indigenous communities; provision of sanitary landfills, latrines and septic tanks have had positive environmental impact. However, additional work to resolve the final disposal from sanitary sewer construction subprojects should be implemented to minimize negative environmental impact. Most of the other subprojects that were financed, especially those dealing with infrastructure, may be classified as environmentally neutral. G. Project Sustainability 41. FHIS has made significant efforts to ensure the sustainability of its subprojects. FHIS requires confirmation by the line ministries that teaching and nursing positions have been filled or budgeted, and that the corresponding ministries have created budgets for recurrent expenditures, before construction of new schools or health centers is approved. It also requires the collection of user-fees by water committees or the municipality to ensure maintenance of water and sewerage systems financed by FHIS. It has hired specialized NGOs to carry out monitoring and training in the use and maintenance of latrines. Support for FHIS-financed projects needs to be strengthened and monitored because there is evidence of insufficient funds available for maintenance and supplies for schools and health centers, and improper use and lack of maintenance of drinking water and latrines in some localities.  - 13 - 42. Project sustainability has also been sought through careful selection of NGOs with experience in the respective types of subprojects. This has been an essential element for the success of the PASI program, because knowledgeable and capable fl.,ancial intermediaries are required for proper management of credit to the informal sector and to small businesses. This proper selection of NGOs, together with the use of market interest rates, will ensure that the program will not be decapitalized and may remain in place over the long term. H. IDA Performance 43. The innovative design of the project required special attention from IDA. This IDA credit was appraised and approved in a relatively short time (para. 2). IDA established close monitoring and supervision mechanisms, requesting quarterly audits by independent auditors, to include a financial review of subprojects and physical inspection of works in the field, and to furnish certified copies of reports within two months after the quarter ended. In addition, IDA requested that SIF maintain an executive director whose experience and qualifications were acceptable at all times, and to be consulted before any replacement for this position could be made. The previous experience with social investment funds acquired by IDA in Bolivia, proved an important factor in the successful assistance provided by IDA to the Honduran Government in the preparation of the FHIS Project. I. Borrower Performance 44. FHIS earned respect from IDA, co-financiers and within Honduras as a successful and efficient institution, mostly influenced by a high quality Executive Director, who has provided strong leadership and managed the program as a modern private enterprise. His efficient management is reflected in clearly defined products, large-scale production, quality control, accountability, the capacity to attract and retain other high-caliber staff, and an implementation strategy based on decentralization and privatization. 45. The Honduran government's commitment to FHIS in getting the program off the ground to an early start, helped to establish its credibility. Continuous government support demonstrated that FHIS' decisions were based on technical and not political considerations. This was instrumental in demonstrating the seriousness of the program to potential donors, which helped mobilize external resources. J. Project Relationship 46. Throughout the project, the working relationship between the Government of Honduras and IDA was positive and constructive. IDA worked very closely with FHIS and commended FHIS for the close coordination of their activities with the policies, norm setting, planning and budgeting of the line ministries and other public agencies, which contributed to their effective operation and the eventual sustainability of many of FHIS' subprojects. The close coordination FHIS maintained with IDA, line ministries, and other agencies demonstrated flexibility, responsiveness and commitment, and were key factors in its successful operations. K. Project Documentation and Data 47. The Staff Appraisal Report was essential in providing implementation guidelines for this project. The Development Credit Agreement was instrumental in defining responsibilities. It  - 14 - was also important that provision for a Special Account directly managed by FHIS was made to facilitate disbursements. 48. FHIS developed a good microcomputer-based management information system (MIS), which facilitated subproject administration and monitoring by enabling the staff to rapidly access data on the current status of any subprojects, especially in discussions with sponsors. The MIS system also improved subproject supervision and financial analysis, especially in the areas of cash flow projections, and monitoring disbursement and administrative costs. Improvements on the system are planned to provide automatic integration between financial and operational modules of the MIS. L. Lessons Learned 49. Integration of Macroeconomic Policies and High-level Political Support. An important aspect of FHIS' success in achieving its objectives was that it became an integral part of the Government's high priority economic policy; i.e., a social program to cushion the social costs of the economic adjustment program. This policy framework provided FHIS with sustained, high level political support and the budgetary resources to start the program even before external financing could be mobilized. Strong governmental support was combined with restraint from political intervention in the FHIS daily operations. Structural adjustment programs have been shown to be necessary to ensure economic growth, but they are not enough to achieve a better distribution of wealth and alleviate poverty, because they demand greater effort and attention on the part of governments in the social arena. Well aware of the importance of alleviating the social costs of adjustment and cushioning the hardship of the adjustment programs, especially on the poor, and of the need to get broad public support for the adjustment program, the Government established FHIS and gave it its full support. As proof of its strong commitment, the Government made a significant initial financial contribution to start the program. This, in turn, attracted other donors. The new administration that took office in 1994 also considers FHIS' work a priority and is providing it with adequate support. 50. Management Autonomy and Operational Efficiency. Its semi-autonomous institutional form allowed FHIS to adopt more efficient management and operational procedures than those used in line ministries. Combined with a strong manager's leadership, usually coming from the private sector, streamlined management procedures resulted in rapid disbursements and good quality subprojects. Implementation experience has shown that management efficiency could be further strengthened by enhancing the existing management information system (MIS) and improving inter-departmental coordination within FHIS. The key elements to FHIS' significant achievements during its four-year existence and to its positive image, was the use of a standardized menu of subprojects and of simplified procedures for budget, procurement, disbursement and hiring staff, and the use of private sector contractors together with an efficient administrative management. Without these efficient procedures and competent staff, FHIS would have no advantage over line ministries. The simplified procurement procedures established in the law that created FHIS have streamlined disbursement of subloans without undermining qualiti. This was also achieved by the good quality of FHIS staff, the use of cost information systems, the efficient evaluation mechanisms that were established, and an effective control and monitoring system. To maintain these standards, it will be necessary to review salary levels which have deteriorated, relative to the private sector which is the most susceptible of attracting FHIS staff, fully integrate the MIS, and improve the supervision and control systems. Additional efforts are needed to improve coordination among FHIS units, and further improve its impact evaluation capabilities.  - 15 - 51. Exception from Central Government Procurement and Salary Regulations. The special Presidential Decree allowed FHIS to use simplified procurement procedures and to pay its staff at competitive market rates. These two factors were instrumental in ensuring the efficiency of FHIS, leading to a high volume of operations and accelerated disbursements without compromising the quality of subprojects. These positive features need to be reinforced by periodic reviews of the salary scale, integration of management information systems, continuous attention to supervision of subprojects under execution, and improved evaluation of completed subprojects. 52. Simple and Effective Targeting and Promotion. FHIS allocated its funds transparently, according to a poverty map and a set menu of subprojects which received ample publicity. This system represents a significant improvement over traditional revenue-sharing formulas based exclusively on population, since it allows for allocating additional resources proportionally to the level of poverty in each municipality. For this targeting system to work effectively, FHIS had to promote subproject proposals actively in the poorest municipalities where spontaneous demand has been shown to be the lowest, due to its weaker organization and subprojects preparation capacity compared with less poor communities. These special promotion efforts, covering the 80 poorest municipalities, resulted in increases in the share of resources channelled to the poorest communities, from 25 percent in 1990 to 45 percent in 1993. FHIS' targeting mechanism based on poverty categories and map has been successful. Most funds were channelled to the poorest municipalities and to districts and settlements with extreme levels of poverty. It was important for FHIS to make a special effort to help prepare subprojects in poorer communities which normally have weaker organization and project capabilities, and therefore, are likely to have fewer subprojects and less benefit from the social investment fund. 53. Coordination with Line Ministries. FHIS was established at a time when social sector planning and implementation capacity was lacking in line ministries, and there was a large backlog of schools and health clinics in disrepair throughout the country. Coordination between FHIS and the line ministries ensured that appropriate staff (principally teachers and nurses) and recurrent budgets would be available for the social infrastructure that FHIS would finance. FHIS also ensured that the proposed subproject would fit within the overall priorities of the line ministries. This level of coordination was appropriate, given FHIS' policy of not engaging in new construction, but only in the rehabilitation or expansion of existing facilities. Closer coordination would be required if FHIS evolves into a longer-term agency responsible for social investments, including construction of new health and education facilities. Line ministries would exercise their normative role in establishing sector policy priorities, and standards for new infrastructure. Their construction departments would be redefined as smaller technical units, responsible for management of large scale projects, development of prototype designs, norms and standards, supervision and support for local maintenance of school buildings and clinics constructed with FHIS financing. The good level of cooperation with social ministries can be achieved without creating duplications with the functions of the line ministries when proper coordination mechanisms are adopted and FHIS operates efficiently. The Fund complemented the execution of programs of the social ministries, especially those of the Ministries of Health and Education (para. 4), and these line ministries delegated their traditional functions to FHIS for an efficient attainment of their objectives. 54. Innovative Micro-Credit Program. With the intermediation of NGOs, FHIS has been successful in using a small share of its resources (6.5%) to finance innovative short-term credits that benefitted small scale artisans and microentrepeneurs (para. 26), without previous access to credit. The design of the program takes advantage of FHIS' financing capacity and the NGOs  - 16 - knowledge of the market, minimizing operating costs. FHIS lends to a few, highly experienced NGOs, and these in turn screen potential borrowers and make small loans at market interest rates assuming the credit risks, thereby protecting the fund from possitle decapitalization. The participating NGOs were gradually strengthened by clearly established lending guidelines and technical assistance provided by FHIS. The loan recovery rate exceeded 98 percent. The future development of this program is being analyzed with the goal of enlisting the support of commercial banks, and establishing the basis for a sustainable revolving credit program without FHIS' continuous financial support. Credit to the informal sector has been a success, and if it is properly designed, the line of credit can be a useful tool for poverty alleviation on a sustainable basis. 55. Importance of Technical Assistance Technical assistance provided by UNDP and IDA during project preparation and implementation, have contributed to the development of FHIS operational procedures and helped sustain a process of continuous improvements in the program during implementation. UNDP technical assistance, strong supervision by IDA, and independent, external quarterly audits have been essential in making FHIS' activities efficient and transparent, thus achieving its objectives and mobilizing more cofinancing resources. 56. The Pilot Nutrition Assistance Program. The pilot nutrition program demonstrated that distribution of food coupons is a more cost-effective means of providing nutrition assistance than distribution of food in kind; that specific interventions should integrate into a broader nutritional assistance policy, which includes periodic monitoring of the health/nutritional status of the participants, and education and training of the beneficiaries in sound health and nutrition behaviors and attitudes. By distributing food coupons through primary health care and education facilities, the program generated greater demand for quality education and health services, and more efficient use of health and education service facilities available at the local level, resulting in broader and longer term health and education benefits to the beneficiaries. The program (BMI) under the PRAF also demonstrated that primary health care services need to be strengthened, as a pre-condition for successful nutrition programs. The PRAF pilot program fulfilled the objective of providing efficient secure nutrition assistance for vulnerable groups affected by adjustment policies.  - 17 - PROJECT COMPLETION REPORT HONDURAS SOCIAL INVESTMENT FUND PROJECT (CREDIT 22120-HO) PART II: PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE (Translation from the Spanish original) A. Comments on Parts I and III 57. FHIS fully endorses the analysis and data presented in Parts I and III. B. IDA Performance 58. The World Bank has played an excellent role in terms of its evaluation guidelines and procedures in support of the emergency program of the Honduran Social Investment Fund (FHIS). At all times, the Bank paid great attention to FHIS' performance, both in terms of overseeing the approval of subprojects and their impact on the poorest groups of the Honduran population. 59. It should be noted that the Bank has provided training to our administrative staff on management and disbursement procedures, which has allowed financial transactions to be performed more efficiently. 60. The Bank placed special emphasis on disbursement procedures through attention to subprojects presented to it for approval. Its overall performance was very efficient and timely. 61. It was noted, however, that when Bank staff are on vacation, our reimbursement requests are delayed, affecting the above mentioned timely disbursement pattern. 62. Through its Mid-Term Reviews (MTRs), the Bank has established an ideal means of evaluating the management of FHIS, which has tried to follow the recommendations made on those occasions strictly. 63. The incentive for creating the units of Financial Analysis and Impact Assessment was another of the Bank's successful recommendations which FHIS has implemented and strengthened with considerable care and attention. 64. The Bank has helped promote the FHIS by suggesting that it serve as a model for social action for similar programs. The Bank has also acted as effective liaison between FHIS and other financial agencies and donors. This has helped international missions from other institutions to get to know the FHIS. The Bank and UNDP have also encouraged the FHIS' executive staff to inform other countries about the project's experiences.  - 18 - C. Borrower Performance 65. The Honduran Government has provided very strong support to FHIS during its formation and development, which has allowed it to improve its administration, strategies and investment programs in an independent and politically transparent manner. 66. FHIS has developed important contacts with donor and financial organizations and with friendly countries. The formulation of specific subprojects and the clear relationship between subprojects and the communities requesting them, contributed significantly to FHIS' success in mobilizing funds. FHIS' subproject portfolio has continued to grow, demonstrating its credibility with the communities and institutions requesting financing, as well as trust on the part of financial and donor agencies regarding FHIS processes to evaluate, approve and disburse subproject funds. To accomplish this, FHIS had to eliminate bureaucratic obstacles with respect to national and international commitments. 67. One of FHIS' basic objectives was to create employment and generate social benefits through its subprojects. This involved an ongoing effort by the FHIS to assist the poorest groups of society by properly focussing its Infrastructure, Basic Needs and Credit programs on disadvantaged rural and urban areas. 68. Because FHIS represented an innovative social action model in Honduras, it evolved gradually. It began slowly and tentatively, and later took firm, confident steps toward becoming a very efficient institution whose staff shared a strong work ethic and service orientation. 69. Other positive features of FHIS are its strong capacity and skill in approving subprojects covering all of the country's 291 municipalities, and its competent management, efficient and productive staff, its project targeting procedures, its positive public and international image, and the excellent coordination it has with line ministries: (a) The use of the poverty map gave FHIS strength and credibility in resource allocation nationwide and helped focussed its efforts on the poorest groups. Decisions of a sectarian and political nature were thereby avoided. (b) FHIS' very simple law, which provided for broad administrative flexibility, and the development of manuals, procedures and regulations for each operational unit, enabled it to operate with a high degree of efficiency. (c) FHIS succeeded in promoting proper coordination among local governments and communities on matters of common interests. FHIS informed each municipality about the availability of resources so that they can be used for tangible works, thereby converting the aspirations of the poor into concrete projects. (d) The Development Credit Agreement with the World Bank specified that FHIS administrative expenses should not exceed 10 percent. FHIS results in this area have been clear: administrative expenses in 1990 were 5 percent of the total and less than 8 percent at the end of 1993. 70. FHIS' weak points and limitations resulted, for the most part, from the speed with which it has conducted its operations. Other factors include:  - 19 - (a) The approval of subprojects countrywide, including remote areas, has severely limited FHIS's supervision capacity and have significantly slowed down the disbursement process. (b) FHIS emphasized engineering works and physical execution, rather than promotion activities and human development. However, physical works may serve as a catalyst for the promotion of grassroots organization and participation of the population in the country's development. (c) The lack of comprehensive solutions to community problems and the limited scope of certain projects financed by FHIS were due, in many cases, to financial restrictions. (d) The lack of specialization on the part of certain intermediary agencies (such as non- government organizations (NGOs)), tended to limit the quality of their work especially when their programs become diversified, (e) The lack of community participation in project development and financing points to the need to strengthen FHIS's promotion procedures. (f) The lack of dissemination of specialized information on FHIS' efforts was noteworthy. Dissemination of FHIS' operations was limited and general in nature. For example, no documentation on poverty research or specific issues related to poverty developed by FHIS has been published. (g) There is a need to integrate FHIS's network of computer services linking the main operational units in order to ensure better transactions and daily updating of administrative and technical accounting data. (h) There is a need to expand preventive and corrective maintenance activities for recently constructed education and health infrastructure projects financed by FHIS and to ensure that these projects are generally sustainable. D. DA - Borrower Relationships 71. The Mid-Term Review (MTR) process carried out by the Bank and the Borrower has proved an appropriate mechanism for taking preventive and corrective actions to improve FHIS performance. Generally, relations between FHIS and the Bank have been very successful, with no difficulties. 72. The technical and administrative issues raised by the Bank in formal and informal communications and consultations were well received, and many of the FHIS' achievements were due to the broad, frank and timely cooperation between the Bank and the Borrower for the benefit of the project.  - 20 - PROJECT COMPLETION REPORT HONDURAS SOCIAL INVESTMENT FUND PROJECT (CREDIT 22120-HO) PART III: STATISTICAL INFORMATION 1. Related Credits Credit Year of Name/Number Purpose Approval Status Comments Second Social Help the govemment sustain its 1992 Under This project builds Investment Fund poverty alleviation efforts and implementation upon the Project maintain social cohesion during the achievements of (Cr. 2401-HO) period of economic adjustment FHIS-1 and expands until line ministries strengthen the program using their institutional capacities and the basically the complete policy reform programs. same project design. Nutrition and Health Project Protect groups vulnerable to the 1993 Under (Cr. 2452-HO) economic adjustment process by implementation The concept of this channeling nutrition assistance to project, particularly children, pregnant and nursing its nutrition women among the poorest groups assistance of the population; support the component, was establishment of a longer-term tested on a pilot nutrition assistance strategy; scale under the reduce maternal, infant and child FHIS-1 project and mortality and morbidity rates by lessons learned were improving quality and access to incorporated in basic health services and water project design. supply and sanitation; strengthen the institutional capacity of the Ministry of Health, the Family Assistance Program and the Social Cabinet Executive Secretariat; and control the spread of AIDS.  - 21 - 2. Project Timetable PROJECT TIMETABLE Processing Date Date Date Steps Planned Revised Actual 1. Identification (EPS) 05/14/90 05/14/90 2. Prep./Preappraisal 06/15/90 07/15/90 07/26/90 3. Appraisal 08/15/90 10/21/90 4. Credit Negotiations 11/15/90 12/17/90 01/14/91 5. Board Approval 12/18/90 01/29/91 02/28/91 6. Credit Signature 01/15/91 03/14/91 7. Credit Effectiveness 03/30/91 08/15/91 06/26/91 8. Credit Closing 12/31/93 03/31/94 03/31/94 9. Credit Completion 06/15/94 06/30/94 GRAPH I CR: 2212-HO PROCESSING SCHEDULE Planned Time CD 4 - . , , Revised rime Actual Time 3 2 1a-90 Jul 90I I Ju-91 -92 JuI92 Jn-9-Ju l J 'I I Jan-90 Jul-90 Jan-91 Jul-91 Jan-92 Jul-92 Jan-93 Jul-93 Jan-94 Ju1-94  - 22 - 3. Credit Disbursements CUMULATIVE ESTIMATED AND ACTUAL DISBURSEMENTS SDR million IDA FY FY91 FY92 FY93 FY94 Appraisal Estimates 2.7 8.6 14.2 14.3 Actual Disbursements i 0.0 12.5 13.7 14.3 !' Undisbursed amount of SDR 17,767 was canceled August 1, 1994. GRAPH 2 CR: 2212-HO: Time Line of Planned and Actual Disbursement Schedules 1 6 C') .