Document of The World Bank Report No:ICR0000353 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-73020) ON A LOAN IN THE AMOUNT OF US$ 75.38 MILLION TO THE REPUBLICA ORIENTAL DEL URUGUAY FOR A SOCIAL PROGRAM DEVELOPMENT POLICY LOAN February 26, 2007 Human Development Department Argentina, Chile, Paraguay and Uruguay Country Management Unit Latin America and the Caribbean Regional Office CURRENCY EQUIVALENTS (Exchange Rate Effective 1/31/2007) Currency Unit = Uruguayan Pesos (U$) Uruguayan Pesos 1.00 = US$ 0.04098 US$ 1.00 = Uruguayan Pesos 24.40 FISCAL YEAR January 1-December 31 ABBREVIATIONS AND ACRONYMS AAA Analytical and Advisory Activity ANEP Administración Nacional de la Educación Pública (National Administration of Public Education) ASSE Administración de los Servicios de Salud del Estado (Administration of State Health Services) BPS Banco Previsión Social (Social Security Fund) CAS Country Assistance Strategy CODICEN Consejo Directivo Central (Central Directive Council) DPL Development Policy Loan FNR Fondo Nacional de Recursos (National Resource Fund) FTS Full-Time Schools Model GDP Gross Domestic Product IADB Inter.-American Development Bank IAMC Instituciones de Asistencia Médica Colectiva (Collective Medical Aid Institutions) IBRD International Bank for Reconstruction and Development ICR Implementation Completion Report IMAE Institutos de Medicina Altamente Especializada (Institutes of Highly Specialized Medical Care) IMF International Monetary Fund INE Instituto Nacional de Estadística (National Statistics Institute) LAC Latin America and the Caribbean Regional Office M&E Monitoring and Evaluation MDGs Millennium Development Goals MIDES Ministerio de Desarrollo Social (Ministry of Social Development) MOE Ministerio de Educación (Ministry of Education) MOF Ministerio de Economía y Finanzas (Ministry of Finance) MSP Ministerio de Salud Pública (Ministry of Health) MTEF Medium -Term Expenditure Framework OECD Organization for Economic Co-operation and Development OPP Oficina de Planeamiento y Presupuesto de la Presidencia de la República (Office of Planning and Budget) PAC Programa de Actividades Comunitarias (Community Activities Program) PANES Plan de Asistencia Nacional a la Emergencia Social (Nacional Social Emergency Assistance Plan) PER Public Expenditure Review PFM Public Financial Management PISA Program for International Student Assessment RUCAF Registro Único de Cobertura Asistencial Formal (Single Registry of Formal Health Assistance Coverage) SAL Structural Adjustment Loan SPDLP Social Program Development Program SSAL Special Structural Adjustment Loan UNDP United Nations Development Program UNESCO United Nations Educational, Scientific and Cultural Organization Vice President: Pamela Cox Country Director: Axel van Trotsenburg Sector Manager: Helena G. Ribe Task Team Leader: Rafael P. Rofman Uruguay Uruguay Social Program Support Loan CONTENTS DATA SHEET............................................................................................................................ 2 A. Basic Information................................................................................................................... 2 B. Key Dates............................................................................................................................... 2 C. Ratings Summary................................................................................................................... 2 D. Sector and Theme Codes........................................................................................................ 3 E. Bank Staff............................................................................................................................... 3 F. Results Framework Analysis.................................................................................................. 4 G. Ratings of Program Performance in ISRs.............................................................................. 5 H. Restructuring (if any)............................................................................................................. 5 1. Program Context, Development Objectives and Design ........................................................ 6 2. Key Factors Affecting Implementation and Outcomes ........................................................ 12 3. Assessment of Outcomes...................................................................................................... 17 4. Assessment of Risk to Development Outcome..................................................................... 21 5. Assessment of Bank and Borrower Performance ................................................................. 22 6. Lessons Learned.................................................................................................................... 24 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners....................... 24 Annex 1 Bank Lending and Implementation Support/Supervision Processes.......................... 25 Annex 4. Summary of Borrower's ICR and/or Comments on Draft ICR................................. 26 Annex 7. Map............................................................................................................................ 28 1 DATA SHEET A. Basic Information Uruguay Social Program Country: Uruguay Program Name: Support Loan Program ID: P095028 L/C/TF Number(s): IBRD-73020 ICR Date: 02/26/2007 ICR Type: Core ICR THE GOVERNMENT Lending Instrument: DPL Borrower: OF URUGUAY Original Total USD 75.4M Disbursed Amount: USD 75.4M Commitment: Implementing Agencies: Ministry of Economy and Finances Cofinanciers and Other External Partners: B. Key Dates Process Date Process Original Date Revised / Actual Date(s) Concept Review: 04/13/2005 Effectiveness: 07/01/2005 07/01/2005 Appraisal: 05/04/2005 Restructuring(s): Approval: 06/09/2005 Mid-term Review: Closing: 06/30/2006 06/30/2006 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Low or Negligible Bank Performance: Satisfactory Borrower Performance: Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Not Applicable Quality of Supervision: Satisfactory Implementing Agency/Agencies: Not Applicable Overall Bank Overall Borrower Performance: Satisfactory Performance: Satisfactory 2 C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments (if Performance Indicators any) Rating: Potential Problem Program Quality at Entry No None at any time (Yes/No): (QEA): Problem Program at any Quality of Supervision No None time (Yes/No): (QSA): DO rating before Closing/Inactive status: D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 4 100 Compulsory health finance 9 General education sector 44 Health 30 Other social services 13 Theme Code (Primary/Secondary) Education for all Primary Health system performance Primary Improving labor markets Secondary Social analysis and monitoring Secondary Social safety nets Secondary Primary E. Bank Staff Positions At ICR At Approval Vice President: Pamela Cox Pamela Cox Country Director: Axel van Trotsenburg Axel van Trotsenburg Sector Manager: Helena G. Ribe Helena G. Ribe Program Team Leader: Rafael P. Rofman Rafael P. Rofman ICR Team Leader: Rafael P. Rofman ICR Primary Author: Cristina Flood 3 F. Results Framework Analysis Program Development Objectives (from Project Appraisal Document) The Social Program Development Policy Loan aimed at: (i) Supporting the maintenance of macroeconomic stability; (ii) Recognizing that Uruguay's social policy response to the economic crisis went considerably beyond actions supported by the Bank under the Second Special Structural Adjustment Loan; (iii) Supporting past and ongoing structural and administrative reforms in the education, health, and social protection sectors to further improve both efficiency and equity in service delivery; and (iv) Assisting the early activities of the new administration in various social policy areas, as a foundation for the Bank's support for the medium-term Government policies. Revised Program Development Objectives (if any, as approved by original approving authority) (a) PDO Indicator(s) Original Target Formally Actual Value Indicator Baseline Values (from Achieved at Value approval Revised Completion or documents) Target Values Target Years Indicator : Proportion of insured and uninsured patients billed at public hospitals Value 90% of insured (quantitative or patients N/A Qualitative) 30% of uninsured patients Date achieved 12/31/2005 Comments Due to changes in Government procedures, data on this indicator (incl. % achievement) became unavailable, as information on number of billed patients is no longer centrally collected. Indicator : FNR financial result Value (quantitative or 10.6% maintain surplus 6.8% Qualitative) surplus during 2005 Date achieved 12/31/2004 12/31/2005 12/31/2005 Comments (incl. % achievement) Official data for 2006 is still unavailable, but expected to be positive. Indicator : Preschool coverage among 4-year old children Value (quantitative or 75% 80% 83% Qualitative) Date achieved 12/31/2003 06/30/2006 06/30/2006 Comments (incl. % achievement) 4 Indicator : Administration of National Assessment of Student Performance Value (quantitative or applied in New round applied round applied during Qualitative) 2004 in 2005/2006 2006 Date achieved 12/31/2004 12/31/2006 10/31/2006 Comments (incl. % achievement) Indicator : Number of beneficiaries of non contributive family allowances beneficiaries Value (quantitative or 184000 200000 209429 Qualitative) Date achieved 12/31/2004 12/31/2005 06/30/2006 Comments (incl. % achievement) Indicator : Status of PANES monitoring system Value Document on (quantitative or System Monitoring reports beneficiaries profile Qualitative) under design published published Date achieved 06/30/2005 12/31/2005 12/31/2005 Comments Further work by the Direction of Monitoring and Evaluation produced (incl. % achievement) several additional reports, on program's impact, social expenditures, et cetera. These reports were completed and published during 2006. (b) Intermediate Outcome Indicator(s) Original Target Formally Actual Value Indicator Baseline Values (from Achieved at Value approval Revised Target Completion or documents) Values Target Years G. Ratings of Program Performance in ISRs No. Date ISR Actual Disbursements Archived DO IP (USD millions) H. Restructuring (if any) Not Applicable 5 1. Program Context, Development Objectives and Design 1.1 Context at Appraisal (brief summary of country macroeconomic and structural/sector background, rationale for Bank assistance) Macroeconomic and Social Context After several years of macroeconomic stability and steady growth, Uruguay suffered a sharp reversal in 1998 with a recession that persisted for more than three years before collapsing into a deep economic crisis in the second half of 2002. The country faced a sharp devaluation of its currency, and the lack of financing placed the economy on the verge of default on its sovereign debt, and GDP fell by 7.5% from 1998 to 2001, before suffering and additional drop of 11 percent in 2002. Several external factors contributed to explain Uruguay's recession, including the poor economic performance and crises of its neighboring countries; a deterioration in terms of trade (higher oil prices and lower prices of agricultural commodities); and worsening financial conditions in international capital markets. On the domestic front, persistently high fiscal deficits (around 4% of GDP), an appreciated real exchange rate, weak financial supervision and an outbreak of foot-and-mouth disease during 2001 contributed to the recession and financial difficulties. The 1998 recession and the subsequent economic crisis had a severe social impact, especially on unemployment and poverty. Unemployment increased from about 10 percent in 1998 to 17 percent in 2002/2003. During the period from 1998 to 2002, the proportion of self-employed and of those employed in the informal sector also grew and was accompanied by a reduction in real wages in the private sector. Household income started to decline in 1998 and fell by more than a fifth in the period from 1998 to the end of 2002, as it was negatively impacted by poor performance of the labor market in terms of job creation and wage behavior. As a result, poverty increased between 2000 and 2003/2004 from 17 percent to 31 percent of the population, while extreme poverty also doubled during the same period. Despite the impact on household income, extreme poverty remained low in Uruguay with respect to other Latin American countries and the recent economic recovery should reverse the increasing trend in poverty rates. After an improvement in the early 1990s, income distribution worsened during the 1990s, as the Gini coefficient increased from 0.424 in 1990 to 0.462 in 2004. The deterioration in social indicators in the early 2000s resulted in growing social exclusion, as many Uruguayans found themselves without a job, or a safety net to avoid poverty. The outcome of the crisis could have been much worse had it not been for an effective adjustment effort by the Uruguayan authorities and the consensual nature of the country's political system. The success with which Uruguay was able to weather the economic crisis of 2001-02 owes much to its prompt and purposeful response to events. Negotiations with creditors led to the successful conclusion of a sovereign debt exchange in May 2003, raising the average maturity of bonds by over 5 years without increasing interest rates and without a principal haircut. Fiscal adjustment resulted in a primary fiscal surplus of 3.8 percent of GDP in 2004 (a major turnaround from primary deficits through 1999-2001). Prudent monetary management enabled the inflationary impact of the 2002 devaluation to be limited to only 19.4 percent that 6 year. Subsequently, inflation was brought down to single figures. The Government's response to the crisis was not limited to macroeconomic measures. A set of mitigating policies to limit the social impacts and prepare the stage for a more rapid recovery was adopted as the crisis developed. The main focus of Government social policies during the crisis was on protecting some critical social sector budgets and providing access to social services and protection to the most vulnerable population, including those who, due to the increased unemployment or decline in real wages, were forced to turn towards the public health system to obtain medical care, as they lost the coverage provided by social insurance and private providers. Economic and social recovery and political transition Efforts by the Uruguayan Government to recover from the crisis began to have an impact on economic and social indicators since mid 2003. Real GDP growth in 2003 became positive after four years of decline, reaching 11.9 percent in 2004 and 6.5 percent in 2005. Financial markets began to improve, and social indicators reversed the negative trends. Poverty incidence in 2005 declined by two percentage points, to less than 30 percent, unemployment fell back to pre-crisis levels (12.2 percent in 2005) and income distribution slightly improved, as the Gini coefficient declined to 0.45. In addition, a significant tightening of spreads and successful renewed access to private markets indicated that the economic situation was returning to normal. The victory of the Frente Amplio-Encuentro Progresista - Nueva Mayoría coalition in the October 2004 elections ended 170 years of Uruguayan politics being dominated by the two traditional parties, the Partido Colorado and the Partido Nacional. The new Government took office on March 1, 2005. The political transition period was smooth with collaboration from outgoing authorities and continuation of critical policies by the new administration. Bank Assistance As the crisis hit in the early 2000s, Uruguay and the Bank agreed that structural adjustment lending would be the most appropriate tool to support the administration in its efforts to soften the impacts and recover. Two Structural Adjustment Loans (SAL I and SAL II1) and two Special Structural Adjustment Loans (SSAL I and SSAL II2) were approved between August 2002 and April 2003. Under the first SAL, the social protection system was to be strengthened by improving management and by safeguarding budget allocations. The program goals were all substantially achieved, and the loan was fully disbursed. The second Special SAL (SSAL II) was designed to be disbursed in three tranches. The operation aimed at improving the equity and efficiency of public expenditures and health and education by improving management and by giving budgetary protection to priority programs. Good progress was made towards those goals and, by 2004, the Government had complied with all conditions in the social sectors for release of the second and third tranches. However, tranche release was held up because the loan was linked with the SAL II program, which supported 1SAL I: Report No 24515 ­ UR / SAL II: Report No 25012 - UR 2SSAL I: Report No 24515 ­ UR /SSAL II: Report No 25012 - UR 7 reforms in the infrastructure sector. As advances in this area were slower than expected, tranche releases in both loans were delayed. The Special SAL was brought to closure in May 2005, when Uruguay's Government requested cancellation of the second and third tranches of SSAL II because it no longer required financial support on special terms. Under the new CAS, the Government requested a new DPL, which was to support reforms and measures that had been undertaken to overcome the crisis effects and to advance reforms in the social sectors to improve quality, efficiency and equity in service provision. The new operation would fit well within the overall strategy of the CAS and, in particular, within the objective of improving living standards. It was also to prepare the way for further lending, as the indicative lending program put forward in the CAS included additional operations in the social sectors to support for Uruguay's effort to strengthen its tradition as a highly equitable country and efficient social institutions, with a view to reduce poverty in the medium term. 1.2 Original Program Development Objectives (PDO) and Key Indicators (as approved) The Social Program Development Policy Loan aimed at (i) supporting the maintenance of macroeconomic stability; (ii) recognizing that Uruguay's social policy response to the economic crisis went considerably beyond actions supported by the Bank under the Second Special Structural Adjustment Loan; (iii) supporting past and ongoing structural and administrative reforms in the education, health, and social protection sectors to further improve both efficiency and equity in service delivery; and (iv) assisting the early activities of the new administration in various social policy areas, as a foundation for the Bank's support for the medium-term Government policies. Section V.5 of the Program Document identified a set of near and medium-term impact indicators for the operation, linking supported actions with the CAS overall objectives. The indicators, organized by sector, were: Near-Term Indicators Medium-term Impact Indicators (end of 2005) (end of CAS period) Billing system is used for billing at Equity and Sustainability least 90 percent insured patients - Fiscal transfers to BPS reduced in line with medium- identified by the Single Registry of term macro framework Formal Health Assistance - National Health insurance regulation completed and implemented Health Coverage (RUCAF) at hospitals and at least 30 percent uninsured patients Equity and Access - Share of health sector expenditure directed towards FNR in surplus during 2005 primary and preventative care increases from 0.4 percent in 2003 to 4 percent in 2009 8 Coverage: - School enrollment rate of 4 year olds reaches at least 95 percent by June 2010 Quality and Equity: Preschool coverage among 4-year - Percentage of students achieving proficiency levels in olds increases to 80 percent by the math and language increases by 15 percentage points end of 2005 by June 2010 Education - Achievement gap between students from low and high income backgrounds is reduced National assessment of student - Performance of 15 year old students in PISA 2006 is performance is successfully higher than in PISA 2003 administered Efficiency and Equity: - First grade repetition rates fall to less than 10 percent by June 2010 - Secondary school dropout rates decrease to 25 percent by June 2010 Equity and Access: - Family allowance program has at least 60 percent of take-up among the poor by 2009 The number of family allowances - Pension coverage of people in old age increases to at beneficiaries from the informal least 90 percent. sector increases by 10 percent by Social the end of 2005 Sustainability Protection - Pension system becomes more sustainable financially with more flexibility to include workers. Pension spending not to exceed 17 percent of GDP by 2009. Monitoring reports for PANES Efficiency and Equity published by the end of 2005 - Social emergency program (PANES) implemented, reaches 200,000 beneficiaries by 2006, and is largely phased out by 2009 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and Reasons/Justification 1.4 Original Policy Areas Supported by the Program (as approved) The SPDPL supported actions taken to overcome different structural problems in the different social sectors, as well as others aiming at overcoming the direct impact of the economic crisis. Some of these actions had been initiated before the loan was prepared, and their inclusion in the policy matrix served as a recognition of their contribution to improve the situation, while others were defined as part of the new government program. In general, the goal was to achieve higher efficiency, less inequities and better incentives for participants and beneficiaries of the different programs. While recognizing previous actions, SPDPL support was always linked to the medium term government strategy, as a way to engage and support current and future efforts to advance the necessary reforms. 9 The four areas supported by SPDPL were macroeconomic policy; health; education; and social protection: The Macroeconomic Policy As part of the efforts to reduce impacts and recover from the effects of the crisis, the Government of Uruguay adopted a rigorous macroeconomic policy, which ensured fiscal sustainability of public policies and programs, including those from the social sectors. The SPDPL recognized these efforts as a critical contribution to a faster and less traumatic recovery process. The Health Sector The health sector in Uruguay is organized through a complex array of public and private providers and financiers. Nearly 97 percent of the population have access to health care services, either through the public health system, private insurers (organized as cooperatives) that cover formal workers and voluntary participants, and a few commercial insurers. While coverage has been traditionally high, excessive costs and inefficiencies have affected the sector, a problem that worsened during the crisis, when many Uruguayans formerly protected by the private providers were forced to turn towards the public hospitals for health care services. The main issues that demanded actions in the sector were: · Inefficient allocation of health care resources across public hospitals and facilities, due to lack of incentives and inadequate budgeting criteria · Duplication of coverage for individuals paying health insurance through their jobs but using public facilities to receive health care, with no systems for cost recovery, which results in high cross-subsidies between public and private providers · Inadequate management and regulation of the catastrophic insurance scheme, resulting in increasing deficits and additional subsidies to private insurance schemes. The SPDPL supported several actions taken to overcome these issues. First, changes in the budgeting and fund allocation process for public hospitals were introduced, to benefit better- performing hospitals and improve the incentives structure in the sector. The second action was the development of a beneficiaries database and its use to start billing patients in public hospitals. This action was to allow the reduction of the incidence of cross-subsidies with the private sector, improving the overall efficiency of the sector. Finally, the third action supported by SPDPL in the health sector was the improvement in management of the catastrophic insurance scheme, which resulted in the reduction and elimination of financial deficits. The Education Sector Uruguay has had one of the strongest education systems in the region for most of the 20th Century, and this had an important role in explaining the high levels of social and economic equity. By 2003, 95 percent of children were enrolled in preschool at age five, and 90 percent remained in school to complete the primary cycle. However, progress in some areas of the education system until the early 2000s had been slower than in other countries in the region. Among those, access and quality of education for pre-school children and teenagers in secondary schools were below expectations. The causes of these problems could be traced to administrative inefficiencies, lack of incentives and insufficient evaluation of policies and programs. The 10 SPDPL supported actions that, as part of the Government strategy, ensured financing to critical programs in the aftermath of the crisis, deepened reforms that provide the central administration with more adequate tools to plan and adjust operations of the system, and advanced in the expansion of coverage as well as improvements in education quality and equity. The main issues in the sector were: · Funding for critical education programs was at risk due to the fiscal impact of the crisis. As the economic crisis created growing fiscal restrictions, the risk that funding for critical educational programs would be cut was high. Continued investment in these program was critical to maintain and improve education access, especially in poor neighborhoods, making it necessary to adopt budgetary protection measures; · Information management systems at central institutions were inefficient and impaired advances in system reforms. The central administrative structure of the education system had significant shortcomings with regards to transparency, results monitoring, and auditing systems; · Coverage among pre-school children (especially 4 year olds) in Uruguay was below expected levels, affecting these children future opportunities; and · The sector lacked a standard evaluation system, including a system to maintain regular students' performance assessments. Uruguay had a limited history regarding student performance evaluations. While investment in the sector was needed, the lack of consistent information to track performance changes hampered the Government's ability to design strategies and policies to improve educational quality The SPDPL supported several actions taken to overcome these issues. First, the efforts made by the Government to protect the budget of three critical education programs (basic school supplies, bilingual education and books and teaching materials) in the aftermath of the crisis was recognized. Second, several new information management systems were introduced at ANEP, the central education management institution. They include a system to file legal documents, a human resources administration database, and school-based information systems for primary and secondary levels. Also, the creation of an internal auditing unit at ANEP was supported by the operation. Third, the efforts to continue expansion of 4-year olds coverage were recognized by SPDPL and, finally, the adoption of a permanent system of student performance evaluation (through national and international testing) was also supported by SPDPL. The Social Protection Sector The social protection sector in Uruguay has been one of the strongest in the region for many decades. Coverage among active workers and the elderly was very high, compared with other countries in the region or even some countries members of OECD. However, the system was almost exclusively focused on the contributory pension system, as more than 90% of expenditures were explained by this program. Social Security expenditures reached as much as 15 percent of GDP in 2000, crowding out other programs. The impact of the crisis on the labor market made evident the need to develop strategies to provide protection to those outside of the formal sector, since they represented a growing number of workers. Recognizing this need, the Government introduced in 2000 an important reform, providing access to family allowances to low income families, even if they were not contributing to the social security system. The system was expanded again in early 2004, aiming at a universal coverage among poor households. Also, 11 immediately after taking office, the new administration in 2005 created a Ministry of Social Development (MIDES), that was responsible for the design and implementation of an emergency social program and for the coordination and monitoring of all social policies. The main issues in the sector were: · Poor families lacked access to family allowances benefits when parents had no formal employment. This problem was correctly addressed by the innovative reforms of 2000/2004, but actual expansion of coverage was insufficient and a renewed effort and commitment by authorities was necessary to fully implement these laws. · BPS management of social insurance programs was efficient, but given their size (the aggregate budget of BPS reached between 15 and 20 percent of GDP), further efforts to increase transparency and accountability were necessary, in particular with regards to public access to normative and statistical information produced at the institution. · The creation of MIDES represented an important step in Uruguay's effort to redirect part of its effort in social protection to include the poorest and most vulnerable in the system. While MIDES immediately focused on the design and implementation of the emergency program, it was also necessary to develop a reliable monitoring and evaluation system to assess different social policies and support strategic decisions in this area. The SPDPL supported several actions to overcome these issues. First, the loan recognized the previous Government's efforts to expand coverage of the family allowances program through the 2000 and 2004 legislation, as well as the continuous effort to expand actual coverage and reach those legally entitled to receive benefits. Second, the SPDPL supported a decision by the BPS Board to publish all resolutions and statistics produced by the institution. Finally, the loan supported the design of a monitoring and evaluation plan for PANES and other social programs in MIDES. 1.5 Revised Policy Areas (if applicable) 1.6 Other significant changes (in design, scope and scale, implementation arrangements and schedule, and funding allocations) 2. Key Factors Affecting Implementation and Outcomes 2.1 Program Performance (supported by a table derived from a policy matrix) Number of 1 tranches: Tranche Amount: Expected Actual Release Release Date: Date: Release Floating Restructured 1 75,380,000.00 09/30/2005 07/01/2005 Regular No No Tranche Release binding Conditions Tranche Condition Text of Condition Status: 12 (a) MSP has issued Directive (Circular) No. 12, dated April 27,2005, authorizing a system for the allocation of budget amounts to its 1 1 executing agencies based on per capita and production criteria, and Met started the application of such system. (b) ASSE is operating a budget administration system, satisfactory to the Bank, in its health facilities. (a) MSP is operating a program of database maintenance which includes an identification of its beneficiaries, and enables MSP to identify coverage duplications. (b) ASSE has been implementing 1 2 since January 2002 a billing system for insured in-patients satisfactory Met to the Bank, and has authorized through the Borrower's Decree dated February 13, 2003 the utilization by the public health providers of the proceeds of the fees charged by such providers. (a) FNR has maintained a financial equilibrium (regular revenues, not including any amounts attributable to the increase in contribution rates mandated by a decree of the Executive, have been equal to or greater than regular expenditures ­ any extraordinary, not operationally-related revenues and expenditures excluded) in its 2003 and 2004 financial statements. (b) FNR's Board of Directors approved 1 3 on April 14, 2005 reforms in its administration procedures which include: (i) setting of unitary costs for medical procedures and Met utilization rates of principal medical procedures satisfactory to the Bank; and (ii) validation of service authorizations made by FNR against RUCAF's and ASSE's consolidated beneficiary databases. (c) FNR's Board of Directors approved on May 30, 2002 reforms in its administration procedures setting forth adjustment of tariffs for medical procedures based on variations of unitary costs. The Borrower has, as needed to protect critical education programs: (a) executed budgets for the calendar years 2003 and 2004 at the following minimum yearly amounts: (i) $900,000 for basic school 1 4 supplies; (ii) $250,000 for bilingual education; and (iii) $300,000 for Met books and materials; and (b) approved a budget for calendar year 2005 at least in the yearly amounts mentioned in paragraph 1 (a) above, for each of the three programs mentioned therein. ANEP has implemented a series of management information systems, satisfactory to the Bank and described in the annexes to the letter from ANEP to the Bank dated April 29, 2005, which include: (a) a file 1 5 management system; (b) a filing system for CODICEN's resolutions; (c) an information management system each for the primary and Met secondary education systems; and (d) the incorporation of ANEP's human resource database into the central database of public servants of the Planning and Budgeting Office of the Borrower's Presidency. ANEP has: (a) through its resolution dated May 27, 2003 staffed its 1 6 internal auditing unit; and (b) through its resolution dated October 9, Met 2003 approved the operational procedures of such unit. The Borrower has prepared a plan, satisfactory to the Bank, to 1 7 expand to 80% school coverage of four-year-old students during the Met 2006 school year. 5. CODICEN has decided: (a) through its resolution dated August 24, 1 8 2004 to continue implementing national assessments of student learning; and (b) through its resolution dated November 16, 2004 to Met participate in 2006 in the Organization of Economic Cooperation and 13 Development (OECD) Program for International Student Assessment (PISA 2006). BPS has delivered a report dated April 22, 2005 indicating that the 1 9 number of beneficiaries of family allowances under Laws No. 17139 and No. 17758 published in the Official Gazette on July 29, 1999 and Met May 10, 2004 respectively, reached 184,252 in December 2004. BPS has issued Resolutions No. 8-5/2005, 8-6/2005 and 8-7/2005, all dated March 31, 2005, and Resolution No. 10-26/2005, dated April 13, 2005, improving its disclosure policies, including access to 1 10 statistical information, access of BPS' directors to databases, Met authorization to regional managers to provide information to local media, and publication of general resolutions through the internet and the Official Gazette. The Borrower's Ministry of Social Development has created a 1 11 Directorate for Programs Evaluation, named its director, and designed an impact evaluation and monitoring system for implementation by Met such Ministry. Comments 2.2 Major Factors Affecting Implementation: Preparation of SPDPL began in April 2005, and was approved by the Bank's Board two months later. All tranche release conditions had been met by appraisal, and effectiveness and disbursement followed quickly, since no additional conditions were defined. A central factor in the successful implementation of SPDPL was the good overall relation between the Bank and Uruguay's Government. The operation was prepared at the same time the new CAS was being formulated, in a context of strategic partnership in all sectors. The Government counterparts, including MEF, OPP, and sector officials, showed a strong commitment with the operation and its implementation. While some of the actions supported by the SPDPL had been implemented before the operation was prepared, others were defined and implemented in a timely manner, in line with the agreements reached during the preparation process. Smooth implementation of the operation was facilitated by the strong background analysis that supported it, including policy notes, analyses conducted during the preparation of previous operations, and other AAA, such as a Poverty Assessment and a Public Expenditure Review. Knowing that the operation would be a single-tranche policy support loan with a rapid disbursement, the team aimed at designing a policy matrix that would not include too many actions, focusing on their relevance and feasibility. Risks identified at appraisal (political, economic, and managerial) were well managed in the context of the mitigating measures proposed at that time. Thus, the team concern with a possible lack of ownership of ongoing policy reforms by the new government was managed through very intense dialogue between Bank staff members and official counterparts, in the context of 14 preparation of new AAA and loan operations and supervision of existing ones. The economic risks identified at the time of appraisal originated in possible fiscal restrictions in continuing implementation of supported policies. However, the sound macroeconomic management, in a favorable international context, helped to control this risk. Finally the potential problems arising from managing risks (in particular, due to the inexperience of the new Ministry of Social Development staff) were also managed by the strong support that other agencies with stronger managing records (in particular, BPS) provided to MIDES. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization: (a) M&E design: During the preparation of SPDPL, a set of indicators to monitor progress with regards to the PDOs were defined, as indicated in section 6.2 of this ICR. These indicators were selected in agreement with Government counterparts, considering availability of data at the time of appraisal, relevance to represent the trends in the different areas and issues included in the operation and expected availability in the future. (b) M&E implementation: Data availability for most indicators was adequate after appraisal, allowing the team and Government officials to follow up on the policy dialogue initiated during preparation of the loan. Being a single-tranche policy support operation, the program design for SPDPL did not include a formal strategy to continuously monitor the evolution of these indicators, but it was focused to ensure availability at the time of ICR preparation. Data on these indicators are included in Annex 1 of this ICR. 2.4 Expected Next Phase/Follow-up Operation (if any): Following the approval of SPDPL, the World Bank and the Government have had a very active policy dialogue to continue collaborating in the area of social policies through development policy and investment lending, and analytical and advisory services. This collaboration covers the three social sectors supported by SPDPL (health, education, and social protection), with a combination of instruments. In health, a Bank team is preparing, together with the Ministry of Public Health, a technical assistance loan to support ongoing and planned reforms and programs in the sector3. This operation, planned to be submitted to the Bank's Board of Directors in mid 2007, would aim at: (i) Strengthening the Ministry to improve its monitoring capacity, to improve the quality of primary and secondary health prevention of non communicable diseases, developing epidemiological monitoring and surveillance systems; (ii) promoting further improvements in regulatory and supervisory systems for public and private health service providers; (iii) providing financing for key infrastructure and medical equipment acquisitions for the primary health care network; and (iv) strengthening the Ministry of Public Health capacity to implement public health promotion strategies in schools and municipalities, to increase 3National Health Insurance and Social Security Loan (P050716) 15 prevention under a social inclusion strategy. These areas of action are directly linked to the policies supported by SPDPL in the sector, and represent a continuation of the same strategy. In education, an AAA on Equity and Quality of Education4 is being prepared to help define the policy to improve these two critical areas. The report focuses on the issue of equity in access to quality education, indicating that the main problems are in the enrollment level of some specific age groups and on the quality of education received by part of the population. While the extension of coverage among pre-school children supported by SPDPL has been successful and continued beyond the original goal, the focus on the quality of that education and on the necessary strategies and tools to improve it are the next step in policy development for the sector. Also, the ongoing Third Basic Education Quality Improvement Project 5 has three basic objectives, supporting Government efforts to (i) increase equity in the provision of preschool and primary education, by expanding full time schools; (ii) improve the quality of preschool and primary education; and (iii), improve the efficiency of the preschool and primary education system, always with a focus on socio economically disadvantaged and very disadvantaged contexts. This program has provided substantial support to achieve the SPDPL goal of increasing preschool coverage. In social protection, an AAA on Income Transfer Policies6 is being prepared to provide inputs to the Government for the design of the new "Plan de Equidad", the integrated social policy that should replace the emergency program "PANES" by the end of 2007. The study is focused on identifying and assessing policy options, considering the goals (high coverage with reasonable benefits), restrictions (limited fiscal resources and need to adapt institutional setting), and trying to reconvert existing programs to support the new policy. Also, a Non-lending Technical Assistance (P101152) to support the implementation of the monitoring and evaluation (M&E) system of MIDES and the preparation of a PSIA is currently being executed. A non-lending Technical Assistance project to support the development and institutionalization of the monitoring and evaluation system of social policy in Uruguay7 is also under execution, as a follow up of the support provided in SPDPL to the development of the M&E system in MIDES. This TA focuses on the participatory monitoring system, to ensure that beneficiaries and other interested citizens are heard in the process of evaluating and redesigning social policies. Finally, a new programmatic development policy loan8 is being prepared, with the goal of submitting it to the Bank's Board in early 2007. This operation has a wider scope than the SPDPL, as it also includes support for a tax reform and improvements in capital markets, but it includes a social protection component focused on the continued expansion of coverage by the family allowances program and its eventual role as a core component of the new program "Plan de Equidad". The PDPL will also support additional improvements in management and 4Education Equity and Quality in Uruguay (P95503) 5Third Basic Education Quality Improvement Project (P070937) 6Income Transfer Policies in Uruguay (P095508) 7Strengthening Participatory Monitoring and Evaluation of Social Policy (P101152) 8First Programmatic Development Policy Loan (P083927) 16 transparency in BPS, resulting in higher coverage and collection among active workers. An accompanying technical assistance loan9 will support the implementation of SIAAS, a system to identify social programs beneficiaries across the country. This system will include information from health, education, social protection, social insurance and other sectors, resulting in an unified data base extremely useful to advance in some of the reforms supported by SPDPL in the health sector (reducing the magnitude of cross-subsidies between public and private providers) improve targeting of same programs and limit the magnitude of gaps and overlapping in coverage. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation (to current country and global priorities, and Bank assistance strategy) The SPDPL objectives were to "...(i) support the maintenance of macroeconomic stability; (ii) recognize that Uruguay's social policy response to the economic crisis went considerably beyond actions supported by the Bank under the Second Special Structural Adjustment Loan; (iii) support past and ongoing structural and administrative reforms in the education, health, and social protection sectors to further improve both efficiency and equity in service delivery; and (iv) assist the early activities of the new administration in various social policy areas, as a foundation for the Bank's support for the medium-term Government policies." (from SPDPL PD, par. 63) These objectives were adopted considering that the country had already adopted important policies to protect the population from the crisis impacts, and continued its efforts to develop policy reforms to increase access, equity, efficiency and sustainability in the social sectors. The new Government early actions were clearly directed in the same direction, providing continuity and deepening several needed policies in health, education, and social protection. In that context, the SPDPL objectives were clearly relevant at the time of appraisal in regards to country priorities, and continue to be relevant at ICR preparation. Objectives were relevant to the Bank assistance strategy. The SPDPL objectives were aligned with the new CAS framework, which was submitted to the Board together with the SPDPL. The SPDPL fits well within the overall strategy of the CAS and, in particular, within the objective of improving living standards. Also, the SPDPL contributed directly to other objectives adopted by the CAS, such as state modernization, enhanced transparency, strengthening accountability, and increased operations efficiency. Being the first operation prepared and approved under the new CAS and with the new Government counterparts, the SPDPL had an important role in setting the tone and style of collaboration between the Bank and the new Government. The operation served as a bridge between past and future support, indicating that the Bank considered that many policies originally designed and implemented by the previous government were adequate and necessary, and that continuation and deepening of these policies would result in better social and economic conditions for the population. 9 Institutions Building Technical Assistance Loan (P097604) 17 The near-term Indicators (end 2005) of SPDPL are aligned with the Medium-Term Impact Indicators defined in the CAS, and advances in these indicators produced under the support of SPDPL can be already considered as significant steps towards the medium term goals for these indicators. The objectives of the SPDPL have contributed to increase the efficiency of reforms, as well as to promote careful analysis and evaluation in the implementation of social programs. Implementation of reforms that had started before SPDPL and those initiated as part of it have continued, in some cases with better results than expected. Thus, the relevance of objectives, design and implementation is considered satisfactory, based on: (i) the consistency of Program with Bank and Government priorities; (ii) quality of the design, with a clear focus in the protection of the most vulnerable; and (iii) adequate implementation, which resulted in increased sustainability of supported reforms. 3.2 Achievement of Program Development Objectives (including brief discussion of causal linkages between policy actions supported by operations and outcomes) Achievement of Program Development Objectives is considered satisfactory. The three core objectives of the program - (i) support Uruguay's efforts to maintain a stable macroeconomic framework; (ii) recognize Uruguay's social policy response to the economic crisis of 2001 and 2002; (iii) support past and ongoing structural and administrative reforms in the health, education, and social protection sectors; and (iv) assist the early activities of the new administration in various social policy areas- were achieved as expected, thanks to the results of each individual action. The macroeconomic policy in Uruguay achieved its overall objectives, with sustained growth in a stable context, progressive reductions in the public debt-to-GDP ratio, and positive fiscal results. Real GDP grew by 6.6 percent in 2005, with inflation at below 5 percent, and improvements in the exchange rate. Public sector debt (that had reached 104% of GDP in 2003) declined to 60% of GDP in 2005, and further declines were expected for 2006. Similarly, the primary balance of the non financial public sector reached a record surplus of 3.9% of GDP in 2005. In the health sector, the reforms in budgeting, advances in public hospitals billing systems and improvements in the financial and regulatory management of the catastrophic fund (FNR) were substantial to recognize past efforts (in particular, regarding the improvement in FNR), and set up the conditions for a longer term reform process in the health sector, increasing equity (by reducing cross-subsidies) and efficiency (by improving budgeting criteria and procedures). In education, the policy actions provided an explicit recognition to past policies by including the budget protection condition for years 2003-2005. Also, the improvements in the information management systems in the central education system and at the schools resulted in higher efficiency in the sector, together with the improvement in control generated by the creation and implementation of an internal auditing unit at ANEP. The focus on equity was implemented through the expansion of preschool coverage, which resulted in sustained advances in the proportion of 4 year old children with access to the formal educational system. This action, initiated by the previous government and deepened by the new administration, represents a 18 significant improvement in equity of opportunities for children that previously entered the formal schooling system in a disadvantaged position. Also, the establishment of a regular program to measure students' performance will result in a more transparent process to design and implement policies in the sector. Finally, in social protection, the SPDPL included an action that recognizes previous efforts (the approval of the 2000 and 2004 laws providing access to family allowances to poor households) and continuing policies, as the new government successfully supported the goal of further expanding coverage in this program. Also, new measures, including the increased transparency in BPS operation by making public all resolutions of its board of directors and all statistics, and the design of an evaluation and monitoring plan for social policies were very important to improve efficiency and support the new administration first steps towards the design of a new social policy strategy. 3.3 Justification of Overall Outcome Rating (combining relevance, achievement of PDOs) Rating: Satisfactory The overall outcome rating for SPDPL is "satisfactory" since all planned reforms were implemented in full and they achieved their key objectives of maintaining and improving social service delivery. Further, in all areas the government continued developing its reform agenda. The satisfactory rating is considered justified since: (i) the education and health reforms were strengthened through better management, increased efficiency and the effective protection of socially-critical budget allocations, (ii) social service delivery indicators were maintained or improved during the lifetime of the operation; and (iii) the impact of social programs directed to the poorest population has improved. Advances in near-term indicators show the positive evaluation of SPDPL outcomes in quantitative terms. The recognition of past actions in response to the crisis was very effective as a signal to the new Government regarding the need to give continuity to some of these policies, which where initiated under the previous government, maintained within the context of SPDPL, and, in several cases, deepened and considered key components of the medium term strategy by the new authorities. While in some cases the impacts were indirect, in others it is clear that actions supported by SPDPL resulted in significant improvements in the near-term indicators proposed in the program document: 1. The financial result of FNR (the catastrophic health insurance fund) continued to be positive, at 6.8% of revenues. The decline from the previous year (10.6% in 2004) was caused by poor financial results, since the operational result (revenue minus cost of medical services) went from 10.2% in 2004 to 10.4% in 2005. Data for 2006 is not available at the time of ICR preparation (2006 balances for FNR will be available in mid 2007). However, initial estimates indicate that the balance was positive. 2. School coverage among 4 year old children exceeded the 80% goal set for 2005, reaching 83% in mid 2006. This indicator is highly relevant as it shows that not only the coverage recovered from the crisis impact, but it reached a new record level, indicating the positive trend in the medium term. 3. As planned, the national assessment of students' performance was applied during 2006. Results from the assessment will be available in early 2007 19 4. Family allowances for children of informal workers continued to expand. The goal of an additional 10% increase during 2005 (reaching 200,000 beneficiaries at the end of the year) was obtained and exceeded, reaching 209429 by June 2006. Further improvements are expected, but at a slower pace, since officials at BPS estimate that a plateau may have been reached. 5. A monitoring report for PANES was published by the end of 2005, as expected. Furthermore, the Direction of Monitoring and Evaluation of MIDES, continued publishing analytical reports during 2006, including assessments of PANES impacts, beneficiaries profiles, a survey of social programs and, in December 2006, a report on Public Social Expenditures since 2000. 3.4 Overarching Themes, Other Outcomes and Impacts (if any, where not previously covered or to amplify discussion above) (a) Poverty Impacts, Gender Aspects, and Social Development SPDPL supported a set of actions in the three social sectors that aimed, directly or indirectly, at reducing poverty and improving the overall welfare of Uruguayans. The loan was approved and implemented in 2005, as the worst stage of the crisis had passed and different socioeconomic indicators were recovering. Poverty and extreme poverty incidence reached record highs in 2004, with 31.8% and 3.1% of the population respectively. As the country recovered from the crisis effects, these indicators began to decline, and by early 2006 nearly 27% of the population was poor and 2% was affected by extreme poverty. Income distribution was also affected by the crisis, as the Gini coefficient went from 0.445 in 2001 to 0.46 in 2004. The recovery in this case was limited, as the coefficient was around 0.452 in early 2006. Other socioeconomic indicators show similar trends, with some worsening due to the onset of the crisis in the early 2000s and a recovery as mitigating measures such as those supported by SPDPL and overall economic improvement had an impact. For example, the infant mortality rate had grown from around 14 deaths per thousand births in the early 2000s to 15 per thousand in 2003, but recovered and, by 2005, was at 12.7 per thousand. The implementation of the SPDPL and further measures taken by the Government had an impact on the social development dimension. As one of the actions supported by the loan (the design of an M&E system for social policies) was implemented, the Ministry of Social Development included standard monitoring tools (such as definition of quantitative indicators) but also propose the adoption of a social monitoring model, which is being developed with support from the Bank. (b) Institutional Change/Strengthening (particularly with reference to impacts on longer-term capacity and institutional development) In spite of being a single-tranche project, the SPDPL had a substantial institutional development impact in the areas involved in the program (education, health and social protection). The program had an immediate impact in the different institutions, as it supported policies aiming at improving efficiency and transparency. Better management of FNR (the catastrophic health insurance scheme) or changes in the budgeting and incentive structure of public hospitals had a direct impact on these institutions that resulted in stronger and more sustainable policies. Similarly, the reforms introduced at ANEP (the education board) gave this institution a new 20 strength to manage the system, limiting previous abuses and lack of transparency. On social protection, the inclusion of an explicit action in the policy matrix to support the increase in transparency at BPS represented not only an important gesture of support for a new direction in the way this institution operates, but resulted in better than expected improvements in terms of institutional governance. BPS not only began to publish all resolutions and statistics, but it also made public on a regular basis the studies prepared by its Division of Studies, which produced analysis of the current status and trends of the system. BPS also collaborated actively in the organization and implementation of several open workshops. Finally, the development of an M&E plan at MIDES resulted in a much stronger policy making process. The Department of Monitoring and Evaluation at MIDES became a central component of the policy making process for the social sectors, providing analytical and technical inputs to the decision makers that were not available before. The compilation of a detailed database of PANES beneficiaries was not only a core element of the targeting and control systems at MIDES, but it was also extremely useful, together with other datasets managed by BPS, in the analysis of policy options for the future. (c) Other Unintended Outcomes and Impacts (positive or negative, if any) 3.5 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops (optional for Core ICR, required for ILI, details in annexes) 4. Assessment of Risk to Development Outcome Rating: Low or Neglible Risks identified at time of appraisal were considered to be low to moderate. Three categories of risks were identified at that point: Political, economic and financial and managerial. After closing the operation, Risk to Development Outcome is also considered to be negligible to low, since mitigating measures discussed in the PD are still in place. In particular: Political Risks: Potential problems were based on the fact that the SPDPL was started with a Government that was just taking office, while it supported some reforms initiated by the previous administration. Mitigating measures for this risk included continued dialogue with the Government through the supervision of an investment loan in education, the preparation of a new loan in the health sector, support to MIDES through the non lending TA operation, preparation of a AAA on income transfer policies, and, more recently, preparation of a new DPL and an accompanying TAL. Nearly 18 months after appraisal, commitment of the Government towards the reform program continues to be strong and focused. Economic and Financial Risks: The implementation of reforms required continued financing in a macroeconomic context of restrictions and high levels of indebtedness. Mitigating measures for this potential problem resided in the maintenance of a consistent macroeconomic and fiscal framework, which was achieved in 2005 and 2006. Managerial Risks: The implementation and consolidation of the reforms included in the SPDPL required strong managerial abilities. Components of the reform process could have failed if administrative capacity would have been inadequate. However, the agencies involved (ANEP, MSP, ASSE, BPS, MIDES, showed a strong commitment and towards achieving the goals of the program. 21 5. Assessment of Bank and Borrower Performance (relating to design, implementation and outcome issues) 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry (i.e., performance through lending phase) Rating: Satisfactory Bank lending performance is rated as satisfactory. As noted, loan identification and design were consistent with the CAS, built on the experience of previous operations (SAL and SSAL-II), and was consistent with the Government's development strategy. The Bank worked closely with the IDB and other donors on the design of the loan. Policy actions in the social sectors supported by the SPDPL program were well designed, with an expected positive impact on social outcomes. The focus on policies that would protect basic services in health, education and social protection in the wake of the economic crisis was appropriate, considering the social and economic emergency in the country at the time. The quality of the project design was satisfactory because it was targeted at key areas in the education and health sectors and social protection and had the virtue of mobilizing the debate on basic structural matters at the start of the new Government. The Program made a relevant contribution to Uruguay's return to stability, and triggered important changes in areas that were traditionally considered structural constraints. The assessment of the situation in the social sectors in Uruguay in early 2005 indicated that, while the crisis had affected some indicators, the Government had already adopted several policies to mitigate these impacts, and the Bank considered appropriate to recognize these efforts in this DPL policy matrix. The choice of specific objectives in the health, education and social protection areas reflects a thorough knowledge of the sectors in Uruguay, because they each play a key role in the systems. Resolving of the chronic deficit of the FNR, modifying the performance guidelines for ASSE, making the ANEP more efficient and incorporating an Internal Audit unit are all highly relevant, with potential for extension of their impact on the operation of the sectors. At the time the SPDPL Program was prepared, the Bank made an accurate diagnosis of the social situation. In particular, it identified the principal risks to which the most vulnerable sectors of the population were exposed. Working with the Government, the Bank ensured that the SPDPL Program would provide protection to the most vulnerable sectors of the population, and to improve the efficiency of the important health, education and social protection programs to improve and extend their services without incurring additional inefficiencies. The Program was targeted at key areas in the health, education and social protection sectors, and had the virtue of mobilizing the debate on basic structural matters in a complex situation. (b) Quality of Supervision (including M&E arrangements) Rating: Satisfactory 22 Bank supervisory performance is rated as satisfactory. Being a single-tranche project and having been disbursed very shortly after approval, full implementation of all actions supported by the program had been achieved early on. However, the team had frequent contacts with counterparts after the loan was fully disbursed, embedded in the larger program on social policies. Missions reviewing ongoing operations and preparing new loans or AAA in the three sectors (Education, Health, and Social Protection) visited Uruguay. Between July 2005, when the loan was declared effective and disbursed, and June 2006, when it closed, members of the team visited Montevideo more than 20 times to discuss different aspects of the social policies, to participate in public and closed seminars and workshops and to interact with official counterparts and independent analysts. The missions followed up progress on implementing agreed monitoring indicators and discussed results with MIDES, BPS, ANEP, OPP, MEF, and MSP. The supervision of this Loan helped ensure continued dialogue with the various authorities of the previous government, as well as building a bridge to the current administration. (c) Justification of Rating for Overall Bank Performance Rating: Satisfactory As both the Quality at Entry and the Quality of Supervision are considered satisfactory, the Overall Bank Performance is also considered satisfactory. Throughout the full life of the program, from identification to closing, the team was deeply involved in a policy dialogue process with authorities and independent counterparts, collaborating to ensure that the underlying goal of this operation (to provide support to Uruguay in its effort to develop and sustain an adequate and consistent social program) was achieved. The combination of policy actions supported in the SPDPL loan with continuous dialogue after the loan was approved and disbursed in the context of supervision and preparation of other operations resulted in an intense interaction with counterparts, providing additional sustainability to policies supported by SPDPL. 5.2 Borrower Performance (a) Government Performance Rating: Not applicable (b) Implementing Agency or Agencies Performance Rating: Not applicable Implementing Agency Performance Ministry of Economy and Finances (c) Justification of Rating for Overall Borrower Performance Rating: Satisfactory The borrower role in loan preparation is rated as satisfactory. The borrower participated actively in the preparation of the SPDPL, providing guidance to the Bank team regarding Government objectives and programs, and discussing specific actions and indicators to be included in the loan 23 documents. This included the preparation of interviews, information, research, surveys, contacts, meetings and discussions. During implementation, the borrower also maintained a proactive attitude, facilitating and coordinating actions with the Bank and the agencies that participated, ensuring prompt action, establishing compliance with the conditions laid down in the Program. This demonstrated the borrower's commitment to the social reforms that had already been begun and to the achieving of greater transparency and administrative efficiency. Several Government agencies, including MSP, ANEP, BPS, MIDES, MEF, and OPP participated during the preparation and implementation of the operation, all with clear commitment to implement reforms in their respective areas. 6. Lessons Learned (both operation-specific and of wide general application) The experience of SPDPL provides important lessons for future operations, as it was a well designed program, with necessary and feasible policy actions: (1) In Middle-Income Countries with highly skilled government staff, it is critical to adopt a social participatory and consultative process in the preparation of the operations. Continuous dialogue with official counterparts and independent analysts simplified the team's work during preparation, as the main sectors and policies to be supported were clearly identified. The topics and areas chosen for the SPDPL Program played key roles in modifying deep-rooted problems in those sectors, and in paving the way for structural reforms in the near future. (2) The institutional restrictions of a new administration must be taken into account when preparing an operation. The context in which policy reforms are designed and implemented at the time a new government takes office necessarily generates additional restrictions that must be taken in consideration when designing an operation. In the case of SPDPL, the program preparation started one month after the new administration - composed mostly by officials with little or no experience on negotiating with the Bank - took office. However, by working together on the process of preparing the documents, these problems were rapidly solved, and ownership of the program was clear. (3) A one-tranche DPL can be an effective instrument for the Bank to provide continuity to reform efforts and lay the foundations for programmatic sector dialogue when a new administration takes office. By working on the preparation of the DPL, the Bank team was able to engage the new officials in discussions about their medium term plans and possible areas of collaboration, a process that would have been much more difficult without the SPDPL. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/Implementing agencies (b) Cofinanciers (c) Other partners and stakeholders (e.g. NGOs/private sector/civil society) 24 Annex 1 Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Names Title Unit Responsibility/ Specialty Lending Evelina Bertranou Junior Professional Associate LCSHS- DPT Data preparation Antonio Leonardo Blasco Financial Management Specialist LCSFM Financial Management Francis J. Earwaker Consultant LCC7C Technical Advisor Sergio Espana Consultant LCSHE Education Alejandro Daniel Guerson Economist LCSPE Macroeconomics Febe Mackey Program Assistant LCSHD Assistant Marta Elena Molares-Halberg Lead Counsel LEGLA Legal Natalia Moncada Team Assistant LCSHH Assistant Claudia Nin Team Assistant LCC7C Assistant Luis Orlando Perez Sr Public Health Spec. LCSHH Health Sector Rafael P. Rofman Lead Social Protection Special LCSHS TTL- Social Protection Emiliana Vegas Senior Education Economist LCSHE TTL- Education Supervision Cristina Flood Consultant LCSHS Technical Advisor Febe Mackey Program Assistant LCSHD Assistant Sarah Ruth Bailey Program Assistant LCSHS Assistant Luis Orlando Perez Sr. Public Health Spec. LCSHH Health Rafael P. Rofman Lead Social Protection Special LCSHS TTL- Social Protection Emiliana Vegas Senior Education Economist LCSHE TTL- Education (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage No. of staff weeks USD Thousands (including travel and consultant costs) Lending FY05 16 55.50 FY06 -0.20 FY07 0.00 Total: 16 55.30 Supervision/ICR FY05 0.00 FY06 0.45 FY07 4.04 Total: 4.49 25 Annex 4. Summary of Borrower's ICR and/or Comments on Draft ICR 26 27 Annex 7. Map 28