The World Bank Azerbaijan COVID-19 Emergency Response Project (P176503) Project Information Document (PID) Appraisal Stage | Date Prepared/Updated: 02-Jun-2021 | Report No: PIDA31656 May 11, 2021 Page 1 of 9 The World Bank Azerbaijan COVID-19 Emergency Response Project (P176503) BASIC INFORMATION OPS_TABLE_BASIC_DATA A. Basic Project Data Country Project ID Project Name Parent Project ID (if any) Azerbaijan P176503 Azerbaijan COVID-19 Emergency Response Project Region Estimated Appraisal Date Estimated Board Date Practice Area (Lead) EUROPE AND CENTRAL ASIA 07-Jun-2021 06-Sep-2021 Health, Nutrition & Population Financing Instrument Borrower(s) Implementing Agency Investment Project Financing Ministry of Finance State Agency on Mandatory Health Insurance (SAMHI), Ministry of Labor and Social Protection of the Population (MLSPP) Proposed Development Objective(s) The PDO is to prevent, detect, and respond to the threat posed by COVID19 and strengthen national systems for public health preparedness in the Republic of Azerbaijan. Components Component 1 – Emergency COVID-19 Response Component 2 – Temporary Social and Financial Support for Vulnerable Households/Individuals Component 3 – Project Implementation and Monitoring PROJECT FINANCING DATA (US$, Millions) SUMMARY -NewFin1 Total Project Cost 95.00 Total Financing 95.00 of which IBRD/IDA 95.00 Financing Gap 0.00 DETAILS -NewFinEnh1 May 11, 2021 Page 2 of 9 The World Bank Azerbaijan COVID-19 Emergency Response Project (P176503) World Bank Group Financing International Bank for Reconstruction and Development (IBRD) 95.00 Environmental and Social Risk Classification Substantial Decision The review did authorize the team to appraise and negotiate Other Decision (as needed) B. Introduction and Context Country Context 1. Azerbaijan is an upper middle-income country with an estimated gross domestic product (GDP) per capita of USD 4,205 in 2020. The country has a population of about 10.1 million.1 From 2000 to 2010, Azerbaijan experienced strong economic performance, largely driven by natural resources. This resulted in significant improvements in living standards, with the national poverty rate declining from 50 percent in 2000 to only 4.8 percent in 2019 (WDI, 2019). Since 2015, economic performance has stalled, revealing systemic macroeconomic and structural challenges. Regional inequality persists, informality is widespread, much of the workforce is employed in low productivity sectors – for example, 36 percent in agriculture – and a considerable part of the population remains socially and economically vulnerable. 2. The country has achieved significant improvements in key health outcomes, but still lags behind countries of a similar income level. Life expectancy at birth increased from 71.8 years in 2000 to 76.4 years in 2019, while under-five mortality declined from 74 deaths per 1,000 live births in 1990 to 20.4 deaths per 1,000 live births in 2019. While life expectancy is slightly above average for Azerbaijan’s level of gross national income per capita, under-five mortality is significantly above the global average. Azerbaijan’s Human Capital Index increased by 0.08—from 0.50 in 2010 to 0.58 in 2020 but is lower than most of its regional peers and the average for the Europe and Central Asia (ECA) region. A child born in Azerbaijan today will be 58 percent as productive when she grows up as she could be if she enjoyed complete education and full health. 3. In 2020, Azerbaijan was hit by the triple shocks of the COVID-19 pandemic, reduced oil prices, and an armed conflict with neighboring Armenia; the economic downturn and pandemic response measures have affected vulnerable populations and increased poverty and inequity. The economy experienced its second recession since 2015, contracting by an estimated 4.3 percent in 2020. Lockdowns halted activity in nonhydrocarbon sectors, particularly travel, hospitality, and domestic trade. The high uncertainty associated with COVID-19 has exacerbated Azerbaijan’s economic and social challenges 1 World Development Indicators (WDI), 2020 May 11, 2021 Page 3 of 9 The World Bank Azerbaijan COVID-19 Emergency Response Project (P176503) including health, labor market, and social protection. The adverse effects are likely to be disproportionately felt by vulnerable households with inadequate coping strategies and insurance mechanisms. Prior to the onset of the pandemic, 5.1 percent of the Azerbaijani population lived below the national poverty line and 57 percent were identified as being vulnerable2 to falling back into poverty should they suffer a labor market or health shock.3 The results of a rapid survey, conducted by the United Nations (UN), to assess income loss highlighted this vulnerability and identified initial income losses of between AZN 92.3 and 139.7 million (equivalent to USD 54.29 and 82.18 million). Sectoral and Institutional Context 4. Azerbaijan was relatively successful in containing the first wave of the pandemic. Between March and May 2020, Azerbaijan experienced less than 5,000 cases and 58 deaths. The first wave was contained due to the Government of Azerbaijan (GoA)’s swift action following the first confirmed COVID- 19 case on February 28, 2020. Between March 2020 and January 2021, three lockdowns were initiated. In response to the immediate health needs, the GoA swiftly mobilized a health sector response and worked with multiple partners to secure emergency supplies. Medical supplies were purchased and brought to Azerbaijan by the Ministry of Health (MoH), the State Agency for Mandatory Health Insurance (SAMHI) and the Management Union of Medical Territorial Units (TABIB) and United Nations (UN) agencies, the European Union (EU), and private donors. Coordination through the UN helped the country maintain access to international epidemiological expertise and risk communication guidance. Other forms of support were provided by countries such as Turkey, China, South Korea, Poland and United Arab Emirates. These collective efforts averted a shortage of personal protective equipment (PPE). 5. Subsequent waves of the pandemic reveal the need for support to sustain much-needed public health measures. Overall, as of May 11, 2021, there were more than 327,000 confirmed cases of COVID- 19 and 4,698 deaths. The country has experienced three surges. Between October 2020 and January 2021, the country experienced a pronounced rise in cases, with a peak of 411.7 daily new confirmed cases per million people on December 14, 2020. The third wave, which started in March 2021, reached its peak on April 13, 2021, with 221.7 daily new confirmed cases per million people. Recent experience highlights the need for sustained support to avoid further surges, particularly as compliance with public health measures becomes harder to secure and more economically challenging for vulnerable populations. 6. The demands of the last two surges have strained the health system and prompted the need to mobilize exceptional surge response and address structural weaknesses at the primary healthcare level. Following the April 2021 peak, as of April 29, 2021, 26,125 patients were receiving care in hospital settings and resulting in the need for the GoA to provide exceptional top-up compensation for healthcare workers. COVID-19 has also exposed the fragmentation of the health sector’s information management systems at the primary healthcare level. These have limited the system’s ability to engage in NCD risk prevention and management, consequently reducing the overall vulnerability to severe COVID-19. 7. The prolonged duration of the crisis and the triple shock, of conflict, recession, and a pandemic, are limiting public compliance with social distancing and other COVID-related guidance, further 2 Vulnerable populations are defined as people living above the US$5 and below the US$10 poverty lines, both per capita per day in 2005, purchasing power parity international U.S. dollars. 3 World Bank, South Caucasus In Motion, 2019. May 11, 2021 Page 4 of 9 The World Bank Azerbaijan COVID-19 Emergency Response Project (P176503) weakening Azerbaijan’s capacity to contain the pandemic. The April 2021 surge corresponds with “superspreading� events following the March 2021 Nowruz celebration and, when compared with 2020, reflect waning public compliance with social distancing measures. Mass gatherings, household celebrations and absence of social distancing and mask wearing, despite continued messaging from the authorities to adhere to the preventative measures. “Pandemic fatigue� has made previous measures to enforce public health measures less effective during the third wave, especially among vulnerable populations and in the context of more infectious and deadly variants. 8. Emergency needs, public compliance with pandemic control measures and underlying health system weaknesses need to be addressed so that the GoA can strengthen its response to the COVID-19 crisis. Critical investments are needed to put the health system in a position to prevent, detect, and respond to the pandemic effectively and sustainably. These include: mobilizing surge response capacity, on an exceptional basis, in hospital settings; improving risk communication and community engagement to overcome the public’s “pandemic fatigue�; financing unemployment benefits and cash transfers to vulnerable populations to enable social distancing; improving capacity at the primary healthcare level to monitor, track and facilitate integrated care for patients with NCDs, who are at increased vulnerability for severe COVID-19 and improving protocols and guidelines for healthcare workers, so that they are well placed to manage COVID-19 cases and NCD co-morbid patients, who are more vulnerable to severe COVID-19. C. Proposed Development Objective(s) Development Objective(s) (From PAD) The PDO is to prevent, detect, and respond to the threat posed by COVID19 and strengthen national systems for public health preparedness in the Republic of Azerbaijan. Key Results 9. The Project objectives are aligned to the results chain of the COVID-19 SPRP. The PDO will be monitored through the below PDO level outcome indicators. (i) Number of diagnosed cases treated in acute healthcare facilities, disaggregated by gender; (ii) Number of individuals receiving temporary social assistance or unemployment cash benefit under the Project, disaggregated by gender D. Project Description 10. The Project will support the GoA curb the spread of COVID-19 pandemic, strengthen the health system to detect and treat cases, and mitigate some of the social consequences of the pandemic. The project has three components. Component 1: Emergency COVID-19 response 11. Subcomponent 1.1: Case Management (Detection, Confirmation, Contact Tracing, Recording, Reporting and Treatment). This subcomponent will provide immediate support to the Republic of Azerbaijan to prevent the spread and facilitate the management of COVID-19 by financing: • Top-up payments for health workers providing exceptional services for COVID-19 patients during the May 11, 2021 Page 5 of 9 The World Bank Azerbaijan COVID-19 Emergency Response Project (P176503) COVID-19 surges; • Medical supplies, devices and equipment for the evaluation, treatment and monitoring of COVID-19 patients. This may include limited renovations, if needed, to operationalize additional ICU beds, for five hospitals, and support to laboratories; • Infection prevention and control protocols for healthcare workers in hospital settings; • Risk communications to support continued social distancing and public health measures to limit the spread of the epidemic. 12. Subcomponent 1.2: Health systems strengthening. This subcomponent will support health systems strengthening, recognizing the impact of COVID-19 on current and future needs, given Azerbaijan’s existing disease profile, by financing: • Guidelines and protocols for health care workers to support the identification and treatment COVID- 19, and related comorbidities such as cardiovascular disease. • Equipment and supplies in primary health care facilities for data reporting, analysis, and dissemination for the treatment of patients with COVID-19 risk factors. Strengthening e-health capabilities in primary health care facilities will better enable patients with NCDs to benefit from integrated care between primary and specialist facilities, both during the ongoing COVID-19 pandemic and in the future. • Maintenance services for medical equipment across hospitals. Component 2. Temporary Income Support for Vulnerable Families/Individuals 13. Subcomponent 2.1: Temporary cash transfers for vulnerable families. This subcomponent will finance transfers delivered through the existing TSA program procedures4 and delivery system to support the increased need for social assistance because of the pandemic. The Project will use the existing online application system and follow the material and household conditions verification process through MLSPP and local branches of the State Social Protection Fund. The project will finance benefits for newly eligible 47,000 households for three months with an AZN 225 (approximately USD 132) monthly allowance. 14. Subcomponent 2.2: Unemployment cash benefit. This subcomponent will finance one-time cash payment of AZN 190 (approximately USD 111) for 170,000 citizens who have become unemployed and are registered as unemployed with the State Employment Service. The GoA allocated a monthly allowance of AZN 190 to 600,000 unemployed citizens from April to June 2020. 5 The assistance covered formal and informal workers who lost their job because of the economic downturn resulting from the measures adopted to contain the outbreak. This subcomponent will finance the payment for 170,000 unemployed people among 600,000 unemployed citizens who received the assistance. 4 The TSA benefit was increased to AZN 225 (approximately USD 132) per family in 2020. This has helped to cover basic needs for vulnerable populations receiving assistance. In addition, application procedures and the implementation processes have been simplified to minimize the risk of contagion in compliance with the regulations on social distancing. In 2020, coverage was expanded to newly poor households; 9,000 new families (37,350 persons) were granted TSA without a comprehensive assessment of their household conditions. In addition, the TSA that had expired for 9,408 households was extended during March- June of 2020. 5 AZN 190 amount is commensurate to the cost of living. Those who did not have Internet access could call the Employment Centers of the district or city in which they live to register as unemployed and provided the required information. May 11, 2021 Page 6 of 9 The World Bank Azerbaijan COVID-19 Emergency Response Project (P176503) Component 3. Project Implementation Management and Monitoring 15. This component will support the administrative and human resources needed to implement the Project and monitor and evaluate progress in MLSPP and SAMHI. The approach to project implemenation will be to integrate key functions into existing institutions and the project will finance incredmental staff costs for project implementation (project implementation – procurement, financial management (FM), environmental and social safeguards, outreach activities, communication campaigns, monitoring and evaluation, reporting, and stakeholder engagement), coordination and administration. This component will also finance performance audits focusing on key project activities, which will be carried out by an . external auditor. . Legal Operational Policies Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Areas OP 7.60 No Summary of Assessment of Environmental and Social Risks and Impacts . E. Implementation Institutional and Implementation Arrangements 16. SAMHI and MLSPP will be the primary implementing agencies, each with its own Project Implementation Unit (PIU) to support Components 1 (PIU-1) and 2 (PIU-2), respectively. A new PIU will be established in SAMHI, and the PIU in the MLSPP, which is currently supporting the Employment Support Project, will be augmented to provide support for this Project.6 For Component 1 activities, decisions will be made by SAMHI, in discussion with other institutions involved in health-sector COVID-19 response. For Component 2 activities, decisions will be made by the MLSPP in consultation with relevant agencies of the GoA. The PIUs will respectively report to the SAMHI and MLSPP and will be responsible for day-to-day project implementation, overall project coordination, monitoring activities, safeguards and fiduciary functions, and reporting. Additional key PIU functions include two coordinators—one for Component 1 and Component 2 of the Project, who will also be responsible for coordination between SAMHI and MLSPP. For both PIUs, additional experts will be hired, as needed, including safeguards experts, fiduciary staff (procurement specialist, FM specialist, and FM assistant), an IT officer and monitoring and evaluation specialists. For Component 2, some of the existing MLSPP PMU staff will assume the listed functions and additional consultants, for procurement and other needs will be hired within 30 days of the Project’s Effective date. 6The approach of two separate PIUs has been selected to: (1) build capacity within SAMHI, particularly in areas such as health sector procurement, which are often technically complex and require specialized skills; (2) to ensure that appropriate oversight over health sector activities can be coordinated, particularly given that the technical agencies, such as the WHO, are providing guidance to SAMHI on COVID-19-related activities. May 11, 2021 Page 7 of 9 The World Bank Azerbaijan COVID-19 Emergency Response Project (P176503) 17. Project timeline. Most activities, including the social protection measures, will be financed and completed in the first six to nine months of project implementation. Some of the health measures, particularly those pertaining to the strengthening of the health system to respond to future pandemics, may take longer to implement. Also, future waves of COVID-19 are likely to occur as new variants emerge. As a result, a two-year timeline has been established for the Project. . CONTACT POINT World Bank Yoshini Naomi Rupasinghe Health Specialist Elvira Anadolu Senior Health Specialist Sirma Demir Seker Senior Economist Borrower/Client/Recipient Ministry of Finance Implementing Agencies State Agency on Mandatory Health Insurance (SAMHI) Ruslan Abdullayev Director rabdullayev@its.gov.az Ministry of Labor and Social Protection of the Population (MLSPP) Anar Aliyev Deputy Minister anara.aliyev@milspp.gov.az May 11, 2021 Page 8 of 9 The World Bank Azerbaijan COVID-19 Emergency Response Project (P176503) FOR MORE INFORMATION CONTACT The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects APPROVAL Yoshini Naomi Rupasinghe Task Team Leader(s): Elvira Anadolu Sirma Demir Seker Approved By Practice Manager/Manager: Country Director: Sebastian-A Molineus 02-Jun-2021 May 11, 2021 Page 9 of 9