Argentina - Social Protection Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-6657-AR 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$152 MILLION TO THE ARGENTINE REPUBLIC FOR A SOCIAL PROTECTION PROJECT OCTOBER 27, 1995 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit - Argentine Peso (A$) Official Rate: US$1 = A$1 FISCAL YEAR January 1 to December 31 ACRONYMS ASOMA Programa Apoyo Solidario a los Mayores FNE Fondo Nacional de Empleo FOPAR Fondo Participativo de Inversion Social IDB Inter-American Development Bank INDEC Instituto Nacional de Estadistica y Censos MCE Ministry of Culture and Education MOE Ministry of Economy MOH Ministry of Health MTSS Ministry of Labor and Social Security PAI Programa Ampliado de Immunizaci6n PEP Programa de Empleo Privado PRENO Programa de Entrenamiento Ocupacional PROAS Programa de Asistencia Solidaria PRODESO Programa Participativo de Desarrollo Social PRONAPAS Programa Nacional de Pasantias PROSSE Mexico Program of Essential Social Services PSA Programa Social Agropecuario PSE Plan Social Educativo SDS Secretaria de Desarrollo Social SIEMPRO Sistema de Informaci6n, Evaluaci6n y Monitoreo de Programas Sociales UCAF Unidad de Coordinacion Administrativo Financiera UEC Unidad Ejecutora Central UEP Unidad Ejecutora Provincial  FOR OFFICIAL USE ONLY ARGENTINA SOCIAL PROTECTION PROJECT Loan and Project Summary Borrower: The Argentine Republic Inplementing Ministries of Economy, Education and Culture, Labor and Agency: Social Security, and Social Development Secretariat Beneficiaries: Social services protected and improved under the project (basic education, vaccinations and disease control, nutrition, and employment) would benefit more than three million poor persons, primarily mothers and children. The pilot Participatory Social Investment Fund would benefit approximately 70,000 poor families in Northern Argentina. Poverty Category: Program of Targeted Interventions. Protected social services and the social fund are directed to the poor and vulnerable. Amount: US$152 million (including up to US$30.4 million of retroactive financing). Terms: Standard amortization term, grace period, and interest rate for fixed-rate US Dollar single currency loans expected to disburse within three years. Commitment Fee: 0.75% on undisbursed loan balances, beginning 60 days after signing, less any waiver. Financing Plan: See Schedule A Net Present Value: Not applicable Staff Appraisal Report: No. 14832-AR Project Code: AR-PA-35495 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 wiLhout World Bank authorization.   MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE ARGENTINE REPUBLIC FOR A SOCIAL PROTECTION PROJECT 1. I submit for your approval the following memorandum and recommendation on a proposed loan to the Argentine Republic for US$152 million to help finance a two- year project to protect critical social expenditures and improve the efficiency of programs for the poor and unemployed during the period of economic downturn and fiscal restraint in 1995 and 1996. The loan will be a single currency (US Dollar) loan with the standard amortization term, grace period and interest rate for fixed-rate US dollar single currency loans expected to disburse within 0-3 years. 2. Background. After four years of rapid economic growth averaging 7.7 percent annually, Argentina is facing its first serious economic crisis since it implemented the highly successful Convertibility Plan in 1991. Higher international interest rates and the Mexico crisis have reduced capital inflows. Between December 1994 and March 1995, the stock market declined by about 30 percent and banking deposits fell by around 15 percent. Economic growth has slowed considerably, with economic growth in 1995 expected to be flat. 3. In mid-March of this year, the Government reacted forcefully to the crisis. It announced the extension to March 31, 1996, of its Extended Fund Facility agreement with the International Monetary Fund (IMF), and proposed changes in the tax system that are expected to generate a fiscal surplus of 1.4 percent of GDP (including privatization proceeds) in 1995. The main measures included a temporary increase in the VAT rate from 18 to 21 percent, an increase in wage taxes, and a reduction in export subsidies. 4. At the same time, the federal budget was cut by 3.9 percent, from US$42.9 billion to US$41.3 billion. Excluding social security, planned federal spending for the social sectors was reduced by 6.3 percent, from US$8.6 to US$8.1 billion, with education reduced by 9 percent and health by 4 percent. Social programs targeted to the country's poor and unemployed (programasfocalizados), which account for about US$3.7 billion in planned spending for 1995, fared slightly worse. Comparisons with actual spending in 1994 show, however, that the Government remains committed to increasing real expenditures for the social sectors and especially the poor -- planned 1995 spending (adjusted for cuts) for all social programs other than social security is 16 percent higher than last year, and for the poverty-oriented programs it is more than one-third higher. 5. If the Federal Government makes any additional budget cuts during 1995 or reduces its expenditures in 1996, however, the reductions could fall heavily on social expenditures, resulting in serious declines in the coverage and quality of critical services (for example, supplementary feeding, vaccinations and infectious disease control, public works employment) for the poor and out-of-work. Unless special measures are adopted,  2 the current economic downturn and reductions in public social expenditures are likely to have an adverse impact on social conditions in Argentina, as reflected in higher rates of malnutrition, illness, school drop-out, etc. Unemployment, which increased from 7 percent in 1991 to 13 percent in 1994 as a consequence of structural changes in the Argentine economy, has risen to an alarmingly high level of 18 percent of the work force in recent months. At the same time, funding for unemployment insurance and for related public works employment and training programs is shrinking. The share of the population living in poverty, which declined from about 35 percent in 1990 to 20 percent in 1993, is in danger of rising once again during the period of economic austerity that Argentina is entering. Under these circumstances, it is critical that the Govemment protect and increase the efficiency of its spending for health, nutrition, education, rural development, and employment and income support programs which are targeted to the poor. 6. Government Economic and Social Policy. In the face of the current economic crisis, the Argentine Government is reinvigorating the adjustment process by passing legislation capping social security pensions, liberalizing labor laws applicable to small and medium enterprises, and adopting measures to restructure the financial system by accelerating the privatization of provincial banks and the consolidation of private banks. To bolster its adjustment program, the Government in March 1995 sought and obtained pledges of financial assistance totaling about US$6.2 billion from the IMF, the World Bank, the Inter-American Development Bank (IDB), and the Japanese EXIM Bank. Combined with US$2.3 billion from the sale of special government bonds and projected revenues of US$2.4 billion from the privatization of state enterprises, these exceptional resources should help maintain the integrity of the Convertibility Plan. 7. In the area of social policy, as stated in its letter to the Bank dated October 10, 1995, the Government is committed to policies that will invest in human capital for a competitive labor market, create new employment opportunities, and help to reduce poverty. This will be done by: (a) raising the quality and efficiency of spending for health, education, employment, and training; (b) improving the targeting of poverty programs and strengthening the information base for poverty monitoring and program evaluation; and (c) encouraging the participation of non-governmental and community-based organizations in social programs, especially those directed to the extreme poor. The Government's commitment to invest in human capital and reduce poverty is reflected in the growth of public social expenditures, which rose from 16.4 percent of GDP in the 1984-88 period to 17.3 percent during the first administration of President Carlos Menem (1989-94), reaching 18.4 percent of GDP in 1994. In the area of labor policy, the Government has recently enacted new laws on employment contracts, wage taxes, and workmen's compensation designed to make contracting more flexible and to reduce the cost of labor. Additional laws related to bankruptcy and to collective labor agreements have either been sent to the Congress or will be submitted shortly. The Government has also begun the process of improving its employment programs by closing and consolidating existing programs and by placing greater emphasis on promoting employment and training by the private sector.  3 8. The Government has requested that a portion of the US$2.45 billion in emergency loans from the World Bank and IDB (US$1.3 billion from the Bank and US$1.15 billion from the IDB) be directed toward protecting and improving federal social expenditures. The project described here responds to that request. The IDB has recently approved a US$450 million adjustment loan that provides balance of payments support in return for fulfillment of social policy conditionalities related to the maintenance of adequate levels of public social expenditure, the development of a national food and nutrition policy, and improvements in specific nutrition programs. IDB and the Bank have worked closely together in the design of their respective operations, to ensure the complementarity of policy conditionality and program activities. While the IDB loan aims at protecting social expenditures in 1995, the World Bank project focuses on raising the efficiency of social programs over the next 2-3 years. The IDB operation will help to improve spending on provincial nutrition programs, whereas the proposed World Bank loan will assist employment and training and rural basic education programs. 9. Project Objectives. The project's major objectives are to: (a) protect and increase the internal efficiency of nine ongoing social programs for the poor and unemployed during 1995 and 1996; (b) increase the overall efficiency of social expenditures by improving program targeting and implementation, promoting the participation of civil society, and developing greater transparency and accountability; and, (c) through a small social fund, test ways to provide more basic social services and stimulate the economic production of poor households. 10. Project Description. The proposed project has three main components: (a) Priority Social and Income Support Programs; (b) Pilot Participatory Social Investment Fund (Programa Participativo de Inversion Social, FOPAR); and (c) Technical Assistance for the Improvement of Social Information, Monitoring and Evaluation of Targeted Social Programs (Sistema de Informaci6n, Evaluaci6n, y Monitoreo de Programas Sociales, SIEMPRO). 11. Component A: Priority Social and Income Support Programs (US$366.8 million): Under this component, loan funds will finance a share of the 1995 and 1996 federal budget for selected programs in the areas of education and employment'. These programs have a total 1995 budget of about US$190 million. They were selected using the following criteria: (a) effectiveness of targeting the poor; (b) ability to provide income support to the unemployed; (c) internal program efficiency; and (d) potential for further rapid improvements in the short run. Loan resources will be used to ensure that spending for these programs is maintained at its March 1995 level (already reflecting two earlier rounds of budget cuts). In 1996, spending for these priority programs will be at least maintained, and possibly increased, above the 1995 amounts. The programs are: Plan Social Educativo (PSE); Programa Nacional de Pasantias (PRONAPAS); Programa de Entrenamiento Ocupacional (PRENO/PROAS); and FORESTAR.  4 12. As part of the project, the Government has agreed to protect the 1995 and 1996 budgets for these programs, plus the budgets of four other critical social programs for childhood immunization, communicable disease control, nutrition, and small-scale farm development.2 Altogether, US$300 million in annual spending is involved. To improve these social programs, project funds will be used to conduct independent evaluations, develop better internal monitoring and oversight by the Budget Evaluation Directorate in the Ministry of Economy, and undertake in 1996 a broader review of public social expenditures. The Ministry of Labor will use project assistance to reassess and modify its employment generation programs and its unemployment insurance scheme, improve its employment services (information and counseling), and design and promote changes in labor policies and associated legislation. 13. Component B: Pilot Participatory Social Investment Fund - FOPAR (US$36.7 million): FOPAR is a two-year pilot which will create a transparent and flexible mechanism for channeling resources directly to communities for poverty reduction activities. It will also develop and test ways to target the poor, stimulate community participation in all stages of the project cycle, and improve monitoring and evaluation of poverty projects. FOPAR will concentrate its activities in the 92 poorest districts located in Argentina's ten northern provinces. 14. FOPAR will have two parts. Community-based subprojects (US$25.8 million) will emphasize strengthening of community organizations and implementation of small- scale infrastructure. Maximum subproject size will be US$100,000. Typical subprojects will include strengthening of grass roots organizations, training of community leaders, construction and rehabilitation of water supply and drainage systems, pedestrian bridges and sidewalks, health posts, and feeding centers; and extension of credits to micro- enterprises through revolving funds. Institutional development (US$10.9 million) will cover capacity-building for the FOPAR central office (SDS) and its provincial counterparts, including training, technical assistance, and office equipment for subproject appraisal, supervision, monitoring and evaluation. 15. Component C: Technical Assistance for the Improvement of Social Information, Monitoring and Evaluation of Social Programs - SIEMPRO (US$14.4 million): When SDS was created by presidential decree in early 1994, it was charged with the tasks of assisting the cabinet of ministers in setting national social policy and coordinating social programs for the poor. To carry out these tasks, SDS has established SIEMPRO. Project funds will be used to assist SIEMPRO to expand and maintain a social information data base, in collaboration with government, academic and non- governmental institutions. A survey of living conditions and access to social programs and participatory poverty assessments will be carried out. A data bank covering national and provincial social programs directed to the poor and vulnerable groups will be established. Improved methodologies for targeting and evaluating social programs will be developed 2 Programa Ampliado de Inmunizaciones; Programa de Control de Chagas; Programa Apoyo Solidario a los Mayores (ASOMA); and Programa Social Agropecuario (PSA).  5 and disseminated through seminars and workshops to staff of social sector agencies. Social policy analysis will be carried out to assist the decisions of the social cabinet. Finally, project funds will be used to establish the SIEMPRO unit in SDS, set up SIEMPRO in provincial Ministries of Social Action (through a Technical Dissemination Fund), and prepare a follow-up technical assistance project. 16. Project Cost and Financing. The proposed project, to be carried out over a 30- month period, is estimated at US$417.9 million equivalent: US$366.8 million for Component A, US$36.7 million for Component B, and US$14.4 million for Component C. Foreign exchange amounts to US$105.4 million or 25 percent of the total. 17. The proposed Bank loan of US$152 million will finance 36 percent of project costs. The Government will finance the remaining US$265.9 million equivalent, or 64 percent. Consistent with the objective of protecting existing government social programs from budget cuts, the Bank share of financing for Component A is 32 percent. Since Components B and C are for pilot investments in a social fund and in poverty analysis and program management, the Bank's share of planned spending is correspondingly higher, at about 70 percent. 18. The Government of Argentina is eligible for single currency loans under the expanded SCL program. Including the proposed loan, and US$500 million of previously approved single currency loans, Argentina will have used 43 to 47 percent of its expected US$1.4 - US$1.5 billion FY96 program. Argentina opted for the US dollar single currency loan terms to facilitate improved debt management, and the fixed interest rate to protect against possible market rate interest rate increases after the loan is fully disbursed. 19. Project Implementation Arrangements. The Ministry of Economy will coordinate the implementation of Component A, drawing on the support of program managers from the Ministries of Education and Labor and from the Secretariat of Economic Programming in its own ministry. The Ministry is creating a small unit composed of a project coordinator, a project officer and an administrative assistant to plan and manage the component. The Ministry will be responsible for the project Special Account for Component A. The SDS will be responsible for the oversight of the FOPAR (Component B) and SIEMPRO (Component C), which will have a second Special Account. FOPAR will be managed centrally, but with strong local involvement in planning and implementation of subprojects. Institutionally, it will have four tiers: a national project unit in SDS, headed by a coordinator and assisted by an advisory committee; a provincial office and council (Consejo Provincial Participativo); local councils at the municipality level (Consejo Local de Desarrollo Social), composed of local institutions and beneficiary representatives; and an executive committee at the community level (Nuicleos de Beneficiarios). SIEMPRO will be managed by a central unit (Unidad Ejecutora Central) in SDS with four departments (General Coordination, Social Information and Targeting Department, Evaluation and Monitoring; and Training and Technology Transfer). SIEMPRO will also have small units in provincial Ministries of Social Action that would request assistance under a Technical Dissemination Plan.  6 Participation by the provinces in SIEMPRO will be demand-driven, and will require the signing of Subsidiary Agreements. 20. Project Sustainability. Component A of the project will not entail incremental recurrent costs, as the education and employment programs to be financed are already under implementation. The main purpose of this component, in fact, is to sustain these ongoing programs during 1995 and 1996, at which time Argentina is expected to have achieved the economic and fiscal adjustment that will permit the government to continue financing priority social programs using domestic resources. The only minor exception to this is in the area of technical assistance for the Ministry of Labor and for the public social expenditure review. In both cases, the Government has recently created permanent policy units financed from the regular budget, thus ensuring their sustainability beyond the life of the project. Incremental recurrent spending in components B and C, amounting to less than one percent of total project cost, will be easily absorbed by SDS and the provincial and municipal agencies involved in the social investment fund. 21. Bank Experience and Lessons Learned. There has been no previous Bank experience in Argentina with this type of project which finances existing government social programs for a two year "time-slice" (Component A). A similar operation - the Mexico Program of Essential Social Services (PROSSE) - was negotiated earlier this year and is at a very early stage of implementation. Lessons from the Mexico project are that: (a) it is important to identify up-front social programs that use procurement and financial accounting practices already acceptable to the Bank, to ensure that ongoing government expenditures will be eligible for Bank financing; (b) choice of a limited number of large social programs greatly simplifies implementation; and (c) social expenditure conditionality should be simple, clearly monitorable, and should build in some flexibility for adjustments in the "outer" years to be agreed between the government and the Bank. Each of these lessons has been taken into account in the proposed project. A major effort has been devoted to reviewing procurement and accounting practices during pre-appraisal and to verifying their compatibility with Bank guidelines. To simplify implementation, only five federal government programs managed by two line agencies will be financed directly with the proposed loan. In the unlikely event that one of these programs falls out of the project, a list of back-up programs has been developed to permit substitution. The social expenditure conditionality includes clear monitorable targets for 1995 and 1996. At the same time, the Argentine Govemment will have some flexibility in adjusting the intemal composition of the social budget for next year in order to improve targeting and efficiency. Such adjustments will be discussed between the Govemment and the Bank at the appropriate stage in the 1996 and 1997 budget cycle and as part of a review of public social expenditures. 22. The World Bank already has considerable experience with the kind of social investment funds and stand-alone Technical Assistance operations being proposed for Components B and C of this project.  7 23. Rationale for Bank Involvement. The proposed loan is fully consistent with the Bank's Country Assistance Strategy presented to the Board on May 4, 1995, with the Provincial Bank Privatization Project (Ln. 3878-AR). The strategy focuses on supporting Argentina's efforts to: (a) consolidate and deepen structural reforms, with strong support during the current economic crisis; (b) reduce poverty and develop human resources; and (c) rebuild the country's deteriorated infrastructure base. The proposed loan, part of the US$1.3 billion emergency package offered by the Bank to Argentina to reform the banking and health insurance sectors, would support objective (b) related to poverty reduction and human resource development, by helping to safeguard the delivery of social services to the poor and those most adversely affected by the current economic crisis. The World Bank is already involved in the social sectors in Argentina through a series of recent lending operations3 and a poverty assessment. The proposed project would build on this prior knowledge and experience. 24. Key Issues and Actions. Prior to negotiations, the Government: (a) presented to the Bank a final draft of its Letter of Social Policy, which has now been signed by the Minister of Economy; (b) provided draft terms of reference and a more detailed costing for the public social expenditure review; (c) confirmed its figures for amounts budgeted and spent to date for the social programs to be financed from the loan and protected as part of the loan conditionality; and (d) presented a sample set of performance indicators for the protected programs, to be used in the monitoring reports of the Directorate of Budget Evaluation. 25. At negotiations, assurances were obtained for Component A that: (a) the Government will maintain the 1995 budget for the "basket" of protected social programs at US$300 million; (b) no later than December 15, 1995, the Government will furnish to the Bank information showing that the 1996 federal budget proposal contains a set of social programs with similar composition to the 1995 basket and with a budgeted amount of at least US$300 million; (c) by December 15, 1995 the Government will agree with the Bank on the specific employment and training programs to be financed from the Bank loan during 1996; (d) by January 15, 1996, the Government will hire the project officer in the Ministry of Economy, and by January 31, 1996, will employ the manager in the Ministry of Labor; and (e) the Government will send to the Bank by December 15, 1995 the terms of reference of a public social expenditure review, by May 31, 1996 a draft of the report on federal social 3 Approved projects include the Maternal and Child Health and Nutrition Project (Loan No. 3643-AR, also known as PROMIN), approved on August 3, 1993 in the amount of US$100 million, and the First Decentralization and Improvement of Secondary Education Project (Loan No. 3794-AR), approved on September 15, 1994 in the amount of US$190 million. Projects under preparation include the proposed Second Decentralization and Improvement of Secondary Education Project (negotiations held in October 1995, for a proposed loan of US$115 million), the Provincial Health Sector Development Project (Loan No. 3931-AR, presented to the Board on August 3, 1995, for US$144 million) and the Higher Education Reform Project (Loan No. 3921, presented to the Board on July 6, 1995, for US$165 million).  8 expenditures, and by December 31, 1996 a draft of its review of provincial social spending. 26. Assurances were also obtained that FOPAR would submit for the Bank's review: (a) the first five grant agreements for subprojects, including their approval reports; and (b) any subproject which does not conform with the eligibility criteria in the FOPAR Operational Manual. For Component C, assurances were obtained that: (a) unless agreed with the Bank, SDS would not terminate, amend, or fail to enforce any provision in the subsidiary agreement with INDEC, and (b) draft terms of reference and preliminary design of the survey of living conditions and access to social services would be furnished to the Bank for its review. 27. Conditions of disbursement will include: (a) for Component A for 1995, the Minister of Economy will have appointed the project coordinator with qualifications satisfactory to the Bank; (b) for Component A for 1996, the Government and Bank will have agreed on the exact composition of the employment programs to be financed from the Loan; (c) for Components B and C, the FOPAR and SIEMPRO executing units will have been staffed with managers with qualifications acceptable to the Bank; and (d) for Component B, the FOPAR operational manual will have been approved by the Bank and issued. 28. Program Objective and Poverty Category. The Social Protection Project is a central part of the program of targeted interventions for Argentina, since it preserves and improves essential social services for the poor, generates short-term employment and training for those adversely affected by the economic crisis, and ensures food and nutrition benefits for the most vulnerable population groups. It thus falls under the Poverty Reduction category. Targeting to the poor occurs in several ways in the project. Civil works, books, and teacher training under the Plan Social Educativo are reserved exclusively for poor communities. Child immunization and Chagas disease control activities are self-targeted, because only low-income families use public facilities for vaccinations and Chagas occurs only in sub-standard housing. The Programa Apoyo Solidario a los Mayores (ASOMA) nutrition program and the Programa de Asistencia Solidaria and Programa de Entrenamiento Ocupacional (PROAS/PRENO) employment programs use strict screening devices to complement the self-targeting that occurs with these programs because of the relatively low social status associated with their benefits. 29. Participatory Approach. Proposed improvements in several of the social programs under Component A will emphasize expanded beneficiary participation. The action plan for ASOMA requires that recipients of food packages carry out community service activities; communities benefiting from the Plan Social Educativo must donate labor and materials for school construction; and in the Programa Social Agropecuario, special efforts will be made to involve indigenous populations through technical assistance and representation in decision-making bodies. FOPAR will emphasize strong beneficiary participation through its community development component, the  9 formation of local councils to oversee subprojects, and the heavy involvement of local NGOs in the design and implementation of subprojects. Beneficiary consultation meetings were also carried out during the preparation phase of FOPAR. Further, beneficiary assessments will be used as a project evaluation tool under SIEMPRO. 30. Environmental Impact. The project does not present major environmental risks, and therefore an environmental rating of "C" applies. 31. Expected Benefits and Risks The proposed project will help to reduce the social costs associated with Argentina's current economic crisis and related adjustment program. It will preserve health and nutrition services for millions of Argentines currently living in poverty or facing unemployment. About 850,000 children and pregnant women will be vaccinated and over half a million persons protected from Chagas Disease, and about 170,000 poor persons will receive supplementary feeding. Nearly two million students will benefit from the Plan Social Educativo. The project will provide employment opportunities and develop the skills of about 200,000 currently unemployed persons, and will help improve the productive capacity of thousands of poor rural families. At the same time, the project will assist in building federal and provincial capacity for social policy analysis and formulation and for monitoring and evaluating social programs. It will also help generate a new model for financing grass-roots poverty reduction activities using community participation. 32. The main risks facing the project are: (a) further budget cuts; and (b) slow disbursement as a result of lack of local capacity and insufficient coordination between the Ministry of Economy, SDS and the implementing agencies. The Bank (and IDB) are working closely with the Ministry of Economy to safeguard the budget of the targeted social programs. Project conditionality related to public social spending in 1995-96 will reduce this risk. The second risk will be mitigated by concentrating on a small number of important social programs and by giving priority to implementing agencies with a demonstrated record of strong program management. Covenants for appointing the project coordinator and hiring the project officer and sub-coordinator in the Ministry of Labor will help to ensure that an accountable management team is in place at the outset of the project. Procurement and disbursement procedures have been designed to expedite implementation and reimbursement.  10 33. Recommendation. I am satisfied that the proposed loan complies with the Articles of Agreement of the Bank, and recommend that the Executive Directors approve it. James D. Wolfensohn President Washington, D.C. October 27, 1995 Attachments  Schedule A ARGENTINA SOCUIL PROTECTION PROJECT Project Cost Summary by Component (USS Million) % % Total Foreign Base ComponenVSubcomponent Local Forelgn Total Exchange Costs ,... .,- .......... ...... .. . . . . . . ., . . . ........... ... .... ... .. .. . .. . a. -.------- Priority Social and Income Support Programs AQ) Social Programs 1. Education Program for Schools inPoorAreas (Plan Social Educativo) 124.0 72.8 196.8 37 47 2. EmploymenVTraining Programs (PROAS/PRENO) 97.2 10.8 108.0 10 26 3. Apprenticeship Program (APRENDER) 36.7 4.0 40.7 10 10 4. FORESTAR 14.4 1.6 16.0 10 4 Subtotal Social Programs 272.3 89.2 361.5 25 87 A(ii) Institutional Development for Employment Programs, Public Social Expenditure Review & Program Admin. (Consultant services & computer & office eqpt.) 3.3 2.0 5.3 38 1 l Subtotal Priority Social and Income Support Programs 275.6 91.2 366.8 25 88 '~~~~~~~~~~~~~~ ..... .: -': ,':, '.-- .. '''''--. ''' --'---. B. Pilot Participatory Social Investment Fund (FOPAR) 1. Community-Based Subprojects 18.1 7.7 25.8 30 6 2. Institutional Development a/ 7.4 2.6 10.0 26 2 Subtotal Pilot Participatory Social Investmnent Fund (FOPAR) 25.5 10.3 35.8 29 9 - { - , .. .... . -- . --; - . - ................... . . . . . . ., ---..----, ..,-, .,~~~~~~~~~~~~~~~~~~~ ~ ..... ,.,,.., , .. ............... .... C. Improvement of Social Information, Targeting and Monitoring of Social Programs (SIEMPRO) 1. SocialLnformationandTargeting 3.7 1.0 4.7 21 1 2. Monitoring and Evaluation ofTargeted Social Programs 2.1 0.9 3.0 30 1 3. Dissemination and Transfer of Methodologies and Systems 2.9 0.8 3.7 22 3 to National and Provincial Agencies 4. Institutional Strengthening and Management at 1.1 0.7 1 8 39 0 Subtotal Improvement of Social Information, Targeting and Monitoring of Social Programs (SIEMPRO) 9.8 3.4 13.2 26 3 TOTAL BASE COSTS 310.9 104.9 415.8 25 100 Physical Contingencies 0.3 0.1 0.4 25 0 Price Contingencies 1.3 0:4 1.7 24 0 .......~~~~~~~~~~~~~~~~~~~~~~~~.... ,;;;. ., . . .-.,... .... . -. ;... .. .. . .... -..- . .. -. ---.--. .- TOTAL PROJECT COSTS 312.5 105.4 417.9 25 101 at Includes cost of UCAF staff with 65% charged to FOPAR and 35% charged to SIEMPRO SUMMARY OF FINANCING PLAN (US$ million) Financier Local Foreign Total Government 231.3 34.6 265.9 World Bank 81.2 70.8 152.0 TOTAL 312.5 105.4 417.9  Schedule B ARGENTINA SOCIAL PROTECTION PROJECT SUMMARY OF PROPOSED PROCUREMENT ARRANGEMENTS (US$ million equivalent) | Procurement Method |Procurement Element ICB OTHER N.B.F. Total COMPONENT A 1. Civil Works 93.8 a/ 93.8 (39.5) (39.5) . Textbooks 15.9 b/ 15.9 31.8 (6.2) (6.2) Institutional Development (a) Consultants' Services 3.8 3.8 (3.8) (3.8) (b) Computer&OfficeEqpt. 1.5 1.5 (1.5) (1.5) T. raining and Stipends 40.7 d/ 40.7 (13.0) (13.0) 5. Remuneration for Temporarv/ 124.0 d/ 124.0 Fixed Terrn Staff (51.9) (51.9) . Other Goods & Eqpt. 71.2 71.2 COMPONENT B 8. Grant for Subprojects 25.8 a/ 25.8 (18.5) (18.5) . Goods and Equipment 0.5 a/ 0.5 (0.2) (0.2) 10. Consulting Seriices 8.2 c/ 8.2 (5.4) (5.4) 11. Training and Workshops 1.3 c! 1.3 (1.0) (1.0) 12. Administrative Expeases 0.9 0.9 COMPONENT C 13. Consulting Services 9.3 ci' 9.3 (7.4) (7.4) 14. Training and Workshops 2.2 c/ 2.2 (1.7) (1.7) 15. Goods and Equipment 1.0 a/ 1.0 (0.4) (0.4) 16. Administrative Expenses 0.4 0.4 17. PPF Refinancing 1.5 e/ 1.5 (1.5) (1.5) TOTAL 1.5 328.0 88.4 417.9 (1.5) (150.5) (0.0) (152.0) ICB = Intermational Competitive Bidding NBF = Not Bank Financed a/ Shopping bl Direct Contracting c/ Consulting Services d/ Not involving procurement e/ PPF Refinancing is for both Components B and C Note: Values in parentheses reflect Bank financing.  13 Schedule B ARGENTINA SOCIAL PROTECTION PROJECT DISBURSEMENTS WITHDRAWALS OF THE PROCEEDS OF THE LOAN Loan Allocation Percent of Expenditures CATEGORY (USS Million) to be Financed COMPONENT A 1. Civil Works 35.5 75% 2. Textbooks 5.6 75% 3. Institutional Development 4.8 100% 4. Training and Stipends 11.9 75% 5. Remuneration for Temporary/ 46.5 75% Fixed-Term Staff 6. Unallocated 11.6 COMPONENT B 7. Grant for Subprojects 18.5 70% of cost of subprojects 8. Training and Workshops 1.0 80% 9. Consulting Services 5.4 80% 10. Other Goods and Equipment 0.2 40% COMPONENT C 11. Consulting Services 7.4 80% 12. Training and Workshops 1.7 80% 13. Other Goods and Equipment 0.4 40% 14. PPF Refinancing 1.5 TOTAL 152.0 ESTIMATED DISBURSEMENT SCHEDULE FY96 FY97 FY98 Annual 80.6 56.9 14.5 Cumulative 80.6 137.5 152.0  14 Schedule C ARGENTINA SOCIAL PROTECTION PROJECT TIMETABLE OF KEY PROJECT PROCESSING EVENTS (a) Time taken to prepare 4 months (b) Prepared by Ministries of Economy, Education and Culture, Labor and Social Security, and Social Development Secretariat (c) First Bank Mission March 1995 (d) Appraisal Mission Departure June 1995 (e) Date of Negotiations October 1995 (f) Planned Date of Effectiveness December 1995 (g) List of Relevant PCR and PPARs Not applicable  15 Schedule D THE STATUS OF BANK GROUP OPERATIONS IN ARGENTINA STATEMENT OF BANK LOANS (as of Septwmber 30, 1995) (USS million) Lon Fbca AMOUNT (ess UNDISSURSED Number Year Borrower Purpose cancerlations) Fully disud loo (44) 5,361 .2 0.0 of which SALUSECAUDett Reduction loans: 2675 1966 Argentina Agricuture Sector 350.0 2815 1987 Argentina Trade Policy 496.0 2996 1989 Argentina Trade Poicy II 300.0 3291 1991 Argentina Pubglc Enterprs Reform 300.0 3394 1992 Argenina Public Sector Reform 325.0 3565 1993 Argentina DOSR Support 450.0 3568 1903 Argia FHI Seor Adjusrweit 400.0 3556 193 Argenina Pub Enteprise Ref II 300.0 2641 1966 Argentina Water Supply 40.0 2.0 2854 1987 Argenina Power Distnibuton 276.0 69.8 2920 1988 Argentina Municipal Deveopmt 120.0 3.7 3280 1991 Argentina Provici Development 200.0 116.7 3281 1991 Argentina Water Supply 100.0 928 3292 1901 Argenti PEREL 23.0 0.3 3297 1991 Argetn Agncultural Service 33.5 11.5 3362 t901 Argentina Pub Sectr Reform TA. 23.0 4.7 3460 1992 Argentna Tax Adminisation II 20.0 3.9 3520 1903 Argentina Yacyreb II 300.0 14.2 3521 193 Argentina Flood Rehab 170.0 37.4 3611 1993 Argetina Road Maintenance & Rehab 340.0 221.5 3643 1904 Argetn Materal & Child Health 100.0 83.0 3709 1904 Argentina Capitl Markct 500.0 500.0 3710 1994 Argentira CapiW Makes TA 8.5 7.4 3794 1996 Argentina Secondary Education 1 190.0 190.0 '33U 1996 Argentina Provinrcial Refom 300.0 200.4 3801 / 1906 Argetina MuncipalDelopmet I 210.0 210.0 3877 1/ 190S Argentina Provwncl Dev. II 25.0 225.0 *3878 199 Argentina Provincial Bank Privatiz. 500.0 333.0 3921 1/ 1996 Argetina Higher Education Reform 165.0 165.0 '3923 1/ 194 Argentina Bank Reform 500.0 600.0 39271/ 1906 Argentina Miring Sector Developre 30.0 30.0 3931 1/ 1906 Argentina Provincal Healh Sector Dev. 101.4 101.4 TOTAL 9,836.6 of wh ch has ben repaid 2,585.5 TOTAL NOW OUTSTANDING 7,251.1 AMOUNT SOLD 12.8 o wich has been repad 12.8 TOTAL NOW HELD BY BANK AND IDA 9836.5 7,238.3 TOTAL UNDISBURSED 37 'Vlsburslng SECAL. SAL or Debt Reduction Loan 11 Notyet signed. 05-Oct-96  16 Schedule D ARC12N[CY STATUKZN OF TIC fl1W3?!1rTr As of September 30, 1995 (In Milliona 03 Dollars) - Original Groas Const-ents - Held Held ZhdJb Fiscal Years Irc lIC by by incl. Comtted Obligor Type of Business Loan Equity Ptpnt. Totals IZC Ptpnt. Ptpnt. 1360 a/ Papelera Rio Parana, S.A. Timber. Pulp and Paper 3.00 - - 3.00 - - - 1960/95 Acindar ZLdustria Argenti Mining and Extraction of 27.94 - 20.73 48.67 25.00 20.00 35.00 1961 a/ Fabrica Argentina de Lngr Motor Vehicles and C aon 1.23 - .28 1.51 - - - 162 a/ Pasa, Petroquisica Argent Oil Refinlin 3.05 - - 3.05 - _ - 1965/72 a/ Celulosa Argentina, S.A. Timber, Pulp and Paper 8.25 - 4.25 12.50 - - - 1969 a/ Editorial Codes Sociedad Manufacturing 5.00 1.60 .40 7.00 - - - 1969/75 a/ Daln-in Sidarca. S.A.Z.C. Mining and Extraction of 14.75 - 2.25 17.00 - - - 1973 a/ Calera Avellaneda. S.A. Cement and Construction K 5.50 - - 5.50 - - - 1977/84/8/88/94 Alpargatas S.A.X.C. Textiles 62.93 5.00 36.50 104.43 32.52 29.00 - 1977/85 a/ Sayes S.A. Food end Agribusiness 21.00 - - 21.00 - - - 1978/81/86/87/93/94 Juan cinetti S.A. C-cet and Construction X 44.00 - 67.50 111.50 6.79 6.31 - 1978/85/86/88/91 a/ Macsub S.A. Timber, Pulp and Paper 25.65 4.25 3.00 32.90 - - - 1979/82/87/92 a/ 3pako Industrias Petroqui Ceicals and Petrochemic 21.00 1.15 9.00 31.15 - - - 1979/83/84 a/ Alpesca. S.A. Food and Agribusiness 5.20 1.61 - 6.81 - - - 1964 Petroquimica Cuyo S.A.I.C Ch icals end Petrochoaic 21.00 4.00 21.09 46.09 - - - 1986 a/ Atsnor S.A.M. Cbmicals and Petrochmdic 7.00 1.00 - 8.00 - - - 1986 Cattorini Hbos. S.A. Manfacturing - - - 0.00 .12 - 1986 Cerisica Pilar S.A.C.I. M-adacturing - - - 0.00 .13 - - 1986 CopspAla Sudasericana BST Manufacturing - - - 0.00 .14 - - 1986 Diario La Nueva Provincia Timber, Pulp and Paper - - - 0.00 .04 - - 1986 Piedra Greads Mining and Extraction of - - - 0.00 .04 - - 1986 Roberts Participacione g Financial Services - .05 - .05 .05 - - 1986 3.A. de Inversiones de Ca Financial Services - 2.00 - 2.00 .43 - - 1986/89/91/95 Benco Roberts S.A. Financial Services 48.00 - - 48.00 20.00 - 1987 a/ S.A. Garovaglio y Zorraqu Cbmicals an d Petrochiic 13.00 - - 13.00 - - - 1987/90 a/ Hidra Oil Development Pro Mining and Extraction of 80.00 - 27.60 107.60 - - - 1987/90/91 Term4"al 6 S.A. Znfrastructure 12.50 - - 12.50 4.75 - - 1988 a/ Arcor S.A.I.C. Food and Agribusiness 12.00 - - 12.00 - - - 1988 a/ Astra C.A.P.S.A. Xining and Extraction of 12.38 - - 12.38 - - - 1988 a/ Dridas S.A.P.I.C. XMining and Extraction of 20.63 - - 20.63 - - - 1988 Colortex S.A. TeSxtiles - - - 0.00 .27 - - 1988 Corporacid. General de Al Food and Agribusinese - - - 0.00 .13 - - 1988 Cla Industrial Lanera S.A Textiles - - - 0.00 .05 - - 1988 Pro-,ctos Pulpa Moldeada, Timber, Pulp end Paper - - - 0.00 .27 _ - 1988 San Sebastidn S.A.I.C.I.F Food end Agribusines - - - 0.00 .27 - - 1988 Tevycoa Papeco S.A. Manufacturing - - - 0.00 .08 - - 1988 Valley Evaporating Compan Wood and Agribusiness - - 0.00 .13 - - 1988 Vandenfil. S.A.I.C.X.F. y Textile - - - 0.00 .13 - - 1988/89 Fince Flichman. S.A. Food end Agribusiness - - 0.00 .38 _ - 1988/59/94 Banco General de Negocios Fi4--aial Services 35.00 - - 35.00 15.00 - _ 1988/92 a/ Cirete/Morillo/Olleros 0 Mining and Extraction of - 6.62 - 6.62 - - - 1988/92 Banco Rio de la Plean, S. Financial Services 50.00 - - 50.00 23.18 4.00 7.53 1988/93 Bunge y Born S.A. Food and Agribusiness 63.00 - 57.50 120.50 9.75 56.71 - 1988/93 Longvie Perani, S.A. Y-facturing - - - 0.00 .90 - _ 1989 a/ Argentine Investment Com Financial Sezvices - 2.00 - 2.00 - - 1989 a/ chibuidos Petroleu Mi-n-n and Extraction of - 4.98 - 4.98 - - - 1989 a/ CompaMa General de Saver FinAncial Services - .10 - .10 - - - 1989 Banco Frencis del Rio de Financial Services 15.00 - - 15.00 7.55 2.00 - 1989 Carboclor Industries Quin Cheicals and Petrochm_ic - - - 0.00 .07 - - 1989 Cencosud, S.A. TIndstrial and Consuumr S - - - 0.00 .27 - - 1989 Comesi S.A.I.C. Manufacturing - - 0.00 .66 - 1989 Fracchia Boos. S.A. Lnirascruczure - - - 0.00 .42 - - 19893 dAustrias Quimicas Lauri Chicals and Petroch aic - _ - 0.00 .22 - 1989 late S.A. Textiles - - - 0.00 .66 - - 1989 N.A. Soprano S.A. Timber, Pulp end Paper - - - 0.00 .05 - - 1989 Parafina del Plata, S.A. Ch aicala and Petrochaic - - - 0.00 1.13 - - 1989 Pastoril Santiaguen S.A. Food end AgribusinLes - - - 0.00 .29 - - 1989 S.A. GCnaro Garcia Liitas Food uud Agribusiness - - - 0.00 1.23 - - 1989/92 Atera - CompaLia Argentin Mining end Extraction of 50.00 - 43.00 93.00 18.39 28.58 _ 1989/93 Bolland & Cia. S.A. Hotels and Tourism - - - 0.00 .40 - - 1990 Algodonera Santa Fe S.A. Textiles - - - 0.00 .46 - - 1990 Corporacidn de Inversione Fin acial Services - .08 - .08 .08 _ _ 1990 Frigorifico Totb. S.A. Food and Agribusiness - - - 0.00 .23 _ _ 1990 Willuor S.A. Food and Agribusiness - - - 0.00 1.23 _ _ 1990/95 Petroken Petroquimica RSn Chemicals end Petrochaic 40.00 - 11.00 51.00 33.33 8.92 10.00 1991 BHnco de Crddito Argentin Financial Services 10.00 - - 10.00 2.83 3.60 - 1991 Guilford Argentina S.A. Textiles - - - 0.00 .40 - - 1991 Jugos del Sur, S.A. Food and Agribusines - 0.00 .27 _ 1991 TSR. S.A. Menufacturing - - - 0.00 .32 _ -  17 Schedule D norZMTN STATflZT 0? xEC DWZVSTfhUT3 As of Septamber 30. 1995 (In Millions Us Dollars) - Original GroAss Coamtmasts - Held Held Undsb Fiscal Years rFC ZiG by by mdLc. camitted Obligor Type of Business Loan EquLity Ptpnt. Totals ETC Ptpnt. Ptpat. 1992 Frigortfico Rioplatense S Food end Agribusiness 12.00 1.00 6.00 19 .00 10.33 5.00 2.00 1992 RCA Sociedad de BalsaL S.A Financial Ser-vices; - .15 - .15 .16 - - 1992 Oleaginoag Osete. S.1. Food and Agribusiness 20.00 - 15.00 25.00 14.16 14.94- 1992 Polisur. S.M4. Chmicals end Petrochemic - 7.00 - 7.00 7.00 - - 1992/93 PetroleraL Argentina Sen. J Mining end txtractionL of 15.00 27.00 35.00 77.00 329 .50 29.16 27.00 1993 Alto Parana S.A. Timber. Pulp end Paper - - - 0.00 19.47 - 1993 Cadipsa S.A. Mining end fltraction of 15.00 5.00 20.00 40.00 20.00 13.00 9.20 1993 Capri 3.A.I.C.E Food end Agribusiness - - - 0.00 .90 - - 1393 tmprigas S.A. Inifrastructure - - - 0.00 .94 - - 1993 Ferroexpreso Psmpeanz. S. Infrastructure 13.00 - 20.00 33.00 12.45 17.07 4.60 1993 Interpack. 5.1. Timber. Pulp end Paper - - - 0.00 1.28 - - 1993 La Industrial klizencic:ia Food end Agrilbusiness - - - 0.00 .6 - 1993 Malter(a Peaps, S.A. Food enad Agribusiness 12.00 - 12.00 24.00 5.0 16.00 1993 Mendoza Refrescos, S.1. Food and Agribusiness - - - 0.00 .94 - - 1993 Nueva Central Argentino S Infrastructure 10.00 3.00 15.00 28.00 12.35 15.00 15.00 1993 Surfacten S.1. Chaicals end Pet:rochmaic - - - 0.00 .17 - - 1993/94 Nolinos Rio de la PlateL S Food end Agribusiness - 3.00 - 3 .00 7.53 - - 1993/96 Brides S.A.P.I.C. Xining end fltraction of 55.00 25 .00 100.00 150.00 76.00 86.00 52.00 1994 Cerveceria. y Malteria Qui Food end Agribusimnes 15.00 - 15.00 3 0.00 15.00 15.00 - 1994 Cospadfia General de Combu Xining end flctraction of 25.00 15.00 40.00 80 .00 35.00 42.00- L994 rescoa DistrIbuidore Nor Infrastructure 45.00 - 125.00 173.00 39.35 121.05 1994 Ferrua 8.1. Cement end Construction M4 - - 0.00 1.10 - - 1994 Mamisa-Argentine. 3.1. Timber. Pulp end Palper 11.00 - - 11.00 11.00 - - 1994 The ArgentinLe Equity lave Financial Servicess - 4.00 - 4.00 4.00 - - 1994 Yacylec 3.1. InLfrastructure 20.00 .04 45.00 65.04 15.49 44.71 - 1995 Aceitera General Daexas S Food end Agribusiness 15.00 10.00 15.00 40.00 25.00 15.00 15.00 1993 Aguas Argentines Infrastructure 35.00 7.00 134.50 179.50 45.00 125.533 1995 Cc=eaZia Ilaboredora de P Food and Agribusiness 15 .00 - 6.00 21.00 14.33 5.40- 1995 Cc=pwUa Americans de Sup Industrial end Consumer S 25.00 - 25.00 21.00 - - 1995 Eleppe 8.A. and 21 Calder Food end Agribusizness 6.00 - 6.00 6.00 - - 1995 La tuenos Aires New York Financial Services - 2.59 - 2.59 2.59 - - L995 La Buenos Aires 8.1. Reti Financial Services - 1.17 - 1.17 1.17 - S53 1995 Mastellone Nenennes 8.1. Food end Agribusiness 40.00 - 35.00 75.00 40.00 - - 1995 Maxima 3.1. 1137 FinAncial services - 14.13 - 14.139 14.19 - .04 1995 Nahuelsat 8.1. Infrastructure 30.00 5.00 - 35.00 35.00 - 30.00 1995 Sencor Cooperatives Unida Food end Agribusiness 40.00 - 30.00 70.00 40.00 - - 1995 gosm Asericena 3.1. InLfrastructure 24.99 15.00 60 .01 100.00 39.99 - - 1995 The Tower Fund. LIP. Financial Services - 20.00 - 20.00 20.00 - 17.73 1995 The Tower Inves-ment Mawa Financial Services - .15 - .15 .15 - .13 Total grose c-itments bI 1243.00 200 .06 1035.61 2475.67 Less cancellations. terminations. repaymnent& sales 562.19 1.52 311.60 57 5.31 Total cammtmenLts now held c/ 650.51 198.54 724.01 1603.36 879.35 724.01 225.76 Pendiing Comitments AZCSA 20.00 - 61.00 51.00 AquAs Argentinas Infrastzructure 40.00 - 110.00 150.00 BR.AO. A.RzGTni 10.00 5.50 25.00 43.50 flUSUR 40.00 - 50.00 120.00 ftresa Distribuidora. Infrastructure - - 5.00 8.00 Tm1LZSTA PORT. 10.00 2.00 - 12.00 TUCCM - .30 - .30 Total penmding commitments 120.00 10.80 254.00 414.50 Total cmmfments held end pending camitnents 500.51 209.34 1005.01 2 015. 16 Total -ndisbursed comitments 57.45 45.43 92 .85 225.76 a/ Investments which have been fully cancelled, terminaLted, written-off, sold, redeemed, or repaid. b/ GVros cemenots consiset of approved end signued projects. c/ Held comitments consist of disburssed end undibursed investsnats.    , . . 7
l .. j I I I . I . ; . : -, : - 7 . . I I ! I I :