Home | Mena Transition Fund
Document of
The World Bank
FOR OFFICIAL USE ONLY
PROJECT APPRAISAL DOCUMENT
FOR A
PROPOSED GRANT
FROM THE MENA TRANSITION FUND
IN THE AMOUNT OF US$ 4.70 MILLION EQUIVALENT
TO THE
republic of tunisia
FOR A
SOCIAL PROTECTION REFORMS SUPPORT PROJECT
|Vice President: |Inger Andersen |
|Country Director: |Simon Gray |
|Sector Director: |Steen Lau Jorgensen |
|Sector Manager: |Yasser El-Gammal |
|Task Team Leader: |Heba Elgazzar |
|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. |
ABBREVIATION AND ACRONYMS
|AAA |Analytical and Advisory Activities |
|AfDB |African Development Bank |
|CFAA |Country Financial Accountability Assessment |
|CNSS |Caisse Nationale de Sécurité Sociale / Pension Fund (Private Employment) |
|CNAM |Caisse Nationale d’Assurance Maladie / National Medical Insurance Fund |
|CNRPS |Caisse Nationale de Retraite et de Prévoyance Sociale / Pension Fund (Public Employment) |
|CPAR |Country Procurement Assessment Review |
|CSOs |Civil Society Organizations |
|DPL |Development Policy Lending |
|FSAP |Financial Sector Assessment Program |
|FHC |Free Health Cards |
|GBO |Gestion du budget par objectif (Performance-based Budgeting) |
|GDP |Gross Domestic Product |
|GOJ DPL |Governance, Opportunity and Jobs Development Policy Loan |
|IBRD |International Bank for Reconstruction and Development |
|IFIs |International Financial Institutions |
|IFRS |International Financial Reporting Standards |
|ILO |International Labor Organization |
|INS |Interim Strategy Note |
|IMF |International Monetary Fund |
|INS |Institute Nationale de la Statistique / National Statistics Office |
|ISN |Interim Strategy Note |
|M&E |Monitoring and Evaluation |
|MDGs |Millennium Development Goals |
|MENA |Middle East and North Africa |
|MIC |Middle Income Country |
|MICI |Ministry of Investment and International Cooperation |
|MOF |Ministry des Finances (Ministry of Finance) |
|MOH |Ministry of Health |
|MOSA |Ministry of Social Affairs |
|MPDR |Ministry of Planning and Regional Development |
|MTEF |Medium-Term Expenditure Framework |
|MTFF |Medium-Term Financial Framework |
|NEF |National Employment Fund |
|PAYG |Pay-As-You-Go |
|PNAFN |Program National d’Aide Aux Familles Necessiteuses (National Program for Poor Households) |
|PROST |Pensions Reform Options Simulation Toolkit |
|SHC |Subsidized Health Cards |
|UCT |Unconditional Cash Transfers |
|TND |Tunisian Dinars |
Republic of Tunisia
Social Protection Reforms Support Project
TABLE CONTENTS
I. Introduction and context 7
A. Country Context 7
B. Sector and Institutional Context 8
C. Higher Level Objectives to which the Project Contributes 11
II. Project Development Objectives 12
A. Proposed Development Objective(s) 12
B. Key Results 12
III. Project Description 12
A. Project Components 12
B. Project Financing 15
Financing Instrument 15
Project Cost and Financing 15
C. Lessons Learned and Reflected in the Project Design 16
IV. Implementation 17
A. Institutional and Implementation Arrangements 17
B. Results Monitoring and Evaluation 19
C. Sustainability 19
V. Key Risks and Mitigation Measures 19
VI. APPRAISAL SUMMARY 21
A. Economic and Financial Analyses 21
B. Technical 22
C. Financial Management 23
D. Procurement 24
E. Social (including Safeguards) 24
F. Environment (including Safeguards) 25
Annex 1: Results Framework 26
Annex 2: Detailed Project Description 30
Annex 3: Implementation Arrangements 36
Annex 4: Operational Risk Assessment Framework (ORAF) 47
Annex 5: Implementation Support Plan 51
| |
|PAD DATA SHEET |
|Republic of Tunisia |
|Social Protection Reforms Support Project |
|PROJECT APPRAISAL DOCUMENT |
|. |
|Middle East and North Africa Region |
|Human Development Department |
| |
|. |
|Basic Information |
|Date: |March 4, 2013 |Sectors: |Social Protection (50%); Public Finance (50%) |
|Country Director: |Neil Simon M. Gray |Themes: |Human Development and Social Protection, |
| | | |Public Sector Governance, Economic Dev |
|Sector Manager/Director: |Yasser El-Gammal / Steen Lau |EA Category: |C |
| |Jorgensen | | |
|Project ID: |P144674 | | |
|Lending Instrument: |SIL | |
|Team Leader(s): |Heba Elgazzar | |
|Joint IFC: |
|. |
|Borrower: Republic of Tunisia |
|Responsible Agency: Ministry of Finance |
| Contact: |Mrs. Faouzia Said | Title: |Presidente, Comite National de l’Administration du Budget de|
| | | |l’Etat |
| Telephone No.: |(+216) 71 56 14 04 | Email: |Faouzia.said@email.ati.tn |
|. |
|Project Implementation Period: |Start Date: |
|Expected Closing Date: |June 30, 2017 |
|. |
|Project Financing Data(US$M) |
|[ ] |
|Total Project Cost : |
|Financing Source |Amount(US$M) |
|RECIPIENT (Government of Tunisia contribution) |1.0 |
|IBRD | |
|IDA: | |
|IDA: | |
|Others (MENA Transition Fund) |4.7 |
|Financing Gap | |
|Total |5.7 |
|. |
|Expected Disbursements (in USD Million) pertaining to Transition Fund financing only |
|Fiscal Year |
|Project Development Objective(s) |
|The proposed project development objective (PDO) is to strengthen institutional capacity to implement social protection reforms and improve targeting of|
|safety net programs. |
|. |
|Components |
|Component Name |Cost (USD Millions) |
| |pertaining to Transition Fund financing only |
|Subsidy and Safety Net Reform Support |3.78 |
|Strengthening Social Security Analysis and Planning |0.4 |
|Project Management and Monitoring |0.4 |
|Reserve (Miscellaneous) |0.12 |
|. |
|Compliance |
|Policy |
|Does the project depart from the CAS in content or in other significant respects? |
|Does the project require any waivers of Bank policies? |
|Safeguard Policies Triggered by the Project |Yes |No |
|Environmental Assessment OP/BP 4.01 | |X |
|Natural Habitats OP/BP 4.04 | |X |
|Forests OP/BP 4.36 | |X |
|Pest Management OP 4.09 | |X |
|Physical Cultural Resources OP/BP 4.11 | |X |
|Indigenous Peoples OP/BP 4.10 | |X |
|Involuntary Resettlement OP/BP 4.12 | |X |
|Safety of Dams OP/BP 4.37 | |X |
|Projects on International Waterways OP/BP 7.50 | |X |
|Projects in Disputed Areas OP/BP 7.60 | |X |
|. |
|Legal Covenants |
|Name |Recurrent |Due Date |Frequency |
| | | | |
|Description of Covenant |
| |
|. |
|Team Composition |
|Bank Staff |
|Name |
|Name |Title |Office Phone |City |
|Sonia Sanchez Quintela |Operations specialist | |Tunis,Tunisia |
|Abdelrahmen El-Lahga |Economist | |Tunis, Tunisia |
|Slaheddine Ben Halima |Procurement specialist | |Tunis, Tunisia |
|Wassim Turki |Financial Management specialist | |Tunis, Tunisia |
|Pierre Killeen |Public Consultation specialist | |Ottawa, Canada |
|Ana Nuñez Sanchez |Environmental Specialist | |Washington, DC |
|. |
|Locations |
|Country |
Republic of Tunisia
Social Protection Reforms Support Project
Introduction and context
Country Context
1. The challenges faced by Tunisia following the January 2011 popular uprising in terms of high unemployment and regional disparities have called for a new vision of economic growth and the social contract since 2011. The effectiveness and efficiency of Tunisia´s social sector expenditures have greater urgency in the context of the economic slowdown and increasing budget constraints.
2. With the election in October 2011 of a Constituent Assembly and the formation of a new interim Government of Tunisia (Government), Tunisia completed the first phase of its political transition to a multi-party democracy. National elections under the new Constitution are expected to take place between by the end of 2013.
3. The most immediate challenge for Tunisia is to ensure economic and social stability, in a situation where the short-term economic outlook remains uncertain. Economic growth has started to recover in 2012 but the economic outlook remains uncertain and external financing needs are expected to remain large in the near term. Gross domestic product (GDP) growth is projected at 3.5 percent for 2013,[1] but the pace of recovery will depend on the Government’s ability to manage the social and political tensions in Tunisia, the execution and effects of the large fiscal stimulus, the impact of the increase in international food and fuel prices, and the extent to which the European recession will affect tourism, exports and foreign direct investment (FDI).
4. The increased fiscal pressure with lower revenue is increasing the urgency for rationalizing public spending, including the main component, social expenditure. Social expenditure accounts for approximately 60 per cent of total public expenditure or an estimated 20 percent of GDP. Similar to other countries in the Middle East and North Africa (MENA) region, safety net expenditure, a component of total social spending, is dominated by subsidies in Tunisia that primarily benefit wealthier households.
5. Overall, given the increasing constraints to both monetary and fiscal policies, the authorities envisage that the future macroeconomic stance will gradually become more conservative and have initiated social protection reforms supported by the proposed project. The Ministry of Finance (MOF) has prepared its medium term fiscal framework (MTFF) based on a relatively cautious approach to public investment spending which reflects a vision to controlling the wage bill and rationing food and fuel subsidy expenditure. Implementing such reforms against the backdrop of continuing social pressures and in the run up to the 2013 elections will require significant efforts by the authorities. This project will support priority areas of policy reform in line with the economic and social challenges facing Tunisia.
Sector and Institutional Context
6. The interim Government has initiated a package of economic and social reforms which seeks to pave the way for stronger economic growth and job creation, particularly in lagging regions. A key pillar of this strategy includes strengthening human capital through programs to promote quality in education and health services, consolidate and improve active labor market programs, improve coverage of social safety nets for vulnerable households, and improve the sustainability of the pension and health insurance funds. The Government also aims to increase labor force participation and reduce social disparities reinforcing accountability, quality and effectiveness in the social sectors. Policies and programs for targeted public expenditures and social transfers can enhance opportunities for economic participation and mitigate poverty.
7. Given lagging economic growth, a relatively high informal labor force and growing fiscal pressure, Tunisia’s spending on universal subsidies for food and fuel and its social security system are considered unsustainable in the medium-term. While Tunisia was near the middle of MENA countries for revenue, expenditure and public debt as a percentage of GDP in 2010, there has been a relative decrease in revenue and increase in debt pressure. With less robust GDP and revenue projections, the imbalance will require the Government to increase the efficiency of public expenditure. The ratios of total revenue to total expenditure for Tunisia and for MENA alike averaged approximately 1.0 in 2010. However, expenditure in Tunisia is projected to exceed revenue through at least 2017, whereas MENA countries on average will have revenue to expenditure ratios greater or equal to 1.0 over the same period, indicating relatively lower fiscal pressure in other MENA countries as compared to Tunisia.
8. Subsidy expenditure, which is regressive and high, could be reallocated to other programs that have a more direct welfare impact and lower fiscal burden. Tunisia´s social expenditure mainly comprises education (accounting for 20 percent of total public expenditure), followed by consumption subsidies (12.9 percent), health (8.3 percent), direct cash transfers and in-kind social assistance (1.3 percent, of which direct cash transfers accounts for nearly 0.5 percent) and active labor market programs (3.9 percent). Nearly 3000 million Tunisian dinars (TND) were spent on fuel, food and transport subsidies, accounting for 4 percent of GDP as of 2012, projected to account for 8 percent in 2013. Of this spending, fuel subsidies account for 1500 million TND and 1200 million TND goes towards subsidizing food and basic products. Universal subsidies, particularly for fuel, are regressive, with approximately 70 percent of the subsidy bill benefits the wealthiest 20 percent of the population. In this respect, subsidy expenditure represents a priority area of reform in terms of fiscal sustainability and social equity.
9. Tunisia has in place a direct cash transfer program providing a social safety net (SSN) for vulnerable households, the “Programme National d’Aide Aux Familles Necessiteuses” (PNAFN). PNAFN, created in 1986 and managed by the Ministry of Social Affairs (MOSA), is a non-contributory program that provides unconditional cash transfers to approximately nine percent of the population considered vulnerable, or 235,000 households as of 2012[2]. Eligibility is based on a combination of categorical criteria and a variation of community-based targeting, determined by social worker interviews and local MOSA committees that are required to involve representatives from the National League on Human Rights. Eligibility criteria include declared revenue (with those falling below the national poverty line given priority), household size, incapacity to work, and presence of a disability. Beneficiary households receive a cash transfer allocation of 100 TND per month plus child supplements of 10 TND per child for up to three children. 27 percent of the population also receives health care insurance cards through this program for free or subsidized services. However, targeting, information and monitoring of PNAFN is considered relatively weak. An estimated 60 percent of beneficiaries are not considered poor[3], using a standard definition of consumption poverty and analysis of the 2005[4] household survey data from the National Institute of Statistics. This degree of leakage suggests that the program is relatively inefficient and is inadequately targeted to the poor, requiring targeting and monitoring reforms to improve coverage.
10. Regarding social security, the Government has initiated analysis on scenarios for reform of the publicly-managed pension and health insurance funds in order to assess options for improving sustainability in the medium-term. The publicly-managed pension schemes for public sector and private sector workers are financially unsustainable, with a larger deficit facing the public sector regime, Caisse de la Retraite et de la Prévoyance Sociale (CNRPS), than the private sector regime, Caisse de la Sécurité Sociale (CNSS). Expected income flows of the two funds are not enough to cover expected expenditures and a combined deficit is expected to reach 2 percent of GDP in the absence of reforms by 2018. Current pension expenditures in Tunisia represent approximately 5 percent of GDP, with a contribution rate of 37 percent of the working age population.
11. While the private sector pensions regime (CNSS) faces less deficit, fiscal pressures are expected to emerge as early as 2014. CNSS has not yet depleted its reserves and not all its schemes are facing deficits yet. However, they are projected to appear as soon as 2014 and the accounts will have an uncovered deficit. The sources to finance these deficits are still unclear, since the Ministry of Finance is not expecting to have to attend CNSS financing needs.
12. The national health insurance fund also faces a pending deficit due to rising expenditures, estimated to amount to 50 million TND by 2015. Health insurance for active workers has been administered by a single fund since the merging of multiple schemes in 2007, Caisse Nationale d’Assurance Maladie (CNAM). CNAM is financed by mandatory contributions from employees and public/private employers; the contribution rate is 6.75 percent for employees and nearly 15 percent for employers. CNAM provides health insurance through social security contributions for 3.3 million civil and private sector employees in addition to their dependents as of 2011, which is estimated to account for 80 percent of the population. Nearly 13 percent of the population remains uninsured as of 2011.
13. Despite the aforementioned deficits, the level of social contributions is relatively high, which affects negatively the growth of formal employment. From the perspective of the labor market, there are two issues related to social security reform that need attention. First, the high level of pay-roll taxes and social security contributions that have increased the tax-wedge to close to 39% -- high enough to reduce incentives to create formal jobs. Second, the high fragmentation of the social insurance system, which has different schemes to cover different groups of workers. This can affect labor mobility and, in the case of the very generous scheme for civil servants, provide incentives to cue for public sector jobs. Nearly 55 percent of the labor force is informal and therefore not covered by social insurance, and there is weak protection for workers who become unemployed[5].
14. Taken together, a reform of social protection programs is seen as a priority by the Government as evidenced by its ongoing social dialogue and its request for the proposed project to prepare the way for consensus on reforms. In May 2012, the Government launched a social dialogue process which reached a significant milestone in January 2013 with the signing of a new “Social Pact”. The Social Pact sets in place principles for launching dialogue on key areas of reform involving social protection, regional development, employment and skills, and governance of social dialogue, namely among the Government, the labor unions [as represented by Union Generale des Travailleurs Tunisiens (UGTT) and other bodies] and the private sector [as represented by Union Tunisienne de l'Industrie, du Commerce et de l'Artisanat (UTICA) and other bodies].
Higher Level Objectives to which the Project Contributes
Alignment with the Objectives of the MENA Transition Fund
15. The objective of the Transition Fund is to improve the lives of citizens in transition countries, and to support the transformation currently underway in several countries in the region (the “Transition Countries”) by providing grants for technical cooperation to strengthen governance and public institutions, and foster sustainable and inclusive economic growth by advancing country-led policy and institutional reforms.
16. The proposed project aligns well with the objectives of the MENA Transition Fund in terms of (i) Enhancing Economic Governance and (ii) Inclusive Development. The revolution of January 14, 2011 revealed that Tunisia’s economic growth over the previous decades has hidden great disparities in regional development and in the distribution of wealth among the various segments of Tunisian society. It also revealed a deficit in social cohesion and exposed the true extent of poverty and marginalization. Today, Tunisian civil society and the Government view social justice as a national priority in order to promote fair and inclusive development. In the context of Tunisia’s transition to democracy, major reforms are required to achieve this objective, including an overhaul of the subsidies system to ensure they reach those who truly need them, thereby relieving pressure on the national budget and liberating funds to more economically and socially worthwhile programs. Improving the targeting of price subsidies, coverage of safety net programs and strengthening capacity to develop a consensus around social protection reforms are essential to improving equity, transparency, and good governance of public revenues.
Alignment with the Country Assistance Strategy
17. The proposed operation directly supports the Bank’s interim country strategy for Tunisia during the transition period as described in the Bank’s 2013-2014 Interim Strategy Note (ISN) [6], approved in July 2012. The ISN responds to the country challenges and government priorities and is designed to support the transition phase until a new government is elected under a new constitution. The ISN focuses on three main areas: (i) Laying the Foundation for Renewed Sustainable Growth and Job Creation, (ii) Promoting Social and Economic Inclusion, and (iii) Strengthening Governance. By seeking to improve the efficiency of public expenditure and coverage of social protection schemes, the proposed operation directly supports pillars (i) and (ii) of Tunisia’s ISN.The proposed operation is also linked to the Bank’s ongoing programmatic Governance, Opportunity and Jobs (GOJ) Development Policy Loan (DPL) series (2011-2014) and the Governance in Social Sectors Technical Assistance Program (2011-2014). The project is fully consistent with the DPL series by supporting measures to implement a conservative fiscal framework while addressing social disparities and improving the effectiveness of social spending. The activities supported by this project, being fully aligned with the DPL, will facilitate the design and implementation of reforms led by the Government and supported in coordination with key development partners, namely the African Development Bank and the European Union.
Project Development Objectives
Proposed Development Objective(s)
18. The proposed project development objective (PDO) is to strengthen institutional capacity to design social protection reforms and improve targeting of safety net programs.
Key Results
19. At the PDO level, the project is expected to strengthen institutional capacity as indicated by:
a. Indicator 1: Direct project beneficiaries (number), of which female (percentage), in terms of total beneficiaries for institutional capacity building and registration in unified population database (Core Sector Indicator)
b. Indicator 2: Citizens registered in new unified database (number), of which are female (percent)
c. Indicator 3: Number of Safety Net Beneficiaries (Core Sector Indicator)
d. Indicator 4: Subsidy and safety net reform plan prepared and disseminated
e. Indicator 5: Integrated social security reform plan prepared and disseminated
Project Description
Project Components
20. The project has three components: (1) Subsidy and Safety Net Reform Support; (2) Strengthening Social Security Analysis and Planning, and (3) Project Management and Monitoring.
Component 1: Subsidy and Safety Net Reform Support (US$ 3.78 million)
21. This component finances consultant services, workshops and goods to support the reform process and includes the following sub-components and associated activities:
Sub-Component 1.1: Technical Assistance to Inter-ministerial Working Group (US$ 0.82 million):
22. This sub-component would finance consultant services and workshops to provide technical assistance and capacity-building to the Inter-ministerial Working Group that builds upon analysis completed during 2012 on the distribution and potential impact of energy subsidy reforms. This component will therefore focus on technical assistance to the design of a food and fuel subsidy reform implementation plan and subsidy-compensation program for households, including: (i) developing an implementation plan and operational manual (OM) for a subsidy-compensation program for households, including simulating the amount needed to compensate households under various reform scenarios and the key target households and their eligibility criteria; (ii) evaluating reform options for automatic fuel price adjustment mechanisms; (iii) monitoring and evaluation of the poverty, economic and social impact of reforms for food and fuel subsidies. To help sustain social stability during the design and implementation of reforms, the existing cash transfer program for the poor (PNAFN) will be maintained by the Government. The communication and redress mechanisms supported by this project will help to ensure that vulnerable households affected by reforms are informed and involved in the preparation of the compensation program in advance of the implementation of reform measures.
Sub-Component 1.2: Development of a Unified Database and Targeting System (US$ 2.12 million)
23. This sub-component would finance consultant services, workshops and goods to provide technical assistance for the creation of a unified population database to identify households through a unique identification number (UIN) for all social transfer programs, including: (i) developing proxy-means testing (PMT) formula and questionnaire for targeting compensation; (ii) assessing various payment options for delivering household cash transfers under the subsidy-compensation program (banking, postal or other mechanisms); (iii) an assessment of options for implementing a UIN based on an evaluation of identification systems currently used by various government programs; (iv) information technology (IT) support for creating an inter-ministerial management information system (MIS) for the unified database; and (v) support to improving the MOSA MIS for managing current social protection programs. The unified database will be managed by MOF and will be created through consolidation of existing databases (including those hosted by MOSA) linked to revenue collection, national identification numbers used by the Ministry of Interior (MOI), the database administered by the National Gas and Electricity Company [(Societe Tunisienne de l'Electricite et du Gaz (STEG)], and various identification numbers used for social programs administered by MOSA. Specialist consultants would provide international best practice and input to the architecture of a unique identification system and coordination with other national databases, such as the social security system and national identification number.
24. This activity will be supported by contribution of US$ 1.0 million from the Government’s budget to MOSA to consolidate and develop a “smart card” system for social security beneficiary registries that would be linked to the MOF unified population database, including reducing fragmentation among registries for CNSS, CNRPS, CNAM, PNAFN and the subsidized health card program. MOSA conducted a feasibility assessment for the development of a new MIS in 2012, to which the Government has allocated funding to launch a MOSA MIS project for its development.
Sub-Component 1.3: Consensus-Building and Communication (US$ 0.84 million):
25. This sub-component will finance consultant services, workshops and goods to provide technical assistance for consensus-building and communication, including: (i) monitoring of political economy considerations; (ii) improving access to information on subsidy and safety expenditure analyses through traditional and social media in advance of reforms for internal (including governmental agencies, Council of Ministers and National Constituent Assembly/Parliament) and external (public) stakeholders; (iii) developing a public consultation mechanism on reform options in advance of reforms; and (iv) refining communication and existing grievance redress mechanisms after the launch of reforms.
26. This sub-component would therefore support greater social accountability through both public disclosure of relevant administrative information, new types of consultative mechanisms, and improving grievance redress for ensuring the poor and vulnerable have access to social support during reforms. The tasks described above would help to inform and involve the public in the assessment, planning and design of reforms throughout the process. During this activity, the PIU in the MoF would track, measure and support reporting on program-related dialogue and communications. The work would finance consulting firms and consultants to support the development and dissemination of key information on data and reforms, develop public participation mechanisms, and liaise with radio, television, newspapers and social media in implementing a communication strategy in advance of and during the reform process.
Component 2: Strengthening Social Security Analysis and Planning (US$ 0.4 million)
27. This component would finance consultant services, workshops and goods to provide technical assistance for building institutional capacity to analyze and develop consensus on an integrated reform plan for pensions and health insurance. This component includes the following activities: (i) hands-on training of Government staff on policy analysis of pension and health insurance reform options, including an assessment of legislation and administrative arrangements; (ii) hands-on training on poverty and social impact analysis of various scenarios for social contributions and unemployment insurance; (iii) training on policy analysis of labor legislation in relation to social security; and (iv) preparation, coordination and dissemination of information on policy reform options among social dialogue partners.
Component 3: Project Management and Monitoring (US$ 0.4 million)
28. This component finances consultant services and goods to support the PIU in managing the project and monitoring project-related activities and outcomes. This component would also entail support to ensuring all project activities and tasks are executed, coordination among all actors involved in project implementation, fulfilling and monitoring procurement and fiduciary requirements and audits, and monitoring and evaluation of project outcomes and intermediary results.
Project Financing
Financing Instrument
29. The financing instrument is a technical assistance grant in the amount of US$4.7 million, which will be financed through trust fund financing. The project will be submitted for financing by the Ministry of Investment and International Cooperation (MICI) to the MENA Transition Fund for financing. If approved, the project would be financed through a Recipient-executed grant agreement for US$4.7 million.
Project Cost and Financing
30. The total project budget is estimated to be US$5.7 million over a three-year period, of which US$ 4.7 million is sought from the MENA Transition Fund. The Government of Tunisia will contribute US$ 1.0 million from its own funds to the project budget.
|Project Component |Transition Fund |Country Co-Financing |Other Co-Financing |Total |
| |(USD) |(USD) |(USD) | |
| | | | |(USD) |
|Component 2. Strengthening Social Security Analysis|0.4 |0 |0 |0.4 |
|and Planning | | | | |
|Component 3. Project Management and Monitoring |0.4 |0 |0 |0.4 |
|Reserve (Miscellaneous expenditures) |0.119 |0 |0 |0.119 |
|Total |4.7 |1.0 |0 |
|Project Stakeholder Risks | |Project Risks | |
| - Stakeholder Risk |High | - Design |Moderate |
|Implementing Agency (IA) Risks (including | | - Social and Environmental |Low |
|Fiduciary Risks) | | | |
| - Capacity |High | - Program and Donor |Low |
| - Governance |Moderate | Delivery Monitoring and Sustainability |Moderate |
|Overall Preparation Risk |Moderate |Overall Implementation Risk |High |
Overall Risk Explanation
31. There are high risks to the successful execution of the overall project, stemming mostly from nature of the reforms which will require strong consensus-building and communication. First, from the need to implement subsidies reform in parallel to the improvement in the equity and efficiency of cash transfer programs. On the pensions, risks derive from the careful communication of the details of the reform and the actual impact on workers and employers. The reform of the health insurance system faces other kinds of challenges resulting from the need to improve the management and the health insurance systems. It is particularly important to adequately sequence the reforms and conduct the dialogue with the beneficiary groups.
32. The ongoing period of political transition may affect the timing and implementation of reforms. Financial and political support from the international community will help mitigate these risks.
33. There are high risks related to the uncertainty of the economic outlook. In addition to domestic social tensions, uncertainty about the economic outlook related to the impact of the Eurozone crisis and the stabilization process in Libya, as well as the pressure on the fiscal deficit and the balance of payments (BOP) resulting from the recent spike in international food and fuel prices, all pose significant risks to economic and political developments in Tunisia. Lower economic growth and additional pressure in the labor market could lead to renewed social tensions and reinforce a sense of lack of economic opportunity. A recurrence of instability might lead to a renewed loss of foreign investors’ confidence, which will in turn affect industrial production and exports, further depressing domestic consumption and slowing economic recovery, and sending Tunisia into a negative spiral. To mitigate these risks, the authorities have adopted a supplemental budget to accelerate public investments, notably in lagging regions, scale up social interventions, and support enterprises during this transition. The measures supported by this operation also aim to facilitate both public and private investments (through simplification of procurement procedures, and removal of red-tape), introduce reforms to progressively improve the quality and provision of social services, particularly in underserved regions, and to help reestablish social stability by consolidating the progress in giving greater voice and accountability to the population.
34. There are high risks related to the implementation of the proposed operation given the political transition. First, while the Constitutional Assembly Government has been elected in a general election and has full popular legitimacy, some key stakeholders may deem it inappropriate to address politically sensitive issues before a new government is elected under the new Constitution. Second, there is a risk that the next Government could reverse the reform agenda, and/or adopt policies that may hinder long-term growth. All of the above risks can be mitigated by consensus-building both within and outside of the current government. The Bank’s technical assistance to the Government on consultations with civil society and key stakeholders during the preparation and implementation of the operation should help reduce these risks. The Bank is working with the Government to support evidence-based dialogue on the various reforms and ensure there is broad consensus-building on reforms.
35. Stakeholder Risks: There is also a relatively high degree of stakeholder-related risks unless managed well, given uncertainty regarding public perceptions on reforms that impact welfare and economic growth. Popular opinion may be against subsidies and pensions reforms. Reform experiences in other countries on those areas have trigger demonstrations and Governments have, in some cases, postponed the reforms. In order to mitigate the risk, the project places a special emphasis on the management of the dialogue and the communication within the Government, key external stakeholders and civil society.
APPRAISAL SUMMARY
Economic and Financial Analyses
36. The economic and financial benefits accruing from the proposed project are expected to be high. In terms of fiscal impacts of safety net and subsidy reform, improved targeting of public expenditure improves equity and creates fiscal space needed for critical public investments. The current universal food and fuel subsidy bill is equivalent to nearly TND 4000 million as of 2012, or 8 percent of GDP. On average, at least 50 percent of this expenditure accrues to the wealthiest 20 percent of the population, or at least 2000 million. By more efficiently targeting at least 50 percent of subsidy expenditure to lower-income households who are more vulnerable to economic shocks, equity and efficiency of public spending may be improved.
37. In terms of social impacts of targeting subsidies including gender-related effects, the subsidy-compensation program for vulnerable households would improve welfare by improving purchasing power and protecting against rising food and fuel prices. The impact on poverty may be high, given that the poor will benefit disproportionately greater from a redistribution of subsidy expenditure from wealthy to vulnerable households. Previous results from subsidy reform in other countries such as Indonesia, Brazil and the Dominican Republic have demonstrated that redistributing fuel subsidy expenditure to the poor and vulnerable populations can reduce poverty, whether in terms of the intensity and/or headcount. Taking the example of household benefits from subsidized liquid petroleum gas (LPG) in Tunisia as of 2005, redistributing subsidy expenditure would result in the lowest quintile receiving a subsidy-compensation cash transfer of approximately TND 45 per capita year, or nearly 3.6 percent of household expenditure, which is higher than the amount currently accruing to the poor, or TND 32 per capita per year, or 2.6 percent of household expenditure. Given that 51 percent of the poor who receive cash transfer assistance under PNAFN are women as of 2012, redistribution would disproportionately also benefit poor women. Previous analyses also suggest positive externalities associated with delivering cash transfers to female heads of households, who are more likely to invest this expenditure into human capital than male counterparts. Furthermore, the creation of a unified database will help improve equity of the existing cash transfer program for the poor, PNAFN. Currently, the program has high leakages and many of the poor are not covered. Approximately 40 percent of benefits go to the non-poor and 12 percent of the poor are enrolled in PNAFN, as of 2005. Thus, subsidy reform, accompanied by a subsidy-compensation program and improved targeting, would help in reducing poverty and improving welfare for poor women in particular.
38. Improvements in the sustainability and solvency of the pensions and health insurance funds will also have, over the medium and long-term, a strong impact in ensuring coverage and reducing poverty among pensioners and achieving universal health care coverage. The current deficit projected over the next five years for Tunisia’s pension funds is equivalent to 2 percent of GDP and the health insurance deficit is expected to rapidly grow due to a growing dependency ratio, putting welfare at risk for pensioners. Approximately 57 percent of PNAFN beneficiaries are above the age of 60 years, receiving TND 100 per month, which is higher than the average pensions benefit from approximately 30 percent of pension fund beneficiaries as of 2012. Insufficient health insurance coverage can be impoverishing, and 14 percent of Tunisia’s population pays catastrophically high out-of-pocket health payments as of 2006. Further deficits to the pension and health insurance funds can increase poverty. By building consensus on reform options as supported by this project, reforms needed to reduce the social security deficit and ensure coverage for maintaining welfare in the long-term.
39. Therefore, the project’s investments would yield relatively high returns in terms of equity and sustainability. The pace and depth of the reforms envisioned, as well as the quality of the technical assistance delivered in this operation, will determine the ultimate economic and financial benefits of this project.
Technical
40. The project is technically sound, is consistent with the local economic and political context, and directly supports activities led by the Government. The introduction of capacity-building on evidence-based policy reform, unified database, targeting system, participatory communication, and access to information before and during reforms are considered best practices from a number of countries that have reformed safety nets and subsidy expenditure. The existing Inter-ministerial working group has been functioning and has begun to prepare a calendar of reforms which provides a sound foundation for targeted technical assistance provided under the project. The unified database has been discussed by the Government and MOSA has taken steps to begin unifying its own databases for social programs, which will provide a basis for further consolidation and creation of a unified system linking databases from other concerned ministries, coordinated by a central body at the MOF for improved governance and transparency. The activities of the project have been adequately tailored to respond to the local economic, social and political context and support the government-funded program to improve MIS.
Financial Management
41. An evaluation of the financial management capacity of the proposed PIU was conducted on January 30, 2013, and confirmed its capacities to be adequate for project implementation, provided that additional technical capacity-building on Bank-specific procedures is provided to the implementing agency. A series of meetings were held to assess financial management capacity at the Ministry of Finances with the Director of the State Budget administration General Committee (Comité Général d’Administration du Budget de l’Etat / CGABE), Director of the General Directorate of Resources and Equilibrium (Direction Générale des Ressources et de l'Equilibre), Director of the Directorate of Financial Affairs Equipment and Material (Direction des Affaires Financières, des Equipements et du Matériel / DAFEM), and Directors of units responsible for budget management and procurement, including the Sous-Direction de l’Ordonnancement, Sous-Direction du Budget and Sous-Direction des Achats.
42. The financial management will be implemented by the PIU within the CGABE, and will use the existing skills and human resources within this department and coordinate with the DAFEM. The Project expenditures will be managed as part of the CGABE operating budget.
43. Project accounting will cover all sources and uses of project funds, including payments and expenditures. The assessment of financial arrangements including the accounting system and accounting policies and procedures, budgeting system, reporting, staffing, internal controls policies and procedures, external auditing arrangements of the project under the Ministry of Finance reflected that these arrangements are satisfactory and meet the Bank’s minimum requirements (see Annex 3).
44. The assessment identified the following risks and mitigating measures: (i) PIU Staff capacities: The PIU has been created and will have a financial management specialist (FMS) dedicated to the project and an additional FMS recruited to support project activities by effectiveness; (ii) PIU Fiduciary management capacities: The PIU will maintain analytical accounting logs, integrated in the general accounting, allowing identification of expenditures according to categories and project components. Moreover, the PIU will require an OM for guiding administrative and financial procedures. The OM will highlight the need for all procedures to be documented well and applied by all concerned parties. As a result, the overall financial management risk is deemed to be high given the lack of experience with Bank procedures and an OM and implementation support will be needed to guarantee systematic management of the project from a financial and procurement perspective.
45. The PIU should mitigate the highlighted risks in order to establish acceptable financial management arrangements. Key mitigating measures will be to: (i) ensure the preparation of an OM detailing including administrative and financial procedures by negotiations; (ii) ensure at least one dedicated FMS for the project within the PIU; and (iii) maintain the financial information in an excel spreadsheet which should be controlled and validated by the director of the PIU.
Procurement
46. An assessment of the capacity of the Ministry of Finance for the purpose of the project was carried out on January 30, 2013, and on the basis of the types and amounts of Goods and Services to be procured under this Grant, has been found to be adequate. The overall procurement risk for the project is rated as moderate and an appropriate set of mitigation measures will be carried out to minimize it (see Annex 3). Procurement will be carried out in accordance with the World Bank’s (i) “Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants”, dated October 15, 2006 and revised in January 2011; (ii) “Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers” dated January 2011; and (iii) “Guidelines: Procurement of Goods, Works and Non-consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers” dated January 2011.98.
47. A procurement assessment with mitigation measures and appropriate monitoring arrangements has been prepared to help reduce the risks associated with procurement. To the extent possible, the Requests for Proposal (RFP) will be launched in advance of project approval for contracts greater than $200,000 through Quality- and Cost-Based Bidding System (QCSBS), notably for a firm to manage the technical preparation of the reforms and a firm to manage communication strategies.
48. A procurement plan and terms of reference for consultants needed during the first 18 months of project implementation were developed during project appraisal. The procurement plan will be updated quarterly or as required to reflect actual project implementation needs.
Social (including Safeguards)
49. The project is expected to have positive social impacts by improving equity through enhanced targeting of social safety nets and sustainability of the social security system. The primary goal of the project is to implement economic reforms by strengthening Government’s capacity. The project provides financial resources for technical assistance for well-defined, time-bound activities that include permanent improvements in the Borrower’s institutional framework and capacity. These changes are expected to translate into significant positive impacts on economic governance and the population, including vulnerable groups and women who make up a considerable proportion of safety nets, pensions and health insurance beneficiaries. The project will specifically monitor the involvement and identification of vulnerable populations and females during implementation. The population will be consulted during implementation of the project and in particular as new methods for targeting various levels of vulnerability are developed as a result of the project (i.e., such as proxy-means testing approaches used to target social safety net programs).
Environment (including Safeguards)
50. The project is expected to have minimal or no adverse impacts on the environment and hence is considered as a category “C” project as per World Bank Operational Policy 4.01 Environmental Assessment. The project will be mostly financing technical assistance, analytical work and institutional capacity building and no direct or indirect physical investment is envisaged.
51. Annex 1: Results Framework
TUNISIA: Social Protection Reforms Support Project
Stage: Appraisal
|Indicators by Component |
|Indicator 1: |
|Direct project beneficiaries (Core Sector Indicator) |
|Component I. Safety Net and Subsidy Reform Support |
|Participants involved consultation activities during project implementation |
|Joint social security-labor code |Qualitative |None |
|assessment conducted with stakeholders | | |
|as part of social dialogue process | | |
|Component | |Transition Fund |Country co-financing |Total |
|Component 1. Safety Net and Subsidy Reform Support |
|Sub-Component 1.1 | | | |820,000 |
|Analytic support |2 Experts (senior |250,000 | |250,000 |
| |and junior) | | | |
|TA and workshop support to the dialogue|Firm |500,000 | |500,000 |
|and coordination within the GOT and the| | | | |
|Steering Committees for the Reform | | | | |
|TA to Support to the preparation of new|1 Consultant |70,000 | |70,000 |
|legislation | | | | |
|Sub-Component 1.2 | | | |3, 120,000 |
|Management of information systems and |1 IT/ICT Firm |2, 120,000 |1, 000,000 |3, 120,000 |
|setting up a new database | | | | |
|Sub-Component 1.3 | | | |840,000 |
|Design and implementation of an |Communication Firm, |400,000 | |400,000 |
|information and communication strategy |Media | | | |
|Technical support |3 Consultants |150,000 | |150,000 |
|Workshops | |100,000 | |100,000 |
|Conduct assessments |Surveys |80,000 | |80,000 |
|Training and Capacity Building | |110,000 | |110,000 |
|Sub-Total Component 1 | |3, 780,000 | |4, 780,000 |
|Component 2. Strengthening Social Security Analysis and Planning |
|Analytic support and training |2 Experts (senior |200,000 | |200,000 |
| |and junior) | | | |
|Design and implementation of an |Communication/Media |200,000 | |200,000 |
|information and communication strategy |Firm | | | |
|Sub-Total Component 2 | |400,000 | |400,000 |
|Component 3. Project Management and Monitoring |
|Support to the economic reform Unit |4 Consultants |270,000 | |270,000 |
|Training and Capacity Building |2 Consultants |100,000 | |100,000 |
|Financial and procurement audits |1 Consultant |30,000 | |30,000 |
|Sub-Total Component 3 | |400,000 | |400,000 |
|Sub-Total All Components | |4,580,000 | |5,580,000 |
|Reserve (miscellaneous expenditures) | |120,000 | |120,000 |
|TOTAL | |4,700,000 |1,000,000 |5,700,000 |
Component 1: Safety Net and Subsidy Reform Support (US$ 4.78 million)
1. This component finances consultant services, workshops and goods to support the reform process and includes the following sub-component activities:
Sub-Component 1: Technical Assistance to Inter-ministerial Working Group (US$ 0.82 million):
2. This sub-component would finance consultant services, workshops and goods to provide technical assistance and capacity-building to the Inter-ministerial Working Group that builds upon analysis completed during 2012 on the distribution and potential impact of energy subsidy reforms. This component will therefore focus on technical assistance to the design of a food and fuel subsidy reform implementation plan and subsidy-compensation program for households, including: (i) developing an implementation plan and operational manual (OM) for a subsidy-compensation program for households, including simulating the amount needed to compensate households under various reform scenarios and the key target households and their eligibility criteria; (ii) evaluating reform options for automatic fuel price adjustment mechanisms; (iii) monitoring and evaluation of the poverty, economic and social impact of reforms for food and fuel subsidies. To help sustain social stability during the design and implementation of reforms, the existing cash transfer program for the poor (PNAFN) will be maintained by the Government. The communication and redress mechanisms supported by this project will help to ensure that vulnerable households affected by reforms are informed and involved in the preparation of the compensation program in advance of the implementation of reform measures.
Sub-Component 1.2: Development of a Unified Database and Targeting System (US$ 2.12 million)
3. This sub-component would finance consultant services, workshops and goods to provide technical assistance for the creation of a unified population database to identify households through a unique identifier (UI), including: (i) developing proxy-means testing (PMT) formula and questionnaire for targeting compensation; (ii) assessing various payment options for delivering household cash transfers under the subsidy-compensation program (banking, postal or other mechanisms); (iii) an assessment of database reform scenarios based on an evaluation of identification systems currently used by various government programs; (iv) information technology (IT) support for creating an inter-ministerial management information system (MIS) for the unified database; and (v) support to improving the MOSA MIS for managing current social protection programs. The unified database will be managed by MOF and will be created through consolidation of existing databases (including those hosted by MOSA) linked to revenue collection, national identification numbers used by the Ministry of Interior (MOI), the database administered by the National Gas and Electricity Company [(Societe Tunisienne de l’Electricite et du Gaz (STEG)], and various identification numbers used for social programs administered by MOSA. Specialist consultants would provide international best practice and input to the architecture of a unique identification system and coordination with other national databases, such as the social security system and national identification number.
4. This activity will be co-financed by the Government through a budget of US$ 1.0 million to MOSA to consolidate and develop a “smart card” system for social security beneficiary registries that would be linked to the MOF unified population database, including reducing fragmentation among registries for CNSS, CNRPS, CNAM, PNAFN and the subsidized health card program. MOSA conducted a feasibility assessment for the development of a new MIS in 2012, to which the Government has allocated funding to launch a MOSA MIS project for its development.
5. This sub-component would therefore establish a new management information system (MIS) within the MOF and the creation of a unified database. In a first phase, consultants will exhaustively list existing SSN programs managed by different ministries in Tunisia, identifying their type (price subsidies/ration cards, conditional cash transfers, fee waivers, etc.), the agency responsible for running the program, the targeting method, the number of beneficiaries and the related expenditures. For the main programs, the consultants will describe the main MIS components (governance and organizational structure, information management, application management, infrastructure)[10]. Based on this exhaustive chart, the consultants will work towards consolidating the beneficiary registries through the setting of a unified registry hosted by MOF, relying on system integration and interoperability. For each MIS component, the program process will aim at assessing the optimal approaches for the underlying functions:
• Beneficiary identification: targeting, registration and graduation
• Registry: database, validation, updates, smart card
• Conditions: collection, verification, penalization
• Payment: eligibility, payment, reconciliation
• Control: grievances, processes, impact
Sub-Component 1.3: Consensus-Building and Communication (US$ 0.84 million):
6. This sub-component will finance consultant services, workshops and goods to provide technical assistance for consensus-building and communication, including: (i) monitoring of political economy considerations; (ii) improving access to information on subsidy and safety expenditure analyses through traditional and social media in advance of reforms for internal (including governmental agencies, Council of Ministers and National Constituent Assembly/Parliament) and external (public) stakeholders; (iii) developing a public consultation mechanism on reform options in advance of reforms; and (iv) refining communication and existing grievance redress mechanisms after the launch of reforms.
7. This sub-component would therefore support greater social accountability through both public disclosure of relevant administrative information, new types of consultative mechanisms, and improving grievance redress for ensuring the poor and vulnerable have access to social support during reforms. The tasks described above would help to inform and involve the public in the assessment, planning and design of reforms throughout the process. During this activity, the PIU in the MoF would track, measure and support reporting on program-related dialogue and communications. The work would finance consulting firms and consultants to support the development and dissemination of key information on data and reforms, develop public participation mechanisms, and liaise with radio, television, newspapers and social media in implementing a communication strategy in advance of and during the reform process.
8. This sub-component would therefore support greater social accountability through both public disclosure of relevant administrative information on expenditures and reform options and the introduction of a grievance redress mechanism for ensuring the poor and
9. This component will therefore help the Government coordinate with internal and external stakeholders and public by informing, communicating and advocating for the reform process. It will facilitate the implementation of the reforms by identifying obstacles, supporting the effective management of expectations and minimizing potential resistance to change by anticipating, capturing and elevating public concerns to concerned authorities.
Component 2: Strengthening Social Security Analysis and Planning (US$ 0.4 million)
10. This component would finance consultant services, workshops and goods to provide technical assistance for building institutional capacity to analyze and develop consensus on an integrated reform plan for pensions and health insurance. This component includes the following activities: (i) hands-on training of Government staff on policy analysis of pension and health insurance reform options, including an assessment of legislation and administrative arrangements and risk analysis; (ii) training on policy analysis of labor legislation in relation to social security; and (iii) preparation, coordination and dissemination of information on policy reform options among social dialogue partners.
11. This activity will also develop a poverty and social impact assessment to quantify the impact of social security reforms (notably of changes in social security contributions) on labor market outcomes and will explore options to (i) assure fiscal sustainability of the social security system based on various scenarios for social contributions and (ii) assess the fiscal and operational feasibility of introducing unemployment insurance schemes.
12. This sub-component would therefore help to introduce annual updates of pensions and health insurance actuarial analyses and reform options, taking into account changes in the macroeconomic context; the monitoring of public pension expenditure flows; and support to instituting a framework for ensuring routine and updated information is publicly disclosed to promote social accountability.
Component 3: Project Management and Monitoring (US$ 0.4 million)
13. This component finances consultant services and goods to support the PIU in managing the project and monitoring project-related activities and outcomes. This component would also entail support to ensuring all project activities and tasks are executed, coordination among all actors involved in project implementation, fulfilling and monitoring procurement and fiduciary requirements and audits, and monitoring and evaluation of project outcomes and intermediary results.
14. Key activities supported by this component are shown in the table below.
Component 3: Key project management and monitoring activities
|Activity |Output |Frequency |
|Development of Operations Manual and Procurement Plan |Operations Manual |Once; updated monthly |
|Preparation and management of Procurement Plan |Procurement Plan |Once; updated monthly |
|Management of day-to-day work plan, including recruitment and |Project Work Plan |Once; updated montly |
|management of all goods and consultants, including preparation of| | |
|terms of reference and ensuring completion of all project | | |
|deliverables and milestones | | |
|Establishment of M&E database and data collection plan |Database |Once; updated monthly |
|Interim audits and reports completed |Reports |Quarterly |
|Mid-term and final project evaluation |Reports |Annual |
Annex 3: Implementation Arrangements
TUNISIA: Social Protection Reforms Support Project
Stage: Appraisal
Project Institutional and Implementation Arrangements
1. The MOF will oversee implementation of the project through a Project Implementation Unit (PIU) as part of the General Budget Administration Committee, the Comité Général de l'Administration du Budget de l'Etat (CGABE). The PIU has been created and includes the Project Director, a technical specialist, a procurement specialist and a financial management specialist.
2. Implementation and coordination responsibilities: The PIU will implement project activities with oversight provided by an existing technical, Inter-Ministerial Working Group on Social Transfers, which will serve as the Technical Steering Committee (TSC). The TSC was created in early 2012 by the Ministry of Finance and coordinates with the Prime Ministry’s Economic and Social Affairs Advisor’s Office. The TSC will provide guidance and monitor progress through routine meetings and monthly monitoring reports. The TSC will be organized along three Thematic Groups on subsidy reform, pension analysis and health insurance analysis. The TSC includes members from the Ministries of Finance, Commerce, Industry, Social Affairs, Regional Development and Planning and the Prime Ministry, as well as labor (UGTT) and employers’ unions (UTICA) and civil society representatives. Other concerned ministries which will also be included are the Ministries of Transport, Agriculture, Health, and Employment and Vocational Training.
3. The Operational Manual (OM) describing guidelines for implementing project components will be ready by negotiations. The OM will specify guidelines for: (i) roles and responsibilities of the PIU and TSC, including supervision and reporting arrangements; (ii) procurement; (iii) financial management; and (iv) project monitoring and evaluation.
4. The OM includes a negative list of expenditures which the project should not include, e.g., activities and items which could harm the environment, cause involuntary resettlement, promote child labor, cause conflict, etc. A screening process using criteria developed by the Bank will be used to ensure that activities financed by the Project grant will not trigger World Bank environmental or social safeguards. Activities that entail potential environmental or social impacts will not be approved.
5. Grant agreement arrangements: The grant agreement will be established directly between the World Bank and MOF, accompanied with a request of a letter of endorsement from the Government for MOF to be the implementer and recipient of the grant.
6. The PIU will be responsible for day-to-day management of the project and for monitoring project performance. The institutional structure of the PIU and the main roles and responsibilities of each actor are described in the OM.
7. The PIU will:
• manage all funds and procurement for activities
• open a Designated Account into which funds from the World Bank will be deposited
• organize regular steering committee meetings to provide operational guidance
• appoint staff and recruit consultants where necessary for project implementation (PIU)
• maintain and, where necessary, update the OM
• monitor implementation
• ensure proper financial management of funds and compliance with World Bank’s procedures
• ensure proper and appropriate procurement procedures
• submit regular reports and disseminate findings.
Financial Management, Disbursement and Procurement
Financial Management
8. The public financial management (PFM) system in Tunisia is governed by a comprehensive legal and regulatory framework that includes safeguards to enhance accountability. This system is based on the principle of the separation of the functions of authorizing officers and finance officers, as well as on internal controls rules governing ex-ante expenditure as well and internal and external auditing rules. The PFM system also relies upon high quality, administrative structures and well-equipped human resources and financial support. Overall, the public expenditure system in Tunisia poses as low budgetary and financing risks in terms of regulation.
9. The PFM controls operate within a complete legal and authorization framework in coordination with line ministries and audit and control bodies. A full panoply of audit arrangements is in place (internal and external audit, ex-ante and ex-post), ensuring effective PFM auditing within the public sector.
10. Under the proposed Project, the Ministry of Finance (MOF) will oversee implementation of the project through the establishment of a Project Implementation Unit (PIU) as part of the Comité Général d’Administration du Budget de l’Etat (CGABE). The Bank has prior experience with the MOF through Bank-financed lending operations, the Export Development Project I and II, which include a component implemented by the Direction Générale des Douanes (DGD), a department within the MOF. The proposed Social Protection Reforms Support Project (SPRP) would be the first operation to be managed by the CGABE.
11. The PIU will be responsible for planning, execution and monitoring and evaluation of project activities. The PIU FMS and procurement specialist will also coordinate with staff within the main department responsible for financial and procurement procedures for the MOF, the Direction des Affaires Financières, des Equipements et du Matériel (DAFEM).
12. The PIU will maintain project bookkeeping and will produce annual Project Financial Statements (PFS) and Unaudited Interim Financial Reports (IFR) within 45 days of the end of each calendar semester. The PIU will be responsible for maintaining financial management arrangements in a manner acceptable to the Bank.
13. The assessment identified the following risks and mitigating measures: (i) PIU Staff capacities: The PIU has been created and will have a financial management specialist (FMS) dedicated to the project and an additional FMS recruited to support project activities by effectiveness; (ii) PIU Fiduciary management capacities: The PIU will maintain analytical accounting logs, integrated in the general accounting, allowing identification of expenditures according to categories and project components. Moreover, the PIU will require an OM for guiding administrative and financial procedures. The OM should highlight the need for all procedures to be documented well and applied by all concerned parties. As a result, the overall financial management risk is deemed to be high given the lack of experience with Bank procedures and an OM and implementation support will be needed to guarantee systematic management of the project from a financial and procurement perspective.
14. The PIU should mitigate the highlighted risks in order to establish acceptable financial management arrangements. Key mitigating measures will be to: (i) ensure the preparation of an OM detailing including administrative and financial procedures by negotiations; (ii) ensure at least one dedicated FMS for the project within the PIU; and (iii) maintain the financial information in an excel spreadsheet which should be controlled and validated by the director of the PIU.
Inherent Risks
|Risk |Risk After Mitigating Measures (MM) |
|Country level | | | |
|The public finance management system (PFM) is |Low |n/a |Low |
|governed by a comprehensive legal and regulatory | | | |
|framework that with reliability and transparency | | | |
|safeguards. | | | |
|The public expenditure management system presents| | | |
|a low budgetary and financing risk factor. | | | |
|Project level | | | |
|Lack of experience by PIU in managing projects |Substantial |Recruit additional FMS dedicated to the |Moderate |
|financed by World Bank financing. | |project and build the capacity of DAFEM | |
| | |staff members responsible for the financial | |
| | |management of the project, with qualified | |
| | |specialists and tailored training programs | |
| | |on project financial management (FM) | |
| | |procedures. | |
| | |Close supporting mission of Bank FM staff to| |
| | |provide advice to the project. | |
| | |An administrative and financial procedures | |
| | |manual for the project, which clearly | |
| | |describes TORs of each actor as well as the | |
| | |flow of information and funds. | |
|Inherent Risk Before MM |Substantial |Inherent Risk after MM |Moderate |
Control Risks
|Risk before MM |Risk After MM |
|Budgeting | | | |
|The MOF presents an annual budget for financial |Low |n/a |Low |
|commitments. The budget should be approved by | | | |
|the Parliament/National Constituent Assembly by | | | |
|December 31st of each year. Budgetary control is| | | |
|implemented through an IFMIS Système d' Aide à | | | |
|la Décision Budgétaire (ADEB). | | | |
|Accounting | | | |
|The MOF accounting, based on the public |Low |n/a |Low |
|accounting, is maintained at the central level | | | |
|based on ADEB. |Substantial |Maintain at the PIU a parallel bookkeeping |Moderate |
|The public accounting system of the MOF does not| |log system based on independent accounting | |
|allow for the automatically generation of the | |software or Excel sheet to produce IFRs and| |
|financial reporting necessary for project | |PFS, which will be reviewed and validated | |
|management. | |by the PIU director. | |
|Financial Reporting | | | |
|The accounting system does not allow producing |Substantial |IFR and PFS will be produced on a separate |Moderate |
|IFR and PFS. | |accounting system and will be validated by | |
| | |the PIU director before submission. | |
|Flow of funds | | | |
|Funds will be managed by the Central Bank of |Low |Funds will be disbursed according to the |Low |
|Tunisia (CBT) based on the foreign finance | |World Bank guidelines | |
|management system SIADE. | |A designed account will be opened at the | |
| | |CBT in order to facilitate the management | |
| | |of funds and disbursement procedures for | |
| | |eligible expenses. | |
|Internal control | | | |
|Sufficient segregation of duties. Functions of |Moderate |An operational manual (OM) for the project |Low |
|ordering, receiving, accounting for, and paying | |is to be prepared, which clearly describes | |
|for goods and services appropriately segregated.| |TOR of each actor as well as the flow of | |
|Verification of payment procedures is weak. | |information and funds. | |
|Budgetary control is implemented through ADEB. | | | |
|Fund management is done through SIADE. | | | |
|Financial and administrative procedures manual | | | |
|of the MOF is still under preparation. | | | |
|Auditing | | | |
|MOF is subject to the supreme audit control |Low |External audit will be conducted in |Low |
|(Court des Comptes) and to the control of | |accordance with International Standards on | |
|Contrôle Générale des Finances (CGF). | |Auditing by CGF. | |
| | |External audit TOR should be acceptable to | |
| | |the Bank ex-ante. | |
|Control Risk Before MM |Substantial |Control Risk after MM |Moderate |
15. Budgeting System. The MOF prepares an annual budget. In terms of funding sources, the overall budget relies on contributions from the central government as well as funds made available by various donors in order to carry out specific projects. The budget should be approved by the Parliament/National Constituent Assembly by December 31st of each year and passed as an appropriation bill. Budgetary control is implemented through an IFMIS system (ADEB).
16. Information system. The information system relies on public accounting and os based upon retracing the execution of the public expenditures; it does not allow for the production of the project Unaudited Interim financial reports (IFRs) will be required by the Bank. A separate accounting log on excel sheet will be used for the project and will be reviewed and validated by the PIU director before submission to the Bank.
17. Transactions will be registered on the accounting system by the PIU financial management specialist who will be responsible for preparing the IFRs before their transmission to the PIU director for approval. Periodical reconciliation between accounting statements and IFRs is also done by the FMS.
18. The general accounting principles for the Project are as follows: (i) Project accounting will cover all sources and all uses of Project funds including payments made and expenses incurred. All transactions related to the Project will be entered into the expenses accounting system and the appropriate reports. Disbursements made from the project Designed Accounts (DA) will also be entered into the Project accounting system; (ii) Project transactions and activities will be distinguished from other activities. IFRs summarizing the commitments, receipts, and expenditures made under the Project should be produced every semester using the templates established for this purpose and sent to the PIU; and (iii) The Project chart of accounts will be compliant with the classification of expenditures and sources of funds indicated in the Project documents (Project appraisal document, COSTAB) and the general budget breakdown. The chart of accounts should allow for data entry to facilitate the financial monitoring of Project expenditures by component and sub-component, expenditure classification, disbursement category and source of funds.
19. Internal control. The internal control system in place within the MOF was deemed satisfactory by the World Bank. Indeed, the MOF guarantees the separation of duties through several controls. SPRSP will be implemented by a PIU to be created within CGADE within the MOF. PIU staff has no experience with donors project financial management and controls and do not include financial specialist.
20. To strengthen FM capacity, an OM for the Project will be prepared. The OM should clearly define the role, function and responsibilities of every responsible, the flows of fund and information, the chart of accounts and include the form of the dashboards to be used. This manual of procedure will be subjected to the approval of the Bank. The PIU should also be equipped with accounting software for the project bookkeeping, assets management and financial reporting. Project commitments will be managed through ADEB information system and use of funds will be managed through SIADE information system.
21. Project reporting. The project financial reporting will include unaudited Interim Financial Reports (IFR) and yearly Project Financial Statements.
(i) IFR should include data on the financial situation of the project. These reports should include: (a) a statement of funding sources and uses for the period covered and a cumulative figures, including a statement of the bank project account balances; (b) a statement of use of funds by component and by expenditure category; (c) a reconciliation statement for the DA; and (d) a budget analysis statement indicating forecasts and discrepancies relative to the actual budget. The PIU should produce the IFRs every semester and send them to the World Bank within 45 days after the end of each semester.
(ii) PFS should be produced annually. The PFS should include (a) a cash flow statement; (b) a closing statement of financial position; (c) a statement of ongoing commitments; and (d) an analysis of payments and withdrawals from the grant account.
(iii) PFS should be produced on an excel spreadsheet, validated by the PIU director and and should be submitted to CGF audit.
22. External Audit. The Project’s financial statements, including the reconciliation of the designated account (DA) will be audited annually by an auditor, acceptable to the Bank, in accordance with internationally accepted auditing standards. The audit will cover all project aspects, all operations implemented under the project and sources and uses of funds. It will also relate to financial operations and internal control, and financial management system.
23. The auditor will produce: (i) an annual audit report including his opinion on the project annual financial statements, and (ii) a report on internal control weaknesses checked while performing his task. The reports will be addressed to the Bank within six months starting from closing date of each fiscal year subject to the audit. The auditors’ terms of reference (TORs) will be prepared by the CGABE and cleared by the Bank before the engagement of the auditor. TORs will include both the audit of the financial transactions and an assessment of the internal control.
Disbursement
24. The proceeds of the grant will be disbursed in accordance with the World Bank guidelines and will be used to finance project activities through the disbursement procedures currently in use: i.e. withdrawal application for direct payment, for special commitments and/or reimbursement accompanied by appropriate supporting documentation or using Statement of Expenditures (SOEs) for amounts less than predefined thresholds for each expenditure category, in accordance with the procedures described in the Disbursement Letter and the World Bank's disbursement manual. Following World Bank standard disbursement procedures, disbursements will end four months after the project closure date.
25. Designated Account (DA). To ensure that funds are readily available for project implementation, the CGABE will open, maintain, and operate one designated accounts (DA) at the Central Bank of Tunisia (CBT). It will finance the activities of the project.
26. An authorized ceiling of DA will be established covering an estimated four months of eligible expenditures financed by the grant. The CBT will be responsible for electronically submitting replenishment requests on a monthly basis, accompanied by appropriate supporting documentation for expenditures made and reconciled bank statements.
27. Statements of expenditures. All requests for withdrawal of the grant funds will be fully documented, except for: (i) expenditures under contracts with below an estimated value established for goods; (ii) for consulting firms; and (iii) for individual consultants or training programs, which will be claimed on the basis of statement of expenditures. Documentation of the expenditures listed above will be maintained and will be made available for review by Bank supervision missions and by project auditors.
28. Counterpart funds will be available from the Government budget or autonomous executing agencies budget. Payments from the budget will be made under the responsibility of the CGABE; and in a timely manner so as to ensure the good execution of the project.
Supervision Plan: The frequency and scope of World Bank supervision missions will be adapted to the needs of the Project. Supervision missions will take place every six months, but may be more frequent, if needed.
Allocation of Grant Proceeds
|Category |Amount of the Grant Allocated |Percentage of Expenditures to be Financed |
| |(expressed in USD million) |(inclusive of taxes) |
|Consultancy Services, Training and Workshops, | |100% |
|Goods and Equipment, Audit and Incremental |4.7 | |
|Operating Costs | | |
|TOTAL AMOUNT |4.7 | |
Summary of actions to be implemented: Project implementation support actions are summarized below:
|Actions |Deadline |
|Hire an additional FMS for the project |Negotiations |
|Operational manual for the project |Negotiations |
Procurement
29. The project will provide technical assistance to strengthen the Government’s capacity to more rapidly identify, prepare and formulate new regulation in coordination with a broad array of stakeholders from different ministries and civil society. The project will thus finance consulting services to provide technical assistance and support the creation of an economic reforms implementation unit at the MOF to coordinate the implementation of high-profile and reforms that involve multiple stakeholders, to be overseen by the Prime Minister’s Office.
30. The capacity of the MOF to carry out procurement to implement the project was assessed on January 30, 2013, and was deemed adequate. The assessment was carried out with the Directeur Général Ressources et Equilibres, the President of the CGABE; the Direction Administrative et Financiere, including the Directeur Général des Affaires Financières et Equipements (DAF), the President of the Commission Départementale des Marchés of MOF; the Sous-Directeur des Achats, Sous-Directeur du Budget et Ordonnancement and Directeur at DAF. The assessment takes into consideration the foreseen nature of the expenditures and the likely size of the contracts.
31. Capacity assessment. The CGABE, with the support of DAF, will be the Unit administering all procurement-related transactions to be financed under the project. Overall, the procurement capacity assessment concluded that in the Tunisian country context, together with the MOF capacity to be developed under the new project activities, the PIU is likely to adhere to applicable procurement procedures. The assessment concludes that the units involved have experience in budgeting and can implement the applicable procurement procedures of this project. The overall assessment of Procurement Risk is moderate (see following table, “Simplified Procurement Risk Assessment of Implementing Agency”).
Summary of Procurement Assessment and Action Plan
OVERALL SUMMARY
|Overall Assessment of Risk: Moderate |PRT for |PRT for Consultancy Services |
| |GOODS: $............. (and first two |FIRMS: $.............. (and first |
|Frequency of Procurement Supervision: every 6 |contracts regardless of value) |contract regardless of value) |
|months |IT SYSTEMS:$................ |INDIVIDUALS: $50,000 (and first |
| | |contract regardless of value) |
|Date of the Assessment: January 30, 2013 | | |
Analysis of Procurement Capacity
|Area |Issues/Risks |Mitigation Measures |
|1. Organization. |During the assessment it was not |It is recommended that the PIU |
|Management of the project will involve 1 Unit in |possible to ascertain that the PIU is |designate a Project Coordinator and |
|the MOF: the Comité Général du Budget (CGB), |committed to this responsibility and the|make implementation arrangements clear|
|responsible for the overall coordination of this |tasks that it entails. |in the legal agreement and in an |
|project (Project Management Unit-PIU). | |Operation Manual. |
|2. Facilities, Support Capacity and |Given that this is the first Bank-funded|Carry out training to brief and update|
|Staffing/Professional Experience. |project to be implemented by the MOF, |the staff involved in project |
|The project implementation will involve, in |there may be a low familiarity and |implementation on the main Bank’s |
|addition to the PIU, two (2) other Units: (i) |understanding of Bank procurement and |procurement procedures -- expected to |
|the Direction Administrative et Financière, |consultant guidelines and capacity to |be used under the project -- before |
|responsible for budgeting, procurement |prepare adequate procurement |its start; and |
|implementation and payment and (ii) the |documentation in a timely manner. |Provide for outside technical |
|Commission Départementale des Marchés, | |assistance from a procurement |
|responsible for procurement prior review. | |specialist to help in the preparation |
| | |of the documents for the procurement |
| | |and selection of consultants. |
|3. Record Keeping and Filing System. |It is not clear that all project |Ensure that instructions and training |
|Procurement records will be kept under the |documents will be filed during |are given to ensure that |
|custody of the 3 involved Units. |procurement post- or independent review.|project-specific files are kept for |
| | |all procurement and related |
| | |transactions and recorded on a |
| | |contract-by-contract basis. |
|4. Procurement Planning. |Procurement Plans may not be ready |The PIU should : (i) finalize the |
|The PIU and DAF will be responsible of |before implementation start or may not |project detailed Action Plan (or PIP) |
|procurement planning and update |be updated periodically. |with full costing and draft the |
| | |project Procurement Plan and (ii) |
| | |periodically update the procurement |
| | |plan. |
|5. Monitoring/Control Systems. |Procedures used may not be fully |Prepare a Procurement Section in the |
|The Commission Départementale des Marchés of MOF |compliant with the Bank procedures. |Project Operation Manual which clearly|
|and eventually the Commission Supérieure des | |describes the necessary procedures for|
|Marchés will be in charge of procurement prior | |project implementation |
|review. | | |
|6. Capacity to meet Bank Reporting Requirements. |Reports may not be provided timely |Confirm that the Project Coordinator |
| |manner nor in an acceptable format. |will be responsible for the reporting |
|The PIU will be in charge of preparing and | |and ensure the OM clearly defines the |
|sending to the Bank all required reports. | |content of the report and the |
| | |contribution of other units involved |
| | |in the project |
|7. Conclusions: The implementing agency (MOF) will have the capacity to carry out and manage procurement under this operation, |
|provided that the recommended actions are taken. The Procurement Plan should be provided before the approval of financing. The |
|procurement-associated risk is rated as moderate. |
Environmental and Social (including safeguards)
9. The project poses no environmental risk and is a category “C” project. The project comprises mainly institutional capacity building and technical assistance for sector reforms. There is no direct or indirect physical investment. The Proposed project has no environmental impact. The concept stage PID and ISDS were disclosed on March1, 2013.
10. The project is expected to have positive social impacts through improving equity through an improved targeting of safety nets and sustainability of social security. The primary goal of the project is to implement economic reforms by strengthening Government’s capacity. The project provides financial resources for technical assistance for well-defined, time-bound activities that include permanent improvements in the Borrower’s institutional framework and capacity. These changes are expected to translate into significant positive impacts on economic governance and the population.
Monitoring & Evaluation
11. The PIU will be required to provide project reports on implementation progress on a quarterly basis to the Bank and during routine supervision missions according to guidelines described in the OM. Project reports will describe status of implementation and progress on outputs and intermediate outcomes. Key components of project reporting include: (i) Financial information; (ii) Procurement information; and (iii) Intermediate outputs and outcomes as per the Results Matrix.
Annex 4: Operational Risk Assessment Framework (ORAF)
TUNISIA: Social Protection Reforms Support Project
Stage: Appraisal
|Project Stakeholder Risks | Rating |High |
|Description: (i) Political instability : a new government reshuffle could challenge |Risk Management: The Government will monitor the country environment closely and engage with |
|consensus-building from the main stakeholders (MOF, MOSA, MOI, MOC); |stakeholders across the political and civil society spectrum. |
|(ii) Unions: there could be tension with the labor and business unions, resulting in delays in |The Bank will support the Government through technical assistance and communication support with a |
|the project implementation. |focus on: (i) improving equity in subsidy expenditure, (ii) improving sustainability of pensions and |
|(iii) General Public: The biggest risk is posed regarding public readiness and perceptions of |health insurance. |
|the reform process and decisions taken. given political uncertainty, there may be a lack of | |
|support for substantive governmental reforms that are seen to impact welfare. | |
| |Resp: Government |Stage: Prep/Impl. |Due Date : |Status: In |
| | | | |progress |
|Sector/multi-sector | Rating |High |
|Description: Challenges in implementing reforms that require coordination across different |Risk Management: The project is designed to enhance technical and financial support to improving |
|ministries and stakeholders. |coordination and dialogue across line ministries and stakeholders as part of the Inter-ministerial |
| |working group already operating, improved communication mechanisms and consensus-building fora. |
| |Resp: Government/Bank |Stage: Prep/Impl. |Due Date : |Status: In |
| | | | |progress |
|Implementing Agency Risks (including fiduciary) |
|Capacity |Rating: |High |
|Description: The PIU has limited experience with Bank procurement and financial management |Risk Management: Financial Management: Key mitigating measures will be to: (i) ensure the preparation |
|procedures and standards. |of an OM detailing including administrative and financial procedures; (ii) ensure at least one |
| |dedicated FMS for the project within the PIU; and (iii) maintain the financial information in an excel|
| |spreadsheet which should be controlled and validated by the director of the PIU. |
| |It is recommended that the PIU designate a Project Coordinator and make implementation arrangements |
| |clear in the legal agreement and in an Operation Manual. |
| |The Bank will carry out training to brief and update the staff involved in project implementation on |
| |the main Bank’s procurement procedures -- expected to be used under the project -- before its start; |
| |and the project will provide for outside technical assistance from a procurement specialist to help in|
| |the preparation of the documents for the procurement and selection of consultants. |
| |The Bank will ensure that instructions and training are given to ensure that project-specific files |
| |are kept for all procurement and related transactions and recorded on a contract-by-contract basis. |
| |The PIU should : (i) finalize the project detailed Action Plan (or PIP) with full costing and draft |
| |the project Procurement Plan and (ii) periodically update the procurement plan. |
| |The PIU should prepare a Procurement Section in the Project Operation Manual which clearly describes |
| |the necessary procedures for project implementation |
| |The PIU should confirm that the Project Coordinator will be responsible for the reporting and ensure |
| |the OM clearly defines the content of the report and the contribution of other units involved in the |
| |project. |
| |Resp: Government/Bank |Stage: Prep/Impl. |Due Date : |Status: In |
| | | | |progress |
|Governance |Rating: |Moderate |
|Description: The PIU will be based at MOF and will work closely with a technical steering |Risk Management: The Bank supervision team will continue to provide guidance on transparency and |
|committee representative of all key line ministries and unions, but there remains a lack of |public participation through improved communication tools during project implementation, and the PIU |
|access to information and social accountability measures. |will ensure that access to key information on expenditures and benefits be made available. |
| |Resp: Bank |Stage: Prep/Impl. |Due Date : |Status: In |
| | | | |progress |
|Fraud & Corruption (sub-category of Governance risk) |Rating: |Moderate |
|Description: MOF has in place adequate safeguards to reduce the likelihood for fraud and |Risk Management: The Bank will ensure appropriate routine audits of project financial management and |
|corruption including the misuse of public funds. |procurement and will utilize project-specific monitoring and evaluation systems. |
| |Resp: Bank |Stage: Implementation |Due Date : |Status: |
|Project Risks | |
|Design |Rating: |Moderate |
|Description: The implementation of the project components may be difficult due to delays in |Risk Management: The PIU and the Technical Steering Committee have prepared roles and |
|procuring required consultants and coordination across the main concerned ministries |responsibilities during project preparation, although some residual risk remains given it is likely |
|(Finance, Cooperation, Social Affairs, Commerce, Industry and Prime Ministry) |the first of its kind in Tunisia. A series of workshops were organized during preparation with the |
| |multi-stakeholder working group to help build capacity and agree on steps needed for implementation of|
| |the project. The Bank will also provide regular supervision on the ground using Country Office and HQ|
| |staff during project implementation. |
| |Resp: Government/Bank |Stage: Prep./Impl. |Due Date : |Status: In |
| | | | |progress |
|Social & Environmental |Rating: |Low |
|Description: Project activities will not result in any adverse environmental and social |Risk Management: Not applicable; there are no adverse impacts associated with the project. |
|impacts. | |
| |Resp: |Stage: |Due Date : |Status: |
|Program & Donor |Rating: |Low |
|Description: Several donors are active in the area of analysis and support to social |Risk Management: The Bank and the donor community in Tunis have well-established donor coordination |
|protection reform (notably the African Development Bank, the International Labor |in place, which will be enhanced as part of regular coordination meetings during project |
|Organization, and the European Union), which will require donor coordination and support. |implementation. The Bank routinely consults with donors, the private sector and civil society and is |
| |also coordinating with the IMF on subsidy and social security reform dialogue. |
| |Resp: Bank |Stage: Prep/Impl. |Due Date : |Status: In |
| | | | |progress |
|Delivery Monitoring & Sustainability |Rating: |Moderate |
|Description: The design of the subsidy-compensation program and the reform plans for |Risk Management: The project components are well-integrated in the Government’s plans to reduce |
|subsidies and social security will need to be institutionalized to ensure sustainability. |public deficit and improve the functioning of social protection schemes, as evidenced by the signing |
| |of a new social contract in January 2013 and a circular for improving targeting and information |
| |systems for social safety nets in October 2012. The Government has allocated financing to contribute |
| |to the project cost and the Bank will provide technical assistance as part of supervision. |
| |Resp: Government/Banknd the |Stage: Prep/Impl. |Due Date : |Status: In |
| |Bank will provide technical | | |progress |
| |assistance as part of | | | |
| |supervision. proving targeting | | | |
| |and information systems f | | | |
Annex 5: Implementation Support Plan
TUNISIA: Social Protection Reforms Support Project
Stage: Appraisal
Strategy and Approach for Implementation Support
The World Bank’s implementation support to the project will comprise of technical, fiduciary and evaluation assistance as follows:
1. Policy guidance: The Bank’s technical assistance has been integral to the preparation of earlier analysis and the proposed operation. During implementation, the Bank will continue to draw upon national and global specialists to provide technical assistance on all components to ensure that the project achieves its intended objectives.
2. Technical assistance to implementation: The Bank team will coordinate closely with the implementing agencies on the design and execution of the activities.
a. Component 1: The Bank team will provide policy and strategic guidance, input to TOR preparation, and oversight on training and technical assistance on food and fuel benefit incidence analysis (BIA) using household surveys and administrative databases; on monitoring and evaluation of food and fuel subsidy expenditure across economic sectors; modeling of macroeconomic, budgetary and welfare effects of differential price adjustments; access to information on social expenditures; options for pricing reform, supporting the drafting and/or revision of legislation on fuel and food pricing policy, and helping to facilitate multi-stakeholder discussions of substantive issues affecting key energy consumption sectors, such as transport, industry, and agriculture/food with a view to developing mitigation measures, if deemed necessary, and effective communication strategies; and creation of a unified population database to improve targeting of social expenditures more broadly, and in the near-term, safety net compensation for subsidy reform.
b. Component 2: The Bank team will provide technical assistance, oversight and input to TOR preparation on pensions and health insurance actuarial analyses and reform options and coordination between the three funds (pension fund for private-sector workers, pension fund for public-sector workers and health insurance), taking into account changes in the macroeconomic context; the monitoring of public pension expenditure flows; and support to instituting a framework for ensuring routine and updated information is publicly disclosed to promote social accountability.
c. Component 3: The Bank team will provide training to the PIU and guidance on project management, monitoring and fiduciary management guidelines, described below.
3. Fiduciary management support: The World Bank team will include fiduciary management staff to provide routine supervision of FM and procurement activities. This will include review and clearance of the TORs of local procurement and financial management officers, the operations manual, interim financial reports, withdrawal requests, and other procurement actions. The Bank fiduciary staff will also provide guidance to the local procurement and FM officers on procurement issues, preparation of the first IFRs, compliance with the Bank guidelines and other issues as they arise during the implementation.
4. Monitoring and impact evaluation support: In addition to the M&E integrated into the project, the Bank will provide day to day supervision and expertise on overall design of the M&E system, the data collection strategies including the design of the data collection system for day to day monitoring, TORs for the beneficiary rapid assessments, quality of the project monitoring reports that will be prepared by the implementing agencies, and most importantly, provide technical expertise to guide the design of the evaluation which will guide the nature and scope of baseline data to be collected.
Implementation Support Plan
|Calendar |Support |Responsible Team |
|Year 1 |Support training and design of the subsidy and safety net |TTL |
| |analyses and policy dialogue and establish project monitoring |Economists |
| |database |Social Protection Specialist |
| | |M&E Specialist |
| |Monitor design/implementation of unified database |Social Protection Specialist |
| | |ICT Specialist |
| | |Operations Officer |
| |Monitor capacity building on actuarial training |Social Protection Specialists |
| |Monitoring the design and implementation of public |Social Protection Specialist |
| |communication, access to information and grievance redress |Communication Specialist |
| | |Governance Specialist |
| | |Operations Officer |
| |Financial management and Procurement training |FM specialist |
| | |Procurement specialist |
|Year 2 |FM, disbursement and procurement support and review and |FM and Procurement specialists |
| |report | |
| |Technical inputs |TTL, Economists, ICT, Social Protection Specialist, |
| | |Operations Officer |
| |Monitoring and Evaluation (Interim Assessment) |TTL, M&E |
| |Project implementation progress |TTL, Operations Officer |
|Year 3 |FM, disbursement and report |FM specialist |
| |Procurement review |Procurement specialist |
| |Technical inputs |TTL, Economists, ICT, Social Protection Specialist, |
| | |Operations Officer |
| |Monitoring and Evaluation (Final Assessment) |TTL, M&E |
| |Project implementation progress |TTL, Operations Officer |
-----------------------
[1] World Bank staff estimates. The Government’s own GDP growth target for 2013 is higher at 4.0 percent.
[2] According to MOSA (Office of Tunisians Abroad), since February 2011, MoSA has also extended social assistance benefits to Tunisian nationals fleeing Libya. The assistance includes a one-time cash transfer of 400 TND per single beneficiary and 600 TND per household. Beneficiaries should provide evidence of hardship and having resided in Libya for a period of at least 6 months prior to repatriation. More than 50,000 Tunisians fled Libya between February and August 2011, most of whom remain unemployed.
[3] Many beneficiaries are still considered vulnerable, since 42 percent are considered poor (below a poverty line of approximately $2 per day) and 29 percent are considered vulnerable (falling just above the poverty line).
[4] The analysis will be updated once the National Institute of Statistics publicly releases the data from the 2010 Household Budget and Consumption Survey.
[5] Only permanent workers laid off for economic reasons are entitled to unemployment assistance. In 2009, only 5.6 % of laid-off workers received the benefit. The potential benefit duration is 12 months, and the level of the benefit is equal to the minimum wage, Workers are poorly protected against the risk of unemployment: (i) severance payment for layoffs are low for international standards (one day salary per month of service; it cannot exceed three months of salary), (ii) advance notices for dismissals are short for international standards (30 days), and (iii) the current unemployment support system in Tunisia only covers a minority of the workforce.
[6] World Bank (2012). Tunisia Interim Strategy Note. Report No. 67692-TN. Washington DC: World Bank.
[7] World Bank (2012). “Chapter 6: Support to Social Protection during the Global Financial Crisis” in The World Bank Group’s Response to the Global Economic Crisis: Phase II. Washington DC: World Bank.
[8] World Bank (2006). Pension Reform and the Development of Pension Systems. An Evaluation of World Bank Assistance. Washington DC: World Bank.
[9] World Bank (2009). Improving Effectiveness and Outcomes for the Poor in Health, Nutrition, and Population. An Evaluation of World Bank Group Support Since 1997. Washington DC: World Bank.
[10] MIS in social safety net programs: A look at accountability and control mechanisms – C. Baldeon, M. D. Arribas-Banos, 2008, SP Discussion Paper no. 0819, World Bank.
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