OFFMCAL Supplemental Letter No. 2 REPUBLIC OF AZERBAIJAN June 23, 2016 International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Re: Loan No. 8627-AZ (Additional Financing for IDP Living Standards and Livelihood Project) Performance Monitoring Indicators Dear Sirs and Mesdames: This refers to paragraph A.1 of Section II of Schedule 2 to the Loan Agreement of even date herewith between the Republic of Azerbaijan (the Borrower) and the International Bank for Reconstruction and Development (the Bank). The Borrower hereby confirms to the Bank that the indicators set out in the attachment to this letter shall serve as a basis for the Borrower to monitor and evaluate the progress of the Project and the achievement of the objectives. Very truly yours, REPUBLIC OF AZERBAIJAN By Authorized Representative Attachment Attachment to the Supplemental Letter No. 2 Performance Monitoring Indicators Project Name: (Additional Financing for IDP Living Standards and Livelihood Project) Project Development Objectives Original Project Development Objective - Parent: The objective of the Project is to improve living conditions and increase the economic self-reliance of targeted internally displaced persons. Proposed Project Development Objective - Additional Financing (AF): No change Results Core sector indicators are considered: Yes Results reporting level: Project Level Project Development Objective Indicators Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target Revised Direct project beneficiaries X Number Value 0.00 199601 371000.00 Date 09-Feb-2012 15-Oct-2015 31-Dec-2020 Comment End target and date modified to reflect AF No Change Female beneficiaries X Percentage Value 0.00 50.10 50.00 Sub Type Supplemental New Percentage of households with Percentage Value 77.00 95.60 30.00 increased access to basic rural Date 15-Apr-2011 15-Oct-2015 3 1-Dec-2020 infrastructure Comment Improvement in relation to the 2 new baseline to be established as part of the impact evaluation Revised % of HH who are satisfied with Percentage Value 3.60 92.70 30.00 the quality of basic rural Dt t Date 15-Apr-2011 15-Oct-2015 31-Dec-2020 infrastructure Comment Improvement in relation to the new baseline to be established as part of the impact evaluation Marked for % increase in access to all Percentage Value 59.90 96.40 75.00 Deletion weather rural roads Sub Type Date 15-Apr-2015 15-Apr-2015 30-Jun-2016 Breakdown Comment Original target exceeded Marked for % with access to 24 hour water Percentage Value 83.20 92.50 75.00 Deletion Sub Type Date 15-Apr-2015 15-Apr-2015 30-Jun-2016 Breakdown Comment Original target exceeded Marked for % with access to 24 hour Percentage Value 89.10 97.20 75.00 Deletion electricity Sub Type Date 15-Apr-2015 15-Apr-2015 30-Jun-2014 Breakdown Comment Original target exceeded Marked for % with access to community Percentage Value 82.00 94.00 75.00 Deletion centers Sub Type Date 25-Sep-2014 15-Apr-2015 30-Jun-2016 Breakdown Comment Original target exceeded 3 Revised Changes in housing Percentage Value 33.00 96.00 75.00 deficiencies: satisfaction with Date 25-Sep-2014 15-Oct-2015 31-Dec-2020 housing condition Comment Original target exceeded Marked for % of households suffering from Percentage Value 93.50 15.20 25.00 Deletion dampness Sub Type Date 25-Sep-2014 15-Apr-2015 30-Jun-2016 Breakdown Comment Original target exceeded Marked for % of households with energy Percentage Value 2.30 98.40 75.00 Deletion efficient doors and windows Sub Type Date 25-Sep-2014 15-Apr-2015 30-Jun-2016 Breakdown Comment Original target exceeded Marked for % with access to 24 hour water Percentage Value 44.30 89.60 75.00 Deletion Sub Type Date 25-Sep-2014 15-Apr-2015 30-Jun-2016 Breakdown Comment Original target exceeded Marked for % with access to 24 hour Percentage Value 69.60 99.90 75.00 Deletion electricity Sub Type Date 25-Sep-2014 15-Apr-2015 30-Jun-2016 Breakdown Comment Original target exceeded New Improvement in the quality and Percentage Value 0.00 43.00 20.00 sustainability of IDP Date 15-Oct-2015 31-Dec-2020 livelihoods Comment Improvement in relation to the new baseline to be established as part of the impact evaluation 4 Marked for Targeted beneficiaries whose Percentage Value 19.60 52.60 25.00 Deletion main source of household income is self generated Date 15-Apr-2015 15-Apr-2015 30-Jun-2016 Comment Original target exceeded Intermediate Results Indicators Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target Revised Number of completed Number Value 0.00 196.00 490.00 subprojects (disaggregated by Date 09-Feb-2012 15-Oct-2015 31-Dec-2020 type) Comment Revised Number of people benefitting Number Value 0.00 153512.00 313000.00 from access to improved Date 09-Feb-2012 15-Oct-2015 3 1-Dec-2020 infrastructure (disaggregated by type; also disaggregated by Comment direct and indirect) Revised Number of collective centers Number Value 0.00 87.00 103.00 having renovation Date 09-Feb-2012 1 1-Jan-2016 31-Dec-2020 Comment New Grievances registered related to X Percentage Value 100.00 100.00 delivery of project benefits Date 15-Oct-2015 Date 5-Oct2015 31-Dec-2020 addressed (%) Comment New Grievances related to delivery X Number Value 0.00 15.00 60.00 of project benefits that are Sub Type addressed-(number) Supplemental Revised Increase in income of direct Percentage Value 0.00 43.00 20.00 project beneficiary households Date 15-Apr-2015 31-Dec-2020 Comment New Number Value 5 Increase in income of direct Date 31 -Dec-2020 project beneficiary households Comment TBD TBD+20% (in AZN) Revised Number of targeted Number Value 0.00 3906.00 9600.00 beneficiaries who gain Date 15-Apr-201 1 15-Apr-2015 31 -Dec-2020 employment Comment New Number of targeted Number Value 0.00 2661.00 5400.00 beneficiaries who gain Sub Type Date 15-Apr-2011 15-Oct-2015 31-Dec-2020 employment - female Breakdown Comment Revised Increased value of assets Number Value 0.00 3237.00 owned by direct beneficiaries Date 09-Feb-2012 15-Apr-2015 31 -Dec-2020 Comment TBD+10% New Percentage increase in profit of Percentage Value 0.00 20.00 buinesses beneficiary Date 15-Apr-2011 31-Dec-2020 businesses Comment Revised No of active loan accounts - Number Value 0.00 1608.00 3300.00 Microfinance Date 09-Feb-2012 15-Apr-2015 31-Dec-2020 Comment New Percentage of active loan Percentage Value 30.00 30.00 50.00 accounts held by vulnerable Sub Type IDPs Supplemental New Percentage of active loan Percentage Value 20.00 accounts held by women Sub Type Supplemental Revised X Percentage Value 0.00 100.00 100.00 Sub Type 6 Percentage of project- Supplemental supported institutions that are reporting on this indicator Marked for Community contribution in the X Percentage Value 0.00 1.44 3.00 Deletion total project costs (percentage) Date 09-Feb-2012 15-Apr-2015 30-Jun-2016 Comment Revised Total community contribution X Amount(USD) Value 0.00 531546.66 500000.00 (US$) Sub Type Supplemental Marked for Conflict affected people X Number Value 0.00 34285.00 25000.00 Deletion receiving benefits in Ist year of Date 17-Apr-2014 17-Apr-2014 project effectiveness Comment No Change Conflict affected ppl receiving X Number Value 0.00 16663.00 12500.00 benefits in 1st yr of proj. Sub Type Date 17-Apr-2014 17-Apr-2014 effectiveness-female Breakdown Comment Marked for % active loans to women - X Percentage Value 0.00 41.00 35.00 Deletion Microfinance Date 09-Feb-2012 15-Apr-2015 30-Jun-2016 Comment Revised Percentage of project- X Percentage Value 100.00 100.00 100.00 supported institutions that are Sub Type reporting on this indicator Supplemental Marked for Number of active micro- X Number Value 0.00 163.00 200.00 Deletion savings accounts Date 09-Feb-2012 15-Apr-2015 30-Jun-2017 Comment Revised X Percentage Value 0.00 100.00 100.00 Sub Type 7 Percentage of project- Supplemental supported institutions that are reporting on this indicator Marked for No of active loan accounts-- Number Value 0.00 1608.00 1500.00 Deletion Microfinance Date 09-Feb-2012 15-Apr-2015 30-Jun-2016 Comment Marked for Increase in targeted Percentage Value 15.00 75.50 40.00 Deletion beneficiaries rating housing Date 09-Feb-2012 15-Apr-2015 30-Jun-2016 conditions as good. Comment Marked for % active loans to women- Percentage Value 0.00 41.00 35.00 Deletion Microfinance Date 09-Feb-2012 15-Apr-2015 30-Jun-2016 Comment Marked for # of new social institutions Number Value 0.00 539.00 400.00 Deletion formed under the project Date 09-Feb-2012 15-Apr-2015 30-Jun-2016 Comment Marked for % of targeted beneficiaries who Percentage Value 94.00 97.50 75.00 Deletion feel able to influence Date I 1-Apr-2014 15-Apr-2015 30-Jun-2016 development decisions. Comment Marked for # of new businesses and micro- Number Value 0.00 2178.00 1500.00 Deletion enterprises created under the Date 09-Feb-2012 15-Apr-2015 30-Jun-2016 project, which are generating profit after one year. Comment Marked for % of targeted beneficiaries who Percentage Value 6.10 2.10 Deletion feel socially excluded in the Date I 1-Apr-2014 15-Apr-2015 30-Jun-2016 wider society. Comment Marked for # of members of social Number Value 0.00 3944.00 4500.00 Deletion institutions Date 09-Feb-2012 15-Apr-2015 30-Jun-2016 8 Comment Marked for Beneficiaries rating access to Percentage Value 2.70 95.90 30.00 Deletion goodr as Date 1 1-Apr-2014 15-Apr-2015 30-Jun-2016 good Comment Marked for beneficiaries rating quality of Percentage Value 3.60 93.80 30.00 Deletion service/utility/infrastructure as Date 11-Apr-2014 15-Apr-2015 30-Jun-2016 good Comment Moved into PDO indicator section Marked for % of targeted beneficiaries Percentage Value 89.70 90.80 80.00 Deletion whose social map of trusted reain inlds.P swl Date 1 1-Apr-2014 15-Apr-2015 30-Jun-2016 relations mecludes IDPs as well as non IDPs Comment Marked for Amount of monthly household Amount(USD) Value 0.00 1558.00 1000.00 Deletion income Date 09-Feb-2012 15-Apr-2015 30-Jun-2016 Comment 9 -oject Development Objective (PDO): P improve living conditions and increase the economic self-reliance of targeted internally displaced persons Baseline Cumulative Target ValuesO U Origina Progre YRI YR2 YR3 YR4 Data Source/ Responsibility )O Level Results Indicators' 0 Frequency for Data Comments m2 Project Date Methodology Collection Start (2015)3 (2011) a). # of direct project Quarterly and Quarterly and neficiaries # 0 158915 220,000 260,000 325,000 371,000 annual project Project MIS annual project reports reports b). of which female Quarterly and Quarterly and E % NA 50.1 50 50 50 50 annual project Project MIS annual project reports reports Percentage of households Change from original wording ith increased access to basic 30% 30% 30% 30% which stated: Change in access iral infrastructure 3 improve- improve- improve- to improved quality of improve- ment on ment on ment on 3 times during Randomized services, infrastructure and metn mn n mn nment on 3.ie drn impact Consulting firm O % 77 95.6 new new new project (baseline, utilities. Definition of basic new .evaluation; ex- (to be hired) IE IE IE mid-term, final) rural infrastructure will include IE baseline poste evaluation baseline baseline baseline water supply, roads, utilities, health centers, schools, and irrigation. Percentage of households 30% 30% 30% 30% New. During the additional ho are satisfied with the ipv improve- improve- improve- 3 Randomized financing, this information will uality of basic rural 3mentvon ment on ment on ment on 3 impact Consulting firm be collected by a consulting O % 36 927 met onproject (baseline, frastructure new new new p evaluation; ex- (to be hired) firm as part of the impact new mdtr,fnl nele IE IE IE mid-term, final) poste evaluation evaluation, and not by the baseline baseline baseline project team. Changes in housing -ficiencies: satisfaction with This indicator has been ousing condition Randomized modified. In the AF, only 3 times during Ra i maintenance of housing will be fl ~75% 75% 75% 75% impact Consulting firm careOu.Teidatrwl Ol % 33 96 project (baseline, eauto;x- (obhid) carried out. The indicator will proect(baelie, evaluation; ex- (to be hired) mid-term, final) therefore measure the satisfaction with housing improvements and maintenance Please indicate whether the indicator is a Core Sector Indicator (for additional guidance - please see http://coreindicators). 2 UOM = Unit of Measurement. For new indicators introduced as part of the additional financing, the progress to date column is used to reflect the baseline value. 4Target values should be entered for the years data will be available, not necessarily annually. Target values should normally be cumulative. If targets refer to annual values, please indicate this in the indicator name and in the "Comments" column. 10 Originally, the indicator read: Changes in housing deficiencies - % decrease in hh suffering from dampness; - % increase in hh with energy; efficient doors and windows; -% increase in access to 24 hr; water; - % increase in access to 24 hr Improvement in the quality New. Original PDO level IDP livelihoods 20% indicator for livelihoods Improve- activities (% of targeted ment in 20% 20% 20% beneficiaries whose main relation to improve- improve- improve- . source of household income is the new ment from ment from ment from 3 times during aself-generated) will be tracked impact Consulting firm l-eeae) ilb rce % 0 43 baseline to new new new project (baseline, as an Intermediate Results evaluation; ex- (to be hired) be IE IE IE mid-term, final) poste evaluation indicator. Quality and established baseline baseline baseline sustainability of IDP as part of livelihoods will be measured the impact through an index including evaluation IDP increased incomes, assets, access to services. Intermediate Results and Indicators Baseline Progre Target Values Ineredat RsutsOriginal ssT R R R R aaSuc/ Responsibility In diaters Unit of Measurement Project ssT Frequency DataoSoc for Data Comments Indicators Start Methodology Collection (2015) (2011) termediate Result 1: Improved IDP living standards 1. 4 of completed Quarterly Type = water supply, subprojects Number 0 196 270 340 410 490 and annual Project MIS SFDI electricity, irrigation, road, (disaggregated by project health centers, schools, etc. for type) reports component A and B. 2. # of people Changed wording. Original benefitting from Quarterly reads: # of people provided access to improved and annual access to services/ utility infrastructure d ] Number 0 129,512 170,000 230,000 270,000 313,000 andanua Project MIS SFDI /infrastructure. Type = water ifrate project supply, electricity, irrigation, (disaggregated by reports road, health centers, schools, type; also etc. 11 disaggregated by direct and indirect) 3. # of collective Quarterly Changed wording. Original and annual PoetMS SD centers renovated by Number 0 66 103 103 103 103 Project MIS SFDI reads: # collective centers the project project having full scale renovation. reports 4a. Grievances registered related to Quarterly delivery of micro- and annual projects benefits that 0 Number 0 15 30 45 60 75 project Project MIS SFDI are actually reports addressed (number) 4b. Grievances registered related to delivery of micro- Quarterly projects benefits that % 0 100 100 100 100 100 and annual Project MIS SFDI are actually project addressed reports (percentage) termediate Result 2: Improved IDP livelihoods Increase in income of direct 3 times Randomized oject beneficiary households during impact Change in wording from: j Percentage 0 43 20 20 20 20 evaluation; Consulting firm "Amount of monthly (baseline, ex-poste (to be hired) household income" mid-term, evaluation final) Increase in income of direct 3 times Randomized oject beneficiary households TBD+2 TBD+2 TBD+2 TBD+2 during impact TBD+2 TB+2 TDproject imac Consulting firm O Number 0 TBD 0% (in 0% (in 0% (in 0% (in project evaluation; New (baseline, eauto; (to be hired) AZN) AZN) AZN) AZN) ex-poste mid-term, evaluation final) i. Number of targeted 3 times Randomized neficiaries who gain Number during impact In the AF, tracking also self- nployment El 0 4,752 6,000 7,200 8,400 9,600 project evaluation; Consulting firm employment. Will also track # (baseline, (to be hired) m (baselin, ex-poste of hours of employment. id-te, evaluation final) . Number of targeted Number 3 times Randomized neficiaries who gain El TBD 3,000 3,600 4,200 5,400 during impact (to be hired) New. project evaluation; 12 iployment - female (baseline, ex-poste neficiaries mid-term, evaluation final) Increased value of assets 3 times Randomized med by direct beneficiaries during impact Change in wording from: "# E]i Number TBD TBD+1 TBD+1 TBD+1 TBD+1I project evaluation Consulting firm and type of assets acquired by 0% 0% 0% 0% (baseline, ex-poste (to be hired) IDP as a result of the project" mid-term, final) ' evaluation final) Percentage increase in profit 3 times Randomized microloan beneficiary during impact sinesses project . Consulting firm O Percentage 0 20 20 20 20 (baseline, evaluation; (to be hired) New mid-term, ex-poste id-te, evaluation final) ______________ iprovement in the This will be measured stainability of IDP livelihoods through an index including IDP risk and dependency on state assistance, number of successive months in which beneficiaries' income exceeds state assistance a. No of active loan accounts- Quarterly icrofinance Number 0 2100 2500 2900 3300 and annual Project MIS SFDI 1608 project reports a. Percentage of active loan Quarterly New. Vulnerable IDPs will be iounts held by vulnerable and annual defined as IDPs living in 'Ps E Percentage 0 30 30 40 50 50 and Project MIS SFDI remote rural communities or reports those living under the poverty line. b. Percentage of active loan Quarterly iounts held by women Ol Percentage 0 10 10 15 20 and annual Project MIS SFDI New 0 project reports ic. Percentage of project- Quarterly pported institutions that are Z Percent 0 100 100 100 100 and annual Project MIS SFDI 3orting on this indicator 0 project reports 13