Document of The World Bankdocuments.worldbank.org/curated/en/622511467992493991/pdf/ICR2834... ·...

Document of The World Bank

Report No: ICR00002834

IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-82570)

ON A

LOAN

IN THE AMOUNT OF EQUIVLENT TO US$150 MILLION

TO THE

THE STATE OF SERGIPE

FOR A

DEVELOPMENT POLICY LOAN IN SUPPORT OF

SERGIPE DEVELOPMENT THROUGH INCLUSION

December 24, 2015

Health, Nutrition and Population Global Practice Brazil Country Management Unit Latin America and the Caribbean Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective as of December 31, 2014)

Currency Unit Real (R$) US$1.00R$2.0205

FISCAL YEAR January 1- December 31

ABBREVIATIONS AND ACRONYMS

BNDES National Bank for Economic and Social Development (Banco Nacional de Desenvolvimento Econômico e Social)

CADIN State Registry of Unpaid Credits (Cadastro Informativo dos Créditos Não Quitados com o Estado)

CadÚnico Single Registry for Social Programs of the Federal Government (Cadastro Único para Programas Sociais do Governo Federal)

CEAC Citizens’ Attention Center (Centro de Atendimento ao Cidadão) COHIDRO Company for Development of Water Resources and Irrigation (Companhia

de Desenvolvimento de Recursos Hídricos e Irrigação) CPS Country Partnership Strategy DPL Development Policy Loan EMDAGRO State Company for Agriculture and Livestock Development (Empresa de

Desenvolvimento Agropecuário de Sergipe) FDI Foreign Direct Investment FUNDEB Fund for Maintenance and Development of Basic Education and

Valorization of Education Professionals (Fundo de Manutenção e Desenvolvimento da Educação Básica e de Valorização dos Profissionais Da Educação)

GDP Gross Domestic Product GoS Government of Sergipe IADB Inter-American Development Bank IBRD International Bank for Reconstruction and Development IBGE Brazilian Institute of Geography and Statistics (Instituto Brasileiro de

Geografia e Estatística) IDEB Basic Education Development Index (Índice de Desenvolvimento da

Educação Básica) i-Gesp Integrated Financial Management Information System (Sistema Integrado de

Gestão Pública) IMF International Monetary Fund IOF Taxon Financial Transactions (Imposto sobre Operações de Crédito,

Câmbio e Seguro ou Relativas a Títulos e Valores Mobiliários) IPEA Institute for Economic Analysis (Instituto de Pesquisa Econômica Aplicada) IPSAS International Public Sector Accounting Standards LRF Fiscal Responsibility Law (Lei de Responsabilidade Fiscal) NCR Net Current Revenue NPL Non-Performing Loans

PFM Public Financial Management PNAD National Household Survey (Pesquisa Nacional por Amostra de Domicílios) PNAIC Literacy at the Right Age Program (Programa Nacional de Alfabetização na

Idade Certa) PPA-P Multi-Year Participatory Plan (Plano Plurianual Participativo) SEAGRI State Secretariat of Agriculture and Rural Development (Secretaria de

Estado da Agricultura e Desenvolvimento Rural) SEED State Secretariat of Education (Secretaria de Estado da Educação) SES State Secretariat of Health (Secretaria de Estado da Saúde) SEFAZ State Secretariat of Finance (Secretaria da Fazenda) SEIDES State Secretariat of Inclusion, Protection and Social Development

(Secretaria de Estado da Inclusão, Assistência e Desenvolvimento Social) SEPLAG State Secretariat of Planning, Budget and Management (Secretaria de

Estado de Planejamento, Orçamento e Gestão) SEPM Special State Secretariat of Women (Secretaria Especial de Políticas para

as Mulheres) SERASA Private enterprise that collects and analyzes personal economic and financial

information to support credit-related decisions created by banks (Centralização de Serviços dos Bancos S/A)

SIGA Integrated Management School System (Sistema Integrado de Gestão Acadêmica)

SUAS Social Assistance System (Sistema Único de Assistência Social) SUS Unified Health System (Sistema Único de Saúde)

Vice President: Jorge Familiar Calderon

Country Director: Martin Raiser

Practice Manager: Daniel Dulitzky

Task Team Leader: Tania Dmytraczenko

ICR Team Leader: Ezaú Pontes

ICR Primary Author: Isabella Bablumian

BRAZIL Sergipe Development through Inclusion

A. Basic Information ............................................................................................................ i

B. Key Dates ........................................................................................................................ i

C. Ratings Summary ............................................................................................................ i

D. Sector and Theme Codes................................................................................................ ii

E. Bank Staff ....................................................................................................................... ii

F. Results Framework Analysis ......................................................................................... iii

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

H. Restructuring (if any) .................................................................................................... vi

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

1.1 Context at Appraisal ................................................................................................. 1 1.2 Original Program Development Objectives (PDO) and Key Indicators (as approved) ........................................................................................................................ 3 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and Reasons/Justification ................................................................................................ 4 1.4 Original Policy Areas Supported by the Program (as approved) .............................. 4 1.5 Revised Policy Areas (if applicable) ........................................................................ 8 1.6 Other significant changes .......................................................................................... 9

2. Key Factors Affecting Implementation and Outcomes .................................................. 9

2.1 Program Performance ............................................................................................... 9 2.2 Major Factors Affecting Implementation Government commitments ..................... 9 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization ........ 10 2.4 Expected Next Phase/Follow-up Operation (if any) ............................................... 12

3. Assessment of Outcomes .............................................................................................. 12

3.1 Relevance of Objectives, Design and Implementation ........................................... 12 3.2 Achievement of Program Development Objectives ............................................... 14 3.3 Justification of Overall Outcome Rating ................................................................ 21 3.4 Overarching Themes, Other Outcomes and Impacts .............................................. 22 3.5 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops ....... 23

4. Assessment of Risk to Development Outcome ............................................................. 23

5. Assessment of Bank and Borrower Performance ......................................................... 24

5.1 Bank Performance ................................................................................................... 24 5.2 Borrower Performance ............................................................................................ 25

6. Lessons Learned............................................................................................................ 26

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ............... 27

Annex 1. Bank Lending and Implementation Support / Supervision Processes ............... 29

Annex 2. Beneficiary Survey Results ............................................................................... 31

Annex 3. Stakeholder Workshop Report and Results ....................................................... 31

Annex 4. Summary of Borrower's ICR and/or Comments on Draft ICR ......................... 32

Annex 5. Comments of Co-financiers and Other Partners / Stakeholders ........................ 43

Annex 6. List of Supporting Documents .......................................................................... 44

Annex 7. Table: Proposed Policy Actions for Sergipe Development through Inclusion . 45

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A. Basic Information

Country: Brazil Program Name: Development Policies for the State of Sergipe

Program ID: P129652 L/C/TF Number(s): IBRD-82570

ICR Date: 12/24/2015 ICR Type: Core ICR

Lending Instrument: DPL Borrower: STATE OF SERGIPE

Original Total Commitment:

USD 150.00M Disbursed Amount: USD 150.00M

Revised Amount: USD 150.00M

Implementing Agencies: Secretaria de Estado da Fazenda - SERGIPE

Cofinanciers and Other External Partners: B. Key Dates

Process Date Process Original Date Revised / Actual

Date(s)

Concept Review: 05/08/2012 Effectiveness: 10/03/2013

Appraisal: 10/01/2012 Restructuring(s):

Approval: 05/21/2013 Mid-term Review:

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: Moderately Satisfactory

Quality of Supervision: Satisfactory Implementing Agency/Agencies:

Satisfactory

Overall Bank Performance:

Moderately SatisfactoryOverall Borrower Performance:

Moderately Satisfactory

ii

C.3 Quality at Entry and Implementation Performance IndicatorsImplementation

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 agriculture, fishing and forestry sector 20 25

General education sector 25 17

Health 40 17

Other social services 16

Sub-national government administration 15 25

Theme Code (as % of total Bank financing)

Education for all 25 17

Gender 16

Managing for development results 15

Other public sector governance 25

Other rural development 25

Population and reproductive health 40 17

Rural policies and institutions 20 E. Bank Staff

Positions At ICR At Approval

Vice President: Jorge Familiar Calderon Hasan A. Tuluy

Country Director: Deborah L. Wetzel Deborah L. Wetzel

Practice Manager/Manager:

Daniel Dulitzky Joana Godinho

Program Team Leader: Tania Dmytraczenko Tania Dmytraczenko

ICR Team Leader: Ezau Pontes

ICR Primary Author: Isabella Bablumian

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F. Results Framework Analysis

Program Development Objectives (from Project Appraisal Document) The Development Policy Objective of the proposed operation is to improve public sector management, and expand access to quality public services and economic opportunities for the extremely poor in the State of Sergipe. The proposed operation is fully consistent with the overarching objective of the CPS 2012-2015, and with the strategic objectives of enhancing the efficiency of public investments, improving quality and expand provision of public services, and promoting regional economic development. It is also fully aligned with the Government of Sergipe's goal to eradicate poverty, as outlined in the Multiyear Participatory Plan (PPA-P) 2012-2015. 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 : Increase responsiveness to citizen complaints in the Citizen Service Centers (CEAC) (Percentage, Custom)

Value (quantitative or Qualitative)

15 90 100

Date achieved 10/31/2011 11/30/2013 12/31/2013 Comments (incl. % achievement)

Target surpassed.

Indicator 2 : Reduce the time to produce agreed upon managerial reports through i-Gesp (Number, Custom)


0 4 4


Target achieved

Indicator 3 : Increase in revenues collected from tax arrears as a share of the stock of tax arrears (Percentage, Custom)


0.43 0.52 0.39

Date achieved 12/31/2011 12/31/2013 12/31/2013

iv

Comments (incl. % achievement)

Target not achieved. It can be attributed mostly to the difficult in recovering the tax arrears timely as well as the option available to tax avoiders for refinancing with discounts, making immediate repay unattractive.

Indicator 4 : Increase the number of maternity hospitals implementing the protocol for classification of admissions by risk (Acolhimento com Classificação de Risco – ACCR) (Number, Custom)


1 3 3


Target achieved.

Indicator 5 : Reduce the cesarean section rate at the referral Maternity Hospital Nossa Senhora de Lourdes according to the guidelines in Portaria No. 3477/1998 (Percentage, Custom)


55.02 50.20 57.46


Target not achieved. The selected hospital is the only high-risk referral hospital in the State, receiving a high number of pregnancies with complications, which commonly requires cesarean sections.

Indicator 6 : Increase the number of school directors selected by merit and with signed management agreements (Number, Custom)


0 151 159


Target surpassed.

Indicator 7 : Increase the number of municipalities receiving technical assistance from the State in the implementation of PNAIC (Number, Custom)


0 38 73


Target surpassed.

Indicator 8 : Increase the number of trained small producer units included in the Núcleos de Produção de Leite and selling at least 90 percent of their production to private and public/institutional markets (Number, Custom)


3 30 30

Date achieved 12/31/2011 11/30/2013 12/31/2013

v

Comments (incl. % achievement)

Target achieved

Indicator 9 : Increase # of small producers in the Program for Agroecological Production and linked to the Social Control Orgs. selling directly in agroecological fairs and to private and public/inst. markets (Text, Custom)


83 producers, 5 women100 producers, 15 women

114 producers, 44 women


Target surpassed.

Indicator 10 : Increase the number of seasonal workers benefitting from the program Mão Amiga included in the program Sergipe Alfabetizado (Text, Custom)


0 565 of which 1/8 are women

241 of which 74 are women


Target partially achieved. Although less workers have benefited, a substantial share were women, complying with the second part of the target.

Indicator 11 : Increase the number of families with monthly per capita income of less than R$70.00/month living in the poorest 15 municipalities included in the CadÚnico (Number, Custom)


39582 41561 48396


Target surpassed.

Indicator 12 : Increase the number of women in situations of violence and vulnerability attended in the Rede de Atendimento à Mulher Vítima de Violência (Number, Custom)


3985 6973 7630


Target surpassed.

vi

G. Ratings of Program Performance in ISRs

No. Date ISR Archived

DO IP Actual

Disbursements (USD millions)

1 09/07/2013 Satisfactory Satisfactory 0.00 2 03/20/2014 Satisfactory Satisfactory 149.63 3 08/18/2014 Satisfactory Satisfactory 149.63 4 12/18/2014 Satisfactory Satisfactory 149.63

H. Restructuring (if any) N/A

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1. Program Context, Development Objectives and Design

1.1 Context at Appraisal 1. Since the early 1990s, Brazil has experienced sustained reductions in poverty and inequality and the share of Brazilians living in poverty had decreased from 42 percent in 1990 to 21 percent in 2009.1 The poor benefited from lower inflation levels, economic growth, and a rapid increase in the minimum wage, trade liberalization and associated job creation. Targeted pro-poor initiatives included the national Bolsa Família cash transfer program, social security transfers, significant investments in education at all levels, and large scale rural community-driven development programs throughout the Northeast region. Improvements in consumption and income indicators were accompanied by important advances across a range of non-income measures of well-being (access to health, education, clean water, sanitation, electrification). With regard to inequality, Brazil’s Gini coefficient decreased from just under 0.61 to about 0.54, and the incidence of extreme poverty2 dropped about twice as fast as overall poverty. 2. However, in 2012, at the time of this preparation of the operation, Brazil still faced major challenges in tackling poverty, vulnerability and social exclusion issues, especially in the Northeast region and its rural areas. Poverty in Brazil remained more deeply entrenched in rural areas (29 percent) than in large metropolitan cities (10 percent) and smaller urban centers (13 percent). Fifty-nine percent3of the country’s poor resided in the Northeast region, mainly in rural areas, villages and small towns, where economic activity revolved largely around agriculture and associated services. Growth in the Northeast equaled or surpassed national rates over the past decade; but the starting point with respect to incomes and well-being was considerably lower than the national average; thus, sustained investment and reform efforts were needed to close the gap. 3. Brazil’s overall macroeconomic framework at the time of Project preparation was deemed adequate and sustainable in the medium term. While the Brazilian economy slowed significantly from 2011 and 2012, the growth was expected to take off towards the end of 2012 with improvements in the services and industrial sectors along with monetary policy interventions that contemplated substantial reductions in interest rates within an expansionary policy aimed at stimulating spending and demand. Policy framework had provided the authorities with sufficient leeway to respond to past and current crises with an array of fiscal, monetary, and external measures to stimulate demand. Gross public sector debt was expected to decline, despite difficulties in maintaining fiscal balance in the face of large investment needs and pressures from public expenditure growth.

1Institute for Economic Analysis (Instituto de Pesquisa Econômica Aplicada –IPEA), 2010. 2 Extreme poverty is defined as average daily consumption of $1.25 or less and means living on the edge of subsistence. World Bank, 2010. 3Brazilian Institute of Geography and Statistics (Instituto Brasileiro de Geografia e Estatística –IBGE), 2010

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Flexible exchange rates and relatively large foreign reserves provided additional comfort in meeting external contingencies. 4. Though Sergipe performed relatively well on key development indicators compared to other states in the Northeast, it was lagging behind the national average. In the previous years preceding the operation, education, health, and income growth indicators had shown improvement at a faster pace than other Northeast states, translating into the highest human development index in the region. Despite progress, Sergipe was still ranking below the national average on key development indicators. The Government of Sergipe (GoS) recognized that closing the gap required reaching the poorest segments of the population. To this end, it had outlined an ambitious program to eradicate poverty in the State, aligned with the federal government’s Brasil Sem Miséria program. In addition, a series of poverty alleviation strategies (discussed further in the document) had been defined, though a participatory planning process, and the World Bank had been sought to support the realization of these strategies. 5. Government’s plan, based on a broad participatory planning process, reflected its commitment to social inclusion, poverty alleviation, and extreme poverty eradication. Beginning in 2007, the Government had introduced new participatory mechanisms as part of its planning process, through consultations with a broad range of stakeholders, such as municipal governments, private sector actors, civil society, and non-governmental organizations. Conferences were held in all the 75 municipalities to identify priority demands from the local population and to elect municipal representatives for eight territorial conferences, which were subsequently held to debate and select demands with territorial and state scope. Late in 2008, the GoS organized a statewide conference in order to create a consensus between the State and society on the priority action plans, projects, and goals. About 24,000 people took part in the first round of municipal conferences and identified 8,671 priority actions; 900 municipal representatives took part in the territorial and statewide conferences. The approved priority actions, which focused on short-term outputs and outcomes were consolidated in the State`s Multiyear Participatory Plan (Plano Plurianual Participativo –PPA-P). 6. In 2011, the Government further developed its participatory planning processes in an attempt to incorporate medium and long-term strategic goals. The preparation of the State's long-term strategic plan had evolved from an attempt to bring together and align the technical expertise needed for strategic and budgetary management, citizen's participation, and social control over policy planning and implementation. Initially, State secretariats and agencies convened to discuss the Government’s strategic guidelines and define priority areas. Subsequently, the Government´s implementation of the previous PPA-P was evaluated in a new round of territorial conferences that convened hundreds of municipal representatives. More than 80 percent of the 377 proposals identified in these conferences were included in the 2012-15 PPA-P. The policies supported by this operation had been scrutinized and validated in conferences and, consequently, included in the Government`s strategic guidelines.

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Rationale for Bank Involvement 7. The overarching goal of the 2011 Country Partnership Strategy (CPS) was to contribute to Brazil’s aim for a faster, more inclusive, and environmentally sustainable growth, with macroeconomic stability. Brazil’s priorities for its partnership with the World Bank Group were set out in the CPS for the period FY2012-2015.4 The strategy was focused on second-generation development problems that require innovative solutions in terms of improving national policy frameworks and finding ways to implement programs with sub-national governments. Specifically, the CPS had identified four strategic objectives: (i) increase the efficiency of public and private investments; (ii) improve the quality and expand the provision of public services for low income households; (iii) promote regional economic development; and (iv) further improve sustainable natural resource management and enhance climatic resilience while contributing to local economic development and helping to meet rising global food demand.

8. The CPS envisaged sustained or increased lending to state and municipal levels, with a focus on multi-sector operations. The Federal Government was interested in the World Bank’s support to sub-national governments as a way of enhancing the implementation of national policies, ranging from the fiscal responsibility framework to strategic social and infrastructure investment programs. Sub-national governments demanded integrated multi-sectoral development solutions that address complex and multidimensional development challenges, combining technical and financial support, while using tailored instruments. 9. The broad objective of the proposed operation was to support the State of Sergipe in improving public sector management and expanding access to quality public services and economic opportunities for the extreme poor. Thus, the proposed operation was fully consistent with the overarching objective of the CPS FY2012-2015, and with the strategic objectives of enhancing the efficiency of public investments, improving quality, expanding provision of public services, and promoting regional economic development. 10. World Bank financing and technical knowledge aimed to increase the State’s capacity to invest in, and implement its strategic programs. The Program, thus, set out to support the State’s efforts to promote social inclusion and reduce poverty, both through the resources provided and through an improved policy and institutional framework for implementing government policy and aligning policies across different levels of government.

1.2 Original Program Development Objectives (PDO) and Key Indicators (as approved)

4CPS FY2012-2015 (Report No. 63731-BR) discussed by the Executive Directors on November 1, 2011.

4

The Policy Development Objective of the proposed operation was to improve public sector management and expand access to quality public services and economic opportunities for the extremely poor. This objective, with its specific policy actions, was measured through twelve key indicators as described below. Increase responsiveness to citizen complaints in the Citizen Service Centers (CEAC)

by increasing the share of complaints that receive a written explanation from 15 to 90 percent in specified CEACs.

Reduce the time to produce agreed upon managerial reports through i-Gesp, the Integrated Financial Management Information System.

Increase in revenues collected from tax arrears as a share of the stock of tax arrears from 0.43 to 0.52 percent.

Increase the number of maternity hospitals implementing the protocol for classification of admissions by risk to 75 percent of maternity hospitals under state management.

Reduce the cesarean section rate at the referral Maternity Hospital Nossa Senhora de Lourdes from 55.2 to 50.2 percent.

Increase the number of school directors selected by merit and with signed management agreements by 40 percent.

Increase the number of municipalities receiving support from the State for implementation of the Literacy at the Right Age Program – PNAIC to 38 (50 percent of the total municipalities in the state).

Increase the number of trained small producer units included in the Milk Production Units (Núcleos de Produção de Leite) and selling at least 90 percent of their production to private and public/institutional markets ten-fold.

Increase the number of small producers included in the Program for Agro-ecological Production and linked to the Social Control Organizations selling directly at agro-ecological fairs and to private and public/institutional markets by 20 percent.

Increase the number of seasonal workers benefitting from the program Mão Amiga included in the program Sergipe Alfabetizado to 50 percent, 1/8 of which are women.

Increase the number of families with monthly per capita income of less than R$70.00 living in the poorest 15 municipalities included in the CadÚnico by 5 percent. Increase the number of women in situations of violence and vulnerability attended by the Network for Support of Women-Victims of Violence (Rede de Atendimento à Mulher Vítima de Violência) by 75 percent.

1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and Reasons/Justification 11. The PDO and key indicators were not revised. 1.4 Original Policy Areas Supported by the Program (as approved) 12. The multisectoral Single Tranche DPL (USD$150m) focused on three policy areas, identified by the Government as posing challenges to achievement of its poverty reduction goals, namely: (i) consolidating fiscal management and public sector innovations; (ii) increasing access to better quality public services in health and education; and (iii)

5

promoting socioeconomic development and inclusive growth in the interior of the State. The operation aimed to support the GoS in realizing its commitment to eradicating poverty in the State by promoting structural reforms and expanding provision of essential public services. Policy Area 1: Consolidating Fiscal Management and Public Sector Innovations 13. The objective of the GoS was to achieve excellence in public management by promoting fiscal responsibility and innovations in public administration. Within this context, the actions taken by the State demonstrated a commitment to: (i) improve quality and responsiveness to citizens; (ii) implement new integrated tools for budget, financial, and human resources management; and (iii) combat fiscal avoidance to ensure fair contributions to public expenditures. 14. To improve citizen services, GoS had proposed an implementation of a ‘one stop shop’ model with standardization of processes in order to unify citizen services within CEACs. These services, though already offered by the Government and delivered in a single physical space, had not been standardized, and the processes were not unified. Lack of standardization was negatively affecting the administration of citizen’s services (such as those offered by the Department of Transit, Secretariat of Public Security and Secretariat of Finance), as well as the quality of their delivery. The new system, contemplating the standardization of all the processes, was designed with the purpose of shortening the average time spent by citizens in obtaining the services delivered in the CEACs and improving client satisfaction. As a complement to this measure, a Charter on the Citizen’s Attention Services was also drafted and approved for implementation to specify the basic rights of citizens as users of the State’s CEACs. 15. To accomplish the goal of modernizing of key planning, budgetary, execution and control processes, GoS undertook the task of replacing its outdated information and telecommunication technology system. The Government acquired a new Integrated System of Public Management system, i-Gesp intended to serve as a Government resource planning system. Compared to the former system, which did not allow for the adoption of the International Public Sector Accounting Standards (IPSAS), adopted by Brazil in 2013, i-Gesp was a tool specifically designed for public management, providing more agility, flexibility, integration, control, transparency, and quality. Within the DPL operation, GoS set out to accomplish the full integration of i-Gesp, including modules covering all key management areas: (i) planning; (ii) budgeting; (iii) budgetary and financial control; (iv) public accounting; and (v) agreements management. Additionally, as the system encompassed an entire cycle of administrative activities, regulation was necessary to establish its compulsory use by the executive branch; this operation was to support the adoption of this regulation. 16. Finally, to combat tax evasion, the State turned to a virtual and integrated process for the collection of tax arrears. Government drafted a Decree to regulate virtualization and integration of the processes for debt recovery. Virtualization meant that all documents relating to the recovery of tax arrears were made available to all parties (tax

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agents, state attorneys and judges) in an electronic form. Further, the integration of all the systems into a single workflow tool eliminated the need to request information through memos, thereby speeding up the process. The system allowed for effective monitoring by all participants as well as provided for enforcement of State Registry of Unpaid Credits (Cadastro Informativo dos Créditos Não Quitados com Estado - CADIN) and the inscription of debtors in Shop Manager Chamber (Serviços de Centralização dos Bancos - SERASA), an enterprise that collects and analyzes personal economic and financial information to support credit-related decisions and a significant tool to recover tax arrears created by banks. It should be noted that the implementation of this system constitutes an innovation in the field of combating tax evasion at the state level in Brazil; previously, only the state of São Paulo has implemented a virtual process, but without integration of concerned bodies. Policy Area 2: Increasing Access to Better Quality Public Services

Health

17. Within a broader goal of increasing access to better quality public services in health, the universal coverage of quality and client-centered healthcare were the primary objectives of the Government. In its strategy, GoS had outlined the need to strengthen the Unified Health System (SUS) by, among other things: (i) adhering to the federal program Rede Cegonha (Maternal and Child Healthcare Network) in order to improve the quality of maternal and newborn health services; and (ii) strengthening integration between levels of care, including maternal and neonatal care network.

18. To reach these goals, the following two policy actions were selected to be implemented in this operation, as follows: (1) to increase the number of maternity hospitals implementing protocol for classification of admissions by risks (Acolihmento com Classificação de Risco-ACCR), and to (2) reduce the cesarean section rate at the referral Maternitiy Hosptial Nossa Sehora de Lourdes. The first Policy Action had as its main goal the early identification of pregnant women throughout the maternal and newborn care network, timely and efficient referral and diagnostics, as well as information management across levels of care. The latter, on the other hand, focused on reducing the incidence of an undesirable in normal birth surgical procedure, the increased rate of which could be attributed to deficiencies in management and the referral system. Education 19. Within the context of increasing access to better quality public education, GoS emphasized two specific goals: (i) strengthening school management in state-run schools, and (ii) improving learning results in municipal elementary schools. To address the first goal, GoS focused on establishing a merit-based and participatory/democratic selection process for school directors, thus adopting a more participatory approach within a decentralized model for school management, and the provision of incentives for increased accountability to the school community and to the state government. Moreover, the Government institutionalized the management and monitoring of the system and schools

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by establishing of management agreements signed between the State Secretary of Education (Secretaria de Estado da Educação - SEED) and the school directors to include an index for evaluating school performance, structured curriculum guidelines, establishment of School Councils, and strengthening of the Integrated Management School System (Sistema Escolar de Gestão Integrada – SIGA).

20. Additionally, the DPL aimed to support the Government in improving coordination within the education system as a whole through institutionalization of a new regime of collaboration between the state and municipal subsystems for the implementation of the Literacy at the Right Age Program (Programa Nacional de Alfabetização na Idade Certa – PNAIC). Within this new policy, SEED would provide technical assistance and guidance to the municipalities participating in the PNAIC in order to guarantee that all municipal schools achieve the objective of improving literacy in children before 3rd grade. Policy Area 3: Promoting Socioeconomic Development and Inclusive Growth 21. The Government´s interventions in this area focused on improving policies and institutional mechanisms to promote socioeconomic development and inclusive growth in the interior of the State, especially in rural areas. In a state, whose economic activity focuses on agriculture, with 70 percent of population living in rural areas, the policy focused on bringing positive social and economic gains to the poor and other vulnerable social groups, with socially and environmentally sustainable rural development and policy reforms based on: (i) technical assistance targeted to small and medium-size producers and traditional communities, (ii) productive inclusion programs, and (iii) social protection policies. The combination of these institutional complementary reforms and inclusive growth policies were focused on bringing positive impact by reducing poverty and improving sustainable practices in fragile ecosystems. 22. In an effort to promote income growth by improving access to markets, GoS implemented a policy for strengthening clusters for family agriculture, including the Dairy Production Clusters (Núcleos de Produção de Leite). The State provided support to rural producers through seed capital, technical assistance and rural extension across selected production chains, with the aim of enabling greater market participation, particularly in institutional niches such as the National School Feeding Program (Programa Nacional de Alimentação Escolar – PNAE), as well as private markets. 23. In promoting sustainable agriculture and productive use of rural landscapes, GoS, through its State Company for Agriculture and Livestock, created a Program for the training family farmers in agro-ecological production. Training of small producers in Agro-ecological Production took place in the Caatinga biome, where rudimentary productive systems (slash-and-burn agriculture), and lack of knowledge and resources to promote soil conservation have been contributing to deforestation, environmental degradation, erosion, silting of water courses, and contamination of springs with the excessive use of pesticides. A set of policies aimed at reducing the burden of poverty by attenuating the environmental constraints that worsen the life of poor people

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included: (i) natural resources management (especially, optimizing water uses and increasing water efficiency) in the target area; and (ii) scale-up of this methodology and approach to other rural areas. Further, to ensure access to markets, the farmers were linked to the Social Control Organizations in order to sell directly to agro-ecological fairs and to private and public/institutional markets. 24. Further, GoS focused on increasing employment and income opportunities for the most vulnerable populations, especially seasonal orange and sugarcane production workers, by providing access to a state literacy program. The SEIDES, in coordination with the SEED, created a plan for including and certifying seasonal workers that are already part of the State’s income transfer and generation Mão Amiga program in the literacy Sergipe Alfabetizado program. This measure was aimed at improving competitiveness of the workers and allowing them to have an increased access to the labor market upon the completion of the program. 25. Finally, to address social protection and prevention of gender-based violence, GoS implemented a Policy Actions aimed at: (i) strengthening the Social Assistance System (Sistema Único de Assistência Social– SUAS) by merging it with the CadÚnico, a roster for identifying and classifying low income families, and co-financing it in at least twenty percent of all municipalities; and (ii) by scaling up state and municipal government protection of women threatened by violence and vulnerability by increasing by 50 percent the number of this group attended by the Women Protection and Support Program (Rede de Atendimento à Mulher Vítima de Violência). 26. The DPL established a need to measure, in some cases for the first time, the baseline and accompanying results of the Policy Actions. While this was a very positive development, not all areas were equally prepared. The lack of capacity by the implementing secretariats to monitor and evaluate data created difficulties in selecting indicators that would correctly measure the actions of their respective sectors. In some cases, this meant selecting indicators that would be easier to measure, yielding much less relevant and weaker impacts. Additionally, the focus on one indicator per Policy Action limited resources to the implementation of only those results required by the selected indicator, instead of the overall development goals. 27. Gender-based violence issues were addressed by the Special Secretary for Women´s right through the scale-up of state and municipal government support for the protection of women threatened by violence and vulnerability, especially in municipalities that had the highest incidence of this type of violence. This policy was to be implemented through the strengthening of the Network for Attention to Women Victims of Violence (Rede de Atendimento à Mulher Vítima de Violência) accompanied by campaigns to increase awareness and political support for this issue.

1.5 Revised Policy Areas (if applicable) N/A

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1.6 Other significant changes N/A

2. Key Factors Affecting Implementation and Outcomes

2.1 Program Performance 28. All the required Policy Actions of this DPL were satisfied in a timely manner, with no delays in effectiveness or disbursement of the financing, significantly advancing the State’s development agenda and creating a significant positive impact in respective areas, as described in the Assessment of Outcomes section below. While some of the PDO indicators, linked to policy actions aimed at combating fiscal avoidance, improvements in maternal health care, and increasing employment opportunities for most vulnerable people (PDO #3,5 and 10) were only partially achieved or not met, 75% of the outcomes were fully achieved and the overall PDO was fulfilled. Additionally, challenges that arose in the process of reaching the results and impediments that prevented others from being accomplished served as important tools for drawing valuable lessons, which serve to better design future reforms and operations that can further advance the development agenda of the State of Sergipe.

2.2 Major Factors Affecting Implementation Government commitments 29. The State of Sergipe was and continues to be fully committed to the ongoing reform process carried out for the development of the State through fiscal management and innovation and promoting inclusive growth for its poorest population segments. Most Policy Actions were drawn from the State’s development agenda; hence, strong ownership facilitated their implementation. In some sectors, as was, for instance, the case with the planning and financial sectors, the leverage created by the Bank investment, played a critical role in adding a necessary political weight for advancing reforms and increasing commitment and adherence to policies. Upon their implementation, these reforms have gained an increased level of sustainability, consolidated by the passage of laws and decrees that served as an essential cornerstone, accomplished within this operation, for making headways in the development agenda. 30. Political and Institutional Risk. In the particular case of the implementation of actions that required the involvement and coordination with other levels of the government, such as was the case with the alphabetization program for seasonal workers, the risk identified during preparation materialized and resulted in bottlenecks and delays, precluding the indicator from reaching its goal. Despite the remedies that were discussed during preparation, such as strong political support by the highest levels of the Government, including the Governor himself, the implementation processes suffered substantial delays and other challenges in coordination between the state and federal levels. However, valuable lessons learned for the design and operation of such social programs were obtained and the Government continues adjusting its approach in order to better reach the most vulnerable populations.

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31. Fiscal Position. The State of Sergipe had some instability in fiscal results prior to the commencement of the program. Primary balance and expenditures had deteriorated, especially post the 2009 crisis. As an important prerequisite for Bank engagement, compliance with fiscal limits in accordance to the Fiscal Responsibility Law was required prior to signing of the Loan Agreement for this DPL. Though fiscal adjustments were implemented in a satisfactory manner, recovering the positions prior to commending the project, expenditures did not fall to a prudential limit. To avoid deterioration, the Bank team maintained close dialogue with the government both during the implementation of this DPL and after its completion in preparation of the second phase in order to assure that the fiscal adjustment measures complied with the Law. 32. Results Framework. The framework described in detail in the section below, was an important instrument in ascertaining measurability of the performance of the program. However, while the tool served well to quantify the outcomes of the implementation of most of the Policy Actions, some implementing agencies lacked the technical and implementation capacity for applying this tool to the intervention, thus hampering the reliability of its results. Additionally, the framework suffered from some flaws in design, especially in capturing the real impact of the PDO actions that required a longer-term timeframe, thus hampering the ability to measure their real impact on development in a short timeframe. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 33. This DPL significantly contributed to the strengthening of the State´s nascent M&E system as well as to the development of a results-based culture in policy- making. Subnational and local levels of government suffer from weaker than the national levels capacity in M&E. Thus, improvements in its design and implementation were important for carrying out policy reforms and monitoring their impact on development. The adoption of i-Gesp by SEFAZ permitted for automation in preparation and search of management reports by all areas of the government. Access to this previously unavailable data significantly facilitated policy-makers´ and implementers´ ability to base decision on quantitative and qualitative data, thus strengthening focus on results and performance, accomplishment of objectives and indicators, and increasing flexibility, integration, and transparency.

34. The DPL established a need to measure, in some cases for the first time, the baseline and accompanying results of the Policy Actions. While this was a very positive development, not all areas were equally prepared. The lack of capacity by the implementing secretariats to monitor and evaluate data created difficulties in selecting indicators that would correctly measure the actions of their respective sectors. In some cases, this meant selecting indicators that would be easier to measure, yielding much less relevant and weaker impacts. Additionally, the focus on one indicator per Policy Action limited resources to the implementation of only those results required by the selected indicator, instead of the overall development goals.

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35. The overall design of the M&E was highly important to track the accomplishments of the Program and the results indicators were generally relevant. However, the selected indicators in some cases proved inadequate in reflecting the progress achieved by the supported policy reforms in their entirety. Some of them did not accurately measure the precise actions and policy measures undertaken by the State, while others could have benefitted from a narrower and more operational definition. 36. For instance, in Prior Action 1.1, the results indicator (PDO #1) selected (percentage of complaints regarding citizen´s services responded) did not accurately reflect the primary concern of improving quality of service to citizens, given that the baseline registered very few complaints to begin with (i.e. 0.6 complaints per month, of which 100% were met). Rather, focus on factors such as delays in receiving service and quality of service provision would have better-captured the root of the problems and reflected the actual challenges successfully addressed by the Secretariat of Planning and Management (Secretaria do Planejamento e Gestão -SEPLAG) in its reform process. Further, the objective of improving learning in primary schools of the municipalities (2.b.2) could have benefited from a more narrowly defined results indicator (PDO #6) rather than the selected one of increasing the number of municipalities receiving technical support from the state to implement the PNAIC. While the indicator is an important one in improving cooperation and institutional strengthening, its results as an immediate outcome of the actions of the project were difficult to capture within the short-term operation.

37. SEPLAG had the overall responsibility for the implementation of M&E, reporting progress and coordinating actions with other involved secretariats. The management of M&E and liaison with the World Bank was carried out by a team within SEPLAG, created especially in order to coordinate the implementation of the Government’s strategic programs with the other implementing agencies on a daily basis. Given its multi-sectorial nature, the operation was implemented by seven different State secretariats, namely the SEPLAG, the Secretariat of Finance (SEFAZ), the Secretariat of Health (SES), the Secretariat of Education (SEED), the Secretariat of Agriculture and Rural Development (SEAGRI), the Special Secretariat of Women (SEPM), and the Secretariat of Inclusion, Protection, and Social Development (SEIDES). These secretariats were responsible for monitoring, implementation, and outcomes in their respective technical areas, while SEPLAG had an additional and overall coordination role. 38. The client carried out the monitoring of Results Indicators satisfactorily, while collaboration and communication with the Bank continued strong throughout the Project. One of the particular strengths of the monitoring and evaluation, and indeed overall implementation, was the high degree of coordination across secretariats through SEPLAG, which showed a high level of commitment and knowledge to this process. Despite this strength, the lack of uniformity across sectors in measuring and monitoring progress, created uneven overall results in implementation, utilization, and sustainability of this measure. 39. During the implementation of the program, in 2012, some of the indicators were at risk for completion, suffering either from delays in implementation or due to

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design flaws. Upon a detailed explanation requested and received from the State for these delays and challenges, correction of indicators was carried out. While some improvements were made, it proved difficult to implement all of the necessary changes given the short-term nature of this operation. 40. In summary, the shortcoming of the results framework can be in large part attributed to the lack of stronger technical assistance during preparation in the design of the framework in secretaries with inadequate capacities as well as weak definitions of indicators for some of the policy actions. Correcting these challenges will require devising a more robust and instrument-appropriate results framework while assistance with design and implementation of the M&E constitutes an important area where Bank could contribute technical knowledge to improving the effectiveness of development with focus on results. 2.4 Expected Next Phase/Follow-up Operation (if any) 41. This DPL operation created a rich venue for continued collaboration of the Bank with the State of Sergipe. The relationship between the two is very likely to continue in the future, as it is seen as an important factor in the ongoing consolidation of the State’s reform process. The State has expressed interest in carrying out another operation, phase two DPL, which has been prepared, but has not yet been approved. If it is materialized, taking into account lessons learned from the phase one operation will be important to continue deepening the reforms focused on development and reaching vulnerable populations more effectively.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation 42. The operation was developed based on the State’s development agenda and was in alignment with the Brazil Country Partnership Strategy. The DPL policy actions addressed three CPS pillars: (i) consolidating fiscal management and public sector innovations; (ii) increasing access to better quality public services in health and education; and (iii) promoting socioeconomic development and inclusive growth in the interior of the State. These objectives were and remain highly relevant for Brazil and for the State of Sergipe. This operation was a result of a continued partnership with the World Bank and has supported the consolidation of the Government reform program.

43. Operational design. This DPL was anchored on the Government’s plan for reform and based on participatory planning carried out in the last few years for an inclusive development agenda. The three DPL policy areas selected were relevant and well reflected in the PDO, and aligned both with the Government’s development agenda as well as with the Bank’s CPS. Support of selected Policy Areas allowed for the consolidation of the reform efforts and contributed to the sustainability of the development agenda. However, some of the actions that were inherited from a previous unfinished Bank investment operation (as described in detail in section 3.1) lacked scale and/or sustainability to farther

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the development policy objective, proving to be inadequate in reaching a sufficient amount of beneficiaries to produce impact necessary for advancing the development goals. 44. Preparation and Policy Area Selection. The Policy Areas were highly relevant and aligned with the State´s priorities. Each of the Policy Actions was selected in coordination with stakeholders involved and secretariats responsible for the respective areas. While this is true for all three Policy Areas, to fully understand the process of selection of the actions under Policy Area 3, it is worth noting that this DPL drew heavily on content from the Sergipe State Integrated Project (SSIP)5 and its predecessor, the Rural Poverty Reduction Program (RPRP)6. Anchored on the Brazil CPS, both of these projects stressed value-added on how to strengthen productive activities in communities and their integration into markets by exploiting social capital gains, and based on the success of the similar projects previously implemented in the neighboring Northeastern states in social capital formation. However, given some fiscal non-compliance issues with the Federal Government, Sergipe was unable to proceed with an additional financing and projects suffered substantial delays in implementation, compromising reaching the objectives set forth.

45. Considering that the objectives and priorities of the Government remained relevant to the needs of poor rural communities in Sergipe, some of the projects and priorities were carried over to this DPL. This decision was based on the volume of demand generated by the potential beneficiaries and direct evidence of pervasive, persistent deficits in basic infrastructure, productive employment, and income opportunities in all of the participating communities surveyed, and the need for cross-sector integration to accelerate and deepen poverty reduction. Despite the relevance, the design of a few Policy Actions did not fit neatly under the DPL investment, more appropriate for wide-scale reforms/actions, proving unable to reach the scale necessary for creating a positive impact in a short timeframe of this operation. 46. Investment Instrument and design of the DPL. The choice of a DPL and its design ensured increased capacity of the government and respective sectors by giving them access to rapid financing mechanism and political leverage necessary for the cross-sectoral reforms and actions in key areas of public administration. However, the above-mentioned inherited programs included in this DPL and the sectors responsible for their implementation, which started off with weaker implementation capacities, were strongly reliant on technical implementation support and proved to be somewhat unprepared for an implementation under a DPL operation. These programs, such as the Green Inclusive Growth and the Intensive Production System programs, would have benefited from a stronger and more engaged assistance in setting up the M&E framework and a more regular technical support/supervision for implementation inherent to Investment Project Financing (IPF).

5 Sergipe State Integrated Project: Rural Poverty (P110614) – Loan N. IBRD 75950 6 Rural Poverty Reduction Project - Sergipe (P074085) – Loan N. IBRD 76490

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47. These incongruences of the design with Policy Actions influenced the implementation negatively, preventing reaching the set out goals and making some of the accomplishments incomplete in their reach and sustainability. Despite this, the design helped further the important reform process and reaching most of the policy actions set out by the program. Fundamental reforms were implemented in the planning and finance sectors, important changes were made in tax collection modernization, some positive gains were accomplished in access of the population to social services, and needed performance-based management measures were adopted in the education sector. The major shortcoming remains in the latter two areas, while lack of results is still observed in tax collection. However, these areas require further monitoring for understanding the long-term impacts of the reforms. 3.2 Achievement of Program Development Objectives 48. The overall PDO of improving public sector management and expanding access to quality public services and economic opportunities for the extremely poor was successfully accomplished by the program. Policy Area 1 made important advances in public sector management, deepening the innovative management model and strengthening budget management within three specific policy actions as described below. Advances in quality public services and economic opportunities for the extremely poor and the promotion of socioeconomic development and inclusive growth were made within Policy Areas 2 and 3 in numerous actions implemented by respective sectors. The specific outcomes achieved under each Policy Areas are described below.

Policy Area 1 – Consolidating fiscal management and public sector innovations

49. Policy Area 1, aimed at consolidating fiscal management and public sector innovation, focused on three Policy Actions, as described below. They were measured by three Results Indicators (PDO #1, 2 and 3), two of which (PDO #1 and 2) were achieved. The achievements of this policy area as measured by these indicators as well as considering improvements in advancing the development objectives that exceeded the results measured by indicators, is considered to be Substantial, as explained below.

50. Policy Action 1: In order to improve the quality of government-citizen services, SEPLAG, in charge of this action, undertook a systematic survey of the CEACs and revision of the main processes to understand the roots of the problems, which included lack of standardization and efficiently, long waits, asides from poor quality of service provision. To tackle these issues, a complete computerization of the system was implemented to enable an online appointment management system, improved transparency and the standardization of processes across the state and customers. While the PDO #1, as targeted, was exceeded, reaching 100 percent of complaints of citizens responded in writing and with motivation, the accomplishments reflected by this indicator do not fully reflect the accomplishments of the policy as is explained in paragraph below.

51. Despite the poorly defined indicator, the results accomplished by SEPLAG in improving quality of citizen services and creating a client-centered model for service

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provision were substantial and sustainable. As a first step and as part of the PPA 2012-2015, SEPLAG implemented a pilot project in one of the CEACs to test out new processes paired with indicators, created based on the results of the surveys that included citizen´s opinions and government employee feedback. Pre- and Post-Evaluation surveys were applied to further fine-tune the processes. The results of this program created immediate improvements. Average waiting and service provision times improved, decreasing to an average of 15 minutes for waiting and less than 5 minutes for service provision. Additionally, a mobile unit was created to provide services to locations with greatest difficulties in access in order to reach the most vulnerable populations. 52. Policy Action 2 aimed to modernize key planning, budgeting, execution, and control processes through replacing the online management software with i-Gesp. The introduction of i-Gesp made it possible to access and cross-check reports from all of the state secretaries, streamline the process of preparing and sharing management reports, and allowing for control of budgets and execution never before possible. The implementing agency, SEFAZ, replaced its dysfunctional system and achieved improvements not only in the overall facility in the production of reports as expected from the indicator, but also, more importantly, in management of expenditure control, innovations in management control, strengthening of coordination between secretaries, streamline of authorizations, hiring management, bidding management, among other managerial activities inherent to SEFAZ. 53. Overall, this online management system dramatically improved the time-efficiency, predictability, and control of budget execution, which was reflected in numerous reports being produced and available for cross-review by the secretaries. The indicator of four reports produced automatically (PDO #2) was far surpassed by the implementing secretary and positive improvements carried over to all the other executing secretaries. Substantial amounts of resources were saved as a result of time-savings of human resources for producing reports and in time needed to locate information necessary in making important managerial decisions. In the case of the latter, easy access to information made its use in decision-making much more prominent across agencies, contributing to development of a culture of policy-making based on results. Another unexpected positive result of the process of modernization was the improvement in transparency and accountability.

54. Policy Action 3 aimed to contribute to efforts to increase revenue by the state by combating fiscal avoidance. GoS issued a decree to implement a virtual and integrated process for collection of tax arrears. In conjunction with the new law, the process of inspection was automated and modernized to allow for a faster turn-around and reaching out to a wider audience of the stock of tax avoiders. This process was not contemplated originally, but occurred as a necessary supplemental reform in order to meet the requirements of the indicator, resulting in tremendous time-savings and improvements in tax administration. 55. The original PDO indicator (PDO #3) of increasing the revenues collected from 0.43 to 0.52 from the tax arrears as a share of stock of tax arrears was not

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achieved. However, as per the evaluation of SEFAZ, the new system in place will very likely prevent tax avoidance in the future, asides from dramatically improving management efficiency. The reasons for not achieving the indicator have to do with the difficulty in recovering the old paper-based storage taxes as well as, more importantly, the option available to tax avoiders for refinancing that allows to pay 5% of the original fine over time, making immediate repayment somewhat less attractive. 56. Overall, GoS went to great lengths to decentralize and modernize its management model, institutionalize better budgetary controls, and increase citizen participation. While not all of the reforms achieved the expected levels of success, as was the case for recovering stock of tax arrears, important lessons were learned and opportunities to improve future efforts in this area were drawn from the operation. Furthermore, the reforms and new policies in place have created a foundation, upon which further improvements in the systems can be built in a more effective and efficient manner, given the new management tools and legal framework in place.

Policy Area 2 – Increasing access to better quality public services in health and education

57. Policy Area 2 that had as its main objective the increase in access to better quality public services in health and education, achieved three out of four Policy Actions as measured by indicators (PDO #4, 6 and 7) outlined in the DPL. The deficiencies in achieving PDO #5 were not indicative of a complete lack of improvements, but more so a poor choice and definition of the indicator as discussed in the section on monitoring and evaluation, asides from the choice of actions that could not show improvements in the short time-frame, given the type of financing instrument chosen for this operation. Thus, the achievements of this area are considered Substantial, based on 75% rate of accomplishment of the set out indicators as well as overall results reached for this portion of the PDO. 58. In the health sector, the Policy Action 4 contributed to systematically monitoring the improvements in maternal care through the implementation of the protocol for classification of patients according to levels of risk (Acolhimento com Classificação de Risco – ACCR). Its implementation was an important step in correcting deficiencies in the quality of service by actions that encourage for a more effective identification of pregnant women, prompt referral of high risk pregnancies, reduction in delays to obtaining test results or treatments, asides from an attempt to reduce the practice of Cesarean sections, which at rate its 60-70 percent rate in the state, is well above the 15 percent recommended by the World Health Organization.7 59. The results indicator (PDO #4) set out to measure Policy Action 5 aimed at increasing the number of maternity hospitals implementing the protocol for classification of admissions by risk from 1 to 3, to cover 75 percent of the SUS hospitals, was achieved. Specifically, the implementation has occurred in the high-risk

7World Health Organization (1985).Appropriate technology for birth. Lancet 326: 436-7.

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referral center, Maternidade Nossa Senhora de Lourdes in the capital of Aracaju, and in José Franco and São Vicente de Paula maternity hospitals. All the trainings and workshops associated with protocol implementation of staff were completed. This measure contributed to the inception of a work ethic based on results, the mapping out of mother´s route within the health system, asides from contributing to improvements in communication between sectors. However, given the long-term nature of the intervention, the impact of this action cannot be fully evaluated at the closing of the project.

60. The results indicator (PDO #5) that set out to reduce the rate of cesarean sections at the referral Maternity Hospital Nossa Senhora de Lourdes from 55.2 to 50.2 percent encountered difficulties in completion. The rate actually showed a slight increase to 57.5 percent during the period of intervention. An important impediment for advancing the development objective included the difficulty in access to hospitals in non-central locations, resulting in overcrowding due to over-referral of non-high risk cases. However, the result can also be attributed to the incorrect choice of a hospital selected for this policy action. Being the only high-risk referral hospital in the State, Nossa Senhora de Lourdes receives a high number of pregnancies with complications, i.e. those that have a higher probability of resulting in cesarean sections. Some of the improvements in the patient routing and referrals, achieved by the implementation of the first health policy action, could have actually increased the number of high-risk pregnancies reaching only high-risk facility in the State, which would in fact constitute a positive accomplishment.

61. Policy Action 6, in the education sector, focused on strengthening school management and learning outcomes for public schools. Policy Action 6 emphasized improvement in management through meritocracy and results-based framework in the public school system by replacing the previous political appointment of school directors with a merit-based participatory process. As a prior action, a decree establishing a new management system for the state-run schools was enacted by the Governor, defining a merit-based and participatory/democratic selection process for school directors. 62. The goal of reaching 40 percent (i.e. 151) of the 378 state-operated schools in selecting their directors based on merit and signing of school management agreements (PDO #6) was achieved, with 159 of the schools now part of this initiative. Despite the success of this action and the strong commitment from the government in enhancing meritocracy and management, some factors stand in the way of the sustainability of this program and require strengthening to assure continuity. They include competitiveness of future selective processes, improvements in the rigor and quality of the training programs for pre-selecting directors, improved cooperation with the unions that initially resisted the process, as well as increased incentive of participation of potential candidates, hampered somewhat by the lack of information as well as a law forbidding occupation of other positions while exercising the role of a director.

63. Policy Action 7 aimed to improve learning in municipal schools through increasing state technical support for the implementation of the federal Literacy at the Right Age Program (Programa Nacional de Alfabetização na Idade Certa – PNAIC). As a prior action, a legal administrative rule was issued and published,

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establishing guidelines for technical agreements between SEED and the municipal education systems for supporting, among other programs, the implementation of PNAIC, an integrated national program aimed at contributing to literacy in children in rural and urban areas. Within this new policy, SEED provided technical assistance and guidance to the municipalities participating in the PNAIC in order to guarantee that all municipal schools achieve the objective, as measured by annual assessments and external evaluations of all students graduating from 3rd year. 64. The goal of increasing the number of municipalities receiving technical assistance from the State of Sergipe in the implementation of PNAIC to 50 percent of municipalities (38 total) was exceeded, with 73 schools having received the assistance and become part of the program (PDO #7). However, in further discussions with the State, shortcomings were identified in this indicator and in its ability to measure the achievements of the PDO. While adherence to PNAIC improved coordination with the state to some degree, allowing for a more close-knit support of the municipal schools, qualitative improvements are difficult to assess in this short-term operation given their long-term nature, while additionally a difficulty exists in attributing such improvements to the support received from the state. Policy Area 3 – Promoting socioeconomic development and inclusive growth in the interior of the State

65. Socioeconomic development and inclusive growth in the State´s most remote and underserved areas were the goals contemplated under the third policy area, through the promotion of the use of environmentally sustainable agricultural practices, increased employment and income opportunities for the most vulnerable populations, as well as strengthening the social assistance system. A set of complementary reforms contemplated for this area included: (i) technical assistance targeted to small and medium-size producers and traditional communities, (ii) productive inclusion programs, and (iii) social protection policies. The achievements of this area focused on five Policy Actions as measured by the five indicators defined (PDO #8, 9, 10, 11 and 12) by this operation, four of which (PDO #8, 9, 11, and 12) were fully accomplished (3 of those surpassed their targets) are considered Substantial, as explained below.

66. Policy action #8, aimed at improving access to market and income growth, set out to organize production of family famers into dairy production clusters (Núcleos de Produção de Leite), as part of the Intensive Production System (Balde Cheio). GoS through its State Company for Water Resources and Irrigation (COHIDRO) provided support to rural producers with seed capital, technical assistance, certification of products and rural extension across selected producer chains, with the aim of enabling greater market participation, particularly in institutional niches such as the National School Feeding Program (Programa Nacional de Alimentação Escolar – PNAE), as well as private markets. The number of small producers included in the dairy production clusters and selling 90 percent of it to private and public markets increased from 3 to 30 producers, representing the accomplishment of the results indicator (PDO #8). All of the new participants received training and continue having ongoing assistance and continuous support to maintain the infrastructure and sales of their product. An additional

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improvement as a result of this policy action was the increase in the total production of milk among the program participants from 2096 liters in 2012 to 3010 liters in 2014.

67. While this program has brought positive improvements in environmentally sustainable agriculture practices and in doing so expanded economic opportunities to the extremely poor as set out in the PDO, the results are very modest as based on the absolute numbers of beneficiaries paired with the lack sustainability. In order to create an important positive outcome both for the poor and in green growth, more beneficiaries will need to be included in the program. The challenge of this lies in the limited funding available for the program and the labor-intensive ongoing training required to sustain the intervention.

68. To address sustainable agriculture and productive inclusion, two complementary Policy Actions (#9 and #10) were implemented. The first action was carried out by the State Company for Agriculture and Livestock Development (EMDAGRO) within the Agro-Ecological Production Program for inclusion of family famers. EMDAGRO provided technical assistance to train small agricultural producers in transitioning to sustainable and green practices in some of the most fragile ecosystems of the region with the aim of helping them overcome social instability in rural areas. The goal of increasing the number of small producers included in the program and linked to a Social Control Organization (Organizações de Controle Social) for the purpose of enabling direct sales to agro-ecological fairs and private and public markets (PDO #9) from 83 (5 women) to a 100 (15 women) producers was exceeded with 114 producers (out of them 44 women) currently included in the program. 69. The program shows great potential in providing alternative income solutions for most vulnerable groups of producers and can greatly contribute to improvements in Sergipe´s challenges of inclusion as well as green growth, if scaling of the program is made possible. However, sustainability of this program faces the same challenges as the Policy Action above as well as those inherent to the practice, such as the need for neighboring producers to turn to sustainable farming along with the extensive process of transition, requiring some initial financial losses. Additionally, deficiencies in M&E implementation hampered the ability to measure improvements in production and quantify impact of the program on inclusive growth.

70. The second action aimed at increasing employment and income opportunities for the most vulnerable people, especially seasonal orange and sugarcane production workers. The Secretariat of Social Assistance in coordination with the Secretary of Education joined efforts to improve employment opportunities of this group by providing certification to those already enrolled in the Sergipe´s income transfer program Mão Amiga, a cash transfer program for seasonal workers, in Sergipe Alfabetizado, a program aimed at reducing illiteracy in the most underserved and poor populations. 71. The program was an important step in enhancing the cash transfer program with a sustainability measure by contributing to the graduation of the populations of vulnerable workers benefitting from Mão Amiga, which had reached 7,673 families of

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sugarcane cutters and orange pickers (36 and 64 percent of the total, respectively) in 29 municipalities, thus reducing the burden of seasonal unemployment. While the goal of enrolling and certifying 565 (1/8 of which women) program participants in the literary program (PDO #10) was not fully accomplished, certifying only 241 participants (74 of them women), the establishment of the program serves as an important measure to graduate and enhance opportunities of future seasonal workers of Sergipe. Structural challenges in achieving this goal included difficulties in coordination with the federal government as well as delays in commencing the literacy program, which was undergoing some restructuring. On the participant side, the program faced the challenge of insufficient interest in the program due to the distance of the location of class, time-commitment, as well as incentives for realizing the intensive eight-month-long program.

72. To tackle social protection and prevention of gender-based violence, this operation included two Policy Actions (#11 and #12). Policy Action 11, implemented by the Secretary of Social Assistance in coordination with the Ministry of Social Development set out to improve the implementation of the federal program, Bolsa Família at the state level by strengthening active search of qualifying beneficiaries to be included in the CadÚnico. Asides from strengthening this federal program, the initiative was important in enhancing the use of this instrument by finding and qualifying those registered in the roster for other state and municipal level social programs. The goal of increasing the number of families that live on a monthly per capita income of less than R$70/month included on the roster from 39,582 to 41,561 families (PDO #11) was exceeded by 116%, reaching 48,396 families in 15 of the Sergipe´s poorest municipalities. This action not only assisted in finding more families that are now benefitting from federal, state and municipal social programs, but also contributed to improving the validity of the rosters through cross-checks and more active management of CadÚnico at the state level.

73. The Policy Action 12 had an aim of scaling up state and municipal government support for protection of women threatened by violence and vulnerability. In a strategy of decentralization for women´s protection, the Special State Secretariat of Women created in 2011, focused on four of the most affected regions within the interior of the State, by expanding its network of assistance including the creation of seven regional centers, Specialized Regional Centers for Victims of Domestic Violence (Centros Regionalizados Especializados no Atendimento à Mulher Vítima de Violência doméstica - CREAMs), especially created for women - victims of violence. The centers were an addition to the already existing expensive network of Social Assistance Reference Centers (CRAS), but had the specific aim of having staff especially trained and sensitized to assist in attending to women victim´s psychological, legal, enforcement, and medical needs, to address the root cause of the hesitance of seeking out help by women victims of violence. 74. The process of decentralization was essential in creating awareness in the regions where persisting prejudice and ignorance contribute to high incidence and lack of interventions of gender-based violence. The goal to increasing the number of women in situation of violence attended by the network by 50% (PDO #12) was over-exceeded, with 7630 women benefiting from the program at the end of the program as opposed to 3985 in the beginning. As a results of the campaign that was launched within

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the framework of the program, the number of calls to the call centers increased by 36% and cases of gender-based violence increased by 52% during the same period. While efforts need to be made to interpret the reasons behind these increases to be able to attribute it to the program and discard the possibility of actual increases in violence, the initial results of the program show widespread benefits to this very vulnerable group through an increase in demand by victims and stronger awareness and effective intervention on the part of the municipal and state authorities.

3.3 Justification of Overall Outcome Rating Rating: Moderately Satisfactory 75. The outcome of the project is rated as Moderately Satisfactory based on the modest overall relevance and substantial achievements under policy areas 1- 3. The objective of this operation as expressed by its PDO of improving public sector management and expanding access to quality public services and economic opportunities for the extremely poor in the State of Sergipe was achieved. As described in the sections above, the State´s reforms of its management model were consolidated and in large part become part of the institutional structure of the administration of each respective sector. Sector policy management underwent important regulatory and institutional reforms, with key results achieved in improving quality and access of services for some vulnerable populations, especially in governance, transparency, and accountability in provision of public services.

76. Despite these advances, some of the shortcomings present in the preparation, design, and implementation of the DPL served as obstacles to reaching the set out outcomes and the PDO. Failure to incorporate special provisions for correcting the uneven levels of capacity present in the State´s implementing agencies during preparation partially compromised the uniformity of the results. Some outcomes lacked scale and sustainability due to flaws in design, which while serving well for wide-scale actions and leveraging the reform process, did not take into account the needs of smaller projects, requiring stronger technical support. As for the results framework, it sometimes placed a stronger focus on compliance with less important indicators instead of attaining the outcomes in overall development. 77. Additionally, despite the advances made within the framework of this DPL, there are some challenges in attributing all of the results to this operation. This is attributable to the combination of a short timeframe of the project paired with some Policy Areas that required long-term implementation in order to show positive changes. Moreover, some of the selected programs were not in implementation and took a long time before launching. Therefore, some of the reforms and actions carried out during the operation have not yet registered their transformational effects and cannot yet be fully evaluated. Difficulties are further exacerbated by the selection of indicators that in some cases failed to show impact on PDO within the timeframe of implementation of the project.

78. The need for monitoring and evaluation created by adherence to the operation, served as a catalyst for improving the culture of policy-making based on results and

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best practices. Actions that did not generate the desired results are being revised and will be addressed in the future operation, with alternative solutions developed to improve results. Furthermore, lessons learned from the experiences of numerous pilot projects implemented in this operation were taken into account and will be incorporated for further improvements of sector policies. This process of learning is a critical element in sustained and continued improvements in the State´s capacity for strengthening management and effectively reaching its most vulnerable groups.

3.4 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 79. The DPL emphasized social inclusion and poverty reduction through inclusive growth in most of the policy actions developed under this operation. Some of the most vulnerable groups and regions were targeted in actions that included: (i) support for the smallest and thus vulnerable producers of dairy and agriculture (PDO #8 and 9) by equipping them with tools for growth and access to the market; (ii) support to seasonal cane-sugar and orange pickers in providing them with skill (alphabetization) and extra resources necessary to have access to other sources of income (PDO #10); (iii) active inclusion of the poorest and most remote populations into the CadÚnico roster (PDO #11) in order to qualify them for the cash-distribution schemes as well as improve their access to other state and municipal social program; and (iv) providing mobile CEAC units to remote populations under PDO 4 and supporting municipal schools, where most of the poor populations are concentrated (PDO #7). 80. Gender aspects were addressed directly within the health and social protection policy actions by strengthening maternal health (PDO #4) as well as creating awareness and protection of women in situations of violence (PDO #12). Indirectly, special care was taken to include women in many of the productive inclusion policy actions that could have the potential male bias. This emphasis on women in initiatives with small agricultural producer and seasonal workers not only prevented the bias completely, by including the targeted percentage of women, but also contributed to improvements in the sustainability of some of the programs, such as was in the case of green growth policy action, given the documented advantages of empowering women with financial and technical tools to practice sustainable agriculture.

(b) Institutional Change/Strengthening 81. The operation has contributed to the strengthening of institutional capacity of the GoS, especially through modernization of key processes of planning, budgeting, and control functions with the new information system. Some of the reforms, such as automation and computerization of managerial reports improved not only the institutional efficiency and time savings, but allowed for greater transparency and evidence-based policy-making through access to information and reports, not readily available before. In the case of tax administration, the computerization of the system improved the

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responsiveness of the system to the problem of accumulating arrears by making notifications automatic and timely.

82. Furthermore, unintended important shifts were made in the overall nature of service provision of the executing agencies from a top-down political approach to that of management with accountability, customer-centeredness, and focus on results. For example, revisions of attention of citizen services with the new management system in Policy Action 1 helped make the system more transparent, giving it more customer-centered approach. Additionally, improvement in monitoring occurred as the executing agencies carrying out the reforms were faced with the need to evaluate the baseline, monitor the results, and achieve the targets established under the program through the adoption of performance indicators in many places for the first time. This is an important step for the state in moving towards a results-focused policy framework and building upon lessons learned. (c) Other Unintended Outcomes and Impacts (positive or negative, if any) N/A

3.5 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops N/A

4. Assessment of Risk to Development Outcome Rating: Moderate 83. The risk to the achieved outcome of deepening Sergipe´s policy action for inclusive growth is considered to be moderate for a number of reasons. First, the model is now embedded in the State’s institutional structure and its processes, reaching a high level of integration and implementation. This is strengthened by the passing and institutionalization of prior action decrees and policies, making it unlikely that changes in government administration might undo the effects achieved in this DPL. Executing agencies and staff have shown commitment to the implemented policies and include a experienced team that participated directly in the implementation and are now there to assist in giving continuity to the programs. Furthermore, the policy actions fit seamlessly into state´s pluriannual investment plans and aligned with many of the federal requirements and programs, allowing for widespread support at all the levels of the government. 84. The participatory process of planning and the follow-up reforms were launched and supported by the highest level of government. The elections that took place in 2014 had posed a slight risk of changes in policy priorities, which would potentially move the State away from the previous reform process and/or diminish Sergipe´s management model. However, while some of the policy priorities might have changed, many of the institutional mechanisms, which are now well entrenched in the State´s structure, will be used to implement these changes by the incumbent government. It is expected that this and the following administrations will follow its predecessor’s priorities and continue with the reform processes.

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5. Assessment of Bank and Borrower Performance

5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Satisfactory

85. This operation was designed within the overarching context of the Development Partnership Series. The strategy to implement overarching policy reforms tackling development and inclusion was devised by the Government in coordination with the Bank based on long-term participatory planning processes carried out by the State over the past years and provided the basis for the design of this operation. This was a very timely operation, properly conceived with reasonable Prior Actions, objectives and desired outcomes selected within the overarching context of the Sergipe´s development through inclusion process.

86. Fiscal position of the State of Sergipe was an issue at entry and underwent important adjustments to satisfy the Law of Fiscal Responsibility (as described in more detail in section 2.1). Previous operations had been suspended because of fiscal non-compliance with funds withheld, preventing project from reaching completion. Prior to signing the DPL, the fiscal position was recovered and was considered satisfactory. Despite this, expenditures were considered high and continued under scrutiny throughout the implementation of the project.

87. Another area, that required additional caution, proved to be the design of the results framework and the definition of Indicators. Some had technical design flaws, such as the inability to fully measure results, tenuous links between Policy Areas and Results Indicators, and focus on processes rather than results (See section 2.3 for a detailed description). As a result, the link between the results framework and the PDO had shortcomings with several indicators not adequately measuring the desired PDO outcome. (b) Quality of Supervision Rating: Satisfactory 88. Supervision was carried out with much care given the first time ever use of a DPL instrument in Sergipe. Close communication between State officials and Bank staff facilitated the supervision. Asides from formal supervision missions, the Bank team was in continual contact with the State, to advise on issues and problems as they developed.

89. Despite the proximity with the client and the regular process of supervision, a more systematic approach could have helped avoid some of the shortcomings in the outcomes. This operation would have benefited from a tighter involvement in supervision with each of the implementing agencies used to correct the bottlenecks in implementation and M&E as they appeared. The lack of this approach can primarily be attributed to the short-term nature of the program as well as the type of instrument used for financing it.

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(c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory 90. Overall Bank performance is rated as Moderately Satisfactory as the overall project design and implementation support resulted in the desired outcome of the operation, contributing to a strong and sustainable collaboration with the State of Sergipe and assisting GoS in deepening its reform processes, while enhancing the results of execution of management strengthening and development policy actions. However, based on the fact that there were some shortcomings discussed above, as reflected in the overall Moderately Satisfactory rating for outcome, the overall Bank performance is rated as Moderately Satisfactory.

5.2 Borrower Performance (a) Government Performance Rating: Moderately Satisfactory 91. GoS was fully committed to this operation. The Government of Sergipe was and remains fully committed to the continuous reform process supported under this operation within the Sergipe´s Inclusive Development Program. The use of the participatory process in establishing the development priorities with stakeholders from all the levels of government and civil society guaranteed commitment, ownership and improved sustainability. 92. The State, however, would benefit from further improvements in technical and institutional capacity for strengthening implementation. The technical capacity of the government staff while overall of high quality, displayed certain degree of non-uniformity in its capacity for implementation, especially in the use of internal M&E system. Ascertaining uniform technical capacity-building across sectors would enhance the achievement of full impact in future operations and policy reforms. The newly implanted intergovernmental implementation and coordination mechanisms embedded in the system will prove to be highly beneficial in the enhancement of the institutional framework, which in turn will facilitate an efficient implementation process and timely and technically-sound resolution of arising implementation issues. 93. Most of the Policy Actions and some of the Results Indicators were part of the State’s development agenda, enjoying high ownership and political support. Government overachieved some of the indicators that were well defined and in areas, where it had full control. However, others indicators did not align neatly with the Government’s true objectives and /or failed to capture the true aim of the policy, thus suffering some impediments in implementation. While design flaws of some indicators were recognized by the State, little was done to correct and mitigate these mistakes within the first DPL given the unfamiliarity of the Government with this framework. Given the in-depth discussions and drawing lessons learned from this operation, the Bank will either adjust the type of lending to assure technical assistance for improved implementation capacity or select actions/indicators that are within the capacity of the government agencies to implement and measure on their own.

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(b) Implementing Agency or Agencies Performance Rating: Satisfactory 94. The coordinating secretary, i.e. SEPLAG, was highly committed to the implementation of this operation, assuring excellent communication and coordination during preparation and implementation. The liaison with the participating secretaries and the provision of information to Bank counterparts was timely and of high quality. While all of the implementing agencies had strong commitment to implementation and most have done an excellent job of implementing this operation, some secretariats exhibited deficiencies in the use of their internal M&E system for follow-up and early recognition of potential implementation issues, as discussed in the section above.

(c) Justification of Rating for Overall Borrower Performance Rating: Moderately Satisfactory 95. The numerous positive outcomes of this operation are a result of strong commitment of government (especially at the highest levels) to the reform process, the technical capacity of the government staff, and the continuous effective collaboration with the Bank team. However, the results framework inconsistencies, along with some difficulties in the processes of implementation as well as the inability to accurately evaluate the results of actions of the project, are some of the weak points that need to be addressed in future operations. Hence, overall Borrower performance is rated as Moderately Satisfactory.

6. Lessons Learned 96. Reform processes require a long-term commitment and have a steep learning curve, especially at their onset. As the current operation shows, the process of reform is ongoing and evolving over time, requiring constant adaptation and refinement. Sergipe, as one of the Northeastern Brazilian states, has a history of management deficiencies and resulting setbacks in accountability and quality of services provided to citizens. The participatory approach in identifying the long-standing problem and defining priorities and actions with the involvement of all stake-holders involved has initiated an important transformation process within the State, while the DPL has introduced new concepts of results-based policy, M&E, as well as accountability and ownership. There are important lessons to be learned, as described below, from Sergipe´s experience that will doubtless be of use to the next administrations as well as other neighboring governments. Some of the policy actions using latest state-of-the-art best practices or management tools, such as those used by the Finance and Planning Secretaries, have produced unexpected leaps, while other areas, such as the Health and Education, will require deeper scrutiny and further planning and improvements for strengthening quality of services.

97. Identifying actions and results indicators for reforms is a challenge. Great care must be taken in selecting actions that can be more directly attributable to the operation as well as in technical design of the Results Framework and its implementation. Despite the fact that this DPL was designed by experienced Bank and State officials, some actions

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seem to reflect more the overall performance of the state, rather than a direct attribution of the DPL. Also, some of the Results Indicators included technical flaws, requiring longer-term horizons for improved measurement, and/or focused on processed rather than on results, compromising their ability to measure real impact of policy actions on development (see section 2.3 above for a more detailed explanation).

98. The experience of the State of Sergipe indicates that there is no unique template of processes and institutions for a successful management model. The iterative application of the monitoring system led to considerable adjustments. Supporting a client with a careful attention to accurately defining the priorities identified by the implementing agencies at preparation as well as providing technical assistance in setting up a monitoring framework will be critical in assisting the state in making further progress in strengthening its management and quality service provision models. Long-term partnership between the state and Bank will allow for continued collaboration, and mutual learning and could significantly contribute to the success of the reform process. 99. Actions that depend on the coordination with other levels of the government require special attention. Sergipe´s DPL highlighted the need to exercise additional care in identifying risks in delays associated with the coordination, approvals, and other bureaucratic issues associated with the engagement of agencies from other levels of the government, not directly involved in the implementation of the program. One suggestion to avoid bottlenecks and delays in coordination would be to reinforce and/or sign agreements between the state and other levels of government prior to the signing of the program, or, alternatively, to identify alternative courses of action upon materialization of the risks.

100. Replication to other States at similar development level. Many of the Brazilian northwestern states face similar issues in management deficiencies and provision of quality services, especially for vulnerable populations. This is especially the case in the Health and Education sectors, where strict adherence to national models and/or policies creates inflexibility and inability of management to efficiently respond to the challenges of the local reality. Some of them can draw important lessons on how to implement similar reforms, especially with successful policies such as the management program for improvement of quality of government-citizen services or the virtual and integrated process for the collection of tax arrears, which constitutes an innovation in the field of combating tax evasion. The challenge will be for the Bank to find an appropriate manner to disseminate the case of Sergipe more broadly and replicate this experience effectively elsewhere, taking into account the dissimilarities between the states as they relate to size, economic profile and population.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/Implementing agencies N/A (b) Co-financiers N/A

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(c) Other partners and stakeholders N/A

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Annex 1. Bank Lending and Implementation Support / Supervision Processes (a) Task Team members

Names Title Unit Responsibility/

Specialty Lending Tania Dmytraczenko Senior Economist GHNDR Team Leader Leandro Oliveira Costa Economist GEDDR Team Member Ezau Pontes Senior Health Specialist GHNDR Team Member

Daniela Pena De Lima Senior Operations Officer

GHNDR Team Member

Gunars Platais Senior Environmental Economist GENDR Team Member Maria de Fatima de Sousa Amazonas

Senior Rural Development Specialist

GFADR Team Member

Rafael Chelles Barroso Senior Economist GMFDREconomic and Financial Analysis

Eduardo Franca De Souza Financial Management Specialist Financial Mgt. Tatiana Cristina O. de Abreu Souza

Finance Officer WFALN Disbursement

Patricia Rodrigues de Melo

Finance Analyst WFALN Disbursement

Alberto Coelho Gomes Costa Senior Social Development Speciallist

GSURR Team Member

Diego Arias Carballo Senior Agriculture Economist GFADR Team Member Julia Conter Ribeiro Senior Finance Assistant WFALN Disbursement Daniel Alvarez Estrada Sr Public Sector Mgmt. Specialist GGODR Team Member Magnus Lindelow Practice Manager Mariana Margarita Montiel Senior Counsel LEGLE Lawyer

Joseph Kizito Mubiru Lead Financial Management Specialist

GGODR Financial Mgt.

Marize De Fatima Santos Program Assistant GHNDR Team Member Angela Nieves Marques Porto Consultant Estela Maria Souza Costa Neves

Consultant

Jose M. Rodriguez Alvarez Consultant Maria Madalena dos Santos Consultant Supervision/ICR Daniel Dulitzky Practice Manager GHNDR GP Manager Tania Dmytraczenko Senior Economist GHNDR Team Leader Daniela Pena De Lima Senior Operations Officer GHNDR Quality Team Ezau Pontes Senior Health Specialist GHNDR ICR Team Leader Leandro Oliveira Costa Economist GEDDR Team Member Daniel Alvarez Estrada Sr Public Sector Mgmt. Spec. GGODR Team Member Diego Arias Carballo Senior Agriculture Economist GFADR Team Member

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Maria de Fatima de Sousa Amazonas

Senior Rural Development Specialist

GFADR Team Member

Luiza Guaraciaba Program Assistant LCC5C Team Member Renata Pereira de Mello Team Assistant LCC5C Team Member Isabela Bablumian Consultant ICR Author Jin Woo Chung Consultant (b) Staff Time and Cost

Stage Staff Time and Cost (Bank Budget Only)

No. of staff weeks USD Thousands (including travel and consultant costs)

Lending

FY12 31.31 172,719.71 FY13 36.38 174,716.13

Total: 67.69 347,435.84 Supervision/ICR

FY14 18.68 111,804.95 FY15 9.94 50,406.09 FY16 2.85 8,906.82

Total: 31.47 171,117.86

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Annex 2. Beneficiary Survey Results N/A

Annex 3. Stakeholder Workshop Report and Results N/A

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Annex 4. Summary of Borrower's ICR and/or Comments on Draft ICR 1. This Annex summarizes the full version of the Borrower’s Completion Report which was made available to the Bank on February 27, 2015. The full version (in Portuguese) can be accessed online. 2. The Borrower’s report is divided into four sections. The first section provides a brief introduction to the project and its context. The second section presents the policies and prior actions supported by the operation. Subsequently, the third section deals with the implementation of the operation and presents the results from the DPL by presenting achievements in the monitored areas, including a detailed description of the results and targets, as well as the reasons for compliance and non-compliance of the goals. The results show a significant improvement of most of the indicators monitored. With regard to the observed improvements, it is highlighted that no evidence exists that links the improvement of the indicators with the operation. However, it is believed that the World Bank’s support had a positive impact on the performance of the indicators monitored. The last section provides the Borrower’s conclusion highlighting important outcomes in terms of advancing social development in Sergipe and of delivering more inclusive and transparent public services.

A – ACTIONS CARRIED OUT The Development Policy Loan (DPL) covered three policy areas: (i) consolidation of fiscal management and public management innovation; (ii) promotion of improved access and quality of public services; and (iii) promotion of socio-economic development with inclusive growth. The IBRD loan supported the following specific goals designed for the three areas: Policy 1 - Consolidation of fiscal management and innovation in public management

1.1 To improve the quality of services provided to citizens Introduction of the “One Step” (Guichê Único) model to cater to all the requests by members of the public for the services available at each of the Citizens Service Centers (CEACs). The main idea of this system is to simplify and standardize the various processes in order to save time both for clients and officials. Despite the centralization of the services in a single environment, the various services delivered in the CEACs were previously split between different “windows” according to the type of service required. This meant that members of the public had to present themselves at a number of different windows depending on the particular service they required. The implementation of the “One Stop” system using single windows and single access codes speeded up customer service and has proved to be user-friendly, saving time and inconvenient waiting. While to date the system has been implemented only in the Mobile CEAC, it is planned to deploy it also in the Shopping RioMar CEAC in 2015. 1.2. To modernize key planning, budgeting, execution and control processes

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Deployment of management reports in the i-Gesp was a very important milestone in the recent process aimed at modernizing the State of Sergipe´s public expenditure management procedures. This IT solution, focused on State Public Management, has provided greater agility, flexibility, integration, control, transparency and quality to the various procedures. The provision of management reports has been carried out gradually, but consistently, and the system has proved to be reliable. Over 15 reports have been made available and new modules are now in operation, such as the Contracts Management Module. In 2015 this system will be fully adapted to the new public accounting scheme. 1.3. To increase revenues by combating tax evasion The deployment of tax arrears collection instruments to increase revenue: the introduction of the State Register of Unpaid Credits (the “State CADIN”), registration of debtors in the SERASA and the process for outstanding debt virtualization all aim to increase the State's ability to quickly recover unpaid taxes, and also encourage timely settlement of future voluntary payments. The projects are on course and fall within the implementation schedule. However, despite good results, it is difficult to measure the effectiveness of the scheme due to the existence of the REFIS Tax Recovery Program. During the project deployment period there was a REFIS, and a further one is expected during the current Financial Year. The adoption of measures to recover arrears of tax prior to the launch of the collection instruments (actions of preventive collection), as well as the arrears already recovered at the administrative stage, help to reduce the State´s stock of outstanding debt due to the reduced number of new inscriptions. The development, with PROMOFAZ resources, of the Tax Credit with the Possibility of Recovery Classification System, planned to be introduced in 2015, will also contribute to better collection management.

Policy 2 – Promotion of improved access and quality of public services 2.1. To improve the quality of services of high risk maternal/newborn health care, in response to a major cause of maternal mortality Implementation of the maternal and newborn health program, the Rede Cegonha (Stork Network), seeks to reduce the caesarean section rates at Our Lady of Lourdes Maternity Clinic. This program, designed to upgrade and improve maternal/newborn health care, involves actions ranging from pregnant women being attended at a Family Health Clinic to delivery services performed in maternity hospitals for those with a risk rating. This program also seeks to encourage: (i) family presence at time of delivery; (ii) natural childbirth; (iii) breastfeeding; and (iv) donations of milk to the “milk bank”. As a result of the actions implemented, three State-managed maternity hospitals adhered to the risk classification admissions protocol. Risk Classification for Admittance (ACCR) met the target for this indicator in December 2013.

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In addition, the State Government signed a Public Action Contract (CAP) with Sergipe municipalities and the Federal Government (the Union) to reorganize and define SUS operations at the regional level. This involves all the federative entities (States + the Federal District) being responsible for their own accountability, for decentralization of care and for setting goals to attain health indicators. 2.2. To improve the management of the schools network in the State of Sergipe Selection of school principals by merit: with the aim of scaling up school management policy, the State Government established a new system for selecting State system school managers based on merit, taking into account training, planning, target-setting and consultative processes. Two other instruments have been implemented to improve school management in the State: (i) the signing of a Management Term of Commitment (the principal to be responsible for establishing a set of educational goals and actions as defined and agreed between the network and the individual schools); and (ii) an Index Guide (Índice Guia) to establish monitoring and evaluation procedures for the different facets of school activity based on the systematic tracking of daily school routines and their outcomes. By December 2013, the State Government had succeeded in exceeding the planned target (151 schools). 159 State schools possessed school principals selected under the new merit system who had signed the relevant terms of commitment. 2.3. To improve primary school education in the municipal networks State Government technical support for the implementation of the National Literacy at the Right Age Program (PNAIC) in the municipalities: The PNAIC is a comprehensive program designed to teach the Portuguese language and mathematics to students up to the 3rd year of primary (elementary) school, and to all children attending municipal and state schools in Brazil. This program consists of a number of different actions and teaching materials that contribute to literacy training in two ways: (i) program management is shared between the Federal Government, States and municipalities; and (ii) the students´ right to learn and develop is assessed on the basis of annual appraisals. Given the weakness of the municipalities in the education sphere, the partnership between State and municipality also seeks to improve educational performance through the use of new teaching tools. The State is responsible for coordinating the program and for providing technical support and assistance to municipalities to enable them to implement the PNAIC in Sergipe. By 2013 the State Government had provided technical support for PNAIC implementation in 73 municipalities, thus exceeding the planned target of 38 municipalities and, as a result, contributing to improving learning opportunities in primary schools in the Sergipe municipalities.

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Policy 3 – To promote socio-economic development together with inclusive growth 3.1. To strengthen the milk and dairy products production chain by focusing on family farming The inclusion of family farmers in milk production facilities. Social inclusion based on strengthening the milk production chain in the semi - arid zone of the State has involved improving the organization of production. This was done by creating intensive milk production centers for family farmers, as well as by improving the products´sanitary conditions. Sergipe State is replicating the Balde Cheio (Full Bucket) production model involving intensive milk production, to other organizations, with fairly satisfactory results. The expansion of the model, which seeks to place small farmer milk products in the formal market, thereby increasing employment and income in these communities, calls for intensive training and the structuring of a new model of organized production. The efforts of the State Government to apply the intensive milk production system based on the Balde Cheio model led to the establishment, by the end of 2013, of 30 production units in the Milk Production Center framework. 3.2. To promote the use of environmentally sustainable agricultural practices ("green growth") An increased number of small producers participating in the Agroecological Production Program: the organic farming methods seek inter alia to ensure economic and ecological sustainability, to maximize social benefits and reduce dependency on non-renewable energy sources. The increase in the number of small producers, through Social Control Organizations (OCS) in this growing product market, produces a number of benefits: to ability to take advantage of the business opportunity to include low-income workers; to train technicians and farmers in organic production systems; to improve environmental quality and the preservation of natural resources; to broaden the marketing opportunities for organic products; and, finally, to produce better household incomes for producers, and ensure food security for consumers. With the aim of promoting the use of environmentally friendly farming practices, the State of Sergipe is currently developing training and knowledge-outreach activities in this area for small producers through the Agroecological Production Program. By the end of 2013 the State had 114 producers participating in the Program and directly marketing their products. This exceeded the target of 100 producers forecast in the DPL. 3.3. Expanding job and income opportunities for the socioeconomically vulnerable population (seasonal sugarcane workers and orange pickers)

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Increased number of illiterate workers in the Helping Hand Program (Programa Mão Amiga) enrolled in the Sergipe Literacy Program. One of the main production inclusion initiatives of the State government in the rural area has been the Helping Hand Program. This aims to pursue measures to alleviate the effects of seasonal unemployment due to the lack of work during the dry season for sugarcane workers and orange pickers. The Program has led to income generation, provision of food support, skills development and improved quality of life for the affected population. The Helping Hand Program provides an allowance of R$190.00 during the four dry months of the year. In counterpart the worker or a member of his/her family is required to attend vocational training courses and / or citizenship, health and agriculture class modules. The inclusion of illiterate rural workers covered by the Helping Hand Program in the State Literacy Program represents a further step towards breaking the existing poverty cycle in the poorest regions of Sergipe. 3.4. To strengthen the Unified Social Assistance System (SUAS) Increasing the number of families included in the Unified Register (CadÚnico). The project aims to provide municipal co-financing under the Unified Social Assistance System (SUAS) to strengthen the activities concerned with the "active search" of people that are not included in the CadÚnico. The decision of the State Government to co-finance this initiative highlights the progress made in strengthening such actions at the municipal level by making it possible to transfer funds from the State Social Assistance Fund (FEAS) to the Municipal Social Welfare Fund (FMAS) for co-financing improvements in management, services, programs, projects and benefits (e.g. resulting from the “Active Search” scheme). By supporting "Active Search" and other initiatives (including municipal co-financing), the State Government succeeded by the end of 2013 in expanding the number of families living in the 15 poorest municipalities of the state and included in the CadÚnico to 48,396, thus exceeding the estimated target of 41,561 families. 3.5. To expand access of women in situations of violence to protection and prevention programs and better quality care Increased number of women victims of violence assisted by the State network. In July 2009, the State of Sergipe joined the National Pact to Combat Violence against Women, which aims to consolidate the National Policy to Combat Violence against Women through the implementation of comprehensive public policies throughout the entire national territory. In line with the Pact´s guidelines, Sergipe has made efforts to expand the Women´s Referral Care Centers network by decentralizing specialized care to the municipalities. These centers provide services for women in situations of violence or vulnerability and serve as shelters. They also provide specialized investigations, as well as services to bring offenders to account and offer them rehabilitation.

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The network has expanded in Sergipe and in 2013 catered for 7,630 women, surpassing the estimated goal of 7,000 care services provided. B - RESULTS ACHIEVED FROM THE DPL PROGRAM ACTIONS 75% of the targets agreed with the World Bank were achieved. Only 25% of the expected results of the DPL I have not been reached. These relate to the following:

(a) the ratio between the income from outstanding debt recoveries during the year vis-á-vis the total stock of outstanding debt (prior action 1.3);

(b) the caesarean section rate in the Our Lady of Lourdes Maternity Clinic, according to the guidelines of Government Directive 3477/1998 (prior action 2.a.1); and

(c) the number of seasonal workers benefiting from the Helping Hand Program accepted in the Sergipe Literacy Program (prior action 3.b.2).

REASONS FOR NON-COMPLIANCE WITH 25% OF THE GOALS

►Deployment of Tax Arrears Collection Instruments to increase revenue. The reason why the target of the indicator of prior action 1.3 was not reached was due to the National Council of Finance Secretaries (CONFAZ) authorizing the REFIS Fiscal Recovery Program in 2013. This program allows fines and the tax debt interest to be waived, thus compromising the ability of the State to recover debts in accordance with regular procedures. The indicator description provides for the recovery of the amounts recorded as outstanding debt, minus the REFIS amounts.

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►Deployment of the Rede Cegonha to reduce the caesarean section rate in Our Lady of Lourdes Maternity Hospital The target for reducing the caesarean section operations rate at Our Lady of Lourdes Maternity Hospital (MNSL) was not reached due to a number of factors, including: (i) difficulty of access and/or care in hospitals in other locations; (ii) increased demand due to non-high risk pregnant women being referred to the MNSL; and (iii) the shortages of medical staff resulting in maternity shifts in the network being cancelled.

The latter situation (a common structural problem in Sergipe´s health establishment) is tackled by sending pregnant women who could be treated in normal maternity clinics to “high-risk” reference hospitals. As a result, the MNSL suffers from issues of overcrowding and is unable to monitor labor systematically, thus leading to caesarian sections being performed.

The assessment made it possible to define a number of recommendations to be implemented in Sergipe such as: (i) awareness-raising of professional medical staff at the MNSL; (ii) compliance with the official reference flow procedures for referring pregnant women; and (iii) monitoring implementation of the above recommendations and the effectiveness of the medical personnel.

We are aware that the choice of caesarean delivery is a cultural issue linked to purchasing power. The percentage of caesarian births in Sergipe (37% in 2013) is lower than the national average (55.6% in 2012). A study of the historical series however reveals an upward trend in the State, in line with the national figures.

►Increased number of illiterate workers benefiting from the Helping Hand Program and approved in the Sergipe Literacy Program According to the State Government, only 42% of the agreed DPL target for the Helping Hand Program (literacy training for beneficiaries of the Literate Sergipe Program) indicator was reached.

The failure to reach the agreed target was due to a number of problems in FY 2013. The Sergipe Literacy and Brazil Literacy programs underwent a series of changes in their scope of action which ruled out any remedial steps that could be taken to achieve our objective.

The target was missed due partly to the following:

The delay in starting the Literate Sergipe Program (SEED-SE). Training activities were due to commence in April 2013 but were delayed until September 2013 due to various problems related to the bidding processes;

The list supplied by the State Secretariat of Inclusion, Social Welfare and Development (SEIDES) to the Sergipe Literacy Program contained the names of several workers who were already enrolled in other modules of the Sergipe Program, which ruled out their enrollment in the Brazil Literacy Program (SBA);

Workers residing in places of difficult access where Sergipe Literacy Program groups were non-existent;

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Workers spread out thinly in various regions of the state made it difficult, in some cases, to form viable groups of trainees;

Orange pickers migrated to other municipalities or to other jobs when they were unemployed. Most of these workers in fact possessed official work documents (carteira assinada) and worked in different farms or smallholdings in the same municipality;

The difficulty of attending classes regularly during the cane-cutting and orange picking season.

Given the above problems, SEIDES (jointly with SEED) is reshaping the program in order to attract sugarcane workers and orange pickers to literacy classes. C – CONCLUSION The projects agreed under the Development Policies for the State of Sergipe Program with the International Bank for Reconstruction and Development (IBRD), using the Development Policy Loan (DPL) modality, achieved important outcomes in terms of advancing social development in Sergipe and of delivering more inclusive and transparent public services.

Goals Outcome Potential Impacts

1. Consolidation of Fiscal Management and Innovations in Public Management

1.1 To improve the quality of services provided to citizens

- To increase the percentage of responses in writing (using encouraging language) to complaints by members of the public about the services received

Baseline (October 2011): 15% of complaints answered in writing using encouraging language.

Target (December 2013): 90% of the complaints responded to answered in writing using encouraging language.

Result evaluation: 100% (TARGET MET)

- Greater transparency in customer care. - Enhanced customer satisfaction

1.2 To modernize key planning, budgeting, execution and control

procedures

- To reduce preparation times of management reports

Baseline (December 2010): reports unavailable in the previous system (SAFIC)

Target (December 2013): 4 reports issued immediately (Integrated Public Management System i-Gesp)

Result evaluation: 4 reports issued immediately (TARGET MET)

- More agility in obtaining and analyzing budgetary and financial information.

- Reduced budget and financial operational costs.

- Greater reliability of data in the unified system.

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1.3 To increase revenues by combating tax evasion

- To increase the ratio of revenues from the recovery of outstanding debt during the year vis-á-vis the total stock of outstanding debt.

Baseline (December 2011): 0.43%

Target (Financial Year 2013): 0.52%

Result evaluation: 0.39% (TARGET NOT REACHED )

- Positive impact on revenue recovery. - Enhanced taxation equality

Policy 2. To promote improved access and quality of public services

Health

2.a.To improve the quality of maternal/child care services for high-risk pregnant women

- To increase the number of hospitals that admit patients according to the risk classification protocol (Risk Rated Admittance - ACCR) Baseline (December/2011):1 Target (December/2013): 3 (75% of the State-managed maternity clinics were operating normally in 2013)

Result evaluation: 3 hospitals implementing the ACCR Protocol (TARGET MET)

-Expansion of specialized services, with the inclusion of patients not previously attended -Positive impacts expected regarding the quality of life of high-risk mothers and newborns - Reduction of deaths attributed to high-risk pregnancies

- To reduce the rate of Caesarean sections in Our Lady of Lourdes Maternity Hospital, according to the guidelines set forth in Government Directive 3,477 / 1998 Baseline (December 2011): 55.2% Target (December 2013): 50.2% Result evaluation: 57.46% (TARGET NOT MET)

Education

2.b.1. To improve management in the schools belonging to the State of Sergipe network

- To increase the number of State school principals selected by merit and possessing a signed management contract

Baseline (December 2011): zero

Target (December2013):151 principals selected and terms of commitment signed (40% of 378 State schools) Result evaluation: 159 principals selected and with signed terms of commitment (TARGET MET)

- Greater transparency and participation in school management.

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2.b.2. To improve educational levels in the municipal primary schools

-To increase the number of municipalities receiving State technical support for implementation of the PNAIC Baseline (December 2011): zero Target (December 2013):38 (50% of all the municipalities in the State of Sergipe)

- Improved match between students ‘ages and school grades, thereby contributing to better learning processes in the municipal school networks.

Result evaluation: 73 (TARGET MET) - Improved State/municipal co-ordination in the implementation of educational policy

Policy 3. Promotion of socio-economic development with inclusive growth

Market access and income growth

3.a.1. To strengthen the milk and dairy products production chain focused on family farming

-To increase the number of trained small production units included in the Milk Production Centers, selling 90% of their milk production to the private and public / institutional market.

Baseline (March 2012): 3 production units

Target (December 2013): 30 production units

Result evaluation : 30 (TARGET MET)

- Promotion of technical skills of family farmers.

- Positive impact on the quality of the products

- Improved incomes for dairy farmers on small farms

Sustainable agriculture, productive inclusion and gender

3.b.1. To promote environmentally sustainable agricultural practices -"green growth"

-To increase the number of small producers included in the Agroecological Production Program and associated with the Social Control Organizations, and who sell organic products directly in organic produce fairs and private public / institutional markets.

Baseline (December 2011): 83 producers (including 5 women)

Target (December 2013): 100 producers, (including 15 women)

Result evaluation : 114 producers (including 44 Women (TARGET MET)

- Knowledge dissemination, sustainable agricultural practices

- Increased supply of organic products in the Sergipe market.

- Impact on the incomes of the producers resulting from being able to offer wider range of products

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3.b.2.To broaden job opportunities and income for the population in conditions of socioeconomic vulnerability (seasonal agricultural workers in the sugarcane and orange growing sectors)

- To increase the number of seasonal workers benefiting from the Helping Hand Program accepted in the Sergipe Literacy Program

Baseline (February 2012): Zero

Target (December 2013): 565 workers accepted (1/8 of them women).

Result evaluation: 241, including 74 women (TARGET NOT MET)

- Increased literacy rate among the people attending classes. - Improved technical and

professional training for the beneficiaries

- Guaranteed income in off-season

periods for seasonal farm workers (sugar cane and oranges sectors).

Social protection, gender inclusion and eradication of extreme poverty

3.c.1To strengthen the Unified Social Assistance System (SUAS) – “Active Search” for inclusion in the Unified Register (CadÚnico).

- To increase the number of families with monthly per capita incomes of below R$70.00 living in the 15 poorest municipalities of the state, included in the Single Registry.

Baseline (January 2012): 39,582 families

Target (December 2013): 41,561 families

Result evaluation: 48,396 (TARGET MET)

- Increased number of beneficiaries of social programs who had previously been unidentified by the Government´s programs.

3.c.2. To increase State and municipal government support for programs aimed at the protection of women in situations of violence and vulnerability

- To increase the number of women in situations of violence attended in the Network for the Assistance of Women Victims of Violence

Baseline (March 2012): 3,985 women attended

Target (December 2013): 7,000 women attended

Result evaluation: 7630 (TARGET MET)

- Increased number of specialized services for combating violence against women. - Preventive effect Against violence against women. - Promotion of inter-gender equality.

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Annex 5. Comments of Co-financiers and Other Partners / Stakeholders N/A

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Annex 6. List of Supporting Documents 1. Borrower´s Final Report - Relatório do Encerramento 2. SEPLAG Improvements in Citizen Services Presentation - SEPLAG Política de

Atendimento Ao Cidadão No Estado De Sergipe 3. The Center of Citizen Services – Strategic Map – CEAC – Mapa Estratégico 4. Inclusion in Social Services through Unified Registry Report (CadÚnico) 5. Summary of implementation of actions in access to better quality public education –

Resumo da Experiência com a Implantação das Ações Pactuadas com o Banco Mundial

6. Mão Amiga - Alphabetization Program Results – Resultado do Programa Mão Amiga

7. Report – Women´s Special Secretary - Relatório Simplificado sobre o cenário atual dos dados referentes ao número de Mulheres Vítimas de Violência Doméstica

8. Aide Memoire – Identification Mission - Ajuda Memória – Missão de Identificação 9. Aide Memoire – Preparation Mission - Ajuda Memória – Missão de Preparação 10. Aide Memoire – Evaluation Mission - Ajuda Memória – Missão de Avaliação 11. Implementation Status and Results Report (ISR) – September 7, 2013 12. Implementation Status and Results Report (ISR) – March 20, 2014 13. Implementation Status and Results Report (ISR) – August 18, 2014 14. Loan Agreement Document - Sergipe Development Through Inclusion 15. Program Appraisal Document – IBRD Program Document for a Proposed Loan in

the Amount of Equivalent to US$150 Million to the State of Sergipe 16. Program Information Document - Sergipe Development Through Inclusion

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Annex 7. Table: Proposed Policy Actions for Sergipe Development through Inclusion

OBJECTIVES POLICY ACTIONS EXPECTED RESULTS

Policy Area 1: Consolidating Fiscal Management and Public Sector Innovations 1.1 Improve the Quality of Government-Citizen Services

Policy Action 1: The State of Sergipe standardizes services oriented to respond to citizens’ needs/complaints by issuing (a) Decree No. 28837 of October 18, 2012 regulating a “one-stop shop” model (guichê único) – Published in the Diário Oficial do Estado on October 22, 2012) and (b) Portaria No. 3242 of October 29, 2012 establishing the Charter of Citizens’ Attention Services (Published in the Diário Oficial do Estado on October 31, 2012) Responsibility: State Secretariat of Planning

Increase responsiveness to citizen complaints in the Citizen Service Centers (CEAC) Baseline (Oct 2011): 15 percent of complaints receive a written explanation in the Riomar and Rua do Turista CEACs Endline (Dec 2013): 90 percent of complaints receive a written explanation in the same CEACs

1.2 Modernize Key Planning, Budgetary, Execution and Control Processes

Policy Action 2: The State of Sergipe issues Decree No. 28830 of October 16, 2012 making the use of i-Gesp (which includes the processes of (i) planning, (ii) budgeting, (iii) budgetary and financial execution, (iv) public accounting, and (v) agreements management) compulsory within the executive branch, with an implementation schedule for the price database, debt management, integration with human resource systems, purchases and assets monitoring modules (Published in the Diário Oficial do Estado on October 18, 2012) Responsibility: State Secretariat of Finance

Reduce the time to produce agreed upon managerial reports through i-Gesp Baseline (Dec 2010): reports not available under the previous system (SAFIC) Endline (Dec 2013):4 reports8 produced automatically

1.3 Increase Revenues Through Combating Fiscal Avoidance

Policy Action 3: The State of Sergipe issues Decree No. 28843 of October 19, 2012 regulating a virtual and integrated process – between the State Secretariat of Finance, the Office of the Attorney General of Sergipe, and the Judiciary – for collection of tax arrears (Published in the Diário Oficial do Estado on October 23, 2012) Responsibility: State Secretariat of Finance, Office of Attorney General of Sergipe

Increase in revenues collected from tax arrears as a share of the stock of tax arrears Baseline (Dec 2011): 0.43 percent Endline (Dec 2013): 0.52 percent

Policy Area 2: Increasing access to better quality public services 2.a Health 2.a.1 Improve the Quality of Maternal and Newborn Health Services for High Risk Pregnancies

Policy Action 4: The State Secretariat of Health publishes an Amendment to the Public Action Contract (Termo Aditivo ao Contrato de Ação Pública– TCAP),which includes the priority maternal and newborn health program Rede Cegonha, integrating municipal actions

Increase the number of maternity hospitals implementing the protocol for classification of admissions by risk (Acolhimento com Classificação de Risco– ACCR)

8The four reports are: (1) Asset Sales Control, (2) Collected Revenue Comparison, (3) Debt Amortization Comparison and (4) Construction/ Facilities/ Property Acquisitions for Use by the State Administration.

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OBJECTIVES POLICY ACTIONS EXPECTED RESULTS and services under the SUS-Sergipe (Published in the Diário Oficial do Estado on April 25, 2012) Policy Action 5: The annual regional plans, which include implementation of Rede Cegonha, are approved by the State-and-Municipal Committee (Colegiado Interfederativo Estadual – CIE) (Issuance of deliberations for the regions of Aracaju, Itabaiana, Estância, Nossa Senhora do Socorro, Propriá, Lagarto and Nossa Senhora da Glória, May 24 to June 22, 2012). The strength of the action is further supported by the Ministry of Health’s validation of the plans through publication of a PortariaNo.3069 of December 27, 2012 (Published in the in the Diário Oficial da União on December 28, 2012) Responsibility: State Secretariat of Health, Ministry of Health

Baseline (Dec 2011): 1 Endline (Dec 2013): 3 (75 percent of maternity hospitals under state management that were operating under normal conditions in 2013)9 Reduce the cesarean section rate at the referral Maternity Hospital Nossa Senhora de Lourdes according to the guidelines in Portaria No.3477/1998 Baseline (Dec 2011): 55.2 percent Endline (Dec 2013): 50.2 percent

2.b Education 2.b.1 Improve School Management in State-Run Schools

Policy Action 6: The State of Sergipe issues Decree No. 29120 of March 6, 2013 implementing a new school management model based on use of result-based management strategies and selection of school directors by merit and through a participatory/ democratic processes (Published in the Diário Oficial do Estado on March 8, 2013) Responsibility: State Secretariat of Education

Increase the number of school directors selected by merit and with signed management agreements Baseline (Dec 2011): zero Target (Dec 2013): 151 school directors selected and with signed management agreements (40 percent of 378 state schools)

2.b.2 Improve learning results in municipal elementary schools

Policy Action 7: The State of Sergipe issues PortariaNo.6146 of October 04, 2012 establishing the State-and-Municipal collaboration to support implementation of the Literacy at the Right Age Program (PNAIC) in municipal schools (Published in the Diário Oficial do Estado on October 10, 2012) Responsibility: State Secretariat of Education

Increase the number of municipalities receiving technical assistance from the State in the implementation of PNAIC Baseline (Dec 2011): zero Target (Dec 2013): 38 municipalities (50 percent of all municipalities in the State)

9One of the State’s five public maternities will be operating in temporary quarters while a new facility is under construction.

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OBJECTIVES POLICY ACTIONS EXPECTED RESULTS Policy Area 3: Promoting Socioeconomic Development and Inclusive Growth

3.a Access to Market and Income Growth3.a.1 Strengthen the Cattle Milk and Dairy Production Cluster with Focus on Family Agriculture

Policy Action 8: The State of Sergipe issues Decree No. 28733 of August 27, 2012 organizing production to include family farmers into the Dairy Production Clusters (Núcleos de Produção de Leite), which are part of the Intensive Production System (Balde Cheio) that aims to improve quality by providing sanitary certification of dairy products and genetic enhancement of the herd in the irrigated perimeter of Jabiberi(Published in the Diário Oficial do Estado on August 30, 2012) Responsibility: State Company for Water Resources and Irrigation

Increase the number of trained small producer units included in the Núcleos de Produção de Leite and selling at least 90 percent of their production to private and public/institutional markets10 Baseline (Dec 2011): 3 Endline (Dec 2013): 30

3.b Sustainable Agriculture and Productive Inclusion3.b.1 Promote Use of Environmentally Sustainable Agriculture Practices – ‘Green Inclusive Growth’

Policy Action 9: The State of Sergipe enacts Law No. 7270 on November 17, 2011, creating the Program for Agroecological Production for inclusion of family farmers and establishing instruments to give incentives for environmentally sustainable production (Published in the Diário Oficial do Estado on November 23, 2011) Responsibility: State Company for Agriculture and Livestock Development

Increase the number of small producers included in the Program for Agroecological Production and linked to the Social Control Organizations selling directly in agroecological fairs and to private and public/institutional markets24 Baseline (Dec 2011): 83 producers, 5 women Endline (Dec 2013): 100 producers, 15 women

3.b.2 Increase Employment and Income Opportunities for the Most Vulnerable People (Especially Seasonal Orange And Sugarcane Production Workers)

Policy Action 10: Certification11 that participants from the State’s income transfer and generation program Mão Amiga are enrolled in the literacy program Sergipe Alfabetizado (Certification dated August23, 2012) Responsibility: State Secretariat of Social Assistance and State Secretariat of Education

Increase the number of seasonal workers benefitting from the program Mão Amiga included in the program Sergipe Alfabetizado Baseline (Feb 2012): 0 Endline (Dec 2013): 565 (or 50 percent), 1/8 of which are women

3.c Social Protection and Prevention of Gender-Based Violence3.c.1 Strengthen the Social Assistance System (SUAS) – Busca Ativa for inclusion in the CadÚnico

Policy Action 11: The State of Sergipe enacts Law No. 7251 of October 31, 2011 (published on November 7, 2011) establishing the detailed resource transfer system to finance social assistance in municipalities, and institutionalizes co-financing agreements with two municipalities (Published in the Diário

Increase the number of families with monthly per capita income of less than R$70.00/month living in the poorest 15 municipalities included in the CadÚnico Baseline (Jan 2012): 39,582 families

10 Federal Government programs for food acquisition: (i) Programa de Aquisição de Alimentos da Agricultura Familiar (PAA), created through the Federal LawNo.10696/2003; and (ii) Programa Nacional de Alimentação Escolar (PNAE), created through the Federal Law No. 11947/2009. 11A high-ranking officer in the Secretariat of Education, Secretariat of Social Assistance or related entity issues a certificate of approval attesting to accuracy of the list of participants.

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OBJECTIVES POLICY ACTIONS EXPECTED RESULTS Oficial do Estado on November 7, 2011) Responsibility: Secretariat of Social Assistance and Ministry of Social Development

Endline (Dec 2013): 41,561 families

3.c.2 Scale Up State and Municipal Government Support Programs Aimed at Protecting Women in Situations of Violence and Vulnerability

Policy Action 12: Technical Cooperation Agreement signed between the State and at least one municipality in each of the four (4) regions with the highest concentration of gender-based violence (Sul Sergipano, Agreste, Baixo São Francisco and Alto Sertão) for decentralizing women protection and support programs to the interior of the State, as required by the Cooperation Agreement of July 21, 2009 between the State and Federal Government (Agreements signed on October 9, 2012 for Poço Redondo municipality in Alto Sertão Sergipano, Propriá municipality in Baixo São Francisco and Itabaiana municipality in Agreste Sergipano; and on December 7, 2012 for Estância in Sul Sergipano) Responsibility: State Secretariat of Public Security and Special State Secretariat of Women

Increase the number of women in situations of violence and vulnerability attended in the Rede de Atendimento à MulherVítima de Violência Baseline (Mar 2012):3,985 Endline (Dec 2013): 6,973

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