Document of
The World Bank
FOROFFICIAL USEONLY
Report No: 31724-HR
PROJECTAPPRAISAL DOCUMENT
ON A
PROPOSEDLOAN
INTHEAMOUNT OF EURO31MILLION
(US$40.0 MILLIONEQUIVALENT)
TO THE
REPUBLIC OF CROATIA
FORA
SOCIAL WELFARE DEVELOPMENT PROJECT
MAY 5,2005
HumanDevelopmentDepartment
EuropeandCentralAsia Region
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 disclosedwithout World
Bank authorization.
CURRENCY EQUIVALENTS
(Exchange Rate Effective April 28,2005)
Currency Unit = Croatian Kuna (HRK)
EUR 1 = US$1.29
US$1 = HRK5.70
FISCAL YEAR
January 1 - December31
ABBREVIATIONSAND ACRONYMS
CARDS Community Assistance for Reconstruction, Development and Stability
CAS Country Assistance Strategy
CBS Central Bureau of Statistics
csw Center for Social Welfare
EC European Commission
ECA Europe and Central Asia
EU European Union
GDP Gross Domestic Product
GOC Government of Croatia
HRK Croatian Kuna
IBRD Intemational Bank for Reconstruction and Development
ICB International Competitive Bidding
IMF International Monetary Fund
ILP Innovation and Learning Program
IT Information Technology
M C Methodological Center
MHSW MinistryofHealthand Social Welfare
MIC Middle Income Country
MOF MinistryofFinance
NCB National Competitive Bidding
NGO Non-Government Organization
PAL Programmatic Adjustment Loan
PHRD Policy and Human ResourcesDevelopment Grant (Japan)
SA0 State Audit Office
SBD Standard BiddingDocuments
SIDA Swedish InternationalDevelopment Agency
S I L Specific Investment Loan
SWDP Social Welfare DevelopmentProject
TOR Terms of Reference
UK-DFID UKDepartment for IntemationalDevelopment
UNDP UnitedNationsDevelopmentProgram
Vice President: Shigeo Katsu
Country Managermirector: Anand K. Seth
Sector Manager: Hermann von Gersdorff
Task Team Leader: Inguna Dobraja
FOROFFICIALUSEONLY
CROATIA
SocialWelfareDevelopmentProject
CONTENTS
Page
A . STRATEGICCONTEXTAND RATIONALE ................................................................................. 1
1. Country and Sector Issues......................................................................................................... 1
2. Rationale for Bank Involvement ............................................................................................... 3
B . PROJECTDESCRIPTION ................................................................................................................. 4
1. Lending Instrument................................................................................................................... 4
2. Project Development Objective and Key Indicators ................................................................. 4
3. Project Components .................................................................................................................. 4
4. Lessons Learned and Reflectedinthe Project Design .............................................................. 5
5. Alternatives Considered and Reasons for Rejection................................................................. 5
C . IMPLEMENTATION .......................................................................................................................... 6
1. Partnership Arrangements ......................................................................................................... 6
2 . Institutional and Implementation Arrangements ....................................................................... 6
3. Monitoringand Evaluation o f Outcomes and Results............................................................... 7
4. Sustainability ............................................................................................................................. 7
5. Critical Risks and Possible Controversial Aspects.................................................................... 8
6. LoanConditions and Covenants................................................................................................ 9
D . APPRAISAL SUMMARY ................................................................................................................. 10
1. Economic and FinancialAnalyses........................................................................................... 10
2. Technical................................................................................................................................. 11
3 . Fiduciary.................................................................................................................................. 11
4. Social....................................................................................................................................... 12
5. Environment............................................................................................................................ 12
6. SafeguardPolicies................................................................................................................... 12
7. Policy Exceptionsand Readiness............................................................................................ 13
....
This document has a restricted distribution and may be usedby recipients only in
~
the performance of their official duties Its contents may not be otherwise disclosed
.
without World Bank authorization.
TABLES
Table 1: SocialBenefit Spending inCroatia. 2004 (HRK billion) ..................................................................... 1
Table 2: Summary of PAL Social Welfare Program(as ofNovember 2004) .................................................... 2
Table 3: Risks andMitigationMeasures............................................................................................................ 8
FIGURES
Figure 1: SWDP Partnership Arrangements ........................................................................................................ 6
ANNEXES
ANNEX 1. Country and Sector Background ............................................................................................. 14
ANNEX 2. Major Related Projects Financed by the Bank and Other Agencies........................................ 20
ANNEX 3. Results Framework and Monitoring........................................................................................ 22
ANNEX4. Detailed Project Description ................................................................................................... 25
ANNEX 5. Project Costs............................................................................................................................ 31
ANNEX 6. Implementation Arrangements ................................................................................................ 32
ANNEX 7. FinancialManagement andDisbursementArrangements ....................................................... 33
ANNEX 8. Procurement............................................................................................................................. 37
ANNEX 9. Economic and Financial Analysis ........................................................................................... 45
ANNEX 10. Safeguard Policy Issues........................................................................................................... 49
ANNEX 11. Project Preparation and Supervision ....................................................................................... 53
ANNEX 12. Documents inthe Project File................................................................................................. 54
ANNEX 13. Statementof Loans and Credits............................................................................................... 55
ANNEX 14. Country at a Glance................................................................................................................. 56
MAP. 33394
IBRD
CROATIA
SOCIAL WELFARE DEVELOPMENT PROJECT
Date: M a y 5, 2005 Team Leader: Inguna Dobraja
Country Director: h a n dK.Seth Sectors: Other social services (100%)
Sector Manager: Hennann von Gersdorff Themes: Social riskcoping (P); Social risk
mitigation (P); Social risk reduction(S); Other
social protection and riskmanagement (S)
Project ID: PO69937 Environmental screening category: Partial
Assessment
Lending Instrument: Specific InvestmentLoan Safeguard screening category: Limitedimpact
[XI Loan [ ] Credit [ 3 Grant [ ] Guarantee [ ] Other:
For Loans/Credits/Others:
Total Bank financing (US$m.): 40.0 equivalent, or EUR 3 1.O million
Proposedterms: FSL, euro, semesterly payments, variable rate interest conversion
Grace Period: 5 years Years to maturity: 15 years
DEVELOPMENT
SWEDISH INTN'L DEVEL.AGENCY 0.7 1.3 2.0
Total: 50.2 10.1 60.3
F Y 2005 2006 2007 2008 2009
Annual 0.1 11.2 16.4 12.3 0
Cumulative 0.1 11.3 27.7 40.0 40.0
Project implementationperiod: October 2005 - September 2009
Expectedeffectiveness date: October 2005 II
Expected closing date: September 30, 2009
-Does the project depart from the CAS incontent or other significant respects? Re$
PADA.3 [ ]Yes [XINO
Does the project require any exceptions from Bank policies? [ ]Yes [XINO
Have these been approved by Bank management? [ ]Yes [XINO
I s approval for any policy exception sought from the Board? [ ]Yes [XINO
Does the project include any critical risks rated "substantial" or "high"? [XIYes [ ] N o
Does the project meet the Regional criteria for readiness for implementation?
Re$ PADD.7 [XIYes [ ]No
Project development objective Re$ PAD B.2
'he Social Welfare Development Project will strengthen the quality, targeting and administration of
ocial benefits and services to those most inneed.
'roject description Ref: PAD B.3,Annex 4
ihe SWDP i s a Specific Investment Loan with three components that will (i) Improve Social Services
Ielivew by developing a sustainable spectrum o f social programs across prevention, service delivery, and
:lient re-integration into the community; (ii) StrenPfhen Social Welfare Management by improving the
eliability and timeliness of social benefit administrative information used for cash benefit system
wersight and individual claims processing, and implementing `one-stop shop' administrative services for
:lients; and (iii)Umrade Social Services Facilities, by upgrading county centers for social welfare and
mhancing the safety o f older residential social service facilities by investing in hygienic upgrades. See
h e x Section B.3 and Annex 4 for project details.
Mhich safeguard policies are triggered, ifany? Ref: PAD D.5, Annex 10
The project was rated Category B (environment).
jignificant, non-standard conditions, if any, for: Ref: PAD C.6
5'onditions of Effectiveness:
0 The Borrower shall: establish Working Groups within M H S W for each respective part of the
Project, and appoint a Project Manager responsible for managing inputs from MHSW's working
groups for developing terms o f reference for technical assistance and training, disbursement of
funds and financial management, procurementandmonitoring.
0 The Borrower has adopted an Operational Manual acceptable to the Bank.
Disbursement Condition:
No withdrawals shall be made in respect of the Innovation and Learning Program until
the ILP Guidelines, satisfactory to the Bank, have been adopted.
Covenantsapplicable toproject implementation:
The-SIDA Grant Agreement has to be signed by December 31, 2005, or such later date as the
Bank may agree; or adequate funds for the Project are available to the Borrower from other
sources on terms and conditions consistent with the obligations o f the Borrower under the Loan
Agreement
The Borrower shall, during the duration o f the Project, maintain (a) working groups within
M H S W for each respective part o f the project; and (b) a Project Manager responsible for
managing inputs from MHSW's working groups for developing terms o f reference for technical
assistance and training, disbursement of funds and financial management, procurement and
monitoring.
Not later than December 31, 2005, MHSW, shall establish a Grant Committee for the Innovatior
and Learning Program. The Innovation and Learning Program Grant Committee will select sub-
projects for financing from the proceeds o f the loan in accordance with the criteria and selectior
procedures set forth in the ILP guidelines acceptable to the Bank, and said financing will be
provided on a grant basis in a format and substance acceptable to the Borrower and the Bank
The Guidelines will include details on procurement procedures and methods applicable tc
procurement under the Grant.
0 Procurement Plan prepared by the Borrower i s updated on an annual basis and approved by the
Bank. The MHSW will maintain financial management arrangements acceptableto the Bank.
0 The Borrower shall carry out the Project in accordance with the provisions of the Operational
Manual, including provisions o f the Environmental Management Plan, and shall not amend,
suspend, abrogate, repeal or waive any provision of the Operational Manual without prior
approval o f the Bank.
0 Sufficient counterpart co-financing funds are allocated inthe MHSW annual budgets to cover all
contracts included inan approved annual procurement plan.
0 An annual report on the progress of Project implementation shall be provided to the Bank by
September 30 o f each year throughout the execution o f the project, commencing from September
30, 2006, and including a draft annual project plan for the following year. A report shall be
prepared on or about September 30,2007, integratingthe results of the monitoring and evaluation
activities on the progress achieved in carrying out the Project, and setting out the measures
recommended to ensure the efficient carrying out o f the Project and the achievement of the
objectives thereof.
A. STRATEGIC CONTEXT AND RATIONALE
1. Countryandsectorissues
Introduction. Croatia's transition efforts have largely shifted fi-om independence and regional conflict to
European Union (EU) accession and the accompanying structural reform agenda. InJune 2004, the European
Council (EC) granted Croatia candidate status for EU membership, noting that Croatia i s (i) a functioning
democracy; (ii) can be regarded as a functioning market economy, and (iii) be expected to assume the other
can
obligations of membership over the medium term. While EU accession and the related requirements around
the acquis communautaire will be the focus of much national attention over the next several years, Croatia i s
also facing major structural challenges to improve its competitiveness and investment climate, to strengthen
governance, and to ensure broader participation in growth.
Croatian households will face differential impacts and challenges from economic transition and European
accession. Social services are a public good that can mitigate those impacts when effectively delivered. Still,
social welfare development in Croatia will occur in an environment o f fiscal consolidation. Public
expenditures still account for a little less than 50 percent of GDP, which i s very highcompared to EUaccession
and candidate country averages. The Government gradually reducedthe fiscal deficit from 8.1 percent o f GDP
in 1999 to 4.5 percent of GDP in 2002, but these gains were partly reversed as a new round of spending
increases led to an increase inthe fiscal deficit to an estimated 5.8 percent o f GDP in2003. The fiscal deficit
in2004 fell to 4.5 percent of GDP, andthe 2005 programis seeking an additional onepercent cut inthe deficit
through additional consolidation. Real GDP growth has been positive, but has declined from 5.2 percent in
2002 to 3.8 percent in2004. The external debt rose from 60 percent o f GDP in2000 to 82.4 percent o f GDP in
2003, and despite monetary and fiscal tightening it grew further to 88.1 percent o f GDP (inU S Dollars; 80.5
percent o f GDP in EUR). The current account balance improved over the last two years fi-om 8.4 percent of
GDP towards 4.0 percent of GDP (ifmeasured inUSD).The Government i s working closely with the IMFand
the World Bank Programmatic Adjustment Loan (PAL) team to support further fiscal adjustment and to reduce
external vulnerability.
Consolidation and improvement of social benefit spending will be an important component of Croatia's fiscal
agenda, especially with pension spending still increasing from a high 13.5 percent of GDP. Cash social
benefits total about 4.1 percent of GDP, with only about 0.26 percent of GDP devoted to the single means-
tested social support allowance within the social welfare envelope o f 0.91 percent of GDP (see Table 1). The
remainder i s spent on categorical benefits that are poorly targeted and some social services. While not directly
comparable, the EU spends an average of 2.5 percent of GDP on family benefits and other benefits to
vulnerable groups (2001).
Social welfare 1.83 0.91 22
Unemployment 0.77 0.41 9
Other 0.19 0.11 2
TOTAL 8.16 4.1 100.0
The significant fiscal policy challenges presentedby social benefits are best addressedunder the PAL program.
For example, a number o f categorical benefits are managed by the Ministry o f Intergenerational Solidarity,
Families and Veterans, with the Ministry o f Health and Social Welfare (MHSW) managing social benefits and
services, presentingcross cutting challenges that are amenable to PAL intervention. Veterans' benefits are not
poverty mitigationper se, but represent a public policy choice to recognize past military service. The proposed
PAL has focused o n bridgingMISFS with the MHSW, so that a common social benefit policy can be agreed.
This has proved challenging, but a joint working group (along with the Ministry o f Finance) has been
established, and PAL triggers identified for the coming years (see Table 2).
PAL SocialWelfare rogram(as of Novem :r 2004)
PAL-I
(April 2005 target)
1. Spendingon social Govemment inter- Govemment adopts Govemment
spendingcontained, benefitsreducedas a ministerial working and starts implementsthe
the overallnumber of share of GDP. grouppreparesa implementingthe strategy, reducingcash
benefitsdecreased, and strategy for strategy, reducingcash social benefitsand
spendingfocusedon 2. Increasedshare of rationalizationof socialbenefitsand increasingallocationto
best-targeted the best-targetedand socialbenefit increasing allocationto best-targetedbenefits.
programs. means-testedsocial spending, including best-targetedbenefits.
support allowance in war veterans' benefits
total socialspending.
Note: the PAL is anticipated to go to negotiti bns in42 CYO5, andthe above measures may iange before Board.
Inparallel with that fiscal dialogue, a Social Welfare Development Project (SWDP) will be implementedby
the Ministry o f Health and Social Welfare (MHSW). The focus o f the SWDP will be on those benefits and
services administered within MHSW, given that they are the ones primarily aimed at poverty reduction, work
incentives, and the community. The M H S W will streamline and improve the targeting o f those ten benefits
governed by the Social Welfare Act. The goal o f Croatia's social assistance and welfare development i s to
create a system that i s client-centered, outcome-driven and user friendly. It is guided by principles to: (i)
help clients to achieve, to the greatest degree possible, self-reliance through provision o f effective social
services to the most needy; (ii)ensure uniform access to quality and relevant social services; and (iii)
streamline targeted social assistance programs, strengthen fiscal sustainability, while preserving work
incentives for benefit recipients. The aim o f this project will be to assist Croatia's most vulnerable to benefit
from the country's growth and development.
The issues to be covered under the project are:
Social services
Social services are provided through a variety o f residential and community services, where the residential
services are predominant. This i s partially explained by the past legacy o f institutionalization o f populations
who could perhaps be more effectively cared for in the community, or alternative care settings. InDecember
2002, almost 23,000 people were placed inpublic residential institutions. Old and infirmpeople are the single
largest client categories, followed by disabled, and children. The standard o f care provided can be quite poor,
and facilities o f low and deteriorating quality - in early 2004, several residents of one residential institution
died from food poisoning. There i s a limited supply o f alternative community day services that are more
effective and less expensive than residential care, though more than 4,500 are placed inhost families which are
regarded as community based alternatives to resident services. The deinstitutionalization process has been
slow and hampered by the absence o f alternative service provision and structural disincentives to find and use
alternative care options. Monitoring and control instruments for quality assurance and quality improvement are
weak. The standards that are inplace are merely focusing on technical aspects o f service provision and do not
reflect any ambitions concerning the core in all care provision, quality o f life and the result that can be
achieved for individuals invulnerable situation.
Cash social benefits
The Social Welfare Act sets out a system o f nationally based and funded social assistance provision aimed at
those in poverty (see section D.4 for a poverty summary). In addition, county authorities and local self
government authorities provide a range o f benefits also aimed at the poorest. The result is a mixed benefit
provision, which i s difficult for many individuals to establish their own entitlement and leaves open the
2
possibility for some to obtain benefits to which they are not entitled. Further,the benefits are administeredby
different offices depending on whether they are national or local, leading to conhsion for potential
beneficiaries. Inshort, the main issues concerning cashbenefits are: (i) levels of benefits are quite low and do
not meet the poverty gap, while some families do manage to receive sums that take them over the poverty
level; (ii)administration i s cumbersome, with families having to make multiple claims at offices, with
inefficiencies and gaps inthe collection, management and use of information; (iii) i s a highlevel o f errors
there
o f inclusion, with only 50 percent o f benefits going to the bottom quintile; (iv) beneficiaries may become
dependent on a benefit level income; (v) beneficiaries make no contribution to the community inreturn for the
benefit support the received; and (vi) local authorities have little say inhow benefits should be administered,
and to whom.
2. Rationale for Bankinvolvement
The World Bank has strong comparative advantages in this sector: (i) has built up significant experience
it
(including in ECA) in assisting governments to prepare and implement social welfare reforms; (ii) it brings
long standing experience insocial welfare project design and management; (iii)i s well positionedto facilitate
it
the coordination o f different stakeholders that have an influence on social welfare reform and are influenced
by it, with a strong local presence of Bank technical specialists in Zagreb; and (iv) European accession will
bring many challenges for Croatian communities, and some households will have difficulty coping with the
adjustment to new economic and social realities, which fits with the Bank's mission. With respect to the last
issue, the 2004 EC opinion (avis) on Croatia's accessionaccordingly notes that Croatia needs to "prepare itself
for the cooperation processes developed at the European level in the fields o f employment, social inclusion,
and pensions." The European Social Policy Agreement recommends that Member States (i)guarantee
everyone a level o f resources consistent with human dignity; (ii) ensure that living standards are maintained
when workers are forced to interrupt work due to sickness, accident, maternity, invalidity, or unemployment;
(iii) guaranteedminimumresourcesfordisabled,andfostertheirsocialandeconomicintegration; and
provide
(iv) develop the benefits and services available to the most disadvantaged families. Currently, there are
minimal resources available within the external aid program to assist Croatia with moving forward on this
important agenda, and the SWDP will therefore fill an important resource gap while providing direct advisory
support.
Higher level objectives to which the project contributes
The SWDP will support the overall objectives o f the Country Assistance Strategy (2005-2008, approved bythe
Government of Croatia on November 11, 2004 and endorsed by the World Bank Board on December 21,
2004). In particular, SWDP will contribute to wider participation in economic growth by improving the
targeting, sustainability, quality and efficiency o f social welfare.
The SWDP also supports the National Program for the Reduction of Poverty, adopted by the Government in
August 2002, and which proposes a multidimensional approach to the poverty reduction by proposing
measures that are not limitedto the social welfare system only but also include actions in the areas o f labor
market, employment, education, health and housing. Within the scope o f social assistance and welfare, the
Project endorses decentralization and gradual deinstitutionalization o f social services and promotion o f
community alternatives to institutionalization including increased role o f NGOs in the provision o f social
services, privatization within social welfare, introduction o f the guaranteed minimumincome and linking it to
the official poverty line, annual indexation of social assistance benefits, improved poverty monitoring and
introduction of the official poverty line, introduction o f IT to data collection and processing system in the
social welfare.
3
B. PROJECTDESCRIPTION
1. Lendinginstrument
The SWDP i s financed through a Specific Investment Loan (SIL). The loan amount is EUR 31.0 million
(US$40.0 million equivalent), with additional grant cofinancing ofUS$2.0 millionequivalent from SIDA. The
SWDP will review the annual budget program with the Government to ensure that the investments to be
supported under the project are adequately reflected inthe followingyear's budget.
2. Project development objective and key indicators
The SWDP will strengthen the quality, targeting and administration of social benefits and services to those
most in need. Project performance will be assessed through a number of qualitative assessments and
quantitative indicators. Project monitoring during implementation will be carried out by the MHSW's
Economic Department within its new organization. They will be assisted by data generated under the project
including that produced by the surveys conducted by the Central Bureau o f Statistics (CBS), data from the
computerized benefit system, and data generated by surveys in the pilot regions on social service provision.
The SWDP indicatorsare detailed inAnnex 3.
3. Project components
The SWDP will be implemented around three components, in conjunction with the PAL focus on benefit
policy, the EC's labor market and retraining support, and the UNDP's ongoing support to social welfare
monitoring capacity inMHSW (see section C.l.). Theprojectispresented in detailin Annex 4.
Component 1: Improving Social Service Delivery (EUR 5.3M total, EUR3.9M IBRD financing)
The goal of this component i s to improve the entire spectrum o f social welfare provision in Croatia, from
prevention, to quality of service delivery, to reintegration o f clients into the community. Social services will be
made more inclusive, family oriented and efficient through (i) developing and introducing a new organizational
model for front line social service administration and service delivery, covering the Centers for Social Work
(CSWs) and Methodological Centers (MCs), (ii)establishing new and more innovative community based
programs; (iii)transforming residential institutions; (iv) enhancing the quality of services, and reducing the
time spent in those services; and (v) implementing incentives that encourage financially responsible
management of public funds for services. The first sub-component, `Programming Cost-effective, Efficient and
Inclusive Social Services,' will focus on introducing substantial improvements in administration and service
delivery in three selected counties before national replication. The second sub-component, `Managing and
Financing for Results, ' will help public sector agencies to utilize new tools and approaches to achieve the
changes envisaged under this project. An Innovation and Learning Program will be established to finance or
co-finance initial costs for the provision of new and innovative community care programs, evaluate and
disseminate lessons learned with respect to improvements in quality, effectiveness and costs. Fiduciary
strengthening of MHSWwill also be supported under this component.
Component 2. Strengthening of the Social Welfare Management Information System (EUR 7.OM
total, EUR 4.3M IBRDfinancing)
The goal of the component is to improve the administration o f cash and non-cash benefits by implementing a
new organizational model inCSW and to ensure that the management information system provides timely and
highquality datato the Ministrystaff for designing, monitoring and analysing social policy.
The component will consist of two subcomponents. The first subcomponent, "Implementation o f a New
Administrative Organization" will develop the new organization of social welfare. The new organization will
be based on a One-Stop-Office Model for CSWs that will bring together cash and non-cashbenefits in a way
4
that will provide better service to the client and improve the CSW work organization. The second
subcomponent, "Introduction of a management information system," will establish a register o f all welfare
systembeneficiaries, automate the process o f claiming, processing and paying cashbenefits and institute a case
management system that would assist the Government to undertake a review o f relative program effectiveness,
to track services at the client level, and to use this information for better policy decisionmaking.
The activities under this component will be closely coordinated with the activities under Component 1 and
Component 3.
Component 3. Upgrading of Existing Social Services Facilities (EUR 34.OM total, EUR 22.8M
IBRDfinancing)
The Ministry of Health and Social Welfare estimatesthat some 70 percent of residential institutions currently
fail to meet basic public health standards. In addition, many county CSWs require refurbishments or new
construction in order to (i)introduce the One-Stop-Office Model; (ii) provide an appropriate installation
environment for IT upgrades; and (iii) improve overall facility conditions, many o f which are in very poor
shape. The objective o f this component i s to (i) upgrade a range o f selected residential institutions to ensure
that they meet the minimumstandards, thus contributing to an improved overall quality o f social services; and
(ii)provide CSW renovations or new constructionconsistent with the administrativereorganization. There i s a
clear need to improve the standards of many institutions (a number o f residents died from food poisoning in
one facility in 2004), and a multi-year infrastructure upgrade program has been developed that was based on a
professional assessment o f the needs for the improvement inhygiene of the public residential institutions. To
avoid conflict with the stated aim of the first component o f the project, criteria were used to assess institutions
assessed institutional investment priorities and sequencing.
4. Lessons learned and reflected in the project design
The preparation and implementation o f this operation will benefit from numerous other similar operations in
ECA countries that have received Bank support for retrenchment and social welfare reforms, from
Lithuania/Latvia to Romania. These countries offer Croatia, and the project team, a wide array o f social
welfare models and implementation lessons that can be adapted to Croatian circumstances and priorities. The
project will also aim for the simplest and most flexible design possible, through selectivity and criteria-based
investment selection during the project life. Numerous assessments have shown that (over) complexity and
lack o f ownership is an important factor behind many problematic programs. This i s also consistent with the
Bank's findings on appropriate engagement in middle income countries. The SWDP has been based on a
package o f comprehensive studies financed from the project PHRD and UK-DFID,which are listed in Annex
12. Finally, given the array of studies already completed, the project will take an `action-oriented' approach to
introducing change based on assessments to date, it will focus on assisting the authorities to actually introduce
some o f the options that have been extensively considered through a major package o f technical work
5. Alternatives considered and reasons for rejection
The project has benefitedfrom several studies of various aspects o f social policy provision and delivery over
the period of project design, where policy and institutional options for engagement were assessed. Project
alternatives included (i) different scenarios for establishing lines o f fiscal and functional subordination across
central, county and local authorities managing social welfare, with an ultimate conclusion to strengthen the role
of county Centers for Social Work as the loci of key administrative decision-making on the ground, given that
the other options were administratively too complicated; (ii) a variety of options on project scope, with a final
determination to focus exclusively on social welfare issues, and to cover statistical strengthening at the Bureau
of Statistics through other programs, inorder to avoid multi-agency difficulties; and (iii) late stage inclusion of
investments inresidential institutions, which are not policy-oriented, but which will contribute to the quality of
life and safety of the children, elderly and disabled inthose institutions.
5
Figure 1: SWDP Partnership Arrangements
2005 2006 2007 2008
->
(Cash social benefits --PAL
fiscal and crosscutting)
I I I
Strategy Benefitsreduced Social benefit spending Fiscal efficiency +
Initiated and reallocated falls, but better targeted social mitigation
I I 1
SPP
(Cash social benefits and Social Services)
SWDP New services on line Fewer residential clients, Greater quality and
initiated MIS system progressing more and better services, better administra-
Financing reforms retrenchment o f workers tion o fprograms
Support to workers i s effective
UNDP
(Policy MonitoringCapacity)
Staff trained and
Action Plan implemented participant inLisbon
support continues
C. IMPLEMENTATION
1. Partnershiparrangements
Partnership under the SWDP has been closely coordinated (see Figure 1). The UNDP i s supporting a policy
monitoring unit in MHSW. Sweden's SIDA i s also considering significant grant co-financing of the SWDP.
While donor aid resources in this specific area will be limited, social welfare reform i s complementary to the
EU accession (acquis) agenda, and the European Commission and European Delegation will be regularly
consulted on project implementation.
2. Institutionalandimplementationarrangements
The MHSW will be the lead implementing agency for the SWDP and the proposed implementation
arrangements will build on the existing MHSW structure and skills [see Annex 7 for details]. The proposed
project management arrangements will utilize both the technical and fiduciary units under the Department o f
Economic Affairs. The proposed implementation arrangements will put an emphasis on continued
strengthening of the MHSW capacity to manage its fiduciary functions. Training of procurement staff and
6
development o f standard agreement forms and tender documents will be done in cooperation with the Public
Procurement Office and the Project ImplementationUnit for the existingHealth System Project.
The MHSW Assistant Minister for Economic Affairs will act as the Project Coordinator and be responsible for
the reforms and the technical content of the SWDP. Each project component will be led by a working group
with a coordinator at its head. The heads of the workmg groups will liaise with the Project Coordinator and
Project Manager on administrative issues. The Project Coordinator will liaise closely with the National
Coordinator for Social Welfare Reform in Croatia. A Project Manager i s being appointed and will be
responsible for day to day management o f MHSW team's inputsand administration o f project implementation,
including procurement, contract administration, financial managemerrt, and monitoring and evaluation. The
terms o freference for each position and division o f responsibilities will be described inthe Project Operational
Manual.
MHSW will prepare an annual budget and a procurement plan for the SWDP for the following year and agree
on these with the Bankby September 30 of the preceding year before submission to the MOF. Bank loan funds
will be disbursed into a special account, which will be utilized for project financing. Procurement will be
carried out by MHSW structures following with World Bank procurement procedures, and MHSW financial
management systems will track the flow of funds. The procurement and financial management arrangements
are detailedinAnnexes 7 and 8.
3. Monitoringand evaluation of outcomeshesults
The MHSW Department of Economic Affairs will be responsible for overall project monitoring. The
component working groups will be responsible for monitoring the implementation o f the components and the
outcome indicators to be achieved. They will be assisted by data generated under the project including that
produced by the surveys conducted by CBS, data from the computerized benefit system, and the baseline
survey.
Monitoring of financial resource use and contract management will be done by the respective units in the
Department of Economic Affairs and coordinated by the Project Manager. The existing systems of the MHSW
generate most of the required information and this would be strengthened by upgrading the software to
establish an integrated accounting and financial management system o f the Ministry, introduce automated
contract management and monitoring system. Integration of the project into the structure of the Ministry
would enhance the capability of the MHSW management to monitor the implementation and outcomes o f the
project through its regular reports.
The Project Manager will compile the information from the component working groups and the fiduciary units
into annual monitoring reports. Reports on the indicators outlined in Annex 3 will be sought during each
supervision visit.
4. Sustainability
The fiscal sustainability of the SWDP is outlined in Annex 9, which will be achieved through strengthened
targeting, new financing tools, and more efficient administration. More specifically, sustainability o f the
SWDP project will be ensured through: a) strengthening capacity of the MHSW and other counterparts to
integrate the project supported activities and outputs into routine operations o f the Ministry and its subsidiary
agencies; b) rationalizedand computerized benefit calculation and payment will allow for more efficient use o f
human resources and time in CSW, and improved CSW administration of social services, will help to ensure
accuracy on administrative information and provide the possibility to cross check data; c) improved targeting
of cash assistance through enhanced information collection and management will reduce errors o f exclusion
and inclusion and would allow to better reach the poor and address poverty; and d) development o f social
services mix through changing financing mechanisms, standards and set of incentives will greatly improve
7
sustainability, as shown in other ECA counties that have implemented such activities. The baseline survey
and follow up surveys will improve the information available to the MHSWto monitor and evaluate policy.
5. Critical risks andpossiblecontroversial aspects
The risks and mitigation measures inthe table below have been identified and discussed with the Government.
able 3: Risks and Mitigation Measures
RiskMitigationMeasure
Political will to implement improvements in M Project will focus on developing the permanent
social benefits capacity to adjust to Croatia's future changing needs,
rather than on static implementation o f one policy
agenda in the short term. Policy proposals will be
based on a presentation of options to senior
policymakers with benefits (and costs) clearly
outlined, based on full stakeholder consultations.
Implementation o f all project components places S Effective monitoring and evaluation arrangements
a high demand on limited human capacitylstaff will be critical to project success. Implementation o f
resources and staff time o f the MHSW new organization for MHSW to improve Ministry
efficiency will also be necessary. Local
consultancies will be contracted on as needed basis to
assist with the implementation of the project.
Information technology activities may prove S An administrative analysis will be conducted prior to
difficult to implement successfully imdementation o f anv IT activities.
New approaches to standard setting will require N Well structured working groups, study tours and
a change inthinking about best social practice. good training.
MHSW fiduciary capacity and skills needs S Fiduciary capacity plan is implemented based on the
further strengthening fiduciary assessment findings
Overall riskrating is moderate. The MHSW has agreed to increase the number of
staff working on fiduciary and monitoring and
evaluation functions. Local and international
consultancies will assist with training necessary to
builda Dermanent long-termcaDacitv inthe Ministrv.
Key: H-high; S -substantial; M-moderate; N-negligible
Benefits of theproject
The SWDP will support the efficient administration of the social benefit system, including (a) concentrating the
available resources on the very poorest, (b) reducing the risk o f exclusion by making the benefits more
understandable and easier to claim, and (c) reducing the risk o f inclusion errors by improving the information
system, making claims more transparent and providing a better cross checking ability in the system. The
project i s designed to enhance efficiency and quality o f social service delivery that better respond to the client
needs through: a) development and implementation o f a set o f organizational, administrative and financial
mechanisms creating incentives and possibilities for development o f community based services and
deinstitutionalization; and b) development o f quality care standards and improvement of physical infrastructure
insocial services.
8
6. Loan conditions and covenants
The following project conditions have been confirmed duringthe project Negotiations.
Conditions of Effectiveness:
e The Borrower shall: establish Working Groups within M H S W for each respective part o f the Project,
and appoint a Project Manager responsible for managing inputs from MHSW's working groups for
developing terms o f reference for technical assistance and training, disbursement o f funds and
financial management, procurement and monitoring.
e The Borrower has adopted an Operational Manual acceptable to the Bank.
Disbursement Condition:
e No withdrawals shall be made inrespect of the Innovation and Learning Programuntilthe ILP
Guidelines, satisfactory to the Bank, have beenadopted.
Legal Covenants:
e The SIDA Grant Agreement has to be signed by December 31, 2005, or such later date as the Bank
may agree; or adequate funds for the Project are available to the Borrower from other sources on terms
and conditions consistent with the obligations o f the Borrower under the Loan Agreement
e The Borrower shall, duringthe duration o f the Project, maintain (a) working groups within M H S W for
each respective part o f the project; and (b) a Project Manager responsible for managing inputs from
MHSW's working groups for developing terms o f reference for technical assistance and training,
disbursement o f funds and financial management, procurement and monitoring.
e Not later than December 31, 2005 M H S W shall establish a Grant Committee for the Innovation and
Learning Program. The Innovation and Learning Program Grant Committee will select sub-projects
for financing from the proceeds o f the loan in accordance with the criteria and selection procedures set
forth inthe ILP guidelines acceptable to the Bank, and said financing will be provided on a grant basis
in a format and substance acceptable to the Borrower and the Bank. The Guidelines will include
details on procurement procedures and methods applicable to procurement under the Grant.
e Procurement Plan prepared by the Borrower i s updated on an annual basis and approved by the Bank.
The M H S W will maintain financial management arrangements acceptable to the Bank
e The Borrower shall carry out the Project inaccordance with the provisions o f the Operational Manual,
including provisions o f the Environmental Management Plan, and shall not amend, suspend, abrogate,
repeal or waive any provision o f the OperationalManual without prior approval o fthe Bank.
e Sufficient counterpart co-financing funds are allocated in the M H S W annual budgets to cover all
contracts included inan approved annual procurementplan.
e An annual report on the progress o f Project implementation shall be provided to the Bank by
September 30 o f each year throughout the execution o f the project, commencing from September 30,
2006, and including a draft annual project plan for the following year. A report shall be prepared on or
about September 30, 2007, integrating the results o f the monitoring and evaluation activities on the
progress achieved in carrying out the Project, and setting out the measures recommendedto ensure the
efficient carrying out o fthe Project and the achievement o f the objectives thereof.
9
D. APPRAISAL SUMMARY
1. Economic and financialanalyses
A detailedeconomic analysis is developedinAnnex 9. The proposed SWDP includes a substantialpackage of
activities that aim to improve the efficiency and targeting o f Croatia's social assistance system. These alone, if
realized, would substantially offset the overall costs for the entire project. There are three main types of direct
fiscal savings that can be realizedfrom social assistance cash benefit reform:
J Savings from improvedtargeting ofbenefit (e.g., public benefitmoney is reachingmore of those it is
supposed to, and fewer who should not be receiving benefits)
J Savings from reduced benefit expenditure (e.g., better targeting and lower poverty levels from
economic growth permit the national budget to reduce the level spent on benefits)
J Savings (administrative) coming from clear distribution of responsibilities between local and central
government inpayments o f social assistance cash benefits.
In2002, Croatia spent almost HRK3 billionon socialwelfare (at all Government levels), equivalentto roughly
US$382 million at average 2002 exchange rates. According to the 2001 Croatia Economic Vulnerability and
Welfare Study, only about 50 percent o f social assistance i s reaching the poorest one-fifth o f the population
(only about 20 percent o f child and family allowance reaches the poorest one-fifth of the population, though
these do not have only a poverty alleviation function). For simplicity, this analysis does not cover benefits
other than social assistance and social welfare, though benefit reform should certainly aim to coordinate and
streamline all o f the benefits that are being administered in Croatia. If the SWDP benefit streamlining and
administrative activities lead to an improvement in internal system targeting o f a modest 5 percent (all else
being equal, and using 2002 figures), the project would lead to notional cash flows in this area of roughly
$20M equivalent per year, with a notional payback period for the principal amount of the loan o f about 2 years.
The cash flow is `notional' because it essentially means that resources that were formerly being allocated to
ineligible recipients are now being allocated to those who are eligible, consistent with the policy intent. In
theory, improved targeting should also allow for reductions inoverall expenditure in following years, again all
else being equal, but actual expenditure levels will be dependent upon the annual budget negotiation process in
a given year.
Social welfare reforms o f the type to be supported under this project provide the following economic benefits:
-- It is generally more cost effective to prevent a social Droblemthan to correct a social problem. For example,
preventing a young person from becoming a drug abuser can also assist that individual to avoid much more
costly hospitalizationor imprisonment. Providing a young orphan with a family environment through adoption
or foster care can help that person to become a more productive and satisfied member o f society inlater years.
Thiskindofbenefit is difficult to quantify infiscal terms.
-- It i s also more cost effective to provide services to somebody living at home, rather than in residential
institutions. Day services, such as elderly social and meal programs, training o f disabled, and foster care are
both more effective, and less expensive, than placement in residential institutions. In Croatia, finding day
service alternatives i s particularly pressing as the projected demand for new placements in old age homes i s
expected to increase dramatically over the coming years, well above current capacity. While some residential
care i s necessary, most countries aim to minimize reliance on large residential institutions, due to their cost and
generally low quality o f service. In many transition economies, residential care can cost up to roughly 210
percent o f GDP per capita, versus 55 percent o f GDP per capita for non-residential care.
-- Effective social services will facilitate European integration: Croatia expects to realize many benefits from
EUaccession. However, it will also need to (i) social spending within fiscal levels that are consistent
contain
10
with EUmonetary targets; and (ii) increasingly provide social services at a level commensurate with other EU
member states (many o f which have developed highquality social service programs for their populations). As
noted, it i s quite likely that accession will lead to strains on some Croatian communities and households that
may increase the demand for social care services as well.
2. Technical
The proposed project draws in part on the consultant reports prepared as part o f the former Ministry o f Labor
and Social Welfare's development o f a Social Welfare Reform Strategy (SWRS). The design was also based
on discussions with working groups established within the M H S W on each component. The SWRS and other
technical documents are available inthe project files.
3. Fiduciary
Financial Manaqement. The latest Croatia CFAA report (June 2004) concludes that the level o f fiduciary risk
attached to the primary elements o f Croatia's public financial management systems (legal framework,
institutional capacity and practices for the core financial control processes such as budgeting, treasury and cash
management, accounting, financial reporting, internal control, internal audit, external audit and parliamentary
oversight) i s significant. However, the level o f risk i s not constant across all areas of the public financial
management system. A review was undertaken in February 2005 to determine whether the financial
management systems to be utilized by the Ministry o f Health and Social Welfare (MHSW) for the Project are
acceptable to the Bank. It has been concluded that the Project satisfies the Bank's financial management
requirements.
As of the date o f this report, the Borrower i s in compliance with its audit covenants of existing Bank-financed
projects. Annual audited project financial statements will be provided to the Bank within five months of the
end of each fiscal year and also at the closing o f the project. Disbursements from the LoanAccount will follow
the report-based method, i.e., the M H S W will use Financial Monitoring Reports to support applications for
withdrawal from the Loan Account; it will not provide the Bank with a detailed list o f expenditures.
Procurement: The conclusion o f the CPAR conducted in 2004 i s that all levels o f the procurement system in
the country need to be substantially strengthened to operate in a structured and reliable control environment.
An assessment o f the MHSW procurement capacity was carried out in May 2004, and the overall risk was
evaluated as medium. The M H S W has some experience with implementation o f Bank-financed projects
through participation on the evaluation committees and contributing to preparation o f the Terms o f Reference
(for consultants' assignments) and technical specifications (for goods and works biddingdocuments) under the
Health System project. Since M a y 2004, two capital investments units (one for the social welfare and one for
health) have merged, and now all procurement o f civil works and goods i s managed by one unit led by the
former head o f the health capital investments unit. The unit, which had limited number o f staff, has now
received additional positions, but it i s still a challenge to recruit qualified staff to fill all positions at current
compensation rates. The unit has substantial experience inprocurement o f civil works under national bidding
procedures ("open tenders") which can be amended to incorporate the list o f exemptions (as per the Loan
Agreement) for the use on the SWDP-financed contracts. The unit lacks experience in selection o f technical
assistance with participation o f international firms and complex IT procurement. Specialized technical
assistance (inprocurement) will need to be used for assistance to the unit to prepare large consultants and IT
packages and for on-the-job training to the unit staff.
4. Social
A rapid social assessment was carried out between October and December 2003. Focus groups and interviews
were conducted with national, county and municipal officials, social policy experts, social workers, NGO
representatives, andjournalists. The findings o fthis initial exercise were: concerns about capacity to implement
reforms, responsiveness to regional diversity and specific social needs. Public consultation on social welfare
11
reform has taken place in the form of three national workshops and several regional meetings. Nevertheless,
information flows about the reformprocessremains a concem for certain stakeholders such as private agencies,
staff of social agencies, the NGO sector, and journalists. A follow-up is planned prior to implementation to
establish a baseline for monitoring beneficiary satisfaction with social service delivery with periodic surveys
and focus groups to be conducted to highlight issues that emerge during implementation. In particular, the
surveys will measure clientbeneficiary satisfaction, timeliness, and responsiveness to clientbeneficiary
concerns. Trends invulnerability and social risks will also be addressedthrough the follow-up work.
A poverty analysis conducted in 2000 indicates that poverty in Croatia is relatively low and shallow. At the
end of 1990s, only four percent of the population lived on less than US$4.30 a day (at the purchasing power
parity), and about 10 percent lived on less than US$9 a day, which the study suggested i s an appropriate
poverty line for Croatia. The poverty gap was about 1.8 percent, and on average the consumption o f a poor
household was 20.7 percent below the poverty line. Income distribution' i s only slightly less equitable than the
average for the countries belonging to the EU prior to May 1, 2004 (EU-15), and according to the Central
Bureau of Statistics Croatia's relative poverty rate for income2 in 2003 (at 16.9 percent) was only slightly
higherthan the EU-15 average (below 15 percent) and an improvement from 18.2 percent in2002. However,
some regions (especially war-affected areas) and certain ethnic groups have higher poverty rates. The results
also showed that there are no significant differences inthe prevalence o f poverty by gender. Income inequality
measured by the Gini coefficient was 0.29 in 2002, which i s a bit higher than the average in advanced
transition countries. Nearly three-fourths of the poor live in families whose headhas only a primary education
or less. The poverty profile reveals two main economic causes o f income poverty: limited employment
opportunities and inadequate targeting of the social safety net. A new Living Standards Assessment i s
programmedfor completion inFY05.
5. Environment
The project was ratedCategory Bunderthe environmental assessment safeguarddue to the planned civil works
to take place at Centers for Social Welfare and residential institutions. An Environmental Management Plan
has beenprepared. Environmentalimpacts identified are minor innature and associated with construction. See
Annex 10.
6. Safeguard policies
The planned civil works at the Centers for Social Welfare and residential institutions will involve renovation o f
existing facilities and a limited number of contracts for new construction not exceeding EUR 3 million per
contract. New constructionwill take place to build facilities for the Centers for Social Work at nine identified
sites. These nine identified sites are all public lands owned by the municipalitieskities and are unencumbered;
therefore, 0.P 4.12 i s not triggered.
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment (OP/BP/GP 4.01) [XI [I
Natural Habitats (OP/BP 4.04) [I [XI
Pest Management (OP 4.09) [I [XI
Cultural Property (OPN 11.03, beingrevised as OP 4.11) [I [XI
Involuntary Resettlement (OP/BP 4.12) [I [XI
Indigenous Peoples(OD 4.20, being revised as OP 4.10) [I [XI
Forests (OP/BP 4.36) [I [XI
''Measuredas
by the Ginicoefficient at 0.29 in2003.
Defined the percentage of persons whose net income is less than 60 percent o f median net income of all households.
12
Safety of D a m s (OP/BP 4.37) [ I [XI
Projects inDisputed Areas (OP/BP/GP 7.60)* [ I [XI
Projects on International Waterways (OP/BP/GP 7.50) [ I [XI
7. Policy Exceptions andReadiness
There are no exceptions required from Bank policies, and none are anticipated. All disclosure requirements
have been met. Agreed project staff i s being mobilized, and a technical assistance and procurement plan for
2005 was finalized and agreed at Negotiations. Biddingdocuments for the procurement packages required for
the first year o f project implementation will be based on the documents used by the Ministry for the
implementation o f an ongoing Health System Project and are being revised to accommodate the requirements
of M a y 2004 Guidelines. The documents will be available by Project effectiveness and will be added to the
Operational Manual. Counterpart fund requirements have been identified and are fully reflected in the 2005
budget, which was approved by Parliament in November 2004. As noted in Annex 3, a comprehensive and
results orientedmonitoringplan has been agreedunder the project.
* By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed
areas.
13
Annex 1: Country and Sector Background
CROATIA: SocialWelfare DevelopmentProject
Country Overview
1. Croatia's economy has undergone profound transformation since the country gained independence. It
has overcome tremendous challenges during the 1990s, such as the costs o f the war and management of
hyperinflation. Macroeconomic stability initiated with the 1993 Stabilization Program together with the
resumption o f peace in 1995 contributed to a strong revival o f economic activity. A steep collapse in output
was finally reversed in 1994, and during the 1994-1998 period the economy recorded an average growth o f 5.6
percent. At the same time inflation was brought down to below 4 percent on average. The recovery was driven
bya surge indomestic demand supported by abank-lendingboom, whichboostedthe current account deficit to
as highas 12.5 percent in 1997 and more than doubled external debt to 60 percent o f GDP by 2000. Although
Croatian public sector spending increased by more than 16 percentage points during the 1990s and reached 57
percent in 1999, fiscal deficits have been kept low throughout the second half o f the 1990s due to strong
revenue performance from a successful tax reform.
2. During the last four years, Croatia took steps toward European and global integration through WTO
and CEFTA memberships, signing o f the Stabilization and Association Agreement with the EU and, most
importantly, receiving of a positive opinion by European Commission for beginning of EU membership
negotiations. The development of social welfare in Croatia i s needed to improve targeting efficiency and
service quality, as households will face differential impacts and challenges from transition and accession. Still,
this development will occur inan environment of fiscal consolidation. Public expenditures account for over
50 percent of GDP, which i s very high compared to EU accession and candidate country averages. The
Govemment gradually reduced the fiscal deficit from 8.1 percent o f GDP in 1999 to 4.5 percent of GDP in
2002, but these gains were partly reversed in2003, as a new round of spending increases ledthe fiscal deficit to
increase to an estimated 5.0 percent o f GDP. Real GDP growth has been positive, but has declined from 5.2
percent in 2002 to 3.8 percent in 2004. External debt rose from 60 percent o f GDP in 2000 to 82.4 percent of
GDP in 2003. The Govemment i s working closely with the TMF and the World Bank Programmatic
Adjustment Loan (PAL)team to support further fiscal adjustment and to reduce extemal vulnerability.
3. Social welfare reform i s an important component of EUaccession, particularly the Lisbon agenda. The
"EC Strategy for Croatia" through 2006 notes that social services are currently delivered largely by the
government sector, with limited local or NGO involvement to date. Decentralizationand improved quality of
service delivery will "not only improve the quality o f human services, but also be more cost-effective and
eliminate some holes in the social safety net."* The European Social Policy Agreement recommends that
Member States undertake the following, inter alia:
e Guaranteeing everyone a level o f resources consistent with human dignity;
e Ensuring that living standards are maintained when workers are forced to interrupt work due to
sickness, accident, maternity, invalidity, or unemployment;
e Individualizing rights and contributions to take account o f new personal lifestyles and family
structures;
e Providing guaranteed minimum resources for disabled, and fostering their social and economic
integration; and
e Developing the benefits and services available to the most disadvantaged families.
* EC CountryStrategy Paper for Croatia, 2002-2006
14
4. European accession will bring many challenges for Croatian communities, and some households will
have difficulty coping with the adjustment to new economic and social realities. The 2004 EC opinion (avis)
on Croatia's accession accordingly notes that Croatia needs to "prepare itself for the cooperation processes
developed at the European level in the fields of employment, social inclusion, and pensions." The Social
Welfare Development Project will complement the proposed Programmatic Adjustment Loan (PAL) program,
which will focus on cost containment, with development of a package of services and benefits that are better
suitedto the needs o f a rapidly developing society and economy that are poised for Europeanintegration. This
agenda i s described infurther detail below.
Sector Issues
5. A government-sponsored study found that the absolute poverty rate for 2001 was 11.1 percent. The
study found no significant differences in the prevalence o f poverty by gender. Income distribution3 is only
slightly less equitable than the average for the countries belonging to the EUprior to May 1, 2004 (EU15), and
according to the Central Bureau of Statistics Croatia's relative poverty rate for income4 in 2003 (at 16.9
percent) was only slightly higher than the EU15 average (below 15 percent) and an improvement from 18.2
percent in2002. However, some regions (especially war-affected areas) and certain ethnic groups have higher
poverty rates. Overall, the poverty profile i s dominatedby two groups o f Croats: the poorly educated and the
elderly. Nearly three-fourths o f the poor live infamilies whose head has only a primary education or less. The
poverty profile reveals two main economic causes o f income poverty: limited employment opportunities and
inadequate targeting of the social safety net.
6. Croatia operates a system o f social welfare similar to that found inthe sub-region. The system covers
cash benefits, social services and institutional care. Cash social benefits total about 4 percent o f GDP, with
about 0.26 percent o f GDP devoted to the single means-tested social support allowance (see table). The
remainder i s spent on categorical benefits that are poorly targeted, and some social services. While not directly
comparable, the EU spends an average of 1.4 percent o f GDP on cash family benefits and grants. Overall, the
Government recognizes that it i s necessary to consolidate and improve the efficiency o f Croatian social sector
expenditures, many o f which support consumptionrather than investment.
urrent and Pro
Policy Decision Making
7. The MHSW has a legacy of limited capacity to design social policy. Over the last two years, it has
worked intensively to formulate a clear agenda that aims to shift to improved targeting, client focus, and work
incentives, but statistical capacity remains weak and data collection, management and analysis needs
strengthening. Croatia has recently developed an official poverty line, which will serve as the basis of the
poverty benefits, but an improved household survey mechanism i s clearly needed to identify income correlates
Measuredby the Gini coefficient at 0.29 in2003.
Defined as the percentage of persons whose net income is less than 60 percent of the median net income of all
households.
15
and trends over time. Such tools will help the Government to design, communicate and defend policy changes
more effectively before Parliament and the broader public.
8. Although there are formal procedures for the preparation o f new legislation, including the requirement
for additional documentation with information about the actual situation, the rationale for the new legislation
and the financial planning, a limited monitoring system i s inplace that will allow the staff to regularly assess
the success o f the new policy. This issue has become the focus o f the UNDP program o f support to the
MHSW. The MHSWwill gradually take over the functions assignedto the UNDP project team.
Organizational Challenges
9. The MHSW faces several organizational challenges. First, a number o f categorical benefits are
managed by the Ministry o f Intergenerational Solidarity, Families and Veterans, rather than MHSW. The
proposed Programmatic Adjustment Loan (PAL) program has focused on bridging this Ministry with the
MHSW, so that a common social benefit policy can be agreed. This has proven challenging, but a joint
working group (along with the Ministry o f Finance) has been agreed. Mucho f the focus o f the SWDP will be
on those benefits administered within MHSW, given that they are the ones primarily aimed at poverty
reduction, work incentives, and community social services.
The second challenge i s the internal organization and management o f social welfare within the MHSW itself.
The structure of the MHSW i s changing, and the roles and task o f the staff are being redefined in order to
improve policy development, monitoring and evaluation, as well as administrative oversight o f benefit
programs. A UNDP financed project has created a monitoring unit to support the MHSW in pursuing the
policy process, defining priorities, plan and assess different policy options, and monitor and evaluate pilot
activities. This unit has a limitedoperational time frame.
Administrative Data
10. The collection of administrative data in the MHSW is currently the task o f two staff members of the
Department for Social Assistance (one fulltime, one part-time). They collect data from the local institutions:
115 CSWs and more than 160 institutions (state and privately financed). Local institutions provide data based
on templates they receive from the MHSW. The content of the `official' data i s determined within the Annual
Statistics Program o f the Government of Croatia. The MHSW yearly proposes a list o f data to be collected
based on their needs. This Social Statistics Advisory Group of the CBS discusses the proposals and makes the
final recommendation about the data to be included inthe project. The Government and finally the Parliament
approve the project.
Social assistance and administration
11. The Social Welfare Act sets out a system of nationally based and funded social assistance provision
aimed at those inpoverty. However, the benefits are not well targeted and only about 50 percentreaches those
inthe bottomquintile. Inaddition, county authorities and local self government authorities provide arange of
benefits also aimed at the poorest. The nationally based benefits are paid through a network o f 115 CSW
offices while the municipal provided benefits are paidthrough local government offices. The result i s a mixed
benefit provision, which i s difficult for many individuals to establish their own entitlement and leaves open the
possibility for some to obtain benefits to which they are not entitled. Because o f the lack o f links between the
benefits policy development it i s possible for people who do claim their full entitlement to raise the family
income significantly above that of either a working low income family, or a non-working family who have not
claimed all their entitlements.
12. Total expenditure on nationally legislatedbenefits for 2002 amounted to HRK 1.2 billion. There i s no
single data base and therefore all these figures relate to individual claims for individual benefits, and in many
16
cases reflect more than one claim per year for the same family, or one family claiming one or more benefits.
As there was no representative household survey between 1991 and 1998, it is difficult to monitor poverty
dynamics and trends or to assess the impact o f social assistance in addressing poverty, but some analysis
carried out in Croatia Economic Vulnerability and Welfare Study suggests that poverty i s perceived as
stagnant. However growing unemployment is perceived as a problem (particularly in some areas where the
unemployed exceed 50 percent o f the social assistance recipients). All benefits have either a Kuna for Kuna
cut o f f or an absolute cut o f f with no incentives to attempt to become self-sufficient or to improve the family's
financial positionwith limitedwork. The main concerns o fthe M H S W with regardto the cashbenefits are:
levels o f benefits are quite low and do not meet the poverty gap, while some families do manage to
receive sums that take them over the poverty level,
administration i s cumbersome, with families having to make multiple claims at multiple offices,
there i s a high level o f errors o f inclusion, with only 50 percent o f benefits going to those above the
bottom quintile (and this for the smallest benefit package available, the social support allowance)
there i s a lack o f good information on which to develop future policy,
beneficiaries may become dependent on a benefit level income (perhaps supplemented by unrecorded
work)
beneficiaries make n o contribution to the community inreturn for the benefit support the received; and
local authorities have little say inhow benefits shouldbe administered, and to whom
Unification and simplification and mechanisms to reduce the errors o f inclusion and exclusion are seen
as a high priority to better-target the poverty benefits. In addition, the government wishes to simplify the
administration and allow the highly trained social workers more time to deal with the social, rather than
financial, problems o f the poor.
Social Service System
14. Social services are provided through a variety o f residential and community services, where the
residential services are predominant. This i s partially explained by the historic traditions o f institutionalization
o f populations who could perhaps be more effectively cared for inthe community, or alternative care settings.
InDecember2002, almost 23,000 peoplewere placedinpublic residentialinstitutions.Oldandinfirmpeople
are the single largest client categories, followed by disabled, and children. There i s a very limited supply o f
alternative community day services that are more effective and less expensive than residential care, though
more than 4,500 are placed in host families which are regarded as community based alternatives to resident
services. Discussions duringproject preparation suggest that, all inall, more than 30,000 citizens are placed in
care and services, out o f which the majority are in resident institutions; this means that 0,46 percent o f the
population i s placedinservices. The deinstitutionalizationprocess has been slow and hamperedby the absence
o f alternative service provision and structural disincentives to find and use alternative care options.
15. Currently there are 166 resident institutions run by the state, counties and municipalities. The state
cost for 2001 was HRK 886 million and the cost has increasedby 3 - 4 percent over the latest three years. Out
o f the total state expenditures for social welfare, HRK 1,961 million in year 2001, 45 percent was spent on
social services. The Ministry estimates the costs for residential service as higher than those for community
care. Although these cost differences have not been sustained by actual figures, experiences from other
countries in the region confirm the estimation. Although reliable data i s not available, the working group on
17
social services estimates that cost per day per person in resident institutions i s about HRK 117 while
community care cost range between HRK 50-65.
16. The incentives for the local level to conduct social planning are weak. Funds that could allow for
realization o f plans are not at hand and planning i s more based on what services there are, than what services
clients may possibly need. The weak interface between benefits on the one hand and services on the other
hampers the aspirations to find client focused and tailor made solutions to various social problems citizens
face. Since funds are tied up inresident institutions, the policy intentions to directly support families cannot be
sustained effectively. Referring individuals to residential institutions become a tempting option for
municipalities with scarce funds to invest in care forms that could better meet the individual needs o f clients.
The local discretion to choose care alternatives for its citizens and have an impact on services is limited and the
Ministry is engaged in detailed managerial tasks regarding services that could be more effectively handled
locally.
17. Monitoring and control instruments for quality assurance and quality improvement are weak. To the
extent service provision i s monitored at all, it i s arbitrary and random and usually triggered by calamities and
drawbacks in service provision. The standards that are in place are merely focusing on technical aspects o f
service provision and do not reflect any ambitions conceming the core inall care provision, quality o f life and
the result that can be achieved for individuals invulnerable situation.
18. The Ministry intends to improve the quality o f social welfare services, promoting
deinstitutionalization, increasing publidprivate partnerships in social service delivery, developing independent
professional bodies in the areas o f social policy and social work, upgrading the skills o f sector staff and
devolve functions and decisions to the local level. There are a number o f overarching principles meant to
guide the reform. Prevention, deinstitutionalization and reintegration programs are being initiated. The
importance o f family solidarity i s highlighted, the principle o f self-reliance, the principle o f local capacity
buildingto make decisions, andthe principle o fequitable access to social services.
19. These policy intentions have been important in the preparation of the project and have had an impact
on project design. Project activities are clearly related and the core o f the component i s to design and develop a
more varied mix o f services and put in place incentives that will encourage the CSWs to find the care forms
that give the highest benefitsto the lowest costs. At the same time, the providers - regardless ifthey are public
or private - would have to aspire towards high results and good outcomes o f care; if not, they would fail to
meet the standards and not be allowed to operate.
20. Prior to the core activity, the social planning instrument must be developed and used to take stock on
the needs o f clients, the care and service resources available, identify and bridge the gaps between demand and
supply and develop a plan for development o f new services as well as transformation and improvements of the
old. It i s hardly possible to develop new services unless the scope and type have been carefully planned. A
model for coordinated work between a county CSW and a Methodological Center i s being developed.
Alongside with these two activities, the quality o f services will be improved through development o f standards
and monitoring system, equally applicable to all services. The staff capacity enhancement will be addressed
under the component by an assessment o f needs o f training, identification o f capacity to provide training and
development o f programs and start o f training activities. The staff capacity activity will target both those
practitioners already employed inthe system.
GovernmentStrategy
21. The goal o f Croatia's social assistance and welfare reform i s to create a system that is client-centered,
outcome-driven and user fiiendly. It i s guided by principles to: (i) help clients to achieve, to the greatest
degree possible, self-reliance through provision o f effective social services to the most needy; (ii)ensure
uniform access to quality and relevant social services; and (iii) streamline targeted social assistance programs,
18
strengthen fiscal sustainability, while preserving work incentives for benefit recipients. Reform proposals
involve a number of various policies, actions and suggested management/administration structures which,
however, require further strategic rethinlung and prioritizationprior to moving to their implementation.
22. Croatia's social policy reform will need to balance tradeoffs between: (i) living standards and
raising
providing effective social services to the most needy; (ii) keeping program costs affordable, given the current
broader fiscal pressures and aging o f the Croatian population; (iii) preserving work incentives for benefit
recipients and identifying employment opportunities for them - some fifty percent o f social benefit recipients
inCroatia are able-bodied for work; and (iv) keepingprograms administratively simple. Relatedproject design
issues for Croatia include: (i) defining who will be eligible for benefits and services; (ii)determining what
factors will establish the benefits they receive, in what form, and for how long; and (iii) establishing what
levels o f government will be responsible for policies and rules, financing, administration, andmonitoring.
19
Annex 2: Major RelatedProjectsFinancedbythe Bankand/or other Agencies
CROATIA: SocialWelfareDevelopmentProject
IBRD
1. The Programmatic Adjustment Loan (FY05, P082278) for Croatia will include measures to support
social benefit rationalization and sustainability o f the pension system. The objective of the proposed P A L i s to
enhance economic growth in Croatia through promoting macroeconomic stability (in particular fiscal
adjustment), and improving the investment climate. PAL-1 (US$l50 million equivalent) i s expected to go to
Board inmid-2005.
2. The Pension System Investment Project (FY03, US$27.3 million, P063546) i s improving the
effectiveness and transparency of Croatia's system for reporting and enforcement o f social contributions and
personal income taxes, in particular for the new system o f funded pensions, and strengtheningcapacity in
existing and new agencies which manage different parts o f the pension system to operate and regulate the new
multi-pillar system.
3. The Health System Project (FYOO, US$29.0 million, P051273) is creating a more effective, efficient
and financially sustainable health system through strengthening institutional capacity within the health sector,
introducing pilot delivery system improvements - particularly hospital care - and a national heart disease
program, strengthening public health activities, developing policy options that will increase the sector financial
sustainability, improving and expanding the health information system and disposing of outdated and unusable
pharmaceuticals.
4. The Bank has been working with the Croatian Government on preparation o f a Social and Economic
Recoverv Project (CSERP) targeted to support the economic and social revitalization of disadvantaged and
war-affected areas as a way to increase social cohesion. To achieve this, the project i s expected to adopt a
social fund type approach to fund community-selected subproject activities. The project has been approved
(FY2005).
5. The Bank is also preparing a proposed Education Sector Support Prowam (ESSP). The overall
objective o f the ESSP will be to improve the education o f all students inthe classroom, so that student learning
outcomes will progressively close the gap with European averages, and in a manner that i s supportive o f
innovation-led growth and private sector development, enhancing equity and equal access to good education,
and consistent with the strengthenedefficiency, effectiveness, and accountability o f the sector. The program i s
expectedto be approved inFY06.
Other Agencies
6. The EUCARDS Social Service Delivery by the Non-Profit Sector Project (EUR 1.5 million) will focus
on: (i) The provision o f `institution building' support to state institutions and Civil Society Organizations
(CSO) in relation to the operation of decentralised services in the areas o f social care, health and education
policies; and (ii) The provision of a `grant scheme' to strengthen the operations of a selection o f those CSOs
already participating under the State Budget's 3-year financial support programme, as well as new other
eligible CSOs.
7. The UNDP Strengtheningo fthe Policvmaking andEvaluation Capacities o fthe Ministryo fHealthand
Social Welfare Project was signed in November 2003. The project has established a Monitoring Unit in
MHSW, which intum will: (i) the likely impacts and probable costs o f current proposed social welfare
assess
reforms, (ii) assess and select appropriate evaluation methods and instruments and to develop monitoring
systems, (iii) to design, implement, monitor, and evaluate pilot projects, (iv) undertake other research and
20
activities as needed to support comparative policy analysis and prepare recommendations for action by the
Government o f Croatia.
8. The Swedish Intemational Development Cooperation Agency Capacity Building o f Social Service
Providers through Training inSupervision Proiect was recently completed, and aimed to improve the quality of
social services and extend these services through development o f the model o f supervision inthe social welfare
field, training o f students, social workers and teachers, and to introduce the supervision into the regular
curriculum at the Universitylevel. Duringthe three-year training period over 40 supervisor teams from Croatia
with over 200 professional participated inthe program. The training was done inaccordance with the specific
requirements o f the Association of National Organizations for supervision in Europe, which ensures the
compliance with the EU standards. At the end of the program, 35 professionals in social care system became
certified supervisors. The University o f Zagreb approved the inclusion of the "Methods of Supervision in
Psycho-Sociological Work" as separate subject in the regular curriculum. In addition, SDA i s supporting a
Training of Experts, Professionals and Foster Parents in the Area of Foster Family Care program with the
overall goal to promote and upgrade the quality o f the existing Foster Family Care model in Croatia through
sharing and applying best practices of the Swedish Foster care experience/model in Croatia, as altemative to
institutional care for children without adequate parental care. Duringthe three-year program implementation, it
i s expected that some 100 professionals and 50 foster parents will be identified, selected and trained inthe area
o f social welfare (social workers, psychologists, sociologists, special pedagogues) inorder to upgrade services
for children deprived of parental care, applying know-how and slulls relevant for the organization and
implementation o f foster family care and specialized foster family care arrangement.
21
Annex 3: ResultsFrameworkandMonitoring
CROATIA: Social WelfareDevelopmentProject
PDO Outcome Indicators Use of Outcome Information
The Social Welfare Development 5 - 10 % increase inall targeted 3rrors o f inclusiodexclusion
Project will strengthen the quality, social benefits that reachesthe wogressively minimized through
targeting and administration o f bottomquintile o fthe :ontinued policy and administrative
social benefits and services to those population.fiom baseline in2005 levelopment
most inneed. "Living Standards Assessment"
Reduction by at least 15 YOo f social viore time available for direct client
worker time spent on socialbenefit iervice
administration.
Reduction o freferrals to resident The potential o fprevention,
institutions by lo%, yearly from ,eintegration and cost effectiveness
2008. Ifcommunity services vis a vis
.esidential services demonstrated to
111stakeholders
Project supervisionshows improved ?rojectwill support the technical
targeting and administrative iolicy designand administrative
simplicity through streamlined ssues related to benefit
benefit entitlements inSocial iimplification, which inturnwill
Welfare Act. Feedinto the new administrative
structure and MIS.
Intermediate Results Results Indicators for Each Use o f Results Monitoring
One per Component Component
Component One: Improving Component One: Component One:
Social Service Delivery
Sub-componentI:Social Service Sub-component I: 9ub-component I:
Planning and Development of
New ServiceMix
Service mix planning manual At least 15 %more clients served in SWDP supervision visits show that
available to assist County CSW and programs that prevent communities are being increasingly
M C inthree initial counties to help institutionalization and help providedwith social welfare options
Government to target resources to integration at the end o f the project. that effectively meet their most
priority projects for prevention and pressing social needs (based on the
reintegration. annual survey data) and the MHSW
has prepared a plan for nation- wide
redirecting o f funding towards
community based services.
Sub-component2: Managing and Sub-component 2: Sub-component 2:
Financing for Results
Service quality improved through 100%of all programs overseen by Ministrycanmonitor compliance
perfonnancebasedbudgeting, better MHSW and its subsidiary agencies with new standards, which guides
standards, andmonitoring to assess either meet service standards, or are their decisions to close down some
compliance with standards. implementing a satisfactory plan to sub-quality services and promote
achieve minimumstandards. those services inline with policy
goals.
22
1Component TWO: Social Welfare Component Two: Component TWO:
Management Information System
Automated management information Automated management Delays or problem inautomation
system, and new organization o f information systemeffectively plan implementation and o f
CSWs, will result inbetter client implementedand national reorganizing the office procedures
services. beneficiary databases runningby will show incomponent monitoring
mid-project. Public awareness and sustained by client survey, that can
client satisfaction increases, lay the groundwork for remedial
processing times shortened and rate action
o f errors has decreased 10percent
yearly from mid-project, measured
inclient satisfaction survev.
Component Three: Upgrading of Component Three: Component Three:
Social Services Facilities
CSW administrations providing All 21primary County CSWs have a This informationwill feed into the
more effective client service, and are hlly functioning one stop shop overall social service standards and
physically able to incorporate IT model. monitoring systems.
upgrades under component 2
100%of social welfare facilities
Public health standards met by all have acceptable hygienic standards
institutions inplace to meetnational criteria
23
Ar ingement for resuh monitoring
Outcome Indicators Baseline 2006 2007 2008 Frequency and Data Collection Responsibility for
2005 Renorts Instruments Data Collection
5 - 10% increasein all X X X X+ 5-10% Annual socialpolicy Monthly and annual dHSW
targeted socialbenefitsthat assessment andreports socialpolicy data
reachesthe bottom quintile of from CentralBureauof reports, poverty
the population.. Statistics update (2005, WB)
Reductionby at least 15% of 70% 70% 65% 55% Administrative data on Annual survey of VIHSW, WG
socialworker time spenton staff time allocation staff time spent
socialbenefitadministration. Set by
Reductionofreferralsto baseline X X x-10% Baselinestudy 2005 and Survey inpilots, VIHSW, WG
residentinstitutionsby IO%, survey Annual inpilots from regular reports from
yearly from 2008 inpilot 2006 County CSWs
Iareas.
Results Indicators
Component One:
At least 15 % more clients --Set by X X x+15% Annual report Annual review of aHSW, WG
servedin programsthat baseline SWDP
prevent institutionalization survey implementation
andhelp integrationat the end
of the project.
New service purchasing 0 0 0 1 Annual report Annual review of MHSW, WG
modelintroducedin x pilot SWDP
communities (#) implementation
# programsprovidedwith 0 2 4 6 Annual report Annual review of WHSW, Project
seed financingthat is pooled SWDP loordinator
with local funds and other implementation
donor resources
# clientsprovidedwith new 40 80 120 Annual report, progress Annual review of MHSW, Project
servicesunder SSGF reports SWDP Zoordinator
implementation
# clientsdeinstitutionalized 0 25 50 Annual report, progress Annual review of MHSW, Project
andretumedto families or reports SWDP Coordinator
independentliving implementation
% of all programsoverseen 40 75 100 Annual report, progress Annual review of MHSW, Project
by MHSW and its subsidiary reports SWDP Coordinator
agencies either meet implementation
standards, or are
implementinga satisfactory
plan to achieve minimum
standards
Financialmanagement and
procurementprocedures
increasinglyprofessionalized, _- Qualitative Qualitative Qualitative Annual report,progress Annual review of MHSW, Project
and conductedincreasingly in assessments assessments assessments reports SWDP Coordinator
line with EUstandards implementation
ComponentTwo:
Introductionof amanagement Dataneeds Software Equipment Annual report, progress Administrative data, MHSW, Project
information system, and case defined developed installedin reports contract Coordinator
management system, for all 30% O f management
socialassistanceclients. offices
YOof public social welfare 0 40 75 100 Annual supervision Annual review of MHSW, Project
facilities haveacceptable report (SocialWelfare SWDP Coordinator
hygienic standardsinplaceto Department) implementation
meet nationalcriteria
Numberof County CSWs 0 3 8 21 Annual supervision Annual review of MHSW, Project
with functioning one stop report (SocialWelfare SWDP Coordinator
Department) implementation
24
Annex 4: Detailed Project Description
CROATIA: SocialWelfare Development Project
The Social Welfare Development Project will strengthen the quality, targeting and administration of
social benefits and services to those most in need. Project performance will be assessed through a
number o f qualitative assessments and quantitative indicators. Project monitoring during implementation
will be carried out by the MHSW's Economic Department within its new organization. They will be
assisted by data generated under the project including that produced by the surveys conducted by CBS,
data from the computerized benefit system and analyzed by the Policy Development Department, and
data generatedby surveys inthe pilot regions on social service provision.
Project components
The SWDP will be implementedaround three components, inconjunctionwith the PAL focus on
benefit policy, the EC's labor market and retraining support, and the UNDP's ongoing support to
social welfare policy development capacity inMHSW.
Component 1:Improving Social Service Delivery (EUR 5.3M total, EUR 3.9M IBRD financing)
The goal o f this component i s to improve the entire spectrum o f social welfare provision in Croatia, from
prevention, to quality o f service delivery, to reintegration o f clients into the community. Social services
will be made more inclusive, family oriented and efficient through (i) developing and introducing a new
organizational model for front line social service administration and service delivery, covering the County
Centers for Social Work (CSWs) and Methodological Centers (MCs), (ii)establishing new and more
innovative community based programs; (iii)transforming residential institutions; (iv) enhancing the
quality o f services, and reducing the time spent in those services; and (v) implementing incentives that
encourage financially responsible management o f public funds for services. The first sub-component,
`Programming Cost-effective, Efficient and Inclusive Social Services, ' will focus on introducing
substantial improvements in administration and service delivery in three selected counties before national
replication. The second sub-component, `Managing and Financingfor Results, ' will help public sector
agencies to utilize new tools and approaches to achieve the changes envisaged under this project.
Subcomponent 1: Programming Cost-effective, Efficient and Inclusive Services will develop an
organization for planning and delivery o f services at the county level, drawing on a model for coordinated
work between a single County Center for Social Welfare, (County CSW), Methodological Center (MC),
and other CSWs in the county. The County CSW will assume the lead role for planning and oversight of
all types o f social services. The MC, most often located at an institution exercising best practice social
work, will liaison with the County CSW and provide advisory services to help select the most effective
and qualitative service for a client. The MCs will assist inthe planning o f services, the setting o f criteria
for selection o f services, the improvement of service quality, the engagement of volunteers, and the
assistance to the CSW in short-term client assessments.
This subcomponent introduces two innovations for Croatia. First, system planning and oversight will be
rationalized by establishing a single lead administrative CSW in each county (which may also provide
services), with the remaining CSWs focused primarily on service delivery. As designed, this approach
should (i) facilitate annual budgeting and resource monitoring, and help the counties to identify and
exploit economies o f scale, e.g., inprocurement; and (ii) redirect scarce countywide staff resources from
paperwork to direct client service. As noted above, the M C s will provide localized technical support to
the CSWs. The second innovation i s the inclusion o f a policy-driven reorientation towards prevention,
25
service quality enhancement and reintegration of clients into society, that i s expressed in three programs
guidingthe work of the MCs; prevention o f institutionalization, deinstitutionalization and transformation
of residential institutions. These programs reflect the Government's policy intentions for service delivery.
The sub-component will provide a package of advisory services and training to:
Develop the organization of service planning and delively, specifying the functional lines of
responsibility for the CSWs and MCs. The cooperation between these agencies will be formalized
through written agreement.
Develop a masterplan for a new and more varied service mix. This activity will develop a planning
manual that would allow the County CSWs - with the assistance o f the MCs - to assess the needs of
services, the current supply of services, and to identify the gaps in provision, and thus, lay the
groundwork for planning for a new and more varied service mix in a county. This activity will
specify the business needs (feeding into the second component specifications) for (i) planning and
projection o f the demand and supply o f social services, (ii) tracking outcomes o f social service
interventions, (iii) identifyingcosts for different types o f services, and (iv) establishing and updating
a register o f providers of services. The final output of this activity will be a long-term master plan for
the provision o f services that complies with the policy goals to deliver inclusive, qualitative and cost-
effective services. The Innovation and Learning Program (ILP, see below) will attract new and
innovativeproviders to becomeparts of a small but growing market for services inthe three counties.
Design and develop a concept for One Stop Offices (OSO) that will establish one initial point o f
contact for clients for most or all social service programs. Once fully designed, OSOs will be
supported under the second and third components to facilitate the processing of benefit application,
case management and payment. The program will develop a concept for OSOs in terms o f staff
organization, delegation routines, staff skills, staffroutine manuals, distribution of responsibilities and
tasks, and implications for management. A full training package for management and staff to comply
with these requirements will be developed inclose cooperation with the second component.
Compile best practice and design and develop the concept for the MCs, based on a review o f best
practice social work inthe three pilot counties. This would include an assessment o f the effectiveness
and costs o f MC interventionsthat support prevention, inclusion and deinstitutionalization. The MCs
inthe three counties would be supported in developing a broadrange of social work specializations.
Once developed, the three MCswould become anational asset for promoting modern service delivery
approaches in other counties. Training programs in social service delivery will be developed on a
`train the trainers' model.
Design and conduct a baseline study covering the current demand and supply o f services, developing
indicators for measuring project progress, and then implementing an annual repetition o f the
assessment that would allow for continuous monitoring o f project progress.
Explore and define additional needs of studies, investigations, reports and concept development,
which may occur duringthe work on this sub component. Further, needs o f investments to bring up
the material standards of the three County CSW offices and RCs should be described and defined;
computers, library, handicap adaptation of buildings, and similar needs. The program will allocate
some resources on a flexible basis to address future needs of this type that cannot be identified at
present.
26
Subcomponent 2: Managing and Financing for Results
The purpose o f this sub-component i s to support the implementation o f the Government's policy for
qualitative and cost-effective service delivery, by using two tools: new financing mechanisms and
improved result-oriented standards. An Innovation and Learning Program will be set up to support the
enforcement of the Government's social service policy.
The current financing and budgeting system provides weak incentives for the CSWs to find the most
qualitative and cost effective service options. Services are financed directly from the central Government
budget, and CSW staff has few financial incentives to limit spending on services. CSW staff i s also
unable to determine the actual costs o f services or on whether they are receiving value for money. This
makes it difficult to identify and provide cost-effective and high quality options relative to the current
residential services being offered. Service providers also have few incentives to improve quality, as they
receive direct budgetary revenues that are input based, and that are rarely tied to improved service
delivery or new innovations.
The program will assist the Ministry to design, pilot and implement a performance based budgeting
system, by which the providers would be paid for what they deliver and for the quality of their services.
This system will reorganize the service financing system by allowing County CSW management to
purchase the services that best meet the needs o f the client, and that would produce best outcomes to the
lowest costs. The pilot would most likely be initiated in the three initial counties, once the concept is
fully ready, including development o f standard contractual agreement form with the service providers.
Implementing performance based goals, management and budgeting will require a clear specification of
what performance that i s desirable. In other words, the system should reward good performance that
complies with the Government's policy goals, and not pay for performance that contradicts these goals.
The program therefore includes the specification o f clear indicators to ensure that the improvement o f
services follows the Government's policy guidelines.
Developing new service standards will be essential for establishing (i) the extent to which the policy goals
are being met; (ii) the effectiveness o f the administration o f delivering against those goals; and (iii) the
extent to which public resources are being targeted to those goals. Compliance with standards will be
tracked through a monitoring unit at the M H S W Economic Department, and training provided for staff at
that unit. The Innovation and Learning Program (ILP) will be used to finance start up costs for new or
transformed services, that have the capacity to sustain the new policy and deliver services that comply
with the new quality standards. List o f eligibility and selection criteria, and detailedprocedures (including
applicable procurement procedures) would be developed prior to the use o f funds allocated for the ILP.
The sub-component contains three major activities; (i)Managing and Budgetingfor Results, (ii)
Developing Standards and Monitoring systems,and (iii) up an Innovation and Learning Program,
Setting
and will provide a package o f advisory services, technical assistance and training, and grant funds for ILP
to:
Managing and Financingfor Results
Assess the costsfor residential and community based services aimed at describing the effects o f the
policy-driven re-orientationtowards preventive approaches to social work and a stronger emphasis on
reintegration. The assessment would allow for comparisons between different service forms and
project the future costs for a more varied and community based service mix.
Develop the CSWstaffcapacity to become informedpurchasers inthe procurement of social services,
through (i) assessing clients needs - with the assistance o f MC expertise, (ii) deciding -together with
27
client - on type of service, (iii)developing a care plan with clear targets, (iv) financing the service by
paying the provider for service delivered, (v) tracking the results of a service, (vi) keeping informed
and updated on the supply o f services, knowing its quality and costs.
Change the direct financing of services from Ministry to service institution, by developing a
mechanism for financing that (i) i s based on what a provider manages to deliver, (ii) provider's
on
performance and results, and (iii) that complies with the Ministry's policy. The funds for financing
services (on an initial pilot basis) would be put in the hands o f the CSW management, and allow for
them to purchase the service that best meet the needs o f the client and that is qualitative and cost-
effective.
Develop a program for performance based budgeting that draws on the Government's policy,
identifies what performance that i s desirable, develops indicators for measuring performance as well
as identification o fbest practice, andthat linksthese indicators to the standards for services.
Standards and Monitoring
Assess the current standards, comparing them with best practice (and results-oriented) standards, and
identifying the needs o f improvements. This activity aims at working out o f a small set o f standards
covering 5 - 7 different types o f services, both community based and residential. This activity aims at
building capacity within the Ministry to improve standards. Further, an appropriate place in the
Ministry organization for a monitoring unit will be identified, its organization developed, staffing,
tasks and responsibilities described and training provided for the staff to handle standard
development, their implementation as well as monitoring o f service provider's compliance with
standards, described ina long-term monitoringplan.
Innovation and Learning Program
Develop guidelines and design an organization for the Innovation and Learning Program, and
provide Jinancing for that program that enable the Ministry to identify best practice social work,
stimulate the growth o f services that complies with policy and standards, and that can finance start up
costs for such social service projects. The Innovation and Learning Program will support innovative
projects that transform the residential care services and promote community - based care and are in
line with government commitment to reduce the role o f residential care, prevent institutionalization
and develop alternative care options for the clients o f welfare system. The ILP will be governed by a
grant committee (chaired by the MHSW) and will finance or co-finance initial costs for the provision
o f new innovative community care programs. The detailed description of the eligibility o f the
projects, approval and selection criteria, grant limits, applicable procurement procedures, and grant
committee membership will be developed with foreign and local technical assistance and grant
disbursements will start only after these procedures are established in the M H S W in an ILP manual.
Every year the grant committee will issue a report on projects that have received grant financing. All
programs funded by the ILP will be carefully evaluated to disseminate lessons learned with respect to
improvements inquality, effectiveness and costs.
Component 2. Strengthening of the Social Welfare Management Information System (EUR 7.OM
total, EUR4.3M IBRD financing)
There are a number o f issues that currently detract from the good administration of cash benefits and
services, and that add to the general problems o f poor financial controls o f benefits and services, errors of
inclusion and exclusion, and policy development difficulties. Social policy i s difficult to monitor and
review, partly because the administrative data on the beneficiaries is unreliable, or not available quickly,
28
or not inthe manner requiredfor policy development. Limited computer facilities are currently available
in CSW offices. This component will support the development and implementation of a management
information system (MIS) that would include (i) a central registry o f beneficiaries, including basic data
and information on their social rights; (ii)a benefit calculation and payment module; (iii)a case
management system; (iv) accounting and planning tools; and (v) a database of service providers. In
addition to facilitating the work o f local level staff, this MIS would provide timely and accurate national
data to the Ministry staff to design, monitor and analyze social policy. The overall design of the system
will incorporate the concept o f a single point of benefit claim (one stop shop) approach, and the
separation o f clients from the working areas o f the office with a front officehack office design (in
coordination with component 3). The component will consist o f two sub-components:
1. Implementationof a new administrativeorganization in CSW.The new organization will
be based on a One-Stop-Office model that will bring together cash and non-cash benefits in an
organizational model that will provide better service to the client and improve the work
organization incenters for social welfare throughout the country.
2. Introductionof a managementinformation system.The improved management information
system will establish a register of all welfare system beneficiaries, automate the process of
claiming, processing and paying cashbenefits and institute a case management system that would
assist the Govemment to undertake a review o f relative program effectiveness, to track services at
the client level, and to use this information for better policy decisionmaking.
The activities under this component will be closely coordinated with the activities under Component 1
and Component 3. This component will be implementedas follows:
J Inthe first phase, the MHSW will undertake a business process review to analyze the
current business needs, and to revise the existing automation plan accordingly. The assessment
will review how information is collected, managed and disseminated (for budgets, benefits,
clients and institutions) by the Centers of Social Welfare, service providers, and Govemment
ministries and agencies. It will provide specific recommendations to help to ensure that the
technical design o f the MIS i s fully consistent with the structure and needs o f the social service
administration. It will also outline how CSW or other staff will needto be redeployedinorder to
manage and utilize the new system.
J In the second phase, the development of the MIS will be initiated. The M I S
development would cover (i) design, drawing from the automation plan; (ii)
system development
of applications to cover the central registry of beneficiaries, includingbasic data and information
on their social rights; (iii) a benefit calculation and payment module; (iv) a case management
system; (v) accounting and planning tools; and (vi) a database o f service providers. The system
will be pilotedinthe three counties that are includedinComponent 1above.
J Once the pilots have been fully evaluated, and any remaining issues resolved, the third
phase would scale upthe system to cover the entire country.
J This component will provide full training to staff and technical manualsheference
materials.
J The MIShardware package will likely beprocuredseparately from the other components
of the system, taking into account the phasing o f the software development, the progress o f
renovations under Component 3.
29
Introducing the M I S hardware, and providing training o f staff to use it, will significantly improve
efficiency and effectiveness in administration of benefits, although it i s not aimed at improving the
benefits as such. However, once administration improves, it allows for assessing the appropriateness o f
the benefits and whether a merger o f some o f the benefits would add value and further improve the
benefit structure. Information concerning streamlining of the benefits should be compiled, systematized
and early on utilized for further simplification of the benefit structure and reduced spending.
Component 3. Upgrading of ExistingSocialServices Facilities(EUR 34.OM total, EUR22.8M
IBRDfinancing)
The Ministry o f Health and Social Welfare estimates that some 70 percent o f residential institutions
currently fail to meet basic public health standards. In addition, many county CSWs require
refurbishments or new construction in order to (i) introduce the one stop office concept; (ii) provide an
appropriate installation environment for IT upgrades; and (iii) improve overall facility conditions, many
of which are in very poor shape. The objective o f this component i s to (i) upgrade a range o f selected
residential institutions to ensure that they meet the minimumstandards, thus contributing to an improved
overall quality o f social services; and (ii)provide CSW renovations or new construction consistent with
the administrative reorganization. There i s a clear need to improve the standards o f many institutions (a
number of residents died from food poisoning in one facility in 2004), and a multi-year infrastructure
upgrade program has been developed that was based on a professional assessment o f the needs for the
improvement inhygiene of the public residentialinstitutions. To avoid conflict with the stated aim o f the
first component o f the project, the criteria used to assess institutions assessed institutional investment
priorities and sequencing.
30
Annex 5: ProjectCosts
CROATIA: SocialWelfareDevelopmentProject
Project Cost By Component andor Activity Local Foreign Total
U S $million U S $million US$million
1. Social Service Delivery 5.1 1.7 6.8
2. Social Welfare Management Information System 0.5 8.5 9.0
3. Upgradingo f ExistingSocial Service Facilities 37.6 4.2 41.8
Total Baseline Cost 43.2 14.4 57.6
Physical Contingencies 0.4 0.1 0.5
Price Contingencies 1.9 0.3 2.2
Total Proiect Costs' 45.5 14.8 60.3
Total FinancingRequired 45.5 14.8 60.3
'Identifiable taxes and duties are US$9.8 million, and the total project cost, net of taxes, i s US$50.0
million. Therefore, the share of project cost net of taxes i s 83 percent.
31
Annex 6: ImplementationArrangements
CROATIA: SocialWelfareDevelopmentProject
The MHSW will be the lead implementingagency for the SWDP and the proposed implementation
arrangements will build on the existing MHSW structure and skills. The proposed project management
arrangements will utilize both the technical and fiduciary units under the Department of Economic
Affairs. The proposed implementation arrangements will put an emphasis on continued strengtheningo f
the MHSW capacity to manage its fiduciary functions. Training o f procurement staff and development
of standard agreement forms and tender documents will be done in cooperation with the Public
Procurement Office and the Project ImplementationUnitfor the existingHealth SystemProject.
The MHSW Assistant Minister for Economic Affairs will act as the Project Coordinator and would be
responsible for the reforms and the technical content o f the SWDP. Each project component will be led
by a working group with a coordinator at its head. The heads of the working groups will liaise with the
Project Coordinator and Project Manager on administrative issues.. The Project Coordinator will liaise
closely with the National Coordinator for Social Welfare Reform inCroatia. A Project Manager i s being
appointed and will be responsible for day to day coordination o f MHSW team's inputs and administration
of project implementation, including procurement, contract administration, financial management, and
monitoring and evaluation. The Terms of Reference for eachposition and division o f responsibilities will
be described inthe ProjectOperational Manual.
MHSW will prepare an annual budget and a procurement plan for the SWDP for the following year and
agree on these with the Bank by September 30 of the preceding year before submission to the MOF.
Bank loan funds will be disbursed into a special account, which will be utilized for project financing.
Procurement will be carried out by MHSW structures following with World Bank procurement
procedures, and MHSW financial management systems will track the flow of funds. The procurement
and financial management arrangements are detailed inAnnexes 7 and 8.
Based on an assessment o f the fiduciary units of the Ministry, it was agreed the units within the
Department o f Economic Affairs would be responsible for carrying out procurement and financial
management tasks required for implementation of the SWDP. Inparticular, the capital investments unit
of the Department would be responsible for all procurement activities, including planning, purchasing,
monitoring and records keeping.
32
Annex 7: FinancialManagementandDisbursement Arrangements
CROATIA: Social WelfareDevelopmentProject
1. Country Issues
The latest Croatia CFAA report (June 2004) concludes that the level o f fiduciary risk attached to the
primary elements of Croatia's public financial management systems (legal framework, institutional
capacity and practices for the core financial control processes such as budgeting, treasury and cash
management, accounting, financial reporting, internal control, internal audit, external audit and
parliamentary oversight) i s significant.
Most o f the weaknesses in the PFM arrangements revolve around inefficiencies and weaknesses in the
existingfinancial accounting and management systems. The number o f staff in key PFMfunctions, such
as financial control, accounting and auditing, are inadequate and training capacities are lacking. The
Croatian Treasury within the Ministry o f Finance (MOF) relies on a SAP payment and financial
accounting system to process and record revenues and expenditures to and from a Treasury Single
Account (TSA) held at the Croatian National Bank. Whereas the SAP system can process and record all
payments made from the TSA, the Treasury has to rely on separate reports from Budget Users (BUS)for
reconciliation and commitment accounting purposes.
The Government's decision to implement modified accrual-based accounting rules from the fiscal year
2002 was taken without due consideration of the state of the current system infrastructure. Consequently,
the annual financial reporting from BUS,and the compilation and presentation o f the Government's
consolidated financial statements for the fiscal year 2002, were significantly delayed and contained
unreliable data.
The internal control framework of the Government administration has several weaknesses and i s not
supported by a general system o f internal audit, though this i s a statutory requirement o f the organic
Budget Act. Although the absence o f internal audit means that an important assurance function for the
efficient and effective functioning o f systems i s missing, the Government's external auditor, the State
Audit Office, does provide a basic external assurance function vis-a-vis Parliament. The SA0 is
discussedbelow.
2. Strengthsand Weaknesses
The significant strengths that provide a basis of reliance on the project's financial management
arrangements include: (i) the reliance on the MHSW accounting system and the Ministry o f Finance
Treasury Payment System; (ii) the experience of the MHSW's financial management staff; and (iii) the
existence of a ongoing Bank financed project within the Ministrythat can lend support to the project team
duringthe early periodof implementation.
The weakness of the project's financial management system i s the lack o f a comprehensive computerized
contract monitoring system linked to the general accounting system. However, the Ministry i s in the
process of updating its existing software systems and expects to have an adequate contract monitoring
systeminoperation by end-year. Further, for the remainder of 2005, the project will receiveprocurement
and financial management support from staff working on an existing Bank-financed health project within
the Ministry.
33
3. Funds Flow
The IBRD would make funds available to the Government o f Croatia under the Loan Agreement,
goveming the terms and conditions o f the IBRD loan and specifying the project. Project funds will flow
from: (i) IBRD via a single Special Account, in a bank acceptable to the Bank; (ii) IBRDdirectly
the the
from the Loan Account to suppliers; and (iii) the Government, on the basis o f payment requests approved
bythe MHSW.
4. Accounting Policies and Procedures
The project's accounting and reporting systems will be based on those used within the MHSW. Data in
the MHSW's system i s reconciled with data in the MOF Treasury Ledger System. Accordingly, the
project financial statements will be presented on a cash basis and in Croatian Kuna. The M H S W has an
appropriate set o f procedures and internal controls including authorization and segregation o f duties over
the use o fthe Treasury Ledger System and the Ministry's own accounting system.
5. Internal Audit
Internal audit i s a relatively new function within the Croatian financial management framework. The
2003 Budget Act required all ministries to establish an intemal audit function reporting directly to the
responsible Minister. Accordingly, the M H S W has appointed two staff into the internal audit function
who are currently beingtrained by the Ministryo f Finance. Given the formative stage o f this function, no
reliance will be placed 00this unit. Consideration will be given during the SWDP implementation o f the
reliance that may be placedon this unit as well as ifan how this unit may be strengthened.
6. External Audit
The project financial statements will be audited by an independent auditor acceptable to the Bank, in
accordance with standards on auditing that are acceptable to the Bank. Terms o f reference for the audit of
the project have been agreed with the Bank and are included inthe Project Operational Manual.
The Croatia CFAA (June 2004) draws attention to a number o f weaknesses in the operations o f the State
Audit Office (SAO). However, the S A 0 is, through a twinning arrangement with the UKNAO and other
measures, seeking to improve its capacity. An assessment o f the capacity o f the S A 0 was undertaken in
connection with the preparation o f the Croatia Education Sector Support Project and it was determined
that, subject to the use o f audit terms o f reference acceptable to the Bank, the S A 0 was eligible to
perform the audits o f Bank financed projects. If the M H S W elects instead to engage a private sector
auditor, the cost o f the audit may be financed from the Loan
7. Reporting and Monitoring
The M H S W will maintain accounts o f the Project and will ensure appropriate accounting o f the funds
provided. The M H S W will be responsible for preparing FMRs on a quarterly basis. The FMRs will
include:
0 Project Sources and Uses o f Funds
0 Uses o fFundsby Project Activity (component)
0 Special Account Statement
0 Procurement Reporting (Contract Monitoring).
0 A forecast o f sources anduses o f funds
34
The first Financial MonitoringReport will be furnishedto the Banknot later than 30 days after the end of
the first calendar quarter after the Effective Date, andwill cover the period from the Effective Date to the
endo f the first calendar quarter. FMRformats have been agreedwith the MHSW and are included inthe
OperationalManual.
8. Information System
The project will primarily use the Ministry's existing information systems. Supplemental spreadsheet
basedreports may also be generated.
9. Disbursement Arrangements.
Allocation of Loan Proceeds
Expenditure Category Amount inEURmillion FinancingPercentage
Works 17,000,000 82%
Goods 8,000,000 100%of foreign expenditures,
100%o flocal expenditures (ex
factory) and 82% o f localcosts for
other itemsprocured locally
Consultants' Services 1,500,000 100%of foreign expenditures and
75% of local expenditures
Training 500,000 100%
Grants (Learning and 4,000,000 100%
Innovation Program)
Premia for Interest Rate _ _ Amount due under Section 2.09(c)
Caps and Interest Rate of this agreement
Collars
Total 31,000,000
Use of report-based disbursement: Disbursements from the Loan Account will follow the report-based
method, i.e., the MHSW will use Financial Monitoring Reports to support applications for withdrawal
from the Loan Account; it will not provide the Bank with a detailed list of expenditures. Direct payment
(payments from the Loan Account directly to a supplier) requests will also be accepted. Supporting
documentation, including completion reports and certificates, will be retainedby the Borrower and made
available to the Bank duringproject supervision.
Special Account: To facilitate timely project implementation, the Borrower will open ina bank acceptable
to the Bank, and maintain and operate a Special Account inEuro under terms and conditions acceptable to
the Bank. Upon receipt of eachapplication for withdrawal of an amount of the Loan, the Bank shall, on
behalf of the Borrower, withdraw from the Loan Account and deposit into the Special Account an amount
equal to the lesser o f (a) the amount so requested; and (b) the amount which the Bank has determined,
based on the Financial Monitoring Reports, i s required to be deposited in order to finance Eligible
Expenditures during the six-month period following the date o f suchreports.
35
10. Supervision Plan
The project implementation progress reports will be monitored in detail during regular supervision
missions. FMRs will be reviewed on a regular basis by the country FMS and any issues arising will be
followed up promptly. The frequency of on-site FM supervision missions will be determined based on
the Project's FM risk rating, which will be generated using ECA's financial management risk model.
Audited financial reports ofthe Project will be reviewedand identifiedissues followed up.
36
Annex 8: Procurement
CROATIA: SocialWelfareDevelopmentProject
1. General
Procurement for the SWDP with the use of the IBRD loan and SIDA grant funds would be carried out in
accordance with the World Bank's "Guidelines: Procurement Under IBRD Loans and IDA Credits"
(Guidelines); and "Guidelines: Selection and Employment o f Consultants by World Bank Borrowers"
(Consultants' Guidelines) both dated M a y 2004, and the provisions stipulated in the Legal Agreement,
The SWDP activities not financed from the World Bank loan (Loan) or SIDA grant (Grant) can be
procured in accordance with national regulations, or implementing agency's procurement regulations.
The general description o f various items under different expenditure categories are described below. For
each contract to be financed from the Loan andor Grant, the different procurement methods or consultant
selection methods, estimated costs, prior review requirements, and time frame will be agreed between the
M H S W and the Bank team in a rolling annual Procurement Plan. The Procurement Plan will be updated
at least annually or as required to reflect the actual implementation needs and improvements in
institutional capacity.
Advertisinz. A General Procurement Notice (GPN) listing all main procurement packages will be
advertised on line in UNDB, local newspaper Nurodny Novine and on the M H S W website following
SWDP negotiations. Specific Procurement Notices (SPN) for ICB Goods packages and Expression of
Interest (EOI) for consultants' contracts above EUR 200,000 equivalent would be advertise on-line in
UNDBand onthe MHSWwebsite.
Advertisement o f NCB contracts for goods and works would be done inthe Narodny Novine and M H S W
website.
Inaddition, the MHSW should allocate a part of the website for posting information on contract awards,
including name o f each bidder who submitted the bid, bid prices as read out at public opening, name and
evaluated prices o f each bid that was evaluated, name o f bidders who were rejected and the reasons for
rejection, the name o f the winning bidder and the price it offered as well as duration and summary of the
scope of the contract awarded. All contracts financed by SWDP awarded through direct contracting shall
be listed on the website.
Procurement of Works: Works procured under the SWDP include retrofitting CSW offices and
construction o f nine new CSW offices to incorporate new functional layout and limited rehabilitation of
the residential facilities to improve sanitary conditions. There will be no large value contracts, All
contracts are below the ICB threshold level set up inthe recently completed CPAR (EUR 3 million), thus
it i s envisaged that all works contracts will be subject to NCB procedures. The procurement will be done
under National Competitive Bidding (NCB) procedures (or "open tendering" as per public procurement
law with the exceptions detailed in the Loan Agreement) using the bidding documents agreed with the
Bank and included inthe Operational Manual.
Procurement of Goods: Goods procuredunder the SWDP would include: software, computer and office
equipment, office furniture, furniture and equipment for upgrading o f residential institutions and CSWs,
printingand training materials. Procurement o f ICB-level contracts will be done usingthe Bank's SBDs.
Procurement of NCB-level contracts will be done similar to the works contracts described above.
Procurement o f IT equipment (hardware, software, etc.) o f standard specifications below N C B threshold
can be done by E-Croatia following the existing practice in the country. Otherwise, IT procurement
37
below NCB level shall follow the procedures set forth in the Bank external website, which lists dealers
authorized by the manufacturers. Inparticular, when soliciting quotations, the MHSW shall include inthe
shortlist the authorized firms which are recommended in this website; in addition, other firms or local
dealers may be added to the shortlist, upon checking their credentials directly with respective
manufacturers.
Selection of Consultants: Technical assistance in a form of individual consultants and consulting firms
(both local and international) will be required to assist inimplementation of all project components. Short
lists o f consultants for services estimated to cost less than EUR 200,000 equivalent per contract may be
composed entirely by national consultants in accordance with the provisions o f paragraph 2.7 o f the
Consultant Guidelines.
The MHSW would follow the World Bank anti-corruption measures and would not engage services of
firms and individuals debarred by the Bank. The listing of such debarred firms and individuals i s located
at: http://www. worldbank.orp/html/our/vrocure/debarr.html
Others: Innovation and Leaming Program (ILP) including in Component 1o f the SWDP would provide
seed funding to promote innovative community care programs. Procurement o f goods, works and
services financed from the ILP will follow provisions of paragraph 3.17 of the Guidelines and provisions
of the ILP Guidelines acceptable to the Bank. Acceptable ILP Guidelines for the ILP (which would be
prepared with the assistance of consultants financed by SIDA duringthe first year o f implementation) is a
condition of grants disbursement.
2. Assessment of theMHSW's capacity to implement procurement
Procurement activities will be carried out by capital investments unit of the Department o f Economic
Affairs o f the MHSW. The unit staff includes economists, a lawyer, social workers, and engineers. The
unithasbeenrecently merged frompreviously two separateprocurement units (one for the social welfare
and one for the health section) and expanded (in terms o f numbers o f positions) to accommodate an
increased workload. In addition to procurement financed from the MHSW budget the unit i s also
administeringprocurement o f civil works under the CEB credit.
The unit staff shall be given an opportunity to attend the specialized training at the ILO center andor
procurement courses inthe region organized by the Bank starting from 2005. Consultants from the Health
project PIU would provide substantial assistance, especially during the first year o f implementation and
on-the-job training to the unit staff. The unit should plan for contracting a technical firm to assist in
preparation of the civil works bidding documents and carrying out on-site technical supervision due to a
large number of contracts and geographical spread o f sites all over the country. A procurement consultant
will need to be engaged inpreparation of the biddingdocuments for IT procurement later in the project
implementation.
The overall SWDPrisk for procurement is medium.
3. Procurement Plan
A draft of the Procurement Planwas agreed at negotiations. The Procurement Planprovides the basis for
the procurement methods and identification of contracts subject to prior review by the Bank. An agreed
Procurement Plan will also be available inthe Project's database and inthe Bank's extemal website. The
format of the Procurement Plan will be expanded to provide a planning and monitoring tool for the
MHSW, and after that will be updated. The Procurement Plan will be updated in agreement with the
38
Bank team annually or as requiredto reflect the actual project implementationneeds and improvements in
institutional capacity.
The following generic time schedule shall be followed by the MHSW to ensure smooth and timely
implementation o f the SWDP:
GENERIC PROCUREMENT TIME SCHEDULE:
-
Item Key action - milestone NCB open tendering ICB
Period[days] IAccruingtime [days] Period [days] Accruing time [days]
1 Issuanceof Bidding Documents + I 0 + II 0
2 Preparationof bids min. 52 52 min.42 52
3 Opening of bids + +
4 Evaluationof bids [within bid validity] 60' 112 90' 112
5 EvaluationReDort + +
6 Icontract preparation I 20 I 132 I 20 I 132
7 Icontractsigning + +
+ -milestone
60* - ImplementingAgency shall make all efforts to award contract in 30 days
39
L m
0
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0
8
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8 6
0 0
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B
Methods of Procurement:
Procurement methods for the above goods, works, and Consultants contracts, planned under the Project,
are specified in the following paragraph. The proposed procurement arrangements are summarized in
Tables A and A1.
Prequalifzcation: Not foreseen.
For Goods above EUR 500,000 equivalent: Intemational Competitive Bidding following the Bank's
Guidelines.
For all Works and services (other than consultant services) and for Goods up to EUR 500,000
equivalent: NCB.
For Goods up to EUR 60,000 equivalent: The MHSW may follow the National Shopping procedures in
accordance with the provisions o fparagraphs 3.5 and 3.6 of the Guidelines.
For Works and services (other than consultant services) up to EUR 60,000 equivalent: The
Implementing Agency may follow the World Bank procedures for procurement o f Shopping (i.e. small
works) or for services (other than consultant services) up to EUR 60,000 equivalent
CONSULTANTS'SERVICES
Firms:
As appropriate Quality and Cost-Based Selection (QCBS)
Quality Based Selection (QBS)
FixedBudget Selection (FBS)
Least Cost Selection (LCS)
Upto EUR 160,000 equivalent: Selection Based on Consultants Qualifications (CQ)
As appropriate: Single Source Selection (SSS) that meettasks under
Consultants Guidelinesparagraph 3.10
Individuals:
As appropriate: Individual Consultants
BIDDINGDOCUMENTS
ICB World Bank's Standard BiddingDocuments for Goods;
NCB NCB sample BiddingDocuments agreed with the Bank
Shopping: (Goods) Bank's Standard Format for Invitationto Quote.
Shopping (Small Works) Bank's standard Format for Three Quotation Procedures for
Minor Works.
Consulting Services Bank's standard RFP for QCBS, QBS,FBS and LCS, and Letter
o f Invitation applicable to selection methods Based on
Consultants Qualifications for Firms and for Individual
Consultants.
42
r Table B: Thresholds for Procurement Methods and Prior Review
Section I:Procurement Review
Goods and ICB NCB
Works
(GOODS)
Thresholds: Goods 500,000 Works all Works Goods
Goods <500,000 <60,000 <60,000
PriorReview All All subjectto postreview All subject to All subject
postreview to post
review
TECHNICALASSISTANCE
LCSIFBI CQ ss IC
Firms Firmsand Individuals
~
method below160,000 individuals
thresholds/ as
availableto identifiedin
the
procuremen
t plan
Firstone, All All contractsabove
160,000 All -TORS 25,000.
onlv
Total value of contracts subject to prior review: 9 million
Overall Procurement RiskAssessment: Medium
Frequency of procurement supervision missions proposed: Once every six (6) months
(includes special procurement supervision for post-review/audits).
Retroactive financing: None I Advance procurement No
Co-financing: The funds of the World Bankloan and SIDA Grant are pooled together with the
funds ofthe Government for implementation ofthe SWDP.
43
Frequency of Procurement Supervision
Inaddition to the prior review,procurement supervision will be carried out by the Bank team during the
implementation period of the SWDP. The capacity assessment of the Implementing Agency has
recommended supervision missions every 6 months to visit the field to carry to review the status of
procurement arrangements, progress on capacity buildingplan, provide on-the-job training to the MHSW
staff and carry out post review of procurement actions.
44
Annex 9: EconomicandFinancialAnalysis
CROATIA: SocialWelfareDevelopmentProject
INTRODUCTION
This note outlines the possible economic impact for Croatia o f a proposed World Bank loan for a Social
Welfare Development Project. The analysis i s a preliminary assessment by Bank staff, and is intended to
provide the basis for a dialogue on the proposed projects benefits and risks. The Croatian Government i s
advised to undertake its own independent economic analysis o fthe proposed project as well.
ASSUMPTIONS
For this analysis, the assumption i s made that the World Bank loan will be in the amount o f US$36.0
million equivalent (this amount may change during project negotiations).' It is further assumed that
Government co-financing o f the project may total roughly $5.0 million equivalent, and that donors might
contribute another USS5.0 million, for a total project cost (loan and non-loan) o f US$46.0 million
equivalent.
DIRECT PROJECTFINANCIAL BENEFITS: SOCIAL ASSISTANCE
The proposed SWDP includes a substantial package o f activities that aim to improve the efficiency and
targeting o f Croatia's social assistance system. These alone, if realized, would substantially offset the
overall costs for the entire project.
There are three main types o f direct fiscal savings that can be realized from social assistance cash benefit
reform:
J Savings fromimprovedtargetingofbenefit (e.g., public benefitmoney isreachingmore ofthose
it is supposed to, andfewer who shouldnot be receivingbenefits)
J Savings fi-om reducedbenefit expenditure (e.g., better targeting and lower poverty levels from
economic growth permit the national budget to reduce the level spent on benefits)
J Savings (administrative) coming from clear distribution of responsibilities between local and
central government inpayments o f social assistance cash benefits.
Countries can sometimes realize additional fiscal savings from more efficient service delivery and
staffing. For example, delegating tasks from the municipal to the country level might lead to
administrative efficiencies ifproperly designed and executed.
A very simple and indicative analysis can be illustrative o f the potential impact o f a reform (whether or
not it i s project funded) that (i)sets improved criteria for social assistance benefit eligibility within a set
spending envelope; and (ii)invests in a more efficient and effective organization, management and
administration o f the system. This simple analysis converts better-targeted benefit resources into cash
flows that offset project costs (put another way, the Government receives a notional cash flow return on
This analysis is conducted indollar terms for ease o fcomparison. The actual loanmay be inother currencies,
45
the investment when reforms lead to benefits reaching more of those actually eligible, and fewer who are
not). Also, this analysis only covers the initialproject cost, before any interest i s accrued.
In 2002, Croatia spent almost HRK 3 billion on social welfare (at all Government levels). This is
equivalent to roughly US382 million at average 2002 exchange rates. According to the 2001 Croatia
Economic Vulnerability and Welfare Study, only about 50 percent o f social assistance i s reaching the
poorest one-fifth o f the population (only about 20 percent o f child and family allowance reaches the
poorest one-fifth o f the population, though these do not have only a poverty alleviation function). For
simplicity, this analysis does not cover benefits other than social assistance and social welfare, though
benefit reform should certainly aim to coordinate and streamline all o f the benefits that are being
administered inCroatia.
If SWDPbenefitstreamliningandadministrativeactivitiesleadtoanimprovementininternalsystem
the
targeting o fjust 5 percent (all else beingequal, and using2002 figures), the project would leadto notional
cash flows in this area o f roughly $20M equivalent per year, with a notional payback period for the
principal amount o f the loan o f about 2 years. The cash flow is `notional' because it essentially means
that resources that were formerly beingallocated to ineligible recipients are now being allocated to those
who are eligible. In theory, improved targeting should allow for reductions in overall expenditure in
following years, all else being equal, but actual reductions will be dependent upon the annual budget
negotiation process in a given year. This example i s illustrative, and there are many issues related the
fungibility ofGovernmentresourcesthat are not includedinthe assessment.
OTHER PROJECTBENEFITS: SOCIAL SERVICES
International experience suggests that the demand for social care rises with national income.6 Croatia
faces additional pressures from (i) an aging population; and (ii) legacy o f the war. EUaccession and
the
more open borders will benefit many, but may also bring socio-economic challenges to some Croatian
households.
Reform of Croatia's social care services, which are important complements to the education, health,
employment, and housing sectors, i s therefore almost unavoidable.
Social welfare reforms o f the type to be supported under this project provide the following economic
benefits:
-- It is generally more cost effective to preventa social problemthan to correct a socialproblem.
For example, preventing a young person from becoming a drug abuser can also assist that individual to
avoid much more costly hospitalization or imprisonment. Providing a young orphan with a family
environment through adoption or foster care can help that person to become a more productive and
satisfied member of society inlater years. This kindof benefit i s difficult to quantify in fiscal terms, but
i s widely recognized and accepted.
-- It i s also more cost effective to provide services to somebody living at home, rather than in
residential institutions. Day services, such as elderly social and meal programs, training o f disabled, and
foster care are both more effective, and less expensive, than placement in residential institutions. In
Croatia, finding day service alternatives i s particularly pressing as the projected demand for new
placements in old age homes i s expected to increase dramatically over the coming years, well above
current capacity. While some residential care i s necessary, most countries aim to minimize reliance on
large residential institutions, due to their cost and generally low quality o f service. In many transition
See Louise Fox and Ragnar Goetestam, Redirecting Resources to Community Based Services, July 2002.
46
economies, residential care can cost up to roughly 210 percent of GDP per capita, versus 55 percent of
GDPper capita for non-residential care.
The following data for Lithuania and Latvia are strongly illustrative of the economic benefits of
community care:
Average Costs per Year and Client for Residential and Non-Residential Care
Client Group Residential Care Non-residential Care
Children $4,880 equivalent $1,300 equivalent
Elderly $3,700 equivalent $1,200 equivalent
It is highly likely that Croatia would show a very similar pattern as other OECD and transition countries
on costs.
-- Contractingout services, when done right, can leadto maior benefits. Most OECD counties
have abandoned the idea that public authorities shouldboth finance social welfare, and provide the actual
services through their own organizations. Many have moved to contracting out these services. The
Government o f Iceland launched a major social service reform in the early 1990s, as it was concerned
about the rising costs of residential care for children in Government owned facilities. Today, most
residential homes in Iceland have been contracted out or are in the process o f being contracted out to
independent, qualified management companies. It i s important to note that many issues had to be
resolved (qualityhtandards, transparent tender, pricing structures, ownership, monitoring and inspection
etc.). A recent evaluation found that Iceland reduced unit costs by 20 percent, and also reduced
Government overhead costs, while improving quality standards. The city of Stockholm launched a major
reform in the 1980s as well, which also led to a reduction in unit costs with quality standards being
maintained.
-- Effective social services will facilitate European accession: Croatia expects to realize many
benefits from EU accession. However, it will also need to (i) contain social spendingwithin fiscal levels
that are consistent with EU monetary targets; and (ii) increasingly provide social services at a level
commensurate with other EUmember states (many o f which have developed high quality social service
programs for their populations). As noted, it i s quite likely that accession will lead to strains on some
Croatian communities and households that may increase the demand for social care services as well.
SUMMARY
Ifthe Government implements a successful social welfare reform, the above suggeststhat the project loan
costs would be offset by:
i.Highnotionalcashflows from improvedbenefit targeting. A modestandsustained five
percent improvement in targeting would itself lead to a very short loan payback period from this
perspective (inour hypothetical example, roughly two years for the loan principal alone).
ii. More `bang for the buck' from increasingly cost-effective and efficient social service
programs, in line with the experience of OECD and other accession countries. The option of
contracting out services shouldbe carefully considered inthis light.
iii.Improvedefficiency ofsocialbenefitadministration(frommanagementinformationsystems
to clearer functional roles at each level o f Government)
47
iv. Important economic benefits through the prevention andtreatment o f serious and costly social
problems, such as drug abuse (which leads to an increase in theft, higher disease rates for
hepatitis and HIV/AIDS, and higher prison population levels).
v. Improved quality of life for those who are receiving the services, fi-om orphans to the
disabled.
48
Annex 10: SafeguardPolicyIssues
CROATIA: SocialWelfareDevelopmentProject
The project was rated as a Category B for the environmental assessment safeguard due to the planned
civil works to take place under the project.
Under the project the MHSW will use a portion of the loan to renovate or construct new Centers for
Social Welfare and rehabilitate residential care facilities throughout the country. Inorder to ensure that
there are no adverse environmentalimpacts from this work, an EnvironmentalManagement Planhas been
prepared.
The Centers for SocialWork are the mainpoint of delivery of social benefits and social welfare assistance
inCroatia. Underthe projectthe administrationofthe CSWs isbeingreformedandthe functioning ofthe
offices will change. As a result it is necessary to make some changes to the layout o f the CSWs to better
serve the population. Inaddition, some of the buildings need additional renovations to address general
maintenance issues.
The works concentrate on the re-figuring of the internal configuration of offices inorder to provide better
services. Other rehabilitation includes repair of roofs and upgrading o f plumbing and installation of
accommodations for disabled clients, as well as buildingconstruction.
A portion of the residential care facilities will also be renovated to upgrade the sanitary and hygienic
conditions and to facilitate new services through internal reconfigurations.
The planned civil works at the Centers for Social Welfare and residential institutions will involved
renovation o f existing facilities and some new construction. New construction will take place to build
facilities for the Centers for Social Work at nine identifiedsites. These nine identified sites are all public
lands owned by the municipalities/cities and are unencumbered; therefore, 0.P 4.12 i s not triggered.
An Environmental Assessment was conducted which identifies key issues to address during the design,
construction and operation phases. It recommends establishment o f a working group to oversee the
Environmental Management Plan and a seminar to convene key parties involved with the EMP process.
The EMP is presentedbelow:
49
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Annex 11: Project Preparation and Supervision
CROATIA: Social Welfare DevelopmentProject
Planned Actual
PCNreview 411012002 411012002
Initial PID to PIC 412912002 412912002
Initial ISDS to PIC 51612002 5/6/2002
Appraisal 31112005 41112005
Negotiations 412812005 0412812005
BoardRVP approval 61912005
Planned date of effectiveness 1013112005
Planned date o f mid-termreview 12l3Ol2007
Planned closing date 913012009
0 Keyinstitution responsible for preparation ofthe project: MHSW
Bank staff and consultants who worked on the Droiect included:
IngunaDobraja Team Leader ECSHD
Philip Goldman Lead Operations Officer ECSHD
IvanDrabek Operations Analyst ECSHD
Ivanka Perkovic Team Assistant ECCU5
Vilija Kostelnickiene Sr. Operations Officer ECSHD
MarilouAbiera ProgramAssistant ECSHD
Kinnon Scott Senior Economist DECRG
Franziska Gassmann Social Statistics Consultant
Alan Thompson Administration Consultant
LidijaJapec Social Assessment Consultant
Ragnar Gotestam Social Services Consultant
Kathryn Dahlmeier Project Officer Consultant
IrinaKichigina Senior Counsel LEGEC
Maria Vannari Sr. Procurement Specialist ECSPS
Antonia Viyachka Procurement ECSPS
RanjanKumar Ganguli Financial Management ECSPS
Michael Gascoyne Financial Management ECSPS
Karin Shepardson Environment ECSSD
Paula F. Lytle Social Assessment ECSSD
Bankfunds expendedto date onproject preparation:
1. Bank resources: $577,878
2. Trust funds: PHRD Grant US$200,000;UK Grant -GBP 352,800 (US$678,434)
-
3. Total: $1,456,312
Estimated Approval and Supervision costs:
1. Remaining costs to approval: $15,000
2. Estimatedannual supervision cost: $78,000
53
Annex 12: Documentsinthe ProjectFile
CROATIA: SocialWelfareDevelopmentProject
Croatia Economic Vulnerability and Welfare Study. April 2001
Social Welfare Reform inCroatia. Recommendations for the Design and Implementationo f the
Social Welfare Reform inthe Republic of Croatia. November 2003
The Decentralizationof Social Services inCroatia: The Case o fCaring for the Aged. An
Assessment and a Proposal for a Pilot Project. USAID, September 2002
Social Welfare Reform inCroatia. FiscalDecentralizationTeam report. May 2003
Social Welfare Reform inCroatia. Labor and Employment Team Report. May 2003
Social Welfare Reform inCroatia. Strengthening Poverty MonitoringCapacity report. May 2003
Social Welfare Reform inCroatia. Administrative Strengthening, Information Technologies and
DatabasesReport. June 2003
Social Welfare Reform inCroatia. Social Assistance (Cash benefits) Report. May 2003
Social Welfare Reform inCroatia. Social Services Team Report. April 2003.
InitialProcurement Plan (version agreed at negotiations)
Fiduciary Capacity BuildingProposal (May 2004) ,GanguliNannari
EC Strategy for Croatia, 2002-2006
54
Annex 13: StatementofLoansand Credits
CROATIA: SocialWelfareDevelopmentProject
Difference between
expected and actual
Original Amount inUS$ Millions disbursements
Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Ong. Frm.Rev'd
PO76730 2005 SOCIALAND ECONOMIC RECOVERY 45.7 0.00 0.00 0.00 0.00 45.25 0.00 0.00
PO65416 2004 COASTAL CITIES POLLUTIONCONT 47.54 0.00 0.00 0.00 0.00 47.54 0.00 0.00
PO79978 2004 ENERGY EFF LOAN & GEF 5.00 0.00 0.00 7.00 0.00 5.47 0.00 0.00
PO43195 2004 RIJEKA GATEWAY 156.50 0.00 0.00 0.00 0.00 130.21 3.11 0.00
PO63546 2003 PENSIONSYS INVST 27.30 0.00 0.00 0.00 0.00 15.16 2.42 0.00
PO67149 2003 REAL PROP REG& CADASTRE 25.70 0.00 0.00 0.00 0.00 27.72 0.52 0.00
PO42014 2002 KARST ECOSYSCONSV (GEF) 0.00 0.00 0.00 5.07 0.00 5.04 1.36 0.00
PO65466 2001 COURT & BANKRUPTCY ADM (LIL) 5.00 0.00 0.00 0.00 0.00 3.77 3.34 1.05
PO51273 2000 HEALTH SYSTEM 29.00 0.00 0.00 0.00 0.00 13.22 17.41 9.37
PO39161 1999 RAILWAY MOD. &REST. 101.00 0.00 0.00 0.00 0.00 2.23 44.87 0.00
PO57767 1999 TA INST REGREF PSD 7.30 0.00 0.00 0.00 0.00 2.42 3.81 0.00
PO43444 1998 MUNENV INFRA 36.30 0.00 0.00 0.00 0.00 19.97 19.21 0.00
Total: 540.84 0.00 0.00 5.87 0.00 322.85 118.19 10.42
CROATIA
STATEMENT OF IFC's
HeldandDisbursedPortfolio
InMillions ofU SDollars
Committed Disbursed
IFC IFC
FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic
1973/81/98/02 Belisce 13.61 0.00 0.00 16.09 13.61 0.00 0.00 16.09
2002 CroatiaBanka 3.06 0.00 0.00 0.00 3.06 0.00 0.00 0.00
1999 CroatiaCapital 0.00 4.90 0.00 0.00 0.00 4.52 0.00 0.00
1999102 E&S Bank 27.21 0.00 0.00 0.00 27.21 0.00 0.00 0.00
2005 PBZ 102.05 0.00 0.00 0.00 102.05 0.00 0.00 0.00
2001 Pliva 0.00 0.00 10.00 0.00 0.00 0.00 10.00 0.00
2000 Viktor Lenac 6.00 1.90 0.50 8.18 6.00 0.00 0.00 8.18
Totalportfilio: 151.93 6.80 10.50 24.27 151.93 4.52 10.00 24.27
Approvals PendingCommitment
FY Approval Company Loan Equity Quasi Partic.
2002 Croatia Banka 8.07 3.59 0.00 0.00
2002 ESBankZagreb 11 8.97 0.00 0.00 0.00
2004 Viktor Lenac Exp 5.79 0.00 0.00 7.00
Totalpendingcommitment: 22.83 3.59 0.00 7.00
55
*--Annex 14: Countryat a Glance CROATIA: SocialWelfareDevelopmentProject
-
4
POVERTY and S O C W Central
Croatia &la
4 4 473
5,500 2,570
24 0 2*1'? T
-0 8 O D
a3 a 2
Mostrecentestimate(latestyear available,?BY-03)
I1
8s 433
75 89 1
7 31
15 91
2 3
95 i03
1a4
r02
KEY ECOIJOMICRATIOS andLONG-TERM7REEiOS
1983 1993 2002
10 3 228
15 5 267
52 4 43 3
14 3 '7 9
162 20 5
2 8 -84
0 3 1 2
22 8 67 f
4 9 24 3
63 3 .L
$22%
2052 2003
5 2 4 1
5 1 435
1 3 "09
1983 1993 2002 2003 Growth of investment and ODP 1%)
13 8 9 0 8 7 4:t
35 3 29 4
33 5 20 1
50 3 63 3
62 2 fiO 7
23 5 2 ?4
53 8 54Q
1983-93 199363 2m2
4 ? 05
34 a t
? 1 137
4 8 3 3
3 3 1.3
-0 1 9 8
8 5 "73
5 1 a 4
56
I
I983 1.393 bfiatian (%) c
1:
1,5166 4
7.48.d i(
359
4 1
-2.0
1983 1893
3,s 113
237
373
12?B2
4,620
266
447
749
1983 1993
6 19s
5,767
a29
-120
32-3
1333
-171
467
d18
36
1983 1893
2 418
92
0
325
43
0
0
-52
12
1J2
0
?i
1
33
-33
9
42
MAP SECTIOK