Document of The World Bank FOR OFFICIAL USE ONLY Report No: PAD5282 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROJECT PAPER ON A PROPOSED ADDITIONAL LOAN IN THE AMOUNT OF US$500 MILLION TO UKRAINE FOR A FOURTH ADDITIONAL FINANCING FOR PUBLIC EXPENDITURES FOR ADMINISTRATIVE CAPACITY ENDURANCE (PEACE) IN UKRAINE December 6, 2022 Governance Global Practice Europe And Central Asia Region 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 disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective October 31, 2022) Currency Unit = Ukraine Hrivnya (UAH) US$1 = UAH 36.93 SDR1 = US$1.33 FISCAL YEAR January 1 - December 31 Regional Vice President: Anna Bjerde Country Director: Arup Banerji Regional Director: Lalita M. Moorty Practice Manager: Daniel J. Boyce Oleksii Balabushko, Ana Bellver Vazquez-Dodero, Karlis Task Team Leader(s): Smits ABBREVIATIONS AND ACRONYMS AF Additional Financing AUP Agreed Upon Procedure ESCP Environmental and Social Commitment Plan EU European Union Fourth AF Fourth Additional Financing GDP Gross Domestic Product GoU Government of Ukraine GRM Grievance Redress Mechanism IDP Internally Displaced People IP Implementation Progress IPF Investment Project Financing MDTFs Multi-Donor Trust Funds MoES Ministry of Education and Science MoF Ministry of Finance MoH Ministry of Health MoSP Ministry of Social Policy NACS National Agency of Civil Service NBU National Bank of Ukraine NHSU National Health Service of Ukraine PDO Project Development Objective PEACE Public Expenditures for Administrative Capacity Endurance PEFA Public Expenditure and Financial Accountability PFM Public Financial Management PFU Pension Fund of Ukraine PMG Program of Medical Guarantees POM Project Operational Manual SEP Stakeholder Engagement Plan SES State Emergency Service STS State Treasury System SSN Social Safety Nets UAH Ukraine Hrivnya WBG World Bank Group Ukraine Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine TABLE OF CONTENTS I. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING ....................................... 8 II. DESCRIPTION OF ADDITIONAL FINANCING .................................................................... 14 III. KEY RISKS ..................................................................................................................... 16 IV. APPRAISAL SUMMARY .................................................................................................. 19 V. WORLD BANK GRIEVANCE REDRESS .............................................................................. 27 VI SUMMARY TABLE OF CHANGES ..................................................................................... 27 VII DETAILED CHANGE(S) .................................................................................................... 28 VIII. RESULTS FRAMEWORK AND MONITORING ................................................................... 31 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) BASIC INFORMATION – PARENT (Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine - P178946) Country Product Line Team Leader(s) Ukraine IBRD/IDA Oleksii Balabushko Project ID Financing Instrument Resp CC Req CC Practice Area (Lead) P178946 Investment Project EECG1 (9750) ECCEE (1607) Governance Financing Implementing Agency: Ministry of Finance ADD_FIN_TBL1 Is this a regionally tagged project? No Bank/IFC Collaboration No Expected Approval Date Closing Date Guarantee Environmental and Social Risk Classification Expiration Date 07-Jun-2022 30-Jun-2023 Substantial Financing & Implementation Modalities Parent [ ] Multiphase Programmatic Approach [MPA] [ ] Contingent Emergency Response Component (CERC) [ ] Series of Projects (SOP) [✓] Fragile State(s) [ ] Performance-Based Conditions (PBCs) [ ] Small State(s) [ ] Financial Intermediaries (FI) [ ] Fragile within a Non-fragile Country [ ] Project-Based Guarantee [✓] Conflict [ ] Deferred Drawdown [✓] Responding to Natural or Man-made disaster [ ] Alternate Procurement Arrangements (APA) [ ] Hands-on Expanded Implementation Support (HEIS) Nov 15, 2022 Page 1 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) Development Objective(s) To contribute to sustaining the government administrative and service delivery capacity to exercise core government functions at the national and regional levels Ratings (from Parent ISR) RATING_DRAFT_NO Implementation Latest ISR 13-Jun-2022 06-Jul-2022 05-Sep-2022 13-Nov-2022 Progress towards achievement of PDO S S S S Overall Implementation Progress (IP) S S S S Overall ESS Performance S S S S Overall Risk H H H H Financial Management S S S S Project Management S S S S Procurement S S S S Monitoring and Evaluation S S S S BASIC INFORMATION – ADDITIONAL FINANCING (Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine - P180453) ADDFIN_TABLE Urgent Need or Capacity Project ID Project Name Additional Financing Type Constraints P180453 Fourth Additional Restructuring, Scale Up Yes Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine Financing instrument Product line Approval Date Nov 15, 2022 Page 2 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) Investment Project IBRD/IDA 20-Dec-2022 Financing Projected Date of Full Bank/IFC Collaboration Disbursement 30-Jun-2023 No Is this a regionally tagged project? No Financing & Implementation Modalities Child [ ] Series of Projects (SOP) [✓] Fragile State(s) [ ] Performance-Based Conditions (PBCs) [ ] Small State(s) [ ] Financial Intermediaries (FI) [ ] Fragile within a Non-fragile Country [ ] Project-Based Guarantee [✓] Conflict [ ] Deferred Drawdown [ ] Responding to Natural or Man-made disaster [ ] Alternate Procurement Arrangements (APA) [ ] Hands-on Expanded Implementation Support (HEIS) [ ] Contingent Emergency Response Component (CERC) Disbursement Summary (from Parent ISR) Net Source of Funds Total Disbursed Remaining Balance Disbursed Commitments IBRD 1,021.90 1,021.89 100 % IDA 1,000.00 167.43 820.94 17 % Grants 10,300.00 7,300.00 3,000.00 71 % PROJECT FINANCING DATA – ADDITIONAL FINANCING (Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine - P180453) PROJECT FINANCING DATA (US$, Millions) SUMMARY -NewFi n1 SUMMARY (Total Financing) Nov 15, 2022 Page 3 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) Proposed Additional Total Proposed Current Financing Financing Financing Total Project Cost 12,522.00 6,700.00 19,222.00 Total Financing 7,821.90 500.00 8,321.90 of which IBRD/IDA 2,021.90 500.00 2,521.90 Financing Gap 4,700.10 6,200.00 10,900.10 DETAILS - Additional Financing NewFinEnh1 World Bank Group Financing International Bank for Reconstruction and Development (IBRD) 500.00 COMPLIANCE Policy Does the project depart from the CPF in content or in other significant respects? [ ] Yes [ ✔ ] No Does the project require any other Policy waiver(s)? [ ] Yes [ ✔ ] No Nov 15, 2022 Page 4 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) ESStandards Environmental and Social Standards Relevance Given its Context at the Time of Appraisal E & S Standards Relevance Assessment and Management of Environmental and Social Risks and Impacts Relevant Stakeholder Engagement and Information Disclosure Relevant Labor and Working Conditions Relevant Resource Efficiency and Pollution Prevention and Management Not Currently Relevant Community Health and Safety Relevant Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Not Currently Relevant Biodiversity Conservation and Sustainable Management of Living Natural Not Currently Relevant Resources Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Not Currently Relevant Local Communities Cultural Heritage Not Currently Relevant Financial Intermediaries Not Currently Relevant ESStandardsNote NOTE: For further information regarding the World Bank’s due diligence assessment of the Project’s potential environmental and social risks and impacts, please refer to the Project’s Appraisal Environmental and Social Review Summary (ESRS). INSTITUTIONAL DATA Practice Area (Lead) Governance Contributing Practice Areas Climate Change and Disaster Screening This operation has been screened for short and long-term climate change and disaster risks Nov 15, 2022 Page 5 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) PROJECT TEAM Bank Staff Name Role Specialization Unit Team Leader (ADM Oleksii Balabushko EECG1 Responsible) Ana Bellver Vazquez- Team Leader EECG2 Dodero Karlis Smits Team Leader EECDR Procurement Specialist (ADM Dmytro Donets EECRU Responsible) Financial Management Iryna Babich EECG1 Specialist (ADM Responsible) Social Specialist (ADM Mariia Nikitova SCASO Responsible) Environmental Specialist (ADM Oksana Rakovych SCAEN Responsible) Anastasiia Golovach Team Member Macroeconomics EECM2 Andrianirina Michel Eric Team Member WFA WFACS Ranjeva Anna Baranova Team Member Social assitance HECSP Caryn Bredenkamp Team Member Human development HECDR Daria Gulei Team Member Administrative support ECCUA Ghislain Martial Yanou Team Member Treasury TRECI Iryna Shcherbyna Team Member Public sector EECG1 James Gresham Team Member Education HECED Jose Simon Rezk Team Member Financial Management EECG1 Kateryna Petryna Team Member Social protection HECSP Ma Dessirie Kalinski Team Member WFA WFACS Mariya Myroshnychenko Team Member Legal LEGLE Maya Abi Karam Team Member Legal LEGLE Olena Doroshenko Team Member Healthcare HECHN Sidet Kim Team Member Operations EECG1 Nov 15, 2022 Page 6 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) Extended Team Name Title Organization Location Nov 15, 2022 Page 7 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) I. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING A. Introduction 1. This Project Paper seeks the approval of the World Bank’s Executive Directors to provide additional financing in the amount of US$500 million for a Fourth Additional Financing (Fourth AF) to Ukraine for the Public Expenditures for Administrative Capacity Endurance (PEACE) Project and undertake a Level 2 restructuring for the Project to update project costs, project description, disbursement arrangements, results framework, and Environmental and Social arrangements. The Fourth AF will be financed by a loan in the amount of US$500 million equivalent guaranteed by the United Kingdom (guarantee amount of US$500 million). 2. The original project is a US$1.492 billion Investment Project Financing (IPF), financed by a EUR 946.6 million (US$1 billion equivalent) non-concessional IDA credit and EUR 465.96 million (US$492 million equivalent) IBRD loan, guaranteed by the Netherlands, Latvia, Lithuania, and the United Kingdom. The project was approved by the Executive Directors on June 7, 2022, with a closing date of March 31, 2023. The Project became effective on June 18, 2022. The Project Development Objective (PDO) is to contribute to sustaining the government administrative and service delivery capacity to exercise core government functions at the national and regional levels. The Original Project reimbursed government expenditures for salaries of government and school employees. Progress towards achievement of the PDO and Implementation Progress (IP) are both rated Satisfactory in the third Implementation Status Report of the Parent project (November 14, 2022). All other ratings are also Satisfactory. As of October 31, US$481 million equivalent has been disbursed from the loan, and US$117 million equivalent from the credit. The credit disbursements were deferred due to the availability of large grant financing. The IDA credit resources also ensure regular smaller amounts of disbursements in case of a decrease in disbursements from other sources in a particular month. 3. Two additional financing grants and one additional financing loan have been approved for a total amount of US$6.33 billion. The First and Second AFs, which are grant financed through the PEACE IPF Co-Financing Multi- Donor Trust Funds (MDTFs, TF073828 and TF073829) - supported by the US, Germany, Spain, Switzerland, Finland, Belgium, and Iceland – have been fully disbursed (US$1.3 billion and US$4.5 billion, respectively). Under the Third AF, which is funded by an IBRD loan, US$500 million has been disbursed. The Second AF introduced additional types of expenditures incurred by the government to pay pensions, social assistance, wages of first responders and deliver healthcare services. The Third AF also extended the closing date to June 30, 2023. The Project continues to remain in compliance with environmental, social, audit and financial management reporting requirements. 4. The proposed Fourth AF will introduce additional types of expenditures incurred by the government to pay child and family benefits, and salaries of employees of public higher education institutions. As a result of the Fourth AF, a Level 2 restructuring is proposed to update project costs, project description, disbursement arrangements, results framework, and Environmental and Social arrangements. Nov 15, 2022 Page 8 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) B. Rationale 5. Russia’s invasion of Ukraine on February 24, 2022 continues to have devastating economic consequences. According to official statistics, Ukraine’s gross domestic product (GDP) shrank by 37.2 percent YoY in Q2 and GDP contraction is projected to be 35 percent in 2022. After the localization of the active combat in April, economic activity showed signs of stabilization, even though it remains much below the prewar level. Consumer price inflation has accelerated rapidly, reaching 26.6 percent YoY in October, with high food price inflation hurting families, particularly the poor. Consumer prices are expected to increase further due to the supply side shocks and increased depreciation expectations of Ukraine’s currency. Balance of payments pressures have built up, resulting from limited ability to export agricultural commodities and withdrawal of foreign exchange funds from their Ukrainian accounts by refugees to finance their spending abroad. In response to growing pressures on foreign exchange, the National Bank of Ukraine (NBU) devalued the exchange rate peg by 25 percent and tightened capital flow management measures, including limiting withdrawals from abroad. This helped to stabilize foreign exchange reserves and maintain overall macroeconomic and financial stability. With the war continuing and recent increased attacks on civilian infrastructure, Ukraine continues to face several macro-critical challenges: (i) high fiscal financing needs and inability to mobilize domestic revenues; (ii) increasing reliance on monetary financing; (iii) deteriorating asset quality of the financial sector; and (iv) a weak external position. 6. Ukraine’s public finances remain under severe pressure, with disbursement of external donor financing only partially covering the financing needs. Monthly tax revenues have dropped by nearly half relative to pre- war levels, even as spending needs have sharply risen. Fiscal policy has been swiftly adjusted to reduce non- priority expenditures, to preserve priority spending on critical social needs and to increase defense expenditures. In addition, the government successfully completed its external liability management transaction related to a two- year freeze on payments on its Eurobonds (US$19.6 billion) in August 2022. The 2023 Budget law was adopted on November 3, with US$3.4bn monthly fiscal needs (including US$2bn of non-military needs). Thus, Ukraine will continue to require budgetary financing from donors to ensure provision of key public services and will continue rely on internal sources to cover military expenditures. The NBU has already monetized over US$11 billion in fiscal needs since the beginning of the war. If international aid is delayed and monetization of fiscal needs accelerates, inflationary pressures will continue to build and will become increasingly difficult to control going forward. 7. The recent attacks on energy infrastructure have further impacted the economic and fiscal situation. These attacks have included strikes on power plants and substations, cutting electricity, heat, and hot water in many cities, and forcing factories in some areas to temporarily close. Overall, the attacks damaged up to 40 percent of energy infrastructure,1 while also adding to fiscal pressures and making the work of the first responders even more essential. 8. In response to the Government of Ukraine (GoU) request on November 15, 2022, the proposed Fourth AF provides further support to core government functions at the national and regional levels. The PEACE project (including all AFs) provides funding to cover the wage bill of non-security sector government employees, pensions, social payments, and education, emergency and healthcare services that are essential to ensure continuity of core government functions and mitigate the social and economic impact of the war. 1 https://www.atlanticcouncil.org/blogs/ukrainealert/ukraine-needs-urgent-help-to-counter-putins-energy- infrastructure-attacks/ Nov 15, 2022 Page 9 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) 9. From the beginning of the war, the PEACE in Ukraine Project support the Government in supporting its core services and social payments. The payments for salaries of eligible government, school, healthcare employees, first responders, pensions and social assistance have been reimbursed in the amount of US$6.9 billion equivalent, supporting service delivery across all regions of Ukraine, except Crimea. Including with support from the Project, in October 2022 9.9 million pensioners received their old age, disability and survivorship pensions out of an estimated 10 million with pension payments due. Most of the remaining 100,000 pensioners are likely to receive their payment shortly, with delays related to the ability of the postal service to deliver pension payments in war-affected areas. Over 95 percent of social assistance beneficiaries also received their payments on time in July, September, and October of 2022. Education services continue to be delivered, with the Ministry of Education and Science (MoES) reporting on September 30, 2022, that 12,822 schools remain open - operating remotely, in a blended mode or holding in-person classes. Strong regional differences are expected. For instance, only 12 percent of schools in Odeska oblast provided in-person classes in the school year, which started on September 1, while this figure went up to 55 percent in Lvivska oblast and goes down to fully remote modality in Donetska or Kharkivska oblasts. As of October 31, salaries of eligible education, government and school employees have been paid almost in full. There were around US$10 million equivalent of wage arrears,2 mainly for September and October of 2022, in territories of the four regions (Kharkiv, Donetsk, Luhansk, and Kherson), which were either temporarily occupied or experienced active fighting and had payment systems down as a result of electricity blackouts. This amount is only 2 percent of the two months wage bill and a significant share of the payments is expected to be made during November 2022. 10. Government spending on core public services and social payments for the duration of the project is vast and remains considerably larger than the amount of financing available. The approximate expenditures by expenditure type already covered by the Project, including the original Project, three AFs and Italian parallel financing, are presented in Table 1. The eligible expenditures except expenditure types proposed under the Fourth AF have been covered 100 percent by the PEACE in Ukraine Project or other development partners from March to July 2022, and partially covered for August 2022. The expenditure estimates for government expenses not yet covered under the PEACE in Ukraine Project or other development partners’ financing are presented in Table 2. These estimated are USD equivalent and are based on historical data and government estimates. Expenditures will fluctuate and could be lower should devaluation of local currency occur. This Fourth AF will scale up this support by increasing the amount of eligible expenditures reimbursement up to 100 percent for the proposed new expenditure types – child and family benefits, and salaries of employees of public higher education institutions. The Fourth AF will cover US$500 million of these expenditures incurred by the government from March 2022-January 2023. Development partners are ramping up planned support to Ukraine with the European Union (EU) announcement of EUR 18 billion1 in budget support and US announcement of US$4.5 billion in economic support (expected to be channeled through the PEACE project),2 but the needs will continue to persist over the medium term. 2 The data is based on the GRM regular reporting. Nov 15, 2022 Page 10 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) Table 1. Eligible Government Expenses Covered under the Project so far, US$ million equivalent Estimated government expenses covered March April May June July August September Total through PEACE as of November 1, 2022 Government employees’ 115 115 115 115 96 103 99 wages 655 180 (Italy School employees’ 200 200 - 300 250 250 parallel wages financing) 1380 Transfer from budget for pensions (MOF 500 500 600 600 600 500 - projection) 3300 IDPs payments - - - 195 195 - - 390 GMI +HUS +Disabilities 138 138 138 135 138 138 - 825 PMG - - - - - - - 0 First responders’ wages 103.5 105 97.5 110.4 43.8 90 - 550.2 TOTAL 1056.5 1058 950.5 1458.4 1322.8 978 279 7100 Table 2. Estimated Eligible Government Expenses Not Covered under the Project or by Development Partners, US$ million equivalent Estimated government expenses not yet covered March April May June July August September October November December January Total as of November 1, 2022 Government employees’ - - - - - - 52 90 90 90 90 412 wages School employees’ wages - - - - - - - 180 180 180 180 720 Transfer from budget for - - - - - 68 600 600 600 600 600 3068 pensions (MOF projection) IDPs payments - - - - - 136 130 130 60 - 130 586 GMI +HUS +Disabilities - - - - - 138 138 138 138 138 138 828 PMG - - - - - 200 200 200 200 200 200 1200 First responders’ wages - - - - - 56 56 56 56 56 56 336 Child and family benefits 25 25 25 25 25 25 25 25 25 25 25 275 Higher education 40 40 40 40 40 40 40 40 40 40 40 440 institutions wages TOTAL 65 65 65 65 65 663 1241 1471 1401 1341 1471 7865 Out of which to be covered under: Original PEACE (IBRD/IDA) 52 200 200 200 200 852 Third AF (IBRD) 30 - - - - - 30 Fourth AF (IBRD) 65 65 65 65 65 65 65 45 - - - 500 Grants (TF073828 and 500 1250 1481 1400 - - 4631 TF073829) Note: Amounts by source of funding is based on available funds as of November 1, 2022 Nov 15, 2022 Page 11 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) 11. This Fourth AF provides emergency support to Ukraine during the war - as part of the World Bank Group (WBG) Response to the Global Impacts of the War in Ukraine – A Proposed Roadmap - and supports the priority themes under the WBG Strategy for Fragility, Conflict, and Violence 2020-2025 (Report No. 146551). The Fourth AF, consistent with the parent project, is a core element of the initial fast-track response under the strategic framework for the WBG on Global Impacts of the War in Ukraine. It supports both short-medium and long-term considerations outlined in the Proposed Roadmap presented by Bank management to the Bank’s board on April 12, 2022, the first dimension of which is increased support to Ukraine, including through financing sizeable non- military expenditure needs. As part of the overall support to Ukraine, the World Bank has also partnered with the GoU to develop urgent projects to support other critical areas including road and railway connections (Repairing Essential Logistics Infrastructure and Network Connectivity, P180318), restore and sustain critical energy supply services (Green Resilient European Electricity Network, P177972), and restore and improve access to essential health services (Health Enhancement and Lifesaving Project, P180245). C. Additional Activities and Types of Expenditures Child and family benefits (Component 2 of the PEACE Project) 12. Ukraine operates programs of child and family benefits, including maternity-related benefits, funded from the central government budget. The child and family benefits in Ukraine amount to around 1 percent of GDP and over 20 percent of the total social assistance budget. About 42 percent of total transfers under the child and family benefit programs reach the poorest 20 percent, and almost 64 percent of all transfers in this category go to the poorest 40 percent of beneficiaries. One in three households with children lived below the poverty line even before the war. Poverty rates in Ukraine are highly dependent on the socio-demographic composition of households: poverty rates were highest in large families (with three or more children). The war and mass displacement further exacerbated livelihoods and economic opportunities, reducing the ability of many to provide support for their children. Households with children, especially those whose livelihoods were significantly affected, continue to require social assistance to smooth consumption, prevent falling into poverty, reduce poverty-related stress and ensure safety and development of children during the war. The child and maternity- related benefits, regulated by the Resolution of the Cabinet of Ministers #1751 of December 2001, include birth grants, maternity benefits, social assistance to children under custody and guardianship, social assistance to single parents, social assistance for child adoption and social assistance to a person taking care of a sick child. These types of benefits are financed through the budget program 2501030 in 2022 (in 2023 - 2501400) and administered by the Ministry of Social Policy (MoSP). These programs include other types of social expenditures, therefore the State Treasury monthly and quarterly reports do not desegregate birth grants, maternity benefits and social assistance to single parents, thus provide information on the total spending only. The planned budget of the program 2501030 is US$2.0 billion equivalent in 2022. 13. The following child and family benefits are proposed for financing by the Fourth AF for the PEACE project, to reach over 1.5 million beneficiaries: a. The birth grant and adoption grant are categorical benefit programs that provide social assistance for a newborn or adopted child to one of the parents or a guardian permanently residing with the child. The size of the benefit is 41,280 Ukraine Hrivnya (UAH) (US$ 1,129). The assistance is paid for Nov 15, 2022 Page 12 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) 36 months, including a lump sum payment of UAH 10,320 followed by monthly payments of UAH 860. The budget of the program for 2022, which supported 1.1 million persons, was UAH 11.4 billion (US$ 312 million). The budget allocated for 2023 amounts to UAH 9.7 billion (US$ 274 million); the program is expected to cover 943,500 beneficiaries. b. Social assistance to single parents is a means-tested program which provides benefits to single parents, single adoptive parents, and mothers (fathers) of children whose other parent has died and whose surviving parent is not entitled to a survivor’s or social pension. The monthly benefit is provided for a child under the age of 18 (for individuals who continue their studies - until the age of 23 or until graduation from an educational institution). The total budget of the program for 2022, which supported 139,900 children, was UAH 2.1 billion (US$ 58 million). The budget allocated for 2023 to support 145,100 beneficiaries amounts to UAH 2.2 billion (US$ 60 million). c. Maternity benefit is a categorical program that covers women not insured under the obligatory social insurance system. The maternity benefit is provided for the whole duration of the maternity leave (up to 126 calendar days). The benefit size amounting to 100 percent of the average monthly income (including scholarship, allowances, unemployment benefit, etc.) should exceed 25 percent of the Subsistence Minimum established for a working person. In 2022, the number of beneficiaries was 157,600. The total expenditure for 2022 amounted to UAH 362.6 million (US$ 9.9 million). The estimated number of women to be supported in 2023 is 136,300. The women in the security sector are excluded from the Project funding as their benefits are financed from the budgets of the Armed Forces of Ukraine, State Border Guard Service, Security Service of Ukraine, Foreign Intelligence Service. 14. The MoSP is providing these benefits through the regional social welfare bodies and structural welfare units subordinated to them. Every month, regional social welfare bodies prepare applications based on the need for the budget funds required to pay benefits to the eligible beneficiaries and submit these applications to the MoSP, which transfers the overall sum of benefits to the regional social welfare bodies. The regional social welfare bodies transfer amounts to be paid to beneficiaries to the accounts of the structural social welfare units, which then transfer payments to the individual accounts of the beneficiaries in the authorized banks. The payments can also be made through the national postal operator Ukrposhta. Based on Government resolution #215 of March 7, 2022, in the war-affected areas of Ukraine, where the social welfare bodies and units have no capacity to ensure the preparation of the payment statements and making transfers, the following procedure, which is satisfactory to the Bank, is used: (i) the MoSP finances benefits based on the data from the Data Processing Center of the MoSP; (ii) based on these data, the overall sum of benefits is transferred by the MoSP to the State Savings Bank of Ukraine (Oshchadbank), which transfers payments to the individual accounts of the beneficiaries or makes transfers through the My Transfer international payment system; (iii) on the first day of every month, the Oshchadbank reports to the MoSP on the amounts of transfers made. (iv) if beneficiaries do not claim the benefits for more than 30 calendar days, the funds are returned to the MoSP by Oshchadbank. The MoSP then transfers funds to the PrivatBank, which operates the largest network of branches and ATMs in Ukraine. If beneficiaries do not claim benefits from PrivatBank during 30 calendar days, the funds are returned to the MoSP and beneficiaries need to reach out to MoSP through different available means to receive the benefits, and (v) within two months after the lifting of martial law, the social welfare units will reconcile the amounts paid to beneficiaries. Higher Education Institutions Employees’ Salaries (Component 1 of the PEACE Project) Nov 15, 2022 Page 13 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) 15. Higher education institutions in Ukraine have continued to operate during the Russian war on Ukraine, many in remote or hybrid mode. Despite the war, 1.2 million students are studying in higher education institutions in the 2022/23 academic year, including 250,000 newly accepted students. Many of the universities and colleges from the East and the South have been evacuated to safer parts of the country. Many of them operate remotely. Revenues from international students went down by 90 percent, increasing reliance on budget resources for salary payments. Higher education institutions are funded from the budget based on the number of students, with the institutions then preparing their own budget and maintaining recording and accounting. 16. According to the education legislation, the system of education includes among others professional education institutions and universities, academies, institutes and colleges (hereinafter referred as Higher Education Institutions). These institutions include military colleges and some of the universities, academies, institutes and colleges form the second tier have reserve-military officer training departments. Staff of those departments may have military ranks, and some are financed directly by the Ministry of Defense of Ukraine. 17. The actual number of higher education institutions employees was around 135,000, as of October 1, 2022. The staff composition is equally split between teaching staff and administrative staff. The higher education institutions are subordinated to and financed though ministries or central government authorities including the Ministry of Education and Science, Ministry of Culture and Information Technologies, Academy of Science, and the Cabinet of Ministries. These key spending units supervise and monitor budget planning, execution and reporting of subordinated entities. The State Treasury Service administers financial transactions from the key spending units to higher education institutions, and reflects total spent amounts in the monthly and quarterly reports. Therefore, detailed reports on higher education institutions’ expenditures and number of staff are collected by the key spending units and submitted to the MoF regularly. 18. The Fourth AF will finance budget expenditures on salaries with taxes and social security contributions for all employees of higher education institutions as reflected by the code of functional budget classification (CFBC) 0940 (when CFBC 0941 reflects specialized professional education and CFBC 0942 covers high education institutions), except any type of military and security institutions, reserve-military officer training departments of higher education institutions, and staff who joined military or territorial defense forces. II. DESCRIPTION OF ADDITIONAL FINANCING 17. The PDO will remain the same as originally stated: to contribute to sustaining the government administrative and service delivery capacity to exercise core government functions at the national and regional levels. The Fourth AF will reimburse eligible expenditures from Components 1 and 2 of the project to cover child and family benefits (Component 2) and higher education institutions employees’ salaries (Component 1). The components of the project will not change, as the additional expenditure types will be added to existing components. The expenditure types are spelled out in Table 3. The achievement of the PDO supports the Ministry of Finance’s (MoF) objective of stable implementation of the State Budget policy. 18. The results framework of the project will be revised, to include additional indicators reflecting the addition of new eligible expenditure categories to the Project. The results on the new eligible categories to be reimbursed will be measured by the following indicators: Nov 15, 2022 Page 14 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) (i) Higher education institutions salaries are paid on time. This indicator will be added as an Intermediate Result Indicator. (ii) Child and family benefits are paid on time. This indicator will be added as an Intermediate Result Indicator. 19. The Fourth AF will use the design of the parent project, relying on country systems and strengthened fiduciary arrangements when needed and practical. As a result, the Fourth AF will support financing eligible government expenses based on government delivery systems. The Fourth AF will be implemented based on the Project Operational Manual (POM) of the parent project, which will be updated within one month of effectiveness of the AF loan agreement to reflect the additional financing for new eligible categories of expenditures. 20. Government spending on core public services for the duration of the PEACE Project is vast and remains larger than the amount of financing available. The parent project was designed to provide funding to partially cover the wages of a subset of public sector workers – government and school employees - from March to November 2022 and had identified additional expenditures of US$550 million. The first AF scaled up funding up to 100 percent of the government and school employees wage bill in March to July 2022, covering these expenditures. At the same time, given the deteriorating fiscal situation it was noted that it would be important to continue funding the wage bill after July 2022, justifying additional spending of around US$550 million until November 2022. Given the difficult fiscal situation and potential future contributions of development partners to the MDTF, the Second AF identified US$1.65 billion of eligible expenditures as financing gap. The Third AF covered US$529.9 million of these expenditures following the Second AF and identified US$4.7 billion as a financing gap considering extension of the project. The US Grant funds are expected to cover US$4.5 billion out the financing gap under the Third AF. 21. In light of the continued need for funding and the development partner contributions, the financing gap for the Project is now estimated to be US$6.2 billion. The Fourth AF is expected to cover the remaining financing gap of US$200 million, however given additional categories, and continued need for funding, all funds available including the upcoming US Grant funds of US$4.5 billion are expected to be fully disbursed by end of March 2023, covering expenditures until February 2023. The expected additional donor contributions are expected to cover at least additional 4 months of the expenditure financing needs, and therefore the financing gap for the Project is now estimated to be US$6.2 billion. This financing gap under the Fourth AF will create a space to bring in new funding from development partners to support continuity of government core functions until June 2023. Nov 15, 2022 Page 15 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) Table 3. Government Program Supported by the Fourth AF Line item Governm School Higher Pensions GMI HUS Transfers IDP Child and PMG First ent employees’ education payments payments to persons payments family responders’ employee salaries institutions with benefits wages s’ personnel disabilities salaries salaries Component 1 Component 2 Component 3 Nature of Salaries of Salaries of Salaries of Will Social Social Social Grants toBenefits Wage bill Wages of program non- school public finance assistance assistance assistance internally to part of State security employees higher pensions for low- to for persons displaced families prospectiv Emergency sector at the local education up to an income compensat with persons with e Service staff governme level in the institutions amount individual e payment disabilities, children payments nt portion funded subsidize s and low- of utility except for (birth to employee funded through the d from income bills payments grants, hospitals s through central the families to adoption and clinics education budget Central individuals grants, for health subvention Governm who live in social service from the ent social assistanc delivery central Budget institutions e to budget single parent, maternit y benefit) financed from the central budget Approximate ~US$90 ~US$180 ~US$45 ~US$600 ~ US$40 ~US$65 ~US$25 ~US$130 ~US25 ~US$200 ~US$70 monthly cost million million million million million million million million million million million of program Expected 15 days 15 days 60 days 15 days 30 days 30 days 30 days 45 days 30 days 60 days 15 days period of verification after the end of reporting month Note: The exact figures could change depending on exchange rate fluctuations and seasonal variations related to specific government programs. III. KEY RISKS 20. The Fourth AF does not change the overall risk rating of the Project, which remains High due to the ongoing war, with widespread and unpredictable security, combined with political, social, and macroeconomic instability. The Environmental and Social risk, Sector Strategies and Policies risk, the Institutional Capacity for Implementation and Sustainability risk, and the Stakeholders’ risk associated with the implementation of the Third AF remain as Substantial for this Fourth AF. Political and Governance, Macroeconomic and Fiduciary risks remain as High as discussed below. 21. Political and Governance risk is High. The ongoing war and the declared state of emergency pose a major risk to the political and governance landscape. At the time of preparing this operation, the conflict appeared to Nov 15, 2022 Page 16 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) be concentrated in and around the eastern part of the country, but its evolution and the potential impact on the ability of the Government to perform core functions remains highly uncertain as the war continues. 22. Macroeconomic risk is High. Rising geopolitical tensions and the ongoing war have led to a severe deterioration of the macroeconomic situation in the country. Macroeconomic and financing pressures have intensified, and conditions continue to worsen. Disruptions to economic activity and the resulting decline in tax revenue are constraining fiscal space at a time when the spending pressure on the government to provide essential services and repair damaged infrastructure is increasing. Ukraine is not currently able to borrow externally from the market, and the ability of its domestic market to absorb additional government debt is limited. Given the severe contraction in the economy, and amid weak tax collection, the Government is faced with the difficult financial decision of whether to fully fund other activities (including emergency restoration of critical infrastructure) at the cost of reducing key social services, or to not fully pay out wages and pensions in the near term. Either of these choices would have a significant impact on the welfare of people of Ukraine. The NBU could serve as a lender of last resort to monetize the emerging fiscal financing gap; however, the ensuing inflationary pressures will result in significant welfare losses for the most vulnerable people, significantly delay the economic recovery and risk undermining economic stability in the medium term. With large-scale monetization of the deficit or a sharp drawdown of foreign exchange reserves (with a subsequent sharper decline in the exchange rate), already high inflation can be expected to spike which would continue to erode the purchasing power of low- and middle-income households because of significant direct pass-through effects and inflationary expectations. Both options, cutting expenditures and deficit monetization, come at great current costs to the population and compromising future recovery as poverty rates could climb further to levels not seen since the early 2000s. The proposed Fourth AF contributes to mitigating macroeconomic risks by helping the GoU to mobilize much-needed financial resources to honor its now bare-bones social expenditures, limit irrevocable damage to Ukrainians’ living standards, and restore and rehabilitate Ukrainians’ personal incomes and opportunities by sustaining the purchasing power of families for their basic needs. However, even with significant Bank financing and the development partners’ pledge to continue supporting Ukraine, the country’s financial needs are enormous, and will remain so in the foreseeable future. 23. Sector Strategies and Policies risk is Substantial. The Government has been implementing public financial management and civil service reforms with support from the World Bank and other development partners since 2017 when the Public Financial Management (PFM) Reform Strategy was approved. World Bank analytical work has contributed to the existing strategies and policies with Education Review of 2019, Public Expenditure and Financial Accountability (PEFA) Assessment of 2019 and subnational PEFA assessment of 2020. The Government’s commitment to the reform agenda is strong, and sector policies are not likely to change during the duration of the project; for example, the Human Resource Management Information System continues to be implemented under the World Bank project financed by the EU. However, without continuing external support, the war situation creates Substantial risks for maintaining the progress on PFM and civil service that has been achieved over the several years. 24. Institutional Capacity for Implementation and Sustainability risks are Substantial given the uncertainty about the evolution of the conflict and the damage it could cause to the currently resilient financial management, payment and banking systems. To mitigate the residual risk, the situation will be monitored closely and if needed existing procedures will be amended to facilitate the processing of salary payments in emergency circumstances. Moreover, even though the project maintains its basic design using country systems and electronic payments, the inclusion of additional expenditures in the Second AF and further in the Fourth AF in support of various Nov 15, 2022 Page 17 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) government programs increases the technical and institutional capacity risks. MoF remains as the implementing agency and budget holder, but it must coordinate with Ministry of Health (MoH), State Emergency Service (SES), PFU and MoSP for verification and reporting, in addition to MoES for the parent project. The categories added under the Fourth AF do not add any new stakeholders to this process. Given the dire needs during the conflict, the Bank team has secured resources to provide enhanced implementation support to the MoF, including through hiring short term experts to work with the MoF. 25. Fiduciary risk is High due to financial management risks. There is no procurement in the project (other than for the project audit) and PFM systems are still operating effectively in Ukraine. The project contemplates few disbursements, which are being done mostly as large reimbursements to the government’s treasury based on monthly reports of eligible expenditures already made. The new categories follow the same funds flow and verification arrangements. However, the war could affect PFM systems, and the frequency of payroll data reconciliation, especially as project implementation may extend out as far as the proposed new closing date of June 30, 2023. The World Bank team will closely monitor the situation with the MoF and, if needed, use manual reconciliation processes to ensure that government employees continue to be paid. The monthly structure of disbursement is expected to be viable even if some delays are experienced because the State Treasury Service currently reconciles the Treasury Single Account with the Government’s commercial bank accounts daily. Risks related to the financing of wages of regional public sector workers that are displaced, or those located in territories that are not under control of the Government due to the war, are mitigated by making payments directly into the bank accounts of workers - and only to workers who are Ukrainians. In a situation where the GoU loses complete control of a part of the territory, the Government will stop making payments to that region (as was done in 2014-2015 in Crimea and certain regions of Luhansk and Donetsk). 26. Social and Environmental risks are rated Substantial. Project activities are not expected to have any direct adverse environmental and social risks or impacts. The new categories do not change social and environmental risk ratings. The parent project’s Social and Environmental risk was rated as Moderate given that project activities were to take place within a highly volatile context beyond the immediate control of the implementing agency. The Second AF expanded the support to cover pensions, social payments, health services and emergency services that are essential to mitigate the social and economic impact of the war. The Fourth AF proposes to expand the support to cover child and family benefits and higher education institutions employees’ salaries. The social and environmental risk of the are Substantial given potential for community and worker health and safety incidents associated with exposure to ongoing war fighting and aerial bombardment during the delivery of the social services supported by the Fourth AF and associated risks and impacts. Some services will require participants to attend in person activities and would require essential workers to staff their places of employment or conduct outreach activities potentially increasing their risk of exposure to attack especially in eastern parts of the country. This contextual risk also increases the likelihood that vulnerable groups and individuals who may be eligible to receive such services do not seek them out for fear of exposure to war fighting and bombing. These are highly contextual and beyond the immediate control of the project and not caused by the activities supported by the Bank financing. Preventative measures are described in the project’s Environmental and Social Commitment Plan (ESCP) and POM. These include principles for information disclosure and consultation, and grievance redress mechanism (GRM). The Stakeholder Engagement Plan (SEP) will be updated to define principles for information disclosure and opportunity for feedback and access to redress for complaints and concerns for newly introduced Fourth AF supported activities. Nov 15, 2022 Page 18 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) 27. Stakeholders’ risk associated with the implementation of the Project is rated as Substantial. Project implementation success depends on personnel management by line ministries and agencies, and commercial banks remaining in operation for the duration of the conflict. The Ukrainian banking system entered the war in good shape and the electronic payment system remains functional in Ukraine. Large retail networks and gas stations still accept cards, and cash back operations through POS terminals as an alternative to ATMs in case they are damaged (with a limit of UAH 6000 per withdrawal) have been facilitated. The MoF and the Bank will closely monitor any disruption caused to commercial banks and/or related payment systems. To avoid disputes on payments and payroll list, existing grievance redress mechanisms and the information disclosure policy of the Government, strengthened through the ESCP as needed, will be used. Project implementation also depends on financial intermediaries – the PFU manages payment of pensions through its account in Oshchadbank – a state owned bank (the Treasury transfers money from the Single Treasury Account to the PFU’s account in Oshchadbank, while the PFU finances pensions from that account to individual accounts of beneficiaries). While the Ukrainian banking system entered the war on solid ground, the conflict is expected to affect banks’ asset quality and solvency. Recent amendments introduced a blanket guarantee for retail deposits and brought Oschadbank under the deposit guarantee system. At the same time, loss of assets, collateral, and revenues will severely affect banks' profitability and solvency. IV. APPRAISAL SUMMARY A. Economic and Financial (if applicable) Analysis 28. The Fourth AF will further expand the project’s benefits in mitigating the humanitarian crisis and its impact on human capital. The toll of destruction, damage, and dislocation in Ukraine from the war continues to grow. As of October 31, more than 11 million people (about half of whom are children) had been displaced and double that number were estimated to be in need of life-saving humanitarian assistance, with food and essential services severely constrained in the areas affected by the fighting and a third of displaced households reporting no income. In addition to loss of life and human suffering, the war has crippled Ukraine’s economy with large adverse social and poverty impacts. Latest WB estimates suggest that the poverty rate in Ukraine, based on the new upper middle-income poverty line of US$6.85 per person per day (2017 PPP), is projected to increase from 5.5 percent in 2021 to 25.4 percent in 2022. Poverty rates in regions most affected by the war are expected to increase much more. Therefore, providing additional funding for pensions, social payments and healthcare will help the government to provide support to the most vulnerable groups, such as the elderly, families with kids, and persons with disabilities. 29. The Fourth AF will also further support the project’s indirect benefits of preserving human capital and reducing the risk for the country to fall into the fragility trap, maintaining trust in the Government’s capacity to deliver basic services during the war. The war resulted in a significant decline in fiscal revenues. Expenditures were cut significantly (including capital expenditures by almost 90 percent) and reduced only to the most critical social items, but despite this, revenues are projected to cover only around 60 percent of non-military expenditure in 2022. Tax and non-tax revenues will remain depressed for the near future. However, critical public social expenditures are still on the rise due to active military conflict. With intensified combat in the south-east part of the country, central government expenditures on social programs increased in June by more than 50 percent Nov 15, 2022 Page 19 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) month-over-month largely due to one-off payments to internally displaced people. Thus, it is critical to support government in ensuring public service functions in meeting the basic needs of the population to be maintained. B. Technical 30. Overall, the status of preparation is satisfactory, and the Fourth AF is ready for implementation. The project has performed well during its short duration. Disbursements have been made under the first, second and third AF, and the Fourth AF will scale them up by providing more financing for the existing activities and adding new categories using the same verification and funds flow arrangements. The Fourth AF will use the implementation arrangements on project management, financial management and audits established under the parent project with the adjustments to accommodate for the new expenditure types. However, one of the lessons learned during implementation is that absorbing the expanded project financing is a challenge for an already overstretched government during wartime, due to the extensive verification required. The team has secured funding to provide capacity enhancement support to the government for coordination, reporting and verification through several short-term experts. Through a Bank-executed Trust Fund, the Bank is also contracting a firm for enhanced monitoring of project expenditures and funds flow. 31. The governance and institutional arrangements of the PEACE project are designed to fit the current circumstances by using government processes where possible and ensuring the least additional administrative burden on the Government. The verification reports for March-September 2022 were submitted by the MoF under the parent project and the first, second and third AF, and these reports were found satisfactory by the Bank. The Fourth AF will keep the project’s arrangements, relying on the existing country system procedures which were deemed as satisfactory before the crisis and have continued to function during wartime. 32. The Ministry of Finance of Ukraine remains the Implementing Agency of the project. The appointed Project Coordinator (Deputy Minister) oversees project implementation, monitors progress, and ensures prompt delivery and reporting on project indicators. The Project Coordinator also acts as a focal point for communication with the World Bank team on project-related issues. 33. The POM prepared under the Parent Project and updated under the Second and Third AFs will be used for the Fourth AF. The POM reflects institutional arrangements and verification mechanisms for all types of eligible expenditures. The POM lays out the project’s overall operating, fiduciary, verification protocols, decision- making procedures, eligibility criteria, and results monitoring arrangements in line with applicable World Bank policies. The POM will be updated within one month after the effectiveness of the Fourth AF to reflect minor changes related to the increased project amount and new expenditure types. 34. Monitoring and Evaluation system. For monitoring, the project relies on data from the GoU, including that of the State Treasury System (STS). The MoF monitors this data monthly and reports on project results (including PDO indicators and intermediate result indicators), which the World Bank team reviews as part of its project monitoring. The project mainly uses existing arrangements within the GoU, and ongoing coordination within the MoF, MoH, National Health Service of Ukraine (NHSU) and MoSP with the STS and ministries, agencies, and state and rayon oblast administrations. The MoF and coordinating ministries ensure that the collection and processing of personal data4 is managed under applicable national law with a view to ensuring the legitimate, appropriate and proportionate use of such data in accordance with best practice. Nov 15, 2022 Page 20 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) 35. Implementation Arrangements. Section E describes the verification arrangements per type of expenditure, including previous expenditure types, which remain as described in the Project Paper for the Second AF, and proposed new expenditure types. The implementation arrangements will remain the same given that the new proposed expenditure types are administered by the MoES Box 1. Enhanced Implementation Arrangements for PEACE in Ukraine and MoSP. Implementation capacity of the MoF for After the approval of the Second and Third AFs, the PEACE in Ukraine project size coordination, verification and has grown significantly, creating a much more challenging coordination effort across reporting will be strengthened sectors and verification of eligible expenditures. The project design relies on country systems and electronic payments (which mitigates risks significantly) but financing by the Bank with short term more types of expenditures increases the coordination, technical, and institutional experts under enhanced capacity risks. In addition, where relevant, it is important to create feedback loops implementation through beneficiary and citizen engagement approaches to understand whether and arrangements. The details of how money provided through various types of expenditures is ultimately helping enhanced implementation people. Under the project, the government is providing detailed verification of support are provided in the spending on a monthly basis and an end of the project audit is envisaged. Box 1. Understanding the need for additional capacity of the MoF and World Bank teams C. Financial Management to ensure that verification is robust and service delivery takes place as expected, the World Bank and the Government of Ukraine agreed that the Bank will provide enhanced implementation support in the following areas: 36. The PFM system continues to be reliable. (a) Strengthening capacity for implementation support will include several Financial controls including short-term consultants to support the World Bank team and MoF’s commitments and payments International Financial Projects Department to ensure no duplication takes place and eligible expenditures are covered only once by PEACE project and continue to be functional other parallel development support. during the war, and social benefits and pensions have (b) Agreed Upon Procedures (AUP) reviews will be carried out by an audit firm been paid during February- during project implementation. These reviews will aim to provide assurance October 2022. The controls on that the agreed procedures with respect to the eligible expenditures have these payments are sound, been followed. The audit will cover a sample of eligible expenditures agreed ensuring that even during the with the Bank. The first AUP review is expected to commence in December war, relevant records are 2022 and the second one in spring 2023. maintained. MoF relies on its (c) Monitoring service delivery and social payments during the war will include existing system for planning Listen to Ukraine surveys, which is planned to start in 2023 with mobile and execution of eligible surveys of users of education and healthcare services, social assistance government expenditures that beneficiaries and pensioners, to ensure that services continue to be are financed by this Project. delivered and payments are made in a timely manner. MoF is tasked with consolidating, reviewing, and submitting monthly reports on social assistance, pensions and Program of Medical Guarantees (PMG) expenditures to be reimbursed by the project. For social assistance, and child and family benefits, the MoF is reconciling treasury payment data with verification of social assistance payments and IDP program payments made by MoSP. For the pensions, the verification only ensures that funds are transferred from the Treasury to the PFU. The PFU provides a monthly report on all pensions paid in Ukraine. For PMG, the NHSU provides information on payments to healthcare facilities and verifies that payments have reached all the facilities. The NHSU collects information on healthcare worker salary payments under PMG from healthcare facilities and Nov 15, 2022 Page 21 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) submits the report to the MoF for consolidation. For payments to higher educational institutions employees’ salaries, MoES, Ministry of Culture and Information Technologies, Academy of Science and other government agencies overseeing them collect data from the institutions, MoF reconciles the collected data and submits verification report to the Bank. For payments of the government utilities, MOF consolidates the verification report and reconciles with the treasury data. 37. Given the war’s potential effect on PFM institutions and processes, additional fiduciary arrangements have been put in place for this operation. In addition to the government’s own verification processes, monthly government reports submitted for reimbursement under the project are reviewed by the World Bank task team prior to processing respective disbursements. The World Bank will supplement verification and end of the project audit with Agreed Upon Procedure (AUP) regular reviews (see Box 1) that will check verification reports to confirm eligibility of project expenditures and internal controls of the government agencies involved based on samples of transactions. The scope of AUP reviews will cover all government expenditures financed by this Project. 38. The scope of the audit will be as contemplated under the parent project, as expanded for the First, Second, Third and Fourth AF. The independent audit of the eligible expenditures will go beyond the regular audit of financial statements, to include tests to verify the eligibility of project expenditures. It is expected that an independent and experienced auditor acceptable to the World Bank would carry out the financial audit, along with additional assurance procedures with respect to the eligible expenditures for the entire period that is financed by the Project, in line with the Terms of Reference agreed with the World Bank. The financial auditor will take into consideration any financial reviews, such as the AUPs referred to above, that may be carried out during project implementation. 39. As in the original project and first three AFs, the Fourth AF disbursements will be based on withdrawal applications submitted monthly by the MoF. The Fourth AF will only finance expenditures incurred on or after March 1, 2022. Withdrawal applications would be supported by the monthly report(s) on actual eligible expenditures incurred for the past month(s), reconciled to State Treasury records and reviewed by the World Bank. Disbursements will be made by the World Bank to a segregated US Dollar denominated account of the state treasury in the NBU that would be indicated by the Government, and then converted and credited to the government State Treasury account in UAH. It is expected that a sizable portion of this Fourth AF will be disbursed as retroactive financing. D. Procurement 40. There are no procurement processes envisaged under the Fourth AF. The audit will be financed under the original Bank financing. E. Verification 41. The following explains verification procedures in different expenditure areas, for the project as a whole. As noted previously, this Fourth AF could potentially finance expenditures in any of these areas. Verification of the child and family benefits Nov 15, 2022 Page 22 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) 42. The MoF verifies payments based on the MoSP reports and passports of relevant budget programs. The MoSP provides verification of the spending on four selected social assistance programs and child and family benefits. The MoSP report for each program is based on the MoSP spending report that was verified in most regions and presented as expenditure per oblast. A verified spending report becomes available on every 13th day of the month that follows the reporting month. There is potential difficulty with the verification of spending on child and family benefits in several regions where fighting is occurring in these regions, verification is executed by the MoSP through the Oshchadbank that reports to the MoSP on the total amount spent on the program. Given that that budgets of child and family benefits are included into the relevant budget programs together with other social expenditures, the MoF will use information on estimated number of beneficiaries from passports of these programs to track planned expenditures and compare them with actual expenditures. 43. Starting October 1, 2022, the Pension Fund of Ukraine became a payment agent for all social assistance programs. As a result, verification of social assistance programs will continue to be done by the MoSP based on their data and reporting on payment of benefits provided by the Pensions Fund. Verification of the higher educational institutions staff salaries 44. The MoF verifies payments to the higher education institutions based on the Treasury data and reports provided by the MoES and other central government authorities with subordinated higher education institutions. The MoES and other authorities with subordinated higher education institutions verify payments to these institutions and collect monthly reports on salary payment and number of eligible staff from each institution. While expenditures at the higher education institutions level are not done through the Treasury Single Account, the MoF will reconcile the data collected. The MoF consolidates the verification report based on all sources of data. F. Legal Operational Policies . Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Areas OP 7.60 No . G. Environmental and Social Social 50. The activities supported by the Project are not expected to have any direct adverse social risks or impacts, but they take place within a highly volatile context beyond the immediate control of the implementing agency. The proposed Fourth AF will continue to fund expenditures in categories identified in the parent project and the Second AF. New expenditure types added in this Fourth AF do not pose additional risks. Nov 15, 2022 Page 23 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) 51. The scope of the project results in substantial social risks arising from potential safety and health incidents associated with exposure to the war and aerial bombardment during delivery of services. The original project provided funding to the wage bill of non-security sector government employees and school employees who are integral for ensuring continuity of core government services (mainly public administration and education services) and preventing erosion of learning outcomes. The Second AF expanded this support to cover pensions, social payments and health and emergency services that are essential to mitigate the social and economic impact of the war. The social risk is substantial given the potential for community and worker health and safety incidents during the delivery of the social services supported by the Fourth AF and associated risks and impacts. Some services will require participants to attend in person activities and would require essential workers to staff their places of employment or conduct outreach activities potentially increasing their risk of exposure to attack, especially in eastern parts of the country. This contextual risk also increases the likelihood that vulnerable groups and individuals who may be eligible to receive such services do not seek them out for fear of exposure to war fighting and bombing. These are highly contextual and beyond the immediate control of the project and not caused by the activities supported by the bank financing. Preventative measures for the Fourth AF activities under emergency conditions are already described in the project’s ESCP and POM. These include principles for information disclosure and consultation, and GRM. 52. MoF demonstrates good capacity in handling project grievance mechanism and social and environmental risk management. MoF takes proactive efforts in reaching out to the potentially affected parties and seek their feedback on the ongoing project activities, collecting feedback not only from relevant ministries and government agencies but also using social media channels such as Facebook, Telegram, Viber. As per POM, the MoF is responsible for keeping the grievance log of any inquiries or complaints (including anonymous grievances) pertinent to the Project activities and informing the World Bank team on the status. MoF has timely submitted a consolidated grievance log recorded to date for the project as part of the Quarterly Project Progress Report that was reviewed by the Bank and found acceptable. The SEP for the project was revised during the Second and Third AF to define principles for information disclosure and opportunity for feedback and access to redress for complaints and concerns for newly introduced Second and Third AF supported activities. 53. Data collection and processing. Personal data are likely to be collected and processed in connection with Project activities, particularly in the case of social benefits payments. This may include the processing of sensitive data (including biometrics), which are collected and managed by the MoSP under their existing social assistance programs to support the identification (to determine uniqueness) and authentication (determining that the person eligible to receive the cash transfer is in fact the person they say they are). Ukraine currently has a data protection law of general application (Law No. 2297 VI 'On Personal Data Protection' as of June 1, 2010) that essentially meets international standards, albeit is in the process of being updated. Since 2014, the Ukrainian Parliament's Commissioner for Human Rights (Ombudsman) is the state authority in charge of overseeing compliance with the data protection law. 54. In order to guard against abuse of this data, Project activities are implemented in accordance with the applicable national legal framework and good international practices for dealing with such data in such circumstances. Such measures include complying with use limitations (data are only used for legitimate and related purposes to the disbursement of cash transfers), data minimization principles (only collecting and processing the data that is necessary for the legitimate purpose), limits on data retention (retaining the data only for as long as they are necessary), where practicable informing individual data subjects of how their data is used and processed, and allowing data subjects the opportunity to correct information about them and seek redress Nov 15, 2022 Page 24 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) for abuse of these provisions, etc. Additional technical and organizational measures should be taken to ensure the protection of personal data against unlawful processing (loss, unlawful or accidental elimination) and unauthorized access, including by third parties. Gender 55. The war in Ukraine has exacerbated vulnerabilities and heightened economic, social, and health risks for women and girls. The war causes civilian casualties and destruction of civilian infrastructure, forcing people to flee their homes seeking safety, protection, and assistance. The Office of the United Nations High Commissioner for Human Rights recorded 16,631 civilian casualties in Ukraine as of November 14, including 6,557 deaths and 10,074 injuries. At least 1,158 children in Ukraine have been killed or injured since the war escalated eight months ago, on average over four children are killed or injured each day. The gender impact of the armed conflict depends on the country's demographic profile, which includes large numbers of older women, women and girls with disability, as well as internally displaced and refugee women and girls. Since the onset of the war, nearly one-third of Ukrainians have been forced from their homes. Over 6.24 million people have been displaced within Ukraine, 61 percent of whom are women (6 percent are pregnant or breastfeeding women) (IOM, September 26). More than seventy percent of IDP households contain at least one boy, and 84 percent have at least one girl between the ages of 5 and 18. An estimated 5 million people have fled their homes to the neighboring countries. Ninety percent of refugees are women and children, while most men aged 18–60 are required to stay behind under martial law. Ukraine has a large number of people with disabilities (over 2.7 million), of whom more than one million are women and girls. Rapid Gender Analysis conducted by the UN Women and CARE revealed that women are facing immense hardship when it comes to health, safety, and access to food as a result of the war. 56. Access to social protection is critical for mitigating the vulnerabilities of women and their families. Women are disproportionally affected by the crisis. They experience heightened economic stress caused by the double burden of the house- and care-work and limited financial resources. Women constitute 54 percent of the population and 71 percent of all heads of households are female. During the war, many women were left to care for their families on their own, including by being responsible for earning an income for their household. This can be due to their husband being unemployed, conscripted, or deceased or due to family separation. For many women, social assistance or pension is the only source or the largest share of income. Women represent most pensioners and social assistance beneficiaries supported by the proposed AF. Women represent most beneficiaries of the child, family and maternity support programs. Out of 10.8 million pensioners, around 64 percent are women. Given the growing number of the newly low income and vulnerable women and children, the financing of child and maternity benefits is critical to ensure their food security, safety, and continuity of health care and social services. Citizen Engagement 57. Despite the difficult operating environment, the SEP was prepared for the Second AF and expanded the parent project’s GRM to cover beneficiaries of additional types of expenditures and therefore is equipped to cover the Fourth AF expenditures, including child and family benefits, and higher education institutions employees’ salaries. The project’s GRM, which is not limited to safeguards, will allow for two-way communication between citizens and the government and will establish multiple channels to receive not only grievances but also feedback from citizens. The project will rely on existing communication channels maintained Nov 15, 2022 Page 25 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) by the Government, including those by the MoES, the MoH, and the MoSP. Pensioners and beneficiaries of child and family benefits and all SSN programs, including Guaranteed Minimum Income (GMI), housing utility subsidy (HUS), social assistance for the IDPs, and social assistance for persons with disabilities since childhood and children with disability, can use the multi-channel GRM operated by the MoSP. The MoSP maintains an easily accessible GRM with functions, staffing, and resources, enabling stakeholders to submit complaints, information requests, suggestions, and feedback through various channels (phone, email, physical mail, online, and during visits). Grievances can be submitted in-person in the Public Reception Office of the MoSP. The MoSP discloses semi-annual GRM performance reports on its website. The ‘15-45’ Government Hotline can be used to submit complaints and other types of appeals related to social assistance and pension provision and the ’15 -39’ hotline for beneficiaries of social assistance programs and persons with disability. Pensioners can use the same channels as other social protection beneficiaries. According to the GRM report disclosed by the MoSP, 31.1 percent of all grievances/information requests received in 2021 were related to pensions. Currently, PFU continues to operate its regional offices and more than 470 local service delivery centers/units - located in the government-controlled areas of Ukraine. Pensioners can submit complaints, information requests, suggestions, etc. in these centers/units or use the other channels (website, mobile applications, PFU hotline, email). The Beneficiary Feedback indicator from the Parent Project will be used (Percentage of Grievances addressed) and capture grievances across types of expenditures covered under Parent Project, and four AFs. 58. Government employees will remain subject to the terms and conditions of their existing employment arrangements and civil service grievance redress. Principles for protecting against harmful labor, child labor and security forces activities are also described in the ESCP, including ensuring access to service providers responding to sensitive incidents such as those related to Sexual Exploitation and Abuse/Sexual Harassment and other forms of violence that may be associated with the invasion context. Labor risks will be addressed through the Client’s commitment in the ESCP, and clear guidance provided in the POM to comply with the relevant requirements of ESS2. The existing civil service GRM is governed by a legal framework comprising the Labor Code, Civil Service Law, and statutes of government agencies and covers all human resource related issues including payroll. The complaints are handled by the employer, National Agency of Civil Service (NACS) as a civil service regulator, and if not resolved could be escalated to courts. Environment 59. The Fourth AF will not support physical works or envisage any other kind of activities that may cause direct or indirect environmental impacts. The environmental rating is moderate given potential for community and worker health and safety incidents during the delivery of the social services supported by the Fourth AF and associated risks and impact. Climate Change 60. Climate risk screening has been conducted for the expanded scope under the Second AF, covering all the types of expenditures contemplated under the Fourth AF. The nature of this operation limits its potential to directly support climate action as requested by WBG’s corporate commitments on climate. Ukraine is at risk of hydrometeorological hazards and natural disasters such as droughts, elevated temperatures, heat waves, wildfires, soil erosion, mudflows, extreme precipitation and flooding, which primarily affect the sectors of agriculture, water resources, energy, transportation, health, the urban environment and forests. Due to climate change, Ukraine has been experiencing an increase in the frequency and severity of natural disasters (such as Nov 15, 2022 Page 26 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) droughts and floods) - causing in many cases, fatalities and leading to significant economic losses. Given the nature of the proposed Fourth AF, climate resilience-enhancing measures are not prioritized in the project design. However, by helping to sustain the Government functions, this operation supports the efforts to maintain the expertise and human resources that were engaged in the implementation of the ambitious climate action strategies and action plans of Ukraine. These resources will play a crucial role in integrating climate action in future reconstruction programs and will enable the continuation of Ukraine’s climate action strategies and action plans after the war. V. WORLD BANK GRIEVANCE REDRESS 61. Grievance Redress. Communities and individuals who believe that they are adversely affected by a project supported by the World Bank may submit complaints to existing project-level grievance mechanisms or the Bank’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the Bank’s independent Accountability Mechanism (AM). The AM houses the Inspection Panel, which determines whether harm occurred, or could occur, as a result of Bank non-compliance with its policies and procedures, and the Dispute Resolution Service, which provides communities and borrowers with the opportunity to address complaints through dispute resolution. Complaints may be submitted to the AM at any time after concerns have been brought directly to the attention of Bank Management and after Management has been given an opportunity to respond. For information on how to submit complaints to the Bank’s Grievance Redress Service (GRS), please visit http://www.worldbank.org/GRS. For information on how to submit complaints to the Bank’s Accountability Mechanism, please visit https://accountability.worldbank.org. VI SUMMARY TABLE OF CHANGES Changed Not Changed Results Framework ✔ Components and Cost ✔ Implementing Agency ✔ Project's Development Objectives ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Legal Covenants ✔ Nov 15, 2022 Page 27 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ VII DETAILED CHANGE(S) COMPONENTS Current Component Name Current Cost Action Proposed Component Proposed Cost (US$, (US$, millions) Name millions) Social Assistance and 4,585.00 Revised Social Assistance and 4,885.00 Pensions Pensions Healthcare and First 444.90 Revised Healthcare and First 544.90 Responders Responders Support to government and 2,791.60 Revised Support to government 2,891.60 school employees wage bill and school employees wage bill Audit expenses 0.40 Audit expenses 0.40 TOTAL 7,821.90 8,321.90 Expected Disbursements (in US$) DISBURSTBL Fiscal Year Annual Cumulative 2022 1,772,642,302.32 1,772,642,302.32 2023 5,519,000,000.00 7,291,642,302.32 SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT) Risk Category Latest ISR Rating Current Rating Political and Governance ⚫ High ⚫ High Macroeconomic ⚫ High ⚫ High Sector Strategies and Policies ⚫ Substantial ⚫ Substantial Technical Design of Project or Program ⚫ Substantial ⚫ Substantial Nov 15, 2022 Page 28 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) Institutional Capacity for Implementation and ⚫ Substantial ⚫ Substantial Sustainability Fiduciary ⚫ High ⚫ High Environment and Social ⚫ Substantial ⚫ Substantial Stakeholders ⚫ Substantial ⚫ Substantial Other Overall ⚫ High ⚫ High LEGAL COVENANTS2 LEGAL COVENANTS – Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) Sections and Description No withdrawal shall be made for payments of Eligible Expenditures that have already been financed under the Original Loan Agreement, the Original Financing Agreement, the First Additional Financing Grant Agreement, the Second Additional Financing Grant Agreement, the Third Additional Financing Loan Agreement, or the Third Additional Financing Grant Agreement or for which withdrawals have been requested under the Original Loan Agreement, the Original Financing Agreement, the First Additional Financing Grant Agreement, the Second Additional Financing Grant Agreement, the Third Additional Financing Loan Agreement, or the Third Additional Financing Grant Agreement. The Borrower undertakes that no Loan proceeds or resources may be used for defense, security, or military purposes, or for any payments made to any defense, security, or military forces. No later than one (1) month after the Effective Date, the Borrower shall update the POM in form and substance acceptable to the Bank, containing detailed implementation and institutional arrangements for the Project; including, inter alia: (a) procurement; (b) financial management and accounting; (c) monitoring and evaluation; (d) eligibility criteria for the selection of Eligible Employees and Eligible Higher Education Institutions Employees; under Part 1.(a)(i) and (ii) of the Project; (e) verification protocols and procedures for payment of Salaries of Eligible Employees and payment of Salaries of Eligible Higher Education Institutions Employees; (f) eligibility criteria, amounts and procedures for monthly pension payments and payments under the GMI Program, HUS Program, Disability Program, Family with Children Programs and IDP Program under Part 2 of the Project; (g) eligibility criteria, amount and procedures for PMG Payments and payment of Salaries of Eligible First Responders under Part 3 of the Project; (h) grievance mechanism for the Project; (i) personal data collection and processing in accordance with applicable national law and good international practice; and (j) such other technical, administrative, fiduciary or coordination arrangements as may be necessary to ensure effective Project implementation. Conditions Type Financing source Description Disbursement IBRD/IDA No withdrawal shall be made for payments made prior to the Signature Date, except that withdrawals up to an Nov 15, 2022 Page 29 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) aggregate amount not to exceed $498,750,000 may be made for payments made prior to this date but on or after March 1, 2022, for Eligible Expenditures. Type Financing source Description Disbursement IBRD/IDA No withdrawal shall be made under Category (1), (3) and/or (4) until and unless the Borrower has furnished evidence satisfactory to the Bank in accordance with the verification protocols set forth in the POM showing that payments under Category (1), (3) and/or (4) have been paid. Nov 15, 2022 Page 30 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) VIII. RESULTS FRAMEWORK AND MONITORING Results Framework COUNTRY: Ukraine RESULT_NO_PDO Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine Project Development Objective(s) To contribute to sustaining the government administrative and service delivery capacity to exercise core government functions at the national and regional levels Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_ PD O Indicator Name PBC Baseline End Target Core government functions are maintained Government continues to exercise core functions (Number) 5.00 4.00 Number of public administration staff paid in non-security sectors (Text) 160,000.00 At least 85% of staff paid in the baseline month Number of female civil servants paid on time (Text) 110,000.00 At least 85% of staff paid in the baseline month Number of school employees paid on time (Text) 450,000.00 At least 85% of staff paid in the baseline month The number of female school employees paid on time (Text) 300,000.00 At least 85% of staff paid in the baseline month Number of schools that remain operational (Number) 13,866.00 10,000.00 Share of pensions paid on time (Percentage) 100.00 90.00 Nov 15, 2022 Page 31 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) RESULT_FRAME_TBL_ PD O Indicator Name PBC Baseline End Target Share of pensions paid to female pensioners (Percentage) 65.00 85.00 PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_ IO Indicator Name PBC Baseline End Target Component 1: Government and School Employees Central and regional government staff in non-security sectors 100.00 Wage bill for October is paid with 70% paid on time. paid on time (Text) Percentage of Grievances Addressed (Percentage) 0.00 70.00 Number of schools that remain operational (Number) 13,866.00 10,000.00 Higher education institutions salaries are paid on time (Yes/No) Yes Yes Action: This indicator is New Component 2: Social Assistance and Pensions Social payments paid on time (Yes/No) No Yes Share of social payments paid on time to female beneficiaries 90.00 85.00 (Percentage) Child and family benefits are paid on time (Yes/No) Yes Yes Nov 15, 2022 Page 32 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) RESULT_FRAME_TBL_ IO Indicator Name PBC Baseline End Target Action: This indicator is New Component 3: Healthcare and First Responders Number of health service providers operational under the PMG 2,432.00 2,200.00 (Number) Salaries of SES staff paid on time (Percentage) 100.00 85.00 IO Table SPACE Monitoring & Evaluation Plan: PDO Indicators Mapped Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection Ministry of Finance, State Treasury Service, State Based on the Government continues to exercise core Once Tax Service, information provided by MoF functions Ministry of the MoF Justice, Minist ry of Social Policy Based on reports from Number of public administration staff Monthly. MoF, STS the treasury and key MoF paid in non-security sectors spending units. Number of female civil servants paid Once NACS Based on information MOF Nov 15, 2022 Page 33 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) on time provided by NACS Based on the Treasury MoES and data on payments and Number of school employees paid on Monthly MoF STS reports MoES data on personnel time and payroll Based on data provided The number of female school Once MoES by the MoES and shared MoF employees paid on time through MoF reporting Based on reporting of Number of schools that remain Quarterly MoES data MoF MoES operational The indicator will measure the government’s The data from the performance in making on- Monthly Pension Fund monthly Pension Fund MoF Share of pensions paid on time time pension payments reports. (i.e. share of pensions paid within the month when pensions are due). The indicator measures share of pensions paid on Pension Fund Share of pensions paid to female time to female pensioners. Quarterly MoF reports pensioners At least 85% paid on time within the month pensions are due. ME PDO Table SPACE Nov 15, 2022 Page 34 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) Monitoring & Evaluation Plan: Intermediate Results Indicators Mapped Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection Based on regular The Ministry Treasury reports and of Finance of payroll/personnel Ukraine, The Central and regional government staff in Monthly monthly reports MoF State Treasury non-security sectors paid on time submitted by the Key Service of Spending Agencies to Ukraine the MoF Data from GRMs for MoF/MoES Quarterly school employees and MoF Percentage of Grievances Addressed data government employees. Based on Number of schools that remain Number of schools that Quarterly reporting of MoF operational remain operational MoES Higher education staff are Higher education institutions salaries are Quarterly MoES MoF paid within 30 days when paid on time salaries are due. The indicator will measure the government's performance in making on- time eligible social Monthly MoSP MOF Social payments paid on time payments (i.e. within the month when payments related to the identified social programs are due). Nov 15, 2022 Page 35 of 36 The World Bank Fourth Additional Financing for Public Expenditures for Administrative Capacity Endurance (PEACE) in Ukraine (P180453) Share of social payments paid on time to female beneficiaries Child and family benefits Quarterly. MoSP MoF Child and family benefits are paid on time are paid within 30 days when benefits are due. Number of municipal (communal) health service providers operational under the PMG (baseline Number of health service providers 2,432 – target 2,200 operational under the PMG allowing for potential damage to healthcare infrastructure). SES and Monthly MoF Salaries of SES staff paid on time Treasury data ME IO Table SPACE Nov 15, 2022 Page 36 of 36