Project Name PARAGUAY-Pilot Community Development

Transcription

1 Public Disclosure Authorized Report No. PID10533 Project Name PARAGUAY-Pilot Community Development Region Latin America and Caribbean Region Sector Other Social Protection Project ID PYPE69269 Public Disclosure Authorized Borrower(s) Implementing Agency REPUBLIC OF PARAGUAY Address SOCIAL ACTION SECRETARIAT (SECRETARIA DE ACCION SOCIAL) Secretaria de Accion Social Address: Presidente Franco esquina Ayolas, Edificio AYFRA, 2do piso Contact Person: Dr. Aurelio A. Varela C., Ministro Secretario Ejecutivo Tel: (595 21) Fax: (595 21) Avarela@presidencia.gov.py Public Disclosure Authorized Public Disclosure Authorized Environment Category Date PID Prepared November 26, 2001 Projected Appraisal Date December 8, 2001 Projected Board Date February 21, 2002 B 1. Country and Sector Background Paraguay's growth performance during the 1990s has been disappointing. Between 1990 and 1999 per capita income has fallen by 4 percent with most of the deterioration occurring within the last five years. Since 1995 the economy has been contracting four straight years with real per capita GDP falling by 6.5w during the period, resulting in the worst macroeconomic performance in all Latin America. Recent government figures indicate that in 2000 GDP had contracted by 0.4w and that the agricultural sector had declined by 8.5w. In addition, an extended bank crisis, falling agricultural prices and other shocks have combined to produce an extended recession. Paraguay is a country where poverty is explained in part by lack of strong institutions (state and civil society) and the underutilization of the country's resources of labor and land and the lack of forward and backward linkages between productive sectors. During the first half of 2001 progress has been made in meeting macroeconomic targets. Although the government will not meet the IMF targets for the 2001, fiscal deficit has been decreased at the expenses of capital spending. However, more needs to be done, particularly advancing with the privatization of state-owned companies in Growth is expected to stabilize in 2002 as investment spending rises, exports growth and consumer spending levels off. Recently, the exchange rate experienced a depreciation of more than 25t in nominal terms and almost 18t in real terms since the start of 2001, and most likely the GuaranU to continue to fall for the rest of 2001 before appreciating mildly against the US dollar in 2003.Poverty and Social ExclusionAccording to the national statistics

2 bureau, total population in 2000 was estimated at 5.5 million people, of which about 46% lived in rural areas, a much higher rate than other Latin American countries. Although the population growth rate has fallen since the 1980/1990 from 3.1% to 2.7% in the 1990s, this rate still is significantly higher than the average of 1.59 for other middle income countries. Most of the population (65%) is under 29 years old and four out of ten people are under 15 years old. A small proportion of the population is of indigenous origin. There are some 70,000 indigenous peoples from 17 different ethnic groups (estimates range from 38,000 to 120,000). About two-thirds of the indigenous population lives in the Chaco.The overall poverty rate for Paraguay between 1995 and 1999 increased from 30% to 34%-. There are significant variations in the distribution of poverty, between urban (26.79) and rural (42%) areas, regions of the country, and social groups. A large part of the increase in poverty has been in the countryside. In 1995, there were 1.5 million poor of whom 670,000 were extremely poor. In 1999, the number of poor had increased to 1.8 million, of which 830,000 were extremely poor. Of the net increase in extreme poverty between 1995 and 1999, most of it (94%) took place in rural areas, where the percentage of extreme poor rose from 75% to 79%. Poverty rates are substantially higher (44.5%) in areas in the central region of the country along the corridor from Asuncion to Ciudad del Este, in the northern region (61.5%), and in the North-east region. Even in highly productive departments there are significant areas where poverty rates surpass the national or regional average. During the last decades, the social and economic structure of the southern region of Paraguay (Departments of Itapua, Misiones, and ieembucu) has experienced significant impacts due to agricultural, industrial and commercial depression. Economic growth in Paraguay has been dualistic, this is particularly evident in the Southern departments of the country, where the urban sector (commerce, services and industrial activities) and some modern agricultural producers have experienced growth. However, at the same time, the urban poor, and particularly, small farmers have not experienced much benefits from that growth. This phenomenon, associated with other structural and macroeconomic factors, has contributed to a persistent deterioration in the living conditions of the poor, both rural and urban, and in the decline of traditional sources of employment and the loss of small producer's capital. Comparatively, in aggregate terms, poverty is less severe in the departments of Itapua, Misiones and ieembucu than in the North and Central regions. However, according to the 1992 population census, in all three departments the percentage of households with at least two unsatisfied basic needs (NBI) was above the national average. Furthermore, there are sharp differences in the distribution of poverty within the departments. Poverty levels in several districts of the three departments is as high as that observed in the poorest regions of the country. This is particularly true for some peri-urban areas near Ecarnaci6n (Itapua) San Patricio, Santa Rosa and Santa MarUa (Misiones) and in all rural districts. In relative terms, the Departments of Misiones and ieembucu are poorer than the Department of Itapua. In contrast, figures on absolute poverty show Itapua with over four times the number of households with two or more unsatisfied NBI than either ieembucu or Misiones.Comparative Population and Poverty IndicatorsArea (Km2)Population (2000)Pop. Growth rate- Rural Pop. (2000)Poverty Headcount rate (1998)Households with 2 or more NBI (1992)Total pop. in households with 2 or more NBI (1992)Paraguay4O6,7525,496,4502.7%45.5%33.7%30.9%1,270,496North -2 -

3 Region6l.5 5tCentral Region44.5 5%Itapual6,525490, W66. 3%36.797%33. 4%125,278Misiones9,556100, A ,667ieembucul2,14788, W A43.7%30,816The increased demands placed on local institutions, such as municipalities, to address the needs of growing communities are further exaggerated by the government's decentralization initiative. The decentralization process has yet to be fully effective. While the constitution introduced a new intermediate tier of government in the form of 17 departments, with directly elected departmental councils and departmental governors and autonomous municipal governments (217) in the country, their powers, responsibilities and financing are vaguely defined. The central government continues to control a large percentage of the resources and local institutions remain weak in their capacity to design and manage local development programs. In fact, of total government expenditures, departmental level expenditures (Gobernaciones) represent less than lt of the total.b. Government StrategyParaguay faces key challenges. Meager economic growth, deterioration in the external accounts, negative terms of trade, depressed domestic demand, slow progress in the privatization process and modernization of the State among other issues have contributed to worsen the economic and social context, weakening the policy-making environment. Nevertheless, the current administration is struggling to meet the targets set out with the IMF and the Bank to improve public finances and to develop sustainable economic and social development policies. Key to these efforts are macroeconomic policies aimed at fiscal discipline, low inflation and interest rates, and an exchange rate that encourages productive activities. At the same time, in addition to macroeconomic targets, the government is developing a specific poverty reduction strategy to curve the increasing poverty rates, that represent a daunting political and social challenge for policy makers. Since the early 1990s, the government has implemented several poverty alleviation related programs. Most of these initiatives were implemented by different government agencies, without much coordination among them and, the impact of these programs were not monitored properly. Recently, the Government has taken the initiative of preparing a poverty reduction strategy (Paraguay is not part of the group of countries which have prepared such strategies as a conditionality for receiving debt relief under the Highly Indebted and Poor Countries initiative). The SecretarUa de Acci6n Social is in charge of preparing the strategy. To this end, it has requested technical assistance from the World Bank and the United Nations Development Program (UNDP).The SecretarUa de Acci6n Social (Social Action Secretariat, SAS), under the President's Office, has the mandate of coordinating the development, implementation and monitoring of the government's poverty alleviation strategy. As such, the SAS can directly implement poverty alleviation-related activities or, establish agreements with other government agencies to transfer resources for poverty alleviation programs, collaborate with them in the design, implementation and monitoring of these programs. Since its establishment in 1997, SAS has been responsible for the implementation of three poverty alleviation programs: (i) PROPAIS, a social fund with the support of the Inter-American Development Bank (IADB). From January 1997 to February 2001, PROPAIS had financed about 580 subprojects (US$ 26.9 million) reaching some 300,000 beneficiaries. Currently, the Government and IADB are preparing a new loan (PROPAIS II) for an estimated US$ 30 million that would support social sub-projects in small rural and urban communities (less than 5000 people) and slum upgrading (Mejoramiento de Barrios) in -3 -

4 large cities. While the proposed project would support community development activities (water and sanitation, community infrastructure, training, etc.), it would not provide financial assistance for demand-based income generating sub-projects. (ii) Programa de Atenci6n Integral al Nito y Adolescente Trabajador de la Calle (US$ 8 million IADB grant). This program, scheduled to be completed by July 2001 provided support to street children. (iii) Sistema de Capacitaci6n en Gesti6n y Proyectos Sociales (US$ 0.7 million). This program seeks to develop and establish a monitoring unit capable of providing follow-up to poverty alleviation projects and technical assistance to implementing units when required. The project ended in August 2001.Rural Investment Pilot (US$ 5 million). The pilot is being carried out by the Ministry of Agriculture under the World Bank supported Natural Resources Management project. The pilot, launched in November 1996 had the objectives of: (i) increasing the income of rural poor families; (ii) increasing productivity, and (iii) creating employment opportunities for the rural poor by developing sustainable natural resources management strategies and supporting income generating sub-projects. The pilot targeted poor rural households in the Departments of Caazapa, Caaguazu and Cordillera. Despite some significant delays in its implementation, the pilot has successfully supported about 325 sub-projects (US$4.2 million). The government has requested the Bank to reallocate an additional US$7.0 million to the Pilot and expand its coverage from the current three departments to nine (including Itapua), as well as, has requested an extension of the closing date of the pilot until December Onondivepa, Poverty Alleviation Program. This program was established in November 1999 under the Ministry of Work and Justice, seeks to fight poverty by increasing the planning capacity of local governments and strengthening democratic institutions. The program supports social infrastructure projects (education, health) and some productive (income generating) activities. Activities are focalized in extreme poverty districts (based on NBI), including Concepci6n, Caaguazu, ieembucu and Chaco, among others.secretarua de la Mujer. The Women's Secretariat (SM), established in 1992, has multiple programs targeted at advancing women's rights and improving women's quality of life and opportunities. The SM has five main programs: (i) Social participation (Red de Centros de Iniciativas y Desarrollo para la Mujer), a program that supports networking and women leaders' participation in public decision-making processes; (ii) Institutional strengthening and training on gender issues and equality for departmental and municipal government officials; (iii) Research on gender issues and poverty; (iv) Social services aimed at providing social and financial help to women in need, and finally a (v) Social Investment Fund that supports small social infrastructure and income generating projects for women's groups.direcci6n de Beneficencia y Ayuda Social (DIBEN). The social welfare office has three main programs: (i) Human development; (ii) Social action, and (iii) Emergency. These social programs provide financial help to vulnerable groups including among others, street children, the elderly, and people affected by natural disasters. Their coverage is small and conditioned by budgetary constraints. In year 2000, total budget for all programs country-wide was less than US$ 900,000. C. Sector Issues to be Addressed by the ProjectParaguay is in the process of consolidating a democratic transition. Democratic institutions are still weak and the political system is moving from a one party system to a multi-party system shaped by clientelistic relationships and local "bosses". Local governments have little capacity and no real power in terms of budget allocations and - 4 -

5 decision making. Civil society confidence in the Government and national institutions is low. Politicians, the judicial system, the armed forces, and the government are less trusted than other types of organizations such as the catholic church, unions and peasant organizations. Strengthening democratic institutions and decreasing corruption are seen by the population as key issues to be resolved for the development of the country and the implementation of a poverty reduction strategy.the lack of trust in the government and the political system contributes to the absence of good governance. Among other things, this situation has led to a lack of vision and coordination regarding poverty programs and policies. There are numerous small programs benefiting the poor directly or indirectly which are managed by different agencies with little coordination and in a clientelistic fashion. The targeting of these programs for the poor tends not be very good. Furthermore, existing data suggest that allocation of resources fore poverty alleviation and social programs in some cases has been influenced by political bosses. Poverty alleviation and local development projects have not resulted from well coordinated state-civil society collaboration. Partnerships between civil society organizations (CSOs) and various levels of government (central and local) is improving only slowly. The collaboration has taken place primarily at the project level, with CSOs providing services to beneficiaries of government programs. These experiences, although limited, have legitimized the role of CSOs as efficient service providers. The development of a state-civil society synergy will require a state that actively removes the obstacles that impede the enjoyment or exercise of rights, and the development of a new relationship between the state, the political system and civil society. The development of a culture of partnerships and co-responsibility in public management will also require expanding the capacities of local governments and communities to undertake development activities. The Government is taking steps to improve its coordination of social policies and programs. The SecretarUa de Acci6n Social was created to improve the allocation and effectiveness of public programs targeted to the poor. However, there still is much to be done in terms of clearly identifying the specific responsibilities of each agency. Most poverty alleviation related programs implemented by the government have focused on issues related to lack of income, access to services (social infrastructure), and welfare of marginal groups. Little progress has been made in developing a more participatory approach to poverty alleviation that would link issues related to material deprivation and access to markets and services with social exclusion related to lack of participation, and exclusion of groups based on gender, age, or ethnic identity. 2. Objectives The Paraguay Pilot Community Development Project seeks to improve the quality of life and social inclusion of poor rural and marginal urban communities in three departments on the southern border of Paraguay (Itapua, Misiones and ieembucu). The project will contribute to poverty alleviation and to the development of the capacity of local communities to implement community development activities by: (i) creating income generating opportunities for poor communities, and (ii) building capacity of local institutions and beneficiary organizations to identify, design and implement community development activities.to achieve this objective, the project would: (i) finance small grants for demand-based income generation and community development sub-projects; (ii) support - 5-

6 institutional development activities for strengthening the capacity of local governments and community organizations in the planning, design, implementation and evaluation of community development projects; and (iii) develop a monitoring and evaluation system that would allow the project to check implementation progress and project's impacts and to learn about the sustainability of the different instruments and delivery mechanisms implemented and to adapt, disseminate and mainstream those that work. 3. Rationale for Bank's Involvement The Bank is collaborating with the Government of Paraguay in providing technical assistance along with UNPD for the preparation of the country's Poverty Reduction Strategy that the government has voluntarily undertaken (Paraguay is not required to prepare a PRSP). The Bank's involvement with the proposed project is considered important because it would support the government's effort to develop the capacity for coordinating and implementing targeted poverty alleviation interventions. The Bank's involvement would also contribute to test decentralized and participatory institutional and implementation arrangements that otherwise would not be possible to pilot. In addition, the Bank's support would contribute to the development of partnerships between civil society and the government at the national and local levels, as well as to increase the accountability of these operations. Finally, the Bank's involvement will make a substantial contribution to the design of socially inclusive poverty alleviation and community development programs that would lead to decreasing social exclusion and clientelistic relationships with the poor and vulnerable groups. 4. Description 1. Community Investment Fund 2. Capacity Building and Institutional Strengthening 3. Project Administration, Monitoring and Evaluation 5. Financing Total ( US$m) BORROWER 1.2 IBRD 9.0 Communities 1.6 Total Project Cost Implementation Implementation PeriodThe project will be implemented over a period of 48 months.institutional and Implementation ArrangementsThe institutional arrangements of the project have been designed to build upon the existing capacity and experience of the Social Action Secretariat (SAS) and seek to develop the capacity of the central government, local (Departmental and Municipal) governments and civil society for establishing partnerships aimed at implementing community development and socially inclusive programs. The institutional arrangements of the project are based on three principles: (i) highly participatory mechanisms to ensure that local level institutions, private sector and civil society collaborate; (ii) transparency in decision making through the establishment of Local Consultative Committees (CCL) and Departmental Development Councils (CDD) which would be responsible for social auditing, verify eligibility - 6 -

7 criteria and assess subproject proposals, respectively and; (iii) strengthening of local institutions and development of the skills required for identifying, planning and implementing socially inclusive community development and poverty alleviation activities at the local level.the executing agency, SAS, would implement the project in accordance with the project Operational Manual. Presentation of the final version of the Operational Manual satisfactory to the Bank will be a condition of effectiveness of the loan. Implementation would be guided by annual operating plans (POAs), which would be submitted to the Bank for its no-objection by October 15 of the previous year. The specific responsibility for project coordination and implementation will lie with the Project Management Unit (UGP), under the Project Coordination Directorate of SAS -which has the responsibility of implementing other multilateral and international cooperation projects, including the IADB-financed PROPAIS. The UGP will comprise a Technical Unit (UT) and an Administrative Unit (UA), which would coordinate the technical and administrative aspects of the project and oversee implementation functions decentralized to local institutions. The UGP will be headed by a Project Coordinator and staffed with technical and administrative staff. Specific inter-institutional agreements have been established with the Ministry of Agriculture, Women's Secretariat, Environment and Sustainable Development Secretariat, Vice-Ministry of Youth, Departmental (Gobernaciones) and Municipal (Intendencias) governments to ensure their collaboration in project implementation. The signed agreement will be part of the Operational Manual.The UGP will be headed by a Coordinator and staffed with a small core team of Specialists which will oversee project implementation, provide technical assistance to the CCLs and CDDs and service providers. For each of the three Departments there will be a Community Development Agent who will promote project activities and follow-up project implementation with project beneficiaries and civil society. A Department Development Council (CDD) will be established in each of the three Departments. The CDDs will consist of representatives of the Departmental Government, Municipal Governments, beneficiary groups, civil society and a specialist from the UGP. The CDD will assess subproject proposals and to ensure technical standards and sustainability and that the proposals are consistent with a departmental strategy. Local Consultative Committees (CCL) will be established to assist with the promotion of the demand for project activities, identification of potential beneficiaries, establishment of new groups, verification of targeting and eligibility criteria of sub-project proposals, and to ensure social control of project implementation on the ground. Based on the characteristics of the area, the CCLs could group municipalities (up to 4) that have similar characteristics. The CCLs will consist of representatives of local government, beneficiaries and the community development agent. Qualified technical assistance providers (NGOs, private providers, CBOs, CSOs) will assist beneficiary groups in the identification, preparation and implementation of the sub-projects as required. Funding for the technical assistance of the sub-projects will be included in the proposal amount. Proposals could be developed throughout the year in accordance with procedures to be outlined in the Operational Manual, however, they would be presented through the CCL to the CDD for their assessment every three months. Monitoring and evaluation arrangementsa monitoring and results assessment area would be established within the PCU and a comprehensive project Management Information System (MIS) would be developed for project implementation. This MIS would -7 -

8 complement the existing system (SIFEM) within SAS, developed with the assistance of CEPAL to support monitoring, financial management and administrative management tasks of SAS projects. It would allow recording of physical and financial information related to project implementation for financial management purposes and tracking of project performance. Included in the semi-annual progress reports to be submitted to the Bank, the PCU would include an update of the status of the various indicators for project implementation -physical and financial- and development performance, based on system information related to the control and supervision of beneficiary subprojects. In addition, SAS would prepare and submit an Annual Operating Plan (POA) for Bank review in the month of October (15) of each year, including documentation evidencing sufficient allocation of funds in its budget to cover for the need of counterpart funds raised by planned activities. As part of regular project supervision activities, joint SAS/Bank annual reviews would be undertaken, including an in-depth Mid-Term Review. Independent evaluation of the project's socioeconomic impact would be conducted through baseline and final evaluation studies. In addition, annual beneficiary assessments will be carried out to ensure that beneficiaries' perspectives are satisfactorily reflected in the monitoring of project activities. 7. Sustainability The project's sustainability depends on: (i) the likelihood of the subprojects being successful, (ii) community participation and the functioning of the CCLs and CDDs, and (iii) the capacity of SAS to absorb and replicate the lessons. It is expected the project would be sustainable, as it comprises specific activities that would improve the technical design of the subprojects, strengthen social capital and community involvement, and would contribute to systematize, analyze and learn from the project implementation process. First, regarding the subprojects' sustainability, the project is based on demand and beneficiary participation in the selection and design of the subprojects. Also, technical assistance would be provided to beneficiary groups to help them to organize, develop their technical skills related (required for) the subproject, and strengthen their organizational and administrative skills. The technical assistance provided would address a series of technical, organizational and managerial issues that would increase the sustainability of the subprojects. With regards to community participation and the functioning of the CCLs and CDDs, the project's sustainability would be ensured by the project's approach which involves clear and transparent rules and procedures to ensure fair participation of the different stakeholders, support to local organizations and civil society and providing technical assistance to the CCLs and CCDs to perform their responsibilities. In reference to the capacity of SAS to learn from the pilot, the project supports a monitoring and evaluation system and special studies that would allow the project unit and SAS to systematize the information that would be generated, analyze it, disseminate and discuss periodically with other government agencies, local governments and civil the ongoing results and lessons emerging from the project.nevertheless, there are potential problems that may hamper the project's sustainability. First, due to the state reform and lack of budget, SAS (or the Ministry of Social Action that could replace it) might face a significant attrition in its operational capabilities. Second, due to the existing sociopolitical problems and the current lack of capacity at the local level, the capacity building and participation process - 8 -

9 required for full beneficiary participation and normal functioning of the CCLs and CDDs may take longer than expected, delaying project implementation. 8. Lessons learned from past operations in the country/sector Within Paraguay: Paraguay has limited experience with targeted assistance to the poor. Most social programs are not well targeted and the Government has only recently initiated a dialogue with different stakeholders to develop a poverty reduction strategy that will guide future poverty-targeted interventions. Nevertheless, the government has accumulated some experience with targeted poverty alleviation interventions through the ongoing Rural Investment Pilot (financed by the World Bank) executed by the Ministry of Agriculture and the Social Fund Propais (IADB financed) executed by the SAS. These projects have provided important lessons that are reflected in the design of the proposed project. First, these projects strongly suggest the need for a decentralized demand-driven approach to provide technical and financial assistance to the poor. Second, the experience gained with these projects has highlighted the need for transparent and objective eligibility and targeting criteria to ensure that funds will go to the intended beneficiaries (and all eligible groups have equal access to project benefits), minimizing potential leaks and political manipulation of the funds. Third, and related to the above, the experience indicates that participation and social auditing mechanisms are crucial. Participation in project implementation is important but participatory monitoring (social auditing) is essential to ensure accountability, minimize clientelism and proper use of funds. A final lesson learned is the need for continuing provision of technical and organizational assistance to ensure the development of social capital and to improve the sustainability of the subprojects. Lack of technical assistance and/or focusing it only on "narrowly-defined technical issues" leaving out organizational development and administrative skills has hampered the sustainability of past investments. To increase the sustainability of the investments and to minimize the risk of failure, the proposed project would support through decentralized, participatory mechanisms the implementation and monitoring of community development investments by providing technical assistance (through qualified service providers) to local governments and community groups to organize and acquire the required skills to identify, design and implement community development projects.bank-wide:among the lessons learned from the Social Investment Funds (SIFs) in Latin America, it is clear that most SIFs have complemented and reinforced structural adjustment and reform policies. Most SIFs have targeted their resources well to reach the poor, making a significant contribution to poverty reduction and have proven to be effective in channelling external aid and resources directly to the community level. Employment generation by SIFs, while modest in relation to the labor force or the number of under and unemployed, was significant in benefitting poor population groups. SIFs have begun to have a meaningful impact on the operations of the social sector ministries as well as on central water and sanitation entities. In addition, SIFs targeting techniques are being used by some line ministries, which are beginning to press for reforms in order to employ cost controls, management information systems and simplified procurement and payment systems used by SIFs. However, the long term sustainability of the investments in the SIFs, as well as the ownership by the communities of the investments has been questioned. While social/community -9-

10 infrastructure is needed, it has been shown that the sustainability of these investments increases when they are associated with income generating activities and social capital development. In that context, the lack of long term technical assistance linked to most of the SIFs community infrastructure investments has hampered their sustainability.in the case of the Brazil - Rural Poverty Alleviation Projects, the main lessons learned applicable to the Pilot project are in the areas of decentralization, participation, and poverty targeting mechanisms. Decentralization of investment decision-making and implementation to community organizations, ensures efficient program implementation administration and superior outcomes. Participation by beneficiaries in the selection, financing, execution, and O&M of subprojects ensures that investment meets genuine community needs, leads to cost savings, and increases community 'ownership' leading to improved sustainability of investments. Poverty targeting mechanisms that are simple, verifiable and based on objective criteria can foster transparency, minimize political interference in project resource allocation and ensures that project resources reach the poorest areas. India - Singrauli Project:A parallel was established between the proposed operation and the Social and Environmental Development Project in Singrauli, Uttar Pradesh, India. The following types of risks were identified: (i) reputational - direct or indirect association with Yacyreta - NGOs will use the proposed project to hold the Bank accountable for negative impacts and exposure to Yacyreta.; (ii) project dragged to attend complaints by Yacyreta affected families and capture of benefits by local elites; and (iii) lack of ownership by the government. 9. Program of Targeted Intervention (PTI) Y 10. Environment Aspects (including any public consultation) Issues : Most project activities are likely to have no negative environmental impacts. Most of the sub-projects to be supported are likely to either have neutral or positive environmental impacts. Some sub-projects (agricultural productivity and small cottage industries) may pose minor environmental risks. Appropriate environmental screening criteria and procedures ("Procedimientos Ambientales para Determinar los Impactos Ambientales de los Proyectos con Fondos Sociales", in project files) for all subprojects have been developed and found satisfactory by the Bank. Institutional arrangements have been agreed to guarantee the participation of local or municipal environmental offices in the screening of all sub-projects, thus ensuring further local capacity building. The criteria and procedures were applied to a set of projects that have already been identified in participating provinces and all projects were found to be Category B according to Bank policies. The criteria and procedures were also discussed with and approved by the Sub-secretary of Natural resources and Environment in the Ministry of Environment, in charge of the EIA system in Paraguay. Appropriate technical guidance will be provided to projects to deal with siting, construction techniques and management of wastes as appropriate.technical assistance and participation of local agencies in the screening of projects will be further strengthened by training and environmental awareness programs implemented in parallel to the sub-projects. 11. Contact Point:

11 Task Manager Estanislao Gacitua-Mario The World Bank 1818 H Street, NW Washington D.C Telephone: For information on other project related documents contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C Telephone: (202) Fax: (202) Web: Note: This is information on an evolving project. Certain components may not be necessarily included in the final project. This PID was processed by the InfoShop during the week ending Dec. 14,