The World Bank Nicaragua COVID-19 Response (P173823) REPORT NO.: RES56303 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF NICARAGUA COVID-19 RESPONSE APPROVED ON DECEMBER 8, 2020 TO REPUBLIC OF NICARAGUA HEALTH, NUTRITION & POPULATION LATIN AMERICA AND CARIBBEAN Regional Vice President: Carlos Felipe Jaramillo Country Director: Michel Kerf Regional Director: Jaime Saavedra Practice Manager/Manager: Michele Gragnolati Task Team Leader(s): Amparo Elena Gordillo-Tobar The World Bank Nicaragua COVID-19 Response (P173823) ABBREVIATIONS AND ACRONYMS AF-V Additional Financing for Vaccine (AF-V) COVID-19 Coronavirus Disease 2019 IBRD International Bank for Reconstruction and Development ICR Implementation Completion Report IDA International Development Association ISR Implementation Status and Results Report MHCP Ministry of Finance and Public Credit (Ministerio de Hacienda y Crédito Público) MPA Multiphase Programmatic Approach MTR Mid Term Review PAHO Pan-American Health Organization PDO Project Development Objective SPRP Strategic Preparedness and Response Program UNOPS United Nations Office for Project Services The World Bank Nicaragua COVID-19 Response (P173823) BASIC DATA Product Information Project ID Financing Instrument P173823 Investment Project Financing Environmental and Social Risk Classification (ESRC) Substantial Approval Date Current Closing Date 08-Dec-2020 30-Jun-2025 Organizations Borrower Responsible Agency Republic of Nicaragua Multiphase Programmatic Approach (MPA) Program Development Objective The Program Development Objective is to prevent, detect and respond to the threat posed by COVID-19 and strengthen national systems for public health preparedness Multiphase Programmatic Approach (MPA) Status (Public Disclosure) Status and Key Decisions (Public Disclosure) COVID-19 MPA (as of August 15, 2023) Sustained efforts continue to be made to advance the implementation of the 87 Multiphase Programmatic Approach (MPA) operations. A great deal of activity (restructurings and disbursements) was registered at the end of FY23. Several operations were restructured just before or on June 30, 2023. The restructurings reflected: (i) extension of closing dates, (ii) partial cancellation of funds, (iii) reallocations of funds among components, and (iv) expansion/scale down of activities within components. Forty (40) million dollars in disbursements were processed under the MPA during the week ending June 30, 2023. Disbursements under the Additional Financing for Vaccine (AF-V) operations reached $143.2 million for combined disbursements of $183.2 million. The World Bank Nicaragua COVID-19 Response (P173823) As of August 15, 2023, 88 MPA-projects had been approved with a total commitment of US$4.3 billion. One operation (Guatemala) was cancelled in mid-September 2021, at the request of the Government. Total disbursements as of August 15, 2023, amount to US$3.94 billion or 92% of overall commitments. This amount does not include disbursements under MPA-V operations which are reported together with AF-V operations. A large refund from the UN to the project account of the Myanmar operation was processed in late March due to the inability to implement the project. This transaction affected total disbursements. Also, (i) Loans and Credits denominated in SDRs and Euros are being affected because of fluctuations between the SDRs and Euros against the US dollar, and (ii) at this late stage of project implementation, several operations are processing refunds to the project accounts, which have an impact on total disbursements. Ten operations closed by the end of CY22 and nine operations closed on June 30, 2023. While there are seventeen (17) operations with closing dates by the end of CY23, there are plans for several projects to process extensions so this number will change. As with the Mid Term Review (MTR) issued on March 25, 2023, no individual COVID-19 MPA operation will need an Implementation Completion Report (ICR). Instead, one ICR will be prepared for the entire COVID- 19 MPA Program based on final Implementation Status and Results Reports (ISRs) packages prepared by country operations’ teams. A template for the final ISR was issued by Operations Policy and Country Service on March 25, 2023. Several operations have/are preparing final ISR packages. The overall conclusion of the MTR was that the COVID-19 MPA Program embodied a rapid, innovative approach to new lending for human health response. Further, the MTR concluded that the COVID-19 MPA has been successful, notwithstanding considerable uncertainty and multiple constraints in the early stages of the pandemic. The Bank’s emergency response was remarkably swift in the most vulnerable countries facing human capital losses and development setbacks. The MTR also concluded that notwithstanding the challenges, the MPA is on track to achieve its PrDO, “prevent, detect and respond to the threat posed by COVID-19 and strengthen national systems for public health preparedness." Seventy two (72) country projects or 84 percent of projects approved have reached 70-100+ percent disbursement (reasons for >100% disbursements relate to fluctuations between the Euro and the SDR against the US$). Out of the 72 operations, 62 operations or 86 percent have disbursed 90+ percent of commitments. Out of the 72 operations, 41 operations or 57 percent are fully disbursed and sixteen (16) operations have disbursed 95-99 percent of commitments. There are four operations with disbursements of 50 percent or less. Out of these four operations, one operation has disbursed 30 percent (AFW), two operations in EAP have disbursed 44-48 percent and one operation in AFE has disbursed 50 percent. The projects are benefitting around 3.7 billion people or 50% of the global population. When countries with AF-V operations are counted, the projects are benefitting 4.1 billion of 51 percent of the global population. This is because some countries that do not have a parent project have AF-V operations. All projects approved are disbursing. ECA has the highest percentage of disbursements at 100 percent, followed by MNA with 99 percent, SAR with 94 percent, LAC with 93 percent, EAP with 86 percent, AFW with 84 percent and AFE with 78 percent. Disbursements for EAP operations are being affected by low disbursements in four countries. AFE lower disbursements compared to other regions are a result of low disbursements under two operations. In the case of AFW low overall disbursements are a result of low disbursements under one operation. Retroactive Financing (RF) continues to represent 20 percent of commitments. SAR has the highest percentage of RF at 37 percent, followed by ECA at 18 The World Bank Nicaragua COVID-19 Response (P173823) percent. International Development Association (IDA) continues to represent 40 percent and International Bank for Reconstruction and Development (IBRD) 60 percent of disbursements. Streamlined procedures, delegated approvals, coupled with flexible project design and intensified efforts across the Bank have contributed to the progress. Implementation is being guided by Bank teams working in parallel with other health related projects, including Additional Financing operations supporting vaccine procurement and deployment efforts. COVID-19 MPA AF-V (as of August 15, 2023) As of August 15, 2023, the Bank has approved 116 operations (including MPA-V operations) to support vaccine procurement and rollout in 78 countries amounting to $9.25 billion. The Senegal AF2 operation for $15 million financed by a Grant from The Global Finance Facility was approved on June 30, 2023. One hundred and eighteen (118) operations had been approved amounting to $10 billion, but the: (i) Costa Rica operation ($120 million), and (ii) Peru operation ($500 million) were cancelled at the request of both governments. Also, the Gabon ($12 million) reported last month as closed is in fact in the process of being closed. The Afghanistan operation commitment of $113 million was reduced to $60 million. Partial cancellations have been processed under other operations, thereby the overall commitment has decreased in the past months. Of the 116 approved operations: (i) 66 are in Africa – 30 in AFE and 36 in AFW; (ii) 10 in East Asia and the Pacific; (iii) 11 in Europe and Central Asia; (iv) 11 in Latin America and the Caribbean; (v) 9 in Middle East and North Africa; and (vi) 9 in South Asia. The 116 operations approved, include 6 operations that involved restructuring of parent projects (Bhutan, Cameroon, North Macedonia, Philippines, and Pakistan) and in the case of Lebanon, restructuring of the Health Resilience Project. Thirty-two (32) operations are being implemented in Fragile and Conflict-affected situations. IDA represents 45 percent and IBRD 55 percent of disbursements. Total disbursements under these projects as of August 15, 2023, amount to US$6.11 billion or 66 percent of overall commitments. Disbursements under MPA-V operations are included in this total while disbursements under the six restructured projects are counted under parent projects. With less than planned demand for IDA/IBRD funds for vaccine procurement because, inter alia, over supply of vaccines from donations from various sources, several projects have been/are being restructured and more will need to be restructured to reallocate funds allocated for procurement of COVID-19 vaccines and deployment. Guidance was issued under an EM from Juan Pablo Uribe of July 7, 2023 to provide direction for the use of undisbursed funds under COVID-19 operations. The EM provides guidance on eligibility for the use of funds under the Strategic Preparedness and Response Program (SPRP) MPA, and specifically on financing under vaccine projects. HNP is monitoring progress with the implementation of the guidelines and presented an update on progress on the compliance with the guidelines on August 3, 2023. A second update will be presented on September 6, 2023. Forty-one (41) AF-V/MPA-V operations or 36 percent of operations approved have disbursed over 70 percent of their commitments. Out of the 41, seventeen (17) operations or 41 percent have disbursed 90+. Out of the 17, four operations are fully disbursed (Argentina, Indonesia, Sri Lanka AF-V 1, and Ukraine AF-V 3). Five The World Bank Nicaragua COVID-19 Response (P173823) operations have disbursed 97-99 percent of commitments (Ecuador AF-V 1, Gambia, Iraq, Sierra Leone AF-V 1, and Yemen). Eight operations have disbursed 95-99 percent. Ninety-three (93) operations or 82 percent of total operations approved are disbursing. ECA has the highest percentage of disbursements at 86 percent, followed by SAR at 77 percent, MNA at 75 percent, EAP and LAC at 73 percent, AFW at 56 percent, and AFE at 55 percent. As of August 1, 2023, the World Bank had purchased 635.4 million doses of the COVID-19 vaccine of which 506.8 million had been delivered to client countries and 500.7 million administered. Retroactive Financing (RF) represents 37 percent of overall commitments. High levels of RF have been authorized under different operations - Ukraine (100%), Panama and Turkey (90%), Argentina and Guyana (80%), and Belize, and Sri Lanka (70%). One hundred and fifteen (115) loan/financing agreements or 99 percent of projects approved have been signed and 114 or 99 percent have become effective. As with the COVID-19 MPA operations, streamlined procedures, delegated approval, wide use of Bank Facilitated Procurement, coupled with flexible project design, and intensified efforts across the Bank have contributed to the rapid design, processing, and implementation of the AF-V operations. OPS_TABLE_PDO_CURRENTPDO Project Development Objective (PDO) Original PDO The objective of the Project is to support Nicaragua's readiness to respond to the COVID-19 pandemic. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-71400 23-Jun-2022 06-Jul-2022 13-Feb-2023 30-Jun-2025 116.00 31.50 84.50 IDA-68040 08-Dec-2020 17-Dec-2020 02-Jun-2021 30-Jun-2025 20.00 20.00 0 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Introduction The World Bank Nicaragua COVID-19 Response (P173823) 1. This Project Paper seeks the approval of the Country Director for a proposed simple restructuring of the Nicaragua COVID-19 Response Project (P173823) to broaden the Project scope’s by revising the definition of Eligible Goods in the Financing Agreement for IDA-71400 to finance routine immunizations and related essential medicines and supplies. This change is necessary to ensure that the Project remains relevant within the context of the increased availability of COVID-19 vaccines. If approved, this would be the second restructuring of the Nicaragua COVID-19 Response Project. The first restructuring, processed as part of an additional financing to the Project, was approved on June 23, 2022, and made the following changes: (a) modification to components and costs; (b) revision of the Project Results Framework; (c) extension of the credit closing date from February 28, 2023, to June 30, 2025; (d) change in disbursement arrangements; and (e) change in procurement arrangements. B. Project Status 2. The Project Development Objective (PDO) of the Nicaragua COVID-19 Project is to support Nicaragua’s readiness to respond to the COVID-19 pandemic. The Project was processed under the World Bank’s COVID- 19 Strategic Preparedness and Response Program (SPRP) using the MPA that was approved by the Board on April 2, 2020 to support developing countries in their efforts to prevent, detect and respond to the threat posed by COVID-19 and strengthen national systems for public health preparedness. The Project is financed by two IDA credits: (a) the initial credit (IDA-68040) in the amount of US$20 million was approved on December 8, 2020 and declared effective on June 2, 2021; and (b) an additional credit (IDA-71400) in the amount of US$116 million was approved on June 23, 2022 to finance COVID-19 vaccines, and was declared effective on February 13, 2023. Both credits are scheduled to close on June 30, 2025. 3. The project consists of one component (Component 1: Provision of Essential Medical and Laboratory Supplies and Equipment) for US$136 million. Under this Component, the Project is supporting the readiness of the public health providers to care for mild and severe cases of COVID-19 and the protection of health care workers. More specifically, financing under this Component is being used to purchase: (a) essential, life- saving medical and laboratory supplies and equipment for COVID-19 response; and (b) the procurement and deployment of COVID-19 vaccines. 4. Achievement towards the PDO and Implementation Progress have consistently been rated Satisfactory throughout project implementation, as confirmed by the latest ISR filed on April 26, 2023. As of July 2023, two of the three PDO indicators have been achieved or surpassed: "selected health facilities with essential medical and laboratory supplies and equipment procured and delivered by the Project” has reached its target of 27 facilities, and the “share of the eligible population fully vaccinated” has reached 95.66 percent, surpassing the 85 percent end-project target. 5. The Government of Nicaragua is responsible for the implementation of the Project but has appointed the United Nations Office for Project Services (UNOPS) as the implementation agent, and the Pan-American Health Organization (PAHO) to serve as a procurement agent. The Project Management Unit within the General Coordination of Programs and Projects (Centro General de Programación de Programas y Proyectos, CGPP) in the Ministry of Finance and Public Credit (Ministerio de Hacienda y Crédito Público - MHCP) provides implementation oversight and remains fully staffed. Despite some procurement challenges (resulting primarily from the scarcity of COVID-19 medical equipment due to the high demand, increased market prices and/or a lack of qualified bidders), UNOPS has worked closely to revise technical specifications to access the market accordingly and has been closely monitoring awarded contracts to ensure compliance with the The World Bank Nicaragua COVID-19 Response (P173823) outputs agreed. The procurement agreement between the Government of Nicaragua and PAHO is under preparation and expected to be finalized in the coming weeks. The key project functions, including financial management, procurement, monitoring and evaluation, and project management performance are all assessed as Satisfactory. 6. As of August 29, 2023, 38 percent of the total credit proceeds have been disbursed (100 percent of the original US$20 million credit has disbursed, and US$31.5 million – or 27 percent - of the US$116 million additional credit has been disbursed). The Project remains in compliance with key covenants, including those related to staffing, safeguards, audits, and financial management reporting requirements. Safeguards performance remains Satisfactory, and the environmental and social risk classification remains Substantial. C. Rationale for the Restructuring 7. Due to the evolution of the COVID-19 pandemic and changes in the demand and supply of vaccines (including donations), needs for COVID-19 vaccine procurement under the current project have been met, as is the case in several of the MPA beneficiary countries. Under the original design, the planned purchasing of COVID-19 vaccines comprises 17 percent of the Project funds (US$22.5 million). However, the Ministry of Health (MINSA, for its Spanish acronym) does not envision an additional need to finance COVID-19 vaccines moving forward. The changes in the need for COVID-19 procurement, as is the case in the majority of other MPA countries facing similar demand shifts, are driven by: (a) changes in the epidemiological profile of the disease, and (b) continuous availability of COVID-19 vaccine donations, including larger than anticipated donations from the COVAX facility. Instead, the procurement and deployment of routine vaccines and other essential health medicine and equipment was highlighted as a priority for the MINSA to strengthen the preparedness of the health system and ensure a rapid response in the case of a future disease outbreaks. In this context, on July 12, 2023, the Bank received a request from Ministry of Finance to restructure the Project by allocating the funds originally defined for the procurement of COVID-19 vaccines to: (a) routine vaccines and related supplies; and (b) other COVID-19 response activities, namely other health system strengthening needs. II. DESCRIPTION OF PROPOSED CHANGES 8. Summary of Proposed Changes. This proposed restructuring would modify the Project’s scope, as indicated below. 9. Modification of the Component’s Scope. This restructuring would broaden the definition of “Eligible Goods” under Section (I)(A)2 of the Financing Agreement to include routine immunizations and related inputs under the Nicaragua’s National Immunization Program. By doing so, the Project would then be able to fully utilize the remaining US$10.1 million of original COVID-vaccine financing to purchase routine vaccines and related inputs (US$8.5 million and US$1.6 million respectively). This change is aligned with the World Bank’s July 2023 decision that the financing of non-COVID vaccines, and their deployment, is eligible under Component 1 of the SPRP MPA. The financing of routine vaccines is essential to addressing the healthcare needs of COVID-19 patients because they protect against other infectious diseases, reduce the burden on health care systems, prevent co-infections, and build immunity, ultimately improving the overall health of COVID-19 patients and limiting the spread of the disease. By financing these vaccines, the World Bank is supporting the strengthening of the health system’s capacity to cope with COVID-19 and other future pandemics. The World Bank Nicaragua COVID-19 Response (P173823) 10. Disbursement Category Adjustment. Per the modification in Project scope, the definition of Disbursement Category 2 of Credit IDA-71400 (Eligible Goods, Project COVID-19 Vaccines, direct costs and indirect costs under the Procurement Agreement) would be revised accordingly to Eligible Goods, Project COVID-19 Vaccines, routine vaccines, direct costs, and indirect costs under the Procurement Agreement). This adjustment would allow the Government of Nicaragua to fully utilize the IDA resources and respond to the shift in needs from COVID-19 to routine immunizations and other essential healthy system strengthening needs to such as the financing of basic medical equipment at the primary care level, equipment maintenance, medical gases, project management and other operating costs under Subcomponent 1.3 (Strengthening the Health System Response to the Pandemic at the Health Service Provision Level). The strengthening of MINSA’s existing medical equipment maintenance program is particularly needed to safeguard the investment and guarantee the quality and efficacy of public health service provision. These expenditures are critical inputs for the adequate and efficient care of patients. III. SUMMARY OF CHANGES Changed Not Changed Other Change(s) ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ MPA Program Development Objective ✔ MPA Expected Results and Indicators ✔ Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ The World Bank Nicaragua COVID-19 Response (P173823) Procurement ✔ Implementation Schedule ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) MPA PROGRAM DEVELOPMENT OBJECTIVE Current MPA Program Development Objective The Program Development Objective is to prevent, detect and respond to the threat posed by COVID-19 and strengthen national systems for public health preparedness EXPECTED MPA PROGRAM RESULTS Current Expected MPA Results and their Indicators for the MPA Program Progress towards the achievement of the PDO would be measured by outcome indicators. Individual country-specific projects (or phases) under the MPA Program will identify relevant indicators, including among others: • Country has activated their public health Emergency Operations Centre or a coordination mechanism for COVID-19; • Number of designated laboratories with COVID-19 diagnostic equipment, test kits, and reagents; • Number of acute healthcare facilities with isolation capacity; • Number of suspected cases of COVID-19 reported and investigated per approved protocol; • Number of diagnosed cases treated per approved protocol; • Personal and community non-pharmaceutical interventions adopted by the country (e.g., installation of handwashing facilities, provision of supplies and behavior change campaigns, continuity of water and sanitation service provision in public facilities and households, schools closures, telework and remote meetings, reduce/cancel mass gatherings); • Policies, regulations, guidelines, or other relevant government strategic documents incorporating a multi- sectoral health approach developed/or revised and adopted; The World Bank Nicaragua COVID-19 Response (P173823) • Multi-sectoral operational mechanism for coordinated response to outbreaks by human, animal and wildlife sectors in place; • Coordinated surveillance systems in place in the animal health and public health sectors for zoonotic diseases/pathogens identified as joint priorities; and • Mechanisms for responding to infectious and potential zoonotic diseases established and functional; and • Outbreak/pandemic emergency risk communication plan and activities developed and tested .