Document of The World Bank

FOR OFFICIAL USE ONLY

Report No: 32449-BR

IMPLEMENTATION COMPLETION REPORT(CPL-45370)

ON A

LEARNING AND INNOVATION LOAN

IN THE AMOUNT OF US$5.05 MILLION

TO THE

FEDERATIVE REPUBLIC OF BRAZIL

FOR A

SOCIAL SECURITY TECHNICAL ASSISTANCE PROJECT

JUNE 30, 2005

BRAZIL COUNTRY MANAGEMENT UNIT, LCC5CPOVERTY REDUCTION AND ECONOMIC MANAGEMENT UNITLATIN AMERICA AND THE 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 May 26, 2005)

Currency Unit = Brazilian Real (R$) R$2.43 = US$ 1

US$ 0.40 = 1 R$

FISCAL YEARJanuary 1 - December 31

ABBREVIATIONS AND ACRONYMSANSES Argentina's National Social Security Administration CAS Country Assistance Strategy CNIS Unified Data Base of Social Information DATAPREV The Government's data processing service ESW Economic and Sector Work FGTS Severance Guarantee Payment Fund ICR Implementation Completion Report ICT Information and Communication Technology IADB Inter-American Development Bank INSS National Institute for Social Security IT Information Technology LCR Latin American and the Caribbean Region MARE Ministry of Administration and State Reform MPAS Ministry of Social Security NGO Non-Governmental Organization PAD Project Appraisal Document PCU Project Coordination Unit PDTI Information System Master Plan PMA Attention Improvement Program PMR Project Management Report QAG Quality Assurance Group RGPS Private Sector Workers Pension System (Regime Geral da Previdencial Social) RJU Public Sector Workers Pension System (Regime Juridico Unico) SAP Secretaria de Estado da Admiistracao e do Patrimonio (formerly MARE) SPC Secretariat of Complementary Pension Funds SIGECOF Intergrated Financial Management System S/SECAL Special Sector Adjustment Loan SUNSEP Superintendency of Pension Insurance UNDP United Nations Development Program

Vice President: Pamela CoxCountry Director: Vinod ThomasSector Manager: Ronald E. Myers

Task Team Leader/Task Manager: Chris Parel

BRAZILSOCIAL SECURITY TECHNICAL ASSISTANCE PROJECT

CONTENTS

Page No.1. Project Data 12. Principal Performance Ratings 13. Assessment of Development Objective and Design, and of Quality at Entry 24. Achievement of Objective and Outputs 65. Major Factors Affecting Implementation and Outcome 156. Sustainability 167. Bank and Borrower Performance 168. Lessons Learned 179. Partner Comments 1710. Additional Information 19Annex 1. Key Performance Indicators/Log Frame Matrix 20Annex 2. Project Costs and Financing 21Annex 3. Economic Costs and Benefits 23Annex 4. Bank Inputs 24Annex 5. Ratings for Achievement of Objectives/Outputs of Components 25Annex 6. Ratings of Bank and Borrower Performance 26Annex 7. List of Supporting Documents 27Annex 8. Borrower's Evaluation Report 28

Project ID: P062619 Project Name: BR INSS REF LILTeam Leader: Chris Parel TL Unit: LCSPSICR Type: Core ICR Report Date: June 28, 2005

1. Project DataName: BR INSS REF LIL L/C/TF Number: CPL-45370

Country/Department: BRAZIL Region: Latin America and the Caribbean Region

Sector/subsector: Compulsory pension and unemployment insurance (94%); Law and justice (5%); Central government administration (1%)

Theme: Law reform (P); Administrative and civil service reform (P); Social risk mitigation (P)

KEY DATES Original Revised/ActualPCD: 01/11/1999 Effective: 03/31/2000 05/24/2000

Appraisal: 03/25/1999 MTR: 10/01/2001 03/03/2002Approval: 02/07/2000 Closing: 12/31/2002 12/01/2004

Borrower/Implementing Agency: REPUBLIC OF BRAZIL/MINISTRY OF SOCIAL SECURITY (MPAS)Other Partners: N/A

STAFF Current At AppraisalVice President: Pamela Cox David de FerrantiCountry Director: Vinod Thomas Gobind T. NankaniSector Manager: Ronald E. Myers Danny LeipzigerTeam Leader at ICR: Chris Parel Mariluz CortesICR Primary Author: Denise von Gersdorff; Kathrin A.

Plangemann; Chris Parel

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)

Outcome: S

Sustainability: L

Institutional Development Impact: M

Bank Performance: S

Borrower Performance: S

QAG (if available) ICRQuality at Entry: S S

Project at Risk at Any Time: No

3. Assessment of Development Objective and Design, and of Quality at Entry

3.1 Original Objective:The objective of the Project was to provide technical assistance for the design and implementation of institutional and legal reforms in order to help put into effect constitutional changes in the Brazilian Government’s social security system, and for advancing changes in the system’s provisions regarding private sector workers.

To these ends, the Project plan called specifically for supporting measures to: (a) enable the National Institute of Social Security (INSS) to carry out new responsibilities; (b) strengthen the pension and insurance legal framework; and (c) strengthen supervision and regulation of the complementary pension funds system by the Secretariat of Complementary Funds (SPC).

These objectives were set to help further the Government’s pension reform program. The latter was part of the comprehensive fiscal reform campaign launched to overcome a crisis in Brazil at the end of the 1990s. This was fueled to a considerable extent by a sharp increase in pension expenditures and deficits, which contributed to an overall rise in the country’s fiscal deficits and its substantially increased public debt.

In November 1998, the Congress approved constitutional amendments which provided the basis for a first phase of social security reforms. The amendments were mainly aimed at: (a) introducing principles of actuarial and fiscal balance in private and public sector workers’ pension systems; (b) eliminating certain special benefit rules and regimes; and (c) enabling states and municipalities to create complementary pension funds. The Bank subsequently approved an S/SECAL of $757. 57 million in December 1998 in support of these policy actions, constituting its initial support of this phase of the pension reform program.

This loan for the Social Security Technical Assistance Project, along with the S/SECAL, were consistent with the June 1998 CAS Progress Report (Document R98-116). It called for quick Bank financial support for key reforms in such areas as social security if the Government responded to external shocks with suitable corrective measures. Still other Bank measures taken for these purposes included a State Pension Reform TA Project (PARSEP) and help in arranging a PHRD grant for preparation of a second Social Security S/SECAL.

The subject loan, in the course of seeking additional progress in pension reform, attempted to draw on the advantages of LIL features to provide some “learning and innovative” benefits. One of these elements was a provision to draw on, and to disseminate, international experience in pension reform. This was intended to inform social security stakeholders of the options available in such programs in order to have a more informed public (and possibly enlarging the constituency for reform). A second LIL aim was to define the parameters of possible solutions to the problems of restructuring social security institutions.

The Project’s objectives were well formulated and timely in relation to the Government’s problem. They were closely linked to the requirements for rationalizing the social security system's issues. The Project’s design provided clear and well-directed approaches to their remediation. Its components were well aligned with the desired institutional and technical

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changes.

3.2 Revised Objective:N/A

3.3 Original Components:Component 1. Restructuring of the INSS

The 1998 constitutional changes included provisions calling for reforms of the INSS (which administers the private sector workers' pension system-RGPS) in line with the Government's intentions of reducing that system's generous benefits formula. The authorities were also interested in the possible adoption of individual accounts under further pension system reforms.

In addition to these factors, attention was focused on requirements for restructuring the INSS in order to try to overcome some of its deficiencies. The Institute was then the composite of several merged prior organizations. It suffered also from the problem of a very large scale and costly operation. Its revenue collection and benefit control procedures were weak, and its customer service facility had a poor public image.

Consequently, the aforementioned S/SECAL set the stage for a series of remedial actions. It helped introduce measures to reduce INSS' costs and improve its collections. For this Project, it was decided to initiate even broader strengthening measures. These include an assessment of the Institute's strengths and weaknesses, based on which a strategic plan would be elaborated. (It should be noted though that consideration of the full implementation of the strategic plan was explicitly left for possible financing under a larger TA loan). In parallel, it was decided to determine what could be done to overcome INSS' lack of both reliable information on contributors and beneficiaries, as well as efficient data processing services.

(i) Diagnostic/Strategic Plan

This sub-component was to support the preparation of the diagnostic work and design of the Strategic Plan for institutional restructuring. It would evaluate possible institutional changes, define a future profile of the agency and formulate the Plan. Other activities included the evaluation and strengthening of the program to improve attention to users, improvement and validation of information system plan, audit planning and research. The aim of the Strategic Plan work was to design alternatives for the restructuring.

(ii) Information System Renewal Master Plan - PDTI

This sub-component was to diagnose the prevailing IT situation, design solutions and then develop a Master Plan for information system renewal. The renewal aimed: (a) to improve collection, monitoring and benefit payment functions; (b) adopt a system of individual pension accounts; (c) improve communications between INSS/MPAS and the Government's data processing agent; (d) improve client service center links to the information system; and (e) introduce an effective management information system.

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(iii) Implementation of Management of Contributors by Segment (SGS)

This sub-component was to expand the "collection by segments system" (SGS). This was established to implement a contributors' management system. It was focused on groups including the 10,000 largest employers which account for 70% of all collections. The idea was to build on activities completed including the system's design and installation. It envisaged the following complementary activities: (a) SGS installation in 195 centers; (b) training of supervisory staff in SGS uses; and (c) study and research.

(iv) Evaluation of CNIS

This sub-component was to evaluate the quality of INSS' Unified Databases of Social Information material for determining pension benefits. The INSS had made significant efforts to unify the different data bases of social information under the CNIS.

(v) Public Information Dissemination Strategy

This sub-component was to help design an effective strategy for informing social security stakeholders about the choices and implications of system reform. Component 2. Pension and Insurance Legal Framework

The Project was also concerned with the need for new parameters of the pension system for private workers to conform with the constitutional changes stipulating actuarial and fiscal balances. This component therefore called for studies to show trade-offs of different alternatives for achieving these balances.

(i) Regulation of Work-Related Injury Insurance

This sub-component would finance: (a) an evaluation of the proposed Injury Insurance Law, and (b) an examination of the regulation of private sector participation in the worker insurance system.

(ii) Regulation of the Private Sector Workers System

This sub-component was to prepare the legal framework for planned reforms of the RGPS, including the adoption of individual pension accounts. Activities to be financed would be: (a) the elaboration of actuarial models; (b) a study on expanding coverage of social security and (c) additional research.

Component 3: Strengthening of Secretariat of Complementary Pension Funds-SPC

The constitutional amendment for reforming the complementary system prescribed activities to eliminate or reduce the subsidization of these funds and to tighten their governance. Therefore, the SPC had undertaken institutional strengthening measures to enable it to implement these new provisions. Their main elements include: (a) the elaboration of laws and regulations regarding the

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constitutional changes, (b) upgrading the Secretariat's regulatory and supervisory activities, and (c) consideration of the creation of a new national agency which would regulate all pension funds according to a single set of business practice standards.

(i) Preparation of Complementary Laws and New Models

This sub-component would finance: (a) the preparation of complementary laws; (b) design and implementation of a new investment model; (c) preparation of actuarial, financial, registration, accounting and other modules; and (d) coordination of related activities.

(ii) Preparation of Ordinary Laws

This sub-component was to support the: (a) drafting of ordinary laws and regulations; and (b) the conduct of conferences and seminars on the new framework.

(iii) Strategic Plan for Regulatory Agency

This sub-component was to support the preparation of a strategic plan for the creation of a the new national agency to regulate complementary pension funds. The activities to be financed would be: (a) drafting of the plan; (b) equipment purchases; and (c) staff training.

(iv) SPC’s Information System

This sub-component was aimed at improving, expanding and upgrading SPC’s information system and related administrative procedures. The activities financed would be: (a) elaboration of a plan for these purposes; and (b) purchase of equipment and (c) training.

(v) External Information Network

This sub-component was to provide advisory services for preparing and implementing a new external information network. The Project would finance: (a) a design of the network; (b) equipment; (c) training; and (d) additional studies.

Component 4: Project Coordination

This component was to enable the implementing institution, the Ministry of Social Security and Social Assistance (MPAS), to establish a project coordinating unit (PCU). The component would provide funds for project administration assistance including training in Bank procurement, disbursement and financial management procedures; the purchase of equipment for the PCU and UNDP management services. It also aimed to create a Technical Unit in the Ministry to assist the PCU in meeting the technical requirements of the Project.

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3.4 Revised Components:The Project's plans regarding the institution for regulation of complementary pension funds were altered to the extent that the planned changes to affect the SPC were set aside. Only after the change in the Brazilian Government administration, did the authorities decide to proceed with the envisaged creation of a new autonomous national agency and new legislation was recently submitted to create a new autonomous organization, "PREVIC". Hence, much of the planned work on this activity was not carried out.

In their place, the Government requested the reallocation of the funds involved to provide greater support for the evaluation of CNIS than had been originally designed. The work done in the evaluation had shown a need to expand the existing date bases and create additional ones. As a result, the Government requested, and the Bank subsequently approved, the reallocation of Loan funds to meet the enlarged task.

3.5 Quality at Entry:Satisfactory. Quality at entry was not assessed by the Quality Assurance Group (QAG). This review concludes that the Project's quality at entry was satisfactory. The Project's objectives were consistent with the Government's need and program to improve the long-term actuarial balances of the social security system, in view of its heavy burden on public finances. The Project was well shaped to address the structural problems involved, alongside of the policy measures addressed by the S/SECAL and other Bank-assisted activities. It was thus consistent with the Bank's strategy too. The preponderant Loan support for INSS was appropriate, as well as suitably focused on the reforms it needed to discharge its new responsibilities. During project design, the operation's controversial aspects were well evaluated and covered (although the proposed creation of a new complementary fund national agency was not considered to be very risky). The design did not, however, include particularly substantial "learning and innovation" features.

4. Achievement of Objective and Outputs

4.1 Outcome/achievement of objective:Satisfactory. The Project achieved its main objectives. Its accomplishments can be expected to help arrest over time the growth of national expenditures and of the public sector pension system deficit, as well as to reduce the complementary funds' debt. In turn, these developments should contribute to the advancement of greater national equity.

It bears noting, though, that the Project's accomplishments were 'limited' by the influence of political forces on some planned measures. This applied most notably to the proposed creation of a new national agency for regulation of pension funds, discussed above, and IT strategy and platform definition. However, the deficiency in the case of SPC may be considered to have only constituted a temporary setback. The subsequent enactment of new legislation (Law MP 233) in December 2004 established a new autonomous supervision agency, which has taken over some of the supervisory functions of the SPC. It is expected that this will contribute to a more effective private pension system. In addition, there were also problems which still remain unsolved concerning the proposed improvement of the Ministry's IT operation. It proved difficult to obtain decisions on the related strategy and the platform.

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The project's accomplishments are also significant in that they advanced the changes needed for momentum in the second phase of the social security reform program. This was no small feat given that this reform has to be considered as meeting one of the most important challenges in Brazil. Significant political and technical obstacles still continue to impede these efforts but the project provided important assistance and resources for continuing analytical work and debate and many technical solutions. (Ref. section 4.2) Notable examples include the following:

(a) The Project contributed to strengthening the legal framework for pension reform through the design of three Complementary Laws, (two of them already approved by Congress) and the drafting of a Law on Injury Insurance.

(b) The Project contributed to the strengthening of INSS' institutional capacity. Its Strategic and Technology Master Plan is now beginning to be implemented (albeit slowly). It helped the INSS to reorganize its activities and staff, improve the calculation and approval of benefits, and to accelerate their payments. The effectiveness of the INSS was also enhanced by the improvements that were made to the integrated data base (CNIS). Similarly, the INSS strengthened its internal audit process and follow-up of large contributors.

4.2 Outputs by components:Component 1. Restructuring of the INSS

Enabling Legislation (Satisfactory)Output Sought: Enabling legislation to implement the Constitutional Amendment of 11/98.Target: To have enabling legislation in place Actual: This was completed and approved by Congress. The studies done with Loan funding that contributed to the drafting of laws included:

• Upgrading/reform of CNIS and verification of data quality and that the data could be used for calculation of benefits from 1976 Draft Law--Inversao do Onus da Prova (“Inverting the Burden of Proof”)

• Elaboration of a Draft Law regarding Workers/Workplace Insurance; publication of volume #5 of the Social Security Collection, "Work Injury Insurance System in the Americas” (Sistema de Seguro Contra Acidentes de Trabalho nas Américas).

Institutional reforms (Satisfactory)Output Sought: To have reforms in placeTarget: INSS diagnosis and Strategic Plan for institutional restructuring of this agency completed within 6 months after Loan effectiveness.Actual: INSS diagnostic and Strategic Plan involving numerous agencies and activities completed (note: it took about 12 months). The institutional reforms began to be implemented in a largely satisfactory manner.

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Sub-components:

(i) Diagnostic/Strategic Plan for the INSS (Satisfactory)

The following studies and activities were undertaken and completed. • Strategic Plan for INSS with recommendations completed.• Diagnostic of processes and service quality in the agencies completed, including the implementation of specific measures intended to improve attention to clients• Modernization and improvement plan for Internal Auditing completed.• Diagnostic and proposals made for restructuring INSS.• Institutional strengthening diagnostics/recommendations across key agencies undertaken.• Diagnostic/recommendations completed regarding administrative/judicial efficiency of collections.• 170 officials trained as a result of the above study and 40 officials were trained in fiscal management.• Computer equipment provided to 102 Executive Offices.• Data Mart (MIS) developed for Procuradoria.• Data Mart developed for Fiscal Planning and Collections Directory.

(ii) Information Systems Master Plan (Satisfactory)

Output Sought: Information Systems Renewal Master Plan (PDTI) finished Target: Information System Master Plan finished within 6 months after Loan effectivenessActual: Master Plan finished

Significant progress was made on the design of a high quality IT Strategy Plan. However, its development was not followed by significant progress in its implementation following the Lula administration's assumption of government. The new administration reviewed work done and made changes. Debates continue regarding key issues. Some criticism has been leveled at PROAST and the GOB regarding the need to evaluate more critically INSS's interactions with other institutions and programs. In particular, questions were raised as to whether it should have tackled the debatable issue of the role of DATAPREV, the Government agency which manages the INSS data base and has been criticized for its technical limitations and policy decisions. And greater attention should have been paid to data security in the design of the PDTI. But the PDTI, despite its criticisms, remains an important and technically sound contribution. In addition, component products included: (i) the completion of a diagnostic and recommendations for IT strategic architecture, and (ii) information systems strengthening activities implemented.

(iii) Implementation of the SGS system (Satisfactory)

Output Sought: Strengthening of the SGS system to manage large debtorsTarget: The SGS system implemented--connected to all management units--and INSS staff trained.Actual: System changes completed, plus provision of equipment for 103 INSS Management

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Units.

The following studies and activities were carried out.• Evaluation, review, conceptualization and detailing of the processes of the Active Debt-Divida Ativa system.• Redesign of the process of Judicial Collection of the INSS Divida Ativa in the states of Sao Saulo and Rio de Janeiro• Evaluation and reform of administrative and judicial collections verifying inconsistency of data, fragmentation of credits, low success rates-especially for large credits.• Training of 170 officials in reformed processes• 102 INSS Executive Agencies equipped and making use of the SIGS system, Internet, networks, etc.--acquisition of 148 microcomputers, 130 printers, 12 scanners, 29 notebooks• Training of 40 INSS staff in a Fiscal Management MBA course• Support for developing Data Mart for the area of "Fiscal Action Planning" of the INSS Collections Department• Definition of a "Portal of Fiscal Intelligence," (a managerial vision for planning supervisory)• Development of Data Mart for the Procuradoria, making available essential data for managing administrative and judicial collection efforts.

(iv) Evaluation of CNIS (Satisfactory)

Strengthening CNIS ("Unified Data Base of Social Information")--including evaluating its data and proposing improvements to the system—was contemplated in the original loan design. It expanded by the reallocation of funding (from the SPC component) to implement recommendations and carry out the work program identified in the initial studies. The studies undertaken were strategic, generally quite solid, comprehensive and well addressed. The implementation of study recommendations could possibly have been pushed more proactivly, which would have required stronger high level leadership, resolution of PDTI issues, and considerable staff training. The remaining challenges include greater exchange of information between different ministries.

The following studies and activities were completed:• Evaluation of quality of data• Development of GFIP information system for obtaining information directly from employers• Development of cadastre of natural persons • Development of program to permit migration of data to Oracle• Development of Data Mart for CNIS• Development of system to incorporate unemployment insurance information from the Ministry of Labor • Development of a security system controlling access to CNIS• Development of a system for identifying natural persons based upon Portuguese phonetics• Development of a system (Oracle) to recognize employees’ rights related to

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employment/remuneration• Implementation of OLTP technology in CNIS• Elaboration of Data Mart for CNIS-UNISYS• Elaboration of system for quality control of the data base of pessoas fisicas ("Protective Shield-Escudo Protetor")• Elaboration of system to develop the validate awards/payments of the INSS system (Projeto Ambiente de Homologacao- Homologation Environment Project)• Elaboration of a system to disseminate statistics—GFIP• Elaboration of Data Mart--CNIS-OracleElaboration of a system to disseminate statistics regarding legal persons pessoas juridicas of CNIS• Purchase and installation of six servers and other equipment for CNIS• Development of a Project to Create Statistical Indicators –GEFIP• Elaboration of a Strategic Communications Plan for social security• Elaboration of standard visual identity norms in INSS agencies• Acquisition of a large central storage equipment--server for the network servers system.

(v) Public Information and Dissemination Strategy. (Satisfactory)

Output Sought: Studies on expanding coverage Target: Studies completedActual: Studies completed

This component is rated satisfactory because of the sizeable number of activities carried out and their outreach. However, there was not always adequate support from the Ministry to carry out the component dissemination strategies. As a result, in some cases, the design of the dissemination was suboptimal in its targeting, and its implementation could have been more rapid and effective. It is also important to note that the studies performed contained qualitative analyses rather than quantitative ones.

Studies and activities completed:• Diagnoses of IT and "e-Government" to attend the production of films portraying reforms in employers' electronic payment of obligations ("guidelines for electronic payment of social security” and “payment of Social Security into individual retirement accounts”) and nation-wide dissemination • Elaboration of a prototype website to portray individuals social security situation (Prev-Cidadao)• Development of a website regarding INSS "INTRA-PREV"• Elaboration of a system to present on a website an extract of the work life of individuals• Contracting of consultants to support expansion effort in 10 states• Publication of "Social Security inclusion, and combating poverty", Social Security and Social Stability; and "Basic course in Social Security"• Training of all members of Regional Committees of the Social Stability Program• Publication of volumes on strategic topics: political economy of reform, actuarial and financial management, pension reform in Latin America, and the translation of actuarial

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mathematics of social security.

Component 2: Pension and Insurance Legal Framework (Satisfactory)

(i) Workers Accident Insurance Law –SAT (Modest)

Output Sought: Draft Workers Accident Insurance Law Target: Present a draft Law to CongressActual: Studies completed; a Final Draft Law was produced but was not submitted to Congress. Studies also included• Diagnostic/recommendations regarding repercussions of the new SAT model.• Survey leading to publication of Volume # 13 of the Social Security Collection Colecao Previdencia Social, "Machinery and Work Accidents"

(ii) Regulation of RGPS (Satisfactory)Studies included the following• Actuarial analysis --probability tables regarding the concession of benefits for new retirement/pension/LOAS beneficiaries.

• Study of the Actuarial Model for Government Employees--creation of a cadastre of 2,150 state and municipal laws and social security benefits in 900 municipalities.

Component 3: Strengthening of Secretariat of Complementary Pension Funds-SPC (Modest)

When the Government decided not to set up an independent SPC, work under this component was focused on more limited institutional and systems strengthening.

(i) Preparation of Complementary Laws and New Investment, Actuarial, Financial, Supervision Models (Satisfactory) Output Sought: Draft Ordinary Laws to Regulate Complementary Pension System Target: Required ordinary laws presented to Congress Actual: Several ordinary laws were presented to Congress

Studies carried out included the following.• Development of specific norms and analytic tools--resulting in a draft decree to regulate Complementary Law 109 of 2001.• Proposals to alter the minimum retirement age which influenced the improvement of actuarial results and financial health of systems, and the harmonization of legislative and actuarial practices.

(ii) Strategic Plan for new regulatory agency for Complementary Pension Funds (Unsatisfactory)

Output Sought: Strategic Plan for new regulatory agency for Complementary Pension Funds

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Target: Strategic Plan for new regulatory agency for Complementary Pension Funds Actual: This work was not done during loan implementation because the Cardoso administration ruled out proceeding with the creation of an autonomous agency.

(iii) Strengthening of SPC Information System (Modest)

Output Sought: Upgrade SPC information systemsTarget: Plan to expand and upgrade SPC's information system completedActual: A new system partially developed

Studies and activities undertaken included:• Digitalization and indexation of SPC archived documents resulting in facilitating access and dissemination of documents.• Development of specific norms and analytic tools--governing profitability calculation, budgeting, portability, market risks, and dissemination strategies.• Development of the DAIEA system that maintains data bases of affiliated complementary pension systems resulting in greater transparency, norms for calculation, standard reports, and facilitating policy development.• Development of an integrated MIS-SPC system and affiliated companies' systems

(iv) External Information Network and Institutional Strengthening Studies (Satisfactory)

Studies and activities carried out produced:• Publications (3) on Complementary Pensions' proportional deferred benefits, market regulation, principal norms.• Organization of events involving SPC, companies and government agencies with closed systems to explain the application of legislation.• Study on acquired rights and breaking contracts, which influenced the definition of plan parameters for financial equilibrium, age limits, compatibilization of rights with pension policy.• Manual of procedures on restructuring processes, documents, guidelines.• Training of 20 officials in the evaluation of assets and investment portfolios• Study on proposals to alter minimum retirement ages which impacted on improving actuarial results and financial health of systems, and equating legislation and actuarial realities.

Component 4: Project Coordination

Project Coordination was initially rated "highly satisfactory". Nearly the entire loan had been disbursed by the original Closing Date. Taking into account that the Ministry was not always an easy work environment, the PCU did well, e.g., to generate quality terms of reference for the consultants, evaluating proposals and performing the work required to negotiate and sign contracts.

However, the final period's work considered just "satisfactory" because of the delays in the purchase of the server which required extensions of the Closing Date of two years. The new administration, upon taking office, questioned the management and direction of the program and

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brought in fiscal inspectors to verify procurement. It also undertook changes affecting all PCUs in the Federal Government that resulted in an almost complete turnover of staff. This had less impact on PROAST than other MPS loans because most of the loan had been implemented.

Procurement Issues. Issues arose as a result of the changes in the PCU and resulting project implementation difficulties. A two year extension was allowed for the purpose of procuring a single large server, which also proved to be a difficult process owing to confusion regarding equipment specification and guarantees. These problems were identified during supervision missions. All procurement under these categories was halted. The Procurement Specialist concluded that the aggregate amounts could not be increased for a second time. The Disbursements Department indicated that the amounts disbursed in “excess" of the aggregate limit were ineligible expenditures and should be refunded to the Bank. The PCU suggested, that to solve the issue, they would reverse the disbursement applications of a number of contracts exceeding aggregate limits and fund them instead with counterpart funds. The idea was that, once refunded, these amounts would be available for use against subsequent expenditures, provided these were procured in accordance with Bank rules. The Bank accepted this proposal.

Auditing and Financial Management. Initially, there were concerns regarding auditing methodologies and supporting financial systems. The COFRE financial management system introduced by the PCU around the time of start-up was assessed by the Bank, and found to be adequate for generating financial reports and requisite information. It proved to be reliable. FMRs were submitted on a timely basis. In addition to improving financial management systems, the PCU was also instrumental in improving auditing of project funds and INSS funds. Good progress was made by moving towards greater ‘preventive auditing’ and the good practices initiated in the PCU were replicated in other ministries.

4.3 Net Present Value/Economic rate of return:Typically, activities of this nature are not subject to conventional economic analyses.

4.4 Financial rate of return:Typically, activities of this feature are not subject to conventional financial analysis

4.5 Institutional development impact:One of the principal objectives of the Project was to help bring about reforms to improve the Government agencies that oversee the pension system. This assessment concludes that the Project’s performance was satisfactory on balance in meeting this goal.

The Project was unsuccessful in realizing the goal of setting the basis for the creation of a new national agency of complementary pension fund regulation. As noted above, this intention was thwarted because of the Cardoso administration's decision to not implement the reform. To be sure though, as para. 4.1 indicates, this can be considered to have been a temporary shortfall since the passage of the 2004 law did ultimately result in the establishment of a new supervisory agency (which partly succeeds SPC). Meanwhile, the targeted plan for internal SPC improvements was developed.

The Project was more successful in bringing about the envisaged INSS improvements. The

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Government obtained the important agency assessment and resulting strategic plan, which sets a framework for accomplishment of the intended restructuring. Initial implementing actions have been taken. Thus, the target was met. And it merits noting that the Borrower’s segment of this ICR (ref. Annex 8) cited still other useful achievements than those reported in para. 3.3 on Component 1. These include the creation of a new information technology unit, installation of better yardsticks to gauge the performance of executing management units, and the installation of stronger controls on employer contribution payments.

Collectively, these actions represent a quite positive advance. However, they do not comprise fundamental structural improvements (which the Project did NOT promise). It is uncertain moreover how far and well the INSS strategic plan will be fully put in place.

COMPONENT/BENEFICIARY

ACTIVITIES/MAJOR PROJECTS

Current Use and Impact of Outcomes

I – Restructuring the INSS

INSS (Controller’s Division (‘Controladoria’), CGINF and SGS)MPS (SE, Social Communication)

1. INSS Strategic Plan The Annual Operating Plan of the INSS employs strategic guidelines established by the INSS Strategic Plan undertaken with Project resources.

2. Information Technology Master Plan

At present, all contracts and procurements involving the information technology area must be in line with the Information Technology Master Plan drawn up by the company contracted.

3. Implementation of Segment Management System - SGS.

The Segment Management System was an innovative task based on dividing debtors into different segments and different economic status levels. The training that was provided and the expanded technical resources incorporated by the SGS contributed to improvements in the quality of work.

4. Quality Assessment of CNIS data

The CNIS is the National Register of Social Information, basically a register containing data about Brazilian workers. The register is used by Social Security and a number of other government bodies. A range of measures and rules was introduced to enhance the security of the data contained in the CNIS. Furthermore, a quality evaluation was undertaken of such data, which confirmed that the registered data is reliable and can be employed for granting benefits from 1976 onwards, thereby eliminating the need for beneficiaries to present date-specific documentation. A Bill was drawn up covering utilization of all CNIS data in the process of automatic recognition of rights for the award of benefits for workers from 1976. However, this Bill has not yet been voted on in the Congress. The figures have in effect been used for calculating benefit payments from July 1994 onwards.

5. Strategic Social Communication Plan

A company undertook a survey dealing with the public’s image and opinion of, and satisfaction level with, the INSS. At present, the measures outlined in this Plan are used indirectly by the Ministry of Social Security, with the research data being employed as a source of information for social communication projects.

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II – Legal Structure of the Social Security General Regime – RGPS and SAT

MPS and Social Security Secretariat– SPS

1. Legal appraisal of Parliamentary Bill

The final draft of the Bill concerning Accidents at Work insurance, drawn up on the basis of appraisals and opinions of contracted consultants, was not approved by the National Congress.

2. Regulating the participation of the private sector in the ‘Accident at Work’ System - SAT

In view of the non-approval of the Bill, the resources that were initially earmarked for this activity were reallocated to the activity on "Study of the Expansion of Coverage".

3. Elaboration of the pure actuarial model

Consultants were contracted to draw up probability tables of entries concerning new retirement pension (aposentadoria) and family survivor (pensão) benefits. These projections are used for awarding retirement pensions and family survivor benefits.

4. Studies on the expansion of coverage

A range of training activities was carried out in addition to activities aimed at educating the public in general on Social Security questions. The latter consisted of seminars and a series of publications on the influence of Social Security on Brazilian society.

5. Major Factors Affecting Implementation and Outcome

5.1 Factors outside the control of government or implementing agency:Positive. The devaluation of Brazilian currency vis-à-vis the US dollar resulted in significant increases in Project funds. This helped give more momentum to the implementation of activities.

Negative. The transition disruption attending the change in Government plus change in rules regarding employment in PCUs caused some delays in project implementation.

5.2 Factors generally subject to government control:Positive. The support and commitment of high level Ministerial authorities were critical, as were the experience and dedication of the PCU team which was able to implement almost the entire loan in the 3 year loan period—a rarity in Brazil.

Negative. Government's delay in taking decisions constrained the reform of SPC. The new administration brought a different approach to IT and other issues that resulted in important changes and leaving some issues still pending.

5.3 Factors generally subject to implementing agency control:Positive. Procurement, disbursement and financial management issues were managed efficiently by the PCU. Its stability was an important factor up to the change in administration. Monthly meetings and presentations to top Ministerial staff facilitated implementation.

Negative. The Borrower also indicated that the inexperience of new PCU staff created some delays in procurement and contract/implementation.

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5.4 Costs and financing:The total cost of the Project was US$9,722,270 compared with the Project Appraisal Document (PAD) estimate of US$10,050,000. The Bank financed US$4,857,107 million (49.96%), while the Government contributed a total of US$4,865,166 million equivalent (50.04%)

6. Sustainability

6.1 Rationale for sustainability rating:Since fiscal sustainability continues to be Brazil's central economic challenge, and increased equity one of its most pressing social challenges, the Government has shown its appreciation that the pension system will need further reforms. Therefore, it is likely that the changes which this Project advanced will be sustained for the further advancement of the reform program. This forecast is supported by the now extensive evidence that Brazilian Government administrations (even of differing parties) have been serious about tackling the pension systems' strains on public resources and ending their past abuses. The constitutional amendment of December 2003 demonstrated continuing resolve as well as progress in efforts aimed at rationalizing pension expenditures and deficits. However, the expectation of still greater changes needs to be qualified. Some of the additional reforms required involve some complex areas and very sensitive political undertakings, a number of which may need the approval of two thirds majorities in Congress. And much will depend on the extent to which Brazil maintains a sound macroeconomic program.

6.2 Transition arrangement to regular operations:In June 2005, the Bank approved a programmatic Loan for further social security reform, primarily for public sector works, along with further changes concerning private sector workers and the "voluntary pillar". In addition, it is preparing a TAL that addresses INSS/Complementary Pension issues.

7. Bank and Borrower Performance

Bank7.1 Lending:Satisfactory. The Bank’s extensive sector and operational work provided it with an in-depth knowledge of social security in Brazil, which led to an effective identification of the main challenges it faced. It also led to a high quality in the design of the operation as well as other Bank projects in Brazil and Argentina. The Project's monitoring yardsticks were well designed and targeted.

7.2 Supervision:Satisfactory. The Bank’s supervision was satisfactory. The Project was supervised regularly and its ratings were adequately reported. During the interviews conducted as part of the ICR preparation, management and staff in government repeatedly praised the input from Bank counterparts. Tasks managers and teams were perceived as very responsive to client needs, reacting promptly to requests and dealing professionally and courteously with the clients, even under difficult circumstance, and providing adequate support as needed. At times, relations were tense but task managers and other staff succeeded in maintaining the channels of communication

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open.

7.3 Overall Bank performance:Satisfactory. Overall Bank performance was satisfactory during all stages of the Project cycle.

Borrower7.4 Preparation:Satisfactory. The Borrower’s performance in the preparation of the Project was satisfactory. The Administrations were committed to accomplishing the objectives set out for the implementation of the second phase of pension reform. Government officials and staff of the implementing agencies worked closely with the Bank’s team on a continuous basis providing good cooperation and all information required.

7.5 Government implementation performance:Satisfactory. Under the Cardoso Government there was strong commitment for fulfilling the Project's objectives. The new administration, however, halted progress on many initiatives made under the Bank loan for 8-10 months (not counting the six months prior to elections when everything stopped) as it took stock of what had been done. The Minister was changed as were the technical teams. Progress on important initiatives and especially on the fate of key IT Strategy work was stopped and changes were introduced. On balance, however, the Government's performance is rated "Satisfactory" because it largely achieved what it set out to do under the loan. Also, the PCU and MPS officials demonstrated considerable flexibility and creativity in carrying out the numerous activities. And according to the Ministry, the practices developed for project management were recognized as a national model by the Office of Good Practices at INFASIG.

7.6 Implementing Agency:Satisfactory. In the first three years of operation, almost all anticipated results were achieved, a significant achievement. Project unit staff have generally been highly professional, technically strong and results-oriented although the turnover in project staff under the successor administration initially created problems.

7.7 Overall Borrower performance:Satisfactory. Overall Borrower performance is rated satisfactory. The Project did not suffer from major counterpart funding, procurement or financial administration problems; audit reports were generally available on or just after the due dates, and there were no major accountability issues.

8. Lessons Learned

(a) Project ownership and implementation team continuity is key. Under the first administration, and when the PCU team was intact, loan implementation functioned very well. But the project suffered when the turnover of staff occurred. Could anything have been done to improve the transition from one administration to another? Perhaps not as the gulf between the two political parties was very great. Conceivably, some mitigating actions were possible, e.g. (i) preparation of a transition strategy and studies supporting key reforms, (ii) a fuller dissemination of project objectives among staff likely to continue in important ministerial positions, (iii) planning for the transition and courting the new administration, explaining the advantages of carrying

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through with the existing programs, (iv) stressing the high cost/benefit return of IT and other reforms, (v) undertaking public information and stakeholder campaigns prior to elections. But it is not at all certain that any of these would have made a difference. Also it would have required unusual action on the part of the project team and a willingness to intervene in such sensitive circumstances. These actions are not always advisable either.

(b) Upfront investment in PCU staff. The Ministry had little experience in multilateral (IFI) project funding and lacked trained procurement and financial management staff. (Even today the procurement unit in the Ministry does not handle IFI projects). In such circumstances, an investment in helping the client adapt to a "project culture" and master Bank procedures could pay dividends. The Bank should insist on Bank training for PCU staff, especially in procurement.

(c) Promoting a culture of strategic planning. During interviews, the Borrower consistently highlighted the need for a culture of strategic planning for project management and the need for better defined mechanisms for project monitoring and control. It suggested that instruments for control of project activities be designed well before implementation begins and then fine-tuned during the period of execution, especially for IT systems. (d) Maintaining Flexibility. Much work was carried out for this project which contributed importantly to its impact. Many of the studies and activities were shaped as the project progressed. e.g. the CNIS work. In this regard, a LIL's flexibility can be very important, especially in difficult institutional strengthening projects in challenging environment. The early LILs, before they were converted into 'hypothesis testing' exercises, were well suited to challenging institutional environments. PROAST testifies to the utility of small, flexible and well targeted technical assistance operations. The State Pension Reform LIL--PARSEP which closes in December will reaffirm this finding. The Bank needs to continue to make space for small, targeted, flexible operations which are too often avoided because of cost, a bias towards larger loans, and limitations on SIL and total loan numbers.

(e) Maintaining contact with middle income countries. Social Security system reforms in Brazil were the culmination of many years of ESW and policy dialogue. In an MIC such as Brazil, this association plays a valuable role. And the Bank has learned a good deal from Brazil in this process.

9. Partner Comments

(a) Borrower/implementing agency:See Annex 8 [Borrower’s Evaluation Report]

(b) Cofinanciers:N/A

(c) Other partners (NGOs/private sector):N/A

10. Additional Information

A. The Bank’s ICR Team consisted of the following members:

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Chris Parel, Senior Operations Officer, Task Team Leader/Task ManagerKathrin A. Plangemann, Senior Public Sector Specialist, ICR Mission LeaderDenise von Gersdorff, ConsultantRuxandra Burdescu, ConsultantHerman Nissenbaum, ConsultantAda Garcia, Program AssistantSharon Spriggs, Program Assistant B. List of Task Team Leaders of the project in chronological order:

(i) Mariluz Cortes, Task Team Leader/Task Manager(ii) Chris Parel, Task Team Leader/Task Manager

C. Persons interviewed for the preparation of the ICR:

(i) Chris Parel, Senior Operations Officer, Task Team Leader/Task Manager(ii) Katrin A. Plangemann, Senior Public Sector Specialist, ICR Mission Leader(iii) Mariluz Cortes, Task Team Leader/Task Manager(iv) Valter Silveira, Financial Coordinator for the PCU (Coordenador Administrativo Financeiro da UCP)(v) Vera Lucia de Sousa Gavazzoni, Support Technician for the PCU (Tecnica de Suporte da UCP)

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Annex 1. Key Performance Indicators/Log Frame Matrix

Outcome / Impact Indicators:

Indicator/Matrix

Projected in last PSR1

Actual/Latest Estimate

Enabling legislation to implement the Constitutional amendment

Enabling legislation Done.

Institutional Reforms to implement the Constitutional amendment in place

INSS and SPC Institutional reforms and strengthening

INSS studies completed and reforms initiated. SPC reforms held up by GOB indecision

Enabling legislation to implement the Constitutional amendment

Enabling legislation Done

Output Indicators:

Indicator/Matrix

Projected in last PSR1

Actual/Latest Estimate

INSS diagnosis and Strategic Plan completed

INSS diagnosis and strategic plan completed Done

Information System Master Plan finished Information System Master Plan finished Done. Note that MPS has distanced itself from results under the Lula administration.

Strengthening of the SGS system to manage large debtors

SGS large debtors system implemented Done

Draft Ordinary Laws to regulate Complementary Pension System

Ordinary law presented to Congress Done

Strategic Plan for new regulatory agency for Complementary Pension Funds

Strategic plan developed for Complementary Pension Funds

Bank adjustment loan and TAL Indefinition on SPC reform by Government; persist and will be addressed by

Plan to expand SPC's information system SPC Information System Plan Completed Done. But indefinition on SPC reform by Government

Draft law for work related injury insurance Draft law for injury insurance presented Done

Study to reduce evasion and expand coverage of social security

Studies completed Done. But implementation depends on follow-on loan in part.

1 End of project

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Annex 2. Project Costs and Financing

Project Cost by Component (in US$ million equivalent)AppraisalEstimate

Actual/Latest Estimate

Percentage of Appraisal

Component US$ million US$ millionComponent 1INSS Institutional Restructuring

5500.00 7120.03 129.46

Component 2Work Injury Insurance & RGPS Legal Framework

300.00 299.17 99.72

Component 3Strengthening of Regulatory Framework Capacity of the Complementary System - SPC

3900.00 1470.11 37.7

Component 4Project Coordination

300.00 782.46 260.82

Total Baseline Cost 10000.00 9671.77Total Project Costs 10000.00 9671.77

Front-end fee 50.00 50.50 101.00Total Financing Required 10050.00 9722.27

Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)

Expenditure Category ICBProcurement

NCB Method

1

Other2 N.B.F. Total Cost

1. Works 0.00 0.00 0.00 0.00() (0.00) (0.00) (0.00) (0.00)

2. Goods 1050.00 0.00 0.00 877.00 1927.00(1050.00) (0.00) (0.00) (0.00) (1050.00)

3. Services 0.00 0.00 5473.00 2100.00 7573.00Consultants (0.00) (0.00) (3450.00) (0.00) (3450.00)4. Training 0.00 0.00 500.00 0.00 500.00

(0.00) (0.00) (500.00) (0.00) (500.00) Total 1050.00 0.00 5973.00 2977.00 10000.00

(1050.00) (0.00) (3950.00) (0.00) (5000.00)

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Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)

Expenditure Category ICBProcurement

NCB Method

1

Other2 N.B.F. Total Cost

1. Works 0.00 0.00 0.00 0.00 0.00(0.00) (0.00) (0.00) (0.00) (0.00)

2. Goods 624.00 161.00 416.00 16.00 1217.00(499.00) (129.00) (235.00) (0.00) (863.00)

3. Services 0.00 0.00 5740.00 1108.00 6848.00Consultants (0.00) (0.00) (3543.00) (0.00) (3543.00)4. Training 0.00 0.00 1607.00 0.00 1607.00

(0.00) (0.00) (401.00) (0.00) (401.00) Total 624.00 161.00 7763.00 1124.00 9672.00

(499.00) (129.00) (4179.00) (0.00) (4807.00)

1/ Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies.2/ Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff

of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units.

Project Financing by Component (in US$ million equivalent)

Component Appraisal Estimate Actual/Latest EstimatePercentage of Appraisal

Bank Govt. CoF. Bank Govt. CoF. Bank Govt. CoF.Component 1INSS Institutional Restructuring

3000.00 2500.00 4056.00 3064.00 135.2 122.6

Component 2Work Injury Insurance & RGPS Legal Framework and SAT

250.00 50.00 203.00 96.00 81.2 192.0

Strengthening of Regulatory Framework Capacity of the Complementary System - SPC

1500.00 2400.00 525.00 945.00 35.0 39.4

Component 4Project Coordination

250.00 50.00 73.00 760.00 29.2 1520.0

Total 5050.00 5000.00 4857.00 4865.00 96.2 97.3

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Annex 3. Economic Costs and Benefits

N.A.

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Annex 4. Bank Inputs

(a) Missions:Stage of Project Cycle Performance Rating No. of Persons and Specialty

(e.g. 2 Economists, 1 FMS, etc.)Month/Year Count Specialty

ImplementationProgress

DevelopmentObjective

Identification/Preparation8/19985/1997

Appraisal/Negotiation11/16/1999 2 1 Consultant, 1 Task

ManagerS S

3/16/2000 1 1 Task Manager S S

Supervision2/4/2002 1 1 Consultant S S3/03/2002 1 1 /Task Manager, 1 Pension

AdministrationS S

02/22/2003 1 1 Task Manager S S06/21/2003 1 1 Task Manager S S09/30/2003 1 1 Task Manager S S12/03/2003 1 1 Task Manager S S02/23/2004 1 1 Task Manager S S05/23/2004 1 1 Task Manager S S12/03/2004 1 1 Task Manager S S

ICR3/13/2005 1 Senior Public Sector

SpecialistS S

(b) Staff:

Stage of Project Cycle Actual/Latest EstimateNo. Staff weeks US$ ('000)

Identification/Preparation .4 1.2Appraisal/Negotiation 17.20 51Supervision 32.41 107ICR 1. 8.2Total 51 167.40

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Annex 5. Ratings for Achievement of Objectives/Outputs of Components(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)

RatingMacro policies H SU M N NASector Policies H SU M N NAPhysical H SU M N NAFinancial H SU M N NAInstitutional Development H SU M N NAEnvironmental H SU M N NA

SocialPoverty Reduction H SU M N NAGender H SU M N NAOther (Please specify) H SU M N NA

Private sector development H SU M N NAPublic sector management H SU M N NAOther (Please specify) H SU M N NA

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Annex 6. Ratings of Bank and Borrower Performance

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating

Lending HS S U HUSupervision HS S U HUOverall HS S U HU

6.2 Borrower performance Rating

Preparation HS S U HUGovernment implementation performance HS S U HUImplementation agency performance HS S U HUOverall HS S U HU

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Annex 7. List of Supporting Documents

Project Management Report - PMR periodo ate 31 dezembro 2004Review of Audit Report year end 2003Audit Secretaria Executiva-MPAs FY end Dec. 2002Project Management Report - PMR periodo ate 31 dezembro 2002Project Management Report - maio-junho 2002Project Management Report 01-january - 29-March 2002Audit UCP-SE-MPAs FY end Dec. 2001Project Management Reprot 30-Setembro - 31 - dezembro 2001Audit - PROAST - FY end Dec. 31, 2001Project Management Report - PMR periodo 01-July 2001 - 30 setembro 2001Audit Min Previdencia and Assistencia Social FY end dezembro 2000Borrower's Evaluation ReportProject Implementation Plan (PIP)Loan Agreement dated May 2, 2000Amendment to Loan Agreement dated October 18, 2001

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Additional Annex 8. Borrower's Evaluation Report

Assessment of Development Objectives and Design, and of Quality at Entry

• Was the project objective well designed, relevant and realistic?

The growing social security deficit highlighted the need to restructure the entire welfare system through the creation of a new model. PROAST was developed at a particularly useful moment since it focused on a highly relevant issue for the Brazilian government – the need to contain shortfalls in public finances. The pensions question is of course a major concern not only in Brazil but also in many other countries.

The overall objective of the Project was to assist the implementation of institutional and legal reforms needed to create a new social security model. The specific aim was to provide the wherewithal for the Ministry of Social Security and the National Social Security Institute (INSS) to take forward the Social Security Reform Project from the legal and institutional point of view by implementing the provisions contained in Constitutional Amendment No 20, published in December 1988. In order to achieve its objectives, the basic aim of the Project was to develop activities related to institutional strengthening and to endow management and information systems policies with a formal structure. The components of this approach are listed in the following chart:

COMPONENT/BENEFICIARY ACTIVITIES/MAJOR PROJECTSI – Restructuring the INSS

INSS (Controllers, CGINF and SGS)MPS (SE, Social Communication)

1. INSS Strategic Plan

2. Information Technology Master Plan3. Implementation of Segment Management System - SGS.4. Quality Assessment of CNIS data5. Social Communication Strategic Plan

II – Legal Structure of the General Social Security Regime – RGPS and SAT

MPS and Social Security Secretariat– SPS

1. Legal appraisal of bill

2. Regulating the participation of the private sector in the ‘Accident at Work’ System – SAT (workers disability insurance)3. Elaboration of a ‘pure’ Actuarial Model4. Studies on the expansion of coverage and reduction of evasion

III – Secretariat for Complementary Social Security

MPS – Secretariat for Complementary Social Security

1. Elaboration of Ordinary Laws and Regulations

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2. Studies for implementation of the Regulatory Agency3. Expanding and updating the SPC Integrated Information System4. Interconnecting the SPC Integrated Information System with other government organs and the EFPP

IV – Project Coordination

MPS – Executive Secretariat - UCP

1. Technical Assistance for the Technical Management

Units (UCP)2. Implementation of the UCP3. Payment of fees to UNDP and IBRD4. Management of the Cooperation Agreement (project implementation)

The PROAST objectives were well designed and timely. They fully satisfied Brazil's requirements concerning the social security question. In view of the type of project (basically studies), measuring the actual results is a more difficult matter. It is difficult to gauge outcomes in numerical terms - the performance of activities over the longer term will be a more accurate reflection of the value of the Project.

Revised objectivel

One of the objectives of the project underwent revision. This involved reallocating funding between components I (INSS restructuring) and III (Regulation of Complementary Pension Funds). This was proposed as a result of a change of strategy at the ministerial level, since at the time of the LIL #4537 negotiation, a government project existed which involved establishing a “National Agency for the Regulation of Private Pension Funds”. Implementation of the latter would have resulted in the extinction of the Secretariat for Complementary Social Security (MPS) and simultaneously in the establishment of a new structure to be put together and implemented by the Ministry itself. All the activities flowing from the establishment of such a body and the transition phase were to have been carried out under component III of the LIL. In November 2000, the plan to transform the SPC into an Agency was abandoned as a result of modifications to governmental guidelines. The resources that had been earmarked for the transition were therefore reallocated into other activities of greater priority for the Ministry.

Following a series of analyses and with due consideration for the basic objectives of the LIL, it was proposed to reallocate resources for the ISS Restructuring Component specifically to the Evaluation of the National Register for Social Information (CNIS). The latter register is effectively a databank containing all the information on the insured parties in the Social Security system. It constitutes a key element in the information infrastructure of the Ministry. In order to upscale NPS/INSS capacity to implement the reforms in its systems, the CNIS required modernizing, and a number of different projects were developed and presented to the IBRD concerning this modernization. These embraced the following:

- Structural projects aimed at increasing the amount of information retained in the CNIS and improving the quality and speed with which data could be accessed, together with introducing tools which would enable the INSS to enhance its management procedures using data entered in the register regardless of origin;

- Technical improvements dealing principally with technical aspects and targeted at improving the technical infrastructure of the CNIS through the introduction of tools designed to improve the quality of

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response to inquiries by CNIS users, reducing the length of time required for developing new applications;

- Statistical improvements aimed at helping the CNIS to generate data about the labor market, employing the database to provide background information for studies and surveys of interest in the Social Security area.

Original components: objectives and costsl

Components Cost in US $million

% of total Bank Financ. US$m

% of Bank Financ.

I – INSS restructuring 4,850.00 48.3% 3,000.00 59.4%

II – Legal Structure of the Social Security General Regime – RGPS and SAT

300.00 3% 250.00 5%

III – Regulating the Complementary Pension Funds 3,900.00 38.8% 1,700.00 33.7%IV – Project Coordination 949.50 9.4% 49.50 1%IBRD fees 50.50 0.5% 50.50 1%Total including fees 10,050.00 100% 5,050.00 100%

Revised componentsl

Components Cost in US $million

% of total Bank Financ. US$m

% of Bank Financ.

I – INSS restructuring 7.062,74 70,3% 3.783,57 74,9%

II – Legal Structure of the Social Security General Regime – RGPS and SAT

300,00 3% 250,00 5%

III – Regulating the Complementary Pension Funds

1.687,26 16,8% 916,43 18,1%

IV – Project Coordination 949,50 9,4% 49,50 1%IBRD fees 50,50 0,5% 50,50 1%Total including fees 10.050,00 100% 5.050,00 100%

Achievement of Objectives and Outputs

Component I – INSS Restructuring.

- Elaboration of the INSS Strategic Plan.Result: An INSS Strategic Plan was elaborated and strategic guidelines put in place. - Evaluation of the new Agencies on the basis of the PMA.Result: The analysis and evaluation of the processes and quality of the services provided in the revamped Social Security Agencies.

- Elaboration of the ongoing Modernization and Improvement of the INSS Internal Audit Division.

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Result: Modernization and improvement program for the INSS Internal Audit Division elaborated and under implementation.

- Elaboration of the Technology and Information Master Plan (PDTI).Result: Social Security Technology and Information Master Plan was elaborated and is under implementation.

- Definition of the Social Security services available to the public through IT – e-government. Result: The Social Security PDTI was linked with the Federal Government/Ministry of Social Security e-government programs.

- Analysis and evaluation of large capacity IT installation in the Social Security system. Result: DATAPREV large capacity installations and contracts (physical and logistical components) linked to it were evaluated.

- Evaluation, revision, conception and detailed presentation/scrutiny of the Outstanding Debt (‘Divida Ativa’) Procedures and Systems – Redesigning the Procedures of INSS Outstanding Debt repayment through the legal channel – Sao Paulo/Rio de Janeiro. Result: Improvements made in the recovery of Outstanding Debt through administrative and legal channels. The following was confirmed: i) the database is inconsistent; ii) debt is fragmented into small credits; iii) poor debt recovery success rate; iv) recovery of higher value credits have lowest rate of success; v) limited liaison between the different stages of the collection process.

- Training of 170 employees in the new debt recovery approach, with emphasis on segmentation and economic status of debtors.Result: Improved liaison between the Segment and Executive Management Units. Improved debt recovery through administrative and legal channels. Segment Managers trained to draw up proposals for action within their segments.

- Procurement of 148 desk top computers, 130 printers, 12 scanners and 29 notebooks.Result: 102 Executive Management Units of the INSS supplied with suitable equipment employing the SIGS system, Internet, Net, Informar etc. The equipment is used in Fiscal Enforcement Planning.

- Training of 40 INSS inspectors in Fiscal Management (MBA – FINATEC/UNB).Result: Improved efficiency of the management of Social Security contributions. Participants are in a better position to acquire a deeper understanding of government policies and new management instruments in the area of tax administration including the new model of collection management and the Fiscal Intelligence Project.

- Contracting consultants to elaborate DATA MART for the Fiscal Enforcement Planning Division of the INSS Collection Directorate.Result: Definition of the Fiscal Intelligence Portal – a management-based overview of the information needed for planning of fiscal enforcement. Implementation of the Fiscal Intelligence System as a planning tool for fiscal proceedings.

- Contracting consultants to elaborate DATA MART for the INSS Attorney’s Department (‘Procuradoria’).Result: Management information made available to the INSS Procuradoria aimed at improving collection

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procedures through the administrative and legal channels.

- Evaluation of CNIS data quality.Result: Short term actions developed to improve data quality and enhance CNIS (see below). It was confirmed that the data can be utilized for granting benefits from 1976 onwards. – Support provided for a new Bill: “Automatic Recognition of Right to Benefits”.

- Improvements in the CNIS Result: Specialized consultants contracted to develop the original GFIP Project.Construction of computerized system to secure general GFIP data directly from employers. In addition , the following important activities were undertaken to strengthen CNIS and related systems and procedures.

· Specialized consultants contracted to develop the ‘Migration (Individuals) Project’ for ORACLE.· Construction of new computerized system for the Register of Individuals on the ORACLE platform.· Specialized consultants contracted to develop the Migration (Individuals) Project for ORACLE. · Construction of new computerized system for receiving payments from individual contributors on the ORACLE platform.· Specialized consultants contracted to develop specifications for CNIS DATA MART.· Specifications for a multidimensional database for delivering statistical information related to the entire CNIS (with the exception of company-related data ).· Specialized consultants contracted to develop the Unemployment Insurance Base Project.· Construction of computerized system able to incorporate into the CNIS data referring to employees seeking Unemployment Benefit (‘Seguro de Desemprego’) from the Ministry of Labor. · Specialized consultants contracted to develop the Access Control Project.· Implementation of access procedures, as set forth in the Ministerial Ruling No 862/2001, for all the computerized systems in the CNIS.· Specialized consultants contracted to develop the Alphabetic Processor Project· Implementation in the computerized system of the CNIS Register of Individuals of a routine method for identifying people using Portuguese language phonetics. · Specialized consultants contracted to develop the ‘Updating Linkages (‘Vínculos’)and Remuneration Project’ on ORACLE.· Construction of a computerized system for the ORACLE platform to provide information for the Social Security regarding the process of automatic recognition of insured contributors’rights. · Specialized consultants contracted to develop the Components Library Project and to introduce more modern technical standards (OLTP) in the CNIS large-scale computer system.· Specialized consultants contracted to construct CNIS DATA MART – UNISYS.· Construction of computerized system with a multidimensional database for disseminating statistical information relating to the entire CNIS· Specialized consultants contracted to develop Phase 1 of the “Protective Shield Project”.· Construction of computerized system for data quality management referring to individuals. · Specialized consultants contracted to develop the ‘Data Matching Project’ (Projeto Ambiente de Homogolação) .· Construction of computerized system to be utilized by the project developers, with the aim of quickly facilitating the authorizations required for ensuring correct matching of the Social Security applications.· Specialized consultants contracted to develop the ‘Insured Individual’s Integrated Working Life History’ Project.· Construction of computerized WEB system to facilitate registering of work histories of employees.· Specialized consultants contracted to develop the GFIP Book Project.· Construction of computerized system with a multidimensional database for disseminating GFIP

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statistical data.· Specialized consultants contracted to develop ‘PREV-Citizen’ Pilot Project (PREV- Cidadão) .· Construction of a functioning WEB prototype for the PREV-Cidadão application. · Specialized consultants contracted for constructing DATA MART of the CNIS – ORACLE.· Construction of a computerized system with a multidimensional database for disseminating statistical data referring to Companies registered in the CNIS. · Procurement of 6 application/data servers, 6 laser printers and 5 notebooks.· Data stored securely. Technical upgrading of CNIS.· Specialized consultants contracted to develop Statistical Indicators Project (GEFIP).(i) Definition of the indicators and elaboration of estimators; (ii) Definition of the Sampling Plan; (iii) Consistency and organization of data; (iv) Data processing; (v) Presentation of indicator estimators.

- Strategic Communication Plan for Social Security.Result: Strategic Communication Plan was elaborated and the following was carried out.· Training of officials in the Social Security Communication Advisory Units through attendance at the Media Texts Workshop (Oficina de Texto Jornalístico). · Films made about the specific type of bank document (GPS) for paying in social security contributions by electronic means (Previdenciário Eletrônico) and for the payment of Retirement Pensions and Survivor Family benefits into individuals’ bank accounts.· Public dissemination throughout Brazil of the new services provided by Social Security.· Consultants contracted to introduce standardized visual identity for the Social Security and the Social Security Agencies and also for the corporate website known as INTRA – PREV. Making all members of the public in Brazil aware of the institutional logo of the Ministry.

Component II – Legal Structure of the General Social Security Regime (RGPS) and of the Accidents at Work Insurance (SAT-Workers Disability Insurance).

- Contracting Brazilian and international consultants to evaluate and produce legal opinions regarding the viability and repercussions of the new SAT model, covering the following points: international experience; background of Brazilian national attitudes to prevention and treatment; organization and working methods related to the economy and the national health system; ensuring compliance with current legislation.Result: Final draft of the Bill ; Volume Nº 5 of the Social Security Collection “Insurance System for Work-Related Accidents in the Americas.”

- Contracting of Brazilian consultant to undertake a survey on machines capable of causing work-related accidents.Result: Publication of Volume Nº 3 of the Social Security Collection - “Machines and Work- Related Accidents”.

- Contracting of Brazilian consultant to draw up probability tables covering entries for new retirement and family survivors’ benefits.Result: Long term projections for granting new retirement and family survivors’ benefits and LOAS.

- Contracting of 11 consultants, to operate in different areas, charged with informing the public about the expanded Social Security programs Result: Public information activities undertaken in 10 states, covering 3,020 people.

- Study of Expanded Coverage and Reduction of Evasion

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Result: An article "Social Security, Social Inclusion and Fighting Poverty", published in the Report on Social Security (Informe de Previdência Social) for July 2001, and in the April/June edition of “Social Situation” (Conjuntura Social); Hardback book published with an anthropological-photographic study on the influence of the Social Security in Amazonian communities. This book will be a special volume to form part of the Social Security Collection;

- Training and publications to support training and dissemination activities including· Trainingof all members of the Social Stability Program Regional Committees. · Revised version of the 2nd Edition of Vol. 7 of the Social Security Collection - “Social Security and Social Stability: “Formation Course for training specialists in Social Security ”.· Publication of Vols. Social Security Collection: 9 – the “Political Economy of Social Security Reform”; 10 – Specialist Meeting: “Actuarial Techniques and Financial Management”; 11 – “Social Security ‘own’ regimes”;· “Organizational, Legal and Investment Management Model”; 12 – “Pension System Reform in Latin America”;· Training of all the members of the Social Stability Program Regional Committees; Revised version of the 2nd Edition of Vol. 7 of the Social Security Collection - “Social Security and Social Stability: Formation Course for specialists in Social Security”. Booklets and folders produced on Social Security benefits.· Translation of the book “Actuarial Mathematics of Social Security Pensions” by Subramaniam Iyer, published in a Social Security Collection volume, March 2002.· Contracting Brazilian consultant to undertake a Study on the Actuarial Model of Federal Government Employees.Results: Registration of 2150 State and Municipal Legislations in CADPREV; Analysis of the Social Security Compensation Covenant process involving 900 Municipalities (596 Prefectures completed); Guidance provided for 250 Municipalities with own Social Security regimes; fine-tuning SIPREV; organization of six technical meetings in Florianópolis, Fortaleza, Brasilia, São Paulo, Tocantins and Rio de Janeiro.

- Contracting consultants to elaborate proposals for structuring the SPS. Result: SPS restructuring plan defined.

Component III – Expanding and updating the SPC Integrated Information System

- Contracting consultants to carry out technical studies to endow the SPC with a range of specific norms and analytical tools.Result: Draft decree for introducing regulatory framework to 2001 Supplementary Law N.º 109; Standardization of the method for calculating the profitability of the schemes of the closed complementary social security entities (EFPC) based on the ‘quota’ model; budget model standardized for the EFPC; Study of the way portability is applied in Europe and the United States; Definition of the methodology for market risk analysis; Strategies for publicizing the SPC project.- Publication of books about Complementary Pensions in Brazil i) deferred proportional benefit; ii) regulating markets; and iii) Complementary Social Security: Collection of Main Rules. Result: Improvement of the relationship between the SPC and society on the basis of discussion of issues related to Complementary Social Security; guidance for the users of the complimentary Social Security system regarding the application of current legislation; background information for improving MPAS strategic planning. - Consultants contracted to carry out a study on acquired rights and contract breaking.

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Result: Definition of parameters to achieve economic and financial equilibrium of schemes; examining concept of progressive upper age limit for retirement; bringing the rights of participants into line with Social Security policy.- Consultants contracted to carry out an economic study on the applications of the proposal to modify the minimum age requirement in the complementary pension schemes. Result: Improved actuarial results of the EFPP; financial health of the complementary Social Security system; bringing legislation into line with current Brazilian demographic realities.- Consultants contracted to introduce instruments for restructuring the working methods of the SPC to secure maximum advantage from the relevant instruments and to assemble them for easy access in a Manual of Procedures. Result: Description of the activities in the RH area of the SPC; manuals elaborated; summary description model of the new procedures; documentation model; model of the principal stages and deadlines to be observed.- Training of 20 SPC officials: MBA in Evaluation of Asset and Investment Portfolios.Result : Improved performance by SPC officials who were able to acquire solid knowledge regarding the evaluation of risk in investment markets and, as a result of training, were able to research, analyze and monitor EFPC financial applications made in Brazil.- Consultants contracted to assist development of the DAIEA - Analytical Presentation of Investments and Monitoring of Financial Applications (a system with a database containing investment portfolios aimed at endowing the SPC with managerial instruments capable of following up and monitoring investments made by the pension funds).Result:. Transparency in the administration of pension fund assets; standardization of calculation of the rate of return enabling comparisons to the made between profitability and actuarial minimums; setting up EFPC investment portfolios; improving the database for formulation of public policies.- Consultants contracted to assist the SPC. to integrate its information system into the information and data structure of Closed Complementary Social Security bodies.Result: System enhanced.- Procurement of 16 Notebooks, 2 data servers, 4 desktop computers and increasing disk size for NEC server.Result: To speed up the scrutiny (fiscalização) process, making it possible to access basic fiscal enforcement software; improving SPC technical assets; managing/storing files related to all SPC users.- Consultants contracted to provide technical assistance to the Secretariat for Social Security as part of a process of modernization and integration of the SPC information system, Closed Complimentary Social Security entities and governmental bodies connected with the organization of events relating to the application of Complementary Social Security legislation.Result: EFPC data updated, made available, stored and monitored.

Socioeconomic outcomes and other social benefits

Transparency in the execution of INSS funds and measurement of the executive performance of the lExecuting Management Units through the employment of performance indicators designed to follow up the activities undertaken by the administrative and functional units;Creation of the Information Technology Unit within the ambit of the INSS and MPS together with the lstandardisation of new information systems developed for supporting the operational activities of the Institution;Creation of social control mechanisms for payment of employer contributions (‘contribuições lpatronais’),with Social Security beneficiaries securing access to the CNIS database via the Internet;Enhanced security and reliability of the data in the Social Security databases, thereby facilitating the l

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creation of mechanisms to provide benefits in a quicker and more reliable manner;Identification of possible fraud by using data cross-referencing in the CNIS database;lPriorities established in supporting the legal actions undertaken by the INSS resulting in improving lsuccess rates. Dissemination of information about Social Security through publications. The latter cover, for lexample, the activities undertaken by Social Security in riverine communities and explanations about technical aspects of Social Security legislation.

Major factors affecting implementation and outputs

Factors outside government control or implementation agency control (positive/negative) l

- Positive: The devaluation of the Brazilian currency against the dollar substantially increased the resources available for use in the project, thereby favoring the complementarity of the planned activities.

- Negative: The project was held back by the change of government. The amount of time needed for the new managers to adapt and acquire the necessary knowledge caused major delay towards the end of the project.

Factors within Government Control or implementation agency control (positive/negative)l - Positive: The commitment by the top echelons in the Ministry of Social Security was a determining factor in the success of the activities undertaken under the aegis of the project. Individuals were nominated to be responsible for each of the activities in order to ensure that results were in line with project expectations, thereby creating an ‘accountability mechanism’.

- Negative: The strategic modification introduced by the Ministry of Social Security in the course of the project affected the development of a number of activities, making it necessary to revise and reallocate resources within the ambit of the project.

Factors subject to control of implementation agencyl

- Positive: By retaining officials responsible for project activities and coordination, the project proceeded in a uniform manner and with no drawbacks. The Project Coordination Unit adopted a pari-passu follow-up of activities by organizing monthly meetings with those responsible for the activities. At these meetings the outcomes were presented to Senior Directors, as a result of which the latter were induced to show heightened commitment to the project.

- Negative: The lack of experience of the Coordination Team caused a number of delays and difficulties in complying with the contractual conditions. This situation led to work having to be repeated and to adjustments to be made to the project.

Costs and financingl

Total costs amounted to US$ 9,722,273.90 (nine million, seven hundred and twenty two thousand , two hundred and seventy three dollars and ninety cents) corresponding to 96.74% of the costs of project. Of this amount, US$ 4,857,107.83 was financed by the World Bank and US$ 4,865,166.07 from national counterpart funds.

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Sustainability (See the Annex at end of this report)

In order to implement the studies, a loan of US$ 94 million was negotiated with the IDB. This loan, PROPREV – ‘Programme in Support of the Modernisation of the Management of the Social Security System’ - targeted the redesign of the working procedures of INSS, the development of new corporate systems, training technicians in the new procedures and systems, upgrading Social Security technical/IT facilities to access the new systems and updating the Social Security agencies with a view to improving services to members of the public. The project is in its fourth year of execution and is currently developing the new systems and upgrading the technical facilities based upon the Technical Master Plan developed under PROAST.

Bank and Borrower Performance

Bank performance during preparationl

The World Bank was an excellent partner for the Ministry of Social Security, both in the elaboration and execution of the project. As far as elaboration was concerned, the Bank made an important contribution by indicating activities (not planned at the outset) to help ensure the integrity of the project. Furthermore, the World Bank contributed to the creation of the Project Coordination Unit within the Social Security Ministry. The latter had no experience at the time in executing projects financed with external resources and the Bank’s intervention made it possible to provide training for technicians in IBRD contracting and procurement rules as well as encouraging Financial and Disbursement Management best practice.

Bank performance during supervisionl

During execution of the project, the World Bank, through its local representation, afforded every support in the area of contracts and procurement as well as supporting the financial management of the project. The Bank was always on hand to assist the UCP and the technical divisions of the Ministry of Social Security in the elaboration of the TOR, bids, rendering of accounts and to help overcome a range of difficulties encountered in complying with contractual conditions.

Government Implementation Performancel

Brazilian government bodies provided all necessary support and demonstrated their commitment to the successful implementation of the project by the Ministry of Social Security. It is worth highlighting the support given by the Ministry of Planning through SEAIN and that of the Finance Ministry through PGFN and COREX.

Implementing Agency Performancel

We consider that the performance of the executing agency was excellent throughout virtually the whole project. However, the performance of the Ministry of Social Security fell short of expectations in executing one of the activities – the procurement of a ‘Storage Capacity’ to facilitate CNIS data cross-referencing. The procurement of the server caused the project to be postponed two years.

Lessons learned

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Among the lessons learned during execution of the project the following should be highlighted:

-Lack of an international project “culture” – The execution of an activity with a predetermined beginning, middle and end is a source of difficulty within the context of the Brazilian public administration. The change of culture associated with the execution of activities planned under the aegis of the project and requiring adherence to a strict timetable calls for a certain dynamism which is not evident in the public service - where bureaucracy and budgetary problems are at the root of constant delays.

-The need to make projects well-known internally so that individuals can fully participate – In order to ensure that projects are successful, it is necessary at the outset to undertake an ongoing campaign to familiarize people within the institutions with all the relevant issues vis-à-vis the projects. Officials working for the institutions involved must know about and show interest in what is happening and be fully aware of the changes that will flow from project implementation. The parties involved need to feel that they have an important role to play in achieving project results, especially those outcomes which concern social matters, and officials need to be in a position from which they can make a contribution. It is important to implant the idea that the above-mentioned campaign should not be restricted to Project launch. The information flow needs to be constant during the course of the entire project in order to provide transparency and uniformity.

-Lack of engagement in the areas involved - The lack of participation occurs as a result of ignorance of the project, as mentioned in the above paragraph. Participation in the project remains confined to those people who are directly involved. This undermines development of the project, and is especially onerous for those who are committed to changing the institutional culture. Application of the results effectively becomes obligatory, thereby creating resistance to the proposed changes.

-The need for the commitment and support of the Administration– In order to achieve the success of the project, it is vital to gain the support and involvement of the Administration. Such support helps to make the decision-making process more rapid and efficient. All those involved are thus stimulated to work towards obtaining results, basically on account of the need for them to present results to the Directors of the Institution. Commitment by the top echelons of the Administration ensures that in the case of modifications to the direction of the project or changes of government, procedures can be rapidly adapted to the new circumstances.

-The need to adjust procedures - The relevant procedures need to be well-defined and available in manuals or other documents easily accessible to all those involved in the project-related activities. Such measures ensure that familiarity with the activities underway do not remain solely in the hands of particular individuals but are of interest to the Institution as a whole. Well-defined procedures guarantee an easy transition in the event of changeovers of managers or other officials concerned with the project. -Better definition of responsibilities– As with case-flow management, the responsibilities of

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each of the parties involved in the project must be properly specified. Instruments (decrees/edicts, regulations, etc) current within the Institution must be clearly set out in writing so that everyone is fully aware of their own responsibilities within the project.

-Better definition of the instruments of control– The instruments of control must be established before the project commences and fine-tuned during the course of its execution. The creation of computerized systems for following up the project must be a relevant concern for its managers and not simply a mechanism to make the project more effective. The requirement for information to be available for all the institutions involved directly or indirectly in the project, such as the World Bank and the internal and external control bodies of public entities, calls for reliable data to be freely available. However, in spite of the widespread existence in the various organs of financial follow-up systems, the majority of projects lack mechanisms to facilitate evaluation of the social outcomes. The impact generated by the projects, especially in the area of Brazilian Social Security, with its substantial structure and social reach, is extremely difficult to evaluate. Results are generally long-term and need to be continuously followed up in order to obtain an accurate final evaluation.

-Improved document management – The project documents need to be stored in an organized and easily accessible way. The is a constant need for ‘closed documents’ and case data to be consulted, whether for audits or for researching progress of the project.

-Improved elaboration of terms of reference– The Term of Reference is the basic document for effecting contracts and procurements within the project. Poorly drawn up terms will inevitably result in badly-drafted contracts. It is important for the project to have within its team (or to be in a position to contract) specialist consultants to draw up such documents in accordance with World Bank rules, particularly in order to avoid future problems with bidding exercises, given that errors made in the documentation can lead to the cancellation of the latter.

Partner Comments

We regard the project as a model to be followed both by the Brazilian Government and by IBRD, given that the commitment shown by both parties to its success was out of the ordinary. The close interest shown in the project by the senior administration of the Ministry of Social Security made it possible to elaborate high-quality products in which we were able to identify outcomes that were reflected in improvements in the quality of services provided for members of the public. We find the ‘quality’ aspect difficult to measure, since any improvement in the quality of services provided for the public are basically the sum total of the activities undertaken directly by the organization and those developed by the project. A good example of this is the advantage to society as a whole of being able to access the CNIS to effect individual control of social security contributions collected by companies.

The Ministry of Social Security received the unconditional support of the World Bank, which made it possible to execute 93.5 8% of the project within a period of three years, in accordance with the original plan.

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