The World Bank Report No: ISR11361 Implementation Status & Results Brazil Rio de Janeiro Municipality Fiscal Consolidation for Efficiency and Growth DPL (P111665) Public Disclosure Copy Project Name: Rio de Janeiro Municipality Fiscal Consolidation for Efficiency Program Stage: Implementation Seq.No: 6 Status: ARCHIVED Archive Date: 10-Jul-2013 and Growth DPL (P111665) Country: Brazil Approval FY: 2011 Product Line: IBRD/IDA Region: LATIN AMERICA AND CARIBBEAN Lending Instrument: Development Policy Lending Implementing Agency(ies): Municipal Secretariat of Finance of the City of Rio de Janeiro Key Dates Board Approval Date 01-Jul-2010 Original Closing Date 30-Jun-2013 Planned Mid Term Review Date Last Archived ISR Date 11-Feb-2013 Effectiveness Date 27-Aug-2010 Revised Closing Date 30-Jun-2013 Actual Mid Term Review Date Program Development Objectives Program Development Objective (from Program Document) The objective of the operation is to assist the municipality of Rio de Janeiro in creating fiscal space which will be used for investments to improve the quality and efficiency of public service delivery, especially in poor areas, through innovative programs in health, education and private sector development. Other investments will strengthen the institutional framework for efficient service delivery through the implementation of a medium term expenditures framework, results-based management with the public sector, and PPPs with the private sector. Has the Program Development Objective been changed since Board Approval of the Program? Yes No Overall Ratings Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory Implementation Status Overview Public Disclosure Copy The DPL is fully disbursed and is scheduled to close end June 2013. Implementation of the reforms supported by the DPL has progressed satisfactorily and most indicators have not only been met but have exceeded the end target goals. The DPL has been successful in achieving its objective of creating fiscal space to expand public investment through the implementation of fiscal adjustment measures: improvements in revenue collection, rationalization of personnel expenditures and debt restructuring. Going forward, maintaining momentum with the reforms will be important to ensure sustainability of the results. For example, advancing the pension reform agenda through parametric reforms will be important to consolidate the gains made in creating fiscal space. The Technical Assistance Loan approved by the Board on 14 June 2013 will help strengthen innovations adopted and support their medium term implementation. Results Results Indicators Page 1 of 7 The World Bank Report No: ISR11361 Indicator Name Core Unit of Measure Baseline Current End Target Reduction of NPV of the pension system’s Number Value 36.00 0.65 29.70 actuarial deficit Date 31-Dec-2009 31-Dec-2012 31-Dec-2012 Public Disclosure Copy Comments The baseline for this indicator The end target value has The end target value was a was over estimated. The NPV been exceeded. The approval reduction of NPV of the of the pension system’s of Law 5.300/2011 by the pension system’s actuarial actuarial deficit, as estimated Municipal Chamber – deficit by 17% or R$6.3 of by the authorities, was R$22 focusing on the which R$3.1 billion was tobe billion recapitalizationplan for achieved from parametric FUNPREVI – allowed for the reforms and R$3.2Billion from financing of an actuarial the recapitalization measures. deficit of R$ 22 billion (in NPV terms), as estimated by the authorities. The recapitalization process restedon three pillars: (a) R$ 1.7 billion through transfers from PREVIRIO (real estate sales and loan amortizations); (b) R$ 2.5 billionfrom oil & gas royalties over a 45-year period; and (c) the remainder through supplemental contributions by the MRJ as an employer over a 35-year period. The latest estimate (December 2012) for the resulting actuarial deficitis R $650 million. Revenue collection Percentage Value 0.00 5.77 4.00 Date 31-Dec-2009 31-Dec-2012 31-Dec-2012 Comments The baseline for the The end target value has The end target value was an percentage increase (in real been exceeded. Collection of improvement in revenue Public Disclosure Copy terms) of ISS tax collection the city's main tax, the tax on collection, evidenced by a 4 from 2010 to 2011 is 0.0%. services (ISS), increased percent increase in ISS tax 17.6% and 15% in nominal collections through NFEs terms in 2011 and 2012 (Electronic Tax Invoices). respectively. In real terms growth in ISS was 10% and 9% in 2011 and 2012. An increase of over 5% in the ISS due to the notacarioca is estimated by the authorities. Page 2 of 7 The World Bank Report No: ISR11361 The Government is conducting research on the contribution of the Electronic Fiscal Invoice to ISS growth. Public Disclosure Copy A more precise estimate based on this research is expected by August 2013. Improved municipal business registration Days Value 20.00 3.00 12.50 processes Date 31-Dec-2009 31-Dec-2012 31-Dec-2010 Comments The baseline for the number The end target value was met Reduction in the number of of days to obtain a municipal in 2010 and has since been days to obtain a municipal business license is 20 days. exceeded. Introduction of business license from 20 days The indicator value Alvará Já, a project to simplify in 2009 to 12.5 days in 2010. corresponds to a subsetall registration forbusiness municipal business licenses. activities with low Specifically, licenses for environmental impact and activities with low implementation of the online environmental impact and registration system REGIN, which register online. This has led to improvementin the indicator has been used processes for registering throughout supervision. businesses. For businesses with low-impact activities and which register online, the average numberof days to obtain a municipal business license was reduced from 20 to 3 days. family health care coverage Percentage Value 6.00 40.60 12.00 Date 31-Dec-2009 30-Apr-2013 31-Dec-2012 Comments The baseline for the The original end target of 12% Family health care coverage percentage of the population of the population covered by will double from a January covered by the family health the family health care 2009 baseline of 6 percent to care program is 6%. program was met as of a projected 12 percent in Public Disclosure Copy January 2011 and has December 2011. sincebeen exceeded. Family health care coverage currently stands at around 40.6% of the population, and is set to continue to expand incoming years. Page 3 of 7 The World Bank Report No: ISR11361 Reduction in student dropout rates and Number Value 3.60 2.05 improvement in test scores for Escolas do Date 31-Dec-2009 31-Dec-2012 31-Dec-2012 Amanhnã Comments The baseline for student The end target has been met. Annual reductions in student Public Disclosure Copy dropout rates is 3.6%. The Student dropout rates have within year and between-year baseline is 3.7 for IDE-Rio successfully been reduced dropout rates and annual and 4.6 for IDEB for grades from 3.6% in 2008 to 2.31% in improvement in IDEB/IDE-Rio 1-5. The baseline is 3.0 for 2011 and 2.05% in 2012. for Escolas do Amanhã from IDE-Rio and 3.1 for IDEB for the 2009 baseline. grades 6-9. Escolas do Amanhã have improved their scores on Dropout rate: 3.6% IDEB/IDE-Rio between 2009 and 2012 for all grades as IDE-Rio: 2009 follows: Grades 1-5: 3.7 Grades 6-9: 3.0 IDE-Rio: 2011 IDEB: 2009 Grades 1-5: 4.2 Grades 1-5: 4.6 Grades 6-9: 4.1 Grades 6-9: 3.1 IDEB: 2011 Grades 1-5:5.0 Grades 6-9:4.0 IDE-Rio: 2012 Grades 1-5: 4.6 Grades 6-9: 4.2 IDEB: 2012 Grades 1-5:N/a Grades 6-9:N/a new openings in enrollments in ECD centers Number Value 29921.00 50614.00 38921.00 and pre-schools Date 31-Dec-2009 30-Apr-2013 31-Dec-2012 Comments The baseline for new The target value, which calls Annual expansion by 3,000 openings in enrollments for for a total expansion of 3,000 new openings in enrollments public creches (Early places per year in ECD in ECD centers and Childhood Development centers and preschools preschools targeted to low- Public Disclosure Copy Centers, ECDs) is 29,921. has been attained and income communities from exceeded. As of April 2013, 29,921 (crèches) and 77,845 The data focuses on ECDs as 50,614 children were (pré-escolas) from 2009 reported by the authorities attending public crèches, up baseline. due to a change in the from 39,386 in 2011. eligibility ages for pre-school enrollments over this period (pre-schools used to enroll children aged 4-6, but since 2010, 6 year olds enroll in first grade, because the primary Page 4 of 7 The World Bank Report No: ISR11361 school cycle wasincreased from 8 to 9 grades). Implementation of a Medium Term Expenditure Text Value Framework (MTEF) Public Disclosure Copy Date 31-Dec-2009 31-Dec-2012 31-Dec-2012 Comments No medium-term strategy with The end target was met. The Implementation of the initial expenditures and financing government has implemented year of a 3-5 years strategy plans in place. initial elements of a Medium with associated expenditures Term Expenditure Framework Implementation of the initial (MTEF). It has prepared a year of a 3-5years strategy medium term costing of with associated expenditures planned expenditures and an plan and financing plan used associated financing plan for the preparation of the including all anticipated budget guideline law of 2012 - funding sources. This LDO (Lei das Diretrizes exercise has been repeated Orçamentárias). on an annual basis in order to inform annual budget preparation. evaluation of the performance contracts Number Value 0.00 42.00 16.00 Date 31-Dec-2009 30-Apr-2013 31-Dec-2012 Comments No performance contracts The end target has been met. The end target, as indicated were signed as such none As of April 2013, the in the program document, is were evaluated. Municipality had signed or the implementation of RBM, renegotiated agreements/ evidenced by the evaluation contracts with 42 entities, up of performance contracts from a total of 39 agreements signed between the in 2011 and 19 in 2010. Municipality and its agencies. Annual evaluations of the results agreements/ performance contracts have beenundertaken and evaluations reports for each year are publicly available. Public Disclosure Copy PPPs in infrastructure and service delivery Number Value 0.00 5.00 1.00 projects Date 31-Dec-2009 30-Apr-2013 31-Dec-2012 Comments No PPP was implemented. The end target has been The end target value is the exceeded. 5 projects were establishment of a framework prepared by the PPP unit and to enable PPPs to invest in are currently under infrastructure and service implementation, for a total delivery projects, evidenced amount of R$ 15 billion. Page 5 of 7 The World Bank Report No: ISR11361 (Sanitation in the West Zone, by at least one project Transolímpica road, Olympic prepared by the PPP unit. Park, Porto Maravilha and the Light Rail System) Public Disclosure Copy Improved stock management efficiency Percentage Value 20.00 0.12 10.00 Date 31-Dec-2009 31-Oct-2012 31-Dec-2012 Comments The baseline for this indicator Implementation of the stock The target value is the seems not to have been management system reduction in stock losses of appropriately set up. From (SIGMA) has allowed the goods in the health sector 2006-2009, losses in the Municipality to reduce losses from 20 percent to 10 percent. stock of goods in the health in the stock of goods in the The baseline and target sector averaged 4.9%. health sector from an average values seem not to have been of 4.9% in 2006-2009 to appropriately set up. 0.12% in 2012. However, there has been an improvement in stock management efficiency, evidenced by the reduction in stock losses. Data on Financial Performance (as of 23-Nov-2011) Financial Agreement(s) Key Dates Project Ln/Cr/Tf Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date P111665 IBRD-79420 Effective 01-Jul-2010 20-Aug-2010 27-Aug-2010 30-Jun-2013 30-Jun-2013 Disbursements (in Millions) Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P111665 IBRD-79420 Effective USD 1,045.00 1,045.00 0.00 1,045.00 0.00 100.00 Tranches Tranche 1 Public Disclosure Copy Description Amount (USD) Expected Release Date Actual Release Date Status 545 31-Aug-2010 30-Aug-2010 Pending Released Tranche 2 Description Page 6 of 7 The World Bank Report No: ISR11361 Amount (USD) Expected Release Date Actual Release Date Status 500 30-Nov-2011 23-Nov-2011 Pending Released Public Disclosure Copy Key Decisions Regarding Implementation Implementation is progressing satisfactorily. Restructuring History There has been no restructuring to date. Related Operations There are no related projects. Public Disclosure Copy Page 7 of 7