Document of The World Bank FOR OFFICIAL USE ONLY Report No: 83270-BR INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROJECT APPRAISAL DOCUMENT ON A PROPOSED LOAN IN THE AMOUNT OF US$48 MILLION TO THE STATE OF RIO DE JANEIRO, BRAZIL WITH THE GUARANTEE OF THE FEDERATIVE REPUBLIC OF BRAZIL FOR A STRENGTHENING PUBLIC MANAGEMENT AND INTEGRATED TERRITORIAL DEVELOPMENT TECHNICAL ASSISTANCE PROJECT January 9, 2014 Disaster Risk Management and Urban Sector Unit Sustainable Development Department Brazil Country Management Unit Latin America and the Caribbean Region This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made available in accordance with the Bank's policy on Access to Information. CURRENCY EQUIVALENTS (Exchange Rate Effective January 9, 2014) Currency Unit = Real Real 2.40 = US$1.00 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS AGE Auditoria Geral do Estado - State Audit Agency AGETRANSP Agencia Reguladora de Transporte - State Transport Regulatory Agency AMTU-RJ Ag6ncia Metropolitana de Tranportes Urbanos - Metropolitan Urban Transport Agency BI Business Intelligence CAPSad Centros de Atenqdo Psicossocial 6lcool e drogas - Psychosocial Treatment Centers for alcohol and drugs CEHAB Companhia Estadual de Habitaqdo - State Housing Company CPS Country Partnership Strategy DPL Development Policy Loan DRM Departamento de Recursos Minerais - Department of Mineral Resources EMF Environmental Management Framework GDP Gross domestic product GORJ State Government of Rio de Janeiro IBRD International Bank for Reconstruction and Development IDA International Development Association IDEB Indice de Desenvolvimento da Educaqdo B6sica - Basic Education Development Index IDERJ Indice de Desenvolvimento da Educaqdo B6sica do Estado do Rio de Janeiro - Rio de Janeiro Education Development Index IFR Interim Unaudited Financial Reports IML Instituto Medico Legal - Institute ofLegal Medicine INEA Instituto Estadual do Ambiente - State Environmental Institute IPEA Instituto de Pesquisa Econ6mica Aplicada - Institute for Applied Economic Research IPVA Imposto sobre a Propriedade de Veiculos Automotores - Vehicle Property Tax ISP Instituto de Seguranqa Publica - Institute for Public Security ISR Implementation Status Report ITERJ Instituto de Terras e Cartografia do Estado do Rio de Janeiro - Rio de Janeiro State Land and Mapping Institute M&E Monitoring and Evaluation MP Ministerio Pblico do Estado do Rio de Janeiro - Rio de Janeiro State Public Prosecuter MSM M6dulo de Sadde Mental - Mental health module NBC Normas Brasileiras de Contabilidade - Brazilian Accounting Rules ORAF Operational Risk Assessment Framework PAHI Programa de Apoio aos Hospitais Regionais do Interior - Program to Support Interior Regional Hospitals PDO Project Development Objective PLID Programa de Identificagdo e Localizaqdo de Desaparecidos - Program for the Identification and Localization of Missing People QCBS Quality and Cost -Based Selection RPF Resettlement Policy Framework SAERJ Sistema de Avaliaqdo da Educaqdo do Estado do Rio de Janeiro - Rio de Janeiro State Education Evaluation System SEASDH Secretaria Estadual de Assistincia Social e Direitos Humanos - State Secretariat of Social Assistance and Human Rights SEEDUC Secretaria Estadual de Educagdo - State Secretariat of Education SEFAZ Secretaria Estadual da Fazenda - State Secretariat of Finance SEH Secretaria Estadual de Habitaqdo - State Secretariat of Housing SEOBRAS Secretaria Estadual de Obras - State Secretariat of Public Works SEPLAG Secretaria Estadual de Planejamento e Gestdo - State Secretariat of Planning and Management SES Secretaria Estadual de Sadde - State Secretariat of Health SEDEC Secretaria Estadual de Defesa Civil - State Secretariat of Civil Defense SENASP Secretaria Nacional de Seguranga Pblica - National Secretariat for Public Security SETRANS Secretaria Estadual de Transporte - State Secretariat of Transport SIAFEM Sistema Integrado de Administragdo Financeira para Estados e Municipios - Integrated Financial Administration System for States and Municipalities SISPAT Sistema de Gestdo do Patrim6nio Imobiliario do Estado - State Real Estate Management System SUAS Sistema Onico de Assistincia Social - Social Assistance System UGP Unidade Gestora de Programa - Project Management Unit UPA Unidade de Pronto Atendimento - Emergency Care Unit Regional Vice President: Hasan A. Tuluy Country Director: Deborah L. Wetzel Sector Director: Ede Jorge Ijjasz-Vasquez Sector Manager: Anna Wellenstein Task Team Leader: Alessandra Campanaro  BRAZIL Strengthening Public Management and Integrated Territorial Development Technical Assistance Project TABLE OF CONTENTS Page I. STRATEGIC CONTEXT .................................................................................................1 A. Country Context ......................1.......................... B. Sectoral and Institutional Context......................................... 2 C. Higher Level Objectives to which the Project Contributes ........... ........ 3 II. PROJECT DEVELOPMENT OBJECTIVES ........................................................... 5 A. PDO........................................................ 5 Project Beneficiaries .....................5.........................5 PDO Level Results Indicators.............................................. 6 III. PROJECT DESCRIPTION ......................................................................................... 6 A. Project Components ..................................... ........ 6 B. Project Cost and Financing ............................... ......... 8 IV. IM PLEM ENTATION .................................................................................................. 8 A. Institutional and Implementation Arrangements ..................... ..... 8 B. Results Monitoring and Evaluation .................................... 10 C. Sustainability......... ........ ............................... 11 V. KEY RISKS AND MITIGATION MEASURES..........................................................11 A. Risk Ratings Summary Table ...................................... 11 B. Overall Risk Rating Explanation ....................................... 11 VI. APPRAISAL SUMMARY ......................................................................................... 12 A. Economic Analysis ............................................. 12 B. Technical .................................................... 13 C. Financial Management....................... ................ 13 D. Procurement ......................................... ......... 14 E. Social (including Safeguards) ...................................... 14 F. Environment (including Safeguards) .................................. 15 ANNEXES Annex 1: Results Framework and Monitoring. ...................................16 Annex 2: Detailed Project Description ............................... .........21 Annex 3: Implementation Arrangements ......................................26 Annex 5: Implementation Support Plan.......................................42 Annex 6: Economic and Financial Analysis ............................... .....45 TABLES Table 1 Project Costs and Preliminary Overview of Funds by Component ................8 Table 2 Implementation Arrangements by Component and Subcomponent ...............9 Table A3-1. Agencies Involved in Project and Defined Roles................ ........26 Table A3-2. Institutional Responsibilities for the Production of Documents and Reports .....27 Table A3-3. Institutional Arrangements for Financial Management............... ......28 Table A3-4. Procurement Method Thresholds..............................33 Table A6-1. Economic and Fiscal Impacts of Selected Project Activities ................46 FIGURES Figure 1. Fit of Proposed Project with World Bank Analytical and Lending Program in Brazil, Rio de Janeiro State and Rio de Janeiro Municipality..............................4 Figure A3-1. Institutional Arrangements for Project ......................... .....26 Figure A3-2. Funds Flow Mechanism ...........................................30 PAD DATA SHEET Brazil Strengthening Public Management and Integrated Territorial Development Technical Assistance Project (Pl26735) PROJECT APPRAISAL DOCUMENT LATIN AMERICA AND CARIBBEAN LCSDU Report No. 83270-BR: Basic Information Project ID Lending Instrument EA Category Team Leader P126735 IPF B - Partial Assessment Alessandra Campanaro Project Implementation Start Date Project Implementation End Date January 31, 2014 December 30, 2017 Expected Effectiveness Date Expected Closing Date January 30, 2014 June 30, 2017 Joint IFC Sector Manager Sector Director Country Director Regional Vice President Anna Wellenstein Ede Jorge Ijjasz-Vasquez Deborah L. Wetzel Hasan A. Tuluy Borrower: Rio de Janeiro State Responsible Agencies: UGP 1: Rio de Janeiro State Secretariat of Planning (SEPLAG) Contact Person: Marco Antonio MagalhAes Pacheco Filho Telephone No.: (55-21) 2333-1731 Fax No.: (55-21) 2332-7020 Email: marco.pacheco @planejamento.rj.gov.br UGP 2: Rio de Janeiro State Secretariat of Public Works (SEOBRAS) Contact Person: Paulo Costa Telephone No.: (55-21) 2333-0165 Fax No.: (55-21) 2333-0877 Email: pcesar@obras.rj.gov.br UGP 3: Rio de Janeiro State Secretariat of Finance (SEFAZ) Contact Person: Licia Mascarenhas Telephone No.: (55-21) 2334-4637 Fax No.: (55-21) 2334-4513 Email: Imascarenhas@fazenda.rj.gov.br Supervisor: Vice-Governor's Office Contact Person: Bruno Sasson Telephone No.: (55-21) 2334-3658 Fax: No (55-21) 2334-3223 Email: bruno.sasson@vicegovernadoria.rj.gov.br Contact: Bruno Sasson Title: Technical Advisor Telephone No.: (55-21) 2334-3658 Email: bruno.sasson@vicegovernadoria.rj.gov.br Project Financing Data(in USD Million) [x ] Loan [ ] Grant [ ] Other ] Credit [ ] Guarantee Total Project Cost: US$ 48 million Total Bank Financing: US$ 48 million Financing Gap:0 Financing Source Amount BORROWER/RECIPIENT 0 Bank Financing 48 Total 48 Expected Disbursements (in USD Million) Fiscal Year 2013 2014 2015 2016 2017 Annual 0 4 12 18 14 Cumulative 0 4 16 34 48 Proposed Project Development Objective(s) The objective of the Project is to support the Borrower to improve service delivery through introducing performance-based management information technologies and an Integrated Territorial Development Approach in key public services. Components Component Name Cost (USD Millions) Strengthening metropolitan management through integration and coordination 16.4 in urban development, housing, transport, environment and disaster risk management Improving living conditions in the most vulnerable social settings 23.0 Strengthening core finance and taxation functions 6.1 Project management 2.5 Institutional Data Sector Board Urban Development Sectors / Climate Change Sector (Maximum 5 and total % must equal 100) Major Sector Sector % Adaptation Mitigation Co-benefits % Co-benefits Sub-national government administration 34 Public administration - other social service 25 Public administration - water, sanitation 25 and flood protection General education sector 8 Health 8 I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project. Themes Theme (Maximum 5 and total % must equal 100) Major theme Theme % Other urban development 34 Natural disaster management 25 Other social development 25 Education for all 8 Health system performance 8 Total 100 Compliance Policy Does the project depart from the CAS in content or in other significant respects? Yes [ ] No [x] Does the project require any waivers of Bank policies? Yes [ ] No [x] Have these been approved by Bank management? Yes [ ] No [ ] Is approval for any policy waiver sought from the Board? Yes [ ] No [x] Does the project meet the Regional criteria for readiness for implementation? Yes [x] No [ ] Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 x Natural Habitats OP/BP 4.04 x Forests OP/BP 4.36 x Pest Management OP 4.09 x Physical Cultural Resources OP/BP 4.11 x Indigenous Peoples OP/BP 4.10 x Involuntary Resettlement OP/BP 4.12 x Safety of Dams OP/BP 4.37 x Projects on International Waterways OP/BP 7.50 x Projects in Disputed Areas OP/BP 7.60 x Legal Covenants Financing Agreement Reference Recurrent Due Date Frequency Schedule 2, Section I, A, 6 No Not later than 30 Once days after the Effectiveness Date Description of Covenant The Borrower shall enter into separate agreements with INEA and DRM (the INEA and DRM Agreements). Financing Agreement Reference Recurrent Due Date Frequency Schedule 2, Section I, A, 7 No Not later than 30 Once days after the Effectiveness Date Description of Covenant The Borrower shall enter into a separate agreement with MP (the MP Agreement). Financing Agreement Reference Recurrent Due Date Frequency Schedule 2, Section I, A, 8 No Not later than 30 Once days after the Effectiveness Date Description of Covenant The Borrower shall enter into separate agreements with CEHAB and ITERJ (the CEHAB and ITERJ Agreements). Conditions Financing Agreement Reference Type Section 5.01 Effectiveness Description of Condition SEOBRAS Project Management Unit has been created and fully staffed in accordance with the provisions of Section I.A.3 of Schedule 2 to this Agreement. Team Composition Bank Staff Name Title Specialization Unit Alessandra Campanaro Senior Infrastructure Finance Urban Development, TTL LCSDU Specialist Georges Darido Senior Transportation Specialist Senior Transportation Specialist LCSTR Gunars Platais Senior Environmental Senior Environmental Economist LCSEN Economist Alberto Costa Senior Social Development Senior Social Development LCSSO Specialist Specialist Fabiana Meacham Urban Infrastructure Analyst, Urban Development LCSDU Consultant Barbara Bruns Lead Education Economist Lead Education Economist LCSHE Ezau Pontes Senior Health Specialist Senior Health Specialist LCSHH Roland Clarke Lead Economist and Sector Lead Economist and Sector LCSPR Leader, PREM Leader, PREM Fanny Weiner Public Sector Management Public Sector Management LCSPS Specialist Specialist Magnus Lindelow Sector Leader HD Sector Leader LCSHD Frederico Ferreira Disaster Risk Management Disaster Risk Management LCSDU Consultant Juan Carlos Parra Osorio Social Development Specialist Social Development Specialist SDV Paul Kriss Sector Leader SDN Urban Development LCSSD Non Bank Staff Name Title Office Phone City Anaclaudia Rossbach Senior Housing Specialist Sao Paulo, Brazil Locations Country First Location Planned Actual Comments Administrative Division Brazil Rio de Janeiro Rio de Janeiro x  I. STRATEGIC CONTEXT A. Country Context 1. Over the last two decades, Brazil has made significant advances in economic and public sector management, poverty reduction and other social outcomes. Consecutive governments have maintained sound macroeconomic policies, achieving low inflation, robust economic growth and significant job creation. Growth in employment and labor incomes, complemented by targeted social assistance programs such as Bolsa Familia, has contributed to a reduction in the share of Brazilians living below the extreme poverty line from 10.5 percent at the start of the 2000s to 4.7 percent in 2011. Inequality has also fallen, as reflected in a decline in the Gini coefficient from 0.59 to 0.53 over the same period. 2. However, Brazil's development is at a crossroads. The country is gradually recovering from a slowdown that started in mid-2011. Growth fell from 7.5 percent in 2010 to 2.7 percent in 2011 and only 0.9 percent in 2012. It is not expected to exceed 2.5 percent in 2013. The slowdown was very much associated with external events and was mitigated by appropriate fiscal and monetary policy responses, as well as a sound banking system, large reserves and moderate debt levels. But future growth is constrained by structural bottlenecks in infrastructure, human capital and poor financial intermediation - all of which undermine the prospects for consolidating the last decade's gains in living standards. 3. At the same time, a growing middle class has drawn attention to the failings of the political system and its inability to deliver public services efficiently and cost-effectively. Mass demonstrations in most large cities during June 2013 over corruption and the availability and quality of education, health, transport and other public services sent a strong message to all levels of Government. Responding to these demands without destabilizing the macroeconomic framework poses a severe challenge. So does the persistence of stark disparities between Brazil's regions. 4. The State of Rio de Janeiro (RJ) is the third largest in Brazil. The Rio de Janeiro Metropolitan Region (RMRJ), with a population of 16 million, is the nation's second largest metropolitan area. As the historical capital and a major tourism destination, the RMRJ has special significance for Brazill. The region's economy and urban growth have suffered considerably since the 1970s as a result of the relocation of the capital to Brasilia, as well as industrial restructuring, and social problems. Rio's share of the country's population and GDP declined between 1970 and 2001. However, growth has recovered significantly in recent years, and the RMRJ has entered into a new era of development, supported by new industrial poles (petrochemicals, metallurgical, port, logistics, and creative industries) and the opportunities provided by being the host city of mega-events such as the 2016 Summer Olympic Games and the 2014 World Cup. 5. Despite considerable improvements in the last decade, public service delivery in the state and in the RMRJ especially, has not kept up with the growing expectations of the population. In 1 The RMRJ comprises 19 municipalities, of which the Municipality of Rio de Janeiro (MRJ) is the most important. The MRJ contributes 50 percent of the state's Gross Domestic Product (GDP), equivalent to 69 percent of the RMRJ's GDP, and 74 percent of the state's 16 million inhabitants live in RMRJ. 1 particular, citizen dissatisfaction with public transport service quality and tariffs was one of the catalysts for the protest that paralyzed many Brazilian metropolitan areas, including the RMRJ, in June 2013. More generally, the protests reflect a broader perception of inadequate public services, of concerns with overall government investments and management, and of frustration with prosperity not shared. In many important ways these protests have increased the pressure on governments across Brazil to implement significant reforms to improve public service delivery and enhance the quality of public sector management. 6. The State of Rio de Janeiro faces important challenges to reduce poverty and boost shared prosperity. Extreme poverty is higher than those of states with similar average per capita household income2. While the State of RJ has the third largest average per capita household income among Brazilian states, it is ranked 11th in the list of states with incidence of extreme poverty. Also, although income inequality (measured by the Gini coefficient) has decreased, it has done so at a slower pace than in other Brazilian states and it is currently above all 3 southeastern states B. Sectoral and Institutional Context 7. Rio's territory is spatially constrained and environmentally fragile. Urban growth requires area-wide, integrated planning and coordination for housing development, transport, environmental protection, and disaster risk management. With faster population growth in the outer municipalities, urban settlements have expanded into marginal land, creating a vulnerable situation that is exacerbated by the low capacity of municipal governments to plan for and supply basic services. The peculiar topography of the region and shortage of affordable housing have led to the rapid growth of informal settlements, many of which are located in environmentally fragile hillsides that are susceptible to serious flooding and landslides. This situation is worsened by the lack of affordable and fast transport linkages to the city center. 8. Proactive urban and social development strategies and policies are urgently needed to ensure the reemergence of a competitive and green metropolitan region that is environmentally sustainable and offers a high quality of life as well as equitable access to opportunities and services. These strategies aim at avoiding the pitfalls of earlier boom periods (1960s and 1970s), which were accompanied by significant increases in informal settlements (favelas) and the deterioration of old industrial neighborhoods. Of particular concern is that future growth will be taking place in a fragile natural environment that is highly vulnerable to natural disasters such as flooding and landslides. The government of Rio de Janeiro (GORJ) has recognized the severity of the challenge and is addressing them proactively. 9. The integrated territorial approach to development chosen by the GORJ highlights the interconnections between key sectors that have an impact on the most vulnerable residents and require immediate policy focus. In particular, the approach recognizes that the development of a state facing the complex challenges of a growing metropolis and its periphery cannot be the 2 The State of RJ's has extreme poverty headcount of 3.9 percent, compared to 2.6 percent of SAo Paulo, 2.2 percent for Santa Catarina, 2.4 percent for Parani. The State of RJ's Gini coefficient decreased from 0.568 to 0.532 from 2001 to 2011. However, while in the mid- 1990s the State's level of inequality was lower than the national average, by the end of the 2000s, it was practically equal to the still high Brazilian average. 2 result of a sectoral approach based on silos, but rather of the implementation of a holistic vision that recognizes the interdependence of governance, access to infrastructure and social services, security and sustainable planning, housing, education, and health as key elements. Such an approach could enhance opportunities and accessibility, and contribute to help strengthen governance, and efficiency and effectiveness of investment. C. Higher Level Objectives to which the Project Contributes 10. The activities undertaken by the proposed project support would contribute to the reduction of extreme poverty and increase in shared prosperity through their support for improved service provision at the metropolitan level and better institutional capacity at the State level. Many of the negative impacts of persistent inequality and poverty throughout the region can be addressed through the project's integrated territorial approach, which aims to provide greater access to public services and opportunities for the region's most vulnerable residents by strengthening metropolitan planning and coordination across multiple sectors. 11. The proposed operation is also in line with the Borrower's reform program to improve its effectiveness and efficiency in the provision of public services, as evidenced in its Strategic Plan for the period 2012-2031. This plan introduces a multi-sectoral approach applied to medium to long term planning and it links it with budgetary plans. 12. The proposed operation is fully consistent and closely aligned with the objectives of the World Bank Group's Country Partnership Strategy (CPS) for Brazil covering 2012-2015 (Report No. 63731-BR), discussed by the Executive Directors on November 1, 2011.4 The proposed operation will advance the Bank's program in the first strategic objective of the CPS by implementing results-based management practices in several areas of the State, including real- estate management, education, health and social programs. These improved management systems will increase the productivity of public and private investments in the future. Furthermore, the operation will address the second strategic objective by shedding light on ways in which public services such as health and education can be improved and better reach low- income populations in the State. The project will also provide technical support to enhance low- income housing policies and increase the effectiveness of social programs aimed at improving living conditions for vulnerable populations. Activities that strengthen the metropolitan framework for governance will support the third CPS objective by allowing the state to evaluate the impact of interventions that promote regional economic development. Finally, the operation supports the fourth CPS objective through activities aimed at improving disaster risk management capacity as well as the State's early warning system for high rainfall events, building resilience to climate shocks. Finally, the operation will address the CPS directive to engage with sub-national governments. This operation engages with the State of Rio de Janeiro, with which the Bank has a long-standing and solid relationship. 4 From 2012-2015, the Bank will focus on: (i) increasing the volume and productivity of public and private investment; (ii) improving the quality of public services for low-income households and expanding their provision through public and private channels; (iii) promoting regional economic development through improved policies, strategic infrastructure investments and support for private sector actors in frontier areas; and (iv) further improving the sustainable management of natural resources and enhancing resilience to climate shocks while maximizing contributions to local economic development and helping to meet rising global food demand. 3 Figure 1. Fit of Proposed Project with World Bank Analytical and Lending Program in Brazil, Rio de Janeiro State and Rio de Janeiro Municipality Brad G"reen reg NTA onthe Stanm o NIA and Uuidancu in TransportNLTA Urban Polution Implementation ofMinha (91373) Management in Brazi Casa kMbna 1ida and (PI27510) Integration in NatioDal Housing Plan (P125651) COUn111r1 i Land Markut Instrutmnts for Govancu tihe azlian Clanate Brazil Exadicatig ASSUSSUt cb8ange Policy Fxtreme Poerty (P127740) (?129712) (P129384) Bazi Coutry NLAe Bringing the State Back to Fee-Based Analytical and Pareat C the mivias of Rio de Adviory Srvices to the Sttgy (Cps) Cit, Evelopmit Janeiro Municiplity of Rio d trougthe&nag Publin (PI11238) (PI23747) Janero MAnagemeot and integrated - merasmg the (PI2615) Territoeial Development voTechical AssistanLe Loan productavity of pubke Rio d Janum Low Rio City Wide Approach (PI26735) and private Carbon City Development tO arbon FiMi. swesment PoDn (PE6194)O h (P130612) Toinprove service deay quaty of low- oush toducing mome public perforance-based servces and manapoemunt. informacio expandmg publ and tectnologies and an private pro,oon integrated terrtoril promol-g -eiRoad Jamm Rio de Janeiro Upgrading and Greenling development approach in key econo- pblic Stlor Mass Transit II the Rio de Jano pbcerices. development Modernization (1111996) Urban R ail Systmn Project - >p g th(0668 (PI1630) sutauable natmanagerent fnd DPL 1 - Fiscal DPL 2 - Rio de DPL 3 - Fiscal DPL 4 -Rio de Renovaing and enhani reln a Sistainabli, laneiro Consolidation, Janeiro State Strengthening to clnl cshoc Human Metropolitan Huanan Urban TIanaport Public Development Urban and Developaent and and Fiscal Management and Housing DPI. Public Financial Management TAT Competitiveness (P122391) Management DPL DPL (P106769) DPI (P126465) (P147695) (1117244) Rio dc nneiru Municipality Rio dc Junro Setungthtining i Fiscal Consolidation for Public SectoManageent liciency and Crowth DP. TAL (Mnicipal) (P111665) (127245) Links with other Bank operations 13. Over the past years the Bank developed a close partnership with the state of Rio de Janeiro. The state's reform program received support through two Development Policy Loans (DPLs): the Fiscal Sustainability, Human Development and Competitiveness DPL (P 117244, closed in December 2010), and the Metropolitan Urban and Housing DPL (P122391, closed in December 2012). A third DPL, the Fiscal Consolidation, Human Development and Public Financial Management Development Policy Loan (P126465, closing January 2014), focuses on medium-term sustainable fiscal measures as well as health and education. This third DPL is especially linked to Component 3 of the proposed operation as it supports two main pillars of tax administration: implication of registration in the synchronized taxpayer registration system with the Federal and Municipal tax administrations and implementation of the taxpayer general ledger to allow better control of debts. 4 14. A fourth DPL, the Enhancing Public Management for Service Delivery in Rio de Janeiro Development Policy Loan (P147695) was approved on November 21, 2013. It will focus on metropolitan mobility and fiscal management. These issues are also tackled in the proposed operation (component 1 b and 3) and will complement the DPL through studies around the Bilhete Unico and improvements around quality of public services including fiscal aspects. The Bank has an extensive engagement in urban transport through the Rio de Janeiro Mass Transit Project II (Pl11996). Finally the Bank also is supervising a Technical Assistance Loan, the Renovating and Strengthening Public Management TAL (P106768) focusing on public sector management, education, and health. The proposed operation is closely linked to this latter loan. The proposed operation expands upon the on-going TAL to support areas of metropolitan and territorial governance, public transportation, the environment and disaster risk management, housing and land regularization, and social development. In other words, the proposed technical assistance project will provide a platform for continued integrated dialogue over the several areas of the GORJ's reform and development strategy. II. PROJECT DEVELOPMENT OBJECTIVES A. PDO 15. The objective of the Project is to support the Borrower to improve service delivery through introducing performance-based management information technologies and an Integrated Territorial Development Approach in key public services. 16. For the purpose of this project, integrated territorial development is the approach taken by the state to harmonize and coordinate planning and service delivery at the level of the metropolitan region, operating along three dimensions: (i) cross sectoral integration of land use planning, housing, transport, disaster risk management, environment etc.; (ii) multi-jurisdictional coordination among the various municipalities and state agencies; and (iii) through a spatially integrated approach to reduce service delivery gaps between high- and low-income areas. The urban agglomeration around the City of Rio and its peripheral areas (composed of 19 municipalities) poses a territorial challenge as it suffers from the lack of a mid-level governance structure capable of tackling the continuous development of the territory and integrated planning of services. Project Beneficiaries 17. The estimated number of beneficiaries of this operation is 16 million people, of which 8.3 million are female. Though most of the activities under this project are focused on the metropolitan region, the population of Rio de Janeiro state is representative of the number of beneficiaries because of the activities in Component 1 (d) that support the installation of an early warning system for high rainfall events that will cover all municipalities of the state. 18. Overall, the activities supported by this loan are expected to have significant and positive impact on beneficiaries in terms of poverty alleviation and social development. The activities to This represents the population of Rio de Janeiro State as reported by the IBGE (Instituto Brasileiro de Geografia e Estatistica - Brazilian Institute of Geography and Statistics) 2010 Census. 5 be undertaken address key issues and needs related to historical social and spatial segregation in the RJMR. They include violence, crime, and the long absence of state institutions in most informal settlements; as well as the precariousness of the metropolitan transportation system, the lack of affordable housing alternatives for lower income families, and the issue of land tenure regularization. The proposed operation will also contribute to addressing the poor coordination and fragmentation of metropolitan planning and disaster risk management. The activities are expected to bring major benefits to the poor population living in informal and precarious settlements, substandard housing, and at-risk and/or distant areas. PDO Level Results Indicators 19. Project development objective-level results indicators are the following: * Integrated Metropolitan Plan presented to the State Assembly for approval. * Percentage of target population covered by Rio Sem Miseria core program. * Ratio measuring the collection of the value-added tax on goods and services (ICMS) as a proportion of monthly retail sales volume. III. PROJECT DESCRIPTION A. Project Components 20. The proposed project will have four components. The proposed activities will encompass the following areas: public financial management, metropolitan and territorial governance, housing and land regularization, education, health, environment and disaster risk management, and social development. The proposed components are presented below: Annex 2 includes a more detailed description of the project activities. 21. Component 1: Strengthening metropolitan management through integration and coordination in urban development, housing, transport, environment and disaster risk management (US$ 16.4 million) (a) Strengthening of the Borrower's metropolitan governance framework through, inter alia: (i) monitoring and evaluation of territorial development impacts; and (ii) the development of an integrated master plan for metropolitan urban development. (b) Strengthening of the Borrower's metropolitan transport management capacity through, inter alia: (i) the evaluation and consolidation of the existing transportation ticketing system (Bilhete Unico); (ii) the definition of an action plan for the revision of the AMTU-RJ's role; and (iii) the strengthening of the AGETRANSP institutional capacity. (c) Strengthening of the Borrower's metropolitan housing management capacity through, inter alia: (i) the carrying out of technical studies to develop an institutional strengthening proposal for the SEH and the CEHAB (ii) the carrying out of technical studies to design low income housing programs and integrate those programs with social programs; and (iii) the design of an integrated plan for sustainable urban land regularization. (d) Improvement of the Borrower's disaster risk management capacity and early warning system for high rainfall events through, inter alia: (i) the development and implementation of 6 hardware for the existing Borrower's early warning system to monitor and respond to geological and hydrological disaster risks; (ii) the carrying out of a study to model the hydrological disaster warning system, including basic protocols to be used by the Borrower and its municipalities; (iii) the mapping of the Borrower's landslide and flood risks; and (iv) the carrying out of training to various Borrower's disaster risk management teams. 22. Component 2: Improving living conditions in the most vulnerable social settings (US$ 23 million) (a) Strengthening of the Borrower's capacity to implement an integrated and evidence -based medium-term social development strategy through, inter alia the support to the Borrower's restructuring and strategic planning process for social programs by: (i) developing and implementing a strategic plan for the SEASDH; (ii) carrying out technical studies to design a model for a monitoring and evaluation system, and acquisition of information management hardware and software; (iii) strengthening of existing public sector management procedures and administrative systems; and (iv) strengthening the SUAS' management and effectiveness capacity. (b) Enhancement of the Borrower's capacity to identify, locate and support missing and involuntarily interned people through, inter alia: (i) the development of a software and a methodology (for reporting, classifying and analyzing data on missing people) to implement the PLID; and (ii) the extension of the MSM Information System to all the hospitals located in the Borrower's territory. (c) (i) Strengthening of the Borrower's: (A) education management capacity including evidence-based policy making capacity for secondary education; and (B) management capacity on school infrastructure; and (ii) enhancement of the quality of secondary education, all through, inter alia: (1) the expansion of SEEDUC's analytical and system management capacity; (2) the evaluation of infrastructure conditions in the Borrower's secondary schools; and (3) the development and implementation of a 4-year plan to build and refurbish necessary secondary 6 school infrastructure (d) Strengthening of the Borrower's health monitoring and evaluation processes and public hospitals' information systems through, inter alia:(i) the evaluation of the comparative performance of different models of organizing and delivering primary health care; and (ii) the analysis and restructuring of administrative and clinical processes in public hospitals.7 23. Component 3: Strengthening core finance and taxation functions (US$ 6.1 million) Development and adoption of new practices aimed at strengthening the Borrower's tax administration and financial management systems through, inter alia: (i) (I) the carrying out of technical studies to develop a methodology for estimating lost revenue due to tax waivers, (II) Newly introduced activities will expand SEEDUC's capacity through selective recruitment, improvement in data systems and financing of program impact evaluations, carry out a mapping of infrastructure in the state's secondary schools (many of which function only at night and in "borrowed" primary school buildings that are not adequate for quality secondary education), as well as create a 4-year infrastructure plan necessary for a network of high quality, full-day schools, particularly at the secondary level. The scaling up of the overall component entails increased support to the state in strengthening its capacity to manage school infrastructure. The proposed project will finance the studies described, not subsequent infrastructure work. 7With this proposed operation, this component has been scaled up to contribute to building state capacity to improve coverage and quality of health services. The state requested that the Bank finance activities related to measuring performance of primary care delivery and analyzing administrative and clinical processes in hospitals. These activities were indicated as priorities that did not have sufficient funding. 7 the development of proposed revisions to the tax collection procedures, and (III) the design and implementation of diagnostic mechanisms needed to implement best practices in debt management; (ii) the implementation of a control system for the Borrower's Automobile Property Tax (IPVA); (iii) the development of procedures, processes, manuals and databases to improve the management and costing of public investment programs, to better assess medium term implications of fiscal policy decisions; and (iv) provision of training for technical specialists and managers. 24. Component 4: Project management (US$ 2.5 million) Provision of support for the overall management of the Project. This component will be administered day to day by the SEOBRAS UGP (see Section IV, A on implementation arrangements), however the decisions about its funding allocation will be taken by the Coordination Committee. The project will support project management and provide implementation support including technical, administrative and fiduciary support, support for monitoring and evaluation, data collection, and stakeholder involvement. B. Project Cost and Financing 25. The project costs and financing by components are shown in Table 1. Table 1 Project Costs and Preliminary Overview of Funds by Component Project Components Project cost (US$ m) IBRD Financing % Financing 1. Strengthening metropolitan management through 16.4 16.4 100% integration and coordination in urban development, housing, transport, environment and disaster risk management 2. Improving living conditions in the most vulnerable 23.0 23.0 100% social settings 3. Strengthening core finance and taxation functions 6.1 6.1 100% 4. Project management 2.5 2.5 100% Total Costs Total Project Costs 48.0 48.0 100% Front-End Fees* 0 0 Total Financing Required *A Front End Fee equal to one quarter of one percent (0.25%) of the loan amount will be payable from the Borrower's own resources. IV. IMPLEMENTATION A. Institutional and Implementation Arrangements 26. A Project Operational Manual has been prepared and approved for this Project. The Manual presents governance measures, including institutional and implementation set up. The institutional framework for the operation, as summarized below and in Annex 3, is moderately complex due its inter-sectoral nature. However, previous experience in supervising complex Bank project with the State of Rio has been positive and the Vice-Governor's office direct involvement in project coordination will further strengthen project oversight. Activities are divided between three Project Management Units (Unidades Gestoras de Programa, UGPs), and overseen by a Coordination Committee. Implementation arrangements have been thoroughly discussed with the client and the Bank team in order to streamline them as much as possible, and 8 ensure full buy in by all stakeholders . Table 2 presents implementation arrangements by component and subcomponent. Table 2 Implementation Arrangements by Component and Subcomponent Component UGP Implementing Agency Type of Agency Component 1: Strengthening metropolitan management (a) Strengthening metropolitan governance SEOBRAS (State SEOBRAS State Secretariat framework Secretariat of Public Works) (b) Strengthening metropolitan transport SEOBRAS State Secretariat of Transport (SETRANS) State Secretariat management capacity (c) Strengthening metropolitan housing SEOBRAS State Secretariat of Housing (SEH) State Secretariat management capacity Rio de Janeiro State Housing Company (CEHAB) Public company legally bound with SEH Rio de Janeiro State Land and Mapping Institute (ITERJ) Public Institute legally bound with SEH (d) Improvement of DRM capacity SEPLAG (State Department of Mineral Resources (DRM) Independent State Secretariat of (manages activities under SEPLAG) Entity Planning and Management) State Environmental Institute (INEA) Public Institute Secretaria do Estado de Defesa Civil (SEDEC) State Secretariat Component 2: Improving living conditions in most vulnerable social settings (a) Strengthening capacity to implement SEPLAG State Secretariat of Social Assistance and State Secretariat medium-term social development strategy Human Rights (SEASDH) (b) Enhancement of capacity to identify, SEFAZ Rio de Janeiro State Public Prosecutor (MP) Independent State locate and support missing people Entity (c) Strengthening education management SEPLAG State Secretariat of Education (SEEDUC) State Secretariat capacity and secondary school quality (d)Strengthening health monitoring and SEPLAG State Secretariat of Health (SES) State Secretariat evaluation processes I I Component 3: Strengthening core finance and taxation functions Development and adoption of new practices SEFAZ (State SEFAZ State Secretariat aimed at strengthening the Borrower's tax Secretariat of administration and financial management Finance) systems Component 4: Project Management Overall administration of project SEOBRAS SEOBRAS State Secretariat 27. The three UGPs are as follows: (i) the SEPLAG UGP; (ii) the State Secretariat of Public Works (SEOBRAS) UGP; and (iii) the State Secretariat of Finance (SEFAZ) UGP. The SEPLAG UGP will manage Component 2a, 2c, 2d and Component Id. The SEOBRAS UGP will be responsible for issues covered in Component la, lb, Ic, and Component 4 covers urban development, metropolitan governance, urban transport and housing. The SEFAZ UGP will manage the finance activities under Component 3, and Component 2b. This is due to special nature of the relationship with the Public Prosecutor which the client deems best to be dealt under the SEFAZ UGP umbrella. 8 The option of a single UGP was discarded due to insufficient capacity within SEPLAG to handle the large volume of technical assistance activities. 9 28. As INEA and DRM are institutions independent of the state, for the purposes of implementing Component Id, SEPLAG will enter into cooperation agreements with INEA and DRM to ensure the institute's full commitment to carrying out project activities. Similarly, for the purposes of implementing Component 2b, SEFAZ will enter into a subsidiary agreement with the Rio de Janeiro State Public Prosecutor (MP) to ensure compliance with the project's legal requirements, as the MP is an agency unique to Brazil and does not fall under the administrative, legislative or judicial branches of government. In the same vein, ITERJ and CEHAB will enter into a subsidiary agreement with SEH, for the purpose of implementing Component Ic. 29. Each Secretariat involved in the project will identify a point of contact (POC) and each UGP will work closely with the POCs in day-to-day implementation, fiduciary aspects, and safeguards defined in the Loan Contracts, Disbursement Letter, Project Operational Manual, Project Appraisal Document, Safeguards Data Sheet, among others. Each UGP will have a minimum structure consisting of a Coordinator, Procurement Specialist and Financial Management Specialist, as specified in the Operational Manual. The UGPs have already been staffed, and the personnel have taken part in WB training for financial management and procurement. The UGP under SEOBRAS will take charge of tasks related to Interim Unaudited Financial Reports and disbursement function - this is due to the project management ramp up that SEOBRAS is undergoing, which include management of other projects with international organizations, such as the Inter-American Development Bank. 30. A Coordination Committee will be overseen by the Vice-Govemor's Office and will include one representative member from each UGP. It will be responsible for facilitating inputs for overall production of documentation from the UGPs, as well as putting together all official reports due to the Bank, overseeing training of UGP staff, and overall supervision and coordination of activities among UGPs. The Committee will mediate potential conflicts and will meet every three months to oversee the smooth progression of the project and compliance with Bank policies and requirements. The Operational Manual spells out in detail all functions and mechanisms attributed to the Committee, as well as the role of each agency involved in the project. 31. Each UGP will also be in charge of supervising compliance with the Bank social and environmental safeguards triggered for the project, as well as for the sound and timely implementation of environmental management measures identified in the Environmental Framework. B. Results Monitoring and Evaluation 32. A detailed description of the results framework is presented in Annex 1. Data for project outcome and results indicators will come from a number of sources, including several secretariats and existing administrative data systems (such as the Rio Previd6ncia administrative system and the INEA Flood Warning System website). No additional resources are expected to be needed for monitoring and evaluation. Each UGP will be in charge of collecting data and complying with periodic reporting requirements as well as the end of project evaluation. 10 C. Sustainability 33. The GORJ has launched a comprehensive reform program to improve its effectiveness and efficiency in the provision of public services, shifting from a model of bureaucratic routines to a results-oriented focus. To this effect, in 2007 the Government launched an unprecedented strategic plan to set goals and objectives (Plano Estrategico do Governo do Rio de Janeiro, 2007-2010), identifying core priority areas. As a follow up, the GORJ embarked in a longer term planning exercise, creating a Strategic Plan for the period 2012-2031, and lining up long term sectorial challenges, upon which the four years budgetary plans (PPA) rely on. This effectively introduces linkages between multi-sectoral planning and medium term budgeting. The GORJ will benefit from support from the proposed operation to further build and refine its long term strategy. 34. The proposed set of activities complements and expands upon such integrated development approach in Rio de Janeiro.. Advances in the government's approach (together with increasing challenges linked to the flow of investments resulting from upcoming mega-events) require a prompt and timely engagement by the Bank with planning and scaling up efforts on several fronts, including metropolitan governance, transport, housing, and social development. The inherent interlinks between the activities supported by the proposed operation and the government's complex investment portfolio guarantee sustainability of the proposed project. Large amounts of investments are currently going into Rio State, with strong metropolitan impact, making the technical assistance activities proposed by this operation urgent and tangible as they will be linked to such undertakings. V. KEY RISKS AND MITIGATION MEASURES A. Risk Ratings Summary Table Risk Category Rating Stakeholder Risk Substantial Implementing Agency Risk - Capacity Moderate - Governance Moderate Project Risk - Design Moderate - Social and Environmental Moderate - Program and Donor Low - Delivery Monitoring and Sustainability Moderate Overall Implementation Risk Moderate B. Overall Risk Rating Explanation 35. Overall risks during implementation are assessed as Moderate (see details in Annex 4). No major risk is foreseen as it relates to the project activities under this proposed operation. Three of the most important risks to consider include the Stakeholder Risk (Substantial), Capacity (Moderate) and Governance (Moderate). The Stakeholder Risk has been rated as 11 Substantial due to the risk of a loss of political support for the project from state government as well as competing claims on the funds by different Secretariats. The three UGPs are strongly committed to managing and implementing project activities, and all have been active in defining project activities and indicators. Furthermore, the Project Operational Manual clearly defines the roles and responsibilities of each Secretariat and those of the Coordination Committee made up of representatives of implementing Secretariats. The Capacity Risk has been rated Moderate due to governments' generally poor track record in implementing information technology (IT) systems, and the variation in experience with Bank procedures, procurement and safeguards among the agencies. The Bank will build on synergies from prior positive experience with these agencies to make efforts to bring them to the same level of understanding. The operation will also develop a clear, professional IT system design based on a full understanding of the functionality required and the capacity needs of the eventual users of the IT systems. The Governance Risk has also been rated Moderate due to the numerous secretariats and agencies involved, potentially complicating efforts to exercise proper oversight and execution of the project. All implementing Secretariats have agreed to the terms set out in the Project Operational Manual detailing governance mechanisms, and the Coordination Committee will ensure continuous communication and support to implementing secretariats at all stages. VI. APPRAISAL SUMMARY A. Economic Analysis 36. This US$48 million project supports areas that are likely to have a significant development impact on economic growth, both in the short run (environment, taxation) and in the long run (education, health, urban planning, and governance). The project will have tremendous leverage over much of the 2012-2015 multi-year plan and their investments at the metropolitan regional level. Although a detailed quantitative analysis could not be carried out due to the fact that the project supports mainly studies, the team proceeded to review literature regarding the planned activities and their potential economic impact. There is evidence that investments in the areas, for which the proposed project will provide TA, have positive and high rates of return, as is the case of education, health, and urban governance9. Public sector financing is fundamental in order to address upstream technical design issues around upcoming investments - to ensure that leverage of public and private resources are maximized. Additionally, since intervention relate to the metropolitan scale, these aim at dealing with externalities of urban agglomerations, planning across administrative boundaries. The World Bank value added is its convening capacity, capacity to help ensure high quality standards of the studies the project will support, and brings international experiences to Brazil. Annex 6 summarizes the details of the assessment of economic and financial benefits deriving from the proposed activities. 9 See, for instance, the study of the Institute of Applied Economics Research (IPEA) in 2011, Gastos com a Politica Social: alavanca para o crescimento com distribuiqdo de renda or "Spending on Social Policy: lever for growth with income distribution", in which direct and indirect benefits of public spending are analyzed by key sectors, through a Social Accountability Matrix methodology. 12 B. Technical 37. The GORJ technical capability is limited in some areas. Particularly, the State needs to reinforce its institutional capacity in metropolitan governance, its ability to plan and implement inter-sectoral policies and projects focused on the territory rather than on a purely sectoral basis. The operation will therefore provide support to fill specific skill gaps, including technical quality of designs and introducing international best practices, while widening its approach to more sectors such as housing, urban transport, social development and finance. 38. The project's implementation set-up (through the UGP) will help strengthen institutional arrangements and ensure the smooth execution of activities. At the same time, several activities are designed to strengthen secretariats. For example, the IT system of the Secretariat of Housing (SEH) will be strengthened, the Secretariat of SEADSH will benefit from a re-mapping of its institutional set-up and the re-definition of priority areas. The project will support several impact evaluations, providing the basis for improved programs and performance. The Impact Evaluation approach developed for several sectors (such as the social sector and urban sector) will benefit all secretariats involved and improve their efficiency and use of resources. It will also increase sustainability of this project overtime and create the basis for evidence-based policy making to be mainstreamed. 39. Additionally, the project will foster cooperation among the secretariats. For instance, software developed by the MP will be accessible by other secretariats such as Defesa Civil, INEA, and SEADSH. All activities related to the metropolitan governance framework will require cooperation and coordination among several key secretariats, including SEOBRAS, SEH and SETRANS, among others. C. Financial Management 40. The objectives of the financial management system for the project are: (i) to ensure that funds are used only for their intended purposes in an efficient and economical way while implementing agreed activities; (ii) to enable the preparation of accurate and timely financial reports; (iii) to ensure that funds are properly managed and flow smoothly, adequately, regularly, and predictably to implementing agencies; (iv) to enable UGPs to monitor the efficient implementation of the project; and (v) to safeguard the project assets and resources. 41. The Bank undertook an assessment of the financial management arrangements for the project. These arrangements relate to budgeting, accounting, internal controls, funds flow, financial reporting, and auditing. The assessment was intended to determine whether the arrangements: (i) enable the correct and complete recording of all transactions and balances relating to the operation; (ii) facilitate the preparation of regular, timely, and reliable financial statements; (iii) promote the safeguarding of the project's assets; and (iv) can be subject to an acceptable and regular audit. The results of the assessment are included in Annex 3, with a brief overview provided below. The Bank concluded that the arrangements satisfy its minimum requirements under OP/BP10.00 and are adequate to provide, with reasonable assurance, accurate and timely information on the status of the project required by the World Bank. 13 42. While the activities financed by the project will be executed by different secretariats, the responsibility for overall financial management arrangements for the project will be vested in SEOBRAS. In this regard, SEOBRAS will be responsible for the submission of requests for withdrawal of project funds and for the preparation of periodic and annual financial statements. SEOBRAS has previous experience with operations funded by both the Bank and the Inter- American Development Bank, and will further enhance its institutional arrangements to suit the project. The overall financial management risk is considered moderate. 43. The key risks that the UGPs may face in achieving the objectives of the Financial Management system arise from the need to ensure effective supervision and coordination of arrangements for the accountability of project finances, and to comply with established internal control procedures. To mitigate these risks, SEOBRAS will establish a strong internal control system that will be properly documented and that will be subject to the supervision of the coordinating Secretariats. In addition, the state's Integrated Financial Administration System (SIAFEM) will be used for the recording of the accounting transactions related to the activities implemented by the secretariats. Annex 3 describes the fiduciary arrangements for this project in detail. Finally, central management of the project's designated account by SEFAZ will ensure that requests for payments are processed in a centralized manner in accordance with existing regulations. D. Procurement 44. Procurement for the proposed project will be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated January 2011; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated January 2011 .The procurement risk for this operation has been rated as Substantial, given its complex implementation arrangements and multiple UGPs in charge of procurement. 45. The operation will have three agencies carrying out procurement processes (SEPLAG, SEFAZ and SEOBRAS) and the Procurement Plan will define the detailed responsibility of each agency. The agencies have procurement teams specialized in the national rules and trained on the World Bank Guidelines for Procurement. SEPLAG's procurement team is more experienced with the World Bank's guidelines and will provide assistance to SEFAZ and SEOBRAS when necessary. More detailed information about the proposed procurement arrangements can be found in Annex 3. E. Social (including Safeguards) 46. The Involuntary Resettlement Policy (OP/BP 4.12) has been triggered due to project activities related to studies and activities in the areas of risk mapping, land tenure regularization, and metropolitan plans. To this effect a Resettlement Policy Framework (RPF) has been prepared by a team of technical experts from three state agencies (SEH, ITERJ, and SEADSH). It was subject to consultations among key stakeholder agencies between July and November 2011 and was published on November 2011 for public awareness. The RPF incorporates the lessons learned through the activities on resettlement issues carried out for the Brazilian Ministry of Cities within the Technical Assistance & Guidance in Implementation of Minha Casa Minha 14 Vida and Integration in National Housing Plan project (P125651). It also consolidates best practices from recent experiences with involuntary resettlement. 47. The RPF complies with Bank policies and establishes the principles and guidelines to be followed if it becomes necessary to prepare and implement involuntary resettlement plans during the project's implementation. Included in the RPF are measures to mitigate for the lack of a state regulatory framework for involuntary resettlement, consultative processes related to safeguard issues and evaluation of state capacity to consolidate and implement good practices. With respect to technical assistance activities to be provided under Components 1, the State will ensure that the terms of reference incorporate applicable Bank safeguard policies and are reviewed by the Bank as part of the routine compliance and supervision process. Annex 4 discusses the specific risks involved triggering the safeguard mentioned above. F. Environment (including Safeguards) 48. The Environmental Assessment safeguard Policy (OP 4.01) has been triggered to ensure that proper consideration is given to mitigate potential negative environmental impacts in the context of planning for sustainable development and growth. . To this effect an Environmental Management Framework has been prepared by a technical team in INEA, it was subject to stakeholder consultation during the period August to December 2011, and it was published on December 2011 for public awareness. 49. The proposed new activities are all firmly grounded in existing Bank engagement with the GORJ, which has already been subject to extensive consultation and review. The Environmental Category of the project is B. As a precautionary measure, the Natural Habitats (OP/BP 4.04) safeguard is triggered because of the potential impact of planning and disaster risk management activities. The project does not include conversion or degradation of critical natural habitats, and no significant impact on natural habitats is foreseen. However, it does include conceptual studies and the formulation of policies on housing and land management that may have implications on natural habitats. With respect to technical assistance activities to be provided under Components 1, the State will ensure that the terms of reference are reviewed by the Bank and incorporate applicable Bank safeguard policies. Reporting and monitoring of safeguards will be part of routine compliance and supervision process. Annex 4 discusses the specific risks involved triggering the safeguard mentioned above. 15 Annex 1: Results Framework and Monitoring BRAZIL: Strengthening Public Management and Integrated Territorial Development Technical Assistance Project Data Source/ Responsibil PDO Level Results 0 Cumulative Target Values Frequency Dathource! ity for Data U UOM0 Baseline Methodology Cleto Indicators (2012) 2014 2015 2016 2017 1. Integrated Plan proposed Governor Metropolitan Plan to the presents Plan presented to the E Y/N 0 N Governor by to the State n/a Annual Official Gazette SEOBRAS the to the Stt nsa Ana of Rio de Janeiro State Assembly for Metropolitan asembl approval Committee approval 2. Population MEA Flood benefited by the Millions b f 3.4 5.0 16.0 16.0 16.0 Annual Warning System INEA Flood Warning of people website System 3. Percentage of target population covered by Rio Sem E Percent 15% 35% 50% 65% 75% Annual SEASDH SEASDH Misria core program 4. Ratio measuring the collection of the value-added tax on Transparency goods and services E Ratio 132.56 145.32 152.15 159.30 166.79 Annual Portal- SEFAZ SEFAZ (ICMS) as a website and proportion of IBGE monthly retail sales volume Beneficiaries M o INEA Flood Project beneficiaries 0 Millhons 3.4 n/a 16 16 16 Annual Warning System INEA of people website 10 UOM = Unit of Measurement. "This ratio is calculated by dividing the ICMS collected (with a baseline of 100 in 2003) by a proxy of economic performance expressed by the monthly sales volume (also with a baseline of 100 in 2003). Annual growth rate assumed is 4.7 percent. 16 Responsibil PDO Level Results uo 10 Baseline Cumulative Target Values Frequency Dathource! ity for Data ~ U0M10 BaselineMethodology Cleto Indicators (2012) Collection 2014 2015 2016 2017 Of which female Millions 1.8 nIa 8.3 8.3 8.3 Annual 1BGE Census JBGE (beneficiaries) of people I 2010 Intermediate Results and Indicators Responsib Data Source/ ility for Intermediate Baseline Target Values Frequency Methodology Data Results Indicators r ) 2012) Collection 2014 2015 2016 2017 Intermediate Result 1 (Component 1):Strengthening metropolitan management through integration and coordination in urban development, housing, transport environment and disaster risk management 1. Framework for metropolitan governance and structural studies in the areas of housing, transport and land tenure. 2. Improve state capacity in disaster risk management, particularly to hydrological events. Summary of draft law sent Metropolitan Decrees Fn a to state regulating Fund has 1. Metropolitan legislative new lawn defined Fund is created and E Y/N 0 0% assembly. published in resources, Annual Rio de Janeiro SEOBRAS operationalized Approved law Official budget and is published in Gazette preliminary Official pipeline Gazette 2. Number of Titles housing units E issued 0 7,000 12,000 18,000 25,000 Annual SEH SEH regularized 3. Metropolitan Governor Operationalization Committee approves of new H Y/N 0 0 0 submits proposal and Annual SETRANS SETRANS metropolitan proposal to submits to agency for Governor state 17 Intermediate Results and Indicators Responsib Data Source/ ility for Intermediate Baseline Target Values Frequency Methodology Data o UOM (2011- Results Indicators ) 2012) Collection 2014 2015 2016 2017 transport legislative 12 assembly Governor Policy/ presents 4. Disaster risk Program Policy Project M&E policy formulated Y/N 0 0 0 Designed and Program to Annual Proje INEA submitted to the State system GRAC13 Assembly for approval Intermediate Result 2 (Component 2): Improving living conditions in the most vulnerable social settings 1. Increased capacity and improved effectiveness and monitoring of state social programs 2. Increased capacity of state programs for chemically dependent drug users 5. Percentage of SEASDH E Percent 0 0% 0% 50% 75% Annual SEASDH SEASDH programs included in M&E system 6. Number of hospitals and Number clinics in the State of o hospital 0 23 35 50 65 Annual MP MP of Rio de Janeiro and integrated into the clinics Mddulo de Saide Mental network Intermediate Result 3 (Component 2): Improving living conditions in the most vulnerable social settings: Strengthening education management capacity and secondary education qualityl. Strengthened technical capacity for evidence-based policy making 12 There exists the risk that the Governor will not approve the proposal, in which case this activity and the subsequent activity will not be completed. 13 Grupo Integrado de Aq5es Coordenadas - Integrated Group of Coordinated Actions, created by State Decree 43599/2012. 18 Intermediate Results and Indicators Responsib Data Source/ ility for Intermediate Baseline Target Values Frequency Methodology Data 0 UOM (2011- Results Indicators r) 2012) Collection 2014 2015 2016 2017 2. Diagnostic assessment of secondary school infrastructure 3. Multi-year infrastructure improvement plan 7.Comprehensive Annual Report on SEEDUC's State and national policies and results test scores, school produced and census data, p Report 0 1 1 1 1 Annual administrative and SEEDUC publicly finance data and disseminated program impact within 5 months of evaluations the previous school year Intermediate Result 4 (Component 2):Improving living conditions in the most vulnerable social settings: Health management and information systems 1. Increased attention to the quality of health services delivery 2. Data available for evidence-based decision making to improve the cost efficiency of healthcare services 8. UPAs reporting the full cost of medical services bya CsCeterins Superintendent of by Cost Center in E UPAs 0 0 4 6 8 Annual Contracts and SES their Annual 6nnact Reports (also reported on SES website) 9. Number of hospitals that have had management had anagmentSuperintendent of processes E Hospitals 0 0 8 8 12 Annual Supevie nts SES individual Units SE evaluated and indicators identified for 19 Intermediate Results and Indicators Responsib Data Source/ ility for Intermediate Baseline Target Values Frequency Methodology Data o UOM (2011- Results Indicators ) 2012) Collection 2014 2015 2016 2017 quality of service delivery Intermediate Result 5(Component 3): Strengthening core finance and taxation functions 1. Increased capacity and effectiveness with implementation of information management systems. 10. Percentage of notification of tax law infraction SEFAZ Report reaching the [] Percent 48% 70% 80% 85% 85% Annual rom Tax SEFAZ Collection targeted tax payer Superintendence within the same 14 year 14 The State Secretariat of Finance carries out an administrative procedure to charge violators of the state tax law (Decreto-Lei 5/1975). This procedure is called Auto de Infraqdo. The infraction cannot be charged until the violator is notified of the infraction, after which point the violator may exercise their right to argue the merit of the infraction through processes established in State Decree 2.473/1979. 20 Annex 2: Detailed Project Description BRAZIL: Strengthening Public Management and Integrated Territorial Development Technical Assistance Project 1. The proposed project activities aim to strengthen metropolitan management in Rio de Janeiro by targeting multiple sectors in a comprehensive manner. This will be achieved through four components, encompassing the areas of public financial management, metropolitan and territorial governance, housing and land regularization, education, health, environment and disaster risk management, and social development. Collectively, these components contribute to the proposed project development objective: to support the Borrower to improve service delivery through introducing performance-based management information technologies and an Integrated Territorial Development Approach in key public services. 2. Component 1: Strengthening metropolitan management through integration and coordination in urban development, housing, transport, environment and disaster risk management (US$16.4 million). This component is comprised of four subcomponents. The first subcomponent, strengthening the metropolitan governance framework, includes the following activities: (i) monitoring and evaluation of territorial development impacts; and (ii) the development of an integrated master plan for metropolitan urban development. The second subcomponent, strengthening metropolitan transport management capacity, includes the following activities: (iii) the evaluation and consolidation of the existing transportation ticketing system (Bilhete Unico); (iv) the definition of an action plan for the revision of the AMTU-RJ's role; and (v) the strengthening of the AGETRANSP institutional capacity. The third subcomponent, strengthening metropolitan housing management capacity, includes the following activities: (vi) the carrying out of technical studies to develop an institutional strengthening proposal for the SEH and the CEHAB; (vii) the carrying out of technical studies to design low income housing programs and integrate those programs with social programs; and (viii) the design of an integrated plan for sustainable urban land regularization. The fourth subcomponent, improvement of disaster risk management capacity, includes the following activities: (ix) the development and implementation of hardware for the existing Borrower's early warning system to monitor and respond to geological and hydrological disaster risks; (x) the carrying out of a study to model the hydrological disaster warning system, including basic protocols to be used by the Borrower and its municipalities; (xi) the mapping of the Borrower's landslide and flood risks; and (xii) the carrying out of training to various Borrower's disaster risk management teams; (xiii) improving the sustainability of investments made in Projeto Iguaqu, in the Baixada Fluminense; (xiv) structuring and optimization of a database of risks and natural disasters; and (xv) technical assistance for developing technical documents, specifications, and terms of reference. 3. The institutional aspects of this component will trigger a collective learning process among private and public stakeholders in the metropolitan region. It involves policy roundtables, strategic planning processes, workshops, and study tours coordinated by the state government. Moreover, it will serve to consolidate the gradual creation and negotiation of an institutional framework for the improved and coordinated planning, management, and delivery of a series of environmental, urban, and socioeconomic services at the metropolitan level. The proposed project will contribute by providing a broad-based and participatory arena for the establishment 21 of an integrated metropolitan development strategy that will build upon and improve existing sector-based planning and management exercises that lack adequate communication among the various players. In addition to the traditional (municipal) master planning processes, the proposed project will generate value added by establishing medium- and long-term strategic development targets for the metropolitan area that are linked to stakeholders, investment plans, time horizons, and implementation indicators. Additionally, disaster risk management activities will support the development of a disaster risk management policy/program, which will entail a participatory process to institutionalize disaster risk management in the state. These activities will strengthen identification, hazard monitoring, and early warning systems to better understand the geological and hydrological risks that the state faces. An inter-institutional disaster risk management working group formed by state organizations will further strengthen the state's ability to respond to disasters, as municipalities have little means to do so. 4. Component 2: Improving living conditions in the most vulnerable social settings (US$ 23 million). This component is comprised of four subcomponents. The first subcomponent, strengthening capacity to implement medium-term social development strategy, includes the following activities: (i) developing and implementing a strategic plan for the SEASDH; (ii) carrying out technical studies to design a model for a monitoring and evaluation system, and acquisition of information management hardware and software; (iii) strengthening existing public sector management procedures and administrative systems; and (iv) strengthening the SUAS' management and effectiveness capacity. The second subcomponent, enhancement of capacity to identify, locate and support missing people, supports the following activities through, inter alia:(i) the development of a software and a methodology (for reporting, classifying and analyzing data on missing people) to implement the PLID; and (ii) the extension of the MSM Information System to all the hospitals located in the Borrower's territory. The third subcomponent, is divided in two parts: part (i) strengthening education management capacity and secondary school quality, which includes the following activities: (A) the expansion of SEEDUC's analytical and system management capacity; and (B) management capacity on school infrastructure; and part (ii) enhancement of the quality of secondary education, all through, inter alia, the following activities: (1) the expansion of SEEDUC's analytical and system management capacity; (2) the evaluation of infrastructure conditions in the Borrower's secondary schools; and (3) the development and implementation of a 4-year plan to build and refurbish necessary school infrastructure. The fourth subcomponent, strengthening of the Borrower's health monitoring and evaluation processes and public hospitals' information systems, includes, inter alia, the following activities: (i) the evaluation of the comparative performance of different models of organizing and delivering primary health care; and (ii) the analysis and restructuring of administrative and clinical processes in public hospitals. (a) The first subcomponent will focus on strengthening the capacity of the state to implement an integrated and evidence-based medium-term social development strategy. The state has a mandate to formulate, coordinate, and implement public policies for social assistance, food security, income transfer, and the promotion of citizenship, in coordination with federal and municipal entities as well as nongovernmental organizations. To manage social programs, the state has merged several state institutions, resulting in a complex structure with 6 undersecretaries, 16 superintendents, 11 councils and 2 foundations, as well as several advisories and an ombudsman's office. The state has been making important efforts to improve its 22 efficiency and effectiveness through better integration of its various actions, programs, and target groups in order to face the challenges of providing social services and programs (such as fragmentation, overlaps, and unmet demand). In addition to those described above, activities included in this subcomponent will consist of organizational restructuring and strategic planning process for social programs and Support to the strategic priorities of the state for social development. (b) The second subcomponent focuses on the strengthening of the Borrower's capacity to identify and locate vulnerable missing people such as those displaced by natural disasters, through the scaling-up of the Program for the Identification and Localization of Missing People (PLID). The PLID system uses the Business Process Management methodology to identify, design, measure, control, and improve administrative routines associated with the identification and localization of vulnerable missing people. The system rationalizes the flow of data between different actors in the systems to provide a low cost and more efficient method of maintaining active databases of missing people. This data can be cross-referenced with information on any unidentified people that are found. Catalogued information includes details such as distinctive scars or tattoos. The system currently includes information on more than 6,700 missing people. The activities of this subcomponent will include develop improved IT systems for the reporting, classification and analysis of information on missing people; and capacity development for users of PLID. The second subcomponent also addresses the need to strengthen the Borrower's system for the protection of the rights of citizens involuntarily interned for psychiatric reasons as well as those suffering from mental illnesses, through the roll-out of the M6dulo Saude Mental (MSM) electronic information system. This system was developed to address a gap in the management of information pertaining to these individuals and their respective needs in terms of protective and judicial actions. The MSM system provides an electronic means to upload and manage the information that institutions submit to the MP when patients are involuntarily interned, for example, for alcohol or drug addiction or mental illness. The objective of the system is to ensure more efficient protection of their rights and response to their needs, as well as to support more effective accountability and oversight over their care. Furthermore, the system aims to provide generalized information on demand for public mental health services. The MSM system was designed to be rolled-out over four stages. The first two stages of the program - which covered the development of the relevant software and piloting - have been completed, and it currently houses information pertaining to more than 7,700 cases. The activities of this subcomponent will support the implementation of phases 3 and 4, through Expansion of the program and integration with other databases and Training and capacity building. (c) The third sub-component focuses on strengthening the state's evidence-based policy-making capacity for secondary education, the management capacity on school infrastructure and the quality of secondary education. As secondary school has been identified as the worst-performing segment of the Rio state school system, newly introduced activities focus on supporting key issues that are particular to this level. "To improve learning results in secondary schools, this 1 It should be noted that the proposed operation is only one part of the Bank's program with SEEDUC in the state of Rio de Janeiro. The PRO-GESTAO TAL (P106768) and third DPL (P126465) address weaknesses at the primary school level and system-wide. 23 sub-component will strengthen capacity in conducting studies and managing data systems, particularly in connection with annual school targets and the newly introduced annual report on performance. The annual report directly compares the spending, teacher inputs (pupil-teacher ratios, teaching force composition, infrastructure quality and other inputs) with performance indicators (learning, pass rates, achievement of school targets, bonus pay). In the future, the report will also include classroom observation data at the level of individual secondary schools and school districts. The report has created a degree of transparency to how well individual schools and school districts are performing in relation to their resources that before was impossible to achieve (and indeed, does not exist elsewhere in Brazil). This transparency on results is expected to increase accountability that will stimulate low-performing schools to improve. As a result of the assessment of the state's current needs in the education sector, newly introduced activities will expand SEEDUC's capacity through selective recruitment, improvement in data systems, carry out a mapping of infrastructure in the state's secondary schools (many of which function only at night and in "borrowed" primary school buildings that are not adequate for quality secondary education), as well as create a 4-year infrastructure plan necessary for a network of high quality, full-day schools, particularly at the secondary level. (d) The fourth subcomponent focuses on strengthening health monitoring and to improve evaluation processes and public hospital information systems. The proposed operation scales up activities to contribute to building state capacity to improve coverage and quality of health services, through (i) Evaluation of the comparative performance of different models to organizing and delivering primary health care; (ii) Analyze and restructure administrative and clinical processes in public hospitals. 5. Component 3: Strengthening core finance and taxation functions (US$ 6.1 million). This component supports the state in carrying out studies and adopting new practices aimed at strengthening tax administration and financial management systems. Activities supported by this component include: (i) the carrying out of technical studies to develop a methodology for estimating lost revenue due to tax waivers; (ii) the development of proposed revisions to the tax collection procedures; (iii) the design and implementation of diagnostic mechanisms needed to implement best practices in debt management; (iv) the implementation of a control system for the Borrower's Automobile Property Tax (IPVA); (v) the development of procedures, processes, manuals and databases to improve the management and costing of public investment programs, to better assess medium term implications of fiscal policy decisions; and (vi) the provision of training for technical specialists and managers. 6. This component is closely linked with the Fiscal Consolidation, Human Development and Public Financial Management DPL (P126465) for the state of Rio. Activities under this component will strengthen procedures needed to maintain fiscal discipline and strategic allocation of resources that is aligned with Government priorities and efficient service delivery. The activities supported are divided in three subcomponents on Tax policy, Tax administration and Public investment management and costing. 16 The proposed project will finance the studies described, not subsequent infrastructure work. 24 7. Component 4: Project management (US$2.5 million). This component will finance activities related to the overall administration of the project. In order to cover project administration costs, this component is created to adequately reflect the project's administration needs. The project will support project management and provide implementation support including technical, administrative and fiduciary support, support for monitoring and evaluation, data collection, and stakeholder involvement. 25 Annex 3: Implementation Arrangements BRAZIL: Strengthening Public Management and Integrated Territorial Development Technical Assistance Project Project Institutional and Implementation Arrangements 1. Implementation details about the projects are in the main text of the PAD, Section IV, A. This Annex will include only additional information on coverage of each UGP (Figure A3-1), the role of each agency in the project (Table A3-1) and highlights key institutional responsibilities in terms of production of reports and document, as detailed in the Operations Manual. Figure A3-1. Institutional Arrangements for Project Coordination Committee* Overseen by the Vice Governor Representatives of the 3 UGPs SEPLAG SEOBRAS SEFAZ UGP UGP UGP *Created by Joint Committee Table A3-1. Agencies Involved in Project and Defined Roles Implementing Agency UGP -Type of Agency -Agency Role in Project State Secretariat of SEPLAG State Secretariat Responsible for managing Components 2a, 2c, 2d Planning and UGP and 1d under SEPLAG UGP. Participates in the Management (SEPLAG) _____________Coordination Committee.' State Secretariat of SEPLAG State Secretariat Responsible for the implementation of Component Education (SEEDUC) UGP 2c education activities. 7 See Annex 2 for a list of component activities. 26 State Secretariat of Health SEPLAG State Secretariat Responsible for the implementation of Component (SES) UGP 2d health activities. Department of Mineral SEPLAG Independent State Responsible for managing Component ld under Resources (DRM) UGP Entity SEPLAG. State Secretariat of Public SEOBRA State Secretariat Responsible for managing Component la, 1b, 1c Works (SEOBRAS) S UGP and Component 4 activities under SEOBRAS UGP. Participates in the Coordination Committee. Responsible for the implementation of select ___________________ _____________Component 1la metropolitan governance activities. State Secretariat of State Secretariat Responsible for the implementation of select Transport (SETRANS) Component lb transportation activities. State Secretariat of State Secretariat Responsible for the implementation of select Housing (SEH) Component 1c housing activities. Rio de Janeiro State Public company Housing Company legally bound (CEHAB) with SEH Rio de Janeiro State Land Public Institute and Mapping Institute legally bound (ITERJ) with SEH State Environmental SEPLAG Public Institute Responsible for the implementation of select Institute (INEA) UGP Component 4d disaster risk management activities. Secretaria do Estado de SEPLAG State Secretariat Responsible for the implementation of select Defesa Civil (SEDEC) UGP Component ld disaster risk management activities. State Secretariat of Social SEPLAG State Secretariat Responsible for the implementation of select Assistance and Human UGP Component 2a social development activities. Rights (SEASDH) Rio de Janeiro State SEFAZ Independent State Responsible for the implementation of select Public Prosecutor (MP) UGP Entity Component 2b activities. State Secretariat of SEFAZ State Secretariat Responsible for managing Component 3 and 2b Finance (SEFAZ) UGP under SEFAZ UGP. Participates in the Coordination Committee. Responsible for the implementation of Component 3 financial Defesa__Civil_(SEDEC)_ UGP_Component__d_disaster_riskmanagement activities. Table A3-2. Institutional Responsibilities for the Production of Documents and Reports Interim Unaudited Financial SEOBRAS Reports (IFRs) Disbursement Requests (including SEOBRAS installments) (MP)_UGP_Entity_Component_2b_activities. Procurement Plan Prepared jointly by the UGPs Sent for No Objection by the Vice-Governor's Representative g(adopting new procurement rules) Project Report Prepared jointly by the UGPs Sent by the Vice-Governor's Representative Project Operational Manual Prepared jointly by the UGPs Sent by the Vice-Governor's Representative Safeguards (creation of Environmental UGPs for respective component, unified by Vice-Governor and Social Framework and supervision Safeguards report included in Project Report of its application) Auditing SEFAZ UGP - one contract for the audit of loan Records from Committee meetings Vice-Governor's Representative consolidates and sends to the Bank (every 3 months) Monitoring Project Indicators UGPs consolidate data with respective POCs. Vice-Governor's Office integrates it into the Project Report. 27 Financial Management, Disbursements and Procurement 2. The table below depicts the institutional arrangements that are relevant to the project's financial management arrangements. Table A3-3. Institutional Arrangements for Financial Management STATE AGENCY SEOBRAS SEFAZ, SEPLAG SEFAZ and UGPs SEPLAG Budget Preparation Contributes to budget Contributes to budget SEPLAG finalizes proposals proposals budget Commitment Procurement Procurement Procurement o Verification Contract management Contract management Contract management 8 Payment Sends Request for Sends Request for Treasury makes payment to Treasury payment to Treasury payments to suppliers Record keeping - Record transaction - Record transaction information in information in Integrated Financial SIAFEM Administration - Maintain project System for States specific records and Municipalities (SIAFEM) - Maintains Project specific records - Submits disbursement requests to the Bank Financial Reporting Prepares periodic financial reports 3. Planning and Budgeting. The state's budgeting systems will be used for the purposes of the project. The state's budget documents include four-year plans (Plano Pluri-Annual - PPA), the budget preparation regulations (Lei de Diretrizes Orgamentdrias - LDO), and the annual budget (Lei Orgamentdria Annual - LOA). The state's budget will reflect the appropriate amount of funds corresponding to the project within the budget appropriation for SEOBRAS. A project budget has been drawn up and included in the Project Appraisal Document. Annual budgets for the project will be pulled from the disbursement schedule. The annual budget will be prepared based on the policy guidelines issued by implementing agencies. 4. Budget Execution Cycle and the Budget Descentralization Framework The budget cycle in Brazil comprises three phases: commitment (empenho), verification (liquidacdo), and payment (pagamento). The individual secretariats will be responsible for the first two phases in the cycle in accordance with the procurement plan. The transaction data for all the phases will be recorded in the state's Integrated Financial Administration System (SIAFEM). 5. Funding for project activities to be implemented by the other secretariats will be allocated under a procedure known as "budget decentralization" (descentralizaqdo de creditos 28 orqamentarios). This framework is governed by a Decree No 42.436 of April 30, 2010. The decree specifies the responsibilities of the Sectoral Agency to which the budget allocation is primarily made (herein referred to as the central agency) and the agencies executing the activities for which the budget allocation is decentralized ("executing agency"). The decree is a formal instrument the central agency cedes budget allocations to executing agencies to implement activities whose objectives are agreed upon and for which the central agency has primary responsibility. The Decree provides for the application of the relevant financial management laws and regulations to such transactions, and establishes the requirements under the arrangement. These include the need to prepare a work program with established objectives. The Decree also requires agreement of the arrangement to be documented in a Portaria or Joint Resolution (Resoluqjo Conjunta), models of which are annexed to it. The portaria would describe the objectives and expected results under the arrangement and the amounts subject to the budget allocation decentralization. Such a portaria should be prepared on an annual basis. The Portaria also establishes the requirement for the executing agencies to maintain accounting records to which the central agency has unfettered access for monitoring purposes. 6. Internal Controls and Procedures. The internal control environment for the proposed project appears reasonable. The project will be implemented within the state's internal control environment, which is based on a series of laws and regulations. Principal among these is the Public Accountability Law of 1964, which establishes the principles for financial management at all levels of government. The state has also issued a manual for internal control procedures that contains ample guidance on procedures to be followed in undertaking public transactions. These and subsequent regulations provide for adequate segregation of duties, supervision, quality control reviews, reconciliation, internal audits, and independent external audits. Finally, an Operational Manual will be developed to reflect the procedures to be adopted with the operation. The state has an internal audit agency whose duty is to help ensure the continuing adequacy of the internal control environment. 7. Flow ofFunds: Bank Accounts. A new bank account will be set up and maintained for the purpose of the proposed operation. This designated account will be segregated. The account will be maintained in Brazilian Reais at Banco Bradesco S/A. It will be managed using the state's procedures by SEFAZ in the name of SEOBRAS. 8. Disbursement of Bank Funds to the Implementing Agencies. Disbursements may be made on the basis of advances, reimbursements and direct payments. Supporting documentation required for documenting eligible expenditures paid from the designated account and for reimbursements will include Statements of Expenditure (SOEs), and Summary Sheets with Records. Direct payments will be documented by Records. The designated account will have a Fixed Ceiling of BRL 6,000,000, and the frequency for reporting eligible expenditures paid from the designated account will be quarterly. The Minimum Application Size will be US$ 100,000 equivalent. The Project will have a four month Application Deadline Date (Grace Period). Retroactive Financing up to an aggregate amount not to exceed $9,600,000 equivalent is available, for payments made prior to the date of the Loan Agreement but on or after July 17, 2013, but in no case more than one year prior to the date of the Loan Agreement. 29 Figure A3-2. Funds Flow Mechanism THE WORLD BANK Flow D Flow F Flow C P ------------ow---------------> SEPLAG SEOBRAS SEFAZ SEFAZ Account Flow B Flow A Flow F SUPPLIERS Key Flows involving the movement of funds ----- -> Flows involving documentation or goods and services Flow A Suppliers provide goods and services and related invoices Flow B UGPs submit payment requests to SEFAZ Flow C SEFAZ provides bank statements Flow D SEOBRAS provides bank statements Flow E Disbursement of funds to the Designated Account Flow F Payment to suppliers 9. Payment to Suppliers. Payments to suppliers will be made in accordance with government regulations. At the end of the transaction cycle and once all controls are implemented, the UGPs will send a request for payment to the Treasury. The payment will then be made once the Treasury ensures that compliance with all relevant procedures has been met. 10. Accounting Systems and Procedures. To maintain their accounting records, secretariats of the state of Rio de Janeiro conform to Brazilian Accounting Rules (NBC). The public accounting law of 196418 establishes high level accounting principles and the National Treasury Secretariat is responsible for issuing manuals documenting and detailing accounting procedures. Brazil is currently undertaking a revision of public sector accounting, and intends to complete the adoption of international public sector accounting standards for all levels of government by 2013. "Law 4320/64 30 11. Financial Management Manual. The accounting systems, policies, and procedures employed in the accounting and managing for project funds are documented in the project's Operational Manual. The manual will be used by staff as a reference manual; by the World Bank to assess the continuing adequacy of project accounting, reporting and control systems; and by the auditors to assess project accounting systems and controls as well as in designing specific project audit procedures. In addition, the manual will document the arrangements made for recording project impacts, outcomes, outputs, and inputs that are required to assess progress toward the achievement of project objectives. 12. Accounting System. All accounting transactions related to the project's activities will be recorded using the state's Integrated Financial Management System (SIAFEM). SIAFEM also plays a key role in ensuring the implementation of the internal controls through built-in procedures that are required to be undertaken during the budget execution process. SIAFEM has been used as the primary financial information system on a number of Bank projects in the Rio de Janeiro. It has been the subject of various reviews that have concluded that although its architecture is outdated, it fulfills the Bank's fiduciary financial management requirements. There are plans to upgrade and update it in light of the state's impending adoption of international public sector accounting standards. 13. Accounts are computerized and prepared by the Contadoria Geral do Estado (within the Secretariat of Finance). For the proposed project, the financial management specialist in the SEPLAG UGP will use information from the SIAFEM, together with payment records, to prepare project reports using Excel spreadsheets. While this method is sufficient for the level of proposed transactions, there are plans to obtain a more efficient accounting software package to maintain the project's accounts. The Bank will support the project in the installation of this accounting software. For the operation and before the acquisition of the accounting software, SEOBRAS will access the SIAFEM records in order to prepare the project's financial reports. The supporting documentation for the transactions will be maintained by the UGPs, and access to these will be granted to auditors for the purposes of verification. 14. Financial Reporting. The proposed operation will use the same reporting formats for the various periodic financial reports. The financial reports will be designed to provide quality and timely information to project management, implementing agencies, and various stakeholders on project performance. 15. The UGP in SEOBRAS will prepare and submit to the Bank semi-annual IFRs no later than thirty days after the end of each semester. IFRs will make use of existing financial reporting information entered in SIAFEM by the secretariats. These will include: a statement of sources and uses of funds by disbursement category, showing actual and budgeted expenditures, and including a variance and cumulative (project-to-date; year-to-date and for the period) analysis; a statement of uses of funds by project activity or component, showing actual and budgeted expenditures, including a variance and cumulative (project-to-date; year-to-date and for the period, by financing source) analysis. 16. Internal Auditing Arrangements. The state's public financial management system features strong internal controls, with rules and controls on commitments. However, the internal audit agency (the Auditoria Geral do Estado, AGE) has a number of weaknesses that limit its 31 effectiveness. It currently reports to SEFAZ and is responsible for providing management assurance on the functioning of the internal control system. Although still limited, it also plays a role in assessing value for money aspects of budget execution by government agencies. The state intends to reform the institutional structure of the AGE in order to enhance its independence. As a result of this reform the AGE will report directly to the governor. The government is also undertaking a major recruitment and training exercise to ensure that the office is well staffed to carry out its mandate. 17. External Auditing Arrangements. The audit of the annual financial statements for the proposed project will be carried out by a private firm of auditors that will be selected according to criteria that meet the World Bank's requirements in terms of independence, qualifications, and experience. They will conduct the audit based on terms of reference approved by the World Bank that will ensure that the audit is conducted in accordance with acceptable auditing standards. The audited financial statements together with the auditor's report and management letter covering identified internal control and accounting system weaknesses will be submitted to the World Bank within six months after the end of each financial year. The Bank will review the audit report and will periodically determine whether audit recommendations are satisfactorily implemented. 18. Procurement for the proposed project will be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated Jan 2011, "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated Jan 2011, and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Loan, the different procurement methods or consultant selection methods, the need for pre- qualification, estimated costs, prior review requirements, and time frame are agreed upon between the Borrower and the Bank in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the current project implementation needs and improvements in institutional capacity. 19. Procurement of Goods. Goods procured under this project would include IT equipment. The procurement will be done using the Bank's Standard Bidding Documents (SBD) for all International Competitive Bidding (ICB) and National SBD agreed with or satisfactory to the Bank. 20. Procurement of Non-Consulting Services. Non-consulting services under the project would include: various training events, workshops, seminars, etc. logistics such as hotel services, catering, travel services and printing services. The procurement will be done using the Bank's SBD for all ICB and National SBD agreed with or satisfactory to the Bank, as well as "Shopping" and directing contracting, as applicable. 21. Selection of Consultants. Consulting services under the project would include: engineering services, various studies and projects for management, IT systems, impact evaluation, in-service training, quality accreditation, supply chain management, etc. Short lists of consultants for services estimated to cost less than US$500,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of 32 the Consultant Guidelines. The need to engage universities, government research institutions, public training institutions, non-governmental organizations, or any special organizations was not identified during project preparation. 22. Operating Costs. During project preparation, it was agreed that operating costs will include costs, which would not have been incurred by the respective UGP, absent the Project, for operation and maintenance of vehicles, repairs, fuel, spare parts and insurance, maintenance of the Project's monitoring and information system, travel and per diem costs for technical staff carrying out supervisory and quality control activities, equipment and computer maintenance, office supplies, utilities, and rent for office facilities, but excluding expenditures for salaries and related benefits. The operating costs to be financed by the project will be implemented using the implementing agency's administrative procedures, reviewed and found acceptable to the Bank. 23. Others. The need for special arrangements for scholarships, grants, etc, was not identified during project preparation. The procurement procedures and standard bidding documents to be used for each procurement method, as well as model contracts for works and goods procured, are presented in the Project Operational Manual. 24. Taking into consideration the existing capacity of SEPLAG, SEOBRAS and SEFAZ and the fact that the procurement risk has been rated as substantial, the prior review and procurement method thresholds were defined as follows: Table A3-4. Procurement Method Thresholds Expenditure Contract value Procurement Processes subject to prior review category threshold method (US$ thousands) Goods and International All processes Non- > 500 Competitive Bidding consulting (ICB) services < 1 National Competitive First two processes and all cases to Bidding (NCB) cost over US$150,000 < 100 Shopping First two processes Quality- and Cost- All processes Consulting Based (firms)19 > 300 Selection/Quality- Based Selection (QCBS/QBS) Least Cost First processes in each method and Selection/Consultants all cases above US$150,000 :S 300 Qualiflcations/Source of Funds (LCS/CQS/SOF) Individual Section Vin the All cases above US$ 50,000 and all consultants Guidelines single-source contracts 19Short list of consultants for services, estimated to cost less than $500,000 equivalent per contract, may comprise entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 33 Direct All cases regardless of the amounts contracting involved 25. All bidding documents and respective contracts, regardless of procurement method, are required to have the anticorruption (A/C) clause in the bidding documents and the contract as a condition for eligibility for expenditures. 26. Procurement activities will be carried out by the State Secretariat of Planning and Management (SEPLAG), beyond SEPLAG the procurement activities will be carried out by the State Secretariat of Public Works (SEOBRAS) and the State Secretariat of Finance (SEFAZ). An assessment of the capacity of the new implementing agencies to implement procurement actions for the project was carried out in July and December, 2011. The assessment reviewed the organizational structure for implementing the project and the interaction between the staff responsible for procurement. The major issue identified was the lack of specialized procurement staff in the implementing agency. An action plan was agreed to during project preparation to strengthen the procurement team. 27. A Procurement Plan of November 13, 2013 for project implementation provides the basis for the procurement methods and will define the detailed responsibility of each agency. The agencies have procurement teams specialized in the national rules and were trained on the World Bank Guidelines for Procurement. The SEPLAG's procurement team is more experienced on the World Bank's Guidelines and will provide assistance to SEFAZ and SEOBRAS when necessary. The plan will be updated (in agreement with the project team) annually or as required to reflect current project implementation needs and improvements in institutional capacity. 28. The Details of Procurement Arrangements Involving International Competition are as follows: Consulting Services (a) List of consulting assignments with short-list of international firms above US$ 300,000. 1 2 3 4 5 Description of Assignment Estimated Selection Review Expected Cost US Method by Bank Proposals 1,000 (Prior / Submission Post) Date Strengthening of existing public sector management 2,786 QCBS Prior 13-Jun-2014 procedures and administrative systems Elaboration of an Integrated Plan for developing the Rio de Janeiro Metropolitan Region. Technical study to integrate 3,200 QCBS Prior 14-Mar-2014 metropolitan plans for housing, public works, transport, sanitation and other sectors. Creation of an Operational Manual to identify vacant or underutilized areas for housing. Identification of areas on Avenida Brasil between Deodoro and Campo Grande and 714 QCBS Prior 12-Jul-2014 feasibility study for a pilot project in one of the identified areas. 34 Development of a model for large, mixed-use housing nucleus integrated with social policies. Feasibility studies, including one on the economic and financial structure of this model in the Rio de Janeiro Metropolitan Region. Studies to identify liabilities and negotiation and regularization strategies for housing developments and develop a condominium management and maintenance strategy for future developments. Design an Integrated Plan for Sustainable Urban Land Regularization (integration with other state interventions, 614 QCBS Prior 11-Sep-2014 diagnostic of state programs and municipal initiatives) Mapping of landslide and other mass movements. 900 QCBS Prior 12-Jul-2014 Improvement in the integrated management of risks and 1,400 QCBS Prior 11-Sep-2014 disasters. Technical studies to design a model for an M&E system for social programs, evaluation of main programs, and capacity 1,600 QCBS Prior 11-Sep-2014 building activities. Development of information management hardware and software and development of an information system to 1,500 QCBS Prior 11-Sep-2014 monitor programs. Training for SEASDH staff. Technical studies to develop a strategic plan for SEASDH 840 QCBS Prior 11-Sep-2014 activities and management of processes. Building SEEDUC technical capacity for studies and 1,170 QCBS Prior 11-Sep-2014 evidence-based policy Development and implementation of a 4-year plan to build and refurbish the infrastructure necessary for a network of high quality, full-day schools, particularly at the secondary level Evaluation of the comparative performance of different 1,500 QCBS Prior 12-Jul-2014 approaches to organizing and delivering primary care Acquisition of information management hardware and software and development of an information system to identify and locate missing people, and capacity building for 1,200 QCBS Prior 12-Jul-2014 users of PLID (staff in Policia Civil, ISP, SNSP, IML, and Disque Denincia). Expansion of MSM and integration of the system with other relevant databases, and capacity building for users of PMSM 1,740 QCBS Prior 14-May-2014 (Promotorias de Justiya, Gestores e Unidades de Saide, hospitals, and CAPS). Technical studies for a diagnostic of mechanisms needed to implement best practices in debt management and training of 1,050 QCBS Prior 14-Mar-2014 technical specialists. Implementation of a control system for the Automobile Property Tax (IPVA) administrated by the State Secretariat 1,490 QCBS Prior 12-Jul-2014 of Finance. Creation of a common database for all investment projects in the state, a costing methodology and training of technical 700 QCBS Prior 11-Sep-2014 specialists. Hiring of a consulting firm to support the UGPs 2,000 QCBS Prior 04-May-2014 35 (b) Consultancy services (firms) above US$ 300,000 and all single source selection of consultants will 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$ 500,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. Environmental and Social 29. Environmental Assessment. The proposed operation is expected to have positive environmental impacts, given its focus on improving the capacity of key state government institutions. Institutional capacity improvements have important environmental and social implications, allowing the state to adopt sustainable practices, especially those related to housing and land titling programs. 30. The project includes primarily conceptual studies and activities related to institutional strengthening, which are likely to have minimal or no direct adverse environmental impacts. Some subcomponents (such as the metropolitan master plan, the housing policy, and the land management program) have potential indirect environmental and social implications. For this reason, the project has been rated category B and safeguard policies have been triggered for Environmental Assessment (OP/BP 4.01). The Environmental Assessment Safeguard is mandatory to all projects that may potentially have an environmental or social impact. The Natural Habitats (OP/BP 4.04) and Involuntary Resettlement (OP/BP 4.12) safeguards have also been triggered. 31. The Borrower prepared and will follow an Environmental Management Framework that assesses potential environmental impacts for all activities, as well as a Resettlement Policy Framework (RPF). These were published. The EMF and RPF address screening and eligibility of activities and guidelines for the effective and timely implementation of environmental safeguards during project implementation. They include conceptual frameworks for environmental activities supported by the project that may have indirect environmental implications. An independent consultation with key stakeholders was conducted and its findings were disclosed as part of the reports. 32. Component I will support activities for the development of a framework for metropolitan governance and structural studies in the areas of housing, transport, land tenure, environment and disaster risk management. Recognizing the potential environmental impacts these sectors can have the State has set this component with the purpose of consolidating the gradual creation and negotiation of an institutional framework for the improved and coordinated planning, management, and delivery of a series of environmental, urban, and socioeconomic services at the metropolitan level. Component Id will support activities aimed at improving disaster risk management capacity. 33. The project will provide a broad-based and participatory arena for the establishment of an integrated metropolitan development strategy that will build upon and improve existing 36 sector-based planning and management exercises that lack adequate communication among the various players including a special emphasis on the environment. In addition to the traditional (municipal) master planning processes, the proposed project will generate value added by establishing medium- and long-term strategic development targets for the metropolitan area that are linked to stakeholders, investment plans, time horizons, and implementation indicators while taking environmental implications fully into account. 34. Natural Habitats (OP/BP 4.04). The project does not include conversion or degradation of critical natural habitats, and no significant impact on natural habitats is foreseen. However, it does include conceptual studies and the formulation of policies on housing and land management that may have implications on natural habitats. The natural habitats safeguard is triggered as a precaution to mitigate potential impacts on natural habitats. Additionally, OP 4.04 may be related to urban development activities that foresee the preparation of a metropolitan master plan, given the territorial dimension of such activities. Project activities will give preference to those that do not cause negative impacts on natural habitats. Where such impacts are inevitable the appropriate measures to avoid, mitigate and where appropriate compensate for them will be implemented. 35. Involuntary Resettlement (OP/BP 4.12). Adopting a precautionary approach, the project has triggered the Involuntary Resettlement Safeguard Policy (OP/BP 4.12) because adverse social consequences and disputes may eventually arise from the government's disaster risk management and urban territorial development policies. These policies may yield adverse social consequences and disputes because they could involve the resettlement of families living in precarious settlements and/or in areas at very high risk of massive landslides or flooding. A Resettlement Policy Framework (RPF) was selected as the proper instrument for this operation because the areas to be affected cannot be identified beforehand. The RPF was properly prepared by a team made up of technical experts from three state agencies (SEH, ITERJ and SEADSH), and incorporates the lessons learned through the AAA on resettlement issues for the Brazilian Ministry of Cities. It also consolidates best practices from recent experiences with involuntary resettlement. The RPF complies with Bank policies and establishes the principles and guidelines to be followed if it becomes necessary to prepare and implement involuntary resettlement plans during the project's implementation. Included in the RPF are measures to mitigate for the lack of a state regulatory framework for involuntary resettlement. 36. In Rio de Janeiro, as elsewhere in Brazil, involuntary resettlement is dealt with in accordance with the legislation on land expropriation. However, Rio de Janeiro has recently introduced a new state legislation (State Decree 41.148/2008) that provides guidelines that include (i) the participation of the affected people in all stages of the resettlement process, (ii) the provision of resettlement options, (iii) strong mechanisms of communication with the population, and (iv) extensive consultation processes with main stakeholders to address their concerns throughout the resettlement processes. However, there are gaps between this legislation and Bank procedures, particularly related to (i) the compensation of affected people who lack land tenure rights, (ii) compensation for losses related to economic displacement, (iii) compensation according with the replacement value, and (iv) the provision of easily accessible and responsive grievance mechanisms. 37 37. The RPF properly addresses these outstanding issues. Note that any mitigation action in response to involuntary resettlement needs will not be financed by the Bank, but financed and carried out with State funds. 38. Adverse social consequences and disputes may arise from the Government's disaster risk management policy that could involve the resettlement of families living in areas at very high risk of massive landslides. The Resettlement Policy Framework prepared by the client has set the guidelines to be followed if involuntary resettlement is deemed necessary during project implementation. The framework pays special attention to (i) the evaluation of the state's capacity to consolidate and implement these recently-instituted good practices, and (ii) the identification of the state's need for technical assistance to support capacity building (in each relevant agency) and to strengthen its resettlement policy. The new RPF also emphasizes consultative processes related to safeguard issues. 39. Institutional Arrangements related to Environmental Safeguards. INEA is the State Environmental Agency and is fully involved in the preparation of the project. It will also be responsible for Component Id which might have potential impact on Natural Habitats. Each Project Implementation Unit is responsible for their environmental management and will follow the guidelines established in the EMF under guidance from INEA. Each Secretariat has its own environmental staff and the Project implementation will have staff dedicated to following compliance as stipulated in the EMF and also according to State and National legislation. 38 Annex 4: Operational Risk Assessment Framework (ORAF) BRAZIL: Strengthening Public Management and Integrated Territorial Development Technical Assistance Project Stage: Board Project Stakeholder Risks Rating Substantial Description: State of Rio de Janeiro is leading the preparation Risk Management: State Secretariats of Planning (SEPLAG), Public Works (SEOBRAS) of the project and is planning complimentary urban and Finance (SEFAZ) are strongly committed to managing and implementing project development investments. There is a risk of a loss of political activities. All have been active in defining project activities and indicators and are support for the project from state government. There is also a committed to reporting on progress throughout the project life. The Operation Manual risk of competing claims on the funds by different Secretariats. clearly defines the roles and responsibilities of each Secretariat and those of the Coordination Committee made up of representatives of implementing Secretariats. The Vice-Governor's Office will oversee the Coordination Committee responsible for coordinating deliverables and communication with the Bank. Resp: SEPLAG, SEOBRAS, SEFAZ, Status: On CORAtion SEFA Stage: Prep and Imp Due Date :06/30/2017 going Coordination going Committee Implementing Agency Risks (including fiduciary) Capacity Rating: Moderate Description: Governments generally have a poor track record Risk Management: IT systems: The Real Property Management system has already been in implementing information technology (IT) systems. The developed. For other systems, the project will develop a clear, professional design based on project will build on synergies from the positive experience of a full understanding of the functionality required and the capacity needs of the eventual the PR6-GESTAO UGP's work with Bank procedures. users. The health systems will draw on other states' efforts to develop cost-accounting Experience with Bank procedures in procurement* and systems (e.g. Ceard). Bank supervision will monitor these activities to ensure their safeguards will be uneven among the agencies participating in implementation. the proposed operation, therefore efforts will be needed to bring Resp: SEPLAG, everybody on same level Inability to handle managerial and procedural requirement for Risk Management: The Bank will work closely during preparation and implementation to project implementation, including fiduciary and safeguard build capacity in safeguards. Both the UGP staff and secretariat staff will be offered issues. safeguards training. The overall FM was determined to be moderate by the project Resp: SEPLAG, Status: FM assessment. There is a risk in SEFAZ's ability to generate SEOBRAS, SEFAZ, Stage: Imp Due Date :03/15/2014 Not yet timely and accurately FM reports. Bank Due Risk Management: Exhaustive information on the arrangements and inputs to be delivered will be provided. The institutional arrangements heavily leverage the UGP that is already experienced with procedures in procurement and safeguards. Training for the two new detailed assessment ofprocurement risk is in Section VIiD. UGPs is already underway. Resp: SEPLAG Status: On SEOBAS, EF' Stage: Prep and Imp Due Date :06/30/2017 gm SEBA,SEA9on Risk Management: The inherent FM risk will be mitigated by existing and additional controls. The FM Information System will be assessed to evaluate whether it can handle FM requirements. Development of the FMS database will maintain FM information and ensure that reports are generated for management review and monitoring purposes. This will include registers/ledgers to monitor the status of: contractual payments with suppliers, consultants, and contractors; advances; fixed assets; cash; and bank accounts. Satus: On Resp: SEFAZ Stage: Prep and Imp Due Date:06/30/2017 St O going Governance Rating: Moderate Description: Given complexity and multi-secretariats and Risk Management: The Coordination Committee will ensure communication and support agency involved, it could be difficult to exercise proper to implementing Secretariats at all stages to ensure the successful design of appropriate oversight and execution of the project. However, previous governance measures. All implementing Secretariats have agreed to the terms set out in the experience with government agencies has been positive. Operational Manual detailing governance mechanisms. SEPLAG has been successfully overseeing the original project Resp: Coordination Stage: Prep and Imp Due Date:06/30/2017 so far. SEOBRAS is committed to the successful oversight of Committee the activities of the project and the experience of their Risk Management: While not all municipalities have complied with MP guidelines in the engagement with the DPL has been positive. SEFAZ is also past, this will not necessarily impact project activities since they consist of (i) running a strongly involved in implementation oversight of all loan diagnostic of municipal capacity and (ii) offering capacity building to the municipalities. operations contracted by the state. Implementation arrangements This diagnostic will reveal whether the difficulties arise from inability to comply or lack of will be detailed in the Operational Manual. The Vice- commitment to the MP agenda. It is possible that not all municipalities will be willing to Governor's office will support project coordination and adhere, therefore target indicators take this into consideration (60% of municipalities are oversight. expected to participate by project end). This target is based on preliminary contacts with the Complex institutional framework and competing priorities municipalities. The team has discussed the possibility of class action against the state would create a challenge to project oversight. and/or municipalities with the Governor, who is aware of the possibility and willing to take A moderate risk lies in the ability of municipalities to the risk as this activity is deemed crucial. The state government and the state MP have a implement legal and policy frameworks for the treatment of good relationship and are working together to address issues related to the M6dulo de drug users. Not all municipalities have complied with guidelines Safide Mental and missing persons database in the state of Rio. Continued and tight established by the MP in this area. There is also the possibility supervision of procurement processes will be exercised; including keeping closely involved that the MP could use information provided by the M&E system the procurement specialist and team in the process and procurement audits. implemented by the Bank to sue the state, in which case the Status: On Bank's relationship with the state may be affected. Resp: MP Stage: Prep and IMP Due Date:06/30/2017 going Project Risks Design Rating: Moderate Description: The multi-sectoral nature of the project makes Risk Management: Regular quarterly meetings will be held to facilitate coordination and clear implementation, coordination and oversight rules identify potential problems at an early stage between SEPLAG and the line secretariats. crucial. There is a risk of fragmentation in project Three UGPs will oversee components of the project, develop clear implementation Resp SEPAG, Stage: PrpI nIp Due Date:06/30/2017 Stus imleenatonmantisms ailnot ncoriat iactprcativities inteincetofte thee roist of(iarngement 40 Coordination Due Committee Social & Environmental Rating: Moderate Description: The activities are not expected to generate Risk Management: The State has engaged in strong dialogue and extensive consultation in negative environmental or social impacts. Nonetheless, some the project preparation. This will be continued through implementation, and will be given activities should be closely monitored to ensure that they do not high priority in light of recent protests. Specific activities will be closely monitored to lead to future safeguard risks. The Natural Habitats and ensure that they do not have adverse impacts. Environmental and Social Assessments were Involuntary Resettlement safeguards were triggered. carried out by the client with support from Bank specialists. As a result, an Environmental Some of the activities could provoke negative environmental Management Framework and a Resettlement Policy Framework were prepared for the impacts, social disputes (e.g. recommendations from disaster project. risk management components) or resettlement issues (e.g. Status: mapping outcomes). REsp: SE A Stage: Prep and Imp Due Date: 06/30/2017 On SEOBRAS, SEFAZgon going Program & Donor Rating: Low Description: The project is part of broader Government and Risk Management: Bank engagement on integrated territorial development in Rio de Janeiro, including three DPLs already closed and a fourth in preparation. Several Trust Funds have also supported advisory services to the state including PSIA, SFLAC funds and Korean Trust Fund. Low risk of withdrawal of funds or programmatic support for the project. Resp: Stage: Due Date: Status: Delivery Monitoring & Sustainability Rating: Moderate Description: The number of components and Secretariats Risk Management: Mechanisms and responsibilities for delivering project documents and involved in this project increase the risk that monitoring information are clearly defined in the Operational Manual, which describes in detail all progress and delivery of information will be delayed. Some implementing Secretariats responsibilities and the rules guiding the Coordination implementing Secretariats may find it difficult to oversee the Committee. An emphasis has been placed on state-wide integrated planning and the implementation of activities outside of their own Secretariat. implementation of information management systems in the project activities, encouraging the availability and integration of databases across sectors. This will increase the sustainability of improvements made in public management and integrated territorial development. Resp: SEPLAG, Status: SEOBRAS, SEFAZ, Stage: Imp Due Date:06/30/2017 Not Yet Coordination Committee Overall Risk Overall Implementation Risk Rating: Moderate Description: The most important risks are the risk of loss of political support for the Project from State government, as well as competing claims on the funds by different Secretariats. Additionally, the number of Secretariats and agencies involved may potentially complicate efforts to exercise proper oversight and execution of the project. These risks and corresponding mitigation measures will be closely monitored during implementation. 41 Annex 5: Implementation Support Plan BRAZIL: Strengthening Public Management and Integrated Territorial Development Technical Assistance Project Strategy and Approach for Implementation Support 1. The Implementation Support Strategy design draws upon the risk profile of the Operational Risk Assessment Framework (ORAF, Annex 4) and aims to enhance the client's quality of delivery of the proposed investments. This strategy is focused on risk mitigation measures as per the ORAF and regular Bank implementation support, including technical, institutional, social and environmental safeguards, and fiduciary aspects. 2. The proposed Implementation Support Strategy includes the following main elements: (a) The Project will be supervised by a headquarters-based team which will coordinate with the Country Office in Brazil as necessary. (b) Implementation support will start immediately after Board Approval to finalize and initiate the procurement of the Project's key activities. Frequency of supervision missions is expected to be higher at the beginning of implementation (possibly up to four per year) and decrease to two to three missions per year after the Project reaches a good implementation pace. (c) Fiduciary and safeguards trainings will be provided early on to the project implementation staff and the Bank's fiduciary and safeguards staff will initially provide support and advice to their counterparts in addition to their implementation support function. (d) The Implementation Support Plan will be revised regularly on the basis of project progress and continuous risk assessment. Implementation Support Plan 3. Technical Support. While most of the investments contemplated under the Project are not technically highly complex, the Bank team will be required to ensure that coordination amongst implementing institutions and inter-institutional arrangements receive full support. Specifically: (a) Component 1. The metropolitan management component supports integration and coordination in urban development, housing, transport, environment and disaster risk management. Supervision of the works will require that the Bank's team have solid technical experience regarding each of these sectors and provide support in coordinating amongst the institutions implementing activities within these sectors. 42 (b) Component 2. The social development component will support the state in the education and health sectors. Bank team expertise will likely be required to support the preparation of a strategic plan for the SEASDH as well as carry out technical studies to design a monitoring and evaluation model for the agency. (c) Component 3. The tax administration and financial management component will benefit from support by Bank team members with technical expertise in carrying out studies and developing procedures to improve management and costing of public investment programs. 4. Fiduciary Support. As a result of the fiduciary assessment, an action plan has been suggested on both FM and procurement in addition to closer initial supervision needs. Specifically: (a) Procurement: The Bank supervision team will: (i) Provide training to the Project staff; (ii) provide advice and support to the Procurement Specialists in the UGP; (iii) review procurement documents and provide timely feedback to the UGP; and (iv) monitor procurement progress against the Procurement Plan. (b) Financial Management: FM supervision would include on-site and off-site supervisions. On-site supervision missions will be carried out at least twice a year to the extent possible during the first year and later calibrated to once a year. Off- site supervisions will comprise desk reviews of interim financial reports and audited financial statements. 5. Safeguards support. Regular safeguards support for implementation will be important throughout project implementation. Support for addressing resettlement issues is required for studies related to risk mapping, land tenure regularization, and metropolitan plans. Environmental safeguards support will also be required to ensure that metropolitan planning activities account for potential negative environmental impacts. 6. Implementation main focus. The following table summarizes the main focus of implementation during the life of the Project. Time Focus Skills Needed Resource Partner Role Estimate First twelve Getting the Project Project 150 percent of egin project months underway and management, supervision budget ctivities related to generating goodwill technical support in ousing With early results housing, transport, egularization, environment, isaster risk disaster risk anagement, health management, sectors, financial social, health, anagement education and fiscal areas 43 12-48months Developing good Project Normal supervision Improve speed and practices, management, budget efficiency of implementing technical support in implementation of all activities urban development, three components social, fiscal areas Closing Drawing lessons Project Normal supervision Complete works and learned management, budget activities monitoring and evaluation Skills Mix Required 7. The following table summarizes the proposed skill mix and number of staff weeks in the initial phase of project implementation. It is expected that demand will decrease and change with time. Skills Needed Number of Staff Number of Trips Comments Weeks Task Team Leader 8 2-3 headquarters-based Sector Specialist (Urban) 10 4-6 Two people Environmental Specialist 2 1 Social Specialist 4 4 Two people Procurement Specialist 8 4 Two people (first two years) Financial Management Specialist 2 1 Disbursement Specialist 2 0 Disaster Risk Management 3 2-3 Specialist Education Specialist 3 2-3 Health Specialist 3 2-3 Fiscal Specialist 3 2-3 Operations Analyst 4 2-3 Partners Client State of Rio de Janeiro Borrower UGP SEPLAG, SEOBRAS, Implementing Agency SEFAZ Project Partner Institutions SEEDUC, DRM, SETRANS, Each partner has its own INEA, SHE, CEHAB, ITERJ, roles/responsibilities for SEDEC, MP, SES specific activities under the Project. (Annex 3) 44 Annex 6: Economic and Financial Analysis BRAZIL: Strengthening Public Management and Integrated Territorial Development Technical Assistance Project 20 1. This US$48 million project is linked to US$1,770 million investment in the state DPLs Overall, the program supports areas that are likely to have a significant impact on economic growth, both in the short run (environment, taxation) and in the long run (education, health, urban planning, and governance). The program will have tremendous leverage over much of the 2012-2015 multi-year plan and their investments at the metropolitan region level. There is ample evidence that the areas supported have positive and high rates of return, as is the case of education, health, and urban governance. As a project supporting a broad government program, a quantitative economic assessment was not undertaken. An ideal economic analysis for an investment project would provide an estimate of the present value of the stream of economic benefits from the project net of project costs. Such an ideal approach is not possible in this case, given that most of the specific benefits will be improved institutional capacity and performance that generally cannot be accurately translated into dollars or reais. Moreover, for the most part, it is impossible to ascribe efficiency and effectiveness gains directly and exclusively to the specific activities of the proposed project. Still, several project activities have evident fiscal and economic impacts that can be articulated, even if not fully quantified in advance. 2. Various aspects of the design of the activities help to ensure that investments represent the lowest-cost, best alternative. Two main design features help meet this goal. First, the process of selection of studies was demand-driven which helps ensure that scarce resources flow where they are most needed and that selected activities are the best alternatives. Second, the now- established use of project frameworks (projetos padrio) and cost parameters for the most common types of activities demanded ensures that the efficient selection models are implemented while decreasing associated search and information costs. Internal rates of return have been estimated for the most common types of investments - for which the proposed 21 technical assistance would provide support - and range between 15 and 25 percent . The analysis was based on the Social Accounting Matrix model proposed by IPEA 22and assumed constant benefits over the project life cycle. Sensitivity analysis showed that these activities are reasonably robust in relation to decreases in output and prices, and increases in production costs. Benefit-cost ratios are high (greater than 2.0) for the main types of activities analyzed bringing short term benefits. Analysis of these activities also suggests that investments are generally financially sustainable and often would lead if not to full cost recovery, at least to a more efficient use of resources in the medium term. For instance, it is expected that improvements in tax functions and the restructuring of processes will bring immediate gains in additional tax 20 The Fiscal Sustainability, Human Development and Competitiveness DPL (P117244, closed in December 2010); the Metropolitan Urban and Housing DPL (P122391, closed in December 2012); the Fiscal Consolidation, Human Development and Public Financial Management Development Policy Loan (P126465, closing January 2014) and the Enhancing Public Management for Service Delivery in Rio de Janeiro Development Policy Loan (P147695, approved on November 21, 2013) 21 For instance, the IRR for activities leading to investments at metropolitan level yield an IRR of about 25 percent, while for housing it was calculated to be around 16 percent, for social activities around 20 percent, and for the health sector activities around 14 percent. 22Instituto de Pesquisa Economica Aplicada (IPEA), 2011. Gastos com a Politica Social: alavanca para o crescimento com distribuiqao de renda. Rio de Janeiro. 45 revenues. Also, in the case of improved governance and urban transport modes, the improved frameworks will allow for increased attractiveness and competitiveness of the territory, and the improved allocation of productive factors in the economy. 3. The proposed operation includes several technical assistance activities in a range of sectors. These activities will underpin the reform agenda of the government of the state of Rio de Janeiro and provide the technical assistance backbone for the "Fiscal Consolidation, Human Development and Public Financial Management DPL" (P122391), Rio de Janeiro state Development Policy Loan. The anticipated impacts of the newly introduced activities in each project component are described in the table below. Table A6-1. Economic and Fiscal Impacts of Selected Project Activities Selected Activities Economic Impact Fiscal Impact Component 1: Strengthening Metropolitan Management through Integration and Coordination in Urban Development, Housing, Transport, Environment and Disaster Risk Management Creation and implementation of Optimization of the distribution of Development of efficient a monitoring and evaluation resources in the territory, resulting in governance programs based on system to measure the impact increased regional productivity. performance indicators that and quality of interventions in measure the quality of outcomes the metropolitan region. may reduce public spending. Proposal to reform institutional Improvements in the management and Reduced public spending arrangements for the implementation of urban and resulting from greater efficiency management of metropolitan metropolitan interventions. in projects developed in the development, including a metropolitan region. revision of State Law 87/97 and other norms of metropolitan governance. Elaboration of an Integrated Economic development of the Rio de Improved distribution of public Plan for developing the Rio de Janeiro Metropolitan Region due to the resources due to more efficient Janeiro Metropolitan Region. existence of integrated actions in diverse planning that takes integrated Technical study to integrate areas such as environmental sanitation, actions and policies into metropolitan plans for housing, housing, and public transport. consideration for the metropolitan public works, transport, territory. sanitation and other sectors. Digital mapping of the Greater intervention capacity of the More precise territorial metropolitan region's urban public authority empowered by relevant information, which may result in areas technical information about the increased precision in allocation metropolitan territory, of resources and spending. Evaluation of the Bilhete0Inico Expansion of the system may create Possible increase in public transportation ticketing system. positive externalities for the metropolis, spending on the state and Study of alternatives for the such as greater mobility, which may municipal level due to system's expansion. Detailed increase economic productivity. government subsidies. terms of reference for the development of the expanded metropolitan system. 46 Selected Activities Economic Impact Fiscal Impact Definition of an action plan for Improvements in metropolitan public More efficient procedures and the revision of the Metropolitan transport may result in substantial processes may economize public Urban Transport Agency's economic gains due to the reduction in resources. (AMTU-RJ) role in the region. time spent in traffic, for example. Strengthen capacity for the creation of public policy and improve intersectoral cooperation. Feasibility study to create a metropolitan agency model. Model a more effective state role in responding to cuItoent demand. Strengthen capacity of the Greater regulation capacity strengthens Development of concession Public Services Regulating the agency from the perspective of practices and participation of the Agency (AGETRANSP). concessionaries, which incentivizes the private sector in public services Feasibility study to create a meeting of contractual goals for may result in a decrease in public central location and system for investment and operational quality, spending as a total of investments regulatory information that Increased resources in the sector with the in the urban transport sector. AGETRANSP can access in the participation of the private sector. event of a crisis. Technical studies to develop an Institutional strengthening may increase Public savings may result from a institutional strengthening the capacity of interventions and more robust institutional proposal for the State effectiveness of housing policies, management of SEH and Secretariat for Housing (SEH) CEHAB. and the State Housing Company (CEHAB). Technical studies to design Provision of housing for populations Development of housing portfolio programs and without previous access. Regional programs may increase efficiency integration with social economic growth may result from new by more adequately directing programs. Technical study constructions and a reduction in the spending and avoiding risky uses systematizing urban parameters housing deficit, of public resources. New plots of for new plots of land in areas of land, once adequately occupied, social interest. will generate new sources of tax Creation of an Operational revenue. Manual to identify vacant or underutilized areas for housing. Identification of areas on Avenida Brasil between Deodoro and Campo Grande and feasibility study for a pilot project in one of the identified areas. Development of a model for Large, mixed-use housing nuclei bring New sources of tax revenue due to large, mixed-use housing positive externalities to the local new housing nuclei with great nucleus integrated with social economy due to the concentration in a potential for growth due to the policies. Feasibility studies, specific area of a defined, relatively structuring of PPPs. including one on the economic homogenous consumer market. and financial structure of this model in the Rio de Janeiro Metropolitan Region. 47 Selected Activities Economic Impact Fiscal Impact Studies to identify liabilities Making the real estate market more Increase in tax revenues due to and negotiation and dynamic. Increasing the value of regularized real estate. regularization strategies for regularized real estate and their housing developments and surroundings. Increase in productivity of develop a condominium work associated with the improved management and maintenance quality of living situation. strategy for future developments. Design an Integrated Plan for Potential increase in the value of real Sustainable Urban Land estate in regularized areas. Increase in Regularization (integration with productivity of work associated with the other state interventions, improved living situation. diagnostic of state programs and municipal initiatives) Building capacity of public representatives and civil society organized for land regularization and implementation of housing programs. Workshop to launch the Promotion of the ordered and planned Guarantee that the housing Housing Plan, expansion of areas for housing, avoiding expansion develops in a regular irregular occupation and all associated manner implies a reduction in lost negative externalities, tax revenues due to irregular _______________________ _____________________________occupation. Guarantee the sustainability of Greater efficiency of investments for the Recuperation and increased investments made in Projeto revitalization of the Baixada Fluminense dynamism in the economic Iguau, in the Baixada may result in a quicker economic activity in the region may increase Fluminense. recovery for the region. flows of tax revenue. Structuring and optimization of Mitigation of negative economic impacts Possible reduction in future public a database of risks and natural due to extreme climactic events, spending with the recuperation of disasters. areas affected by extreme Improvement in the integrated Maintenance of economic activity in climactic events. management of risks and areas of risk due to the reduced disasters. uncertainties related to extreme climactic events. Mapping of landslide and flood Increased value of land and increased risks. dynamism to the real estate market. Monitoring equipment, Greater foresight mitigates the impact of including emergency response extreme climactic events, reducing the vehicles to respond to risk of productive investments and landslides and floods. increasing economic potential. Building technical capacity, Increasing potential of positive impacts training to various inter- with greater efficiency of activities due to secretariat teams involved in greater technical capacity. disaster risk management. Technical assistance for developing technical documents, specifications, and terms of reference. 48 Selected Activities Economic Impact Fiscal Impact Component 2:Improving Living Conditions in the Most Vulnerable Social Settings Technical studies to design a Monitoring and evaluation of projects Greater efficiency in specific model for an M&E system for allows for greater efficiency, keeping programs can reduce costs, social programs, evaluation of spending constant. Possibility of new keeping the level of activity main programs, and capacity individuals entering the workforce, constant. Possible overall building activities. increasing productivity. Increased reduction in fiscal spending. administrative and organizational capacity, resulting in improved utilization of human capital involved in activities. Acquisition of information Optimization of the flow of information Reduced spending on obsolete management hardware and and its security, resulting in faster and methods of information storage. software and development of an reliable information management. Mitigation of risks in managing information system to monitor Increased operational capacity. confidential data. Optimization of programs. Training for resource distribution, resulting in SEASDH staff. public savings. Technical studies to develop a Increased efficiency in activities carried Fiscal goals may be included in strategic plan for SEASDH out by the Secretariat. Reduction in the management of SEASDH, activities and management of inequalities and productive insertion of ensuring greater control over processes. families in the workforce may increase spending, avoiding wasted economic activity. resources. Increase in efficiency of administrative structure may reduce costs. Technical studies and Reinsertion of pacified territories in the Increase in tax revenues due to the workshops to develop the social productive dynamic of the metropolis fiscal regularization of economic agenda in pacified territories, through the provision of more products activity in the pacified areas. and services, generating positive externalities in the region. Technical studies and Exchange of knowledge, creating better Efficient allocation of public workshops to develop improved understanding of the demands of the resources. Income transfer management and strategic program. Insertion of excluded families policies negatively impact the design of the state Extreme in the economy, increasing productivity. state budget; however, the Poverty Eradication Plan. increase in economic activity generates new sources of tax revenue. Strengthening the management Increase in social security of families will Successful social assistance and effectiveness of the likely result in their increased activities will reduce the costs of Universal Social Assistance participation in economic productivity. A attending to citizens in dire or System (SUAS). stronger Social Assistance system may emergency situations. result in reduced poverty and inequality. Technical studies to design and Insertion of citizens previously excluded Successful social assistance implement a methodology for results in an increase in demand, activities will reduce the costs of the State Human Rights Plan stimulating the productivity and attending to citizens suffering due (PEDH II), to be discussed for economic activity. to inequality. approval in regional and state conferences. Technical studies and Bringing citizens out of extreme poverty Increase in formal economic workshops addressing social results in development at the local, activity results in an increase in policies and the states' main regional and metropolitan level due to the state tax revenues. social programs. increased level of economic activity. 49 Selected Activities Economic Impact Fiscal Impact . Acquisition of information Families and friends suffer significant In the medium term, the management hardware and health, work, quality of life, emotional, improvement in treatment of software and development of an relationship, economic and other impacts mental health patients will information system to identify associated with a missing person. Better contribute to a reduction in public and locate missing people. and more useful information to identify spending, particularly in public and locate missing people may reduce health and penitentiary systems, these negative impacts. in addition to the possibility of Expansion of MSM and Improved protection and treatment of social and economic reinsertion of integration of the system with mental health patients may result in gains the individual, increasing tax other relevant databases. in social capital and economic revenues. productivity. Capacity building for users of Better information about mental health PLID (staff in Policia Civil, patients may contribute to their ISP, SNSP, IML, and Disque productive reinsertion into society. Denincia) and MSM (Promotorias de Justiga, Gestores e Unidades de Satide, hospitals, and CAPS). Expand SEEDUC's analytical More accurate, policy-relevant, and Management decisions based on and system management timely data will be available to support "real-time" system performance capacity through selective more efficient resource allocation data and rigorous evaluation recruitment, improvement in decisions. Rigorous evaluations of key evidence will increase spending data systems, and financing of programs will support more productive efficiency. program impact evaluations, investment/program decisions. Identify school infrastructure Increased hours of secondary school Improved infrastructure and issues and investment priorities instruction and a reduction in the share of longer hours of instruction have a to permit increased hours of students in (3-4 hour) night shifts can be fiscal cost. However, these will instruction for secondary school expected to improve graduation rates and be offset by reductions in the very students, learning results, which should increase high repetition rate in the Rio individual graduates' productivity and state system. Higher secondary contribute to unemployment reduction graduation rates should also be and productivity growth. correlated with higher employment and worker productivity, which have positive impact on tax receipts. Evaluation of the comparative More efficient strategies for family health An indirect consequence of performance of different programs are fundamental for this policy greater community involvement approaches to organizing and to have a positive impact, particularly: may be increased efficiency in the delivering primary care, refinement of health service delivery, and distribution of resources within increased community awareness and the family health programs. involvement in decision-making in public health. These aspects are expected to increase economic productivity. Analyze and restructure Improvements in hospital management Per capita public health spending administrative and clinical reduce time spent on patient is reduced due to a decreased processes in state hospitals. consultations and increases the number of number of complications and patients attended. Besides improving readmissions as well as lower public health indicators, these changes exposure time to illnesses in may result in increased economic hospitals. productivity. 50 Selected Activities Economic Impact Fiscal Impact Component 3:Strengthening Core Finance and Taxation Functions Technical studies to develop a Mapping tax waivers allows more Identifying tax waivers by sector methodology for estimating lost effective activities in many economic and by period allows sectoral and revenue due to tax waivers. sectors, making them more competitive temporal analyses as the basis of and incentivizing economic growth. crucial decision making by public managers. Technical studies to revise tax Increased access to financing for Programs that allow entities to collection procedures. companies due to improved tax collection pay taxes in installments, as in procedures. Increases in public coffers Sdo Paulo, have been very make possible the creation of new tax successful in recuperating lost waivers that can increase competitiveness revenue. and economic growth. Implementation of a control Increase in anticipated tax collection of A control system for IPVA system for the Automobile IPVA allows managers greater control collection will facilitate and Property Tax (IPVA) and planning abilities for the use of their increase the rate at which taxes administrated by the State resources as well as the possibility of are collected. Real time Secretariat of Finance, granting new tax incentives, interaction with entities in the identification of payments will increase efficiency. Creation of a common database A database will allow managers to access Improvement in transparency of for all investment projects in more information for planning of future control over the use of financial the state and training of activities, as well as improved resources. technical specialists, management of current activities, guaranteeing clarity and effectiveness of state investments. Technical studies for a Access to the best resources and experts Training technical specialists and diagnostic of mechanisms to evaluate financing options and their refining the tools available to needed to implement best respective conditions, allowing the them increases their capacity to practices in debt management Secretariat to better define long-term execute state goals. This may and training of technical goals and strategies in order to avoid increase the state's ability to specialists. short-sighted decisions, access new lines of financing and facilitates relations with investors, creditors and risk rating agencies. 51 IBRD 38295 - \ E DE GUyA French Siarna (Fr) COLOMBA VENEZUEL SURIN C1N fTo Governador Vldres E S P R I T 0 S A N T 0 To Governador To VitóSria Valadares PERU BOLIVIA Bo VitLiaA @Varre-Sai ToVitório To Governador orciåncula C91E PARAGUAY Area ofmap Valadares catividade To Vitória AARGENTINA OCCEA M l N A S G E R A l S Bons,u,do Låje-do Maue oIaperuna abaJna RIO_lio DE JANEIRon MERPOIANAE Sao Jose de Uba H To Ben(7o ate o Mdrcemna otalvo toraS Franäs6tih NA TNA ROA A T ATL NTC CE N LANECRALRND torpe os ro or d os o Moera Hohonteoo STAT JOU ro loreh e dTtBrrrh ii-PCampa damus , 00 25 50c rooiroerro S e d o m,MNCPLBUDRE H o orz o n t e o ° é o t T W r ozo @tcrm4 ' donIra ESanta Mo21 Madalen0 To Belo Horizonte ° r Scipucaia o Suiouo oriircl 3- Co o- umiouro2o u,u Barl Traiano de,Mri Concetao0 Quissamö - PaGraiba °TêRGsSo Jose d le i,;'deMtb oRo das do Sul o dRio,Preto" oLu JrimoCrapebus- Flores Volentca o Aeil NovaFniburgoo Pwtn~~o R- Maaisssoea Por Ral Ouhs o assouas oPat doAlferes@Trsph Ita i Barra doXPir oMgTPereirn "8 ahers eMtt .01 -n -ir Ene ngenheiroý Paulo An1i Peroos iuap,imCsmrod Abreu o ods Ostras Barra Mr-nså ReIdand Fränti To São Paulo To São Paulo agueimadosdi aClao Seroped. ... 0 Bef RoIaoral o i ° oio, racods zo B R A Z I L S Ã 0 P A U l 0Nova l Uac 0 o°Cxas ° Tnguad iBmooAmtooBzo IO D A ER ER P LTNA E taguugo RIO D E JA N EIRO M ETRO P OLT N A E RIG~~ DEoålcrauaa Cabo Fnio JA EI0 Säm® --HIGHWAYS gra ds Res o ' .- o angoatib ' .Arrdäld. lCab °== HIGHWAYS UNDER CONSTRUTO Bra des Septis 23° S NATIONAL ROADS ====NATIONAL ROADS UNDER CNTUTO Baia du Illa Grurnde Y1, a ------ ALO D A TL A NT IC OC E AN PLANNED RAILIROADS @ MUNICIPAL CAPITALS To São This mp was poduced by the Aiap Design Paul af Te Wrl Bork Te boorre- STATE BOUNDARIES 0 25 50 inforrmntion sha aon this ap da rot imnply',- U IIALB U D RE judgmnt an the legal sftoatuf any territory, K|LO E TbEeRSnendemet,. cetac tsc Source: www.dnit.gov.br