Document of The World Bank Report No: 71639-BB RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF BARBADOS SECOND HIV/AIDS PROJECT LOAN APPROVED BY THE BOARD ON AUGUST 7, 2008 TO THE MINISTRY OF FINANCE AND ECONOMIC AFFAIRS March 5, 2013 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. 1 ABBREVIATIONS AND ACRONYMS ART Antiretroviral Therapy CSOs Civil Society Organizations EPE Eligible Program Expenditures IBRD International Bank for Reconstruction and Development MDG6 Millennium Development Goal Number 6 MOH Ministry of Health MTR Mid-Term Review NAP National AIDS Program NHAC National HIV/AIDS Commission PCU Project Coordinating Unit Regional Vice President: Hasan A. Tuluy Country Director: Francoise Clottes Sector Director: Keith E. Hansen Sector Manager: Joana Godinho Task Team Leader: Shiyan Chao 2 Restructuring Status: Draft Restructuring Type: Level two Last modified on date : 3/5/2013 1. Basic Information Project ID & Name P106623: BB Second HIV/AIDS Project Country Barbados Task Team Leader Shiyan Chao Sector Manager/Director Joana Godinho/ Keith Hansen Country Director Francoise Clottes Original Board Approval Date 08/07/2008 Original Closing Date: 11/30/2013 Current Closing Date 11/30/2013 Proposed Closing Date [if applicable] EA Category C-Not Required Revised EA Category C-Not Required-Not Required EA Completion Date 02/25/2008 Revised EA Completion Date 2. Revised Financing Plan (US$m) Source Original Revised BORR 59.39 59.39 IBRD 35.00 35.00 Total 94.39 94.39 3. Borrower Organization Department Location Ministry of Finance and Investment Department Barbados Economic Affairs 4. Implementing Agency Organization Department Location Ministry of Health HIV/STI Program Barbados 3 5. Disbursement Estimates (US$m) Actual amount disbursed as of 3/5/2013 14.80 Fiscal Year Annual Cumulative 2013 15.20 30.00 2014 5.00 35.00 Total 35.00 6. Policy Exceptions and Safeguard Policies Does the restructured project require any exceptions to Bank policies? N Does the restructured project trigger any new safeguard policies? If yes, please select from N the checklist below and update ISDS accordingly before submitting the package. 7a. Project Development Objectives/Outcomes Original/Current Project Development Objectives/Outcomes The project would support the implementation of the 2008-2013 Barbados National HIV/AIDS Strategic Plan, specifically to increase: - Adoption of safe behaviors, in particular amongst key populations at higher risk. - Access to prevention, treatment and social care, in particular for key populations at higher risk. - Capacity of organizational and institutional structures that govern the National AIDS Program (NAP). - Use of quality data for problem identification, strategy definition and measuring results. 7b. Revised Project Development Objectives/Outcomes [if applicable] 4 BARBADOS SECOND HIV/AIDS PREVENTION AND CONTROL PROJECT P106623 LOAN 7585-BB Restructuring Paper 106623 TABLE OF CONTENTS A. SUMMARY ............................................................................................................... 6 B. PROJECT STATUS ................................................................................................. 6 C. PROPOSED CHANGES AND RATIONAL .......................................................... 7 ANNEX 1: GOVERNANCE STRUCTURE FOR THE PROJECT………………..10 ANNEX 2: PROPOSED CHANGES TO THE DISBURSEMENT TABLE ............. 11 ANNEX 3. PROPOSED CHANGES TO THE DISBURSEMENT TABLE……….12 5 RESTRUCTURING PAPER PROPOSAL TO RESTRUCTURE BARBADOS SECOND HIV/AIDS PROJECT Loan No. IBRD 7585-BB Project ID: P106623 A. SUMMARY 1. This Restructuring Paper proposes to introduce changes in the Project Loan Agreement for the Barbados Second HIV/AIDS Project (the Project) (Loan No. IBRD 7585-BB) to: (i) modify Project’s institutional arrangements to strengthen leadership and capacity of the Project by transferring coordination, disbursement and financial management functions to the Ministry of Finance and procurement, monitoring and evaluation and supervision functions to Ministry of Health; (ii) revise the results framework by changing the final target year from 2012 when the surveys were expected to be done, to 2013, the end of the Project for three indicators and the target for one indicator; and (iii) increase the percentage of Bank financing of Eligible Program Expenditures (EPE) under Component 1 from 35 percent to 65 percent to accelerate the disbursement in order to successfully achieve the Project Objectives. B. PROJECT STATUS 2. The US$35 million Loan Agreement for the Barbados Second HIV/AIDS Project was signed on September 25, 2008 and became effective on January 6, 2009. The Project is a follow-on project for the Barbados HIV/AIDS Prevention and Control Project, which was successfully completed on December 31, 2007. The Government sought the Bank’s support to finance the implementation of the National HIV/AIDS Strategic Plan over the period of 2008-2013, and to increase access to prevention, treatment and social care by key populations at higher risk of HIV exposure. The Project is expected to close on November 30, 2013. 3. The Project has two components. Component 1 focuses on Prevention and Care (US$31.4 million of the loan). This component co-finances the implementation of the National Strategic Plan for HIV Prevention and Control 2008-2013 and focuses on three sub-components: National Program Coordination and Monitoring; Scaling up Prevention Efforts; and Improving Diagnosis, Treatment, and Care. Component 2 supports institutional strengthening (US$3.5 million of the loan). This component finances capacity building in disease management and the health information system. 4. With the project support, Barbados has made significant progress in combating HIV/AIDS. Available data indicates that Barbados is on track to achieve MDG 6 (halt or reverse HIV/AIDS) by 2015. The rate of AIDS-related mortality has dramatically decreased, due to the greater availability of antiretroviral therapy (ART). Barbados has eliminated mother to child HIV transmission since 2007 and 100 percent of identified HIV positive pregnant women have received a complete course of ART to reduce mother to child transmission in 2011. The country has expanded access to HIV testing through the provision of provider initiated testing and counseling, introduction of rapid testing 6 and targeted testing services for key populations. Coverage of those eligible for ART services has been reported to be above 80 percent since 2010, which well exceeds the project target of 60 percent coverage. The Grant Scheme to support civil society organizations (CSOs) has commenced strongly. The behavioral sero-status surveys for key populations are underway. The results from these surveys will support the development of more effective prevention activities and better targeting. 5. However, the Project has been facing challenges and therefore it is rated Moderately Satisfactory for PDO and Moderately Unsatisfactory for IP. . The Mid-term review (MTR) identified three major weaknesses: (a) lack of effective leadership and weak capacity of the National HIV/AIDS Commission (NHAC); (b) lack of coordination between the NHAC and Ministry of Health (MOH), the main implementing agency of the Project; and (c) delayed implementation and underutilization of available loan funds. These weaknesses affected the NHAC’s ability to coordinate the national response across agencies and delayed the implementation. As of March 5, 2013, US$14.8 million, 42.25 percent of the Loan has been disbursed and the remaining US$20.2 million need to be fully utilized before the Project closing date on November 30, 2013. 6. The proposed project restructuring follows recommendations made and agreements reached during and after the MTR on December 5-9, 2011, and is in response to a Government letter of November 23, 2012. C. PROPOSED CHANGES AND RATIONAL (a) Institutional Arrangement 7. Amending Section I of Schedule 2, A. Institutional Arrangements to transfer the coordination, disbursement, financial management functions of the project to the Ministry of Finance and under the supervision of the Permanent Secretary of Investment and the procurement, monitoring and evaluation and supervision functions to the Ministry of Health (MOH). The Project Director of the Project Coordinating Unit (PCU), who is responsible for the day-to-day management of the Project, will report to the Permanent Secretary of Investment of Ministry of Finance (MOF) on coordination, disbursement and financial management and to the Permanent Secretary of the MOH on procurement, monitoring and evaluation and other technical issues. The new governance structure for the Project is attached as Annex 1. The Bank has assessed the institutional capacity under the MOF and MOH for managing fiduciary functions such as financial management and procurement and found it satisfactory. Under the new structure, the project financial management officer reports to the Project Director and the MOF oversees the financial management of the project to ensure the preparation of the financial reports, withdrawal applications and audits are carried out according to the Bank requirements in a timely manner. The procurement officer at the MOH, who has trained for Bank procurement requirement, will manage project procurement. The Permanent Secretary of the MOH will provide guidance on the technical issues related to HIV prevention and control and monitor and evaluation. The new management structure will improve the leadership and management capacity for final project implementation. 7 8. The revised project governance structure will strengthen project leadership and improve capacity for better performance. The NHAC will continue to coordinate the multisectoral national response to HIV including the civil society grant scheme and behavior change communication. (b) Results Framework 9. Amending Schedule 2, Section II A. 1. (b) to change performance indicators as follows: (1) The final target dates for the following three indicators would change from 2012 when the surveys were expected to be completed to 2013, at the end of the project. Due to delays in conducting the related surveys, the data for three performance indicators will become available only in 2013.  Indicator ii: Percentage of female sex workers reporting the use of a condom with their most recent client (target: increased from 80 percent in 2006 to 85 percent in 2013);  Indicator iii: Percentage of men reporting the use of a condom the last time they had sex with a male partner (target: increase from 64 percent in 2007 to 70 percent in 2013); and  Indicator v: Percentage of most at risk populations (female sex workers and men who have sex with men) reached with HIV prevention services (target: for men who have sex with men increase to 75 percent by 2013 and for female sex workers increase to 70 percent by 2013). (2) The target value for indicator iv would change from 65 percent to 60 percent:  Indicator iv: Percentage of young men and women aged 15-24 years reporting the use of a condom the last time they had sex with non- marital non cohabitating sexual partner (target: increase from 21 percent in 2005 to 60 percent in 2013). 10. The initial target for Indicator iv was achieved and the target was increased in the first Loan Agreement Amendment from 21 percent to 65 percent in July 2011. The Government is concerned that this target was set too high and requested to change the target to 60 percent, which is still way above the initial target of 21 percent and more realistic. 11. Annex 2 presents the revised performance indicators for the Project. (c) Withdrawal of Loan Proceeds 12. Amending Schedule 2, Section IV. A. General: to increase the percentage of Bank financing under Component 1 from 35 percent to 65 percent. Annex 3 presents the revised withdrawal of loan proceeds. 13. The global economic and financial crisis affected revenue generation in Barbados and the Project has not been able to implement the activities based on the initial design. The Government appreciated the Bank’s financial support to its national response to HIV and would like to fully utilize the loan. Considering the Project is closing on November 8 30, 2013, the Government requested that the Bank increases the financing percentage for Component 1 to increase loan disbursements in order to successfully utilize the funds to achieve the Project Development Objectives. The Government is committed to continue to finance its national response to HIV and maintain the NHAC. During the remaining implementation period of the Project, it will focus on priority programs and target key populations, as well as strengthening the health system. The Project Development Objectives are still attainable. 14. The proposed restructuring will not trigger any new safeguard policies nor affect the environmental safeguard rating of the Project. 9 Annex 1: Governance Structure for the Project 10 Annex 2: Revised Performance Indicators The revised performance indicators are as follows: (i) Percentage of young women and men aged 15-24 indicating sexual relations as a way of transmitting HIV (target: maintain a knowledge rate of at least 90 percent during 2008-2013). (ii) Percentage of female sex workers reporting the use of a condom with their most recent client (target: increase from 80 percent in 2006 to 85 percent in 2013). (iii) Percentage of men reporting the use of a condom the last time they had sex with a male partner (target: increase from 64 percent in 2007 to 70 percent in 2013). (iv) Percentage of young men and women aged 15-24 years reporting the use of a condom the last time they had sex with non-marital non cohabitating sexual partner (target: increase from 21 percent in 2005 to 60 percent in 2013). (v) Percentage of most at-risk populations (female sex workers and men who have sex with men) reached with HIV prevention services (target: for men who have sex with men increase to 75 percent by 2013 and for female sex workers increase to 70 percent by 2013). (vi) Percentage of identified HIV-positive pregnant women who gave birth in the last 12 months receiving a complete course of antiretroviral therapy to reduce the risk of mother to child transmission (target: maintain at a rate above 95 percent during 2008 to 2013). (vii) Percentage of people living with HIV on first line antiretroviral regimen achieving virologic success within the first 6 months of treatment (target: maintain a virologic success rate above 70 percent). (viii) Amount of funds spent by civil society organizations under results-based agreements (target: reach the amount to US$150,000 by 2013). (ix) An evidence-based Strategic Plan for 2014-2018 prepared by June 2013. 11 Annex 3. Withdrawal of Loan Proceeds Category Amount of the Loan Allocated Percentage of (expressed in USD) Expenditures to be financed (exclusive of Taxes) (1) Eligible Program 31,412,500 35% subject to Part B Expenditures (EPE) paragraphs 1 through 4 below until it reaches USD 8,111,541 and 65% thereafter (2) Goods and consultants' 3,500,000 79% of expenditures until services under Part 2 of the it reaches USD 119,373.00 Project and 100% thereafter (3) Front-end Fee 87,500 Amount payable pursuant to Section 2.03 of this Agreement in accordance with Section 2.07 (b) of the General Conditions (4) Premia for Interest Rate 0 Amount payable pursuant Caps and Interest Rate to Section 2.07 (c) of this Collars Agreement TOTAL AMOUNT 35,000,000 12