Document o f The World Bank

FOR OFFICIAL USE ONLY

Report No: 36299-DO

PROJECT APPRAISAL DOCUMENT

O N A

PROPOSED L O A N

IN THE AMOUNT OF US$19.4 MILLION

TO THE

DOMINICAN REPUBLIC

FOR A

SOCIAL PROTECTION INVESTMENT PROJECT

July 2,2007

Human Development Sector Caribbean Country Management Unit Latin American and Caribbean Region

This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. I t s contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective June 1,2007) Currency Unit = RD$

RD$33 = US$1

ADESS APL CAS CCT CEC CERSS

CONANI C Y DA DAF D O DPL

ENCOVI ENDESA ESSD EU FM FMA FMR GAIN GDP GIS HIV/AIDS HR IBRD ICB ICR I C T IDA IDB IEC IFC ILAE IMF INESPRE

DR-CAFTA

IP

FISCAL YEAR January 1 - December 31

ABBREVIATIONS AND ACRONYMS Administradora de Subsidios Sociales (Administrator o f Social Subsidies) Adaptable Programmatic Loan Country Assistance Strategy Conditional Cash Transfers Junta Central Electoral - JCE (Central Electoral Council) Comisidn Ejecutivapara la Reforma del Sector Salud (Executive Comission for Health Sector Reform) Consejo Nacionalpara la Niiiez y la Adolescencia (National Council for Children) Calendar Year Designated Account Departamento de Administracidn Financiera (Financial Administration Department) Development Objectives Development Policy Loan Dominican Republic-Central America-United States Free Trade Agreement Encuesta de Condiciones de Vida (Living Conditions Survey) Encuesta Demogrbjca y de Salud (National Demographic and Health Survey) Environmentally and Socially Sustainable Development Network European Union Financial Management Financial Management Assessment Financial Management Report Global Alliance for Improved Nutrition Gross Domestic Product Geographic Information Systems Human Immunodeficiency Virus/Acquired Immunodeficiency Syndrome Human Resources International Bank for Reconstruction and Development International Competitive Bidding Implementation Completion Report Information and Communication Technology International Development Association Inter-American Development Bank Information, Education and Communication International Finance Corporation Incentivo a la Asistencia Escolar (School Attendance Incentive) International Monetary Fund Instituto Nacional de Estabilizacidn de Precios (National Institute for Price Stabilization) Implementation Progress

IRR ITLA L A C LAN LSMS M&E MDG MIS N C R NGO NPV ONAPLAN ONE OPS PAD PARSS PCN PCU PID PROMESE RVP SBD SCRAL SEE SENASA SESPAS

SIGEF SIUBEN SOE SPIL SPP S WAp TUCSC UN UNICEF USAID WAN

Internal Rate o f Return Instituto Tecnoldgico de Las Amkricas (Las Americas Technology Institute) Latin America and the Caribbean Local Area Network Living Standards Measurement Survey Monitoring and Evaluation Millennium Development Goals Management Information System National Civ i l Registry Non-Government Organization N e t Present Value OJicina Nacional de Planijkacibn (National Planning Office) OJicina Nacional de Estadistica (National Statistics Office) Organizacidn Panamericana de la Salud (Pan-American Health Organization) Project Appraisal Document Programa de Prkstamo Adaptable de Apoyo a la Reforma del Sector Salud Project Concept Note Project Coordination Unit Project Information Document Programa de Medicamentos Esenciales Regional Vice President Standard Bidding Documents Social Crisis Response Adjustment Loan Secretaria de Estado de Educacidn (State Ministry o f Education) Seguro Nacional de Salud (Nacional Health Insurance Agency) Secretaria de Estado de Salud Pliblica y Asistencia Social (State Ministry o f Public Health and Social Assistance) Sistema Integrado de Gestidn Financiera (Integrated System for Financial Management) Sistema Unico de Bene3ciarios (Single Beneficiary Selection System) Statement o f Expenditures Social Protection Investment Loan Social Protection Program Sector Wide Approach Program Technical Unit for Coordination o f the Social Cabinet United Nations United Nations Children’s Fund United States Agency for International Development Wide Area Network

Vice President: Pamela Cox

Sector Manager: Helena Ribe Country ManagerDirector: Caroline Anstey

Task Team Leader: Samuel C. Carlson

DOMINICAN REPUBLIC Social Protection Investment Loan

CONTENTS

Page

STRATEGIC CONTEXT AND RATIONALE .................................................................. 1 Country and sector issues .................................................................................................... 1 Rationale for Bank involvement .......................................................................................... 5 Higher level objectives to which the project contributes .................................................... 6

PROJECT DESCRIPTION .................................................................................................. 6 Lending instrument .............................................................................................................. 6

Project development objective and key indicators .............................................................. 7

Project components .............................................................................................................. 8 Lessons learned and reflected in the project design .......................................................... 12

Alternatives considered and reasons for rejection ............................................................. 13

C . IMPLEMENTATION ......................................................................................................... 14 9 . Partnership arrangements (if applicable) ........................................................................... 14

10 . Institutional and implementation arrangements ................................................................ 14

1 1 . Monitoring and evaluation o f outcomes/results ................................................................ 15

12 . Sustainability ..................................................................................................................... 16

13 . Critical risks and possible controversial aspects ............................................................... 16

14 . Loadcredit conditions and covenants ............................................................................... 20

APPRAISAL SUMMARY .................................................................................................. 20

A . 1 . 2 . 3 .

B . 4 . 5 . 6 . 7 . 8 .

D . 15 . 16 . 17 . 18 . 19 . 20 . 21 .

Economic and financial analyses ....................................................................................... 20

Technical ........................................................................................................................... 22

Fiduciary ............................................................................................................................ 23

Social ................................................................................................................................. 25

Environment ..................................................................................................................... -26

Safeguard policies .............................................................................................................. 26

Policy Exceptions and Readiness ...................................................................................... 27

. .

Annex 1: Country and Sector o r Program Background .......................................................... 28

Annex 2: Major Related Projects Financed by the Bank and/or other Agencies .................. 35

Annex 3: Results Framework and Monitoring ......................................................................... 36

Annex 4: Detailed Project Description ...................................................................................... 43

Annex 5: Project Costs ................................................................................................................ 59

Annex 6: Implementation Arrangements .................................................................................. 61

Annex 7: Financial Management and Disbursement Arrangements ..................................... 63

Annex 8: Procurement Arrangements ....................................................................................... 72

Annex 9: Economic and Financial Analysis .............................................................................. 78

Annex 10: Safeguard Policy Issues ............................................................................................. 83

Annex 11: Project Preparation and Supervision ...................................................................... 90

Annex 12: Documents in the Project Fi le .................................................................................. 91

Annex 13: Statement of Loans and Credits ............................................................................... 94

Annex 14: Country at a Glance .................................................................................................. 95

Annex 15: Map N o . 33398 ........................................................................................................... 97

DOMINICAN REPUBLIC

Source

SOCIAL PROTECTION INVESTMENT L O A N

L o c a l Foreign T o t a l

PROJECT APPRAISAL DOCUMENT

LATIN AMERICA AND CARIBBEAN

LCSHS-DPT

BORROWER INTERNATIONAL BANK FOR

Date: July 2,2007 Country Director: Caroline D. Anstey Sector ManagerAIirector: Evangeline Javier

Team Leader: Sam Carlson Sectors: Other social services (73%); Central government administration (27%) Themes: Other human development (P); Other social protection and risk management (P); Social safety nets (S) Environmental screening category: Not Required I Lending Instrument: Specific Investment Loan Safeguard screening category: N o impact

Project ID: PO900 10

[XI Loan [ ] Credit [ ] Grant [ 3 Guarantee [ ] Other:

~

2.60 0.00 2.60 12.70 6.70 19.40

For Loans/Credits/Others: Total Bank financing (US$m.): 19.40 Proposed terms: Fixed-Spread Loan (FSL) in USD with 17 years total repayment and 5 years grace Deriod (standard terms).

RECONSTRUCTION AND DEVELOPMENT Financing GaD 0.00 0.00 0.00 Total: 15.30 6.70 22.00

Borrower: Government o f the Dominican Republic Responsible Agency: Social Cabinet Edificio San Rafael Av. Leopoldo Navarro Dominican Republic Tel: 809-534-2105 Fax: 809-534-4848 Technical Coordinator: Susana Gamez susaagam@,grnail.com

Estimated disbursements (Bank FY/US$m) ~~

2Y

4nnual hmu la t i ve

2008 2009 2010 2011 4.40 6.00 7.00 2.00 4.40 10.40 17.40 19.40

Improve the coverage, targeting and effectiveness o f the Borrower’s social protection programs, through the provision o f legal identity documents to poor Dominicans, institutional strengthening o f targeting mechanisms, and increased monitoring and evaluation o f social programs. Project description Re$ PAD B.3.a, Technical Annex 4

Component One, Provision o f National Identity Documents (US$15.6 M), would aim to improve access o f poor households to basic social services and economic opportunities, through provision o f identity documents to 400,000 poor Dominicans.

Component Two, Strengthening Social Protection Services (estimated US$5.1 M), would aim to build the capacity o f the Social Cabinet, SIUBEN, and social program monitoring and evaluation by c iv i l society.

Component Three, Coordination o f Loan Implementation (US$l.3 M) Which safeguard policies are triggered, if any? Re$ PAD 0.6, Technical Annex 10 N o safeguard policies are triggered. Significant, non-standard conditions, if any, for: Re$ PAD C. 7 NIA Board presentation: NIA Loadcredit effectiveness conditions: Fulfillment o f the standard conditions for establishing the necessary Special Account and Dominican peso-denominated sub-accounts for both Bank and government counterpart funds. Covenants applicable to project implementation: N/A

A. STRATEGIC CONTEXT AND RATIONALE

1. Country and Social Sector issues

1.1 The Dominican Republic experienced strong economic growth with improvements in the quality o f l i fe in the 1990s. Indeed, it was considered one o f the “stars” o f Latin America during this period. Poverty declined from the early 1990s to 1998, albeit modestly, and there was important progress in social indicators that put the country on track to reach some o f the Millennium Development Goals. Between 1998 and 2002 the country continued to experience economic growth, although deceleration began in 2000. In 2003-2004 the country experienced a major financial, economic and social crisis, with negative growth and high inflation. GDP growth rates rebounded strongly in 2005 and 2006, to 9 percent per year, fueled by tourism, construction and telecommunications, but the impact on poverty has been very limited, as explained below.

1.2 The 2005 Poverty Assessment showed that poverty and the incomes o f the poor saw virtually no improvements during the growth bonanza o f 1997-2002, and that the 2003-2004 economic crisis resulted in a dramatic deterioration o f real incomes and poverty levels. Between early 2003 and May 2004 about 15 percent o f the Dominican population (1.4 million people) became poor, and about 6.5 percent (600,000 people) fe l l into extreme poverty, meaning their incomes were too low to afford the food basket o f minimum caloric intake. In 2004, 43 percent o f the population was poor, o f which 16 percent were indigent (less than US$l/day on average). Despite stabilization and robust growth over the past two years, poverty declined only slightly, such that today 36 percent o f the population i s poor and 13 percent i s extremely poor. Income inequality remains unchanged over the last 7 years with a Gini coefficient o f 0.52, the average for Latin America and the Caribbean (LAC), the most unequal region in the world. Inequality means growth does not benefit the poor as much as it does higher income households. Indeed, this structural poverty has increased the vulnerability of poor households to external and internal shocks, establishing the clear need for improved social protection services.

1.3 The Poverty Assessment identified five principal sets o f factors behind the limited poverty reduction in the late 1990s, the subsequent sharp income deterioration, and persistent inequality, all o f which translate into increased vulnerability o f poor households:

First, growth in labor earnings (source o f more than half o f the poor’s incomes) has been very unequal, benefiting workers with university education, sectors which have a relatively lower demand for unskilled labor, Santo Domingo and other more affluent regions.

Second, the 2003-2004 crisis resulted in real income declines o f about one third. The “new poor” were mostly created by the fall in real incomes resulting from the sharp rise in the prices o f food and other wage goods (86 percent cumulative), while unemployment increased from 14 percent in 2000 to 18.4 percent in 2004.

Third, low labor productivity i s a f i rst order factor behind poverty and inequality. This mainly results from the poor’s lack o f minimum education and ski l ls (completion o f secondary education in urban areas and completion o f 8th grade in rural areas), rather than from their inability to leverage education into better-paying jobs.

Fourth, the main reason behind l o w labor productivity i s that many children leave school too early to accumulate the minimum level o f sk i l ls demanded by the labor market. Only 53 percent o f Dominican children complete 8th grade (end o f basic education), and net enrollment at the secondary level is just 38 percent. By law, students who lack birth certificates cannot take the 8th grade national examination and must leave the education system; this automatically excludes almost 30 percent o f young poor Dominicans from obtaining the skills demanded by the labor market. In addition, high repetition rates contribute to school dropout and, ultimately, in l o w levels o f years o f schooling achieved.

Fifth, fiscal policies to support human capital formation and provide short-term income support have been ineffective. Despite investing a significant amount o f public resources in transfer and subsidy programs, a legacy o f highly politicized resource allocation, duplication, poor targeting, and inadequate information systems significantly diminish the impact o f expenditures on poverty and human development. While there has been recent important progress, in their aggregate social assistance programs remain regressive in absolute terms, reinforcing the pattern o f total private transfers (domestic and international remittances).

1.4 The Poverty Assessment recommended a broad set o f pol icy measures in these five areas to reduce poverty and inequality. The resumption o f economic growth, sustained over the long te rm with prudent macro-economic policies, i s a fundamental and necessary condition. Given that many o f the “new poor” remain close to the poverty line, continued economic growth and price stability should deliver a significant reduction o f poverty in the short term. However, deepening o f social protection reforms and a frontal attack on inequality i s needed to help the structurally poor move out o f poverty and ensure their full participation in development. This i s especially true for Dominicans who lack official identification documents and so are excluded from almost al l economic and social development opportunities.

1.5 The lessons from past successes and failures in reducing poverty in the Dominican Republic and international experience suggest that public pol icy should focus on three core objectives: (i) promoting growth opportunities for the poor; (ii) strengthening social services delivery and strategic investments in the poor; and (iii) revamping social protection to protect the poor and vulnerable groups against risks. The proposed Social Protection Investment Project would pursue the latter two objectives, promoting human capital formation among poor households so they can lift themselves out o f poverty.

1.6 Consistent with this analysis, the Fernandez Government declared improved social equity and protection one o f i t s three strategic objectives for the 2004-2008 administration (along with economic growth and governance). Similarly, the Bank’s Country Assistance Strategy (CAS) 2005-2008 defined improved social equity through human development and social protection investments as one o f i t s two key pillars. There is an alignment o f views regarding the importance o f this issue, and Government-expressed willingness for the World Bank to play a key role with both lending and technical assistance.

Social Sector Policy and Context

1.7 The Fernandez Government has articulated a new social sector policy, as part o f a broader government policy for growth and human capital development which aims not just to

2

reduce levels o f poverty, but also to increase the capacity o f the poor to l i f t themselves out o f poverty and integrate into the economy and society at large. It i s linked to economic policies which promote not just stability but also sustainable economic growth. These economic policies include measures to increase internal savings which can be transformed into productive investments, which in turn stimulate employment and higher value-added production, thereby increasing wages and overall living conditions. Social sector policy i s comprised o f four components:

0 social protection 0

0 social security system, and 0

social services supply (education, health, etc.)

an efficiently functioning labor market

1.8 For the latter three components o f the Government’s policy, multi-year strategies and budgets are under implementation, supported by both domestic and external financing.’ Improving educational access and quality, in particular, has been given a high priority by the Government, as has the launch o f a three-tiered social security/national health insurance system (with support from the Bank). Labor market functioning i s being addressed through a recently approved loan from the IDB. Hence, the focus o f this discussion i s on the first component: social protection.

1.9 The Government’s social protection policy i s to build human capital and increase risk management capacities o f the poor, thereby reducing their vulnerability to external and internal shocks. This i s to be accomplished through: institutional strengthening o f the sector overall; inclusion o f “the excluded” (Dominicans with no legal identity); continued development of targeting instruments (SIUBEN) and the conditional cash transfer program (Solidarity); rationalization o f poorly targeted social assistance programs; and improved measurement of social program impacts.

1.10 Institutional Strengthening: Since 2000 the Social Cabinet2 has led this process, beginning with mapping o f the social assistance sector, followed by initial evaluation o f all major programs in 2003. This culminated in a 2004 Presidential Decree (1 504-04) creating the Social Protection Program which consists o f six sub-programs: social assistance/conditional cash transfers (CCT); highly vulnerable groups; community development; employment generatiodtraining; social subsidies; and administration. (The decree also eliminated nine ineffective programs.) In October 2005 another Presidential Decree (570-05) gave the Social Cabinet increased power and “institutionality”, with oversight responsibility for planning, administration and budgetary execution o f all programs, projects and activities which are part o f the Social Protection Program. In effect, this consolidates the budgets o f almost all social protection and social assistance programs (approximately US$190 Myear) under the Social

Supply o f social services i s being addressed by World Bank, IDB, EU, UN, and bilateral loans and grants in the sectors of education, health, water and sanitation. Social Security (at least the subsidized part o f it) i s being supported by the Bank’s Health Sector Reform APL. The recently prepared multi-phase $10 M IDB loan, “Labor Markets and Social Transfers”, aims to improve the functioning o f the labor market. More on this in Annex 2. * Social Cabinet i s headed by the Vice President o f the Republic, and composed o f the Secretaries o f the Presidency, Education, Health, Labor, Sports, Women, Youth, Culture, and Higher Education. 2 1 institutions or programs implementing social policy are affiliated with the Social Cabinet.

1

Cabinet, and establishes the Social Cabinet’s monitoring and evaluation oversight responsibilities for all social assistance/social protection programs, which should result in improved resource allocation through i ts Department o f Administration and Finance (DAF). In October 2006, the Social Cabinet prepared a proposal for institutional rationalization and restructuring o f the social sector. If approved by the Executive and Legislative branches, this would culminate in the creation o f a Secretary o f State for Social Development in 2008 or 2009.

1.1 1 Including the Excluded: As part o f the SIUBEN targeting exercise described below, the Government identified approximately 400,000 poor individuals who would be otherwise eligible for social assistance programs (subsidized health insurance, Solidarity CCT program, etc.), but are excluded for lack o f legal identity documents (birth certificates and/or the national identity card, “ la cedula”). Indeed, a 2006 Household Survey (ENHOGAR) conducted by the National Statistics Office with support from UNICEF revealed that 22 percent o f children under the age o f 5 had no birth certificate. Birth registration i s directly related to education and poverty: 30 percent o f children under 5 born to women with only primary education are unregistered, versus just 4 percent o f those born to women with higher education; and 40 percent o f children born to women in the poorest quintile lacked birth certificates, versus just 3 percent o f children in the highest quintile. This contributes greatly to trans-generational transmission o f poverty. Not only are these individuals prevented from participating in social protection programs, they also cannot open a bank account, own t i t le to land, vote, obtain a driver’s license or passport, or attend school beyond 7th grade. These individuals are not considered part o f the population o f legal and illegal Haitians residing in the country, but rather are poor Dominicans who never obtained their birth certificates or let their old “cedulas” expire. Government policy i s to launch a major nationwide campaign to help these people obtain their legal identity document^.^

Legally, they do not exist.

1.12 Targeting: An updated Poverty Map (based on the 2002 Census and 2003 Demographic and Health Survey) and household-level targeting instruments were developed in 2004, with Bank technical support under the Social Crisis Response Adjustment Loan (SCRAL). In late 2004 the Government launched the Sistema Unico de Benejkiarios (SIUBEN), a single central database for social assistance beneficiaries and a consistent targeting mechanism which could be used across a wide range o f social programs in education, health, nutrition, housing and energy. SIUBEN conducted over 1.2 million household surveys (comprising 4.4 million people, or 56 percent o f the population) in all areas o f poverty and extreme poverty identified by the National Poverty Map, and applied a proxy-means test to identify and rank households in need o f social protection. O f these, 14 percent were classified as extremely poor and 39 percent as poor. Beyond targeting, SIUBEN offers an opportunity to: (i) break from the country’s long tradition o f using social programs to generate electoral outcomes; (ii) concentrate a range o f social programs on the poorest households and generate the “critical mass” needed significantly increase human capital among the poor; and (iii) increase transparency and capacity for impact evaluation. SIUBEN’s institutional capacity has been strengthened with the hiring o f additional staff (total staff now 170 people) and the opening o f 10 regional offices, but more needs to be done, especially in database management, updating information and training staff.

A law has been passed by the Senate and i s now before the House o f Representatives, to provide an “amnesty” to all children up to 16 years old for a period o f 12 months, so they can be declared by their parents under simplified procedures. If passed, this would complement and accelerate the proposed interventions to be financed by this loan.

4

1.13 Conditional Cash Transfer (CCT) Program: In September 2005 the Government established by Presidential Decree the Solidarity Program, as an amalgamation o f two existing, institutionally weak CCT programs, “Comer es Primero” and “Incentivo a la Asistencia Escolar”. Solidarity uses SIUBEN to identity program participants, who are then validated and issued electronic debit cards which can be used in local grocery stores to buy basic foodstuffs. The health benefit i s RD$ 550 pesos per month (approximately US$18) and requires poor families to take their children aged 0-5 for vaccinations, heighdweight monitoring, and periodic check-ups. The education benefit varies between RD$300-600 pesos per month (US$lO-20), depending on the number o f children aged 6-16, conditional upon all children enrolling and attending basic education on a regular basis. Beneficiaries must also participate in program-sponsored training.

1.14 As o f December 2006 approximately 255,000 households have been identified as eligible for the Solidarity program, and 216,000 o f these have received their electronic debit cards and are currently receiving monthly payments. All 1 12,000 extremely poor households identified in the SIUBEN survey are enrolled in the program, plus another 114,000 poor households located in the 15 poorest provinces and in marginal urban areas o f Santo Domingo and Santiago. Another 92,000 households were identified as eligible for Solidarity but excluded for lack o f identity documents, highlighting the importance o f this issue. Government plans to increases the number o f beneficiaries to 300,000 households by the end o f 2007.

1.15 Solidarity i s a significant positive step in implementing the Government’s social protection policy, but it lacks basic institutional capacity (trained staff, ability to apply operating procedures, etc.) and clear procedures for working with the ministries o f health and education. The critical issue right now i s implementing conditionality verification and enforcement mechanisms. Simply put, as o f April 2007 it i s functioning as a simple targeted cash transfer program without the conditionalities.

1.16 Rationalization o f Social Assistance Programs and Public Expenditure Management Reform: The Dominican Government committed i tse l f to important reforms o f i ts social assistance programs in early 2007, supported by the IDB’s US$l50 million Social Management Reform Development Policy Loan. Tranche release conditions for this loan include inter alia: reduction and elimination o f social assistance programs (such as INESPRE and Comedores Economicos) which have l i t t le distributional impact; improved management and quality o f the universal school feeding program; increased public spending on education and health; proper functioning o f the Solidarity CCT program; and a law in place which establishes a single institutional framework for the stewardship and execution o f social assistance and safety net programs. The proposed Social Protection Investment Loan has been explicitly designed to complement this DPL.

2. Rationale for Bank involvement

2.1 The Government i s committed to social protection reforms as evidenced by recent actions taken to strengthen key institutions, protect social program budgets, consolidate overlapping programs, improve targeting, and collaborate with civil society to evaluate social programs. The US$lOO mill ion Social Crisis Response Adjustment Loan (SCRAL, DO-72 15) supported these

5

actions in a timely and effective manner, leveraging some important ini t ial reforms. To maintain reform momentum and build public support for deepening reforms, the tasks ahead for the Government are to increase access o f undocumented poor households to social assistance and human capital development opportunities, effectively implement consolidated and better targeted social programs, and rationalize untargeted social programs. The pol icy dialogue and initial reforms achieved through the SCRAL, particularly in the area o f undocumented Dominicans, provide the Bank with a comparative advantage to assist in these areas. In addition, the Bank’s extensive experience in the area o f social program targeting justifies its intervention in this area.

2.2 The proposed project would provide much needed investments to address the needs o f undocumented fami l ies and to strengthen the institutional capacity for targeting social assistance/social protection. It would complement other World Bank investments in the social sectors, such as the US$25 mi l l ion Youth Development project (approved in March 2006), with i t s focus o n high-risk youth, most o f who come from poor households and frequently lack identity documents. Other complementary social sector operations include the Early Childhood Development Project (US$32 mi l l ion to be disbursed), the Health Sector Adaptable Programmatic Loan (US$25 mi l l ion to be disbursed), and the Control and Prevention of H IV /A IDS Loan (US$9 mi l l ion to be disbursed).

3. Higher level objectives to which the project contributes

3.1 The World Bank Group’s Country Assistance Strategy over the FY06-09 period supports the Government’s program. I t s over-arching focus i s on improving governance and strengthening institutions. Two main pillars support this goal:

(i) stabilize the economy, improve competitiveness, restore economic growth; and (ii) achieve greater social equity through human development and increased coverage and

3.2 This project contributes to this second main pi l lar in particular, although its longer-term impacts on human capital formation should improve the country’s competitiveness, as well. More specifically, this project supports the Government’s broad objective o f increasing access o f poor households, particularly undocumented, to effective Government social programs for education, training, nutrition, and health insurance. The objective o f governance would be addressed transversally, through institutional strengthening o f the Social Cabinet, increased accountability o f the national c iv i l registry, and extensive c iv i l society monitoring o f social programs.

quality o f basic public services.

B. PROJECT DESCRIPTION

4. Lending instrument

4.1 A standard four-year US$19.4 mi l l ion investment loan, the Social Protection Investment Loan (SPIL), i s proposed, with US$2.6 mi l l ion provided by the Government, for a total project amount o f US$22 M. This would include US$2 mi l l ion in Bank financing based o n achievement o f quantifiable outputs in the provision o f late birth certificates and national identity cards to poor Dominicans.

6

5. Project development objective and key indicators

Objective: The objective of the Project i s to improve the coverage, targeting and effectiveness o f the Borrower’s social protection programs, through the provision of legal identity documents to poor Dominicans, institutional strengthening of targeting mechanisms, and increased monitoring and evaluation o f social programs.

5.1 Through the provision to poor Dominicans o f national identity documents, the project would open paths to social and economic opportunity, including education, health care, ownership rights, banking privileges and legal services, thereby contributing to both short-term and long-term poverty reduction. The focus would be o n empowerment o f most vulnerable groups: over 1 mi l l ion extremely poor Dominicans and approximately 400,000 undocumented Dominicans excluded f rom social services and economic opportunities. There i s (not surprisingly) overlap o f these two groups: almost al l undocumented Dominicans are poor. The issue o f governance would be addressed transversally, through institutional strengthening o f the Social Cabinet, c iv i l society monitoring o f social programs, increased transparency o f social program expenditures and outcomes, and increased accountability o f the national c iv i l registry.

5.2 0

0

0

0

0

0

0

0

0

Key project indicators include: Coverage: At least 75 percent o f households which have at least one member targeted by the Documentation Component have been integrated into a social protection program; Coverage: The percentage o f poor households with members who lack identity documents decreases from 26 to 10 percent; Coverage: The percent o f extremely poor household heads who lack identity documents (otherwise eligible for Solidarity CCT program) decreases f rom 28 to 10 percent; Coverage: The percentage o f extremely poor Dominicans participating in the Solidarity CCT program increases from 5 1 to 85 percent; Targeting and Coverage: The percentage o f poor households enrolled in SIUBEN database and subsequently validated for participation in social programs increases from 31 to 50 percent; Targeting: Implementation o f the 2009 national SIUBEN survey, including 1.5 mi l l ion households located in poor areas, recertification o f Solidarity CCT program beneficiaries and updating o f national database o f poor Dominicans using proxy-means methodologies; Targeting and Effectiveness o f Social Sector Spending: by the end o f the project, transfer o f financial resources equivalent to 20 percent o f 2006 spending on untargeted social protection programs (baseline: RD$5.5 billion) to social protection programs which use SIUBEN or 2005 Poverty Map to target and identify beneficiaries; Effectiveness Measurement: Adherence to and completion o f the Inter-Institutional Agreement between the Social Cabinet and Consultative Council o f C iv i l Society for monitoring and evaluation o f public social protection programs, including at least two independent evaluations o f public social programs (processes and/or impact) conducted annually throughout the l i f e o f the project; Effectiveness: Relative to a baseline survey, assessment o f social and economic impact o f providing legal identity to poor Dominicans, measured through a quasi-experimental

7

impact evaluation design and use o f specific social and economic indicators (such as secondary enrollment rate and access to health insurance).

5.3 among approximately 300,000 poor households, representing more than 1 mi l l ion Dominicans.

The impact o f these interventions would be improved CAS intermediate social indicators

6. Project components

Component One, Provision of National Identity Documents (US$15.6 million, of which US$13 million from World Bank and US$2.6 million from Government)

6.1 This component would aim to improve access o f poor households to basic social services and economic opportunities. Specific objectives for this component are: (i) all 195,000 family members o f the 2 16,000 households currently enrolled in the Solidarity CCT program, currently lacking their documentation, would obtain their birth certificates or identity cards (this i s a conditionality o f the CCT program itself, thus requiring a supply-side response); (ii) all 170,000 family members o f the 92,000 households deemed eligible for enrollment in the Solidarity CCT program, but excluded for lack o f documentation by the head o f household, would obtain their birth certificates or identity cards;4 and (iii) other unidentified poor undocumented children (estimated 50,000) aged 16 and under obtain their birth certificate. Additional poor undocumented families would be identified through SIUBEN’s 2009 national household survey, with the expectation that the loan would assist a total o f 400,000 Dominicans.

6.2 The first two sub-components would be aimed at stimulating a strong demand-side response on the part o f undocumented individuals, and the third sub-component would aim to strengthen the supply-side. Bank financing would support: large-scale, nationwide information, education and communication (IEC) campaigns; targeted legal assistance to undocumented families; simplification and standardization o f procedures to obtain identity documents; modernization o f c iv i l registry offices; and incentives to c iv i l registry offices to process late birth certification. The latter would include output-based disbursements linked to actual provision of late birth certificates and identity cards, using a unit-cost formula (US$S/identity card) agreed with the Government and the Bank. All o f these measures were identified as high-priority under the National Plan for the Provision o f Identity Documents, which was developed via a participatory process supported by the World Bank, and subsequently validated by the Central Electoral Council (responsible for the national c iv i l registry).

Sub-Component 1: Information, Education and Communication Campaigns (US$1.4 million)

6.3 This sub-component would specifically target undocumented individuals identified by SIUBEN, using communication media appropriate for where they l ive and how they learn about public initiatives. Specifically, the Social Cabinet would work with local community leaders to

Undocumented Dominicans are unable to take education examinations, participate in CCT programs, benefit from national health insurance or hospital care, obtain a formal sector job, open a bank account, own land or a house, get a driver’s license or passport, etc. In short, they have no legal existence and are extremely vulnerable to shocks o f al l kinds.

8

disseminate the message through NGOs, local grocery stores (“colmados”), radio, the church and other oral channels which are more appropriate for poor, undocumented families, many o f whom are illiterate. In addition, a secondary campaign would emphasize to the public at large the importance o f obtaining national identification documents and clearly explain the steps required to do so. This campaign would also emphasize the full respect o f all Dominican laws in this area, to avoid possible political backlash linked to fears o f Haitian immigration. The loan would finance development and broadcasting o f radio spots; production and distribution o f posters, brochures and guidelines; training o f communicators, operational costs, and use o f other mass media outlets.

Sub-Component 2: Targeted Legal Aid Campaigns (US$5.7 million)

6.4 This sub-component would help undocumented households already identified through the SIUBEN household surveys to obtain their national identity documents through provision o f para-legal support. First, all identified undocumented individuals would be cross-referenced against the Civi l Registry’s newly digitized (though s t i l l incomplete) database, to check for any previous issue o f birth certificates and/or national identity cards, which would greatly expedite the processing o f new ones. Secondly, those not appearing in the database would be surveyed as to their place o f birth and their parents’ origins and identity documentation. This would indicate where each individual would need to apply for documentation, and what additional documents could be collected to establish citizenship. Thirdly, NGOs and para-legals (recent law school graduates and law school students performing community service) would be contracted to work with undocumented poor households to collect all information required to submit a late birth certificate and/or national identity card application (in many cases, this requires re-constitution o f earlier generations’ identification records, which i s simply beyond the capacity o f poor households themselves). In addition to financing these para-legals, the loan would finance training, preparation and printing o f guides and personal data forms, small amounts o f computers and office furniture, operational and transportation costs.

Sub-Component 3: National Civil Registry Support (US$8.4 million, o f which US$5.8 million from World Bank and US$2.6 million from Government)

6.5 This sub-component would finance civil registry office rehabilitation and automation (US$5.4 million), modernization and technical assistance for the Late Birth Registration Office o f the civil registry (US$0.5 million), three mobile civi l registry offices (US$0.3 million), and para-legal support to the Attorney General’s Office and Supreme Court (which must ratify late birth certificate claims) to improve efficiency and results in the issuance o f identity documents (US$0.3 million).

6.6 In addition, the loan would finance output-based disbursement (US$2 million), under which the Central Electoral Council would be reimbursed for personnel expenditures incurred by the National Civil Registry, based on an agreed unit cost formula for each “late” birth certificate and national identity document issued by the National Civil Registry to approximately 400,000 poor undocumented Dominicans identified in the SIUBEN database. (Please see Annex 7 for more details on the unit cost formula, which calculates average staff time and costs at each stage o f document processing. The original basis o f this unit cost would be reviewed after 12 months

9

and updated if necessary during project implementation.) Each poor undocumented Dominican would be assigned an individual code by the National Civi l Registry which could be cross- referenced to the SIUBEN database. The National Civi l Registry would open a f i l e for each undocumented individual, and as the identity documents are issued to these specific individuals the National Civil Registry would report this information to the DAF o f the Social Cabinet. These reports would be used by the DAF to request output-based reimbursement from the Bank. Documentation o f birth certificates would be “bundled” in sets o f 20,000, so each disbursement would be for US$lOO,OOO. (Initial financing o f salary costs related to processing o f identity documents would be financed by the Central Electoral Council through the 2008 national budget l ine item for the civil registry.)

6.7 Infrastructure support would include small works and furniture to rehabilitate 50 civil registry offices owned by the Government, upgrading electrical, security and structural elements, so that these offices can accommodate information and communication technology hardware and oft ware.^ These information technology investments are being financed by a complementary US$35 million loan recently obtained by the Central Electoral Council from the state-owned Banco de Reservas, for the modernization o f the national civi l registry, o f which US$2.6 million would be considered as Government counterpart financing. This loan i s financing a signed contract with a private sector consortium to bring the civil registry into the modern information age. All civil registry books (15 million entries) have been digitally scanned, 150 civil registry offices around the country will be connected in real time via a virtual private network to central database servers, digital fingerprinting and other biometrics will be captured as new identity cards are issued, and processing o f all civil registry h c t i o n s will be automated. This loan and contract includes financing o f hardware, software, training and technical assistance. However, it does not include the financing o f civil works so that civil registry offices can securely accommodate the technology, which means the entire civil registry modernization project i s in jeopardy (more information about this loan can be found in Project Files).

6.8 In addition, this sub-component would finance additional temporary para-legal staff in the Supreme Court and Attorney General’s office, to speed up processing o f identity document applications, as these institutions must also issue administrative approval o f all late birth certificates and identity cards. The project would monitor average processing times for ratification o f these identity documents by both entities.

6.9 Project financing also includes civil society monitoring o f local civil registry offices (as part o f the M & E sub-component o f Component 2 below) to: (i) ensure application o f current legal provisions which specify that issuance o f birth certificates and national identity documents i s without charge to the population, (ii) monitor standardization across all 150 civil registry offices o f identity document processing procedures, and (iii) track efforts by civil registry officials to reduce the percentage o f undocumented households in their respective jurisdictions.

No new constructions or land acquisitions are supported by the loan; only rehabilitation and minor extensions o f existing civil registry offices. Government would contract with UNDP, which would use standard World Bank procedures for civil works.

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Component Two, Strengthening o f Social Protection Services (estimated US$5.1 million)

6.10 monitoring and evaluation o f social protection programs.

This component would aim to build the capacity o f the Social Cabinet, SIUBEN,

Sub-Component 1, Social Cabinet Institutional Strengthening (US$0.2 million)

6.1 1 Under this sub-component, the loan would increase the capacity o f the Social Cabinet to play an effective role in the country’s strategy to reduce poverty and to foster investments in human capital among poor households. Specific functions o f the Social Cabinet to be strengthened include social program planning, budgeting and inter-institutional coordination, in response to recent Government decisions which expand the role and mandate o f the Social Cabinet.6 I t i s anticipated this will lead to improved efficiency in resource allocation, program rationalization, improved targeting, and reduced waste in public social assistance programs. Specifically, the loan would finance technical assistance, training and workshops to build awareness and consensus regarding social assistance reform.

6.12 As part o f this sub-component, the loan would complement reforms supported by the IDB’s Social Management Reform DPL, aimed at consolidating or shrinking poorly targeted social programs, particularly those related to food security, such as “Comedores Econ6micosY’, school feeding, and subsidized sale o f food commodities by the National Institute for Price Stabilization (INESPRE). This process would begin with external evaluation o f these programs supported by the loan, to identify comparative advantages, targeting methodologies and opportunities to reduce duplication. The Social Cabinet has established a baseline o f total untargeted social program expenditures in 2006 o f US$172 million, against which this process o f consolidation and rationalization would be measured. I t i s expected this would lead to reductions in real spending for these programs by at least 20 percent over the l i f e o f the project, generating an estimated $34.0 million in fiscal savings each year, which could go to finance the expansion o f the Solidarity CCT Program.

Sub-Component 2, Institutional Development o f the SIUBEN targeting instrument (USS3.4 million)

6.13 This sub-component would strengthen the institutional capacity o f the SIUBEN, the Government’s social program targeting instrument (used for the Solidarity Program, national health insurance enrollment and other social programs). Key program objectives to be financed by the project include a nationwide household survey in 2009 (to update the 2004 survey), additional ICT hardware and software for secure dynamic beneficiary database management, refinement o f proxy-means targeting formulae to incorporate income data, and ability to respond to additional household requests for inclusion at decentralized levels (including training o f new staff). Additional l i n k s to labor market and social security policies and databases also need strengthening. Bank financial support would include ICT equipment, survey administration and

As of 2007, budget execution o f all major public social assistance and social protection programs i s through the 6

Social Cabinet’s Department of Administration and Finance (DAF), and a proposal has been submitted to the Presidency to transform the Social Cabinet into a Secretary o f State for Social Development in 2008 or 2009.

11

processing, staff training and technical assistance. The project would not finance the operating costs o f SIUBEN, which are supported by the national budget (US$30 mill ion in 2006).

Sub-Component 3, Social Policy Monitoring and Evaluation (US$1.5 million)

6.14 Under this sub-component, the loan would support increased transparency and capacity for impact assessment o f all major social protection programs, particularly o f the Documentation component. Baseline and end-of-project impact evaluations o f the Documentation program would be carried out (please see Annex 4 for more description o f the evaluation design). Civil society organizations would be contracted to conduct process evaluations o f different social programs, including o f the Solidarity CCT program and the Documentation component, to improve accountability o f public social programs and strengthened l i n k s between clients (poor people) and service providers. The newly created national department for social and economic development (under the Secretary for Economy, Planning and Development, established in January 2007) would also receive limited support (technical assistance and ICTs) under this sub- component, to improve monitoring and evaluation o f social program public spending and impact, linked to actual budget expenditures and indicators for monitoring the updated Poverty Reduction Strategy.

Component 3: Coordination of Loan Implementation (US1.3 million)

6.15 The loan would provide financing sufficient to hire a Project Coordinator, two component coordinators, a secretary and one M&E specialist, who would be integrated into the operations o f the Technical Unit for Coordination o f the Social Cabinet (TUCSC), with a financial management specialist and a procurement specialist integrated into the DAF o f the Social Cabinet. Under the project these staff would receive appropriate technology, training, equipment and other required logistical support for their jobs.

6.16 Worth noting i s the decision not to create a separate Project Coordination Unit (PCU) within the TUCSC, but rather to strengthen the existing DAF with key personnel who can ensure proper application o f Bank financial management and procurement procedures, as well as produce regular financial monitoring reports. This additional staff would work alongside their colleagues in the DAF, transferring knowledge and experience on the job. Non-fiduciary project staff (technical coordinators) would work with senior staff o f the TUCSC, further strengthening strategic planning, budgeting and M&E capacities o f the Social Cabinet.

7. Lessons learned and reflected in the project design

7.1 as part o f the 2005 Poverty Assessment which have been included in project design include:

Key lessons from the analysis o f the social assistancehocial protection sector conducted

1. Ensure that no Dominican family be excluded from social programs for lack o f documentation;

2. Improve targeting o f social programs through institutional strengthening o f SIUBEN, including the need for clear definition o f roles o f all participating institutions (ONAPLAN, ONE, Social Cabinet, etc.); dynamic SIUBEN data management with

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increased transparency in selection o f beneficiaries, enhanced reliability o f data collection, and updating o f the Operational Manual; provision o f adequate technological infrastructure for SIUBEN; hiring o f sufficient, skilled staff; and expanded use o f SIUBEN for targeting o f social program participants;

3. Increase impact o f social assistance spending by: consolidation o f programs which have similar consumption support objectives (e.g. INESPRE, Comedores Econdmicos, Solidarity, school feeding); and increased transparency and accountability o f al l social programs through expanded monitoring and evaluation by Social Cabinet and c iv i l society;

7.2 Additional lessons learned from the implementation o f the U S $ 100 mi l l ion Social Crisis Response Adjustment Loan (SCRAL) include: (i) confirmation o f the Government’s technical capability to implement a sophisticated social program targeting methodology; (ii) the complexity and importance o f the undocumented issue; (iii) the positive role played by c iv i l society monitoring mechanisms; and (iv) the need to verify social program expenditures, not just budget allocations, and to link them to on-the-ground results.

8. Alternatives considered and reasons f o r rejection

8.1 Both development pol icy (DPL) and adaptable programmatic lending (APL) options were considered. The D P L option was rejected because o f the need to ensure earmarked financing for social programs established through the reforms, and to provide implementation support for these programs. By investing in capacity-building o f key social protection agencies and strengthening accountability systems, the SPIL would promote deepening o f reforms. The A P L option was rejected mainly because it did not appear to offer any advantages over standard investment lending instruments, particularly given that political traditions in the Dominican Republic make it difficult to establish a long-term (1 0-year) vision for social protection reform. In addition, much o f the proposed loan aims to address the issue o f undocumented Dominicans once and for all, meaning a long-term programmatic approach to this issue i s not required.

8.2 Institutional strengthening and impact evaluation o f the Solidarity CCT program were included as part o f ini t ial project design, but it was agreed with the Government during the final stages o f preparation to drop these activities, because o f differences over the perceived need and timing for the updating o f the program’s Operational Manual and Inter-Institutional Agreements with the ministries o f health and education. Hopefully, a future operation could include support to this important element o f the Government’s social protection strategy.

8.3 Additional supply-side interventions were considered for financing, particularly to ensure vaccination and health insurance services for the extremely poor. These were rejected given that the Bank’s Health Sector Reform A P L i s addressing these issues.

8.4 Traditional input-based financing for the national c iv i l registry (vehicles, technical assistance, operating costs, etc) was considered but rejected in favor o f output-based disbursement. First, the Central Electoral Council (responsible for the National C iv i l Registry) received a US$35 mi l l ion loan from the national commercial bank, which will finance almost al l inputs required, except for c iv i l works for c iv i l registry offices, and minor equipment and

13

supplies for the Late Birth Registration Unit which would be financed under the loan. Secondly, civil registry personnel costs would be financed based on actual outputs, providing incentives to civil registry officials to meet specific quantitative targets in terms o f documentation o f poor households.

C. IMPLEMENTATION

9. Partnership arrangements

9.1 Whi le this loan contains no formal co-financing, the Inter-American Development Bank (IDB) should be considered a partner. The banks have agreed on a common policy framework for social protection, linked to their joint preparation o f the Dominican Republic Poverty Assessment, and are supporting this through complementary, parallel financing. Specifically, the IDB recently approved the Social Management Reform Program DPL (US$lSO million) and the Multi-Phase “Labor Markets and Social Transfers” project (Phase 1: US$lO million; Phase 2: US$30 million). The former i s discussed above. Under the latter, the IDB will support increased efficiency o f the labor market through the establishment o f employment offices and labor market clearinghouses to better link demand and supply, and a diagnostic o f the proxy-means methodology used by SIUBEN. A second component will support the extension o f the Government’s Youth and Employment Project, which will be parallel-financed by the Bank’s Youth Development loan. The Bank and IDB have agreed to jointly support the strengthening o f both the Ministry o f Labor and the Social Cabinet, and to use harmonized financial management and procurement procedures (see below).

10. Institutional and implementation arrangements

10.1 The Social Cabinet would be responsible for project coordination, and would use i t s Financial Administration Department (DAF) to handle all project financial management and procurement. The capacity o f the Social Cabinet’s DAF was assessed during project appraisal by both the Bank and the IDB, and it was agreed to strengthen the DAF with specialists in financial management and procurement who are familiar with Bank procedures. In addition, the Social Cabinet would hire an overall Project Coordinator, technical coordinators for the social protection services and documentation components, and a monitoring and evaluation specialist, financed by the loan. Extensive training would be provided in both financial management and procurement to existing DAF and other personnel.

10.2 For the first component (Provision o f national identity documents), the Social Cabinet would play a lead coordinating role, while the Central Electoral Council (CEC) would play a lead executing role. For the civil works to be carried out in the civil registry offices, the Social Cabinet would have the option o f signing a sole source contract with the United Nations Development Program (UNDP) to handle the contracting o f engineering design and construction f i rms. This would minimize potential political and institutional conflicts between the Social Cabinet (part o f the Executive branch) and the CEC (an autonomous entity outside the Executive, Legislative and Judicial branches). would be responsible for contracting on a competitive basis the legal and technical assistance needed by Dominican families to complete their identity document dossiers, the bulk o f which would be

In addition, the Social Cabinet

14

provided by NGOs, legal aid associations, and church-affiliated groups. Design and execution o f the national IEC campaigns would be the responsibility o f the Social Cabinet, working in collaboration with the National Council for Children (CONANI), NGOs, church groups, public relations f i r m s and community-based organizations.

10.3 The provision o f late birth certificates and national identity cards i s the responsibility o f the Civi l Registry Office o f the Central Electoral Council. To this end, the CEC has established a Special Unit for Late Birth Certificates, with 50 temporary staff (financed by the national budget), to handle the increased demand stemming from the loan’s activities. In addition, the Social Cabinet and CEC would need to work closely with the Attorney General’s Office and the Supreme Court for expeditious processing o f their administrative approvals o f issuance o f late birth certificates. The Supreme Court and Attorney General’s Office have agreed that the Social Cabinet would recruit additional para-legals to speed up their handling o f cases, and have defined the profile and terms o f reference for this technical assistance.

10.4 For the Social Protection Services component, the Social Cabinet would work closely with SIUBEN, the Solidarity CCT program and the Sub-secretary o f Economy, Planning and Development. Indeed, all these institutions need to work seamlessly in terms o f information management for social program targeting, implementation and evaluation. The Social Cabinet would also have the lead responsibility for consolidating all food security programs under i t s control, which would enable it to improve targeting, reduce duplication, increase transparency and accountability, and ultimately to allocate public social spending more effectively.

10.5 SIUBEN i s implemented by 170 staff nationwide, located in the central and 10 regional offices. I t was officially established by Presidential Decree in 2004 and has annual operating costs o f US$30 million financed through the national budget. In 2006 it strengthened staff and institutional capacities, and greatly improved coordination and information-sharing with the Solidarity CCT program and national health insurance agency (SENASA) which also uses SIUBEN to identify beneficiaries. It would take primary responsibility for carrying out the national survey o f poor households in 2009, assisted by the DAF o f the Social Cabinet for fiduciary matters.

11. Monitoring and evaluation o f outcomeshesults

1 1.1 The project includes a significant investment in strengthening monitoring and evaluation systems o f the Social Cabinet and the national department for social and economic development (responsible for monitoring o f the national poverty reduction strategy). This would enable the Social Cabinet to assume lead responsibility for tracking all key indicators o f the Results Framework (Annex 3 o f this PAD), in collaboration with executing l ine ministries and government agencies.

11.2 To assess the impact o f providing legal identity documents to poor Dominicans, the project would conduct a baseline survey o f a sample o f participating households when the fieldwork i s carried out to assess the identity status o f each undocumented household (Sub- component 1.2). This survey would be an amalgamation o f the Living Conditions Survey (ENCOVI) and Household Survey conducted by the National Office o f Statistics, capturing both

15

social (schooling, vaccinations, enrollment in health insurance, etc.) and economic data (employment, asset ownership). A control group composed o f undocumented households just above the poverty l ine (determined by SIUBEN’s proxy means methodology) would also be surveyed, for a quasi experimental design. At the end o f the project, the same households would be surveyed. The results for poor households whose members obtained their legal identify would be compared to the baseline (before/after comparison) and to those o f undocumented non- poor households just above the poverty l ine (regression discontinuity design). Please see Annex 4 for more detail on evaluation design.

1 1.3 In addition to this quasi-experimental evaluation, periodic qualitative process evaluations would be conducted by qualified civil society organizations, selected in collaboration with the Consultative Council o f Civil Society, to monitor and evaluate social programs. The loan would also finance workshops and dissemination o f evaluation results, to be sure such evaluations reinforce accountability and transparency in program operations and results.

12. Sustainability and Risks

12.1 The documentation o f poor Dominicans i s likely to lead to an increase in government expenditures for subsidized national health insurance, enrollment in the Solidarity CCT program, and secondary education. Staff estimate the total annual recurrent financing impact o f documentation at US$18.4 million, if all extremely poor household members are enrolled in these programs. Reductions in spending on poorly targeted social programs such as INESPRE, comedores economicos, and the school breakfast program should more than offset these recurrent costs. Indeed, as part o f this project the Government has agreed to reduce funding for untargeted social protection programs by 20 percent by 201 1 (compared to 2006), equivalent to US$34 m i l l i ~n .~ (Note: this process i s also supported by the IDB’s US$lSO mill ion Social Management Reform Program DPL in 2007 and 2008.) In summary, these reforms and current macroeconomic analysis suggests Government will have the fiscal space to accommodate the projected expansion o f the Solidarity Program and the additional costs for health insurance, but this could change during project implementation and would need to be carefully monitored.

13. Critical risks and possible controversial aspects

13.1 Similarly to other World Bank projects in the Dominican Republic, ratification by Congress may not occur immediately. To reduce the time before Board approval and effectiveness, staff have met repeatedly with leaders o f both opposition and ruling political parties in the Senate and Houses o f Representatives, to address questions and build support, particularly for the documentation component. Opposition politicians have expressed their support o f the project’s objective to improve targeting, inclusion and transparency o f social protection programs, as they see benefits in party-blind targeting. In April 2007 they indicated their support for the documentation component, as well, saying this issue could no longer be neglected. Should the loan’s approval be delayed, however, the documentation component would simply be stalled, although the civil registry modernization program financed by the parallel loan from the Banco de Reservas would move forward slowly. During this time Bank staff would continue i ts strategy o f meeting with key Congressional officials to build support for

Political Risk:

’ This i s a Results Framework Indicator, see Annex 3.

16

the loan’s approval, and would engage both civi l society and the Church to press for the loan, as well.

13.2 Political Risk: The Documentation Component, which would lead to issuance o f the national identification card (the so-called “cedula”), i s unavoidably linked to electoral politics because the cedula i s also a voter registration card, without which no Dominican can vote. The country’s political system i s such that either Presidential or Congressional elections are held every two years, such that the country i s almost permanently in an electoral cycle. There may be pressure from the party in power to inappropriately issue identity documents to maximize their future electoral results, and conversely, opposition to this component from opposition parties. To address this, careful mitigation measures have been (and would continue to be) conducted, such as: (a) building a strong consensus among all stakeholders (including political parties) on the urgency o f carrying this work out regardless o f political environment; (b) keeping the independent Central Electoral Council (whose nine judges were recently selected through a participatory, consultative process by the Senate) in control o f deciding who qualifies to obtain a birth certificate and/or the cedula, (c) financing independent civil society oversight mechanisms with the participation o f credible actors to oversee the work o f the civil registry; and (d) keeping all political parties well informed as to results o f the Documentation component, so they can to see that opportunities for manipulation are extremely limited and under control.

13.3 Political/Social Risk: Addressing the exclusion o f undocumented families i s a very sensitive topic in Dominican society, linked to fears o f Haitian immigration on one side and accusations that the Dominican Government applies discriminatory policies against Haitians on the other side. Both aspects o f this risk need to be addressed. The “nationalist” aspect would be minimized through consultations with Congress, meetings held with all political groups, respect for national laws regarding citizenship, and promotion o f public debate through church groups and prominent civil society organizations. The Catholic Church, in particular, has been vocal and pro-active in supporting undocumented families, and has supported efforts to simplify documentation processes. In addition, since July 2005 all major newspapers have regularly reported on this issue o f undocumented Dominicans, which has served to increase public understanding o f the issue, making the public less susceptible to extreme nationalist rhetoric.

13.4 The “discrimination” aspect would be addressed through contracting o f NGOs which represent Haitian interests to monitor the application o f Dominican laws regarding citizenship and identity and bring to light any irregularities; public education campaigns; and close oversight by the Bank. This was agreed during focus group meetings with NGOs representing Haitian interests in the Dominican Republic, during which these groups indicated their support for the loan. In addition, the Bank and Ministry o f Health have agreed to use Health Sector Reform APL funds to improve the issuance o f birth registrations (not certificates) for all babies born in the Dominican Republic, regardless o f nationality. Haitian fami l ies could use these registrations to declare their children as Haitian citizens in Haiti, in conformity with Haitian law.

13.5 Institutional Risk: The legal basis o f the Social Cabinet i s not as strong as one would like. Created by Presidential Decree under the previous administration (and therefore subject to elimination by Presidential Decree), it has been progressively strengthened under the Fernandez Government. A supplemental Presidential Decree (570-05; October 1 1, 2005) authorizes the

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Social Cabinet to operate a Department o f Administration and Finance (normally reserved only for l ine ministries), and gives the Social Cabinet significant additional control over all public social assistance and social protection programs, including both budgetary authorization and monitoring oversight responsibilities. This decree consolidates over 25 social programs under the Social Cabinet, including a 2006 budget o f US$190 million. In conformity with this decree, the Social Cabinet submitted for the Government’s consideration in October 2006 a proposal for rationalizing and restructuring the social sector, which would logically lead to establishment o f a Secretary o f State for Social Development in 2008 or 2009. Notwithstanding these measures, not all government agencies support this process and the risk remains that a subsequent President could reverse this process. To address this concern, the Legal Agreement would contain clauses allowing for the Bank’s suspension o f disbursements should the Government modify the current institutional status of the Social Cabinet such that, in the opinion o f the Bank, the probability o f achieving the project’s development objectives are adversely affected.

13.6 Institutional Risk: Institutional constraints and political realities may result in fewer resources than anticipated transferred from untargeted to targeted social programs over the l i fe o f the project. I t i s possible that spending on targeted social protection programs will increase without complementary decreases in untargeted programs. To mitigate this risk, the project would strengthen both the Social Cabinet (through which all public funding flows for social assistance and social protection programs), and the department for economic and social development within the Secretary o f Economy, Planning and Development (responsible for national budget formulation), and would promote their coordination on this issue. In addition, the IDB’s Social Management Reform DPL includes specific targets linked to this reallocation process which would complement the project’s funding. Finally, the Vice President has repeatedly confirmed the Government’s desire and intention to reallocate funds from untargeted to targeted social programs, and requested the support o f both development banks to achieve this.

13.7 Implementation Risk: The proposed plan for providing all Dominicans with their identity documents i s complex, and relies on several institutions (such as the Central Electoral Council and the Supreme Court) which are outside the control o f the Executive Branch. The number o f key actors and their institutional autonomy present significant challenges to program coordination. This risk has been minimized through the participatory development o f the National Plan for Provision o f Identity Documents which has involved all key stakeholders over the past twenty four months and obtained the approval o f the Central Electoral Council, as well as repeated meetings between Bank staff and the judges o f the CEC. Key responsibilities have been agreed to and necessary financing identified.

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Table 1: Project R i s k s and Mitigation Strategies

Key R i s k s

Overall Rating 1, Congress may not approve the loan in a timely fashion.

2. Politicians may attempt to manipulate or obstruct the process for issuing identity documents (which also give right to vote), depending on how they expect newly documented poor Dominicans to vote.

3. The public at large may object to efforts to provide identification documents to poor Dominican families, on the grounds that Haitian families may benefit. Conversely, the Bank may face a reputational risk if the documentation process i s perceived to be prejudicial against the human rights o f Haitians. 4. The Social Cabinet may be terminated by the next president, given i t s existence by Presidential Decree and that incoming presidents often seek to personalize social assistance programs (including rejection o f earlier President’s programs). 5. Institutional constraints, political realities and limited project funding (leverage)

Rating

S

M

S

Mitigation

1. Continued advocacy with congressional leaders should strengthen multi-partisan support for the loan; l is ts o f social protection program participants would be published on the Internet to maximize transparency and establish public credibility o f targeting instrument. If the loan i s seriously delayed, some project investments may be financed by other World Bank loans in the social sectors. 2. Build a strong consensus among al l stakeholders (including political parties) on the urgency o f carrying this work out regardless o f political environment; create independent oversight mechanisms with the participation o f credible actors; and keep political parties informed as to the results o f Documentation, so they see that spaces for manipulation are limited and under control. 3. National IEC campaigns would stress adherence to all Dominican laws regarding citizenship and identification, emphasizing the basic human rights o f all Dominicans to a name and nationality. Civi l society organizations would be contracted to monitor civi l registry offices and bring to light any abuses o f the law. Bank health loan financing i s available to help Government issue birth registrations to babies o f Haitian parents, so they can be declared as Haitians in accordance with Haitian law. 4. The Legal Agreement would include suspension o f disbursements in case o f institutional changes to the Social Cabinet, such that, in the opinion o f the Bank, achievement o f the project’s development objectives are jeopardized.

5. The project would strengthen both the Social Cabinet and the department for economic and social development within the

Rating after Mitigation

S M

M

S

M

M

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for social program public expenditure reform may result in fewer resources than anticipated transferred from untargeted to targeted social programs over the life o f the project.

6. The Documentation Component i s complex in terms o f the number and autonomy o f key actors, raising implementation risks.

6. Financial Management Risk 7. Procurement Risk

Risk Rating - H (high risk); S (subs

S

S

H

ntial risk); 1

Secretary o f Economy, Planning and Development (which together are responsible for social program budget formulation and execution), and would promote their coordination on this issue. In addition, the IDB’s Social Management Reform D P L includes specific targets linked to this reallocation process which would complement the project’s funding. 6 . The National Plan for Provision o f Identity Documents was developed with all key actors involved. All nine judges o f the CEC endorsed the Inter-Institutional Agreement between the Social Cabinet and CEC. Output-based disbursements would promote intei-institutional coordination. 6. Implementation o f the FM action plan described in Annex 7. 7. Thresholds for prior review have been established at relatively low levels to minimize risk, and a 7-point action plan detailed in Annex 8 would be carried out. (modest risk); N (negligible/low risk).

M

M

S

14. Loadcredit conditions and covenants

14.1 None.

D. APPRAISAL SUMMARY

15. Economic and financial analyses

15.1 estimated while others are dif f icult to quantify.

In terms o f the longer-term economic and financial benefits o f this project, some can be

15.2 Economic benefits include: - an increase in productivity and earnings due to additional years o f schooling and an increase

in primary and secondary education completion rates, linked to 1 the provision o f birth certificates to children so they are not evicted from school after 7 grade and can progress on to secondary education, and to (ii) enrollment o f poor households into the Solidarity CCT program after obtaining legal identity documents, which should also improve school attendance and health indicators; an increase in productivity and earnings due to economic opportunities made possible through issuance o f legal identity documents (permission to open a bank account, take out a loan, own title to assets, obtain a driver’s license, travel abroad, etc.).

i?

-

15.3 In order to estimate specific economic rates o f return for this project only the first benefit listed above was considered. Thus the calculations represent a lower bound estimate o f the

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economic return. (For full treatment o f the economic analysis methodology, please refer to Annex 9.) The economic rate of return for this project i s calculated at 22 percent, with a Net Present Value (NPV) of US$16 million, using a 12 percent discount rate.

I RR 10 15

15.4 This assumes pre-project baseline salaries equivalent to average wages o f young (aged 15-25) workers with primary education in the Lowest 4 Income Deciles (equivalent to RD$14,65/hour or US$0.49/hour), calculated from the October 2004 National Labor Force Survey. It also assumes: an increase in the total years o f completed schooling o f 1 .O year due to the project; that 12 annual cohorts would be needed before full benefits accrue linked to primary education impact and that 15 annual cohorts would be needed before full benefits accrue linked to secondary education impact; and that 57% o f 275,000 currently undocumented children will finish basic education (the national average), o f which one-third will continue o n to secondary. These are considered to be conservative assumptions.

0.2 0.4 0.6 0.8 1 9% 12% 15% 18% 21%

11% 14% 17% 20% 23%

15.5 Sensitivity analyses were conducted to determine the robustness o f the project’s expected benefits. The two key variables which affect the IRR and N P V are the pre-project baseline salaries (what hourly wages o f young workers would be without the project) and the increase in total years o f completed school due to the project.’ The projected number o f beneficiaries (calculated by the number o f current households participating in the program, multiplied by average number o f school-aged children per household, 2.75) was also kept constant, even though the number o f households participating is expected to increase by 50 percent over the l i f e o f the project, so these calculations should also be considered quite conservative. Even under a base case scenario, with a project impact o f just 0.4 years o f completed schooling and pre-project hourly wages o f less than one-third o f minimum wage, the project’s rate o f return i s acceptable.

I IDD

Table 3: Sensitivity Analyses to Rate of Return Calculations

0.2 1 0.4 1 0.6 1 0.8 1 1 I I

12% 15% 18% 21% I 1 7 0 14% 17% 20% 23%

n n r

ImDact o n Years o f Schooling

20 25

14% 17% 19% 22% 25% 16% 19% 21% 24% 27%

15.6 Financial benefits include: - reduction in wasted government spending caused by high dropout rates at both primary and secondary education levels, as provision o f birth certificates would allow youth to continue their studies and benefit from the Solidarity CCT program (which should improve enrollment, attendance and completion rates); reduction in inefficient government spending o n untargeted social assistance programs which in many cases benefit the middle and upper classes more than the poor.

-

15.7 Other benefits included reduced costs to society linked to delinquency, adolescent pregnancy, crime, substance abuse, HIVIAIDS and other negative behaviors, because o f poor

* Note: the projected increase in hourly wages per year o f schooling was calculated using ENCOVI 2004 and is considered a “secure” number.

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youth’s improved access to education and economic opportunities due to the conditional cash transfer program and provision o f national identity documents. Rather than undocumented youth being forced out o f school and cut o f f f rom formal sector employment opportunities as i s currently the case, youth will be able to remain in school and obtain better jobs upon leaving school. These reduced costs are difficult to quantify.

Primary Education Dropout Secondary Education Dropout

15.8 For the purposes o f establishing a lower bound estimate o f the financial benefits, only the f i r s t benefit described above was considered, under the assumption that whatever savings accrue from improved targeting will be spent in the CCT program. The expected improvement in primary and secondary education internal efficiency is calculated to result in financial savings equivalent to US$4.5 M in net present value terms over a 25-year period. Overall dropout rates are expected to decrease by 15 percent, while no change in repetition rates linked to the project are forecast. Specific assumptions regarding dropout rates before and after the project are provided below in Table 4.

6.4 5.4 8.8 7.5

Table 4: Expected Improvement in Internal Efficiency of Education System

1 Before the Proiect\l I After the Project 1

16. Technical

16.1 The Documentation Component is undeniably complex, involving many different actors across al l branches o f Government. To address this, both demand-side and supply-side measures are to be supported under the loan, and great care has been taken to involve al l key stakeholders. As part o f this process, the Bank sponsored two multi-stakeholder full-day workshops which brought together al l the key actors to develop a National Action Plan for Identification (included in Project Files). These actors include the Central Electoral Council, the national c iv i l registry, the Supreme Court, the Attorney General’s Office, the Social Cabinet, NGOs active in this area, other donors (e.g. UNICEF, UNDP), the Catholic Church and legal aid associations. The National Plan has been validated by the plenary o f the Central Electoral Council, which would have final authority on the issuance o f these national identification documents.

16.2 A key feature o f the Bank’s support for this plan i s output-based disbursement, whereby the Bank would reimburse the Government for expenses directly l inked to the provision o f identity documents, based o n average unit costs to process these documents and the number o f documents actually issued to poor Dominicans. This would avoid simply financing inputs (technical assistance, equipment, transportation, c iv i l works, etc) which, given the history o f the national c iv i l registry in the Dominican Republic, might not lead to anticipated results. The Government would include in the part o f the national budget allocated to the c iv i l registry sufficient financing for related personnel costs, which the Bank would reimburse if the c iv i l registry meets certain quantitative targets.

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17. Fiduciary

Financial Management

17.1 A World Bank Financial Management (FM) Specialist conducted in September 2005 a financial management assessment (FMA) o f the proposed financial management arrangements for the execution o f funds to be granted under the projectg. The assessment was updated in April 2007. The overall conclusion o f the FMA i s that the proposed financial management arrangements for the project would meet the Bank's minimum requirements once the time-bound FM action plan detailed in Annex 7 i s fully executed.

17.2 control environment, including the following actions:

Over the past year, the DAF o f the Social Cabinet has significantly improved i t s internal

o The Department has an internal audit function which i s performed by 12 full-time auditors f rom the General Comptroller's Office, responsible for the 14 social programs implemented through the Social Cabinet.

o The DAF uses Dac Easy Accounting, an automated system that i s capable o f providing funds accounting and is adequate for financial management purposes. The DAF is also implementing most o f the modules o f the country accounting system known as SIGEF (Sistema Integrado de Gesti6n Financiera). The modules implemented so far include budgeting and procurement. The DAF intends to keep both systems until the SIGEF i s completely implemented, with al l SIGEF modules with the same level o f detail and the funds accounting capability (s t i l l under design with UEPEX a subsystem o f SIGEF, for implementing units with donor funded projects). The f l ow o f funds process i s electronically processed through SIGEF: assignment o f budget, request for the budget (planning and budgeting), "libramientos" requests and approval to/from Comptroller's Office, requests/approval and wire banking o f funds from Treasury and payments to providers.

o The DAF appointed an officer who i s trained on the institutional processes needed to implement the law o n Citizens Access to Public Information. Required office equipment has been purchased and space should be allocated shortly to enable commencement o f operations.

17.3 The risk assessment conducted as part o f the FMA found that the country specific risk i s high, due to the results o f the Fiduciary Assessment Report issued in April 2005, as wel l as developments in the areas o f anti-corruption and transparency", while entity-specific and control risk ratings are substantial, particularly due to the f low o f funds arrangements which in the past were dysfunctional and time-consuming. However, the implementation o f many laws that were enacted in 2006 and early 2007 to strengthen the public financial management has led to substantial improvements in the financial management in general, and in the f low o f funds in

See technical Annex 7 for more details on the FMA results. The Executive Director o f Pro-Reforma and Technical Coordinator o f the National Commission for Ethics and

Prevention o f Corruption, presented his resignation September 1,2005, based on disagreements wi th presidential decisions that he considers affect "institutionalism and non-negotiable principles". His withdrawal from the government i s considered a hard blow for officials committed to the fight against corruption.

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particular. The flow o f funds cycle for most o f the project coordination un i t s managing World Bank projects has dramatically improved: from 45 days (2003) to 11 days (2007). The implementation o f the new financial management legal framework was highlighted in a Public Expenditure and Financial Accountability (PEFA) exercise in January 2007, coordinated by the European Commission with participation from the Bank. The level o f coordination required for the implementation o f these unprecedented FM reforms along with their enabling regulations remains a challenge o f great magnitude. Notwithstanding, successful completion o f the F M Action Plan prior to effectiveness would result in an entity specific and control risk rating o f modest.

17.4 One outstanding issue i s relatively weak coordination between the DAF and the JCE, and the risk that the lack o f coordination will delay or hamper project execution, or more specifically, the flow o f funds for the second component.

17.5 In addition, to further mitigate financial management risk, it has been agreed that the IDB wi l l also use the DAF o f the Social Cabinet to manage one minor component o f their complementary loan, “Labor Markets and Social Transfers”. Although the IDB intervention has been reduced in scope in 2007 and the loan would be limited to strengthening the Sistema Unico de Beneficiarios (SIUBEN), s t i l l all financial management reporting and audits will be harmonized between the two institutions. A single integrated financial report would be prepared by the DAF for both loans every six months. A single audit firm would be selected for both loans, and the annual external audit would cover both loans, with resources from both loans clearly identified.

Procurement

17.6 Procurement activities would be carried out by the Department o f Administration and Finance (DAF) o f the Social Cabinet. The project would not seek the creation o f a Project Implementation Unit (PIU) in the Social Cabinet, but instead would strengthen the DAF with specialists in the areas o f procurement and financial management. The Procurement Specialist for the DAF would be hired before effectiveness and would be in charge o f all procurement under the project.

17.7 An assessment o f the capacity o f the Implementing Agency to implement procurement actions for the project was carried out by the Bank in September 2005, and updated in April 2007 (Project Files). The assessment reviewed the organizational structure for implementing the project and the interaction between the project’s staff responsible for procurement and the Social Cabinet’s relevant central unit for administration and finance.

17.8 The key issues and risks identified for the implementation o f procurement for the project include the lack o f prior experience with Bank-financed procurement within the DAF and the overall weak procurement environment. Further, the country does not have a transparent public procurement system in place. Although the new Procurement Law No. 340-06 has been approved, it i s s t i l l pending implementation, for which dissemination and extensive training wi l l be required. There i s a shortage o f skilled personnel in procurement with knowledge o f international rules and also limited planning and follow-up capacity and a lack o f standard

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bidding documents, rules and procedures. The current overall project risk for procurement i s HIGH. The corrective measures which have been agreed are:

Social Cabinet would hire by effectiveness a Procurement Specialist with relevant experience in Bank procurement, to be dedicated full time to the project. TORS o f the proposed specialist and review o f at least three candidates would be subject to the Bank's approval. Training in procurement provided by the Bank to the Social Cabinet as soon as the project is declared effective. Further training to be provided during the f i rst year o f implementation. Submission to the Bank o f a preliminary Procurement Plan to cover the f i rs t 18 months o f the project. Due for approval by negotiations. Preparation by the Social Cabinet o f draft bidding documents following the Bank's standards for al l processes, by negotiations. (Done) Preparation by the Social Cabinet o f an operations manual with a specific chapter on procurement, detailing a l l the procedures and channels o f responsibilities and f low o f documentation. Due for review and no objection by the Bank by negotiations. Establishment o f a procurement filing system, to be subsequently submitted for Bank's no objection by effectiveness. Organizing a launch seminar before project effectiveness.

Following execution o f this action plan, the overall project r isk for procurement i s SUBSTANTIAL.

18. Social

18.1 This loan i s specifically intended to have a positive social impact, especially for the most vulnerable segments o f the population. Specifically, the loan would reach at least 400,000 poor undocumented Dominicans, the majority o f whom live in extreme poverty (less than US$1 per day). Documentation would al low the enrollment o f 92,000 extremely poor households into the Solidarity CCT program, providing each household with an additional US$30/month o n average (depending on the number o f school-aged children attending school). In addition, these households represent a total o f approximately 300,000 Dominicans, who would also become eligible after obtaining the legal identity documentation for enrollment in the fully subsidized national health insurance program. As only poor Dominicans identified by the SIUBEN are eligible for the Solidarity CCT and subsidized health insurance programs, this is an extremely effective way o f targeting the loan's benefits o n those who need it most. (Please see Annex 10 for a ful ler discussion.)

18.2 As part o f project appraisal, the Bank presented and discussed in a ''focus group" approach the proposed Documentation component with seven NGOs active in representation o f the interests o f Haitians in the Dominican Republic. The purpose o f this was to determine if the loan's activities appear to present any reputational r isk issues for the Bank, and if so what measures should be taken by the Bank or Borrower to address them. The NGOs expressed concern that the proposed loan would do little to improve the situation o f Haitian immigrants, and that the loan itself might be considered discriminatory since it supports a system that i s

25

discriminatory in nature. But all participants recognized the intentions and benefits o f the loan, and expressed their commitment to support i t s implementation. They also were supportive and appreciative o f the Bank’s efforts to raise the profile o f the issue o f undocumented families in the Dominican Republic-whether Dominican or Haitian. The Bank team promised to maintain close contact with these groups, and agreed they should participate in loan implementation through identification o f NGOs which could provide para-legal support to undocumented households and as part o f civil society monitoring.

18.3 The proposed rationalization and consolidation o f the social assistance/social protection sector overall, including improvement o f targeting mechanisms across the sector, would mean fewer benefits to the lower middle and middle classes. This i s a concern, particularly for those families living just above the poverty line, particularly given the strong negative impact o f the recent economic crisis on the middle class (declining real incomes linked to rampant inflation) in 2003 and 2004. These groups are also important political actors and their opposition may reduce the the Government’s willingness to implement proposed social sector policy reforms. However, economic stabilization and low inflation in 2005, and a robust growth in 2006, helped approximately 700,000 people to move above the poverty line, such that the time i s opportune to move forward with these reforms.

19. Environment

19.1 This loan has no direct anticipated impact on the environment. It has been rated as a Category “C” by the Quality Assistance Team. No new constructions are financed under this loan. Minor civi l works required for the rehabilitation o f existing civil registry offices, so as to permit the installation and security o f essential ICT equipment as part o f their modernization program, are not anticipated to have any negative environmental impact. This rehabilitation might include minor expansion o f existing office space on existing land plots occupied by the civil registry offices.

20. Safeguard policies

Safeguard Policies Triggered by the Project Yes N o Environmental Assessment (OP/BP/GP 4.0 1) [I [ X I Natural Habitats (OP/BP 4.04) [I XI Pest Management (OP 4.09) [I E XI Cultural Property (OPN 1 1.03, being revised as OP 4.1 1) [ XI Involuntary Resettlement (OP/BP 4.12) [I [ XI Indigenous Peoples (OD 4.20, being revised as OP 4.10) [ XI Forests (OP/BP 4.36) [I [ XI Safety o f Dams (OP/BP 4.37) [I [ XI Projects in Disputed Areas (OP/BP/GP 7.60)* [I [ XI Projects on International Waterways (OP/BP/GP 7.50) 11 [ XI

[I

[I

* By supporting the proposedproject, the Bank does not intend to prejudice the final determination of the parties’ claims on the disputed areas

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21. Policy Exceptions and Readiness

2 1.1 N o pol icy exceptions are required for this loan. There are no conditions o f effectiveness.

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Annex 1: Country and Sector Background

DOMINICAN REPUBLIC: Social Protection Investment Loan

Country Background

After two years o f economic stagnation and decline precipitated by the 2003 banking crisis, the Dominican economy i s on the road to recovery. The 2003 collapse o f the private bank, BANINTER, and financial difficulties in two other private banks and the subsequent intervention by the Central Bank created a serious crisis o f confidence in the economy, leading to macro imbalances, capital flight, a massive depreciation o f the peso, and a doubling o f total public debt and a tripling o f domestic debt between 2002 and 2003. The peso depreciated by 100 percent from March 2003 to January 2004, driving inflation up from 5 percent in 2002 to 27 percent in 2003 and 52 percent in 2004, and GDP f e l l by 2 percent in 2003, recovering modestly in 2004. GDP growth rates rebounded strongly in 2005 and 2006, to 9 percent per year, fueled by tourism, construction and telecommunications, but the impact on poverty has been very limited, as explained below.

The Fernandez Government came into office in August 2004, and pursued a policy agenda focused on restoring macro balances, strengthening the banking system, and stabilizing public debt through fiscal adjustment and electricity sector reform. The ensuring period has witnessed a tremendous turnaround in economic performance, in conjunction with an IMF Stand-By Arrangement, and primarily driven by restored confidence in the economy. The peso appreciated from RD$52/US$ in January 2004 to around RD$29-30/US$ for most o f 2005, and has remained stable at RD$33/US$ since early 2006. The debt restructuring granted by the Paris Club in 2004 not only eased the debt service obligations in a year o f tight fiscal balances, but also provided a positive signal to other creditors that the Dominican authorities were engaged in serious economic reform. The bond restructurings and subsequent agreements with private creditors provided further breathing room, as has donor support through fast disbursing assistance.

Progress in key policy areas and the remaining challenges are summarized below, with a focus on the following main themes: the ongoing electricity crisis, the changing external environment, and transparency issues that have plagued the country in the past.

Electricity crisis. The ongoing electricity crisis - characterized by frequent black-outs stemming from inefficiency and financial insolvency among the power distribution companies - poses a major challenge to the Government, and i ts continuation seriously harms the fiscal balance. The Government has developed a strategic plan to reduce the sector’s debt and improve the companies’ financial position through increasing the very low cost recovery index and introducing private sector management aimed at increasing transparency and efficiency through reducing operating costs (Le., reduce workforce through the implementation o f HR plans), improving bill collection and reducing losses (particularly o f large defaulting consumers). Government efforts are being supported by a World Bank Programmatic Power Sector Reform Loan for US$l50 million, approved by the Bank in May 2005 and to be disbursed in three tranches o f US$50 mill ion each (the loan became effective in December 2006 and the first disbursement was made). The Bank also has approved a US$7.3 mill ion Technical Assistance

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Loan which became effective on August 12, 2005. Recent progress in loss reduction and bill collection has been encouraging but slow.

Trade. The Dominican Republic officially entered the Central American-Dominican Republic Free Trade Agreement (DR-CAFTA) in March 2007 with the declaration by the United States Government that the Dominican Government had fulf i l led al l pre-conditions for entry. In preparation for the anticipated trade revenue losses, a fiscal reform bill was passed by Congress in December 2005 which proposes revenues measures to partially offset lower import duty collection. This reform comes on the heels o f already significant fiscal reforms taken at end- 2004 to help close the financing gap. Continued improvements in competitiveness by other countries (e.g. China) have progressively eroded the Free Trade Zones in the Dominican Republic, particularly in the area o f textiles, leading to losses o f tens o f thousands o f jobs in 2006 and 2007.

Transparency. The government’s program includes efforts to strengthen public institutions, fight corruption, and improve citizen security. The principal challenge will be to adopt a transparent, rule-based system that ensures accountability and focuses on maximizing the public good. Recent events (notably the banking crisis) have highlighted the potential impact o f private sector corruption and weak government regulation.

A National Ethics and Corruption Commission was created in February 2005 to increase transparency in public administration, with a special focus on financial management, and to promote c iv i l society participation and thus a stronger democracy. The Commission developed an action plan in conjunction with other government institutions and c iv i l society. Congress recently passed a series o f laws intended to strengthen public financial management and improve the efficiency o f public administration (inter alia by reducing the discretionary spending o f the Executive Power), including: the Organic L a w for the Public Administration Budget (Ley Organica de Presupuesto para el Sector Publico); the Public Planning and Investment L a w (Ley de Planificacion e Inversion Publica); the Procurement L a w (Ley de Compra y Adquisiciones); and the Public Credit L a w (Ley de Credit0 Publico). The Government’s anti-corruption efforts have met with dif f icult challenges, and virtually no official accused o f corruption has actually been brought to tr ial and convicted. O n the other hand, recent progress is reflected in the fact that a l l cases related to the Banco Mercantil and Baninter bank failures have been sent to trial on criminal charges.

In conclusion, the Dominican authorities have been successful in overseeing the return of economic growth and the improvement o f macroeconomic indicators, and the authorities have articulated a public sector reform agenda in close conjunction with and support f rom the donor community, and have advanced in i t s implementation. The forward-looking pol icy agenda includes many challenges, however, particularly concerning the need to reduce inequality. Continued reform progress in both the economic and social sectors will be essential to maintaining a virtuous growth-investment-competitiveness cycle and delivering better results for Dominicans and especially the poor.

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Social Sector Background

Summary

The Fernandez Government has articulated a new social sector policy, based on a system of social protection which aims to help households in extreme poverty manage risks and reduce their vulnerability to external and internal shocks. These shocks may be economic, political, internal to the household (illness, death), or l inked to natural disasters. Economic shocks include domestic (such as that caused by the collapse o f the financial sector in 2003) and international (e.g. DR-CAFTA). This social pol icy i s part o f a broader government pol icy for growth and human capital development which aims not just to reduce levels o f poverty but also to increase the capacity o f the poor to lift themselves out o f poverty and integrate into the economy and society at large. I t is linked to economic policies which promote not just stability but also sustainable economic growth. These economic policies include measures to increase internal savings which can be transformed into productive investments, which in turn stimulate employment and higher value-added production, thereby increasing wages and overall l iv ing conditions.

Tradit ional Social Sector Policy

Traditional social policy in the Dominican Republic has been based o n the provision o f untargeted, universal social services closely linked to political objectives (“clientelismo politico”), rather than on the needs o f the poor, reinforcing the paternalistic image o f the State. Resources have been spent without regard for efficiency, effectiveness, targeting, transparency, or impact measurement, frequently subject to corruption, with the predictable result that those in extreme poverty remain there. Political cycles have only reinforced volatility in resource allocation to different social programs; with each new government existing programs have been scrapped and new ones launched. The country’s extremely l o w social indicators in relation to i t s middle-income status provide testimony to these traditions in Dominican social sector policy.

The recent economic crisis increased the numbers o f poor Dominicans and deepened their poverty, at the same time as it reduced the Government’s fiscal capacity to respond to social needs. Reduced coverage and quality o f social programs further increased the poor’s vulnerability.

N e w Social Sector Policy

The new social pol icy o f the Government i s based on a more in-depth, multi-dimensional understanding o f poverty. Economic growth alone i s not sufficient. In addition, the Government has proposed pro-poor social policies which target resources on the poorest households, enabling them to improve their living conditions and invest in the development o f their human capital, increasing their labor market participation. Linked to this i s an awareness that women and youth are particularly vulnerable, and that rural areas (traditionally neglected by social programs) are where poverty i s greatest.

Four basic principles underlie the new social policy: integration, equity, efficiency and consistency.

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Integration means: linking social pol icy with economic policy; consolidating institutions and programs working o n similar issues; improving ties between government, c iv i l society and the private sector; enhancing accountability between the State and social program participants in reciprocal ways.

Equity means reaching the poorest and most vulnerable households so they have opportunities to develop their human capital, increase their assets, and integrate into productive activities.

Efficiency means improving quality o f social services; strengthening institutional capacity in the sector; defining costs and benefits o f social programs; focusing on results.

Consistency means maintaining focus on the 201 5 Millennium Development Goals (MDGs), on basic human rights, and protecting children and youth in particular over the long-term. This includes rights to a legal identity, to health, education, and minimum food requirements. MDGs specifically targeted by the Government are those linked to the eradication o f extreme poverty and hunger; universal primary education, reduction in chi ld mortality, improvements in maternal health, control o f transmissible diseases such as HIV/AIDS, and the elimination o f gender inequality in al l education levels and in the labor market.

Requirements o f the N e w Social Sector Policy

Institutional changes in the design and implementation o f social sector pol icy are required, to optimize resource allocation and establish instruments for oversight, monitoring and evaluation o f executing agencies. This is the f i rs t key element o f “integration” referred to above, which would reduce individual discretion and political interference. To this end the Government has strengthened the Social Cabinet” and now channels key social protection programs through its budget and Department for Administration and Finance as o f 2006. It is hoped this will enable the Social Cabinet to improve the articulation and synergy o f social program across institutions and levels o f Government (national, regional, municipal), and a plan has been submitted to the Executive Branch for the transformation o f the Social Cabinet into a Secretary o f State for Social Development in 2008 or 2009.

Inclusion o f the Excluded: A s part o f the proxy-means testing exercise described below, the Government identified approximately 400,000 poor individuals who would be eligible for social assistance programs (subsidized health insurance, Solidarity CCT program, etc.) but are excluded for lack o f legal identity documents (birth certificates and/or the national identity card, “ la cedula”) N o t only are these individuals prevented from participating in social protection programs, they also cannot open a bank account, own title to land, vote, obtain a driver’s license or passport, or attend school beyond 7‘h grade. Legally, they do not exist. Note these individuals are N O T considered part o f the population o f illegal Haitians

Social Cabinet i s headed by the Vice President o f the Republic, and composed o f the Secretaries o f the Presidency, Education, Health, Labor, Sports, Women, Youth, Culture, Higher Education. 2 1 institutions or programs implementing social policy are affiliated with the Social Cabinet.

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residing in the country, but rather are poor Dominicans who never obtained their birth certificates or le t their old “cedulas” expire. Government policy i s to launch a major nationwide campaign to help these people obtain their legal identity documents.

Civi l society participation in the execution and monitoring o f public social sector policy will be enhanced, not only through the mechanism o f the Consultative Civi l Society Council (an “apex” organization o f 100 or so leading non-governmental institutions) but also through local community, faith-based and private-sector affiliated organizations.

Establishment o f Operational Procedures and Systems for Monitoring; and Evaluation are another requirement. To this end the Solidarity CCT Program and the Administrator o f Social Subsidies (ADESS) have developed detailed Operational Manuals which describe how participants are selected, what services are offered, which responsibilities pertain to the government and which to the participant, etc. A comprehensive monitoring and information system (MIS) i s progressively being put in place to track implementation o f these programs, but this i s not fully operational. Ultimately, clear operating procedures enable monitoring by civil society and measurement by the Social Cabinet.

Development o f Targeting Systems i s a fourth requirement for the new social policy. This i s most clearly seen in the launch and institutionalization o f the Unified Beneficiary System (Sistema Unico de Benejkiarios, or SIUBEN). Traditional universal social programs have focused on people that vote, typically in urban areas. Almost deliberately, they have excluded the extreme poor, most o f who lack national identity cards and therefore cannot vote. In contrast, SIUBEN i s an instrument which takes into account geographic and household variables to specifically identify and include the extremely poor, whatever their political affiliation and wherever they live.

SIUBEN i s a two-stage targeting system, based first on the recently updated National Poverty Map (which identifies geographic areas o f poverty and extreme poverty in units o f 500 households), and second on comprehensive household-level surveys in those identified areas. The survey collects data on 24 key household variables (number o f household members, type o f house, roofing, flooring, access to water and sanitation, employment status, possession o f legal identity documents, essential consumer goods, etc.) and uses an econometric formula derived from the National Demographic and Health Survey (ENDESA) to apply a proxy- means test which ranks these households by their degree o f poverty. (The Operational Manual for SIUBEN i s in project files, as noted in Annex 12.)

In i ts initial survey o f 1.2 mill ion households conducted in late 2004 and early 2005 SIUBEN identified approximately 700,000 poor households, 1 12,000 o f which were extremely poor. l2

SIUBEN’s survey corresponds nicely to calculations in the Bank’s 2005 Poverty Assessment, which calculate the 12

poverty rate at 34 percent, equivalent to about 3 million people or 700,000 households (average household size o f the poor i s 4.2). However, it probably under-surveyed the extremely poor, which the 2005 Poverty Assessment estimated at 1 1 percent, equivalent to just under 1 million people or 235,000 households. Methodological differences in determining levels of extreme poverty partially explain this, as does the fact that many extremely poor households live in isolated rural areas which are difficult to reach with census-type surveys.

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These households form the core target participant group for the new social policy, which in turn are the key participants in the proposed Social Protection Investment Loan.

Components o f the N e w Social Sector Policy

There are four components o f the Government’s social sector policy:

social protection;

social security system; and 0 efficiently functioning labor market.

supply o f social services (education, health, nutrition, etc.);

For the latter three components o f the Government’s policy, multi-year strategies and budgets are under implementation, supported by both domestic and external financing. l3 Improving educational access and quality, in particular, has been given a high priority by the Government, as has the launch o f a three-tiered social securityhational health insurance system. Labor market functioning i s being addressed through a recently approved loan from the IDB. Hence, the focus o f this discussion i s on the f i rs t component: social pr0tecti0n.l~

The “flagship” o f the social protection safety net i s the conditional cash transfer (CCT) program, Solidarity. Solidarity i s similar to other CCT programs in the region, in that i t promotes education and health (human capital development) investments among poor households through a monthly cash incentive program. Households which fail to fulfill their responsibilities under the program are suspended from the program.

Solidarity was officially launched in September 2005 by Presidential Decree, as an amalgamation o f two existing CCT programs, “Comer es Primero” and “Incentivo a la Asistencia Escolar”. Solidarity uses SIUBEN to identity program participants, who are then validated and issued electronic debit cards which can be used in local grocery stores to buy basic foodstuffs and in banks to extract cash. The health benefit i s RD$ 550 pesos per month (approximately US$18) and requires poor families to take their children aged 0-5 for vaccinations, heighvweight monitoring, and periodic check-ups. The education benefit varies between RD$300-600 pesos per month (US$lO-20), depending on the number o f children, conditional upon all children enrolling and attending school on a regular basis.

As o f January 2006 2 16,000 households are enrolled in the Solidarity program and are receiving monthly benefits. All 112,000 households in extreme poverty (which can show national identity cards) have been enrolled in the program, plus another 114,000 poor households located in the

l3 Supply o f social services i s being addressed by World Bank, IDB, EU, UN, and bilateral loans and grants in the sectors o f education, health, water and sanitation. Social Security (at least the subsidized part o f it) i s being supported by the Bank’s Health Sector Reform APL. The recently prepared multi-phase $10 M IDB loan, “Labor Markets and Social Transfers”, aims to improve the functioning o f the labor market. More on this in Annex 2. l4 Supply o f social services i s being addressed by World Bank, IDB, UN, and bilateral loans and grants in the sectors o f education, health, water and sanitation. Social Security (at least the subsidized part o f it) i s being supported by the Bank’s Health Sector Reform APL. The recently prepared multi-phase $10 M IDB loan, “Labor Markets and Social Transfers”, aims to improve the functioning o f the labor market. More on this in Annex 2.

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15 poorest provinces (located towards the Haitian border) and in marginal urban areas o f Santo Domingo and Santiago.

Another 92,000 households were identified as eligible for Solidarity but excluded for lack o f identity documents. These households form the init ial target group o f Component Two o f this Social Protection Investment Loan.

As part o f project preparation, the complete Operational Manual, Organizational Structure o f Solidaridad, and Inter-Institutional Agreements between Solidaridad and the ministries o f health and education were reviewed and approved by the Bank in April 2006. Implementation o f the CCT program over the past year, however, has led to decisions by the CCT program to apply procedures other than those specified in these documents. A s part o f project appraisal the Bank team encouraged the Government to discuss, update and approve a revised Operational Manual and inter-institutional agreements, and thereby render the program eligible for project investments, but the Government decided against this approach in the interests o f expediting loan processing for other components and sub-components which are ready.

Poverty Reduction Strategy

Following the legal establishment o f the Secretary o f State for the Economy, Planning and Development in early 2007, the Government has increased i t s efforts to update and monitor i t s Poverty Reduction Strategy. This includes the creation o f the national department for economic and social development, which i s charged with monitoring social program budget execution and linking public expenditures to actual progress in PRS indicators. The Bank’s PREM unit has been providing technical support to this department, which needs some basic information technology and technical assistance (to be financed under the loan) to carry out i t s new functions.

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Annex 2: Major Related Projects Financed by the Bank and/or other Agencies DOMINICAN REPUBLIC: Social Protection Investment Loan

In parallel to this project, the Inter-American Development Bank (IDB) prepared a “Labor Markets and Cash Transfers” Multi-Phase Loan (Phase 1: US$10 million, approved on November 30, 2005), and approved in late 2006 a US$l50 M quick-disbursing loan which has social protection as one o f two key sectors to be supported. Bank staff participated as team members in the initial preparation missions for these loans, which will provide complementary financing and synergy to the Bank’s Social Protection Investment Loan. The Multi-Phase Loan will focus primarily on improving labor market intermediation and employment opportunities, and secondarily on reforms o f the Youth and Employment program o f the Ministry o f Labor (which will also be supported by the Bank, see below). The quick disbursing loan i s expected to support protection o f key social protection expenditures and institutional reform o f the social assistance sector, including verification o f fulfillment o f Solidarity CCT program co- responsibilities.

The Bank’s US$25 million Youth Development Project (approved on March 23, 2006, but not yet ratified by Congress and so not effective) will complement the Social Protection loan by focusing on the education, l i fe-ski l ls and employment training needs o f youth-at-risk. Specifically, this project will strengthen and expand the Youth and Employment program o f the Ministry o f Labor (in collaboration with the IDB loan discussed above), and wi l l offer at-risk youth a “second chance” to return to school to obtain their primary and secondary education degrees through the Ministry o f Education’s successful night-school programs.

The US$lOO mill ion Social Crisis Adjustment Loan (closed August 2005) initiated many o f the reforms and programs to be supported by the Social Protection Investment Loan, including strengthening o f the CCT program for school attendance (which has evolved into the Solidarity Program), development o f the proxy-means test for beneficiary selection (which has evolved into the SIUBEN), updating o f the National Poverty Map, revised procedures for selecting beneficiaries o f subsidized health insurance, and programs to help thousands o f schoolchildren obtain their birth certificates. QAG gave this loan a satisfactory quality-at-entry ranking, and the Implementation Completion Report (ICR) indicated satisfactory implementation.

Other Bank loans in the social sectors which offer critical financing for the supply side o f social services include:

0 the US$42 mill ion Early Childhood Development Project: IP and DO “satisfactory”; 0 the US$25 mill ion Control and Prevention o f HIV/AIDS Loan: IP and DO “satisfactory”; 0 the US$30 mill ion Health Sector Reform APL: IP and D O “satisfactory”;

the recently completed US$50 million Basic Education Improvement Project: ICR “satisfactory”; the recently completed US$25 million Provincial Health Services Project: ICR “satisfactory”.

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Annex 3: Results Framework and Monitoring

DOMINICAN REPUBLIC: DO Social Protection Investment Loan

Results Framework

Improve the coverage, targeting and effectiveness of the Borrower’s social protection programs, through the provision of legal identity documents to poor Dominicans, institutional strengthening of targeting mechanisms, and increased monitoring and evaluation of social programs.

Coverage: Provide legal identity required for enrollment in social protection programs.

Coverage: At least 75 percent o f households which have at least one member targeted by the Documentation Component have been integrated into a social protection program.

Coverage: The percentage o f poor households with members who lack identity documents decreases fkom 26 to 10 percent.

Targeting: Implementation o f the 2009 national SIUBEN survey, including 1.5 million households located in poor areas.

Effectiveness: Adherence to and completion o f the Inter-Institutional Agreement between the Social Cabinet and Consultative Council o f Civil Society for Monitoring and Evaluation o f public social protection programs. Intermediate Outcome

rs The percent o f extremely poor household heads who lack identity documents (who would otherwise be eligible for Solidarity CCT program and national health insurance) decreases from 28 to 10 percent.

ome

The names o f poor undocumented Dominicans, identified through the SIUBEN survey, would be communicated to the national civil registry. On a quarterly basis the civil registry wi l l provide to SIUBEN information regarding issuance o f identity cards and birth certificates to these individuals (basis for output-based disbursement). These individuals would then be assessed for enrollment into the Solidarity CCT program and national health insurance (SENASA). This information would be used to assess Government’s progress in including previously undocumented poor Dominicans into social protection programs, and identify those individuals who remain undocumented andor unenrolled in a social protection program.

Use o f Intermediate Outcome Monitoring Indicator wi l l serve to monitor effectiveness o f Documentation component for family members o f poor households, assess compliance with the Solidaridad CCT co- responsibility (application for identity documentation), and identify youth aged 6- 16 eligible to benefit from the education component o f the Solidaridad CCT program. In addition, this wi l l allow comparisodranking o f civil registry jurisdictions to identify those where additional project resources (community mobilization, legal services, civil society monitoring) are required.

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Coverage: Increase percentage o f poor and extremely poor households enrolled in social protection programs.

Targeting: Eligibility o f poor households for enrollment in social protection programs i s clarified and updated.

Targeting: Increase public expenditures for targeted social programs and reduce public expenditures for non-targeted social programs.

Measurement o f Effectiveness: Improved monitoring and evaluation o f social protection programs

Effectiveness: poor households, by virtue o f obtaining legal identity, are able to access economic and social development opportunities.

Percentage o f p o o r e ~ t ' ~ households covered by Solidarity Program increases fkom 51% to 85%;

Percentage o f poor16 households enrolled in SIUBEN database and subsequently validated for participation in social programs (subsidized health insurance, subsidized food programs, Solidarity Program, etc.) increases from 3 1% to 50%.

Recertification o f Solidarity CCT program beneficiaries and updating o f national database o f poor Dominicans using proxy-means methodologies.

By 20 1 1, the transfer o f the equivalent o f 20 percent o f untargeted social protection expenditures in 2006 (baseline RD$5.5 billion) to targeted social protection programs which use SIUBEN and/or the updated poverty map. In collaboration with c iv i l society, at least four independent evaluations o f public social programs (processes and/or impact) are conducted annually throughout l i f e o f the project.

Relative to a baseline survey o f poor undocumented households, assess social and economic impact o f provision o f legal identity documents (e.g. by measuring secondary education enrollment rate o f formerly undocumented children, and quality o f employment o f formerly undocumented adults), through implementation o f quasi- experimental impact evaluation.

Quarterly updating o f the Solidarity beneficiary database, compared to national census figures, the national poverty map and annual household surveys (LSMS, Labor Force, etc.) by Central Bank and National Statistics Office, w i l l allow monitoring o f progress on this indicator, and w i l l provide SIUBEN with information as to areas o f under-coverage and where SIUBEN household surveys should be conducted to expand coverage. Information would service to establish new national database o f poor households and individuals, for recertification o f social protection program beneficiaries, coverage of previously unidentified poor households, and extension o f Documentation component services. Annual national budget allocations and expenditures for al l social protection programs channeled through the DAF o f the Social Cabinet would be tracked, with differentiation between untargeted and targeted programs.

Results o f c iv i l society social monitoring and evaluation would be disseminated to the public at large, for increased transparency and accountability o f public social programs, and to identify reforms and actions to increase effectiveness o f these programs. Results o f impact evaluation would be used to assess overall project impact, and to define additional actions and reforms required to ensure that poor Dominicans with legal identify fully benefit from economic and social benefits to which they are entitled.

l5 Poorest households (extreme poverty) are those earning less than RD$1,118 (or US$38.60) in April 2005, equivalent to the cost o f a normative food basket to obtain minimum caloric intake for the given reference group o f the population. l6 Poor households are defined by the 2005 World Bank/IDB Poverty Study as those earning less than RD$2,178/person (or US$75) in April 2005, referring to the cost o f a normative food basket to obtain minimum caloric intake and cover basic non-food expenditures for the given reference group o f the population.

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Arrangements for results monitoring

Institutional Issues

The Social Cabinet would have overall responsibility for monitoring and evaluation o f project indicators, and o f public social protection program outcomes more generally. In addition, with support from the project, the Social Cabinet intends to develop a comprehensive set o f monitoring and performance indicators for all major social protectiodsocial assistance programs executed through i t s DAF (approximately 25) and will track them compared to budget allocations, expected program coverage (number o f beneficiaries), and key deliverables. The Social Cabinet will also contract external evaluations o f several o f the largest social protectiodsocial assistance programs (Solidarity Program, INESPRE, “comedores economicos”, school feeding, PROMESE) to assess impact and inform subsequent program modifications and resource allocation decisions. Complementary to these actions, the national department for social and economic development within the Secretary o f State for Economy, Planning and Development would monitor public social expenditures which are linked to the updated Poverty Reduction Strategy, and link these expenditures to downstream PRS indicators, to assess cost- effectiveness and identify reforms to public social programs.

The Consultative Council o f Civil Society would collaborate with the Social Cabinet in the oversight o f independent monitoring and evaluation o f public social programs carried out by local civil society organizations. According to an Inter-Institutional Agreement signed by both parties, civil society organizations would be contracted under the loan to monitor and evaluate both loan components. Specifically, for the documentation component, civil society would monitor the gratuity o f issuance o f birth certificates, the standardization among all 142 civil registry offices o f procedures for late birth certificate processing, average processing time o f late birth certificate requests and overall client satisfaction. For the second loan component, civil society would monitor correct application o f the SIUBEN operational manual, processes for handling complaints o f incorrect application o f the proxy-means methodology, updating o f the SIUBEN database, and possibly procedures for distribution o f Solidarity CCT debit cards and verification o f beneficiary fulfillment o f co-responsibilities under this program.

Data Collection

With funding the national budget, the Social Cabinet has established a management information system (MIS) for data collection and analysis, linked to these databases maintained by SIUBEN, Solidarity CCT program, SENASA, the Civil Registry and Social Security. The project would fund additional technical assistance and minor equipment to continue development o f this MIS system, which would also be used for tracking PDO and Intermediate Outcome Indicators on an annual basis, in close collaboration with other statistical agencies (Central Bank, National Statistics Office, National Planning Office, National Budget Office, National Civi l Registry) and l ine ministries (particularly those for education and health). Additional data i s expected from the upcoming Living Conditions Survey (ENCOVI), the twice-a-year National Labor Force Survey, the 2006 Household Survey (ENHOGAR), and annual national budget allocation and execution figures. Finally, an external quasi-experimental evaluation o f the Documentation Component

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would be conducted (baseline and end-of-project), with a control group composed o f undocumented Dominicans living just above the poverty line.

Over the past several years, the World Bank and IDB have been strengthening the capacity o f these government offices to generate these statistics, most recently as part o f the Poverty Assessment. The Central Bank has longstanding capacity for data collection and analysis o f the labor force survey, and the national department for economic and social development in the newly established Secretary o f Economy, Planning and Development has a unit which tracks social sector budget allocations and execution and produces high-quality quarterly reports. Further strengthening o f the national statistics office i s foreseen with an ongoing IDB loan. In sum, Government institutional capacity both within and beyond the Social Cabinet i s both sufficient and improving for program monitoring and evaluation.

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Annex 4: Detailed Project Description DOMINICAN REPUBLIC: Social Protection Investment Loan

Component 1: Provision of National Identity Documents to Poor Dominicans (UW15.6 million)

The National Plan for the Provision o f Identity Documents (Project Files) was developed during two multi-stakeholder workshops supported by the World Bank and subsequently validated by the Central Electoral Council (responsible for the national civil registry). The plan includes consideration o f seven different scenarios, depending on the age and official status o f the child and parents, particularly o f the mother who under law i s the only spouse authorized to declare offspring.

The Bank loan would finance a number o f these activities, while a $35 mill ion loan recently obtained from the state-controlled Banco de Reservas by the Central Electoral Council for the modernization o f the civil registry would finance many o f the other activities described. Given the strategic importance o f this modernization effort, US$3.5 M from this loan would be considered as government counterpart financing for this component. Specifically, the project would finance small works, furniture, technical assistance and output-based disbursement in the following areas:

1. Nation-wide Information, Education and Communication (US$1.4 million) campaigns, emphasizing the importance o f obtaining national identification documents and clearly explaining the steps required to do so. This would include radio, TV, print and other forms o f mass communications (e.g. small trucks with large speakers moving through neighborhoods o f high concentration o f undocumented households), and recruitment o f respected public figures to produce public service advertisements regarding the issue.

2. Targeted Family Support (US$5.7 million) campaigns (including legal assistance and NGOs qualified in this area) to help those households already identified through the SIUBEN household survey process as “undocumented” to obtain their national identity documents. These so-called “operativos” would follow an initial process o f cross-referencing the SIUBEN database o f undocumented individuals with the national civil registry’s recently digitized records (s t i l l incomplete) to identify those individuals who may have a birth certificate or old identity card on file, which would greatly facilitate a re-documentation process. For those who do not, NGOs, para-legals, and national civil registry personnel would be mobilized to go to areas o f high concentration o f undocumented Dominicans and pro- actively provide assistance in completing late birth certificate and national identity card dossiers. This would require funding for legal services, local technical assistance, transportation, materials/supplies, and small amounts o f ICT equipment and software to construct a database o f target beneficiaries which can be continuously tracked as they complete their files/documentation required to submit identity requests and move through the registration process.

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3. _Support to the National Civil Registry (US$8.4 million. including US$5.8 million in Bank financing;, plus $2.6 million in Government counterpart financing), with:

a.

b.

C.

d.

financing (US$2.8 million) for infrastructure (c iv i l works and furniture) improvements o f 50 civil registry offices, so that they can accommodate ICT equipment provided as part o f the Modernization contract financed through the complementary US$35 million Banco de Reservas loan. Under output-based disbursement (US$2.0 million), the Government would be reimbursed for personnel expenditures incurred by the National Civil Registry, based on an agreed unit cost formula for each “late” birth certificate and national identity document issued by the National Civil Registry to approximately 400,000 poor undocumented Dominicans identified in the SIUBEN databa~e.’~ (Please see Annex 7 for more details on the unit cost formula, which calculates average staff time and costs at each stage o f document processing. The original basis o f this unit cost would be reviewed on an annual basis and updated if necessary during project implementation.) Each poor undocumented Dominican would be assigned an individual code by the National Civil Registry which could be cross-referenced to the SIUBEN database. The National Civil Registry would open a f i le for each undocumented individual, and as the identity documents are issued to these specific individuals the National Civil Registry would report this information to the DAF o f the Social Cabinet. These reports would be used by the DAF to request output-based reimbursement from the Bank. Documentation o f birth certificates would be “bundled” in sets o f 20,000, so each disbursement would be for US$lOO,OOO. (Initial financing o f salary costs related to processing o f identity documents would be financed by the Central Electoral Council through the 2008 national budget l ine item for the civil registry.) Strengthening o f Late Birth Certificate Unit o f Civi l Registry (US$0.5 million): the project would finance computers, printers, scanners, and other ICT equipment necessary to accelerate processing and productivity o f late birth certificate requests, in addition to training o f additional staff hired by the civi l registry (not financed by project) and basic supplies. Acquisition o f four (4) mobile Civil Registry Offices (US$0.3 million): These mobile offices are essentially trucks which have been outfitted with appropriate ICT equipment and office space, and linked to the broadband Internet system for access to the civil registry’s virtual private network. They would enable the civil registry to pro-actively target areas o f large concentrations o f poor undocumented Dominicans and bring registry services to them, rather than requiring “clients” to come to one o f the 150 civil registry offices located in the country (not all o f which will receive all required ICT equipment to be fully automated given that they are located in buildings not owned by the Government).

l7 Under this mechanism the Government would agree in the Loan Agreement to increase the budget o f the national civi l registry, sufficient to provide al l additional staff and other resources required to process the projected annual increase in issuance o f birth certificates and national identity cards.

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e. Financing o f 50 para-legals (US$0.3 million) o n a contractual, temporary basis to increase the workf low capacity o f the Supreme Court and Attorney General’s Office for handing administrative approvals o f late birth certificate and identity card applications.

This sub-component would include the reduction and simplification o f the steps required to obtain “late” birth certificates and national identification cards. For example, the requirement o f obtaining a certificate f rom the Catholic Church indicating the chi ld has not been baptized (typically at a cost o f US$S/certificate) would be eliminated, as such a certificate is no guarantee the chi ld does not already have a birth certificate and discriminates against non-Catholics. Testimony o f reliable witnesses for adults who never obtained their birth certificate as a chi ld would be accepted in place o f birth records lost long ago in some rural maternity ward. Verification procedures and scope that birth certificate requests have not been f i led in other c iv i l registry jurisdictions would be reduced.

Note that under the sub-component for monitoring and evaluation o f social policies, the loan includes financing for c iv i l society monitoring o f local C iv i l Registry Offices to: (i) ensure application o f current legal provisions which specify that issuance o f birth certificates and national identity documents i s without charge to the population, (ii) monitor standardization o f identity document application procedures across al l 150 offices; and (ii) track efforts by c iv i l registry officials to reduce the percentage o f undocumented households in their jurisdiction. The Social Cabinet would competitively contract c iv i l society organizations in al l c iv i l registry jurisdictions where large concentrations o f undocumented households reside, which would have as terms o f reference social monitoring o f households’ efforts to obtain documentation, including respect for the gratuity o f c iv i l registry services for birth certificates and national identity cards. Each year these organizations would calculate the absolute and relative reduction in undocumented households, ranking c iv i l registries by performance and making this information transparent with the hope o f increasing accountability o f c iv i l registries vis-&vis the Dominican population.

Component 2: Strengthening of Social Protection Services (US$5.1 million)

Sub-Component 1: Institutional Development of the Social Cabinet (US$0.2 million)

The project would support efforts to improve the efficiency and effectiveness o f social protection services in the Dominican Republic through a process o f evaluation, consolidation, rationalization and elimination o f social protectiodsocial assistance programs. Beginning in 2006 the budgets for a l l social protectiodsocial assistance programs are executed through the DAF o f the Social Cabinet, which will therefore have much greater oversight and control o f resource allocation for the sector. The project would finance strategic technical assistance (local and international), consultation workshops and trainings (particularly in program evaluation).

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Sub-Component 2: Capacity-Building of the Unified System for Beneficiary Selection (SIUBEN), (US$3.4 million)

The project would finance technical assistance, information and communication technology hardware, software, equipment, furniture and training for the expansion and strengthening o f the SIUBEN. This would include support for the strengthening o f nine regional SIUBEN offices recently established to allow closer contact with clients and to respond to household requests for inclusion into the SIUBEN survey and database.

This sub-component would be parallel-financed by the IDB’s “Labor Markets and Social Transfers Project”, which includes US$620,000 to finance (i) technical assistance required to assess and refine the entire beneficiary selection process; (ii) purchase o f some I C T hardware and software; and (iii) evaluation o f the success o f the SIUBEN in terms o f minimizing errors o f inclusion and exclusion at the national level.

In late 2004 the Government launched the Sistema Unico de Beneficiarios (SIUBEN), which aims to establish a single central database for social assistance beneficiaries and a consistent targeting mechanism across a wide range o f social programs in education, health, nutrition, housing and energy. SIUBEN identifies l o w income groups under poverty levels in two stages: geographic focalization to select the poorest areas in the country and individually to identify households and eligible family members to government social programs.

The strengthening o f the SIUBEN Information System would address the need to develop a dynamic beneficiary database management and survey processing, refine the proxy- means targeting formulae to incorporate data f rom the Living Conditions Survey, and improve ability to respond to additional household requests for inclusion at decentralized levels.

The loan would also finance a nation-wide update o f the SIUBEN beneficiary database in 2009, v ia census o f a l l households located in geographic areas o f concentrated poverty, as was done initially in 2004. This i s the major activity o f this sub-component, at US$3 million.

SIUBEN Information System

SIUBEN database i s an information system developed in visual Studio 6.0 to operate in MS SQL platform containing demographic, social and economic information and educational levels o f a l l household members. The system was developed by programmers from the Social Cabinet to capture, register and evaluate socio-economic conditions o f the families and the household characteristics and goods and services available. SIUBEN conducted during 2004 - 2005, over 1.5 mi l l ion household surveys in al l areas o f poverty and extreme poverty identified by the National Poverty Map, thus covering about 70% o f al l households in the country (Table 4.1).

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Table 4.1 SIUBEN Database

Poverty status

Number of Households % All country 2,200,000 100

a) Registered in SIUBEN database 1,229,143 55.9

b) Not registered in SIUBEN* 329,224 15 Not covered by SIUBEN census 641,633 29.2

Covered by SIUBEN 1,558,367 70.8

Documentation status of household head Total With ID Without ID Y O

Based on the information collected, a proxy-means test" has been applied to rank and identify households in need o f social protection. Registered households have been classified in three categories using two cut-offs (with different values for urban and rural areas) separating the extreme, moderate poor, and not-poor households (Table 4.2)

Table 4.2 Distribution of SIUBEN households by poverty status and

documentation status of household head

The size o f the survey and the existing manual and semi automated processes, have required tremendous effort from the Social Cabinet and SIUBEN staff; the field survey and the processing o f the household questionnaires, required external support from contractors; the data input i s being carried out by the Americas Technology Institute (ITLA) a government owned semi-autonomous agency, which at the peak o f the survey had close to 180 data entry personnel working in three daily shifts to be able to cope with the demand generated by the household registry data entry. Cartography available from ONE'S 2002 Census required extensive field work to be updated; th i s situation has improved with the ongoing digital cartography project which included the establishment o f a repository to be accessible via web.

Note: both the poverty map and proxy-means test were developed under the SCRAL.

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Although the system has provided the basic needs for the creation and population o f the databases and the categorization and selection o f the targeted program beneficiaries, the existing modules lack full automation and work flow integration as shown in Figure 1.

Figure 1 - Social Cabinet- SIUBEN Information System Work Flow

I UNIQUE BENEFICIARY SYSTEM - SIUBEN INFORMATION SYSTEM I

MANUAL ONE CARTOORAPHY

UPDATE AND SEGMENATION

FIELD HOUSEHOLD SURVEY

DATA MRlFlCATlO AND PRE-

VALIDATION

t

QUALITY OF LIFE INDEX (ICW AND

DATA INPUT AND HOUSEHOLD

O M l I i o n ITLA BA

BENEFICIARY SELECTION AND

VALIDATION

BENEFICURIES DATA0ASE DATA0ASE

A

Missing data from field surveys which are found during the pre-verification carried manually at the reception desk in the Central Level, reflects the need for additional quality control mechanisms at the field level to avoid redundant household visits; The quality control processes in place for the data entry and the verification and validation grids need improvement; The Social Information Unit (UIS) from the Technical Secretariat o f the Presidency responsible for the categorization through the proxy mean test, requires elaborate semi automated processes including the use o f missing data protocols to be able to complete the categorization with the application o f the 17 poverty variables using SPSS data mining package; The existing information technology (IT) platform, provides limited back up security o f the SIUBEN database which i s residing in one server without redundancy; a new upgrade kit being acquired will include additional drives to implement a RAID 5 configuration; however, this solution will not be sufficient for disaster recovery in the event o f total loss o f the server or fatal failure o f current SIUBEN LAN at the central level;

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The operation o f the different modules in multiple locations without connectivity (SIUBEN Central Office, ITLA, UIS) and the delivery to SIUBEN users l ike the ADESS and SENASA, requires physical transportation in several electronic media (Le., CDs and laptops) posing a security r isk and potential confidentiality breach to personal information o f those surveyed.

The init ial SIUBEN field survey i s now being complemented through the inclusion by demand o f those potential beneficiaries living outside the poverty zones provided by the poverty mapping. To automate the process to be initiated f rom the regional offices, the Social Cabinet contracted consultants to develop an Internet Portal for the Cabinet including a web enabled Inclusion by Demand Module, based on .NET framework technology. This module i s now functional and 50% o f the on-demand applications, o f a total o f about 100,000 are now recorded in the database.

In 2006 SIUBEN strengthened i t s institutional capacity through (i) the organization o f a territorial network with 9 Regional offices; (ii) modernization o f i t s human resources and financial management departments; (iii) acquisition o f hardware to implement a network permitting interconnectivity with the regional offices; (iv) revision o f procedures for data collection and updating; and (iv) training o f i t s staff. This allowed SIUBEN to improve i t s capacity to update the information about the registered beneficiaries and respond to on-demand applications.

Notwithstanding progress, there are remaining challenges in consolidating the basic legal and institutional architecture o f SIUBEN. The proposed loan would finance equipment, training and consultancies to support the institutional strengthening o f SIUBEN in order to:

(a) Improve the information communication technology, including online interconnectivity between SIUBEN, Solidaridad, SENASA y ADESS , to allow a better management o f the database and periodical cross checks with other administrative databases (such as the c iv i l registry, social security) to improve the accuracy o f information.

(b) Revise the operational manuals, procedures and policies to allow more rapid update o f the information and improved safety features in the manipulation o f the database. N e w guidelines will be developed to avoid duplication o f efforts between SIUBEN, SOLIDARIDAD, SENASA in updating the information about beneficiaries.

(c) Training o f SIUBEN staff in using the new software, procedures, and polices and in preparing customized reports and analytical studies for various users.

(d) Recertification o f SIUBEN registered households and incorporation o f households living in poor areas that were not interviewed when the f i rs t data collection took place. In preparation for the recertification process foreseen for 2009 SIUBEN would have to develop a new proxy means test using the most recently available nationally representative household survey, develop a new questionnaire and new procedures for data collection, data entry and quality controls, and train the enumerators and supervisors.

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Sub-component 3: Social Policy Monitoring and Evaluation (US$1.5 million)

The monitoring and evaluation system proposed includes four main activities: (a) c iv i l society social auditing o f public social programs, to ensure they operate as intended, are accountable to the key stakeholders and public, and incorporate recommendations to increase effectiveness; (b) monitoring and evaluation o f public expenditures directly linked to the updated Poverty Reduction Strategy, and their linking to PRS indicators; (c) monitoring and analysis o f social protection programs and (d) project impact evaluation. The need for an integrated monitoring and evaluation system was legislated in September 2005 through Presidential Decree 536-05, which requires evaluation o f program processes and performance every three months, and evaluation o f program impact on key development outcomes every three years.

a. Social Audits by Civil Society (US$0.4 million)

The f i rs t activity would finance independent implementation and process evaluations and social audits to be realized under the supervision o f the C iv i l Society Consultative Council. These evaluations would serve the purpose o f (i) monitoring operational aspects o f the main social assistance programs, (ii) monitoring users satisfaction with the quality o f social assistance programs, and (iii) complementing the impact evaluation o f the documentation component by providing essential information to explain how the program was implemented thus avoiding a “black box” impact evaluation.

Process evaluation and social audits are important tools to understand how the program was implemented. They try to answer questions related to service use, service delivery, variations in service delivery, the organization o f the program, the use o f program’s resources. Some o f the identified questions to be addressed through this type of evaluations are: Are the programs implemented according to their operational manuals/procedures? Have al l beneficiaries received their transfers in time and at the levels specified in the program? Were the program conditionalities enforced? Where major differences in the quality and quantity o f the supply o f health and education services across the country? Are program resources or program delivery consistent across al l geographical locations? Are services focused on those easier to reach at the expense o f those harder to help? Have al l groups o f beneficiaries received the same doses o f interventions, or some groups got an easier access than others? I s program staffing and funding sufficient to ensure appropriate standards? Are cost per unit reasonable? Are the beneficiaries satisfied with the quality o f services? By investing in monitoring and process evaluation, the project would avoid the “black box” approach in evaluating the impact o f the Documentation component, national health insurance, and other social protection programs. The classic impact evaluation design treats the intervention as “given.” It assumes participants received the same “dose” o f the same intervention, and records only which treatment or control group they were in, not what people actually got or how they got it. This design is called “black box” because the impact evaluation i s not concerned with looking inside the “black box” o f the intervention itself. W h i l e this might work for physical sciences, doesn’t work for

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interventions affecting social policy. In social sciences, measuring “dosage” is extremely important to know what beneficiaries are getting, how much, for how long, etc., because complex interventions never give the same “doses” o f the same things to everyone, and dosage usually matters. Good monitoring systems and process evaluation can help identify which parts o f the intervention were actually delivered, which parts had the impact, how what was delivered interacted with participant characteristics, etc., so that recommendations can be developed to increase program effectiveness.

b. Monitoring and Evaluation of Poverty Reduction Strategy (US$0.2 million)

The second activity would finance technical assistance and hardware to strengthen the capacity o f the General Department for Social and Economic Development in the Secretaria de Economia, Planifcacion y Desarrollo to monitor the Strategy o f Poverty Eradication, including its capacity to link the budgetary allocation for social programs to specific results and targets for poverty reduction. Over time, this would result in reforms and adjustments in the allocation o f the national budget to social programs to increase the effectiveness o f public expenditures in reducing poverty. This would also strengthen institutional ties between the Social Cabinet and the newly established Secretaria de Economia, Planijkacion y Desarrollo.

c. Research and Targeted Studies of Social Programs and Issues (US$0.4 million)

This activity would finance consultancies for specific studies and analysis o f social programs to help the Social Cabinet in i t s efforts o f consolidating and mainstreaming social assistance programs. Working closely with local and international researchers, the Social Cabinet would commission specific research aimed: at identifying critical needs and constraints faced by poor Dominican households; evaluating existing programs for their effectiveness; and developing longer-term strategic institutional reforms which would enable the State to reduce trans-generational transmission o f poverty and assist poor fami l ies to lift themselves out o f poverty.

d. Impact evaluation (US$0.6 million)

The objective o f the impact evaluation i s to identify the changes in the well-being o f project beneficiaries that can be attributed to provision o f legal identity documents. To measure the causal impact o f Documentation requires estimating the difference in program outcomes (such as enrollment in the CCT program) for beneficiaries after they participate in the program and in the absence o f the program. Only the f i rs t outcome can be observed; the second one - called the counterfactual outcome - can only be estimated. The practical manner through which i s estimated i s by identifying a control group: a group with characteristics similar with program beneficiaries, but that does not participate in the program. Finding such group is impossible for full coverage programs, and tricky for programs targeted to the poor such as the Documentation component, where both program participation and outcomes are influenced by poverty status.

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During project preparation Bank staff discussed with key Government stakeholders what options are feasible to evaluate the impact o f the program: - H o w can a control group be formed given the design and plans for the

implementation o f the Documentation component; - What types o f impact evaluation designs are feasible, form both technical and

political point o f view; What outcomes are o f interest; What stakeholders are critical in this process, either as users o f the impact evaluation, or to be co-opted in implementing it; and H o w soon can a baseline survey be implemented; what elements should be captured in the baseline survey.

- - -

Proposed evaluation design

While the design o f the impact evaluation will be defined after further consultation with the experts in the Dominican Republic and the Bank, a preliminary agreement on the evaluation methodology was developed during appraisal. The impact o f the program could be evaluated using two most credible methods: (i) experimental evaluation with a control and treatment group randomly selected f rom the pool o f undocumented poor and potentially eligible households; and (ii) quasi-experimental evaluation using a regression discontinuity design to compare the outcomes o f two samples o f program applicants, those located just bel low the poverty threshold and those located just above the threshold.

The identification o f the treatment and control group for both experimental and quasi- experimental evaluations can be done using the SIUBEN database. Household participation in the Documentation Component would be decided on the basis o f a score derived from SIUBEN, and information regarding the documentation status o f household members. The SIUBEN registered about 1.2 mi l l ion households (56% o f al l households) and about 80% o f the poor. A composite welfare index known as SIUBEN score is developed on the basis o f information on individual characteristics (demographic composition and education levels o f household members), dwelling characteristics (building materials) and access to services, estimated using principal components techniques. Based o n the SIUBEN score, households are classified in three groups - extreme poor (Pl), moderate poor (P2) and non-poor. The score ranges from 0 to 100. Urban households with a score below 47.2 points are classified as extreme poor (PI), those between 47.2 and 60.3 points are classified as moderate poor (P2), with the rest being non-poor. In rural areas, the two thresholds are 37.5 and respectively 54.5 points (Figure 2). Both poor and non-poor households are identified in the SIUBEN database, as i s the documentation status o f the heads o f households and family members.

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Figure 2: Distribution of SIUBEN households

Note: the x axis measures the SIUBEN scores: the vertical lines depicts the cutoff points for extreme poverty (Pl) and moderate poverty (P2) for urban and rural areas

Because some poor household heads lack identification documents, they are not eligible for social programs requiring proof o f identification. The SIUBEN data bases include about 361,000 households where the head o f household and other members lacks proper identification. O f this, about 190,000 households or 364,000 individuals are classified as extreme or moderate poor and are eligible for the Documentation program (Figure 3 and Table 4.3).

Figure 3. Participation in Documentation component, by SIUBEN poverty status

Documentation Support 181,000 households

I b I I

SIUBEN extremely poor SIUBEN moderately poor SIUBEN undocumented

56,000 households 125,000 households 181,000 households

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Table 4.3 Distribution o f undocumented poor individuals registered in SIUBEN

Eligible but not in In Solidaridad Solidaridad Total

Children younger than 16 without birth certificate 11 5,799 45,167 160,966 Adults 16+ without IDS 78,354 124,900 203,254 Total 194,153 170,067 364,220

All poor undocumented households (P1 and P2) are eligible for the program, which implies, inter alia, that it i s dif f icult to randomly assign a set o f householdshndividuals receiving the documentation program and a set that serve the role o f control group not receiving the program. Furthermore, for ethical reasons it i s inappropriate to intentionally withhold support for obtaining a legal identity for basic c iv i l rights. These considerations make difficult for an experimental impact evaluation design. However, it should be possible to establish a control group among undocumented families who l ive just above the poverty line, such that their socio-economic status is only marginally different from the intervention group.

Given criteria for selecting undocumented Dominicans to participate in the program, a quasi-experimental design, using regression discontinuity techniques, could be used to provide estimates o f program impact.

Regression discontinuity design

Under this evaluation technique, the outcomes are compared o f two samples o f program applicants, those located just below the program threshold and those located just above the program threshold. The two groups o f households are similar in al l respects, except for the fact that some would be included in the documentation program (below threshold) and some would not (above threshold). If the program treatment i s effective, i t should be possible to observe a step-like discontinuity in the outcome o f interest at the program threshold, due to the participation in the documentation program. The estimate i s valid for those households whose score (income) i s close to the moderate poverty threshold or P2 (Figure 4).

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Figure 4: Impact Evaluation: Regression Discontinuity Design

Fttiere is a treatmetit effect, therewill b e a...

LU 1 I l l 1 I I I l l ’ o IO 20 30 40 50 60 70 80 9a l o o 0 10 20 30 40 50 So 70 80 90 IC0

Pm P re

From the SIUBEN database for the 3 1 provinces and National District, i t would be possible to extract a random sample o f program participants whose scores are close to the upper threshold (60.3 points for urban households and 54.5 points for rural households, the “border” between moderate poor and not poor). This i s the “treatment group”. The control group would be extracted in a similar fashion, f rom those SIUBEN households who cannot participate in the Documentation program but obtained scores just above the threshold (for example, urban households with a score f rom 60.3 to 62). The sample size for the two groups would be determined based o n power calculations, to capture the expected changes in outcomes o f interest with sufficient precision. The outcomes o f the two groups would be collected during the baseline survey, and then again at a three-year interval. The difference between the mean outcomes o f the two groups would indicate the program impact for upper-moderately poor households.

The two estimates would allow evaluators to determine if program effects are different for upper-extreme and upper-moderately poor households, and to extrapolate this impact across the distribution o f the poor beneficiaries.

The timing o f the baseline survey

Data for the baseline survey would be collected before the treatment group would have received the birth certificates and or identification..

What impacts would be estimated?

The evaluation survey questionnaire would include modules on living standards, access to basic services (education among poor children 6 to 16 years old, health, documentation), access to social programs, health and nutritional status o f children 0 to 5 years old, . I t i s expected that the evaluation would address the following questions:

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Area Welfare (Consumption)

Access to basic services

Access to social protection programs

Impacts to be assessed 0 Improvement in consumption due to the program. Using a 15/30 days recall period

the survey could ask questions on consumption o f food, noon-food, and essential services and how they were obtained (purchases, sel f consumption, remittances, social program etc)

Education I s the program having an impact on school enrollment and grade transition? I s the program having an impact on regular school attendance both at the primary and secondary level?

0 Are enrollment rates in upper secondary school higher among program beneficiaries compared to the control group?

0 Are there any differences in outcomes between boys and girls? Health The objective i s to assess changes in health care practices among poor, in particular children 0 to 5 years old. Some o f the questions that the evaluation i s expected to address are: 0 Does the program have an effect on the number o f child visits for preventive care

and growth monitoring? 0 Does the program have an effect on timely vaccination o f children 0-5 not enrolled

in school? What types o f vaccinations? 0 Does the program affect the heighvweight for children aged 12-60 months? 0 Does the program have an effect on morbidity? 0 Does the program have an effect on use o f health services (what type o f service

provider, reason for not using services when sick, time to reach a health center, waiting time) Does the program have an impact on reproductive health (knowledge and access to family planning, birth control mechanisms, pre-natal controls, service provider for pre-natal controls and birth delivery) What i s the level o f satisfaction o f program beneficiaries with health services? Does the program have an impact on access to SP programs?

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

Solidaridad (Comer es Primero, ILAE) Seguridad SociaWensiones RBgimen Subsidiado de Salud Subsidios Sociales y Ventas subsidiadas Alimentaci6n escolar Atenci6n a la primera infancia Control de Crecimiento del Ni i io Comedores Econ6micos Plan Presidencial de lucha contra la pobreza Prog Discapacitados INFOTEP Capacitaci6n laboral para j6venes Mercados Populares Planificaci6n Familiar Empleo transitorio en programas de desarrollo comunitario (Desarrollo Barrial, Desarrollo Freonterizo, Desarrollo de la Comunidad, Iniciativa Comunitaria)

0 What i s the level o f satisfaction o f program beneficiaries with the social

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Access to other basic services

Migration

Assets

Employment

Citizenship

programs?

Does the program have an impact on access to: o Bank account o Credit (if ever asked for a credit/loan - what type of institution, what

purpose (farming, acquiring tools, bying land, bying inputs, animals, payment of other debts, appliances, emergency expenses, cars)?; if credit refused - reason (insufficient guarantees, insufficient documentation, etc)

o Leasing (same as above) o Renting (same as above) o Title (Land, House) o Driving license o Business permit

Migration outside the country Housing

e Appliances

Reasons to migrate to present place (work, better earnings, study, health, violence, domestic violence, etc)

Employment status (employedhnemployedhnactive) Type of employment (permanentheasonal, fixed tendopen ended, private/public sector, salaried workerhelf-employed) Quality of employment (type o f contract, access to social insurance, paid sick leave, vacation, severance payment, accident insurance, receiving payroll stub) Earnings (number of hours, net amount, payment frequency If unemployed, what i s the reason? If unemployed, how i s searching for work /why i s not searching? Business outside the household? What type, how long, what member o f the household i s the owner, who in the household i s working in the business, which i s the main products manufacturedsold or services, in which place i s the business operating? Farming? Working owdrented farm? What size i s the farm (fincdparceldpredio)? Who in the household i s the decision maker regarding the farm? Since when working on the farm? How was the farm acquired? What title document? Whose name i s on the title? I s the property registered in the Public Registry? If not having title, why not? What equipmenthools? What animals? Participation in organizations (neighborhood, municipality, PTA, mothers, sport, professional, religious, trade union, political party) Actively involved in community activities (meetings, appeals committee, send a letter, interpellation, fill a complaint, information campaign, public works, etc)

0

Finally, it should be pointed out that this evaluation design i s l ikely to underestimate program benefits, such that i t s results would establish a conservative, lower-bound estimate o f program impact. This i s because the control group i s composed o f households which are marginally better o f f than those in the intervention group, and because there are many economic benefits which cannot directly be measured (as indicated in Annex 9, Economic and Financial Analysis).

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Component 3: Coordination o f Loan Implementation (US$1.3 million)

The loan would provide financing sufficient to hire a technical coordinator, two component coordinators, a secretary, a financial management specialist, a procurement specialist and an MIS specialist, who would be integrated into the operations o f the Technical Unit for Coordination o f the Social Cabinet (TUCGS). Under the project these staff would receive appropriate technology, training, equipment and other required logistical support for their jobs.

Worth noting i s the decision NOT to create a separate Project Coordination Unit (PCU) within the TUCGS, but rather to strengthen the existing DAF with key personnel who can ensure proper application o f Bank financial management and procurement procedures, as well as produce regular financial monitoring reports. This additional staff would work alongside their colleagues in the DAF, transferring knowledge and experience on-the-job.

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Annex 5: Project Costs

DOMINICAN REPUBLIC: Social Protection Investment Loan

Summary of Project Cost Estimates (US$ Million)

Foreign Local Total

A. 1 .O Provision of National Identity Documents 1.1 Information, Education and Communication Campaigns 0.83 0.60 1.43 1.2 Targeted Legal Aid Campaigns 0.94 4.58 5.71 1.3 National Civil Registry Support 3.46 4.96 8.43

Subtotal 1.0 Provision of National Identity Documents 5.23 10.15 15.57 B. 2.0 Strengthening of Social Protection Services

2.1 Social Cabinet Institutional Strengthening 0.04 0.14 0.18 2.2 Institutional Development of the SIUBEN targeting instrument 0.76 2.63 3.38 2.3 Social Policy Monitoring and Evaluation 0.35 1.18 1.53

Subtotal 2.0 Strengthening of Social Protection Services 1.14 3.95 5.09 C. 3.0 Coordination of Loan Implementation

Subtotal 3.0 Coordination of Loan Implementation 0.28 1.07 1.35 Total BASELINE COSTS 6.65 15.16 21.81

Physical Contingencies 0.02 0.06 0.08 Price Contingencies 0.01 0.10 0.1 1

Total PROJECT COSTS 6.68 15.32 22.00

3.1 Coordination of Loan Implementation 0.28 1.07 1.35

Components by Financiers Government of

Dominican Republic The World Bank Total

% Amount Amount % Amount %

A. 1 .O Provision of National Identity Documents 1.1 Information, Education and Communication Campaigns 1.43 100.0 1.43 6.5 1.2 Targeted Legal Aid Campaigns 5.71 100.0 5.71 26.0 1.3 National Civil Registry Support 2.60 30.8 5.83 69.2 8.43 38.3

Subtotal 1.0 Provision of National Identity Documents 2.60 16.7 12.97 83.3 15.57 70.8 B. 2.0 Strengthening of Social Protection Services

2.1 Social Cabinet Institutional Strengthening 0.18 100.0 0.18 0.8 2.2 Institutional Development of the SIUBEN targeting instrument 3.38 100.0 3.38 15.4 2.3 Social Policy Monitoring and Evaluation 1.53 100.0 1.53 6.9

Subtotal 2.0 Strengthening of Social Protection Services 5.09 100.0 5.09 23.1 C. 3.0 Coordination of Loan Implementation

3.1 Coordination of Loan Implementation 1.35 100.0 1.35 6.1 Total PROJECT COSTS 2.60 11.8 19.40 88.2 22.00 100.0

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Project Cost, Cont.

Project Components by Year Totals Including Contingencies

A. 1 .O Provision of National Identity Documents 1 .I Information, Education and Communication Campaigns 1.2 Targeted Legal Aid Campaigns 1.3 National Civil Registry Support

Subtotal 1 .O Provision of National Identity Documents 6. 2.0 Strengthening of Social Protection Services

2.1 Social Cabinet Institutional Strengthening 2.2 Institutional Development of the SIUBEN targeting instrument 2.3 Social Policy Monitoring and Evaluation

Subtotal 2.0 Strengthening of Social Protection Services C. 3.0 Coordination of Loan Implementation

3.1 Coordination of Loan Implementation Subtotal 3.0 Coordination of Loan Implementation

2008

0.38 1.74 3.73 5.85

0.07 0.25 0.54 0.85

0.25 0.25

0.50 0.40 1.61 1.35 2.50 1.62 4.61 3.38 --

0.1 1 0.1 1 3.02 0.24 0.21 0.46 3.23 --

0.42 0.33 0.42 0.33 -- --

201 1 Total - -

0.15 I .43 1.01 5.71 0.57 8.43 1.73 15.57 - -

0.18 3.38

0.54 1.53 0.54 5.09 - -

0.35 1.35 0.35 I .35 - - --

Total PROJECT COSTS 6.96 5.49 6.94 2.62 22.00

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Annex 6: Implementation Arrangements

DOMINICAN REPUBLIC: Social Protection Investment Loan

The Government has named the Technical Unit for the Coordination o f the Social Cabinet (TUCSC) as the project coordination entity for this loan. The TUCSC i s institutionally part o f Social Cabinet which i s under the Secretary o f the Presidency, specifically reporting to the Vice President (who under the Fernandez Government oversees Social Policy). The Social Cabinet would use i t s Department o f Administration and Finance (DAF) to handle al l project financial management and procurement.

The capacity o f the Social Cabinet’s DAF was assessed during project appraisal by both the Bank and the IDB, and it was agreed to strengthen the DAF with two additional personnel: a financial management specialist and a procurement specialist. In addition, extensive training would be provided in both financial management and procurement to DAF personnel, and additional capacity-strengthening measures as outlined in the Action Plan prepared by FM and Procurement specialists would be supported by the loan.

TUCSC Organization Chart - VPR

Administrative

I

Information Proc. Management Coordination

General Services Supplies Accounting Budget Accounting Purchasing

For the first component (Provision o f National Identity Documents), the TUCSC would play a lead coordinating role, while the Central Electoral Council (responsible for the national c iv i l registry) would have the lead executing role. Execution o f the national I E C campaigns would contracted out to NGOs, church-affiliated groups and professional public relations firms). The Social Cabinet would also be responsible for contracting on a competitive basis the legal and technical assistance needed by Dominican families to complete their identity document applications. The bulk o f this assistance would be provided by NGOs, legal aid associations, and

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church-affiliated groups. For strengthening o f the national c iv i l registry, the Social Cabinet would have the option o f doing a sole source contract with U N D P to manage the upgrading o f c iv i l registry offices (small works and furniture), in order to minimize political and institutional conflict between the Executive Branch (Social Cabinet) and the Central Electoral Council (which functions as an autonomous “fourth power”). That said, the CEC would need to work closely with the Social Cabinet to document the issuance o f identity documents for the targeted individuals, which would trigger the output-based disbursements. The actual provision o f late birth certificates and national identity cards is the responsibility o f the Central Electoral Council. To the end, the CEC has established a special Late Birth Certificates Unit, with 50 temporary staff and additional I C T resources, to handle the increased demand stemming from the loan’s activities. In addition, the TUCSC and CEC will need to work closely with the Attorney General’s Office and the Supreme Court for expeditious processing o f their administrative approvals o f issuance o f late birth certificates.

For the Social Protection Services component the Social Cabinet would work closely with SIUBEN, the Solidarity Program, the Secretaries o f Education and Health, the Administrator for Social Subsidies, and the National Planning Off ice (soon to be a Secretary for Planning and Sustainable Development). Indeed, al l these institutions need to work seamlessly in terms o f information management for CCT program targeting, implementation and evaluation. Beyond the CCT program, the Social Cabinet would have the lead responsibility for consolidating al l food security programs under its control, which would enable it to improve targeting, reduce duplication, increase transparency and accountability, and ultimately to allocate public social spending more effectively.

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Annex 7: Financial Management and Disbursement Arrangements

DOMINICAN REPUBLIC: Social Protection Investment Loan

A World Bank Financial Management (FM) Specialist conducted in September 2005 a Financial Management Assessment (FMA) o f the proposed financial management arrangements for the execution o f funds to be granted under the project. The FMA was performed in accordance with OP/BP 10.02 and Guidelines for Assessment o f Financial Management Arrangements in World Bank Financed Projects, to evaluate the proposed financial management arrangements for the execution o f funds to be granted under the Dominican Republic Social Protection Investment Project. The assessment was updated in April 2007. The overall conclusion o f the FMA is that the proposed financial management arrangements for the project would meet the Bank's minimum requirements once the time-bound FM action plan detailed in Annex 7 i s fully executed.

Over the past year, the DAF o f the Social Cabinet has significantly improved i t s internal control environment, including the fol lowing actions:

1. The Department has an internal audit function which i s performed by 12 full-time auditors from the General Comptroller's Office, responsible for the 14 social programs implemented through the Social Cabinet.

2. The DAF uses Dac Easy Accounting, an automated system that is capable o f providing funds accounting and i s adequate for financial management purposes. The DAF i s also implementing most o f the modules o f the country accounting system known as SIGEF (Sistema Integrado de Gesti6n Financiera). The modules implemented so far include budgeting and procurement. The DAF intends to keep both systems until the SIGEF i s completely implemented, with al l SIGEF modules with the same level o f detail and the funds accounting capability ( s t i l l under design with UEPEX a subsystem o f SIGEF, for implementing units with donor funded projects). The f low o f funds process i s electronically processed through SIGEF: assignment o f budget, request for the budget (planning and budgeting), "libramientos" requests and approval to/from Comptroller's Office, requests/approval and wire banking o f funds from Treasury and payments to providers.

3. The DAF appointed an officer who i s trained on the institutional processes needed to implement the law on Citizens Access to Public Information. Required office equipment has been purchased and space should be allocated shortly to enable commencement o f operations.

The risk assessment conducted as part o f the FMA found that the country specific risk i s high, due to the results o f the Fiduciary Assessment Report issued in April 2005, as wel l as developments in the areas o f anti-corruption and transparency lg, while entity-specific and control risk ratings are subsfantial, particularly due to the f low o f funds arrangements which in the past

l 9 The Executive Director o f Pro-Reforma and Technical Coordinator o f the National Commission for Ethics and Prevention o f Corruption, presented his resignation September 1,2005, based on disagreements with presidential decisions that he considers affect "institutionalism and non-negotiable principles". His withdrawal from the government i s considered a hard blow for officials committed to the fight against corruption.

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were dysfunctional and time-consuming. However, the implementation o f many laws that were enacted in 2006 and early 2007 to strengthen the public financial management has led to substantial improvements in the financial management in general, and in the flow o f funds in particular. The flow o f funds cycle for most o f the project coordination un i t s managing World Bank projects has dramatically improved: from 45 days (2003) to 6-13 days (2007). The implementation o f the new financial management legal framework was highlighted in a Public Expenditure and Financial Accountability (PEFA) exercise in January 2007, coordinated by the European Commission with participation from the Bank. With th i s improvements entity specific control was upgraded to modest. The level o f coordination required for the implementation of these unprecedented FM reforms along with their enabling regulations remains a challenge of great magnitude. Notwithstanding, successful completion o f the FM Action Plan prior to effectiveness would result in an entity specific and control risk rating o f modest.

One outstanding issue i s relatively weak coordination between the DAF and the JCE, and the risk that the lack o f coordination will delay or hamper project execution, or more specifically, the flow o f funds for the second component, so the project risk rating i s modest.

In addition, to further mitigate financial management risk, it has been agreed that the IDB wi l l also use the DAF o f the Social Cabinet to manage one minor component o f their complementary loan, “Labor Markets and Social Transfers”. Although the IDB intervention has been reduced in scope in 2007 and the loan would be limited to strengthening the Sistema Unico de Beneficiarios (SIUBEN), s t i l l all financial management reporting and audits will be harmonized between the two institutions. A single integrated financial report would be prepared by the DAF for both loans every six months. A single audit firm would be selected for both loans, and the annual external audit would cover both loans, with resources from both loans clearly identified.

1. The following matrix summarizes the financial management risk assessment for the project.

Risk Assessment

Overall Inherent Risk I d I Control Risk

Comments

See text above on country risk. The Government i s implementing several FM reforms as part of an IDB-funded program. DR Country Office and FM Sector Board have also scheduled to perform two policy notes during FY08: Policy note on Use o f Country Systems; and Policy Note on Expenditure Efficiency. See text above on entity risk. The DAF would be strengthened during project implementation See text above on project risk. The fiduciary arrangements and the action plan would help mitigate the risks at the project level. Close financial management supervision would also be undertaken.

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1. Implementing Entity

2. Funds Flow

3. Staffing

5. Budget

4. Accounting Policies and Procedures

5. Internal Audit

6. External Audit

7. Reporting and Monitoring

8. Information Systems

Overall Control Risk

H - High S - Sub:

Although the DAF has not had previous experience implementing WB-fimded operations, the use o f the FM country system, the implementation o f an internal audit function, and the substantial improvement in flow o f funds reflect an enhanced FM capacity. The flow o f funds process has been dramatically improved. The previous average cycle of 45 days has been reduced to 6-13 days. The Social Cabinet would be staffed with good qualification and experience commensurate with the scope o f the proposed project. As explained above, planning and budgeting are in line with the general government procedures regulated by the Annual Budget Law - Ley de Presupuesto operated under the Sistema Integrado de Gestion Financiera (SIGEF). The draft budget for the fmt year o f the project will be presented to the Congress in November of 2007 and will be based on planned expenditures by component, disbursement category and financing source The implementing entity already has a manual specifying accounting policies and procedures. The Unit i s developing an operations manual for the project to provide

I for adequate controls. 4 I There are internal auditors appointed by the

I Comptroller General of the DR. 4 I Annual audits will be required to be done by I an independent private auditor acceptable to

I the Bank I Arrangements are clearly defined in the

operations manual to be approved by the Bank and submissions of FMRs will be included in the OP. Arrangements are clearly defmed in the operations manual to be approved by the Bank

M - Modest N - Negligible or Low

Overall performance was rated as Modest and a Financial Management Action Plan i s included at the end o f this section.

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Summary Conclusion o f Financial Management Assessment: On the basis o f the assessment performed, the financial management team concluded:

1.

2.

3 .

4.

The proposed arrangements for financial management o f the project would meet the Bank’s minimum requirements. However, these arrangements are not yet final or in place, therefore, a time-bound action plan should be executed. Successful implementation o f the action plan would result in adequate FM arrangements to be in place prior to effectiveness.

The arrangements for the f l ow o f funds from the Bank to the project, and from the DAF o f the Social Cabinet to each beneficiary agency, should be finalized by negotiations to ensure adherence to the fiduciary requirements o f the World Bank and the Dominican government. (Done)

The output-based disbursement report needs to be finalized in coordination with the JCE and the Social Cabinet and a copy submitted as a condition o f negotiations. (Done). To fol low guidelines issued by OPCS on Implementing Output Based Disbursement Mechanisms for Investment Operations, April 2, 2007, the submitted report needs to be revised prior to effectiveness.

The sample Interim Financial Report (IFR) to be presented to the Bank on a semester basis needs to be presented and cleared by the Bank as a condition for negotiations. (Done)

Audit Arrangements: Annual financial audits would be carried out by an independent external auditor. The project would be required to present an annual audit for a l l project activities four months after each fiscal year end in accordance with the guidelines issued by the Bank on June 30,2003. Therefore in the case o f this project, the annual audit must be presented by April 30 o f each year that the project receives and spends loan funds.

Disbursement Arrangements: Disbursements would be made in accordance with guidelines set out in the World Bank’s Disbursements Guidelines for Projects, issued in M a y 2006. During the Bank’s Country Project Portfolio Review (CPPR) held in March 2006, the government agreed to prepare and present to the Bank new f low o f fund procedures that will apply to projects’ revolving funds. In GoDR letter response to the CPPR the Government informed: “There is commitment to the IMF, within the framework o f the stabilization program with this organism to reform radical and integrally al l the Dominican financial system.” The enacted laws are: the Treasury L a w (Ley de Tesoreria), the Public Credit L a w (Ley de CrCdito Publico), the Public Planning and Investment (Ley de Planificacibn e Inversi6n Publica), the Procurement L a w (Ley de Compra y Contrataciones), Internal Control L a w (Ley de Control Interno), Integrated Financial Management System L a w (Ley de Sistema Integrado de Gesti6n Financiera -SIGEF), Freedom o f Access to Public Information L a w (Ley de Libre Acceso a l a Informaci6n Publica). In addition, the Organic L a w for the Budget o f the Public Sector (Ley Organica de Presupuesto para e l Sector Publico) reduced the practice o f ut i l iz ing budget surpluses for discretional expenditure by the President, which was authorized under a 1967 law. Most o f these

66

laws have begun to be implemented in the various ministries, departments and agencies, including the implementation o f SIGEF in 90 o f these entities. The implementation o f SIGEF began during the previous administration and continued slowly, but steadily, during the Fernandez administration, supported by an IDB program. This is an achievement worth noting, an important reform which corrects a legacy from the days o f Truj i l lo and Balaguer.

The reforms and the modernization o f some processes, which included expanded use o f technology (with the implementation o f SIGEF) and automation o f many processes which were done manually in the past, have led to an improvement in the f low o f funds cycle in al l Bank- funded project coordination, except for one. The average delay between Bank disbursement and deposit in the special account o f the project unit has declined 45 to 1 1 days.

The project would open a Designated Account (DA) at the Central Bank o f the Dominican Republic in US Dollar currency, for the Bank to deposit amounts withdrawn from the Loan account for the purpose o f paying for eligible expenditures as they are incurred. The Designated Account would be a Segregated Account where only loan proceeds may be deposited, with a ceiling o f US$ 1 mil l ion. The DAF would also open an operating account at the Banco de Reservas, the national commercial bank, so it could make payments in Dominican pesos to i t s vendors and providers. The disbursement methods would be direct payment, advance payment and reimbursement. The use o f other disbursement methods must receive prior approval by the Bank and the approval must be included in an amendment to the Disbursement Letter.

Use o f Statements o f Expenditures (SOEs): Loan withdrawal applications would be supported by SOEs for expenditures relating to contracts that are not subject to the Bank’s prior review. Reimbursement o f other expenditures would require submittal to the Bank o f full supporting documentation. Supporting documentation o f SOEs must be maintained by the DAF for at least one year after the Bank has received the audit report for the fiscal year in which the loan withdrawal was made. Such documents must be available to review by external auditors and Bank staff.

Output-Based Disbursement: For sub-component 1 o f Component 1 , Provision o f National Identity Documents, the project includes an output-based disbursement mechanism which would reimburse the government for staff costs incurred as part o f the documentation process. Reimbursements would be made in the currency o f the expenditure, which in this case would be the Dominican Pesos (DOP) using the exchange rate applicable on the date o f disbursement.

A detailed work f l ow analysis was conducted to determine the average unit cost for the Government to process an identity document application, which i s provided below. I t is this unit cost which would be multiplied by the number o f identity documents issued to calculate the disbursement request. On an annual basis the Government would provide to the Bank evidence o f actual expenditures for these activities through i t s integrated financial management system - SIGEF, and the output reports would be reviewed as part o f the project’s annual audit. The original basis o f this unit cost would be periodically reviewed and updated if necessary during project implementation.

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Work Flow and Unit Cost for Processing of Identitv Document

I. Submission o f Application in Civi l Registry Office a. Interview o f applicant, revision o f required documents, and completion o f form

by civil registry legal staff 0

0

0 RD$480/day/80 applicants = RD$G/application b. Write applicant information in two Civil Registry Books (one original and one for

Central Civil Registry Archives) by administrative staff 0

0

RD$300/day/40 applications = RD$7S/application c. File sent to Municipal Fiscal Agent (for late birth certificates)

Legal Staff Daily Wage: RD$480 Interview 80 persons per day

Administrative Staff Daily wage: RD$300 80 entries (40 applications) per day

. .

. RD$40/10 applications = RD$4/application

Average Monthly Salary: RD$l 00,000, or RD$700/hour

Administrative Staff Hourly Wage: RD$40 Takes one hour to prepare package o f ten applications and write official note to Municipal Fiscal Agent

d. Supervision by Civil Registrar 0

0 30 applicatiodhour = RD$23/application e. Send f i l e to Attorney General’s Office (or to the Central Electoral Council if

applicant i s an adult)

11.

111.

Identity Card Department o f Central Electoral Council (CEC) a. Review archives to determine if applicant had previous identity document . . Reception and scanning o f f i le

Issuance o f certification o f no prior identity card o Hourly Wage o f CEC Administrative Staff RD$90 o 10 minutes each application = RD$l Yapplication

o Hourly Wage o f CEC Administrative Staff: RD$90 o 10 minutes each application = RD$l Yapplication

. Verification and Signature by Director o f Electoral Database

b. Send back to Civil Registry Office

District Attorney’s Office (Procuraduria Fiscal) a. Review documents, 200 applications per week b. Send to court the authorization to issue the ratification notice

Enter application f i le numbers o f each application in database Administrative Staff Hourly Wage: RD$90 12 applications per hour = RD$7.5/application

0

0

c. Supervision by Fiscal Agent *:* RD$ 1 Yapplication

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d. After issuance o f ratification notice, return to Civi l Registry Office

IV. Court for Minors or Supreme Court for Adults a. Administrative review o f documents b. Issuance o f ratification by judge with signature and enter application f i l e numbers

in court database 0

0

*:* 20 pesos/application

Administrative Staff Hourly Wage: RD$90 12 applications per hour = RD$7,5/application

c. Review and Signature by Court Judge

V. Civil Registry Office a. Note issuance o f ratification by Fiscal Agent in Civi l Registry Book Secretary

stamps the page o f the civil registry book and enters the number o f the ratification.

0

0

0

Hourly Wage: RD$40/10 applications per hour = RD$4/application

Lawyer reviews entire f i l e before signature by Civi l Registrar Legal Staff Daily Wage: RD$400/80 birth certificatedday = RD$S/birth certificate

b. Issue Birth Certificate

c. Signature and Final Review by Civi l Registrar Average Monthly Salary: RD$lOO,OOO, or RD$700hour

0 20 applicationshour = RD$35/application

Summary o f personnel costs for standard cases o f issuance o f late birth certificates or cedulas: RD$84. Ycertificate Personnel o f Civi l Registry Office RD$3 O/certi ficate Personnel o f Central Electoral Council

Personnel o f Attorney General’s Office = RD$22S/certificate ~ ~ $ 2 7 . Ycertificate Personnel o f Supreme Court -

- - - -

- Total Unit Cost = RD$164,5/certificate

US$S/certificate - - TOTAL UNIT COST in US$

Accounting Policies and Procedures Planning and Budgeting will be in l ine with the general government procedures regulated by the Annual Budget Law - Ley de Presupuesto operated under the Sistema Integrado de Gestion Financiera (SIGEF)). The operating and capital budget will be prepared and submitted to Congress on an annual basis on or before October 31 each year. Assuming the project i s approved in August 2007, the draft budget for the first year o f the project will be presented to the Congress in November o f 2007 and will be based on planned expenditures by component, disbursement category and financing source.

The Project would use the National Chart o f Accounts as dictated by the norms o f the Comptroller’s General o f the Dominican Repubic which i s currently in use by SIUBEN. In i t s

69

present form, the Chart o f Accounts does not capture the project design i.e project components, disbursement categories, financing sources, etc. However, the addition o f sub accounts to the Chart o f Accounts i s part o f the proposed FM Act ion Plan. Accounts would be prepared using the cash basis and the accounting and reporting functions would be carried out by a separate accounting system since the SIGEF only has its budget module operational.

With the exception o f component 2.1 which might be executed by UNDP, the DAF o f the Social Cabinet would operate and maintain al l bank accounts for the project. Payment requests would be processed by the DAF o f the Social Cabinet, and al l releases o f funds from the Designated Account to the project’s operational account would be requested by the DAF o f the Social Cabinet. All payment requests would be prepared, processed and archived by the DAF o f the Social Cabinet.

Should the Social Cabinet exercise i t s option to hire U N D P to manage the c iv i l works sub- component for the national c iv i l registry, i t would be responsible for the records, accounts and reports o f the financial transactions related to the execution o f component 2.1. UNDP would carry out the execution o f this component under a cost sharing agreement signed between the Social Cabinet and U N D P with the no objection o f the Bank.

Reporting and Monitoring Financial Statements, prepared o n the cash basis, would fo l low national norms which are acceptable to the Bank. In the interest o f simplification and reduction o f costs, the IDB and the Bank would combine procedures to allow the project to prepare a single semi-annual Interim Financial Report (IFRs formerly known as FMRs) comprising Project Financial Statements, physical progress and procurement sections. In addition, the project would be allowed to prepare single Annual Financial Statement Report that would include (i) the Statement o f Receipts and Payments by Funding Source (with expenditures classified by budgetary l ine and/or disbursement category); (ii) Uses o f Funds by Project Activities (including budget comparison); and (iii) the Special Account Reconciliation Statement, for both the IDB and Bank financed projects.

With regards to the output-based disbursements, the IFR reports would include the quantity and cost incurred in the issuance o f identity cards, to the extent that information becomes available from the National Budget Office and the financial management department o f the Central Electoral Council.

O n an annual basis (e.g. for reporting expenditures for the annual project audit), those actual expenditures used for the output-based disbursements component would be reported for project accounting purposes. This should ensure that such aggregate expenditures are at least equal to or more than the amounts claimed under each output-based disbursement to provide assurance that the Bank does not disburse more than was justified.

Supervision Plan Given the risk profile o f the country and entity, and the extensiveness o f the Financial Management Action Plan, a financial management supervision mission should be performed prior to effectiveness. This mission will focus o n the Organizational Arrangements, and the

70

Information and Reporting Systems which are to be implemented and would involve a review o f the Accounting Systems and Procedures. During the first year o f implementation it i s recommended that two supervision missions be performed, supplemented by semi-annual reviews o f the IFRs. Thereafter on-going supervision should be through continuation o f the IFRs desk reviews, annual review o f the external audit reports, and at least one supervision mission per year.

Legal Agreement Provisions Schedule 2, Section 11, B. Financial Management, Financial Reports and Audits, paragraph 2, "Standard" wording for IFRs except that, instead o f quarterly reports, the project would be required to submit semi-annual FMRs to the Bank and IDB no later than 30 days after the end o f each six month period.

Schedule 2, Section 11, B. Financial Management, Financial Reports and Audits, paragraph 3, "Standard" wording for project audits. The annual audit reports would be furnished to the Bank not later than three months after the end o f each year.

71

Annex 8: Procurement Arrangements

DOMINICAN REPUBLIC: Social Protection Investment Loan

A. General

Procurement for the proposed project would be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004; and "Guidelines: Selection and Employment o f Consultants by World Bank Borrowers" dated May 2004, and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Loadcredit, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank in the Procurement Plan. The Procurement Plan would be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.

Procurement o f Works: Works procured under this project would include rehabilitation o f 50 existing Civil Registry offices (average estimated cost per office: US$60,000). Management o f this civil works sub-component for the Civil Registry, including the procurement o f related furniture, may be sub-contracted to the United Nations Development Program (UNDP). Rehabilitation will include measures to improve working conditions and ensure installation and security o f I T equipment from theft and environmental damage. Procurement o f works will be carried out using the Bank's Standard Bidding Documents (SBD) for all ICB and National SBD agreed with the Bank for other methods.

Procurement o f Goods: Goods procured under this project would include: I T hardware and software, information and communication technologies, equipment and furniture. This procurement wi l l be carried out using the Bank's SBD for all ICB and National SBD agreed with the Bank for other methods.

Procurement o f non-consulting services: wi l l consist o f printing o f materials and publication and dissemination services. This will include printing o f training materials and brochures for (i) the Solidarity Program, (ii) the legal aid to undocumented households sub-component, and (iii) the national IEC campaigns to promote documentation and citizenship o f all Dominicans. These services will also be procured using the Bank's SBD or national SBD agreed with the Bank.

Selection o f Consultants: The loan will finance contracts with consulting f i r m s for technical assistance, training, development o f MIS systems, development o f impact evaluators, support for legal and institutional reforms, and national awareness raising campaigns, among others. Short l i s ts o f consultants for services estimated to cost less than $200,000 equivalent per contract may be composed entirely o f national consultants in accordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines. Civi l society organizations will be contracted to monitor local civil registry offices and to provide social audits o f key social programs, in collaboration with the Civil Society Consultative Council attached to the Social Cabinet. In addition, NGOs are likely to be contracted to provide legal aid services to help poor Dominican households to obtain their

72

national identity documents. Universities offering law degrees may also be contracted to provide para-legals for this same purpose, and to assist the Attorney General’s office to process late birth certificate applications. Research institutions (both public and private) may be contracted to assist in the external evaluation o f the Solidarity Program.

Where teams o f consultants are not required, individual consultants will be hired to provide specialized advisory services, training, and services to support project implementation and monitoring. The project will finance the salaries o f three project coordination staff in the Social Cabinet (Project Coordinator, monitoring and evaluation specialist, and project assistant) and two specialists within the DAF (procurement and financial administration) which will be directly responsible for the implementation o f the project.

Training: Under Component One, Strengthening Social Protection Services, the project will finance training, study tours and workshops for the staff in the Social Cabinet, SIUBEN social program targeting unit.

Operating Costs: These costs will include consumable goods required to implement the project and other expenditures related to utilities, office rental, purchase and maintenance o f office equipment, consumable office supplies, per diems, transportation and logistic expenditures to conduct supervision.

Others: The project will also support output-based disbursement to the Treasury, based on issuance o f national identity documents and an agreed-upon unit cost formula, and confirmation o f national budget expenditures by the Central Electoral Council (CEC) for the purpose o f providing late birth certificates and national identity cards to poor Dominicans.

The procurement procedures and SBDs to be used for each procurement method, as wel l as model contracts for works and goods procured, are presented in the Operational Manual that has been approved by the Bank.

B. Assessment o f the agency’s capacity to implement procurement

Procurement activities will be carried out by the Department o f Administration and Finance (DAF) o f the Social Cabinet. The Social Cabinet i s headed by a Secretariat, which reports directly to the Vice-president o f the Republic and provides al l logistic support to the Cabinet. The project will not support the creation o f a Project Implementation Unit (PIU) in the Social Cabinet. Instead it will strengthen their DAF by hiring specialists in the areas o f Financial Management and Procurement as well as a Technical Coordinator. The Procurement Specialist for the DAF will be hired before effectiveness and will be in charge o f al l procurement under the project.

An assessment o f the capacity o f the Implementing Agency to implement procurement actions for the project was carried out by the Bank in September 2005 and updated in April 2007. The assessment reviewed the organizational structure for implementing the project and the interaction between the project staff responsible for procurement and the Social Cabinet’s relevant central unit for administration and finance.

73

The key issues and risks identified for the implementation o f procurement for the project include the lack o f prior experience with Bank-financed procurement within the DAF and the overall weak procurement environment. Further, the country does not have a transparent public procurement system in place. Although the new Procurement L a w No. 340-06 has been approved, it i s s t i l l pending implementation, for which dissemination and extensive training will be required. There i s a shortage o f skilled personnel in procurement with knowledge o f international rules and also l imited planning and follow-up capacity and a lack o f standard bidding documents, rules and procedures. The current overall project risk for procurement is HIGH. The corrective measures which have been agreed are:

Social Cabinet would hire by effectiveness a Procurement Specialist with relevant experience in Bank procurement, to be dedicated full time to the project. TORS o f the proposed specialist and CV will be submitted for the Bank’s approval by negotiations. Submission to the Bank o f a preliminary Procurement Plan to cover the f i rs t 18 months o f the project. Due for approval by negotiations. Training in procurement provided by the Bank to the Social Cabinet as soon as the project i s declared effective. Further training to be provided during the first year o f implementation. Preparation by the Social Cabinet o f draft bidding documents fol lowing the Bank’s standards for al l processes, by negotiations. Preparation by the Social Cabinet o f an operations manual with a specific chapter on procurement, detailing al l the procedures and channels o f responsibilities and f low o f documentation. Due for review and no objection by the Bank by negotiations. Establishment o f a procurement filing system, to be subsequently submitted for Bank’s no objection by effectiveness. Organizing a launch seminar before project effectiveness.

In addition to the action plan detailed above, the procurement thresholds for prior review by the Bank have been set at relatively l o w levels for the Dominican Republic in order to mitigate further the procurement risk. The overall project risk for procurement fol lowing successful execution o f the proposed action plan remains SUBSTANTIAL.

C. Procurement Plan

The Borrower, at appraisal, developed a procurement plan for project implementation which provides the basis for the procurement methods. This plan has been agreed between the Borrower and the Project Team on M a y 29, 2007 and is available at the DAF in the Social Cabinet. It will also be available in the project database and in the Bank’s external website. The Procurement Plan wil l be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.

D. Frequency of Procurement Supervision

In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment o f the Implementing Agency has recommended at least one supervision post-review

74

mission per year, during which at least 1 in 10 contracts should be reviewed, along with one procurement audit in conjunction with the financial audit o f the project.

8

E. Details o f the Procurement Arrangements Involving International Competition

9

1. Goods, Works, and Non Consulting Services (a) L i s t o f contract packages to be procured following ICB and direct contracting:

2

Contract (Description)

I T equipment Institutional Strengthening Implementing

- 1

Ref. No.

-

- a-1)

- a-2)

3

Estimated cost

US$224,000

b-2)

- c-1)

-

Expected Bid-

Opening Date

March 08

Nov. 08

Nov. 08

Comments

Agency I T equipment I US$164,500 Institutional Strengthening Implementing Agency IT equipment for Documentation (CEC) Mobile Civil Registry Units

US$240,000

US$3 10,000

for CEC

4

Procure ment

Method

ICB

ICB

ICB

ICB

Preference (yedno)

Yes

Yes

Yes

Y

7

Review by Bank

(Prior /Post)

Prior

Prior

Prior

Prior May 08 * (b) All ICB contracts and all direct contracting will be subject to prior review by the Bank.

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2. Consulting Services

(a) List o f consulting assignments with short-list o f international f i rms .

4 5 6 1 1 2 7

Ref. No.

:[" 1 Eduia: Campaign for Identi Documents Baseline study for Legal Identity Documentation Pro ram

Description of Assignment

3

QCBS

Estimated cost

Post) Date Prior April 08 US$300,000

Selection Review Expected Comments Method by Bank Proposals 1 (Prior / 1 Submission 1

(b) Consultancy services estimated to cost above US$1 00,000 per contract and al l Single Source selection o f consultants (firms) will be subject to prior review by the Bank.

(c) Short l i s ts composed entirely o f national consultants: Short lists o f consultants for services estimated to cost less than US$200,000 equivalent per contract may be composed entirely o f national consultants in accordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines.

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F. Thresholds for Procurement Methods and Prior Review

I Irrespective o f value

Recommended thresholds for the use o f the procurement methods specified in the loan agreement are identified in the table below, which also establishes the recommended thresholds for prior review. The final procurement method and the review modality (prior or post) for specific contracts will be established in the agreed Procurement Plan.

Single Source Al l

Thresholds for Procurement Methods and Prior Review

ccordance with Chapter V o f the Guidelines

specified in the PP.

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Annex 9: Economic and Financial Analysis

DOMINICAN REPUBLIC: Social Protection Investment Loan

Introduction

The Social Protection Loan includes two key components which will produce economic benefits: (a) the provision o f national identity documents to poor families and (b) the conditional cash transfer program, Solidarity, into which poor undocumented households may be enrolled once they obtain their identity documents.

A. The provision o f identity documents to poor families offers many o f the economic benefits o f the Solidarity program (see below), in that it will enable approximately 90,000 households currently excluded for lack o f documentation to benefit. So the economic benefits cited below for households currently participating in the Solidarity program are predicted to increase by 40 percent once the documentation component i s completed.

In addition to access to the CCT program, documentation is expected to generate the following economic benefits:

0 Increased productivity and earnings, due to reduced dropout at basic and secondary education levels and improved basic and secondary education completion rates, because youth will no longer be evicted from 8‘h grade for lack o f a birth certificate and will be allowed to take the national exam required to progress to secondary and university education, which are the levels shown by the Poverty Assessment to have the greatest impact on an individual’s rise out o f poverty;

0 Increased productivity and earnings linked to better health and nutritional status among poor families, made possible by their enrollment in the national subsidized health insurance program (which requires official documentation);

0 Increased productivity and earnings linked to better economic opportunities stemming from poor families’ ability to obtain a formal sector sector job, a driver’s license, open a bank account and take out a loan, establish t i t le to land and other assets, travel abroad, etc

B. Solidarity, l i ke other social assistance programs that use conditional cash transfers to reduce poverty and raise the human capital o f the poor, are multi-sectoral and multi-dimensional by their nature. Such programs have a range o f economic and social benefits. Among other things, the Solidarity program i s expected to generate:

0 immediate reductions in income poverty resulting from extremely poor households’ receipt o f a cash transfer o f US$300 per year on average (as wel l as a reduction in income inequality, due to the redistributive effects o f targeting the transfer to the poorest municipalities and, within them, the poorest households);

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increases in household food consumption due to the income effects o f the transfer and, thus, immediate improvements in chi ld and family nutrition (through both higher and healthier consumption);

gains in education, both due to the income effect o f the transfer and the “price effect” associated with the school attendance co-responsibilities; increases in enrollment and years o f schooling can be expected to result, among other things, in greater productivity, earnings, and income on the part o f the student as an adult; and

gains in health and nutritional status due to both the income effect o f the transfer and the “price effect” associated with the health and nutrition co-responsibilities; improvements in health status has direct welfare effects, but can also be expected to increase schooling levels, improve cognitive achievement, as wel l as productivity, earnings and incomes as an adult.

Trainings impact bf regarding childhood

associated with the Solidarity program are intended to reinforce and strengthen the the cash transfers by imparting critical infonnation and knowledge to poor families, improved health and nutritional practices, parenting skills (e.g. importance o f early education), the value o f immunization and other preventative healthcare visits, and

how to obtain critical identity documents.

The multi-dimensionality o f the Solidarity and other similar programs makes it difficult, if not impossible, to quantify in monetary terms al l the different social and economic benefits; this i s true both for conceptual and data-related reasons. More specifically, given existing data, i t is possible to quantify only the private benefits associated with improved education, health, and nutritional status, measured in terms o f expected additional earnings o f direct Program beneficiaries over their working lives.

Several other important categories o f (potential) benefits o f the Social Protection Investment Loan are not valued here. These include:

Reduced costs to society linked to delinquency, adolescent pregnancy, crime, substance abuse, HIV/AIDS and other negative behaviors, because o f poor youth’s improved access to education and economic opportunities due to provision o f national identity documents and the conditional cash transfer program and. Rather than undocumented youth being forced out o f school and cut o f f f rom formal sector employment opportunities as i s currently the case, youth will be able to remain in school and obtain real jobs. These reduced costs are particularly difficult to quantify.

the “economic value” o f reductions in poverty and/or income inequality;

the social benefits associated with basic human capital investments (e.g., fostering better learning environments, and health and nutritional practices both among the current and subsequent generations);

0 reduced family healthcare costs associated with more and better preventative care provided and fostered through the Solidarity CCT program;

79

0 the general equilibrium effects (benefits) o f greater human capital investments associated with higher future rates o f economic growth and faster future poverty reduction.

In spite o f these limitations, it i s possible to generate reasonable lower-bound estimates o f the (private) economic benefits - in terms o f increased earnings and income - that can be expected v ia improved education, health, and nutritional status among children in the households targeted under the Program. This is the approach adopted here and presented in the fol lowing section. The Annex ends with a summary o f the results o f the financial analysis carried out for the Project.

Economic Analysis

This section summarizes the economic analysis carried out to identify, ex ante, a subset o f the economic returns associated with investing in the provision o f legal identity documents to poor undocumented Dominicans and in the Solidarity CCT program. With benefits due to increased years o f schooling at both basic and secondary education levels among poor Dominicans, the benefits o f documentation and subsequent enrollment into the Solidarity program are estimated to exceed the costs, indicating that this i s a sound economic investment. This analysis concludes that, at a 12 percent discount rate, using a base case scenario, the net present value (NPV) o f the project will be approximately US $16 million, with an internal rate o f return (IRR) of 22 percent, depending on the assumptions (Table A9.1). Should the impact o f documentation increase total years o f schooling 50 percent more than anticipated among project beneficiaries, and using a higher init ial hourly earnings rate equal to just two-thirds o f minimum wage (RD$23, or US$0.70, an hour), the rate o f return and net present value o f the project would increase significantly, as seen in Table A9.1 below.

Table A9.1: Net Present Value (NPV) of the Dominican Republic Social Protection Project

Base Case Scenario (Impact on years o f schooling: 1 .O; Init ial hourly earnings = average o f young workers with primary education in lowest 4 income deciles for those who do not go on to secondary education; Average initial hourly earnings for those who continue on to secondary education Upper Case Scenario (Impact on years o f schooling: 1.5; Init ial hourly earnings = 2/3 minimum wage) * uses 12% discount rate Sources: World Bank staff calculations, World Bank 2005 Poverty Assessment; World Bank 2001 Pover Labor Force Survey October 2004

Methodology and Assumptions of the Analysis

NPV* (US$ M)

16.1

33.2

Assessment;

IRR

22.4%

32.7%

ational

The basic methodology involves standard cost-benefit analysis, in which a discounted stream o f expected benefits i s compared with a discounted stream o f project costs. A discount rate o f 12 percent was used to discount the net stream o f total benefits generated by the Project. This i s the

80

rate normally used in World Bank to evaluated projects, which represents the investment opportunity cost o f project resources.

Beneficiary population. It i s assumed that the potential beneficiary pool i s 227,700 children, which represents 90 percent o f undocumented children under age 16 targeted by the project. O f these, 57 percent are projected to complete basic education (Grade 8), and one-third o f basic education graduates (42,830) are expected to continue on to secondary education.

Estimating the benefits of improved educational outcomes. T o estimate the private benefits associated with additional schooling, the standard procedure i s to identify how many new individuals would enroll and how many years o f schooling they and existing enrollees would have due to the Program, and then to estimate how much additional (discounted) income they will earn over their lifetimes due to the additional schooling. The assumption behind this external efficiency analysis i s that by gaining additional years o f schooling, individuals will be more productive and have more access to better paid jobs and therefore will have higher earnings during their lifetime.

The estimated schooling impact and, thus, expected benefits o f the Documentation and Solidarity CCT program i s estimated to be one additional year o f schooling. First, documentation o f children means that children can attend school beyond fourth grade (current Ministry o f Education policy stipulates that if a chi ld does not have hisher birth certificate by the end o f fourth grade they can be prohibited from fifth grade), and can take the gfh grade Basic Education Qualifying Exam (which by law requires presentation o f a birth certificate). Overcoming these two major obstacles to schooling may indeed have a much greater impact on years o f schooling for poor young Dominicans, but this conservative assumption was used to demonstrate the economic value o f the project.

In addition, this estimate draws from the findings o f a recent impact evaluation o f the Progesa program (now called Oportunidades) in Mexico. Specifically, the impact evaluation found that the Progresa program led to an increase o f 0.66 years o f schooling, o n average, among eligible families (Schultz 2000; IFPRI 2000). Approximately 230,000 children are expected to benefit from the Solidarity CCT program under the project, once their parents obtain their national identity cards required for enrollment. So the CCT program impact would combine with the Documentation impact.

For the base case scenario, average hourly earnings for poor primary school leavers (average years o f schooling, 4.5) were taken from a recent National Labor Force Survey. This wage was calculated at RD14.66/hour (US$O.42/hour), which i s approximately 1/3 the official minimum wage. For the second scenario 2/3 o f the minimum wage (or RD$ 23hour, equivalent to US$O.7O/hour) was used.

Secondary Level Impact. In addition to increasing average years o f schooling, Documentation and Solidarity CCT program are expected to lower dropout rates at the basic education level, thereby increasing the basic education completion rate, a key objective o f the Government. An increased number o f students are expected, therefore, to continue on to secondary education. The analysis assumes the basic education completion rate will increase over the l i fe o f the

81

project f rom 53% to 57%, and that one-third o f these completers will continue on to secondary school, producing an additional 42,830 secondary students. Similar to the primary level, the analysis then calculates the economic impact (increase in earnings) linked to an increase o f 1.0 years o f schooling for these youth aged 16, using the impact o f an additional year o f school on average hourly earnings from the World Bank Poverty Assessment.

To estimate the stream o f benefits associated with additional years o f primary and secondary schooling under the Program, private rates o f returns were applied using results o f returns to education analysis reported in the World Bank Poverty Assessment. Those estimates indicate that one additional year o f primary education increases workers hourly earnings by 7 percent, while an additional year o f secondary education increases workers hourly earnings by 11 percent. Calculations o f the stream o f discounted benefits associated with this additional education assume that upon completion o f schooling, beneficiaries work for 25 years.

Financial Analysis

Financial Benefits

In addition to the economic benefits calculated above, the project is expected to reduce financial losses due to dropout at the primary and secondary levels. I t i s estimated that school dropout will decline by 15 percent (from 6.4 percent in 2005/06 to 5.4 percent in 2009/10. As student enrollment improves due to the documentation component (they will no longer be evicted at grade S), and as student enrollment and attendance improves due to their fami l ies’ participation in the Solidarity C C T program, these are reasonable assumptions. Taking into account basic education unit costs calculated by the Ministry o f Education in 2006, and the number o f children reached under the project, these reductions in dropout can be converted in calculations o f financial savings and net present values. The total financial savings from improved internal efficiency o f the education system i s estimated at US$4.5 M in NPV terms, assuming the benefits do not k ick in until after the project ends but that they continue for 20 years after that.

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Annex 10: Safeguard Policy Issues and Social Assessment

DOMINICAN REPUBLIC: Social Protection Investment Loan

This project has been rated a Category “C” by the L A C Safeguards Unit. No specific environmental or social issues are raised.

As part o f loan preparation a Social Assessment was undertaken, carried out by three leading Dominican sociologists assisted by L A C ESSD. Specifically, the assessment examined the social dimensions o f the economic and financial crisis in the Dominican Republic, with a focus three types o f households: those in extreme poverty, poverty and just above the poverty line. These households are the targeted participants in the proposed Social Protection Investment Loan. In addition, loan preparation involved extensive consultation with local NGOs working on issues o f c iv i l rights for Haitian immigrants and Dominicans o f Haitian descent, to discuss the sensitive questions o f identity and nationality. These are discussed at the end.

The researchers used Social Risk Management as a guiding conceptual framework for their assessment, examining ways in which households: prevented or reduced risks or shocks; mitigated the impact o f those risks or shocks; and adopted strategies to overcome them. Households typically managed these risks using private and public assets including those in informal settings (family, friends, neighborhood), the market (savings, insurance, credit), and public sector (pensions, social assistance, labor regulations, use o f public space). In-depth interviews (IS), focus groups (9) and case studies (3) were carried out with a sample o f extremely poor, poor and lower class households. These households were located in 16 different communities across the country, including poor barrios o f Santo Domingo, bateys2’, rural areas near the Haitian border where poverty i s most highly concentrated, and five other urban areas.

This Annex begins with a description o f key features o f these different target beneficiary groups, and then focuses on the impact o f the economic crisis on the poor and extreme poor, and on their responses to it, including their suggestions for the design o f the Social Protection Investment Loan. Finally, it analyzes the distributional impact o f intended project benefits on different stakeholder groups.

1. Key Features of Target Households

Extremely Poor Households In general, the extremely poor are unable to pay rent and live in areas which are barely inhabitable and frequently vulnerable to natural disasters (such as on riverbanks, in ravines, and steep hillsides). Land i s unproductive, has no basic services (water, electricity, sewer, police, etc.), and i s untitled. Housing is constructed f rom cardboard, metal and wood gathered from solid waste sites. They have few assets with which to manage risk. According to the Poverty Assessment, approximately 11 percent o f the Dominican population falls in this category. For them the economic crisis has simply been an intensification o f their situation o f “permanent crisis” in simply trying to survive. The extreme poor are constantly looking for sources o f income and/or work, and ways to reduce expenses. This includes street

2o The batey i s a rural agricultural community whose population works primarily in the production o f sugar, and typically includes both Dominican and Haitian families.

83

vending, begging, foraging in solid waste sites, squatting and exploiting public land, using traditional medicine and simply walking rather than paying for transportation. Extremely poor households typically earn less than RD$3,400 per month, equivalent to US$85 (August 2004), well below US$l/day/person for the average household size o f 4.2 members.

Many o f these households are headed by women, who are frequently depressed and physically abusive at home. These women indicated these problems are directly linked to inability to generate sufficient income and to the lack o f a male authority figure in the household. In these situations some women resort to having children with various men (to diversify their sources o f income) but this has only increased economic vulnerability and resulted in confusion in terms o f household authority. Often they rely on family members or neighbors to take care o f children while they work, except for those who forage in solid waste sites in which case they take their children with them to increase collection.

In general, extremely poor households do not participate in formal social networks and mainly inter-act with other poor households in times o f dire need (illness, family death, flooding, etc.). While weak, this system o f exchange does provide one way to survive in times o f crisis. Nonetheless, those interviewed expressed feelings o f marginalization f rom basic activities o f production and consumption, such that they feel trapped in their poverty with l i t t l e hope o f progress. This leads to alcoholism, violence and feelings o f failure. Youth leave school and often express anger at their parents’ inability to care for them. Several families with children in school described them as hyper-active, with l o w grades and frequent repetition.

Poor Households

One step up, the poor often l ive in densely populated areas located on the edges o f major urban areas, or in rural areas. Minimum infrastructure (water connections, electricity, some streets) exists but with inadequate coverage and service. Public spaces are exploited for small businesses providing basic goods and services (food, repair, etc.). Poor households typically earn between RD$3,400-8,000 per month, equivalent to about US$140 on average (August 2004), with women typically working near the home in schools, churches or the neighborhood while men typically worked (or searched for work) further from home.

In general, poor households tended to perceive the crisis as related to social inequality, tied to the incapacity o f the State to serve the needs o f the poor due to capture by powerful political and economic interests. They are more l ikely to participate in religious activities and take advantage o f reciprocal family support networks. Interestingly, a l l households interviewed indicated that the crisis had deteriorated traditional support networks while delinquency and violence by youth gangs had increased. Violence within the household had increased, as had episodes o f depression and anguish among adults responsible for sustaining the family.

In terms o f access o f social services, both extremely poor and poor households reported using government services such as schools, public hospitals, subsidized pharmacies, water and electricity, subsidized propane gas and transport, in addition to the markets o f INESPRE (where subsidized food baskets can be purchased). However, many poor households expressed difficulties in accessing social protection programs, particularly as their needs have increased.

84

Lower Middle Class Households

Lower middle class households typically live in urban areas and suburban areas, where housing i s single-family or multi-family in decent condition. Public services and infrastructure (water, electricity, sanitation, schools, health clinics) are adequate. O n average, households earn between RD$8,000-12,000 per month, equivalent to about US$250 (August 2004). Lower middle class households were more l ikely to express the psychological effects o f the crisis. Lower middle class households are more likely to organize themselves in neighborhood associations and other community organizations, which offer increased opportunities to manage risks and mitigate shocks. In terms o f public services, they typically benefit from educational services, school feeding, and propane gas subsidy, while avoiding public health services.

2. Response to the Crisis

Household Level Extremely poor households have increased their use o f chi ld and youth labor in the informal sector, which has lead to school dropout or attendance at sub-standard night school classes. The increased cost o f school supplies and uniforms has led to additional dropout (as has the lack o f birth certificates among many poor families which i s an obstacle for school enrollment). In addition, poorest households have increased their use o f “the street”, as almost the only means o f poorest households to generate subsistence and the primary space for extending and accessing social support networks. At the same time, the crisis has increased their self-exclusion from society, alcoholism and resort to religion for help.

Poor households have responded to the crisis by increasing their search for new sources o f income, increasing their working hours, diversifying their agricultural production, increasing debt (personal loans), suspending certain services (e.g. phone), changing food consumption habits towards basic foodstuffs, reducing spending on leisure and recreation, and increasing engagement in i l l ic i t activities (prostitution, illegal emigration, delinquency, drugs, etc.). Examples o f economic activities include fruit-sales by bicycle, sale o f used clothing, and sub- minimum wage day labor (in both urban and rural areas). Children have increased their work within the households as parents have had to spend more time away from home.

Lower middle class households tended to continue the education o f their children, with chi ld labor considered as an option only o f last resort. Instead, they reduced spending on imported food, recreation, and brand-name clothing while increasing their use o f flea markets and purchase o f domestically produced goods to lower their expenditures.

Recommendations for Social Policy

Among both the poor and extremely poor households interviewed, the greatest concerns among parents during these moments of crisis are the education and nutrition of their children.

85

In addition, households suggests the need for improved food security, temporary j ob creation, continued price subsidy o f the basic household consumption basket (or even the reduction o f prices), and increases in minimum wage levels. Other measures cited the expansion o f social assistance programs and subsidy o f al l basic services. Particular emphasis was placed on improving the quality and reducing the cost o f health, education and transport services. Women suggested programs to help them obtain paid jobs such as child-care services and housing for the elderly.

In general, the suggestions focused on priority actions for survival. Only two types o f programs were suggested for medium-term economic development: (i) construction and rehabilitation o f streets and housing and low-interest loans for housing (increase in private assets); and (ii) improved quality and access o f educational services for human capital development. All these suggestions are summarized in the table below.

Table A10.1 Summary o f Social Policy Measures Proposed by the Poor

Framework o f Proposed Actions

1. Improvement o f salaries in general

2. Job-creating program

3. Food & Nutri t ion

4. Social Aid Program

Type o f Proposals SUI Macro-social Character

Measures Increase salary Increase minimum salary in accordance with prices o f the [canasta familiar] Create free zone or other type o f j o b sources

Reduce prices o f the [canasta familiar]

Implement social aid program and subsidies to al l basic services

aitted by Interviewees Sectorial o r Micro-social

Character Measures - Provide monetary subsidy

to poor families (compensation due to inflation)

- Facilitate access to credit to new micro-companies development initiatives

- Finance workshops and grant loans to sustain workshops during crisis

- Create more free zones to increase jobs for women

- Provide basic food to housewives (milk, beans and rice)

with lower-priced products

social aid card

and clothing for the poorest

- Create attention centers for elders and disabled

- Install popular markets

- Expand the allocation o f

- Provide medicines, food

86

F r a m e w o r k o f Proposed Actions

5. Program to help women

6. Health program

7. Transportation system improvement Drogram

8. Basic infrastructure program in urban and rural areas

9. Education program

Project Participants

T y p e o f Proposals Sut Macro-social Character

Measures

Program to assist working mothers

Improve health services, social protection and lower prices o f medications

Improve transportation service and reduce its cost Construct and repair basic infrastructure: streets and housing

Improve and extend education services

nitted by Interviewees Sectorial o r Micro-social

Character Measures people

centers

the creation o f cooperatives for the sale o f products at lower prices to low-income women

pharmacies in poor neighborhoods and insure their adequate supply o f stock

- Eliminate fee for medical services to the poorest

- Decrease transportation costs to the poor

- Repair streets - Improve houses - Facilitate low-cost loans

for acquisition o f housing - Provide school

transportation - Provide school breakfast - Provide uniforms and

books - Provide scholarships for

technical courses (shoemaking, cabinet- making, dressmaking, confectionery, hairdressing, etc.)

- Create free daycare

- Stimulate and facilitate

- Install popular

Specifically, the loan will ini t ial ly target 92,000 heads o f poor households, identified by the SIUBEN as economically eligible for the Solidarity Program but excluded for lack o f identification. In addition, the loan will a im to reach al l the members o f those same households, as wel l as undocumented family members f rom households which are benefiting from the Solidaridad CCT Program. This represents approximately 400,000 beneficiaries, when both household heads and dependents are included. Special efforts will be made to reach out to al l

87

children who lack birth certificates under the age o f 16, whatever their socio-economic status. Again, the SIUBEN targeting instrument will ensure that project benefits accrue to poor and extremely poor families only.

The proposed rationalization and consolidation o f the social assistance/social protection sector overall, including improvement o f targeting mechanisms across the sector, would mean fewer benefits to the lower middle and middle classes. This i s a concern, particularly for those families living just above the poverty line, particularly given the strong negative impact o f the recent economic crisis on the middle class (declining real incomes linked to rampant inflation) in 2003 and 2004. These groups are also important political actors and their opposition may reduce the the Government's willingness to implement proposed social sector pol icy reforms. However, economic stabilization and growth in 2005 and 2006 helped many o f these households on the margin o f the poverty line to move above it (the share o f households living in poverty declined from 43 percent to 36 percent between 2004 and 2006), so their potential opposition i s expected to be mild. Finally, the IDB's Social Management Reform quick-disbursing loan (US$lSO M) provides the Government strong incentives to carry out this rationalization process.

Identity and Nationality on the Island of Hispaniola

As part o f project appraisal the Bank presented and discussed in a "focus group" approach the project's components and activities to seven active NGOs which represent the interests o f Haitians in the Dominican Republic (workers, women, children, human rights, etc.). The purpose o f this was: (i) to determine, based on the participants' reactions, if the loan's activities appear to present any reputational risk issues for the Bank in the eyes o f the Haitian interests and if so, what are those issues; and (ii) to develop measures for the Bank or the government (borrower) to take to avoid these issues, if possible.

The Social Cabinet, on behalf o f the Dominican Government, presented the loan, its objectives and activities. The Executive Branch's commitment to resolve the issue o f undocumented Dominicans was emphasized, to ensure that poor Dominicans would benefit from existing and future social programs. The representatives o f the seven NGOs al l commented on the loan and i t s components. They raised issues o f concern about the situation o f undocumented individuals o f Haitian origin born in the Dominican Republic, the lack o f the political will to resolve the situation, and the alleged violation o f their rights according to the Dominican Constitution. The NGOs felt strongly that the World Bank loan will do l i t t l e to improve the situation o f Haitian immigrants and that the loan itself might be considered discriminatory since it supports a system that is discriminatory in nature.

The Bank team underlined the fundamental goal o f the loan: to help 400,000 undocumented Dominicans to get their identity documents. There i s no intention to harm or discriminate against any individual o f Haitian origin whatsoever. At the end o f the meeting, the representatives o f the groups al l recognized the intentions and benefits o f the loan, and expressed their commitment to support its implementation in any possible way. They also were supportive and appreciative o f the Bank's efforts to raise the profile o f the issue o f undocumented families in the Dominican Republic--whether Dominican or Haitian.

88

Mitigation mechanisms and Follow Up

The Bank would maintain close contact with these groups, and al l o f them agreed to effectively contribute in the future implementation o f the loan through inclusion in the mechanisms o f control; monitoring by c iv i l society; participatiodassistance in identifying the NGOdparalegals to work with undocumented poor households, etc.

Based o n the discussions and the commitments mentioned above, it i s the assessment o f staff that the reputational risk o f the Bank has been reduced and that there is solid consensus among the Haitian interests groups convened to go ahead with project implementation as it i s designed.

Nevertheless, the issue o f undocumented poor households in the Dominican Republic i s s t i l l controversial from the perspective o f Dominican nationalists who are afraid the Bank project will end up offering Dominican citizenship to Haitians. In order to prevent any misconception and/or potential reputational risks, the Bank should continue working together with key actors in Dominican society, Haitian interest groups and others, and closely monitor the situation and strategize on the evolution o f events accordingly.

89

Annex 11: Project Preparation and Supervision DOMINICAN REPUBLIC: Social Protection Investment Loan

Planned Actual PCN review June 20,2005 June 20,2005 Initial PID to PIC June 28,2005 June 28,2005 Initial ISDS to PIC June 28,2005 June 28,2005 Appraisal January 9,2006 March 13 , 2006 Re- Appraisal April 16,2007 April 16, 2007 Negotiations May 29,2007 May 30,2007 Board/RVP approval August 2,2007 Planned date o f effectiveness November 17,2007 Planned date o f mid-term review November 2009 Planned closing date December 3 1 , 20 1 1

Key institutions responsible for preparation o f the project: Social Cabinet o f the Vice-presidency Sub-secretary for Economy, Planning and Development Central Electoral Council

Bank staff and consultants who worked on the Droiect included: Name Title Unit Sam Carlson Sr. Economist for Human Development LCSHD Cornelia Tesliuc Sr. Social Protection Specialist LCSHD Katherine Bain LAC Civil Society Team Leader LCSPR Patricia Hoyes Sr. Financial Management Specialist LCOAA Maritza Rodriguez Financial Management Specialist LCOAA Aracelly Woodall Project Costing Specialist LCSHD Jacqueline Veloz Team Assistant LCSHD Catherine Abreu Procurement Analyst LCPROC Evelyn Vilatoro Sr. Procurement Specialist LCPROC Fabiola Altimari Lawyer LEGLA Xiomara Morel Disbursement Officer L O A G l Josefina Stubbs Sr. Social Development Specialist LAC ESSD Francisco Ayala Consultant Rosie Hidalgo Consultant Blanche Arevalo Consultant

Bank funds expended to date on project preparation: 1. Bank resources: US$300,000 2. Trust funds: US$O 3. Total: US$300,000

Estimated Approval and Supervision costs: 1. Remaining costs to approval: est. US$O 2. Estimated annual supervision cost: US$85,000

90

Annex 12: Documents in the Project Fi le DOMINICAN REPUBLIC: Social Protection Investment Loan

Atlas de la Pobreza en la Republica Dominicana 2005, Oficina Nacional de Planificacih, Secretariado TCcnico de la Presidencia, Republica Dominicana

Dominican Republic Povertv Assessment: Achieving More Pro-Poor Growth, World BarWIDB, 2005

Dimensiones Sociales de la Crisis Econdmica Y Financiera en la Republica Dominicana, INTEC , July 2005

National UNDP Human Development Report: Dominican Republic, 2005

SIUBEN: Operational Manual and Institutional Structure, 2005

Solidarity: Operational Manual and Institutional Structure, 2005

Analisis v Cartografia de Riesnos y Vulnerabilidad en la Republica Dominicana, World Food Program, Inter-American Development Bank, and Secretariado TCcnico de la Presidencia, 2005

Financial Management Assessment Report, November 2005

Procurement Capacity Assessment, April 2007

Programa “Elaboracih de expendientes y acopie de documetnaci6n necesario para la dotaci6n de actas de nacimiento y/o cedulas de identidad y electoral, Hacia Una Identidad Plena”, Ana Melba Rosario, December 2005

“Manual Maestro de Procesos: MetodologiCas de Intervencih en Facil itacih y Capacitaci6n para la Gestoria Documental, SISOID, Republica Dominicana, December 2005

ComitC de Seguimiento “Republica Dominicana con Nombre y Apellido”, Matriz de Resultados para Casos de Personas Indocumentadas ” [Preliminary Version], Gabinete de Coordinacibn de Politicas Sociales, Santo Domingo, August 2005, 13 p.

Final, presented to Consejo Consultivo de la Sociedad Civi l del Gabinete Social, Santo Domingo, May 24,2005, 140 p.

Salida de la Pobreza, [confidential document], Santo Domingo, s/d, 26 p.

Equipo Vargas de Investigacih Social, Estudio sobre e l programa Comer es Primer0 - Informe

Gabinete de Coordinacih de Politicas Sociales, Nueva Politica Social; Una Estrategia de

91

Instituto Tecnolbgico de Santo Domingo (INTEC), Dimensiones Sociales de la Crisis Econdmica y Financiera en la Reptiblica Dominicana, INTEC, July 2005.

Inter-American Court o f Human Rights, Judgment: Yean and Bosico v. the Dominican Republic, Costa Rica, September 8,2005,99 p.

Moncibn, Carmen Luisa; Mateo, Osilia y Zeballos, Molvina, Proceso de Declaraciones Tardias en las Comunidades de 10s Bateyes 7, 8 y 9 en la Zona Cafiera de la Provincia Independencia, Workshop for the Systematization o f Rural Development Local Experiences, PROPESUR-PREVAL-FIDAMERICA, Neyba, 2004,29 p.

Oficina Nacional de Planificacih (ONAPLAN), Atlas de la Pobreza en la Reptiblica Dominicana 2005, Secretariado Tecnico de la Presidencia, Santo Domingo.

Piiieyro, Jose, Aspectos institucionales y estructurales necesarios de reformar a efectos de eliminar duplicacidn de funciones y dispersidn de actividades, Gabinete de Politica Social, Santo Domingo, August 2005.

Programa Solidaridad, Manual Operativo y Estructura Institucional, Santo Domingo, 2005.

Programa Solidaridad, Manual Operativo, Gabinete de Politica Social, Santo Domingo, May 2006,382 p.

Rosario, Ana Melba, Elaboracidn de Expedientes y Acopio de Documentacidn Necesaria para la Dotacidn de Actas de Nacimiento y/o Ce'dulas de Identidad y Electoral, Hacia una Identidad Plena, Santo Domingo, December 2005, 61 p.

Gestoria Documental, SISDOID, Santo Domingo, November-December 2005, 55 p.

Domingo, 2005, p.

Dominican Republic, Santo Domingo, 2005, - p.

Rosario, Ana Melba, Metodologias de Intervencidn en Facilitacidn y Capacitacidn para

Sistema Unico de Beneficiarios (SIUBEN), Manual Operativo y Estructura Institucional, Santo

United Nations Development Program, National UNDP Human Development Report:

World Bank, Financial Management Assessment Report, November 2005, Santo Domingo.

World Bank, Procurement Capacity Assessment, April 2007, Santo Domingo.

World Bank/Inter-American Development Bank, Dominican Republic Poverty Assessment: Achieving More Pro-Poor Growth, World Bank/Inter-American Development Bank, Washington, D.C., October 10,2006,320 p.

Presidencia, Ancilisis y Cartografa de Riesgos y Vulnerabilidad en la Reptiblica Dominicana, Santo Domingo, 2005.

World Food Program, Inter-American Development Bank and Secretariado TCcnico de l a

Agreements

Contrato para la Automatizacidn del Registro del Estado Civil, Registro Electoral y del Proceso

Adenda a1 Contrato para la Automatizacidn del Registro del Estado Civil, del Registro Electoral

Electoral, Santo Domingo, October 13,2004, 30 p.

y del Proceso Electoral suscrito entre la Junta Central Electoral y e l Consorcio

92

Soluciones Modernas (SOMO) de fecha 13 de octubre de 2004, Santo Domingo, June 12, 2005, 8 p.

Laws and Decrees

Decree No. 536-05 about Programa Solidaridad, Santo Domingo, September 26,2005, 8 p.

Decree No. 591-05 about Director of Programa Solidaridad, Santo Domingo, November 2,

Law No. 141-02 that modifies Law No. 821 about Judicial Organization, creating the Court of

2005, 1 p.

Appeals and various courts and tribunals in the province of Santo Domingo East and otherprovinces of Cibao, Santo Domingo, September 4,2002,21 p.

Law No. 50-00, Santo Domingo, July 26,2000, 12 p.

93

Annex 13: Statement o f Loans and Credits DOMINICAN REPUBLIC: DO Social Sectors Investment Program

:ive - Difference Between ,jects

)ject Project Name

- Last PSR

S G r v i s i o n Rating

Expected and Actual

Disbursements a/ Original Amount in US$ Millions - Dev. Implem. Fiscal IBRD IDA GRANT Cancel Undisbursed Original Formc Obi. Pron. Year Reviewe

71505 HIWAIDS Prevention & Control MS MS 2001 25 5.700013 5.7000128 2.00001 54937 Early Childhood Education S S 2003 42 30.97767 23.925734 76802 Health Sector Reform MS MS 2003 30 23.97204 23.972038 3.6087s 78838 Financial Sector TA S S 2004 12.5 11.47536 9.4753562 3271 5 Power Sector TA MS MS 2004 7.3 6.35709 3.8570898 1.830C

36605 Youth Development MS MU 2006 25 25 9.25 32712 Power Sector Programmatic MS MS 2005 150 100 100

erall 291.8 203.4822 176.18023 7.4389C

isbursement data is updated at the end of the first week of the month. a. Intended disbursements to date minus actual disbursements to date as projected at Iraisal.

DOMINICAN REPUBLIC STATEMENT OF IFC's

68 (IFC) for Dominican Republic

Dominican Republic Committed and Disbursed Outstanding Investment Portfolio

As of 0513112007 (In USD Millions)

Committed Disbursed Outstanding

"Quasi - Partici "Quasi Loan Eauitv "GTIRM Pant Loan Eauitv 'GTIRM Dant - FY ADDrOVal ComDany -

2006 200512006 06/25/1905 2007 2005 2002

2004/2005/2006 1999 2004 2000/2003 2005 2005 2002/2003 2000 2007

Adopem Aerodom Banco BHD Banco Leon Basic energy CiI CIP Dominican Domicem sa. Flamenco bavaro Grupo M Hospiten Occidental Ho ... Occidom Orange Dominicana Rica Sans Souci

0 60 10 0

9.55 28.5

9.8 25.9 0.79 3.95 0.86

0 7.78

12.13 3.38

13

1 0 0 0 0 0 2 15 0 10 0 0 0 0 2.24 0 0 0 12.65 0 0 0 0 0 0 0 0 0 0 0 0 24.66 0 5.78 0 2.71 0 0 0 0 0 0 0 0.4 0 20 0 0 0 0 0 31.11 0 15 0 17.33 0 3 0 0 0 8 0 0

0 60 0 0

9.55 28.5

9.8 25.9 0.79 3.95 0.86

0 7.78

12.13 3.38 6.81

0 0 0 0 0 0 1.5 15 0 10 0 0 0 0 2.24 0 0 0 8.93 0 0 0 0 0 0 0 0 0 0 0 . 0 24.66 0 5.78 0 2.71 0 0 0 0 0 0 0 0.4 0 20 0 0 0 0 0 31.11 0 15 0 17.33 0 3 0 0 0 4.19 0 0

Total Portfolio: 185.64 I 6 1.78 16.89 9i .z i 169.45 0 57.97 12.67 91.21

Denotes Guarantee and Risk Management Products ** Quasi Equity includes both loan and equity types.

94

Annex 14: Country at a Glance

DOMINICAN REPUBLIC: DO Social Sectors Investment Program

2O02

118 $3.6

P O V E R T Y a n d S O C I A L

2003 Population. mid-year (millions) GNI per capita (Atlas method, US$) GNI (Atlas method, US$ billions)

G r o w t h o f i n v e s t m e n t and G D P (%)

40 T

La t in Lower - D o m i n i c a n A m e r i c a midd le -

Republ ic & Carib. I n c o m e

8.7 2,070

18.1

A v e r a g e annua l growth, 1997-03

Population (w Labor force (%)

M o s t r e c e n t es t imate ( l a t e s t year avai lable, 1997-03)

Poverty (%of population belo wnatio nal PO vertyline) Urban population (%oftotalpopulation) Life expectancyat birth (years) infant mortality (per looolive births) Chiid malnutrition (%ofchildren under5) Access to an improvedwatersource (%ofpopulation) illiteracy (%o fpopulation age 59 Gross primary enrollment (%of scho 01-age population)

Male Female

KEY E C O N O M I C R A T I O S a n d LONG-TERM T R E N D S

16 2.5

29 59 67 32

5 86 16

P 6 125 127

1983 1993

GDP (US$ billions) 8.6 9.6 Gross domestic investment1GDP 211 26.5 Exports o f goods and ServicesIGDP 14.4 30.2 Gross domestic savings1GDP 7 . 2 8 .1 Gross national savings1GDP 19.3 212

Current account balancelGDP interest paymentslGDP Total debtlGDP Total debt servicelevorts Present value of debtlGDP Present value o f debtlexports

-4.0 -5.5 1.5 12

34.0 50.6 272 8.6

1983-93 1993.03 2002 (average annualgrolulh) GDP 2.6 6.0 4.1 GDP percapita 0.9 4.3 2.5

534 3,260 1741

15 2.1

77 71 26

66 11

129 0 1 126

2002

213 23.5 26.1 14.7 8 . 6

-4.1 10

29.4 6.6

28.0 76.1

2,655 1.480

3,934

0.9 1.2

50 69 32 11

81 a lt? 10 111

2003

15.9 21.7 36.0 12.8

26.5

4.7

2003 2003-07

-13 3.5 -2.7 1.4

1 D e v e l o p m e n t diamond'

Life expectancy i I T

Gross

enrollment primary

Access to improved water source

-Dominican Republic

Lover-middle-Income group

E c o no m IC ra t ios '

Trade

T

Indebtedness

-Dominican Republic

-Lover-middle-income group c

S T R U C T U R E o f the E C O N O M Y

(%ofGDP) Agriculture Industry

Services

Private consumption General government consumption imports of goods and services

Manufacturing

(average annual gro lulh) Agriculture industry

Services

Private consumption General government consumption Gross domestic investment Imports of goods and services

Manufacturing

1983 1993

17.2 0 . 3 29.0 316 17.7 18.8

53.7 55.1

73.7 76.5 9.1 4.4

18.3 37.7

1983-93 1993-03

0.3 4.0 6.1 6.1 5.7 3.8 2.1 6.3

3.3 5.5 -6.1 118 5.3 8.9 7.3 6.1

I 16.1 15.3 , /A& 32.9 32.4 2o

55.2 57.0 o *.* Li_ 98 9s 00 01 02 *_I 75.6 80.5 .20

9.7 6.8 34.9 44.9 -GDi W G D P

2 o 0 2 2003 I Growth o f expor ts and i m p o r t s (Oh) 1 2.5 -4.4 20 3.7 -6.0

-9.3 4.0 4.7 1.7

0 0.7 0.0 15.4 -31.0 -10

lo

-&ports -Import8 15.4 -15.1 0 . 9 -7 .o I

95

Dominican Reuublic P R I C E S and G O V E R N M E N T F I N A N C E

D o m e s t i c p r i c e s (%change) Consumer prices 7.6 Implicit GDP deflator 3.5

1983

G o v e r n m e n t f inance (%of GDP, includes current grants) Current revenue Current budget balance Overall surpiusideficit

T R A D E

(US$ millions) Totalexports (fob)

Raw sugar Raw cocoa Manufactures

Total imports (cif) Food Fuel and energy Capital goods

Export price index (S95=00) Import price index(995=00) Terms of trade (995=WO)

B A L A N C E o f P A Y M E N T S

(US$ millions) Exports o f goods and services Imports o f goods and services Resource balance

Net income Net current transfers

1983

906 209

55 8 8

1,569

1983

1,363 1,890 -527

-297 478

Current account balance -346

Financing items (net) Changes in net reserves

288 58

M e m o : Reserves including gold (US$ millions) Conversion rate (DEC, locaVUS$) 1.0

E X T E R N A L D E B T and RESOURCE FLOWS

(US$ millions) Total debt outstanding and disbursed

1983

2,930 IBRD D9 IDA 22

Total debt service IB RD IDA

Composition of net resourceflows Official grants Official creditors Private creditors Foreign direct investment Portfolio equity

World Bank program Commitments Disbursements Principal repayments

373 0 0

11 94

-23 48

0

7 27 4

1993

4.6 4.9

s.5 7.5 -11

1993

1,352 112 33

990 2,795

884 498 831

1993

2,941 3,671 -730

-697 894

-533

533 0

P.7

1993

4.860 261

l 3

324 45

1

43 -11

-28 189

0

0 26 26

2002

5.2 5.8

18.7 4.6

-2.2

2002

2,647

1761 6,237

1,289

2002

5,593 7,521

-1,928

-1,209 2,262

-875

350 526

632 18.8

2002

6,256 350

D

671 46

1

51 -33 390 961

0

42 57 25

2003

25.6 25.4

8.2 3.7

-0.9

2003

3,043

2,207 5,882

786

2003

5,767 7,204 -1,437

-1,l77 3,355

742

-811 69

665 30.8

2003

98 99 00 01 02

-GDPd#lator -CPI

Expor t and i m p o r t leve ls (US$ mlll.)

8,000

97 98 98 00 01 02 03

mExports mlmpotis

Cur ren t a c c o u n t balance t o G D P (%)

6 T

1 C o m p o s i t i o n o f 2002 debt (US$ mill.)

A: 350 B: t3

994

E 1,121

I F: 1.728

! A - i8RD E - Bilateral F - Private G - Short-tern

D . Other rmitilateral

96

Annex 15: Maps DOMINICAN REPUBLIC: SOCIAL PROTECTION INVESTMENT PROJECT

Map No. 33398

97

MONTEMONTE

CRISTICRISTI

22

11

S A N T I A G OS A N T I A G O

S A N J U A NS A N J U A N

B A O R U C OB A O R U C OA Z U AA Z U A

L A V E G AL A V E G A H AH AT OT OM AM AY O RY O R

L AL AA LA L TTA G R A C I AA G R A C I A

55

66

77 9988

S A M A NS A M A N ÁÁ

33

44

MARMARÍÍAATRINIDADTRINIDADSSÁÁNCHEZNCHEZ

E L S E I B OE L S E I B O

LLAAEE

SSTT RR

EE LLLL EE

TTAA

PEDERNALESPEDERNALES

BARAHONABARAHONA

DUARDUARTETE

INDEPENDENCIAINDEPENDENCIA

MONTE PLAMONTE PLATTAA

PUERPUERTO PLATO PLATTAA

PERAPERAVIAVIA

Pico DuarPico Duartete(3175 m)(3175 m)

Monte MijoMonte Mijo(2266 m)(2266 m)

Monte TMonte Tinaina(2830 m)(2830 m)

CCoo rrdd ii ll ll ee rr aaCCeenn tt rr aa ll

CCoorrddiill lleerraa OOrriieennttaall

CCoorrddiill lleerraa SSeepptteennttrriioonnaall

CCoorrddiill lleerraa NNeeiibbaa

SSiieerrrraa

ddee BBaaoorruuccoo

YYaaqquuee ddeell NNoorrttee

YYaaqquuee ddeell SS

uurr

CC aammuu

YYuunnaa

OOzzaammaa

VVilla Villa Váásquezsquez

RincRincóónn

PimentalPimental

GasparGasparHerHernnáándezndez

LuperLuperóónn

BonaoBonao

CabralCabral

OviedoOviedo

VVicenteicenteNobleNoble

DuvergeDuverge

El CercadoEl Cercado

ImberImbertt

Rio SanRio SanJuanJuan

FantinoFantino

Sabana GrandeSabana Grandede Boyade Boya

YYamasaamasa BayaguanaBayaguana

VVillaillaAltagraciaAltagracia

San JoseSan Josede Ocoade Ocoa

ConstanzaConstanza

PoloPolo

RestauraciRestauracióónn

Monte CristiMonte Cristi

MaoMao

SabanetaSabaneta

ElElíías Pias PiññaaSan JuanSan Juan

SantigoSantigoMocaMoca

SalcedoSalcedo

La VLa Vegaega

CotuCotuíí

San CristSan Cristóóbalbal

BanBaníí

San FranciscoSan Franciscode Macorde Macorííss

El SeiboEl Seibo

HigHigüüeyey

HatoHatoMayorMayor

NeibaNeibaJimanJimanííAzuaAzua

DajabDajabóónn

MonteMontePlataPlata

San JoseSan Josede las Matasde las Matas

JJáániconico

H A I T I

To Fort Liberté

To Lascahobas

To Port au Prince

MONTE

CRISTI

2

1

S A N T I A G O

S A N J U A N

B A O R U C OA Z U A

L A V E G A H AT OM AY O R

LA ROMANA

L AA L TA G R A C I A

5

6

7 98

S A M A N Á

ESPAILLAT

3

4

MARÍATRINIDADSÁNCHEZ

1. DAJABÓN2. SANTIAGO RODRÍGUEZ3. VALVERDE4. SALCEDO5. SÁNCHEZ RAMÍREZ6. MONSEÑOR NOUELSAN7. SAN CRISTÓBAL8. DISTRITO NACIONAL9. SAN PEDRO DE MACORÍS

E L S E I B O

LAE

ST R

E LL E

TA

PEDERNALES

BARAHONA

DUARTE

INDEPENDENCIA

MONTE PLATA

PUERTO PLATA

PERAVIA

PepilloSalcedo Villa Vásquez

Rincón

Pimental

Cabrera

Sánchez

Miches

Boca de YumaBocaChica

El Macao

Sabana de la Mar

GasparHernández

Luperón

Bonao

Cabral

Oviedo

VicenteNoble

Duverge

El Cercado

ImbertSousúa

Rio SanJuan

Fantino

Sabana Grandede Boya

Yamasa Bayaguana

Nigua

VillaAltagracia

San Josede Ocoa

Constanza

Polo

Punta Palenque

Restauración

Monte Cristi

Mao

Sabaneta

Elías PiñaSan Juan

SantigoMoca

Puerto Plata

Salcedo

La Vega

Cotuí

San Cristóbal

Baní

San Franciscode Macorís

Nagua

Samaná

El Seibo

Higüey

La RomanaSan Pedrode Macorís

HatoMayor

Neiba

Barahona

Jimaní

Pedernales

Azua

Dajabón

MontePlata

San Josede las Matas

Jánico

SANTODOMINGO

H A I T I

LagoEnriquillo

Yaque del Norte

Yaque del S

ur

C amu

Yuna

Ozama

Bahíade Ocoa

Bahía deNeiba

ATLANTIC OCEAN

Caribbean Sea

To Fort Liberté

To Lascahobas

To Port au Prince

To Grand Gosier

Co rd i l l e r aCen t r a l

Cordillera Oriental

Cordillera Septentrional

Cordillera Neiba

Sierra

de Baoruco

IslaSaona

IslaBeata

Pico Duarte(3175 m)

Monte Mijo(2266 m)

Monte Tina(2830 m)

72°W 71°W 70°W

72°W 71°W 70°W 69°W

18°N

19°N

20°N

18°N

19°N

20°N

DOMINICANREPUBLIC

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

0 20

0 20 40 Miles

40 Kilometers IBRD 33398

DEC

EMBER 2004

DOMINICANREPUBLIC

SELECTED CITIES AND TOWNS

PROVINCE CAPITALS

NATIONAL CAPITAL

RIVERS

MAIN ROADS

RAILROADS

PROVINCE BOUNDARIES

INTERNATIONAL BOUNDARIES