Document of The World Bank FOROFFICIAL USEONLY ReportNo: 41498-BO PROJECTAPPRAISAL DOCUMENT ON A PROPOSEDCREDIT INTHEAMOUNTOFSDR 11.7MILLION (US$18.5MILLIONEQUIVALENT) TO THE REPUBLICOF BOLIVIA FORA EXPANDINGACCESS TO REDUCEHEALTHINEQUITIES-APL I11 (HEALTHSECTORREFORMPROJECT,THIRD PHASE) December20,2007 HumanDevelopment SectorManagementUnit Bolivia, Ecuador, Peruand VenezuelaCountry ManagementUnit LatinAmericaand the CaribbeanRegion This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosedwithout World Bankauthorization. CURRENCYEQUIVALENTS (ExchangeRateEffectiveDecember 11,2007) CurrencyUnit = BolivianBolivianos (Bs) 1Bs = US$O.13 US$ 1.00 = 7.65 Bs FISCALYEAR January 1 - December31 ABBREVIATIONSAND ACRONYMS APL Adaptable ProgramLoan BMI Body Mass Index CAIS Health Information Analysis Committees- Comite'de Andlisis de Informacidn en Salud CAS Country AssistanceStrategy CIDOB Center for IndigenousPeoples of EasternBolivia - Centralde Pueblos Indigenas del Oriente de Bolivia CONAPES National Council of Social and Economic Policies ConsejoNacional de Politicas Socialesy - Econdmicas DA DesignatedAccount DGAA Directorate of GeneralAdministrative Affairs - DireccidnGeneral deAsuntos Administrativos DHS Demographic and Health Survey DILOS Local Health Boards - DirectoriosLocales de Salud DPT Diphtheria, Pertussis and Tetanus Vaccine DUF Directorio Unico de Fondos EDA Acute Diarrhea EFPH EssentialFunctions inPublic Health ENDSA National DemographicsandHealth Survey - EncuestaNacional de Demografia y Salud EPI ExpandedProgramon Immunization-Programa Ampliado de Inmunizaciones (PA0 EXTENSA National Programfor the Expansionof Coverage of the SBSISUMI FA0 United Nations Food and Agriculture Organization F M Financial Management FPS Productivity and Social Fund- Fondo Productivoy Social GAIN Global Alliance For ImprovedNutrition GDP Gross Domestic Product GOB Government of Bolivia HB Hepatitis B Vaccine HIPC The EnhancedHeavily IndebtedPoor CountriesInitiative HNP Health Nutrition andPopulation IBRD International Bank for Reconstructionand Development ICB International Competitive Bidding IDA International DevelopmentAssociation IDH Direct Tax on Hydrocarbons- ImpuestoDirect0 a 10s Hidrocarburos IFR Interim Financial Reports IMR Infant Mortality Rate IRR InternalRate of Return MAR Mechanismof Assignment of Resources MDG Millennium DevelopmentGoals MMR MaternalMortality Ratio MSD Ministry of Health and Sports-Ministerio de Saludy Deportes FOR OFFICIAL USEONLY NBI Unmet Basic Needs NGO Non Governmental Organization PAD ProjectAppraisal Document PAHO PanAmerican Health Organization PDCR Second Participatory Rural InvestmentProject PDO ProjectDevelopment Objectives PDS SectoralDevelopment Program-Programa de DesarrolloSectorial PFM Public Financial Management PHC Primary Health Care PIU Project ImplementationUnit PNC Policy of National Compensation POA Annual Operational Plan PRONACS NationalProgram Supporting Culture - ProgramaNacional de Apoyo a la Cultura SAFCI Intercultural, Family and Community Health SaludFamiliar, Comunitaria eIntercultural - SBD Standard Bidding Documents SBS Basic Health Insurance-SeguroBcisico de Salud SEDES DepartmentalHealth Service Sewicio Departamental deSalud - SIGMA Governmentof Bolivia's integratedfinancial management system SNIS National Health Information System -SisternuNacional de Informacidn en Salud SP SocialProtection SU SALUD Universal Health Insurance-Seguro Universal en Salud SUM1 Maternity andChildhood Health Insurance-Seguro de Salud Materno Infantil SVE Epidemiological Surveillance System TGN National Budget USMR Under Five-Year-Old Mortality Rate UDAPE Economic and Social Policy Analysis Unit Unidad deAncilisis de Politicas Socialesy Econdmicas - UCOFI Unitfor External Financing Unidadde CoordinacidnFinancieradeProgramasy Proyectos - UGTFD DepartamentalUnit for Technical and Financial Management Unidades de Gestidn Te`cnicay - Financiera Departamental UGTFN National Unitfor Technical and Financial Management Unidades de Gestidn Ticnicay Financiera - Nacional UNDP UnitedNations Development Program UNICEF UnitedNations Children's Fund UNFPA UnitedNations Population Fund USD United StatesDollar VIPFE Vice-Ministry of Public Investmentand External Financing Viceministeriode Inversidn Pliblicay - Financiamiento Extern0 VOH Vice Ministry of Health VSP Public Health Surveillance VTM Vice-Ministry o f Traditional Medicine WB World Bank WBG World Bank Group WFP UnitedNations World FoodProgram Vice President: Pamela Cox Country Director: Carlos Felipe Jaramillo Sector Director: Evangeline Javier Sector Manager: Keith Hansen Sector Leader: Daniel Cotlear Task Team Leader: Marcel0 Bortman This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. BOLIVIA EXPANDING ACCESS TO REDUCE HEALTHINEQUITIES . APL 111 CONTENTS Page I STRATEGICCONTEXTANDRATIONALE . ................................................................. 1 A. Country and sector issues.................................................................................................... 1 B. Rationale for Bank involvement ......................................................................................... 2 C. Higher level objectives to which the project contributes.................................................... 4 I1. PROJECTDESCRIPTION ............................................................................................. 4 A. Lending instrument............................................................................................................. 4 B. Program objective and Phases ............................................................................................ 5 C. Project development objective and key indicators.............................................................. 5 D. Project components ............................................................................................................. 7 E. Lessons learned and reflected inthe project design............................................................ 8 F. Alternatives considered and reasons for rejection ............................................................ 10 I11. IMPLEMENTATION .................................................................................................... 10 A. Partnership arrangements .................................................................................................. 10 B. Institutional and implementationarrangements................................................................ 10 C. Monitoring and evaluation o f outcomes/results................................................................ 11 D. Sustainability..................................................................................................................... . . . 12 E. Critical risks and possible controversial aspects.,............................................................. 12 F. Loadcredit conditions and covenants............................................................................... 14 I V. APPRAISAL SUMMARY ............................................................................................. 16 A. Economic and financial analyses ...................................................................................... 16 B. Technical ........................................................................................................................... 16 C. Fiduciary ........................................................................................................................... 17 D. Social................................................................................................................................. 18 E. Environment...................................................................................................................... 18 F. Safeguard policies............................................................................................................. 19 G. Policy Exceptions and Readiness...................................................................................... 19 Annex 1:Country and Sector or Program Background ......................................................... 20 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies .................35 Annex 3: Results Framework and Monitoring ........................................................................ 37 Annex 4: Detailed Project Description ...................................................................................... 42 Annex 5: Project Costs............................................................................................................... 54 Annex 6: Implementation Arrangements ................................................................................. 55 Annex 7: Financial Management and DisbursementArrangements ..................................... 59 Annex 8: Procurement Arrangements ...................................................................................... 74 Annex 9: Economic and FinancialAnalysis ............................................................................. 83 Annex 10: Safeguard Policy Issues ............................................................................................ 86 Annex 11:Project Preparation and Supervision ................................................................... 106 Annex 12: Documents inthe Project File ............................................................................... 107 Annex 13: Statement of Loans and Credits ............................................................................ 108 Annex 14: Country at a Glance ............................................................................................... 110 Annex 15: Map IBRD 33374 .................................................................................................... 112 BOLIVIA EXPANDING ACCESS TO REDUCE HEALTHINEQUITIES -APL I11 PROJECT APPRAISAL DOCUMENT LATINAMERICA AND CARIBBEAN LCSHH Date: December 20,2007 Team Leader: Carlos Marcel0 Bortman Country Director: Carlos Felipe Jaramillo Sectors: Health (80%); Sub-national government Sector ManagedDirector: Keith E.Hansen administration (20%) Themes: Health system performance (P);Child health (P) Project ID: P101206 Environmentalscreening category: Partial Assessment LendingInstrument: Adaptable Program Loan [ ] Loan [XI Credit [ ] Grant [ ] Guarantee [ ] Other: For Loans/Credits/Others: Total Bank financing (US$m.): 18.50 Proposedterms: Standard, with 35 years maturity, including 10 years grace period. Borrower: REPUBLIC OF BOLIVIA Bolivia ResponsibleAgency: MINISTRYOF HEALTHAND SPORTS (MSD) Bolivia Attn.:Dra. Nila Heredia, Minister. Dra. Marcia Ramirez, Project Coordinator, and Dr.German Crespo, PlanningDirector, MoHMSD IDoes the project depart from the CAS in content or other significant respects?Re$ [ ]yes [XINO I 1PADA.3 Does the project require any exceptions from Bank policies? ReJ PAD D.7 [ ]Yes [XINO Have these been approved by Bank management? [ ]Yes [XINO I s approval for any policy exception sought from the Board? [ ]Yes [XINO Does the project include any critical risks rated "substantial" or "high"? ReJ PAD C.5 [ ]Yes [XINO Does the project meetthe Regional criteria for readiness for implementation? Re$ PAD D.7 [XIYes [ ] N o Project development objective Re$ PAD B.2, TechnicalAnnex 3 The Project Development Objectives for APL I11 are four: i)to reduce occurrence o f critical risk factors affecting maternal and infant health in the targeted areas so that current gaps between regions are reduced; ii)to reduce chronic malnutrition among children under 2 years o f age in the targeted areas; iii)to increase health insurance coverage in the targeted areas; and iv) to upgrade the National Health Information System (Sistema Nacional de Informacidn en Salud -SNIS) so that it will be integrated with Bolivia's new health insurance program. Project description [one-sentence summary of each component] Re$ PAD B.3.a, TechnicalAnnex 4 This APL 111is being designed and proposed as the last phase of a 12-year Health Sector Reform Program. This third phase would have two scopes o f intervention: first, nation-wide; and second, targeted on 82 o f the most vulnerable rural municipalities and 6 peri-urban areas surrounding three cities. APL 111would include the following components: Component 1. StewardshipRole of HealthAuthorities EssentialFunctionsin Public Health - This component would strengthen the capacity o fnational, regional and local health authorities so all can effectively perform the critical EFPH. Component 2. Family, Community and InterculturalHealth This component would improve access to materna1and infant health services inthe project's target areas. Activities would support the development of InterculturalMaternal and Infant Health Referral Networks, complementing&e existing EXTENSA health brigade program. Component3. Health Insurance Component Three would support the GOB'Simplementation of the new S U SALUD health insurance program through three project subcomponents, focusing on strengthening implementationcapacity: a) Strengthening o f the enrollment system; b) Strengthening management practices; and c) Development o f SU SALUD's monitoring and evaluation system. Component 4. Project Administration The fourth component would support project administration with equipment, technical assistance, training, and operating costs to finance the administration o f the project, and financial and procurement audits. Which safeguard policies are triggered, ifany? Re$ PAD 0.6, TechnicalAnnex 10 EnvironmentalAssessment (OP/BP 4.01) Indigenous Peoples (OB/BP 4.10) Significant, non-standard conditions, if any, for: Re$ PAD C.7 Board presentation: None. Loadcredit effectiveness: (a) The FPS Subsidiary Agreement, the MSD Subsidiary Agreement and the Inter-Institutional Agreement have been executed on behalf o f the Recipient, FPS and MSD. (b) The Operational Manual has been adopted in a manner satisfactory to the Association. Covenants applicable to project implementation: None. I. STRATEGICCONTEXTANDRATIONALE A. Country and sector issues 1. In spite o f recent progress, Bolivia's human development indicators remain among the lowest in Latin America. Bolivia stands at the bottom o f regional rankings on a wide range o f health conditions (scoring above only one country, Haiti) such as life expectancy at birth. A sizable proportion of Bolivia's population endures difficult living conditions, malnutrition and chronic poverty -- formidable challenges which are compounded by large inequities in access to health care. Some o f the poorest Bolivians have little or no access to basic health services. The result is a widespread vulnerability to premature mortality from infectious diseases and other avoidable health-related causes. In addition to this delay in the epidemiological transition', critical and ongoing health issues in Bolivia include highmortality rates for infants and children under five years o f age, and very high mortality rates for women related to pregnancy, childbirth or puerperium (the time period immediately following childbirth). This proposed Health Sector Reform Project, the third phase o f a multi-year commitment, continues to address these issues by enhancing capacity in the public health system, further improving maternal and child health services, and expanding insurance coverage for the poorest Bolivians. It would be implemented at a time o f positive momentum inthe health sector and strong commitment onthe part o f the Bolivian government for improving health outcomes. 2. Bolivia's low human development indicators reflect the challenges o f the country's complex social structure and recent history. Bolivia has historically been divided geographically and ethnically, with wide income gaps between the poorer highlands and the wealthier lowlands. Many indigenous groups have been subject to social and economic exclusion for decades. The effects o f these divisions persist, reflected in dramatic variances in health indicators in different areas o f the country, and very substantial variations in health care among income quintiles. Bolivia: RegionalVariations inHealthIndicators Source: INE, 2003 and2004. 3. The Health Sector Reform Project is addressing several persistent challenges o f the Bolivian health care system. L o w coverage o f services has been a chronic issue in Bolivia, caused by a combination o f supply and demand factors. Many areas remained underserved for years, exacerbated Epidemiological transition refers to the change in the pattern of diseases away from infectious and preventable diseases towards degenerative/chronicdiseases. This transition is usually correlated with improved life conditions, better access to healthservices, and progressin economic development. 1 by the ethnic and cultural differences in Bolivian society. High costs for services and medicines also discouraged large numbers o f Bolivians to stay away from health care institutions. Quality of care was also a longstanding issue, as was the lack of appropriate and robust referral networks. 4. In spite o f the challenges, some progress is being made. Both the infant mortality rate (IMR) and the maternal mortality ratio (MMR) have seen significant reductions over the last ten years. The IMR indicator is well on track to reach the project goal o f 48 per 1,000 live births in 2008 and to meet the corresponding MDG by 2015. APL Iand I1 contributed significantly to these advancements since commencing activities in 1999. Additional intervention, planned under this APL I11 project, is requiredto achieve the MDG for the MMR. 5. Most significantly, the current Bolivian political situation also holds potential for progress on health reform, since the government i s strongly committedto improving the quality and availability o f health care for all citizens. The Morales administration won the 2005 election by an absolute majority and its political party holds a majority o f seats in the lower house o f Congress. The Government o f Bolivia (GOB) is in the midst of an ambitious process o f reform that seeks to transform the some o f most fundamental relationships in society, including the Constitution and the relationship between the central Government and the regions. 6. The decentralization measures envisioned by the Morales administration require greater stewardship capacity on the part o f all levels o f the health sector, including national, regional and local authorities. Regional officials will be required to exercise additional authority to ensure that departmental level standards and policies are applied in each region. For their part, local health officials will be required to provide some services to local populations that were previously provided by the Ministry of Health and Sports (Ministerio de Salud y Deportes - MSD) or its extension services. Training and capacity-building will be necessary to ensure that the decentralized functions will be implemented effectively. At the same time, capacity must be increased at the central government level, so that M S D officials can effectively supervise, monitor and evaluate regional and local health authorities. B. Rationale for Bankinvolvement 7. The proposed Project, the third phase o f a 12-year Adaptable Program Loan (APL), aims to consolidate progress achieved during the previous two Project phases and build on the impressive commitment to improved health evidenced by the actions o f the Morales administration. IDA has supported Bolivia's health sector improvements for the past 10 years, and has been an important partner in the sector's development. IDA funds provided technical assistance, donor coordination, and training and financing to Bolivia's mobile health teams under the APL Program. To date, the APL Program has achieved significant results in expanding health insurance coverage and in increasing access to health services for previously underserved populations. It is expected that with the Morales administration's commitment to ambitious public health goals, combined with a more narrowly-defined focus o f interventions in this final phase, A P L I11will consolidate past progress, achieve the original objectives, move toward additional objectives defined in this third phase, and ensure sustainability o f the program. The project team is confident that the Morales administration has designed a robust reform package for the health sector that will result in increasedparticipation in the health system by all ethnic groups, better management and transparency, better gathering and tracking o f critical data, and, most importantly, better health outcomes for the most vulnerable Bolivians. 2 8. The proposed APL I11 would also be a key player in an innovative partnership whose joint resources would be focused on improving the health o f the country's most vulnerable populations. APL I11would join a potential IDA Social Protection (SP) Project (currently under preparation on a schedule approximately 30 days behind this project), and the GOB'SZero Malnutrition Program in closely coordinated and mutually reinforcing activities designed to battle chronic malnutrition in locations where food insecurity is the highest. The GOB has identified 88 locations (82 municipalities and 6 peri-urban areas -20% of total population) throughout the country with the most severe food insecurity and resultinglow malnutrition indicators. APL 111, the SP program and Zero Malnutrition (supported by WFP, UNICEF, PAHO and others) plan to initially join forces in the 37 most vulnerable locations of the 88. Zero Malnutrition will support families in the target locations through activities such as providing fortified complementary foods for young children and pregnant and lactatingwomen. The SP program will support the same families with conditional cash transfers for utilizing basic health services like ante- and post-natal checkups. APL I11would increase the supply and quality of health services in the 37 target areas. The proposed Project also plans to coordinate its activities with the Global Alliance for ImprovedNutrition(GAIN). 9. As further described in paragraphs 22-24, under APL 11, continuation of the program into the third phase was contingent upon completionof six triggers. Five ofthe six have been achieved. The sixth has been partially achieved. The sixthtrigger was a matrix of eight indicators, some of which were fully achieved, while others proved to be either affected by factors beyondthe Project's control, or else so imprecisely defined that final analysis was impossible. 10. The proposed APL I11maintains the Program's overall development objectives. It is in line with main sector strategies defined by the Morales administration, and is consistent with: (a) reducing further the IMR and MMR and their risk factors, (b) increasing access to and financial coverage for maternal and infant health care services, and (c) strengthening the capacity o f the MSD, the departments and local authorities to perform critical Essential Functions inPublic Health (EFPH). 11. While the process of Bolivian political reform continues, the Bank and GOB agreed in a 2006 InterimStrategy Note to move forward on projects and discussions that conform to three objectives: enhancing good governance and transparency, fostering jobs through growth, and providing better services to the poor. The Morales administration's commitmentto improving the healtho fthe poor is impressive and is worthy of Bank support. The GOB has collaborated fully inproject design, and the Bank and the GOB agree on both methods and goals for APL 111. In addition, this project complements and supports the GOB'S drive to decentralize government services and increase technical capacity inregionaland local health service providers. 12. The proposed APL I11 is also aligned with three of the four tenets of the new World Bank Strategy for Health, Nutrition, and Population Results, approved on April 22, 2007.* Specifically, this APL I11would aim to improve the level and distribution of key HNP outcomes, outputs and system performances (Strategic Objective 1); reduce and prevent poverty due to illness by improving financial protection(Strategic Objective 2); and improve governance, accountability and transparency inthe healthsector (Strategic Objective 4). World Bank Strategy for Health, Nutrition, andPopulation Results, Approved April 22,2007: STRATEGIC OBJECTIVE 1. Improve the level anddistribution ofkey HNP outcomes, outputs, and systemperformance at country andglobal levelsto improve livingconditions, particularly for the poor andthe vulnerable STRATEGIC OBJECTIVE 2. Prevent poverty due to illness (by improving financial protection) STRATEGIC OBJECTIVE 3. Improve financial sustainability inthe HNP sector and its contribution to sound macroeconomicand fiscal policy and country competitiveness STRATEGIC OBJECTIVE 4. Improve governance, accountability, andtransparencyinthe health sector 3 C. Higher level objectives to which the project contributes 13. The proposed project coordinates closely with the development and poverty-reduction objectives o f the Morales government. Through the National Development Plan (Plan Nacional de Desarrollo), the Sector Development Plan (Plan de Desarrollo Sectorial), and the recently launched Zero Malnutrition Program, the GOB has launched an ambitious strategy to improve the health status of all Bolivians and to reduce gaps in health indicators. The GOB plans encompass a variety of activities, including strengthening the health system networks; increasing the coverage of, access to and demand for health services, especially in high vulnerability areas; increasing the scope and reach of public services messages encouraging healthy behaviors; promoting intercultural health; preventing chronic malnutrition; upgrading the health insurance system; and strengthening the MSD's capacity to implement the EFPH. The WB project team believes that these plans together constitute a cohesive strategy to tackle the most critical and entrenched challenges that face the Bolivian health system. The APL I11program was designedin collaboration with the GOB, and project activities such as the proposed Maternal and Infant Referral Network, the strengthening o f the insurance system, and the planned enhancement of MSD's capacity andregulatory capability align exactly with GOB priorities. 14. The proposed project will also assist Bolivia in moving toward its Millennium Development Goals in health. The health sector showed some improvements duringthe 1990s which improved the sector's MDG indicators (See Annex 1). These advances have beencredited to improved policies and increasedservices, especially inthe following three areas: (i)services aimed at reducingmaternal and child mortality; (ii)services aimed at controlling communicable diseases more rigorously (especially Chagas Disease, Tuberculosis and Malaria); and (iii)services designed to enhance local incentives to improve health outcomes. Some of these activities received support under APL Iand 11. However, in spite o f achievements inthese areas, there exists room for improvement which this APL I11projectaddresses. 11. PROJECTDESCRIPTION A. Lending instrument 15. The proposed lendinginstrument i s the thirdphase of a 12-year Adjustable Program Loan (APL), initiated in 1999. This third and final phase of the Health Sector Reform Project will consolidate progress achieved during the first two phases: the first phase (US$25 million APL ICredit) was implemented from 1999 to 2003 and the second (US$35 million APL I1Credit) is expected to close on February 28, 2008. During the first two phases, the Government of Bolivia has achieved significant progress in its health sector, and APL Iand APL I1have been the main vehicles of IDA'S support to the Government for this sector. Important intermediate and outcome indicators have experienced significant improvements during this time period. The current government i s strongly committed to further improving the health of its citizens, especially those who are most vulnerable and who face multiplechallengeswith access to health care. APL TI1would thus consolidate progress achieved to date, build on the positive momentum in the Morales administration toward the health sector, undertake important service and capacity-building expansions, and plan for sustainability of project activities after the termination ofthe project. 4 B. Program objective and Phases 16. Program Objective. The objective of this third and final phase conforms to the objective originally described in APL Iand APL 11: to continue a successful, results-driven approach to reducing Bolivia's infant mortality rate. Since inception, the Health Sector Reform program has evolved inboth geographic area covered andthe complexity of the projects implemented. 17. Program Phases. In order to strengthen the health sector, the Health Sector Reform Program was launched in 1999, supported by an Adaptable Program Loan. The program envisioned a series of three APL's with financing of approximately US$25M in each phase. The first phase successfully created and implemented two health insurance programs directed at mothers and children: the Insurance of Maternity and Childhood (Seguro UniversuZ Materno-Zn~until-SUMI), and the Basic Health Insurance (Seguro Bdsico de SuZud - SBS). This phase also strengthened Bolivia's Immunization Program, and implemented performance agreements between the central government and the nine regional departments in order to base health policy on clearly-defined objectives and results. Health services were also improved by upgradingthe infrastructure and equipment of health units(health centers and hospitals) with a special focus on prioritizing resourcesand interventions for the greatest impact on maternal and child health. Duringthis first APL Iphase, human resources were also trained, standardsand protocols were designed, and a process for monitoring quality of care was developed. Under APL Ithe goals defined by the project were fully met with the total execution o fthe project resources. 18. The second phase (APL 11) launched in February of 2002 with US$35 million as a credit resource. APL I1 initially estimated closing in June 2006; however, due to implementation delays caused by Bolivian political developments surrounding the prior administration, the project has been extended to February 2008. The activities in APL I1were aimed at the same project development objectives as APL I:To increase coverage and quality of health services and related programs that would improve the health of the population, to empower communities to improve their health status; and to strengthen local capacity to respond to health needs. An emphasis was placed on expanding health insurance programs, launching the National Program for the Expansion of Coverage of the SBS/SUMI (EXTENSA). APL I1also focused on supporting the national immunization program, implementing a national program to improve the quality of health services, and supporting new strategies and tools to improve management practices at departmental and local levels, as well as improving the leadership and steering role of the MSD. C. Project development objective and key indicators 19. The original purpose of the Health Sector Reform Program was to help reduce the infant mortality rate and the maternal mortality ratio by introducing several key sector reforms, including: i)thedesignandimplementationofabasichealthinsuranceprogramtargetingthepoor(SBS) that later was upgraded to become the SUM1program; ii)strengthening the immunization program and introducing new vaccines in the national schedule of vaccines that are now being fully financed by the Government; iii) introducing new management and implementation instruments such as performance agreements, investmentmechanismsto promote maternal and child health interventions, an equitable system to finance municipal investments, and treatment protocols for mothers, babies and children under five years old; iv) a National Program for the Expansion of Coverage of the SBS/SUMI (EXTENSA); and many other sector interventions. In parallel, the Health Sector Reform Program was designed to be complemented by many other interventions in education, rural 5 productivity, and water and sanitation included inthe equity pillar o f the Bolivia 1998 CAS, and later inthe 2001 CAS Update, and Bolivia's PovertyReduction Strategy. This phase of the project would be implemented during a time when the policy environment in Bolivia remains fluid, and thus relies on a two-year Interim StrategyNote publishedinDecember 2006 inplace of a new CAS. 20. As in the previous two phases, the activities of APL I11would have two primary PDOs: a) to increase coverage and quality of health services and related programs that would improve the health o f the population (specifically, mothers and children) and to empower communities to improve their health status; and b) to strengthen national, regional and local capacities to respond to health needs. Inaddition, this phase would introduce a multi-actor targeting strategy to focus critical interventions on Bolivia's most vulnerable populations. 21. As a programobjective, the APL series pursuedthe reduction of the infant and maternal mortality rates by one-third, as per the proposed indicators for the Program. Progress i s being made, as indicated inthe table below: Baseline: Progress at Progress at Goal: End of RPfnrP Before Endof Endof APL I11 APL I APL I ** APL I1 1.1 I I I Year 1998 I Year 2001 Year 2006 Year2006 IYear 2011 Year2011 Infant mortality rate (IMR) mortplh /TMR\ 67 I 54 CA 52 57 39 Under five imortalityy rateC(U5MR)l I l u r w L I ~ L ~ u J l v n ~ I 92 7L I 75 I J I 72 I L I J I 57 Maternal Mortality ratio (MMR) 390* 230 218 164 22. While the use of IMR/USMR/MMR as PDOs seems the rational way to measure the final impact of any health program focusing on maternal and child health, later analysis identified a critical problem. These indicators are affected by a number of issues which are outside the control and scope of the project, making it nearly impossible to attribute changes in the indicators directly to project activities. This is compounded in Bolivia by the lack of accurate vital statistics systems (or difficulties obtaining precise and timely data from DHS/surveys) which would make it easier to identify precise origins of change. Finally, focusing on IMR/USMR/MMRcan distract stakeholders from focusing on mid-level indicators and goals that are very much withintheir control. 23. Accordingly, the Project Development Objectives for APL 111 are four: i)to reduce occurrence of critical risk factors affecting maternal and infant health in the targeted areas so that current gaps between regions are reduced; ii)to reduce chronic malnutrition among children under 2 years of age inthe targeted areas; iii)to increase health insurance coverage in the targeted areas; iv) to upgrade the National Health Information System (Sistema Nacional de Informacidn en Salud - SNIS) so that it will be integrated with Bolivia's new health insurance program. 24. The following indicators will be used as key performance indicators (for quantitative targets and definitions, see Annex 3): 0 Ratio betweenthe percentageo f pregnant women receivingfour pre-natal care check-ups in the target areas and the rest of the country 0 Ratio between the percentageo f institutional deliveries inthe target areas andthe rest o fthe country 0 Percentage of children receiving exclusive breast feedingat 6 months inthe target areas 6 0 Percentageof children 2 years oldtaller than -22 scores inthe target areas3 0 Percentageof populationenrolled in healthinsurance intarget areas 0 Health insurancereports generatedby software system include information about production of services Additional intermediate outcomes for each component and intermediate outcomes indicators are defined inAnnex 3. D. Project components 25. This APL I11is being designed and proposed as the last phase o f a 12-year Health Sector Reform Program. This third phase would have two scopes of intervention: first, nation-wide; and second, targeted on 82 of the most vulnerable municipalities and 6 peri-urban areas surrounding three cities. APL I11would includethe following four components: Component1. Stewardship Role of Health Authorities EssentialFunctionsin PublicHealth - (UX47.7 million: US$4million IDA US$3.7million Government) + 26. This component would strengthenthe capacity o f national, regional and local health authorities so all can effectively perform the critical EFPH. Component One will focus on the need for robust information systems to improve the health sector's response, the need to increase disease prevention and good health promotion as key elements of reducingthe disease burden among the poor, the need to strengthen capacity, regulation and monitoring to improve the quality of the health services, and measures to promote accountability of both providers (accountability for quality services) and users (awareness of their rightto receive services) ofthe health system. 27. Activities under this component would focus on making the SNIS more robust, efficient and relevant. On the human resources side, management tools and processes would be upgraded, including extensive management training for health authorities at central, regional and local institutions. Donor coordinationwill also be a priority, as well as public outreach to local populations regarding health issues. Finally, a national program of quality for the health sector will be continued and improved. Component2. Family, Community and InterculturalHealth (US$ll.6 million: US$9.9million IDA +US$l.7million Government) 28. This component would improve access to maternal and infant health services in the project's target areas. Activities would support the development of Intercultural Maternal and Infant Health Referral Networks, complementing the existing EXTENSA health program. These networks would promote the demand for maternal and infant health care by focusing on the following three goals: 1) increasing the number of safe institutional childbirths; 2) increasing the numbers of referral of obstetric emergencies directly from the community; and 3) providing access to a referral system for children with acute respiratory and digestive diseases. The healthchallenges addressedby these goals disproportionately affect vulnerable communities. The component's activities would also focus on -22 scores are two standarddeviations less thanthe median for the age andheight. A child who measures more thantwo standarddeviations shorter thanthe medianis consideredto be chronicallymalnourished. 7 increasing community participation in health issues, and on increasing the management capacity of departmental and local health institutions. 29. Activities under this component would also focus on strengthening the referral networks that already exist in the project's target areas. Activities would build human resource capacities and physical infrastructure in the networks' institutions, including upgrading or purchasing equipment. Community participation in health issues would be encouraged under this component, via solicitation of participation in the planning phase of local activities, and via a coordinated public awareness campaign on diseasepreventionand good healthpractices. Component3. HealthInsurance(US$4.2million: US$3.2million IDA US$I million Government) + 30. Component Three would support the GOB'S implementation of the new S U SALUD health insurance program through three project subcomponents. The components would focus on strengthening implementation capacity: a) Strengthening of the enrollment system; b) Strengthening managementpractices; and c) Development of SU SALUD'smonitoring and evaluation system. Component4. ProjectAdministration(USS2.2million: US$O.9 million IDA + US$1.3million Government) 3 1. The fourth component would support project administrationwith equipment, technical assistance, training, and operating costs to finance the administration of the project, and financial and procurement audits. E. Lessonslearned and reflectedinthe project design 32. Lessonslearned from international researchand past moiects: The most vulnerablepopulations respond more slowly to health interventions. Experience in similar health projects has shown that sectors of the population who are not at the very bottom o f the economic scale will improve rapidly with intervention and support; however, those at the bottom (the poorest and most vulnerable) will not respond as rapidly. Thus an intervention applied equally to all socioeconomic levels will cause some groups to improve more quickly, widening the gap in health status. Accordingly, APL I11will narrow its focus to those locations which are home to the poorest and most vulnerable Bolivians: 82 municipalities and 6 peri-urbanareas. Pastprojects andprogramsfailed to target thepoorest. Past projects have focused on the supply side of healthreform measures, which often do not sufficiently addressthe healthneeds of the poor. Even under an improved health system, the poor often continue to have difficulty accessing care. As mentioned above, APL proposes to target project activities to the poorest and most vulnerable in Bolivia. Public information systems are crucial. Lessons from Colombia's insurance program reveal the centrality of robust public information systems. After the successful program was implemented, it was discovered that one-third of the eligible population was not covered by insurance solely due to a lack of basic information about how to obtain coverage. APL I11 proposes an integrated public information program that takes into account the unique cultural and linguistic characteristics of Bolivia, as well as issues such as geographic isolation and literacy rates. 8 33. Lessons LearnedinAPL Iand 11: A results-driven approach and focus on accountability facilitate project implementation and monitoring, provided a speciJc and an appropriate set of indicators is defined in advance. The project's results-drivenapproach has provento be key. Duringthe prior phases of the project, the MSD realized that it did not have sufficient fundingto increase activities to a sufficient level to reach the specific targets for vaccinations. The MSD then approached Bolivia's Ministry of Finance and, referring to the specific numerical results that were the goal o f the project, was able to secure additional funding and achieve the target for vaccinations. Without the numerical goal, the MSD's argument for increasedfundingmay nothavebeensuccessful. Selecting appropriate indicators has also proven to be a critical lesson. Under APL 11, eight indicators were selected and together defined to be one of the six triggers that, if achieved, would initiate preparations for APL 111. During the execution of APL 11, it was discovered that a number of indicators were not precisely defined, or were defined assuming data existed that in reality did not. This lesson was taken into account indesigning APL I11and clear, unambiguous indicators and sourcesof data are defined. The defined set of indicators requires commitment and actions beyond the specijc project objectives and activities, and involve key actors across the health sector. Some projects define activities so narrowly that it is possible to successfully complete the activities while losing sight o f the overall objective. It was found duringprior phases of this project that having a defined set o f indicators helped to keep the focus on the final results. For example, focus on the number of vaccinations kept project staff committed to achieving their specific project goals (whether those be in such areas as procurement or reporting) withthe final outcome inmind. 0 Close supervision by WB/IDA, complementedby staff in the Country Office, has been important to maintain the pace of project implementation. The project team kept a vigorous schedule of consultations and meetings with the MSD, in spite of the protracted political instability and numerous changes in administrations that characterized the early years o f the project. In contrast to some projects that schedule twice yearly progress meetings, the project team held monthly meetings with their Bolivian counterparts. They were thus able to keep the project moving forward and attain remarkable results duringa period of extreme fluidity in Bolivian politics and society. 9 F. Alternativesconsideredandreasonsfor rejection 34. Some key aspects of the project under APL Iand APL I1were evaluated and areas for change have been identified that will increase the impact of the third phase. APL I11would expand on or depart from the previous two project phases inthese areas: 35. Targeting speciJic locationsfor project activities. As described above, this project will focus activities on 88 locations (82 municipalities and 6 peri-urban areas) in Bolivia that the GOB has identified as being the most vulnerable. An alternative would have been to roll out project activities nation-wide, without considering variations in socio-economic status, geographical remoteness or access to health care. Targeting will more efficiently use project resources and will produce more impact inthe populations with the greatestneed. 36. Adding intermediate indicators. This phase of the APL will introduce several intermediate indicators that are closely linkedto infant, child and maternal health. These are indicators that are under the immediate control of Bolivian health institutions and are also easily measured, especially since they will be tracked only in the project's target areas. Intermediate indicators that will be introduced are listed in Section C above, and include indicators such as percentage of pregnant women receiving four pre-natal care visits, percentage of institutional deliveries, percentage of children receiving exclusive breast feeding at 6 months, percentage o f target population enrolled in health insurance, and others. An alternative would have been to keep the original indicators of reducing infant and maternal mortality, but as discussed above, these indicators are affected by numerous issues that are outside of the project's control. 37. Integratingproject activities into the regular activities of the MSD. The Project Implementation Unit(PIU) insidethe MSD,which managedproject activities duringAPL I and 11,will beeliminated. Instead, project activities will be integrated into the regular activities and responsibilities of MSD staff. An alternative would have been to keep the PIU in place, but stakeholders felt it kept project activities isolated and therefore less effective as parallel activities instead o f regular programs within the Ministry. Integration within the MSD will also contribute to the sustainability of project activities, since they will be seamless with GOB programs. 111. IMPLEMENTATION A. Partnershiparrangements 38. There are no partnership arrangements envisioned for this phase o f the project. Instead, project activities will focus on integrating project components into GOB policies and procedures to ensure sustainability. B. Institutionalandimplementationarrangements 39. The Project is to be implemented primarily by the MSD with the support o f the Social Productivity Fund(Fondo Productivoy Social - FPS) on activities related to health investments at the municipal level. For this purpose, Inter-institutional Agreements will be signed between the MSD and the municipalities. 40. The organization structure defined for project implementation is being designed based on the structure of the MSD and the FPS, without the establishment of a specific Project Implementation 10 Unit. Both institutionswill beworking independently from one another, but ina closely coordinated manner. The MSD through the Vice-Ministry of Health (VoH) will have responsibility for overall project results. The VoH will have a small Technical Coordination Area to keep track of and coordinate with the Vice-Ministry of Traditional Medicine and technical unitsresponsible for project implementation components and activities. The monitoring and evaluation system will be developed through a new Monitoring and Evaluation Unit to be created in the MSD, which will include the researchand evaluation areas andthe SNIS. 41. The project's administrative aspects will be the responsibility of the Directorate of General Administrative Affairs (Direccihn General de AsuntosAdministrativos -DGAA) inthe MSDthrough the Unit for External Financing (UCOFI) to be created, whose specific responsibilities and operational procedures will be detailed inthe Project's Operational Manual. The MSD's manual also will describe the flow of project coordination processes between the technical and administrative units inside the MSD. In the case of the FPS, project activities will be managed through its own administrative structure, taking into account the action plan previously agreed between FPS and IDA (see paragraph 60.). 42. Since the Project will no longer have an independent implementation unit, an underlying objective of this effort is to build the MSD's capacity to efficiently implement and administer its health programs and strategies, providing specific technical support where needed. However, it is expected that many of the staff who have worked in the PIU will be converted to MSD employees, and will continue to work on project activities, Thus, the institutional memory o f APL Iand APL I1 will not be lost, and MSDwill not be starting from zero interms of implementationcapacity. 43, At the regional and local levels, the MSD, through the Health Insurance Management Office, will create specific management insurance units, which will be responsible for the supervision and compliance of Project indicators. These units will work in close coordination with the SEDES, dependanton the prefectures and with the health networks. For detailed activities o fthe actors implementingthe project, please see Annex 6. C. Monitoringandevaluationof outcomeshesults 44. As mentioned, unlike the previous two phases of this program, the execution of APL I11will not be carried out by an independent implementation unit within MSD. Instead, all activities related to the execution, supervision, monitoring, and evaluation of the project will be integrated into the regular activities of the MSD (see institutional arrangements paragraph above). The Vice-Ministry of Health's UCOFI will be responsible for general project coordination and supervising project monitoring and evaluation. 45. SNIS has been designated as the key player for basic data collection, systematic processing and preparation of the indicators. Through Component 1, this project would support the development of the SNIS inorder to increase its capacity to gather, analyze and manipulate data. This upgrade ofthe system is crucially needed, so that robust and accurate health data will be available for a wide range o f reporting, including results monitoring. Finally, the project design includes an impact assessment which will be done with the participation of an external consulting firm. 11 D. Sustainability 46. This third and final phase of the Health Sector Reform Project incorporates several key activities that are designed to ensure sustainability after the end o f project activities. Key objectives include continued funding and institutional capacity to carry out the EFPH, continued service outreach inand physical facilities supporting ongoing improvements in maternal and child health, and continued functioning ofthe SU SALUDsystem. 47. Sustained Funding. Over the life of APL 111, IDA funding for human resources will be progressively reduced and replaced by GOB funding so that at the end of the project cycle the GOB will be fully funding all human resources expenses established under the project. This is the same arrangement utilized under APL Iand 11. This third phase of the project will not finance activities for which GOB assumedfull responsibilityduringprior phases. 48. Full Integration into MSD. APL I& I1relied on a Project Implementation Unit within the MSD that managedprogram activities. Under APL 111, all project activities will be integrated into existing MSDprograms and staffresponsibilities. An internalmanagementunitwill direct and coordinate all activities across the MSD, ensuring that the project's activities are incorporated into the regular activities of Ministry staff and into MSDpolicies and standard operating procedures. 49. EnhancedMedical Training to Encourage Retention of Quality Stafli APL will expand training opportunities for young doctors and nurses, affording them professional development opportunities that will encourage them to stay within the Bolivian public health system. The training will take the form of 3-year SAFCI residencies in the referral networks, and will include training at the networks' primary hospitals. 50. EfJicienciesand Coordination in Medical Equipment Purchaseand Repair. Under Component 2, the project will build new or remodel existing health centers, including purchase of new medical equipment. The project activities envision the establishment of regional equipment maintenance centers, which will contribute to the sustainability o f the project by reducing inefficiencies in acquiring new or repairing existing machines. These regional centers will define and disseminate standards for equipment purchases throughout the region, ensuring efficient repair and replacement part availability. 5 1. Robust Public Information Systems. The project activities will design and implement robust public information systems, both to inform local communities about public health programs and insurance systems, and to encourage public feedback. This will encourage grassroots support by beneficiaries and communities, further strengthening the sustainability prospects of all o fthe project's programs and activities. E. Criticalrisksand possiblecontroversialaspects The Project team has identified several potential risks to the effectiveness and sustainability of the operation as well as feasible mitigation options. The risks fall into two broad categories: Country-wide and Project-specific. 12 Riskfactors Description of risk Rating4 Mitigation measures Ratinga of risk of residual risk I.Countryand/orSub-NationalLevelRisks Macroeconomic Macroeconomic deterioration due M The Bankis working with the M framework to failure to control path o f Government's economic team to external and internal debt chart a projectedpath o f fiscal discipline that is economically, socially and politically feasible. Governance There is a conflict o froles H Efforts are being made to clarify M between the National and local roles, responsibilities and fiscal administration. Slow process o f regulations among different actors decentralization andmeasuresare beingtakento strengthen local governments. Systemic Patronage and corruption persist H Strengthen oversight capacity o f M corruption despite National and local civil society participation and other elections institutions such as the FPS Other Donor community doesn't respond M The Project's catalytic approach M as expected promotes the participation o f other donors. Criticalto the success o fthe Project is the Government's commitment to lead the agenda. 1I.Operation-si cific Risks TechnicaV The proposed Project would M The project was designed to match L Design suppoi an increase of the supply other projects and programs' o f health services in the target intervention areas and the areas. Experience shows that Government is committed to target improvement in the supply side i s its resources in the more vulnerable not suficient to produce expected areas, Specifically, the Government outcomes. The Project would need is preparing a project, with Bank to be complemented by the actions assistance that would promote the to promote the demand o f health demand for health services in these service. same priority areas. Implementation The MSD's capacity for M Component 1o fthe project is M capacity and systematic planning, information specifically designed to address sustainability collection, monitoring and these weaknesses. Component 4 o f evaluation, all o fwhich are the project includes resources to necessaryfor management results, support the MSD units that would are weak or inadequate implement the project; possible Implementation o fthe project by implementation by the MSD itself, the MSD without a PIUcould add instead o fthrough a PIU, would new responsibilities andthe need contribute to the sustainability o f for additional, new skills to the project interventions. It i s expected MSD's existing units andlor that some staff o fthe PIUwill relegate the project's priorities to convert to regular MSD staff and other MSD Units' priorities will continue to work on project activities, thus maintaining 4Risksare ratedon afour-point scale (high, substantial, moderate, and low) accordingto the probability ofoccurrenceand magnitudeof adverse impact. 13 institutional memory and implementation capacity. Institutional arrangements to implement the project by the MSD were designed. Financial Financial management for APLI A WB team evaluated the financial M management andAPLII were considered management arrangements for the satisfactory. However, because project, within the broader context new institutional arrangements are ofthe institutional arrangements for being implementedfor this phase project implementation, and with the creation of a unit mitigating measureshave been UCOFIDGAA within the MSD, incorporated into project design to additional risks are involved address the identifiedrisks at the relatedto adequate financial project level. These measures are management o f project resources, summarized inparagraphs 55 to 62 including the adequacy ofFM and detailed inAnnex 7. systems, staffing and internal control arrangements. Inaddition, the involvement ofFPS inthe implementation o fthe inftastructure activities adds additional riskto project implementation. Procurement The mainrisksare: (i) Subsidiary Agreement, operation M procurement implementation manual, training, and close Bank delays; (ii)cost overruns due to supervision. poor capacity o f FPS and MSD; Procurement for APLI and APLII (iii)uncertainresponsibility and were considered satisfactorily accountability o f FPS andMSD handledbyPIU. However, there for project activities, and (iv) poor have beenconcerns about the role of regulation. FPS as an accountable institution andthe decision to work with the Administrative Unito fthe MSD instead o f a PIU. Mitigation measures are summarized in paragraphs 55 to 62. F. Loadcredit conditions and covenants Effectiveness conditions (a) The FPS Subsidiary Agreement, the MSD Subsidiary Agreement and the Inter-Institutional Agreement have been executed on behalf o fthe Recipient, FPS and MSD. (b) The Operational Manual has beenadoptedinamanner satisfactory to the Association. 14 Other Covenants (a) Not later than one year after the Effective Date, the Republic of Bolivia and the Association shall carry out a comprehensive review of the Project focused on Project performance. After said review is completed, the Republic of Boliviashall take, ifnecessary, any actions recommended as a result ofthe review to remedyany problems identified duringthe review. (b) The Republic of Bolivia shall cause FPS to maintain throughout the implementation of the Project, to the satisfaction of the Association: (i)the control and monitoring unit under FPS's executive office; (ii) the environmental unit; and (iii) procurement monitoring unit. the (c) Not later than 90 days after the Effective Date, the Republic of Bolivia shall ensure that the UCOFI the Technical Area are fully staffed and operational, and shall maintain them thereafter throughout the implementation of the Project. (d) Not later than 6 months after the Effective Date, the Republic o f Bolivia shall establish and operateMSD's integrated financial management system. (e) Before carrying out any civil works under the Project, FPS shall have entered into a Municipal Agreement with each Municipality within the Target Area. Other withdrawal Conditions; (a). No withdrawals shall be made for payments under categories 2 (b) and (c) of the table in paragraph A section IV schedule 2 of the Financial Agreement (categories executed by FPS), untilFPShas establishedto the satisfaction ofthe Association: (i) control andmonitoring unit the under FPS's executive office; (ii)the environmental unit; and (iii) procurement monitoring the unit. (b). N o withdrawals shall be made for payments under Categories (l), (3) and (4) o f the table in 2(a), paragraph A section IV schedule 2 of the Financial Agreement, until MSD has signed the contracts of: (i) UCOFI's financial management specialist and procurement specialist; and (ii) the the Technical Area's technical coordinator. 15 IV. APPRAISAL SUMMARY A. Economic and financial analyses Economic analysis 52. The project will generate economic and social benefits due to its impact on morbidity, mortality and nutrition as well as in the improvement of health sector managerial capacities to implement the EFPH and SU SALUD programs. An evaluation was undertaken that included all project costs, but considered only the benefits from the Familiar, Community and Intercultural Health Component (Component 2) intargeted areas, which account for a fifth o ftotal Bolivian population. Benefits from components 1, 3 and 4 were not taken into account due mainly to insufficient information regarding public health surveillance, budgetary planning, intervention gaps and performance indicators. In addition to clear social benefits including reducing mortality, morbidity and malnutrition, the project's Internal Rate of Return (IRR) is projected to be 13 percent. The IRRwould be higher ifthe benefits from components 1,3 and 4 were included. Financial Analysis 53. FinancialAnalysis and FiscalImpact: Tax revenues increased from 26 percent of GDP in 2005 to 33 percent of GDP in 2006, mainly due to the new hydrocarbon policy, but also because of an increase in tax collection efficiency. Public expenditures were contained, generating a fiscal surplus of approximately 4.5 percent in2006 coupled with an important current account surplus of 11percent of GDP. In 2007, a fiscal as well as a current account surplus are still expected. In addition, Bolivia benefitedfrom the MDRI, reducing its external debt to close to 20 percent of GDP. Recently, S&P has revised its outlook on Bolivia's B minus rating to stable from negative. In this context, the Central Government will have enough resources to cover the new obligations triggered by this project. Moreover, the total recurrent cost represents a small fraction o f the total cost linkedto this project. The most important recurrent cost triggered by the project is the stipend given to approximately 70 health professionals for working in the targeted areas which amounts to less than $USO.1million per year. B. Technical 54. The project is proposed as the last phase of a 12-year Health Sector Reform Program, and includes two scopes of intervention: nation-wide, as well as interventions targeted on 82 of the most vulnerable municipalities and 6 peri-urban areas surrounding three cities. APL I11would include the following four components covering several technical issues: Component 1 focuses on the stewardship role of the public health authorities and their ability to carry out the EFPH. This component will focus on upgrading health information systems, methods to increase disease prevention and good health promotion in order to reduce the disease burden among the poor, strengthening capacity, regulation and monitoring of and inhealth services, and measuresto promote accountability. Component 2 focuses on improving access to maternal and infant health services in the project's target areas. Activities would support the development o f Intercultural Maternal and Infant Health ReferralNetworks, increasing community participation in health issues, increasing the management capacity of departmental and local health institutions, and upgrading human resources and physical infrastructure. Component 3 would support the GOB'Simplementation of the new S U SALUD health insurance program through project activities covering implementation capacity, the enrollment system; management practices; and SU SALUD's monitoring and evaluation system. Component 4 is comprised o f project administration activities. 16 C. Fiduciary Financial Management 55. A Financial Management (FM) Assessment of the arrangements for the proposed Project has been carried out in accordance with OP.BP 10.02 and in line with the Financial Management Practices in World Bank-financed investment operations. The assessment was conducted for both MSDandFPS. Itconcluded that FMarrangementsfor the Project are overall soundand acceptableto the Bank, subject to the strengthening measures to which both institutions, MSD and FPS, have demonstratedcommitment interms of completingthe key actions under their respective strengthening action plans agreed duringpreparation. The remaining actions are expected to be implementedbefore project implementation starts. Details of the assessment and strengthening action plans are included inAnnex 7. 56. The assessment of FPS was based on the results of the Operational Review that was conducted with the support of an international consulting firm contracted bythe Bank at the endofFY2007. As a result of the review, a time-bound action plan, including mitigating measures to address identified external and internal risks was agreed with FPS to strengthen its operational FM and procurement performance, with particular emphasis on strengthening its internal control environment and capacity both within FPS and at the municipal level. Financing for the implementation of this action plan is beingprovided by IDA under the recently approved SecondParticipatory RuralInvestmentProject. 57. Within the action plan, FPS is to implementthe following key actions: strengthening the information system, with an emphasis on the internal control environment by enhancing programming and budgeting and assisting the regional offices to prepare programs and budgets; establishment of a monitoring and control unit inFPS; a streamlined sub-project cycle for the activities executed by the FPS; processes and procedures inthe framework of local requirements that reflect better the roles and responsibilities o f different actors (e.g. municipal governments), and the design and implementationof punctual internalcontrolmechanisms training of FPS staff inBank procurement andFMprocedures; delivery of capacity buildingat the municipal level and development of a supervision plan for the procurement ofworks and goods carried out by the municipalities; automatic generation of FPS financial reports, specifying sources and uses of project funds by component; and strengthened audit arrangements,including separate audits for FPS and MSD. 58. To date, FPS' ExecutiveCommittee has approved a new Internal Operations Manual including: i) a redesign of the sub-project cycle for the activities executed by the FPS; ii)establishment of a monitoring, evaluation, environmental impact and procurement units; iii)reductions of administration costs, including unitscosts; and iv) designof accountability policies for social oversight. 59. In addition to the broad measures under the action plan financed under the Second Participatory Rural Investment Project, the Operational Manual of this Project, the Inter-institutional agreement between the FPS and MSD, and the Subsidiary agreement between the Republic of Bolivia and the FPS, all of which were discussed during negotiations and will be approvedsigned by effectiveness will include requirements specificallyfor this Project. 17 60. Financial Management Risk:The project's inherentrisk is rated as substantial and the control risk as moderate. Consequently, the project's overall residual FMrisk is considered as moderate, after the successful implementation of the mitigating measures included inthe project design for MSD and the completion o f key actions o f the action plan agreed with FPS and being monitored through the PDCR. The Bankwill carry out semi-annual FMmissions to monitor the risk. Procurement 61. The project will be implemented by MSDwith the assistanceof FPS. MSD's "Direccion General Administrativa (DGAA)", through its "Unidad de Coordinacion Financiera - UCOFI", will retain overall responsibility for project implementation acting as a permanent link with the Association. FPS will be mainly responsible for implementing with the municipalities, the renovation of public healthfacilities. 62. A procurement capacity assessment o f the MSD and the FPS was carried out during project preparation to reviewtheir current capacity andthe envisaged interaction between their relevant units for the project implementation. The procurement assessment of FPS integrated also the results of the Operational Review mentioned in paragraphs 57-59. The key issues and risks concerning procurement have been identified and include delays and cost overruns inthe project implementation mainly due to: (i) poor capacity of MDS and FPS; (ii)uncertainty regarding the responsibility and accountability of MDS and FPS for project activities; and (iii)poor regulatory framework. a D. Social 63. With respect to Indigenous Peoples, given the focus on intercultural health for the maternal and infant population, as well as the fact that most beneficiaries are self-identified as autochthonous, this Project i s being considered an Indigenous project, and therefore that a separate Indigenous People's Plan is not necessary. The Social Assessment is in its final stages of execution. Preliminary informationwas considered inthe Project design. E. Environment 64. In preparation of this project, an Environmental Assessment was undertaken. The assessment found that Bolivia's existing laws and regulations regarding the environment were comprehensive and robust, and that the laws mandate that MSD has responsibility for environmental issues that are related to public health. The assessment made an important recommendation: the MSD should identify an internal unit that will be responsible for establishing environmental norms and standards, as well as supervising the application of such norms and standards in MSD activities. See Annex 10 for more details on the environmental issuesrelatedto the project. 18 F. Safeguard policies Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) [XI [ I Natural Habitats (OP/BP 4.04) [I [XI Pest Management(OP 4.09) [I [XI Physical Cultural Resources(OP/BP 4.11) [ I [XI Involuntary Resettlement (OP/BP 4.12) [I [XI Indigenous Peoples (OP/BP 4.10) [XI [I Forests(OP/BP 4.36) [ I [XI Safety of Dams (OP/BP 4.37) [ I [XI ProjectsinDisputedAreas (OP/BP 7.60). [I [XI Projectson International Waterways (OP/BP 7.50) [I [XI G. Policy Exceptions andReadiness 65. This project does not require policy exceptions. Once the project i s declared effective, activities are ready to commence. * By supporting theproposedproject, the Bank does not intend toprejudice thefinal determination of theparties' claims on the disputedareas 19 Annex 1:Country and Sector or ProgramBackground BOLIVIA: EXPANDING ACCESS TO REDUCE HEALTHINEQUITIES-APL I11 66. In spite o f recent progress, Bolivia's human development indicators remain among the lowest in Latin America. Bolivia stands at the bottom o f regionalrankings on a wide range of healthconditions (scoring above only one country, Haiti) such as life expectancy at birth. A sizable proportion of Bolivia's population lives inpoverty, without access to safe water or adequate food supplies, and with little or no access to basic health services. As a result, many Bolivians are vulnerable to premature mortality from avoidable causes. Shortfalls include: delays in the epidemiological transition' with highmortality from infectious diseases; highmortality rates for infants and children less than 5 years of age; and a very high mortality rate related to pregnancy, childbirth or puerperium (the time period following childbirth). Low income levels cannot be the sole cause of these woes: the other two IDA countries inthe region, Honduras and Nicaragua, show a comparative higher life expectancy in spite of very similar GDP per capita figures (Graphic 1). Graphic 1. Correlation betweenAdjusted GDP per capita and Life Expectancy at Birth (Countrieswith adjusted GDP per capita below US$25,000) 0 dor.......................................................... .............................................. SouthAfrica Eq.Guinea 0 Botswana 0 500 5000 10000 15000 20000 25000 GrossDomestic Product US$ PPPper capita, 2004 Source: UNDP HumanDevelopmentReport, 2006 ' Epidemiologicaltransition refers to the change in the pattern o f diseases away from infectious and preventable diseases towards degenerative/chronic diseases. This transition is usually linked to improving life conditions, better access to health services, and progress ineconomic development. 20 67. Duringthe 1990sand the start o fthe current decade, the Government o f Bolivia engaged in concerted efforts to improve the health sector. Some progress was made inmaternal and infant health indicators. If current trends continue, Bolivia could meet MDG's 4 and 5 (Table 1). 1 1 Table 1:Bolivia's Progress towards the MillenniumDevelopmentGoals Starting Numerical Progress Expectedby MDG Indicator Bolivia's Goal (most for 2015 Point (1990) 2015 for recent (estimated) 2015 Mortality rate Reducethe for children 1990mortality under age 5 rateby two- 120 MDG 4: thirds Reduce Child I I Mortality Infant 54 mortality rate 89 (per 1,000 live (1989) 30 births) I (2006) I MDG 5: Maternal Reducethe I 235 I Improve mortality ratio 1990mortality 416 138 Maternal (per 100,000 ratio by three- (1989) Health live births) fourths Sources: UDAP :,2005. MSD,2( 7 68. The aggregated data presented in the Table 2 shows the recent improvements in some o f Bolivia's MDG-related indicators. Advances have been credited to improved policies and increased coverage concentrated on: (i)services for reducing maternal and child mortality; (ii)reducing mortality due to some communicable diseases; and (iii) enhancing local incentives to improve health outcomes. However, in spite of impressive achievements, there is still room for improvements. In addition, the progress of some of these risk factors indicators over recent years reveals a decelerating rate o f improvement or excessively slow progress. Table 2: Progress in Selected Health ServicesIndicators Indicator 1996 1999 2000 2001 2002 2003 2004 2005 2006 BirthsattendedbySkilledHealth 36% 47% 52% 51% 58% 59% 60% 62% 65% Staff(%) * 4th prenatalcheck-up coverage ** 28% 31% 33% 35% 34% 37% 40% 50% 56% 3rddose Pentavalen; and DPT vaccines inchildrenunder 1vear 75% 85% 89% 92% 88% 81% 85% 84% 83% Women using some family planning 58% method 48% Percentageof childrenwith chronic malnutrition 27% 27% (*) For theperiod 1994-2000the indicator is in-hospital births coveragePA) (**) For theperiod 19962004 it was calculated as: # 4thprenatal check-up/ #Istprenatal check-up.Since 2005 the denominator was changed to expected number of births Source:MSD. 21 69. Movement toward controlling communicable diseases has not shown significant improvement. Chagas i s endemic in Bolivia, and malaria continues to be present, even though the malaria rate has diminishedsomewhat due to anti-malaria programs. The incidence of yellow fever has diminished, but this disease continues to affect the departments of Santa Cruz and Pando. Among emerging and reemerging diseases, most notable is the reappearanceof dengue fever (serotypes Iand II), especially in the departments of Beniand Pando. 70. Malnutrition among Bolivian children has not improved at all. The two most recent national surveys (1999 and 2003) show a stagnant malnutritionrate inchildren. (Table 2) 71. Nationalfigures dilute the countrywide differences. Troubling inequities in indicators persist, with large differences in health conditions in different areas of country. For example, according to a survey completed after the 2002 Census, the total number of maternal mortalities was 320 per 100,000 live births in the Highlands, 147 in the Valleys and 206 in the Plains (Table 3). Further, there are very substantial inequities inhealthcare spending among income quintiles (Table 4). Table 3: RegionalVariationinHealthIndicators Source: INE, 2003 and 2004. 72. As for the coverage o f the health insurance system, 27 percent of the total population was affiliated with the social security health system in 2004 and about 10 percent of the population has private health insuranceto supplementgovernment coverage. 73. Inequality affects not only access, but also health insurance protection. Only 3 percent of those receiving social security healthcare belongto Q1 (the poorest), while 15 percent belongto Q2, 10 percent to Q3, 29 percent to 44, and 43 percent to Q5 (the richest quintile) (Table 4). Many of the most vulnerable are not currently receiving coverage. Table 4. Expenditures inHealthby Quintile, 1999 (inbolivianosper capita) Income Quintiles(poorest = 91) Source of spending: Q1 Q2 43 Q4 Q5 Public 80.3 84.4 81.9 73.1 65.4 SocialSecurity 30.5 45.5 136.9 241.1 242.8 Private 30.9 66.5 127.3 186.5 366.6 Source: World Bank, 2004. 22 74. The M S D and the public health sector provide services to approximately 70 percent o f population. The remainder use the social security health system, and some use private providers. Despite its relatively high level o f coverage, the public sector accounts for only 25 to 28 percent of national expenditures on health. Between 37 and 40 percent o f expenditures is covered by social security funding, 5 to 10 percent by the private insurance sector, and the rest directly by families. At the aggregate level, this is not much different from what i s observed in the other Andean countries, Health expenses in Bolivia amount to around 7 percent o f GDP (approximately US$550 million) and have been growing due to increasing costs o f medication (based on spending groups), in the social security system and the private sector (which includes family expenses). Public spending on health i s estimated to represent approximately 1.4 percent o f GDP, part o f which is covered by funds received through the Highly IndebtedPoor Countries Initiative (HIPC) (Table 5). Table 5. Trends in Health Expenses as a Percentage of GDP Health Spending Indicators(% o f GDP) I I 1995 I 1996 I 1997 I1998 I1999 I2000 I2001 I2002 I Total National Spending 4.38 4.64 4.71 4.97 6.20 6.08 6.40 6.95 Public Spending 1.21 1.13 1.04 1.15 1.41 1.39 1.32 1.46 Social Security 1.64 2.01 1.97 2.11 2.36 2.42 2.63 2.86 Private Spending 1.52 1.50 1.70 1.71 2.42 2.27 2.46 2.64 Organization of the Sector. 75. Bolivia's health sector functions through different institutions at the national, regional (departmental) and local (municipality) level, and via formal working agreements made among them. The national Ministry of Health and Sports (Ministerio de Saludy Deportes - MSD) is responsible for the general supervision o f the country's public and private healthcare system and for implementing public health policies on a national level. The M S D is ultimately responsible for carrying out the Essential Functions in Public Health, discussed in detail in the description o f project activities later in this document. The M S D i s financed exclusively by the fiscal budget, which includes grants and projects that receive multilateral financing. The M S D controls close to 25 percent o f the public budget for health. The majority o f these funds are earmarked for public health activities and for staff salaries at the central level. 76. The M S D works closely with the nine regional Departments (equivalent to states) via its regional offices known as SEDES (Sewicio Depurtumentul de Sulud). There is one SEDES in each Department, and they work closely with the Departmental government to manage Department-wide health issues. The M S D has partial control over the public system funds earmarked for the Departmental provision o f services, but in practice, there is sometimes some overlap in jurisdiction. A significant part o f the operating budget for financing the human resources payroll has been transferred to the departmental governments. 77. Based on the budget they receive from M S D for human resources expenses, the Departments are responsible for paying health personnel. In addition, based on a mutual agreement with the municipalities, the Departments are responsible for selecting the locations and evaluating the performance o f health services within their borders. In practice, the Departments' activities are limited to payment of personnel salaries, since to date they do not have authority to hire or fire personnel or reallocate funds 23 received from the MSD. The Departmental governments collaborate with the SEDES on public health campaigns and epidemiological control, facilitate some logistical resources, and cooperate on the maintenance o f certain establishments such as the national institutes. The departments also have another significant role of co-financing investments on approved projects or loans for the municipalities. 78. The Municipalitiesare the owners and managers of the health service units, and are responsible for investment, maintenance, and administration. However, since municipalities lack the personnel and funds for these tasks, they must negotiate operating agreements with the Departments on the assignment of staff. These negotiations are accomplished through an institutional agreement known as Local Health Boards (Directorios Locales de Salud-DILOS). The municipalities are representedon and preside over the DILOS. Also represented on the DILOS are the SEDES and the local towns and neighborhoods (the latter via community leaders). This DILOS mechanism both plans healthcare services and evaluates their delivery. To make investments, the municipalities must use their own funds or request funds from the central level, which requires support from the Departments. This makes the Departments de facto guarantors of credit for investment, whether through the Productivity and Social Fund(Fondo Productivo y Social-FPS) or any other fund. The municipalities can also use funds from revenue sharing for health, allocated to SUMI. 79. In recent years, the MSD has received support from several international initiatives and multilateral entities, including the HIPC program. Because of this, new target indicators and goals are being monitored across the country by the health system for reporting purposes. The SNIS has been strengthened to monitor progress on these new indicators in addition to its regular activities. Formal management agreements have been implemented between the MSD and each o f the nine SEDES. In addition, the use of basic follow-up indicators has been promoted in different health sector support projects (for example, indicators of coverage for institutionalized childbirth, vaccinations, prenatal care, etc.). The APL Programand the APL II Triggers 80. DuringBolivia's process of health sector reform, along with the GOB'S structural and other reforms (such as the law of Popular Participation), municipalities have become important new actors in the government. Bolivian law now confers management autonomy on municipalities, providing increased potential to strengthen democracy and economic development in local communities. This legal shift, while encouraging local empowerment, has also had the effect of decreasing the responsibility and functions of central government. This is especially true in the central government's responsibilities regarding the guarantee of equal access to health care for the entire Bolivian nation. One result is that the health sector has become somewhat fragmented and now requires the kind of sector-wide management and leadership training envisioned as part of this APL I11project. 81. 82. In order to strengthen the health sector, the Health Sector Reform Program was launched in 1999, supported by an Adaptable Program Loan (APL). The program envisioned a series of three APL's with financing of approximately US$25M in each phase. The first phase successfully created and implementedtwo health insurance programs directed at mothers and children: the Insurance of Maternity and Childhood (Seguro Universal Materno-lnfantil-SUMI), and the Basic Health Insurance (Seguro Bbsico de Salud - SBS). This phase also strengthened Bolivia's Immunization Program, and implementedperformance agreements between the central government and the nine departments inorder to base health policy on clearly-definedobjectives and results. Health services were also strengthenedby upgrading the infrastructure and equipment of health units (health centers and hospitals) with a special focus of prioritizing resources and interventions for greatest impact on maternal and child health. During 24 this first APL Iphase, health personnel were also trained, standards and protocols were designed, and a process of monitoring quality of care was developed. Under APL Ithe goals defined by the project were fully metwith the total execution ofthe project resources. 83. The second phase (APL 11) launched in February of 2002 with US$35M as a credit resource. APL I1 initially estimated closing in June 2006; however, due to implementation delays caused by Bolivian political developments surrounding the prior administration, the project has been extended to February 2008. The activities in APL I1were aimed at the same development objectives as APLI: To increase coverage and quality of health services and related programs that would improve the health of the population, and to empower communities to improve their health status; and to strengthen local capacity to respond to health needs. An emphasis was placed on expanding health insurance programs and to launch the National Program for the Expansion of Coverage of the SBS/SUMI(EXTENSA). APL I1also focused on supporting the national immunization program, implementinga national program to improve the quality o f healthservices, and supporting new strategies and tools to improve managementpractices at departmental and local levels, as well as improving the leadership and steering role o fthe MSD. 84. At the beginning of the APL I1program, six triggers were identifiedthat would be used to evaluate the success ofAPL I1and that would, ifmet, initiate negotiations for APL 111. The following six APL I1 triggerswere chosento measurethe project's impactinhealthservice coverage, quality and equity: 1. Performance Agreements will continue to be signed and monitored for all regions and at least three large municipalities; 2. The SBS will continue to be utilized as an instrument to finance basic health care for the poor. Within the framework of decentralization, it will continue to be implemented by municipalities and regulated by MSD.Financial controls and audits will have been strengthened. 3. EXTENSA (the National Program for the Expansion of Coverage of the SBS and SUMI) will have deployed no less than 150 healthteams combining indigenous community agents and health professionals inunderserved locations and financing of the new teams will become absorbedinto nationalbudgets ina fashion consistent with the process of decentralization; 4. New vaccines would be incorporated into the national schedule o f vaccines with nationwide coverage and would be fully financed by the government; 5. An equitable system to finance municipal investments in basic health will be put in place, along with clearly defined financing mechanisms; and 6. The sixth trigger requires that five of eight indicators included in the matrix of Performance Benchmarksreach their target. Status of the triggers at pre-appraisal of the APL 111: 1. AnnualPerformanceAgreements.This trigger was achieved. The performance agreements and their performance indicators are considered of vital importance. The indicators were carefully and collaboratively selected to measure the progress achieved in coverage, quality, and equity in health services. Annual performance agreements are now signed at the Departmental level, and included all key sector stakeholders: SEDES, Departmental Prefectures, and municipal governments. During2006 there were some difficulties in negotiating the agreements with the departments of La Paz and Santa Cruz. In 2007, the methodology of creating the agreements, and of the agreementsthemselves, was changed. The MSD's Direction of Planning became responsible for the signing of the performance agreements with the Departments. The methodology of the 25 agreements was revised and can be summarized in four points: 1) a set of indicators will be carefully defined that are closely related to current health policies, 2) matrices will be developed to consolidate data on the indicators; 3) workshops and departmental trainings are held to explain the definition of the indicators and how they will be verified; and 4) the departments establish internal mechanisms to set goals and track progress towards the indicators. In 2007 performance agreements were signed with the following departments: Oruro, La Paz, Potosi, Tarija, Beni, and Santa Cruz. The signing with the remaining three departments (Cochabamba, Pando and Sucre) is planned after the completion of the National Constitutional Assembly. All the 2008 performance agreements are scheduled to be finalized and signed after the ConstitutionalAssembly finishes its work inDecember 2007. 2. BasicHealthInsurance. This trigger was achieved. APL I1 focused considerable effort on expanding health insurance coverage for economically disadvantaged mothers and children. The SBS program was expanded under APL I1to become SUMI which, after the initial launch, expanded services for women up to 60 years of age. Financing of the SUMIprogram was guaranteedby law duringAPL 11, by allocating a percentage (initially 7% and currently 10%) of the municipalities' share of federal tax revenue (Cuentus de CoparticipacidnTributaria). 3. The NationalProgram for the Expansion of Coverage of the SBS and S U M I (EXTENSA). Thistriggerwas achieved. The objective of MSD's EXTENSA program (the National Program for the Expansion of Coverage of the SBS/SUMI) is to provide direct basic health services to populations in remote areas o f the country. EXTENSA deploys multidisciplinary healthteams (a doctor, nurse, dentist, and assistant) for preventive care actions and health control, especially for infant and maternal health. Each "brigade" provides services in a series of 40 to 50 locations, which are covered every two months inrounds lasting 20 to 25 days. In2004, EXTENSA is reported to have reached over 300,000 people, mostly indigenous, inmore than 2,600 villages in Bolivia's nine departments. At first, all of EXTENSA's financing came from the Reform Project, but gradually, this financing was complemented with human resources and inputs from existing healthcare systems in the municipalities and departments. The modus operandi of the brigades has also been evolving. Originally, the teams were organized at the central level. Now, new brigades are being created locally with personnel from existinghealthcare systems, with the result that 76 EXTENSAteams are currently being financed by municipalities. At one point, Municipalities financed up to 120 teams, but some target areas were aggregatedand some teams discontinued because of relatively easy access to the health centers. EXTENSA has contributed to improved health access by incorporatingan inclusive interculturalapproach, and it has been identifiedfor the Government as a key programfor the implementation of its family, community and interculturalhealthpolicies. 4. The new vaccines. This trigger was achieved The new vaccines, Haemophilus influenzae type b (Hib) and Hepatitis B (HB), have been introduced into the basic series ofthe Expanded Program on Immunization(EPI - PA1in Spanish) 26 since 2002. In 2006, the amount allocated by the National Budget (TGN) for immunizations was US$l1million, nearly double the US$6 millionestablishedas a goal for APL 11. For 2007, the total amount allocated is US$11.7 million. O f this amount, US$5.8 million was usedby mid-October and the remainder was added to the unused balance from the previous year. The available stock ofvaccines is enough to completethe needs ofthis calendaryear. 5. An equitable system to finance municipal investments in basic health. This trigger was achieved. The Health Reform Project in APL Ilaunched MAR I,the Mechanism of Assignment of Resources (Mecanisrno de asignacidn de recursos). This mechanism allocated resources for investments in infrastructure and equipment basedon aneeds analysis of five departments. In APL I1 (MAR II), assignments of resources are framed in the Policy of National these Compensation (PNC), that allocates resources to the municipalities on the basis of an analysis of unmet basic needs (NBI). Studies and later analyses showed that the prioritization based on this indicator did not guarantee equity in health services. As a result, a new assessment was implementedto classify municipalities onthe basis of avulnerability index. This made it possible to identifywith greater clarity the most vulnerable municipalities inthe country which could then become targets of focused interventions. The mechanism for the assignment of municipal matching funds is defined inthe CONAPES (National Council of Social and Economic Policies - Consejo Nacional de Politicas Sociales y Econdmicas). It divides the hnds according to a sliding scale based on vulnerability. For example, 45% of funds will go to the most vulnerable municipalities (those receiving a score of 5 on the 1-5 vulnerability scale) and 15% to the least vulnerable municipalities (those receiving a score of 1). 6. The Matrixof Performance Benchmarks. This trigger was partially achieved. To monitor progress on the project's activities, a matrix of eight indicators was created. The trigger statedthat five out of the eight indicators should be achieved by the end of APL 11. Three triggers were fully achieved, one was nearly achieved, one was not achieved, and three had significant problems with the definition of indicators and/or interpretation of results, which makes final determination o fthe indicator status impossible. Inspite of this partial success, the appraisal team feels strongly that significant progress was made and that APL I11should go forward. The activities in APL I11 specifically target the country's most vulnerable areas, and the team is confident that the Bank and GOB have together designed a robust project that will address the issues where progress on indicators was stalled or thwarted. Table6: PerformanceBenchmarksfor APL I1 Type of SpecificIndicator Status 12/31/06 Indicator Coverage i. Birthsattendedbytrainedhealthpersonnel Fully Achieved Coverage ii.Pneumoniacasesofchildrenattendedinhealthservices Unclear - indicator problematical Coverage iii.Immunizationcoveragewithpentavalentvaccine Not Achieved 27 Type of SpecificIndicator Status 12/31/06 Indicator Coverage iv. Childrenunder 5 with third dose of iron Partiallyachieved, with the percentageof coverage increasingfiom 2% to 37%, very close to the goal of41%. Quality v. Complete prenatalcare attendance Fully Achieved Quality vi. Early neonatal hospitalmortality Unclear -indicator Problematical Equity vii. Numberofmunicipalitieswith pentavalentcoverageof Indicatorproblematical less than 80% Sustainability viii. Annualtargets for the domestic financingof vaccines Fully Achieved (This indicatoris also consider intrigger 4) These indicators were very similar to those comprisingthe performance matrix utilized for APL I, where incidence o f pneumonia replaced the number of acute diarrheas (EDAs), and the monitoring of early neonatal mortality was focused in 15 selectedhospitals. Indicators i,v and viii were fully achieved. While indicators iand v achieved the percentages stated as the goals, indicator viii also included as a separate trigger (trigger 4) was achieved. Indicator iv showed significant and important improvement. The proportion children below 5 years old receiving 3 annual doses of iron increased from less than 2% to 37%, which is very close to the 41% stated as a goal. i.Birthsattendedbytrainedhealthpersonnellaterdefinedasdeliveriesinhealthservices. - ____~ Year 2001 2002 2003 2004 2005 2006 Observednumber 138,042 158,555 160,882 163,842 170,689 178,605 51% 58% 59% 60% 62% 65% Goal 117,392 147,783 159,129 167,791 179,267 179,753 43% 54% 58% 61% 65% 65% v. Numberofuremantwomen with complete prenatal care attendance(4 prenatal controls) - Year 2001* 2002" 2003* 2004" 2005** 2006** Observednumber 117,93 1 116.608 127.597 139.391 140.309 155.149 35% 34% 37% 40% 50% 56% Goal 121,300 130,327 141,391 153,330 147,414 153,103 36% 38% 41% 44% 53% 55% *** 4 prenatal controls / at least one control 4 prenatal controls / estimated births. Since 2005 the indicator chance its denominator to estimated live births 28 iv. Number of children bellow 5 year old with 3 doses o f iron. - Year 2001 2002 2003 2004 2005 2006 Observed number 18,414 75,779 145,7 18 197,792 319,994 378,090 2% 8% 15% 20% 3 1% 37% Goal 19,435 98,444 149,605 252,3 13 356,601 420,614 2% 10% 15% 25% 35% 41% Three other indicators (ii,vi and vii) turned out to be quite problematical once project activities were underway. One indicator was ambiguous: the number of child pneumonia cases seen in health services. While the number increased (from 124,849 to 157,953) this could be interpreted as reflecting an increase of access by the infant population to health services. However, an opposite interpretation may also be true: improvements in the capacity and quality of diagnosis increase the specificity of the diagnosis, and therefore may reduce the number o f illness cases reported as pneumonias. The early neonatal hospitalmortality rate is also a difficult indicator to be evaluated. While better treatment should reduce this mortality rate, a better health service referral network will increase the proportion of severe cases accessing to the 15 selected hospitals, thus increasing the early neonatal mortality rate. The neonatal mortality rate was reduced from 17 per thousand to 12 per thousand, a significant achievement, but did not achieve the goal as originally defined. Indicator vii, the number of municipalities with pentavalent coverage o f less than SO%, could not be evaluated due to the lack of accuratedatato determine denominators at municipal levels. ii.Pneumoniacasesofchildrenattendedinhealthservices - Year 2001 2002 2003 2004 2005 2006 Observed number 124,849 128,244 151,539 174,008 163,984 157,973 Goal 122,000 122,000 127,000 131,000 135,000 176,262 vi. Early neonatal hospital mortality rate in 15 selectedhosDitals. Year 2001 2002 2003 2004 2005 2006 Observed number 762 750 817 1029 1019 938 Live births 32,970 49,479 49,287 49,335 48,392 47,764 Observed mortality rate 17 10 11 15 12 12 Goal 11 11 11 11 11 11 29 Finally, immunization coveragewith pentavalent vaccine remained below the stated goal. iii.Immunizationcoveragewithpentavalentvaccine(3rddosein1yearoldchildren) -Year 2001 2002 2003 2004 2005 2006 Observednumber 228,955 220,049 206,675 219,941 220,022 216,099 92% 88% 81% 85% 84% 83% Goal 185,761 213,472 221,674 232,270 234,375 235,43 0 75% 85% 87% 90% 90% 90% The Government and Sector Priorities 85. For the first time inmore than 40 years, Bolivia has a government elected by an absolute majority that also enjoys a majority inthe lower house o f Congress. Since the Morales administrationtook office at the beginning of 2006, the political instability surrounding the previous government has improved. The new administration has promised sweeping changes, including Constitutional reform and re-negotiating governance relationships between the central Government and the regions. An elected assembly, aimed at negotiating and proposing a new Constitution within a year, began working on this task in August 2006 and recently extended its mandate through December 2007. The Morales administration's policies aim for nationalpolitical reform, butthe efforts underway imply significant changes at the sector level as well. 86. Through the National Development Plan (Plan Nacional de Desarrollo), the Sector Development Plan (Plan de Desarrollo Sectorial), and the recently launched Zero Malnutrition Program, the Government has clearly articulated its commitment to improvingthe health status o f the population and to reduce health inequity gaps. In these national plan documents, the Morales Government identifies five key objectives: i)a unique, intercultural and community-based health system; ii)the steering and leadership role of health authorities; iii)social participation; iv) promotion of good health practices; and v) social solidarity. 87. The GOB plans to approach these objectives by strengthening health system networks; increasing coverage, access to and demand for health services, especially in the most vulnerable populations; increasing the focus on the promotion o f good health practices and of disease prevention; increasing intercultural health practices and preventingchronic malnutrition; upgradingthe health insurance system; and strengthening the MSD's capacity to implement the EFPH. In this context, the Government's priorities are focused on achieving better heath results in MMR, IMR and nutrition by developing a demand-oriented Maternal and Infant Referral Network in targeted areas, strengthening the insurance system, and reinforcing the regulatory role of the MSD.The latter may be the most critical activity since the decentralization processthat is underway inBoliviarequires a stronger MSDthat is able to implement the EFPHto regulate and support regional and local authorities. 88. The demand-oriented Maternal and Infant Referral Network in target areas will be built on the experience and success of the EXTENSAprogram. 30 89. The public insurance system in Bolivia has undergone a rapid evolution since its inception, continually increasing scope and services covered. Public insurance was established in in Bolivia in 1996, with the launching o f the Maternity and Childhood Insurance program, which offered 39 health benefits for women and children under 5 years old. In 1998 the Basic Health Insurance program was launched, which expanded the number of benefits offered to 92. In January 2003, under APL I1the Maternal and Child Universal Insurance program was implemented, which grants nearly 600 benefits to pregnant women from the beginningof pregnancy until 6 months after delivery, and to children from birth to 5 years old. The insurance is accepted by all three levels of care in Bolivian public health facilities, the short-term social security insurance and inthose private, nonprofit and for-profit institutions that are assigned provider status by GOB agreement. In March 2006, benefits were expanded into a new program -- S U M I -- with 27 new benefits in sexual and reproductive health and cervical cancer for women from 15 to 59 years old. 90. The creation of SUMIwas a remarkable step forward. The implementationof the insurance and of the SUMIinparticularhas managedto partially overcome economic barriers for the accessto health services by children under 5 and pregnant women. S U M I is a positive innovation of the Bolivian healthcare system. S U M I provides financial protection around a package of services to mothers and infants. The services, which are available to the entire potential beneficiary population, are providedthrough public and private systems. S U M I is financed through the following mechanism: the municipalities receive revenue sharing funds "earmarked" for SUMI. The percentage of funds from this source has been 10 percent since 2005. However, inorder to obtainthese funds, the recipientestablishmentmustprovideanaccounting o f the services provided. Furthermore, the establishment's prices are set by a central 31 91. In spite o f the considerable expansion o f services and coverage, a significant number o f Bolivians remained without insurance coverage. Because o f this continuing lack o f access to services, the GOB has recently created a Universal Health Insurance system (Seguro Universal de Salud - SU SALUD), which was launched in2007. 92. SU SALUD will be financed bythe following: a) 10%o f federal tax revenue administeredby the Municipal Governments. b) 10%of the HIPC funds administered bythe MSD. c) 14% of the Direct Hydrocarbon Taxes (Impuestos Directos a 10s Hidrocarburos - IDH) administered by the Departmental Governments. 93. SU SALUD will be managed at the national level by the MSD, which will be responsible for monitoring and evaluation o f operations. The SU SALUD Collective National Council (Consejo Nacional Solidario SU SALUD), headed by the Minister o f Health and Sports and departmental and municipal representatives, will regulate and plan the use o f resources, procurement and distribution of drugs, medical supplies and reagents. At the Departmental and Municipal levels, the SU SALUD program will be managed by a departmental council and the DILOS. The operational entities of SU SALUD are the responsibility o f the Networks o f HealthFacilities. 32 94. To fight the problem of chronic malnutrition in children, the GOB launched its Zero Malnutrition Program in2007. The program's objective i s to eradicatemalnutrition by meetingthe nutritional needs of children under five (with special focus on children under two) and pregnant and lactating women. Its success is an important priority of the Morales government. The Zero Malnutrition Program is supported by PAHO and severalU.N.agencies, including WFP, UNICEF, UNFPA, and FAO. The launch of the Zero Malnutrition Programtriggeredthe reactivationo f the inter-institutional National Council on Food and Nutrition, which will oversee the program and which reports directly to President Morales. The Zero Malnutrition Program will be managedby MSD. 95. As described below and more fully in Annex 4, the Zero Malnutrition program will partner with this APL I11programas well as a SP programwhich is currently being developed inparallel. The SP program will seek Board approval inFebruaryMarch 2008. All three programs share the objective of reducingor eradicating malnutrition. Joint activities will be closely coordinated to target initial interventions in the 37 most vulnerable municipalities inthe country, according to a recent GOB survey of food insecurity. A secondphase will roll out activities inadditional locations. 33 34 Annex 2: Major RelatedProjectsFinancedby the Bankand/or other Agencies BOLIVIA: EXPANDINGACCESS TO REDUCE HEALTHINEQUITIES-APL I11 96. The Bolivia Health Sector Reform Project, Third Phase, is one o f several initiatives supported by the Bank to address the persistent challenges o f the Bolivian health care system: L o w coverage o f services, highcosts for services andmedicines, quality ofcare andlack of appropriate and robust referralnetworks. The APL I11aims to consolidate progress achieved during the previous two Project phases. In fact, the APL Program has achieved significant results in expanding health insurance coverage and in increasing access to health services for previously underserved populations. In addition, other Bank projects address complementary areas, such as education. The Bolivia Health Sector Reform Project, Third Phase is part of an agenda that also includes projects such as: RelatedProjects supported by the WorldBank are: ProjectName I I I Amount Financier Ratings Do'1P Sector Issue BO-Secondary US$lOM IDA Not rated Supportthe Municipal Government's education Education yet. strategyby: (i)increasingaccess to secondary Transformation educationfor adolescentsand young peopleand Project (P083965) improvingtheir permanence inthe educationsystem; (Cr. 34970-BO) (ii)improving quality and relevanceofprimary and secondary education; and (iii)strengtheningthe decentralizededucationmanagementcapacity ofthe Municipality of La Paz. Relatedprojects b other international agencies include thefollowing programs listed below: Agencies and I Approval 1 Programs Amount Date Sector Issues I I I Hygiene andBasic 880.000 INov. 2007 I Institutional strengtheningfocusing onthe linkage betweenthe HealthCare Eu. to March innovation processes at aregional level and the development of Program I2008 healthpolicies at anational level. (PROHISABA) SpanishAgency of 410.000 Feb. 2007 StrengtheningofPublic Health andthe capacityto integrateand International $USD. to March administeredthe MSD; sector decentralizationprocessesand Cooperation 2008 management strengtheningincludingattentionto healthnetworks, (AgenciaEspaAola DILOS and SNIS. de Cooperacidn Internacional) CanadianAgency 1.7 M Mar. 2007 Strengtheningthe "rectoria" andthe regulatory function ofMSD for Internacional can.~ ~ 1to . March and the "SEDES" of Oruro, BeniandPando. Development 2010 (Agencia Canadiense de Desarrollo Internacional) UnitedNations 16.000 Ongoing BOL3R202 PopulationsFunds $USD. o Strengtheningthe formulation, implementation, (UNFPA) monitoringandevaluationcapacityofhealthpolicies and (Fondo de sexual andreproductive rights to promote equitable access Poblacidn de las to sexualandreproductive health. Naciones Unidas) o Strengtheningthe quality ofservices for sexualand reproductive health. o Increasecapacityto ensure sustainable provisionof 35 contraceptives and other sexual and reproductive health materials. o Information and specific sexual andreproductivehealth services for adults and teenagers. United Nations 56.923 Ongoing BOL3R205- PG0003 Populations Funds $USD o PreventionPlanfor pregnancy inadolescence. (UNFPA) o Available health services for teenagers, youth, andwomen (Fondo de inthe context ofSU SALUD. Poblacidn de las o Accredited differential services inplaced andrunning. Naciones Unidas) o Appropriate age registry for specific health care provision o f services applyingthe SNIS tools. I I 36 Annex 3: ResultsFrameworkandMonitoring BOLIVIA: EXPANDING ACCESS TO REDUCEHEALTHINEQUITIES-APL I11 97. The project development objectives for APL I11include the same as those of the previous two phases: increasing access to good quality and culturally appropriate health services to improve the health of the population in general and to mothers and children in particular. As a program objective, the APL series pursues reducing the infant and maternal mortality rates by one-third, as per the proposed indicators. In addition this phase include as PDO some risk factors indicators indirect relation to the original PDOs. ResultsFramework m Reduction o f the gap o f Ratio between the percentage o f pregnant women receiving maternal and infanthealth four pre-natal care inthe areas o f project intervention and critical risk factors between the the rest o fthe country people living inthe Ratio between the percentage o f institutional deliveries6in municipalities prioritized by the areas o f project intervention and the rest o f the country maternal and infanthealth indicators and the rest o fthe Bolivian population * To reduce chronic malnutrition Percentage o f 2 year old children with a height over -22 among children younger than 2 scores inthe intervention areas o f the project' Lessons for strengthening years o f age inthe rural areas o f Percentage o f children receiving exclusive breast feeding at the 82 municipalitiestargeted health and nutrition 6 months inthe project areas services and for scaling by the project. strategies m Overall increased coverage o f Percentage o ftarget population enrolled inhealth insurance the health insurance inthe inthe project areas target population m The SNIS incorporated a new Health insurancemanagement module reports include information strategy and information about production information about production in the intervention area is generated from the health insurancemanagement module 'Institutionalistwo delivery i s defined as births attended informal health institutions by skilled health personnel -22 scores standard deviations less than the median for the age and height. A child who measures more than two standard deviations shorter than the median is consideredto be chronically malnourished. 37 Intermediate Outcomes IntermediateOutcome Indicators Use of Outcome Information 1 The Ministry ofHealthand Sports (MSD), the departments 0The SNIS includesthe new information modules and local authoritiesimproved 0The modulesincludedinthe SNIS are fully implemented in their capacityto perform the 9 SEDES, the 9 Departmentand all the headsof the critical EssentialFunctionsin referralnetworks inthe interventionareas. Public Health(EFPH), Monitor implementation Monitoring andevaluation, 0The healthunits apply the sector regulationnorms andthe of interventionsinthe Sectorpolicy and investment PRONACSnorms. projectareas coordination,andquality 0Monitoring andEvaluationofthe projectdone with regular control reports from the informationsystem providing the data (habilitationlaccreditation) (reports shouldhave the data disaggregatedby area, region, municipality, indigenous andnon-indigenous,rural and urban) Component Two: %ofreferralnetworksevaluatedas satisfactory inthe 1 Designand strengtheningof yearly quality assessment. the MaternalandInfant Health Network inthe Projecttarget %ofpregnantwomen receivingpre-natal care within the areas first 20 weeks ofpregnancyinthe areas of intervention %mothersreceivingpost-natalcare within 10days of Monitor implementation of interventionsinthe deliveryinthe areas of intervention projectareas 0Percentageof childrenunder 2 years old who participatein the growingmonitoringsessions inthe areas of intervention PercentageIndigenouspeoplesatisfied with the delivery servicesreceived Component Three: ~ ~~~ ~~ 1 Increase the health insurance Percentageof target populationenrolledat the national coverageandthe quality ofthe level healthservicesprovided Monitor implementation Percentageof municipalitiesachieving80% ofthe throughthe health insurance o f interventionsinthe managementperformancetracers at the nationallevel projectareas Percentageof populationreceivingservicessatisfiedwith the quality ofthe services Arrangementsfor resultsmonitoring 98. Unlikethe previous two phases of this program, the execution of APL I11will not be carried out by an independent implementation unit. Instead, all activities related to the execution, supervision, monitoring, and evaluation of the project will be integrated into the regular activities of the MSD (see institutional arrangements paragraph above). The Vice-Ministry of Health's Unit of Coordination of Projects with External Financing will be responsible for general project coordination and supervising project monitoringand evaluation. 99. SNIS has been designated as the key player for basic data collection, systematic processing and preparation of the indicators. Through Component 1, the project will support the development of the SNIS in order to increase its capacity to gather, analyze and manipulate data. This upgrade of the system is crucially needed, so that robust and accuratehealth data will be available for a wide range o f reporting, 38 including results monitoring. Finally, the project design includes an impact assessment which will be done with the participationof an external consulting firm. - Arrangements for results monitoring Data Cc Frequency Outcome indicator Ratiobetweenthe percentage ofpregnant Health womenreceivingfour pre- 0.66 0.80 0.85 Yearly SNIS institutions natalcare inthe areas of and SNIS projectinterventionandthe rest ofthe country Ratiobetweenthe percentageof institutional Health deliveriesinthe areas of 068 0.80 0.85 Yearly SNIS institutions projectinterventionandthe and SNIS rest of the country Percentageof 2 year old childrenwith aheightover Health -22scoresinthe 37.6 37 25 22 Yearly SNIS institutions interventionareas of the and SNIS project - 0Percentageof children Health receivingexclusive breast 62 65 Yearly SNIS institutions feedingat 6 monthsinthe 51 54 and SNIS project areas - Percentage of target I I Health populationenrolledinthe 0 32 80 Yearly SNIS institutions projectareas andUGTFN Healthinsurance Health managementmodule Quarterly 0 20 SNIS institutions , reports includeinformation andyearly andUGTFN about production 39 Targets Data Collectionand Reporting Frequency Data Responsibility Outcomeindicator Baseline YR1 YR2 YR3 YR4 YRS and Collection for Data Reports Instruments Col~ection 1OutputsIndicatorsfor EachComponent mponent One : The SNIS includesthe SNIS Quarterlyand new information modules 30% Reportsand SNIS yearly forms The modulesincludedin SNIS the SNIS are fully Epimediolog implementedin the 9 SNIS ical Unit SEDES, the 9 Department 0% Quarterlyand Reportsand Investigation andall the headsof the yearly forms And H. referralnetworks in the Economics interventionareas. Unit Planning The healthunits apply the SNIS Quality Unit sector regulationnorms 0% Quarterlyand Reportsand Health andthe PRONACSnorms. yearly forms Environment Unit Monitoring andEvaluation o f the projectdone with M&E regular reports from the Reports informationsystem HHand providingthe data (reports Facility Planning 0% Quarterlyand shouldhave the data yearly Surveys, Unit disaggregatedby area, Impact region, municipality, Evaluation indigenousandnon- indigenous, rural andurban 40 Target values Data Collectionand Reporting Frequency Data Responsibility Outcomelndicators Baseline YR1 YR2 YR3 YR4 YR5 and Collection for Data Reports Instruments Collection IOutputsIndicatorsfor Each Component l- Component Two : %ofreferral networks Network evaluated as satisfactoryin 0% 20% 40% 60% 80% Quarterly managers, SNIS the yearly quality oyo Yearly SEDES assessment. %ofpregnant women 1 1 receiving pre-natal care within the first 20 weeks 55% 56% 57 58% 59% 60% Quw L W I ' J managers, SNIS o f pregnancy inthe areas SEDES of intervention 1 1 I I %mothers receiving post- I natal care within 7 days of Network delivery inthe areas of 0% 0% 20% 40% 50% 70% Quarterly Yearly managers, SNIS intervention SEDES Percentageof children under 2 years old who Network participate inthe growing 66 70% 75% 80% 80% 80% Yearly managers, monitoring sessions inthe SEDES areas of intervention PercentageIndigenous I I people satisfiedwith the qualitative delivery services received 0% 0% 10% 20% 40% 60% Every other survey, Survey Year Focus Percentageoftarget DGSS population enrolled at the 0 32% 54% 74% 80% 1 DatabaseSU I national level SALUD Percentageof municipalities achieving Report on 80% of the management 0 20% 30% 40% Quarterly tracer UGDs performancetracers at the indicators national level I 1 Percentageof population receiving services satisfied with the quality ofthe 0 10% 20% 30% Satisfaction UGDs services Surveys I I 41 Annex 4: DetailedProjectDescription BOLIVIA: EXPANDINGACCESS TO REDUCEHEALTHINEQUITIES-APL I11 This APL I11is being designedand proposedas the last phase o fa 12year HealthReform Program. This thirdand final phase seeksto consolidate and buildonthe three mainachievements o fphasesIand 11, namely: i)a focus on performance agreements and results which i s increasing accountability across the sector; ii)the expansion o fthe health insurance system to reach more o f the poor; and iii)the implementation o f a National Program for the Expansion of Coverage (EXTENSA) which i s providing health care to Bolivians ingeographically remote areas. Inaddition, the project would build on the energy and momentum evident inthe Morales administration's commitment to improvingthe health o f the most vulnerable citizens. This final phase would be implemented over a period o f five years, and the estimated total project cost would be SDR 11,700,000 (US$ 18.5 million equivalent) including US$0.5 million, unallocated). 100. The Project would have two scopes o f intervention. Some activities would be implemented nationally and would impact the entire Bolivian health sector, while other critical interventions would be more narrowly focused where intervention is most needed and where impact i s likely to be highest. This second set o f activities would target the 82 o f the most vulnerable municipalities and the 6 most vulnerable peri-urban areas in Bolivia, as identified by the GOB.' A national assessment analyzed food insecurity and other risks across the country on a scale from 1 (most secure) to 5 (most vulnerable). All o f the locations targeted under these activities were rated 4 or 5 on this scale. 101. APL I11would focus on three primary activities: i. Strengtheningcapacityinthenational,regionalandlocalhealthinstitutionstoperformthe Essential Functions in Public Health (EFPH). Improving capacity in regional health institutions is a critical issue because o f Bolivia's ongoing process o f political decentralization. More responsibility i s being devolved to local and regional health officials, which requires increased capacity at all levels to perform, supervise and evaluate the execution o f the EFPH; ii.Stimulatingboththesupplysideandthedemandsideforhealthservicesbyencouragingthe development o f maternal and infant referral networks in the poorest areas (the targeted 82 municipalities and 6 peri-urban areas), and by closely coordinating activities with the WB Social Protection program and the GOB'SZero Malnutrition program, which will stimulate demand in the same areas. This work is critical for reducingthe inequity gaps inthe Project's Development Objective indicators; and iii.Supportingtheimplementationofanexpandedhealthinsurancesystemthat upgrades the current SUM1 to a Universal Health Insurance (SU SALUD). This new insurance program expands the age groups covered, improves the range o f services covered and increases the focus o f the health insurance system on promotion o f good health as well as disease prevention methods. APL I11would includethe following four components: The vulnerability levels were calculated bythe Bolivian Government, usinga combined index of 16 indicators including risk of food insecurity, number o f institutional births, access to drinking water, literacy, connection to sewer system, school attendance, and availability o f electric power. 42 Component I. StewardshipRole of HealthAuthorities EssentialFunctionsin Public Health - (US$7.7million: US$4million IDA US$3.7million Government) + 102. The objective of this component would be to strengthen the resources and the capacity of national, regional and local health authorities so all can more effectively perform the critical Essential Functions in Public Health (EFPH). EFPH refer to core elements of public health policy which apply across all activities, independent of specific diseases or levels of interventions. These functions are the ultimate responsibility of the national government, and range from surveillance and disease control, to social participation, regulation, and monitoring and evaluation. 103. Component One will focus on updating and improving the health sector's information and data systems, improving management skills and results-basedmanagement inthe health sector, designing and implementinga national program improve quality across the sector, and developing expertise within the MSD to identify existing and emerging environmental issues that affect health and that may be incorporated into future policies. Component 1would includethe following subcomponents: a. Strengthening the National Health Information System (SistemaNacional de Informacibn en Salud - SNIS) in the areas of data gathering, analysis, reporting, monitoring, supervision, evaluation, management and research. The SNIS would be enhanced to support the new MSD priorities (Health Insurance; Zero Malnutrition Program; Family, Community and Intercultural Health Program) with appropriate data analysis and reporting. Bolivia's health information system was established in 1976 with the implementation of a paper- based form system for the reporting of data regarding epidemiological surveillance and production of services. In 1990, the MSD began migrating data to a computer-based system and changed the system name to SNIS. Although the SNIS encompasses Bolivia's 3194 health facilities, data collection at health facilities is incomplete and fragmented. Current systems collect and input information for discrete reporting of narrowly-defined data sets, and do not allow manipulation, analysis or reporting of the data in different formats. In addition, the reliability of the information produced by SNIS is limitedbecause reports are completed or revisedusing datathat is incomplete. The plannedexpansion ofthe SNIS underAPL I11includes a structural change inthe way data will be captured. The proposed improvements to SNIS include new software modules which will managethe health insurance system, featuring clinic-level software programs that would become the entry portals for patient data. The software will also include databases and other programs to generatea wide array of reports and analyses that are currently non-existent or incomplete. The new data modules to be incorporated in the SNIS include systems to manage the following types of data: patient affiliation with insurance, medical-administrator-financial,human resources, medical equipment, infrastructure, admissions, pharmacy, purchases, monitoring o f the annual operating plan (Plan Operativo Anual- POA), management of hospital medical waste, vital statistics, laboratory tests, patient demographic informationand expansion o fthe database of epidemiologicalsurveillance. This new stage of development of the SNIS will maintainthe same strategy as the previous stages of the system. The design, and the programmingand implementationwill be basedwithin the resources of the MSD's in-house software development team. This has proven to be a successful strategy. This subcomponent would finance: equipment, technical assistance, software tools, training, and communication services, to develop and implement the new modules of the SNIS at National, regionaland local levels inthe targeted municipalities. 43 The main activities ofthis sub-component include: J Technical Standards. Designandadaptation ofthetechnical standards, processes, proceduresand standards of the SNIS-in Public Health and Epidemiological Surveillance (VSP and SVE) including: i)Identification and evaluation of new sectoral and intersectoral information needs causedby implementation of new health policies; ii)Development of instruments for the capture and validation of the data from primary and secondary sources of information, securing flows of information, frequency, quality control, and definition of levels of information; and iii) Development of complementary computer tools and software for implementationand operation at the national, departmental andproject-targetedmunicipalities level. J Monitoring and Evaluation. Implementation of the Monitoring, Evaluation, and Feedback System of the GOB'SSector Development Plan for 2006-2010 (Plan de Desarrollo Sectorial - PDS), at national, departmental, and local health institutions including: i)Integrated design (production of services, administrators, financial, etc) of the System of Monitoring, Evaluation, and Feedback and its implementation at the national level; ii)Training o f staff at all levels of management for the analysis, processing, and use of M&E information; iii)Reorientation of the methodologies for the Committees of Information Analysis (CAI) in the different levels of management; iv) Dissemination of M&Eresults at all levels of management. J National System of Health Research. A new national system for health research would be developed, to include: i)Support for the design, development, and implementation of a national system of health research; ii)Researcho f impact of projects and health programs. (impact-cost, benefit-cost, effectiveness, etc); iii)Design of mechanisms to select priority lines of research; iv) Design of a virtual library for the national network of information (including digitizing and cataloging past research, and providing research information for policy-making and decision- making in health). J National Health Survey 2011. Financial support to implement Bolivia's next Demographic and HealthNational Survey, "EncuestaNacional de Demografia y Salud 2011" and strengtheningof the vital statistics service in coordination with all actors and institutions involved in the system includingthe link with the SNIS. b. Regulation, Results-based Management and Culture of Accountability. This sub-component will - focus on strengthening the capacity of the MSD and of the departmental and local health authorities in order to apply modern management methodologies and instruments, and to design programming basedon priority and goal selection. The main activities ofthis sub-component include: J Management Tools. Support in development and implementation of standard practices and management tools: i)Preparation and validation of norms, processes, methodologies, and management tools; and ii)Training for national and departmental level public health staff in the use of new standard practices, processes, methodologies and management tools, monitoring, project and programs evaluations. J Donor Coordination. Strengthen the coordination of international and multilateral donors and generate a coordinated process of planning, including: i)Harmonization o f cycles of projects, processes, administrative and financial procedures and the harmonization of the national standardsand of international cooperation; ii)Advocacy for the support for the implementationof 44 the GOB'SSector Approach inHealth; iii)Collaborationof donors inpreparation and monitoring of the Institutional Strategic Plan of the MSD and decentralized institutions; iv) Collaborationof donors in monitoring the implementation of departmental health plans; v) Regulation of the operation of NGOs in Bolivia for the assessment of the outcomes of their health projects; vi) Updating of the information on interventions in health of NGOs and assessment of its outcomes at the national level and departmental; vii) Updating of the information on the health interventions of cooperative agencies and assessment of program outcomes; viii) Evaluation and systematization o f impact of projects, health programs and the design o f new strategies; and ix) Diffusion and feedback of the advantages and disadvantages of the strategies, programs and projects. J Impact Evaluationofthe APL I11Proiect. As part ofthis sub-component, the evaluation ofAPL I11activities would be incorporated at the national level. Evaluations will be coordinated by MSD as part of the regular exercise of its responsibilities. The assessment of impact of the interventions on the targeted areas will be made jointly with the impact evaluation of the component of conditional cash transfers of the IDA Social Protection Project. It is anticipated that the MSDwill hire an outside firm to conduct the evaluations. The preliminary design of this impact assessment is centered on evaluation of changes in health indicators in the project's targeted areas compared to areas that were not covered by the project. In view o f the fact that many of the most vulnerable areas (those assessed at levels 4 or 5) will be targeted by the program, the idea of using a second phase group as a control group is under discussion. In order to compare the global effect of both phases of APL 111, the study will also compare indicators in all the targeted municipalities with a randomized sample of municipalities which were assessedat level 3 vulnerability. This latter comparison will make it possible to demonstrate impact if,as is expected, the initial gaps inthe indicators among vulnerability levels are reduced at the end of the Project. J SocialCommunication. Underthisactivity, the Ministry,the departments,the municipalitiesand the local health authorities will communicate to their constituent communities the health results achieved (or not achieved) during each management period. These communications and reports will use the executive reports of the SNIS as a basis. Dissemination will be achieved via community meetings, workshops and publications financed by the project. J Human Resources. Strengthening of MSD's human resources policy. Activities would be designed to upgrade the human resources data captured by SNIS in order to identify gaps, limitations of training, evaluation of performance, etc. The project will support the updating of regulatory framework for the managementof human resourceso fthe sector. c.Development and Implementation of a National Promam of Quality. This sub-component would support the process of licensing, certification and monitoring of Bolivia's health facilities to assure the delivery of quality health care services. Institutions covered include hospitals, ambulatory health centers, clinical laboratories, blood banks, clinics and rehabilitative services, and other heath service units. The main activities ofthis sub-component include: J Capacitv development in aualitv management concepts: i)Incorporation of Quality Managers into the MSD, SEDES, and referral networks of the target area; and ii)Training and diffusion in the use of quality standardsfor SEDEShealthworkers. 45 J Support the development and implementation of standards and instruments of quality manapement in the provision of health services: i)Preparation and validation of standards, processes, methodologies, and tools; ii)Promotion and Diffusion of a culture of quality; and iii) Monitoring, evaluation and feedback of the application and control of the standards, processes, methodologies and tools of the National Program of Quality for licensing and certification activities. +Component 2. Family,Communityand InterculturalHealth (US$ll.6 million: US$9.9million IDA USS1.7million Government) 104. The objective ofthis component would beto improve access to maternal and infant health referral networks in the target areas. This component would support the development of an Intercultural Maternal and Infant Health ReferralNetwork inthe Project's target areas, complementing the existing EXTENSA program. These networks would also promote the demand for maternal and infant health care, and contribute to the following three health challenges, which disproportionately affect vulnerable communities: 1) increasing the number of safe institutional childbirths; 2) increasing the numbers of referral of obstetric emergencies directly from the community; and 3) providing access to a referral systemfor children with acute respiratory and digestive diseases. 105. Since 1985, Primary Health Care (PHC) has been promoted in Bolivia as the primary strategy to reduce morbidity and mortality of the maternal and infant populations. For a few years following inception, this strategy achieved marked improvements inmaternal and child health indicators. However, progress reacheda plateau and for many years further advanceswere not achieved. Although primary care units were organized in networks, these networks were not connected with referral systems and many of them did not have a secondary level of care. Lack of secondary care means that higher-risk health problems do not have access to institutions with technical capacity to identify and resolve such issues. Sometimes a lack of secondary care facilities can also mean that health issues are referred directly from primary care to tertiary care. This can result in inefficient use of resources, since tertiary care facilities should receive only the most complex cases and not those that could be resolved with secondary care. As an additional consequence, ifpatients drop out of the system becauseof inability to access the appropriate level of care, then the benefits of primary health care are lost along with the potential impact of the strategy. 106. There are approximately 300 primary care health facilities and 17 secondary care hospitals inthe 88 high-vulnerability municipalities as defined by this project. These health units are divided into 17 networks totally included within the target areas and other networks partially included within the target areas. But these networks do not adequately reflect the health needs of the local population, nor are they organized to be mutually referring (i.e. from lower to higher complexity care, and vice-versa). Inaddition, in the 6 peri-urban areas that are part of the project's target areas, urbanmigration has greatly increased the population. Currenthealth service networks do not serve these areas. 107. Component 2 would include two subcomponents: a) Development and strengthening of Intercultural Maternal and Infant Health Referral Network, and b) Strengthening the local management inhealth, and community participation. a. Development and Strengthening of Intercultural Maternal and Infant Health Referral Network. This subcomponent would include the following activities: analysis and redesign of the existing referral networks; definitions of the standards and regulations governing the networks; analysis of medical equipment needs of the networks' health facilities, including repair or purchase where necessary; analysis of communication systems and transportation systems (ambulances) of the networks' health facilities, including repair or purchase recommendation where necessary; implementation of new 46 health brigades (from the EXTENSA program) for expansion of coverage in remote populations; incorporation of human resources, technical training and management training for the networks; support for epidemiological research in response to suspected outbreaks; and the creation of three regional centers for medical equipment maintenance and repair. In addition, MSD will explore the possibility of establishing a program of incentives for increasing management quality within the networks. (Initially, these would be non-monetary incentives for performance, primarily training opportunities, with the possibility of usinglocal funds at a subsequent stage for monetary incentives.) For example, if a network reaches its annual performance goals, the professional members of the network would be eligible to receive professional training within the country (either in their area of expertise or in a new technical area). This activity would serve the dual purpose of stimulating quality management practices as well as increasing the training and capacity of health workers network-wide The main activities ofthis sub-component include: J Analvsis of Current Referral Networks. This activity includes a consultancy to analyze and determine the status of resources and existing capacities of the health networks inthe target areas. The activity will undertake a collaborative process of redesignwith the local communities, the DILOS and the SEDES. As a result, it is expected the current 51 unconnected networks become 24 structured networks with increased capacity to resolve health concerns of the local populations. J Renovation of Health Facilities. Public Housing and Purchase of Medical Equipment: Of the 1200 existing primary health care centers in the project's target areas, some 200 were rehabilitated and equippedthrough FPS and some 250 through other projects. This subcomponent proposes to renovate or rehabilitate the remaining 300 establishments that require minor repairs, new primary care equipment, culturally appropriate infrastructure, and, construction or rehabilitation of public housing for the health workers. In addition, the 10 secondary care hospitals that are the lead hospitals in the networks require physical rehabilitation, including the space for the integrated nutritional unit, and additional equipment. Finally, seven primary care centers would be converted into secondary care hospitals, including creating office space for the network managementoffice. J Financing Expanded Human Resources. The financing of human resources withinthis component i s necessary in order to support four critical areas of the project: i)creation of 34 new EXTENSA brigades (average two per rural network) with a team of 5 members in each brigade; ii)support for the SAFCI medical residence. This 3-year residency will locate a new medical resident in each network every year (17 residents will be in place in the first year, 34 in the second and 51 from the third year onwards); iii)completion of formal training in the four basic medical specialties (pediatrics, internal medicine, obstetrics/gynecology and surgery) for enough specialists so that each of the main hospitals in the network system will have one doctor in each specialty (it is estimated that about 51 additional specialists will be needed to complement those already in place); and iv) incorporating a nutritionist and a social worker into each network (17 professionals). The financing of this human resources component will be carried out on the basis of a shared financing and with progressively lower contributions by the project, not exceeding 20% in the final year. This component will also finance a rotation system for specialized personnel inwhich they will live and work temporarily inrural areas. J Professional Training. This activity would design a program of regular continuing education for each referral network. This innovative program proposes that the main hospital in each network set aside one day every week or every two weeks as a "network training day." On these days, 47 doctors from the community health centers would travel to the primary network hospital together with the patients they are referring on for more specialized care. The patient would be attended by the secondary-care doctor together with his or her local doctor from the primary care community health center. This system will serve the dual purpose of training the community doctors in higher level care and reinforcing professional relationships among doctors, as well as providing a higher level of comfort for patients unfamiliar with the environment within the main hospitals. In addition, the medical residents working in the main hospitals would organize and present a formal seminar on a topic of medicalresearchor practice for the doctors that are visiting on that day from the outlying institutions. Similar programs would be structured for network managersand medicalequipment technicians. J Operational Research. The Project would help to finance the operating expenses of operational researchof outbreaks or suspectedoutbreaks. This researchwill utilize existing equipment of the SEDESand ofthe Networks. J Regional Equipment Maintenance Centers. This activity would assist in the creation of three regional centers for medical equipment repair and maintenance. These centers will depend directly on three departmental capital cities. The centers maintainand repair the equipment of the hospitals of in these three cities, and would sell services to the health units of the remaining municipalities, whose costs should be financed by the municipalities. The project would finance training and would purchase the required tools to establish the centers. The resulting sale of services outside the immediate locale will ensure sustainability o f the centers' operations. b. Strengtheningo f Local Management and Community Participation. This sub-component would focus on strengthening community participation in the management of local health activities, including promotion of healthy lifestyles, and the demand for maternal and child healthservices. The main activitiesofthis sub-component include: J Particiuatow planning. The Project will promote community participation in the process of planning local health-related activities through a series of workshops. Focus will be on community participation in the development of local epidemiological profiles and local disease surveillance, with special emphasis on issues affecting maternal and child mortality, and chronic malnutrition. Activities will also support any necessarytraining for local social organizations and community leaders J Support for the CAIS (Health Information Analysis Committees) including training for health workers, organizations and community leaders inthe methodology gathering and analyzing health data. J Public Awareness. Disseminationof community and inter-sectoral health strategies andresults, inmeetings of social organizations and other spaces. Accountability will be improved by regular dissemination of the results of the CAIS. The health workers and community authorities will provide informationto the population on the results and cost of the healthplans. J Health Promotion Materials. Collaborative preparation of Health Promotion materials with community participation. Printing and dissemination of the Promotion materials in the local communities. J Trainingofthe DILOSfor increasedcapacity to managelocalhealthissues. 48 J Suuuort for the DILOS for monitoringthe municipal management commitments and with the healthnetworks. Target Municipalities 49 ITotal 41 municipalities I 448696 Total 41 municipalities I I 553966 I 108. Coordination with Social Protection Promam and Zero Malnutrition Program. Working in the same areas, the SP program entitled Enhancing Human Capital of Children and Youth, currently under preparation, will provide conditional cash transfers to families with infants for health and nutritional care, as well as for improving consumption, The program will pay transfers to families who seek health care services that will prevent maternal and child malnutrition, such as regular pre- and post-natal checkups, monitoring of children's height and weight, and counseling about feeding practices, exclusive breastfeeding, hygiene practices, andthe warning signs of illness. 109. Both the APL I11and the SP program will coordinate closely with the GOB'SZero Malnutrition Program, which aims to meet the nutritional needs of children under five (with special emphasis on children under two) and pregnant and lactating women. The Zero Malnutrition program will encourage consumption of fortified complementary foods (FCF) and will promote the participation of local agricultural producers and SME's in the production o f these FCF. It will also undertake public outreach activities to local families in the target areas, to improve households' knowledge and practices regarding nutrition. Zero Malnutrition will also coordinate with the health networks to develop complementary Rural Integral Nutrition Networks, which will focus on preventing malnutrition. Finally, Zero Malnutrition will expand access to clean drinkingwater and improved sanitation. 110. All three programs will initially work in up to 10 municipalities as a first stage, to refine the approach and structure the joint activities to be optimally effective. The activities will then scale up to serve an additional 24 of the most vulnerable municipalities. This coordinated set of programs will serve to stimulate the supply of health services in the targeted areas, via the conditional transfers to health networks. Demand for health services will also be stimulated, by the SP's programs conditional cash transfers and the educational and prevention activities of Malnutrition Zero. With the activities of three robust programs focused on reducing malnutrition in a limited number o f areas, a significant impact can be expected. Component3. Health InsuranceProgram (US$4.2 million: US$3.2 million IDA US$l million - + Government) 111. As described in Annex 1, the Government is implementinga new universal health insurance programknown by its Spanishacronym S U SALUD.The S U SALUDprogram was launched in2007 and dramatically expands coverage from its predecessor program SUMI. A description of services offered and populations covered by SU SALUD can be found inAnnex 1of this document. 50 112. Component 3 would support the implementation of SU SALUD through three project subcomponents. These components would focus on strengthening capacity for implementationof the new insurance: a) Strengthening of the System of Enrollment; b) Strengthening the Management; and c) Development of the system of monitoring and evaluation of the insurance. All subcomponents are discussedin detail below: a. Strengthening of the SU SALUD enrollment svstem. This subcomponent will support the rollout of a national SU SALUD record system for the enrollment of families and individuals. This system will permit the classification of members and coverage according to geographical areas, urbadrural areas, levels of poverty and other demographic characteristics. Under APL 11, SU SALUD's enrollment system was designed, developed and tested in two pilot programs (one in a rural area, and other in an urban area). These pilots allowed a dry-run test of the system, and as a result of issues identifiedduring this process, minor adjustments were made. Currently the software is ready to be implemented inthe entire country. The main activities ofthis sub-component include: J Training in use of the enrollment system for key personnel, operational personnel, and community leaders. J Implementation of a communication and social marketing stratem to promote enrollment throughout the country, including: production of materials, and dissemination at the national level. Intrasectoral and intersectoral activities for coordination and consensus-building. Training for local media. Meetings and community workshops. J Printinganddistributionofenrollmentforms nation-wide. J Designandimplementationofamassenrollment campaign in the project's target areas. b. Development and Strengthening o f M&E Management Capacitv in the National Unit for Technical and Financed Management (Unidades de Gestibn Te`cnicaY Financiera Nacional - UGTFN) and Departmental units (UGTFDs). This subcomponent will strengthen capacity to plan, manage, and carry out monitoring and evaluation of S U SALUD at the national, departmental and municipal levels. The main activities ofthis subcomponent include: J Strengthening professional capabilitv. The subcomponent will support the incorporation of 19 new professional positions (one statistician for the central office, and one Public Health specialist and one economist for each UGTFD). These positions will initially be partially financed by the project, but over the life o fAPL 111will be progressively financed with GOB resources. J Provisionto the UGTFDof computer equipment, office equipment, and supplies for operational activities. J Technical assistance for audit analysis, control of fraud, and management of incentives. Part of the budget will be reserved in order to pay for two additional programs of technical assistance, the subject of which will be determinedas the project progresses and currently unknown needs emerge. 51 J Preparation, printing, and distribution of forms, standards, and operational guides. Training on the use ofthese materials. J Monitoring and supervision by the MSD of departmental level health institutions and activities, and by the departmental authorities of municipal institutions and activities. This activity requires financing so that the members of the UGTFN can regularly carry out supervisory visits to the UGTFDsandthe referralnetworks. J Coordination meetings at the national level with the participation of the prefectures, SEDES, presidents ofthe municipalassociations, representativesof civil societies, UGTFN,UGTFDs, and MinistryofHealth. c. Development of a Monitoring and Evaluation System for SU SALUD. This sub-component will support the processes of evaluating S U SALUD's public policies, transparency, and accountability. It will also support an analysis of SU SALUD's local and departmental effectiveness. The main activities ofthis subcomponentinclude: J Determine the baseline. Establishing baseline indicators will provide an understanding of the initialenvironment into which S U SALUD i s beinglaunched. J Implementation of the medical-administration-financial software for SU SALUD. This software i s being developed by APL I1and maintains links with the SNIS. The implementation will be carried out in the 88 locations targeted by APL 111, and i s planned to finance, computer equipment, to carry out the installation of the software and to train the data-entry personnel, network managers, members of the SEDES, and medical, administrative and financial staff. The computer equipment included in this subcomponent will also be used to extend the utilization of the SNIS. J Expansion of the SU SALUD software for the incorporation of special reports for decision- makers and for the wider community. This tool is an application that will be developed once the software has been implemented, and will make it easy to generate unique for specific audiences. This process will include the collaborative participation by community actors inthe design phase of the software tool, in order to ensure its ease of use. J Measurement of the qualitv of care and user satisfaction in the target areas. Audits on achievement of performance indicators and satisfaction surveys regarding S U SALUD's activities on disease preventionand healthpromotion. J Suuuort for meetings for evaluation ofthe health insuranceat locallevelinthetarget areas. J Implementation of the local mass communication strategy to guarantee transparency in management(accountability). 52 Component 4. Project Administration(US$2.2million: US$0.9million IDA + UW.3 million Government) 113. The objective o f this component would be to support project administration with equipment, technical assistance, training, and operating costs to finance the administration o f the project, and financial and procurement audits. 114. As previously mentioned, the project would be executed through MSD's existing staff and structure, eliminating the PIU from earlier phases. The objective o f this component would be to support the project's coordination and administration within the MSD. Specifically, this component would finance the following: J Human resources to strengthen the MSD. Fourteen new professional positions will be filled, financed under declining contributions from the project (APL I11would finance loo%, the first year, and 80%, 60% 40% and 20% respectively inthe subsequent years. (US$474.000) J Office equipment. software and training (US$91.OOO) J Operating cost (US$61.OOO) J Financial audits (US$150.000); procurement audits (US$75.000); and other consultancies (US$50.000) 53 Annex 5: ProjectCosts BOLIVIA: EXPANDINGACCESS TO REDUCEHEALTHINEQUITIES-APL I11 Project Cost By Component and/or Activity IDA Government Total Project Cost By Component andor Activity us$ us$ us$ 1. StewardshipRoleofHealthAuthorities- EssentialFunctionsinPublicHealth 3.979.000 3.720.000 7.699.000 2.a Family, Community andInterculturalHealth executedby MSD 5.119.000 1.730.000 6.849.000 2.b Family, Community andInterculturalHealth executedby FPS 4.540.000 4.540.000 2.c FPS OperatingCost 259.000 259.000 3. HealthInsurance 3.201.000 980.000 4.181.OOO 4. ProjectAdministration 902.000 1.324.000 2.226.000 Total Baseline Cost 18.000.000 7.754.000 25.754.000 Unallocated 500.000 500.000 TotalProjectCosts 18.500.000 7.754.000 26.254.000 54 Annex 6: ImplementationArrangements BOLIVIA: EXPANDINGACCESS TO REDUCEHEALTHINEQUITIES-APL 111 Partnershiparrangements 115. There are no partnership arrangements envisioned for this phase of the project. Instead, project activitieswill focus on integratingproceduresas well as projectcomponents into GOB policiesinorder to ensure sustainability. Institutional and implementationarrangements 116. The project implementationwill be carried out based on centralizedplanning(Assessment and determination of needs) and for the most part civil works and procurement of medical equipment under component 2 will be implementedin a decentralizedprocessunder the responsibilityofthe municipalities and MSD-SEDES. MSD will be responsible for general coordinationand planningof the project, and FPSwill assistthe municipalitiesincarryingout procurementactivities. 117. The Project is to be implementedprimarily by the MSDwith the support ofthe FPS on activities relatedto health investmentsat the municipallevel.For this purpose, there will be a subsidiary agreement amongVIPFEMSDRPSandan inter-institutionalagreementbetweenMSDandFPS. 118. The organization structure defined for project implementationis being designed based on the structure of the MSD and the FPS, without the establishment of a specific ProjectImplementationUnit. Bothinstitutionswill be workingindependentlyfrom one another, but ina closely coordinatedmanner. MinistryofHealthand Sports(MSD) 119. The MSD through the Vice-Ministry of Health (Vow will have responsibilityfor the project's overall results. The VoH will have a small Technical CoordinationArea to coordinate with the Vice- Ministry of TraditionalMedicineandthe technical units, which are responsible for the implementation of all components and activities. The monitoring and evaluation system will be developed through a new Monitoring and Evaluation Unit to be created within the MSD. This Unit will embrace research and evaluation activitiesas well as the SNIS. 120. The project's administrative aspects will be responsibility of the Directorate of General AdministrativeAffairs in the MSDthroughthe Unit for ExternalFinancing(UCOFI) to be created. The UCOFI's specific responsibilitiesand operational procedureswill be detailed inthe Project's Operational Manual. The Manualalso will describe the flow of project coordinationprocesses among the technical and administrative units within the MSD and FPS. In the case of the FPS, all project activitieswill be managed through its own technical and administrative structure, taking into account the project implementationplanas well as the FPSown institutionalactionplanagreedwith IDA. 121. Since the Project will not have an independent unit, an underlyingobjective of this effort is to build the MSD's capacity to efficiently implement and administer its health programs and strategies, providingspecific technical support when needed. 55 122. At the regionaland local levels, the MSD, through the HealthInsurance Management Office, will strengthen its existing specific management insurance units, responsible for the supervision and compliance o f Project indicators. These units will work in close coordination with health networks and the SEDES, which depend on the prefectures. 123. The M S D will undertake procurement capacity assessmentso f the municipalities. Productive and Social Investment Fund- (FdwdodeInversibn Productiva v Social -FPS) 124. The M S D will identify the institutions which require civil works and medical equipment depending on the initial baseline analysis undertaken for the restructuring o f the referral networks and will prioritizetheir implementation 125. The municipalities will be the agencies in charge o f implementing investments for civil works, equipment and the supervision o f both. The FPS will coordinate and supervise with the municipalities on the execution o f investments. The municipalities will request financing for pre-investment or investment projects. Once the project investment is approved by FPS, the municipalities will be in charge of processing the biddingand procurement activities or delegating them to FPS. FPS' main role is ensuring that all activities meet technical quality standards and comply with safeguards and fiduciary requirements. Inthe case of medical equipment procurement, the MSD will be consulted to ensure compliance with its technical standards. FPS will also manage a dedicated account for the investments component and will receive a percentage o f the project investment amount, including municipalities' counterparts, to cover their operating costs. The percentage amount is included in the FPS-subsidiary agreement between the Government and FPS. 126. The Bank carried out an "Operational Review o f FPS" with the aid o f an international consulting firm. This review resulted inan action plan, which forms the basis for strengthening FPS' administrative and operational capacity and adjusting FPS' Operational Manual. FPS will operate under an Inter- institutional Agreement to be signed by MSD, which establishes, in addition to its legal obligations, clear performance indicators. 127. FPS Regional Offices. The FPS regional offices (at least one in each department) will undertake project ex-ante evaluations, monitor contractual integrity, conduct field supervision, and order payments to contractors inclose coordination with the MSD-SEDES. Municipal Governments 128. Local governments are key Project actors. They are legally in charge o f either providing or coordinating the provision o f infrastructure, equipment, services and assets, which the project intends to deliver. They will also co-finance the investments through agreements to be defined with the sector. 56 .......................................................................................................... ............................. .................................................. ................................... Ministryof Health Productiveand Social andSports(MSD) InvestmentFund(FPS) Unit for External Financing (UCOFI) Insurance Units ...............,...............................................,........,...,,,,........,,,,......,,..,...,. .......,......,,,,......,,........,,,,,,......,,,,,,.....,,,,,.... ........................................................................ .. .. Withinthe MSDand FPS, day-to-day project implementationwill beas follows Component 1- Stewardship Role of Health Authorities - Essential Functions in Public Health, will be carried out by different bodies: General Health Services Office; National Health Information System Unit, Social ProductiveandInvestment Fund. Component 2 - Familiar, Community and Intercultural Health, activities that will be developed through the General Health Services Office; Health General Insurance Office and the Vice-Minister o f Traditional Medicine. Component 3 - Health Insurance, under the responsibility of the General Management Insurance Office and the public insurance unitso fthe MSD. Component4 -Project Administration; MSD's General Administrative Office, FPSAdministrative Office Monitoring and evaluation of outcomesh-esults 129. Unlikethe previous two phases of this program, the execution of APL I11will not be carried out by an independent executing unitwithinMSD.Instead, all activities related to the execution, supervision, monitoring, and evaluation of the project will be integrated into the regular activities of the MSD (see institutional arrangements paragraph above). The Vice-Ministry o f Health's Unit o f Coordination of 57 Projects with External Financing will be responsible for general project coordination and supervising project monitoringand evaluation. 130. SNIS has been designated as the key player for basic data collection, systematic processing and preparation of indicators. Through Component 1, the project will support the development of the SNIS in order to increase its capacity to gather, analyze and manipulate data. This upgrade of the system is crucially needed, so that robust and accurate health data will be available for a wide range of reporting, including result monitoring. This will require a systematic collection of data, as well as periodic audits. Finally, the project design includes an impact assessment, which will be done with the participation of an external consulting firm. 131. Monitoring and Evaluation (M&E) for the activities include an M&E system in the Ministry of Health and an InvestmentAdministrative System (SAI) inFPS. Both systems will collect data to measure project impacts and verify the intermediate outcome and impact indicators. Monitoring the project progresswill be done by assessing progress in: (i) institutional strengthening (ii) activity implementation, and (iv) overall project implementation. Evaluation will focus on the achievement of the outcome indicators, includingthe measuring ofthe impact of the project on the lives of the beneficiaries. 58 Annex 7: FinancialManagementandDisbursementArrangements BOLIVIA: EXPANDINGACCESS TO REDUCEHEALTHINEQUITIES-APL I11 Executive Summary 132. As part ofthe preparationprocessof the Health Sector ReformProject, Third Phase(APL 111), a financialmanagementassessmentwas performedto determinethe adequacyofthe Ministryof Healthand Sports (Ministerio de Sulud y Deportes, MSD) financial management arrangements to support project implementation. The assessment was performed in accordance with OP/BP 10.02 and the Manual "Financial ManagementPractices in World Bank FinancedInvestment Operations". The objectiveof the assessmentwas to determinethe adequacy ofthe MSD's capacity to properlymanageand account for all project proceeds and to produce timely, accurate and reliable financial statements for general and Bank special purposes. As a result, an action plan was agreed with the MSD to mitigate the risks identified duringthe assessment. 133. In addition, a financial management capacity assessment was conductedfor the Fund for Social and Productive Investment(FPS), the entity that will implement the renovationof health facilities, public housing and purchaseof medicalequipment activities under subcomponent 2 (a) of Component 2 of the project. This assessment is basedon the results of the Operational Reviewof FPS whichwas conducted with the support of an internationalconsulting firm contractedbythe Bankat the endofFY07.As a result of the review, a time-boundaction planincludingmitigatingmeasures to address identifiedexternal and internal risks was agreed with FPS to strengthen its operational performance, including the internal controlenvironment. The agreed actionplanwith FPS is being followedthroughthe recently negotiated SecondParticipatoryRuralInvestmentProject (PDCR). Withinthe strengthening actionplanagreedwith FPS the followingkey actions are contemplated:i)strengthening ofthe informationsystemby enhancing programming and budgeting and assist the regional offices to prepare program and budgets; ii) establishmentof a monitoringand controlunit; iii)a streamlined sub-projectcycle, and(iv) processesand procedures in the framework of local requirements includingthe design and implementationof punctual internal controlmechanisms. Overall Conclusion 134. Bolivia's country Public FinancialManagement(PFM) risk ratingis substantial, accordingto the CFAA publishedin January 2006. The advances reached towards improvingthe PFM, have been offset by several weaknesses found inthe unevenapplicationofthe legalframework, particularlywith regardto financial reportingand internal controlenvironment. The situationat sub-nationallevelis not different. 135. Project design and implementation arrangements require that robust financial management systems are in place, so as to ensure that associated risks are adequately being addressed and that the implementingentities will be able to provide the Bank, the Borrower and other interestedparties with accurate and timely information regarding project resources, expenditures and activities. To the extent possible, for the implementationof the projectactivities, existingarrangements within bothentitieshave been used, strengthening them as neededin order to guaranteetheir adequacyto ensure projectfunds are usedeconomically, efficientlyand for the intendedpurposes. 136. In the case of the MSD given that, unlike the previous two phases of this program, the implementation of APL I11will not be carried out by an independent project implementation unit within the MSD, but ratherbasedonthe organizational structure ofthe MSD, the project's administrativeaspects will be the responsibility of the Directorateof General Administrative Affairs (DGAA) in the MSD. 59 Taking into consideration that this will be the first Bank operation managed directly by the DGAA several mitigation measures have been proposed to address identified risks which are described in the Risk section below. Actions pending completion are detailed in an action plan (presented in this annex). RegardingFPS, the action plan agreed with the Bank (as mentioned above) is being followed through the implementation o fthe recently negotiatedPDCR project. 137. As o fthe date o fthis document, both institutions, MSD and FPS, have demonstratedcommitment interms o fcompletingthe key actions agreedunder their respective actionplans. 138. The project inherent risk i s rated as substantial and the control risk as moderate. Consequently, the project overall residual FMrisk rating is considered as moderate, after the successful implementation o f the mitigating measures included in the project design for M S D and the completion o f key actions of the strengthening plan agreed with FPS and being monitored through the PDCR project. However, the risk profile of the project can be adversely affected if implementing entities are not able to maintain the proposed arrangements, including qualified staff, throughout the project's life. 139. On the basis o fthe review performedand expected implementation o fthe respective action plans, the financial management team concludes that the proposed FM arrangements -as designed - can be considered acceptable to the Bank, subject to their effective and successful implementation. SUMMARYOFFINANCIAL MANAGEMENT ASSESSMENT 140. The following sections summarize the results of the assessment o f the proposed financial management arrangements o f the MSD, and the agreements reached for the implementation of WE3 projects under FPS, following the recommendations o fthe Operational Review o f FPS'. RiskAssessment and Mitigation 141. The risk assessment presented below, constitutes a summary of the issues related to the project as a whole, as o f the date of the capacity assessment and on the basis o f the Bank's knowledge of both proposed implementingentities, the M S D and FPS. RiskMitigating MeasureIncorporated into Agreements, Residual Project Design Condition of Rating Negotiations, Board or Effectiveness (ym) INHERENTRISK Country level Country's PFMrisk S The project implementation arrangementsunder Draft Ministerial rating (including the differentcomponentshavebeenreviewedand Resolution creating sub-nationallevel) evaluated, making sure clear roles and the UCOFIwithin is substantial." responsibilities are definedandwill be includedin DGAA issued by the OperationalManual. Negotiations. MSD's creationofaunitfor the financial managementofthe project (UCOFI) andreporting OperationalReview ofFPS, June 29,2007 (Draft Report). lo2004 Bolivia Country Financial Accountability Assessment 60 to the DGAA will be supportedwith qualified staff. A project component also includes managementcapacitydevelopmentfor the MSD, SEDES andreferral networks.MSDwill also createtechnical coordinating and monitoringunits at central level. Inthe caseofFPS, astrengtheningAction Planis under implementationandwill be followed through the PDCRproject. Inadequatesalaries RegardingFPS, key F Mexperiencedstaff -at KeyF Mstaff inthepublic sector, M Central Office- havebeenmaintainedduringthe selectedprior to due to wage last year. The strengtheningFPS action plan disbursements reductions, limit the includesspecific training on Bankprocesses and Disbursement (Y) capacityto attract procedures. andmaintain qualified staff The MSDhas committed to establisha unit, UCOFIoperating (UCOFI), within the DGAA for the financial effectively management andprocurement aspects ofthe Dated Covenant:90 project. UCOFIwill be staffedwith qualified days after professionalsto be selected following Bank effectiveness Cy) procedures; therefore the TORSofkey staffwill be approvedby the Bank.Although the salary levels will be similar to the ones applied for the rest of the public sector, the staff will be financedwith project funds. Entity level FPS: Several An OperationalReview ofFPS was carried out Compliancewith key weaknesses inthe S with the support of externalconsultants, financed actions of Action internal control and directly contractedby the Bank.As result of Plan is being environmentand suchreview, an integral strengtheningactionplan followed through the other deficiencies has beenagreedwith FPS. Key issues and PDCR project. on FPS mitigatingmeasureshavebeenincorporatedinto performancewere the Action Planwhich includesstreamlinedsub- identified as part of project cycle, better definedroles and supervisionof Bank responsibilities of different actors (e.g. municipal projects and other governments), establishmentof amonitoring & specializedreviews control unit, and a strengthened information conductedwithin system, with emphasis on control environment. the lastyear MSD: This willbe MSDis being supportedinthe projectpreparation MSDDraft the first Bank through the PIUofthe APLII. Support includes the Operationalmanual project where development ofan OperationalManual that will completedby financial incorporatethe definition ofroles and Negotiations and managementwill be responsibilities ofthe differentactors as well as final version institutionalized appropriate internal control procedures. The unit approvedby within the Ministry, beingcreated(UCOFI) is expectedto undertake effectiveness. as previousphases the implementation of fiduciary aspects of future Effectiveness (Y) ofthe APL program donor or multilateral financed-project. As such it have beenmanaged i s expectedthat some humancapacitywill be through a PIU absorbed &omthe unit currently implementing the Functionsand draft APL 11. Inaddition, the selectionofkey F M staff TORSofkey staff will follow Bankproceduresandtherefore TORS approvedby the Bank 61 will be approvedby the Bank. by Negotiations. Project level S Project Inadditionto the creationofUCOFIwithin implementation DGAA, a monitoring andevaluationunitwill be MSDto issue internal includesactivities createdwithin MSD.The DGAA will assign ministerial to be implemented administrativecoordinators in5 regional areas resolutionsapproving at a decentralized within the project focused area. Clear definition of the creationand levelby boththe roles and responsibilities,and coordination among structures of UCOFI MSDandFPS. The the unitswill be definedanddocumentedinthe and technicaland project involved OperationalManual. coordinatingunits by different regional negotiations. and local levels of government, as well as the involvement ofthe SEDES, and Internal controls and procedures for payments to DraftOperational medicalbrigades medicalbrigades andtraining are documented in manualcompletedby within the referral the OperationalManual Negotiations and networks covering final version mainly rural areas. approvedprior by effectiveness Effectiveness Cy) FPS will implement FPS will implementthis subcomponent through its Draft inter- the renovationof own administrativeand operational structure and institutional healthfacilities, inaccordancewith its OperationalManual. The agreements between public housingand selectionofthe renovationofhealth facilities, FPS andMSD purchase of medical public housingand purchaseof medical equipment reviewedby the Bank equipmentactivities activities will be basedon a diagnostic conducted beforeNegotiations under by the MSD. The roles and responsibilitiesofthe and signedbefore subcomponent 2 (a) FPS will be included inthe MSDOperational effectiveness ofthe project Manual andthe inter-institutional agreement Effectiveness (Y) betweenMSDand FPS. CONTROLRISK 62 Budget: FPS' M FPShas preparedspecificproceduresfor the Compliancewith the currentbudget preparationof operationalandfinancial requiredactions ins proceduresestablish programming. Thoseprocedureswill be assisted beingfollowed that budget with a customizedprogrammingmoduleto be throughthe PDCR modificationsbe includedinSAP (FPS' informationsystem), that project. approvedby DUF. will allow RegionalOfficesto preparedetailed Experiencehas programandbudgetallocationat sub-project demonstratedthat level.This enhancedprogrammingprocess, if suchprocessmay properlyimplemented,shoulddiminish considerablydelay considerablythe numberofbudgetmodifications the implementation requiredfor the Project. o f sub-projects, whena budget Budgetfor the subcomponent to be implemented Draft Subsidiary modificationis by FPSwill be part of FPS' institutionalbudget, agreementbetween required. basedonthe annualoperatingplanofthe the Republic of activitiesto be implementedby FPSandapproved Boliviaandthe FPS by MSD reviewedby the Bank byNegotiations, and signedby effectiveness. Effectiveness (Y Inter-institutional agreementbetween FPSandMSDsigned by effectiveness. Effectiveness (Y ). Budget(other than M FPShas workedonspecific streamlinedbudgeting, StrengtheningAction modifications) andaccounting,processesandproceduresinthe Planfor the FPS Accounting framework ofexistinglocalrequirementsand informationsystem InternalControl strengtheningthem as needed, includingthe design beingfollowed andimplementationofpunctualinternalcontrol throughthe PDCR mechanisms. The strengtheningofthe budget project. moduleis includedinthe FPSstrengtheningofthe informationsystem. Inthe past, the A computerizedaccountingsystemthat MSDIntegrated MSD'sbudgets complements SIGMA will be implemented,to financial havebeen assistthe MSDwith the accountingandbudget managementsystem overestimated,and programmingandmonitoring. The accounting is implemented implementationhas systemof APLII will be usedtemporarily until the within6 monthsof beendelayeddueto new system is implemented. effectiveness. reprogramming. Dated covenant (Y) Reviewsfromthe To ensure compliancewith proceduresagreed, the MSD's legal UCOFIreportingto DGAA will coordinatewith A legalcounselwill counselhave the MSD's planningoffice andthe technical be contractedand resultedinthe :oordinating unitthe opportune andrealistic dedicatedto APLIII. delays ofthe preparationofannualoperatingplans andits processingof respectivebudget. modificationsor amendmentsto the budget. 63 FundsFlow M Inthe framework oftheproceduresset by SIGMA andthe SingleTreasuryAccount, funds flow The project arrangementshavebeendefinedfor FPSand involves different MSD.Thoseproceduresavoidunnecessarylayers. regionalandlocal As the specificregulationsfor the operationofthe levels o f SingleTreasuryAccount inU S dollars are issued government,as well bythe Government,the flow of funds wouldneed as the involvement to be slightlyadjusted. o f the SEDES, and medicalbrigades The regionaladministrativeofficers will manage Draf?Operational withinthe referral reasonablerevolvingfunds (up to $25,000) to manual completedby networkscovering cover operatingexpensesofthe medicalbrigades Negotiations and mainlyruralareas andlocaltrainings, basedon the activities final version approvedinthe annualoperatingplan. approvedby Management ofthe funds for the brigades effectiveness. operatingexpensesandtraining are documentedin Effectiveness the OperationalManual. FinancialReporting M Formatandcontentof InterimFinancialReports Reports issued andFinancialStatementshavebeenagreedwith automaticallyl?om the Bank for bothentities. corresponding system. Inthe case ofFPSthe strengtheningActionPlanof the informationsystem(SAP) includesthe generationofthe financial reportsautomatically fromthe system. The informationsystemto be implementedby MSDto complementSIGMA will require generatingthe IFRsdirectly from the system. Auditing M Audit scope for financial auditswill require Draft Audit ToRs interimvisits aimedat evaluatinginternalcontrol reviewedby the Bank for bothimplementingentities to ensure, among beforeNegotiations. 64 linkagesbetweenphysicaland financial progress. Itwill also require on site visits, inthe case ofFPS to RegionalOffices, and inthe case o f MSDto decentralizedMSDUGTFD units. Separate audits will be contractedfor the Acceptable audit respectivepart(s) ofthe project implementedby f m s selectedsix each entity, and consequentlyseparate audit monthafter reports for FPSandMSDwill be issued. effectiveness. Weaknessesand Action Plan 142. All actions relatedto FPS' institutional strengthening action plan are being addressed through the PDCR project inthe framework of the strengtheningaction plan agreed with FPS. Inthe case of MSD an action plan to strengthen the UCOFI's capabilities for the financial management of the project has been agreed, as follows: Deadline for Action Responsible Implementation 1. New integrated accounting system implementedand MSDDGAA 6 months after effectively operating effectiveness 2. Chart of account finalized and automated in the MSDDGAA Prior to integrated accounting system disbursements 3. Finalversion ofthe operational manual adopted MSDDGAA Prior to project effectiveness 4. Establishment of UCOFI and technical and monitoring MSDDGAA 90 days after coordinatingunits effectively functioning effectiveness 5. Inter-institutional agreement between MSD and FPS. MSDDGAA Prior to pro-ject effectiveness 6. Appointment o f external auditors MSDDGAA Within the next 6 months after project effectiveness FinancialManagementImplementationArrangements ImplementingEntity, OrganizationStructureand Staffing 143. The MSD has overall responsibility for project implementation and will work in coordination with FPS on the activities related to health investments at the municipal level, which are defined under sub-component 2 (a) of the project. 144. Following the implementation arrangements defined in section 1II.B o f this PAD, it has been agreed that the financial managementtasks will be undertaken by: a) the DGAA inthe MSDthrough the creation of a Unit for External Financing (Unidadde Coordinacion OperativaFinancierade Programas 65 y Proyectos UCOFI); and b) FPS for the Renovation of Health Facilities, Public Housing and Purchase - of Medical Equipment under the activities in the subcomponent (a) of Component 2. UCOFI's specific responsibilities and operational procedures will be detailed in the Project's Operational Manual. The MSD's manual also will describe the flow of project coordination processes between the technical and administrative unitsinsidethe MSD. 145. FPS project activities will be managed through its own administrative structure, taking into account the institutional implementationplan agreedbetweenthe FPS and the Bank. 146. The following sections describe the financial management arrangements for each entity, identifying, as appropriate, the required additional actions to complete the design of fully acceptable financial managementarrangements. Ministry ofHealthand Sports (MSD) 147. The UCOFI reporting to the DGAA, to be created, will be integrated by a coordinator supported by three officers inchargeof budgeting and accounting, treasury, and procurement, and assistants, as well as administrative officers, inat least 5 regions of the project focused area. The latter will be located at the SEDES but reporting to UCOFI. To support project implementation and establishment of the UCOFIthe positions will be funded under the project. The terms of reference of the new positions will be reviewed and approved by the Bank. As the rest of the positions under the UCOFI, key FM staff will be selected through a competitive process. 148. In compliance with local requirements, some specific administrative and financial tasks -annual budget recording- need to be coordinated with the DGAA. As appropriate, those requirements will be reflectedinthe project's Operational Manual. Programmingand Budget 149. The preparation ofthe annual program and budget will follow localregulations established bythe Ministry of Finance11, and specific regulations and instructions that may be issued by the Ministry of Health and Sports, through its General Administrative Unit. However, those general procedures will be complemented by additional guidelines, as documented in the operational manual, to clearly identify the budgetary items under which project specific activities need to be recorded, in accordance with their nature. In defining those procedures, the following issues will need to be considered in order to allow adequate budget control: 1) timely preparation of programming, budget and procurement plan, establishing a clear relation among them; 2) proper recording of the approved budget in the financial management system, not only following Government required classification (partidas por objeto del gusto), but also a classification by project component and cost category (as needed); and 3) timely recording of commitments and payments, to allow an adequate budget monitoring and also provide accurate information on project commitments for programmingpurposes. Accounting-InformationSystem 150. The MSD has to comply with the Governmental Accounting Standards. Therefore, the project will use the Chart of Accounts established by the Accountant's General Office, followed by SIGMA (Government's integrated financial management system). This chart of accounts will need to be complemented with a more functional classification including project components/sub-components and 11Law No. 2042, SupremeDecree No. 27849 datedNovember 12,2004 -Regulations for Budgetary Modification. 66 cost categories. Projecttransactions and preparationof financial statements will follow the cash basis of accounting. 151. The project will benefit from the use of SIGMA, and the Single Treasury Account (CUT) to process payments.However, in order to ensure adequatemonitoringof projectactivities, SIGMA will be complemented by an integrated ring-fenced system (budget, accounting and procurement) that will be designed and implementedto meet projectneeds. To start implementationof phase I11and untilthis new system is efficiently functioning, the projectwill use the system currently usedby the APLII project, the latter althoughmeet minimumrequirements, has some shortcomings due to the fact that i s outdatedand is not user friendly. The design of the new system will allow the use of a customized classification of project expenditures and the subsequent preparation of project financial reports and withdrawal applications ofcredit proceeds.Arrangementsare beingmadeto ensure that the new systemmeetsproject specific needs, including its accounting manual, chart of accounts and format and content of financial reports, andallowsmigrationofinformationfromthe APLII accounting system. Internal controls 152. Specific processes and procedures, for administrativeand financial tasks will be documented in the operational manual, including the definition of roles and responsibilities of different levels, segregation of duties and relevant internal controls, especially for payment purposes at UCOFI and the revolvingfunds management by the regional administrativeofficers. These procedures will also reflect the internal control mechanisms in terms of authorizationand approval, reviews and approvals by the technical coordinatingunit, and specific documentationrequiredineach step. Financialreporting 153. The interimfinancialreports (IFRs) will specifysources andapplications of projectresources and a statement of investment by project component, reporting the current semester and the accumulated operations against on-goingplans. The reportswould includecreditproceeds and local funds providedby the GOB, so as to provide information on the project as a whole. The design of the new accounting systemwill incorporatethe preparationof the IFRs directly fromthe integrated system. Thesereports will be prepared on a semi-annual basis and submitted to the Bank within 30 days after the end of the semester.. The reports will be prepared in local currency and U S dollars, and in compliance with the accountingprinciplesinBolivia.The specific details ofthe InterimFinancialReportshavebeendiscussed andagreedbeforenegotiations. Audit 154. Annual audit reports on project financial statements, including management letter will be submitted to the Bank, within six months of the end of the Borrower's fiscal year (December 31). The audit should be conducted by an independent audit firm acceptable to the Bank and under terms of referenceapprovedby the Bank.Audit cost would be financedout of credit proceeds and selectionwould follow standardBank procedures.The scope of the fiscal year audit would be defined by MSD's team in agreement with the Bank based on project specific requirements and responding, as appropriate to identifiedrisks. Audit Report DueDate 11Proiect snecific financialstatements June 30 SOE June 30 67 FUNDFOR SOCIALAND PRODUCTIVEINVESTMENT (FOND0NACIONAL DE INVERSION PRODUCTIVA YSOCIAL-FPS) 155. Likewise the rest of the projects for which FPS undertakes the municipal infrastructure component, FPS subproject cycle will rely on municipalities for execution of subprojects. Under such arrangements, FPS' role will focus on ensuring technical quality of the renovation of health facilities, public housing and purchase of medical equipment, activities under subcomponent 2.(a) and compliance with fiduciary requirements. These tasks will be performed through FPS' existing institutional and financial managementarrangements, both at central and regional level. 156. Within the FPS structure, the Finance Management Unit will assume overall responsibility for financial management tasks, through specialized staff, both at central and regional offices. Although FPS has gained sufficient experience in external financed projects, under different sources of financing -WB, IDB, and others- additional guidance will be requiredespecially at RegionalOffices, givenstaff rotation, and more important the changes that are taking place in terms of policies and procedures. FPS' strengthening action plan provides for staff training and other capacity buildingefforts. 157. As a result of the Operational Review conducted with support of an international consulting firm contracted by the Bank, a time-bound action plan has been agreed to strengthen FPS operational performance, including the internal control environment and mitigating measures to address identified external and internal risks. Key financial managements arrangements are detailed below, indicating, as appropriate, the specific arrangements agreedwith the Bank. Programmingand Budget 158. The preparation of the annual program and budgetwill follow localregulations establishedby the Ministry of Finance12, and specific regulations and instructions issued by VIPFE for public investment, and Ministry of Finance and Directorio Unico de Fondos (DUF), as applicable. In addition to the requirements and tools available in SIGMA and SISIN for the recording and control of municipal subprojects; a customized programming module is being developed as part o f FPS information system (SAP). This tool will assist FPS in preparing a detailed program and budget allocation at the subproject level, which will also be used for monitoring purposes. On the basis of its former experience, FPS will have to issue specific procedures and guidance for Regional Offices to ensure an efficient and smooth administration of sub-project budget and an adequate control and monitoring of budget execution. While definingthose procedures, the following issues will need to be considered in order to allow an adequate budget control: 1) timely preparation of programming, budget and procurement plan, establishing a clear relation among them; 2) proper recordingof the approved budget inthe financial managementsystem, not only following Government required classification (partidus por objeto del gusto), but also a classification by project component and cost category (as needed); and 3) timely recording of commitments, payments and accruals to allow an adequate budget monitoring and also provide accurate information on project commitments for programmingpurposes. 159. A key issue to be definedby FPS is the specific procedures and requirement related to budget modifications at the subproject level, and the interaction with VIPFE, the DUF.Once this is finalized, the Bank would evaluate the proposed arrangementswithinthe framework of Bank-financedprojects. '*Law No. 2042, Supreme Decree No. 27849 datedNovember 12,2004 -Regulationsfor BudgetaryModification. 68 Accounting 160. In compliance with Government Accounting Standards, FPS uses the Chart of Accounts established by the Accountant's General Office, followed by SIGMA (Government's integrated financial management system). Being a decentralized entity, FPS is able to issue consolidated general purpose financial statements (balance sheet, and statement of income and expenditures). However, and although SIGMA allows registration at sub-project level, suchchart of accountswill needto be complemented with a more functional classification including project componentshb-components and cost categories, as needed. Given the nature of the entity and its information needs, FPS has developed an information system (SAP for its name in Spanish) that allows the recording of every single subproject through out its subproject cycle. The interface developed between SAP and SIGMA allows that each advance certificate (plunillu) approved in SAP, automatically generates a record in SIGMA. Following the procedures established in SIGMA, upon completing the required approval and authorization process, payments are executed through the SingleTreasury Account (CUT) inlocal currency. Project transactions are therefore recorded in both systems, SIGMA following the accounting and budgeting classification used by the Government and in SAP, following a more functional classification of project activities by components/subcomponents. 161. On the basis of the recommendations emerging from the Operational Review, FPS is currently working in strengthening its information system (SAP), to ensure that it meets the requirements in terms of internal controls, programming, and financial reporting. Internal controland internalaudit 162. Followingthe recommendations of the Operational Review, FPS is in the process of reviewing and adjusting, as appropriate, its operational processes and procedures, including fiduciary arrangements -both financial managementand procurement- with the main purpose of strengtheningthe internal control environment and, at the same time, ensuring an efficient and smooth implementation o f subprojects. As part o f such process, the sub-project cycle has been streamlined, and roles and responsibilities of different parties involved in the implementation of subprojects -municipalities, sectors, Prefectures -throughout subproject cycle have been clarified and better defined towards avoiding duplication, and enhancing accountability. 163. Key internal control mechanisms and additional mitigating measures to address identified risks have also beendiscussed and agreed as part of FPS' institutional strengthening actionplan (resultingfrom the Operational Review). Interim progress of the implementation of key actions will be followed-up through the implementation of the PDCR project. 164. Inaccordancewith localregulations, the project is also subjectto FPS' InternalAudit Unit, as per the annual audit program defined bythis unitapproved by the Comptroller's General Office. FinancialReporting 165. Taking into account the considerations made in the accounting section, it has been agreed that SAP will also be adjusted to allow the direct issuance o f specific interim financial reports and financial statements. Those interim financial reports should specify sources and applications of project resources and a statement of investment by project component, reporting the current quarter and the accumulated operations against ongoing plans. The reports will include credit proceeds, and counterpart contributions -municipal and prefecture's- and other sources as required. Although core content of financial reports has been agreed, specific content and format still need to be defined, reviewed and finally developed in the information system. The final format and content of InterimFinancial Reports have been agreedwith the 69 Bank.Those reports wouldbe preparedon a semi-annualbasis and submittedto the Bank within 30 days ofendof semester. Auditingand ExternalOversight 166. Annual audit reports on specific projectfinancial statements-including all sources of financing- and corresponding management letter should be submitted to the Bank, within six months of the end of the Borrower's fiscal year (December 31). The audit will be conducted by an independent audit firm acceptable to the Bank and under terms of reference approved by the Bank. Project audit cost will be financed out of credit proceeds and selection would follow standardBank procedures.It has been agreed that scope of the audit would include interim visits to review the operation of specific internal control arrangements, as appropriate, especially at the regionallevel, includingon-site visits to sub-projects on a sample basis. I Audit ReDort I DueDate I 1) Continuingentity financial statements June 30 2) Projectspecific financial statements June 30 3) Specialopinions SOE June 30 I ~ ~~ I Compliancewith OperationalManual June 30 167. FPS has agreed to publishon its website all contract awards, includingthe name of the project, name of the company and amount. This is being followed through the Second Participatory Rural InvestmentProject. FUNDSFLOW AND DISBURSEMENT ARRANGEMENTS 168. Considering the results of the assessments, the following disbursement methods may be used to withdraw funds fromthe credit:(a) reimbursement,(b) advance, and(c) direct payment. 169. Under the advance method and to facilitate project implementation, a segregated Designated Account (DA) in U S dollars would be opened and maintainedin the Central Bank of Bolivia inthe name of the project, for each implementingentity - MSD and FPS. These accounts would be managedby the UCOFI reporting to the DGAA within the MSD and, by FPS, respectively.Therefore, they will have direct access to funds advanced by the Bank to these DAs. Funds deposited into the DAs as advances, would follow Bank's disbursement policiesand procedures, as described inthe Disbursement Letter and DisbursementGuidelines. 170. Currently the Designated Accounts in the Central Bank of Bolivia are segregated for each operation (i.e credit or Trust Fund) financed with multilateral or donor funds. However, the Bolivian Governmenthas issueda SupremeDecreeI3that establishesthe operationof a Single TreasuryAccount in U S dollars (CUT-ME) in the Central Bank of Bolivia. With the establishment of the CUT-ME, the proposal is that credit proceeds are directly deposited in this account, and similar to the CUT in Bolivianos, the CUT-MEwould allow the opening of individualLibretas under the name of the project from which they will have direct access to funds advanced by the Bank to be used for project eligible expenditures. l3SupremeDecree No 29236.dated August 22,2007. 70 171. Under the arrangement described above for the CUT-ME, it is expected that implementing entitieswill be able to process payments in US dollars from the Libreta inthe CUT-MEwhen required; however, to process payments in local currency, funds would still needto be transferred from the CUT- MEto the correspondingLibreta inBolivianos,followingthe proceduredescribedabove. 172. As of the time of this assessment, specific regulations for the operation of the CUT-MEare still being worked out by the Vice Ministry of Treasury and have not been issued yet by the Ministry of Finance. Therefore, any changes to current arrangements regarding the Designated Account for each implementingentity will be reflectedthrough an amendmentto the DisbursementLetter as appropriate in the near future. 173. Taking into consideration that both implementingentities use SIGMA and the Single Treasury Account (CUT) in compliance with local regulations, a specific Libretas within the CUT would be exclusivelyopenedfor credit funds and it wouldbe usedto processpaymentsinlocal currency, following the establishedmechanism,whichhas provedto functionefficiently for other projects. Disbursementsfrom the WB and supporting documentationfor withdrawal applications Ministry of Health and Sports MSD - 174. The ceilingfor advancesto be made into the DA would be USD1,500,000. The reportingperiod to documenteligibleexpenditurespaidout of the DA is expectedto be on a monthlybasis. 175. Supporting documentation for documenting project expenditures under advances and reimbursement methods would be records evidencing eligible expenditures (e.g. copies of receipts, invoices)for paymentsfor consultant services against contracts valued at USDlO0,OOO or more for firms, andUSD25,OOO or more for individuals;for paymentsfor goods against contractsvaluedat USD200,OOO. For all other expenditures below these thresholds, includingoperating costs, supporting documentation for documentingprojectexpenditureswill be StatementsofExpenditures(SOEs). 176. Documentation for all consolidated SOEs will be maintained for post-reviewand audit purposes for up to oneyear after the final withdrawalfromthe credit account. 177. Direct Payments supporting documentation will consist of records (e.g.: copies of receipts, supplier/ contractors invoices). The minimum value for applications for direct payments and reimbursementswill beUSDlO0,OOO. FPS 178. The ceilingfor advancesto be made into the DA would be USD 1,000,000. The reportingperiod to documenteligibleexpenditurespaidout ofthe DA is expectedto be on a quarterly basis. 179. Supporting documentation for documenting project expenditures under advances and reimbursement methods would be records evidencing eligible expenditures (e.g. copies of receipts, invoices)for payments for consultant services against contracts valued at USD100,OOO or more for firms, and USD25,OOO or more for individuals; for paymentsfor goods against contractsvalued at USD200,OOO or more, for payments for civil works against contracts valued at USD3,000,000 or more. For all other expendituresbelowthese thresholds, supportingdocumentationfor documentingprojectexpenditureswill be Statements of Expenditures (SOEs). Customized SOEs would be used for reporting FPS operating costs. 71 180. All consolidated SOEs documentation will be maintained for post-reviewand audit purposes for up to oneyear after the final withdrawalfromthe credit account. 181. Direct Payments supporting documentation will consist of records (e.g.: copies of receipts, supplier/ contractors invoices). The minimum value for applications for direct payments and reimbursementswill beUSDlO0,OOO. Disbursement of FPS' operating costs 182. Following the recommendations of the Operational Review, FPS' administrativecosts will be disbursed following an output-baseddisbursement mechanism, which consists of disbursingon the basis ofoutputsupto 5% ofthe total cost ofthe subproject for activitiesimplementedat municipallevel. Inthe past, a similar mechanism was followed, except that disbursements were based only on payments. However, this mechanismwas distortedcreating a negative incentive, which would affect the quality of the sub-projects.The 5% is subject to review within one year of negotiation, based on the results of the evaluationofthe FPS' costs. 183, The term subproject inthis section refers to the activitiesundertakenby FPS for the renovation of healthfacilities, public housingand purchase of medical equipment, activitiesunder subcomponent2.(a). The subprojects implemented by FPS will be based on the diagnostic to be conducted by the MSD throughrequestchanneledbythe municipalities. 184. This 5% will be disbursedas follows: i)2.25% whenthe sub-project contracthas beensigned; ii) 2.25% during sub-project execution and on the basis of financial execution; and iii)0.5% when the sub- projecthasbeencompletedandadministrativelyclosed. 185. To this end, FPS will prepare customized SOE report detailing: i)the list of sub-projects with contracts signed; ii)the amounts disbursed for each subproject under execution for a defined period of time; iii)the list of sub-projects completed with administrativeclosing. These reports will be submitted periodically to the MSD, which would express conformity on the outputs completed by FPS, per an agreeduponprocedure. 72 Allocation of CreditProceeds Percentageof Amount of the Credit Expenditures Allocated to beFinanced Catepoty (exwessed in SDR) (inclusive of Taxes) (1) Good, Consulting Services, Training and MSDOperating Costsfor Part 1ofthe 2,500,000 100% Project. (2) (a) Good, works, consulting Services, and audits under FPS 6,100,000 100% (b) FPS Operating Costs 200,000 5% of the total cost of (c) Good, consultant services, training and the works andgoods MSDOperating Costs for Part2 ofthe underthe Project paid in Project; tranches as set forth in the Operational Manual (3) Good, consultant services, Training and MSDOperating Costsfor Part 3 ofthe Project 2,000,000 100% I (4) Good, consultant services (including audits) and MSDOperating Costs for Part 4 of 600,000 100% the Project (5) Unallocated 300,000 TOTAL AMOUNT 11,700,000 SUPERVISION PLAN 186. On the basis of the results of the assessments, identified risks and recommendations of the financial management assessment, project supervision will include desk review o f IFRs, and annual audited financial statements, and on site visits to be performedon a semi-annual basis duringthe first two years of the project, both for MSD and FPS. From the third year, supervision would be performed on an annual basis, unless otherwise required. 73 Annex 8: ProcurementArrangements BOLIVIA: EXPANDINGACCESS TO REDUCE HEALTHINEQUITIES-APL I11 A. General 187. Procurement for the proposed project would be carried out in accordancewith the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004, and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004, both versions updated in October 2006, and the provisions stipulated inthe Legal Agreement. The various items under different expenditure categories are described below. For each contract to be financed by the Credit, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame, are agreed between the Recipient and the Association in the Procurement Plan. The Procurement Plan will be updated at least annually or as requiredto reflect the actual project implementation needsand improvements ininstitutional capacity. 188. Procurement of Works: Works procured under this project would include improvement and rehabilitation of health facilities, such as hospitals, ambulatory health centers, clinical laboratories and blood banks. All procurement of works will be carry out by the municipalities under the supervision of FPS. As part of the project, MSDwill define the needs and location of civil works. Preliminary estimates done for preparing the Procurement Plan indicate that most of the civil works are small in scope and that no ICB would be required. In any event, the Procurement Plan will be updated after completion of the MSDassessment. 189. Procurement of works will be done usingthe Bank's StandardBidding Documents (SBD) in case of International Competitive Bidding (ICB) procurement. For National Competitive Bidding (NCB) or Price Comparison (PC) methods, documents agreedwith or satisfactory to the Bank will be used. 190. Procurementof Goods: Goods procuredunder thisprojectwould include medicalequipment for health facilities and office equipment following MSD specifications. Procurement of goods will be done usingthe Bank's SBD for all ICB procurement. For NCB or Shopping (S) methods, documents agreed with or satisfactory to the Bankwill be used. 191. Procurement of non-consulting services: The project will include logistics for training activities to provide education to the users of the National Health Information System, and for mass communication on health promotionand prevention. N o other non-consulting services are to be procured under the project. All non-consulting services would be procured in accordance with the Bank's Procurement Guidelines, as appropriate. This procurement would also be carried out usingBank's SBDs or National SBDs agreedwith or satisfactory to the Bank. 192. All procurement notices shall be advertised inthe project website, the government website, and at least in one local newspaper of national circulation. ICB notices and contract award information shall be advertised in the UN Development Business online (UNDB online) and in the Development Gateway's dgMarket, inaccordancewith provisions of paragraph2.60 o fthe Procurement Guidelines. 193. Selection of Consultants: Consulting Firms services will be contracted under this project inthe following main areas of expertise: (i) Information Systems; (ii) Health Issues; (iii) Health Public Familiar, Community and Intercultural Health; (iv) Management training activities; (v) design o f communication campaign; (vi) Health Insurance; (vii) Supervision of works contracts; and (viii) MSD assessment of the municipalities needs. The procurement of consulting firms will be carried out using Bank's standard 74 Request for Proposals (RFP). International firms will have the opportunity to participate in about all concoursesabove $100,000. 194. Selection of Individual Consultant Services: Individual consultant services will be contracted mostly for Project Management. 195. A project website, a government website, and a national newspaper shall be used to advertise expressions of interest as the basis for developing short lists of consulting firms and individual consultants, and to publishinformation on awarded contracts in accordance with provisions of paragraph 2.28 of the Consultants' Guidelines and as mandated by local legislation. Contracts expected to cost more than $100,000 shall be advertised in the UNDB online and in dgMarket. Short lists of consultants for services estimated to cost less than $100,000 equivalent per contract may be composed entirely of national consultants inaccordance with the provisions o f paragraph 2.7 of the Consultant Guidelines. 196. OperatingCosts: Component 4 of the project will finance expenses for Project Administration. These expenses will include equipment, technical assistance, training, project procurement audits, MSD financial audits, and the UCOFI project operating costs. These operating costs would be in accordance with the Bank's Procurement Guidelines, as appropriate. This procurement would also be carried out usingBank's SBDsor National SBDs agreedwith or satisfactory to the Bank. 197. Others: None B. Assessment ofthe agency's capacityto implement procurement: 198. This section presents an assessment of the MSD andthe FPS regardingthe implementationof the procurement to be carried out under the proposed project, and an action plan to enhancetheir procurement activities. The assessment was carried out in April 2007 and finalized in October 2007. It reviewed the organizational structure of: (i)the MSD General Financial Management Directorate, and (ii)the FPS proposed structure for implementing the project. It also reviewed the interaction between the procurement officers and implementingunits within the MSD and the FPS. The assessment concluded that both institutions have weak procurement units. Particularly, they lack enough people with the right skills to implement a program of radical improvement in their procurement functions. To ensure proper coordination among the two institutions and effective involvement of their staff in the procurement activities, the project provides for: (i)subsidiary agreements between VIPFE and MSD, and VIPFE and FPS, as well as un inter-institutional agreement between MSD and FPS with respect to the role and responsibilities of MSD and FPS under the project. These agreements should be executed as a condition of effectiveness of the Financial Agreement; (ii)a project operational manual, detailing the procedures and guidelinesfor carrying out the project, to be adopted ina manner satisfactory to the Association, as a condition of effectiveness of the Financial Agreement; (iii)FPS to enter into agreement with each municipality within the project area, with respect to the role and responsibilities o f the municipality, for the carrying out of its responsibilities under the project; (iv) UCOFI and the Technical Area under MSD to be fully staffed and operational no later than 90 days after the effectiveness date of the Financial Agreement; and (v) FPS to establish its procurement monitoring unit and MSD to sign contracts for UCOFI's technical coordination ofthe project, as a withdrawal condition of the financing proceedsfor the civil works component. 199. The Project is to be implementedprimarily by the MSDwith the support of the FPS on activities related to health investments at the municipal level. MSD and FPS will be working independently from one another, but in a closely coordinated manner. The MSD's VoH will have a small Technical CoordinationUnitto keep track of and coordinate with the Vice ministry o f Traditional Medicine (VTM) 75 and other technical units responsible for project implementationcomponents and activities. The figure below synthesizesthe arrangements: PROJECT PROCUREMENTARRANGEMENTS Recipient Financing Agreement Procurement Guidelines Consultant Guidelines Antt-Carruption Guidelines Operational Manual Procurement Plan Procurement Audit Special Provisions FPS Inker~InstitutIoneIAgreement HSD 200. The project's administrative aspects will be responsibility of the MSD General Financial Management Office through the recently created UCOFI, whose specific responsibilitiesand operational procedures will be detailed in the Project's OperationalManual. The manual will also describe the flow of project coordinationprocesses among the technical and administrativeunits inside the MSD and FPS. Inthe case ofthe FPS, project activitieswill be managedthrough its own administrativestructure, taking 76 into account the project implementation plan as well as the FPS own institutional action plan agreed with IDA. 201. Legal Aspects. The law that rules the Public Sector Procurement (Normas Bbsicas del Sistemade Administracidn de Bienes y Sewicios, SABS), was established by Decreto Supremo No. 29190, dated July 11,2007, and its Reglamento del Subsistema de Contratacidn de Bienes y Sewicios, dated August 27, 2007, the law has been recently revised, and it applies to all government institutions. 202. The main shortcomings o f the Procurement Law includes: (i)multiple exceptions for specific cases involved inthe various procurement methods, and efforts to avoid open competition through ICB / NCB; (ii)authorization for government agencies to contract with other government agencies; (iii)an explanation o f domestic preference that i s in conflict with the text o f Annex I1o f Bank Guidelines; (iv) open competition for the selection o f consulting firms instead o f short listing; (v) request o f bid and performance guarantees for consultants; (vi) inadequate time to prepare bids; (vii) lack o f an independent agency to review and resolve disputes. This means that bidders will have to go to the Administrative Court, meaning long delays and unknown results. 203. In view o f the deficiencies of the national legal framework for procurement and lack o f procurement experience in the agencies, all project procurement should be made following Bank Guidelines and agreed procedures, includingthe Special Provisions detailed further down. 204. Organization and Staffing: (a) the M S D Directorate o f General Administrative Affairs through the UCOFI, whose specific responsibilities and operational procedures will be detailed in the P O M will nominate a procurement specialist under TOR agreed or satisfactory to the Bank, and (b) FPS will confirm before the withdrawal o f funds for civil works, the proposed structure at the central and departmental levels to be responsible o f the supervision and/or implementation o f procurement, that will be executed mostly by the municipalities. At the time o f the procurement capacity assessment, FPS had only one procurement specialist, with experience in Bank procurement procedures at the central office and none at the departmental offices. In previous projects, procurement at the departmental offices was carried out by technical staff or consultants hiredaccording to the needs. 205. The responsibilities for implementingproject procurement by the UCOFI unit include: (i) prepare and execute its own procurement, coordinate implementation within M S D and with FPS, follow-up the implementation o f the work carried out by FPS through the municipalities or by itself, follow-up the updating and implementationo f the Procurement Plan, and in the case o f medical equipment procurement the M S D will be consulted to ensure compliance with its technical standards; (ii)prepare bidding documents and coordinate preparation o f terms o f reference and technical specifications; (iii)participate inthe Evaluation Committees, prepare bid evaluation reports, coordinate contract awards and coordinate the preparation o f contracts; (iv) establish and keep up-to-date the contract administration system to include contracts from all executing agencies; (v) design a filing system to keep procurement records; (vi) prepare requests to the Bank for no objection; (vii) prepare and deliver a training action plan; and finally (viii) keep an information system for complaints and their resolutions. 206. FPS will carry out a procurement assessment o f the municipalities involved in the project to identify their capacity and will define its own organizational structure to ensure assistance to the municipalities at the operational level. At the central level, FPS will propose the structure to carry out certain procurement activities related to goods as required by municipalities. Based on the results o f the assessment, FPS will prepare and deliver a training plan, and a supervision plan for the procurement o f works and goods carried out by the municipalities. FPS will incorporate in its financial system a module for contract administration that will start with the procurement plan and supervision at different stages o f 77 the contracts. The system will be functioning before procurement starts. It will also establish, monitor, and supervise the filing system at all levels. Finally, FPS will send information to MSD on the assigned dates and other matters related to the procurement plan and its implementation, to be consolidated by MSDand includedinthe implementationreports to be sent to the Bank 207. The key issues and risks concerning procurement for implementation of the project have been identified and include delays and cost overruns in the project implementation mainly due to: (i)poor capacity of MDS and FPS; (ii) uncertainty regarding the responsibility and accountability of MDS and FPS for project activities; and; (iii)a poor regulatory framework. In particular, the risk assessment identified the following likely causes o f said risks: (i)GFMO staff lack experience in implementing substantive procurement following Bank's procedures, and has poor procurement planning and internal controls; (ii)the fractioning of contracts, late payments to contractors, and inefficient practices, fostered by the regulatory weaknesses; (iii)the likely large number of project procurement processes that will make effective supervision of the procurement procedures difficult; (iv) lack of a Control System within the MSDandFPSto monitor projectimplementation, and of an adequate system and proceduresfor filing procurement documents; and (v) in FPS neither the procurement structure to supervise procurement activities that will be carried out by municipalities, nor to carry out some procurement as requested by municipalities is inplace. 208. The overall project risk for procurement is HIGH. The corrective measures that have been considered or implemented to mitigated the above mentioned risks include: (i) number o f inter-agency a agreements have been devised to facilitate the carrying out of the project and ensure clarity in the responsibilities and accountabilities of the different actors (VIPFE, MDS, FPS, and the municipalities); (ii)aprojectoperational manualunderpreparation, including, interalia, procurement andcontracting procedures, will be adopted as a condition of effectiveness of the Financing Agreement; (iii)FPS to strengthen its procurement unit and MSDto contract key staff for UCOFI, including a senior procurement specialist as a withdrawal condition of the Financing proceeds; (iv) the Financing Agreement to include additional provisions relating to Particular Methods of Procurement; (v) close monitoring by the Association, particularly during the first year of project implementation. The following table presents a detailed planto mitigate the risksandto improve the agencies implementation capacity. Action By whom Bywhen I Bank to review and comment To havethe UCOFIestablishedandproperly MSDI FPS 90 days after I NO to TORSfor key staffedandthe FPS structure andfunctions to effectiveness staff superviseI executeprocurement. Definefunctions, organization, and MSDI FPS F.A Inter-institutional relationshipamongUCOFI, technical staff, effectiveness Agreement andFPS. FPSto evaluatethe capacity of each FPS Before Assessment criteria municipalityincludedinthe project. carryingout any civil works To define the procurementwork flow MSDI FPS F.A Procurement includingapprovers andtimetable (mapping effectiveness processesand ofall steps), MSDandFPS. functions to be includedinPOM FPSto submit trainingplanfor FPS Two months Planand schedule municipalities. after completionof MSD's assessment of 78 needs Finalizethe procurementsectionofthe MSDI FPS F.A Draft ofthe POM POM, with detailedinstruction on: (i) effectiveness responsibilities andrelationshipsbetweenthe variousunits involvedinprojectprocurement (ii)individualresponsibilities for approval andprocessingofkeyprocurementactions underthe project; (iii) definitionofa planfor a periodic supervisionandpriorreviewby: FPSofthe procurementprocessescarriedout by municipalities, includinga modelfor the supervisionreports,procurementex-post review; and(iv) specific sectionto include instructionsanddetails ofthe processand responsibilities for procurementfiles. Preparea GeneralProcurementPlan(For the MSD Negotiations Planandupdating first 18 months) andupdatingas necessary. andduring project implementation Preparethe GeneralProcurementNotice. MSD Endof ProposedNotice December 2007 Preparestandardbiddingdocuments for MSD F.A Documentsas partof NCB, Shoppingandselectionof consultants, effectiveness the draft POM and Standardformats for bidevaluation. To design/ includeprocurementmodule in MSDI FPS Mid-June Draft ofthe proposed the currentMDSandFPSprojectMIS 2008 system system, to monitorprocurementplans, contractimplementationandproducereports. Includeinthe Procurementpart ofthe Bank Negotiations FinalText FinancingAgreement: (i) the Special Provisionsagreedfor Bolivia; (ii) a requirementfor the use of standardbidding documents agreedinadvance withthe Bank, (iii) projectprocurementwillbemade all followingBank Guidelinesandagreed procedures Invitations for all contracts, expressionsof MSDI FPS Duringproject Invitations should interestandcontractawardwill be advertised (municipalities) implementation follow the Bank's through a governmentandprojectweb page, Standardformat and ina local newspaper. For consultant services above $100,000, the call for bids, the expressions of interestandcontract awardinformation shouldbe also published inthe UNDB anddgMarket. Submitto the BankProcurementAudit MSD EachMarch31 Report reportscarriedout by IndependentAuditors. startingin2009 209. SpecialProvisions A. In addition to and without limitation on any other provision set forth in this Schedule or the Procurement Guidelines, the following rules shall govern all procurementof goods and works under NCB: 1. A merit point system shall not be usedinthe pre-qualification of bidders. 79 2. The award of goods and works contracts shall be based exclusively on price and, whenever appropriate, shall also take into account factors similar to those referredto inparagraph2.5 1 ofthe Guidelines, provided, however, that the bid evaluation shall always be based on factors that can be quantifiedobjectively, andthe procedurefor suchquantification shall be disclosed inthe invitationto bid. 3. The Borrower shall open all bids at the stipulated time and place in accordance with a procedure satisfactoryto the Bank 4, The Borrower shall use a single envelopeprocedure. 5. Whenever there is a discrepancy between the amounts in figures and in words of a bid, the amounts inwords shall govern. 6. There will be no prescribed minimum number of bids submitted for a contract to be subsequently awarded. 7. Foreignbiddersshall be allowedto participate. 8. Foreign bidders shall not be requiredto legalize any documentationrelatedto their bids with Bolivianauthoritiesas a prerequisitefor bidding. 9. No margin of preferenceshall be grantedfor any particularcategory of bidders. 10. Inthe event that a bidder whose bid was evaluatedas the bid with the lowest evaluatedprice withdraws its bid, the contract may be awarded to the second lowest responsive evaluated bid. 11. Foreign bidders shall not, as a condition for submitting bids, be requiredto enter into ajoint ventureagreement with local bidders. 12. No other procurement rules or regulations of the Borrower's agencies or of any state-owned entity shall apply without the prior review and consent ofthe Association. 13. Government-ownedenterprises may participle inbids only ifthey follow paragraph 1.8 (c) of the Guidelines. B. In addition to and without limitation on any other provisions set forth in this Schedule or the Consultant Guidelines, the following rules shall govern all procurement of consultant services referredto inthis Schedule: 1. As a condition for participating in the selection process, foreign consultants shall not be required to enter into ajoint venture agreement with local consultants, unless the conditions stated inparagraph1.12 ofthe ConsultantGuidelinesare met. 2. As a condition for participating in the selection process, foreign consultants shall not be required to legalize their proposals or any documentation related to such proposals with Bolivian authorities. 3. Foreign consultantsshall not be requiredto be registered inthe Borrower'sNational Registry of Consultants(RegistroNacionalde Consultoria). 4. Consultants (firms and individuals) shall not be required to present Bid and Performance securities as a conditionto present proposals and sign a contract. C. ProcurementPlan 210. The MSD has prepared a procurement plan for project implementation, based on the project existing information and envisaged implementation. This planwas discussed and agreed between the Borrower and the Project Team during Negotiations and i s available at MSD offices. It will also be available inthe project's database and in the Bank's external website. The Procurement Plan will be updated semi-annually or as required to reflect the actual project implementation needs and improvements ininstitutional capacity. 80 211. The FPS will develop a procurementplanfor civil works, medicalequipment and supervisionof works on the basis of the investments projects to be submitted by the municipalities. Since this component will be implementedon the basis of a MSD assessmentof needs to be carriedout as part of the project, the initial procurement plan includes only a preliminary estimation of the civil works and medical equipment. FPS will send to MSD when requested its part of the procurement plan to be consolidatedandsent to the Bank. D. FrequencyofProcurement Supervision 212. In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment of the Implementing Agencies has recommended semi-annually supervision missions, includingfield visits, to carry out postreviewsof procurementactions. E. Detailsofthe ProcurementArrangementsInvolvingInternationalCompetition 1. Goods,Works, andNonConsultingServices (a) List of contract packagesto beprocuredfollowingICB anddirectcontracting: 1 2 3 4 5 6 7 8 9 Ref. Contract Estimated Procurement P-Q Domestic Review Expected Comments No. (Description) Cost Method Preference by Bank Bid- (yesho) (Prior / Post) Opening Date None envisaged 1 12 13 14 I15 6 7 Ref.No. Description Estimated Selection Review Expected Comments of cost Method by Bank Proposals Assignment US$ (Prior / Submissio Post) n Date (Information not available) I I I I (b) Consultancy servicesestimatedto cost aboveU S $100,000 per contract and all single source selection of consultants ( f m s ) will be subject to prior reviewby the Bank. Individualconsultants servicesto cost US$25,000 or above per contract or single source, regardless of the amount, will be subject to prior reviewbythe Bank. 81 (c) Short lists composed entirely of national consultants: Short lists o f consultants for services estimated to cost less than U S $100,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph2.7 ofthe Consultant Guidelines. F. THRESHOLDS FORPROCUREMENT METHODS AND PRIOR REVIEW Expenditure ContractValue 1 Procurement BankPrior Review Category I(Threshold) Method (TJS%OOO) 1. Works I>3,000 I ICB All I3,000>250 I NCB Firsttwo eachyear I <250 I (Price Firsttwo eachyear EEnarisonl 2. Goods I >200 I ICB ~ All 200>50 NCB Firsttwo eachyear <5 0 Shopping Firsttwo eachyear 3. Consultant Services >loo QCBS, QBS All 4 0 0 QCBS, QBS, CQ, All TORs. FBS, LCS (as per Selection Process Procurement Plan) reviewed twice yearly (Ex Post). All contracts awarded under SSS. 4. Individual Consultants >25 T n All All TORs. Selection Process reviewed twice yearly (Ex Post). All contracts awarded under SSS. I Notes: ICB = InternationalCompetitive Bidding NCB= National Competitive Bidding QCBS= Quality-Cost Based Selection QBS=Quality Based Selection FBS=Fixed Budget Selection LCS=Least-Cost Selection CQS=Consultant Qualification Based Selection SSS= Sole Source 82 Annex 9: EconomicandFinancialAnalysis BOLIVIA: EXPANDINGACCESS TO REDUCEHEALTHINEQUITIES -APL I11 213. This annex summarizes the project's cost-benefit analysis, based upon the project's costs and its measurable economic benefits. The project will generate economic and social benefits due to its impact on morbidity, mortality and nutrition as well as inthe improvement o f health sector managerial capacities to implement the EFPH and S U SALUD programs. This analysis includes all project costs, but considers only the benefits from the Family, Community and Intercultural Health Component (Component 2) in targeted areas, which account for a fifth o f total Bolivian population. Benefits from components 1,3 and 4 have not been taken into account due mainly to insufficient information regarding public health surveillance, budgetary planning, interventiongaps and performance indicators. The project's IRRwould be higher ifthese benefits are included. 214. The analysis considers the benefits derived from the projected project outcomes. These outcomes include the reduction in maternal and under-3 children mortality, and childhood malnutrition rates as a result o f improved service delivery. Benefits from morbidity reduction are excluded because there are no reliable burden-of-disease analyses to estimate the gained disability-adjusted life years. It is also assumed that decreases in unnecessary hospital stays are marginal because the project i s aiming to improve health services in areas where current services are very poor. 215. Project outcomes are then converted to number o f deaths avoided and children saved from malnutrition applying conservative parameters and assumptions based on international literature (Table 1): it is assumed that children whose mothers received prenatal care were 30 percent less likely to die in the first six months14; 50 percent of child death among 6-24 months are related to malnutrition''; 20 percent o f maternal deaths are avoidable through prenatal/community-basedinterventions; and 50 percent o f maternal deaths can be prevented by ensuring access to essential obstetric care16. Maternal Death avoided 3 19 37 58 86 203 Infant and child death avoided 126 435 725 998 1,259 3,543 Infantdchildren savedfrom malnutrition 1,211 10,623 19,071 26,440 32,862 90,207 216. The next step involves calculating the future income flow received by children and women whose lives are saved by the project as they eventually become part o f the working population. Additionally, the benefit o f reducing stunting is estimated as the present value o f the increased income-earning capacity o f the persons whose nutrition status was improved by the project. In line with international literature, it is assumed that children that avoid stunting will have an earnings premium o f 10 percent - also linked to an l4The World Bank estimatedthat at least 30-40 percentof infant deaths are the resultof poor care duringpregnancyand delivery. Hong and Ruiz-Beltran(2007) showedthat Bangladeshi children of mothers who did not receive prenatal care were more than twice as likely to die during infancy as children whose mothers received prenatal care, independent of the child's sex, delivery assistance, birth order; mother's age at child birth, nutritional status, education level; household living conditions, and other factors. Lara and Pullum (2005) found in Egypt that children whose mothers received prenatal care were 36 percent less likely to die in the first year, comparedto those whose mothersreceivedno prenatalcare. l5 Basedon informationfrom 53 developing countries, Pelletier et a1(1995) estimatedthat 56 percent of deaths among children a ed 6-59 months inthe developing world are due to the underlyingeffects of malnutritionondisease. ''lowett (2000) estimatedthat 26 percent of maternaldeaths are avoidablethroughprenatallcommunity-basedinterventionsand 58 percentof maternaldeaths can be preventedensuringaccess to high qualityessentialobstetric care in low incomecountries. 83 additional 0.6 years of s~hooling.'~Economic benefits for those who do not participate - voluntarily or involuntarily -inthe labor market are excluded". This is a conservative approach since life has value as a consumption good, and the project could trigger other positives outcomes as well". 217. The economic benefits were estimated usinghousehold survey information, underthe assumption that earning and working profiles would not change: future cohorts will have the same income opportunities in their productive life years as current ones?' Figures 1 and 2 show the estimated age- earning and age-working profiles inBolivia. Profiles for overall populationhave beenusedto estimatethe income generated by avoiding childhood death and chronic malnutrition, and women's profiles have been usedto estimatethe income generateby avoiding maternal death. Figure1.Age-earning profiles in ruralareas Figure2. Age-working profilesinrural areas 1 'Oo0 0 9 0 0.0 , , , , , , , , , , , , ~ , , , , , , , , , , , , , , , , , I I , , II I , , , , I I I I I #I I I , 2 1 z z z 4 4 4 % 2 : 9 G S f i % s r " E z z 4 4 4 % 2 ? 9 G : G % s -Overall ......, population .......Women -Overall populallon Women Source:EDH2005 Source: EDH2005 218. The analysis considers three basic elements interms of the costs: (i) investment costs of the the World Bank-financedproject and the government's counterpart which together amount to US$26 million over a four year schedule beginning in 2008 and (ii) The cost to educate children saved from death and the cost to provide additional education to children saved from malnutrition, considering that educating a child costs Bs 2.200 per year, and assuming that children would have 10 years o f education - with those l7Evidenceindicatesthat youngchildrenwho sufferfrom chronicmalnutritionearn significantlylower incomesthroughouttheir economicallyactive lives.Empirical studies estimatethenegativeeffects of stuntingon worker productivity and adult earningsto be about 10 percent, controlling for other factors (Hoddinott 2003; Quisumbing; Gillespie and Haddad 2003; Alderman, Hoddinottand Kinsey2002; Ross andHorton 2003). The estimatedschooling impactswere calibratedon the findings of arecent impact evaluation of the Progresa program in Mexico which estimated that this program led to an increase of 0.66 years of schoolingon average among eligible families (Schultz 2000; IFPRI 2000); this effect could be underestimatedbecausetargeted areas in Bolivia are startingat lower levelsof educational attainment, than were seen in Mexico at the start of Progresaandthus incremental gainsmay be accrue more readily. l8Ifawomanchoosesnotto work, we canconcludethat shevalueshertimeat leastas muchas what she wouldbeearningifshe were working. However, if she is kpffrorn participating in the labor market by cultural, familial or institutional barriers, she would be preventedfrom enjoyingthe economicbenefits of health. As it is impossibleto assign weights to these alternatives, this analysis does nottake into accountthe economicbenefits from peoplewho are not working. l9 Malnutrition in children increases the risk of death, inhibits their physicaland cognitive development and has lifelong health effects, thus constitutingone ofthe major mechanismsfor the intergenerationaltransmission of poverty and inequality.Maternal mortality and morbidity have a direct negative impact on the welfare of infants and children that are out of the scope of this analysis. The death or illness of a mother also leads to a reduction in household income given the important role commonly "layedby women.Maternaldeathhas also anegativeimpact on child's education,throughenrolmentanddropout. Itis assumedthat incomegenerationcapacitieswill notgrowthas this improvementwouldrequireadditionalinterventions. 84 saved from malnutrition receiving 0.6 additional years. It is expected that there will be no additional recurrent cost becauseexisting human and financial resourceswill be reallocated to the project activities- total S U SALUD and Solitary Fund budgets are exogenously defined and will not be affected by the project activities. 219. Table 3 shows the project's costs and benefits, which result in a project's IRR of 13 percent which is higher than the standarddiscount rate used inBank's project evaluation of 10 percent. Moreover, it is worth noting that, in accordance with a WHO standard, a 3 percent discount rate is generally used with income streams received by people whose premature death has been averted due to the project (Murray and Lopez, 1994). The breakeven point occurs after 30 years of implementation considering a discount rate of 10percent. Table3. ProjectCosts,Benefitsand Internal RateofReturn 2008-2010 -19.3 19.3 0.0 0.1 2011-2015 -6.1 6.5 0.4 0.8 2016-2020 -2.2 0.0 4.2 1.9 2021-2025 2.0 0.0 10.7 12.7 2026-2030 36.6 0.0 11.5 48.1 2031-2035 113.0 0.0 0.0 113.0 2036-2040 188.6 0.0 0.0 188.6 2041-2045 252.2 0.0 0.0 252.2 2046-2050 289.9 0.0 0.0 289.9 2051-2055 297.2 0.0 0.0 297.2 2056-2060 275.9 0.0 0.0 275.9 2061-2065 232.8 0.0 0.0 232.8 2066-2070 178.5 0.0 0.0 178.5 2070-2075 124.1 0.0 0.0 124.1 30 yr IRR 9.3% 50 yr IRR 12.7% 40 &IRR 12.1% 60 y'IRR 12.8% 220. Financial Analysis and FiscalImpact: Tax revenues increasedfrom 26 percent o f GDP in 2005 to 33 percent of GDP in2006, mainly due to the new hydrocarbon policy, but also becauseof an increase in tax collection efficiency. Public expenditures were contained, generating a fiscal surplus of approximately 4.5 percent in 2006, coupled with an important current account surplus of 11percent of GDP. In 2007, a fiscal as well as a current account surplus are still expected. In addition, Bolivia benefited from the MDRT, reducing its external debt to close to 20 percent of GDP. Recently, S&P has revised its outlook on Bolivia's B minus rating to stable from negative. In this context, the Central Government will have enough resourcesto cover the new obligations triggered by this project. Moreover, the total recurrent cost represents a small fraction of the total cost linked to this project. The most important recurrent cost triggered by the project is the stipend given to approximately 70 health professionals for working inthe targeted areas which amounts to less than $USO. 1million per year. 85 Annex 10: SafeguardPolicyIssues BOLIVIA: EXPANDINGACCESS TO REDUCE HEALTHINEQUITIES -APL 111 EnvironmentalSafeguards 221. The two most relevant environmental issues resulting from the implementation of this project would be an increase inthe production of Health Care Waste (HCW), and the impacts associatedwith the physical rehabilitation of health centers and other construction activities. As a part of the supervision of the APL I1Project andthe design process of this Project, an environmental assessmentwas undertakento review and analyze: (i)Bolivia's public health policies associated with the environment; and (ii)the policies and specific standards related to HCW and its environmental impact. The assessment identified the following needs and recommendations: Need for Strengtheningthe MSD's LeadershiDon Environmental HealthIssues 222. Better control of health hazards associated with the environment requires a strategic re- positioning of the MSD. Existing Bolivian law already requires the health sector to establish criteria for defining sanitary policies, norms, and environmental standards. Law No. 1333, the Law of the Environment;' recognizes the need to have an entity within the health sector that is responsible for environmental issues, especially those related to the effects of health activities on environmental preservation and conservation. The same Law 22 also recognizes the responsibilities of the MSD to protect and restore the natural environment, where environmental degradation constitutes a potential or actual health hazard. Thus, the need for the MSD's institutional development in the field of 21 Ley 1333. Ley del Medio Ambiente. Articulo IOo.- The Ministries, agencies, and all national, departmental, municipal, and local public institutions, in reference to environmental problems, should adapt their organization structures in order to have an entity for the matters related to the environment. Furthermore, in coordination with the Secretariat of the Environment,they will support the execution of programs and projects that have the purpose of preserving and conservingthe environmentand natural resources. - Los Ministerios,organismos e instituciones pliblicas de cardcternacional, departamental,municipal y local, relacionadoscon la problemdtica ambiental,deben adecuar sus estructuras de organizacion a fin de disponer de una instancia para 10s asuntos referidos a1 medio ambiente. Asimismo, en coordinacion con la Secretaria del Medio Ambiente correspondiente apoyardn la ejecucion de programas y proyectos que tengan el proposito de preservar y conservar el medio ambiente y 10s recursos naturales. 22 Ley 1333. Ley del Medio Ambiente. Articulo 79O.- The State, through its competent agencies, will carry out actions of prevention, control and evaluation of the degradation of the environment that directly or indirectly threatens human health, and animal and plant life. Also. it will safeguard the restoration of adversely affected areas. The promotion of actions of environmental sanitation, guaranteeing the basic services and others to the urban and rural population in general, are of national priority. Article 80O.- For the Purposes of the previous article the Ministry of Social Welfare and Public Health, the Ministry of Urban Matters,the Ministry of Rural and Livestock Matters and the National Secretariat of the Environment in coordination with the responsible sectors at departmental and local level, will establish the standards, procedures and respective regulations. El Estado a - traves de sus organismoscompetentes ejecutard acciones de prevention, control y evaluacidn de la degradacion del medio ambiente que en forma directa o indirecta atente contra la salud humana, vida animal y vegetal. lgualmente velard por la restauraci6n de /as zonas afectadas. Es de prioridad nacional, la promoci6n de acciones de saneamiento ambiental, garantizando 10s servicios bdsicos y otros a la poblaci6n urbana y tural en general. Articulo 80O.-Para 10s fines del articulo anterior el Ministerio de Prevision Social y Salud pliblica, el Ministerio de Asuntos Urbanos, el Ministerio de Asuntos Campesinos y Agropecuarios y la Secretaria Nacional del Medio Ambiente en coordinacidn con 10s sectores responsables a nivel departamentaly local, establecerdn las notmas, procedimientosy reglamentosrespectivos. 86 environmental matters is clear: it is requiredby law to assume leadership on these issues across the health sector. 223. Strengthening the MSD's leadership on environmental activities will also encourage a more cohesive environmental policy across the sector. The analysis of legislation undertaken during the environmental analysis, combined with the interaction with the working team in the field, revealed the effects of MSD's institutional weakness inenvironmental health. Currently, various government agencies are implementingdifferent environmental activities that are not coordinated, reducing the social relevance of the activities and diminishingtheir development impact. However, public perception of and trust inthe MSD's competency inenvironmental issues remains high. Need for ImprovedManagement of Health Care Waste 224. The project's environmental assessment also evaluated the current state of solid waste management by health facilities. In general, facilities were found to show significant and satisfactory progress in terms of Bolivia's prevailing sanitary standards, although much of the recent progress is due to a specific technical cooperation project.23 The technical project has designed a transition process that will facilitate sustainability of its activities, utilizing the strengthened capabilities o f the Comprehensive Health Training Units (Unidades de Capacitacih Integral en Salud - UCIS). Progress on managing HCW was also observed at local levels (local health facilities). Most of this success comes from policy implementation by local bio-safety committees, and by HCW management practices that were evaluated up to the point of final disposal. National studies have been conducted in order to obtain a full overview of current conditions country-wide. This national picture will help to further progress on local-level activities that have been successful. The adoption of stronger environmental health regulatory measures at the Ministry level will permit the consolidation of these achievements, resulting in greater environmental and healthsecurity for the Bolivianpopulation. 225. With regard to the final disposal of solid waste, especially o f hazardous solid waste from health facilities, adequate disposal in safety `grid-cells' was verified at the Alpacota landfill for the case of La Paz. In addition, both the concessionary company's supervision of operations and its correct application of relevant standards were deemed to be adequate by corresponding entities of the La Paz municipal government. Recommendations. Reduce the Risks of Health Care Wasteat the Point of Generation 226. Inspite of satisfactory achievementswith regardto standardization efforts for environmental and health policies, some further consolidation is necessary with regards to certain policies and standards. Until now, progress has been achieved by managing risk via interventions based on environmental criteria, emphasizing activities surrounding the final disposal of hazardous solid waste in secure landfills. Focus has been placed on handling of waste from its origin up to the final disposal, without attempts to modify its dangerous nature. Contingency measures were not developed, for example, to respond to potential accidents during transportation of hazardous waste to the landfill. Thus, a significant level of risk associated with waste managementpersists, but the risk can be progressively reduced. The APL I11 project would recommend aiming for the largest possible reduction inrisk related to Health Care Waste. 23 Swisscontact. Proyecto Gestion Integral y Bioseguridad de Residuos Solidos Generados en Establecimientosde Salud2001-2006.Cochabamba,La Paz, El Alto y Santa Cruz. 87 This would mean changing policies to emphasizereducingthe dangers inherent inHCW beginningat the point o f generation. 227. Once identified, an internal MSD unit will be responsible for establishing environmental norms and standards, as well as supervisingthe application of such norms and standards in MSD activities. For example, this unit should study the implementation of waste treatment systems in health facilities. Potential activities would include such things as analysis of the use of autoclaves (devices which use steam to sterilize aqueous wastes) which can control the pathogens in infectious or Class A wastes, in order to allow them to be handled together with common waste for disposal in sanitary landfills. The studies' results could be used to develop new health policies for comprehensive management plans for this type ofwaste, basedonreductionor elimination ofthe hazard at the point ofwaste generation. Ensure Health Center Renovations and Other Construction Activities Comply with Environmental Standards 228. The National Productive and Social Investment Fund have adopted measures to ensure that the development of infrastructure in the health sector complies with relevant environmental standards. The Fundhas even established, apriori, a global environmental license for construction, which aims to ensure that health sector construction activitiestake into account both environmental risk as well as the measures that must be adopted inorder to mitigate these risks. 229. Social Safeguards. The total population of Bolivia (2001 Census) is 8.27 million people of whom 62% or 5.13 million self-identify as Originary or Indigenous, compared to 38% or 3.14 million of non-indigenous. There are 36 Indigenous and Originary and one Afro-Bolivian group. The largest groups are the Quechua (1.55 million or 25% ofthe population), Aymara (1.27 million or 25% of the population) and Guarani (81,000 or 1.6% of the population). The three groups account for 58% of the Indigenous, and live mostly inthe highlands, Andean valleys and Chaco. The other 34 groups live throughout the country but mostly in the lowlands, Chaco and valleys. The Chiquitano (Bksiro, Napeca, Paunaca, Moncoca) are 112,000 people or 2.22%, and the Mojeiio are 46,300 people or 0.91%. The rest of the groups have 6,200 or less inhabitants. Some 25 different groups inhabit the Amazon region, 5 groups live in the Oriental Region, and 3 groups inthe Chaco Region. 230. According to the 2005 projections from the Economic and Social Policy Analysis Unit, the estimated population living in poverty in 2006 was 5.9 million people (63%)24 and of this group, 2.0 million (35%) were living in extreme poverty. This population concentrates in municipalities of the high Andean valleys and altiplano and is mainly of Indigenous descent. The plains area, El Chaco region, and the peri-urban areas of the largest Bolivian cities also have significant levels of poverty, due to migration. 231. Upon request of the MSD, and consistentwith the Operational Policy 4.10 of the World Bank, the Health Reform Project I11will be treated as an Indigenous Project because (a) The targeted population is mostly Originary25/Indigenous in the 17 health networks in the 82 municipalities and three peri-urban areas of El Alto (La Paz), Santa Cruz and Cochabamba selected for intervention, (b) The project is designed under the Family, Community and Intercultural Health model. 232. The project uses an "intercultural health" approachwhich aims neither at the integration of both bio-medicine (also called academic or Occidental medicine) and traditional medicine(multi-cultures), nor 24Bolivia, Unidad de Anhlisis de Politicas Economicas y Sociales. Informe economico y social 2005. La Paz: UDAPE 2006. 25The term "Originary" refer to the autochthonous peoples of the Andean region, while the term "Indigenous" is usedto identify those ofthe Easternlowland andvalley regions. 88 the displacement o f one for the other. It requires that both be practiced in an articulated, parallel but complementary manner to obtain best results. This approach takes into account the complementarities between bio-medicine and traditional therapy, and between medical staff and traditional therapists and midwives. Moreover, the project design includes lessons learned from national and international intercultural health practices. It aims at mutual respect and acknowledgement of health practices of both medical-academic staff (kharisiris, inAymara) and traditional healers (kallahuayas, yatiris, jampiris, male and female midwives, therapists, masseurs, hueseros, rezadores26).It also underscoresthe respect for the consuetudinary rights o f communities, suyus, marcas, ayllus, tentas, capitanias and other territorial organizations inthe country. 233. In traditional medicine, health is conceived as the equilibrium of a human being and nature. Illness reflects an imbalance between the body and the surrounding environment. When imbalance occurs, health care starts at home with self-medication, next the sick person will seek the help of traditional healers, and lastly the sick person will go to a formal health facility. Bio-medicine, i s viewed as merely curative, focused on illness and disease. The interculturalhealth model, the principal strategy of current health policy, is preventive, focused on a well-balanced life, a healthy diet, and a clean environment. 234. Social Assessment. Consistent with Bank O.P. 4.10, the borrower is carrying out free and informed consultations by means o f the local multi-disciplinary firm Centro de Estudios y Proyectos. The assessment includes consultations on a sample of 40 rural communities showing low health indicators in the Western highlands, and Eastern lowlands and Chaco region. The objectives of the consultation are to (a) provide a diagnosis of the present state of health care services (preventative and curative) offered to Indigenous and Afro-descendant peoples; (b) to assess the use of intercultural approachesto health at the primary, secondary and tertiary level of care; (c) to assess the cultural access of users to health units and hospitals, cultural barriers, and people's preferences of one health care service over another; (d) to assess the perceptions of good practices (traditional or non-traditional) by public or private providers, individuals or agencies; and (e) the relationship between the official health services (MDs, nurses, auxiliary nurses, promoters) at the traditional network (midwives, andtraditional therapists). 235. The results of the social assessmentare beingusedto improve the project design. Annex 10will articulate the 'intercultural health approach' of this project. It will explain how it is integrated in each one of the components, and the corresponding mechanisms for monitoring and evaluation of this results-based approach. 236. The conclusionsof the consultationsinclude: (a) A weakness of the present health system is the lack of proactive efforts to strengthen the social health networks. At the community level, there are no active organizations empowered to demand good health services. Social control at the health facility level is very weak. The present health system has not managed to promote strategic community planning. At the municipal level, organizations are stronger but participation of the Indigenous organizations in the DILOS is almost non-existent, except for municipalities with Indigenous majority, where participation is higher. (b) Although coverage of health services by MSD and NGOs has increased in the past decade, the services have not been adapted to respond to the needs of the Indigenous. The field team verified cases of maternal and infant mortality due to preventable causes in isolated communities (Le. in the Departments ofBeniandPando). 26 Hueseros(bonemigament therapy). Rezadores (cure with prayers). 89 (c) The most common health problems found are poverty-related: diarrheic and upper respiratory infections, chronic malnutrition in children, rheumatism in adults and the elderly. Some regional diseases found are Chagas, resulting in heart and gastrointestinal problems in El Chaco; and prevalent malaria inthe Amazonian communities visited. (d) The most worrisome health issues for adults are those that impede or reduce labor productivity such as osteoporosis, cardiovascular and gastrointestinal diseases. It is recognized by men and women that women bear a double workload, particularly when they are heads o f households as men migrate in search o f economic opportunities elsewhere. (e) Many health problems are extrinsic. Both old communities and new settlements suffer from lack o f basic services such as safe water, sanitation, transport, or housing. Those most affected are children, women inthe productive age range, and the elderly. (0 Most prevalent problems among children are chronic malnutrition, diarrheic and respiratory infections, parasites, vector-spread diseases and dermatological problems. (g) Communitiesvisited have access to either permanent or mobile healthfacilities. The few sampled communities that were completely inaccessible by the team are suspected to lack basic health services. (h) Access limitations are not only geographic but cultural, particularly in relation to women. For example, both men and women disapprove o f women having to undress or to be examined by male doctors. Women prefer to be examined by women, in private places (some mobile brigades lack privacy settings). Even for child delivery (standing, kneeling, squatting) women like to keep all their clothes on. All surveyed women demand to be given the placenta which they bury. In some cultures, women give birth in a hole in their land (the Pacha-Mama), where they bury the placenta afterwards. (i)Most communities visited prefer medical contact with brigades than with health posts, as brigades, intheir view, provide more humane treatment, are more likely to give a diagnosis inthe local language, and services are more acceptable. Informants at large felt more discriminated at healthposts, i.e. the Weenhayek and Ayoreo peoples. 6) The brigades implemented by the EXTENSA program are in high demand by users. They are perceived in some cases as external to the M S D system, as it is not evident that the brigades sufficiently plan or coordinate services. (k) There is a generalperception that hospitals discriminate againstIndigenous peoples, are unwilling to respect their traditions, provide unpleasant treatment and make Indigenous people wait for long periods o f time, even if they come from far away. As a result, most Indigenous go to hospitals only as a last resort. Instead, they use natural medicine. (1) In case o f emergency, many people bypass the local hospital and go directly to the hospitals located in the capital cities o f L a Paz or Santa Cruz, because there is no lodging close to the local hospitals. (m)Traditional medicine is utilized across the country. Health-seeking behavior analysis indicates everyone self-medicates and seeks traditional healing first. If traditional medicine does not solve the problem, people will then go to the official M S D health facilities. 90 (n) Traditional medicine has been implemented for centuries. Traditional healers feel supported by the communities, but not by the official health system. Most traditional healers are male in the highlands, and female in the lowlands. All were found to be at least 50 years old. About 1/3 of them have some schooling butreachedat most 5* grade. Only 12%of those interviewedare full- time traditional healers. In most cultures, knowledge is transferred from the elders to youths in same family lineage, except for the shamans who may select a pupil to whom they will transfer their knowledge, or some may chooseto diewith it. (0) The insertion of the Western medicine through SUMI, or SUSAT (Tarija) and the lack of definition of Traditional Medicine have weakened local traditional medicine. Western medicine can not solve cultural diseases such as "wrong-doing" or "witchcraft", according to informants. Only traditional healersknow how to deal with them. (p) SUMIis well received inIndigenous communities. 84% o f interviewedfamilies have usedSUMI services. Dissatisfaction, where it exists, is usually caused by (i)Insufficient services and medication; (ii)the fact that SUMI excludes men, children older than 5 years of age and the elderly. (9) Some deficiencies of the Interculturalhealthmodel are: (i) health staff is not duly trained to MSD understand and implementthe model; (ii) MSDhealthstaff don't know howto articulate Western and Traditional medicine; (iii)traditional healers don't have enough knowledge of Western medicine. Only 20% of traditional healersknow something about first aid. (r) The language of communication is important inhealthcare consultations and interactions. Inthe lowlands, most health care is conducted in Spanish, although many women and children do not understand it. There are significant populations in Bolivia that are monolingual in Indigenous languages. Brigades have some bilingual staff only for Quechua, Aymara, Guarani and Guarayo languages, (s) The persons interviewed, in addition to caring about aspects such as the color of the walls of a health institution, the material used in the furniture, or other issues, value most highly in a medical consultation the following three issues: the privacy of the consultation, the clear explanation of the illness, and the respect shown to their own cultural customs. (t) The CPS volunteers (many of whom are indigenous, healers or midwives) are some of the most capable health workers to serve as links between Western and traditional healers. Unfortunately, they are not beingusedbyMSD. (u) Many of the communal pharmacies (boticus comunules) failed for lack of volunteers and community preparation to manage and sustain the services. In addition, failure was attributed to the lack of integrationofthe pharmacies' community volunteers intothe healthnetworks, because the network healthpersonnel didnot professionally recognize nor support the volunteers. 91 237. Further recommendationsinclude: (a) The MSD should implement the `intercultural' policy in health services offered to Indigenous communities who rely primarily on traditional medicine and where MSD services are scarce or non-existent. At the moment, preventive health maintenance depends on traditional medicine. Expedite the use of referrals and counter-referrals between health facilities and traditional healers. (b) Policy-making seeking cultural appropriateness of health services should consider the socioeconomic, geographic and cultural situation of each Indigenous group. For example, health services to fit the reality of Amazonia, Chaco and some Eastern lowlands communities require different strategies (the Araona's health conditions were found to be deplorable). Community- based facilities such as casus maternas and lodges for the illand their companions should be explored. Strengthen the mobile health teams in remote communities, where access is difficult, and where establishing a formal health facility may not bejustified. These teams would prioritize health promotion and disease prevention, together with education for the community on health issues. (c) Brigades were found to be a `must' in most communities visited. They should be trained to coordinate with Indigenous Organizations (IO), and strengthened for community training of disease prevention and surveillance, i.e. watershed maintenance. (d) Carry out sensitivitytraining for MSD staffat the central, departmental, municipal and local level on "intercultural health", to train people to provide quality services to the poor and disadvantaged, with special attention focused on respecting the indigenous population. (e) Strengthen the traditional medicine network operating in all communities 365 days of the year. Strengthenthe localhealth committees and empower IO'Sto participate inDILOS. ( f ) To reduce maternal and infant mortality, strengthen local networks of midwives by providing themwithtraining and equipment for a more secure birthingassistance, and their connection with the health networks. (g) The implementation of S U SALUD will permit the expansion of services to the majority of the population(men, women, children and the elderly) with highly integrated services. (h) Ensure all MSDfacilities and brigades have at least one bilingual person trained in intercultural health, to support medical staff and bilingual/monolingual patients. (i)Reduceinequitybetweenmedicalstaffandtraditionalhealers, inorder for SAFCIto succeed. Promote cooperation and dialogue between both groups of health care providers. 6) Promotetraining ofwomen inmedicine, to respondto demandofwomen practitioners. (k) All promotion and diffusion of materials or dissemination of policies, and training should be bilingual, that is, both languageson the same page, insteadof only one or the other. 92 238. Other consultations include: (a) In 1999, the Originarydndigenous organizations demanded the following from the basic health system: (i)improve the information dissemination to educate people on services offered; (ii) improve the quality of the interaction between service providers and patients; and (iii) recognize the value of traditional medicine and traditional therapists. (b) In the 2005 Second National Dialogue on Health Issues, people demanded: (i) and better more qualified health care providers for rural areas, Originarydndigenous and isolated communities; (ii) improve communication skills of health staff; and (iii)include traditional therapists and local workers who speak local languagesand know the local culture. (c) In August 2006 the Traditional Medicine and Intercultural Health Meetings were held in Potosi2' and attended by over three hundred people including MSD authorities and staff, the main indigenous campesinoand originary organizations of Bolivia, i.e. the Confederacidn Sindical Unica de TrabajadoresCampesinos de Bolivia (CSUTCB), the Central de Pueblos Indigenas del Oriente de Bolivia (CIDOB) and the Consejode Ayllus y Marcus del Qollasuyo (CONAMAQ), traditional therapists and midwives, health providers, academics, associations, NGOs and donors (PROHISABA, UNFPA, UNICEF, COOPITAL, OPS/OMS, Save the ChildrenBASICS, Family Care International - PROCOSI and international discussants of intercultural health models from Chile, Venezuela, Ecuador and Peru. The main objectives were (i)to discuss the national and international experience in Intercultural Health; (ii) to integrate the `intercultural' approach to the existing family and community health model; and (iii)to discuss the issues, risks and responsibilities of adopting the model. Lack of knowledge of intercultural health care is a problem with both groups' bio-medical staff andIndigenous peoples. (d) The main recommendations ofthese consultations were: (i) The Indigenous organizations proposeto work side-by-sidewith MSD,to discuss health plans with traditional therapists who know the communities well. (ii)Establishsocialcontrolstoempowerlocalorganizationstododiseasesurveillance. (iii)CreateaUniversalHealthInsurance. (iv) Regulate the quality and humane treatment of patients, and install social controls to enforce rules. (v) Sensitize staff working on SUMI, PAI, AIEPI, EXTENSA to work with rural communities. They should preferablyspeak the local language. (vi) The MSD should acknowledge the traditional therapists (masseurs, hueseros)and midwives, train and certify themto work inprimary health care networks. (vii) Prioritizethe valuation and legalizationof traditional medicine. (viii) Send outreach program to excluded and hard-to-reach communities, where health units or posts do not exist. (ix) Provide scholarships to qualified IndigenodOriginary candidates capable of studying the medical and nursingfields. (e) The Pre-Constitutional Assembly carried out inNovember 2006 with the participation of all health stakeholders including MSD, private providers, Originarydndigenous organizations, NGOs and civil society, agreedon these points: 27Ministry of Health, August 2006. "Jornada Nacional de MedicinaTradicionaly SaludIntercultural.Memoria". La Paz, Bolivia. 93 The right to health and universal access to health. The Government would guarantee the availability, acceptance and universal access to health services of a universal system, free of charge, decentralized, participatory, intercultural and inter-sectoral. The Government would definenorms and administrate the primary healthcare system. The intercultural approach is characterized by health promotion, disease prevention, integrated health services, with permanent training of human service, and with cultural identity. Social participationand social mobilizationfor decision-making inhealth issues. All departments recognize the MSD as the regulatory entity, and accept its authority at all levels, but demand decentralization and autonomy. Financing of health system. The health system would be financed with national resources, which would not be lower than 10% of GDP which represents an 80% increase (adding social security, municipal contributions, donors, etc.) Creation of Originary institutes to train professionals in natural medicine. Implement in the universitiesTraditional Medicine as an academic field or as a subject. (viii) Promote the industrialization of medicinal plants (coca leaf, ajinko, molle, etc). Protect the intellectual property and control illegal patenting by transnational entities. (ix) Certify and strengthentraditional midwives. (x) Installwater and sanitation systems throughout the country. 239. An Ex-post EvaluationofEXTENSA is beingcarried out nation-wide and results should be ready by December, 2007, intimeto improvethe project implementationplanning. 240. The Family and CommunityInterculturalhealthmodel This modelrests on four pillars: a) Social participation of stakeholders in the decision-making processes for the design of public policy, administration, monitoring and social control of said policy. b) Equityand fair treatment inthe access and distribution o f federal resources. c) Participation of Indigenous/Originary Peoples in the discussion of social, economic and legal issues of the country, with respectto cultural identity and values. d) An intercultural approach that implies the commitment to promote respect, acknowledgement, and equitable interaction of culturally-different representations of groups and peoples of Bolivia. 241. Legal Framework. In 1995, the National Constitution o f Bolivia was amended through Law 1585, to recognize the country as a multi-ethnic and pluri-cultural nation (Art. 1) and decrees the protection of the social, economic and cultural rights of Indigenous Peoples (Art 171). It also recognized the common territories of Origin and the right to natural resources, identity, values and institutions, traditions and costumes of the Indigenous and Originary Peoples of Bolivia. The Constitution does not mention the Afro-Bolivians. However, in the past few years the Afro-descendant community presented their case before the Permanent Assembly for Human Rights (May 2006) to be recognized as a separate ethnic group. It i s estimated that the Afro-Bolivian community amounts to 35,000 people livingmostly in the department of L aPaz. 242. Bolivia ratified the International Labor Organization's Convention 169 on Indigenous Peoples and Tribal Groups in 1991 (Law 1257). It signed the UN Declaration on the Rights o f Indigenous Peoples, September 2007. 94 243. The Vice-Ministry of Traditional Medicine and Intercultural Health (VTM&I) was created by Executive Decree (February, 2006). It replaced the Ministry of Indigenous Affairs and Originary Peoples (MAIPO). The mandate of the VTM&I is to oversee (a) the articulation of traditional health systems into public health services, and (b) the revaluation of traditional medicine. 244. 5. Main OriginarylIndigenousOrganizations nationwide. Each Originaryhndigenous group has its own representative organization(s). Each organization includes a Board, Central Office, Sub- centrals and communities. Table 1: Main Originaryhndigenous Organizations participatinginthe ConstitutionalAssembly Organization Acronym The organizationsare conformedby: Confederacidn CSUTCB Departmental, Regional, Provincial, Central, Sub-central Federations, Union Sindical Unicade Boards, The National Federation of Campesino Women Bartolina Sisa and its Trabajadores network nationwide. CSUTCB includes the following commissions: Health, Campesinosde Education, Transports & Communication, Land, Human Rights, Natural Bolivia Resources. Central de Pueblos CIDOB Asamblea del Pueblo Guarani (APG), Organizaci6n de Capitanias Weenayek Indigenasdel (represent 8 Tapiete (ORCAWETA); Central de Pueblos Indigenas del Beni (CPIB); Central Orientede Bolivia organizations) Indigena de Pueblos Originarios de la Amazonia de Pando (CIPOAP); Central de Pueblos Indigenas de La Paz (CPILAP); Central de Pueblos Indigenas del Tr6pico de Cochabamba (CPTICO); Central de Indigenas de la Regi6n Amaz6nica de Bolivia (CIRABO); Central de Pueblos Etnicos de Santa Cruz (CPESC). ConsejodeAyllusy CONAMAQ Headedby the General Assembly Jacha'Tantachawi, the organic Assembly Mara Marcas del Tantachawi, Regional and Conamaq Councils Jisk' A Tantachawi; Apu Council Qollasuyo Mallkus; and Commissions: Development, Law, Land, International Relations. Confederacidn CSCB 24 regional and departmental federations in the Departments of La Paz, Sindical de Cochabamba, Santa Cruz, Tarija, Beniand Sucre. Colonizadores de Bolivia The OfficialIndigenous HealthOrganizations inBoliviaare: National Councils of Indigenous Health, and Regional Councils of Indigenous Health. 245. Difference between traditional healers and natural medicine practitionersin Bolivia. The rights and identity of both informal groups o f healers are often subjects of dispute, but the difference is clear. 246. Traditional healers are male or female and receive their knowledge from their elders, not from formal education. A key principle of traditional practitioners is that of the ayni or `reciprocity', responsible for the survival of millenary Bolivian cultures even in most inhospitable situations. Traditional healing is a combination of magic, plant therapy, prayers, cleansing, chants, etc. Traditional healers, as opposed to Natural healers, do not expect monetary remuneration for their services, but reciprocal recognition in the form of respect, prestige, and if the patient can afford it, a small animal (a chicken, a piglet, etc) or agricultural products. 247. Practitioners of natural medicine, on the other hand, may have received formal training or may be self-taught entrepreneurs. Similar to bio-medics, they require payment for their services. They usually live and work inurban settings, and often call themselves "traditional doctors". 248. The National Directorate of Traditional and Natural medicine, under the Vice-Ministry of Traditional Medicine and Intercultural Health, supports both. 95 249. DemographicProfile of Bolivia. The difference between Originary, Indigenous and Colonizers is subtle. Originary peoples are those who inhabited the highlands before the Spanish conquest. The Indigenous are those who occupied mostly the lowlands prior to colonization. The colonizers are some 1 million IndigenoudOriginarypeoples who migratedfrom the highlands to the mid and lowlands in 1960s under the US-backed Alliance for Progress, in search of land and better living conditions. They are representedby the CSCB organization. 250. Some 62.5% of Bolivians live in urban and 37.5% in rural areas. Annual population growth in urban areas (3.62%) is marked by a strong migration in search of opportunities and services. In contrast, rural areas grow at the rate of 1.42% per year only. The highest concentration of ethnic groups is in La Paz/E1 Alto, Cochabamba and Potosi, but the fastest annual population growth is in Santa Cruz (4.3%), Pando (3.5%), Tarija (3.2%) receiving vast migration. Dept Country Population Non-Originary/ non-Indigenous Originaryhndigenous Total Growth Total Urban Rural Total Urban Rural %* Nation 8,274,325 2.7 4,141,187 3,307,888 833,299 4,133,138 1,857,342 2,275,796 Chuqui 531,522 1.7 186,512 103,237 83,275 345,010 114,889 230,121 *Populationrrrowth 1992-2001 Souice: INEcensus 2001 251. The Indigenous population of Bolivia is concentrated in high and cold areas where agricultural productivity is low. Most of the northern part of the Western Andes rises to about 4,000 meters. The adverse geographical environment prompts problems of income-generation and domestic food production. Inadequate and costly transport, a result of the country's rocky terrain and scattered population, severely hinders access to basic services and to the markets of the main cities. The inhabitants of the Andes are familiar with food crises; in the altiplano and the valleys, recurrent cycles of drought, frost and hail affect crops and kill livestock. 252. Linguisticprofileof beneficiaries. The linguistic profile of Bolivia is important for the delivery of health services in a culturally-acceptable manner. About 75% of the population of Bolivia speaks Spanish, but a large number of OriginaryDndigenous speakers may not be able to understand, read or write it, which puts them in strong disadvantage.As shown on Table 3 Quechua, Aymara and Guarani are the main Indigenous languages.The 2001 census collected the linguistic profile only of children >6 years old, concluding that there are 2.1 million Quechua-speakers, of whom 55% live in rural areas. Likewise, there are 1.46 million Aymara-speakers half of whom live in rural areas. There are 57,000 Guarani- speakers and 44,000 speakers of other languages, livingmostly inrural areas. 96 Table 3:Indigenous/Originary Peoples per Department 253. Infant Mortality among Indigenous and Originary peoples. According to the 2001 census, there were high rates of infant mortality in ethnic groups. Some 37% of childbirths were attended by a doctor, 32.7% by a midwife or another person; 21% were unattended childbirths. In 2005, a study was conducted of institutional birth levels by municipality among native monolingualwomen. Fewer than 7% of all births inthe eight municipalities whose female populations were 80%-89% indigenous took place in a healthcare facility; among the 12municipalities inwhich 70%-79% o fthe female population was native monolingual, this figure was 10%. In contrast, in the 138 municipalities where the ercentage of native monolingualwomen was 9% or under, 45% of all birthsoccurred ina health facility.2F: 254. Overall infant mortality declined from 67 to 54 per 1,000 live birthsbetween 1998 and 2003. For mothers without a formal education, however, the figure was 87 per 1,000; it was 73 in the poorest municipalities; 72 among the poorest populationquintile and inthe country's poorest department (Potosi); 67 inrural areas, and 61 inthe altiplano area29. 255. Mother's educationis an importantindicatorof infant mortality3'. Illiteracy is higher among Bolivian women than men, and significantly higher among Originary/ Indigenous women (29%) on average, compared to 9.9% on average for Originary/Indigenous men. The highest rates of illiteracy are found in highland women in Potosi (44.7%) and Chuquisaca (42.5%) followed by Tarija (30.3%) and Beni(29.7%), comparedto 25% inLaP a s 1Alto and22% in Santa Cruz women. 256. Compatibility between the language of the mother and that of the health workers is critical to positive interaction, rapport, explanation of procedures, explanation of source of illness and satisfaction with service. 28Calvo A. Equidad en salud. Bolivia. Desigualdad en la poblacih monolingtie nativa, mediciones bksicas. Salud Pdblica Boliviana. 2005; 45. 29Bolivia, Instituto Nacional de Estadistica. EncuestaNacional de Demografia y Salud 2003, La Paz. 2004. 30Mortality rates include only those that are reported. It is suspectedthat many more go unreported. 97 Dept Infantmortality Child Delivery by Fertility Migration %Unsatisfied Ratel 1,000 alive Qualifiedstaff % rate Rate/1,000 basic needs 1992 2001 National 66 4.4 70.9 58.6 Total Chuqui 71 54.8 5.2 -6.3 79.8 70.1 saca La Paz 64 51.8 4.0 -3.1 71.1 86.2 Cocha 72 64.5 4.4 2.4 71.1 55.0 bamba om0 82 59.3 4.1 -8.9 70.2 67.8 Potosf 99 41.6 5.7 -14.8 80.5 79.7 Tarija 53 74.2 3.9 7.2 69.2 50.8 SantaCruz 54 82.6 4.2 10.9 60.5 38.0 Beni 60 61.6 5.4 -8.4 81.0 76.0 Pando 63 57.9 5.7 22.2 83.8 72.4 Source: NE, 2003. 257. Nutrition. Height and Weight. The prevalence of malnutrition in Bolivia is shockingly high, even relative to other developing countries. Studies show that the mother's education, literacy, the presence of a native language different from mainstream, and other geographical and cultural variables are significant determinants of child's health and nutritional status. They also show that the mother's anthropometrical characteristics are substantial determinants of their children's status. (Morales et al, 2005). 258. Some studies on the high prevalence of under-nutrition in Bolivia suggest that factors such as high altitude, hpoxia andor genetics have a negative influence on children's growth (Miller 2001). However, other studies show that good childcare practices can lead to normal growth and development patterns inany child, irrespective of altitude. 259. Several studies have pointed out that Quechua-speaking families exhibit poorer nutritional indicators than others, but none have explained why. Relative to their Spanish-speaking or Aymara peers, Quechua mothers exhibit the worst child health indicators, and these differences may be related to the mother's educational level. Studies suggest that altitude and Quechuaculture influence child's health.31 260. Underlyinginterculturalcharacterizationof the healthsector reform project, APL 111. As shown above, targeting i s pro-poor and aimed at Originary/Indigenous people and the poor living in isolated areas of the country. The "intercultural health" approach cuts across most o f the project components and activities, as described below. Component 1: StewardshipRole ofHealthAuthorities-EssentialFunctionsinPublicHealth 1.1 Strengtheningofthe NationalHealthInformationSystem(SNIS) 261. The Vice-Ministry of Traditional Medicine and InterculturalHealth(VTM&I) is inthe processof agreeing with SNIS on the inclusion of pertinent intercultural variables including "ethnic group" and "language used" inthe information systems. The latter i s key for the monitoring and impact evaluation of 31Morales, Roland0et al. 2005. Under-nutritioninBolivia: Geography and Culture Matter. Inter-American DevelopmentBank. 98 health programs among the Indigenous population, and for implementing culturally-appropriate adjustmentsto specific health programs. 1.2 Norms, Results-based management system and information dissemination to the health networks (rendicidn de cuentus) 262. The VTM&I is responsible for settingup and enforcing the norms, procedures and regulationfor the management and use of traditional medicine and intercultural health principles in the country. Culturally-adequate protocols for maternal and neonatal health care gearedtowards mortality reduction of maternal and <5 year old children were published by the MSD in June, 2006 under Ministerial Resolution, however, the norms are not always enforced. Norms for second and third level facilities are still pending. Other norms in preparation are: social communicationand social controls; identification and traininghensitivity training of health staff and the traditional network; accreditation and certification of the traditional healers and midwives; intercultural criteria for accreditation of health facilities; stakeholderheneficiary participation in decision-making of healthplanning and activities; etc. The project will support the Vice-Ministry inthe revision andor elaboration of intercultural norms for the provision of the SAFCI package of health services, and the administration of human resources in health facilities and brigades serving ethnic communities. 263. Guidelines are needed for the intercultural social communication strategy within the MSD's proposed Management Model (Modelo de GestidnSocial). The bottom-up approach i s based on decisions made at community-level Local Health Committee, which inturn are elevated to the DILOS level, and to the Prefectural level. 264. Guidelines are also needed for the construction or rehabilitation of infrastructure. The Vice- Ministry will agree with the Social Protection Fund (FPS) on intercultural norms and procedures for community participation inthe diagnosis, planning, design, construction and particularly inthe utilization and maintenance o f health-related facilities. The intercultural approach to infrastructure requires the involvement o f key stakeholders and users of the facilities to guarantee cost-effective utilization and to ensure maintenance of all facilities built. 265. Many cooperation agencies, i.e. PAHO/WHO, USAID, UNDP, European Union (PROHISABA), CIDOB, etc., have issued intercultural guidelines for health activities. For example, the Intercultural Maternal Strategy in 10 Kechwa Ayllus of the Municipalities of Caiza "D" and Cotagaita (Potosi) which systematizes procedures (i) to liaise the midwifewith healthcenter/ obstetrician to respond to the needs of a pregnant woman or one giving birth; (ii)to identify pregnant women; (iii)to identify signs of risk during pregnancy, labor, birth and post-partum, with instructions; (iv) to apply women's and children's rights to health care.32 1.3 Development and Implementationof the Quality-based Program 266. The VTM&I is responsible for reviewing all the norms and instruments for the administration of the NationalQuality HealthProgram (PRONACS). 32 Also, the study "One OJTWO" discussesthe involvementofthe Aymara husbandinprenatal, birth, andpostnatal care in Santa Rosa, ElAlto. It is traditionalto pamper the women duringpregnancy, with massages (manteo),not allowingher to carry heavy weights, and ensuringthat she eats a proper diet. Helpingthe wife amongthe Aymara booststhe husband's self-esteem. 99 267. Manuals, posters and graphic materials on SAFCI and SU SALUD, for training as well as for promotional purposes to be displayed in key facilities (health facilities, schools, community rooms) will needto be elaborated with an intercultural focus, for different regions ofthe country. Component2: IntegratedHealth ServicesNetworks.Family, Community and InterculturalHealth 268. The SAFCI model seeks to complement bio-medicine and traditional medicine, within a framework of mutual recognition, respect, and willingness to work jointly to improve the health of Indigenous, Afro-Bolivian and campesinos of indigenous descent. 269. SAFCI serves the individual, the family and the community with an intercultural health model where the network of health providers is linked to the social control network (gestidn social) and the other sectorswhich have incidence on the health of the population. 2.1 Developmentand strengthening of Intercultural Maternal and Infant HealthReferral Network. 2.1.1 Diagnosisof the installedcapacityof the health networksin Projectareas. 270. The diagnosis and geo-referential mapping of facilities, human resources, equipment, infrastructure, and communications resources (radio, telephone, internet, transport and roads) in the network should not only quantify the resources, but also account for intercultural relevance of facilities, that is, not only how many resources, but also whether they are being adequately used by the intended beneficiaries, particularly in multi-cultural contexts. The diagnosis will be used to draw the baseline to measure future impact. The diagnosis should include information systems, epidemiological surveillance, social control systems, health services providers (bio-medical and traditional healers and midwives accredited by their communities as such). 2.1.2 Re-design of the healthfacility networks 271. A renewed agreement with FPS will include guidelines and norms for rehabilitation and new construction of health facilities with an intercultural approach. As agreed with FPS, a study should be carried out, based on a diagnosis and analysis of successful and unsuccessful experiences in intercultural health infrastructures in the country. The study should provide the methodology for working with communities before, during and after the project. It should provide participation schemes for decision- making, agreement on financing and maintenance. 272. For already existinginfrastructure which is not beingusedto its full potential, as indicatedby the diagnosis, the methodology should provide guidelines for community organization to increase proper utilization. The methodology should conclude with a prioritization of the infrastructure that the communities can maintain, an improvement or construction plan, a financial plan, and a maintenance plan with signed commitments by stakeholders (municipalities, churches, NGOs, national and international organizations, and other civil society organizations.) 273. Certain infrastructure such as the birthing home, the short-term lodge, the Traditional Medicine Center, may preferably form a "complex facility" near the Basic Hospital, to serve the entire health network, as described below. 2.1.3 Implementationof infrastructureand equipment of the health networkwith an intercultural focus. Based on the initialdiagnosis andbaseline, the involved communities may demandthe following: 100 274. The Birthinghome(Casa Materna). A CumMaterna is a house rehabilitatedor built next to a hospital in municipalities with high indices of maternal and infant mortality in remote areas. Pregnant women identified by midwives or brigades as `high-riskcases' may come to the birthinghome two weeks before child birth, and stay until fully recuperated. Considerations o f the architecture (lights, colors, pictographic signs, furniture height)may be important. Birthinghomes should always be located close to a surgical unit in case a surgery is needed. International experience may shed light on the methodology for promotion (to organize the demand), planning, funding, and implementation with sustainability. All the main stakeholders of the health network, including the municipality, churches, NGOs, Associations, businesses, universities, should participate from the beginning, to ensure ownership and commitment with a maintenance plan. The organized stakeholders should form a Committee to oversee the planning and implementation of the birthing home, The Committee, together with the communities, would then elaborate the rules for the utilization of the home, time of stay, duties and responsibilities of pregnant women and their families, and of stakeholders (MSD, base hospital, NGOs, associations, churches, clubs, etc.). 275. The short-term stay lodging "Albergue, Alojamiento". Short-term lodging is envisioned as a rehabilitated house close to a hospital, to allow illpersons or relatives accompanying patients to stay for few days (2-3) instead o f going back-and-forth to distant homes. The objective o f the lodging is to provide a place to stay for patients who are at risk but should not take hospital space/attention, and for relatives who may accompany a patient and need a place to sleep. A Committee selected by the health network (MSD, base hospital, NGOs, associations, churches, clubs, etc.) together with the community will agree on funding, designofthe lodge, rules for maintenance, and responsibilities ofthe guests. 276. The TraditionalMedicine Center (TMC). One TMC will serve an entire health network. The health network community may decide the composition of the center. It may include: one or more practice rooms for traditional healers and midwives, a room for massages, a lab for preparation of traditional medicine, a room to store herbs and an herb-drier,a training room for "Encounters for mutual enrichment", a spiritual corner (Chapel) or other as needed. The purpose o f the TMC is to provide a place where the traditional and biomedical health providers can meet, discuss their different approaches, exchange views, learn from each other, and work jointly. The center is also meant to demystify the healing practices of both groups. A Committee selected by the health network should decide its organization, planning and maintenance. An herb gardenmay be neededoutside the facility. 277. The First and second level facilities. Intercultural adaptation o f health facilities of primary and secondary care should also be decided by the organized community, according to their needs and expectations. The objective is to increase the utilization of facilities and to create links between bio- medical staff and the traditional network. The main adaptations include: (a) Intercultural birthing room (purto humunizudo) which may be different in different parts of the country; but for the most part includes: a room or part of a roomwith a corner dedicated to vertical birth(standing, leaning, kneeling, or squatting) on a small platform (for comfort of the doctor or midwife); a bar, or a ladder-bar, or other for holding onto to push; a sheepskin or mattress on the floor; and culturally-adequate room decoration. Birthingrooms are being customized inthe highlands as well as lowlands and valley. The objective is to give the pregnant woman a choice of giving birthin an environment as similar to home as possible, or the conventional medical stretcher, to avoid the trauma of being forced to give birth on a metallic bed. Considerations of room temperature, colors (walls, sheets), lighting (dim lights), no windows, bilingual symbols are important. Some rooms may include a secondbedfor a companion, midwife or relative. 278. The waiting room may also be adapted to attract more people to health facilities, with warm colors, comfortable non-metallic seating, colorful promotional materials and/or video recordings of interestinginterculturalexperiencesinother parts of the country are recommended. 101 2.1.4 Managementof healthstaffwithin the frameworkof SAFCI 279. The SAFCI model will include a social specialist, a Nutritionist (for Integrated NutritionUnits), GynecologistlObstetrician,Pediatrician, Anesthesiologist, and Surgeon. This health model seeks health workers who speak the local language or are willing to learn to communicate in it. SAFCI staff will undergo sensitivity training to deal with Indigenous peoples and observe agreed interculturalprotocols. 280. The SAFCI model will seek to involve medical residents inthe health network facilities. It will train permanent health staff in situ, under the approaches o f learning-by-doing, direct observation, and practicaltraining 2.1.5 Operationaldevelopmentof the healthfacilities networks 281. A value-added feature of bringingboth health systems together is to have a referral and counter- referral systemthat may allow high-riskpatients to be quickly identified and referredto a qualified health facility. The referral network system will needto include the traditional health network operating in each community inthe country. An effort will be made to identify, train and certify eligible traditional healers and midwives (men and women). Following best practices of culturally-adequate referrals and counter- referrals used by NGOs, the project will elaborate forms that can be easily filled out and understood by healersand midwiveswho may neither read nor write. 282. The traditional healers and midwives (female and male) are an important part of the health network. Mapping of traditional healers and midwives, under VTM&I i s beingcarried out in some of the departments, as a first step. The second step will be the sensitivity training of bio-medical staff and the traditional healer networks in the municipalities targeted by the project. The operational arrangements, particularly for the referrals and counter-referrals will need to be agreed on by the bio-medical staff and traditional healersand midwives in eachhealth network. 283. Accreditatiodcertification of health facilities. The following is suggested to be included among the criteria for accreditation under SAFCI: (i) quality standards adapted to serve Indigenous users, (ii)communicationwith beneficiaries (inboth languageand empathic actions), (iii)participationof stakeholders in the decision-making processes of the health facility, (iv) a system to monitor users' satisfaction with services received. 284. Accreditation and Certification of traditional healers & midwives (male and female). Accreditation is done by the community in consensus, based on years of service, acquired prestige, and accomplishment of hisher life-time (believed to be "supernatural" mandate). Certification is done by the VTM&I, under the followingcriteria: (i) Accreditation by the community; (ii) Minimumnumber of years of experience; and (iii)Sensitivity training to approach the conventional system for mutual enrichment activities, and agreement to provide referrals to hospitals, health centers and posts. 2.2 Strengthening of the local health management through the promotion and community participation. 285. As a rule-of-thumb, informed consultations with the affected population and inclusion of traditional community authorities should take place before interventions. 286. As brigades serve hard-to-reach areas, certain protocols will be observed, such as: (a) contact the traditional authorities first and be introduced by them to the community, (b) engage with Indigenous 102 communities, (c) identify culturally-specific behaviors, (d) Show respect for traditional practices, (e) adapt brigade schedule to that of the community, (f) agree on the logistic arrangements (i.e. covered/private place for gynecological exams). It is a best practice to agree with the community on these protocols early on in the brigade vkits. The members of the brigades should preferably speak the local language(s) and show sensitivity for the culture. In case of uncommon languages, the brigade team together with the community should identify community memberscapable of serving as interpreters. 2.2.1 Health promotion, disease prevention, creation of healthy environments, and social communication. 287. Traditional medicine promotes health surveillance and disease prevention, and creates healthy environments. In hard-to-reach areas, the traditional healers are available 365 days of the year for community surveillance. As they constitute the most immediate source of health advice and medication, the MSDshould providetrainingand quality control simultaneously. 288. SAFCI residents are viewed by VTM&I as a new crop of medical residents beingtrained at the moment to provide intercultural health servicesto people particularly inrural areas. 289. Several types o f training are being considered under the SAFCI model, as explained below. Training through direct observation andpractice, instead of lectures, i s encouraged (a) Sensitivity training on the Intercultural Health Approach within the SAFCI model, to acknowledge, accept and respect both bio-medicine and the traditional practices. The first step should be sensitivity training of: (a) The central MSD staff, (b) SAFCI residents, (c) Directors of health networks, (d) Authorities at the department, prefecture, municipal and local levels, (e) Permanent and itinerant Medical staff including doctors, nurses, auxiliaries, receptionists and other support staff, (f) The traditional health network includinghealers, midwives (male and female), and traditional authorities. (b) "Encounters for mutual enrichment" are in-situ training sessions or workshops in non-formal settings, to be done at two levels: (i)between midwives (male and female) and medical staff; and (ii) between MDs and traditional healers. The purpose i s to establish rapport, to discuss and learn from each other on how to prevent disease and how to solve health problems. The goal is to allow patients to make informed decisions as to which medicine to use first, Best practices show it is possible for academic and traditional practitioners to complement each other and treat patients jointly or alternatively. Protocols should be established early on as a result of these encounters. Having a traditional medicine center near the basic hospital facilitates this interaction. (c) Studies. The following studies have been included in the project design: (i)Systematization of traditional healing and feeding practices in Originary/Traditional cultures, to support good practices, and discourage unhealthy ones. It has 2 parts: (1) a desk review to assess practices already documented; and (2) systematization of other practices in the field. (ii)Systematization, diagnosis and analysis of successful and unsuccessful experiences in intercultural health infrastructures in the country. The study should provide FPS the methodology for working with communities before, during and after the project. It should include participation schemes to decide on financing, implementation, and maintenance of the facilities. 2.2.2 Strengtheningof shared responsibilitiesinthe administrationof health 290. Support to the development of community-based committees for data analysis. Local authorities, health staff, traditional healers will participate in the assessment of the health situation of the community, inorder to make decisions and monitor completion. 103 291. Follow-up and implementationof community-based pharmacies.A volunteer, accredited by the community, is responsible for the administration of the pharmacy. 292. Sensitivity and other training for the DILOS, health teams, leaders and organizations, and the traditional health network on the responsibilities inthe administration of community health. Development of a culture of reportingresults to the stakeholders and beneficiaries. 3. UniversalHealthInsurance (SU SALUD) 293. Training at departmental, municipal and local level on promotional and administrative aspects of SU SALUD is being carried out at the national level with an intercultural focus. Promotional workshops include local and traditional authorities who, in turn, disseminatethe information intheir communities, in the local language. 3.1 Affiliation 294. Mass affiliation through brigades, with the help of local authorities, i s beingused inrural areas to register everyone in the household. Local staff speaking the local language has been key to reach isolated families. An agreement of the MSD with Civil Registryfor mass affiliation allows the provision of birth certificates on-site, which is a value-added product of affiliation. The biographic information inthe carnet is in Spanish, but an important note on its usage i s also printed in Aymara, Quechua and Guarani, on the back of the form. 3.2 Monitoringand evaluation (technical, administrativeand financial). 295. The "ethnic group", and "language used" variables are being added to the information system, baseline, and affiliation forms, inorder to be able to disaggregate ethnographic information on affiliation, awareness o f benefits, access to the insurance, use of the facilities, and impact on health indicators by ethnic group. 296. A strategy to evaluate levels of satisfaction with the services financed by this project will be an annual assessmentof a small random sample of users of health services (permanent and mobile). This will allow MSD to make adjustments through implementation. A key project indicator is "OriginaryDndigenous users' satisfaction with services received (financed by the project). 297. Institutional framework. Assessment of the capacity and commitment of the institutions responsible for implementing and monitoring the agreed plans. The VMT&I sets the norms of intercultural health in the sector. It will work together with the MSD departments on project implementation. Strengthening of the VMT&I will be of keen importance for the successful implementation ofthe project. 298. Descriptionof proposals to strengthen the institutional capacity. MSD will facilitate the transfer of quality intercultural norms to SEDES, municipalities and local levels. Sensitivity training of health staff will be carried out at all levels. For component 1, central and departmental staff will be trained to carry out essential intercultural functions. For component 2, sensitivity training and strengthening of the local level and brigade teams will take place. Under component 3, community leaders and groups will be sensitized and trained for the promotion and organization o f massive affiliation of populationto SU SALUD, with the participation of municipalities and local networks. 104 299. Mechanisms to monitor plans agreed upon. Inthe selectedhealth networks, indicators will be monitored to assess performance. Each level (central, departmental, municipal, local) is responsible for monitoring and evaluation through different mechanisms, At the local level, responsible entities will submit reports (rendicidn de cuentus) to the population (via assemblies), and their community and institutional authorities, on the efficacy and efficiency o f agreedupon plans and programs. 300. In the case of SU SALUD, two semi-annual meetings will take place to analyze its operation, with the participation of four delegations per department including municipal authorities and civil society organizations. The state of the program will be disclosed to the general public to guarantee transparency inthe 82 municipalities ofthe project. 301. Institutional arrangements, including human and financial resources for supervisidn and implementationof agreed plans. The Project managementwill be under the Vice-Ministry of Health. It will coordinate with the Quality Service Directorate, Health Insurance, Traditional Medicine and Intercultural HealthVice-Ministry, PlanningDirectorate and SNIS. 105 Annex 11: ProjectPreparationand Supervision BOLIVIA: EXPANDINGACCESS TO REDUCEHEALTHINEQUITIES-APL I11 Planned Actual PCNreview 09/05/2007 InitialPID to PIC 0912412007 InitialISDS to PIC 10109/2007 Appraisal 1211Of2007 Negotiations 1211212007 BoardfRVP approval 01/24/2008 Planned date of effectiveness 07101/2008 Planned date of mid-termreview 09/15/2010 Planned closing date 06/30/2013 Key institutions responsible for preparation of the project: MINISTRYOF HEALTHAND SPORTS. At&.: Dra. NilaHeiedia, Minister.-Dra. MarciaRgmirez, Project Coordinator MSDand Dr.German Crespo, PlanningDirector MSD. Bank staff and consultants who worked on the project included: Name Title Unit Marcel0 Bortman Task Team Leader LCSHE KeithHansen Country Sector Manager LCSHH Daniel Cotlear Country Sector Leader LCSHH Fabiola Altimari Counsel LEGLA Patricia de laFuenteHoyes Sr. Finance Officer LOAFC Lourdes Consuelo Linares Sr. Financial Mngmt Spec. LCSFM Xiomara Morel Sr. FMSpecialist LCSFM Luz Zeron Consultant, FM Specialist LCSFM Maria Lucy Giraldo Sr. Procurement Specialist LCSPT Ximena Traa-Valarezo Social Evaluation Specialist LCSHD Patricia Alvarez Operations Officer LCSHE Teddy Landaeta Consultant LCSHD Miriam C6spedes Procurement Assistant LCSPT Javier Jahnsen Consultant LCSHD Maria Alejandra Velasco Consultant LCCBO Cecilia Lorena Brady Consultant LCSHH Jorge Villena Chhvez Consultant (Health and LCSHD Environment) Julio Velasco ResearchEconomist LCSPE Julio Loayza B O Office Economist LCSPE M6nicaClaros TeamAssistant LCSHD Patricia Orna Program Assistant LCSHD Bank funds expendedto date on project preparation: 1. Bank resources: US$ 195,029.47 2. Trust funds: 0.00 3. Total: US$ 195,029.47 EstimatedApproval and Supervision costs: 1. Remaining coststo approval: US$71,535.53 2. Estimated annual supervision cost: US$97,000.00 106 Annex 12: Documents in theProjectFile BOLIVIA: EXPANDING ACCESS TO REDUCE HEALTHINEQUITIES -APL I11 1. Project files usedfor the Bolivia HealthSector ReformProject (APL Iand APL II), Period 1999-2004. 2. Ayudas Memorias. World Bank.Period 2000-2004. 3. Project Appraisal Document BO HealthSector Reform Project (APL I). World Bank. June, 1999. 4. Project Appraisal Document BO SecondHealthReformProject (APL I1). World Bank.June, 2001. 5. Implementation Completion Report BO HealthSector ReformProject (APL I). World Bank.June, 2004. 6. Bolivia InterimStrategyNote (ISN). World Bank.October, 2006. 7. Health, Nutritionand Population Strategy Note. World Bank. April 2007. 8. Economist Country Report, Bolivia Country Profile. 2006. 9. Informe Evaluacidn Social. Ministerio de Salud. 10. Informe de Evaluacidn Ambiental, Bolivia SecondHealthReformProject (APL 11). Banco Mundial. 11. Salud Ambiental. Villena Chavez, Jorge. October, 2007. 12. Plan Nacional de Desarrollo Sectorial. Ministry of Health. 2007. 107 Annex 13: Statementof Loansand Credits BOLIVIA: EXPANDING ACCESS TO REDUCE HEALTHINEQUITIES-APL 111 Difference between expectedand actual Original Amount inUS$Millions disbursements ProjectID FY Purpose IBRD IDA SF GEF Cancel, Undisb. Orig. Frm. Rev'd PO83979 2007 BO UrbanInfrastructureProject 0.00 30.00 0.00 0.00 0.00 31.62 0.00 0.00 PO83051 2005 BORuralAlliances 0.00 28.40 0.00 0.00 0.00 27.45 0.67 0.00 PO73367 2003 BODecentInfrasfor RurTransformation 0.00 20.00 0.00 0.00 0.00 19.17 16.35 4.79 PO68968 2002 BORoadRehab.& MaintenanceProject 0.00 77.00 0.00 0.00 0.00 38.70 23.49 0.00 PO74212 2001 BO-HealthSector ReformAPL I1 0.00 35.00 0.00 0.00 0.00 4.71 -1.04 0.00 Total: 0.00 190.40 0.00 0.00 0.00 121.65 39.47 4.79 BOLIVIA STATEMENT OF IFC's Held and DisbursedPortfolio InMillions ofUSDollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 1995 BISA 0.00 0.54 0.00 0.00 0.00 0.54 0.00 0.00 1998 BISA 0.00 0.09 0.00 0.00 0.00 0.09 0.00 0.00 2003 BancoLos Andes 6.60 0.00 0.00 0.00 6.60 0.00 0.00 0.00 2003 Banco Sol 4.00 0.00 0.00 0.00 4.00 0.00 0.00 0.00 1999 CBTI 0.00 0.00 0.85 0.00 0.00 0.00 0.85 0.00 1994 COMSUR 0.00 0.00 1.30 0.00 0.00 0.00 1.30 0.00 1991 CentralAguirre 0.00 0.24 0.00 0.00 0.00 0.24 0.00 0.00 2001 CentralAguirre 1.69 0.00 0.00 0.00 1.69 0.00 0.00 0.00 1999 Electropaz 18.04 0.00 0.00 0.00 18.04 0.00 0.00 0.00 2003 FIE 1.25 0.00 0.00 0.00 1.25 0.00 0.00 0.00 1993 GENEX 0.10 0.00 0.00 0.00 0.10 0.00 0.00 0.00 1999 Illimani 3.84 0.00 0.00 0.00 3.84 0.00 0.00 0.00 Minera 0.00 3.40 0.00 0.00 0.00 3.40 0.00 0.00 2001 PQB 10.50 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2003 PRODEM 2.45 0.00 0.00 0.00 2.45 0.00 0.00 0.00 2003 TDE S.A. 12.72 0.00 15.00 0.00 12.72 0.00 15.00 0.00 TRECO 0.00 1.16 0.00 0.00 0.00 1.16 0.00 0.00 2001 TelecelBolivia 3.33 0.00 5.00 1.43 3.33 0.00 5.00 1.43 2005 Transierra 45.35 0.00 0.00 86.05 45.35 0.00 0.00 86.05 Total portfolio: 109.87 5.43 22.15 87.48 99.37 5.43 22.15 87.48 108 Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic Total pendingcommitment: 0.00 0.00 0.00 0.00 109 Annex 14: Country at a Glance BOLIVIA: EXPANDINGACCESSTO REDUCEHEALTHINEQUITIES-APL I11 L a t h Lower- POVERTY and SOCIAL Amerlca mlddle- ~ollvicl 6 Carlb. income Jevelopment diamond. 2005 Population, mid-year(millions) 9 2 551 2 475 ON1percapita (Atlas method, US$) Lifeexpectancy IOU 4,008 19% GNI(Atlasmethod, US$billions) 93 2,2u 4,747 T Average annual growth, 1999-06 Population (Sy 2 0 14 10 Laborfona(4 30 2 2 14 Gross primar) Most recent estimate (latest year avallable, l999-06) capita P0varty (%of populatlon belownationalpoveriyline) 63 Urbanpopulation (%oftotalpopulation) 64 77 50 Lifeexpectancyat birth ()ears) 65 72 70 I infant mortality (per 1000live birihs) 54 27 33 Childmalnutntlon (%of childrenunder5) 8 7 12 A C C ~ S Sto improvedwatarsourca Access to an improvadwatersource (%ofpopulation) 85 91 62 Literacy(%ofpopulation age Is+ 87 90 69 Gross primaryenrollment phof school-age population)) 113 18 1yI -Bo //via Male 114 P1 115 -Lo rnr-m/ddle-Inco megruup Female x) W m KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1986 1996 2004 2005 GDP (US$ billions) 3 1 6 7 6 7 9 3 Gross capitalfonnation/GDP 8 5 152 P 4 Trade I Exports Of goods andsaNicas/GDP 8 0 226 30 9 Gross domestic savings/GDP 157 0 6 6 1 Gross national savings/GDP 9 1 0 6 6 8 T Current account balance/GDP -139 -50 3 3 2 0 Domestic Capital Interestpayments/GDP 5 0 2 3 15 savings formation Total debt/GDP 1539 785 70 0 Total debt service/axpo~s 494 293 6 6 Present valueof debtlGDP 345 Present valueof debt/expofts a89 Indebtedness 1985-95 199546 2004 2005 2006-09 (averageannualgmwth) GDP 3 5 2 9 3 9 4 1 3 7 -Bolivia GDP percaplta 12 O B l 9 2 1 2 0 - - Lornr-middle~ncomegmup Exports Of goods andSeNiCBS 9 5 4 7 6 1 STRUCTURE of the ECONOMY 1985 I995 2004 2005 Growth of capltal and GDP (K) (%of GDP) Agnculture 20.6 6.9 15.7 40T Industry 34.8 33.1 30.9 Manufacturing Q.3 8.0 14.4 Services 44.6 50.0 53.4 Householdfinal consumptionexpenditure 73.6 75.6 68.6 Generalgov't final consumptionexpenditure 0.6 13.6 15.3 Imports of goods andsewices 22.8 27.2 27.2 I -0CF d G D P 1986-95 1996-06 2004 2005 (averageannualgmwthj IGrowth o f exports and Imports (Oh) I Agriculture 2.7 2.5 0.3 Industry 4.3 2.3 5.8 Manufacturing 3.7 2.6 5.1 SeNiCeS 2.9 3.4 2.9 Householdfinal consumptionexpenditure 2.9 2.9 2.6 Generalgov't final consumptionexpenditure 12 2.9 -0.6 Gross capitalformation 4.1 0.0 -0.1 Imports Of goods and SeNICeS 5.6 3.3 5.4 Note:2005data are preliminaryestimates. This tablewas producedfrom the Development Economics LDB database. 'Thediamonds showfourkayindicators inthecountry(in boid)comparedwithits income-groupaverage. lldataaremissing,thediamondwill be incomplete. 110 Bolivia PRICES and GOVERNMENT FINANCE 1985 1995 2004 2005 Domestic prices (%change) Consumer prices 11749.6 a.2 4.4 5.4 ImplicitGDP deflator P,336.7 114 7.4 4.6 Government finance (%of GDP,includescurrent grant@ Currentrevenue 25.7 26.8 27.9 00 01 02 03 04 05 Currentbudgetbalance 5.7 3.4 5.0 Overallsurplus/deficit -18 -5.6 -4.4 -GDPdefldor &CPI TRADE 1985 1995 2004 2005 (US$ millions) Export and Import level. (US$ rnlll.) Totalexqorts (fob) 628 1075 2,146 2,527 13.000 Zinc 29 8 1 82 Silver x) 71 91 Manufactures 300 380 Total imports (cif) 691 1385 1844 2.84 Food 55 74 Fuelandenergy 2 55 9 2 Capitalgoods 254 535 467 Exportpriceindex(20OO=VOJ 7 6 m t?O 133 88 00 01 02 03 04 05 Importpriceindex(200O=VOJ 63 x)O x)4 0 7 mExports mlmports Terms of trade (20OO=VOJ 280 m m P4 GDP (US$ biiiions) ,+, 3 1 6.7 0.7 9.3 Gross capital formationlGDP 19 5 15.2 12.4 Trade Exportsof goods and services/GDP 19 0 22.6 30.9 Gross domestic savingslGDP 15 7 10.6 16.1 Gross national savinQs/GDP 9 1 10.6 16.8 Current account balance/GDP -13.9 -5.0 3.3 2.0 Capital Interest pavrnents/GDP 5.0 2.3 1.5 savingsDomestic formation Total debffGDP 153.9 76.5 70.0 Total debt service/exports 49.4 29.3 16.6 Present value of debWGDP 34.5 Present value of debffexports 108.9 Indebtedness 1985-95 199595 2004 2005 200599 (averape annualQrOwthJ GDP 3.5 2.9 3.9 4.1 3.7 -Bolivia GDP per capita 1.2 0.8 1.9 2.1 2.0 Lower-middle-rncornegroup Exportsof QOOdSand services 9.5 4.7 16.1 1985 1995 2004 2005 Growthof capltal and GDP (Ye) (% of GDPJ I lndustry 34.8 33.1 30.9 Manufacturing 17.3 19.0 14.4 Services 44.6 50.0 53.4 General gov't final consumption expenditure 10.6 13.6 15.3 -GCF *GDP 1985-95 1g95.05 IGrowth of exports and Imports (%) I (average annualgrowth) 1I AQriCUlture 2.7 2.5 0.3 20 .? Industry 4.3 2.3 5.8 Manufacturing 3.7 2.6 5.1 Services 2.9 3.4 2.9 Householdfinal consumption expenditure 2.9 2.9 2.6 General Qov'tfinal consumption expenditure 1.2 2.9 4.6 Gross capital formation 4.1 0.0 -10.1 Imports of QOOdSand services 5.6 3.3 5.4 Note: 2005 data are preliminary estimates. 111 Annex 15: Maps BOLIVIA: EXPANDING ACCESS TO REDUCE HEALTHINEQUITIES APL I11 - MAPIBRD33374 112 IBRD 33374 70°W 65°W BOLIVIA SELECTED CITIES AND TOWNS B R A Z I L DEPARTMENT CAPITALS NATIONAL CAPITAL To RIVERS Porto Velho 10°S Abunã MAIN ROADS RAILROADS Miles PA N D O DEPARTMENT BOUNDARIES Riberalta Cobija Madre de Dios INTERNATIONAL BOUNDARIES Asunción Asunción 60°W This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Puerto Heath Yata Guaporé Group, any judgment on the legal status of any territory, or any Lago Lago endorsement or acceptance of such boundaries. Madidi Huaitunas Rogaguado P E R U Beni Magdalena Lago B E N I Rogagua Santa Ana Lago de Yacuma San Luis Reyes Apere amoré San Apolo M Trinidad Paraguá San Borja S an 15°S L A PA Z Puerto Miguel Blanco Martín 15°S Acosta Lago Nevada Caranavi Ascención Ascención Titicaca Ichoa To Illampu Puno (6,362 m) Guaqui Quiquibey Concepción Concepción LA PAZ Nevada Las Petas Viacha Illimani pay) (6,462 m) Chapare Gran d e San Ignacio C O C H A B A M B A Ichilo Yapacaani (Gu Cochabamba Montero S A N TA C R U Z Desaguadero San José de Chiquitos José Oruro Santa Cruz To Nevada Sajama Arica (6,542 m) Cordiller O R U R O Banados del Lago C o rdiller Aiquile Roboré Roboré Izozog Puerto Poopo Sucre Santa Suárez Suárez Salar de o Ana Coipasa Potosí Potosí To 20°S Iquique O Central Tarabuco C h a c Salar de C Pilcomayo G r a n To Campo Grande Carniri 20°S na Uyuni H Uyuni U Q U I S PA R A G U AY ce Pila y a A C A P O T O S Í To O C H I L E ccidental Villa Montes Mariscal Estigarribia Pacific To Calama G ra n d eeLd Yucuiba Tarija ípez TA R I J A Viljazón iljazón To Tartagal To BOLIVIA Abra Pampa 0 50 100 150 Kilometers To San Ramón de la Neueva Orán 0 50 100 Miles A R G E N T I N A 70°W 65°W 60°W SEPTEMBER 2004