Document of
                   The World Bank


                                             Report No: 80202-PE




                RESTRUCTURING PAPER

                        ON A

           PROPOSED PROJECT RESTRUCTURING
                           OF
SECOND PHASE APL OF THE HEALTH REFORM PROGRAM PROJECT
                        (P095563)
                    FEBRUARY 17, 2009


                       TO THE

                  REPUBLIC OF PERU


                     JUNE 21, 2011
                      ABBREVIATIONS AND ACRONYMS



APL     Adaptable Program Loan
GoP     Government of Peru
MINSA   Ministry of Health
PDO     Project Development Objectives




           Regional Vice President:      Pamela Cox
           Acting Country Director:      Laura Frigueti
                   Sector Manager:       Omar Arias
                Task Team Leader:        Fernando Lavadenz / Nelson Gutiérrez

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                                        PERU
                  SECOND PHASE APL HEALTH REFORM PROGRAM PROJECT
                                 PARSALUD II (P095563)


                                                                CONTENTS


                                                                                                                                              Page
SUMMARY ................................................................................................................................. 4
PROJECT STATUS .................................................................................................................. 4
PROPOSED CHANGES .......................................................................................................... 4
TABLE 1- REVISED COST TABLE WITH BANK ......................................................... 5
TABLE 2- REVISED ALLOCATION OF THE LOAN ................................................... 6




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            SECOND PHASE APL HEALTH REFORM PROGRAM PROJECT
                           PARSALUD II (P095563)

SUMMARY
The purpose of the proposed restructuring is to reallocate the percentage of financing by the
Bank’s loan three of the four components of the Project in response to the request made by the
Government of Peru (GoP) in February 2011. As a result of budget constraint, linked to the use
of loan funds among 2010, the Government of Peru paid with counterpart resources various
technical assistance activities. Thus, the loan funds initially linked to these activities need to be
reallocated. This restructuring will allow for a better allocation of resources and support timely
project disbursements.

PROJECT STATUS
This Project is framed within the long-term objective of the Health Reform Program (APL, in all
its phases) to reduce maternal and infant mortality rates in the nine poorest regions of the country
(Amazonas, Huanuco, Huancavelica, Ayacucho, Apurimac, Cusco, Cajamarca, Ucayali and
Puno).

The Project Development Objectives (PDO) are to: (i) improve family care practices for women
(during pregnancy, delivery and lactation), and children under the age of three; (ii) strengthen
health service networks with capacity to solve obstetric, neonatal and infant emergencies and to
provide comprehensive health services to women (during pregnancy, delivery and lactation) and
children under the age of three; and (iii) support MINSA's governance functions of regulation,
quality, efficiency and equity for improving the new health delivery model of maternal and child
health care in a decentralized environment.

The project has reached its targets to date, and the Government is working on improving its
disbursement performance, which has been moderately unsatisfactory due to delays to allocate
loan funds to the Project linked to the above-mentioned budget reform. The project has delivered
several key products, which will contribute to the political transition of the new Government in
July 2011.

PROPOSED CHANGES
The proposed reallocation of loan proceeds among disbursement category is outlined in Table 1,
and includes revised percentages of financing by component. This table shows that there are no
changes in total expenditures by component and categories of expenditures, and only the
percentage of financing of the first three components changes. Table 2 shows the original and
proposed loan funds allocation. The rationale for the reallocation of percentages of financing in
these components has been explained above.




                                                 4
          TABLE 1- Revised Cost Table with Bank

                                         Allocation    % of Financing
      Expenditure Category                Current     Current  Revised

Component 1                                 6,0        50,0      25,0
  Goods                                     1,5
  Consultants' Services                     2,3
  Training/Workshops/Dissemination          2,2

Component 2                                142,3       6,0       8,0
  Goods                                     31,8
  Works                                     85,7
  Consultants' Services                     19,0
  Training/Workshops/Dissemination           5,7

Component 3                                 5,2        50,0      25,0
  Consultants' Services                     5,1
  Training/Workshops/Dissemination          0,1

Component 4                                 9,0        2,0       2,0
  Consultants' Services                     0,5
  Operating Costs                           8,5

TOTAL                                      162,4       9,2       9,2




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    TABLE 2- Revised Allocation of the Loan

                                         Amount of the Loan
                                              Allocated
                                         (expressed in USD)
             Category
                                         Current      Revised
   (1) Goods, works, consultant’s
services and Training under Part 1 of
             the Project
                                        2,987,788    1,493,894
   (2) Goods, works, consultant’s
services and Training under Part 2 of
             the Project
                                        9,163,781    11,955,029
   (3) Goods, works, consultant’s
services and Training under Part 3 of
             the Project
                                        2,594,708    1,297,354
  (4) Goods, consultant’s services
including audit and Operating Costs
                                         253,723      253,723
         TOTAL AMOUNT                   15,000,000   15,000,000




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