@#&OPS~Doctype~OPS^dynamics@afpidaprcoverpage#doctemplate Report No: PIDIAF0110 Project Information Document (PID) Appraisal Stage | Date Prepared/Updated: 26-Nov-2024 The World Bank Investing in Social Protection for Inclusion, Resilience, and Efficiency (INSPIRE) Project (P181081) – Additional Financing Request 1 @#&OPS~Doctype~OPS^dynamics@afpidaprbasicinformation#doctemplate BASIC DATA A. Product Information Main: Investing in Social Protection for Inclusion, Resilience, and Efficiency (INSPIRE) Project (P181081) Operation ID Product/Financing Instrument P181081 Investment Project Financing (IPF) Beneficiary Country/Countries Geographical Identifier Ukraine Ukraine Practice Area (Lead) Social Protection & Jobs Borrower(s) Implementing Agency Ukraine Ministry of Social Policy of Ukraine Additional Financing Request 1 Estimated Appraisal Date Estimated Board Date 30-Oct-2024 28-Nov-2024 Development Objective Original Development Objective (Approved as part of Decision package on 29-Nov-2023) The development objectives are to (i) contribute to the sustainable provision of social assistance to vulnerable groups, and (ii) improve the coverage and efficiency of selected social safety net programs. Components Provision of Social Assistance to Vulnerable Groups @#&OPS~Doctype~OPS^dynamics@afpidaprprojectfinancing#doctemplate COSTS & FINANCING (US$, Millions) SUMMARY Proposed Last Approved Addition Total Page 1 The World Bank Investing in Social Protection for Inclusion, Resilience, and Efficiency (INSPIRE) Project (P181081) – Additional Financing Request 1 Total Operation Cost 1,200.00 664.00 1,864.00 Total Financing 1,200.00 664.00 1,864.00 Of which IBRD/IDA 1,200.00 662.00 1,862.00 FINANCING DETAILS Additional World Bank Group Financing Last Approved Financing Total International Bank for Reconstruction and Development 1,200.00 662.00 1,862.00 (IBRD) International Bank for Reconstruction and Development 1,200.00 662.00 1,862.00 Non-World Bank Group Financing Trust Funds 0.00 2.00 2.00 Early Learning PartnershipNEW 0.00 2.00 2.00 IDA Resources @#&OPS~Doctype~OPS^dynamics@afpidaprenvsocrisk#doctemplate Other Decision (as needed) B. Introduction and Context 1. The proposed Additional Financing (AF) in the amount of US$664 million is to scale up activities under the Investing in Social Protection for Inclusion, Resilience, and Efficiency (INSPIRE) Project. The proposed AF is supported by the credit enhancement from the Advancing Needed Credit Enhancement for Ukraine (ADVANCE Ukraine) Trust Fund with the contribution from the Government of Japan1 and co-financed by a US$2-million grant from the Early Learning Partnership (ELP) Multi-Donor Trust Fund (MDTF), housed at the World Bank.2 The proposed AF will support structural 1 This project will use add-up capitalization to lower Ukraine’s debt service burden through March 31, 2027. Add-up capitalization reserves an estimated amount of interest and commitment charges over the project implementation period from the overall loan am ount. Ukraine’s Ministry of Finance requested use of add-up capitalization for the Project (interest accruing and fees due under the terms of the loans) supported under the Japan’s credit enhancement by letter on October 27, 2023. 2 Early Learning Partnership MDTF, https://www.worldbank.org/en/programs/early-learning-partnership Page 2 The World Bank Investing in Social Protection for Inclusion, Resilience, and Efficiency (INSPIRE) Project (P181081) – Additional Financing Request 1 improvements of the Social Safety Nets (SSN) to be achieved through (i) piloting a new Basic Income Benefit (BIB) program, which represents a major shift in social policy by combining various benefits into a single, efficient, adaptive, and inclusive program; (ii) further expanding the Guaranteed Minimum Income (GMI)—Ukraine's main anti-poverty social assistance program—to support low-income families during the transition to the BIB; (iii) improving the administration of benefits; (iv) introducing rent subsidies and people-centric social services to strengthen support for Internally Displaced Persons (IDPs); (v) and enhancing access to affordable childcare for vulnerable families. 2. The project will continue to support the government’s provision of 29 types of benefits to vulnerable groups that include persons with disabilities and their caregivers, orphans and children under guardianship, foster families and families with many children, social pensioners, victims of the Chornobyl nuclear disaster and human trafficking, and socially vulnerable students, and cover around 2.6 million of the most vulnerable adults and children exposed to the devastating impacts of invasion. The project funds will be disbursed to finance 29 types of social assistance benefits against the achievement of 6 Performance-Based Conditions (PBCs) that secure the implementation of important reform actions. These PBCs are aligned with comprehensive and cohesive reform package to accelerate and scale up the modernization of the SSN system, paving the way for introducing the BIB program to significantly enhance support for vulnerable groups. 3. The AF forms an integral part of the international support package for Ukraine to meet its financing needs during 2024–25. The proposed project will bridge the reforms supported by the original INSPIRE project and other World Bank operations with the next generation of SSN reforms. The AF strengthens the World Bank engagement in social protection in Ukraine, helping to sustain the provision of social benefits to over 2.6 million people after February 24, 2022, enhancing existing systems and programs, and contributing to longer-term post-war recovery efforts. Specifically, the AF builds on the ongoing Social Safety Nets Modernization (SSNMP) Project (P128344) and the original INSPIRE project designed to leverage the financing of the Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P178946) and complement the reforms undertaken as part of the Ukraine Relief and Recovery Development Policy Loan (DPL) (P181023).3 Country Context 4. Russia’s invasion of Ukraine continues to impose a severe humanitarian and economic toll. Almost 2.8 years of invasion have resulted in significant civilian casualties, the largest migration crisis in Europe since World War II, the internal displacement of millions of people, a global energy and food crisis, as well as a large-scale destruction of Ukraine’s infrastructure and disruptions in the provision of essential services critically needed to protect and build human capital.4 Due to strong public consumption demand and a supply recovery in sectors related to supporting the defense economy, the Gross Domestic Product (GDP), which declined by 29.1 percent in 2022, grew by 4.8 percent in 3 The ongoing SSNMP (approved on July 3, 2014) and its two AFs support the expansion of the GMI program and other essential reform actions, administrative modernization of the SSNs, and development of digital systems. It also financed emergency response measures to support the poor and vulnerable during the COVID-19 pandemic. The PEACE project (approved on June 7, 2022) and its AFs finance social and administrative expenditures, including pensions, HUS, GMI, and IDP benefits, as well as part of the family benefits, while the DPL (approved on June 29, 2023) supported the government’s efforts to provide social relief and prepare the country for post-invasion recovery. 4 Between February 24, 2022, and September 2024, the Office of the United Nations High Commissioner for Human Rights recorded 37,916 civilian casualties in the country, including 11,973 deaths and 25,943 injuries, with actual numbers being much higher. Approximately 3.67 million people (or 9 percent of the pre-war population) are displaced within Ukraine, and around 6.75 million Ukrainian refugees (around 16 percent of the population) are recorded globally. UNHCR, October 15, 2024, and International Organization for Migration, August 2024, https://data.unhcr.org/en/situations/ukraine#:~:text=Almost%203.7%20million%20refugees%20have,people%20crossing%20has%20f..., https://dtm.iom.int/ukraine Page 3 The World Bank Investing in Social Protection for Inclusion, Resilience, and Efficiency (INSPIRE) Project (P181081) – Additional Financing Request 1 2023. At the same time, Ukraine's recovery pace is projected to slow to 3.2 percent in 2024, reflecting a smaller harvest and a persistent labor shortage. Starting from 2025, Ukraine’s economic growth is expected to accelerate to 6.5 percent under the baseline assumption as export growth resumes, and reconstruction investment supports the demand side. Inflation is expected to pick up in 2024 as one-off factors subside but is projected to decrease from 2025.5 The country’s economic outlook remains conditional on the timing and quantity of external support to ensure the provision of essential public services. 5. The resulting shocks of the invasion have the hardest effects on the poor and vulnerable. Poverty has surged, with over 9 million people now living below the poverty line. This marks an increase by at least 1.8 million individuals since the beginning of the invasion. The World Bank estimates indicate that Ukraine would have had an additional 3 million people in poverty if international partners had not provided support.6 Reforms and investments for recovery and reconstruction may lay the groundwork for Ukraine to progress towards the European Union (EU) accession. After being granted candidate status in June 2022, EU member states agreed in December 2023 to open accession negotiations with Ukraine, recognizing the country's ongoing reform efforts and ability to align with the EU acquis.7 Sectoral and Institutional Context 6. Ukraine's social protection system, as of 2023, redistributed approximately 2.7 percent of GDP through social assistance. The composition of Ukraine's safety net significantly changed between 2022 and 2024. The largest portion of the social assistance budget (59 percent) is now allocated to benefits for people in difficult life circumstances, including social assistance for IDPs and persons with disabilities. This group of benefits is followed by assistance for low- income families, which in 2023 included GMI, HUS, and other energy assistance benefits and absorbed around 27 percent of the social assistance budget. There are over 20 types of family and child benefits in Ukraine, which make up 13 percent of the SSN spending. Social support for rehabilitation of persons with disabilities accounts for 2 percent. The SSN budget increased by over 25 percent in nominal terms between 2022 and 2024. 7. Improving the targeting of the categorical IDP assistance program was crucial to supporting those in need and ensuring the fiscal sustainability of the SSN system. Since February 24, 2022, the number of IDPs has significantly risen, resulting in a substantial increase in spending on the program of 1 percent of GDP in 2022. The categorical IDP benefits grew to absorb 35 percent of the overall social assistance budget. To rebalance the system, in August 2023, the Government of Ukraine (GoU) introduced means and assets testing for beneficiaries and capped the benefit duration to discourage welfare dependency. In addition, a cross-registry beneficiary verification at enrollment using public registries' data was implemented. The original INSPIRE project supported the introduction of these impactful reform measures which allowed to reduce IDP program allocations in the 2024 budget by a fifth compared to 2023 expenditures. 8. Since 2018, the second largest SSN program, HUS, has undergone improvements to better support households vulnerable to energy cost fluctuations. In 2015-16, the program was significantly expanded to mitigate the impact of rising energy tariffs. It absorbed around 2 percent of the GDP at its peak in 2017, channeling aid to 40 percent of the country's households. Subsequent changes implemented during 2018-21 included tightening the social norms used to determine the amount of the transfer, introducing cross-checking of reported incomes and assets, and implementing 5 World Bank, August 1, 2024, https://www.worldbank.org/en/country/ukraine/overview#1 6 World Bank, August 1, 2024, https://www.worldbank.org/en/country/ukraine/overview#1 7 European Commission, 2023, https://neighbourhood-enlargement.ec.europa.eu/system/files/2023-11/EU-UA%20FS.pdf Page 4 The World Bank Investing in Social Protection for Inclusion, Resilience, and Efficiency (INSPIRE) Project (P181081) – Additional Financing Request 1 consumer-level monetization to directly provide subsidies to beneficiaries without involving utility companies. As a result, as much as 42 percent of program funds would reach the poorest quintile in 2020 (30 percent in 2018). 9. The administration of the HUS has been further improved to respond to the challenges posed by the invasion. In 2022, client intake, benefits provision, and payments were given to the Pension Fund of Ukraine (PFU), which improved access to HUS for IDPs and ensure stronger beneficiaries’ data protection. With the support of the INSPIRE project, the GoU introduced proactive identification of potential beneficiaries eligible for energy assistance and automated beneficiary data verification through cross-registry data exchange, including on income, expenses, assets, living area of house or apartment, etc. These measures significantly strengthened the scalability of the HUS, enhancing the ability of the SSN to respond to tariff increases. 10. Over the past decade, the reforms of the GMI program supported by the SSNMP and the INSPIRE project focused on enhancing its coverage and adequacy. Following the 2024 increase in the eligibility threshold8, supported by the INSPIRE project, the average monthly number of families benefitting from the GMI increased from 172,800 (622,000 individuals) in 2023 to 201,400 families (725,000 individuals), in Q2 of 2024. In addition to gradually increasing the eligibility threshold, the GoU has introduced activation conditions to promote self-sufficiency, including strengthening conditionality related to job search capping benefit duration to entice job search. The program rules have been unified, and a start-up grant program for GMI beneficiaries has been launched to promote self-sufficiency.9 The GMI program, despite its dwindling size (0.18 percent of GDP in 2023), boasts the best-functioning targeting mechanism. About 75 percent of GMI assistance is received in the poorest quintile and over 90 percent in the two bottom quintiles. However, its impact on poverty reduction remains limited due to its relatively small coverage: only 3.5 percent of the population in the poorest quintile benefited in 2020. 11. The operations financed by the World Bank consistently support the development of an efficient social services system to ensure comprehensive support to the vulnerable. The GoU is committed to developing the system to improve the coverage of the poor and vulnerable with integrated, high-quality, and user-friendly social services based on individual needs. The division of powers and functions between national and local authorities related to the provision of social services took force under the Law of Ukraine "On Social Services" adopted in 2020. The reform aim is to introduce services that maximize beneficiaries' potential to graduate from social benefits, improve their employability, and help vulnerable households—including families with children, persons with disabilities, IDPs, and other groups— address their challenging life circumstances related to care, health, housing, and psycho-emotional needs. These reform efforts were supported by the SSNMP, INSPIRE, and the recently completed JSDF: Community-based Social Service Delivery Project (P165346), financed by a grant from the Government of Japan.10 The original INSPIRE project supported piloting a new financing mechanism for social services. To develop a social service market and address supply gaps, the GoU co-finances psycho-social services from the state budget through the Fund for Social Protection of Persons with Disabilities, encouraging the participation of non-public providers. 8 In 2015, the eligibility threshold for able-to-work family members was 21 percent of the SM, which increased to 35 percent in 2021 and further to 55 percent in 2024. Similarly, the income threshold for children rose from 85 percent of the SM in 2015 to 130 percent in 2021 and then to 140 percent in 2024. 9 In 2022, the GoU introduced a program promoting small business development and job creation. This program provides start-up grants to unemployed able-to-work GMI beneficiaries. The key parameters of the program are based on the "Hand of Help" pilot that was successfully implemented under the SSNMP between 2017 and 2019. 10 JSDF stands for the Japan Social Development Funds. The project piloted a community-based social service delivery model in 28 communities of two regions of Ukraine from 2018 to 2023. Page 5 The World Bank Investing in Social Protection for Inclusion, Resilience, and Efficiency (INSPIRE) Project (P181081) – Additional Financing Request 1 C. Proposed Development Objective(s) Original Development Objective 12. The development objectives are to (i) contribute to the sustainable provision of social assistance to vulnerable groups, and (ii) improve the coverage and efficiency of selected social safety net programs. The original development objectives remain unchanged for the AF. D. Project Description 13. The AF to INSPIRE will address two main areas: (i) providing immediate social relief by financing 29 social benefits and (ii) enhancing the readiness of the SSN to introduce the BIB, thus bridging the reforms supported by the original project and other World Bank-financed operations with the next generation of SSN reforms. The long-term reform agenda, which includes the introduction of the BIB program, represents a significant shift in social policy by integrating various benefits to improve the system's responsiveness, effectiveness, and inclusivity. The AF, which will support a testing of this new program and enhance benefits administration efficiency, will also focus on linking social assistance for IDPs, which will be integrated into the BIB, with a range of social services to address the needs of this group related to housing, social care, and childcare. In summary, the proposed AF will support the following reform measures: (a) Piloting the new BIB program to prepare the SSN system for nationwide implementation. (b) Further expanding the GMI program to support low-income families during the transition to the BIB. (c) Improving the administration of benefits through centralized payments. (d) Providing rent subsidies and a shift towards people-centric social care services to strengthen support for IDPs. (e) Expanding access to affordable childcare for vulnerable groups, including IDPs and other war-affected groups. 14. The total project amount will be allocated to Component 1—Provision of Social Assistance to Vulnerable Groups. Component 1 will be split into two subcomponents as follows: 1.a. Assistance to Vulnerable Groups—to finance 27 benefits, except for the Municipal Nanny (MN) Program, which includes two types of childcare benefits; and 1.b. Improved Access to Affordable Childcare for Vulnerable Families—to finance benefits under the MN Program. The ELP recipient-executed grant of US$2 million will be allocated to subcomponent 1.b. 15. Subcomponent 1.a.—Assistance to Vulnerable Groups. This subcomponent will finance selected 27 types of social benefits envisaged by five State Budget programs. These benefits provide support to around 2.6 million beneficiaries. 16. Disbursements of funds under subcomponent 1.a. will be triggered by the achievement of six new PBCs. These should be considered as additional conditions the Bank is introducing on project financing to incentivize additional outcomes beyond what can be achieved by financing eligible expenditures alone. These outcomes include increased administrative efficiency of the SSN and demonstrated capacity to protect the poor and vulnerable from becoming trapped in a cycle of poverty. 17. The proposed AF will support measures to prepare the SSN system for introducing the BIB program, a more integrated and people-centric safety net (PBC 7). The BIB, designed to assist the most vulnerable individuals, is a significant reform aimed at addressing the shortcomings of existing cash transfer programs. The new program will Page 6 The World Bank Investing in Social Protection for Inclusion, Resilience, and Efficiency (INSPIRE) Project (P181081) – Additional Financing Request 1 consolidate six existing SSN programs, including the current GMI program, into the BIB to act as a "one-stop shop" for families with multiple vulnerabilities. The spending for these programs accounted for 0.4 percent of GDP in 2023, and the budget allocated for 2024 to finance them makes up 18 percent of the total social assistance budget. IDP assistance is expected to be integrated into the BIB at a later stage of the reform. The eligibility for BIB and benefit amount will be determined using a new, more flexible indicator of basic needs (basic value), thus decoupling the current benefit formulas from the Subsistence Minimum level set by the State Budget Law. 18. Before the BIB nationwide implementation, the AF will support testing this program's enrollment and delivery mechanisms in a pilot mode. Under the pilot supported by the proposed AF, the MoSP, jointly with the Ministry of Digital Transformation, will test the new enrollment and verification protocols that include receiving data from all applicable public registries to verify eligibility for BIB benefits. Under the pilot administration of the BIB will be transferred from the local welfare offices to the PFU who will make decisions to grant benefits based on cross-checking of potential beneficiaries' data available in various state registries against eligibility criteria for assistance. Once the PFU verifies and confirms the proposed enrollment, the BIB will be awarded and paid to a beneficiary. The mechanism for the beneficiary's appeal against the PFU decision has also been put in place to allow applicants to correct the errors that may occur during data matching. Participation in the pilot for beneficiaries is voluntary. Families can choose to switch to the BIB if it provides a larger amount of assistance than the current SSN benefits to which they are entitled. The pilot would allow a small-scale testing of a new program before rolling it out nationwide, tentatively in 2026. 19. The AF will support an increase of the GMI eligibility threshold for children and able-to-work members of applying households by at least 5 percent of the Subsistence Minimum (PBC 8). During the transition to the BIB, the adequacy and coverage of the GMI program needs to be further strengthened to support an increasing number of impoverished families. The increase in the GMI eligibility thresholds would enhance coverage of poor households with social assistance to smooth consumption and compensate for higher costs and lost income to avoid resorting to negative coping strategies with long-term impacts, such as eroding human capital. 20. The AF seeks to incentivize further improvements to enhance administrative efficiency as well as transition to centralized payment of social benefits, which will significantly reduce the time required to receive assistance. The Unified Information System of Social Sphere (UISSS), created with the support of the SSNMP,11 is a comprehensive Management Information System designed to integrate all types of social support within a single digital environment and platform. The Single Social Registry, which is at the core of the UISSS, ensures a centralized accumulation of the data related to all social protection interventions provided to each beneficiary, including beneficiary status, eligibility for social support, and benefits and services provided. To ensure greater administrative efficiency, the MoSP will introduce centralized ex-ante verification of benefits eligibility and payment of social benefits using the UISSS capacity (PBC 9). 21. To ensure comprehensive support for IDPs, the reform efforts will include policies to provide access to affordable housing, long-term social care, and childcare (PBCs 10, 11, and 12). The International Organization for Migration (IOM) estimates that over 3.67 million people remained internally displaced in Ukraine as of August 2024. It is critical to ensure access to safe and secure housing for IDPs, regardless of whether they choose integration in host communities, return, or resettlement. Although 18 percent of IDPs report affordable accommodation as their most pressing need, their limited financial resources can hinder their ability to rent or purchase new homes. To resolve this issue, the GoU will launch a pilot to test a mechanism for rent subsidy provision. 11The MoSP, with financial resources of the state budget and donors’ financing, has developed new software for the UISSS and has begun nationwide implementation while all hardware for the UISSS is provided by the Bank-financed SSNMP. Page 7 The World Bank Investing in Social Protection for Inclusion, Resilience, and Efficiency (INSPIRE) Project (P181081) – Additional Financing Request 1 22. To enhance the support provided to IDPs, the GoU plans to pilot output-based payments for social services for inpatient care and supported living, using the 'money follows the person' (MFP) approach (PBC 11). Based on the data provided by the IOM, 29 percent of IDPs report that at least one member of their household has a disability; the elderly and those who suffer from chronic illnesses make up 49 and 45 percent of the IDP population, respectively.12 The output-based payments for social services closely align with the GoU's social service reform efforts and contribute to rebalancing the existing system. Allowing funds to 'follow the person' supports the transition of beneficiaries from institutions to community-based settings where they may lead more independent lives. Additionally, when payments for social services are output-based, these services would be designed to stimulate broader competition, which can drive efficiency and innovation in delivery. Output-based payments can provide a sustainable funding source for local service providers, ensuring they can continue operating and serving the beneficiaries over the long term. 23. The pilot will focus on community-based service providers13 utilizing the payment model introduced with the support of the INSPIRE project. The Fund for Social Protection of Persons with Disabilities, subordinated to the MoSP, will finance services using state budget proceeds through the "Privatbank"14 and report to the MoSP on the pilot implementation. The National Social Service of Ukraine (NSSU)15 will ensure the selection of service providers to participate in the pilot based on the criteria stipulated in the national legislation. The NSSU will be responsible for quality control and supervision of compliance with national standards for inpatient care and supported living services. Furthermore, the NSSU will train service providers and representatives of local governments to equip them with the necessary knowledge and skills for client intake and service delivery. 24. Subcomponent 1.b.—Improved Access to Affordable Childcare for Vulnerable Families. This subcomponent will co-finance eligible expenditures on two MN benefits provided by the MoSP. The AF will support expanding the MN Program to improve access to childcare for vulnerable families, including IDPs and other war-affected groups. The improvements will be achieved by: (i) reaching new beneficiary groups, such as internally displaced children and children in war-affected areas; (ii) strengthening activation requirements for parents to encourage participation in the labor force, including mothers who bear the burden of unpaid care work; and (iii) expanding small business development and job opportunities for caregivers, the majority of whom are women. The expanded program is expected to lay the groundwork for developing models for family-based childcare and small childcare business development. The funds of the ELP recipient-executed grant will be allocated to subcomponent 1.b. and disbursed based on the evidence provided by the MoSP for eligible expenditures on two MN Programs. @#&OPS~Doctype~OPS^dynamics@afpidlegalpolicyandscreeningrisk#doctemplate 12 Ukraine Internal Displacement Report, International Organization for Migration, October 2023, https://dtm.iom.int/reports/ukraine-internal- displacement-report-general-population-survey-round-14-september-october?close=true 13 The pilot does not provide financing for large-scale residential institutions. Only small-scale community-based facilities that serve the community residents and meet specific eligibility criteria for the quality of services can participate. These criteria include: (i) a maximum of 35 people for inpatient care and eight for supported living; (ii) distance to healthcare or rehabilitation facilities not exceeding 20 km; (iii) access to cooking and laundry facilities for supported living beneficiaries; (iv) space for socializing and leisure at the facility, etc. 14 The Joint-Stock Company Commercial Bank "Privatbank" is the largest in Ukraine. The GoU is the sole shareholder of the bank, owning 100 percent of the shares of its authorized capital. 15 NSSU is the central executive body coordinated by the Cabinet of Ministers through the MoSP. Its primary responsibility is implementing state policies related to social protection and children's rights and ensuring compliance with the legal requirements for providing social support and observing children's rights. Page 8 The World Bank Investing in Social Protection for Inclusion, Resilience, and Efficiency (INSPIRE) Project (P181081) – Additional Financing Request 1 Legal Operational Policies Policies Triggered? Current Projects on International Waterways OP 7.50 No Projects in Disputed Area OP 7.60 No Summary of Screening of Environmental and Social Risks and Impacts The environmental and social risk of the original project and AF is rated as Moderate. The AF for INSPIRE will have overall positive social impacts. The activities supported by the original INSPIRE project and AF are not expected to have any direct adverse social and environmental risks or impacts but take place within a highly volatile context beyond the immediate control of the implementing agency. The project aims to provide direct social benefits to the poor and vulnerable and ensure the continuity of crucial government benefits and services. However, social workers and beneficiaries may live in those areas where ongoing hostilities pose occupational health, safety, and security risks. These risks are highly contextual and beyond the immediate control of the project and are not caused by the activities supported by World Bank financing. The AF will introduce the following changes to the Eligible Expenditure Program (EEP): (a) (i) Social assistance for unemployed individuals caring for the elderly over 80 or persons with disabilities and (ii) monetary compensation for health resort treatment for persons with disabilities will be removed from the EEP, as the government no longer provides these types of assistance. (b) Two new benefits will be added to the EEP: (i) temporary assistance for children deprived of parental care who are placed in temporary care under the Child Is Not Alone program and (ii) a Municipal Nanny (MN) childcare benefit expanded for the period of martial law and for up to three months after it is lifted. The legislation on these two new benefits for compliance with the prescribed environmental and social mitigation measures set out in the ESF instruments has been reviewed and found acceptable. Therefore, no further audit or assessment of retroactive expenditures is required. The project will continue to implement and monitor ESF instruments that will be updated to include AF activities. The project will not involve any physical activities or civil works and will not adversely impact human populations or the environment. However, there are potential risks that the current social assistance and social services programs may have gaps in coverage or not provide adequate support to vulnerable and disadvantaged groups. These groups, especially IDPs, may be disproportionately affected by the ongoing invasion, impacting their income, livelihoods, and health. To ensure comprehensive support for IDPs and address exclusion errors, the AF will support policy measures that provide access to affordable housing, long-term social care, and childcare. The project will also support the expansion of the Guaranteed Minimum Income, the main anti-poverty social assistance program, to better protect poor households during the crisis. Per ESCP requirements, the parent project has prepared an Emergency Preparedness and Response Plan (EPRP) incorporated in the Project Operational Manual, which remains relevant and will be updated to include AF. The EPRP includes measures to protect the safety and security of project workers and nearby communities from war- related hazards and information on warning systems and designated shelters. The POM also has a labor risks section with clear guidance on complying with the relevant requirements of ESS2. The parent project Stakeholder Engagement Plan will be update to include AF. AF will utilize the current communication channels for citizens' feedback established at the MoSP. These allow stakeholders to convey their concerns, questions, and complaints to the GRMs managed by the MoSP and PIU and, if needed, to other parties at the local level. The GRM is accessible, multi-channel, capable of receiving inputs from communities and external stakeholders and responding to issues related to a broad range of project implementation challenges. The parent project has established a confidential reporting channel and redress Page 9 The World Bank Investing in Social Protection for Inclusion, Resilience, and Efficiency (INSPIRE) Project (P181081) – Additional Financing Request 1 mechanisms for gender-based violence that will be expanded to cover AF. The implementation arrangements under the AF will remain the same as those for the INSPIRE project. The MoSP will be the main implementing agency for the AF, which has solid institutional capacity in place, developed during the preparation and implementation of five Bank- financed projects in Ukraine, including the ongoing Social Safety Nets Modernization Project and parent INSPIRE projects. The Borrower's performance in meeting environmental and social requirements is regularly monitored and assessed based on project reports during implementation reviews. Additional environmental and social consultants will be hired by the MoSP as needed to strengthen the PIU capacity. E. Implementation Institutional and Implementation Arrangements 25. The implementation arrangements under the AF will remain the same as those for the INSPIRE project. As the central government body responsible for social assistance policy development, the MoSP will be the main implementing agency for the AF. The MoSP has solid institutional capacity in place, developed during the preparation and implementation of five Bank-financed projects in Ukraine, including the ongoing SSNMP and INSPIRE projects. The Deputy Minister of the MoSP will be responsible for overall project implementation, including the ELP-financed activities, and will lead the project management group established in the MoSP under the INSPIRE to guide implementation and make decisions. These implementation arrangements will be reflected in the POM. @#&OPS~Doctype~OPS^dynamics@afpidisdscontactpoint#doctemplate CONTACT POINT World Bank Kateryna Petryna Sr Social Protection Specialist Page 10 The World Bank Investing in Social Protection for Inclusion, Resilience, and Efficiency (INSPIRE) Project (P181081) – Additional Financing Request 1 Borrower/Client/Recipient Ukraine Implementing Agencies Ministry of Social Policy of Ukraine Daria Marchak First Deputy Minister darina.marchak@gmail.com FOR MORE INFORMATION CONTACT The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects @#&OPS~Doctype~OPS^dynamics@afpidapproval#doctemplate APPROVAL Task Team Leader(s): Kateryna Petryna Approved By Practice Manager/Manager: Paolo Belli 16-Oct-2024 Country Director: Kevin A Tomlinson 26-Nov-2024 Page 11