Document of
         The World Bank


                                   Report No:   65156 v1




     RESTRUCTURING PAPER

              ON A

PROPOSED PROJECT RESTRUCTURING
              OF
SOCIAL INVESTMENT FUND 2 PROJECT

           June 17, 2004




             TO THE

     REPUBLIC OF MOLDOVA




         October 17, 2011
                 ABBREVIATIONS AND ACRONYMS
MSIF   Moldova Social Investment Fund
GoM    Government of Moldova




         Regional Vice President:        Philippe H. Le Houerou
                Country Director:        Martin Raiser
        Sector Manager / Director:       Kathy Lindert/ Mamta Murthi (Acting)
               Task Team Leader:         Yuliya Smolyar



                                     2
                                         MOLDOVA
                             SOCIAL INVESTMENT FUND 2 PROJECT
                                          P079314
                                        CONTENTS

                                                                                                                       Page
A.   SUMMARY ............................................................................................................... 4
B.   PROJECT STATUS ................................................................................................. 4
C.   PROPOSED CHANGES .......................................................................................... 4




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                    SOCIAL INVESTMENT FUND 2 PROJECT

                             RESTRUCTURING PAPER


SUMMARY
The proposed changes are meant to amend the provisions in the Financing Agreement for
Credit # 4682-MD to allow utilization of the Government of Moldova (GoM) list of
schools that will not be closed under the schools optimization program as a basis for
investing the Credit proceeds in school-related sub-projects.


PROJECT STATUS
The Second Moldova Social Investment Fund project (MSIF II) demonstrates good
implementation progress. After having completed the implementation program for the
original credit MSIF (implementing agency) has disbursed about 80 percent of the (first)
Additional Financing credit and fully committed the part of the credit allocated for sub-
projects. Implementation of the most recent Second Additional Financing credit of
USD20 million has reached a very intense phase. MSIF has approved 149 community
sub-projects of which 41 sub-projects are already completed and another 72 sub-projects
are under implementation. An additional 36 sub-projects are ready to be launched once
community contributions are collected and works are procured. After a bit more than a
year passed from effectiveness, about USD7 million of the credit proceeds was disbursed
and USD13 million was committed.

The project complies with fiduciary requirements and has no overdue audit reports.


PROPOSED CHANGES
    • Institutional arrangements
At negotiations of the Second Additional Financing for the MSIF II project in 2009, the
GoM and the World Bank agreed that the project investment should be made to support
only those schools which would not be closed as a result of schools network
optimization. At that point the GoM had not finalized its schools optimization program
and therefore it was agreed that community applications related to schools rehabilitation
would be endorsed on a case-by-case basis after Ministry of Education reconciles each
application against optimization plans and issues written confirmation for those schools
which will remain functioning.

Recently, the GoM has finalized its schools network optimization program. Given the
progress made in this regard, the GoM requested to change the current case-by-case
schools approval procedure in the Financing Agreement for Credit # 4682-MD. The
MSIF Supervisory Board approved a list of schools that will remain functioning under
optimization program. This list has been proposed as a basis for approving MSIF`s
investments into school-related community sub-projects. The restructuring is undertaken
to amend the provisions in the Financing Agreement for Credit # 4682-MD to allow
                                           4
utilization of the GoM list of schools that will not be closed under the schools
optimization program as a basis for investing the Credit proceeds in school-related sub-
projects.




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