Template for Project Concept Note (Pcn) s1

Document of The World Bank

Report No: 66406-CO

RESTRUCTURING PAPER

PROPOSED PROJECT RESTRUCTURING OF

ADDITIONAL LOAN FOR THE PEACE AND DEVELOPMENT PROJECT (Loan 7781-CO)

TO THE

REPUBLIC OF COLOMBIA

January 24, 2012

Sustainable Development Colombia and Mexico Country Management Unit Latin America and the Caribbean Region

Restructuring Restructuring Type: Last modified on date : 11/21/2011 2

1. Basic Information Project ID & Name P101277 Additional Loan for Peace and Development Project Country Colombia Task Team Leader Natalia Gomez Sector Manager/Director Maninder S. Gill Country Director Alexandra Ortiz Original Board Approval Date 06/10/2004 Original Closing Date: 03/15/2008 Current Closing Date 09/15/2012 Proposed Closing Date [if applicable] EA Category B-Partial Assessment Revised EA Category EA Completion Date 10/22/2007 Revised EA Completion Date

2. Revised Financing Plan (US$m) Source Original Revised BORR 7.067 7.067 IBRD 7.812 7.812 Total 14.879 14.879

3. Borrower Organization Department Location Republic of Colombia Colombia

4. Implementing Agency Organization Department Location Departamento Administrativo para Colombia la Prosperidad Social

5. Disbursement Estimates (US$m) Actual amount disbursed as of 01/16/2012 5.684 Fiscal Year Annual Cumulative 2010 1.60 1.60 2011 2.52 4.12 2012 1.56 5.68 2013 0.00 0.00 Total 5.68

2 6. Policy Exceptions and Safeguard Policies Does the restructured project require any exceptions to Bank policies? N

Does the restructured projects trigger any new safeguard policies? If yes, please select N from the checklist below and update ISDS accordingly before submitting the package.

7a. Project Development Objectives/Outcomes Original/Current Project Development Objectives/Outcomes

This additional financing remains with the same objectives as the original project: to assist vulnerable, low- income and displaced populations in rural and urban communities in the conflict affected region in order to reduce the risk of their exposure to conflict and mitigate the negative impact of possible derived effects.

7b. Revised Project Development Objectives/Outcomes [if applicable]

COLOMBIA – PEACE AND DEVELOPMENT PROJECT APL I - ADDITIONAL FINANCING (P051306)

Loan 7781-CO Restructuring Paper

1. Proceeds for Colombia, PEACE AND DEVELOPMENT PROJECT (APL I - ADDITIONAL FINANCING), Loan No.7781-CO, P051306, will be reallocated as follow:

Category of Expenditure Allocation % of Financing Current Revised

(1) Goods, Works and Consultants’ 4,427,000 4,253,305 100 Services for Investment Subprojects under Part A of the Project

(2) Goods, Consultant Services and 1,302,000 1,100,151 100 Training under Part B of the Project

(3) Goods, Consultants’ Services, Non-Consultant Services, Training and Operating Costs:

(a) under Part C.1 of the Project 814,000 362,169 100

(b) under Part C.2 of the Project 1,269,000 2,096,375 100

TOTAL 7,812,000 7,812,000 100

4 2. The loan was approved on September 10, 2009, signed on November 6, 2009 and declared effective on February 26, 2010. The original Project (APL I) closed satisfactorily on April 15, 2010 achieving its PDO. The Additional Financing Project (AF) had a slow start in 2010 due to: (i) lack of leadership in DPS (formerly named Acción Social) in regards with this operation during the transition period (2010); (ii) several changes in the Project Coordination Team and the reduction of personnel in charge of the Project in DPS; and (iii) weak administrative performance to guarantee timely flow of funds from the national level to the territories.

3. Fortunately, DPS and Partners Organizations at the territorial level have been able to accelerate Project implementation. Currently, the Project’s goals have reached up to 66% and implementation has recovered its required pace for the Project to achieve all its expected outcomes and results by September 15, 2012 (the Project’s closing date). There are no outstanding audit reports. The outcomes and results recorded in the mid-term review on September 2011, show positive expectations about the future implementation of the Project that have materialized: (i) future budget allocations (for 2012) that were approved, allowing the signature of Subsidiary Agreements with Partner Organizations for the remaining of the Project's implementation period. This will facilitate an uninterrupted flow of funds from the national level to the territories until the end of the Project; (ii) a new Project Coordinator and additional staff to strengthen the Project’s Coordination Team in DPS were appointed; (iii) Partner Organizations’ capacity to overcome the administrative difficulties encountered at the national level, was once more demonstrated; and (iv) Macizo-Colombiano-Alto Patía Region’s activities finally started implementation, using alternative institutional arrangements (direct contracts between DPS and beneficiary organizations to implement subprojects).

4. The current Project’s Overall Implementation Rating is “Moderate Satisfactory”.

5. As requested by the Borrower, the proposed reallocation is necessary to allow the financing of additional costs under Part C.2 of the Project, corresponding to the provision of support for Project management, monitoring and evaluation at the local level by Partner Organizations, during the final stage of the Project. To cover the additional costs, the proposed reallocation provides for:

(i) The reallocation of USD$173,695 from Category (1) to Category (3)(b).

(ii) The reallocation of USD$201,849 from Category (2) to Category (3)(b).

Both Categories (1) and (2) will require less financing to cover eligible expenditures under Parts A and B of the Project in order to achieve the originally projected outcomes and results.

(iii) The reallocation of USD$451,831 from Category (3)(a) to Category (3)(b). DPS will assume the costs of its own incremental staff with national counterpart funds.

6. In brief, Category (3)(b) will be increased in a total amount of USD$827,375 (18.03%).