the world bank...the project development objectives are to: (i) expand coverage of the family...

Document of

The World Bank

FOR OFFICIAL USE ONLY Report No: PAD3006

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

PROJECT PAPER

ON A

PROPOSED ADDITIONAL LOAN

IN THE AMOUNT OF US$450 MILLION

TO THE

ARGENTINE REPUBLIC

FOR THE

CHILDREN AND YOUTH PROTECTION PROJECT

August 30, 2018

Social Protection & Jobs Global Practice Latin America And Caribbean Region

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

Exchange Rate Effective August 29, 2018

Currency Unit = AR$

AR$ 34.01= US$ 1

US$ 1.4= SDR 1

FISCAL YEAR

January 1 - December 31

Regional Vice President: Jorge Familiar

Country Director: Jesko Hentschel

Senior Global Practice Director: Michal Rutkowski

Practice Manager: Pablo Gottret

Task Team Leader(s): Juan Martin Moreno, Marcela Ines Salvador

ABBREVIATIONS AND ACRONYMS ABP Argentina Basic Protection Project ADP ANSES’ Main Database for Individuals (Administrador de Personas de ANSES) AF Additional Financing ANSES National Administration of Social Security (Administración Nacional de la Seguridad Social) APA Alternate Procurement Arrangements AUH Universal Child Allowance (Asignación Universal por Hijo) BCRA Central Bank of the Argentine Republic (Banco Central de la República Argentina) CAF Development Bank of Latin America CPF Country Partnership Framework CPS Country Partnership Strategy CUIL Personal code of labor identification (Código Único de Identificación Laboral) DLI Disbursement-Linked Indicators DO Development Objectives DPF Development Policy Finance FA Family Allowances GDP Gross Domestic Product GRM Grievance Redress Mechanism GRS Grievance Redress Service IADB Interamerican Development Bank IBRD International Bank for Reconstruction and Development IMF International Monetary Fund INAI National Institute for Indigenous Affairs (Instituto Nacional de Asuntos Indígenas) IP Implementation Progress IPF Investment Policy Finance ISR Implementation Status & Results Report LEBAC Short-term Central Bank papers (Letras del Banco Central) MDS Ministry of Social Development (Ministerio de Desarrollo Social) NIPP National Indigenous Peoples Plan PAMI Integral Medical Assistance Program (Programa de Asistencia Médica Integral) PAT Territorial Action Plan (Plan de Acción Territorial) PDO Project Development Objectives PLR Performance and Learning Review RENAPER National Registry of People (Registro Nacional de las Personas) SCD Systematic Country Diagnostic SP Social Protection SSN Social Safety Net TA Technical Assistance UDAI Integral Assistance Unit (Unidad de Atención Integral)

BASIC INFORMATION – PARENT (Children and Youth Protection Project - P158791)

Country Product Line Team Leader(s)

Argentina IBRD/IDA Juan Martin Moreno

Project ID Financing Instrument Resp CC Req CC Practice Area (Lead)

P158791 Investment Project Financing

GSP04 (9343) LCC7C (6297) Social Protection & Labor

Implementing Agency: ANSES - Administracion Nacional de la Seguridad Social, Ministerio de Desarrollo Social ADD FIN TBL1

Is this a regionally tagged project?

No

Bank/IFC Collaboration

No

Approval Date Closing Date Original Environmental Assessment Category Current EA Category

30-Jun-2016 31-Dec-2020 Not Required (C) Not Required (C)

Financing & Implementation Modalities Parent

[ ] Multiphase Programmatic Approach [MPA] [ ] Contingent Emergency Response Component (CERC)

[ ] Series of Projects (SOP) [ ] Fragile State(s)

[ ] Disbursement-Linked Indicators (DLIs) [ ] Small State(s)

[ ] Financial Intermediaries (FI) [ ] Fragile within a Non-fragile Country

[ ] Project-Based Guarantee [ ] Conflict

[ ] Deferred Drawdown [ ] Responding to Natural or Man-made disaster

[ ] Alternate Procurement Arrangements (APA)

Development Objective(s)

The Project Development Objectives are to: (i) expand coverage of the Family Allowances programs; and (ii)

The World Bank Additional Financing Children and Youth Protection Project (P167851)

September 19, 2018 Page 5 of 42

improve transparency of social protection programs implemented by ANSES.

Ratings (from Parent ISR) RATING_DRAFT_NO

Implementation Latest ISR

20-Sep-2016 21-Mar-2017 28-Sep-2017 05-Apr-2018

Progress towards achievement of PDO S

S

S

S

Overall Implementation Progress (IP) S

S

S

S

Overall Safeguards Rating S

S

S

S

Overall Risk M

M

M

M

BASIC INFORMATION – ADDITIONAL FINANCING (Additional Financing Children and Youth Protection Project - P167851) ADDFIN_TABLE

Project ID Project Name Additional Financing Type Urgent Need or Capacity Constraints

P167851 Additional Financing Children and Youth Protection Project

Scale Up No

Financing instrument Product line Approval Date

Investment Project Financing

IBRD/IDA 20-Sep-2018

Projected Date of Full Disbursement

Bank/IFC Collaboration

31-Dec-2020 No

Is this a regionally tagged project?

No

Financing & Implementation Modalities Child



[ ] Series of Projects (SOP) [ ] Fragile State(s)

[✓] Disbursement-Linked Indicators (DLIs) [ ] Small State(s)

[ ] Financial Intermediaries (FI) [ ] Fragile within a Non-fragile Country

[ ] Project-Based Guarantee [ ] Conflict

[ ] Deferred Drawdown [ ] Responding to Natural or Man-made disaster

[ ] Alternate Procurement Arrangements (APA)

[ ] Contingent Emergency Response Component (CERC)

Disbursement Summary (from Parent ISR)

Source of Funds Net

Commitments Total Disbursed Remaining Balance Disbursed

IBRD 600.00 492.40 107.60

82 %

IDA

%

Grants

%

PROJECT FINANCING DATA – ADDITIONAL FINANCING (Additional Financing Children and Youth Protection Project - P167851)

PROJECT FINANCING DATA (US$, Millions)

SUMMARY-NewFi n1

SUMMARY (Total Financing)

Current Financing Proposed Additional Financing

Total Proposed Financing

Total Project Cost 600.00 450.00 1,050.00

Total Financing 600.00 450.00 1,050.00

of which IBRD/IDA 600.00 450.00 1,050.00

Financing Gap 0.00 0.00 0.00

DETAILSNewFinEnh1- Additional Financing

World Bank Group Financing



International Bank for Reconstruction and Development (IBRD) 450.00

COMPLIANCE

Policy

Does the project depart from the CPF in content or in other significant respects?

[ ] Yes [ ✔ ] No

Does the project require any other Policy waiver(s)?

[ ] Yes [ ✔ ] No

INSTITUTIONAL DATA

Practice Area (Lead) Social Protection & Labor

Contributing Practice Areas

Climate Change and Disaster Screening

This operation has been screened for short and long-term climate change and disaster risks

Gender Tag Does the project plan to undertake any of the following? a. Analysis to identify Project-relevant gaps between males and females, especially in light of country gaps identified through SCD and CPF No b. Specific action(s) to address the gender gaps identified in (a) and/or to improve women or men's empowerment No c. Include Indicators in results framework to monitor outcomes from actions identified in (b) No



PROJECT TEAM Bank Staff

Name Role Specialization Unit

Juan Martin Moreno Team Leader (ADM Responsible)

Senior Social Protection Economist GSP04

Marcela Ines Salvador Team Leader Senior Social Protection Specialist GSP04

Ana Maria Grofsmacht Procurement Specialist (ADM Responsible) Sr Procurement Specialist GGOPL

Maria Elizabeth Grandio Procurement Specialist Procurement specialist GGOPL

Luz Maria Meyer Financial Management Specialist Financial Management Analyst GGOLF

Alejandro Roger Solanot Team Member Sr Financial Management Specialist GGOLF

Carmen Veronica Del Rosario Silva Villalobos Team Member CCT expert GSP04

Claudia Regina Baddini Curralero Team Member Sr Social Protection Specialist GSP04

Elba Lydia Gaggero Environmental Safeguards Specialist Environmental specialist GEN04

Florencia Pilar Chaves Team Member Team Assistant LCC7C

German Nicolas Freire Social Safeguards Specialist Social Safeguards Specialist GSU04

Ignacio Raul Apella Team Member Social Protection Economist GSP04

Luciana Garcia Team Member Team Assistant LCC7C

Maria Virginia Hormazabal Team Member Disbursement Specialist WFACS

Patricia M. Bernedo Team Member Operations Analyst GSP04

Pilar Elisa Gonzalez Rodriguez Counsel Country Lawyer LEGLE

Renata Pantoja Team Member Financial Analyst WFACS

Santiago Scialabba Social Safeguards Specialist Social Safeguards specialist GSU04

Extended Team

Name Title Organization Location



ARGENTINA

ADDITIONAL FINANCING CHILDREN AND YOUTH PROTECTION PROJECT

TABLE OF CONTENTS

I. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING ...................................... 10

II. DESCRIPTION OF THE ADDITIONAL FINANCING ............................................................. 15

III. KEY RISKS ..................................................................................................................... 17

IV. APPRAISAL SUMMARY .................................................................................................. 17

V. WORLD BANK GRIEVANCE REDRESS .............................................................................. 19

VI. SUMMARY TABLE OF CHANGES .................................................................................... 20

VII. DETAILED CHANGE(S) .................................................................................................... 20

VIII. RESULTS FRAMEWORK AND MONITORING ................................................................... 24



I. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING

Context

1. The current macroeconomic context in Argentina is characterized by marked financial volatility emerging from a combination of domestic and external factors. Since taking office in December 2015, the Government has been implementing important reforms to eliminate distortions in the economy. Given the ambition of the reform program, and in order to maintain the social consensus needed to ensure sustainability over time, the Government adopted a gradual approach to the reforms, including the fiscal and monetary adjustments. However, tightening global financial conditions in April 2018 led to an increase in market volatility which, in turn, resulted in loss of appetite for the country’s bonds, and pressures on the peso. The Government response to the market volatility has included a tightening of the fiscal and monetary policy stances supported by an International Monetary Fund (IMF) program.1

2. Argentina’s macroeconomic outlook presents substantial downside risks that could have an impact on job creation and poverty reduction. Employment in Argentina has remained stable since 2011, losing its role as the main driver of household income increases in the previous eight years. While poverty rate declines over the 2004-2008 were mostly explained by labor income gains, the role of non-labor income has been more relevant since 2009.2 Conscious of the vulnerable status of many households, the current administration expanded several social benefits, including child allowances and unemployment insurance, and prepared a plan to settle pension-related lawsuits. Income transfer policies, including the pension and family allowances systems, have become a critical determinant of income levels and equity.

3. Beyond the International Monetary Fund (IMF), the Government’s response to the financial pressures is supported by multilateral development banks. The World Bank is preparing a set of operations, both Development Policy and Investment Project Financing, which are part of a broader package being prepared with other international partners, including the Interamerican Development Bank (IADB), and the Development Bank for Latin America (CAF). The World Bank program focuses on supporting the Government’s reform agenda to lay the foundations for growth and protect the most vulnerable, being complementary and fully consistent with the IMF-supported program. The program explicitly establishes an agreed social safety net spending floor and allows some well-targeted social assistance transfer programs to expand if needed. Against this background, the Government has requested Bank support to reinforce social protection policies that will provide effective protection to the most vulnerable through the Universal Child Allowance program Asignación Universal por Hijo (AUH). The World Bank has financed the implementation and expansion of AUH through previous loans (P115183 and P120622 - Argentina Basic Protection Project); as well as the ongoing Project (P158791 - Children and Youth Protection Project). Therefore, the Bank is well positioned to rapidly respond to the Borrower’s request by providing additional financing under the current operation to accelerate and scale up the implementation of the Project and contribute to its sustained financing.

Background

4. Over the last fifteen years, social protection systems in Argentina have significantly improved

1 The IMF Board approved the exceptional access Stand-By Arrangement on June 20, 2018. While the IMF was preparing the First Review of the Program at the end of August, lack of market confidence led to renewed pressure on the Argentine peso and this will require adjustments to the SBA program. 2 See World Bank Policy Notes for Argentina (2015), Social Protection and Labor chapter.



and today are better prepared to provide an effective response in times of need. Given the downside macroeconomic risks, a slowdown of economic and employment growth in 2018 and 2019 could have a significant social impact. Unemployment and informality could then increase. In such context, the social protection (SP) system, and especially the social safety nets (SSN), are of core importance to mitigate the potential social and poverty consequences of such adverse macroeconomic developments.

5. The major economic crisis of 2002 represented an inflexion point for the SP system in Argentina. It revealed the limited ability to deal with the social consequences of poverty and unequal income distribution as the system had provided mainly protection for those linked to the formal labor market. Social safety nets were very small. Since then, the SP system has moved towards an integrated and coordinated system of income transfer programs and policies, which reduced poverty and improved income distribution by expanding coverage and public social spending. The improvements in the SP system contain two milestones: First, since 2005, the coverage of pensions increased to levels observed in the OECD, especially expanding effective inclusion of low-income contributors/earners. Second, the implementation of the Universal Child Allowance program (AUH) in 2009 created the most important social safety program in Argentina today, providing coverage to families with children under 18 years of age who were not included in the contributory family allowance program.

6. The AUH is an integrated part of the Family Allowances (FA) programs. AUH, part of the Family Allowances, is a cash transfer program with co-responsibilities in health and education that covers children in the most vulnerable households. The Family Allowances system includes four main programs: (i) a contributory program for children of formal workers in the private sector, civil servants working for the National Government and, as of April 2016, self-employed workers registered through a simplified taxation system called “Monotributo”; (ii) a non-contributory program for children of beneficiaries of other programs such as Pensions and Unemployment Insurance; (iii) the non-contributory AUH Program which covers children of the inactive, unemployed or low-income informal workers; and (iv) several smaller FA programs that cover children of civil servants in sub-national governments, managed by the provinces. Eligibility criteria for households to benefit from the AUH program include: (i) both parents being unemployed, informal, or not receiving a benefit from other ANSES programs; (ii) showing proof of compliance with co-responsibilities of health and education (depending on the age of the child, benefit amounts are the same in the three programs managed by the National Government). Benefits are adjusted four times a year using a formula that includes wages (30 percent) and inflation (70 percent).

7. Today, the Family Allowances programs effectively reach families with children. Overall, coverage of the FA programs run by ANSES is 9,123,927 children in May 2018, which represents 68.1 percent of all children under 18 years of age in Argentina. Coverage of the contributory family allowance program reached 5,207,598; the non-contributory AUH provides child benefits to 3,916,329 million children. Coverage of these two FA programs expanded by almost 2 million children since 2010, half of which over just the last two years. Another 13.1 percent of all children under 18 (1,756,023) are covered by either a sub-national FA program or included in the deductions of those high-earners who file income tax returns. The remaining 18.7 percent of all Argentine children not covered comprise children not showing proof of compliance with co-responsibilities (4 percent), who would otherwise be eligible to receive AUH; children with incomplete ID information, preventing them from being included in the eligibility process (3.5 percent); and non-eligible children due to legislation (11.3 percent).3

3 Within this remaining category (1,508,925 children), the two largest groups are: a) the children of those already



8. Significant improvements of the FA have been introduced over the past two years. These include: (i) introduction of a new benefit indexation mechanism that updates FA benefits four times a year (increasingly relevant in an inflationary context); (ii) unification of parameters between the contributory family allowance program and AUH (e.g. income thresholds, benefit amounts); (iii) extension of FA coverage to children of the formal self-employed (monotributistas) and of employment programs beneficiaries.

9. The non-contributory family allowance AUH is an effective tool that can mitigate the social impact of adverse macroeconomic conditions.4 In addition to strengthening the formation of human capital through the co-responsibilities in health and education, the program is designed to automatically expand during downturns, when fewer people are in formal jobs making contributions to Social Security. The periodic adjustments of the benefit amount allow the program to avoid losses in purchasing power in times of high inflation, which is even more important for the low-income families targeted by AUH. The good coverage and advanced administrative systems allow policy makers to temporarily increase benefit amounts in times of crisis or even natural disasters.5

10. Simulations find that an expansion in the AUH and/or an increase in benefit amounts could substantially mitigate the impacts of an economic deceleration or a recession. A quarter of Argentines live in households with children in which neither of the parents has a formal job. These households are thus eligible to receive the AUH. Among them, moderate and extreme poverty rates are more than twice the national rates, and thus, more than half of the poor and three-quarter of the extreme poor belong to this group. While the current transfer amount is not sufficient to lift many out of poverty, the program does represent an effective instrument to reach almost two-thirds of the poor in times of need. Microsimulations show an expansion of AUH could effectively reduce the impact of adverse economic situations and protect households from falling into (or deeper into) poverty.

11. The ongoing Project has supported coverage expansion for eligible children, although further progress is needed. When the non-contributory AUH was launched, ANSES used administrative records which implied that no separate enrollment or registration process was required. People were informed via mail, SMS, email, etc. of their eligibility, and payments were made via debit cards. However, if the database from ANSES was incomplete and a child ID was not linked to that of his/her unemployed or informally working parents, the child could not be included in the eligibility process.6 The ongoing Project helps to close this coverage gap by supporting ANSES in obtaining the missing information and allowing

receiving a non-contributory pension (434,802); and children of the self-employed who report high earnings (340,723). 4 A design shortfall of a SP system with a life cycle approach is that poor households with neither children nor elderly are not covered by these programs. A more thorough description of this shortfall is presented in the Annex to this Project Paper. 5 Before adopting an indexation mechanism AUH benefits were updated on a discretionary basis. Between 2015 and 2017, the benefit amount was updated periodically, twice a year. In times of a sudden increase in consumer prices, lump sum payments have been granted (normally in the month of December), on top of the monthly payments. Finally, as an adaptive response to natural disasters, AUH was used as the vehicle to channel additional resources to those affected by flooding, volcanic ashes, etc. 6 The verification process implied that if both mother and father (unless the child was registered by a single mother/father) were not contributing to Social Security as formal workers, or receiving a benefit from ANSES (pension, survival pension, etc.), the person was implicitly assumed to be unemployed or informal.



children to enter the eligibility screening process.7 More than one million new eligibility processes were started and 688,000 more children are now registered correctly in the ANSES database relative to before Project inception. Although the number of children included in the eligibility process increased much faster than expected, there are still 469,345 children with missing ID information in ANSES’ administrative records.

12. A second area where the AUH could be improved is in the verification of the co-responsibilities. AUH pays 80 percent of the benefit on a monthly basis and accumulates the remaining 20 percent to be paid as a lump sum once compliance with the co-responsibility is verified. This process is carried out once a year at ANSES offices (Unidades de Atencion Integral, UDAIs), when the beneficiary presents copies of school attendance, vaccination records or health checks, depending on the age of the child. Due to transaction costs and information barriers, a significant number of beneficiaries fail to show proof of compliance and therefore lose their right to receive the accumulated 20 percent of the benefit or are later suspended from the payment of the monthly benefit. Most of the suspended beneficiaries show proof of compliance with the co-responsibility a short time after payments are halted.

13. The IMF supported Government program foresees a special role of social safety nets protecting the poor in general and the non-contributory AUH program in particular. The program establishes a floor for spending on social assistance by the Federal Government, at 1.3 percent of GDP in 2018. Furthermore, the targeted fiscal deficit can be adjusted by as much as 0.2 percent of GDP if economic conditions worsen such that the Government judges either the benefits under the universal child allowance program to be insufficient or the level of enrollment becomes higher than expected.8 Also, in July 2018, the Government issued Decree 702, which introduced a series of parametric modifications to the contributory FA program to improve its targeting with the aim of making it more equitable and transparent.9

14. The proposed Additional Financing would include an acceleration of registry expansion so that eligibility can be assessed for remaining children currently not covered by AUH, as well as implementing several administrative improvements to verify co-responsibilities more effectively. The first improvement to be implemented is aimed at exploiting the advances in technology to reduce the transaction costs associated with the cumbersome paperwork to prove compliance. The second improvement is oriented towards reducing information barriers through a series of early alerts directed to beneficiaries and service providers. The third improvement seeks to develop an alternative mechanism to verify compliance in a systemic way, relieving the beneficiaries from the responsibility of doing so. On top of these two innovations, the Project continues to be aimed at closing the coverage gap of those excluded from the eligibility process.

7 As explained earlier, the original target population (children with missing ID links on ANSES administrative records) was 1.5 million children and the Project originally aimed at reaching half a million children. After two years of implementation, ANSES included more than 1 million children in the eligibility process and is committed to reaching 250,000 more children over the next two years. 8 Quote from the IMF Country Report No. 18/219, published in July 2018. 9 The parametric changes introduced by Decree 702/18 are: (i) a reduction of the income range of formal workers that makes them eligible for the contributory FA program (further targeting the program towards lower income earners); (ii) harmonizing benefit amounts across the country, eliminating regional differences (the implementation of this measure was postponed until September 2018). The changes in (i) imply both an increase in the minimum wage required to become eligible for contributory FA benefit (from AR$200 to AR$ 2,400) and a reduction in the maximum amount (from approx. AR$47,000 to AR$ 41,000). The children whose parents have a reported income below the new threshold would qualify for AUH.



15. The World Bank has accompanied improvements in Argentina’s Social Protection system over more than 20 years. This support was focused especially towards consecutive developments of the social safety net as it evolved from a small, poorly targeted, and low-impact program to the current effective and well managed system. Starting in the 1990s with projects that supported the design and implementation of employment programs, the World Bank support expanded to include other social protection programs during the 2000s. Between 2009-2016 the Argentina Basic Protection (ABP) Project (P115183) supported important reforms to the traditional family allowances system and its expansion to families of unemployed and informal workers, through the non-contributory AUH program, launched in late 2009. In 2016, this Project, the Children and Youth Protection Project (P158791), was originally aimed at expanding the coverage of the FA programs by including more than 1 million children who were not previously considered, due to lack of adequate information for assessing their eligibility.

Rationale

16. The proposed Additional Financing, in the amount of US$450 million, will help scale up and accelerate the implementation of the Project and contribute to its sustained financing. The Borrower requested that this scale-up be processed as an AF, rather than a new operation, for two main reasons: (i) the Project is performing satisfactorily and the proposed Project activities are a natural continuation of the current Project activities and can be easily managed with the borrower’s existing implementation capacity and (ii) the shorter processing time of an AF could allow for an expedited loan ratification and effectiveness, thus allowing the AF to contribute to the Government’s objective of strengthening the FA system and contributing right away to its sustained financing in 2018. The proposed activities are consistent with the original PDO and are aligned with the current CPS/PLR.

17. Project Performance to date. The most recent Implementation Status and Results Reports (ISR) for the Project shows that the Project’s results have been generally consistent with or better than the expectations set out in the PAD. Both Implementation Performance and Progress towards the Development Objective have been consistently rated Satisfactory since Effectiveness. The US$ 600 million loan for the Children and Youth Protection Project (Ln. 8633 AR/P158791) was approved by the Board of Directors on June 30, 2016 and became effective on September 30, 2016. The Closing Date is December 31, 2020. As of June 30, 2018, the Project had disbursed US$ 492 million, representing 82 percent of the original Loan amount. The Mid-term Review will take place in October 2018.

18. Financial support to the AUH, the most responsive and effective tool of the SSN, becomes even more relevant in the context of fiscal consolidation and of the potential poverty impact of an economic downturn in a more adverse scenario. A slowdown of economic activity is likely to have a negative impact on fiscal revenues, in times of budget reviews aimed at reducing fiscal deficits. Financial support to the SSN through the AUH is expected to cushion the impact of measures that could otherwise result in poverty increases. The prioritization of this financial support is in line with the social spending floor included in the IMF program.

19. The proposed restructuring that is being processed together with the AF would support the improvement of the quality of the SP delivery system in Argentina, particularly the SSN. The Project aims to support ANSES to continue and complete existing structural, administrative improvements as well as introducing new ones that go beyond coverage expansion. The mitigation capacity of the SSN to respond to increases in poverty will be directly strengthened by such improvements, which will make the program more inclusive and cost-effective. These include: (i) improvements in ANSES’ administrative records to reduce to a minimum the number of children with missing or incomplete data; (ii) a more



beneficiary-friendly method to show proof of compliance with co-responsibilities. Such improvements increase the system’s mitigation capacity in times of need.

20. The proposed AF is well aligned with the Country Partnership Strategy (CPS) for Argentina FY15-FY18, as revised by its Performance and Learning Review (PLR) dated January 13, 2017.10 The PLR confirmed the broader focus areas for the Bank’s engagement identified under the CPS and, with the new Government in place, strengthened the collaboration between Argentina and the WBG. The Project fits squarely with the poverty and shared prosperity focus of the PLR, especially its second pillar on “Increasing access and quality of social infrastructure & services for the poor”. The child benefit contributes to this pillar by preventing households from falling into poverty during a period of economic transition, as it provides a crucial support for vulnerable households to meet their most important needs and not forgo vital access to basic services. Also, by linking the income transfer effectively to the completion of health and education standards, the program represents an important building block to break the inter-generational transmission of poverty, as it promotes human development.

21. The World Bank Group is developing a new Argentina Country Partnership Framework (CPF) FY19-FY22, which is expected to build on the current CPS program and focus on achieving the WBG twin goals through four interdependent focus areas closely linked to the priorities areas identified by the recent Argentina Systematic Country Diagnostic (SCD): putting the macroeconomic and fiscal fundamentals in place; improving competitiveness and productivity; fostering an inclusive economy; and strengthening environmental sustainability and harnessing natural capital for growth.

II. DESCRIPTION OF THE ADDITIONAL FINANCING

22. The proposed AF and restructuring would scale up the Project’s activities and support achievement of its Development Objectives. The resources of the Additional Financing would be allocated to Component 1 (financing the Universal Child Allowance) for cost-effectiveness reasons. The following changes will also be introduced: (i) setting new DLI targets associated with the new funding for Component 1, reflecting the faster-than-expected achievements of the Project; (ii) adding new and innovative activities to be carried out under Sub-component 3.1, financed with savings from the successful implementation of the original loan; (iii) including new indicators to reflect both these new activities and to improve the monitoring of the already existing strategies for expanded coverage; and (iv) adopting the Bank’s new procurement framework. The inclusion of these new activities, the revision of the results framework, and the adoption of the new procurement framework would be realized through a Level 2 restructuring, reflected in an amendment of the original loan agreement. Except for the activities to be included in Sub-component 3.1, no further changes are proposed for components 2, 3 and 4. Implementation arrangements, safeguards, social accountability and citizen engagement, and risks will remain unaltered. The new activities to improve the delivery systems will be financed through savings resulting from efficient implementation of the Project, thereby improving cost-effectiveness.

23. Additional funding will finance AUH grants to AUH beneficiaries. As in the original Loan, disbursements will be approved to reimburse grant payments, with a schedule that links them to achievements in two target indicators. The AF includes retroactive financing of up to 20 percent of the loan amount (US$ 90 million) upon Loan effectiveness, six additional disbursements of US$ 50 million, and

10 Performance and Learning Review dated January 13, 2017 (Report No. 110546-AR), for the Country Partnership Strategy FY14-FY18 for Argentina, discussed by the Executive Directors on September 9, 2014 (Report No. 81361-AR).



a seventh and a final disbursement of US$ 60 million minus the front-end fee, for a total of US$ 450 million. As in the original loan, except for the first disbursement which will take place upon effectiveness of the additional loan and would constitute retroactive financing, each subsequent disbursement will take place after at least 3, 6, 9, 12, 15, 18, 21 months from the Signature Date of the Loan Agreement for the AF.

24. As of May 2018, 469,000 children were still being excluded from the eligibility assessment due to a lack of adequate information. ANSES plans to reduce this figure by about 53 percent by the end of AF implementation, in December 2020. To reach this goal, ANSES will accelerate its work with civil registries and other agencies, as well as the implementation of its territorial strategy to collect missing information. Moreover, in line with the transparency part of the PDOs, ANSES will increase the frequency of publication of the public reports from quarterly to monthly. While the expenditures for the AUH program are specifically protected in the Government plan supported by the IMF, an expansion of the program to cover an additional 250,000 children would amount to US$46 million annually or 0.01 percent of GDP11.

25. Planned activities will focus also on the collection of evidence to prove compliance with education and health requirements for AUH beneficiaries. AUH requires beneficiaries to follow the mandatory vaccination calendar, undergo regular health check-ups, and attend school at both primary and secondary levels. The system currently requires beneficiaries to obtain evidence of their compliance by downloading forms from the ANSES webpage, obtaining certifications from schools or health service providers, and bringing them back to ANSES offices. This cumbersome mechanism creates information barriers and transaction costs that result in many beneficiaries having their benefits reduced or suspended, in most cases due to difficulties with the certification paperwork, but not necessarily with actual compliance. Thus, ANSES is developing a series of actions to improve information exchanges between ANSES and beneficiaries, including internet-based applications and improved coordination with providers of health and education services (which are under the jurisdiction of provinces) to simplify and accelerate information flows. These improvements will also be less costly both for the implementing agency as well as for the beneficiaries. These activities include:

a) the implementation of mechanisms to improve the verification of compliance of co-responsibilities under the AUH, through information technology applications that can be operated directly by AUH Recipients. More specifically, smartphone applications to allow beneficiaries to remotely check (first stage), download (second stage) and upload forms (third stage) would be developed, eliminating the need to schedule appointments and to bring evidence to an ANSES office. This first activity to be implemented is aimed at exploiting the advances in technology to increase the citizen engagement, and to reduce the transaction costs associated with the cumbersome paperwork currently needed to prove compliance;

b) the development and operation of an early alert system for both AUH beneficiaries as well as provinces. This would consist of early alerts to beneficiaries at risk of suspension via radio, mobile text messages, voice recorded messages, web banners, personalized emails, and messages printed in the payment orders (for those getting paid via post offices). In addition, ANSES has recently launched a new and more active strategy consisting of sending early alerts to the provinces, who are responsible for delivering education and health services, in the form of

11 This estimate assumes that 32.8 percent of those children with complete ID information in ANSES records will enter one ANSES FA programs.



confidential lists of beneficiaries at risk of being suspended from the program due to lack of proof of compliance;

c) the design of mechanisms for direct verification of compliance of co-responsibilities under the AUH, including the improvement of information flow among ANSES, MDS and the provincial Ministries of Health and Education. Although this is an existing activity, the AF and restructuring introduces a concrete mechanism to verify compliance in a systemic way, relieving the beneficiaries from the responsibility of doing so. ANSES is working to develop a system that would allow provinces to inform about school attendance and health controls, inverting the burden of proof in the process. In the case of health requirements, ANSES is also exploring the use of data generated by Plan Sumar, a national non-contributory health insurance scheme.

III. KEY RISKS

26. The overall risk of the Project remains Moderate with this AF. The “technical design” risk, originally rated as Substantial, will be lowered to Moderate, given the positive experience in the implementation of the output-based mechanism. Agreements with both municipalities and provincial civil registries have been signed, the respective outputs have been delivered and paid. The remaining risks are unaltered with respect to the original assessment.12 The Project has been screened for short-term and long-term climate change and disaster risks and no relevant risks have been detected.

IV. APPRAISAL SUMMARY

A. Economic and Financial Analysis

27. The economic analysis prepared for the original Project remains relevant. With the AF the Internal Rate of Return (IRR) increases by 26.8 percent, from the originally estimated rate of 8.2 percent to 10.4 percent13. Two factors explain this significant increase. First, the original ‘benefits’ planned to take place over four years, have been exceeded (doubled) within the first two years and in a more cost-effective way than was envisaged. Second, the innovative activities to be included in this AF will be financed through those savings. Hence, no additional ‘cost’ will be incurred. Moreover, this AF is updating the results framework to indicate that by the end of the Project, the original target of half a million children to be included in the eligibility process of AUH will be surpassed by a factor of 2.5. The benefits of the Project are estimated as the net present value of the returns to schooling resulting from extended coverage of the AUH program.

28. The expenditure of the FA programs run by ANSES was US$ 4.8 billion, which accounts for 1.29 percent of GDP in 2017. This figure includes AUH (0.46 percent of GDP), the contributory FA program for private sector workers (0.63 percent of GDP), the FA program that cover the children of pensioners (0.17 percent of GDP) and the beneficiaries of the unemployment insurance (0.02 percent of GDP). Considering the resources mobilized by both loans under the Children and Youth Protection Project, a total of US$1.05 billion will have been invested in this core program of the SSN in Argentina, which represents about 10 percent of total AUH expenditures over the lifetime of the Project. So far, the Project has completed the ID information (link with parent’s ID) of 1,056,837 children of whom about 368,000 (32 percent) are now 12 The “institution capacity” risk will remain rated as Substantial as the team confirms that this was correctly assessed at the start of the Project. The risk mitigation strategy continues to be close monitoring and coordination by the Bank team, and improved processes by ANSES for verification of eligibility and compliance with co-responsibilities. 13 For a detailed explanation of the methodology, please see Annex 6 in page 57 of the Original Project Appraisal Document (Report No: PAD1853)



receiving benefits from one of the FA programs. So far, 3.6 percent of the coverage expansion is explained by the children included by the activities financed by the Project. The AF aims at completing the data for 250,000 children which may result, if all were eligible to receive the benefit, in an expansion of coverage (and expenditure) equivalent to 4.4 percent. In terms of GDP, this marginal coverage expansion would increase the total expenditure of the FA programs from 1.29 percent of GDP to 1.34 percent of GDP.

B. Technical

29. The new activities to be incorporated with the AF with restructuring do not require a re-appraisal of the original technical design, which remains robust.

C. Financial Management

30. Financial management (FM) and disbursements arrangements for the scaled-up activities will follow the arrangements already in place for the original Project under Component 1. ANSES will continue to be responsible for the Project’s FM and disbursement functions. The Project has adequate FM arrangements in place that have ensured the provision of timely and reliable information required to manage and monitor Project implementation as evidenced by the last FM implementation support mission carried out in April 2018.

D. Procurement

31. The Project will adopt the World Bank’s new Procurement Framework. This requires a Project restructuring to amend the original loan agreement. The procurement plan will not be affected by the AF, since the activities financed with the AF are not procurable. A new version of the Operations Manual (OM) incorporating the change in procurement framework has been reviewed and is acceptable to the Bank.

E. Social (including Safeguards)14

32. The scaled-up Project activities will not trigger new safeguards policies. The Project triggered OP 4.10 (indigenous Peoples) and the National Indigenous Peoples Plan (NIPP) prepared at the outset of the Project remains valid with the AF. The NIPP is being implemented through Sub-component 2.3 by ANSES and the Ministry of Social Development (MDS), to improve access to AUH for indigenous populations. These activities require close coordination with local indigenous organizations and other public institutions (e.g., provinces and municipalities), and ANSES and MDS are coordinating to make sure the Project reaches its targets. The implementation of the Project’s social safeguard is Satisfactory.

33. During Project/AF implementation, collaboration between ANSES, the National Ministry of Social Development (MDS) and National Institute for Indigenous Affairs (INAI) will continue to improve efficiency and cultural appropriateness of the specific activities implemented under the parent Project and this AF. To date, these activities have included 168 field visits, reaching 861 indigenous communities between 2015 and 2017, and 121 additional field visits are being implemented during 2018 to reach the target of 18,000 children under 18 years old living in indigenous communities that have been identified through the completed socioeconomic survey (ficha social). In addition, 350 community leaders are receiving training to serve as a link between their communities and the Government.

14 Although the Summary Table in page 20 reflects that there would be a “Change in Safeguard Policies Triggered”, no new Safeguards policies are being triggered by the AF. The check mark on the ‘Yes’ column is due to an update in the text associated to the triggered OP 4.10 (Indigenous Peoples), which describes the activities carried out during implementation.



34. Finally, inter-ministerial roundtable councils have been created and operate in five pilot regions in the Provinces of Chaco, Formosa, Misiones, Salta and Neuquén to provide a comprehensive approach to solving indigenous communities’ challenges. These councils have representatives from ANSES, INAI, the Ministry of Labor, Employment and Social Security, the Secretariat of Family Agriculture, and the National Institute for Agricultural and Cattle Technology, among other public-sector institutions. During 2018 this pilot is expanding to two additional regions in the Provinces of Catamarca and Buenos Aires. All the field-based activities are not only working to reach beneficiaries but also serving as channels to receive continuous beneficiary feedback through direct interaction with communities and their representatives.

F. Environment (including Safeguards)

35. The Project’s Category C rating for environmental assessment purposes remains unchanged with the AF, consistent with the provisions of OP 4.01. The AF does not trigger any of the World Bank environmental safeguards policies, as none of the AF-supported activities are linked to carrying out physical works/interventions. The Project has not triggered any environmental safeguard issues to date, and the AF is not expected to imply any environmental risks or to lead to any adverse environmental impacts. There are no unresolved safeguard issues and negative impacts are not expected. The Project’s social safeguard performance is rated Satisfactory.

V. WORLD BANK GRIEVANCE REDRESS

36. Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported Project may submit complaints to existing Project-level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project-affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/en/projects-operations/products-and-services/grievance-redress-service. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org.

http://www.worldbank.org/en/projects-operations/products-and-services/grievance-redress-service

http://www.inspectionpanel.org/



VI. SUMMARY TABLE OF CHANGES Changed Not Changed

Results Framework ✔

Components and Cost ✔

Disbursements Arrangements ✔

Safeguard Policies Triggered ✔

Procurement ✔

Implementing Agency ✔

Project's Development Objectives ✔

Loan Closing Date(s) ✔

Cancellations Proposed ✔

Reallocation between Disbursement Categories ✔

EA category ✔

Legal Covenants ✔

Institutional Arrangements ✔

Financial Management ✔

APA Reliance ✔

Implementation Schedule ✔

Other Change(s) ✔

VII. DETAILED CHANGE(S) COMPONENTS

Current Component Name Current Cost (US$, millions)

Action Proposed Component Name

Proposed Cost (US$, millions)

Universal Child Allowance program financing

522.00 Revised Universal Child Allowance program financing

970.87



Closing the coverage gaps of the Universal Child Allowance program

53.60 No Change Closing the coverage gaps of the Universal Child Allowance program

53.60

Institutional Strengthening of ANSES in information procedures and transparency and Project Management

10.50 No Change Institutional Strengthening of ANSES in information procedures and transparency and Project Management

10.50

Institutional Strengthening of the Ministry of Social Development and Project Management

12.40 No Change Institutional Strengthening of the Ministry of Social Development and Project Management

12.40

TOTAL 598.50 1,047.37

DISBURSEMENT ARRANGEMENTS Change in Disbursement Arrangements Yes

Expected Disbursements (in US$) DISBURSTBL Fiscal Year Annual Cumulative

2016 0.00 0.00

2017 299,400,000.00 299,400,000.00

2018 191,500,000.00 490,900,000.00

2019 291,200,000.00 782,100,000.00

2020 208,600,000.00 990,700,000.00

2021 56,675,000.00 1,047,375,000.00

SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT)

Risk Category Latest ISR Rating Current Rating Political and Governance Moderate Moderate Macroeconomic Moderate Moderate



Sector Strategies and Policies Low Low Technical Design of Project or Program Substantial Moderate Institutional Capacity for Implementation and Sustainability

Substantial Substantial Fiduciary Moderate Moderate Environment and Social Low Low Stakeholders Moderate Moderate Other Overall Moderate Moderate

Safguard_Table COMPLIANCE

Change in Safeguard Policies Triggered

Yes

Safeguard Policies Triggered Current Proposed

Environmental Assessment OP/BP 4.01

Yes Yes

Performance Standards for Private Sector Activities OP/BP 4.03

No No

Natural Habitats OP/BP 4.04

No No

Forests OP/BP 4.36

No No

Pest Management OP 4.09

No No

Physical Cultural Resources OP/BP 4.11

No No

Indigenous Peoples OP/BP 4.10

Yes Yes

Involuntary Resettlement OP/BP 4.12

No No

Safety of Dams OP/BP 4.37

No No

Projects on International Waterways OP/BP 7.50

No No



Projects in Disputed Areas OP/BP 7.60

No No

LEGAL COVENANTS2

LEGAL COVENANTS – Additional Financing Children and Youth Protection Project (P167851) Sections and Description

OPS LEGAL CONVENANT CHILD NODATA No information available

Conditions



VIII. RESULTS FRAMEWORK AND MONITORING

Results Framework

COUNTRY: Argentina Additional Financing Children and Youth Protection Project

Project Development Objective(s)

The Project Development Objectives are to: (i) expand coverage of the Family Allowances programs; and (ii) improve transparency of social protection programs implemented by ANSES.

Project Development Objective Indicators by Objectives/ Outcomes

RESULT_FRAME_T BL_ PD O

Indicator Name DLI Baseline Intermediate Targets End Target

2019 1 2 3 4 2021

Expand coverage of the Family Allowances programs (Action: This Objective is New)

Number of children under 18 years old with complete records in ANSES' ADP database for AUH eligibility purposes. (Number)

11,583,647.00 11,770,773.00 12,105,364.00 12,948,254.00 13,069,952.00 13,181,650.00

Action: This indicator has been Revised

Beneficiaries of Safety Nets programs (number) (CRI, Number)

7,897,000.00 7,997,000.00 8,097,000.00 9,173,000.00 9,273,000.00 9,373,000.00




RESULT_FRAME_T BL_ PD O


2019 1 2 3 4 2021 Beneficiaries of Safety Nets programs - Conditional cash transfers (number) (Number)

3,798,000.00 3,898,000.00 3,998,000.00 3,937,000.00 3,980,000.00 4,023,000.00

Beneficiaries of Safety Nets programs - Conditional cash transfers - Female (number) (Number)

1,899,000.00 1,949,000.00 1,994,000.00 1,968,000.00 1,990,000.00 2,011,000.00

Beneficiaries of Safety Nets programs - Female (number) (Number)

3,949,000.00 3,999,000.00 4,049,000.00 4,586,000.00 4,636,000.00 4,686,000.00

Improve transparency of the Social Protection programs implemented by ANSES (Action: This Objective is New)

Number of published social security monitoring reports (Number)

0.00 2.00 4.00 6.00 8.00 10.00

Action: This indicator is New

PDO Table SPACE

Intermediate Results Indicators by Components

RESULT_FRAME_T BL_ IO


2019 1 2 3 4 2021

Closing the coverage gaps of the Universal Child Allowance program (Action: This Component is New)

Number of children under 18 years old whose information 0.00 0.00 400,000.00 900,000.00 1,000,000.00 1,100,000.00





2019 1 2 3 4 2021 has been completed at ANSES' ADP through activities in civil registries (Number)

Number of published AUH monitoring reports (Number) 0.00 4.00 8.00 13.00 25.00 37.00


Percentage of AUH beneficiaries for which the payment has been suspended due to lack of evidence of compliance with co-responsibilities (Percentage)

11.40 11.40 11.00 10.50 10.00 9.50

Number of active Territorial Action Plans (PAT) (Number) 0.00 0.00 15.00 50.00 90.00 100.00

Number of households with socioeconomic survey completed (ficha social) (Number)

0.00 0.00 17,000.00 57,000.00 97,000.00 120,000.00

Number of children under 18 years old that have been identified with the completed socioeconomic survey (ficha social) (Number)

0.00 0.00 42,500.00 142,500.00 242,500.00 300,000.00


Number of children under 18 years old that have been identified with the completed socioeconomic survey (ficha

0.00 0.00 3,000.00 7,000.00 12,000.00 18,000.00





2019 1 2 3 4 2021 social) that live in indigenous communities (Number)

Institutional Strengthening of ANSES on information procedures and transparency and Project Mgmt (Action: This Component is New)

Percentage of ANSES grievances responded in 20 days or less (Percentage)

50.00 50.00 60.00 70.00 80.00 90.00

Average response time to AUH grievances. (Days) 21.00 21.00 20.00 15.00 10.00 5.00


List of beneficiaries suspended or to be suspended sent to provinces (Number)

0.00 0.00 0.00 4.00 12.00 18.00


Digital mobile application to download and upload proof of compliance with corresponsibilities (Yes/No)

No No No No Yes Yes


Number of student rosters sent by provinces to ANSES (Number)

0.00 0.00 0.00 0.00 4.00 8.00


Institutional Strengthening of the Ministry of Social Development and Project Management (Action: This Component is New)





2019 1 2 3 4 2021

Strengthening the MDS capacity to implement, monitoring and evaluate Social Programs (Text)

.

Development of the Instrument of household socioeconomic characterization -Inventory of MDS and subnational governments' social programs

Development of monitoring instruments -training to MDS staff and subnational governments -Manuals with procedures on rules' programs

Process and impact evaluation of key MDS' programs

Key elements of the monitoring system of MDS? programs functioning -Report on Impact evaluation of the AUH

IO Table SPACE

Monitoring & Evaluation Plan: PDO Indicators Mapped

Indicator Name Definition/Description Frequency Datasource Methodology for Data Collection

Responsibility for Data Collection

Number of children under 18 years old with complete records in ANSES' ADP database for AUH eligibility purposes.

This indicator shows the number of children with CUILs linked to parents' CUILs and thus, able to participate in the AUH eligibility process. Unit of measure: Number of children under 18 years old.

Biannual / Quarterly

ANSES Statistical Report

National Social Security Administration

Beneficiaries of Safety Nets programs (number)

This indicator measures the number of individual beneficiaries covered by safety nets programs supported by the Bank.

Biannual

ANSES' Statistical Report




Safety nets programs intend to provide social assistance (kind or cash) to poor and vulnerable individuals or families, including those to help cope with consequences of economic or other shock.

Beneficiaries of Safety Nets programs - Conditional cash transfers (number)

Follows the safety nets programs' classification used in SP Atlas.

Quarterly


Administration of the Social Security Administration

Beneficiaries of Safety Nets programs - Conditional cash transfers - Female (number)

This indicator measures the number of AUH female beneficiaries covered by the Family Allowance System, managed by ANSES.

Biannual



Beneficiaries of Safety Nets programs - Female (number)

This indicator measures female beneficiary participation in SSN programs. It has the same definition as the "Beneficiaries of Safety Nets programs" but applies only to female. This indicator will yield a measure of coverage of SSN projects disaggregated by gender (in absolute numbers)

Biannual

ANSES? Statistical Report




Number of published social security monitoring reports

This indicator reflects the biannual published monitoring reports of the social security programs.

Biannual

ANSES’ Statistical Report published through ANSES’ website.


ME PDO Table SPACE

Monitoring & Evaluation Plan: Intermediate Results Indicators Mapped

Indicator Name Definition/Description Frequency Datasource Methodology for Data Collection

Responsibility for Data Collection

Number of children under 18 years old whose information has been completed at ANSES' ADP through activities in civil registries

This indicator shows the number of children's CUILs that have been linked to parents' CUILs and are able to participate in the AUH eligibility process, based on information provided by the activities with civil registries described in Sub-component 2.1


Administrative data Biannual

Number of published AUH monitoring reports

This indicator reflects the monthly published monitoring reports of the AUH program as described in the Operational Manual.

Monthly

Administrative data


Percentage of AUH beneficiaries for which the payment has been suspended due to

The indicator is estimated as the number of AUH

Annual

Administrative Data, National Social Security

Administration



lack of evidence of compliance with co-responsibilities

benefits that have been suspended due to lack of compliance with co-responsibilities, as a percentage of the eligible beneficiaries (monthly benefits paid plus suspended), during the month in which benefits have been suspended.

measured in August each year.

Number of active Territorial Action Plans (PAT)

This indicator shows the number of agreements signed by ANSES and MDS with selected municipalities, including a PAT, to reduce the coverage gaps of AUH.

Biannual

Administrative Data

Ministry of Social Development

Number of households with socioeconomic survey completed (ficha social)

This indicator shows the number of households visited by municipal and MDS staff, where the ficha social has been applied.

Biannual

Administrative data


Number of children under 18 years old that have been identified with the completed socioeconomic survey (ficha social)

This indicator shows the number of children whose information has been completed on ADP database through the activities described in Sub-component 2.2

Biannual

ANSES Statistical Report

Administration of the Social Security Administration

Number of children under 18 years old that have been identified with the

This indicator shows the number of children whose

Biannual

Administrative data National Social Security

Administration



completed socioeconomic survey (ficha social) that live in indigenous communities

information has been completed through the activities described in Sub-component 2.3

Percentage of ANSES grievances responded in 20 days or less

This indicator reflect the progress in the percentage of grievances received by ANSES that have been responded according to established procedures, described in the Operational Manual.

National Security Administration

Administrative data Biannual

Average response time to AUH grievances.

This indicator represents the number of working days in which claims related to AUH registered by the ANSES'�� GRM have been responded.

Biannual

Administrative data


List of beneficiaries suspended or to be suspended sent to provinces Yearly

Administrative records

ANSES

Digital mobile application to download and upload proof of compliance with corresponsibilities

Digital mobile application developed by ANSES that is operative and can be downloaded by beneficiaries to improve citizen engagement and facilitate verification of compliance with co-responsibilities

Once in the lifetime of the project

ANSES systems

ANSES



Number of student rosters sent by provinces to ANSES

Number of student rosters sent by provinces to ANSES to pilot and develop a mechanism for the systemic verification of the co-responsibilities.

Bi-annually

Administrative records

ANSES

Strengthening the MDS capacity to implement, monitoring and evaluate Social Programs

This indicator shows the progress in the implementation of the activities described in Component 4.

Biannual

Administrative data


ME IO Table SPACE



Annex I

1. The Disbursement Linked Indicators for the Additional Financing shall be as follows:

Disbursement Indicators Number of children under 18 years of age

with complete records in ANSES ADP

Number of AUH Reports (cumulative since

Signature Date of original Loan) published and publicly accessible

First Set of Target Indicators 12,930,329 10 Second Set of Target Indicators 12,948,254 13 Third Set of Target Indicators 12,976,178 16 Fourth Set of Target Indicators 13,009,103 19 Fifth Set of Target Indicators 13,037,028 22 Sixth Set of Target Indicators 13,069,952 25 Seventh Set of Target Indicators 13,097,877 28 Eight Set of Target Indicators 13,125,801 31



Annex II

1. This Annex describes the Social Protection (SP) System in Argentina with specific focus on the Universal Child Allowance program (or AUH according to the acronym in Spanish), and its key and central role in the Social Safety Net (SSN). The Annex describes one of the programs’ main outstanding challenges: closing the coverage gap and how the proposed AF would support ANSES to successfully close the gap. This Annex also assesses the potential mitigation capacity that the AUH could have in the face of adverse macroeconomic conditions.

Evolution of Social Protection in Argentina

2. The social protection system in Argentina is constantly evolving. The origin of Argentina’s Social Protection System date to the introduction of pension programs organized as contributory schemes and managed by trade unions at the beginning of the twentieth century. Coverage gradually expanded to other programs, including family allowances (that provided child benefits to formally employed parents), unemployment and health insurance. In the 1960s, the Social Security system started to consolidate and in the early 1990s the National Administration of Social Security (ANSES) was created to manage most contributory pension schemes, the family allowances programs and the Unemployment Insurance program.

3. As a result of the deep economic crisis experienced in 2002, Argentina undertook a major reform of the social protection system that significantly expanded coverage and increased expenditures. Today, the country’s SP system is well prepared to cushion the social effects of higher inflation and pressures on the labor market. Non-contributory schemes have recently complemented the traditionally contributory ones, providing quasi-universal coverage to the elderly and children and youth aged 18 years or less. The elderly are covered by pensions, survival, and disability programs. Children are covered by the Family Allowances system. Social Protection programs also include a contributory Unemployment Insurance scheme, “PROGRESAR”, a scholarship program run by ANSES, workfare programs run by the Ministry of Social Development (MDS), and training and intermediation services run by the Labor Ministry (MTESS) through a network of employment offices. MDS also manages five loosely articulated networks, which will be the basis for creating an integrated social protection network, a priority for the current administration.

4. An important reform to the Family Allowances system was introduced in October 2009 with the launching of the Universal Child Allowance (AUH). AUH is part of the Family Allowances and a cash transfer program with co-responsibilities in health and education that covers children in the most vulnerable households. The Family Allowances system includes four main programs: (i) a contributory program for children of formal workers in the private sector, civil servants working for the National Government and, as of April 2016, self-employed workers registered through a simplified taxation system called “Monotributo”; (ii) a non-contributory program for children of beneficiaries of other programs such as Pensions and Unemployment Insurance; (iii) the non-contributory AUH Program which covers children of the inactive, unemployed or low-income informal workers; and (iv) several smaller FA programs that cover children of civil servants in sub-national governments, managed by the provinces. Participation in AUH is subject to compliance with vaccination schemes, health checks and school attendance. Benefit amounts are the same in the three programs managed by the National Government. Benefits are adjusted four times a year using a formula that includes wages (30%) and inflation (70%).



Figure A1. Benefit transfer amount, relative to relevant income levels

Source: Staff estimations with data from 2017 Permanent Household Survey (second semester) Note: ‘AUH / AAFF min’ is the amount of the benefit of the Universal Child Allowance program (which is equivalent to the benefit of the contributory FA program for the workers with the lowest wages).

Institutional framework of Social Protection in Argentina

5. The main SP institutions in Argentina are ANSES, the Ministry of Labor, Employment and Social Security (MoL), and the Ministry of Social Development (MDS). ANSES is an autonomous agency, supervised by the Ministry of Labor, responsible for cash transfers including the national contributory social security system and, since the early 2000s, a number of social programs, such as the AUH, non-contributory pensions. It has a wide network of field offices and is widely recognized for its capacity to manage large programs.

6. The Ministry of Labor expanded its role in the mid-1990s by including a Secretary of Employment whose responsibility is to manage employment and training programs. The Ministry of Labor had traditionally focused on collective bargaining and the regulation of trade unions and social security policies, A series of small programs was consolidated into the Plan Trabajar, a workfare with average coverage of 150 thousand beneficiaries (individuals), with close links between the National Government and Municipalities and other NGOs. In 2002, in the midst of a serious economic and social crisis, the Plan Jefes was launched, reaching a peak coverage of 2 million beneficiaries (households) and replacing existing employment and cash transfer programs like Plan Trabajar. More recently, the Secretariat has focused on training and activation programs, such as the Training and Employment Insurance (launched in 2006 to offer training and intermediation services to former Jefes beneficiaries)



and the Youth Employment Program, which provides similar services to the population aged 18 to 24 facing difficulties securing formal employment.

7. The Ministry of Social Development (MDS) was created in 1999 as the economic and social situation began showing signs of deterioration that led to the 2002 crisis. It originally managed non-contributory pensions, a feeding program (that was implemented with support from the provincial governments) and in 2004 incorporated a program called Familias, which offered conditional cash transfers to former Jefes beneficiaries. The Ministry is currently in charge of promoting cooperatives and small entrepreneurs and has run a large program called Argentina Trabaja since 2009, that offers employment opportunities to low-skilled workers through cooperatives that are organized by municipalities or social movements. MDS has recently unified the Argentina Trabaja program and the Ellas Hacen program into a new one called Haciendo Futuro. The re-enrollment of beneficiaries is carried out by ANSES through the also recently launched One-Stop Shop, Ventanilla Unica.

Universal Child Allowance and the Social Safety Net

8. AUH has become the cornerstone of Argentina’s social safety net (SSN), and a key instrument to cushion the effects of poverty, unemployment and informality among the most vulnerable. The atomized series of scalable training or workfare programs that characterized the SSN in Argentina was merged into a single program for the unemployed and informal workers: AUH. This metamorphosis of the SSN resulted in greater efficiency and transparency of the policies aimed at covering the most vulnerable segments of the population. Currently, the FA programs spend nearly 1.3 percent of GDP, of which AUH represents 0.46 percent of GDP. Benefits as of July 2018 are AR$ 1,578 (US$56) per month, approximately 15 percent of the legal minimum wage. Due to its design, the coverage and costs of the FA programs are not affected by labor market performance, as beneficiaries may move from AUH to the contributory program and vice-versa, depending on their employment status. The AUH program introduced two salient design features: (i) all qualifying children in ANSES administrative records are automatically enrolled and eligibility is determined on a monthly basis; and (ii) 80 percent of the benefit is paid monthly, while the balance is paid once a year upon verification of compliance with co-responsibilities on health and education services, which is organized on the basis of an appointment scheme to avoid bottlenecks at local offices. The coverage of both FA programs has been recently expanded to include 263,366 children under the Sistema Único de Asignaciones Familiares, (SUAF) and the other FA programs, and 105,259 children under AUH.

9. Family allowances (both contributory and non-contributory) and pensions are effective in reaching a large proportion of families. Sixty percent of Argentines live in households with children and are either eligible for the contributory family allowance (35 percent) or the non-contributory one, AUH (25 percent). Another 15 percent of households, who do not have children, have a retiree or pensioner as one of the heads of households. In this sense, the Government has an effective tool to reach three-quarters of families through the social security system, that can potentially be used to mitigate the impacts of a downturn (lower wages) via a temporary adjustment of the benefits received by low-income earners. In addition, the continuum of the AUH and contributory family allowances implies that if a worker were to lose her formal job, the AUH would automatically become active, softening to some extent, the loss of income.



10. Sustaining the AUH program and expanding its coverage is key to protecting the most vulnerable, while the system should continue to be improved so that it can be an effective mitigating tool in times of need and contribute to breaking the intergenerational cycle of poverty. AUH ensures that families that lose formal jobs maintain access to child allowances, and thus mitigates negative welfare shocks for households. Moreover, the associated incentives to ensure that children remain enrolled in school and obtain adequate health care guarantees the long-term effects of the program on human capital accumulation and helps to break the intergenerational cycle of poverty. The AUH has created synergies with other important programs such as the Plan Nacer/Sumar, a health insurance program, which registers newborns into ANSES’ individual registry (known as the ADP). The design of AUH also has incentives to encourage school enrollment, which is particularly relevant for the age group of 16-18 years of age, which is characterized by a relatively high dropout rate.

11. AUH has a significant impact on poverty incidence, which is higher among children and youth, but not as much impact on labor supply. Microsimulations show that the AUH program reduces overall poverty by 3 percent, and 6 percent among household with children (see Figure A2). AUH plays an important role in providing basic income protection to households where both parents are either unemployed or informally employed. In fact, the incidence of AUH is largely concentrated in the lower deciles of the income distribution, complementing the coverage of the contributory FA programs (see Figure A3). Several studies, considering the effect of AUH on labor supply, found that it is either negligible or very small, marginally affecting informal-to-formal transitions among some groups of workers.

Figure A2. Poverty rates by age group with and

without AUH, 2015

Figure A3. Percentage of households receiving FA programs by income decile, 2016

Source: World Bank based on EPH

Structural improvements to AUH and the World Bank Project

12. This World Bank Project supports the closing of the coverage gap of FA programs via an active search strategy to find and include potentially eligible children who are not participating in the program, due to missing information. These activities are carried out through fieldwork and database improvements and benefit a large group of children who are currently excluded from the eligibility

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process, further expanding the impact of AUH on poverty and inequality. According to ANSES, as of December 2017, the monthly process used to determine eligibility for the benefit excluded 469,000 children (approximately 4.4 percent of the population under 18 years of age). In addition, as of May 2018, 424,000 children have had their benefit suspended due to the absence of proof of compliance with co-responsibilities. This figure is higher than expected given the available data on education attainment by age, possibly indicating that there are some weaknesses in the compliance verification process.

13. Closing the coverage gap of AUH requires a joint effort between ANSES and the Ministry of Social Development (MDS). While ANSES has proven to be key in the program’s management (determining eligibility, processing payments and verifying compliance of co-responsibilities), MDS is a key actor in the implementation of a pro-active enrollment approach as it is responsible for the identification and follow-up with participating households that have failed to comply with the co-responsibilities. Although ANSES carries out this process through a network of 375 local offices (UDAIs, Unidades de Atención Integral), proximity may be a barrier to compliance verification.

Figure A4. Children and youth by family allowances coverage

Source: ANSES

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Figure A5. Children under 18 years of age by type of coverage. 2016

Source: World Bank based on ANSES

14. The Project will help improve the ease of access into AUH and transparency of the process. First, unlike previous programs, ANSES automatically enrolls all children using administrative records, and it does not require an application from potential beneficiaries unless records are incomplete in the databases. Therefore, the quality of information in the ANSES ADP database (universe of IDs or CUILs) is key to determining the children’s eligibility to the program. Second, there is no beneficiary registry, as eligibility is determined every month, based on compliance with participation requirements. As ANSES needs to communicate with beneficiaries to provide them with debit cards to collect benefits, the address of beneficiaries recorded in ADP is essential to maximize the chances that the persons effectively receive the transfer. Since the launching of the AUH program in 2009, ANSES has been systematically improving the quality of its administrative records. Nevertheless, these records are still incomplete in many cases, because the link between children’s and parents’ IDs is missing, not allowing the children to be included in the eligibility process. This systemic problem calls for more pro-active intervention to reduce both the stock of excluded children under 18 years of age, as well as the flow of similar cases in the future.

Simulation of the mitigation capacity of SSN

15. Simulations find that an expansion in the AUH and/or an increase in benefit amounts could substantially mitigate the impacts of an economic deceleration or a recession. A quarter of Argentines live in households with children in which none of the parents are formally employed and are thus eligible to receive the AUH (Figure A6). Among them, moderate and extreme poverty rates are more than twice the national rates, and thus, more than half of the poor and three-quarters of the extreme poor belong to this group. While the transfer amount is not sufficient to lift many out of poverty, the program does represent an effective instrument to reach almost two-thirds of the poor. A simulation of an expansion of the AUH indicates that it could mitigate the impact of an economic contraction, effectively reducing the impact and protecting households from falling into poverty. Figures A7a and A7b show the simulated impact on poverty rates and gap for the group of households with children whose adults work in the



informal sector. Raising the benefit above the current level (20, 50 and 100 percent) could effectively reduce rates and the poverty gap.

Figure A6. Distribution of individuals by household composition

Source: Staff estimations with data from 2017 Permanent Household Survey (second semester)

16. Despite the reach of the FA and pension programs, a quarter of Argentines live in households for which the instruments for reaching them are less effective. These are household with no children, with heads or spouses who are either formal or informal workers. For those with formal wage employment (14.3 percent), the impact of a job loss can be lessened through the unemployment insurance if the worker was fired from the position. The benefit amount is limited (around 11 percent of the average wage in the formal sector) and can last from three months to up to a year, depending on the number of years worked in the formal system. After this period, the worker and her family would join the ranks of the 10 percent of households that is not currently reached by an automatic income transfer. Among them, they are more likely to be extremely poor than other groups and have incomes that, on average, amount to less than half of what is needed to cover a basic food basket (the extreme poverty line). For this group, alternative mechanisms would have to be found. Figures A8 and A9 provide poverty statistics for different household types (by composition and employment status) in Argentina.



Figure A7a and A7b. Simulations of poverty rates among potential beneficiary families (informal with children) under alternative AUH response

Source: Staff estimations with data from 2017 Permanent Household Survey (second semester) and national poverty lines. AUH benefit is equivalent to ARS $1,412 per child per month (in Sept-Dec 2017 values). For reference, extreme poverty line for an adult equivalent in GBA is ARS $ 2118, which is close to the $5.5 per person per day line for upper-middle income countries, and the moderate poverty line is ARS $ 5219 per adult equivalent per month.

17. The expansion of the AUH is expected to have a positive poverty and social impact. This reform will help to ensure that social protection programs reach the poorest and most vulnerable social groups in Argentina. Estimates from 2015 suggested that those children not currently reached by either AUH or family allowances are more likely to be poor and the proportion could reach as high as 27 percent among children in the bottom decile (and 16 in the second decile).15 These are largely due to missing information and other non-identified causes, with only a smaller proportion due to non-compliance with conditionalities. As the broadest social assistance program, the AUH will have the ability to expand and adapt to socio-economic conditions, preventing increases in poverty and supplementing the incomes of those who could become unemployed.

Figure A8. Moderate poverty rates by household composition

Figure A9. Extreme poverty rates, by household composition

Source: Staff estimations with data from 2017 Permanent Household Survey (second semester)

15 Cetrángolo, O. and Curcio, J. 2017. UNICEF-ANSES-Ministerio de Desarrollo Social, Buenos Aires.

60.9 59.3 56.752.3

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the world bank...the project development objectives are to: (i) expand coverage of the family...

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