1
Document of
The World Bank
Report No. 82586-TN
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED GRANT
FROM THE MENA TRANSITION FUND
IN THE AMOUNT OF US$4.70 MILLION
TO THE
REPUBLIC OF TUNISIA
FOR A
SOCIAL PROTECTION REFORMS SUPPORT PROJECT
November 5, 2013
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties. Its contents may not otherwise be disclosed without World
Bank authorization.
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CURRENCY EQUIVALENTS
(Exchange Rate as of October 9, 2013)
TND 1 = US$ 0.61
US$ 1 = 1.65 TND
FISCAL YEAR
January 1 - December 31
ABBREVIATIONS 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
CRES Centre de Recherche et d’Etudes Sociales
CSO Civil Society Organization
DPL Development Policy Lending
FMS Financial Management Specialist
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
IFI International Financial Institution
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 of Finance
MOH Ministry of Health
MOSA Ministry of Social Affairs
3
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
PIM Project Implementation Manual
PNAFN Program National d’Aide aux Familles Nécessiteuses (National Program for Poor
Households)
PROST Pensions Reform Options Simulation Toolkit
SHC Subsidized Health Cards
UCT Unconditional Cash Transfers
TND Tunisian Dinars
Vice President:
Country Director:
Sector Director:
Sector Manager:
Task Team Leader:
Inger Andersen
Simon Gray
Steen Lau Jorgensen
Yasser El-Gammal
Heba Elgazzar
4
REPUBLIC OF TUNISIA
SOCIAL PROTECTION REFORMS SUPPORT PROJECT
TABLE CONTENTS
I. STRATEGIC CONTEXT ................................................................................................. 9
A. Country Context .................................................................................................................. 9
B. Sectoral and Institutional Context ..................................................................................... 10
C. Higher Level Objectives to which the Project Contributes .............................................. 13
II. PROJECT DEVELOPMENT OBJECTIVES .............................................................. 14
A. Proposed Development Objective(s) ................................................................................ 14
B. PDO Level Results Indicators ........................................................................................... 14
III. PROJECT DESCRIPTION ............................................................................................ 15
A. Project Components .......................................................................................................... 15
B. Project Financing .............................................................................................................. 17
Financing Instrument .......................................................................................................................... 17
Project Cost and Financing ................................................................................................................. 18
C. Lessons Learned and Reflected in the Project Design ...................................................... 18
IV. IMPLEMENTATION ..................................................................................................... 20
A. Institutional and Implementation Arrangements .............................................................. 20
B. Results Monitoring and Evaluation .................................................................................. 21
C. Sustainability..................................................................................................................... 21
V. KEY RISKS AND MITIGATION MEASURES .......................................................... 22
A. Risk Rating Summary ....................................................................................................... 22
B. Overall Risk Explanation .................................................................................................. 22
VI. APPRAISAL SUMMARY .............................................................................................. 23
A. Economic and Financial Analyses .................................................................................... 23
B. Technical ........................................................................................................................... 25
C. Financial Management ...................................................................................................... 25
D. Procurement ...................................................................................................................... 26
E. Social (including Safeguards) ........................................................................................... 27
F. Environment (including Safeguards) ................................................................................ 27
ANNEX 1: RESULTS FRAMEWORK .................................................................................... 28
ANNEX 2: DETAILED PROJECT DESCRIPTION .............................................................. 31
ANNEX 3: IMPLEMENTATION ARRANGEMENTS ......................................................... 37
ANNEX 4: OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF) ................... 46
ANNEX 5: IMPLEMENTATION SUPPORT PLAN ............................................................. 49
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6
PAD DATA SHEET
Republic of Tunisia
Social Protection Reforms Support Project (P144674)
PROJECT APPRAISAL DOCUMENT .
Middle East and North Africa Region
Human Development Department
.
Basic Information
Date: October 11, 2013 Sectors: Social Protection (50%); Public Finance (50%)
Country Director:
Simon Gray Themes: Human Development and Social Protection,
Public Sector Governance, Economic Dev
Sector Manager/Director: Yasser El-Gammal / Steen Lau
Jorgensen
EA Category: C
Project ID: P144674
Lending Instrument: IPF Team Leader(s): Heba Elgazzar
Joint IFC: .
Borrower: Republic of Tunisia
Responsible Agency: Ministry of Finance
Contact: Mr. Kais Rzigua Title: Director
Telephone No.: (+216) 71 241 767 Email: [email protected] .
Project Implementation Period: Start Date: November 1, 2013 End Date: December 31, 2016
Expected Effectiveness Date: October 15, 2013
Expected Closing Date: June 30, 2017 .
Project Financing Data(US$M)
[ ] Loan [ X ] Grant [ ] Other
[ ] Credit [ ] Guarantee
For Loans/Credits/Others
Total Project Cost : 5.7 Total Bank Financing : 4.7
Total Co-financing : 1.0 (Government of Tunisia contribution)
Financing Gap :
.
Financing Source Amount(US$M)
RECIPIENT (Government of Tunisia contribution) 1.0
IBRD
IDA:
IDA:
Others (MENA Transition Fund) 4.7
Financing Gap
Total 5.7
7
.
Expected Disbursements (in USD Million) pertaining to Transition Fund financing only
Fiscal Year 2014 2015 2016 2017
Annual 1.2 2.0 1.0 0.5
Cumulative 1.2 3.2 4.2 4.7 .
Project Development Objective(s)
The proposed project development objective (PDO) is to strengthen institutional capacity to design 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? Yes [ ] No [ X ] .
Does the project require any waivers of Bank policies? Yes [ ] No [ X]
Have these been approved by Bank management? Yes [ ] No [ ]
Is approval for any policy waiver sought from the Board? Yes [ ] No [ X]
Does the project meet the Regional criteria for readiness for implementation? Yes [X] No [ ] .
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
8
.
Team Composition
Bank Staff
Name Title Specialization Unit UPI
Heba Elgazzar Senior Economist Human Development MNSHD
Hala Ballout Program Assistant Human Development MNSHD
Christina Wright Operations Officer Human Development MNSHD
Gustavo Demarco Lead Economist Human Development MNSHD
Diego Angel-Urdinola Senior Economist Human Development MNSHD
Fanny Missfield-Ringus Senior Economist Sustainable Development MNSSD
Isabelle Huynh Senior Operations Officer ICT and Development TWICT
Besma Saadi Refai Team Assistant Operations MNCO1
Paolo Verme Senior Poverty Specialist Poverty Reduction MNSED
Antonio Nucifora Lead Country Economist Country Economist MNSED
Jean-Charles de Daruvar Senior Counsel Legal LEGEM
Hassine Hedda Finance Officer Loan Operations CTRLA
Non Bank Staff
Name Title Office Phone City
.
Locations
Country First Administrative
Division
Location Planned Actual Comments
.
9
REPUBLIC OF TUNISIA
SOCIAL PROTECTION REFORMS SUPPORT PROJECT
I. STRATEGIC CONTEXT
A. 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 during 2014.
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 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 4.0 percent for 2013 based on
Government estimates at the time of writing, 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 therefore 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
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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.
B. Sectoral 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 compares to other MENA countries in terms of 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 benefitting 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.
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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
Nécessiteuses” (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 2012.1 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 poor2, using a standard definition of consumption
poverty and analysis of the 20053 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.
1 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. 2 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). 3 The analysis will be updated once the National Institute of Statistics publicly releases the data from the
2010 Household Budget and Consumption Survey.
12
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 MOF 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 negatively affects 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.4
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
4 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.
13
by Union Tunisienne de l'Industrie, du Commerce et de l'Artisanat (UTICA) and other
bodies]. Furthermore, MOSA, specifically the Centre de Recherche et d’Etudes Sociales
(CRES), is leading an assessment of social protection programs, including social
assistance and social security, and preparing an integration strategy for social protection
systems which this project supports.
C. 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 is aligned 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 World Bank’s
2013-2014 Interim Strategy Note (ISN) 5
, discussed 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
5 World Bank (2012). Tunisia Interim Strategy Note. Report No. 67692-TN. Washington DC: World
Bank.
14
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. In addition, the project is also aligned with MNA’s Regional Strategy and
contributes to the pillars of social inclusion, growth and governance.
II. PROJECT DEVELOPMENT OBJECTIVES
A. Proposed Development Objective(s) and Project Beneficiaries
18. The proposed project development objective (PDO) is to strengthen institutional
capacity to design social protection reforms and improve targeting of safety net
programs. The main beneficiaries would include the poor and near-poor households,
including female-headed households who comprise 51 percent of beneficiaries, who are
vulnerable to rising food and fuel prices; in addition, middle-income households who
face similar risks including impinging pensions and health insurance benefits as a result
of growing deficits. It is expected that the project will benefit approximately 7 million
beneficiary households, plus up to 3 million beneficiaries, who would receive a new
identification number in order to improve targeting accuracy and strengthening
governance of safety net and social security programs. In addition, beneficiaries include
governmental representatives whose technical and operational capacity to design reforms
and manage social protection systems will be strengthened.
B. PDO Level Results Indicators
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), of which are vulnerable (percent)
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c. Indicator 3: Number of Safety Net Beneficiaries (Core Sector Indicator),
of which are poor, of which are female.
d. Indicator 4: Subsidy and safety net reform plan prepared and
disseminated
e. Indicator 5: Integrated social security reform plan prepared and
disseminated
III. PROJECT DESCRIPTION
A. Project Components
20. The project has three components: (a) Subsidy and Safety Net Reform Support;
(b) Strengthening Social Security Analysis and Planning; and (c) Project Management
and Monitoring.
Component 1: Subsidy and Safety Net Reform Support (US$3.78 million)
21. This component will finance 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) evaluation of economic and social
impact of potential reforms for energy and food subsidies; (ii) evaluation of reform
options for automatic fuel price adjustment mechanisms; and (iii) development of an
implementation plan and operational manual for a subsidy-compensation program for
households. 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.
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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 by expanding the unique identifier number (UIN) database developed by
MOSA’s Centre de Recherche et d’Etudes Sociales (CRES) for all social transfer
programs, including: (i) development of proxy-means testing formula and questionnaire
for targeting compensation; (ii) assessment of various payment options for delivering
household cash transfers under the subsidy-compensation program; (iii) assessment of
options for implementing a UIN based on an evaluation of identification systems
currently used by other programs; (iv) information technology support for the creation of
a national MIS for the unified database; and (v) enhancement of the MOSA MIS for
managing current social protection programs. The unified database 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
(MOInt), 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 an additional 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, 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)
evaluation of the economic and social implications for different stakeholders; (ii)
improving access to information on subsidy and social protection 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) enhancing
existing grievance redress mechanisms for social protection beneficiaries.
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
17
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) training of Recipient’s staff on policy
analysis of pension and health insurance reform options; (ii) training on economic and
social impact analysis of various scenarios for social contributions and protection for
workers who become unemployed; (iii) training on policy analysis of labor legislation in
relation to social security; and (iv) preparation, coordination and dissemination of
information 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 ensure i) all project activities and tasks are
executed, ii) coordination among all actors involved in project implementation, iii)
fulfilling and monitoring of procurement and fiduciary requirements and audits, and iv)
monitoring and evaluation of project outcomes and intermediary results.
B. Project Financing
Financing Instrument
29. The financing instrument is an investment financing grant in the amount of
US$4.7 million, which will be financed through trust fund financing. The project was
submitted by the Ministry of Development and International Cooperation (MDCI) to the
MENA Transition Fund for financing and approved on May 15, 2013. The project will
be financed through a recipient-executed grant agreement for US$4.7 million.
18
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 will be financed by 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
(USD)
Country Co-
Financing
(USD)
Other Co-
Financing
(USD)
Total
(USD)
Component 1. Subsidy and Safety
Net Reform Support 3.78 1.0 0 4.78
Component 2. Strengthening Social
Security Analysis and Planning 0.4
0 0
0.4
Component 3. Project Management
and Monitoring 0.4 0 0 0.4
Reserve (Miscellaneous
expenditures) 0.12 0 0 0.12
Total 4.7 1.0 0 5.7
C. Lessons Learned and Reflected in the Project Design
31. Since 2011, the Bank has supported Tunisia’s transition period through technical
assistance on social protection reforms led by the Government and supported by the
Governance and Opportunity (GO) DPL (P126094) in 2011and the Governance,
Opportunity and Jobs (GOJ) DPL in 2012 (P128251). The Bank is currently supporting
two safety net workfare pilot projects in Tunisia; (a) the Participatory Service Delivery
Project (P127212), financed through a US$5m State and Peace-Building Fund (SPF)
grant in two southern governorates, and (b) the Community Works Project (P128427),
financed through a US$3m Japan Social Development Fund (JSDF) in a northern
governorate. Through these operations, the Bank has been providing support in
analyzing options for reforms, such as accountability in social services and targeting for
safety net programs to improve coverage for the poor. However, implementation has been
slow due to a lack of technical capacity to assess the impact of different reform scenarios,
assess stakeholder interests and political economy barriers to reforms, involve the public
in decision-making and build consensus, and ensure resources are available to execute
reforms.
32. International experience also demonstrates the importance of managing technical
and political economy considerations in implementing social protection reforms.
Previous Bank-supported lending and technical assistance projects on social protection in
MENA and elsewhere have demonstrated the importance of focusing on both the
technical and political dimension to the design of social protection reforms and their
implementation. Three of the Bank’s recent Independent Evaluation Group (IEG)
19
assessments6
7
8 provide extensive assessments of the performance of previous lending
and technical assistance operations show the importance of key lessons for reforms on
subsidy, safety nets, pensions and health insurance, including social protection responses
during periods of economic crisis similar to that currently witnessed in Tunisia.
33. The proposed project has been designed to incorporate lessons learned from past
projects in the following ways:
a. Strong government capacity is needed to accurately analyze and plan subsidy
and social protection reform options together with civil society partners. The
Bank provided technical assistance to assess targeting of social assistance
programs provided in 2011 through analysis of PNAFN’s targeting efficiency in
comparison to international benchmarks. Given the complex nature of subsidy
reform, the project design focuses on supporting capacity building to conduct
simulations and multi-dimensional analysis of the economic and social impact of
food and fuel subsidy reforms.
b. Broad social dialogue among government and civil society stakeholders is
needed to introduce social protection reforms and ensure implementation.
Reforms implemented successfully on subsidy and safety nets in countries
mentioned above were accompanied by strong communication and grievance
redress mechanisms, which helped to improve confidence and credibility of the
Government’s reform program. The project thus responds to this by dedicating
resources to ensure technical assistance for supporting social dialogue and
communication based on sound evidence.
c. A high degree of transparency is critical to ensuring credibility of social
protection programs and garnering the trust of intended beneficiaries during
reforms. In advance of subsidy and social security reforms, this project was
designed to ensure there are dedicated resources to improving transparency in
targeting through a unified database and in ensuring access to information needed
for the public to be informed and involved in the reform process.
d. Specifically for countries such as Tunisia embarking on social protection
reform amidst economic and political transition, strong monitoring and
evaluation of poverty and economic impacts is critical. The project therefore
includes technical assistance to establish a well-developed monitoring and
evaluation framework for assessing the poverty, social and economic impact of
reforms during the reform process. This framework will help to identify and
6 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. 7 World Bank (2006). Pension Reform and the Development of Pension Systems. An Evaluation of World
Bank Assistance. Washington DC: World Bank. 8 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.
20
mitigate the impact of reforms for vulnerable groups such as the poor, low-
income workers as well as key industries such as agriculture and transport.
IV. IMPLEMENTATION
A. Institutional and Implementation Arrangements
34. The MOF has established a Project Implementation Unit (PIU). The PIU has
been created and includes the Project Director, a technical specialist, a procurement
specialist and a financial management specialist.
35. Implementation and coordination responsibilities: The PIU will implement
project activities with oversight provided by the Technical Steering Committee (TSC).
The TSC will be overseen by the Head of Government and is organized along two
Thematic Groups, including Subsidy Reform (coordinated by MOF) and Social
Assistance and Social Security reform (coordinated by MOSA, notably CRES). The
TSC was formed in 2012 and will provide implementation guidance and monitor progress
through routine meetings and monthly monitoring reports. The TSC includes
representatives from the Head of Government, Ministry of Finance, Ministry of Social
Affairs, Ministry of Development and International Cooperation, Centre of Social
Research and Studies (Ministry of Social Affairs), Ministry of Commerce and Ministry of
Industry. The project will finance consultant services, workshops and goods to provide
technical assistance and capacity-building to the Inter-ministerial Working Group, a
group formed in 2012 whose role is to design subsidy and social security reform plans
through consensus-building among key civil society stakeholders. The Inter-ministerial
Working Group comprises representatives from the Head of Government and the
Ministries of Development and International Cooperation, Social Affairs, Center of
Social Research and Studies (Social Affairs), Finance, Commerce, Industry, Health,
Transportation, Vocational Training and Employment, and Agriculture.
36. Project Stakeholder Assessment: The main government stakeholders are:
MOSA, MOF, Ministry of Commerce (MOC) and the Ministry of Industry (MOI) as well
as the Ministries of Transport, Agriculture, Health and Employment and Vocational
Training. The Inter-ministerial Working Group has been instrumental in the preparation
of the proposed operation through extensive consultations supported by Bank technical
assistance over the course of 2012.
37. Role of civil society and non-governmental stakeholders: The main civil
society stakeholders include the public at large, current beneficiaries of social protection
programs, labor and trade unions and associations involved in supporting economic and
social development. The precise role of these stakeholders will be to: (i) engage in active
consultation with the Government during the analysis and preparation of reform plans
through the Inter-ministerial Working Group meetings, roundtables and fora, and (ii) to
support dissemination and communication of reform options, subsidy-compensation
program implementation, and monitoring and evaluation of the impact of reforms.
21
38. Implementation Support by the World Bank: Implementation Support will be
provided by the Bank, notably by country-based staff, which will allow the Bank to
continue providing policy advice and technical assistance to Government and civil
society during implementation of the project. The Bank will continue to maintain
dialogue with the relevant government counterparts and civil society groups and will
conduct regular reviews of progress to identify in advance potential solutions to technical
or administrative constraints to project implementation.
B. Results Monitoring and Evaluation
39. The monitoring and evaluation of the program and its expected results will be
based on the Government’s regular monitoring and evaluation (M&E) activities and in
consistency with the results framework of this project (Annex 1). The PIU will carry out
the M&E function. The PIU will provide quarterly monitoring tables and progress
reports. All reports will be submitted to the World Bank during regular implementation
support missions. M&E indicators will be closely reviewed by the Technical Steering
Committee and by the World Bank team. The Bank team will closely monitor progress
and identify strategies to advance progress for under-performing components.
40. A mid-term review will be carried out to assess, draw lessons from the project and
provide an opportunity to adopt any corrective action that may be required to ensure that
the project meets its development objectives. An Implementation Completion Report
(ICR) will be prepared at the end of the project.
C. Sustainability
41. The project directly supports the enhancement or reform of existing social
protection programs identified by the Government as key priorities of its interim
economic and social program of reforms and the activities are therefore expected to
continue after the end of the project. The Prime Ministry has already publicly
announced, in advance of the project, its intention to target subsidies. The Government
has recently increased petrol prices (in September 2012) and has announced plans for an
additional increase. MOSA has also adopted a policy Circulaire dated October 2012 to
begin with consolidation of beneficiary identification of social programs administered by
MOSA, and many beneficiaries of the two public pensions funds have already been
enrolled in the new MOSA identification system. Given that the national cash transfer
program for the poor has been running since 1986 irrespective of Bank financing, Tunisia
has an established track record of delivering safety net benefits and will likely continue to
do so, albeit in an improved manner, following the project’s conclusion. Although
political uncertainties may delay the implementation of full fuel and food subsidy
reductions, the investment in technical and communication capacity among government
and civil society envisioned by the project will help sustain the government’s activities
supporting evidence-based and transparent reforms.
22
V. KEY RISKS AND MITIGATION MEASURES
A. Risk Rating Summary
Risk Category Rating
Stakeholder Risk High
Implementing Agency Risk
- Capacity High
- Governance Moderate
Project Risk
- Design Moderate
- Social and Environmental Low
- Program and Donor Low
- Delivery Monitoring and Sustainability Moderate
Overall Implementation Risk High
B. Overall Risk Explanation
42. There are high risks to the successful execution of the overall project,
stemming mostly from the 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.
43. 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.
44. 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 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 down economic recovery 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, to scale up social
23
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 providing greater voice
and accountability to the population.
45. 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.
46. 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 triggered
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.
VI. APPRAISAL SUMMARY
A. Economic and Financial Analyses
47. 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 TND 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.
48. In terms of social impacts of targeting subsidies including gender-related
effects, the subsidy-compensation program for vulnerable households would
24
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 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, (TND 32 per
capita per year, 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 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.
49. 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
for 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, the needed reforms will reduce the social
security deficit and ensure coverage for maintaining welfare in the long-term.
50. 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.
25
B. Technical
51. 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.
C. Financial Management
52. 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 MOF 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.
53. The financial management will be implemented by the PIU within the MOF, who
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 MOF
operating budget.
54. 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 MOF reflected that these arrangements are satisfactory and meet the
Bank’s minimum requirements (see Annex 3).
26
55. 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. The PIU
has adopted a Project Implementation Manual (use the PIM) for guiding administrative
and financial procedures. The PIM highlights 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. The PIM has been adopted to guarantee systematic management of the
project from a financial and procurement perspective.
56. The PIU should mitigate the highlighted risks in order to establish acceptable
financial management arrangements. Key mitigating measures will be to: (i) ensure
implementation according to the PIM, which has been adopted; (ii) ensure at least one
dedicated support to the project’s FMS 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.
D. Procurement
57. An assessment of the capacity of the MOF 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.
58. 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 US$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.
59. A Procurement Plan, dated September 18, 2013 and terms of reference for
consultants for the first 18 months of project implementation was prepared. The
procurement plan will be updated on a quarterly basis or as required to reflect actual
project implementation needs.
27
E. Social (including Safeguards)
60. 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).
F. Environment (including Safeguards)
61. 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 mostly finance
technical assistance, analytical work and institutional capacity building and no direct or
indirect physical investment is envisaged.
28
ANNEX 1: RESULTS FRAMEWORK
TUNISIA: Social Protection Reforms Support Project
Indicators by
Component Unit Baseline
Cumulative Target Values Frequency Data Source/
Methodology
Responsibility
for Data
Collection
Description
(indicator
definition etc.)
2014 2015 2016 2017
PDO LEVEL RESULTS INDICATORS:
The proposed project development objective (PDO) is to strengthen institutional capacity to design social protection reforms and improve targeting of safety net programs.
Indicator 1: Direct project
beneficiaries (Core Sector
Indicator)
Monthly Project M&E
Database
PIU Total number of
beneficiaries
from all
components of
the project
combined (a) Of institutional
capacity
building
Number 0 50 100 300 500
(b) Of registration
in unified
population
database
Number 0 0 7
million
10 million 10 million
(c) Total Number 0 50 0 7.3
million
10.5
million
(d) Of which are
female
Percentage 0 50 50 50 50
Indicator 2:
Citizens registered in new
unified database
Monthly Project M&E
Database
PIU Citizens that
have received a
unique
identification
number (UI)
(a) Total Number 0 0 7
million
10 million 10 million
(b) Of which are
female
Percentage 0 50 50 50 50
(c) Of which are
vulnerable
Percentage 0 50 50 50 50
29
Indicators by
Component Unit Baseline
Cumulative Target Values Frequency Data Source/
Methodology
Responsibility
for Data
Collection
Description
(indicator
definition etc.)
2014 2015 2016 2017
Indicator 3:
Number of Safety Net
Beneficiaries (Core
Sector Indicator)
Yes/No No No Yes Yes Yes Bi-annual Project M&E
Database
PIU Heads of
households
registered in
subsidy
compensation
program, based
on 235,000 poor
and vulnerable
households
currently
registered in
PNAFN and an
increase of at
least 10% as part
of subsidy
compensation.
(a) Total Number 235,000 235,000 235,000 258,500 258,500
(b) Of which are
poor
Percentage 60 60 60 80 80
(c) Of which are
female
Percentage 51 50 50 50 50
Indicator 4:
Subsidy and safety net
reform plan prepared and
disseminated
Yes/No No Yes Yes Yes Yes Once Project
Implementation
Reports
PIU Report
disseminated
Indicator 5:
Integrated social security
reform plan prepared and
disseminated
Yes/No No Yes Yes Yes Yes Once Project
Implementation
Reports
PIU Report
disseminated
INTERMEDIATE RESULTS INDICATORS:
COMPONENT I. SAFETY NET AND SUBSIDY REFORM SUPPORT
Participants involved
consultation activities
during project
implementation
Number
0
200
1000
5000 10000 Quarterly Project
implementation
reports
PIU Citizens having
received
information or
provided
feedback through
various channels
30
Indicators by
Component Unit Baseline
Cumulative Target Values Frequency Data Source/
Methodology
Responsibility
for Data
Collection
Description
(indicator
definition etc.)
2014 2015 2016 2017
Government staff and
civil society
representatives trained to
evaluate subsidy and
social expenditures
Number 0 50 100 300 500 Annual M&E Database PIU Training
delivered
Unified database
Operations Manual
developed
Yes/No No No Yes Yes Yes Once Project
Implementation
Reports
PIU Manual designed
on use and
access of unique
identifier system
Targeting Operational
Manual developed for
subsidy-compensation
program
Yes/No No No Yes Yes Yes Once Project
Implementation
Reports
PIU Manual designed
on targeting
mechanism for
subsidy-
compensation
program
COMPONENT 2. STRENGTHENING SOCIAL SECURITY ANALYSIS AND PLANNING
Joint social security-labor
code assessment
conducted with
stakeholders as part of
social dialogue process
Yes/No No Yes Yes Yes Yes Once Project
Implementation
Reports
PIU Report prepared
on the basis of
social dialogue
with government
and civil society
Poverty and social impact
analysis of social security
reform options completed
and disseminated
Yes/No No Yes Yes Yes Yes Once Project
Implementation
Reports
PIU Reports
published
Feasibility study to
explore options to finance
unemployment insurance
completed and
disseminated
Yes/No No No Yes Yes Yes Once Project
Implementation
Reports
PIU Reports
published
Annual reports on updates
of pensions and health
insurance actuarial
analyses completed and
disseminated
Yes/No No Yes Yes Yes Yes Annual Project
Implementation
Reports and
Documents
PIU Report published
on simulations
and assessment
of policy options
31
ANNEX 2: DETAILED PROJECT DESCRIPTION
TUNISIA: Social Protection Reforms Support Project
Project 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 has greater urgency in the context of the
economic slowdown and increasing budget constraints. The proposed project
development objective (PDO) is to strengthen institutional capacity to design social
protection reforms and improve targeting of safety net program.
Detailed Project Costing
2. The following table outlines key activities, resources and the estimated budget.
To the extent possible, individual consultants and firms will be recruited that can support
more than one task and/or component to improve coordination and reduce fragmentation.
DETAILED PROJECT COSTING BY COMPONENT AND ACTIVITY
COMPONENT UNIT
TRANSITIO
N FUND
(US$)
COUNTRY CO-
FINANCING (US$)
TOTAL
(US$)
COMPONENT 1. SAFETY NET AND SUBSIDY REFORM SUPPORT
(a) Sub-Component 1.1 820,000
Analytic support
2 Experts
(senior and
junior)
250,000 250,000
TA and workshop support to
the dialogue and
coordination within the GOT
and the Steering Committees
for the Reform
Firm 500,000 500,000
TA to Support to the
preparation of new
legislation
1 Consultant 70,000 70,000
(b) Sub-Component 1.2 3,
120,000
Management of information
systems and setting up a new
database
1 IT/ICT Firm 2, 120,000 1, 000,000 3,
120,000
(c) Sub-Component 1.3 840,000
Design and implementation
of an information and
Communicati
on Firm, 400,000 400,000
32
COMPONENT UNIT
TRANSITIO
N FUND
(US$)
COUNTRY CO-
FINANCING (US$)
TOTAL
(US$)
communication strategy Media
Technical support 3 Consultants 150,000 150,000
Workshops 100,000 100,000
Conduct assessments Surveys 80,000 80,000
Training and Capacity
Building 110,000 110,000
Sub-Total Component 1 3, 780,000 4,
780,000
COMPONENT 2. STRENGTHENING SOCIAL SECURITY ANALYSIS AND PLANNING
Analytic support and training
2 Experts
(senior and
junior)
200,000 200,000
Design and implementation of
an information and
communication strategy
Communicati
on/Media
Firm
200,000 200,000
Sub-Total Component 2 400,000 400,000
COMPONENT 3. PROJECT MANAGEMENT AND MONITORING
Support to the economic
reform Unit 4 Consultants 270,000 270,000
Training and Capacity
Building 2 Consultants 100,000 100,000
Financial and procurement
audits 1 Consultant 30,000 30,000
Sub-Total Component 3 400,000 400,000
Sub-Total All Components 4,580,000 5,580,000
Reserve (miscellaneous
expenditures) 120,000 120,000
TOTAL 4,700,000 1,000,000 5,700,000
Component 1: Safety Net and Subsidy Reform Support (US$ 4.78 million)
3. 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):
4. This sub-component would finance consultant services and workshops to provide
technical assistance and capacity-building to the Inter-ministerial Working Group that
33
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) evaluation of economic and social
impact of potential reforms for energy and food subsidies; (ii) evaluation of reform
options for automatic fuel price adjustment mechanisms; and (iii) development of an
implementation plan and operational manual for a subsidy-compensation program for
households. 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)
5. 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 expanding the unique identification number (UIN) database
developed by MOSA’s Centre de Recherche et d’Etudes Sociales (CRES), including: (i)
development of proxy-means testing formula and questionnaire for targeting
compensation; (ii) assessment of various payment options for delivering household cash
transfers under the subsidy-compensation program; (iii) assessment of options for
implementing a UIN based on an evaluation of identification systems currently used by
other programs; (iv) information technology support for the creation of a national MIS
for the unified database; and (v) enhancement of the MOSA MIS for managing current
social protection programs. The unified database will be created through consolidation of
existing databases (including those hosted by MOSA) linked to revenue collection,
national identification numbers used by the MOInt, 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.
6. 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, 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.
7. 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
34
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)9. 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):
8. This sub-component will finance consultant services, workshops and goods to
provide technical assistance for consensus-building and communication, including: (i)
evaluation of economic and social implications for different stakeholders; (ii) improving
access to information on subsidy and social protection expenditure analyses; (iii)
developing a public consultation mechanism on reform options in advance of reforms;
and (iv) enhancing existing grievance redress mechanisms for social protection
beneficiaries.
9. 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.
10. 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 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.
35
11. 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)
12. 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) training of Recipient’s staff on policy
analysis of pension and health insurance reform options; (ii) training on economic and
social impact analysis of various scenarios for social contributions and protection for
workers who become unemployed; (iii) training on policy analysis of labor legislation in
relation to social security; and (iv) preparation, coordination and dissemination of
information policy reform options among social dialogue partners.
13. 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.
14. 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)
15. 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.
16. Key activities supported by this component are shown in the table below.
36
COMPONENT 3: KEY PROJECT MANAGEMENT AND MONITORING ACTIVITIES
Activity Output Frequency
Development of Project Implementation Manual
and Procurement Plan
Project
Implementation
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 management of all goods and
consultants, including preparation of terms of
reference and ensuring completion of all project
deliverables and milestones
Project Work Plan Once; updated montly
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
37
ANNEX 3: IMPLEMENTATION ARRANGEMENTS
TUNISIA: Social Protection Reforms Support Project
Project Institutional and Implementation Arrangements
1. The MOF has established a Project Implementation Unit (PIU). 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 the Technical Steering Committee (TSC).
The TSC will be overseen by the Head of Government and is organized along two
Thematic Groups, including Subsidy Reform (coordinated by MOF) and Social
Assistance and Social Security reform (coordinated by MOSA, notably CRES). The
TSC was formed in 2012 and will provide implementation guidance and monitor progress
through routine meetings and monthly monitoring reports. The TSC includes
representatives from the Head of Government, Ministry of Finance, Ministry of Social
Affairs, Ministry of Development and International Cooperation, Centre of Social
Research and Studies (Ministry of Social Affairs), Ministry of Commerce and Ministry of
Industry. The project will finance consultant services, workshops and goods to provide
technical assistance and capacity-building to the Inter-ministerial Working Group, a
group formed in 2012 whose role is to design subsidy and social security reform plans
through consensus-building among key civil society stakeholders. The Inter-ministerial
Working Group comprises representatives from the Head of Government and the
Ministries of Development and International Cooperation, Social Affairs, Center of
Social Research and Studies (Social Affairs), Finance, Commerce, Industry, Health,
Transportation, Vocational Training and Employment, and Agriculture.
3. The Project Implementation Manual (PIM) describing guidelines for
implementing project components has been adopted by the PIU. The PIM specifies
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 PIM 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 Republic of Tunisia, accompanied by a request for
38
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 PIM.
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 PIM
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 as 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 MOF will oversee implementation of the project
through the establishment of a Project Implementation Unit (PIU) as part of the MOF.
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.
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
39
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 includes a 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 requires a PIM for guiding
administrative and financial procedures. The PIM highlights 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 a PIM and implementation support is 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
implementation according to the PIM, which has been adopted; (ii) ensure
implementation support to the project’s FMS 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 governed by a
comprehensive legal and regulatory
framework with reliability and
transparency safeguards.
The public expenditure management
system presents a low budgetary and
financing risk factor.
Low n/a Low
Project level
40
Risk Risk After Mitigating Measures (MM)
Lack of experience by PIU in
managing projects financed by World
Bank financing.
Substantial
Recruit additional FMS dedicated
to the 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.
Moderate
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 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).
Low
n/a
Low
Accounting
The MOF accounting, based on the
public accounting, is maintained at the
central level based on ADEB.
The public accounting system of the
MOF does not allow for the automatic
generation of the financial reporting
necessary for project management.
Low
Substantial
n/a
Maintain at the PIU a parallel
bookkeeping log system based on
independent accounting software
or Excel sheet to produce IFRs
and PFS, which will be reviewed
and validated by the PIU director.
Low
Moderate
Financial Reporting
41
Risk before MM Risk After MM
The accounting system does not allow
producing IFR and PFS. Substantial
IFR and PFS will be produced on
a separate accounting system and
will be validated by the PIU
director before submission.
Moderate
Flow of funds
Funds will be managed by the Central
Bank of Tunisia (CBT) based on the
foreign finance management system
SIADE.
Low
Funds will be disbursed
according to the World Bank
guidelines
A designed account will be
opened at the CBT in order to
facilitate the management of
funds and disbursement
procedures for eligible expenses.
Low
Internal control
Sufficient seggregation of duties.
Functions of ordering, receiving,
accounting for, and paying for goods
and services appropriately segregated.
Verification of payment procedures is
weak.
Budgetary control is implemented
through ADEB.
Fund management is done through
SIADE.
Financial and administrative
procedures manual of the MOF is still
under preparation.
Moderate
A PIM for the project was
prepared, which clearly describes
TOR of each actor as well as the
flow of information and funds.
Low
Auditing
MOF is subject to the supreme audit
control (Court des Comptes) and to
the control of Contrôle Générale des
Finances (CGF).
Low
External audit will be conducted
in accordance with International
Standards on Auditing by CGF.
External audit TOR should be
acceptable to the Bank ex-ante.
Low
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
42
through an IFMIS system (ADEB).
16. Information system. The information system relies on public accounting and is
based upon retracing the execution of the public expenditures; it does not allow for the
production of the project Unaudited Interim financial reports (IFRs). 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 in 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, a PIM for the Project was prepared. The PIM clearly
defines the role, function and responsibilities of every responsible staff, the flows of fund
and information, the chart of accounts and include the form of the dashboards to be used.
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
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
43
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 PIU at the MOF 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 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 MOF will open, maintain, and operate one designated account (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 below an estimated value
established for goods; (ii) for consulting firms; and (iii) for individual consultants or
44
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 MOF; and in a timely manner so as to ensure appropriate 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
(expressed in US$)
Percentage of Expenditures to be Financed
(inclusive of taxes)
(1) Goods, consultants’
services, Training and
Incremental Operating
Costs
4,700,000 100%
TOTAL AMOUNT 4,700,000
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 PIU at the MOF, 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
45
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”).
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 activities
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
March 4, 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 PIM. 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.
46
ANNEX 4: OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF)
TUNISIA: Social Protection Reforms Support Project
Project Stakeholder Risks Rating High
Description: (i) Political instability : a new government reshuffle could challenge
consensus-building from the main stakeholders (MOF, MOSA, MOI, MOC);
(ii) Unions: there could be tension with the labor and business unions, resulting in
delays in project implementation.
(iii) General Public: The biggest risk is posed regarding public readiness and
perceptions of 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.
Risk Management: The Government will monitor the country environment closely and
engage with stakeholders across the political and civil society spectrum.
The Bank will support the Government through technical assistance and communication
support with a focus on: (i) improving equity in subsidy expenditure, (ii) improving
sustainability of pensions and health insurance.
Resp: Government 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 procedures and standards.
Risk Management: Financial Management: Key mitigating measures will be to: (i) ensure
project is implemented according to PIM; (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 PIM.
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-
47
contract basis.
The PIU should : (i) finalize the project detailed Action Plan (or PIP) with full costing and
(ii) periodically update the procurement plan.
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 committee representative of all key line ministries and unions, but there
remains a lack of access to information and social accountability measures.
Risk Management: The Bank supervision team will continue to provide guidance on
transparency and public participation through improved communication tools during project
implementation, and the PIU will ensure that access to key information on expenditures and
benefits be made available.
Resp: Bank Stage: Prep/Impl. Due Date :
Status: In
progress
Project Risks
Design Rating: Moderate
Description: The implementation of the project components may be difficult due to
delays in procuring required consultants and coordination across the main concerned
ministries (Finance, Cooperation, Social Affairs, Commerce, Industry and Prime
Ministry)
Risk Management: The PIU and the Technical Steering Committee have prepared roles
and responsibilities during project preparation, although some residual risk remains given it
is likely 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
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Description: Project activities will not result in any adverse environmental and
social impacts.
Risk Management: Not applicable; there are no adverse impacts associated with the
project.
Resp: Stage: Due Date : Status:
Program & Donor Rating: Low
Description: Several donors are active in the area of analysis and support to social
protection reform (notably the African Development Bank, the International Labor
Organization, and the European Union), which will require donor coordination and
support.
Risk Management: The Bank and the donor community in Tunis have well-established
donor coordination in place, which will be enhanced as part of regular coordination meetings
during project 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 subsidies and social security will need to be institutionalized to ensure
sustainability.
Risk Management: The project components are well-integrated in the Government’s plans
to reduce 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/Bank Stage: Prep/Impl. Due Date :
Status: In
progress
Overall Implementation Risk Rating High
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ANNEX 5: IMPLEMENTATION SUPPORT PLAN
TUNISIA: Social Protection Reforms Support Project
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.
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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 implementation 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 analyses and policy dialogue and
establish project monitoring database
- TTL
- Economists
- 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 communication, access to information and
grievance redress
- Social Protection Specialist
- 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 report FM and Procurement specialists
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