PEOPLE'S REPUBLIC OF CHINA SARS and Infectious Diseases Response Program Proposed Amendments to Eight Development Credit Agreements Environmental Technical Assistance (Cr.2522-CHA) Loess Plateau Watershed Rehabilitation (Cr.26 16-CHA) Yangtze Basin Water Resources(Cr.2710-CHA) Southwest Poverty Reduction (Cr.2744-CHA) National Rural Water Supply (Cr.N0270-CHA) Basic Health Services (Cr.3075-CHA) Fourth Rural Water Supply and Sanitation (Cr.3233-CHA) Enterprise Reform (Cr.3271-CHA) ' A. Background 1 The SARS Crisis. As of June 5, 2003, there were 5,339 confirmed cases of Severe Acute Respiratory Syndrome (SARS) in China resulting in 336 deaths. The Hong Kong Special Autonomous Region and the rest of China accounted for 86% of all SARS infections and 80% of all reported deaths globally. Beijing alone reported 2,522 probable cases. While the number of probable cases has decreaseddramatically, at one point there were more than 150 new cases daily and this pattern continued for several weeks. The most pressing challenge, now that the epidemic appearsto be on the decline in Beijing and elsewhere, is, as stressedby the World Health Organization (WHO), to make a major effort to eradicate SARS in China if possible. Or, if SARS turns out to be an endemic disease,to ensure that any future outbreaks are effectively monitored and controlled. It is especially important to make sure the epidemic does not establish a foothold in rural areas,which would be far less well equipped to cope with outbreaks. 2 SARS appearsto have originated in Guangdong last fall, then spreadto Hong Kong and in turn to the rest of China. Guangdong, Beijing, Shanxi, Inner Mongolia, Tianjin, Hebei, Guangxi Henan and Sichuan Provinces/Autonomous Regions have accounted for 98% of the reported ases. The Government's initial responsewas not as sufficient as it could h.avebeen, in C part becausethis was a new disease and in part becausethe health system, "had not been well prepared for emergencies and the emergency control system was comparatively weak." Initially, the Ministry of Health (MOH) did not put into place a "timely and unified system for collecting and reporting information" on SARS cases. This was made more difficult by having hospitals managed by different jurisdictional authorities. However, once it became clear that the epidemic could only be addressedthrough wide-spread public awareness and a coordinated program for containment, the Government acted aggressively in taking appropriate measures. It introduced a massive campaign to addressthe SARS epidemic in places like Guangdong and Beijing, which have been hardest hit. Also, strict isolation, containment, public awareness and preventive measureswere introduced in neighboring provinces and throughout many regions country-wide. The resulting sharp decline in confirmed cases in recent weeks is indicative of the major successesthat the Government has achieved with such policies. 3 The SARS epidemic has at the same time placed in stark relief the general lack of preparedness of China to cope with a rapidly moving infectious disease crisis despite the country's size and considerable resources. It has demonstrated that there are significant deficiencies in the health system's ability both to detect, and mount timely responsesto, new infectious diseasethreats. 4 Potential Impacts. Given the many unknowns about this disease, it has threatenedthe general health of the populace and, if not brought under full control, could jeopardize the hard won economic progress that the country has achieved in recent years. There are also global implications due to the mobility of individuals and China's growing involvement in the world economy. The virus has appeared in more than 20 countries or autonomous regions, most prominently in Singapore, Hong Kong, Vietnam, Canadaandmore recently Taiwan, China. 5 Preliminary indications suggest that with the deepening of the epidemic's impact in Beijing and the implications nationwide, China's growth rate has been affected in the range of 0.5 percent or more. For the region as a whole, the World Bank estimates that the direct impact effect of SARS could reduce East Asian growth by about 0.4-0.5%, principally through reduced demand for the service industries that rely on face to face human interactions, such as tourism, transportation, hotels, restaurants and retail sales. Moreover, the multiplier and other ripple effects of falling employment and lower consumer and investor confidence could entail an even greater economic impact. Heightened uncertainty and the sudden slowdown in domestic consumer spending will likely have a pronounced effect in slowing or delaying fixed investment in the region in the near term. Therefore, although in principle a temporary shock, SARS has been China's most compelling recent challenge and a major concern for the senior leadership. 6. The vulnerable groups and rural poor are also potentially at risk. China's poverty numbers have continued to fall in recent years underpinned by better rural income gains, supported in part by higher primary commodity prices. So far SARS has been mostly found in urban centers. However, unless brought to a halt, the epidemic could spread to the western provinces and other rural areasthat are more vulnerable to this kind of epidemic. The relatively poor public hygiene and health care infrastructure in the countryside could mean a rapid spread of the infection in rural areas. Thus, high level officials have indicated that particular efforts must be made to guard against outbreaks in rural areas. Some observershave even argued that if the virus were to penetratethe countryside, it could prove to be a medical time bomb even bigger than AIDS, which has infected more than one million people. 7. It is essential therefore that steps be taken to completely control the disease and prevent any potential spread to rural areas. This has meant identifying and implementing technically sound containment practices and putting these in place in major urban areasand urban centersin the provinces. In the near-term, the focus will need to be on strengthening/building those basic institutional capacities that are essential for bringing to an end the recent emergency situation. Over the medium-term, there are a number of systemic issues in the health system that will need to be addressedto ensure that similar epidemics can be avoided in the future. Especiallv so as some experts believe it is possible that SARS coulld reoccur in the colder months of the coming fall . 8 Government% Emergency Response and Overall Strategy. The Government of China (GOC) has outlined the following overall approaches for combating the disease: (i) strengthening the accountability of Government; (ii) strengthening SARS surveillance and dissemination of information; (iii) strengthening supervision and inspection; (iv) supporting SARS prevention in the middle and western regions, especially in rural areas; (v) working on legislation on how to respond to public health emergencies; and (vi) securing medical and general supplies. In developing their approach,the GOC has worked closely with the WHO and the U.S. Centers for Disease Prevention and Control (CDC) as well as with the SARS designated laboratories worldwide. 9 Leading groups for SARS prevention and control have been set up at the provincial level. Central Government has committed to providing medical financial assistanceto the provinces so that the poor are guaranteed accessto SARS treatment and care. Central Government is also supporting the provinces to strengthen supervision and evaluation of local responsesto SARS. Many provinces and cities have already decided to invest additional resources to contain the epidemic. However, preparednessto face the challenge varies by province and some are more vulnerable. Although the Government has issued guidelines on SARS surveillance and case reporting, implementation varies by province and has been impeded by the lack of integration of the health system. 10 Government has also taken urgent steps to put in place containment mechanisms, most notably in Beijing. This has involved isolation and quarantinepolicies, screening procedures and examination equipment at airports and train/bus stations, and regularly disinfecting major social and health centers. However, given the scale and speedwith which actions have neededto occur, some of these preventive measures have been inevitably more beneficial and efficient than others. 11. The Government has prepared a comprehensive national SARS Prevention and Control Strategy that has guided its overall program of responseto the epidemic. The development of this Strategy has been influenced heavily by the experience accumulated in Beijing and has been based on close collaboration with the WHO team, which has been strengthened to extend technical advice to other provinces. At the same time, priority expenditure needs for implementing the Strategy have been estimated. B. The Proposed SARS and Infectious DiseasesResponse Program 12 This memorandum requeststhe immediate reallocation of a total of SDR8.1 million (US$ , 1115million equivalent) of Credit proceeds under eight operations to support the SARS and Infectious Diseases ResponseProgram described below (hereafter referred to as the "Program"). In all casesthe reallocations would neither compromise the original objectives nor the economic viability of the eight projects concerned. 13 The respective Development Credit Agreement for each of the eight operations, listed in the table which follows, will be amended to add a new component covering activities to be carried out under the SARS and Infectious Diseases Response Program and to enable Credit proceeds to be used to fund the activities. For activities that will be carried out by provinces, agreementswill be entered into with each province for the carrying out of such activities using the proceeds of the Credit. Sector Existing Credit Credit Credit Amount as of Proposed Signature Date May 29,2003 Reallocation Environmental Technical Assistance Environment (Cr.2522-CHA) July 16, 1993 50.0 1.1 0.8 1.1 Loess Plateau Watershed Rehabilitation Rural Dev. (Cr.2616-CHA) June 28,1994 150.0 1.1 0.8 1.1 Yangtze Basin Water Resources Water (Cr.2710-CHA) July 18, 1995 110.0 0.3 0.2 0.3 Southwest Poverty Reduction (Cr.2744- Agriculture CHA) July 18, 1995 200.0 1.2 0.9 1.2 National Rural Water Supply (Cr.N0270- Water CHA) Aug. 14, 1997 70.0 1.9 0.6 0.8 Basic Health Services Health (Cr.3075-CHA) June 12, 1998 85.0 37.7 2.3 3.3 Fourth Rural Water Supply and Water Sanitation (Cr.3233-CHA) Sept. 17, 1999 30.0 12.3 0.6 0.9 Law and P.A. Enterprise Reform (Cr.327 l-CHA) Dec. 30, 1999 5.0 2.9 1.9 2.7 ITotal Reallocation: I 8.1 I 11.5 I 14 Rationale for Bank Involvement. The World Bank has worked with the Ministry of Health, Ministry of Finance (MOF), and National Development and Reform Commission on the formulation of an emergency response program in support of the Government's SARS Prevention and Control Strategy. This Program has been sharedwith other donors who have an interest in providing emergency support under an integrated approach. The formulation of the above-mentioned Strategy and policies for its implementation therefore provide the Bank and others with a basic framework for assistance. Moreover, WHO, in consultation with the Government, has developed a set of key activities that it believes must be undertaken urgently to eradicate the diseasein China. As the Bank moves forward in providing support, it will continue to draw heavily on WHO's technical guidance and that of WHO's close partner in this effort, the U.S. CDC. 15. The Government has officially requested support for implementing its Strategy from various members of the donor community. The UN Disaster Management Group has provided a forum for discussing some of the most immediate emergency needs. Some bi-lateral donors have sent emergency shipments of key medical supplies centeredon Beijing. The World Bank's support for an integrated response Program will begin to address some of the more systemic/institutional needs, with special reference to the epidemic's potential effects on other provinces. Trust funds arrangements with DFID and CIDA are under preparation, to be administered by the GOC, that will provide additional co-financing for the Program. 16 World Bank assistancein the current crisis is, moreover, a logical outgrowth of past and current Bank projects to assist the GOC to address communicable disease challenges, in TB, HIV/AIDS, etc. The proposed Bank support will assist the Government in addressing emergency needsin ending the SARS epidemic. However, the Bank would also seek to use this support as a platform for building essential longer-term capacity via future Bank financing so that potential future infectious diseasethreats can be averted. It will be essential in due course to also engage the Government in dialogue about those systemic health systems issues that have arguably contributed to the severity of the current crisis. 17. The Bank's involvement, therefore, has been instrumental in helping the Government to urgently move to a program approach so as to make best use of external resources. At the same time, it has served a catalytic role in helping the GOC mobilize additional concessional funding to addressthe crisis. 18 It should also be pointed out that the Program will have benefits well beyond China. It will help China accessthe best international expertise on infectious diseasesto bring SARS fully under control. The experience gained and the lessons learned in responding to the SARS epidemic will in turn enrich the global knowledge and understanding of SARS, thus benefiting other countries in combating this global public health concern. Further, a partnership between China and key international sources of expertise (such as WHO and the U.S. CDC, which have been at the forefront of control efforts globally) will provide an opportunity to better understand the origins of the SARS-related corona virus and its means of transmission. In the process,it is expected that important contributions will be made to the stock of global knowledge on the detection and prevention of rapidly emerging, previously unknown infectious diseases. 19. Lessons Learned. In designing this Program, the Bank drew from operational experience in China with previous emergency responseoperations as well as from elsewhere in the region. One of the most important considerations is the need for a clear framework to guide the responseto an emergency situation. This framework needsto be based on an understanding of the wider context and consequencesfor the sector as a whole. Careful consideration needsto be given to capacity issues with respect to the various stakeholders so as to maximize the value of support and inputs from the international and donor community in responseto the emergency situation. Lastly, it is important to find a balance between short-term emergency needs and the longer-term issues facing the sector. Care must be taken not to addressthe former at the expense of the latter. 20 A review of Implementation Completion Reports from China emergency operations suggestssome guidelines for optimizing the Program's results. Key operational lessonsfrom the Yangtze Flood Emergency Rehabilitation Project (No. 24876) and the Hebei Earthquake Rehabilitation Project (No. 22216) are the need for: (a) participation and coordination of local governments and end-users,and effective inter-agency coordination; and (b) flexible approaches to handling procurement, including force account to construct small works in rural areas and increased use of national shopping. 21. Program Objectives. The objective of the proposed Program is to: (1) address emergency needs for W&S-related diagnosis, clinical management, and personal protection that are necessary to bring the current epidemic fully under control; and (2) support the Government's efforts to strengthen the capacity of the public health system more generally so that China's health system is prepared to combat the possible re-emergence of SARS and, equally important, similar infectious diseasethreats that might occur in the future. 22 Outline of Proposed Program. The total Program funding would amount to approximately US$2 1.5 million -see Annex 1 for a breakdown of funding by financiers. The Bank's contribution would be SDR8.09 million (US$l 1.5 million equivalent). The components and their investment costs are: (1) Program Planning, Coordination and Policy Development (SDR.04 million); (2) Clinical Management of SARS patients (SDR4.31 million); and (3) Disease Prevention and Control, with a focus on SARS and Other Infectious Diseases (SDR3.74 million) : Component (1): Program Planning, Coordination and Policy Development. This component would support activities to: (1) review and take stock of SARS related policies and accumulated experience, including the provision of free treatment for the poor, in part to determine lessons for other, more general public health programs and policies, e.g., for TB and HIV/AIDS, and assessthe extent and nature of SARS related determinants (public health, socio-economic, financial barriers to accessing health care especially for the poor and vulnerable) in both affected and non-affected areas; (2) identify gaps in preparedness and local responses in addressing SARSinfectious diseasesissues and develop and/or revise protocols for emergency responses to SARS and other similar outbreaks; (3) hold international and national workshops, seminars and conferences that involve exchanges of information and the sharing of best practices with respect to addressing SARS and related public health challenges that include integrating gender concerns into health policy; (4) plan and implement supervision efforts and domestic and international technical assistance, drawing upon technical input from WHO and other centers of international expertise; and (5) support the dissemination and implementation of operational research findings. Component (2): Clinical Management of SARS Patients. This component would provide support to: (1) establish fever clinics where needed in selected medical institutions; (2) renovate designated SARS hospitals and wards in provincial capitals and selected prefectures in accordance with appropriate infectious disease control standards; (3) train male and female health care workers on SARS/infectious disease diagnosis and treatment; (4) strengthen personal protection measures for health care workers in order to minimize hospital infections in both patients and health care workers; (5) provide emergency supplies of consumables, medical equipment, and appropriate vehicles for transporting SARS patients; (6) undertake regular supervision to evaluate compliance with MOH guidelines on the clinical management of SARS and hospital infection control for SARS and other related infectious diseases;and (7) carry out operational research. l Component (3): Disease Prevention and Control, with a focus on SARS and Other Infectious Diseases. This component would: (1) strengthen disease surveillance and case reporting systems; (2) strengthen the laboratory network development for SARSinfectious diseasessurveillance; (3) carry out gender sensitive health promotion activities to, among other things, improve general awareness on preventing infection as well as reduce fear and stigmatization associated with SARSinfectious diseases; and (4) train Ministry of Health Communicable Disease Center staff in field epidemiology, contact tracing, case reporting and ensure the implementation of these activities. C. Program Implementation Arrangements 23 Program Organization and Management. Under the overall direction of the National S!&S Command Center of the State Council, the Ministry of Health will be responsible for the implementation of the Program. Various departments of the Ministry of Health with the relevant technical expertise, the National Development and Reform Commission, and the Ministry of Finance will provide the necessarypolicy and technical guidance. 24 The Foreign Loan Office (FLO) of the Ministry of Health will be responsible for day-to- day management and coordination of Program implementation, related procurement and financial management, and the monitoring of implementation. FL0 currently carries out these functions for on-going Bank health projects. In addition, existing provincial health Project Management Offices or Foreign Loan Offices will be responsible for Program planning and implementation at the provincial level, including civil works and health promotion activities, overseen by the provincial development and reform commissions, finance bureaus and health bureaus. The Program will be carried out in eight priority provinces/autonomous regions or cities that have been heavily affected. Inner Mongolia, Shanxi, Henan, Guangxi, and Hebei would utilize Program funds. Tianjin, Guangdong, and Beijing would also benefit from Program resources (though not Bank funding). In addition, other potential provinces that have been affected by SARS and are economically disadvantaged could be supported by an MOH managed central fund depending on the evolution of the epidemic. 25 Implementation Standards. Implementation will be carried out in accordance with a detailed Program Implementation Plan (PIP), a copy of which is kept in the Program Files. 26 Implementation Period. The Program would be implemented within 24 months, beginning June 15, 2003. The completion date would be June 30, 2005; the closing date would be December 31,2005. 27 Given the emergency nature of the crisis, the bulk of expenditures would be completed by-December 31, 2003. However, some activities, particularly studies, will only be completed by December 31, 2005. For example, it is critical that lessonsbe extracted from the SARS crisis on a number of topics for future applications-prevention techniques, treatment protocols, etc. Such analysis can only be properly undertaken if sufficient time is allowed to carefully compile, synthesize and analyze the relevant data and experience. Procurement Arrangements 28. Given the emergency nature of the Program and the fact that the proposed Program activities could take place in various places throughout the country, depending on where outbreaks might occur, neither international competitive bidding (ICB) nor national competitive bidding (NCB) for civil works and goods would be suitable. The following procurement procedures would be established, in accordance with the Guidelines for Procurement under DRD and IDA Credits (January 1995, revised January and August 1996, September 1887, and January 1999), and Selection and Employment of Consultants by World Bank Borrowers (January 1997, revised September 1999, January 1999 and May 2002). Annex 2 provides detailed procurement arrangements, thresholds for various procurement methods, prior review and post review thresholds, a capacity assessmentand the frequency of procurement supervision. Civil Works: Civil works would primarily involve renovation of existing hospital spacein order to renovate isolation wards, improvement in ventilation in isolation wards, and small-scale medical waste disposal facilities in Inner Mongolia, Shanxi, Henan, Guangxi, and Hebei. Force Account will be used to carry out and complete the renovation works in the first few months of the Program. The estimated cost per contract is less than $100,000 and the aggregatedamount is about $1.5 million. Goods: Procurement of medical equipment for fever clinics, hospitals, medical laboratories, consumables, vehicles and ambulances will be procured following international and national shopping procedures carried out by the central and provincial implementation agencies. The estimated cost per contract is less than $500,000 and the aggregated amount for goods is $7.4 million. Consultant Services and Training: Short-term individual consultants and specialized agencies such as WHO and other international and national institutions and firms will be contracted to provide consulting services with respect to practices, protocols and training for infection control and the clinical management of SARS patients, design and implementation of disease surveillance and reporting systems, development of laboratory networks for surveillance, health promotion, and various types of operational research. These consultants would be employed in accordance with the Bank's Guidelines on Selection and Employment of Consultants, through comparison of CVs and qualifications or through sole source selection method. The total estimated cost for services and training is about $1.5 million. Financial Management Arrangements 29. Assessment. An assessment of the financial management capabilities of the PMOs concluded that they will have in place an adequate financial management system that can provide, with reasonable assurance,accurate and timely information on the status of the funds as required by the Bank, as stipulated in OP/BP 10.02. 30 Responsibilities. All the PMOs of the proposed Program have experience in implementation of the Bank's projects. The finance division in the Project Management Office (PMO) in the Foreign Loan Office of the Ministry of Health at the national level would be held accountable for managing the financial aspectsof the Program, for keeping track of all financial activities to be incurred, and would manage, monitor and maintain all financial accounts. Original supporting documents for Program activities would be retained at PMOs at different level for all transactions taking place. 31. Accounting and Financial Reporting. For IDA funds, the administration, accounting and reporting of the Program will be set up in accordancewith Circular #13: "Accounting regulations for World Bank Financed Programs" issued in January 2000 by MOF. For trust funds, MOF issued in July 2001 a special set of financial and accounting regulations, providing detailed instructions for accounting setup and treatment, format and content of financial statements, internal control procedures, and audit requirements. The task team recommended and MOH agreed that the accounting and reporting of the grants contributed by DFID, CIDA and JSDF should follow theseregulations. 32 Auditing. The Bank requires that project financial statements be audited in accordance with standards acceptable to the Bank. In line with Bank-financed projects in China, the Program will be audited in accordancewith the Government Auditing Standards of China. The foreign Funds Application Audit Department of the China National Audit Office and provincial audit offices in each participating provinces have been identified as auditors for the Program. Audit reports on annual financial statements will be due to the Bank within 6 months of the end of each calendar year. A single audit report will be submitted for IDA Credits and grants. Disbursement Arrangements 33. Eligible Percentages. The proceeds of the credits/grants would be disbursed against eligible expenditures in the following percentages: 100% of foreign and local ex-factory expenditures for equipment; 80% of local expenditures for equipment; 80% of expenditures for civil works; 91% of expenditures for consultants' services; and 100*/oof training, workshops and similar activities. 34 Disbursement Methods. Disbursements will be processed using transaction-based disbursement methods and will not use FMR-based disbursements, in accordance with the agreement between the Bank and the Ministry of Finance. Disbursement methods such as replenishment, direct payment, and special commitment are available to the Program. The statement of expenditure limits will be set up consistent with procurement thresholds as follows: (i) each contract for equipment estimated to cost the equivalent of US$500,000 or less; (ii) each contract for civil works estimated to cost the equivalent of US$200,000 or less; (iii) each contract for consulting firms estimated to cost the equivalent of US$200,000 or less; (iv) each contract for individual consultants estimated to cost the equivalent of US$lOO,OOOor less; and (v) no limits for all other expenditures. 35 Advance Contracting. The amendments would allow for advance contracting of up to approximately 20% of funds provided to be applied to eligible expenditures made after April 23, 2003. The specific limits and eligible categoriesare shown in Annex 3. 36 Special Accounts. For existing credits, new special accounts will be established at each of *the locations where the Program will be implemented. The authorized allocation of each special account will be equivalent to about 6 months of eligible expensesreimbursable through the special account. Given the short time frame of the lending (two years), the full authorized allocation will be immediately available. Special accounts will also be established for each of the two new grants under these same guidelines. Annex 3 provides the specific authorized allocation amounts. -lO- 37. Non-Bank Financing. Co-financing, via a multi-donor trust fund, is being discussed with DFID and CIDA, in the amounts of US$5 million and US$3 mi.llion, respectively. Their support for this Program would give greater emphasis to institutional strengthening and policy issues in a number of areassuch as health financing for the poor and gender issues. Participation and the amounts indicated for DFID and CIDA should be viewed as tentative as these trust fund arrangements are still under preparation. The Government of Japan has just announced at the Evian Summit, as the latest in a series of SARS-related assistance,that it will contribute US$3 million to assist countries in the East Asia and Pacific Region in preventing SARS, through the Bank in the form of JapanSocial Development Fund (JSDF). Of that amount, US$2 million will be used to support the Program in China, the most severely affected country in the Region. For purposes of supervision, the World Bank will assist in coordinating the various donor inputs. Annex 1 indicates the financing provided from these sources. In addition, the Asian Development Bank (ADB) is working in four provinces not supported by the Program, which have been seriously affected by SARS. ADB's inputs are similar to those of the Program. There is coordination between these two efforts, both of which are managed by the MOH's FL0 as well as exchangesof information and documentation between the Bank and ADB. 38. Assurances. The Ministry of Finance will assumeresponsibility for repayment of 100% of those Credit proceeds devoted to the Program in those provinces/autonomous regions benefiting from the Program. 39. Environmental and Safeguard Policies. Given the urgent nature of the operation (being processed under OP 8.50 Emergency Recovery Assistance) and the proposed areas for Bank financing, a full-fledged Environmental Assessment was not carried out. This is in accordance with the provisions of OP 4.01 Environmental Assessment. The potential environmental impacts of the Program are limited in scope. The risks associated with clinical wastes in connection with the treatment of SARS patients will be mitigated by adherence to established WHO recommended guidelines on hospital waste management. As SARS is a new disease,complete knowledge about appropriate practice is only now being accumulated by WHO based on its worldwide experience with the epidemic. Indeed, an important function of the Program will be to disseminate this new experience and knowledge throughout the country in order to ensurebest practice. In addition, technical assistancewould assessthe needsin this area and recommend any necessary additional measuresto minimize environmental risks. The civil works to be undertaken will be small scale primarily involving creation of isolation areas in existing health facilities. Civil works contracts will incorporate reasonable obligations to mitigate any potential environmental effects. New construction is not anticipated. There will not be any land acquisition or resettlement related to health facility renovation. 40. SARS makes no distinctions in terms of the socio-economic status, gender, ethnic origin, etc., of those it infects. However, those poorer elements of society who have less access to health care or who do not have financial resources with which to seek care will be most vulnerable if they become infected. Moreover, poorer areas will in general have less well developed health care systems and thus could see a rapid spread of the disease because both prevention and treatment systems will be less well equipped to combat outbreaks. Therefore the Program has as a central objective preventing the spread of the disease to such areas, or containing it if it emerges. Moreover, Government has issued legislation prescribing that no -ll- SARS patients, regardless of income level, shall be denied care on financial grounds and has pledged to provide funds to cover diagnosis and treatment related to SARS. 41 Women and girls may be unduly affected by SARS and other infectious diseasesin large part due to their caregiver role. In order to mitigate this risk, the Program will identify the different needs and interests of women and men in the process of reviewing SARS related policies and health promotion materials; ensure the equal participation of men and women in decision-making, training, and other Program components and activities; and ensurethat women and men have equitable access to SARS treatment. Technical assistance will be used to undertake a gender assessmentto identify areasin which the above gender considerations can be integrated and implemented in the Program. 42. As it is not possible to predict with certainty where any future outbreaks might emerge, it is not possible a priori to specify precisely in which areasthe Program might need to function beyond those provinces already heavily affected. The latter municipalities, provinces and autonomous regions that will receive assistancefrom the Program are: Inner Mongolia, Shanxi, Henan, Guangxi, Hebei, Tianjin, Beijing and Guangdong. Should outbreaks occur in areaswith ethnic group concentrations, special care will be taken to prepare health promotion/public awareness materials and to conduct public information campaigns that are appropriate to the respective cultural context. The Ministry of Health has considerable experience with such health promotion approaches in the Health VII, Health VIII, Health IX and Tuberculosis Control projects and this experiencewill be tapped for the Program where indicated. D. Program Benefits and Risks 43 Benefits and Beneficiary Participation. The Program's beneficiaries will include all those members of society who have been protected from potential infection by SARS or other infectious diseases. In addition, members of the health work force are a particularly important beneficiary given both their high susceptibility to SARS, particularly in China to date, as well as their vital role in preventing its further transmission and avoiding increased morbidity and mortality from SARSlinfectious diseases among the general population. Indeed, without the intensive commitment and involvement of health professionals in many facets of combating epidemics, it will not be possible to bring them under control. Toward that end, it will be especially important that health professionals command the trust of the public so that the public has the confidence in taking the preventive steps health professionals recommend. Efforts to minimize the irrational fear often surrounding infectious diseasesas well asthe stigmatization of infected individuals will be an important part of the Program. 44. Risks. Government commitment to the Program is very high, in part because of the serious longer-term implications that a prolonged epidemic would have on the Chinese economy and in turn the region. Thus, at the national level, senior leaders have committed to taking whatever actions are necessary to halt the further spread of the epidemic. Program implementation could be delayed in some poorer provinces, however, because they have the weakest administrative systems and will be less able to mobilize both the resources and personnel to take the required actions. GOC is taking steps to reinforce capacity in these areas and is increasing supervision from the national level to ensurethat necessaryactions are taken in -12- a timely manner. Lastly, experience has shown that accurate and timely reporting is critical in keeping the public informed about the nature and status of an epidemic. WHO has been working closely with MOH in ensuring consistency in case definitions and improving reporting systems and surveillance. Continued vigilance in this regard will be key to maintaining the important gains that have been achieved to date. -13- Annex 1 PEOPLE'S REPUBLIC OF CHINA SARS and Infectious DiseasesResponse Program Table A: Summary Cost Table By Component and Financier (US$ Million) 3. Disease Prevention an with a focus on SARS Infectious Diseases Total 11.52 8.00 2.00 21.52 I/ In addition to these external resources, the Government is providing significant funding to implement its SARS Prevention and Control Strategy throughout the country. 2/ Based on May 29,2003 exchange rate of SDR:USD = 1.4262. 3/ Based on May 28,2003 exchange rates as follows: (a) 1 U.S. Dollar = 0.61 British Pound; and (b) 1 U.S. Dollar = 1.39 Canadian Dollar. -14- Table B: Detailed Cost Table By Component and Expenditure Category (US$ Million) 1. Program Planning, Coordination and Policy Development 1.1 SARS policy review and 0.30 0.30 lessons learned 1 1.2 AssessSARS determinants ) 0.40 1 I 0.40 1 0.80 I 1.4 Annual plans and budgets 0.09 0.09 1. 5 Dissemination and 0.04 0.04 operational research Sub-total 0.40 0.00 1.13 1.53 2. Clinical Management of SARS Patients 12.1 Establish fever clinics I 1.18 1 I 0.10 I 1.28 I I 2.2 Renovate hospitals and wards I I 1.69 1 -0.10 I 1.79-1 I 2.3 Training for health workers I I I 1.30 I 1.30 I 2.4 HW personal protection and 1.25 1.25 hospital infection control 2.5 Consumables, medical 2.47 2.47 equipment and vehicles 2.6 Supervision for SARS 0.35 0.35 activities I 2.7 Operational research I I I 0.45 1 0.45 I Sub-total 3.65 1.69 -3.55 8.89 3. Disease Prevention and Control, with a focus on SARS and other Infectious Diseases 3.1 Strengthen surveillance and 1.50 1.50 reporting 3.2 Laboratory network 5.01 0.85 5.86 development 3.3 Health promotion 0.79 2.01 2.80 3.4 Other SARS interventions 0.94 0.94 I Sub-total I 5.80 1 0.00 1 5.30 1 11.10 I ( Total I 9.85 I 1.69 I -998. 21.52 -15- Annex 2 PEOPLE'S REPUBLIC OF CHINA SARS and Infectious Diseases Response Program Procurement Arrangements Procurement Guidelines 1 The procurement of goods and works will be carried out in accordance with the Bank's Guidelines on Procurement under IBRD Loans and IDA credits (January 1995, Revised January and August 1996, September 1997, and January 1999). The procurement of services will be done in accordance with the Bank's Guidelines on Selection and Employment of Consultants by the World Bank Borrowers (January 1997, Revised September 1997, January 1999 and May 2002). Standard Bidding Documents 2 The Bank's standard documents for consulting services will be used under the Program. A sample quotation solicitation form for equipment and contract form for civil works which have been used under the health projects financed by the Bank would be used for procurement through shopping procedures and force account under the SARS program. Implementation Arrangements 3 Under the overall direction of the National SARS Command Center of the State Council, the Ministry of Health will be responsible for the implementation of the Program. Various departments in the Ministry of Health with the relevant technical expertise, the National Development and Reform Commission, and the Ministry of Finance will provide policy and technical guidance. The Foreign Loan Office (FLO) of the Ministry of Health will be responsible for day-to-day management and coordination of Program implementation, related procurement and financial management, and the monitoring of implementation. FL0 currently carries out these functions for health projects in China. In addition, existing health Project Management Offices or Foreign Loan Offices at the provincial level will be responsible for Program planning and implementation at the provincial level, including civil works and procurement of some equipment, and health promotion activities, which will be overseen by the provincial development and reform commissions, finance bureaus and health bureaus. Implementation will be carried out in accordancewith a detailed Program Implementation Plan (PIP), including the Operational Manual. Assessment of Agencies' Capacity to Implement Procurement 4 The Program team has reached an understanding that there is no need to carry out a comprehensive capacity assessment of the agencies in the Ministry of Health and at the provincial level, as all of them have been implementing Bank financed projects in past years and -16- have gained substantial experience in carrying out procurement according to Bank procurement policies and procedures. In general, project implementation under these agencies has been satisfactory and there have been no major procurement issues in health projects. The implementation agencies in Beijing, Tianjin and Guangdong are new agencies that have little experience with the Bank procurement procedures. They will not carry out any procurement of goods and works under the Program. They will be involved in procurement of consulting services with assistance from FL0 in Ministry of Health. FL0 will also provide procurement training and technical assistance to all agencies during Program implementation, in particular before any procurement activities are initiated. The risk rating for this Program is average.Based on this assessment,the thresholds for prior review, post review and supervision plan have been agreedand are statedin the following paragraphs. Procurement Prior Review and Post Review 5. Given the emergency nature of the Program and the fact that the proposed Program activities could take place in various places throughout the country, depending on where outbreaks might occur, neither international competitive bidding (ICB), nor national competitive bidding (NCB) for civil works and goods would be suitable. Therefore, all contracts for goods will be through shopping procedures,both international and national shopping, depending on the technical requirements of the equipment needed. Goods contracts at and above $500,000 each will be subject to prior review by the Bank. Procurement of civil works will be small-scale renovations of hospitals and fever clinics scattered in various provinces and counties. These contracts will be carried out through Force Account and will be completed within a tight schedule. The prior review threshold for civil works contract is $200,000 per contract. Consultant contracts estimated to cost over $200,000 for firms and $100,000 for individuals shall be subject to prior review by the Bank. All other contracts and the Statement of Expenditures shall be subject to post reviews. The Bank's supervision missions will review one out of five contracts. The Program launch workshop is expectedin June2003. Procurement Methods 6. International Shopping (IS) and National Shopping. Procurement of medical equipment for fever clinics, hospitals, medical laboratories, consumables, vehicles and ambulances will be procured following international and national shopping procedures carried out by the central and provincial implementation agencies. The estimated cost per contract is less than $500,000 and the aggregatedamount for goods is $7.4 million. 7 Force Account: Civil works would primarily involve renovation of existing hospital space in order to renovate isolation wards, improvement in ventilation of isolation wards, and small-scale medical waste disposal facilities in Inner Mongolia, Shanxi, Henan, Guangxi, and Hebei. Force Account will be used to carry out and complete the renovation works in the first few months of the Program. The estimated cost per contract is less than $200,000 and the aggregatedamount is about $1.5 million. 8 Single Source Selection: WHO and other specialized firms will be contracted to provide consulting services with respect to practices, protocols and training for infection control and the clinical management of SARS patients, design and implementation of disease surveillance and -170 reporting systems, development of laboratory networks for surveillance, health promotion, and various types of operational research.Due to the emergency nature of the Program and the very limited number of specialists available in the world for the assignment, sole source selection method will be used to hire the consulting firms. The total estimated cost for sole source contracting for consulting firms is about $500,000 and the cost per contract is less than $100,000. 9 Consultant Qualifications: Consulting services for practices and protocols for infection control and management of SARS patients will be contracted to consulting firms through comparison of Consultant Qualifications for less than $100,000 per contract and with an aggregatedamount of $200,000. 10 Individual Consultants: Individual consultants will be hired for training, management, design and implementation of disease surveillance and reporting systems, health promotion and related researchand studies. Selection of individual consultants will be carried out in accordance with the provisions 5.1 through 5.3 of the Guidelines on Selection and Employment of Consultants by World Bank Borrowers. The aggregatedamount is $300,000. 11 Training and Workshops: The Program will finance various international and national workshops, seminars and conferences to exchange information on how to address SARS and other public health challenges, and on dissemination and implementation of operations research findings. Training of health care workers on SARS and infectious disease diagnosis and treatment will also be organized. Related costs for workshops and training will be eligible for financing through Statement of Expenditures according to government internal expenditure and accounting procedures. Advance Contracting (advanceprocurement and retroactive firzanchg) 12 Given the emergency nature of the Program, some procurement of goods and consulting services were carried out during Program preparation. Expenditures incurred since April 23, 2003 will be eligible for financing by the Credit. However, since the Program funding comes from existing Credits, the term "Advance Contracting" is used instead of Advance Procurement and Retroactive Financing. Procurement Plan, List of Equipment, and Operational Manual 13 The procurement plan for the Program including all civil works contracts, procurement of goods, and consulting services, procurement methods, time frames for each contract, and estimated amount was discussed and agreed with the Ministry of Health during Program preparation. The draft Terms of Reference for some consulting contracts and the draft technical specifications for goods areunder preparation. The procurement plan is a rolling plan and will be updated every three months to coincide with the Bank's supervision of the Program in the field. Major changesin the procurement plan will be subject to the Bank's review and approval. Given the emergency nature of the Program and the fact that each province may have used different sources of financing for some equipment while this Program is under preparation, the list of equipment is likely to be revised during implementation. It is agreed that the revised list of equipment prepared by each province will be subject to prior review and approval of the Ministry of Health to avoid repeatedpurchase of equipment which may have been supplied by -18- other sources or are committed to be supplied by other sources. . WJ or ch.angesin the list of equipment will require the Bank's review and approval. Overall Procurement Risk Assessment: Average Frequency of procurement supervision missions proposed: There will be one supervision mission every 3 months (a procurement staff or consultant will be included in the supervision mission to carry out post-reviews). Attachment A presentsthe Procurement Plan. -19- Attachment A Procurement Plan SARS and Infectious Diseases Response Program No Estimated Preparation Evaluation Contract Contract Activities TYPe Procure- of Contract of SP/ Signing Completion By Component Of ment ctr Value TOR CtI-' Method* (IIw 1. Program Planning, Coordination and Policy Development 1.1. SARS Policy Review and C ss 6/2003 6/2005 Lessons Learned 1.2. G shopping 1,187,OOO 6/2003 6-7/2003 12/2004 (a) Assess SARS determinants (medical/clinical equipment) 1.2. C/T SS/SOE 612003 6/2005 (b) Assess SARS determinants (TA/workshops) 1.3 .workshops for knowledge T SOE sharing, int'l and national 6/2003 612005 1.4.preparation of annual plan C/T SS/SOE 50,000 1012003 and budget 1.5. Information C/T SS/SOE 8/2003 dissemination and OR 2. Clinical Management of SARS 2.1. G Shopping 378,600 612003 6-7/2003 1212004 (a) Medical equipment for fever clinics 2.1. T SOE 6/2003 1212004 (b) Training of medical staff in Fever Clinics 2.2. W FA 1,500,000 6/2003 8/2003 12/2004 (a) Renovation of hospitals and wards 2.2. C ss (b) Technical assistance for hospital and wards 2.3. T SOE 300,000 (a) Training for health workers 2.3. C ss (b) TA for health workers' training program 2.4. HW personal protection C/T SS/SOE 150,000 and hospital infection control 1 C - Consulting Services G - Goods T - Training/workshops W - Works 2 FA - Force Account Shopping SIC - Selection for Individual Consultants SOE - Statement of Expenses following the government procedures SS - Single Source Selection CQ - Selection Based on Consultant Qualifications -2o- No Estimated Preparation Evaluation Contract Contract Activities TYPe Procure- of Contract of SP/ Signing Completion By Component Of ment Ctr Value TOR Cl2 Method2 (IDA) 2.5. G shopping 6/2003 8/2003 6/2005 (a) Consumables 2.5. G shopping 1,338,500 6/2003 6-7/2003 12/2004 (b) Medical equipment 2.5.0 Vehicles I G I shopping I I 2,02 1,800 I 6/2003 I I 6/2003 I 6/2004 2.6. SPN for SARS activities T SOE 150,000 2.7. Operational research C ss 12/2003 6/2005 3. Disease Prevention and Control, with a focus on SARS and other Infectious Diseases 3.1. Strengthen surveillance T/C SOE/SIC/ 150,000 612003 6/2005 and reporting ss 3.2. G shopping 2,472,400 6/2003 6-7/2003 12/2004 (a) Procurement of lab equipment 3.2. T/C SOE/SIC/ 150,000 6/2003 612005 (b) Training and network ss development 3.3. T/C SOE/SIC/ 6/2003 6/2005 (a)Health promotion ss 3.3 G Shopping W2003 8/2003 612005 (b) Equipment for health promotion 3 -4. SARS interventions T/C SOE/SIC/ 250,000 6/2003 612005 SSICQ Contingency3 1 ,ooo,ooo 3Contingency for the project is $l,OOO,OOOthat will be shown in the disbursement table. However, contingency is not shown in the standard procurement table. -210 Annex 3 PEOPLE'S REPUBLIC OF CHINA SARS and Infectious Diseases Response Program Financial Management and Disbursement Arrangements Assessment of Financial Management Capacity Background 1 The objective of the proposed Program is to: (1) address emergency needs for SARS- related diagnosis, clinical management, and personal protection that are necessaryto bring the current epidemic fully under control; and (2) support Government's efforts to strengthen the capacity of the public health system more generally so that China's health system is preparedto combat the possible re-emergence of SARS and, equally important, similar infectious disease threats that might occur in the future. 2. The breakdown of total financing plan for the Program activities is as follows: l World Bank: SDR 8.1 million (approximately USD 11.5 million) l DFID: USD 5 million l CIDA: USD 3 million l JSDF: USD 2 million 3 The purpose of the assessmentis to determine whether financial management capacity of the proposed Program Management Office (PMO) in respectof managing loan and grants will be able to meet the requirements as stipulated in BP/OP 10.02. The assessment of financial management capacity is based on relevant Bank guidelines and consequently included procedures as considered necessary and appropriate to the Program's circumstances, including discussion and observation. The following were noted as a result of the discussion. Organization and Stafjng 4 Under the overall direction of the National SARS Command Center of the State Council, the Ministry of Health will be responsible for the implementation of the Program. Various departments of the Ministry of Health with the relevant technical expertise, the National Development and Reform Commission, and the Ministry of Finance will provide the necessary policy and technical guidance. 5 The Foreign Loan Office (FLO) of the Ministry of Health will be responsible for day-to- day management and coordination of Program implementation, related procurement and financial management, and the monitoring of implementation. FL0 currently carries out these -22- functions for on-going Bank health projects. In addition, existing provincial health Program Management Offices or Foreign Loan Offices will be responsible for Program planning and implementation at the provincial level, including civil works and health promotion activities, ' overseen by the provincial development and reform commissions, finance bureaus and health bureaus. 6 All the PMOs of the proposed Program have experience in implementation of the Bank's projects. For those financial staff who might not have such experience, training and supervision from MOH will be essential for the implementation of the Program. The World Bank Beijing Office could also provide related training and guidance, if required. Fund Flows 7 For IDA credits, since the new SAs will be established in the related provinces within the original IDA credits, the funds flow will follow the same procedures of the original Programs, e.g.: SAs in provinces and at MoH For the grants, the SAs will be established in the central level (with either MOF or MOH), with second generation special accounts established in the provinces. The funds are expected to flow as follows: World SAs in MOF SGSAs in Suppliers and Bank b orMoH b Provincial b contractors PMOs Bookkeeping 8 The finance division in the Program Management Office (PMO) in the Foreign Loan dffice of the Ministry of Health at the national level would be held accountable for managing the financial aspectsof the Program, for keeping track of all financial activities to be incurred, and would manage, monitor and maintain all financial accounts. Original supporting documents for Program activities would be retained at PMOs at different levels for all transactions taking place. Accounting Policies and Procedures 9. For IDA funds, the administration, accounting and reporting of the Program will be set up in accordance with Circular #13: "Accounting regulations for World Bank Financed Programs" issued in January2000 by MOF. -23- The standard set of project financial statementshas been agreedto between the Bank and MOF and applies to all Bank projects appraisedafter July 1, 1998 and includes the following: l Balance sheet l Statement of sourceand use of fund l Statement of implementation of credit agreement l Statement of special account A set of tailored financial statements will be designed for the Program based on the discussion between MOH and the Bank. 10 Periodic consolidated financial statements would be prepared by the finance division of the FL0 before submitting these in a timely manner for the Bank review. Unaudited consolidated financial statements would be submitted b&annually (no later than October 1 and April 1 respectively) by the PM0 to the Bank. 11 In order to streamline financial management of trust funds, MOF has issued in July of 20bl a set of financial and accounting regulations, providing detailed instructions for accounting setup and treatment, format and content of financial statements,internal control procedures, and audit requirements. The task team recommended and MOH also agreedthat the accounting and reporting of the grants contributed by DFID, CIDA and JSDF will follow theseregulations. External Audit and Audit Reports 12 The Bank requires that Program financial statements be audited in accordance with standards acceptable to the Bank. In line with Bank financed Programs in China, the Program will be audited in accordance with the Government Auditing Standards of P.R.China. The foreign Funds Application Audit Department of the China National Audit Office and provincial audit offices in eachparticipating province have been identified as auditors for the Program. 13 Audit reports on annual financial statements will be due to the Bank within 6 months of the end of each calendar year. A single audit report will be submitted for IDA Credits and grants. Conclusion 14. Based on the above analysis, the task team has determined that the PMOs, for purpose of managing IDA credit and grants, will satisfy the Bank's financial management requirements as stipulated in OP/BP 10.02. In the task team's opinion, the PMOs will have in place an adequate financial management system that can provide, with reasonable assurance,accurate and timely information on the status of the funds asrequired by the Bank. Further Information on Disbursement Arrangements 15. Advance Contracting Limits and Categories are as follows: -24- Credits/Grant up to For Categories IDA 3075 SDR 450,000 Civil Works - 11 (c-l-l), Goods - 11 (c-l-2) IDA 3271 SDR 380,000 Civil Works - 4 (a), Goods - 4 (b) IDA 2616 SDR 160,000 Goods - 4 (a), Civil Works - 4 (b) IDA 2744 SDR 170,000 Goods - 9 (a), Civil Works - 9 (b) IDA 2710 SDR 40,000 Civil Works - 11 (a), Goods - 11 (b) IDA 2522 SDR 150,000 Civil Works - 4 (a), Goods - 4 (b) IDA NO270 SDR 110,000 Training & TA - 7 (c) IDA 3233 SDR 120,000 Training & TA - 5 (c) CIDAIDFID Grant USD 1,600,OOO Goods, Training & TA JSDF Grant USD 320,000 Goods, Training & TA 16. Authorized Allocations for Sr>ecialAccounts are as follows: Location Credits Nos. Authorized Allocation Inner Mongolia IDA 3075 $650,000 Shanxi IDA 3271 $540,000 Henan IDA 2616 $230,000 Guangxi IDA 2744 $250,000 Hebei IDA 2710 and 2522 $300,000 Ministry of Health IDA NO270 and 3233 $330,000 Ministry of Health CIDADFID Grant $1,600,000 Ministry of Health JSDF Grant 320,000 -25- Annex 4 PEOPLE'S REPUBLIC OF CHINA SARS and Infectious Diseases Response Program Key Performance Indicators The following Key Performance Indicators are proposed to monitor and evaluate the health impact of the Program. They will be further refined and agreedupon during the program launch workshop. 1. Program Planning, 1.1 No. of provinces that have developed or revised protocols for Coordination and Policy emergency response to SARS outbreaks according to the Development recommendations from SARS response preparedness assessments. 1.2 No. of non-affected areas that prepare critical stock of SARS- related supplies with which to mount a first wave response to SARS outbreak or a similar infectious disease threat. 1.3 Program annual plans are developed and integrated in atimely manner with existing national plan for SARS response. 1.4 Lessons learned and best practices in addressing SARS epidemic are analyzed for wider public health applications, and are disseminated. 1S SARS related policies are reviewed and revised both for their implications for SARS and other infectious diseases. 2. Clinical Management of SARS 2.1 Designated SARS hospitals/wards with a capacity of providing Patients quality SARS clinical management for at least 200 probable and 200 suspected SARS casesset up within the 3 months after program effectiveness in 6 priority provinces and cities. 2.2 National guidelines on SARS diagnosis, treatment, transportation of SARS patients verified or revised according to well designed prior&v operational research. 3. Disease Prevention and 3.1 No. and % staff recruited and trained for SARSinfectious Control, with a focus on SARS diseasessurveillance and reporting. and other Infectious Diseases 3.2 National Health Promotion Strategy for SARS and other infectious diseasesdeveloped and implemented. 3.3 Positive knowledge and behavior changed among targeted populations with respect to SARS and other infectious diseases. WB18167 L:\WORD\China\SARSbvIOP--SARS Emergency Program.doc June 3,2003 3 : 15 PM