PROGRAM INFORMATION DOCUMENT (PID) CONCEPT STAGE May 31st, 2012 Report No.: AB7020 (The report # is automatically generated by IDU and should not be changed) Operation Name PE Social Inclusion DPL Region LATIN AMERICA AND CARIBBEAN Country Peru Sector Other social services (100%) Operation ID P131028 Lending Instrument Development Policy Lending Borrower(s) Government of Peru Implementing Agency Ministry of Economy and Finance Date PID Prepared May 30, 2012 Estimated Date of Appraisal September 7, 2012 Estimated Date of Board November 15, 2012 Approval Corporate Review Decision Following the corporate review, the decision was taken to proceed with the preparation of the operation. Other Decision {Optional} N/A 1. Key development issues and rationale for Bank involvement The operation is fully consistent with the Bank’s Peru CPS Peru for FY12-FY16, which calls for supporting the Government’s plan of “growth with social inclusion to overcome social gaps and boost productivity�. In particular, the reforms targeted by this DPL align with the First Strategic Objective of Increased “Access and Quality of Social Services for the Poor�, and specifically with the first Result Area of “a more inclusive and effective social protection system�. Key issues. Peru has realized consistent economic growth over the last decade and weathered the recent crisis well. Poverty has also declined over this period (from 48.7 percent in 2005 to 31.3 percent in 2010) and social indicators, such as chronic malnutrition, have improved (from 28 percent in 2005 to 23.2 in 2010). However, major challenges in reducing inequality remain, with high poverty still persistent in rural areas, reaching 61 percent in the highlands. To address these outstanding challenges and promote socially inclusive growth, the GoP has created a new Ministry of Development and Social Inclusion (Ministerio de Desarrollo e Inclusión Social, MIDIS) to lead the Government’s social inclusion strategy, exercise stewardship and coordination of social policies; and implement specific targeted social protection programs. The Government has defined social inclusion as a process through which “all citizens can exercise their rights, access public services and seize economic opportunities.� Prior to the Humala Administration, the social policy agenda was marked by a mixed performance, both in terms of the level and quality of social spending for anti-poverty strategies and programs. Regarding the levels of spending, there was a sustained increase over the last decade, but the level of spending and coverage of the social protection system were still below 1 the levels of other countries in the region. Regarding the quality of social spending, the Government made efforts in addressing poverty reduction, particularly through the creation of social programs targeted to improve the livelihood of the most vulnerable populations. A major achievement in this regard has been the creation of the Conditional Cash Transfer (CCT) Program Juntos, in 2005. Furthermore, the implementation of some reforms such as the national strategy CRECER in 2007 and the Performance-Based Budget (PBB) of the Ministry of Economy and Finance (MEF) had started to improve the coherence of social policies. However, these multi-sectoral initiatives have been isolated and fragmented. Peru’s social programs have been characterized by their heterogeneity in terms of goals, types of target populations, programs institutional cultures, targeting criteria and eligibility rules, and coverage levels. In sum, the GoP had implemented social programs and reforms that aimed to mitigate poverty and improve access to social services. However, these efforts have lacked a solid institutional framework to build upon a coherent social policy reform 2. Proposed Objective(s) This operation has three main inter-related objectives: (i) to support the institutionalization of the leadership and stewardship of the social inclusion agenda; (ii) to lay out the foundations for improving the inclusiveness and effectiveness of key social programs that MIDIS is mandated to execute; and (iii) to develop adequate systems for targeting; monitoring and evaluation; and overall coordination. In terms of the programs mentioned under (ii) above, the operation specifically focuses on three social protection programs: the CCT Program Juntos; the social pension program Pensions 65, and the National Food Assistance Program PRONAA 3. Preliminary Description This proposed Social Inclusion DPL, of an amount of US$45 million (TBC) focuses on the set-up of the social policy reforms that are being promoted and coordinated by the recently created Ministry of Social Development and Inclusion (MIDIS). It is accompanied by a proposed Social Inclusion Technical Assistance Loan (TAL). Both operations will be presented simultaneously for approval to the Board. This DPL supports the first phase of MIDIS’ reforms. The second phase of the reform program, focused on the consolidation of the reforms, will be supported by a follow-on operation, which is expected to be presented to the Board by the end of calendar year 2014. The proposed TAL will support the development of the second phase of reforms and as such will provide a bridge of technical support between both operations. The overall package of support will allow the provision of seamless technical support for the overall social inclusion reform program. 4. Poverty and Social Impacts and Environment Aspects Poverty and Social Impacts The reforms supported by this Social Inclusion Development Policy Loan are specifically intended to reduce poverty and increase social inclusion for vulnerable groups. Nonetheless, a detailed analysis of stakeholders’ concerns and distributional impacts of some of the policies 2 proposed will be conducted as part of the preparation of the loans and a monitoring of those issues will be carried out during the implementation of the reforms. A Poverty and Social Impact Analysis (PSIA) will inform the policy dialogue among key stakeholders of the main policy reforms supported by the two sets of operations (DPLs and TAL). The PSIA will combine qualitative and quantitative methods, including a stakeholders’ assessment. The final Program Document will summarize the main findings of these assessments. Environment Aspects The policy actions supported by this operation focus on improvements in social policy processes that are not likely to generate significant positive or negative effects on the environment, forests, and other natural resources. 5. Tentative financing Source: ($m.) Borrower 0 International Bank for Reconstruction and Development 45 Borrower/Recipient IBRD Others (specifically) Total 45 6. Contact point World Bank Contact: Carine Clert Title: Sector Leader. Human Development. Tel: 5357+364 Email: cclert@worldbank.org Location: Lima, Peru (IBRD) 7. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-4500 Fax: (202) 522-1500 Web: http://www.worldbank.org/infoshop 3