FOR OFFICIAL USE ONLY

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Human Development Sector South Asia Region Document of The World Bank FOR OFFICIAL USE ONLY PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF SDR MILLION (US$300 MILLION EQUIVALENT) TO THE PEOPLE S REPUBLIC OF BANGLADESH FOR A THIRD PRIMARY EDUCATION DEVELOPMENT PROGRAM June 11, 2011 Report No: BD This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank s Policy on Access to Information.

2 CURRENCY EQUIVALENTS (Exchange Rate Effective as of May 31, 2010) Currency Unit = Bangladesh Taka Tk = US$1 US$ = SDR 1 FISCAL YEAR July 1 June 30 ABBREVIATIONS AND ACRONYMS ADB ADP AFR AIEC Asian Development Bank Annual Development Program Annual Fiduciary Review Access and Inclusive Education Cell/DPE ASPR Annual Sector Performance Report AOP Annual Operational Plan AUEO Assistant Upazila Education Officer BBS Bangladesh Bureau of Statistics BANBEIS Bangladesh Bureau of Education Information System B. Ed. Bachelor of Education BNFE Bureau of Non-formal Education CAMPE Campaign for Popular Education CAS Country Assistance Strategy CF Government s Consolidated Fund CGA Controller General of Accounts C-in-Ed Certificate in Education CIDA Canadian International Development Agency CPEIMU CPTU DEO Dip-in-Ed DFID DDO DG DP DPC DPP DPE DPEO Compulsory Primary Education Implementation and Monitoring Unit Central Procurement Technical Unit District Education Officer Diploma in Education Department for International Development (of the United Kingdom) Drawing and Disbursement Officer Director General Development Partner Development partners Consortium Development Proforma Proposal Directorate of Primary Education District Primary Education Office DPHE DSM EC EETC EFA EHS ELCG EMF EMIS FPD FY GDP GER GOB GPS GWG HIES HRD HSC IA ibas ICB IDA IFR IMSC IPP IRR JARM JFA Department of Public Health Engineering Design, Supervision and Management consultant European Commission Expanding Education of Tribal Children Education for All Education Household Survey Education Local Consultative sub Group Environmental Management Framework Education Management Information System Finance and Procurement Division Fiscal Year Gross Domestic Product Gross Enrollment Rate Government of Bangladesh Government Primary School Governance Working Group Household Income and Expenditures Survey Human Resources Development High School Certificate Implementation Agency Integrated Budgeting and Accounting System International Competitive Bidding International Development Association Interim Financial Report Inter-Ministerial Steering Committee Indigenous Peoples Plan Internal Rate of Return Joint Annual Review Mission Joint Financing Arrangement

3 JICA KPI LGED M&E MDG MOPME MOE MOF MOHFW MOPA MoU MTBF MDTF NAPE NCTB NER NFE NGO NPRS NPV ODCB OICR PAD PBH PCE PCR PEC PECW PEDP PEDPII Japan International Cooperation Agency Key Performance Indicators Local Government Engineering Department Monitoring and Evaluation Millennium Development Goals Ministry of Primary and Mass Education Ministry of Education Ministry of Finance Ministry of Health and Family Welfare Ministry of Public Administration Memorandum of Understanding Medium Term Budgetary Framework Multi-Donor Trust Fund (for PFM improvement) National Academy of Primary Education National Curriculum and Textbook Board Net Enrollment Rate Non-Formal Education Non-Government Organization National Poverty Reduction Strategy Net Present Value Organizational Development and Capacity-Building Organizational and Institutional Capacity Review Project Appraisal Document Program Budget Head Primary (Grade 5) Completion Exam Primary Completion Rate Primary Education Cadre Primary Education Curriculum Wing/NCTB Primary Education Development Project Second Primary Education Development Program PEFA PFM PLU PMU PPR PRMP PRSP PSC PSQL PTA PTI PTR R&D RBM RMS RNGPS ROSC RP SBM SIDA SLIP SMC SMF SSC SWAp SPEMP TOR TST UEO UNESCO UNICEF UPEP URC WFP Public Expenditure and Financial Accountability Public Financial Management Program Liaison Unit Program Management Unit Public Procurement Regulations Procurement Risk Mitigation Plan Poverty Reduction Strategy Paper Public Service Commission Primary School Quality Level Indicators Parent-Teacher Association Primary Teacher Training Institute Pupil/Teacher Ratio Research and Development Results- based Management Risk Mitigation System Registered non-government Primary School Reaching Out- of- School Children Project Resettlement Plan School-based Management Swedish International Development Agency School Level Improvement Plan School Management Committee Social Management Framework Secondary School Certificate Sector/sub-sector-Wide Approach Strengthening Public Expenditure Management Program Terms of Reference Technical Support Teams Upazila Education Officer United Nations Educational, Scientific and Cultural Organization United Nations Children s Fund Upazila Primary Education Plan Upazila Resource Center World Food Program Vice President: Country Director: Sector Director: Sector Manager: Task Team Leader: Isabel M. Guerrero Ellen A. Goldstein Michal Rutkowski Amit Dar Susan Opper & Ayesha Vawda

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5 Table of Contents I. Strategic Context... 1 A. Country Context... 1 B. Sectoral and Institutional Context... 2 C. Higher Level Objectives to which the Project Contributes... 5 II. Project Development Objectives... 5 A. PDO... 5 B. Program Beneficiaries... 5 C. PDO Level Results Indicators... 5 III. Program Description... 6 A. Project Component... 6 B. Program Financing... 9 C. Lessons Learned and Reflected in the Program Design IV. Implementation A. Institutional and Implementation Arrangements B. Results Monitoring and Evaluation C. Sustainability V. Key Risks and Mitigation Measures VI. Appraisal Summary A. Economic and Financial Analysis B. Technical C. Financial Management D. Procurement E. Social (including Safeguards) F. Environment (including Safeguards) Annex 1: Results Framework and Monitoring Annex 2: Detailed Program Description Annex 3: Implementation Arrangements Annex 4 Operational Risk Assessment Framework (ORAF) Annex 5: Implementation Support Plan Annex 6: Team Composition Annex 7: Governance and Accountability Action Plan (GAAP)... 78

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7 PAD DATA SHEET BANGLADESH Third Primary Education Development Program PROJECT APPRAISAL DOCUMENT South Asia Human Development Date: June 11, 2011 Country Director: Ellen A. Goldstein Sector Director: Michal Rutkowski Sector Manager: Amit Dar Team Leader: Susan Opper & Ayesha Vawda Project ID: P Lending Instrument: Specific Investment Credit Sector(s): Primary Education (90%); Government Administration (10%) Theme(s): Education for All (P); Public expenditure, financial management and procurement (S), Administrative and civil service reform (S) Proposed terms: Project Financing Data: [ ] Loan [x ] Credit [ ] Grant [ ] Guarantee [ ] Other: Source Total Project Cost: 5860 Environmental Assessment Screening Category: B Total Amount (US$M) Cofinancing: ADB DFID EU CIDA AUSAID SIDA JICA UNICEF Borrower: Total Bank Financing: IDA Borrower: People s Republic of Bangladesh Responsible Agency: Ministry of Primary and Mass Education (MOPME) Address: Bhaban 6, Room 609 Bangladesh Secretariat, Dhaka Contact Person: Mr. AKM Abdul Awal Mazumder, Secretary, MOPME Telephone No.: Fax No.: scymopme@gmail.com i

8 Estimated Disbursements (Bank FY/US$ m) FY Annual Cumulative Project Implementation Period: Start July 31, 2011 End: January 31, 2015 Expected effectiveness date: July 31, 2011 Expected closing date: December 31, 2015 Does the project depart from the CAS in content or other significant respects? If yes, please explain: Does the project require any exceptions from Bank policies? Have these been approved/endorsed (as appropriate) by Bank management? Is approval for any policy exception sought from the Board? Yes x No x Yes No x Yes No x Yes No If yes, please explain: A waiver is sought for an expansion of the exception to open eligibility under paragraph 1.8(d) of IDA s Procurement Guidelines to allow IDA, in the case of contracts jointly financed with the Asian Development Bank (ADB), to recognize the ineligibility of firms and individuals debarred by the ADB. Does the project meet the Regional criteria for readiness for implementation? If no, please explain: x Yes No Project Development objectives are to (i) increase participation and reduce social disparities in primary education, (ii) increase the number of children completing primary education and improve the quality of the learning environment and measurement of student learning, and (iii) improve effectiveness of resource use for primary education. Project description: The proposed operation uses a Sector Wide Approach (SWAp) to support implementation of the Government of Bangladesh s primary education program (PEDPIII). The Credit will finance recurrent and development expenditures, up to capped amounts, covering the entire primary education sub-sector, and which fall under agreed program budget heads (PBHs). Disbursement is conditioned on the achievement of pre-specified results, referred to as Disbursement-linked indicators (DLIs), which are a subset of the Government s results framework for PEDPIII. The activities to be financed will fall under the following categories: (i) improving the quality of the learning environment and the measurement of student learning; (ii) increasing participation and reducing social disparities; and (iii) improving program planning and management, and strengthening institutions. ii

9 Safeguard policies triggered? Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Forests (OP/BP 4.36) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Indigenous Peoples (OP/BP 4.10) Involuntary Resettlement (OP/BP 4.12) Safety of Dams (OP/BP 4.37) Projects on International Waters (OP/BP 7.50) Projects in Disputed Areas (OP/BP 7.60) Financing Agreement Reference Implementation Covenants Schedule 2, Section I. A.1. (a) Conditions and Legal Covenants Description of Condition/Covenant The Recipient shall, not later than three months after the Effective Date, establish and thereafter maintain throughout the period of the Project implementation, an Inter-Ministerial Steering Committee, headed by the Secretary, MOPME, and having as members representatives of key ministries and agencies, including, inter alia: the Finance Division and Economic Relations Division of the Ministry of Finance; the Ministry of Public Administration; the Planning Commission; the Implementation Monitoring and Evaluation Division of the Ministry of Planning; and the Directorate of Primary Education of the MOPME; and representatives of Non-Government Organizations. x Yes No Yes x No Yes x No Yes x No Yes x No x Yes No x Yes No Yes x No Yes x No Yes x No Date Due Three months after the Effective Date Schedule 2, Section I. A.3. (a) The Recipient shall, not later than three months after the Effective Date, establish and thereafter maintain throughout the period of Project Implementation, a Technical Committee headed by the Director General (Program Director), DPE, and having as members inter alia, the Additional Director General, all DPE directors; representatives from MOPME, the National Academy of Primary Education, National Curriculum and Textbook Board, Compulsory Primary Education Implementation and Monitoring Unit, Bureau of Non-formal Education, and the Bangladesh Bureau of Education Information and Statistics; and a representative from a Non-Governmental Organization. Three months after the Effective Date iii

10 Financing Agreement Reference Schedule 2, Section I. A. 4. Schedule 2, Section I. B. Schedule 2, Section I. C. (a) Schedule 2, Section I. C. (c) Schedule 2, Section I. E.1. and Schedule 2, Section I.E. 2. Description of Condition/Covenant The Recipient shall: (a) ensure that all budgetary allocations related to the Project are timely released to the appropriate directorates and agencies of the Recipient, as shall be required for the effective implementation of the Project; and (b) apply suitable internal controls to ensure that payments of budgetary expenditures, including monthly reconciliations thereof, shall be made in a timely manner, together with an appropriate accounting of budgetary advances, if any, with a view to keeping said advances separate from budgetary expenditures. The Recipient shall, not later than May 1 of each year, commencing May 1, 2012, prepare and furnish to the Association, for its endorsement, the Annual Plan for the following fiscal year. The Recipient shall, not later than May 31 of each year commencing May 31, 2012 carry out joint reviews of the Project and the Program with the Association and the Cofinanciers, to, inter alia, assess the progress of implementation and achievement of the agreed results, and identify obstacles or impediments, if any. By not later than thirty (30) months after the Effective Date, the Recipient shall review with the Association the progress made in the implementation of the Project, particularly progress made in the Recipient s compliance with the DLIs, and Recipient s proposals, if any, to substitute DLIs not complied with by their due date with other DLIs that are conducive to the achievement of the Project s objectives (Mid-term Review). The Recipient shall carry out the Project in accordance with the Environmental Management Framework (EMF), the Social Management Framework (SMF) and the Tribal Peoples Plan, and when applicable, prepare and carry out appropriate mitigating measures pursuant to the EMF and SMF. Date Due May 1, 2012 and May 1 of each of the following years of the Project. May 31, 2012 and May 31 of each of the following years of the Project. Thirty months after the Effective Date iv

11 I. Strategic Context A. Country Context 1. Bangladesh has made striking progress in the last thirty years of economic growth and social transformation, accompanied by significant poverty reduction and a curbing of population growth. Sustained macro-economic measures, which notably increased the market orientation of the economy and eased trade and exchange restrictions, have underpinned an average GDP growth of 5.8 percent per annum over FY01-10, up by a percentage point compared to the previous decade. Recent indicators show that Bangladesh has weathered the global economic crisis, staying on track with a still healthy percent annual growth rate in FY09 FY10 and an expected 6 percent plus growth rate in FY11. This performance is noteworthy, given the slow global recovery and severe power shortages in Bangladesh. Sustained growth has led to reduction in the incidence of poverty from 57 percent at the beginning of the 1990s, to 49 percent in 2000, and 40 percent in These gains were achieved despite fragile institutions, political volatility and poor governance exacerbated by frequent, large-scale natural disasters whose consequences can be most devastating for the poor. Per capita income is US$640 (2010), but close to 30 percent of the country s 164 million population remain below the poverty line earning less than US$1 a day. Prospects for progress over the medium-term will depend upon continued macroeconomic stability, a deepening of structural reforms to address severe infrastructure deficits (energy, transport, extreme urban congestion) as well as steps to improve governance and strengthen institutions to provide better quality services and bring marginalized groups more securely into the development process. 2. Education is one of the most powerful instruments for reducing poverty. The effect is compounded when there are linkages for education and health to work together to ensure that children are well nourished, healthy and ready to learn. The effect is self-perpetuating across generations. Educated parents are more likely to have reduced family size and provide schooling to their children. Bangladesh is a good example of this phenomenon. Increased access to primary education, particularly the rapid influx of girls over the past thirty years, have been powerful enabling conditions for social mobility as young people have entered the labor market and are attaining higher earnings. Workers have been moving away from low productivity jobs in agriculture to more productive jobs in the nonfarm private sector, particularly in urban areas and overseas. Widespread entry of women has been a leading factor in the rapid expansion of the garment industry, a driver of the Bangladesh economy. All these factors contributed to declining fertility rates which were halved in the 1990s as well as the high rates of poverty reduction. 3. Despite laudable progress on many fronts, development needs remain large and pressing. Bangladesh is one of the most densely populated and poor countries in South Asia. Its GDP per capita is half that of India. Chronic malnutrition pervades all socioeconomic strata in Bangladesh, affecting 56 percent of children among the poorest and 32 percent among the wealthiest quintiles. Yet, in some areas of human development, the country has outstripped progress elsewhere in South Asia; for example, in infant and child mortality, which declined by around half in Bangladesh over the last two decades. Continued investment in human capital is essential to improve livelihoods for all. Bangladesh is projected to have an estimated 220 million 1

12 inhabitants by This poses a daunting development challenge in a setting that is vulnerable to natural disasters, and the latter is amplified by the effects of climate change. B. Sectoral and Institutional Context 4. The outstanding accomplishment of the last three decades is the increased access to education and the achievement of gender parity. In the space of 30 years, the number of young people completing primary education has more than doubled, and the participation of girls has so accelerated in the past 15 years that more girls than boys now complete primary school. Gross enrollment rates (GER) in primary education rose from 76 percent in 1991 to percent in 2010 (MOPME data), and net enrollment (measured by household data 1 ) reached 84.7 percent in In secondary education, the GER of 57 percent in 2008 is three times higher than in Greatly contributing to this gain was a seven-fold increase in girls enrollment; there is now gender parity in secondary education as well as in primary. For progress in all these areas, it has been critical that, since the 1990s, demand-side interventions including primary school feeding, cash transfer programs, and a gender-targeted secondary school stipend program have been met with expanded supply in the public and non-government (NGO) sectors. Today, over 16 million students are enrolled in about 78,000 primary schools. These include ten types of schools, the vast majority of which are Government Primary Schools (GPS) and Registered Non-Government Primary Schools (RNGPS; privately operated but heavily government subsidized). In addition, over 1.5 million children are enrolled in NGO schools. Despite these achievements, access challenges remain: notably marked disparities in participation rates for children in pockets of poor and disadvantaged communities compared to the national average (the 2005 NER of the poorest economic quintile is 58 percent, compared to NER of 80 percent for the richest quintile). The stipend program for primary school aged children, insufficiently targeted to the poor, has not been effective in reducing these disparities. Overcrowded and deteriorated classrooms, insufficient availability of sanitary facilities and drinking water still constrain access in parts of the country and for some population groups. 5. Through a sustained injection of public resources into education, Bangladesh has reached some international benchmarks, including one of the education Millennium Development goals (gender parity). From 1999/00, government spending on education increased significantly owing to the country s high rates of economic growth. Specifically, although the share of GDP devoted to education remained around 2.3 percent over this period, real spending increased by 50 percent as a function of the overall growth in real government spending. The per annum commitment of approximately 15 percent of government resources allocated to education over the past decade also appears comparable to developing and regional country averages. However, when measured in terms of public current expenditure on primary education per pupil, the US$99 (in constant 2006 US$) spent in Bangladesh is the lowest in South Asia (UNESCO). Considering as well that personnel costs take the largest share of the education revenue budget in Bangladesh, with some 98 percent of revenue spending in primary education devoted to salaries, expenditures on nonpersonnel items are well below recommended norms. This has an impact on learning achievement and system efficiency both of which remain low. 1 Administrative data provide higher estimates of enrollments than household survey data, but trends are similar. 2

13 6. There is a collective recognition that improving the quality of primary education is one of Bangladesh s highest priorities. Learning outcomes and primary cycle completion rates must improve substantially. Only 60 percent of primary school children complete the primary cycle (Grades 1-5) in 5 years, and of these, only about 44 percent go on to lower secondary school. The primary cycle completion l rate (PCR) varies by geographic locality and family income level. The PCR is exceptionally low in the seasonal poverty-prone areas of the Padma-Jamuna- Brahmaputra basin. In addition, of the primary graduates who do go to secondary school, less than half complete their education; the problem of drop-outs is more acute among girls. As for learning outcomes, although there is not yet an assessment system in place providing reliable and regular monitoring, there is wide recognition that learning levels are low and that excessive emphasis is put on rote learning. One study conducted in showed that it is still not until the end of grade 9 in the secondary cycle that percent of students attain competencies in the basic skill areas (reading, writing, mathematics) which they should have achieved by the end of grade five. Evidence suggests this is not predominantly attributable to changes in the demographics of the in-school population; that is, even those children from more advantaged families are not mastering learning outcomes to acceptable levels. 7. Teachers, textbooks and curricula are the main supply-side factors contributing to the poor learning outcomes and weak systems efficiency in the primary sector. The situation is aggravated by the nature of the examination system and the overall weak institutional capacity for monitoring and evaluation. There are approximately 340,000 primary teachers in the public sector, and their qualifications are relatively low. Regulations stipulate that female and male primary teacher recruits are to have a tenth grade (SSC) and a twelfth grade (HSC) education, respectively, to be followed by a one-year Certificate-in-Education (C-in-Ed) training course within two years after recruitment. Around 85 percent of GPS and RNGPS teachers have met this requirement. The Government recognizes that it must raise the bar on teacher qualifications, and it intends to pilot a new Diploma in Education program that will be rolled out over the course of PEDPIII (see Annexes 1 and 2). Analysis has shown that prerequisites for success also include the professional development of teacher trainers at the Primary Teacher Training Institutes and improving the ability of school heads to provide support to teachers at school level on an ongoing basis. Equally critical is to maintain a competitive and transparent recruitment process that ensures that the jobs are given to the most qualified applicants. 8. The above reasons help to explain why the Government s overall objective for primary education is to improve its quality. The main issues surround the need to usher in major reform toward a competency-based approach (rather than rote learning), in order to be more supportive of each child s learning. Textbook development remains a major challenge, as do the related issues of the nature and quality of examinations (Grade 5 Completion Exam (PCE) and national student assessments in grades 3 and 5). Notwithstanding the commendable achievement in 2009 of the first time ever administration of the PCE on a national basis, it is generally recognized that the exam has low reliability, the test items measure rote learning rather than the actual competencies children possess at the end of the primary cycle, and exam results are not fed back to teachers and teacher trainers to improve teaching. 2 See School Choice and Cognitive Achievement in Rural Bangladesh by M.N. Asadullah, N. Chaudhury, and A. Dar, World Bank

14 9. More broadly, the range of monitoring and evaluation mechanisms in the primary sector are ad hoc and insufficiently networked, as a system, for early reporting to inform improvements in service delivery, and to fortify the evidence base for policy making and strategic planning. Management of the sector is constrained by certain capacity limitations, in particular, lack of specialized staff (see Annex 4). The regulatory framework for working across the sector with all providers government, non-government, private remains in nascent stages of development. Currently, the Government only controls and regulates four types of schools, although it intends gradually to extend its monitoring capacity to all primary education providers. Decentralized planning and management is also one of the Government s aims, but implementation has so far been constrained by lack of funding. In addition, the accountability relationships between levels of government (central, District, Upazila) and between government and schools and communities still require clarification and reinforcement through regular monitoring for quality assurance. 10. The Government of Bangladesh has been heavily engaged with external development partners in investing in primary education through two successive operations: PEDPI and PEDPII. The advent of PEDPII in 2004 was instrumental in primary education receiving even greater importance within the education sector, as a function of an increasing development budget allocated to primary. A great deal of non-salary recurrent spending occurred on the development side of the budget, e.g. production and distribution of (free) primary school textbooks. PEDPII was an important step towards better coordination of development partner support and the corresponding reduction in transaction costs for Government, with the adoption of a sectorwide approach. Results from PEDPI and PEDPII show positive trends, on average, in enrollment and completion rates, achievement of gender parity in access, classroom construction (30,000 new classrooms) as well as improvements in quality with preparatory steps for a revised curriculum and teachers professional development (e.g. development of the Diploma-in- Education), extension of the Grade 5 Completion Exam to all primary school students, and a round of learning assessments. PEDPII furthermore increased the scope for local school-based management by initiating school level improvement plans (SLIPs) and initiated an annual sector performance reporting as a major achievement in monitoring and evaluation systemwide. 11. The Third Primary Education Development Program (PEDPIII) is intended to build on the momentum generated in the areas of access and quality, while it distinctly promotes accountability through a results-based program approach. A determined effort will be made to fast track actions which can bring immediate, measurable impact on classroom learning and primary cycle completion. Focus is on the use rather than simply the supply of inputs at the school and classroom level to improve learning outcomes for individual children enrolled in GPS and RNGPS schools. By following a Disbursement Linked Indicator approach (described elsewhere in this document), the Development Partners and Government are broadly aligning financial incentives with critical actions for which there is strong evidence nationally and internationally that they will be capable of boosting progress toward more equitable participation in higher quality primary education. 4

15 C. Higher Level Objectives to which the Project Contributes 12. The proposed Project which supports the Government of Bangladesh (GOB) Third Primary Education Development Program (PEDPIII) that covers the primary education subsector contributes to Bangladesh s long-term objective of human capital development for sustaining economic growth and poverty reduction. The PEDPIII objectives are well aligned with the Second National Strategy for Accelerated Poverty Reduction (NSAPR-II) for FY , the Perspective Plan , the National Education Policy 2010, and the Bank s Country Assistance Strategy (CAS) 5. The NSAPR-II, which represents the first phase in implementation of the Government s vision for 2021, lays out the education sector strategy for Bangladesh highlighting in particular the quality of education as one of the major strategic issues to be addressed and also encouraging progress toward equitable access and more efficient delivery of public services. The comprehensive National Education Policy provides more specific direction for operational objectives and expected results across the entire spectrum of the education sector. The CAS advocates improving the delivery of social services to bring marginalized groups and rural communities more firmly into the development process. The CAS also identifies strengthening the accountability at central and local levels as part of a strong governance agenda leading to faster and more inclusive growth. PEDPIII can thus play an important role in effectively operationalizing GOB s strategy for the education sector. II. Project Development Objectives A. PDO 13. The development objectives of the proposed Project are to (i) increase participation and reduce social disparities in primary education, (ii) increase the number of children completing primary education and improve the quality of the learning environment and measurement of student learning, and (iii) improve effectiveness of resource use for primary education. B. Program Beneficiaries 14. The direct beneficiaries are the 16.5 million students who attend pre-primary and primary school in any given year, the 340,000 teachers in government schools who receive training, as well as the younger cohorts of about 3 million children who will most likely enter primary school each year over the course of the Project. C. PDO Level Results Indicators 15. Success in meeting the Project objectives will be measured by using the following outcome indicators and targets: 3 National Strategy for Accelerated Poverty Reduction II, Government of the People s Republic of Bangladesh, The Strategy lays out an ambitious agenda and commitment to systemic reforms. To generate growth and reduce poverty, it focuses on five strategic blocks: (a) macroeconomic environment; (b) pro-poor growth; (c) essential infrastructure; (d) social protection for the vulnerable; and (e) human resources development. 4 Outline Perspective Plan of Bangladesh: Making Vision 2021 a Reality, Government of Bangladesh, Planning Commission (March 2010) 5 Bangladesh Country Assistance Strategy , The World Bank, August

16 Outcome indicator Latest available baseline Target, 2014/15 Primary Net Enrollment Rate (NER, in %) 84.7 (2010) Primary cycle Completion Rate to Grade 5, as % of cohort 52.2 (boys) 57.5 (girls) (2009) 62.0 (boys) 67.0 (girls) Decreased disparity in access to schooling between poorest 20% and richest 20% (1).72 (2005).77 Learning levels regularly monitored through learning assessment system (2) Percentage of schools/smcs preparing School Improvement Plans and receiving funds (1) Measured by ratio of NER of poorest 20% and NER of richest 20% (2) As measured by conduct of Grade 5 completion exam every year Grade 5 exam introduced in 2009, testing memory more than ability to use subject knowledge Grade 5 exam with at least 25% items competency-based 27.0 (2010) 75.0 III. Program Description A. Project Component Financing of the GOB Third Primary Education Development Program (PEDPIII) Total: US$5800 million; IDA: US$300 million 16. The proposed Project finances civil works, goods, non-consulting services and recurrent costs through a Sector Wide approach (SWAp) with eight other Development Partners, to cofinance with the Government of Bangladesh the implementation of the GOB s primary education program (PEDPIII). The Project finances recurrent and development expenditures from both the development and the revenue budgets to support the carrying out of interventions as approved for inclusion in the annual plans (see below) for improving the quality of the learning environment and measurement of learning; increasing participation and reducing social disparities; and improving program planning and management, and strengthening institutions. The detailed interventions are described in Annex 2 of the PAD. 17. The GOB and the Development Partners used a strategic planning process to identify key expected results and the operational framework through which to achieve these to attain the development outcomes for primary education. The Government has a results framework with expected results in the areas of access, equity, quality and effectiveness. The scope of interventions and resource requirements vary across Districts and sub-districts, and also from year to year, so the Project is unlike a traditional Investment Credit with predefined components. The Project would induce greater incentives in the system to facilitate achievement, while affording the Government greater flexibility in the choice of inputs to reach the agreed results. The Project will finance against the government s annual plan for the primary education subsector (which will list the development activities to be undertaken in the Annual Operational Plan, and the total budget allocation ceiling for agreed-upon program budget heads (PBHs)), and the annual procurement plan. IDA will finance the identified PBHs, up to maximum amounts as explained in Annex 3. Disbursement is conditioned on the achievement of pre-specified results, i.e. Disbursement Linked Indicators (DLIs), which are a subset of the Government s results framework and have been agreed between the GOB and Development Partners as the milestones 6

17 which reflect the priority elements in PEDPIII. The DLIs build incrementally and include institutional changes, implementation steps, and output/outcome indicators which are critical for demonstrable progress of the sub-sector toward its overall development outcomes. DLIs will generate improved efficiency and effectiveness during the period of the Credit, and will have an impact and sustain results beyond the life of the Project. All DLIs are weighted equally. The activities financed are described below; Annex 1 provides details on the DLIs. The full range of Project interventions is detailed in Annex The following activities, included in the Annual Plans, will be supported. Other activities may be supported during program implementation if jointly agreed between MOPME and the Development Partners: Improving quality of the learning environment and measurement of student learning (a) Improvement of the timely delivery of free textbooks to all eligible schools and the quality of textbook content through the provision of quality learning materials; (b) Improvement of the effectiveness of teacher training through the carrying out of a comprehensive teacher education and development plan, including the development and piloting of a new Diploma-in Education and progressively increasing the number of Primary Teacher Training Institutes implementing the Diploma-in Education program; (c) Recruitment of teachers and head-teachers, and application of the competitive, merit-based recruitment, as well as taking account of vacancies to be filled as a result of new classrooms constructed through the needs-based infrastructure approach; (d) Improvement of the quality, transparency and effectiveness of the primary completion examination through the carrying out of an action plan to improve the Grade 5 completion examination; (e) Improvement of the national assessment program, including its organizational management; (f) Development of techniques to determine pupils current knowledge and skill level, including through the training of teachers to identify students learning strengths and weaknesses; (g) Improvement of the curricula for grades one to five, including the carrying out of a regional comparative study on competencies, curriculum substance and revision practices, and capacity building of staff for curriculum development; (h) Implementation of a pilot initiative Shikhbe Protiti Shishu (Each Child Learns) to improve learning of basic skills in Bangla and mathematics, and dissemination of good practices and lessons learned to a progressively larger number of schools; and (i) Provision of equipment and materials for the setting-up of multi-media classrooms. 19. DLI milestones in this area focus on the improvement of the quality, transparency and effectiveness of the Grade 5 exam; more effective textbook distribution; teacher education development; and merit-based teacher recruitment. 7

18 Increasing Participation and Reducing Social Disparities (a) Provision of one year of free pre-primary education (PPE) for five-year olds through a new school-based approach to reach coverage of all children in government primary schools through: (i) the development and implementation of a plan for the scaling up of participation in pre-primary education; and (ii) the expansion of pre-primary education coverage; (b) Initiating a needs-based approach to improve physical facilities (reconstruction of schools, additional classrooms, toilets and safe water source) through the preparation and implementation of an action plan for infrastructure development; (c) Development and implementation of a public relations and communications strategy to inform and encourage enrollment and retention of children in school for the full primary cycle; (d) Implementation of a revamped stipend program to support participation of children in primary education; (e) Coordination and implementation of a school health and nutrition program, including curriculum development on health and nutrition practices and health screenings in selected areas, and nutritional interventions such as school feeding; (f) Implementation of an inclusive primary education plan at the upazila level, with support from a block grant, to provide resources to schools accommodating previously excluded children, develop supplementary learning materials, and strengthen the capacity of teachers to identify and teach children with special needs; and (g) Coordinating alternative primary education opportunities with education service delivery in the formal, public sector, including the development of an equivalency framework aligned with the revised national curriculum, inclusion of non-formal education in upazila primary education plans, participation of non-formal education learners in the Grade 5 completion examination, and reporting on non-formal education outputs in the PEDP III reporting. 20. In this thrust area, DLIs will be milestones related to the implementation of the PPE program; and the needs-based infrastructure plan. Improving Program Planning and Management, and Strengthening Institutions (a) Improvement of the efficiency and effectiveness of service delivery at central and decentralized levels through the provision of grants to schools based on their school-level improvement plans; (b) Enhancement of the primary education subsector budget preparation process by improving the linkage between the budgetary process and the medium-term primary education subsector strategy, and the consistency between annually approved primary education subsector budgets and the PEDPIII results framework and medium term budgetary framework (MTBF); 8

19 (c) Improvement of the timeliness, quality and coverage of the Recipient s Annual School Census (ACS) through: (i) the development and implementation of an improved administration plan for the monitoring and evaluation/education management information system; and (ii) the revising of the Annual School Census; (d) Development and implementation of a human resource management plan to strengthen the Directorate of Primary Education and improve delivery of teacher education programs; and (e) Carrying out of analyses and stakeholder consultations to clarify issues and potential actions to develop an integrated, comprehensive framework to include school standards for all categories of primary schools in the country. 21. The DLI s in this area focus on setting targets for progressively larger percentages of SMCs preparing plans and receiving and using the block grant financing; ensuring consistency between annually approved primary education budgets and the PEDPIII results framework and MTBF; and improvements expected in the timeliness and quality of the ASC. B. Program Financing Lending Instrument 22. The proposed operation is a US$300 million Specific Investment Credit to support the first phase (four years) of implementation of the Government's program for primary education (PEDPIII). The commitments from the additional Development Partners are summarized in the following section. The IDA Credit disbursements will be made against identified program budget heads (PBHs) contingent upon achievement of the agreed set of DLIs. The total amount that can be claimed from the IDA commitments is defined by the total number of DLIs to be achieved (9), and the costing of DLIs for each year. The proposed schedule of IDA disbursements is shown in Annex 3 (Table A3.1) which sets out the total disbursement amount of US$300 million as a function of the costing of DLIs for each year. The total estimated amount for each annual disbursement would be subject to any deduction equivalent to the price of any unmet DLIs. DLIs are priced, so that missing one does not hold back disbursement of others which are met. 23. Over the financing period of the Project, there are four scheduled disbursement cycles: in July for each of the years 2011 to If fewer than the nine DLIs are achieved by a July cycle, withheld amounts against unmet DLIs will be available for disbursement in January, subject to confirmation that the said DLIs have been satisfied, and on condition that DLIs are achieved no later than 18 months after the initially specified DLI achievement deadline. 24. IDA will disburse against PBHs to reimburse against expenditures incurred. The PBHs to be supported by the Project account for the bulk of GOB's program expenditures for primary education. The PBHs are part of the Government's own economic heads of account which are used to track expenditure on non-development as well as development sides of the budget. The PBHs are described in Annex 3. 9

20 Development Partner Co-Financing 25. All Development Partners committing funds for the SWAp to support PEDPIII will finance the identified PBHs of the GOB primary education sector program. All Partners, including the World Bank, would be signatories to a Joint Financing Arrangement (JFA) with the Government. The JFA will govern the working arrangements for the SWAp. The indicative total contribution under the JFA for the first four years of PEDPIII is US$909.4 million, of which the total contribution of the Development Partners other than IDA is US$609.4 million (see table below). The defined disbursement intervals are the same for all the Development Partners. All (except UNICEF) are planning to condition their disbursements on the achievement of the DLIs. In addition, some Partners (not including IDA) have indicated they will condition part of their disbursement to financial and other reporting on PEDPIII, as defined in the JFA, to be reviewed by all Partners and the GOB at the Annual Joint Reviews. PEDPIII represents an important move toward using the country system of fund flow in that the Development Partner financing will be disbursed using the Government system without Development Partners requesting use of project-specific designated accounts. Under certain conditions, there will be separate tracking of the IDA and ADB disbursements, respectively (see Section VI. D, below). ADB is expected to present the project to their Board in early July 2011 to be effective shortly thereafter. The remaining Development Partners are planning to begin disbursing within the following twelve month period. Program Financing Table (first 4 years of the program) 6 Component and/or Activity IDA, of which - Textbooks and other goods procured through ICB (financed with other Development Partners (not ADB) ) - Goods, works, non-consulting services, recurrent costs, stipends ADB. of which - Consultancies financed by ADB (with other Development Partners excluding IDA) Total (US $million) Goods, works, non-consulting services, recurrent costs, stipends DFID 110 EU 55 CIDA 48 AUSAID 28 SIDA 24 JICA 24 UNICEF.4 GOB Financing TOTAL The proportionate allocations for IDA (ICB compared with other financing) and for ADB (Consultancies compared with other financing) are approximate. Development Partners (other than the ADB) have indicated their commitment to provide an additional approximately US$95 million for the fifth year of the program. 10

21 C. Lessons Learned and Reflected in the Program Design 26. Based on the experience of previous projects in Bangladesh, as well as international experience, key lessons incorporated in the PEDPIII program design include: (a) Usefulness of an Education Sub-Sector Approach. Under PEDPII, the Government took increased ownership and activities began to be somewhat mainstreamed and integrated into the regular system activities. Harmonization of management, planning, procurement, accounting and reporting arrangements helped to reduce GOB transaction costs. PEDPIII will further consolidate those gains, enabling the Government to work towards management of improvements across the whole primary education sector in a phased approach commensurate with capacity of the implementing agency and use of technical assistance. (b) Need for a Robust M&E: During PEDP II, it was difficult to obtain sufficient focus on results and timely reporting. Much of the information available centered around progress of activities instead of key implementation reforms and outcomes. System development for sound data collection, and analysis and dissemination of data to improve planning were limited. Through the DLIs, stronger emphasis will be placed on bolstering the technical capacity of the M&E system and its ability to monitor program interventions. This will be complemented by technical assistance aimed at improving data quality for timely planning. (c) Leveraging Reform through Result-Based Financing: Many of the planned reforms under PEDPII could not be implemented because they were not in the jurisdiction of DPE and/ or MOPME. For example, DPE had no control over approval of the plan to devolve planning and management responsibilities to districts, Upazilas and schools. In this regard, experience from other countries shows that result-based disbursement linked to the use of country systems for flow of funds can help to provide incentives and ensure greater support from other ministries; in particular, the Ministry of Finance. (d) Experience with Results-Based Financing and Disbursement Linked Indicators in other countries: Some insights from the World Bank collaboration under Pakistan operations (in Punjab and Sindh) are being incorporated into PEDPIII, where possible, and include: (i) the DLIs, coupled with regular dialogue and engagement with the client, promote the focus on results and their achievement. This is particularly important in securing government commitment to politically difficult but potentially beneficial governance initiatives supported by reform-minded stakeholders; (ii) the verification of DLIs can be leveraged to support improvements in monitoring and evaluation practices; this is conducive for undertaking more third party validations and impact evaluations to enhance the reliability of assessments and measurement of sector performance; (iii) the DLIs help keep program implementation rolling and consistent with the program designs; (iv) keeping the number of DLIs to a small number is important to ease the administrative and supervision burden on the government and task teams; (v) there need to be sufficient internal flexibility to adjust results and the DLIs linked to those results in the event of unanticipated developments, while preserving the high-powered incentives to achieve results via the DLIs; and (vi) as a consequence of the continuous engagement with authorities at all levels, supervision intensity for the Project will be high. 11

22 (e) Development Partner Coordination: Use of the results-based financing approach, the pooling of Development Partners funding, and use of the Government s systems for PEDPIII will result in the nine Development Partners having more harmonized implementation arrangements and joint planning towards key program results. Parallel financing will be greatly reduced, except for pre-existing projects and technical assistance. Because Government has driven the design and preparation of the program, there will be no need for a single lead agency during implementation, as was the case in PEDP II. Suitable arrangements for donor coordination and program management have been agreed and will be articulated in a Joint Financing Arrangement (JFA). All participating Development Partners will be signatories to the JFA. This will also facilitate other partners who may wish to support the Government s program at a later stage in a more coordinated program approach, something which was not possible earlier. IV. Implementation A. Institutional and Implementation Arrangements 27. Overall policy guidance, program oversight and coordination will be provided by an Inter-Ministerial Steering Committee chaired by the Secretary, MOPME, and comprising representatives of key ministries as well as representatives of NGOs. Besides reviewing program progress and approving the annual operational plans, the Steering Committee would be responsible for resolving any critical inter-ministerial implementation issues. 28. The Directorate of Primary Education (DPE) headed by a Director General (Program Director) will be responsible for day-to-day program implementation under the guidance of the Steering Committee. DPE will be assisted by a Technical Committee, chaired and coordinated by the Director General, assisted by an Additional Director General. The Technical Committee will comprise all DPE directors and representatives from all agencies involved in the implementation of PEDPIII. 7 The main functions of the Technical Committee will be to: (i) provide support to line directors to resolve implementation problems; (ii) devise strategies for the gradual integration of different streams of formal and non-formal education in terms of curriculum and service delivery structure; (iii) support the establishment of an integrated data system and plan for results-based management; and (iv) support policy revision based on implementation experience. 29. DPE line directors will be given responsibility for implementation of key areas of PEDPIII. Although the implementation capacity of DPE has improved significantly during the PEDPII phase, implementation of the new program will pose additional challenges: the size of the program is significantly larger, and it has the ambition gradually to encompass the full subsector (within a framework that eventually will incorporate the non-government service providers as well). The intention is to develop long-term capacity of the regular staff of DPE and 7 These include: the National Academy of Primary Education (NAPE), National Curriculum and Textbook Board (NCTB), Compulsory Primary Education Implementation and Monitoring Unit (CPEIMU), Bureau of Nonformal Education, Bangladesh Bureau of Education Information and Statistics (BANBEIS), and anon-government organization (NGO). 12

23 strengthen the interface between the central level personnel and decentralized levels (Upazila, District and Division officers) as well as the outreach to teachers and head teachers at school level. The DPE line directors will thus be supported, when required, with technical assistance that will either be provided by Development Partners or recruited by GOB. 30. The financial management arrangements of the Program would be based on the country financial management systems for budget execution, accounting, internal controls, financial reporting and auditing). A comprehensive risk assessment and review of alternative funding arrangements conducted during program preparations concluded that this arrangement represents the least fiduciary risk (see Annex 3). Accordingly contingent upon meeting a set of DLIs for each of the fiscal years Development Partner funds will be directly disbursed to the Government s Consolidated Fund on a reimbursement basis. DPE would access funds according to the normal government budgeting process. Via the Government s integrated budgeting and accounting system (ibas terminal), DPE will monitor the monthly/quarterly budget execution reports and quarterly financial reports for the entire program to ensure that budget execution is in line, and keeps pace, with the approved budget. B. Results Monitoring and Evaluation 31. A robust M&E system is key to the success of the result-focused approach. Monitoring and Evaluation are systematically integrated into the PEDPIII program design through DLIs and a clearly established results framework against which to evaluate operational performance of the program, including risk mitigation, and progress toward the PEDPIII development objectives. Undertaking the program monitoring activities will be the responsibility of the M&E Division of DPE. The main tasks are described in Annex 3. The Government aims to strengthen the existing unit and to correct the weaknesses that a recent stock-taking exercise identified. 32. Over the course of PEDPIII implementation, the M&E Division will improve the data quality through regular validation, expand the coverage of the Annual School Census to all types of primary schools, and establish closer links with the Bangladesh Bureau of Education Information and Statistics (BANBEIS), Local Government and Engineering Department (LGED), National Curriculum and Textbook Board (NCTB) and the Ministry of Education (MOE) to gain access to other sources of data and thereby improve DPE capacity to monitor interventions; for example, construction and textbook delivery. Closer collaboration with the Bangladesh Bureau of Statistics (BBS) will also give access to large-scale household surveys (including commissioning new surveys) and permit triangulating findings on outcomes and improving the validity of core sector indicators such as disparities in net enrollment rates by family income levels. 33. Monitoring that is specific to the fiduciary and procurement functions, and environmental and social safeguards, is described elsewhere in the respective sections of the PAD. 34. The Government and Development Partners participating in the SWAp have a good understanding of the constraints to achieving the results outlined for the program, as well as reporting in a timely manner through robust and credible mechanisms. A Technical Assistance (TA) strategy and plan are in advanced stages of development and will be reviewed before 13

24 Effectiveness. The TA needs have been identified to develop a culture of results monitoring by strengthening the systems which provide the information and incentivizing the use of more credible information. The TA plan, building on lessons learnt of past practices, aims to ensure intime implementation support on a rolling basis, to respond to emerging needs. While coordinated through a single, global plan, the TA would partly be managed by Government and partly contracted directly by one or more of the Development Partners. The DPE and other agents implementing PEDPIII would draw upon technical assistance as they faced challenges in evidence-based planning and management, including: (i) developing enhanced monitoring instruments, (ii) independent validation of information; (iii) analysis of information from administrative data to report on DLI achievement, where required, (iv) more in-depth analysis and information dissemination to support policy making, (v) steps to mitigate risks in procurement, and (vi) impact evaluations and cost effectiveness of various interventions. In addition, the TA can help to advance in specific technical areas especially, although not exclusively where PEDPIII introduces significant change. These include: (a) the needs-based approach to provision of quality infrastructure, (b) pre-primary education (for which the GOB has no prior experience delivering through primary schools in the formal sector), (c) stipend programs (for targeting issues); (d) learning assessment and examinations, and (e) curriculum and teacher professional development. C. Sustainability 35. The sustainability of PEDPIII is shaped by several factors. First, the political commitment to basic education which has remained stable since the country s independence is reaffirmed in the Government s vision 2021, the Second National Strategy for Accelerated Poverty Reduction (FY ), and the National Education Policy (2010). Second, Bangladesh has a track record of meeting milestones for access and equity in basic education. The Government has accomplished in 20 years what it took many developed countries more than 60 years to achieve. Third, the sector s institutional capacity to manage national scale programs has been consolidated over decades of implementing four major primary education programs, nine large scale projects, and numerous smaller ventures under the National Plan of Action for Education for all. The PEDP II ( ) particularly strengthened DPE and MoPME management functions in planning, financing, monitoring and evaluation, and coordination of simultaneous production and distribution of different types of inputs. Fourth, Government s financial commitment to primary and mass education is nested in the country s broader Medium- Term Budgetary Framework (MTBF). Sustainability considerations are built directly into the PEDPIII design through improvements in budgetary processes to refocus program implementation under a results-based management model; furthermore, the economic analysis conducted for PEDPIII indicates parameters for fiscal sustainability (see below). Fifth, the country s growth prospects make it possible to envisage an increasing allocation of resources to education. V. Key Risks and Mitigation Measures 36. Potential risks are summarized in the Operational Risk Assessment Framework (ORAF) (Annex 4). The proposed overall risk rating for the Project for implementation is Medium driven by impact (MI). The following key risks identified in the ORAF have contributed greatly to the choice of the overall risk rating of PEDPIII: 14

25 (a) Capacity: Despite ongoing capacity building efforts, staff vacancies and turn over, civil administration issues and lack of accountability cut across the sector. Weak capacity at planning, implementing and monitoring stage, as well as low fiduciary capacity, could jeopardize program achievement. To mitigate this risk, the program ramps up technical assistance in various aspects of educational management as well as on fiduciary issues to assist the GOB in achieving results. Local capacity and accountability are being enhanced through scaling up school-based management under School Level Improvement Plans (SLIP). Increased focus is placed on developing quality monitoring and evaluation systems. (b) Fraud and corruption: Certain systemic weaknesses in some aspects of the program, such as delivery of stipends, contracts for books, hiring of teachers, and civil works expose the Project to a risk of corruption and non-transparent or inefficient practices. Furthermore, enforcement of GOB s procurement regulatory system may not meet the needed level of governance and accountability. These risks are mitigated through several measures. The program design incorporates expenditure monitoring; external validation exercises, and an Annual Fiduciary Review. A PFM action plan is being implemented to ensure timely and reliable financial reports and to enhance monitoring for follow-up of audit observations. The Bank's own intensive supervision of technical and fiduciary aspects will also mitigate this risk. On procurement, GoB s regulatory system will be strengthened in line with internationally accepted procedures, and procurement capacity will be enhanced as needed, including through recruitment of procurement (and financial management) consultants. There will be transparency in disclosure of procurement activities, mainly through DPE s website. (c) Focus on inputs: The current focus of DPE is on inputs. Given that results-based interventions are fairly new, it will take some time to change from a culture based on inputs to focus on outcomes and results. Hence, if adequate emphasis is not placed on monitoring and evaluating effectiveness of programs/dlis, the effectiveness of the program is likely to be reduced. There has been a systemic effort to reduce this risk. Significant dissemination regarding the change in approach has taken place through the system, and will continue. MOPME, through DPE, has already initiated a results-based management system which will be strengthened during PEDPIII. Further, capacity support in strengthening monitoring and evaluation will be pronounced feature of PEDPIII. Finally, the adoption of DLIs builds an incentive mechanism into the program design. VI. Appraisal Summary A. Economic and Financial Analysis 37. The economic analysis for the prospective PEDPIII presents an assessment of benefits and costs associated with the program using a counterfactual identification approach whereby PEDPIII investment is the estimated additional cost over and above the projected spending for primary education in the absence of this program. Similarly, the benefits are taken to be those changes in the quantity, quality and reduction in internal inefficiency of education produced over the period as a result of PEDPIII. Benefits come from three sources: (i) increased number of primary school completers who earn higher wages (relative to non-completers); (ii) increased quality of education resulting in higher wage-premium for all primary school completers; and 15

26 (iii) decreased wastage of public and private resources as a result of reduced dropout and repetition. Costs include additional program costs (from GOB and Development Partner sources) and private costs which comprise direct household outlays as well as opportunity costs. While GOB has presented to Development Partners a five-year program, IDA will support the first four years (with a possible additional financing at a later stage). The economic analysis provided here focuses on the costs and benefits of this first four-year phase. 38. Underlying the analysis is the projection of the 6-year-old cohort population, gross-intake ratio into grade 1, and repetition and dropout rates (and thus promotion/completion) for each of primary grades 1-5. Under PEDPIII, dropout and repetition rates are estimated to decline faster than if there were no PEDPIII. This allows calculation of student-flow numbers with and without PEDPIII, and thus the difference between the two cases is the impact of the new program on the completers, repeaters and dropouts. The additional number of primary completers will earn the wage-premium (wage levels for primary completers and non-completers is estimated from HIES 2005 and then projected to account for inflation for future years). Quality premium (due to increased skills and relevance through PEDPIII), however, applies to all primary completers. For this, a conservative two percent of the wage level of the primary completer is assumed. The benefit stream accruing from life-time earnings for the five cohorts is assumed to continue for 20 years (even though a typical primary completer will earn beyond 20 years, discounting will make the values insignificant beyond this time). Finally, the impact of improved internal efficiency will reduce the number of student years to complete the primary cycle per each completer. Student-cohort analysis indicates that PEDPIII will save 0.7 student-years per completer (from 7.4 years to 6.7 in four years), and savings apply to both program/public unit costs as well as private household expenditure and opportunity costs. 39. Additional program investment is derived from the difference between the proposed PEDPIII cost estimates and the projected spending on primary education had there been no PEDPIII (projected using trends from the former PEDPII program spending). For the four-year period , the differential investment is expected to be about US$1.7 billion (in the range of US$400 million each year). Household outlays and opportunity costs are also accounted for additional enrollees. 40. Based on a discount rate of 12 percent for the benefit and cost streams described above, the present discounted value of benefits for the base-case scenario is estimated to be US$2,062 million while the present discounted value of costs is estimated to be US$1,327 million, and therefore the net present value (NPV) of program benefits is US$735 million. The Internal Rate of Return (IRR) associated with this NPV is 21 percent. The sensitivity analysis under varying scenarios for progress in internal efficiency and external efficiency gains indicate that the IRR ranges from 13 percent to 21 percent. These results suggest that PEDPIII is expected to be a very sound investment. In fact these are conservative lower-bound estimates, given that they do not yet account for externality benefits arising from a healthier, more educated and a more equitable/ inclusive society. Nor has the above analysis assigned additional benefits to those primary level completers who would have gone on to complete even higher levels of education and receive higher wage-premiums. 16

27 41. The fiscal sustainability of PEDPIII over the medium-term will be dependent on the budget availability to meet the additional recurrent costs that will result from the program. Current macroeconomic prospects suggest that fiscal space will be available to accommodate substantial increases in spending on education. The robust GDP growth witnessed over the past decade is expected to continue given the country s strengths a vibrant private sector, a large pool of inexpensive labor, and the emergence of several promising exports sectors. Real GDP growth is expected to rise over 7 percent by FY 2013, tax revenues to increase by about 2 percent of GDP and Government expenditures to increase from 14.6 percent of GDP in FY10 to 17.6 percent in FY14. These figures indicate that, even with a constant share of the budget spent on primary education, the Government would be able to absorb a 20 percent increase in real spending on primary education which would be sufficient to cover the expected additional recurrent costs resulting from the program. B. Technical 42. It was agreed that the next phase of Government s primary education program would build on the PEDPII experience, keeping a sector-wide approach but, this time, encompassing the whole primary sub-sector (not only development but also revenue budget), and with Government taking the lead for the program. A key technical consideration was to design a project that would place a greater emphasis on (i) achieving specific key results; and (ii) providing incentives in the system to facilitate this achievement while giving greater flexibility to the Government in the choice of inputs to achieve agreed results. 43. The program aims at simultaneously raising school participation and retention, as well as student learning, through a set of focused interventions. This rests on the well-known complementarities between both objectives: school quality and attainment. Simply attempting to expand access could be self-defeating, whereas when coupled with actions which improve quality, this can yield a bonus in terms of meeting goals for attainment. The choice of DLIs rests on predictions of links between the selected interventions and the program s development outcomes, which are derived from lessons learned in Bangladesh and other parts of the world as well as from research. For example, world-wide research has shown that the quality of teachers is the key to student performance. Thus, interventions (and related DLIs) which attempt to raise the quality of the teacher training system, ensure a fair recruitment process and the availability of teachers, as well as the reliability and timeliness of textbooks (particularly critical to learning outcomes in resource-poor environments), are likely to raise student attendance and learning. It is also expected that changes in the content of exams, increasingly focused on competencies (rather than rote learning), will have powerful feedback effects on teaching methods. Similarly, improving the quality of school infrastructure in underserved areas, providing wider access to pre-primary education and giving stipends to children from poor households (compensating families for foregone child labor earnings) are expected to induce parents to send their children to school and to encourage their regular attendance. 44. The design of interventions supported by the Project also takes into account that achieving the expected development outcomes, in particular improving school quality, is a gradual process and a lengthy endeavor. The target levels set for improvement (indicators in Annex 1) are based on past projections as well as an analysis of improvement in indicators as a 17

28 result of effective implementation of programs (PEDPII). The analysis relied heavily on the Household Income and Expenditure Survey, third party evaluation of the M&E system, and reports from the Annual School Census. In the first years of PEDPIII, there is a greater emphasis (reflected in the DLIs) on putting into place critical policy related actions and meeting important implementation milestones to build stronger foundations in key areas of the system including M&E, and measuring student learning. These steps build incrementally over the life of the program with the later years of PEDPIII then focusing more toward program outcomes. The shift of emphasis from inputs to meeting implementation milestones and outcomes, as well as more use of the country s financial systems, is better to address Government s own focus on results, and its desire for program flexibility and more harmonized procedures with and between all Development Partners. C. Financial Management 45. The public financial management systems of Bangladesh can meet World Bank requirements under OP/BP 10.02, and there would be sufficient basis to place reliance on the country financial management systems for all financial management aspects of PEDP III subject to satisfactory implementation of the agreed public financial management (PFM) action plan which is well underway prior to Effectiveness. While the use of country financial management systems was assessed as a lower fiduciary risk than the use of a parallel financial management system as under PEDP II, it was recognized that there would be considerable challenges in shifting from parallel systems to mainstream funds flow through the country systems. Certain necessary actions were therefore identified to be accomplished prior to the start of project implementation. Two of these tasks have been completed, i.e. agreement by the Comptroller and Auditor General (CAG) on the Statement of Audit Needs for annual audit of PEDPIII and agreement by MOPME on Terms of Reference for the Annual Fiduciary Review. The Controller General of Accounts confirmed at negotiations that the remaining necessary actions would be taken by July 2011, ie: (a) the Payment Process Times Compliance report will be generated on a monthly basis for transactions under the Program; (b) a monthly report on the status of reconciliation of expenditures between the DDO (Drawing and Disbursement Officers) and their respective accounting officers will be generated from the Integrated Budgeting and Accounting System (ibas) and provided to the MOPME secretary; (c) ibas will capture the PEDPIII Component/Sub-Component wise expenditures; and (d) CGA will revise the procedure and ibas to enable an appropriate accounting for advances so that advances are not shown as final expenditures. 46. No separate designated account will be established for the IDA contribution to PEDPIII. Instead, the Credit proceeds will be disbursed directly to the Consolidated Fund Account (CF) of the Government of Bangladesh as indicated in the withdrawal applications. The resources to be transferred at each disbursement cycle will be linked to the Government s achieving the DLIs. The estimated expenditure levels that IDA will finance for each disbursement cycle are set out in the disbursement schedule (Table A3.1). Availability of funds for PEDPIII activities would be secured through government approved budget, and payments for the program activities across the country would be made by the accounts offices on the basis of approval of expenditures by the DDOs in accordance with Government s own internal control procedures. IDA (OP 10.02) requires that the financial statements for the PBHs be audited annually and provided to it no later 18

29 than six months after the end of the reporting period. The financial statements of PEDPIII will be audited by the CAG under the agreed statement of audit needs. 47. While upfront strengthening of government systems under the PFM action plan is critical for smooth transition to the Government s financial system, the PFM capacity building at sectoral level would primarily be carried out under the Multi-Donor Trust Fund (MDTF) for SPEMP. In addition, PEDPIII would ensure the timely follow-up of audit observations and conduct of Annual Fiduciary Review as specific risk-mitigation measures. The Joint Financing Arrangements will document the requirements in terms of broad financial management arrangements including PBHs, key internal controls, disbursement, financial reporting, and auditing. D. Procurement 48. IDA will finance civil works, goods, non-consulting services and recurrent costs under the identified PBHs through a SWAp with eight other Development Partners, to co-finance the implementation of the PEDPIII of Government. It is estimated that approximately 20 percent of the overall expenditures for PEDPIII will be for procurable. The majority of procurement will comprise small value contracts (constituting 80 percent of total procurement expenditure of US$1.6 billion), for which essentially only local bidders will compete. These contracts would be jointly financed by the Development Partners, and procured in accordance with the requirements set forth or referred to in Section 1 of IDA s Guidelines Procurement under IBRD Loans and IDA Credits, Published May 2004 as revised in October 2006 and May 2010 through National Competitive Bidding methods of the GOB Procurement Rules 2008 (as amended in August 2009) and the GOB Public Procurement Act (1 st Amendment 2009) with six modifications as required by IDA (see Annex 3) and deemed acceptable by ADB and the other Development partners, subject also to proposed waivers (see following paragraph). Goods and civil works procured through International Competitive Bidding (ICB) method would be financed by IDA, other Development Partners (except ADB) and GoB, following IDA s Guidelines. The IDA Credit will not finance expenditures against Consultant Services since the selection of consultant services will follow the Asian Development Bank s Guidelines on the Use of Consultants by the Asian Development Bank and its Borrowers (April 2010, as amended from time to time). 49. In the context of NCB contracts for civil works, goods, and non-consulting services jointly financed by IDA and the Development Partners, including ADB, Section 1 of IDA s Guidelines will apply, with the six modifications, and subject to approval of waivers with the objective of harmonization between the procurement and anti-corruption guidelines of IDA and ADB. A waiver is being requested from the World Bank Board to extend IDA s rights under paragraph 1.8(d) of the IDA Guidelines to provide additionally for the ineligibility of firms and individuals debarred by ADB. ADB management intends to obtain a waiver to open up eligibility to individuals and firms from all World Bank member countries. 50. All eligible procurement will be carried out by the implementing agencies (IAs): Directorate of Primary Education (DPE), Local Government Engineering Department (LGED), National Academy of Primary Education (NAPE), and the National Curriculum and Textbook 19

30 Board (NCTB) (hereinafter referred to as implementing Agencies, IAs). The procurement assessment conducted during program preparation verified that, through experience gained in the execution of IDA funded projects, the IAs have developed reasonable procurement capacity to carry out the procurement activities of the primary education budget. Various audit reports during the initial years of PEDPII showed substantial deviations, for which there were a few incidents of misprocurement. These concerns were subsequently mitigated by implementing a Risk Mitigation System (RMS). For PEDPIII, risk mitigation and monitoring measures are also being incorporated for procurement managed by the IAs (see Annex 3). To enhance their procurement capacity and safeguard against risks of fraud and corruption, the Borrower will implement a Procurement Risk Mitigation Plan (PRMP) that calls for monitoring procurement performance against key indicators and submitting quarterly reports to IDA. The key indicators include: timeliness of bid evaluation and contract award, strengthening complaint handling mechanisms, and disclosure of contract award information. In addition, a needs-based technical assistance strategy is being developed (see Annex 5) and will be updated during Project implementation to ensure adequate support. The Governance and Accountability Action Plan (GAAP), developed in conjunction with this PAD, further incorporates relevant actions (highlighted in Annex 4: ORAF) to mitigate fraud and corruption risks. 51. The Project design mandates that Government s annual procurement plan for PEDPIII shall be the Project s procurement plan. The first Procurement plan, which DPE has prepared for 12 months covering FY , was reviewed at Project negotiations and will be part of the Annual Operational Plan for the primary education sub-sector. E. Social (including Safeguards) 52. One of the principal concerns in preparing PEDPIII has been to identify more effective means of reducing disparities in access to quality schooling. The PEDPIII aims to achieve this through a particular focus on children of the most marginalized groups who remain out of formal schooling. The actions will include, inter alia, the stipend program, criteria guiding implementation of the needs-based infrastructure program, and reinforcement of decentralized planning and management through support to SMCs and the Upazila education offices. For culturally appropriate provision of benefits to Indigenous Peoples, the Indigenous Peoples Plan for Expanding Education of Tribal Children (July 14, 2003), developed for PEDPII and publicly disclosed, is also the instrument being used for PEDPIII. This and a specific Gender Action Plan have been endorsed by all the Development Partners participating in the PEDPIII SWAp. To ensure targets are achieved, the EMIS will closely monitor disparities in enrollments, learning achievement, and primary school completion across diverse social groups. The DLIs as well as the implementation support to be provided by the Development Partners systematically focus on strengthening the use of EMIS for planning and management. 53. The Environmental Management Framework (EMF) and Social Management Framework (SMF) have been developed through extensive consultation with stakeholders, and specifically with indigenous peoples groups. Both EMF and SMF provide for participatory approach, community accountability, and grievance mechanisms. The documents conform to World Bank safeguard policies and apply to the entire SWAp. 20

31 54. The process of preparing the PEDPIII has included all stakeholders e.g. teachers and head-teachers, community leaders and parents, madrasha representatives, non-formal education representatives, and nongovernmental organizations. These groups have been active in consultation workshops, translating needs into program design, articulating implementation challenges, and identifying how to build upon achievements of PEDPII. 55. Social Safeguards: As a function of the needs-based criteria for the PEDPIII infrastructure program, expansion and renovation of existing schools, where required, will involve construction of additional classrooms, provision of separate toilets for girls and boys, safe drinking water supply, and repair/renovation of the buildings for overall improvement of the learning environment. Construction of additional classrooms and toilets will be carried out on the existing school premises. Most of these schools are likely to be located in the relatively densely population areas. New building construction is mostly foreseen for the disaster-prone coastal regions. The new schools in the Chittagong Hill Tracts (CHT), which have the largest concentration of the country s indigenous population, will have dormitories to offset travel difficulties and risks encountered by children from highly dispersed settlements. The new schools will be built on khas and other public lands (including those owned by MOPME) which are free of private users including squatters; lands would be transferred from one government agency to the other. Where public lands are not available, they will be sought on voluntary private donation by local individuals and communities. Beyond these possible options, DPE has also decided that, unlike the case for PEDPII, it will not rule out the remote possibility of land acquisition during PEDPIII as it steps up efforts to assure physical facilities are available for full enrolment of all school-aged children. Hence, OP 4.12 on Involuntary Resettlement has been triggered. With its program in the CHT, PEDPII triggered OP 4.10 on Indigenous Peoples, and this will remain applicable under PEDPIII. 56. Consistent with the World Bank s OP 4.10, OP 4.12 and the safeguards requirements of the other Development Partners, DPE prepared a Social Management Framework (SMF) that was publicly disclosed before appraisal. DPE carried out consultations with indigenous peoples groups whose views and recommendations were incorporated into the SMF. 57. The SMF sets out the principles, policies, guidelines and procedures to prepare the Indigenous Peoples Plans (IPPs) and Resettlement Plans (RPs) as and when required for the individual schools in the event that physical works are identified to cause any adverse impacts on indigenous peoples, private landowners, or public land users. Regarding OP 4.12, it has been assessed as highly unlikely that there will be any potential squatters displaced, but the SMF has been prepared keeping the option of land acquisition as a last resort for procuring required lands; Annex 3 provides additional detail. As executing agency, DPE will be responsible for supervision, monitoring and evaluation of compliance with the SMF. A Social specialist with expertise in resettlement, indigenous peoples, and gender issues will be appointed by DPE. District and Upazila offices will perform all process tasks specified in the SMF; the District Education Officers will report to DPE, which will monitor and report on the entire Project. Jointly with DPE, the World Bank and the other Development Partners will evaluate the year s compliance with the social and environmental safeguards (e.g. during the Joint Annual Review). Post reviews of RPs and IPPs on a sample basis are further envisaged to ensure safeguards compliance. 21

32 F. Environment (including Safeguards) 58. The PEDPIII infrastructure program, to be implemented throughout Bangladesh, does not envisage any large scale, significant or irreversible environmental impact since the interventions foreseen are all relatively small scale. The program was reviewed during preparation and designated as environmental Category B which is appropriate and consistent with the provisions of OP/BP The program requires partial environmental assessment of subprojects before their implementation. 59. PEDPIII will support mainly four types of subprojects: (i) maintenance and minor renovation of buildings; (ii) expansion or major renovation of existing classrooms/buildings; (iii) new building construction; and (iv) provision of water supply and sanitation facilities. Particular attention will be placed on infrastructure in vulnerable geographic locations, e.g. coastal areas, hilly areas, and floodplains. Many of the schools are likely to be in the disaster-prone coastal regions where they will also serve as shelters during cyclone and natural calamities. The Environmental Management Framework (EMF) prepared and publicly disclosed by DPE before appraisal is the framework on which they will prepare Environmental Management Plans comprising the mitigating measures, where required, to eliminate adverse environmental impacts or reduce them to acceptable limits. 60. Following the practice as in PEDPII, DPE will delegate implementation of the infrastructure program for PEDPIII to the Local Government Engineering Department (LGED). The LGED has reinforced its Environmental Unit with a head engineer. This Unit will also have a full time Environmental Specialist responsible for supervising (including ensuring program activities do not infringe upon natural ecosystems during the design stage) and reporting on compliance with the EMF. DPE will sign a Memorandum of Understanding with the Department of Public Health Engineering for annual arsenic testing of tube-wells and data analysis. 22

33 Core Annex 1: Results Framework and Monitoring BANGLADESH Third Primary Education Development Program (PEDPIII) Results Framework Project Development Objective (PDO): (i) increase participation and reduce social disparities in primary education, (ii) increase the number of children completing primary education and improve the quality of the learning environment and measurement of student learning, and (iii) improve effectiveness of resource use for primary education. PDO Level Results Indicators* Indicator One: Increase in the number of children enrolled in primary education Unit of Measure Net enrollment rate by gender Baseline 84.7% (overall) (HIES, 2010) 93.9% (overall) 89.1% (boys) 99.1% (girls) (ASC,2009) Cumulative Target Values** 2011/ / / /15 98%(overall) 97%(boys) 100%(girls) Frequency Every 3 years (HIES) Annual (ASC) Data Source/ Methodology HIES (2010), EHS (2012/13), HIES (2015) ASC (2009) Responsibility for Data Collection BBS, DPE Description (indicator definition etc.) Proportion of children aged 6-10 enrolled in primary education Indicator Two: Primary cycle Completion Rate (PCR) %, disaggregated by gender 52.2%(boys) 57.5%(girls) (2009) 58% (boys) 63% (girls) 59% (boys) 64%(girls) 60% (boys) 65% (girls) 62% (boys)67% (girls) Annual ASC DPE Primary cycle completion rate (PCR) as % of cohort; gender parity index Indicator Three: Decreased disparity in access to schooling measured by family income levels Indicator Four: Learning levels regularly monitored through learning assessment system X X NER of 20% poorest relative to NER 20% richest Frequency and quality of assessment of learning of primary education completers (Grade 5 completion exam) NER of 20% poorest: 58% NER of 20% richest: 80% (2005) Ratio:.72 Grade 5 completion exam implemented for first time in 2009 to all students: testing memory more than ability to use subject knowledge a 5-yr Action plan for quality improvement in Grade 5 completion exam developed and adopted with new test items piloted 2011 Grade 5 completion exam based on pilot results 2012 Grade 5 completion exam with at least 10% competency based test items 23 NER of 20% poorest: 66% NER of 20% richest: 85% Ratio: Grade 5 completion exam with at least 25% competency based test items Every 3 years Annual HIES (2010)EHS 2012/13, HIES (2015) MICS, WFP Poverty Profiles a) Exam and assessment result databases; b) test items BBS, DPE DPE, NAPE Decrease in disparity in NER by: poor/nonpoor; and compared to national average NER a) Quality defined as competency-based exam items b) Grade 5 is the last grade of primary schooling

34 Core PDO Level Results Indicators* Unit of Measure Baseline Cumulative Target Values** 2011/ / / /15 Frequency Data Source/ Methodology Responsibility for Data Collection Description (indicator definition etc.) Indicator Five: Expanded coverage of decentralized planning and management at school levels Proportion of schools preparing SLIPs & receiving funds 27% (2010) Guidelines revised 50% 60% 75% Annual budget reporting Budget reports DPE Director of Finance Intermediate Result 1: Improved quality of the learning environment Intermediate Result indicator One: Adequate learning resources Intermediate Result indicator Two: Classroom environment more conducive to learning Intermediate Result Indicator Three: % of qualified primary teachers X X % schools receiving textbooks within first month of academic year Share of schools that met minimum quality levels PSQL (%) INTERMEDIATE RESULTS 32.7% (2010) 75% 80% 85% 90% Annual Reports based on receipts signed in the field. Monitoring to be gradually improved 24 DPE, NCTB % of schools following NCTB curriculum having received Grades 1 to V textbooks The types of schools receiving free textbooks is increasing from 4 to 6 types compared to baseline 17% (2009) 18% 25% 35% 50% Annual ASC DPE PSQL (Primary School Quality Level Package of minimum standards measuring physical, teaching/learning environment e.g. PTR, student classroom ratio, access to safe water, available toilets for girls. % teachers who have C-in- Ed : 85% % teachers who have Dipin-Ed: 0% (2010) % teachers who have C- in-ed: 86 % % teachers who have Dip-in-Ed 0% % teachers who have C- in-ed: 87% % teachers who have Dip-in-Ed 0% %teachers who have C-in-Ed: 88% % teachers who have Dip-in-Ed: 2% % teachers who have C- in-ed: 88% % teachers who have Dip-in-Ed: 6% C-in-Ed and Dip-in-Ed databases (information from PTIs consolidated at DPE level) Indicator measures the proportion of schools that meet at least 3 out the 4 standards % teachers in GPS and RNGPS

35 Core PDO Level Results Indicators* Unit of Measure Baseline Cumulative Target Values** 2011/ / / /15 Frequency Data Source/ Methodology Responsibility for Data Collection Description (indicator definition etc.) Intermediate Result 2: Improved infrastructure and financial support provided to the disadvantaged Intermediate Result % of indicator One: beneficiaries Providing financial belonging to support to 40 % poorest disadvantaged students households Program not well targeted:52.5% of beneficiaries belong to 40% poorest households (2005) 65% 75% Twice during PEDPIII lifetime 2010 HIES 2011 study 2012 EHS BBS, DPE Monitors impact of change in targeting modalities for the stipends by measuring (increase in) proportion of beneficiaries belonging to the poorest households Intermediate Result indicator Two: Adequate infrastructure and facilities X Number of classrooms built or rehabilitated (from prioritized list) according to agreed construction standards including adequate sanitary facilities. 32,000 new classrooms required to reduce overcrowding 3,200 9,600 17,600 Annual LGED data LGED Prioritized classroom is defined in DPEapproved list. Stipulated design and quality standards are approved and supervised by LGED. Intermediate Result 3: Improved program planning and management, and strengthened institutions Intermediate Result indicator One: Strengthening Upazilas for supporting school management Proportion of Upazilas having prepared UPEPs and receiving funds Revision of guidelines for UPEPs under preparation to include identification of block grants Revised guidelines issued 10% 25% Annual budget reporting Budget reports DPE Director of Finance Intermediate Result indicator Two: M&E systems strengthened to improve monitoring and data utilization for program performance and planning a)number of months for census administration and dissemination b)increased coverage of ASC (types of schools) ASC DPE Increased coverage of ASC defined as types of schools providing data *Please indicate whether the indicator is a Core Sector Indicator (see further **Target values should be entered for the years data will be available, not necessarily annually. 25

36 1. Textbooks/ Curriculum: Improving the timeliness of textbook distribution and quality of textbook content Disbursement Linked Indicators (DLIs) I Improving Quality of the Learning Environment and Measurement of Student Learning DLI Baseline Year 0 (May-June 2011) Year 1 (April/May 2012) Year 2 (April/May 2013) Year 3 (April/May 2014) Textbook At least 75% of all At least 80% of all At least 85% of all At least Grade 1 distribution to eligible schools eligible schools eligible schools textbook revised, schools spread receive all approved receive all approved receive all approved based on new over several textbooks (Grades 1 to textbooks (Grades 1 to textbooks (Grades 1 to competency-based months 5) within one month of 5) within one month of 5) within one month of curriculum developed school opening day school opening day school opening day by NCTB Textbook content still based on current curriculum Third party validation of monitoring mechanism completed Monitoring system of textbook distribution improved with actions agreed by MOPME and MOE based on validation results At least 90% of all eligible schools receive all approved textbooks (incl. revised Grade 1 textbook) within one month of school opening day Protocol Definition: Grades 1 to 5 textbooks approved by NCTB are to be made available to all eligible schools (through the UEOs) and delivered to all schools under the purview of MOPME and MOE. Eligible schools are all those mentioned in the Book distribution guidelines and following NCTB curriculum. Source: DPE s Administration Division s reconciled reports based on receipts signed by head masters and compiled by UEOs and DPEOs, and (ii) reports of textbooks delivery at Upazila levels submitted by NCTB; third party validation reports. 2. Teacher Education and Development (TED) : Improving teacher training effectiveness and teacher quality Low standards and competencies guiding teacher training (inservice) Comprehensive TED plan prepared and adopted by MOPME All preparatory steps for introduction of Dip-in-Ed completed in accordance with the Plan Dip-in-Ed diploma piloted in at least 7 PTIs with number of instructors according to the Plan Dip-in-Ed diploma rolled out in 57 PTIs with number of instructors according to the Plan Definition: The plan and strategy for primary teacher education and development (TED plan) defines the professional standards/competencies of teachers, head teachers and AUEOs and the strategy for improving pre-service (with the introduction of a new Dip-in- Ed), in-service (CPD), teacher supervision, networking and mentoring. Preparatory steps for introduction of the Dipin- Ed include sufficient instructors in each PTI, curriculum, training materials & assessment tools development, and training of instructors as specified in the TED plan. Source: TED plan as approved by MOPME Secretary; reports from training division and NAPE, curriculum and training materials and administrative data. 26

37 DLI Baseline Year 0 (May-June 2011) Grade 5 completion exam implemented for all primary school students in Grade 5 Completion Exam: Improving the quality of primary completion exam and the regular measurement of learning 4. Teacher and Head Teacher recruitment: Ensuring quality of new teachers hired Content focused on testing students memory more than ability to use subject knowledge Approximately, 5,000 to 6,000 vacancies to be filled every year. In addition, new positions needed to reduce classroom overcrowding. Teacher recruitment procedures in place are competitive and merit-based A 5 -year Action plan for improvements in Grade 5 Completion Exam developed by NAPE and approved by MOPME and including revising test items to gradually transform exam into competency-based test New test items developed by NAPE on selected competencies and piloted with accompanying guidelines for pilot test administration and training of test administrators Assessment of yearly needs for new teachers and head teachers based on verification of current teaching force, and on needsbased infrastructure development plan completed and approved by MOPME Year 1 (April/May 2012) Revised 2011 Grade 5 Completion Exam, based on action plan and pilot results implemented, incl. guidelines developed for markers and training of markers Analysis of 2011 Grade 5 completion exam results and content completed by DPE and NAPE and results disseminated All teachers and head teachers positions (regular vacancies and newly created positions) filled according to meritbased recruitment procedures and on needs basis. And at least 90% of new teachers and head teachers positions to be created for current year in accordance with needs assessment filled. Revised final proposal for career paths for teachers and head teachers, career paths, Year 2 (April/May 2013) Action plan implemented with at least 10% of items competency-based introduced in the 2012 Grade 5 exam and an additional 15% of competency-based items piloted Analysis of 2012 Grade 5 completion exam results and content completed by DPE and NAPE and results disseminated All teachers and head teachers positions (regular vacancies and newly created positions) filled according to meritbased recruitment procedures and on needs basis. And at least 90% of new teachers and head teachers positions to be created for current year in accordance with needs assessment filled. Year 3 (April/May 2014) Action plan implemented with at least 25% of items competency-based introduced in the 2013 grade 5 exam and an additional 25% of competency-based items piloted Analysis of 2013 Grade 5 completion exam results and content completed by DPE and NAPE and results disseminated All teachers and head teachers positions (regular vacancies and newly created positions) filled according to meritbased recruitment procedures and on needs basis. And at least 90% of new teachers and head teachers positions to be created for current year in accordance with needs assessment filled. Recruitment rules with career paths for teachers and head teachers; career paths, Protocol Definition: The Grade 5 Action Plan specifies the number of new competency-based items to be introduced each year, with the aim of achieving a fully competency-based exam by end Analysis of results includes: (i) analysis of pass rates by gender, subjects, Upazilas conducted by DPE; and (ii) analysis of NAPE of marking and scoring of a sample of answered scripts in selected Upazilas. Source: Action plan as approved by DG, NAPE and MOPME; sample of test items and questionnaire of grade 5 exam; test analysis reports by DPE and NAPE. Definition: Needs-based analysis (conducted by DPE) require a detailed review of EMIS and teacher database to identify schools below minimum standards for STR (1:56) followed by site verification by UEOs and AUEOs. The competitive, merit-based teacher recruitment rules currently in place would be applied to all recruitment. They include: (i) applications screened by committee (or on-line): (ii) anonymous exam; (iii) weight given to exam (80), academic record (5) and viva voce (15). Source: Needs-based analysis of new teacher positions approved by MOPME; administrative data, sample of exams, implementation plans and schedules for recruitment cycles; career paths, recruitment and promotion rules for teachers, head teachers and DPE officers as approved by Government of Bangladesh through a Government order issued by the Ministry of Public Administration (status of approval process to be communicated annually). 27

38 DLI Baseline Year 0 (May-June 2011) Year 1 (April/May 2012) recruitment and promotion rules for DPE officers (field and headquarters) submitted by MOPME to the committee of the Joint Secretary, Regulations, Ministry of Public Administration Year 2 (April/May 2013) Year 3 (April/May 2014) recruitment and promotion rules for DPE officers field and headquarters) approved by Government of Bangladesh Protocol Sub-Program Baseline Year 0 (May-June 2011) 5. Pre-Primary: About 1.4 million Guidelines prepared children entering and endorsed by Grade1 with some MOPME on the role of PPE prior NGOs in pre-primary experience education. Strengthening children s readiness for learning PPE provision in 43% of GPS mostly through non-government providers II Increasing Participation and Reducing Social Disparities Year 1 (April/May Year 2 (April/May Year 3 (April/May 2012) 2013) 2014) Integrated database At least 15,000 PPE of PPE provision by teachers placed and type of provider trained in areas of completed greatest need Plan for PPE expansion approved by MOPME Curriculum, standards and materials for PPE and teacher training approved by MOPME 28 At least 60% of PPE teachers in GPS trained in using new preprimary curriculum and materials PPE provision in at least 75% of GPS schools Protocol Definition: 1 year PPE program organized for children aged 5. Guidelines define the role of NGOs in the delivery of PPE and specify the types of partnerships that can exist with the Government, in particular, in setting up new school-based PPE, training and coaching teachers, preparing materials, and providing services if required in the catchment area. The integrated database of providers would include the location of services and, combined with the child survey data, would provide a map of areas of greatest need for PPE. The expansion plan, based on needs identified through the database, standards for PPE and the role of NGOs/private sector, defines the pace of recruitment and training, the type and duration of training, timing of classes, and expansion pace. PPE teachers will be recruited through a transparent process; they can be regular primary teachers, or contract teachers hired by schools with n the local communities. Source: Letter of endorsement of guidelines by MOPME; provider database, expansion plan approved by MOPME; curriculum, standards and materials, ASC, CAMPE reports and administrative data.

39 Sub-Program Baseline Year 0 (May-June 2011) 6. Infrastructure 53% of GPS, 49% of RNGPS and 31% of community schools overcrowded Reducing classroom overcrowding and improving school environment Need for about 32,000 new classrooms, 120,000 new toilets for teachers and students, repair of about 18,000 existing ones, drinking water supply. Infrastructure needs assessment completed and 5 year plan for prioritized needs-based infrastructure finalized and approved by MOPME Year 1 (April/May 2012) At least 10% of planned needs-based infrastructure development completed according to agreed criteria and technical standards Year 2 (April/May 2013) At least 30% of planned needs-based infrastructure development completed according to agreed criteria and technical standard Third party validation of compliance of infrastructure development with criteria and technical standards Year 3 (April/May 2014) At least 55% of planned needs-based infrastructure development completed according to agreed criteria and technical standards Third party validation of compliance of infrastructure development with criteria and technical standards completed Protocol Definition: The plan for prioritized needs-based infrastructure specifies criteria and standards used for estimates of needs. Based on these criteria, the plan provides estimates of needs to be covered over 5 years for: (i) additional classrooms and teachers rooms: (ii)additional toilets, urinals for students and teachers; (iii) repair of existing toilets; (iv) drinking water; (v) school maintenance and repair. Building specifications and technical standards are those designed and approved by LGED. Source: Needs-based infrastructure plan approved by MOPME Secretary; construction contracts; construction supervision reports by LGED engineers; third party supervision reports. III Improving Program Planning and Management, and Strengthening Institutions Sub-Program Baseline Year 0 (March 2011) Year 1 (April/May 2012) Year 2 (April/May 2013) Year 3 (April/May 2014) 7.School governance: Strengthening SMC s and Upazilas for supporting school management Limited involvement of SMCs in school management and improvement Low capacity of Upazila offices to provide support to schools Circular/ Guidelines for SLIPs revised, (including monitoring arrangements), approved by MOPME and distributed to all schools SMC guidelines ( in accordance with SLIP guidelines) revised and approved by MOPME 50% of schools having prepared SLIPs and received funds according to the SMC guidelines Revised guidelines for UPEPs, including identification of expenditures for block grants, approved by MOPME and distributed to all Upazilas At least 60% of schools having prepared SLIPs and received funds according to SMC guidelines(1) XX% of schools having received guidelines and prepared SLIPs At least 10% of Upazilas having prepared UPEPs and received funds according to UPEP guidelines. At least 75% of schools having prepared SLIPs and received funds according to SMC guidelines validated by expenditure tracking survey (at least 25% of Upazilas having received funds based on UPEPS guidelines and validated by expenditure tracking survey Protocol Definition: A SLIP is a school level improvement plan prepared by the SMC, and the school community. A UPEP is a planning instrument setting out ways to support schools and the quality agenda. Revised guidelines for SLIPs/UPEPs specify how improvement plans should be prepared, what are expenditures eligible for block grants as well as the fund flow mechanism, tracking and training. They will allow for differential support to schools. SMC guidelines specify membership, roles and responsibilities of SMC members (including fiduciary). Source: SLIPs, UPEPs, and SMCs guidelines as approved by MOPME; MOF s approval of advances to schools; administrative data; sample analysis of SLIPs and UPEPs. 29

40 Sub-Program Baseline Year 0 (March 2011) 8. Education sector financing: Ensuring adequate financing of primary education program and improving medium-term budgeting 9. M&E: Improving the quality of the Annual School Census (ASC) data and the effectiveness of the M&E unit Links between budgetary process and medium-term education sector strategy still weak Low level of public financing of primary education M&E and EMIS insufficiently staffed IT support functions preventing adequate and timely data analysis and effective M&E Census data covering only 4 types of primary schools FY11 Primary education program approved with financing levels consistent with agreed program results framework and FY11-16 MTBF ASC questionnaire and software adjusted to meet PEDPIII requirements Year 1 (April/May 2012) FY12 Primary education program approved with financing levels consistent with agreed program results framework and FY12-17 MTBF Actual primary education expenditures in FY11 within 15% deviation of the originally approved budget New ASC questionnaire fully implemented in 2012 census. Plan developed and approved by DPE for expanding coverage of monitoring system (to all primary schools) with periodic validations IT function separated from EMIS function; EMIS and M&E staffed with at least 2 statisticians each Year 2 (April/May 2013) FY13 Primary education program approved with financing levels consistent with agreed program results framework and FY13-18 MTBF Actual primary education expenditures in FY12 within 15% deviation of the originally approved budget Census administration, report preparation and dissemination complete within the academic year ; expanding coverage to at least 6 types of schools Internal data validation mechanisms in place and validation of data accuracy completed Year 3 (April/May 2014) FY14 Primary education program approved with financing levels consistent with agreed program results framework and FY14-19 MTBF Actual primary education expenditures in FY13 within 15% deviation of the originally approved budget 2014 Census administration, report preparation and dissemination complete within the academic year ; covering at least 6 types s of primary schools Third party validation of census data completed Protocol Definition: Subsector financing has to be adequate to implement GoB s PEDPIII and cannot be less than 1.03% of GDP in any period. Source: budget circulars 1 & 2, Detailed budget framework and expenditure forecast. Financial reports. Draft budget (May), expenditure statement until April/May, approved budget (July); simplified AOP and IFR (June). Definition: the current census questionnaire collects information on enrollment, repetition, teachers qualification and training, physical infrastructure, furniture and availability of teaching-learning materials. To adjust to PEDPIII needs, new information is required on pre-primary education, textbook distribution and stipend beneficiaries. Internal data validation mechanisms include background checks during data entry and data cleaning rules. Source: EMIS, M&E units 30

41 I. Project development objectives Annex 2: Detailed Program Description 1. The Project development objectives (PDO) are to (i) increase participation and reduce social disparities in primary education, (ii) increase the number of children completing primary education and improve the quality of the learning environment and measurement of student learning, and (iii) improve effectiveness of resource use for primary education. The main basis for these objectives is the National Education Policy (2010) for which PEDPIII implements the first phase with respect to pre-primary and primary education. PEDPIII also aims more broadly, to improve public finance management and effectiveness of public expenditures and service delivery in the primary education sector. PEDPIII interventions are integrated within the GOB organizational and operational systems. All programs and activities supported by the Development Partners in the SWAp are coordinated within this framework. 2. The precursor, sector-wide program (PEDPII) jointly financed by the Bank and ten Development Partners was implemented through a mix of pooled and parallel funding. The operation was managed by a dedicated unit within DPE. Results show positive trends, as described earlier in this PAD, but there is also the recognition that marked disparities still need to be bridged in participation rates of children from different socio-cultural groups. Learning outcomes and primary cycle completion must improve substantially across the system. Management at all levels needs to overcome various capacity limitations, and the regulatory framework for working across the primary education sector with all providers government, non-government, private is only in early stages of development. PEDPIII is intended to build on the momentum generated by its precursor in areas of access, quality, and effectiveness but with a distinctly concerted emphasis on accountability. The focus is on the use rather than simply the supply of inputs to achieve expected results. 3. The Government and Development Partners have agreed on a set of Key Performance Indicators (KPIs) which cover the entire scope of the primary sector, to assess performance and results on an annual basis. The Project incorporates a selected number of these KPIs into the PDO level Results Indicators of Annex 1 (net enrollment rate, decreased disparity in access to schooling, and learning levels regularly monitored). Additional KPIs are incorporated into the Intermediate Results Indicators (Annex 1) and the DLI matrix (e.g. DLIs on textbooks, physical infrastructure, strengthening of M&E systems). Annex 2 presents a detailed description of PEDPIII program interventions grouped by the three thrust areas of the DLIs. By way of introduction, Figure A2.1 explains the results chain in terms of how it is expected that achievement of the DLI actions, as well as other activities supported by PEDPIII, will contribute to development outcomes described in the PDO. For example, the four DLIs in the thrust area Improving quality of the learning environment and measurement of student learning (textbooks, Dip-in-Ed, Grade 5 exam, and teacher recruitment per merit and quality criteria) track upward to directly corresponding targets in the first category of Intermediate Results Indicators (IR1: Improved quality of learning environment) and, further, to the PDO level indicators (including completion rate, as this is expected to rise as a function of improving quality of the learning environment). Additional program areas in PEDPIII which amplify the effects of the DLI actions are shown in the last row of Figure A

42 PDO statement Figure A2.1 Results Chain Linkages between PDO, Intermediate Results and DLIs Increase participation and reduce social disparities in primary education Increase the number of children completing primary education and improve the quality of the learning environment & measurement of student learning Improve effectiveness of resource use for primary education PDO level indicators- Results Framework Net enrollment by gender NER ratio of 20% poorest to 20% richest Completion rate to grade 5 (end of primary education) Frequency and quality of assessment of learning Increasing use of results based framework measured by % schools preparing results-based SLIPs & receiving funds Intermediate Results (IR) IR 2: Improved infrastructure and financial support provided to the disadvantaged Financial support provided to disadvantaged (stipends targeted to higher proportion of children in poorest geographical areas) Number classrooms built/rehabilitated ( needs-based for which there are targets regarding access for disadvantaged groups) IR 1: Improved quality of learning environment Schools receiving textbooks Classroom environment conducive to learning (PSQL) % qualified teachers IR3: Improved program planning & management, and strengthened institutions % of Upazilas having prepared UPEPS Improving quality, timeliness & coverage of ASC DLIs Increasing participation & reducing social disparities PPE: expansion in areas of greatest need Infrastructure : % needs-based plan completed and implemented Improving quality of learning environment & measurement of student learning Schools receiving textbooks on time and better quality textbooks Dip-in-Ed (improving teacher training and effectiveness) Improving quality Grade 5 exam & regular assessment of learning Ensuring quality new teachers hired and adequate number of teachers: % recruitment per the conditions specified in DLI Improving Program Planning & Management, Strengthening Institutions % schools preparing SLIPs/receiving funds Ensuring adequate sector financing and stronger links between budgetary process and results framework Improving timeliness & quality of ASC; improving effectiveness of the M&E Unit Additional Program areas for PEDPIII Communication and social mobilization campaigns School health and nutrition programs Second chance and inclusive education programs for disadvantaged and dropouts School and classroom-based assessment National Assessment Active learning methods and Teacher support ICT in education Human Resource Development through needs and merit-based approach 32

43 II. Program Description Financing of the GOB Third Primary Education Development Program (PEDPIII) Total: US$5800 million; IDA: US$300 million A. Sector Wide Approach (SWAp) 4. The proposed Project finances civil works, goods, non-consulting services and recurrent costs through a Sector Wide approach (SWAp) with eight other Development Partners, to cofinance with the Government of Bangladesh the implementation of the GOB s Third Primary Education Program. The Project finances both recurrent and development expenditures to support the carrying out of interventions for improving the measurement of student learning and the quality of the learning environment; increasing participation and reducing social and regional disparities in primary education; and improving program planning and management, and strengthening institutions. The Government has a results framework for PEDPIII with expected results in the areas of quality, access, equity, and effectiveness. The scope of interventions and resource requirements will vary across Districts and sub-districts, and also from year to year, so the Project is unlike a traditional investment credit with predefined components. The Project would induce greater incentives in the system to facilitate achievement, while affording the Government greater flexibility in the choice of inputs to reach the agreed results. 5. The Project will finance against the government s annual plan for the primary education sub-sector (which will list the activities to be undertaken, and which fall under agreed upon program budget heads (PBHs)), and the procurement plan. IDA will finance the identified PBHs, up to maximum amounts as explained in Annex 3. Disbursement is conditioned on the achievement of indicators, i.e. Disbursement Linked Indicators (DLIs), which are embedded in the results monitoring framework for the Government s program. The DLIs, determined in partnership with the GOB and Development Partners, reflect priority elements in PEDPIII, primarily to generate significant impact in the medium term (4-5 years) toward longer term sector objectives. The DLIs build incrementally and represent results which are largely under the control of the government (central, District and Upazila levels) and achievable, although representing a challenge to the government authorities. The DLIs include institutional changes, essential steps to implement policies and/or regulations and/or to scale up coverage of programs and initiatives for realizing the access and quality objectives, and similar outputs/outcomes. All DLIs are weighted equally. The DLIs will be reviewed at the Project midterm review, and revisions will be made if needed. B. PEDPIII Program Areas and Strategic Interventions 6. The program interventions and corresponding DLIs are grouped in three categories: (i) improving quality of the learning environment and measurement of student learning, (ii) increasing participation and reducing social disparities, and (iii) improving program planning and management, and strengthening institutions. 33

44 Improving quality of the learning environment and measurement of student learning 7. Context: The Government s ultimate objective is to ensure that each child learns, and that learning competencies are relevant and incrementally build on appropriate skills each year. There are disparities in learning outcomes which detract from otherwise notable achievements in gender parity. For example, in some Districts, girls show higher rates of enrollment and retention, yet lower achievement than boys in learning outcomes. 8 PEDPIII continues systemic reforms introduced under PEDPII to ensure enabling learning conditions and the regular measurement of student learning. The major interventions are both at student/school level and center level, and they recognize the critical inter-relationship between textbooks, teacher training, and assessment of learning for improving internal efficiency and quality of learning. 8. Strategic Interventions (DLIs): The DLIs focus on improving the timely delivery of free textbooks to all schools and the quality of textbook content (DLI 1), improving the effectiveness of teacher training (DLI 2), and the quality, transparency and effectiveness of the primary completion exam (Grade 5 terminal exam) for measuring student learning (DLI 3). PEDPIII aims at a phased implementation of the GOB s National Education Policy to revise student learning competencies (discouraging rote learning), which will guide quality improvements in textbook content and the Grade 5 exam, as well as teacher education and performance standards. The improvement process includes training teachers through constant linkage of theory and practice. Country-wide, there is also a major shift under PEDPIII to a demand-based deployment of resources for staffing (DLI 4). The deployment of new teachers and head teachers is to be governed by clear, merit-based criteria as well as filling vacancies which are determined on the basis of needs for new teachers and head teachers, in part, as a function of progress in creating more classrooms under the needs-based infrastructure program. The deployment of teachers on a needs basis is further guided by the objective to achieve pupil-teacher ratios more conducive to learning. In operation, this calls for review of EMIS and teacher databases to identify schools below the minimum standard student-teacher ratio. The DLIs are key elements of a broader agenda in the PEDPIII, for which additional program areas are also described below. 9. Textbooks and other instructional materials: PEDPIII will continue to promote the availability of textbooks for all grades and will add an emphasis on the utilization of textbooks and other materials for learning. Textbooks for all grades will be printed and distributed annually. Matching teacher guides will be prepared once every five years. The premium that PEDPIII places on impacts at school level is highlighted in the DLI for textbook distribution as the priority is to establish reliable proof that the books arrive and are received by all schools on time, across all the different types of schools which follow the NCTB curriculum. To enhance the quality of learning materials, quality standards (for content which matches the competencies and age appropriateness, pedagogical layout, and physical specifications) will be defined and adopted. Capacity building of staff for learning material development will be included in the program. 10. Examinations and Assessments: MOPME/DPE successfully completed the first Grade 5 Completion Examination in December The examination serves the functions of: (i) providing school leavers with a certificate of completion and proficiency and (ii) identifying 8 Education Watch 2008; 2008 National Assessment at Grades 3 and 5. 34

45 pupils who are eligible for receiving scholarships for entry into Grade 6. In PEDPIII, based on an action plan, improvements to the completion exam will focus on progressively moving away from all knowledge/rote recall questions to competencies with more application and problem solving for real life situations. An action plan has been developed by NAPE during PEDPIII preparations is geared to improve the Grade 5 completion exam by (i) successively transforming it into a competency-based test (the 2013 Grade 5 exam is to comprise at least 25 percent competency-based items and to pilot an additional 25 percent of competency-based items), (ii) implementing the test, and (iii) analyzing the Grade 5 results on an annual basis and revising test items accordingly. Analyses of successive completion examination results and content will be used to inform and guide changes in further test-item design, curriculum development and teacher training, sharpening the focus of the curriculum/ competencies and changing the way teachers teach. Skill development for improving the examination, including training markers and test-items developers, will be an equally important part of this work. 11. Teacher Education and Professional Development: One principal difference under PEDPIII compared with PEDPII is the emphasis on learning in the classroom that is activity based, competency-oriented and individually-paced. This profound change in practice will require on-site professional supervision of teachers and follow-up, as well as peer support. A second reform under PEDPIII is the Diploma in Primary Education (Dip-in-Ed) which is to raise the bar for in-service training, aiming to prepare stronger quality future teachers. Under PEDPIII, four types of professional programs are included in a comprehensive teacher education and development plan, with the first of these the Dip-in-Ed being the strategic area targeted in the DLI: (i) A new 18-month Dip-in-Ed is an initial pre-service teacher education program being adopted to provide foundation training for all future primary school teachers in Bangladesh. The course will be piloted in a select number of Primary Teacher Training Institutes (PTIs) and then progressively rolled out as staffing, capacity and resources allow until it is offered in all 55 PTIs (see details in DLI on teacher training; the DLI focuses on pre-service and institutional changes in lieu of ambitious quantitative targets for number of teachers trained). The curriculum framework has already been designed and is awaiting MoPME s approval. (ii) Orientation Training is planned as a three-week residential training for new teachers. The training will be conducted by PTI instructors or an outreach trainer trained at the PTIs. (iii) Sub-Cluster Training is for one day six times a year for all teachers, as part of the in-service program; the Assistant Upazila Education Officer conducts the training. (iv)teacher Support Networks will be strengthened to provide peer support for new teaching approaches. These networks will be initiated in Upazilas in a phased manner and linked to the needs-based teacher training. An assessment of utilization and impact of teacher support networks is envisaged, to guide improvements in this large reform area. 12. Teacher and Head teacher Recruitment: This sub-area is linked to having sufficient trained teachers working with students for an improved learning environment. Approximately 5,000 to 6,000 vacancies need to be filled every year. In addition, new positions are needed to reduce classroom overcrowding. DPE s objective is gradually to decrease class size to around 40 children to one teacher as an important element in improving quality of the learning environment. Ideally, this ratio would also facilitate the use of activity based learning approaches and better enable each child to learn at her or his own pace. Prior to the onset of PEDPIII, the norm used to calculate the need for additional classrooms is a teacher-pupil ratio of 1:56. In order to reach a ratio of 40 students per teacher, about 46,597 new teachers will be needed in 35

46 GPS. The competitive, merit-based recruitment per the GOB s existing rules would continue under PEDPIII and be applied to all recruitment. Among others, the rules require applicants to pass an entrance exam (see details in the DLI on teacher and head teacher recruitment). Transfers would be made according to need; to receive transferred teachers, schools must have a studentteacher ratio greater than 50 to 1. During PEDPIII, DPE will also seek revisions in the rules for recruitment, promotion and career path to encourage the highest standards of professional performance within the primary education sub-sector. 13. Additional Program Areas: In addition to the strategic interventions, the Government also intends for PEDPIII to finance: (i) continued development of the National Student Assessment; (ii) instruments and training for extending the use of Continuous Pupil Assessment in classrooms; (iii) revision of the curricula for Grades 1-5 to center it around student learning competencies; (v) establishment and piloting of active learning methods and teacher support networks in selected Upazilas; and (vi) piloting various initiatives to expand the use of information and communications technology in primary schools. 14. National Student Assessment: This sub-area is focused on establishing better measurement of trends in learning achievement at the system level. PEDPIII will refine the current national assessment program in terms of its organizational management (i.e. entity to deliver the program its staffing, functions and relation to other key bodies within the education enterprise); methodology, and data dissemination and utility for results-based management. The Government aims to conduct the National Assessment every two years in Grade 3 for Bangla literacy and numeracy. Decisions on whether the next grade for testing will be Grade 5 (Bangla literacy and numeracy, and English), or Grade 6 and/or Grade 8 will be taken in the first year of PEDPIII in discussion with the Ministry of Education. It is important to ensure that there will be consistent measurement techniques throughout the system, to be able to discern trends over time. Learning achievement in English language may be added at Grade 5 if this is to be maintained as a testing year. Establishing a semi-autonomous national center/ authority for assessment and evaluation is being considered. 15. Classroom assessment: In PEDPIII, with the emphasis on classroom learning support, techniques will be developed to determine pupil s current levels of knowledge, skills and understandings, to diagnose problems they may be having, identify how to enable children to overcome the problems, and then evaluate whether learning takes place. The National Curriculum Framework prescribes that teachers should make regular use of Continuous Pupil Assessment (CPA) and record results at the completion of definite lessons. Teachers will be trained to identify particular learning strengths and difficulties. Tools will be developed to help teachers better diagnose and help students overcome learning difficulties. 16. Curriculum: The National Curriculum and Textbook Board (NCTB) will continue with a 10-year cycle of ongoing curriculum development for Grades 1-5. A regional comparative study on competencies, curriculum substance and revision practices will be undertaken to help in the revision of terminal and subject-wise competencies for Grades 1-5. The subject content of learning materials will be revised based on these updated competences, beginning with Grades 1 by year 4 of the program (see DLI on quality of textbook). NCTB and the National Academy for Primary Education (NAPE) will coordinate with pedagogical strategies, classroom assessments, and in-service training programs for teachers on the revised materials. The practice of providing 36

47 positive representations of women, girls, minority groups and children with disabilities in learning materials (i.e. textbooks, teacher guides and learning materials) will continue in PEDPIII. In line with this, while there will be a focus on the development of Bangla as the national language, multi-lingual education will also be incorporated in the new curriculum framework. Capacity building of staff for curriculum development will be included in the program. 17. Active learning methods and teacher support for classroom learning: With its objective to focus on improving quality learning at the school/classroom level, PEDPIII will seek to shift the emphasis from teaching the syllabus to enabling each child to learn basic skills and competencies at her/his own pace. The Government is piloting a new flagship initiative entitled Shikhbe Protiti Shishu ( Each Child Learns ), through which school clusters in seven divisions will participate in a model building exercise to improve learning of basic skills in Bangla and mathematics, relying on available resources. Good practices and lessons learned will be disseminated immediately to all schools, with the expectation that more effective models for improving children s learning outcomes will propagate rapidly, driven by the capacity of each school to use available inputs. As noted in previous sections of this document, one key feature of PEDPIII is institutionalizing feedback loops between learning in the classroom and central level institutions responsible for developing inputs such as: school standards, curriculum, materials, assessment, or teacher training. This will be accomplished by enabling school clusters in seven divisions to serve as listening posts to provide information in real-time to apex institutions for policy formulation, and training. 18. Information and Communications Technology (ICT): This is a component of the National Education Policy that supports the priorities of the Digital Bangladesh program. MOPME envisages provision of equipment and materials for setting up multi-media classrooms, Increasing participation and reducing social disparities 19. Context: Although Bangladesh has been successful in steadily improving access to education at all levels, social and regional disparities persist. Prior to PEDPII, there was limited effort to reach out to marginalized population groups through the formal primary education sector, relying instead to a large extent on the informal sector to provide services through the work of NGOs. PEDPII embraced a policy of inclusive education for the formal sector, but at the time PEDPIII was prepared, there were remaining pockets of poor and disadvantaged communities as well as significant disparities in the availability and quality of schooling facilities. Even the stipend program, in principle targeted to the 40 percent poorest, was not effective in reaching all its intended beneficiaries. Children who are particularly disadvantaged in terms of access to primary education are in remote areas, among poor and minority ethnic groups, as well as working children and those in urban slums. 20. Strategic Interventions (DLIs): To promote participation to primary education, PEDPIII will finance both demand and supply side interventions, employing specific provisions for targeting children from disadvantaged groups. The DLIs focus on supply side interventions including provision in the regular public budget of one year of free pre-primary education (PPE) for five-year-olds through a new school-based approach to reach coverage of all children in GPS in the country (DLI 5), and initiating a needs-based approach to improve physical 37

48 facilities (additional classrooms, toilets, arsenic free/safe water) to (i) reduce disparities in geographic access to primary school and (ii) reduce classroom overcrowding (DLI 6). 21. Pre-primary education (PPE): Through scaling up participation in pre-primary, the GOB aims to strengthen children s readiness for school and thereby induce increased enrollment and retention rates in primary education. In line with the National Education Policy 2010, the investment strategy for PEDPIII is to introduce and scale up one year of pre-primary education for five-year-old children through publicly financed provision. It is estimated that 1.4 million children entering grade 1 have had some form of pre-primary education, mostly provided through the NGO sector 9. More than 150 NGOs conduct pre-primary education throughout the country, notably in poor and disadvantaged areas. In many instances these operations are at or near Government Primary Schools (GPS). However, coverage by such NGOs is subject to availability of funding, and this has varied significantly in the past. To scale up coverage of preprimary education and build upon gains in access, GOB aims to provide a pre-primary class in each GPS, financed by the public budget. The aim is that by the fourth year of PEDPIII, preprimary will be provided in at least 75 percent of GPS. Preparatory actions under PEDPIII, include Government s updating a mapping of PPE providers (government and nongovernment) and establishing a database of the target population so that planning priorities can be based both on needs analysis of demand and the potential for increasing supply. The Government s long term objective is to build out PPE capacity at all GPS. 22. The new school-based approach to PPE requires that additional teachers be hired and trained, additional classrooms constructed, and materials produced and disseminated. At the outset, DPE has sought to leverage expansion of PPE coverage through partnerships with the NGO sector. The guidelines for engaging into such partnerships, and the roles of NGOs in service delivery under PEDPIII, are being finalized by MOPME. Under the plan for PPE expansion, the first element is to expand access to PPE classes at GPS. The second element is to standardize the curriculum, teaching and learning materials, entry requirements (for students and teachers), learning competencies and teacher competencies across the various providers (public, NGO, private) as well as integrate PPE within the formal primary education system. During the preparation period for PEDPIII, interim packages of teaching and learning materials developed by the NCTB were distributed to a selected number of GPS in each district to initiate some service delivery directly by public primary schools. While the NGO-run pre-primary classes may continue to use their teaching and learning materials known to be of reasonably good quality NGOs are also being engaged with the government to develop a set of standardized teaching and learning materials, which will be expected to be utilized by all pre-primary providers, once they are developed. 23. Infrastructure, including improved school facilities: This sub-area seeks to facilitate progress towards universal enrolment through a needs-based approach to building out infrastructure that adopts a prioritized list of standards, including for toilets and water supply, and disability/accessibility so that more children will have access to quality schools without overcrowding. Following field surveys and consultations with local communities, DPE is preparing a five-year action plan for infrastructure development, with targets, taking account of disparities within and across Upazilas. Given the extent of overcrowding, the Government 9 BANBEIS data,

49 decided to set 56 students per classroom as the target. With such a norm, at the outset of PEDPIII, half of all GPS and RNGPS, and a third of the community schools, are reported to have overcrowded classrooms, as well as needs for safe drinking water, toilets and school furniture (to conform to DPE standards). Guided by the criteria (see also Environmental Safeguards section of Annex 3), the estimated needs are to construct 32,000 new classrooms, 120,000 new toilets for students and teachers and repair 18,000 existing sanitation facilities, and supply safe drinking water (55% of those needs would be met within 4 years) In addition, the school grants (to SMCs) will include a sum for maintenance and repair of school buildings. 24. Additional Program Areas: In addition to the above strategic interventions, the Government intends for PEDPIII to finance a number of demand side and supply side interventions. On the demand side, PEDPIII will finance (i) social mobilization and communications activities to inform and encourage all families and communities to enroll and keep their children in school for the full primary cycle, and (ii) implementation of a revamped stipend program, to compensate families for the opportunity costs of primary school and encourage the poorest families to enroll and keep their children in school. 25. Communications and Social Mobilization: DPE will develop and implement a public relations and communications strategy targeted for different groups of stakeholders and utilizing multiple media. Face-to-face workshops and seminars will engage educationists and opinion leaders; broadcast media will be used for wide market penetration on core themes, and print media for longer and more nuanced communications. 26. Stipends: The Primary Education Stipend Program (PESP) has been recently modified for better poverty targeting across schools and Upazilas, and to encourage more children, especially the disadvantaged, to enroll and complete their primary education. While in the past, stipends were given to the 40 percent poorest children in each school, changes introduced in 2010 now result in provision of stipends to a greater share of students in high poverty areas as identified by the World Food Program poverty mapping (geographical targeting). The administrative processes, including monitoring, remained unchanged. Future studies to evaluate the effectiveness of the revised program will be made, to guide any further revisions. Multiple options for strengthening the program monitoring and evaluation include third party validation, expenditure tracking (to track flow of funds to the beneficiaries), and digitalizing the beneficiary database to track students through the system over time. 27. On the supply side, PEDPIII also envisages to finance: (i) coordination and implementation of a school health and nutrition program, including school feeding and health screenings in select areas; (ii) development and implementation of action plans for mainstreaming disadvantaged children, as well as (iii) coordinating second chance and alternative primary education opportunities more closely with education service delivery in the formal, public sector. 28. School Health and Nutrition: The PEDPIII school health and nutrition sub-area aims at improving the day-to-day health and nutritional status of school children, thereby reducing absenteeism and foster improved learning. Setting out from the previous engagement for school health and nutrition, a new framework has been established for PEDPIII as an operating structure to coordinate activities between Ministries, specifically MOPME and MOHFW. This framework 39

50 is built around the following package of interventions: (i) hardware arsenic free tube well and safe water supplies, adequate latrines/toilets respecting the cultural gender dimensions to foster attendance by girls, and other physical elements which support good health and nutrition; (ii) curriculum development around healthy living, including nutrition, hand washing, hygiene practices, good pregnancies and safe motherhood, well baby care etc.; these activities are to avoid fostering existing gender stereotypes; (iii) school health days - envisaged to operate in every District twice a year; and (iv) school feeding and deworming. 29. Inclusive education program to mainstream disadvantaged children: The organizing principle of PEDPIII is to decentralize administration and decision making on inclusive education to the Upazilas. Each Upazila is to have a Primary Education Plan (UPEP) to be implemented with support from a block grant. The grant might be used to provide disabled children with a small monthly fund, or to provide resources to schools accommodating previously excluded children. All teacher training will contain modules on working with differently-abled children. Affirming messages about people with disabilities will be included in textbooks and supplementary learning materials; modules on special needs children will be included in training for Assistant Upazila Education Officers (AUEO and Upazila Education Officers (UEOs), to allow them to provide classroom teachers with professional supervision. Leadership training programs will include modules on the value of inclusive education. A focal person in each school is to be designated to assist other teachers to identify children with learning disabilities and provide them specialized teaching. 30. Second Chance and Alternative Education: This area is linked to the objective of universal enrolment and addresses the needs of two types of primary school age children: those who never enrolled in school and those who dropped out. These matters will be under the auspices of Bureau for Non-formal Education (BNFE), and its capacity will be strengthened. PEDPIII will finance the development of an equivalency framework aligned with the revised national curriculum, inclusion of NFE activities in UPEPs, participation of NFE learners in the Grade 5 terminal examination, and reporting on NFE outputs in the PEDPIII reporting including the ASPR. Improving program planning and management, and strengthening institutions 31. Context: PEDPIII builds on capacities developed under PEDPII and brings these more sharply into a results-based model, viz. performance based planning, client (stakeholder) focus, improved financial management, human resources development, and outcome level reporting. A key dimension is to enhance decentralized planning at District, Upazila and school levels. Functions and responsibilities are being redefined and, in some cases, expanded, with a view to prepare and implement needs-based Annual Operational Plans (AOP). The process calls for substantially more field level capacity for planning, management and monitoring. School Management Committees (SMCs) are a cornerstone. The aim is for SMCs to continue their involvement in minor public works but additionally to address factors which contribute to learning outcomes and primary school completion in order to make a greater contribution to improving indicators in their respective Upazilas. Improvements are also being sought in the fiscal sustainability and effectiveness of public expenditures as well as in monitoring and evaluation systems to improve data use for evidence-based planning. 40

51 32. Strategic Interventions (DLIs): The DLIs in this area focus on improving efficiency and effectiveness of service delivery at central and decentralized levels: targets are set for the SMCs to prepare plans and deploy block grants accordingly (DLI 7); education budget preparation is to achieve tighter links between the budgetary process and medium-term education sector strategy, and consistency between annually approved primary education budgets and the PEDPIII results framework and MTBF (DLI 8); and among efforts to strengthen and build out M&E systems, the focus is on improving the timeliness, quality and coverage of the Annual School Census (ASC) the main source of information on inputs, process, outputs and outcomes at school level (DLI 9). 33. Decentralized School-Based Management: PEDPIII seeks to improve the effectiveness of school level management and governance by focusing especially on accountability and institutional capacity at school and Upazila levels in support of school improvement plans. Under PEDPII, DPE piloted School Level Improvement Plans (SLIP) prepared by SMCs and Upazila Primary Education Plans (UPEP). Evaluation pointed to a need to provide consolidated grants directly to schools, based on their SLIPs, and to strengthen the capacity of Upazila offices to facilitate this process. Guidelines for school level SLIPs, and Upazila level UPEPs will be updated, and district level DPEPs established. This sub-area specifically aims to strengthen the role of school management committees (SMCs): encouraging stronger participation of parents, teachers and local community members, building their capacity for school improvement planning and local governance through further training; and empowering the process through a more streamlined transfer of grants to schools to realize the plans. The receipt of funds will be validated through a Public Expenditure Tracking System. The Government recognizes that this will take sustained effort over time and that it must be backed by strong Upazila (and district) management. Longer term, DPE is planning to incorporate leadership development, including School Management Committee development, with measures for head teacher recruitment, career path and incentives. 34. Fiscal sustainability and effectiveness of public expenditure: This priority area is intended to assist Government to ensure adequate allocations to PEDPIII by aligning the primary education budget with the PEDPIII framework, while improving fiscal and budget management and consistency with the rolling Medium Term Budgetary Framework. This will assist the Government to implement their National Education Policy according to an approved, costed implementation plan which phases in interventions according to capacity and resources available. 35. Monitoring and Evaluation (M&E): The objective is to establish a robust system for improved decisions about program targets, procedures and achievement on the basis of a reliable and efficient system for collecting and exploiting data. Key activities include strengthening the functioning of the M&E/EMIS system through the development and implementation of an improved administration plan; revising the Annual School Census; conducting periodic internal and external validation studies of the census data, and making commensurate revisions and adjustments to the census mechanism. PEDPIII would finance requirements for adequate staffing, organizational management arrangements, office equipment, and training. In addition, PEDPIII would finance work to use results of large scale household sample surveys (HIES) and other current studies to monitor and triangulate findings on outcomes. PEDPIII will continue to mainstream the results based management approach for sector monitoring, among others, through Upazila level training workshops. 41

52 36. Additional Program Areas: The additional areas include (i) strengthened institutional capability to manage education service delivery through by developing and carrying out a human resource management plan to define career paths, fill staff vacancies, strengthen DPE particularly through capacity building at the Upazila level, and improve delivery of teacher education programs by filling staff vacancies at PTIs and establishing instructor career paths; (ii) moving towards an integrated comprehensive framework to include school standards for all categories of primary schools in the country; and (iii) financing public-private partnerships to deliver educational services. 37. Human Resource Development to manage education service delivery: The Government recognizes that strengthening human resources and leadership capabilities are critical to ensure effective institutional capacity for managing the primary education sector, and in particular to achieve the PEDPIII development objectives and to sustain gains over time. To address the serious weaknesses in education management capacity identified in Annex 4, PEDPIII will finance actions intended to have a relatively rapid effect, as well as initiatives which will need to be phased in over time. The short term measures include filling staff vacancies through a needsbased and merit-based approach, and in addition providing several types of training which is targeted for the respective responsibilities of government officers from the Upazilas to the central levels. The content of the training will focus on management, administration and financing. PEDPIII will also support the establishment and gradual implementation of a human resource management plan. The plan will set out the framework and principles for institutionalizing merit-based progression along career paths, including for teachers, head teachers, PTI instructors and Upazila Education officers. 38. Institutional changes for unifying and developing the primary education system: The Government envisages, longer term, to move toward a single framework and governance structure for all primary education providers to improve sector management for reaching all students with quality education. In view of such a prospect, it is envisaged under PEDPIII to carry out analyses and stakeholder consultations to clarify issues and actions which could be taken to develop such a comprehensive framework, including studies on aspects such as: unified curriculum, equivalence of formal and non-formal provision, infrastructure standards, performance standards, harmonized teacher career paths, and changes to the legal and regulatory structures for an expanded system. C. Technical Assistance 39. IDA will not finance technical assistance directly through this Project. Technical assistance from several of the other development partners is envisaged to support the M&E system as well as analytical work and feasibility studies to feed into policy development and plans, and to pilot initiatives in areas identified in the Government s results framework and DLI matrix, where comparatively limited technical or strategic work has been undertaken to date. 40. The Government and all the development partners participating in the SWAp have a good understanding of the constraints to achieving the results outlined for the program, as well as reporting in a timely manner through robust and credible mechanisms. A Technical Assistance (TA) strategy and plan are in advanced stages of development, building on the lessons learnt of past practices, i.e. ensuring high levels of coordination among TA providers and adequacy of 42

53 planning and government ownership. The current plan aims to provide implementation support on a rolling basis, and on plan as prepared by the Government in consultation with the development partners. MOPME and DPE would coordinate and manage most of the TA, which should aim at building system capacity and be used for short term tasks and not to substitute for staff functions. International TA should be partnered with Government counterparts and/or local experts to build national capacity. 41. An initial needs assessment was conducted and several technical areas have already been identified as particularly in need of implementation support. These are: (i) management and evidenced-based planning; (ii) monitoring & evaluation; (iii) human resource management; (iv) needs-based approach to the supply of quality infrastructure; (v) pre-primary education, for which the Government has no prior experience delivering directly through primary schools in the formal sector; (vi) stipend programs (for targeting issues); (vii) learning assessment and examinations; (viii) curriculum and teacher professional development. This initial needs assessment will be further refined and completed before PEDPIII effectiveness. 42. The TA needs have been identified to develop a culture of results monitoring by strengthening the systems which provide the information and incentivizing the use of more credible information through DLIs. TA to strengthen monitoring and evaluation systems is expected to support: (i) development of enhanced monitoring instruments (through greater coverage of the annual school census, systematic validation of the census data, triangulating census data through the use of other information sources, including the Household Income and Expenditure Survey as well as an Interim household survey specifically for the education sector); (ii) independent validation of information (third party validations of textbook monitoring mechanisms, infrastructure quality, census information, as well as expenditure tracking surveys); (iii) greater analysis and dissemination of information to support policy making (annual analysis of Grade V exam results and national assessment results linking student performance and system wide performance with critical policy levers), and (iv) analysis of information from administrative data to report on DLI achievement, where required (analysis of teacher recruitment norms to determine if in fact teacher recruitment is as per the agreed policy, synthesis of information from administrative data to determine textbook delivery), and (v) impact evaluations and cost effectiveness of various interventions. 43

54 I. Program Administration Mechanisms Annex 3: Implementation Arrangements 1. The organizational and management structure for PEDPIII (see Figure 3.1) is designed along two dimensions: (i) policy and oversight; and (ii) implementation. Overall policy guidance, program oversight and coordination will be provided by an Inter-Ministerial Steering Committee (IMSC), chaired by the Secretary of MoPME, and comprising representatives of key ministries and agencies inter alia: the Finance Division and Economic Relations Division of the Ministry of Finance; the Ministry of Public Administration; the Planning Commission; the Implementation Monitoring and Evaluation Division of the Ministry of Planning; the Directorate of Primary Education of MoPME; and representatives of NGOs. As such, the Steering Committee should play a key role in resolving critical inter-ministerial implementation issues. The IMSC will also review and endorse the budget allocations, and approve the Annual Operational Plans. 2. The Directorate of Primary Education (DPE) headed by a Director General will be responsible for day-to-day program implementation under the guidance of the Steering Committee. DPE will be assisted by a Technical Committee, chaired and coordinated by the Director General (Program Director). The Technical Committee will comprise inter alia the Additional Director General, all DPE directors; representatives from MOPME, the National Academy of Primary Education (NAPE), National Curriculum and Textbook Board (NCTB), Compulsory Primary Education Implementation and Monitoring Unit (CPEIMU), Bureau of Non-formal Education, the Bangladesh Bureau of Education Information and Statistics (BANBEIS), and a representative from the NGOs. 3. The main functions of the Technical Committee are to: (i) provide support to line directors and other agencies to resolve implementation problems; (ii) devise strategies for the gradual integration of different streams of formal and non-formal primary education in terms of curriculum and service delivery structure; (iii) support the establishment of an integrated data system and plan for results-based management; and (iv) support policy revision based on implementation experience. 4. DPE line directors will be given responsibility for implementation of key areas of PEDPIII. Although the implementation capacity of DPE has improved significantly during the PEDPII phase, implementation of PEDPIII will pose additional challenges: the size of the program is larger and it has the ambition gradually to encompass the full sub-sector (within a framework that eventually will incorporate the non-government providers). The intention is to develop long-term capacity of the regular staff of DPE and strengthen the interface between the personnel in their respective functions at central level in DPE with decentralized levels (Upazila, District and Division officers) as well as teachers and head teachers at school level. It is possible that new divisions will be established, should the Government extend primary education vertically up to grade 8. The DPE line directors will thus be supported, when required, with technical assistance that will either be provided by DPs or recruited by GOB. 44

55 Figure A3.1: Proposed Organization & Management Structure - PEDPIII Implementation PROPOSED ORGANISATION AND MANAGEMENT STRUCTURE FOR PROGRAM IMPLEMENTATION 3 Interministerial Steering Committee POLICY & OVERSIGHT MoPME to coordinate (GOB + NGO + DP Representative group) 1 Secretary MOPME Development Partners Program Support 3 Program Support Office 5 Technical Committee 4 Director- DPE Coordination PROGRAM DPE to coordinate (DPE/NAPE/ General of existing DP/NGO IMPLEMENTATION CPEIMU/NCTB/BANBEIS) Madrasha DPE/ADG 2 funded projects NGO BNFE etc Note: 1. GoB includes key ministries and agencies: MoPME,(Secretary, Chair of the committee) Line Consultants Finance, Public Administration, Planning, ERD, IMED, MOE Directors and 2. Proposed position: Additional Director General, DPE. He will be the contact person TA Support between DPs & program. 3. DPs will keep close contact with MoPME and DPE as necessary 4. Relevant agencies will be added in phases as program evolves 5. A lean Program Support Office (PSO) to expedite coordination and clearances Field Operations II. Financial Management, Disbursements and Procurement Financial Management 5. Following the last PEFA assessment (2005), many improvements in the PFM systems of the country have been registered: roll-out of the Medium-Term Budgeting Framework (MTBF), application of improved accounting principles and standards, and scaling up out to the District Accounts Offices the use of a government-wide financial management information system (Integrated Budgeting and Accounting system, ibas). In addition, a comprehensive reform strategy is being implemented and supported by a Multi-Donor Trust Fund (MDTF) 10. The MDTF supports three discrete projects in the PFM arena, namely: (i) deepening the mediumterm budget framework (MTBF) and strengthening financial accountability; (ii) strengthening 10 The MDTF (SPEMP) grant for PFM reforms (US$84 million) is being administered by the World Bank on behalf of other Development Partners 45

56 the office of the Comptroller and Auditor General; and (iii) strengthening legislative and public oversight. 6. A comprehensive Fiduciary Risk Assessment and Study of PEDPIII were completed to assess the risks and challenges of alternative financial arrangements. The diagnostic work validated the accuracy of numbers in the ibas system and the capacity of the system to capture the real-time data at each stage, and checked the robustness of current accounting business processes. The study recommends that PEDPIII leverage and facilitate the above-mentioned PFM reforms from the demand side by proactive participation of the spending agencies in the primary education sector while at the same time relying on third party validation and monitoring for results to help mitigate the fiduciary risks. The assessment concludes that mainstreaming of the program fund flow and expenditure management with the government financial management system would be the least risk fiduciary option for PEDPIII. Finally, a PEFA study for primary education has been conducted as a subset of a broader PEFA assessment with a view to improving the sector PFM reforms over the medium term, under the MDTF (SPEMP). 7. As one of the key line ministries for FM capacity development under the SPEMP Project A, component 3 (US$ 10.9 million), MOPME would receive ample support for: (a) use of Budget System Development module; (b) development of the budget management function better linkage between policy and budget allocation, budget allocation and performance, and monitoring and evaluation of budget implementation; (c) phased strengthening of the internal audit function; (d) strengthening the Planning Cell in MOPME to support resource allocation decision making processes in achieving policy objectives; (e) strengthening budget execution and reporting and devolved financial management; and (e) integrating procurement planning with budget formulation. 8. To address remaining challenges identified by the risk assessment study and allow a smooth and complete transition towards the treasury system, a comprehensive PFM action plan was developed and agreed. It aims, in particular, at: (i) improving compliance with payment processing standards; (ii) monitoring for regular reconciliations between spending and accounting offices; (iii) ensuring timely and reliable financial reports for the program; and (iv) encouraging enhanced monitoring for executive follow-up of audit observations. Substantial progress has been made in implementing the PFM action plan by negotiations of the Project. The measures in the PFM action plan are to be complemented by an Annual Fiduciary Review (AFR)) conducted each year of PEDPIII implementation. The AFR will provide an opportunity to drill-down in the areas of fiduciary concern in order to generate concrete recommendations for improvement of systems, processes, and internal controls. For essential financial management tasks, the DPE and LGED being the key implementing agencies for PEDPIII would require a read-only access to ibas. This is in the process of being established, so that it will enable effective budget monitoring and timely financial reporting. The overall PFM arrangements and disbursement modalities are documented in the Joint Financing Arrangement to be signed between Development Partners and the Government of Bangladesh. The Comptroller and Auditor General (CAG) has agreed to the Statement of Audit Needs for annual audit of PEDPIII, and MOPME has agreed to the Terms of Reference of the Annual Fiduciary Review as proposed by the Development Partners. At negotiations, the Controller General of Accounts confirmed that the following financial management arrangements of the program to be based on the country s 46

57 financial management systems for budget execution, accounting, internal controls, financial reporting and auditing would be in place as of July 1, 2011: a) the Payment Process Times Compliance report will be generated on a monthly basis for transactions under the Program; b) a monthly report on the status of reconciliation of expenditures between the DDO (Drawing and Disbursement Officers) and their respective accounting officers will be generated from the Integrated Budgeting and Accounting System (ibas) and provided to the MOPME secretary; c) ibas will capture the PEDPIII Component/Sub-Component wise expenditures; and d) CGA will revise the procedure and ibas to enable an appropriate accounting for advances so that advances are not shown as final expenditures. 9. The financial management risk at entry is assessed as high overall, given the risk factors of the wide range of activities which are being carried out by various government agencies across the country. To a great extent, these risks are mitigated by the availability of the ibas system up to the district accounts office level (including Upazilas). The expected residual risk at program effectiveness would therefore be ML due to the implementation of the agreed PFM action plan. Budgeting and counterpart funding arrangements 10. The budgeting of all PEDPIII expenditures will be part of the government budgeting process. Development Partners would finance both development and non-development expenditures. The detailed annual budget for PEDPIII would ensure that appropriate allocation is provided for all critical activities in accordance with government Delegation of Financial Powers and released to the spending units within the first two weeks of the fiscal year. There is a need to improve the integration of budgeting and accounting modules under ibas for better budgetary control and timely booking of in-year re-appropriations. This is included in the PFM reform initiative through the SPEMP project. DPE via the ibas terminal will monitor the monthly/quarterly/semi-annual budget execution through respective l financial reports for the entire primary education sector to ensure that budget execution keeps pace with the approved budget. Flow of funds 11. Annual scheduled disbursements will ensure a consistent flow of funds throughout the life of the program (see disbursements section below). Every disbursement will be contingent upon meeting of DLIs. The first disbursement for PEDPIII upon meeting the Year 0 DLIs (see Annex 1) will be on the basis of reimbursement of expenditures for the previous six months actual expenditures (from January-June 2011) against employee related expenditures on the recurrent side (PBHs Pay of Officers, 4600 Pay of Establishment, and 4700 Allowances - excluding PEDPII). The amount of the first disbursement cannot exceed the maximum proportion (20 percent) of the Project s total Credit which is allowed under the World Bank s policy to finance expenses incurred prior to signing. If this amount will be less than the total 47

58 value of all Year 0 DLIs met (by Effectiveness), the remaining amount can be disbursed at midyear, after the November Consultation meeting of GOB and the Development Partners (see Tables A3.1 and A3.3). Thereafter, the annual disbursement process would be repeated every July over the life of the Project. In this way, the GoB would pre-finance the government expenditures of the program (PEDPIII). Amounts claimed would depend on the indications given in the disbursement schedule as well as timely achievement of DLIs. 12. The World Bank will finance up to 20 percent of the total program expenditures, including procurable, and inclusive of taxes. Nevertheless, amounts claimed for withdrawal in a year could not exceed the total value of the DLIs met in that year. If all 9 DLIs were achieved consistently each year for the four years, the total annual disbursements would be as shown in Table A.3.1 (disbursement schedule). An ex post reconciliation will be performed each year to confirm that the amount of eligible expenditures made by the GOB was higher than the maximum amount (20 percent) of total expenditure agreed ex ante as the proportion of total expenditures eligible for World Bank financing (for reimbursement of PBHs). This reconciliation would be based on a consolidated financial management report and accompanying reports. 11 Figure A3.2: Funds Flow - PEDPIII Implementation 13. A few program activities such as training may need advance funds to be at the disposal of DDOs/cost centers, rather than the suppliers/vendors being directly paid through the accounting offices. Those activities will be carefully identified and selected, and MOPME would issue Government Orders (GOs) in favor of respective DDOs/cost centers to enable them to draw cash 11 Fiduciary Arrangements for Sectorwide Approaches (Swaps): Interim Guidelines to Staff, The World Bank,