Document of The World Bank · 2016. 7. 14. · PDO Program Development Objectives Objetivos de...

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Document of The World Bank

Report No: ICR00003701

IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-81770)

ON A LOAN

IN THE AMOUNT OF US$700 MILLION

TO THE

STATE OF BAHIA

FOR A

BAHIA SOCIO ECONOMIC DEVELOPMENT FOR INCLUSIVE GROWTH DEVELOPMENT POLICY LOAN

April, 2016

Macroeconomics & Fiscal Management Global Practice Brazil Country Management Unit Latin America and the Caribbean Region

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CURRENCY EQUIVALENTS

Exchange Rate Effective as of April 29, 2016

Currency Unit = Brazilian Real (R$) US$ 1.00 = R$ 3.48

FISCAL YEAR

January 1 — December 31

ABBREVIATIONS AND ACRONYMS

CadÚnico Single Cadastre Cadastro Único CORDEC Coordination of Civil Defense Coordenação de Defesa Civil CPS Country Partnership Strategy Estratégia de Parceria com o país CRAS Social Assistance Reference

Center Centro de Referência de Assistência Social

DERBA Bahia Road Agency Departamento de Infraestrutura de Transportes da Bahia

DPL Development Policy Loan Empréstimo para Políticas de Desenvolvimento

DRM Disaster Risk Management Gestão de Risco de Desastres FIPLAN Financial Management

Information System Sistema Integrado de Planejamento, Contabilidade e Finanças do Estado da Bahia

HR Human Resources Recursos Humanos ICR Implementation Completion and

Results Report Relatório de Conclusão da Implementação do Projeto

IADB Inter-American Development Bank

Banco Interamericano de Desenvolvimento

IGD-M Index of Municipal Management Efficiency for Bolsa Família and CadÚnico

Gestão Descentralizada Municipal

IPSAS International Public Sector Accounting Standards

ISR Implementation Status & Results LDO Budgetary Guidelines Law Lei de Diretrizes Orçamentária M&E Monitoring and Evaluation Monitoramento e Avaliação PD Program Document Documento do Programa PDO Program Development Objectives Objetivos de Desenvolvimento do

Programa PEFA Public Expenditure and Financial

Accountability

PMI Expression of Interest Process Processo de Manifestação de Interesse PPA Multi-year Plan Plano Plurianual

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PPP Public-private Partnerships Parcerias Público Privadas PPV Pact for Life Pacto pela Vida PSIA Poverty and Social Impact

Analysis

PTA Annual Work Plans Plano de Trabalho Anual SEDES State Secretariat of Social

Development Secretaria do Estado de Desenvolvimento Social

SEFAZ State Secretariat of Finance Secretaria do Estado da Fazenda SGA Management and Evaluation

Oversight Superintendência de Gestão e Avaliação

SEINFRA State Secretariat of Infrastructure Secretaria de Infraestrutura SEPLAN State Secretariat of Planning Secretaria do Planejamento SUAS Single Consolidated System of

Social Assistance Sistema Único de Assistência Social

WDR World Development Report

Vice President: Country Director:

Global Practice Senior Director Practice Manager:

Task Team Leader: ICR Team Leader:

ICR Primary Author:

Jorge Familiar Calderon Martin Raiser Carlos Felipe Jaramillo Pablo Saavedra Antonio Nucifora Fabio Sola Bittar Eduardo Somensatto

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BRAZIL

BAHIA SOCIO ECONOMIC DEVELOPMENT FOR INCLUSIVE GROWTH

DEVELOPMENT POLICY LOAN

CONTENTS

Data Sheet ............................................................................................................................................. 5

A. Basic Information ........................................................................................................... 5

B. Key Dates ........................................................................................................................ 5

C. Ratings Summary ............................................................................................................ 5

D. Sector and Theme Codes ................................................................................................ 6

E. Bank Staff ....................................................................................................................... 6

F. Results Framework Analysis ........................................................................................... 7

G. Ratings of Program Performance in ISRs .................................................................... 13

H. Restructuring ................................................................................................................ 13

1. Program Context, Development Objectives, and Design .............................................................. 13

1.1 Context at Appraisal .................................................................................................... 13

1.2 Original Project Development Objectives and Key Indicators ................................... 15

1.3 Revised Program Development Objective and Key Indicators, and Reasons ........ 16

1.4 Original Policy Areas Supported by the Program (as approved) ................................ 16

2. Key Factors Affecting Implementation and Outcomes................................................................... 20

2.1 Program Performance ............................................................................................. 20

2.2 Factors Affecting Implementation .......................................................................... 21

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization ........ 21

2.4 Expected Next Phase and Follow-up Operation ..................................................... 22

3. Assessment of Outcomes ................................................................................................................ 22

3.1 Relevance of Objectives, Design and Implementation ........................................... 22

3.2 Achievements of Project Development Objectives ................................................ 23

3.3 Justification of Overall Outcome Rating ..................................................................... 33

3.4 Overarching Themes, Other Outcomes and Impacts ................................................... 33

4. Assessment of Risk to Development Outcomes ............................................................................. 34

5. Assessment of Bank and Borrower Performance ........................................................................... 35

5.1 Bank Performance ....................................................................................................... 35

5.2 Borrower Performance ................................................................................................ 37

6. Lessons Learned ............................................................................................................................. 38

Annex 1. Bank Lending and Implementation Support/Supervision Processes ................................... 40

Annex 2. Beneficiary Survey Results (if any) .................................................................................... 43

Annex 3. Stakeholder Workshop Report and Results (if any) ............................................................ 44

Annex 4. Summary of Borrower’s ICR and/or Comments on Draft ICR........................................... 45

Annex 5. Comments of Cofinanciers and Other Partners/Stakeholders ............................................. 46

Annex 6. List of Supporting Documents ............................................................................................ 47

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Data Sheet

A. Basic Information

Country: Brazil Program Name: Bahia Inclusion and Economic Development DPL

Program ID: P126351 L/C/TF Number(s): IBRD-81770

ICR Date: 04/29/2016 ICR Type: Core ICR

Lending Instrument: DPL Borrower: STATE GOVERNMENT OF BAHIA

Original Total Commitment:

USD 700.00M Disbursed Amount: USD 700.00M

Revised Amount: USD 700.00M

Implementing Agencies: Secretary of Finance (SEFAZ)

Co-financiers and Other External Partners:

B. Key Dates

Process Date Process Original Date Revised / Actual

Date(s)

Concept Review: 10/27/2011 Effectiveness: 02/15/2013 12/21/2012

Appraisal: 02/08/2012 Restructuring(s):

Approval: 06/28/2012 Mid-term Review: 09/15/2014

Closing: 12/31/2014 12/31/2014

C. Ratings Summary

C.1 Performance Rating by ICR

Outcomes: Moderately Satisfactory

Risk to Development Outcome: Moderate

Bank Performance: Moderately Satisfactory

Borrower Performance: Moderately Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)

Bank Ratings Borrower Ratings

Quality at Entry: Moderately Satisfactory Government: Satisfactory

Quality of Supervision: Moderately Satisfactory Implementing Agency/Agencies:

Moderately Satisfactory

Overall Bank

Performance: Moderately Satisfactory

Overall Borrower

Performance: Moderately Satisfactory

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C.3 Quality at Entry and Implementation Performance Indicators

Implementation

Performance Indicators

QAG Assessments (if

any) Rating:

Potential Problem Program at any time (Yes/No):

No Quality at Entry (QEA):

None

Problem Program at any time (Yes/No):

No Quality of Supervision (QSA):

None

DO rating before Closing/Inactive status:

Satisfactory

D. Sector and Theme Codes

Original Actual

Sector Code (as % of total Bank financing)

General industry and trade sector 29 29

Health 14 14

Other social services 29 29

Primary education 14 14

Sub-national government administration 14 14

Theme Code (as % of total Bank financing)

Education for all 14 14

Other Private Sector Development 14 14

Other social protection and risk management 44 44

Population and reproductive health 14 14

Rural markets 14 14

E. Bank Staff

Positions At ICR At Approval

Vice President: Jorge Familiar Calderon Hasan A. Tuluy

Country Director: Martin Raiser Deborah L. Wetzel

Global Practice Senior Director

Carlos Felipe Jaramillo

Practice Manager: Pablo Saavedra Auguste Tano Kouame

Program Team Leader: Roland Clarke Pablo Fajnzylber

Task Team Leader Antonio Nucifora Yaye Seynabou Sakho

ICR Team Leader: Fabio Sola Bittar

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ICR Primary Author: Eduardo Somensatto

F. Results Framework Analysis

Program Development Objectives (from Project Appraisal Document)

The objective of the proposed operation is to support the State of Bahia's program to reduce social inequality, develop more efficient institutional infrastructure and logistics, and strengthen public sector management with a two-tranche Development Policy Loan (DPL). Revised Program Development Objectives (if any, as approved by original approving

authority)

(a) PDO Indicator(s)

Indicator Baseline Value

Original Target

Values (from

approval

documents)

Formally

Revised

Target Values

Actual Value

Achieved at

Completion or

Target Years

Indicator 1 : Education: Number of partnership agreements signed by the State with the municipalities

Value (quantitative or Qualitative)

217 329 403

Date achieved 12/31/2011 12/31/2013 09/30/2015 Comments (incl. % achievement)

Achieved. The State authorities were able to enter into partnership agreements with almost all 417 municipalities.

Indicator 2 : Health: Increase in the proportion of pregnant women enrolled by primary health care team


41.4% 45% 52.2%


Achieved. Indicators in the health sector had their baseline and target value inverted in the Policy Matrix. This was noticed during supervision missions.

Indicator 3 : Health: Increase in the proportion of pregnant women with timely pre-natal care Value (quantitative or Qualitative)

46.7% 50% 51.2%

Date achieved 12/31/2010 12/31/2014 12/31/2015 Comments (incl. %

Achieved. Indicators in the health sector had their baseline and target value inverted in the Policy Matrix. This was noticed during supervision missions.

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achievement)

Indicator 4 : Productive Inclusion: Increase in the targeted number of rural producers benefiting from technical assistance under the State Program for Productive Inclusion


Zero 150,000 160,000


Achieved.

Indicator 5 : Social Inclusion: Increase in the household registrations to the Social Assistance Reference Center CRAS and in the Cadastro Único in the 50 most vulnerable municipalities (with the lowest IGP-M)


50 percent of population 20 percent increase from 2011 to 2014

CRAS: Only 15 out of 50 municipalities reported an increase of CRAS registry above 20%. CadÚnico: 29 out 50 municipalities reported an increase of CadÚnico registry above 20%.


Partially Achieved. In general, the program of supporting the CRAS made visible progress, but it fell slightly short of the initial targets. Nonetheless, the programs has been successful.

Indicator 6 : Social Inclusion: Increase in the information available on school attendance (monitoring of education conditionality) in the 50 municipalities with the lowest IGD-M


average of 90% in the selected municipalities

5% increase in the 50 municipalities with the lowest IGD-M

19 out of 50 municipalities reported an increase on school attendance monitoring


Partially Achieved. While there was a commensurate increase in the number of students being followed, the level varied considerably across municipalities.

Indicator 7 : Crime & Violence: Increased number of priority municipalities that receive prevention programs/interventions through initiatives of the Sub-committee of crime and violence prevention through Social Development CSPS.

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4 municipalities 20 municipalities at least one training is taking place in all 20 municipalities


Achieved. The indicator was met; moving ahead the objective should be to expand the programs more broadly.

Indicator 8 :

Gender: The Grupo de Gestão Integrada is fully operational as evidence by an increased number of sectorial partnerships signed and implemented between the Secretariat for Women and other secretariats to mainstream gender issues in State Programs


1 (Agreement with Secretaria de Agricultura)

At least 5 sectorial partnerships signed

Six partnership agreements signed


Achieved.

Indicator 9 : Gender: Expansion of services offered by reference centers to women victims of violence in the State of Bahia as per the technical guide (territorialização)


13 counties 27 counties 27 counties

Date achieved 12/31/2011 12/31/2014 09/30/2015

Comments (incl. % achievement)

Achieved. Until the ICR mission in October 2015, 26 counties counted with a reference center for women and the expectation was for a new center to enter into operation in the coming weeks. This was confirmed by a news report from November 2015 relative to the opening of a new center in the municipality of Barreiras.

Indicator 10 : Disaster Risk Management: The State of Bahia's Disaster Risk management is operational as evidenced by


(i) 5 regional nodes established and trained by December 2014

0

Date achieved 12/31/2014 12/31/2014 Comments (incl. % achievement)

Not Achieved. Fiscal issues are part of the reason the 5 regional nodes have not been established.

Indicator 11 : DRM: The State of Bahia's Disaster Risk management is operational as evidenced by


(ii) Risk-mapping for 2 pilot areas done

Accomplished

10

Date achieved 09/30/2015 Comments (incl. %

Achieved. The value of the information obtained through the risk mapping exercise led the authorities to expand the concept to 11 areas.

Indicator 12 : DRM: The State of Bahia's Disaster Risk management is operational as evidenced by


No brigades

(iii) 10 self-established voluntary brigades trained

20 trained brigades.

Date achieved 09/30/2015 Comments (incl. % achievement)

Achieved.

Indicator 13 : Transport: Bahia Advisory Committee issues 3 resolutions Value (quantitative or Qualitative)

3 2

Date achieved 12/31/2014 12/31/2014


Not Achieved. The committee gathered twice in 2013, and issued two resolutions. Nonetheless, given the elections period and the administrative reform that took place under the new government, there were no meetings in 2014 and until October 2015 no further resolution was issued.

Indicator 14 : Transport: Draft Decree reorganizing DERBA and internal regulation ready Value (quantitative or Qualitative)


Not Achieved. The agency was incorporated in SEINFRA and some of its areas, such as procurement and financial, were eliminated and consolidated with the secretariat.

Indicator 15 : Planning & Budgeting: Policy planning capacity established in at least six line secretariats


Accomplished


Achieved. Level of capacity to be established was not originally defined. Refer to paragraphs 69-70 for further explanations.

Indicator 16 : Planning & Budgeting: Secretariats are directly involved in the annual budget planning process

Value (quantitative or

Accomplished

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Qualitative) Date achieved 12/31/2014 Comments (incl. % achievement)

Achieved. Refer to paragraphs 69-70 for further explanations.

Indicator 17 : Planning & Budgeting: Revised budget and planning process fully documented Value (quantitative or Qualitative)

Accomplished


Achieved. Refer to paragraphs 69-70 for further explanations.

Indicator 18 : Planning & Budgeting: Reduction of number of intra-year modifications to the budget by at least 75 percent (baseline 2010: 7000)


Date achieved 12/31/2014


This indicator was dropped during supervision and it was agreed that the government would target an increase in the number of priority programs in the budget with an improvement plan. The government reported that the number of priority programs published in the annex of the LDO was 32 (2013), 19 (2014) and 18 (2015).

Indicator 19 : Financial Management: Budget preparation and reporting takes place consistent with IPSASs


Accomplished


Achieved. The system exceeded the targeted results under the DPL. Refer to paragraph 71 for further explanation.

Indicator 20 : Human Resource Management: All the personnel from the secretariats of health and of public security are fully documented within the new HR system



Partly Achieved. The basic documentation has proceeded and the cadastre is essentially done. The new HR system will be fully introduced in the next months

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Indicator 21 : Human Resources Management: All promotions and transfers for the secretariat of health and public security are through a transparent merit based selection



Not Achieved. This indicator was perhaps unattainable. It is rather difficult to foresee such fundamental change in managerial culture.

Indicator 22 : Tax administration: Tax arrears collection as a percentage of tax revenue Value (quantitative or Qualitative)

1.02% 1.8% Accomplished

Date achieved 12/31/2010 12/31/2014 12/31/2014


Achieved.

Indicator 23 : PPPs: At least two private sector participation in early project State PMI processes are undertaken


3 2 3

Date achieved 12/31/2014 12/31/2014 Comments (incl. % achievement)

Achieved.

Indicator 24 : PPPs: all new contracts signed include a clause requesting that an independent auditor will be contracted to review the contract


Accomplished


Achieved. Refer to paragraphs 76-78 for further explanation.

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target

Values (from

approval

documents)

Formally

Revised

Target Values

Actual Value

Achieved at

Completion or

Target Years

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G. Ratings of Program Performance in ISRs

No. Date ISR

Archived DO IP

Actual

Disbursements

(USD millions)

1 11/20/2012 Satisfactory Moderately Satisfactory 0.00 2 06/23/2013 Satisfactory Moderately Satisfactory 350.00 3 12/21/2013 Satisfactory Satisfactory 700.00 4 07/12/2014 Satisfactory Satisfactory 700.00

H. Restructuring Not Applicable

1. Program Context, Development Objectives, and Design

1.1 Context at Appraisal

1. The DPL was the first policy loan to the State of Bahia, and the sixth in a series

of loans to the States in Brazil. The Bank had accumulated considerable experience working with States on broad policy reforms, and Bahia benefited from the knowledge gained from similar DPL engagements in Minas Gerais, Rio de Janeiro, Rio Grande do Sul, Alagoas, and Pernanbuco.

2. Bahia, though, had some unique characteristics. It was geographically a large State (same size as France) with dispersed and limited administrative capacity. Located in the northeast of Brazil, with a population of 14 million, its social and economic development lagged many other States. For example, the State’s health and education indicators have been consistently below the national average. With a large rural population, living in arid land, the State has one of the largest numbers of extreme poor in Brazil.

3. In the few years leading to the DPL, the State had made great advances and had

seen a sharp reduction in poverty. The State had come through the 2008 international financial crises as well as other states in Brazil, and by 2011 the fiscal and economic position of the State had improved. By then, a new government had taken office and had issued a Strategic Vision, which outlined their program to improve the economic and social conditions in the State. This was further refined with the preparation of a Participatory Multi-Annual Plan (PPA).

4. The new Multi-Annual Plan (Plano Plurianual, PPA) identified three strategic

axes: a) Social Inclusion and Affirmation of Rights; b) Sustainable Development and Infrastructure for Development; c) and Democratic Management of the State. The challenges identified in the PPA were quite extensive and covered essentially all sectors under the realm of the State’s public administration. They ranged from education, health, poverty reduction, regional development, integration, public security, gender, race, and ethnicity, the

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environment, disaster risk management, logistic, transport, public sector management, tax administration, human resources, public sector partnerships and planning.

5. The PPA also contemplated important new public investments. This occurred at a time when federal transfers and loans, which had helped the State in the past, were being curtailed. In the face of growing needs, the authorities looked for alternative sources of financing, including from multilateral institutions.

6. The primary motivation to approach the Bank for a DPL was to support a

comprehensive reform agenda (that required multi-sector expertise) and access funding

to preserve investments and retire more expensive debt. The State government did not have much experience with DPLs. They had prepared one with the IDB during the financial crisis of 2008, primarily as a financing vehicle.

7. The preparation of the DPL with the World Bank was distinct, since it was

marked by an extended dialogue in a number of sectors. The Bank had a good understanding of the conditions in the State, as it had established a long standing partnership with the State over the years. The Bank’s knowledge about the challenges confronting the State was due in part to its previous local presence through many investment projects in the areas of rural development, transportation, water management, urban infrastructure and health. A number of Bank staff involved with the State participated in the preparation of the DPL. The proposed policy based operation provided an opportunity for the Bank to engage with the authorities on a number of policy areas and to carry out a dialogue on a wide ranging set of policy issues.

8. The Bank relied on several analytical sources as a basis for its dialogue. As indicated in the Program Document (PD) several sectoral studies informed the focus and design of the program supported by the DPL (see Table 4 of the PD). This included a Poverty Assessment, the Health Sector Study of Bahia, the report Achieving World Class Education in Brazil, and also the findings from the Brazil Gender Review and State-level gender analysis by the project team. (See Gender and Poverty in the State of Bahia, 2011 in the project files). The Bank also carried out an analysis of the fiscal conditions of the State and a debt sustainability analysis to verify that the State would remain within the limits of the Fiscal Responsibility Law, despite the ambitious public investment program.

9. The State Secretariat of Finance (SEFAZ, Secretaria do Estado da Fazenda

Superintendência de Gestão e Avaliação) was the main counterpart for the preparation

and implementation of the DPL. They had the task of organizing a large number of sectors, evaluating the feasibility of the proposed measures, and ensuring consistency with the government’s priorities. A particular challenge was to identify the sequence of measures in a two-tranche operation while evaluating the commitments being made by individual secretariats during preparation. An initial concern was the ability to carry out the proposed reforms within the committed time.

10. One of the issues carefully considered during preparation was the structure of

the DPL. Particularly, it was discussed whether it should be a single-tranche loan, a two-tranche operation, or a programmatic series. Given that the Government had committed to

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introduce a series of policy measures over an extended period of time, in a sequential manner, and given the legal delays in approving separate operations in Brazil, it was decided to have a two-tranche loan.

1.2 Original Project Development Objectives and Key Indicators

11. The objectives of the proposed operation was to support the State of Bahia's

program to reduce social inequality, develop more efficient institutional infrastructure

and logistics, and strengthen public sector management. These objectives, with their specific policy actions, was to be measured through twenty-four key indicators by end-2014 as described below.

• Improvement in accountability for results in the education sector between the State and the Municipalities through the establishment of partnership agreements called Pacto com Municipios (Pact with Municipalities). Number of partnerships to increase from 217 in 2011 to 329 in 2014.

• Increase in the proportion of pregnant women enrolled by primary health care team from 41.4% in 2010 to 45% in 2014.

• Increase in the proportion of pregnant women with timely antenatal care from 46.7% in 2010 to 50% in 2014.

• Increase in the number of rural producers benefiting from technical assistance under the State Program for Productive Inclusion from a baseline of zero in 2011 to 150 thousand in 2014.

• Increase in the number of households registered in the Social Assistance Reference Centers (CRASs) and in the Cadastro Único (CU) in the 50 most vulnerable municipalities (with the lowest IGD-M). Target was for a 20 percent increase by end-2014.

• Increase in the information available on school attendance in the 50 municipalities with the lowest IGD-M. Target was for a 5 percent increase by end-2014.

• Increase in the number of priority municipalities that receive crime prevention programs/interventions through initiatives of the Sub-committee of crime and violence prevention through Social Development (Subcomitê para a prevenção da criminalidade e da violência por meio do desenvolvimento social, CSPS), from 4 to 20 municipalities by end-2014.

• Operationalize the Grupo de Gestão Integrada as evidenced by an increased number of sectorial partnerships signed and implemented between the Secretariat for Women and other secretariats to mainstream gender issues in State Programs. Target was for at least 5 sectorial partnerships signed by end-2014.

• Expand the services offered by reference centers to women victims of violence as per the technical guide from 13 to 27 municipalities between 2011 and 2014.

• Operationalize the State of Bahia’s Disaster Risk Management as evidenced by five regional nodes established and trained by end-2014.

• Operationalize the State of Bahia’s Disaster Risk Management as evidenced by risk mapping for two pilot areas completed by end-2014.

• Operationalize the State of Bahia’s Disaster Risk Management as evidenced by 10 self-established voluntary brigades trained by end-2014.

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• Operationalize the Bahia Logistics Advisory Committee as evidenced by three resolutions issued by the Committee by end-2014.

• Reorganize the Bahia Roads Agency (DERBA) as evidenced by approval of the decree and the issuance of internal regulation by end-2014.

• Establish policy planning capacity in at least six line secretariats. • Involve secretariats directly in the annual budget planning process. • Fully document all revisions to the budget and planning process. • Reduce the number of intra year modifications to the budget by at least 75 percent

(baseline 2010: 7000). • Budget preparation and reporting takes place consistent with International Public Sector

Accounting Standards (IPSASs). • Fully document all the personnel from the secretariats of health and of public security

within the new HR system. • Ensure that all promotions and transfers for the secretariat of health and public security

are done through a transparent merit-based selection. • Increase tax arrears collection as a percentage of tax revenue from 1.02 to 1.8 percent

between 2010 and 2014. • Undertake participation of private sector at the Expression of Interest Process (PMI)

stage in at least two State projects. • Ensure that all new PPP contracts signed include a clause requesting that an independent

auditor will be contracted to review the contract.

1.3 Revised Program Development Objective and Key Indicators, and Reasons

Not applicable, since there were no formal revisions to the operation.

1.4 Original Policy Areas Supported by the Program (as approved)

12. The basis for the DPL program was the State’s Multi-Year Plan (PPA) for 2011-

2015. The challenges identified in the PPA were extensive and covered a number of sectors. The structure and the components of the DPL program were aligned with the PPA and the objectives of the State. However, the Bank differentiated clearly in the Program Document (PD) between the DPL supported actions/program and the government’s program.

13. The DPL was also consistent with the 2012-2015 Bank’s Country Partnership

Strategy (CPS) for Brazil. The CPS emphasized sound macroeconomic management, fiscal consolidation, increasing the efficient public sector management, and improving quality of education and health expenditures for low income households, especially at the sub-national level, as key pillars for achieving sustainable economic development and inclusive economic growth in Brazil.

14. The DPL program covered three general areas: a) Improving Social and Productive Inclusion (Equity issues); b) Developing Social, Physical, and Institutional Infrastructure for Sustainable Development (Efficiency issues); and c) Strengthening Planning and

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Management of the Public Sector (Governance). The approach and measures supported under each policy area are discussed below.

Policy Area 1 – Improving Social and Productive Inclusion

15. Education. One of the main policy areas supported by the DPL was the Pacto pela Educacao, which was ambitious in its reach. The actions planned under the program required establishing partnerships with more than 300 municipalities, evaluating test results for all second graders, disseminating the results, and monitoring performance in all schools. This was to be complemented by the provision of special assistance to the lowest performing schools (in the bottom quartile).

16. Health. The focus was on strengthening the primary health care network, with

particular attention to expanding access to pre-natal care in the municipalities in great

need. The objective was to develop a more complete maternal and child care network in the State, which required considerable coordination with the service providers at the local level and reallocation of resources within the sector. The basis for the program was initially a State-Municipal committee resolution that defined the strategies, guidelines, and standards of services of primary health. Subsequently, there was a need to formalize the arrangement with the approval of a State Policy Decree on Primary Health. The final element was to work with the local service providers to increase the number of pregnant women receiving pre-natal care.

17. Productive Inclusion. The main focus of this component was to support the small

scale producers in the semi-arid rural areas operating under difficult conditions. This component was a modern version of integrated rural extension programs, which have a long history in Bahia. The new State Productive Inclusion Program, however, has a broader perspective than previous models. It combines a community-based development approach with the provision of a wide range of technical assistance services to eligible families. The objective was to raise the incomes and productivity of the participants, particularly by providing better access to markets, and preferential purchase agreements. The DPL helped to formalize the new program by supporting the approval of laws that established a newly integrated system of technical assistance and also a program of debt restructuring for family farms.

18. Social Inclusion. The Social Inclusion component focused mostly on improving

the administration of the Reference Centers for Social Assistance (CRASs, Centros de

Referência de Assitência Social), and building the single cadastre database of potential

beneficiaries. The objective was to increase the number of families being serviced by the CRASs and captured in the cadastre in the 50 most vulnerable municipalities, with a view to expand the number of poor families eligible for social assistance in the State. By expanding this coverage, more families would gain access to social service programs, particularly through the single consolidated system of social assistance (SUAS), which includes the conditional cash transfers Bolsa Familia. The means to achieve that goal was for the Social Development Secretariat (SEDES) to provide funds and technical assistance to the municipalities to improve their management capacity in the social assistance sector and to

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actively search for non-registered poor households who would be eligible for assistance and register them in the single cadastre. The core of the State program was to develop the support system and promote the work of the CRASs, since they were the municipal agencies responsible for coordinating locally the social assistance programs.

19. Crime and Violence. One of the novel aspects of the DPL was the inclusion of the

flagship Pacto pela Vida (PPV) program, which launched a multi-dimensional approach to prevent crime and violence through social development interventions. The case for including this component in the DPL was the deteriorating crime incidence in Bahia and its impact on social and economic development. The main rationale was dealing with crime and violence not just through law enforcement but also through social policy and better public sector management. The government wanted to focus on finding new solutions particularly for the young and vulnerable, ensuring they had improved access to coordinated services, in health, education, employment opportunities and others. The initial measures required the creation of a high-level coordination committee with representation from different secretariats and with the strong participation of the social defense system.

20. Gender. The inclusion of this component in the DPL reflected a political decision

to elevate the gender program in the State and give it greater visibility and influence. The confluence of the interests of many civil society groups, along with the Bank’s interest to promote gender policies, was a powerful combination that gave strong support for the government’s decision to create a Women Secretariat.

21. The actions contemplated in the program, besides the creation of the secretariat,

included the adoption and execution of the State Policy on Gender Equality and the

operationalization of an Integrated Management Group for Gender. The overarching goal was to mainstream gender issues in State programs, to improve the organizational structure, and to expand human and financial resources dedicated to gender issues. The measure of success in mainstreaming was the number of partnership agreements reached with other secretariats on their contribution to gender issues. The organizational structure was to be gauged by the expansion of reference centers for women victims of violence in the State of Bahia. The inclusion of this component, along with crime and violence, were commended by Board of Executive Directors of the Bank, when approving the operation.

Policy Area 2 – Developing Physical and Institutional Framework for Sustainable

Development

22. Disaster Risk Management. This policy area was included in the DPL to promote

the creation of a more coordinated DRM program in the State. The concern over periodic flooding and lack of preparedness focused the attention of the authorities on the need for a better disaster management apparatus by improving and modernizing the State’s system of civil defense. The goal was to institute a structure to deal with prevention, mitigation and response to natural disasters. The DPL supported the creation of the legal framework governing the new DRM program. The first tranche supported the adoption of a decree forming a coordinating committee within the Chief of Staff office in order to raise the prominence of the DRM work. The second tranche, supported a new law presented to the

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legislature formalizing a new administrative structure and establishing regional DRM units with trained staff to respond to natural disasters.

23. Transport. Policies in this area were aimed at strengthening the State’s

institutional capacity in logistics and infrastructure management. The Bank has been engaged in the transport sector of Bahia for a long time. The recent PREMAR project focused on the rehabilitation of the highway system to reduce logistic costs and the DPL complemented this effort by supporting the improvement of the institutional framework and policies. The measures supported by the DPL focused on the establishment of a Logistic Advisory Committee composed of the heads of several government agencies, federal, and private sector representatives and the reorganization of the Bahia Roads Agency (DERBA). The role of the Logistics Advisory Committee was to coordinate the various stakeholders and develop more informed logistic policies.

Policy Area 3 – Strengthening Planning and Management of the Public Sector

24. Planning and Budgeting. The government’s program in planning and budgeting

was geared toward redesigning the planning, policy and budget process. As with many other States, Bahia devoted considerable efforts to medium-term planning and to improve the coordination between annual budgets and multi-annual plans, but had a very erratic budgetary process, with sharp fluctuations. The Government of Bahia already had a political commitment to improve public sector management, and had embarked on a robust program of reforms, before the DPL was discussed. The goals were to better align the budget to planning and policy, foster coordination across entities, and introduce a management by results orientation (to ensure greater correspondence between resource allocation and priorities). Prior to the approval of the DPL, the government prepared a diagnostic study on the weaknesses in the planning and budgetary systems, with a proposed road map for reforms.

25. Financial Management. The measures supported by the DPL primarily focused

on the legal and regulatory reforms necessary for the widespread adoption of the new

systems and institutional arrangements. The government had decided to integrate the existing planning, budget preparation and accounting systems. Prior to 2013, there were two different non-compatible systems with considerable deficiencies. The government opted to introduce a new financial management information system (FIPLAN) by adapting available software to the State’s needs. At the time the DPL was prepared, the Government was in the process of preparing a road map for the introduction of the new technology, new business processes, and the training necessary for the roll-out of the system. A particular feature of the new system, was to introduce accrual-based International Public Sector Accounting Standards (IPSAS) to the budget and financial management of the State. This action was seen as critical for improving transparency, internal controls and budget reporting.

26. Human Resources Management. The prior actions supported were geared to

build upon on-going reform efforts. As with any multi-sector entity with over 200 thousand employees, the State confronted considerable difficulties in managing its workforce. Prior to 2007, when the first reforms were introduced, the State did not have a centrally available record of public servants, nor their qualifications and experience—resulting in a very deficient selection and training process. Prior to the DPL, the government had begun a series of large

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pilot reforms to compile a registration of existing public servants in key sectors, notably health, education, and security. The primary aim of the program under the DPL was to further extend the reforms. This was to be done through a new regulatory framework that would improve workforce planning, career tracking, and performance management—all contributing to the construction of a merit-based promotion system. The new regulations needed to specify the required qualifications and promotion standards for civil servants, as well as hiring mechanisms to meet future demand of the public service. Critical for implementing these extensive changes was the adoption of a modern HR management system, which would be the backbone of the new institutional arrangement governing HR management and policies.

27. Tax Administration. The tax administration actions were oriented to increase

tax revenues through more effective administrative procedures. The focus was on improving the collection of tax arrears which had reached an amount equal to one year of tax revenues. The discussion and analysis in the program documentation highlighted the potential of reducing tax evasion, facilitating compliance, and collecting overdue taxes. The latter was to be achieved through a two-pronged approach: first by rationalizing and expediting procedures to reduce arrears; and second by exchanging and cross checking information with other agencies and tax administration entities. The intention was to use the incongruence in different tax filings or available information on different transactions to identify sources of tax evasion and accumulation of arrears in general.

28. Public Private Partnerships. An important element of the Government’s

program was to pursue partnerships with the private sector to promote public

investments. Prior to the preparation of the DPL the State of Bahia already had experience with PPPs. It had been a pioneer of PPPs in Brazil with the approval of related legislation as far back as 2004. But institutional and technical shortcomings in the framework for managing these transactions was evident. The objectives were to strengthen the institutional framework to enable more but better handled PPPs. For the first tranche, it was expected that the new manual would guide the application of best practices. For the second tranche, the program supported efforts to clarify the private sector’s role in initiating and motivating PPPs through refinements of the process, particularly as it pertained to private sector expression of interest in the early stages of the PPP process.

2. Key Factors Affecting Implementation and Outcomes

2.1 Program Performance

29. The DPL was approved in June 2012 and it became effective and was disbursed

later that year. The second tranche was disbursed one year later, at the end of 2013, following the fulfillment of nine additional prior actions. These covered a wide set of measures largely to support the implementation of important parts of the program.

30. Overall, the program’s implementation was good, although with some

unevenness (see Section 3.2). The program’s performance reflected the government’s steady efforts to advance the proposed reforms and achieve results. The DPL provided impetus to accelerate certain measures and embark on new initiatives. By the end of 2014 the State had

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achieved the lion share of the expected results indicators and attained the goals of the operation.

2.2 Factors Affecting Implementation

31. The performance of the program in the different components was a function of the implementation capacity of different agencies and their institutional foundations. The implementation of each area of the program is discussed detail in Section 3.2 and here we provide only a brief summary of these common factors.

32. Administrative Capacity. A key factor influencing pace of implementation was

the level of administrative capacity in various sectors, especially in lower levels of

subnational governments (e.g., municipalities). Low administrative capacity was a constraint mainly for the programs that had to be executed locally, primarily through municipalities and community organizations, such as in the Productive Inclusion, Social Inclusion and DRM policies. These programs required considerable level of coordination and organization, along with capacity over a widespread geographic area. The State government focused efforts mostly on providing technical assistance, support, and coordination. Limited resources also hindered the administrative capacity is some cases, notably in the areas of Social Inclusion and DRM.

33. Institutional Foundations. The areas of the program which were more successful

were often those which built on the existence of previous institutional foundations. For example, in the Health area, the network of maternal health was already in place and had experience with providing pre-natal care. The program helped to expand the coverage and improve the focus of the existing program. In the Financial Management component, the introduction of a new integrated system relied on the experience with the previous accounting, planning and budgeting systems. There was an adaptation of the available software to the State’s needs and the introduction of a new set of institutional arrangements in the core functions of public sector management. Building on experience was also a key feature of the work under the Public Private Partnerships component. Prior to the DPL, there were three PPPs already in place, and others were in different stage of preparation. The program under the DPL extended the learning process and legal framework for the use of PPPs.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization

34. Implementation of the program supported by the DPL was overseen by a Project

Implementation Committee (PIC) made up of officials from the agencies directly

involved in the prior actions. The committee operated under the leadership of competent and seasoned staff in SEFAZ, and whose main initial roles were to ensure compliance with the prior actions, define management structures for implementation, monitor the operation, and coordinate technical assistance activities. As progress took hold, these roles were gradually left to each sector or responsible Secretariat.

35. Overall, the monitoring of the implementation was satisfactory. A few gaps in the monitoring framework were identified but were addressed during supervision of the operation. SEFAZ was able to collect data on most of the results indicators established for

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each component under the DPL and to monitor progress towards the results and objectives under the program. Nevertheless, the complexity of the operation translated into a large results framework, which included 24 results indicators, and a couple of indicators experienced some design and/or data shortcomings.

36. The monitoring of the DPL has contributed to the strengthening of M&E systems

across the administration. Individual agencies strengthened the monitoring of relevant data and in a few cases they are considering using available data to rigorously assess the effectiveness of particular interventions, notably in the social sectors, education, and in crime and violence.

2.4 Expected Next Phase and Follow-up Operation

37. Building on the good progress under this first DPL, the Bank has continued to

provide support to the State of Bahia for the implementation of many public sector

reforms that were supported under this program. A second DPL (Strengthening Fiscal Management and Promoting Better and More Inclusive Service Delivery Program) was approved on April 2014. The objectives of DPL II are to improve fiscal management and territorial planning, and to tailor selected public services to the needs of women, afro-descendants and minorities. Under the fiscal management and planning, the DPL II is focusing primarily on: pension reform; tax administration; financial management; and human resources management. In public services, the DPL II is supporting a number of initiatives, particularly involving the municipalities, to expand attention to minorities and vulnerable groups. There are many complementary actions to the first DPL, such as in the health and education sectors, as well as in the gender program, crime and violence, and social and productive inclusion. The execution under the second DPL is proceeding well and meeting result expectations, and should also help in consolidating the reforms supported under the first DPL.

38. Besides the new DPL II, the Bank has other project operations under execution

in the State of Bahia, and is also in the final stages of preparing new ones. The existing operations are: the Sustainable Rural Development Project (P147157), which supports activities related to the Productive Inclusion agenda of the DPL; and the Rural Environmental Cadastre and Fire Prevention in the State of Bahia, which complements the work under the Disaster Risk Management program supported by the DPL. More recently, the Federal Government gave the approval to proceed with the Bahia Transport Project (PREMAR II), which was approved by the World Bank’s Board in FY16 and will assist with the roads and transport sector in the State, and would be a vehicle to continue the engagement and institutional strengthening in the transport sector.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation

39. The objectives of the DPL were and continue to be relevant for the State. They reflect most of the public sector’s essential priorities, covering a broad set of activities, and will remain guiding goals for years to come. In their current manifestation, they had their origin in the quadrennial Multi-Annual Plan (PPA), which identified the needs of an array of

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sectors and areas. These objectives became the foundation for the DPL program, and were expanded with the inclusion of new areas, such as with gender and disaster risk management. The objectives relevance is self-evident and the results durable.

40. The magnitude and breadth of the program supported by the DPL was

significant at the request of the authorities. The Bank had a long relationship with the State of Bahia and it would have been possible to prioritize the program towards fewer areas. However, both the authorities and the Bank saw significant value added in the Bank supporting several key areas of the broader government’s program. Indeed the operation provided a basis for a useful policy dialogue with large parts of the administration during the preparation phase of the operation.

41. Implementation challenges seem to arise from the depth of the reforms in each

sector rather than from the breadth across sectors. While the scope/breadth of the program was significant, this feature in itself does not appear to have posed a significant constraint in the management of the operation. However, the reforms within each specific area were ambitious and some reached lower levels of sub-national government such as municipalities and community organizations beyond the state level. The design of the operation identified critical policy measures as prior actions for first and second tranche disbursements. These reforms to complex service delivery programs across a couple of the sectors in the scope required administrative capacity at the level of the municipalities, which turned out to be somewhat uneven, challenging the speed of implementation in some communities. It was probably hard to anticipate these detailed challenges at lower levels of government that arise from broad state reforms. However, a lesson for subsequent operations is that coverage and ambition in the depth of reforms needs to be calibrated and balanced to enable sufficient support for implementation.

3.2 Achievements of Project Development Objectives

42. The program PDOs entailed mostly improving and strengthening the State’s

public sector management in a number of sectors. Based on the results achieved by the end of 2014, overall the program’s performance was good. The great majority of the results were achieved or almost achieved (the later mostly constrained by the timing of this ICR).

Policy Area 1 – Improving Social and Productive Inclusion

Rating: Moderately Satisfactory

43. The rating for this policy area, which covers six large sectors of public

administration, is based on the improvements that have taken place. The achievements in five of the six areas can be classified individually as being moderately satisfactory.

44. Education. Much was accomplished in the sector during the life of the DPL. During the last two years, the State authorities were able to enter into partnership agreements with almost all municipalities (403 out of 417). There were strong incentives for the municipalities to participate. They received support, pedagogical material, training, and assistance to the teachers with organization of work and teaching techniques. The biggest challenge was to actually carry out the subsequent activities, to monitor the impact of the

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program by evaluating the test results of second graders, to disseminate the results, and to help the lowest performing schools.

45. The medium-term expected outcome indicator was based on improvements in the

students’ evaluation using the standardized tests for second graders, which however

were discontinued in 2013. The standardized tests were discontinued in 2013 after a national initiative focusing on the alphabetization achievements of third graders replaced the State’s tests. Consequently, all of the related outcome indicators based on second graders’ achievements had to be adjusted and adapted to national directives and re-based on the national test results. The sector authorities had to develop a different evaluation system by applying national methodologies and relying on a new set of indicators.

46. As a result, the focus of implementation under the education component was

slightly adjusted; nevertheless, this did not alter the overall goal of the program which

was to improve the quality of education and the efficiency of service delivery. The focus of the program implementation shifted from building an evaluation system based on second graders results towards the need to provide better services to and monitor the performance of the municipalities, notably the least performing ones.1 The secretariat developed a dedicated office and staff to track the lowest performing municipalities and to provide them with even greater support than the other schools. The revised outcome indicators, which were agreed during supervision, were more focused on addressing such specific needs. The attention was to teaching techniques, to work-flow and class room management, and to pedagogical materials. The authorities used more intensively the school census to follow other indicators, such as repetition rates, which was one of the original goals under the DPL program. As an example, the staff assessed the improvements over one year of students in municipalities receiving special support and found that their performance exceeded the rest of the sample. While the results so far are positive, it will take a few years of continued involvement and data to establish whether the new approach will be effective. The interventions are building a better structure of support and assistance, improving conditions in many municipalities. But, it is not yet evident that these measures are leading to improvements in educational outcomes.

47. Health. The implementation of the health program was adequate, especially

when considering the challenge of coordinating services across so many municipalities

with weak capacity. There has been significant progress, as attested by the fulfillment of both targets. The first was to have a larger share of pregnant women enrolled by primary care teams. This was achieved as anticipated, even though there were difficulties in attracting women earlier in the pregnancy. The experience highlighted that it is important to have more consistent assistance throughout the pregnancy, even late in the cycle. The second results indicator, which was to increase the number of pregnant women receiving timely pre-natal care, was also met.

48. The medium-term outcome to expand the coverage of primary health care

appears to have been achieved, even though it is difficult to document. The main 1 After the national policy was instituted, the State abandoned its own evaluation system. The evaluation now is performed at the national level. The exam from the federal government covers math and Portuguese. The one from the State used to cover only Portuguese. The government no longer performs evaluation at the State level, but follows the national one.

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indicator, based on the attention to the family unit, relied on erratic information provided by local doctors and nurses. Also, the overly ambitious goal of reducing maternal mortality rate by 2 percent annually did not take place. There is disagreement as to whether the government committed to such goal, since a more realistic outcome would have been a reduction of 2 percent over a four-year period. The indicator suffers from high variability across the years, which is in part explained by lower/higher investigation capacity. The government provided evidence that between 2007 and 2014, maternal mortality rate dropped 1.7 percent (from 68.4 to 67.2). If one takes 2010 as the baseline, the reduction is even greater, from 76.2 to 67.2. The result should be taken with caution for the reasons explained above2.

49. Progress toward the medium-term expected outcome of expanding the coverage

of primary health care was also positively affected by the additional resources provided

through the new federal program Mais Medicos. The results achieved under the program were positively influenced by the large influx of foreign born doctors, financed by the federal government, who were brought to rural and more remote areas to provide basic health care. Bahia was a great beneficiary of this initiative. Eventually 1600 new doctors were added to the teams dedicated to primary health care, doubling their number. The sector authorities recognize that it would have been difficult to achieve the results (primary care expansion in remote areas) attained so far without the new doctors. The concern though is whether the Mais Medicos program is sustainable and will continue to be financed and operated at current levels.

50. Productive Inclusion. The government fundamentally reformed the institutional

structure of assistance to rural families through the rural extension program. With the passage of a new law and the adoption of a new organizational apparatus, the government consolidated the activities under one program, Bahia Productiva, and decentralized the assistance to 27 regional centers. A decentralized network of service providers would provide a multi-dimensional set of services, with the focus on small family farms. The services were not limited to rural development, but also included many other sources and purposes, such as for instance facilitating access to income maintenance programs, access to finance, and crop insurance. The program exceeded its results target, as it reached 160 thousand registered producers taking advantage of the program (compared to a goal of 150 thousand). The authorities believe the extension program is now better organized and is more responsive through its decentralized regional network of technical assistance. While the program has achieved its results in terms of registered beneficiaries, the sector authorities also recognize, however, that there is still a need to strengthen the capacity to administer such network of broad services. The medium-term expected outcome, the institutional participation of small farmers in the National School Feeding program, has been partially met. The national program was to give special preferences to the small farmers by sourcing from them 30 percent of its purchases. The initial goal of the program was to reach a weighted average of 20 percent of all small farmers participating in the program. The participation proved to be quite variable across regions, with few municipalities exceeding the target due to capacity constraints. The final weighted average (measured by taking the averages of the

2 Maternal mortality ratio in Bahia: 68.4 (2007); 77.4 (2008); 91.2 (2009); 76.2 (2010); 70.6 (2011); 71.4 (2012); 78.2 (2013; 67.2 (2014) – source: Sesab/Suvisa/DIS and SIM

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municipalities, not the number of all participants) was just below the goal for 2014, but it has continued to improve.

51. In the Social Inclusion area the results have been substantial, but further

progress may be challenging. The primary goal was to increase the number of registered families eligible for social assistance, through the CRASs and the inclusion in the Cadastro Unico. All municipalities saw an increase in their roles, with about half of them reaching the program target of a 20 percent increase of household registration over the three years period.

52. Organizing the municipalities and the 609 CRASs throughout the State to gather

the information on eligible families was a significant challenge. The task of gathering the information alone proved to be demanding, not simply because of the number of families but also because of the challenges in monitoring their social and economic conditions. For example, the criteria for establishing eligibility were based on the definitions of poverty and family income, which proved to be much more variable than expected due to adverse events such as droughts. The eligibility of many newly registered families proved to be temporary. As a result, the CRASs had to strengthen their monitoring systems and devote greater efforts and more resources to monitor these changing conditions. An added burden was the growing information requirements for the cadastre with the passage of time. Today, the CRASs need to obtain much greater detail on the social and economic characteristics of the eligible families.

53. The work of the CRASs was also affected by political developments. Following mid-term municipal elections several newly elected mayors opted to reduce the level of resources and support to their local CRASs, thus limiting their effectiveness.3 Keeping track of the families and the services provided was a major undertaking, taking important fiscal space at the municipal level. With the reduced support, the on-going task of collecting and transferring the information could not be easily carried out. Needless to say, to monitor the quality and timely provision of the services is still one of the medium-term objectives that will require considerable more time to attain.

54. A second target was to get the CRASs to monitor the school attendance of the

children of families in Bolsa Familia. As is well known, the cash transfer is conditional on school attendance. Already 90 percent of the students were being monitored prior to the DPL, and the objective was to look for an additional 5 percent, who were mostly transient and had erratic school attendance. While there was a commensurate increase in the number of students being followed, the measures varied considerably across municipalities. The exercise also highlighted the difficulties of setting up a monitoring system to cover all students from families receiving the cash transfer—and it is unclear if the cost of this effort may not have been greater than the benefits accrued.

55. Overall, despite the administrative challenges, the program of supporting the

CRASs has made visible progress and programs have been successful. The CRASs needed considerable technical assistance to carry out their basic functions and, although there 3 The Federal government transfers funds to these activities in accordance with the municipality performance / progress with registrations. However it is expected that there will be co-financing such that States and municipalities must also provide their own resources for the program.

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was progress, they will require more time and resources to achieve the program’s medium-term objectives. Significantly improving the quality of the services being provided by CRASs and the impact they will have on the long-term economic well-being of the beneficiary families will require a longer timeframe and sustained technical assistance.

56. Crime and Violence. There have been tangible advancements under the State’s

innovative and multi-dimensional approach to deal with crime and violence also through

social prevention initiatives. The sub-committee in social prevention was created and charged with coordinating the actions of many secretariats, as well as to develop social programs in different neighborhoods and regions. Their work gained added support with the eventual participation of non-government agencies also interested in assisting youth at risk.

57. Many different ground-breaking interventions have been promoted and

organized. The activities being supported range from sports, to music, vocational training, education, employment, and entrepreneurship. The individual projects, however, are still mostly pilots, given their reach and number of participants. The plan was to expand these services more broadly and eventually cover 20 priority municipalities (from an existing presence in just 4 municipalities). This results indicator was achieved, since at least one of the interventions, the vocational training program, is taking place in all 20 municipalities. Moving ahead the objective should be to expand the programs more broadly. For example, the sports programs have the greatest participation with 13 thousand individuals, but are present in just four municipalities.

58. The authorities are aware that the program is in its early stages and there is much

to be done. They recognize the need to expand and test different interventions. They have good information on the coverage of the programs, and can note with great satisfaction that in very specific areas there has been a reduction in crime, although the link between the interventions and crime is still rather tenuous. They also point to the possibility of using the emerging information to develop randomized tests of control groups and to find the correlation among the nature of the intervention and the tendency in the crime and violence incidence over time, and to use new geo-referencing technology to target interventions. In sum, it is early to judge the full effectiveness of the crime prevention social programs, but the authorities can point to preliminary findings that show some potential. Those preliminary results demonstrate the importance of continuing with the program, even if it is simply a testing ground for different local interventions.

59. Gender. The results of the gender component have been good. There have been important gains in mainstreaming gender policies across the administration and in the provision of services to women victims of violence, although naturally this policy area will require a long process to change attitudes and pre-conceived concepts and to raise the priority assigned to gender policies in the State.

60. The first results indicator, to reach partnership agreements with five agencies to

mainstream gender issues in those sectors, was achieved. In order to ensure a coordinated and systematic approach to include a gender perspective into other sectoral policies, Secretariat for Women Policies (Secretaria de Políticas para as Mulheres, SPM) established a management group on gender issues (Grupo de Gestão Integrada Para as Mulheres,

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GGIPM, previously included as GGI) composed of representatives from 17 Secretariats and public sector agencies.4 The Secretariat entered in at least 6 formal agreements with other agencies. These agreements are limited to cooperating on certain activities, and may therefore be seen as relatively ‘weak’ evidence of solid partnerships, but as envisaged by the DPL they underscored formal partnerships aiming to promote gender mainstreaming with other sectors.5 The Secretariat also argues that even beyond formal agreements, they have been able to make progress based on strong commitment within the cabinet to support gender policies.

61. The second results indicator envisaged an expansion in the services offered by

the reference centers to women victims of violence. There are now 27 centers compared to 13 in 2011. The centers are administered by the municipalities and offer an integrated set of services including counseling, psychological evaluations and legal support, among others. Service delivery has also expanded beyond the centers with the introduction of mobile units that serve as itinerant centers, and the creation of special units in the police departments to handle women victim of violence.

62. Overall these services are improving and there is a growing awareness of the

importance of providing support to women at risk. The active lobbying by the secretariat has been important in identifying other sources of funding. However the municipalities are facing considerable budgetary challenges supporting the centers. The State’s budgetary commitment, while growing, is still relatively small. Most of the operational funds come from the federal government. If fiscal conditions continue to be constrained, the resources for maintaining the existing services network may be curtailed in future.

63. The more challenging task has been for the Secretariat to gain greater political

presence and increase its influence on government policy. With the inclusion of the program in the DPL, the secretariat has been empowered and has acquired prominence within the cabinet and with other groups. The Secretariat also gained credibility before the NGOs involved in women’s issues. They acquired a greater level of respectability through their enhanced position within the government.

64. Overall, while these reforms have yielded very positive outcomes so far, the

efforts to develop a stronger gender agenda within the State government are noteworthy

and can be expected to deliver a significant impact over time. The sector authorities recognize that this kind of policy does not change overnight the culture in a State, and that it will be a long process to change attitudes and pre-conceived concepts and to raise the priority assigned to gender policies in the State. They point to the support they are receiving from the executive and also the developments nationwide. There has been strong movement to raise the profile of gender policies and in particular to deal with women who are victims of

4 The decree formalizing the GGIPM was published in the Official Gazette of the State of Bahia on 23 August 2013 (Decree 14711). 5 In addition, in November 2013 SPM introduced two more calls for proposals for grants to civil society organizations and municipalities, one in the area of violence against women (Seguindo em frente - Moving on) and another one that promotes female entrepreneurship (also in partnership with NGOs or municipalities) (Construindo a virada - Building the turn) (evidence also attached). Both initiatives do not necessarily constitute gender mainstreaming into other sectors (as the narrow interpretation of the indicator), however, they show the commitment to mainstream gender into other state policies at different levels.

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violence. The authorities credit the Bank for helping with the creation of the Secretariat and for promoting the policies.

Policy Area 2 – Developing Physical and Institutional Framework for Sustainable

Development


65. Disaster Risk Management. There has been good progress in the construction of

a more coordinated State structure to deal with natural disasters, even though results

with respect to the DPL indicators have been partially achieved. The authorities have involved other public institutions and the private sector in disaster risk management. The Coordination of Civil Defense committee (CORDEC) is operational and at the center of the new structure. It meets every week to review developments, needs, and areas deserving attention. There has also been a more concerted effort to organize the civil defense apparatus, which now counts with close to 1000 volunteers. Part of the plan was to improve the response system by training and equipping 10 brigades of volunteers. In fact, while the training program has covered more brigades, fiscal constraints have limited the amount of equipment made available to the brigades. Fiscal constraints are also part of the reason why the 5 regional nodes, one of the results indicators, have not been installed. The initial design called for a 10 person team in each node, which meant an important financial commitment to maintain them in operational form. The concern about future funding has precluded their installation. Furthermore, the new sector authorities believe a smaller and different coordinating structure may be more effective under current circumstances.

66. One of the most noticeable achievements has been the experience with risk

mapping. The original program called for CORDEC to carry out two pilot risk studies for the municipalities of Lauro de Freitas (flooding) and Canabrava (landslide). The pilot studies demonstrated the State’s capacity to mobilize internal expertise to perform disaster risk management activities. The value of the information obtained through the risk mapping exercise led the authorities to expand the concept to 11 areas, and are now considering constructing the risk cartography of the entire State. This expanding initiative had its beginning with the preparation of the DPL. Many agree that the DPL provided the impetus for introducing risk maps in Bahia, and today the merits of the work are recognized at the highest levels of the administration. However, the administrative capacity has been only partially strengthened, as the central coordinating committee staff is still fairly small, and the regional nodes have not been created. The PD identified the lack of resources and a weak administrative capacity as the main factors that could jeopardize the restructuring of the civil defense system and the ability to deal with natural disasters.

67. Transport. The expected results under the DPL in this area have not yet fully

materialized. The Logistic Advisory Committee was formed and met twice in 2013, and issues two resolutions. However, in 2014 the committee confronted a legal setback as many of the members of the committee decided to run for different public offices, and according to the law, public office holders cannot serve in executive decision making capacity if running for office. As a result, the committee could not become fully operational in the timeline intended. While there has been delays in the achievement of the result expected, the

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authorities remain committed to the regular operationalization of the committee and strengthening the coordination in the transport sector remains a key objective. Indeed the PREMAR II roads infrastructure investment project approved in FY16 includes a project subcomponent focusing on strengthening logistics under the regular operations of this committee, which is still deemed essential for planning and coordination purposes.

68. The Bahia Road Agency (DERBA) was initially reorganized with a focus on

strategic planning and results orientation, and it was subsequently incorporated into the

Secretariat of Infrastructure (SEINFRA). The new Government that took office in early 2015, decided to incorporate DERBA into SEINFRA, and some areas such as procurement and financial management were consolidated with the rest of the secretariat. The sector authorities believe the new integrated administrative structure should improve the sector’s management. Bank staff has accompanied and provide advice to the authorities through this process under the DPL supervision and the dialogue accompanying the preparation of the proposed new investment loan.

Policy Area 3 – Strengthening Planning and Management of the Public Sector


69. Planning and Budgeting. The results indicators for this component of the

program were largely attained. The annual budget approval process now incorporates a report on how proposed budgetary allocations contribute to reaching specific goals of the government’s plans. The State Secretariat of Planning (SEPLAN) has a module to connect actual expenditures to physical execution and project advancement. Individual agencies are now responsible for presenting information on how their intended actions will contribute to specific results. In addition, there is now a quarterly report prepared on the advancements towards measurable results, particularly physical projects. One can surmise that even this simple improvement in the agencies’ reporting systems alone reveals an acceptable planning capacity. The authorities also met the results indicator on increased participation in the annual budget planning process. These actions were partly the result of intensive monitoring and training by the Superintendência de Gestão e Avaliação da Secretaria Estadual do Planejamento (SEPLAN/SGA). Also, the Superintendência de Orçamento Público da Secretaria Estadual do Planejamento (SEPLAN/SPO) has worked with all secretariats to review and adjust each budget action and the revisions have been reflected in their respective Annual Work Plans (PTA).

70. Overall the institutional structure for both the budgeting and planning processes

has improved. There has been a learning process on how to institute a results-based orientation to planning and how to better align budgetary outcomes to medium-term policy goals. Progress is evident with the advancements in the preparation of the new PPA and the sharper focus on results. The new multi-annual plan for 2016-19 is being prepared with greater results orientation. The exercise has motivated different agencies to demonstrate how their proposed actions and program will yield planned results. There is a much broader set of indicators covering different themes related to specific secretariats or strategic areas under the PPA, such as nutritional targets, security, and gender.

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71. Financial Management. The accomplishments in this area have been very good,

exceeding the expected results under the DPL program. A review of the new software and financial systems shows that there has been impressive modernization of the budget management of the State. All of the different stages of budget preparation and execution and now well integrated into a single financial management system. The level and detail of information that can be obtained is quite impressive and allows for much more efficient management of assets, liabilities and planned expenditures. There is greater transparency, given the level of access by different agencies and oversight bodies. The system allows for the production of up-to-date reports (with results updated daily). The monthly reconciliation of accounts can be concluded in a matter of a few days. The reports also help track budgetary execution according to the identified targets. The system can be used and has broad capabilities to improve the efficiency in budget execution, for example in tracking expenditures or emerging liabilities. The system also follows the standards set by the National Treasury in relation to the adoption schedule of MCASP (Public Sector Accounting Manual), which is in line with IPSAS.

72. Human Resources. Progress on the results was partially achieved, but one of

them was too ambitious for the timeframe and scope of the operations. The first result was to compile the full documentation of the personnel working in health and public security under the new HR system. The basic documentation has proceeded and the cadastre is essentially done. The new HR system will be fully introduced in the next few months. After several delay, in 2015 the State selected and contracted SAP as the service provider for installing the new system. It took much longer for the bidding documents and process to be completed. Possible delays in the procurement were identified in the program document as a possible risk to the component, but in hindsight this possibility should have been accounted for in the establishment of the target dates—more allowance for delays should have been considered, given the complexity of the task and the norms of the public sector. In any case the provider and the government are now in the process of customizing and testing the new design, and they anticipate that the new system will become fully operational in 2016. The second results indicator anticipated that all promotions and transfers within the secretariats of health and public security be done through a transparent merit-based selection system, which was perhaps unattainable. It is rather difficult to foresee such fundamental change in managerial culture in a short period of a few years. Very few public or private entities have all of their promotions and transfers done under a fully transparent merit-based system. These are fairly high standards to attain.

73. Nevertheless, the government has made some progress towards introducing a

merit-based system. Within the cadastre it has developed the historical for each staff, mostly for proper retirement benefit calculations. It has worked on the definition of the requirements of certain careers and the standards for evaluating along those career paths. It has also introduced the first evaluations for the civil policy staff. In general, there has been a long methodical learning process. The process of reforms has shown the challenges of changing long standing cultural norms. Evaluations and merit-based concepts were not widely used in the government before. Just the pilot with the civil police showed the importance of clearly identifying and publicizing the nature of the process and the criteria used for promotions and transfers.

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74. There is considerable anticipation that the new HR system, once fully

operational, will be the basis for the modernization of HR processes. It will standardize procedures, produce administrative reports, and allow for personnel management. The intention is to migrate from current management of the staffing and payroll to a career management system based on continuous evaluations.

75. Tax Administration. The results envisaged under this reform area, focusing on

improving collection of tax arrears were achieved. However the focus was very narrow, and failed to capture the full potential of tackling tax arrears which was the intent of the policy dialogue under the DPL.6 The results indicator anticipated that collection of tax arrears, measured as a percentage of tax revenues, was to increase from 1.02 percent in 2010 to 1.8 percent in 2014.7 The actual result was closer to an increase to 2 percent of tax revenues.

76. Public Private Partnerships. Progress with building the legal-institutional set-up

for PPPs has been substantive. To improve the institutional framework for private sector participation in PPPs, the State issued a decree to regulate the request for private sector participation in early project stages. It established the procedures for handling the requests, screening the proposals, holding public hearings, and selecting the projects. There have also been improvements in the institutional framework, particularly as it pertains to contract management and independent performance monitoring. Individual agencies are responsible for the managing the contracts, and they hire auditing companies to monitor the results and verify compliance with the contracts.

77. The government has fully achieved the results expected in this area under the

DPL. The government has signed at least two additional contracts, as envisaged in the results matrix, and those contracts have clauses that allow for private auditors to review compliance. The contract monitoring has been improved with the addition of performance indicators and the use of independent auditors.

78. There are some challenges, beyond the scope of this operation, worth checking

ahead. Fiscal restrictions are constraining counterpart funding and delaying projects, thus raising their overall cost. There is also a Federal law limiting the amount of PPPs that can be signed to 5 percent of tax revenues. More importantly, the complexities of the projects and the contracts require dealing with a myriad of issues and pose considerable political and administrative challenges. These have contributed to the slow adoption and application of PPPs. New contracts will have to include many more contingency clauses and the potential for expanding them to new areas is being evaluated. The small size of the staff handling PPPs restricts the ability of the government to be more pro-active. Overall, PPPs are now a part of the government’s tools to improve public sector service delivery, and should expand, even considering the currently imposed limitations. The private sector has already shown interest in three more projects, and there are many other potential candidates.

6 The follow up DPL operation, approved in 2014, includes a broader policy action on tax arrears. 7 The authorities also followed a different indicator which measured the tax arrears reduction in Bahia relative to those in all other States. This measure was meant to gauge the relative efforts of the State but it does not capture the absolute efforts by the State and it is not under the full control of the authorities.

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3.3 Justification of Overall Outcome Rating


79. The outcome rating for the entire operation is based on the significant progress

that has taken place in most of the sectors covered under the program. The individual results in each of the areas are relevant in their own right. But perhaps more important than the progress made in each sector – necessarily limited by the relatively short time frame for an assessment of impact of policy changes – were the changes in the state’s overall public sector delivery platform. The scope of this change was well articulated in the Government’s PPA, and the DPL supported an important part of the shift towards a results oriented and accountable state government administration.

80. The moderately positive evaluation of the achievements of the whole program

also reflects that the achievements provide a good foundation for continued

improvements and reforms. A significant portion of the program has good prospects, as many sectors have embarked on a modernization process that is likely to be continued. Much of the institutional structure that has been built is likely to be preserved and improved in the future. There is also an important element of learning-by-doing that is helping to change the institutional culture. New norms, procedures, incentives, and systems are building a foundation for future improvements. The most advanced to date is the financial management area, but good progress was also made in education and pre-natal care and to a lesser extent in DRM, and significant changes could take place if the new human resources system is properly applied and public private partnerships expand.

3.4 Overarching Themes, Other Outcomes and Impacts

(a) Poverty Impacts, Gender Aspects, and Social Development

81. The wide coverage of the program supported by the DPL essentially included all

sectors that could have an impact on poverty, gender and social development. All of the components of Pillar 1 directly addressed those overarching themes. In fact the social and productive inclusion sub-component focused its efforts primarily on families below the poverty line eligible for receiving public social services. The gender sub-component was a pioneering effort to elevate the role of gender policies in the State government and to expand public services, particularly to women victims of abuse. The same applies to the crime and violence sub-component, which piloted ground-breaking interventions to promote alternative social activities that could help prevent crime and violence with a focus on the youth (e.g., sport activities and assistance to drug users).

82. The Bank prepared a Poverty and Social Impact Analysis during DPL

preparation. The desk review PSIA, based on secondary data, interviews with stakeholders and experts, along with an analysis of the supported policies, concluded that the operation would address the underlying causes of socio-economic inequalities. It was fairly evident that many of the proposed policies and measures were pro-poor, since they focused on the population most in need. Similarly, many components were designed to broaden coverage

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and address inclusion. It is not surprising, therefore, that the program was seen as overwhelmingly positive.

(b) Institutional Change/Strengthening

83. The program supported by the DPL undoubtedly contributed to building the

institutional capacity of the State. A goal of the initial design was to promote reforms that would change the institutional structure governing many areas of the public sector service delivery platform. This is taking place and is likely to continue. There has been an element of institutional building in all sectors that were supported by the DPL program. In every sub-component there has been at least of the following: the adoption of new legal or regulatory regime; the modernization of organizational arrangements; the introduction of new systems and processes; the issuance of norms and procedures; the creation of new incentives and rewards; the application of knowledge and information; and the establishment of monitoring and evaluative capacity. Those are many of the building blocks required to strengthen the institutional structure of the State.

4. Assessment of Risk to Development Outcomes

Rating: Moderate

84. The DPL’s Program Document identified a number of possible sources of risk to

the program, along with risk mitigating measures. There is still a moderate possibility that some of the expected outcomes and development objectives may not be fully preserved. In some areas, such as financial management the risks are now negligible, since the reforms are well established. The engagement through the DPL II has also helped to consolidate and deepen the reforms.

85. Broadly there are three main sources of risks: limited administrative capacity; lack of sufficient resources; and changes in political priorities.

86. Administrative capacity at the municipality level. This is a source of risk,

particularly in the education, health, social and productive inclusion areas, where

municipalities and local groups are responsible for the provision of social services. In fact, municipalities in Brazil are responsible for the delivery of important services in education and health. The program’s implementation in some of these sectors has been hampered by the uneven administrative capacity at the local levels as highlighted earlier. The authorities at the State level recognize this risk and will continue to provide technical assistance to these lower levels of local government. The Bank’s continued engagement through other DPL and IPF activities across sectors has also been helping in this regard.

87. Fiscal constraints. One of the risks foreseen at preparation was the potential

difficulties in obtaining the necessary financial resources to operate the programs at the

expected levels. This became a greater concern with emergence of the fiscal constraints resulting from the deteriorating national macroeconomic conditions over the past two years. Looking ahead, several sectors face the possibility of reduced support, although the extent and sector shortcomings is not clear.

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88. Political priorities. The program passed its first major test with gubernatorial succession of early 2015, when the new administration maintained the thrust of reform process. There were only minor adjustments on relative priorities. But political risks are still present in the context of both national and municipal priorities. The tangible results achieved under the DPL should help to shield the reforms program, as they are highly valued and supported by the population.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance

(a) Bank Performance in Ensuring Quality at Entry


89. The Bank mobilized resources and dedicated exceptional efforts to the

preparation of the DPL. It had a large number of staff involved with the State, who participated in the process. They had a good understanding of the conditions in the State, in part because of a long standing partnership in many sectors. The Bank’s breadth of knowledge was accumulated through many previous investment projects, such as in the areas of rural development, transportation, water management, urban infrastructure and health. The strength of preparation process is reflected in the very high quality PD, which presents a thorough analysis of the challenges confronted by the State, and identifies the policies to address them. The Bank and the authorities devoted considerable time to prepare the DPL, taking close to nine months to complete the process.

90. This engagement in Bahia created an opportunity for the Bank to support a wide

development agenda for the State. There was considerable interest within the Government to have a broad coverage and to include a large number of sectors in the operation. The DPL was seen as vehicle to promote reforms and advance policies, some of which had already been discussed during previous engagements. The operation also offered the opportunity to introduce and highlight the prominence of new policy areas supported by the government and encouraged by the Bank, such as with DRM and Gender.8 While this clearly increased the complexity of the operation, the broad scope of the DPL did not turn out to be an unsurmountable challenge for the authorities during implementation. On balance, as attested by beneficiaries, the inclusion of the additional sectors appears to have been valuable, as it raised the visibility of those sectors within the government and propelled actions that may not otherwise have taken place.

91. Implementation challenges were linked to the depth/ambition of some

institutional reforms and the uneven local (municipality level) capacity that was not fully

anticipated. In hindsight, therefore, especially in light of the breadth of the program

8 In fact the Governor of Bahia had formally requested the preparation of a stand-alone operation on “Gender and Entrepreneurship”, which was subsequently partly folded into the DPL due to investment space priorities. Both Gender (including LGBT issues) and DRM were part of the official government program and were included in the DPL program.

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supported under the DPL, the scope of the measures under several components appears to have been too ambitious.

92. Overall, the quality at entry was moderately satisfactory. This rating reflects the positive identification of a broad reform program, based on a solid understanding of the sectors, with results that represent meaningful milestones in a longer process. It also reflects the fact that the overall combined program was very ambitious, and perhaps excessively so in a few specific areas, such as in Human Resources and in DRM, which underestimated the length and complexity of the implementation of new systems. Some results indicators could have also been better crafted at the early stages of preparation, for instance related to Planning and Budgeting and HR.

(b) Quality of Supervision


93. The quality of supervision met standards. Three large multi-sectoral supervision missions took place in 2012 and 2013 following the approval of the DPL to accompany the progress in the implementation of the reforms program. The most important team visit occurred for the certification of the second tranche disbursement, where all agencies and secretariats participated jointly and the program was reviewed in its entirety. Supervision of most of the operation was also carried out in 2014 as part of the preparation of the DPL II, which as mentioned covered/expanded many of the same reform areas, and though several sectoral missions, and the findings were summarized in an Implementation Status Report (ISR) in mid-2014.

94. In addition to joint multi-sector supervision missions, separate dialogue was

carried out by sectoral Bank teams involved in the DPL. As highlighted in the various ISRs the multi-sector missions were complemented by follow-up sectoral missions required to continue the dialogue and provide additional support. For instance, following the October 2012 multi-sector mission, additional missions were scheduled for Planning and Budgeting, Education and Financial Management. Similarly, following the May 2013 multi-sector mission there was a follow-up mission on Disaster Risk Management, as well as self-standing mission for the Education, Productive Inclusion, Transportation, and Tax Administration components which were not evaluated in depth during the multi-sector mission. The November 2013 mission was preceded by sectoral missions in Health, Productive and Social Inclusion, Transport, Gender and Public Private Partnership. Similarly, during 2014 follow-up visits were undertaken on a sector by sector basis, including for updating information on developments in the different parts of the program. Such visits were dependent on the specific needs of a sector and were often combined with other activities supported by the Bank.

95. The authorities in many sectors point to specific assistance received by the Bank

both on technical and operational issues as part of the supervision process. They note the benefit from a close dialogue with the Bank, which many times sharpened their focus and led to reviews of interventions. For instance, the focus of the implementation of the education sector reforms was discussed after the standardized tests for second graders were discontinued in 2013. Similarly, as documented in the Aide Memoires in May 2013 and November 2013,

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there was substantial discussion during supervision on how to improve the quality of the budget and the appropriate indicators to monitor progress. Similarly, there was substantial discussion during supervision on how to achieve improvements in collection of tax arrears and the appropriate indicators to monitor progress. The Bank’s supervision was also highly appreciated in the public sector reforms to support the implementation of the new Financial Management and HR systems. In all of the above areas the Bank’s supervision led the responsible government agencies/staff to make presentations on what could be accomplished and to reflect on how to improve the program’s implementation. The participation of the staff in discussions on the progress of the reforms resulted in constructive questions, the identification of deficiencies to be corrected, and in general a level of engagement that motivated government staff to reflect and perfect the design and implementation of the reforms.

(c) Justification of Rating for Overall Bank Performance


96. Overall, the Bank was responsive to government demand for wide support, and

devoted considerable efforts and resources at the design and supervision stages. The Bank and the Government agreed on a very extensive reform program. The analytical capacity brought to the preparation of the DPL was impressive. The Bank carried out adequate supervision, which was recognized as very valuable by the authorities. In some areas, however, the reforms undertaken were very ambitious and the challenge of implementation at the municipal and community level was not fully anticipated by the Bank.

97. The overall objectives of the operation were laudable. The sectors covered and the actions supported by the Bank’s DPL were crucial for the goals of reducing poverty and inequality, developing a more efficient institutional infrastructure, and strengthening public sector management. Staff and the authorities recognize that the commitment made under the DPL was a catalyst for a more aggressive implementation plan. The Bank support generated greater political will and helped to attract additional resources for the application of the reforms throughout the government.

5.2 Borrower Performance

(a) Government Performance


98. The government’s performance rating is based on the magnitude of the reforms

and the number of sectors that had to be managed. During the design of the operation the authorities also underestimated the implementation challenges to some of the more ambitious reforms. That said, for the most part there was important progress made in the 14 sectors supported by the operation. The rating reflects the Government’s overall success in managing such a wide-ranging program, which entailed the adoption and execution of many policies that required perseverance and commitment by the authorities in several sectors.

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(b) Implementing Agency or Agencies Performance


99. The primary responsibility for the preparation and monitoring the program

rested with a coordinating team from SEFAZ. They were the primary counterpart to the Bank and handled the negotiations. They also faced the task of coordinating the activities of 14 sectors, bringing together disparate policies into a coherent program, and evaluating the feasibility of the proposed measures, their effectiveness and consistency with the government’s priorities. They ensured compliance with the prior actions for first and second tranche, and were responsible for monitoring implementation. Members of the coordinating committee were also appointed to help implement parts of the program, notably in the areas of crime and violence and budgeting. Overall, their efforts were critical for the positive impact of the operation.

100. There were 14 agencies or secretariats responsible for implementing the DPL

program. Many of the measures contemplated in the program required concerted and continued efforts in the part of the executing agencies. This is most evident in the area of human resources reforms. On the whole, the majority of the secretariats persevered and methodically advanced with the implementation of the program. In most cases this did not occur just because of a specific commitment to the DPL program, but rather as part of the broader implementation of the government program detailed in the PPA (which the DPL reforms supported). In fact, in a few instances the executing agencies were not fully aware of the specific DPL commitments for their sector in terms of the results indicators and expected outcomes.

(c) Justification of Rating for Overall Borrower Performance


101. Overall, the performance by the borrower was moderately satisfactory. The authorities achieved most of the results anticipated under the DPL program. Most importantly, the government showed a continuous commitment to the core policies and proceeded with the reforms supported by the operation. The moderate shortcomings in the execution of the program were not unusual. They were in line with the standard difficulties most State governments confront managing complex public sector programs that have to be implemented by municipalities and other lower levels of local government.

6. Lessons Learned

102. There are several lessons that can be extracted from the experience with the first

DPL to the State of Bahia.

103. Designing a Broad Operation. The broad coverage of the DPL per se was not

necessarily a shortcoming, and opened the opportunity for policy dialogue and reforms

in multiple areas. The lesson stemming from the complexity of the operation and the large number of sectors included does not simply condense to reducing the scope of the program

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and being more focused. In fact, on balance, in terms of the design of DPL operations, the implementation of this DPL suggests that, given the fairly good government capacity at the State level in Bahia, having a complex multi-sectoral operation is not per se a negative feature. This requires, however, that one calibrates the ambition in the various sectors accordingly, anticipating that it will not be possible to move at a similar pace in all areas. This becomes more relevant when some of the reforms have to be implemented by lower levels of sub-national government (below the State level) such as municipalities and other local organizations (see lesson below). This tradeoff was perhaps not sufficiently appreciated in the design of this operation.

104. Assessing Administrative Capacity at Local Level. Success requires the team not

to overestimate the capacity at the lowest level of local government that deals with

implementation. The Bank team knew a lot about the State, its development challenges, and the policies needed to tackle them. It also had long lasting established relationships, and other related activities that supported the implementation. But in hindsight, it could have placed more attention to implementation modalities, especially where the policies needed to be implemented at the municipal/local level where capacity was uneven.

105. Institution Building and Learning from Local Experience. The most successful components were those that built on an established institutional base and had a history of execution and accumulated experience.

106. Unexpected political and macroeconomic risks. Some parts of the program were affected by unexpected political developments and by the worsening fiscal space due to the deteriorating national macroeconomic conditions, which reduced the availability of resources for implementation. These risks were clearly foreseen, but it is not clear how these risks can be better mitigated. This may point towards limiting engagement in innovative areas, which may be the first ones to be downsized in a recession or subject to changing political preferences. It may highlight a further tradeoff between seeking to address difficult social and economic problems through innovative ‘frontier interventions’ and facing a significant risk that these interventions may be abandoned as a result of changes in political and/or economic environment.

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Annex 1. Bank Lending and Implementation Support/Supervision Processes

a) Task team members

Name Title Unit Responsibility/Specialty

Lending (from task team in program document)

Yaye Seynabou Sakho Practice Manager MFM Task Team Leader

Alberto Costa Senior Social Development Specialist

URS Team Member

Ana Lucia Armijos Consultant LCRCE Team Member

Andressa Lagerborg NA NA Economic Policy

Anna Fruttero Senior Economist Poverty Team Member

Antonio Velandia Lead Financial Officer FAB Team Member

Arturo Herrera Practice Manager Governance Public Sector

Carlos Costa Principal Financial Officer

Risk Team Member

Cindy Audiguier NA NA Team Member

Edith Kikoni Economist MFM Economic Policy

Edward Bresnyan Senior Agriculture Economist

Agriculture Social and Productive Inclusion

Erik Alda Consultant URS Team Member

Evelyn Levy Consultant Governance Public Sector

Ezau Pontes Senior Health Specialist Health Health

Fernando Lavadenz Senior Health Specialist Health Health

Florencia Liporaci Consultant NA Team Member

Gregoire Gauthier Senior Transport Engineer

Transport Transport

Jorge Jatoba NA NA Team Member

Joseph Kizito Lead Financial Management Specialist

Governance Financial Management

Luis Felipe Lopez-Calva

Lead Economist Poverty Poverty

Marcela Santacoloma NA NA Team Member

Maria Madalena dos Santos

Consultant Education Team Member

Michael Drabble Senior Education Specialist

Education Education

Miguel Navarro Martin Lead Financial Officer FAB Team Member

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Miguel Santiago de Oliveira

NA NA Team Member

Miriam Muller Social Scientist Poverty Gender

Pablo Fajnzylber Practice Manager Poverty Sector Leader

Patricia Chacon Holt Language Program Assistant

MFM Team Member

Patricia Miranda Senior Counsel LEGOP Legal

Paulo Santos NA NA Team Member

Rafael Barroso Senior Economist MFM Economic Policy

Rogerio Santarrosa NA NA Poverty

Roland Clarke Program Leader Governance Public Sector

Silvan Tamir NA NA Team Member

Silvana Feitosa Hill Program Assistant LCC5C Team Member

Taimur Samad Program Leader Urban

Supervision (from task team in all archived ISRs)

Philip Schellekens Lead Economist DEC Task Team Leader

Angela Marques Porto Consultant Governance Team Member

Cornelius Fleischhaker Consultant MFM Economic Policy

Edward Bresnyan Senior Agriculture Economist

Agriculture Social and Productive Inclusion

Elaine Tinsley Operations Officer LLIIL Team Member

Enrique Fanta Senior Trade Facilitation

TAC Economic Policy

Ezau Pontes Senior Health Specialist Health Health

Fabio Sola Bittar Research Analyst LCC5C Team Member

Frederico Pedroso DRM Specialist Urban, DRM DRM

Gregoire Gauthier Senior Transport Engineer

Transport Transport

Indu-John Abraham Representative Operational Policy and Country

Gender

Joaquin Toro Senior DRM Specialist URS, DRM DRM

Joseph Kizito Lead Financial Management Specialist

Governance Financial Management

Laura Zoratto Senior Economist Governance Public Sector

Lorena Viñuela Public Sector Specialist Governance Public Sector

Madalena dos Santos Consultant Education Team Member

Miriam Muller Social Scientist Poverty Gender

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Pablo Fajnzylber Practice Manager Poverty Sector Leader

Renata Gukovas Research Analyst Poverty Social Protection

Rodrigo Chaves Country Director Operational Policy and Country

Sector Director

Roland Clarke Program Leader Governance Public Sector

Rui Monteiro Senior PPP Specialist PPP PPP

b) Staff Time and Cost (from SAP)

Staff Time and Cost (Bank Budget Only)

Stage No. of staff weeks

US$ thousands (including

travel and consulting costs)

Lending 68.9 528.8

FY 2011 15.4 136.3

FY 2012 53.3 398.6

FY 2013 0.2 -6.1

Supervision 97.3 538.9

FY 2013 42.9 258.9

FY 2014 38.6 206.3

FY 2015 2.9 15.8

FY 2016 12.9 57.9

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Annex 2. Beneficiary Survey Results (if any)

NA

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Annex 3. Stakeholder Workshop Report and Results (if any)

NA

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Annex 4. Summary of Borrower’s ICR and/or Comments on Draft ICR

Government has approved the report for publishing without comments.

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Annex 5. Comments of Cofinanciers and Other Partners/Stakeholders

NA

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Annex 6. List of Supporting Documents

1. Program Document, May 2012

2. ISRs and Aide Memoires of October 2012, May 2013, November 2013 and July 2014.

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