World Bank Document...-Enrollment in 9th grade of EGB3 from 216,000 to 240,000-Transition rate from...

Document ofThe World Bank

Report No. 17498

PROJECT APPRAISAL DOCUMENT

ONA

PROPOSED LOAN

IN THE AMOUNT OF US$119.0 MILLION

TO

PROVINCE OF BUENOS AIRES

WITH THE GUARANTEE OF THE ARGENTINE REPUBLIC

FORA

THIRD SECONDARY EDUCATION PROJECT

March 12, 1998

Human and Social Development GroupArgentina, Chile and Uruguay CMIJLatin America and the Caribbean Region

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CURRENCY EQUIVALENTS(Exchange Rate Effective January 1998)

Currency Unit = Peso1.00 Peso = US$ 1.00US$ 1.00 = 1.00 Peso

FISCAL YEAR 1998

ABBREVIATIONS AND ACRONYMS

AIJE School-based Extracurricular Activities ProgramPrograma de Apoyo a las Iniciativas Juveniles en la Escuela

COPRET Provincial Council for Technical EducationConsejo Provincialpara la Educaci6n Tecnica

DEMTyA Secondary Education DepartmentDireccion de Educaci6n Media, Tecnica y Agraria

EGB Basic EducationEducaci6n General Bcisica

EGB3 Third Cycle of Basic Education (from 7th to 9th grade)MCE Federal Ministry of Culture and Education

Ministerio de Cultura y EducacionNBI Unsatisfied Basic Needs index

Necesidades-Bdsicas InsatisfechasNREE Risk Level of Education Exclusion index

Nivel de Riesgo de Exclusi6n EducativoUEP Project Implementation Unit

Unidad Ejecutora ProvincialPBA Province of Buenos AiresPEI School-based plan

Plan Educativo InstitucionalPIEs School-based Improvement Projects

Proyectos Institucionales EspecificosDGCyE Directorate General of Culture and Education

Direcci6n General de Culturay Educacion de la Provincia de BuenosAires

PTENM Provincial Program for the Polymodal TransformationPrograma de Transformaci6n Educativa al Nivel Medio

PRISE IDB Program of Reforrn and Investments in EducationPrograma de Reformas e Inversiones en Educaci6n, IDB

ProFEI Institutionally Strengthening Program at the School Level Sub-ComponentPrograma de Fortalecimiento Educativo e Institucional

Vice President: Shahid Javed BurkiCountry Manager/Director: Myrna AlexanderSector Manager/Director: Julian Schweitzer

Task Team Leader/Task Manager: William Experton

PROVINCE of BUENOS AIRES, ARGENTINAThird Secondary Education Project

CONTENTS

A. Project Development Objectives

1. Project development objectives and key performance indicators

1B. Strategic Context

1. Sector-related CAS goals supported by the project2. Main sector issues and Government strategy3. Sector issues to be addressed by the project and strategic choices

IC. Project Description Summary

1. Project components2. Key policy and institutional reforms supported by the project3. Benefits and target population4. Institutional and implementation arrangements

D. Project Rationale

1. Project alternatives considered and reasons for rejection2. Major related projects financed by the Bank and other development agencies3. Lessons learned and reflected in proposed project design4. Indications of borrower commitment and ownership5. Value added of Bank support in this project

E. Summary Project Analyses

1. Economic2. Financial3. Technical4. Institutional5. Social6. Environmental assessment7. Participatory approach

IF. Sustainability and Risks

1. Sustainability2. Critical risks3. Possible controversial aspect

G. Main Loan Conditions

1. Effectiveness conditions2. Other

H. Readiness for Implementation

I. Compliance with Bank Policies

Annexes

Annex 1. Project Design SummaryAnnex 2. Detailed Project DescriptionAnnex 3. Project Articulation Description and GraphAnnex 4 Estimated Project CostAnnex 5. Cost-Benefit Analysis Summary and

Cost-Effectiveness Analysis SummaryAnnex 6. Financial AnalysisAnnex 7. Social AssessmentAnnex 8. Procurement and Disbursement Arrangements

Table A. Project Costs by Procurement ArrangementsTable B. Thresholds for Procurement Methods and Prior ReviewTable C. Procurement Schedule for Year One of Project ImplementationTable D. Allocation of Loan Proceeds

Annex 9. Project Processing Budget and ScheduleAnnex 10. Documents in Project FileAnnex 11. Statement of Loans and CreditsAnnex 12. Country at a Glance

Map of ArgentinaMap of the Province of Buenos Aires


Project Appraisal Document

Latin American and the Caribbean RegionArgentina, Chile and Uruguay CMU

Date: March 12, 1998 Task Team Leader/Task Manager: William ExpertonCotntry Manager/Director: Myma Alexander Sector Manager/Director: Julian Schweitzer

Project ID: AR-PE-50714 Sector: Education Program Objective Category: PRLending Instrument: Investment Loan Program of Targeted Intervention: [Xl Yes [ ] No

Project Financing Data [X] Loan [ Credit [] Guarantee [I Other [Specity]

For Loans/(Credits/Others:

Amount (US$mrSDRm): US$ 119 millionProposed terms: [] Multicurrency [X] Single currency, specify

Grace period (years): 5 [] Standard Variable [ Fixed [XJ LIBOR-basedYears to maturity: 15Commitment fee: 0.75%

Service charge: -

Financing plan (US$m):Source Local Foreign TotalGovernment 51.0 51.0IBRD 107.0 12.0 119.0

Total 158.0 12.0 170.0

Borrower: The Province of Buenos AiresGuarantor: Argentine RepublicResponsible agency(ies): Directorate General of Culture and Education - DGCyE

Estimated clisbursements (Bank FY/US$M): 1998 1999 2000Annual 103.8 10.6 4.6

Cumulative 103.8 114.4 119.0

Financing aLvailable without guarantee?: [] Yes [J NoIf yes, estimated cost or maturity: N/AEstimated financing cost or maturity with guarantee: N/A

Project implementation period: 3 yearsExpected effectiveness date: July 1, 1998Expected closing date: December 31, 2001

OSD PAD Form: July 30, 1997

A: Project Development Objective

1. Project development objective and key performance indicators (see Annex 1):

(1) Increase access to third cycle of Basic Education and Polymodal secondary levell: Thisobjective will be achieved by: (i) increasing coverage of the third cycle of EGB (Basic Education from7th to 9th grades) and the transition rate between the third cycle of EGB and the new Polymodal level(from 10th to 12th grade); and (ii) improving the capacity of 200 Polymodal schools to attract students bymaking the school more appealing to the youth.

(2) Improve the learning process in the targeted Polymodall schools: This objective will be achievedby: (i) assisting schools in their transition to the new curriculum; (ii) improving school management bysupporting the development of school institutional plans (PEI) with an emphasis on educationalobjectives; (iii) providing educational equipment and in-service training for teachers and schooladministrators; and (iv) providing more resources at the school level by improving the efficiency ofsector administration.

(3) Improve the skills of Polymodal graduates in order to facilitate entrance in the labor market:This objective will be achieved by: (i) adopting curricular prograins and providing equipment which areup to date with labor market needs; (ii) improving teachers' knowledge and practices in technicaleducation; and (iii) developing permanent ties between the targeted schools and private sector.

The progress made towards these development objectives will be measured using five mainindicators with their respective targets:

- Enrollment in 9th grade of EGB3 from 216,000 to 240,000

- Transition rate from EGB3 to the Polymodal level from 93% to 980%

- Completion rate of Polymodal in Participating Schools from 18.5% lto 50%

- Achievement test scores in Spanish and Mathematics in Polymodal l'articipating Schools measured inthe last grade of this level.

Spanish from 63.60% to 68.05%Mathematics from 64.70% to 67.90%

- Repetition rate in Polymodal Participating Schools from 15.6% to 7°'o

- 30% reduction of time necessary for graduates of Polymodal Participating Schools to enter the labormarket.*

Note: all but the first indicator are for the 200 targeted Polymodal schools.* A study will deternine the baseline for this indicator.

'The Polymodal secondary education means the last three years of high school education (from 10th to 12th grade)in which a new curniculum composed of both traditional disciplines and technologically oriented fields will betaught.

B: Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goals supported by the project (see Annex 1):

CAS document number: Report No.: 16505-AR Date of latest CAS discussion: May 15, 1997Date of latest CAS Progress Report: March 17, 1998.

The CAS considers that:

a. Investment in long-term human resource development is the key to sustain growth, reduce povertyand improve international competitiveness: "Notably, education and health, which receive the bulk ofprovincial public expenditures, would be the focal point of our next generation of provincial reformoperations." In this respect, secondary education is considered the main challenge since Argentina'ssecondary school age youth is less schooled than those of countries with similar income levels.

lb. Investment in education improvement is crucial to sustain growth and efforts to enhance theeffectiveness of needed investment outlays. This is especially true for secondary education, since thequality of education provided at this level has deteriorated compared to international standards: "Asurvey in 1993 indicated that 40% of students completing secondary education did not read and write upto acceptable standards."

c. Argentine provinces need to target social assistance to the poorest sections of the population.Unnfortunately, provincial governments, which execute more than 80 percent of social expenditures(excluding social security), are hampered by "a lack of targeting to priority beneficiaries."

1. The Bank should support efforts to improve the decentralized management of the education sector:"the process of decentralization has increasingly forged a link between the institutional capacity of sub-national governments and the human and infrastructure development required to put the country on asusitained growth path."

The proposed project complements two ongoing projects, the Decentralization and Improvement ofSecondary Education projects I and II (loans 3794-AR and 3971-AR). The objectives of theseoperations are to facilitate the decentralization of secondary education to the provinces, strengthenprovincial institutions, improve resource management and target more resources to the poorest schools.The project of the Province of Buenos Aires directly responds to those broad CAS objectives by: (i)increasing the decentralized capacities to expand secondary education coverage; (ii) enhancing qualitythrough the provision of education resources and the improvement of school management; and targetingthose schools serving poor and educational at-risk students.

2. Main sector issues and Government strategy:

Main Sector Issues:

Experiencing rapid economic changes, with a more open economy and a dominant service sector(approximately 75% of employment), Argentina requires more and better qualified workers. In thisscenario, adequate education of the workforce is even more crucial in order to achieve higheremployment rates and ensure the country's international competitiveness and continued growth. TheProvince of Buenos Aires (PBA), with more than 13 million inhabitants and producing about 35% of thenational GDP is particularly affected by the new labor market standards. Based on a survey of privateemployers, a 1997 study concluded that applicant prerequisites have been substantially raised due to newproductive process and growing competition in the labor market. The completion of secondary educationis now a minimum requirement to enter formal employment. In fact, a recent study indicates that 73% of

the unemployed between the ages of 14 and 24 did not finish secondary school.

With the passage of a comprehensive Federal Education Law in 1.993, Argentina has taken importantsteps to restructure primnary and secondary education. Some of these changes include modifying thecurriculum and increasing mandatory Basic Education education from 7th to 9th grade (third cycle ofEGB). The PBA has the largest educational system in the country (roughly 4 million students and300,000 teachers). Also, it is more advanced than the other provinces of Argentina in the implementationof the education reforrn. For example, it completed the building of needed infrastructure for the newEGB (Basic Education) 8th grade one year in advance of the federal Govermment timetable and in March1998, the first cohort of students are expected to enter the new 9th grade. The Province is alsocontemplating: passing a provincial law that would make the Pol:modal level (from 10th to 12th grade)mandatory; raising the education budget in order to finance the expansion; increasing teachers' salaries;improving the conditions of services; and creating a scholarship program for underprivileged children.

In spite of these efforts, the Province of Buenos Aires is still facing several education issues:

a. Low secondary school coverage, efficiency and equity: Although Argentina has one of the mostdeveloped education systems in Latin America, it lags behind cornpeting nations with similar per capitaincome. For instance, in the Province of Buenos Aires, although coverage at the secondary level is 67%only 21.7% graduate, when in OECD secondary completion rates averages 77%. In Korea, a countrywith a similar GDP per capita level, this rate reaches 92%.

Low educational efficiency at the secondary level in the Province of Buenos Aires is illustrated by theschools inability to retain students. Drop-out and repetition rates are high, reaching more than 60% and13.4% respectively. These coverage and efficiency issues are more acute in poverty areas.2 Forinstance, only 52% of the population of the lower income quintile between the ages of 14 and 18 attendschool, while this number is 85% in the upper quintile; and drop out and repetitions rates are higher in theproposed project's targeted schools serving low-income students, at 63% and 15.6% respectively.

b. Low quality and relevance of education: According to the recent evaluations, the quality ofeducation in Buenos Aires is low, especially in unprivileged areas. National standardized tests results forthe students in the last year of secondary school indicate that, although there has been some improvementin the last 4 years, an important gap between the performance of low-income educationally at riskstudents and more privileged students still persists.

Another important problem is the low relevance of what is taught in schools in relation to new societaland market requirements. National youth unemployment rates (about 26% among the populationbetween 14 and 24 years of age who have completed secondary education) indicate that there is amismatch between what the education system provides and the needs of the economy (essentially servicejobs, representing 75% of the positions, which require individual with more advanced skills). Thismismatch translates into low student motivation and retention rates. This situation, in turn, has severalnegative consequences, such as: more children and youth on the street; early entrance into the informallabor market; violence; drug consumption; teenage pregnancy; etc. In fact, recent provincial statisticsindicate that, in the last five years, there has been a 40% increase in crime among youth under the age of18.

c. Inefficient management and unbalanced spending: The main problems of the sectormanagement affecting both the central and school levels are the following: (i) lack of a coherent and

2Although Buenos Aires GDP per capita is approximately $7,000 there are large pockets of poverty in theProvince: 26.6% of the population is considered poor and 7% is in extreme poverty.

accessible information system in order to better plan, monitor, and supervise the sector; (ii) slow andinefficient paying system; (iii) lack of an educational quality evaluation system; (iv) inefficientassignment and management of human resources; and (v) inefficient management of financial resourcesandl high administrative cost.

The main consequence of these problems is unbalanced spending in the sector. Investment in educationhas increased from 1.7% to 2.2% of GDP between 1992 and 1996, a level corresponding to internationalstandards. However, the Province is lagging behind in its expenditure on goods and services, a key forthe provision and maintenance of quality educational inputs. In 1996, expenditures in goods and servicescorresponded to only 3% of the education budget. By contrast, OECD countries spent between 8 and1 0%o of their education budgets on these inputs.

Secondary consequences, affecting the quality of the teaching process, are: (i) weakness of staffmanagement and lack of adequate control which lead to high levels of absenteeism; (ii) late pay checks,the absence of incentives and insufficient attention to teachers working conditions which negatively effectteachers' motivation and commitment; (iii) teachers' economic necessity to work in several schoolswhiich hampers team work and pedagogic improvement; and (iv) centralized management which results inlack of accountability among directors and teachers; the absence of a decentralized school budget formaintenance; and little of information and participation among parents.

G;overnment Strategy:

a. At the Federal level: The federal Government has launched an ambitious reform program framedby the Education Decentralization Law (1992), the Federal Education Law (1993), and the HigherEducation Law (1995). This program has four main areas: (i) the decentralization to the provinces ofresponsibilities for secondary and technical education and teacher training institutions; (ii) the expansionof mandatory education from 7 to 10 years; (iii) a curricular reform that establishes one year of pre-school, nine years of Basic Education (EGB) and three years of Polymodal; (iv) an administrative reform;and (v) the higher education reform. The federal Ministry of Culture and Education (MCE) is alsoproviding direct resources at the pre-school and primary education levels to ensure a smoothertransformation and reduce inequities (Plan Social Educativo). The government has requested continuedsupport from the Bank and the IDB for this reform package, particularly to strengthen decentralizedsector institutions and improve the quality of education.

b. At the Provincial level: Like every province, PBA signed an agreement with the federalGovernment on the phasing of the education reform and on the federal financing to be allocated to theProvince (Federal Education Pact). In the last five years, the PBA increased its education budget at anaverage annual rate of 15.5%. After almost three decades of very little of expenditure on infrastructureand maintenance of school buildings, investment in this area has increased from approximately US$ 15million in 1992 to approximately US$ 550 million in 1999. In March 1998, the first cohort of studentswill enter the 9th grade of the new educational structure and in 1999 the Polymodal curriculum will startto be implemented. To facilitate the transition to the new Polymodal curriculum, the Province haslaunched the PTENM (Provincial Program for the Polymodal Transformation) which during its firstpha,se produced a diagnostic study of the situation of every secondary and technical school. In its secondphase, the PTENM is planning the transition of every secondary school to the new Polymodal curriculum.Currently, the Province is also implementing the administrative reform agreed with the federalGovernment. Furthermore, the Province is contemplating a provincial law that would make thePolymodal level (from 10th to 12th grade) mandatory and would increase substantially the educationsector budget to finance the expansion, improve teachers' salary structure and condition of services, andcreate a scholarship program for underprivileged children.

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

Sector Issues to be addressed:

* Low secondary school coverage, efficiency and equity: by increasing the transition rate betweenEGB and the new Polymodal, and increasing retention rates at the Polymodal level.

* Low quality and relevance of education: by implementing the Polymodal transformation andproviding up to date educational resources and in-service teacher training in order to make schoolmore attractive to the youth and prepare them to meet new societal expectations (labor market, highereducation, etc.).

* Inefficient management and unbalanced spending: by imrproving school management andpushing the implementation of the administrative reform at the provincial level.

Strategic choices:

A. Reinforcing the Bank's assistance for secondary education in the Province of Buenos Aires isconsidered critical for the following reasons:

(1) The Province of Buenos Aires is more advanced than the other provinces of Argentina in theimplementation of the education reform. It completed the building of needed infrastructure for the newEGB (Basic Education) 8th grade one year in advance of the federal Government timetable and in March1998, the first cohort of students are expected to enter the new 9th grade. In addition, the PBA has astrong institutional and fiscal base: according to the Bank's fiscal criteria, used to determine provincialeligibility, the PBA has a sound financial position with very little debt.

(2) The Province has the single largest educational system in the country (roughly 4 million students and300,000 teachers). These characteristics make the proposed project very likely to be taken as example bythe other provinces. This potential multiplier effect would benefit the country as a whole.

B. The proposed Secondary Education III project has been designed to complement and reinforce the twoongoing secondary education projects. Together the three operations form a package which willaccelerate the implementation of the secondary education reform in the PBA. The three operations focuson the following:

The Secondary Education I project, in the Province of Buenos Aires, will finance improvements in threeareas:

(1) Sector administration, including the implementation of (i) a decentralized model for sectormanagement; (ii) an human resources administration system; (iii) a financial administration system; (iv)the simplification of administrative procedures; (v) a sector information system; (vi) a management andmaintenance plan of the sector infrastructure; and (vii) a quality evaluation system.(2) Education quality, by (i) providing computer equipment to EGB3 and Polymodal schools and (ii)implementing the second phase of the PTENM.(3) School rehabilitation to accommodate the increasing demand diue to expansion of mandatoryeducation.

In addition, Secondary Education II project for the Province of Buenos Aires is financing:

(I) Essential educational resources (e.g., library, computer and science laboratories); and

(2;) school-based improvement projects (Proyectos Institucionales Especificos - PIEs) in 200 secondarysc]hools serving poor and low achieving students.

Secondary Education III will be linked to these two ongoing projects' components by:

(1;) Finalizing the expansion and rehabilitation of EGB schools, particularly of 9th grade classrooms, inorder to accommodate the growing demand due to the extension of mandatory education.(2') In the 200 secondary schools targeted by Secondary Education II: assisting schools with thetransition to the Polymodal and improving school management by supporting the development of the PEI;supporting an extracurricular program from youth; and providing supplementary educational materialsand training for 42 technical schools. In addition, the project will implement a quality monitoring andevaluation system for the targeted schools connected to the provincial information system financed bySecondary Education I.(3Y) Connecting these investments on access and quality to the progress of the provincial education sectoradministrative reform, supported by Secondary Education I.

C: Project Description Summary

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

Component Category Cost Incl. % of Bank- % ofContingencies Total financing Bank-

(IJS$M) <(US$M) f(1) Expansion of Access: Physical 141.0 83.0 93.0 66.0

* Construction of classrooms for 43.0 25.3 30.1 70.3the 9th grade of the new EGB3(7th to 9th grade of BasicEducation).

* The rehabilitation of EGB 91.( 53.6 58.2 64.0schools.

* The construction of bathrooms 7.0 4.1 4.4 64.0in EGB schools.

(2) Quality and Relevance Physical and 27.4 16.2 24.7 90.2Improvement: Institutional

building* Institutional strengthening at the 4.5 2.7 4.4 96.2

school level.

* Restructuring technical schools 14.2 8.4 12.8 90.0through the provision of up-to-date educational resources andin-service teacher training.

* Establishment of school-based 8.7 5.1 7.5 87.5extracurricular programs foryouth.

(3) Project Administration Administration 1.5 0.9 1.3 90.0

TOTAL 170 100 119 70.0Note: Numbers may not add due to rounding

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

a. The project directly supports the implementation in the Province of the Federal Education Law(Ley Federal de Educaci6n) passed in 1993. This Law established (i) the change in education structureand curriculum; (ii) the extension of mandatory education from 7 to 10 years; (iii) the responsibilities ofthe administrative bodies of the sector as well as of the school community; (iv) the increase of total publiceducation financing 20% annually.

b. The project directly supports the implementation of the Federal Education Pact (Pacto FederalEducativo), a five year agreement passed in 1994 between the PBA and the federal Ministry of Cultureand Education (MCE) for the phasing of the reform between 1994 and 1999. Through this pact, it wasagreed to progressively increase education finance to achieve the objective set in the Federal Education

Law and to coordinate efforts in order to: (i) construct and rehabilitate school infrastructure necessary forthe extension of mandatory education; (ii) provide teacher training for the implementation of theeducation transformnation; (iii) expand access to education at all levels; (iv) improve education quality andefficiency; and (v) provide computer, library and other pedagogic resources to the schools. The Provinceof Buenos Aires has made progress in all these accounts.

c. More specifically, the project supports the Provincial Program for the Polymodal Transformation(Programa de Transformaci6n Educativa para el Nivel Medio de la Provincia de Buenos Aires - PTENM)which was launched by the Directorate General of Culture and Education Secondary EducationDepartment (DEMTyA), in order to implement the transition to the Polymodal. The PTENM consists ofthree phases: (i) an in-depth diagnostic study of the situation of secondary and technical schools; (ii)preparing the transformation and adoption of the new Polymodal curriculum by all secondary schoolsbased on the findings of the study (financed by the Secondary Education I project); and (iii) theprogressive implementation of the Polymodal in all secondary schools starting in 1999. The project willfacilitate the implementation of Polymodal in the 200 targeted schools.

d. The Province will present a detailed education sector administrative reform plan which includes: (i)a decentralized model for sector management; (ii) a human resources administration system; (iii) afiinancial administration system; (iv) the simplification of administrative procedures; (v) a sectorinformation system; (vi) a management and maintenance plan of sector infrastructure; and (vii) a qualityevaluation system. This is a condition for project effectiveness.

3. Benefits and target population:

B enefits:(a. is applicable to the whole universe, while the rest of the benefits are applicable to the 200 targetedP'olymodal schools)(all benefit goals are for 2001, unless otherwise noted)

a. Increased access to and equity in Basic Education: By building new classrooms for the new 9thgrade to implement the extension of obligatory education from 7th to 9th grade, the project expects toincrease the enrollment in 9th grade of EGB3 (7th to 9th grade of Basic Education) from 216,000 to240,000. The expansion of access and mandatory education will increase the percentage of children fromhigh NBI (Unsatisfied Basic Needs index) families attending EGB3.

b. Increased participation and equity at the Polymodal level: The project expects to: (i) increasetransition rate from EGB3 to the Polymodal level from 93% to 98%; (ii) increase the percentage of youthfrom high NBI families attending Polymodal, by targeting its investment at 200 educationally at-riskPolymodal schools in high NBI areas; and (iii) increase the Polymodal graduation rate from 18.5% to50% in these targeted schools.

Xc. Improved completion rate at the Polymodal level: By making Polymodal school more relevant andattractive to secondary school-age youth, the project expects to increase the graduation rates as mentionedabove and decrease the repetition rate of Polymodal students from 15.6% to 7%. Consequently, theinumber of secondary school-age youth in the streets are expected to decrease, causing several positiveexternalities (spill over benefits). Experience demonstrates that when young people stay in school, theyare less likely to get involved in risky behavior such as: consumption of drugs, alcohol and tobacco,involvement in violent behavior, early pregnancy, etc.

d. Improved relevance and quality of Polymodal education: By improving the relevance andqluality of education provided at the school level the project will significantly contribute to increase

participating Polymodal schools' students' achievement test scores in Spanish from 63.60% to 68.05%and in Mathematics from 64.70% to 67.90%.

e. Improved employment perspectives for Polymodal graduates: By reconverting 42 technicalschools through the improvement and modernization of their educational resources, the provision of in-service teacher training and the promotion of links to the private sector; the project expects to (i) increasethe number of collaboration arrangements (donations to the school, school selling services to thecompanies, student intemships in the companies, etc.) between technical schools and the labor marketfirms; and (ii) reduce by 30% the amount of time necessary for technical school graduates to enter thelabor market.

f. Improved sector and school management: The project will be linked to the improvement insector administration, partially financed by Secondary Education I. The improvements in this regard willbe also measured by the Project Monitor system. The expected benefits include: 10.8% increase inprovincial government expenditure in education; increase of investments destined to educational goodsand services in the education budget from 2.8% to 4%; decrease in the percentage of administrativeexpenditures in the total education budget from 7.48% to 6.98%; and decrease in cost per secondaryeducation graduate. (see Annex 3)

Target population:

The project will especially target the 200 schools selected to receive the Basic Educational resourcesfinanced by the Secondary Education II project. These schools serve low income (high NBI) studentsand educationally at-risk students (measured by the Risk Level of Education Exclusion index - NREE).NBI Low income students are more likely to be educationally at-risk. For example, the secondary schooldrop-out rate for children that belong to poor households is ten times greater than for those belonging tonon-poor households.

The Expansion of Access component will affect a total of 4474 EGB schools buildings.

4. Institutional and implementation arrangements:

Implementation period: 3 years

Project coordination: As they are closely linked, Secondary Education Projects I, II and the proposedproject will be jointly managed under the UEP (the Project Implementation Unit of the DirectorateGeneral of Culture and Education - PBA's DGCyE) which has been coordinating both ongoingSecondary Education projects and a Basic Education IDB project (PRISE). The General Coordinator willcontinue to manage all UEP operations while a Project Coordinator will be specifically responsible forthe three Secondary Education projects. Three Sub-coordinators (Infrastructure, Education andAdministrative Reform, respectively) will be in charge of all aspects pertaining to their area in the threeprojects and answer to the Project Coordinator. In addition, the UEP has a team of 25 professionalsproviding services for: contracting, accounting administration, auditing, legal, and educationaladministration. The proposed project will finance about 50% of all UEP staff involved in the jointmanagement of these three projects.

Financial Management: The Province of Buenos Aires would maintain adequate financial managementsystems --including accounting, financial reporting, and auditing systems-- to ensure that they canprovide the Bank accurate and timely information regarding project resources and expenditures, inaccordance with: (i) the Financial Accounting, Reporting, and Auditing Handbook (Washington, D.C.:World Bank, 1995), and (ii) the Bank's Operational Policy (OP) and Best Practice (BP) 10.02, dated July

1996;. Efforts are being made on a country basis to discuss with the Government the revised Bankfinancial management standards to comply with OP and BP 10.02, dated August 1997. With respect toauditing, the Bank has confirmed that the Auditoria General de la Naci6n (AGN) is eligible to provideaudit preparation services as long as it meets criteria of independence, quality, capacity and timeliness inthe opinion of the Bank. The AGN is already auditing existing projects, including Education Sectorprojects being implemented in the Province of Buenos Aires, and up to now the financial management ofEducation Sector projects has been satisfactory.

Executing agencies:

The PBA's Directorate General of Culture and Education (DGCyE) will be the responsible and mainexecuting agency of the project. Under its responsibility, and managed by the UEP, several executingagencies and main stakeholders (Cooperadoras and school communities) will be in charge of differentaspects of project implementation. These include:

(1) The UEP Infrastructure Unit and the Public Works office: will work in collaboration to implementthe "Expansion of Access" component: construction of 9th grade classrooms and rehabilitation ofsecondary schools. The UEP Infrastructure Sub-Coordinator and the Public Works office of the DGCyEwill be in charge of planning, budgeting, managing and ensuring the quality of the public works.

(2) The Cooperadoras: are legal associations composed of parents, teachers and school administratorsraise and manage local voluntary contributions to supplement school budgets. They will administrate andoversee the public works in their respective schools. Technical assistance and supervision will beprovided to the Cooperadoras at all stages by a team of inspectors financed by the project.

(3) The Secondary Education Department (Direcci6n de Educaci6n Media, Tecnica y Agraria -DEITyA): will be in charge of designing and implementing the Institutionally Strengthening at theSchool Level sub-component (ProFEI) consisting of training for and technical assistance to supervisors,directors and teachers, with three objectives: (i) reconversion of supervisors to promoters of theeducation transformation; (ii) increased management capacity and performance of school administrators;and (iii) the development and implementation of a school-based plan (PEI) in every school. TheDEMTyA will also implement and supervise the school-based extracurricular activities program (AIJE),the permanent quality monitoring and evaluation system and, in collaboration with the COPRET, thereconversion of technical schools. The person selected as the UEP Education Sub-coordinator is also partof the DEMTyA team. The DEMTyA is the adequate body to take on these responsibilities because itprepared a school-by-school quantitative and qualitative diagnosis of the actual situation of the secondarysub-sector for the first phase of the Program for the Polymodal Transformation (Programa deTransformaci6n Educativa para el Nivel Medio - PTENM). Based on its findings and financed by theSecondary Education I project, the DEMTyA is currently implementing the second phase of the PTENMconsisting of planning the transition of the secondary education sector to the new Polymodal curriculum.

(4) P'rovincial Council for Technical Education (COPRET): has analyzed the current situation of technicalschools and generated a proposal aimed at creating more links between the private sector and technicalschools in order to improve the employment perspectives of secondary education graduates. In thisproject, the COPRET will, in collaboration with the DEMTyA, prepare and implement the reconversionof 42 technical schools, among the 200 targeted schools, through the provision of up-to-date equipmentand in-service teacher training.

(5) The Administration Sub-Secretary: is in charge of implementing the administrative reform accordedwith the federal Government and supported by the Secondary Education I project. The proposedSecondary Education III project, is linked to the advancements made in this area. The UEP

Administrative Reform Sub-Coordinator is part of the Administration Sub-Secretary team.

(6) Schools Communities: composed mainly of teachers, students, parents and school administrators arebeneficiaries and participants of the project implementation. They will: (i) administrate the public worksin their school through the Cooperadoras; (ii) be provided wilh technical assistance and training under theInstitutional Strengthening at the School Level (ProFEI) for tlhem to improve school management anddevelop the school PEI; (iii) run the Extracurricular Programs for the Youth (AIJE) sub-component at theschool level.

In addition, the federal Ministry of Culture and Education (MCE), currently coordinating the SecondaryEducation I project and an IDB project, and implementing Secondary Education II, will provide technicalassistance to the UEP based on its experience with secondary education projects in five other provinces.Particularly, the provincial DEMTyA will work in close coordination with the MCE to articulate theinterventions to the 200 secondary schools under both, the Secondary Education II project and theSecondary Education III proposed project. To this end, the position of the Provincial PedagogicalCoordinator required under the Secondary Education II project to coordinate the quality interventions ineach province will be filled by the UEP Education Sub-Coordinator.

D: Project Rationale

1. Project alternatives considered and reasons for rejection:

a. Quality intervention in all the secondary schools: It was decided to target the qualityinterventions to the 200 schools already under Secondary Education II, instead of the whole universe, inorder to: (i) increase equity, since these schools serve low income educationally at-risk students; (ii)work in schools where the existence of basic educational resources will help to increase the motivation ofschool actors and facilitate the successful implementation of the Polymodal transformation; and (iii), inthe near future, utilize the lessons from this in-depth implementation of the Polymodal transformation in200 schools to implement the transformation of all provincial secondary schools.

b. A semi-competitive Fund to finance school-based improvement projects: The original idea of afund was rejected due to the following reasons: (i) the current institutional structure is not prepared forimplementing this bottom-up approach to school financing; and (ii) school capacity and managementneed to improve before schools can put forward quality proposals, particularly in the case of the poorerschools. In the future, the evaluation of the school-based improvement projects (PIEs) beingimplemented under the Secondary Education II project, and continued study of possible institutionalarrangements, will provide better instruments to work on the establishment of a Fund or other alternativesfor school-based improvements.

c. Institutional strengthening: It was decided not to include an ample provincial institutionalstrengthening component in this project since those efforts, for the time being, are being financed by theSecondary Education I project. Furthermore, this project will be linked to the progress achieved in thisarea (see Strategic Choices section, B). A sub-component of Institutional Strengthening at the SchoolLevel (ProFEI) will be financed in order to reconvert the role of the supervisors, improve schoolmanagement and assist in the development of the school PEI.

d. Teacher management and training: It was decided that this project will not include pre-serviceteacher training nor teacher labor reform (which will be contemplated in another project underpreparation). It will only focus on the in-service training needed by teachers to help develop the PEI,utilize the new technical education resources and improve their technical education subject contentknowledge.

2. AMajor related projects financed by the Bank and/or other development agencies (completed, ongoingand' planned):

Sector Issue Project Latest Supervision (Form 590)Ratings

(Bank-financed projects only)Implementation DevelopmentProgress (IP) Objective (DO)

Bank-financedNeed to strengthen the institutional Secondary Education I S Scapacity of the provincial ministries of (AR-5992)education and to increase the coverage andquality of secondary education.Need to improve the quality of secondary Secondary Education II S Seducation. (AR-6057)

Other development agenciesNeed to improve quality and coverage of PRISE - Programa de N/A N/Aprirmary education in targeted areas. Reformas e Inversiones en

Educaci6n, IDB(AR-0122)

IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)

3. Lessons learned and reflected in the project design:

A review of operational and policy experiences and of existing literature and studies offered thefollowing lessons that are relevant to the proposed project:

a. Simple project design: Simplicity in the design of a project assure successful implementation.This lesson stems from the difficulties faced during the first stages of the implementation of SecondaryEducation I due to its complexity. The proposed project only has two components and simpleimplementation mechanisms.

b. Creditworthiness: The Bank's experience with Argentine and other provincial projects around theworld, indicates that creditworthy sub-national governments are likely to be more successful in projectimplementation. As it is reflected in the proposed project's financial analysis (Annex 6), recent creditratings for the Province of Buenos Aires indicate that the province is creditworthy.

c. Synchronization with government policies: Experience in Argentina (Secondary Education I)shows that synchronizing the implementation of the project with government policy and/or differentstages of the reform is crucial to avoid administrative and implementation delays or obstacles. Theimplementation activities of this project are designed to coincide with the timetable of the implementationof the Polymodal transformation in the Province of Buenos Aires.

dl. Articulation with ongoing secondary education projects: Bank operational experience indicatesthat, especially in countries as large as Argentina, not one single project can work on all sector issues(e.g., sector management, education quality) at all levels (e.g., federal, provincial, school levels). In somecases, the most effective alternative is to articulate the components of several projects working atdifferent levels. This is the approach that we have adopted for the Secondary Education I, II and III (see

Strategic Choices and Annex 2, Project Articulation Description and Graph, for a detailed description).

e. Role of the private sector: Studies show that participation of the private sector in educationimproves efficiency and increases resources allocated to the sector. Furthermore, it provides betterlinkages between the education offered in the schools and the labor market requirements. The proposedproject will provide incentives for schools, particularly technical ones, to seek collaborative arrangements(exchange of services, donations, internships, etc.) with private sector firms.

f. School community participation: Experience in other Latin American countries (i.e. Brazil and ElSalvador) demonstrates that strong school community participation in the education process has manyadvantages (e.g., increased accountability, greater communication, improved school management). Withthis in mind: (i) the first phase of the PTENM, a diagnostic study, included consultation with teachers,parents, school administrators, supervisors and students; (ii) the second phase of the PTENM, supportedby the Secondary Education I project and the proposed project, will involve the school community in thedecision making process required to transform secondary schools into Polymodal schools; (iii) thetechnical assistance and training provided under the InstitutionaLl Strengthening at the School Level(ProFEI) sub-component will foster consultation, particularly for the development of the school PEI; and(iv) the Extracurricular Programs for the Youth (AIJE) sub-comnponent will promote local communityinvolvement in at least 60% of the programs.

g. Institutional strengthening: Experience shows that an adequate institutional capacity at thecentral level is crucial to the success of the project. Since the project is linked to the SecondaryEducation I project, which focuses on administrative reform, the proposed project does not necessary toinclude an ample institutional strengthening component at the provincial level. At the school level,however, the proposed project will strengthen the schools' institutional and management capacity throughthe ProFEI. This will be facilitated by a transparent quality monitoring and evaluation system.

4. Indications of borrower commitment and ownership:

The legal framework and provincial commitment are conducive to the implementation of the reform. ThePBA passed the Provincial Education Law in 1995, which endorsed the transformation launched by theDecentralization Law (1992) and Federal Education law (1993). Additionally, the PBA and the FederalGovernment signed the Federal Education Pact in which, among other things, the Province agrees on thephasing cf the reform between 1994 and 1999 (see Key policy and institutional reforms supported by theproject, above). Currently, a provincial project of law to extendl mandatory education to the Polymodalhas been submitted to the provincial legislator.

More importantly, the PBA is more advanced, in comparison to most other provinces, in theimplementation of the reformn. It has shown commitment to the reform through: the implementation of8th grade of EGB one year in advance (1997); preparation of a diagnostic study (phase one of thePTENM) for the Polymodal transformation; initial efforts to strengthen its institutional capacity and toincrease resource allocated to the sector. In addition, the provincial Law 12081 was recently passed tocreate an Education Fund of US$ 300 million which will be utilized to restructure teachers' pay scalesand increase their salaries. The most important actions that demonstrate provincial commitmnent to thegoals of the proposed project are:

* The Provincial Council for Technical Education (COPRET) was created by a provincial law in 1995,to lead the transformation of technical secondary schools in the Province. Headed by a leadershipthat is well connected in the private sector, the COPRET has made important progress in this areathrough: the identification of the issues affecting technical education, a proposal of several types ofcollaboration between schools and the private sector, proposals for teacher training in technicaleducation, and the implementation and evaluation of pilot reorganizations of technical schools.

* The Secondary Education Department (DEMTyA) of the DGCyE has taken the lead in the Polymodaltransformation. It has prepared a school by school quantitative and qualitative diagnostic study ofsecondary education which includes: socio-economic mapping of student population, identification ofat-risk students, identification and analysis of sub-sector's internal inefficiencies, consultation withteachers, school administrator, supervisors, parents and students. Based on the findings of this study,The DEMTyA will lead the implementation of the Education Quality and Relevance component ofthe proposed project.

The Administration Sub-Secretary of the DGCyE team, in charge of the Administrative Reform, hasconfirmed the current and near-future implementation of five institutional reforms necessary for thefeasibility and sustainability of the quality improvements financed under the proposed project. Thesereforms are: (i) decentralized school budgets for maintenance, particularly in technical schools; (ii)concentration of teaching hours in the same school; (iii) incentives for teachers tied to training andthe teaching hours concentration; (iv) availability of paid staff hours and school facilities for thedevelopment of extracurricular activities; and (v) decentralized sector management and informationnetwork to support the reconversion of school supervisors.

The UEP's team of architects and planners, based on previous experience with the IDB's PRISEproject, have presented a coherent infrastructure program which includes enrollment projections,targeting criteria, and pedagogically appropriate classroom plans.

.5. Value added of Bank support in this project:

The Bank's financial and technical assistance will provide valuable contribution to the project's designand implementation, particularly because:

* The Bank has substantial lending experience with Argentine provinces. In the ongoing SecondaryEducation I project, the Bank is working with seven provinces, and the Secondary Education IIproject is financing secondary schools in all provinces. Furthermore, two Public Sector reform loansare also working directly with provincial governments.

T The Bank provides a balanced expert opinion in project design and implementation. The transition tothe Polymodal, with its physical requirements, initially prompted the PBA to emphasize investment ininfrastructure as the main component of the project. Through continuous dialogue and cooperationbetween the Province and the Bank, the Province has redefined the project's priorities and restated itscommitment to institutional strengthening and education quality interventions.

The Bank's team offers expertise and familiarity with the latest international developments ontechnical education, an area which the PBA intends to radically reform.

The Bank has accumulated experience in the design and implementation of school-based programsfor youth, particularly in Chile in the framework of the Bank's secondary education project (MECEMedia).

Bank team members are available to contribute cross-country knowledge and experience, with linksto operations in Chile and Uruguay.

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

1. Economic (see Annex 5):

a. Cost-Benefit Analysis: Public finance of expansion of government school enrollment capacity andquality improvements are justified by the externalities generated by household expenditures on BasicEducation. Equally important, it is justified by its potentially considerable positive income distributioneffects. The rate of return to an additional year of Basic Education from increased income alone is about10 %. Including the consumption value of education and the social gain from externalities (e.g. reducedjuvenile delinquency, increased social capital and lower governance cost) the social rate of return couldarguably raise the rate of return to a much higher level. With respect to income distribution, asenrollment rate approaches 100 percent, the additional students will increasingly be coming from poorfamilies. These families can further benefit from quality improvements that would be brought about bythe project, insofar as their children are able to acquire better cognitive and affective skills that are greatlyvalued in the labor market.

b. Cost Effectiveness Analysis: The question is how to expand the capacity of the education systemto accommodate additional enrollment in the 9th grade and ensure that existing schools, many of whichare old and dilapidated, fit the requirements of the new curriculum and quality improvement efforts. Inorder to answer this question in a cost-effective manner, the PBA analyzed three major options: (i) newschools, (ii) total renovation, and (iii) construction of additional classrooms, rehabilitation andenhancement. The last option was chosen as the best approach because it is significantly cheaper, lessdisruptive, and appropriate for existing schools needing additional classrooms to meet increasedcommunity demand. With respect to construction methodology the Province examined two choices: (i)industrial technology and (ii) traditional construction method. The second option was chosen because itfavors decentralization and community involvement, employment of local labor and materials, and lowerunit cost of construction and maintenance.

2. Financial (see Annex 6):

A Financial analysis was performed to evaluate the recent fiscal performance of the Province of BuenosAires and the fiscal impact of the proposed Secondary Education III project. The main purpose was toestablish whether the Province has sufficient resources to finance both future debt service generated bythe project and incremental operational costs generated by the physical investments conducted under theproject.

The conclusion is that the project would have a relatively minor fiscal impact. When fully disbursed, the$119 million loan would represent only 1.2 percent of projected current revenues, and the debt service onthis loan would represent only 0.1 or 0.2 percent of current revenues. The classroom expansionprogrammed for the project would lead to additional operational costs for maintaining the newlyexpanded schools. These additional annual operational costs are estimated, by the Province, to be in therange of $26 million to $38 million, representing only 1.1 to 1.6 percent of total 1996 educationalexpenditures.

3. Technical:

The project is technically justified on the basis of the importance and the public nature of the problem itaddresses. It is responding to this problem in a cost effective and appropriate manner by:

(1) Ensuring the urgent implementation of mandatory Basic Education up to the 9th grade of EGB, in aProvince that has taken the lead of the national education reform and which serves almost half of theArgentine students.

(2) Facilitating the Polymodal curricular transformation: the project has adequately targeted its

intervention to 200 at risk secondary schools, serving approximately 20% of the total number ofsecondary level students in the Province.

(3) Addressing the lack of interest of the youth on schooling by providing more attractive educationalservices, involving students in extracurricular activities and raising the job expectations.

4. Institutional:

a. Executing agencies: The Provincial government is committed and institutionally ready toiimplement the project (see Indications of borrower commitment and ownership, above). The DEMTyA,the COPRET, and the Administration Sub-Secretary of the DGCyE are working collaboratively andeffectively among each under the UEP management. In order to ensure that school Cooperadoras fulfilltheir responsibilities, they will be provided with appropriate technical assistance and supervision by ateam of inspectors financed by the project.

b. Project management: The UEP is satisfactorily coordinating two Bank projects (SecondaryE,ducation I and II) and one IDB project at the provincial level. In order to manage the three SecondaryE]ducation projects in an articulated manner, the UEP has been appropriately reorganized and staffed.The UEP's dynamic working relations and open communication with the primary executing agenciesestablished during project preparation will facilitate project management. When necessary, based on itstexperiences in five other provinces, the MCE will provide technical assistance to the UEP.

5. Social (see Annex 7):

A social assessment was carried out during project preparation. Its primary objectives were to evaluatethe impact of the education reform supported by this project in the poor areas and identify the socialobstacles to its implementation. The secondary objectives were to review the stakeholders' views andpossible social impact of three specific areas of the proposed project: the extracurricular program (AIJE),the improvement of the skills of secondary graduates in order to facilitate entrance in the labor markets,and the improvement of learning processes in secondary schools. Thirty-six focus groups were held withprimary stakeholders: teachers, parents, students and community organization representatives. The mainresults of the focus groups were: (i) there is a consensus on the need to reform and improve secondaryeducation, (ii) teachers and principals are very committed to the reform, while parents are not wellinformed about the reform and show weaker commitment; (iii) all stakeholders want to be consulted; (iii)stakeholders, particularly teachers, feel there are some time and legal constraints to the implementation oft'he AIJE program; and (iv) students perceive that there are few job opportunities for them.

The assessment concluded that the proposed project will adequately respond to the social issues raised bytlhe stakeholders by including the following: (i) an adequate mix of quantitative and qualitative measuresto improve secondary education; (ii) a participatory approach, particularly in the InstitutionalStrengthening (ProFEI) and AIJE sub-components; (iii) specific administrative measures will increase thetime that teachers can dedicate to the implementation of the AIJE; and (iv) the implementation of the newFPolymodal curriculum aimed at improving the relevance of secondary education.

6. Environmental assessment: Environmental Category [ ] A []B [XI C

According to Bank regulations, an environmental assessment is not necessary for this project.

7. Participatory approach

The primary beneficiaries of the project at the school level are: school principals, teachers, parents,students and some community organizations. These key actors were consulted during:

(1) A participatory diagnostic study of the situation of every secondary schools in the Province (firstphase of the PTENM). This study included interviews with 2100 scliool administrators, 60 supervisors,2151 teachers, 924 parents and 1725 students.

(2) A Social Assessment, carried out during project preparation in order to evaluate the impact of theeducation reform supported by this project in the poor areas and ideritify the possible social obstacles toits implementation (see Social Assessment above).

Project design reflects the results of these participatory studies. Consequently, during projectimplementation participation will be fostered by: (i) Involving primary stakeholders in the decisionmaking required to prepare and implement the Polymodal transformation (second and third phases of thePTENM) supported by the Secondary Education I project and the proposed project respectively; (ii)providing technical assistance and training which foster consultation with all members of the schoolcommunity, particularly for the development of the school PEI; and (iii) promoting local communityinvolvement in at least 60% of the programs of the Extracurricular Programs for the Youth (AIJE) sub-component.

F: Sustainability and Risks

1. Sustainability:

The project would be sustainable because:

(1) The federal and provincial governments are committed to the education reform supported by theproject.

(2) The project would have a relatively minor fiscal impact (see Financial analysis, above).

(3) The primary executive agencies are part of the established structure of the Directorate General ofCulture and Education.

(4) Primary stakeholders have been consulted and are actively participating in the project implementation.

2. Critical Risks (reflecting assumptions in thefourth column of Annex 1):

Risk Risk Rating Risk Minimization Measure

Annex 1, cell "Goal to Bank Mission"

(1) The upcoming 1999 Presidential and provincial M The project has been simplified in orderelections; the continuity of the federal policy on to fit into a three year implementationeducation; and the stability of Province period and includes a participatoryadministration and higher level staff in charge of the aplproach to involve all keyeducation policy. stakeholders.

(2) Weak commitment of the Province to implement L The Province of Buenos Aires willthe Administrative Reform agenda agreed with the provide a detailed plan for theFederal Government. implementation of the education sector

administrative reform for project

effectiveness.Annex 1, cell "Objective to Goal"

(3) Lack of continued demand for the EGB3 L According to the economic analysis, acontinued expansion of demand forEGB3 and secondary education isexpected (see Annex 5).

(4) Unwillingness of private firms to collaborate L The reconversion of technical schoolswith technical schools and the fiscal credit given to private

firms working with schools will fostercollaboration. The COPRET hasspecifically been created to stimulatethis collaboration.

Annex 1, cell "Outputs to Objective"

(5) Inefficient administration could affect the timely M The following has been included: (i) aand synchronized school level implementation of the project design which links thevarious educational inputs necessary to improve institutional changes supported by thequality. Secondary Education I project to the

proposed project; (ii) a single projectimplementation unit (UEP) workingdirectly with the Administration Sub-Secretary and the Secondary EducationDepartment; (iii) a limited interventionin 200 target secondary schools.

(6) Low teachers salaries and difficult conditions H Three measure are expected tomight affect the participation of the teachers in the minimize this risk: (i) the Province hastransformation process. created an Education Fund (provincial

Law 12081) of US$ 300 millionwhich will be utilized to restructureteachers' pay scales and increasetheir salaries; (ii) institutionalmeasures will aim at concentratingteaching hours in the same school andimproving timely payment of salaries;and (iii) the project's participatorytraining and technical assistance will bedesign in order to foster teachers'motivation.

(7) In most of the schools considered in the project, H Two components will make the schoolwhich deal with the lower income population, more attractive to these teenagers: (i)teenagers feel alienated from and reject their school. participatory extra-curricular activities;

(ii) computer laboratories and themulti-media libraries, financed underthe Secondary Education II project; and(iii) up-to-date technical equipment in42 technical schools, to be financed bythe proposed project.

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

3. Possible ControversialAspects:

The willingness of teachers needed in order to implement the proposed reform and the Polymodaltransformation is untested, while continuing rotating strikes and protests by teachers' unions cloud labor-management relations. The project will improve the timely payment of teachers and the Province willcreate a fund to raise their salaries. However, the improvement of the condition of services (procedureand practice on appointment, deployment, promotion, discipline and transfer), labor relations (code ofconduct, conflict resolution, etc.) and professional support (staff development, teachers organization,career paths, recognition mechanisms) are also key to increase teacher motivation and professionalism.These improvements will require a reform in teacher management; a process that will be supported by aproject under preparation and will take much longer that the duration of the proposed project. During thelife of the this project, however, the measures mentioned above (see risk number 6) will minimize therisks.

G: Main Loan Conditions

1. Effectiveness Conditions:

- The Province will provide a detailed plan for the implementation of the education sector administrativereform program described above.- Signing of a subsidiary counterguarantee agreement between the Borrower and the Guarantor.

2. Other [classify according to covenant types used in the Legal Agreements.]: none

H. Readiness for Implementation

[X] The engineering design documents for the first year's activities are complete and ready for the startof project implementation. [] Not applicable.

[X] The procurement documents for the first year's activities are complete and ready for the start ofproject implementation.

[X] Implementation of the project is already underway, particularly the construction of 9th gradeclassrooms. Substantial retroactive financing of approximately 25 % of loan amount is included inproject.

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

I. Compliance with Bank Policies

[X] This project complies with all applicable Bank policies.[X] The following exceptions to Bank policies are recommended for approval:An increase of retroactive financing from 10% to 25% of total loan was approved on February 10, 1998.

Task Team Leac\er/Task Manager: William Experton

Acting Sector Manager/Director: Xavier Coll

Country Manager/Director: Myrna Alexander

Annex 1


Project Design Summary

Notes:All key performance goals are for 2001, unless otherwise indicated.

* refer to indicators for the 200 targeted schools only.

Narrative Summary Key Performance Monitoring and Critical AssumptionsIndicators Evaluation

Sector-related CAS Goal: (Goal to Bank Mission)

1. Investing in long-term Increased access to Basic Project Evaluation Report Continuity of the Federalhuman resource Education, particularly of education policy.development by increasing the poor.economically active Commitment and stability ofpopulation with secondary Increased quality and the Provincial govemmenteclucation. relevance of what is taught education policy.

in 200 targeted at-risk2. Increased quality of Polymodal schools.*edlucation services.

3. Increased access of thepoor to basic social services.

Project Development (Objective to Goal)Objective:

1. Improve the completion Increase in enrollment in 9th PMR Continued demand forrate of secondary level grade of EGB3 from EGB3 and Polymodalstudents. 216,000 to 240,000 education.

Increase in transition rate PMRbetween EGB3 andPolymodal from 93% to98%.

Increase in completion rate PMRof Polymodal level 18.5% to50%.*

2. Improve the learning Increase in the achievement Standardized Achievementprocess at the school level. scores in Spanish and Test Report /PMR

Mathematics in Polymodalschools measured in the lastgrade of this level.Spanish from 63.60% to68.05% and Mathematicsfrom 64.70% to 67.90%.*

Reduction of repetition rate PMRfrom 15.6% to 7%.*

3. Improve the skills of 30% reduction of time PMR Willingness of private firmssecondary graduates in necessary for graduates to to collaborate with technicalorder to facilitate entrance enter the labor market.* (a schools.in the labor market. study will determine the

baseline)Outputs: (Outputs to Objective)

1. Access:

1.1. New 9th grade 1,336 new 9th grade PMR Province in able to constructclassrooms to accommodate classrooms. and rehabilitatethe demand for EGB3 infrastructure as scheduled.created by the extension ofmandatory education.

1.2. Increased proportion of 1755 rehabilitated schools. PMREGB schools in satisfactoryphysical condition. PMR

2. Quality and relevance:

2.1. Supervisors that are 100% of provincial PMR Efficient administration forpromoters of the education supervisors trained to the timely and synchronizedtransformation. provide guidance, school level implementation

monitoring and supervision of the various educationalduring the development and inputs necessary to improveimplementation of school- quality (educationbased plans (PEI).* resources, training, etc.).

2.2. Improved school Provision of training and PMRmanagement. technical assistance on

schools management to 80%of school principals andvice-principals on: schoolmanagement, administrationand pedagogicalsupervision.*

2.3. Development and 100% of PEIs, containing PMR Teachers are able andimplementation of school- clear school objectives and willing to participate inbased plans (PEI). strategy to achieve them.* transformation.

Increase in the percentage Social Assessment report/of teachers that work in PMRteam from 20% to 60%.*

2.4. Improved technical 69 technical "basic module" PMReclucation of equipment installed and

functioning.*

350 technical school PMRteachers trained in theutilization of the equipmentand technology subjectcontents. *

Schools actively PMRimplementing a plan toincrease collaboration withthe labor market (including:following-up graduatesinsertion in the labormarket, establishinginterships, getting donationsfrom firms and sellinggoods and/or services tofirms)*

2.4. Implementation of 25% of students Social Assessment report/ Adequate incentives forSchool-based participating in AIJE.* PMR students participation.extracurricular activitiesprograms. 50% of extracurricular Social Assessment report!

programs that foster PMRcollaboration between theschool an the community.*

Project Components/Sub- Inputs: (Components to Outputs)components: (see Annex 2for project description)

1. Expansion of Access: US$M 141.0 Directorate General ofCulture and Education/UEP

1.l. Construction of US$M 43.0 Project Statistics capacityclassrooms for the 9th gradeof the new EGB3 (7th to 9thgraLde of Basic Education).

1.2. Rehabilitation of EGB US$M 91.0 Project Statisticsschools.

1.3. Construction of school US$M 7.0 Project Statisticsbathrooms in the EGBschiools.

2. Quality and Relevance US$M 27.4Improvement:

Project Statistics2.1. Institutional US$M 4.6

strengthening at the schoollevel. Project Statistics

2.2. Restructuring technical US$M 14.2schools through theprovision of up-to-dateeducational resources andin-service teacher training. Project Statistics

2.3. Establishment of US$M 8.7school-based extracurricularprograms for youth. Project Statistics

3. Project Administration US$M 1.5

Annex 2


Project Description

The Third Secondary Education Project has the following Development Objectives:

(1) Increase access to third cycle of Basic Education and Polymodal secondary level.

(2) Improve the learning process in the targeted Polymodal schools.

(3) Improve the skills of Polymodal graduates in order to facilitate entrance in the labor market

In order to accomplish these objectives the project has three main components: (1) Expansion of Access; (2)Improvement of Education Quality and Relevance; and (3) Project Administration. A detailed description ofthese component follows:

Project Component 1 - Expansion of Access (total component cost of 141.0 US$ million)

Investments in school construction and rehabilitation has been neglected for a long time until about 1992.Consequently, most school facilities are in precarious conditions. These facilities are not adequate toaccommodate the demand, in particular now that the Province of Buenos Aires (PBA) has extended mandatoryeducation from seven to nine years of Basic Education (EGB) divided into three cycles (EGB 1, EGB2 andEGB3). In order to expand access to mandatory Basic Education and increase the number of students eligible toenter the new three-year Polymodal secondary education, the Expansion of Access component includes:

(i) The construction of classrooms for the 9th grade of the new EGB3 (7th to 9th grade of Basic Education);(ii) The rehabilitation of EGB schools; and(iii) The construction of school bathrooms in the same schools.

Each EGB school affected by this component has a single "civil work project" which articulates all the civilworks intervention. In this way, interventions do not pile up on top of each other, but follow a school buildingglobal plan. The school Cooperadoras (legally constituted associations composed by parents, teachers and schooladministrators in charge of raising and administrating local voluntary contributions to the school) will pre-selectlocal companies to take on the construction and rehabilitation works, with the final selection and hiring done bythe UEP. A team of inspectors financed by the project will assist the Cooperadoras and provide technicalassistance during the rehabilitation and construction works. This approach will optimize resources as local smallcompanies' labor is cheaper than larger construction companies' and the Cooperadoras' constant involvementwill keep companies accountable.

Project Component 2 - Improvement of Education Quality and Relevance (total component cost of 27.4US$ million)

This component will be targeted to 200 unprivileged and educationally at-risk Polymodal schools. It is composedby three sub-components which deal with interconnected aspects of quality and relevance of secondary education:

(i) Institutional strengthening at the school level (Programa de Fortalecimiento Educativo Institucional -

ProFEI): The institutional characteristics of the school and the education sector as a whole greatly affect thequality of the education provided. Weak institutions lack a mission and the capacities to effectively plan andmanage their activities towards specific objectives. This weaknesses translates into deficiencies in the provisionof services such as high teacher absenteeism, lack of motivation, inadequate utilization of educational inputs, lackof communication among school stakeholders, unprepared classroom lesson, among others. In order tocounteract this reality in most secondary schools in the PBA, this sub-component will finance three programsdirectly directed to the school level and the school supervisors:

a. Training for Supervisors: This will be done in two phases. In the first phase, all the provincial schoolsupervisors will receive training to teach them how to guide, monitor and supervise the development of theschool-based plan (Proyecto Educativo Institucional -PEI). This training is aimed at transforming thesupervisors from a mere administrators to a more proactive promoter of the educational transformation. Duringthe second phase, the supervisors working with the targeted school will be given a more specific and intensivetraining to improve their technical assistance and evaluation skills. Its is expected that after the project'scompletion, these supervisors will take on the roles and responsibilities of the project-funded "Orientadores" inthe provision of continuos assistance for the institutional development of the schools.

b. Training and technical assistance for school administrative teams: School principal and vice-principal will beprovided with training and technical assistance on school management, institutional administration, pedagogicalsupervision and the elaboration and implementation of a plan to increase collaborations between the school andthe labor market (see (ii)c. bellow). These skills will also be strongly linked to the managerial leadership theywill progressively take in the formulation of the school PEI.

c. Technical assistance for the development of the school PEI: A school PE1 Committee, a representative groupof school stakeholders (principals, vice-principals, department heads, other teachers, etc.), will be provided withdirect technical assistance to guide the participatory development of the school PEI. The PEI will be developed infour phases: (i) an institutional diagnostic of the school; (ii) the identification of institutional objectives based onthe diagnostic; (iii) the elaboration of the PEI document; and implementation of specific PEI activities. The mainprovider of technical assistance, the local "Orientador," will regularly visit the school to facilitate the creation ofmeeting and discussion spaces among school stakeholders, propose work strategies for the development of thePEI, provide consultation and training materials, etc.

d. Implementation of a permanent quality evaluation and monitoring system for the 200 targeted schools: Thissystem will be developed as a pilot in conjunction with the improvement of the information system financed bythe Secondary Education I project. It will supports project implementation and generate the needed knowledgeabout education reform at the secondary level by carefully monitoring the impact indicators and producingevaluation reports.

e. Pilot Experimentation of high standard curriculum and evaluation process corresponding to the InternationalBaccalaureat (IB) in five of the targeted schools: This will include seminars which will promote exchanges withschools already implementing the IB and intensive training of some selected teachers.

(ii) Restructuring technical schools: In order to prepare their students to meet the new market requirements, theeducation offered by the PBA technical schools has to become more relevant to the technological, economic andsocietal changes. Moreover, the quality of the education provided in technical schools, particularly attractingunderprivileged youth, has to improve. With these objectives, 42 targeted technical, among the 200 targetedschools serving unprivileged youth, will be restructured through:

a. The provision of up-to-date educational resources: Each school will receive a "basic module" of equipmentand resources which corresponds to its Trayectos Tecnicos Profesionales (TTP) or specialty. Thus there will befive "basic modules" for five TTPs (organizational management, electronics, food processing industry, chemicalprocessing industry, electromechanics, construction and agricultural production). The concept of "basic module"

was selected to: provide the same technical basis for a specific TTP in all schools; facilitate the provision ofteacher training in relation to the modules; permit and promote exchanges among schools (mobility of teachers,transfer students, sharing of experiences, shared utilization of equipment, etc.); and ease project implementation.

b. In-service teacher training in two areas: (1) training on the utilization of the technical education equipment andresources and (2) training on technical education pedagogical practices and subject content

c. Promotion of the creation of links between the technical schools and the private sector: This will be achievedby promoting donations from private firmns to the schools with the "credito fiscal" system and providing technicalassistance and training to school administrative teams to implement, under the PEI, a plan to increasecollaborations between the school and the labor market. Among the actions that will be included in this plan are:following-up graduates insertion in the labor market, establishing interships, getting donations from firms andselling goods and/or services produced by the school to firms.

(iii) Establishment of school-based extracurricular programs for the youth (Programa de Apoyo a lasIniciativas Juveniles en la Escuela - AIJE): The school culture prevailing in most Buenos Aires secondaryschools does not promotes formal or informal youth involvement. On the contrary, schools are usually isolatedfrom youth and local community initiatives and activities. This situation is particularly acute in poverty areas. Tocounteract this situation, the AIJE program intends to actively involve youth people in extracurricular activities inthe school. The goals are to provide attractive alternatives for youth which are prone to getting involved in riskybehavior (alcoholism, drugs, early pregnancy, etc.), improve the communication between teachers and students,make the school more attractive to students, and promote collaboration between the school and the localcommunity. The implementation of this sub-component will entail:

a. Technical assistance, training, and financial support for the participatory formulation and implementation of theschool AIJE project: The school will form a AIJE school committee conformed by one or two teachers, oneparent, one student, and one community representative in charge of leading the formulation and implementationof the AIJE. Each AIJE project will consist of two type of activities, in areas such as communication, art,community support, sports, elected by the school body. The AIJE committee members will be paid the equivalentto 8 teaching hours per month. The necessary expenses to implement the AIJE projects will be covered through amonthly per-student transfer to the participating schools. Projects that involve cooperation among schools andwith the local community will be promoted.

b. Project Competition: In order to reward the best projects an annual competition will take place. The reward isa grant to complement AIJE financing which will allow the school to acquire more equipment or organize specialactivities under the AIJE project. By the conclusion of the proposed project, most schools will have received areward.

c. Special activities and contests for participating schools: activities and contest such as sport games, art shows,plays, school newspaper competitions, etc., will be funded to promote interactions among participating schools.

Project Component 3 - Project Administration (total component cost of 1.5 US$ million)

A provincial Project Implementation Unit (UEP) is already implementing Secondary Education I and II. Thesame unit has been expanded in order to administer the proposed project. For the administration of the threeproject, the UEP has been staffed with a total of 30 professionals, of which only 17 will be financed by theproposed project. The UEP composition is as follows: One UEP General Coordinator, one Sub-Coordinator forthe three project, three Sub-Coordinators for the Infrastructure, Education and Administrative Reform which willwork across the three projects and a team of 25 junior professional in five support areas (contracting, auditing,accounting administration, legal, and educational administration). The UEP will be responsible for thecompliance with Bank's financial monitoring and auditing requirements.

Annex 3


Project Articulation Description

The proposed Secondary Education III project has been designed to complement and reinforce the two ongoing secondaryeducation projects. Together the three operations form a package which will accelerate the implementation of thesecondary education reform in the PBA. The three operations focus on the following:

The Secondary Education I project, in the Province of Buenos Aires, will finance improvements in three areas:

(1) Sector administration, including the implementation of (i) a decentralized model for sector management; (ii) an humanresources administration system; (iii) a financial administration system; (iv) the simplification of administrativeprocedures; (v) a sector information system; (vi) a management and maintenance plan of the sector infrastructure; and(vii) a quality evaluation system.(2) Education quality, by (i) providing computer equipment to EGB3 and Polymodall schools and (ii) implementing thesecond phase of the PTENM.(3) School rehabilitation to accommodate the increasing demand due to expansion of mandatory education.

In addition, Secondary Education II project for the Province of Buenos Aires is financing:

(1) Essential educational resources (e.g., library, computer and science laboratories); and(2) school-based improvement projects (Proyectos Institucionales Especificos - PIEs) in 200 secondary schools servingpoor and low achieving students.

Secondary Education III will be linked to these two ongoing projects' components by:

(1) Finalizing the expansion and rehabilitation of EGB schools, particularly of 9th grade classrooms, in order toaccommodate the growing demand due to the extension of mandatory education.(2) In the 200 secondary school targeted by Secondary Education II: assisting schools with the transition to thePolymodal and improving school management by supporting the development of the PEI; supporting an extracurricularprogram from youth; and providing supplementary educational materials and training for 42 technical schools. Inaddition, the project will implement a quality monitoring and evaluation system for the targeted schools connected to theprovincial information system financed by Secondary Education I.(3) Connecting these investments on access and quality to the progress of the provincial education sector administrativereforn, supported by Secondary Education I.

The following graph, illustrates the projects' articulation.

Annex 3


Project Articulation Graph

Secondary Education I- Administrative reform US$ 8.2- Rehabilitation of 8th grade mprovng the managementclassrooms US$ 7.6 o

- Second phase of the polymodal f the education sectortransformation (PTENM) US$ 1.7 _

Loan TOTAL US$ 17.5

Secondary Education II

- Basic educational resources xpanding access to- School-based improvement mandatory Basic Educatioil

projects (PIEs) E

Loan TOTAL US$47

Secondary Education III- C'onstruction of 9th grade classrooms , t * of

and rehabilitation of EGB schools US$94 Impronng the quality of- Improvement of Education US$ 23.7 education in 200 targeted

Quality and Relevance polymodal schools- P'roject implementation US$ 1.3

Loan TOTAL US$ 119

Notes:- Secondary Education I and II loan totals correspond to the portion of the loan directed to the Province of Buenos Aires.- All dollar figures are in millions.

Annex 3

PROVINCE of BUENOS AIRES, ARGENT[NAThird Secondary Education Project

Projects Objectives and Impact Indicators; chart

Project Objectives Indicators and Target

Secondary Education I 1. Improved sector management. l.a. 10.8% increase in provincial(indicators for sub-project government expenditure in education.corresponding to the PBA) l.b. Increase of investment destined to

educational goods and services in theeducation budget from 2,8% to 4%.I.c. Decrease in the percentage ofadministrative expenditures in the totaleducation budget from 7,48% to 6,9%.l.d. Decrease in cost per secondaryeducation graduate.

Secondary Education II 1. Increase access to secondary 1. Secondary school enrollment from(indicators for all participating education. 452,000 to 500,000 students.provinces including PBA) 2. Reduce repetition rates. 2. Repetition rate from 10.4% to 9.4%.

3. Increase quality and efficiency of 3. Improvement in standardized testsecondary education. results in mathematics, Spanish and4. Increase efficiency in the utilization science.of educational resources. 4. Student-teacher ratio from 8.47 to 12.

Proposed Secondary Education m 1. Increase access to third cycle of 1. Increase in enrollment in EGB3 from(Province of Buenos Aires) Basic Education and Polymodal .... to

secondary level 2. Increase in transition rate between2. Improve the learning process in EGB3 and Polymodal from .... % toPolymodal schools. .... %.*3. Improve the skills of Polymodal 3. Increase in completion rate ofgraduates in order to facilitate entrance Polymodal level 18.5% to 50%.*in the labor market. 4. Substantial increase in the

achievement scores of Polymodal schoolstudents for Spanish and mathematics.*5. Reduction of repetition rate from ....%

6. Significant reduction of timenecessary for graduates to enter the labormarket from .... to .*

(* only for the 200 targeted Polymodal schools)

Annex 4


Estimated Project Costs

Project Component Local Foreign Total-----------------------US $ million--

Expansion of Access 131.7 0.3 132.0Building classrooms 40.1 0.3 40.4Rehabilitation of EGB schools 85.2 - 85.2Construction of bathrooms in EGB schools 6.4 - 6.4

QiLality and Relevance Improvement 15.6 11.0 26.7Institutional strengthening at the school level 4.4 - 4.4Restructuring technical schools 2.8 - 13.8Establishment of school-based extracurricular activities 8.4 - 8.4for youth

Coordinating Unit 1.4 - 1.4

Total Baseline Cost 148.7 11.3 160.0Physical Contingencies 8.0 - 8.0Price Contingencies 1.8 0.2 2.0

To,tal Project Cost 158.5 11.5 170.0

Annex 5


Cost Benefit Analysis Summary,

Note: The complete Cost Benefit Analysis Document is available upon request

The project has two main outputs: expansion of access to 9th grade education and increased quality of secondaryeducation in targeted schools. About 83 percent of total project cost will finance the first component, which essentiallyaims to expand supply of 9th grade public school places for about 40,000 to 59,000 students per year. Ninth grade is thelast year of the compulsory basic education cycle, which the Bank supports. For project decision, therefore, cost-benefitanalysis is not relevant. What is relevant is its cost-effectiveness, analysis of which is given in the second part of thisannex.

The second component will benefit about 150,000 secondary students per year. The benefits potentially includereduction in repetition rates and increased learning achievement of children. Reduction in repetition rates means thatchildren can enter the labor force and earn income earlier. It also means savings in school cost. These benefits can besubstantial. There is no available information, however, with which to estimate how much reduction in repetition andincrease in learning achievement the second component of the project will generate. For this reason and the size of theExpansion of Access component, the mission restricts its quantitative analysis on the first component.

The Govermment of Buenos Aires provided the Bank an estimate of the internall rate of return (IRR) from increasedincome due to the additional supply of 9th grade school places. The IRR was estimated to range from about 15 percent to30 percent, depending on whether the income gain is made to diminish with age or not. The mission considers theseestimates to be unrealistically high. The income gain used was not due to a year of secondary education. It was ratherdue to multi-year differences in education because of the way the data was aggregated.

The above-mentioned IRRs contrast with education sector rates of return to an extra year of education by Carola Pessino(1995). In 1993 the private rate of return to education was about 10 percent in (Greater Buenos Aires. For males aged 25-54 the rate appears to have risen from about 9.0 percent in 1990 to approximately 11 percent in 1993. More importantly,for the present purpose, an additional year of secondary education for males aged 25-64 appears to have a rate of return inthe neighborhood of 10 percent from 1990-1994.

The private rate of return to a year of secondary education would probably be higher, if one includes its consumptionvalue. From the perspective of public finance principle, the above consideration is not a sufficient justification for publicfinance of the proposed expansion of ninth grade enrollment. Social efficiency requires that subsidy for educationexpansion should, strictly speaking, be based on the value of the externalities generated by an additional year of schooling-- not on private returns. There are, however, no quantitative estimates of the value of these externalities. Nevertheless,following conventional wisdom, the project argues that these externalities are substantial in terms of preventing juveniledelinquency, reducing the cost of governance and increasing social capital.

Equally important, the project argues that by providing universal access to ninth grade, income distribution will beimproved considerably. As net enrollment rate approaches a hundred percent, the additional students entering ninth gradeare likely to come predominantly from the poor. Caution is, however, called for. It is possible that equity could sufferwhen poor families are forced to send their children to school and the private return to them (relative to the well-off) islow.

Apropos this concern, estimates by Pessino (1995) shows that in 1993 the average rate of return to education for bluecollar workers is only 3.0 percent. This low rate of return is probably due to a self-selecting problem. But, this could alsomean that schools attended by the poor need to become more effective in educating their children. This could also mean

that much of the gain from education comes from shifting out of blue collar jobs, which the poor are probably less able todo with the current inflexibility of the labor market and low quality education. Either way these observations point to theimportance of the quality improvement component of the project and of paying adequate attention to the effectivenesswith which poor children are taught in school.

This brings the analysis to its final point. As mentioned, the civil works component of this project can be justified by theneed to build up physical capacity to ensure that no eligible children obligated to complete the ninth grade is unable to goto school because of lack of classrooms. But from the Bank's perspective its main value added is in the opportunity thatthe project creates for a thoughtful, systematic, and continuous dialogues between the PBA government on policy andstrategic education issues. In this regard, it is important to keep in mind that the key benefit from this project lies in theproper implementation of the quality improvement component, its ability to stimulate more effective education of the poorand disadvantaged, and encourage better financing of the education sector.

Summary of Benefits and Costs: The social rate of return is probably about 10 percent; it is more if the consumptionvalue of education and its external effects are taken into account.

Main Assumptions: (1) Use of Mincerian rate of return estimates. (2) Self-selection is negligible. (3) The calculated rateof return indicates only income effect. (4) No information for meaning cost-benefit analysis of quality component.

Sensitivity analysis / Switching values of critical items: The value of the critical items that should enter into thecalculation of social rate of return are difficult to quantify. These refer to the consumption value of education and itsexternal effects on good citizenship, cost of governance, public health and other contributions to social capital.

Annex 5


Cost Effectiveness Analysis Summagry

Note: The complete Cost Effectiveness Analysis Document is available upon request

A. To make the project cost-effective, the government analyzed three major choices regarding civil works. The issue washow to expand the capacity of the education system to accommodate additional enrollment in the 9th grade and ensurethat existing schools, many of which are old and dilapidated, fit the requirements of the new curriculum and qualityimprovement efforts. These three choices are:

(i) New schools. The first option considered was to replace with new buildings schools that are so dilapidated, old anddeficient that their rehabilitation would have cost more than 55 percent of the cost of building a new one. This wasjudged to be too costly. A new building with nine classrooms, central services and external refurbishment would costabout $645,000. Hence, no new buildings are included in the project. (Note, however, that 216 new schools were built in1996/97 and another 76 will be built in 1998 outside the purview of the project.)

(ii) Total renovation. The second option is total renovation of all functionally deficient schools. This implies, aside fromhigh cost, civil works that would have to be done during the school year and that would be totally intrusive and disruptiveof classes. Hence, only 12 interventions of this type are included in the project.

(iii) Construction of additional classrooms, rehabilitation and enhancement. The approach here is to do relatively"undisruptive" school improvements such increasing the number of classrooms, adding toilets and rehabilitation ofdeficiencies. Unit costs are estimated to be:

Additional classroom (gross/planta baja) $22,550Additional classroom (gross/planta alta): $25,969Toilet module $30,515Average rehabilitation $49,664

This option was chosen as the best approach because it is significantly cheaper, hless disruptive, and appropriate forexisting schools needing additional classrooms to meet increased community dernand.

B. Having opted for the last approach to meet required school capacity expansion and improvements in physicalinfrastructure, the government then examined two choices with respect to constraction technology:

(i) Industrial technology. Use of industrial system was studied but was found to be inappropriate for the followingreasons:

(a) Location and variety of civil works needed. The limited number of civil works located in different types oflocality needing various kinds of improvements makes intensive use of industrial modules impractical anduneconomical. Existing schools are not uniformly designed. Hence, adcLitional classrooms, toilets and otherrehabilitation efforts need to be tailored to the schools' unique characteriistics.

(b) Management and community involvement. The project decided that construction should be decentralized andmanaged by Cooperadoras with the active involvement of the community. Traditional methods, tierefore, wouldbe more appropriate (see below).

(c) Cost. Due to high transportation cost, the scarcity of local specialized skills needed to install industrial type

construction, and the limited size of the market (absence of economies of scale), it was estimated that use ofindustrial technology would cost 25 percent more than traditional methods.

(d) Maintenance. Maintenance would be problematic due to lack of local specialized skills and the non-existenceof local supply of pre-fabricated materials.

(ili) Traditional construction method. As mentioned, traditional construction methods favors decentralization andcommunity involvement, employment of local labor and materials, and lower unit cost of construction and maintenance.

To ensure that on average the unit cost of construction is not unreasonable, the mission got various cost estimatesper square meter, using traditional construction method and roughly comparable civil work (Table below). Some of theestimates are based on private experience; others came from government projects such as Plan Social Educativo. Thesecomparative estimates show that Prodymes l's proposed cost per square meter is quite reasonable. It is lower than theunit cost of Plan Social Educativo, which is a well regarded Federal program.

Source Cost per meter ($)Clarin (office) 812Clarin (house) 722Housing review 620Plan Social Educativo 600Proposed project 567

The issue of using private schools to accommodate additional enrollment was also examined. There is no clear evidencethat it is more cost effective to enroll 9th grade students in private schools than to expand the capacity of public schoolsunder Prodymes IIl. Cost per student for EGB III, including personnel, infrastructure and other costs, has been estimatedto be about $1,174 for private schools, while the unit cost of expanding enrollment capacity under the project is only$657. It is possible that children in private schools learn more because of better education. There is no evidence,however, in Argentina that the difference in learning achievement between private and public school children is as largeas the cost differential.

Annex 6


Financial Analysis

Note: The complete Financial Analysis Document is available upon request

A Financial analysis was performed to evaluate the recent fiscal performance of the Province of Buenos Aires and thefiscal impact of the proposed Secondary Education III Project. The main purpose was to establish whether the provincehas sufficient resources to finance both future debt service generated by the project and incremental operational costsgenerated by the physical investments conducted under the project.

Credit Ratings:

For the Province's last international bond issue in 1996, Moody's gave a rating of B1 and Standard and Poor's gave arating of BB-, the same rating prevailing for the federal Government at that time. This relatively positive assessmentprobably is due to two factors: (1) the Province's relatively strong fiscal performance in recent years; and (2) arecognition of the Province's importance within the country, with approximately 39 percent of the country's populationresiding within its jurisdiction.

In termns of the Bank's fiscal eligibility criteria for access to loans, the Province passes all three, with respect to theirperformance in both 1996 and 1997: (1) a positive current balance; (2) debt service less than 15 percent of currentrevenues; and (3) a debt stock less than 60 percent of current revenues. The IDB has also judged the Provincecreditworthy for access to direct-to-province loans.

In addition, in the Bank's Provincial Finances Study, the Province of Buenos Aires was ranked fourth among provinces,based on a variety of economic, political and fiscal indicators. The only provinces ranked higher were two smallprovinces, La Pampa and San Luis, which have a long history of fiscal discipline, and the Municipality of Buenos Aires.

Fiscal Impact of the project:

The project would have a relatively minor fiscal impact. When fully disbursed, the $119 million loan would representonly 1.2 percent of projected current revenues, and the debt service on this loan would represent only 0.1 or 0.2 percent ofcurrent revenues. The classroom expansion and school rehabilitation programmed for the project would lead toadditional operational costs for maintaining the newly expanded schools. These additional annual operational costs areestimated, by the Province, to be in the range of $26 million to $38 million, representing only 1.1 to 1.6 percent of total1996 educational expenditures.

Fiscal Impact of Additional Annual Operational Costsdue to civil works under the project

(Pesos, Millions)

low high low high--Additional personnel 24.3 35.6 1.3% 1.9% -As a % of 1996 personnelexpenditures expenditures in education--Additional 2.0 2.4 2.7% 3.3% --As a % of 1996 good/servicesnon-personnel expenditures expenditures in education

-As a % of total 1996Total additional operational costs 26.3 38.0 1.1% 1.6% leducation expenditures

Annex 7

PROVINCE of BUENOS AIRES, ARGENTINATlhird Secondary Education Project

Social Assessment

Note: The complete Social Assessment Document is available upon request

Objectives and methodology

1. Thie Social Assessment (SA) is composed of two phases. The first one took place during project preparation and thesecond one will be undertaken during project implementation. Activities during preparation included: (i) focus groupswith primary stakeholders, including students, teachers, directors, parents and community-based organizations; (ii)consultation with the authorities of the provincial education sector and the project Task Manager in order to present themain ideas of the project during the focus groups and to discuss the participation of civil society during itsimplementation.

2. Thirty-six focus groups were held in 9 public schools, 6 in the greater Buenos Aires area and 3 in a middle size andsmalll cities of the Province. The schools that participated belong to the three highest NREE (the Province ranks theeducational-risk from level 1-minimum- to level 4 - maximum-). One focus group for each kind of stakeholder wasformed in each school, with a total participation of: 34 directors and vice-directors (representatives of 33 public schools),43 teachers, 51 students, 41 parents (some of them were representing community based organizations).

- T he main objectives were to review the impact of educational reform in poor areas and the possible obstacles to thereform implementation in terms of stakeholders' expectations and needs.

- The secondary objectives were to review the stakeholders views and possible social impact of three specific areas ofthe proposed project: the extracurricular program (AIJE), the improvement of the skills of secondary graduates inorder to facilitate entrance in the labor markets, and the improvement of learning processes in secondary schools.

Results:

1. There is a general consensus among primary stakeholders about the necessity of the transformnation and improvementof the secondary schools in the Province of Buenos Aires.

2. To fulfill the demand for education and meet the needs of the poorest children, it is important to integrate coverageactions with quality actions. However, the problem of access is not only an educational problem, since there aresocioeconomic barriers.

3. The commitment to the reform varies greatly among actors. Teachers and directors are deeply committed to thereform, while parents and students do not have enough information about the reform and show very weakc,ommitment.

4. The opening of the schools to the extracurricular program (AIJE) properly answers community needs. The school isperceived as a community space, as an attractive place and as a space for social congregation.

5. Some groups see problems with the utilization of the school building during non-regular hours. In particular, teachersand directors say that this could create a problem since "a regulatory framework does not exist for the implementationof extracurricular activities."

6. Teachers' lack of time availability does not facilitate a participatory approach, the generation of innovative projectsand opening of channels of communication and collaboration with the community.

7. Student perceive that: (i) there are very few job opportunities; and (ii) the job that they could get is not related to theslkills they get at school.

8. The school stakeholders want to be consulted on the reform process. The social assessment was regarded as apositive development by most participants in the focus groups.

9. There is consensus about the need of gender equity. Gender bias still prevails in technical schools, but it is changingquickly.

Conclusions for the Project:

The assessment concluded that the proposed project will adequately respond to the social issues raised by the stakeholdersby including the following:

1. An adequate mix of quantitative and qualitative measures to improve secondary education.2. A participatory approach, particularly in the Institutional Strengthening at the School Level sub-component (ProFEI).3. Specific administrative measures will increase the time that teachers can dedicate to extracurricular program (AIJE).4. The implementation of the new Polymodal curriculum aimed at improving the relevance of secondary education.

Annex 8


Procurement and Disbursement Arrangements

Procurement

Project Costs by Procurement Arrangements (Table A)

Prior Review Thresholds (Table B)

Procurement Schedule for Year One of Project Implementation Table C)

Disbursement

Allocation of Loan Proceeds (Table D)

Disbursement Schedule (Table E)

Annex 8, Table A: Project Costs by Procurement Arrangements

(in US$million equivalent)

Expenditure Category Procurement Method Total Cost (includingcontingencies)

ICB NCB Other N.B.F.

1. Works 40.3 91.0 131.3(25.8) (58.2) (84.0)

2. GoodsEquipment 14.2 3.8 18.0

(12.8) (3.4) (16.2)Materials and Supplies 2.9 2.9

(1.7) (1.7)

3. Technical Assistance 17.0 17.0(17.0) (17.0)

4. Recurrent Cost 0.8 .8

Total 14.2 44.1 110.9 0.8 170.0(12.8) (29.2) (76.9) (119.0)

Figures in parentheses are the amounts to be financed by the Bank loanICB = Intemational Competitive BiddingN.B.F. = Not Bank-fnancedNCB = National Competitive BiddingOther = Includes Local Shopping

Annex 8, Table B: Thresholds for Procurement Methods and Prior Review(US$1,000 equivalent)

Category Contract Value (Thresholds) Proctarrement Method Contracts Subject toPrior Reviews By Bank

Works 350 to 5,000 NCB First two contractsAll contracts > 500

<350 Three quotations First two contracts

Goods >350 ICB All100 to 350 NCB First two contracts

<100 Shopping First two contracts

Consulting ServicesFirms QCBS >100

QCBS and CQ <100: TORs onlyIndividuals Individuals >50

Individuals <50: TORs onlyExemption from prior review does not apply to consultant contracts below the threslholds in cases of: single source selection of firms,assignments of critical nature, and amendments to contracts raising the original value above the threshold

ICB = International Competitive Bidding; NCB = National Competitive Bidding; QCBS = Quality-and-Cost Based Selection;CQ = Consultant Qualification (only acceptable for contracts costing US$ 100,000 or less)

Procurement of works, goods and services financed in whole or in part under the loan, will be carried out in accordancewith Guidelines for Procurement under IBRD loans and IDA credits (January 1995 version, revised on January, August1996 and September 1997). The Bank's Standard Bidding Documents for the Procurement of Goods (Spanish version)will be applied in International Competitive Bidding; and model bidding documents previously agreed with the Bank willbe used for contracting goods and civil works under National Competitive Biidding.

In contracting consulting services, the Guidelines for Selection and Employment of Consultants by World BankBorrowers (version January 1997, revised September 1997) will be applied. A Spanish translation of the Bank's StandardRequest for Proposals documents will be used when soliciting proposals from shortlisted firms.

Most procurement would be carried out at central level by the UEP. The UEP will include 3 full-time procurementofficers and 6 administrative staff whose main responsibility will be to: (a) prepare and submit to the Bank allprocurement documents which require Bank's prior review; (b) carry out any procurement at central level; (c) coordinateand monitor procurement carried out by each executing unit; and (d) prepare and submit to the Bank at the beginning ofeach calendar year a detailed procurement schedule. The appointment of the procurement officer will be done inconsultation with the Bank. At project launch, the Bank will deliver a procurement workshop to present and explainprocurement guidelines and commence preparing specific bidding documents.

Civil works. The project would finance civil works to rehabilitate schools and construct classrooms and bathrooms inEGB schools for a total amount of US$131.2 million equivalent. No new buildings/schools are expected to beconstructed under the project. Contracts estimated to cost US$350,000 equivalent or above will be awarded followingNational Competitive Bidding procedures. It is estimated that approximately 20% of total civil works contracts -representing about US$40.3 million or 30% of total allocation for civil works- will fall in this category. Civil worksestimated to cost less than US$350,000 equivalent will be awarded on the basis of lump-sum fixed price contracts, with atleast three quotations from pre-selected qualified contractors. The list of preselected qualified contractors will beprepared and updated periodically by the School Cooperadoras; however the comparison of quotations and final contract

For contracts between US$100,000 and US$200,000 the Borrower has to submit to the Bank only the results of the technicalevaluation (no the evaluation report).

award will be carried out by the UEP. A team of inspectors financed by the project will assist the Cooperadoras andprovide technical assistance during the rehabilitation and construction works. It is estimated that approximately 80% ofcivil works contracts -representing about US$91.0 million equivalent or 70% of total allocation for civil works- will fallunder this category.

Goods. The project would finance equipment, materials and supplies for a total amount estimated at US$21.0 millionequivalent. Whenever possible, contracts will be bulked into large packages estimated to cost US$350,000 equivalent ormore and will be tendered following International Competitive Bidding procedures; it is estimated that about US$14.2million equivalent of the total allocation for goods will fall under this category. For bidding packages estimated to costless than US$350,000 equivalent National Competitive Bidding will apply; about US$3.8 million would be contractedfollowing this procedure. In case of goods estimated to cost less than US$100,000 equivalent, National or InternationalShopping may be applied, for up to US$2.9 million equivalent.

Technical Assistance. The project would finance consulting services including training, supervision of works, specialistsservices (such as legal and accounting support,) and related support for a total estimated at US$17.0 million equivalent.In cont-acting consulting firms, the selection will be on the basis of Cost and Quality (QCBS). When contractingindividual consultants, the criteria for selection will be based on qualifications.

Review by the Bank of Procurement Decisions. The Bank's prior review will include: (i) all bidding documents,evaluation reports and contracts for ICB; (ii) all NCB tenders for civil works contracts estimated to cost US$500,000 orabove; (iii) the first two NCB tenders for goods: (iv) the first two NCB tenders for civil works estimated to cost less thanUS$500,000; (v) all Request for Proposals packages (letter of invitation, terms of reference, draft contract) for contractingconsulting firms for contracts estimated to cost US$100,000 equivalent or above -in case of contracts estimated to costUS$200,000 or above, the Bank should review the technical evaluation before financial envelopes are opened-; and (vi)all selection processes for contracting of individual consultants for the amount of US$50,000 or above per year.Additionally, the Bank shall review ex-ante all extensions of contracts for consulting firms or individual consultantsraising the total contract value above US$ 100,000 or US$50,000 equivalent, respectively.

For contracts not subject to the Bank's prior review (NCB -except for the first two-, Shopping, or consulting contractswith firms or individuals below US$100,000 and US$50,000 equivalent, respectively) model documents previouslyagreed with the Bank shall be used. These contracts will be subject to sampling post-review by Bank staffduringsupervision missions.

At pre-appraisal, the Borrower presented a procurement plan for the first year of project implementation acceptable to theBank (Annex 6, Table C). During annual review meetings the Bank would review the procurement schedule for thefollowing year, including international or national tenders, as well as the number and estimated costs of the sub-projectsto be financed under the loan.

Annex 8, Table C. Procurement Schedule for Year One of Project ImplementationPeriod: FY98

US$ 1,000 equivalent

1 2 3 4 5 6 7 8Date of

Estimated General Receipt of Date of Specific Evalust. SignedValue of Procurement Procurement Bidding Does. FProcurement Date of Bid Report in Contract

Contracts Contract Method Notice in IBRD Notice Opening IBRD in IBRD

A.Works PQn/98 () <300 PQ 4/1/98 N/A N/A N/A N/A N/A

R.Technical Assistance

B. I Consultant 42 B.G 4/1/98 4115198 N/A N/A N/A 5/15/98Pedagogical MonitoringB.2 UCP Staff) 100 B.G 4/1/9S 4/15/98 N/A N/A N/A 5/15/98

B.3 (T.As ) 133 B.G 4/1/98 4/15/98 N/A N/A N/A 5/15/98

B.4 (Equip. Cons.) 36 B.G 4/1/98 4/15/98 N/A N/A N/A 5/15/98

B.5 (AccL Cons.) 36 B.G 4/1/98 4/15/98 N/A N/A N/A 5/15/98

B.6 (2 Monitoring 72 B.G 4/1/98 4/15/98 N/A N/A N/A 5/15/98Consultant ) I I_I

C. Equipment

C.l. LPI 1/98 6,300 ICB 4/1/98 5/1/98 7/1/98 8/16/98 9/16/98 10116/98(Technical Equipment)C.2. LPI 2/98 3,300 ICB 4/1/98 5/1/98 7/1/98 819/98 9/1898 10/19/98( School funitue)C.3. WL ( Vehicles) 350 ICB 4/l/98 5/1/98 7/1/98 82/198 9/25/98 10/20/98

C.4. PQn/98 ) 78 PQ 4/1/98 N/A N/A N/A N/A N/AComputers Equipment)

N/A= Not Applicable B.G.: Bank's Cons.Guidelines

Annex 8, Table D: Aliocation of Loan Proceeds(US$ million equivalent)

Expenditre Category Anount In US$mWon Financing Percentage

1. Civil Worics 80 63%

2. GoodsEquipment 16.0 100% foreign and 70% local

expendituresMaterials and Supplies 1.7 60%

3. Technical Assistance 15.5 100%

5. Unallocated 5.8

Total 119

Annex 8, Table E: Disbursement Schedule3

(US$million equivalent)

Quarter ending Appraisal estimate CumulativeFY98

First SemesterSecond Semester 51.9 51.9

FY99First Semester 51.9 103.8

Second Semester 5.3 109.1

FY00First Semester 5.3 114.4

Second Semester 2.1 116.5

FYO1First Semester 2.5 119.0

The proposed loan would be disbursed over a period of three years up to June 30, 2001 (Annex 6, Tables D and E). Theproject completion date (i.e. the final date for presentation of requests for approval or authorization to disburse in respectof sub-projects would be June 30, 20001). The project closing date would be December 31, 2001, six months after thecompletion date.

Retroactive Financing. The Bank would finance contracts retroactive for eligible expenditures incurred up to 12 monthsprior to the expected date of loan signing, up to 10% of the amount of the loan, unless an exception is granted. Thesefunds would be used to finance eligible sub-projects approved in line with the eligibility and appraisal criteria acceptableto Bank.

Documentation. The UEP would present full support documentation for all withdrawal applications with a contract valueof US$300,000 for civil works, US$250,000 for goods, US$50,000 for service of consulting firms, and US$20,000equivalent for individual consultant contracts. The UEP would submit withdrawal applications of smaller contract valueshaving a statement of expenditures (SOEs), and would maintain the respective supporting documents for Bank review.

Special Account. The Province of Buenos Aires would open a Special Account at Banco de la Naci6n with an initialdeposit of US$13 million equivalent. This would correspond to about four months of expenditures required under theproject. The Project Coordination Unit would request the Bank to replenish the special account on the basis of standarddisbursement procedures. Withdrawals from the special account would be supported by sufficiently detaileddocumentation or SOE in accordance with Bank disbursement procedures.

Financial management, accounting and auditing. The Project Coordinating Unit would be audited annually by auditorsacceptable to the Bank. No later than six months after the end of its fiscal year, the project Coordination Unit wouldsubmit to the Bank copies of audit reports containing the auditor's opinion on (a) project accounts, including statement ofexpendiitures and the Special Account; (b) whether procurement was carried out in accordance with Bank guidelines; and(c) the adequacy of internal controls to minimize the possibility of misuse of funds or other improprieties.

3Loan assumed to be effective by July, 1998.

Annex 9


Project Processing Budget and Schedule

A. Project Budget (US$000) Planned Actual(At final PCD stage)

US$200 US$119

B. Project Schedule Planned Actual| (At final PCD stage)

Time taken to prepare the project (months) 9First Bank mission (identification) 08/05/1997 08/05/1997Pre-Appraisal mission departure 12/08/1997 12/08/1997Appraisal Date 03/02/1998 02/10/1998Planned Negotiations Date 03/04/1998 03/13/1998Board Presentation Date 05/1.2/1998 04/09/1998Planned Date of Effectiveness 07/01/1998

Prepared by: Directorate General of Culture and Education/UEP

Preparation assistance: French Consultant Trust Fund

Bank staff who worked on the project included:

Name Specialty and/or Project ResponsibilitySandra Cesilini Local Consultant and NGO Specialist in charge

of the Social AssessmentSandra Guti6rrez Project AssistantWilliam Experton Task ManagerJacques Mazeran Technical Education Specialist in charge of

evaluating the Restructuring Technical Schoolssub-component

Jos6 Moscoso Procurement SpecialistVicente Paqueo Economist in charge of Cost-Benefit and

Cost-Efficiency AnalysesLuis Pisani Principal Operations Officer in charge of

evaluating the Quality and Relevancecomponent

David Rosenblatt Economist. in charge of the Financial AnalysisElena Rodriguez Task AssistantLuis Secco Arquitect iin charge of evaluating the

Expansion of Access componentRudolf Van Puymbroeck Project LawyerAracelly Woodall Project Costing

Annex 10

PROVINCE of BUENOS AIRES, ARGENTINAThird Secondary Education ProjectDocuments in the Project File*

*Including electronic files

A. Project Implementation Documents:

1. Project Implementation Plan for the Expansion of Access Component2. Implementation time table and budget for Improvements in Quality and Relevance of Education

Component

B. Bank Staff Assessments:

1. Economic Analysis: Cost-Benefit and Cost-Effectiveness2. Financial Analysis3. Social Assessment

C. Projiect history documents:

1. Aide Memoires for Identification, Preparation and Pre-Appraisal missions2. Back-to-Office Reports for Identification, Preparation and Pre-Appraisal missions3. Project Concept Document4. Comments on Project Concept Document5. Minutes of the PCD review meeting6. Detailed Cost Tables

D. Pro ject background documents presented by the Directorate General of Culture and Education (DGCyE):

1. Project Preparation Documents in each sub-component2. "El Polimodal: Programa de Transformaci6n" (The Polymodal transformation progran)3. "Informaci6n Basica Preliminar" (Basic educational and socio-economic for the Province of Buenos

Aires)4. Situation of Secondary Schools Report (PTENM first phase)5. Provincial Education Sector Administrative Reformn program6. Document on Buenos Aires School Infrastructure

E. Relevant Legal Documents:

1. Federal Education Law2. Provincial Education Law3. Federal Education Pact4. Law for the creation of the COPRET

F. Other projects' documents relevant to the proposed project:

1. Secondary Education I project Implementation Plan for the Province of Buenos Aires2. Secondary Education II Project Implementation Plan

Annex 11PROVINCE of BUENOS AIRES, ARGENTINA

Third Secondary Education ProjectStatement of Loans and Credits

Number of Closed Loans/credits: 48

AR-PA-5945 L26410 1986 GOVERNMENT WATER SUPPLY 60.00 0.00 20.03 1.64AR-PA-5968 L28540 1987 SEGBA SEGBA V 276.00 0.00 0.00 68.45AR-PA-5977 L32810 1991 ARGENTINE REPUBLIC WTR SUPPLY II 100.00 0.00 0.00 81.59AR-PA-6005 L32800 1991 REPUBLIC OF ARGENTINA PROVINCE DEV PROJ 200.00 0.00 0.00 80.96AR-PA-6009 L32970 1991 GOVT OF ARGENTINA INA AG SERVCES&INST DEV 33.50 0.00 0.00 6.17AR-PA-6034 L34600 1992 GOVERNMENT TAX ADMIN II 20.00 0.00 0.00 2.83AR-PA-6003 L36110 1993 GOVT OF ARGENTINA INA RD MAINT & REHAB SCT 340.00 0.00 0.00 187.25AR-PA-6036 L35200 1993 GOVERNMENT YACYRETA II 300.00 0.00 0.00 4.02AR-PA-6051 L35210 1993 ARGENTINA FLOOD REHABILITATION 170.00 0.00 0.00 16.24AR-PA-6062 L37100 1994 MIN OF ECONOMY CAPITAL MKT TA 8.50 0.00 0.00 5.9BAR-PA-5986 L37090 1994 REP OF ARGENTINA A CAPITAL MKT DEVT 500.00 0.00 0.00 483.88AR-PA-6025 L36430 1994 GOVT OF ARGENTINA INA MTNAL CHILD HLTH & N 100.00 0.00 0.00 66.68AR-PA-40826 L38780 1995 ARG REPUBLIC PROV.BANK PRIV. 500.00 0.00 0.00 166.00AR-PA-5992 L37940 1995 GOVT OF ARGENTINA INA SECONDARY ED I 190.00 0.00 0.00 180.43AR-PA-6018 L38770 1995 ARGENTINE REPUBLIC PROV DEVT II 225.00 0.00 0.00 225.00AR-PA-6035 L38360 1995 REP OF ARGENTINA PROV.REFORM 300.00 0.00 0.00 100.37AR-PA-6060 L38600 1995 GOVT OF ARGENTINA MUNIC DEVT II 210.00 0.00 0.00 202.81AR-PA-34091 L39210 1996 REP OF ARGENTINA HIGHER ED REFORM 165.00 0.00 0.00 158.54AR-PA-35495 L39570 1996 SEC.OF SOC.DEVIT (OFFICE SOCIAL PROTECTION 152.00 0.00 0.00 55.13AR-PA-38883 L39600 1996 REPUBLIC OF ARGENTINA ENT.EXPORT DV. 38.50 0.00 0.00 35.99AM-PA-40904 L39260 1996 REPUBLIC OF ARGENTINA BANK REFORM 500.00 0.00 0.00 333.00AR-PA-40909 L40020 1996 REP. OF ARGENTINA H. INSURANCE REFORM 250.00 0.00 0.00 100.00AR-PA-45687 L40040 1996 REP. OF ARGRNTINA H.INSURANCE TA 25.00 0.00 0.00 23.17AR-PA-6030 L39310 1996 REPUB OF ARGENTINA PROVCL HLTH SCTR DEV 101.40 0.00 0.00 98.08AR-PA-6040 L39480 1996 GOVERNMENT FORESTRY/DV 16.00 0.00 0.00 15.70AR-PA-6055 L39270 1996 GOVT. OF ARGENTINA MINING SCTR DEVT 30.00 0.00 0.00 22.29AR-PA-37049 L39580 1996 GOVT OF ARGENTINA PUB.INV.STRENGTHG 16.00 0.00 0.00 16.00AR-PA-40909 L40030 1996 REP. OF ARGENTINA H. INSURANCE REFORM 100.00 0.00 0.00 100.00AR-PA-6057 L39710 1996 GOV'T OF ARGENTINA SECNDARY ED 2 115.50 0.00 0.00 115.50AR-PA-40808 L40850 1997 GOA N.FOREST/PROTC 19.50 0.00 0.00 19.50AR-PA-5980 L40930 1997 GOVT OF ARGENTINA PROV ROADS 300.00 0.00 0.00 300.00

a. Intended disbursements to date minus actual disbursements to date as projected at appraisal.b. Rating of 1-4: see OD 13.05. Annex D2. Preparation of Implementation Summary (Form 590). Following the FY94 Annual Review of

Portfolio performance (ARPP), a letter based system will be used (HS - highly Satisfactory, S - satisfactory, U -unsatisfactory, HU - highly unsatisfactory): see proposed Improvements in Project and Portfolio Performance RatingMethodology (SecM94-901), August 23, 1994.

c. Following the FY94 ARPP, "Implementation Progress" will be reported here.

STATEMENT OF IFC'sCommitted and Disbursed Portfolio

Committed- Dibum,.IFC

31 Company Loan Equity Quasl Partic Loan 4EqP Qi a1960 Aeindar 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001977 Alpargatas 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001978 Minetti 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001981 MineKti .67 0.00 0.00 0.00 .67 0.00 0.00 0.001984 Alpargatas 0.00 1.05 0.00 0.00 0.00 1.05 0.00 0.001985 ROPASA 0.00 .05 0.00 0.00 0.00 .05 0.00 0.001986 Alpargatas 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001986 Minetti .23 0.00 0.00 1.17 .23 0.00 0.00 1.171987 BGN-Bolland 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001987 BGN-CENCOSUD .07 0.00 0.00 0.00 .07 0.00 0.00 0.001987 BGN-CILSA .01 0.00 0.00 0.00 .01 0.00 0.00 0.001987 BGN-COLORTEX .07 0.00 0.00 0.00 .07 0.00 0.00 0.001987 BGN-Flichman .02 0.00 0.00 0.00 .02 0.00 0.00 0.001987 BGN-Longvie .03 0.00 0.00 0.00 .03 0.00 0.00 0.001987 BGN-Moldeada .07 0.00 0.00 0.00 .07 0.00 0.00 0.001987 BGN-Noroeste .03 0.00 0.00 0.00 .03 0.00 0.00 0.001987 BGN-Sebastian .07 0.00 0.00 0.00 .07 0.00 0.00 0.001987 BGN-Tevycom .02 0.00 0.00 0.00 .02 0.00 0.00 0.001987 BGN-TBR .21 0.00 0.00 0.00 .21 0.00 0.00 0.001987 BGN-Valley .03 0.00 0.00 0.00 .03 0.00 0.00 0.001987 BGN-Vandenfll .03 0.00 0.00 0.00 .03 0.00 0.00 0.001987 BRLP 3.00 0.00 0.00 0.00 3.00 0.00 0.00 0.001987 Minetti .47 0.00 0.00 2.33 .47 0.00 0.00 2.331987 Terminal 6 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001988 Alpargatas 1.70 0.00 1.37 0.00 1.70 0.00 1.37 0.001988 Bunge y Born 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001989 Astra CAPSA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001989 Banco Frances 4.31 0.00 0.00 1.14 4.31 0.00 0.00 1.141989 BGN-Algodonera .32 0.00 0.00 0.00 .32 0.00 0.00 0.001989 BGN-Bolland .27 0.00 0.00 0.00 .27 0.00 0.00 0.001989 BGN-Ferrum 1.00 0.00 0.00 0.00 1.00 0.00 0.00 0.001989 BGN-Flichman .20 0.00 0.00 0.00 .20 0.00 0.00 0.001989 BGN-FRIGOTOBA .15 0.00 0.00 0.00 .15 0.00 0.00 0.001989 BGN-Genaro .82 0.00 0.00 0.00 .82 0.00 0.00 0.001989 BGN-lnterpack .30 0.00 0.00 0.00 .30 0.00 0.00 0.001989 BGN-Parafina .75 0.00 0. 0.00 .75 0.00 0.00 0.001989 BGN-Willmor .82 0.00 0.00 0.00 .82 0.00 0.00 0.001989 ROB-COMESI .38 0.00 0.00 0.00 .38 0.00 0.00 0.001989 ROB-Fracchia .21 0.00 0.00 0.00 .21 0.00 0.00 0.001989 ROB-INTA .38 0.00 0.00 0.00 .38 0.00 0.00 0.001989 Terminal 6 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001990 CIP 0.00 .08 0.00 0.00 0.00 .08 0.00 0.001990 Petroken 8.33 0.00 5.00 4.58 8.33 0.00 5.00 4.581990 Terminal 6 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001991 Astra CAPSA 11.57 0.00 0.00 20.42 11.57 0.00 0.00 20.421991 BCA 2.20 0.00 0.00 2.80 2.20 0.00 0.00 2.801991 Minetti .58 0.00 0.00 0.00 .58 0.00 0.00 0.00

Aprva ompany- Loan Equity Qusii Pirt c Loan: E .ui uai i $ tI'

1991 ROB-Alimenticia .28 0.00 0.00 0.00 .28 0.00 0.00 0.001991 ROB-Emprigas .38 0.00 0.00 0.00 .38 0.00 0.00 0.001991 ROB-Guilford .20 0.00 0.00 0.00 .20 0.00 0.00 0.001991 ROB-Interpack .33 0.00 0.00 0.00 .33 0.00 0.00 0.001991 ROB-Jugos .06 0.00 0.00 0.00 .06 0.00 0.00 0.001991 ROB-Longvie .45 0.00 0.00 0.00 .45 0.00 0.00 0.001991 ROB-Mendoza .38 0.00 0.00 0.00 .38 0.00 0.00 0.001991 ROB-Surfactan .04 0.00 0.00 0.00 .04 0.00 0.00 0.001992 Astra CAPSA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001992 Bridas 24.36 0.00 15.00 43.43 24.36 0.00 15.00 43.431992 BRLP 10.78 0.00 0.00 2.63 3.24 0.00 0.00 2.631992 FEPSA 10.80 0.00 0.00 12.67 8.60 0.00 0.00 10.271992 Malteria Pampa 7.19 0.00 0.00 13.27 7.19 0.00 0.00 13.271992 Oleaginosa Oeste 7.64 0.00 5.00 11.83 7.64 0.00 5.00 11.831992 Rioplatense 6.33 1.00 0.00 2.00 6.33 1.00 0.00 2.001992 San Jorge 10.00 27.00 0.00 23.33 10.00 0.00 0.00 23.331993 Argentina Equity 0.00 4.00 0.00 0.00 0.00 4.00 0.00 0.001993 APSA 0.00 19.47 0.00 0.00 0.00 19.47 0.00 0.001993 Bunge y Bom 4.25 0.00 0.00 36.09 4.25 0.00 0.00 36.091993 Cadipsa 9.29 0.00 5.00 11.70 9.29 0.00 5.00 11.701993 Malteba Pampa 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001993 Minenti 1.62 0.00 0.00 0.00 1.62 0.00 0.00 0.001993 Molinos 0.00 4.31 0.00 0.00 0.00 4.31 0.00 0.001993 Nuevo Central 7.50 3.00 0.00 12.50 7.50 3.00 0.00 12.501993 Yacylec 9.35 5.04 0.00 36.13 9.35 5.04 0.00 36.131994 Aceitera 15.00 10.00 0.00 15.00 15.00 10.00 0.00 0.001994 Aguas 36.53 7.00 0.00 107.60 36.53 7.00 0.00 107.601994 Alpargatas 11.54 5.00 5.00 20.71 11.54 5.00 5.00 20.711994 BGN 12.00 0.00 3.00 0.00 12.00 0.00 3.00 0.001994 Cia. Combustible 19.46 15.00 0.00 32.80 19.46 15.00 0.00 32.801994 EDENOR 21.13 0.00 15.00 99.25 21.13 0.00 15.00 99.251994 La Maxima 0.00 10.19 0.00 0.00 0.00 10.19 0.00 0.001994 LBAR 0.00 1.17 0.00 0.00 0.00 .64 0.00 0.001994 LBAV 0.00 3.62 0.00 0.00 0.00 3.62 0.00 0.001994 Molinos 0.00 1.24 0.00 0.00 0.00 1.24 0.00 0.001994 MASISA 9.63 0.00 0.00 0.00 9.63 0.00 0.00 0.001994 Petroken 15.91 0.00 0.00 2.50 15.91 0.00 0.00 2.501994 Quilmes 12.64 0.00 0.00 12.50 12.64 0.00 0.00 12.501995 Acindar 15.00 0.00 10.00 20.00 15.00 0.00 10.00 8.571995 Aguas 40.00 0.00 0.00 173.00 40.00 0.00 0.00 121.801995 Banco Roberts 0.00 0.00 20.00 0.00 0.00 0.00 20.00 0.001995 Bridas 20.00 10.00 0.00 40.00 20.00 10.00 0.00 40.001995 CEPA 13.00 0.00 0.00 4.20 13.00 0.00 0.00 4.201995 EDENOR 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001995 Kleppe/Caldero 6.00 0.00 0.00 0.00 6.00 0.00 0.00 0.001995 La Maxima 0.00 0.00 4.00 0.00 0.00 0.00 3.96 0.001995 Mastellone 38.57 0.00 0.00 35.00 38.57 0.00 0.00 0.001995 Nahuelsat 30.00 5.00 0.00 0.00 30.00 5.00 0.00 0.001995 SanCor 20.00 0.00 20.00 30.00 20.00 0.00 20.00 30.00

. - - . - - ~~~~~~~~~Committed : .----Disbursei . -s-wi 9' ...............,n-N

FY IFC-Aprroval company Loan Equity Qualsi Partic Loan Eqt Q Pa

1995 Socma 24.99 0.00 0.00 0.00 24.99 0.00 0.00 0.001995 SIDECO 0.00 15.0 0.00 0.00 0.00 15.00 0.00 0.00

1995 Terminales Port. 10.00 2.00 0.00 0.00 7.00 1.40 0.00 0.00

1995 Tower Fund 0.00 18.71 0.00 0.00 0.00 5.54 0.00 0.00

1995 Tower Fund Mgr 0.00 .13 0.00 0.00 0.00 .03 0.00 0.00

1996 Aguas 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

1996 Alpargatas 15.00 0.00 0.00 81.00 10.00 0.00 0.00 81.001996 APSA 0.00 0.00 2.50 0.00 0.00 0.00 2.50 0.00

1996 Banco Frances 40.00 0.00 0.00 0.00 2.31 0.00 0.00 0.001996 Banco Galicia 30.00 0.00 0.00 200.00 30.00 0.00 0.00 200.001996 Brahma -ARG 18.50 0.00 0.00 33.00 18.50 0.00 0.00 33.00

1996 CAPSA 12.00 0.00 5.00 0.00 0.00 0.00 0.00 0.00

1996 Grunbaum 8.00 0.00 2.00 0.00 8.00 0.00 2.00 0.00

1996 Malteria Pampa 6.00 0.00 1.00 0.00 6.00 0.00 1.00 0.00

1996 Minetti 10.00 0.00 0.00 30.00 4.10 0.00 0.00 12.30

1996 MBA 0.00 .16 0.00 0.00 0.00 .16 0.00 0.00

1996 Neuquen Basin 0.00 26.40 0.00 0.00 0.00 15.11 0.00 0.00

1996 Refisan 20.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

1996 Terminal 6 10.50 0.00 0.00 6.50 10.50 0.00 0.00 6.00

1996 Transconor 25.00 0.00 20.00 210.00 25.00 0.00 20.00 210.00

1996 Zanon 14.00 0.00 6.00 0.00 12.00 0.00 6.00 0.00

1997 Acindar 0.00 0.00 15.00 0.00 0.00 0.00 15.00 0.00

Pending Commitments .1997 'ACINDAR TF LOAN 25.00 0.00 0.00 50.00

1996 'AGUAS III - INC 15.00 0.00 0.00 75.00

1996 ' BANSUD CL 25.00 0.00 0.00 0.00

1996 * DIADEMA FIELD 0.00 0.00 0.00 40.00

1994 'EDENOR INCREASE 0.00 0.00 0.00 8.00

1996 * EDESUR II BLINC 0.00 0.00 0.00 108.00

1996 * EDESUR REHAB 40.00 0.00 0.00 80.00

1993 ' FEPSA (II) 0.00 0.00 0.00 4.00

1997 * GUIPEBA 15.00 0.00 5.00 20.00

1997 * MILKAUT 20.00 0.00 0.00 5.00

1996 ' MINETTI EM 0.00 0.00 10.00 0.00

1995 ' R-E-C TOLL HWAY 20.00 0.00 0.00 61.00

1997 'TGN II BLINC 0.00 0.00 0.00 10.00

1996 ^ TRANSCONOR II 5.00 0.00 0.00 0.00

1997 * VICENTIN 25.00 0.00 0.00 10.00

1996 * WESTERN ACCESS 30.00 0.00 5.00 130.00

Argentina at a glanceLtin Upper-

POVERTY and SOCIAL Americ middle-rgentna & Carib. Incom DOelopmentdiamond-

Populaon mid-1996 (mEfn.) 35.1 485 479GNP per capita 1998 (US$) 8.410 3,710 4,540 Lle expecGNP 1996 (lslons USS) 295.0 1,799 2,173

Averag, annual growth, 199048

Populion (%) 1.3 1.7 1.5 GNP G/ \GrssLabor fore (U) 2.0 2.3 1.8 per primary

Most recnt eImat lasyear avaible sine 1989) capita "' , enmlment

Povery: headwunt hdex (X of popuWton) 26Urban popuation (U of toapopuafIon) 8S 74 73ULi expetancy at birth &ars) 73 69 69Infant mortlity (per 1,000 ioe bsJlt) 22 37 35 Acoess to safe waterChild malnutrition (U of clin under 5)Accon to safe water (% of popAton) 64 80 86IlltKacy (U of populanton gs5 I) 4 13 13Gss prlmaiyenrollmentm(wU fscohoolLpoppxailon) 111 110 107

Male Upper-middle-income groupFemale

KEY ECONOlIC RATIOS and LONG-TERM TRENDS

1975 1985 1995 1996Economic ratbls

GDP (bions USS) 52.4 88.4 280.8 300.5Gross domestic Investnent/GDP 294 17.6 18.3 18.5 OpennesseconomyExports of goods and swvs/GDP 5.8 11.7 8.5 9.0Gross domestic savhngaGDP 29.3 23.1 18.4 18.1Gross naional savngs/GDP 28.4 16.6 17.5 17.2

Current account balance/GDP -2.5 -1.1 -0.9 -1.3Interest payments/GDP 0.9 5.0 2.1 2.3 Savings ' InvestmentTotal debt/GDP 14.7 57.6 32.0 33.2 \/Total debt servIeexports 44.7 60.1 47.4 46.7Present value of debtGDP 29.5Prent value of debt/exports 332.1

Indebtedness

1975S 1986-96 1996 1996 1997-O6(avera aua goh) tArhenaGDP 0.6 2.9 -4.6 44 5.0GNP per capita -1.8 2.0 -6.4 2.8 3.9 Up grupExports of goods and services 5.1 7.6 26.4 7.4 8.0

STRUCTURE of the ECONOMY

(U of GDP) 1976 1986 1996 1996 Growth rates of outputand nvestmont%)Agriculture 6.6 7.6 74 7.1 4Industry 50.1 39.3 36.0 36.2 30 -

Manufacturing 38.2 29.7 20. .10.

Services 43.3 53.1 56.6 56.7

Private consumption 58.1 72.3 73.3 -20General govemment consumptin 12.6 9.4 8.5Imports of goods and servIes 6.0 6.3 8.5 9.3 GDI -0-GDP

197C-5 1986-9 1996 1996(average annual growth) Growth rates of exports and Imports (%)Agriculture 1i6 1.5 2.3 0.3 soIndust"y -1.5 2.7 -8.5 4.9 N

Manufacturing -1i6 0.9Serves 2.2 3.3 -3.0 4.6 40

Private consumption , -8.6 5.7 20

General govemment consumptbon -6.6 -54 0Gross domestc investment -3.5 5.7 -11.9 5.4 -20 aImpots of goods and servIes 2.4 14.5 -14.0 10.0 0Gross natonal product -0.3 3.4 -5.1 4.0 Ext 0mpor

Note: 1996 data are prelminaWy estmas. Figures in alics are for years other than those specfied.* The diamonds show four key indicator In the country (n bold) compared with its income-group average. If data are missing, the diamond will

be incompleb.

Argentina

PRICES and GOVERNMENT FINANCE1976 1986 1995 1996 __l_i.

Domestic prices In1bUo (%)(% change) 3,000Consumer prices 182.6 672.3 3.4 0.1 .0.Implicit GDP deflator 198.2 618.2 4.5 2.5

Government finance .,0(% of GDP) oCurrent revenue .. .. 16.7 16.5 91 52 93 94 ss a.Current budget balance .. .. -0.2 -1.1 GDPd CPIOverall surplusideficit ,, .. -1.1 -2.4

TRADE

(millionsUSS) 1975 1986 1996 1996 Export and Import leves (mill. US$JTotal exports (fob) 2,961 8,396 20,964 23,774 zs,ooo

Food .. .. 1,969 2,203 _Meat 1,582 1955Manufactures . .. 10,836 12,004 15.000

Total imports (ci) 3,947 3,814 20,120 23,733 1s'00l

FoodFuel and energy . .. 809 846 ssCapital goods.. . 4,746 5,647 s

Exportpriceindex(1987=100) ., .. 118 124 90 91 r2 93 94 86 96lmport price index (1987=100) .. .. 115 120 o Exports mimportaTermns of trade (1987=100) .. .. 102 103

BALANCE of PAYMENTS1976 1986 1996 1996

(millions US$) Current account balance to GDP ratio ()Exports of goods and services 3.498 10,039 23,889 27,078 2Imports of goods and services 4,324 5,285 23,826 27,900Resource balance -826 4,754 63 -824 nNet income -466 -5,706 -2,941 -3,523 oNetcurrenttransfers 6 0 432 334 90 s 92 93 94 9 98

Current account balance, I2before official capital transfers -1,286 -952 -2,446 -4,013 .2

Financing items (net) 208 Z200 2515 231Changes in net reserves 1,078 -1,248 -69 3,782 -4

Memo:

Reserves including gold (mill. US$) 848 4,703 15,992 19,774Conversion rate (locaWUS$) 3.7E-10 6.OE-0 1.0 1.0

EXTERNAL DEBT and RESOURCE FLOWS1975 1985 1995 1996 I

(millions USS) I Composition of total debt, 1995 (mill. USS)Total debt outstanding and disbursed 7,723 50,946 89,719 99,701

IBRD 341 700 4.913 5,372 G AIDA 0 0 0 0 10170 4913 C

6131Total debt service 1,603 6,209 9,732 14,529 0

IBRD 43 114 565 608 | / |,|IDA 0 0 0 0 E

11709Composition of net resource flowsOfficial grants 0 6 36Official creditors 59 217 1,411 .. /Private creditors -111 2,350 5,674 ..Foreign direct investment 0 919 1,319 F FPortfolio equity 0 0 211 .. 52323

Wodd Bank programCommitments o 0 2,272 946 A - IBRD B - ilateralDisbursements 19 144 941 1,077 B-IDA D- Othermultilateral F- PrivatePrincipal repayments 17 68 259 282 C-IMF G -Short-trm|Net flows 1 75 682 795Interest payments 26 46 306 326Net transfers -25 30 376 469

Development Economics 8128197

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World Bank Document...-Enrollment in 9th grade of EGB3 from 216,000 to 240,000-Transition rate from...

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Transcript of World Bank Document...-Enrollment in 9th grade of EGB3 from 216,000 to 240,000-Transition rate from...