FOR OFFICIAL USE ONLY

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized G Document of The World Bank FOR OFFICIAL USE ONLY TECHNICAL ANNEX ON A PROPOSED CREDIT IN THE AMOUNT OF SDR 3.3 MILLION (USD 5.0 MILLION EQUIVALENT) TO BOSNIA AND HERZEGOVINA FOR AN AVIAN INFLUENZA PREPAREDNESS PROJECT UNDER THE OBAL PROGRAM FOR AVIAN INFLUENZA AND HUMAN PA JDEh PREPAREDNESS AND RESPONSE (GPAI) FOR ELIGIBLE COUNTRIES UNDER THE HORIZONTAL APL May 29,2007 Report No: T7676 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. C

2 CURRENCY EQUIVALENTS (Exchange Rate Effective, May 29,2007) Currency Unit = Konvertible Mark KM 1.46 = US$l US$1.51 = SDRl FISCAL YEAR January 1 - December 31 AI AIPP APL BiH CQ CF CP EA EC EMP ERA ERL FA0 FBiH GDP GPAI H5N 1 ICB ILI MAWMF MCA MoFTER MoE MoH M&E MoF Avian Influenza Avian Influenza Preparedness Project Adaptable Program Loan Bosnia and Herzegovina ABBREVIATIONS AND ACRONYMS Selection based on consultants qualifications Counterpart Financing Contingency Plan Environmental Assessment European Commission Environmental Management Plan Emergency Recovery Assistance Emergency Recovery Loan Food and Agricultural Organization Federation of Bosnia and Herzegovina Gross Domestic Product Global Program for Avian Influenza and Human Pandemic Preparedness and Response Influenza A virus of H5N 1 type International Competitive Bidding Influenza-like illness Ministry of Agriculture, Water Management and Forestry Ministry of Civil Affairs Ministry of Foreign Trade and Economic Relations Ministry of Environment Ministry of Health Monitoring and Evaluation Ministry of Finance NCB NGO OIE PFD PHI PPE POM QCBS RS State svo TF UNDP USAID WG WP WB WHO National Competitive Bidding Non Governmental organization World Organization for Animal Health Program Framework Document Public Health Institute Personal Protective Equipment Project Operational Manual Quality and Cost Based Selection Republika Srpska Bosnia and Herzegovina State Veterinary Office Trust Fund United Nations Development Program US Agency for International Development Inter-sectoral working group Work Program World Bank World Health Organization Vice President: Country ManagerDirector: Sector Manager: Task Team Leader: Shigeo Katsu Orsalia Kalantzopoulos Marjory-Anne Bromhead David A. Bontemoo

3 BOSNIA AND HERZEGOVINA Avian Influenza Preparedness Project FOR OFFICIAL USE ONLY CONTENTS A. I. 2. Page STRATEGIC CONTEXT AND RATIONALE Countly and Sector Background and Global. Regional and National Dimensions... i Rationale for Bank involvement B. PROJECT DESCRIPTION Lending Instrument Project Development Objectives Project Components Lessons learned and rejected in the project design C. IMPLEMENTATION Partnership arrangements Institutional and implementation arrangements Monitoring and evaluation of outcornes/results Sustainability Critical risks andpossible controversial aspects Credit Conditions D. APPRAISAL SUMMARY Economic analysis Technical Social Fiduciary Environment Safeguard Policies Policy Exceptions & Readiness... Appendix 1: Results Framework and Monitoring Appendix 2a: Detailed Project Description Appendix 2b: Culling and Compensation Procedures Appendix 2c: Implementation Arrangements Appendix 3: Project Costs and Financing Arrangements Appendix 4: Procurement Arrangements This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization.

4 Appendix 5: Financial Management Arrangements Appendix 6: Environmental and Social Issues Appendix 7: Organization of the Veterinary Services and the Health Care System in BIH Appendix 8: Project Preparation and Supervision Appendix 9: Documents in the Project File Appendix 10: Statement of Loans and Credits Appendix 11: Country at a Glance Annex 12: Map IBRD 33375R... 87

5 BOSNIA AND HERZEGOVINA AVIAN INFLUENZA PREPAREDNESS PROJECT (AIPP) TECHNICAL ANNEX EUROPE AND CENTRAL ASIA ECSSD Date: May 29, 2007 Country Director: Orsalia Kalantzopoulos Sector Manager: Marjory-Anne Bromhead Project ID: P Lending Instrument: Emergency Recovery Loan Team Leader: David A. Bontempo Sectors: General agriculture, fishing and forestry sector (50%); Health (50%) Themes: Natural disaster management (P); Other communicable diseases (P); Rural policies and institutions (S); Other environment and natural resources management (S) Environmental screening category: Partial Assessment Project Financing Data [ ] Loan [x ] Credit [I Grant [ 3 Guarantee [ ] Other: For Loans/Credits/Others: Total Bank financing (US$m.): 5.OO Proposed terms: Proposed terms (IDA): Standard Credit Modified Terms: 20 years to maturity; 10 years Source Local Foreign BORROWER IDA Total: Total Borrower: Ministry of Finance and Treasury Trg. BiHl, Sarajevo, Bosnia and Herzegovina Responsible Agency: Ministry of Foreign Trade and Economic Relations at state level; and: Federation Ministry of Agriculture, Ministry of Agriculture, Water Resources Water Management and Forestry and Forestry Sarajevo Republic of Srpska Bosnia and Herzegovina Banja Luka Bosnia and Herzegovina Federation Ministry of Health Sarajevo Bosnia and Herzegovina Ministry of Health and Social Welfare Banja Luka Republic of Srpska Bosnia and Herzegovina

6 Does the project depart from the CAS in content or other significant respects? Re$ PAD A.3 Does the project require any exceptions from Bank policies? Re$ PAD D. 7 Have these been approved by Bank management? - Is approval for any policy exception sought from the Board? Does the project include any critical risks rated substantial or high? Re$ PAD C.5 Does the project meet the Regional criteria for readiness for implementation? Re$ PAD D. 7 [ ]Yes [XINO [ ]Yes [XINO ]Yes [ IN0 [ ]Yes [XINO [XIYes [ ]No [XIYes [ ]No Project development objective The overall objective of the Project is to minimize the threat posed to humans and the poultry industry by the Highly Pathogenic Avian Influenza (HPAI) infection and other zoonoses, by enhancing both animal and human health infectious disease response and control capacities. To achieve this, three areas will be supported by the project: (i) prevention, (ii) preparedness and planning; and (iii) response and containment. Achieving these goals will contribute to diminishing the burden of disease and loss of productivity, limiting the regional spread of HPAI, and enhancing economic and social prospects at the national, regional, and global levels. Project description [Details can be found in Appendices 2 and 2a] In addition to the Bank and government co-financing described below, various other international organizations-including the European Commission (EC), World Health Organization (WHO), United States Agency for International Development (USAID), United Nations Children s Fund (UNICEF)-are active in assisting the Government of Bosnia and Herzegovina to address the threat of Avian Influenza. The Project has been designed in close cooperation with these organizations to leverage the maximum financing possible and to avoid duplication of efforts. The complementary activities of these organizations are briefly explained below. However, the exact levels of financing of these donor activities is not presented, as this is not considered direct cofinancing of the Bank-funded project (in all descriptions, IDA total plus the Counterpart Financing (CF) is equal to total Componentjnancing). Component 1: Strategic Communications and Public Information - US $0.20 million Financing IDA Credit: US$0.20 million IDA Credit Proceeds FBiH: US$O. 11 million RS US$0.09 million It is of critical importance that all sectors of society are properly informed about the risks from HPAI, in order that proper protective measures can be taken, and, as importantly, to reduce the risk of unwarranted fear about the disease (e.g., unnecessarily reducing consumption of poultry products). This component would provide support for a broad range of information and communication activities, to increase the

7 attention and commitment of government, private sector, and civil society organizations, and to raise awareness, knowledge and understanding among the general population about the risk and potential impact of the disease. Implementation of the first phase of the communications strategy has already been completed, through UNICEF s Sarajevo office. Bank financing would implement subsequent phases. Component 2: Animal Health Protection and Disease Prevention and Control - US $2.98 million Financing Gov t. of Bosnia and Herzegovina FBiH RS IDA Credit: US$0.25 million US$O. 17 million US$O. 10 million US$2.46 million IDA Credit Proceeds FBiH: US$1.62 million RS US$0.84 million The most effective way to reduce the threat from HPA, to both the economic sustainability of domestic poultry production and human health is to prevent the disease from establishing itself in domestic poultry. This component would support implementation of disease prevention and control strategies at national and entity levels to address short, medium and long-term needs. Areas for support are based on detailed assessments of (i) the epidemiological status of HPAI in Bosnia-Herzegovina; (ii) the capacity of the State Veterinary Office (SVO) to cope with a highly pathogenic avian influenza (HPAI) epidemic, including surveillance and diagnostic capacity at the national and entity levels; and (iii) the vulnerability of the poultry industry to newly emerging infectious diseases. Implementation of the Animal Health component will be assisted by the EC s Twinning Arrangement (financed by the Government of the Federal Republic of Germany) with the SVO to provide technical assistance on institutional aspects of the veterinary sector, particularly in food safety, inspections, and support to laboratories. The EC will also finance a feasibility study on large-scale animal waste disposal Component 3: Human Health Protection, and Disease Prevention and Control - US $1.98 million Financing IDA Credit Proceeds Gov t. of Bosnia and Herzegovina US$0.22 million PBiH: US$0.98 million FBiH US$O. 10 million RS US$0.98 million RS US$O.lO million IDA Credit: US$1.96 million At present, there have been no human cases of HPAI infection reported in BiH. However, it is likely that at some point in the future, suspected or confirmed cases will occur, and rapid and coordinated interventions will be necessary. Under this component, the project will (a) help enhance the coordination and planning of human health related activities, (b) strengthen the capacity of investigation teams and virology laboratories in both entities, (c) help BiH rapidly join the European Influenza Surveillance Network, (d) help develop the capacity of hospitals to adequately and safely isolate and treat (suspected) human cases and, (e) finance the procurement of seasonal flu vaccines and anti-viral drugs. Particular attention will be paid to capacity building and the training of staff at the various levels of the health system. This component contains support to the Ministry of Civil Affairs at the State level, to enhance their capacity to fulfill their mandate to coordinate human health policy and response for all of Bosnia- Herzegovina. One of the most crucial activities for preparedness in the Human Health sector is the finalization of a National Contingency Plan (CP), which integrates the CPs already prepared by each Entity. Most importantly the National CP will define a clear Chain of Command in the event of a large-scale outbreak affecting human health. WHO is leading this effort, through a series of workshops undertaken in June The final CP, integrating the two Entity-level plans has been completed, and is awaiting

8 parliamentary ratification; the AIPP will provide financing for operationalization of this plan. WHO has also recently completed an assessment of laboratories throughout BiH, which will form the basis for the technical planning for the upgrade of laboratories under the Project. In addition, WHO, with EC support, is working to strengthen the overall surveillance system for seasonal flu, which will also help with faster identification of any unusual flu strains which might arise. Component 4: Poultry Culling Compensation Scheme - US $0.75 million Financing FBiH RS IDA Credit: US$O.lO million US$O.lO million US$0.55 million IDA Credit Proceeds FBiH US$0.3 1 million RS US$0.24 million Experience from world HPAI outbreaks has clearly shown that individuals are more likely to report sick animals if they have credible assurances from government that they will be compensated in the event that their animals must be killed to prevent further spread of disease. Therefore, in order to provide sufficient incentive for early reporting by citizens of sick animals, and hence timely response by government authorities, within this component funds for compensation will be provided. As evidenced by the experience from the culling campaign (that followed the AI occurrence in wild birds in February 2006), the compensation procedure prescribed and elaborated in the CP for AI ensures timely, efficient and transparent compensation payment to farmers. Component 5: Implementation Support, and Monitoring and Evaluation (M&E) - US $0.45 million Fin an cing Gov t. of Bosnia and Herzegovina FBiH RS IDA Credit: US$O. 12 million US$O. 15 million US$O. 15 million US$0.03 million One of the key characteristics of the HPAI threat is the difficulty in predicting the course the pandemic will take. An important feature of the project, therefore, will be the flexibility to adapt to a changing situation with the ability to reallocate funds between components and categories, and possibly draw up new activities. The component would support costs associated with project management and coordination. It would comprise two sub-components: (i) Implementation Support to the Technical Support Group in the Ministry of Foreign Trade and Economic Relations; and (ii) Monitoring and Evaluation (M&E). Which safeguard policies are triggered, if any? Re$ PAD 0.6, Appendix 8 Only the Environmental Assessment safeguard is triggered by the Project. Since the Project is being processed under emergency procedures and is assessed as a B-category project, a waiver was requested and granted to permit preparation of the Environmental Management Plan (EMP) after Appraisal. The EMP has been finalized and disseminated. Formal adoption of the EMP is a condition for Effectiveness. Significant, non-standard conditions, if any, for: Re$ PAD C. 7 Board presentation: There are no Conditions for Board Presentation. Bosnia-Herzegovina (BiH) fulfills the eligibility criteria requirements for borrowing under the Global Program for Avian Influenza (GPAI). Specifically, BiH

9 should be considered, according to the GPAI Program document, as one of the countries at risk, with no outbreak, or that are at an early stage of an outbreak, government commitment and appropriate plan of early detection and rapid response, including appropriate implementation and monitoring arrangements that the international agencies and donor community, including the Bank, could support. (World Bank Report Number Program Framework Document for the GPAI, December 5,2005, page 14) Loadcredit effectiveness: No non-standard conditions. Covenants applicable to project implementation : Conditions of Effectiveness: (i) Establishment by the Recipient of the Technical Support Group in a manner and with the composition and terms of reference satisfactory to the Association; (ii) The Annual Work Program for the first year of the implementation of the Project, satisfactory to the Association, has been prepared and adopted by the Recipient and each Entity; (iii) The Project Operational Manual, EMP and the FM Manuals, each satisfactory to the Association, have been adopted by the Recipient and each Entity; (iv) A Project Agreement has been executed on behalf of the Association and an Entity, on terms and conditions satisfactory to the Association; and (v) A Subsidiary Agreement has been executed on behalf of the Recipient and the Entity concerned, on terms and conditions satisfactory to the Association. Conditions of Disbursement: (i) a Project Agreement between the Association and the Entity responsible for implementing Part 2 or Part 3 of the Project, as the case may be, has been executed, on terms and conditions satisfactory to the Association; (ii) a Subsidiary Agreement between the Recipient and such Entity has been executed, on terms and conditions satisfactory to the Association; (iii) An opinion has been furnished to the Association stating that such Project Agreement and Subsidiary Agreement have been duly authorized or ratified by the parties thereto and are legally binding upon them in accordance with their respective terms; (iv) For expenditures under Component 4, adoption by the Recipient and each Entity of the Poultry Culling Compensation Scheme Manual, satisfactory to the Association; and (v) Retroactive Financing under Categories 2 and 4, up to an equivalent of SDR 100,000 (vi) (vii) The Federation of Bosnia and Herzegovina has opened a Project Account with an initial deposit equivalent to US$0.02 million. The Republika Srpska has opened a Project Account with an initial deposit equivalent to US $0.015 million

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11 A. STRATEGIC CONTEXT AND RATIONALE 1. Country and Sector Background and Global, Regional and National Dimensions (a) Country and Sector Background 1. Bosnia and Herzegovina has made remarkable progress in post-conflict reconstruction, social integration and state building since the end of the war. However, the economy stands at only 70% of its prewar level. The business environment is not as investor-friendly as it needs to be to attract the levels of investment required for sustained economic growth. Some 50% of the 4.1 million population is at or near the poverty level. The lack of employment opportunities is a major factor limiting the resettlement of refugees and internally displaced persons. 2. The composition of GDP appears to have changed markedly in the post-war period. According to official statistics, the share of agriculture has declined significantly while the share of services has increased. While the overall trends follow a similar direction in both entities, there are notable differences. The primary production sector (agriculture, fisheries and forestry) has remained an important sector in Republika Srpska (RS) at 20 percent of GDP, but has dropped to less than 10 percent in the Federation of Bosnia and Herzegovina (FBIH). Agricultural Gross Domestic Product (AGDP) makes up about 14% of the country s overall GDP. It is estimated that 18% of the population is employed in agriculture. 3. The poultry industry represents one of the main agriculture sub sectors, and production currently falls just short of meeting the national market demand for its products. It is estimated that BIH has around 32 million broilers (estimated annual production capacity), 1 million laying hens, and approximately 1 million animals raised in back yards. Annual production capacity for the industry is 10 kg of meat and 120 eggs per capita (annual consumption in BiH is 14 kg of poultry meat and 180 eggs per capita). The total annual production of poultry meat for 2004 is estimated at approximately 43,000 tons, and for the same year production of eggs was around 450 million. Average market price for poultry meat is US$2 per kg, and the price of an egg is US$O.O8. Commercial poultry farming is largely organized as industrial production, primarily involved in the production of eggs and fresh/frozen chicken meat and processed meat products. The commercial poultry plants are enclosed operations which use modern equipment and technologies. Other poultry are raised on small household farms limited to a few chickens and/or other domestic birds. (b) International Dimension 4. East Asia is the region most affected by HPAI to date, with Cambodia, China, Indonesia, Thailand, and Vietnam all reporting human infections. The number of countries affected by HPAI in East Asia has increased and now includes Cambodia, China, Indonesia, Japan, Lao PDR, Mongolia, South Korea, Thailand, and Vietnam. The geographical spread of HPAI, the human dimension and the potential enormous social and economic impact are unprecedented. Despite control measures the disease continues to spread, causing further economic losses and threatening the livelihoods of hundreds of millions of poor livestock farmers, jeopardizing smallholder entrepreneurship and commercial poultry production, and seriously impeding regional and international trade, and market opportunities. With outbreaks rapidly spreading in other regions such as Europe and Central Asia (ECA) and Africa, there is a growing realization that the international community faces several transnational challenges that do not emanate directly from the policies of individual states. Correspondingly, these challenges cannot be countered solely by the actions of individual states, because they present a threat to the entire world. An important emerging transnational threat is the spread of infectious diseases across national borders, which has the 11

12 potential to undermine countries stability, security, economic development, human capital accumulation, and not least, the welfare of the population. (e) Regional and National Dimension 5. Until recently, avian flu outbreaks were limited to Southeast Asia. In July 2005, outbreaks were registered in domestic poultry and fowl in seven regions of Russia. Four months later, outbreaks in poultry of HPAI H5N1 were reported in four regions of Kazakhstan. Since 2005, outbreaks of avian flu have occurred in many countries outside East Asia. After crossing from China into Russia and Kazakhstan, outbreaks were reported in Albania, Azerbaijan, Austria, Bosnia and Herzegovina, Bulgaria, Cyprus, Croatia, France, Greece, Germany, Italy, India, Iran, Romania, Serbia, Slovenia, Switzerland, Turkey, and Ukraine. Seasonal migration of birds contributes to transmission of new strain variations to different geographical regions. In October 2005, H5Nl was reported among migrating swans in Croatia, which lies on the northern border of Bosnia and Herzegovina. 6. On February 16, 2006, four swans from Pliva Lake in Jajce Municipality were brought to the Reference Laboratory of the BiH State Veterinary Office (Poultry Center of Sarajevo Veterinarian Faculty) for testing. Two of the four swans tested positive in preliminary serologic tests; necropsy findings for these two swans indicated the presence of AI. State authorities subsequently mounted a coordinated and thorough response to what was in essence a real-time emergency simulation. The preparation mission of March/April2006 was presented with substantial detail on this response, and noted that implementation of the veterinary control measures elaborated in the Contingency Plans (CP) appear to have successfully halted any further spread of the infection. In particular, the CP s clear chain of command rules allowed local authorities to act with confidence. In addition, on March 9, 2006, a case of AI was confirmed in a rooster in the municipality of Bajina Basta (Serbia). As a consequence, the nearby community of Bratunac in BiH was declared an endangered area, and measures were instituted as prescribed by the CP. The infection also appears to have been halted in this area. No new cases have been reported since then. 7. The emergence of outbreaks in neighboring countries has had a negative impact on both poultry production and consumption in BIH. Based on data from large-scale traders, poultry consumption appears to have fallen by about percent after the recent cases emerged in Croatia and Romania. Official production fell by more than 50% in mid-2006, with some of the major producers almost fully halting production. The decline in production and consumption have been accompanied by a drop in market prices of about 10 percent, while farm-gate prices of chicken declined from 2.3 KM/kg to KM/kg. (d) Organizational Structure of the Health Care and Veterinary Systems (please refer to Appendix 9) 2. Rationale for Bank Involvement 8. HPAI control programs require a multi-disciplinary approach to integrate technical, social, economic, political, policy, and regulatory issues in addressing a complex problem. Working in a collaborative manner with other agencies (WHO, UNDP, UNICEF, EC, USAID), the Bank is well-placed to apply the evidence and lessons learned from international best practice in the various regions to help ensure that BiH s emergency preparedness plans and capacities are ready for the HPAI challenge. The Bank has a strong comparative advantage in providing integrator skills and multi-sectoral perspectives, I As poultry production needs to be planned in such a way that 36 days old chicken are available daily, the production chain cannot be stopped instantly. Therefore, the real extent of the reduction can be seen only with a two-month delay, time required to complete the full production cycle. 12

13 and in addressing the institutional dimensions of the response to such emergencies. It can also bring extensive experience and skills in analyzing and addressing the social and economic impact. Importantly, the Bank has a long record in BiH in bringing together the relevant ministries, government agencies, and the donor community, and in helping ensure high level political coordination. 9. Given the Bank s work with local and international partners in BiH and at the international level to address both preparedness and outbreaks and to assist with institutional assessments, the Bank can assist Bosnia and Herzegovina in leveraging additional resources from other international and bilateral agencies. In addition to its financial role, the technical assistance provided by the Bank has been important in similar global or regional emergency situations such as SARS, Tsunami relief, and HIV/AIDS. The Bank s national and regional support will be closely linked with the activities of FAO, WHO, OIE and the EU, and the proposed project is fully consistent with, and draws heavily on the global strategies proposed by FA0 and WHO. B. PROJECT DESCRIPTION 1. Lending Instrument 10. The project is to be supported by a Credit from the International Development Association (IDA) of US$5 million equivalent. In addition, the Bank is working on helping to mobilize additional resources from bilateral and international agencies. Activities under the IDA-financed project will complement activities supported by other international partners and donor agencies (EC, UNDP, UNICEF, USAID, and WHO) and help ensure the availability of adequate resources to fund the priority investments and technical assistance which BIH has identified as critical needs in implementing its response to HPAI. The Project is supported by the Bank-financed Global Program for Avian Influenza Control and Human Pandemic Preparedness and Response (GPAI) approved by the Bank s Board on February 9, As per the GPAI, a country will qualify for support under the GPAI when it demonstrates its commitment and readiness to implement early detection and rapid response measures appropriate to the specific country conditions. A country request for assistance would be eligible for financing under the GPAI when it meets the following eligibility criteria: (i) For countries in endemic situation where new human infections are being detected, it has prepared and is implementing an HPAI Control Strategy; (ii) For newly infected countries with an active outbreak of avian flu among poultry, but no human infections, the existence of an appropriate program of rapid response, detection and containment measures, including appropriate implementation and monitoring arrangements that the international agencies and donor community, including the Bank, could support. (iii)for countries at risk, with no outbreak, or that are at an early stage of an outbreak, government commitment and appropriate plan of early detection and rapid response, including appropriate implementation and monitoring arrangements that the international agencies and donor community, including the Bank, could support. (iv)for countries with very low income levels and very low capacity circumstances, including LICUS countries, special criteria and waivers would apply if a full-blown human pandemic were to materialize, to ensure that assistance would be available if and when needed, even if the country itself would hardly be able to generate or mobilize any effective AI response, to safeguard the globalpublic-good nature of the global avian influenza objective. 13

14 12. The joint BanWWHOAJNICEF pre-appraisal mission of MarcWApril 2006 made an assessment of the readiness of BiH to proceed with a program of support under the GPAI. It concluded that BiH meets the eligibility criteria as per (iii) above. The level of commitment of BIH is high: (i) a letter requesting the Bank s assistance was received on February 24, 2006; (ii) draft assessment plans and preparedness plans on the response to an avian influenza pandemic were prepared by the Government prior to the appraisal mission; and (iii) appropriate implementation and monitoring arrangements have been discussed and agreed. 13. Project Characteristics. The financial assistance under the project will be provided as a Credit. The Credit is being processed as an emergency investment operation using procedures under OP Emergency Recover Loan (ERL), and it meets all applicable Bank policies, practices and standards as discussed below. 2. Project Development Objectives 14. The overall development objective is to minimize the threat posed to humans and the poultry industry by HPAI infection and other zoonoses, by enhancing both animal and human health infectious disease response and control capacities. To achieve this, three areas will be supported by the project: (i) prevention, (ii) preparedness and planning; and (iii) response and containment. 3. Project Components 15. The project would finance activities under five components: (i) Strategic Communications and Public Information; (ii) Animal Health Protection, and Disease Prevention and Control; (iii) Human Health Protection, and Disease Prevention and Control; (iv) Poultry Culling Compensation Scheme; and (v) Implementation Support, and Monitoring and Evaluation (M&E). Even though the activities are organized by sectoral components, the project strongly endorses an integrated national plan that ensures common objectives across sectors for dealing with the avian flu issue. Component I: Strategic Communications and Public Information - US $0.20 million Financing IDA Credit: US$0.20 million IDA Credit Proceeds FBiH: US$O. 11 million RS US$0.09 million 16. Building on the work initiated by the Entity Public Health Institutes with the support of UNICEF, several communications interventions will be financed, chief among them the further development and implementation of the already drafted communication strategy. The draft strategy includes, inter alia, improved communications strategies between and across government agencies (National Communication Plan); protocols for coordination of the outbreak and crisis communication for professionals (veterinarians, human health medical personnel, inspections, civil protection, state border service, etc); materials and targeted training for educators; capacity building in communication techniques for health workers, teachers and media professionals; and, at the community level, awareness raising and communication for behavior change activities through all appropriate communications channels. While it is crucial that each sector involved in public awareness and communications work under an overall strategy and broader framework, the actual implementation of communication and public information activities will necessarily be carried out sectorally with a core set of common objectives (more details are included in Annex 2A). UNICEF took the lead role in implementation of the first phase of the communications strategy, with financing from USAID in the amount of US$0.21 million. IDA financing would complement the planned UNICEFLJSAID interventions, especially after the first year of implementation. Three sub-components are foreseen: 14

15 0 Developing basic communication materials; Developing and testing messages and materials to be used in the event of a pandemic or emerging infectious disease outbreak; and Developing training courses in communications methodology for veterinary staff as well as for health workers at the local levels. Component 2: Animal Health Protection, and Disease Prevention and Control - US $2.98 million Financing IDA Credit Proceeds Gov't. of Bosnia and Herzegovina US$0.25 million FBiH: US$1.62 million FBiH US$O.17 million RS US$0.84 million RS US$O. 10 million IDA Credit: US$2.46 million 17. The most effective way to reduce the threat from HPAI to both economic sustainability of domestic poultry production, and human health, is to prevent the disease from establishing itself in domestic poultry. This component will provide support to the implementation of disease prevention and control strategies established at national and entity levels to address short, medium and long-term needs. Areas for support are based on detailed assessments of: (i) the epidemiological status of HPAI in BIH; (ii) the capacity of the State Veterinary Office (SVO) to cope with highly pathogenic avian influenza (HPAI) epidemic, including surveillance and diagnostic capacity at the national and entity levels; and (iii) the vulnerability of the poultry industry to new emerging infectious diseases. 18. The component would have four sub-components: Enhancing HPAI prevention and preparedness capability; Strengthening of Veterinary Services, disease surveillance, diagnostic capacity and applied research; Strengthening HPAI control programs and outbreak containment plans as well as capacities to implement those plans; and Improving bio-security in poultry production and trade, and isolating its potentially adverse effects on other aspects of people's lives. 19. The European Commission is actively providing support to animal health objectives through a twinning program with the SVO. This program is under implementation, initially during to support capacity building with the SVO in the areas of legislative reform, food safety, phytosanitary regime, inspections, and laboratory upgrading. Component 3: Human Health Protection, and Disease Prevention and Control - US $1.98 million Financing IDA Credit Proceeds Gov't. of Bosnia and Herzegovina US$0.22 million FBiH: US$0.98 million FBiH US$O. 10 million RS US$0.98 million RS US$O.lO million IDA Credit: US$1.96 million 20. ' Both Entities have developed contingency plans. With the aim to further improve planning and coordination, the project will (a) help conduct simulation exercises, (b) support the revision of the plans and (c) support the preparation of social distancing plans and clean-out plans for hospitals. The surveillance system will be strengthened through: (i) the training and equipping of investigation teams, 15

16 (ii) the equipping of 1 virology laboratory in RS and two in the FBiH (one for virus typology in Sarajevo, and one for virus identification in Mostar); and (iii) the strengthening of the communicable diseases monitoring and reporting system. It is expected that all these efforts will result in BiH joining the European Influenza Surveillance Network. To help reduce the risk of a genetic recombination/ mutation of the virus, the project will support the immunization against seasonal influenza of populations at high risk. The capacity of the health sector to adequately isolate and treat suspected or confirmed human cases of avian flu will also be strengthened. Particular efforts will be made to train health staff at different levels of the health system, improve their knowledge of infection control measures and facilitate the adoption of the most appropriate attitudes and behaviors so they can both protect themselves and effectively take care of their patients. The interventions supported under the Project will be based on BIH s epidemiological and programmatic needs, and well-assessed options for meeting them. The interventions will be grouped in three sub-components: Enhancing public health program planning and coordination; Strengthening of the national public health surveillance system; and Strengthening health system response capacity The European Commission (EC) has allocated US$l 80,000 equivalent from its ongoing project, being implemented with WHO support, to continue strengthening the surveillance systems in the human health sector. In addition, for the period , the EC will contribute EUR 500,000 to strengthen the overall human health laboratory system. This support will be complementary to the laboratory upgrades provided under the AIPP. Component 4: Support to the BiH Poultry Culling Compensation Scheme - US $0.75 million Financing FBiH RS IDA Credit: IDA Credit Proceeds US$O. 10 million FBiH US$0.3 1 US$O.lO million RS US$0.24 US$0.55 million 22. Experience from world HPAI outbreaks has clearly shown that individuals are more likely to report sick animals if they have credible assurances from government that they will be compensated in the event that their animals must be killed to prevent further spread of disease. As evidenced by the experience from the culling campaign that had followed AI occurrence in wild birds in February 2006, the compensation procedure prescribed and elaborated in the CP for AI ensures timely, efficient and transparent compensation payment to the farmers. The CP contains the necessary forms and instructions for personnel and institutions involved in culling, and ensures reimbursement of the farmers within a timeframe of 7-10 days post-animal depopulation. The only factor that can compromise the effectiveness of the existing compensation procedure, and thereby decrease the incentive for farmers to participate in AI control efforts, is the limited budget available for this purpose. Currently, compensation costs related to animal disease outbreaks are covered from the emergency fund (entity level budgets). Compensation costs on the scale of that needed for the AI outbreak. experienced in February 2006 can be easily covered by the government. However, if AI would occur in an area close to large-scale poultry farms, the available budget under the current culling arrangements would not come even close to covering the resulting expenses. Therefore, in order to provide sufficient incentive for early reporting by owners of sick animals, and hence enable a timely response by government authorities, funds for compensation will be provided within this component. A mechanism for the mobilization of these funds will need to be agreed as a condition of disbursement (under the Animal Health Component), as well as distribution of the responsibility for repayment among national and entity governments. 16

17 Component 5: Implementation Support and Monitoring and Evaluation (M&E) - US $0.45 million Financing Gov t. of Bosnia and Herzegovina FBiH RS IDA Credit: US$0.12 million US$O. 15 million US$O. 15 million US$0.03 million 23. One of the key characteristics of the HPAI threat is the difficulty in predicting the course the pandemic will take. An important feature of the project, therefore, will be the flexibility to adapt to a changing situation with the ability to reallocate funds between components and categories, and potentially to draw up new activities. The component would support costs associated with project management and coordination. It would comprise two sub-components: 0 Implementation Support to the Technical Support Group and PIU/PCU Monitoring and Evaluation (M&E). 4. Lessons Learned and Reflected in the Project Design 24. Relevant lessons for the design of the proposed project have been drawn from implementation of projects in the agricultural and health sectors in Bosnia and Herzegovina. They have also been drawn from the design of previous World BanWIDA and FAO-supported emergency recovery projects. These include the Vietnam Avian Influenza Emergency Recovery Project, which was the first Bank-financed project in response to the Avian Influenza. In addition, lessons have been drawn from the design of the Kyrgyz Republic AI project, which was the first country-specific project drawing from the GPAI, as well as projects currently under implementation in Turkey, Azerbaijan, Armenia, Georgia, and Albania. 25. Lessons learned indicate that project success depends to a large extent on the speed of the response provided. Particularly when dealing with smallholders production systems, a speedy, efficient and transparent distribution of suitable key inputs is clearly a major factor in limiting the impact of a crisis and hastening recovery. A performance audit of some of the emergency projects supported by the Bank in various regions drew the following general lessons: (i) emergency projects should avoid policy conditionality; (ii)project design must be simple and take into account a realistic assessment of the existing Borrower s capacity and other stakeholders capacity; (iii) a speedy project processing and approval are crucial to provide a prompt response and a substantial contribution to project success; (iv) procurement arrangements need to be flexible and should be finalized at an early stage; (v) mitigation and prevention measures should be included in the design to minimize impacts of a possible recurrence of the disaster; and (vi) realistic assessments should be made of counterparts absorption capacity, as well as of the effective communications and coordination mechanisms among all relevant stakeholders. 26. The main recommendations arising from the first 18-month implementation period of the Vietnam Avian Influenza Emergency Recovery Project are: (a) Preparedness is a key factor. While Vietnam had a national strategy document to control avian influenza in the domestic poultry population, it was not clearly understood and shared by all relevant agencies and stakeholders, and some aspects of the response were lagging behind. (b) A two-pronged strategy is recommended. This should include: (i) the control of avian influenza at the source in high-risk regions (through aggressive measures including culling, movement control and vaccination campaigns for poultry and ducks); and (ii) simultaneously 17

18 prepared short and medium-term measures to minimize the risks to humans and prepare for an eventual pandemic. High level government commitment is of the essence. For implementation arrangements, it is important to have a coordination structure that is empowered with multi-sectoral responsibilities, along with full-time project coordinators to implement activities in a crisis situation. Moreover, this level of coordination would foster effective integrated national response, including all technical ministries in charge of agriculture/animal health and human health, as well as other relevant sectors, at the national and sub-national level, in case of a human epidemic. HPAI Control Strategy and Preparedness Plans need to be linked to the broader agenda of regulatory and institutional reforms. In particular, a revised compensation framework is an essential element to obtain real cooperation from affected stakeholders (farmers/producers) and to ensure the efficacy of the surveillance and diagnosis mechanisms. Other long-term reforms include the restructuring of the poultry industry and the development of food safety regulations. Technical, scientific and operational capacity of the relevant participating agencies, and in particular National Veterinary Services, should be strengthened. The AI crisis highlighted several weaknesses in the animal health as well as public health services systems, including: poor surveillance at the local level, weak diagnostic capacity, lack of epidemiological expertise and information system, and inadequate operating budget to bear the additional costs of physical and human cost to contain the spread of the disease. Control strategies must include awareness raising and public information campaigns. It is extremely important to raise awareness in the public and private sectors from the initial moments, and to strengthen effective coordination mechanisms for the implementation of the necessary technical responses, involving the Government, the donor community, the private sector and the civil society. Regional collaboration is critical. Attention should be given to support the integration of each country to a regional and global framework for the control of HPAI, and more broadly of all trans-boundary animal diseases and other emerging infectious diseases, to increase costeffectiveness and ensure the harmonization of activities and responses. Some important lessons learned from the response to the HIV/AIDS epidemic2 are incorporated in the design of the proposed project. They include: I e 0 e e 0 The need for high level political commitment and leadership is key. A comprehensive multi-sectoral approach is needed. Monitoring and evaluation is critical in the scaling-up of a national response. Stakeholders at the country and international levels, are important in dealing with the AI threat. Building a strong fiduciary architecture is essential. C. 1. IMPLEMENTATION Partnership Arrangements 28, The Bank and the international community can play a key role in the response to Avian Influenza, especially at the country level where there is a need to develop an overall framework to guide national action plans that can be the basis for government and donor support. Such a framework should address 2 World Bank Committing to Results: Improving the Effectiveness of HIViAIDS Assistance. An OED Evaluation of the World Bank s Assistance for HIViAIDS Control. Washington, D.C. 18

19 both animal and public health aspects as well as economic impact. Many of the investments needed to address this disease are core public health and animal health functions that are considered "global public goods", thus, necessitating a global and regional response with support from the international community. Such partnership arrangements have been developed in BIH with the technical agencies as well as with bilateral agencies. Several meetings were organized prior to and during appraisal to brief the international partners on the Bank's plans to work with the Government in the design of a country-specific project and to confirm their interest in participating in the financing of the project. 29. BIH is receiving support on the technical content of an Avian Influenza response from key technical agencies. International agencies and donors have been active through a Task Force established in BIH for coordinated support of AI. The European Commission (EC) has allocated US $180,000 equivalent from its ongoing project, being implemented with WHO support, to continue strengthening the surveillance systems in the human health sector. In addition, the EC has allocated EUR 500,000 for the , to assist with provision of biosafety equipment for human health laboratories and hospitals. UNICEF has been working closely with the Inter-Sectoral Committee to design a draft communications strategy. As importantly, UNICEF support for AI communications was funded by USAID in the amount of US $0.20 million. These activities are now nearly completed, and have delivered a wide range of communications tools to enhance the overall government response. UNDP has expressed its interest to collaborate by making available US $100,000 to support AI activities. The aim of the IDA-funded Project is to support an integrated response to AI with all international partners contributing and supporting BIH's preparedness and control program. Further work in this regard will continue prior to effectiveness and during implementation to ensure complementarity of all such grant financing from international partners. 2. Institutional and Implementation Arrangements 30. Because of the inter-sectoral nature of this project and potential for an AI outbreak or human pandemic that is national in scope, it is critical that both animal and human health experts, as well as communications specialists, work together closely at national and entity levels to perform the day-to-day tasks of implementing the Project. Implementation of the Project will be undertaken by a Technical Support Group (TSG) consisting of technical advisors who are representatives of the State Veterinary Office (SVO)3 in the Ministry of Foreign Trade and Economic Relations, Ministry of Civil Affairs, FBiH and RS Ministries of Agriculture (Veterinarian Services), FBiH and RS Ministries of Health, and consultants for communications and monitoring and evaluation The representative of SVO on the TSG will be a permanent civil servant and will serve as Project Coordinator, reporting to the Minister of MoFTER. The TSG will report to the Council of Ministers through MoFTER. The TSG government representatives will be responsible for coordinating with and reporting to their relevant government departments, to guide and monitor implementation of activities in their respective areas. The TSG will be responsible for monitoring and evaluation, the preparation of annual work programs and budgets, preparation of TORS and specifications for goods and works bidding documents, and preparation of quarterly and annual progress reports. 32. Procurement, financial management and financial reporting services for the project will be provided by the PIU Forestry and Agriculture in Sarajevo, and by the Health Sector PCU in Banja Luka. More details on the implementation arrangements are provided in Appendix 2c. SVO has the mandate to coordinate veterinary services on behalf of the Entity Ministries of Agriculture, Water Management and Forestry. 19

20 3 3. Overall responsibility for overseeing and coordinating institutional and implementation arrangements will be vested with the Minister of Foreign Trade and Economic Relations (MoFTER) on behalf of Council of minister^.^ 34. At the cantonal and municipalities levels, implementation would be the direct responsibility of each cantonal/municipal veterinary/health authority. Small coordination units should be established at the local level comprising officials from healthheterinary services to work under the supervision and guidance of the entity ministries. 35. To facilitate the management and implementation of the Project, a Project Operational Manual (POM) satisfactory to the Association is to be prepared by the TSG as a Condition of Effectiveness. 3. Monitoring and Evaluation of OutcornesDtesults 36. M&E activities related to the project will be the responsibility of Technical Support Group (TSG) supported by the PIU/PCU. These activities could be carried out by the regular staff of the agencies (with technical assistance from the project) or by contracting out these functions with specialized agenciedinstitutes when appropriate. 37. Monitoring project progress and the achievement of objectives will entail a process of continuously and systematically reviewing the various project implementation activities. The objectives of the M&E activities are to: (i) measure input, output and outcome indicators (see Appendix 1); (ii) provide information regularly on progress toward achieving results and facilitating reporting to the government and IDA; (iii) alert government authorities and the international partners to actual or potential problems in implementation so that adjustments can be made; (iv) determine whether the relevant stakeholders are responding as expected and intended by the project; (v) provide a process whereby the implementation agencies can reflect and improve on their performance; and (vi) enable the project to make necessary changes should the situation evolve. 38. The results of relevant M&E activities will be reflected in the quarterly and annual progress reports. A section of the progress reports will be devoted to issues identified during project implementation and the strategies and actions to be taken to resolve such issues that affect progress. 4. Sustainability 39. Critical to the sustainability of the Project will be the continuous ownership of this initiative by the various stakeholders, coupled with strong political support and the availability of an adequate flow of financial resources to carry out project activities. In addition, institutional sustainability would be ensured by: (i) strengthening of programs to maintain public awareness of the threat of avian influenza and other rapidly spreading infectious diseases; (ii) sustained surveillance and prevention and control activities, particularly in high risk regions; (iii) strengthened country capacity to manage at national and local levels the risk factors associated with the spread of avian influenza and other infectious diseases; and (iv) effectiveness of programs to control the spread of avian influenza from birds to the general population. 4 An inter-sectoral Crisis Committee was established in November 2005 under the chairmanship of the MoFTER to oversee the HPAI control and containment effort and to provide general policies and guidance for avian influenza control. An Inter-Sectoral Working Group (ISWG) was established by the MoFTERto provide technical response to the AI outbreak in February 2006, and led project preparation for the BiH. Both the Crisis Committee and the ISWG may continue to function as circumstances warrant. However, neither would have a role in implementation of the Project. 20

21 5. Critical Risks and Possible Controversial Aspects Risk From Outputs to Objective Decline in political commitment to addressing Avian Influenza and the threat of a Global Influenza Pandemic. Project implementing agencies do not have sufficient authority, leadership, and capacity to take leading role in Avian Influenza prevention and control. Inadequate or lack of multi-sectoral and intra- Entity participation Low cantonal/municipality level commitment means that strong central commitment does not translate into action on the ground. From Components to Outputs Controlling the spread of the pandemic may expose the government to criticism for the curtailment of civil rights due to the adoption of quarantines and other related measures. Inadequate institutional capacity to manage the project. Financial resources not accessible in a timely manner, weak procurement management Lack of timely and predictable access to expert advice and technical support Low priority given to public accountability and transparency in program management Overall Risk Rating: Rating S S S S M S M M M S Mitigation Measure Continuing support for inter-sectoral collaboration through information exchanges and dialogue and operationalization of the Technical Support Group, which is to provide liaison with the BiH and entity implementing agencies. Adequate implementation arrangements are being put in place as a pre-condition of Bank financing; careful monitoring of leadership and project management during project implementation; technical assistance and training. The TSG will inter alia, ensure coordination and linkages across relevant agencies and international partners. In addition, an inter-sectoral working group was established by the Chair of the Committee as the counterpart team to work with the Bank and other donors in project design and will continue to play a role if needed during project implementation,. Implementation mechanisms explicitly address the link between the required centralized decision making (the principle of direct chain of command ) with the needed local-level implementation, communication strategies will include local-level implementing actors as targets; capacity building includes periphery. Project will support advocacy and coalition building to sensitize key groups including policy makers and the media. This will be complemented by carefully designed communication campaigns to build support for the project among the wider population. Capacity building and institutional development is one of the project s key objectives. Procurement and financial management arrangements will be handled by experienced staff which will receive support from consultants. Project activities are being designed with assistance from leading multilateral agencies such as FA0 and WHO. Arrangements in place for provision of expert resources (OIEIWHOIFAO) during implementation. Publication of audit results and achievements; transparency in decision and resource allocation. Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N (Negligible or Low Risk) 21

22 Possible Controversial Aspects 40. The Project will support the implementation of immediate term responses to a global influenza pandemic -- the classic social distancing measures -- such as quarantine, bans on mass gatherings, and travel restrictions that may be politically and socially controversial. This means that dialogue and compromises are needed among different stakeholders, backed by a well-designed communication strategy. A high degree of political commitment to preventing and controlling the spread of infectious diseases such as a global influenza pandemic would be needed for managing controversies that will undoubtedly arise. 6. Credit Conditions 4 1. The key conditions needed to minimize the risks to the Project would be addressed by the country meeting the eligibility requirements for entering the Global APL. Specific provisions have been developed to meet the standard requirements covering organizational and staffing arrangements, as well management, procurement and financial management arrangements. These have been addressed during appraisal and were confirmed prior to Negotiations. Conditions of Effectiveness for the project would be: (a) Establishment by the Recipient of the TSG in a manner and with the composition and terms of reference satisfactory to the Association; (b) The Annual Work Program for the first year of the implementation of the Project, satisfactory to the Association, has been prepared and adopted by the Recipient and each Entity; (c) the Project Operational Manual, the EMP, and the FM Manuals, all satisfactory to the Association, have been adopted by the Recipient and each Entity (d) a Project Agreement has been executed on behalf of the Association and each Entity, on terms and conditions satisfactory to the Association; (e) for each Entity, a Subsidiary Agreement has been executed on behalf of the Recipient and the Entity concerned, on terms and conditions satisfactory to the Association. 42. Conditions of Disbursement comprise: (i) execution of a Project Agreement between the Association and the Entity; (ii) execution of a Subsidiary Agreement between the Recipient and the Entity; (iii) for expenditures under Component 4, adoption by the Recipient and each Entity of the Poultry Culling Compensation Scheme Manual; (iv) provisions for Retroactive Financing under components 1, 2, 3, and 5; and (v) the opening of Project Accounts (for the Federation of Bosnia and Herzegovina, the initial deposit is to be equivalent to US $0.02 million; for Republika Srpska, the initial deposit is to be equivalent to US $ million). 43. Financial Covenants. The Federation PIU in the Ministry of Agriculture and the RS PCU established in the Ministry of Health will maintain financial management systems acceptable to the Bank. The project financial statements, summary reports and the designated account will be audited by independent auditors acceptable to the Bank on terms of reference acceptable to the Bank. The annual audited statements and audit report will be provided to the Bank within six months of the end of each fiscal year. 44. The audits will be conducted in accordance with International Standards on Auditing (ISA) as issued by the IFAC and on terms of reference acceptable to the Bank. 45. The PIU and PCU will appoint an acceptable firm of auditors under terms of reference acceptable to the Bank to carry out operational review of the compensation payment system as part of the annual audit when compensation claims have been made. 22

23 D. APPRAISAL SUMMARY 1. Economic Analysis 46. The poultry industry in BH is relatively small. Overall 2004 production amounted to 24.5 million kilograms. Of that, about half is produced by large commercial poultry farmers and the rest by individuals, mainly subsistence farmers (Table 1). Exports have been negligible, largely because of lack of veterinary certification. 47. Poultry accounts for a relatively small part of households consumption. In 2004, overall consumption of poultry amounted to 38.2 million kilograms, domestic production meeting 64 percent of consumption needs and imports accounting for the rest. One-half of imports originated from Croatia. Overall poultry consumption amounted to about 1.3 percent of GDP, 3 percent of total food expenditures and slightly over 1 percent of overall household consumption. Together with the consumption of eggs and processed poultry products, consumption of poultry and poultry-related products amounted to about KM350 million in 2004, equivalent to 2.6 percent of GDP and 2.1 percent the overall household consumption. Table 1. BH: Poultry Production and Consumption, 2004 I Million of Million kg chicken Economic Impact Analysis Production large farmers * own-use informal sector Exports Imports officially registered informal sector Informal sector ConsumDtion / Exports are negligible 21 Includes registered market-oriented production 48. The economic analysis considers the short-term financial benefits and costs of the project and the associated program under a with-project and without-project scenarios. The analysis should be considered as setting only the lower bound on the potential economic benefits that would accrue. The analysis does not attempt to quantify the costs and benefits preventing the spread of the virus to humans. 49. The analysis considers two events. One is sporadic outbreak of disease, as occurred in early 2006, and the other is a catastrophic outbreak. Table 2 lists the key assumptions of the analysis. The probability of a sporadic outbreak is assumed equal to 100 percent without a project, constant every year, while the probability of a catastrophic outbreak is assumed to increase from 40 percent to 50 percent over time. Both the probabilities of sporadic and catastrophic outbreaks are assumed to be smaller and declining under the with-project scenario. Further, it is assumed that a sporadic outbreak will cause 5 percent of poultry to perish, while a catastrophic event will result in a 25 percent death rate. 23

24 Table 2. Assumptions for the Economic Analysis Year Year Year Without Project Sporadic contained outbreaks 100% 100% 100% Widespread outbreak 40% 45% 50% With Project Continued sporadic contained outbreaks 90% 85% 80% Widespread outbreak 38% 30% 30% Percent of stock lost during sporadic contained outbreaks 5 yo Percent of stock lost during catastrodhic outbreaks 25% 50. Under these assumptions, the Net Present Value (NPV) of the project using a discount rate of 10 percent is $0.3 million. The IRR for this project is unique and equal to 25 percent. 5 1, As indicated above, the project presents the lower bound of benefits to society. The estimated economic benefits would be substantially larger if the costs and benefits of averting human hospitalization are taken into account. For example, were an outbreak of avian flu to result in human infection, the cost of hospitalization and possibly death would be substantial. 2. Technical 52. Animal Health. Successful implementation of the project depends on a phased multidisciplinary strategy based on a sound epidemiological approach to control HPAI outbreaks. This strategy has to take into consideration the range of epizootic and epidemiological scenarios that exist or may arise in BiH, as well as the different poultry production systems within the country, and different levels of incidence (ranging from high incidence with variable flock outbreaks, through low frequency disease outbreaks with partial flock immunity, to sporadic outbreaks). A balanced combination of appropriate disease control options, tailored to the specific characteristics and needs of BiH, is therefore essential for the achievement of the project objectives. 53. Key technical issues being addressed by the project include: (i) capacity of the public and private veterinary services; (ii) adequate regulatory and incentive framework (including sub-laws); (iii) regulations and protocols in accordance with OIE standards and guidelines); (iv) adequate laboratory facilities and staff capabilities; (v) harmonization of disease information systems to improve BiH s capacity to participate in the World Animal Health Information System (WAHIS) of the OIE; (vi) biosecurity measures; (vii) minimizing contact between potential infected wild birds and domestic poultry; and (viii) coordinating among public agencies and with the private sector to improve long-term planning for infectious disease control. 54. Human Health. So far, no human HPAI cases in humans have been reported in BiH. However, the existence of free-ranging poultry in backyards and close contact between human and poultry put BiH at relatively high risk of transmission of the virus to humans. The assessments carried out show that the capacity of the MOHs, Public Health Institutes (PHIS) and other stakeholders to: (i) rapidly and accurately detect HPAI cases in humans; (ii) adequately isolate and treat suspected or confirmed cases of AI in humans; and (iii) protect from the AI virus and other communicable diseases both populations at high risks and the general population is still relatively limited. 24

25 55. First, the chain of command is insufficiently defined, which could lead to many problems and delays, even in case of a limited crisis. Second, while investigation teams do exist at the Entity level PHIs, and cantonal and regional PHIs, their capacity to quickly and effectively investigate and respond to local outbreaks appears too limited. Third, although efforts are being made by both Entities, the ability of health services to effectively isolate and treat suspicious or confirmed AI human cases is at present extremely limited. This is even true at the level of tertiary hospitals, where appropriately organized and equipped isolation rooms do not exist at present. Fourth, the investigation teams as well as laboratory and medical personnel lack protective equipment and clothing and the current stocks of antiviral drugs appear too limited. Fifth, health services will rapidly become unable to cope with an explosive increase of the number of patients. 56. In such a context, priority needs to be given to: (i) the strengthening of the capacity of Entity and local investigation teams through training and the provision of necessary equipment, notably personal protective equipment; (ii) the creation of isolation rooms in hospitals, for effective isolation of the first cases of HPAI in humans; (iii) the training of health workers in infection control measures; and (iv) the preparation of plans to "clean out" hospitals in case of a severe outbreak and the identification of culturally and socially appropriate social distancing measures in case of a pandemic. In parallel, actions should be taken to help: (a) strengthen the system for the surveillance of communicable diseases and help BIH become part of the European Influenza Surveillance network; and (b) build-up adequate human microbiology and virology laboratory capacity in each Entity. 3. Social, 57. Although there are several large and a number of medium-size commercial poultry producers, about 25% of poultry are kept by smallholders in their backyards and managed by women with the help of children. Such families are disproportionately likely to be in the lower income quintiles. 58. The central roles of women and children in managing backyard poultry have important implications for the project: 0 Given the involvement of children managing domestic birds (feeding, egg collection, herding geese and ducks, etc.), awareness and educational efforts need to ensure that children are effectively targeted and reached with appropriately designed messages, through the schools. Reaching women with critical AI awareness messages and information will, similarly, require specific targeting and utilization of suitable dissemination and outreach channels. School-age children can bring leaflets to their mothers. In the event of culling, compensation will need to be provided to women owners, and the project will ensure that mechanisms are in place to ensure this. 4. Fiduciary 59. The financial management arrangements of the project are acceptable to the Bank. The overall FM risk for the project is moderate except for the Poultry Culling Compensation Scheme that is considered to be high risk. However adequate mitigation measures and internal controls are required prior to the disbursement of funds and some of the key controls are included below (appendix 5). The financial management arrangements of the Federation PIU in Ministry of Agriculture and the RS PCU established in the Ministry of Health have been assessed and continuously monitored as part of project supervision, and have been found to deliver high quality fiduciary services to the projects. They have both established and maintained good financial management system for the implementation of the Bank financed projects. The financial management systems will be expanded to support the proposed project and additional 25

26 expertise in financial management will be engaged and financed under this project. The internal control and fund flow arrangements are yet to be finalized for the cash grants/poultry Culling Compensation Scheme component, but the basic control procedures for the existing compensation system for Avian Influenza described in 2005 is a valuable basis for finalizing the procedures with the added complication with additional sources of financing for the compensation from this project. The flow of funds under the cash grantspoultry Culling Compensation Scheme sub-component will only begin after appropriate internal control and fund flow procedures have been documented in the financial manual that will be part of the Project Operational Manual and after the Bank has assessed the internal control arrangements as satisfactory. Appropriate flow of fund mechanisms is a condition of disbursement. Detailed financial management arrangements are described in Appendix Procurement. The capacity of the PIUPCU to conduct procurement under Bank guidelines has been assessed as satisfactory under the Forestry/Agriculture and Health Projects, respectively.. Procurement functions will be strengthened by the recruitment of an additional procurement specialist to be responsible for procurement under this project in the PIU and PCU. Activities to be financed from the Credit shall be undertaken in accordance with the procedures set forth in the Bank "Guidelines - Procurement under IBRD Loans and IDA Credits" dated May 2004 (the Procurement Guidelines). Similarly, the selection and employment of consultants' services shall be governed by the "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004 (the Consultant Guidelines). Details on procurement arrangements are provided in Annex 4. The procurement plan will be finalized during Appraisal. 5. Environment Environmental assessment Environmental Category PI 61. The two safeguard issues which pertain to the Project are those of environmental assessment for methods to be deployed for disposal of culled poultry and of mitigating the negative impacts of mandated culling of poultry on small scale backyard poultry producers. A delay in the completion and disclosure of the Environmental Assessment from the normal appraisal stage has been approved, instead making this a condition of disbursement for Component 2 - Animal Health, and Component 3 - Human Health. The draft EMP has been completed, with the public consultation held on July 20, 2006 in Sarajevo. Following this, the EMP was finalized in end-september Nevertheless, prior to Effectiveness, evidence of the adoption of the EMP by the Recipient and each Entity needs to be provided to the Association. Activities under the proposed project are not expected to generate any significant adverse environmental effect, as a large part of the project is geared to support prevention activities. Overall, the project would have positive environmental and social impacts. The primary potential environmental risks can be grouped into three categories: (a) Inadvertent human exposure and spread of the virus due to: improper culling and disposal of dead birds (wild birds, sick and dead birds from backyard and commercial poultries); lack of, or improper use of personal protection equipment (PPE); improper disposal of farm waste (i.e., bedding, manure, washings, etc. during and/or after an outbreak); and inadequate lab biosafety protocols. (b) Inadvertent release of chemicals in the environment from unsatisfactory decontamination procedures (for personnel, poultry sheds, and transport vehicles, etc.). (c) Release of chemicals and infectious agents into the environment from inadequate laboratory and medical facility waste management. 26

27 62. Building capacity for collection and testing of Avian Influenza virus. The Project s investments in facilities, equipment, and training for laboratories will improve the effectiveness and safety over existing avian influenza handling and testing procedures by meeting international standards established by OIE. Upgrading for laboratories will include provision of appropriate facilities and training for waste management and for bio-safety level 2 and 3 operations. Medical waste generated in health care facilities will be managed using existing guidelines in BiH, which have been found satisfactory under previous projects. The Project would also support updating these guidelines, training of health care workers to manage medical waste following these guidelines, and, as appropriate, purchase of equipment for the proper handling and disposal of medical waste in participating facilities. These provisions would be included in the Project Operational Manual to be prepared prior to effectiveness. 63. Overall, the Project will assist the government to develop a strategy for managing future emerging and re-emerging zoonotic and infectious diseases outbreaks. As such, the project would improve environmental and social safeguards, in two areas: (i) mainstreaming environmental safeguards into protocols and procedures for the culling and disposal of animals during an outbreak, in particular by adopting OIE standards in these areas, and improving bio-medical waste management systems in health facilities and laboratories; and (ii) development of policies on compensation for poultry farmers affected by future outbreaks. 6. Safeguard Policies Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP/GP 4.0 1) [XI [I Natural Habitats (OP/BP 4.04) [I [XI Pest Management (OP 4.09) [I [XI Cultural Property (OPN , being revised as OP 4.1 1) [I [XI Involuntary Resettlement (OP/BP 4.12) [I [XI Indigenous Peoples (OD 4.20, being revised as OP 4.10) [I [XI Forests (OP/BP 4.36) [I [XI Safety of Dams (OP/BP 4.37) [I [XI Projects in Disputed Areas (OP/BP/GP 7.60) [I [XI Projects on International Waterways (OP/BP/GP 7.50) [I [XI 64. Since the Project is assessed as a B-category project, an Environmental Management Plan (EMP) would be implemented with project support (see project components). The EMP addresses safe culling practices, and disposal of carcasses, laboratory wastes, and medical waste. This EMP also covers the clean up of animal wastes of culled poultry by the local public veterinary services and minor civil works supported under the Project. 7. Policy Exceptions & Readiness 65. The only policy exception requested has been with regard to the waiver of the completion of the EA and EMP per para. 12 of OP As noted above, evidence of the adoption of the EMP is a condition for Effectiveness. The project meets the regional criteria for readiness for implementation. 27

28 28

29 Appendix 1: Results Framework and Monitoring BOSNIA AND HERZEGOVINA: Avian Influenza Preparedness Project Project Development 0 bj ec tive The overall objective of the Project is to minimize the threat posed to humans and the poultry industry by the HPAI infection and other zoonoses, by enhancing both animal and human health infectious disease response and control capacities. Outcome Indicators With regard to awareness of HPAI threat and how to prevent it: Behavior changes among key veterinary and public health personnel Improved public awareness of how to prevent spread increases, and behavior changes. With regard to HPAI outbreaks among poultry: Government culls birds at the infection points following international best practice Government provides timely compensation to farmers for culled birds With regard to HPAI outbreaks among humans: Infection diagnosed and contained Patients receive effective treatment for HPAI infection Use of Outcome Information YR1 - gauge effectiveness of government HPAI strategy YR2 - determine if government HPAI strategy needs to be changed YR3 - mainstream lessons learned from HPAI strategy into animal health and public health systems. Intermediate Outcome (One per Component) Component 1: Target population informed about public health risks and procedures associated with HPAI. Component 2.A: National policy framework defined and national strategy developed to prevent, control, and eradicate HPAI among the animal population. Component 2.B: Animal disease surveillance and diagnostic capacities strengthened and training of the veterinary services designed and completed. Component 2.C: Outbreak Containment Plan prepared and activated as needed in response to AI outbreaks Intermediate Outcome Indicator (*) 50% percent of at-risk population practicing safe handling procedures with respect to poultry and poultry meat. Relevant legislation - for registration of poultry farms, biosafety, and surveillance and monitoring - including all necessary sub-laws, regulation, protocols and guidelines, prepared and adopted 0 Laboratory equipment and materials are procured, distributed and installed; Staff is trained in surveillance and diagnostic methods; 0 Reporting and reaction time for suspected cases of AI is reduced to the minimally acceptable levels; 75% average monitoring coverage in atrisk areas. 0 Outbreak Containment Plan conforms with the guidelines of FAO/OIE and GPAI; Chain of command and coordination arrangements in place and functional. Emergency supplies procured and Use of Intermediate Outcome Monitoring YR1-YR3. No change in behavior indicates need to review media and messages. YRl-YR2: Identify gaps and needs for additional support. Determine if plans need to be changed. YR1-YR3: Verify compliance with procedure and identify needs for changes and training YR1-YR2: Identify gaps and needs for additional support. Determine if plans need to be changed. YRl-YR2: Identify gaps and needs for additional support. Determine if plans need to be changed. 29

30 Intermediate Outcome (One per Component) Component 3.A: Better managed public health agencies through improved planning and coordination Component 3.B: Strengthened surveillance of influenza-like illnesses National Influenza Laboratory (NIL) safely collects, manipulates and tests HPAI specimens. Timely transmittal of specimens to the UK reference laboratory National and regional teams able to investigate and respond to influenza outbreaks Intermediate Outcome Indicator (*) available at strategic locations in the field; If appropriate, ring vaccination around infected areas completed;. Culling, disposal and disinfection activities completed as needed; Compensation provided to poultry owners rapidly and transparently. (in conjunction with Component 4) Chain of command and coordination arrangements in place and functional Detailed response plan prepared, including a detailed implementation plan for social distancing Simulation exercise conducted each year and report produced and disseminated to all stakeholders. Notification of Influenza like syndromes improved and early warning system functioning. X personnel trained in influenza surveillance and control At least one laboratory able to type and subtype influenza viruses and at least at bio-safety level 2 each entity. Maximum5 days elapse between collection and transmittal of specimens to reference laboratories for confirmation. At least one team in each Entity able to properly respond to outbreak within 24 hours after notification/alert. Use of Intermediate Outcome Monitoring YR1-YR2: Identify gaps and needs for additional support. Determine if plans need to be changed YR2-YR3: Review and evaluate plan and modify as necessary YW-YR3: Results of simulation exercises and actual investigation of outbreaks used to identify need for information, training and equipment YR1-YR2: identification of gaps and needs for additional suppodtraining. YE-YR3: Assess need to revise the strategy for alert, investigation of outbreaks and response. YRI-YR3 Inability to achieve biosafety levels indicates need to review investment, staffing, protocols and procedures YRl -YR3: Verify compliance with procedure and identify needs for changes and training YRl-YR3: Verify capacity to respond to suspected outbreaks. Identify needs for training and additional support. Component 3.C: Public health system responds to suspected or actual HPAI cases in humans Staff guidelines for immunization against both seasonal flu and HPAI completed and disseminated 100 percent of PHI, hospital, and PHC service personnel vaccinated against seasonal influenza. 30 percent of population at high risk vaccinated against seasonal influenza YR2-YR3: Assess guidelines to ensure sufficient immunization coverage of populations at risk. YRl-YR3: Review procedures and modify to meet targets YR1-YR3: Review procedures and modify to meet targets 30

31 Intermediate Outcome (One per Component) Component 4: Poultry Culling Compensation Scheme operational, including agreed procedures for compensation of both small-scale producers ("backyard"), and large-scale commercial producers Component 5.A: Coordination and management of project activities carried out as planned. Component 5.B: Coordination and management of project M&E activities carried out in a professional manner, as planned. Intermediate Outcome Indicator (*) 2000 units of anti-viral drugs stockpiled in each Entity and operational plan to rapidly procure anti-viral drugs completed Isolation rooms established and adequately equipped in at least 2 Hospitals in each Entity with staff trained (andor re-trained). Safety measures well know and PPE available. Prepare hospital clean out plans in cases of serious outbreaks or pandemic. Guidelines on the use of antiviral and on isolation and care produced and disseminated to staff. 50 percent of staff in Entity, cantonal and RS hospitals knowing how to protect themselves and patients against the HPAI, use anti-viral drugs and adequately treat patient with HPAI. In the event of outbreak, timely compensation provided to all farmers whose animals are culled Progress reports, financial monitoring, procurement and disbursement reports, audits, management and financial reports prepared and submitted periodically. Baseline developed for monitoring and evaluating Project impact six months after Credit effectiveness. Methodology defined and monitoring and evaluation periodically undertaken. Use of Intermediate Outcome Monitoring YR2-YR3: Review procurement and storage procedures Y2: Review plan and modify as necessary YR2-YR3: Assess progress in establishing rooms and revise procedures if objectives not met YR2-YR3: Assess guidelines and dissemination methods Y2-YR3 Assess capacity of hospital staff to isolate and treat first cases of patients. Identify alternative strategies Y2-YR3 Assess capacity of hospital staff to isolate and treat first cases of patients. Identify alternative options to take care of large numbers of patients in case of large outbreaks or a pandemic. Compensation procedures subject to regular updating, based on results of each compensation event Y 1 - Review comprehensiveness and timeliness of reports and make adjustments as required Y 1 -Y2 Assess quality of data collected through M&E activities and define what program adjustments are needed. NOTE: Should any disease outbreak occur (avian flu or another communicable disease), the response of the health system will be examined, both for results monitoring and to ensure that lessons learned will inform further implementation of this operation. 31

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39 Appendix 2a: Detailed Project Description BOSNIA AND HERZEGOVINA: Avian Influenza Preparedness Project 1. The project would finance activities under five components: (i) Strategic communications and public information; (ii) animal health protection and disease prevention and control; (iii) human health protection and disease prevention and control; (iv) poultry culling compensation scheme; and (v) implementation support, monitoring and evaluation. It should be emphasized that even though the activities are organized by sectoral components, the Project calls for, and strongly endorses an integrated national plan that ensure common objectives across sectors for dealing with the threat of HPAI. In addition to the Bank and government co-financing described below, various other international organizations -- including the European Commission (EC), World Health Organization (WHO), United States Agency for International Development (USAID), United Nations Children s Fund (UNICEF) - are active in assisting the Government of Bosnia-Herzegovina to address the threat of Avian Influenza. The Project has been designed in close cooperation with these organizations, to leverage the maximum financing possible, and to avoid duplication of efforts. With the exception of UNICEF, the exact level of financing of these donor activities is not presented, as this is not considered direct cofinancing of the Bank-funded Project, COMPONENT 1: STRATEGIC COMMUNICATION AND PUBLIC INFORMATION - US $0.20 million Financing IDA Credit: US$0.20 million IDA Credit Proceeds FBiH: US$O. 11 million RS US$0.09 million 2. It is of critical importance that all sectors of society are properly informed about the risks from HPAI, in order that proper protective measures can be taken, and, as importantly, to reduce the risk of unwarranted fear about the disease (e.g. unnecessarily reducing consumption of poultry products). This component would provide support for a broad range of information and communication activities, to increase the attention and commitment of government, private sector, and civil society organizations, and to raise awareness, knowledge and understanding among the general population about the risk and potential impact of the disease. 3. Building on the work initiated by the Entity Public Health Institutes with the support of UNICEF, numerous communications interventions will be financed, chief among them the further development and implementation of the already drafted communication strategy. The draft strategy includes, inter alia: improved communications strategies between and across government agencies (National Communication Plan); protocols for coordination of the outbreak and crisis communication for professionals (veterinarians, human health doctors, inspections, civil protection, state border service, etc); materials and targeted training for educators; capacity building in communication techniques for health workers, teachers and media professionals; and, at the community level, awareness raising and communication for behavior change activities through all appropriate communications channels. A local Communications Specialist will be hired to work in the Technical Support Group to coordinate activities under this component. He/she will be assisted by short-term consultants to be engaged as needed to address specific communications issues. In order to assist with the above tasks, three types of activities are being considered for financing: 39

40 0 0 Developing basic communication materials, including developing and testing messages and materials to be used in the event of a pandemic or emerging infectious disease outbreak; Developing training courses in communications methodology for veterinary staff as well as for health workers at the cantonal and municipal levels; and Collaboration among stakeholders, including state level authorities such as the Ministry of Foreign Trade and Economic Relations, the Ministry of Civil Affairs, the Ministry of Security, as well as veterinary and public health authorities at the state, entity and municipality levels. A. Developing Basic Communication Materials 4. Activities to be supported would include developing and testing messages and materials to be used in the event of a pandemic or emerging infectious disease outbreak, and further enhancing the infrastructure to disseminate information at the state and local levels and between the public and private sectors. Communication activities will support cost effective and sustainable methods such as marketing of handwashing through various channels through the delivery of handwashing messages via mass media, counseling, schools, etc. Communication materials would be integrated into Avian Flu specific interventions as well as ongoing outreach activities of ministries and sectors, especially ministries of health, education, agriculture, security and transport. Specifically, support would be provided for: (i) the development and distribution of basic communication materials (such as question and answer sheets and fact sheets) on influenza, influenza vaccine, antiviral agents, and other relevant topics; (ii) general preventive measures such as do s and don t s for the general public. Support would also be provided for information and communication activities to increase the attention and commitment of government, private sector, and civil society organizations, and to raise awareness, knowledge and understanding among the general population about the risk and potential impact of the pandemic and to develop multisectoral strategies to address it. B. Developing Training Courses in Communications Methodology 5. This sub-component would support the development and implementation of training courses in communications methodology for veterinary staff as well as health workers at the State and local levels. It will include the preparation and dissemination of information materials, and the provision of communications and information equipment for use at the state and local levels. Specifically, support would be provided for (i) information and guidelines for health care providers; (ii) training modules (webbased, printed, and video); (iii) presentations, slide sets, videos, and documentaries; (iv) and symposia on surveillance, treatment and prophylaxis. In addition, support would be provided to strengthen networks of communication offices, as well as mechanisms to increase coordination and consistency of messages among risk communication managers. Training would be provided under this sub-component for spokepersons from priority sectors in managing the media, partnering with the electronic and print media with a view to highlighting the national response, as well as accurately reporting on the monitoring, preparedness, containment and mitigation plans, as the case may be. The Ministry of Education and relevant partners will participate in the development of educational materials to be used in schools. C. Collaboration with Stakeholders 6. The multi-dimensional problems associated with HPAI infection necessitate collaboration from a wide range of stakeholders within each country, which has to be supported by broad communications and information campaigns to improve public awareness. The major stakeholders include various ministries (Finance, Agriculture, Health, Transport, veterinary services, national research institutions and diagnostic laboratories), NGOs and civil society organizations, private sector companies and associations (e.g. large poultry producers, farmers associations, veterinarians and farmer involvement at the grass roots level). 40

41 The sub-component would support activities designed to improve the effective coordination and collaboration among these stakeholders. COMPONENT 2. ANIMAL $2.98 million HEALTH PROTECTION AND DISEASE PREVENTION AND CONTROL - - us Financing IDA Credit Proceeds Gov t. of Bosnia and Herzegovina US$0.25 million FBiH: US$1.62 million FBiH USO.17 million RS US$0.84 million RS US$O. 10 million IDA Credit: US$2.46 million 7. The project would support a program to develop and implement HPAI prevention, containment, control, and eradication activities in the livestock sector, specific to the needs of BiH in the short, medium and longer term. These activities reflect an assessment of the particular risks, conditions, constraints, needs and possibilities in the country, including a rapid assessment of the veterinary services. Government contribution to this Component will consist primarily in of consumables (e.g. personal protective equipment and supplies), minor goods, running costs o f various reporting systems, and in-kind staff costs. A. Enhancing HPAI Preparedness and Prevention Capability (US $0.31 million) 8. Al: Strengthening the National Policy and Regulatory Environment. The project will support activities aimed at improving the policy, legal and regulatory framework that governs the national capability to implement the recommended disease detection, control, prevention, containment, and eradication measures in a uniform and effective way and in accordance with OIE standards and guidelines. The project includes support for a detailed review of current policies and the existing legal and regulatory environment and for the drafting, as may be warranted, of legal amendments, regulations and implementation guidelines and manuals. Staff of the Ministries of Agriculture, SVO, and other concerned agencies will, in topical working groups and with support by international experts on veterinary laws and regulations, review the relevant laws and regulations governing animal disease control and will draft the necessary legislative amendments, regulations and implementation guidelines. Particular emphasis will be placed on regulations concerning the control of notifiable diseases, the delineation of the respective responsibilities of the veterinary authorities, private veterinary service providers and farm owners. Specific areas of emphasis are: 0 Development of legislation establishing a national program for registration of poultry farms. Data related to farm location, type of production and capacity (number of animals, production output) will be necessary for planning, implementation and evaluation of AI preparedness and control activities. This information will also be necessary for efficient indemnification of losses incurred from the destruction of livestock. 0 Development of legislation regarding biosafety requirements/conditions necessary for establishing and maintaining poultry farms. The capacity of relevant agencies should be increased to provide extension services/education to producers in support of biosafety requirements. Development of legislation mandating surveillance activities. This legislative framework will need to incorporate equitable solutions for distributing costs and responsibilities for surveillance between government and producers. 41

42 B. Strengthening of Veterinary Services, Diagnostic Capacity, Applied Research, and Disease Surveillance (US $2.3 million) 9. B1: Strengthening Veterinary Services and Diagnostic and Applied Research Capacity. There are wide divergences in the capacities of the individual animal health laboratories within the country. None of the laboratories have an appropriate biosafety environment for handling AI agents. The short term goals for the system include developing appropriate capacities and biosafety levels (BSL) in regional laboratories involved in routine monitoringlscreening for AI. An evaluation of capacities and procedures in existing laboratories, to include biosafety protocols, will precede the determination of the specific steps that will be required to develop laboratory capacities. 10. The longer-term goal is to upgrade all laboratories to at least Biosafety Level 2 and, depending on the overall financing that becomes available, to establish one BSL 3 lab, which could handle not only HPAI, but any other highly pathogenic organisms which need to be tested. Project financing will provide, inter alia: civil works for rehabilitation and modernization of the National Animal Health Laboratories network (likely to focus on 5-7 labs); crucial diagnostic equipment; waste decontamination and disposal equipment; refrigerators and microbiological cabinets; computers and software; and basic laboratory furnishings. Additional support for laboratories would be provided under the proposed IDA-financed Agriculture and Rural Development Project. 11. B2: Strengthening Animal Disease Information Systems. The effectiveness of an AI control program will dependent upon the establishment of a well functioning surveillance system, fed by valid data collected in the field. This surveillance system should permit rational allocation of resources, creation of alternative actions, and objective evaluation of activities performed. Surveillance programs should be differentiated between wild and domestic birds and further delineated within the domestic population between free-range and commercial poultry. In order to achieve optimization of surveillance efforts, risk areas (wild bird habitat) must be expanded and a scientifically based sampling scheme must be developed for domestic poultry. This will require assistance in obtaining sampling equipment, developing arrangements for sample transportation, obtaining personal protective equipment and training local staff. 12. Support will be provided for basic equipment, training, surveillance, and integrated reporting systems, for improved monitoring of wild bird migration and resting points. This activity will be coordinated with technical professionals from the biological sciences, with training focused on disease recognition, safe handling of potentially infected wild birds, and public communications. C. Strengthening HPAI Control and Outbreak Containment Capacity (US $0.30 million) 13. Project support will be made available for the implementation of HPAI outbreak containment actions, as set forth in the draft national action plan and to be further specified in the final plan and associated implementation guidelines and manuals. The national action plan specifies the responsibilities and functions of a National Disease Crisis Coordination Center (NDCCC). It also defines the composition and responsibilities of Local Disease Crisis Coordination Committees (LDCCCs) that will be formed and trained now, and activated in any location where an outbreak is suspected andor confirmed. 14. The project will finance and support activities related to the implementation of the plan, including, inter alia, technical assistance and training for enhanced emergency response, outbreak control, data collection and interpretation, early warning systems, and basic epidemiology, as well as equipment such as personal protective equipment for field and laboratory epidemiological staff, culling equipment, and disinfection sprayers. In addition, a specific unit for epidemiological communications will be established. 42

43 D. Improving Biosecurity in Poultry Production and Trade (US $0.07 million) 15. Support will be provided for a training program on farm biosecurity practices. This training will be primarily oriented towards smallholder operations, as larger commercial farms generally have quite good biosecurity. However, large operations will also be targeted, particularly where they are nearby to significant poultry populations in backyards. COMPONENT 3: $1.98 million HUMAN HEALTH PROTECTION AND DISEASE PREVENTION AND CONTROL - us Financing IDA Credit Proceeds Gov t. of Bosnia and Herzegovina US$0.22 million FBiH: US$0.98 million FBiH US$O. 10 million RS US$0.98 million RS US$O.lO million IDA Credit: US$1.96 million 16. This component would support a program to further plan and implement preparedness, and improve surveillance and prevention as well as response and containment activities in the human health sector in the short, medium and longer term. 17. On the basis of the country s epidemiological needs and assessment of the particular conditions, constraints, needs and possibilities in BiH, initial support under the project will concentrate on a few essential areas. These will include the further refinement of the contingency preparedness plans and the establishment of a clear chain of command and coordination mechanisms, the rapid strengthening of capacities in intervention epidemiology (including simulation exercises), the expansion of seasonal flu vaccinations, and the strengthening of the health sector capacity to isolate and adequately treat a few suspected or confirmed cases of AI in humans. In parallel, the project will help plan and support the strengthening of the surveillance system for communicable diseases and of laboratory capacity as well as of the capacity of the health sector to prevent the spread of the AI virus among humans and to protect groups at high risk. Finally the project would also support efforts to prepare for social distancing and other interventions measures in case of a pandemic. 18. Activities to be supported under the project would be grouped in three sub-components: (a) enhancing public health program planning and coordination; (b) strengthening of public health surveillance system; and (c) strengthening health system response capacity. Government contribution to this Component would consist primarily of laboratory and hospital consumables (e.g. personal protective equipment and supplies), minor goods, and in-kind staff costs. A. Enhancing Public Health Program Planning and Coordination (US $0.13 million) 19. Legal aspects regarding communicable diseases (including highly pathogenic infections) are covered by the Laws on the protection of the population from infectious diseases, which were adopted in 1995 in RS and May 2005 in FBiH. Current institutional arrangements for addressing Avian Influenza in Humans in BiH parallel the organization of the health system and responsibilities lie with the entities. 20. In the past year, both Entities have made significant efforts to plan and coordinate activities. The RS Preparedness Plan was adopted by the Government in October The FBiH preparedness plan for expected emergence of the Pandemic Influenza has been revised in February 2006, and has now been approved by the Federation Government. In any case, these plans have now been superseded by the creation of a National Contingency Plan, produced through a series of multi-stakeholder workshops 43

44 sponsored by WHO. The National CP contains clear chain of command and individual responsibilities and (b) the measures to ensure coordination between stakeholders working on animal and human health in MOHs and between MOHsAPHS and other actors within the health sector. The National CP is not yet formally ratified by the full BiH Parliament; this is expected to be completed by mid The subcomponent would support the following three activities: 22. Al: Refining Plans and Strengthening the Chain of Command. As noted, the WHO has sponsored a series of workshops which have led to an integrated National Contingency Plan (CP), which addresses the shortcomings noted above. To help prepare all stakeholders to better cope with outbreaks and ensure that individual responsibilities and procedures to be followed are well known, the project would finance the conducting of simulation exercises at the State, Entity and local levels, once the new National CP is approved. 23. A2: Review and Amendments of Laws and Bylaws. The project would finance technical support to review and prepare necessary amendments to current laws and bylaws. More specifically, assistance will be given for the review and/or preparation of, inter alia: (i) statutory provisions regarding quarantine laws and how they apply in a public health emergency, (ii) laws and procedures for closing businesses and schools and suspending public meetings during a declared state of emergency, (iii) medical volunteer licensure, liability and compensation for retired and non medical volunteers; and (iv) worker s compensation laws as they apply to heath care and other essential workers. 24. A3: Social Distancing. The project would support the development of a detailed implementation plan for so-called social distancing measures to be activated in case of an epidemic. Social distancing measures will typically be activated on advice from health professionals and institutions, although they will not be the enforcing agencies. The implementation plan will have therefore to explicitly define institutional responsibilities for activation and enforcement of social distancing measures and for inter-agency and inter-ministerial coordination. Training will also be provided to enforcement agents such as the police and military in safe, efficient implementation of social distancing measures in ways that do not induce panic. Additional preventive actions that will complement social distancing (such as personal hygiene promotion through various communication channels, including hand-washing and proper cooking, and distribution and use of masks) will also be supported. 25. A4: Clean Out Plans for Hospitals (Preparing for Coping with Severe Outbreaks and a Pandemic). The project will also support the preparation of plans and measures to be implemented in case of larger outbreaks or a pandemic. While a full-scale pandemic will rapidly overwhelm hospital capacity, there is a need to prepare hospital clean-out plans to help create a buffer for localized outbreaks. Specifically, the project will support the preparation of plans to reorganize and clean out infectious clinics and other departments in hospitals to make them able to cope with an increase of suspected or confirmed AI cases. The plans will necessarily include measures to evacuate hospitals of non acute cases through, for instance, the canceling of elective procedures or finding alternative accommodation for non-emergency admissions. B. Strengthening National Public Health Surveillance Systems (US $0.95 million) 26. At this point in time, there is no national surveillance system for communicable diseases. The surveillance systems in place at the Entity level are based on routine health facilities reports for 62 diseases, which are compiled and analyzed by the hygiene and epidemiological departments of the IPHs. See the WHO report titled assessment of the national surveillance system for communicable diseases and dated September A new assessment of the national laboratory capacity will be conducted by WHO in June

45 Except in the case of suspected or confirmed outbreaks, reports are sent weekly to the intermediary level (regional or cantonal PHIS) and monthly to the Entity level. No specific surveillance system is in place for influenza and influenza-like (ILI) illness and BiH is not part of the European Influenza Surveillance network. 27. Investigation and response teams exist at the Entity level (2 in RS in Banja Luka and Doboj and 1 in FBiH) and additional capacity can be mobilized at regional or cantonal level. These teams, however, lack protective personal equipment, spraying devices and disinfectant. Efforts to train staff in intervention epidemiology have already started and recently (2005), 24 epidemiologists attended the EPIET course organized by WHO with EU financial support. However, there is an obvious need to further build-up capacity in intervention epidemiology and to train and/or retrain investigation and response teams. 28. There is no national or Entity Influenza Laboratory and or no capacity in the health sector for typing and sub-typing of influenza virus strains. As indicated in the 2004 report on laboratory capacity in BiH6, the capacity of existing microbiology and virology laboratories need to be significantly improved before the country can be considered to have an effective communicable diseases surveillance system. Basic facilities and good expertise exists in the country. However, the existing laboratory capacity is highly fragmented and the lack of training and investment in the past 15 years have left the laboratories operating at a level far below EU standards and the minimum bio-safety level 2 required for manipulating highly pathogenic viruses. Three interventions are planned. 29. B1: Improvement of Capacity in Intervention Epidemiology. The project will first strengthen the capacity to investigate and respond to outbreaks, including: (a) investigation and collection of specimens in areas where AI in birds or poultry are reported, (b) safely and rapidly transport of specimens to laboratories (including to the UK reference laboratory) for diagnostic testing and virus sub-typing and confirmation of results and, (c) outbreak investigation and containment measures in areas with suspected or confirmed human cases. To this end and building on activities supported by WHO (with financing from EC), the project will support the Public Health Institute and regional/cantonal epidemiological investigation and response teams through: (a) the re-training of staff, (b) the provision of personal protective gears and other equipment and consumables (sprayers, disinfectants), the provision of materials and bio-safety boxes for the collection and transport of samples and, (c) communications equipment. 30. B2: Strengthening the Surveillance of Influenza and Communicable Diseases. In parallel with activities listed in B1 above, the project will complement the EU/WHO current efforts and pilot project aiming at the strengthening of the communicable diseases surveillance system. In particular, the project will provide part of the necessary IT equipment (computers, servers, software) and will contribute to the building of capacity for reporting and analysis of epidemiological data. In this framework, particular attention will have to be paid to the active surveillance of influenza with a view to help BIH rapidly join the European Influenza Surveillance network. 31. B3: Strengthening the Laboratory Capacity. The project will contribute to building the laboratory capacity and network. More specifically, the project will contribute to efforts towards upgrading two laboratories (1 in each Entity) to bio-safety level 2 and make them able to type and subtype influenza virus strains. In addition, the Project will assist with upgrading the laboratory in the PHI in Mostar, to enable it to provide virus identification capacity. To this end, the project will finance part of the necessary studies, limited civil works and equipment as well as kits, reagents and other consumables and personal protective equipment (PPE) for laboratory staff. The project will also finance training and 6 Laboratory capacity in BiH- April (Ray Sanders and Bernardus Ganter) 45

46 retraining of laboratory staff. If needed, the project would also finance appropriate sterilization equipment and incinerators for the management and disposal of contaminated lab materials. C. Strengthening Health Care Response Capacity (US $0.9 million) 32. At this point in time, the BIH health sy,stem appears relatively unprepared to immediately and adequately respond to even a limited outbreak, not talking of coping with a pandemic. Seasonal influenza vaccination remains limited and MOHs have only very limited stocks of anti-viral drugs (only 400 and 1000 antiviral treatments are available in respectively RS and the FBiH). 33. While the hospitals where the first AI suspected or confirmed human cases would be hospitalized have been identified, these facilities are not ready to appropriately and safely taking care of highly infectious patients. Isolation rooms need to be established and properly equipped and health workers from these facilities need to be trained or re-trained in many areas and to be provided with personal protective equipment. Three types of intervention are proposed: 34. C1: Emergency Measures. Under the project, assistance will rapidly be provided to ensure that optimal medical care to AI suspected or confirmed human cases can be offered and to provide essential services to the community in case of a pandemic. Towards this aim, the project will provide support for the: (a) establishment of isolation capacity in the hospitals and infectious clinics that have been already identified (Banja Luka and Foca for RS; Sarajevo and Tuzla for the FBiH); (b) equipment of the isolation rooms; (c) emergency stocks of medicines and consumables, (d) protective equipment for health workers and; (e) training and retraining of staff. In addition, an enhanced triage capacity will be supported for the Clinical Center in Mostar. 35. In case of a declared influenza pandemic, this sub-component will finance emergency imports identified as necessary under a well-defined preparedness and response program to be prepared as part of project implementation. These imports are likely to include: (i) pharmaceuticals and vaccines, (ii) medical supplies and equipment, (iii) communication equipment, supplies and information campaigns, (iv) food and water containers, and (v) protective clothing. Particular attention will be paid to the definition of measures towards the protection of health care workers and to ensure that they will be willing and can continue to be at work in a pandemic situation (including protection and compensation measures for the risks involved). 36. C2: Vaccination. This sub-component will help expand regular seasonal flu vaccination for targeted priority groups (as defined in the contingency plan). In view of financial constraints as well as the anticipated limited quantities of seasonal flu vaccines available on the international market, the project will more specifically focus on the immunization of the most at risk populations (poultry farmers and veterinarians) and of health care workers. It would also finance the development of a detailed logistical (procurement and distribution) plan for mass vaccination should an HPAI vaccine become available. 37. C3: Anti-Viral Drugs: Under this sub-component, the project will finance the stockpiling on anti-viral drugs (Oseltamivir or others). It is plan to help increase buffer stocks of Tamiflu up to 3000 treatments for the Federation and to 1000 treatments for RS. 7 Including poultry farmers, veterinarians, health staff and persons with chronic disorders of the pulmonary and cardio-vascular systems andor chronic metabolic and immunologic disorders. To all the extent possible, vaccines will also be provided for the immunization of children below 5 and persons over 65 years of age 46

47 COMPONENT 4: POULTRY CULLING COMPENSATION SCHEME - US $0.75 million Fin an cing FBiH RS IDA Credit: IDA Credit Proceeds US$O. 10 million FBiH US$0.3 1 US$O. 10 million RS US$0.24 US$0.55 million 38. Early detection and reporting as well as rapid response depend critically on the incentives for poultry owners to report very quickly any sick and dead poultry to their veterinarians. Without adequate compensation arrangements in place, poultry owners have no incentive to do so, but must fear that their animals will be destroyed and they lose this valuable capital. 39. The June 2002 Veterinary Law in BiH confirms the right of farmers to compensation for the elimination of contagious animals, and determines the procedures for culling and compensation. The value of culled animals is determined by Entity Veterinary Services, according to the damage appraisal list prepared by the appraisal commission. In the case of Avian Influenza, the commission also confirms the number of culled poultry. These procedures have been successfully employed for the recent outbreak of HPAI in Jajce and Jezero. 40. In the event of further HPAI outbreaks in BiH, the Project will provide support for culling and elimination of infected and at-risk poultry, with compensation to farmers and commercial poultry producers based on the existing legal framework and the AI contingency plan. The order for culling and compensation will determine in advance the compensation value by type of poultry (rather than requiring a commission to determine the value on a case-by-case basis). Accurate lists will be kept of all poultry culled, so that the culling committee can calculate the compensation that will go to each poultry owner. Strict requirements will apply to recording, reporting and verification of poultry culling, compensation claims and payments. 41. Bosnia-Herzegovina s current capacity to compensate farmers for culled animals will be enhanced by the provision of US $0.55 million from the Project. This will be split evenly between the Entities, with each Entity provided matching funds of US $0.1 million. Access to the Bank portion of these funds will be conditional on the modalities for operating the Fund being approved by IDA. Key parameters guiding this effort are provided in Appendix 2b. COMPONENT 5: IMPLEMENTATION SUPPORT AND MONITORING AND EVALUATION - US $0.45 million Financing Gov t. of Bosnia and Herzegovina FBiH RS IDA Credit: US$O. 12 million US$O. 15 million US$O. 15 million US$0.03 million A. Implementation Support 42. This sub-component would support costs associated with project management and coordination, including costs associated with the Technical Support Group to be established to support project coordination and management, and costs associated with the PIU/PCU for procurement and financial management services. An inter-sectoral Crisis Committee was established in November 2005 under the chairmanship of the Minister of Foreign Trade and Economic Relations (MoFTER) to oversee the HPAI control and containment effort and to provide general policies and guidance for avian influenza control. This Committee will operate as needed in the event of further AI outbreaks to ensure coordination and 47

48 linkages across relevant agencies and with international partners. discussed in Annex 2c below. Implementation arrangements are B. Monitoring and Evaluation (M&E) 43. B1: Training. This sub-component would support training in monitoring and evaluation at all administrative levels, mid-term evaluation workshop, and development of an action plan for M&E and replication of successful models. It would support the following activities: Training in M&E; 0 Implementation of baseline studies; 0 Mid-Term evaluation of the project; On-going part'icipatory monitoring and evaluation; and 0 Final project evaluation. 44. B2: Project Monitoring and Impact Evaluation. Support would be provided to develop project monitoring and impact evaluation assessments. Two types of M&E are envisaged: 45. B2(i): Monitoring of project implementation. This is a function of the TSG, which would collect relevant data from line ministries and other implementation agencies and then compile them into quarterly progress reports focusing on status of physical implementation by component, use of project funds (based on data provided by the PIUPCU) and monitoring indicators. Specific surveys can be conducted to obtain data for this purpose. Annual expenditure reviews would be conducted to assess government commitment to strengthen the public health functions as measured by budgetary allocations and their distribution by activity. 46. BZ(ii): Impact evaluation. The aim of evaluation is to find out whether the interventions are effective or the program is having the desired impact. The evaluation will include both quantitative and qualitative aspects and be conducted on a yearly basis. The quantitative aspects will rely on new information systems and surveys implemented as part of the various components of the project, currently existing data sources, and primary evaluative data collection efforts. The goal of the qualitative aspect of the evaluation will be to document perceptions of program managers, staff, patients, and local and national leaders. Qualitative information will be collected using site-visit interviews, focus groups, and respondent surveys. 48

49 Appendix 2b: Culling and Compensation Procedures BOSNIA AND HERZEGOVINA: Avian Influenza Preparedness Project Table 1 : 2004 Production and Consumption of poultry in BH/l Million of chicken Million kg Production offic iav ow n-use Imports Informal sector/ Consumption /1 Exports are negligible /2 Includes registered market-oriented production 13 Includes unofficial domestic production and unregistered imports Poultry Culling Compensation Scheme 1. Early detection and reporting, as well as rapid response, depend critically on the incentives for poultry owners to report very quickly any sick or dead poultry to veterinarians. Without adequate compensation arrangements in place, poultry owners have no incentive to do this, and will fear that with the destruction of their animals they will lose this valuable capital. 2. The June 2002 Veterinary Law in BiH confirms the right of farmers to compensation for the elimination of contagious animals, and determines the procedures for culling and compensation. The value of culled animals is determined by Entity Veterinary Services, according to the damage appraisal list prepared by the Appraisal Commission. In the case of Avian Influenza, the Commission also confirms the number of culled poultry. These procedures have been successfully employed for the February 2006 outbreak of HPAI in Jajce and Jezero. 3. In the event of further HPAI outbreaks in BiH, the Project will provide support for culling and elimination of infected and at-risk poultry, with compensation to farmers and commercial poultry producers based on the existing legal framework and the AI contingency plan. The order for culling and compensation will determine in advance the compensation value by type of poultry (rather than requiring a commission to determine the value on a case-by-case basis). Accurate lists will be kept of all poultry culled, so that the culling committee can calculate the compensation that will go to each poultry owner. Strict requirements will apply to recording, reporting and verification of poultry culling, compensation claims and payments. 4. The Poultry Culling Compensation Scheme will be financed by an IDA credit of US$0.55 million, conditional on IDA S approval of the modalities for operating the Fund.-In addition, each Entity would contribute US $0.10 million, as part of the regular emergency fund allocation provided to the animal health sector. Village and Backyard Poultry Culling 5. Compensation for AI-infected poultry in Jajce and Jezero followed the procedures provided by the contingency plan. In future cases of AI, the same approach should be taken. After official confirmation of an outbreak, the State Veterinary Office authorizes the local veterinary stations to undertake necessary measures for control of the disease. First an inventory of all poultry is done within a radius of 3 km. Then, the actual culling is undertaken. After the culling, the owner and assessor sign a 49

50 form defined in the Contingency Plan (Form 6 in Annex IV) in three copies. One copy is kept by the owner, one copy is submitted to the Entity Ministry of Agriculture, and the third copy is submitted to the Technical Support Group. Pre-numbered forms will be given to the Local Disease Crisis Coordination Committees (LDCCCs)' based on the inventory of poultry in the at-risk region. The signed Form 6 will be the basis for payment of farmers. The payments will be made with cash transfers through the municipal treasury systems. After culling, owners to be compensated in each municipality and the amounts to be paid will be announced in a public place. Commercial Poultry Culling 6. At commercial poultry enterprises and other large producers the culling will be conducted in the presence of the owner by a team designated by the LDCCC. All will sign a form (in 3 copies) listing the culled birds. One copy of the form will be kept by the owner of the commercial enterprise; a second copy will be kept at the entity Ministry of Agriculture and the third will be sent to the TSG. The compensation payments to commercial poultry enterprises will be made through bank wire transfers. The forms will be pre-numbered. Database and Forms 7. Forms will be printed, pre-numbered and kept with the Technical Support Group. The TSG will keep the database of the forms sent to each municipality, owner and commercial producers. Compensation Payments 8. The parameters for payments will include the following: 0 Compensation to farmers will made be in cash through transfers to the respective municipalities; farmers will receive the compensation amounts from the municipality cashier. Appropriate procedures for supervising and verifying payments are specified by the Contingency Plan for AI and will be undertaken by the PIU/PCU at the direction of the TSG. Full details regarding these procedures will be addressed in the Project Operational Manual. For small farmers, compensation per bird will be 100 percent of the market price of the laying hens as reported by the entity agriculture statistical directorate/or competent authority during the month preceding that in which the culling took place. 0 For commercial producers, compensation will be provided by bank transfer. Compensation will be for reasonable replacement cost, Le., for birds less than 3 months old at the cost of one-day-old chicks, and for birds older than 3 months at the cost of 3-month-old birds, as reported by the entity agriculture statistical directorate/or competent authority during the month preceding that in which the culling took place. 9. If and when an HPAI outbreak occurs, the Entity Ministry of Agriculture will issue an ordinance for the use of funds for compensation including the parameters of compensation amounts. These amounts will be posted in a public place in the municipality. It is strongly recommended that the parameters for compensation are coordinated by both entities. 8 The project proposes using the exact same form defined in the BIh Contingency Plan - Annex IV: Form 6 50

51 Flow of Funds 10. Procedures on flow of funds should minimize delay but ensure maximum transparency. As stated above, compensation payments will be made through: (i) wire transfers to municipalities which will pay in cash for the compensation amounts to the farmers, and (ii) wire transfers to the accounts of commercial poultry producers. 11. The State Veterinary Office, through the Technical Support Group, will verify that forms are complete, and on the basis of Form 6 and the farmers paying lists, will direct the PIUPCU to prepare the withdrawal application with the necessary supporting documents for submission by the Ministry of Agriculture to the State MoF to the Association for reimbursement, with instructions in the withdrawal application to transfer the payment directly to the Entity MOA. 12. The Entity MOA then transfers the funds to the municipality treasury, which processes the payments to the owners. On payment of the compensation, the owner signs a payment receipt form, copies of which are forwarded by the municipality to the Entity MOA, Entity MoF and the PIU/PCU. After the completion of the payments, the municipality will submit payment lists to the TSG. 13. The PIU and PCU provide the TSG with reports on the payments on a quarterly basis, as part of the regular financial management reporting. A Poultry Culling Compensation Scheme database for each Entity will be maintained by the respective PIU/PCU to facilitate record keeping, claim verification, payment facilitation, monitoring and auditing. 14. Further detail regarding flow of funds under the Poultry Culling Compensation Scheme can be found in Appendix 6 on Financial Management. These procedures will be fully elaborated in the Project Operational Manual. 15. Based on the law, the payment should be completed within 30 days. However, it would be highly desirable for compensation to be completed in a shorter time span, for example, no longer then seven days. After the HPAI outbreak in Jajce and Jezero, both Entities were able to compensate farmers within seven days of culling. 16. Table 2 below illustrates the funds required to compensate farmers, both commercial and noncommercial (Le,, backyard or village, for personal consumption) if x percent of all poultry in the state were lost to AI culling, given a price of 10 KM per free range (backyard) chicken and 5 KM for commercial poultry and assuming a compensation scheme of 100% reimbursement for non-commercial farmers and 50% reimbursement for commercial farmers. 51

52 Table 2: Funds required to secure percentage of State poultry stock, by type of farmer Total Value (IO Kh4 non- Total # of commercial; poultry 5 Value Value Value Value Value Type of farmer (millions) commercial) Of 1% Of 2% Of 3% Of 4% Of 5% Non-commercial Registered commercial Total Total Value in USD ($6.20 noncommercial) Non-commerciaL Total

53 Technical Support Group Appendix 2c: Implementation Arrangements BOSNIA AND HERZEGOVINA: Avian Influenza Preparedness Project 1. Implementation of the Project will be undertaken by a Technical Support Group (TSG) consisting of technical advisors who are representatives of the State Veterinary Office (SVO) in the Ministry of Foreign Trade and Economic Relations, Ministry of Civil Affairs, FBiH and RS Ministries of Agriculture (Veterinarian Services), FBiH and RS Ministries of Health, a full-time consultant for communications and a part-time monitoring and evaluation consultant (see organizational chart below). SVO has the mandate to coordinate veterinary services on behalf of the Entity Ministries of Agriculture, Water Management and Forestry. The representative of SVO on the TSG will be a permanent civil servant and will serve as Project Coordinator, reporting to the Minister of MoFTER. The Project Coordinator will be supported by one full-time administrative assistant. The Administrative Assistant could be a civil servant, but would more likely be a short-term contracted position. The Terms of Reference (TOR) would include assistance with office management, record-keeping, correspondence, drafting of minutes of meetings, translations and interpretation, and general organizational matters. The TSG will report on project implementation progress to the Council of Ministers through MoFTER. The TSG government representatives will be responsible for coordinating with and reporting to their relevant government departments, to guide and monitor implementation of activities in their respective areas. Except for the Project Coordinator and the communications specialist, the TSG members will serve on a part-time basis, retaining their regular civil service positions and responsibilities in their home agencies. 2. To facilitate the management and implementation of the Project, a Project Operational Manual (POM) is to be prepared by the TSG as a Condition of Effectiveness. The TSG will operate as a virtual office, with daily communications via telephone, fax and , and will meet regularly on a schedule and in locations to be specified in the POM. The TSG will be responsible for preparation of annual work programs and budgets, preparation of TORS and specifications for goods and works bidding documents, monitoring and evaluation of project activities, and preparing quarterly and annual progress reports to the Association. The TSG shall take decisions on the basis of consensus. The detailed procedures governing the functioning of the TSG will be described in the POM. Local Level Implementation 3. At the cantonal and municipalities levels, implementation would be the direct responsibility of each cantonal/municipal veterinary/health authority. Small coordination units should be established at the local level comprising officials from healthheterinary services to work under the supervision and guidance of the entity ministries. PIU and PCU 4. Procurement, financial management and financial reporting services for the project will be provided by the PIU Forestry and Agriculture in Sarajevo, and by the Health Sector PCU in Banja Luka. For procurement, the PIU and PCU will prepare bidding documents or requests for proposals based on technical specifications or TORS provided by the TSG, conduct tenders, organize evaluation committees, and process payments to consultants and contractors after acceptance and approval of the goods, works or services by the TSG. TSG members or specialists identified by the TSG will be invited by the PIU and 9 It is noted that when the planned state-level Ministry for Agriculture and Rural Development (exact legal name TBD) is created, the SVO will move from MoFTER to this new ministry. 53

54 PCU to participate in proposal and bid evaluations. arrangements are found in Appendix 5 below. Further details regarding project procurement 5. The PIU and PCU will be responsible for financial management under the Project. They will be responsible for ensuring that each Entity establishes and maintains: (i) adequate accounting systems and procedures; (ii) flow-of-funds mechanisms facilitating timely disbursement of funds and timely payments for goods, works and services; (iii) regular reporting on the use of funds; and (iv) appropriate arrangements for regular financial audits. The PIU and PCU will prepare quarterly financial monitoring reports to the TSG and the Association. These responsibilities are described further in Appendix 6 (Financial Management Arrangements) below, and will be described in detail in the manuals of financial procedures and summarized in the Financing Agreement. The PIU and PCU have experience with financial management under Bank-financed projects and have established sound internal control mechanisms on the application and use of funds. Operating costs 6. Most of the operating costs of the TSG, PIU and PCU will be provided by the Entities as part of the counterpart contribution to project funding. Operating costs may include (i) maintenance and operation of equipment and vehicles procured or used for the management of the Project; (ii) staff salaries; (iii) travel costs and per diems; (iv) consumable office supplies; (v) communication, printing and publications; (vi) costs of translation and interpretation; (vii) bank charges; and other miscellaneous costs as may be agreed. Poultry Culling Compensation Scheme 7. Both the TSG and the PIU/PCU as well as government at the municipal, entity and State levels will be involved in administration and reporting on payments under the Poultry Culling Compensation Scheme that are financed from the Credit proceeds. Access to proceeds from the IDA credit for eligible Compensation payments will operate under the following procedures: (a) In the event of an AI outbreak and culling of poultry, local veterinary services officials provide compensation application forms and instructions to owners (b) Copies of the forms are provided by vet services to the owner, the Entity MOA and SVO (c) SVO through the TSG directs the PIU/PCU to prepare the withdrawal application with necessary supporting documents for submittal by the Entity MOA to the State MoF to the Association for reimbursement, with instructions in the withdrawal application to transfer the payment directly to the Entity MOA. (d) The Entity MOA transfers the funds to the municipality treasury, which processes the payments to the owners (e) On payment of the compensation, the owner signs a payment receipt form, copies of which are forwarded by the municipality to the Entity MOA, Entity MoF and the PIU/PCU. The PIU and PCU provide the TSG with reports on the payments on a quarterly basis, as part of the regular financial management reporting. (f) A Poultry Culling Compensation Scheme database for each Entity will be maintained by the respective PIU/PCU to facilitate record keeping, claim verification, payment facilitation, monitoring and auditing. (g) Operation of the Poultry Culling Compensation Scheme will be monitored and evaluated by the TSG as part of the overall project M&E arrangements 54

55 8. Further details on the Poultry Culling Compensation Scheme are provided in Appendix 2b. In addition, the internal financial control procedures and flow-of-funds arrangements to be implemented by the PIU and PCU will be incorporated into the financial management section of the POM. Project Implementation Arrangements Solid Lines indicate Reporting Responsibilities Dashed Lines indicated Functional Coordination Responsibilities Council of Ministers b MoFTER PT Tech Advisor Communications *For purposes of simplicity, organizational "boxes" are not presented for each governmental authority: this chart assumes that all members of the Technical Support Group continue to fulfill their normal reporting responsibilities to their relevant minist eriallgovernmental authorities In addition to the above implementation structures, the natiodl Crisis Committee (ad hoc body) will provide political leadership as necessary Compensation Fund activities will be coordinated through entlbyldget structures, as at present 55

56 56

57 ~ Appendix 3: Project Costs and Financing Arrangements BOSNIA AND HERZEGOVINA: Avian Influenza Preparedness Project US $6.4 million (Note: Component totals below for Components 2 and 3 do not precisely match the totals in the preceding text. Because of their larger size, and the likelihood that it is under these components where contingencies will be required, this table subtracts a portion of the total component cost (approximately 15%), and places it in the Contingencies allocation.) COMPONENTS 1. Strategic Communications and Public Information 1.A Capacity Building 2.B Information and Communication Services Sub Total Local Foreign Total Animal Health Protection, and Disease Prevention and Control 2.A Enhancing HPAI Prevention and Preparedness 2.B Strengthening Disease Surveillance 2.C Strengthening HPAI Control Programs 2.D Improving Bio-security in Poultry Production Sub Total Human Health Protection and Disease Prevention and Control 3.A Enhancing Public Health Program Planning 3.B Strengthening of Health Surveillance Systems 3.C Strengthening Health System Response Capacity Sub Total Poultry Culling Compensation Scheme Implementation Support and Monitoring & Evaluation 5.A Project Management 5.B Monitoring and Evaluation Sub- Total Total Base Costs Physical Contingencies Price Contingencies TOTAL PROJECT COSTS

58 Total project costs have been estimated at approximately US$6.4 million, of which US $5.0 million (78.1 % of total project costs) would be financed by an International Development Association (IDA) Credit. The Government would finance approximately US $1.4 million (21.9%). 58

59 Appendix 4: Procurement Arrangements BOSNIA AND HERZEGOVINA: Avian Influenza Preparedness Project 1. As described in OP 8.50 for Emergency Recovery Assistance (ERA), in addition to emergency assistance, the Bank may support operations for prevention and mitigation in countries prone to specific types of emergencies. Such operations could assist in: (a) developing a national strategy, (b) establishing an adequate institutional and regulatory framework, (c) carrying out studies of vulnerability and risk assessment, (d) reinforcing vulnerable structures, and (e) acquiring hazard-reduction technology. 2. Given the threat that HPAI may pose to the economic and social fabric of the country, as well as to the health of the population because of the risk of an influenza pandemic, the proposed Project would be financed through a Credit to be approved following ERA procedures. A. Procurement 3. Procurement under the Project will be carried out in accordance with the Bank s Guidelines: Procurement under IBRD Loans and IDA Credits dated May 2004, and Guidelines: Selection and Employment of Consultants by World Bank Borrowers dated May 2004, and with the provisions stipulated in the Legal Agreement. Agreements covering procurement methods, thresholds, and other conditionality will be consistent with ERA assistance guidelines and determined for the Kyrgyz Republic according to its capacity and experience with Bank procurement. 4. The activities covered under the Project will be implemented on the basis of annual work plans to allow for needed flexibility in adjusting activities to account for in-country experience and the lessons from implementation by other countries participating in the multi-country GPAI. Accordingly, the following approach to procurement will be adopted. 5. Implementing Agency Assessment. The Bank has carried out a procurement capacity assessment of the PIU for the World Bank-funded Forest Development and Conservation Project (FBiH), and the PCU for the World Bank-funded Health Sector Enhancement Project (RS) which will be responsible for fiduciary tasks, including procurement, and found them satisfactory. Procurement staff in the PIU are experienced with procurement following World Bank guideless, including with all the procurement methods to be included under the Project. The same qualified staff will be responsible for procurement under this Project. However, given the country conditions, the Project has been classified in category C, signifying high risk (A low, B medium, and C high risk). The annual Procurement Plan (PP) would define thresholds for prior review appropriate to the category; these thresholds would be determined so as to minimize prior review as appropriate to the level of risk. 6. Procurement Plan. A Procurement Plan (PP) covering the initial 12 month period of Project implementation will be prepared by Negotiations. The updated PP for each subsequent year will be submitted to the Bank for approval before the end of the previous year and would use a pre-defined standard format which would list as a minimum: (i) goods and services to be procured during the following calendar year, (ii) their value; (iii) the method of procurement; and (iv) the timetable for carrying out the procurement. At the time of approving the annual work program, the Bank would agree on the consistency with the application of the Bank procurement guidelines to the specific procurement lots expected during the year and their methods of procurement. If needed, the plan could be revised and re-submitted. A format for a typical PP would be agreed at Negotiations. 59

60 7. Procurement Methods and Thresholds. The Credit Agreement would define the appropriate methods and thresholds for International Competitive Bidding (ICB), National Competitive Bidding (NCB), Limited International Bidding (LIB), or Shopping in accordance with ERA guidelines. Thresholds for project procurement methods and prior review requirements have been indicated on the basis of the Bank s assessment of the capacity of the PIU which will be responsible for procurement, the estimated risks of corruption in BiH, and the country s capacity of construction and manufacturing industries. I I I I Quality and Cost Based Selection (QCBS) for Consultant Services Selection Based on Consultants Qualifications Individual Consultants Single-Source Selection >us$200,000 (International shortlist) <us$200,000 (National shortlist) <us$200,000 Services for assignments that meet the requirements set forth in the first sentence of para 5.1 of the Consultant Guidelines. Services for tasks in circumstances which meet the requirements of para of the Consultant Guidelines, with the Bank s prior agreement. 8. Prior Review by the Bank. The Procurement Plan shall set forth those contracts which shall be subject to the Bank s prior review process. All other contract shall be subject to post review. 9. Advertisement. The General Procurement Notice (GPN) shall be published in the on-line edition of Development Business following Project approval by the World Bank Board of Directors. Special Procurement Notices (SPN) for all ICB goods contracts and Requests for Expression of Interest for consulting assignments with firms exceeding the value of US$lOO,OOO equivalent shall be published in the Public Procurement Bulletin, a local newspaper of a wide circulation and the on-line edition of the UNDB and posted on the websites of the State Veterinary Office, the Ministries of Agriculture and of the Ministries of Health. 10. These agencies will allocate a part of their respective websites for posting information on contract awards, including the name of each bidder who submitted a bid, bid prices as read out at public bid opening, name and evaluated prices of each bid that was evaluated, name o f bidders who were rejected 60

61 and the reasons for rejection, the name of the winning bidder and the price it offered. All contracts awarded through direct contracting (irrespective of the amount) shall be listed on the websites. Information on the contracts awarded as a result of an ICB and results of selection of consultant firms for contracts exceeding US$lOO,OOO will also be posted on the World Bank web-site by submitting the information to the World Bank Country Office in Sarajevo. 11. The PIU would follow the World Bank anti-corruption measures and would not engage services of firms and individuals debarred by the Bank. The listing of debarred firms and individuals is located at: littp:// 12. Procurement under Emergency Assistance Provisions. Following ERA procedures, the Project is likely to include financing for items included on a positive list of imports identified as necessary under a well-defined preparedness and response program to be prepared as part of project implementation. In case of a declared global influenza pandemic, which will trigger disbursement conditions for critical imports, support would be provided under the Project for the procurement of a positive list of critical imports. These may be procured under Modified International Competitive Bidding (MICB), according to paragraphs 2.66 and 2.67 of the Procurement Guidelines. Also, commonly traded commodities may be procured through organized international commodity markets or other channels of competitive procurement acceptable to the Bank, in accordance with the provision. 13. The positive list of critical inputs to be prepared by Bosnia-Herzegovina or to be purchased by the Borrower from the private sector, based on historical imports during national emergencies, would include: 0 Pharmaceuticals and vaccines 0 Medical and veterinary supplies and equipment 0 Communication equipments, supplies, and public awareness campaigns 0 Food and water containers 0 Protective clothing and gear 14. Disbursements for items procured under emergency assistance provisions can be made for up to 100 percent of import costs. No more than 20 percent of the Credit proceeds may be used for retroactive financing of expenditures, and the payments must have been made after the appraisal mission. 15. Procurement Audits. Because the Project would have a strong decentralized implementation element, and to help the Bank to carry out post-reviews of procurement actions, consultants would be contracted as a cost to the Project to carry out annual procurement audits of a sample of contracts, under Terms of Reference acceptable to the Bank. 61

62 62

63 Country Issues Appendix 5: Financial Management Arrangements BOSNIA AND HERZEGOVINA: Avian Influenza PreDaredness Proiect 1. A Country Financial Accountability Assessment (CFAA) for BiH was carried out in An update of the CFAA has recently been finalized. The CFAA identified systemic and structural weaknesses in public sector budgeting, accounting, reporting, and auditing. However, there have been several positive developments in the past four years, most notably, implementation of a fully automated treasury system across all the Cantons in the Federation and all the regions in the RS. The introduction of the on-line treasury system has brought about a major improvement in the accounting and reporting of budget execution at the State, entity, and cantonal levels. The Bank s Country Financial Management Strategy (CFMS) envisages mainstreaming of project management into Ministries and Departments, and abstain from creating new stand-alone Project Implementation Units (PIUs) outside the ministries for implementation of Bank-financed projects. This project accordingly will use the Federation PIU in the Ministry of Agriculture and the RS PCU established in the Ministry of Health for the purpose of delivering fiduciary services to the project and securing the necessary reporting. Risk Analysis and Conditions 2. The risk analysis from the Financial Management Questionnaire is as presented below. (Note: The project s financial management risks are not considered to be significant enough to warrant inclusion in section C5 of the TA). Risk Risk Incorporated Risk Conditions of Negotiations, Rating Mitigating Measures Board or Effectiveness. Entity Level Project Level Control Risk. Budgeting financed projects S As mentioned above None M The coordination made by None the Technical Support Group need to rely fully on the two PIU/PCUs for fiduciary aspects S Only issue would be if funds None are not allocated by the entities for the Poultry Culling Compensation Scheme, as the funds are reimbursed by the bank. This 63

64 ~ Risk Accounting Internal Control Risk Rating M H 1 Financial IM I Strengths I M Incorporated Risk Mitigating Measures will be followed closely by the task team No issues to mitigate Only the internal control risk for the Poultry Culling Compensation Scheme is high. The Poultry Culling Compensation Scheme manual on the financial management parts needs to be finalized before disbursement starts. No issues - following well established procedures No issues - following well established procedures Following well established procedures. Adding an operational review of the project. Conditions of Negotiations, Board or Effectiveness None Disbursement condition None None None 3. Both PIUs have extensive experience in implementing Bank-financed projects. The two financial managers have been working in their capacity six and seven years respectively. Weaknesses and Action Plan 4. Financial management arrangements of the AIPP are generally adequate, but a number of actions are required to ensure that arrangements are fully satisfactory for the project, with its specific FM needs, especially with respect to the Poultry Culling Compensation Scheme. The following action plan was discussed with the Recipient during Negotiations. Satisfactory implementation of the action plan will ensure the establishment of a financial management system that fully meets requirements of the Project and of the Bank. 1 2 Action Implementation of appropriate internal control procedures and fundflow arrangements for the Poultry Culling Compensation Scheme component Staffing of the FM Units. Recruitment of two Financial/Disbursement SDecialists. This is onlv an action Responsibility PIU/PCUs with input from TSG PIU/PCUs Due Date Condition for the Poultry Culling Compensation Scheme component To be ready before project implementation I Remarks Compensation Scheme sub-component will be disbursed after the APIU has implemented appropriate internal control and fund flow procedures. Done 64

65 for capacity building and not a FM condition. FM Procedures Manual. Revise existing manual to fully document the procedures for accounting and internal control, including disbursement and flow of funds (including flow chart), financial reporting, including IFR, annual reports and audit. This is only an action for capacity building and not a FM condition. Project Accounting and Financial Reporting System. Upgrade existing accounting software, to reflect requirements of the new project, including capacity to generate FMRs without manual summarization in Excel; test the accounting and reporting system by producing sample FMRs for submission to the Bank for review and comments. This is only an action for capacity building and not a FM condition. PIU/PCUs PIUPCUS To be ready before project implementation To be ready before project implementation A manual already exists and will require only minor updates to reflect the characteristics of the project, including flow of funds and accountability for cash grants/ Poultry Culling Compensation Scheme. I Done Implementing Entity 5. The main implementation responsibility of the project is with the Technical Support Group consisting of broad technical participation from all involved institutions dealing with the activities of this project. However, all financial management responsibilities as well as procurement responsibilities will be given to the Federation PIU in Ministry of Agriculture and the RS PCU established in the Ministry of Health. Budgeting 6. The two PIU/PCUs will prepare annual plans based on the implementation program, including the procurement plan. RS and FBiH will allocate budget funds to cater for the Poultry Culling Compensation Schemes according to already established procedures. Accounting 7. Both the PIUs have implemented computerized accounting systems using locally developed FM software, which is used in several Bank-financed projects and have been found to be reliable and responsive to Bank-needs. The PIU/PCU will be using the same software for accounting for this project. 8. Accounting procedures for the two PIU/PCUs are set out in their respective Financial Management Manuals. The manual contains procedures for flow of accounting information, invoice verification procedures, payment controls, and reporting formats. The manuals are satisfactory and the risk associated with the accounting policies and procedures is negligible. The existing manuals will, 65

66 require only minor updates to reflect the characteristics of this project. A separate manual on the Poultry Culling Compensation Scheme will be finalized before disbursement starts for this part of the project, see further details below. 9. The staffing of the existing Federation PIU in Ministry of Agriculture and the RS PCU established in the Ministry of Health are considered adequate to implement this new project at the initial phase, but additional staff might be needed to strengthen the existing capacity, to monitor the financial management of the Poultry Culling Compensation Schemes, and to allow for periodic visits to the village level to review the Poultry Culling Compensation Schemes. The additional staff, if needed, would report to the PIUPCU s financial managers and would be responsible for disbursement functions as well as project accounting-maintaining books of accounts, reporting day-to-day transactions and preparing accounting reports and financial statements, as well as monitoring financial flows to project beneficiaries. The financial manager will have primary responsibility for the quarterly financial reports (Interim unaudited Financial Reports - IFRs) and will prepare the annual financial statements for audit. Internal Control & Internal Auditing 10. With the exception of the Poultry Culling Compensation Scheme component, for which the AIPP does not have previous experience, the PIU/PCUs have maintained an effective internal control system to ensure that project expenditures are properly authorized, supporting documents are maintained; accounts are reconciled periodically; project assets, including cash, are safeguarded, and cash compensation grants are properly accounted for. Although project accounting will be on a cash basis, detailed assetiinventories register will be maintained as part of the project internal control procedures. The AIPP will implement appropriate controls over inventories of drugs, vaccines, medical equipment, and other sensitive and/or expensive assets will be especially important for the project Since the Federation PIU and the RS PCU are part of the government set-up, they are subject to an audit by the respective Supreme Audit Institution of the entities. Currently, neither entity has enacted law on internal audit in the public sector. However, establishment of internal audit units within ministries is a long term process and has not been factored into while assessing internal control environment for the project. 12. Poultry Culling Compensation Scheme. The Governments have established Poultry Culling Compensation Schemes from which the owners of animals culled will be compensated (see Annex 2B). The Veterinary Law provides the legal basis to do so, but the required implementation arrangements still need to be refined and put in place, and the Project will provide technical support to do so. The necessary details will be developed and agreed upon during the first months of project implementation and will be included in the Operational Manual. 13. As a condition of disbursement of funds under the Poultry Culling Compensation Scheme component, the PIUiPCUs will implement appropriate internal control procedures and flow-of-funds arrangements acceptable to the Bank and documented in the Poultry Culling Compensation Scheme manual. The Project will provide US $0.55 million to finance and operate these Funds. 14. Internal Control Arrangements for the Poultry Culling Compensation Scheme. Annex 2B sets forth the procedures for recording poultry culled under government orders and for establishing and recording poultry owner s claims for compensation payments. A number of minimum internal control procedures and risk mitigation measures will be implemented with respect to recording and verifying poultry culling and claims for compensation payment before any flow of funds is initiated. 66

67 15. The financial and operational manuals will detail the mechanisms, as described in Annex 2B, for identifying those eligible for compensation payments, ensuring that there will be no multiple claims. A Poultry Culling Compensation Scheme database will be maintained by the Project to facilitate record keeping, claim verification, payment facilitation, monitoring and auditing. 16. In the event of government-ordered culling of poultry, the culling and the preparation and processing of culling records and compensation claims will be done in accordance with the procedures detailed in Annex 2B. 17. All forms to be used to record poultry cullings and compensation claims will provided by the Project. They will be pre-numbered and recorded in the database of the Poultry Culling Compensation Scheme. All unused forms, as well as any invalid or incorrectly completed forms, must be returned to the Poultry Culling Compensation Scheme when the culling records are submitted. 18. Compensation payment to poultry owners will be by cash, bank transfer or postal transmission. There will be no vouchers or animal replacements. Payment will be made within four weeks from the date of culling. 19. The owners of village and backyard poultry will, at the time of culling, receive a Culling Certificate noting the date and the type and number of birds culled. Each certificate will be signed by all four members of the Community Culling Supervision Committee (CCSC) or assessor and countersigned by the poultry owner. The certificate will be completed in three copies: one for the poultry owner, one for the local government administration, and one will be attached to the village summary culling record compiled by the CCSC and sent by the local government administration to the Poultry Culling Compensation Scheme through the TSG. Certificates not signed by all members of the CCSC and the poultry owner are invalid. 20. Based on the individual poultry owner certificates, the CCSC will compile a Village Summary Poultry Culling Record. All four CCSC members will sign and the poultry owners will countersign this list of birds culled and their owners. Forms not signed by all four members of the CCSC are invalid, and all claims included on an invalid Village Summary Poultry Culling Record are rendered invalid as well. The village summary culling record is the official record that establishes the poultry owners right to compensation from the Poultry Culling Compensation Scheme. It will be completed in eight identical copies: one will be posted in a weather-protected public location in the village. Attached to the copies that are sent by the local government administration to the Poultry Culling Compensation Scheme and to the PIU/PCUs must be copies of all individual owners culling certificates that form the basis for the compilation of the village summary culling record. 21. The local government administration compiles a Summary Report on the basis of all village summary poultry culling records, listing all villages and for each village the total number of different poultry culled. This report is made out in five copies and signed by the mayor of the local government. Attached to the copies sent to the PIU/PCUs and to the Poultry Culling Compensation Scheme are the village summary poultry culling records and copies of all individual owners culling certificates. 22. For medium- and large-scale poultry operations with more than 200 birds, the owner or manager will, at the time of culling, receive an Enterprise Poultry Culling Record, signed by the veterinarian and an official from the local government administration, and certified by an audit firm acceptable to the Bank. The ownedmanager countersigns. There will be five identical copies. This document is the official record that establishes the poultry owners right to compensation. Actual compensation payments will be based, however, on the lower of (a) the number of birds reported by the enterprise to the Poultry Culling Compensation Scheme at the end of the quarter preceding the mandatory culling and for which 67

68 the required fee has been paid to the Poultry Culling Compensation Scheme or (b) the number of birds reported and certified on the Enterprise Poultry Culling Record. If all or part of the fee due to the Poultry Culling Compensation Scheme is overdue by more than three months, no compensation will be paid. 23. Flow-of Funds Arrangements for the Poultry Culling Compensation Scheme. Flow-of-funds arrangements for making compensation payments are designed to minimize the number of stages through which funds will need to pass before reaching the intended beneficiaries, while ensuring maximum transparency. Once authorized by the PIU/PCUs, compensation payments will be effected by the Poultry Culling Compensation Scheme through the banking system or through the Postal Service. 24. Payment to the poultry owners will be made by the local government administration and supervised by the two community representatives on the CCSC, based on the village summary culling record kept by the local government and cross-checked against that kept in the village. To receive payment, each poultry owner will be required to present hidher culling certificate; the date and amount of payment will be recorded on the certificate and countersigned by the poultry owner. 25. All payments made to individual poultry owners are recorded on both copies of the village summary poultry culling record kept by the local government administration, and each poultry owner must sign for the payment received on both copies to confirm receipt of payment. These two copies of the village summary poultry culling record thus become the village culling-and-payment record. They must be signed by the local government representative and the two community representatives on the CCSC. The local government administration then completes the Summary Report by entering in the final column for each village the amounts paid, by village and by type of poultry. The local government administration keeps one copy of the completed Summary Report and submits the other to the Poultry Culling Compensation Scheme, with a copy of each village s culling-and-payment record attached. 26. For medium- and large-scale poultry enterprises the compensation payments will be made through the banking system. The Poultry Culling Compensation Scheme will transfer the funds to the credit of the account(s) of the eligible recipients. Banking fees associated with this service will be financed by the Project. The Poultry Culling Compensation Scheme will inform the PIU/PCUs of the dates and amounts of payments made, with appropriate documentary evidence. For enterprises that have no bank account or that failed to provide the necessary account details at the time of culling, the payments will be made through the Postal Service. The Poultry Culling Compensation Scheme will provide the necessary information and instructions to the Postal Service, with the name and address of the eligible recipient, and the amount of payment. The Postal Service will obtain confirmation from the recipient that the payment has been received and will submit this confirmation to the Poultry Culling Compensation Scheme. The Poultry Culling Compensation Scheme in turn will inform the PIU/PCUs of the dates and amounts of payments made, with appropriate documentary evidence. 27. Funds Flow and Disbursement Arrangements. The Recipient will establish two Designated Account (previously called Special Accounts), one for each Entity, in commercial banks, acceptable to IDA. Disbursements from the IDA Credit will follow the transaction-based method, Le., traditional Bank procedures: Advance documented with Statement of Expenditures and other records, Direct Payments, and Special Commitments. For certain payments, above the Minimum Application Size as specified in the Disbursement Letter, the AIPP would submit withdrawal applications to the Bank for payments to suppliers and consultants directly from the Credit proceeds. Disbursement to the Poultry Culling Compensation Schemes will be made on reimbursement basis. Withdrawal applications and documentation will be checked by the PIU/PCUs before submission to the Bank. 28. In case of declared emergency, following procedures agreed with IDA, additional funds may be deposited to the Designated Accounts A and B, the ceiling to which may be increased up 68

69 to EUR 500,000. The declaration of a national emergency would be a disbursement condition for this element of the project. Upon declaration of an emergency, the Recipient would submit to the Bank an initial recovery plan documenting the disaster declaration, the related budget appropriation and the proposed use of the funds. The PIUs will keep the Bank informed of updates in the recovery plan as the emergency response operations unfold. Allocation of Credit Proceeds Expenditure Category 1. Goods, Works, Services, and Operating Costs - FBiH Amount in US$ million 2.55 Financing Percentage 100% 2. Goods, Works, Services, and Operating Costs - RS 3. Unallocated - FBiH 4. Unallocated - RS TOTAL AMOUNT % Financial Reporting. For project monitoring purposes, quarterly interim un-audited financial reports (IFRs) will be required. The AIPP will be responsible for designing appropriate IFRs to include: (a) Project Sources and Uses of Funds, (b) Uses of Funds by Project Activity, (c) Special Account/Local Bank Account Statements, (d) Physical progress report, and (e) Procurement report. These financial reports will be submitted to IDA within 45 days of the end of each quarter. The first quarterly IFR will be submitted after the end of the first full quarter following the initial disbursement. Formats of the annual financial statements and the IFRs are incorporated in the Financial Management Manual. The accounting software currently used by the PIU/PCUs will need to be upgraded to have the capacity to prepare IFRs incorporating all components, sub-components and expenditure categories, as may be appropriate. 30. Financial Audits. There will be annual audits of the project financial statements, covering all aspects of the project, including specific requirements for the Poultry Culling Compensation Scheme. The audits will be performed by independent auditors acceptable to the Bank, and in accordance with International Standards on Auditing (ISA), and the Bank's guidelines on auditing as stated in the guidelines: Annual Financial Reporting and Auditing for World Bank-financed Activities (June 2003). The auditors' TOR will be prepared by the PIU/PCUs and cleared by the Bank before the engagement of the auditor. They will include both the audit of financial transactions, an assessment of the internal control, funds flow mechanisms, and the reasonableness of the accounting, reporting and internal controls in respect of the Poultry Culling Compensation Scheme, The annual audit reports will consist of a single opinion on the financial statements of the project, incorporating the project accounts, including Designated Account Reconciliation, and SR Withdrawal Schedule; as well as a Management Letter. The audit reports will be submitted to the Bank not later than six months after the end of the fiscal year to which they relate. The cost of the audits will be eligible for financing from the Credit. The AIPP will provide the auditor with full access to project-related documents and records, including the compensation claims database, and with the information required for the purpose of the audit. Sample TORS for project audit will be included in the Financial Manual The PIU/PCU will carry out, or will arrange to have carried out, as part of the annual audit when compensation claims have been paid out, additional checks to ensure that the eligible poultry owners, and only they, are paid and are paid in full. This will include, but not be limited to, operational reviews to confirm the validity and legitimacy of the compensation payments made. The reviewers would be required to verify compensation claims and payments made in randomly selected samples of villages. 69

70 This verification will include: checking against the database maintained by the Poultry Culling Compensation Scheme, collecting and verifying information available and obtained at the village level, checking with individual poultry owners, checking forms and reports, etc. Any significant weaknesses identified will be promptly rectified in close consultation with the Bank. In addition, the external independent auditors would be asked to provide an opinion on the reasonableness of the accounting, reporting and internal controls in respect of the operations of the Poultry Culling Compensation Scheme, and the audit TORS (acceptable to IDA) would include these specific requirements. All ineligible claims would be refunded to the Poultry Culling Compensation Scheme and to IDA. 32. Supervision Plan. During project implementation, the Bank will supervise the project s financial management arrangements in two main ways: (i) review the project s quarterly interim un-audited financial reports as well as the project s annual audited financial statements and auditor s management letter; and (ii) during the Bank s supervision missions, review the project s financial management and disbursement arrangements (including a review of a sample of Statement of Expenditures and movements on the Designated Account) to ensure compliance with the Bank s minimum requirements. As required, a Bank-accredited Financial Management Specialist will assist in the supervision process. 70

71 Appendix 6: Environmental and Social Issues BOSNIA AND HERZEGOVINA: Avian Influenza Preparedness Project 1. The Bosnia and Herzegovina Avian Influenza Preparedness Project has been assigned World Bank environmental category B, since it involves moderate environmental impacts that can be mitigated during implementation of the project. Although project activities supporting AI prevention, preparedness and planning, response and containment are not expected to generate significant adverse environmental effects, they do present a moderate environmental risk from inadvertent spread of the AI virus and waste management. Overall the AI prevention and response-focused activities are expected to have a positive environmental impact, as the investments in facilities, equipment, and training for veterinary and public health service staff and laboratories will improve the effectiveness and safety over existing avian influenza handling and testing procedures by meeting international standards established by OIE and WHO. This would be reinforced by the mainstreaming of environmental safeguards into protocols and procedures for the culling and disposal of animals during AI outbreaks. 2. This environmental management plan (EMP) will address the moderate adverse environmental effects of the Animal and Human Health Components. For the Animal component, the EMP will address zoonotic disease containment and waste management as pertain to disposal of special waste, emissions and materials at laboratories, and training for veterinary services workers, to include procedures for safe handling of AI materials, safe culling of infected and at-risk poultry and disposal of carcasses. For the Human Health component, the EMP will focus on equipment, refurbishing and training for laboratories and medical facilities to include key environmental issues in zoonotic disease containment and waste management. The EMP will provide mitigation plans and monitoring plans to ensure appropriate attention to environmental issues, and tracking progress or problems in their management. A delay in the completion and disclosure of the Environmental Assessment from the normal appraisal stage has been approved, instead making this a condition of disbursement for Component 2 - Animal Health, and Component 3 - Human Health. 3. The main areas of environmental risk from project activities are the inadvertent spread of the AI virus during culling, transport and disposal of carcasses, animal waste, litter, and used protective gear; contamination of surface and groundwater from use of disinfectants; and laboratory bio-safety and waste management. In addition, minor environmental disturbances may occur during renovation of laboratories. 4. Strategic Communications: No environmental issues, but an important component for design and delivery of communications tools for good hygiene, safe culling and disposal of animal carcasses, animal waste management. 5. Animal Health: Equipment, refurbishing and training for regional laboratories and border inspection to include key environmental issues in zoonotic disease containment and waste management as pertain to special waste, emissions and materials; training for veterinary services and poultry sector workers to include procedures for safe handling of AI materials; safe culling of infected and at-risk poultry and disposal of carcasses. Formal compensation for culled animals should target owners/primary beneficiaries (e.g., specifically including women where they are the primary backyard producers). 6. Human Health: Equipment, upgrading, refurbishing and training for national reference and regional diagnostic laboratories to include key environmental issues in zoonotic disease containment and waste management 71

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73 Appendix 7: Organization of the Veterinary Services and the Health Care System in BIH A. Veterinary Care Veterinary Services BOSNIA AND HERZEGOVINA: Avian Influenza Preparedness Project 1. The veterinary service of BiH, as it currently exists (see Figure, page 64), is the combination of a recently created system (incorporated in the country s administrative structure as of 1995) and remnants of the former (Yugoslavian) legislative and institutional framework. Veterinary services at the state level in BiH fall primarily under the responsibility of the senior veterinary agency in the country, the State Veterinary Office (SVO). SVO operates under the Ministry O f Foreign Trade and Economic Relations (MoFTER) of the national government (Council of Ministers (COM) of B&H). 2. The state of BiH consists of two administrative units called entities, the Republika Srpska (RS) and the Federation of BiH (FBiH). Each entity has its own Minister of agriculture, forestry and water management (MAFW), under which the entity veterinary service operates. Both veterinary services are directly subordinated to the SVO BiH. 3. FBiH is composed of ten cantons, each with its own government, Ministry of agriculture and veterinary service. Cantonal veterinary services are subordinated to the MAFW of the FBiH. The smallest administrative units are municipalities. At that operative level, veterinary service is established through municipality veterinary practices. 4. The ongoing evolution and development of the BiH veterinary service is primarily motivated by increased awareness of the significance of animal health and production issues for public heath and food safety. It is also driven by concern for economic development and food security. Further, the country s overall developmental direction is toward full accession to the EU, which will require updating of veterinary services and harmonization of related legislation with current EU requirements. 5. Current issues related to the global spread of HPAI have emphasized the need for strengthening capacities and coordination within the veterinary service. Since institutional arrangements within this sector are complicated and heterogeneous, placement of the managing authority for veterinary services (State Veterinary Office) at the national level (within MoFTER) clearly provides benefits towards a coordinated national response to AI threats. 6. At this point, the H5N1 strain has only been confirmed in two wild birds in BiH. The resources that were required to address this discovery were, on an economic and human resources scale, relatively small, and the country s veterinary services were able to provide a response that was adequate to prevent further spread. However, veterinary services in BiH are inadequately equipped and experienced to cope with a large scale HPAI outbreak. This is evident across the entire range of critical capacities, including: surveillance and diagnosis, implementation of response and control measures and applied research capability necessary to understand the etiology of the disease. 7. Further strengthening and capacity building will require assistance to the BiH SVO, as the national competent authority, in developing animal health legislation related to avian influenza (further addressed in separate section). This includes expanding human resources, developing competency, and providing necessary equipment to support SVO staff. 73

74 8. To ensure efficient implementation of plans and programs developed and adopted at a national level, regional (entity) and local (cantons/ municipalities) veterinary services must be strengthened as well. This will require assistance in organizing training (possibly through SVO B&H) of regional and local staff and assistance in equipping them with PPE and other required equipment. Figure: Hierarchy of the Veterinary Service of Bosnia-Herzegovina B. Health Care System 9. Organization, financing and provision of health care in BiH are the responsibilities of the two Entities, and the ten autonomous Cantons in FBIH. Therefore, the health care system in BiH consists of 13 heath sub-systems to cover approximately 3.9 million people. At the BiH level, the Ministry of Civil Affairs (MCA) is the only State body with responsibilities for coordinating the health sector. The legal basis for MCA is provided by the BiH Law on Ministries (March 2003) authorizing MCA to represent BiH at international level, to establish the basic principles for co-ordination and to co-ordinate plans of entities and other governmental bodies. Federation of Bosnia and Herzegovina (FBiH) 10. FBiH occupies approximately 51% of the total territory of BiH and has a population of approximately 2.3 million. Administratively, it is divided into 10 cantons, each having its own Government and Assembly. The cantons are sub-divided into 79 municipalities. 74