RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING BANGLADESH - SECONDARY EDUCATION QUALITY AND ACCESS IMPROVEMENT APPROVED ON JULY 31, 2008

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1 Public Disclosure Authorized RESTRUCTURING PAPER REPORT NO.: RES29620 Public Disclosure Authorized ON A PROPOSED PROJECT RESTRUCTURING OF BANGLADESH - SECONDARY EDUCATION QUALITY AND ACCESS IMPROVEMENT APPROVED ON JULY 31, 2008 TO PEOPLE'S REPUBLIC OF BANGLADESH Public Disclosure Authorized EDUCATION SOUTH ASIA Public Disclosure Authorized Regional Vice President: Country Director: Senior Global Practice Director: Practice Manager/Manager: Task Team Leader: Annette Dixon Qimiao Fan Jaime Saavedra Chuvi Keiko Miwa Shwetlena Sabarwal

2 ABBREVIATIONS AND ACRONYMS ACT AF AY CD DDO DLI DRH DSHE EA FA GoB IAA IDA IO IP KPI M&E MEW MoE MoF MoPA PDO PMT SDR SEQAEP SSC USD Additional Classroom Teacher Additional Financing Academic Year Country Director Deferred Drawdown Option Disbursement Linked Indicator Developing the Reading Habit Directorate of Secondary Higher Education Environmental Assessment Financing Agreement Government of Bangladesh Institutional Achievement Awards International Development Association Intermediate Outcome Implementation Progress Key Performance Indicator Monitoring Evaluation Monitoring Evaluation Wing Ministry of Education Ministry of Finance Ministry of Public Administration Project Development Objective Proxy Means Testing Special Drawing Right Secondary Education Quality Access Improvement Project Secondary School Certificate United States Dollar

3 Note to Task Teams: The following sections are system generated can only be edited online in the Portal. BASIC DATA Product Information Project ID P Original EA Category Partial Assessment (B) Approval Date 31-Jul-2008 Financing Instrument Investment Project Financing Current EA Category Partial Assessment (B) Current Closing Date 31-Dec-2017 Organizations Borrower People's Republic of Bangladesh Responsible Agency Directorate of Secondary Higher Education, MOE Project Development Objective (PDO) Original PDO The project development objectives are to improve the quality of secondary education, systematically monitor learning outcomes, to increase access equity in project upazilas. Summary Status of Financing Ln/Cr/Tf Approval Signing Effectiveness Closing Net Commitment Disbursed Undisbursed IDA Dec Feb- 25-Mar- 31-Dec IDA Jul Aug Sep Jun Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No

4 Note to Task Teams: End of system generated content, document is editable from here. I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status Context: The Government of Bangladesh (GoB) is implementing the Secondary Education Quality Access Improvement Project (SEQAEP) since 2008, with IDA Credit financing of US$395.7 Million ($130.7 million for the original project $265 million for the AF). The project provides poverty-targeted (based on Proxy Means Testing) stipends to students, quality-enhancing incentive grants to schools, teachers students (in grades 6-10) in about 10,000 secondary schools madrasahs from selected Upazilas (sub-districts) in the country. Project Development Objective (PDO) are to improve the quality of secondary education, systematically monitor learning outcomes, to increase access equity in project upazilas. PDO status: The PDO is currently rated Satisfactory given that project is on track to achieve the end of project targets. All six project key performance indicators (KPIs) - cycle completion rate, number of students appearing in the Secondary School Certificate (SSC) examinations, monitoring learning levels, gender parity (as measured by male to female ratio), percentage of poor children in total enrolment total number of project beneficiaries - are likely to be achieved by the end of the project. As of May 2017, updated data for 10 of the 11 IOs indicates that they have either met or surpassed the endof-year targets Implementation Progress (IP): IP of SEQAEP Project is currently rated Satisfactory. The IP of first three components (quality, access management) of SEQAEP has been rated as Satisfactory. The IP of fourth component (M&E) has been upgraded to Moderately Satisfactory. Positive developments in the IP of this component are evidenced by: (i) achievement of Disbursement Linked Indicators (DLIs) for Year-0 Year-1 submission of supporting documentation on associated eligible expenditures; (ii) submission of progress towards achievement of year-2 (2015) year 3 (2016) DLIs. Key achievements in the past twelve months include: timely implementation of Developing the Reading Habit (DRH) sub-component activities in 9,618 institutions; deployment of Additional Class Teachers (ACT) in English, Mathematics Science in 388 institutions; provision of the institutional achievement awards (IAA) to 1,366 best-performing institutions in the country; disbursement of Proxy Means Tested (PMT) stipends to 1.5 million students for both semesters (January-June, July-December) of Academic Year AY2015; disbursement of school grants for AY2015 in most of the project institutions. associated eligible expenditures; (ii) submission of progress towards achievement of year-2 (2015) DLIs.

5 B. Rationale for restructuring extension: The project has suffered from exchange rate losses amounting to USD 15m during the Additional Financning loan period. The exchange rate during the signing of the Additional Financing (AF) Credit was $ 1.53 per 1 SDR. The current exchange rate is $1.41 per 1 SDR. During various stages of implementation, the project suffered losses due to downward movement of USD against SDR. In addition, the total number of beneficiaries receiving grants stipends under the project has exceeded the projections made at the time of preparation of AF due to high dem/awareness. Number of original PMT beneficiaries was 5,764,206 against actual of 6,119,067) grant beneficiaries was 1,024,820 against actual of1,166,296, showing an increase in both cases. These changes have led to a shortfall of USD 15.9m in available financing under categories 1,2, 3 necessitate a reallocation of funds from Category 5 (DLI) to Categories 1,2, 3. Funds will be reallocated from Category 5 (DLIs). The changes to the DLI matrix shall be (i)the scaling down of the price of DLIs in year 1,2 3 in an equal proportionate manner moving undisbursed DLIs to year 4 in order to allow for funds to be disbursed. No DLIs will be dropped the DLI indicators will remain unaltered. The achievement of DLIs will not be adversely impacted as all year 1, year 2 year 3 DLIs have already been achieved. Further, DLIs were priced as incentives not by costs, so some built-in buffers exist in their current prices. This will allow for all the envisioned activities to be completed; funding to be fully utilized; project results to be satisfactorily met. The restructuring will allow for the project to reach maximum beneficiaries discharge all its commitments without jeopardizing results achievement in any way. This makes the proposed restructuring both efficient judicious. II. DESCRIPTION OF PROPOSED CHANGES This restructuring paper seeks authorization for two changes in the design of Secondary Education Quality Access Enhancement project (SEQAEP). These are: (i) reallocation of funds from Category-5 (DLI) to Categories-1,2, 3 in the amount of SDR 20m equivalent (approximately USD 28.1m). This would involve scaling down of selected DLIs in year 1, 2 3; (ii) allow all undisbursed DLIs to be carried over to year 4. Project closing date, component costs results framework will remain unchanged. The DLI matrix will change as follows: - All three DLIs in Year 1, will be moved to Year 4 proportionately scaled down by a total of SDR 6.66 million equivalent - All three DLIs in Year 2, will be moved to Year 4 proportionately scaled down by a total of SDR 6.67 million equivalent - All three DLIs in Year 3, will be moved to Year 4 proportionately scaled down by a total of SDR 6.67 million equivalent - Revised DLI table to allow all DLIs to be achieved by the closing date of the Project - Removal of additional rows from the DLI table in the interest of simplification; Submission of achievement report, Verification by the Association, Disbursement - The existing definition of DLI period will not require revision as these above changes will allow more flexibility in disbursement.

6 The reallocated funds will be used to support the following activities: - PMT-based stipends under part 2.1(a) of the Project as mentioned under category 1 of the Financing Agreement - Grants under Part 1.2(a) (b), Part 1.3. (c), Part 2.1(b) Part 2.3 (a) of the Project as mentioned under category 2 of the Financing Agreement - Consultant s services, non-consulting services, goods, Training Operating Cost under Parts 1.2.(a) (c),,parts 1.3. (a), (b) (d), Part 2.1.(c), Parts 2.3 (a) (b)part 3.1.(a) (b), Part 3.2. of the Project III. SUMMARY OF CHANGES Changed Reallocation between Disbursement Categories Not Changed Change in Disbursement Estimates Other Change(s) Change in Implementing Agency Change in DDO Status Change in Project's Development Objectives Change in Results Framework Change in Components Cost Change in Loan Closing Date(s) Cancellations Proposed Change in Disbursements Arrangements Change in Overall Risk Rating Change in Safeguard Policies Triggered Change of EA category Change in Legal Covenants Change in Institutional Arrangements Change in Financial Management Change in Procurement Change in Implementation Schedule Change in Economic Financial Analysis

7 Change in Technical Analysis Change in Social Analysis Change in Environmental Analysis IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Current Allocation Actuals + Committed Proposed Allocation Financing % (Type Total) Current Proposed OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed ,771, ,649, ,584, ,086, ,531, ,914, ,297, ,912, ,552, ,608, ,000, ,764, ,000, ,890, ,000, ,579, ,000, ,498, ,000, ,505, Note to Task Teams: End of system generated content, document is editable from here.

8 Indicator Results to be achieved in 2013 Annex 1a: Revised Distbursement Linked Indicators Results to be achieved by December 31, Protocol/Verification 2017 DLI 1: Learning assessment carried out nationally DLI Value (a) MOE/DSHE to determine that learning assessment be carried out on nationally representative sample; (b) Secondary education learning assessment carried out on nationally representative sample; (c) Report of secondary education learning assessment disseminated; Framework for the 2017 national learning assessment approved US$ 396,278 for DLI Target (a); Results to be achieved by December 31, 2017: DLI Targets (a) (c): MOE letters approving the learning assessment frameworks for assessments, respectively. Framework to include objectives, subjects, grades, time frame, implementation arrangements, including implementing bodies. DLI Target (b): Nationally representative sample defined as relevant grade to be represented at all boards of intermediate secondary education. DLI Target (c): Learning assessment report with proof of dissemination to key stakeholders. US $396,278 for DLI Target (b); US $396,278 for DLI Target (c) DLI 2: MEW institutionalized financed through revenue budget MOE to submit proposal along with DSHE organogram to create new positions in DSHE s permanent structure to the organization (a) Final proposal for MEW submitted by MOE received by MOPA for processing; (b) MEW proposal, including job descriptions approved by MOPA forwarded to MOF; (c) MOF concurs with the proposal forwarded by MOPA informs MOE; Results to be achieved in 2013: DSHE to submit to the Association a copy of the proposal sent to MOPA. Results to be achieved by December 31, 2017:

9 Indicator Results to be Results to be achieved by December 31, Protocol/Verification achieved in management wing MOE issues a Government Order to the DLI Target (a): MOE submits to the Association copy of MOPA effect that MEW would be transferred to of the receipt of the final proposal by MOPA. revenue budget beginning from January 2018; DLI Target (b): Copy of the decision endorsed by MOPA forwarded to the Association. (d) All arrangements made for MEW staff to be paid under revenue budget from January 2018 DLI Target (c): Copy of issued Government Order forwarded to the Association. DLI Target (d): A letter from MOE/DSHE confirming the arrangements in place for transfer of MEW staff salary recurrent cost to revenue budget from January DLI Value US$7 m US$396,278for DLI Target (a); US$396,278for DLI Target (b); US $396,277for DLI Target (c); US $3,500,000 for DLI Target (d) DLI 3: Monitoring evaluation surveys conducted as scheduled DLI Target (a): Impact evaluation baseline survey conducted; DSHE approves the list of corrective actions based on findings of 2013 PMT validation compliance survey reports; Results to be achieved by December 31, 2017: DLI Target (a): DSHE submit survey reports proof of corrective action taken based on the respective survey report to the Association.

10 Indicator Results to be Results to be achieved by December 31, Protocol/Verification achieved in (b) PMT validation compliance survey DLI Target (b): DSHE submit survey reports proof conducted incorporating the approved of corrective action taken based on the respective finding of the 2013 PMT validation survey report to the Association. compliance survey reports; DLI Target (c): DSHE submit proof of corrective action (c) DSHE approve the list of corrective taken based on the respective survey report to the actions based on findings of 2015 PMT Association. validation compliance survey reports; DLI Target (d): DSHE submit survey reports proof of corrective action taken based on the respective (d) Impact evaluation follow-up survey survey report to the Association completed by March PMT validation compliance survey conducted incorporating the finding of 2015 reports DLI Value US$396,278for DLI Target (a); US $396,278for DLI Target (b); US $396,277 for DLI Target (c); US $3,500,000 for DLI Target (d)

11 Annex 1b: Original Distbursement Linked Indicators Areas Indicator Baseline Protocol/Verification (Year 0) (Year 1) (Year 2) (Year 3) (Year 4) Learning DLI 1: One round MOE/DSHE Secondary Report of MOE letters approving the Assessment Learning completed to education secondary learning assessment frameworks for 2015 assessment in SEQAEP determine learning education 2017 assessments, respectively. carried out Upazilas in that learning assessment learning Framework to include objectives, subjects, (Responsible agency: MOE, MEW/DSHE) nationally 2012 assessment be carried out on nationally representati ve sample carried out on nationally representati ve sample US$4 m assessment disseminated Framework for the 2017 national learning grades, time frame, implementation arrangements, including implementing bodies Nationally representative sample defined as relevant grade to be represented at all boards of intermediate secondary DLI Value US$4 m assessment approved education Learning assessment report with US$4 m proof of dissemination to key stakeholders Institutionaliza DLI 2: MEW MEW MOE to Final MEW MOF concurs All DSHE to submit to the Association a tion of MEW institutiona under submit proposal for proposal, with the arrangements copy of the proposal sent to MOPA (Responsible agency: DSHE/MOE, MOPA, MOF) lized financed through revenue budget SEQAEP project budget proposal along with DSHE organogram to create new positions in DSHE s MEW submitted by MOE received by MOPA for processing including job descriptions approved by MOPA forwarded to MOF proposal forwarded by MOPA informs MOE. MOE issues a Government Order to the made for MEW staff to be paid under revenue budget from January MOE submits to the Association copy of the receipt of the final proposal by MOPA Copy of the decision endorsed by MOPA forwarded to the Association.

12 Areas Indicator Baseline Protocol/Verification (Year 0) (Year 1) (Year 2) (Year 3) (Year 4) permanent US$4 m US$4 m effect that US$3.5 m Copy of issued Government Order structure to MEW would be forwarded to the Association. DLI Value the organization managemen t wing of MOPA transferred to revenue budget beginning from January 2018 US$4 m A letter from MOE/DSHE confirming the arrangements in place for transfer of MEW staff salary recurrent cost to revenue budget from January 2018 US$7 m Monitoring DLI 3: Last round Impact PMT DSHE approve Impact - DSHE submit survey reports Monitoring of impact evaluation validation the list of evaluation proof of corrective action taken based on evaluation activities (Responsible agency: MEW/DSHE) DLI Value evaluation surveys conducted as scheduled evaluation survey in 2009 Last round of validation in 2010 Last round of compliance survey in 2010 baseline survey conducted DSHE approves the list of corrective actions based on findings of 2013 PMT validation compliance survey conducted incorporatin g the approved finding of the 2013 PMT validation compliance survey reports corrective actions based on findings of 2015 PMT validation compliance survey reports US$4 m follow-up survey completed by March PMT validation compliance survey conducted incorporating the finding of 2015 reports the respective survey report to the Association DSHE submit survey reports proof of corrective action taken based on the respective survey report to the Association DSHE submit proof of corrective action taken based on the respective survey report to the Association DSHE submit survey reports proof of corrective action taken based on the respective survey report to the Association compliance

13 Areas Indicator Baseline Protocol/Verification (Year 0) (Year 1) (Year 2) (Year 3) (Year 4) survey US$4 m US$3.5 m reports US$4 m Submission of December October October October 2016 June 2017 achievement report Verification by January November November November 2016 July 2017 the 2015 Association Disbursement February December December December 2016 August Number of DLIs Total: DLI Values (US$ m) Total US$21.8m 7m*1=7m 4m*3=12m 4m*3=12m 4m*3=12m 3.5m*2=7m

14 Category Annex 2: Revised Withdrawal Schedule Amount of the Credit Allocated (expressed in SDR) Percentage of Expenditures to be Financed (inclusive of Taxes) (1) PMT-based stipend under Part 2.1 (a) of the Project 92,700, % (2) Grants under: Part 1.2.(a) (b), Parts 1.3. (c), Part 2.1 (b), Part 2.3 (a) of the Project (3) Consultants services, non-consulting services, goods, Training Operating Cost under: Parts 1.2.(a) (c), Parts 1.3. (a), (b) (d), Part 2.1.(c), Parts 2.3 (a) (b) Part 3.1.(a) (b), Part 3.2. of the Project (4) Consultants services, non-consulting services, goods, Training Operating Cost under: Parts of the Project 33,200, % 29,700,000 91% 4,600, % (5) DLI Expenditures 12,600, % TOTAL AMOUNT 172,800,000

15 Annex 3: Reallocation Between Disbursement Categories Category (1) PMT-based stipend under Part 2.1 (a) of the Project (2) Grants under: Part 1.2.(a) (b), Parts 1.3. (c), Part 2.1 (b), Part 2.3 (a) of the Project (3) Consultants services, non-consulting services, goods, Training Operating Cost under: Parts 1.2.(a) (c), Parts 1.3. (a), (b) (d), Part 2.1.(c), Parts 2.3 (a) (b) Part 3.1.(a) (b), Part 3.2. of the Project (4) Consultants services, non-consulting services, goods, Training Operating Cost under: Parts of the Project Current allocation (expressed in SDR) Proposed allocation (expressed in SDR) Percentage of Expenditures to be Financed (inclusive of Taxes) 84,700,000 92,700, % 25,200,000 33,200, % 25,700,000 29,700,000 91% 4,600,000 4,600, % (5) DLI Expenditures 32,600,000 12,600, % TOTAL AMOUNT 172,800, ,800,000