Document ofThe World Bank

Report No: 22359 JM

PROJECT APPRAISAL DOCUMENT

ONA

PROPOSED LOAN

IN THE AMOUNT OF US$40 MILLION

TO

JAMAICA

FOR A

SOCIAL SAFETY NET PROJECT

August 9, 2001

Sector Management Unit for Human DevelopmentCaribbean Country Management UnitLatin America and the Caribbean Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective June 6, 2001)

Currency Unit = Jamaican Dollar (JMD)

1JMD = US$.022US$1 = JMD 45.45

FISCAL YEARApril 1 -- March 31

ABBREVIATIONS AND ACRONYMS

CAS Country Assistance Strategy NGOs Non-Goverinmental OrganizationsCFAA Country Financial Accountability NIS National Insurance Scheme

AssessmentDFID Department for International OPM Office of the Prime Minister

DevelopmentECD Early Childhood Devlopment PIOJ Planning Institute of JamaicaFMIS Financial Management Information PMR Project Management Report

SystemGOJ Governnent of Jamaica ROSE II Jamaica Reform of Secondary

Education ProjectIRC Human Resource Council SA Special AccountIBRD Intemational Bank for Reconstruction SIF Social Investment Fund

and Development (World Bank)ICB Intemational Competitive Bidding SLC Survey of Living ConditionsIDB Inter-American Development Bank SMP Staff Monitored ProgramIMF Intemational Monetary Fund SOE Statement of ExpendituresJSIF Jamaica Social Investment Fund SPAD Social Protection and

DevelopmentKMA Kingston Metropolitan Area SSN Social Safety NetLAC Latin America and the Caribbean TA Technical Assistance

RegionLACI Loan Administration Change TC Technical Cooperation

InitiativeMIS Management Information System TCT Targeted Conditional TransferMLGCD Ministry of Local Government, Youth TOR Terms of Reference

and Community DevelopmentMLSS Ministry of Labour and Social UBP Unified Benefit Program

SecurityNCB National Competitive Bidding USAID United States Agency for

International Development

Vice President: David de Ferranti

Country Manager/Director: Orsalia KalantzopoulosSector Manager/Director: Xavier Coll

Task Team Leader/Task Manager: Andrea Vennehren

JAMAICASOCIAL SAFETY NET PROJECT

CONTENTS

A. Project Development Objective Page

1. Project development objective 22. Key performance indicators 2

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 42. Main sector issues and Government strategy 43. Sector issues to be addressed by the project and strategic choices 8

C. Project Description Summary

1. Project components 102. Key policy and institutional reforms supported by the project 123. Benefits and target population 134. Institutional and implementation arrangements 14

D. Project Rationale

1. Project alternatives considered and reasons for rejection 162. Major related projects financed by the Bank and other development agencies 183. Lessons learned and reflected in the project design 184. Indications of borrower commitment and ownership 195. Value added of Bank support in this project 20

E. Summary Project Analysis

1. Economic 202. Financial 213. Technical 224. Institutional 235. Environmental 246. Social 247. Safeguard Policies 26

F. Sustainability and Risks

1. Sustainability 262. Critical risks 273. Possible controversial aspects 28

G. Main Loan Conditions

1. Effectiveness Condition 282. Other 29

H. Readiness for Implementation 29

I. Compliance with Bank Policies 29

Annexes

Annex 1: Project Design Summary 30Annex 2: Detailed Project Description 35Annex 3: Estimated Project Costs 39Annex 4: Cost Benefit Analysis Summary 41Annex 5: Financial Summary 43Annex 6: Procurement and Disbursement Arrangements 44Annex 7: Project Processing Schedule 53Annex 8: Documents in the Project File 55Annex 9: Statement of Loans and Credits 56Annex 10: Country at a Glance 58Annex 11: Overview of current Social Safety Net 60Annex 12: Social Assessment 63Annex 13: Institutional Arrangements: Responsibilities of the SPAD Division 65Annex 14: Organization Chart: Ministry of Labour and Social Security 67Annex 15: Proxy Means Test in Jamaica 68Annex 16: Letter of Development Policy 69

MAP(S)Map of Jamaica

JAMAICASocial Safety Net Project

Project Appraisal Document

Latin America and Caribbean RegionLCSHS

Date: August 9, 2001 Team Leader: Andrea VermehrenCountry Manager/Director: Orsalia Kalantzopoulos Sector Manager/Director: Xavier E. CollProject ID: P067774 Sector(s): SA - Social AssistanceLending Instrument: Specific Investment Loan (SIL) Theme(s): Social Protection

Poverty Targeted Intervention: Y

Program Financing Data[X] Loan [ ] Credit [ ] Grant [ ] Guarantee [ Other:

For Loans/Credits/Others:Amount (US$m): $ 40.00

Proposed Terms (IBRD): Fixed-Spread Loan (FSL)Years to maturity: 17.5Front end fee on Bank loan: 1.00%

Financing Plan (US$m): Source Local Foreign TotalBORROWER 37.50 0.00 37.50IBRD 35.37 4.63 40.00

Total: 72.87 4.63Borrower: JAMAICAResponsible agency: MINISTRY OF LABOUR AND SOCIAL SECURITYAddress:14 National Heroes CircleKingston 4JamaicaContact Person: Mr. Alvin McIntosh, Permanent SecretaryTel: (876) 922-4207 Fax: (876) 924-9639 Email: mlss@netcom-jm.com

Estimated disbursements ( Bank FY/US$m):FY 2002 2003 2004 2005

Annual 4.94 11.55 11.02 12.49Cumulative 4.94 16.49 27.51 40.00

Project implementation period: 4 yearsExpected effectiveness date: 01/02/2002 Expected closing date: 12/31/2005

,OCS PAD Fans Rw~ Mach. YOO

A. Project Development Objective

1. Project development objective: (see Annex 1)

The proposed project will support the Government's efforts to transform the Social Safety Net (SSN) into afiscally sound and more efficient system of social assistance for the poor and vulnerable. Specifically, theproject seeks to provide better and more cost-effective social assistance to the extreme poor. To this end,the project will: (a) consolidate major income transfer programs into a Unified Benefit Program (UBP) thatensures (i) a meaningful level of benefits, (ii) cost-efficient and accessible delivery system, (iii) access tobenefits linked to desirable behavioral changes for promoting investment in the human capital developmentof the poor, especially children, and (iv) effective targeting of social assistance to special groups; and (b)strengthen institutional capacity to (i) operate the program effectively and efficiently, and (ii) implementoverall social safety net reform elements, including a transparent targeting mechanism.

Jamaica has a long tradition of public provision of welfare programs, dating back to the 19th century. TheGovernment of Jamaica (GOJ) currently operates a large number of social assistance programs aimed atthe delivery of cash and in-kind benefits and social services to individuals and families who are poor and toindividuals with specific needs. In 1999/2000, the GOJ, with support from the World Bank, conductedvarious studies on the SSN which pointed to the need for reform to reduce fragmentation and duplication ofservices, improve targeting of benefits and increase coverage of persons who are poor. In addition, morecost effective provision of meaningful benefits was needed and links of welfare benefits to human capitalinvestment, especially through school attendance and preventive health care, were deemed desirable. Basedon these studies and a series of consultative workshops with a broad range of government agencies,academics and civil society, an inter-institutional task force led by the Planning Institute of Jamaica (PIOJ)developed a Policy Matrix for the Reform of the SSN of Jamaica. The SSN reform proposal was approvedby Cabinet in October 2000 and provides the basis for the proposed project.

T'his loan is part of a coordinated package of financial and technical assistance requested by theGovernment of Jamaica from the donor community to support the reform. The Inter-AmericanDevelopment Bank (IDB) is preparing a complementary US$40 million SSN sector loan to (a) protectsocial sector and safety net spending during a period of strong fiscal adjustment, and (b) facilitate therestructuring and better targeting of several important safety net programs, including the school feedingprogram. The IDB loan is linked to progress in the implementation of the new Unified Benefit Programand the targeting mechanism. An IDB Technical Cooperation (TC) operation of US$1.2 rmillion will alsosupport the analysis/restructuring of other safety net programs closely related to IDB's health and educationsector operations. Finally, British DFID is supporting the GOJ with Technical Assistance to improveSocial Policy coherence and evaluation capacity.

2. Key performance indicators: (see Annex 1)

The program will begin with an eight month pilot in the Parish of St. Catherine that will be accompanied bya process evaluation to assess bottlenecks and aid program design before the program is scaled up to fullnational coverage. During this time, the following data collection instruments that are further described inAnnex I will form the basis of the Monitoring and Evaluation system:

* Household Surveys. The household surveys will take advantage of the Jamaica Survey of LivingConditions (SLC) to oversample program beneficiaries. This oversampling combined with the dataavailable from the SLC will allow for program evaluation and an assessment of poverty targeting.

* Monitoring Indicators. The program's Management Information System (MIS) will generate

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monitoring indicators to track program performance and efficiency.* Qualitative Beneficiary Assessment. A series beneficiary assessment will be conducted with a

sub-sample of beneficiaries selected from the quantitative sample to assess beneficiary satisfaction.

The impact and outputs of the Unified Benefit Program will be assessed by the following measurableindicators:

a) Outcome Indicators

The following indicators will be measured:

(i) Education grants

Change in school attendance - primary and secondary schoolChange of enrollnent for secondary school

(ii) Health grantsChange in the percentage of children brought to health centers for preventive careChange in children age 0-6 and not enrolled in school with on-time, complete immunization scheme

(iii) Adult Assistance grantsChange in poor pregnant, and lactating mothers visiting health centers for timely check upsChange in poor elderly, disabled and other beneficiaries visiting health centers

(iv) Beneficiary satisfaction with the UBP (will be assessed through beneficiary consultations)

(v) Percentage of overall SSN expenditure channeled through the Unified Benefit Program (target > 19.5percent).

b) Output indicators

(i) Number of beneficiaries (target > 217,000 total in Year 3 of project)

(ii) Approximate monthly benefit under the program (target: Year 1: US$6, Year 2: US $6, Year 3 US$7.5,Year 4 and thereafter US$9 per person/month). (Benefits will be gradually increased to replace the existingtransfer programs).

(iii) School attendance rate by children (primary and secondary students eligible under the UBP to attend atleast 85 percent of school sessions).

(iv) Health care utilization by children 0-6 and not enrolled in school (target: Number of visits according tonational standards, see annex 2).

(v) Percentage of grant recipients below the poverty line (target > 70 percent).

(vi) Percentage of eligible poor not receiving grant (target < 30 percent).

(vii) Administrative costs below 15 percent (Year 3 of project).

The targets will be reviewed based on the experience of the pilot phase.

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B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1)Document number: SecM2000-680 Date of latest CAS discussion: November 30, 2000

The Jamaica Country Assistance Strategy (CAS) for 2001/02 builds on the Government's developmentagenda which rests on four pillars: (i) restoring economic growth; (ii) ensuring that growth is inclusive andthat the poor are adequately protected; (iii) improving governance, efficiency and effectiveness in the publicsector; and (iv) ensuring sustainable development.

Based on this agenda, and given the context of the fiscal, economic, social and environmental challenges,the Bank's program with Jamaica aims to help prevent a reversal of the recent gains in poverty reductionand create the foundation for sustained growth. The CAS lays out a highly focused program, based onthree principles: (i) a focus on the Bank's core mandate of poverty reduction; (ii) a focus on areas wherethe Bank has a comparative advantage; and (iii) a focus on complementarity with other developmentpartners. Under the base case scenario, the Bank's lending program includes fast-disbursing support torestructure the financial sector, and, closely linked to the above, support for a social sector programconsisting of the proposed Social Safety Net operation and a Secondary Education project (ROSE II).

The proposed Social Safety Net project speaks directly to the CAS goal of "protecting the poor andensuring inclusion" by enhancing the efficiency and effectiveness of the social safety net, focusingparticularly on improving assistance to the poorest. First, the project will improve efficiency of servicedelivery by consolidating the existing social assistance programs into a Unified Benefit Program. Strongtechnical assistance and training will be provided to strengthen institutional capacities at central andlocal/parish levels. Second, it will introduce an objective and transparent targeting mechanism that will beused for selecting beneficiaries of the UBP as well as other poverty alleviation programs later on (schoolfeeding, etc.). Third, by linking benefits to school attendance and health clinic visits for children andpregnant mothers, the project will improve the long-term accumulation of human capital of poor childrenand their ability to break out of the inter-generational cycle of poverty. And fourth, the project will improvetargeting of transfers to special target groups (e.g. disabled) and improve their health care by linkingbenefits to health clinic visits as well. This investment project is an integral part of the Government ofJamaica's strategy in meeting the CAS goals.

2. Main sector issues and Government strategy:

Declining Growth: Threat to Recent Improvements in Poverty

Jamaica has been experiencing a difficult phase of low or negative economic growth, caused mainly byexternal shocks, the impact of a tight monetary policy adopted in 1995, and a continuing financial sectorcrisis. Although inflation has been reduced significantly from around 80 percent in 1991 to about 8 percentin 1999, GDP declined in real terms about 4 percent per year between FY 94/95 and FY 98/99.Accompanying this decline, Jamaica has experienced large fiscal deficits over the last five years due to along term accumulation of outstanding debt, and more recently, the Government's bail out of large indebtedbanks during a financial crisis in 1997. These deficits averaged around 6 percent of GDP in the latter halfof the 1990s and declined to 4 percent in FYI 999/2000. At present, 62 percent of central government'sbudget is spent on interest and redemption payments. In order to balance the budget and curb the adversedebt dynarnics fueled by the deficit, the government has committed itself to a firther reduction in the fiscaldeficit. As a signal of its commitment to this policy, the GOJ agreed on a Staff Monitored Program (SMP)with the IMF, one component of which is the strengthening of the SSN in order to protect the poor duringthis transition period.

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Despite negative growth during most of the period since 1995, many of the country's social indicators arestill good and recent trends indicate declining poverty. In 1991, 44 percent of the population was poor (asdefined by the poverty line) as compared to 17 percent in 1999. The forces which have worked to lowerpoverty during a period of sustained recession remain poorly understood and in need of rigorousinvestigation, but are attributed in part to the effects of migration, remittances from abroad, and informalsector activities. However, these factors were also present prior to 1991, underscoring the importance offurther research into the causes of the decline of poverty in the 1 990s.

Even though poverty did decline, the decline tapered off in 1997/1998 and in 1999/2000 poverty increasedslightly. The challenge for the Government now lies in maintaining the achievements in povertyreduction. In addition, there are serious concems relating to income and non-income dimensions of povertyand inequality. In Jamaica, the poor have disproportionately low access to quality educationalopportunities, and are more exposed to violence. Perhaps more significantly, their age distribution --almost half of the poor are under 18 and a further 10 percent are over 65 -- limits household strategies,making the need for effective and well-targeted social assistance programs critical. Poverty isoverwhelmingly rural in character, with nearly 80 percent of the poor living in rural areas and less than 10percent in the Kingston Metropolitan area. However, there are heavy concentrations of poor households inthe violence torn inner city areas of Kingston. Although women head only 44 percent of Jamaicanhouseholds, 66 percent of poor households are female-headed. Poor households are large, with 40 percentof poor families having six or more members and nearly one-fifth with 8 or more members. Sound healthand education policies together with a well designed, targeted safety net are urgently needed to alleviateliving conditions particularly for the poorest and most vulnerable groups.

I. Main Sector Issues

Jamaica's Social Safety Net: Need for Reform

Expenditures on the social safety net. Jamaica has made a continuing commitment to the social sectorsand, despite increasing resource constraints, real allocations to health and education have increased inrecent years. The Government invested 6.2 percent of GDP in education and 2.5 percent in health (FY2000/01), a considerable allocation compared to other middle-income countries in the region. However,expenditures on the social safety net programs - defined broadly to include programs that provide incomesupport and access to basic services to the poor and vulnerable and/or those needing assistance aftereconomic downturns, natural disasters, or household-specific adverse events that lower income - accountedfor only 2.6 percent of GDP in FY2000/01 or approximately US$78.4 million per year. This is well belowthe average in the Latin America and the Caribbean (LAC) region where expenditures on SSN range froma high of almost 9 percent in Chile to a low of 0.7 percent in Haiti.

Array of programs and lack of coordination. In addition to the comparatively low budget allocations tothe social safety net, the modest amount is spent on an array of programs. The Government operates overtwenty social safety net programs targeted to persons who are poor and/or vulnerable. At present, there arethree income support programs, four education based transfer programs, two pharmaceutical programs,two feeding programs, three housing programs, three community-based safety net programs including asocial fund, a variety of community based training programs and other (minor) programs. An overview ofthe main SSN programs, their beneficiaries and budgets for 2000/01 is provided in annex 1 1. Duplicationof administrative systems and a lack of coordination increases both the direct costs of programs and theindirect costs to beneficiaries.

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Insufficient targeting and coverage. A recent assessment of Jamaica's social safety net revealed that it isnot well targeted to the poor. Means testing criteria and procedures differ for the different programsdespite the fact that many of them seek to reach the same population. Some programs are not targeted tothe poor. Despite a large number of programs, the existing safety net has a low coverage of the poor.Formal social insurance systems like the national pension system is limited to those with formal sectoremployment who have made contributions, excluding the majority of the elderly who do not have acontribution history. The biggest safety net program in Jamaica, the Food Stamp Program, providesbenefits to approximately 170,000 individuals, but only reaches 15 percent of the poorest quintile, and 9percent of the second poorest quintile. The Poor Relief Program reaches between 5 and 7 percent ofhouseholds in the poorest quintile. While these programs are progressive in the distribution of benefits(largely due to the low level of benefits), there is still significant leakage. In the Food Stamp Program, forexample, approximately one third of beneficiaries come from the three richest per capita householdconsumption quintiles. A high proportion of the poor appear to be unaware of the range of benefitsavailable or unable to afford the direct and indirect costs (travel, time, etc.) to obtain benefits.

Low level of benefits. Finally, Jamaica's social safety net programs provide beneficiaries with a very lowlevel of benefits that does not adequately protect the poor. The Food Stamp prograrn pays approximatelyUS$ 1 88 per child per month - only 1.2 percent of the basic food basket. The average monthly Poor Reliefand Public Assistance benefits - mainly targeted towards elderly and disabled persons are slightly higher atUS$4 per person, but benefits are strictly rationed, coverage is low and eligibility criteria are not employedrigorously. The per capita value of all three transfers combined adds up to about 10 percent of the overallpoverty line in Jamaica. The low level of benefits contributes to the high proportion of poor not applyingfor the benefit.

Education and Health: Disadvantages of the Poor

Favorable Social Indicators. Jamaica has made impressive progress in providing universal coverage inprimary school enrollment and near universal coverage in junior secondary education (grades 7-9). Genderequity in access to education has been achieved. Furthermore, Jamaica was a pioneer in the development ofprimary health care. As a result, its social indicators are favorable compared to most countries at similarincome levels in the region as reflected in the low infant mortality, high school enrollment rates, and longlife expectancy.

Persistent low school attendance. The social indicators mask a significant lack of access to education forthe poor. Although they are enrolled, children (and particularly poor children) do not attend schoolregularly. In 1999, 35 percent of children from families of the poorest quintile attended school less than 15days per month. The main reason given by poor families for school absence was "money problems". Aprimary coping strategy among families that are poor is to keep children home from school when money isshort. Poor educational quality and low school attendance, particularly in schools in inner-cities and ruralareas, combine for poor results-approximately 30 percent of 6th grade students are functionally illiterate.In addition, enrollment corresponds to economic status in upper secondary (grades 10 and 11) and tertiaryeducation. At ages 15-16, enrollment rates among children from the poorest quintile fall to 67 percent,against a national average of 83 percent and 94 percent of the children from the wealthiest quintile. Thisgap between poor and non-poor widens further with age. Only 21 percent of children aged 17-19 from thepoorest quintile are enrolled in school, as compared to 87 percent of the wealthiest quintile. The IDB andUSAID are supporting primary education programs to improve the quality of primary education. TheWorld Bank is providing funding, through its Reform of Secondary Education Project, for initiatives toimprove access to and quality of secondary education.

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Declining health indicators. There are increasing problems in maintaining health indicators.Immunization rates among infants from birth to eleven months are down from 93 percent in 1993 to 85percent in 1999. Although most children are eventually immunized by the time they start primary school atage 6, the late receipt of vaccinations increases the risk of preventable illnesses. Increasing problems withprenatal care parallels the decline in on-time immunizations. Only 25 percent of mothers have their firstprenatal visit during the first four months of pregnancy. Anemia in pregnancy affects approximately 50percent of all pregnant women and is a contributing factor to the persistent incidence (10 percent) of lowbirth weight babies.

The elderly have the highest rates of self-reported illness, of being ill for a longer duration of time and ofdecreased ability to carry out activities of daily living. At the same time, the elderly - and especially theelderly poor - are less likely than the general population to be covered by health insurance and more likelyto need medical care. Changing family structure and increased migration have augmented the risk of socialisolation and loss of or abandonment by relatives. Almost 10 percent of the poor are elderly. The 1991Census data reported that approximately 5 percent of the population is disabled. Although not all disabledpersons are poor, inequities in access to education, training and employment increase the risk of povertyamong the disabled.

II. Government StrateLy

Jamaica's most recent Poverty Eradication Strategy is summarized in Ministry Paper #13, signed by thePrime Minister in 1997, which sets broad guidelines for programming in this area. Key features of thestrategy include a focus on more development oriented programs that especially target families with smallchildren and youth, better overall targeting of programs, and rationalization to increase cost effectivenesswhere possible.

In recognition of the serious weaknesses in the social safety net, Cabinet asked the Planning Institute ofJamaica (PIOJ) and the Office of the Prime Minister (OPM) in 1998 to take the lead in developing acomprehensive reform proposal for the social safety net including a suitable process to address theGovernment's concern about the SSN shortcomings. The objective of the reform proposal was defined as"developing a well-crafted integrated safety net program aimed at empowering the poor and vulnerable toachieve and maintain a satisfactory living standard. Such a prograrn should be effective, efficient andparticipatory." The complexity of the assignment to improve both the effectiveness and efficiency of theSSN prompted the PIOJ to invite the World Bank and the IDB to engage in a collaborative process todevelop a SSN reform proposal (for more detail on the reform process supported by the Bank, see sectionD4).

Five objectives for the SSN reform were defined a priori: (i) to tailor programs more specifically to risksand conditions associated with poverty and vulnerability and to develop an associated targeting mechanism;(ii) to integrate programs in order to reduce delivery costs; (iii) to ensure a comprehensive range of benefitsto address different conditions (including age-specific factors) associated with poverty and vulnerability;(iv) to introduce flexibility in programs (for up- or down-scaling as needed); and (v) to ensure efficiencyand fiscal sustainability of programs, notably by maximizing complementarity and partnerships withNon-Governmental Organizations (NGOs). Government has identified the following as target groups of theoverall reform: children in poverty, youth at risk, the elderly poor, the disabled, poor single-parenthouseholds; large poor (rural) families; the long-term unemployed, and victims of social or natural disasteror HIV/AIDS. Special priority is to be given to children and youth.

As a result of the collaborative process, Government developed a sector-wide approach for the SSN

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reform, encompassing all existing programs targeted to the poor. The proposal, approved by Cabinet,addresses institutional, administrative, managerial and programmatic changes. Among the key refornmeasures proposed is the development and implementation of a universal targeting system based on a proxymeans test. The system is to be used by the main safety net programs in order to increase transparency inthe selection of beneficiaries, reduce the administrative costs associated with having each program carryout its own assessment of eligibility, and improve targeting. The proposal also calls for the unification ofthe three cash/in-kind transfer programs into one unified benefit, thereby reducing fragmentation andduplication. Cost-savings are to be translated into a higher benefit level, in order to improve the impact ofthe program on poverty levels. In addition to restructuring the income support programs, the proposal alsoaims at reforming the various school-based and other programs, improving their targeting, efficiency andimpact. Finally, the reform places emphasis on the development of monitoring and evaluation systems forthe various programs, building on existing instruments, such as the yearly Survey of Living Conditions.

The GOJ's strategy to reform the social safety net, its implementation plan and the respective targets will bedetailed in a Policy Letter, which is attached as an Annex to this PAD (See Annex 16).

3. Sector issues to be addressed by the project and strategic choices:

The above mentioned assessment of the Social Safety Net carried out in 1999/2000 pointed to the need forreform of the social safety net to reduce fragmentation and duplication of services, to improve targeting tothe poor and to increase the level of benefits. The Social Safety Net project would reduce vulnerability toincome swings among the poor and foster long-run investments in human capital by linking benefits tobehavioral change (e.g. school attendance, health check ups). Furthermore, it would strengthen thecapacity of Government to establish a targeting mechanism that can be applied to all poverty programs,and a monitoring and evaluation system for the income transfer scheme. The following sector issues will beaddressed by the project:

1. Sector Issues

Poverty. As noted previously, Jamaica has managed significant poverty reduction in spite of weakeconomic performance. However, further gains in poverty reduction are unlikely without the resumption ofgrowth, and even with the reduction in poverty observed over the 1990s, there is still a group of Jamaicanswho have remained poor--some 17 percent in 1999. This program is designed to help lift some of thechronic poor out of poverty (poor elderly, disabled, large rural families), and to ensure that theinter-generational cycle of poverty is not repeated, by investing in the human capital of poor children. Theprogram is targeted towards the most vulnerable groups, including poor children and pregnant women, andin the Jamaican counterpart financing, the elderly and persons with disabilities.

Organizational fragmentation. The SSN system in Jamaica is marked by a lack of coordination and littleintegration between programs. Duplication of administrative systems increases the direct costs of theprogram and also increases indirect costs to recipients (in terns of time and travel costs). In the face offiscal constraints, it has become increasingly important to establish a fiscally sound social safety net thattargets Jamaica's scarce resource to the most vulnerable but that also provides programs that are responsiveto the varied needs of clients and that enhance the productivity and dignity of the individual. Therefore,GOJ decided to merge the three income transfer programs into a new Unified Benefit Program along thelines of a new generation of conditional transfer programs developed in Mexico, Colombia and elsewhere.Among the many social assistance programs in Jamaica there are a number of small programs whosebenefits are limited and therefore impossible to measure. The Government of Jamaica decided to terminatesome of these and redirected their resources to the new Unified Benefit Program to improve program

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impact.

Targeting. A more effective and efficient targeting system is required. Means testing criteria andprocedures differ for the various programs despite the fact that many programs target the same generalpopulations. Social workers make home visits to certify eligibility for some programs, but the criteria usedare not uniformly applied. Guidance counselors and principals certify eligibility for school based welfareprograms. Eligibility criteria may similarly not be uniformly applied by school personnel. The World Bankfunded assessment of the Social Safety Net noted that Jamaica's income transfer and education basedprograms perforn only moderately well in comparison to other countries and that it should be possible toimprove targeting. Preliminary work with the Survey of Living Conditions data has produced a scoringformula with low errors of exclusion (type I, around 10 percent) and even lower leakage (type II errors,around 3 percent). This scoring formula will be used to target the new unified benefit and other socialtransfers (see annex 15).

High administrative costs. Duplication and proliferation of SSN programs in Jamaica has lead tounnecessary overlap and expenditures on administrative costs. Additionally, the Poor Relief Program hasextremely high administrative overheads (up to 50%), firther limiting services provided.

H. Strategic choices

The following strategic choices have been made in the design of the Social Safety Net operation:

1. Institutional ReformA strategic choice was made to strive for a new institutional framework to implement the new transferprogram. Up-scaling existing programs is not a feasible option for the reasons mentioned above(duplication, high overhead costs and poor management and implementation capacity with some of theexisting agencies in the field). In order to provide more effective and efficient service, reduce fragmentationand duplication and lower the cost to benefit ratio, the Food and Kerosene Stamp, Poor Relief andEconomic Support Programs will be consolidated in the Unified Benefit Program of the MLSS.

2. Conditional benefitsA strategic choice was made to eliminate the current unconditional, supply based income support programs,and to replace them by a new system of conditional, demand based transfers. The aim is to use the benefitsystem to build human capital, improve health care and increase empowerment of the poor. To ensure thatthe benefits go to children who most need them, it is expected that major education and health basedtransfers including school lunches as well as school and exam fees will be targeted through the unifiedbeneficiary targeting system. Receipt of social assistance benefits will be linked to school attendance andhealth clinic check ups. As a result, incentives associated with school based programs will encouragechildren and youth to stay in school and to attend school regularly. Incentives to receive health check-upswill encourage families to utilize health care services on time. Provision of integrated welfare and caseworkservices will foster human capital development among children who are poor. Improved identification ofchildren in need, provision of relevant health and education services, parenting education, and linking ofwelfare benefits to school attendance and health check-ups are an important part of the reform strategy thatwill transform social assistance expenditures into investments in human capital development.

3. Targeted to the very poorA strategic choice was made that the reformed safety net programs were to be distinctly pro-poor. This willbe achieved by designing and tailoring programs to specifically address risks and conditions associated withpoverty and vulnerability and by developing and using an appropriate targeting mechanism. A proxy

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means-tested system will be used to identify beneficiaries for all programs targeted to the poor, includingincome transfer programs, school feeding programs, school fee assistance programs, school welfareprograms, grants for tertiary education, fee waivers at public hospitals, and other programs. The systemwill apply uniform and objective criteria, screening instruments and procedures for approval so that peoplein all parts of the country are measured with the same standard and criteria. The household will be themain unit of intervention under the new system. The poverty and eligibility status of the household will bedetermined by a scoring fornula. Under the Unified Benefit Program, this system would be applied to allbeneficiaries.

4. Size of TransfersThe Government of Jamnaica faced a strategic choice on the level of the conditional transfer to be provided.The Cabinet considered its overall available fiscal envelope, and has approved the following amounts forthe unified benefit, which would not be differentiated among beneficiaries:

CY 2002 J $ 250CY 2003 J $ 375CY 2004 J $ 500

These amounts have some reference to poverty standards. The ending level for the benefit, approximatelyUS$9 per beneficiary per month, is close to 30 percent of the World Bank's absolute poverty line of US$1per person per day. The starting level for the benefit, approxirnately US$6 per month, compares to whathouseholds in 1999 spent monthly per person on average on education, US$7, and on health care andmedicines, US$4.50.

Spending on secondary school fees was higher, ranging from US$16 per month in Kingston to US$9 permonth in rural areas. The possibility of setting the conditional transfer for secondary school studentshigher than that of primary students, which would reflect the higher cost of older children in terms ofclothing, school materials, books etc., was discussed with the GOJ at appraisal. It was decided that itwould be more advantageous to have a higher number of children covered under the program than to havehigher benefits for some (older) children. Therefore, the possibility of differentiating the level of benefitswas ruled out at this point.

C. Project Description Summary

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

(1) Child Assistance Grants component. The first component (US$ 4 7 . 8 7 million) will fnanceconditional grants for poor children age 0-17 eligible under the program (see table 1). These grants willfinance direct costs to keep poor children in school and healthy. The receipt of benefits will be conditionedon regular health clinic visits for children age 0-6 not enrolled in school, as well as on school attendance forchildren age 6-17 (see details on conditions in Annex 2). Eligible and registered beneficiaries will receivethe grants for as long as they comply with the agreed requirements. The benefit will be paid to the familyrepresentative which in general would be the mother; in case the mother is not available, the person takingcare of the child would be determined as the family representative. Payments will be made bimonthly withhealth and educational conditionality compliance checked at least three times a year. Based on theGovernment's decision to phase increases, the average monthly benefit per person will be J$250 (approx.US$6) in the first year, J$375 (approx. US$7.5) in the second, and J$500 (approx. US$9) during and afterthe third year of program implementation.

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Table 1: Projected number of children receiving transfers

Beneficiaries of Child Assistance TransfersChildren 0-6 (not enrolled in school), 53,300for health clinic visits;Children 6-11, for primary school attendance 55,600Children 12-14, for lower secondary school 27,400attendanceChildren 15-17, for upper secondary school 23,700attendance

Total 160,000

(2) Social Assistance grants to Adults component. The second component (US$ 16 . 94 million) willfinance conditional grants to poor pregnant/lactating mothers, elderly poor over 65, poor disabled anddestitute adults under 65 eligible under the program. The receipt of benefits will be conditioned on regularhealth clinic visits for the adult beneficiaries. This component will be financed entirely with Borrower'scounterpart funds as expressed in the project's cost table (see below). The average monthly benefit perperson will be the same as for the child assistance transfer and increase accordingly over time.

Table 2: Projected number of adults receiving transfer

Beneficiaries of Adult Assistance Transfers __Pregnant and lactating women 9,000Elderly poor over 65 26,700Poor disabled 15,300Adults under 65 poorest 6,000Total 57,000

The selection of grant beneficiaries and the verification of compliance with requirements of their receiptwill be done in accordance with procedures and criteria described in the Operations Manual.

(3) Institutional strengthening component. The third component (US$ 11. 92 million) will strengthenthe institutional capacity of the MILSS and others involved to operate a streamlined and efficient socialsafety net in Jamaica. To this end, it will provide support for:

* Targeting mechanism and enrollnent. (US$ 1. 3 9 million). The bulk of this component will be spenton the enrollment mechanism, including the necessary information technology equipment and software,and to cover the cost of temporary employees hired for data processing of applications. Additionally,this component includes a small amount of technical assistance on the scoring formula. A preliminaryscoring formula based on data of the Survey of Living Conditions has been developed for the targetingmechanism. However, during the early years of program implementation, the scoring formula willrequire periodic review and refinement. The project will provide for local and intemational consultantsand technical assistance for periodic review of the targeting mechanism.

* Information System (US$ 1. 2 8 million). Appropriate infornation technology (hardware/software)will be introduced to support efficient management of the program. The envisioned system will require

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computer workstations in the parish offices, the ministry offices and in the Computer ServicesDepartment. Appropriate training in handling the system will be ensured.

* Training and Promotion (US$ 3 .01 million). This will help to strengthen technical, administrative(e.g. procurement and financial management), and social work capacity in the MLSS to implement thenew Unified Program. MLSS staff directly involved in the management and implementation of theProgram, and beneficiaries will receive training to ensure that they fully understand their role,requirements and procedures defined for the new program. Education and health staff will be trained inthe rationale, requirements and procedures of program implementation. In addition, a publicinformation campaign will be carried out aimed at creating awareness of the Social Safety Net reform,among the general public, potential beneficiaries, and other stakeholders (staff in the agenciesinvolved), focusing on the advantages expected from the unified benefit program. The campaign isexpected to last approximately 6-9 months. Activities will be carried out through television, radio, andprint media (newspapers as well as posters, brochures, billboards, etc.).

* Project Management (US$ 5 . 58 million), to finance the design and implementation of the UnifiedBenefit Program. This includes financing of incremental professional staff (at MLSS central office and13 parish offices), vehicles, and administration cost of the Implementation Unit. The component costsfurthermore include service fees, estimated to be US$ 1. 61 million or 2 . 5% of the total amount oftransfers, charged by financial institutions in Jamaica to deliver the transfers to poor families.

* Monitoring & Evaluation System (US$ 0. 66 million) to measure the outcomes and impact of theprogram. This will include a baseline survey, regular beneficiary consultations, periodic operationalaudits, an MIS system as well as an extenal evaluation of program outcomes (for details, see annex 1).

Indicative Bank- % of:Coponent Sector Costs % of financing 8ank-

__________________________ _ :( US$M) Total PUS$M) financingI.Child Assistance grants Social Assistance 50.67 65.4 28.73 71.82. Adult Assistance grants Social Assistance 14.14 18.2 0.00 0.03. Institutional strengthening Institutional 11.92 15.4 10.50 26.2

Development- Unallocated - 0.37 0.5 0.37 0.9

Total Project Costs 77.10 99.5 39.60 99.0

Front-end fee 0.40 0.5 0.40 1.0Total Financing Required 77.50 100.0 40.00 100.0

2. Key policy and institutional reforms supported by the project:

This project seeks to support the Government of Jamaica in implementing the proposed SSN reform. Basedon preparatory analytical work on the existing social safety net, the following decisions and concrete stepswere undertaken by GOJ:

* On October 31, 2000, Cabinet decided to unify the three transfer programs (for description ofprograms, see annex 11) into a Unified Benefit Program (UBP) under the MLSS, link benefits tobehavioral change where possible, and introduce a targeting mechanism that would be adopted by themain safety net programs;

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* On February 24, 2001, Cabinet decided on the categories of beneficiaries eligible under the UBP andon the level of benefits;

* In early April, 2001, Parliament approved an incremental allocation of J$69 million (approximatelyUS$1.5 million) for the UBP in the FY 2001/02 budget.

With these decisions, the GOJ has shown its readiness to move ahead with implementing the proposed SSNreform, and concretely has paved the way to introduce the new Unified Benefit Program and a universaltargeting mechanism, to be supported by the project. In addition, GOJ has decided to undertake evaluationsof other safety net programs such as the school feeding, school assistance, Lift Up Jamaica programs toidentify strengths and shortcommgs and introduce improvements. This initiative will be supported by thesocial safety net loan of the IDB.

In October 2000, Government decided to consolidate the existing income transfer programs into the UBPunder the leadership of the Ministry of Labour and Social Security. As a first step in the consolidationprocess, the Ministry of Local Government and Commnunity Development has agreed to delegate thepayment of Outdoor Poor Relief benefits to the MLSS. Furthermore, Government has commissioned astudy to a management consulting firm that will determine the optimal institutional arrangements for the"core" (e.g. transfer programs) and "non-core" (in-house care and other social work) social assistanceprograms. This study will include reconmmendations on required changes in the legal and institutionalframework of the social assistance system. Cabinet Office in the Office of the Prime Minister is leading thisbroad process due to its implications for public sector management. Further details are described in thePolicy Letter (Annex 16).

During project implementation, the following reform steps will be supported:

* Identification and implementation of the institutional arrangements that need to be made to unify theexisting transfer programs now being merged under the UBP;

* Identification of the institutional arrangements for "non-core SSN services" (including indoor poorrelief, rehabilitation grants, compassionate grants and some casework services);

* Linking the targeting mechanism to other social safety net programs (school feeding, generic drugprograms etc).

Other elements of the SSN reform, as outlined in the Policy Letter (Annex 16), will be addressed throughthe Bank's policy dialogue on Social Protection issues. This dialogue will be continued in coordination withthe IDB and other involved donors during the implementation of the project.

3. Benefits and target population:

Overall, approximately 17 percent of the Jamaican population is poor. The UBP will focus on these poorwithin certain categories (children aged 0-17, pregnant and lactating women, elderly over 65 years andolder, persons with disabilities and destitute adults). The child assistance grants target poor children age0-17 (160,000 beneficiaries) who comply with preset conditions (school attendance, "well-baby visits").The adult assistance grants target poor adults that are not able to help themselves due to physical or mentallimitations. The receipt of adult assistance grants is conditioned on regular, bi-annual health clinic visits.The project would generate the following benefits: (i) raise the health status and immunization rate amongchildren age 0-6, and (ii) increase school attendance and learning outcomes among poor school age children6-17. In the long term, these improvements are expected to have a direct impact on poverty rates amongthe beneficiary population by contributing to raising beneficiary children's human capital earningscapacity.

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In addition, GOJ contributions will target grants to poor pregnant and lactating mothers to protect theunborn and new born child and the mother from birth related insufficiencies, to poor elderly, persons withdisabilities and other poor persons. The receipt of grants for adults is conditioned on regular, bi-annualhealth clinic visits which will particularly improve preventive health care for the recipients. In all cases,beneficiaries must be members of families categorized as poor and they must comply with the respectiveconditions. Benefits will be paid out in cash. The benefit level will be the same for all beneficiaries,regardless of age, sex, or depth of poverty.

4. Institutional and implementation arrangements:

a) Institutional Arrangements

The Ministry of the Labour and Social Security (MLSS) has been tasked with general responsibility forsocial welfare in Jamaica. The MLSS will be the executing agency for the UBP. The Director of the SocialProtection and Development (SPAD) Division in the MLSS will be responsible for ensuring that programimplementation proceeds according to project objectives and design (see organizational chart in annex 14).They will be responsible for ensuring that the activities of the UBP are fully integrated into the permanentoperation of the MLSS, and implemented according to the terms and agreed timetable, including theappropriate synchronization of pilot activities and other complementary changes resulting from the study onInstitutional Arrangements for the Welfare System in Jamaica. Financial Management, ManagementInformation System, Procurement and Public Relations and Education functions within the MLSS willsupport program implementation. In the context of the Unified Program/Project, the MLSS will liaiseclosely with:

v Planning Institute of Jamaica (PIOJ). The development of the scoring formula for the targetingmechanism of the UBP will be housed in the PIOJ, because it will eventually be used for targeting ofother welfare programs. The MLSS will interface with PIOJ to review and refine the formula asneeded. The PIOJ will also be responsible for advancing the social safety net reform program.

* Office of the Prime Minister (OPM). The OPM will be responsible for ensuring that lessons learnedfrom the UBP, especially as they relate to other GOJ welfare programs, are brought to the HumanResources Council of Cabinet. The OPM will be responsible for institutional reform as outlined in thePolicy Letter (Annex 16).

* Ministry of Education. Youth and Culture and Ministry of Health. The conditional transfer programwill require close coordination with the Ministries of Education and Health to obtain the informationnecessary to validate school attendance and health system checkups. Both Health and EducationMinistries welcomed the decision to link transfers to behavior and have cooperated in the elaboration ofprocedures to link school and clinic attendance to the receipt of benefits (see annex 2). The MLSS hassigned inter-institutional agreements with both ministries on respective responsibilities and procedures.

* Civil society. Conmnunity groups and NGOs may identify potential beneficiaries and refer them to theUBP. Civil society groups will also participate in the appeals process (see also paragraph on AppealsCommittee below).

Adequate coordination of these important actors during project implementation will be ensured through theProject's Steering Committee which is chaired by the MLSS.

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b) Implementation Arrangements

Ministry of Labour and Social Securitv central level. lmplementation of the Unified Benefit Program willbe carried out by the Social Protection and Development (SPAD) Division within the MLSS, which is apermanent division within the MLSS, not a temporary project unit. This approach was chosen to ensureinstitutional sustainability of this important program. The proposed structure rests on two principles: (a)small dynamic division composed of experienced and high-quality staff; and (b) technical, administrativeand management functions kept within the division to facilitate program implementation and take timelymanagement actions. The SPAD division will include the following core staff:

Director/ Project Manager* Program Coordinator* Information and Training Coordinator* Monitoring and Evaluation Officer* Senior Social Worker* Financial Management Specialist

Procurement Officer* Administrative Staff

Clerical Staff

Responsibilities of the SPAD division are described in annex 13. The organizational chart of the MLSSincluding the SPAD is shown in annex 14. Management and staff would be strengthened by technicalassistance. Specific training and other resources will be provided by the project as needed.

Parish Offices. The MLSS has 13 local (parish) offices throughout the country. Each Parish Office isheaded by a Parish Manager and staffed by two administrators (one for Welfare Services and one forNational Insurance), social work and clerical staff (on average 12 persons). The project will strengthen thetechnical, administrative and social work capacity at the Parish Office staff in order to implement theprogram at this level. Parish Managers will report to the Director of Social Security and will be responsiblefor ensuring program irnplementation at this level.

Program design. The Governnent of Jamaica has presented a draft program design which was jointlyreviewed during appraisal. Based on the program design, a draft Operational Manual (OM) for the UBPhas been developed. A final version, satisfactory to the Bank, is a condition of effectiveness.

Program testing and exMansion. The program will be implemented in stages. Implementation starts inJanuary 2002 with an initial pilot phase, estimated to last about 8 months, in St Catherine. This parish wasselected for the pilot phase because it was felt that it was typical for the island's poverty characteristics, itincludes rural and urban areas and because of its capable and motivated management team at the parishoffice. The pilot is intended to generate the experience, capacity, and information necessary to makeadjustments on the project design and expansion plan and will be accompanied by a process evaluation (seeannex 1). The pilot will be used to test, inter alia, the operational procedures, the scoring formula, and thefunctioning of the appeals mechanism. Based on the experience of the initial phase the program will beexpanded to the other parishes. The MLSS plans to expand the program to all 13 parishes during 2002.

Case Management. A system for case management was designed in collaboration with social workers fromthe three existing income support programs. The components of case management include intake,assessment, enrollment, monitoring of behavioral outcomes, re-certification, referral to other agencies incases of special need (for exarnple, Child Guidance Clinics, Children's Services, Family Court) and

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graduation/termination. Record keeping is an integral part of case management and the MIS will be centralto effective case management. The project will provide training for improving the qualification of socialworkers in accordance with the training needs assessment canied out during project preparation.

Appeals mechanism. An appeal process will be established to address the concerns of beneficiaries andcivil society who are (i) dissatisfied with termination from the program, (ii) concerned about exclusion ofneedy person, and (iii) concerned about inclusion of persons who are not needy. To this end, a LocalCommittee of Social Welfare will be established at the parish level with members selected from relevantstakeholders, such as Conmnunity Health Aides, Guidance Counsellors or Teachers, Ministers of Religion,Parish Councillors, representatives from NGOs, and community representatives. Workshops would be heldto educate and train committee members. The Committee will meet regularly as required at the outset of theprogram and then once monthly when the program is fully functional. Limnits on the number of additionalhouseholds added to the program will be devised centrally, with local decision making for prioritization ofnew households. Further details of this mechanism are described in the Operational Manual.

Annual Reviews. An annual review will be conducted at the end of each project year. The purpose of thereviews would be to examine the impact of welfare policies and the progress of program/projectimplementation at the local and national level, and to suggest refinements for program implementation asneeded. The MLSS will be responsible for ensuring that a broad cross section of representatives from thepublic sector, academia and civil society are invited. The Bank will participate as much as possible in theannual review process.

c) Financial Management Arrangements

The flow of funds from the Bank to the UBP and from the UBP to the beneficiaries, financial managementarrangements for the project, the results of the FM assessment carried out by the Bank, and the Action Planto be completed prior to loan effectiveness, are detailed in Annex 6.

Payment method. Five possible modes of payment have been analyzed: food stamps, cash transfers,cheques, banks/automated credit transfers, and vouchers. According to this assessment, the least costoption and the one offering most convenience to the recipients is the use of direct transfers either using thebanking system combined with debit cards or utilizing a bill payment company such as Paymaster orTelepost. The bill payment companies are fairly new and are in the process of expanding their coverage onthe island. The MLSS is presently carrying out a detailed analysis of the different service providers. TheTerms of Reference for the selection of the pay agency, satisfactory to the Bank, have been developed. Theselection of a Payment Agency will go through a bidding process. The option/agency chosen will bedependent on who can meet the requirements of the UBP at the most efficient cost.

Financial Management. Project financial management will be carried out within the Finance and Accountsunit of MLSS. A financial management specialist has been recruited to have primary responsibility forproject financial management, and will report to the Ministry's Principal Finance Officer while also havingfunctional responsibilities to the Director of the SPAD division.

D. Project Rationale

1. Project alternatives considered and reasons for rejection:

Project alternatives considered include different approaches to reform of the social safety net and theprovision of assistance to the poor. Experience under other projects financed by both the Bank and the IDB

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was taken into account in designing the new income transfer mechanism, as well as the existing capacity inthe institution that would be responsible for project implementation.

Maintaining three transfer programs but increasing the value of transfers. Based on the Social SafetyNet Assessment, this alternative was judged to be unacceptable. The current unreformed safety net is ajumble of programs, many of which are not targeted to the poorest, and administration is spread acrossseveral ministries. Merely increasing the Poor Relief and Food Stamp payments without requiringbehavioral change among recipients (such as keeping children in school) perpetuates a system of handoutsthat fosters a culture of dependency and does not ensure adequate human capital investment.

Reforming other SSN programs. The school lunch program in Jamaica is relatively costly, does notcover many poor households, and is not well-targeted to the poor. Intemational experience indicates thatschool lunch has little impact on school performance since it is served too late in the day to combat fatigue,inattention or short-term memory loss from short-term hunger. The cost of school lunches are highcompared with the average per student cost of education and with other forms of incentives for schoolattendance. Direct income transfers linked to school attendance have proven to be more cost-effective andsimpler to administer. Under a separate project, the IDB has agreed to evaluate the existing school feedingprogram and has offered Technical Assistance (TA) to reform the program as part of the SSN reform.Furthermore, the IDB is considering offering TA also for reforming the drug for the elderly programsadministered by the Ministry of Health.

Focusing on Youth at Risk as a major concern of Government and society. In the consultation processwith Govenmuent, academia and civil society, all parties expressed their serious concerns about youngpeople in Jamaica. A recent Youth at Risk study conducted by the Bank revealed how urgent action isneeded on this matter. The proposed project will only focus on youth at risk insofar as the income transfercovers the age cohort 6-17 that stay in school ("in school youth at risk"). However, it does not cover youththat have dropped out of school and are not employed. The IDB is considering a project to address 'out ofschool' youth at risk, under a separate operation, which is expected to start next fiscal year.

Strengthening the SSN through the Jamaica Social Investment Fund. The Jamaican Social InvestmentFund (JSIF) has performed satisfactorily as a project, although has not matured and reached the scope andintensity of other Social Investment Funds (SIFs) in the region. In addition, SIFs can only have a limitedimpact on the poorest as they focus on improving access to basic infrastructure services. Considering thenature of the activities under the proposed project, the JSIF is not well-suited to deliver income transfersdirectly.

Public works. In 1999, Jamaica started an 18-month public works program, Lift-Up Jamnaica. Thisprogram has not yet been evaluated, however public works by definition exclude key vulnerable groups ofthe poor, particularly children and the elderly. Income transfers paid out directly to elderly, disabled and tothe mother would more accurately target these vulnerable groups and deliver income support more directly.

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2. Major related projects financed by the Bank and/or other development agencies (completed,ongoing and planned).

1 1 ~~~~~~~atest SupervisionSector Issue Project (PSR)ARatings

_________________ :__._._:_:_ (Bank-financed projects only)Implementation Development

Bank-financed Progress (IP) Objective (DO)

Lack of adequate social and economic Jamaica Social Investment S Sinfrastructure & services Fund ProjectInadequate quality of secondary Jamaica Reform of Secondary S Seducation Education ProjectTax admninistration and govemance Jamaica Public Sector S Sweaknesses Modernization Project

Other development agencies

Insufficient social policy coordination DFID Social Policy ProjectPrimary education inadequate IDB Primary Education

Projects I & IIHealth system insufficient IDB Health ProjectUrban violence IDB Citizens Security and

Justice ProjectDeficient educational quality USAID, Primary education

assistance projectsHigh teenage pregnancy rates USAID, Health and family

planningLack of adequate social and economic IDB, CDB and EU, Socialinfrastructure & services Investment FundDeficient Social Safety Net IDB, Social Safety Net

ProgramSocial conflict and inappropriate justice CIDA, Social Conflict andsystem Legal Reform

I____ ____ ____ ____ ____ ____ ____ ____ ____ ____ _____ ____ ____ ____ ____ ____ __ _ ____ ____ ____ ____ _____ ____ ____ ____ ____ ____ ____ ____ ___ ____ ____ _____ ____ ____ ____ j _ __I_ ____ ____ ____ ____ ___IIP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)

3. Lessons learned and reflected in the project design:

The lessons leamed and incorporated into project design were drawn from experience with similar projectsfinanced by the Bank in Latin America and other regions. This experience demonstrates that successfulprojects in providing incentives for human capital investment will include the following key elements: (a) atargeting mechanism that will identify the poorest; (b) a management information system to monitorprogram pay-out and eligibility status; (c) linkage of benefit receipt to changed behavior; (d) consultationwith beneficiaries and local civil society (see annex 12).

Similar programs in the region have had positive results. The PROGRESA program in Mexico has beendetermrined to have a positive impact on school enrollment, promotion and attendance rates. A preliminaryevaluation found that the overall lower-secondary education enrollment rate increased by 4.9 percent, butfor PROGRESA households, this rate increased by 19 percent. Brazil has a school stipend program (BolsaEscola) that also had these positive results, while in Honduras, the Beca program demonstrated a primaryschool enrollment rate increase of 12 percent in participating areas, as opposed to an annual increase of 3

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percent. School performance improved by nearly 12 percent and repetition rates declined by an average of3 percent.

PROGRESA was also found to have significant positive health impacts in Mexico, where utilization ofpublic health clinics for preventive care increased by 60 percent among PROGRESA families. Thesepreventive visits enabled the PROGRESA beneficiaries to reduce the number of inpatient hospitalizationsby more than half among children and adults, suggesting that PROGRESA lowered the incidence of severeillness. At the same time, there was no reduction in the utilization of private providers, indicating that theincreased utilization at public clinics did not substitute public care for private care. Finally, PROGRESAchildren had a 14 percent lower incidence of illness and adults had a 12 percent reduction in the number ofdays unable to perform daily activities due to illness.

In a recent World Bank survey about Targeted Conditional Transfer Programs (TCT Programs) in severalLatin American countries, preliminary evidence suggests that the programns have been reasonablysuccessful in targeting, though some aspects need attention. Evidence from Brazil and Mexico on programtargeting (based on comparisons of beneficiary and control populations) suggests that these programstarget well. Leakage rates (i.e., the non-deserving benefiting from the program) have been low. However,under-coverage rates (the deserving populations that are missed by the program) have been high. Indecentralized programs such as Bolsa Escola, this is partly due to a lack of finances; some municipalitieshave had to ration coverage within the qualifying group to the poorest. The Jamaican program thereforewishes to target the very poor, i.e. approximately the poorest 15 percent of the population, to guaranteeadequate financing.

On the other hand, surveys show that excessively stringent criteria for selection of families can lead toexclusion of the needy. In Brasilia for example, because some of the programs explicitly focus on poorfamilies with children in school age, poor families with only pre-school and adolescent children areexcluded. The Jamaican program will use a scoring formula that is based on a targeting mechanism toidentify persons with the lowest consumption level. In this way an effort is made to prevent unintendedexclusion of some groups.

Another important conclusion from the study is that perhaps the biggest hindrance to the successfulimplementation and growth of decentralized programs is their fiscal affordabilitv. Not only are some of theprograms in other countries implemented at the municipal level, but their financing also has to come fromlocal sources. This has created a particularly perverse problem in that the poorest municipalities are theones that need these programs the most (since they have a high incidence of poverty) but are unable toafford them (since they also have low local revenues). The problem is avoided in the Jamaican program asit will be financed from the national government's general revenues by reallocation of funds from other,inefficient safety net programs or from the social expenditure budget.

4. Indications of borrower commitment and ownership:

In 1998, the Government of Jamaica asked the Bank to provide support in assessing the existing socialsafety net (SSN) in Jamaica and advise on how to improve efficiency and effectiveness of the safety net.Based on this request, Government and the Bank agreed on the following process in order to prepare a SSNreform proposal built on national consensus:

1. A comprehensive package of analytical work was agreed upon by the PIOJ and the World Bank thatincluded an assessment of the Social Safety Net programs, a Social Sector Expenditure review, aLabour Market Study, a study on the present pension system of Jamaica as well as a study on the

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profile of the poor and the effect of macroeconomic shocks on the poor.

2. A Jamaican Task Force was appointed to develop a reform proposal with concrete suggestions for S SNreform.

3. A series of workshops and stakeholder consultations were held with government agencies, academia,donors and civil society to discuss the results of the studies and sharpen the focus of the reformproposal.

4. Based on the discussions and studies, a social safety net policy matrix was presented by the PIOJ to theHuman Resource Council (HRC). The HRC approved the basic directions of the SSN reform proposal.

5. On October 30, 2000, Cabinet approved the SSN reform proposal and the National Action Program.

6. On February 24, 2001, Cabinet decided on the level of benefit, eligible beneficiaries and other issuesrelated to the introduction of the Unified Benefit Program.

7. In April 2001, the Ministry of Finance presented the budget for FY 2001/02 which included an initialallocation for the UBP of J$69 million.

Based on this process, the World Bank and the IDB began preparation of their respective operations tosupport the safety net reform.

5. Value added of Bank support in this project:

This project is part of an overarching reform plan for the social safety net in Jamaica. The World Bank'svalue added consists of:

* Transferring the experience from similar projects (Mexico, Honduras, Colombia, Brazil, Armenia,Russia) in project design and implementation;

* Technical Assistance (through Japanese Grant funding) on the content and process of the SSN reformand its implementation;

* Technical assistance on the targeting mechanism and scoring formula;* Monitoring and Evaluation and necessary adjustments in the delivery mechanism;* Coordination with other donors (particularly IDB, DFID, EU and CIDA).

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

1. Economic (see Annex 4):* Cost benefit NPV=US$406 million; ERR = 16 % (see Annex 4)O Cost effectivenessO Other (specify)Preliminary results suggest that the benefit from providing conditional cash transfers can be substantial.Three scenarios were calculated. In terms of the education grant, the analysis shows that Option 1 (236,000 beneficiaries with a cap or limit of three children per household) has a Net Present Value of $406million at a discount rate of 10 percent and an intemal rate of return of 16 percent. This option was basedon information about the number of the poorest in the mentioned vulnerable groups. Option 2 (272,000beneficiaries) has a net present value of $2.027 billion and an internal rate of return of 35 percent. WithOption 2, the incremental expenditure is 5.8 percent more than Option 1, while Option 2 would benefit 15.3percent more children than Option 1. Option 2 has more beneficiaries because it does not include a cap onthe number of beneficiaries per household as does Option 1. Option 1 was favored by the Government ofJamaica because of its lower overall cost. Assumptions were made about the number of children that

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would likely fail to comply with the conditions, so the final figure of the GOJ is about 217,000beneficiaries.

It should be noted that there are several benefits to the project which were not quantified in the cost benefitanalysis. In particular, it was not possible to estimate the benefits accruing to the health portion of theprogram, due to a lack of data. Additionally, there are important social benefits expected from the programsuch as reduced violence and youth-at-risk by keeping children in school, and better social cohesion. Theseimportant benefits, while beyond the scope of the cost benefit analysis, would help demonstrate the viabilityof the program if they could be included.

Efficiency gains of consolidating the existing transfer program into one Unified Program can not beestimated at this time. However, the in-depth study on the present and future institutional arrangementsmentioned in E 4. below will give some indication of these gains.

2. Financial (see Annex 4 and Annex 5):NPV=US$ 406 million; FRR = 16 % (see Annex 4)Financial Management Assessment. Ministry of Labour and Social Security will be responsible formaintaining project financial management arrangements acceptable to the Bank. In accordance with Bank'spolicy OP/BP 10.02, the LCR Financial Management Unit (LCOAA) reviewed MLSS' financialmanagement arrangements relating to the project. The review focused on the assessment of the internalcontrol, planning, budgeting, accounting, and financial reporting system, and audit arrangements. Thereview concluded that the MLSS has well-established financial procedures for the Ministry's existingprograms, particularly the Food Aid (food stamp) program, which most closely mirrors the design of theproposed project. However, the cash or quasi-cash nature of the program, the fact that improvedmonitoring is a key part of the program, and the need to ensure that certain Bank requirements are met, allnecessitate that actions be taken prior to loan effectiveness to enhance the Ministry's financial managementcapacity. These actions, as well as key aspects of the project financial management arrangements, areexplained in more detail in Annex 6.

Annexes 4 and 5 detail the cost-benefit analysis conducted for the program and the financial summary.

Fiscal Impact:

It is expected that at the end of the project, GOJ will be in a position to finance the entire UBP with its ownresources. The IBRD loan will help finance the Program during the transition process. Over the 4 yearimplementation period, the Unified Benefit Program including the new targeting mechanism, M&E systemetc. requires GOJ counterpart funding of approximately US$37.5 million. The counterpart resources wouldstem from (i) the unification of the existing programs, (ii) the re-allocation of other social safety netprograms that will either be scaled down or terminated, and in the long term (iii) reduction in debt servicingcosts, an increase in revenue inflows as a result of improved administration and collection strategies, and anincrease in long term growth of GDP. GOJ has already started this process, which is the core of the SSNreform, in its budget for the Jamaican FY 2001/02. One of the objectives of this exercise is to ensure thatthe program does not increase the fiscal burden of Jamaica.

The GOJ and the WB will finance a constant share of the child assistance grants, but the Bank will financea declining share of the institutional strenghthening component (see table below).

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Figures are In LIS$ Jaalcan FY200 r) Jamaican FY2003M Jarriaican FY20D405 Jarnlci FY200596 Total

1.0* Assi,ce TasWer 739,565 493D43 7,870,474 5246,933 9,619,468 6,412,979 10,493,965 6,995,977 28,723472 19,148,9822. SauftAssistanze Transer . 436,043 . 4,640,382 . 5,671 ,578 6187176 196,91,783 ImlituIion~ SrESering 3,801,561 409544 3677203 518,012 1,401,889 236278 1i621,447 263,006 1Q502,100 1,415,839

1Aoed - - 374,430 - 374,430 -

rt-d Fe 4D0,000400,60 40906 -

TOTAL 4,941,12 1,33,630 11,547,67 10,405,76 11 ,02i,357 1Z319,634 12,489,843 i3,436,15,8 40,000,002 37,499,998T'Ndes ( Irdde 2rd wneer dr Jaicn FY2001ll2 (Ocbe 2001-al 3 2002)

3. Technical:

The Goverunent of Jamaica has presented a draft operational manual for the program. It includes chapters

on eligible beneficiaries, the program cycle from registration to payments, as well as procurement

arrangements and mechanism for the flow of funds from the Bank to the program and from the program to

the beneficiaries. The final version of the Operational Manual, satisfactory to the Bank, is a condition of

effectiveness.

The new targeting mechanism based on a proxy means test is a key element of the project. In coordination

with the PIOJ and the IDB, the Bank has developed a scoring forrnula from the Jamaican Survey of Living

Conditions (SLC) data base (see annex 15). The scoring formula will be used to rank all the households in

the SLC database from lowest score to highest score, and the sample will be "blown up" (expanded) by

using statistical sampling weights to generate a distribution of the possible beneficiaries. The overall

budget envelope for transfers under the UBP agreed between the Bank and the GOJ will be divided by the

benefit levels established by Cabinet to set the desired number of beneficiaries. A cut-offpoint will be set

to correspond to a target 20 percent lower than the desired number of beneficiaries, to leave scope for cases

brought to the attention of the appeals committees and to allow for unexpected contingencies. To the extent

that the scoring formula is a good fit (which is the case, as leakage errors are less than 3 percent), there

should be no problem with more applicants qualifying for the benefit than there are funds available, but in

any case the 20 percent margin should be sufficient to ensure this.

Careful monitoring during the application stage of how many applicants qualify is necessary to make sure

that costs do not over-run the available funds. If during the pilot phase, such an over-run should appear

likely, a new lower cut-off point will be established for reducing eligibility. Careful monitoring is also

necessary to improve the scoring formula. The scoring formula will be revised based on the initial

experience in the field during the pilot phase. The proposed project will continue to provide technical

assistance to refine the targeting mechanism for the safety net programs in Jamaica. The World Bank will

work closely with the GOJ to provide the necessary technical expertise on setting the cut-off point and

imnproving the scoring formnula.

In addition, Technical Assistance will be provided to facilitate the institutional changes needed to

consolidate the existing programs.

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4. Institutional:The Government of Jamaica as part of the Medium Term Economic and Social Policy Framework, iscommitted to reform Jamaica's safety net to improve targeting for the poor, relevance and effectiveness ofwelfare, and related programs and efficiency in the delivery of services. The proposed reform will involve,primarily, the Ministries of Labour and Social Security, Local Government and Community Development,Health, and Education. During project preparation, an institutional assessment was carried out to identifypending issues related to the consolidation of the existing transfer programs. Based on this assessment,under the leadership of the Office of the Prime Minister, a Management Consulting firm has beencontracted to determine the institutional arrangements to deliver the welfare benefits to the needy, and tomake recommendations on the most effective and efficient manner to deliver social assistance, including ananalysis of the legal implications of the proposed safety net reform. The study will include an action planand a time table to implement the proposed changes.

As part of the implementation strategy of the SSN reform, the government has decided to establish aUnified Benefit Program, under the MLSS, to replace three existing income transfer programs. The MLSShas had a long standing experience in the implementation of similar programs (for example Food StampProgram), and is currently adjusting its institutional structure and management arrangements, to implementthe new program. A management study will be undertaken during the first year of implementation of theUBP to develop the optimal organizational structure for program implementation. The management studywill assess administrative, policy and planning capacity of the MLSS and identify required adjustments tostrengthen service delivery. The organizational structure in the MLSS will be adjusted in accordance withthe results of this management study.

At the Bank's request, the Government of Jamaica, through the Attomey General's office, provided a legalopinion stating that there are no legal impediments to giving recipients a single cash payment under thethree existing transfer programs.

4.1 Executing agencies:

Ministry of Labour and Social Security (MLSS) and its 13 parish offices at the local level (see annex 14),which are equipped and motivated to initiate the program.

4.2 Project management:

Overall responsibility for project management lies with the Director of the Social Protection andDevelopment (SPAD) division supported by the Financial Management and MIS Divisions within theMLSS, for program financial and procurement matters respectively.

4.3 Procurement issues:

Only a small percentage of the loan would be used for procurement of goods and services. Nevertheless, aprocurement capacity assessment was carried out during project preparation. According to the assessment,the MLSS is not yet well enough equipped to carry out project procurement activities but, based on thisassessment, the Government agreed on a plan of actions to strengthen its implementation capacity and hasalready taken important actions, namely: (i) selected personnel with adequate capacity to carry outprocurement activities, and (ii) prepared a draft Procurement Manual. The Bank will ensure that (i) trainingon Bank procurement methods and procedures is provided, and (ii) technical assistance is provided formajor procurement activities (informnation technology, contract with consulting firms etc.). In addition,regular procurement reviews will be carried out as outlined in Annex 6.

4.4 Financial management issues:

During project preparation, the Bank finalized its Country Financial Accountability Assessment (CFAA) of

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Jamaica. This assessment, which concluded that the country's financial management framework wasgenerally sound, was taken into consideration when designing the FM arrangements for the project. Basedon the CFAA findings, and in response to Borrower's desires, an effort was made to utilize existinggovernment financial management mechanisms whenever such mechanisms would not require significantstrengthening during the project's life. For example, it has been decided by GOJ and accepted by the Bankthat the Auditor General will carry out the annual financial audits of the program.

Project financial management in Jamaica has been generally adequate, and has seen improvements in recentyears. Compliance with audit covenants has sometimes not been achieved (reports being received in somecases many months after the deadline), and disbursement applications have sometimes not been sent on aregular and/or timely basis. These risks will be mitigated by significant efforts to establish and build FMcapacity prior to the launching of the project. Still, regular (twice annual) financial management reviewsby Bank staff are considered necessary until such time as the project has established a good record offinancial/disbursements reporting.

5. Environmental: Environmental Category: C (Not Required)5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (includingconsultation and disclosure) and the significant issues and their treatment emerging from this analysis.

None

5.2 What are the main features of the EMP and are they adequate?

Not applicable

5.3 For Category A and B projects, timeline and status of EA:Date of receipt of final draft: Not applicable

Not applicable5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EAreport on the environmental impacts and proposed environment management plan? Describe mechanismsof consultation that were used and which groups were consulted?

Not applicable

5.5 What mechanisms have been established to monitor and evaluate the impact of the project on theenvironment? Do the indicators reflect the objectives and results of the EMP?

Not applicable

6. Social:6.1 Summarize key social issues relevant to the project objectives, and specify the project's socialdevelopment outcomes.

One of the major challenges to Jamaica's social development is the low level of social cohesiveness. This ismanifested by the high level of violence in the inner-city, which has reached crisis proportions. In theseneighborhoods, children are sometimes prevented from going to school by ongoing gun battles betweenrival gangs, and virtually everyone has a close relative or friend who has died a violent death. Poverty andexclusion are among the main causes of violence. Dropping out of school is often how the vicious circlestarts. Drop-out boys will quickly reject the few options they might have for low-paying jobs and turninstead to fast and easy ways to make money through illegal means (mainly the sale of drugs). Drop-outgirls will soon find themselves pregnant, but without the psychological or material means to take care oftheir offspring. The next generation will then grow up in a climate marked by violence, emotionalinstability and material deprivation. In inner-city neighborhoods there is a deep feeling of alienation fromthe Government. Within this context, finding ways to promote social inclusion is crucial, as inclusion is

-24 -

one of the building blocks for reduced violence and greater social cohesiveness.

The most significant social development outcomes of the program will be: (a) a more equitable andtransparent system of delivering social care services, and (b) positive behavioral changes among theextremely poor. Both outcomes, in turn, should result in greater inclusion for the poor, and therefore inreduced poverty and vulnerability. In particular, poor children's opportunity for human capitaldevelopment should be greatly increased as the conditional transfer system will facilitate their access toeducational and health services while promoting a more positive and proactive attitude in their parents. Theongoing participatory process envisaged by the program throughout implementation (see section below)will not only help make the program more responsive to its clients' needs, but also encourage theirinvolvement in the definition of policies and interventions that affect their lives, ultimately resulting in theirempowerment. The equitability and transparency openly sought by the program should also inspire greatertrust in the government, thus contributing to develop social capital. Overall, the proposed reform shouldplay an important role in strengthening social cohesion, a most important social development outcome for asociety threatened by high levels of violence and social fragmentation.

6.2 Participatory Approach: How are key stakeholders participating in the project?

Government. Consensus has been built at the working level of the Govemment through a series of workinggroup meetings conducted with a professional facilitator. An Inter-Agency Steering Committee comprisedof GOJ senior technical staff was constituted to outline a policy matrix for the broader reform of the socialsafety net. Social workers from the programs to be merged have participated in meetings to inform thedesign of the new program. The Govenmuent's public information campaign will include communitymeetings and meetings with NGOs.

Beneficiaries. In order to design the new program as closely to the needs of the poor as possible, abeneficiary consultation process was carried out during project preparation. Potential beneficiaries wereinterviewed about their perceptions with regard to (i) the means to identify the poor and the poorest (thiswas taken up to define the criteria used in the scoring formula), (ii) the strengths and weaknesses of theexisting social assistance programs, and (iii) recommendations for specific design features of the new UBPsuch as payment method, level of benefits, and frequency of payments (Annex 12 summarizes the answersgiven by beneficiaries and stakeholders). The design of the UBP is based on the results of this consultationprocess. In addition, the program design includes an appeals process whereby complaints can be registeredand individuals can ask for their case to be reconsidered.

Civil society organizations. See 6.3 below.

General public. With support from the Bank, the Govermment is presently designing a vigorous publicinfornation campaign to explain the new system's rationale to the public, stakeholders and beneficiaries.The importance of linking the benefit to behavioral change to promote human capital development amongchildren who are poor and of targeting programs only to those who are most needy should illustrate to thepublic the significant advantages that will be incurred for the country as a whole.

6.3 How does the project involve consultations or collaboration with NGOs or other civil societyorganizations?

Once the SSN reforn proposal was drafted, Govemment conducted a series of workshops with civil societyin Kingston and throughout the country to discuss the proposal with these important stakeholders. Therepresentatives of civil society welcomed the SSN reform proposal enthusiastically and urged the

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Government to implement the suggested changes. Government plans to continue this process and intensifyit as the social safety net reform evolves. The project will provide the means to support this process.

In particular, it is proposed that the new institutional structure for the UBP include a Local Committee forSocial Welfare to monitor and assess the local impact of welfare policies. This Local Committee should bea vehicle for local NGOs, churches and other civil society organizations to discuss the impact of thevarious programs on the needs and aspirations of the local community (see section C4 b on AppealsMechanism). The Committee, one in each parish, should be able to raise issues and concerns to the nationallevel.

6.4 What institutional arrangements have been provided to ensure the project achieves its socialdevelopment outcomes?

Given that the aim of the project is measured in terms of social development outcomes, the institutionalarrangements to accomplish the project objectives - as presented in Section 4, above and in annex 13 -describe clearly how the project would ensure attainment of social development outcomes.

6.5 How will the project monitor performance in terms of social development outcomes?

Because the program outcomes are social development outcomes, the M&E system of the program, whichis described in Annex 1, will pay special attention to the monitoring of social development outcomes. Inparticular, regular beneficiary consultations and the appeal mechanism envisaged will make it possible toassess client satisfaction and whether the program is succeeding in fostering a greater integration of thevery poor into mainstreamn society. The project MIS will provide quantitative data to complement thisinformation.

7. Safeguard Policies:7.1 Do any of the following safeguard policies apply to the project?

Policy ApplicabilityEnvironmental Assessment (OP 4.01, BP 4.01, GP 4.01) 0 Yes * No-Natural habitats (OP 4.04, BP 4.04, GP 4.04) 0 Yes * NoForestry (OP 4.36, GP 4.36) 0 Yes 0 NoPest Management (OP 4.09) 0 Yes 0 NoCultural Property (OPN 11.03) 0 Yes 0 NoIndigenous Peoples (OD 4.20) 0 Yes 0 NoInvoluntary Resettlement (OD 4.30) 0 Yes 0 NoSafety of Dams (OP 4.37, BP 4.37) 0 Yes 0 NoProjects in International Waters (OP 7.50, BP 7.50, GP 7.50) 0 Yes 0 NoProjects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60) 0 Yes 0 No

7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies.

n/a

F. Sustainability and Risks

1. Sustainability:

The sustainability of this project has to be analyzed from various angles: (i) financial sustainability; (ii)sustainability of behavioral changes; and (iii) sustainability of institutional strengthening.

(i) The proposed project is intended to protect the human capital of the poor. During the four-year project

- 26 -

period, the World Bank will finance approximately one-half of the costs of the safety net reform program,which includes not only the new benefits, but also the institutional strengthening and development. Alreadyduring the project years, the Government will have to increase the budget allocations to the UBP. Theseallocations are expected to be provided inter alia through reallocation of funds from other, less effective orefficient SSN programs. The contributions of the Government and World Bank are shown in the table onfiscal impact in Section E.2.

Furthermore, the IDB is planning to support the implementation of the SSN reform through a sector loanconditional to the successful introduction of the UBP, which would provide additional funds to theGovernment of Jamaica. The total amount of counterpart funding necessary during project implementationis US$ 37.5 million.

After project completion, the Government will take on the full responsibility for financing the transfers. It isexpected that by then, growth rates would recover and debt service would decrease due to the financialsector reform supported by IDB, CDB, EU and World Bank. Therefore, additional funding should beavailable to cover the full cost of the new income transfer program.

In 1998, the Government of Jamaica spent J$616 million (US$15.4 million) on the three income transferprograms combined. By the third year of the UBP, it is envisioned to cover 217,000 beneficiaries with amonthly benefit level of US$9. To sustain the program, Jamaica would need to spend about US $8 millionmore on the unified benefit program than was paid out in 1998. This amount should be re-allocated fromless targeted or efficient SSN programs.

(ii) Experience with cash benefits linked to school attendance indicates that behavioral changes encouragedthrough participation in the program will continue even if the transfer is discontinued, as children will haveformed the habit of attending. Furthermore, successful implementation of the proposed project wouldprovide Jamaica with a suitable mechanism to provide the needed assistance to the poor that could bescaled up or down, depending on economic conditions.

(iii) The project includes a significant component of institutional development to implement the safety netreform, including consolidation of cash transfer programs, the establishment of a targeting mechanism, andthe establishment of a management informnation system and a monitoring and evaluation system. Thissignificant increase in capacity of Jamaica's social safety net will continue beyond the life of the project.

2. Critical Risks (reflecting the failure of critical assumptions found in the fourth column of Annex 1):

Risk Risk Rating Risk Mitigation MeasureFrom Outputs to ObjectiveEducation and health services are not N Inter-Institutional agreements between MLSSadequate to meet increased demand, and Ministries of Education and Health aboutaccess becomes more difficult. responsibilities and services to be provided to

UBP beneficiaries. Continuous donor support toimprove access to and quality of primary andsecondary education (see section D.2)

Government commitment to irnplement the M Clear agreements on responsibilities andsocial safety net reforms weakens due to counterpart funding. Maintain a participatorychange in priorities. process throughout project implementation.

Commitment as expressed in Policy Letter(Annex 16).

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Fiscal situation does not allow for an S Provisions for flexibility in loan agreement.increase in level of benefits as planned.

Consolidation of programs is hampered by M Public information campaign. Provisions inemployees and/or unions. project implementation to encourage change.

Gradual introduction of necessary changesbased on thorough institutional analysis.

Displacement of current beneficiaries not M Public information campaign; appealselegible under the UBP mobilize mechanism.opposition to the new program.

From Components to OutputsLevel of transfers proves insufficient to M Constant monitoring of compliance withstimulate desired behaviors. conditions; regular beneficiary consultations;

linking UBP to other safety net programsImplementation of UBP is delayed. S Technical Assistance is included in the project

to support a quick and efficient implementationprocess.

Technical expertise, organizational S Technical assistance included in the projectstructure and management capacity are strengthens institutional capacity of MLSS. Keynot conducive to effective program staff is hired in consultation with Bank.implementation. Management study carried out during first year

of program implementation.Grants do not reach eligible beneficiaries S Regular review of cut-off line for targetingdue to limitation of scoring formula, mechanism will prevent overdemand orineffeciencies and/or delays. underutilization. Training for social workers to

adequately employ targeting mechanism.Periodic operational audits and consequentadjustments of system.

Selected payment agency does not deliver S Evaluation of experience with payment agencytransfers adequately. after pilot phase. Safeguards in contract with

payment agencies.

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

3. Possible Controversial Aspects:

Not applicable

G. Main Loan Conditions

1. Effectiveness Condition

* Adoption of an Operations Manual for the Unified Benefit Program, including financial managementand procurement arrangements, satisfactory to the Bank.

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* Appointment of the financial auditors, in accordance with terms of reference acceptable to the Bank.* Establishment of a financial management system, satisfactory to the Bank.

2. Other [classify according to covenant types used in the Legal Agreements.]

Condition of DisbursementPrior to the presentation of each withdrawal request of Loan proceeds for grants, the borrower shallfurnish to the Bank evidence to the effect that independent operational auditors have audited the list ofeligible poor children and the list of eligible Family Representatives.

H. Readiness for Implementation

0 1. a) The engineering design documents for the first year's activities are complete and ready for the startof project implementation.

1 1. b) Not applicable.

OI 2. The procurement documents for the first year's activities are complete and ready for the start ofproject implementation.

1 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactoryquality.

[]1 4. The following items are lacking and are discussed under loan conditions (Section G):

1. Compliance with Bank Policies

2 1. This project complies with all applicable Bank policies.IL1 2. The following exceptions to Bank policies are recommended for approval. The project complies with

all other applicable Bank policies.

Andrea Vermehren avier E. Coll KalantzoqulosTeam Leader Sector Manager/Director Country Manager/Director

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Annex 1: Project Design Summary

JAMAICA: Social Safety Net Project

Hierarchyo Obj o c:v Indit Monitoring & Evaluation Critical AssumptionsSector-related CAS Goal: Sector Indicators: Sector/ country reports: (from Goal to Bank Mission)Protecting the Poor and * Percentage of Survey of Living Conditions * The economy does notEnsuring Inclusion Govemment spending on annual report decline

safety net (2.6% of GDP) * The Government remains* Decrease in number of committed to a poverty

poor below poverty line reduction strategy* Poor can be targeted

effectively

Project Development Outcome / Impact Project reports: (from Objective to Goal)Objective: Indicators:Support the Govemment of Increase in health care Ministry of Health reports, Quality of education andJamaica's efforts to reform its utilization by very poor extemal project evaluation health services does notsocial safety net in order to children 0-6 decline, access remainsprovide better and more Increase in complete, on time adequatecost-effective social assistance immunization rates for veryto the extreme poor poor children 0-6 MOEYC and MOH comply

with inter-institutionalagreements

Increase in school attendance Ministry of Education reports, Widespread support andby poor children and youth extemal project evaluation political commitment to(85% of the time) reform continue

Ministry of Education reports,Increase in enrollment rates extemal project evaluationfor upper secondary schools

Percentage of overall SSN Annual Govemment budget Government re-allocatesexpenditure channeled sufficient funds from otherthrough the UBP SSN programs to UBP

Beneficiary satisfaction with Reports from beneficiary Level of benefits are increasednew program consultations as planned

Percentage of eligible poor not Survey of Living Conditionsreceiving grant

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Key PerformanceHierarchy of Ob1ectives Indicators Monitori & Evaluation Critical Assumpbons

Output from each Output Indicators: Project reports: (from Outputs to Objective)Component:1. Eligible children have Number of children receiving Program MIS Transfers are big enough toregularly received grants. the transfers regularly every provide an incentive for

two months (estimated target: families to comply with160,000) conditions for transfers

2. Eligible adults have Number of adults receiving Program MIS Fiscal situation allowsregularly received grants. transfers regularly every two sufficient budget to satisfy

months (estimated target: demand for transfers to57,000) eligible beneficiaries

3. Targeting mechanism is Percentage of program Program MIS, program yearly UBP division posseses neededoperational and UBP works beneficiaries below the evaluations expertise and promptly seeksefficiently poverty line (target > 30%), assistance when needed

and UBP administrative costsdo not exceed 15% by Year 3.

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Hieacy * Oclv Indkatora Monitorin * Ev lato C _ tia Asw :'; -Project Components I Inputs: (budget for each Project reports: (from Components toSub-components: component) Outputs)1. Child Assistance Grants USS 47.87 million* Quarterly progress reports, * Beneficiaries willing andcomponent: program MIS able to comply with* health (0-6 year olds), not requirements.

enrolled in school; * The grants would actually* education (6-17 year reach eligible

olds) beneficiaries with littleleakage, inefficienciesand/or delay.

* The adopted scoringformula provides anadequate targetingmechanism.

2. Social Assistance grants to USS 16. 94 million* Quarterly progress reports, * The grant distribution/Adults component program MIS payment mechanism

functions well.* The outreach campaign

reaches beneficiarieseffectively.

* There is capacity toestablish an adequateMIS.

* Appeals mechanismfunctions effectively.

3. Institutional strengthening USS 11.92 millions Quarterly progress reports, * MLSS remains in chargecomponent: program MIS of implementing the* Targeting & Enrollment UBP.* Information system * Organizational structure* Training and promotion of MLSS conducive to* Project Management effective program* M&E system implementation.

* Low overturn ofpersonnel.

* The amounts do not add up to USS 77.5 million because Unallocated and Front-end Fee is not taken into account inthe matrix.

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Monitoring and Evaluation System

A Monitoring and Evaluation (M&E) system will be implemented to assess the Program's success inachieving the desired outcomes. The M&E system will produce the indicators specified in the logicalframework through the implementation of five principal components: (i) a process evaluation of the initialphase of the Unified Benefit Program; (ii) a management information system (MIS); (iii) a beneficiaryconsultation and appeal committee; (iv) operational audits; and (v) an extemal evaluation. In addition tothese, there will be annual financial audits.

Process Evaluation of the Initial Phase. The initial phase being carried out in the Parish of St. Catherinewill be evaluated through a process evaluation in order to make recommendations conceming neededadjustments to the program design. The process evaluation will include a consideration of each of theProgram's components, with particular attention to: (a) the targeting mechanisms (especially thefunctioning of the scoring fornula); (b) program cycle arrangements - division of labor between localoffices and central administration; (c) linkages with Ministries of Health and Education; and (d) functioningof the appeals mechanism.

Management Information System. A networked management information system (MIS) will bedeveloped to track the Program's physical and financial progress during implementation. The MIS willcollect data to monitor poverty targeting, compliance with grant eligibility criteria, the timely delivery ofgrants, administrative efficiency, financial flows etc. In order to allow for future expansions ormodifications of the program, the MIS will be developed with a modular approach, using a relationaldatabase.

Beneficiary Consultation and Appeals Committee. Regular consultation with beneficiaries on servicedelivery, targeting and procedures will form an integral part of the M&E system. This system will havetwo components -- (i) Appeal Committees will be conformed by local officials and members of civil societyat the parish level to channel complaints, suggestions, and assessments from beneficiaries to programadministrators. A system will be established to ensure that key elements from the Appeals Committees willbe fed into the Program's MIS; (ii) Beneficiary Consultations will be carried out as part of the ExtemalImpact Evaluation with a sub-sample of beneficiaries selected from the survey.

Operational audits. Reviews of Program operations will be conducted on a sample basis by an extemalfirm every four months. These will be used to validate the accuracy of data being collected for the Program,regarding eligibility of beneficiaries and their compliance with conditions for benefits and the efficiency ofthe Program's operational systems. These extemal reviews will serve as a cross-check for the monitoringdata collected through the Program's MIS.

External Evaluation. An external evaluation will be conducted to assess whether the goals of the Programare being met, particularly with respect to children's health and education outcomes. The evaluation will bebased primarily on the use of household surveys to assess the Program's targeting and outcome, using as areference the measures listed in the Logframe. The evaluation will harmonize its data collection efforts withthe existing system of household surveys and the estabhshed poverty measures in Jamaica in order toevaluate the Program's success in poverty targeting, and to support and improve upon the existing systemof household surveys. As mentioned above, the evaluation will also include a qualitative assessment of theprogram in a sample of beneficiaries to complement the findings produced by the household survey data.

Two committees will support the quality of the M&E system, ensure its relevance in providing inputs forpolicy decisions in Jamaica, and build M&E capacity. First, a Technical Committee established in the

- 33 -

MLSS will work directly with the staff contracted for the various components of the M&E system and withthe PIOJ to ensure the relevant and timely production of needed information and its relevance to overallpolicy decisions. In addition, the Program Steering Committee consisting of high level representatives ofrelevant ministries, academics and representatives from civil society will liaise with the TechnicalCommittee to guide, inter alia, the implementation of the program, including the design, analysis and use ofthe M&E system, and, in particular, the extemal evaluation.

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Annex 2: Detailed Project DescriptionJAMAICA: Social Safety Net Project

By Component:

Project Component I - US$47.87 millionChild Assistance Grants. This component would finance conditional Health and Education grants for poorchildren age 0-17 eligible under the program. These grants will finance direct costs to keep poor children inschool and healthy, they will not finance lost opportunity costs.

* Education Grants. Receipt of educational grants would be conditioned on school attendance of poorchildren 6-17 enrolled in school. A child must attend 85 percent of sessions to remain eligible forbenefits. Eligible and registered beneficiaries would receive the grants for as long as they comply withthe agreed requirements. The benefit would be paid to the family representative which in general wouldbe the mother; in case the mother is not available, the person taking care of the child would be assignedas the family representative. At the beginning of each school year, the Ministry of Education, Youthand Culture (MOEYC) will report to the MLSS on the number of sessions in each of the three terms inthat school year. The family representative will be responsible for ensuring that compliance forns arebrought to the schools for completion. Principals will be responsible for completing compliance forms.The family representatives will deliver the compliance forms to the MLSS during the designateddelivery period. Furthermore, the family representative will be responsible for reporting changes ofschool to the old school and to MLSS to ensure that benefits are not terminated. The reporting scheduleis once per school term (three times per year). The Regional Community Relations Officer will liaisewith the MLSS parish office and assist with community relations as they relate to the educationrequirements of the Unified Benefit Program. It is envisaged that officials from the schools will haveinput into any appeal of termination of benefits.

* Health Grants. Receipt of health grants would be conditioned on health clinic visits for children 0-6(not enrolled in school) in accordance with an established plan. The Health Center Nurse will establisha clinic visit schedule for each beneficiary child with the number of required visits dependent on the ageof the child (see details in table below). If a visit is missed, the appointment must be rescheduled forwithin 30 working days of the missed appointrnent. If not, the household will be marked asnon-compliant. The family representative will report to the MLSS on whether or not a child wasbrought for a scheduled visit. Health Center Nurses will be responsible for certifying attendance andaffixing a sticker to the compliance forns. The Public Health Nurse in charge of the health center willbe responsible for ensuring that nurses sign and affix stickers to compliance forms. The famnilyrepresentative (in principle the mother, see above) will ensure that compliance forms are completed ateach visit and will be responsible for keeping the compliance forms between visits. Furthermore, thefamnily representative is responsible for delivering the compliance forms to the MLSS during thedesignated submission period. The reporting schedule will be every four months (three times per year)with dates to synchronize with reporting dates for Education Grants. The Parish Health Managers willliaise with the MLSS parish office and assist with community relations as they relate to the healthrequirements of the Unified Benefit Program.

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Required Number Of HealthBeneficiary Required Care Visits

group

Birth to ll Immunization (BCG x 1; OPV x 3; DPT xmonths 3; MMR); Nutritional Screening, Health 5

Education for Household Head12 to 23 Booster; Nutritional Screening, Healthmonths Education for Household Head 224 to 35 Booster; Nutritional Screening, Healthmonths Education for Household Head 236 to 47 Booster; Nutritional Screening, Healthmonths Education for Household Head 248 to 59 Booster; Nutritional Screening, Healthmonths Education for Household Head 2

In both Education and Health Grants, the average monthly benefit per child would be US$6 in the firstyear, US$7.5 in the second, and US$9 during and after the third year of program implementation, thegradual increase has been established for budgetary reasons. It is assumed that starting in April 1, 2004(fourth year), the level of benefit will retain its real value. In case of higher than presently expectedinflation, the benefit level would be adjusted accordingly. The education benefit basically covers the out ofpocket expenditures of families for children going to school. The health grant would enable and motivatebeneficiary mothers of 0-6 year old children to give them the nutrition and health care they need during thiscritical period of growth and development.

Signed inter-institutional agreements between MLSS, MOEYC and MOH on the responsibilities andprocedures will ensure adequate supply response for the beneficiaries. It will not be necessary to report onimmunizations and care provided as the MOH has agreed through this accord to provide all required care(immunization, nutritional screening and health education) when the child is brought for the scheduled "well-baby" visit. This component includes the direct costs charged by financial institutions in Jamaica todeliver the grants to poor families.

Project Component 2 - US$16.94 millionSocial Assistance Grants for Adults. The second component will finance conditional grants to especiallyvulnerable groups of poor adults, including pregnant and lactating mothers, elderly over 65, and disabledand destitute adults under 65 eligible under the program. The grants will be conditioned on regular healthclinic visits (see details in table below). This component will be financed entirely with Borrowerscounterpart funds. It will ensure that the program is able to reach out to all poor persons belonging to thepoorest quintile, and therefore increase coverage of social assistance - one important objective of theprogram. In addition, it will support the GOYs efforts to provide appropriate pre- and postnatal care topoor women and general health care to poor adults eligible under the program. The estimated number ofbenefiting adults under this component (50,700) is considerably lower than for the children (165,900). Ingeneral, the beneficiary will be the person receiving the benefit directly. In case the beneficiary is not ableto receive the benefit, a representative would be assigned. The average monthly benefit per adult would be

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US$6 in the first year and increase over time as for the child assistance transfer. The selection ofbeeficiaries and the verification of compliance with conditions will be done through the program's targetingmechanism and in accordance with procedures and criteria established in the Operations Manual. Thiscomponent also includes the direct costs charged by financial institutions to deliver the grants.

Beneficiary group Required Care Required Number Of Health Visits

Pregnant Prenatal care and immunizations, 4 visits (or pro rata depending onnutritional screening when in the pregnancy the woman

applies for benefits)Lactating Postnatal care, health/parenting At 6 weeks and between 3 to 4

education months post deliveryElderly over 65, disabled, destitute Regular health check-ups, 2 visits per yearunder 65 counseling

Project Component 3 - US$ 11.92 millionInstitutional strengthening component. This component will strengthen the institutional capacity of theMLSS to operate a streamlined and efficient social safety net in Jamaica. To this end, it will providesupport for

* Targeting mechanism and Enrollment (US$ 1.39 million). The bulk of this component will bespent on the enrollment mechanism, including the necessary information technology equipment andsoftware, and to cover the cost of temporary employees hired for data processing of applications.Additionally, this component includes a small amount of technical assistance on the scoring formula. Apreliminary scoring formula based on data of the Survey of Living Conditions has been developed forthe targeting mechanism. However, during the early years of program inplementation, the scoringformula will require periodic review and refinement. The project will provide for local andinternational consultants and technical assistance for periodic review of the targeting mechanism.

- Information System (US$ 1.28 million). Appropriate infornation technology (hardware/software)will be introduced to support efficient management of the program. The envisioned system will requirecomputer workstations in the parish offices, the MLSS offices and in the Computer ServicesDepartment. Approximately 90 workstations, 50 printers and 30 laptops will be required for the usersand developers to implement the program. These costs will be covered by IBRD. There are fourcategories of training that will be necessary for implementing the Unified Benefit Program.:

1. Introduction to Computers for Users for new users of the computer equipment who have little or noexperience working with computers.

2. Unified Benefits System Training for Users to learn about the Unified Benefit software system for theemployees of the parish offices and of the ministry headquarters who will be working with theapplications software.

3. User Technical Support Training to cover the system support functions that will be necessary in eachparish office and in the ministry user offices.

4. Advanced Technical Training for some of the employees in the Computer Services Department to learnadvanced computer technology.

* Training and Promotion (US$ 3 . 01 million), to strengthen technical, administrative (e.g.

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procurement and financial management), and social work capacity in the MLSS to implement the newUnified Benefit Program. MLSS staff directly involved in the management and implementation of theProgram, education and health staff and beneficiaries will receive training to ensure that they fullyunderstand their role, requirements and procedures defined for the new program. Other stakeholders(for example members of appeals committees) will be trained in the rationale, requirements andprocedures of program implementation. In addition, a public information campaign will be carried outaimed at creating awareness of the Social Safety Net refonn, among the general public, potentialbeneficiaries, and stakeholders, focusing on the advantages expected from the UBP. The campaign isexpected to last approximately 6-9 months. Activities will be carried out through television, radio, andprint media (newspapers as well as posters, brochures, billboards, etc.). A consultant is presentlydesigning the campaign which will also include the costing for the proposed activities. A consultingfirm will be hired to carry out these activities during project implementation. The campaign will beintegrated in the MLSS's overall public education programme.

* Project Management (US$ 5. 5 8 million), to finance the design and implementation of the UnifiedBenefit Program. This includes financing of incremental professional staff (at MNLSS central office and13 parish offices), vehicles, and administration cost of the Implementation Unit. The program will beadministered by the SPAD division and the 13 parish offices of the MLSS. A management study willbe undertaken during year 1 of program implementation. The purpose of the management study is toassess the administrative, policy and planning capacity of the MISS and to identify required changesto strengthen service delivery. The UBP personnel working for this program will initially consist of 39staff, including a director and six office managers including for planning and evaluation, informationsystems, operations, procurement, financial management and training. Each of the 13 parish officeswill be staffed with approximately 12 persons (total of 156 staff), depending on the parishcharacteristics (number of beneficiaries, accessibility etc.). This will include one parish office managerand approximately 6 professionals (inter alia, social workers). Additional staff needed to initiate theprogram (approximately one third of the technical and administrative staff) would be financed underthe loan. It is expected that by the end of 2003, contract officers would be decreased to about 30 atcentral levels and 9 each at the parish level, with the effect that toward the end of the project, IBRDfunding for this item can be reduced significantly.

In addition, this item includes Technical Assistance to strengthen the MLSS implementation capacity,particularly in the areas of procurement and financial management. Furthermore, administrative costsfor office supplies, office equipment (copiers, faxes etc.), and vehicles will be covered.

* M&E system (US$ 0. 66 million) to measure the outcomes and impact of the program. This willinclude beneficiary consultations, regular operational audits (three per year), an MIS system as well asa baseline survey and an evaluation of program outcomes (for details, see annex 1). Additionally, theintemal auditors of the MILSS as well as management will carry out regular supervision of compliancewith program procedures as described in the Operational Manual. Financial provisions under theprogramn are made for external audits, the development of the MIS system, the beneficiaryconsultations, the baseline survey and the final evaluation.

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Annex 3: Estimated Project Costs

JAMAICA: Social Safety Net Project

Local Foreign TotalProject Cost by Component US$ million US$ million US$ million

Child Assistance Transfer 47.87 47.87Health Grants 16.69 16.69

Education Grants 31.18 31.18Adult Assistance Transfer 16.94 - 16.94

Pregnancy Grants 2.80 - 2.80Poverty Grants 1.24 - 1.24

Elderly Grants 8.18 - 8.18Disability Grants 4.71 - 4.71

INSTITUTIONAL STRENGTHENING 7.88 4.04 11.92Project Management 5.02 0.55 5.58

Targeting & Enrollment Costs 0.77 0.63 1.39Information System 0.26 1.02 1.28Training & Promotion 1.50 1.50 3.01Monitoring and Evaluation 0.33 0.33 0.66

Total Baseline Cost 72.69 4.04 76.73Physical Contingencies 0.09 0.09 0.19Price contingencies 0.09 0.09 0.19

TOTAL PROJECT COST 72.87 4.23 77.10

Front-end fee - 0.40 0.40

Total Financing Required 72.87 4.63 77.50

Local Foreign TotalProject Cost by Category US$ million US$ million US$ million

Goods 1.84 2.89 4.74Grants 64.81 - 64.81

Services 6.03 1.15 7.18

Total Baseline Cost 72.68 4.04 76.73Physical Contingencies 0.09 0.09 0.19Price contingencies 0.09 0.09 0.19

TOTAL PROJECT COST 72.87 4.23 77.10

Front-end fee - 0.40 0.40

Total Financing Required 72.87 4.63 77.50

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Local Foreign TotalProject Cost by Category US$ million US$ million U S$ million

Goods 1.84 2.89 4.74- Vehicles and equipment - 0.52 0.52- UBP materials 0.05 0.02 0.06- Parish materials 0.24 0.11 0.35- Enrolment materials 0.05 0.02 0.07- Payment forms 0.31 0.15 0.46- Training and promotion materials 0.48 0.31 0.80- System information hardware & software - 1.04 1.04- Mobilization 0.72 0.72 1.43Grants 64.81 - 64.81Services 6.03 1.15 7.18- UBP consultants 0.67 - 0.67- Parish consultants 1.89 - 1.89- Monitoring and evaluation 0.42 024 0.66- System maintenance 0.17 0.07 0.23- Training senrices 0.35 0.19 0.53- Workshops 0.17 0.07 0.24- Targeting 0.40 0.40 0.80- Enrollment seNces 0.35 0.18 0.53- Financial Institution Transactions 1.61 - 1.61

Total Baseline Cost 72.68 4.04 76.73Physical Contingencies 0.09 0.09 0.19Price contingencies 0.09 0.09 0.19

TOTAL PROJECT COST 72.87 4.23 77.10Front-end fee - 0.40 0.40Total Financing Required 72.87 4.63 77.50NOTE: totals may not be exact due to rounding

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Annex 4: Cost Benefit Analysis Summary

JAMAICA: Social Safety Net Project

Summary of Benefits and Costs:A cost benefit analysis was performed on three options presented to the Government. Option 1provides benefits to 236,000 persons and places a ceiling on the number of beneficiaries perhousehold at a maximum of three children and four persons overall. This option is based oninformation about the number of the poorest in Jamaica by type of vulnerability. Option 2provides benefits for 272,000 persons and prescribes no ceiling per household, however, itstipulates that only a portion of the benefits would be payable for children in excess of themaximum of 3 children per household. Option 2 is the more expensive option, however, it alsotargets more beneficiaries. Option 3 is based on a number of 217,000 beneficiaries, reflecting thereality that if the Government targets 236,000 beneficiaries, a certain percentage of the eligiblewill either fail to apply or a percentage of those who apply will fail to meet the conditions.

The benefits of the project are calculated from the incremental hourly wage earned from staying atschool longer based on the incremental income that a person can earn from staying in school for alonger period of time. The incremental income per hour for completing each cycle was establishedand this was divided by the total number of attendee days to obtain the incremental income perhour per attendee day. This was calculated at 0.021985. The incremental income per year perattendee day was calculated at 45.73. This provided an annual stream of benefits that wasdiscounted. These benefits were compared with the projected annual costs for the project todetermine the net present values and internal rates of return. The discount rate used is 10% andthis is the discount rate suggested by Dr. John Weiss of the University of Bradford who calculatedthe national economic parameters for Jamaica.

The costs of the program are calculated as the number of beneficiaries for each option multipliedby the benefits intended by the Government (J$250, 375 and 500 respectively for the first threeyears of the program and J$500 for each subsequent year).

The results of the cost benefit analysis shows that Option 1 had a Net Present Value of $406million at a discount rate of 10 percent and an internal rate of return of 16 percent. Option 2 hada net present value of $2.027 billion and an internal rate of return of 35 percent. This is to beexpected since with Option 2, the incremental expenditure is 5.8 percent more than Option 1,while Option 2 would benefit 15.3 percent more children than Option 1.

Lack of data on the health status of children and the link between improved health status andearnings meant that the cost benefit analysis could only be done for the education-related benefits.Actual benefits of the program would therefore be higher than those calculated here.

Main Assumptions:The repetition rate and hence reduction of repetition days is assumed to represent a benefit to theGovernment. The assumption is made that the enrollment rate will move from 92.6 percent to 96

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percent over a five year period, and the attendance rate will move from 75.1 percent to 78percent. These figures have been conservatively assumed. The main assumption made is thatattendee days will increase as a result of implementing the project. For instance, in year 1, withthe implementation of the project, it is assumed that the enrollment rate will increase from 92.6percent to 93.0 percent and the attendance rate will increase from 75.1 percent to 75.5 percent.

Sensitivity analysis / Switching values of critical items:A sensitivity analysis was performed on the three options by determining the extent to which costscould be increased without making the project non-viable (zero net present value). In this analysis,costs were increased without increasing the level or value of benefits. For Option 1, costs could beincreased by only 4.2 percent before the net present value became negative. On the other hand,Option 2 showed that costs could be increased by 19.9 percent before the project becamenon-viable.

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Annex 5: Financial Summary

JAMAICA: Social Safety Net Project

IMPLEMENTATION PERIOD(US$ million) Year 1 Year 2 Year 3 Year 4

Total Financing RequiredProject Costs

Investment Costs 3.01 18.37 21.35 21.34Recurrent Costs 2.87 3.59 1.99 4.59

Total Project Costs 5.88 21.95 23.34 25.93Front-end Fee 0.40 _ .

Total Financing 6.28 21.95 23.34 25.93

FinancingIBRD 4.94 11.55 11.02 12.49Govemment 1.34 10.41 12.32 13.44User Fees/Beneficiaries - - - -Others _ _ _ _

Total Project Financing 6.28 21.95 23.34 25.93

Time period spans October 2001 - September 2005. Numbers may not add exactly due to rounding

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Annex 6: Procurement and Disbursement ArrangementsJAMAICA. Social Safety Net Project

Procurement

Procurement Arrangements

Procurement for the proposed project would be carried out in accordance with World Bank"Guidelines: Procurement Under IBRD Loans and IDA Credits", published in January 1995 (revisedJanuary/August 1996, September 1997 and January 1999); and "Guidelines: Selection andEmployment of Consultants by World Bank Borrowers" published in January 1997 (revised inSeptember 1999 and January 1999), and the provisions stipulated in the Credit Agreement.

Procurement methods: The methods to be used for the procurement described below, and theestimated amounts for each method, are summarized in Table A. The threshold contract values for theuse of each method are detailed in Table B.

Procurement of Goods

Goods procured under the Loan are estimnated to cost US$ 4. 48 million and would include:vehicles, computer hardware, and office equipment. To the extent possible, contracts for these goodswill be grouped into bidding packages of more than US$150,000 equivalent and procured followingInternational Competitive Bidding (ICB) procedures, using Bank-issued SBDs. Contracts withestimated values below this threshold per contract and up to an aggregate amount of USS 2 .42million may be procured using National Competitive Bidding (NCB) procedures, using previouslyagreed SBDs. Contracts with estimated value below US$25,000 and up to an aggregate amount ofUS$ 0 .49 million may be procured using shopping (National /Intemational) procedures based on amodel request for quotations satisfactory to the Bank.

Assessment of the agency's capacity to implement procurement

The Procurement Officer under the Permanent Secretary of the MLSS will carry out procurementactivities in close coordination with the Principal Finance Director who will administer project funds.An assessment of the capacity (PCA) of the MLSS to implement procurement actions for the projectwas carried out and cleared by the Regional Procurement Advisor (RPA) on June 13, 2001.

The risks identified in the assessment include: (i) MLSS' lack of qualified procurement staff and ofinstitutional structure and experience in procurement; and (ii) lack of adequate procurementprocedures, as defined by Bank guidelines. The following plan to address these risks is included in thePCA report and was agreed upon during appraisal: (i) MLSS to appoint a Procurement Officer with adegree in Engineering or Business Administration and experience in competitive bidding processes(done); (ii) MLSS to define its organization for project implementation, including procurement (done);(iii) MLSS to formally approve and implement a procurement procedure manual, acceptable to theBank, to be used for project operations (draft manual done); (iv) MLSS to prepare an OperationManual that includes standards and procedures and documents the delegation of authority andresponsibility and guidelines and procedures for procurement record filing (in progress); (v) use ofBank SBDs for the procurement of goods under ICB modality, Bank standard RFPs for the

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procurement of consultant services, and standard, Bank approved, bidding documents for theprocurement of goods under NCB and Shopping modalities; and (vi) a training program for theProcurement Officer in regards to specific Bank procurement guidelines and procedures.

Procurement Plan

The MLSS has submitted (as condition of negotiations) a Procurement Plan for project implementationthat provides the basis for the aggregate amounts for the procurement methods (per Table A). At June15 and December 15 of each calendar year, the MLSS will update the Procurement Plan with a detailedprocurement schedule for the coming six months.

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Procurement methods (Table A)

Table A: Project Costs by Procurement Arrangements(US$ million equivalent)

______________ ____ProcurementMethod (*1) | _

Procurement Category ICB NCB Other (*2) NBF (*3) Total

1. Goods 1.56 2.42 0.49 - 4.47(1.33) (2.06) (0.42) (3.81)

2. Consultants(*4) - 7.44 7.44-- (6.69) (6.69)

3. No Procurement(*5) - 48.25 16.94 65.19-- (29.10) - (29.10)

4. Front-end Fee - 0.40 0.40........ .- (0.40) - (0.40)

Total 1.56 2.42 56.58 16.94 77.50(1.33) (2.06) (36.61) - (40.00)

(*1) Figures in parentheses are amounts to be financed by the Bank loan. All costs include contingencies(*2) Includes civil works and goods to be procured through national shopping, consulting services, services of

contracted staff of the project management office, training, technical assistance services, and incrementaloperating costs related to (i) managing the project, and (ii) re-lending project funds to local govemment units.

(*3) Not Bank-financed(*4) Details in Table Al(*5) Child and Adult Assistance Grants

Selection of Consultants

Consulting services would be contracted in the following areas of expertise: development of software,monitoring and evaluation, collection of field data, and training. The services to be procured under theLoan are estimated to cost US $ 7 .44 million equivalent and would be procured using the Bank'sStandard Request for Proposals.

FinnsAll contracts for firms would be procured using QCBS, except for small and simple contractsestimated to cost US$100,000 equivalent or less that would be procured using CQ, up to an aggregateamount of US$ 0. 82 million equivalent.

IndividualsSpecialized advisory services would be provided by individual consultants selected by comparison ofqualifications of three candidates and hired in accordance with the provisions of paragraphs 5.1through 5.3 of the Consultant Guidelines, up to an aggregate amount of US$ 0. 5 0 rnillion.

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Operational Costs: The Loan would not finance operational costs.

Table Al: Consultant Selection Arrangements(US$ million equivalent, including contingencies)

Selection MethodsType of Consultant QCBS l BS SFB LCS CQ Other _NBF Total

1. Firms 6.12 0.82 . 6.94(5.50) (0.74) - - (6.24)

2. Individuals 0.50 - 0.50

... : - - (0.45) - (0.45)

Total 6.12 0.82 0.50 - 7.44(5.50) - - (0.74) (0.45) - (6.69)

Note: Figures in parentheses are amounts to be financed by the Bank loan. All costs include contingenciesQCBS: Quality and Cost Based Selection CQ: Selection Based on Consultants' QualificationsQBS: Quality Based Selection Other: Selection of individual consultants (per Section V ofSFB: Selection under a Fixed Budget Consultants Guidelines), Commercial Practices, etc.LCS: Least Cost Selection NBF: Not Bank-financed

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Prior review thresholds (Table 8)The proposed thresholds for prior review are based on the procurement capacity assessment of theMLSS and are summarized in Table B.

Table B: Thresholds for Procurement Methods and Prior Review

Contract Value Contracs Sublct toThreshld Procurement Pi ir Reiew 0

Expenditure Ctgory (US$ thousands) Method (US$ millions)1. Works

2. Goods >150 ICB All

<150 NCB First three contracts: bidevaluation and technical

specifications

<25 National or International None____________________ ~ ~ ~ ~ ~ ~ .Shopping

3. Services4. Consulting Firms >100 QCBS All

<100 CQ None5. Consulting According to IDA Guide Individual Consultants All > $50,000 (TOR,Individuals contract, CV)

Nothing <$50,000

Total value of contracts subject to prior review:

Overall Procurement Risk Assessment

High

Frequency of procurement supervision missions proposed: One every 12 months (includes specialprocurement supervision for post-review/audits)

In addition to the prior review supervision, the capacity assessment of the MLSS suggests one fullsupervision mission every twelve months to carry out a post review of procurement actions. Based on theoverall risk assessment (HIGH), the post-review analysis should cover a sample of not less than 10 percentof the signed contracts.

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

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Disbursement

Allocation of loan proceeds (Table C)The proposed loan would be disbursed over a period of four years, and the loan is expected to close byDecember 31, 2005. Disbursements would be made in accordance with the guidelines set out in theBank's Disbursement Handbook. Disbursements would be made against categories of expenditurepresented in Table C below.

Funds Flow from the World Bank to the Program (SOEs/PMRs). Disbursements will initially bemade via traditional Bank procedures, under which an agreed-upon advance is first made to the SpecialAccount, and subsequently this account is replenished via withdrawal applications supported by fulldocumentation or Statements of Expenditures (SOEs), as required (see below). During the first year ofthe project, when disbursements are expected to be relatively low, the project will begin to produceregular Project Management Reports (PMRs). Once these reports are being produced quarterly, adecision can be made between the government and the Bank as to whether disbursements will be madevia PMRs rather than traditional disbursements. A transition to PMR-based disbursements wouldallow the MLSS to place more of its energies into management reporting, instead of merely trackingtransactions. Additionally, under PMR-based disbursements the Bank would perrnit a larger amount tobe advanced to the Special Account than is allowed under traditional disbursements.

Retroactive Financing. Up to 10% of categories 1 and 2 of the loan amount would be eligible forretroactive financing. Expenditures made between appraisal and loan effectiveness, for all disbursementcategories except Grants, would be eligible for retroactive financing.

Table C: Allocation of Loan Proceeds(US$ million equivalent)

Amount inDisbursement Category US$ million Financing Percentage

1) Goods 3.81 85%

2) Consultant Services and Audits 6.48 90%

3) Training 0.22 90%

4) Grants 28.72 75% of amounts disbursed to FamilyRepresentatives of Eligible Children

Total Allocation for Project Costs 39.23

Unallocated 0.37

Front-end Fee 0.40

Total Amount of IBRD Financing 40.00

Use of statements of expenditures (SOEs):

Disbursements would be made on the basis of full documentation for all expenditures made under contractsrequiring prior review by the Bank, as indicated in Table B; and contracts whose value would be raisedabove the prior review limits, as a result of amendments. Prior to the presentation of each withdrawalrequest of Loan proceeds for grants, the borrower shall fumish to the Bank evidence to the effect thatindependent operational auditors have audited the list of eligible poor children and the list of eligibleFamily Representatives (condition of disbursement).

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For all other expenditures, disbursements would be granted against SOEs for which supporting documentswould be maintained by MLSS, and be available to the Bank and external auditors for review.

Special account:A special account will be established by the GOJ for the project, with an authorized allocation of up to $4mnillion and an initial deposit of $1 million. Further details of the operation of the Special Account withregard to project funds flow is discussed below.

Financial Manauement

Financial Management Assessment. The Bank carried out a Financial Management Assessment of theproject, which was followed up with a second visit, prior to appraisal. The results of the assessment, andrelated agreements reached, are reflected in the following sections.

Funds Flow Mechanisms within the Program. The steps in the funds flow process are expected to be asfollows:

I . Three bank accounts would be set up in a commercial bank (preferably the same one): (i) a SpecialAccount, in US$, for loan proceeds; (ii) an Expenditure Clearing Account (ECA), where the totalarnount received via the warrant (budget) process would be deposited; and (iii) a Program Account, toeffect transfers to program beneficiaries.

2. The budget for the program would be approved annually in accordance with Jamaican law andprocesses.

3. Funds would be released (made available) by the Accountant General on a monthly basis, inaccordance with the quarterly warrants issued by the Ministry of Finance and Planning.

4. Payments for all expenditures except those of the transfers will be made via the ECA. Approximatelymonthly, a reimbursement will be effected from the Special Account to the government's ConsolidatedFund for any portion of the expenditures that are eligible for loan financing. Some expenditures - suchas those in foreign currencies, those financed 100% by the loan, or very large equipment purchases -may also be made directly from the Special Account.

5. To effect the bimonthly cash transfers, a block transfer would first be made from the ECA to theProgram Account just prior to the date of payment to beneficiaries. Based on instructions from theMLSS, the private payment agency would then effect the transfers from the Program Account to thebeneficiaries. The loan-eligible portion of transfers made would be calculated using the financial andMIS systems of the program, and this amount would be transferred from the Special Account to thegovernment's Consolidated Fund only against lists certified by the Operational Auditors (as describedin the following paragraphs).

6. To ensure that Bank funds are used only to finance payments to eligible recipients, a firm will becontracted to carry out periodic Operational Audits prior to replenishment of the Special Account.These audits would, inter alia, focus on:

* the validity of application data;* whether, based on this data, the recipients were eligible for benefits; and* whether other key operational procedures in relation to the cash transfers (e.g. denial of benefitswhen school attendance is below the threshold) are being followed.

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Part of the Terms of Reference for the firm conducting the Operational Audits would be to estimate,based on professional sampling techniques, the percentage of total amounts disbursed that had beenpaid to ineligible beneficiaries. This percentage would be projected to the total population anddeducted from the amounts to be drawn by the project from the Special Account, thus facilitating thesmooth processing of the Bank's replenishment of this account.

7. Disbursement applications would be prepared to replenish the Special Account for anypayments/reimbursements made from it. They would be prepared by the Project Accountant/FinancialManager and would require appropriate authorized signatures from officials in the MLSS and/orMinistry of Finance.

Program Financial Management Personnel and Duties. It was agreed during project preparationthat it was not desirable to create a separate "project accounting unit" for this program. Instead, theProject Accountant/Financial Manager will be placed in the Finance and Accounts unit of the MLSS,reporting to the Principal Finance Officer, with perhaps a "dotted line" reporting responsibility toproject management. The work of the Project Financial Manager will be in many ways integrated withthat of the Finance and Accounts unit as a whole, but some project-specific resources, such asguidelines, training and a personal computer, will need to be provided to this person. The personselected will be a professional accountant, with good computer skills, and knowledge of thegovermment's Financial Management Information System (FMIS) and government accountingpractices. He/she will be given training, as needed, in Bank financial management requirements, aswell as technical assistance, as needed, in the use of any project-specific software and the creation offinancial reports. A sample Terms of Reference for the Project Financial Manager was provided tothe MLSS by the Bank, and a qualified person was assigned at appraisal.

Audit Arrangements. Project accounts will be audited annually by Jamaica's Auditor General, underterms of reference to be approved by the Bank. Certified copies of the audit reports would befurnished to the Bank no later than four months after the end of the fiscal year. The auditor for thefinancial audits will be appointed prior to effectiveness under Terms of Reference acceptable to theBank.

In addition to the annual financial audit, Operational Audits, focussing on the eligibility of grantrecipients, will be carried out periodically. These are discussed in the "Funds Flow Mechanismswithin the Program" section above. A procurement process would be carried out in order to select afirm with appropriate expertise to complete the Operational Audit in a timely and effective manner.The Operational Audits will be performed and reported in accordance with terms of referenceacceptable to the Bank. The costs of these audits will be financed under the "Consultants" category ofthe loan. The respective audit reports would be provided to the financial auditor, so that they could beconsidered as part of the annual financial audit. This would serve to streamline the financial auditprocess with regard to the eligibility of disbursements made under the Unified Benefit Program.

Action Plan - Other Issues

In addition to the items discussed above, the following actions remained to be completed as of theproject appraisal date. Further details as to what they involve can be found in the initial FMassessment of April, 2001:

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Item Completed By Responsible Party

1. Agreement as to the project'sChart of Accounts Negotiations MLSS, Bank(i) agreement as to format of quarterlyPMRs, with financial section inaccordance with agreed Chart ofAccounts Effectiveness MLSS, Bank(ii) Incorporation of Chart ofAccounts into govt. budgetaryFramework and the FMIS Effectiveness MLSS, MOF

2. Preparation of a financial manualfor the project*(i) draft, submitted to the Bank Negotiations MLSS(ii) finalized Effectiveness MLSS, Bank

*The financial manual will form part of the larger Operational Manual

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Annex 7: Project Processing ScheduleJAMAICA. Social Safety Not Project

Project Schedule Planned ActualTime taken to prepare the project (months) 18 18First Bank mission (identification) 11/27/2000 11/27/2000Appraisal mission departure 06/18/2001 06/18/2001Negotiations 07/09/2001 07/18/2001Planned Date of Effectiveness 01/02/2002

Prepared by:

Planning Institute of Jamaica and Jamaica Ministry of Labour and Social Security with the assistance ofconsultants funded by Japanese PHRD grants and Bank staff.

Preparation assistance:

Trust Fund: PHRD TF025979 and TF026843

Bank staff who worked on the project included:

Name SpecialityAndrea Vermehren Task ManagerJeanine Braithwaite Social ProtectionHideki Mon Social ProtectionChristina Alquinta Operational SupportVladimir Jadrijevic ProcurementMarcelo Osorio ProcurementEduardo Brito LegalEdward Daoud DisbursementDaniel Boyce Financial ManagementKarla McEvoy EnvironmentAna-Maria Arriagada Sector ManagerWilliam Experton Sector Leader

ConsultantsSonja HarrisLorraine BlankSylke Von ThaddenCarmen HamannFrancisco AyalaSusan ParkerDonna EdgertonHenley MorganHoward Moo YoungKristin Fox

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Carole McDowellUdo KockWilliam JackNoel JonesDavid LoganDillon Alleyne

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Annex 8: Documents in the Project File*JAMAICA: Social Safety Net Project

A. Project Implementation Plan

* Draft Operations Manual

B. Bank Staff Assessments

* Anderson, Dr. Patricia, Labor Market Study.* Blank, Lorraine. Draft Training Assessment, May 2001.* Blank, Lorraine. Jamaica: Social Safety Net Assessment, January 2001.* Blank, Lorraine, Joerg Goldberg and William Jack. Jamaica: Social Sector Expenditure Review,

March 2000.* Blank, Lorraine. Preliminary Training Needs Assessment, June 2001.* Blank, Lorraine. Youth at Risk in Jamaica Policy Note, November 2000.* Boyce, Daniel. (FM Specialist, LCOAA). Financial Management Assessment, April and May 2001* Handa, Ashu and Daniien King. Macroeconomic Policy and Poverty in Jamaica: An Evaluation of

Option, February 2000.* Harris, Sonja. Report on Beneficiary Consultations on Social Safety Net Reform Programme, April

2001.* Jones, A. Noel. Reform of Jamaica's Social Safety Net: Workshop Report-Government of

Jamaica/World Bank, July 2000.* Jones, A. Noel. Social Safety Net in Jamaica: Workshop Report-Government of Jamaica/World

Bank, May 2000.O Kock, Udo. Income Transfer Programs in Jamaica: Institutional Analysis of the Food Stamp

Program, Poor Relief and Economic and Social Assistance Programs, January 2001.* Logan, David, Cost-Benefit Analysis of Income Transfer Program.* Morgan, Henley and Noel Jones. GOJ/IBRD Reform of the Social Safety Net: Civil Society

Consultations, October 2000.- Osorio, Marcelo, Procurement Capacity Assessment, April 2001.

C. Other

* Perez, Cecilia. Jamaica Social Safety Net Reform: Analysis of Budget Allocation and ExecutionProcedures, May 2001.

*Including electronic files

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Annex 9: Statement of Loans and Credits

JAMAICA: Social Safety Net ProjectMay-2001

Difference between expectedand actual

Original Amount in US$ Milions disbursements

Project ID FY Purpose IBRD IDA Cancel. Undisb. Orig Frm Rev'dP038700 1997 JM- STUDENT LOAN 28.50 0.00 0.00 0.89 0.62 0.00

P007490 1997 JM PUB SCTR MODERNIZ 28.40 0.00 0.00 18.07 15.85 8.87

P039029 1997 JM- SOC. INVEST. FUNO 20.00 0.00 0.00 0.91 -0.59 0.91

P007485 1994 PRIVATE ENTERP INV & 35.00 0.00 0.00 4.92 4.92 0.00

Total: 111.90 0.00 0.00 24.79 20.81 9.7,

-56 -

JAMAICASTATEMENT OF IFC's

Held and Disbursed PortfolioMay-2001

In Millions US Dollars

Committed DisbursedIFC IFC

FY Approval Cornpany Loan Equity Quasi Partic Loan Equity Quasi Partic1995 Jam Energy Prtnr 16.41 0.00 0.00 36.86 16.41 0.00 0.00 36.86

Total Portfolio: 16.41 0.00 0.00 36.86 16.410.00 0.00 36.86

Approvals Pending Commitment

FY Approval Company Loan. Equity Quasi Partic

Total Pending Commitment: 0.00 0.00 0.00 0.00

- 57 -

Annex 10: Country at a Glance

JAMAICA: Social Safety Net ProjectLatin Lower-

POVERTY and SOCIAL America middle-Jamaica & Carib. Income Development diamond'

1999Population, mid-year (millions) 2.6 509 2,094 Life expectancyGNP Per caoita tAtlas method, USS) 2,530 3,840 1,200GNP (Atlas method, US$ billions) 6.6 1,955 2.513 T

Average annual growth, 1993-99

Population (%) 0.8 1.6 1.1Labor force (%1 1.5 2.5 1.2 GNP Gross

Most recent estimate (latest year available, 1993-99) per p enrolment

Povertv I`% of pooulalion below national PovertV line) . .. .

Urban DoDulation t% of total population) 56 75 43Lite expectancv at birth (vears) 75 70 69Infant mortalitv (per 1,000 live births) 21 31 33Child malnutrition (16 of children under 5) 10 a 1S Access to safe waterAccess to improved water source (% of population) 70 75 86Itlliteracy(% of population a8q 15+) 14 12 16Gross primary enrollment (%of school'aoe Ppoulalion) 100 113 114 -Jamaica

Male 100 . 114 Lower-middle-income groupFemale 99 116

KEY ECONOMIC RATIOS and LONG-TERM TRENDS

1979 1989 1998 1999 --Economic ratios'

GOP (USS billions) 2.4 4.1 7.1 7.2Gross domestic investment/GDP 19.2 28.5 29.0 29.6 TExports of qoods and serviceslGDP 49.8 47.2 47.2 46.7 radeGross domestic savinqslGDP 18.4 19.0 21.0 20.3Gross national savinoslGDP 13.3 20.2 26.0 25.1

Current account balancelGDP -7.2 3.0 4 5 D1 _n\Interest Davments/GDP 4.4 4.2 2.4 3.0 Domestc _I

Total debt/GDP 71,7 111.1 56.2 56.4Total debt service/exports 23.8 29.6 14.9 18.6Present value of debt/GDP - 53.5Present value of debt/exports 106.0

Indebtedness197949 1989-99 1998 1999 1999-03

(average annual growth) ,GOP 12 0.6 -0 S D.0 12 JamaicaGNPPercapita 0.6 0.5 0.0 -3.2 1.0 | Lower-middle-income groupExports of qoods and services 4.0 0.6 -3.2 0.2 2.4

STRUCTURE of the ECONOMY1979 1989 1998 1999 |Growth of investment and GDP (%)

(1% of GDP) 10Aariculture 7.2 6.9 7 0 6.9Industrv 40.3 42.7 31.7 2 7 .7

Manufacturing 16.4 19.6 13.9 12.4 Services 52.5 50.4 61.3 65 .4 5 5s

Private consumption 62.3 67.0 60.4 62 .3 10General government consumption 19.3 14.1 18.6 17.4 -GOI GDPImports of qoods and services 50.6 56.7 55.2 56.0

1979-89 1989-99 1998 1999 Growth of exports and imports (%)(average annual growth)Agriculture 0.3 3.0 0.2 1.7 20Industry 0.8 -0.2 -1.4 -0.1 I

Manufacturinq 1.7 -1.8 -3.9 -0 9Services 1.5 0.9 0.2 -0.1

Private consumption 3.5 -0.9 8.1 0.4 -10General government consumption 5.2 1.5 -5.3 -2.6Gross domestic investment -1.1 5.4 -8.8 0.4 -20ImDorts of goods and services 7.7 1.4 -2.3 -2.4 - Enports - ImporlsGross national product 0.7 1.4 0.9 -2.4

Note: 1999 data are preliminary estimates.

- The diamonds show four keY indicators in the country (in bold) compared with its income-qroup averaqe. If data are missing, the diamond willbe incomplete.

- 58 -

Jamaica

PRICES and GOVERNMENT FINANCE1979 1989 1998 1999 Inflation (%)

Domestic prices 6

(% change) 6

Consumer prices 28.7 14.3 6.0 8.4 40

Implicit GDP deflator 16.6 12.6 6.9 10.4104

Govemment finance(% of GDP, includes current qrants)Current revenue 31.8 28.0 30.3 94 95 96 97 96 9

Current budget balance 5.6 -4.3 -2.4 - GDP deflator -CPIOverall surplus/deficit 1.2 -7.2 -4.3

TRADE1979 1989 1998 1999 Export and import levels (US$ mill .)

(US$ millions)

Total exports (fob) 1,000 1,551 1,535 4.000

Alumina 475 588 672Bauxite ill11 83 48 3,000Manufactures 69 43 44 *

Total imports (cif) 1,674 3,131 3,179 2,000

Food 160 280 328 1o000Fuel and enerqy 274 293 429Capital goods 565 516 472 o 0J l. _

93 94 95 96 97 98 9Exportpriceindex(1995=100) 81 107 110Import prce index (1995=100) .. 81 107 111 * Exports * Imports

Terms of trade (1995=100) 100 100 99

BALANCE of PAYMENTS1979 1989 1998 1999 cunent account balance to GDP I%)

(US$ millions)

Exports of goods and services 1,165 1,941 3,353 3,365 0°Imports of goods and services 1,198 2,291 3,925 4,035Resource balance -32 -350 -571 -670

Net income -187 -271 -283 -354 iI1 U II iNet current transfers 80 323 638 698

Current account balance -298 -217 -326 -4

Financing items (net) 136 204 204Changes in net reserves 159 161 13 122 .6

Memo:Reserves including gold (US$ millions) 700 801Conversion rate (DEC, locallUS$) 1.8 5.7 36.9 40.1

EXTERNAL DEBT and RESOURCE FLOWS1979 1989 1998 1999

(US$ millions) composition of 1999 debt (USS mill.)Total debt outstanding and disbursed 1,705 4,560 3,995 4,069

IBRD 127 650 410 393IDA 0 0 0 0 G 638 A:393

C:866Total debt service 302 643 537 674

IBRD 15 109 99 99IDA 0 0 0 0 /D: 526

Composition of net resource flowsOfficial grants 13 123 92Official creditors 110 75 -144 -186 F: 1,215 ,Privatecreditors -39 -11 217 -108Foreign direct investment -26 57 369 : 1,216Portfolio equity 0 0

World Bank programCommitments 60 75 0 0 A - IBRD E - ilateralDisbursements 19 52 31 64 B- IDA D- Other multiateral F - PrivatePrincipal repayments 5 54 72 75 C- IMF G- Short-termNet flows 15 -2 -41 -11Interest payments 11 55 28 24Net transfers 4 -57 -68 -35

Development Economics 9/9/2000

- 59 -

AdditionalAnnex 11

Overview of current Social Safety Net

Jamaica spends approximately US$78 million per year on social safety net programs, defined as programsintended to provide assistance to poor and vulnerable groups. The main programs in the safety net, alongwith their associated budget, and number of beneficiaries (where relevant) are listed in the table below.

1. Income transfer programs

Jamaica has three main income support programs which provide cash or in-kind welfare benefits,and which together account for about 20% of spending in the SSN. The largest and most important ofthese is the food stamp program, which was started in 1984 in part as a response to large public sectorlayoffs at that time, and is administered through the Ministry of Labour and Social Security (MLSS). Thefood stamp program's annual budget is US$9 million, and there are about 170,000-200,000 beneficiaries,with the two largest beneficiary groups being the elderly and/or disabled, and families with nutritionallyat-risk children aged 0-5.

The second transfer program is poor relief program, which also targets the elderly and disabled, aswell as indigent families, and is administered by the Ministry of Local Government. Beneficiaries areidentified by local poor relief workers, who also perform casework. There are about 24,000 beneficiariesin this program. The third income support program is the Public Assistance Program, also administered bythe MOLSS. This program provides a small cash transfer to a target group consisting of the elderly poor,disabled, and indigent individuals.

2. School-based programs

The Ministry of Education and Culture administers a subsidized School Feeding Program (SFP),which consists of a hot lunch component and a snack component ("nutribun" and milk). The program isintended to provide one meal per day to beneficiaries in basic, infant, primary, all-age, junior high andcomprehensive schools. According to the Ministry's Corporate Plan for 1998-99, the objective of theprogram is to "provide students with meals of basic nutritional value in an effort to encourage regularattendance, and give support to developmental activities in the schools." While the cost of lunch is sharedby the Government (through a subsidy of the production and delivery of the different products) and thestudent, schools are supposed to be provided with funds to cover up to 20% free lunches per school toneedy students identified by school administrators. However the current cost-recovery and exemptionprocedures and targeting are neither systematic nor well monitored. The cost to students of the snack isJ$2 and the cost of the cooked lunch varies from approximately J$ 10 to 40. The SFP is one of the largeritems in the SSN, with an annual budget of US$9 million and coverage of about 170,000 with the snackand 130,000 children in the cooked lunch program.

Although one of the objectives of the program is to encourage regular attendance, it is not apparentwhether the current design of the program, which is not clearly poverty-targeted, is achieving that aim. Thecost of lunch is the most significant component of non-tuition out-of-pocket school expenditures forhouseholds, representing 40% of all such expenditure, while 80% of households from the lowest quintilecite 'money problems' as the main reason for non-attendance by children. School attendance, especially forpoor children in rural areas, is a significant problem in Jamaica. Within this context, the cooked lunch

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component, which formally requires a fairly large co-payment, may not be going far enough to overcomethe financial constraints for school attendance among poor children, particularly in rural areas. Thishypothesis is consistent with anecdotal reports from school-level administrators and teachers. Additionally,data from the 1999 SLC show that a full 59% of children from the richest quintile participate in the SFP,while only 65% of children from the poorest quintile do so. Further research is required to reform the SFP's targeting mechanism in order to achieve its objective of improving school attendance and making programexpenditures more progressive.

A major education-based program with the potential for impacting poor families is the Grants toBasic Schools Program. Enrollment in early childhood education (age 3-5) is extremely high in Jamaica,and predominantly through basic schools or infant departments of primary schools. However, the currentsubvention of Basic Schools is not clearly poverty targeted nor focused on any beneficiary's need criteria,potentially leading to schools in poorer regions (rural and inner city areas) receive lower subsidies thanothers.

The other program for school-aged children is the School Fee Assistance Program, designed to helpneedy secondary level students pay school fees that were introduced in 1994/95 as part of a formal CostSharing Scheme which requires that parents contribute to the cost of secondary education. Parents mustapply for assistance, and the school principal or guidance counselor deternines the amount of subsidy, ifany, based on an assessment of need. In 1997, 38,500 students received assistance, 18% of which receiveda full fee waiver. Only 17% of the students who receive waivers are from the poorest quintile while 31% ofstudents who receive fee waivers are from quintile 4. The amount of resources spent on this program hasincreased 329% in nominal terms between 1995 and 1997, while requests for full assistance during thissamne period increased by 126% and by 227% for partial assistance. The current poor distribution of thesubsidy across quintiles and the rising expenditure trend implies that a better targeting system needs to beapplied.

3. Other SSN programs

The Ministry of Health operates the Jamaica Drugs for the Elderly Program (JADEP) providessubsidized drugs to the elderly who suffer from specific diseases such as hypertension, diabetes, glaucoma,artr.itis, and asthma. The Ministry also administers a small supplementary feeding program, whichdistributes commeal to malnourished children in public health clinics.

Finally, there are three community-based safety net interventions, the Jamaica Social InvestmentFund (JSIF), which is co-financed by the World Bank (LN 4088-JA), the IDB and other donors, the Socialand Economic Support Program (SESP), and Lift-Up Jamaica. The JSIF is a social investmnent fund thatfinances community social and economic infrastructure on a demand-driven basis. The SESP isadministered by the Office of the Prime Minister and also provides funds to communities for infrastructureand training projects, although the selection criteria for projects and beneficiaries are not clear. Lift-UpJamaica is a community based public works program targeted towards youth-at-risk. It was designed as ashort-term response to a critical social situation, with a project life of 18 months and funding from theprofits of public sector enterprises.

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EXPENDITURES ON MAJN SOCIAL ASSISTANCE PROGRAMS

2000-01 NUMBER OFBUIDGET BNUMEIIRIOS

___________:__E_______________:______ USS MILLION BENEfICIARIESINCOME SUPPORT PROGRAMSFood Stamps 9.0 200,000Poor Relief 2.5 16,000Public Assistance 3.8 24,000

SUBTOTAL 15.3SCHOOL BASED WELFARE PROGRAMSSchool Feeding Program 10.0 300,000

School Fee Assistance 4.8 40,000

SUBTOTAL 14.8COMMUNITY BASED PROGRAMSSocial Investment Fund (IDB, World Bank, CDB) 8.3

Social Economic Support Program 9.0SUBTOTAL 17.3

LABOR MARKET PROGRAMSLift Up Jamaica 14.0 4,000Skills 2000 1.3Self-Start Fund (EU) 6.3

SUBTOTAL 21.5

TARGETED HEALTH PROGRAMSJamaica Drug for the Elderly 2.8 100,000Supplementary Feeding Program 0.1 80,000

SUBTOTAL 03.0

INDIGENT HOUSINGOperation Pride and Golden Age Homes 2.0

SUBTOTAL 2.0OTHER PROGRAMS 5.0

SUBTOTAL 5.0TOTAL 78.4

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AdditionalAnnex 12

Social Assessment

In preparation of the new Unified Benefit Prograrn, a range of social assessment data informed the designof the project, including:

* Studies conducted as part of the project preparation, including a Social Safety Net Assessment, aLabor Force Assessment, a Profile of the Poor, an Econometric Study of the Impact of StructuralAdjustment on the Poor and a Policy Note on Youth-at-Risk.

* The Jamaica Survey of Living Conditions (SLC), an annual Living Standards Measurement Study usedto assess the incidence of poverty and other social indicators in Jamaica since 1989.

* A Study On Coping Strategies of The Poor commissioned by the Plarning Institute of Jamaica as partof the 1999 SLC. This report highlighted that the primary coping strategies of the poor are to reducefood intake and to keep children home from school.

* The draft UNICEF Situation Analysis of Children and their Families 2000 that highlighted theincreased incidence of late immunizations among young children, low levels of pre- and post-natal care,high incidence of low birth weight babies and high incidence of micronutrient deficiencies in childrenand pregnant women.

* A Beneficiary Consultation commissioned as part of project preparation to gain insights into howexisting and potential clients perceive social assistance programs and to afford beneficiaries theopportunity to participate in the design of the proposed program.

Highlights of The Beneficiary Consultation

Beneficiaries (N=248) from the Food Stamp Public Assistance, Poor Relief programs were interviewed ineighteen focus groups held in eight of Jamaica's fourteen parishes.

Respondents identified the following weaknesses in existing programs: insufficiency of benefits; stigma;discontinuing children's benefits at age 6; fact that children's benefit sometimes starts up to 4 years afterregistration, leaving only 2 years for benefits; problems with cashing Food Stamps because of theinflexibility of shopkeepers (this affects roughly half of respondents); long intervals between payments;regulation that one person cannot collect more than 3 Food Stamp payments which discriminates againstlarge families and those who may be collecting for someone else; unsatisfactory condition and location ofpay stations; lack of system to inform beneficiaries of payment date changes; high time and travel costs toreceive benefits.

Based on their assessed levels of need, the benefit required to better able beneficiaries to "fill a gap" insatisfying basic needs was between J$ 1,000 per month or J$ 1,500 every other month for approximatelyhalf of those consulted (irrespective of geography) and between J$500 and J$ 1,000 per month for theremaining beneficiaries. Male respondents tended to be the ones citing extremely high amounts needed -some requiring between J$ 3,000 and J$ 10,000 monthly.

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Positive features of existing programs include: caring treatment of beneficiaries; advice on accessingother programs; assistance in accessing healthcare and medication for those who are ill; benefits can bedepended on, even if they were occasionally late; benefits 'stop a gap,' particularly when there were noother sources of income or benefits.

Beneficiaries felt that a combined program would be better. The response was largely based on the idealof having sufficient money at one time and therefore being able to plan and budget better, permit them to beless dependent on credit and reduce their time and travel costs.

Beneficiaries overwhelmingly support the requirement of school and clinic attendance, as a conditionfor remaining on the new program.

Respondents recommend the following eligibility criterion: elderly incapacitated; disabled elderlypoor/elderly disabled; destitute; unemployed household head; large number of dependents; no visible meansof support; inadequate food intake.

With respect to payment arrangements, the majority wanted (a) the location of pay stations to be retainedand (b) cash on a monthly basis. However, beneficiaries noted that cash payments have their downsidebecause clients could be easy targets for robbers - especially if pay station are moved - and becausepayment in cash requires restraint on the part of the recipient.

With respect to procedures for registering grievances, responses ranged from keeping the current'informal' system of registering complaints in person verbally with the respective officers, which is moresensitive to the needs of non-literate clients, to written complaints taken to the main parish office.

Disabled and elderly clients constitute a special category for whom infrequently paid benefits isparticularly difficult. They also have a broader range of needs than the benefits they receive are able tomeet. Home visits are reported to be critical, more so for those without families, so that they can becontinually monitored for any deterioration in living condition and ameliorative measures taken.

Beneficiaries emphasize the importance of home visits to investigate and monitor the poor.

Re-certification was seen as a part of regular case management and respondents saw routinere-certification as necessary.

The role of existing clients and community residents in making referrals was highlighted.

Beneficiaries pointed to the need for public information through a neutral system for the moremarginalized poor. The church could be invited to play an active role in this vital area of informationdissemination.

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AdditionalAnnex 13

Institutional Arrangements:Responsibilities of the Social Protection and Development (SPAD) Division

1 . Oversee and facilitate the implementation of the Unified Benefit Program, the Bank-funded Project andits comnponents;

2. Formulate and recommend revisions of Unified Benefit Program policies and present submissionsthrough the Permanent Secretary for consideration by Cabinet.

3. Formulate divisional goals and account for progress or otherwise towards predetermined objectives;

4. Direct the preparation and carry out the final review of amendments and revisions of operatingguidelines methods and procedures for implementing the UBP;

5. Work closely with the MLSS Finance Division in financial management arrangements related toproject implementation and disbursements (see Annex 6 on Financial Management);

6. Work closely with the Management Information System Division in the design and implementation ofthe MIS system for project implementation;

7. Prepare terms of reference, supervise the work of consultants contracted to assist in projectimplementation; review and approve on a preliminary basis the documents produced by consultants andrequest final review and approval by Director of Social Security in the MLSS and the Bank asrequired;

8. In collaboration with the Finance Division, operate a computerized control system for tracking allproject specific activities: budgeting, contracting, procurement, disbursement, accounting and auditingto enable adequate monitoring and control of implementation;

9. Organize based on need, workshop or other training activities for the MLSS staff (central and perishlevel), other agencies and beneficiaries, directly related to project implementation;

10. Oversee the design and supervise the implementation of public information and education campaignsrelated to project implementation;

11. Prepare periodic reports on physical and financial progress of project performance and proposecorrective actions as needed;

12. Develop and maintain a documentation system for project implementation to generate complete andupdated information on the progress of project implementation for each of the components and for theproject as a whole, in line with specific indicators, to permit the production of periodic reports asrequired by the MLSS and the Bank;

13. Act as MLSS counterpart for Bank missions related to project coordination submissions,implementation, and other matters related to the project;

14. Coordinate the design and implementation of a monitoring system, prepare terms of reference for thedesign of the impact evaluation;

15. Establish the linkages with other Ministries and Agencies directly related to project implementation;

16. Provide terms of reference, oversee, supervise and establish procedures for the pilot income transferscheme and the transfer program thereafter,

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17. Organize and prepare the agenda for the Annual Review.

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AdditionalAnnex 14

PROPOSED ORGANIZATION CHARTMINISTRY OF LABOR AND SOCIAL SECURITY

Minister

|Permnanent|

Director of Director of Director of MIS Director of HumanAdministration Finance Resources

Director DirectorSocial Security Labor

Directo Director lNational Insurance Social Protection &

_ Development Program

Admientra t ivestraParishCManager Program Coordinator

Informaacon &Training Coord.M & E Of ficerSenior Social WorkerFM SpecialistProcurement Of ficerAdministrative StaffClerical Staff

NtoaInsurance |Unified BenefitPrsAdinistrator |Parish Administrator

| Workers -

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AdditionalAnnex 15

Proxy Means Test in Jamaica

A proxy means test is a method to estimate household consumption or welfare without requiringextremely detailed information about household income. In countries such as Jamaica, Russia orChile where there is a large informal sector, it can be very difficult and administratively very costlyto verify true household money income. Furthermore, in Jamaica and other countries, asignificant part of household food consumption comes from food grown on private garden plots.It can be very difficult to estimate the true value (impute the value correctly) of home-producedgoods, since typically, they are produced with "costless" family labor and their quality may bedifferent than for example food items which are produced for sale.

The Government of Jamaica is interested in finding cost-effective ways to determine who is poorand how to best help the poor. In proxy means tests, rather than trying to measure total incomeperfectly, information is collected on items which are much easier to measure and verify, such asthe number of children in the family, etc. These variables should be ones which are known tocorrelate with poverty in the country, and ideally, which are easy to measure and thus require littleadministrative cost to verify. The first large-scale use of proxy means-testing occurred in Chile inthe late 1970s and 1980s, in a program called the Ficha CAS (card for social assistance). Since1994, Costa Rica and Columbia have adopted proxy means-tests for some of their socialassistance programs, Mexico is about to start a proxy means-test program, and Argentina andVenezuela are actively considering the idea. In other regions of the world, Armenia has aproxy-means tested family benefit (child allowance) and experiments with the approach wereconducted in three provinces of Russia.

Fortunately, Jamaica has an annual Survey of Living Conditions (SLC) - a household expendituresurvey which can be used to determine the correlates of expenditure-based poverty and transformthem into a scoring formula that can be used to rank households from the poorest to the best-off.The task is to measure the correlation between household welfare (per equivalent expenditures)and other easily-measured variables. The technique used was ordinary least squares (OLS)regression, and further, stepwise regression (in which variables are excluded if they are notsignificantly correlated with per capita expenditures) will be used. Technically speaking, the OLSor stepwise techniques should only be used for variables which are thought to be independent(exogenous) and not directly correlated with each other. However, since we are only trying tofind proxies (substitutes) for poverty which are more easily measured than householdexpenditures (rather than trying to decide what determines poverty) we can ignore this caveat inthis context.

The resulting scoring formula will be revised periodically to minimize errors.

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AdditionalAnnex 16

Letter of Sector Development Policy

MINISTRY OF FINANCE AND PLANNING30 NATIONAL HEROES CIRCLE

eP.O. BOX 512.. tbM4. IL.4' ½i '4 P*ACA ~t~r~4 ZIS' 48

I -Wsr.'4I1,t tW4k . rffiThg, KINGSTON 4. ,x¢ : s. .... JAMAICA

Kingston, July 31, 2001

. ,,S2CAN-NEI FILI r

r-l. Dilnles L .Wl ill I N liDate 9 (C No.h_

I IIe Wtorld Ralik (MR

I IS Il Street Fdder I U C > [2tWasiington lI' 0433

I D)ar Mr. \WI IL'flSOil

j 1134. ( pCri1JI3 of1 jitOht. ab as of r ils 'Mcktlmtani Toms Fcuntic :md Social Potievrtamcwork. is umiscrlaklti, a relbiV n of tle Soc:ial Safety Net (SSN) tO imprtOvc, targctgnw 01

Vfie leedy, relevuince alnd eIltivcncss of the lf .ad r;ichd programmes. ande-;Licincy itt tle tiClemitry o1 the services. These acisomis are lwmng laken ii thle< cow%lt ;l

iitUJOr McJiumitnnr social polsmcy agendia aimod at ;sddrussina special wceds tf tliThiictsii

2 Ibis Letter or Social Sector D v%e cloproeiw Policy desenbes .Iantazcit's current SOCLO LiuHit

coilditiOns anid its cullrent and propvised process of social soetr rvforms, in suppoit of mIte

SSN reforms, the (iovcniniellt hlws rquested a loanl firolio tile Wtisrld H3alnk, -The¢ (GO%enmmctient

appreciates tlhe Hanik's 0ilculmn 10 pl rovide over tlhe: nICit twto yeaIrs. up LO S75 miillioni in

MtTpport to-, ttim weocal :cL;tt. ot o Which tle proposed lot) to I;<o 4 1at II 54 nlct icijino } 'll

provide ¶40,1 nmillion. f l1 Jamaican audtltitircs tnlend to reqLLst support rot th4e

Ctttt1t0litiUtt r tc'fltvIlir ofi Netimnhtlaty etiheation its i n thek developuent of crl,y childhoodedUcatIon. Jt J 1ate' ldame.

'Ilw4 Beiak's support for the Social Safety Net Relurut l'r;jact is intmnmidetl lti en.abhl l th:

(iovcreimtitk' to) cstablbsh a 1 Umfijed licfsIoft twrgcttedl tt pOwr tersonis, to icpkmcc tin cc cxutsimsMc)M'le :sutppon progrfilnles itec overall ttiediil;U progranmmne wdll itncludc paymllw'; 14i

persons in pwor Iouseholds with tho fillowing charactcristics: leads or householdsN lmnAt

chilidIreni, butweenl thte augsul ol eur and 17 ycars old, are attentdinig schtool mektmrl.y aind4I

rOceivitg scedl01uled check-ups iat heallth clitics: tlte eldcrly: the ds&sblcd;: dcStitiLsc Stillv'lc

- 69 -

ici' ns,i anti pr;g,ian0 lawiv womIUeL. For imtl of the htrtciuiarte", cmiinitoil 4V'aymi ot'hewlfts wSlH he linke4M lo .icrltidnce at uehools and clinics.

41. Il'he SSN liOrwt is focussd vlwithin tie contuxt of the pi-Jrity eqWuirenteis l'r cikijet vn,yoWli iand gender eatzidil licalth; edotation mid tr4ining; sucial mxtnity, well'ate andpo)krty eradication. T(w wC(onmn strategy is tiniAd to: firtm, cnsure udoqtLwt%devc1loritilai provs1i os 6iir chitdren fionin i M ew a;arly cIhildoIIJod yveats. scixon, iros- loquitable ducafioo antd r;iitnim, desigoW lto ixlulp young pcsnouis tir emplovinemopportutitiQs coitnensmare 4< t1h tiki domtmuds ota dynamic g'lAliz.cd taivitir nmark*kC. (wmd,etiahhiv atiolesuets 10 cti vhoL sxieially wnd persnmUlly cSbir4 alierf)i.es ri rWlation Ioiidrtillay. drug abuse and ciiew., uourtli, promote aind eniowewr cizies to le;td licallhvifastyks, anu Iiid I, ratio;liili, conisolidate and StrengtcL1n thc ;nittil ina) aurr;mj,,vm,-s ii

deltvory of Incrcased honclits :ir so'iul socurity. N%elfwrv tand poverty cradicaJionprlgr.llllltL'S

Trhui s,traiqy will be iurstwti witilin tii; coutest of a %ibramt~f pir ai'tuly kdeuotae':

facihitatvtl by a reiirmae sysutemi of local gcvrnuncnt. dececixralised seirvice ministrWis a;ln d1icrelilcal slruciitmr of delopment commitIMees IftIo IthC COMMUni Iity level tho the natimial

1eVeL. (;,'i& nP1rg ithc itratliles for social advancement, 1the note Xt ricieunt andtttl ' i-vSocial S.Curity, vvtfarc aid lioverty ceradic:nion provisionS %vtl[ bc fin ak to iluh dc<} etlprogrammes. 'i'lhe (iovcrnmicut will comtinue to undTc rc ltlh inpOtianice of coiwUlevel patrticipation in the plamnng ad imid mplattiatlion of services .i(ta protgrarnms, 1-1mivisIVtn will conlintic to lead in the creution of parish (ICNevlopwmiet nnluel.iltvi, comll6tiVlttllStlifalXVe cot mXniees a1d niiiativesu ueh as local govemcmrt relirmn.

SMIO) ECONOM1(C lFRAMIMO7K(

t. Kl oput is estinlald Lo lahve grown by 08 per cent in 2XIU, tfolowibt . a decline of n. iper Cent in fiscal i 999, FtOf thie lsLal year 2000/01i, it is estiuinatec that real UutpUt i1VsedCkI

by about I eler cent, lolsi tg a &dcinc olf) I per ccti in riscal 100820(4)0 whichlrpresented the fourth consQccintsc year of ontractuon. itnlatiot l'Or fscal year 20ou0Jl ixa0.4 p-er cntt. down rront the 1999J2WU increase orS.4 per cLaut winch was lal-$cty thiv remSltt)F hlighr prices for oil imxIrls. Tih tmeploYmkirn rate is cstimaled ton biavk retmnailued

stable at about 15.3 p; ec1ut. vitlh somne niew cntrants itoilu th labour force hciitg eiigtepd Intihe informal sextoT. 1)urm-i 2(Xg, thle excthnge raw aveivag4 A143.32 to USl$1 .0.:zesepeli(ng a I MJ)0 per cenlt dqirciation, compxared with a 7.2 peo cnti aiijostmetat inu 1999p;

r fajor eli'lafrts in fcal cosohlaal werc underaken du,rin- 19Y).2CXX) it) 2(K0010) li h2(XKQIOl fiscall suiplus of $4.4 Wiioo or ).4 per cen r tol) ouct-pcrIo^md the SMP" nuClof 1.0 per cent, ulid was t1e fitut surpluiS Sinc rfiicI JP)95$ )(. The 6.4 per Lent rate tw1ibnflators for the fiscal yeaitr Ui"' wvithini the SMP targct rangge of fl} p-r cent to I'M per 1xet.Ithe lhvVl ol N[IR msupaS>ett 7 itarget of 14 YI NweCks oI pmjVclC(d1 111portS 01u,s . I

services. In twrmk oif strtuio hienchmiaurks, tlhc Governmeint was- succefussful Mn Alt11\ 1

Solme Q>f the. %;Irges incluklil thic rcduction ot ceal rcsrve requirements to 12, per Ccki

1 X hci ave0Agc anuweztj1 csxvNazie fi r 8 jas A 7 a -ic i litm ul t tcs

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:i hM hq~thi.Xx*5lnv r tre'soLS to) 21.0 per cent-: ttahhtn ol approyir ial: k-ias w t trc&tfrds thk ili Fiti.anial Scr e tcc } Commission: aKi the privatisition ovl tclclrwcityl lit-Janica Ptlbltc Scrvicc Co4mpany iiitlcd.

( rlic fiscait 2100001 pcrjira;tlcc undCrinis Ilic efforts at rual. sustainei m'tj cmlt Itcconomy, Trie ptiubic sector lm)imiUary surplus had increasd by 6.5 pcrccn:agc f-wints ol (ii)1to 7 0 V . ccit in 1999, aiivly through strengtheneod taxs dninistralioi) and eff(ewnc gains.ti the operation tsif the public ntnerpriscs. Thle growing interest bill on thle large publics%ctor dcbt had morc thai olYset iltis gain, and tte overall ptthlic sector dJeicit 1h;ad ino%cedfromn ?T per cent of (ilW, I 19S'`99 to 3.6 p3r cetnt of 1'0.1- in 191199/201). 1Furtlieaconsolidation efforts in N9'.2M(), relying miiailly on expndinture cuts anid somtte reVC'lttle'tlcasUtres. raised the public set'cor ptimary sutrpls by .bouti 4.0 lxreeniagtc points to 11 ,I pcicern i1 OD1. Theu ovcrrll public sector dericit impnovod by 3 ruagv pointS oF (l)i}'

tuscaw of, vxpenditure CuiS Ind ijncreaised reveLue. Suh%qucn0y. tie sitIck l of puhlic &thad risen fronil atbon 1131S pe;r cciit of GDP at IhI: end ofthe tiscat year 099sP9) to aNxiht144,0) pcr ¢cot of ̀00 P tt tit., vmi ol f"MO MW

P for some n yvears, the Go.J has pursued strategics io iltigatie crses in thc Financial ScrmicoSetor (F.SSif which could have resulted in finiaicial colIapss. hI 1997. a GoernmintitOWAned Iumxll1cd liability tompn;yt. Fitac (1Finuncial SnLor Adjusttmcnt omipaiiy~ NW aSronned, to manage the rst&whor al 'io liq4uidity and reswtiring of the FSS. Fitsll, ae iith -risinrt dcht pilronfoo was operaled 'offbudget 1or ovc' two years. lit crallillng teMdtint'I cnn r bconomic and Social Framnwork. a itioro aWlgtssivc sItraegy Iiir Fillsav w.vadeveloped. To support (tc st,utcly. Ionctary inflows rrom nIultiltcralt lituviing m-tumwc,were avaituble through ol'filciat (oJ borrowing, starling in 20KM10t. Cotcurreitly, ttic Fiisucdcbt was br-ought into thc Iiscuai liigc With the bringing ol Finsac' dcbt into the 2(g)z 01hbudel, the Govemmnm) will hK challenged to resolve thie debt and debt wrvlcing cotmts. rhtplanncd deht manutgmerne strategies hatYC tlkAct into accounit the need to achievc it continu11tedklowering of tic iitcrest rakle. t'hc potential to mcci the chalIcagcs has gained ismtl#rcoysliliols ili the jpgradmilw. ti l:amatic's long-torm sLovcreigni crcdit ratlimgp 1w .iatid.iranld Yoor, TI'his improvedi r.linl8g will facilitate tle (iO'S sihift of its det4 port olbo to lotcicost tireign sources, ane comniinbtte to the lowcrilig ol'intercSt raics.

thi (iTh nGverunivicn is comimtmtcd io taking the necessary actions Lo rclurn toa suslaimudble lone-tern paiti. IFonr year,, the straiegnes to mitigaic thC Clisis in the lititc tal "rvies 5tsc tiom •n^mainly donseStic resources relaced (htc cApacity orf thl )ublic SOector to dteivcr estsn fiatsorvices, particularly healtil. education and social services used hy ihe pior. (iceniraleJcfforts mt reditcing the anntuil ebht service requirents of (3o.. will rlceasc resource.s tlo

assist itt l'nlcinig social. %C:eootitc, atul prodtHwfiv t mns nt,ilctut. .11nd to sustalin Mtc prporseincreitSes in the social safeti n. n,Within ttle wi4er coltlxt. the mimtllinclnt returil (to a Patil o-rowth will provide OppOrlniuties for man3y of' tilm tiiivemptoyed ai uaK ider-eimployv% Io;articiplut in thl liUsctio moltulie tacivilies ol'-th coanltry.

B3. fI h Social Sector

i 0)J's long-tmn) social prliey critelrs on an itit.grateid programnoic of sociaL dcvlopmnclidesigned to create a Mor N pmroducLive anjid empowed citif.anry. As such, tIe priorttiL' Mrdi short o mediurn cm are tcuSc on protectiti, poo and vulncrabl while inmpml iitythe quality of liic throughi increased access to dcveloplmtetal progruiminics, xi; itj mi

'3

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cowullniic 1)}(llp-luI cs :ttIL l iaCti socialhtn iios¢*tot ill concautraw omv: fik osiot of curly childhood carc and devclopl lwiWimnpfoving quality. access, fkrAOsUnce and equity at the scconduwy level; atic provisioit otappropriate klnowledge and skills tltrough tertiary education lld Ihe Iraining system (o t celthlc ncds or the l.our xarkct. il tbe tailth sector, wc will see to consolitdate (Ile oamnsmadc in primary hemlth; care Und simultanmeously emphasize preventive stralegics and lealthylife styles. 1hi addition, rocus will he placed on seexting the wclfaro of Me most vtulncrahlh.cspccially the poor and childrei. via a mlodcriic andi smretimlited SSN.

12 InI advatcig (tic social a-tcida, the e nprchensivu pro gratno of rfurmi currentlyunderway will ha intensiliold I or ex-amplo, lAwal Govornment Reform and Public SeclotModern isaion will allow ihe average citiz.en to play *m grcater role in tile process ofgovc:rnuncc atul tihX rsmullt III nereacd accountability. bttwr 1t-Mus'tdi atnd iiorc mvtiVmtpublic policics uInd a morc involved and empowcr dA ciltiycry. Morcovwr, refiwt-n% Siviilmcit) Ilic stejal sectlor sutcih s' t}h .Jamaica Social Policy F'valuaiion Prnojet (JASiJ*PV) %jlicreatc a fraunicwom tior lig-ioenil policy planning. continuous policy review and juadsltoelil.and more integrated and e.sd,olalital policy planninii1g amsd implementatiotn. JASPEV willalso Xestablish benchmarks aainst which policies will be otintlorcd and cvalualtcd

Priorities for Poverty Eradication

Consistent witlh Ih policy goid o eCOOrklic (irowttt iuld vl OOP"Tnc t, ( vCrosneit rclAtinsfocu5sed oti thI eradicalioti of Absolute poverly in Jamnica. In addition tto 11h in"provCdpurchasing power brought aotwl by the stability aitd improved clitmate of cot mpctiion Irconsumer goods, coordiiated efforts to iinprove thc quality of life of the poor hegant with ih1niiplcmtemialtntm of the National Povrty Er-adicaAion P1rogaunmme (NPEP) inth ilic 199596riscal year. 'The incidetnce tiflxveny has fallem fNrm 28,0 per cenlt in tha year, to i 17.0 pecoitt in 1O99)9 Ovet the next dtivo years, poverty ceraditatiott will remain a tmajor focus l'thcsocial agenda. Withi enipha'.is oin consolidating gatins anil riucing Iisk tlhrougliimplemunlat ion of more developrnentoriented progrinmu¶eq

I lih hpopulation growth 1 Axitiiiibuledi to ltighi levels otf 'iasulultt povertyv environmnlem.dc,gradatioi, antd xcessive (I.ia-ldI on availablc resources. Stabilization of Jamaica'spopiuation at zcro growlh is ;i oujor objective ofthe National Population Policy. Over th:miediunm terni, xpulatioi gn)wlh rate is exlpcted to declinr to 0.7 pr cont frotm its currnmlevel of 0.9 per cent. in ortier 1 imnprove wc)lheing ud achiteve thc desired lppUlatiotgrowth rate of 0.7 per ent targets to be pursu Wd include reduction of the Total Fertility Rate

(TFR) to an average of 2.6 ciiltdreni per womai by 2003. dowI frtm its presownt rate ol 7.X

children per woman.

f[he G(;wMttlent rexxileC iZe., the 11ed for a IonMglei. eompreheiisive sotluion m t t aidros% iluticds of the poor and vUonCr'.hle. Ai commitment to contiprelItisive reformim oi hm scwials:ccirity arx WtA (lre sys" wa4ll tsi riilaliwAl in a (tahilwet lDxisioa in October 20Xg). For hiyv

specific IUtiii'tn benerit reiotrm it) which the 13ank is providing supporL, the Cahitice Lk-o od4mision In Vebrary 2001. In the shou to iedium rinm. Government has cmb^rket onreforin and rationolisatiotn of the social security and welfare system to achtevc grawtreffectiveness and efiTcincicy. Ihis is to be achicved by a two-prongod strategy a simetd aimproved social scurity o t11im cne hand, wid a better targeped and strcuinmlmi soelat.tneft sysitcm on the other.

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16. Social sccurity is sen ii, 11}w key to prvontilng povery in, th populaton's non-workiungyears. 'lli nutcklus of the social security cmpojcnl is comprVhensivu pension rchiml Lircflcet current global uan national ecnomic and labour market enlvironlmou an1d to esusurthat all persons andlor thcir bvictcioarics are adequately provided fr after retirenienl and arvprotectLd against loss of inIcojm duc to iWvaliditydisability or cmp1oynwn-relaite injtar ofdcath* During 1499 and 20ft, dliscussions on proposed Pcnsion Rformn were held wiiltindustry staikeholdrs and at public ncdins. In tirder to itcrporate th views of the publicand iniplenicl th;e rrom1z wcomonnded, a N iannt Pcn3ions Act is being drauf.

'. 'rite ncw Pcnsiotis Act s expluted to bc ini pl" duritg 7iscal 20023. Atmiong lth cxpcctcdouicorrcs or pensio rcbrni will be: the cxtensin of the basic provisions of th N1alionalInsuraiwe Schete (NIS) to) at wider critm-section of Jamiaicuns; improvement in tlhadministration or the NIS. iniroduction of a wiusex irutiresnetit age. initroductiuii o4'rraigeienmts ior ehiidrvis to iprovide pensions lor their parents, bcltr rqgulafuiof th,of

pension antd superaamuatioll ,henes rw both public aixi privaic seclor enphwe s; utmtden and ralevant legal franmewoik ftr pension aiaratioti.

S. i'hc philosophy in res:pel of we:lar coAiOiues to bx that or reduciig dependeney tndpronioting self-rcliance wmong huneficiarics. Thu undcrlying arategy is lhrme-pniiett:

3a mciai assistance cornpone4t with t11 prosed txrgettud. inome iransfcrs unuler the I titifitlB.liurtd Piogitjuitiua U the mIajso lhtvst, making the lbtai rits condilional on atwitdance atschool andi IwalIh clinics by poor children between 0 and 17 yeas will cottuibtuw to breakingsih cycle trf povrty in the long term,

* tievcoping the II -CO nngcapucity or tho working ago Wle-bodied poor hy providintgtratlvng Opportunities, micro enterprise suPort. anid ltnancial services., using ctXtnlmUtntv-based upproaches: and

* provision and upgrading of m.wial inrrastnicture (sucd as waWr supply and saitwation* in pooiareas.

' Tbese will be cpkxpcmented by on-going refonns in oducation nUd lhealth.P'riority programmes in cdtca!aon and healkh, contributing as they dto o the development ofhuman capitai undcrlyinig the aimns of the SSN refornts, are described below

Rofrwms for Mutation

20,. nhe Governfmeanc is conrntitito to niaintaining priority bugdwry allocation ibr educalionandl traininlg in the medium) term. In the lscalf yer 20(0/1 tshueaiion ands tr-tining rct'eivc,11 0 per cent ol thy budgn. tlhe largest allocation to any other -Ministry excep the Mmrastryol Financo .tinl Planning. hi addition to public funding for oducation atuf trainigl-. theGovrunment intinds to attract private sector support, so A;gage the people in thc stronxcstptssibic pa2rncrship for devlopinmnt through education and traininig. This pallousrhill sbased un the rcognition thliti is lthe reLumn Ot invesituent in the building oCr iit mian anldisvial capital that repstnits owu best hope for eonotimic growth axd social weMll-h:ug, qh,major requirentcnls for an improvcd aixd suitable cluality of lifc in Jamaica.

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21 1 lt is-tIS at OWi EU' 011 4I /IIood level (O}-5 yearS) iS tLhe expaniofl of |rlt)lient atldimprovecIctrrl ° (tuality withl .r Commiitmenlt made t1ir the provision or' a least ofic 11Irinedteacher at evcrv b.>asic slwoo wiltitl iiv: years, At tthe jwhaivn l^i el, 1W limWi,}11 ir ilt t .Wsethe nunth;t of studens prqpmred to access s"ihnary tvevl editucatiol3S 4Icinoijmcot at this level is 9&) per cnl. eCnp1rbi I'is of) (n >hancing 4uulity: lVvIsioin 01

curricula, ,siablishmnt of I;ibrarics, improving physical facielics. a3id retention anilrenl(liatioun at Grade 4, to t.3SLitc tihat pupils at this level itar flunctionally lilcralte aIndnurncrale and prepared or lic1 sccoodary level,

2 At the sccondadrvs levcl trpasls is oil ctuiLy aml access. 'l hie intotjiion is to provide * vcarsof s¢c4tuda7ry education lbt all students enLering (iradle 7 in 2{)03 asi thereatfcr. Al tOewiri(rmv Icvc]. while increasimr, t(ire crimilment'l rate to i5,0 per ecern by 200), focujs will he onprovkidin,, students withi ctImptencies wlhich arc relevait to ffte Ilneeds of a Uyilvaimic

enlvironmen¢1t. fIn lilI row1 wt-.Ji.'; caicgory, er;;lphai3 wisvl)l iJe o11 pwtv3dirrr reedoialt .arid ph"

%Acational imining, Particularvl i'o- young itmen. A trainiig p1rotramime targetted .i mti; oimu-of sckhool youth, and 4t11ill t3 rC-irte.tratc iem oItto the¢' fOmllA edueartnii 5ySic. ro

>belrdulcd to he itiplcnretrlct "-itlin the text three vrWs. Iartncr5imps WiIll ho m'mullt \vlfliN(;Os vvho Nvork witlh thi-s L,,rotip of yowig PQopCe.

23. Hlcalth indirators have rcmiamtund relatfivey stablc taid the populatioln's lhL.altlh stauts rilltonipares faiourtbVly Wihll lticr CaribbeKn cotlries. 'I'liw Gvernment wi1l cotttinutec to)pursue the vision tf lloJatl?h kr AlJ, ihrosugh Jittegratiug lwrimary anid ¢sccondaty StrVices. andthrough the protiiotiort offi ealthy hchaviour. The health sctor c nlprss ca iubliJprivarenul.k wi3il substanual (1 nrco lhkinrms frorn Non-overosinnilt Organisrtions (N(3Os) itdttreflects tirc (overnmerlln's expresscd desirc or ta parnwrship approach in healthl di\ncryIhe privatw sector has grown, l7ui accounts for the brgesa pinriain of health expenrditures iambulatory. diagnosmtc, and phlariuaccutieal scrvices, The public thcalth seeLtor continues tobes the major provider of iiipaLtient scrviccs. It is recognised ilat sutbstartial frianciun gap.S,which halve constrained thle dclivciv or all tlhe health care services, will have toi be ad-lkroissvvith some mi_gcy. (Cosi reiox cry lthrough IS,,er Ce xS ildl comtinue;'1 il1 levels.

24. A d ceniralisd Admintisiratinv s(ructure has been intrIuced;xi: Reg ional I tealtir ALUitirmle,:.are: Inanaged by Regional ltcrrtis ol' Directorsm while the Mirtistry or lcatilt's heal oflic.identifies national priorilici. toais and targtss establishes standarms anl rc rttet, ons. andt3rovides policy guidelncs, Fratymncntafioi andi Jtiplicatton of scrvic" au cxpecct(l tudccrcasc utnider the Regional IlCilih Authorities Iitrough thet 1fill inlegratioin rl' JrWttIIfsecondary. crtl:ary, amd untiaul hoalth care ser% ices aridi prograrnmes.

2 In ils eflfor ILI reduce incquatli and im1prove access to hcalth cae tIr el Ministry off I leal Ikiahosver the last foiur anfd a tiafl years, hecti d:veloping a suitablc methoLdloIogy 3;3

implemcnting a Nahional sIfallth 1ilsurince Pllan Resource constraint bave ted t o;dccisiont tO litttW0dtiCc tbli' Pltal iti Ph1uA; lhc lCist phawil will bk a National i ltklh FUnILI Itlt)tU^i.idi( pcslritioli nCedi(ctiJi4.1 at greatly icdulde( CoLIs IiSi all pCisons witth a itwidu limi: otSpecii(l ttchronic 4hscases

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Refoms tfor National Security and Justice

2) 'T'lhe Ministry ol'National cetriiy and Jutice (MNSJ) has atopti.td as inwcgratc irlippitaclh toRiihtitnM crime ad viokatC' Isn thai ed Ihe Minairy lia~'started to} devekW plublic Jorrprograrncms witlh other Ministrics having critical roles to play (rratslwort tnd Wtks, LtKalGovetnmient and Conmiunivy I>cvclop wni; Education, Youth and Chilrtire).

2. The Jamaica cotl:rabulary F(Acc (JCP' is to contiillue to u,t; crimle by dcccnlrdlisitBg wsOper~UQOat I ar i enzitncir, Iintllilgsca. placing gIutrer reliuncc on foretsic cevidiocc. <cg.DNA. ar: nprovinlg its iil%':stigalivc capabililies. Ihe JTF is to tocus hlicaviy oncommunity policing to inpro,nn; ils rclat;unship wtith itizews nstki dingisliglai crime prtCfntlxl,.'I-hc Janiaica Del;nce Fo:ce (Itlc urnnyl will ilicri'suilgly ciaitrhittle to rwutional deiopmenilt.winlle provi4ing .i suppottin e crimi-fhtirlng role t)t thze Cl`.

in ttitXs ol' d3rug prvellowl and abuse. the Giveninent.11l, with assisiacc 1'rttth i'Io)Asv'1)A. iS updati _g its National Aiti-dtrag lPlan (NADP) ior the five y 2ar 1 2t14 (I2006, Tog,cith,cr, the priv'itt. ind public swr-s. andi civil society will evaluate the c.xisug-;ystc,1 wtith rcspect to d4eimi rcduiAon at-a Cntrol mnasurcs. In additiont. Ircals lot,dcs chopt ncI, lows of action. mnd policis will tic i&aetified. relateAt siratetUis wvill heouthIiIet. lioraIIinnes aitnd projecis prc sed1: inancing xtritegtes will be djailed a-dcVaiuiill mcihlO;i l9lnes will he V imeded.

Social SaFetv Net (SSN) Refrnrm

>'i. ;SN prograninws are deli-ecd broadly as those wbiuh provide inconte stsppwl and acess tos crviCeS hy thc' p;oor and needy andVor clos requiring assistancc uflur economic dowuittrins.nattiral dtsasiors. or housellol4lspVcific adverse cvents thai lower incomc. lixisting sialulsafcly nct provisions itncludc. dit incollie supporcI school-bascd welfare for fleding, fix-,.hooks, sihos and unilrnts; -moniniunily-bascd pIgranirnes; labour miiarket iutmventions.inedicalionS; itidigetl liousitw, tinati asSistance for micro-investment; andj assisanvce to'NGO2s wIhich srco the b^,):

its T'he Gal c.tt ied otit Atn aw mslvs (If eXiSlilng SSN jttigtsttcs nll d iMUdltified IVeral 1411o

Sh)r1COmingS. lXnadcNuale trguelitit mcihanisms have lcd to a situatkn in whitchi nian ohthe most ncedy arc ,xcludedl (rom benefrts and undeserving recipients arc intludled. Svcraltypes of beucitits are paid andil- on avcragi. hetlfits arc low (transfers range frojim JS75A}tmonllthly tiM Food Stamps ('Or Children 0-0 years to J$24(1,(J a monih for Poor Rdliclrccipiemts). L)clivery is frugmentled. there is duplication Mn] lacGI of timeliness int dlivcry.and udinnisu-ation costs arc h4ilh. Trhe social sector rcfonr proposals dwere dlineLd in apolicy nuitrix approved in liprnciple in July 2000tJ with the unuerstanding that, sarting ini1scal 2tXOl!ti2. priority woIdki be givci to tht; reftimt ageula. 'Ilie pxlicy matrix was thesub"jot of Comliunislity ioultttns fr inorutmion,. e;onysdcration, Jmnd inpt*It; t1e vViarattheniz was tth itmporEant ro' oltiie conmmunity working, in parnership with erwvnittni it)ineet the nesads of the vulnerabtle

i. t is proposed that a rctloincd SSN be a permanenit eluenst of social policy witih built inilexibility to rospond to chasigcs in the levels aidi types of needs as dictated by the economyasnd the widLr environnlect. It will addiess risks and ssues oi' the different lire stages a%k

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w ASt us tboK whiCh tnW KV IAX l ae 4 rU1pS ait will sp6iktlly r 1t dimnwullvpoor arud vu;lnerable_.

.32. HseI o(n aInalyss or tiW mlajo t&)ia issues, groupt presenily a risk i'Or poverty, andX1 ih1content aind scop of extisiing ilgramrrrs, thC SNN rcDi'ntl rocuss Ull'

: isthnaivcly pro-lpor pmgr'Immes. itsing a culrdSgiicd t%euirg inThiUhn_nR i_,icakage orh(crielii O.dl jrwietsid heutcr vcrag tir tile needy

hItteration ol the range of blnellks to addrcss the risks asstciatcd with diferenit Condition.tsopovertyivulocrability ovecr tile various life stags of the poor, and wi incretabett tkevl ofhialefits

Consoliated. ratiolWiscd aind integrated progrAma;i., antt scrvicc% led by a single welfreageticy bil3 itivolvi;n othur sL'uwer ageinces and using Appropriate ted nology ikr pr%vssi1ng.payment and r-ecard keeping. io ;itlprvc tinieliness of &elivery

I'conomny. el0iiesiecy and fiqc.aif sust.-;inability - doing mrtore wVit lessc achicved 1y clitnminuatinmmrginal programmes, csrtlmittaills andt modifyint 0t11rs. divestlent of sorie ser iceS, and

forging straie4ic alliancms pjaicularly with NCOs

Floxibilitzvadapahiilily uItIii i set tofore clemelils whilch aurc casiiy seaIlcx f Lp or douit itL

relect demantd , anid wilh a stIotsig Inolitoring systemn lo track betneficiories atid rcuinv c tlhe:lifih*nl rocipmn sl tss iW> hiit lo .moly Or IrtIcir status improve.

3. Sp.ctxiically. IIIL rforinis ofiU the SSN iIIVolve ShOrt tWril anld IIedLHiUil1 t nlt 3j S

t;iDlows:

Shi2U 1S31.-

I SimUfing in October 20tHi, itntroduction of an objective atd transparent nicclUmism lorbetter targetting, to identity household-aindlividuals who receive bWfit.. .target3ing/scoring Ioniwula lias ben deeloleI as part of the ppradrlion activities iolthe proposed SSN refunn pr)ojct with tho Batk ari will be uscd to selec thlh:4wrICiur;: it) rwcVIVv poymcn"t.

To mitrnnis; delivety costs, improve udmnitirative cUifcicncy, aXd :eloutctedluplication. thfre inastin programmes (food anid kcxnue stanp. ptiblic assistaiLw.annd poor rclicf) will be itciged intno oe inonic transfer under a inilictd Vtene11tProgram ,nc starting wilth a 6n-month pi1o plum targeliug atout 34 lA?) befie:iurnsin onc parish in Jantwjry 2002, an expeling to reacth atmut 236,00 boncticiaries inall 13 parishes by the ithir year of the prograne, this will i volve thv gaidualphasing out of the ex isti ug programmucs ovor tbe poriod Junte 202 io M areh 200311.

3. Ilmasing the Value U4: i h bvllofits to a nior' realistic level, taking iiLo consideratioiIhe erosioJ7 or purchasing power of existing bencfits whih has occurrad bocause ofinflation, the privatv vo-sts of obtning halth and education among the poor. ant theccapacity of the tIifFr l 6tietw to absorl tdie ;ncnIt^'Sc'

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4. li'ec2lits unider etic (;ilied ikzwfilt Inorainetr will hw ciodtional twin iicitdltaunticu lilt 0-5 yvai Ulls,; reFuir schno a Kttennce anmoig the 6 to i? Vajs olds-an regular clinic visiu, f'i the other cateiwics or teneficiarics. A winaim *villhe intodueWd pciietly to mwnior progres of tic delivery an1d conpliamie withcondiutiots. anJ to li; vah the impact of the lijnikag of trdnsfe.S it allendlanet: aU

caltlih facititics anid swools: the results of this ptwi:LSS will provide ihl ustitiicatioji

br oihnuo supploil troini il Bank. during tih- Ntcriod vf tlc pro~pobd Wanl.

5. Siartitig itn 2(0KW(Ji2 ;uti conlinuuing a(t tle ti nil ?(1t1.04 *xni1 *l'imli a1bi.

cducatHti/ticiptlion w progrnlic tk inlvolve all play.rs; atul stk.eholtlers inIrnmulation of stra-eici tos rshaipo and imptcrlont Ihe reformed SSN.

6 n .Enatincri of a Chikl C',rc sad rltAcclior Act isn N(A. to bringS Jmntawica titnisu iii lincwith ihL. principlcs ol' dw nittntational Cotivtntioo o it 1T Riglts of tile Cliild

A plaesd iniplenuatatiion if the National I Latli ldiIfrtu e Plain, start1toi in fit 2 nitwiti a National ficalli l undl to provide prescriplion medication al greatly frMtlued

coist ifi all persons with a wite range ofspeiezttd eironic diseases.

Mtsitimt} lter

S. L;Vaiun o11 to,lh Stih,ol ]'CdIng1 Ilgr}anlilne Wilth i VIeW js r;41ili-VAItII. 4tsldideifyify tialtorn3live methods to pnxhctu aindl deliver i:iwol lfoeidig from ihl pre.

school to the seconldary levO' and OFotrihUtb it) increased covnirge iuali ;diulol

attendance; studsic i nw heing conduteci will providc tlhe bascs i, chanpo andr tnimmend an implrnipk ntation horizon.

9'. .Pplying the tar3ctultl nil :haitinii to the p-lVistson of educationial betel'iks suci ws

school fevding and a;&istlicu with schoo wad examtinrAtioni fces at all helecl. 1I1jS willhe implIcteted on a plh;ased basis. starting itn fiscal yea 2003104. ahier the rewults ol'

ith swt,ing fonrmoa n tite Wkoik's SSN project h3avc bn cwateldw aMd adjusted.

I. F-valuation of the ;Scn l anti dEconomic Suppon Programme during 212t)3. to

i(Wntify the aras of diuplication with existing prograri1es such as thc assistatice with

schtol anld ex aminaltioir fies and tie Joniaieta Soti:. I nv%strnt; unI ut, el tmafsing an)ttuphrcaloIws fitbr. atd rc-focussing o-n imafl cniomunity developmenit andcnlergency activiilsc, It iltainilain equity aul Lrtnltsparency, bciefilciaries will also hc

i*ntilied tirgttgil sti t(f l icoring trniulb,

I ^I Evaluation of tic exs:nence ol the Lift Ullp .1aXlamate pn-jLCt durii?i 2(Xy4J., anld

incorporation of tlib l)b"t fracticc entering to youtl.-al-risk Info the Ytt4ill

ve1topnioent projixt hiieV develtir,ned for financinig by tlhe ll 1.

12. Modification of clSibililty critera for Drugs for tlw' Fl&-rly and O)rigScri

programnivet to recovo- a gruater portion or tite coas fronm noet-poomr he,ficiarics antfulier reducc thec cmt to) thos idwti;iod by the argeting ineeasoin.to conicittwitl thlic inplentation tiof tl Nationial I Icaki Funidl.

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13 1 Io vtdc *, i ni + in d Icehr at eao70 hbaSic sic lt.o ;ih*n S y s iraei_0ft(i l vas part ofi a1k: CommitnIn. ko i vPfOVe (tie quality of I.ar1y (on,JJhoU,

14~ TO Impliumul g ort~tilw r t~t Alto for Pie IIv yuq's 2,j(12 to 2W)(,ac lw , 1n relc1,m5}' cOn1 o ' i XpaLl of tIllV/AIDS o) the econoy;ly enbis will be ouprevcntitin (cspti-iqy of p4Cdialric AIDS) survOlMoJ4#w&, mideimiohvi autl rQCSjI Cl

Policy a*lVOCU'y, a4ld tivl and humzini right1s.

34. Mo,tosin~an~ C lation a the ocrz,lI cial 4jCc4or r 1,filr Will eud icia an ll lvraiollal lavcK ' it (GoP s I luman) Rcsout".s. Council. a st&( ommilt' >b. i' t.will onllutorto cosurc thal die liolicy reformits ar beinlg ifliPlOlUamccd. anl willh re tprcdt du;ilc oan po3licy adjustlneJlls idkentiicdi Thc Pl'icy Rcview, 1)nii tidwe Office orI th 1rittwMwiswr wvi)) have utnbrOla" resqxonsibility for ot'fbrn,ajwC rcvitc, 'Trie phum4ifn IISII)II)of uamaica will continuiec ti mll.tint(litte poly raclareh, nt3siasl5 cltuillon adiJd,evAJolor7n II ptsS Which itkltiry tlue ncLxi folr potriry itjltoiwint's and to} mjkA; (iudcr~cewn nzltt,i,sl (ir COIISIde;Ltznm. nth Janisaie,, Siurvey 0o '1.vin; Cionijiion}:. wJil psros'i itlvaIblahl inlo'itj0 04f Iw utit poverItVy and prowammo alysi&

F4i"naning tbe SSN lReforxn

N., OIrning the t.xptccd pcriodl ofl w Project (Ociuhi,i' 20I) to 'picnuiwl 2i$hS ) 1 x l lItrvid. ovcrall, about 48)2 1-wir cjtnit of ttib estimatcd tUSS77,4 willion itunacing reqpiwd tn

ii~Snpkztn thc z l l i s av tv SWapr'AamrC tr wh7 ci3v t)he Bank will prov id4e 1onlfnils Thhs fCiancing wll i rcase tle mllonthly Va1w nif' otbenlils fi-ot 1 a rwtg of bvltk.'enItp.iijo to S240.0; (dqvaShti;Pg (ml lth eatto}try at pnt. t a monthly $2300) fOr alljuteg-wrim in 2002. a 50 pe' cntl ctrcasc to S375A)0 iin 2003, Atd£ a M3A0 Ier cctut mct<ctc± it;5t1Xj.0) on:o}thly i 2(104 ti<eod tih 2(904f5 tiwew yeai'. t e G o) w6l h11 'Sole',.rl:snsiblal f'or fiXtIaneitig t}he p:ro minem¢. Sub SWuLII r;views Of cost o(in )vtg t"We"isewill irtfintil dmisions oln tlk kvl ol- badgcixtary dju&WtUnct requirid to 1aUnUithel rthevaiJac of the henctits.

3I. t. base tIvir dewnningi;n, I1we bnctWl, levels was the eStitm)adte %;or oif hie Rt)A ot Is.wloods. This wevel was Chosen in keeping with thi ocrnineaiOn of fitsiaaeda. c'1 itI4 1999)9 tht tihg V4lfC of rhc lra)ltCer should be approxilluly 40) per cetnt ul' :thve eOM 1 f httbiasic feo(d hasket. The *.0A pTr cnt r ct th provisin Cr 40Je tvrre&t'citce tuak xt".1< 11ur,eitv rzquu'iremcnlis atr ,ilteuraly higher than those of other houschold niembers thebneftl lels ea ,t for 1ie 4, (inepi/ cc ofintlation) wortd lI at JiSl)2.tIj ettIlolltn in year I . J$302,tjO rt" onh ii ye> 2. amdl 1%S43(2,1 0 t y¢ar 3. 'o reflect >

cmrnitmeat ito make te btowilaeth mre paLaniij&jtl. the level for ycar I vwas set a3 3 aOi wlc'ce11ti higer {thnhat catlkcae. T11h levels FoIr years 2 antd 3 were adjusted byy bcow-cn If)t"and} 5o.2R pr Cxain in keeping with cest matd budget capcitly.

i t . l-inauca , sof t)w J Ulifictk litictil ig t tih fitst a JStics * plai iitcreases iii Si)1Sit' onkey SSN progam ete, vllics tit G tllS lo fince y dit de bt stIifltn t .increased revenue injlow%s a, a result of improvedt adinuitstrattion and collectioi lrIgics.ain1 ulsed4l troh inl (W)1'. (Xwnlxplecncntary to d]¢R btt¢¢ivS (N r t;lalcits. wk'ill te It'

10

- 78-

aIliwation st ,'rtacSs dctiti14 ;,s t'casible as a cois U:iee ol pariiel reviws and S4ttdiS zs

'Xiisti% SS'N programnws (~.S ,iicliurn Wrrn at;vitics dCSCic ft p tpi

ObIher Finaneeial and Tec4hnies Assgitanee

ii ~ ~ ~ ~ iI iilul.+@. Wll W-I|'4'Xt Ow mqi' uliml 1Ow your loanl, Ith%Q tlx-i% lgriAmcr:L)

1Devieeopnieit Ba'ik, hias hbvit prtcw sinig a reqtetst for a US$40.0 tillitiisixtar htsif oodaibout 1 S$SI.2 iti1tkn rit tc1I1iiiwl voopemrion iuiuls.. PThi. finuin will he?p to prtotvc.t _ Aiwmsafcty nct spenldiua duriosig fhi, priod of strontg tiScad adjustmCnt. aiid t1x61itaw tfhic

rn,vruwturII- and be h acr gtatgt m of pecific OiSil: snwt pnograninmicsD t)iti SaupuiX dI ticpirvitidc rif r rms ktt5 dw " sits Fdini ng1 rogranimme attd tic Schoodaiv vclIol F.cv

Assistantce (r°og -iiiinnc; ttsi impnmve thc iargctt6i.g (' 'grants lo tiasic tiloo,ik. aad I to 1111t1-s ttihc i1nitoriinl .aId cvaluation (i Ilit. SSN.

C'. ('oacIui srn

.'). Jamaica hias Ititad signitfiutut jroggcss tit ad4risstitl ig ih uis rcsuhltl fhi ni 1twt Ji:e iIUtncr~o-ornoic stiructural r. l`0rmne. as Well 1tS refOrMft oF 1the %ocilt set4rnt Al; i'*sd.*1 ttsttis 1.1cr £t1i: Ck)VmrUmt lL.11m its tisaktittito g suk stantiataz l ftlirher ptgrvss iu f wivitltcas. Tht; pubey atnd proccidlut changes ito hLe implemented during the exit tlhrue v:u-s.

s0outl stren,tBhen the sotu:lness ol thc soCial siCC oi and trlevut;ee of the social &afvty uetT he Jaatcnl Govemnmol Mitsevas that the Worlid I4iitk's sassislumcc will bizi tegral it) dxes-ucct,SS ol thel propost;i progr;xm

Si ib enJ y.

Oramr Davies

llinM,ter of Fitiance and Phlanitjg

- 79 -

-25 8155 U.S.A\.J800 c 7 70 77030 77 000' 76030'

BAHAlt4AS Elevations:J HA M,AS -t 9°00i Feet Meters JA MI A ICA t9,0

ME 0 CUBA DOMINICAN 5908 1800 Main Arterial Roads o Selected Towns

2 CA R16SEAN HA 2954 900 Main Secondary Roads @ Parish Capitals

BELIZE JAMAICA 477 450 Main Ports National Capital

IInternationalInternational Airports Parish Boundaries

IjONDURAGA Boundaries 1500 0 Region Boundaries County BoundariesSALX#2R NICRAGUA 80 700

oV 185 180 l l 0

78°000 CA RIBBEA IV

CORNWALL i;0

-1830'ALMOUTH j MNE T A4 ' SEA 1830'0

L0 10 20 30 40 50 KILOMETERS S E A 0 10 20 30 MLES

cm ~~~~~78'00' 77030' 77 000 78030'