Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. P-6550-IND

MEMORANDUM AND RECOMMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED LOAN

IN AN ANOUNT EQUIVALENT TO US$88 MILLION

TO THE

REPUBLIC OF INDONESIA

FOR A

FOURTH HEALTH PROJECT

IMPROVING EQUITY AND QUALITY OF CARE

MAY 22, 1995

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EOUIVALENTS(as of March, 1995)

Currency Unit = Rupiah (Rp)Rp 1 million = US$456US$1.00 = Rp 2,193

FISCAL YEAR

April 1 - March 31

ABBREVIATIONS AND ACRONYMS

ARI - Acute respiratory infectionBHS - Basic health servicesBupati - Head of district administrationCAS - Country Assistance StrategyGOI - Government of IndonesiaHP III - Third Health ProjectHP IV - Fourth Health ProjectIMR - Infant mortality rateKaltim - East KalimantanNTB - Nusa Tenggara BaratMOH - Ministry of HealthPDE - Program development expendituresPuskesmas - Health centerQA - Quality assuranceSAF - Special Assistance FundTA - Technical assistanceTB - Tuberculosis

FOR OFFICIAL USE ONLY

INDONESIA

FOURTH HEALTH PROJECT: IMPROVING EOUITY AND OUALITY OF CARE

Loan and Project Summary

Borrower: Republic of Indonesia

ImplementingAgency: Ministry of Health (MOH)

Poverty: Program of Targeted Interventions

Amount: US$88.0 million equivalent

Terms: Repayable in 20 years including five years of grace at the Bank's standardvariable interest rate.

Commitment Fee: 0.75 percent on undisbursed loan balances, beginning 60 days aftersigning, less any waiver

Financing Plan: See para. 20

Economic Rateof Return: Not applicable

Staff AppraisalReport: No. 13991-IND

Map: IBRD No. 26852

Project IdentificationNumber: ID-PA-3965

This document has a restricted distnbution and may be used by recipients only in the performance of theiroffilcial duties. Its contents may not otherwise be disclosed uwithout World Bank authorization.l

I

MEMORANDUM AND RECOMMENDATION OF THE PRESIDENTOF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

TO THE EXECUTIVE DIRECTORSON A PROPOSED LOAN TO INDONESIA

FOR A FOURTH HEALTH PROJECT:IMPROVING EQUITY AND QUALITY OF CARE

1. I submit for your approval the following memorandum and recommendation on a proposedloan to the Republic of Indonesia for the equivalent of US$88.0 million to help finance The FourthHealth Project. The loan would be at the Bank's standard variable interest rate, with a maturity of20 years, including five years of grace.

2. Country and Provincial Background. During its first 25-year development plan (1968/69-1993/94), Indonesia achieved sustained economic growth rate averaging over 6 percent annually,and, in the process, reduced poverty. During this period, the country also registered advances inthe health sector. Access to modern health care widened and health status increased considerably,as indicated, for example, by the rise of life expectancy at birth from 45.7 years in 1967 to 62 yearsin 1990. In addition, the nutritional status of the population improved, as illustrated by the declinein the prevalence rates of protein energy malnutrition and vitamin A deficiency. The use of certainpreventive health measures such as modem family planning has also increased at a rapid rate. Forinstance, the contraceptive prevalence rate among married women of reproductive age rose to 55percent in 1994 from 10 percent in the 1960s, facilitating the reduction of total fertility rate from6.61 children in 1971 to 2.90 in 1994.

3. Indonesia's provinces have shared to a greater or lesser extent in economic growth,improved access to modem health services and infant mortality rate decline. The country's regionaldifferences and commonalities are illustrated in the project provinces of East Java, West Kalimantan,East Kalimantan, Nusa Tenggara Barat (NTB), and West Sumatra. East Java, for example, hasreached an estimated infant mortality rate (IMR) of about 64 deaths per thousand live births in 1990,while the infant mortality rate (IMR) in NTB continues to be high at about 145 despite health gainsmade during the past decade. West Kalimantan, which has the highest poverty rate in the country(33.8 percent), also registered a decline in infant mortality and gains in education and othersocioeconomic indicators. Accessibility of basic health services, however, remains a problem.Average catchment area of health centers, which relatively few people visit, is sixteen times largerthan in East Java and transportation is difficult. East Kalimantan is beginning to encounter the costlychronic and degenerative disease problems associated with higher income areas. Yet, infectious andparasitic diseases continue to account for more than half of all reported episodes of disease anddeaths.

4. Despite differences in mortality and morbidity levels and epidemiological agendas, theproject provinces all face comparatively high infant mortality rates and similar service deliverychallenges, including the need to improve performance and quality of care within a common healthcare delivery system. Part of the problem is low public spending for basic health services (BHS).But factors other than money, particularly those relating to institutional capacity, work process, staffattitudes and other aspects of organizational culture also contribute to performance problems. Forexample, service quality is affected by lack of sensitivity to clients, inefficient work processes, poormanagement, and weak performance incentives. These weaknesses can make government healthfacilities less attractive and accessible to clients. Consequently, health system efficiency andeffectiveness often suffer, as evidenced by frequent lapses from recommended clinical norms and

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underutilization of government facilities and staff in many localities. Finally, another deficiency inthe performance of the health systems in the five provinces is that the poor continue to lag behind.Currently, the poor receive a disproportionately low share of overall health subsidies due in part tothe substantial share of health spending going to hospital services that are used mostly by the well-off.

5. Health Sector Strategy. Improvements in the performance of the publicly managed healthsystem represent a feasible and cost-effective means of enhancing health outcomes. To realize thisexpectation, the Government of Indonesia (GOI) will pursue the following strategy:

(a) Effect facility level changes to raise the level of performance of basic health service (BHS)providers, specifically in rendering higher quality BHS and reaching out to the poor;

(b) Promote decentralization, adjust institutional arrangements and enhance the capacity ofprovincial and district level managers to supervise, motivate and support lower-level staffand hold them more accountable for service performance; and

(c) Improve health financing by allocating a greater percentage of government health spendingto highly cost-effective basic health services and raising the share of health benefits of thepoor, increasing local government financial support for health and raising the retention ofrevenues from fees for health services to support their improvement, and adjustingbudgetary arrangements, in particular promoting the use of block grants for health services.

6. Lessons Learned from Previous Bank QOerations. The Bank has funded thirteen healthprojects since 1977. These include support for nutrition, community health, health manpowerdevelopment, water and sanitation, referral facilities and family planning initiatives. Bank loans forthese projects totalled US$602 million. There are several important lessons that are relevant to thedevelopment of this project. First, the experience of the first cohort of Bank-supported healthprojects in Indonesia confirms that too rapid expansion of activities can jeopardize quality and lackof attention to quality assurance and effectiveness issues seriously limits project impact on healthoutcomes. Second, it is critical to address demand and utilization issues. Ignoring them has led toimplementation problems, as shown by the experience of the manpower and hospital constructionprojects. Third, from the recent group of projects, the experience of the Third Health Project (HPIII) reveals that incremental steps towards decentralization, particularly strengthening theresponsibility and authority for and the management and delivery of health programs at the provincialand district levels, can have considerable positive impact on health sector development. Measuresintroduced under the Third Health Project include consolidation of the central development budget(DIPs) for community health into a single budget for high priority basic health services, transfer ofbudget responsibility to the District Health Offices and drugs management reforms. But to sustaininstitutional changes and extend them down to health facilities, follow-up efforts are needed. Forexample, the quality of care provided at health centers in Nusa Tenggara Barat (NTB) and EastKalimantan (Kaltim) is still deficient in terms of compliance with recommended clinical standards,indicating the need for quality assurance mechanisms, reform of work processes and other aspectsof organizational culture of health centers.

7. Rationale for Bank Involvement. The health sector is an appropriate area for Bankinvolvement. Public intervention in the sector is legitimate and necessary to maximize sector

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efficiency. Many basic health interventions have public goods characteristics; moreover, marketimperfections in the health sector are quite serious due to the asymmetry of information betweenconsumers and providers. Some public interventions can also be justified on grounds of equity. Inparticular, Bank analysis shows that the provision of basic health services is a cost-effective way toalleviate poverty.

8. The Bank is well suited to provide the support needed to deal with these various issues.First, it is at the forefront in assisting health sector reforms in Indonesia and has accumulatedrelevant knowledge and experience. Its analytical work and recent innovative lending operationshave dealt with key sectoral issues. Second, the Bank has established an excellent partnership withGOI and a credible approach to health sector reform. Third, the Fourth Health Project (HP IV)represents an excellent vehicle for pursuing the objective, cited in the Country Assistance Strategy(CAS), of helping Indonesia overcome human resource bottlenecks by strengthening provincial anddistrict management, and improving the quality and utilization of basic social services like health.The project is consistent with the CAS which was discussed by the Board on March 21, 1995. TheFourth Health Project would contribute to the CAS agenda by:

(a) supporting GOI efforts to enable and motivate frontline health providers and managersin public facilities to deliver higher quality, more accessible services that fit the needsand demands of clients;

(b) promoting decentralization and enhancement of capacity of provinces and districts tosupervise and support lower level managers and staff; and

(c) assisting in improving health financing by reorienting (i) public expenditures in healthto assure that a larger share of sectoral allocations goes to the poor and provision ofbasic service packages, and (ii) sector financing mechanisms, with much greater relianceto be placed on direct cost recovery and health insurance modalities.

9. Project Objectives. The aim of the project is to improve health outcomes by givingprovinces, districts and puskesmas (health center) managers greater responsibility, authority,resources, and skills to enhance health care quality and equity. Specific project objectives are: (i)to increase the authority and capacity of provincial and district health offices and health centers toplan and implement health programs as they deem appropriate to local conditions; (ii) to ensure thatthe provision and consumption of key health services conform to affordable, cost-effective standardsof care; (iii) to improve access and utilization of these health services by the poor; and (iv) toimprove efficiency in the delivery of basic health services (BHS). These objectives address key issuesthat are essential to further health sector development and poverty alleviation.

10. Project Description. As mentioned, the project would cover the provinces of West andEast Kalimantan, East Java, Nusa Tenggara Barat, and West Sumatra and provide, over five years,support for various components. The choice of the five provinces was based on the followingconsiderations. First, Kaltim and NTB were included to follow up assistance provided under ThirdHealth with additional innovative activities deemed necessary to bring about required changes inorganizational culture and institutional capacity at the facility level. Second, GOI chose theremaining three provinces from those that did not have any major donor-assisted health project.

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Within, this group, priority was given to those provinces with the worst poverty indicators (WestKalimantan) and the largest number of poor families (East Java).

11. Components. In each province, the project consists of facility-level service improvement,institutional development, and resource allocation and revenue generation components. In the facility-level service component, funds would be used to: (i) upgrade and construct health facilities toimprove delivery of basic health services (BHS); and (ii) provide discretionary health center SpecialAssistance Funds (SAFs) and other additional resources for operational and recurrent costs (on adeclining rate) to support implementation of quality assurance and other BHS programs initiated byprovincial, district and frontline providers.

12. Funds for institutional development would finance improvements in the capacity ofprovincial, district, and Central-level agencies to assist, motivate, and supervise frontline healthproviders in delivering accessible high quality packages of basic health services. Specifically, projectexpenditures would go to: (i) establishing quality assurance mechanisms and supportingtraining/curriculum development activities; (ii) developing effective performance-linked incentives;(iii) financing discretionary district SAFs, replication of HP III innovations, and other pilotprograms; and (iv) strengthening the capacity of Central-level MOH units to give technical guidance,disseminate quality assurance and other HP IV innovations, and carry out oversight functions.

13. Finally, funds would be provided in the resource allocation and revenue generationcomponent for technical assistance (TA), data collection and analysis, materials and workshops todesign and promote facility-level fee increases and revenue retention, and to institute more effectivetargeting of health subsidies to appropriate recipients and activities.

14. Provincial Health Improvement Programs. Project activities and outlays by province aredescribed below (amounts in parentheses are base costs):

15. East Java (US$23.1 million equivalent): The project would mainly fund operational andincremental recurrent costs (73 percent) to meet the drugs and other requirements of an expandedBHS coverage program and developmental expenditures (13 percent) needed to establish qualityassurance practices and supporting training programs. Over a fifth of the project costs would financediscretionary SAFs for health centers and districts which support GOI's decentralization efforts.Outlays would be directed at existing deficiencies in the quality and coverage of ten basic healthservices, which include nutrition, maternal and child care/family planning, immunization, healtheducation, control of communicable diseases (dengue, malaria, TB, diarrhea, and acute respiratoryinfection) and school health services.

16. West Kalimantan (US$29.6 million equivalent): A distinctive feature of the province'sprogram is its support for technical assistance and other components that would address systemicissues arising from the application of Indonesia's conventional health delivery system and approachesto an area characterized by non-standard geographic configurations. SAFs (30 percent) and thebudget for quality assurance (QA) and supporting activities (10 percent) would be the vehicle toenable the province to tailor its approaches to the distinctive environment within which its healthprograms operate. In addition, the project would support civil works (40 percent) and equipmentprovision more heavily than in other provinces to improve the physical infrastructure of its publiclymanaged basic health services facilities. Referral facilities for maternal and child services would be

strengthened. Water and sanitation programs would be improved to reduce the high prevalence rateof water-borne diseases.

17. Nusa Tenggara Barat (NTB) (US$9.0 million equivalent): NTB would further develop,expand and institutionalize the quality assurance program that it has successfully piloted. In addition,it would try out Referral Health Centers and develop a program to enhance the ability of traditionalbirth attendants (the predominant source of birth delivery assistance) to conduct their practice moresafely and to make timely and appropriate referrals of high risk pregnancies. NTB's SAFs (28percent), quality assurance efforts (15 percent), and support for health equipment and recurrent costsfor supervision and medical supplies (21 percent) would provide funds to promote safe motherhood,child immunization, ARI interventions and other BHS activities. As in other provinces, the SAFswould not only increase discretionary resources available to district offices and health centermanagers to respond more quickly to quality problems documented through the application of QAmethodologies; they would also be used as a vehicle for developing and instituting a budgetarypractice of providing extra operational resources for underserved areas.

18. East Kalimantan (US$14.5 million equivalent): As in the other provinces, the projectwould support the development of effective systems of performance evaluation and associatedincentive schemes linked to service improvements in terms of both utilization and quality assurance-based indicators. The province would further develop and expand its pioneering efforts to use healthcenter fees as a source of extra-budgetary resources and incentives for improved service performanceby health staff. It also plans to use project funds for Program Development Expenditures (PDE) topilot a managed prepaid health care system in Balikpapan that would utilize private providers ofhealth services. However, project funds allocated for this province would be used largely to establishquality assurance processes and supporting activities (about 10 percent) and finance recurrent costsfor health supplies (15 percent), SAFs (23 percent) and equipment (17 percent) purchases to addressKaltim's remaining problems of communicable and infectious diseases.

19. West Sumatra (US$27.5 million equivalent): The project would supp9rt: (i) thedevelopment of an institutionalized QA program; (ii) the expansion of outreach activities, particularlyin the remote areas; (iii) training to address skills deficits that affect quality of care; (iv) expandedsupervisory contacts with service providers to facilitate the QA program and development ofinterventions to make these contacts more productive and accountable; (v) redeployment of staff tounderserved areas; (vi) the provision of adequate health supplies and greater availability of functionalequipment in health centers; and (vii) decentralized problem-solving initiatives by health center,district and provincial managers. The province would use the above funds to raise immunization rateand utilization of cost-effective health interventions to strengthen maternal child health services andcontrol of communicable and infectious diseases such as ARI, tuberculosis (TB), malaria, anddiarrhea. In this regard, about a quarter of the above funds would finance discretionary SAFs toenable the province to expand its BHS programs, especially to poor communities. In addition,another third of the province's project funds would be allocated for drugs and other recurrent coststo meet shortages of supplies.

20. Project Implementation. The proposed project would be carried out by the Ministry ofHealth. The project cost is estimated at US$134.3 million equivalent, with a foreign exchangecomponent of US$40.4 million equivalent (30%) and taxes and duties estimated at about US$3.0million equivalent, of which the Bank would finance US$88.0 million equivalent (96% of the foreign

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exchange and 67 % of the total project cost excluding taxes). A breakdown of costs and the financingplan are shown in Schedule A. Amounts and methods of procurement and of disbursements, andthe disbursement schedule are shown in Schedule B. A timetable of key project processing eventsand the status of Bank Group operations in Indonesia are given in Schedules C and D, respectively.A map is also attached. The Staff Appraisal Report, No. 13991-IND dated May 22, 1995, is beingdistributed separately.

21. Project Sustainability. Prospects for project sustainability are very good. Indonesia'soutlook for economic growth is bright, and the cost of the project's various initiatives is modest andaffordable. Moreover, there is a strong sense of project ownership and a firm commitment by GOIand participating local governments to carry on successful HP IV initiatives with local funds andretained earnings of health facilities. Furthermore, as the project eases current concerns about thepublic health sector's inability to efficiently absorb additional funds, resistance to budgetary increasesfor basic health services could be reduced considerably. Finally, through its promotion of highercost recovery, greater retention of revenues earned by public health facilities, as well as intensifiedmobilization of private resources (e.g., health insurance), the project is expected to facilitatebudgetary reallocations that would increase health subsidies to basic health services and povertyalleviation.

22. Agreed Actions. During negotiations, the following assurances were obtained from theGovernment of Indonesia that it would:

(a) not later than December 31, 1995, furnish to the Bank a classification, on the basis ofpoverty issues, of health centers and health districts in the project provinces;

(b) not later than October 31, 1996, furnish to the Bank guidelines for pricing personalhealth services provided by health centers and hospitals and protecting the poor fromthe impact of price adjustments;

(c) not later than October 31, 1996 implement the system for the annual collection ofconsolidated budgetary information to monitor achievement of the targets relating toincreased government health spending for BHS and the poor and for assessing theimpact of proposed central and provincial budgetary allocations on the funding of BHS;

(d) cause the local governments of the participating provinces to take all actions requiredfor the implementation of the Provincial Government Statement of Support in eachdistrict selected to participate in the project, including the requirement:

(i) that the share of district health budget going to BHS and the poor be increasedannually;

(ii) that health service fees be adjusted upwards and that such revenues be used forpurposes of the health sector; and

(iii) that part of the earnings of the health centers be used by such facilities for healthcenter incentives;

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(e) not later than January 31, 1996, furnish to the Bank a proposal for a scheduling andmanagement mechanism for the training of staff which minimizes disruption in thehealth facilities' activities and which ensures: (i) that training courses under the projectaddress documented skills deficits critical to BHS improvement and have definedmeasurable outcomes; and (ii) that training courses are evaluated on the basis of thetrainees' measurable acquisition of relevant gains in skills and knowledge;

(f) before implementing a training program, have the relevant course materials availablefor the trainees;

(g) (i) not later than March 31 in each year commencing on March 31, 1997, furnish to theBank evaluation reports of the health districts' performance covering a two-year periodin terms of agreed performance indicators; and (ii) thereafter, review with the Bank thereports and take all measures required to ensure improvements in the health districts'performance in terms of the performance indicators, including, if necessary, thereduction of Special Assistance Funds to non-performing health districts;

(h) undertake midterm and final project reviews, acceptable to the Bank, and submit copiesof reports of the midterm review not later than December 31, 1997, and discuss withthe Bank the results of the review not later than February 28, 1998;

(i) cause technical audits of project implementation to be carried out, in a manneracceptable to the Bank, by April 1 in each year during the implementation of the projectand furnish a copy of such audit to the Bank for comments, by July 31 of each suchyear;

(j) provide the required vehicles for the project in accordance with a schedule agreed withthe Bank;

(k) carry out the activities under the Special Assistance Fund (SAF) in accordance with theSAF Operating Guidelines, agreed with the Bank; and

(1) carry out the Program Development activities in accordance with the ProgramDevelopment Expenditures Operating Guidelines, agreed with the Bank.

23. Environmental Aspects. The project does not pose any significant environmental threat.The possibility of hospital wastes impacting on the environment is unlikely to be significant, sincethere will be no major hospital construction under HP IV. On the contrary, HP IV could contributeto the quality of the environment to the extent that the project strengthens the ability of health centersto deal with communicable diseases and pathogens in the environment.

24. Project Benefits. By improving the delivery and quality of BHS, the project would increasethe number of people utilizing them and benefiting from their use. Covering about 886 healthcenters, HP IV could benefit an estimated 27 million people. Of these, about 20 percent are poorand another 13 percent are near-poor. While all demographic groups could benefit from the project,the major beneficiaries are expected to be women and children from both poor and non-poor

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families. The poor, however, would benefit from the project disproportionately, as subsidies forhealth centers and their outreach activities are strongly pro-poor

25. Risks. The project has two salient risks. First, increasing cost-recovery rates toappropriate levels might be delayed in some districts, given that price increases for publicly providedservices represent a politically sensitive decision. Second, the training activities sponsored by theproject could become burdensome on staff and disruptive of their work. These risks have beenreduced during project preparation by ensuring that enough funds have been allocated for thepromotion of price reforms and that both provincial, district and central officials are committed tothem. Evidence for this commitment is shown by their involvement in advancing this aspect of theproject and by the decrees issued by Bupati (head of district government) of starter districtsexpressing support for price adjustments. As to training, the project would emphasize distancelearning and other on-the-job approaches. It would also establish mechanisms for controlling thenumber of days staff are away from work to attend off-the-job training.

26. Recommendation. I am satisfied that the proposed loan would comply with the Articles ofAgreement of Bank and recommend that the Executive Directors approve the proposed loan.

Richard H. FrankPresident ad interim

Attachments

Washington, D.C.May 22, 1995

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Schedule APage 1 of 2

INDONESIAFOURTH HEALTH PROJECT: IMPROVING EQUITY AND QUALITY OF CARE

Estimated Costs and Flnancing Plan(US$ million)

Estimated Project Costs: Local Foreign Total

Facility-Level Service InprovementHealth Facility Construction and Upgrading 21.6 15.3 36.9Special Assistance Program for Basic Health Services 27.5 9.8 37.3

Institutional DevelopmentSupport for Quality Assurance Mechanisms 6.1 1.4 7.5Support for Training and Curriculum Development 3.6 5.5 9.1Support for Performance-Linked Incentives 0.4 0.2 0.6Replication and Piloting Innovative Initiatives:

Dissemination and Adaptation of HP III Innovations 1.5 0.3 1.8Piloting Exemplary Integrated District Health System 12.1 1.6 13.7

Project Management Support 4.5 2.0 6.5

Better Resource Allocation and Revenue Generation 1.1 0.3 1.4

Total Base Costs 78.4 36.4 114.8

Contingencies:Physical 3.9 1.8 5.7Price increase 11.6 2.2 13.8

Total Cost /a 932 40.4 134.3

Financing Plan:

Government of Indonesia 44.6 1.7 46.3IBRD 49.3 38.7 88.0

Total 93.9 40.4 134.3

/a Includes identifiable taxes and duties estimated at US$3.0 million equivalent.

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Schedule APage 2 of 2

INDONESIAFOURTH HEALTH PROJECT: IMPROVING EQUITY AND QUALITY OF CARE

(US$ million)

Provincial Health OfficeEast East West West West

Component Java Kalimantan Kalimantan Nusa Tenggara Sumatra MOH Total

Facility-Level Service Inprovement- Health Facility Construction and Upgrading 2.5 5.6 15.6 4.0 9.2 0.0 36.9- Special Assistance Program for Basic Health Services 14.9 3.6 5.3 2.2 11.3 0.0 37.3

Subtotal 17.4 9.2 20.9 62 20.5 0.0 74.2

Institutional Development- Support for Quality Assurance Mechanisms 0.2 1.1 1.7 0.5 1.6 2.4 7.5- Support for Training and Curriculum Development 2.1 1.2 2.6 0.8 1.2 1.2 9.1- Support for Performance-Linked Incentives 0.0 0.0 0.1 0.0 0.0 0.5 0.6- Replication and Piloting Innovative Initiatives:

Dissemination & Adaptation of HP Im Innovations 0.2 0.2 0.3 0.0 0.4 0.7 1.8Piloting Exemplary Integrated District Health System 2.5 2.1 3.2 1.0 2.9 2.0 13.7

- Project Management Support 0.5 0.6 0.7 0.4 0.7 3.6 6.5

Subtotal 5.5 5.2 8.6 2.7 6.8 10.4 39.2

Better Resource Allocation and Revenue Generation 0.2 0.1 0.1 0.1 0.2 0.7 1.4

Total Base Costa 231 14.5 29.6 29 27.5 11.1 114.8

Physical Contingencies 1.1 0.7 1.4 0.5 1.4 0.6 5.7Price Contingencies 2.8 1.7 3.6 1.1 3.5 1.1 13.8

Total Costs 27.0 16.9 34.6 10.6 32.4 12.8 134.3

% of TotalProjectCosts 20% 13% 26% 8% 24% 10% 100%

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Schedule BPage 1 of 2

INDONESIAFOURTH HEALTH PROJECT: IMPROVING EQUITY AND QUALITY OF CARE

Procurement Arrangements(US$ million)

ProcurementProcedures Total Cost

Category of Expenditure ICB NCB OtherLa N.B.F. includingContingencies

Civil Works 24.4 7.0 31.4(16.8) (4.5) (21.3)

Equipment and Furniture 2.0 5.4 7.9 /b 15.3(1.5) (4.1) (5.9) (11.5)

Vehicles 0.1 0.1

Consultant Services and Studies/c 8.5 8.5(8.5) (8.5)

Fellowships:Domestic 2.7 2.7

(0.0) (0-0)Overseas 6.9 6.9

(6.9) (6.9)Training and Workshops 3.8 3.8

(3.8) (3.8)Project Management 5.2 5.2

(5.2) (5.2)Incremental Recurrent Costs Ld 60.4 60.4

(30.8) (30.8)

Total 2.0 29.8 102.4 0.1 134.3(1.5) (20.9) (65.6) (88.0)

Notes: Figures in parentheses are the respective amounts financed by the Bank.N.B.F - not Bank financed.

La Includes direct contracting, force account, shopping, hiring of consultants, and administrativeexpenditures.

/b Includes small equipment for the SAF and PDE programs./c Includes contract services for PDE programs./d Includes supervision travel expenses, O&M, drugs, office consumables and expenditures for the

SAF program.

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Schedule BPage 2 of 2

INDONESIAFOURTH HEALTH PROJECT: IMPROVING EQUITY AND QUALITY OF CARE

Disbursements(US$ million)

Category Amount % of expendituresto be financed

Civil Works 20.3 91%(non-INPRES)

Equipment and Furniture 8.9 100% of foreign expenditures(excluding vehicles) 100% of local expenditures

65 % of local expendituresfor other items procured locally

Consultant Services and Studies 6.1 100%

Overseas Fellowships 6.6 100%

Training and Workshops 3.6 100%

Program Development Expenditures 4.7 91%

Special Assistance Expendituresa" 100% incurred in:3.0 FY1995/96 and FY1996/976.5 FY1997/98 and FY1998/993.6 FY1999/2000 and thereafter

Project Management Support 4.9 100%

Incremental Operating Costsa" 100% incurred in:4.5 FY1995/96 and FY1996/977.6 FY1997/98 and FY1998/993.5 FY1999/2000 and thereafter

Unallocated 4.2

Total 88.0 66%

Estimated Disbursements:Bank Fiscal Year 1996 1997 1998 1999 2000 2001Annual 4.0 12.0 24.0 26.0 15.0 7.0Cumulative 4.0 16.0 40.0 66.0 81.0 88.0

a/ Declining absolute amount financing of 75%, 75%, 50%, 50%, 25% of five-year annual total expenditures.

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Schedule C

INDONESIAFOURTH HEALTH PROJECT: IMPROVING EQUITY AND QUALITY OF CARE

Timetable of Key Project Processing Events

(a) Time taken to prepare: 16 months

(b) Project prepared by: Government with IBRD assistance

(c) First IBRD mission: August 15, 1993

(d) Appraisal mission departure: December 2, 1994

(e) Negotiations: April 18, 1995

(f) Planned date of effectiveness: September 20, 1995

(g) List of relevant ICRs and PPARs:

Credit/Loan No. Project Date No.

ICRLn. No. 1373 First Nutrition Project June 28, 1985 5757Ln. No. 1869 Population III Project December 23, 1988 7564Ln. No. 2542 Health II Project December 2, 1994 13745Ln. No. 2529 Population IV Project September 14, 1993 12310

PPARCr. No. 0300 Population I May 28, 1985 3748Ln. No. 1472 Population II June 23, 1986 6276Ln. No. 2636 Nutrition and Community

Health Project December 12, 1994 13782Ln. No. 2235 Provincial Health Project December 12, 1994 13782

- 14 -Schedule DPage 1 of 4

STATUS OF BANK GROUP OPERATIONS IN INDONESIA

A. STATEMENT OF BANK LOANS AND IDA CREDITS /a(as of March 31, 1995)

Amount (US$ million)Loan/ Bank IDACredit Fiscal Original principal Undis-

Number Year (less cancellation) bursed

One-hundred-twenty-six loans and 10,652.49 901.60forty-eight credits fully disbursed

Of which SECALS, SALs and Program Loans /b

2780 1987 Trade Policy Adjustment . 300.002937 1988 Second Trade Policy Adjustment 300.003080 1989 Private Sector Development 350.003267 1991 Second Private Sector Development 250.00

Subtotal: 1,200.00

2638 1986 Nusa Tenggara Agriculture Support 33.00 2.992705 1986 Manpower Development and Training 58.10 4.382773 1987 Fisheries Support Services 20.00 3.622930 1988 Forestry Institutions & Conservation 30.00 7.032932 1988 Jabotabek Urban Development 150.00 27.432940 1988 Accountancy Development 113.00 18.982992 1989 Tree Crops Human Resource Development 18.40 2.653000 1989 Tree Crops Processing 88.40 32.113031 1989 Agriculture Research Management 34.53 2.863040 1989 Industrial Restructuring 238.06 4.893041 1989 Small & Medium Industrial Enterprise 94.43 0.463042 1989 Third Health 43.50 9.603097 1989 Power Sector Efficiency 321.00 36.933098 1989 Paiton Thermal Power 346.00 56.243112 1990 Public Works Institutional 36.10 4.66

Development & Training3133 1990 Highway Sector 350.00 29.043134 1990 Professional Human Resource Development 117.50 7.523158 1990 Second Secondary Education 154.20 60.143180 1990 Rural Electrification 273.56 40.603182 1990 Third Telecommunications 350.00 115.463209 1990 Gas Utilization 86.00 63.673219 1990 Second Jabotabek Urban Development 190.00 91.583243 1990 Second Forestry Institution 20.00 11.58

and Conservation3246 1991 Third Jabotabek Urban Development 61.00 37.07

/a The status of the projects listed in Part A is described in a separatereport on all Bank/IDA-financed projects in execution, which is updatedtwice yearly and circulated to the Executive Directors on. April. 30 andOctober 31.

/b Approved during or after FY80.

- 15 -Schedule DPage 2 of 4

Amount (US$ million)Loan/ Bank IDACredit Fiscal Original principal Undis-

Number Year (less cancellation) bursed

3249 1991 Second BRI/KUPEDES Small Credit 125.00 9.963282 1991 Fertilizer Restructuring 221.46 27.973298 1991 Fifth Population 104.00 30.283302 1991 Provincial Irrigated Agriculture 104.50 52.00

Development3304 1991 East Java/Bali Urban Development 180.30 74.063305 1991 Yogyakarta Upland Area Development 15.50 7.243311 1991 Second Higher Education 150.00 36.323340 1991 Sulawesi-Irian Jaya Urban Development 100.00 44.723349 1991 Power Transmission 171.60 42.013385 1991 Technical Assistance Project for 30.00 24.03

Public and Private Provisionof Infrastructure

3392 1992 Second Irrigation Subsector 215.00 27.143402 1992 Agricultural Financing 106.10 75.313431 1992 Third Non-Formal Education 69.50 34.173448 1992 Primary Education Quality Improvement 37.00 28.643454 1992 BAPEDAL Development 12.00 8.463464 1992 Treecrops Smallholder 87.60 60.323482 1992 Fourth Telecommunications 375.00 289.123490 1992 Third Kabupaten Roads 215.00 78.693496 1992 Primary School Teacher Development 36.60 24.393501 1992 Suralaya Thermal Power 423.60 335.003526 1993 Financial Sector Development 307.00 124.093550 1993 Third Community Health & Nutrition 93.50 76.153579 1993 E. Indonesia Kabupaten Roads 155.00 105.493586 1993 Integrated Pest Management 32.00 28.413588 1993 Groundwater Development 54.00 45.123589 1993 Flores Earthquake Reconstruction 42.10 25.993602 1993 Cirata Hydroelectric Phase II 104.00 93.933629 1993 Water Supply & Sanitation for 80.00 76.44

Low Income Communities3658 1994 National Watershed Management and 56.50 53.48

Conservation3712 1994 Second Highway Sector Investment 350.00 315.973721 1994 Skills Development ,7.70 26.703726 1994 Surabaya Urban Development 175.00 167.203732 1994 Fifth Kabupaten Roads 101.50 93.043742 1994 Dam Safety 55.00 52.003749 1994 Semarang-Surakarta Urban Development 174.00 169.003754 1994 University Research for Graduation Study 58.90 55.913755 1994 Integrated Swamps 65.00 63.003761 1994 Sumatera & Kalimantan Power 260.50 259.503762 1994 Java Irrigation Improvements and 165.70 163.70

Water Resource Management

- 16 -

Schedule DPage 3 of 4

Amount (US$ million)Loan/ Bank IDACredit Fiscal Original principal Undis-

Number Year (less cancellation) bursed

3792 1995 Land Administration 80.00 77.503810 1995 Second Accountancy Development 25.00 25.003825 1995 Second Professional Resource Development 69.00 67.00

Total 19,190.43 901.60of which has been repaid 4,845.23 129.23

Total now held by Bank and IDA 14,345.20 772.37Amount sold 88.08of which repaid 79.72

Total undisbursed 4,145.94

- 17 -Schedule DPage 4 of 4

B. STATEMENT OF IFC INVESTMENTS(as of March 31, 1995)

(US$ million)- Original Gross Commitments - Held Held Undisb'd

Fiscal Year IFC IFC by by inci.

Committed Obligor Type of business Loan Equity Partic Totals IFC Partic Partic1971 /a P.T. Kabel - Indonesia Industrial equip. & t 1.80 0.37 1.00 3.171971 P.T. Unitex Textiles 0.75 0.80 1.75 3.30 0.351971/73/74/76/84 /a P.T. Semen Cibinong Cement & constructi 21.23 5.31 25.27 51.81 -

1971174 /a P.T. Primatexco Indonesia Textiles 3.35 0.80 0.65 4.801972/77/79 /a P.T. Daralon Textile Textiles 4.43 1.12 1.73 7.281973/89 Ia P.T. Jakarta Tourism 4.00 1.49 7.00 12.491974 /a P.T. Monsanto Pan General mfg. 0.90 - - 0.90 -

1974 P.T. PDFCI Bank Development financ - 0.48 - 0.48 0.34 - -

1974/77 la P.T. Kamaltex Textiles 2.36 0.75 1.39 4.501980 /a P.T. Supreme General mfg 5.10 0.94 6.00 12.04 -

1879 P.T. Papan Sejahtera Capital markets 4.00 1.20 - 5.20 1.20 -

1980/88 P.T. Semen Andalas Cement & constructi 28.51 5.00 28.53 62.04 23.44 13.981982185/94 P.T. Saseka Gelora Capital markets 4.52 0.38 2.00 6.90 1.90 -

1988 /a P.T. Nonterado Mas Minin Mining 3.50 2.00 4.50 10.00 - -1.351988 P.T. Asuransi Jiwa Capital markets - 0.32 - 0.32 0.32 -

1988 P.T. Bali Holiday Village Tourism 9.32 - 2.00 11.32 1.09 0.171990 /a Nomura Jakarta Fund (NJF Financial services - 3.00 - 3.00 -

1990 la P.T. Bank Umum Nasional Capital markets 10.00 - - 10.001990 /a P.T. Federal Motors Automotive & acces 12.50 - - 12.501990 Bank Niaga Capital markets 7.50 - - 7.501990 P.T. Nusantara Island Tourism - - - 0.00 1.091990/91/94 P.T. Astra International Automotive & acces 12.50 35.43 - 47.93 22.41 -

1990/91/95 P.T. Indo-Rama Synthetics Textiles 57.00 6.18 67.50 130.68 57.56 67.50 48.751991 /a Raja-Pendopo Oil Energy - 3.60 - 3.60 - -

1991 P.T. Agro Muko Food & agribusiness 10.50 2.20 - 12.70 12.70 -

1991 P.T. Argo Pantes Textiles 30.00 13.00 53.00 96.00 35.50 37.86 -

1992 P.T. Indonesia Asahi Textiles 4.00 1.83 - 5.83 3.83 - 0.391992 P.T. Rimba Partikel Timber, pulp & pape 9.88 0.60 10.00 20.48 12.15 7.50 -

1992 P.T. Swadharma Kerry Tourism 35.00 - 51.00 86.00 35.00 51.001992/94 P.T. Lantai Keramik Mas Cement & constructi 5.40 3.10 10.00 18.50 7.34 7.00 0.131992/95 P.T. Bakrie Kasei Corp. Chemical & petroch 60.00 12.63 95.00 167.63 72.63 95.00 33.001993 P.T. BBL Dhamala Finance Capital markets 5.00 - 5.00 3.53 - -

1993 P.T. Nusantara Tropical Food & agribusiness 9.00 - 7.00 16.00 9.00 7.00 0.751993 P.T. Samudera Indonesia Industrial services 12.00 5.00 3.00 20.00 16.00 2.25 -

1993 P.T. South Pacific Textiles 20.00 - 25.00 45.00 17.32 15.801993 SEAVI Indonesia Aruba Capital markets - 1.50 - 1.50 1.50 -

1993/95 P.T. Mitracorp Industrial services 18.75 4.12 - 22.87 22.67 -

1994 P.T. Asia Wisata Tourism - - - 0.00 2.63 2.63 -

1994 P.T. KDLC Bali BancBali Capital markets 15.00 1.14 - 16.14 16.14 - 12.001994 P.T. Pama Indonesia Capital markets - 0.71 0.71 0.71 - -

1994 P.T. Saripuri Pamai Tourism 8.00 3.60 24.00 35.60 11.60 24.00 11.601994 P.T. Sinar Pure Foods Food & agribusiness - - - 0.00 1.19 - -

1994 Prudential Asia Indonesia Capital markets - 6.75 - 6.75 6.75 4.781995 P.T. Bakrie Kasei Pat Chemical & petroch 12.00 2.00 - 14.00 14.00 - 12.00

Total gross commitments /b 447.80 127.35 427.32 1002.47Less cancellations, terminations, repayments & sale 150.92 12.34 96.98 260.24Total commitments now held /c 296.88 115.01 330.34 742.23 411.89 330.34 123.40

/a Investments have been fully cancelled, terminated, written-off, sold, redeemed, or repaid.Ib Gross commitments consist of approved and signed projects./c Held commitments consist of disbursed and undisbursed investments.

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Report No: F- 1 L550 INDType: INOP