world bank document · currency equivalents currency unit = brazilian real (r$) us$1.00 = r$1.89...

45
Document of The World Bank Report No: 19956-BR PROJECT APPRAISAL DOCUMENT ONA PROPOSED LEARNING AND INNOVATION LOAN IN THE AMOUNT OF US$5.05 MILLION EQUIVALENT TO THE FEDERATIVE REPUBLIC OF BRAZIL FOR A SOCIAL SECURITY TECHNICAL ASSISTANCE PROJECT January 19,2000 Finance Private Sector and Infrastructure Sector Unit Brazil Country Management Unit LCC5C Latin America and the Caribbean Regional Office Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized

Upload: trinhkhanh

Post on 12-Nov-2018

217 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Document ofThe World Bank

Report No: 19956-BR

PROJECT APPRAISAL DOCUMENT

ONA

PROPOSED LEARNING AND INNOVATION LOAN

IN THE AMOUNT OF US$5.05 MILLION EQUIVALENT

TO THE

FEDERATIVE REPUBLIC OF BRAZIL

FOR A

SOCIAL SECURITY TECHNICAL ASSISTANCE PROJECT

January 19,2000

Finance Private Sector and Infrastructure Sector UnitBrazil Country Management Unit LCC5CLatin America and the Caribbean Regional Office

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Page 2: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

CURRENCY EQUIVALENTS

Currency Unit = Brazilian Real (R$)

US$1.00 = R$1.89

FISCAL YEARJanuary ISt - December 31 s

ABBREVIATIONS AND ACRONYMS

ANSeS = Argentina's National Social Security AdministrationCAS = Country Assistance Strategy PaperCNIS = Unified Data Base of Social InformationDATAPREV= The Government's data processing serviceESW = Economic and Sector WorkFGTS = Severance Guarantee Payment FundFMS Financial Management SpecialistIDB = Inter-American Development BankINSS = National Institute for Social SecurityLIBOR = London Interbank Offer Rate-MARE = Ministry of Administration and State ReformMPAS = Ministry of Social SecurityPCU = Project Coordinating UnitPDTI = Information System Master PlanPMA = Attention Improvement ProgramPMR = Project Management ReportsRGPS = Private Sector Workers Pension System

(Regime Geral da Previdencia Social)RJU = Public Sector Workers Pension System

(Regime Juridico Unico)SAP = Secretaria de Estado da Administra,cao e do Patrim6nio (formerly

MARE)SCP = Secretariat of Complementary Pension FundsS/SECAL = Special Sector Adjustment LoanSGS = Management of Contributors by SegmentSPC = Secretariat of Complementary Pension SystemsSUSEP = Superintendency of Pension InsuranceUNDP United Nations Development Program

Vice President: David de FerrantiCountry Director: Gobind T. NankaniSector Manager/Director: Danny LeipzigerTask Team Leader/Task Manager: Mariluz Cortes

Page 3: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

BrazilSocial Security Technical Assistance Project

CONTENTS

A. Project Development Objective ............................................................ 2

1. Project Development Objective and Key Performance Indicators ............... 2

B. Strategic Context ............................................................... 2

1. Sector-Related CAS Goal Supported by the Project ................................. 22. Main Sector Issues and Government Strategy ......................................... 23. Learning and Development Issues to be Addressed by the Project ....... ......... 54. Learning and Innovation Expectations ................................................... 6

C. Project Description Summary ............................................................... 8

1. Project Components ............................................................... 82. Institutional and Implementation Arrangements ............. ......................... 93. Monitoring and Evaluation Arrangements ............................................. 9

D. Project Rationale ............................................................... 9

E. Summary Project Analyses ............................................................... 9

1. Economic ............................................................... 92. Financial ............................................................... 93. Technical ............................................................... 94. Institutional ............................................................... 95. Social ............................................................... 96. Environmental assessment ............................................................... 97. Participatory approach ............................................................... 9

F. Sustainability and Risks ............................................................... 10

1. Sustainability ............................................................... 102. Critical Risks ............................................................... 103. Possible Controversial Aspects ........................................................... 11

G. Main Loan Conditions ............................................................... 11

1. Effectiveness Conditions ................................................................. 11

H. Readiness for Implementation ............................................................... 12

I. Compliance with Bank Policies ............................................................... 12

Page 4: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Annexes

Annex 1. Project Design SummaryAnnex 2. Detailed Project DescriptionAnnex 3. Estimated Project CostsAnnex 4. Cost-Benefit Analysis Summary, or

Cost-Effectiveness Analysis Summary. Not applicableAnnex 5. Financial Summary for Revenue-Earning Project Entities, or

Financial Summary Not applicableAnnex 6. Procurement and Disbursement Arrangements

Table A. Project Costs by Procurement ArrangementsTable Al. Training and Consultant Selection ArrangementsTable B. Thresholds for Procurement Methods and Prior ReviewTable C. Allocation of Loan Proceeds

Annex 7. Project Processing Budget and ScheduleAnnex 8. Documents in Project FileAnnex 9. Statement of Loans and CreditsAnnex 10. Country at a Glance

Page 5: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

BrazilSocial Security Technical Assistance Project

Project Appraisal Document

Latin America and the Caribbean Regional OfficeBrazil Country Management Unit LCC5C

Date: February 2, 2000 Task Team Leader/Task Manager: Mariluz Cortes (LCSFP)Country Manager/Director: Gobind T. Nankani (LCC5C) Sector Manager/Director: Danny Leipziger

Project ID: P062619 Sector: Economic Management Program Objective Category: Economic ManagementLending Instrument: Learning and Innovation Loan Program of Targeted Intervention: [ ] Yes [X] No

Project Financing Data [X] Loan [] Credit [] Guarantee [ Other [Specify]

For Loans/Credits/Others:

Amount: US$5.05millionProposed terms: [X] Multicurrency [ Single currency, specify

Grace period (years): 5 [X ] Standard Variable [ Fixed [ LIBOR-basedYears to maturity: 15Commitment fee: % of 1%

Service charge: N/aFront-end Fee 1%

Financing plan (US$m):Source Local Foreign Total

Government 3.80 3.80Cofinanciers 1.20 1.20IBRD + front end fee 1.00 4.05 5.05IDAOther (specify)

Total 4.80 5.25 10.05

Borrower: Federative Republic of BrazilGuarantor: idemResponsible agency(ies): Ministry of Social Security (MPAS)

Estimated disbursements (Bank FY/US$M): 2000 2001 2002 2003Annual 1.0 2.5 1.0 0.55

Cumulative 1.0 3.5 4.5 5.05

Project implementation period: 33 months.Expected effectiveness date: March 31, 2000 Expected Closing Date: December 31, 2002

OSD PAD Form: July 30, 1997

Page 6: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 2

A: Project Development Objective

1. Project Development Objective and Key Performance Indicators (see Annex 1):

The main project objective is to support the design and implementation of institutional and legal reforms-neededfor the second phase of Social Security and Pension Reform in Brazil.

The first phase of the Government's Social Security Reform Program involved reform measures passedwith Congressional approval, on December 15, 1998, of an amendment to the Federal Constitution of1988. This first phase of reform was supported by a Bank S/SECAL of US$757,570,000. The secondphase of pension reform will involve the enactment of enabling legislation and institutional changes tocomplete the pension reform. The proposed project would provide technical assistance for the design andimplementation of institutional and legal reforms needed to put into effect the reforms approved by theConstitutional amendment of December 1998 and to initiate the second phase of the program of socialsecurity reform for private sector workers in Brazil. Specifically, the project would support: (i) the designand selected implementation of institutional reforms to enable the National Institute of Social Security(Instituto Nacional de Seguridade Social - INSS) to carry out its new responsibilities within the reformedpension system; (ii) the strengthening of the pension and insurance legal framework; and (iii) thestrengthening of supervision and regulation of the complementary pension funds system by the Secretariatof Complementary Pension Funds (Secretaria da Previdencia Complementar -SPC)'.

B: Strategic Context

1. Sector-Related Country Assistance Strategy (CAS) Goal Supported by the Project (see Annex 1):

CAS document number: R98-116 Date of latest CAS discussion: June 2, 1998

The June 1998 CAS Progress Report acknowledged that Brazil could be subject to external shocks, andthat in such eventuality, if the Government responded with corrective policy measures, the CAS proposedto respond quickly with financial support for reforms in such areas as privatization, social security andsafety nets. In response to external shocks at the end of 1998, the Government initiated a strong reformprogram in (among other areas) social security to improve the long term actuarial balance of the system,which accounts for two thirds of the fiscal deficit. The Bank's strategy is to support the Government'sSocial Security Reform Program with two S/SECALs and related technical assistance.

2. Main Sector Issues and Government Strategy:

The Government's Pension Reform Program. The current administration is committed to a phasedprogram of pension reform aimed at: (i) reducing the fiscal deficit of the pension system by introducingthe principle of actuarial balance; (ii) reducing the inequality in pension benefits between the pensionprograms of private and public sector workers; and (iii) broadening individual choice by limiting the first-pillar pension systems to workers with relatively low earnings, while stimulating the creation ofcomplementary pension funds for workers with higher earnings, in private companies and governmententities. This reform program is being implemented in two phases and will complement major reforms inthe areas of labor legislation and administrative reform.

The Government's pension reform program is being implemented in two phases. The First Phase ofPension Reform. The main objectives of the Constitutional Amendment approved in December 15, 1998,were to: (i) introduce the principle of actuarial and fiscal balance for the pension systems of private andpublic sector workers; (ii) replace pensions based on length-of-service by pensions based on years-of-contribution; (iii) eliminate the benefit rule to determine pensions for private sector workers from the textof the Constitution; (iv) eliminate most special pension regimes (except for school teachers and workers

' The INSS and the SPC are both under the Ministry of Social Security (MPAS).

Page 7: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 3

in hazardous activities); (v) impose a minimum retirement age on civil servants; and (vi) extend theoption of creating complementary pension funds to states and municipalities. Together with theConstitutional Amendment, Congress approved legislation to reduce the deficit of the state and municipalpension regimes. The first phase of pension reform also included the initial stages of restructuring ofINSS to improve revenue collection and reduce evasion. The Second Phase of Pension Reform willinvolve the implementation of the Constitutional Amendment reform through the passage ofcomplementary and ordinary laws and institutional reforms of the government agencies that oversee thepension system: the INSS, which manages the pension system for private sector workers (RGPS), and theSPC, which monitors and regulates the system of closed pension funds.

Pension Legal Framework. The Ministry of Social Security and Social Assistance (MPAS) is in chargeof implementing the second phase of reforms with respect to the RGPS. To accomplish this, MPAS is inthe process of drafting the new complementary and ordinary laws that will define the parameters of thereformed RGPS, in order to achieve the objective of financial and actuarial balance stipulated in theConstitutional Amendment. The new legislation is likely to generate some controversy. For this reason,the MPAS plans a public information and dissemination campaign aimed at informing about theimportance of the reform, the implications of the options under consideration and the internationalexperience. The MPAS is also working on the reform of the pension system for federal workers (RegimeJuridico Unico -RJU) with the collaboration of technicians from SEAP (Secretaria de Estado daAdministragao e do Patrim6nio). MPAS is also assisting in the reform of state and municipal RJUs2.

Restructuring of INSS. The INSS administers the RGPS for private sector employees and oversees theclosed funds run by state enterprises. The INSS is the result of the merger of several previousorganizations. It has a staff of 50,000, distributed in 1,200 offices and a yearly operating budget of R$5 .0billion in 1998. While the INSS has begun a program of institutional strengthening, more work needs tobe done to make it into a more efficient organization able to support the structural changes in theGovernment's pension reform program. Some of the problems facing the INSS include: (i) high cost ofoperation per client served; (ii) an organizational structure in which the previous organizations thatmerged to form the INSS are not fully integrated; (iii) weak revenue collection auid benefit controlprocedures; and (iv) slow customer service, which has resulted in a poor public image of the institution.Some of the difficulties the INSS faces are the result of a lack of both reliable information on contributorsand beneficiaries and efficient and timely data processing services.

INSS has initiated a process of institutional strengthening to improve its efficiency, reduce operating costsand enable it to implement the systemic reforms of the RGPS, including the adoption of individualpension accounts. 1NSS is implementing a cost reducing program, and has already begun to take actionsto improve revenue collection. The INSS strengthening program will involve two steps. The first stepwill be to develop an audit of the institution's strengths and opportunities, and based on the findings ofthis audit, to elaborate a Strategic Plan for the INSS. The Strategic Plan will also form the basis fordeveloping detailed plans and funding estimates for the different components of the restructuringprogram, and for setting up priorities. A second step would be the implementation of the Strategic Plan,which will lead to a new organizational structure for the INSS, and a total reengineering of processeswithin the institution.

In parallel with the preparation of the diagnosis and Strategic Plan, the INSS is embarked on an effort to:

* Develop a Master Plan of Information Systems Renewal: The objectives are to: (i) improve

2 Financing for the technical work needed to define the new parameters for the pension system for public sectorworkers at the State and Federal levels is being done under a LIL for State Pension Reform Technical AssistanceProject, approved in June 1998. A proposed PHRD Grant in support of the preparation of a Second Social SecuritySpecial Sector Adjustment Loan, will also finance additional technical work for the reform of the federal RJUsystem.

Page 8: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 4

collection, monitoring and benefit payment functions; (ii) adopt a system of individual pensionaccounts; (iii) improve the communication net between INSS/MPAS and the data processing agentDATAPREV; (iv) improve the links of client service centers to the information system; and (v)introduce an effective management information system;

E Expand the New System of Revenue Collection: Since August 1998, the Contributions CollectionDepartment (DAF) has established a new unit (SGS) to implement a contributor's managementsystem focusing on specific groups of contributors, by productive sectors and market segments, andto monitor and collect contributions from different segments of the economy. This includes the10,000 largest employers which account for 70% of all contributions. MPAS has spent its ownresources to: (i) initiate the establishment of a management information system by segments; and (ii)provide training and personal computers to new inspectors.

* Improve the National Integrated Data Base of Social Information (CNIS): INSS has made importantefforts to unify the different data bases of social information under the CNIS, but the quality of thedata has not been evaluated for use in determining pension benefits. Improvement of the CNIS isfundamental to the implementation of a system of individual accounts, as contemplated in theGovernment's pension reform program.

Strengthening of the SPC. The main problems facing the system of complementary pension funds(SCPP) are: (i) low coverage (less than 5% of Brazil's economically active population); (ii) incompleteregulation; and (iii) weak and fragmented supervision. The regulatory framework lacks transparency anddetail on issues like funding levels, solvency proceedings, portability, vesting and investment rules.Supervision is divided between two entities. Closed funds are supervised by the SPC, which is a specialbranch within MPAS; and the open funds are supervised by the Superintendencia de Seguros Privados(SUSEP), attached to the Ministry of Finance. The capacity of the regulatory agencies to regulate andsupervise is severely constrained, given their limited resources.

The SPC has initiated a process of institutional strengthening to enable it to implement the provisions inthe Constitutional Amendment concerning the SCPP. This program is being supported by a US$1.2million grant from the IDB. The main elements of the strengthening program include:

- Elaboration of Complementary and Ordinary Laws: The Constitutional amendment will beimplemented through three Complementary Laws that must be submitted to Congress within 90 daysof approval of the Amendment. With support from an IDB grant of US$1.2 million, the SPC hasalready drafted these laws and presented them to Congress for approval. The first law will create anew framework for closed pension funds and cover such issues as who can form pension funds, whatwill be the rights of workers, the funding, vesting and portability requirements, and similar regulatoryissues. It will provide the possibility for non-employer-based funds to be set up (for example byprofessional associations), and for multi-employer funds to be established to cater for the needs ofsmaller firms. The second law will allow for closed pension funds to be created by public authorities(federal, state and municipal). The third law will regulate institutional aspects of the day to dayfunctioning of the closed pension funds of public enterprises. Following Congressional approval ofthe three Complementary Laws, the SPC will draft ordinary laws and implementing regulations.

* Strengthening SPC's regulatory and supervisory activities. Also, with support from the IDB grant,the SPC is in the process of creating investment, accounting, actuarial, fisJcal and registration records.The SPC has also initiated preparation of a new framework for regulating pension fund investments,including prudential controls on investment that are not performed at present.

* Creation of a new regulatory agency for Complementary Pension Funds. The SPC is in a process ofpreparing a new law proposal for the creation of a new National Agency of Complementary Pension

Page 9: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 5

Funds, that would regulate all pension funds according to a single set of sound business practices.

3. Learning and Innovation Issues to be Addressed by the Project

This LIL focuses on learning and piloting in search of developmental solutions to issues presented by therestructuring of the institutions that administer the Pension System in Brazil, and the design of the legaland regulatory framework for the new pension system for private sector workers. The solutions foundunder this LIL will be implemented through three larger-scale future operations. This LIL will helpprepare the strategic plans for the INSS and the SPC. These strategic plans will develop new solutions tothe institutional restructuring of the INSS and the SPC. The solutions developed under this LIL will helpdesign a larger TA loan to support the implementation of the proposed institutional reforms. This LILwill also help to design an affective public information and communication strategy to inform socialsecurity stakeholders about the choices and implications of social security reform. This strategy will beimplemented under a future TA loan. The actuarial models developed under this LIL will contribute toestablish the financial viability of alternative benefit formulas for the RGPS. The insights gained troughthis work will help design Brazil's second phase of pension reform. Similarly, the legal and regulatorywork to be carried our under this LIL will help design new laws and regulations needed to implement thesecond phase of pension reform in Brazil. The expectation is that the second phase of social securityreform will be supported by a second Bank special S/SECAL.

A) Institutional Reform of the Government agencies that administer the Pension System:

Restructuring of the INSS. The project would assist in the preparation of the diagnostic work and ofthe Strategic Plan for the institutional restructuring of the agency. It would also assist in the preparationof the Master Systems Renewal Strategy, in the expansion of the SGS (to cover all the contributorsegments, to integrate INSS regional offices into the system, and to train additional officers in its use);and in the qualitative and quantitative evaluation of the CNIS. The implementation of the Strategic Planwould be supported by a follow up technical assistance loan.

There are some strategic considerations that will be taken into account during project implementation.The informational and institutional requirements of 1NSS will depend heavily on the nature of the reformbeing implemented. For example, a notional accounts reform will require more timely information andmore intensive record-keeping than a reform which involves only a salary-based defined benefit formula.However, although the thinking about the specifics of the reform is still evolving, it is necessary to initiatethe reform of the INSS to avoid the possibility of having to delay the reform due to lack of institutionalpreparedness. For this reason, as the project evolves, it is contemplated that the Bank and the INSS willtake a broad view of reforms and make sure that the institutional diagnosis and restructuring plans do notclose the door on any policy options. To this effect, the studies to be financed under the LIL will look notonly at the institutional requirements of notional accounts systems, but also at the institutionalrequirements of a well-run salary based defined benefit systems, at the institutional requirements of fullmultipillar systems, where the Complementary System would apply to everyone, not just those withsalaries above Rs. 1,200 per month. It will look also at the institutional implications of integrating thestate RJUs and the RGPS systems and the degree of compatibility between the data bases of the Ministryof Administration and State Reform (MARE) with DATAPREV in case that such integration may occur.Also, in the design of the information requirement for the adoption of individual accounts by the INSS,the project will take into consideration the possibility of using the FGTS system as the basis forintroducing individual accounts in the INSS3

Strengthening regulation of Complementary Pension System. The proposed project would support thepreparation of a Strategic Plan for the creation of a New National Agency of Complementary Pension

3 The FGTS is a Severance Guarantee Payment Fund composed of individualized accounts for worker's monthlycontributions.

Page 10: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 6

Funds to regulate pension funds according to a single set of sound business practices. With financingfrom the IDB, the SCP has prepared three Complementary Laws to implement the changes in theComplementary Pension System stipulated in the recently approved Constitutional Amendment. Theproposed project would support the preparation of additional laws and regulations required to fullyimplement reform of the complementary pension system stipulated in the Constitutional Amendment.The project would also support the strengthening of SPC's capacity to regulate and monitorcomplementary pension funds by improving its information system, and administrative procedures.

There is an strategic choice in deciding to complement, under the LIL, the technical work for therevamping of the regulatory framework of private pension funds that will be supported by an IDB grant.The work in this area includes the design of investment and actuarial models and the creation of a database consisting of six modules. Close cooperation between the work supported by the LIL and the worksupported by the IDB grant will ensure consistency of the technical work financed by both institutionswith the overall objectives of a sound regulatory system. The dissemination funds included in the LILwill allow for extensive consultation with the private sector in this area.

B) Design of the legal and regulatory framework for the reform of the Pension System of Private SectorWorkers.

The project would strengthen the capacity of the MPAS to carry out the technical studies and legal workto establish the new parameters of the reformed pension system for private sector workers within theparameters of the approved Constitutional Amendment. These parameters stipulate the need for actuarialand fiscal balance in the pension system. The need to achieve such balances, coupled with the politicalconstraints to pension reform, pose a challenge to the MPAS on how to design the future pension laws.This LIL will support the studies that will clearly present the trade-off of different alternatives forachieving these balances. The project would also support studies to reduce evasion and expand coverageof social security and to reform the work related injury insurance system.

There is a strategic link between the proposed LIL and the other ways in which the Bank supports theprocess of pension reform in Brazil, including: (i) the ongoing ESW on pension reform; (ii) the FirstSocial Security S/SECAL (approved in December 1998); (iii) the State Pension Reform TechnicalAssistance Project -PARSEP- (approved in June 1998); and (iv) a PHRD grant, recently approved, tosupport the preparation of the Second Social Security Special Sector Adjustment Loan. The Bank's ESWon pension reform in Brazil provided the analytical basis for the first Social Security S/SECAL and servesas the basis for the ongoing Bank/Government dialogue on these issues. The PARSEP supportsstrengthening the capability of the states and federal governments on pension modeling, to allow them todiagnose their pension problems and design the solutions. The proposed LIL and the PHRD grant willsupport the initial stages of institutional restructuring of the Government agencies administering thepension systems and the technical work for the elaboration of the laws and regulations that will define thesecond phase of pension reform. that would be supported by a proposed Second Social SecurityAdjustment Loan. There is also strong coordination between Bank support of pension reform in Braziland the support that the IMF provides to Brazil in this area.

C) Dissemination and Communication of Pension Reform Issues:

This LIL includes an innovative component to increase awareness of the importance of pension refornand lessons from international experience. Assistance under this component will cover preparation of aninformation dissemination strategy, information material for dissemination of information, and seminarsto disseminate international experience in pension reform.

4. Learning and innovation expectations

The project's expected results are:

Page 11: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 7

Institutional

* An Strategic Plan that will establish the main parameters for the restructuring of the INSS andimproved capacity of the INSS to implement the systemic reforms of the pension system for privatesector workers.

* An Strategic Plan for the creation of a new national agency for the regulation of complementarypension funds and improved regulation and monitoring of the funds. In the long run, the expectationis for faster growth of complementary pension funds both in number of funds and in assets-under-management, brought about by the lowering of risks through improved regulation and monitoring ofthe funds. Growth of these funds will have a stimulating effect in the capital markets and will ensurebetter retirement benefits for the participating workers; and

* An strategy for dissemination of information about pension reform to increase awareness of the needfor further pension reform, the options available and lessons from international experience.

Economic

* A legal framework for the pension system for private sector workers which establishes the basis for amore actuarially fair and financially viable system.

Participation

* A more informed population that will support pension reform as a result of the communications anddissemination campaign.

Page 12: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 8

C: Project Description Summary

1. Project Components (see Annex 2for a detailed description and Annex 3for a detailed costbreakdown):

Component Category Cost Incl. % of Bank- % ofContingencies Total financing Bank-

(US$M) (US$M) financing

1. INSS Restructuring 4,850,000 48.3 3,000,000 59.4

> Diagnostic/Strategic Plan Studies 1,000,000 9.9 1,000,000 19.8

> Information System Master Plan Studies, 900,000 8.9 850,000 16.8equipment

> Implementation of SGS Institution 2,200,000 21.9 450,000 8.9building,equipment ___

> Evaluation of CNIS Studies, 250,000 2.5 200,000 3.9institution

building

> Public Information and Studies, 500,000 5.0 500,000 9.9Dissemination Strategy Information

II. Pension & Insurance Legal Studies, 300,000 3.0 250,000 4.9Framework

> Regulation of work related Studies, 189,875 1.9 150,000 2.9injury insurance

> Regulation of RGPS Studies, 110,125 1.1 100,000 2.0

1II. Strengthening of the SPC 3,900,000 38.8) 1,700,000 33.7

> Preparation of Complementary Studies, 1,900,000 18.9 0 0Laws, and Design of New equipmentInvestment, Actuarial,Financial, Supervision Models

> Preparation of Ordinary Laws Studies, 345,400 3.4 345,400 6.8

> Strategic Plan for Regulatory Studies 895,800 8.9 595,800 11.8Agency

> Expansion of SPC's integrated Studies, 388,600 3.9 388,600 7.7information system equipment

> External Information Network Studies, 370,200 3.7 370,200 7.3equipment

IV. Project Coordination Institution 950,000 9.4 50,000 1.0building,equipment

Front end fee 50,000 0.5 50,000 1.0

Total including front end fee 10,050,000 100.0 5,050,000 100.0

Page 13: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 9

2. Institutional and Implementation Arrangements:

The Project Coordinating Unit (PCU). A PCU has been established under the implementing institution,the Ministry of Social Security and Social Assistance (MPAS). An experienced Project Coordinator hasbeen hired to head this unit. The Project Coordinator will be assisted by a small team including anaccountant and a lawyer.

Technical Unit. A Technical Unit (TU) will be constituted at MPAS to assist the PCU in managing thetechnical aspects of the project. It will vet terms of reference for consultants, organize workshops andgenerally manage, provide opinions, and handle all technical aspects of the project. The TU will includetechnical staff from the MPAS, INSS, and DATAPREV. MPAS will enter into an administrativearrangement with INSS and DATAPREV to govern the participation of these institutions in the Project.

Financial Management and Procurement. The Project Coordinator and all members of the ProjectCoordinating Unit will undergo training in Bank procurement, disbursement and financial managementprocedures. Procurement will be supervised from the Bank's Brasilia office. A Brasilia based FinancialManagement Specialist (FMS) will assist the PCU to meet Bank standards and help with projectimplementation thereafter.

3.Monitoring and Evaluation Arrangements

A mid-term review would take place when half of the project funds have been committed, or aftereighteen months after the date of the Loan Agreement, whichever is earlier.

D. Project Rationale:(This section is not to be completed in a LIL PAD)

E: Summary Project Analysis (Detailed assessments are in the project file, see Annex 8)

L. Economic (supported by Annex 4):

[NA] Cost-Benefit Analysis: NPV=US$ million; ERR= % [NA] Cost Effectiveness Analysis:[ ] Other (Specify)

2. Financial (see Annex 5): [NA] NPV=US$ million; FRR= %

Fiscal impact: [NA]

3. Technical: [NA]

4. Institutional.

a. Executing agencies: Ministry of Social Security (MPAS)b. Project management: Ministry of Social Security (MPAS)

5. Social: [NA]

6. Environmental Assessment: Environmental Category [IA []B [X] C

7. Participatory Approach

a. Primary beneficiaries and other affected groups:

The primary beneficiaries of the restructuring of the INSS and of a new legal framework toimplement reforms to the pension system brought about by the Constitutional Amendment, are futureretirees. They will benefit in terms of better services and lower risk of insufficient retirement income.

Page 14: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 1 0

Future beneficiaries have participated in the political debate preceding Congressional approval of theConstitutional Amendment. Workers not covered by the social security system will benefit from thestudies aimed at expanding the system's coverage. Finally, the population at large will benefit frombetter informnation about social security issues and alternatives through the project's publicinformation and dissemination program.

* Groups that would be affected by the new regulatory framework for pension funds include theaffiliates and managers of closed and open pension funds, as well as the clients and managers ofbanks and insurance companies. In the course of project preparation, Bank staff met withrepresentatives of these groups to discuss their opinions and concerns.

b. Other key stakeholders:

An additional group of key stakeholders in the project are the staff of INSS. In the course of projectpreparation, Bank staff met with INSS staff at upper and middle managerial levels to discuss theirconcerns about the current problems in the institution and their views on how INSS should be reorganizedin the future to be more efficient and provide better services to its clients.

F: Sustainability and Risks

1. Sustainability:(This section is not to be completed in a LIL PAD)

2. Critical Risks (reflecting assumptions in the fourth column ofAnnex 1):

Risk Risk Rating Risk Minimization Measure

Annex 1, cell 'from Outputs to Objeetive"

> That MPAS/INSS does not follow up on the M MPAS authorities are very committedguiding principles of the Strategic Plan to to the restructuring of the INSS anddevelop detailed plans for the reorganization of have expressed interest on a follow upthe INSS and the reengineering of INSS TA loan to support implementation ofprocesses. the reforms envisaged in the Strategic

Plan

> That the Government fails to support the M The SPC will receive technicalcreation of a new single National Agency of assistance to explore theComplementary Pension Funds advantages/disadvantages of different

approaches to regulation of pensionfunds.

> That consensus in the MPAS in favor of pension M Consensus in MPAS for pension reformreform diminishes is strengthened by this and other TA

loans, and by the Bank ESW onpension reform which is the basis for anongoing dialogue between the Bank andthe Government on pension reform.

Annex 1, cell "from Components to Outputs"

> That the staff and middle management of the M The incorporation of management andINSS opposes the proposed restructuring plan staff of INSS into the diagnostic work

and preparation of the Strategic Planensures support for the reforrns

> That the Government rejects proposal to review M The MPAS/INSS authorities are wellthe role of DATAPREV aware of the key role that a good

Page 15: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 1 1

information system will have in theimplementation of individual accounts

> That the staffand middle management of SPC M The strategic plan will be formulatedopposes the proposed management changes taking feedback of SPC middle

management into account, to win theirsupport

> That the complementary pension laws are not N Govermment plans constituencyapproved or approval significantly delayed. building measures to raise support for

the reform

> That the largest contributors fail to collaborate M INSS will disseminate the advantagesin the implementation of the link with SGS ofjoining the new SGS system through

public information materials

> That PCU fails to effectively coordinate M Coordination with MPAS departmentimplementation between the various heads and IDB, included in the Projectdepartments of MPAS, and the IDB Coordinator's TORs

OverallRisk Rating M _

Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N (Negligible or Low Risk)

3. Possible Controversial Aspects:

Aspects related to Pension Reform Legislation. The project will support the elaboration of the legalframework for reform of the RGPS. The new laws will define the parameters of the reformed regimein order to achieve the objective of financial and actuarial balance stipulated in the Constitutionalamendment. The achievement of that balance will require difficult choices. Current governmentthinking with respect to the RGPS is to introduce individual pension accounts. Contribution recordswould be kept by INSS for each individual worker, and the individual's contributions would becredited with a notional interest rate. Upon retirement, the individual's balance in the account wouldbe divided by a factor based on the life expectancy for the individuals at that age, and the result wouldbe a pension indexed by inflation throughout the individual's lifetime. Controversial aspects of thisoption include the determination of the initial year of the individual account, and the methodology fordetermining the notional interest rate.

* Aspect related to the restructuring of INSS. In any institutional reorganization, decisions aboutorganizational restructuring and staff downsizing, tend to create controversy. However, this project isnot expected to generate major controversies in these areas because it will only support the initialstage of INSS restructuring, including the elaboration of a Strategic Plan. The actual restructuring ofthe institution would be supported by a follow up technical assistance loan.

* Aspects related to the regulation of pension funds. Another controversial issue is the scope of thenew regulatory agency for pension funds. It is unclear at this time if this regulatory agency shouldcover only closed funds or also open pension funds, which are currently overseen by the insuranceregulator, SUSEP.

G: Main Loan Conditions

1. Effectiveness Conditions

1. The PCU has established the accounting and planning system for the Project.

2. MPAS has entered into arrangements with INSS and DATAPREV to govern the participation ofthese institutions in the Project.

Page 16: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 12

H. Readiness for Implementation

[NA] The engineering design documents for the first year's activities are complete and ready for the startof project implementation. [NA] Not applicable.[ ] The procurement documents for the first year's activities are complete and ready for the start ofproject implementation.[OK] The Project Implementation Plan has been appraised and found to be realistic and of satisfactoryquality.[ ] The following items are lacking and are discussed under loan conditions (Section G):

I. Compliance with Bank Policies

[X] This project complies with all applicable Bank policies.[ ] [The following exceptions to Bank policies are recommended for approval:. The project complies

with all other applicable Bank policies.]

Task Team Leader! ger: Mariluz Cortes (LCSFP)

Sector Manager/Director: Danny eipziger SFP)

Country Miector: Gobind T. Nankani (LCC5C)

Page 17: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 13

Annex 1

Project Design Summary

Brazil: Social Security Technical Assistance Project

NariaItive Stimiinuiia Ke.' Perforinance toINusitorill aii'IId Faluiatioll (CriticalI Ass11111i)Iiopis

I f(licttorl-s

Sector-related CAS Goal: (Goal to Bank Mission)Support Government's " Congressional approval TM and PCU will monitor Continued Congressionalefforts to improve the long of Complementary and these basic indicators support for pension andterm fnancial viability of Ordinary Laws administrative reformsocial security and reduce regulating the reforms tothe inequalities between the pension systemsthe pension system of approved with theprivate and public sector Constitutionalworkers Amendment of 11/98

Project DevelopmentObjective: (Objective to Goal)* Implementation of / Enabling legislation to TM and PCU will monitor > MPAS remains

institutional and legal implement the Congressional approval of committed to pensionreforms needed for the Constitutional proposed legislation reform and will work tosecond phase of social amendment drafted and ensure passage ofsecurity reform submitted to Congress required legislation

Institutional reforms toimplement the TM and PCU will monitorConstitutional implementation of proposedamendment in place institutional reforms

Project Outputs: (Outputs to Objective)* Initial steps in v INSS diagnosis and Output indicators will be > The MPAS/INSS

restructuring the INSS to Strategic Plan finished monitored by Periodic management remainsmake it into a more within 6 months of loan Progress Reports generated committed to institutionalefficient institution able to effectiveness by the PCU and presented to reform and uses theimplement the systemic V Information Systems the Bank. Strategic Plan to developreform of the pension Renewal Master Plan detailed plans for thesystem for private sector finished within 6 months reorganization of theworkers of loan effectiveness INSS and the

reengineering of INSSV SGS system connected processes.

to all management unitsand INSS administrativestaff trained

* Improved regulation andsuperovi ogf pension V Draft Ordinary Laws to > The Govermnent

funds according to sound regulate Complementary continues supporting thebusiness practices System ready to present creation of a new single

to Congress National Agency ofV Strategic Plan for new Complementary Pension

regulatory agency Fundsfinished

V Plan to expand SPC'sinformation systemcompleted

* Legislation to implement v Draft law for workthe Constitutional related injury insuranceAmendment incorporating ready for presentation tothe principle of actuarial Congress

Page 18: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 14

and financial balance, I Study to reduce evasionready for presentation to and expand coverage ofCongress social security

concludedI Draft ordinary laws to > That consensus within

regulate RGPS ready for MPAS in support ofpresentation to Congress pension reform is

maintained.

Project Components Inputs: (budget for each (Components to Outputs)component)

I. INSS Restructuring: > The staff and middle* Diagnostic/Strategic Plan X US$1,000,000 management of the INSS

accepts the proposed* Information Systems restructuring plan

Master Plan I US$900,000 > The Government agreesto review the role of

* Expansion of SGS I US$2,200,000 DATAPREV

US$250,000 ~~~~~~~~~> The largest contributors* Evaluation of CNIS v US$250,000 collaborate in the

implementation of the* Public Information and link with SGS

Dissemination * US$500,000

II. Pensions & Insurance > MPAS will retain the leadLegal Framework: in the design of the new

* Regulation of work related v US$189,875 pension system, and theinjury insurance I US$110,125 regulation of private

work-injury insurance* Regulation of RGPS provision

III. Strengthening of the The regulatory agency (SCP) > PCU will maintainSPC: has prepared the communication and close

* Preparation of complementary laws on coordination with the SPCcomplementary laws v US$1,900,000 which ordinary laws and for the implementation of

• Preparatio ofordina (total of three first bullet regulations will be based. the project, as well as* Preparation of ordiary items) The PCU will coordinate project coordinating staff

laws and regulations with the regulatory agency from the IDB (to prevent

* Strategic Plan for I US$345,400 for all other project activities. duplication of efforts).regulatory agency

* Expansion of SPC's v US$895,800information system

* External InformationNetwork v US$370,200

Page 19: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 15

Annex 2Brazil: Social Security Technical Assistance Project

Project Description

Project Component I INSS Restructuring - US$4.85 million (total cost of component)

1.1 Evaluation of INS S' recent institutional changes and formulation of Strategic Plan1.2 Evaluation and strengthening of program to improve attention to contributors and beneficiaries (PMA)1.3 Improvement and validation of information plan and audit planning2.1 PDTI Stage 1 - Development of business strategy2.2 PDTI Stage II - Diagnosis of current situation2.4 PDTI Stage III - Design of solution2.5 PDTI Stage IV - Design of Information System Master Plan

Activities already completed or in progress

3.1 Purchase of computer equipment3.2 SGS System design and development3.3 SGS System installation

New activities

3.4 Installation of SGS system in 195 Centers3.5 Training of INSS management staff in the use of the SGS3.6 Training of INSS administrative staff in the use of the SGS4.1 Qualitative and quantitative evaluation of CNIS data base5.1 Design of Public Information Campaign Strategy and dissemination material

Project Component II Pension and Insurance Legal Framework - US$300,000 (total cost of component)

1.1 Legal evaluation of proposed Injury Insurance Law1.2 Regulation of private sector participation in worker insurance system2.1 Elaboration of actuarial models2.3 Study to reduce evasion and expand coverage of Social Security

Project Component III Strengthening of the SPC - US$3.9 million (total cost of component)

Activities already completed or in progress:

1.1. Preparation of Complementary Laws1.2. Design and Implementation of New Investment Management Model1.3. Design and Implementation of Actuarial model1.3.1 Design and Implementation of New database1.3.2 Design and Implementation of Financial module4.3.3 Design and Implementation of Actuarial module4.3.4 Design and Implementation of Registration module4.3.5 Design and Implementation of Accounting module4.3.6 Design and Implementation of Supervision and Sanction module4.3.7 Design and Implementation of Processing module

Page 20: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 16

1.4. Technical Coordination of Activities in Progress

New activities:

2.1 Drafting of ordinary laws and regulations2.2 Conference and seminars on new regulatory framework for the Complementary System3.1 Strategic plan for the new single regulatory agency3.2 Purchase of necessary computer equipment and software3.3 Training of regulatory agency staff4.1 Elaboration of plan to expand SPC's information system4.2 Purchase of server and software to implement external information network4.3 Training of staff in use and maintenance of external information network.5.1 Design of external information network5.2 Purchase of equipment5.3 Training of staff in operation of the network

Project Component IV Project Coordination - US$950,000 (total cost of coordination)

1.1 Project administration technical assistance1.2 Purchase of equipment1.3 UNDP management agreement

Page 21: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 17

PROJECT IMPLEMENTATION PROGRAM

The following reflects how the World Bank project team and Brazil (MPAS) PCU will manage events on the critical path with focus on theinitial stages of the project components.

Critical Path Event Proposed Event Manag-emenlt Responsible

1. Hiring of Project Coordinator. MPAS has hired a project coordinator MPAS and Bank.2. Complete The PCU staffing and MPAS will ensure that PCU is in place and ready to MPAStraining. begin operations

a. Ensure that procurement skills PCU staff will receive training in procurement at the The PCUare adequately covered Bank's office in Brasilia.b. Become proficient in Bank PCU staff will receive training in disbursement The Bank and the PCUdisbursement procedures and procedures at the Bank's office in Brasilia.regulationsc. PCU must satisfy the Bank's The Bank's financial management specialist in the The PCU must adopt systems infinancial management Bank's office in Brasilia will assist the PCU to develop accordance with Bank prerequisites.requirements as a condition of an action plan to enable it to prepare Project Bank must assist the PCU and verifyeffectiveness. Management Reports. that this work is satisfactorily

completed.3. Initiate Procurement Operations. A. Studies: PCU is responsible for preparing TORs

TORs and short lists should be nearly completed or and short lists of consultants, in closecompleted by effectiveness for all project components. consultation with the heads of respectivSpecial priority should be given to the TORs for INSS MPAS departments and secretariatsinstitutional audit, the formulation of the INSS Strategic (INSS, SPC, etc.)Plan, the Information Systems Renewal Master Plan, toensure compatibility and consistency. The sameattention should be paid to TORs for the formulation ofthe Strategic Plan for the new single regulatory agencyfor pension funds, and the information systems needs inthe complementary system.B. Hardware/software: PCU is responsible for the preparationDecision on how equipment will be procured and of procurement documents. The Bankpreparation of bidding documents should be readied by will assist with bidding documents andeffectiveness. the specs of required hardware/software.C. Training: The PCU will make decisions relative toDecision on location and type of training, as detailed in training, in close consultation with thethe description of each project component, should be heads of respective MPAS departmentsmade by effectiveness. and secretariats (INSS, SPC, etc.)

Page 22: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 18

DETAILED PROJECT COMPONENT ACTIVITIES AND COSTS

* I I I ~~~~~~~~"if HUU V f

Int. Loc Trips Month! Unit CostDays __.______

I. INSS Institutional Restructuring I I 54,850,000

1. Diagnostic & Strategic Plan _ _ 1,000,000

1.1 IEvaluation of institutional changes, definition offuture 384,15

rofile andformulation of Strategic Plan _ _______

Consultant Fee 6 6 m 8,000 288,000 - ||

Travel 10 4,200 42,000

Lodging 95 384 36,480

Subsistence 95 186 17,670 .

1.2. Evaluation and strengthening ofprogram to improve 200,40

attention to users (PMA)

Consultant Fee 3 6 m 8,000 144,000Travel 8 4,200 33,600

Lodging 40 384 15,360Subsistence 40 186 7,440

1.3 Improvement and validation of information plan and auditplanning

Consultant Fee 7 6m 8,000 336,000 400,000Travel 10 - 4,200 42,000Lodgin 40 15,360 _ _

Consultant Feel 40 7,440

1.4 Study, Research and Drafting _ _ _ 15,450

2. Information System Master Plan PTDI _ =__ _ __ 900,000

2.1 Stage 1: Development of business strategy _ _ 3 m 8 186,640

Consultant Fee 4 3 m 8,000 96,000

Consultant Fee _ 4 4 m 4,000 64,000

Travel 2 4,200 8,400

Lodging 32 384 12,288.

Subsistence _ 32 186 5,952

2.2 Stage I.: Diagnosis of current situation _ _ _ 179,800|

Consultant Fee 3 4 m 8,000 96,000 _

Consultant Fee _ 4 4 m 4,000 64,000 _

Travel =1 = 2 4,200 8,400 _ __

Page 23: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 19

Activitv Tvpe of No. of Length Unit Consulting Number Training Total: Cost Total Cost

Expense Prnt; rmsl Cost Cost USS of Staff Cost USS by Activity US$

Trips USS US$

Int. Loc Trips Month] Unit Cost

I_______ _ I _ Days _

Lodging 20 384 7,680 l

Subsistence 20 186 3,720

2.3 Stage III: Design of solutions _ 228,200

Consultant Fee 2 4 m 8,000 64,000

Travel 10 4,200 42,000 l

Lodging _ _ 60 384 23,040

Subsistence 60 186 11,160 l l

Consultant Fee 5 4 m 4,000 80,000

|Travel 10 800 8,000

2.4 Stage IVV: Design of Strategic Information Plan _ 297,70

Consultant Fee 4 3 m 8,000 96,000

Travel 18 4,200 50,400 l l

Consultant Fee 6 3 m 4,000 72,000

Travel 35 800 28,000 l

Lodging 45 768 34,560

| ________________________________ _ - -Subsistence 45 186 16,740

2.5 Study, Research and Drafting _ _ 7,660 _

3. Expansion of Collection by Segments System (SGS) _ _ _ 2,200,000

Activities completed or in progress = = = _ _

3. 1 Purchase of computer equipment _ _ ||

3.2 SGS system design and development _ _

3.3 SGSsystem installation ____._._|

New Activities I l l

3.4 Installation of SGS in 195 Centers ____ 315,000

Equipment _ = _L_|

3.5 Training of supervisory staffin the use of the SGS 1,875,750

Training ___g 3,645 350 1,275,750 l

3.6 Training of administrative staff Trainin _____ 2,000 300 600,000

3.7 Study, Research and Drafting 9,250

4. Evaluation of CNIS l _ 250,000

4.] Evaluation of CNIS' Data Base _ _ 245,425 l

Consultant Fee 3 5 m 8,000 120,000 l

_ ___________ _______________ Consultant Fee 5 - 5 m 4,000 100,000

Page 24: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 20

I i I=__;

nt. Loc Trips Month/ Unit CostDays

Travel _ 3 4,200 12,600

Lodging - = - 45 192 8,640 _

Subsistence 45 93 4,185

4.2 Study, Research and Drafting _ = 4,575

5. Public Information and Dissemination Program 500,000

5.1 Design ofDissemination Campaign

Consultingfirm Consulting Fee __ = = 200,000 150,006

5.2 Design and Production of Brochures and InformationMaterials

Consultin rm Consulting Fee __ 150,000 150,00fi

5.3. Design and Production ofAudio and Video CampaignsMaterials

Audio/visual studio IConsulting Fee I = 150,000 150,00_

II. Pension and Insurance Legal Framework ___ 300,000

1. Regulation of work related injury insurance _ _ 189,875

1.1. Legal evaluation of proposed Injury Insurance Law _ ____._171,200 _

Consultant Fee 2 5 m 8,000 80,000

Travel 4 4,200 16,800

Lodging _ - 70 192 13,440 .

Subsistence _ - 70 93 6,510

Consulting Fee _ 3 2 m 4,000 24,000

Travel - 6 800 4,800

Lodging 45 384 17,280

Subsistence 45 186 8,370

1.2. Regulation ofprivate sector participation in worker 18,675

insurance system _ _ _ .

Consulting Fee I - 3 m 4,000 12,000

Travel ___ 3 800 2,400 .

Lodging I 5 576 2,880

Page 25: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 21

--Kul,=_ Total Cost

5 S = z - __Ns = t~~~~~~~~~~~~~~~~~~~L ss

Int. Loc Trps Month Unit CostD ays _ _ _ _ _ _ _ _ _ _ _

Subsistence ___ 5 279 1,395

. Regulation of RGPS _ _ _ 110,125

2.1. Elaboration of actuarial models 72,125

Consulting Fee 2 2 m 8,000 32,000

Travel - 4 4,200 16,800 r rLodging 30 384 11,520

Subsistence ___ 30 186 5,580

Consultant Fee _ 1 - I m 4,000 4,000 r _

Travel I 800 800

Lodging = = = 5 192 960 _

Subsistence - 5 93 465 I I

2.2 Study to Reduce Evasion and Expand Coverage of Social 32,375Security _ _ _

[Consulting Fee I - I m 4,000 4,000

Consulting Fee _ 2- 2 m 4,000 16,000

Travel - 3 800 2,400

Lodging ___ 35 192 6,720 _ _ _

|Subsistence __ 35 93 3,255 _ _ _

2.3. Study, Research and Drafting - _ _ _ _ 5,625

III. Strengthening of SPC _ ____|_3,900,000Activities completed or in progress _ _

1. Preparation of complementary laws and design of new 1,900,000investment, actuarial, financial, supervision model _ _

1.I Preparation of complementary laws _ _ 170,000

1.2. Design and implementation of new investment model _ _ _ 80,000 _-

1.3. Actuarial model _ _ . 290,000

1.3.1 New database ______L_180,000

1.3.2 Financial module _ __.___ 320,000

1.3.3 Actuarial module _ _ _ _ 320,000

1.3.4 Registration module _ _ _ _ 30,000

1.3.5 Accounting module _ _ _ _ 185,000

1.3.6 Monitoring and sanction module _ _ _ r _ _ 115,00 0

1. 3.7 processing module _ _ _ r 40,000

Page 26: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 22

.~~~~~~~~~~~~~~~~~~~~ Li. ___I g

Int. Loc Trips Month/ Unit CostDays

1. 4. Technical coordination of activities in progress I 170,000

New Activities__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _

2. Preparation of ordinary laws and regulations r _ 345,4002.1 Drafting of laws and regulations I_ = 219,000

Consultant Fee 5 3 m 8,000 120,000

Travel 10 4,200 42,000

Lodging ___ 100 384 38,400 C

Subsistence 100 186 18,600

2.2 Conference and seminars 126,400

One conference / workshop and various Consultant Fee 4 0.33 6,000 8,000dissemination seminars / presentations in

different cities on the new regulatory

framework.

Travel - - 16 800 12,800 C

Lodging ___ 40 768 30,720

Subsistence 40 372 14,880

____= r___ _ Facilities _ 60,000

3 Strategic Plan for regulatory agency | _ = = 895,800

3.1 Drafting of Strategy Plan __ _ _ _ _ __ __ _ __ _ _ _ ____ ____ 195,806 _ _ _ _ _ _

3-. I|Drafting ofStrategy Plan Consultant Fee 4 4 m 8,000 128,000 195,800

Travel 8 4,200 33,600 _

Lodging _ 60 384 23,040

|Subsistence _ 60 186 11,160

3.2 Equipment L 500,000G

Package estimated at 70 PC's and software packages (US$ _ I

5,000 each), and 20 laptops for auditing purposes (US$ 4,000 r- _each), a server (US$ 50,000), and other office equipment(printer, scanner) ____.

3.3 Training of regulatory agency staff 200.000

Training of (approx.): 20 auditors/actuaries in actuarial t = =°000 25 200,000analysis, funding rules, and portability and vesting rules, 5pension fund investment analysts. _

Page 27: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 23

Activity Type of No. of Length Unit Consulting Number Training Total: Cost Total CostExpense [o, M Ir;W1l Cost Cost USS of Staff Cost USS by Activity USS

Trips USS lJS$Int. Loc Trips Month/ Unit Cost

|________________I_______________I_______________________ ____ Days l_______ _____________Days

4 Expansion of SPC's information system D_=_=_l_388,600

4. lElaboration of Plan to expand information system _ ____lConsultant Fee _ 4 3 m 4,000 48,000 88,600Travel 8 800 6,400Lodging 60 384 23,040Subsistence r ___ 60 186 11,160 l

4.2 Equipment 140,000Package estimated at 20 PC's and software packages (5,000 C__

each), and 10 laptops for auditing purposes (4,000 each). E ______-__4.3 Training 160,000

Training of (approx.): 15 auditors/actuaries in actuarial 8,000 20 160,000analysis funding rules, and portability and vesting rules L - I5 pension fund investment analysts. -_ _ l

5. External Information Network _ _ 370,2005.1 Design of external information network 163,800

Consulting for designing and implementing a Consultant Fee 4 3 m 8,000 96,000new external information network,connecting the regulator to the closed fundsand to other regulatory agencies. l - -

Travel 8 4,200 33,600

Lodging I 60 384 23,040

Subsistence 60 186 11,160

5.2 Equipment 150,006New server for investment management L -

And external link network to pension funds L_And other regulatory agencies _

5.3 Training 50,00G

Training of (approx.): 5 investment analysts and IT support in 10,000 5 50,000operation of new network. _ . l

5.4. Study, research and drafting 6,400 l

Page 28: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 24

Int. Loc Trips Month! Unit Cost___Days

IV. Project Coordination _ 950,0001. I Technical Assistance to the Project Coordinating Unit 506,640

Consulting Fee I_ 30 m 4,000 120,000 l

Consulting Fee 4 = 30 m 2,000 240,000Travel 40 800 32,000 . _ _

Subsistence _ __ 367 93 34,200 . ll

1.2 Other consulting 80,000 l

1.3 Study, research and drafting _ _ X _ ________ 31,8001.4 Equipment _ _ 12,000

1 5 UNDP Administration fee 3% ___ _ . 300,000

1.6 Government fee 1% 100,000

Front end fee L _ 50,000TOTAL COSTS _ = _ _ $10,050,000

Notes:(1) Components III.1-5 are partly funded with the IDB grant. The budget is based on preliminary estimates by the IDB and SPC and may be subject to revision.(2) Component 111.6.1 (preparation of ordinary laws and regulations of the complementary pension system) may be supported by an additional US$ 194,000 from a PHRDgrant to prepare a study on comparative international regulation of private pension plans.

Page 29: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 25

Annex 3Brazil: Social Security Technical Assistance Project

Estimated Project Costs

Project Component Local Foreign Total-----------------US $ million------------

I. INSS Institutional Restructuring 1,850,000 3,000,000 4,850,000II. Pension and insurance legal Framework 50,000 250,000 300,000III. Strengthening of the SPC 2,200,000 1,700,000 3,900,000IV. Project Coordination 900,000 50,000 950,000

Total 5,000,000 5,000,000 10,000,000Fee 50,000 50,000Total Baseline Cost

Physical ContingenciesPrice Contingencies

Total Project Cost 5,000,000 5,050,000 10,050,00

Page 30: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 26

Annex 6Brazil: Social Security Technical Assistance Project

Procurement and Disbursement Arrangements

I. Procurement

1.1 The procurement of project components financed by the Bank loan would be carried outin accordance with the Bank Guidelines for Procurement of Goods and Works (January 1995,revised January and August 1996, September 1997 and January 1999), and the Bank Guidelinesfor the Use of Consultants (January 1997, revised September 1997, and January 1999).

1.2 Procurement of Goods: Goods (computer equipment and software) costing more thanUS$350,000 would be procured following International Competitive Bidding (ICB) procedures.Although not envisaged, there may be the need to procure during project implementation someitems costing less than US$350,000, but more than US$100,000, and others costing less thanUS$100,000. They, if any, would be procured on the basis of National Competitive Bidding(NCB) or National/International Shopping respectively. Shopping procedures would requirequotations from at least three suppliers. There would be no works to be procured under thisproject.

1.3 Technical Assistance: Consulting Services and Training worth more than US$100,000would be selected in accordance with Quality and-Cost-Based Selection procedures (QCBS).Contracts for simple assignments not exceeding the equivalent of US$100,000 per contract, up toan aggregate amount equivalent to US$250,000, may be awarded following Least Cost Selectionprocedures (LCS). Consulting services estimated to cost less than US$100,000 equivalent percontract, up to an aggregate amount of US$250,000, for which the need for preparing andevaluating competitive proposals is not justified, may be procured under contracts awardedfollowing consultant's qualifications. Consulting services estimated to cost less than US$100,000equivalent per contract, up to an aggregate amount of US$250,000 equivalent, may, with theBank's prior agreement, be procured under contracts awarded based on single source selection.Consulting services not requiring the use of teams, up to an aggregate amount of US$250,000,may be procured under contract awarded to individual consultants, selected based on theirprofessional qualifications.

1.4 Bank's Procurement Review: Prior Review: The Bank will review ex-ante the ICBbidding documents for the procurement of goods estimated to cost US$350,000 or more and thefirst contract under NCB, if it materializes. The Bank would also review ex-ante alldocumentation for the selection of consultants (request for proposal, short lists, letters ofinvitation, contract forms, terms of reference, etc) of contracts estimated at more thanUS$100,000 for firms and US$50,000 for individuals. Prior review of terms of reference onlywould be required for contracts estimated at less than US$100,000 for firms and less thanUS$50,000 for individuals. Post review: All procurement documentation, including that relatedto contracts not subject to prior review would be kept by the Borrower for ex-post review by theBank during the supervision mission.

1.5 The Borrower is planning to administer and implement part of the project under theauspices of the United Nations Development Program (UNDP). This agency will help to enhancethe local institutional capacity and take care of some procurement processes following Bank'sguidelines. The Project Document (PRODOC) has to be approved by the Bank prior to itssignature. The UNDP fees would be financed by the Borrower. Table A shows Project Costs by

Page 31: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 27

Procurement Arrangements. Table Al shows Project Costs by Consultant SelectionArrangements and Table B shows Thresholds for Procurement Methods and Prior Review.

II Financial Management.

2.1 A financial management assessment has been performed by the local Bank FMS/OPRprior to loan negotiations. A time bound detailed action plan has been agreed with projectmanagement, describing the necessary steps and measures required to strengthen the FinancialManagement System to enable the Borrower to disburse based on PMRs. This plan would beimplemented within six months of loan effectiveness.

IIl. Disbursement

3.1 Allocation of loan proceeds: The project is expected to be completed over a period ofthirty three months. The last disbursement will be incurred twenty four months after the contractsigning date. The closing date of the loan will bq December 31, 2002. The allocation of loanproceeds by project component is shown in Table C.

3.2 Initially, the loan would be disbursed on the basis of Statements of Expenditures (SOEs).After the action plan for the financial management system has been implemented, the loan will bedisbursed under the Project Management Reports (PMRs)-based disbursement system. The PCUwill prepare, in accordance with guidelines acceptable to the Bank, and furnish to the Bank nolater than 45 days after the end of each calendar quarter, a PMR for such period, which (i) setsforth actual sources and application of funds for the project, both cumulatively and for the periodcovered by the report, and projected sources and application of funds for the following six-monthperiod; (ii) PMRs in each quarterly report will describe the physical progress in projectimplementation and explain variances between the actual and previously forecast implementationtargets; and (iii) set forth the status of procurement under the project and expenditures undercontracts financed out of the proceeds of the loan as at the end of the period covered by thereport.

3.3 Special Account: A Special Account will be established to cover expenditures paiddirectly by the Borrower. For the initial period of disbursements under SOEs, the AuthorizedAllocation of the Special Account will be US$500,000. Once the PMR-based disbursementsystem is implemented, the authorized allocation will be established based on the cash flowforecast for a six month period. Withdrawals from the Loan Account of amounts to be depositedinto the Special Account, shall be supported by PMRs. The Special Account would be managedby the PCU, which would be responsible for preparing applications for withdrawals and thesupporting PMRs. These applications would be submitted every six months or when the SpecialAccount has been drawn down by a third of the initial deposit, whichever occurs first.

3.4 Retroactive Financing: There would be retroactive financing of up to US$500,000 forexpenditures incurred between February 1, 1999 and the loan signing date. Retroactive financingis recommended to allow for Bank financing of expenditures, which have been incurred since theproject was identified.

IV. Accounting and Auditing

4.1 Accounts, including the Special Account and related financial information (including

Page 32: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 28

supporting documentation for the PMRs), would be audited annually by an independent auditoracceptable to the Bank, in accordance with Bank auditing guidelines. Certified copies of theaudited consolidated project accounts and audited Special Account (including a separate opinionon the use of PMRs) would be submitted to the Bank no later than six months after the close ofthe fiscal year.

Page 33: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 29

Annex 6, Table A: Project Costs by Procurement Arrangements'

(in US$ thousand equivalent)

Expenditure Category Procurement Method Total Cost(including

contingencies)ICB NCB Other (3) N.B.F (1)

1. Goods960 90 913 1,963

(960) (90) (1,050)

2. Technical Assistance

(a) Consultants 5,473 2,0640 7,537(3,450) (3,450)

(b) Training (4) 500 500(500) (500)

Total 960 6,063 2,977 10,000(960) (4,040) (5,000)

Note:

(1) N.B.F. = Not Bank-financed

(2) Figures in parenthesis are the amounts to be financed by the Bankloan

(3) Other includes training and consultants to be selected according tothe guidelines "Selection and Employment of Consultants by the WorldBank, January 1997, revised, September 1997 and January 1999".

(4) includes workshops/seminars

Page 34: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 30

Annex 6, Table Al: Consultant Selection Arrangements

(in US$ thousand equivalent)

Selection Method Total CostConsulting including

Services contingenciesExpenditure

CategoryQCBS LCS Consult. Single Other

Qualifications Source

A. Firms 2,450 250 250 250 4,087 7,287(2,450) (250) (250) (250) (3,200)

B. Individuals 250 250(250) (250)

2,450 250 250 250 4,337 7,537Total (2,450) (250) (250) (250) (250) (3,450)

Note: QCBS = Quality- and Cost-Based SelectionLSC = Least Cost ProceduresOther = Selection of individual consultants (per Section V ofConsultants Guidelines), Commercial Practices, etc., andselection under procedures of other co-financiers

Figures in parenthesis are the amounts to be financed by theBank loan.

Page 35: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 31

Annex 6, Table B: Thresholds for Procurement Methods and Prior Review'

Expenditure Contract Value Procurement Contracts Subject toCategory (Threshold) Method Prior Review

US $ thousands1. Goods

>350 ICB All350-100 NCB First contract

<100 Shopping None

2. Consulting ServicesFirms >100 QCBS All

<100 LCS TOR only<100 Consultant's TOR only

qualifications<100 Single source TOR only

Individuals >50 According to Allqualifications

<50 According to TOR onlyqualifications

s Thresholds generally differ by country and project. Consult OD 11.04 "Review of ProcurementDocumentation" and contact the Regional Procurement Adviser for guidance.

Page 36: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 32

Annex 6, Table C: Allocation of Loan Proceeds

Expenditure Category Amount in US$ Financing Percentagethousands (loan allocation / total allocation)

Goods 1,049,500 100% of foreignexpenditures, 100% of localexpenditures (ex-factory cost)

and 80% of localexpenditures for other itemsprocured locally

Consulting Services 3,450,000 100%Training 500,000 100%

Fee 50,500Total 5,050,000

Page 37: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 33

Annex 7Brazil: Social Security Technical Assistance Project

Project Processing Budget and Schedule

A. Project Budget (US$000) Planned Actual(At final PCD stage)

81.7 73.8

B. Project Schedule Planned Actual(At final PCD stage)

Time taken to prepare the project (months) 7 15First Bank mission (identification) August 1998 August 1998Appraisal mission departure January 1999 January 1999Negotiations March 1999 November/l 8/1999Planned Date of Effectiveness April 1999 March /31//2000

Prepared by: Ministry of Social Security and Social Assistance

Preparation assistance: None

Bank staff who worked on the project included:Name Specialty

Mariluz Cortes (Task Manager) Institutional Reforms - PensionsIndermit Gill Economist - Labor/Pensions

Truman Packard Economist - PensionsJuan Yermo Economist - Pensions

Jose Baigorria Pera Sr. Procurement SpecialistTulio Correa Finance Management Specialist

Jose Augusto Carvalho Lawyer

Page 38: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Page 34

Annex 8Social Security Technical Assistance Project

Documents in the Project File*

A. Project Implementation PlanIncluded in the PAD.

B. Bank Staff AssessmentsEnvironmental and Social Comments on PAD

C. Other-Performance Monitoring Indicators-Schedule of expenditures

*Including electronic files.

Page 39: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

Brazil

Statenet of loans and CQedits

Status of Bank Group Opeations (Operations Portfolio)

Closed 173Projects

Difference BetweenLast PSR Expected and Actual

BoardDate Supervision Rating b/ Original Amount In USS Millions Disbursements '

Fiscal DvlpetIpeettoYear Active Projects Develosment Pmolemensson IBRD tDA Cancel. Undisb. Orig. Frm Rev'd

1989 P006370 NE IRRI JAIBA S S 71 0 0 0.22 0.22 0

1990 P006453 NE IRRIG I S S 210 0 69 14.8 83.8 50.34

1992 P006505 MATO GROSSO NAT RES S U 205 0 0 48.41 48.41 0

1992 P006454 RONDONIA NTRL RES. M S S 167 0 0 27.38 27.38 0

1992 P006368 WATER SECTOR MODERNI S S 250 0 0 1.24 1.24 0

1993 P006541 BR WTR Q/PLN(SP/PR/FED) S S 245 0 9.3 18.77 28.07 6.77

1993 P006547 METRO TRANSP. RIO S S 128.5 0 0 0.29 0.29 0

1994 P006452 BR NE BASIC EDUC III S S 206.6 0 0 12.61 12.61 0

1994 P006558 BR PARANA BASIC EDUC S S 96 0 0 15.37 14.71 0

1994 P006522 ESP.SANTO WATER U U 154 0 4 72 75.27 51.39

1994 P006543 M. GERAIS BASIC EDUC S S 150 0 0 19.88 18.88 0

1994 P006524 MINAS MNC.DEVELOPMT S S 150 0 5 29.44 34.44 0.03

1994 P006555 STE HWY MGT II S S 220 0 36 2.58 38.58 2.58

1995 P006564 BELO H M.TSP S S 99 0 0 37.2 29.3 0

1995 P006436 Ceara Urban Development & W S S 140 0 0 55.01 54.35 -2.99

1995 P038882 RECIFE M.TSP S S 102 0 0 71.95 57.29 0

1995 P035717 RURAL POV. (BAHIA) S S 105 0 0 36.21 18.55 0

1995 P038884 RURAL POV.- CEARA S S 70 0 0 14.41 1.41 0

1995 P038885 RURAL POV.-SERGIPE S S 36 0 0 6.23 -0.27 0 o

1996 P037828 BR (PR)R.POVERTY S S 175 0 0 132.41 98.85 0 I-h

1996 P006512 BR ENV/CONS(CVRD) U U 50 0 0 18.15 12.66 0 '

1996 P006554 HLTH SCTR REFORM S S 300 0 0 209.49 159.49 0

a. Intended disbursements to date minus actual disbursements to date as projected at appraisal.

35

Page 40: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

BrazilStatenent of Loans and Credits

Status of Bank Group Operations (Operations Portfolio)

Closed 173Projects

Difference BetweenLast PSR Expected and Actual

BoardDate Supervision Rating bl Original Amount in US$ Millions Disbursements a'

Fiscal DvlpetIMrettoYear Active Projects Development Implementation IBRD IDA Cancel. Undisb. Orig. Frm Rev'd

Objectives Progress

1996 P040028 RAILWAYS RESTRUCTURG S S 350 0 50 37.42 64.09 34.95

1997 P043871 (PIAUI)R.POVERTY S S 30 0 0 7.5 -1.16 01997 P043873 AG TECH DEV. S S 60 0 0 45.3 20.22 0

1997 P006562 BAHIA MUN.DV S S 100 0 0 91.41 45.75 6.58

1997 P046052 CEARA WTR PILOT s s 9.6 0 0 6.36 6.36 -0.11

1997 P006532 FED HWY DECENTR S S 300 0 0 240.38 140.38 0

1997 P006475 LAND RFM PILOT S S 90 0 0 55.09 26.24 0

1997 P048870 MT STATE PRIV. HS S 45 0 0 20.09 20.09 0

1997 P042566 R.POVERTY(PE) S S 39 0 0 12.59 3.06 0

1997 P038896 R.POVERTY(RGN) S S 24 0 0 13.17 6.01 0

1997 P034578 RGS HWY MGT S S 70 0 0 64.28 32.62 3.28

1997 P043868 RGS LAND MGT/POVERTY S S 100 0 0 87.67 28.57 0

1998 P006559 (BF-R)SP.TSP S S 45 0 0 45 31.67 0

1998 P035728 BAHIA WTR RESOURCES S S 51 0 0 36.74 21.91 0

1998 P050762 BR Fundescola I S S 62.5 0 0 22.15 -14.93 0

1998 P006474 BR LAND MGT 3 (SAO PAULO 55 0 0 55 14.17 0

1998 P038947 BR SC. & TECH 3 S S 155 0 0 132.61 43.45 0

1998 P048357 CEN.BANK TAL S S 20 0 0 16.83 16 0 CD

1998 P038895 FED.WTR MGT S S 198 0 0 161.75 59.8 -0.25 N

1998 P006549 GAS SCTR DEV PROJECT HS HS 130 0 0 109.25 106.25 0 0

1998 P051701 MARANHAO R.POVERTY S S 80 0 0 56.68 2.85 01998 P040033 MG STATE PRIV. U U 170 0 0 170 168.34 0

a. Intended disbursements to date minus actual disbursements to date as projected at appraisal.

36

Page 41: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

BrazilStatewent of Ipans anr Credits

Status of Bank Group Operations (Operatons Portfolio)

Closed 173Projects

Difference Between

Board Last PSR Expected and ActualDate Supervision Rating b/ Original Amount In USS Millions Disbursements v

Fiscal DvlpetIpeettoYear Active Projects Development Implementaton IBRD IDA Cancel. Undisb. Orig. Fnn Rev'd

Oblectives Progress

1998 P042565 PARAIBA R.POVERTY S S 60 0 0 45.26 3.73 01998 P057910 PENSION REFORM LIL HS S 5 0 0 4.98 4.98 01998 P043421 RJM.TRANSITPRJ. S S 186 0 0 178.12 117.09 01998 P043420 WATER S.MOD.2 S S 150 0 0 150 64.05 12.071999 P054120 AIDS 2 S S 165 0 0 144.73 44.73 01999 P055388 ANIMAL&PLANT DIS. CO S S 44 0 0 44 2.11 01999 P058129 BR EMER. FIRE PREVENTION U U 15 0 0 15 3.5 01999 P050763 BR Fundescola II S S 202.03 0 0 202.03 13.37 01999 P043874 DISEASE SURVEILLANCE S S 100 0 0 96.52 28.19 01999 P048869 SALVADOR URBAN TRANS S S 150 0 0 150 10.42 02000 P039200 BR ENERGY EFFICIENCY 43.4 0 0 43.4 0 02000 P035741 BR NATL ENV 2 15 0 0 15 0 0

If

a. Irntn dsbursmt to date minus acta dsbusemew to date as projected at appraisal.

37

Page 42: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

38 Annex 9(b)Page 1 of 1

BrazilStatement of IFC's

Held and Disbursed PortfolioAs of 8/31/1999

(In US Dollars Millions)

Held Disbursed

FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic

1998 Arteb 20 7 0 20 20 7 0 201993 BACELL 6 15.7 0 16.2 6 15.7 0 16.21998 BSC 13.18 0 0 7.06 13.18 0 0 7.06

1990/91/92 BahiaSul 0 0 0 0 0 0 0 01996 BancoBradesco 40 0 0 54.36 18.32 0 0 25.161997 Bompreco 25 0 5 0 25 0 5 01991 Bradesco-Bahia 3 0 0 0 3 0 0 01991 Bradesco-Eucatex 7.5 0 0 0 7.5 0 0 01995 Bradesco-Hering 7.5 0 0 0 7.5 0 0 01991 Bradesco-Petrofl 7.5 0 0 0 7.5 0 0 01991 Bradesco-Romi 1.19 0.4 0 0 1.19 0.4 0 01995 Brahma - BRA 25 0 0 49.2 25 0 0 49.21981 Brasilpar 0 0.04 0 0 0 0.04 0 0

1993/96 CEVAL 0 10 0 0 0 10 0 01994/96 CHAPECO 15 0 0 5 i 5 0 0 51973/78/83 CODEMIN 0 0.4 0 0 0 0.4 0 0

1992 CRP-Caderi 0 1.93 0 0 0 0.68 0 01995 Cambuhy/MC 16.88 0 0 0 16.88 0 0 01997 Copesul 37.5 0 0 167.14 37.5 0 0 167.14

1993/97 Coteminas I5 0 0 18.18 15 0 0 18.181980/92 DENPASA 0 0 0.12 0 0 0 0.05 0

1998 DixieToga 0 15 0 0 0 15 0 01987/96/97 Duratex 19 0 3 72.17 19 0 3 72.17

1990 ENGEPOL 0.88 0 0 0 0.88 0 0 01999 Eliane 32 0 13 0 0 0 0 01998 Enpesca 5 0 10 0 5 0 10 01998 Fosfertil 20 0 0 45 12 0 0 271998 Fras-le 10 10 0 0 10 6.7 0 01994 GAVEA 9.38 0 5.5 0 9.38 0 5.5 01994 GP Capital 0 14.04 0 0 0 14 0 0

1995196/98 Globocabo 0 9.91 0 0 0 9.91 0 01997 Guilmana-Amorim 28.92 0 0 81.42 28.92 0 0 81.421998 IcatusEquity 0 30 0 0 0 0.28 0 0

1980/87/97 Ipiranga 40 0 0 150 40 0 0 1501995 LATASA -Brazil 13 0 0 2 13 0 0 2

1996/97 Lightel 0 8.17 0 0 0 8.17 0 01995 Lojas Americana 24 0 5 12 24 0 5 12

1987/92/96 MBR 0 0 0 0 0 0 0 01993 Macedo Alimentos 14.5 0 0 0 14.5 0 0 01996 Mallory 7.27 0 0 0 7.27 0 0 0

1980/88 OPP 0 0 0 0 0 0 0 01975/96 Oxiteno NE 22.5 0 0 0 22.5 0 0 01982/84/86 PISA 0 0 0 0 0 0 0 0

1994 ParaPigrnentos 30 0 9 31.03 25.5 0 9 25.781987/96 Perdigao 26.25 0 0 12 26.25 0 0 121989/95 Politeno nd. 13.15 0 0 0 13.15 0 0 0

1994 Portobello 12.14 5 0 0 12.14 5 0 01998 Randon 7 0 3 0 7 0 3 01991 Rhodia-Ster 5.71 5.95 0 0 5.71 5.95 0 01995 Rhodiaco/PTA 20 0 0 18 20 0 0 181990 Ripasa 1.43 5 0 0 1.43 5 0 01997 Rodovia 35 0 0 79.5 33.07 0 0 75.131994/S.A.I.C.C. 0 0 6.87 0 0 0 6.87 0

1987/97 SP Alpargatas 25 0 5 0 25 0 5 01994/95/97 Sadia 28 0 9.33 149.33 28 0 9.33 149.33

1997 Samarco 16.2 0 0 13.33 16.2 0 0 13.331998 Saraiva 15 3 0 0 15 3 0 01997 Sucorrico 15 0 0 0 15 0 0 01996 TIGRE 23.08 0 5 17.09 23.08 0 5 17.09

1992/93 TRIKEM 0 0 0 0 0 0 0 01998 Tecon Rio Grande 7.5 0 5.5 18 3.33 0 5.5 8

Page 43: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

39 Annex 9(b)

Page 2 of 2

1993 Votorantim 11 71 0 0 0 86 11 71 0 0 0 861999 Vulcabras 20 0 0 0 20 0 0 01997 Werblcy 0 10 0 0 0 10 0 01999 Wiest 9 0 8 0 0 0 8 0

Total Portfolo 80787 151 54 9332 103887 72659 11723 8025 97205

Approvals Pending Commitment

Loan Equity Quasi Panrc

1999 AUTOBAN 35 0 0 46

1999 CIBRASEC 0 7 5 0 01997 CTBC 35 0 0 1502000 FLEURY 9 0 6 01998 FRAS-LE 0 0 0 151998 FSA 35 0 10 451996 GLOBOCABO 11 0 0 0 381999 INNOVA 20 5 0 1601999 INNOVATIVE liS 0 0 6.25 01997 IPIRANGA EXPANS 0 0 5 0

1998 IPIRANGA-RI 2 0 0 09 0 01999 JOSAPAR 13 0 7 01999 MBRLTDP 20 0 5 1151996 OXITENOiETHYLO 0 5 0 02000 PURAS 4 0 1 01998 RANDON 0 0 0 151997 SP ALPARGA2AS 11 0 0 0 301998 UNIBANCO 40 0 0 250

Total Pending Commitment 211 1759 40.25 864

Page 44: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

40 Annex 10

Country at a Glance Page I of 2

Brazil at a glance 919/99

Latin Upper-POVERTY and SOCIAL Arnerica middie-

Brazil & Carib. income I Development diamond'1998Population. mid-year (millions) 165.9 502 5sa Life expectancyGNP per capita (Atlas method, US$) 4,570 3,940 4,860GNP (Atlas method, US$ billions) 758.0 1,978 2.862

Average annual growth, 1992-98

Population () 1.4 1.6 1.4Labor force (X) 1.7 2.3 2.0 I GNP Gross

per primaryMost recent estimate (latest year available, 1992-98) capita enrollment

Poverty (% of population below national poverty line) 17

Urban population (% of total populatfon) 80 75 77Life expectancy at birth (years) 67 70 70Infant mortality (per 1,000 live births) 34 32 27Child malnutrition (% of children under 5) 6 8 Access to safe waterAccess to safe water (% of population) 69 75 79Illiteracy (% of population age 15+) 16 13 11Gross primary enrollment (% ofschool-age population) 123 113 108 - Brazil

Male . --- Upper-middle-income group

Female

KEY ECONOMIC RATiOS and LONG-TEiRM TRENDS

1977 1987 1997 199Economic ratios*

GDP (USS bilbions) 176.2 294.1 820.4 750.8

Grossdomesticinvestment/GDP 22.1 22.3 21.3 21.2Exports of goods and services/GDP 7.3 9.5 7.6 6.9 TradeGross domestic savingslGDP 21.4 25.6 18.6 18.aGross national savings/GOP 19.7 21.8 16.9 16.8 6

Current account balance/GDP -2.9 4-S -4.1 47Interest payments/GDP 1.2 2.1 1.2 1.4 DomescInvestmentTotal debt/GDP 23.9 40.7 23.6 28.2 SavingsTotal debt service/exports 42.5 41.7 57.4 67.7 QPresent value of debVGDP 22.5Present value of debt/exports 277.4

Indebtedness1977487 1988-98 1997 1998 1999-03

(average annual growth)GDP 3.0 2.4 32 0.2 30 -BrazilGNP per capita 0.5 0.5 1.9 -1.4 1 0 U Jpper-middle-income groupExports of goods and services 10.1 4.8 1.8 0.2 6 2

STRUCTURE of the ECONOMY1977 1987 1997 1998 Growth rates of output and investment (%

(¶6 of GDP)Agriculture 14.7 10.0 8.1 8 6 1Industry 38.6 45.9 35.2 37.5 8

Manufacturing 29.3 32.0 22.8 24.3 4

Services 46.7 44.1 56.7 53.9 j w w 9 7 w

Private consumption 69.2 62.3 63.2 68.5

General govemment consumption 9.4 12.2 18.1 127 GDI - GDPImports of goods and services 7.9 6.2 10.2 9.2

197747 1988-98 1997 1998(average annual growth) Growth rates of exports and Imports I%)

Agriculture 3.5 2.5 1.9 05 40

Industry 2.7 1.8 55 0.5Manufacturing 2.3 0.7 3.8 0.5 20-

Services 3.2 2.6 3.5 1.2

Private consumption 3.6 5.3 2.4 -3.4 94 95 95 97 98

General govemment consumption 4.0 -1.5 8.0 2.1 1 9

Grossdomesticinvest.ment -1.3 2.1 6.2 0.1 -25

Imports of goods and services -2.6 13.4 13.9 8.9 -Exports t*ImportsGross national product 2.7 2.0 3.3 0.0

Note: 1998 data are preliminary estimates.

* The diamonds show four key indtcators in the country (in bold) compared with its income-group average. If data are missing, the diamond willbe incomplete.

Page 45: World Bank Document · CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (R$) US$1.00 = R$1.89 FISCAL YEAR January ISt -December 31 s ABBREVIATIONS AND ACRONYMS ANSeS = Argentina's

41 Anex 10Page 2 of 2

Brazil

PRICES and GOVERNMENT FINANCE1977 1987 1997 1998 Inflation (%)

Domestic prices (% change) 3,' 0

Consumer prices . 228.3 6.9 2.7 2,000Implicit GDP deflator 46.2 204.1 7.8 0.0 1 y \

Government flnance(% of GDP, includes cuffent grants) 93 94 9 , 7

Current revenue .. 10.4 18.6 21.2Current budget balance -1.4 -1.8 -4.6

'- * ' : ~~~~~-GDP deflator C--POverall surplus/deficit .. -2.8 -2.7 -5.7 da

TRADE1977 1987 1997 1998 Export and Import levels (US$ millions)

(US$ millions)

Total exports (fob) 26,225 52,990 47,176 90,0o0 -Coffee .. 2,185 3,094 2,505Soybeans 2,325 5,729 4,580 60.000 t

Manufactures .. 14,331 32,736 27,601Total imports (cif) , 15,053 61,354 53,012 40000 .

Food .. 500 3,290 2,961 20000 1 |Fuel and energy .. 4,674 3,220 3 903 1 929304111Capital goods .. 3,958 26,232 25,262

Export price index (1995=f100) . 78 96 92 9

Importpriceindex(1995=100) .. 81 95 84 m Exports lImporltsTermsoftrade(1995=100) , 97 101 108 _

BALANCE of PAYMENTS

(US$ millons) 1977 1987 1997 1998 Current account balance to GDP ratio (%)Exports of goods and services 13,003 28,073 56,831 55,479 2

Imports of goods and services 14,646 17,749 74,147 70,517Resource balance -1,643 10,324 -17,316 -15,038 0

Netincome -3,469 -11,699 -18,331 -21,794 94

Net current transfers 4 -43 2,216 1,886 -2 1 I

Currentaccount balance -5,108 -1,418 -33,430 -34,946 tFinancing items (net) 5,629 363 25,629 26,455Changes in net reserves -521 1,055 7,801 8,491 .6

Memo:Reserves including gold (US$ millions) 7,256 6,420 51,729 43,366Conversion rate (DEC, IocatJUS$) 5.14E-12 1.43E-8 1.1 1.2

EXTERNAL DEBT and RESOURCE FLOWS1977 1987 1997 1998 1

(US$ millons) Composition of total debt, 1998 (USS millions)Total debt outstanding and disbursed 42,037 119,820 193,663 212,069 6298

IBRD 1,371 9,384 5,743 6,298 5310IDA 0 0 0 0 492 5264

Total debt service 5,737 11,956 38,091 44,049 12944IBRD 204 1,555 1,428 1,373IDA 0 0 0 0

Composition of net resource flowsOffical grants 5 35 63 80 IOfficial creditors 415 10 -1,820 -2,571 /

Private creditors 5,708 -890 19,890 -26,999Foreign direct investment 1,833 1,225 19,652 23,737Portfolio equity 0 78 5,300 -1,852 133324

World Bank programCommitments 319 1,394 1,104 1,291 A-IBRD E-BilateralDisbursements 299 915 1,416 1,240 B- IDA 0- Other multlateral F - PnvatePrincpalrepayments 101 867 1,049 995 C-IMF G-Short-temNetflows 198 48 368 245 1 _

Interest payments 104 688 380 378Net transfers 95 -641 -12 -133

Development Economics 9/9/99