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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Human Development Unit South Asia Region Document of The World Bank FOR OFFICIAL USE ONLY PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF SDR MILLION (US$ MILLION EQUIVALENT) TO THE PEOPLE S REPUBLIC OF BANGLADESH FOR A HEALTH SECTOR DEVELOPMENT PROGRAM May 3, 2011 Report No: BD This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank s Policy on access to Information.

2 CURRENCY EQUIVALENTS (Exchange Rate Effective March 31, 2011) Currency Unit = BDT BDT72.52 = US$1 US$1.59 = SDR1 FISCAL YEAR July 1 June 30 ABBREVIATIONS AND ACRONYMS AAA ADP AIDS APR ARI BBS BCC BDHS BMA C&AG CAO CAS CCs CGA CIDA CMSD CPR CPTU DDO DFID DGFP DGHS DOTS DP DPA EC EmOC EMP EPI ESP/ESD FAPAD FM FMR Analytical and Advisory Activities Annual Development Program Acquired Immune Deficiency Syndrome Annual Program Review Acute Respiratory Infection Bangladesh Bureau of Statistics Behavior Change Communication Bangladesh Demographic and Health Survey Bangladesh Medical Association Comptroller and Auditor General Chief Accounts Officer Country Assistance Strategy Community Clinics Controller General of Accounts Canadian International Development Agency Central Medical Stores Depot Contraceptive Prevalence Rate Central Procurement Technical Unit Drawing and Disbursement Officer Department for International Development (United Kingdom) Directorate General of Family Planning Directorate General Health Services Directly Observed Treatment-Short Course Development Partner Direct Project Aid European Commission Emergency Obstetric Care Environment Management Plan Expanded Program for Immunization Essential Services Package/Delivery Foreign Aided Projects Audit Directorate Financial Management Financial Monitoring Reports

3 FMRP FP FWA FY GAC GAAP GDP GEV GFATM GNSP GOB GIZ HA HEU HIES HIS HIV HNP HNPSP HPNSDP HPSP HSDP HR HCWM IBAs ICB IDA IEC IMCI IMR IRR IUD IUFR IYCF JANS JFA JICA KfW LCG LD LLP M&E MCH MCWC MDG MDTF Financial Management Reform Program Family Planning Family Welfare Assistant Fiscal Year Gender Advisory Committee Governance and Accountability Action Plan Gross Domestic Product Gender, Equity and Voice Global Fund for AIDS, Tuberculosis and Malaria Gender, NGO and Stakeholder Participation Government of Bangladesh Gesellschaft für Internationale Zusammenarbeit (Germany) Health Assistant Health Economics Unit Household Income and Expenditure Survey Health Information System Human Immuno-deficiency Virus Health, Nutrition and Population Health, Nutrition and Population Sector Program Health, Population and Nutrition Sector Development Program Health and Population Sector Program Health Sector Development Program Human Resources Health Care Waste Management Integrated Budget and Accounting System International Competitive Bidding International Development Association Information, Education and Communication Integrated Management of Childhood Illness Infant Mortality Rate Internal Rate of Return Intra Uterine Device Interim Unaudited Financial Report Infant and Young Child Feeding Joint Assessment of National Strategies Joint Financing Arrangement Japan International Cooperation Agency Kreditanstalt für Wiederaufbau (Germany) Local Consultative Group Line Director Local Level Planning Monitoring and Evaluation Maternal and Child Health Maternal and Child Welfare Center Millennium Development Goal Multi-Donor Trust Fund

4 MIS MMR MOF MOHFW MOLGRDC MOU MTBF MTR NSAPR II NCB NCD NGO NNS NPV NTP OP PAC PAD PHC PIP PLMC PMMU PPP PPR PWD QA RF RH RPA SBA SBD SDS Sida SIM SMF SOE SPEMP STD SWAp TA TB TFR THE THNPP Tk Management Information System Maternal Mortality Ratio Ministry of Finance Ministry of Health and Family Welfare Ministry of Local Government, Rural Development and Cooperatives Memorandum of Understanding Medium Term Budgetary Framework Mid-term Review Second National Strategy for Accelerated Poverty Reduction National Competitive Bidding Non-Communicable Diseases Non-Governmental Organization National Nutrition Services Net Present Value National Tuberculosis Program Operational Plan Public Accounts Committee Project Appraisal Document Primary Health Care Program Implementation Plan Procurement and Logistics Monitoring Cell Program Management and Monitoring Unit Public Private Partnership Public Procurement Regulations Public Works Department Quality Assurance Results Framework Reproductive Health Reimbursable Program Aid Skilled Birth Attendant Standard Bidding Documents Service Delivery Survey Swedish International Development Cooperation Agency Sector Investment and Maintenance Loan Social Management Framework Statement of Expenditures Strengthening Public Expenditure Management Program Sexually Transmitted Diseases Sector-wide Approach Technical Assistance Tuberculosis Total Fertility Rate Total Health Expenditure Tribal/Ethnic Health, Nutrition and Population Plan Taka

5 TOR U-5MR UHC UHS UHFWC UNDP UNFPA UNICEF USAID US$ WB WHO Terms of Reference Under Five Mortality Rate Upazila Health Complex Upazila Health System Union Health and Family Welfare Center United Nations Development Program United Nations Population Fund United Nations Children s Fund United States Agency for International Development United States Dollar World Bank World Health Organization Regional Vice President: Isabel M. Guerrero Country Director: Ellen A. Goldstein Sector Director: Sector Manager: Michal J. Rutkowski Julie McLaughlin Task Team Leader: Sameh El-Saharty

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7 I. Table of Contents I. Strategic Context... 1 A. Country Context... 1 B. Sectoral and Institutional Context... 1 C. Higher Level Objectives to which the Project Contributes... 3 II. Project Development Objectives... 3 A. PDO Project Beneficiaries PDO Level Results Indicators... 4 III. Project Description... 4 A. Project components... 4 B. Project Financing Lending Instrument Project Cost and Financing... 8 C. Lessons Learned and Reflected in the Project Design... 8 IV. Implementation A. Partnership Arrangement B. Institutional and Implementation Arrangements C. Results Monitoring and Evaluation D. Sustainability V. Key Risks and Mitigation Measures VI. Appraisal Summary A. Economic and Financial Analysis B. Technical C. Financial Management D. Procurement E. Social (including safeguards) F. Environment (including safeguards) Annex 1.A: Results Framework and Monitoring of the Health Sector Development Program Annex 1.B: Results Framework and Monitoring of the GOB s Program (HPNSDP) Annex 2: Detailed Project Description Annex 3: Implementation Arrangements Annex 4 Operational Risk Assessment Framework (ORAF)... 69

8 Annex 5: Implementation Support Plan Annex 6.A: Economic and Financial Analysis Annex 6.B: Performance Based Financing through Disbursement for Accelerated Achievement of Results Annex 7: Team Composition... 93

9 Date: May 02, 2011 Country Director: Ellen A. Goldstein Sector Director: Michal Rutkowski Sector Manager: Julie McLaughlin Team Leader: Sameh El-Saharty Project ID: Lending Instrument: Sector Investment and Maintenance Loan PAD DATA SHEET Bangladesh Health Sector Development Program PROJECT APPRAISAL DOCUMENT South Asia Region Human Development Project Financing Data: Proposed terms: [ ] Loan [X] Credit [ ] Grant [ ] Guarantee [ ] Other: Source Total Project Cost: Cofinancing: Borrower: Total Bank Financing: IBRD IDA New Recommitted Sector(s): Health (100%) Theme(s): Health systems (40%), Child health (20%), Nutrition & food security (20%), Population & reproductive health (20%) EA Category: B (partial assessment) Risk Rating: MI US$8,011 US$1,817 US$5,844 US$ US$ US$40 Total Amount (US$M) Borrower: Economic Relations Division, Ministry of Finance, Government of Bangladesh Responsible Agency: Ministry of Health and Family Welfare, Government of Bangladesh Contact Person: Mr. Humayun Kabir, Secretary Telephone No.: Fax No.: healthsecretary@gmail.com Estimated Disbursements (Bank FY/US$m) FY Annual Cumulative

10 Project Implementation Period: Start: July 1, 2011/ End: June 30, 2016 Expected effectiveness date: July 1, 2011 Expected closing date: December 31, 2016 Does the project depart from the CAS in content or other significant respects? If yes, please explain: Does the project require any exceptions from Bank policies? Have these been approved/endorsed (as appropriate by Bank management? Is approval for any policy exception sought from the Board? If yes, please explain: Does the project meet the Regional criteria for readiness for implementation? If no, please explain: Yes Yes Yes Yes X Yes X No X No No X No No Project Development objective: To enable the GOB to strengthen health systems and improve health services, particularly for the poor. Project description [one-sentence summary of each component] Component 1: Improving Health Services: This component will: (a) improve priority health services to accelerate the achievement of the HNP-related MDG targets by scaling up on-going interventions as well as introducing new interventions and (b) strengthen the service delivery system. Component 2, Strengthening Health Systems: This component will strengthen health systems. Safeguard policies triggered? Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Forests (OP/BP 4.36) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Indigenous Peoples (OP/BP 4.10) Involuntary Resettlement (OP/BP 4.12) Safety of Dams (OP/BP 4.37) Projects on International Waters (OP/BP 7.50) Projects in Disputed Areas (OP/BP 7.60) Conditions and Legal Covenants: X Yes Yes Yes Yes Yes X Yes X Yes Yes Yes Yes No X No X No X No X No No No X No X No X No Financing Agreement Reference Description of Date Due Condition/Covenant The Operational Plans are March 31 of each year Schedule 2, 1.A.1 submitted to the Association Schedule 2, 1.A.3 Annual program review held December 31 of each year Schedule 2, 1.A.5 Midterm review held December 31, 2014 Schedule 2, 1.A.6 Procurement audit June 30, 2012 and then each year Section 4.01 The MDTF Administration Agreement has been entered into by at least one (1) Co-financier December 31, 2012

11 I. Strategic Context A. Country Context 1. Bangladesh has recorded substantial progress over the past two decades in economic growth and poverty reduction. A country with about 160 million people and per capita income of United Stated Dollar (US$) 640 in fiscal year (FY) 2010, the Gross Domestic Product (GDP) of Bangladesh grew on average 5.8 percent per annum over FY01-10 despite periods of political turmoil, fragile institutions, poor governance, and frequent challenges of large-scale destruction from natural disasters. Bangladesh has successfully weathered the global economic crisis and its GDP is expected to grow around 6 percent in FY11. There has also been rapid social transformation and improvements in human development, particularly with the widespread entry of girls into the education system and women into the labor force to support rapid expansion of the garment industry. 2. There, however, remain significant development challenges. Bangladesh remains one of the poorest countries in South Asia with GDP per capita still half that of India and with 40 percent of its population below the poverty line (in 2005) 1. Prospects for change over the medium-term will depend on the continuation of macroeconomic stability, deepening of structural reforms and continued investment in human capital. Moreover, in one of the most densely-populated countries in the world, population growth and urbanization have given rise to problems of severe infrastructure deficiencies, environmental degradation and urban congestion. At around 15 million inhabitants, the capital, Dhaka, is now the eighth largest city in the world, projected to become the third largest by The overall governance environment remains challenging. B. Sectoral and Institutional Context 3. On the whole, Bangladesh has made laudable progress on many aspects of human development which has provided a foundation for improvements in growth, empowerment and social mobility. In education, Bangladesh has made significant progress in the last two decades in increasing access (Millennium Development Goal, MDG 2) and gender parity (MDG 3). In health, nutrition and population (HNP) related MDGs, infant and child mortality rates have had impressive declines, outstripping progress in the rest of the region. In recognition of the achievement of reduction in child mortality Bangladesh was awarded the United Nations MDG Award in Similarly, the maternal mortality ratio (MDG 5) has been impressively reduced from 320 per 100,000 live births in 2001 to 194 deaths per 100,000 live births in 2010, which exceeded the expected decline by around 40 points. All these factors, plus increased female job opportunities, have contributed to declining fertility rates, which have been halved since 1970 (one of the fastest declines in the world). However, the fertility rate will need to be reduced further in order to avoid a doubling of the population in the next years. 4. Nutrition indicators, however, have not progressed as envisioned and several other structural challenges and weaknesses in the health system still remain. After a dramatic decline in child underweight rates (MDG 1c) from 66 percent in 1990 to 51 percent in 2000, 1 Information on poverty trends since 2005 is not yet available. 1

12 progress nearly stagnated between 2000 and At this rate, Bangladesh is unlikely to meet the MDG target for nutrition. Bangladesh is also facing the alarming challenge of a double burden of non-communicable and communicable diseases. There are large disparities in HNP outcomes, access to care, and health care utilization between the rich and the poor. In addition, the HNP sector is faced with key health systems challenges and weaknesses such as an overly centralized health system, weak governance structure and regulatory framework, weak management and institutional capacity in the Ministry of Health and Family Welfare (MOHFW), fragmented public service delivery, inefficient allocation of public resources, lack of regulation of the private sector, shortage of human resources for health, high staff turnovers and absenteeism, lack of essential drugs and medical supplies and weak storage and distribution systems and poor maintenance of health facilities and medical equipment. 5. The Government of Bangladesh (GOB) recognizes the importance of HNP for development and poverty reduction, and, over the past ten years, has implemented two HNP sector wide programs with several development partners (DPs): the Health and Population Sector Program (HPSP ) and the Health, Nutrition and Population Sector Program (HNPSP ). 6. GOB s HNPSP has been a US$4.3 billion six-year program which will be completed by the end of June It has been implemented through a sector-wide approach (SWAp) that has used government systems. HNPSP mobilized a total of US$1.2 billion in DP assistance that includes US$687 million of pooled funds (US$300 million International Development Association (IDA) Credit plus an IDA-administered multi-donor trust fund (MDTF) of US$387 million from seven other DPs). HNPSP has three components: (i) accelerating achievement of HNP related MDGs; (ii) meeting new and emerging HNP challenges such as non-communicable diseases; and (iii) advancing HNP sector modernization through reforms such as decentralization and contracting out with non-state providers. The joint annual program review (APR) of the closing program (HNPSP) concluded that the program has made progress in strengthening service delivery and achieving its overall objective. Several indicators of the closing program (HNPSP) have been already achieved, and most of the remaining indicators are progressing well and are expected to be attained by the end of the program. 7. The MOHFW has prepared its new sector program, spanning from 2011 to 2016, the Health, Population and Nutrition Sector Development Program (HPNSDP, the Program), and is revising its draft National Health Policy based on the lessons learned from previous programs. The Program is also consistent with the priorities reflected in the Second National Strategy for Accelerated Poverty Reduction (NSAPR II) 2. The Program recognizes the challenges facing the health sector particularly in terms of governance, equity, quality and efficiency of health services. As per the Sixth Five-year Plan, the GOB s priority is to stimulate demand and improve access to and utilization of HNP services in order to reduce morbidity and mortality, particularly among infants, children and women; reduce the population growth rate; and improve the nutritional status, especially of women and children. The Program has two major components. The first component on improving health services aims at improving priority HNP services to accelerate the achievement of the HNP-related MDGs including: (a) the 2 National Strategy for Accelerated Poverty Reduction II, Government of the People s Republic of Bangladesh,

13 delivery of essential health services which seek to improve reproductive, adolescent, maternal, neonatal, infant and child health and family planning (FP), nutrition, communicable and noncommunicable diseases; as well as (b) supporting the service delivery system including primary health care particularly for strengthening the Upazila Health System (UHS) and the community clinics (CCs), as well as hospital services. The second component aims at strengthening health systems particularly governance, stewardship, health sector planning, human resources, health care financing, quality of health care and pharmaceuticals. 8. The proposed Project, Health Sector Development Program (HSDP), will support the implementation of the GOB s Program (HPNSDP) and will be synchronized with its implementation timeline. The Project is consistent with the GOB s Program and policies and will play an important role in operationalizing GOB s commitments in the HNP sector as outlined in Vision 2021, the draft National Health Policy, the draft sixth five-year plan, and other national strategies, policies and programs. C. Higher Level Objectives to which the Project Contributes 9. The Project contributes to Bangladesh s long-term objective of human capital development for sustaining economic growth and poverty reduction. The objectives of the Project are well aligned with the Bank s Country Assistance Strategy (CAS). 3 Strategic objective 2 in the CAS is to Improve social service delivery - with a specific outcome of Improved access to quality health, population and nutrition services - to bring marginalized groups and rural communities more firmly into the development process. Strategic objective 4 in the CAS is to Enhance accountability and promote inclusion - with a specific outcome of Increased effectiveness of public service delivery at the local level - as part of a strong governance agenda leading to faster and more inclusive growth. II. Project Development Objectives A. PDO 10. The objective of the Project is to enable the GOB to strengthen health systems and improve health services, particularly for the poor. 1. Project Beneficiaries 11. The primary beneficiaries of the Project would be children under five, women of reproductive age, the poor and marginalized populations. Secondary beneficiaries would be the entire population who will benefit from the better performing health services. Other beneficiaries and stakeholders include the MOHFW staff and other institutions engaged in Project implementation. 3 Country Assistance Strategy for the People s Republic of Bangladesh FY10-12, Report No BD, The World Bank,

14 2. PDO Level Results Indicators 12. The PDO level results indicators evidence the impact of strengthened systems and improved services for the target groups: (i) the proportion of deliveries by skilled birth attendants (SBA) among the lowest two wealth quintile groups, (ii) coverage of modern contraceptives in low performing areas of Sylhet and Chittagong, and (iii) prevalence of underweight among children under 5 years of age among the lowest two wealth quintile groups. III. Project Description A. Project components 13. The Project will continue to support the implementation of the GOB's Program (HPNSDP) through a sector-wide approach. The Project will finance a share of the overall Program (together with co-financing from some DPs) and parallel financing of the Program from others. The Project will support MOHFW to implement activities from the components listed below and included in the Operational Plans (OPs), and the share of Annual Development Program (ADP) which will be agreed upon annually. The Project, consistent with the Program, comprises two broad components: (a) Improving health services, and (b) Strengthening health systems. 14. Component 1: Improving Health Services (total estimated IDA contribution: US$251.2 million) Component 1.A: Improving Health Programs: This sub-component will support the GOB s interventions aiming at improving priority HNP services to accelerate the achievement of the HNP-related MDGs by scaling up the interventions undertaken by the closing program (HNPSP) as well as introducing new interventions. It includes: i) the delivery of essential health services which seek to improve reproductive, adolescent, maternal, neonatal, infant and child health and family planning (FP) services through improving the quality and reliability of antenatal care, scaling up essential emergency obstetric and newborn care services and ensuring 24/7 services in selected district hospitals and upazila health complexes, expanding facility- and community-based integrated management of childhood illnesses (IMCI) services, strengthening routine immunization services, increasing demand and use of FP services, and expanding the contraceptive method-mix; ii) interventions to improve the nutritional status, especially of pregnant women and children by integrating nutritional services in the Directorate General of Health Services (DGHS) and Directorate General of Family Planning (DGFP) services (mainstreaming the nutrition strategy), conducting behavior change communication (BCC) interventions (related to breastfeeding, complementary feeding, and hygiene practices), micronutrient interventions (periodic vitamin A supplements, therapeutic zinc supplements for management of diarrhea, multiple micronutrient powders, deworming drugs for children and adolescent girls and iron-folic acid supplements for pregnant women, lactating mothers, and adolescent girls), therapeutic feeding interventions (treatment of severe acute malnutrition), and strengthening sectoral and 4

15 iii) iv) national capacity for improved planning, supervision, implementation and coordination of nutrition actions across sectors; the control and treatment of communicable diseases and non-communicable diseases (NCDs) by expanding quality directly observed treatment short course (DOTS) services of TB, strengthening malaria control and treatment in the 13 highly endemic districts, by scaling up HIV/AIDS targeted preventive interventions for the most-atrisk groups, strengthening the diagnosis and management of sexually transmitted diseases (STDs), strengthening the diagnosis and management of diabetes in primary and secondary care facilities, improving awareness about the cardio-vascular disease risks and their management, screening for early cancer detection, and strengthening of the disease surveillance system; and interventions to promote healthy behavior in support of the above programs and priorities with particular focus on interpersonal communication and community level interventions. Component 1.B: Improving Service Provision: This sub-component will support the GOB s interventions for strengthening the service delivery system, including: i) primary health care with a focus on piloting the UHS that would put in place a functional referral system at the upazila and district levels and improve the continuity of care across the different service delivery levels. This would include upgrading and equipping at least one upazila health complex (UHC) in each district, and a commensurate number of union health and family welfare centers, and rehabilitating the community clinics and ensuring a functional entry point to the health system; ii) hospital management at the secondary and tertiary levels by improving the efficiency and quality of hospital services through the development and implementation of clinical protocols, appropriate human resources (HR) and management structures; introducing hospital autonomy, initially for the tertiary level specialized hospitals; introducing an accreditation tool; ensuring safe blood transfusion, and implementing an effective health care waste management plan; and iii) the provision of health, nutrition and family planning services to the urban population by establishing a coordination mechanism between MOHFW and the Ministry of Local Government, Rural Development and Cooperatives (MOLGRDC) and expanding these services to urban areas which are currently not covered by MOLGRDC. 15. Component 2: Strengthening Health Systems (total estimated IDA contribution: US$107.7 million). This component will support the GOB s interventions for strengthening health systems, including: Governance and stewardship: conducting an institutional and regulatory analysis of the government and parastatal organizations in order to establish an effective regulatory framework, revising the Consumer Rights Protection Act and the Clients Charter of Rights, developing a regulatory framework for contracting out to non-governmental organizations (NGOs), preparing the Public Private Partnership Strategy and developing an action plan, mainstreaming gender, equity and voice (GEV) elements in the Operational Plans (OPs), and developing a local level accountability mechanism; 5

16 Health Sector planning and management: by ensuring consistency of the Program Implementation Plan (PIP) and OP budgets with the Medium Term Budgetary Framework (MTBF), facilitating the preparation of complementary development and revenue budgets, establishing monthly reviews of budget execution, introducing a resource allocation formula, decentralization of management of service delivery and delegation of commensurate financial power to the district level as feasible, piloting the functionality of an UHS, and updating the local level plans; Human Resources for Health: developing a HR plan, establishing a functional HR Information System (HRIS), scaling up the production of critical health workforce cadres, introducing incentive packages to deploy and retain a critical health workforce in remote and rural areas, addressing the challenge of skilled-birth attendance by training community-based SBAs and/or nurse-midwives, midwives and family welfare visitors, and streamlining the recruitment and promotion of nurses; Health care financing: developing a national health care financing framework to ensure equitable access of the poor to quality health services and decrease in out-of-pocket expenditure, and scaling up the Demand Side Financing program based on its evaluation; Health Information System (HIS), monitoring and evaluation (M&E) and research: developing an M&E strategy and work plan in order to establish a sustainable M&E system with an organizational mandate and institutional home, and conducting a comprehensive HIS assessment and developing a strategy with the aim of strengthening the Data Management and Information System that would integrate data from various systems and programs, and promote the use of data for decision making; Quality of health care: developing a quality management strategy and policy for health care services, updating the existing standard operating procedures for the public hospitals, and conducting periodic user and provider satisfaction surveys; Drug Administration and Regulation: strengthening the government stewardship and policy formulation in the pharmaceutical sector; strengthening pharmaceutical quality assurance and control; and strengthening public sector procurement and supply chain management of pharmaceuticals; Procurement and supply chain management: strengthening the procurement capacity to ensure an efficient storage, inventory, supply and distribution chain, introducing an online procurement tracking system, and exploring options for electronic procurement; and Physical Facilities and Maintenance: developing a master plan to guide the new construction and upgrading of health facilities, and preparing a comprehensive plan for repair and maintenance of health facilities, procurement of equipment and drugs, and mobilizing the required HR, along with budget requirement. 16. The Project may also support other priority Program activities as mutually agreed with the Bank. In addition, the scope and scale of the activities described above that will be financed by the Project will be expanded based on the funds available under the MDTF. B. Project Financing 1. Lending Instrument 6

17 17. The lending instrument for the proposed IDA support is a Sector Investment and Maintenance (SIM) Credit. This instrument is appropriate as the Project will support and finance a share of the Sector s overall expenditure program (as described by the MTBF). The total amount of Bank financing would be US$ million over a five year period. 18. Various alternative lending instruments were considered and a SIM was found to be most suitable to the challenges faced by the sector. A Development Policy Loan (DPL) would not respond to the needs to invest in building the sector s capacity. A Specific Investment Loan (SIL) would not recognize the programmatic nature of this Project. Similarly, an Adaptable Program Loan (APL) was discussed and rejected because the GOB s Program is not a multiphased program and the Project support would be aligned with the Program s time frame. 19. This Project will be implemented through a sector wide approach (SWAp) supported by a number of DPs. A number of the DPs will pool their resources with IDA into an MDTF. The IDA Credit together with the MDTF will be referred to as the pooled funds and will be channeled using the GOB s Treasury system. The non-pooling DPs will channel their resources in parallel and provide direct financing to GOB or to specific activities. 20. The Project is adopting a revised Performance-Based Financing (PBF) modality. Building on the experience from the PBF modality under the closing HNPSP 4, the MOHFW and the DPs agreed to pursue a revised PBF modality using a Disbursement for Accelerated Achievement of Results (DAAR) approach. Under this modality, the MOHFW will be eligible to use a greater share of the total IDA Credit each year to finance eligible expenditures 5 to cover Project activities (effectively drawing down funds programmed for year five) upon attainment of agreed upon targets that demonstrate accelerated achievement of Project results. Disbursements without the DAAR are estimated to be US$71.78 million per annum over five years. Under the scenario where all agreed upon targets are fully met in each of the first four years, US$71.78 million would be fully disbursed each year along with the additional allocation for results achieved. For partially met DAAR targets, the additional allocation would be disbursed on a pro-rata basis for partially achieved targets. DAAR funds not disbursed because of targets not met would continue to be available to the Project under the regular allocation for year five. Approximately 15% of the annual IDA allocation would be available under DAAR each year. The exact amount will be discussed and agreed upon by the MOHFW and pooling DPs and DAAR funds would be programmed in the same manner as the regular allocation in support of the OPs. Each DAAR indicator will be clearly linked to one or more OPs and will contribute to specific results framework (RF) indicators. The intent is to define indicators that will leverage changes/reforms that are deemed to contribute to RF level indicators and that can be achieved because the necessary inputs are provided in the OPs. For each DAAR indicator, data sources, reporting and verification mechanisms will be identified. DAAR indicators will be defined for priority subcomponents and programs such as maternal health, FP, nutrition, HR, budgeting and 4 Under the closing program (HNPSP), a percentage of pooled funds were allocated to a specific category from which funds were disbursed on the basis of performance. Funds would only be disbursed from this category if performance during the previous year, as measured in the annual review, was evaluated as satisfactory, (HNPSP PAD, p ). 5 Eligible expenditures include cost of goods, works or services, including taxes, required for the Project as well as incremental operating costs, to be financed out of the proceeds of the Financing and procured, all in accordance with the provision of the Financing Agreement. 7

18 planning, and fiduciary management that are part of the OPs. The DAAR indicators for the first year have been agreed upon with the MOHFW as described in Annex 6 which provides more details on the PBF. 2. Project Cost and Financing Project Components IDA Financing (USD million) MDTF financing (USD million)* % Financing 1. Improving Health Services % 2. Strengthening Health Systems % Total Financing Required % * These are indicative figures 21. As reflected in the table above, the pooling DPs, AusAID, DFID, KFW, Sida and USAID, will co-finance the Project for an estimated aggregate amount of US$214 million. An Administration Agreement, between IDA and each of the pooling DPs who will channel support through the MDTF, will define the terms and conditions of co-financing arrangements for donor funds managed by IDA. Discussions about pooling arrangements with the concerned DPs have been initiated and these arrangements are expected to be in place within a year from effectiveness of the Project. The disbursement ratio from the IDA credit and MDTF grants will be determined based on the total grant funds available in the MDTF. C. Lessons Learned and Reflected in the Project Design 22. Health Reforms need to be fully owned by the GOB, supported by adequate technical assistance (TA) to establish the evidence, and based on a constructive policy dialogue from the DPs that recognizes the political economy of reforms. Planned reforms were not fully pursued under the now closing HNPSP such as the diversification of service delivery through contracting out with NGOs and modernization of the HNP sector through further decentralization and local level planning (LLP). The TA provided was not adequately and effectively mobilized in support of these reforms. Moreover, DPs persistently pursued reforms, envisaged at the program design stage, without sufficient adaptation to the changing political environment. During the preparation of the MOHFW s Program, the DPs and GOB have jointly initiated a policy dialogue on several reform areas. The dialogue will expand beyond the MOHFW/Planning Wing and involve key decision makers as well as implementers. A coherent multi-year integrated and consolidated TA plan is being developed to support the MOHFW in implementing the agreed upon reforms. This consolidated TA will be supported separately by DFID and other DPs to ensure its effectiveness. The Project has several interventions to improve efficiency such as reducing the number of OPs implemented as part of the closing sector program (HNPSP), linking payments to performance, improving maintenance and operation of the health facilities, and improving the utilization of available resources. The Program aims at improving resource allocation, revitalizing the Community Clinics (CCs) 6 and engaging with non-state providers in order to improve access and delivery of essential health services. The RF for the Program also incorporates a number of pro- 6 In 1998, community clinics were created to provide basic health care services at the village level and were in operation till In 2009, the Government has committed to operationalizing 18,000 community clinics, which will be done under the sector program. 8

19 poor indicators (e.g., skilled birth delivery among the poorest 40 percent, expansion of CCs as a proxy for access to poor) to measure the performance of the Program. 23. The PBF modality needs to be developed in close collaboration with implementers in the MOHFW and directly linked with the expected Project results. Under the closing program (HNPSP), PBF was implemented with mixed results. Performance was often measured through process level indicators that did not have a direct causal link with the desired program results, as measured in the RF. Further, it was not always clear which Line Directors (LDs) had the responsibility for achievement of various PBF indicators and whether their OPs had appropriate provisions to ensure implementation of the activities required to achieve these results. Under the Project, a revised PBF modality using DAAR will be used as jointly agreed between MOHFW and prospective pooling DPs. (Please refer to Annex 6 for details). 24. The pool funding arrangement needs to be more flexible and support capacity building and not just mitigating the fiduciary risks and complying with procedures. Under the closing program (HNPSP), the MDTF and fiduciary arrangements have been complex and cumbersome, resulting in implementation delays. The procurement workload has been unsustainably large primarily due to low prior review threshold levels. The quality of the procurement documents prepared by MOHFW has been poor, thereby requiring repeated revisions and further exacerbating the delays. Also, the pool funders have different fund replenishment procedures, which require several administrative transactions. Under the Program, a Joint Financing Arrangement (JFA) will be employed to provide detailed and streamlined financing arrangements as well as the responsibilities of the signatories. The Bank is working with MOHFW to streamline some of the processes under the Project by exploring the possibility of increasing the prior review thresholds, using multi-year framework contracts, and putting in place mitigation mechanisms against risks and weaknesses identified during the procurement assessments. Also, there are capacity building and governance measures such as introducing e- procurement and customizing the GOB automated integrated budgeting and accounting system (IBAs) for financial reporting. At the midterm of the Program, the GOB and DPs will assess the fund flow arrangements and assess future possibility of moving towards even strengthened alignment with the GOB s Treasury system and possibility of sending direct financing to GOB s Treasury account. 25. More concerted efforts are needed to improve the provision of primary health care services for the growing urban population. Under the closing program (HNPSP), there have been several gaps in primary health care coverage of urban areas, except in areas covered by the Urban Primary Health Care Project II, Smiling Sun Franchise Program and some other NGO providers. Under the Program, primary health care services for the poor will also be provided in the urban areas supported by other DPs and a strengthened coordination mechanism will be established between MOHFW and MOLGRDC. 9

20 IV. Implementation A. Partnership Arrangement 26. A large group of DPs will support the GOB s Program (HPNSDP) through a Sector Wide Approach (SWAp), building on the implementation experience of HPSP and HNPSP. Under the closing program (HNPSP), a number of DPs have pooled their funds under an MDTF arrangement administered by the Bank. The Bank team has worked with the DPs in exploring alternative pooled funding arrangements. Several DPs including AusAID, DFID, KfW, Sida, and USAID agreed that an MDTF managed by the Bank is the most appropriate arrangement to continue with under the GOB s Program but with the aim of strengthening the MOHFW fiduciary management and institutional capacity in order to move towards a GOB managed pooled fund. In addition to pool funding arrangements, there will be non-pooling DPs who will channel their funds in parallel to the GOB s budget. In order to be successfully implemented, the partnership arrangement between the GOB and the DPs for the Program will be further strengthened through a JFA. The JFA will guide both the pooled and non-pooled fund contributions of the DPs as well as provide detailed arrangements for disbursing, managing and reporting on the use of funds. The process of consultations between MOHFW and all DPs will be further strengthened by replacing the HNP Forum with the Local Consultative Group (LCG- Health), which is part of GOB-DP overarching coordination mechanism. 27. The estimated total budget of the GOB s Program ( ) is about US$8,011 million which includes both the development and non-development budgets. The estimated development budget is about US$3,334 million of which the GOB will provide about US$1,167 million and the remaining amount of US$2,167 million will be provided by the DPs. To date, the indicative allocations of the DPs amount to US$1, million, although some of these commitments are only estimated for the first 2-3 years of the Program. The financing gap of US$ million would, therefore, be covered by commitments yet to be confirmed, and by those DPs who would allocate additional funds after their initial contributions during the first 2-3 years. The table below provides the indicative amounts allocated by the DPs who will support the Program. Agency Estimated Total (in US$ million) AusAID* CIDA 102 DFID* 191 EC 27 KfW* GIZ 3 JICA 70 Sida* 80 UNFPA 46 WB UNAIDS 6 10

21 Agency Estimated Total (in US$ million) UNICEF 130 WHO 75 USAID* 450 TOTAL 1, * DPs who expressed interest in pooling part of their funds in an MDTF with the Bank B. Institutional and Implementation Arrangements 28. The Project will be implemented by the MOHFW under a SWAp modality (as explained above) to ensure harmonization and effective implementation. The Project will be implemented by the MOHFW through existing institutional structures similar to the closing program (HNPSP) but with significant improvements which build upon its experience. The various units under the LDs will implement the Project with policy and administrative guidance from the MOHFW and in consultation with the DPs. The five-year PIP and the three-year OPs will be reviewed by the DPs including the Bank. Another key change is the agreement of the MOHFW to share the Annual Development Program (ADP) budget with the DPs to ensure that priority interventions are adequately resourced. Also, the APR jointly conducted by the MOHFW and the DPs to assess performance, identify gaps and define the Program priorities for the following year (including Project funded activities), will be synchronized with the preparation of the OPs and ADP in order to ensure that the APR recommended actions are included and can be implemented. In addition, there will be a coherent multi-year integrated and consolidated TA plan of the Program, currently being developed, to support the MOHFW in Program implementation and strengthening its institutional capacity at different levels, and increase focus on achieving results as well as carrying out the agreed upon reforms. This consolidated TA will be supported in parallel by DFID and other DPs. The MOHFW will carry out the Project in accordance with the Environment Management Plan (EMP), the Social Management Framework (SMF), and the Tribal/Ethinic Health, Nutrition and Population Plan (THNPP). C. Results Monitoring and Evaluation 29. The Program has a robust Results Framework and M&E system that will enable the effective tracking of results and implementation progress. The progress of both the Program and the Project (which has a subset of indicators) will be monitored against the results described in the RF attached in Annexes 1A and 1B. The MOHFW will prepare annual reports on the status of performance indicators as listed in the RF to track the overall implementation progress towards achieving the PDO, which will also feed into the APR reports. 30. Data from a variety of sources will be used to monitor progress of the Program and the Project. While the data generated from routine sources will mostly be used to track progress of the indicators at the OP level, household and health facility surveys will continue to play a vital role in monitoring the progress of the Program. The Bangladesh Demographic and Health Survey (BDHS), planned for every three years starting from 2011, and the Bangladesh Health Facility Survey (BHFS), planned for every two years starting from 2011, will be the major sources of information. The Utilization of Essential Service Delivery (UESD) survey, the 11

22 Coverage Evaluation Survey (CES), the Bangladesh Maternal Mortality Survey (BMMS), and community based bio-behavioral surveys will also be providing information to track progress. Please refer to Annex 3 for details. 31. The Project will provide Technical Assistance to strengthen routine M&E systems. The Project will support capacity building, streamlining, and scaling up of M&E systems in the HNP sector in Bangladesh. The Project will also promote stronger collaboration between the agencies responsible for strengthening the management information system (MIS) of the MOHFW and DPs, research and academic institutions with the long term goal that monitoring of RF indicators would be possible through routine data sources. The Project will support essential epidemiological analyses, operations research, cost effectiveness studies and impact evaluation to guide strategy development and Program implementation. D. Sustainability 32. GOB s new Program ( ) has a broad ownership base and the Project will be implemented through existing GOB structures and systems. The Program reflects inputs from MOHFW implementing agencies at the central, district and upazila levels, other GOB ministries, DPs, NGOs and civil society organizations. These inputs were collected through extensive consultations with a wide range of stakeholders at multiple stages of the drafting process. No parallel structures will be created to manage the Program and IDA-financing will continue to support strengthening of government systems to ensure sustainability of the institutional and management capacity. 33. Reliance on support from the DPs to narrow the financing gap in public funding is likely to continue into the foreseeable future. DPs finance approximately 15 percent of total health expenditures, 46 percent of which is channeled through government, mostly through the MOHFW (approximately 26 percent of MOHFW expenditures are financed by external resources). Current per capita public expenditures on HNP are low by any measure. This is explained by Bangladesh s low level of income and low level of indebtedness, rather than a lack of commitment to the sector. The Medium Term Expenditure Framework does indeed forecast increased allocations to HNP. However, the country s weak performance in tax revenue generation limits its capacity to expand public spending substantially without increasing annual deficits beyond the current 4 percent of GDP, even at a healthy projected annual growth rate of 6.5 percent of GDP per annum. In this context, continued strengthening of donor coordination mechanisms, for financial and technical assistance, will be essential. 34. Improved sustainability of public health spending will require major changes in how overall health care is financed over the medium to long term. Households directly finance the largest, and growing, share of health spending 64 percent in 2007, up from 57 percent in 1997 through out-of-pocket payments at the point of service. Although impoverishment due to catastrophic health expenditures does not appear at present to be a major issue in Bangladesh, this is masked by underutilization of care due to financial barriers, particularly of the poor. Although the GOB s Program aims to target the poor, disparities in utilization of HNP services and infrastructure-based budget allocation formula translate into public subsidies that disproportionately benefit the better off. The Project will support the development of a 12

23 comprehensive health financing strategy that will outline measures to improve sustainability, equity and efficiency through resource mobilization and allocation mechanisms that promote achievement of desired results. V. Key Risks and Mitigation Measures 35. The Project is rated as a substantially risky (medium-i) operation. The HNP sector suffers from weaknesses relating to governance and regulatory frameworks, management of human resources, M&E, and fiduciary oversight. However, the risks in the country and sector are known and predictable and the use of country systems has been implemented under the closing program with adequate mitigation measures, which would be strengthened further under the Project and, therefore, lessen the impact of the risks on the achievement of the PDO. 36. A number of mitigating measures were proposed to reduce the risks during Project implementation. During Project preparation, the GOB and the Bank agreed on a number of mitigating measures that are highly likely to reduce the risk of the operation during implementation, and these are described in detail in the Operational Risk Assessment Framework (ORAF) attached as Annex 4. The main risks identified in the ORAF include inherent weaknesses in financial management, procurement and M&E; high rates of absenteeism of health professionals; shortage of drugs and equipments; frequent transfers of staff in MOHFW; and weak governance and accountability framework. 37. Furthermore, a Governance and Accountability Action Plan (GAAP) has been prepared and will be implemented and regularly monitored jointly by the MOHFW and the pooling partners. The GAAP outlines the governance and accountability risks and mitigation actions to ensure the success of key aspects of the Project which may otherwise be adversely impacted by these risks. The GAAP has recommendations in support of improving financial management, strengthening weak internal controls, improving procurement management, and strengthening the M&E capacity. It is also expected to help strengthen HR capacity development both in technical areas as well as the overall sector management, including fiduciary controls. In addition, the GAAP will address some programmatic aspects such as ensuring adequate number of health workforce, timely availability of drugs, equipment and supplies, and timely release of funds to health facilities. The GAAP will be jointly monitored with the key stakeholders as part of the APR. VI. Appraisal Summary A. Economic and Financial Analysis 38. While the GOB has reiterated its commitment to achieving the HNP-related MDGs, fiscal space at present is limited and unlikely to expand unless the country s tax revenue performance improves markedly. The medium-term fiscal policy is consistent with public debt sustainability, with the central government public deficit projected to remain below 4 percent. 7 According to World Bank (WB) projections and in the current MTBF, public expenditures as a 7 Bangladesh Public Expenditure and Institutional Review: Towards a Better Quality of Public Expenditure. Volume I. June World Bank. Report No BD. 13

24 share of GDP fluctuate from 14 to 18 percent. Resource mobilization from external financing is forecast to drop to 2 percent of GDP from the current 2.2 percent, while domestic revenue will be around percent of GDP, with domestic borrowing covering the gap. In terms of allocative efficiency, Bangladesh performs well in allocating public resources to the government s stated strategic priorities. Around 25 percent of the GOB budget is allocated to the social sectors health (6 percent), education (15 percent) and social security and welfare (4 percent), reflecting the priority given to development of human resources. 39. Increasing efficiency of public spending will be paramount to improving its impact on HNP outcomes. Under-spending of the development budget is a problem across the public sector and HNP is no exception; between 10 to 20 percent of the ADP goes unspent in any given year. Further, within the sector, resources have not always been allocated to the most costeffective, priority interventions because budgets are mostly done on a historic, incremental basis. Low technical efficiency in use of public funds can be attributed to weak planning capacity, a highly centralized planning process, late initiation of procurement activities, delays in release of third and fourth quarter funds, and weak budget and results monitoring. In order to make significant gains in efficiency, the MOHFW will have to scale up initial efforts it has made to transition to a poverty-weighted population based budget allocation formula and to decentralize the planning process by resourcing local level plans, as well as improve the focus on results and responsiveness to user needs. 40. Given the gap between resource availability and needs, the GOB will have to prioritize cost-effective interventions that improve the health status of the poor. Bangladesh has already achieved remarkable equity in access to cost effective public health programs such as immunizations, vitamin A supplementation and FP. However, the gap between the rich and the poor in utilization of priority HNP services e.g., antenatal care, deliveries assisted by skilled attendants remains a major challenge. Narrowing this gap will require significant improvements in the quality of care and better alignment of provider incentives with the achievement of sector goals. The Program will address this by devoting 70 percent of its financing to support delivery of priority health services with another 30 percent to improving the health systems that enable provision of quality care and ensure performance. B. Technical 41. The Project supports the GOB s Program and is fully supported by the DPs. The HSDP will support a comprehensive Program that covers all aspects of the HNP sector. It is in line with GOB s Program, NSAPR II, and the National Health Policy. The Program was developed with full leadership of the MOHFW and the engagement of all DPs active in the health sector. As such, the Program is fully owned by the MOHFW. The Program is also adopting strategies to increase multisectoral cooperation in the programs that require collaborating with other ministries and sectors such as nutrition and urban health. 42. The Program and the Project are primarily focused on health services that aim at achieving the HNP MDGs, particularly for the poor. The MOHFW is cognizant of the need to accelerate the achievement of the MDGs, building on the successful reduction of the infant mortality rate (MDG 4) and maternal mortality ratio (MDG 5). Thus, the Program is 14

25 appropriately prioritizing HNP service delivery interventions and aiming at strengthening critical health systems including planning, health financing, HR, health information systems, pharmaceutical management, procurement and financial management (FM), and M&E. 43. The Project and the Program are also taking into consideration the need for adopting reforms in important areas that are critical for improving health outcomes, particularly for the poor. During Program preparation, a matrix of policy issues was developed by the DPs to engage the MOHFW in a constructive dialogue. In response, the MOHFW identified its position and the strategic direction to address these policy issues, which provides assurance of government ownership and commitment to these reforms. This policy matrix will be discussed, monitored, and updated periodically in a constructive and pragmatic manner through the LCG- Health. To support the MOHFW in implementing the agreed upon reforms, a coherent multiyear integrated and consolidated TA plan is being developed and supported separately by DFID and other DPs to ensure its effectiveness. Please refer to Annex 2 for more details. C. Financial Management 44. Despite notable improvements in FM, weak MOHFW institutional capacity remains a key constraint. FM under the closing HNPSP has improved as reflected by the timely preparation of financial reports, the use of the treasury system for utilization of DP funding, the outsourcing of internal audits to a private audit firm, and the formation of an audit committee and a FM task force to monitor FM actions. However, the performance in FM has been affected by various factors including frequent staff transfer, a dearth of finance staff at all levels, absence of an appropriate training strategy and the lack of timely follow up on issues raised by the internal and external audits. A two-pronged approach will be adopted to address existing FM weaknesses which includes a set of short term measures to increase fiduciary assurance under the Project (described in Annex 3), and other measures to improve institutional capacity under the Bank-supported on-going Strengthening Public Expenditure Management Program (SPEMP). With the implementation of these actions, the proposed FM arrangements will satisfy the Bank s minimum requirements under Operational Policy/Bank Policy Taking into account the risk mitigation measures proposed, the overall financial management risk for this financing is assessed as Substantial. Annex 3 provides additional information on agreed financial management arrangements including risk mitigation measures. D. Procurement 45. Several institutional and management capacity constraints remain in the management of procurement. Key findings of the procurement capacity assessment included: (i) low quality of procurement documentation and process in some entities, (ii) lack of appropriate planning and procurement packaging, (iii) under-utilization of the delegated procuring authority, (iv) lack of understanding on handling procurement complaints, (v) delays in procurement process and contract award from the MOHFW and, in some cases, from the Bank. The mitigating measures include: the establishment of a Procurement and Logistics Monitoring Cell (PLMC) under the direct supervision of the Joint Secretary (Development and Medical Education) of MOHFW; collation and updating of all technical specifications; the adherence to the requirement of submitting quarterly procurement reports to the Bank; the Bank conducting annual post reviews; 15

26 and the introduction of an electronic procurement tracking mechanism including complaint handling. A Procurement Plan covering the first 18 months of Project implementation is available and published in the Bank s external website as well as the procuring entities websites. A summary of the Project procurement arrangements is provided in Annex 3. E. Social (including safeguards) 46. Existing initiatives relating to Gender, Equity and Voice will be strengthened under the Project. The women friendly hospital initiative of the closing program (HNPSP) will be further expanded and a coordination mechanism will be developed with one-stop crisis centers to ensure medico-legal services for victims of violence against women. The Health Users Forum will be used as a mechanism for incorporating citizens voice at all levels. MOHFW will also explore avenues of developing partnerships with NGOs and the private sector for piloting new interventions that address GEV issues. The Gender, NGO and Stakeholder Participation Unit of MOHFW will be the GEV focal point. F. Environment (including safeguards) 47. The Project is categorized as Environmental Category B. The safeguard policy on Environmental Assessment (Bank s Operational Policy 4.01) is triggered and MOHFW has undertaken an Environmental Assessment and developed an acceptable EMP. The EMP 2011 has documented the achievements and improvements and lessons learnt from the implementation of Environmental Action Plan prepared in 2004 and also identifies existing gaps and mitigation measures required to be implemented under the Project. The environmental issues are triggered by and primarily associated with infection control and waste management. Other environmental issues related to construction include site location and planning, especially in sensitive ecological regions, and issues related to building design and construction. The revised and updated EMP also provides recommendations and new action points to address the identified gaps and a system for monitoring and evaluation, along with a new timeline and revised budget. It has been agreed with the GOB that the resources under the IDA Credit will not be used to finance the procurement of new incinerators. 48. Safeguards. Safeguard Policies Triggered Yes No Environmental Assessment (OP/BP 4.01) X Natural Habitats (OP/BP 4.04) X Forests (OP/BP 4.36) X Pest Management (OP 4.09) X Physical Cultural Resources (OP/BP 4.11) X Indigenous Peoples (OP/BP 4.10) X Involuntary Resettlement (OP/BP 4.12) X Safety of Dams (OP/BP 4.37) X Projects on International Waterways (OP/BP 7.50) X Projects in Disputed Areas (OP/BP 7.60) X 16

27 49. The Project triggers Operational Policies 4.10 and 4.12 because of its proposed activities in the Chittagong Hill Tracts and other areas populated by indigenous/ethnic people, and a potential need for private land acquisition. With regards to the development of physical facilities, smaller facilities may be built on land available from private donation and/or direct purchase by MOHFW but the larger facilities might require private land acquisition. 50. Consequently, MOHFW has developed a Social Management Framework to deal with issues concerning indigenous peoples and involuntary resettlement. The SMF will apply to the Project and provide the basis to prepare and implement the Resettlement Plans and Indigenous People s Plans, as and when required for the individual facilities. The Bank has reviewed the SMF and ensured compliance with the safeguard policies. 51. Operational Policy 4.10 necessitates the preparation of an action plan to address the specific HNP needs of the indigenous people and ethnic minorities. MOHFW has prepared a Tribal/Ethnic HNP Plan 2011, which documents the improvements and lessons learnt from the implementation of THNPP prepared in 2004 and also identifies existing gaps and mitigation measures required to be implemented under the Program. 17

28 Annex 1.A: Results Framework and Monitoring of the Health Sector Development Program Project Development Objective (PDO): To enable the GOB to strengthen health systems and improve health services, particularly for the poor PDO Level Results Indicators* Proportion of delivery by skilled birth attendant among the lowest two wealth quintile groups Coverage of modern contraceptives in the low performing areas of Sylhet and Chittagong Prevalence of underweight among children under 5 years of age among the lowest two wealth quintile groups Core Unit of Measure Baseline % 11.5%, UESD 2010 % Sylhet: 35.7% Chittagong: 46.8%, UESD 2010 % %, BDHS 2007 Cumulative Target Values** YR 1 YR 2 YR3 YR 4 YR5 Frequency 15% BDHS every 3 yrs; UESD every 2 yrs Sylhet & Chittagong: 50% BDHS every 3 yrs; UESD every 2 yrs 43.3% BDHS every 3 yrs Data Source/ Methodolo gy BDHS, UESD BDHS, UESD Responsibility for Data Collection NIPORT NIPORT Description (indicator definition etc.) SBA defined as medically trained providers BDHS NIPORT Percent of children in the two lowest quintiles having weight-for-age <-2 SD from the median group INTERMEDIATE RESULTS Intermediate Result (Component One): Service delivery improved Proportion of births in health facilities % 23.7%, UESD 2010 Number of functional Community Clinics (CC) Coverage of Measles Immunization for children under 12 months of age Proportion of infants exclusively breastfed up to 6 months of age Proportion of postnatal care for women within 48 hours (at least 1 visit) Number 10,323, CC Project 2011 % 82.4%, CES 2009 % 43%, BDHS 2007 % 20.9%, UESD % BDHS every 3 yrs; UESD every 2 yrs BDHS, UESD 11,000 12,000 13,500 Every year Administrati ve record NIPORT CC Project/MIS/ MOHFW 90% Every year CES EPI 50% Every 3 yrs BDHS NIPORT 50% BDHS every 3 yrs; UESD every 2 yrs BDHS, UESD NIPORT Intermediate Result (Component Two): Strengthened health systems Proportion of annual work plans with budgets submitted by LDs by defined time period (July/Aug) Proportion of vacant service provider positions at upazila/district level and below, by category % NA 100% Every year Administrati ve record % Physicians: 45.7% Nurses: Physicians: 22.8% Nurses: 15% Planning Wing/MOHF W Every 2 yrs BHFS HPSDP Target is to halve the 2009 status 18

29 Proportion of health facilities, by type, without stock-outs of essential medicines Number of additional service providers trained in midwifery at District and upazila health facilities Proportion of serious audit objections settled within the last 12 months Proportion of OPs with spending > 80% of ADP allocation (annually) 29.9% FWV/SACM O/MA:16.9 %, BHFS 2009 % 66.1% 9, BHFS 2009 FWV/SACM O/MA:8.5% 8 75% Every 2 yrs BHFS HSDP Number 0 3,000 Every year Administrati ve record >80% Every year Administrati % 7%, FMAU 2007/8 10 ve record % 44.7%, 100% Every year Administrati FMAU 2011 ve record HRD/MOHF W FMAU FMAU/Planni ng Wing Definitions of the indicators: Proportion of delivery by skilled birth attendant among the lowest two wealth quintile groups: The percentage of women age from two lowest wealth quintiles, giving live birth in the five years preceding the survey, attended by a medically trained provider. Numerators: Number of live births with a medically trained person providing delivery assistance, i.e. a qualified doctor, nurse, midwife, paramedic, family welfare visitor (FWV), or community skilled birth attendant (CSBA); Denominator: Number of live births in the last five years. Coverage of modern contraceptives in the low performing areas of Sylhet and Chittagong: The percentage of currently married women who use any modern method of contraception. Numerator: The number of women who say they use one of the following methods at the time of the survey: female sterilization, male sterilization, contraceptive pill, male condom, IUD, injectables, implants, does not include abortions and menstrual regulation; Denominator: All women between ages 15 and 49 years, who are currently married. Prevalence of underweight among under-5 children from the lowest two wealth quintile groups: The percentage of children under 5 years of age underweight from two lowest wealth quintiles at the time of the survey. Numerator: Number of children with weight-for-age z-score is less than 2 SD below the median of the WHO Child Growth Standards; Denominator: Number of living children under 5 years. 8 Target set as reduction by 50% 9 Notes for definition: at least 75% of union level essential drug kit (10 drugs) available in the facilities at district level and below 10 Baseline used from APIR

30 Proportion of births in health facilities: The percentage of deliveries in the five years preceding the survey, and resulted in a live birth, taking place in a health facility. Numerators: Number of live births taking place in a health facility in public, private or NGO sector; Denominator: Number of live births in the last five years. Number of functional Community Clinics (CC): Number of Community Clinics functional, i.e. established, staffed, and reporting and increased number of service contacts over time. Coverage of Measles Immunization for children under 12 months of age: The percentage of children age months who received measles vaccine by 12 months of age. Numerator: Number of children reported to have received measles vaccine by 12 months of age; Denominator: Number of living children age months. Percent infants exclusively breastfed up to 6 months of age: The percentage of children under six months who are living with their mother were exclusively breastfed. Numerator: Number of children under six months who were given nothing but breast milk in the 24 hours preceding the survey; Denominator: Number of living children under six months. Proportion of postnatal care within 48 hours: The percentage of women received a postnatal check-up for the last live birth from a medically trained provider within 48 hours of delivery. Numerators: Number of women receiving their first postnatal checkup within 48 hours of delivery from a medically trained provider, i.e. a qualified doctor, nurse, midwife, paramedic, FWV, CSBA, medical assistant (MA), or sub-assistant community medical officer (SACMO); Denominator: Number of women age with a live birth in the last five years. Proportion of annual work plans with budgets submitted by LDs by defined time period: The percentage of Line Directorates submitting annual work plans with budgets on time. Numerator: Number of LDs submitted annual work plans with budgets 31 August of any given year; Denominator: Total number of LDs. Proportion of vacant service provider positions at upazila/district level and below, by category: Percentage of sanctioned service provider positions in health facilities at district level and below remained vacant at the time of the survey. 20

31 Numerator: Number of service provider positions (i.e. physicians, nurses, FWVs, SACMO/MAs) are filled; Denominator: Number of sanctioned positions at district level and below facilities. Proportion of health facilities, by type, without stock-outs of essential medicines: The percentage of health facilities at the district level and below, do not have at least 75% of union level essential drug kit at the stock at the time of survey. Numerator: Number of health facilities at the district level and below not having at least 75% of the following drugs at stock: Amoxicillin, Paracetamol, Iron tablets, Vitamin A, Tetracycline ophthalmic ointment, Chlorpheniramin, Cotrimaxazile, Benzyle benzoate; Denominator: Number of health facilities at district level and below. Number of additional service providers trained in midwifery at District and upazila health facilities: Number of fully qualified midwives trained to provide round-the-clock assistance in district and upazila level health facilities. Proportion of serious audit objections settled within the last 12 months: The percentage of bank-identified serious audit objections settled within the last 12 months of APR reporting. Numerator: Number of serious audit objections settled within the last 12 months; Denominator: Number of serious audit objections raised by the Bank. Proportion of OPs with spending more than 80% of ADP allocation (annually): The percentage of Operational Plans spending more than 80% of ADP allocation. Numerator: Number of OPs spending more than 80% of ADP allocation; Denominator: Total number of OPs. 21

32 RESULT Goal: Ensure quality and equitable health care for all citizens of Bangladesh Annex 1.B: Results Framework and Monitoring of the GOB s Program (HPNSDP) INDICATOR MEANS OF VERIFICATION & TARGET BASELINE TIMING 2016 Infant mortality rate (IMR) BDHS, every 3 yrs 52, BDHS Under 5 mortality rate BDHS every 3 yrs 65, BDHS Neonatal mortality rate BDHS, every 3 yrs 37, BDHS Maternal mortality ratio BMMS, every 5 yrs 194, BMMS 2010 <143 Total fertility rate (TFR) BDHS, every 3 yrs 2.7, BDHS Prevalence of stunting among children under 5 years of age BDHS, every 3 yrs 43.2%, BDHS % Prevalence of underweight among children under 5 years of age BDHS, every 3 yrs 41.0%, BDHS % Prevalence of HIV in MARP Sero-Surveillance Survey (SS), <1%, SS 2007 <1% every 2 years Program Goal: Increase availability and utilization of user-centered, effective, efficient, equitable, affordable and accessible quality health, population and nutrition services. Program Strategic Objective: To improve access to and utilization of essential health, population and nutrition services, particularly by the poor RESULT Component 1: Service delivery improved Result 1.1 Increase utilization of essential HPN services: maternal, neonatal, and child health family planning and reproductive health nutrition services communicable diseases INDICATOR MEANS OF VERIFICATION & TIMING BASELINE TARGET 2016 % of delivery by skilled birth attendant BDHS, every 3 yrs 26%, UESD % 18%, BDHS 2007 Antenatal care coverage (at least 4 visits) BDHS, every 3 yrs 19.9%, UESD % 20.6% BDHS 2007 % of women receiving postnatal checkup within 2 days of BDHS, every 3 yrs 20.9%, UESD % delivery from a medically trained provider 18.5% BDHS 2007 Contraceptive prevalence rate (CPR) BDHS, every 3 yrs 61.7%, UESD % 55.8%, BDHS 2007 Unmet need for FP BDHS, every 3 yrs 17.1%, BDHS % Measles Immunization Coverage by 12 months CES, annual 82.4%, CES % % of children (0-59 months) with pneumonia receiving antibiotics BDHS, every 3 yrs 38.0%, UESD % 11, BDHS % 11 Proxy used as % of children with pneumonia taken to medical doctor/health facility, to be estimated in BDHS

33 RESULT Result 1.2 Improve equity in essential HPN service utilization (MDGs 1, 4, 5 and 6) Result 1.3 Improved awareness of healthy behavior (MDG 1, 4, 5) Result 1.4 Improved PHC-CC systems INDICATOR MEANS OF VERIFICATION & TIMING BASELINE TARGET 2016 % of children (6-59 months) receiving Vitamin A BDHS, every 3 yrs 82.6%, UESD % supplementation in the last 6 months 88.3%, BDHS 2007 TB case detection rate NT Program, annual 74%, NTP % Proportion of births in health facilities by wealth quintiles BDHS, every 3 yrs Q1:Q5=8.0:59.5, Q1:Q5 = <1:4 UESD 2010 Q1:Q5 12 =4.4:43.4, BDHS 2007 Use of modern contraceptives in low performing areas of BDHS, every 3 yrs Syl: 35.7%, Ctg: Sylhet & Sylhet and Chittagong 46.8%, UESD 2010 Chittagong: 50% Syl: 24.7%, Ctg: 38.2%, BDHS 2007 # of upazilas with women targeted by improved 13 voucher Demand Side Financing 31 (+9 universal) 70 scheme for having institutional deliveries Monitoring Reports, annual Rate of exclusive breastfeeding in infants up to 6 months BDHS, every 3 yrs 43%, BDHS % % of children 6-23 months fed with appropriate Infant and BDHS, every 3 yrs 41.5%, BDHS % Young Child Feeding (IYCF) practices # of Community Clinics (CC) with increasing number of CC Project/MIS/MOHFW NA 14 13,500 service contacts % of upgraded 15 union-level facilities able to provide basic EmOC services Health Facility Survey (BHFS), every 2yrs 15.5% 16 50% Component 2: Strengthened Health Systems Result 2.1 Strengthened planning and budgeting procedures Result 2.2 Strengthened monitoring and % of MOHFW budget allocated to upazila level or below Public expenditure review, annual 52%, PER 2006/7 60% % of annual work plans with budgets submitted by LDs by defined time period (July/Aug) 17 Planning Wing, annual NA % (achieved by 2013) MIS reports on service delivery published and disseminated 19 MIS of all agencies, annual NA % annually 12 Q1: Bottom 20% and Q5: Top 20% of wealth quintiles to represent socioeconomic status of households 13 Note for definition of improved: Demand-side financing upazilas that are means-tested, i.e. women need to meet specific criteria to be eligible for the voucher program 14 Set as Not Available as service registers are not yet to the CCs [CHECK] 15 In 2006, MOHFW decided to upgrade 1,495 UH&FWCs to provide basic EmOC [Source: Mridha et al. (2009) Public-sector Maternal Health Programmes and Services for Rural Bangladesh, J Health Popul Nutr 27(2): ] 16 % of UHFWC (upgraded) able to provide vacuum and forceps delivery 17 Refers to Single Work Plan 18 Baseline set Not Applicable as this was not practiced in HNPSP 19 Defined as distributed to, and discussed with relevant stakeholders 20 Baseline set as Not Applicable as the current practice by MISs is to publication on time and distribution (no stakeholder discussion) 23

34 RESULT evaluation systems Result 2.3 Improved human resources planning, development and management Result 2.4 Strengthened quality assurance and supervision systems Result 2.5 Sustainable and responsive procurement and logistic system Result 2.6 Improved infrastructure and maintenance Result 2.7 Sector management and legal framework INDICATOR Performance report of OPs reviewed with policy makers, MOHFW, Directorates and DPs, six monthly and annually each FY Proportion of service provider positions functionally vacant at upazila/district level and below, by category # of additional providers trained in midwifery at upazila health facilities No. of comprehensive EmOC facilities with functional 24/7 services Case fatality rate among admitted children with pneumonia in UHC % of health facilities, by type, without stock-outs of essential medicines at time of survey % of facilities without stock-outs of contraceptives at time of survey % of facilities (excluding CCs) having separate, improved toilets for female clients Regulatory framework for accreditation of health facilities including hospitals (both in the public and private sectors) reviewed and updated 28 MEANS OF VERIFICATION & TIMING Planning Wing, six monthly (Jul- Dec->Feb), (Jul-Jun -> Aug) DGHS/DHFP MIS, annual BHFS, every 2yrs BASELINE TARGET 2016 Not Available Physicians: 45.7% Nurses: 29.9% FWV/SACMO/MA: 16.9%, BHFS % (achieved by 2013) Physicians: 22.8% Nurses: 15% FWV/SACMO/MA: 8.5% 21 HRD/MOHFW, annual NA 3,000 MIS/EOC BHFS, every 2yrs DGHS MIS % 24, Health Bulletin BHFS, every 2yrs 66.1% 26, BHFS % LMIS, annual 58.1% 27, BHFS 70% BHFS, every 2yrs 2009 BHFS, every 2yrs 51.0%, BHFS % MOHFW 1982 Regulatory Act Reviewed (by 2012) Result 2.8 Decentralization through LLP procedures # of Districts/upazilas having functional LLP procedures Respective agencies, annual NA Piloting completed and reviewed for scaling up 21 Target set as reduction by 50% 22 Approximated figure to be updated 23 DGHS MIS Voice of MIS Feb Calculated from sex distribution of causes of death in each age cluster of children who attended outpatient and emergency departments of IMCI facilities 25 Calculated as the reduction of the case fatality rate after the implementation of the WHO s standard acute respiratory infection (ARI) case management guidelines found to be 23% [Source: Theodoratou et al (2010) "The effect of case management on childhood pneumonia mortality in developing countries." International Journal of Epidemiology 39: i155 i171] 26 Notes for definition: at least 75% of union level essential drug kit (10 drugs) available in the facilities at district level and below 27 Notes for definition: four contraceptives supplied (condom, oral pill, DMPA, IUD) available in the facilities at district level and below 28 Notes for definition: Start with a framework for facilitating accreditation of public hospitals and then extend to private hospitals 24

35 RESULT Result 2.9 SWAp and improved DP coordination (deliver on the Paris Declaration) Result 2.10 Strengthened Financial Management Systems (funding and reporting) INDICATOR # of non-pool DPs submitting quarterly expenditure reports each FY MEANS OF VERIFICATION & TIMING BASELINE TARGET 2016 Planning wing Irregular 100% % of project aid fund (e.g. development budget) disbursed FMAU 79.4% 29, FMAU 100% (by 2013) annually and quarterly by FY 2009/10 % of OPs with spending > 80% of ADP allocation (annually) FMAU/Planning Wing , FMAU % 31 (by 2013) 11 % of serious audit objections settled within the last 12 months FMAU 7%, FMAU 2007/8 32 >80% 29 Baseline taken from HPSDP Strategic Document, p Baseline taken from HPSDP Strategic Document, p Target set as 100% to ensure efficient fund utilization 32 Baseline used from APIR

36 Annex 2: Detailed Project Description The Government of Bangladesh (GOB) has developed a strategic plan for its new sector program, the Health, Population and Nutrition Sector Development Program (HPNSDP, the Program) July 2011 to June 2016, through an extensive consultative process building on the lessons of the previous sector programs. The proposed Project, Health Sector Development Program (HSDP), builds on the results of the closing program (HNPSP) and draws on the lessons learned. HSDP will support the Program of the Ministry of Health and Family Welfare (MOHFW) during the years by financing a proportion of the MOHFW budget and through related technical support. The Project is consistent with the GOB s programs and policies and will play an important role in operationalizing GOB s commitments in the health, nutrition and population (HNP) sector as outlined in the Vision 2021, the proposed National Health Policy and other national strategies, policies and programs, including the Second National Strategy for Accelerated Poverty Reduction (NSAPR II) and the draft Sixth Five Year Plan for Vision, Mission, Goal and Strategies of the GOB s Program (HPNSDP) The vision of the Program is to see the people healthier, happier and economically productive to make Bangladesh a middle income country by The mission is to create conditions whereby the people of Bangladesh have the opportunity to reach and maintain the highest attainable level of health. The overall goal is to ensure quality and equitable health care for all citizens in Bangladesh by improving access to and utilization of health, population and nutrition services. The GOB s strategic document for the Program sets out the strategic priorities, which will be supported by the Project. The strategic document also explains how these will be addressed, taking into account the strengths, lessons learned and implementation challenges experienced during the last two sector programs, the Health and Population Sector Program (HPSP) and the closing Health, Nutrition and Population Sector Program (HNPSP). The details of priorities, activities and interventions along with their implementation mechanisms are described further in the five-year Program Implementation Plan (PIP) and incorporated into the annually agreed upon Operational Plans (OPs). Key sector strategies include: Streamline and expand the access and quality of maternal neonatal and child health (MNCH) services, in particular supervised deliveries (millennium development goal (MDG) 4 and MDG 5). Revitalize family planning (FP) interventions and services. Improve and strengthen nutritional services by mainstreaming nutrition within the regular health services (MDG1). Strengthen preventive approaches as well as control programs to communicable diseases (MDG 6). Expand non-communicable disease (NCD) control efforts at all levels by streamlining referral systems and strengthening hospital accreditation and management systems. 26

37 Revitalize the community clinic (CC) based services as part of a functional Upazila Health System (UHS). Strengthen the various support systems by increasing the health workforce at upazila and CC levels, including their capacity building and enhanced focus on coordinated implementation of OPs, management information system (MIS) with information communication and technology and monitoring and evaluation (M&E) functions. Strengthen drug management and improve quality drug provision and improve procurement to reduce the time between procurement and distribution. Increase coverage and quality of services by strengthening coordination with other intra and inter-sectoral and private sector service providers. Pursue priority institutional and policy reforms and innovative ideas, such as decentralization and LLP, public private partnerships, and incentives for service providers in hard to reach areas. 2. Project Development Objective The Project Development Objective is to enable the GOB to strengthen health systems and improve health services, particularly for the poor. 3. Project Components The Project, consistent with the Program, has two components, which are interdependent and mutually reinforcing: (a) Improving health services, and (b) Strengthening health systems. The components have elements that expand and add value to the closing program (HNPSP), particularly in addressing maternal and neo-natal health and nutrition. Some notable changes are: In the Directorate General of Health Services (DGHS), a new OP for MNCH will be put in place to better emphasize MNCH issues; The maternal health strategy will be updated to emphasize the implementation of improved newborn care and related interventions; Community Clinics and domiciliary level services will provide woman-friendly preconception and pregnancy care; MNCH and nutrition services for urban slums, will be promoted, in collaboration with the Ministry of Local Government, Rural Development and Cooperatives (MOLGRDC) and other health care providers, including NGOs; Nutrition has been made a priority and all facilities under the DGHS and the Directorate General of Family Planning (DGFP) providing MNCH services will be made available for integrated nutrition service delivery; and Community based integrated management of childhood illnesses (IMCI) programs along with programs through CCs will deliver community nutrition services in rural areas. The Project will support MOHFW to implement activities from the components listed below and included in the OPs, and the share of Annual Development Program (ADP), which will be agreed upon annually. The scope of the activities described below that will be financed will be expanded based on the funds available under the multi donor trust fund (MDTF). 27

38 Component 1 Improving Health Services Sub-Component 1.A Improving Health Programs This component aims at improving priority HNP services in order to accelerate the achievement of the HNP-related MDGs by capitalizing on and scaling up the interventions undertaken under the HNPSP as well as introducing new interventions. This component will support the following priority programs: (a) Maternal, Reproductive, Neonatal and Child Health services: These services constitute the first priority with particular attention to improving the quality, reliability and coverage of MNCH services, including in urban areas. Key areas include HR placement and development, including pre service training, expansion of skilled birth attendance and strengthening of 24/7 emergency obstetric care (EmOC) and neonatal care, community support systems, and nutrition counseling services. Specific measures will be taken to expand the provision of care for the newborn, improving reproductive health services including menstrual regulation and postabortion care in addition to implementing the Adolescent Health Strategy. FP has been prioritized with emphasis on long term and permanent methods, targeting the newlyweds, better management of side effects, commodity security, strengthened behavior change communication (BCC) activities and specific attention to low performing areas etc. Also scaling up of proven interventions and best practices such as use of misoprostol for post partum hemorrhage in the absence of oxytocin and the use of magnesium sulphate for prevention of pre-eclampsia and learning from piloting Demand Side Financing have been proposed. The priority interventions to improve maternal, neonatal and child health will include: Improve the reliability of quality maternal health services from preconception to the postnatal period in facilities at every level from medical colleges to CCs, including management of satellite clinics; Expand skilled birth attendance during home deliveries by continuing the community-based SBA training program with strengthened management and clinical supervision, continue post-basic 6 months midwifery training and the start of direct entry midwife training course; Increase institutional childbirth with skilled attendance through the provision of 24/7 services in appropriate facilities with geographical targeting for low performing and hard to reach areas; Strengthen 24/7 EmOC services through improved development, deployment and retention of human resources (HR) with an appropriate skill mix and training at district hospitals and Maternal and Child Welfare Centers, and selected Upazila Health Complexes; Expansion of the Demand Side Financing scheme taking into consideration the recommendations from the economic evaluation; Create awareness and demand for services through mass media and strengthened information education and communication (IEC) and BCC services as well promote MNCH services nationwide including urban slums, in collaboration with non-governmental organizations (NGOs); Expanding facility based-imci and community based IMCI services including training of doctors, nurses, paramedics, Female Welfare Visitors (FWVs) and field workers; 28

39 Tackling acute respiratory infection (ARI) and diarrhea through expansion of IMCI particularly at the community level to cover the whole country with special emphasis on hard to reach areas; Reducing malnutrition through fortification of food with vitamin A, iron and iodine for children, iron and folic acid for pregnant women including other nutritional services; Ensuring growth promotion and monitoring with counseling on appropriate feeding practices including breast feeding through training and orientation; and Strengthening and sustaining of routine immunization and disease surveillance activities together with Supplementary Immunization Activities, National Immunization Days, and Measles Campaign. (b) Reproductive and Adolescent Health: The reproductive and adolescent health related priority interventions will include: Improving knowledge on reproductive health and creating a positive change in the behavior and attitude of the gate keepers, of adolescents (e.g., parents, guardians, teachers, religious leaders, peers) towards reproductive health issues; Providing easy access to adolescent friendly health services and other related services as well as reducing early marriage and pregnancy among adolescents; Reducing prevalence and incidence of reproductive tract infection/sexually transmitted disease (STD), including HIV/AIDS among women through health and FP workers, clinicians and paramedics; and Implementing the National Reproductive and Adolescent Health Strategies along with targeted interventions for out-of-school adolescent boys and girls. (c) Population and Family Planning: The priority interventions to improve population and FP services will include: Promoting delay in marriage and childbearing, use of FP before and after the first birth thus promoting birth spacing and limiting family size; Strengthening FP awareness building efforts through mass communication and IEC activities; Ensuring uninterrupted availability of quality FP services closer to the people (at the CC level); Providing incentives for long acting and permanent contraceptive performance; and Improve on partnership with private providers to improve FP services. (d) Nutrition: The GOB is planning to accelerate the progress in reducing the persistently high rates of maternal and child under-nutrition by mainstreaming the implementation of nutrition interventions into health (DGHS) and FP services (DGFP), scaling-up the provision area-based community nutrition, updating the National Plan of Action on Nutrition in the light of the food and nutrition policies, amongst other important priority actions. To achieve this, nutrition has been made a priority and the various key strategies and actions that will be pursued will include: 29

40 Growth Monitoring and Promotion: the regular measurement, recording and interpretation of a child s growth change in order to counsel act and follow-up on results, will be implemented to detect growth faltering of infants and young children early and enhance the transfer of nutrition information in order to take the preventive and curative actions needed. BCC to promote good nutritional practices (e.g. infant and young child feeding practices): Mass media campaigns, social mobilization and behavioral change and communication activities at health facility and community levels will be implemented to promote good health and nutrition practices. Specific behaviors to be targeted will include; promotion of exclusive breast feeding for 6 months and continued breastfeeding up to 2 years; introduction of complementary foods of adequate nutritional quality and quantity after the age of 6 months; and improved hygiene practices including hand washing. Vitamin A supplementation of children 6-59 months: National Nutrition Service (NNS) will strive to increase further the high coverage of Vitamin A supplementation and ensure that areas or population groups that have not been reached thus far are better targeted. Zinc Supplementation during treatment of diarrhea: The incidence of diarrhea among Bangladeshi children is amongst the highest in the sub-continent, hence contributing to infant and young child malnutrition. Zinc supplementation during treatment of diarrhea has been shown to have both curative and preventive. Therefore, NNS will promote and strengthen support that the provision (including procurement) of Zinc supplements along with oral rehydration solution. Salt Iodization: The salt iodization program will continue to be strengthened and expanded through advocacy at household and national level. Iron-folic acid supplementation for pregnant women: Bangladesh has one of the highest prevalence of maternal anemia in the world. The country has a policy of providing iron-folic acid (IFA) supplements to pregnant women (during antenatal care) in order to reduce the incidence and prevalence of anemia. However, poor coverage, weak compliance and stockouts have affected the effectiveness of this intervention. Therefore, the Program will help set up systems to ensure adequate procurement and supply of IFA tablets at all levels of the health system and train health workers to develop their skills to counsel women to enable full compliance. Iron supplementation and deworming of adolescent girls: NNS will endeavor to provide structured BCC sessions for adolescent girls to provide them with the necessary knowledge on reproductive and nutritional health through individual and group counseling. The girls will also be provided with de-worming tablets and IFA tablets when they come into contact with the health service providers. Treatment of severe acute malnutrition: Mainstreaming the implementation of nutrition interventions into health and FP services will ensure more coordination in the treatment of moderate and severe acute malnutrition at the health facility as well as community level. At the health facility level, children with severe acute malnutrition and who have additional medical complications will be treated according to national & internationally recommended protocols. At the community level, the GOB will address community-based management of acute malnutrition through the community based IMCI program and community clinic services. Training and capacity building: Capacity building and various forms of training will be a major priority for NNS as the weak capacity to sufficiently and effectively supervise and monitor the implementation of the National Nutrition Program has been identified as a key 30

41 bottleneck. The mainstreaming process will require that many health personnel (from Upazila Health Complex through community levels) perform duties and responsibilities for which they have not received sufficient training. Coordination of nutrition activities across different sectors: Malnutrition is intrinsically multi-sectoral, and hence achieving sustainable nutrition security is fundamentally a multisectoral cross-cutting challenge requiring a coordination of policies and strategies of different sectors and ministries on a sustained basis. Therefore, the NNS will develop mechanisms for effective coordination of nutrition and nutrition-related activities in other sectors for example, food security, food safety, fortification of staple foods, livelihoods programs including income generation initiatives. M&E/Nutrition Surveillance: The availability and use of quality data is essential for evidence-based decision making to improve nutrition programming. M&E and Nutrition Surveillance systems will be established to monitor the implementation of the Program and link them to existing HIS tools and systems of the GOB and other stakeholders. Mainstreaming gender into nutrition programming: Gender and nutrition are closely associated, and there are strong linkages between a woman s status and both her health and her children s nutritional outcomes. Therefore, both the health facility and the communitybased nutrition interventions will involve all community and household members who are responsible for decision making and those who can influence maternal, infant and young child feeding practices as well as other nutrition behaviors. (e) Priority Communicable Diseases: These include tuberculosis (TB), malaria, HIV/AIDS and STDs, and neglected tropical diseases. TB control is a successful public health program, which will be maintained in line with the National Strategic Plan to Control TB ( ). About 12 million people in 13 districts of the north-eastern border belt and the Chittagong Hill Tracts, live in malaria high-risk areas. About 98 percent of malaria cases are reported from these 13 districts. However, both diagnosis and treatment need to be strengthened along with quality assurance (QA) of diagnosis by Institute of Epidemiological Disease Control and Research (for all vector borne diseases). Bangladesh continues to have low a HIV prevalence (below 1%) partly due to the early and sustained implementation of HIV prevention programs targeted to the most at risk populations, informed by data from regular surveillance and behavioral surveys. It is important to sustain these efforts, to avoid escalation of concentrated epidemics. The priority interventions to combat the communicable diseases will include: Pursuing quality directly observed treatment-short course (DOTS) expansion and enhancement, establishing interventions to address HIV associated TB and drug-resistant TB, and forging partnerships to ensure equitable access to an essential standard of care to all TB Patients; engage people with TB, and affected communities; Strengthening identification and treatment of malaria cases especially in 13 highly endemic districts as well as promoting insecticide treated nets/long lasting impregnated nets in endemic areas, with particular emphasis in the three Chittagong Hill Tract districts; scaling up of quality of targeted interventions for vulnerable populations including opioid substitution therapy; Strengthening the management capacity of the National AIDS/STD Program (NASP) for national program management; and 31

42 Developing and implementing one unified national M&E plan, including surveillance for HIV/AIDS, and scaling up support and treatment to achieve universal treatment for people living with HIV/AIDS through the public health system. (f) Non communicable diseases (NCDs): The priority interventions to improve NCD services will include: Strengthening BCC activities for prevention of NCDs, and diagnosis and management of kidney diseases, diabetes and arsenicosis patients in primary, secondary and tertiary hospitals Strengthening prevention awareness and diagnosis of cardio-vascular disease in all three tiers of facilities in the health system and treatment and management in secondary and tertiary hospitals; Screening for early detection of cancer (cervix, uterus, breast, oral, larynx, lung, etc); and Strengthening diagnosis and management facilities including for the palliative care of cancer patients in secondary and tertiary hospitals. (g) Disease Surveillance: The priority interventions to improve disease surveillance will include: Strengthening the capacity of Institute of Epidemiological Disease Control and Research to carry out disease surveillance effectively; and Mapping of all major diseases for each district and upazila. (h) Information, Education and Communication (IEC) and Behavioral Change Communication (BCC): The IEC and BCC activities to support the achievement of MDGs 1b, 4, and 5 have been elaborated in the national Health Education and Promotion Strategy and the National Communication Strategy for FP and Reproductive Health. The priority interventions to improve IEC and BCC services will include: Promoting health, FP and nutrition services through electronic and print media and motivational programs in the form of feature films, posters, and local dramas; Providing need based BCC/IEC support in order to increase awareness and community participation; Producing and printing BCC/IEC materials and distributing these materials at all facilities of health and FP services; and Promote interpersonal communication interventions to achieve communication objectives. Sub-Component 1.B- Improving Service Provision This entails the development of standards for services, quality and logistics for each tier together with relevant clinical and managerial expertise; provision of guidelines and training manuals/modules and training staff at different levels. (a) Primary Health Care: As an integral part of strengthening primary health care (PHC), the Program will focus on initiating the UHS, which entails establishing a functional referral system at upazila and district levels and improving the continuity of care across the different service 32

43 delivery levels. The priority interventions to improve health service delivery at the upazila level and below will include: Defining the composition of the Upazila Health Management Committee along with tasks/ responsibilities and focus on capacity building of the committee members as well as the referral and supervision linkages and responsibilities between the various levels of care (district, upazila, union and community); Strengthening CC management groups to ensure community participation in CC management and training of health providers at the CC level; The recruitment of community health care providers to strengthen voice and accountability through support to CC management groups; and The provision of service packages by NGOs/community based organizations, where appropriate, through a formal agreement between the local public health manager and the contracted party. (b) Hospital Care: The priority interventions to improve hospital services will include: Strengthening performance of secondary and tertiary level hospital services by deploying skill-mixed HR; introducing clinical protocols; equipping the hospitals with modern materials and diagnostic facilities and introducing a timely maintenance system; ensuring adequate drugs and consumables; Establishing hospital accreditation and the total quality management concept in public and private hospital services through QA teams and mortality audits and developing and initiating a performance based payment system for all service providers; Strengthening emergency services in public hospitals and promote their availability in nonpublic hospitals; Strong coordination between directors in charge of construction, human resources and medical equipment procurement is necessary, especially for new construction/expansion of hospitals; and Introducing administrative and financial autonomy for tertiary level specialized hospitals and gradually extended to medical college and district hospitals and strengthening management Committees at hospitals for better and effective service delivery including ensuring utilization by the poor and women; and Establishing an effective waste management system and ensure the provision of safe blood. (c) Urban health: The priority activities will include: In collaboration with MOLGRDC, the development of an urban health strategy and urban health development plan. A coordination mechanism will be developed for the two Ministries to jointly assess, map, coordinate, plan and work together to provide quality health care services for the urban population; Expanding essential health services to urban areas which are currently not covered by MOLGRDC including expanding urban dispensaries for effective and quality PHC and FP services; Defining an adequate referral system between the various urban dispensaries and the second and third level hospitals; and 33

44 Determination of the role and accountability of different NGOs and the private sector in the delivery of urban health services and formalizing the relationships through PPPs and through diversification of health service delivery strategies (e.g. GP system). Component 2 Strengthening Health Systems (a) Governance and Stewardship: The stewardship role of MOHFW will be strengthened with a view to ensuring good governance in the health sector through strengthening its regulatory and supervisory roles for effective policy formulation, and the monitoring of quality of care and safety of patients in both public and private sectors. The existing structure and capacity of DGHS, DGFP, and Directorate General of Drug Administration (DGDA) will be reviewed and strengthened for increasing supervisory performance and enhancing institutional capacity. Legal and Regulatory Framework: The main regulation functions under the MOHFW are the accreditation of hospitals; private health services; diagnostic centers and training institutions (including medical colleges); the licensing and control of pharmaceuticals; the licensing of some cadres of health workers; and overall setting of standards, including for alternative medical care and medical waste management. The GOB has established different professional regulatory and statutory bodies that play important oversight roles to ensure transparency and accountability. 33 Parastatal Organizations: Development of the health sector requires direct involvement, interaction and collaboration with policies and programs of ministries, agencies and a variety of different role players, including: (a) GOB ministries 34 and agencies, (b) private and other nonstate health service providers, and (c) professional associations, mass media, community organizations and various other NGOs contributing to health sector s development. Non Governmental Organizations (NGOs): NGOs are a significant and growing source of health service delivery in both rural and urban Bangladesh. The MOHFW will strengthen its engagement with the NGO and private sector, but in doing so recognize that NGOs and the private sector are not a homogenous group in terms of their engagement and involvement in the health sector. There are some well established and institutionally strong NGOs, (i) as health care providers, (ii) as innovators in diversifying modalities of health care delivery, (iii) in training formal and informal health service providers, (iv) in research and development, (v) work as catalyst/facilitator for creating demand for services and linking community with health and FP facilities, and (vi) in holding government accountable for its interventions through raising community and civil society voices. Public Private Partnerships (PPP): The GOB recognizes the wider involvement of the private sector, including non-state institutions 35 for enhancing effective health service delivery. PPPs in 33 These include: Bangladesh Medical and Dental Council, Bangladesh Nursing Council, Bangladesh Pharmacy Council, State Medical Faculty, Bangladesh National Nutrition Council, the Bongobandhu Sheikh Mujib Medical University, the Dhaka Shishu Hospital, the Dhaka National Medical College and Hospital, Bangladesh Homeopathy Board, the Bangladesh Unani and Ayurvedi Board, the Bangladesh College of Physicians and Surgeons, the Bangladesh Medical Research Council, the Centre of Medical Education, and the Bangladesh Pharmacy Council. 34 These include: MOLGRDC, Ministry of Education, Ministry of Primary and Mass Education, Ministry of Food & Disaster Management, Ministry of Women & Children Affairs, Ministry of Social Welfare, Ministry of Agriculture, Ministry of Fisheries & Livestock, Ministry of Information, Ministry of Commerce, MOF, and Ministry of Law, Justice and Parliamentary Affairs. 35 The private sector includes (i) the private for profit institutions, organizations and individual care providers and the private not for profit organizations (NGOs, civil society organizations and faith based organizations). 34

45 health services delivery and in the areas of medical and allied education will be further expanded and strengthened with effective monitoring and regulatory mechanisms. The proposed Private Health Care Facilities Services Act is currently being reviewed. Gender, Equity and Voice (GEV): The GOB has made it a priority to eliminate discrimination against women and girls and promote gender equity which is reflected in the Program. The existing Gender Equality Strategy of MOHFW will be revised to incorporate gender-related in areas such as human resource planning, development and management at facility level, housing, and promotion for women in the workforce. Voice and accountability mechanisms will be mainstreamed into the governance and stewardship functions of the overall Program. A local level accountability mechanism will be developed in participation with community people and local NGOs. Community planning and management mechanisms will ensure the representation and participation of representatives of particularly disadvantaged and marginalized groups, to ensure that their opinions are taken into account and to improve the health care delivery services for such groups. The priority interventions for the governance and stewardship functions will include: Constituting a Taskforce to: (i) oversee the revision of the existing laws/ordinances, (ii) assess the need of any new ones, and (iii) determine measures to improve the existing legal framework, as appropriate; Conducting an institutional and regulatory analysis of the government and parastatal organizations and making recommendations for establishing an effective regulatory framework including exploring the consolidation of existing entities and the creation of new ones like a health policy council and accrediting bodies for medical education, hospital service delivery and for ensuring food safety; Establishing an effective regulatory framework, with adequate mechanisms for strengthening its implementation and enforcement in order to strengthening government s stewardship functions. Updating the PPP strategy and the development of an action plan; The development of a regulatory framework for contracting out with NGOs based on an analysis of the MOHFW experience in contracting out different health services. Mainstreaming GEV issues in all components of the Program and ensure that they are adequately budgeted for (at central and local levels) and improving coordination and ensuring that GEV and accountability dimensions are incorporated in all the objectives and activities in the OPs and reflected in the RF of the Program Updating the GEV strategy and developing an action plan and developing a local level accountability mechanism, through score card methods, exit interviews, focus group discussions, and workshops, in participation with community leaders and local NGOs, on a pilot basis; Revising the Consumer Rights Protection Act (2009) and redesigning the Clients Charter of Rights and patient s duties and responsibilities, including communication activities for increasing awareness among clients and service providers; and Improving coordination and ensuring that GEV and accountability dimensions are incorporated in all the objectives and activities in the OPs and reflected in the results framework (RF) of the Program. 35

46 (b) Health Sector Planning and Management: This subcomponent entails several critical functions including program planning and budgeting, single work plan and budget, decentralization and local level planning (LLP). Sector Wide Planning and Management: The Planning Wing of the MOHFW oversees the planning and budgeting process of the ministry and is responsible for timely submission of the OPs. It is responsible for preparation of the annual development budget of the MOHFW and 5 year Program budget and the PIP on the basis of the medium term budgetary framework (MTBF). Based on the PIP, the Line Directors will develop their respective OPs for all the components for three years with a five-year budget (the final two years of the budget will be kept as a block allocation). It is expected that the mid-term review (MTR) will take place at the middle of the PIP implementation and the OPs will be revised accordingly. Resource allocation formula: Public funding for health care through the MOHFW to geographic areas is currently based on norms related to the size of facilities. Such allocations often do not reflect population need. Therefore, MOHFW requires a formula based on population needs, poverty indices, disease burden and other relevant factors. A prototype formula will be reviewed and piloted. A working group will be established to monitor formula implementation. MOHFW- wide comprehensive work plan: The development and the revenue budget of the MOHFW are currently being prepared under the MTBF resource envelope. As both the development and non-development budgets are prepared separately and presented in two distinct documents, it is thus difficult for decision makers and managers to take a holistic view on the allocation of resource. In the absence of any effective coordination such compartmentalized budgeting system always has the risk of duplication, under- allocation of resources in priority areas and under appreciation of the recurrent costs implied by investments. Therefore, a single work-plan will be prepared to fulfill Ministry of Finance (MOF) s commitment to using one unified budget. Decentralization: Decentralization to the upazila level is a commitment by the GOB. Depending on the GOB decentralization scope and depth, the MOHFW is planning to decentralize the management of public health service delivery with delegation of financial power to the lowest appropriate level to make the services more responsive to the needs of the local population. The role of the MOLGRDC will be crucial in ensuring and facilitating public involvement and community participation in managing the provision of public health services. In addition, retention of local cost recovery fees may be introduced to meet the financing gaps and improve quality of services. As part of these strategies, it will be critical to develop and implement an institutional and management capacity building plan of the subnational levels. Local Level Planning (LLP): In spite of gaining considerable experience in producing local level plans at upazila level over the past two programs, the LLP could not be linked to budget process and as a result did not receive any resource allocation for its implementation. Also, a study was undertaken by the MOHFW to examine the feasibility of operating a district plan, which was found it to be not realistic under the present legal, administrative and budgetary system. To this effect, the MOHFW has formed a national level committee and six district committees to carry 36

47 forward the task of decentralized budget planning under the overall LLP policy directions. It is also expected that the UHS program will become part of this initiative. The priority interventions to improve budgeting and planning will include: Introducing joint review of non-development and development expenditure in the MOHFW as well as in the Directorates on a monthly basis; Establishing a new Coordination Section in the MOHFW and at the Directorate level to facilitate preparation and use of single work-plan; Conducting a study to explore the possibility of financing the commonly funded items from a particular budget, either non-development or development; Reviewing periodically work plan formats and procedures for making further improvements and link with the Single Work Plan with LLP once decided and revising and updating the LLP Toolkit, reflecting the changes according to the regulatory framework; Ensuring adequate flexibility by MOHFW in revising the OPs based on each year s annual program review (APR) and in inter and intra allocation and reallocation of development budget amongst the OPs; and Developing and implementing a capacity building plan including training and technical assistance on administrative, management and financial management and meeting the needs for human resources to support the decentralization plan. (c) Human Resources for Health: The priority interventions to improve health workforce planning will include: Develop and implement an HR plan based on HR projections for ; Develop a functional HR Information System as a priority to provide updated and consolidated data on the health workforce; Increase the availability of the critical health workforce including skilled nurses, midwifes, specialized medical doctors (e.g. anesthetists and obstetricians) to minimize the immediate gaps as well as ensure service provision of such personnel at all levels including deployment; Create a national health workforce career plan that clearly describes staff development paths, promotion and deployment prospects for all types of health personnel and staffs; Introduce specific incentives packages to deploy and retain health workforce in remote, rural and hard to reach areas as well as work out a mechanism to improve and scale up Individual Performance Management System (IPMS) to cover more and more health institutions and facilities; broaden concept of IPMS to transform it into an Organizational Performance Management System; Continuation of community-based SBA and nurse-midwife training and start direct-entry training for midwifes; Streamline the recruitment and promotion rule of the nursing services and post/ recruit/promote staff as per standard; and Increase the capacity of the Bangladesh Nursing Council to enable it to monitor all the nursing institutes and colleges in the public and private sector. (d) Health Care Financing: In the context of global economic crisis, declining development partner (DP) contributions to the health sector in Bangladesh, and increasing out-of-pocket 37

48 expenditure, the GOB is faced with a challenge to cope with and manage this changing economic and financing environment by exploring alternative health care financing options to make it more effective and efficient for the poor. Moreover, a more rational and explicit approach to allocating resources would help to achieve efficient resource allocation in the health sector, and create fiscal space. Health care financing framework: The purpose of the health financing framework is to guide the development of action plans to move from the status quo towards achievement of long-term strategies by assessing: (i) different health financing instruments currently being discussed (demand side health financing, supply side financing, mixed systems, etc.) on their inherent principles relating to equity, efficiency, poverty focus, coverage, sustainability and administrative arrangements; (ii) different health financing instruments currently being discussed which could contribute to an effective decrease of out-of-pocket expenditure as a core poverty trap; (iii) what other factors correlate with financial barriers to access health services which should be addressed; and (iv) the development of both short and longer term strategies to ensure access of the poor to quality health services, including joint development of a methodology for identifying the poor. Demand-Side Financing: There is recent evidence that the ongoing demand side financing scheme (maternal voucher scheme) has helped to increase the utilization of safe motherhood services, but there are also some concerns. These relate to: (i) the scheme s affordability and sustainability, if it were to be scaled up, (ii) procedural constraints related to fund disbursement and management, (iii) improvement of the supply side (human resources, logistics, equipment, quality) in order to consistently keep up with the increased demand, (iv) inclusion of the private sector or NGOs; and (v) some aspects of the design of the incentives (e.g. cash payments, service coverage) that may change provider and patient incentives in ways that are not supportive of the maternal health objectives. To scale up, recommendations from the economic evaluation of Demand Side Financing program, which was disseminated and discussed extensively, will be considered. The activities related to health care financing will include: Reviewing different health financing instruments currently being discussed on their inherent principles and their capacity to contribute to an effective decrease of out-of-pocket expenditure and identify critical health financing constraints for their solutions; Developing short and long term strategies to ensure access of the poor to quality health services, including joint development of agreed methodology on how to identify the poor; Activating a task group that will discuss the issues of health financing framework and review the weaknesses and strengths of the current national health financing system; Reviewing and evaluating health financing approaches (e.g. role of pre-payment mechanisms with community health financing) including innovative approaches, user fees (with and without retention), private sector financing and PPP, and various types of donor financing; and Scaling up on-going Demand Side Financing program based on the/an economic evaluation including reviewing and piloting of new ones. 38

49 (e) M&E, Health Information System (HIS) and Research: The current capacity for M&E, HIS and research within the MOHFW and at implementing agency level is inadequate and fragmented. In the absence of an improved routine MIS system, Program monitoring is dependent on survey data, and sector monitoring is inadequate. Despite the emphasis on information communication technology, the reporting systems are still paper-based and time consuming. At the MOHFW level, the M&E function is weak due to a lack of skilled staff and a clear institutional mandate. Priority will be given to: Establishing a sustainable M&E system with an institutional home in the ministry for tracking progress of the Program and ensuring evidence-based decision making; Developing an M&E strategy and work plan for the Program based on a comprehensive capacity assessment of the system at all levels; Developing the Data Management and Information System, which will play a critical role to integrate data from various MIS and Program and improving the web-based reporting system and flow of information and the creation of a monitoring culture at sub-district (upazila) level with system; Improving the quality of routine data collection from the public sector and developing initiatives to collect data from private health facilities; and Coordinating research, survey, surveillance agenda and activities as part of the Ministry s stewardship role through the provisions of Ethical Review Committee /Research Review Committee aiming at promoting research on priority programs. (f) Quality Assurance, Standards and Regulation: Improving quality of services in public health facilities is one of the most important areas of the Program since quality is among the main factors determining the utilization of public health care facilities and affecting health outcomes. The priority interventions to improve QA will include: Improve quality of diagnostic facilities and services at both public and private hospitals; Improve functioning of National Steering Committee, National Technical Committee, and QA Task Group and strengthen the functional QA system; Develop a gradation of the licensed institutes, hospitals and individual practitioners based on quality through a transparent accreditation mechanism, will entail a quality assessment by a board, formed with proper representation from the beneficiaries as well as the relevant experts; Conduct regular client and provider satisfaction surveys in primary, secondary and tertiary level health facilities; and Develop a quality management strategy and policy for primary, secondary and tertiary level health care services and update existing standard operational procedures along with standard clinical and operational protocols to be practiced in all hospitals both public and private. (g) Drug Administration and Regulation: The DGDA through the Drug Regulatory Authority is the national regulatory authority of pharmaceutical products and vaccines in Bangladesh. It has full control on all aspects of drug and vaccine development and use, for any drug produced and/or imported in the country. The priority interventions to improve drug administration will include: 39

50 Strengthening government stewardship and policy formulation in the pharmaceutical sector, which includes: a) updating the National Drug Policy 2005; b) ensuring its consistency with the draft National Health Policy and the pharmaceutical goals within the National Industrial Policy; c) within the National Drug Policy ensuring the development of an essential drugs program and a concurrent program for rational use of drugs (e.g. National Formulary, National Standard Treatment Guidelines, A Generics Policy, mechanisms of audit and feedback of prescribing data and effective drug information system); and d) the DGDA, in consultation with the expert committee will update from time to time the list of essential medicines in line with the current Essential Drug List (EDL) of the World Health Organization (WHO). They will also ensure the use of the EDL for all public procurement, prescription, dispensing, and consumption of drugs. Strengthening pharmaceutical quality assurance and control, which includes: a) establishment of quality assurance and control norms, standards and guidelines (e.g. current Good Manufacturing Practices, Good Laboratory Practices, Good Pharmacy Practices, internationally accepted pharmacopial standards, etc.); b) Enforcement of the established quality assurance and control standards; c) Capacity building of the DGDA inspectorate; and d) Modernize the drug testing labs to meet international standards at central and regional levels. Strengthening public sector procurement and supply chain management of pharmaceuticals: as described below under the section on Procurement and Supply Chain Management, the Project will ensure that the pharmaceuticals are procured, stored and distributed in an efficient and equitable manner. (h) Procurement and Supply Chain Management: Coordination among the requisitioning Line Directors (LDs) will have to be ensured by the relevant Directorates. TA will be provided to ensure improved performance in procurement and logistics management. TA support is being provided by USAID for the Logistics and Supply Unit of the DGFP, which will be further strengthened to ensure availability of commodities, e.g. contraceptives, medical and surgical supplies and equipment. As for DGHS, a similar technical assistance (TA) will be provided and the logistics and monitoring information system will be strengthened as a priority. In parallel, the capacity and staffing of the Central Medical Stores Depot (CMSD), which is the largest procurement entity in the MOHFW, will be further strengthened. The priority interventions to improve procurement and supply chain management will include: Ensuring efficient, timely and transparent procurement and distribution throughout the year to prevent stock-out of contraceptives, Medical and Surgical Requisites, equipment, etc. and an efficient storage, inventory, supply and distribution chain and utilization of procured goods and logistics; Facilitating an efficient on line procurement tracking and automated store management systems; Exploring options of e-procurement and framework contracts; and Building up capacity for procurement and strengthening monitoring and establishing accountability of the procured goods and logistics. (i) Physical facilities and Maintenance: The Program envisages developing a need-based plan for the renovation and upgrading of the existing health facilities as well as the construction of new facilities and equipment installation. Physical design of the health facilities needs to be 40

51 women friendly. New and upgraded facilities will be synchronized with the provision of manpower, logistics and supplies. While designing new facilities, consideration will be made of demographic and geographic characteristics with special focus on building disaster resilient structures and ensuring adequate infection control and waste disposal systems. Replication of one stop crisis centers will be scaled up at district level. The allocation of funds for operation and maintenance of facilities, equipment, machines and vehicles will need to be an integral part of investment planning. To this effect, the PIP will ensure that an adequate defined percentage of the budget is allocated for post purchase maintenance and repair. The priority interventions will include: Mapping out the need for new constructions and upgrading of health facilities; Designing need-based user and women friendly health facilities; and Preparing a comprehensive plan for repair and maintenance of health facilities, equipment and vehicles along with budget requirement. Table 1: Key health indicators, Bangladesh Key health indicators Baseline positions Target 2015 Infant mortality rate (IMR) / 1000 live births 153 (1970s) 65 (2004) 52 (2007) On track to 31 Neonatal mortality / 1000 live births 52 (1993) 41 (2004) 37 (2007 ) Off track to 22 Under-five mortality (U5MR) / 1000 live births 151 (1990/1) 88(2004) 65 (2007) On track to 48 Maternal Mortality / 100,000 live births 574 (1990/1) 320 (2001) (2010) On track to 147 Prevalence of underweight children (6 to 59 months) 67 (1990) 47.5 (2004) 46.3 (2000) Off track to 33 Total Fertility Rate 3.4 (1993-4) 3.0 (2004) 2.7 (2007) On track to 2.2 Prevalence of HIV / 100, (1990/1) (2007) On track - halting Prevalence of Malaria / 100, (1990/1) 59 (2008) On track - halting Prevalence of TB / 100, (1990/1) 225 (2007) On track - halting TB Case Detection Rate 41.0 NTP NTP NTP 2007 TB Cure Rate 83.7 NTP NTP NTP 2007 % children (under 1yr) fully immunized 52.8 CES, 1999/00 73 CES, CES, 2006 % newborn protected at birth against tetanus 83 CES, CES, CES, Bangladesh 2008 MDGs Progress Report 37 Bangladesh Maternal Mortality Survey 2010, BMMS

52 % Children 1 5 receiving Vita-A supplements in last 6 months 73.3 BDHS 1999/00 Utilization rate of ESD of the two Lowest Income Quintiles % of Births attended by Total 12.1 (1999/00) % of Births attended by lowest wealth 3.5 quintile (1999/00) % ANC by medically trained providers by 33.3 Total % ANC by medically trained providers by Lowest Wealth Quintile Contraceptive Prevalence Rate CPR (modern methods) % eligible couple/women on Long Lasting Birth control methods (1999/00) 19.4 (1999/00) 43.4 (1999/00) 8.9 (1999/00) 81.8 BDHS BDHS BDHS 5.2 UESD BDHS UESD

53 Annex 3: Implementation Arrangements 1. As part of the Government of Bangladesh (GOB) s sector Program (Health, Population and Nutrition Sector Development Program, HPNSDP), the Health Sector Development Program (HSDP, the Project) will be implemented by the Ministry of Health and Family Welfare (MOHFW) with its existing structures, similar to the now closing program (Health, Nutrition and Population Sector Program, HNPSP), and in accordance with the GOB and Bank s procedures and guidelines. The MOHFW is responsible for overall Project implementation and donor coordination. The entities within MOHFW involved in Project implementation include the Directorate General of Health Services (DGHS), Directorate General of Family Planning (DGFP), National institute of Population Research and Training (NIPORT), Directorate of Nursing and Education, Directorate General of Drug Administration (DGDA), Central Medical Stores Depot (CMSD), Health Engineering Department (HED) and the Public Works Department (PWD). There are 32 Line Directors (LDs), responsible for the elaboration of Operational Plans (OPs), their implementation and the disbursements under the OPs. Each LD will be responsible for certain actions included in the Project components and the Joint Secretary/Joint Chief of MOHFW will monitor implementation in their units. Non-governmental organizations (NGOs) will be contracted to provide specific services when and where appropriate. 2. The GOB intends to continue to improve the performance of its institutions in managing health, nutrition and population (HNP) sector resources in order to enhance the development impact of the Program. To facilitate coordination between the MOHFW and the development partners (DPs) during implementation, MOHFW had established an HNP Forum under the closing program (HNPSP), consisting of senior-level representatives of the GOB and the DPs. The Secretary of MOHFW was the chair of the HNP Forum. Under the Project, the HNP Forum will be replaced by Local Consultative Group-Health. 3. Summary OPs and budgets are prepared for a period of five years, and these OPs, taken together, constitute the five-year Program Implementation Plan (PIP). The proposed PIP is submitted for approval to the Executive Committee of National Economic Council. Based on the approval of the PIP, the LDs subsequently elaborate detailed OPs for the five years with detailed budgets for the first three years and block allocations for the last two years. The OPs are then submitted for approval to the Steering Committee, which is comprised of inter-ministerial representatives and headed by the Minister of Health. 4. The Program will be financed through several mechanisms: a) GOB contributions through its regular budget allocation to the HNP sector; b) reimbursable project aid from DPs, using GOB disbursement mechanisms through Treasury (the pooled funds); and c) direct project aid from DPs, using separate, agency-specific disbursement channels (non-pooled funds). DPs will operate within the GOB planning and budget cycle as reflected in a Joint Financing Arrangement (JFA). The GOB will reflect in its budget all the support that it receives in the sector. 5. Project implementation will be carried out through the OPs -- reviewed by IDA and the other co-financiers -- in which detailed activities, results and annual budgets are defined. By March 31 each year, the GOB will furnish to the Bank the specific activities of the OPs and the 43

54 share of the Annual Development Program (ADP) to be financed under the Project, for the following fiscal year. Funds provided by the GOB and the pooling DPs will be used to finance eligible expenditures under the OPs, consistent with the Medium Term Budgetary Framework resource envelop. Eligible expenditures incurred under the OPs financed by the Project will be reimbursed through a foreign exchange (Forex) account established at the Central Bank as a subaccount of the consolidated account of Treasury. 6. A number of DPs are expected to pool their financial contributions through a Multi- Donor Trust Fund (MDTF), administered by IDA. The pooled funds will be channeled through the same Forex account at Treasury. An Administration Agreement between IDA and each of these DPs will outline the terms and conditions of co-financing arrangements. 7. The MOHFW, in collaboration with the DPs, will jointly review the Project in the third quarter of every calendar year to assess implementation progress. The review will: (i) evaluate the effectiveness of the implementation mechanisms and the efficiency of the organizational structures; (ii) assess implementation performance against agreed upon indicators in the results framework (RF) and adjust indicators as needed; (iii) identify health policy issues that would support achieving the Program results; (iv) assess the performance of budget execution; (v) review the progress made in the implementation of the Governance and Accountability Action Plan (GAAP) and update the GAAP as appropriate; and (vi) assess the effectiveness of the implementation mechanisms. An Independent Review Team will play a key role in Annual Program Review (APR) and assist GOB and DPs during policy dialogue. 8. A number of fiduciary weaknesses were identified during the closing program (HNPSP) s implementation. Overall, the risk mitigation measures implemented under the closing program (HNPSP) appear to have significantly contained the risks associated with these weaknesses, given that the program (HNPSP) experienced no significant instances of fraud, corruption or misprocurement. Progress in the strengthening of fiduciary systems, however, has not been adequate. On financial management there was a lack of integration of planning and budgeting (synchrony between the operational planning cycle and the medium term budgetary framework, MTBF), delays in release of development funds to spending units, difficulties in getting information from below district level from the integrated budget and accounting system (IBAs), delays in submission of financial monitoring reports (FMRs), and the poor timeliness and quality of external and internal audits. The continued vacancies and shortage of staff trained in financial management remains a challenge. Several challenges related to procurement were identified, including the insufficiency of procurement capacity, delays in conducting procurement audits, and the lack of supplier interest due to the fiduciary environment. A Governance and Accountability Action Plan (GAAP) has been prepared to address many of these issues and implemented thereafter. Activities contained in the GAAP will be implemented by the MOHFW under the leadership of the MOHFW Secretary. DPs will provide technical support for capacity enhancement of the MOHFW which would also provide services to implement the GAAP. The GOB is committed to increase its capacity building efforts in terms of institutional set up and human resources to implement the Project. The implementation of the Environment Management Plan (EMP), the Social Management Framework (SMF) and the Tribal/Ethnic Health, Nutrition and Population Plan (THNPP) will be reviewed during the APR with recommendations incorporated in the following OPs. Given the weakness of the health 44

55 information system (HIS), most health service indicators are monitored through household surveys. Strengthening critical parts of the HIS during Project implementation and ensuring a robust RF will be an important factor in determining the achievement of results. In addition, independent technical audit mechanisms will be employed to verify the achievement of the results. 9. Pursuant to the Social Management Framework (SMF), the MOHFW will ensure that: (i) all buildings to be constructed under the Project should be located on land owned by the GOB and no resettlement of people, including squatters, would be involved or if private land is required, the land purchase will be completed and resettlement of people done in compliance with the GOB and the Association's social safeguard policies as specified in the SMF; (ii) the design, extension, upgrading, renovation and operations of facilities under the Project should be consistent with the GOB and the Association s social safeguards and environmental policies as specified in the SMF and EMP; (iii) for all facilities to be constructed or rehabilitated under the Project, particular attention shall be given to the provision and maintenance of safe drinking water, including regular testing of water for arsenic contamination; and (iv) the resettlement of affected persons, if any, should be carried out in accordance with the guidelines as specified in the SMF and a Resettlement Action Plan and Indigenous Peoples Plan prepared accordingly. The MOHFW will also ensure implementation of the THNPP for addressing the specific needs of the tribal people. i. Financial Management, Disbursements and Procurement Financial Management (FM) and Disbursement: 10. This section provides a general overview of the Public FM systems of the MOHFW and concludes with recommendations for improvement drawing on the findings from the FM Assessment and Public Expenditure and Financial Accountability (PEFA) Assessments conducted in 2010 and The objective of the assessment, which was carried out in accordance with the FM Investment Operation issued by the FM Sector Board on March 1, 2010, was to determine whether the implementing ministry and its agencies have acceptable financial management arrangement as evidenced by: (i) the use of funds in an efficient and economical way and for the purpose intended; (ii) the preparation of accurate, reliable and timely periodic financial reports; and (iii) the safeguard of assets procured under the Project. 11. Overall, the FM risk for the Project is assessed as Substantial (Medium-I). The assessment has concluded that with the implementation progress of the agreed actions during preparation as well as actions initiated by the MOHFW to support FM arrangements, the proposed financial management arrangements will satisfy the Bank s minimum requirements under OP/BP The MOHFW is compliant with the Bank s financial management requirements. Audit Reports have been received timely including Interim Unaudited Financial Reports (IUFRs) from the MOHFW which served as basis for fund disbursement. Improvements made in FM: 45

56 12. Despite the risk assessed as Substantial (Medium-I) and the assessment pointing to persistent weaknesses in the FM system, it is important to note of the achievements made thus far under the closing program in using Bangladesh s country financial management systems to channel donor funds following treasury rules and use of GOB s internal controls, accounting, reporting and audit functions. Progress made during implementation of HNPSP include: The development of procedures for operation of the Forex Account to reimburse the GOB its pre-financed expenditure in the health sector, clearly assigning responsibilities to three unitsthe FM and Administration Unit (FMAU), the Chief Accounts Officer (CAO) and the Bangladesh Bank. The new procedures have been critical in streamlining of funding through government systems, the first attempt by pool financiers to apply this in the health sector. The channeling of a substantial amount of DPs funding for the Project using the government Treasury system. Expenditures financed from these pooled funds are first made from the GOB Consolidated Account using the same procedures applicable to expenditure of the GOB s own funds. Statements of actual expenditures are the basis to trigger transfer of funds by the Controller General of Accounts (CGA) from the GOB Forex account to the consolidated account in order to reimburse the amounts spent. Disbursement of donor funds is based on quarterly Financial Management Reports (FMRs), which include quarterly expenditures, and these are compared to the annual budgets for the OPs. The FMRs include revenue expenditure, parallel/direct expenditure financed by non pooling DPs thereby ensuring a comprehensive picture covering all expenditures of the health sector. Since 2007, FMRs have mostly been submitted on time but have been subject to a number of revisions due to its low quality. The overstaffed FMAU, the unit responsible for FM function in the MOHFW headed by a Joint Secretary, has been downsized from 54 to 29 staff positions. FMAU has shortage of staff trained in financial management. An Audit and Accounts Cadre Officer has been put in place as Deputy Secretary to oversee all financial management activities under the Project. Under the existing system, the CAO of the MOHFW was unable to process payments to foreign consultants and NGOs in conformity with the design of the closing program (HNPSP). This has caused low utilization of pooled funds initially. Under the closing program (HNPSP), government expenditures requiring a letter of credit, payment to NGOs and treatment of advances have been streamlined through government directives. The MOHFW is the only ministry which responded positively to the proposal that internal audits be undertaken by a private firm until internal capacity is built, and thus met the additional requirements of the DPs for increased monitoring of operational and financial risks. An Audit Committee headed by the Additional Secretary has been set up to follow up and respond to the Foreign Aided Project Audit Department (FAPAD) audit report objections. The Audit Committee adopted a number of measures aimed at corrective actions for serious audit objections. 46

57 An annual audit of the ministry s financial statement has been carried out under an agreed Terms of Reference (TOR) with the Comptroller and Auditor General (CAG). For the first time, disbursement has been tagged to pending audit issues. Disbursement of pooled funds was reduced by an amount equivalent to the amount of audit objections remaining pending beyond a set due date. 13. Notwithstanding these several improvements, some capacity development activities have not yet been taken forward, including the lack of an approach to internalize reforms under the sector wide approach (SWAp), frequent staff transfers, a dearth of finance staff at all levels, the absence of an appropriate training strategy and the lack of timely follow up of internal and external audit issues. These issues have persistently affected FM performance in the sector. Summary of FM Assessment: Current risk level 14. The FM risk for this operation is assessed as Substantial (Medium-I). Fiduciary risk at the country level bears a direct impact at the sectoral level. While many of risk factors may go beyond the control of the sector, there are still a number of initiatives that are or can be undertaken at the sectoral level to mitigate the risk environment. The sectoral level risks are mainly attributable to the risk associated with (a) the residual risks after the application of short term measures to increase fiduciary assurance; and (b) the lack of a strategic approach to strengthening institutional capacity. In order to mitigate the risks and to ensure good governance in the implementation of the Project, the GOB has agreed to implement the GAAP, which will address governance and accountability issues that relate to the management of the Project. Highlights of the FM Assessment: 15. Budget and OPs are not always synchronized with the annual development budgets and the expenditures are therefore not consistent with the MTBF resource envelopes, which results in significant differences between planned expenditure for a fiscal year and the ADP allocation; 16. As budget information can be tracked through IBAs and all payments are processed through IBAs, this system should logically be the means for generating regular financial management information. This functionality has been constrained by the lack of integration of the budget and expenditure modules of IBAs and exclusion of some information, e.g. on direct project aid payments. The Accounts Code, the Treasury Rules and the General Financial Rules of the GOB form the basis for accounting of the expenditures under the closing program (HNPSP). A detailed FM manual has been prepared to facilitate accounting and reporting of these expenditures. The CGA system has been followed for preparing reports under which the FMAU receives and records financial information for both GOB and pool funds. The FMAU also receives Statements of Expenditure (SoEs) from the LDs and reconciles these with CGA information. For direct project aid and parallel project activities supported by DPs, the FMAU accounts for such expenditure following the existing accounts code of the GOB and then consolidate the information with the main financial reports. This use of dual reporting sources needs to be discontinued, requiring a phased approach to bring gradual improvements in the 47

58 timeliness of the reporting, the reconciliation process and the use of IBAs across more than thousand cost centers. 17. A framework of rules and regulations to establish internal control over expenditure exists but the application of these is weak. LDs are not supported by adequately trained financial management staff. Too much reliance is placed on pre-audit checking of claims for payment instead of effective monitoring of expenditure against approved allocation. The system however, incorporates comprehensive controls that limit expenditure commitments according to real cash availability (conformity with budget allocations and availability). Existing control mechanisms are understood and complied with mechanistically for the majority of the transactions. Regarding payroll expenditures, there is a direct connection with personnel records to assure data coincidence and its monthly reconciliation. 18. The current system of asset and inventory recording, maintenance and verification in MOHFW and LDs is weak as in other public sector institutions. Neither the LDs nor the Drawing and Disbursement Officers (DDOs) at district and upazila offices maintain an up-todate asset register. There is no system to ensure that fixed assets are properly recorded at the time of procurement or immediately thereafter. This is partly because the GOB s current procedure does not treat the procurement and utilization of fixed assets as a process requiring controls. 19. The internal audit arrangement within MOHFW is fragmented and not well resourced. Separate audit units exist within MOHFW, DGHS and DGFP. The in-house audit continues to pre-audit payments (an internal check function rather than internal audit) and inspect compliance with rules and regulations. The external auditor places little reliance on internal audit activities in planning the scope of the external audit of the MOHFW. Contract arrangements for internal audits by a private audit firm under the closing program (HNPSP) were established to overcome the recognized weakness of the existing situation. The first internal audit report found significant capacity constraints, operational inefficiencies and weak internal controls, however the effective response to internal audit findings has been undermined by the resistance of MOHFW staff viewing the auditor as outsiders and the failure to ensure a continuous and high quality service in subsequent audits. 20. The fund release procedures and reporting mechanism under HNPSP were not complicated, but the government procedures were not well understood at all levels. The timely availability of funds at the various spending units has been a major concern throughout the HNPSP implementation period. A specific spending bottleneck relates to fund releases for the fourth quarter. After having received funds for the one quarter, LDs need to provide evidence that at least 75% of the funds have been spent in order for the CGA to recognize the expenditures and allow funds for the following quarter to be released. In the case of procurement, expenditure is only recognized by the CGA when the full procurement process is completed, which can take considerable time. This means that fund releases to LDs for the fourth quarter will continue to be significantly delayed. 21. The single most important cause of the weak FM capacity of the MOHFW relates to the lack of qualified, skilled and experienced FM staff at all levels within the MOHFW, 48

59 including at LD levels. Despite FMAU being a separate unit within MOHFW with a large number of staff and the LDs having a finance department, financial management functions at various levels were left with non-financial management personnel and junior-level staff who lacked understanding of the sector-wide approach including the government s own rules and procedures. Frequent staff turnover resulted in discontinuity of FM functions, particularly for staff who received local and international training under the Project. Staff transfers at the top level in the FMAU have severely affected FM performance of HNPSP. It was furthermore noted that there were persistent delays in filling vacant positions. Although capacity constraints have been addressed through technical assistance supported by DPs, the staffing issue remains a key factor for MOHFW from building sustainable capacity. 22. The external audits have been timely and in conformity with the agreed coverage, scope and methodology, but there have been considerable delays in settling audit observations. External audits of the HNPSP, undertaken by the Foreign Aided Project Audit Department (FAPAD) of the CAG have been timely and in conformity with the agreed coverage, scope and methodology but the resolution of audit objections were delayed. The Bank identified 30 serious audit observations between 2005/06 and 2009/10. The settlement of audit observations by the MOHFW has generally been very slow. The long process led to funds being withheld by the World Bank, which put pressure on the MOHFW to settle the observations in a timely manner. As final audit objections were not addressed within the set time given by the audit, these were submitted to the Public Accounts Committee (PAC) of the Parliament for hearing and action. There has been a large backlog for hearing the audit objections by the PAC. However, no pool fund-related audit observations have been referred to the PAC. 23. At the initial stage of HNPSP, various training activities on procurement and financial management were carried out for the auditor but the benefits of these were not reaped due to frequent staff changes. Despite various attempts, such as joint periodic meetings between MOHFW and LDs, the formation of quality assurance committee by the CAG, tripartite meetings and reactivation of the Audit Committee headed by the Additional Secretary, slow settling of audit observations remains a key concern. Financial Management Arrangements for the Project 24. Based on the Project design features and FM assessment summarized above, the following arrangements are agreed upon for financial management and disbursements under the Project. These include two sets of measures: (i) FM plan for strengthened fiduciary arrangements: this relates to steps that need to be taken for the efficient and transparent management of Project funds as well as ensuring adequate monitoring and oversight over the expenditure of funds under the Project; and (ii) institutional and capacity development: this entails building systems and competencies in core FM areas within the broad framework of GOB s Strengthening Public Expenditure Management Program (SPEMP) implemented by the MOF. 25. Measures completed during preparation: (i) a time bound action plan has been elaborated for resolving pending audit observations and a confirmation of the final status of annual audit observations; (ii) the development of a TOR for a consultant to prepare an audit strategy has been finalized outlining the coverage, focus of audit and steps for effective and 49

60 timely follow up on audit observations; (iii) MOHFW management has confirmed the continuation of internal audit by a private audit firm with TOR and selection process acceptable to the Bank until MOHFW s own capacity is developed to carry out the audit 38 ; (iv) the development of TORs for FM staff/consultants to strengthen and capacity development for the Line Directors; and (v) the development of a draft organogram for FMAU along with job descriptions for each position. 26. Measures expected to be completed by September 2011: Agreement has been reached that the MOHFW will initiate various actions to support effective implementation of FM arrangements including: (i) the elaboration of a revised FMAU organogram and job description for staff including a strategy paper stating a) staffing needs at ministry and LDs level, b) the appropriate size of FMAU, c) the continuity of service for minimum period of three years in key FM position, and d) a training plan and an integrated approach to capacity development; (ii) the confirmation of one OP for FM capacity development instead of existing three OPs; (iii) the development of an agreed action plan, addressing existing bottlenecks in fund release procedures; (iv) the customization of IBAs to generate IUFRs; (v) the initiation of a procurement process to hire private audit firm for internal audit and outsourced staff/consultant to support capacity development of LDs FM operations. 27. FM Arrangements during implementation: i. Planning and Budgeting: Linkages will be maintained between MTBF, OPs, and the ADP resource envelope. As part of the implementation support, the MOHFW will share the ADP budget with the DPs and the DPs will commit their annual contributions accordingly. ii. Accounting and Reporting: The existing mainstream accounting system of the GOB will be followed. For GOB funds, and IDA and pooled funds channeled through the government Treasury System, accounting will follow the system of CGA. Under the system, the FMAU of the MOHFW will continue receiving and recording financial information for GOB, IDA Credit and pooled funds following one single source of information (i.e. the CGA system, IBAs) and will be responsible for maintaining the sector accounts. Efforts will be initiated to build on the current IBAs to establish elements of an Integrated Financial Management Information System (IFMIS) which in turn would avoid the need to maintain separate parallel systems for accounting and reporting. iii. Internal Control: Government s existing financial power, authority and payment responsibility outlined in the Financial Management Handbook of the health sector and General Financial Rules will be followed. There are clear guidelines for authorization and approval of financial transactions at the Secretary (MOHFW) and LDs and DDOs levels (issued by MOHFW in 2008). By December 2011, the FM Handbook both in Bangla and English will be updated to cover changes, if any, in the Program. A computerized assets management system with both central and distributed databases (both of which need to be updated on a regular basis and be consistent with each other) needs to be procured and placed under the MIS departments or as appropriate in any other department of the MOHFW. Initially, it would be done for the key 38 An evaluation of this capacity will be carried out during Mid Term Review. 50

61 LDs and then be rolled out to all LDs, DDOs at district and upazila level. The installation and completion of the system are expected to be completed by December iv. Internal Audit: An outsourced private firm will carry out internal audits of the Project under an agreed TOR. The in-house capacity to effectively conduct internal audit within MOHFW will be developed under the SPEMP. The Internal Audit report, together with the management response and follow up action will be shared with the Bank within 15 days from date of the receipt of the report. An evaluation of the in-house capacity will be carried out during the MTR with a view to possibly phase out the audits by the outsourced firm. v. Fund Flow and Release procedures: IDA will administer the funds channeled through the Multi Donor Trust Fund (MDTF). Based on the review of ADP MOHFW, IDA and the MDTF Co-financiers will, by March 31 st of each year, estimate the share of ADP that will be financed by the Project in the following fiscal year. IDA and Bank administered MDTF resources will flow to a pooled FOREX Account maintained as a sub account of the consolidated account. Figure 1 below depicts the arrangement of the flow of funds for the Program. The first advance by IDA to the pooled Designated Account will be in an amount equivalent to its share of six months estimated eligible expenditures of the Project. First the GOB will spend from the consolidated account which will then be reimbursed by IDA. The share of disbursement from IDA and the MDTF when effective, in USD, will be made twice a year (approximately in mid February and mid August) into the pooled FOREX Account and determined upon the time of payment processing on a prorated basis according to the funds actually available in the MDTF account and IDA undisbursed funds. Consolidated Financial Statements will be generated on the basis of IBAs including a statement on funds required for the next six months so as to facilitate replenishment of DA. The FMAU, based on Chief Accounts Officer s advice, will submit withdrawal applications together with consolidated financial statements documenting eligible expenditures incurred in the sector. GOB can also request a payment to be made through a special commitment or directly from the Bank to a supplier. Retroactive financing would be considered for disbursements against eligible expenditures up to an aggregate amount not to exceed $70 million equivalent, incurred one year prior to expected date of signing but after January 01, Disbursement for Accelerated Achievement of Results (DAAR) approach: under this modality, the MOHFW will be eligible to use funds programmed for year five to the first four years of implementation upon attainment of agreed upon targets that demonstrate accelerated achievement of Project results. Further details provided in Annex 6B. 51

62 Fund releases for the fourth quarter will be expedited after submission of provisional SOE. Figure 1: Flow of Funds for the Program Flow of Funds Arrangements for the Program Reimbursable Project Aid (RPA), co financing support Multi Donors Trust Fund IDA Credit DPs DPs RPA, parallel support DPs HPNSDP Designated FOREX Account in Central Bank DP Designated Account Government Treasury Account in Central Bank DPA Direct Project Aid, parallel support 100% payment of program expenditures vi. Staffing: FM staffing at all levels (ministry and LDs) will be revised and will include, in the shorter term, the appointment of financial staff at all levels in accordance with the actual needs and requirements of the positions, and, in the longer term, the transfer issue related to senior managers needs to be agreed at the management level of MOHFW. To begin the process, the existing organogram will be revised including the job descriptions of staff within FMAU. The primary focus would be to ensure an appropriate size of FMAU with qualified and competent staff, instead of appointing a large number of staff without significantly increasing the competency levels of the unit. FM staff, including auditors, would undergo training at the beginning of Project implementation and periodic training for institutional development as per approved OP and staffing policy paper. vii. Project Reporting: Appropriate formats of the periodic financial reports (IUFRs) have been agreed. FMAU will continue the consolidation of financial data from the CGA and direct payments through special commitment etc. The requests for direct payments will be supported by records evidencing eligible expenditures (e.g., contracts). These requests and documentation will be consolidated by the FMAU where the Withdrawal Application will be prepared and sent to the Bank. The format of FMRs will be formally transmitted to the GOB after completion of negotiations with the understanding that the contents of the reports will undergo changes whenever necessary during Project implementation. viii. External Audit: The annual financial statement under the Project will be prepared by the MOHFW and will be audited by CAG who is considered as an independent 52

63 auditor to carry out annual audits. The audits will be conducted following country procedures and in accordance with an agreed TOR which will specify essential elements of audit coverage under the Project. Throughout Project implementation, audit coverage, focus and steps for effective and timely follow up of audit observations will be driven by the Audit Strategy which is a priority action included in activities to be completed at the beginning of the Project implementation. The Audit Report will be posted on the Bank s website as a part of the Bank s Access to Information Policy. A time bound action plan, with a view to settlement of all pending audit findings is being prepared and will be monitored closely. Table 1: Audit Reports and Due Dates Auditor: Comptroller and Auditor General December 31 of each year Audit report and due date Project Financial Statements including opinion on IUFRs used as basis for drawing funds. Table 2: Reliance of Public Financial Management Country Systems for the Implementation of the Program Execution phases Reliance on Country System Eligible Expenditure Based on OPBs Budget Preparation and Execution Budget Reporting The Project will rely on government systems, Treasury which have been assessed as adequate for this Accounting and Reporting purpose. Internal Control Internal Audit For internal audit, the Project will rely on private sector audit firms until internal capacity is built. External Audit/Control For external audit, the Project will rely on C&AG. Accounting and Financial Reporting, aims to build on the current IBAs to establish elements of an Integrated Financial Management Information System (IFMIS). This could facilitate use of IBAs by MOHFW both for management accounting, monitoring expenditure against budget, and for reporting to DPs on fund utilization. Measures for Institutional Strengthening of the MOHFW 28. The implementation experience from the closing program (HNPSP) has shown clearly that while program specific measures help to mitigate fiduciary risks in the short term, the recurrence of these issues over the years clearly point to the need for addressing the underlying institutional constraints relating to financial management. The three key institutional constraints in the MOHFW, detailed below, will be addressed through the on-going public FM reform program (SPEMP). Various components of the SPEMP, namely components 3, 5, 6, and10 included activities to strengthen FM functions in the ministries. The MOHFW will collaborate with the MOF for ensuring that MOHFW becomes the priority ministry to implement following activities as per design of the SPEMP: 53

64 (i) Strategic Budget management and Improving the efficiency of Expenditure Management. These relate to steps necessary to strengthen the core public expenditure management process in the Health Sector: a. Developing improved budget management function b. Strengthening budget/accounts classification and fiscal reporting c. Installation of requisite system in the IBAs to generate timely and accurate reports d. Strengthening Treasury and Cash Management system and procedures e. Strengthening the Planning Wing of MOHFW and other agency level planning units to support resource allocation decision making process. (ii) Strengthening Monitoring and Oversight functions. Along with strengthening the reporting systems and procedures of the spending units of MOHFW, it is necessary to strengthen the capacities and systems of the MOHFW for efficient and regular monitoring of financial management performance including improvement on action plans under the GAAP. Specific activities will include: a. Strengthening the internal audit function across the sector, including streamlined procurement process until the function can be undertaken by the MOHFW. b. The conduct of annual audits as per Audit Strategy; strengthen follow up process through Audit Committee; quarterly reports to C&AG on the status of audit findings stating amount of withheld disbursement; collaboration within the areas of external audit and parliamentary oversight will also be explored and promoted c. Develop systematic monitoring and improved oversight function of the MOHFW through formation of a high-level task force consisting of MOHFW officials, auditor, DPs and LDs. The group s TOR will include the responsibility to periodically monitor progress both fiduciary and institutional level activities and report to the Secretary and IDA. (iii) Capacity Building and HR development. This will primarily include the capacity strengthening of FMAU. The MOHFW needs to prepare a policy paper stating the staffing need in FMAU as well as across the sector, a training plan and an integrated approach to FM capacity building so as to assist the MOHFW in implementing the policy decision through one OP instead of three different OPs. Furthermore, a sensible minimum time in each position, e.g. two or three years, must be agreed and implemented by the MOHFW in agreement with Ministry of Establishment and Ministry of Finance when necessary. Disbursements Arrangements: 29. The disbursement mechanism for the Project capitalizes on processes in place under the current program (HNPSP) with a few improvements that have the full buy-in from the MOHFW. 30. Disbursement from the pooled funds will be based on the following. (i) Disbursements, based on IUFRs will be made directly from the Bank (IDA and MDTF) to the pooled FOREX Accounts. (ii) Direct payments and Special Commitments from the Bank to the supplier s bank account for major technical assistance and supply contracts (e.g. vaccine procurement through UN organization). 54

65 31. IDA s contribution to the Program is US$ million (channeled through the Project for eligible expenditures), which are in compliance with the Bank s policies in particular the three pillars of operational policy 6.0, which are: (a) expenditures are productive, (b) they contribute to solutions within a fiscally sustainable framework, and (c) acceptable oversight arrangements are in place. IDA will periodically disburse a percentage of eligible expenditures depending on the MDTF available funds. This percentage will be determined during the annual review of OPs. With its cost sharing, the GOB has already demonstrated ownership and commitment for the Program. 32. Disbursement of the IDA Credit will include a retroactive disbursement against actual eligible expenditures incurred one year prior to expected date of signing, followed by an advance of six months of projected eligible expenditures, and subsequent replenishment of funds based on actual eligible expenditures and forecast of eligible expenditures for the following six months. The eligible expenditures consist of both procurable and non procurable items (e.g. good, works, services, and operating expenses) inclusive of taxes. 33. Preparation of quarterly IUFRs is the responsibility of the FMAU of MOHFW. These reports, due in 45 days after the end of each quarter, will document eligible expenditures in each quarter compared to the budget and variation and will be used for the documentation of eligible expenditures financed by the IDA Credit. The reports will be generated mainly from customized IBAs and will also capture prior review contracts and forecast for the following two quarters eligible expenditures. The format for the required reports was agreed upon the content and the ability of the MOHFW to generate them will be verified, during the first year of implementation. 34. Disbursement will be based on IUFRs. The reports will show eligible expenditures incurred under the Project to be disbursed by IDA. In accordance with usual IDA procedures, disbursements will be made for eligible expenditures incurred or to be incurred under the Project. This requires that at least a minimum percent (70%) of ADP expenditure of MOHFW during the preceding fiscal year. The total disbursement amounts will be reduced, if expenditure is not spent at least the minimum percent of the assigned budget in the preceding year. 35. The disbursement procedures were designed as to provide incentives for greater efficiency and results-orientation in the government expenditure management. The requirement that a minimum percent of the budget be executed, described above, creates incentive for timely execution of the OPs supported by the Project, while ensuring that DPs funds are not displacing GOB resources. The requirement to meet a determined level of execution of the ADP and the OP also assures line ministries ownership and timely funding for achievement of Project result and objectives. 36. The disbursement procedures for the DAAR funds, eligible from achieving DAAR indicators in the previous year, will be programmed and disbursed the subsequent year in the same manner as the regular implementation allocation. ADP for a given fiscal year will be prepared inter alia considering two IDA resource envelopes the regular implementation allocation plus a supplemental resource envelope consisting of the maximum DAAR allocation for that year. DAAR funds will be disbursed to the designated account and used to reimburse 55

66 MOHFW eligible expenditures, in the same manner as regular implementation funds. As with regular implementation funds, there is no obligation to utilize funds in the year in which they were programmed. DAAR funds not used in a given year will continue to be available for disbursement in year five of the Project. ii. Procurement Procurement Environment- Country and Health Sector 37. The Country Procurement Assessment Report, broadly accepted by the GOB in February 2001, identified inadequate public procurement practices as major impediments to the implementation of the closing program (HNPSP). The GOB is implementing a procurement reform through two back-to-back procurement reform projects (PPRP and PPRP-II). The GOB created Central Procurement Technical Unit (CPTU) in 2002, has approved and issued the Public Procurement Act (PPA) 2006, and has also issued Public Procurement Rules (PPR) 2008 with associated implementation procedures, including streamlined procurement approval process, delegation of financial powers, and standard set of documents for procurement of goods, works and services. The PPA and the PPR have been made effective from January 31, With the exceptions mentioned in Paragraph 41, the PPA and the PPR contain good international practices including: (i) non-discrimination of bidders; (ii) effective and wide advertising of procurement opportunities; (iii) public opening of bids in one place; (iv) disclosure of award of all contracts above specified threshold in the CPTU s website; (v) clear accountability for delegation and decision making; (vi) annual post procurement audit (review); (vii) sanctions for fraudulent and corrupt practice; and (viii) review mechanism for handling bidders protests. Under PPRP, in order to build procurement management capacity, CPTU, in collaboration with ILO and local institutes, has developed a critical mass of 25 national trainers and provided training to about 1800 staff of different public sector entities up to September, PPRP II, which is under implementation since September, 2007 is focusing largely on implementation and monitoring at key sectoral agencies, capacity development, monitoring, and management of procurement reforms, introduction of electronic government procurement (e-gp), and behavioral change and social accountability. As of end January, 2011, under PPRP-II about 1,300 officials received three-weeks training on procurement. Out of these 3,100 trained GOB staff, about 80 persons are from MOHFW (including 47 from HED, 6 from CMSD and 8 from DGFP Logistics Unit). 38. Lessons Learned: Comprehensive procurement plans have to be submitted on time to avoid delays in procurement processes. There were significant delays in submission of comprehensive procurement plans together with the procurement processing schedule and, as a result, the monitoring procurement process and its implementation got delayed. Proper needs assessments for medical equipment and pharmaceuticals need to be undertaken. MOHFW updated the Table of Equipment and list of essential pharmaceuticals based on different tiers of health facilities. However, need-based assessments for procurement of medical equipment, pharmaceuticals and health commodities remained fragmented, which has resulted in dropping contracts, re-bidding, re-packaging etc., which has in turn caused delays in completing the procurement process. 56

67 Technical Assistance is needed to ensure quality control in preparation of bidding documents. MOHFW lacks capacity in document preparation (including technical specifications). Technical assistance needs to be provided in document preparation as well as enhancing capacity of the technical staff by transfer of knowledge through on the job and formal training to improve the overall procurement processes and ensure transparency and efficiency. The PLMC at the Ministry level under Joint Secretary (Development and Medical Education) should monitor these and ensure compliance. Bid evaluation process needs to be completed properly. There were cases in which conditions were applied at the time of bid evaluation that were not stipulated in the bid documents. The Technical Evaluation Committee should seek advice from the pool of Technical Assistance/Procurement and Logistics Monitoring Cell (PLMC) on bid evaluation keeping in line with the Bank s procurement guidelines and the GOB procurement laws. Pre and post shipment inspection by a third party was not done under HNPSP. Considering the large scale of import of equipment, pharmaceutical and health commodities, bidding documents should incorporate a clause that the selected bidder at their own cost will conduct a third party inspection from the MOHFW s shortlisted International QA Firm. There were cases in which there were substantial delays in opening Letters of Credit (L/C) after the signing of contracts. LC should be opened within 14 days of signing the contract. Long delays in installation and operation of equipment and under utilization of equipment for lack of repair and maintenance were major issues under HNPSP. Technical assistance should consider alternative contracting modalities that will guarantee supply, installation, operation and service of the equipment. Absences of trained procurement staff and frequent transfers have caused serious setbacks to Project implementation. In collaboration with Central Procurement Technical Unit (CPTU), MOHFW should organize regularly scheduled (i.e. once every two/three months) training courses to staff involved in procurement and logistics. Besides, MOHFW should try to retain such professional and trained procurement staff in the position for at least two years. There have been delays in conducting annual procurement audits. Sufficient budget needs to be allocated in the OP and the procurement process should be initiated in a timely manner to ensure availability of procurement audit reports on time. 39. Findings of Procurement Assessment: The Bank conducted assessments of seven entities of the MOHFW which administer procurement. Only CMSD, DGFP Procurement and Logistics Unit and HED are considered entities with good procurement capacity based on the Bank s experience in HNPSP and the number of procurement-proficient staff in those entities. Key weaknesses identified in the procuring entities under the Project are: absence of dedicated procurement staff within the entity to conduct and follow up procurement activities; inadequate capacity in administering large and complex contracts for some entities like the assessed other entities i.e. National AIDS/STD Program (NASP), Communicable Disease Control (CDC), National Nutrition Services (NNS) and Essential Services Delivery (ESD); and an absence of processes for handling complaints. In addition, the following areas need improvement: information dissemination, delivery follow up, and payments. The lack of procurement capacity 57

68 may result in mismanagement in procurement operations, which may lead to significant delay in Project implementation and increase cost for the client. Under the closing program (HNPSP), it is observed that the major loopholes in procurement include improper technical specification, faulty bidding documents, excessive number of contracts for IDA s prior review, improper evaluation resulting in too many complaints to handle, and internal and external interventions resulting in delays in the procurement operations. However, with the interventions of IDA and recurrent hand-on job experience, the capacity of the entities CMSD, DGFP Procurement and Logistics Unit and HED have been improved during HNPSP implementation. Considering all the facts and the experience from the closing program (HNPSP), the Project is rated as Medium-I from procurement operation and contract administration viewpoint, with procurement activities to be conducted by the afore-mentioned three entities as well as MOHFW itself (consultants and non-consultancy services). Several measures to mitigate the risks are either in place or being put in place and have been described below. 40. Measures completed during Project preparation: (a) All procuring entities confirmed (through letters/ ) the names and designations of Procurement Focal Point (PFP) from each entity, and one back-up of the PFP. One PFP from MOHFW is also required. These focal points will be trained on procurement. (b) Finalization of Procurement Plan of each entity covering first 18 months of implementation; (c) Agreement on the use of PROMIS or equivalent procurement performance monitoring and reporting and agreement with each entity on strict adherence to the regular submission to IDA; (d) Development of TOR for the PLMC under MOHFW. 41. Measures to be completed before commencement of procurement of goods, works and non-consultancy services under the Project: (a) dedicate at least one person from each procuring entity as Procurement Officer (PO) and reporting to the PFP; (b) confirm the provision of technical support through individual procurement and technical consultants to CMSD, DGFP and HED through funding sources from other DPs (e.g. USAID); (c) confirm that the concerned trained desk officers in CMSD, DGFP and MOHFW will be mandatory members of bid and/or proposal evaluation committees; (d) create a PLMC under the Joint Secretary (Development and Medical Education) with at least full-time two procurement consultants and two short-term technical consultants to promote the stewardship role of the MOHFW in order to provide QA and to control procurement plan preparation, bidding documents preparation, bid evaluation and overseeing of CMSD and DGFP on a day-to-day basis and provide advice as necessary; and (e) provide capacity building support to the NASP, NNS, ESD and CDC if it is decided in the course of the Project that those entities would start their own procurement activities 39 and guide the PFP and PO on procurement issues for the whole duration of the Project, if required. 42. Measures to be taken during Project implementation: (a) The PFP and Procurement Officer should undergo procurement training both at national level before significant procurement takes place. In addition, the PFPs would undergo training on international procurement (either through Bank-arranged programs or accredited training outside Bangladesh). The entities should prepare a training plan for systematic capacity building of staff handling procurement; (b) The implementing entities will submit quarterly Procurement Risk Mitigation 39 A capacity assessment will be carried out during Annual Program Review (APR). 58

69 Plan (PRMP) status report to IDA starting from 6 months after the Project effectiveness; (c) The procurement consultant for NASP, NNS, CDC and ESD will be a mandatory part of the tender/bid evaluation meetings to assist and guide the evaluation committee members in the evaluation process; (d) For contracts requiring repeated procurement (i.e. pharmaceuticals, contraceptives, medical equipment etc.) the bidding documents will be standardized for each type of procurement, cleared by IDA and the same document will be used for similar types of contracts with customized technical specification for the duration of the Project. For all contracts, Bank s standard format for evaluation report should be used; (e) procuring entities will explore multi-year framework contracts for off the shelf goods instead launching repeated procurement process; (f) The Bank will arrange procurement orientation or training workshops as and when required to enhance the procurement capacity of the entities; (g) The Procurement plan will be updated at least annually or as required; (h) MOHFW will conduct Independent procurement audits for MOHFW each year and share the report with IDA; (i) IDA will conduct reviews of 20% of the post review contracts on a semiannual basis to check the compliance with the World Bank s Procurement/Consultant Guidelines and procedure in accordance with the financing agreement. 43. In addition, the following steps will be followed as part of procurement and implementation arrangements: (a) raise awareness among entities officials/staff about fraud & corruption issues; (b) make bidders generally aware about fraud & corruption issues; (c) the multiple dropping of bids will not be permissible for all procurement under the IDA financed Project; (d) award of contracts within the initial bid validity period, and closely monitor the timing; (e) take action against corrupt bidders in accordance with Section I of the Bank s Procurement/Consultant Guidelines; (f) preserve records and all documents regarding public procurement, in accordance with the Bank Guidelines; (g) publish contract award information in dgmarket/undb online and entities website within two weeks of contract award; and (h) ensure timely payments to the suppliers/ contractors/consultants and impose liquidated damages for delayed completion. The PROMIS and its reporting format will cover all these steps and the draft format will be shared with MOHFW. This report will also function as a useful monitoring tool for MOHFW for implementing the Project. 44. Procurement financed under the Project will be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004, as revised October 1, 2006 and May 1, 2010 and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004, as revised October 1, 2006 and May 1, 2010, and the provisions stipulated in the Financing Agreement. 45. For each contract to be financed by the Project, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements and time frame are agreed between MOHFW and IDA in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual Project implementation needs and improvements in institutional capacity. 46. Particular Methods of Procurement of Goods, Works and Non-consultancy services: Except as otherwise agreed in the procurement plan, works, goods and non-consultancy services may be procured on the basis of International Competitive Bidding. Procurement of Goods, 59

70 works and non-consultancy services having estimated value less than the ceiling stipulated in the Procurement Plan may follow National Competitive Bidding (NCB) and Shopping. Direct Contracting (Goods/Works) may be allowed under special circumstances with prior agreement of the Bank. NCB would be carried out under Bank Procurement Guidelines following procedures for Open Tendering Method (OTM) of the Peoples Republic of Bangladesh (Public Procurement Act PPA, 1 st amendment to PPA (2009) and The Public Procurement Rules 2008, as amended in August 2009) using standard bidding documents satisfactory to the Bank. The Request for Quotation document based on PPA is acceptable to the Bank for shopping. For the purpose of NCB the following shall apply: a) post bidding negotiations shall not be allowed with the lowest evaluated or any other bidder; b) bids should be submitted and opened in public in one location immediately after the deadline for submission; c) rebidding shall not be carried out, except with the Association s prior agreement; d) lottery in award of contracts shall not be allowed; e) bidders qualification / experience requirement shall be mandatory; f) bids shall not be invited on the basis of percentage above or below the estimated cost and contract award shall be based on the lowest evaluated bid price of compliant bid from eligible and qualified bidder; and g) single stage two envelope procurement system shall not be allowed. 47. Methods of Procurement of Consultants Services: Selection of Consultants will follow the Bank Consultant Guidelines. The following methods will apply for selection of consultants: Quality and Cost based Selection (QCBS), Quality-based selection (QBS), Fixed Budget Selection (FBS), Consultants Qualification (CQ), Least Cost Selection (LCS), and Single Source Selection (SSS). Shortlist of consultants for services estimated to cost less than US$200,000 equivalent per contract may be composed entirely of national consultants. For the selection of these national consultants, the request for proposal prepared on the basis of PPA and acceptable to the Bank may be used. The Procurement Plan will specify the circumstances and threshold under which specific methods will be applicable. 48. Operating Costs: The operating costs will include Project staff salaries other than consultants, operating costs for operations and maintenance of vehicles (fuel, maintenance, insurance etc), renting of vehicles, office utilities, office supplies and stationeries, printing materials, souvenirs, events, workshops, rental of office buildings, bank charges, advertising costs or any other operational cost agreed with IDA under the Operational Plans which will be disbursed on the basis of the annual budgets. 49. Prior review Thresholds: The Procurement Plan shall set forth those contracts which shall be subject to the Bank s prior review. All other contracts shall be subject to Post Review by the Association. Initial Procurement plan agreed with the GOB for the first eighteen months indicates the following prior review thresholds which will be updated annually based on the review of the capacity and performance of the procuring entity and will be reflected in the updated procurement plan as appropriate: 60

71 Table 3: Prior Review Thresholds Sl. Description no. a. each contract for goods and works procured on the basis of International Competitive Bidding b. the first contract for goods by each procuring entity following the National Competitive Bidding method, regardless of value, and thereafter all contracts estimated to cost US$600,000 equivalent or more, regardless of the procedure c. the first contract for works following the National Competitive Bidding method, regardless of value, and thereafter all contracts for works estimated to cost US$1,000,000 equivalent or more, regardless of the procurement method applied; d. each contract for consultants services provided by a firm, estimated to cost the equivalent of US$200,000 or more; e. each contract for services of individual consultants, estimated to cost the equivalent of $50,000 or more f. all contracts for goods and non-consultant services procured through Direct Contracting, and all contracts for consultants services procured under single source selection. IDA (Prior Review) US$600,000 equivalent or more US$1,000,000 equivalent or more US$200,000 equivalent or more US$50,000 equivalent or more 50. Post Review: For compliance with the IDA s procurement procedures, IDA will carry out sample post review of contracts that are below the prior review threshold. Such review (expost and procurement audit) of contracts below the threshold will constitute a sample of about 20% of the post-review contracts in the Project. Procurement post-reviews will be done on annual or semi-annual basis depending on the number of post-review contracts. 51. Emergency Procurement: In emergency resulting from natural disasters, when an emergency has been declared by the GOB and the immediate procurement of medical supplies, pharmaceuticals, vaccines, or nutritional supplements is necessary to affect deliveries in the shortest possible time, procurement directly from UN Agencies, and through shopping and direct contracting methods, with prior approval of the Association, and with appropriate justification may be acceptable. 52. Procurement through United Nations Organizations: UNICEF has been procuring vaccines for the GOB. At present, MOHFW is not prepared to process this large procurement without causing interruptions in service delivery. Currently, UNICEF s role is not just a procurement agent but is also actively involved in almost all facets of vaccinations including providing technical assistance, training, cold chain management and quality assurance (QA). During the preparation of the Project, MOHFW expressed its interest to continue procurement of vaccine through UNICEF in order to make use of the technical assistance, training, cold chain management and QA services provided by UNICEF. The World Bank had carried out a comparative assessment of the various ways of vaccine procurement in Bangladesh with regards 61

72 to country capacity, procurement methods followed, and agencies used in order to make recommendations for better vaccine procurement in Bangladesh. The report concluded that due to the lack of quality controls currently in place in Bangladesh alone, it is not advisable that the GOB moves from UNICEF procurement to self-procurement. It is also unclear if there would be significant price savings if Bangladesh moved to self-procurement. MOHFW will continue to procure vaccine through UNICEF. 53. The proposal to introduce electronic government procurement (e-gp) under the Public Procurement Reform Project (PPRP-II) will be rolled out in e-gp along with aforementioned PROMIS will be a web based system which encompasses the total procurement lifecycle and records the all procurement activities. It offers the possibility to significantly enhance the efficiency and transparency of the procurement process, enabling online access to information for all interested parties. It is anticipated that after piloting, which is currently being planned, e-gp will be progressively implemented across GOB. This would be a major opportunity for MOHFW to introduce e-gp at CMSD, DGFP and HED to increase transparency of the procurement process. Environment iii. Environmental and Social (including safeguards) 54. Two Line Directors (one under MOHFW and the other under DGHS) have been implementing health care waste management (HCWM) activities under the closing program (HNPSP). This arrangement will be continued under the Project and Program and adequate budgets are being allocated for these activities. The following activities will be undertaken: The implementation of the HCWM will take place according to the latest policy guidelines. Staff based at the facility need to be trained on HCWM with updated training material. HCWM activities should be expanded to all facilities across the country and will be regularly supervised and monitored by MOHFW. The OP for HCWM will continue to finance the procurement of treatment consumables and equipment through CMSD. Ensure better coordination with other Ministry of Local Government, Rural Development and Cooperatives (MOLGRDC) (for out-house management of waste). Explore scope for public private partnership in managing waste. Incorporate lessons learned from the existing contracting out mechanism under the closing program (HNPSP). 55. Construction waste will be managed and disposed off as per the standard guidelines set by the GOB. The construction agency will be responsible for ensuring proper management of construction waste and the guidelines will be included in bid documents of contractors. 62

73 Safeguards 56. Measures Undertaken to Address Social Safeguard Issues: Consistent with OP 4.10 and OP 4.12, MOHFW has developed a Social Management Framework (SMF) to deal with issues that may concern indigenous peoples and involuntary displacement from private and public lands. The SMF contains principles, policies, guidelines and procedure to identify and address impact issues and preparation and implementation arrangements for Resettlement Plans (RPs) and Indigenous Peoples Plans (IPPs). The Health Engineering Department/Public Works Department will submit completed safeguards screening form for the civil works packages along with the Procurement Plan for the Bank s review and approval. If any safeguards policy is triggered, MOHFW will prepared an RP or IPP (as applicable) which will be approved by the Bank, and implemented prior to commencement of the civil work. As regards land acquisition, the SMF includes principles, policies and mitigation measures specific to various probable adverse impacts, which requires that: (i) all buildings to be constructed under the Project should be located on land owned by the GOB and no resettlement of people, including squatters, would be involved or if private land is required, the land purchase will be completed and resettlement of people done in compliance with the GOB and the Association's social safeguard policies as specified in the SMF; (ii) the design, extension, upgrading, renovation and operations of facilities under the Project should be consistent with the GOB and the Association s social safeguards and environmental policies as specified in the SMF and EMP; (iii) for all facilities to be constructed or rehabilitated under the Project, particular attention shall be given to the provision and maintenance of safe drinking water, including regular testing of water for arsenic contamination; and (iv) the resettlement of affected persons, if any, should be carried out in accordance with the guidelines as specified in the SMF. The MOHFW has also prepared a Tribal/Ethnic Health, Nutrition and Population Plan (THNPP) 2011 which documents the improvements and lessons learnt from the implementation of THNPP prepared in 2004 and also identifies existing gaps and mitigation measures required to be implemented under the Program. 57. Supervision and Monitoring: While MOHFW is responsible for the implementation of the Program as a whole, the physical works will be implemented and supervised by the Health Engineering Department (HED) under MOHFW and the Public Works Department (PWD) under the Ministry of Public Works. Among the different types of facilities, HED will supervise and monitor construction of all physical works related to upgrading / extension / renovation of the existing facilities and construction of new ones at the union and upazila levels, and the Nurses Training Institutes at the district level. Construction of the medical colleges with 500-bed hospitals at the district level and other larger facilities such as 500-bed hospitals and others will be supervised and monitored by PWD. HED and PWD will deal with all land related issues for their respective facilities. HED and PWD will oversee implementation of the SMF with regard to land donation and purchase, and will follow through the legal process where lands are to be acquired. HED and PWD might use specialized consulting services for performing the process tasks and preparation and implementation of impact mitigation plans. 58. Coverage of Social Risks or Issues: The SMF prepared for HSDP addresses the potential social risks and concerns. The Bank s operational policy 4.12 will apply where private lands would be acquired and public lands resumed from private uses. 63

74 iv. Monitoring & Evaluation 59. Data: Data for tracking progress of the Project s outcome and results indicators will be generated from the routine MIS sources, household surveys, health facility surveys, community based bio-behavioral surveys, and respective agencies/projects. Data from these sources will be triangulated to provide an independent view on quality of care, service utilization and coverage, and system efficiencies. During Project implementation, it is envisaged that at least five household surveys (Bangladesh Demographic and Health Survey in 2011 and 2014, a Utilization of Essential Service Delivery (UESD) survey in 2013 and 2015, and a Bangladesh Maternal Mortality Survey (BMMS) in 2015/16 will be carried out along with three facility surveys and three integrated bio-behavioral surveys in 2011, 2013 and 2015 to track the Project s performance (see Table 4 below). The baseline has been constructed by using data from the aforementioned surveys conducted during While the BDHS and BMMS will be financed by MOHFW, USAID and other DPs, the cost of other studies will be borne by the Project. Where feasible, data from these sources will be collected and analyzed to allow assessment of access and outcomes disaggregated by gender and socioeconomic status. 61. Capacity: The Project provides strong support for monitoring and evaluation through the establishment of the Program Management and Monitoring Unit (PMMU), which will be equipped with adequate skilled professionals and logistics, to work on Program management and monitoring. The PMMU will be instrumental for management, coordination, monitoring and evaluation to track progress in the Program. The PMMU will establish a coordination mechanism among different sources for producing performance review reports to assist in the evaluation of the Program on regular basis. The PMMU will also provide support to conduct APRs and facilitate several important surveys through the respective agencies in collaboration with the DPs. In addition, the capacity of the MOHFW in M&E, MIS and research will be strengthened through providing technical assistance to enable both policy makers and LDs to monitor the progress of the entire health sector and improve decision making. The Project also aims to foster the routine MIS system to be capable of monitoring Program performance in the long run. The MOHFW is currently in the process of conducting a comprehensive Health Information System (HIS) Assessment, with the technical assistance from several DPs, which will feed into developing M&E Strategy and Work Plan to identify gaps, duplications and areas for improvement and streamlining the existing routine health information system of all management information systems including the national health workforce database. 64

75 Survey name Bangladesh Demographic and Health Survey (BDHS) Utilization of Essential Service Delivery (UESD) Survey Bangladesh Maternal Mortality and Maternal Healthcare Survey (BMMS) Bangladesh Urban Health Survey (BUHS) Multiple Indicator Cluster Survey (MICS) Bangladesh Household Income and Expenditure Survey (HIES) Bangladesh Global Adult Tobacco Survey (GATS) Bangladesh NCD Risk-factors Survey NNP NGO Performance Review Nutrition Operations Research (OR) Bangladesh Medical Equipment Survey Bangladesh Health Facility Survey (BHFS) Table 4: Survey matrix for X X X X X X X X X X X X X X X X X X 65 X X X X X X X X Sample 10,996 ever-married women of age 10-49; 3771 evermarried men of age Ever-married women age from 10,000 HH Cost (US D) Fundi ng sourc e 1.0m USAI D 50, ,000 HH m 64,000 persons from 12,800 urban HH 333,195 women of age 15-49; 139,580 under-5 children HNPS P USAI D/ HNPS P/AU SAID 1.0m USAI D 1.0m UNIC EF Imple menter NIPOR T NIPOR T NIPOR T NIPOR T BBS X 10,080 HH 1.0m GOB BBS 15+ years person from 11,200 HH X X X X X X X 25+ years person from 11,200 HH X X 2,500 beneficiaries from 208 CNCs X Under5 children and mothers who recently delivered a baby X 50 health facilities, and secondary information for X X X X X 885 health facilities, X X X 5 exit interviews from each facility 0.3m WHO NIPSO M 0.1m WHO BSM 50, m 0.15 m 0.25 m HNPS P HNPS P HNPS P HNPS P National HIV X X X 12,800 people high 0.6m HNPS NASP WB WB WB WB

76 Survey name Serological Surveillance Integrated biobehavioral Survey (IBBS) Bangladesh National Health Accounts (NHA) NOTE 1: X = Implemented or under process, XX = Planned NOTE 2: Sample size and cost of survey is for the most recent round available X X X X X X X Sample risk groups Secondary sources, NGO survey, etc. Cost (US D) Fundi ng sourc e P HNPS P Imple menter NASP 0.6m GIZ HEU/I HE/ BBS v. Role of and Financing from Partners 62. All the main health donors are participating in a Sector Wide Approach (SWAp) and have committed to align their expenditures with the overall GOB-led programmatic goals and agreed-upon priorities. In order to reduce the transaction costs of multiple procedures, to reinforce government ownership, and to strengthen institutional development, the DPs have committed themselves to a harmonized approach to increase the robustness of- and their confidence in GOB institutions, systems and procedures. In this context, DPs will intensify the collaboration with GOB towards strengthening and utilizing GOB systems including planning and budgeting arrangements, mechanisms, rules and procedures for procurement and logistics management, disbursement, accounting, auditing, reporting, and monitoring and evaluation. It is the explicit intention of all DPs to work towards a budget support aid modality as soon as possible, depending on the robustness of government systems and the DPs level of comfort with these systems. 63. The estimated total budget of the GOB s Program ( ) is about US$8,011 million that includes both the development and non-development budgets. The estimated development budget is about US$3,334 million of which the GOB will provide about US$1,167 million and the remaining amount of US$2,167 million would be provided by the DPs. To date, the indicative allocations of the DPs amount to US$1, million, noting that some of these commitments are only for the first 2-3 years of the Program. The financing gap of US$ million would be therefore covered by commitments yet to be confirmed and by those DPs who would allocate additional funds after their initial contributions during the first 2-3 years. The table below provides the indicative amounts allocated by the DPs who will support the Program. 66

77 Agency Estimated Total (in million USD) AusAID* CIDA 102 DFID* 191 EC 27 KfW* GIZ 3 JICA 70 Sida* 80 UNFPA 46 WB UNAIDS 6 UNICEF 130 WHO 75 USAID* 450 TOTAL 1, * DPs who expressed interest in pooling part of their funds in an MDTF with the Bank 64. For the purposes of the Project, the Co-financiers of the Project are defined as IDA and those DPs who channel (part of) their financial support to the same HPNSDP-designated Foreign Exchange Account in the Central Bank for the purpose of financing eligible expenditures under the Project. Every year co-financiers will contribute an agreed upon proportion of the actual MOHFW eligible expenditure as baseline financing. Starting in the second year of support, three months prior to the start of each related fiscal year, MOHFW and co-financiers will review and agree on the proposed budget of the OPs for the following fiscal year. This will be done in a series of consultations between MOHFW and the co-financiers including the APR and the agreed schedule of consultations, which will: (i) be in line with the three year MTBF implementation plan for the HNP Sector; (ii) have been prepared in consultation with and based on data collected from the various stakeholders at various levels; (iii) include fully costed proposed Project activities for each output, linked with performance targets; (iv) include the annual procurement plan, (v) include activities for implementation of the SMF, EMP and THNPP, and (vi) include allocations of adequate resources and counterpart funding in the GOB s development budget for the HSDP. 65. An Administration Agreement between IDA and each of the DPs who channel support through the MDTF will describe the terms and conditions of co-financing arrangements for donor funds managed by IDA. IDA will mainly be responsible for fiduciary oversight while Program supervision, implementation support and policy dialogue remains the joint responsibility of all co-financiers. 67

78 66. There will be a Grant Agreement or Agreements between GOB and IDA providing for the grant financing by the co-financiers and outlining the fiduciary arrangements applicable to resources under the co-financing arrangement and IDA s fiduciary role in managing the MDTF funds. 67. A pool funding committee comprising representatives of the Bank, pooling DPs, and the GOB is expected to be formed by June 30, 2011 to oversee Project implementation. 68. For the purposes of the Project, all other funding mechanisms used by DPs, whether through an agency-specific account held by the Central Bank or by MOHFW, or through commodity support will be termed parallel financing of the Program, outside the Project. 69. In order to be successfully implemented, the partnership arrangement between the GOB and the DPs will be further strengthened through a Joint Financing Arrangement (JFA), which will guide both the pooled and non-pooled funding contributions of the DPs as well as provide detailed arrangements for managing and reporting on the use of funds. Further, the JFA will, inter alia, include clauses that specify that: a) the MOHFW has the obligation to consult with the JFA Partner Signatories if changes are introduced in the OP after the agreed consultations have been finalized; and b) the signatories to the JFA retain the right to withhold their support, or part thereof, if the final OP significantly deviate from the proposed ones as agreed upon between MOHFW and the JFA Partner Signatories. The process of consultations between MOHFW and all DPs will be further strengthened by replacing the HNP Forum with the Local Consultative Group (LCG-Health), which is part of GOB-DP overarching coordination mechanism. 70. Significant efforts are being undertaken to provide a harmonized and comprehensive package of consolidated Technical Cooperation and Technical Assistance, aligned to the RF, to support the implementation of the Project and further the policy dialogue for the health sector. MOHFW has submitted its request for technical support and the DPs, including IDA, are in the process of preparing a technical support package that is responsive to the requested technical support, avoiding duplication and overlap, and aiming to strengthen government systems. 71. Both co-financing DPs and those who provide parallel support are engaged in developing such a coherent and consolidated technical support program, focusing on areas that include, but not necessarily be limited to 1) financial management; 2) procurement and logistics management; 3) monitoring and evaluation; 4) health care financing; 5) human resource management and 6) governance and stewardship. These focus areas are in line with the intention to increasingly rely on government systems and put in place a concerted effort to strengthen these systems. 68

79 Annex 4 Operational Risk Assessment Framework (ORAF) Negotiations and Board Package Version Project Development Objective(s) The Development Objective of the Project is to enable the Government of Bangladesh to strengthen health systems and improve health services, particularly for the poor. PDO Level Results Indicators: 1. Proportion of delivery by skilled birth attendant among the people among the lowest two wealth quintile groups; Baseline: 11.5% (2010); Target: 15% (2016) 2. Increased coverage of modern contraceptives in the low performing areas of Sylhet and Chittagong; Baseline: Sylhet: 35.7%, Chittagong 46.8% (2010); Target: Sylhet & Chittagong 50% (2016) 3. Proportion of underweight children among the lowest two wealth quintile groups; Baseline: 48.3% (2007); Target: 43.3% (2016) Risk Category Risk Rating Risk Description Proposed Mitigation Measures Project Stakeholder Risks ML a. Borrower relations: In the health sector, the Bank has been engaged in a sector wide program for the last decade. The proposed Bank support is aligned with the GOB s program. The GOB policies are highly likely to remain in effect for the life of the program. b. Donor relations: Several DPs have expressed their interest in supporting the GOB s health program. c. Civil society involvement: There is a strong and active presence of NGOs in Bangladesh and the a. The Bank will continue its policy dialogue with the GOB and support it with different analytical work to mobilize the necessary expertise to assist the GOB in strategy implementation. b. The Bank will continue working through a Joint Financing Arrangement to ensure effective donor coordination and harmonization. A Risk and Opportunities Workshop will be held with the DPs, prior to negotiations, to consider all programmatic risks and assess how effectively these can be dealt with. c. The Bank will work with the GOB to proceed with NGO contracting in the areas (interventions and geographic locations) where it has comparative 69

80 Risk Category Risk Rating Risk Description Proposed Mitigation Measures experience of contracting out with NGOs under the closing program (HNPSP) has been mixed in terms of its effectiveness. Moreover, the professional medical associations are strong and greatly influence the national health policy. Implementing Agency Risks MI Substantial risks emanating from weak financial management and procurement capacities in MOHFW along with slow disbursement affect implementation progress. Moreover, the governance framework is weak and the sector is susceptible to fraud and corruption. Project Risks Design L A transaction intensive operation may distract implementation support away from systems strengthening efforts HSDP is aligned with the GOB s Sixth five-year plan, so there is full ownership of the GOB. The GOB is familiar with the investment loan as the lending instrument, which carries low risks. The possibility of Disbursement for Accelerated Achievement of Results (DAAR) would actually shift the program focus on achieving results. Main risks associated with attaining the PDO are shortage of staff, drugs, and inadequate skill mix to advantage to demonstrate effective service delivery and results. A consolidated TA package will be provided by the DPs to address issues relating to capacity constraints in MOHFW. Financial audits (both external and internal) will be undertaken to improve internal control mechanisms in MOHFW. Independent audits will be undertaken. e-procurement will be introduced in two major procuring entities; all procuring entities will prepare Procurement Risk Mitigation Plans (PRMPs) which can be used as performance scorecard by MOHFW and the Bank; framework contracts will be adopted wherever feasible. A Governance and Accountability Action Plan (GAAP) has been prepared which will be implemented by MOHFW to address specific governance related issues. All DPs involved in the sector will provide a concerted effort to strengthen government systems and are elaborating a comprehensive technical support package to that effect. The Bank team s implementation support will be part of these efforts and move beyond the fiduciary oversight of procedures and transactions. The Bank team will ensure through formal and informal consultations with GOB officials and advisors that any reforms are fully owned and embraced by the GOB. The Bank team will work closely with MOHFW on setting the targets for DAAR. To meet shortage of resources (drugs, equipments, etc.) introduce e-procurement in the 2 major procuring 70

81 Risk Category Risk Rating Risk Description Proposed Mitigation Measures provide comprehensive EmOC services Social and Environmental ML There exist no specific national policies for involuntary resettlement. Lands are acquired by using an ordinance that does not satisfy provisions of the Bank s social safeguard policies. Implementation of legal framework related to infection control and medical waste management is progressing slowly. There are cases of violence against women which can be tracked through national surveys as well as individual case reporting. Program and Donor L HSDP is not dependent on any other project, but is building on the achievements of the previous sector programs. There is a strong presence of donors in the sector who meet regularly and coordinate activities through sub-local Consultative Group (titled the HNP Consortium). Approximately 27% of the Program financing are expected to come from the DPs (either as pooled or parallel support). entity ad support adoption of framework contracts. The Bank will support training of support and proper planning on HR deployment and recruitment to ensure staffing with the required skill mix. A Social Management Framework (SMF),an Environmental Management Plan (EMP), and a Tribal/Ethnic Health, Nutrition and Population Plan (THNPP) have been prepared by MOHFW covering Bank s operational policies 4.10 and MOHFW has allocated sufficient budgets for implementation of these. Besides, for every civil work financed by the Project a screening form will be filled in to identify potential environmental impact and social safeguard issue arising out of it. Adequate mitigation measures (keeping in line with the SMF, EMP and THNPP) will be put in place to address any issues raised. Regular supervision through site visits and routine monitoring by the Task Team will ensure implementation of the abovementioned plans. The women friendly hospital initiative of the closing program (HNPSP) will be further expanded and a coordination mechanism will be developed with onestop crisis centers to ensure medico-legal services for victims of violence against women. The Health Users Forum will be used as a mechanism for incorporating citizens voice at all levels. The Bank will continue working through the different structures such as the sub -LCG and pool funders meetings to ensure effective donor coordination and harmonization. Some of the DPs have expressed their interest in pooling their resources with the Bank. In the event that DP funds are not available with the Bank in the first year of Program implementation, IDA credit will be used to reimburse MOHFW activities financed out of the pooled funds. The Bank s fiduciary and social safeguards policies will apply to the activities financed out of the pooled 71

82 Risk Category Risk Rating Risk Description Proposed Mitigation Measures funds. Delivery Quality MI The MIS in MOHFW is fragmented across two main Directorates and other departments. Attempts to integrate these systems have not been very successful. MOHFW depends heavily on surveys for measuring results. There are no significant sustainability risks, although the GOB may not be able to finance the full range of Program activities if DP financing becomes unavailable. The Bank team has been working closely with MOHFW to identify indicators that are measurable and appropriate for the PDO and other output indicators and milestones. These indicators will be measured through regular surveys and data from MIS. Overall Risk Rating at Overall Risk Rating During Preparation Implementation Comments MI MI The risks in the country and sector are known and predictable and the use of country systems has been implemented under the closing program (HNPSP) with adequate mitigatory measures, which would be further strengthened under the proposed Program. 72

83 Annex 5: Implementation Support Plan Strategy and approach for Implementation Support 1. Given the experience of using Joint Assessment of National Strategies (JANS) tool during the preparation of the Government of Bangladesh (GOB) s new sector Program (Health, Population and Nutrition Sector Development Program, HPNSDP), there is strong consensus among the DPs that sustainable development requires a harmonized implementation support to a national program led by the GOB. Therefore, all participating development partners (DPs) will share in the joint responsibility to supervise and provide necessary implementation support to the Ministry of Health and Family Welfare (MOHFW) to achieve the Program objectives. 2. While the support modality of an investment instrument, reimbursing GOB for specified expenditures incurred, is viewed as appropriate at this time, there is an explicit wish to move as quickly as possible towards an aid modality that links disbursements to results achieved. Consequently, the implementation support will go beyond the fiduciary functions of oversight over procedures and transactions and include assisting MOHFW in strengthening its systems, especially in, but not limited to, the areas of financial management, procurement and logistics management, monitoring and evaluation, human resource management, health care financing and governance. This particular focus on systems strengthening will be a joint effort by MOHFW and the DPs and a comprehensive package of technical support is being elaborated by the DPs in close consultation with MOHFW. Progress in the area of systems strengthening will be monitored through more regular capacity assessments and, possibly, the use of the JANS tool during implementation. The specific objective of this part of the implementation support is to arrive at an increased reliance on, and use of government systems in the near future. 3. IDA will be responsible for the fiduciary and safeguards oversight of the Project funds. The strategy for implementation support (IS) with regards to IDA s fiduciary role has been developed based on the nature of the Program and its fiduciary risk profile. It will aim at making implementation support to the MOHFW more flexible and efficient, and will focus on implementation of the risk mitigation measures defined in the Operational Risk Assessment Framework (ORAF). 4. Planning and Budgeting. Operational Plans (OPs) will be revised through a participatory process following the Annual Program Review (APR) and reviewed with the Annual Development Program (ADP). Implementation support will include: (a) consultations between MOHFW and the pooling DPs in order to reach agreement on the share of ADP to be financed by the Project and Procurement Plan; (b) identifying contributions by the DPs and GOB to be confirmed at that time, after which the DPs proposed contributions will be included in the annual national budget and, eventually, the Medium Term Expenditure Framework (MTEF) planning cycle; and (c) the release of funds in time to LDs for effective implementation of Program activities. 5. Financial Management. Supervision will review the Program s financial management (FM) system, including but not limited to, accounting, reporting, internal controls and follow on the settlement progress of pending audit observations. The supervision strategy is based on 73

84 several mechanisms that will enable enhanced implementation support to the GOB and enable timely and effective monitoring. The supervision thus comprises: a) Joint Review Missions; b) regular visits by the DPs and technical consultants between the formal joint review missions; and c) FM Task Group Meetings. On-site visit & desk work Table A.3.3: Financial Management Supervision Plan Type Timing Mechanism Objective General supervision: Joint Review Mission Review FM once a year preferably together performance with independent reviewer Financial audit review Once a year Audit Report submitted to the Bank FM Task Group Meeting Quarterly 74 Review progress on implementation of recommendation various independent review Follow up on external/internal auditor recommendations/ raised issues Review staffing Review progress on GAAP Update assigned risk Review Audit Report Raise issues disclosed in audit report Accounting and Reporting Review progress on GAAP Review progress on external/internal auditor recommendations/ raised issues 6. Disbursement. The Bank will provide training to MOHFW and the Economic Relations Division (ERD) on online submission of withdrawal applications and hands on training on the use of client connection to monitor disbursement from IDA Credit and multi donor trust fund (MDTF). 7. Procurement. To enhance capacity and quality of output quarterly supervision workshops, led by MOHFW with the participation of the World Bank and other DPs, will be conducted. These will aim at reviewing the over-all progress achieved and problems identified during the previous quarter. Implementation support will also include: (a) providing training to staff of various procurement agencies and related staff in the regional Program offices, as well as the Foreign Aided Projects Audit Directorate (FAPAD) auditors; (b) providing training on Procurement Risk Mitigation Plan (PRMP); (c) reviewing procurement documents and providing timely feedback to the Procurement Agencies; (d) providing detailed guidance on the Bank s

85 Procurement Guidelines to the procurement entities; and (e) monitoring procurement progress against the detailed Procurement Plan. 8. Environment and Social Safeguards. Both the Health Engineering Department (HED) of MOHFW and the Public Works Department (PWD) of GOB have virtually no experience in dealing with resettlement and indigenous peoples issues in the health, nutrition and population (HNP) sector. HED is, however, familiar with the Bank s guidelines for land donation and purchase, and oversaw some cases under the closing program (HNPSP). Both these organizations, therefore, require training for their staff, who would be designated to oversee and monitor Social Management Framework (SMF) implementation, including preparation and implementation of the impact mitigation plans. The Bank team will supervise the implementation of the Environment Management Plan (EMP), SMF and Tribal/Ethnic Health, Nutrition and Population Plan (THNPP) and provide guidance to the agencies to address any issues. Inputs from an Environment Specialist and a Social Development Specialist will be required at least once a year during supervision mission. Field visits will be done on a semiannual basis while civil works are under implementation. 9. Governance and Accountability Action Plan (GAAP). The Bank team will supervise the implementation of the agreed GAAP and provide guidance in resolving any issues identified. 10. Implementation Support Plan. Most of the Bank team members will be based in the Bangladesh country office to ensure timely, efficient and effective implementation support to the client. The Team Leader will be based in-country to closely monitor Project implementation. Formal supervision and field visits will be carried out bi-annually. This Plan is an indicative and flexible instrument which will be revisited during implementation as part of the implementation status and results report (ISR) and adjusted based on what is happening on the ground. The implementation plan will be consistent with the design and riskiness of the operation, and should be adequately resourced. Detailed inputs from the Bank team are outlined below: 11. Technical inputs. In addition to the health specialists, a health economist and operations staff, a medical equipment specialist and a pharmaceutical expert will be hired to assist the Bank team to review bid documents to ensure fair competition through proper technical specifications and fair assessment of the technical aspects of bids. 12. Fiduciary requirements and inputs. Training will be provided by the Bank s financial management specialist and procurement specialist to the MOHFW procuring entity staff before the commencement of Program implementation. The team will also help identify capacity building needs to strengthen MOHFW s financial management capacity and to improve procurement management efficiency. Both the financial management and the procurement specialist of the Bank will be based in-country to provide timely support. Formal supervision of financial management will be carried out as indicated in the Financial Management Supervision Plan, while procurement supervision will be carried out on a timely basis as required by MOHFW. 13. Operations. Staff with operations expertise, based in-country will provide day to day supervision of all operational aspects, as well as in coordination with the MOHFW and other Bank team members. 75

86 14. Analytical and advisory activities (AAA) & Operational Research. A Research Analyst or an Economist, based in- country, will closely work to monitor the results and to carry out various sector specific AAA under the guidance of the Task Team Leader. The main focus in terms of support to implementation support is summarized below: Time Focus Resource Estimate Partne r Role First twelve months Technical and Advisory support in supervision Lead Health Specialist (25%) 12 SWs Team Leadership TTL 48 SWs Day to day dialogue with client and DPs on Sr. Health Specialist 48 SWs program technical issues Support on Health Financing, AAA, ESW Sr. Health Economist (25%) 12 SWs Research Analyst/Economist 48 SWs Implementation of Nutrition Component Sr. Nutrition Specialist (25%) 12 SWs Institutional Arrangement and Program Operations Analyst/Officer 48 SWs N/A Supervision Coordination MDTF management Operations Analyst/Officer 48 SWs Technical and Procurement Review of the Medical Equipment Specialist 6 SWs bidding documents Pharmaceuticals Expert 6 SWs Procurement Specialist(s) 20 SWs FM Training and Supervision Financial Management Specialist 7 SWs Disbursement Training Disbursement Officer 1 SW Environmental training and supervision Environment Specialist 1 SW Social Specialist 1 SW months Technical and Advisory support in supervision Lead Health Specialist (25%) 48 SWs Team Leadership TTL 192 SWs Day to day dialogue with client and DPs on Sr. Health Specialist 192 SWs program technical issues Support on Health Financing, AAA, ESW Sr. Health Economist (25%) 48 SWs Research Analyst/Economist 192 SWs Implementation of Nutrition Component Sr. Nutrition Specialist (25%) 48 SWs Institutional Arrangement and Program Operations Analyst/Officer 192 SWs Supervision Coordination MDTF management Operations Analyst/Officer 192 SWs N/A Technical and Procurement Review of the Medical Equipment Specialist 44 SWs bidding documents Pharmaceuticals Expert 44 SWs Procurement Specialist(s) 80 SWs FM Training and Supervision FM Specialist 28 SWs Disbursement Training Disbursement Officer 1 SW Environmental training and supervision Environment Specialist 8 SWs Social Development Specialist 8 SWs Note: SWs Staff Weeks 76

87 II. Skills Mix Required Skills Needed Number of Staff Weeks Number of Trips Comments Lead Health Specialist 12 SWs annually 3 Regional Team Leadership 48 SWs annually Fields trips as Country Office Based Sr. Health Specialist 48 SWs annually Fields trips as Country Office Based Sr. Health Economist 12 SWs annually 2 HQ/Regional Research 48 SWs annually Fields trips as Country Office Based Analyst/Economist Sr. Nutrition Specialist 12 SWs annually 3 HQ/Regional Operations 96 SWs annually Fields trips as Country Office Based Analyst/Officer Procurement 20 SWs annually Fields trips as Country Office Based Specialist(s) Financial Management 7 SWs annually Fields trips as Country Office Based Specialist Environment Specialist First year 1 SW and Fields trips as Country Office Based subsequent years 2 SWs Social Specialist First year 1 SW and Fields trips as Country Office Based subsequent years 2 SWs Disbursement Officer First year 1 SW and 1 SW in year 3 2 HQ/Regional 77

88 Macro- and socio-economic context Annex 6.A: Economic and Financial Analysis 1. Bangladesh has made impressive gains in economic and social development since the turn of the millennium. Economic performance has been strong with the economy growing at an average pace of over 5.8 percent in the last decade and a half (accelerating to over 6 percent on average since 2004). 40 Inflation has been kept in the single digit range and domestic debt levels are low and stable; the economy has also shown resilience to the global economic recession. Per capita Gross Domestic Product (GDP) has risen to US$551 or purchasing power parity (PPP) adjusted of US$1,410, 41 and the share of the population living below the poverty line has declined from 59 percent in 1990 to 40 percent in Bangladesh remains, nonetheless, a low income country with high incidence of poverty. In order to achieve its ambitious poverty reduction goals and reach middle income status by 2021, the country will need to implement a more equitable growth strategy. A central part of this agenda is to invest in the health of its people, particularly the poor and underserved, in order to improve their well-being and productivity. 2. Investments in human capital are a GOB priority, reflected in the allocation of public resources to the social sector. Around 25 percent of the Government of Bangladesh (GOB) budget is allocated to social sectors health (6 percent), education (15 percent) and social security and welfare (4 percent). Social sector spending has been sustained despite the slight decline in total government expenditures as a share of GDP (Figure 1 and 2). These investments are reaping results as measured by performance on achieving the millennium development goals (MDGs). Figure 1 Social Sectors remain in the lead (% of total expenditure) Figure 2 Expenditure Trends Development Expenditures have been declining Total Expenditure Percent GDP Recurrent Expenditure Annual Development Program General Social Services Economic Inf rastruct ure Int erest 2.0 Administration Services Services 0.0 FY98-FY02 Average FY03-FY07 Average Source: MoF and WB staff estimates. 40 Bangladesh Public Expenditure and Institutional Review: Towards a Better Quality of Public Expenditure. Volume I. June World Bank. Report No BD. 41 WDI. Latest figures are for

89 3. Bangladesh has made considerable progress in some of MDGs. At the current pace of decline in the poverty head-count rate the MDG 1 target of 29 percent can be achieved ahead of In education, the gender parity in primary and secondary education targets have already been achieved at the national level, although geographical variations exist; the challenge under MDG 2 will be to reach the targets for completion rate and adult literacy rate, which are lagging behind. In health, infant, child mortality and maternal mortality have had impressive declines, outstripping progress in other countries in the region and setting Bangladesh among the elite group of countries that are on track to meet both the MDG 4 and 5 targets. Challenges, however, remain. Of particular concern is the impact on health, education and social protection of the stagnation in progress on nutritional outcomes, which reached a plateau in the late 1990s. Child underweight rates fell a mere 5 percent to 46 percent between 2000 and 2007 and are pervasively high across all socioeconomic strata (56 percent among the poorest; 32 percent among the wealthiest quintile). Wasting worsened with the rate increasing by more than half to 16 percent in 2007, putting the levels above the WHO emergency threshold of 15 percent. Health context Expenditures on health 4. In light of the overall low level of national income and public expenditures, the high share allocated to the social sectors translates into low expenditures. Even while the Government allocated 6 percent of its budget to the health sector, health spending stood at 3.4 percent of GDP in 2007 or per capita US$16, placing Bangladesh as the lowest spender amongst its South Asian neighbors (Table 1). Though total health expenditures (THE) have increased slightly (from 2.7 percent of GDP in 1997), public spending has stayed flat at around one percent of GDP. Meanwhile, households the main source of financing for health are shouldering a large and growing share of total spending (which increased from 57 to 64 percent from ). The public sector accounts for 26 percent of total health expenditures or US$4 per capita, 97 percent of which is spent through the MOHFW. Approximately a quarter of MOHFW expenditures are financed by external resources; DPs also directly provide funds to nongovernmental organizations (NGOs), which accounted for around 8 percent of total expenditures in Table 1: Expenditures on health in the South Asia region Country GDP per capita (USD) Per capita THE (USD) Per capita THE (PPP$) THE as % GDP Public exp as % GDP Private exp as % GDP Bangladesh India 1, Nepal Pakistan Sri Lanka 2, Note: For comparability with WHO estimates rest of the world figures (0.3 percent of GDP) for Bangladesh were added to private expenditure because these funds are channeled through NGOs. Source: Bangladesh NHA (2007 figures); WHO NHA database (2006, latest available figure) 79

90 Implications for equity 5. Low levels of risk protection places household in peril of becoming impoverished due to expenditures on health. Not only is the level of household spending high and rising, but expenditures are almost entirely made in the form of out of pocket payments at the point of service delivery (Figure 3). At the threshold of 25 percent of non-food expenditure, approximately 10 percent of Bangladeshi households incur catastrophic payments for health care. 42 Out of pocket payments are incurred almost entirely in the private sector because, until recently, there were no user fees at the primary care level in public facilities, the registration fees in secondary hospitals are nominal and the poor are exempt from charges at the tertiary level. High payment for medicines in retail outlets reflects lack of supply in public facilities; only 14 percent of the Ministry of Health and Family Welfare (MOHFW) budget is spent on medical sup plies and requisites. It is worrisome that in 2010 the GOB reinstituted user fees in the absence of appropriate safety nets to protect the poor. 6. The changing composition of household expenditures is another reason for concern. Figure 4 shows that payments for inpatient services and diagnostics are on the rise (from 9 to 19 percent of total out of pocket expenditures from ). These services have a higher cost per episode of treatment and are more like to push households into poverty. The catastrophic expenditure metric does not take into account households that forego health services because they cannot afford to pay. According to the Household Income and Expenditure Survey 2005, a quarter of those who fell ill and did not seek care stated that high cost was the reason for non treatment; this is the second highest reason given by respondents, the main one being that the problem was not perceived as serious (63%). Figure 3: Total expenditures by source Figure 4: Out of pocket payment by type of expenditure Source: Bangladesh NHA Public resources are not allocated equitably, either from a benefit incidence perspective or geographically. An analysis of the distribution of public subsidies for curative care services across socioeconomic strata, according to consumption expenditure quintiles, shows that the rich received a greater share of subsidies than the poor (Table 2), partly because they are more likely to seek care than the poor. Inequities are most marked for inpatient care in tertiary facilities. 42 E. Van Doorslaer et al. Catastrophic payments for health care in Asia. Health Economics Nov;16(11):