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Document of The World Bank FOR OFFICIAL USE ONLY Report No: 33215-AR PROJECT APPRAISAL DOCUMENT
Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 33215-AR
PROJECT APPRAISAL DOCUMENT
ONA
PROPOSEDLOAN
IN THE AMOUNT OF US$l50.00 MILLION
TO THE
ARGENTINE REPUBLIC
FOR
RURAL EDUCATION IMPROVEMENT PROJECT-PROMER
November 17,2005
Human Development Sector Management Unit
Argentina, Chile, Paraguayand Uruguay Country Management Unit
Latin America and the Caribbean Regional Office
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties. Its contents may not otherwise be disclosed without World
Bank authorization.
Disclosure AuthorizedPublic
Disclosure Authorized
Disclosure AuthorizedPublic
Public Disclosure AuthorizedPublic
CURRENCY EQUIVALENTS (Exchange Rate EffectiveNovember 10,2005) Currency Unit = Argentine Peso ARS$2.94 = US$1
CURRENCY EQUIVALENTS
(Exchange Rate EffectiveNovember 10,2005)
Currency Unit
=
Argentine Peso
ARS$2.94
=
US$1
FISCAL YEAR
January 1
-
December 31
ABBREVIATIONS AND ACRONYMS
CAS
CFE
CIPPEC
Country Assistance Strategy
Consejo Federal de Educaci6n or Federal Education Council
Center for Implementationof Public Policies for Equity and Growth (Centro de
Implementacidn de Politicas Ptiblicas Para la Equidad y el Crecimiento)
DGUFI
General Directorate of the Unit of International Finance (Direccidn General
Unidad de Financiamiento Internacional)
DNGCyFD
National Directorate of Curricular Management and Teacher Training (Direccidn
Nacional de Gestidn Curricular y Formacidn Docente)
DNIECE
National Directorate of Educational Information, Evaluation and Educational
Quality (Direccidn Nacional de Informacidn y Evaluacidn de la Calidad Educativa)
EGB
IIPE
General Basic Education (Educacih General Bisica)
International Institute for Educational Planning (Instituto Internacional de
Planeamiento de la Educacidn)
INDEC
MECyT
National Institute of Statistics and Censuses (Instituto de Estadisticay Censos)
National Ministry of Education, Science, and Technology (Ministerio de Educacidn,
NAP
Cienciay Tecnologia)
Core Learning Priorities (Nzicleos de Aprendizajes Prioritarios)
NEA
Northeast Argentina (Noreste Argentina)
NOA
Northwest Argentina (Noroeste Argentina)
NPRE
ONE
PERMER
National Program for Rural Education
Operativo Nacional de Evaluacion or National Evaluation Survey
Renewable Energy in the Rural Electricity Market (Proyecto de Energia Renovable
en el Mercado Ele'ctrico Rural or Project)
PNEIB
National Intercultural Bilingual Education Program (Programa Nacional de
Educacidn Intercultural y Bilingiie)
PIRLS
PISA
PRODYMES
Progress in International Reading Literacy Study
Program for International Student Assessment
Programof Decentralization and Improvement of Secondary Education (Programa
PROMER
de Descentralizacidny Mejoramiento de la Educacidn Secundaria)
Rural Education Improvement Project (Proyecto de Mejoramiento de la Educacidn
Rural)
Vice President:
Country Director:
Sector Director:
Sector Manager:
Sector Leader:
Task Team Leader:
Pamela Cox
Axel van Trotsenburg
Evangeline Javier
Eduardo Velez Bustillo
Jesko Hentschel
Suhas D. Parandekar
ARGENTINA Rural Education Improvement Project .PROMER CONTENTS Page A. STRATEGIC CONTEXT AND RATIONALE 1 1.
ARGENTINA
Rural Education Improvement Project .PROMER
CONTENTS
Page
A. STRATEGIC CONTEXT AND RATIONALE
1
1.
Country and sector
issues
1
2.
Rationale for Bank involvement
5
3. Higher level objectives to which the project contributes
6
B. PROJECT DESCRIPTION
6
1.
Project
development objective and key indicators
6
2.
Project components
7
3.
Lessons learned and reflected in the project design
11
4.
Alternatives considered and reasons for rejection
12
C. IMPLEMENTATION
12
1. Monitoring and evaluation of outcomes/results.,
13
2.
I
Sustainability
14
3.
Critical risks and possible controversial aspects
14
4.
Loan conditions and covenants
15
APPRAISAL SUMMARY
15
1. Economic and financial analysis
15
2.
Technical
15
3.
Fiduciary
15
4.
Social
157
5.
Environment
17
6.
Safeguard policies
17
7.
Policy Exceptions and Readiness
17
Annex 1: Country and Sector or Program Background
18
Annex
2: Major Related Projects Financed by the Bank and/or other Agencies
30
Annex
3: Results Framework and Monitoring
31
Annex
4: Detailed Project Description
36

Annex 5: Project Costs

44

Annex

6: Implementation Arrangements

45

Annex

7:

FinancialManagement and Disbursement Arrangements

49

Annex

8:

Procurement Arrangements

63

Annex

9:

Economic and Financial Analysis

70

Annex

10:

Safeguard Policy Issues

76

Annex

11:

Project Preparation and Supervision

88

Annex

12: Documents in the Project File

90

Annex

13: Statement of

Loans and Credits

94

Annex

14:

Country at a Glance

97

Map IBRD 33362

ARGENTINA RURAL EDUCATIONIMPROVEMENT PROJECT - PROMER PROJECT APPRAISAL DOCUMENT Latin America and the Caribbean
ARGENTINA
RURAL EDUCATIONIMPROVEMENT PROJECT - PROMER
PROJECT APPRAISAL DOCUMENT
Latin America and the Caribbean Regional Office
Human Development Sector Management Unit
Date: November 22,2005
Team Leader: Suhas D. Parandekar
Country Director: Axel van Trotsenburg
Sector Manager/Director: Eduardo Velez Bustillo/
Evangeline Javier
Project ID: PO70963
Lending Instrument: Specific Investment Loan
(SIL)
Sectors: General Education (100 percent)
Themes: Education for all (S)
Environmental screening category: B
Safeguard screening category: B
[XI Loan
[ ] Credit
[ ] Grant
[ 3Guarantee
[ ] Other:
For Loans/Credits/Others:
Total Bank financing (US$m.):
150.00
RECONSTRUCTIONAND
DEVELOPMENT
Total:
228.39
12.19
240.58
Borrower:
Argentine Republic
ResponsibleAgency:
Ministry of Education, Science and Technology (MECyT)
Santa Fe 1548-(1060), Piso 10, Buenos Aires, Argentina
TelDax: (5411) 4129-1931
email: aarango@me.gov.ar
Contact: Lic. Aida Arango, Directora General, Direccih General Unidadde Financiamiento
Intemacional.
i
Does the project depart from the CAS in content or other significant respects? Re$ No
Does the project depart from the CAS in content or other significant respects? Re$
No
PAD A.3
Does the project require any exceptions from Bank policies?
[
]Yes [XINO
Ref: PAD D.7
[
]Yes
[ IN0
Have these been approvedby Bank management?
Is approval for any policy exception sought from the Board?
Does the project include any critical risks rated “substantial” or “high”?
[
]Yes
[ IN0
[XIYes [ ] No
Re$ PAD C.5
Does the project meet the Regional criteria for readiness for implementation? Ref.
[XIYes [ ] No
PAD D.7
Project development objective Re$ PAD B.2, TechnicalAnnex 3
The project seeks to support national Government policy to improve the coverage, efficiency, quality, and
governance of the Argentine education system.
Project description
Ref: PAD B.3.a, TechnicalAnnex 4
The project seeks to contribute to improving the growth potential of Argentina and reducing socia’
inequality. Argentina’s rural sector, which would be supported by this proposed project, has a tremendou!
potential to contribute to growth and economic development in Argentina.
The proposed project would provide education inputs to rural schools under a scheme of bilatera
agreements between the National and Provincial Governments that would seek to attain results regardin8
the coverage and quality of basic rural education. The inputs would include teacher training, didactic
material and equipment including textbooks, workbooks and guides, and school rehabilitation to briq
schools up to basic minimum standards. Special attention would be paid to ensure that these inputs arc
appropriate for the local context of rural areas. The project has two components:
Component A: Improving Quality and Coverage of Rural Education (US$244.60 million)
This component is designed and implemented around three subcomponents: (i)Improving Operatin]
Conditions of Rural Schools; (ii)Expanding Coverage and Improving Student Promotion Flow; and (iii
Strengthening Line Departments at the Provincial Levels;
Component B: Enhancing Stewardship Capacity of the National Government (US$5-40million)
This component consists of the following two sub-components: (i)Strengthening Line Departments at thi
National Level; and (ii)Monitoring and Evaluation.
Which safeguard policies are triggered, if any? Re$ PAD D.6, TechnicalAnnex 10
(i)Environmental (OP/BP 4.01) and (ii)Indigenous Peoples OP 4.10.
Significant, non-standard conditions, if any, for:
Not applicable.
Ref: PAD C.7
Board presentation:
Loadcredit effectiveness: Signed bilateral agreements between the Federal Government and at least tw~
Provinces.
Covenants applicable to project implementation: Signed bilateral agreements between Federal and
Provincial Governments
*.
11
A. STRATEGIC CONTEXT AND RATIONALE 1. Country and sector issues Argentina is now recovering from
A. STRATEGIC CONTEXT AND RATIONALE
1. Country and sector issues
Argentina is now recovering from a severe economic and social crisis. After three years of fast growth
(averaging some 8.5 percent during 2003-2005), GDP has recovered to the pre-crisis peak of 1998. The
focus in Argentina must now move away from crisis response to long-term structural issues regarding the
economy and society-issues of growth, equity, resilience and avoidance of further crises. Three features
of Argentina’s growth path, as recognized in the Bank’s Country Assistance Strategy (CAS) for
Argentina (Report 27340-AR, January 29, 2004) have a crucial bearing on the policies for the education
sector and the role of the Bank in support of those policies:
First, Argentina seeks a permanent improvement in the investment climate to support sustained long-term
growth. There is a strong growth in the productive sector of the economy, not just in services but also in
agriculture and manufacturing. Argentina seeks to build on its existing comparative advantages in
agriculture and certain manufacturing and service sectors to serve as engines of growth. A successful
transition from economic recovery to sustained growth would further fuel a strong demand for skilled
labor and the education sector needs to be able to meet this demand.
Second, the issue of long-term social inclusion of vulnerable groups is a very important item on the
agenda of social policy. The Government seeks to provide equality of opportunity, through employment
generation for excluded populations, like segments of urban youth who never had a chance to complete
schooling, and by improving educational attainment of the population in rural areas, particularly in the
poorer provinces of the Northwest and Northeast. Annex 1 documents the nature of disparities regarding
the quantity and quality of education.
m,the sustained long-term growth path would only be viable under a series of simultaneous policy
actions such as measures to promote infrastructure, investment, improve the business environment and
simplify procedures to start businesses, strengthen property laws, and maintain macroeconomic stability.
Improved human resources are only part of a complex interplay of forces that lead to or impede economic
development. It is vital to remember that improvements in the education sector in turn influence and are
influenced by the larger context of development as the particular context of the education sector is
examinedmore closely.
Uncompletededucational policy reforms
Argentina’s education
sector is characterized by uncompleted reforms, with decentralization as the central
element in the reform agenda. The history of decentralization (of primary schools in 1978 and secondary
schools in 1992) is checkered in Argentina. Provincial Governments had widely varying levels of
ownership and capacity to administer the educational reform program in the 1990s. In addition to the
handover of all schools to provinces that removed the Federal level completely from school
administration, there was simultaneously a major curricular reform. The system that had been in existence
for many decades consisted of primary school in 7 grades, and secondary school in 5 grades (6 for
technical schools). The new system would consist of a compulsory year of pre-school, an extended
compulsory primary or basic school of 9 grades, and a secondary school or Polimodal with flexible,
modular offering of 3 years (4 for technical schools).
A significant changeover of this kind required some rather difficult logistical problems of organization,
and implied the need for significant additional resources to retrain teachers and rearrange the
infrastructure, equipment and didactic materials. The two systems had to co-exist for some time, as
1
children were moved from one educational model to another, which generated additional complications. The resources
children were moved from one educational model to another, which generated additional complications.
The resources available for such a dramatic change although not entirely absent, were not available in all
jurisdictions to the required level, and certainly not with any consistency or regularity for a complete
transition to the new system. Meanwhile, problems of the quality and relevance of the education system,
that had led to the reforms in the first place, remained largely in place, which led to considerable erosion
in the support for the reform.
The late 1990s and the early part of this decade witnessed the worst economic crisis ever experienced in
Argentina, and the education sector suffered the brunt of the cuts in the availability of resources, even
though some jurisdictions were able to cope with less resources and less damaging disasters. In spite of
the problems, there has been a real increase in educational attainment in the 1990s. The out-of-school
population in the 10-14 years age-group fell from 6.8 to 2.9 percent, and the out-of-school population of
15-19 years fell from 45.8 to 30.6 percent (Source: Population Census of 1991 and 2001). Currently in
Argentina, approximately ten years after the reforms were initiated, there are still great disparities across
and within provinces in terms of educational opportunities offered to people, depending on where they
live and their socio-economic background. The current status of the Argentine education system is often
referred to as “fragmented.”
In this fragmented context, the Federal Government recognizes a strategic opportunity to support
provinces through policy guidance and resource transfers under the aegis of a revamped national
educational program. The regulatory framework in Argentina provides a role for a national program as
the responsibility for the education system is shared between the Federal and Provincial levels. Provinces
are responsible for running the education system of their jurisdiction; the Federal Government is entrusted
with supporting the provinces under a national educational policy based on principles of national unity,
cultural identity and equality of opportunities. The role of the Federal Government is best understood in
the context of some basic figures about public educational expenditures.
Public educational expenditures: Role of the Federal Government in the Provinces
Of average public education expenditures of US$6,700 million (in constant 2005 dollars) in Argentina in
the period 1995-2005, the Federal Government’s share was about 24 percent or an average of
approximately US$1,600 million, of which US$1,500 million is the budget of the National Ministry of
Education (MECyT). Of the MECyT expenditures, about 70 percent or about US$950 million is allocated
to universities. The remaining US$550 million is spent as national grant transfers to Provincial
Governments. Of the approximate US$4,900 million of provincial education expenditures, about 95
percent pays salaries of teachers and administrative staff. Although trends regarding the functional
classification of non-university national educational expenditures over time is difficult to make (due to
fluctuations in allocations), in recent years (1999-2005) MECyT transferred substantial amounts to
provinces to supplement teacher
salaries, for an average of about US350 million per year. These Federal
salary supplements were absent before 1999, and were largely begun to address the provincial
Governments’ inability to pay teacher salaries regularly, which led to massive teacher strikes and in
certain provinces, the virtual cessation of educational service delivery. Federal grant transfers for
infrastructure, school materials including textbooks, in-service teacher training, and quality enhancement
programs and scholarships form nearly the entire corpus of non-salary pre-university public expenditures
in provinces.
Argentina’s population and economic activity are highly concentrated regionally; of the country’s 24
jurisdictions, the City of Buenos Aires and three Pampa provinces (Buenos Aires, Santa Fe, and C6rdoba)
account for three-fourths of the GDP and two-thirds of the population. The remaining 20 provinces
account for only 25 percent of the GDP and one-third of the population. Even though provinces have their
own revenues from taxes, the regional disparities necessitate a large dependence on a shared pool of
2
national taxes under a ‘co-participation’ regime that has compensatory elements to make revenues available to
national taxes under a ‘co-participation’ regime that has compensatory elements to make revenues
available to poorer provinces. Annex 1 provides a more detailed account of educational financing issues.
The following five salient points are made in this analysis:
Even with compensatory elements in co-participation, owing to the basic differences in
economic geography, differences in revenue availability to each province are a driver of
huge disparities across provinces in terms of annual expenditures per student (which range
from roughly US$200 in Salta to US$800 in Santa Cruz);
Differences in provincial fiscal effort for education account for only a small portion of
differences in per student expenditures across provinces (education expenditures average
about 27 percent of total provincial expenditures and most provinces are near that number);
Direct federal educational programs in provinces have made only a dent in the inequality of
resource allocation, in part because even though the federal programs are practically the
only programs directed at items other than salaries, the relative magnitude of these
programs is small;
The magnitude of federal programs is changing drastically as a result of a concerted policy
decision by the Government. For example, expenditures on a quality and compensation
programs increased by nearly 17 percent in 2005 as compared to 2004, and an increase of
similar or greater margin is anticipated for the 2006 budget. It should be noted that the
recent increase comes after a period of decline between 1999 and 2004 in such programs
that cumulatively amounts to a decline of nearly 40 percent; and
The margin for improvement within the envelope of the existing pattern of resource
distribution across provinces would not be sufficient to address the disparities in
educational opportunity. There is a need for transparent and non-discretionary transfers
from the Federal Government to address the fundamental or structural inequalities.
Policy response: Improving distribution of federal educational grant transfers to provinces
These structural problems characterized by inter-provincial spending differences are not uncommon in a
country with very high disparities in economic development, and it is difficult to achieve a high degree of
horizontal equity through the single instrument of fiscal policy. There is a limit to which high revenue-
generating provinces can be taxed to transfer to poorer provinces before negative incentive effects set in,
not to mention the adverse incentives for the receiving provinces. Rather than wait for a comprehensive
reform in Argentina’s fiscal framework, the Government’s education sector policy seeks to work within
the limitations of the existing arrangement. The Federal Government would continue to provide resources
for quality and compensatory programs that provinces would not be able to implement on their own.
Policy reforms underway aim to improve the impact of scarce federal resources by applying well-defined
and measurable educational goals as a starting point for the identification of needs and the subsequent
allocation of federal grant transfers across provinces, with the distribution of resources based on
transparent, non-discretionary criteria.
An important attempt to establish a strategic direction for the education sector is being pursued through
the proposed Law for Educational Financing, now under consideration by the National Congress. This
3
proposed law provides a clear vision of ten educational “bi-centenary goals”’ to be accomplished by
proposed law provides a clear vision of ten educational “bi-centenary goals”’ to be accomplished by the
year 2010, when Argentina completes 200 years of its first independent Government. The proposed law
would also provide a mechanism for the utilization of fiscal resources under the shared responsibility of
the Federal and Provincial Governments. Provinces would be able to choose whether to enter into the new
financing framework, in which case they would sign a bilateral agreement with the Federal Government
committing to achieve specific goals and to match additional federal resources with additional resources
from their general revenues. Specific remedial measures would be made explicit in the proposed law to
deal with possible non-compliance. Two modernizing principles would underpin the proposed law the
establishment of clear systemic goals, and the provision of resources under an established set of rules for
resource allocations that provide incentives to provinces to meet those goals.
Bank financing is proposed for one element of the national educational program, namely the National
Program for Rural Education (NPRE). The NPRE would advance regardless of whether or not the new
law is approved or whether or not the Bank approves financing for the NPRE. In this context, the central
idea is for the Bank to partner with the Government through financing and policy innovation that would
potentially be leveraged to other elements of the national program. These innovations relate to the
identification of systemic goals and the allocation of resources to follow provincial needs, using a model
of bilateral agreements. The remainder of this section provides a brief overview of rural education in
Argentina.
Coverage, Quality and Efficiency of Rural Education
The education system in Argentina is heavily biased in favor of the overwhelmingly large urban
population. Rural education in Argentina still faces pockets with limited coverage, mainly in the poorer
Northeast (NEA) and Northwest (NOA) regions of the country, where access to the ten obligatory years
of education is not complete, particularly for pre-school and for the third cycle of Basic Education
(EGB3). In rural areas where there is provision of pre-school and EGB3 education, there are few signs of
constraints on the demand side. However, coverage for the extended span of compulsory education (to
pre-school and EGB3) has lagged for rural areas. For Primary Education (EGB1 and EGB2), coverage is
nearly universal even in rural areas; however, the quality of this education is uneven, which results in
high rates of repetition and dropout, and constrains the possibility of access to higher levels of educationa2
While there are national programs that address the issue of quality in urban schools, this has not been the
case for rural schools to date. As a result, the Government aims to implement a targeted program that
would address the peculiarities of schools in rural areas, including the need to provide education services
to localities with low population density, to provide closer involvement of children with the ambience of
farming and related activities, and to recognize the heightened role of a school as a cultural node for the
local community. The Government’s National Rural Education Program would thus directly support the
first two bi-centenary goals at the focus of the reform agenda-universalization of pre-school and
complete coverage of ten years of compulsory education. The Rural Education Program would also help
address another important bi-centenary goal regarding the quality of basic education, especially related to
1 See Annex 1 for an enumeration of the ten goals. Essentially, these ambitious goals are concerned with an
improvement in the quality and contribution of the education sector to the Argentine society, in a manner that carries
all Argentines with it, especially by including hitherto excluded groups.
2 At the end of Annex 1, a series of schematic maps provides a graphic demonstration of the distribution of
education gaps in Argentina’s rural areas. It is estimated that roughly 140,000 children in rural areas do not have
access to pre-school and EGB3, with 70 percent of those out of school belonging to NOA and NEA. There are
approximately 714,000 children in rural areas in EGBl and EGB2, with 38 percent of those children being overage,
compared to 23 percent for urban areas. The rural EGB1 and EGB2 enrollment from the NOA and NEA provinces
accounts for nearly 60 percent of the total rural enrollment for the country, even though NOA and NEA represent
only about 20 percent of Argentina’s population.
4
the core basic skills that form part of the nationally ratified Core Learning Priorities (Nccleos
the core basic skills that form part of the nationally ratified Core Learning Priorities (Nccleos de
Aprendizujes Prioritarios, NAP). Achievement of the national goals for rural areas would contribute to
the task of making the education system in Argentina more productive and equitable.
Similar to coverage, the quality of education in rural areas is also significantly below that of urban areas.
Owing to low population density, schools in rural areas have multi-grade classrooms, quite different from
the multiple sections per grade that characterize most urban schools. Rural teachers do not have access to
the information sources, peer support and opportunities for professional development that are often taken
for granted by urban teachers. In addition to the problem dealing with the organizational and pedagogical
model that has been used for rural schools, another serious problem has been the lack of access to basic
educational inputs -rural schools have unfortunately tended to be at the end of the priority list in the
allocation of resources for infrastructure, equipment, didactic materials and trained teachers. A significant
proportion of rural schools do not have electricity or drinking water as they are off-grid. It is only recently
that rural schools have begun to be equipped with cost-effective alternative energy sources, such as solar
panels that are now commercially available, or with modem ecologically appropriate methods of
collecting rain water, or with other low cost water sources. Shortcomings in the provision of critical
inputs such as the physical plant and didactic materials are part of a general picture of lack of adequate
attention to rural schools. The characteristics of rural schools also include positive features, such as
greater cohesion with the community and the potential for developing educational activities that are better
integratedwith the daily life of children in rural areas, but this potential is not always fully exploited.
The use of inappropriate pedagogical and organization models, poor physical plant, the lack of
educational equipment and didactic materials, and the neglect of programs to provide training and
pedagogical support to rural teachers explain the low quality of educational attainment of the rural
population. Repetition, over-age and drop-out rates are much higher for rural children than for their urban
counterparts. Rural children learn less when they are in school, and drop out more often after continuous
repetitions. Improving the coverage and quality of rural education has the potential to contribute to an
improvement of the efficiency in the overall use of public educational resources in Argentina. The use of
multi-grade classrooms, when combined with the provision of adequate materials and training also
provides an incremental mechanism to improve the overall efficiency in the deployment of teacher
resources through the educational system.
2. Rationale for Bank involvement
Supporting the important National Program for Rural Education provides an excellent opportunity for the
Bank to continue to work in partnership with the Government, in an area that addresses social inclusion of
vulnerable groups, equality of opportunity and the improvement of productivity-central themes in the
CAS. Bank support under the proposed operation would increase the financial envelope of the Rural
Education Program, allowing it to accelerate implementation and increase its geographical scope. Bank
support would also provide state-of-the-art technical inputs that: (i)strengthen the Government’s
financial, technical and operational capabilities; (ii)contribute to the analytical basis of policy decision-
making; (iii)bring cross-country experience, both fi-om developed and developing countries; and (iv)
facilitate work within a federal framework by building on previous experience gained over several years
of support to Argentina’s education sector at both federal and provincial levels. Experience expected to be
gained by the national and provincial Governments through project implementation would help strengthen
the orientation towards results and development impact, not just for the proposed Bank-financed Project,
but for the Government’s education program as a whole.
5
3. Higher level objectives to which the project contributes The Project supports key elements of
3. Higher level objectives to which the project contributes
The Project supports key elements of the National Educational Program that contributes to the task of
reducing social inequality and improving Argentina’s growth potential. In Argentina, there is a close
correlation between socio-economic levels and schooling success, suggesting that education has often
served in the past to exacerbate rather than alleviate social and economic inequalities. Children who
come from relatively wealthier families do better in school, even if they attend public schools, and are
less likely to repeat and to drop out of school, and they show better test scores. They tend to proceed to
more successful careers in the labor market and earn better incomes. Conversely, children from poor
families tend to perform worse in school and consequently afterwards. In general, the education system is
not able to compensate for the economic deficits that constrain poor children in their home environment.
The proposed Project focused on rural areas would be a part of various other efforts in a national
endeavor to reverse this process of poor education perpetuating poverty. The proposed Project’s
contribution to a reduction in the inequality of outcomes in rural education would help to lead to a
reduction in the overall inequality of the education system.
B. PROJECT DESCRIPTION
The lending instrument is a specific investment loan, which provides both financial and technical
assistance throughout implementation of the proposed Project.
1. Project development objective and key indicators
The Project’s Development Objective is to support national Government policy to: (i)improve the
coverage, efficiency, and quality of the Argentine education system, and (ii)to improve the governance of
the Argentine education system through strengthening of the normative, planning, information,
monitoring, and evaluation capacity at the national and provincial levels. These general objectives
translate into the following specific Project Development Objectives (PDO) to be reached in a period of
five years:
A. Coverage
(Al) Reduce by half the difference in the access of 6 year old children in lstgrade as compared to
5 year old children in Pre-School in rural areas in Argentina;
(A2) Increase from 73 percent to 85 percent the access of students completing the 7th grade to the
8’ grade of schooling in rural areas in Argentina;
B. Efficiency
(B 1) Improve promotion rate in EGB 1 (Grades 1 to 3) in rural areas in Argentina from 76 percent
(2002) to 85 percent (2010);
(B2) Reduce two or more years of overage enrollment in EGB2 in rural areas from 24 percent
(2002) to 12 percent (2010);
C. Quality
(Cl) Improve the percentage of students in Grade 3 in rural schools achieving proficiencies in
the nationally ratified standards of the Core Learning Priorities (NAP);
(Cl) Improve the percentage of students in Grade 6 in rural schools achieving proficiencies in
the nationally ratified standards of the Core Learning Priorities (NAP);
6
D. Governance (Dl) Number of bilateral agreements between national and provincial Governments in satisfactory execution;
D. Governance
(Dl) Number of bilateral agreements between national and provincial Governments in
satisfactory execution; and
(D2) Annual plans regarding the compilation, analysis, dissemination and use of educational
statistics in satisfactory execution.
2. Project components
Component A:
Improving Quality and Coverage of Rural Education (US$234.85 million;
UW44.79 million Bank financing)
This component would support improvements in rural educational services through the National Program
for Rural Education (NPRE) approved by the Federal Education Council (CFE) in 2004. The component
would finance the development and application of pedagogical and organizational models that are
appropriately tailored for the particular social, cultural and economic context of rural households.
Activities in the provinces would be part of the education policy formulated around specified coverage
and quality targets regarding rural education for each province. The national program would be executed
through signed convenios-or bilateral agreements-between the national and provincial Governments.
The NPRE assigns resources to all provinces, with priority to those where the coverage and quality gaps
are the greatest. The distribution of resources among the provinces would be based on the percentage of
rural population and the percentage of households with unmet basic needs in the province. The details of
inter-provincial allocation of resources are specified further in the Operations Manual. The main purpose
of this approach is to use a more equitable instrument to link the federal resources to the needs of
provinces, and contribute to redress the high level of disparity in educational spending across Argentine
regions.
The implementation arrangement for the Project would center on convenios between the national and
provincial Governments. These convenios form the basis of an accountability framework for the project.
The accountability regarding the rural education component would be centered on five-year goals and the
annual targets for rural education that would form part of the convenios described in Annex 6. This annex
also describes how the flow of resources would be linked to accomplishment of the goals laid out in the
convenios.
This component consists of a two-pronged implementation strategy, that would also be reflected in the
definition of the disbursement categories for Bank financing as follows: (i)the first part of the strategy
refers to the implementation of activities that would be coordinated and purchased by the national level,
which include the provision of didactic materials and teaching equipment and other inputs; and (ii)the
second part of this strategy would consist of activities that would be executed directly by the provinces
and schools with resources transferred by the national level to the provinces, referred to as Provincial
Sub-projects. Both of these elements of the implementation strategy would be included in the bilateral
agreement or convenio, and would form part of the province’s plan for rural education. There are three
sub-components:
Sub-component Al:
Improving Operating Conditions of Rural Schools (US$117.79 million;
US$106.01Bank financing)
This sub-component covers four activities that are common to all levels of compulsory education in the
country: Pre-school, EGB 1, EGB2 and EGB3, and special support for indigenous education:
7
Provision of basic didactic materials and teaching equipment: Didactic materials financed by this sub-component would
Provision of basic didactic materials and teaching equipment: Didactic materials financed
by this sub-component would include: (a) textbooks, workbooks, student and teacher
guides; (b)
library books, reference books, school supplies, audio-visual materials; (c)
science and technology equipment (computers and televisions) and software; and (d) sports
and didactic games.
Minimum school infrastructure standards: This activity intends to provide minimum school
infrastructure standards for all schools in the rural areas. This activity would prioritize
schools located in regions where the problem of dilapidatedinfrastructure and lack of water
and electricity supply are most crucial. To achieve its objectives the activity would finance:
(a) construction of additional classrooms to absorb additional enrollment; (b) replacement
of dilapidated schools and rehabilitation of school facilities; (c) furniture; and (d) school
maintenance costs.
Establishment of Clusters of Rural Schools (amupamientos): To facilitate local
organization and management, this activity would support the establishment of school
clusters. These clusters would operate as a support system for teachers in isolated areas and
would increase the exchange of experiences in the rural areas. A cluster of rural schools
would group, more or less, ten schools. The cluster would provide space for dealing with a
common set of problems while at the same time generating economies of scale in core
functions such as educational planning, training and management of didactic materials,
teaching equipments, and financial resources. This activity would finance: (a) technical
assistance; and (b) operational resources for the formation and functioning of clusters as
detailed in Annex 4.
Distance education through the Education TV Channel: This activity would support the
supply of technological tools to permit schools and students to receive the TV programs
delivered by the TV National Education Channel. The component would finance: (a)
technical tools to connect the TVs in each school with the satellite; and (b) operational
costs related to this activity.
Indigenous education: This activity would support the development of actions to increase
awareness of the cultural diversity existing in the rural communities as well as knowledge
of the traditional language and culture of the indigenous population. This activity would
finance: (a) technical assistance and consultant services for the preparation of school
development plans; (b) training of the members of the community who would support the
implementation of literacy programs and development of institutional projects, and (c)
training programs for schools developing indigenous education programs.
Sub-component A2:
Expanding Coverage and Improving Student Promotion Flow (US$106.46
million; US$29.17 Bank financing)
This sub-component would support four activities, each of which corresponds to a particular education
level within the general category of compulsory education in Argentina (Pre-school,
EGBl, EGB2 and
EGB3):
(i) Expanding coverage for Pre-school education: This activity would support the extension of
pre-school programs in the rural areas through the development and application of multi-
grade pre-school models. To expand the provision of pre-school in the rural schools, this
activity would support the following: (a) provision of teacher guides on activities for pre-
school children; (b) training activities for teachers; and (c) technical assistance.
8
(ii) Reducing repetition in EGB1: This activity would promote organizational and pedagogical actions to prevent
(ii) Reducing repetition in EGB1: This activity would promote organizational and pedagogical
actions to prevent dropout and repetition in the first years of schooling, through three lines
of actions: (a) development of actions to increase the reading ability of students in the
initial grades, including preparatory activities at the pre-school level; (b) adoption of a
three-year learning cycle as the framework for learning and students’ promotion; (c)
improvements in the curriculum materials for teaching math and other curricula contents;
and (d) training activities. This activity would finance teacher training programs and
technical assistance to ensure appropriate use of the selected educational teaching-learning
materials financed under sub-component A1,
(iii) Acceleration program for increasing students’ attainment in EGB2: In most rural areas in
Argentina, an estimated 30 percent of students 11 or
12 years of age are over-age in relation
to the grade, due to repetition, dropout and sporadic re-enrollment in school. To reduce the
overage problem, this activity aims to help the over-age students in rural areas catch up
academically and thereby reduce the serious age grade distortion in EGB2. The
implementation of an accelerated learning program, using specially developed materials,
teacher orientation and student self-guided work would reduce the impact of previous
repetitions and would stimulate the capacity in over-aged children for continuing their
studies rather than dropping out prematurely from school. This activity would finance: (a)
teacher training; (b) teaching-learning materials; (c) school supervision visits; and (d)
technical assistance.
(14
Lower secondarv education (EGB3): Schools that belonged to the previous 7-year primary
school system would be extended to the 9-year EGB system. To extend the years of
schooling of students, and continue the use of multi-grade classes in EGB3, this activity
would support: (a) the design of learning modules for students, which would allow students
to work at their own pace with regular guidance; (b) textbooks, workbooks/manuals with
activities adapted to the rural context; (c) audio-visual materials specifically developed for
the rural context; (d) school development plans; (e) training for teachers to act as tutors for
the self-guided activities of EGB3 students; and (0 training of secondary school teachers
who would be itinerant teachers or placed at nodes of rural school clusters, or would utilize
distance learning methods (depending on the specific rural context).
Sub-component A3: Strengthening Line Departments at the Provincial Levels (US$10.60 million;
US$9.61 million Bank financing)
This subcomponent would support the establishment and consolidation of the management capacity of the
provinces in the implementation of the Project and sustainability of the education policies and activities
after project completion. This subcomponent seeks to raise the quality of management of the schools and
intermediary institutions so that they can better achieve their academic functions and social
responsibilities of providing equal access and quality educationto the children in the rural areas. Thus, the
subcomponent would support measures for increasing the provincial ministries’ capacity in the following
dimensions: planning/information and pedagogical and administrative areas, including monitoring. The
line departments at the provincial level would also be strengthened to support project implementation and
operation of the education system at that level. Under this subcomponent, the project would finance: (a)
technical assistance and consultancy services for supporting the pedagogical, administrative and
information areas in each province; (b) travel expenses; (c) school supervision services; (d) information
system costs; and (e) other operational costs. Administrative capacity would include procurement,
financial management, and auditing capacity.
9
Component B: Enhancing Stewardship Capacity of National Government (US$5.35 million; US$4.83 millionBank financing) The
Component B: Enhancing Stewardship Capacity of National Government (US$5.35 million;
US$4.83 millionBank financing)
The Project’s support for the National Program for Rural Education uses an organizational model that
does not rely on parallel institutional structures and functions that would depend on a Bank-financed
project. Project implementation relies on the existing Government structures-existing units at the
MECyT, at the national level, and at the Provincial ministries of education. The Project would finance a
large number of inputs (as provided in Component A above) under the framework of the national-
provincial convenio, which would establish a broad accountability framework for the Project. In order for
that accountability framework to function as planned, the Project would provide assistance for
strengthening the relevant line departments in MECyT. There are two sub-components:
Sub-component B1: Strengthening Line Departments at the National Level (US$2.37 million;
US$2.14 million Bank financing)
An institutional analysis assessing the capability of the majors actors involved in project implementation
was undertaken, and capacity building measures were identified. The requirements at the national level
would strengthen the planning, normative, monitoring, evaluation and implementation support activities,
with the bulk of the support being provided to the departments at the MECyT (i-e., the areas in charge of
the rural education program; evaluation and statistics; analysis of public educational expenditures, and
international project co-ordination). To help ensure the adoption of new processes and procedures and
long-term sustainability of the proposed actions, through this subcomponent, the project would support:
(i)review of the institutional arrangements of selected units to identify and correct overlapping of
activities and establish modem procedures and mechanisms to monitor and evaluate education activities
and projects; and (ii)training programs to upgrade the technical skills of those involved in improvement
of educational quality, mainly in the use of implementation tools and information management systems.
This subcomponent would finance: (i)consultant services and technical assistance to increase the
institutional capacity of line departments of the Ministry of Education dealing with rural education and
information, as well as monitoring and evaluation (M&E) activities; (ii)computer equipment; (iii)
independent auditing at the provincial level; (iv) travel expenses for supervising the provinces and
schools, and other operational costs.
Sub-component B2: Monitoring and Evaluation(US$2.99million; US$2.69 Bank financing)
This sub-component would support the development and implementation of a system of data collection,
analysis, dissemination and use of information for policy decisions at the National, Provincial and School
levels. It is expected that the information system would also provide inputs for future expansion of Project
interventions and for deriving lessons learned for application of educational policy areas not covered by
the Project, This sub-component would finance technical assistance, and equipment (computers and
software). This sub-component would develop the following activities:
(i)
Surveys and Impact Evaluation Studies. Financing would be provided for a periodic survey on
the functioning conditions of rural schools. Surveys would include those at national and
provincial levels that would evaluate processes and outputs in the course of Project
implementation, and an impact evaluation of a general nature to provide insights into the
effectiveness of public investments in education;
(ii)
Student learning. assessments. The proposed Project would finance the extension of a sample of
standardized national student assessments (Operativo Nacional de Evaluacidn or ONE) to
ensure representativeness for rural schools by province. This activity would also include the
10
monitoring of progress in the achievement of the Core Learning Priorities (NAP) and diagnostic information
monitoring of progress in the achievement of the Core Learning Priorities (NAP) and
diagnostic information from this assessment to be provided to individual schools.
3. Lessons learned and reflected in the project design
In the course of supporting Argentina’s educational policy reform through the four PRODYMES Projects
(I,11, I11 and IIIA), well as through support for other investment and adjustment (now development
policy) lending in Argentina, a number of lessons have been learned by the Bank. These can be classified
in five dimensions:
a) Definition of the borrower; In a previous project supporting investments at the provincial level
(PRODYMES I),provinces were identified and provincial willingness to borrow was confirmed during
project preparation. Even so, long delays ensued when external macro-economic shocks compounded
with internal problems led some of the provinces, after loan approval by the Bank, to avoid taking on
additional indebtedness. In the case of PRODYMES 11, the Federal Government stepped in to assume the
Bank loan after a period of two years without disbursements. For the proposed Project, it is clear that this
is a national project with national indebtedness. In keeping with the national Government’s responsibility
for educational quality and for compensatory programs, the national Government would be responsible
for the production of instruments for improved educational service delivery. Provinces would contract
with the nation to use these instruments to obtain improved educational services.
b) Consultation and Partnership with Provincial Education Ministries: An important lesson from
previous projects is the need for a process of consultation with the provinces that are responsible for the
administration of the educational system in their respective jurisdictions. The project supports national
educational policy that is shaped progressively in periodic meetings of the Consejo Federal de Educacidn
(CFE). In addition, the project shares elements with the new proposed educational financing law that is
the subject of extensive consultations with provincial administrations as well as civil society at large. At
the operational level, there have been a series of meetings and consultations with provinces for defining
the Project interventions. The design of the project incorporates provincial participation in determining
the timing and locus of interventions. Convenios between the national and provincial Government would
further strengthen provincial ownership of the project.
c) Systemic and sustainable impact: Projects that do not deal with systemic issues tend to have a low
development impact. For education projects, the inertia of the entire education system can overwhelm
even well executed interventions in project schools. Targeted interventions in urban marginal areas, as
was the case with PRODYMES 11, are fine conceptually, but sustained performance improvement may
suffer since there is no political economy locus of decision making for the schools outside of the project.
Thus, when such a project ends, sustainability proves very difficult, due not only to budgetary restrictions,
but also to the absence of an institutional locus for continuation. The proposed Project’s support of
national educational policies for rural education, integrated with the bi-centenary goals that do not owe
their existence to this proposed Project are factors that enhance the chances for sustained and systemic
project impact.
d) Importance of monitoring and evaluation: In spite of substantial investments in systems to compile
educational statistics, there has not been a commensurate improvement in the ready availability and use of
such statistics as important inputs into policy decision making. The proposed Project includes a
component for monitoring and evaluation and provides resources at both the national and provincial
levels to strengthen the monitoring and evaluation function. The inclusion of educational statistics as part
of national-provincial convenios addresses the need for good monitoring and evaluation. The project
design puts emphasis on the timely collection and feedback of educational indicators at various levels of
11
educational administration and provides resources for the implementation and dissemination of studies including those on
educational administration and provides resources for the implementation and dissemination of studies
including those on impact evaluation.
e) Importance of Flexibility: Investment projects finance inputs. A key learning experience relates to the
need to build into project design a process that enhances the flexibility of activities in order to achieve
productivity of those inputs. The detailed and disaggregated prior definition of activities to be financed
under the proposed Project, over a five year period and across multiplejurisdictions, required foresight to
define the optimal input mix to meet the development objectives. Experience shows that implementation
tends to slow down when circumstances change and alterations to the original plan require agreement by
multiple parties. To address this, the proposed Project incorporates flexibility by providing only a general
definition regarding possible inputs, an understanding of the process by which those inputs would be
employed so as to monitor and obtain the results and a system for annual review and revision on the basis
of intermediate results.
4. Alternatives considered and reasons for rejection
National vs. Provincial Loans. One alternative considered was a combination of selected provincial loans
instead of a national loan. This alternative would involve prohibitively high transactions costs both for
preparation as well as implementation. Also, in a scheme of provincial loans, the provinces with the most
needy beneficiaries may be the ones least able to incur indebtedness, and such a scheme would not be
able to utilize the federal context of Argentine educational policy, where the Federal Government has an
important role to play in redressing inequality and resolving problems of quality.
SWAp. Since the project supports national programs, it would seem a logical step to prepare this project
as a Sector Wide Approach (SWAp), where there would be a full mingling of resources from the National
Treasury and from Bank financing for project interventions. This project already meets one important
objective of SWAPS that seeks to reduce transaction costs since parallel institutional mechanisms would
not be set up, other than those of existing federal programs where execution is cooperatively done with
provinces. However, with regard to financial flows and procurement arrangements, the Government has
indicated its interest in being able to continue a separation of the financial sources and to follow the Bank
procedures.
With an investment lending operation that supports results and is integrally linked to educational policy
measures, another alternative could have been a Development Policy Lending (DPL) operation. However,
in addition to the policy aspects, the proposed operation also covers unmet investment needs for the
expansion of educational services in rural areas. Further, in the current CAS as well as the upcoming CAS
under discussion, there is a clear emphasis on investment lending in the Bank’s portfolio in Argentina. In
a detailed client survey carried out as part of the CAS preparation, a key finding was the public preference
for the Bank to invest more in Argentina in projects for education, health and infrastructure.
C. IMPLEMENTATION
The implementation arrangements for this Project closely follow the principle of partnership with the
Government in the delivery of the national program of rural education. The implementing agency would
be the National Ministry of Education, Science and Technology (MECyT), through its Directorate
General for the Unit of International Finance (DGUFI). The DGUFI would be responsible for
coordinating the various activities of the Project with the other agencies of MECyT as well as other
Federal and Provincial Government Agencies. The DGUFIalso manages an Inter-American Development
Bank-financed (IDB) Operation (see Annex 2) and has substantial experience with the international
standards of financial management and procurement.
12
The DGUFI is not expected to develop technical expertise that already exists in line departments
The DGUFI is not expected to develop technical expertise that already exists in line departments of
national and provincial education ministries. The Rural Education area is under the Directorate General of
Curriculum Management and Teacher Training (DNGCyFD). The area of monitoring and evaluation falls
under the National Directorate of Information and Evaluation of the Quality of Education (DNIECE).
Other units such as the Infrastructure Unit of the MECyT would also be involved in the implementation
of the program. The project implementation arrangements would build on the experience of these national
programs. The three key MECyT units receive a substantial budget for managing their respective national
programs. There would not be any need to set up Project Coordination Units (PCUs) either at the National
or at the Provincial levels. Where there is a particular need to build provincial implementation capacity,
this would be done by strengthening existing line departments at provincial Ministries of Education,
rather than through parallel administrative units.
National-Provincial convenios or bilateral agreements would be signed that would delineate the
responsibilities of the national and provincial Governments, and in some cases, as with resource transfers
to schools, specify the roles and responsibility at that administrative level as well. The bilateral
agreements would be supported by annual work plans with the provinces that would move beyond
specification of inputs and contain targets about the results expected as outputs from the project
interventions. Rather than a pre-determined and fixed allocation across provinces for the duration of the
Project, allocations would be made on a yearly basis of a review of progress towards compliance with the
previous year’s work plan and projected activities for the future year’s plan. Provinces that are slow in
implementation of targets would receive help and special attention from the national level. Continued
problems in implementation at the Provincial level would put at risk the allocation of resources across to
non-performing provinces. Details about the bilateral agreements are provided in Annex 6.
1. Monitoring and evaluation of outcomeshesults
The proposed support of a national program with implementation through a combination of national and
provincial arrangements makes the role of monitoring and evaluation even more important than in more
traditional input-based projects. Implementation Completion Reports of previous Bank-financed
education projects have indicated the need for closer attention to establishing benchmarks early on in the
project cycle, and for follow-up regarding established targets. In order to ensure the timely and regular
availability of data about project implementation, resources have been set aside for a special monitoring
and evaluation component of the proposed Project. There would be three related interventions in this area.
First, there would be special purpose surveys such as those to follow the status of infrastructure of rural
schools. Second, there would be training and technical assistance directed at the provincial level to
encourage the adoption of the use of analytical work on educational policy. Third, there would be
attention placed on dissemination activities including the establishment of systems to generate periodic
information on Project implementation. Information on the success or otherwise in meeting targets used
for project supervision would also be devolved to the educational establishments who would benefit from
the Project. Constant attention to the monitoring of outcomes and results, as well as the dissemination of
results, including the tracking of project expenditures and involvement of civil society organizations is
expected to improve governance and accountability that is crucial to the success of the proposed Pr~ject.~
Details about monitoring indicators are provided in Annex 3.
3 MECyT already collaborates closely with NGOs regarding oversight of the use of public resources for school
infrastructure.
13
2. Sustainability The support for an integrated national program within a federal framework, such as
2.
Sustainability
The support for an integrated national program within a federal framework, such as the National Program
for Rural Education, brings benefits of continuity in Government policy and reduces the uncertainty
regarding sustainability in a project. In the case of national programs, the role of the decision making of
the Federal Education Council (Consejo Federal) is very important-the NPRE is supported by
resolutions and declarations of the Consejo Federal. Apart from the institutional role played by the
Consejo Federal, sustainability is also aided by the operational level deliberations involving provinces.
The proposedProject’s goals have a modest fiscal impact. Increasing the enrollment at the Pre-School and
EGB3 levels in rural areas, with the use of pedagogical and administrative models that rely on multi-
grade teaching and the use of itinerant teachers, tutors and supplemental material for students would have
only a small marginal impact in terms of the teacher wage bill. Improvements in efficiency from the
accelerated programs for over-age children and attention to problems of repetition and dropout would
actually lead to improvements in the efficiency of existing resources. The economic analysis in Annex 9
presents some basic simulations regardingthe analysis of sustainability of the project interventions.
3. Critical risks and possible controversial aspects
Possible Risk Factor
Proposed MitigationMeasures
Risk Rating
1.
Poor
implementation
a)
Substantial
capacity in provinces
would
delay
execution
of
the
program.
Detailed Institutional Analysis of Provincial
Capacity leading up to institutional
strengthening measures in the National -
Provincial convenios.
b) Close and constant monitoring of project
implementation and remedial action in case of
problems.
2. Transfer of project
management from a PCU
approach to management by
line units of MECyT may face
capacity constraints.
3. The project may be
successful in providing inputs,
but outputs and outcomes may
not be attained.
a) Provision of technical assistance to line units of
MECyT.
Medium
b) High priority placed by Government on
strengthening of Rural Education Unit of
MECyT.
a) Inclusion and monitoring of outputs and
outcomes in National-Provincial bilateral
agreements.
Substantial
b) Utilization of results of impact evaluation and
other studies incorporated into the project
design.
c) Flexibility in definition of inputs to be financed
by the project.
4. A re-emergence of crisis
conditions may lead to severe
cutbacks in Government
a) Improved portfolio monitoring procedures put
in place by the Bank’s Country Management
Unit after the last crisis would provide early
warning.
Medium
expenditures as in the 2000-
2002 period.
b)
Current political and economic situation
indicates stability (this is not a mitigation
measure).
Overall Risk
Substantial
14
4. Loan conditions and covenants Loan Effectiveness would require signed bilateral agreements between the Federal
4. Loan conditions and covenants
Loan Effectiveness would require signed bilateral agreements between the Federal Government and at
least two Provinces. The project will be carried out following the requirements of an Operational Manual
that will include among others the fiduciary and technical requirements of the project, including the
selection and implementation requirements of the provincial subprojects and the school managed
activities. The project would also include disbursement conditions requiring for each Province where the
project would be implemented, a signed bilateral agreement and a satisfactory financial management and
procurement assessment of the province.
APPRAISAL SUMMARY
1. Economic and financial analysis
Annex 9 reports the findings of the economic and financial analysis, and it is summarized here. The
Annex presents the findings from a recently conducted Rural Household Survey (RHS) carried out for a
study on rural poverty in Argentina. The survey of isolated rural areas is small in scale (with 414
households sampled in the provinces of Chaco, Santa Fe, Santiago del Estero, and Mendoza) in
comparison to the widely used Permanent Household Survey (Encuesta Permanente de Hogares or EPH)
that covers urban areas in Argentina. However, wage earnings regressions reported in the study provide
important insights regarding the potential benefits of this Project. Following the presentation of data from
the rural household survey, a cost-benefit analysis of the Project is presented that indicates an internal rate
of return of 14.3 percent under conservative assumptions. The second part of Annex 9 identifies the fiscal
impact of the investment, which appears to be minor considering the magnitude of educational
expenditures in Argentina.
2.
Technical
The technical justification of the Project is based on three grounds: (i)timely completion of the obligatory
years of basic education in rural Argentina would be an important element to reduce inequality and
poverty, and contribute to improved productivity of the work force in the long term; (ii)the focus of this
Project is to provide educational inputs under a national program, with bilateral agreements with
provinces to enhance accountability; and (iii)the limited but important investment of the Project in
deepening the use of information and educational research would be very useful in malung marginal
improvements towards stronger analytical foundations of educational policy.
3.
Fiduciary
Financial Management and Audit Arrangements: The project would be implemented using the existing
structures that are in place at the DGUFI. Additional arrangements regarding project implementation at
the provincial level would be implemented to coordinate the flow of funds and information. At the
central level, the MECyT, through the DGUFI, would be responsible for carrying out financial
management, procurement and disbursement activities, as well as for monitoring and supervising the
fiduciary arrangements at the provincial level. Provincial Governments would use their planning,
financial management systems, and internal control arrangements, e.g. M&E, fiduciary management and
internal arrangements, for supervising the rural school clusters.
A number of measures have been agreed during project preparation to address the inherent complexities
of fiduciary oversight for a decentralized operation. These include (i)the financing scheme for the
Project, under which some expenditures would be paid at the National Government level through the
15
DGUFI. Even though the DGUFI is well organized and has experience from previous projects, it
DGUFI. Even though the DGUFI is well organized and has experience from previous projects, it would
benefit from the provision of technical assistance to coordinate actions at the operational level regarding
both national and provincial line departments; and (ii)the strengthening of the fiduciary capacity at some
of the weakest provinces that would be required for the province to participate in the project. The DGUFI
would provide administrative and financial management support to the project and would be responsible
for all payments originated at the Federal Government level directly to providers, contractors and
consultants including the transfers made to the Provincial level and Rural School Clusters. The
Provincial Government level would be responsible to contract and directly pay contractors and
consultants hired by them. The DGUFI would have the main function in this case of consolidating the
financial management information, and supervising the use of project resources according to the project
objectives and the financial planning.
The Project’s Operational Manual would include procurement, disbursement, in-kind contribution,
financial management and internal control procedures and processes The DGUFI’s and the initial selected
provinces’ financial management capacity is in the process of being strengthened with the support of
technical staff. The financial statements of the Project would be audited annually by the Comptroller
General (AGN). The DGUFI would be responsible for collecting financial management data, accounting,
reporting, and ensuring external auditing of all project-related expenditures. Annual audit reports would
be completed by AGN, and forwarded to the Bank within six months of the end of each fiscal year. The
Project financial statements audits would be conducted following national audit standards compatible
with International Organization of Supreme Audit Institutions (INTOSAI). The Project would have
external audit arrangements for the central Government and all provinces, which would join the Project,
under the responsibility of AGN. This arrangement requires that external auditors would provide a
traditional independent audit jointly with the support of the MECyT internal audit unit in order to provide
technical assistance during the fiscal year. The Project incorporates the Bank’s new policy on eligibility
for Bank financing. To implement the policy, the Country Financing Parameters for Argentina were
approved by the LCR Regional Vice President in May 2005.
A special account (SA) would be required to transfer resources from the Bank based on the requirements
to be made by the Government. The Bank would finance up to 90 percent of the project total expenditures
effectively made by the project. Loan proceeds would be disbursed at a rate of up to 90 percent to cover
the cost of goods, works, services and flat recurrent costs required to implement the bilateral agreement.
The terms and conditions for the advance of finds from the SA to the provinces would be agreed in each
bilateral agreement. The Bank would monitor the Government of Argentina’s assessment of the
institutional performance of each participating Province for the purpose of adjusting the size of the
advances in the future. As it is customary in Argentina, the Government would open a SA, as a revolving
bank account to pre-finance project expenditures for all components and would request reimbursement for
the Bank’s share of the financing. Requests for reimbursement would be submitted to the Bank on the
basis of Statements of Expenditure (SOEs). Resources would be transferred from the World Bank to a
Ministry of Finance transitory Bank Account at the BIS Bank in Base1 in dollars. The Bank would
disburse to the Government based on transaction-based disbursement requests sent by the DGUFI.
Resources would be transferred from the World Bank to a special account open at the Banco de la Nacion
Argentina in dollars. An operative bank account in pesos would be also open at “Banco de la Naci6n” on
the name of the DGUFVMECyT to manage resources transferred from the SA.
An assessment of the procurement capacity was carried out for the implementing agency DGUFI and for
one of the Provinces that would be responsible for the implementation of the sub-projects (Province of
Misiones). The overall procurement risk is assessed as AVERAGE. In order to mitigate risks, special
procurement provisions are being included in the Loan Agreement and a Procurement Action Plan has
been agreed.
DGUFI would organize a procurement team consisting of at least one senior procurement
specialist and two junior procurement specialists, all of them should be already familiar with the Bank’s
16
procurement guidelines, documents and procedures. This team would assess the implementing capacity of the selected
procurement guidelines, documents and procedures. This team would assess the implementing capacity
of the selected provinces and determine the level of risk involved in the case of each beneficiary Province
using a methodology acceptable to the Bank. The team would establish an Excel-based information
system to monitor project and procurement progress.
4. Social
The national program supported by this project has been discussed widely with civil society. There are no
controversial social issues associated with this project. A brief summary of the consultations is presented
in Annex 10 in connection with the support being provided under the project for education in rural areas
where student beneficiaries include those from indigenous families, mainly in the NEA and NOA regions
of the country. The Indigenous People’s Development Plan (IPDP) is presented in Annex 10 and has been
duly discussed and divulged in accordance with Bank disclosure policies.
5. Environment
This Project does not support the large-scale construction of new schools. However, the project does
include civil works activities in general of a small scale for the repair and rehabilitation of existing
schools. In the case that provinces do undertake such construction activities, they would undertake
preventive measures to limit environmental damage. A template of environmental guidelines to be used in
possible construction contracts has been presented to the Bank; and these guidelines would be included as
part of an Environmental Management Framework (EMF) in the Operations Manual for the project.
6. Safeguard policies
Safeguard Policies Triggered by the Project
Yes
No
Environmental Assessment (OP/BP/GP 4.0 1)
Natural Habitats (OP/BP 4.04)
Pest Management (OP 4.09)
Cultural Property (OPN 11.03, being revised as OP 4.11)
Involuntary Resettlement (OP/BP 4.12)
Indigenous Peoples (OD 4.20, being revised as OP 4.10)
Forests (OP/BP 4.36)
Safety of Dams (OP/BP 4.37)
Projects in DisputedAreas (OP/BP/GP 7.60)
[I
[XI
[I
[XI
[I
[XI
[I
[I
[XI
[I
11
[XI
[XI
[I
[I
[XI
Projects
on International Waterways (OP/BP/GP 7.50)
[XI
The National Program for Rural Education supported by the Project is associated with a program of
intercultural and bilingual education (Programa de Educacidn Intercultural Bilingiie or PEIB) for
indigenous groups in Argentina, about 50 percent of whom live in rural areas. There are approximately
500,000 indigenous people in Argentina, including the following ethnic groups: Collas, Chiriguano-
ChanC, Chulupi, Diaguitas-Calchaqui, Huarpes, Wichi, Mocovi, Pilagh, Toba, Mbya-Guarani, Mapuche
and Tehuelche. Annex 10 includes a presentation about the status of education regarding indigenous
populations in Argentina and discusses the support of the project to the education of children in
indigenous communities living in rural areas. The IPDP is also presented in Annex 10 and has been duly
discussed and divulged in accordance with Bank disclosure policies.
7. Policy Exceptions and Readiness
No policy exceptions are expected.
17
Annex 1: Country and Sector or Program Background Argentina: Rural Education ImprovementProject- PROMER Significant
Annex 1: Country and Sector or Program Background
Argentina: Rural Education ImprovementProject- PROMER
Significant strides in educational attainment: Argentina’s education sector has made great strides in
the past four decades, and represents the highest average level of education in the region.
United
Year
Argentina
Brazil
Chile
Mexico
Uruguay
Korea
Canada
Greece
Italy
Portugal
Spain
States
1960
5.3
2.9
5.2
2.8
5.4
4.3
9.1
4.8
4.7
1.9
3.7
8.5
1965
5.5
3.0
5.0
2.9
5.1
5.4
8.8
5.1
5.0
2.4
3.8
9.1
1970
6.2
3.3
5.7
3.7
5.7
4.9
9.1
5.4
5.5
2.6
4.8
9.5
1975
6.3
3.0
5.6
3.9
6.2
6.6
9.8
5.9
5.7
2.8
4.7
9.7
1980
7.0
3.1
6.4
4.8
6.2
7.9
10.3
7.0
5.9
3.8
6.0
11.9
1985
7.1
3.5
6.7
5.2
6.9
8.7
10.8
7.3
6.2
3.9
5.8
11.6
1990
8.1
4.0
7.0
6.7
7.1
9.9
11.0
8.0
6.5
4.9
6.4
11.7
1995
8.5
4.5
7.3
7.0
7.3
10.6
11.4
8.3
6.9
5.5
6.8
11.9
2000
8.8
4.9
7.6
7.2
7.6
10.8
11.6
8.7
7.2
5.9
7.3
12.1
Increasingincome inequality:The increase of educational attainment shown in the above table contrasts
markedly with the distribution of income in the past three decades or so. Data are available only for
Greater Buenos Aires, but it is remarkable that the Lorenz curve for income shown in Figure 1 has kept
expanding outward. The Gini
Figure 1: Lorenz Curves -Distribution of Equivalized Household
coefficient for the distribution of
household per capita income increased
from 34.5 in 1974 to 53.8 in 2002,
while the poverty headcount ratio
increased from around 5 percent to
more than 50 percent in the same
period. In “Argentina’s Distributional
Failure: The role of Integration and
Public Policies”, by Leonard0
Gasparini, National University of La
Plata, CEDLAS Working Paper # 1,
Sept. 2003 (source of Figure l),the
author claims that there are no
countries in Latin America and the
Caribbean that experienced such dramatic changes in the income distribution. Education is often posited
to be the engine of reducing social inequality, which makes eminent common sense-absent significant
physical asset redistribution, education potentially affords children from poor or relatively less well-off
families to acquire skills that would, in principle, help them to overcome their disadvantage at birth.
However, in Argentina over the past few decades, as the average educational attainment grew, the
inequality also grew dramatically. In order to understand this mystery, it is important to look at
productivity, since the link between education and incomes comes through productivity.
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.D
1
- .
-isn
- - 19w
.me
-m-~soz
-+
-sow
18
Contribution of Human Capital to Productivity: The simplest evidence regarding the link between human capital
Contribution of Human Capital to Productivity: The simplest evidence regarding the link between
human capital and productivity can be obtained by an empirical estimation of a Cobb-Douglas production
function. Using data from 1991 from
155 countries, Hall and Jones
analyzed the patterns of output per
worker, using the United States as a
standard. Output per worker is
regressed on a measure of physical
capital and human capital and the
residual is attributed to productivity
that cannot be measured directly.
Table 2 presents an excerpt of the data
for a subset of countries with a focus
on the example of Argentina. The
table shows that the output per worker
in Argentina was 42 percent of that in
Due to
Due to
differences in differences in
Output per
Physical
Human
Residual
Worker
Catital
CaDital
Differences
United States
1.00
1.oo
1.oo
1.oo
Norway
0.76
1.20
0.91
0.70
Canada
0.94
1.oo
0.91
1.03
Hunparv
0.3 1
1.12
0.93
0.29
Poland
0.241
1.281
0.801
0.24
Ireland
0.58
1.051
0.771
0.71
Argentina
0.42
0.951
0.681
0.65
the US., about the number that could
be expected for a middle-income
developing country. Workers from
Argentina have 68 percent of the Human Capital of the numeraire U.S. worker, so the years of attainment
(used to measure Human Capital) does not quite explain the large difference in overall productivity, and
the difference in the residual is closer to Ireland than the Eastern European countries. It is probable that
the productivity difference is due to differences in educational quality, and due to the distribution of
educational attainment within the country.
Low educational quality and skewed distribution:The Program for International Student Assessment
(PISA) provides a very useful understanding of educational quality benchmarked to an international
context. -The data for the PISA assessment
for mathematics provides a revealing
Figure 2: CDF of PISA Test Score 2000: Selected Comparison
picture. Considering mathematics scores, if
we arrange the participating countries by the
average score, Argentina, with a score of
388, comes in at the eighth from the bottom
amongst 43 participating countries. The
average scores range from a high of 564
(Netherlands) to a low of 292 (Peru), with
the average of country averages being 473,
indicating that Argentina's score is much
below the average. It is more interesting to
note that if the countries are ranked
according to the difference in average scores
of the top 5 percentile and the bottom 95
percentile, Argentina's rank falls precipitously, second from the bottom, with only Israel showing higher
inequality. The cumulative distribution function (CDF) comparing some countries makes this point
vividly-the top 20 percent of students in Argentina (third line going down from the top) score more than
500 points, The second line from the top is USA, and it crosses the 500 mark at about 60 percent -
meaning that 60 percent of the students in USA scored less than 500. Thus, 20 percent of Argentine
children scored better than 60 percent of children in the USA. If we imagine taking these 20 percent of
Argentine children to the United States, a country with four times the per capita GDP in PPP terms (it
would be 8 times in terms of nominal exchange rates), they would be doing better than the median US
child, or alternatively, they would be performing much better than other groupings of similar size in the
700
600
500
400
300
200
1
20
40
60
80
100
19
USA. At the same time, at the bottom end of the distribution, Argentina crosses over
USA. At the same time, at the bottom end of the distribution, Argentina crosses over to be below Chile
and Peru. In Argentina, therefore, the high performing students do much better than at least the general
regional pattern,
and the low performing students do much worse.
Nexus between Equity and Quality: Figure 2 above shows only the distribution of the test scores and
not incomes. However, there is a close correlation between student achievement and family background
and income. A recent Bank report (“Building a Skilled Labor Force for Sustained and Equitable
Economic Growth”, World Bank 2005) reports from a regression analysis of three different kinds of test
scores, including the PISA, the Progress in International Reading Literacy Study (PIRLS) and the
ONE, Argentina’s own national standardized test. The authors also used multiple measures of household
resources, including household income. The authors report “Consistent with prior research on the factors
associated with learning in Argentina and in other countries, our analyses also find that family
background is closely related to student achievement. Parental education is strongly associated with
student achievement in all three assessments. Children of better educated parents, have higher scores, on
average, in all three assessments evaluated for this report. This consistent result indicates that
intergenerational mobility in educational attainment and quality remains a challenge.”
Regional Disparities: There are significant disparities in terms of access to pre-school education and to
EGB3 or lower secondary education. Primary Education (EGB1 & 2) has universal coverage, though this
level is plagued by problems of inefficiency. The table below shows the coverage across the provincial
jurisdictions and by urban and rural areas within a Province. Note the low figures for coverage of Pre-
School (age 5 years) in some provinces, such as the 44.6 percent coverage in rural areas of Chaco. In the
age-group of 12 to 14 years, corresponding to EGB3, the figures showing coverage in the seventies and
eighties in percentage terms correspond to the poorer North Eastern and NorthWestern Provinces.
20
Table 3: Coverage of the Education system by Urban and Rural Areas across Provinces. Bicentenary
Table 3: Coverage of the Education system by Urban and Rural Areas across Provinces.
Bicentenary Goals: Argentina celebrates its second bicentenary in the year 2010, and has proposed to
meet ten simple but strategic educational goals that are drawn from the Millennium Development Goals
(MDGs) and the
Dakar goals of Education For All
(EFA). The bicentenary goals are as follows:
Enrollment of the population of 5 years of age into schools throughout the country. Fifty
percent of children between three and four years old enrolled into pre-school
level.
Guarantee a minimum of ten years of compulsory schooling for Argentine children and
youth. Aim for 30 percent of EGB students accessing full-time school.
Move forward towards universal access to secondary education, including young people
who are out of school and helping them complete their studies.
Improve teachers’ labor and salary conditions, contributing to giving prestige to teaching
as a career.
Expand the incorporation of information and communication technologies in an
increasing number of establishments and move forward towards a universally taught
second language.
Improve the quality of the national education system,
guaranteeing a
100 percent
achievement of the Core Learning Priorities (NAP)by EGB students
Eliminate illiteracy throughout the country.
21
Guarantee equipment and modernization of technical schools and the necessary pedagogical transformations in order to
Guarantee equipment and modernization of technical schools and the necessary
pedagogical transformations in order to reach the federally agreed quality standards for
competency-based national certifications of technical and vocational education.
Strengthen democratization, quality, innovation and relevance of higher-level education.
Give prestige to science and technology research, guaranteeing the goals proposed for the
Science and Technology Pluri-annual Plan approved by the Cabinet Committee on
Science and Technology (GACTEC).
Increased Educational Expenditures within an accountability framework: In order to meet these
goals, the Government has proposed legislation that seeks to increase the amount of public expenditure on
education from 4.2 to 6 percent of GDP, distributed between the National and Provincial Governments,
with the National Government potentially contributing 40 percent and Provinces potentially contributing
60 percent of the increment in expenditures. The proposed changes in the framework of educational
financing would include the linkage of incremental resources for education to three factors regarding each
Province: (i)actual enrollment (a weight of 80 percent); (ii)contribution of rural to total enrollment (a
weight of 10 percent); and (iii)population of 3 to 7 year children out of school (a weight of 10 percent).
The proposed project is but a small part of the overall picture regarding public educational expenditures
and the associated reforms. The project would make federal resources available to Provinces for rural
education, with Provinces contributingresources in terms of teachers’ salaries.
The MECyT makes grant transfers that averaged US$550 million to provinces for non-university
education. The Ministry of Education (MECyT) has spent an average of US$1,500 million per year
between 1995 and 2005. Of this expenditure, approximately US$550 million or AR$1,600 million is for
non-university expenditures that are spent as federal grant transfers to provinces, as shown in Table 4
below. In the table, the entry for FONID refers to the Incentive Fund for Teachers (Fondo de Incentivo
Docente) that is a federal supplement to the provincial salaries of teachers. Other federal transfers are for
quality and compensatory programs. The MECyT budget between 2004 and 2005 increased by 17 percent
after a drop of 40 percent between 1999 and 2004. An increase in 2006 similar to the magnitude for 2005
is foreseen.
Table 4: FederalEducation Expenditures (MECyT): 1995 - 2005
Source: MECyT; * Figure for 2005 shows programmed expenditure
Provinces in the North East and North West that represent the greatest education deficit are the
ones that are most dependent on Federal Co-participationTransfers: Table 5 shows the provinces
arranged in descending order of dependence on National Transfers. The provinces at the bottom of the list
are the very NEA and NOA provinces that have the greatest deficit in terms of provision of educational
services as shown in Table 3. These are the poorer provinces in the country, and their low revenue
22
collection is strongly linked to the lower level of economic activity. The table shows that
collection is strongly linked to the lower level of economic activity. The table shows that only a few of
the provinces escape the dependence on national transfers. Other than the City of Buenos Aires, this
includes the Patagonianprovinces that receive oil revenues. This regional inequality in Argentina is very
important when it comes to considerations of national expenditures for education-the capacity of the
most needy provinces to raise their own revenues may be very limited in some cases, and even the not so
needy provinces in the Pampa region (Entre Rios, Santa Fe, C6rdoba) and the Cuyo region (Mendoza,
San Juan, San Luis, La Pampa) are dependent on national transfers. The case of the Province of Buenos
Aires is completely unique and is not discussed further here, except to say that the project does not intend
to make large transfers to this Province.
Table 5: Provincial Dependence on National Transfers (Year 2003)
In thousands of pesos
I
I
own
Jurisdiction
Total Receipts (Own
Revenues +National
Transfers)
Provincial
Provincial own
RevenuedTotal
Revenues
Receipts
Ciudad de Buenos Aires
Neuquen
3,988,452.81
3,498,597.88
87.72
1,802,800.74
1,410,542.93
78.24
Chubut
1,048,651.24
669,916.58
63.88
Santa Cruz
1,259,455.88
791,760.22
62.87
Buenos Aires
11,345,998.71
6,573,742.00
57.94
Mendoza
1,790,952.89
925,447.79
51.67
Chaco
1,158,405.49
174,35 1.OO
15.05
Corrientes
864,803.53
111,550.50
12.90
755,741.73
92,625.83
12.26
Jujuy
La Rioja
674,760.49
60,282.45
8.93
Formosa
778,671.65
59,432.4 1
7.63
TOTAL
41,846,870.3 1
19,388,120.62
46.33
Federal transfers are in principle based on non-discretionary rules, but in practice significant
discretionary elements have entered into the picture: Table 6 shows the provinces arranged in
descending order of the provincial per capita income. It can be seen at a glance from the table, comparing
the first and last column of numbers in the table, that there was no clear compensatory pattern to transfers,
though provinces with high per capita income are not necessarily richer in terms of the population of poor
or those in greater need of social services. The simple correlation coefficient between the two columns of
23
co-participation transfers and provincial per capita income is -0.22; however, if the row of the
co-participation transfers and provincial per capita income is -0.22; however, if the row of the City of
Buenos Aires is excluded, the correlation coefficient becomes +0.22.
Table 6: Compensatory Effect of National Transfers: Average Annual (1994-2000)
Source: Mezzadra and Rivas, (CIPPEC) 2005; Figures are in current pesos of the period.
High Inequality in Public Expenditures per Student: Table 6 shows the inequality in availability of
public resources across the provinces in Argentina, that is in large part a product of the historical
development of Argentina. Next, the correlation between total resources and education expenditures is
presented in the graph below.
24
Figure 3: Per Student Expenditurescompared to Province Total Fiscal Resource per Capita Expenditure per Student
Figure 3: Per Student Expenditurescompared to Province Total Fiscal
Resource per Capita
Expenditure per Student (Current Pesos, Av. Annual for 1994-
*'O0'
3,000 1
2,500
2,000
1,500
1,000
500 -
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Total Fiscal Resources per Resident of Province
Whereas Table 6 and Figure 3 deal with general transfers per capita and consolidated education
expenditures per student respectively, it is useful to examine the incidence across provinces of specific
transfers in educational programs directed through MECyT. Table 7 shows that there is still a positive
correlation between provincial education per spending and national transfers (the value of the correlation
coefficient, not shown in the table, is 0.27). Given the inequality alluded to earlier regarding provincial
spending, if the national transfers had been perfectly compensatory, there would have been a negative or
at least an absence of a positive correlation between the two amounts. It should be noted that even though
it may not be so good for inter-provincial equity; the more positive the correlation, from a point of view
of encouraging fiscal effort from the provinces, the less tendency there would be for national crowding
out of provincial expenditures.
25
Table 7: Comparisons of Education Spending per Student and National Educational Programs Source: CIPPEC, 2005;
Table 7: Comparisons of Education Spending per Student and
National Educational Programs
Source: CIPPEC, 2005; Figures are in current pesos of the period.
Table 7 shows that for a child born in NeuquCn or Santa Cruz, the State spends AR$2,000 or AR$2,800
on one year of education, and for a child born in Misiones or Chaco, this figure is around AR$800. The
differences in expenditures are related to differences in teacher salaries, and in the number of teachers
employed, and to a lesser extent on non-wage expenditures. The wage bill accounts for roughly 90
percent of expenditures. Does a higher paid teacher necessarily mean a better quality of education? This is
a difficult question to answer, but an interesting analysis reported by Mezzadra and Rivas is that there was
an inverse correlation between the days lost to teacher strikes and the average teacher salary. In addition,
there is a strong correlation between higher paid teachers
and the presence of auxiliary or support services
to teachers and non-salary expenditures. In general, the conclusion reached by the various authors who
have examined public educational expenditures in Argentina’s federal and decentralized environment is
the following-there are important differences in the general fiscal effort made by provinces and in the
distribution of provincial fiscal resources for education as compared to other areas of expenditure, and
reforms should be made to encourage greater provincial fiscal effort, in general and for education in
particular. At the same time, the margin for improvement within the envelope of the existing pattern of
26
distribution of resources across provinces would not be sufficient to address the disparities in educational
distribution of resources across provinces would not be sufficient to address the disparities in educational
opportunity,
and there
is
a
need
for
transparent
and non-discretionary transfers from the national
Government to address the fundamental or structural inequalities.
Solving the problem of inequality and inefficiency in expenditures through tied and matching
transfers from the Federal Government: The policy response of the Federal Government is to make a
marginal effort at change, provide earmarked fiscal resources for education to provinces, follow
principles of transparency and provide adequate attention to issues of accountability for the expected
results. The project seeks to serve as an example of how the national Government can provide direct
assistance to provinces to improve the quality of educational services in the area of rural education, while
at the same time encouraging provinces to take ownership of the program and to increase their own
commitment to the educational sector. The use of multi-grade instruction implies a lower need to hire
more teachers as compared to the standard model of one teacher per section. Project interventions to
reduce repetition, overage and drop-out in rural areas would result in more students being retained
productively in the educational system. In this way, the project would not lead to a worsening of the
situation regarding efficient teacher deployment, and may even lead to marginal improvements. However,
the project is not going to solve the general problem of inefficiencies in teacher depl~yment.~
A series of schematic maps provides a graphic demonstration of the distribution of education gaps
in Argentina’s rural areas. It is estimated that roughly 140,000 children in rural areas do not have
access to pre-school and EGB3, with 70 percent of those out of school belonging to NOA and NEA.
There are approximately 714,000 children in rural areas in EGBl and EGB2, with 38 percent of those
children being overage, compared to 23 percent for urban areas. The rural EGBl and EGB2 enrollment
from the NOA and NEA provinces accounts for nearly 60 percent of the total rural enrollment for the
country, even though NOA and NEA represent only about 20 percent of Argentina’s population. The first
map shows the geographical area of provinces, that appears similar in shape to the familiar geographical
map of Argentina. The second map shows the distribution of the population across provinces, with the
city of Buenos Aires and the Province of Buenos Aires distorting the geographical map owing to their
huge populations. The third map shows the rural students in school, which indicates the influential weight
of the NOA and NEA provinces. In the last map, showing gaps in rural coverage, the distortion is
completely towards the NOA and NEA provinces.
4 This problem does not appear as serious when the provincial distribution of teachers in the NOA and NEA
provinces is considered. The national average of students per teacher is 16 at the EGBl and 2 levels, which is low
compared to international standards. However, a number of those classified as teachers are in fact administrative
staff rather than teachers, and all the NOA and NEA provinces are above this national average, with the exception of
Catamarca, that comes in with 15.8 students per teacher.
27
Annex 2: Major RelatedProjects Financed by the Bank and/or other Agencies Argentina: Rural Education ImprovementProject
Annex 2: Major RelatedProjects Financed by the Bank and/or other Agencies
Argentina: Rural Education ImprovementProject - PROMER
Sector
Project
Last supervision ranking (ISR)
World Bank financed Projects
Implementation
Development Objective
Progress (IP)
PO)
1. Energy and
S
S
Mining Sector
Renewal Energy and
Rural Markets
(P006043)
2. Health Sector
Maternal and Child
Health (P006959)
S
S
3. Education Sector
Prodymes IIIA
S
S
(Province of Buenos
(PO64614)
Aires)
Other Agencies’ Proj
cts
3.
Improving the
Education System
MECyT- IDB Loan
1345/0C AR
The Program supports provinces in the
improvement of quality, equity and efficiency
Program
in the education system and the development of
an active citizenship, thus contributing to
diminishing social inequality through an
increase in enrollment rates, helping youth-at-
risk to fulfill their educational needs. These
objectives
are oriented towards reaching full
4. Equity in
Education Integral
MECyT- European
Commission
Project
secondary school coverage, increasing average
years of schooling, improving academic
performance and efficiency regarding
provincial education spending.
Target population: public middle schools of
urban and marginal areas.
Duration: 5 years.; Amount US$l,OOO million
The Equity in Education Integral Project (PIIE)
is a national program to strengthen primary
urban educational institutions with children in a
social vulnerable situation in the country. This
Programhas formulated a series of goals and
actions that are part of the MECyT’s overall
strategy including: inclusion and rights, the
right to education and the principle of equal
opportunities for all.
Duration: 5 vears: Amount USs12.5 million
30
Annex 3: Results Framework and Monitoring Argentina: Rural Education Improvement Project- PROMER PDO Outcome Indicators
Annex 3: Results Framework and Monitoring
Argentina: Rural Education Improvement Project- PROMER
PDO
Outcome Indicators
Use of Outcome Information
To support the National
Educational Policy in its
efforts to improve the a)
coverage; b) efficiency; c)
quality; and d) governance of
the Argentine Education
System.
Coverage [Improving
coverage of Pre-School
Education and EGB3 in rural
areas of Argentina]
0 Efficiency [Improve
Promotion Rate and reduce
Overage Enrollment and
Drop-Out Rate at the EGB1
and EGB2 levels in Rural
Areas]
Quality[Improve the
Percentage of Students in
Rural Schools achieving
Proficiency on NAP]
Governance[Bilateral
Agreements between
National and Provincial
Governments in Satisfactory
Execution; Annual Plans
regarding Educational
Statistics and Impact
Evaluation Studies* in
satisfactory execution]
Information from the successes
and failures of individual
project interventions will be
fed back into ongoing
implementation of the project
and in other areas of national
educational policy.
An important intervention of
this project is that information
about the progress on
implementation or lack of it
needs to be fed back at various
implementation levels. Thus,
wherever feasible, indicators
would be made available at
various levels of
disaggregation - schools,
clusters, districts and
provinces.
* Impact Evaluation Studies refers to the studies of results obtainec
project.
The lack of timely information
on indicators in the process of
Bank Supervision would
immediately result in an
unsatisfactory implementation
flag being raised. As long as
such a flag is noted, the Bank
would not provide any no-
objections that may be
required, regardless of the
particular merits of each case.
kom the interventions of the
31
~ Component A: Improving ( Results 1, School coverage at the Preschool level for 5
~
Component A: Improving (
Results
1, School coverage at the
Preschool level for 5 year
olds in rural areas.
2. School coverage in EGB3
level in rural areas
iality and Coverage of Rural Edul
Results Indicators
Enrollment of 5 year old children
in rural areas.
PromotionRates for Grades 7 to
Grade 8 in rural areas
dion
Use of Results Monitoring
The results would form part of
the Provincial and National
agreements, with annual
follow-up.
3. Improvement of internal
enrollment flux between
PromotionRates in Grades 1
through 3
EGB 1 and 2 and within
EGB 2
Extreme Overage (2 or more years
Overage) Enrollment Rate and
Overage Enrollment Rate for
EGB2 [Measured in Percentage
of overage children over total
enrollment for EGB21
4. Improvement in Student
Achievement
Proficiency in the NAP (Priority
Learning Core) measured in Grade
3 and Grade 6
32
Component B: Enhancing Ste IntermediateResults zrdship Capacity of NationalGovern Results Indicators lent Use of
Component B: Enhancing Ste
IntermediateResults
zrdship Capacity of NationalGovern
Results Indicators
lent
Use of Results
Monitoring
1. Improvement in the timely
availability of educational
statistics that would be used for
project monitoring.
Database with indicators established
and online access provided to eligible
users.
~~
~
2. Standardized National
Assessment Tests (ONEs)
sample extended and specially
designed student achievement
tests (in alternate years)
regarding the meeting of NAP
in rural schools in Grade 3 and
in Grade 6.
Test instrument needs to be
developed, pilot tested, and applied in
alternate years. During life of this
project, test should be implemented at
least twice; once at the beginning of
the project; and again near the end of
the project with compatibility
between the two applications.
Sample Size should be sufficient for
inferences to be drawn regarding
schools and rural schools by Province
This component seeks to
ensure that a) monitoring
and evaluation of the
core interventions of
Project Component A are
working effectively and
efficiently; b) progress is
achieved in reducing
parallel structures due to
existence of a Bank-
financed project, and to
ensure that the project is
mainstreamed as an
integral part of the
National and Provincial
administrative setup.
statistics to schools.
Complementary instruments to the
ONEs would include additional
modules for Rural Schools.
Implementation of school-level
projects for the use and dissemination
of educational information; and
impact evaluation study at project
comdetion.
4. Capacity building of
Provincial Jurisdictions
regarding compilation and use
of educational statistics.
Institutional Capacity Assessments to
be carried out and Technical
Assistance provided.
5. Implementation of Impact
(Output) Evaluation studies
and dissemination through
seminars.
6. Strengthened capacity of line
units at the national and
provincial levels.
Number of Impact Evaluation Studies
carried out and number of seminars
held (national and provincial).
Quality Standards regarding different
administrativeprocedures connected
with fiduciary matters (Procurement,
Financial Management, including
audits) to be set up and monitoring of
those standards to be performed at
least twice a year.

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Annex 4: Detailed Project Description Argentina: Rural Education Improvement Project - PROMER Component A: Improving
Annex 4: Detailed Project Description
Argentina: Rural Education Improvement Project - PROMER
Component A: Improving Oualitv and Coverage of Rural Education (US$234.85 million;
US$144.79
million Bank financing)
Objective: The objective of this component is to support improvements in quality and coverage
of rural educational services in the country.
This component would support improvement in rural educational services through the National
Program for Rural Education approved by the National Council of Education Ministers of
Argentina in 2004. The component would finance the development and application of
pedagogical and organizational models that are appropriately tailored for the particular social,
cultural and economic context of rural households. Activities in the provinces would be
imbedded in the provincial education policy formulated around specified coverage and quality
targets, The National Program for Rural Education (NPRE) would be executed through signed
Convenios-or bilateral agreements-between the national and provincial Governments.
The NPRE assigns resources to all provinces, with priority to those where the coverage and
quality gaps are the greatest. The distribution of resources among the provinces would be based
on the percentage of rural population and the percentage of households with unmet basic needs in
the province; detailed criteria would be defined in the Project Operations Manual. The main
purpose of this approach is to use a more equitable mechanismto link the federal resources to the
needs of provinces, and contribute to redress the high level of disparity in educational spending
across Argentine regions.
Component activities: This component has three broad sets of activities-each supporting a
different objective. The first set of activities (A1 below) covers activities directed at rural basic
education in general, without a specification of the particular education level that would benefit,
The second set of activities (A2 below) includes activities that are aimed at specific education
levels, ranging from pre-school through to lower secondary or EGB3. The third set of activities
(A3 below) would provide technical assistance for strengthening line departments at the
provincial level and capacity building of provincial jurisdictions in the use of information systems
through specific ‘information projects’ in each province to monitor the performance indicators of
rural schools.
Implementation arrangements: This component would use a two-pronged implementation
strategy: (i)the first part of the strategy refers to the implementation of activities that would be
part of the convenios to be signed by the provinces, but for economy of scale would be purchased
at the national level and distributed to the province accordingly. This category includes: (a) the
provision of didactic materials, training materials and learning modules, (b) equipment--
television, computers, and also transportation costs; and (ii)the second part of the strategy would
include activities that would be executed directly by the provinces and schools with resources
transferred by the national level. Each provincial plan would include all the Project activities that
would benefit the education in the province, even those directly developed by the national level.
Investments directly operated by the provinces would constitute Provincial Sub-projects.
Financing: This component would finance: textbooks, workbooks, student and teacher guides,
reference books, audio-visual material, science and technology equipment and material, sports
and didactic games. The activity would also include technical assistance to ensure that the
36
materials work together with training and other inputs so that the materials would be used
materials work together with training and other inputs so that the materials would be used
effectively and efficiently.
Sub-component Al: Improving Operating Conditions of Rural Schools (US$117.79 million;
US$106.01 Bank financing)
This sub-component covers four activities that are common to all levels of compulsory
education-Pre-School, EGB 1, EGB2 and EGB3 and special support for indigenous education:
Provision of basic didactic materials and teaching equipment: Didactic materials would
include textbooks, workbooks, student and teacher guides, library books, reference books, school
supplies, audio-visual materials, science and technology equipment (computers and televisions)
and software; and sports and didactic games. Each year, the quantity and type of didactic
materials for the different levels and modalities of education levels would be indicated through
the bilateral agreements. The didactic materials would be selected takmg into consideration the
NAP (Nzicleos de Aprendizaje Prioritarios).
Minimum School infrastructure standards: This activity would target schools located in
regions where the problem of dilapidated infrastructure and lack of water and electricity supply
are greatest. This activity would finance: (a) construction of classrooms to absorb additional
enrollment; (b) replacement of dilapidated schools and rehabilitation of school facilities; (c)
furniture; and (d) and school maintenance costs. A basic standard for school infrastructure has
been developed by the MECyT, which is also carrying out a survey of actual conditions of all
rural schools in the country. This activity has already been implemented for some 1,000 schools
using project preparation funds fkom a PHRD grant. The survey methodology includes the use of
Geo-Positioning Satellite or GPS locators and digital images of both the inside and outside of
buildings. The minimum infrastructure standard assumes that as prerequisites of schooling, a
school should have a set of inputs (materials, furniture and equipments). Thus, a school operating
at minimum infrastructure standards is one that is considered minimally capable of providing
satisfactory conditions for student learning. Another item to be addressed by this activity is the
provision of electricity in the schools. The provision of electricity in school buildings in many
rural areas in Argentina has been made possible through PERMER, a federal program of
alternative energy sources for rural areas. Depending on the specific situation, this project activity
would support the provision of electricity to schools not attended by the PERMER program. To
preserve the quality of the school infrastructure in the rural areas, school maintenance activities
would be implemented through the establishment of a Rural School Maintenance Program, which
would finance the schools’ maintenance costs.
Establishment of Clusters of Rural Schools: To facilitate local organization and management,
this activity would support the establishment of school clusters. These clusters would operate as a
support system for teachers in isolated areas and would increase the exchange of experiences in
the rural areas. A cluster of rural schools would group, more or less, ten schools. The cluster
would provide space for dealing with a common set of problems while at the same time
generating economies of scale in core fimctions such as educational planning, training and
management of didactic materials, teaching equipments, and financial resources. This activity
would finance: (a) technical assistance; and (b) operational resources for the formation and
functioning of clusters. Implementation arrangements for the cluster activities The provincial
jurisdictions would assign coordination functions for the cluster to selected supervisors. This
supervisor would ensure coherence and continuity of activities among the schools that belong to a
cluster. The supervisor selected, who should have prior experience as a rural school teacher
and/or school principal, would be responsible for (a) resource management, (b) identifying
37
teacher professional development needs in consultation with each school principal and teachers, and (c) organizing
teacher professional development needs in consultation with each school principal and teachers,
and (c) organizing the cluster meetings.
Distance education through the Education TV Channel: This activity would support the
supply of technological tools to permit schools and students to receive the TV programs
developed by the national Education channel. The component would finance: (a) technical tools
to connect the school TVs with the satellite; and (b) operational costs related to this activity. In
order to execute this activity, a specific agreement on technical issues is required, which the
MECyT would present to the Bank.
Indigenous Education: This activity would support the development of actions to increase
awareness of the cultural diversity existing in the rural communities and knowledge of the
traditional language and culture of the indigenous population. This activity would finance: (a)
technical assistance and consultant services for the preparation of school development plans; (b)
training of the members of the community who would support the development of literacy
programs and development of institutional projects, (c) training programs for schools developing
indigenous education programs; and (d) school development plans. The school development
plans would be designed and evaluated by the school members and other members of the
community.
Sub-component A2:
Expanding Coverage
and
Improving Student
Promotion Flow
(US$106.46 million; US$29.17 Bank financing)
This sub-component would support the development of four activities, each of which corresponds
to a particular education level @re-school, EGB 1, EGB2 and EGB3):
Expanding coverage for pre-school education: This activity would support the extension of
pre-school programs in the rural areas through the development and application of multi-grade
pre-school models. Several alternative models have been adopted by the provinces in the
provision of pre-school services to children in the rural areas. The expansion of the pre-school
program would be made through the: (a) opening of classrooms for preschool level, where there a
strong demand for this level of education services, or the adoption of “plurisalas,” in which 4 and
5 year olds would attend together; (b) incorporation of 5 year old children in an integrated
“plurigrado” in the first cycle of EGB; and (c) establishment of pre-school activities by specially
trained community agents. The extension of the model in the rural areas would include the
following: (a) provision of teacher guides on activities for pre-school children; and (b) technical
assistance and training programs for teachers. The didactic materials for pre-schools models
would be developed under component A1.
Reducing repetition in EGBl: This activity would promote organizational and pedagogical
actions to prevent dropout and repetition in the first years of schooling, through a three-pronged
strategy, which includes: (a) the development of actions to increase the reading ability of students
in the initial grades, including preparatory activities at the pre-school level; (b) the adoption of a
three-year learning cycle, as the framework for learning and students’ promotion; and (c)
upgrading the curriculum methodologies for teaching math and other school subjects. This
activity would finance teacher training programs and technical assistance to ensure appropriate
use of selected educational teaching-learning materials. These teaching-learning materials would
be financed by sub-component A1 (Para. 7.i).
Acceleration program for increasing students’ attainment in EGB2: In most rural areas in
Argentina, at least, 30 percent of students 11 or 12 years of age are over-age in relation to the
38
grade, due to repetition, dropout and reentry problems. This activity aims to help these students
grade, due to repetition, dropout and reentry problems. This activity aims to help these students
catch up academically, and thereby reduce the serious age grade distortion in EGB2, and would
support the implementation of an accelerated learning program to reduce the impact of previous
repetitions and to stimulate the capacity for continuing studies. This activity would finance:
teacher training, teaching-learning materials, school supervision visits, and technical assistance.
In addition, to help with the schooling attainment of children and adolescents with special needs,
the program would finance the contracting of specialists who would develop local-level models
for early detection of special education needs and develop micro planning with specialized health
services. In order to better attend children with special needs and learning gaps, a systematic
support system would be developed for basic education teachers. In order to implement this
activity, four operations would be considered: (a) Development of learning modules focusing on
knowledge of the central areas of the Core of Priority Learning. This material should allow each
student to gain knowledge of the curriculum content autonomously and progressively, according
to hisher own pace and learning skills; (b) Teacher training for the application of a pedagogical
and didactic acceleration model to follow students’ progress. Teachers would be trained in how to
(i)organize the learning sequences for each student,(ii) organize classroom team work ; and (iii)
prepare Complementary didactic sequences, as needed; (c) Pedagogical support for the initial
stage of implementation to make room for the necessary adjustments and complementary
activities during the first three years of the application of the acceleration program; and (d)
Definition of a normative amendment at the jurisdictional level for recognizing and encouraging
the acceleration model and an indication of the administrative requisites for its implementation.
Lower secondary education (EGB3): Schools that belongedto the earlier 7-year primary school
system would be extended to the 9-year EGB system. The problem of ensuring completion of all
nine grades of compulsory education is larger than merely ensuring that all children in the 8th
grade be enrolled in 9th grade. The statistics on rural schools for the year 2003 reveal that while
there were 67,000 students in the 7th grade, there were 48,000 students in the 8th grade and only
42,000 students in the 9th grade; a net gap of 44,000 within the same cycle. If we consider that
there are about 264,000 students in EGB2, the supply gap for offering compulsory schooling at
the EGB3 level is approximately 100,000. To extend multi-grade schooling to EGB3, this activity
would support: (a) learning modules for students to be able to work on their own pace with
regular guidance; (b) textbooks, workbooks/manuals with activities adapted to the rural context;
(c) audio-visual material specifically developed for the rural context; (d) school development
plans; (e) training for teachers to act as tutors for the self-guided activities of EGB3 students, and
(9 training of secondary school teachers who would be itinerant teachers or placed at nodes of
rural school clusters, or utilize distance learning methods (depending on specific rural context).
School Development Plans: The School Development Plans would consist of a set of
pedagogical and organizational activities to be selected and developed by the school community
(teachers, students and parents) that would contribute to improve the school and the students’
performance. The School Development Plan would be developed by the local community, with
technical assistance from the provincial jurisdiction and the MECyT. A wide range of possible
activities is contemplated, with the budgetary restriction of a maximum of US$900 per school
over the length of the program. Examples of activities would include productive activities (such
as a vegetable garden), cultural activities (such as music and dance groups), sports, public health
awareness campaigns and care of community resources.
39
Sub-component A3: Strengthening Line Departments at the Provincial Levels (US$10.60 million; US$9.61million Bank
Sub-component A3:
Strengthening Line Departments at the Provincial Levels (US$10.60
million; US$9.61million Bank financing)
Strengthening Line Departments at the Provincial Level: This subcomponent would support
the establishment and consolidation of the management capacity of the provinces in the
implementation of the project and sustainability of the education policies and activities after
project completion. The main objective is to increase the provincial ministries’ capacity in the
following dimensions: planning/information, pedagogical and administrative areas and
monitoring. The line departments at the provincial level would also be strengthened to support
project implementation and operation of the education system at that level. To achieve these goals
this sub-component would finance: (i)technical assistance and consultancy services for
supporting the pedagogical, administrative and information areas of each province; (b) travel
expenses; (c) school supervision services; (d) information system costs; and (e) other operation
costs.
Each province would develop a Provincial Plan of Rural Education. This Plan would be
developed with the technical assistance of the MECyT. In addition, this activity would design
capacity building processes/procedures/ instruments and training programs at the provincial level
to train staff members on the new instruments and procedures for increasing
rnanagementhnforrnatiod monitoring and evaluation of education policies and service delivery.
These instruments would be defined through agreed protocols with the national authorities
regarding data collection and formatting of reports to be made available across different
hierarchical levels of provincial administration, including the schools. The output of these
information projects would constitute an important tool for monitoring the national-provincial
bilateral agreements, and would include provisions for an independent audit.
Comuonent B: Enhancinp Stewardshiu Cauacitv of National Government (US$5.35 million;
US$4.83 million Bank financing)
The Project’s support for the National Program for Rural Education uses an organizational model
that does not rely on parallel institutional structures and functions that would owe their existence
only to a Bank-financed project. Project implementation relies on the existing Government
structures-existing units at the MECyT, at the national level, and at the Provincial ministries of
education. The Project would finance a large number of inputs (as provided in Component A
above) under the framework of the national-provincial Convenio which would establish a broad
accountability framework for the Project. For the accountability framework to function as
planned, the Project would provide assistance for strengthening the pertinent line departments in
the MECyT.
This component would finance: (i)consultant services and technical assistance to increase the
institutional capacity of line departments of the Ministry of Education dealing with rural
education and information, as well as monitoring and evaluation activities; (ii)equipment; (iii)
travel expenses for supervising the provinces and schools, and other operation costs.
Sub-component B1: Strengthening Line Departments at National Level (US$2.37 million;
US$2.14 million Bank financing)
The institutional assessment of the MECyT has resulted in the identification of specific areas that
require institutional building activities for supporting successful project implementation. Since
the Project would support national programs integrally, the requirements at the national level
would be aimed at strengthening the planning, normative, monitoring and evaluation and
40
implementation support activities, with the bulk of the support being provided to the departments at
implementation support activities, with the bulk of the support being provided to the departments
at the MECyT, Le., the area of Rural Education that is placed within the Directorate of Curricular
Management and Teacher Training (DNGCyFD); and the area of Evaluation and Statistics, in the
Directorate of Information and Evaluation of School Quality (DNlECE).
Sub-component B2:
Monitoring and Evaluation (US$2.99 million; US$ 2.69 Bank
financing)
This sub-component would support the development and implementation of a system of data
collection, analysis, dissemination and use of information for policy decisions at the national,
province and school levels. It is expected that the information system would also provide inputs
for future expansion of Project interventions and for deriving lessons learned for application of
educational policy areas not covered by the Project. This sub-component would finance technical
assistance, and equipment (computers and software).
This sub-component would develop the following activities:-
(i)Surveys and Impact Evaluation Studies. Financing would be provided for a periodic
survey on the functioning conditions of rural schools and for initiating a longitudinal
survey of graduates of technical schools. Surveys would include those at national and
provincial levels that would evaluate processes and outputs in the course of Project
implementation, and an impact evaluation of a general nature to provide insights into the
effectiveness of public investments in education;
(ii)Student learning assessments. The proposed Project would finance the extension of
a sample of standardized national student assessments (Operativo Nacional de
Evaluacihn or ONE) to ensure representation of rural schools by province. This activity
would also include the monitoring of progress in the achievement of the core priorities of
learning (NAP) and diagnostic information from this assessment to be provided to
individual schools. The monitoring of progress in NAP would be performed in two ways
- one includes the implementation of standardized assessment tools for rural schools in
the alternative years when the ONESare not conducted; the second is the implementation
of testing at the school and classroom level.
41
Appendix-Annex 4 The following tables provide an indication of (i)the magnitude of the system of
Appendix-Annex 4
The following tables provide an indication of (i)the magnitude of the system of rural education
in Argentina, and a comparison between urban and rural education; and (ii)an indicative
calculation of the distribution of project resources across provinces, using an index combining the
rural enrollment, the number of rural schools, the flow bottlenecks and the children outside of
school in rural areas.
Table 1: Representationof Rural Schools within Argentine EducationSystem
Source; MECyT, FromRelevamiento Annual 2001 and 2002 and ONE 2000
': Percent of students who do not enroll in subsequent year. The high percentage for rural schools at the EGBl/2 level
reflects migration between schools rather than complete drop-out from the education system, which can be obtained
from Household Surveys;
- indicates that data were not available.
Table 2: Distribution of Rural Component Spending and All Public EducationExpenditures
Source; Own calculations for Project expenditures; MECyT for Public Education Expenditures 2003
42
The above table shows the distribution of public educational expenditures across the Provinces, as compared
The above table shows the distribution of public educational expenditures across the Provinces, as
compared to the distribution of resources for Component A. The calculation is based on the
distribution of the student population across urban and rural areas (index of rurality) and on the
Percentage of households with unmet basic needs (NEI). The Operations Manual for the Project
specifies the method used for calculating the distribution of resources across Provinces.
43
Annex 5: Project Costs Argentina: Rural Education Improvement Project- PROMER Project Cost by Component Indicative
Annex 5: Project Costs
Argentina: Rural Education Improvement Project- PROMER
Project Cost by Component
Indicative
% of
Bank
cost
Total
financing
% of Bank
financing
(US$)
A.
Improving Quality and Coverage in Rural Education
234.85
98%
144.79
62%
A1. Improving Operating Conditions of Rural Schools
117.79
49%
106.01
90%
A2. Expanding Coverage and Improving Student
Promotion Flow
106.46
44%
29.17
27%
A3, Strengthening Line Departments at the Provincial
10.60
4%
9.61
91%
I
B.
EnhancingStewardship Capacity of National
5.35
2%
4.83
90%
Government
B 1. Strengthening Line Departments at the National level
2.37
1Yo
2.14
91%
B2. Monitoring and Evaluation
2.99
1Yo
2.69
90%
-
Front-end Fee
0.38
0%
0.38
100%
Total FinancingRequired
240.58
100%
150.00
62%
44
Annex 6: Implementation Arrangements Argentina: RuralEducation Improvement Project - PROMER Introduction The
Annex 6: Implementation Arrangements
Argentina: RuralEducation Improvement Project - PROMER
Introduction
The implementation arrangements for this Project closely follow the principle of partnership with
the Government in the delivery of the national programs of rural education. The implementing
agency would be the National Ministry of Education, Science and Technology (MECyT), through
its Directorate General for the Unit of International Finance (DGUFI). The DGUFI would be
responsible for coordinating the various activities of the Project with the other agencies of
MECyT as well as other Federal and Provincial Government Agencies. The DGUFI also manages
an Inter-American Development Bank-financed (IDB) Operation (see Annex 2) and has
substantial experience with the international standards of financial management and procurement,
The DGUFI is not expected to develop technical expertise that already exists in line departments
of national and provincial education ministries. The Rural Education area is under the Directorate
General of Curriculum Management and Teacher Training (DNGCyFD). The area of monitoring
and evaluation falls under the National Directorate of Information and Evaluation of the Quality
of Education (DNIECE). Other units such as the Infrastructure Unit of the MECyT would also be
involved in the implementation of the program. The project implementation arrangements would
build on the experience of these national programs. The three key MECyT units receive a
substantial budget for managing their respective national programs. There would not be any need
to set up Project Coordination Units (PCUs) either at the National or at the Provincial levels.
Where there is a particular need to build provincial implementation capacity, this would be done
by strengthening existing line departments at provincial Ministries of Education, rather than
through parallel administrative units.
Project execution would be based on the signed agreements between the Federal and Provincial
ministries of education. These agreements, also termed as Convenios would approve Provincial
Rural Education Plans and the operational mechanisms for the execution of actions. The
agreements would lay out the assignment of responsibilities between the two levels of
Government, describe the monitoring mechanism to be used and the re-programming of the
activities in case of non-compliance of the goals, contain articles that would be in effect for all
five years of project implementation, and include annual program covenants (Actas de
Programacidn Anual) for activities complementary to the agreement.
At least two provinces must have signed bilateral agreements for the project to be declared
effective,
and a particular province can only enter the project with the signing of a bilateral
agreement.
Content of Bilateral agreements
The agreements would include the following duties and faculties for each of the involved entities:
I Duties-Faculties of the Nation (Ministry of Education):
Approve the actions plans for each sub-project (specific activities contemplated).
0
Supervise execution of the sub-projects and the fulfillment of the results indicators.
0
45
0 Finance the subproject with loan proceeds and according to annually established implementation needs. Contribute
0
Finance the
subproject with loan proceeds
and according to annually
established
implementation needs.
Contribute counterpart funds.
0
0
Provide goods from centralized procurement (computer, texts and printouts) according to
the agreed programming.
0
Make payments to suppliers and contractors “por cuenta y orden” of the province in the
case that it is so established.
0
Keep a registry of fund transfers to the Rural School Clusters (that would serve as a basis
for disbursement).
0
Procurement for centrally procured items would not be bound by signing of bilateral
agreements, but the nation would ensure that centrally procured items are used only in
eligible provinces, ie, provinces that have entered into signed bilateral agreements.
I1
Duties of the Province:
0
Develop the provincial level sub-project.
Execute the
activities
of the
sub-project
following
the requirements of the Loan
0
Agreement and the provisions of the Operational Manual regarding sub-projects.
0
Use the transferred funds to execute sub-project activities.
Keep financial
and accounting registies
and documentation
of expenses incurred
0
following procedures in the Loan Agreement and the Operational Manual.
0
Develop an annual Plan of Activities (POA) and a Procurement Plan (PP) for goods,
works [if compatible] and services, provide annual adjustments, and accomplish the POA
and PP arrangements.
0
Keep the registry and required documentation for disbursement as established in the Loan
Agreement (following the established procedures in the Bilateral Agreement and the
Operational Manual).
0
Sign a specific agreement about indicators, baseline and goals no longer than six months
after the initial bilateral agreement;
0
Carry out the activities established in the Indigenous Peoples Development Plan (IPDP)
and the environmental safeguards.
0
Sign agreements with Rural Schools Clusters, School Principals of provincial schools, or
parent associations of agricultural schools or other mixed type of school, if eligible, for
financing expenditures for works, school materials and other inputs for the clusters’
functioning conditions and institutional and pedagogical activities. The signature of this
agreement with the authorities would be a prerequisite for fund transfers.
46
0 Present the supporting execution and fiduciary documents (needed for financial auditing of the project’s
0
Present the supporting execution and fiduciary documents (needed for financial auditing
of the project’s accounts following the Loan Agreement) to the Nation.
0
Specify school regulations (school organization, curricular adjustment, promotion) in
accordance with the project’s objectives.
0
Appoint school teachers for the expansion of EGB3 as stipulated in the provincial
development plan.
0
Take part in annual meetings to review implementationprogress.
Diagnostic Tool
The bilateral agreement would include an activity by each province to undertake the diagnostic
work required to define the gaps of coverage and in the efficiency indicators for rural education,
using a standardized methodology developed by the MECyT for that purpose. For this purpose, a
Complementary Agreement of Goals and Indicators (Acta Complementaria de Metas e
Indicadores) would be signed within six months from the signature of the Bilateral Agreement.
The diagnostic work would include an analysis at disaggregated levels, from provincial
departments and regional units to the level of school communities and schools. The diagnostic
work would be a key input into determining the annual goals to be agreed upon, and would be
used as a tool to define progress in adhering to the annual plan, as well as an input for the
identification of rescheduled actions. The protocol for the diagnostic tool would be included in
the Operational Manual for the project.
Phased Approach
The bilateral agreement would recognize that some time would be required before the project
intervention results in measurable outcomes for project beneficiaries. The agreement would also
recognize that events outside of the control of the national Government or the provincial
Government could influence the pace of execution of the program. Accordingly two measures
would be incorporated in the bilateral agreement.
First, there would be a phased approach regarding expected results. In the first two years of
execution of the program, the results expected would be those that deal with processes, and in the
final three years of the program, the annual programming agreements would also include results
pertaining to outcomes. Process indicators would consist of the various institutional and
methodological inputs for execution. Thus, for rural education, the results would include the
definition of the rural school clusters and the identification and initial execution of school
construction activities where such activities are deemed to be necessary for meeting the program
goals, Results indicators in the next phase would deal with outcome measures such as enrollment
rates and internal efficiency indicators.
Second, throughout the first and second phase of the program, there would be an institutional
mechanism to evaluate compliance with the Annual Programming Agreements. This mechanism
would include an annual meeting between provincial and Federal Government representatives in
the months of October and November to allow for sufficient time to prepare for the beginning of
the school year in March of the subsequent year.
47
If a province is not in compliance with the annual programming Agreements, the province would
If a province is not in compliance with the annual programming Agreements, the province would
submit a report to the Federal Government detailing the corrective measures being taken by the
province. These corrective measures could include, where appropriate, the assignment of further
resources for technical assistance from the Federal Government. The acceptance of the report
based on the corrective action would include a continuation of program activities in the
subsequent year. If compliance proves to be a problem for a second year in succession, the
Federal Government would be empowered under the terms of the agreement for a partial or total
suspension of project activities in the non-performing province. In this case, the Federal
Government would be empowered to reassign resources to other provinces with a satisfactory
track record of meeting the agreed goals.
Levels of Program Execution
Three management and execution levels have been identified: Level 1 or central level; Level 2 or
provincial level and Level 3 or local level (rural school clusters).
Level 1- or central level- would consist of DGUFI, DNGCyFD, DNIECE, DPC (Directorate of
Compensatory Programs) and the DI (Directorate of Infrastructure). DGUFI would be responsible
for general administrative execution of the entire project, channeling the requirements from the
other Directorates
Level 2 -or provincial level would consist of a specific department designated by the provincial
education authority (Provincial Sub-secretary for Administration and Finance or equivalent). The
requirements for contracting and payments would be initiated by the corresponding technical
areas of rural education (Provincial EGB Directorate or equivalent), and evaluation and statistics
(Statistics Directorate or equivalent).
Level 3- or local level would consist of rural school clusters.
48
Annex 7: Financial Management and Disbursement Arrangements Argentina: RuralEducation Improvement Project - PROMER
Annex 7: Financial Management and Disbursement Arrangements
Argentina: RuralEducation Improvement Project - PROMER
Executive summary
The overall conclusion of the Financial Management Team was that, under the management of
the MECyT, the Project would be able to maintain financial management arrangements
compatible with Bank requirements. Agreement was reached on an action plan on the standards
to be met by the financial statements and the time frame for their submission to the Bank after
being certified by the auditors, and on the Financial Management Report (FMR) format. Specific
recommendations were made regarding the organizational arrangements, the strengthening of
human resources and the operational manual, and included in the action plan. The conclusions of
the Financial Management (FM) assessment are that: (i)the financial management risk
assessment shows a moderate to highrisk for the project implementationbased on the weaknesses
at the provincial level, (ii)FM design is tailored to support the mainstreaming of project
management to the DGUFI to strengthen their financial management capacity; (iii)the DGUFI
would be responsible for the preparation of project consolidated financial management statements
and supervision of provincial level, and (iv) the provinces would require additional investments to
improve their financial management institutional capacity. The provinces’ capacity has to be
complementedby an additional accountant to help manage project financial affairs, and the use of
information systems capable of operating using the intranet accessible via the Web.
The financial management risk assessment concluded that the inherent and control risks for the
project are moderate.
Country Issues
The Country Financial Accountability Assessment (CFAA) prepared by the Bank in 2003-2004
states that at the central level, the Government of Argentina has a fully integrated budget,
accounting, treasury, and public debt financial management system. These systems control the
funds received by the central Government from any source and provide sufficient information to
determine if the funds were utilized as planned.
This CFAA covered the Federal Government central system and did not cover the assessment of
public financial systems at the sub-national level (Provinces). A CFAA update of the Federal
system in Argentina is planned for FY2006 while the evaluation of Provincial systems is planned
for FY2007.
A FM issue raised in the Country Assistance Strategy (CAS) document (January 2004) was the
chronic problem related to the timely submission of audit reports to the Bank. However, since
2003, there has been some improvement on country audit report compliance. The audit
compliance issue is being addressed by the Bank at the portfolio level and through an Institutional
Development Fund (IDF) grant to strengthen the institutional capacity of the Auditoria General
de la Nacidn (Borrower’s Auditor General Office, AGN). The 2006-2008 CAS for Argentina that
is currently under preparation develops a fiduciary action plan that seeks to improve the
timeliness and effectiveness of the external audit function in the country.
The International Monetary Fund issued an experimental Report on the Observance of Standards
and Codes (ROSC) for Argentina in April 1999, which includes a section on Fiscal Transparency.
This report noted that based on the description of practices provided by the authorities and
49
summarized in the report, Argentina has achieved a high degree of fiscal transparency. This is
summarized in the report, Argentina has achieved a high degree of fiscal transparency. This is a
reflection of the significant progress that has been made since the implementation of landmark
legislation on financial administration and control in 1992.
FinancialManagement Assessment
As required by OP/BP 10.02, a Senior Financial Management Specialist carried out a financial
management assessment during the Project’s pre-appraisal phase. A Senior Finance Officer from
Bank Headquarters also provided guidance regarding the Project’s financing and disbursement
arrangements.
The Financial Management Assessment (FMA) indicates that an adequate financial management
system to keep records and report on the use of funds of the project is in place. However some
further steps need to be taken as described in the Action Plan below.
The FMA took into account a preliminary assessment of provinces selected by the DGUFI and
MECyT. This assessment involved ensuring that project design allows for an appropriate level of
transparency, facilitating oversight and control while also supporting smooth implementation.
The assessment included discussions with the financial team, a review of the financial systems to
be used for project accounting, financial administration, controlling and reporting and the internal
controls and administration procedures to be implemented to control and monitor the project’s
executing and auditing arrangements.
ImplementingEntity
The DGUFIof the borrower’s Ministry of Education (MECyT) would be the coordinating unit for
the proposed project. The DGUFI would be responsible for project accounting, reporting
including preparation of FMRs, internal control, disbursements and the external audit. The
DGUFI FM staffing would be specified in the Operational Manual.
FinancialManagement Arrangements
At the Central and the Provincial Government
0
The MECyT financial management responsibilities. The MECyT would be the Bank’s
direct counterpart responsible for financial management issues. Its responsibilities
include the preparation of consolidated financial statements; disbursement arrangements
with the Government and Bank financial authorities; external audit arrangements; and
supervision of provincial level financial management and disbursement arrangements;
among others.
0
Institutional Arrangements. Implementation of the project in general would be carried
out using the same financial management and audit arrangements that are in place at the
MECyT. Additional arrangements regarding Project Component A would be
implemented at both the system and the institutional level to strengthen the DGUFI and
its relationship with the provincial level.
At the central Government level, the MECyT would be responsible for carrying out financial
management, procurement and disbursement activities at the central level, as well as for
monitoring and supervising the fiduciary arrangements at the provincial level. The DGUFI has
the experience and capacity fiom other World Bank-financed projects: (Loan 3971-AR PO06057
50
amount US$115.0 million, approval December 21, 1995; closing date April 30, 2004 - Loan 3794-AR
amount US$115.0 million, approval December 21, 1995; closing date April 30, 2004 - Loan
3794-AR PO05992 amount US$190.0 million, approval September 15, 1994; closing date June
30, 200 1) and Inter-American Development Bank (IDB)-financed projects to manage large
projects, implement their fiduciary procedures, monitor implementation and provide technical
assistance to beneficiaries.
At the provincial Government level, institutions would use their planning, financial management
systems, and internal control arrangements (e.g. M&E, fiduciary management and internal
arrangements) to achieve the bilateral technical agreements with rural schools clusters. An
assessment of the Provincial Tribunales de Cuenta (PTCs) would not be carried as part of the
Project. However, the Government of Argentina is responsible for periodic assessments of these
institutions.
A number of options were considered during project preparation to address the inherent
complexities of fiduciary oversight for this decentralized operation including: (i)the financing
scheme for the project, in which a substantial portion of Project expenditures would be paid at the
national Government level through the DGUFI; (ii)the strengthening of the DGUFI to ensure
continuity and adequate coordination with the provinces; and (iii)the strengthening of the
fiduciary capacity of some of the weakest provinces that would participate in the Project.
The minimum financial management requirements provinces would have to comply with, in order
to be eligible to receive resources from the project are summarized as follows:
1. Contract an accountant or business administration specialist with experience in project
management financed by international cooperation.
2. Consultant contract arrangements. Based on the existing legal framework, contracts for project
coordination units personnel have to be at least for one year.
3. Project coordination units have to be built-in to the organizational structure of the provincial
Ministry of Education or the Educational Council. No parallel structure to the central
administration is acceptable.
Project coordination unit budget is integrated into the province budget,
0
0
Their financial management and control systems respond to the needs of the province
authorities. The accounting, the budget, the flow of funds and the internal control would
have to be defined according to province financial management arrangements,
0
Processes and procedures are developed and monitored by the provincial authorities, and
0
Project coordination unit human resources arrangements are an integral part of the central
administration.
4. The project coordination unit in the Province received technical assistance and initial basic
training from the DGUFI.
Disbursement Arrangements
0 New EZigibiZity Policy. The project incorporates the Bank’s new policy on eligibility for Bank
financing.’
To implement the policy, the Country Financing Parameters for Argentina were
approved by the LCR Regional Vice President on May 11,2005.
The Bank would finance up to 90 percent of the project total expenditures effectively made by the
project. Loan proceeds would be disbursed based on expenditure incurred at a rate of up to 90
5 See OP 6.00, Bank Financing.
51
percent of the variable advances made by the Borrower to provinces to cover the cost
percent of the variable advances made by the Borrower to provinces to cover the cost of goods,
works, services and flat recurrent costs required to implement the bilateral agreement. The terms
and conditions for the advance of funds to provinces would be agreed in each bilateral technical
agreement. The Bank would monitor the DGUFI’s assessment of institutional performance of
provinces interestedin participating in the project.
0 Execution accounts. As it is customary in Argentina, the Government would open a Special
Account (SA), as a revolving bank account to finance project expenditures for all components
and would request replenishment for the Bank’s share of the financing. Requests for
reimbursement would be submitted to the Bank on the basis of Statements of Expenditure
(SOEs).
Resources would be transferred from the World Bank to a special account opened at the Banco de
la Nacion Argentina in dollars. An operative bank account in pesos would be also open at “Banco
de la Naci6n” in the name of the DGUFWECyT to manage resources transferred from the SA.
0 Disbursement
Mechanisms
and Documentation. The Bank would disburse to the
Government based on transaction-based disbursement requests sent by the DGUFI. Advances to
provinces for a 60 day period of eligible expenditures will be allowed based on the presentation
of an acceptable action plan presented by the provinces to the DGUFI. Prior to approving further
advances, provinces will have to present full documentation proving that the advances were used
for eligible expenditures. The following describes the disbursement approach for the main
activities:
0 Flow of Funds and Information. A number of entities would be involved in project
implementation, oversight, and financial management. For Component B, all expenditures would
be made by the MECyT, through the DGUFI , for activities carried out at the central level, and
for preparing the information requiredby the Financial Monitoring Reports.
The DGUFI provides administrative and financial management support to the project and would
be responsible for all payments made directly or upon request by the provinces to providers,
contractors and consultants for Components A or B, for contracts and expenditures over
US$lOO,OOO. In addition, for Component A, advances for a 60 day period of eligible expenditures
could be made to the provincial level to be executed by the province. The various provincial
Governments could be responsible for payments to contractors and consultants contracted by
them under US$ 100,000. The DGUFIwould have the main function in this case of consolidating
the financial management information and supervising the use of project resources according to
the project objectives and the financial planning.
52
Disbursement Categories and Allocations
Disbursement Categories and Allocations
Disbursement Categories and Allocations Project Flow of Funds e Reporting betweenprovincial level and the MECyT: 1.
Project Flow of Funds
Project
Flow of Funds
Categories and Allocations Project Flow of Funds e Reporting betweenprovincial level and the MECyT: 1. The
e Reporting betweenprovincial level and the MECyT:
e Reporting betweenprovincial level and the MECyT:
1. The DGUFI proceeds to assess completion of technical requirements and verifies that contracts and
1. The DGUFI proceeds to assess completion of technical requirements and verifies that
contracts and agreements conditions were fulfilled;

53

2. Provincial level pays providers or contractors directly and would inform the DGUFI that the
2. Provincial level pays providers or contractors directly and would inform the DGUFI that
the payment process has been completed on a monthly basis.
3. The FMRs and disbursement documentation would be prepared by the DGUFI, based on
consolidated information provided by the provincial level and the MECyT itself.
The Bank would monitor the flow of funds, especially to ensure that undisbursed funds do
not sit in the provincial level for a long period of time.
In-kind Contributions. In-kind contributions would be an integral part of project execution,
jointly with cash resources provided by the central and provincial governments. However, in-kind
contributions will not be included in the local counterpart hnding. The concept of in-kind
contribution would be used to promote involvement of provinces and mal schools in project
execution with materials, work, and other non-cash investments that otherwise would be not
accounted for.
A table for conversion of in-kind contributions into monetary measurements would be developed
by the DGUFI and distributed to the provinces. The responsibility for the preparation of the
reports, including in-kindcontributions and reporting, would be under the province coordinator.
The DGUFI financial team would register these contributions using the project chart of accounts
under “cuentas de orden”. These in-kindcontributions would not need to be audited.
Information Systems. The project would not require a new information system. There is a basic
system in place implemented by the DGUFI for the IDB-financed PROMSE Project, to monitor
subproject implementation and resource transfer. This system would also be used to produce the
requisite financial statements for this project. Even though, the system is not linked with the
national Government’s integrated financial management system, it provides a comprehensive tool
for project monitoring and can work in parallel with the central Government budget information
system.
Written Procedures. Project financial procedures would be documented in an Operational
Manual, which would define the roles and responsibilities of all entities involved in Project
implementation. The Operational Manual would include, among other financial procedures: (i)
accounting policies and procedures, including basis of accounting and chart of accounts; (ii)the
reporting requirements fi-om the provincial level; (iii)formats of the consolidated Financial
Monitoring Reports for the program; (iv) internal controls including criteria and procedures for
processing payments and advances; (v) records management; (vi) audit arrangements; and (vii)
format and content of the financial statements
Financial Reporting. The DGUFI would prepare semiannual Financial Monitoring Reports
(FMRs) in accordance with Bank procedures, which specifies accounting and report formats for
all Bank-financedprojects. Financial Monitoring Reports (FMRs) would comprise at least:
A financial section stating for the period and cumulatively (project life) cash receipts by sources
and applications by main expenditures classification as well as beginning and ending cash
balances of the project and a statement of accumulated investments by project component with a
comparison between actual and planned expenditures.
An output monitoring section that: (a) sets forth physical progress in project implementation, and
(b) explains variances between the actual and previously forecast implementation target.
54
A procurement section describing the status of procurement under the project, as of the end
A procurement section describing the status of procurement under the project, as of the end of the
period covered by the report.
The FMR’ s formats would be agreed with the DGUFI and included in the Operational Manual,
The
Operational Manual prepared by the DGUFI and acceptable to the Bank is part of the Action
Plan. The DGUFI would be responsible for the project financial management, including
accounting, and timely submission of the Financial Management Reports, annual audits and
disbursements and would record all transactions in its own system. The physical progress
indicators and the timing of the FMRs would be consulted with the Bank to ensure the usefulness
of the FMRs in the overall project supervision. The preparation of these reports would rely
heavily on the information provided by the provincial level. The DGUFI financial management
team agreed on the format of reporting and the preparation of consolidated reports for project
management and distribution to the various stakeholders, including national control entities and
the Bank.
Financial statements would be prepared on the basis of accrual accounting and shall be in line
with the Bank requirements.
Audit. The financial statements of the project would be audited annually by the Comptroller
General (AGN). The project financial statements audits would be conducted following national
audit standards compatible with the International Organization of Supreme Audit Institutions
(INTOSAI). The project would have external audit arrangements under the responsibility of
AGN, for the central Government and all provinces, which would join the project. This
arrangement requires that external auditors would carry out a traditional independent audit,
jointly with the support of the MECyT internal audit unit, and the auditors would provide
technical assistance during each fiscal year. There are several objectives of this additional
requirement:
0
Ensure external auditors would have close follow-up on internal control, accounting and
budgeting processes and procedures, based on the understanding this would not affect
their independence and objectivity.
0
External auditors would have the opportunity to assist or guide the project to correct any
deviations from the procedures to avoid any possible problems during the fiscal year.
0 Ensure a better understanding of project execution that would contribute to carrying out
the external audit.
There is no need to wait until the end of the fiscal year to perform an ex-post audit review where
the possible outcomes would have only a retroactive effect on project execution.
Detailed Financial Management Arrangements
In order to contribute to a better understanding of project financial management arrangements, a
matrix was developed to describe the different activities and responsibilities of the different
entities involved in project execution.
55
Table 1: Project FM Issues General Understanding and Financial Management Arrangements Financial Management
Table
1:
Project
FM
Issues
General
Understanding
and
Financial
Management
Arrangements
Financial Management
Arrangements
, BY COMPONENT
Component A
Improving Quality and
Coverage of Rural Education
Component B
Enhancing Stewardship
Capacity of National
Government
GENERAL ARRANGEMENTS
FINANCIAL MANAGEMENT
ARRANGEMENTS IN GENERAL
Would be conditioned by two main
instruments:
Traditional approach
rraditional approach
The DGUFIof the MECyT
has main responsibility for
Provincial Capacity
0
Assessment
project oversight and
implementation
(already in place)
The DGUFI of the MECyT
has main responsibility for
project oversight and
implementation
(already in place)
Bilateral technical agreement
0
PROVINCES CAPACITY
ASSESSMENT CRITERIA AND
METHODOLOGY ON FM AND
BILATERAL AGREEMENT
Would be prepared jointly with
the counterpart team and included
in the Operational Manual
Would be prepared jointly with
the counterpart team and included
in the Operational Manual
ADMINISTRATIVE
ARRANGEMENTS
Preparation of consolidated
financial statements, centralized
at the MECyTDGUFI
Preparation of FM information,
Centralized at the
MECyTDGUFI
DISBURSEMENT
ARRANGEMENTS - FLOW OF
FUNDS
Disbursements would be based on the
use of a SA to pre-finance expenditures
incurred and SOEs
Provincial level execution -
decentralized at eachprovince
Traditional Approach
Traditional Approach
The Government spends and
requests reimbursement through
traditional SOEs
The Government spends and
requests reimbursement through
traditional SOEs
An SA is needed as a revolving
fund
Commercial bank account at
“Banco de la Nacion”.
Lump sums would be advanced
in tranches to the provinces
MECyTDGUFI responsible for
payments when acquisition
process is performed at the
central level.
MECyTDGUFI responsible for
payments at the completion of the
procurement process at the
provincial level.
INFORMATION SYSTEMS
The DGUFI existing information
system
BUDGETING,
TREASURY
AND
ACCOUNTING
InternalControl
The DGUFI existing information
system to be shared with
provinces
The DGUFI existing information
system
MECyT and Provinces
The DGUFI existing information
system
MECyT
56
External Audit SA1- AGN SA1- AGN, or Private Audit Firms at the provincial level for
External Audit
SA1- AGN
SA1- AGN, or
Private
Audit
Firms
at
the
provincial
level
for
recurrent
audit arrangements
Reporting
- Financial Monitoring
MECyT/DGUFI
MECyTiDGUFI
Reports
Bilateral Technical Agreement
Responsible for
bilateral
Responsible
for
bilateral
technical agreement preparation
technical agreement preparation
and signing with provinces and signing with rural schools
clusters
Technical Assistance and Training
Responsible
for
technical
assistance
and
training
to
I provinces
Arranger
mts by National and Provincial Levels
National Level 1Provincial Level
ProvincialPlans
Prepares provincial plans
Prepares advance reports
Requests cash advances
Works
Approves provincial plans
Approves advance reports for
disbursement purposes
Direct payment to providers and
Direct payment to providers and
contractors hired by the central
contractors hired
by
the
Government
Goods and Materials
Responsible for
1provincial Government
educational I Prepares procurement process
Terms of Reference
Direct payment to providers and
constructors hired by the central
Government
Prepares terms of reference for
central Government
Cluster activities
Approves catalogs, selects
material, acquires materials and
books,
Assigns quantities for distribution
to rural schools, and
Responsible for procurement
process at the central Government
Responsible for approval of
provincial draft documents
Direct payment to providers and
constructors hired by the central
Government
Prepares terms of reference for
central Government
Assist and supports the
preparation of terms of reference
at the provincial level
Advances for a 60 day period of
eligible expenditures would be
made from the SA to the
provinces bank accounts at the
"Banco de la Naci6n"
The provincial coordinator would
approve the content of
expenditures as reported by the
provinces
Advances would be managed at
separate bank accounts for each
grant per cluster at the "Banco de
laNaci6n"
A table would be prepared by
each cluster including all
expenditures of project resources
through the grants

57

Table 1: Project FM Issues General Understanding and Financial Management Arrangements B. BY EP Ministry
Table
1:
Project
FM
Issues
General
Understanding
and
Financial Management
Arrangements
B. BY EP
Ministry of Economy
‘ITIES
Financial
MECyTLDGUFI
Provinces
Management
Arrangements
Central Budget
Information
System
Developed and
Implementedby the
Ministry of Economy
Implements the central
Public Financial
Management system
Provinces Capacity
Assessment
Criteria and
Methodology on FM
and Performance
Agreement
Disbursement
Arrangements -
Flow of Funds
GOAspends and
Requests Reimbursement
through Traditional
SOEs by the Treasury
SA is needed as a
revolving fund
Provides inputs to the
Bank’s FMS for the
preparation of FM
Capacity Assessment
and supervises provinces
performance
Lump sums would be
transferred in trenches
Are subject to FM
Capacity
Assessment
Separate project
accounts
management
Disbursements
would be based on
SA advances and
expenditures
incurred
Information
SIDIF
DGUFIInformation
Systems
System
Provinces are
required to use the
DGUFIInformation
System
Accounting
DGUFIInformation
System
Internal Control
MECyT
Internal Audit
Provinces are
required to use the
DGUFIInformation
System
Provinces Internal
Audit arrangement
arrangement
ExternalAudit
SA1- AGN
Reporting-
Financial
FMRs consolidation of
project information
SA1- AGN, or
private
recurrent external
audit
Prepares inputs for
the FMRs
Monitoring
Reports
Technical
Assistance and
Responsible for service
provision to provinces
Training
Responsible for
service provision to
rural schools
clusters
58
Financial Management Risk Assessment The overall project financial management risk is moderate based on the
Financial Management Risk Assessment
The overall project financial management risk is moderate based on the consolidated financial
management assessment, performed at the federal and provincial level.
MODERATE
2. CONTROL RI
Risks that the project’s accounting and internal control framework are inadequate to ensure project
ff in the implementing agency. The FM capacity is defined by the
of audit work performed, and audit results delivered: (i)Quality of
tions/ disclaimedadverse opinions; (ii)Content of Management
Letters.
2.3.3 Internal Audit arrangements
HIGH
Assesses quality of the internal audit arrangements of the implementingentity.
59
Risk Mitigation Measures The mitigation measures will be financed using loan proceeds. In order to
Risk Mitigation Measures
The mitigation measures will be financed using loan proceeds. In order to mitigate the project
fiduciary high risk areas assessed during the appraisal mission, the Operational Manual would
include several actions that are described in the following table:
Table 3: Risk Mitigation Measures
Risk Description
Risk Level
Weaknesses
Mitigation Measures
2.1. FM Arrangements
MODERATE
Budgeting and Financial
Planning, FM Staff
capacity
Week capacity of FM staff
in the implementing agency.
The FM capacity at the
provincial Government is
also weak; the number and
qualification of the
accountants, disbursement
specialist and other FM staff
employed on the project
needs to be mainstreamed
into the provincial FM
structure.
Strengthening the DGUFI financial
and procurement management team.
Concentrate the project accounting,
budgeting and reporting system in
the DGUFIusing an intranet network
to connect all provinces to perform
data entry under one software
r
2.1.2 Internal Controls
HIGH
Poor internal control
measures in place, lack of
processes and procedures at
the federal and provincial
levels designed to support
and ensure effectiveness and
efficiency of operations,
reliability of financial
reporting and compliance
with applicable
lawsiregulations during the
project’s implementation.
Strengthen the MECyT internal audit
unit operational capacity.
Strict implementation of internal
control procedures at the provincial
level according to the Operational
Manual.
Technical assistance and training to
provincial staff on internal control
and financial management
HIGH
HIGH
timeliness
Delays on audit reports and
quality of audit work
performed, and audit results
delivered
HIGH
arrangements
Poor quality of internal
audit arrangements of
provinces and the MECyT
internal audit.
Implementing concurrent external
audit by AGN, with the support oi
the provincial external audit
institutions “Tribunal de Cuentas
Provincial” and “Contaduria
Provincial”, for all participating
provinces during the fiscal year
Strengthen the MECyT internal audil
unit operational capacity
Concentrate payments at the DGUFI
for contracts over US$lOO,OOO, and
centralized procuremenl
arrangements for specific contracts
and purchases
60
FinancialManagementAction Plan A Financial Management action plan was agreed with the Government. The priority items
FinancialManagementAction Plan
A Financial Management action plan was agreed with the Government. The priority items are the
strengthening of the DGUFI and the provinces financial management arrangements, which would
include the incorporation of additional staff.
Table 4: FinancialManagement Action Plan
ACTIVITIES
FINAL PRODUCT
RESPONSIBLE
COMPLETION
DATE
Strengthen
the
DGUFI
The DGUFI has incorporated
a professional with experience
in financial management, and
the intranet connection with
the provinces is functioning
effectively
The operational manual FM
component is completed and
approved by the Bank, and
includes all new arrangements
and procedures for the
implementation of the
financial information system,
and terms of reference for
external audit (including
FMRs), format and contents
of the financial statements.
The DGUFI provided at least
one workshop including all
the provinces enrolled in the
project, and technical
assistance to each of them.
DGUFI
Assurance
financial management
team
received
from
DGUFI
that
this
activity
is
in
the
process
of
being
completed.
The Operational Manual,
Financial Management
component in place
DGUFI
Completed
The DGUFI financial
DGUFI
Part
of
bilateral
management
group
agreement
and
provided
technical
Financial
assistance and training to
the provinces including
in the first stage of the
project
Management
Assessments
Establish a separate
budgetary line in the
MECyT annual budget to
keep track of project
execution
The provinces comply
with the minimum FM
requirements described
above.
The .separate line would be
ensured by the Ministry of
Economy
DGUFI
Completed
Provinces
Part
of
bilateral
and
Review
DGUFI
FM
WB -FMS
Staffing
The financial system is
operating effectively using the
intranet, and staff is trained.
The provinces are able to
connect to the intranet
CVs of all DGUFI’s FM staff
presented and reviewed by a
Bank FMS
agreement
Financial
Management
Assessments
Assurance
received from
DGUFIthat this
activity is in the
process of being
completed.
61
Timing Mechanism Objective Type Visit General Supervise a year Integrating supervision missions at least one
Timing
Mechanism
Objective
Type
Visit
General
Supervise
a year
Integrating supervision
missions at least one time each
semester.
Review FM system.
Supervision:
Special
Account
Twice
Reconciliation. Use of funds.
for
first
year,
Follow up
on
External Auditors
once a year for
the
following
recommendations/ raised issues.
Review staffing.
years.
FMRReview
With
each
The
FMR
submitted
to
the
Review
FMR
information
report
Bank.
consistency.
Raise issues disclosed in FMR.
Audit
Once a Year
Review
The Audit Report submitted to
the Bank
Review Audit Report.
Raise
issues
disclosed
in
Audit
Report
62
Annex 8: Procurement Arrangements Argentina: Rural Education Improvement Project - PROMER A. General Procurement would
Annex 8: Procurement Arrangements
Argentina: Rural Education Improvement Project - PROMER
A. General
Procurement would be carried out in accordance with provisions stipulated in the Legal
Agreement and the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits"
dated May 2004 for the supply of goods and civil works; and "Guidelines: Selection and
Employment of Consultants by World Bank Borrowers" dated May 2004 for technical assistance
and other consultant assignments. The various items under different expenditure categories are
described and summarized below. For each contract which would be financed by the Loan,
the
applicable procurement methods or consultant selection methods, the need for pre-qualification,
when necessary, estimated costs, prior review requirements, and time frame are agreed between
the Borrower and the Bank in the Procurement Plan that is described in the Operational Manual,
The Procurement Plan would be updated at least annually or as required to reflect the actual
project's implementation needs and improvements in institutional capacity. The Bank's Standard
Bidding Documents (SBD) and Standard Request for Proposals would govern the procurement of
Bank-financed International Competitive Bidding (ICB) goods and civil works and consultant
services respectively. The same rules would apply to ICB procurement and to large contracts
with consultant firms as identified in the procurement plan of the participating Provinces. For the
National Competitive Bidding (NCB) and Shopping or Three Quotations procurement of goods
and civil works, the DGUFI would use National SBD agreed with or satisfactory to the Bank. All
SBDs would be used for each procurement method, as well as model contracts for works, goods
and consultants procured, and should be included in the Operational Manual (OM).
Procurement of Works:
Civil works procured under this project would include infrastructure for
rural and vocational schools. This may imply repairing and expanding existing buildings or
through the replacement of existing buildings where rehabilitation is not feasible and only minor
maintenance of school buildings. The Bank evaluated one Province and the rest of the
participating Provinces would be evaluated by the DGUFI, following the Bank's standard format.
The initial risk grading of the participating Provinces would be subject to review (upgrade or
downgrade) depending upon their performance as monitored by the DGUFI. All civil works
contracts estimated to cost over US$5 .O million equivalent would be procured using International
Competitive Bidding (ICB) procedures and the Bank's SBD. Civil works contracts estimated to
cost less than US$5.0 million equivalent may be procured using National Competitive Bidding
(NCB) procedures. Works estimated to cost less than US$350,000 equivalent, may be procured
on the basis of at least three quotations from qualified contractors. The procurement under NCB
and three quotations would be done using national SBD acceptable to the Bank. For small-scale
rehabilitation or maintenance of existing schools, the participating schools would subcontract
directly to contractors when the individual contracts do not exceed US$20,000. When no such
contractors are available in the participating school area, the schools would select a contractor
from outside the local area on the basis of acceptable administrative procedures under national
regulations. This type of investment would be specified in the procurement plans contained in the
sub-project plans presented by the participating Provinces during Project's implementation.
Procurement of Goods: Goods to be procured would include: equipment provision especially for
drinking water and for the supply of electricity for rural schools; textbooks, didactic materials,
printouts, furniture, videotapes, computer and audiovisual equipment. All goods estimated to cost
over US$500,000 may be procured using International Competitive Bidding (ICB) procedures
and the Bank's SBD. Goods estimated to cost less than US$500,000 may be procured in
accordance with the National Competitive Bidding (NCB). Books, libraries and didactic materials
63
may be procured under Community Participation in Procurement (para. 3.17 of the Guidelines). This process
may be procured under Community Participation in Procurement (para. 3.17 of the Guidelines).
This process requires that representatives of all levels of the Education Community including
MECyT’s will participate in the evaluation of samples of books, libraries and didactic materials
provided by the Education industry. The terms of reference of the evaluation committee should
be satisfactory to the Bank. The industry will be asked to submit samples to be assessed by the
Education Community based on their technical, pedagogic, curricular, and graphic factors,
competitive aspects, and on price reasonability. The technical competition is the result of an
open request of expression of interest. The outcome of this technical assessment will be included
in the catalogue of books and didactic materials which will be reviewed by the Bank before the
MECyT proceeds with the direct purchase. Details arrangements and criteria for evaluation are
included in the technical section of the Operational Manual. Contracts for goods that cannot be
grouped into larger bidding packages and estimated to cost less than US$lOO,OOO per contract
may be procured using Shopping (National/International). The procurement would be done using
National SBD and a model request for quotations agreed on or satisfactory to the Bank.
Advertisement: All procurement notices shall be advertised in the National Contracting Office
(Oficina Nacional de Contrataciones, ONC) web page or in at least one local newspaper of
national circulation.
The ICB procurement notices and contract award information shall be
advertised in the UN Development Business online (UNDB online) and in the Development
Gateway’s dg Market. The ONC shall also be used to publish information on awarded contracts
in accordance with provisions of paragraphs 2.60 of the Procurement Guidelines and as mandated
by local legislation.
Procurement of non-consulting services: Non-consulting services under this project would
include contracts for logistics services to support training.
Procurement of Consultants’ Services:
(i)Firms: it is expected that the project would finance technical assistance for the implementation
of the components (a) Improving Quality and Coverage of Rural Education and (b) Enhancing
Stewardship Capacity of the National Level. At the national level, Consulting Services through
firms would include technical assistance for the development and application of pedagogical and
institutional models, for the design of teaching materials and didactic models for student
throughput, and for organizing school clusters and training. At a provincial level, this would
include technical assistance for organizing teacher training and providing support in the field. All
contracts for firms would be procured using Quality-and Cost-Based Selection (QCBS), except
for small contracts for assignments of standard or outing nature and estimated to cost less than
US$lOO,OOO equivalent, which would be procured using other methods such as Least-Cost
Selection (LCS) or Consultants’ Qualifications (CQ). Single-source selection (SSS) procedure
may be used only in exceptional cases, with prior agreement of the Bank, in accordance with
provisions of paragraph 3.10 of the Consultant Guidelines, for assignments when only one firm is
qualified or has experience of exceptional worth, and it has been confirmed by a request of
expressions of interest. Consultants’ services to organize workshops would be selected using
LCS. Universities for training purposes would be selected in accordance with provisions of
paragraph 1.11(b) and (c).
Short lists of consultants for services estimated to cost less than US$300,000 equivalent per
contract may be composed entirely of national consultants in accordance with the provisions of
paragraph 2.7 of the Consultant Guidelines.
64
(ii)Individual Consultants: Most of the consulting services to be contracted would be related to supervision,
(ii)Individual Consultants: Most of the consulting services to be contracted would be related to
supervision, training and technical assistance.
The consulting services mentioned above would be
provided by individual consultants selected by comparison of qualifications of at least three
candidates and hired in accordance with the provisions of Section V of the Consultant Guidelines.
Individual consultants for services with an expected duration of six months or more would be
selected as a result of a request of expressions of interest advertised in a national newspaper
and/or ONC, and contracts would be signed for the expected duration of the assignment, subject
to annual reviews for performance. Contracts with individuals may only be terminated for poor
performance or for non-completion of the work with Bank’s prior agreement. The Bank would
not agree to the replacement of individual consultants terminated for other than the
aforementioned reasons.
Advertisement: The ONC or a national newspaper shall also be used to advertise a request of
expression of interest for consulting firms or individuals, and to publish information on awarded
contracts in accordance with provisions of paragraphs 2.28 of the Consultants Guidelines and as
mandated by local legislation. Contracts expected to cost more than US$200,000 shall be
advertised in UNDB online and in dgMarket.
Operating Costs: The loan would finance operating costs that would be procured using Bank
Shopping procedures, if the conditions of Clause 3.5 of the Procurement Guidelines are met. The
operating costs include cost of maintenance of computer, office and audiovisual equipment,
transportation fares, travel expenses and per diem, either related to training or supervision
activities and other operational costs of the Program.
Others: Didactic materials and book fairs (FERIAS). An innovative procurement procedure
known as the Didactic Support and School Books Fair (Feria de Apoyos Didkcticos y Libros
Escolares, FERIA), would be conducted under special procurement arrangements in the project.
The strategy of the FERIA seeks to resolve a supply-side procurement issue for these educational
inputs via a participatory scheme in the educational chain of the MECyT. All books, materials
and other education items in the catalogue are then shown during a FERIA Week to all school
community teams, invited ex-profeso by the MECyT. The MECyT may again use the services of
a specialized logistics firm to provide support during the FERIA events and later to distribute to
schools the books delivered by all publishers or editorial homes that were awarded purchase
orders/contracts at time of FERIA. With the financing provided by the MECyT to schools,
according to specific school/student quotas, school teams can decide to buy the books and
materials that their schools want and need, without any intervention at this stage from the MECyT
central areas. Schools place direct purchase orders with each editorial home representative
attending the FERIA. When these purchase orders and contracts are finalized, the editorial homes
are made responsible for making arrangements to deliver all materials and books, either directly
to each school or to the designated warehouse, depending on the option selected by the MECyT
for distribution. Details on the FERIA arrangements and criteria for evaluation are included in the
technical section of the Operational Manual.
B. Assessment of the agency’s capacity to implement procurement
Procurement activities would be carried out at the national level by the Ministry of Education,
Science and Technology (MECyT) through its Directorate General for the Unit of International
Finance (DGUFI). The DGUFI would have technical support from the area of Rural Education
under the Directorate General of Curriculum Management and Teacher Training (DNGCyFD).
The DGUFI is staffed with a General Coordinator and various technical experts.
65
Procurement Responsibility. There would be three levels of implementing agencies. At the central level, the
Procurement Responsibility.
There would be three levels of implementing agencies.
At the
central level, the Directorate General for the Unit of International Finance (DGUFI) of the
Ministry of Education Science and Technology (MECyT) would hire an additional consultant to
complete the procurement unit for the project. The unit would procure larger packages of goods
and consultants services.
As an option, the MECyT could contract UNOPS to facilitate
procurement processes; the fee related to the services would be paid with local funds. The
UNOPS would carry out procurement activities using the methods established in the Loan
Agreement (LA) and in the OM and would be subject to the same prior and ex-post review
procedures. The Provinces participating in the subprojects would also carry out procurement
activities using the methods established in the LA. The third level, schools, would contract small
contractors to carry out the maintenance of the buildings and procure small goods using
administrative procedures defined in the OM. The DGUFI would be responsible for overall
procurement activity under the Project, including compliance with procedures and timetables
agreed with the Bank.
For financing civil works and goods related to them, each jurisdiction must submit technical
documentation of each project to the Infrastructure Department of the MECyT for its approval.
Once the project is approved, funds would be transferred. The responsibility of the area and time
frame for the review of the documents would be indicated in the OM, to avoid delays in the
process.
An assessment of the capacity of the Implementing Agency to implement procurement actions for
the project was carried out by the Directorate General for the Unit of International Finance
(DGUFI) with the resources of a PHRD grant during project preparationbetween April and May
2005 and by the Bank during the pre-appraisal mission. The assessment also reviewed the
organizational structure of the Province of Misiones for implementing the project and the
interaction between the project’s staff responsible for procurement and the relevant central unit
for administrationand finance.
The capacity assessment of the DGUFI and the unit in Posadas (Province of Misiones) as well as
the action plan for improving their procurement capacity includes providing office space, hiring
specialized staff, and maintaining an information system.
The key issues and risks concerning procurement for implementation of the project have been
identified and include: (i)obsolete regulatory framework for the procurement of goods and works
and lack of legal framework for the selection of consulting services, (ii)inadequate office space
and equipment, and (iii)lack of an information system for monitoring project and procurement
progress.
The corrective measures that have been agreed to mitigate each of the above-mentioned risks are:
(i)the Loan Agreement would include Special Provisions and the DGUFI would adopt a Project
OM satisfactory to the Bank before implementation begins, (ii)adequate office space and
equipment would be provided by the MECyT ; (iii)an Excel-based information system to monitor
project and procurement progress. The Project OM includes the agreed NCB documents.
The overall project risk for procurement is AVERAGE.
A risk level would be established for each participating Province based on a self-assessment by
the Province and a review by qualified staff at the DGUFI. The Bank would confirm the resulting
estimate of risk in each case. Based on this approach, the DGUFI would prepare a capacity
assessment for each participating Province before any disbursement is made under Subprojects,
66
The DGUFI will use the Bank’s toolkit for determining the procurement implementing capacity and assessing
The DGUFI will use the Bank’s toolkit for determining the procurement implementing capacity
and assessing risk. The DGUFIwould be using the same questionnaire and methodology usedby
the Bank in classifying the risk of the participatingProvinces.
C. ProcurementPlan
The Borrower, at appraisal, prepared an overall Procurement Plan for the tasks to be carried out
during the Project’s implementation. This model procurement plan is included in the OM.
Procedures for institutional procurement planning are specified in the OM.
The plan has been agreed between the Borrower and the Project Team. It is also to be made
available in the project’s database and in the Bank’s external website. The Procurement Plan
would be updated in agreement with the Project Team. The Bank would review the project
procurement plan annually, including the plan for selecting consultants, and confirm its approval
of the procurement risk classification of each participating Provinces. Before presenting the
consolidated plan to the Bank, the DGUFI would review the plan of each participating Province.
The quality of the plan and its timely presentation to the DGUFI and the Bank would help both to
identify weaknesses in the units. An action plan would be prepared to correct and follow-up on
these issues.
In the case of ICB for works and goods and consultant contracts expected to cost more than
US$300,000 a General Procurement Notice (GNP) is required. The Bank would arrange for its
publication in UNDB online and in dgMarket.
D. Frequency of Procurement Supervision
The Bank would carry out ex-post reviews through an annual supervision mission on
procurement. The DGUFI and the Bank, including procurement and financial management staff,
would meet biannually to discuss
the classification of Provinces, to review their procurement and
action plans and to carry out the ex-post review. The Bank’s project supervision would review
procurement reports and would carry out procurement reviews in the participating Provinces.
Independent Procurement Reviews; For investments under the school activities, the DGUFI
would provide the Bank, no later than six months after the end of each year, the reports of the
independent procurement reviews audited by procurement experts, acceptable to the Bank.
E. Details of the Procurement Arrangements InvolvingInternationalCompetition
A description of the detailed procurement arrangement involving international arrangements,
following the format of the two tables described below is part of the Procurement Plan that would
be made available in the project’s database and in the Bank’s external website.
67
1. Goods, Works, and Non Consulting Services (a) List of contract packages to be procured
1. Goods, Works, and Non Consulting Services
(a) List of contract packages to be procured following ICB and direct contracting:
12
3
4
56
7
8
9
Ref. Contract
Estimated
Procurement
P-Q
Domestic
Review
Expected
Comments
No,
(Descriptio
Cost
Method
Preference
by Bank
Bid-Opening
n)
(yedno)
(Prior/
Date
Post)
(b) ICB contracts estimated to cost above US$5.0 million for works and US$300,000 for goods
and non-consulting services per contract and all direct contracting would be subject to prior
review by the Bank.
2. Consulting Services
(a) List of consulting assignments with short-list of international firms.
5
16
17
Review
Expected
Comments
Method
by Bank
Proposals
(Prior
/
Submission
Post)
Date
(b) Consultancy services estimated to cost above US$200,000 per contract and single source
selection of consultants (firms) would be subject to prior review by the Bank.
(c) Short lists composed entirely of national consultants: Short lists of consultants for services
estimated to cost less than US$300,000 equivalent per contract may be composed entirely of
national consultants in accordance with the provisions of paragraph 2.7 of the Consultant
Guidelines.
F. Special Procurement Conditions
The following Special Procurement Conditions would be included in the Loan Agreement (LA)
and shall apply to procurement under the project:
General
0 Foreign and local contractors, service providers, consultants and suppliers shall not be
required to: (a) register or (b) establish residence in Argentina or in a Province or (c)
enter into association with other national or international bidders as a condition for
submittingbids or proposals.
0 International Arbitration shall be included as a condition of conflict resolution
mechanism in contracts with foreign contractors, service providers, consultants and
suppliers.
0
Invitations to bid, bidding documents, minutes of bid opening, requests for expressions of
interest, and modifications of award of all goods, works and services, including
consultants’ shall be published in the web page of the ONC in a manner acceptable to the
Bank.
0
Witness prices shall not be used as a parameter for a bid evaluation or contract award.
68
Works, Goods and Non-Consultant services 0 A two-envelope system for procurement would not be used
Works, Goods and Non-Consultant services
0
A two-envelope system for procurement would not be used for procurement of goods,
services (other than consultant services) and works.
0
After the public opening of bids, information relating to the examination, clarification
and evaluation of bids, and recommendations concerning awards shall not be disclosed to
bidders or other persons not officially concerned with the bidding process until the award
is published. Bidders shall not be allowed to review or make copies of others bidders’
bids.
0
For contracts for goods, services, other than consulting services, and works, “the most
convenient” bid shall be the one that has been determined to be substantially responsive
and has been determined to be the lowest evaluated bid, provided that the bidder is
determined to be qualified to perform the contract satisfactorily.
The lowest evaluated bidder shall not be required to reduce its bid as a condition of
contract award.
0
Price Adjustment for Civil Works Contracts should follow the Price Adjustment
Methodology agreed between the Government of Argentina and the Bank.
The NCB procedures would be modified to make them identical to the ICB procedures,
except for the following features: (a) advertisement may be limited to the national press
or official gazette, or the ONC website, (b) the currency of the country of the Borrower
may be used for the purposes of bidding and payment, (c)
the bidding period (from the
date of publication of the invitation to bid or the date that the documents are available,
whichever is later to the date of bid opening) may be reduced to 30 days, (d) the
INCOTERM clause DDP may be used for the procurement of goods and (e) the price
adjustment mechanism applicable to NCBs, as stipulated in the above-mentioned Price
Adjustment Methodology.
Consultant services
0 Consultants shall not be required bid or performance securities.
Procurement records. Detailed procurement records, reflecting the Project’s supply of goods,
civil works construction / rehabilitation and consultant services, including records of time taken
to complete key steps in the process and procurement activities related to supervision, review, and
audits, would be maintained by the DGUFI. These records would be maintained for at least two
years after the Project’s closing date. The records for civil works and goods would include public
notices, bidding documents and addenda, bid opening information, bid evaluation reports, formal
appeals by bidders and outcomes, signed contracts with related addenda and amendments, records
on claims and dispute resolutions, and any other useful information. The records for consultant
services would include public notices for expression of interest, request for proposals and
addenda, technical and financial reports, formal appeals by consultants and outcomes, signed
contracts, addenda and amendments, records on claims and dispute resolution and any other
useful information. The participating Provinces would retain all invoices, price comparisons,
bids received, bid evaluation reports, and all of the documentation required under the law and
ensure that it is readily available. The filing, recordkeeping, auditing, reporting, post-review, and
monitoring of the smaller procurement activities are crucial for the successful application of the
funds for ensuring economy, efficiency, and transparency.
69

Annex 9: Economic and Financial Analysis Argentina: Rural Education Improvement Project - PROMER

The economic

(hereafter, the project) is carried out in two parts:

and financial analysis of the “Rural Education Improvement Project - PROMER’

The Annex begins by presenting the findings from a recently conducted rural household survey

The survey of dispersed rural areas

in Argentina is small in scale (with 414 households sampled in the provinces of Chaco, Santa Fe, Santiago del Estero, and Mendoza) in comparison to the widely used Permanent Household Survey (Encuesta Permanente de Hogares, EPH) that covers urban areas in Argentina. However, wage earnings regressions reported in the study provide important insights regarding the potential benefits of this project. Following the presentation of data from the rural household survey, a cost-benefit analysis of Component A of the project (rural education) is presented that indicates an internal rate of return of 14.3 percent under conservative assumptions. The second part of this Annex identifies the fiscal impact of the investment, which appears to be minor considering the magnitude of the educational expenditure in Argentina.

(RHS) conducted for a study on rural poverty in Argentina.

Part I: Economic Benefits for Rural Education in Argentina

Rural poverty is extensive in Argentina, especially in the Northwest and Northeast regions of the country, The Rural Poverty Study shows that Extreme Poverty is higher in rural areas (39 percent) than in urban areas (28 percent). Analysis of available empirical data indicates high potential benefits from improving educational attainment in rural areas. At average values of other variables, the Rural Poverty Study reports that having completed primary education raises the probability of employment in high-return jobs to 18 percent. Raising one’s education to the secondary level shows that those with a secondary education are more than twice as likely to be employed in the high-return nonagricultural employment as workers with only a primary school education.

The Rural Poverty Study further reports that more educated individuals in rural Argentina earn higher incomes than their less-educated counterparts. Interestingly, the findings indicate that workers with completed primary education in the low end of the income distribution receive far lower returns to education than their peers in the middle and high end. Workers in the low end (25th quintile) receive a 10 percent return on completing primary education, as compared to median workers who earn a 27 percent return. The variation in the partial correlation between education and earnings indicates the very high heterogeneity of primary education quality in rural areas. This problem of heterogeneity has a quantitative and a qualitative dimension. Quantitatively, the coverage of early childhood education is very low in rural areas, as is the coverage of secondary education. In the absence of teaching and learning methods and associated materials tailored to the special circumstances of rural schools (such as the presence of multi- grade classrooms), the quality of the education experience varies widely across schools. The findings fkom the earnings function regression are reported below as Table 1.

The extremely high returns reported in the table for levels other than primary education indicate the presence of relatively few individuals in the sample with these levels of education, rather than tremendously high rates of retum to education for these levels. Of the 5 14 individuals whose data was used for the regression analysis reportedbelow, 35.7 percent had less than primary education completed; 52.7 percent had primary education completed; 7.6 percent had secondary education

6 Verner, Dorte, June 2005. Rural Poverty and Labor Markets in Argentina, Working Paper, World Bank.

70

completed, and 3.9 percent had higher education completed. With significant out-migration of more educated individuals
completed, and 3.9 percent had higher education completed. With significant out-migration of
more educated individuals fkom rural areas, the small sample of higher educated workers cannot
be taken as representative, and the coefficients for levels beyond primary education completed
should not be considered as representative of the earnings benefits that would accrue from an
expansion of access to secondary or higher education in dispersed rural areas of Argentina.
Table 1: Determinants of Labor Income in Dispersed Rural Areas of Argentina,
OLS and Quantile Regressions, 2003
Dependent variable: Log labor income
1
1
OLS
25"
50th
75"
90"
I
I
Return
Return
Return
Return
Return
%
P>JtJ
%
P>JtJ
%
P>Jtl
%
P>JtJ
%
P>Jtl
0.30
0.00
0.30
0.00
1.21
0.00
0.80
0.00
Age
1.11
0.00
Female
-53.51
0.00
-43.33
0.00
-35.21
0.00
-34.56
0.00
-17.06
0.00
Education
Primary education complete
7.79
0.00
9.75
0.00
27.12
0.00
25.99
0.00
15.60
0.00
Secondary education complete
University education complete
144.49
0.00
58.57
0.00
72.12
0.00
55.89
0.00
88.89
0.00
353.13
0.00
192.41
0.00
135.84
0.00
92.13
0.00
52.50
0.00
Labor status
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Has a permanent job
Has a formal job
Self-employed
Wage worker
121.00
0.00
138.69
0.00
42.19
0.00
34.72
0.00
54.19
0.00
149.93
0.00
66.36
0.00
59.84
0.00
40.07
0.00
16.53
0.OC
-23.43
0.00
-35.60
0.00
-26.36
0.00
4.50
0.00
24.23
0.OC
-16.14
0.00
-5.45
0.00
-3.34
0.00
12.30
0.00
-7.96
0.OC
Sector
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.0C
Commerce and Services
Agriculture and Livestock
Other sector
Public Administration
-72.11
0.00
-43.62
0.00
-22.59
0.00
-21.96
0.00
-9.06
0.OC
-71.75
0.00
-35.92
0.00
-27.67
0.00
-21.26
0.00
-13.24
0.OC
-13.93
0.00
2.74
0.00
-15.72
0.00
-15.21
0.00
-9.43
0.oc
-81.33
0.00
-36.87
0.00
-31.55
0.00
-27.82
0.00
-12.89
0.0C
Province
Santiago del Estero
Chaco
Mendoza
Constant
-32.23
0.00
-46.74 0.00
-36.43
0.00
-55.34 0.00
-33.77
0.00
-48.93 0.00
62705.68 0.00 436673.57 0.00
djusted R2 (OLS) and Pseudo R2
uantile Regression)
0.13
0.085
0.097
0.103 0.136
province. The percentage return is calculated as (exp (coefficient estimate) - 1) * 100. Number of observations: 5 14
(weighted: 209,984) Source: Rural Household Survey, 2003; This table replicates Table 7.8 in Rural Poverty and
Labor Markets in Argentina, by Dorte Verner, Working Paper, World Bank, June, 2005
Results of Part 11: Cost-benefit Analysis
This section presents a cost-benefit analysis of Component A (rural education) of the project.
Project Interventions and Direct and Indirect Beneficiaries. The
project seeks to
increase
educational attainment among the youth population residing in rural areas, particularly in those
71
regions with the lowest education indicators. The project includes the following interventions: (i) Expansion of
regions with the lowest education indicators. The project includes the following interventions: (i)
Expansion of Pre-School and Lower Secondary Coverage in Rural Areas; (i)Improving
Functioning Conditions of Rural Schools; (iii)Directed Programs for Improving Student
throughput in Rural Primary Education; (iv) Rural School cluster.
Assumptions for Economic Analysis of Equity and Education Project. The following
parameters are considered relevant in estimating the economic benefits of the proposed project:
(i)the length of the project horizon, (ii)the time of impact of the project on the student
population, (iii)the size of the target population, (iv) the existing patterns of repetition and
dropout rates of the rural population, (v) the completionrate for EG3,
Given the medium-to-long-term effect of the changes, the estimates presented in terms of reduced
repetition and dropout rates and increased the EGB3 completion rates, which assume a project
horizon of only five years, are conservative. Therefore, this analysis assumes a longer horizon.
The analysis of the Project uses the following assumptions to measure the direct and indirect
benefits (Table 2).
Table 2: Beneficiaries and Targets
Direct Target Population
868,540
Rural population at school age
(age: 5 to 14). All rural areas.
Pre-school(5 year old children)
89%
Assume 95% enrollment after five years.
EGB3
66% Assume 85% enrollment after five years.
Internal Eficiency (I)
Assume
30% reduction in repetition rates after five
ReducedRepetition Rates EGB 1 and 2
10.1%
years
Assume
30% reduction in repetition rates after five
ReducedRepetition Rates EGB 3
5*6% years
ReducedDropout Rates EGB 1 and 2
O%
Assume 30% reduction in repetition rates after five
years
Assume 30% reduction in repetition rates after five
ReducedDropout Rates EGB 3
25.9%
Table 3: Unit Costs and Cost of Intervention
Total Cost of the Project (Component A)*
Unit Cost of a student (Year 2003)
Estimate average incremental earning of lower
secondary education graduates over non-graduates
(EPH, 2003)
US$244.6 million
US$413/year
US$468/year
Additionally, the following parameters were assumed:
(i) Discount rate of 10 percent;
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