Document ofThe World Bank

Report No. 18409-RO

PROJECT APPRAISAL DOCUMENT

ONA

PROPOSED LEARNING AND INNOVATION LOAN (LIL)

IN THE AMOUNT OF US$5.0 MILLION

TO

ROMANIA

FORA

CULTURAL HERITAGE PROJECT

November 18, 1998

Environmentally and Socially Sustainable Development DepartmentRomania Country UnitEurope and Central Asia Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective October 21, 1998)

Currency Unit = Lei1 Leu = US$ .000105US$ 1 = 9,560.0 Lei

BORROWER'S FISCAL YEAR

January 1-December 31, 1998

ABBREVIATIONS AND ACRONYMS

CAS Country Assistance StrategyECA Europe and Central AsiaGoR Government of RomaniaIBRD International Bank for Reconstruction and DevelopmentLIL Learning and Innovation LoanMIS Management Information SystemMoF Ministry of FinancePIU Project Implementation UnitSOE Statement of ExpendituresWMF World Monuments Fund

Vice President: Johannes LinnCountry Director: Andrew N. Vorkink

Sector Director: Kevin CleaverTeam Leader: Thomas Blinkhorn

RomaniaCultural Heritage Project

(Learning and Innovation Loan)

CONTENTS

A. Project Development Objective

1. Project development objective and key performance indicators

B. Strategic Context

1. Sector-related CAS goal supported by the project2. Main sector issues and Government strategy3. Sector issues to be addressed by the project and strategic choices

C. Project Description Summary

1. Project components2. Key policy and institutional reforms supported by the project3. Benefits and target population4. Institutional and implementation arrangements

D. Project Rationale

1. Project alternatives considered and reasons for rejection2. Major related projects financed by the Bank and/or other development agencies3. Lessons learned and reflected in proposed project design4. Indications of borrower commitment and ownership5. Value added of Bank support in this project

E. Summary Project Analyses

1. Economic2. Financial3. Technical4. Institutional5. Social6. Environmental assessment7. Participatory approach

F. Sustainability and Risks

1. Sustainability2. Critical risks3. Possible controversial aspects

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G. Main Loan Conditions

1. Effectiveness conditions2. Other

H. Readiness for Implementation

I. Compliance with Bank Policies

Annexes

Annex 1. Project Design SummaryAnnex 2. Detailed Project DescriptionAnnex 3. Estimated Project CostsAnnex 4. Financial SummaryAnnex 5. Procurement and Disbursement Arrangements

Table A. Project Costs by Procurement ArrangementsTable Al. Consultant Selection ArrangementsTable B. Thresholds for Procurement Methods and Prior ReviewTable C. Allocation of Loan ProceedsTable D. Procurement ScheduleTable E. Procurement InformationAttachment Financial Management System

Annex 6. Project Processing Budget and ScheduleAnnex 7 Environmental Data SheetAnnex 8. Statement of Loans and CreditsAnnex 9. Romania at a Glance

Map Romania Cultural Heritage LIL (IBRD 29748)

RomaniaCultural Heritage Project

Project Appraisal Document

Europe and Central Asia Region

Date: November 18, 1998 Team Leader: Thomas Blinkhom, ECSSDCountry Director: Andrew N. Vorkink, ECCO5 Sector Director: Kevin Cleaver, ECSSDProject ID: RO-PE-58284 Sector: Environmentally and Program Objective Category: Environmentally

Socially Sustainable Sustainable Development(EN); PVDevelopment

Lending Instrument: Learning and Innovation Loan Program of Targeted Intervention: [ x] Yes [ ] No

Project Financing Data [x] Loan [ Credit [I Guarantee [ Other (Specifyl

For Loans/Credits/Others:

Amount (US$m): 5.0Proposed terms: [] Multicurrency [x] Single currency, US$

Grace period (years): 5 [] Standard Variable [ Fixed [x] LIBOR-basedYears to maturity: 20Commitment fee: 0.75% on undisbursed loan balance, less any waiver. A front end fee of 1% of the Loan amount

will also be levied, payable on or promptly after the effective date.

Financing plan (US$m):Local Foreign Total

Government 1.3 - 1.3'World Monuments Fund (United States) 0.1 0.5 0.6IBRD 1.0 4.0 5.0

Total 2.4 4.5 6.9

Borrower: RomaniaGuarantor:Responsible agency(ies): Ministry of Culture (MoC)

Estimated disbursements (Bank FY/US$M): 1999 2000 2001 2002Annual 1.1 2.0 1.0 0.9

Cumulative 1.1 3.1 4.1 5.0

Project implementation period: four (4) yearsExpected effectiveness date: January, 1999Expected closing date: December 31, 2002

The Government contribution includes estimated taxes.

OSD PAD Form: November 18, 1998

A: Project Development Objective

1. Project development objective and key performance indicators (see Annex 1):

The project development objective is to help Romania develop an improved national cultural heritagestrategy that will, among other goals, preserve priority cultural heritage sites/assets by testing differentpartnership approaches (public-private; community based, national-international) with a view toimproving overall management in a more sustainable, cost-effective manner.

Performance Indicators:

1. Completed long-term national partnership strategy for cultural heritage management, includingpriority action plan and national inventory.2. Completion of high quality restoration works.3. Ministry of Culture strengthened in project management capability, strategy formulation,private sector relationships.4. Effective partnerships at targeted restoration sites including broad-based stakeholderrepresentation.5. Local residents in Saxon villages actively collaborating on pilot tourism, crafts development,small scale agriculture and other community-based activities.6. New site fee mechanisms and other revenue-generation measures in place.

B: Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project (see Annex 1):

CAS document number: 16559-RO, May, 1997 Date of latest CAS discussion: June 3, 1997

The proposed project supports the CAS objective of helping to rationalize the role of the state bystrengthening public institutions, improving environmental management, fostering partners in the privatesector, and building local capacity through community mobilization and competitive tendering processes.

2. Main sector issues and Government strategy:

Much of Romania's cultural heritage is in serious disrepair due to lack of public financing and years ofneglect. The constrained current fiscal situation and competing demands for scarce public resourcescontinues to limit financial support for cultural heritage protection and management. Thus, difficultchoices need to be made about national priorities in the near term. Government has decided that thehistoric central role of the state in cultural heritage needs to be supported with new partnership modelswith the private sector, international donors, organized community groups, and civil society at large. Astrategy to achieve this objective is evolving.

One major sectoral issue is the deterioration and/or loss of a large number of historic sites, architecture,and culturally distinctive assets - and the lack of financial resources to renovate them or prevent furtherdeterioration. A closely related issue concerns the lack of local capacity to manage, in a more costeffective, sustainable manner, the country's abundant cultural legacy at a time of transition from statecontrol. The Ministry of Culture has initiated an examination of the state role along with a search forinternational assistance and private sector partnerships in order to build support and financing for thenation's patrimony. The current Government goal is to seek World Bank financing to catalyze a pilot loanin the sector, using it to help develop an improved long-termn national cultural heritage partnershipstrategy and mobilize or leverage additional financing from other international donors such as the WorldMonuments Fund, UNESCO, Council of Europe, bilateral donors and others.

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3. Sector issues to be addressed by the project and strategic choices: The proposed LIL would financeurgent rehabilitation and restoration priorities, as identified by Government. It would also providesupport for improved management of cultural heritage preservation by testing new public-privatepartnership approaches and by building capacity at the national and local levels. Finally, the LIL wouldassist in the formulation of a long-term national cultural heritage partnership strategy that could includeassistance for implementation of national legislative reform; assistance for upgrading an inventory ofnational cultural heritage, as well as a program of public information to help raise national andinternational awareness and support.

C: Project Description Summary -- see Annex 2.

1. The project includes four components:

a) Support for the renovation and restoration of the internationally acclaimed Brancusi SculpturalEnsemble in the town of Tirgu Jiu, northwest of Bucharest. The ensemble is one of Romania's mostrevered artistic complexes, designed by the internationally acclaimed Romanian sculptor ConstantinBrancusi, who was born near Tirgu Jiu. The investment involves highly specialized restoration activities,including renovation of the Endless Column, Gate of the Kiss, Alley of the Stools, and Table of Silence.It will also entail site management planning, including landscaping and tourism development. Thiscomponent has been designated by Government as Romania's Millennium project.

b) Assistance to help (i) complete restoration of the 18 th century Brancovan Palace at Mogosoaia and (ii)finance emergency repairs and prepare a site development and management plan and community supportprogram for a second Brancovan palace at Potlogi. Both palaces are a relatively short distance fromBucharest and are envisioned as part of a future historic and cultural tourism itinerary. Restoration workat Mogosoania will involve installation of a fire alarm system at the palace (almost completely restored),renovation of the entrance hall, and completion of a nearby Cultural Center and small hotel, landscapeimprovements, and green house renovation.

c) Support for a program to test pilot efforts in selected historic Saxon Villages in the centralTransylvania regio to determine options for sustaining cultural preservation and promoting social andinter-cultural cohesion through new income-generating opportunities arising from tourism, infrastructureimprovements, craft development and related activities. Four villages are expected to be involved, basedon criteria which include motivation among ethnic groups to work together. The program will include asocial assessment and community impact study as well as financing for a community developmentprogram to support (i) priority repairs of cultural assets or other important activities defined by thecommunity and, (ii) tourism, historic exhibits and crafts development on a pilot basis.

d) Assistance for Institutional Strengthening involving (i) capacity building in the new projectmanagement unit in the Ministry of Culture, including a monitoring and evaluation program and training.(ii) formulation of an improved, long-term national cultural heritage partnership strategy that will includesupport for the upgrading and implementation of the national cultural heritage inventory and involvepossible legislative reform including zoning standards, (iii) Feasibility studies to determine theappropriate future use of the partially completed new building for theNational Library in Bucharest; and(iv) public information and awareness-raising campaign to help build stronger civic understanding of, andsupport for, the importance of cultural heritage in the nation's future development.

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Component Category Cost Incl. % of Bank- % ofContingencies Total financing Bank-

________________S__M(US$M) (US$M) financing

INVESTMENT:

1. Brancusi Sculptural Ensemble Physical/ 3.7 54 2.6 52at Tirgu Jiu Institutional

Building2. Brancovan Palaces Physical/ 1.8 26 1.5 30

Mogosoaia InstitutionalPotlogi Building

3. Saxon Villages Heritage Physical/ 0.4 6 0.3 6Development - Transylvania Institutional

Building

4. Institution-Strengthening 1.0. 14 0.6 12

* Support to Project Institutional 0.6Management Unit (Ministry Building/of Culture) Policy

- National strategy for cultural 0.2heritage, including upgradingof the National Inventory

* Public awareness program; 0.15training; auditing

* National Library Study 0.05Total 6.9 100 5.0 100

2. Key policy and institutional reforms supported by the project:

The project will support the strengthening and reform of institutions (national and local) involved incultural heritage and tourism through training, capacity-building, decentralization and localempowerment. The project will help redefine the role of national and local governments in the culturalheritage sector and also support private sector development, a national strategic plan, as well as a revisedlegal framework in support of cultural heritage protection.

3. Benefits and target population:

The project will benefit key beneficiary institutions and/or users of cultural heritage assets as follows:

a) Brancusi Sculptural Ensemble: People in surrounding region, local residents of Tirgu Jiu; localadministrations; tourists; service providers; other associated businesses. Given the historic significance ofthe Brancusi monument for Romania, its restoration will also impart a strong sense of national pride andidentity-important, if not quantifiable, benefits for a country enduring a difficult economic transition.

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b) Brancovam Palaces: Visitors/tourists, conference participants; artists; new employment opportunitiesfor local people involved in renovation work and future tourism at Mogosoaia and Potlogi; localauthorities; infrastructure and service business providers.

c) Saxon Villages: local residents, including poor and ethnic groups, in four Saxon villages; local mayorsand governrent; staff and visitors/tourists of cultural facilities benefiting from emergency repair works;farming; artisans; businesses associated with tourism, infrastructure, services, craft development, farmingand preservation.

d) Institutional Strengthening: Ministry of Culture; regional and local community groups and institutionsinvolved in project; national population through development of a new national cultural strategy; thiswould be facilitated through a public awareness program; foreign donors, partners and tourists.

4. Institutional and implementation arrangements:

The project will be implemented over a period of four years (1999-2002).

Institutional Fraimework. An advisory committee chaired by the Minister of Culture and includingrepresentatives of Ministries of Finance, Tourism, Forests, Water and Environment, Research andTechnology!, the World Monuments Fund (co-financier), the National Commission on HistoricMonuments., National Library, and Brancusi International Foundation, other NGO's and local authoritieswill provide policy advice and oversight. A small Project Implementation Unit (PIU) has recently beenestablished in the Ministry of Culture. Competitive recruitment was done for the director and key staff(financial manager, procurement expert, monitoring and evaluation specialist) in a manner foundsatisfactory to the Bank. During the early stages of the project, several local and foreign advisors will berequired in financial management, operations assistance, monitoring and evaluation, andtechnical/procurement. During the first year of the project, foreign technical advisors may be needed on aperiodic basis in the skill-areas of project management, procurement, monitoring and architectural design;these advisors to the PIU will be supported, wherever possible, by trust funds or other grants (e.g. WMF).

For each of the project components (e.g. Brancusi Monument; Brancovan Palaces; Saxon Villages)experienced coordinators, or point people, will be designated to oversee feasibility studies planning andexecution oi works. The World Monuments Fund has agreed to finance, on a grant basis, the services of(a) an experienced intemnational architect (Romanian American) who will serve effectively as TechnicalAdviser to the manager of the PIU for all aspects of the project, particularly the Brancusi and Brancovancomponents, which require specialized expertise, as well as in institutional strengthening; (b) otherexperts to review restoration plans associated with the Brancusi ensemble in Tirgu Jiu.

Procurement and Disbursement. Detailed procurement and disbursement arrangements were agreedduring appraisal and negotiations with the PIU/Government and are reflected in the final projectdocuments as well as in the Implementation Manual. Annex 5 contains a summary of the procurementarrangemenl:s covering goods, civil works, and services/technical assistance, as well as disbursements. AGeneral Procurement Notice for the Brancusi component has already been reviewed, cleared by the Bankand Government, and advertised. To facilitate disbursements against eligible expenditures, theGovernment: will establish in a commercial bank a Special Account (SA) to be operated by the PIU underterms and conditions satisfactory to the Bank. The Bank would, upon request, make a maximumauthorized allocation of US$500,000. Initially the allocation would be limited to US$200,000 untildisbursements have reached an aggregate amount of US$1,000,000, at which time the full authorizedallocation could be claimed. Applications for the replenishment of the Special Account would besubmitted quarterly or when 60 percent of the initial deposit has been utilized, whichever occurs earlier.

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The replenishment application would be supported by the necessary documentation, the Special Accountbank statement, and a reconciliation of this bank statement. The SA would be audited annually byindependent auditors acceptable to the Bank. Retroactive financing of up to US$150,000 will beprovided for eligible expenditures on civil works, goods, technical assistance and training required for theinitiation of project activities from September 1, 1998 until project effectiveness. In addition Govemmenthas agreed, upon ratification of the loan agreement, to either i) deposit counterpart funding of up toUS$100,000 (1 billion Lei) for the first year of the project in a Bank account accessible to the PIU or ii)ensure that a separate line item is included in the annual budget of the Ministry of Culture providingadequate counterpart funds for the project.

Accounting, Financial Report, Auditing Arrangements. The PIU will establish and maintain a projectfinancial management system in a format that is acceptable to the Bank. This will include, among otherthings, an appropriate accounting manual, internal controls and audit procedures, and a codified chart ofaccounts. Details were agreed during appraisal and will be reflected in a comprehensive action plan aspart of the Project Implementation Manual. Formats (twelve) for Quarterly Financial Reporting wereagreed with the Government during appraisal and will also be included in the Implementation Manual.The project annual financial statements will be audited by independent auditors acceptable to the Bankeach fiscal year in accordance with Bank guidelines. Copies of audit reports will be submitted to the Bankwithin three months of the close of the country's fiscal year. The cost of the independent auditor will befinanced from the loan under the Consultant Services category.

The financial management system was appraised by two consultants -- an accredited Bank FinancialManagement Specialist (FMS) and Financial Management Officer (FMO). Based on reports submitted byconsultants and subsequent discussion with the FMS and FMO, it is recommended that the loan bedisbursed initially using traditional method of disbursement. The PIU, however, will start submittingquarterly Project Management Report (PMR) on April 30, 1999 for the period ended March 31, 1999. Adescription of improvements to the financial management system, including the training programrequirements, is provided in Annex 5 - Financial Management System.

Monitoring and Evaluation Arrangements. The PIU will be responsible for monitoring progressagainst specific performance and impact indicators. These will include benchmarks consistent with thosecontained in Section A. 1 above and in Annex I and covering physical works, goods and services,institutional arrangements, procurement and disbursement, financial management, communityinvolvement, private sector participation and sustainability. Specialists in Management InformationSystems (MIS) have been recruited to help the PIU design and set up the monitoring/evaluation system.Special implementation teams at each project site will provide the PIU with quarterly reports for reviewcovering implementation progress in all key areas. The format for these reports will be spelled out in theProject Implementation Manual. A detailed mid-term review in the second year of the project, and nolater than December 31, 2000, will examine these and other project activities with a view to proposingimprovements in the light of experience.

A Project Implementation Manual acceptable to the Bank and providing details of all aspects of projectexecution, has been finalized by the PIU.

D: Project Rationale

1. Project alternatives considered and reasons for rejection:

Grant Assistance for Institutional Strengthening. A special grant from the Bank's InstitutionalDevelopment Fund (IDF) facility was considered to help strengthen cultural institutions at the nationaland local levels as a prelude to a future lending investment assistance project. In fact, Government

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officially requested a grant of about $350,000 as a companion to the proposed LIL for this purpose.However, insufficient funds in the IDF (since amalgamated into a Development Grant Facility [DGF])made it impossible to consider the request. In light of these developments, assistance for institutionalstrengthening, inclluding development of a national strategy, has been included in the LIL at governmentrequest. The World Monuments Fund is providing some grant support for institutional strengthening andadditional grant funding will continue to be mobilized from other donors for this purpose.

Assistance through an ongoing or proposed Bank investment project. This approach was alsoconsidered but rejected by Government because other investment operations have very differentobjectives and institutional linkages that are not amenable to cultural heritage conservation. However, oneother investment operation -- the Social Development Fund, currently under advanced preparation --could conceivably provide limited assistance in selected areas --i.e. local infrastructure improvement suchas road repairs, provision of basic social and economic infrastructure -- that might also benefit thecultural heritage sites targeted for assistance in the proposed LIL.

Learning and Innovation Loan (LIL). This instrument was specifically requested by Government andis supported here because it offers flexibility in testing and piloting new public/private partnerships in themanagement of priority cultural heritage assets. The Government, in its request to the Bank, alsoemphasized the need for a relatively rapid response to its needs in the cultural heritage sector and the LILis designed to provide a prompt response. Thus, it helps strengthen the overall dialogue with governmentas well as Bank-client relations and serves as a convenient instrument to help catalyze support from otherdonors. The World Monuments Fund, for example, is a co-financing partner (with about $100,000 of its$600,000 contribution from a corporate grant from American Express Company) for the first time in aBank lending operation. Other donors are also interested in future collaboration and a specific strategy formobilization of such support has been discussed with Government during appraisal. In addition, theperformance monitoring benchmarks are designed in a manner to indicate whether the LIL has beensuccessful enough to help inform decisions regarding future Bank strategy in the sector; that is, whetherfollow-on assistance for cultural heritage (either stand-alone operations or components of projects inrelated sectors) may be justified as part of the country assistance program or whether a specific exitstrategy should be considered.

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2. Major related projects financed by the Bank, and/or other development agencies (completed, ongoingand planned):

Sector issue Project Latest Supervision (Form 590)Ratings

(Bank-financed projects only)Implementation DevelopmentProgress (IP) Objective

(DO)Bank-financed

Social fund and innovative social Social Development Underservice delivery Fund (RO-PE-49200) preparation

Institutional Development and Child Child Welfare Reform S SWelfare Project (RO-PE-55495)

Rehabilitation of basic educational School Rehabilitation S Sinfrastructure (RO-PE-446 14)

Other development agencies

World Monuments Fund Brancusi Monumentrestoration; institutionalstrengthening.

German Government Saxon village study.

Saxon Foundation Restoration of HarmanEvangelical Church.

Messerschmidt Foundation (Germany) One Transylvania townrestoration (Sighisoara).

UNESCO World Heritagedesignation;Conferences.

Mihai Emanescu Trust Saxon village studies.

Luxemborg Government Rural tourismdevelopment.

IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)

3. Lessons learned and reflected in the project design:

Since cultural heritage is a recent initiative in the Bank and the LIL is a new lending instrument, it is stillearly for lessons from similar projects in this sector. However, lessons from preparation and earlyimplementation of the Georgia Cultural Heritage LIL are instructive. These include: (i) the value ofintensive upstream training of PIU staff in specific areas such as procurement, disbursement, financialmanagement, monitoring and evaluation, and general project management; and (ii) implementation of

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project components/subcomponents should be phased so as not to exceed the PIU capacity in the firstyear. In general, lessons from projects in the ECA region have shown that (i) Project ImplementationUnits should be established as early as possible; (ii) a flexible implementation strategy and identificationand participation of the key players are essential for success; (iii) small, focused simple projects have abetter chance for success; (iv) community involvement and stakeholder participation build ownership andcapacity foir longer-term growth and success; and (v) NGO involvement is key to private sectordevelopment.

4. Indications of Borrower Commitment and Ownership:

The Romanian Government -- Ministry of Culture supported by the Ministry of Finance and PrimeMinister's office -- requested a LIL for the Cultural Heritage project. A special Project ImplementationUnit has been established in the Ministry of Culture and an experienced individual was officially namedas Director. The Government is actively seeking assistance from other donors and intends to intensifyefforts to develop an improved, long-term national strategy for cultural heritage preservation that willemphasize, among other objectives, new public-private-local community partnerships. This same spirit ofenthusiasm is evident at the regional and local government levels, particularly at the proposed projectsites.

S. Value Added of Bank support in this project:

Other organizations such as UNESCO, World Monuments Fund, Getty Trust, ICOMOS, Council ofEurope have provided help for cultural heritage preservation in Romania. With some exceptions (i.e.World Monuments Fund, Getty) this money is invariably provided for technical assistance, and notinvestment rnoney in actual restoration. The Bank is the only major donor that currently offers investmentas a part of a larger sectoral strategy, including efforts at social and economic development; this approachis needed in transition economies such as Romania's where serious deterioration of cultural assets isevident and growing; delays in conservation will either increase future restoration costs or causeirretrievable destruction. Bank involvement will also help catalyze assistance from other donors andstrengthen the kind of partnership arrangements internationally that the Government seeks as part of itslong term strategy in the sector.

E: Summsary Project Analysis

1. Economic:

The project is expected to generate the following benefits: (a) More viable options for securing futurefinancial and institutional sustainability in the management of cultural heritage assets through the pilotingof different fee mechanisms and public-private management configurations, particularly at the Brancusimonument site and at the Brancovan palaces; (b) stronger community involvement and support forcultural heritage preservation as an important social and economic asset; (c) more cost effectiveapproaches for the preservation of cultural assets; (d) an updated, longer term strategy for the restoration,revival and preservation of priority cultural heritage assets (monuments; natural heritage sites; non-builtor living culture such as dance, music, art) determined through a process of public consultation andwithin a modernized legal framework that clarifies public/private roles. Such a strategy will, among otherthings, help inspire new culture-based tourism development, infrastructure and services opportunities andprovide a cllearer focus for future Government budget discussions involving the nation's patrimony.Efforts will be made to engage a local economic research institute in the development of appropriatemethodology -- i.e. contingent valuation -- concerning economic analysis at one of the project sites,possibly Brancusi.

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2. Financial:

Because of the LIL's emphasis on testing and experimentation, the monetary and non-monetary benefitshave not been analyzed comprehensively. The project will test several opportunities for initiating orincreasing revenues at several project sites -- i.e. the proposed new cultural center at the Brancusimonument in Tirgu Jiu; conference and guest fees at the Brancovan palace facility (Mogosoaia); bed andbreakfasts or folk hotels in the Saxon village region. Preliminary socio-economic surveys indicate thatmany people living in or near these sites are poor with limited opportunity for gainful employment duringthe difficult economic transition. They will benefit to some extent from project investments but cannot beexpected to repay in financial terms. Nonetheless, efforts at partial cost recovery will be tested throughdifferent fees and community contributions in labor and in-kind.

a. Fiscal impact: By helping to improve the management of cultural assets in a more cost-effective manner through new public-private partnerships, the project will have a potentiallysignificant impact in (a) reducing public budgetary outlays over time and (b) stimulating tourismin selected areas such as the Southern Transylvania region where the historic Saxon villages arelocated as well in the historic route planned from Bucharest to the nearby Brancovan palaces andto the Brancusi sculptural ensemble at Tirgu Jiu. In addition, formulation of a new longer termnational cultural heritage partnership strategy with defined national priorities and incentives fornew public-private partnerships should also have a significant future impact. The counterpartcontribution for the project from the central Government is estimated at US$1.3 millionequivalent (inclusive of estimated taxes), over four years, or about 18.8 percent of total projectcost including contingencies. The Government's share of the total costs is not expected to exceedUS$0.35 million equivalent in any given year.

3. Technical:

The project will, to a large extent, finance completion of restoration work already started at severalcultural heritage sites or initiate/revise and utilize technical assessments finished at others. For example,at the main Brancusi sculptural ensemble site at Tirgu Jiu, the World Monuments Fund has alreadyhelped finance detailed technical studies and initial structural analysis on the Endless Column. At theBrancovan palace at Mogosoaia, restoration work has been substantially completed on the main structurebut just initiated at the nearby cultural center and guest quarters; technical feasibility studies have alsobeen completed. A feasibility study for the National Library is proposed as part of the institutionalstrengthening component to determine the appropriate future use of the building. All technical feasibilitystudies associated with the project have been, or will be, reviewed by the Bank as part of project activityto confirm their acceptability with respect to technical, cost and other aspects. Environmental and socialanalyses will be undertaken where required such as in the Saxon village component.

4. Institutional:

Executing Agency. The newly established Project Implementation Unit (PIU) in the Ministry of Culturewill be the primary executing entity for the project. Several consultants are being competitively recruitedto support the work of the PIU. Since neither the Ministry nor the PIU have had experience with a projectsuch as this, substantial institution strengthening assistance will be required. Provision has been made inthe project, additional trust funds will be raised for this purpose, and the World Monuments Fund isproviding substantial start-up and ongoing technical assistance in this area. Details are provided in theProject Description (Annex 2) and in the summary on page 5.

5. Social:10

Social aspects will be addressed in the site development plans included in the project for the Brancusi andBrancovan palace components. Emphasis will also be given to engaging local communities throughpublic information programs as well as through special consultation and participation efforts. A socialassessment, supervised by the Bank, is being carried out by local specialists in selected Saxon villages inTransylvania, including assessments of tourism, craft development (i.e. design, production andmarketing), and small-scale agricultural development potential. This work will help provide a frameworkfor the community development program which will finance priority structural repairs, infrastructureimprovements, and income-generating activities such as crafts development and tourism. A primaryobjective of the Saxon village component is to help encourage cooperation among ethnic groups(Romanian/German/Hungarian/Roma (Gypsy) in the region and help strengthen institutional mechanismsfor community organization and participation. This will be essential for future cultural heritageconservation and economic development efforts.

6. Environmental assessment: Environmental Category () A; (X) B; 0 C

The project has been reviewed and is designated as B classification (see Environmental Data Sheet;Annex 7). Generally, the project is expected to have an overall positive environmental impact through sitemanagement and conservation planning, landscape improvements, and a small community fund tofinance priority repairs in selected Saxon villages. Environmental reviews will be conducted as part of theBrancusi site management plan and the community fund investments in the Saxon villages.

7. Participarory Approach:

a. Primary Beneficiaries and other affected groups: Local residents and officials at the key projectsites such as Tirgu Jiu, Mogosoaia, Saxon villages have been, and will continue to be, involved inparticipatory discussions involving proposed renovation and conservation work as well future tourismdevelopmernt possibilities. Site development plans associated with each project component will includecommunity discussion and involvement as part of the process. A social assessment and communityimpact study are underway or planned for the Saxon village area involving Romanian social scientistsand other specialists to, among other objectives, help identify beneficiaries and ensure that project designis sensitive to the needs of other affected groups.

b. Other key stakeholders: Government of Romania, Ministry of Culture; Ministry of Finance; Ministryof Tourism; Miniistry of Public Works; Ministry of Research and Technology; Department of LocalAdministraltion; National Library, Evangelical Church; regional and local authorities; local artisans,museums, and non-governmental organizations working with traditional crafts in the Transylvania area;World Monuments Fund; Brancusi International Foundation; UNESCO; Council of Europe; Germany,Luxembourg, Italy, Sweden, Netherlands.

Preparation Implementation Operation

Beneficiaries/community groups COL COL COLNGOs IS; CON IS; COL IS; COLLocal/Regional Administration IS; COL IS; COL IS; COLAcademic/Research Institutes COL COL COLOther Donors IS: CON: COL IS: CON: COL IS: CON: COL

Note: IS= information sharing; CON= consultation; COL=collaboration

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F. Sustainability and Risks

1. Sustainability:

Several key assumptions underlie the issue of project sustainability: (a) Local communities at the projectsites can be galvanized to support renovation work and, take sufficient pride in the restored heritageresults that they will provide requisite action to maintain sites and react creatively to tourism developmentopportunities; (b) The testing of new fee mechanisms at cultural centers at the Brancusi and Brancovanpalace (Mogosoaia) sites will prove successful and lead to establishment of more permanent financingsupport facilities -- both at project sites and elsewhere; (c) Pilot efforts at establishing new public-privatesector partnerships in cultural heritage management (i.e. Brancusi; Brancovan; Saxon villages) will, in thefullness of experience, reveal appropriate models that can be replicated more widely in the society; (d)Public awareness will help strengthen efforts to formulate and implement an updated, longer-termnational cultural heritage partnership strategy that sets future priorities within a reformed legal frameworkand national and local authorities will support this effort.

The risks involved are significant and relate to the countervailing pressures of aneconomy in transition that tend to focus official minds on crisis management; inexperience in alargely state-controlled society with new private sector opportunities and responsibilities;unfamiliarity or resistance by officialdom to the kind of information-sharinrg and openconsultation on public policy matters relating to cultural heritage preservation that are beingtested and promoted in the project. The proposed project has been designed with these risks inmind and the LIL offers an unusual opportunity to test different approaches in the pursuit ofagreed reform objectives. Support for the project from key reform-minded officials in criticalagencies such as the Ministry of Culture and on important parliamentary committees gives hopethat the risks can be mitigated.

2. Critical Risks (reflecting assumptions in thefourth column of Annex 1):

Risk Risk Rating Risk Minimization Measure

1. Cultural heritage management and M 1. Continue monitoring of pilotpreservation contributes to increased activities to ascertain bestincome through tourism, craft development, experiences.associated businesses, and generaleconomic growth.

2. Partnerships prove to be an attractive model M 2. Diverse partnership modelsfor cultural heritage management will be tested based on site

specific conditions.3. Restoration sub-projects will be attractive M 3. Public education program and

to tourists and conference participants; tourism/conference marketing

4. Willingness of partners to participate in N 4. Institutional mechanism andcultural heritage restoration; designed new laws to encourage

partnerships.

12

5. Macroeconomic outlook stabilizes and S 5. IMF and Bank structuralbudget support for MOC ensured in near- adjustment support.term;

6. Government remains committed to cultural N 6. Build broad based group ofheritage reforms and restoration, and stakeholders through socialsupports a strong PIU. assessment, consultation, public

awareness/education.

7. Local counterpart funds available in a M 7. Included in annual budgettimely manner;

8. Project communities are able and willing to M 8. Social assessments will identifyparticipate; key issues and lay the

groundwork for communityparticipation.

9. Institutional partners continue to cooperate; M 9. Ensure communication andinformation flows andinclusion.

Risk Rating .. H (High Risk), S (Substantial Risk), M (Modest Risk), N (Negligible or Low Risk)

3. Possible Controversial Aspects:

Possible controversial aspects include the following: (a) Restoration of the endless column at theBrancusi s,culptural ensemble involves a number of specialized technical issues relating to materialsused in the spine of the column and the modules that cover it. This has inspired discussion andprofessional debate on appropriate options. To help resolve this, the World Monuments Fund willconvene a panel of experts to reach a consensus, in collaboration with the National Commission onHistoric Monuments, on these options and certify appropriate approaches consistent with historic culturalconservatioin standards; (b) The Saxon village component involves a potentially sensitive issue involvingrelations between Saxon people, Roma (Gypsy) people who have moved into the region in recent years,Romanians, Germans, Hungarians and other ethnic groups. A social assessment, including communityconsultation and participation, is underway to help address this and will be supplemented with a specialcommunity impact study. Pilot villages have been targeted on the basis of initial demonstrations ofleadership iin helping resolve social issues; (c) as part of Institutional Strengthening, some foreignspecialists will be required to assist the newly created PIU in the Ministry of Culture. The costs of theseforeign technical advisers is an issue for the Ministry of Finance. In response, the Bank has made acommitment to try to raise additional trust fund grants to partially support this technical assistance,deemed important particularly during start-up of the project.

1. Covenants

a. A financial management system, satisfactory to the Bank, will be established by June 30,199'3.

b. A grant agreement between the Government and the WMF has been signed. However, if itfails to become effective by March 31, 1999 the Bank reserves the right to assess the situation

13

and, if need be, apply the relevant remedies pursuant to the General Conditions applicable to theLoan Agreement.

c. Payment of a front end fee of 1% of the loan amount is required to be paid on, or promptlyafter, the Effective date.

H. Readiness for Implementation

(X) The engineering design documents for the first year's activities are partly complete in a satisfactorymanner.

(X) The General Procurement Notice for restoration of the Brancusi sculptural ensemble in Tirgu Jiuhas been advertised in "Development Business" and local publications. Detailed technical work is in anadvanced stage. Other procurement work for the first year of work is being done.

(X) The Project Implementation Manual has been completed by the PIU in a manner satisfactory to theBank.

I. Compliance with Bank Policies

(X ) This project complies with all applicable Bank policies.

Team Leader: Thomas A. Blinkhorn

Sector Director: Kevin Cleaver

Country Director: Andrew N. Vorkink

November 18, 1998

14

Annex 1

Romania - Cultural Heritage ProjectProject Design Summary

Narrative Summary Key Performance Monitoring and Critical AssumptionsIndicators Evaluation

Sector-related CAS Sector indicators: (Goal to BankGoal: Mission)To decentralize, improve * Increased number of * ESW reports * Cultural heritageand help sustain the partners involved in (occasional) management andmanagement of unique cultural heritage * Institutional preservationcultural assets through management; assessment reports contributes tocapacity building at the * New role for MOC; (periodic) increased incomecentral and local levels. * Local and regional through tourism,

governments actively craft development,involved in associatedmanagement of businesses, andcultural heritage general economicsites; growth, social

* Effective revenue cohesion.collectionmechanisms (e.g.,visitor charges) forOperations &Maintenance atrestored heritagesites;

Project Development (Objective to Goal)Objective:To demonstrate that public / 1. Up to 3-4 new * PIU reports; * Partnerships proveprivate / community partnerships formed and * beneficiary to be an attractivepartnerships can effectively working satisfactorily; assessments (annual); model for culturalmanage cultural assets in 2. Community cohesion * supervision mission heritagepilot sites. and cooperation reports; management

increased at pilot sites; * evaluation mission;3. Newly acquired skills reports (mid-term &put to good use by ICR);beneficiary * ongoing socialorganizations. assessment

OSD PAD Form: November 18, 199815

Outputs: (Outputs toObjective)

1. Restoration measures 1. Site plans * PIU reports; * Restoration sub-implemented and implemented; assets * beneficiary projects will bepartnerships for restored as planned; local assessments (annual); attractive tomanagement established; partnerships responsible * supervision mission tourists and

for long-term reports; conferencemanagement; evidence * evaluation mission participants;of cost effective reports (mid-term & * Willingness ofmanagement of cultural ICR); partners toheritage at project sites; * ongoing social participate in

assessment; cultural heritage2. Further deterioration of 2. Priority repairs * technical audit report restoration;cultural assets reduced; completed; community (annual);community social and ethnic groups organized and * Financial analysisdynamics better understood; working together in reports (mid-term andcommunity action plans Saxon Villages; new final);developed public and private

partnerships formed;

3. Professional capacity of 3. National culturalMOC improved; cultural heritage strategyheritage framework operationalized, up to 20redefined; legislative and professionals trained inreforms completed; public cultural heritageawareness and educational management; up to 5-6materials produced and new public / private /disseminated; new skills NGO partnershipsacquired within beneficiary formed; implementationorganizations. of legislative reform;

strengthened awarenessof the values of culturalheritage in user surveys;increased knowledge andskills within communityand culturalorganizations (usersurveys); increasedpublic awareness andsupport for Romanianculture; modemconservation methodsadopted and managementskills improved; newmanagement processesand skills establishedwithin MOC;

16

Project Inputs: (budget for (Components toComponents/Sub- each component Outputs)components: including

contingencies)1. Restoration and Planning 1. US$ 5.5 million * Disbursement reports * Macroeconomicof Cultural Assets: (quarterly) outlook stabilizes

* Progress reports and budget support

* Brancusi Sculptural US$ 3.7 million (quarterly); for MOC ensured inEnsemble; * Financial near-term;

* Brancovan Palaces US$ 1.8 million management system * Government(Mogosoaia & Potlogi); audit reports (annual) remains committed

to cultural heritage2. Saxon Vililages 2. US$ 0.4 million reforms and

Development: restoration;* Community US$ 0.4 million * Local counterpart

developmrient program funds available in atimely manner;

3. Cultural Heritage 3. US$ 1.0 million * ProjectInstitutional Strengthening communities areand Capacity Building: able and willing to

participate;* PIU within MOC; US$ 0.6 million * Institutional* National strategy, US$ 0.2 million partners continue to

including upgrading cooperate;national inventorysystem

* Public awareness US$ 0.15 millionprogram;Training,auditing

* National Library US$ 0.05 millionfeasibility study

Total US$ 6.9 million

17

Annex 2

Romania -Cultural Heritage ProjectProject Description

The main objective of the project is to support Romania in its effort to develop an improved, longer-termnational strategy for cultural heritage preservation by testing different partnership approaches (public-private; community-based as well as national-international) with a view to improving overallmanagement in a cost-effective manner and fostering financial sustainability through appropriate tourism.

The project would seek to achieve these objectives by (a) Rehabilitating the internationally famousBrancusi sculptural ensemble in the town of Tirgu Jiu, two hours drive northwest of Bucharest; (b)Renovating the Brancovan (18th century) palace at Mogosoaia outside Bucharest and completing workon an adjacent cultural center and small hotel; supporting preparation of a site development plan andsome limited renovation at a second Brancovan palace at Potlogi; (c) Financing a feasibility study for theNational Library in Bucharest to determine the future of the poorly designed, partly completed newlibrary facility in the capital; (d) Undertaking a detailed social assessment in four medieval Saxon villagesin the Transylvania region with a view to determining options for sustaining the preservation of historicstructures (churches and dwellings) through such pilot activities as tourism (crafts development);agriculture development; provision of assistance for a community development program to financeemergency repairs on historic structures or high priority community infrastructure improvements, and tosupport tourism, crafts development, and related pilot works; (d) Supporting institutional strengthening:(i) Capacity building in the new project implementation unit in the Ministry of Culture includingprocurement, financial management, and monitoring and evaluation assistance; (ii) formulation of animproved long term national cultural heritage preservation strategy that will help establish futurepriorities and help upgrade the national inventory; (iii) public awareness raising campaign to help buildstronger civic understanding of, and support for, the importance of cultural heritage in the nation's futuredevelopment.

A. Brancusi Sculptural Ensemble (US$3.3 million, base cost)

Background. The Brancusi Sculptural Ensemble is Romania's most revered national monument andregarded internationally as one of the stellar artistic creations of the 20th century. It was conceived anddesigned by the famous Romanian sculptor, Constantin Brancusi, a student of Rodin. The monument, orensemble as it is commonly called, consists of four discrete elements: (a) The Table of Silence, a largecircular stone table surrounded by 12 round stools located in a park near the banks of the river Jiu in thecommunity of Tirgu Jiu, northwest of Bucharest; (b) The Gate of the Kiss, a large limestone portal a shortdistance in a straight line from the Table of Silence; (c) The Alley of the Seats -- 30 stone seats in groupsof three lining the axis of the path between the Table of Silence and the Gate of the Kiss; (d) The EndlessColumn, a towering monument 31.5 meters (104 feet) high covered with cast iron, brass alloy platedmodules in the shape of huge hollow beads. The four works of art constitute one ensemble on an east-west axis that spans 1.5 kilometers. Brancusi was born in Hobita, a village near Tirgu Jiu and wasinspired to do the ensemble by the horror of an event that is sacred in Romanian history -- the slaughter ofhundreds of young soldiers who were attempting to defend Tirgu Jiu in World War I. The ensemble,conceived as a progression of spiritual contemplation, commemorates their sacrifice in an artisticstatement that speaks of the silence of death, renewal and rebirth through love, hope and infinite gratitudesymbolized by the Endless Column.

The Ensemble was built in 1937 in Tirgu Jiu (about 75,000 people), the capital of Gorj judet or county.The town is situated in the Jiu valley near the foothills of the Carpathian mountains. The town, believedto have been founded in the 14th century, and surrounding region contain many significant Romanian

18

historical monuments -- churches, manors, ancient fortified structures and houses. It is one of Romania'smost famous tourist sites and has the potential to be developed further as a tourism destination. The Gorjregion traditionally was a significant coal mining area. However,most of the mines have proved to be uneconomic and have closed or are closing. Today the area suffersfrom highi unemployment.

In the 1950s, the Romanian communist regime attempted to destroy the Endless Column for ideologicalreasons. Cables were attached to its upper part and pulled by a large vehicle. Although the attempt failed,the column was bent and connections between several of the modules covering the spine were disrupted.Rain penetrated. the column and over the years caused extensive corrosion to the modules and inner spine.At the initiative of the Brancusi International Foundation, based in Bucharest, the Endless Column (andassociated ensemble structures which are also deteriorating because of poor or inadequate maintenance)was placed on the World Monuments Fund's (WMF) "List of 100 Most Endangered Sites." In 1994, theBrancusi Foundation, WMF, Ministry of Culture, Getty Conservation Institute and otherlocal/international agencies collaborated on a program of research to determine the extent of the damageand to draw up a detailed restoration plan. Some repair work was started but curtailed because of lack offunding.

Project Component. Assistance will be provided to complete restoration of the ensemble and establishappropriate local/national institutional arrangements to manage and maintain it properly. Work will becarried out according to agreed plans that will be certified by an international panel of experts to beconvenecl and financed by the WMF under the overall management of the Project Implementation Unitassisted by an experienced foreign architect, also financed by WMF. The work will be executed asfollows: (a) Restoration of the Endless Column. All 16 cast iron modules that covered the spine havebeen removed to complete examination of the damage. The next step is to test and define the technology(appropriate brass or copper alloys) to restore metallization of the modules. The inner pillar, made ofrolled bars of iron and concrete, will also be tested through selective borings. Two alternatives forrestoration will be assessed: Restoration of the original iron/concrete pillar or replacement with a stainlesssteel replica. The tests will be conducted and completed in about six months and a decision subsequentlytaken about appropriate approaches. Completion of the work is expected to take about a year; (b)Simultaneously, a site development plan will be prepared for restoration of the entire ensemble includingnew landscaping, possible new cultural or visitor's center, repairs to the other structures (Table of Silence,Gate of the Kiss,) which have suffered cracks, discoloration and some water damage and are partlycovered with organic growth. The plan will also examine longer term options for zoning around theensemble, renovation of the hotel and improvement of visitor amenities (i.e. cultural center)in the town.Construction work will be carried out according to the Bank's competitive bidding/procurementprocedures. A local committee, appointed by the mayor of Tirgu Jiu, will work with the PIU, internationalspecialists and the Ministry of Culture's representative in the Gorj judet. A possible Brancusi maintenancefund will be tested, drawing initially on visitor charges at the cultural center, local and foreigncontributions.

B. Brancovan Palace restoration. (US$1.7 million base cost)

Romania's Brancovan palaces are widely considered as the high point in classic Romanian architecture.The "Brancovan" style of architecture, reflecting Oriental, Italian and vernacular influences, began in theWalachia region at the end of the 17th century under the reign of Prince Constantin Brancovenau.Located within an hour by car or public transportation from Bucharest, they are a natural destination forcultural outings and a potential tourism destination. Rehabilitation of the palaces, which have deterioratedthrough past neglect, is regarded by Government as a cultural heritage preservation priority that will re-establish an important part of the nation's patrimony and provide employment possibilities in aneconomically depressed rural area. The palaces are located in three communities: Mogosoaia, Potlogi andStoenesti. Government has requested assistance with the first two.

19

Mogosoaia is a Bucharest suburb, a rural village of some 9,000 people, northwest of the capital. Thevillage is known for its picturesque lake in the Colentina valley. The Brancovan palace complex lies onthe border of this lake and is surrounded by a large park. The complex includes the original palace whichhas been largely restored, a church, a nearby conference center and small hotel, which are now empty,the park with several 18th century greenhouses (all in serious disrepair). The crypt of Prince Bibescu liesunder ancient oaks on the southem edge of the park. Financing would be provided under the project forthe following works: (a) Installation of a fire alarm system in the palace and restoration of decorativeelements of the facade (carvings and paintings); (b) Completion of work on a nearby culture/conferencecenter (mainly utilities and interior finishing) and small hotel to accommodate up to 50 people; (c)rehabilitation of perimeter walls, garden stonework (columns, benches, etc.), landscaping andreplacement planting of certain tree species, and restoration of the greenhouse erected by Prince Bibescu,based on French designs. The complex has its own administrative body -- the National Cultural Centerunder the Ministry of Culture -- which manages the facility and arranges a variety of cultural andeducation programs for local people and visitors. New fee mechanisms will be tested in the restoredcomplex, and a community outreach program supported.

Potlogi. The palace in this town of about 12,000 once functioned as the seat of the Brancovan court. Itwas built in 1698 by Constantin Brancovenau for his son. The two-story palace is situated in the middleof an inner courtyard surrounded by high brick walls. In addition to the palace, which is in much moreserious disrepair than the one at Mogosoaia, there is a church, an entrance tower and ruins of otherstructures. The Potlogi complex is administered by the Targoviste (capital of Dambovita county) NationalMuseum, under the Ministry of Culture. The project will finance a site development plan to determine,among other things, future options for sustainable development and management of the complex. Limitedfunding will also be provided for stabilizing the structure to prevent further structural damage and forlight restoration of part of the structure for adaptive use as an art gallery and/or crafts center.

C. Saxon Village Development (US$0.3 million base cost)

Background. The southern, southeastern, central, and northern regions of Transylvania have housedmore than 200 Saxon villages since the 12th century. Surrounded by the Carpathian mountains, theserural, agricultural villages have remained intact over the centuries. The villages symbolize perfectexamples of medieval architectural patrimony, and include 150 fortified churches and beautiful parochialor noble houses of high artistic value. However, the conditions of this Saxon heritage have beendeteriorating for some time due to out-migration of Saxons in large numbers to Germany prior to 1990,lack of capital investments, and a period of difficult social and economic transition in which other groups,including the Roma (gypsy) people, have immigrated to the area. With a dual aim to better understand thesocial dynamics and potential of the Saxon village region, and to pilot approaches to community-baseddevelopment and tourism, the following key activities will be undertaken:

(a) Social Assessment: The four Saxon villages of Mosna, Cincu, Viscri, and Biertan have beenselected as pilots, based on criteria such as high cultural and historical significance, location, high tourismpotential, local leadership, and demonstrated efforts at social integration. The objectives of the socialassessment and subsequent community impact studies are to: a) demographically characterize the villagecommunities and ethnic groups; b) identify major stakeholders and key social issues in each village; c)improve understanding of existing social capital, resource development potential, and dynamics ofmigration/settlement in the villages; d) strengthen the institutional framework for communityparticipation, development action planning, and intra- and inter-village cooperation; e) assess thepotential for reviving the once thriving small-scale agricultural base; f) assess the potential for cultural-based tourism; and g) help identify priority community-based infrastructure needs, including emergencyrepairs for historic structures or other priority improvements, tourism and/or craft developmentinvestments. The social assessment and community impact studies will establish the foundation for the

20

proposed, demand-driven investments. The work will be undertaken in several phases; the initial socialassessments of the four villages will be completed before planned community development investmentsare undertaken. A longer-term social assessment will be undertaken periodically as a learning andmonitoring tool throughout the project's life.

(b) Community Development Program: A community development program will be supported to: (i)finance urgent repairs to cultural properties of significance or high priority infrastructure improvementsidentified by local communities; and (ii) support pilot efforts to explore financial sustainability optionsthrough such activities as tourism (i.e. small bed and breakfast facilities), crafts development. Selectionand evaluation criteria for this community assistance will include, among others: i) property or assets ofsignificant cultural/historical value; ii) community consensus reached on priorities; iii) 10% communitycontribution in cash or in-kind; iv) community willingness to oversee implementation, monitoring, andfuture sustainability (with verifiable plan); v) investments in public structures to maximize social benefit;and vi) demonstrated commitment to harmonizing community development efforts among ethnic groups.

D. Institutional Strengthening (US$0.9 million base cost).

Financing would be provided under this component to: (a) Help strengthen the newly created ProjectImplementation Unit in the Ministry of Culture -- i.e. hiring of consultants to assist with financialmanagement, procurement, monitoring and evaluation plus ongoing operations; management and stafftraining plus study tours; (b) Assist in the formulation of an improved national cultural heritage,partnerhsip strategy for the country that would examine appropriate institutional mechanisms, public-private partnerships, legislative and regulatory framework, criteria for establishing priorities forconserving built and non-built heritage, plus assistance for development/implementation of a nationalheritage inventory; (c) public awareness campaign to help develop greater public understanding of, andsupport for, the importance of cultural heritage preservation; (d) feasibility study to determine the bestfuture use for the partly completed, poorly designed National Library structure in Bucharest. The Bankhas agreed to try to mobilize trust funds to help support a long-term development plan for the librarysystem, focusing on improved management, cataloguing and computerization, capacity for restoring andpreserving historic manuscripts, and new community outreach programs.

21

Annex 3

Romania Cultural Heritage ProjectEstimated Project Costs

(US$ million)

Local Foreign Total1. Project ComponentA. Brancusi Sculptural Ensemble Restoration 1.0 2.3 3.3B. Brancovan Palace Restoration 0.5 1.2 1.7C. Saxon Village Development 0.1 0.2 0.3D. Institutional Strengthening 0.6 0.3 0.9

TOTAL BASELINE COST 2.2 4.0 6.2

Physical/Price Contingencies 0.2 0.5 0.7

TOTAL PROJECT COST 2.4 4.5 6.9

Includes estimated Government taxes

OSD PAD Form: November 18, 199822

Annex 4

Romania Cultural Heritage ProjectFinancing Plan(US$ million)

Financiers Local Foreign Total % of TotalIBRD 1.0 4.0 5.0 72

World Monuments Fund 0.1 0.5 0.6 9Government 1.3 1.3 19Total 2.4 4.5 6.9 100

23

Annex 5

Romania - Cultural Heritage ProjectProcurement and Disbursement Arrangements

Procurement

Procurement methods (Table A) The Project Implementation Unit will be responsible formanaging procurement for overall project management and coordination. Procurement specialistswould assist the PIU in development of technical specifications and bidding documents.Technical guidance will be provided by an experienced architect financed by the WorldMonuments Fund. Procurement of civil works, goods, and services would be in accordance withthe World Bank's "Guidelines for procurement under IBRD Loans and IDA credits" datedJanuary 1995, revised January and August 1996, and September 1997 and "Selection and Use ofConsultants" dated January 1997 and revised September 1997. During the proposed projectlaunch mission in February 1999, the Bank will conduct a procurement workshop to present andexplain procurement guidelines and help finalize specific bidding documents for issuance.

The PIU, with the assistance of the Bank, has recruited two persons to serve in the capacity asprocurement officers. They will undergo training in Bank procurement guidelines, policies andprocedures. The main responsibility of the procurement specialists will be to (a) prepare andsubmit to the Bank all procurement documents which require the Bank's prior review; (b) carryout any procurement-related activities at the central level and; (c) prepare and submit to the Bankat the beginning of each calendar year a detailed procurement schedule. A general procurementnotice was published in the Development Business Journal on August 31, 1998.

1. Civil Works: (about US$5.7 million) - would be used for the restoration of the BrancusiEnsemble, improvements at Mogosoaia and Potlogi Palaces; and Community Program activitiesin four Saxon Villages. The following methods will be followed.

International Competitive Bidding (ICB) procedures would be used for four contracts eachestimated to cost US$500,000 or more: (a) the restoration of the Brancusi Endless Column; (b)restoration of the stone sculptures and the landscaping activities at Brancusi; and (c)rehabilitation of the Mogosoaia and Potlogi Brancovan palaces. Approximately US$ 4.87 millionwill be procured under ICB. A specialist financed by the World Monuments Fund will helpsupervise the construction activities under this component.

Minor Works (MW) procedures will be used to finance a small number of packages each lessthan US$50,000 for minor works in the four Saxon villages; the number of packages for Saxonvillages would be determined on demand. Approximately US$ 0.4 million will be procured underMW.

2. Goods: (about US$0.38 million).National shopping (NS) procedures would be used for the procurement of office equipment,computers and office supplies for the establishment of the Project Implementation Unit. Therewould be four or five packages not to exceed about US$ 75,000 each. A vehicle estimated to costUS$ 20,000 for the PIU would also be procured using NS.

24

3. Cosuultant Services and Training: (US$ 0.75 million) the following procurement methodswould be used.

Consultant Qualifications(CQ): This method would be used to procure consultant services for thedesign and implementation of (a) a Public Awareness Campaign for the promotion of Romania'scultural heritage both nationally and internationally. This method is proposed since theseactivities are highly specialized and previous experience in this field would be essential tomaximriize the benefits. Firms with previous experience in promoting art and culture and thetourisrn industry will be requested to submit proposals. The TORs would also require that theconsultants provide appropriate materials and designs of tourism promotional material; (b)National Library feasibility study .This method is proposed because of the highly specialized areaof investigation to study various options to determine the fate of the existing National Librarystructure; (c) Feasibility study of the Mogosoaia and Potlogi Palace renovations. This method isproposed for specialized consulting firms undertaking cultural heritage improvements. Theestimated aggregate amount under this method of procurement for consultant services isUS$280,000. A specific procurement notice will be issued in the UN Development BusinessJournal as well as in a local newspaper with wide circulation. A short list of firms would beprepared from those firms that have expressed interest.

Indiviclual Consultants (IC): This method would be used for the selection of local consultantservices for the PIU in the areas of project management, procurement, disbursement, monitoring,engineering, architecture, accounting, computer specialists, and interpretation (total not to exceedabout US$380,000). Foreign advisors will work in the area of monitoring and evaluation andfinancial management, & accounting/financial management. Local lawyers would also beprocured to help prepare draft reform legislation to be included in the national strategy.

Least Cost Selection (LC): This method would be used for the selection of consultants that carryout standard or routine assignment such as audit services where well established practices andstandards exist. The estimated aggregate value is US$40,000.

Single Source Selection (SS): This method would be used for the procurement of consultantservices such as social assessment and impact studies. The estimated aggregate value for theseservices is US$50,000.

1) Project Costs by Procurement Arrangements (Table A)

2) Consultant Selection Arrangements (Table Al)

3) Prior Review thresholds (Table B)

4) Procurement Schedule (Table C)

5) Procurement Information (Table D)

Disbursement

Allocation of loan proceeds (Table C)

The allocation of the loan proceeds is given in Table C.

25

Special Account and Statement of Expenditure (SOEs)::

To expedite disbursements, the Government will open a Special Account for theproject in a commercial bank acceptable to the Bank. The authorized allocationamounts to US$500,000. Upon effectiveness the Government may request aninitial deposit of US$200,000. The remaining balance of US$300,000 will bemade available when the aggregate total of funds disbursed and specialcommitments made amounts to US$1.0 million. Replenishment applications willbe submitted regularly and be accompanied by full documentation for all itemsexcept those eligible for disbursements on the basis of Statements of Expenditure(SOEs). The following SOE thresholds apply.

Civil Works: Contracts amounting to less than US$ 50,000 equivalentConsulting Services - Firms: Contracts amounting to less than US$ 100,000equivalentConsulting Services - Individuals: Contracts amounting to less than US$ 50,000equivalentGoods and Training: All contracts

Retroactive financing of up to US$150,000 will be provided for eligibleexpenditures on civil works, goods, consulting services and training for theinitiation of the project activities since September 1, 1998 until effectiveness.

26

Annex 5

Romania Cultural Heritage ProjectTable A: Project Costs by Procurement Arrangements

(US$million equivalent)

Expenditure Category Procurement Method Total Cost(including

contingencies)ICB MW Other/I N.B.F/2

1. Works 4.87 0.83 5.70(3.80) (0.40) (4.20)

2. Goods 0.30 0.08 0.38(0.30) (0.30)

3. Consultant Services and 0.50 0.25 0.75Training

(0.50) (0.50)

4. Incremental operating 0.12 0.12Costs: office supplies,equipment, salary, insurance,drivers, maintenance, fuel

Total 4.87 0.83 0.80 0.45 6.90(3.80) (0.40) (0.80) (5.00)

Figures may slightly differ due to rounding.

Figures in parenthesis are the amounts to be financed by the Bank loan

/1 Other means National Shopping (NS) for goods; CQ for Consultancy services; IC for Consultancy services; Least CostSelection (LC); Single Source Selection (SS)

/2 N.B.F,: Not Bank-financed (includes elements procured under parallel cofinancing through World Monuments Fund,consultancies under trust funds).

OSD PAD Form: November 18, 1998 27

Annei 5

Romania Cultural Heritage ProjectTable Al: Consultant Selection Arrangements (optional)

(US$ million equivalent)

Consultant Services Selection Method TotalExpenditure Category (including

Contingencies)SS IC LCS. CQ N.B.F.

A. Firms 0.05 0.04 0.28 0.37

B. Individuals 0.38 0.38

Total 0.05 0.38 0.04 0.28 = 0.75

Figures may slightly differ due to roundingSS Single Source Selection.LCS = Least Cost Selection.CQ = Selection Based on Consultants' Qualifications.IC = Individual Consultants.N.B.F. = Not Bank-financed.

28

Annex 5

Romania Cultural Heritage ProjectTable B: Thresholds for Procurement Methods and Prior Review

Expenditure Contract Value Procurement Contracts Subject toCategory (Threshold) Method Prior Review /

Estimated Total ValueSubject to Prior

ReviewUS $ millions US $ millions

1. Works 5.7Contracts of ICB All ICB

US$ 500,000 or moreContracts below NCB First 2 Contracts

US$ 500,000

2. Goods 0.38 NS First 2 ContractsUp to US$ 75,000

3. Consultant Services, 0.75Training & Audits

Firms less than CQ/SS/LCSuS$ 100,000

Individual Consultants ICLess than US$ 50,000

4. Incremental 0.12 Based on AnnualOperating (Costs Budget

Total value of contracts subject to prior review: 5.8

29

ANNEX 5

Romania Cultural Heritage Project

Table C. Allocation of Loan Proceeds(US$ millions)

Expenditure Category Amount Financing Percentage

1. Works 3.69 80% of expenditures

2. Goods 0.30 100% of foreign expendituresI100% of local expenditures (ex-factory);80% of local expenditures for other itemsprocured locally

3. Consultant Services and Training 0.50 100%

4. Unallocated 0.51Total 5.00

30

Annex 5Romania Cultural Heritage Project

Table D. Procurement schedule(US$ millions)

ai PrigfEsted Number Proculrement Date of issuance of Submlsslon Signing Contrac|5N'1.,,,Al,)'" Va eof f - _ Mehod GPN Invkt&n of Bds of Comktdon

.z -t2.>1"< -;. Z w1ntruct r-UL;#ggc3 Ufavff;

A. GoodsI. Vehicle 0.02 I NS 12/10/98 1/10/99 2/15/99 3/15/992. Computers/

off. equipment 0.36 5 NS 12/10/98-2/1/99 1110/99-3/1i/99 2/15/99-411/99 8/16/99B. Works

1. Restoration 2.86 1 ICB 7/30/98 2/11/99 4/12/99 7/1/99 3/9/00Endless Column

2. Restoration of 0.77 1 ICB 7/30/98 5/12/99 6/28/99 10/18/99 2/20/00Stone sculpture

3. Restoration 1.60 2 ICB 7/30/98 4/15/99 5/15/99 7/19/99 1/15/00Mogosoaia & P'otlogipalaces

4. Minor works in 0.41 TBD MW 4/15/99 5/30/99 7/30/99 1/15/(0Saxon villages

C. Service (Technical Assistance)1. Feasibility study for 0.05 2 CQ 7/30/98 1/11/99 2/11/99 4/19/99 5/20/00

National Library2. Feasibility stidy for 0.02 I CQ 7/30/98 1/11/99 2/11/99 4/19/99 5/20/00

Mogosoaia & PotlogiPalaces

3. Public Awareness 0.02 I CQ 7/30/98 02/1/99 03/9/99 01/5/99 02/1/004 Nat'l cult. heritage 0.22 1 IC 7/30/98 12/18/98 1/18/99

Strategy5. Ind. Consultant 0.35 9 IC 7/30/98 12/18/98 1/18/996. Auditing 0.04 I LCS 7/30/98 12/18/98 1/18/997. Soc. Asses/lmp.Stud. 0.05 1 SS 7/30/98 12/18/98 1/18/99

D. Recurrent Costs1. Operation & 0.09

Maintenance2. Personnel 0.02

Inc.opert. costsTOTAL 6.9

* Restoratiotn o' palace include minor civil worksICB = International Completitive Iliddinlg NS = National Shopping R1l:l = Request for l'roposalIC = Individual Constiltant CQ = Selection Based on Consultants' Qualifications MW = Minor WorksSS = Single Source Gl'N = Gcencral Procurement Notice l.CS = I.east Cost Selection

OSD PAD Fonr: November 18. 1998 31

Annex 5

Romania: Cultural Heritage ProjectTable E: Procurement Information

Section 1: Procurement ReviewProcurement of Goods ICB NCB NS Other Methods1. Procurement method thresholds >US$500,000 <US$500,000 <US$75,0002. Prior Review All First two First two

Procurement of Consultant Services QBS QCBS Least Cost SS CQ Individual1. Procurement method thresholds <US$50,000 <US$50,000 <US$100,000 <US$50,0002. Prior Review All TORs All TORs All All TORs and First two contracts3. Ex-post Review First two First two All other contracts

contracts contracts

Section 2. Capacity of the Implementing Agency in Procurement and Technical Assistance requirements

1. PIU to recruit qualified procurement staff with prior experience in World Bank procurement procedures: PIU will have primary responsibility for overseeingimplementation of procurement procedures.

2. Country Procurement Assessment Report or Country Procurement Strategy Paper status: 3. Are the bidding documents for the procurement actions of theOn-going first year ready by negotiations? No, draft bidding documents will

be ready by negotiations.Section 3. Training, Information and Development on Procurement

1. Estimated date of Project 2. Estimated date of General 3. Indicate if contracts are 4. Domestic Preference for Goods:Launch Workshop: Procurement Notice subject to mandatory SPN in Yes

Februar, 1999 |publication: August 31, Development Business: AllFebruary, 1999 1998 contracts above US$200,000

5. Retroactive financing: Yes, US$150,000 6. Advanced Procurement: No

7. Procurement Monitoring System: PIU to report procurement actions in quarterly progress reports.

Section 4. Procurement Staffing

1. Indicate name of Procurement Staff as part of Project Team UNIT Ext.

Seyoum Solomon ECSHD 32393

2. Explain briefly the Expected role of the Field Office in Procurement: Field Office staff to provide advisory support on procurement matters to PIU.

32

Attachement

Annex 5

Financial Management SystemAccounting, Internal Control, Financial Reporting and Audit

Usage ofFunds and internal controls

I. The Project Implementation Unit (PIU) established in the Ministry of Culture for theimplementation of the project will be responsible for the project financial and accounting. Since 1991 theGovernment budgetary system has been patterned after the French Government's Model. Currentlyfinancial accounts in the Ministry of Culture are managed by three departments - Accounting, Budgetingand Investments. The functions of the staff in these departments mostly focus on verification ofprocurement documentation (purchase orders, invoices, etc.) and confirmation that such expenditure is inadherence to the Government budget. The PIU meets with the Ministry budgetary staff, as well asMinistry of Finance staff, on a regular basis to discuss expenditure patterns and usage of funds. Thecurrent process of budgeting and actual usage of funds is cumbersome but reflects strong internal controlson a macro level. The internal controls in the PIU itself need to be addressed and processes need to bechanged. Currently, staff responsible for preparing invoices, salary slips, purchase orders (for smallitems like stationary) are also responsible for preparing payment vouchers and recording thesetransactions in the books of accounts. This system needs to be changed to segregate tasks. The personwho prepares invoices, Purchase orders or salary slips should be different from the staff responsible forthe cash transaction and there should be a different staff member responsible for recording thesetransactions. This would comprise sound internal controls.

Accounting Systems and Financial reporting

2. Tlhe PIU uses a computerized accounting system customized for the needs of the Ministry. Thissystem does not adhere to international accounting standards (IAS), the primary drawback being that itdoes not incorporate the "double entry" system of accounting. The Government has decided to mandatethe use of "accrual basis" of accounting. This is in line with the international accounting standards andwould facilitate the use of a single system for maintaining accounts both for the Ministry and for theproject according to the Bank's requirements.

3. The PIU recognizes the need to implement a new accounting system for the management of theproject and is in the process of reviewing its options. Three systems are currently being considered. Allthree are certified for compatibility to the IAS. The selection would be based on the cost of the systemand the ability of these systems to generate reports pertaining to sources and uses of project funds,statement of accounts and procurement monitoring reports. The bank would have no objection to the PIUusing any of these systems. It is expected that the selected system would be purchased and installed atthe PIU during 'December, 1998 with a training program to follow the installation. Consultants wouldprovide "hands-on" assistance to the PIU to develop a working system during the first year ofimplementation on a regular basis. This would facilitate the PIU to produce the requisite ProjectManagement Reports on a quarterly basis.

OSD PAD Form: November 18, 199833

Staffing

4. The PIU is well staffed for maintaining the necessary books of accounts as required by thecurrent environment. However, there is a need to bring in an experienced accountant who has beenexposed to an accrual system of accounting and lAS. The PIU, with the Bank assistance, has hired anexperienced financial manager.

External Auditors:

5. The project will be audited each fiscal year in accordance with Bank guidelines by independentauditors acceptable to the Bank. Bound copies of the audit report will be submitted to the Bank withinthree months of the close of the country's fiscal year. Auditors have not been selected as yet but aselection process will be underway before the project is effective. Given that all the major internationalauditing firms are represented in Romania, the selection of auditors acceptable to the Bank should not bedifficult.

Conclusion:

6. The basic principles necessary to develop a sound project financial and accounting systems arewell in place in the implementation agency. Weaknesses that exist in the areas of internal controls,accounting systems and staffing are being reviewed and a remedial program put in place to ensuresatisfactory project start-up and implementation.

34

Annex 6

Romania Cultural Heritage ProjectProject Processing Budget and Schedule

A. Project Budget Planned Actual(Draft PAD Stage) TBD

$60,000

B. Project Schedule Planned Actual3.5 Months

Time taken to prepare the project (months) 3.5 monthsFirst Bank mission (identification) 06/28/ to 7/11 06/28/ to 7/11 1998

1998Appraisal miission departure 10/11-21/1998 10/22/98Negotiations 11/9 -10/1998 11/12-13/1998Project Approval 12/14/1998 _/_/19_Planned Date of Effectiveness 1/25/99 _/_/19_

Prepared by: Ministry of Culture and World Bank Team

Preparation assistance: LIL Team; New Products staff (Chandler); World Monument Fund;Swedish, Italian, Dutch, Swiss Governments.

Bank staff or consultants who worked on theproject included:

Name SpecialtyThomas A. Blinkhorn Task Team LeaderRohan Selvaratnam Operations Analyst

Betsy McGean Social ScientistRoberto Fabbro Architect/Engineer (Consultant)

Seyoum Solomon; Dev Singh Procurement Specialists (Consultants)Dan Petrescu Information Specialist (Resident Mission)Evan Meyer Operations Analyst (Consultant)

Marie-Noel Ettori Institution Specialist (Resident Mission,Consultant)

Maurizio Ragazzi Legal CounselRohit Mehta Senior Disbursement Officer

Mona Malhotra Operations Assistant (Consultant)Ramendra Basu Financial Management Specialist

Anirudha Mukerjee Financial Management Specialist (Consultant)Claes Fjellner Accounting Specialist (Consultant)

35

Annex 7

Romania Cultural Heritage ProjectEnvironmental Data Sheet

ENVIRONMENTAL DATA SHEET FOR PROJECTSin the IBRD/IDA Lending Program

Country: Romania Project ID No: RO-PE-58284Project Name: Romania Cultural Total Project Cost: 6.9 Million

Heritage ProjectAppraisal Date: 10/12/98Board Date: 12/14198 Team Leader: Thomas A. BlinkhornManaging Unit ECSSD Sector ECSSDEst. date for receipt of EA by N/ABank:EA Category (A/B/C): B Date Assigned: 12/14/98

Date Sheet Prepared/Updated: 8/14/98Major Project Components:* Support for the renovation and restoration of the internationally acclaimed Brancusi Sculptural Ensemble in the town

of Tirgu Jiu, northwest of Bucharest.e Assistance to help (i) complete restoration of the 18' century Brancovan Palace at Mogososaia and (ii) develop a site

development plan and community support program for another Brancovan palace at nearby Potlogi.* Support for a program to test pilot efforts in.selected historic Saxon Villages in the central Transylvania region

through a community repair fund deternine options for sustaining cultural preservation and promoting socialcohesion through tourism development and/or small-scale agriculture improvements.

* Assistance for Institutional Strengthening

Major Environmental Issues:

None

Other Environmental Issues:There will be some restoration construction work at some project sites of a very minor nature and will be

examined through the site development plans. There may be some asbestos material that may need to be handled anddisposed of properly. Another issue is worker safety in preventing old structures and walls from collapsing duringrenovation process.Proposed Actions:

Actions will be developed and described in detail in site management plans. In the community priority fundinfrastructure rehabilitation investments will be screened using a best practice environmental checklist used in SocialInvestment Funds (SIF).

Just ification/Rationalefor Environmental Category:Generally, the project is expected to have an overall positive environmental impact through site management andconservation planning, landscape improvements, small fund to finance priority repairs in selected Saxon villages.

Status of Category A Environmental Assessment:N/A

36

Signed by: Signed by:

Thornas A. Blinkhom Michele E. de NeversTask Team Leader Environment Sector Leader

I________________________________________ . December 10, 1998

37

Annex 8

Romania Cultural Heritage ProjectStatement of Loans and Credits

Difference Betweenexpected and actual

Original Amount in USS Millions disbursements atProject ID Loan or Credit Fiscal Borrower Purpose IBRD IDA Cancellat Undisburs Orig. Frm.

No. Year ion ed Rev'd

Number of Closed Loans/credits: 36

Active LoansRO-PE-34213 IBRD42580 1998 GOVERNMENT OF ROMANIA GENERAL CADASTRE 25.50 0.00 0.00 25.50 0.00 0.00RO-PE 44614 IBRD42130 1998 ROMANIA SCHOOLS REHABILITATION 70.00 0.00 0.00 70.00 2.50 0.00RO-PE-39250 IBRD41780 1997 GOVERNMENT OF ROMANIA SECOND ROADS 150.00 0.00 0.00 144.68 -.32 0.00RO-PE-8778 IBRD40790 1997 ROMANIA BUCHAREST WATER SUPPLY 25.00 0.00 0.00 22.63 7.63 0.00RO-PE-8793 IBRD40960 1997 ROMANIA HIGHER EDUCATION 50.00 0.00 0.00 48.50 26.67 0.00RO-PE-8795 IBRD41760 1997 GOVERNMENT OF ROMANIA ASAL 280.00 0.00 0.00 80.00 0.00 0.00RO-PE-8795 IBRD41761 1997 GOVERNMENT OF ROMANIA ASAL 70.00 0.00 0.00 65.17 0.00 0.00RO-PE-36013 IBRD39760 1996 SNCFR RAILWAY 120.00 0.00 0.00 116.95 42.30 0.00RO-PE-8773 IBRD8773 1996 ROMANIA FESAL 170.00 0.00 0.00 20.00 100.00 0.00RO-PE-8773 IBRD39751 1996 ROMANIA FESAL 90.00 0.00 0.00 46.09 100.00 0.00RO-PE-8773 IBRD39752 1996 ROMANIA FESAL 20.00 0.00 0.00 16.52 100.00 0.00RE-PE-8794 IBRD39360 1996 RENEL POWER SECTOR REHABILIT 110.00 0.00 0.00 105.04 76.39 0.00RO-PE-8776 IBRD38490 1995 EMPOY.&SOCIAL PROTE 55.40 0.00 0.00 54.05 36.73 0.00RO-PE-8774 IBRD37350 1994 GOVERNMENT OF ROMANIA INDUSTRIAL DEVELOPMENT 175.00 0.00 0.00 135.15 124.17 43.67RO-PE-8777 IBRD37230 1994 GOVERNMENT OF ROMANIA PETROLIUM SECTOR REHAB. 175.60 0.00 0.00 134.13 113.19 0.00RO-PE-8784 IBRD37240 1994 REPUBLIC OF ROMANIA EDUCATION 50.00 0.00 0.00 38.34 5.37 0.00RO-PE-8771 IBRD35930 1993 MOT TRANSPORT 120.00 0.00 0.00 .86 -5.14 0.00RO-PE-8759 IBRD34090 1992 MOF HEALTH SERVICES REHAB. 150.00 0.00 0.00 45.00 44.95 44.95RO-PE-8772 IBRD34860 1992 ROMANIA PRIVATE FARMER &ENT 100.00 0.00 0.00 .66 .65 0.00

TOTAL 2,006.50 0.00 0.00 1,169.27 775.09 88.62

Active Loans Closed Loans TotalTotal disbursement (IBRD and IDA): 815.02 2,811.29 3,626.41

of which has been repaid: 16.54 2,216.55 2,233.09Total now held by IBRD and IDA: 1,989.96 594.84 2,584.80Amount sold: 0.00 19.78 19.78

of which repaid: 0.00 19.78 19.78Total Undisbursed: 1,169.27 0.00 1,169.27

a. Intended disbursement to date minus actual disbursement to date as projected at appraisal.b. Rating of 14: see OD 13.05 Annex D2. Preparation of Implementation Summary (Form 590). Following the FY94 Annual Review of Portfolio performance (ARPP), a letter based system will be used (HS = highlySatisfactory, S = satisfactory, U.= unsatisfactory, HU = highly unsatisfactory): see proposed Improvements in Project and Portfolio Rating Methodology (SecM94-901), August 23, 1994Note:

Disbursement data is updated at the end of the first week of the month

38

Annex 9.

Romania Cultural Heritage Project

Romania at a glance

Europe Lower-&

POVERTY ancl SOCIAL Central middle-

Romania Asia Income

Populaton mid-1997 (millions) 22.5 478 1,125

GNP per capita 1997 (Atlas method, US$) 1,420 2,200 1,740

GNP 1997 (Atlas method, USS billions) 32.1 1,050 1,962

Average annual growth, 1991-97

Population (%) -0.5 0.3 1.4

Labor force (%/i) 0.0 0.5 1.7

Most recent estimate (latest year available since1990)

Poverty: headcount index (% of population) 22

Urban population (% of total population) 57 66 56

Life expectancy at birth (years) 69 68 67

Infant mortality (per 1,000 live births) 22 24 40

Child malnutnt on (% of children under 5) 6

Access to safe water (% of populaton) .. .. 75

Illiteracy (% of population age 15+) .. .. 20

Gross prmary enrollment (% of school-age populaton) 94 100 104

Male 94 101 107

Female 93 100 101

KEY ECONOMIC RATIOS and LONG-TERM TRENDS

1975 1985 1995 1996 1997

GDP (billions IJS$) , - 47.6 35.5 35.2 34.8Gross domestc investment/GDP 40.4 33.0 25.6 23.1 19.2Exports of goods and services/GDP .. 22.9 27.4 27.4 28.2Gross domestc savings/GDP .. 37.2 21.1 18.9Gross national savings/GDP .. 35.9 21.4 18.8

Current account balance/GDP .. 2.9 -4.9 -7.3 -7.1Interest payments/GDP .. 1.1 0.5 1.0Total debt/GDIP .. 14.7 19.3 25.1 29.7Total debt senricelexports 0.0 18.7 11.5 12.2 21.8Present value of debt/GDP .. .. .. 22.3Present value of debt/exports .. .. .. 78.0

1975-85 1986-96 1995 1996 1997

(average annual growth)

GDP 4.8 -3.4 7.7 3.9 -6.6

GNP per capita 4.0 -3.3 13.7 3.5 -2.7

Exports of goods and services .. 0.2 30.7 2.6 2.0

OSD PAD Form: November 18, 199839

STRUCTURE of the ECONOMY

1975 196 1995 1996 197(% of GDP)Agriculture .. .. 18.5 18.1 18.0Industry .. .. 32.9 34.2 35.6

Manulacturing .. ..Services .. .. 48.6 47.7 46.4

Private consumption .. 58.9 66.6 70.2 75.1Generalgovemmentconsumpton .. 3.9 12.2 10.9 10.1Importsofgoodsandservices .. 18.7 31.9 31.6 32.6

197645 1936-46 19SS 1t" 19"7(average annual growth)Agriculture .. 2.4 4.9 -2.4 2.2Industry m -6.5 6.8 6.8 -5.0

Manufacturing .. ..Services .. -5.0 11.1 10.5 -8.2

Private consumption .. 0.7 12.3 11.0 -5.6General govemment consumption .. 4.0 -2.4 -7.5 -11.0Gross domestic investment .. -3.2 1.5 3.9 -15.9Imports of goods and serices .. Z7 45.4 10.6 -1.1Gross national product 4.7 -3.5 13.1 3.8 -3.0

Note: 1997 data are preliminary estimates. Aggregate data are to 1996. Figures in italics are for years other than those specifed.

The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond wiflbe incomplete.

PRICES and GOVERNfENT FINANCE1975 195 1996 1996 1197

Domestic prices(X change)Consumer prices .. .. 32.0 38.8 154.8Implicit GDP deflator .. 0.4 35.7 44.6 146.7

Govemment finance(% of GDP)Current revenue .. 48.9 32.0 29.6 30.4Current budget balance .. 29.7 2.7 1.4Overall surplus/deficit .. 12.1 -2.6 -3.9 -3.6

TRADE1975 1935 1995 9s" 1"7

(millions US$)Total exports (fob) .. 10,174 7,g10 8,085 8,429

Textiles .. .. 2,065 1,734 1,941Metals .. .. 1,513 1,266 1,656Chemicals .. .. 1,001 882 745

Total imports (cif) ,, 8,402 9,487 1 1435 11,275Food .. 160 818 772 596Fuel and energy .. 4,753 1,160 1,037 838Capital goods .. 3,489 7,509 8,211 7,930

Export price index (1993= 100) .. .. 106 108Import price index (19935100) 105 104Temsdof trade (1993=100) .. .. 102 104

BALANCE of PAYMENTS1976 1965 1"5 196 1997

(milffions USS)Exports of goods and services 5,812 10,920 9,404 9,648 9,842Importsofgoodsandservrces 5,858 8,S26 11,306 12,503 12,371Resource balance -46 1,994 -1,902 -2,855 -2,529

40

Net income -89 -613 -241 -309 -376Net current nnsfers 0 0 369 593 419

Current accot nt balance,bere offcial capital transfers -135 1,381 -1,774 -2,571 -2,4S6

Finanang items (net) 103 -1,698 1,583 3,451Changesinnetreserves 32 317 191 -880

fem:Reserves inoihding gold (mill. USS) 904 1,447 2,625 3,145 4,671Conversion rate (b¢cabVSS) 2,033.4 3,082.6 7,167.9

EXTERNAL DEBT and RESOURCE FLOWS1975 1#S I995 193 1997

(mWens US$)Totaldebtoutstandinganddisburseda 211 7,008 6,861 8,841 10,340

IBRD 19 1.633 844 1,009 1,292IDA 0 0 0 0 0

Total debt servioe 1 2,064 967 1,230 1,833IBRO 0 274 53 63 98IDA 0 0 0 0 0

Composition of net resource flowsOfflcial granits 0 0 34 105 0Oficial ceditors 30 -61 707 1,224 4,381Private crediitors 0 -645 267 1,540 1,542Fereigndir4ctinvtment 0 0 419 263 1,224Porffeio equity 0 0 1 11 330

World Bank programConrmierit 160 0 340 475 590Disharsemnts 18 49 129 223 387Principal repayments 0 148 0 0 28Net fiews 1 9 -97 129 228 359Interest pAMments 0 127 53 63 70N; transfers 1 S -225 76 165 283

Note: 1997 data are CMU preliminary estimates. 7/13/98

a. Total debt outstanding and disbursed for 1995-97 reflect data collected from the latest IMF mission. 1997 IBRD total debt, IBRD total debt service,andWorld Bank program data are preliminary from DRS.

41

22° -, 2B" ROMANIA2

- . ~~~~~~ ~~UKRAINE t +hCULTURAL HERITAGE LIL

-48e ^ Sah / 9 \ . t ~~~~~~~~~~~~~~'~~'~~' Sa~~BOTOSANI SAXON VILLAGES

'-''' TL ; R 0 :< C A A X Botoscini 0 VILLAGES

HUNGARY 0 CONT (JDT CENTERSX' :9

YUGOSLAVIA ~~~~ )4. A, I Gaov S I + (SERBIA/MONTENEGRO)Zo6b 2000DjJ \ -GUGU?Clooi -NSAT ,

4A'~~~~~~~~me Iasi ! 500TEERA _w'2 / J j \ AleKOdriaS { CiursU,>/ 25 50 75KilomehEA 2

rbism pv=pm oc df v baMqBEir unoofEbswordrmnt .~~~~~~~~~~~~~~~~Si _]' *_ i; \ / I I I ~~~~~~~~ e ~~ z _ s0

AdI IfCEAE 1d