Report No.: AB5949 Project Name PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Tajikistan Government-implemented grant for targeting and payment of social assistance Region EUROPE AND CENTRAL ASIA Sector Other social services (100%) Project ID P123704 Borrower(s) GOVERNMENT OF TAJIKISTAN Ministry of Finance Ak. Rajabova Str.3 Tajikistan Tel: (992-372) 21-14-17 Implementing Agency Project Coordination Group, Executive Office of the President Mr. Tojiddin Jurazoda, Project Coordinator 21, Rudaki ave, 734025 Dushanbe, Tajikistan Tel/Fax: (992-372) 2217361 Mobile: (992) 90 770 1275 E-mail: tojikddin@psrp.tj Environment Category [ ] A [ ] B [X] C [ ] FI [ ] TBD (to be determined) Date PID Prepared December 9, 2010 Estimated Date of None. No appraisal is required. Appraisal Authorization Estimated Date of Board Approval None. No Board approval is required for Rapid Social Response Trust Fund Grants. 1. Key development issues and rationale for Bank involvement Tajikistan is among the world s poorest countries. Its gross national income (Atlas method) was only USD 700 per capita in 2009. And the consumption expenditure per capita of almost half (47 percent) of the population fell below the poverty line of 162 Somoni (USD 37) per month. Several health indicators, such as child and infant malnutrition rates, are unusually weak. An effective system of social assistance could help this poor population to preserve their health, education, and thus their productivity, over the long-term. Figure 1: Targeting accuracy in Tajikistan: Distribution of social assistance across quintiles of the population (in % points) However Tajikistan s social assistance system exerts almost no downward influence on poverty rates. This conclusion is based on analysis of recent data on households. A simple simulation suggests that the social assistance program lowers the poverty rate by only 0.3 percentage point. 1
One of the main reasons is that only an estimated 23 percent of social assistance is received by the poorest 20 percent (quintile) of the population, while the rest leaks to better-off quintiles (Figure 1). Moreover, targeting accuracy in Tajikistan is the weakest in the Europe and Central Asia (ECA) region, after Belarus (Figure 2). The Government of Tajikistan could improve the impact of its social assistance by developing and adopting a poverty-targeting mechanism for directing social assistance to the poorest households more effectively. Figure 2: Targeting accuracy in ECA countries, percent of social assistance received by the poorest quintile of the population (in percentage points) The other main reason that social assistance has such a small influence on consumption is that benefits are negligible. Social assistance is the smallest, as a percentage of the income of the poor, in the ECA region. That is, in turn, because the national budget for social assistance was less than USD 10 million in 2009. At 0.2 percent of GDP, this budget is also the smallest in the ECA region (Figure 3 below). It is thus especially urgent for Tajikistan to use this limited budget efficiently. Moreover an efficient system of social assistance would help poor households to maintain their human capital during economic downturns. During the 2008 global food price crisis, responses by donors and the government were constrained by the lack of an effective mechanism for channeling assistance to the poor. This continued to cripple response efforts during the global crisis of 2009, which reduced remittance incomes. In Tajikistan, workers remittances from abroad are a major source of household income. Remittances reached US$ 2.3 billion and 45 percent of GDP in 2008. The global financial crisis deflated the real estate and construction bubble in Russia, and as a result, remittances fell by an estimated 35 percent to US$ 1.6 billion and 33 percent of GDP in 2009. Remittances are now recovering, but a full recovery may take several years. In the meantime, remittance-dependent households may cut their expenditures on basic health, nutrition for their children, and education, leading to an irreversible loss of their human capital. 2
Figure 3: Social Assistance as a percentage GDP in ECA Countries 2. Proposed objective(s) The development objectives of the proposed RSR grant are to help the Government of Tajikistan to develop, pilot and evaluate a targeting, registry and payments mechanism that could: (a) Target benefits to the poor more accurately, that is, with lower leakages to the non-poor; (b) Protect the poor more effectively in times of crisis and beyond; and (c) Serve as a credible vehicle through which donors could channel additional benefits and services to the poor, particularly in times of crisis. 3. Preliminary description The country team received preliminary approval of a USD 2.5 million RSR Grant, which is divided into a World Bank-implemented part (USD 300,000) and a government-implemented part (USD 2.2 million). The World Bank-implemented part would support studies and, most importantly, a statistical evaluation study of the pilot of reform of social assistance. This Project Information Document concerns only the government-implemented part, which would support: 3
Development and design of a pilot targeting, registry and payments mechanism, in collaboration with the (MLSP) and the European Union (EU); Piloting of the mechanism as a vehicle for channeling poverty-targeted social assistance transfers in two districts (rayons); and, following evaluation of the pilot, Building the capacity of the MLSP to roll-out a national targeting, registry and payments mechanism through training, provision of equipment, and repairs to infrastructure. The outcomes of the proposed RSR Grant would be achievement of these objectives. The Simplified Table of Outcomes presents the planned outcomes and the planned timing of the outcomes in further detail (Attachment 1). The pilot would test a new targeted social assistance benefit. The program would be funded by eliminating the present electricity and gas compensation program and the conditional cash payment program to promote poor children s participation in education. The pilot would test each technical step in the reform in the field. Importantly, it would test new eligibility criteria, which are based on a proxy-means test, and it would also test a new application form (which corresponds to the new eligibility criteria). The pilot would test the new intake process, including gathering of applications, interviews, and data entry, and it would test a new electronic registry system for managing information. It would test a new payments system, and finally, it would test verification, monitoring, oversight and control mechanisms. Table 1: Budget of the proposed RSR Grant Cost Component A: Technical support and capacity-building for the pilot $467,000 Study tours (1 to 2) $40,000 International consultant on development of software and related training $50,000 Two local consultants on development of software and related training $50,000 Local company to conduct the information campaigns $55,000 Office furniture & electrical equipment: computers, software, printers, scanners generators $82,000 Information campaigns through mass media (radio, TV, newspaper) $25,000 Internal monitoring and evaluation of the pilot s effectiveness $50,000 Office improvement: minor refurbishment $40,000 Procurement of equipment and installation of wireless networks $20,000 Printing of booklets, leaflet and brochure $55,000 Component B: Reserve for payment of social assistance (through the budget) $500,000 Component C: Capacity building for the national roll-out of the reform (excl. registry) $1,033,000 Office furniture & electrical equipment: computers, software, printers, scanners generators $558,000 Training of government specialists in Sogd, RRS, GBAO and Khatlon $300,000 Information campaigns through mass media (radio, TV, newspaper) $45,000 Printing of booklets, leaflet and brochure $50,000 Internal monitoring and evaluation of the system s effectiveness $80,000 Component D: Administration $200,000 Consultants and operating costs of the Project Coordination Group $200,000 Total $2,200,000 Source: World Bank, Ministry of Labor & Social Protection, and Project Coordination Group in the Executive Office of the President of the Republic of Tajikistan. 4
The proposed RSR grant would support the pilot through capacity building. Component A of the grant would support capacity-building in the MLSP s offices in the pilot districts of Istarafshan and Yavan (Table 1). It would support training, the purchase of computers and communication equipment for collecting information on applications, some office furniture and communications connections, development of software for a simple registry of social assistance applications and approvals, development of the questionnaire, as well as monitoring in the regional and central MLSP offices. Component B of the proposed RSR grant could also finance up to USD 500,000 in payment of social assistance in the two pilot districts (Table 1). This amount would form a reserve against submission of unexpectedly large volume of qualifying applications in the target districts in 2011. This component, in effect, covers the risk that spending on social assistance in the pilot districts might exceed the amount budgeted for these districts by the Ministry of Finance in 2011, which is 5.2 million Tajikistan Somonis (TJS). Disbursement of Component B would be subject to conditions. To justify disbursement of all or part of the component, the MLSP would submit reports demonstrating that applications in the target districts in 2011 will lead to expenditures on social assistance of more than 5.2 million TJS. If more than this has already been spent, the Ministry of Finance would justify disbursement by submitting budget expenditure reports. In addition, disbursement would be conditional on World Bank approval of the methodology for targeting, intake, registry, payment, and financial monitoring and controls on benefits in the pilot regions. If these funds are not spent in 2011, the funds would be reprogrammed to support capacity building at the MLSP for the national reform of social assistance, in 2012. Support for payment of social assistance is smaller than in the original Expression of Interest (EOI, Attachment 2). The EOI programmed funds to pay some of the costs of social assistance during the national roll-out of the reform of social assistance. Since the time when the EOI was submitted, the Government and the EU and World Bank teams concluded that it will not be possible to launch the national roll-out until 2013, which is past the closing date for this grant. Therefore these funds were reprogrammed for building of capacity for the national roll-out. The grant would support part of the costs of capacity-building for national roll-out of the reform. Component C would support training of civil servants, information campaigns, computers, communications connections, and monitoring by the MLSP. Component D would support the costs of administration of the grant. The Project Coordination Group in the Executive Office of the President would implement all the components of the grant. This Project Coordination Group in the President s Office is now completing implementation of a civil service reform project, and in this context, it has built a history of cooperation with the MLSP. Its capacity in procurement and financial management is strong and it has a good history of financial audits. The Project Coordination Group would revise its Project Operations Manual (POM). The revised POM would define how the Group will work with the MLSP. It would document the procedure for disbursement of all or part of Component B to the Treasury and the specific 5
financial reporting and controls of this component. The revised POM would also follow the requirements procedures described in the attachment on Financial Management (Attachment 3) The Procurement Plan prepared by the Project Coordination Group and the MLSP would be attached to the revised POM (Attachment 4). Adoption of the revised POM would be a condition for signature of the legal grant agreement. A future IDA social assistance support grant of about USD 2 million would follow-up on the work supported by the RSR grant. The IDA Grant would support national roll-out of the system for social assistance transfers, with a focus on targeting, registry, and payments system. There are several risks in implementation of the proposed RSR grant. One is that the funds might arrive too late to be useful in supporting the pilot, because of delays in preparation (for instance, of the revised POM) and processing (for instance a delay in signature of the legal agreement). A further risk is that the Ministry of Finance might not pay its full 5.2 million TJS contribution to the pilot. Finally, the contract of the EU consultants supporting the MLSP might not be renewed. 4. Safeguard policies that might apply The proposed RSR grant would fall into environmental category C, which means that it does not trigger environmental safeguards. The proposed grant would support some minor rehabilitation of regional offices of the MLSP. The team is not aware of any risks relating to safeguards. The ISDS is attached as an annex to the Grant Financing Request and will be disclosed to the public (Attachment 5). 5. Tentative financing The World Bank, EU, and the Government of Tajikistan are supporting the pilot of social assistance and capacity building for the reform of social assistance. The proposed RSR grant would finance USD 2.2 million of the costs, of which USD 967,000 would support the pilot. The EU is financing about USD 1.14 million (Euro 900,000) in technical assistance. The Government of Tajikistan is allocating USD 1.19 million (USD 5.2 million) for the pilot of poverty-targeting in budget law for calendar year 2011. ($m.) Source: Borrower 1.19 European Union 1.14 Rapid Social Response Multi-Donor Trust Fund 2.20 Total 4.53 6. Contact point Contact: Menahem M. Prywes Title: Senior Economist Tel: (1-202) 458-0433 Fax: (1-202) 477-0574 6
Email: Mprywes@worldbank.org Attachments: 1. Simplified Table of Outcomes 2. Expression of Interest (EOI), revised on June 6, 2010 3. Financial Management 4. Procurement Plan 5. Integrated Safeguards Data Sheet 6. Planned dates and responsibilities for actions. 7