project appraisal document proposed loan in the...

Document of

The World Bank

Report No.: 17199 DO

PROJECT APPRAISAL DOCUMENT

FOR A

PROPOSED LOAN

IN THE AMOUNT OF US$30 MILLION

TO THE

DOMINICAN REPUBLIC

FORA

PROVINCIAL HEALTH

SERVICES PROJECT

December 15, 1997

Caribbean Country DepartmentHuman Development DepartmentLatin America and the Caribbean Region

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CURRENCY EQUIVALENTS(Exchange Rate Effective July 1997)

Currency Unit = Dominican PesoUS$1.00 = RD$ 14 Dominican Pesos

FISCAL YEARJanuary 1 to December 31

ABBREVIATIONS AND ACRONYMS

CAS Country Assistance StrategyCMIJ Country Management UnitDALY Disability Adjusted Life YearsECHSR Executive Commission for Health Sector ReformENDESA Demographic and Health SurveyGDP Gross Domestic ProductGNP Gross National ProductHINP Health, Nutrition and PopulationIBRD International Bank for Reconstruction and DevelopmentICB International Competitive Bidding1DB Inter-American Development BankIDSS Dominican Social Security InstituteIMCI Integrated Management of Childhood IllnessNCB National Competitive Bidding (Licitaci6n Publica Nacional)NGO Non-Governmental OrganizationNBF Not Bank FinancedOECD Organization for Economic Cooperation and DevelopmentPAHO Pan American Health OrganizationPCU Project Coordination UnitPEU Provincial Implementation UnitPNMRE State Modernization and Reforrn ProgramSESPAS State Health SecretariatSTP Technical Secretariat of the PresidencyUNDP United Nations Development ProgramUNICEF United Nations Children's FundWHO World Health Organization

Vice President Shahid Javed BurkiCountry Unit Director Orsalia KalantzopoulosCountry Sector Leader Jamil SalmiTask Manager Patricio Marquez

Dominican RepublicProvincial Health Services Project

Table of Contents

Project Financing Data ........................................................................ 1Block 1: Project Description ........................................................................ 2

1. Project Development Objectives ........................................................................ 22. Project Components ........................................................................ 33. Benefits and Target Population ........................................................................ 34. Institutional and Implementation Arrangements .................................. , .3

Block 2: Project Rationale ........................................................................ 65. CAS Objectives Supported by the Project ......................................................................... 66. Main Sector Issues and Government Strategy ........................................................................ 67. Sector Issues to be Addressed by the Project and Strategic Choices .......................................... 88. Project Alternatives Considered and Reasons for Rejection ...................................................... 89. Major Related Projects Financed by the Bank and/or Other Development Agencies ................. 910. Lessons Learned and Reflected in the Project Design ............................................................ 911. Indications of Borrower Commitment and Ownership ........................................................... 1012. Value Added of Bank Support ....................................................................... 10

Block 3: Summary Project Assessments ....................................................................... 1113. Economic Assessment ........................................................................ 1114. Financial Assessment ........................................................................ 1115. Technical Assessment ....................................................................... 1116. Institutional Assessment ....................................................................... 1217. Social Assessment ....................................................................... 1218. Environmental Assessment ........................................................................ 1219. Participatory Approach ....................................................................... 1320. Sustainabity ....................................................................... 1321. Critical Risks ....................................................................... 1322. Possible Controversial Aspects ....................................................................... 13

Block 4: Main Loan Conditions ....................................................................... 1423. Effectiveness Conditions ....................................................................... 1424. Other ....................................................................... 14

Block 5: Compliance wh Bank Policies ........................................................................ 14

List of AnnexesAnnex 1: Project Design Summary ........................................................................ 15Annex 2a: Detailed Project Description ....................................................................... 18Annex 2b: Subproject Cycle and Eligibility Criteria ....................................................................... 25Annex 3: Estimated Project Costs ....................................................................... 29Annex 4: Summary of Cost Benefit and Cost Effectiveness Analyses .................................................... 30Annex 5: Procurement and Disbursement Arrangements (Tables A through D) ...................................... 37Annex 7: Project Processing Budget and Schedule ....................................................................... 44Annex 8: Documents in the Project File ....................................................................... 45Annex 9: Dominican Republic: Status of Bank Lending Operations in Dominican Republic 47Annex 10: Dominican Republic: Country at a Glance .................................................................. 49

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

INTERNATIONAL DEVELOPMENT ASSOCIATION

Latin America and the Caribbean Regional OfficeCaribbean Country Department (LCC3C)

Human Development Department (LCSHD)

Project Appraisal Document

Dominican RepublicProvincial Health Services Project

Date: 12/15/97 [] Draft [x] FinalTask Manager Patricio Marquez Country Manager: Orsalia KalantzopoulosProject ID: DO-PE-7015 Sector: Health POC: PA

Lending Instrument: Investment Loan PTI: [x] Yes [ ] No

Project Financing Data [x I Loan [ Credit [ Guarantee [] Other [Specify]

For Loans/CreditstOther:

Amount: US$30 million dollarsProposed Terms: [] To be defined [] Multicurrency [x] Single currency

Grace period (years): 4 [xl Standard Variable [] Fixed [x] LIBOR-basedYears to maturity: 17Commitment fee: 0.75%

Service charge:Financing plan (US$m): [] To be defined

Source Local Foreign Total

Government 12.0 12.0IBRD 9.7 20.3 30.0

Other (specify)Other (specify)Other(specify)

Total 21.7 20.3 42.0Borrower: Dominican RepublicGuarantor: N/A

Responsible agency(ies): Technical Secretariat of the Presidency (STP)/State Secretariat of Health (SESPAS)IExecutive Commission for HealthSector Reform (CERSS)

Estimated Bank disbursements (World Bank FY/US$m): 1998 1999 2000 2001 2002 2003 2004Annual: .77 .77 3.0 5.3 8.4 8.5 3.2Cumulative: .77 1.54 4.5 9.8 18.2 26.7 30.0

Note: Figures may not add to totals because of rounding.

Expected Effectiveness Date: November 30, 1998 Closing Date: June 30, 2004

Project Appraisal Document Page 2Country: Dominican Republic Provincial Health Services Project

Block 1: Project Description

1. Project development objectives (see Annex I for key performance indicators):The proposed project, in parallel with a IDB-supported project, would help operationalize the Government's medium-and long term Health Sector Reform Program. The overall objective of the proposed Provincial Health ServicesProject is to improve the health status of the population, particularly among poor pregnant and lactating women andchildren under 5 years of age, in selected peri-urban and rural areas. To this end, the project would: (i) assist in theexpansion of health care coverage to reach the poorest population groups, focusing on mother and child health care,by developing new health care organization, financial, and managerial models at the provincial level; (ii) assist inimproving the quality of health care services already provided to the poor; (iii) assist in strengthening policy-makingand management capacity of provincial health units under SESPAS, that would work in coordination with ProvincialDevelopment Councils, as well as of participating health facilities; and (iv) assist in fostering communityparticipation in the health system. The project represents the first stage in the World Bank's planned assistance to thehealth sector in the Dominican Republic. Policy and institutional reforms to improve health status of the populationat the provincial level are the centerpiece of the proposed project. It would also facilitate the actual decentralizationof decisions and management of resources by delegating to the provincial units and staff in the participating facilitiesin the project area the analysis of needs, as well as the programming and utilization of financing for improving healthcare organization and delivery.

2. Project components:Component Category Indicative Costs % of Total

__ USm _

Provincial Subprojects: Would improve the quality and coverage Physical, 33.5 80of health care services in project areas, with special emphasis on Policy,targeting low-income and underserved population groups in Institutionalprovinces located initially in Regions 0, 3, 4 and 7, by - Buildingtransforming current health care delivery systems from isolatedproviders into provincial integrated delivery systems (i.e., closely-related public/private individual and institutional providers that canprovide a full range of health care services to a defined population).The subprojects would be sponsored by Provincial DevelopmentCouncils. Subprojects would include: (i) essential health careinterventions, centered around maternal and child care activities, toreinforce the capacity of health programs at the provincial level toprovide appropriate and timely care, particularly for low-incomemothers and children, on an ambulatory and in-patient basis (e.g.,maternity wards and neonatal units of local hospitals); (ii) developnew health care organization, financing and managerial models tocreate provincial integrative delivery systems; (iii) institutionalstrengthening to reorganize and enhance the capacity of provincialhealth offices of SESPAS, as well as health facilities, to plan,program, implement and monitor health programs, including thedesign and implantation of information systems that link providersin order to facilitate continuous improvement in service deliveryand health outcomes of the population; (iv) training and continuingeducation of health personnel to raise clinical and managerialcapacity at provincial level, so as to assist in the improvement ofquality of health care and the decentralization of health careorganization and financing; and (vi) monitoring, impact evaluationand dissemination of local level experiences. Subprojects wouldfinance rehabilitation of infrastructure, equipment, training,technical assistance, and incremental recurrent costs.


Policy Development and Studies: Related to and complementing Policy, 2.7 6.4the above component, and in coordination with the IDB-financed Institutional-project, support would be provided for undertaking additional Buildingpolicy/institutional reform studies, including diagnostic andimplementation design stages, to further decentralize health caremanagement and delivery. Approximately eight studies would befinanced by the project. Specific research topics would beestablished by mutual agreement between the PCU and the WorldBank. Additionally, technical assistance would be provided tointegrate the Plaza de la Salud into the provincial networks as areferral center and to set a precedent for an autonomous andfinancial independent medical complex.

Project Administration: Management of overall project Project 2.2 5.2implementation by national, provincial, and area units. Management

Physical Contingencies 1.2 2.8Price Contingencies 2.4 5.7

(Figures may not add upto totals because of rounding) Total 42.0 1003. Benefits and target population:. The project would help alleviate poverty in the medium term and increase human capital among the poor (particularly

women and children), thus improving the country's human capital stock and strengthening the bases for economic andsocial development. These benefits would result from improved health status of the population in the participatingprovinces through the reduction of the disease burden, particularly among low income peri-urban and rural familiesthat currently lack or have limited access to health services. It is expected that project interventions would improveinfant and child survival and maternal health, and reduce the prevalence and severity of the most common diseases. Itwould contribute to improved income distribution by targeting basic health services to the poor. Specifically, at thepolicy and service delivery levels, the project would support the design, pilot testing and adoption of new health careorganization, financing and service delivery arrangements and instruments, for providing a package of integrativehealth services and for decentralizing health care administration. In addition, the project would improve efficiencyand effectiveness of public resource use by strengthening the capacity and improve the quality of decision-making,resource allocation, management and evaluation within SESPAS' provincial and area levels, and foster public andprivate, as well as community participation, in the organization, financing and delivery of health services.

. The potential total beneficiary population in areas covered initially by the project is estimated at about 3.8 million orabout 48% of the total population in the country. The initial project areas are: Regions 0 (Health Areas in the SantoDomingo National District), 3 (Duarte, Maria Trinidad Sanchez, Salcedo, Samana and Sanchez Ramirez Provinces), 4(Barahona, Independencia, Bahoruco and Pedemales Provinces) and 7 (Valverde Mao, Monte Cristi, SantiagoRodriguez and Dajabon Provinces). The project would be implemented in provinces and areas with the highestconcentration of poor with eligible subprojects (about 30% of the total beneficiary population in the four regions ofthe project are below the poverty line). In order to introduce flexibility in implementation, the PCU in agreement withthe World Bank would contemplate the option of including other eligible provinces located in regions not coveredinitially by the project.

4. Institutional and implementation arrangements:Implementation period: S yearsExecuting agenciesThe project will be executed by the Technical Secretariat of the Presidency and SESPAS through the ExecutiveCommission for Health Sector Reform's Project Coordinating Unit (Unidad Coordinadora de Proyectos-PCU). The


Executive Commission for Health Sector Reforrn was established by Presidential Decree No. 308-97 of July 10, 1997as a body responsible for integrating government policy-making efforts within a state modernization and reformframework, providing political support for undertaking substantive change within the health sector, leading the reformeffort, coordinating external assistance, and orienting executing units. The members of the Commission are theleading sectoral institutions as well as the Technical Secretariat of the Presidency. The PCU would be assisted byProvincialImplementation Units (Unidad de Ejecuci6n Provincial-PEU), to be located within the Provincial Health Offices ofSESPAS. The UCP would be headed by the Executive Coordinator of the Executive Commission for Health SectorReform. The UCP's main functions are: (i) lead, coordinate and monitor project implementation; (ii) coordinatetechnical assistance for designing organizational, financing and service delivery arrangements and instruments to beutilized in the networks; and (iii) coordinate technical assistance for the development of sectoral policies to beimplemented at the provincial level as part of the project. The Commission's PCU would also be organized tomanage the parallel implementation of the IDB-supported project. Technical teams, headed by TechnicalCoordinators, would be responsible for coordinating and supervising specific technical activities of the project as setforth in the Operations Manual for the project. The PCU would also include a Financial Administrative Unit, headedby a Financial and Administrative Director and staffed with professional and support personnel as needed, responsiblefor providing administrative and financial support for all project activities, including the maintenance of accountingrecords, processing disbursements, maintaining administrative records, contracts, and the carrying out of relatedactivities. The Unit would review all contracts, make payments for activities related to the project. The PCU wouldcontract a procurement agent for goods and services, and coordinate and monitor project implementation inconsultation with SESPAS. During project preparation, PCU staff developed expertise in technical andadministrative and financial aspects of investment projects supported by the World Bank and IDB. Also, UNDPserved as the procurement agent for the PCU.Qperations Manual

. It will be a condition of effectiveness of the project that the PCU shall have drawn up an Operations Manualsatisfactory to the World Bank, and be adopted by the Government. It would include the conditions for projectimplementation, including guidelines for preparing and implementing provincial subprojects, as well as technicalnorms and administrative, budgetary, disbursements and procurement procedures to be followed during projectimplementation, which would be reviewed and found satisfactory by the World Bank.Project Implementation Aegremnts

. For the preparation and implementation of provincial subprojects, Participatory Agreements between theCommission's PCU and Provincial Governors, representing Provincial Development Councils, and ExecutingAgreements between the PCU's Provincial Implementation Units, to be located at, and working in coordination with,the Provincial Health Offices of SESPAS, and Health Providers (e.g., hospitals, ambulatory facilities), would signed.Such agreements reflect the institutional structure of the Government's reform program for the health sector and aimat fostering the decentralization process at the provincial level and the participation of major stakeholders in thesector, reserving to the Commission's PCU the tasks of supervision and assistance to the provincial authorities.Agreements between the Executive Commission for Health Reform's PCU and participating Provinces and Areas.The formulation and implementation of provincial subprojects would require a great deal of autonomy from thecentral policies of SESPAS. Increased autonomy would be linked with greater financial and managerial flexibility atthe provincial level and accountability to clearly-defined milestones of quality, user satisfaction and cost-effectiveness. To these ends, the drafting by the PCU and the adoption by Government of a model umbrellaparticipation agreement between the Commission's PCU and the Provincial Governors in representation of theProvincial Development Councils in each participating province with terms and conditions satisfactory to the WorldBank would be a condition of effectiveness. Said participation agreement would establish the overall framework forthe activities to be carried out in each province under the provincial subprojects; such subprojects would be prepared,evaluated and executed in accordance with the Operations Manual for the project. The Commission's PCU would actas a liaison agency with the World Bank and, with the support of a procurement agent, would be responsible for theprocurement and disbursement process pursuant to the World Bank's applicable rules; in case of non-compliance byany province of any of its obligations the Commission's PCU may suspend or cancel the financing of any of theactivities originally assigned to such province, and reallocate the respective resources to other provinces. The firstdisbursement for each provincial subproject in participating provinces located in project regions would be subject to


the signing of a specific subproject agreement between the Commission's PCU and the Provincial Governor inrepresentation of the Provincial Development Councils.Executing Agreements between Provincial Implementation Units and Health Care Providers. The ExecutingAgreement would allow the involvement of hospitals and ambulatory facilities in the decentralization process and inthe establishment of the provincial integrated health care networks. Such hospitals or ambulatory facilities wouldbenefit from the activities financed under the provincial subprojects in areas like infrastructure, equipment, andtechnical assistance, provided that they undertake to achieve specific performance indicators in matters of coverageand quality of services.Decentralization FramworkIn addition to the above agreements, during negotiations the Government committed to take all actions necessary oradvisable to establish the framework for a decentralization process at the level of the integrated health servicesnetwork in the participating provinces. Such framework would be furnished to the World Bank not later thanFebruary 15, 1998, and would include an exceptional regime for hospital and health centers to participate in thenetworks, receive financing under the proposed loan and undertake commitments on improvement of quality andcovesrage of services.Accounting. financial reporting, and auditing arrangementsThe financial administration of the project (including contracting and disbursement) would be coordinated by thePCU, with the support from UNDP. To facilitate disbursements, a Special Account with a 90-day advance would beestablished. The project will be audited annually by an independent auditor acceptable to the World Bank.Monitoring and evaluationThe PCU would be responsible for project monitoring and analysis. The supervision of the provincial subprojectswould be carried out by provinces or areas supported by PCU staff and consultants. Progress reports regardingproject implementation results and expenditure for the preceding six months and a related review of achievements andshortfalls based on established plans and objectives, would be sent by the PCU to the World Bank every six months.The two reports covering the immediate prior calendar year shall be consolidated into an annual review held by theWorld Bank and the PCU in the third quarter of each calendar year during project implementation. Each such reviewshall conclude with the preparation of an annual plan of action to be carried out by the PCU during the year followingthe review. A mid-term review would be carried out at the beginning of the third year of project implementation toconduct a comprehensive review of the project components. It would include, in addition, an evaluation of theeffectiveness of provision of project inputs in achieving key targets for improving sector performance.The project is anticipated to require intensive supervision especially in the initial implementation phase because of itsdecentralized nature and the fact that this would be the World Bank's first operation in the health sector of theDominican Republic.


Block 2: Project Rationale

5. CAS objective(s) supported by the project: CAS last discussed on April 4, 1995.Report No. 14260-DO

.The proposed project would directly support the CAS's objectives of reducing poverty and improving the country'shuman capital base. As envisaged in the CAS, the project in conjunction with an IDB-supported project, would helpto reconfigure the health system, promote integration of public and private services within a decentralized context,and reallocate health expenditures to basic health care for the poor. In addition to the IDB, as contemplated in theCAS, the World Bank is working with other donors to support reforms and ensure complementarity in lending andtechnical assistance (e.g., USAID, UNDP, PAHO/WHO, European Union).

. The proposed project is also fully consistent with the World Bank's Strategy in the HNP Sector as stated in the SectorStrategy Paper: Health, Nutrition and Population Sector (HNP SAS) of September, 1997. More specifically, thepolicy advice and financial support to be provided under the proposed project would help operationalize in theDominican Republic approaches to the three major HNP development priorities described in the SAS: (i) improve thehealth, nutrition and reproductive outcomes of the Dominican poor, and protect other segments of the population fromthe impoverishing effects of illness, malnutrition, and high fertility; (ii) enhance the performance of health caresystems by promoting equitable access to preventive and curative care, particularly maternal and child health care,that are affordable, effective, efficient, of good quality, and responsive to clients; and (iii) secure sustainable healthcare financing by mobilizing adequate levels of financial resources and by improving resource allocation andutilization.

6. Main sector issues and Government strategy:Main sector issues:

Widespread Poverty and Low Health Status.. The Dominican Republic, with 7.8 million people, is one of the more densely populated countries in the Americas.

Although about 45% of the population still resides in the countryside, rural to urban migration is very rapid. Thecountry suffers from widespread poverty and a highly unequal distribution of wealth. More than one in fourDominicans live in poverty, and almost in ten, in extreme poverty. Poverty grips rural Dominicans the tightest,especially children. Health indicators in the Dominican Republic are among the worst in the LAC Region, comparingunfavorably with countries of similar per capita income (US$1,460 in 1995). About 48 of every thousand infants diebefore the age of one (a rate four times higher than in Costa Rica and Chile), and it varies from 39 per 1,000 in urbanareas to over 65 per 1,000 in rural communities reflecting regional disparities and income levels. Mortality forchildren under 5 years of age, an indicator that measures the combined effect of nutrition, access to immunization andcurative health services, and local conditions, is over 44 per 1,000 live births (more than three times higher than inChile or Costa Rica). Communicable diseases (infectious and parasitic diseases) and conditions originating in theperi-natal period (diseases of the mother and obstetrical complications that affect the fetus, respiratory problems ofthe fetus, and infections specific to the neonate period) continue to be the chief causes of infant mortality;communicable diseases and external causes such as injuries due to accidents are the main causes of mortality amongclhildren under 5 years of age. For every 100,000 children born, 180 women die in childbirth (about three times therate of Chile). Since toxemia and hemorrhages account for more than 50 percent of maternal deaths in the DominicanRepublic, this situation reflects deficiencies in coverage and quality of both prenatal care and care provided duringchildbirth and in the immediate postpartum.Intrasectoral Fragmentation, Inequitable Access and Coverage, and Institutional Weakness.

. The heath sector is not poised to respond effectively to the above challenges. Equity is a serious concern; about 20percent of Dominicans and 33 percent of the poor lack or have limited access to health care, particularly in rural andperi-urban areas. Although total health care spending represents a modest 5% of GDP per year ( below the average inthe LAC Region of 7.2%), in comparison with other Latin American countries public spending on health as aproportion of GDP is among the lowest (about 1.2%). It is also inequitable and inefficient The Secretariat of PublicHealth and Social Assistance (SESPAS) and the Dominican Social Security Institute (IDSS) account for 0.8% and0.4% of GDP, respectively, or 13% and 10% of total health care spending, allowing average per capita spending inthe public sector of only US$27, well below the average in the LAC Region of US$97. Direct householdexpenditures amount to about 2.8% of GDP or 49% of overall health spending; this situation implies that the poorest


40 % of the population in addition to suffering a disproportional high burden of disease spend a significant portion oftheir income on health care, which averages about 9%, as opposed to less than 3% for the non-poor. Expenditures onprivate health care insurance account for 1% of GDP or 18% of total health spending. Other public and privatearrangements, including NGOs, account for the remaining 10% of total health spending.The current health and social security legislation is archaic. While the Health Code, dating from the 1940s, isstrongly centralist, the social security law excludes public and private workers earning over a relatively low incomelevel from health insurance protection, does not mandate coverage extension or family health coverage, and melds thefinancing and administration of pension, health and work injuries programs into a single fund. Institutionalarrangements for policy, financing and service delivery are weak and disorganized (i.e., they reflect a mix of poorlycoordinated public and private institutions). This intrasectoral fragmnentation implies that different institutions makepolicies, set plans, and implement programs more or less independently, resulting in duplication of investments andactivities. In principle, SESPAS is responsible for providing health care to 70 percent of the population. Yet with the47 percent of public health spending it controls, SESPAS provides services to only about 45 percent of the population.IDSS controls 29 percent of public health spending and serves about 6 percent of the population. The private sectorserves about 20 percent of the population. Although SESPAS is the major provider of care for the poor, the poor arealso major users of private outpatient and hospital facilities.Important services are neglected, resources are allocated inappropriately, and efficiency is low in the public sector.Public services are mainly curative and located in urban hospitals, depleting resources from primary and preventativeservices for patients in rural and peri-urban areas. The pyramidal referral flow between levels of care does not workefficiently. Poor coordination and complementarity between primary care facilities and hospital services are majorfunctional defects of the SESPAS network. As a result coverage of basic health services such as prenatal care isinadequate and the quality of care is poor (e.g., unfamiliarity with basic treatment protocols, erroneous diagnoses andtreatment patterns). About 600 health centers and clinics are underused because of physical deterioration, supplyshortages, staffing deficiency, and poor quality of care. Additionally, management and technical weaknesses at thedifferent levels of the system constrain the implementation of programs and activities. The incentive structure isperverse, as financial resources are allocated to personnel and facilities regardless of their performance or the qualityof services delivered using annual budgets determined centrally on a historical basis. Public resources are alsoinequitable distributed. For example, nearly two-thirds of SESPAS non-administrative spending is concentrated intwo regions containing large metropolitan areas (Santo Domingo and Santiago), where about 50% of the populationresides. All of the above translates into a high consumer dissatisfaction with Government health services. Poorquality medical care is also provided in private settings due to the lack of accreditation standards and monitoringpractices to ensure that minimum quality standards are met by health providers. Risk selection and exclusion ofcostly treatments and chronic diseases are common among private health insurers, as commercial insurers, pre-paidgroup practices, and self-insurance plans operate within a regulatory void.Governiment Development Strategy:The new Administration has formulated a pro-active agenda of poverty reduction, particularly for woman andchildren, wide-scale privatization, social security and pension reform, judicial reform, health sector reform, civilservice reform, and anti-corruption. The new Administration has set a top priority of reforming the role of the state,by reducing its total presence in the economy, while increasing transparency, combating corruption, and directingexpenditures to social sectors.Goverment State Modernizarategy:Soon after taking office in August 16, 1996 the present Government launched the National State Modernization andReform Program (PNMRE). It seeks to transform the role of Government and its relation with civil society throughthe redefinition and transformation of public institutions. Presidential Decree No. 484 (1996) created theCommission for the Reform and Modernization of the State. The Commission is responsible for developing a globalframework and action plan to guide, oversee and coordinate the modernization efforts in public institutions. Fullyconsistent with PNMRE, Presidential Decrees No. 613-96 and No. 312-97, established Provincial DevelopmentCouncils and regulated their organization and operation, respectively. Said Councils, comprised of provincial andmunicipal authorities as well as community representatives, are responsible for promoting social participation inplaming, administering and implementing development programs at the provincial and municipal levels, as well asfor strengthening public and private collaboration. Presidential Decree 313-97 established a Presidential Commission

Project Apprisal Document Page SCountry: Dominican Republic Provindal Health Services Project

for supporting provincial development, including the promotion of rapid social assessments for subprojectformulation and the systematization and dissemination of experiences.Health Sector Strategy:As described in its Policy Letter of August 12, 1997, addressed to both the World Bank and the IDB, theGovernment's Health Sector Reform and Modernization Program, that serves as a framework for the implementationof the World Bank-and the IDB-supported parallel projects, aims to improve health and nutrition status of thepopulation, particularly the poor, by facilitating access to quality health services in an efficient and sustainable way.To this end, the following sector strategies are contemplated: (i) development and strengthening of national healthpolicies, including those geared to the redefinition of institutional roles, decentralization, inter-institutionalcoordination, public-private linkages, human resources development, financing and resource allocation, andmonitoring and impact evaluation; (ii) restructuring of SESPAS, focusing on human resources management,decentralization of service provision, reorganization of budgetary and fnancial management, development of newresource allocation mechanisms and development and implantation of management information systems; (iii)reorganization of the national medical supply system; (iv) expansion of health care coverage following new financingand service provision arrangements; (v) hospital reform and modernization; and (vi) reform of the medical programunder IDSS.The project, in conjunction with the IDB-supported parallel project, is consistent with Government strategies,including: (i) reorientation of government social spending to target resources to special population groups with afocus on poverty reduction; (ii) reorganization of public agencies as a means to improve their efficiency, quality andcoverage; (iii) revamping of legal and regulatory sectoral frameworks; (iv) establishment of linkages betweengovernment and the private sector; (v) decentralization of decision making on social service delivery and resourceallocation; and (vi) community involvement and participation. If implemented successfully, the proposed projectswould in effect represent the vehicles for achieving Government goals in the health sector.

7. Sector issues to be addressed by the project and strategic choices:Overall, the project would help improve the quality and efficiency of basic health care, particularly maternal and childhealth care, by supporting the reform and strengthening of health care organization, financing and delivery at theprovincial and area levels. The project would help expand the coverage of basic health services by targeting vulnerablegroups (i.e. pregnant and lactating women and children under 5 years of age) in provinces in which the greaterconcentration of poor. exists. The project would build upon the Government's public policy ad institutional reforms inaccordance with local needs and conditions, while putting in place the necessary safeguards for ensuring efficient use ofresources. To help create a system that is more equitable, efficient, and integrated, that provides high quality of care, andin which the distinct character and autonomy of the various institutional providers are preserved, integratedpublic/private delivery systems would be designed and pilot-tested in project areas. In addition, the project wouldsupport Government's decentralization efforts through the direct involvement of provincial and area teams in thepreparation and implementation of provincial subprojects.8. Project alternatives considered and reasons for rejection:. op:-Down Approach. One alternative design would have been a top-down, fully-detailed blueprint design. However,

in the context of this project, a blueprint project for each province located in the project's regions would have beentoo rigid. It could have resulted in non-performance by some provinces on account of changes in the fiscal andpolitical situation, causing changes in priorities and rotation of key personnel. Instead, the project is designed as abroad common fund to finance in a gradual and incremental manner a essential program of services and policy andinstitutional reforms at the provincial and area levels according to an agreed set of criteria and procedures. Thisallows for participatory approaches to engage different stakeholders, including potential beneficiaries at the locallevel, test out a wider range of policy and institutional reform instruments on a small scale to learn and incorporatelessons of experience, and build implementation capacity through human resources development.

. Larger Project. The second alternative would have been a larger project. Given the IDB-supported parallel project, aswell as support provided by other international agencies, this may have put excessive pressure on the institutionalcapacity and human resource base in the Dominican Republic's health sector, and would have increased project risk.As currently designed, it responds directly to the request of the Government, is highly decentralized, and would beimplemented directly by the participating provinces and areas. As some provinces will be weaker and will need more

Project Appral Document Page 9Country: Dominican Republic Provincal Health Services Project

assistance, entrance of new provinces would be phased under the project. In addition, the project would benefit froma strong element of social participation at the provincial and area levels. In all subprojects, major stakeholders (e.g.,health workers, beneficiaries, NGOs, government institutions, and other actors) would be closely involved in theirdesign and implementation. This approach would ensure project sustainability.

9. Major related projects financed by the Bank and/or other development agencies (completed, ongoing andplanned).

. Dominican Republic-Health Sector IDF Grant (28730-DR): In 1993, the Government of the Dominican Republicreceived an institutional development grant from the World Bank (US$248,000) to assist in the strengthening ofSESPAS. Two main sets of items were actually financed by the grant: (i) the elaboration of studies and proposals;and (ii) the acquisition of computer and office equipment. The studies looked at the following themes: administrativereforms of SESPAS; implantation of the civil service law and administrative career at SESPAS; and decentralizationof health care management and delivery. The studies and proposals were completed during 1994-96, but no follow upactivity was undertaken due to a series of ministerial and senior staff changes and lack of consensus on a concreteaction plan (a completion report prepared by PAHO/WHO Country Representation in March 1997 is in the projectfiles).

* IDB-supported Projects: The IDB has implemented one health project in the Dominican Republic (Ln. 680/SF andATN/SF-2057), disbursing approximately US$20 million between 1983 and 1987. This project supported theconstruction and equipping of small hospitals and rural clinics. The Technical Cooperation aimed to strengtheninstitutional capacity to operate and maintain the facilities constructed under the loan. An auditing report highlightedthe low technical and managerial capacity of SESPAS to implement program activities. This was particularly thecase for items such as consultancies and training. Delays of government contributions of matching funds stalledimplementation considerably. Similarly, in Ln. 930/SF-DR and 825/OC-DR for the Social Investmnent Fund(Procomunidad) small medical centers were constructed, yet in some cases the absence of personnel and recurrentcost financing by SESPAS jeopardized this part of the program. An important lesson learned relates to the need tolink infrastructure and equipment investments to changes in how delivery systems are organized, managed, paid andsupervised. An important corollary is that the most effective way to assure high benefits frominfrastructure/equipment investments is to reform the policy and institutional framework and augment institutionalcapacity to respond to health care needs.

. Recent World Bank/IDB support for the preparation of Health Sector Reform Program: Since July 1995, the WorldBank, through a Japanese Grant Agreement (TF No. 029364; effective in September 1995) and Advances from theProject Preparation Facility (PPF No 310-0-DO; effective in November 1996, PPF No.310-1-DO, effective in October1997), and the IDB, through ATN-501 1-DR, have supported the preparation of a broad health sector reform programthat would serve as a medium-term framework to guide sectoral reforms and investments. In addition, said assistancehas supported the preparatory work for the proposed project as well as the IDB-financed project. This has been asuccessful experience in part because of SESPAS's delegation of program execution to a technically competent butexternal coordinating unit. The key lesson from this experience is the need to establish a stable but technicallycompetent team to facilitate project implementation.Proposed IDB-financed Health Sector Modernization and Restructuring: The project consists of four components: (i)policy development; (ii) institutional reorganization of SESPAS; (iii) restructuring and institutional modernization ofthe IDSS medical program; and (iv) strengthening of basic and hospital services in regions not covered by theproposed World Bank-financed project. Total project cost is estimated at US$75 million.10. Lessons learned and reflected in proposed project design: The project design builds on the experience ofrelevant operations financed by the World Bank group over the past decade. Lessons learned from these projectsindicate that successful implementation is closely associated with: (i) linking the definition of project objectives andscope to a clear policy framework; (ii) obtaining strong and pervasive government commitnent; (iii) designing simpleprojects with focused and modest objectives; (iv) linking financing of critical investments to the implementation ofpolicy and/or institutional reform; (v) periodic evaluation of the project is essential to allow adjustments to be madeto the project design and its implementation arrangements; and (vi) conducting intensive technical supervision by theWorld Bank. Review of outside literature provide evidence on improved performance of integrated health systems.Specifically, the Health Systems Integration Study (Shortell, Gillies, and Anderson 1994; Shortell et al. 1996) foundthat more integrated systems performed better financially relative to their competitors. Other findings included: (i)

Project Apprisal Document Page 10Country: Dominican Republic Provincial Health Services Project

greater physician-system integration was significantly related to higher inpatient productivity and to higher levels ofclinical integration; (ii) a greater percentage of system physicians practicing in primary care groups was positivelyrelated to a system's total operating margin; and (iii) greater perceived clinical integration was related to greatersystem net revenue and to higher inpatient productivity. Also, a recent study of California hospitals found that thosebelonging to integrated delivery systems had higher price-cost margins and higher profitability than randomcollections of independent hospitals (Dranove and Shanley 1995).The Government's Policy Letter of July 1997 provides the overall foundation for project activities. Given the limitedinstitutional capacity of sector agencies, their lack of familiarity with World Bank procedures, and the complexity ofhealth sector reform, the design of the project is simple but relevant, particularly in terms of advancing thedecentralization strategy in the health sector and the integration of service providers. Project preparation has givenparticular attention to sharpening the focus of project objectives, specifying the scope of the components, and refningthe contents and timetable of implementation arrangements. Political support for health sector reform is manifestedby the establishment of the Executive Commission for Health Reform by Presidential Decree, as well as by the ampleparticipation of different stakeholders in the preparation of the project.

11. Indications of borrower commitment and ownership:The enactment of the above-mentioned Presidential Decree establishing the Executive Commission for Health SectorIteform, and the submission of a Health Policy Letter to both the World Bank and the IDB outlining theGovernment's medium-term goals for the sector, the sector reform program, and the commitment to finance andimplement these reforns, establishes Government commitment to health sector reform.

12. Value added of Bank support:The World Bank

. hbas helped transfer the experience from similar projects worldwide, both in the technical design of the project and inthe introduction of implementation arrangements that ensure a successful operation, as well as supported theestablishment of technical cooperation arrangements with other countries in the region, such as Chile, Colombia andEcuador;

. would provide stronger oversight on the use of funds, consistent with World Bank procurement and disbursementguidelines;

. would permit on-going evaluation of the project during project implementation. and adjustments, if necessary; and

. would facilitate coordination with other health and poverty reduction programs.Expected continuity of Task Manager and team members with appropriate skill mix will help project implementation.


Block 3: Summary Project Assessments (Detailed assessments are in the project file. See Annex 8)

13. Economic Assessment 03 Cost-Benefit Analysis: 0 Cost- Effectiveness Analysis: a] Other(see Annex 4) I: NPV=US$62.0 million; IERR=77%

II: NPV=US$84.1 million; IERR=64%Cost-benefit analysis: Estimating a 10-year stream of benefits Cost-effectiveness analysis: The project isand costs, the net present value of the benefits (NPV) under expected to reduce the burden of disease byScenario I (benefits in terms of reduction in infant and maternal approximately 130,000 disability adjusted lifemortality) is about US$62 million, with an internal economic years (DALYs), with over 60% of the reductionrate of return (IERR) of 77%; and under Scenario II (benefits in among the poorest population groups coveredterms of disability adjusted life years (DALYs), the NPV is by the project, at an average cost of aboutabout US$84.1 million, with an IERR of 64%. US$314 per DALY saved. This in line withSensitivity Analysis: Under Scenario I, if the project were the average cost per DALY estimated in thedelayed by 2 years, the NPV and IER would be reduced to 1993 World Development Report (US$20 toUS$47..3 million and 72% respectively. If the benefits were to US$350), as well as in other World Bankbe reduced by 20%, NPV and IERR would be reduced to projects.US$41.8 million and 53%, respectively. Under Scenario II, ifthe project were delayed by 2 years, the NPV and IERR wouldbe reduced to US$25.4 million and 52% respectively. If thebenefits were to be reduced by 20%, NPV and IERR would bereduced to US$59.4 million and 47%, respectively.

14. Financial Assessment:Upon project completion, the burden of recurrent spending generated by the proposed project on total public healthspending is estimated at US$5.2 per year, including the additional operating costs generated by the investment,maintenance costs of 5% per year, and an annual depreciation of 10% per year for equipment. As a share of existinghealth expenditure levels, estimated recurrent expenditures are projected to reach a maximum of 8% of total SESPASspending, with similar levels of recurrent spending projected in each of the four regions covered under the project.

15. Technical Assessment:. The project is technically justified on the basis of the importance of the problems it addresses, its vulnerability to

cost-effective interventions, their affordability, and the political consensus on the need for health sector reform andmodernization.

. To help reduce high infant and child mortality and morbidity, the project would adopt a new strategy, IntegratedManagement of Childhood Illness (IMCI). The implementation of IMCI worldwide is supported by differentinternational cooperation agencies as one of the most cost-effective public health strategies. Indeed, the WorldBank's 1993 World Development Report, confirmed that IMCI is the most efficient health intervention in terms of itsimpact on the burden of disease and death in the population, and is the most cost-effective health intervention. Theapproach in this new strategy is to treat the child as a whole instead of directing attention to parts of the problem.IMCI teaches health workers how to evaluate major problems and diseases that affect the health of the children, todetect and treat specific diseases or sign of danger, and also includes educating parents on how to care for children inthe home, to prevent diseases and improve their general health conditions.

. The project goes beyond IMCI, as it addresses reproductive health problems. The delivery of a package onintegrative health services would also be geared to address the poor health of women and to curb maternal mortalitythrough services such as prenatal care, referral of high risk pregnancies, family planning, and cervical cancerscreening. In addition, the capacity of provincial health systems to manage appropriately complications of deliverywould be improved by upgrading physical infrastructure and equipment, training personnel, and strengthening thereferral network.

. Additionally, the project, in accordance with some general lessons that have been learned elsewhere, would raiseefficiency in the provincial systems under SESPAS through improvements in policymaking, governance,management, incentives, and accountability (encouraging decentralization and health services integration), and raisethe quality of care through the establishment of quality assurance systems and training of personnel. The projectwould foster in the medium and long term a more balance participation by NGOs, local communities, and the privatesector in health care delivery systems at the provincial level, secure adequate levels of financing, improve budgetingpractices and allocate resources according to priorities. Although worldwide evidence is still incomplete, improved

Project Appraisl Document Page 12Country: Dominican RepubUc Provindcial Health Services Project

integration of patient care has shown to enhance overall performance of the healthcare organization. Evidence alsoexists indicating that coordination and integration of information flows across stages in the patient care process,lowers total system costs, or enhances overall performance in other ways.

16. Institutional Assessment:The institutional capacity of the public health institutions is weak at both the national and the provincial levels, andthis would limit the scope and rapidity of the proposed policy and institutional reforms. Decentralization, widelyperceived in the Dominican Republic as a means to foster greater local participation, is constrained by the absence ofsubnational government levels with elected officials and the authority to raise revenue. In response to thesechallenges, project implementation would emphasize pilot activities and incremental changes, and be linked todecentralization and public sector reform and modernization strategies and programs for the country as a whole.Institutional capacity of participating provincial institutions would be reviewed as part of provincial subprojectpreparation and a technical assistance program would be designed and included as part of each provincial subprojectto strengthen their institutional capacity during implementation. Coordination with other donor agencies would bepromoted to avoid duplication of efforts and to maximize support for policy and institutional reforms. Technicalassistance to be provided under the project would help: (i) improve preparation of subprojects; (ii) strengthen themanagement of the UEPs, so as to improve the implementafion of subprojects; this would result in increases inefficiency through better programming, management, and monitoring of subprojects; and (iii) help provinces set upand consolidate multisector teams.

17. Social Assessment:The strategy for project preparation has been participatory and emphasized broad consultation. Active involvementby institufional representatives was achieved. A political mapping and stakeholder assessment, with technicalassistance from Harvard University School of Public Health, as well as a household survey assessing consumerperceptions of the quality of health services (ESU-96 Utifizaci6n de Servicios de Salud y Satisfacci6n de losUsuarios), were conducted during project preparation. Both the political mapping and stakeholder assessment and thehousehold survey demonstrated considerable support for reform among health service users, private sector providers,NGOs, business community and labor groups. Over half of survey respondents agreed that the system requires acomplete transformation. However, pressure to maintain the status quo is strong among some sectoral actors. Manybenefit from the chaotic nature of the sector and the well-documented disorganization, inefficiency andineffectiveness of its public institutions. As a result, the effectiveness and viability of the reform process will requirestrong political support from higher levels of goveriunent and broad stakeholder consultation and participation. Thepar-ticipatory activities initiated during preparation would continue during implementation, particularly to inform andmobilize the beneficiaries and their representatives in the Provincial Development Councils and in Congress.

18. Environmental Assessment Environmental Category BThe infrastructure works of the provincial subprojects would be limited to rehabilitation and equipping of existinghealth facilities, and are expected to have no negative environmental impact. Environmental construction andmanagement norms for health facilities, including internal waste management, personnel health and safety provisionsfor the operation of equipment would be part of the Operations Manual for the project.Given the deficient environmental situation observed in public health facilities, as documented in two assessmentsprepared during the preparation of the investment program (Informe Ambiental y Social, dated August 4, 1997,prepared for the IDB-supported project, and Informe de Situacion del Manejo de Residuos Hospitalarios para laFicha Ambiental del Proyecto, dated October 3, 1997, prepared for the World Bank-supported project), the project, inconjunction with the IDB-supported project, would support the following specific activities: (i) as part of an overallaccreditation/quality assurance process, the formulation and approval of norms, policies and enforcement mechanismsto control and manage liquid and solid waste in hospitals and ambulatory facilities; (ii) development andimplementation of training and environmental education programs on waste management for health authorities andpersonnel of hospitals and ambulatory facilities, and (iii) under provincial subprojects, rehabilitation of infrastructureand the installation of equipment and systems for the 'self-contained" treatment of liquid and solid wastes in hospitalsand ambulatory facilities located in areas in which municipal systems lack infrastructure for adequate treatment.Also, hospitals and ambulatory facilities receiving project financing would be required to establish training programsand systems for waste management. All of the above measures would be included in the Operations Manual for theproject.


19. Participatory Approach Identification paron Impmtation OperationBeneficiaries/community groups IS, CON, COL IS, CON, COL IS, CON, COL

Intermediary NGOs IS, CON, COL IS, CON, COL IS, CON, COLAcademic institutions IS, CON IS, CON IS, CON

Local government IS, CON, COL IS, CON, COL IS, CON, COLOther donors IS, CON. COL IS, CON, COL IS, CON, COL

Note: information sharing (IS); consultation (CON); and collaboration (COL)20. Sustainability:

The project would be sustainable because it enjoys support at the highest political levels; major sectoral stakeholdershave been involved in project preparation and would participate in project implementation assuring countryownership; the fiscal impact of the investments is very modest (see financial analysis); and project implementationwould be managed by a strong technical group at the PCU with support from provincial bodies. In addition, strongcommitment of Government for counterpart financing has been obtained.

21. Critical Risks (see fourth column of Annex 1)

RRk R Rskating anemizoMProject outputs to development objectives:Frequent political and administrative Medium Continued involvement of major stakeholderschanges at the central and provincial levels (e.g., provincial and municipal authorities,that may affect ownership and management beneficiaries).capacity;Project compmnents to utputs: Low Assigning clear project managementNumber and variety of actors involved responsibilities to the PCU. Flexible project(central level, provinces, and design; clear definition of major participants'municipalities); roles in the project.

Insufficient provincial or municipality High Project implementation would follow a gradualcapacity and incremental approach to allow for

institutional building; project implementationwould proceed independently in each province,diminishing the risk of administrative bottlenecksaffecting the project as a whole; substantialtechnical assistance; periodic monitoring andsupervision; a procurement agent would provideadministrative and financial management support

Limited funds to finance recurrent costs Low Financing of recurrent costs on a declining basis;modest fiscal impact.

Approval of poor-quality subprojects on the Low Using transparent eligibility and evaluationbasis of political patronage criteria for the selection of subprojects;

independent monitoring, and financial audits.Potential conflict and duplication of efforts, High High political commitment for both projects,as well as excessive pressure on the guided by a single Policy Letter; projects tackleinstitutional capacity and human resource different areas of reform program and concentratebase in the health system, due to the parallel in different levels of the health system andimplementation of two projects geographical regions; management of both

projects under same PCU.Overall project risk rating Medium

22. Possible Controversial AspectsNone


Block 4: Main Loan Conditions

23. Effectiveness Conditions:Drafting by the PCU and adoption by Government of a model umbrella subproject implementation agreement betweethe Commission's PCU and the Governors, representing the Provincial Development Councils in the participatingprovinces, as well as executing agreements between Provincial Implementing Units and Health Care Providers, witterms and conditions satisfactory to the World Bank;

. Drafting of Operations Manual satisfactory to the World Bank, and be adopted by the Government.24. Other

The main conditions are:• Implementation of the project in conformance with an Operational Manual covering provincial participation criteria,

and subproject eligibility and evaluation criteria. Maintenance of PCU acceptable to the World Bank. Timely allocation of counterpart funds and adequate source for financing recurrent costsBlock 5: Compliance with Bank Policies

This project complies with all applicable World Bank policies.l

Patricio Marquez Jamil SalmiTask Manager Acting Director CMU

ANNEX 1

Project Design Summary

CAS ObjectivePoverty alleviation and Human resources development ENDESA surveys; Centralhuman resources (HRD) indicators; poverty Bank surveys and data.,development indicators .Project Development (PDO to CAS)Objectiveslmproved maternal and * Reduce by 30% infant, SESPAS health statistics; Overall economicchild health status in under 5 child mortality, ENDESA surveys; health stability, politicalparticipating provinces and maternal mortality status monitoring surveys. support for policy and

rates in project areas Pre-project; Year 3; Post- institutional reforms,project. and adequate

financing of socialsector programs.

Outputs

Financing/ * Number of agreements Project records Main assumptionimplementation of signed between the PCU would be:provincial subprojects and Provincial administrative and

Development Councils political stability atgranting fnancial and the provincial level;managerial flexibility to provincial capacity tothe participating prepare andprovinces from the implementcentral policies of subprojects; SESPAS-SESPAS for subproject provinces defne andimplementation adopt arrangements

* Number of completed for establishingprovincial subprojects in integrative deliveryproject regions. systems;

adequate and effectivecoordination,complementarity andcross-fertilizationarrangements withIDB-financed project.

Enhanced organization * New methods for Project Recordsand management capacity allocating funds toof provincial health providers selected,systems developed, tested, and

adopted at provincialhealth systems

* Cost accounting andfinancial managementsystems selected,developed, tested, and

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adopted at provincialhealth systems

* Prototype medical recordsmodel designed, tested,and adopted at provincialhealth systems

* Quality assurance systemsselected, developed,tested, and adopted atprovincial health systems

* Number of administrativeand fmancial personneltrained

* Number of servicedeliveryagreements/contractssigned between ProvincialDevelopment Councilsand SESPAS healthfacilities, NGOs, andprivate providers

Inproved access to, and * Increase to 60% the SESPAS health statistics;quality of, essential health proportion of mothers that ENDESA surveys; healthinterventions package receive four prenatal status monitoring surveys;targeted to the poor in visits during most recent quality of careparticipating provinces birth assessments; patient

* Increase to 90% the satisfaction surveys. Pre-proportion of project; Year 3; Post-professionally attended projectdeliveries

* Increase to 95% theproportion of childrenwith completeimmunization schedule

* Clinical standards forinterventions in theessential package ofhealth services defmed,tested and adopted atprovincial health systems

* 90% of health facilities inproject areas incompliance withstandards for essentialhealth interventions

* Increased clientsatisfaction with accessto, and quality ofprovincial health systems

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Greater community * Number of community Project recordsparticipation groups involved in the

preparation,implementation,monitoring and evaluationof provincial subprojects

Components: Inputs: (Components toOutputs)

1. Provincial subprojects 1. US$33.5 mMain assumptions

2. Policy development 2. US$2.7 m. would be:and studies

(i) Clear project3. Project administration 3. US$2.2 m management

responsibilitiescoordinated by thePCU with flexibleproject design andclear definition ofmajor participants'roles in the projectduring projectpreparation;(ii) Sufficient funds tofinance recurrentcosts;(iii) Quality ofprovincial subprojects(e.g., technical design,implementationarrangements) isadequate;(iv) Provincialsubprojects areimplemented at anacceptable level ofefficiency.

Baseline values would be defined as part of subproject preparation.

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ANNEX 2a

DOMINICAN REPUBLIC

PROVINCIAL HEALTH SERVICES PROJECT

Detailed Project Description

Project Description

The main objective of the proposed Provincial Health Services Project is to improve thehealth status of the population, particularly among poor pregnant and lactating women andchildren under 5 years of age, in selected peri-urban and rural areas in low-income provinceslocated initially in Regions 0, 3, 4, and 7. To this end, the project would: (i) assist in theexpansion of health care coverage to reach the poorest population groups, focusing on motherancl child health care, by developing new health care organization, financial, and managerialmodels at the provincial level; (ii) assist in improving the quality of integrated health careservices already provided to the poor; (iii) assist in strengthening policy-making andmanagement capacity of Provincial Health Offices of SESPAS, as well as of participating healthfacilities; and (iv) assist in fostering community participation in the health system.

Project Areas

The project would cover initially low-income provinces and areas in Regions 0, 3, 4 and7 (Table 1), where 48% of the country's population resides. A parallel project financed by theInteramerican Development Bank (IDB) covers the rest of the country (four additional regions).Participating provinces would be selected on the basis of eligibility criteria as described in Annex2b. In order to introduce flexibility in implementation, the PCU in agreement with the WorldBank would contemplate the option of including other eligible provinces located in regions notcovered initially by the project.

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TableDistribution of the Estimated Total and Poor Population in the Regions Covered by the

Project, by Province'.1997

Region 0 2,389,937 11.8% 282,013Region 3 773,970 395,235* Duarte 289,645 40.9 118,465* Maria Trinidad Sanchez 130,860 51.4 67,262* Salcedo 102,194 55.6 56,820

76,569 70.5 53,981

* Sanchez Ramirez 174,702 56.5 98,707

Region 4 333,377 204,526* Barahona 165,205 48.6 80,290* Independencia 39,090 89 34,790* Bahoruco 113,194 74.5 84,330* Pedernales 15,888 32.2 5,116

Region 7 399,803 198,785* Valverde Mao 170,978 36.1 61,723* Monte Cristi 99,284 58.2 57,783* Santiago Rodriguez 61,828 58.9 36,417* Dajabon 67,713 63.3 42,862TOTAL 3,897,087 27.73% 1,080,559

Project Components

Component 1: Provincial Subprojects (US$33.5 million, 80% of project costs)

Provincial subprojects would include: (i) essential health care interventions, centeredaround maternal and child care activities; (ii) develop new health care organization, financingand managerial models to create provincial integrated delivery systems; (iii) institutionalstrengthening to reorganize and enhance the capacity of Provincial Health Offices of SESPAS, aswell as health facilities, to plan, program, implement and monitor health programs, including thedesign and implementation of infonnation systems that link providers in order to facilitatecontinuous improvement in service delivery and health outcomes of the population; (iv) trainingand continuing education of health personnel to raise clinical and managerial capacity atprovincial level, so as to assist in the improvement of quality of health care and the

The unsatisfied basic needs data are from: SESPAS/OPS. Evaluacidn conjunta de la cooperaci6n tecnica OPS-RD. Informe dela situacidn de salud. Santo Domingo, D.N., November 30, 1996.

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decentralization of health care organization and financing; and (vi) monitoring, impact evaluationand dissemination of local level experiences.

To the above ends, the project would finance the expansion, refurbishing and equippingof existing facilities, purchasing of drugs, medical supplies, training of personnel and technicalassistance. Funds would also be allocated for staff supervision, maintenance, and health andnutrition information, education and communication.

Essential Health Care Interventions. In line with the recently-launched NationalMobilization for the Reduction of Maternal and Child Mortality, 1997-2000 (May 1997), apriority initiative of the Government, as well as with the Integrated Management of ChildhoodIllness (IMCI) strategy, the project would support the delivery of women's reproductive healthand child health care interventions.

Women's reproductive health care interventions would include: pre-natal care,including nutrition surveillance of pregnant women and detection of possible gestation anddelivery complications; tetanus vaccination; delivery; post-partum care; breastfeeding promotion;birth spacing; control and treatment of sexually transmitted diseases; and cervical and breastcancer screening.

Child health care interventions would help reduce infant and child mortality andmorbidity through infant care, growth monitoring, breastfeeding promotion, vaccination againstmeasles, diphtheria, pertussis, polio, tuberculosis, tetanus, oral rehydration therapy, preventionand early treatment of gastrointestinal and acute respiratory diseases, oral health, as well asinjury control and prevention.

Health and nutrition education and promotion activities would provide information,education, and communication about prenatal care, breastfeeding and infant feeding, dietaryquality, hygiene, family planning, sexually transmitted diseases, environmental health risks,injury prevention, and appropriate management of childhood illness. The objective of theseactivities would be to improve health and nutritional practices among the general population,particularly changing behaviors, and prevent the onset of illness and disease. To this end, theproject would support in-service training for health personnel so that they improve the quality ofservice delivery, disseminate health and nutrition messages effectively, and the development ofhealth and nutrition-related messages and materials, including radio and television campaigns.

Health Care Organization Model. The package of essential health interventions wouldbe delivered through an improved network of existing health centers and maternity wards oflocal hospitals. To this end, the project would assist in the transformation of current health caredelivery systems operating at the provincial level from isolated and uncoordinated providers intointegrated delivery systems. The term integration refers both to "vertical integration" withinthe SESPAS network, whereby the project would enhance coordination among ambulatory andinpatient facilities by developing unified goals and incentives; and "virtual integration" or thepromotion of interinstitutional alliances between SESPAS, NGOs, IDSS and private providersoperating through contracts, agreements, franchise arrangements, or formal affiliation.Underlying this proposed approach is the value chain concept (Porter, 1995) or in health services

20

the continuum of medical care concept, that refers to the sequence of related health serviceproduction processes (from the most basic inputs of labor, capital, and materials to the next stageof creating the service, and, finally, to the distribution of the service to the end-consumer orpatient).

Under this health care organization model, the first level of care will be provided by therural and peri-urban health centers or physician offices, while the most complex health careservices will be provided in a few hospital facilities in order to reduce cost and assure highquality of medical care. Health centers or physician offices will become the entry point to theprovincial integrative delivery system by providing pre-natal care to pregnant women, and wouldrefer patients to higher complexity providers (e.g., specialists) or hospitals with obstetrics andneonatal units for child delivery. After delivery, mothers and children would be referred back tothe health center, where they would receive post-partum care and health and nutrition educationand promotion, particularly for improving breastfeeding and infant feeding practices, andperiodic growth monitoring, checkups, and vaccinations. Health personnel would also undertakeoutreach activities (e.g., home visits would be conducted to detect those beneficiaries failing tomeet their scheduled visits to health centers and motivate them to do so). As demonstratedelsewhere, the two critical determinants of the success of integrated health systems are theefficiency and effectiveness of the coordination of the medical care process and of informationexchange.

Assessments of individual situations in each of the participating provinces woulddetermine which form of integration to be pursued under the subprojects for the provision of theessential health care interventions package. Although initial efforts would focus on increasingefficiency within the SESPAS network, eventually contractual relationships could be establishedwith other providers, particularly with NGOs. In the long run, the integrated delivery systemmust develop an explicit system of referrals between the SESPAS facilities and other institutions(e.g., NGOs, IDSS, private providers). The overall objective in the initial phase of the reformprocess is to support through the subprojects institutional building for the conversion of theSESPAS network at the provincial level into self-standing operational entities able to competesuccessfully for patients in a managed and capitated environment.

The subprojects would require a great degree of autonomy from the central policies ofSESPAS. Increased autonomy would be linked with greater financial and managerial flexibilityat the provincial level and accountability to clearly-defined milestones of quality, usersatisfaction and cost-effectiveness (these conditions would be specified in the subprojectagreements between the PCU and the Provincial Governors representing the ProvincialDevelopment Councils).

The subprojects would finance technical assistance to: (i) define theorganizational structure for the integrated delivery system on the basis of participatorydiscussions and agreements at the provincial level; (ii) conduct rapid assessments of thedemographic and health care characteristics of the population to be covered by the system, aswell as the province's service delivery capacity for the provision of the essential package ofhealth interventions; (iii) determine investment needs for rehabilitating physical infrastructure

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and reequipping of facilities, as well as medical supplies, staffing and training needs; and (iv)test, adapt, and implement medical care quality assurance mechanisms.

Improvement of Health Services Network. In each province covered by a subproject,the project would help rehabilitate and equip existing health facilities participating in theintegrated delivery system, improve staff mix, train existing and new staff, and provide relatedmedical supplies.

Institutional Modernization and Strengthening. The integrated delivery systemswould be sponsored by the Provincial Development Councils and would be under theadministrative authority of Provincial Health Offices of SESPAS, which would need to developand implement appropriate management systems for performing policy-making, programming,resource allocation, supervision and control tasks. The management capacity of the facilities inthe integrated delivery systems would also need to be modernized and strengthened. Inparticular, support would be provided for testing, adapting and implementing locally-based andoperated information systems with the capacity to identify service users, monitor utilization, andprovide cost information. The information system must connect all local providers participatingin the system, including physicians, health centers and hospitals, for the maximum continuity ofcare. Data regarding members, utilization and costs would be collected and analyzed in order tofacilitate continuous improvement in service delivery and health outcomes of the population.

The process of institutional modernization and strengthening to be supported under thesubprojects would comprise the following activities:

3 Definition and development of management structures, decision-making levels, managementservice agreements, and resource allocation mechanisms.

* Testing, adaptation and implementation of cost recovery systems and contractingarrangements for the provision of services.

. Testing, adaptation and implementation of data collection systems for identifying andregistering users of integrative delivery systems.

* Strengthening of medical records.

* Testing, adaptation and implementation of health programming, supervision and controlsystems, as well as epidemiological surveillance, health statistics, and health servicesproduction and utilization systems.

* Testing, adaptation and implementation of financial management systems (accounting,budgeting, costing, auditing and control).

* Testing, adaptation and implementation of medical supply and maintenance systems.

* Testing, adaptation and implementation of human resources management systems.

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Training and continuing education of health personnel. Continuing education andtraining of health personnel to raise technical and administrative capacity is an essentialprecondition for the development and sustainability of the process of building integrated deliverysystems at the provincial level. The subprojects would support continuing education andtraining programs related to maternal and child health care; health care policy and management;health care financing; and medical care quality assurance.

Communication and Dissemination of Experiences. Development and phasedconsolidation of integrated delivery systems at the provincial level would require a broad base ofsocial support together with firm political commitment at the national and provincial levels. Inorder to assure these conditions, the subprojects would provide assistance for activities aimed atmobilizing broad support for policy and institutional reforms. To this end, the proposedintegrated delivery system's organizational and operational characteristics, and, most important,the possible benefits to the population, both in terms of improved access to and quality ofmedical care, and user satisfaction, would be publicized. The activities to be carried out fall intotwo main groups: social communication through the mass media and other mechanisms; andanalysis, discussion and exchange of national and international experiences for policy-makersand health sector officials and personnel.

Monitoring, Evaluation and Supervision. The project would also finance monitoring,evaluation and supervision of subproject implementation.

Strategy for Subproject Implementation. Critical activities for the subprojects wouldbe organized in stages over an average 3-year period. Before progressing from one stage to thenext, it would be necessary that the goals identified for the first stage be fulfilled. If these goalsare not achieved, remedial actions would be taken. If, within a reasonable time period, theremedial action does not accomplish the goal, the subproject would be canceled or reformulated.The stages are:

- Qualification: establish Health Units within the Provincial Development Councils; selectstaff for the Provincial Execution Units (UEPs); identify components of the provincialintegrated system (e.g., health centers, hospitals) and processes for collaboration; conductassessments and feasibility study to confirm readiness, in terms of capacity of existinginfrastructure (e.g., personnel, facilities, information systems); identify action plan andtimeframes for remediation.

* Preparation and Development of Infrastructure: identify current population in catchmentareas; develop estimates of per capita annual costs of essential health interventions package;develop first year budget and test and adapt method for allocating funds to providers andfacilities; establish performance measures by which the network would be evaluated,including cost, patient satisfaction, quality; develop specifications and implementation planfor information systems; develop specifications and implementation plan for cost accountingand financial management system; test and adapt prototype for medical records; test and

23

adapt revised physician salary guidelines; define performance expectations for all membersof the integrated delivery system-physicians, administrators and staff- based on clinicalresults, use of financial resources, and patient service satisfaction.

Implementation Phase: initiate continuous education and training activities related to theabove policy and institutional reforms; study tours within the Dominican Republic andabroad to observe and absorb best practices; seek commitment and support from stakeholdersto support subproject.

* Evaluation and Expansion: establish contracting strategies with providers outside SESPASnetwork (e.g., NGOs); identify additional provincial subprojects.

COMPONENT 2: Policy Development and Studies (US$2.7 million, 6.4% of project costs)

The project would finance workshops, seminars, study tours, and studies to design and assess thefeasibility of additional policy and institutional reforms. and processes. The undertaking of theseactivities would be coordinated with the IDB-financed project and be geared towardsguaranteeing the implementation and sustainability of the changes proposed under the project.More specifically, they would support the development of proposals to further decentralizehealth care management and delivery. Approximately eight studies would be financed by theproject. Specific research topics would be established by mutual agreement between the PCUand the World Bank.

A large unfinished medical campus -called Plaza de la Salud - located centrally in SantoDomingo is a monumental construction hastily initiated about one year before the change overthe current administration. Large amounts of money have been invested. Under this component,technical cooperation would be provided : (i) to minimize any further investments whileoptimizing its use for the benefit of the health of the Dominican population; (ii) to integrate thePlaza de la Salud into the provincial networks as a referral facilities; (iii) to take advantage of itsautonomy to give it a corporate status as a financially independent referral facility; and (iv) toprotect and guarantee the access of the poor referred for medical care. A business plan wouldincluded and implement a mission statement, definition of the target population, relationshipswith provincial networks, economic/financial and reimbursement study, financial managementsystems (budgeting, cost accounting, billing and collections, auditing), human resourcesprograms, quality improvement processes, and management information studies. Experiencesgained and lessons learned would be applicable to other medical facilities and health deliverysystems.

Component 3: Project Administration (US$2.2 million, 5.2% of project costs)

This component would help finance the administrative and operating costs of the PCUover a five-year period (1997-2003). This includes: (i) financing of PCU consultants; (ii)provincial subprojects preparation costs; (iii) travel; (iv) training; and (v) other administrativeexpenses (materials, cleaning, etc.).

24

ANNEX 2 b

Subproject Cycle and Eligibility Criteria

Participating Agencies and Procedures

The PCU, which reports to the Executive Commission for Health Sector Reform underthe Technical Secretariat of the Presidency and SESPAS, would be responsible for projectcoordination, including resource allocation for provincial subprojects.

Subprojects would be formulated by Provincial Implementation Units (UEPs), sponsoredby the Provincial Development Councils and located in the Provincial Health Offices of SESPASusing: (a) the eligibility criteria agreed with the World Bank; (b) the methodology designed forsubproject preparation; and (c) the guidelines for subproject presentation, implementation andevaluation.

The subproject cycle and eligibility criteria would be included in an Operational Manual,satisfactory to the World Bank. They are summarized below.

Subproject Cycle

Promotion. The PCU would invite the provinces in the four Regions covered initially bythe project to identify subprojects for financing under the project. Representatives from the PCUwould visit provinces to transmit and explain subproject eligibility criteria. Technical assistancewould be provided to provinces for subproject preparation.

Preparation. Providers or groups of providers and local coordinating agencies wouldpresent subproject ideas and proposals to the UEP which would prioritize and consolidate them.Subproject documents would include notably a diagnosis of issues to be addressed, proposedsolutions, activities to be carried out, estimated cost, and arrangements to ensure sustainability.Subproject preparation activities would be financed by the project; technical assistance would beprovided by the PCU.

Evaluation. The PCU would analyze proposals using the eligibility criteria.

Approval. The PCU would: (i) approve subprojects; (ii) suggest changes; or (iii) rejectthem if they do not conform to the eligibility criteria. Approved subprojects would be sent to theWorld Bank for its no objection.

Signing of Implementation Agreements. For the preparation and implementation ofprovincial subprojects, Participatory Agreements between the commission's PCU and ProvincialGovernors representing the Provincial Developments Councils, and Executing Agreementsbetween the UEP, to be located within the Provincial Health Offices of SESPAS, and Health

25

Providers (e.g., hospitals, ambulatory facilities), would signed. Such agreements reflect theinstitutional structure of the Government's reform program for the health sector and aim atfostering the decentralization process at the provincial level and the participation of majorstakeholders in the sector, reserving to the Commission's PCU the tasks of supervision andassistance to the provincial authorities.

Agreements between the Executive Commission for Health Reform's PCU and participatingProvinces and Areas. The formulation and implementation of provincial subprojects wouldrequire a great deal of autonomy from the central policies of SESPAS. Increased autonomywould be linked with greater financial and managerial flexibility at the provincial level andaccountability to clearly-defined milestones of quality, user satisfaction and cost-effectiveness.To these ends, the drafting by the PCU and the adoption by Government of a model umbrellaparticipation agreement between the Commission's PCU and the Provincial Governors inrepresentation of the Provincial Development Councils in each participating province with termsand conditions satisfactory to the World Bank would be a condition of effectiveness. Saidparticipation agreement would establish the overall framework for the activities to be carried outin each province under the provincial subprojects; such subprojects would be prepared, evaluatedand executed in accordance with the Operations Manual for the project. The Commission's PCUwould act as a liaison agency with the World Bank and, with support from a procurement agent,would be responsible for the procurement and disbursement process pursuant to the WorldBank's applicable rules; in case of non-compliance by any province of any of its obligations theCommissions PCU may suspend or cancel the financing of any of the activities originallyassigned to such province, and reallocate the respective resources to other provinces. The firstdisbursement for each provincial subproject in participating provinces located in project regionswould be subject to the signing of a specific subproject agreement between the Commission'sPCU and the Provincial Governor in representation of the Provincial Development Councils.

Executing Agreements between Provincial Implementation Units and Health Care Providers.The Executing Agreement would allow the involvement of hospitals and ambulatory facilities inthe decentralization process and in the establishment of the provincial integrated health carenetworks. Such hospitals or ambulatory facilities would benefit from the activities financedunder the provincial subprojects in areas like infrastructure, equipment, and technical assistance,provided that they undertake to achieve specific performance indicators in matters of coverageand quality of services.

Implementation. For each subproject, the procurement of goods and equipment and thecontracting of consultants will be handled by the PCU with support from a procurement agent,following the guidelines and procedures of the World Bank. Civil works contracts would bemanaged by the PCU through a committee which would have majority representation by theUEP and local level health care providers. Civil works contracts may include the rehabilitationof existing facilities to enable the delivery of the defined package of essential services. Themajority of health facilities under the project are health centers in various municipalities. Therewill be relatively little financing of hospitals, except for the rehabilitation and expansion ofmaternity and pediatric services in a limited number of hospitals (about 1 or 2 per health region).Equipment financed under the project would include minimal equipment for health centers, such

26

as personal computers, refrigerators, medical supply cabinets, stethoscopes,sphygmomanometers, scales and measurement tapes, scissors, basic laboratory equipment,among others. Hospital equipment might include beds, cabinets, delivery tables, operation roomlamps, x-ray machines, etc. Training and technical assistance may cover the cost of traininghealth staff, such as physicians, nurses and technicians, as well as administrative personnel.

Monitoring and Supervision. Supervision of the implementation of investmentsubprojects in the provincial health service networks would be carried out by the UEPs and thePCU, based on two different dimensions: (i) the implementation of the rehabilitation andreequipping of facilities should be supervised and monitored in order to ensure compliance withimplementation schedules and the quality of materials (independent consultants could be hired tocarry out this task); and (ii) the transformation of the service delivery model through theestablishment of decentralized, autonomous and pluralistic integrated health networks, includingmonitoring results indicators which would enable measurement of the improvement and impactof services on the subproject's target population, and project performance indicators (Annex 1),including the in-service training program.

Eligibility Criteria

Project Size. Subprojects would be provincial or area level in scale, i.e., at a minimumthey would cover a network of health care facilities that provide services to the target populationin the province.

Targeting. Subprojects should cover provinces or areas in the project regions in whichthe poor represent at least 30 percent of the population.

Organization. A subproject should involve existing organizations, including provincial,municipal, and non-governmental organizations, as well as existing facilities. The UEP shouldremain in place for the duration of the subproject, and is responsible for all liaison with the PCUat the national level. This involves intersectoral and interjurisdictional coordination of the projectrelative to carrying out its objectives and establishing and conforming to project norms.

Sustainability. The province should have the political commitment to undertake policyand institutional reforms for improving the delivery of basic health services as well as possessthe administrative capability to carry out the subproject, as demonstrated in the analysisundertaken as part of subproject preparation. The capacity of a province to implement asubproject would be based on existing capacity in the following areas: (a) types of existingprograms similar to the proposed subproject; (b) capacity of local organizations to manageexisting programs in the subproject area (quality, number, and experience of management staff oflocal institutions); and (c) the province's experience in implementing other health and nutritionprograms.

Basic Package. Agreement to implement proposed package of essential healthinterventions and proposed policy and institutional reforms.

27

Accounting and Audits. Establishment of separate subproject accounts, accounting, andaudit.

Counterpart Funds. Agreement to assign the required resources to the project, includingadvance annual funding allocations and adequate cash releases to cover incremental recurrentexpenditures. Redeployment of staff or, when required, recruitment of incremental staff.

Performance Monitoring. Performance monitoring indicators (Annex 1) would be usedto monitor progress in subproject implementation and impact.

28

ANNEX 3

Estimated Projects Costs(US$ million)

Provincial Subprojects 17.5 16.0 33.5

Policies Development and Studies 0.5 2.2 2.7

Project Management 2.0 0.2 2.2Total Baseline Costs 20.0 18.4 38.4Physical Contingencies 0.9 0.3 1.2Price Contingencies 0.8 1.6 2.4

29

ANNEX 4

Summary of Cost-Benefit and Cost-Effectiveness Analyses

The present annex presents the summary results of the cost-benefit and cost-effectivenessanalyses of the proposed project. The costs considered in the analysis include the expendituresof the proposed World Bank loan and the cost of increasing the production and quality ofmaternal and child health care services for the project's population of approximately 3.9 millionpeople. The benefits, and the overall economic rate of return, have been evaluated under twoscenarios. Under the first scenario, the project's benefits are estimated using reductions inmaternal and infant mortality as proxies for the return on the investment. In the second scenario,the benefits are estimated based on the results of detailed estimates of the total number ofdisability adjusted life years (DALYs) potentially saved by the project for each of theinterventions. The following tables summarize the results of the analysis for each of the twoscenarios.

Summary of Estimated Costs and Benefits

Total Potential Net Present Total Impact onBenefits: Value: Internal the health of

Life of Project 10 year stream Economic the5 years of benefits and Rate of population

(US$ million) costs Retur(US$million)

Scenario I: Benefits in 75.6 62.0 77% 1,687 Infanttersm of reduction in and maternalinfant and maternal deaths avertedmortalityScenario II: Benefits in 53.4 84.1 64% 130,000terms of DALYs DALYs

averted

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Summary of Sensitivity Analysis

Type of Snsitivity Analysis NPV IERR(US$ million)

Scenario I: Reduction in Infant and Maternal Mortality

Base Case 62.0 77.%2-year delay 47.3 723-year delay 40.0 6620% reduction in benefits 41.8 5340% reduction in benefits 21.5 2920% reduction in benefits and 2-year delay 3.5 4.0Scenario II. Reduction in DALYs

Base Case 84.0 64.%2-year delay 25.4 523-year delay 18.4 4520% reduction in benefits 59.4 4740% reduction in benefits 34.7 2920% reduction in benefits and 2-year delay 20.7 50

Discount Rate

A discount rate of 12 percent was used for the analysis.

Assumptions

The analysis of the Dominican Republic Provincial Health Services Project considers thefollowing benefits: (i) direct economic benefits of a reduction in outpatient consultations andhospital discharges resulting from reductions in morbidity; and (ii) indirect benefits resultingfrom reductions in infant and maternal mortality (scenario I) and indirect benefits resulting fromthe DALYs saved from package of infant and maternal health care services (scenario II).

In terms of the costs of implementation, the analysis considers two basic elements: (i) theinvestment costs of the World Bank project; and (ii) the investment and recurrent costs to beincurred as a result of extended coverage of a basic package of services through the existingnetwork of public and private providers. The cost of providing the basic package, includes the

31

fixed and variable costs necessary to increase coverage of basic health services, such asimmunizations and prenatal care.

While the project would lead to an initial increase in services provided to the population as thebasic health package is deployed, it is expected that the preventive nature of the services willeventually lead to a reduction in the demand for ambulatory and hospital care. Given themedium-to-long-term effect of these changes, the estimates presented in terms of reducedmorbidity are very conservative. The following table summarizes the estimated reductions inmorbidity of the 3.9 million inhabitants of the project regions.

Summary of Estimated Reductions in Morbidity

Area of Reduction Outpatient Emergency Hospital DischargesVisits Visits

% reduction % reduction % reduction

1. Acute Respiratory Infection (ARI) 31% 31% 0%2. Acute diarrhea 31% 16% 31%3.. Intestinal Parasites 26% 12% 12%4. Vaginitis 26% 0% 40%5. Other Causes 15% 15% 15%

TOTAL 17% 16% 16%

The estimates for the reduction in demand in each category are then paired with existing datafrom the project regions to determine the total reduction in outpatient visits, emergency visits,and total bed days that could be averted due to the project interventions. Total direct benefits arethen estimated by multiplying the average variable cost per consultation (outpatient andemergency) and the average variable cost per bed-day by the total outpatient and emergencyvisits and total potential bed-days averted, respectively. The costs per bed-day are based on adetailed cost analysis carried out in the Dominican Republic for each of the categories ofavoidable morbidity.

To estimate the indirect benefits, two distinct scenarios are considered. The first scenarioevaluates the indirect benefits of the project in terms of the expected reduction in maternal andinfant mortality. The second scenario evaluates the indirect benefits in terms of the DALYssaved.

The following table summarizes the expected impact of the project in terms of reductions ininfant and maternal mortality, as the basis for the project's expected indirect benefits.

2 The additional costs of increasing the maternal and child health care services are reflected in theinvestment costs.

32

Scenario ISummary of Estimated Inidrect Benefits: Reductions in Mortality

02,356,014 57,722 369 20 389

798,840 19,572 88 7 95IV

345,043 7,729 132 3 135vii

4019217 9,549 75 3 79

TOTALPROYECTO 3,901,114 94,572 1,654 32 1,687

Note/i: Number ofdeaths averted is based on maternal mortality of 229 per 100,000 live births per region.

In total, it is estimated that the project will save nearly 1,700 lives as a result of the reductions ininfant and maternal mortality. The reduction in mortality is taken as the base line assumption tocalculate the indirect benefits of the project. The estimates of reduced mortality are based onconservative estimates that would reduce the levels of infant and maternal mortality in theproject's regions to levels equal to the regions not considered under the project. The estimatednumber of deaths averted as a result of the project are shown in the above table. The discountedlife years saved attributable to these reductions are then converted to monetary terms by usingestimates of the discounted life time earnings lost from each death, as reflected by the use ofaverage wage levels for the poorest 40 percent of the population and the number of years of lifelost for each death.

Under the second scenario of indirect benefits, the analysis is based on detailed estimates of thetotal number of disability adjusted life years (DALYs) potentially averted by the project for eachof the interventions. This analysis is based on the existing levels of coverage, the total numberof cases to be avoided under each intervention, and the expected effectiveness of theintervention. The discounted life years saved attributable to these reductions are then convertedto monetary terms by using estimates of the discounted life time earnings lost from each death.The discounted life time earnings gained through the reduction in mortality are then calculatedby estimating the age at death or onset of the disease and the discounted expected earnings asreflected by the use of average wage levels for the poorest 40 percent of the population and thenumber of years of life lost for each death.

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Cost-Effectiveness

The total disability adjusted life years (DALYs) potentially saved through the projectinterventions are based on a detailed cost-effectiveness studies carried out during preparation(see Table below). It is estimated that the project would reduce the burden of disease byapproximately 130,000 DALYs, with over 60% of the reductions among the poorest populationscovered by the project. The average cost per DALY ranges from US$41 to US$4,000, with anoverall project cost per DALY of approximately US$314 and the majority of the interventionsfalling into the range of US$41 to US$220. This is in line with the average cost per DALYestimated in the World Bank's 1993 World Development Report: US$20 to US$350, as well asother World Bank projects.

34

Summary of Cost Effectiveness Analysis

Total population in project areas (Regions 0,3,4, and 7) (1997): 3,901,115

PRENATAL CARE AND CHILD DELIVERY 95% 100% 5,465 RD$12,902,412 41,260 53% 21,662 RD$596PREVENTION OF R. FEVER 40% 85% 195,446 RD$57,303,911 86,106 80% 51,663 RD$1,109INTEGRATED CARE FOR CHILDREN 40% 100% 379,434 RD$141,261,299 81,616 56% 45,705 RD$3,091SEXUALLY TRANS. DISEASES 40% 85% 3,128 RD$1,356,528 918 49% 337 RD$4,019FAMILY PLANNING 66% 90% 81,050 RD$35,296,131 17,879 63% 7,961 RD$4,434IMMUNIZATIONS (EPI) 39% 90% 56,388 RD$14,223,514 597 72% 359 RD$39,584PREV. AND TREAT. CERVICAL CANCER 12% 80% 5,181 RD$80,565,467 5,378 40% 1,662 RD$48,464PREV.AND EARLY DETEC.OF AIDS 50% 85% 11,216 RD$2,609,988 9,814 12% 824 RD$2,511

Per capita Cost of Package of Interventions RD$ 88.43Per capita Cost in US$* 6.32

(1) Exchange Rate: I US$=$RD 14.00(2) DALYs- Disability Adjusted Life Years

35

Fiscal Impact

Estimates of the sustainability of the project are based on an analysis of the recurrent costs of theproject generated by annual maintenance costs and the extension of the basic package to theuncovered population in the four regions of the project. Upon project completion, the annualrecurrent costs will account for US$5.2 million per year, including the additional operating costsgenerated by the investment, maintenance costs of 5% per year, and an annual depreciation of 10percent per year for equipment. In addition, the analysis assumes an annual incremental costs forextending coverage of US$25 million in the project's regions.

The total incremental costs of the project, and the extension of the basic package to theuncovered population, are compared with the projected expenditure in the four regions of theproject and estimates of total health spending for the SESPAS and total central governmentspending.

The assumptions include: annual health care spending increases of 6 percent per year, or 2percent real growth, projected real GDP growth of 3.5% over the next 10 years, and publicspending constant at 14.5 percent of GDP.

Estimated recurrent expenditures are projected to reach a maximum of 8 percent of total SESPASspending, with similar levels of recurrent spending projected in each of the four regions. Theextension of the essential services to the uncovered population, however, would account for asignificant burden on the SESPAS finances, increasing the overall burden on public healthspending to nearly 25% in the four project regions. At the same time, the burden on centralgovernment spending would remain in the range of 1% if the basic health package were extendedwith an incremental cost of US$25 million per year. Therefore, the key to the sustainability of thepackage of essential service would be directly tied to an increase in public health spending in thefour regions of the project or a reallocation of total health spending.

36

ANNEX 5

Dominican Republic Provincial Health Services Project

Procurement and Disbursement Arrangements

procurement

Project Costs by Procurement Arrangements (Table A)

Prior Review Thresholds (Table B)

Disbursem

Allocation of Loan Proceeds (Table C)

Disbursement Schedule (Table D)

37

TABLE AProject Costs by Procurement Arrangements'

(US$ million equivalent)

1. Works 5.0 3.3 8.3

(2.0) (1.4) (3.4)

2. Goods

Equipment and 2.5 3.3 2.4 8.2

Supplies (2.0) (2.6) (2.1) (6.7)

Pharnaceu- 1.6 2.0 1.6 5.2

ticals and (1.4) (1.7) (1.3) (4.4)MedicalSupplies***

3. Services

Systems 12.5 12.5Development/ (11.9) (11.9)OtherConsultantServices/Training

Administrative 2.2 2.2

(1.8) (1.8)

4. Operational 3.8 3.8Costs

5. PPF 1.8 1.8

(1.8) (1.8)

Note: Figures in parentheses are the amounts to be financed by the Bank loan

ICB = International Competitive BiddingNBF = Not Bank-financedNCB = National Competitive Bidding

*Pharmaceuticals and medical supplies will be procured using Limited International Bidding (llB)

38

TABLE B

Thresholds for Procurement Methods and Prior Review(US$1,000 equivalent)

=S _~~~~~~~~~~~~~~~~~--Works < 50 three quotation SOE

50 - 500 NCB First two> 500 NCB All contracts

GoodsEquipment and Supplies < 50 Shopping SOE

50-250 NCB First two> 250 ICB All contracts

Pharmaceutical and <50 Shopping SOEMedical Supplies*** 50-250 NCB First two

> 250 ICB All contracts

Services

Consulting ServicesFirns > 100 Bank guidelines All

< 100 Bank guidelines Review of TORs only

Individual > 50 Bank guidelines All< 50 Bank guidelines Review of TORs only

AdministrativeConsulting Services (individual) > 50 Bank guidelines All

< 50 Bank guidelines Review of TORs only

Goods and Supplies < 50 Shopping SOE

Operational Costs NBF

Exemption from prior review does not apply to consultant contract below the thresholds in the case of single source selection of firms,assignments of critical nature, and amendments to contracts raising the original value above the threshold.ICB = International Competitive BiddingNBF=Non Bank-financedNCB = National Competitive Bidding

*Pharmaceuticals and medical supplies will be procured using Limited International Bidding (LIB)

39

Procurement of works, goods and services, as well as contracting of consultants with World Bank funds,would be carried out in accordance with guidelines for Procurement under IBRD loan and IDA credits(January and August 1996) and the Guidelines for the Use of Consultants (January 1997). Mostprocurement would be carried out at central level by the PCU, with support from a procurement agent.

The PCU would include a full-time procurement officer whose main responsibility will be to prepareand: (a) submit to the World Bank all procurement documents which require World Bank's priorreview; (b) coordinate with selected procurement agent the procurement of goods and services at centrallevel; (c) coordinate and monitor procurement requests by the UEPs; and (d) prepare and submit to theWorld Bank at the beginning of each calendar year a detailed procurement schedule. The appointmentof the procurement officer would be done in consultation with the World Bank. At project launch, theWorld Bank will deliver a procurement workshop to present and explain procurement guidelines.During appraisal, the Borrower agreed to adopt the World Bank's standard bidding documents forproject implementation.

Civil Works. The project would finance civil works to rehabilitate health care facilities at the provincialand area levels. It is estimated that about US$8.3 million equivalent of the project's costs would beallocated to civil works.

Goods. The project would finance equipment and supplies, pharmaceuticals and medical supplies tosupport the delivery of maternal and child health care services, for a total amount estimated at US$13.4million equivalent. Because of the special nature of pharmaceuticals and medical supplies, they will beprocured using Limited International Bidding (LIB).

Consultant Services. The project would finance consultant services, including systems development andother consultant services, information, education and communication services (i.e. media campaigns),educational materials and training for teachers, health care professionals and community health workers,for a total estimated at US$14.5 million equivalent.

At appraisal the Borrower presented an initial procurement plan for project implementation. Duringannual review meetings the World Bank would review the procurement schedule for the following year,including international or national tenders, as well as the number and estimated costs of the subprojectsto be financed under the loan.

40

TABLE C

Allocation and Disbursement of Loan

Civil Works 3.4 40% total expenditureGoods (other than 6.7 80% local expenditures andpharmaceuticals and medical 100% foreign expendituressupplies)

Pharmaceuticals and medical 4.4 80% local expenditures andsupplies 100% foreign expendituresSystems development for 9.3 100%Health Services Providers andother's consultant's servicesTraining 2.6 80%Project Administration 1.8 80%PPF Refunding 1.8 100%

41. ,.*.... .... ~ . .....* ....*..*...* ..*..*..*. . ~ ~ :..:..:.... *.*. .... . . M *~**:.::::.

41

TABLE D

Disbursement Schedule

(US$ Million equivalent)

FY 98Jun-98 0.77 0.77

FY 99Dec-98 0.77 1.55Jun-99

FY 00Dec-99 1.5 3.1Jun-00 1.5 4.6

FY 01 2.6 7.2Dec-00 2.6 9.8Jun-01

FY 02 4.2 14Dec-01 4.2 18.3Jun-02

FY 03 4.2 22.6Dec-02 4.2 26.9Jun-03

FY 04 1.6 28.5Dec-03 1.6 30.0

Note: Figures may not add up to totals because of rounding.

Retroactive Financing. The World Bank would finance contracts retroactively for eligible expendituresincurred up to 12 months prior to Loan signing up to an amount of US$2.0 million. These funds wouldbe used to finance eligible subprojects approved in line with the eligibility and appraisal criteriaacceptable to the World Bank.

Documentation. The PCU would present full support documentation for all withdrawal applicationswith a contract value of US$250,000 or less for goods (other than pharmaceuticals and medical supplies;for works under contracts costing less than US$500,000 equivalent, other than the first two contracts forworks estimated to cost the equivalent of more than US$50,000; for services of consulting firms undercontracts costing less than US$100,000 equivalent; and for services of individual consultants undercontracts costing less than US$50,000 equivalent. The PCU would submit withdrawal applications ofsmaller contract values having a statement of expenditures (SOEs), and would maintain the respectivesupporting documents for World Bank review.

Special Account. The SESPAS would open a Special Account at Banco Central with all initial depositof US$2 million equivalent. This would correspond to about four months of expenditures required

42

under the project. The PCU would forward to the World Bank the necessary documentation fordisbursement (SOEs or full documentation).

Financial management. accounting. and auditing. The PCU would be audited annually by auditorsacceptable to the World Bank. No later than six months after the end of its fiscal year, the PCU wouldsubmit to the World Bank copies of audit reports containing the auditor's opinion on (a) projectaccounts, including statement of expenditures and the Special Account.

43

ANNEX 7

Project Processing Budget and Schedule

A. Project Budget (US$'000) Actual

Preparation, Appraisal and 126,723Negotiations l

B. Project Schedule AlUl

Time taken to prepare the project 11 monthsFirst Bank mission(identification) 08/18/96Appraisal mission departure 10/13/97Negotiations 10/29/97Planned date of effectiveness 11/30/98Prepared by: Comisi6n Ejecutiva para la Reforma del Sector Salud,

and LCSHDPreparation assistance: Japanese Grant 029364

PPF 310-0-DO

Bank Staff and Consultants who worked on the project include:Patricio Marquez (Task Manager), Oscar Echeverri, Carlos Manzi, Fernando Sacoto, Evelyn Pesantez,Willy de Geyndt, David Varela, Monique Jouanin and Sonia Rodriguez-Crane.

Initial preparatory studieg conducted under the management of:Karen Cavanaugh with the support of Jeff Ruster and Richard Moore.

Local Counteart Team:Alberto Fiallo Billini, Carlos Amor6s Baez, Tirsis Quezada, Miriam Rodriguez, Virgilio Rodriguez,Fatima Guerrero, Pura Guzman, Amarilis Sanchez, Bruno Calder6n and Fernando Rojas.

er Reviewers: Xavier Coil (LCSHD); Mariam Cleason (HNP); and Willy De Geyndt (HNP,Consultant). Comments received by Julian Schweitzer (LCSHD); Orsalia Kalantzopoulos (LCC3C);Efraim Jimenez (LCOPR); H. Weindler (LOAEL); and Edgardo Favaro, Pilar Maisterra, Maria Donoso-Clark, John Panzer (LCC3C).

44

ANNEX 8

Documents in the Project File

A. Project Implementation PlanB. Draft Subproject Preparation GuidelinesC. Draft Project Operational ManualD. Policy LetterE. Economic Analysis (James Cercone)F. Project Costs and Financing Plan (Carlos Manzi, Carlos Amoros and Amarilis Sanchez)G. Organizationa Arrangments (Diagram)H. Terms of Reference for Plaza de la SaludI. Informe de Situaci6n Ambiental del Manejo de Residuos Hospitalarios para la Ficha Ambiental del

Proyecto (Carlos Amor6s)J. Informe Ambiental y Social (IDB Document)K. Results of the Political Mapping and Stakeholders AssessmentL ESU-96 Utilizaci6n de Servicios de Salud y Satisfacci6n de los Usuarios (SESPAS/GPP)M. Others:* Epidemiological and Health System Assessments and Policy and Institutional* Reform Proposals.* Salud Visi6n Futuro (Equipo Nacional)* Asesoria en Recursos Humanos del Sector (Bernard Couttolenc)* Propuesta de Acci6n para la Reforma en Area de RR.HH. en Salud (Pura Guzmn/lMaria Diaz)* Propuesta de Reorganizaci6n de la SESPAS (Fatima Guerrer/Candida Gil y Maritza Arbaje)* Reordenamiento y Reestructuraci6n Institucional de SESPAS/IDSS (Hugo Salinas Portillo)* Descentralizaci6n de SESPAS (Joachim Hahn/Virgilio Rodriguez)* Sistema Informaitico Hospitalario (Juan Andres Zavala)* Reordenamiento del Sistema Financiero de la SESPAS (Luis Rodriguez)* Sistema Suministros del Sector Salud (Rafael Solis)* Modernizaci6n Recursos Humanos SESPAS e IDSS (Richard Moore)* Analisis de la Reforma e Seguridad Social en Salud en Repuiblica Dominicana (Patricia Mintz)* Entitades de Negociaci6n Colectiva (Patricia Mintz)* Piloto de Sistemas Integrados de Salud en Santiago y la Romana (Patricia Mintz)* Piloto del regimen Subsidiado de Seguridad social en Salud (Patricia Mintz)* Proceso de Extensi6n de Cobertura de Salud del Sistema de Seguridad Social (Arismendi Diaz)* Transici6n Institucional del Sistema de Seguridad Social (Arismendi Diaz)* Analisis de Viabilidad para la Creaci6n del Fondo Nacional de Salud (Nelcy Paredes)* Plan Integral de Beneficios para el Sistema de Seguridad Social (Nelcy Paredes)* Modelo Financiero para el Sistema de Seguridad Social (Nelcy Paredes)* Revision del Modelo de Viabilidad Financiera (Nelcy Paredes)* Estudios de Servicios Pre-pagados en Republica Dominicana (IEPD)* Situaci6n Entidades Pre-pagas de Salud en Repiiblica Dominicana (Arismendi Diaz)* Asistencia Tecnica Aseguradores y Proveedores (Arismendi Diaz)

45

* Articulaci6n de Igualas Medicas (Arismendi Diaz)* Encuesta Demografica y Salud (ENDESA/96) (CESDEM/Otros)* El Financiamiento del Gasto Puiblico en Salud (Miguel Ceara)* Documento Base para el Marco Legal y Regulatorio del Nuevo Sistema de Seguridad Social (Emilio

Guerra)* Analisis de la Base del Sector Salud (Emilio Guerra)* Propuesta Modernizaci6n del Sistema Hospitalario (James Fymier)* Proyecto de Gesti6n Aut6noma de Hospitales Publicos (Tomas Tenza)* Estudio Factibilidad Compra-Venta Servicios Clinicos de Apoyo en Hospitales Publicos (Bernard

Couttelenc)* Plan de Acci6n para el Sub-Componente de Garantia (Jorge Hermida)* Estudio de Articulaci6n-Contrataci6n entrel el Gobierno y las ONGs para la provisi6n de* Servicios B6sicos de Salud (Sean Bradley)* Dominican Republic Health Sector Modernization and Restructuring (DR-0078) Loan Proposal.

Document of the Inter American Development Bank.

46

ANNEX 9Status of Bank Group Operations in Dominican Republic

IBRD Loans and IDA Credits in Operations Portfolio

Amount in US$ million(less cancellation)

Loan/Credit Fiscal Year Borrower Purpose Bank IDA Undisbursed Closingdate

Credits3 Credits(s) 22.08closed

Total Number of Credits =0 _ __[ 0.00 0.00

Loans 0.0021 Loans(s) 444.91closed _

MO500 1991 HWY 79.00 6.85 12/31/97MAINT V I

38750 1995 IRRIG LAND 28.00 27.70 12/31/03& WATERSH l

39510 1996 BASIC 37.00 37.00 06/30/01EDUCATION _

41270 1997 NATIONAL 7500 75.00 12/31/01_ HWY. PROJ

Total Number of Loans = 4 219.00 146.55Total*** 663.91 22.08 [of which repaid 301.10 5.73Total held by Bank & IDA [ 362.81 16.35Amount sold 0.00

of which repaid 0.00 1

Total Undisbursed 146.55

47

Dominican RepublicIFC's

Committed and Disbursed Portfolio

As of 31-Oct-97(In US Dollar Millions)

FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic1991/94 DTC 6.10 0.00 0.00 0.00 6.10 0.00 0.00 0.001993 Hotel Flamenco 4.83 0.00 0.00 0.00 4.83 0.00 0.00 0.001995/96 Smith-Enron 24.29 0.00 6.00 41.09 24.29 0.00 6.00 41.09

Total Portfolio: 35.22 0.00 6.00 41.09 35.22 0.00 6.00 41.09

Approvals Pending Commitment

Lian Eaft Quad Paric

.** _ .. 0.00 0.00 0.00 0.00

48

Annex 10

Dominican Republic at a glance 82S

Ldl LawPOVum anid SOCUL Dewuidoen _bnAmuu niddt-

mPi_lc 1OU& _noem DOewopmentd oneud'

PopulaIn mid-1S96 (mNo*n 7.9 485 1,125GNPpercaplb 1996 (USS) 1,570 3,710 1,750 Ufe expectancy,GNP196 (bWnsUS$ 12.5 1,799 1,967

Avelug umumil grewil% " M04

PopuIlaton4 ' 1.8 1.7 1.4 GNP GmeLaborli"s 0 2.8 2.3 1.8 per I >primary

Meat I " I paloest _tava_b h rbb t1989) capta enrollment

Poveit: hemdco Irndex (% Vfpxida 21hUben pop don% i o lopWuho 65 74 56

Uhe keotan atb bihr &*) 71 69 67Inhnt m ot flowhrl, e how 37 37 41 Ac to oewaterCild maln%onfo (Xf d.nw r 10 ..Aoseuto soe Wat (% of pop.1n) 79 80 78* Webroy (% ofpop*On age 15+) 18 13 .Dw.*an Pepub4Grow p1imwy enrollment (% of scaf-op p*Mn) 103 110 104

Mate 103 .. 105 gI _ gOpFemale 104 101

Kf mCONOMIC RATIOS mod LONT11 lUNWO

1Is m 116 136 1966

GOP ,Abuoa USS) 3,6 4.5 1Zo 13.1 Economic nitloGrow domesc D lrwasbnmn4DP 24.5 20.4 24.2 22.6 pExports ofgood andasKioeGWP 27.7 29.5 27.4 26.1 _Gossn dosstc wingDP 22.2 151 24.4 19.5Grs ndiorns sVGDP 20.2 15.9 27.8 22.7

rurent oooutbalanncG1P -2.0 -4.5 2.0 42Intest pwymeOnt P 0.9 3.1 1.9 1.4 Savnu wIngesbntTotal dbtCP 18.7 78.0 34.6 31.470ot deb.t arvedcpos 10.4 225 16.6 14.1P;wdvalued dettWP. 9Z.0Pres"ent valte ofdobiexports 9. . 2.3 .. Ir Wtdneb ss

1576t Iowa 1# 1 1 1s9746(ww annuaY th) Donm*an RepubibGDP 3.5 3.5 4.7 7.0 3.0 Lowrm lra4ne groupGNP per capia 0.4 2.2 2.9 33 1.7Exports of gw and servloe 7.2 9.2 .3 4.9 3.6

STRUCMotlhd ECONOMY1076 1966 lo6 1s6

(% ofGDP) Growth rts of output mid Inmtbnent p4Agdluihge 21.5 19.7 15.4 15.3 4oIndusby 31.6 256 29.0 2a1

Mantlectring 20.9 13.6 17.5 17.0 2 0 I NSeBvioms 4689 545 55.6 56.5 c

Privateconsumpton 716 76.9 68.9 737 zo R IsGeneral go ment consumption 62 6.0 67 6.8 _;O GDPImports d goods and services 30.0 34.8 27.2 29.5

19750619s" 16 lo6(avawe annualgrowth) Growth rstaofxporte and Imports (%)Agrute 3.3 0.7 1.2 9.6 2.Indunby 2.4 1.0 1.5 7.0 2 T A

M anufactr 2.3 1.5 1.5 2.9 le.Service 4.2 5.5 6.9 6.5 10.

Private consumpton 3 3 2.8 6.5 9.8 r P.General government conwmptlcn 11.0 0.0 -1.6 5.8 51 02 It 04 fGross domestic instmnot 42 2.5 0.0 1.5 -'aImports d goods and sekves 4.6 3.8 22 6.4Gmos nafonal product 2.7 4.2 4.8 4.9 - n

Note: 1996 data ame prpilmiry edi Figures Iiatios ae lbr year other than thoe specifed.The damonds dsw bur key Indicao In the country On bld) compared with 1 Income-group avea IH date are mIing, the damiond wlbe moompla.

49

Dominican Republic

1975 N15 109 1996D * mcp~tce. InflotbIn (%)

(% Mawe) o0nsumer prIes 145 37.5 1Z4 6.5 so _

ImplicIt GDP dedo 17.0 38&9 1Z5 5.0 4020.

tX of GOP) o10Currentrevenue 16.6 152 01 62 93 U N nOCwent buWet balae .. . 6.8 5.0 -GDP(. POveteIl su ddIdalit .. .. 0.9 -1.5

TSAE

(mus U$)1 Exportand Import levels(mill. US)

Tolal exports (ob) . 738 743 718 4o0i1

sugar .. 159 132 169Gold 14 45 49 3 xManufadures ..

Total Importl (cdo 1128 2,786 3,17'6 li)Food .. 48Fuel and energy 507 606 777CaplW goods 217

Expoitprloelndex(1987=100) . 125 118 so DI 2 93 U 06 M

Import price index (1967=100) . .. 145 153 *Expod a InportTermsof tade (1987=100) . . 86 78

ALANCE of PAYMENTS19T5 1NS 1995 199S

(nimo USS) Current account balance to ODP rallo %)Expotso goods and seile 1,010 1,323 3,258 3,424Iworts of goods and services 1,009 1,560 3,419 3,871 4Resource babnce 1 -228 -161 447 2

Net Income -113 -319 -461 -449Net currentb tansfe 39 356 867

Cutrent acoount balance, -2..belore dikll ceptal transler -73 -200 247 -29

Financirn Ienm (net) 66 291 -133 21Changesinrno 7 -90 re14 8er

Reserves irdudn gold (mNL USS) 125 346 702 735*onvesion rte (aWJSS) 1.0 3.1 13.3 1a7

EXTERNAL DET and RESOURCE FLOWS176 IS5 195 19Slo

(mhao USS) ComposIton or total debt, 1S99 (mill. US)Toal debt outstanding and dIsbused 673 3,502 4,171 4,119 A

lB1D 20 152 283 244 G AIDA 8 21 17 17 629 2 C

Total debtNservce 108 302 540 482IBRtD 4 22 60 56DIDA 0 0 1 785

832.378Compoalton d net roewooelt os f

Ofical gurts 9 97 49 35Offial crdifto 34 146 -85 -41Prvate credtom 61 20 -24 -23Foeln dret hlmmt 64 36 199 140Portfdo equlty 0 0 0 0 1E12

World Bank pogramCommllrents 8 42 28 37 A-lIBRD E -flatralDIsburuement 3 17 36 18 B-IDA D-Olhsrmut5Mleral F-P PMetPrlncipal ym snet 2 10 40 38 c- IMFOSmNetfitk 0 7 -5 -19Interest payment 2 12 21 19Netbansfer -1 -5 -26 -39

Oewopet EaonomIc 8&28197

50

IBRD 19599R

~~:DOMINICAN REPUBLIC2O~~~~~~~~~~~~ AT AN /~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~o

-. Infernatioriol boundaries

jips,n" Province boundariesMonte crit ~ -- _ -/V- NatIonal copifal

<-,Puerto Plato Province capitals

Pa 1 0C, MOA R IS TI Main rondo~~~~ai~~~odoŽ I P~~~~~~UFRTO P/A TA osnployn -.---- Railroads

ajabon R~~~~~~~~~~~~~~~~~~~~~~IA o Rfe

GO - t- ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~I -- BcsdYm

5 7 BAA'ARODRIGU A SanTE JSTeESn9Aresq1~~~~~edernales ~ ~ ~ ~ ~ e .. Maa

/~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~cs

PEDE//NALES ~~~~~ netsnAoSAMANmanci~~~~~~~~COA

H A I T I '31~- I

ELIAS PINA ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~'.PNAA vauuL

I. .~~~~ 4 ' . I CnLOM8iO~~~~~~~I C

A/ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~PI 901