Peru - Basic Health and Nutrition Project

Docinert of The World Bank FOR OMCLAL USE ONLY I A/- 370J-Pm Re"o. P-61 I 8-PE MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO US$34 MILLION TO THE REPUBLIC OF PERU FOR A BASIC HEALTH AND NUTRITION PROJECT JANUARY 7, 1994 MICROGRAPHICS Report No: P- 6118 PE Type: MOP 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.  CURRIENCY EQUIVALENTS (as of November 1993) Currency Unit: Sol US$1.00 = Soles 2.1 US$0.48 = 1 Sol USCAL YEAR January 1 to December 31 PRINCIPAL ACRONYMS USED GDP Gross Demestic Product IEC Information, Education and Comnmnications NGO Non-governmental Organization UNDP United Nations Development Programme UNICEF United Nations Children's Fund  FOR OMCUL USE ONLY PER') BASIC HEALTH AND NUTRMTON PROJECT LOAN AND PROJECT SUA04RY Borrower: Republic of Peru Renadidar. Ministry of Health Amount: US$34 million equivalent Terms: Repayable in 20 years, including five years of grace, at the Bank's standard variable interest rate Flmndncin Plan: Government of Peru US $ 10.5 million 1BRD US $ 34.0 million Total US $ 44.5 million >*ate of Retuhrn: Not applicable Poverty Category: Program of Targeted Interventions. The operation targets the poor by emphasizing primary health activities and by serving areas of the country where the incidence of extreme poverty is high. Staff Agpraisal Report: 11801-PE This document has a restricted distribution and may be used by recipients only in t' ,'.formance of their offcial duties. Its contents may not otherwise be disclosed without World Bank authotization.  MEMORANDUM AND REC:OMMENDATION OF THE PRESIDENT OF THE IBRD TO THE EXECUTI DIREC1TORS ON A IPROPOSED LOAN TO THE REPUBIIC OF PERU FO)R A BASIC HEALTH AND NUTRMTION PROJECT 1. I submit for your approval the following memorandum and recommendation on a proposed loan to the Government of Peru for the equivalnt of US$34 million to help finance a basic health and nutrition project. The loan would be at the Bank's standard variable interest rate, with a maturity of 20 years, including five years of grace. 2. Peru faces serous health and nutntion problems. Infant and matrnal mtlity rates are among the highest in Latin Amenca. A major share of morbidity and mortality couled be prevented by increased covage of basic services such as attended deliveries. Poor sanitation combined with poor weaning practices and lack of immunization account for close to two- thirds of all child deaths and 50 percent of infant deaths. Inadequate prenatal and delivery care are resonsible for the high number of perinaal deaths and high matermal mortality. The limited access to family planning services in some areas leads to high fertility and short birth intervals, an important cause of matemal depletion and subsequent matenal morbidity. Levels of child malnutrition have not clined significantly over the last two decades. Slightly over a third of children under the age of five suffer from chronic malnutrition (short for age) and about ten percent from global malnutrition (undeveight for age). 3. The Ministry of Health is the main provider of primary health care services. The public resources available for social servces in Peru have become scarce as overall Govenment expenditures fell by 60 percent between 1985 and 1990. The decline is explained by several ictors, including the severe recession and the near disappeaance of the country's tax system-in 1989 tax revenues totaled only 4 percent of GDP. The she of health (excluding Social Secunty) in central government expenditures has remained fairly stable at 4-5 percent since 1970, equivalent to about 1 percent of GDP. Spending by the centrl government on health stood at US$8 per capita in 1990. 4. Wealmesses in the provision of basic health and nutrition services, particularly in rural areas, include: low and uneven coverage; poor quality due to the lack of equipment and drugs and poorly trained staff, among other factors; and inadequate attention to prevention, particularly with regard to health and nutrition education and community outreach.  -2 - 5. Sluggish economic performance is one fact imderlying the poor health conditions in the country. The goal of the refom program now being implemented by the Government is to lay the basis for sustained growth. The first pnciple of the Govemment's poverty alleviation strategy is to rely on the economic stabilizaion and liberalization program as the foundation for a reduction of poverty in the country. The second element is to impwve the living conditions of the population in extreme poverty through programs in the aeas of food assistance, health, education and employment generon. i health, the goal is to inme access to and the quality of primary-preventive services in rural and low-income urban ppuations with a view to contnbuting to a reducton in morbidity and mortality of infants and proecting ttVe health of poor women. The main stategies include restoring a system of monitoring the health status of children; encouraging the participation of communities in preventive health activites; inproving pre- and post-natal care and promotig brsfeeding; and increasing the quality and efficiency of services through training programs for health personnel. In nutrtion, the principal strategies include improving the targeting and nutritional standards of food assistance programs, and carrying out education programs. Relatioship of Project to Bank Country Assstce Strategy 6. The main objectives of the Bank's country assistance strategy for Peru (Jiscussed by the Board on April 20, 1993) are to: (1) sustain stabilization and consolidate structural reforms; (2) foster private sector development and public sector reform; (3) alleviate poverty and promote human resource development; and (4) rebabilitate key instructure and reform related policies. This project is most closely related to the third objective. The Bank has assisted the Government in formuating a two-part poverty alleviation strategy. First, the Government is putting in place policies which encourage broad-based economic growth. The Bank has been supporting this part of the stategy through its adjustment loans. Second, the, Government is seeking to improve basic services, especlly basic health care, nutrition and primary education. The emphasis is on improving living conditions and protecting the welfare of the poor and ensuring that they are able to respond to employment opportunities arising frm economic growth. This project supports the second part of the sategy. It encompasses rural and indigenous people among whom the incidence of extreme poverty is highest. It also focuses on vulnerable groups such as pregant and lactating women, children and the chronically ill.  -3 - Project Objective and Description 7. The objective of the project is to improve health and nutritional staus in the project area, particularly among poor women and children, by: (a) increasing use of maten and child health and nutrition senrices by extending access and improving tie quaity of services; and (b) promoting better health and nutritional practices, with an emphasis on preventive care and education. 8. The prcject would be carried out in three regions, in addition to Lima: Grau, Nor Orientl del Marafion and Inka. In all, 15 provinces are included in the project area, of which aU but 2 are classifled by the Govenment as Umost deprived". The other two provinces are classified as deprived". Most of the beneficiaries are in mountain communities which include a significant share of indigenous people. According to a recent household survey (Peru Living Standards Msement Survey, 1991), the incidence of poerty in Peru is highest by far in the rual mountainous region. Two-thirds of the people living there are poor and 47 percent are extremely poor.- The incidence of poverty is also very high among the indigenous population. Within Lima, the prqect covers the district of San Juan je Lurigpncho, one of the poorest ares of the city. During the last live years this district has experienced one of the most severe declines in per capita expenditures in the city. The population covered by the project area is enmated at 1.7 million, about 8 percent of Peru's total population of 22 million. 9. The proposed project has five components: (a) Materna and Chid Health. The emphasis is on increasing the use of preventive services in reproductive health and the health of infants and young clhildren by expanding access and improving quality. Services to be supported include: prenatl and postl caze; attended deliveries; family planning; chlonnation of community wells; immunizations; deparasitaton; and treatment of acute diarrheal illness and acute respiraoy infections. Senices will be provided by professional and para- professional staff in health centers a.id posts, as well as hIdivis are claified as exremely poor if tdior total daily edius ar less thm the cost of a basic food ba Indivda are caified as poor if their total daily dituros are less than the cost of a basic food basket plus an estma of no-food expnditures. So Pu Povert Asset and Sodal Policies and PmmS for the Por, Report No. 11191-PE, May 5, 1993.  - 4 - by community health workers, depeding on the type of service and accessibility of the popuation. It is expected that the bulk of preventive services would be provided by community health workers with follow-up visits from health cent staff. (b) NutrItion. The project will support an expansion of the coverage of community-based child growth mnitoring and clnse follow-up of growth problems. Malnourished children identified dtough growth monitoring would be enrolled in existing food assistance programs. The project would support the distribution of vitamnm and mineral supplements in order to reduce micronutrient deficiencies, especially among pregriant women and children. This would include iron, folic acid, vitamin A and iodine. It would also support operations research and other studies. (c) Tuberculosis Treatment. The project would support activities aimed at reducing the number of cases and improving she efectiveness of treatment. (d) Ifonation, Education and Co cations (IEC). Educational activities, community outreach and training occupy a central role in the project The poiect would support the implementatin of the National Plan for and Weaing, which has identified and communications strategies to promote improved bxeastding and weaning practices, and the extension of these strategies to the other components of the project. The stategies include the use of mass media to disseminate basic messages, community participation and inter-personal communicaion. Training will be provided to community health workers and technical staff in health centers and posts in order to help them acquire the skills needed to carry out their responsibilities and to deliver infbrmation to potental clients. (e) Management end E on. A project cordinator, located in the Ministry of Health, would oversee implementaton and monitor the project. A proj*et steering committee would provide oversight and guidance. A three-member team under the proect  coordinator would manage the IEC component. The progress of the project would be monitored against annual work programs and budgets. Performance would ba assessed against a set of key indicators on the supply and coverage of serices and outreach and education activities. Prqject impact will be assessed through comparison of the findings of two surveys. The initial survey will be carried out during the first year of the project in order to obtain baseline information. The second will be carried out during the fifth year of implementation in order to measure the results. 10. The proposed project would finance basic medical equipment for maternal and child health serWvces to replace obsolete and non-furctioning equipment at about 60 primary health centers and 200 health posts and for roughly 2,200 community health workers. The project would finance vehcles for supervision; medicines, micronutrients and other supplies; computers; office, printing and laboratory equipment; and basic instructional materials for health facilities. The project would cover the costs of operations research and technical assistance aimed at strengthening the provision of maternal and child health services and nutrition services. The project would also finance the services required to develop and conduct the IEC program as well as training and impact and evaluation studies. Project Costs and Financing 11. The project would be carried out over six years. The total cost is estimated at US$44.5 million equivalent, with a foreign exchange component of US$20 million or about 45 percent of the total. The proposed Bank loan of US$34 million would finance 85 percent of total estimated costs excluding local taxes or 80 percent including local taxes. The Bank loan would finance about 95 percent of foreign exchange costs and 60 percent of local expenditures. A breakdown of costs and the financing plan are shown in Schedule A, The Govemment's financing of a small amount of foreign exchange costs (US$1 million) is for the foreign exchange component of recurrent *xpenditures (drugs, medical supplies and operating and maintenance costs), for which the share financed by the Bank would gradually decline to 20 percent by the end of project implementation. The financing by the Bank of local costs under the project is justified since this is a project targeted to areas of the country where the incidence of extreme poverty is high. Amounts and methods of procurement and the disbursement schedule are shown in Schedule B. A timetable of key project processing events and the status of Bank group operations in Peru are given  -6 - in Schedules C and D, epecdvey. The Staff Appraisal Report No. 11801- PE, dted Juary 7, 1994, also is being circulated. Project Implemeation 12. Responsibility for implementing the project would rest with the four su onal Directors of Health Services in the project area. It is anticipated that non-govnmental o ons (NGOs) will cary out nmny proect activities, given their wide experence and current work with the Ministry of Health. The success of the project depends on effective community participation (primarily through community health workers) and improved community outreach on the part of health aciliies. Raher than hire nww commuity health worke, the project would provide training and work with exs.ing community health workers. Lemons from Previous Bank bIvolveent 13. Sevral reviews of previous prots have stressed the importnce of simple project design and monitoring and evaluation in health and nutrition. One of the main lessons derved from the 1983 Per Primary Health Project (Ln. 2211-PB) is that project desig should be easy to implement and any changes should be introduced gradually. The proposed po.,ect focuses on strengthening and integn a few key health and nutrition intervntions. Project activities wil begin in two of the four regions and will be introduced in the rest of the project area once implementation statgies have been tested. The mechaisms for monitoring and evaluation were deigned dunng project preparation and the costs are covered under the project. One lesson in monitoring from the Nutrition Development Project (Ln. 1373-IND) in Indonesia was that these procedures should be kept simple. The emphasis in the proposed project is on collecting only the most critical information which is needed to track progress in reaching the project's objectives and to guide project management. Prior eperience in both the Primary Heah (Ln. 2211-PE) and Primary Education (Ln. 2465-PE) Projects in Peru also suggests the importnce of: (a) avoiding the creation of project units which duplicate units within the sectrs; and (b) defining the responsibilities of regional staff. The proposed project integrates management to the extent possible witiin the exisding stucture of the Ministry of Health and the sub-regional medical offlices. Regional staff have been involved in the design of the project, including the definition of their rewsponsibdties. Persistent unavilability of counterpart funding was a problem in earlier projects in Peru. The scope of this project was reduced during project preparation, in part to lower the demand on Government resources.  -7- Agreed Actions 14. At negotiations. ageement was reached that: (a) health facilities will only be furnished with the equipment, medicine, and supplies which are appropriate to their category, determined by staff complement as well as other fctors. If a fachty does not meet the criteria which have been set, the inputs agreed for a lower level of service would be provided under the project; (b) a study evaluadng the performance of community health workers pardcipating in the project w,-id be carried out during the second half of 1996. Terms of reference fc- uae study would te agread with the Bank. (c) the project coordinator would prepare and transmit to the Bank no later than March 31, 1994, an operational manual; (d) a training strategy artd indicathve 1994-1999 plar would be prepared by the person responsible for education in the MEC gement team, after consultation with the sub- regional Directors of Headth Sevices and the project coordinator, for reviev by the Bank not later than June 30, 1994; (e) the Government would prepare and tansmit to the Bank by not later than November 1 of each year staring in 1994, annual project work programs and budgets and transmit to the Bank, begnning in 1995, annual monitoring reports of project implementation; (1) a list of indicators (and mechanisms of data collecttin) agreed with the Bank would be used for the purposes of project monitoring and evaluation, as well as baseline and impact surveys, the content and timing of which have been agreed with the Bank; (g) no change in responsibilities for project iplementation would be made unless agreed by the Bank; (h) a Mid-Term Review of project implementation would be held in mid-1997; and (i) the Ministry of Health would at all times during the execution of the project have in place suitable arrangements with one or more o n companies to ensure delivery of goods procured under the project, the cost of which would be fnanced by the Govenment or, altematively, delivery of goods to health facilities would be specified in the prement documents. 15. The Wowing would be a condition of of the proposed loan: evidence will be provided of the employment of an MEC management team, whose qualifc .ations and experience are acceptable to the Bank. 16. A condition of disbursement fo drugs and medical sUies would be that the Government has furmished to the Bank satisfactoty evidence that suitable arangements for their distribution have been made.  - 8 - Program Objective Categories 17. Within the broad category of human resource development, the project's objectives are to promote more effecive population, health and nutrition policies and to reduce poverty. The opeatior, targets the poor by emphasizing pnimary health activities and by erving areas of the country where the incidence of extreme poverty is high. Environmental Impact 18. Since it deals mainly with purchase of equipment and supplies, training, and capacity building, the project is not epected to have any significant environmental impact. Benefits, Risks and Sustalnabiity 19. Benefits. Better health practices and the demand for key preventive services will be promoted through the IEC campaign. The resulting changes in behavior and increased demand, coupled with the greater access to basic health and nutrtion services and improvements in the quality of those services, should improve health and nutrition status in the project area. Also, the project would promote policy and program changes that would improve the effectiveness of the delivery of primary health and nutrition services by assisting in the design and implementation of health and nutrition interventions, by improving data availbility and by supporting esearch and other analysis. 20. Rigk. The main risk is that implementation by the Government will be weal. This risk is addressed in two ways. First, the project focuses on a small number of programs thereby reducing the number of activities to be managed. The project is not supporting new programs, but concentrates on strengthening activities which are currently being implemented by either the Ministry of Health or NGOs. In addition, the project envisages the use of experienced NGOs to supplement the Government's capacity, and steps have been taken to facilitate their participation. A second risk is fte possibility that the Government may revise the process of decentralization of heath services during project implementation. The project asAresses this risk by channelling project finmcing through the central government (instead of directly to regional governments whose status may change). In addition, any change in the responsibilities for project implementation would have to be agreed with the Bank. A third risk is the history of poor outreach by public health facilities, both to the populauton and to community health workers. The project focuses on this aspect by financing the incremental recurrent costs of increased  - 9- supervision on a declining basis, monitoring outreach closely during project implementation, ar.J promoting changes in attiftudes and practices through an integrated IEC campaign. A deterioration in the security situation in Peru is a risk to all projects in the country. The project would be located in areas of the country which are not classiiled as emergency zones. TLhe selection of these sites will be kept under review and would be subject to change u%pending on security conditions. 21. austainabilily. The sustainability of the project is expected to be high. The expansion in coverage of material and child health services relies on existing personnel (both community thealth workers and professionals) and existing infrastructure. Professional staff and health infrastructure are severc!y under-udlized in Peru, in part because of the public's perception of the low quality of services, the lack of supplies and equipment and the absence of sufflicient community outreach. The only salaries to be financed by the project would be for a small number of staff to assist with project administration. Thus the incremental annual recurrent expenditures needed when the progum is in full operation are likely to be small (slightly over US$1 million), coneisting mainly of drugs and supples for the anticipated higher quality and quantity of service delivery. Drugs, supplies and operating and :Aaintenance costs would be financed by the Bank at rates which decrease from 80 percent to 20 percent (See also Schedule B). Over the longer term, the Bank plans to work with the Government in the context of sector work and future lerving in areas that would contribute to sustainability, such as cost recovery and alternative mechanisms for service delivery in rural areas.  - 10- Recommendation 22. 1 am satisfied tnat the proposed loan would comply with the Articles of Agreement of the Bank and recommend that the Executive Directors approve it. Lewis T. Preston President Attachments Washington, D.C. January 7, 1994  - 11 - Schedule A PERU BASIC HEALTH AND NUTRMTON PROJECT Project Cot Sumary (US$million) Project Compoomt - Wal Ereiu T d A. Matera and Child Heath 8.0 10.0 18.0 B. Nutrition 1.7 1.1 2.8 C. Tuberclosis 0.1 0.0 0.1 D. Informaton 11.0 5.8 16.8 E. Management and Evalution 1.5 0.6 2.1 ibtal RASE-JB COSTS 22.3. 17.5 .39.8- Physical Contingencies 0.4 0.6 1.0 Price Cotingencies 2.0 1.7 3.7 aT7 .44.I (US$ milon) --L -: - - :.6 Govemment 9.5 1.0 10.5 Proposed IBRD Loan 15.2 18.8 34.0 Total 24.7 19.8 44.5  - 12 - Schedule B ga 9 IC Ooa O cattoryv of Exnendla ______ Lf Other Total Cot 1. Basic Medical Equipment 4.0') 4.0 ._ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ (2.3) (2.3) 2. Non-Medical Equipment and Funiture 1.3 1.1 1.5v 3.9 (0.8) (0.6) (1.1) (2.5) 3. Vehicles l.' 1.1 .____________________________ __________ _ ,_________ (0.7) (0.7) 4. blucOtlonal Matedals 0.9 0.4 1.3 (0.7) (0.3) (1.0) S. Tainiag 9.14 9.1 9.1) (9.1) 6. TechnIcal Assistace 4.10 4.1 ________________________________________ _____________ _______________ (4.1) (4.1) 7. Comniatio Serice 2.50 3.8a 6.3 (2.0) (3.0) (S.0) 8. Drap and Medical Supp 9.0* 9.0 ____________ ___________________ (5.6) (5.6) 9. opeat and 3.0 2.7" 5.7 MaintenanceCoas __ -_ _ (1-7) (3.7) _ _ _ _ _ _ _ _ _ _ _ _ I L )( 3 2 h 3 . 0 a) To be procured from the stocks of one or more spec;ild internatonal organizations. b) Local shopping on the bWa of quotations from at leat th suppliers. C) Limited radion idding d) Reimbursement of expenditues for training including travel and per diems, course developmen and post evaluations. e) Contracting of consltants and auditors in accordance with Bank Gudelines (Aut 1981). D The major contract (estimated to totl $2.5 million) would be let in a two-stage ICB process. g) Inluides consumabls. Note: AN amos ch de price and pysd conigngcia. Numbers in parsabem are the rpecidve aount financd by the Ba-k  - 13 - Schedule B PERU BASIC HEALTH AND NUTRITMON PROJECr ESTIMATEi) DISBURSEMENTS, CATEGORIES AND PERCENTAGES (US$ millions) corev Amount Perooaage 1. Equipment and Vebicles 5.4 65% of totl expendiures 2. listuctional Matrials 1.0 80% of total expenditures 3. Trning 9.1 100% of total expenditues 4. Conmnications Services 5.0 80% of total expenditures S. Techical As_siae 4.1 100% of total expenditure 6. Dmpgs and Supplies 5.6 80% up to an aggregate disbud amoumt of $2,600,000 equieae; tereafe, 70% up to an aggregt disburd amunt of $4,600,000 equivalent; thereaft, 50% up to an aggregate disbursed amount of $5,300,000 equivalt; and 20% teafter. 7. Fumituet 0.1 80% of totl expenditunr 8. cemet Operating Costs 3.7 80% up to an a_gge disbused amount of $1,500,000 equival; uthereafte 70% up to an aggregate disused amount of $2,800,000 equivsalent; heeafter, 50% up to an aggegate disburs amount of $3,300,000 equivalent; and 20% therfter. Total 34.0