TEMPLATE FOR SUBMISSION OF EPP TO RAPID RESPONSE …
Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No. 40343-LB
EMERGENCY PROJECT PAPER
FOR A
PROPOSED GRANT
IN THE AMOUNT OF
US$1.0 MILLION
FROM THE TRUST FUND FOR LEBANON
TO THE
LEBANESE REPUBLIC
FOR THE
EMERGENCY SOCIAL PROTECTION IMPLEMENTATION SUPPORT PROJECT
August 30, 2007
Human Development Sector
Middle East and North Africa Region
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
CURRENCY EQUIVALENTS
(Exchange Rate Effective, July 20, 2007)
|Currency Unit |= |Lebanese Pound |
|1 US$ |= |1,513 LL |
FISCAL YEAR
|January 1 |– |December 31 |
ABBREVIATIONS AND ACRONYMS
|AMS |Administrative Manual Statement |
|DC-FF |Direct Contribution Fully Funded System |
|DPL |Development Policy Loan |
|EdL |Electricité du Liban |
|EOSI |End of Service Indemnity |
|EPP |Emergency Project Paper |
|ESIA |Economic and Social Impact Assessment |
|ESPISP |Emergency Social Protection Implementation Support Project |
|FAR |Fixed-Asset Register |
|GDP |Gross Domestic Product |
|GOL |Government of Lebanon |
|IC |Implementation Coordinator |
|IMC-SP |Inter-Ministerial Committee for Social Policy |
|ISN |Interim Strategy Note |
|IST |Implementation Support Team |
|IT |Information Technology |
|LOU |Letter of Undertaking |
|MIS |Management Information System |
|MOF |Ministry of Finance |
|MOIM |Ministry of Interior and Municipalities |
|MOPH |Ministry of Public Health |
|MOSA |Ministry of Social Affairs |
|MPD |Multipurpose Household Survey |
|NSSF |National Social Security Fund |
|OP |Operational Policy |
|PHC |Primary Health Care |
|PMT |Proxy-Means Testing |
|RIDPL |Reform Implementation Development Policy Loan |
|RSC |Reform Steering Committee |
|SAP |Social Action Plan |
|SME |Small and Medium Enterprise |
|TFL |Trust Fund for Lebanon |
|TOR |Terms of Reference |
Vice President: Daniela Gressani
Country Director: Joseph P. Saba
Sector Director: Michal Rutkowski
Sector Manager: David Steel
Task Leader: Haneen Sayed
LEBANESE REPUBLIC
EMERGENCY SOCIAL PROTECTION IMPLEMENTATION SUPPORT PROJECT (ESPISP)
MIDDLE EAST AND NORTH AFRICA REGION
EMERGENCY PROJECT PAPER DATA SHEET
Table of Contents
Emergency Project Paper (EPP) Data Sheet 1
A. Introduction 3
B. Emergency Challenge: Country Context, Recovery Strategy and
Rationale for Proposed Emergency Project 4
C. Bank Response: The Project 6
D. Appraisal of Project Activities 10
E. Implementation Arrangements and Financing Plan 11
F. Project Risks and Mitigating Measures 12
G. Terms and Conditions for Project Financing 13
Annexes
Annex 1: Detailed Description of Project Components 14
Annex 2: Results Framework and Monitoring 21
Annex 3: Summary of Estimated Project Costs 22
Annex 4: Financial Management and Disbursement Arrangements 26
Annex 5: Implementation and Procurement Arrangements 27
Annex 6: Project Preparation and Appraisal Team Members 34
MAP # IBRD 33433
LEBANESE REPUBLIC
EMERGENCY SOCIAL PROTECTION IMPLEMENTATION SUPPORT PROJECT (ESPISP)
MIDDLE EAST AND NORTH AFRICA REGION
EMERGENCY PROJECT PAPER DATA SHEET
|Date: August 30, 2007 |Team Leader: Haneen Sayed |
|Country Director: Joseph Saba |Sectors: Other social services (90%); Health (10%) |
|Sector Manager: David Steel |Themes: Social safety nets (P); Health system performance (S) |
|Sector Director: Michal Rutkowski |Environmental category: C |
|Lending instrument: Emergency Recovery (Grant) | |
|Type of Operation: |
|New Operation [X] Additional Financing [ ] Existing Financing (restructuring) [ ] |
|Financing type: Loan [ ] Credit [ ] IDA Grant [ ] Other [X] |
|Project ID: P106489 |Total Amount: US$1 million |
|Proposed terms: Grant from the Trust Fund for Lebanon (World |Expected implementation period: September 6, 2007 – April 30, 2009 |
|Bank-executed) | |
|Expected effectiveness date: September 6, 2007 |Expected/revised closing date: April 30, 2009 |
|Recipient: Lebanese Republic |Responsible agency: World Bank |
|Development Objective: |
|The objective of the Emergency Social Protection Implementation Support Project is to accelerate and improve the quality of the |
|implementation of the package of social sector reforms presented by Lebanon at the Paris III donor conference in the areas of social |
|insurance, safety nets, and health expenditures. This will be achieved through the provision of implementation support and capacity |
|building for the National Social Security Fund (NSSF), Ministry of Social Affairs (MOSA), and Ministry of Public Health (MOPH). Over |
|the medium term, the set of reforms supported by this Project will be expanded in order to ensure the transition to a social protection|
|system that provides adequate income protection and security to all population groups, while ensuring financial sustainability and |
|equity, and minimizing economic distortions. |
|Short Description: |
|The project will: (a) improve the control of expenditures and revenues within the NSSF, as well as the quality of services, by setting |
|up an electronic claims processing and a utilization control system and a registration and contributions collection system; (b) ensure|
|financial sustainability of the NSSF by identifying the needed set of reform measures to control expenditures and optimize revenues; |
|(c) improve the poverty focus of existing or new safety net programs in MOSA by developing and piloting a new targeting mechanism; and |
|(d) control health expenditures by the MOPH through establishing a utilization review function, developing of hospital admission |
|criteria and protocols, implementing hard ceilings on contracts with private hospitals and realigning MOPH coverage towards more |
|cost-effective health services and hospital facilities. These activities will be achieved through the provision of implementation |
|support to the three entities with a focus on the NSSF (70% of the funds). |
|Financing Plan (US$m.) |
|Source |Local |Foreign |Total |
|Borrower | | | |
|Total IBRD/IDA | | | |
|Trust Funds |0.47 |0.53 |1.0 |
|Others | | | |
|Total |0.47 |0.53 |1.0 |
|Estimated disbursements (Bank FY/US$m.) |
| |2008 |2009 | | |
|Total IBRD/IDA | | | | |
|Trust Funds |0.7 |0.3 | | |
|Does the emergency operation require any exceptions from Bank policies? |Yes [ ] No [X] |
|Have these been approved by Bank management? |Yes [ ] No [ ] |
|Are there any critical risks rated “substantial” or “high”? |Yes [ ] No [X] |
|What safeguard policies are triggered, if any? |Yes [ ] No [X] |
|Significant, non-standard conditions, if any: This Grant is Bank-executed as requested by the GOL. Exception was sought and approved |
|by the World Bank Managing Director (paragraph 10) |
A. Introduction
1. This Project Paper seeks the approval of the Vice President for the Middle East and North Africa Region to provide a grant from the Trust Fund for Lebanon (TFL) in an amount of US$1.0 million for the Emergency Social Protection Implementation Support Project (ESPISP).
2. The project will support the implementation of reforms in the social protection system, as part of the broader program of reforms presented to the international community by the Government of Lebanon (GOL) in the context of the donor’s conference held in Paris (Paris III) on January 25, 2007. The GOL program is comprehensive in scope and contains structural, social and fiscal reforms. The program was prepared prior to the July 2006 hostilities but was revised in light of the social, economic and fiscal impacts that resulted. Key objectives of this program include putting the large public debt on a downward trajectory, while simultaneously protecting the poor, vulnerable and middle-class segments of the population from negative shocks, and ensuring an improvement in social indicators, and avoid any deterioration that might result from the hostilities. In this context, a first loan, the Reform Implementation Development Policy Loan (RIDPL), focusing on energy reforms, as well as early actions in the areas of social protection and business development, was presented to the World Bank Board of Executive Directors on August 2, 2007. A proposed Reform Implementation DPL II (RIDPL II), to be approved within the Interim Strategy Note (ISN) period (see below), continues the Bank's support to the GOL's reform program, with an emphasis on the social protection agenda..
3. The social protection agenda to be supported in the second proposed RIDPL is a necessity for the successful implementation of other reforms at the macro level, including those aiming at improving the fiscal situation of the country. Indeed, the reforms to be implemented by the GOL will strengthen income protection systems for the entire population. In addition, the reforms will contribute to rationalize government expenditures in the social sectors and to improve their effectiveness, while containing the accumulation of implicit liabilities of the NSSF. Five principles are guiding the reform program: (i) adequacy of benefits; (ii) affordability and financial sustainability; (iii) progressive and transparent redistribution; (iv) security against macroeconomic and demographic shocks; and (v) economic and administrative efficiency.
4. The social protection reform agenda builds upon the Social Action Plan (SAP) adopted by the Lebanese government and upon the analysis and recommendations outlined in the Economic and Social Impact Assessment (ESIA) carried out by the World Bank in the aftermath of the hostilities. The ESIA covers the different social sub-sectors including health, education, social protection and social insurance. However, the agenda that will be focused on, for the purpose of this grant, will consist of specific actions in the following three major components: social insurance, social safety nets, in addition to a health component. The global objective of the social insurance component seeks to: (i) define a policy framework for rationalizing and expanding coverage; (ii) improve governance and administration within the NSSF; (iii) bring about financial sustainability of the three branches of the NSSF, namely: maternity and sickness fund, family allowances fund and end of service indemnity funds; and (iv) strengthen the income protection systems for workers (through the reform of the End-Of-Service-Indemnity and introduction of a new pension system for private sector workers). The social safety nets component aims to improve the poverty focus and its efficiency and effectiveness through: (i) institutional strengthening and capacity building for social safety nets and social development; (ii) strengthening protection of the disabled; (iii) reform of service delivery arrangements, and (iv)designing and implementing a nationwide targeting system. The health sector component is mainly addresses the rationalization and control of health expenditures by the MOPH.
5. The Bank and GOL have agreed that the proposed ESPISP will be used to reinforce implementation capacity in the NSSF, MOSA, and MOPH. Under Component 1, the grant will support the implementation of a new claims and utilization processing system within the NSSF (including new protocols for hospital admission), and a new registry and collection processing system. It will also support the preparation of a reform program (including the health insurance branch) to ensure financial sustainability. Under Component 2 the project will support the: (i) development of a proxy-means testing (PMT) targeting formula; (ii) development of an operational manual for the new targeting mechanism; (iii) development of an information management system; and (iv) piloting of the targeting mechanism. Finally, Component 3 will build on the work under Component 1 to (i) develop specific admission criteria and protocols within the MOPH; (ii) introduce a utilization review function; and (iii) prepare a plan to realign MOPH coverage towards more cost-effective health services and hospital facilities. These objectives and components have been confirmed in the Council of Ministers Decision No. 54 issued on August 27, 2007.
6. This grant is being prepared under emergency procedures, as stipulated in the TFL (US$70 million, approved by the Board on September 7, 2006). In addition, because of the lack of experience in project management, financial management and procurement within the main agency implementing the reform (NSSF), the GOL requested that the Bank be responsible for the execution of the proposed project.
B. Emergency Challenge: Country Context, Recovery Strategy and Rationale for Proposed Bank Emergency Project.
7. The July 2006 hostilities found Lebanon challenged to cope with its impact due to prior chronic problems facing the economy and the social sectors. Tragic human and economic impacts[1] have reversed the encouraging economic trend seen in the first half of 2006. Lebanon’s social insurance and safety net systems were weak in playing an effective protection role. The health and education sectors continue to face systemic issues and expenditures are not commensurate with outcomes. Unique to the region, Lebanon does not have a pension system for private sector workers (what exists is an End-of-Service-Indemnity). While there is a health insurance system, it is fragmented, costly and unsustainable. The system has also a coverage problem, as only a proportion of the population are formally covered by an insurance scheme, meanwhile around 50 percent of the population have no formal insurance and they resort to benefit from the MOPH for in-patient coverage. Formal safety nets are small, scattered, and not targeted to the poor or vulnerable population. The country relies on its strong confessional-based network of social services which play the role of a safety net (NGOs, welfare organizations, remittances, etc.) but which are also susceptible to economic or political shocks. The lack of an adequate safety net means that the GOL does not have the necessary tools to help absorb shocks that might result from economic adjustment measures.
8. The Government had started to address social issues in a comprehensive manner prior to the summer 2006 hostilities and quickly resumed the agenda once the hostilities abated. The development of the Social Action Plan (SAP) in May/June 2006, as well as individual sector strategies, and with the creation of an Inter-Ministerial Committee for Social Policy (IMC-SP), were important steps in this direction. For the past four years, consecutive Lebanese governments have been advancing the pension reform agenda, which has lead to a draft pension law currently pending in Parliament for its enactment. The draft law, once enacted by Parliament, will provide Lebanon with a fully-funded defined contribution pension system.
9. At Paris III, Lebanon presented a social reform plan, which is an integral part of the economic reform package that aims to protect low income and vulnerable population groups. The proposed reforms are comprehensive, ranging from expanding social insurance (pensions and health insurance) by reforming the NSSF, to strengthening the poverty focus of social safety nets and public health services. One of the key issues within the safety net reforms is the creation of a targeting mechanism for social assistance which will strengthen the poverty and vulnerability focus of the social safety net programs. This targeting mechanism can also be used for allocation of public subsidies to finance health expenditures and income support programs. Segments of both the poor and middle class populations will also benefit from the social insurance reforms through the introduction of a pension system and more efficient and effective health insurance. In addition, the NSSF reforms will gradually lead to the elimination of Government’s implicit liabilities (e.g., from 83 percent of GDP to 52 percent of GDP, as early as 2015) by reducing pension related Government expenditures and transfers to the social security fund.
10. ESPISP responds to the Government’s request for emergency funds from the TFL to assist the NSSF, MOSA, and MOPH to implement the reform agenda for the social sectors. Due to limited institutional capacity in the concerned agencies, GOL has requested that US$1 million be allocated from the TFL to initiate the design and implementation of social protection reforms. In its letter to the Country Director for Lebanon dated May 12, 2007, GOL also requested that this US$1 million grant (forming the initial phase of a reform implementation program) be Bank-executed. As required by OP 8.00, paragraph 10, clearance was granted by the World Bank Managing Director for Bank-execution. The rationale for Bank-execution is as follows:
i) The NSSF lacks the capacity to execute this implementation support program in a speedy and efficient manner;
ii) The NSSF has no prior exposure to World Bank policies, procedures, guidelines, and time is of the essence to kick-start and advance implementation of the proposed reforms;
iii) The NSSF is an autonomous institution, and as such there is no viable alternative government agency to execute the grant;
iv) The grant would be limited to technical assistance and very small contracts for start-up goods; and
v) Bank-execution will be a measure to mitigate the fiduciary and reputational risks inherent in the current situation at the NSSF.
11. The proposed grant is consistent with the objectives of the TFL, which is providing timely assistance in sectors key to rehabilitation. Despite the difficult circumstances facing Lebanon, implementation of the TFL is progressing satisfactorily. From the TFL, a US$30 million complementary grant to the First Municipal Infrastructure Project, approved in November 2006, is financing the rehabilitation of basic services in municipalities affected by the hostilities and providing technical assistance to the Ministry of Interior and Municipalities. Meanwhile, a US$15 million grant, approved at the end of March 2007, is addressing emergency needs in the water and wastewater sector in the Beka'a valley, an area affected by the hostilities. In an effort to facilitate progress on the reform agenda, a US$5 million grant, also approved in March 2007, is helping build capacity in the energy sector to accelerate the reforms and restructuring of Electricité du Liban (EdL), the national electric utility. In addition, a US$4 million grant, is expected to be approved in the first quarter of FY08, and aims to help strengthen public expenditure and financial management capacity throughout the Government. Finally, the TFL, through IFC, is supporting private sector recovery, this is being done through a US$14 million first loss grant to scale up a risk-sharing facility for Lebanese banks (three banks signed an agreement in June 2007), and US$1 million in strategic advisory services to Kafalat, the Lebanese Small and Medium Enterprise (SME) guarantee agency in Lebanon.
C. Bank Response: The Project
1. Brief Description of Bank’s Strategy of Emergency Support
12. The ISN outlines the Bank’s proposed support for Lebanon during the next 12-15 months. The period covered by the ISN is short in appreciation of the current uncertain economic and political situation in Lebanon. Bank management expects to submit a new ISN or a full Country Assistance Strategy to the Board by October 2008.
13. The ISN is anchored in the Government’s medium-term reform program presented at Paris III. GOL presented a comprehensive program at Paris III, building on Lebanon’s pre-hostilities efforts to launch a reform program. However, in Lebanon’s politically charged environment, quick and demonstrable first steps towards implementation are key to establishing reform momentum. The ISN outlines a transitional framework of technical and financial assistance to contribute to this early effort. It emphasizes the medium-term public expenditure and social reform agenda, with a particular focus on energy and social protection reforms and private sector led growth. It is widely understood in Lebanon and by the international community that because of service deficiencies and fiscal drain, quick and demonstrable reform actions in the energy and social protection areas are the essential first steps for: (a) commencing a transition to fiscal sustainability over the medium term; (b) garnering support for the Government’s growth and social reform agenda; and (c) galvanizing donors to disburse their Paris III pledges to underpin reform implementation. Therefore, the ISN is focused on priority reforms for which there is the necessary consensus for early implementation.
2. Project Development Objectives
14. The objective of the ESPISP is to accelerate and improve the quality of the implementation of the package of social sector reforms presented by GOL at the Paris III donor conference in the areas of social insurance, safety nets, and health expenditures. This will be achieved through the provision of implementation support and capacity building for the NSSF, MOSA, and MOPH. The ESPISP will support the development and implementation, over the short term, of key new processes and policies in the three entities. The ESPISP, however, is part of a wider medium term reform program that targets six objectives: (i) preparation of a policy framework for social insurance and coverage expansion; (ii) improvement of the governance and administration of the NSSF; (iii) reforms to guarantee the medium and long terms sustainability of the NSSF; (iv) reforms to strengthen income protection programs (pensions and family allowances); (vi) putting in place a social assistance system that is able to target safety net programs to the most vulnerable population groups; and (vi) controlling costs in MOPH. These reforms will help Lebanon in its transition towards a social protection system that provides adequate income protection and security to all population groups, while ensuring financial sustainability and equity, and minimizing economic distortions.
3. Summary of Project Components
15. The ESPISP will support the implementation of a sub-set of activities from the three components of the social protection reform agenda. This section briefly describes the overall objectives of the full reform program, while detailing the activities to be supported under the ESPISP. The choice of these activities was based on implementable priorities over the short term, as well as budget availability. If additional resources became available, the implementation of other components of the medium-term reform program could start. The exact sequence of the wider reform components still has to be defined but it would depend, in part, on the level of additional resources that become available. The following table is a summary of the specific activities to be financed under the current ESPISP, followed by description of the components. A more detailed description of the full reform program and grant activities is provided in Annex 1.
|Components and Activities to be Covered Under ESPSIP |Estimated Cost |
| |(US$million) |
|Component 1: Modernization of the Social Insurance System |0.7 |
|Provision of technical assistance for the design and implementation of an electronic claims processing and | |
|utilization control system. | |
|Provision of technical assistance for the design and implementation of a registry of plan members and collection| |
|of contributions system. | |
|Provision of technical assistance to identify and implement measures to secure the financial sustainability of | |
|the health insurance branch including the refinancing of accounts payable and accounts receivable. | |
|Capacity building, including training, and project implementation and coordination support at the NSSF. | |
|Component 2: Strengthening of Social Safety Nets |0.2 |
|Development of a “proxy-means testing” targeting formula. | |
|Development of procedures for a new targeting mechanism and preparation of an operational manual that will | |
|detail the mechanism for the distribution of benefits to the poor and vulnerable. | |
|Development of an information management system to support implementation of the targeting mechanism, including | |
|provision of equipment and software. | |
|Provision of technical assistance to carry out testing of the targeting mechanism and method of benefit | |
|distribution. | |
|Component 3: Health Sector Cost Rationalization |0.1 |
|Provision of technical assistance to introduce a MOPH utilization review function. | |
|Provision of assistance in developing 30 inpatient admission criteria within the MOPH. | |
|3. Provision of technical support to prepare a plan to realign MOPH coverage towards more cost-effective | |
|health services and hospital facilities. | |
|Total |1.0 |
Component 1: Modernization of the Social Insurance System. (Total US$3.9 million, of which proposed under this project US$700,000)
16. This component has four core subcomponents and its total implementation cost, over a period of 3-4 years is estimated at US$3.9 million. The four subcomponents are: (a) preparation of a policy framework for social insurance and coverage expansion; (b) improvement of the governance and administration of the NSSF; (c) reforms to guarantee the medium and long terms sustainability of the NSSF; and (d) reforms to strengthen income protection programs (pensions and family allowances).
17. Subcomponent A is aimed at designing a policy framework for the social insurance system that includes defining the mandate of various institutions and coordination arrangements, as well as preparing a multi-year program to rationalize and expand coverage. Subcomponent B will focus on improving policy making, executive, and auditing functions within the NSSF, as well as the core business and administrative processes, in the context of the NSSF Master Plan (currently under implementation), including the reforms envisaged for the three branches. Subcomponent C will deal with the reforms necessary to ensure that the NSSF reaches financial equilibrium over a period of 5-7 years. This includes assessing the financial situation of the three branches managed by the NSSF, identifying policy measures to correct current imbalances (including introducing incentives to control costs in the health insurance branch), and estimating the unfunded liabilities of the NSSF and the arrears of the government, and agreeing on a refinancing plan. Finally, Subcomponent D will focus on the reform of the End-of-Service Indemnity through the implementation of a new Direct Contribution Fully Funded (DC-FF) pension system, and the reform of the family allowances.
18. The ESPISP will focus on the implementation of activities under subcomponents B and C that will cover a period of 18 months at a cost of US$700,000. Under Subcomponent B, the grant will support the design and implementation of two key systems: (i) electronic claims processing and utilization control systems; and (ii) registry of plan members and collection of contributions. For each of these systems, the grant will support (a) a review of the appropriateness of the IT systems and software that are being setup in the context of Phase I of the Master Plan; (b) the design and implementation of the necessary reengineering of business and administrative processes; (c) the identification of needs in terms of staffing and training; and (d) the design and implementation of required new IT systems. The implementation of the new claims processing system will also require setting up a process to clear the backlog in claims processing.
19. Under Subcomponent C the grant will support the following activities: (i) an actuarial valuation of the health insurance branch; (ii) the estimation of the government arrears with the NSSF and the design of a refinancing plan; and (iii) the design of at least three reform options for the health insurance branch including an assessment of welfare and fiscal impacts.
Component 2: Strengthening Social Safety Nets (Total US$3.3 million, of which proposed under this project US$200,000)
20. The GOL is planning to undertake a series of measures to improve the poverty focus and efficiency and effectiveness of the social safety net programs. The reforms include: (i) institutional strengthening and capacity building for social safety nets and social development; (ii) strengthening protection of the disabled; (iii) safety net programs implementation and service delivery arrangements; and (iv) strengthening the poverty focus of the social safety net programs.
21. The GOL decided to introduce a targeting mechanism into the social safety net interventions. Focusing limited fiscal resources on the most needy is expected to improve efficiency and effectiveness of Government programs and thus increase their poverty reduction and social inclusion impact. Implementation of targeting will result in a national database of poor and vulnerable households in Lebanon, which will serve as a key source of information for targeting of various government transfers to Lebanese citizens in need. Introduction of targeting is planned in three stages: Stage one: design of the targeting mechanism and preparation of its piloting; Stage two: testing of the targeting mechanism and method of benefit distribution; and Stage three: a national roll out.
22. The project will support the first two stages. Specifically, the following activities will be supported: (i) development of the PMT formula (the core formula and filters); (ii) development of detailed procedures (work flow processes) for implementation of targeting and preparation of an operational manual; (iii) development of an information management system to support implementation of the targeting system; (iv) testing of the targeting mechanism and method of benefit distribution, including provision of information and communication technology to one of the social development centers in districts where the system will be targeted; and (v) evaluation of the testing.
Component 3: Health Sector Cost Rationalization (Total US$260,000, of which proposed under the project US$100,000)
23. This component will focus on reforms in the MOPH and its implementation will be closely coordinated with Component 1. Component 3 focuses on improving allocative and technical efficiency in health spending. Activities under this component include defining 30 hospital admission criteria and protocols, building institutional capacity for utilization review, creating provider community consensus on criteria and protocols, and implementing hard ceilings with private and public hospitals.
24. The ESPISP will support the implementation of part of Component 3 at an estimated cost of US$100,000. More specifically, it will support the following three activities: (i) the introduction of a utilization review function within the MOPH; (ii) the development of 30 admission criteria and protocols (as in the case of the NSSF); and (iii) the preparation of a plan to realign MOPH coverage towards more cost-effective health services and hospital facilities.
4. Eligibility for Processing under OP/BP 8.0
25. GOL has requested that ESPISP be financed from the TFL. The Board Paper for the TFL stipulates the use of OP/BP 8.50 for all TFL-funded projects[2]. OP/BP 8.00 (Rapid Response to Crisis and Emergencies), issued in March 2007, now replaces OP/BP 8.50. The proposed Project is fully consistent with OP 8.00 criteria, and, in fact, will address the following priorities (as defined in Paragraph 4 of OP 8.00): (a) establishing and/or preserving human, institutional, and/or social capital; (b) assisting with the crucial initial stages of building capacity for longer-term reconstruction, disaster management, and risk reduction; and (c) supporting measures to mitigate or avert the potential effects of imminent emergencies or future emergencies or crisis in countries at high risk.
5. Consistency with Country Strategy (CAS or ISN)
26. The proposed project is fully consistent with the new ISN for Lebanon, which envisions a continuing significant role for the World Bank Group in social sector activities, given its long experience in Lebanon and its comparative advantage. The Government requested that the Bank play a leading role in assisting in the development of the elements of the social protection reform program, and the Bank support is anchored within Pillar 2 of the ISN[3]. Towards this end, the Bank will support implementation of the Government’s comprehensive SAP, developed as part of its medium-term reform program. The principal instrument of engagement is the proposed RIDPL II, complemented by grant funding from the TFL (this project).
6. Expected Outputs and Outcomes
27. Progress towards achieving the Project objectives will be measured by the following key indicators:
i) An electronic claims processing and utilization control system for the NSSF will have been made operational;
ii) A modern registry system is put in place;
iii) An actuarial evaluation of the health insurance branch of the NSSF will have been completed and options for reform approved by NSSF Board;
iv) A pilot social safety net mechanism will have been implemented using a robust targeting formula. The pilot project will have been evaluated and lessons learned/best practices extracted for national roll-out; and
v) The number of unnecessary hospital admissions will have been reduced (both in NSSF and MOPH).
D. Appraisal of Project Activities
28. Financial Management. The proposed Project will be Bank-executed and will therefore utilize World Bank systems for all financial management issues.
29. Procurement Management. The proposed Project will use World Bank Guidelines for all procurement activities. While the Bank is responsible for all procurement processing and management, the goal is to involve the beneficiary agencies in the procurement process, to allow for capacity building, ownership, and relevance of inputs and outputs to reform objectives. Details are found in Annex 5.
30. Policy Exceptions and Readiness. No policy exceptions are foreseen. All terms of reference for activities to be implemented in the first 12 months will be prepared in the early stages of the project, and procurement of goods and selection of consultants can be launched as soon as the ESPSIP becomes effective.
31. Lessons learned and reflected in the Project design. As far as social insurance and NSSF reforms are concerned, experience from other countries reflect the importance of streamlined record keeping and automation of business processes for revenues and expenditures control, and increased accountability and transparency. For social safety nets, PMT mechanisms have been successfully implemented in a number of countries including Mexico, Chile, Columbia, Brazil, Sri-Lanka, Georgia, and Armenia. Jordan and Syria are preparing for implementation of PMT targeting mechanisms. Experience shows that this mechanism (i) is suitable for countries with a relatively large informal sector and seasonality of incomes and where income is not an accurate indicator of household welfare; and (ii) delivers good targeting outcomes if implemented effectively. Well-designed implementation arrangements appear crucially important for the PMT mechanism performance. In other words, each stage of implementation should be carefully planned and executed.
E. Implementation Arrangements and Financing Plan
32. An implementation structure has been agreed between the Bank and the three beneficiary agencies. At the NSSF, the World Bank team will liaise directly with the NSSF Director General on matters related to implementation of the NSSF activities. The DG in-turn will liaison with the NSSF Board as required. An Implementation Support Team (financed by the ESPISP), will consist of on-the-ground international and national advisors and specialists to support implementation of the reforms. An NSSF Counterpart Technical Task Team which includes NSSF technical staff will be established to implement activities within the NSSF and work with the international and national specialists. The implementation structure being put in place does not change the role, responsibility, or mandate of the NSSF Board, the Director General, or the Technical Committee.
33. For MOSA and MOPH, implementation will be led by an Implementation Coordinator (IC) designated by the respective agency through a ministerial decision, reporting directly to the respective Director General (DG), and supported by a technical task team. The World Bank team will have a direct relationship with the Office of the Minister (or DG) in implementation of the activities.
34. Procurement Arrangements. Since the Bank is the executing agency, Bank operational and corporate procurement procedures will be followed. Administrative Manual Statement (AMS) 15.00 for the “Selection and Use of Consultants” and AMS 15.10 for “Corporate Procurement” will apply, as well as the “Guidelines: Selection and Employment of Consultants by World Bank Borrowers,” and the “Guidelines: Procurement under IBRD Loans and IDA Credits – May 2004, Revised October 2006”. The beneficiary agencies shall be consulted at crucial stages of procurement. Procurement Arrangements are further detailed in Annex 5. Contract payments will also be the responsibility of the Bank. Procurement arrangements are further detailed in Annex 5.
35. Financing Plan. The Grant will finance goods, consultants’ services and training. Grant proceeds will be allocated to project components as follows:
|Component |Allocation |Beneficiary Agency|
| |US$ millions | |
|1. Modernization of the Social Insurance System |0.7 |NSSF |
|2. Strengthening Social Safety Nets |0.2 |MOSA |
|3. Health Sector Cost Rationalization |0.1 |MOPH |
|Total |1.0 | |
F. Project Risks and Mitigating Measures
36. The current political environment makes reform implementation risky and could impact the implementation of the proposed ESPISP activities. The Council of Ministers Decision No.54, issued with reference to the ESPISP grant and specifying the activities it finances, is a clear indication of Government commitment to modernization and reform, and therefore provides some mitigation of the inherent risks. Another mitigating factor is the fact that the Social Action Plan was drafted prior to the current stalemate, and has gathered consensus among different stakeholders. At the NSSF, risks exist with respect to resistance from some representatives at the Board of the NSSF, though many Board representatives have indicated support for the ESPISP. There has also been very high engagement by the NSSF Director General and his staff in development of the ESPISP. The NSSF itself has also put forward its own reform program (such as that expressed in the Master Plan) which was approved by its Board and which the ESPISP builds upon.
37. While there is current reform vigor in Lebanon, capacity at some of the beneficiary agencies remains a concern. The Prime Minister and the Minister of Finance have placed social reform at the top of their agenda. The beneficiary agencies have all demonstrated the same vigor for reform. However, the type and the breadth of reforms envisaged under the project will place technical and managerial challenges on those agencies. To mitigate capacity risks, the ESPSIP will be Bank-executed, and funds will be utilized to build capacity at the beneficiary agencies. The Bank will also provide regular supervision of activities, and will dedicate resources at the Lebanon Country Office to undertake day-to-day monitoring and coordination of project activities.
38. The current security environment increases the risk that delays will occur in attracting qualified international advisors and specialists. Close monitoring of the security situation and close coordination with the regional security advisor will take place.
39. There is also an added risk in the process of building ownership within the beneficiary agencies, which may cause implementation delays. Implementation arrangements (Annex 5) call for the involvement of these agencies in: (i) identifying needs jointly with the World Bank; (ii) reviewing and validating terms of reference; and (iii) monitoring, reviewing, and endorsing key decisions arising from consultant deliverables. To mitigate this risk, the proposed ESPISP will finance a full-time Project Coordinator to be located at the NSSF to coordinate and follow-up on the implementation of all activities (in addition to other full-time national technical specialists). At MOSA and MOPH, each of these agencies will designate a full-time Implementation Coordinator to do the same. Furthermore, the World Bank Lebanon Country office will dedicate resources to the management of the agreement, with support from international staff.
G. Terms and Conditions for Project Financing
40. The Project is financed through a grant made under the TFL, and for each category of financing, the disbursement percentage will be 100%. There are no conditions of effectiveness for this Project.
Annex 1
Detailed Description of Project Components
1. Component 1: Modernization of the Social lnsurance System
Subcomponent A: Social Insurance Policy Framework and Strategy for the Expansion of Coverage.
The existing Inter-Ministerial Committee for Social Policy (IMC-SP) would be mandated to develop a National Social Insurance Policy Framework. The Committee working through a high-level Social Insurance sub-committee would be in charge of defining the mandate of the various institutions managing the social insurance programs. This will involve defining the mandate of the MOPH, NSSF and MOSA in terms of population coverage, mechanisms to identify and enroll different population groups based on the new targeting system developed by the MOSA, and mechanisms to subsidize coverage for individuals with limited or no savings capacity
Subcomponent B: Improving governance and administration.
The end goal is to review current governance structures and administrative processes to improve policy-making, executive, and auditing functions as well as corporate services. In terms of governance the goal is to review the composition of the Governing Body, its role and responsibilities as well as those of the Executive Director and the Technical Unit, the selection mechanisms for the various positions, as well as the arrangements to ensure appropriate accountability to plan members and to reduce conflicts of interest. In terms of administration, the focus is on reengineering core business process and administrative functions in the context of the implementation of the Master Plan and the envisaged reforms to the three branches managed by the NSSF. These processes include: registration of plan members, collection and enforcement of payment of contributions, reconciliation, payment systems, financing management systems, and corporate services.
Three key automated systems that need to be implemented (only two through this grant) are: (i) a centralized system to register and collect contributions; (ii) a system for claims processing and utilization control; and (iii) a financial management system based on accrual accounting. For each of these systems, it is necessary to review the appropriateness of the IT systems and software that are being setup in the context of Phase I of the Master Plan; design and implement the necessary reengineering of business and administrative processes; identify needs in terms of staffing and training; and design and implement the required new IT systems. The key features of the three systems are described below. The current grant will, however, only support the implementation of the first and second systems. The distribution of the various activities over time and the costs are described in Annex 5.
Registry and collection of contributions. The management of the NSSF cannot be improved, and various administrative systems cannot be implemented, in the absence of an up-to-date computerized system to register plan members, and collect and reconcile contributions.
The Central Register would contain the details of contributors and institutions and, while inert, it would inform every other system that is connected to the receipt of contributions and payments to third parties (the core business of NSSF). A Central Register would enhance end to-end processing that, in turn, will provide NSSF with greater ability to integrate and then interrogate data to improve services and overall management. The Central Register will be developed based on the principles that it will: (i) be integral to the day-to-day operations of the NSSF by becoming the front end to both the payment and the contributions processes; (ii) maintain use of unique identifiers for individuals (i.e., using the Lebanese Identity number coupled with the Fund Membership number) and institutions; (iii) enable data-entry and updating by Regional Office staff of a central database with facility to access information on a national basis; (iv) assist with the provision of timely management information on contributions, payments, institutions, processing timeliness and workloads etc; (v) link the person to any payments made to or in respect of that person and link the person to his/her institution(s) as appropriate; (vi) be flexible enough to cater for future changes in legislation and administration (including possibilities such as the NSSF gaining responsibility for elements of other Funds); and (vii) include the facility to track users who access the system within the NSSF.
In terms of the collection of contributions, the goal is to supplement stronger controls at registry (and payments in claims, see below) to better enforce the payment of contributions on the basis of deterrence (thus increasing the incidence of voluntary compliance) and risk analysis. A fully functioning IT system will help the NSSF to develop better information profiles about those failing to meet their contribution obligations. This will allow the NSSF to move toward a targeted and more comprehensive review of those institutions that present the highest risk. To reduce the risk of fraud within the NSSF all IT systems should have “auditing functionality.” The development of the new system will involve the adoption of an Integrated Compliance Framework that combines pro-active and re-active measures. A key aspect in the design of the new system will be to have mechanisms in place to cross-check the accuracy of contributions. There are three aspects which need to be covered under this heading namely: the accuracy of the declarations themselves (i.e., there are no arithmetic errors and the amount of contributions due and payable has been assessed correctly by the institution); reconciliation by institutions internally, to ensure that the amount they propose to pay as contributions for the period in question is in fact, the amount which is due and payable according to the information on the declaration forms; actions taken by NSSF to assess the ‘value’ of declarations lodged, to record that amount together with the money paid by each institution in the computing system and to use a ‘comparison account’ to check whether all money due has been paid.
Claims processing and utilization control systems. The NSSF has a range of well-designed utilization control mechanisms in place. The impact of those mechanisms, however, is restricted by a variety of issues, including the lack of computerization and timely data on utilization. Because of the relative sophistication of the programs already in place, if these implementation barriers are overcome it can be anticipated that the programs would achieve significant results relatively quickly. This component will support the following activities:
• Define requirements and timing for all claims to be submitted electronically and introduce programs to assist providers and developers to achieve this.
• Introduce an effective electronic claims processing system that gathers data electronically from the facilities submitting claims, adjudicates the claim using built-in pre-payment triggers and blocks for specific events, and also presents utilization data in a way that enables effective review. The system will also have a capacity to record the decisions made by the medical controllers and the reasons behind those decisions. The sophistication of this system could then be increased over time to detect more subtle service misuse issues.
• Once the electronic systems are progressing, including electronic claims processing and utilization review, restructure the organization to include a utilization review and fraud division.
• Develop additional in-house admission protocols that will enable the medical controllers to make consistent decisions (this will be coordinated with the work with the MOPH where relevant).
• Because the information systems will take time to be set-up (up to 18 months) the component will also identify short term measures to ensure that medical controllers are available on weekends and holidays, thus preventing the current situation where providers display inappropriate admissions when the controllers are not active.
Financial management and accounting systems (not supported by the current grant). This activity will focus on the design and implementation of an accrual based Financial Management and Accounting System Framework to replace the current cash based accounting system. The value of accrual accounting is that it enables managers at the NSSF to make better decisions, based on the economic costs of the decisions under consideration, rather than the cash costs as is now the case. This represents a major technical and cultural change for NSSF managers as well as financial staff. The impact of such a shift will also enable more accurate financial statement disclosure on the NSSF management of economic assets, as well as its management of the contributions provided by the government and the beneficiaries. Entities which have implemented accrual accounting have generally done so in a phased manner, with each phase comprising several steps. The same approach will be followed under this activity.
Indeed, the current system does not provide a comprehensive view of the financial performance of the fund. The Financial Statements do not provide a true picture of assets and liabilities (especially regarding administrative operations and NSSF dues) in so far as: (i) the value of claims for payment received but not paid does not appear on the balance sheet; (ii) the cost of replacing fixed assets (essential to the collection of contributions and the delivery of services) is not reported as a liability; and (iii) the acquisition of fixed assets appears as an increase in expenditures without a corresponding increase in the assets worth. Furthermore, the high volume of transactions and the absence of a computer-based accounting system necessitate the use of global financial transactions on the General Ledger. This reduces the financial transparency and accountability through posting important data as off balance sheet items and by obscuring the “audit trail” that links a given financial transaction to the primary documents that gave rise to the transaction. The accounting system also does not track appropriately the financing of health and family allowances expenditures through the surplus of the End-of-Service Indemnity Program.
It is expected that the new accounting system would be operating in parallel to the current system within a period of 18 months after the implementation of the grant. Achieving this would require changes in legislation as the present law does define that the NSSF has to follow cash accounting. Other than the issues related to business processes reengineering, identification, design, procuring of the accounting system, staffing and training this component will support the following preparatory activities:
• Assess the impact of the proposed reforms on the financial department and the extent to which the data that will be provided is accurate and has been subject to reliable controls;
• Design of financial statements and preparation of chart of accounts;
• Prepare the standards and practices that will be followed by the NSSF financial department for estimating, posting, write-off and depreciation of balances;
• Implement changes to existing processing arrangements to ensure that all claims and contributions are recorded upon receipt (see two previous components);
• Create a special task force to process on-hand unpaid claims;
• Establish a closing balance for the existing cash-based accounting system; and establish an estimated opening balance for cut-over to the proposed accrual-based accounting system;
• Develop a cost attribution model that will allow indirect costs and overheads to be charged to one (or more) of the programs administered by NSSF;
• Create a preliminary Fixed Asset Register (FAR);
• Review of existing Law and regulations to identify the necessary steps to adopt new system and phase out the current one; and
• Design, develop and implement the system
Subcomponent C: Improving the financial sustainability of the NSSF.
This is the key component of the reform program and it involves defining a multi-strategy to ensure that over a period of 5 to 7 years the NSSF reaches financial equilibrium. The component comprises the following activities tasks: (i) assessing the financial situation of the health insurance branch and defining options for reform; (ii) assessing the unfunded liabilities of the EOSI and a refinancing plan; (iii) assessing the amount of government arrears with the NSSF and developing a refinancing plan; and (iv) assessing the financing needs of the family allowance branch under the status-quo. Each of these activities is described below, but the current grant will only support activities (i) and (iii).
Assessment of the financial situation of the health branch and options for reform. The main objective of this activity is to identify a set of reforms that will ensure that the health insurance branch reaches financial equilibrium while meeting basic principles in terms of design (adequacy, affordability, security, robustness, efficiency, and progressive redistribution). The following tasks will be included under this activity:
• Design and estimation of an actuarial model to assess financial sustainability of the NSSF;
• Creation of a new, small actuarial unit within the NSSF and transferring the model with necessary training;
• Design reform options and assess their fiscal and welfare implications. The reform programs under consideration will explore policy changes in terms of: (i) structure and cost of the basic plan(s); (ii) financing mechanisms; (iii) payment and contracting systems; and (iv) quality control systems; and
• Estimating government arrears with the NSSF and designing a refinancing plan
Estimating government arrears with the NSSF and refinancing plan. A joint MOF-NSSF task force will be set up to validate Government liabilities related to: (i) unpaid employer contributions; (ii) subsidies for drivers; and (iii) the unpaid government share (25%) of Health Insurance expenditures. This will first require defining a methodology that involves: describing the system; defining critical account areas and materiality thresholds for each area; estimating error and “precision;” assessing risks and evaluating internal controls; developing and conducting substantive testing procedures (including sampling methodology); and conducting exit interviews. In addition, the Task Force will define and agree a funding plan that will allow the Government to pay existing liabilities.
Estimate unfunded liabilities of the EOSI and refinancing plan (not supported by the current grant). The EOSI is accumulating unfunded liabilities as a result of four factors: (i) the lack of a link between the payment of contributions and benefits accrual; (ii) the use of defined benefit formulas for part of the indemnity and the fact that arrangements with employers to finance the difference between individual savings are not reliable; and (iii) the fact that the end-of-service indemnity has been lending its surplus to the health insurance and family allowances branches; and (iv) the fact that assets used in the calculation of rates of return on the savings on individual accounts are not valued at market prices. This activity will prepare preliminary estimates of these unfunded liabilities and design a refinancing plan to be agreed between the MOF and the NSSF.
Estimate financing needs of family allowance branch (not supported by the current grant). The purpose of this task is to estimate how total expenditures related to the family allowance branch will evolve over time. The projections will then inform on the level of the pay-roll tax that would be required to finance the program and/or the level of budget support. The analysis will inform on the affordability of the current program and the need for reforms.
Subcomponent D: Supporting the reform of income protection programs.
This an important component in the medium-term reform program of the NSSF. Its two activities are described below, although these will not be implemented under the current grant.
Reform of the EOSI and implementation of the fully-funded DC pension system (not supported by the current grant). This activity will depend on the adoption by Parliament of the Draft Law introducing a DC-FF pension system. If approved, the NSSF will need to engage in a series of activities to implement the new system that include designing new business processes and IT, staffing the different units in charge of managing the system, and providing the necessary training. The government will also need to issue a series of regulations including, for instance, those related to the provision of disability and survivorship pensions and annuities, and the management of assets.
Reform of the Family Allowance Branch (not supported by the current grant). The assessment of the financial situation of the branch will inform on the need for reform. This activity will then explore alternative options to contain expenditures and will evaluate their financial and welfare implications.
Component 2: Strengthening Social Safety Nets
The Government of Lebanon is planning to undertake a serious of measures to improve the poverty focus and efficiency and effectiveness of the social safety net programs. The reform includes: (i) institutional strengthening and capacity building for social safety nets and social development; (ii) strengthening protection of the disabled; (iii) reform of service delivery arrangements; and (iv) strengthening the poverty focus of the social safety net programs.
In order to strengthen the poverty focus of the safety net programs the Government decided to adopt the proxy-means testing method as a targeting mechanism, because it is well-suited to an economy characterized by informality and seasonality of economic activities such as the case of Lebanon where income is not a good indicator of household welfare and where information on incomes is not readily available. The PMT method introduces transparency and objectivity into the eligibility testing and assistance award process.
Introduction of targeting is planned in three stages: Stage one: design of the targeting mechanism and preparation of its piloting; Stage two: testing of the targeting system, and Stage three: a national roll out. The project will support the stages one and two.
The following activities will be implemented:
(i) Developing the PMT formula (core formula and filters): Based on the consumption aggregate constructed from the 2004 Multipurpose Household Survey (MPS) results and through a series of simulations, the PMT formula will be developed. Screening filters (3-5 observable indicators of household welfare which are strongly correlated with higher welfare) will be identified, as well.
(ii) Designing the program to be tested jointly with the targeting system (for instance, targeted cash assistance for the poorest households): based on the results of the 2004 MPS a one tranche cash social assistance program would be designed. The program will be targeted to the poorest households in one or several of the poorest districts of Lebanon.
(iii) Developing detailed procedures (work flow processes) for implementation of targeting and preparation of an operational manual: These would include the following key segments: application procedures: procedures for collection of information on applicant households for eligibility testing; data entry; verification and cross check of information; proxy score calculation and application of filters; the establishment of the “National Registry of Applicants for Safety Net Programs” (the records all households that have been assigned a final proxy score will be entered into the National Registry); award of social benefits and calculation of the benefit amount for cash benefits, and procedures for benefit delivery. In addition, the following will be designed: a complaint mechanism and monitoring procedures (of internal processes, of beneficiary households – through random checks after they have been awarded the benefit and monitoring of the poverty impact). All procedures, and responsibilities and accountabilities will be included and described in a detailed operational manual (a book of instructions for the social workers, National Registry staff, system administrators, supervisors, benefit delivery entities, etc.).
(iv) Building an information management system: All business processes, i.e. entire work flow will be fully automated: household application, collection of information on households necessary to apply the formula and determine eligibility for assistance, household data entry, verification, cross checks, calculation of the proxy score, application of filters and final determination of the PMT score, calculation of the benefit and benefit delivery (electronic transfer to a delivery entity). The system will be built on a stable platform, and will include local area network connection, as well as real time connection across various parts of the system.
(v) Testing of the targeting mechanism and method of benefit distribution: the Targeting mechanism and method of benefit distribution will be tested in one or several districts of Lebanon. The testing will require involvement of respective (MOSA) social development center. In carrying out the testing the project will provide for one social development center: requisite information and communication technology equipment and services (computers, connectivity, LAN, etc.); training of social workers, supervisors and MIS system administrators; office equipment; printing of application forms and household questionnaires; development of public information campaign and printing of information materials and evaluation of testing.
Component 3: Health Sector Cost Rationalization.
The main goal of this component is to identify and implement policies to rationalize health expenditures incurred through the MOPH, through promotion of out-patient and primary care services. The MOPH already has a well-developed electronic claims processing system. In selected areas that have immediate utilization benefit, such as in utilization review analyses and pre-payment blocks for specific trigger events, additional capability will need to be developed. The current grant will support the following activities:
• Develop 30 in-house admission criteria and protocols, as in the case of the NSSF, that will enable the medical controllers to make consistent decisions. These should be developed jointly with the NSSF where relevant.
• Introduce a utilization review function within the MOPH
• Develop a plan to realign MOPH coverage towards more cost-effective health services and hospital facilities.
• Implement hard ceilings of MOPH contracts with private hospitals
Over the medium term, there are other interventions that need to be considered, but will not be supported by the current grant. These include introducing mechanisms to reduce the number of contracted facilities to ensure that only the appropriate number of facilities for the population is contracted and that these are of the highest available quality. There could also be mechanisms to push more services to more cost-effective primary care levels, and that patients must be managed at a contracted Primary Health Care (PHC) facilities. Clearly, this will depend on the capacity of the PHC to take on this function.
Annex 2
Results Framework and Monitoring
|PDO |Outcome Indicators |Use of Outcome Information |
|Accelerate and improve|The new systems targeted by this operation are put into place and are |Monitor progress of social sector reforms under|
|quality of |functional according to specifications. |Paris III |
|implementation of | | |
|reforms in NSSF, MOSA,|Essential components of the overall social sector reform strategies are| |
|and MOPH as part of |further developed. | |
|the social sectors | | |
|reform agenda set | | |
|under Paris III. | | |
|Intermediate Results |Results Indicators for Each Component |Use of Results Monitoring |
|One per Component | | |
|Component One: |Complete comprehensive review of hardware and software requirements for|Ensure that the IT systems and software that |
|Modernization of the |the new claims and utilization control system, and the new register for|have been already contracted by NSSF are in |
|Social Insurance |plan members and contribution collection system to ensure consistency |line with the new procedures and requirements |
|System. |with NSSF reforms. |stemming from the new business process |
| | |reengineering financed by the project. |
| | | |
| |Complete design of software requirements for the claims and utilization|Ensure that new business process, functions and|
| |control IT system, the new register for plan members and the new |policy objectives are reflected properly in the|
| |contribution collection system. |operating systems. |
| | | |
| |Development of training plan and completed training of staff on new |Ensure that NSSF staff is properly trained so |
| |functions and responsibilities stemming from the business process |that the new systems financed by the project |
| |reengineering of claims processing, and administration of registers of |can begin operation. |
| |plan members and contributors. | |
| | | |
| |New guidelines and admission protocols are defined and issued. |Effective control of health expenditures. |
| | | |
| |Unified identification mechanisms for plan members and contributors |The new register of contributors and plan |
| |operational. |members operates efficiently |
|Component Two: Social| | |
|Safety Nets |Targeting formula developed and approved |Targeting mechanism tested and evaluated to |
| | |inform and prepare the national roll-out |
| | | |
| |Operational manual for implementation of targeting completed | |
| | | |
| |MIS to support the pilot developed and tested | |
|Component Three: |Utilization review function is introduced in the MOPH which can oversee| |
|Health Sector Cost |and implement more precise admission criteria to reduce unnecessary |Heath expenditures are automated. |
|Rationalization |admissions (paid by MOPH) to facilities public and private facilities | |
| | |Monitoring and rationalization takes place |
| |Enhanced IT module developed and implemented within the current MOPH IT|effectively. |
| |system providing more precision and better tracking mechanisms for | |
| |identifying unnecessary admissions |Numbers of unnecessary admissions reduced |
| | | |
| |30 Admission Criteria/Protocols agreed and established by the provider | |
| |community and the MOPH. |Acceleration of expenditures moderates overall |
| | | |
| |Physicians trained in new criteria to encourage better management and |Improved use of claims information for cost and|
| |quality of care |quality controls |
| | | |
| |Completed plan to realign MOPH coverage towards more cost-effective | |
| |health services and hospital facilities | |
Annex 3
Summary of Estimated Project Costs
(US$ million)
|Component |Total Reform Requirements[4] |Grant-Financed |
|Modernization of the Social Insurance System |3.90 |0.7 |
|Social Safety Nets |3.30 |0.2 |
|Health Sector Cost Rationalization |0.26 |0.1 |
|Total |7.46 |1.0 |
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Annex 4
Financial Management and Disbursement Arrangements
The proposed Project will be Bank-executed, and the managing unit (the Human Development Department of the World Bank Middle East and North Africa Region) is responsible for (i) preparing TORs, (ii) hiring consultants and procuring goods and services, (iii) reviewing output; (iv) managing project budget, and (v) authorizing payment. No specific financial system or bank accounts are required to be setup by the GOL for the purpose of Grant. All activities will be financed at 100% basis, since counterpart funds are not required.
Annex 5
Implementation and Procurement Arrangements
Introduction
1. The ESPISP responds to the Government’s request for emergency funds from the TFL to assist the NSSF, MOSA, and MOPH in implementing the Government’s reform agenda for the social sectors. GOL has also requested that the ESPISP will be Bank-executed and will therefore utilize World Bank Guidelines for all procurement activities. While the World Bank is responsible for all procurement processing and management, the goal is to involve the beneficiary agencies in the procurement process, to allow for capacity building, ownership, and relevance of inputs and outputs to reform objectives.
2. The objective of the ESPISP is to accelerate and improve the quality of the implementation of the package of social sector reforms presented by GOL at the Paris III donor conference in the areas of social insurance, safety nets, and health expenditures. This will be achieved through the provision of implementation support and capacity building for the NSSF, MOSA, and MOPH.
Project Implementation Arrangements
3. The implementation arrangements for each beneficiary agency are described below.
NSSF
4. The institution that is receiving the majority of funds from the project is the NSSF, and is where implementation arrangements are more closely defined. The World Bank team will liaise directly with the NSSF Director General on matters related to implementation of the NSSF activities. The DG in-turn will liaison with the NSSF Board as required. An Implementation Support Team (financed by the ESPISP), will consist of on-the-ground international and national advisors and specialists to support implementation of the reforms. An NSSF Counterpart Technical Task Team which includes NSSF technical staff will be established to implement activities within the NSSF and work with the international and national specialists. Through-out implementation, activities will also be guided by World Bank staff, both from the Lebanon Country Office as well as the Washington Headquarters. The structure for implementation is shown in the following diagram. The implementation structure being put in place does not change the role, responsibility, or mandate of the NSSF Board, the Director General, or the Technical Committee.
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5. The Implementation Support Team will, inter alia, undertake the following: (i) Provide the technical support needed to plan and carry out, and complete the activities to be financed through the ESPISP; (ii) communicate with both international national consultants hired under ESPISP and facilitate their access to information and data needed for the execution of their tasks; (iii) manage conflicts that might arise in the execution of these contracts; (iv) inform the NSSF DG on an agreed regular basis on its activities and progress of implementation; (v) bring promptly to the attention of the NSSF DG any decision-making bottle necks that are hindering implementation of activities or execution of contracts; (vi) report to the NSSF DG on technical issues as required. The IST will have adequate resources to enable it to fulfill its functions and would be granted direct access to the Director General and other Heads of Department, through the Director General when required.
6. The NSSF Counterpart Technical Task Teams will be composed of NSSF staff and consultants, drawn from the NSSF departments who will be directly implementing the specific activities of the Project. The NSSF is expected to form three counterpart tasks teams, corresponding to each of the three activities in Component 1 of the Project. These teams will report the NSSF DG and will: (i) review and monitor technical inputs from national and international consultants; (ii) follow-up on all technical implementation issue; and (iii) liaison with the implementation support team staff and report on activity progress.
MOSA and MOPH:
7. For each of the two remaining agencies, MOSA and MOPH, will be led by an Implementation Coordinator (IC) designated by the respective agency through a ministerial decision, reporting directly to the Director General (DG), and supported by a technical task team, allowing the designated IC and task team the time and resources to undertake their duties. The World Bank team will have a direct relationship with the Office of the Minister (or DG) in implementation of the activities.
Project Supervision and Monitoring
8. The Bank will designate resources at the Lebanon Country Office to provide day-to-day project coordination, under the guidance of the project Task Team Leader. The wider Bank team of sector specialists will provide regular support to project activities, as sequenced through the Implementation Schedule, and through 3-4 supervision mission that are coordinated with the preparation, appraisal, and implementation schedule of the Reform Implementation DLP II.
9. Throughout the implementation period of the project, all parties (Bank, NSSF, MOSA, MOPH, and MOF) shall each keep confidential and shall not, without the written consent of a counterpart party, divulge to any third party any documents, data, or other information of a confidential nature. All consultant contracts shall have a specific confidentiality clause stating that consultants shall adhere to these same confidentiality arrangements to the Bank and the institution for which they are conducting the work (NSSF, MOPH, MOSA, or MOF).
Procurement Arrangements
10. The ESPISP is a Bank-executed operation, where processing of procurement shall be in its majority the responsibility of the Bank, and is to follow Bank operational and corporate procurement procedures:
• Administrative Manual Statement 15.00 – Selection and Use of Consultants By the World Bank For Operational Purposes - March 2007 (AMS 15.00)
• Administrative Manual Statement 15.10 - Corporate Procurement – June 2002 (AMS 15.10)
• Guidelines: Selection and Employment of Consultants by World Bank Borrowers – May 2004, Revised October 2006
• Guidelines: Procurement under IBRD Loans and IDA Credits – May 2004, Revised October 2006
11. The beneficiary agencies shall be consulted in crucial stages of procurement; in particular consultant outputs will be shared simultaneously with the Bank and the direct beneficiary agency. The following matrix lists the procurement processing steps and defines the roles and responsibilities of the respective parties:
|Processing Step |World Bank |NSSF |MOSA |MOPH |
| |Jointly with |Jointly with World Bank |Jointly with World |Jointly with World |
|Identify Needs |beneficiaries | |Bank |Bank |
|Update Procurement Plan (PP) |WB Procurement |Notified |Notified |Notified |
| |Specialist will draft | | | |
|The PP shall be prepared during |initial PP and will | | | |
|Appraisal of the Grant, in close |update PP as needs | | | |
|consultation with the beneficiary |arise | | | |
|agency | | | | |
|Preparation of Terms of Reference |Draft and Finalize |Review and validation by |Review and |Review and validation |
|(TORs) | |the NSSF DG, supported by |validation by MOSA, |by MOPH, within 10 |
| | |the Implementation Support|within 10 business |business days of |
|During implementation, the WB will | |Team, within 10 business |days of receiving |receiving TORs |
|prepare the TORs in batches, and | |days of receiving TORs |TORs | |
|launched in accordance with the | | | | |
|project implementation plan, and | | | | |
|readiness of the beneficiary agency| | | | |
|Contracting (advertising, |Conduct and finalize, |Review and validate short |Review and validate |Review and validate |
|short-listing, evaluation, |supported by the |list |short list |short list |
|selection, contracting |Implementation Support | | | |
| |Team, as needed | | | |
|Implementation/Contract Supervision|Contract management, |Review, monitor, and |Review, monitor, and|Review, monitor, and |
| |oversight, and |follow-up by Technical |follow-up by IC |follow-up by IC |
|The World Bank shall liaise with |acceptance (interim and|Task Team(s) | | |
|the beneficiary agency with respect|final) | |Minister (or DG) to |Minister (or DG) to |
|to contract supervision. Flow of | |NSSF DG to endorse key |Endorse key |Endorse key decisions |
|information shall be maintained to | |decisions arising from |decisions arising |arising from |
|update on progress and discuss | |consultant deliverables, |from consultant |consultant |
|implementation issues | |after appropriate |deliverables |deliverables |
| | |consultation with the NSSF| | |
| | |Board and other relevant | | |
| | |government agencies | | |
Implementation Schedule and Procurement Plan
12. The following chart provides the draft implementation schedule and the draft procurement plan for all ESPISP activities. The schedule will be updated periodically as needed to account for changing requirements.
[pic]
[pic]
[pic]
Annex 6
Project Preparation and Appraisal Team Members
|Haneen Sayed |Lead Operations Officer, Task Team Leader |
|Ghassan Alkhoja |Sr. Information Officer |
|David Robalino |Sr. Economist/Pensions Specialist |
|Aleksandra Posarac |Sr. Economist/Social Safety Net Specialist |
|Robert Bou Jaoude |Sr. Financial Management Specialist |
|Sara Gonzalez Flavell |Sr. Counsel |
|Jean-Charles de Duravar |Sr. Counsel |
|John Langenbrunner |Sr. Health Economist |
|Lina Fares |Procurement Specialist |
|Firas Raad |Health Specialist |
|Celine Gavach |Operations Analyst |
|Mouna Couzi |Sr. Program Assistant |
|Afifa Alia Achsien |Sr. Program Assistant |
|Sophie Urnechlian |Program Assistant |
|Nada Abou Rizk |Team Assistant |
|Anca Mataoanu |Pensions Consultant |
[pic]
-----------------------
[1] Over 1,000 people were killed, 5,000 were injured and close to 1 million (a quarter of the population) were internally displaced. Additionally, brain drain accelerated as more than 200,000 people left the country. Though estimates vary, the Bank’s ESIA measures total direct damage inflicted by the hostilities at US$2.0-2.4 billion, with a further US$700-800 million in indirect damage. More than 100,000 housing units were damaged or destroyed representing the single largest loss, followed by agriculture and irrigation, transport, and health and education facilities. Approximately, 30,000 jobs have been permanently lost, adding 3 percent to the unemployment rate.
[2] The TFL Board Paper indicates the following: “The preparation of TFL-funded projects would be carried out on an accelerated basis using the procedures outlined in OP 8.50 (Emergency Recovery Assistance) in order to provide near-term recovery assistance. Streamlined procurement and disbursement procedures, consistent with Bank guidelines and used in other post-conflict situations, would be employed. Given the Government’s severely strained fiscal position, the Bank would finance 100 percent of eligible expenditures under TFL-funded projects. To ensure appropriate accountability and transparency in the use of funds, projects would be designed consistent with Bank financial management requirements, and accounts would be audited according to Bank guidelines.”
[3] This Interim Strategy Note (ISN) outlines the Bank’s proposed support for Lebanon during the next 12-15 months. The ISN is anchored in the Government’s medium-term reform program presented at a donor conference in Paris in January 2007.
[4] As explained in paragraph 15 of main EPP text.
-----------------------
NSSF Board
Social Inter-ministerial Committee
World
Bank
Support
NSSF technical staff:
- Reviewing and monitoring technical inputs from consultants
- Following-up on technical implementation issues
- Implementing activities in NSSF
NSSF Counterpart Task Teams
* Project Coordinator
* 3 technical specialists in the main areas of reform (IT, Actuarial)
* International advisors and specialists
Implementation Support Team
(World Bank Grant-financed)
NSSF Director General
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