Page 1 PROGRAM INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB5886 Operation Name Third Results & Accountability (REACT) Programmatic DPL Region LATIN AMERICA AND THE CARIBBEAN Sector Other social services (34%); General education sector (33%); Health (33%) Project ID P116264 Borrower(s) GOVERNMENT OF PERU Implementing Agency MINISTRY OF ECONOMY AND FINANCE Ministry of Economy and Finance Dirección Nacional de Endeudamiento Público Jirón Junín 319, Piso 8 Lima Peru Tel: (51-1) 311-5930 Fax: (51-1) 428-2509 dgpmsp@mef.gob.pe Date PID Prepared July 28, 2010 Estimated Date of Appraisal Authorization October 4, 2010 Estimated Date of Board Approval November 30, 2010 1. Key development issues and rationale for Bank involvement This is the third in a planned series of three DPLs (programmed for FY 07, 09 and 11) to support the strengthening of the Results and Accountability (REACT) framework in Peru’s social sectors. The program builds on the recommendations of the “RECURSO” AAA report (“A New Social Contract for Peru”). To help basic education, health and nutrition services break out of prevailing “low quality equilibria”, the REACT DPL promotes transparent performance standards and encourages parents and local governments (whose role is growing due to decentralization) to demand improvements. The ministries of Education and Health have set standards for children’s learning, health and nutrition outcomes, and established goals for the proportion of children achieving them. They are developing monitoring systems to track the performance of health posts and schools, and to provide reports for parents on the health, nutrition and learning status of their children. The operation also supports complementary actions to strengthen the links between budgeting and outcomes (through the roll-out of performance budgeting in the social sectors), to improve service quality, reduce exclusion, improve targeting and increase the participation of poor communities in budgeting and program monitoring. The REACT DPL complements a parallel series of fiscal DPLs, which is supporting the development of the umbrella system of results-based management in the Peruvian Ministry of Economy and Finance. 2. Proposed objective(s) The REACT DPL series supports policies which are expected to lead to: (1) improved parental understanding of expected outcomes in education, health and nutrition; (2) to improved outcomes in second grade literacy (especially in rural schools); (3) reduced maternal and neo-natal mortality; and (4) better nutrition outcomes. These are all highlighted as key development outcomes of the CPS. Page 2 3. Preliminary description The Peru Results and Accountability (REACT) DPL is the third in a planned series of three operations (programmed for FY 07, 09 and 11) to support the GoP in strengthening the accountability framework and improving results in health, nutrition and education. Over the last 15 years, Peru has expanded the coverage of basic social programs, but the quality of services remains poor. There are many causes of poor quality, but a critical factor preventing change is the absence of clearly defined standards and results frameworks, across the social sectors. The consequence is inadequate human capital formation, as reflected in the health, nutrition and education status of children. If these issues are not addressed, the resulting labor supply deficiencies will constitute a major obstacle to the country’s medium-term economic competitiveness strategy, undermining efforts to diversify away from traditional exports towards activities with more local value-added, which require a more sophisticated labor force. Although Peru is a middle-income country, with near-universal coverage of primary education, at the start of the REACT program only 15 percent of second grade students reached full sufficiency in literacy and almost half were unable to read at all. In health, 25 percent of births nationwide were still not institutionally supported – rising to 45 percent in the 10 poorest departments – hampering efforts to reduce maternal and peri natal mortality. Thirty percent of five year old children in Peru were chronically malnourished (stunted). In each case, outcomes were particularly bad in rural areas and among indigenous communities. For these reasons, service quality, results and accountability were placed at center-stage in the Garcia administration’s economic development and poverty reduction strategy. This third REACT DPL will support actions to: (a) strengthen the management of information on the unique identity numbers emitted in every birth certificate, in order to reduce errors of exclusion in social programs; (b) strengthen performance budgeting by carrying out in-depth analysis of resource needs for critical interventions in education (support teachers) and nutrition (nutrition counseling sessions) and making the corresponding budgetary adjustments; (c) reinforce the dissemination of the results of the annual standardized test of second grade students reading and math attainment in order to strengthen local level planning in schools; and (d) improve the planning of resource allocation for health centers charged with providing birthing services. These policy actions build on the steps taken with the support of the previous two REACT operations to institutionalize stronger accountability and results based management in the social sectors. 4. Environment Aspects N/A. 5. Tentative financing Source: ($m.) Borrower 0 International Bank for Reconstruction and Development 100 Total 100 6. Contact point Contact: David Ian Walker Title: Lead Economist Tel: (202) 473-8518 Fax: (202) 522-0050 Page 3 Email: iwalker@worldbank.org