IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-82210) ON A LOAN IN THE AMOUNT OF US$45.00 MILLION TO THE REPUBLIC OF PERU FOR A

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1 Public Disclosure Authorized Document of The World Bank Public Disclosure Authorized Public Disclosure Authorized IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-82210) ON A LOAN IN THE AMOUNT OF US$45.00 MILLION TO THE REPUBLIC OF PERU FOR A FIRST SOCIAL INCLUSION DEVELOPMENT POLICY LOAN December 15, 2015 Report No.: ICR Public Disclosure Authorized Social Protection and Labor Global Practice Latin America and the Caribbean Region

2 CURRENCY EQUIVALENTS (Exchange Rate Effective as of December 15, 2015) Currency Unit = Nuevo Sol S/.1.00 = US$0.30 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS CCT DGSYE DPL ECD FED GoP ICR INEI ISR Juntos M&E MEF MIDIS MINSA NLTA PCM PGH PRONAA PSIA QW RENIEC SINADIS SIS SISFOH SWAP TAL Conditional Cash Transfer Dirección General de. Seguimiento y Evaluación (General Office of Monitoring and Evaluation) Development Policy Loan Early Childhood Development Fondo de Estímulo al Desempeño (Performance Incentive Fund) Government of Peru Implementation Completion and Results Report Instituto Nacional de Estadísticas e Informática (National Institute for Statistics) Implementation Status and Results Report Juntos (Conditional Cash Transfer Program) Monitoring and Evaluation Ministerio de Economia y Finanzas (Ministry of Economy and Finance) Ministerio de Desarrollo e Inclusión Social (Ministry of Development and Social Inclusion) Ministerio de Salud (Ministry of Health) Non-lending Technical Assistance Presidencia de Consejo de Ministros (Council of Ministers) Padrón General de Hogares (General Household Registry Programa Nacional de Asistencia Alimentaria (National Food Assistance Program) Poverty and Social Impact Analysis Qali Warma (School Feeding Program) Registro Nacional de Identificacion y Estado Civil (National Registry of Identification and Civil Status) Sistema Nacional de Desarrollo e Inclusión Social (National System for Development and Social Inclusion) Seguro Integral de Salud (Integral Health Insurance Program) Sistema de Focalización de Hogares (Household Targeting System) Sector-wide Approach Technical Assistance Loan i

3 VPS VPES Viceministerio de Prestaciones Sociales (Vice Ministry of Social Benefits) Viceministerio de Politicas y Evaluacion Social (Vice Ministry of Policies and Social Evaluation) Senior Global Practice Director: Arup Banerji Sector Manager: Margaret Grosh Project Team Leader: Iamele P. Rigolini ICR Team Leader: Julieta M. Trias ii

4 PERU First Social Inclusion Development Policy Loan TABLE OF CONTENTS A. Basic Information... iii B. Key Dates... iii C. Ratings Summary... iii D. Sector and Theme Codes... iv E. Bank Staff... iv F. Results Framework Analysis... v G. Ratings of Program Performance in Implementation status and results report (ISR)... vii H. Restructuring (if any)... vii 1. Program Context, Development Objectives and Design Key Factors Affecting Implementation and Outcomes Assessment of Outcomes Assessment of Risk to Development Outcome Assessment of Bank and Borrower Performance Lessons Learned Comments on Issues Raised by Borrower/Implementing Agencies/Partners Annex 1 Bank Lending and Implementation Support/Supervision Processes Annex 2. Beneficiary Survey Results Annex 3. Stakeholder Workshop Report and Results Annex 4. Summary of Borrower's ICR and/or Comments on Draft ICR Annex 5. Comments of Cofinanciers and Other Partners/Stakeholders Annex 6. List of Supporting Documents Annex 7. Description of the MIDIS Mandate Annex 8. Policy Matrix for Peru s First Social Inclusion DPL Annex 9. Level of Fulfillment to Date of Triggers for DPL Annex 10. Selected World Bank Support to MIDIS MAP 53 ii

5 A. Basic Information Country: Peru Program Name: First Social Inclusion Development Policy Loan (DPL) Program ID: P L/C/TF Number(s): IBRD ICR Date: 12/15/2015 ICR Type: Core ICR Lending Instrument: DPL Borrower: Original Total Commitment: US$45.00 million Disbursed Amount: US$45.00 million Revised Amount: US$45.00 million Implementing Agencies: Ministry of Economy and Finance Cofinanciers and Other External Partners: B. Key Dates Process Date Process Original Date Revised / Actual Date(s) Concept Review: 06/07/2012 Effectiveness: 07/22/ /10/2013 Appraisal: 10/22/2012 Restructuring(s): Approval: 12/13/2012 Midterm Review: Closing: 12/31/ /31/2013 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Moderately Satisfactory Risk to Development Outcome: Moderate Bank Performance: Moderately Unsatisfactory Borrower Performance: Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Satisfactory Government: Satisfactory Quality of Supervision: Moderately Implementing Unsatisfactory Agency/Agencies: Satisfactory Overall Bank Moderately Overall Borrower Performance: Unsatisfactory Performance: Satisfactory iii

6 C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Performance (if any) Potential Problem Program at any time (Yes/No): Problem Program at any time (Yes/No): No No DO rating before Satisfactory Closing/Inactive status: D. Sector and Theme Codes Quality at Entry (QEA): Quality of Supervision (QSA): None None Rating: Original Actual Sector Code (as % of total Bank financing) Compulsory pension and unemployment insurance 6 6 General education sector Health Other social services Theme Code (as % of total Bank financing) Income Support for Old Age, Disability & Survivorship Nutrition and food security Social Inclusion Social Protection and Labor Policy & Systems 6 6 Social Safety Nets/Social Assistance & Social Care Services E. Bank Staff Positions At ICR At Approval Vice President: Jorge Familiar Calderon Pamela Cox Country Director: Alberto Rodriguez Marcelo Giugale Practice Manager/Manager: Margaret Ellen Grosh Helena G. Ribe Program Team Leader: Iamele P. Rigolini Carine Clert ICR Team Leader: ICR Primary Author: Julieta M. Trias Julieta M. Trias iv

7 F. Results Framework Analysis Program Development Objectives (from Project Appraisal Document) The Social Inclusion DPL Series had three main development objectives: (a) supporting the institutionalization of the stewardship of the social inclusion agenda under the Ministry of Development and Social Inclusion (Ministerio de Desarrollo e Inclusión Social, MIDIS); (b) laying the foundations for improving the inclusiveness and effectiveness of key MIDIS social programs; and (c) developing adequate systems for targeting, monitoring and evaluation (M&E), and overall coordination. Revised Program Development Objectives (if any, as approved by original approving authority) (a) PDO Indicator(s) Indicator Indicator 1 : Value (Quantitative or Qualitative) Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years The MIDIS's stewardship of the social inclusion agenda is institutionalized Lack of a single entity exercising stewardship and oversight of the social inclusion agenda at central and subnational levels Establishment of legal and organizational rules at central level and the operation of integrated units at subnational level in all regions Legal and organizational rules at the central level have been established. Regional coordination is ongoing. The MIDIS has appointed 24 liaison coordinators Date achieved 12/31/ /31/ /31/2014 Comments Partially Achieved (incl. % achievement) Achieved at central level Partially achieved at subnational level Indicator 2 : New users enrolled in the Conditional Cash Transfer Program (Juntos) Value (Quantitative or 0 150, ,357 Qualitative) Date achieved 12/31/ /31/ /31/2014 Comments (incl. % achievement) Exceeded target Indicator 3 : Juntos local promoters trained in family support methodology Value (Quantitative or 0 90% 57.5% Qualitative) Date achieved 12/31/ /31/ /31/2014 v

8 Comments (incl. % achievement) Indicator 4 : Not achieved. The family support methodology was piloted in three areas. The indicator refers only to pilot areas. The training was discontinued as the program decided to revise its design to improve efficiency. Elderly living in extreme poverty and complying with the program's eligibility criteria receiving Pension 65 Value (Quantitative or 40.1% 65% 79.4% Qualitative) Date achieved 12/31/ /31/ /31/2014 Comments (incl. % achievement) Exceeded target Indicator 5 : Children attending public preschool and schools served by the School Feeding Program (Qali Warma, QW) Value (Quantitative or 0 70% 82% Qualitative) Date achieved 12/31/ /31/ /31/2014 Comments (incl. % achievement) Exceeded target Indicator 6 : QW districts operating with mechanisms for transparency and civil society oversight Value (Quantitative or 0 40% 43.5% Qualitative) Date achieved 12/31/ /31/ /31/2014 Comments (incl. % achievement) Exceeded target Poor households (as estimated by the National Institute for Statistics (INEI) Indicator 7 : have their socioeconomic information (Ficha Socioeconómica Única) updated by the Household Targeting System (Sistema de Focalización de Hogares, SISFOH) within a period not exceeding three years Value (Quantitative or n.a. 90% 91.6% Qualitative) Date achieved 12/31/ /31/ /31/2014 Comments (incl. % achievement) Exceeded target Indicator 8 : The MIDIS s programs have started to implement the recommendations generated through the M&E system Value n.a. (Quantitative or 40% 61% Qualitative) Date achieved 12/31/ /31/ /31/2014 vi

9 Comments (incl. % achievement) Exceeded target. However, this is a questionable indicator and its value is not a reliable measure. See sections 2.3 and 3 for more discussion. Indicator 9 : Regions with increased coverage of effective interventions (as defined in the chronic malnutrition guidelines) Value (Quantitative or Qualitative) Date achieved 12/31/ /31/ /31/2014 Comments (incl. % achievement) Exceeded target. Original indicator was based on model of joint planning and budgeting. The government of Peru (GoP) created a new and more effective instrument based on result-based agreements to accelerate the reduction in chronic malnutrition. G. Ratings of Program Performance in Implementation status and results report (ISR) No. Date ISR Archived DO IP Actual Disbursements (US$, millions) 1 04/13/2013 Satisfactory Satisfactory /22/2013 Satisfactory Satisfactory H. Restructuring (if any) Not applicable vii

10 1. Program Context, Development Objectives and Design 1.1 Context at Appraisal 1. Adequate macroeconomic environment and fragmented social policies. At the time of appraisal, the macroeconomic situation and policy environment were adequate to proceed with the Development Policy Loan (DPL) as the central government was running a solid primary fiscal surplus, public debt was relatively low and declining, and there was no apparent currency overvaluation. Peru was one of the fastest growing economies in Latin America, 1 which contributed to almost a 31 percent reduction in poverty between 2004 and 2011 and a decrease in extreme poverty from 16.7 to 6.3 percent over the same period. Distributional changes were also positive, with the expenditure-based Gini coefficient declining from 0.44 in 2004 to 0.38 in 2011, whereas the income-based Gini fell from 0.51 to However, the relatively high levels of poverty and inequality still posed a significant challenge for the government. The government of Peru (GoP) responded to this situation by making considerable progress in its social policy by increasing social spending and expanding social programs to reach the most vulnerable population which was particularly undercovered. In spite of these efforts, social programs were still implemented in isolation and the social policies, as a rule, were fragmented with limited institutional coherence. 2. Rationale for World Bank assistance. As indicated, one of the challenges faced by the GoP was the fragmented nature of its social policies, embedded in a framework of weak institutional coherence. This situation inevitably resulted in a less-than-optimal allocation of resources and indicated the presence of a significant space to increase policy effectiveness. In the light of this situation, the GoP decided to introduce a major social reform with the creation of a new sector called Development and Social Inclusion and a new institution in charge of it the Ministry of Development and Social Inclusion (Ministerio de Desarrollo e Inclusión Social, MIDIS). 2 The MIDIS had the mandate to design, coordinate, guide, and implement policies and strategies to reduce poverty and vulnerability and to promote social inclusion. To achieve this mandate, the MIDIS had two basic roles: (a) the implementer of temporary and targeted social programs and (b) the steward of the development of national social inclusion policies and programs (steering role). The creation of the MIDIS in October 2011 represented a milestone in the institutionalization of social inclusion as a Peruvian state policy. This social policy reform was completely in line with the Bank Group's Country Partnership Strategy (Report # PE). The Country Program Strategy called for supporting the government's plan of Crecer para Incluir 3 (Growth with Inclusion) to overcome social gaps and boost productivity. In particular, the reforms targeted by this Social Inclusion DPL Series aligned with the first strategic objective of Increased access and quality of 1 Between 2000 and 2011, gross domestic product (GDP) expanded at an average of 5.7 percent. 2 See annex 7 for more description on the MIDIS. 3 This strategy was reformulated later in 2013 under the name Incluir para Crecer (Include to Grow). 1

11 social services for the poor, and specifically with the first result area of a more inclusive and effective social protection system. 1.2 Original Program Development Objectives (PDO) and Key Indicators (as approved) 3. Program development objectives. The Social Inclusion DPL Series had three main development objectives: (a) supporting the institutionalization of the stewardship of the social inclusion agenda under the MIDIS; (b) laying the foundations for improving the inclusiveness and effectiveness of key MIDIS social programs; and (c) developing adequate systems for targeting, M&E, and overall coordination. In relation to the programs under point (b), the operation specifically focused on improving the effectiveness of three social protection programs: the Conditional Cash Transfer Program (Juntos, the social pension program Pension 65, and the School Feeding Program (Qali Warma, QW). 4. Key indicators. The key development indicators defined to assess the achievement of the program outcomes in the three policy areas outlined were the following: (a) (b) (c) (d) (e) (f) (g) (h) (i) The MIDIS' stewardship of the social inclusion agenda is institutionalized as measured by the establishment of legal and organizational rules at the central level and the operation of integrated units at the subnational level in all regions. Number of new users enrolled in the Juntos program. Percentage of Juntos local promoters trained in the new family support methodology. Percentage of elderly women and men living in extreme poverty and complying with the program's eligibility criteria receiving Pension 65. Percentage of children attending public preschool and schools are served by the QW. Percentage of districts where the QW operates, including mechanisms for transparency and civil society oversight. Percentage of poor households as estimated by the National Institute for Statistics (INEI) have their socioeconomic information (Ficha Socioeconomica Unica) updated by the Household Targeting System (Sistema de Focalización de Hogares, SISFOH) within a period not exceeding three years. Proportion of recommendations generated through the M&E system that helps implement MIDIS programs. Regions with increased coverage of effective interventions (as defined in the chronic malnutrition guidelines). 2

12 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and Reasons/Justification 5. The PDOs and key indicators were not revised. 1.4 Original Policy Areas Supported by the Program (as approved) 6. Policy Area 1. The first policy area involved the consolidation of the institutional framework for the stewardship of the social inclusion agenda under the MIDIS, including (a) the establishment of the new ministry itself, which began to operate in January In a short period of time, the MIDIS was tasked to organize itself based on the principles established by the Law and to make a radical shift from programs working as isolated islands to an integrated policy and operational platform and (b) the progressive setup of its organizational models at the subnational level, with a view to operate effectively and maximize synergies across programs on the ground. 7. Policy Area 2. The second policy area focused on improving the inclusiveness and effectiveness of key MIDIS social programs with a special focus on (a) the expansion of the coverage of the Juntos Program and the improvement of support to users through its social promoters; (b) the establishment of the social, noncontributory Pension 65 program, which represented a major achievement in the GoP's efforts to provide income support for the elderly living in poverty; and (c) the reform of the GoP's food-based programs, with the path-breaking decision to close the deficient National Food Assistance Program (PRONAA) scheme and to initiate a new QW. 8. Policy Area 3. The third policy area focused on reforming social inclusion policy approaches and systems, which involved (a) the overhaul of the SISFOH, so that the MIDIS could function more effectively with a clear, transparent, and technically sound system to identify social program users; (b) the progressive establishment of a National System of M&E for Social Policy, known as Evidencia, to improve the effectiveness of social inclusion policies and programs through timely evidence-based decision making; and (c) the development and implementation of the GoP's National Social Inclusion Strategy, Incluir para Crecer, which the government has defined as the axis for the intersectoral coordination in the field of social inclusion. In addition to this policy platform, the MIDIS needed to ensure the day-to-day organization, coordination, and functioning for the institutional platform that underpins the MIDIS' coordination role, the National System for Social Development and Inclusion (Sistema Nacional de Desarrollo e Inclusión Social, SINADIS). 1.5 Revised Policy Areas (if applicable) 9. The policy areas were not revised. 1.6 Other Significant Changes 10. DPL initial concept, amounts, and timing. The DPL was originally conceived as a programmatic series to support the organization of the MIDIS as the main agency responsible for developing the Social Inclusion Strategy. The first loan (US$45 million) 3

13 was planned to support the establishment of the new Ministry of Development and Social Inclusion, which was in charge of implementing the social inclusion agenda, while the second one (US$30 million) was intended to support the implementation of the Social Inclusion Strategy through enhancing the inclusiveness, performance, and overall resultorientation of the MIDIS programs and policies. DPL2 was expected to be submitted to the Board during the first half of the calendar year 2014, but the preparation continued till the end of 2014, 4 and at that point it was terminated. The reasons for dropping DPL2 are outlined in the following paragraphs. 11. Instrument selection under a stance of strong support: optimistic outlook in combination with formal rigidity. In the context of the continued efforts to support the GoP, the Bank considered that the most adequate format involved a programmatic operation instead of a single operation, as it was expected to take time to gradually implement reforms. This decision allowed providing more robust support, but it also had the downside of introducing a number of potential risks which later materialized. It is important to keep in mind that the information available to the team at the moment of making the decision on the financing instrument was different than the information available at the time of the Implementation Completion and Results Report (ICR) and that this decision was made in the context of a policy stance of strong support from the Bank to the GoP. Having made this caveat, it is still possible to argue that the team was too optimistic regarding the feasibility of implementing significant institutional changes over a short period of time. For instance, its institutionalization at the central and subnational levels was too ambitious for a two-year timeline. Operating with integrated units at the subnational level is challenging because it not only requires regional coordination between the MIDIS (Vice Ministry of Policies and Social Evaluation [Viceministerio de Politicas y Evaluacion Social, VPES]) and its five social programs (Vice Ministry of Social Benefits [Viceministerio de Prestaciones Sociales, VPS]) but also requires articulation with the other ministries and local government. Hence, the formal rigidity introduced by the objectives of the programmatic series in combination with the timing for a programmatic operation 5 was an important factor contributing to terminate the preparation of DPL Changes in the MIDIS. After the approval of DPL1, the head of the MIDIS changed twice between July 2013 and February 2014, and staff turnover was high. As a result of these changes, some of the priorities in the MIDIS shifted, which in turn modified previously scheduled activities. 6 For instance, the MIDIS concluded that the piloted approach for promoters implementing the family support model was not effective, and decided to revise it. This decision affected the achievement of indicative triggers for DPL2 and the achievement on expected outcomes under DPL1. The changes in MIDIS staff also caused delays in dialogue and implementation. Moreover, the MIDIS subsequently 4 The Project Concept Note took place on June 23, 2014 and the the Regional Operational Committee was planned on November 2014, a month before the deadline for the programmatic series. 5 The deadline for DPL2 was December 12, According to Bank Operations Policy, a programmatic series is considered to have lapsed if 24 months have passed between Board approvals. 6 These changes did not affect the Social Inclusion Strategy Incluir para Crecer which remained unchanged. 4

14 prioritized the rest of the instruments supported by the Bank instead of the preparation of DPL Combined effects shaping the conditions for dropping DPL2. In summary, the preparation of DPL2 took place in a changing environment, where its relevance was diminished due to the early achievement in one tentative prior action, the delay in several prior actions, and the GoP's decreasing interest in a DPL of such a small amount (US$30 million) for budget support. The MIDIS also had the Technical Assistance Loan (TAL) project as a means for dialogue with the Bank and as an instrument to support technical assistance. These factors, in addition to the strict rules for programmatic series on timing and policy matrix structure, led the Bank and the government to agree on terminating the preparation of DPL2. Despite this cancellation, the Bank has maintained its dialogue with the government on the social sector through the TAL and Nutrition Sector-wide Approach (SWAP) projects, and Non-lending Technical Assistance (NLTA). 2. Key Factors Affecting Implementation and Outcomes 2.1 Program Performance 14. Disbursements for the first operation were carried out close to the schedule established at appraisal. Table 1 summarizes the dates and amounts. Table 1. Disbursements Tranche # Amount Expected Actual Release Release Release Date Date DPL1 45,000,000 April 1, 2013 August 26, Regular 2013 DPL2 30,000,000 n.a. n.a. Cancelled 15. The government met all the conditions for DPL1 described in the Program Document. Specific policy actions that had to be met before Board approval of DPL1 are summarized in Table 2. 5

15 Table 2. Policy Areas for DPL1 Tranche 1 List Conditions from Legal Agreement/Program Document I. Consolidation of the Institutional Framework for the Stewardship of the Social Inclusion Agenda under the MIDIS The borrower has approved the legal and institutional framework required for the stewardship of the social inclusion agenda under the MIDIS, as evidenced by (a) Law No , dated October 10, 2011, and published in the Borrower's Official Gazette on October 20, 2011, which created the MIDIS; (b) Supreme Decree No MIDIS, dated December, 26, 2011, and published in the Borrower's Official Gazette on December 27, 2011; (c) Resolution of MIDIS General Secretariat No I-MIDIS, dated December 31, 2011, and published on the MIDIS web page, which ascribed five social inclusion programs to the MIDIS; and (d) Supreme Decree No MIDIS, dated September 4, 2012, and published in the Borrower's Official Gazette on September 4, 2012, which approved the MIDIS' rules of organization and operations. II. Improving the Inclusiveness and Effectiveness of Key MIDIS Social Programs II.1 JUNTOS: Enhanced Coverage and Support to Users by Local Promoters The borrower has approved the expansion of the coverage of Juntos to the borrower's districts where the SISFOH has carried out a socioeconomic evaluation and where the poverty levels are between 40 and 50%, as evidenced by Supreme Decree No MIDIS, dated July 5, 2012, and published in the Borrower's Official Gazette on July 06, The borrower, through the MIDIS, has launched the process to improve the quantity and quality of family support provided by Juntos, through the recruitment of 1,000 new local promoters with enhanced terms of reference, as evidenced by Official Letter (Oflcio) No MIDIS/SG/OGCAI, dated October 25, II.2 Pension 65: Enhanced Coverage and Broad-based Strategy for the Elderly Living in Extreme Poverty The borrower has approved the expansion of the coverage of Pension 65 nationwide, as evidenced by (a) Supreme Decree No MIDIS, dated May 5, 2012, and published in the Borrower's Official Gazette on May 6, 2012, which defined the new scope of Pension 65 and (b) Supreme Decree No MIDIS, dated July 5, 2012, and published in the Borrower's Official Gazette on July 6, 2012, which approved Pension 65's geographical expansion nationwide. II.3 QW: Establishment of a New QW in Public Schools The borrower has created the QW to ensure food service delivery to children enrolled in public preschools and primary schools, as evidenced by Supreme Decree No MIDIS, dated May 30, 2012, and published in the Borrower's Official Gazette on May 31, Met Met Status 6

16 Tranche 1 List Conditions from Legal Agreement/Program Document III. Reforming Social Policy Approaches and Systems III.1 Overhaul of the GoP's Targeting System (SISFOH) for Social Programs and Policies The borrower has started developing the institutional framework for the SISFOH under the MIDIS, as evidenced by (a) Emergency Decree No , dated January 21, 2012, and published in the Borrower's Official Gazette on January 22, 2012, which approved the transfer of the SISFOH from the Council of Ministers (Presidencia de Consejo de Ministros, PCM) to the MIDIS until December 31, 2012; (b) Budget Bill of Law No.l465/20l2-PE, submitted to the Congress on August 29, 2012, which transfers the SISFOH to the MIDIS permanently and approves the transfer of information complementing the General Household Registry (PGH), to the MIDIS. The borrower has taken measures to update the PGH, as evidenced by (a) the agreement (Convenio) between the PCM and INEI, dated November 21, 2011, which instructed the INEI to conduct a socioeconomic census in nine regions in the borrower's territory; (b) the agreement (Convenio) between the Sectoral Projects Coordinating Unit (Unidad de Coordinación de Préstamos Sectoriales, UCPS) and INEI, dated February 9, 2012, which instructed the INEI to continue the socioeconomic census in three additional regions in the borrower's territory; (c) Budget Bill of Law No.1465/2012-PE, submitted to the Congress on August 29, 2012, which authorized the MIDIS to transfer S/. 70 million) to the INEI to continue the socioeconomic census; and (d) Ministerial Resolution No MIDIS, dated August 16, 2012, and published in the Borrower's Official Gazette on August 17, 2012, which approved the technical guidelines to improve information collection for the PGH. III.2 Foundations for a M&E System for Social Inclusion Policy and Programs (Evidencia) The borrower, through the MIDIS, has approved guidelines for the development of an M&E system for results-based policy formulation and management in the social inclusion sector, as evidenced by Ministerial Resolution No MIDIS, dated October 23, 2012, and published in the Borrower's Official Gazette on October 25, III.3 Development of Systems and Strategies to Enhance Overall Coordination of Social Inclusion Policies and Programs The borrower, through the MIDIS, has approved guidelines for intersectoral and inter-governmental coordination to reduce chronic malnutrition in the framework of development and social inclusion policies, and has identified priority districts in the borrower's territory where effective interventions will be implemented, as evidenced by Ministerial Resolution No MIDIS, dated July 23, 2012 and published in the Borrower's Official Gazette on July 25, Met Status 16. Despite the cancellation of DPL2, many of its tentative triggers were met. Others were delayed to 2015 or not considered as priority within the changing environment where the MIDIS operated. The status of the tentative indicative triggers for DPL2 are presented in annex 9. 7

17 2.2 Major Factors Affecting Implementation 17. Key factors that contributed to the successful implementation of the DPL are summarized below. 18. Strong government commitment to organize social inclusion policies, to establish clear targets, and to focus on results. Before 2011, the GoP had made different efforts to promote coordinated actions to tackle challenges related to poverty. However, the main step happened in 2011 when the GoP decided to focus attention and resources on the social inclusion policy. The MIDIS was created with the mandate to design, implement, and evaluate policies and strategies that promote social inclusion. The creation of the MIDIS was a milestone in the Peruvian social policy and constituted a significant institutional reform of the Peruvian public sector. In 2013, the GoP approved the National Strategy for Development and Social Inclusion Incluir para Crecer. This strategy was prepared under the framework of the SINADIS and was supported by 14 ministries including the Ministry of Economy and Finance (Ministerio de Economia y Finanzas, MEF). The strategy is the MIDIS main managerial tool to guide social-inclusion-related interventions under a life cycle approach and integrate ongoing result-oriented sectoral initiatives, as well as those of regional and local governments. All MIDIS programs are under a mechanism of results based financing led by the MEF in the annual budget process. 19. Several years of a positive dialogue on social policies and practices provided a sound basis for designing the DPL series. The Bank has supported social inclusion policies in Peru and worked closely with the government in the social sectors for the last decade. Experienced multisectoral teams from Social Protection, Poverty Reduction and Economic Management and Sustainable Development have supported the MIDIS to elaborate the national strategy; institutionalize the MIDIS; improve inter-sectorial and inter-governmental coordination; improve efficiency and effectiveness of MIDIS programs; and improve targeting mechanisms, M&E systems, and transparency. Multiple research products have been produced to support the government initiative. 7 A Poverty and Social Impact Analysis (PSIA) accompanied the preparation of both DPL operations. The first PSIA focused on examining the poverty dimensions of the baseline reform programs and identifying key opportunities and risks to the reforms achieving their poverty and social inclusion objectives. The second PSIA considered for the preparation of the draft DPL2 built on an extensive literature review analyzing the potential effects of the expansion of Pension 65 and Juntos on poverty and inequality, as well as polices to better target social spending. 20. The Bank made use of multiple instruments to support government needs for financing the social inclusion policies. Since 2011, the Bank's efforts have been focused on the improvement of the MIDIS institutional capacity and service quality, the strengthening of multisectoral interventions, and the support of social inclusion reforms. In addition to the DPL (Loan 8221-PE), the TAL (Loan 8222-PE) was carefully designed 7 For instance, Perova and Vakis (2009, 2013a, 2013b), World Bank (2008), Escobal et al (2012), and Rofman et al (2014). 8

18 to maximize complementarities with the DLP-supporting activities to implement the Social Inclusion Strategy. A Programmatic Knowledge Service also supported the MIDIS in the design and implementation of social inclusion reforms. The SWAP Results in Nutrition for Juntos (P117310) supported the demand, supply, and governance of nutrition services provided by the GoP organized under the Articulated Nutrition Program, including Juntos. The M&E System IDF (Institutional Development Fund) and the Poverty and Social Inclusion NLTA (P146773) provided technical assistance to the INEI and MIDIS to increase the GoP capacity to design, monitor, and evaluate social policies aimed at reducing poverty and improving social inclusion. Two NLTAs supported the SISFOH under the MIDIS, the Poverty NLTA (P151096) provided support in the evaluation of alternative algorithms to design targeting instruments and the Social Protection NLTA (P152321) supported the operation of the SISFOH. The combined support of these different instruments provided wide flexibility to the Bank to respond promptly and effectively to the GoP s needs for financing the social inclusion policies (through the DPLs), medium-term technical assistance issues (through the TAL and SWAP), and short-term issues (through the NLTAs and Institutional Development Grant grant). A summary of the multiple instruments used to support the MIDIS is presented in annex The design of the DPL series was based on lessons learned from similar programmatic DPL series on social sector reforms. Among these, the following are worth mentioning: (a) (b) Strong government ownership and alliances between social sector champions and finance ministries. In Peru, the MEF and the MIDIS' leadership have formed a strong alliance that will help mitigate the risks of resistance to reforms. Breadth of support combining lending and non-lending instruments. For example, the Peru Analytic and Advisory Activities Recurso Program was critical in defining and monitoring the accountability reforms targeted by the Results and Accountability DPL series. 22. With regard to the complexity of the policy areas supported by the operation, a major source resides in the inherent complexity of the functions and tasks assigned to the MIDIS. In effect, the MIDIS took over existing social plans that were themselves complex requiring improvements in targeting, coverage, quality of service, transparency, but also high levels of coordination between them and other stakeholders. In addition to the implementer role, the MIDIS also had a steering role. It was expected to define the Social Inclusion Strategy; take the leadership for the M&E component for the social policy under the SINADIS which provides information for decision making on program s implementation and policy design; and manage the SISFOH whose natural organization would have probably been the INEI, given the highly technical and statistical nature of the activities. Moreover, the MIDIS was required to effectively articulate with the three government levels and the other sectors. Each task was extremely complex per se creating a challenging mandate for the MIDIS. This inherent high level of complexity also posed a significant challenge to the Bank s team as it had to adapt to a situation of high complexity in an uncertain environment. 9

19 23. Relevance of the risks identified at appraisal. The program identified four broad risks at appraisal: (a) (b) (c) (d) Macroeconomic risk. There is always a risk at the macroeconomic level (crises such as sudden stops in capital flows, quick reversal of exchange rates, and so on.) Peru s domestic policies were prudent overall and the GoP had done an appreciable effort to reduce the country s vulnerabilities. Overall, the GoP had undertaken measures to mitigate the risk and with the information available to the team at the time of appraisal, the macroeconomic risk appears to have been a relevant risk. Implementation and coordination risk. The team identified a number of risks related to implementation and coordination. In particular, it noted the risk of policy reversal, change in leadership, and lack of continuity of technical staff. In hindsight, the team appears to have made an accurate assessment of these risks as they manifested in similar forms as discussed in section As for the validity of the mitigating elements, the political support of the president appears to be a reasonable measure given the nature of the political interactions in Peru, which is the same as the political coordination with the MEF given the importance of this ministry for the effective operation of the MIDIS. Stakeholder opposition risk. This risk identified for staff and management of social programs that were recently absorbed under the authority of the MIDIS also appears to have been adequately identified as a risk, as it is well-documented that organizational changes are typically resisted by the members of that organization. The mitigating strategies also appear to have been adequate within the limitation of the change under consideration. In particular, there were attempts to increase and improve the communication, open channels for the members of the MIDIS to voice their opinions, and increase their sense of ownership. The implementation of the Incluir para Crecer strategy helped to provide the justification and rationality of the changes implemented. The NLTA also supported the communication strategy. Social risk. The so-called social risks (lack of identification documents of potential beneficiaries, limited mobility for Pension 65 beneficiaries, and decentralized approach for the QW) are better understood as logistical/implementation risks. Under this later interpretation, the risks appear to have been reasonably assessed and the mitigation efforts appear to bear an adequate relation. For instance, the team identified the lack of proper personal identification documents as a potential risk, then mitigated that risk by increasing efforts to provide such documentation in the areas most likely to contain users of social programs. Alternatively, the mobility difficulties of the elderly population are a reasonable risk, and the team mitigated this risk through the pilots for alternative 8 It is important to stress here that the merit of the assessment must take into account the information set available to the team at the moment of assessing these risks. It would be erroneous to take the materialization of one of such event as an indication of the relevance of such risks. However, the relatively high coincidence between the sequence of assessed risks and their manifestation can be taken heuristically as a confirmation of its appropriateness. 10

20 payment options expanding locations and payment mechanism to what seems an appropriate mitigating measure (financed by the TAL). 2.3 M&E Design, Implementation, and Utilization 24. Assessment of the M&E design. The policy matrix lacks an appropriate definition of indicators to monitor the progress of the program. In particular, for many indicators there is no definition of baselines or a description of the specific indicator that is going to be used to assess the achievement of a specific outcome. Furthermore, as a consequence of this lack of definition, there is no proper reference to the data sources or which unit within the MIDIS would be responsible for the generation of the data. Another problem that emerges is that it is not clear what the relevance of some indicators is. For instance, in the objective for Policy Area 3.2, the indicator of percentage of M&E recommendations implemented by the program is a questionable measure, as the recommendation made might not be highly relevant or might be difficult to implement within the time frame of the DPL Assessment of the M&E implementation. Given the lack of adequate definition of the variables to be monitored for instance, how to measure percentage of M&E recommendations implemented for many indicators, no appropriate data and collection methods exist. To measure each indicator, there should have been an agreement on which evaluations or what type of evaluations need to be taken into account, the time frame the programs have for implementation, and the verification methods in place. In the same way, if the indicator requires the operation of MIDIS integrated units at the subnational level, there should have been a description on how to measure this indicator. This difficulty to quantify the indicators was reflected in the Implementation Status and Results Report (ISR) where the baselines were not calculated as initially proposed in the Project Appraisal Document and four indicators were not monitored as no data was available. 10 However, the ISR should have informed the Bank and client about the problems on the M&E arrangements and delay on the achievement of few indicators. 26. Assessment of the M&E utilization. As indicated by the two previous points, the M&E system is inherently limited in its objective. However, in spite of these limitations, there was a collection of information and measurements of variables that informed the preparation of DPL2. It must be noted, however, that the information and variables used for such preparation do not correspond to the indicators under DPL1 due to the problems outlined in the previous two paragraphs. It should also be pointed that these problems did not go unnoticed, and the preparation of DPL2 planned to modify key outcome indicators to address the shortcomings previously described. 9 This objective points to the development of an adequate M&E system for social inclusion policy and programs to promote evidence-based decision making. 10 It is worth stressing that this assessment in this ICR does not refer to the M&E system established in the MIDIS and the quality of the data collected under that system, but rather to the M&E corresponding to the DPL series. 11

21 2.4 Expected Next Phase/Follow-up Operation (if any): Not applicable 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation Rating: High overall relevance of objectives 27. Objectives relevance. The three objectives remain relevant at the time of the ICR. The objectives of the DPL were, and still are, highly relevant to the country s current development priorities as they are aligned with the Incluir para Crecer strategy. These objectives are consistent with the Bank Group s Country Partnership Strategy (Report PE) as its reforms were aligned with the First Strategic Objective of Increased Access and Quality of Social Services for the Poor and specifically with the first result area of a more inclusive and effective social protection system. The rating is based on these findings. 28. Relevance of design. The program was designed in accordance with its objectives, and was based on previous research directly related to the areas of intervention and lessons learned from the Results and Accountability DPL. In effect, the prior actions and indicative triggers were supportive of the government s strategic objectives in the area of social inclusion policies; moreover, the prior actions of the first series were instrumental in the achievement of the goals established for the MIDIS. However, while all the objectives are highly relevant, some of them turned out to be too ambitious given the complexity involved 11 and the uncertainty associated with the creation of a new ministry. 3.2 Achievement of Program Development Objectives 29. All DPL objectives are highly consistent with the Social Inclusion Strategy Incluir para Crecer and hence they need to be analyzed within that framework. This strategy represents the MIDIS management tool to organize social-inclusion-related interventions and generate inter-sectoral and inter-governmental coordination. The MIDIS used several instruments to exercise the responsibility of the social inclusion policy under the framework of the SINADIS. Within the SINADIS operational structure, the MIDIS developed the strategy Incluir para Crecer that is a management tool to organize socialinclusion-related interventions under a life cycle approach and integrate ongoing resultoriented sectoral initiatives, as well as those of regional and local governments. The strategy has five strategic axes: (a) Nutrition (children below three years old); (b) Early Childhood Development (ECD) (children below five years old); (c) Comprehensive Child and Adolescent Development (6 17 years); (d) Economic Inclusion (18 64 years); and (e) Protection for the Elderly (more than 65 years). The strategy considers a set of instruments for the inter-sectoral and inter-governmental coordination based on processes of planning, 11 Operating with integrated units at the subnational level is challenging because it requires regional coordination within the MIDIS and between the MIDIS and the other ministries. The GoP has been trying to identify mechanisms to articulate its public policy during the last 15 years. 12

22 budgeting, implementing, M&E, and prioritizing key effective interventions. This articulation requires a consistent targeting and M&E approach. 30. The first objective is the creation of an entity to not only exercise the leadership role of designing and executing the social inclusion policy but also implement the socialinclusion-related programs. The MIDIS institutionalization responds to both roles, creating two vice-ministries (VPS and VPES) to take on each role and Regional Liaison Offices to coordinate in the territory. The second objective covers (a) the expansion of three MIDIS programs to the most vulnerable population and (b) reforms to improve their effectiveness, all of them contributing to the four axes of the strategy. The third objective supports the development of systems and strategies for targeting, M&E, and overall coordination and responds to the result-based financing approach of the strategy and its targeting and M&E mechanisms. 31. The actions in the policy matrix were conditions before Board approval (see prior actions in section 2 - table 2). DPL1 was implemented in a satisfactory manner, setting the legal and institutional framework for the social inclusion agenda. The government made good progress in DPL1 and toward the tentative triggers expected for DPL2, even though its preparation was terminated. Annex 8 presents the policy matrix for Peru s First Social Inclusion DPL and the level of achievement for each indicator by December As a point of reference, annex 9 summarizes the progress toward the tentative triggers for DPL The nature of the DPL instrument and the simultaneous use of multiple Bank instruments do not allow the identification of a causal link between the DPL and the observed outcomes. The following sections take into account (a) the objectives within each policy, (b) how they fit the strategy Incluir para Crecer, (c) level of achievement of each outcome; and (d) when feasible, how the Bank contributed (through the DPL or combination of instruments) to the observed outcomes. Policy Area 1 - Consolidation of the institutional framework for the stewardship of the social inclusion agenda under the MIDIS. Objective: Support the institutionalization of the stewardship of the social inclusion agenda under the MIDIS, at both central and subnational levels. Rating: Moderately Satisfactory 33. This policy area supported the GoP's objective of establishing an institutional framework to organize the social inclusion policy. It supported the creation of the MIDIS, including the legal definition of its mandate, roles, and the development of its organizational rules. The MIDIS' mandate was to design, coordinate, guide, and implement policies and strategies to reduce poverty and vulnerability and to promote social inclusion. The MIDIS had two basic roles: (a) the implementer of temporary and targeted social programs and (b) the steward of the development national social inclusion policies and programs (steering role). The MIDIS institutionalization responded to its basic roles through the creation of the VPS in charge of the implementer role and the VPES in charge of the steering role. At the local level, this policy area was planned to support the setup and consolidation of the MIDIS' organizational model through DPL2. The tentative trigger for 13

23 DPL2 required the MIDIS to evaluate and adopt integrated operating models in all regions to achieve the operation of integrated units in all regions. 34. The reforms included in this DPL have successfully supported the consolidation of the stewardship of the social inclusion agenda under the MIDIS. Since the creation of the MIDIS in October 2011 (Law No ), the MIDIS has achieved the establishment of the legal and organizational rules at the central level as described in annex The MIDIS role in the territory and challenges to coordinate at the subnational level. Within the SINADIS framework, the implementation of the strategy Incluir para Crecer required the coordination of the development and social inclusion policy in the territory. The MIDIS needed to articulate initiatives and efforts within its five programs but also to connect them with priorities at the local and regional levels. To support those activities, the MIDIS created the Regional Liaison Teams in all 23 regions and the area of Apurímac, Ene and Mantaro River Valleys. While the structure has been created and the MIDIS has been able to open its offices in the territory, some of the regulations related to the integrated units and offices have been dated after the end of 2014 (see annex 8). Moreover, there are still challenges to operating at the desired level of integration. For instance, the regional liaison coordinators have experienced difficulties to coordinate with the regional representative for each of the five MIDIS programs. 36. With regard to Bank contribution, the DPL particularly supported the institutionalization of the MIDIS at the central level. The NLTA has supported the articulation at the local level by (a) strengthening the management tools for articulating social inclusion policy; (b) systematizing learning from the experiences of the articulation pilots in 20 provinces; and (c) designing and implementing articulated strategies between the MIDIS social programs. The MIDIS has tested different models and decided to create MIDIS offices in each region (Regional Liaison Office) to operate with integrated units. Annex 10 summarizes Bank support to the MIDIS. Policy Area 2 - Enhancing the Inclusiveness and Effectiveness of Key Social Programs. Rating: Moderately Satisfactory 37. This policy area covers three main areas of reform: (a) (b) (c) Enhanced coverage of the Juntos program to reach the poorest population and better support to users. Enhanced coverage of income protection for the elderly population living in poverty through the development and expansion of Pension 65. The setup and implementation of the new QW, with a strong focus on transparency, efficiency, and accountability standards. Policy Area Juntos Program: Enhanced Coverage and Better Support to Users by Local Promoters 14

24 Objective: Enhance the inclusiveness and effectiveness of Juntos by (a) expanding its coverage to additional poor households and districts and (b) improving the quantity and quality of family support provided by local promoters to users. Rating: Moderately Satisfactory 38. This policy area fits the first three axes of the strategy (Nutrition, ECD, and Comprehensive Child and Adolescent Development). It responds to two main challenges that limited the ability of Juntos program to reach the poorest population: insufficient coverage (the program benefitted 68 percent of its target population) and missed opportunities with regard to the role of promoters on affiliation and verification of compliance of coresponsibilities. The PSIA found that errors in the affiliation and verification of coresponsibilities were partly due to poor training, or the lack of time to follow up on the task. 39. The government expanded Juntos coverage to more disadvantaged households, exceeding the expected target of 150,000 new beneficiaries. The DPL supported the expansion of Juntos. The program expanded its coverage between 2011 and 2014 from 700 districts to 1,144 districts, reaching 284,357 additional beneficiaries from the baseline of 474,064 beneficiaries in The program is now operating in the poorest 15 regions of the country. 40. The government piloted the family support model in three regions and at that point decided to change its design, hence discontinuing the training of promoters and the post-pilot expansion. In 2012, the Bank s NLTA supported the revision of the role of promoters that were currently acting as liaison between the program and beneficiary households. In the enhanced model, promoters were expected to provide family-oriented information, guidance, and counseling services (including follow-up services) to ensure that the most vulnerable families stay in the program and that those who have difficulty in complying with the coresponsibilities receive more support. The DPL supported the recruitment of 1,000 new local promoters with enhanced terms of reference and expected to support its training on the new family support methodology. The program tested the model in the three regions with the lowest rate of compliance of coresponsibilities (Ayacucho, Huánuco, and Piura). As part of the pilot, the program revised the reasons of low compliance and concluded that the Juntos model needed to be redesigned to tackle the main reasons for noncompliance (deficiencies in supply, access and quality of health and education services, lack of information, and family problems). During , the program trained 57.5 percent of the promoters in the pilot areas, but it discontinued the training plans for 2014 until a new model was in place. The new Family Support Strategy focused on creating awareness and promoting feeding practices to reduce chronic malnutrition of children below five years of age. Policy Area New Program and Approach for the Elderly Living in Poverty: Pension 65 Objective: Increase access of the elderly living in extreme poverty to the new social pension program Pension 65 and complementary services enhancing their well-being, with special emphasis on health services. Rating: Highly Satisfactory 15

25 41. This policy area fits axis 5 of the strategy Protection for the Elderly and is also part of the national policy regarding the elderly. Protection for the poor population aged 65 years and above is closely related to three factors: (a) achieving economic security, (b) accessing quality health care services, and (c) increasing social support networks. According to National Household Survey (Encuesta Nacional de Hogares, ENAHO 2010), 28 percent of people aged 65 years or older are in poverty. The situation in rural areas, where the poverty rate reaches 58 percent, is critical; 30 percent have no health insurance and 72 percent do not have a contributory pension. This policy area addressed two main issues associated with the inclusiveness and effectiveness of Pension 65: (a) the need to expand the coverage nationwide to provide protection to the elderly in extreme poverty and (b) the need to develop a broader and more long-term strategic approach to the social protection of the elderly living in poverty. 42. The DPL supported the expansion of the program on the elderly living in extreme poverty and the MIDIS has successfully exceeded its target. Between December 2012 and December 2014, the number of beneficiaries has expanded from 247,673 to 450,000, reaching all the districts. By the end of 2014, 79.4 percent of the elderly living in extreme poverty and complying with the program's eligibility criteria received Pension 65, exceeding the target of 65 percent for the DPL series. 43. Pension 65 beneficiaries have access to health insurance and other services. One of the tentative triggers for DPL2 required the implementation of a strategy to strengthen the provision of complementary services for the elderly living in extreme poverty. The MIDIS needed to coordinate with other ministries to achieve the desired results in protection for the elderly. In 2012, the MIDIS, MINSA, and Integral Health Insurance signed an agreement establishing that Pension 65 beneficiaries could be enrolled in the Integral Health Insurance (Seguro Integral de Salud, SIS). This agreement provided health access to Pension 65 beneficiaries and represented a prime accomplishment for the MIDIS. By the end of 2014, 100 percent of Pension 65 beneficiaries were affiliated to the SIS and have a clinical history. In coordination with the health sector, the program conducted 2,399 health campaigns in the 24 provinces and provided services to 147,393 program beneficiaries. Another complementary social service provided is Saberes Productivos which promotes social interaction and revalorization of the knowledge of the elderly. The MIDIS signed agreements with several municipalities for the provision of Saberes Productivos. These interventions were implemented in 24 provinces and 81 districts. 44. The MIDIS approved a new procedure to access, remain, and exit Pension 65 and expanded payment mechanisms. The second indicative trigger required the introduction of improvements in the affiliation process and payment system of Pension 65. In 2014, the MIDIS established a procedure to access, maintain, and exit Pension 65 (Supreme Decree MIDIS). The MIDIS also piloted different payment modalities with the support of the NLTA. Pension 65 has worked with Juntos to expand the coverage of payments at a lower cost. Pension 65 increased payment points from 697 in 2012 to 870 in

26 Policy Area QW: A New QW with Transparency and Accountability Standards Objective: Enhance the effectiveness and transparency of school feeding through the creation of a new, decentralized school feeding program (QW), and the development of mechanisms for civil society oversight of the program. Rating: Satisfactory 45. This policy area fits two axes of the strategy: ECD and comprehensive child and adolescent development. It also coincides with the priorities of the National Plan of Action for Children and Adolescents , prepared by the Ministry of Women and Vulnerable Populations. The PRONAA was for many years the main feeding program with national coverage that aimed at reducing malnutrition of vulnerable populations. It was based on the distribution of prepackaged food to low-income households. The program suffered from design problems such as low nutritional content of the food distributed; weak coordination between the health and social protection sectors; targeting problems with regard to both errors of inclusion and exclusion (more than 50 percent of the beneficiaries were not living in extreme poverty and only 16 percent of poor children below three years of age received the program); and lack of an adequate M&E system. When the MIDIS took over the program, it immediately recognized two critical challenges for efficient service delivery of the PRONAA: (a) deficiencies in the information system which did not allow for timely, reliable, and transparent reports and (b) the lack of participation and user feedback across the quality control cycle of the food procurement-delivery chain. The Bank supported the PRONAA s senior management, through the NLTA, in the implementation of a stakeholder assessment at the request of the MIDIS This policy area supported the creation and expansion of a new decentralized school feeding program called the QW based on global best practices of school feeding. The program was supported by the Bank through the NLTA by the identification of best practices in feeding programs and the development of a mechanism for transparency and civil oversight. The QW was created as a new program based on the joint responsibility of parents and school teachers for purchasing meals from specially prepared menus for nursery and primary school children taking into account local products and tastes. The program aimed to guarantee high quality and diversified food service for children from the age of three onward in public preschool and primary schools and started to operate in By the end of 2014, it reached 3,173,235 children in 57,677 schools. The QW served 82 percent of children attending public preschool and schools served by the program. This indicator exceeded the target in the DPL Series by 12 percentage points. 47. The QW has developed procurement mechanisms for transparency and civil society oversight. The second area supported by the DPL series was the scaling up of the operation of the program based on revised rules and regulations to ensure efficiency, effectiveness, transparency, and accountability. The tentative trigger of the DPL required 12 The assessment identified main winners and losers of the reform and a set of strategic measures leading to minimize its potential negative impacts on vulnerable groups, neutralize the potential opposition of strong business stakeholders, and boost social and political support from the main winners and stakeholders who had the capacity to influence public opinion and decision-making. 17

27 the development of mechanisms for transparency and civil society oversight. The QW developed transparency mechanisms as detailed in the Multisectoral Report of December 9, 2013, and the Procurement Process Oversight 13 (Veeduria del proceso de compras) of January 3, By December 2014, 110 Procurement Committees were in place and 43.5 percent of the QW districts included mechanisms for transparency and civil society reaching the target in the DPL series. 48. This policy area is rated Satisfactory as its indicators exceeded the target and the creation of the new program (QW) tackled the main challenges faced by PRONAA on service delivery. 49. Overall Outcome Rating (Policy Area 2). The overall rating is Moderately Satisfactory because there were moderate shortcomings in the implementation of Policy Areas 2.1 as explained above. Policy Area 3 - Reforming social inclusion policy approaches and systems Rating: Moderately Satisfactory 50. The third policy area focuses on reforming social inclusion policy approaches and systems, which involves (a) the overhaul of the SISFOH, so that the MIDIS can function more effectively with a clear, transparent, and technically sound system to identify social program users; (b) the progressive establishment of a National System of M&E for Social Policy, known as Evidencia, to improve the effectiveness of social inclusion policies and programs through timely evidence-based decision making; and (c) the development and implementation of the GoP's National Social Inclusion Strategy, which the government has defined as the axis for the inter-sectoral coordination in the field of social inclusion. Policy Area Reform of the GoP's Targeting System for Social Programs and Policies Objective: Overhaul the SISFOH to ensure targeting accuracy of the MIDIS's social programs and social services using the SISFOH, through (a) setting up clear rules and division of responsibilities between the SISFOH and its users and (b) ensuring an updated database (PGH) and strong quality standards. Rating: Satisfactory 51. The strategy Incluir para Crecer identified the need to define common targeting criteria to improve the impact of the social inclusion policy within the SINADIS framework. This DPL program supported two critical aspects of the reform: (a) the establishment of an institutional framework for the targeting system, including clear rules and division of roles and responsibilities between the SISFOH, its users, and those who exercise stewardship of social policies and spending and (b) improvements in the 13 RM MIDIS defines the institutions approved for the oversight: (a) MIDIS Committee for Transparency and Civil Oversight, (b) RoundTable to fight poverty, and (c) Local Education Management Unit. Each institution should assign a representative for the oversight process who should check if the procedures indicated in the purchase manual were followed and fill out the oversight and early warning templates. 18

28 SISFOH s socioeconomic database, the General Household Census. DPL2 was expected to support the consolidation of these efforts by (a) the approval of the revamped targeting system's legal framework and (b) the continuation of efforts to enhance the targeting accuracy of the overhauled SISFOH. The reform of the SISFOH was crucial to improve the effectiveness of the social programs. 52. The MIDIS has completed and updated the PGH. The DPL supported the transfer of the SISFOH from the MEF (PCM) to the MIDIS in December 2012 and the update of the PGH. An NLTA provided funding to the GoP to update the PGH and supported the development of quality standards, security, and confidentiality of the SISFOH. In 2014, the census that collected targeting data of potential beneficiaries was completed (as evidenced by Min INEI Note INEI/DNCE dated August 21, 2014). At the end of 2014, 91.6 percent of the poor households included in the PGH had the socioeconomic information (Ficha socio-económica única) updated and therefore the expected target for the DPL series was achieved. The SISFOH has implemented a process to allow a continuous update with the support of the local units of enrolment to reach households that were not captured by the census. The update of the PGHhas also helped to identify an identity gap. The MIDIS has worked with National Registry of Identification and Civil Status (Registro Nacional de Identificacion y Estado Civil, RENIEC) for the provision of personal identity documents. 14 The government has continued updating the registry since the closing of this DPL and reviewing the consistency of its information. In addition, the MIDIS has drafted the guidelines to access information (which was a tentative trigger for DPL2) managed by the General Office of User Management but its approval is dated after the closing date of this DPL and therefore, not considered achieved. 53. The MIDIS advanced on the preparation of the institutional framework to improve the management of the targeting system. The Poverty NLTA (P151096) provided support in the evaluation of alternative algorithms to design targeting instruments and the Social Protection NLTA (P152321) supported the operation of the SISFOH including the revision of the Operational Manual. The legal framework to regulate the operation of the SISFOH and the new methodology for households socioeconomic classification, including the new algorithm, was approved after the closing date of this DPL. Policy Area Foundations of a National M&E System for Social Policy (Evidencia) Objective: Develop an adequate M&E system for social inclusion policy and programs to promote evidence-based decision making. Rating: Moderately Satisfactory 54. Within the SINADIS framework, the MIDIS had the responsibility to develop the M&E for social policy known as Evidencia. DPL1 supported the development and implementation of clear operational and technical guidelines for evaluations and key monitoring initiatives for the MIDIS' social programs and policies. DPL2 was expected to 14 The census helped to identify 852,500 persons in poverty without a personal identity document. Lack of documentation prevented individuals to be included in the PGH and consequently to be considered as potential beneficiaries in the programs. 19

29 support the legal directives to govern the use of the information generated by the M&E system to transform M&E recommendations into productive actions by respective stakeholders. 55. The MIDIS successfully developed three tools to monitor the performance of its social programs. First, a platform of georeferenced information on coverage of social programs (INFOMIDIS). Second, dashboards to monitor the program s performance and the achievement of the Incluir par Crecer Strategy. Finally, it has developed checklists to verify the compliance of protocols and quality standards. 56. The MIDIS has approved the guidelines for the development of an M&E system for results-based policy formulation and management. As part of the prior actions for DPL1, the MIDIS approved the guidelines for the development of the M&E system (RM MIDIS) in It also advanced on the legal directives related to the trigger DPL2, creating the monitoring dashboards for each MIDIS social program in 2013 (Directive MIDIS) and preparing a proposal to update the guidelines for the INFOMIDIS (Directive MIDIS) during The MIDIS developed a model to generate rigorous knowledge and use of evidence in policymaking. The MIDIS has promoted the production of process and impact evaluations, literature reviews, and meta-analysis, including the preparation of recommendations based on their results. Those products are included in the Annual Evaluation Plan approved each year. The MIDIS designed 14 process evaluations and 5 impact evaluations (1 for each program). Impact evaluation results are expected for In addition, five process evaluations have been finalized two for the QW, one for Juntos, one for Pension 65, and one for the Roundtable for Poverty Reduction The PDO indicator has limited relevance to assess whether an adequate M&E system is in place. The indicator of percentage of recommendations generated through the M&E system that are implemented by the programs cannot be clearly measured. Some questions arise when computing the indicator, for instance, which evaluations should be taken into account, whether all the recommendations are relevant, whether the time frame considered to implement the recommendations is sufficient. In addition, limited data is available to compute this indicator. Based on six technical notes prepared in 2012, which included recommendations, 61 percent of those recommendations were implemented. Even though a figure was obtained on the quantification of the indicator, as explained before, the value of this indicator is questionable. 16 Hence, this policy will be rated considering the overall progress in the design and implementation of the M&E system (operational and technical guidelines for evaluations and key monitoring initiatives, design and implementation of monitoring tools, number of evaluations, and regulations for the use of the information generated by the M&E system). 15 List of completed evaluations: evaluation of providers (QW), evaluation of Comite de Compras (QW), evaluation of role of mother leader (Juntos), evaluation of the use of cash transfers, and performance assessment of the round table for poverty reduction (Mesa de Concertacion de Lucha contra la Pobreza). 16 It is worth noting that this indicator would have been revised if DPL2 had taken place. 20

30 59. The MIDIS has promoted evidence-based decision making. In 2012, the MIDIS revised the design of its programs, incorporating lessons learned from process evaluations, previous impact evaluations for some of the programs, and best practices from similar interventions. One of the most important evidence-based decisions was the closure of the PRONAA already discussed in policy area 2.3. The MIDIS also has improvement plans in place, which are tools used by social programs to implement the recommendations arising from evaluations. Finally, the Quipu Commission was set up in 2012 to promote evidencebased policies. The commission comprising the MIDIS, the MEF, national and international academics, and private sector representatives proposed seven innovations related to social inclusion, youth employment, school feeding, and chronic malnutrition among others. 60. Through the M&E NLTA, the Bank supported the review and guidance in the development of the general guidelines governing the M&E of MIDIS policies, programs, and projects. 61. This policy is rated as Moderately Satisfactory as the M&E system is in place but the MIDIS has narrowed the scope on those activities under its direct oversight. This was largely due to the uncertainties regarding the National M&E system under development through the MEF, as well as the need to define the functionality of the M&E activities of the MIDIS in the short term. By the end of 2014, the MIDIS had not approved the M&E operational guidelines establishing the process for evidence-based performance agreements of its social programs (tentative prior action for DPL2). Policy Area Development of Systems and Strategies to Enhance the Coordination of Social Inclusion Policies and Programs Objective: Develop an MIDIS-led, coordinated strategy to enhance the effectiveness of interventions to reduce chronic malnutrition in selected priority regions, as the first pillar of the National Strategy Growth with Inclusion. Rating: Satisfactory 62. The strategy Incluir para Crecer seeks to enhance inter-sectoral and intergovernmental coordination to achieve the expected goals on each axis. To reduce chronic malnutrition, the first DPL supported the adoption of the strategy for axis 1 (nutrition) and axis 2 (ECD). In 2012, as part of DPL1 prior actions, the MIDIS approved the guidelines (Lineamientos) to prioritize geographical settings and effective interventions to accelerate reductions in chronic malnutrition as evidenced by Ministerial Resolution MIDIS. During the same year, all the social sectors Inter-ministerial Commission for Social Affairs (Comisión Interministerial de Asuntos Sociales) and the regional governments signed an Agreement to Fight Chronic Malnutrition. In that agreement, they defined coverage targets for effective interventions at sectoral and regional levels to achieve the national target for The MIDIS piloted the implementation of effective interventions to reduce malnutrition. As part of the tentative triggers for DPL2, the MIDIS implemented a pilot during 2013 in two regions (San Martin and La Libertad) where all relevant agencies worked together (plan and budget) to implement a package of interventions that have been 21

31 proved to be effective. The TAL and the Juntos for Nutrition SWAP provided additional support to reduce malnutrition. The TAL supported the development of a monitoring dashboard for infant malnutrition indicators and the systematization of pilot experiences in the local coordination of social policy on chronic malnutrition. The SWAP incentivized the registration of new children in the household, increasing the demand for nutrition services. 64. The MIDIS developed and implemented a new instrument for intergovernmental and inter-sectoral coordination that is more effective to reduce chronic malnutrition. While the pilot on joint piloting and budgeting was successful to reduce malnutrition in the pilot areas, the government needed to accelerate the reduction of chronic malnutrition at the national level to reach the target of 10 percent by The GoP created the Multisectoral Commission comprising all the ministries in the social sector and the MEF and designed a new instrument that incentivized regions to reduce chronic malnutrition called Performance Incentive Fund (Fondo de Estímulo al Desempeño, FED). The FED is a system of results-based agreements between the central government and regional authorities that allocates resources in regional governments budgets based on the level of compliance with their commitments. The FED works on the provision of four packages of services to pregnant women or children up to five years of age. By the end of 2014, 16 regions have signed results-based agreements. Nine departments completed the process of compliance verification reports (phase 1). Seven departments have delivered the first verification reports (phase 2) and nine departments are initiating the implementation process after signing the corresponding Performance Agreement (phase 3). The FED covers 1,060 districts, representing 58 percent of the total districts. The FED reaches 4,214 health facilities and 35,947 schools. 65. This policy is rated as Satisfactory. While the initial expectation was to expand the pilots to at least three regions, the GoP successfully designed and implemented an improved instrument for multisector and inter-government coordination to reduce malnutrition. Hence, the policy is rated Satisfactory taking into account the spirit of this objective and the successful implementation in the nine regions of phase 1 (covering 753 districts, 1,928 health facilities, and 7,504 schools). 66. Overall outcome rating (Policy Area 3). The overall rating is Moderately Satisfactory because there were moderate shortcomings in the implementation and selection of indicators of Policy Area 3.1, as explained above. 3.4 Justification of Overall Outcome Rating 67. Considering the above discussion, as the three policy areas are rated as Moderately Satisfactory, the overall rating is Moderately Satisfactory. 3.5 Overarching Themes, Other Outcomes, and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 68. The reforms supported by this DPL aimed to reduce poverty and increase inclusiveness. The strategy Incluir para Crecer works around a package of short-, medium-, and long-term interventions. In the short term, it provides relief to those in 22

32 extreme poverty. In the medium term, it promotes economic opportunities and investments in basic infrastructure. In the long term, it creates opportunities for the next generation, with emphasis on reducing severe malnutrition in children, promoting early infant development, and comprehensive child and adolescent development. 69. The expansion of the Pension 65 and Juntos programs and the improvement in targeting mechanism have contributed to the reduction of poverty. Previous rigorous impact evaluations conducted for the Juntos program (Perova and Vakis 2009) have found that the program reduced the poverty gap and poverty severity by 5 percent and 6 percent, respectively. The impact evaluations for the programs are ongoing but the results are expected in the next year. Between 2012 and 2014, extreme poverty fell from 4.7 to 4.3 percent and incidence of extreme poverty of the elderly dropped from 5.9 to 3.9 percent. 70. Ethnicity and gender. The PSIA that accompanied the preparation of the DPL and TAL operations helped to identify measures to enhance positive impacts on the indigenous, women, the elderly, and Afro-descendants through culturally and gender-sensitive design in the MIDIS programs. The PSIA for the second DPL operation provided an analysis of the positive outcomes on poverty and inequality of the policy actions outlined in the DPL expanding the analyses by region, gender, and indigenous origin when possible. (b) Institutional Change/Strengthening 71. The DPL program played a key role in supporting the creation and consolidation of the MIDIS. It supported the establishment of the MIDIS legal and organizational rules and enhanced the inclusivity and effectiveness of key MIDIS social programs, expanding coverage to the most vulnerable population and revising targeting mechanisms. It also supported the development of an M&E system for results-based policy formulation and management in the social inclusion sector. The DPL also supported the development and implementation of the National Social Inclusion Strategy enhancing the MIDIS capacity to articulate with all sectors and the three levels of government. 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops Not applicable 4. Assessment of Risk to Development Outcome Rating: Moderate 72. The development outcomes are still subject to four risks, which are assessed below and are the basis for the Moderate rating: (a) Macroeconomic risk. As already stated, there is a risk at the macroeconomic level (financial crises, sudden stops in capital flows, quick reversal of exchange rates, and so on). The domestic policies have already adjusted to the change in the external environment diminishing the policy space. If the external or internal conditions deteriorate significantly, the policy space for countercyclical policy can be quickly eroded. This is a risk that has increased since the inception of the operation. Still, the GoP remains committed, maintaining stability and 23

33 reducing macroeconomic uncertainties emerging from both policy design and fiscal space. In summary, the macroeconomic risks have increased moderately since the inception of the program. (b) (c) (d) Implementation and coordination risks. Given the observed developments since the inception of the program, the risk related to implementation and coordination issues has increased. In effect, there have been two changes in the head of the MIDIS, and changes in staff-caused delays on activities, but maintained the key priorities of the national strategy Incluir para Crecer. Another set of risks emerges from the necessary logistics to implement social programs (as discussed above, distribution of personal identification documents, transport and logistics, and so on). Political and policy risks. In addition to these problems, the political situation in the face of the upcoming elections is another source of uncertainty. The national strategy Incluir para Crecer is expected to guide the social inclusion policy in the next few years. While a new administration might modify the strategy Incluir para Crecer, the principles like performance-based financing (presupuesto por resultados) are likely to remain. Stakeholder opposition. The risk of internal conflict and opposition is now moderate. Initially, there has been opposition to some implementation arrangements of the QW, which has been resolved. Staff working in social programs before the migration to the MIDIS may also resist changes in the structure and operational rules. Challenges in coordination between the regional liaison coordinator and regional program coordinators may also affect MIDIS capacity to articulate at the local level. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Satisfactory 73. The Bank performance in assisting the borrower to identify, prepare, and appraise the operation is rated Moderately Satisfactory. The design of the DPL program benefited from several years of Bank support on social inclusion policies and recommendations in published analytical reports. Many of the team members had been working with the GoP for a long time, allowing them to provide in-depth support. 74. The Bank used multiple instruments to support the creation and consolidation of the MIDIS promptly and effectively. As described in section 2.2, the Bank made an important effort to support the creation and consolidation of the MIDIS using a wide range of instruments (DPL, TAL, NLTAs, and SWAP) to accommodate government needs. Annex 10 summarizes key instruments used to support the MIDIS creation and consolidation. Multiple Bank teams approached the MIDIS together during missions and events working as a single support team. 24

34 75. The Bank s support was key to reorganize the programs through a process of evaluation and redesign. During the preparation of the DPL, the Bank supported the evaluation and posterior closure of the PRONAA feeding program, which was highly sensitive but necessary considering multiple deficiencies and lack of transparency. The Bank then supported the creation of a new QW with an emphasis on transparency and accountability. 76. While the Bank provided support to the creation of the MIDIS, the objectives of the DPL series were too optimistic for the DPL time frame. As discussed in section 1.6, this DPL involved the creation and consolidation of a new ministry (and a new sector) with all the uncertainty typically associated to this kind of processes. The design of the operation introduced a formal rigidity in the selection of objectives and tentative prior actions that contributed to the delay and posterior cancellation of DPL Important shortcomings in the DPL are the M&E arrangements. As discussed in section 2.3, there are shortcomings in the definition of indicators, lack of baselines for several indicators, and no specification of the source of data to be used. An effort to identify sources of data for each indicator is observed from the Aide Memoire July 2012 but it was not reflected in the final document. (b) Quality of Supervision Rating: Moderately Unsatisfactory 78. As indicated in sections 2.2 and 4, the team identified a series of risks. Some of them were clearly outside the area of influence of the Bank, such as the macroprudential policies undertaken to minimize macroeconomic risks, and internal and external imbalances. Among the identified risks, those falling within the category of implementation and coordination risks were, up to a point, within the sphere of potentially actionable items for the team. In this area, the team undertook just-in-time actions to minimize the negative impact of the introduction of the reform (creation of the MIDIS, redistribution of responsibilities, emerging coordination problems, and so on). In particular, the team provided support to design a communication strategy that attempted to ameliorate the internal resistance to the institutional rearrangements. However, there are actions that were foreseeable at the beginning of the program, with the information available at that time, that were not pushed forward. In particular, as discussed previously in this document, there is a problem with the quality of the indicators in the sense that they are not appropriately defined, a problem that trickles down to measurement issues. This is an area where proactive corrective measures should have been taken. As an example of this point, it is worth noting that the first ISR does not include values for any indicator, while the second ISR indicates no data available for four out of nine indicators and lack a discussion on why the PDOs are progressing as expected when there is no data available to measure the progress of four indicators. Moreover, the Aide Memoire did not reflect the discussion on the measurement issues of key outcome indicators. Overall, the rating for the quality of supervision is Moderately Unsatisfactory. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Unsatisfactory 25

35 79. As noted in the previous points, the rating for the Bank performance with regard to ensuring quality at entry is Moderately Satisfactory. On the other hand, the rating with regard to the quality of supervision is Moderately Unsatisfactory. The ICR guideline states When the rating for one dimension is in the satisfactory range while the rating for the other is in the unsatisfactory range, the rating for overall Bank Performance normally depends on the outcome rating. Thus, overall Bank performance is rated Moderately Satisfactory if the outcome is rated in the satisfactory range, or Moderately Unsatisfactory if outcome is rated in the unsatisfactory range, except when Bank performance did not significantly affect the particular outcome. Given the multiple instruments in place and the nature of the supervision arrangements in a DPL, it is not possible to conclude that the Bank performance affected the particular outcome. Therefore, the Bank performance is rated as Moderately Unsatisfactory. 5.2 Borrower Performance (a) Government Performance (MEF) Rating: Satisfactory 80. The Ministry of Finance played a key leadership role in the implementation of the DPL. The ministry effectively coordinated actions to support a result-based financing approach with all the social ministries, contributing to the achievement of the strategic goals defined in the strategy Incluir para Crecer. The MEF performance is therefore rated Satisfactory. (b) Implementing Agency or Agencies Performance (MIDIS) 17 Rating: Satisfactory 81. The government s strong ownership of the development of the social inclusion agenda and reforms supported under the DPL were critical factors determining the success of the operation. After three years of the creation of the Development and Social Inclusion sector, the GoP has changed the social protection debate in Peru: it has developed a cross-ministerial poverty reduction and inclusion strategy, and set up a variety of targeted programs to identify and reach the most vulnerable. The consolidation of the MIDIS has marked the start of the reform of an evidence-based development and social inclusion policy that emphasizes intervention targeting and inter-sectoral and inter-governmental coordination. Government ownership has led directly to the achievement of the PDOs. 82. Changes in GoP priorities affected the preparation of the second DPL. While the key priorities of the strategy remained unchanged, the GoP changed some of its implementation priorities and concentrated most of its dialogue with the Bank on the rest of the financing instruments instead of the DPL. As explained in section 1.6, those changes affected the prompt preparation of the second operation. 17 Despite the MEF being the implementing agency in the DPLs, for the purpose of this section the implementing agency is defined as the MIDIS. 26

36 83. Despite the aspects that affected the second operation, government performance is rated Satisfactory due to the important achievements in the Development and Social Inclusion sector. (c) Justification of Rating for Overall Borrower Performance Rating: Satisfactory 84. Overall, the borrowers performance is deemed Satisfactory for the reasons stated above. 6. Lessons Learned 85. The programmatic development policy instrument proved to have weaknesses in context of this operation. While the programmatic DPL supports gradual reforms, the uncertainty attached to the establishment of a new ministry requires an operational design flexible enough to adjust to changes in institutional priorities. The nature of the programmatic DPL did not provide enough flexibility to include new priorities. 86. The design of the M&E system needs to ensure that the set of indicators are properly defined, ensuring clarity of measuring methods, data collection, and availability of baseline. These elements were central for the success of the M&E arrangements in this operation. More attention should be paid to ensure the use and selection of indicators that are specific, measurable, achievable, attributable, relevant, and time-bound (S.M.A.R.T). 87. The selection of indicators needs to take into account that they should be achievable within a short DPL framework. Including the requirement of integration at the subnational level within two years (Policy Area 1) affected the rating of the operation on quality at entry and the level of achievement of its key indicator. 88. The selection of indicators related to pilot activities proved to be risky. The indicator on training to promoters for family support was based on an activity that the government needed to scale up after piloting. As the government cancelled the expansion, the expected outcome was not achieved. 89. Maintaining a fluid communication with the counterpart proved to be crucial, especially when executing complex reforms. It is of utmost importance to keep continuous communication with the counterparts and to constantly maintain a proactive stance to ensure adequate communication and implementation of the agreed actions. 90. Government commitment and the development of a sector strategy are key elements for the success and sustainability of social inclusion policies. The change in the head of the MIDIS did not affect the direction of the reforms, evidence of a broader support for the reforms supported by the DPL. 91. The combination of instruments (DPL, TAL, NLTA, and SWAP) proved to be effective to provide adequate and timely response to the MIDIS in the area of social inclusion. The ability to offer a mix of tailored instruments in combination with the cross- 27

37 sectoral composition of the teams were essential elements to successfully support the MIDIS. The drawback is that this mix of instruments increases the difficulty of the operation, requiring good communication between teams and coordination of budgets. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/Implementing agencies 92. A summary of the comments received from MEF and MIDIS is presented below. All comments have been incorporated into the final version of the ICR. (a) (b) (c) In reference to the stipulation in paragraphs 34 and 37, which analyzes Policy Area 2.2 linked to the Juntos Program, it is necessary to specify that the indicator related to the training of family support was never dropped nor revised despite the pilot program was not expanded. The family support component was revised in order to improve efficiency in the development of the activity, which is in line with the priorities of the Social Sector. The rating for Policy Area 2.3 (QW) should be changed. The report (paragraphs 43 and 44), points out that the goals established for program coverage and for implementation of transparency mechanisms monitored by civil society have been achieved. In this respect, the rating of "moderately satisfactory" would not be the most appropriate. Include the acronyms for ISR and PAD on the list of Abbreviations and Acronyms, page i. (d) Include in Annex 4, page 33, the following subtitle: Bank's translation of the Borrower s ICR. (e) According to the Borrower s Implementation Completion Report No EF/52.10 of submitted to the Bank, please add at the end of paragraph 4, page 33, a footnote that says "See the annex Policy Matrix of Programmatic Series." Additionally, please include a footnote at the end of paragraph 23, page 36 saying "617,815 individuals satisfy the eligibility criteria (target population)." 28

38 ANNEX 1 BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION PROCESSES (a) Task Team Members Names Title Unit Lending Alessandra Marini Co-TTL (Senior Economist) GSPDR Ana Karina Rozas Operations Analyst LCC6C Andre Medici Senior Economist (Health) GHNDR Carine Clert Co-TTL (Lead Social Protection Specialist) GSPDR Carlos Silva-Jauregui Lead Economist GPVDR Carmen Veronica Silva Senior Social Protection Specialist GSPDR Ekaterina Vostroknutova Lead Economist GMFDR Facundo Cuevas Senior Economist GPVDR Francesca Recanatini Senior Public Sector Specialist GGODR Ignacio Raul Apella Research Analyst GSP04 Indu John-Abraham Representative Ecuador LCCEC Jimena Garrote Senior Counsel LEGLE Lerick S. Kebeck Program Assistant GSPDR Louise J. Cord Country Director AFCF1 Lourdes Consuelo Linares Senior Financial Management Specialist GGODR Maria Eugenia Genoni Economist GPVDR Maria Gracheva Senior Operations Officer GHNDR Marta Favara Consultant GPV02 Nelson Gutierrez Senior Social Protection Specialist GSPDR Patricia de la Fuente Hoyes Senior Financial Management Specialist GGODR Patricia O. Orna Language Program Assistant GSPDR Rafael P. Rofman Program Leader LCC7C Renos Vakis Lead Economist GPVDR Rory Narvaez Consultant GSP04 Sara Burga Program Assistant LCC6C Sarah Keener Senior Social Development Specialist GSURR William Reuben Consultant GSU04 Supervision/ICR Alessandra Marini Senior Economist GSPDR Ana Karina Rozas Operations Analyst LCC6C Carmen Veronica Silva Senior Social Protection Specialist GSPDR Hugo Martin Brousset E T Consultant GSPDR Iamele P. Rigolini Program Leader LCC6C Ignacio Apella Consultant GSP04 Jose Luis Gacigalupo Consultant Julieta Trias Economist/ICR Primary Author GSPDR Lerick Kebeck Program Assistant GSPDR 29

39 Maria Eugenia Genoni Economist GPVDR Rafael Rofman Program Leader LCC7C Sarah Keener Senior Social Development Specialist GSURR (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage US$ (including travel and No. of Staff Weeks consultant costs) Lending FY , FY , Total Lending , Supervision/ICR FY , FY , FY , FY , Total Supervision ,

40 ANNEX 2. BENEFICIARY SURVEY RESULTS Not applicable 31

41 ANNEX 3. STAKEHOLDER WORKSHOP REPORT AND RESULTS Not applicable 32

42 ANNEX 4. SUMMARY OF BORROWER'S ICR AND/OR COMMENTS ON DRAFT ICR 18 I. General 1. In 2012, the Peruvian government requested support from the Bank to promote reforms to its policies for fighting poverty to achieve the social inclusion of marginalized sectors, through a programmatic loan named the Results Management for Social Inclusion Program and a technical support loan known as the Support for the Results Management for Social Inclusion Program amounting to US$14.3 million (including local contribution). 2. The coordination and disbursement of the program loan was to be organized in an annual manner, in two periods between 2012 and The first of these operations, amounting to US$45 million, was approved on April 3, 2013, through Supreme Decree No EF published in El Peruano on April 4, For the second operation, amounting to US$30 million, the negotiation had been scheduled for December 2014 with the agreement to be reached in January However, this program was never concluded because the policy matrix had to be restructured to provide greater continuity with regard to the first operation, requiring extra preparation time. In addition, given the time that had passed between the two operations, it was no longer possible to delay approval of the second operation, and for this reason it fell through. II. Program Description 4. The reforms associated with the program, which aim to promote social inclusion and improve the performance and results-based character of the programs and policies of the MIDIS were organized into three policy areas Policy Area 1: Strengthening the institutional framework required for the MIDIS to carry forward the management and promotion of the social agenda. This policy area included actions related to the approval of the institutional and legal framework required for the MIDIS to carry the management and promotion of the social inclusion agenda forward. 6. Policy Area 2: Improved inclusion and effectiveness of the MIDIS principal social programs. In this policy area, actions that were undertaken were subdivided into three areas: 7. Policy Area 2.1: National Program for Direct Support of the Poor - Juntos. This area sought to strengthen coverage and support for users developed by local promoters. The actions undertaken through the program concern the approval of the expansion of coverage of Juntos to districts where the SISFOH will have carried out socioeconomic evaluation and where the level of poverty stands between 40 and 50 percent. In addition, 18 This section has been translated by the World Bank. 19 See the annex Policy Matrix of Programmatic Series. 33

43 the beginning of the process was considered to improve the quantity and quality of the support provided by Juntos to families by hiring 1,000 new local promoters whose terms of reference were better suited to requirements. 8. Policy Area 2.2: Non-contributory Social Pension - Pensión 65. In this area, efforts were focused on strengthening the coverage of the Pensión 65 program and formulating a more general and long-term strategic focus. The activity considered by the program was the approval of the coverage expansion at the national level. 9. Policy Area 2.3: School Feeding Program - QW. This area of work covers the establishment of a new school meals program for public education facilities. Hence, the program incorporates as a prior action, the creation of the QW program to guarantee the provision of food to children enrolled in public schools at preschool and primary school levels. 10. Policy Area 3: Reform to the social policy approaches and systems. In this policy area, actions were undertaken that were subdivided into three areas: 11. Policy Area 3.1: Review of the SISFOH for social policies and programs. In this section, the programmatic series addressed securing the precision of the targeting system of the social programs and services provided by the MIDIS through the preparation of rules and a division of responsibilities between the SISFOH and its users, and the updating of databases of the PGH, together with quality standards. The actions taken by the program in relation to these problems were related to the development of the institutional framework for the SISFOH within the MIDIS, and the updating of the PGH by the SISFOH. 12. Policy Area 3.2: Developing the fundamentals of the M&E system for social inclusion policies and programs. This section addressed the development of an M&E system for the social inclusion policy and programs to promote evidence-based decision making. The actions undertaken by the program in this section were related to the approval of the guidelines for the development of an M&E system for the formulation of a resultsbased policy in the social inclusion sector. 13. Policy Area 3.3: Development of systems and strategies to strengthen coordination of social inclusion policies and program. This section seeks to develop a coordinated strategy for strengthening the effectiveness of interventions to reduce chronic malnutrition in selected prioritized regions as part of the first pillar of the national strategy Incluir para Crecer. In this way, the program incorporated the approval of the guidelines for inter-sectoral and inter-governmental coordination by the MIDIS to reduce chronic malnutrition, identifying the priority districts where the interventions will be implemented. III. Evaluation of Objective, Design, Operational Experience, and Execution 14. The program proposed reforms in the area of social inclusion, with the objective of improving the capacity for inclusion as well as the performance and general resultsoriented character of the programs, and policies of the MIDIS. According to observed 34

44 experience, the objective of the program was adequately framed within the policy priorities of the government. 15. At the beginning of the current administration, the GoP determined that a fundamental aspect to ensure that the achieved economic growth has a positive effect on reducing poverty and economic gaps is to develop public policies required to improve social inclusion for the population living in poverty. Under this definition, poverty is understood as a situation in which people can exercise their rights, having access to quality public services, and being able to take advantage of the opportunities arising from economic growth. 16. In this regard, in recent years the GoP has made significant advances in social inclusion. Firstly, it created the MIDIS in 2011, which represents a landmark in the social policy sector. Secondly, it set out the Include to Grow (Incluir para Crecer) national strategy for social inclusion, which defined five strategic pillars as a starting point for the implementation of its social inclusion policy. This policy is based on a life cycle approach including infant nutrition, ECD, skills for life, economic inclusion, and care for the elderly. 17. In this way, the MIDIS takes on the responsibility of designing, coordinating, and directing the set of government interventions aimed at reducing poverty, inequality, vulnerability, and social risk. Being the sector responsible for executing targeting and timebased social programs, it must ensure a coordinated and effective intervention in the provision of goods and services to the population who most require direct support from the state. In addition, as the governing sector for the national social policy, it must ensure that the different sectors and levels of government implementing social programs and policies, act in a coordinated manner. 18. From the point of view of the management, the MIDIS has prioritized results in areas where severe gaps between populations and regions remain. These results include the reduction of chronic infant malnutrition, improvement in school attendance, joint access to basic services (water, sewerage, electricity, and telephone), generation of independent income, and sustainable reduction of extreme poverty and poverty gaps. 19. In the design phase, target areas were adequately identified. Although this definition worked for the first operation of the programmatic series, it was not possible to consolidate these lines of action in the second program. However, the solutions achieved because of the first loan remain valid and formed a basis for the sector to continue to make progress with the outstanding agenda. 20. Given that the intervention addressed a single institutional sector, it was simplified to achieve the coordination and management of the activities. Meanwhile, a limited number of conditionalities were observed, which could have simplified the fulfillment stage of the first phase. 21. In the design, a number of institutional risks were identified, such as a change in management, lack of continuity of staff, limited institutional and administrative capacity given the short time the institution was operating, and coordination problems between the 35

45 vice-ministries, among others. Despite the fact that changes in management and personnel in the ministry did occur, the policies and general activities of the MIDIS were not affected. However, the dependence of the programmatic series on the decisions of a single sector made it more vulnerable to changes in policy priorities, which impacted the viability of the second program in the series. IV. Evaluation of the Operation in Relation to the Agreed Objectives 22. The program was structured based on three development objectives. First, it aimed to support the institutionalization of the guiding role of the MIDIS in the management and promotion of the social inclusion agenda. At the beginning of the program, there was no governing sector exercising this guiding role. With the creation of the MIDIS in 2011, and its entry into operation in 2012, responsibility for the design and guidance of the social inclusion policy was assigned to the MIDIS, which also took charge of the operation of the related social programs. 23. Second, the operation sought to establish the bases for improving the inclusion and effectiveness capacity of the key MIDIS social programs. The program focused on improving the effectiveness of three social programs: Juntos, Pensión 65, and the QW. With regard to the Juntos program, it was expected to strengthen the inclusion and effectiveness of the program by expanding its coverage and improving the quality of support for families with the help of local promoters. As a result, in 2014, an increase of 185,079 new households using the program was observed in comparison to the figure for With regard to the Pensión 65 program, an increase in access to the program by the elderly living in extreme poverty was expected. In 2012, only 40.1 percent of people meeting the eligibility criteria took advantage of the program benefits. In 2014, an increase in coverage was observed, reaching 72.5 percent of the total target population nationwide. 25. With regard to the QW program, when this program was created in 2012, it expected to address a significant percentage of the school population who attend public schools at preschool and primary levels, developing at the same time monitoring mechanisms for civil society. In this sense, by the end of 2014, after two years in operation, the QW served 84 percent of children attending public schools at preschool and primary levels ,815 individuals satisfy the eligibility criteria (target population). 36

46 26. Finally, another objective of the program was the preparation of appropriate systems for identification, monitoring, evaluation, and general coordination. As such, a review of the SISFOH was expected to secure the precision of the targeting system of the social programs and services provided by the MIDIS through the preparation of clear rules and a division of responsibilities between the SISFOH and its user programs. The updating of databases of the PGH was also expected, along with the revision of quality standards. Currently, the SISFOH maintains a threefold system for updating the PGH in which the Local Registry Units participate. The system updates this information by demand, selecting some areas and targeting them geographically. 27. In addition, the program sought to develop an M&E system for the social inclusion policy and programs to promote evidence-based decision making. In line with this, the MIDIS created the Office for Monitoring of Social Policies (DGSE), which carries out a series of evaluations and monitors the social programs and policies in the sector. Thus, the DGSE is responsible for promoting systematic evaluation and monitoring of the performance of the social policy and programs, communicating the evidence to decision makers and making the results of the evaluations, evidence, and recommendations for action available to policymakers and to citizens in general. 28. To monitor the performance of social programs, the georeferenced information platform, INFOMIDIS, was used together with the dashboard and the checklist, which are instruments that facilitate the monitoring of targets established by the Include to Grow strategy and the social programs. The verification of fulfillment of protocols and standards applicable to critical processes in the various programs was also included. In addition, the DGSE promotes the impact and performance evaluations, systematic reviews, and metaanalyses, which are programmed as part of the Annual Evaluation Plan. Continuous improvement plans are also in place, which are tools used by social programs to implement the recommendations arising from evaluations. Finally, an effort to implement evidencebased policies was promoted, and to this end the Quipu Commission was set up in 2012, comprising the MIDIS, MEF, national and international academics, a technical team, and representatives of the private sector. In addition, in 2013, the Regional Quipu Commission was set up for the valley formed by the rivers Apurímac, Ene and Mantaro River Valleys. 29. Additionally, the program expected to achieve the development of a coordinated strategy to strengthen the effectiveness of interventions aimed at reducing chronic malnutrition in specific priority regions as part of the first pillar of the Include to Grow national strategy. As part of the strategy, the current target is to reduce infant malnutrition for children below five years of age from 18.1 percent in 2012 to 10 percent in Interventions are in place in 1,455 districts in a coordinated manner in the health, sanitation, education, agriculture, and development and social inclusion sectors, as well as regional and local governments. 30. In the light of the facts mentioned, the efforts made by the sector have met the objectives of the program. In addition, it is expected that the MIDIS will maintain the continuity of these activities over time, given the established sectoral targets, as well as the M&E mechanisms in place. 37

47 V. Borrower Performance 31. The participation of the various agencies in the sector is considered to have fostered the achievement of the objectives set out in the reform, promoting discussion and alternatives for solutions. Both in the design and execution phases, these agencies have provided technical support to the program. In general, the participants have displayed interest in the achievement of the conditionalities, as well as in the results. 32. During the preparation of the second loan, a change in focus of the policy areas of the program was observed, which led to the discontinuation of the programmatic series. However, the actions carried out in the context of the first loan remain relevant, and have achieved the positive results observed. Lessons Learned 33. Political commitment is a key element to be able to develop a policy loan and to maintain its continuity. In addition, stability at the management level and in the technical teams helps to avoid changes in institutional priorities and delays in execution. 34. Defining the principal strategic lines of action of the operation, based on government priorities and sectoral assessments, helps to maintain commitments in spite of regulatory and policy changes, and to achieve relevant improvements for the social programs involved. 35. It is noted that relying on a single institutional actor makes it harder to take better advantage of the programmatic series mechanism, especially in relation to the possibility of solving problems that encompass various sectors. In such cases, provision of support by means of an instrument other than a policy loan may be evaluated. 36. To achieve a greater impact for the program and optimize the use of resources provided by technical assistance, better alignment of the latter with the policy areas of the program is required, as well as with the programing of activities, to avoid potential discrepancies in the achievement of results. In this way, the activities carried out using technical assistance could help to facilitate the continuity of the programmatic series. 37. Despite the progress shown by the sector in line with the objectives of the program, it is considered that a second loan could have represented a significant opportunity to reinforce the results of the programmatic series. VI. Performance Evaluation of the Bank 38. The performance of the Bank for the first loan is considered satisfactory given that it facilitated the participation of technical experts related to social issues, and undertook the coordination necessary to incorporate the relevant aspects of the reform into the program. In addition, the Technical Assistance Program was available as an additional tool to support the sector, aimed at the implementation and consolidation of the reforms, in particular for the second loan in the series. 38

48 39. In addition, during the preparation of the second loan, the Bank, in the light of the demands made by the sector, agreed to alter the strategic lines of action of the program, and for this reason the programmatic series could not be concluded in a satisfactory manner. Lessons Learned 40. In general, it is observed that the technical teams in the social inclusion sector give a positive assessment of the technical assistance provided by the Bank, since it facilitates the definition and execution of activities in a more streamlined manner, and represents support where serious limitations exist because of administrative issues. 41. The involvement of various actors from the sector, encouraged by the Bank team through the discussion and agreement among multiple related stakeholders, meant that the principal initiatives set out in the program received significant institutional support. 42. In the light of the experience of preparing the second loan, the role of the Bank is considered to be primordial to be able to properly formulate an operation of this character. As a result, it is necessary to demonstrate leadership during the preparation stage of the operation and communicate in an appropriate fashion to the target sector the internal procedures of the Bank in approving this type of loan. 43. In the light of this experience, depending on a single sector to provide continuity in the development of the strategic lines of action of the programmatic series, makes the program more vulnerable to changes in policy priorities and in management. VII. Conclusions 44. According to the analysis, the impact of the first loan is considered to have been positive throughout its execution. There is evidence that the definition of the main strategic areas was made on the basis of government priorities, as well as sectoral assessments, which contributed to the reforms generally remaining in place, notwithstanding subsequent institutional changes. 45. The initial design of the series included the participation of a single sector, which facilitated the preparation and implementation of the first loan. However, for the second loan, a change in focus of the policy areas was observed, which led to failure to bring the preparation to a conclusion. 46. The coordinated work between the Bank and the technical teams involved contributed to the promotion of the reforms included in the policy matrix, which facilitated their uptake and their continued use, despite the programmatic series being discontinued. Lima, September 21,

49 Annex 5. Comments of Cofinanciers and Other Partners/Stakeholders Not applicable 40

50 ANNEX 6. LIST OF SUPPORTING DOCUMENTS Escobal, Javier; Saavedra, Jaime; Vakis, Renos (2012) Está el piso parejo para los niños en el Perú? Medición y comprensión de la evolución de las oportunidades, Washington DC: World Bank. IMF (International Monetary Fund) Article IV Peru, Country Report No. 15/133. MIDIS (Ministry of Development and Social Inclusion). 2012a. Annual Report. Peru b. Guidelines for Inter-sectoral and Inter-governmental Coordination to Reduce Chronic Malnutrition. Peru c. Lineamientos básicos de la política de desarrollo e inclusión social. Peru d. Una politica para el desarrollo y la inclusion social. Peru a. Annual Report, Pension 65. Peru b. National Strategy for Development and Social Inclusion. Peru Report of Annual Evaluation. Peru Institutional Strategic Plan. Peru. Perova, Elizaveta, and Renos Vakis Evaluating the Juntos Program in Peru: Evidence from non-experimental estimates. Washington, DC: World Bank a. 5 years in Juntos: New Evidence on the Program's Short and Long-term Impacts. Washington, DC: World Bank b. Improving Gender and Development Outcomes through Agency: Policy Lessons from Three Peruvian Experiences. Washington, DC: World Bank. Rofman, Rafael, Ignacio Apella, and Evelyn Vezza Beyond Contributory Pensions: Fourteen Experiences with Coverage Expansion in Latin America. Directions in development, human development. Washington, DC: World Bank. Trivelli, C, and S. Vargas Entre Discurso y la Acción. Desafíos, decisiones y dilemas en el marco de la creación del Ministerio de Desarrollo Social, Instituto de Estudios Peruanos, Documento de Trabajo No 208. Peru. World Bank Una Mirada a la Evolución Reciente de la Pobreza en Peru: Avances y Desafios. Working Paper a. Social Inclusion TAL (Ln PE). Back-to-Office Report b. Social Inclusion DPL1 (Ln PE). Loan Agreement - First Social Inclusion DPL c. Social Inclusion DPL1 (Ln PE). Project Appraisal Document - First Social Inclusion DPL d. Social Inclusion TAL (Ln PE). Project Appraisal Document - Social Inclusion Technical Assistance Project Social Inclusion DPL1 (Ln PE). Implementation Status and Results Report. 41

51 Social Inclusion DPL1 (Ln PE). Statement of Mission Objective Reports, Back-to-Office Reports, Aide Memoires Social Inclusion DPL2 (P147216). Corporate Review (ROC/OC) - Second Social Inclusion DPL Social Inclusion TAL (Ln PE). Implementation Status and Results Report a. Peru Poverty NLTA (P151096). Completion Note b. Report of Peru. Strengthening MIDIS Capacity to Provide Integrated Services at the Subnational Level. Report ACS13699 (P152321). World Bank Partnership Strategy Report PE. Interviews conducted Government Carolina Trivelli Avila, Former Minister, MIDIS. Ariela Luna, Viceminister of Policy and Social Evaluation, MIDIS. Jorge Arrunátegui Gadea, Former Viceminister, Vice ministerio de Prestaciones Sociales, MIDIS. Silvana Vargas Winstanley, Former Director, Dirección General de Políticas Estratégicas, MIDIS. Janeth Bouby Cerna, Former Director, Dirección General de Descentralización y Coordinación de Prestaciones Sociales, MIDIS. Milagros Alvarado, Former Director, Juntos Program, MIDIS. Gisele Romero, Former Director, QW Program, MIDIS. Ursula Martinez, Former Director of Evaluation of Social Programs, MIDIS. Erica Schabauer, Former Specialist in International Cooperation, Office of Cooperation and International Affair, MIDIS. Marcos Felix, Sub Director, Debt and Public Treasury, MEF. World Bank Alessandra Marini, Senior Economist Nelson Gutierrez, Sr. Social Protection Specialist Veronica Silva Villalobos, Senior Social Protection Specialist Rafael Roffman, Program Leader Maria Eugenia Genoni, Economist Renos Vakis, Lead Economist Alma Kanani, Operations Adviser Karina Olivas, Country Officer Jose Bacigalupo, Former Consultant 42

52 ANNEX 7. DESCRIPTION OF THE MIDIS MANDATE 1. The MIDIS has the mandate to lead the government's social inclusion strategy, exercise stewardship, and coordinate social inclusion policies, and implement specific targeted social protection programs. It serves steering and implementation functions. On the steering front, the MIDIS aims to implement a SINADIS, and to promote closer coordination among the universal social sectors (health and education), productive opportunities, and subnational government actions in priority rural areas. Collaboration between national and subnational governments is led by the MIDIS General Office of Decentralization and Coordination of Social Programs, and facilitated by integrated systems and policies promoted broadly within the MIDIS (for example, integrated information platform including data at different levels of implementation, strengthening the SISFOH s local units of targeting, and so on). The M&E function of the MIDIS aims at increasing the effectiveness of implementation of programs and overall social inclusion strategy by generating a more informed design and implementation of programs based on the realities on the ground and promoting greater supervision of the programs with regard to their broader policy goals. 2. On the implementation front, it has also assumed the responsibility for coordinating five targeted social programs: (a) (b) (c) (d) PRONAA, and now the new program QW. Peruvian Social Fund (Fondo Nacional de Compensación y Desarrollo). The ECD program, Wawa Wasi, now Cuna Ma.s The CCT Program Juntos. (e) The non-contributory pension, Pension The first three programs were initially implemented under the MIMDES, and the last two programs were formerly overseen by the PCM. The creation of the MIDIS and the transfer of the five key social programs have set the foundations for the institutional framework that will allow the implementation of a new and more coordinated social protection strategy. 43

53 ANNEX 8. POLICY MATRIX FOR PERU S FIRST SOCIAL INCLUSION DPL Objective/Target at the end of 2014 Baseline Assessment as on December 2014 Comments I. CONSOLIDATION OF THE INSTITUTIONAL FRAMEWORK FOR THE STEWARDSHIP OF THE SOCIAL INCLUSION AGENDA UNDER THE MIDIS The MIDIS stewardship of the social inclusion agenda is institutionalized, as measured by the establishment of legal Lack of single entity exercising stewardship and oversight of the social inclusion agenda at central and subnational levels Legal and organizational rules have been established at the central level. Regional coordination is ongoing, Regional Liaison Teams have been created in all regions. Evidence: Legal and Organizational Rules at the Central Level Achieved at central level, partially achieved a subnational level and organizational rules Law No , dated October 10, 2011which created the MIDIS at the central level and Supreme Decree No MIDIS, dated December, 26, 2011 the operation of Resolution of MIDIS General Secretariat No I-MIDIS, integrated units at the dated December 31, 2011 sublevel in all regions Supreme Decree No MIDIS, dated September 4, 2012, which approved the MIDIS' rules of organization and operations Supreme Decree No MIDIS, which approved the MIDIS organigram Resolution of MIDIS No MIDIS which approved the Manual of Organizations and Functions Resolution of MIDIS No MIDIS, which approved Manual of Procedures Resolution of MIDIS No MIDIS, No MIDIS, No MIDIS, No MIDIS which approved job classification Integrated Units at the Subnational Level Resolution No MIDIS approved a temporary working group to articulate in the territory composed by a president and the liaison coordinators who are functionally reporting to the Vice- Ministry Office of Policy and Social Evaluation. Regional liaison coordinators have been appointed in all the 24 regions 44

54 In 2015, Resolution No MIDIS approved the liaison offices (physical offices), the staff serving the offices, and the funding. The Regional Liaison Team in each region includes the regional liaison coordinator responsible for the five MIDIS program coordination and the inter-sectoral and inter-governmental coordination, one responsible for the platform for users (Orienta MIDIS), one local coordinator for the FED, one local coordinator for the Central Targeting Unit, one local coordinator for Economic Inclusion Funds in Rural Areas (Fondo para la Inclusión Economica en Zonas Rurales, FONIE) and one administrative coordinator II. IMPROVING THE INCLUSIVENESS AND EFFECTIVENESS OF KEY MIDIS SOCIAL PROGRAMS II.1 JUNTOS: Enhanced Coverage and Support to Users by Local Promoters At least 150,000 new users enrolled in JUNTOS Baseline: 0 (as of end 2011) Households enrolled and receiving payments: 474,064 in 1,011 districts (December 2011) 284,357 new users enrolled and receiving payments (December 2014) Households enrolled and receiving payments: 758,421 (December 2014) Achieved At least 90% of local promoters trained in family support methodology Baseline: 0 Family support methodology was piloted. During the implementation, Juntos decided to redesign the program and cancelled the training plans on family support in the pilot areas. Only 57.9 % of the promoters received the training in those areas Not Achieved II.2. Pension 65: Enhanced Coverage and Broad-based Strategy for the Elderly Living in Extreme Poverty At least 65% of elderly men and women living in extreme poverty and complying with the program s eligibility Beneficiaries: 247,673 in December 2012 (equivalent to 40.1% of eligible elderly) 79.4% Achieved 45

55 criteria receive Pension 65 II.3. QW: Establishment of a New QW in Public Schools At least 70% of children attending public preschool and schools are served by the QW n.a. 82% Achieved At least 40% of districts where the QW operates include mechanisms for transparency and civil society oversight n.a. 43.5% Achieved III. REFORMING SOCIAL POLICY APPROACHES AND SYSTEMS III.1 Overhaul of the GoP s Targeting System (SISFOH) for Social Programs and Policies At least 90% of poor households as estimated by the INEI have their socioeconomic information (Ficha Socioeconomica Unica) updated by the SISFOH within a period not exceeding three years n.a. 91.6% Achieved III.2 Foundations for an M&E System for Social Inclusion Policy and Programs The MIDIS programs have started to implement at least 40% of the recommendations generated through the M&E system n.a. 61% Achieved III.3 Development of Systems and Strategies to Enhance Overall Coordination of Social Inclusion Policies and Programs Increased coverage of effective interventions, Detailed baselines by districts are provided in The MIDIS implemented a pilot in two regions (San Martin and La Libertad) in 2013 where all relevant agencies worked together (plan and Achieved 46

56 as defined in the chronic malnutrition guidelines, in at least three regions the guidelines. Baselines for the selected three regions were planned to be systematized in The baseline was not updated in the ISRs. budget) to implement the interventions. After this pilot, the GoP adopted an integrated approach to Nutrition and ECD and needed to accelerate the reduction in chronic malnutrition. A new instrument called the FED was created to incentivize regions to reduce malnutrition. The FED is a system of results-based agreements between the central government and regional authorities to reduce malnutrition. It has been fully implemented in nine regions that were part of phase 1 and is ongoing in the rest of the regions. Evidence: Supreme Decree No MIDIS. Regulated FED (Performance Incentives Fund) Resolution No MIDIS. Approved Manual of Operations of FED Law No (December 4, 2014). Budget FY2015. Allocated Budget to FED Law No (December 2, 2013). Budget FY2014. Creates FED FED - Compliance verification reports: 47

57 ANNEX 9. LEVEL OF FULFILLMENT TO DATE OF TRIGGERS FOR DPL2 Indicative Trigger for DPL2 I. CONSOLIDATION OF THE INSTITUTIONAL FRAMEWORK FOR THE STEWARDSHIP OF THE SOCIAL INCLUSION AGENDA UNDER the MIDIS The MIDIS evaluated and adopted integrated operating models in all regions. The MIDIS tested different models for coordination at the local level but integration at the local level was ongoing by the end of Status as of December 2014 Partially met II. IMPROVING THE INCLUSIVENESS AND EFFECTIVENESS OF KEY MIDIS SOCIAL PROGRAMS II.1 JUNTOS: Enhanced Coverage and Support to Users by Local Promoters Met The GoP adopted the necessary measures to ensure the continued expansion of the coverage of Juntos. The GoP has continued the expansion of Juntos as evidenced by the executive Direction Resolution MIDIS-PNADP-DE that created Juntos San Martin Territorial Unit; and Resolution MIDIS-SG, assigning funding to cover 770,000 households in Juntos during The MIDIS completed the training of Juntos local promoters to provide them the necessary tools for family support to households. The priorities on family support changed and the model was only implemented in piloting areas. Not met II.2 Pension 65: Enhanced Coverage and Broad-based Strategy for the Elderly Living in Extreme Poverty Met The MIDIS implemented a strategy to strengthen the provision of complementary services for the elderly living in extreme poverty (health). In 2012, the MIDIS and MINSA signed an agreement establishing that Pension 65 beneficiaries could be enrolled in the SIS, receiving the program s services. The MIDIS introduced improvements in the affiliation process and payment systems of Pension 65 based on the recommendation of specific studies and pilots. The MIDIS established a procedure to access, maintain, and exit Pension 65 as evidenced by Supreme Decree MIDIS. The MIDIS also piloted different payment modalities. Pension 65 worked with Juntos to expand the coverage of payments at a lower cost. Met II.3 Qa1i Warma: Establishment of a New QW in Public Schools Met The QW developed mechanisms for transparency and civil society oversight. The QW developed a procurement mechanism for transparency and civil society oversight as evidenced by the Multisectoral Report of December 9, 2013 and Procurement Process Oversight (Veeduria del Proceso de Compras) of January 3,

58 III. REFORMING SOCIAL POLICY APPROACHES AND SYSTEMS III.1 Overhaul of the GoP's Targeting System (SISFOH) for Social Programs and Policies Not met The GoP completed the approval of the legal and institutional framework to improve the management of the targeting system. This indicative trigger was not met by the end of The legal framework to regulate the operation of the SISFOH and the new methodology for households socioeconomic classification was approved in 2015 (Directive MIDIS, RM MIDIS and RM MIDIS). The GoP completed the PGH in 24 regions and the MIDIS (through the SISFOH) designed and implemented quality standards and protocols on the confidentiality and security of information. This indicative trigger is partially met, because only one of the two components of the triggers was met before the end of The MIDIS completed the PGH with the collection of socioeconomic information for 24 million Peruvians in the 24 regions of the country, as evidenced by the INEI Note INEI/DNCE, dated August 21, 2014 where the INEI informed the MIDIS that the data collection process had been completed and the information was delivered. In 2015, the MIDIS approved the guidelines to access information managed by the General Office of User Management (RM MIDIS). Partially met III.2 Foundations for an M&E System for Social Inclusion Policy and Programs (Evidencia) The MIDIS approved the M&E operational guidelines establishing the process for evidence-based Performance Agreements of its social programs. III.3 Development of Systems and Strategies to Enhance Overall Coordination of Social Inclusion Policies and Programs The MIDIS and all relevant agencies completed joint planning and budgeting in two pilot regions. The pilot was conducted in San Martin and La Libertad. Not met Met 49

59 Instrument ANNEX 10. SELECTED WORLD BANK SUPPORT TO MIDIS Start Date 2011 End Date 2012 Amount (US$) 100,000 Objectives Social Inclusion NLTA JUNTOS. (a) Developing an information system on the supply of services and (b) defining and implementing a plan for ongoing training to local managers and a new family support plan. Pension 65. (a) Developing a baseline for evaluating the program's impact on access to health services and annual evaluation; (b) design and implementation of pilots to evaluate alternative payment mechanisms; (c) evaluation of the effectiveness of the targeting system; (d) development of a program of complementary services to the user population, as part of a strategy to promote the improvement of the quality of life of users; (e) developing an information system for Pension 65 and its integration with the MIDIS system; (f) characterization of the program users; (g) developing a strategic vision about the role of noncontributory pensions under the various programs of economic protection of the elderly; and (h) creation of an observatory of the elderly and mechanisms of sensitization. PRONAA. (a) Development of an information system; (b) development and implementation of a staff training plan; and (c) development of user information and accountability mechanisms system. Targeting. (a) Protocol development of quality standards, security, and confidentiality of the SISFOH; (b) funding the updating of padrón general de hogares and its quality audit; and (c) evaluation of institutional strengthening strategy of the local focalization units. M&E. (a) Development of the process for generating evidence; (b) training program on impact evaluation; (c) strengthen the General Office of Monitoring and Evaluation (DGSYE) impact evaluation capacities, PSIA, systematic reviews; (d) design and implementation of mechanisms for the use of evidence and evaluation results; (e) strengthen the DGSYE capacities in the management of evidences and evaluation results; (f) development of performance evaluations of social management strategies for results; (g) strengthening the DGSYE capacities in social policy monitoring systems; (h) strengthening information systems of social programs; (i) training Program on M&E of social programs; and (j) strengthening the implementation of a national system for M&E of social policy. Improved articulation. (a) Support in the development of capacity-building methodologies (developing an elearning system); (b) support the strengthening of management tools for articulating social inclusion policy; (c) support the systematization of learning from the experiences of the articulation pilots in 20 provinces; and (d) design and implementation of articulation strategies between the MIDIS social programs. Improved management. (a) Recruitment of a company specialized in change management for the reorganization of the MIDIS; (b) continuous training program for HR for the MIDIS including subnational government; and (c) support the MIDIS communications office and design of the communications plan for the sector. Transparency. (a) Technical assistance to the DGSYE for the replication of the pilot for establishment of transparency standards and (b) dissemination and awareness of information to users. 50

60 Instrument Social Inclusion TAL Start Date 2013 End Date 2016 Amount (US$) 10 million Quality improvement in the MIDIS programs. Technical assistance to design and pilot a series of activities aimed at improving the quality control of programs. Improving knowledge management, information, and communication. Technical assistance to strengthen the MIDIS information system to collect, process, and produce data to enhance the decision-making processes within the SINADIS. Objectives M&E. Support to the development and implementation of a social M&E system Human resource management and capacity. (a) Development and implementation of a plan of continuous capacity building and training for public officials implementing social policies (b) support the reorganization and organization of human resources in the Juntos and the QW programs, respectively, promoting coordination between different programs at the local level. Instrument Social Inclusion DPL Start Date 2012 End Date 2014 Amount (US$) 45 million (a) Improving the inclusiveness and effectiveness of key social programs that the MIDIS is mandated to execute, with a specific focus on the rural Conditional Cash Transfers (CCT) Program Juntos; the newly created noncontributory pension Objectives program Pension 65, and the QW and (b) developing the new social policy approach and institutional framework that the MIDIS is mandated to formulate through the enhancement and/or establishment of proper systems for targeting; M&E; overall coordination; and basic quality standards. Instrument P SWAP Results in Nutrition for Juntos Start Date 2012 End Date 2016 Amount (US$) 25 million (a) Increase demand for nutrition services by strengthening the operational effectiveness of the Juntos program and (b) improve coverage and quality of the supply of basic preventive health and nutrition services in the communities covered Objectives under the PAN including Juntos. Activities to support both objectives include a strong emphasis in promoting good governance to monitor the impact of the government programs and of the proposed intervention in nutrition outcomes. Instrument Peru MIDIS M&E and Information NLTA (P132330) Start date 2012 End Date 2013 Amount (US$) 317,752 (a) Assess existing capacities and needs; (b) provide guidance on the institutional Objectives and operational frameworks; and (c) offer tools to increase the use and transparency of information. Instrument P PE Poverty and Social Inclusion NLTA II Start Date 2013 End Date

61 Amount (US$) 112,626 Objectives (a) Validating and improving poverty measurement conducted by the INEI (b) strengthening evidence-based decision making in the MIDIS. Instrument P PE Poverty NLTA Start Date 2014 End Date 2015 Amount (US$) 83,385 (a) Validating and improving poverty measurement with the INEI; (b) supporting Objectives the elaboration and technical validation of the MIDIS new welfare index for targeting of social programs; (c) generating analytical products on poverty and social inclusion to inform Peru s policy agenda. Instrument P Social Inclusion NLTA Start Date 2014 End Date 2015 Amount(US$) 122,202 (a) Design an organizational model for integrated service provision at the Objectives subnational level; (b) develop guidelines for the subnational implementation of the model; and (c) design a communication strategy to support the rollout of the model. 52

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