Haiti - First Health Project

Documat of The World Bank FOR OFFICIAL USE ONLY CRepwt NO- P-5118-HA MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 22.2 MILLION TO THE REPUBLIC OF HAITI FOR THE FIRST HEALTH PROJECT NOVEMBER 28, 1989 This document bas a resticted distribution and may be used by recipients only in the performance of their official dut Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALZNTs Currency Unit - Gourde (0) US$1.00 - 0 5.00 0 1.00 - US$0.20 ABBRZVIATIONS AIDS - Acquired Iuuunodeficiency Syndrome CIDA - Canadian International Development Agency COB - Government of Haiti G:N - Gross National Product iCC - International Child Care IDA - International Development Association NEP - Ministry of Economy and Finance MSPP - Ministry of Health and Population NGO - Non-governmental Organization PA - Programatic Area PAlO - Pan American Health Organization PNC - Primary Health Care P30 - Project ManAgement Unit PPP - Project Preparation Facility TB - Tuberculosis UEK - Western Health Region FISCAL YEAR October 1 - September 30  FOR OFFICIAL USE ONLY HAITI FIRST HEALTH PROJECT Credit and Pro1ect Summary Borrower: Republic of Haiti Beneficiary: Ministry of Health and Population Amount: SDR 22.2 million (US$28.2 million equivalent) Termst Standard IDA, with 40 years maturity Financing Plan: GOH US$ 3.1 million IDA US$ 28.2 million CIDA USS 2.4 million Total US$ 33.7 million Economic Rate of Return: Not applicable Staff Appraisal Reports No. 8008-HA map IBRD No. 21848 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.  HMDORANDUK AND RECOKENDATION OF THE PRESIDENT oF THE INTENuATIONAL DEVELOPHENT ASSOCIATION TO THE EXECUTIVS DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF HAITI FOR A FIRST HEALTH PROJECT 1. The following memorandum and recommendation on a proposed development credit to the Republic of Haiti for SDR 22.2 (US$28.2 million equivalent) is submitted for approval. The proposed credit would be on standard IDA terms with 40 years maturity and help finance a First Health Project for Haiti. The project would be cofinanced on a parallel basis by the Canadian International Development Agency (CIDA) for US$2.4 million equivalent. 2. Background. Haiti is one of the poorest countries in Latin America, and its economic and social development face major challenges. Social indicators, among the worst in Latin America, reflect the poor health status that prevails: life expectancy averages 54 years; the infant mortality rate is 119 per 1,000; and maternal mortality is 367 per 100,000 births. Diseases of underdevelopment--diarrhea, malaria, typhoid, poliomyelitis, tuberculosis (TB) and other respiratory diseases--account for high mortality and morbidity. Malnutrition, an underlying etiology of most diseases, is widespreadt only one quarter of children under five years of age are in the normal range of weight for age. Total fertility has risen and is now 6.8 children per woman. Modern contraceptive methods are only practiced by 4.9Z of women in reproductive age. With the population growing at 2.12 per year, projections show the current population of 6.2 million doubling by the year 2030. Since its silent start in the late 19709, Acquired Immunodeficiency Syndrome (AIDS), frequently associated with TB, has reached epidemic proportions. Overall, the current health problems in Haiti may lead to an alarming increase in under-five, young adult, and maternal mortality. 3. Responsibility for policy and public health services is carried by the Ministry of Health and Population (MSPP). The MSPP, which employs over one-fifth of all public sector employees, has three layers of management: central, regional, and district level. The central level is responsible for service standards and norms, and absorbs a significant share (23?) of the health budget; the four health regions act as the administrative liaison between the district level and the center, orchestrating district planning and budgeting; and the fifteen district offices oversee the functioning of health institutions in 136 communal sections. A streamlining of the MSPP is currently being planned, and would involve: the reorganization of the central administration along functional lines; the division of the four regions into nine departments to bring the MSPP in line with the admlnistrative structure of other ministries; and the strengthening of administration at the municipal level. Private health establishments, many of them run by externally-funded non-governmental organizations (NG0s), make up almost 502 of che health facilities in the country. NGO interventions in the health sector have been, on average, more effective than government sponsored activities but have been fragmented and often developed without due consideration of gaps in services provided by the public sector. 4. Despite substantial funding of the health sector--total expenditure on health (public and private) reached 5? of GNP in 1987--the MSPP has been quite ineffective in implementing the Government of Haiti's (GOH) health  - 2 - policy, issued in 1982. Four key factors have undermined efforts to promote public healths (a) excessive share of salaries C87.5X) In the operating budget. due to lack of control of personnel recruitment and failure to implement retirement policles; tb) lack of consistency in applicatlon of service charges, poor management of revenue and, possibly, the disincentive effect of charges to the very poor for preventive services; Cc) centralization of human and financial resources in the Port-au-Prince areal and (d) inadequate management capability and support systems (for procurement of civil works, for example) in combination with crltical shortages of miterials, equipment, and drugs. The GOH has recognized these factors and is seeking external financing and technical assistance to address them. 5. Rationale for IDA Involvement. At present, IDA country assistance strategy for Haiti has three main lines of actiont (a) support for the economic reforms and recovery program initiated in 1986, mainly through technical assistance and policy dialogues Cb) selected investments for critical social services, education, water supply, and health, directed to the lowest income households and in a framework of due attention to finance, including sustainability, and to management and institutional development; and tc) assistance to the GOB in securing external financing for the social sectors by promoting coordination and consultation among donors. Since 1976, IDA has financed four operations in the education sector to increase, among other objectives, access to primary education; a proposed Fifth Education Project is under preparation to expand the program as wall as to strengthen sector management. IDA has also recently approved a credit for a Port-au- Prince Water Supply Project (Credit 2052-HA) that will expand service coverage while strengthening the operational efficiency, and an Industrial Restructuring Project (Credit 2071-HA) that aims to complement existing trade policy reform and generate employment. In order to address the most adverse effects of the depressed economic situation, IDA is preparing a further credit to support small-scale employment-generation projects and social assistance. In extending the operations program to the health sector, the proposed project would closely fit IDA country strategy, and would help implement the recommendations of a 1987 IDA sector review. These advocate: reallocation of public resources in favor of primary health care (PHC) through increased financing of non-salary operating expenditures; decentralization of management, including delegation of operational responsibility to the municipal levelt and more integrated participation of NGOs in PEC. IDA's presence in the sector would facilitate the coordination of activities of other donors, by providing a framework for sector investments. IDA would, for example, collaborate with the Pan American Health Organization (PAHO) in implementing the AIDS and TB national programs. Donor coordination would also be reinforced through the proposed parallel cofinacing from CIDA. IDA financing to rationalize PHC services delivery in the two departments of the Western health region (WHR) is expected to serve as a model for possible replication by donors in other parts of the country. 6. Proiect Objectives. The project aims at assisting the GOH in improving the country's health status and increasing the efficiency and effectiveness of expenditures in health. The objectives includes (a) reducing MSPP central administration expenditures by about 352 in real terms; (b) changing the ratio of salaries to operating expenses from the current 87.5/12.5 to 70/30 by 1994; (c) implementing improved cost-recovery mechanisms for medical services and drugs; (d) developing a more coherent institutional framework involving the selective strengthening of key management and technical functions, and the development and enforcement of personnel norms and standards; (e) for the 2.1 million population of the WHR,  - 3 - reducing both maternal and child mortality rates by 152 by the end of the third year of the project, and by 402 by the end of the sixth year; and (f) reducing the potentially devastating effects of the TB and AIDS epidemics. 7. Project Description. The project would includes An Institutional develogment comonoent (122 of total costs) designed to facilitate and make more effective the project's health service delivery activities, while ensuring the future sustainability of PHC programs in Haiti. This would be accomplished through: (a) development of simple budget allocation indicators to monitor and facilitate a more effective use of public resources in health; (b) design and implementation of more transparent and equitable cost recovery mechanisms for medical services and drugs; (c) reinforcement of MSPP's capacity to manage civil works, and development of better procedures for purchasing and distributing drug supplies; and (d) redeployment of personnel in the WHR to achieve a more balanced distribution between urban and rural areas. To support these actions, the project would finance 20 man-months of technical assistance. A health services delivery coemonent (63Z of total costs) consisting of implementing a PHC services delivery model in the WHR. The W'HR covers one quarter of the area of Haiti, and is composed of four health districts, including Port-au-Prince. Under the project, health services would be organized into 30 local health systems called Programmatic Areas (PAs) that would assume responsibility for coordinating health sector services at the municipal level. Standard health interventions, particularly targeted to mothers and children, would be provided by community health workers in regularly scheduled population gatherings. Further, NGOs would execute specific project activities, and coordination with NGOs in the sector would be improved. The project would also include the rehabilitation of 17 facilities and the remodelling of 11 facilities, medical equipment and supplies, essential drugs, vehicles, materials and equipment for the construction of latrines. and technical assistance. An epidemic prevention and control component (25X of total costs) covering: (a) the support of the PAHO-coordinated medium-term AIDS Control Program through financing of laboratory testing equipment, education materials, and protective equipment and supplies for health personnel. The AIDS Prevention and Control Unit of the MSPP would be responsible for the implementation of this sub-component, and it would be coordinated and monitored by the PAHO office in Port-au- Prince; and (b) the development of an integrated national TB control program through financing of drugs, laboratory equipment, and training and supervision. The project would reinforce the institutional capacity of the MSPP to implement TB programs through the integration of activities with International Child Care (ICC), an NGO with operational and technical expertise in TB control activities. The project would also finance the organization of a conference on TB and AIDS. 8. Project activities would be supported by a suitably staffed project management unit (PMU), integrated into and drawing on staff of the relevant MSPP directorates. Annual reviews, to be conducted jointly by the GOH and IDA, would assess progress in project implementation. Donor coordination would be attained through annual meetings to ensure coordination in allocation of external resources in the sector. 9. A Project Preparation Facility (PPF) of US$560,000 was approved by IDA in October 1987, and increased to US$750,000 in April 1989 and to U'$900,000 in November 1989. The total cost of the project is estimated at US$33.7 million equivalent with a foreign exchange component of US$22.4 million (66Z). A breakdown of costs and the financing plan are shown in  Schedule A. Amounts and methods of procurement, and the disbursement schedule are shown in Schedule D. The timetable of key events of project processing is summarized in Schedule C. The status of Bank Group operations in Haiti is shown is Schedule D. A map is attached. The Staff Appraisal Report, No. 8008-HA, dated November 28, 1989 is also attached. 10. Agreed Actions. Agreements were reached at negotiations that. (a) total expenditures attributable to MSPP's central administration will decrease (in real terms) by 25? by September 1990 from their June 1989 level, and by 15 by September 1992 from their September 1990 levell (b) the cost- recovery study will be completed and discussed with IDA by April 1991, and improved cost-recovery mechanisms, following recomendations of the study agreed by IDA and the MSPP, will be put into effect by September 1991; (c) the MSPP shall take all measures as necessary to achieve at the end of fiscal years 1990, 1991, 1992, 1993 and 1994 and each year thereafter the ratios between salaries and other operating expenses of 84.5115.5, 81/19, 77.5/22.5, 74/26, 70/30, and 70/30 respectively; (d) resources freed from salaries will remain available to the MSPP for other operating expenses; (e) data bases and financial information of the MSPP and the Ministry of Economy and Finance (MEF) will be substantially consistent, so as to enable better control over MSPP's salary expenses; (f) the MSPP shall cause each PA to be staffed in accordance with staffing profiles that have been agreed with IDA; (g) the MSPP shall maintain at all times within its staff an Executive Director, a Project Controller, and an Engineer with qualifications and experience satisfactory to IDA; and (h) the MSPP shall, no later than four months prior to the beginning of each fiscal year during the projects (1) submit to IDA for review and comments the public sector health budget and for approval the detailed plan of pi-oject expenditures for the next following year, and (2) conduct annual project progress reviews, including budgetary allocation and management of health resources. Conditions of credit effectiveness are thatt (a) the GOH presents evidence that key staff positions in the PAs programmed to initiate activities during the first year of the project have been filled; (b) the MSPP and ICC have entered into an agreement stipulating, inter alia, the role and responsibilities of ICC in the implementation of the TB control sub-component and the type of expenditures of ICC to be financed under the project; and (c) the GOB opens and maintains a project account under terms and conditions satisfactory to IDA, and deposits the initial amount representing three months of operating expenditures. Conditions of credit disbursement are that: (a) for the rehabilitation of facilities of participating NGOs, the MSPP and the NGO have entered an agreement, stipulating the role, responsibilities and reporting requirements of the NGO, and type of expenditures to be financed under the project; and (b) for the National AIDS Control Program sub-component, the MSPP has entered into an agreement with PAHO stipulating PAHO's role in carrying out this sub-component and the respective obligations of PAHO and the MSPP. 11. Benefits. The project's main benefit would be to extend health service coverage and improv^ the health status of up to 2.1 million people in the WHR, particularly of mothers and children, and control the spread of two major epidemics (AIDS and TB) nationwide. A second major benefit would be the improvement of the effectiveness and efficiency of the health system: first, by addressing financial and institutional issues; and second, by rebuilding beneficiary trust in public services. A third benefit would be the establishment of a framework that would facilitate future external financing of PHC programs and integrate more effectively services provided by the public and private health sectors.  - 5 - 12. Risks. The project faces four main risks: (a) the weak organizational and implementation capacity of the MSPP compounded by the political and social instability of the country; (b) the lack of financial discipline and budgetary control in the sector; (c) the possibility of delays in implementing the sector's decentralization strategy, particularly with regard to personnel; and (d) the sector inexperience with IDA-financed and policy-based health projects. These risks would be reduced by attention to institutional development, technical assistance, improved donor coordination, and the creation of a small and high-caliber PMU. The gradual phasing of policy measures, supported by annual progress reviews, would also minimize project risks. In addition, to ensure timely start of the project, technical discussions on procurement and disbursement have been held with relevant officials, and intense supervision efforts by IDA (four missions per year) have been planned, particularly for the first two years of implementation. 13. Recomnendation. I am satisfied that the proposed Credit would comply with the Articles of Agreement of the Association and recommend that the Executive Directors approve the proposed credit. Barber Conable President Attachments Washington, D.C. November 28, 1989  -7 Schedule A HAITI FIRST HEALTH PROJECT Estimated Costs and Financing Plan Estimated Costst a/ ----- US$ million_-------- Local Foreign Total A. Institutional Development 2.0 1.6 3.6 B. Service Delivery 6.2 11.4 17.6 C. Epidemic Control 1.2 6.3 7.5 TOTAL BASELINE COSTS 9.4 19.3 28.7 Physical Contingencies 0.2 0.9 1.1 Price Contingencies 1.7 2.2 3.9 TOTAL PROJECT COSTS 11.3 22.4 33.7 a/ The project is exempted of taxes and duties. -------- US$ million -------- Local Foreign Total Financing Plan: GOH 3.1 0.0 3.1 IDA 7.2 21.0 28.2 CIDA 1.0 1.4 2.4 Total 11.3 22.4 33.7  Schedule S Page 1 of 2 HAITI FIRST HEALTH PROJECT Procurement Method (US$ million) Proiect Element ICB Is LCB Other NA Total Civil Works 3.5 3.5 (3.5) (3.5) Equipment, Furniture, Medical Supplies 10.3 10(l 3 Drugs (10.*3) (10.3) Furniture, Office Supplies 0.6 0.1 0.7 (0.6) (0.1) (0.7) Vehicles, Motorcycles 3.5 3.5 (3.5) (3.5) Training 4.3 4.3 (1.9) (1.9) Technical Assistance 1.9 1.9 (1.9) (1.9) Project Management 2.3 2.3 Unit (2.3) (2.3) New Staff Salaries 3.1 3.1 t-) (-) Veh. Op & Maintenance 2.2 2.2 (2.2) (2.2) Supervision Allowances 1.0 1.0 (1.0) (1.0) PPF Refinancing 0.9 0.9 (0.9) (0.9) TOTAL 3.5 10.3 4.1 10.8 5.0 33.7 (3.5) (10.3) (4.1) (8.4) (1.9) (28.2) NOTEt Figures in parentheses are the respective amounts financed by IDA.  Schedule Page 2 of 2 HAITI FMST HEALTH PROJECT Allocation of Credit Proceeds Cutenory Credit Amount Disbursmnt (USI million) x 1. Civil works 8.4 100 of expenditure 2. Equipment, furniture 8.5 100 of expenditures medical supplies and drug (other than for the AIDS sub-component) 8. Goods and services for the 1.7 100 of expenditures AIDS sub-component 4. Vehicles and metorcycles 8.0 100 of expenditures 5. Training and ftllowhtpe 100 of expenditures 1.S (a) per dlem, mteerials and trennportation 0.1 (b) fellowshipe abroad S. Technical assistance 1.0 100 of expenditures and studies (excluding TA from CIDA) 7. Salarie of the PUU and t.0 100 of oxpenditures non-eatery operating costs 8. PPF refinancing 0.9 100 of expenditures 10. Unallocated 2.5 - TOTAL: 28.2 Estlated Disbursements (USS milion) IDA Fisal Year 1990 1991 1992 1998 1994 19"S 1996 Annual 2.5 8.4 4.2 4.7 4.7 4.5 4.2 Cumulative 2.5 5.9 10.1 14.8 19.5 24.0 29.2  -10 - Schedule C HAITI FIRST HEALTH PROJECT Timetable of Ke9 Pro1ect Processing Events Time needed to prepares Two years Prepared by: MSP? with assistance of consultants and IDA First IDA missions June 1987 Appraisal mission departures June 1989 Negotiations: November 1-3, 1989 Date of Board presentation: January 16, 1990 Planned date of effectiveness: April 1990 List of relevant PCR's and PPAR's Second Education Project (PCR No. 6529, December 1986) First Education 2roject (PPAR No. 4605, June 1983)  - 11 - Schedule D HAITI FIRST HEALTH PROJECT STAus OF BAN KmP WUATIN IN HAT A. Stateent of Beok Lease and IDA Credilt a. of September So, 19 --USS M1 I Ion---- Amount Credit Fical ' (Le Cancelloin) No. year broer PugPoo Sanb IDA Undisbureed One loan and 17 ceWite have bee fully dlibrsed 2.6 188.0 1257-H 1o2 Rpubilc of Haiti Forestry 4.0 0.4 FP-H 1to Republc of Haiti Urban Oelomt 18.0 1.$. 188-A 188 R"ubilc of Haiti Urban elopmt 8.0 1.8 1410-A 1984 Repblic of Haiti Rural lopmt I 19.1 0.7 1527-A 18 Republic of Haiti Fourth Poer 21.1 2.8 1592- 1888 Repubilc of Haiti Fourth Education and Training 19.0 6.6 1756-H 1a? Republic of Haiti Treneprt ViI 2s0J 8.0 1766-H 1987 Repblic of Haiti Tochnlal Asetance 8.O 9.2 2062-HA 188 1/ Repblic of Haiti Wtr Supply 26.9 19.4 65-HA 1061/ Republic of Haiti Power V 24.0 28.7 Total 2.0 "S.0 72.0 Of which ha. bee repad 1.6 8.2 Total Now Outetaadng 2/ 8806 Amount Sold 0.4 of which has bee rpaid 0.4 Total Undieburse 72.0 1/ Not yet effective. 2/ DIfference du to fIucustion It aDR/USD eachange rate. Converted at rate prevtling aat September We, 10. S. Statement of IFC Inveetment as of September 89, 180 US-hM Illion-- Investment Fisecl Typ of Number year Ob Igoer lulnse Lon EquIty Total 829-HA 11"2 Przosours at Investises Integrated Poultry 1.4 6.1 1.5 Aesocle, S.A. Total Gross Coemitmnt 1.4 0.1 1.5 Lee Repaymente, Cancellations, Soles 1.1 _ 1.1 Total comitmnte now hld by IFC 9.8 9.1 0.4 Total Undibureed