2018 Accountability Report by FOMILENIOII

2018 Accountability Report FOMILENIO II More investment, less poverty

FOMILENIO II

2018 Accountability Report FOMILENIO II More investment, less poverty

Members of the FOMILENIO II Board of Directors Members with voting rights Principal Members

Members with no voting rights

Óscar Ortiz Vice President of the Republic/Technical and Planning Secretary of the Presidency

Principal Members

Eliud Ayala Minister of Public Works, Transportation and Urban Development Carlos Canjura Minister of Education

Lina Pohl Minister of the Environment and Natural Resources. Luz Estrella Rodríguez Minister of the Economy Carlos Castaneda Minister of Foreign Affairs

Nelson Fuentes Minister of Finance

Deputy Members

Robert Murray Meza Private sector representative

Merlin Barrera Vice Minister of Commerce and Industry

Reina Durán de Alvarado Academic sector representative

Vilma García de Monterrosa General Director of Evaluation and Compliance, MARN

Emely Torres de Silva NGO representative

Schafik Collazo Director of Public Private Partnerships, PROESA

Deputy Members Alberto Enríquez Deputy Technical and Planning Secretary of the Presidency

MUNICIPAL REPRESENTATIVES Principal Member Francisco Hirezi Municipal Mayor of Zacatecoluca

Emilio Ventura Vice Minister of Public Works

Deputy Member

Erlinda Hándal Vice Minister of Science and Technology

José Roberto Aquino Municipal Mayor of Sonsonate

Óscar Anaya Vice Minister of Finance

MCC

José Ángel Quirós Private sector representative

Martha Keays Resident Country Director, MCC FOMILENIO II

Juan Rosa Quintanilla Academic sector representative Santos Alemán NGO representative

William Pleites Executive Director of FOMILENIO II

FOMILENIO II

Millennium Challenge Corporation (MCC)

William Pleites Executive Director

Martha Keays Resident Country Director, MCC

José Suay General Manager

Richard Mora Deputy Resident Country Director, MCC

Ricardo Tablas Legal Advisor

Lara Gabriele Senior International Attorney

Miguel Huezo Public Policy and Communications Advisor

Jim Beverley Director, Program Financial Services

Sergio Bassett Procurement Manager/Procurement Agent

Preston Winter Procurement Director

Gabriela Quintanilla Administration and Finance Manager/Fiscal Agent

Rodney Chow Associate Director, Infrastructure

Medardo Calderón Logistical Infrastructure Manager

Carlos Gargiulo Senior Operations Advisor, HCP Lead

Nancy Argueta Management of Partnerships for development

Jim Hallmark Director, FIT

Sabinela Alfaro Education Quality Manager

Margarita Zelaya Director, LIP

Óscar Díaz Investment Challenge Manager

David Kassebaum Assistant General Counsel

Roberto López Monitoring and Evaluation Manager

Doug Mason Director, ESP

Carlos Huezo Social Management and Environment Manager

Sarah Martiny Senior Program Officer, ESP

Violeta Muñoz Social Inclusion and Gender Equality Manager

Mónica Tejada Associate Director, GSI

María Elena Enríquez Stakeholders Engagement Specialist

Andrew Carter Economist - Roads

Nubia Sigüenza Resettlement Action Plan Specialist

Jenny Heintz Associate Director, M&E

Walter Alarcón Internal Auditor

Anne Pizer M&E

FOMILENIO II, in its commitment to transparency, presents the accountability report for the close of its third year of implementation, which aims to publicize its work during the period from October 2017 to September 2018, stressing its achievements throughout the execution of the projects, the efficiency in the use of resources, and the challenges that still lie ahead

Content Pg. Message from the Chairman of the Board of Directors of FOMILENIO II Welcoming remarks from the Millennium Challenge Corporation (MCC) Presentation by the Executive Director

vii viii ix 1

Intervention municipalities

PROJECTS AND ACTIONS UNDERTAKEN

1. Human Capital

2. Logistical Infrastructure 3. Investment Climate Allocated, obligated, and disbursed Program Budget Difficulties faced Control and auditing ANNEXES

31 33 34 35

FOMILENIO II

For FOMILENIO II, dialogue and stakeholders engagement are essential in order to ensure the successful management of the environmental and social impacts of their projects

Message from the Chairman of the Board of Directors of FOMILENIO II During this year, the Government of El Salvador has maintained its commitment with the good performance of FOMILENIO II, a compact granted by the Millennium Challenge Corporation (MCC), as a result of the good relations and ties of friendship that exist with the people and Government of the United States of America. From the first months of the year, within the framework of the implementation of Plan 10, we intensified actions in order to streamline the execution of FOMILENIO II and we have managed to overcome obstacles such as the delays in the reforms to the Law on Highways and Neighboring Roads [es. Ley de Carreteras y Caminos Vecinales]. We materialized important progress in the development of strategic infrastructure in order to meet the goals and objectives for the benefit of the Salvadorian people. In addition, work has been undertaken on interagency coordination in order to streamline projects at the different State entities. We have achieved significant progress in the pillars upon which this compact is based, such as: 1. Training and growth of human resources, as well as enhancements and adaptations in the conditions of infrastructure and equipment in educational centers; working hand in hand with the mayors and municipal councils from the different territories. As a result of this joint effort, we have made strides in the implementation of comprehensive schools, in training for the complete development of the Integrated Full-Time Inclusive School System, providing children and youths with technical

knowledge that will enable them to better insert themselves into the job market. 2. Modernization of the logistics corridor and connectivity, in order to improve regional development opportunities and increase the country's competitiveness within the Central American framework. We have made progress in the customs union process, modernizing and adapting its border crossings and developing large strategic road infrastructure projects,

such as the highway that connects the MonseĂąor Ă&#x201C;scar Arnulfo Romero International Airport with the city of Zacatecoluca, among others. 3. Improvement of the private investment climate, making progress on the simplification of regulations that hinder or increase the cost of business management; with the purpose of facilitating the creation of jobs for the population. We continue working to make progress on projects for the development of the country that are positively impacting the lives of thousands of Salvadorian families and the economic fabric of the territories. We are aware that the scope of the FOMILENIO II project is national in nature, which integrates and coordinates the forces of all sectors, both the public and private sector and the citizenry alike, all of them united in one single objective: to invest resources and efforts in the holistic growth of our children and youth, since only then will we ensure the present and future development of the country. The openness to dialogue, the inclusion and participation of all sectors of the political, economic, and social spheres that have characterized this administration, has also been maintained during the execution process of FOMILENIO II, as a show of coherence and commitment to democracy and the consolidation of the country's institutions. We reiterate this disposition and we will work to continue down this

path. We submit this FOMILENIO II accountability report to the population, as an eloquent example of the willingness that exists for an effective and transparent management of the Compact, which has been promoted by this Government since its inception.

Ă&#x201C;scar Samuel Ortiz Ascencio Vice President of the Republic, Technical and Planning Secretary and Chairman of the FOMILENIO II Board of Directors

vii

Welcoming Remarks from the Millennium Challenge Corporation (MCC) FOMILENIO II is ready to begin its fourth year of implementation, facing new challenges on a daily basis and the Millennium Challenge Corporation - (MCC) is ready to work side by side next to the great team led by Dr. William Pleites, in order to overcome them, under a transparent process that entails working jointly. There is still a lot of work left to do in order to achieve the expected impact through the implementation of the Compact, and that is why it is necessary to pick up the pace in order to execute each dollar that is contributed. As we have seen previously, team work shows that the success of a project is based on shared responsibility, mutual accountability, and on the concrete outcomes that will turn this development dream into a reality, through a program that is not only designed, but also executed by Salvadorians. MCC is an agency created by the United States Congress tasked with providing assistance to developing countries. Our organization provides time-bound investments that promote economic growth, the reduction of poverty, and the strengthening of institutions. These investments support the stability and prosperity of partner countries, and are a reflection of the support of the American people towards friendly nations. I am convinced that the investment of the United States through the Millennium Challenge Corporation will bring about the conditions for Salvadorians to prosper and for the country to overcome the barriers that curtail it from reaching its full potential. Martha Keays Resident Country Director, MCC

viii

Presentation by the Executive Director The third year of implementation of the FOMILENIO II Program has represented significant challenges for the institution. The undertaking of the projects, however, has accelerated in recent months thanks in particular to the support of the Vice President of the Republic, who, in his capacity as Technical and Planning Secretary of the Presidency and Chairman of the Board of Directors of FOMILENIO II, has institutionalized the holding of monthly meetings with government officials regarding the various interventions of the Program and has promoted exchanges with other key partners for implementation, such as Mayors and local leaders.

In this second accountability report that we are now making available to the public, we disseminate the actions carried out during the past year for each of our projects and hope that it will serve to consolidate trust in our institution, which is deeply committed to dialogue, citizen participation, and transparency. William Pleites Executive Director, FOMILENIO II

In FOMILENIO II, we are fulfilling our commitments. We are improving the quality of education and providing the youth of the country with productive and civic skills that enable them to successfully enter the labor market. We are improving the conditions for investing in our country, with innovative tools that provide public goods and services that, in addition to generating increased social benefits, are indispensable for improving the performance of private investments. We have made progress on improving the quality of regulations, in compiling an inventory of all the procedures required by the 14 ministries of the Executive Branch, and in identifying the treatment that should be given to those that have the greatest impact on companies and citizens in order to further simplify them. We are also contributing to the facilitation of trade between El Salvador and the other countries in the Central American region through the reconstruction and rehabilitation of two highway stretches and other interventions that will enable the substantial streamlining of the transit of goods that takes place through the El Amatillo and AnguiatĂş border facilities. Next year, we will continue to make strides on these actions, with the profound commitment of reaching our goals. We know that the expectations that the population has placed on our projects are great and that there is much work to be done to meet them, but we are optimistic that we will be able to achieve the Program's objective, which is to generate conditions to reduce poverty through economic growth.

FOMILENIO II Intervention Municipalities 10 Departments 66 Municipalities

16 30

14 22

8 1 2

7 11 4 6 3 10 5 9

21 20 24

13 12

18 19

27 31 34

38 33 32 25 29 35 3940 45 37 28 36 47 26 41 43 46 49 50 48 42

62 64

54 56

52 55 52

Ahuachapรกn 1. San Francisco Menรฉndez 2. Jujutla 3. Guaymango 4. San Pedro Puxtla Sonsonate 5. Acajutla 6. Santa Catarina Masahuat 7. Salcoatitรกn 8. Juayรบa 9. Sonsonate 10. San Antonio del Monte 11. Nahuizalco 12. Santa Isabel Ishuatรกn 13. San Juliรกn Santa Ana 14. Santa Ana 15. Metapรกn Chalatenango 16. Nueva Concepciรณn 17. Citalรก La Libertad 18. Teotepeque 19. Chiltiupรกn 20. Sacacoyo 21. Ciudad Arce

59 65 63

57 65

22. San Juan Opico

48. San Juan Nonualco

23. Tamanique 24. Colรณn 25. Santa Tecla 26. La Libertad 27. Quezaltepeque 28. Zaragoza 29. Antiguo Cuscatlรกn

49. San Rafael Obrajuelo 50. Zacatecoluca

San Salvador 30. El Paisnal 31. Nejapa 32. San Salvador 33. Mejicanos 34. Apopa 35. San Marcos 36. Rosario de Mora 37. Panchimalco 38. Ayutuxtepeque 39. Santo Tomรกs 40. Santiago Texacuangos La Paz 41. Olocuilta 42. San Luis Talpa 43. San Juan Talpa 44. San Pedro Masahuat 45. San Miguel Tepezontes 46. El Rosario 47. Santiago Nonualco

Usulutรกn 51. Jiquilisco 52. Puerto El Triunfo 53. Ozatlรกn 54. Usulutรกn 55. San Dionisio 56. Ereguayquรญn 57. Concepciรณn Batres 58. Jucuarรกn San Miguel 59. El Trรกnsito 60. San Jorge 61. San Miguel La Uniรณn 62. Santa Rosa de Lima 63. Conchagua 64. Pasaquina 65. La Uniรณn 66. Concepciรณn de Oriente

Intervention Municipalities

“This shows the conﬁdence that people have in me, because they see the good work I have done in construction.” María de los Ángeles Abarca is currently working for the construction company responsible for the expansion project of the Coastal highway, where she works as a construction assistant and is also in charge of other duties, such as handling machinery, among them the jumping jack rammer and the concrete mixer. in addition to using basic tools when assigned to a pipeline.

Projects and actions undertaken

FOMILENIO II

Human Capital Project

1 1

1 1 1

1 1

1 2

2 1

Number of SI-EITP by municipality System shared between municipalities

With an allocated amount of US$115.7 million, it aims to improve the quality of education and align it with the skills demanded by the labor market, in order to increase the employability of the Salvadorian labor force. To achieve this, two activities are undertaken:

8 Departments 40 Municipalities

Activity 1: Improvement of educational quality What have we done?

1 1

2 3

FOMILENIO II works with the Ministry of Education (MINED) in order to strengthen the national education system and the model of the Integrated Full-Time Inclusive School System (SI-EITP, for its Spanish initials) in the following fields: teacher training, strengthening and assessment of learning, governance of information systems, curricular assessment, education with gender equity and equality, creation of technical education offerings, increase of the school day, supply of educational material and equipment, management of integrated systems and establishment of a comprehensive center in each one thereof.

1 2

During this year, the extended school day got underway in the 349 educational centers that make up the 45 SI-EITP supported by FOMILENIO II. In this regard, workshops of the extended school day have been held at the 183 educational centers that provide third cycle education, in order to strengthen their skills; English training has been given to third cycle and middle school teachers;

the training for the specialists who will be in charge of training teachers from all educational levels on the different specialties; and training on the use of the initial features of the MINED Salvadorian Educational Management Information System (SIGES, for its Spanish initials). Library committees have also been set up to promote â&#x20AC;&#x153;reading communitiesâ&#x20AC;? in the 45 SI-EITPs, which have received two of the three planned book deliveries (70,000 books); workshops on communication skills have also been given to approximately 2,800 teachers regarding the â&#x20AC;&#x153;reading communitiesâ&#x20AC;? initiative. The governance structure of the integrated systems has been defined, validated, and comprised with the different actors involved, who will be given workshops on leadership and citizen participation. Furthermore, socio-emotional care is being provided to all teachers, and workshops are being held to strengthen teamwork among the departmental ministries. Technical assistance resources have been strengthened with the hiring of 33 new positions, whose profile has been readjusted to the functions deemed necessary for the strengthening of the SI-EITP model. A new offering of technical high school degrees was designed with the aim of aligning education with the skills demanded both by the labor market and by the productive demand of the environment, starting its implementation in 14 educational centers under two modalities: agri-business and service enterprises, with a population of 490 students undergoing their first year of high school, accompanied by specialized technical assistance. In terms of curricular assessment, the authors of the new curricula for language studies and English for the national education system were contracted; and the design of the technical diploma courses for the general high school degrees got underway, as well as the curricular materials for the new technical high school degree offering. 2,864 computers were delivered in order for schools, as well as MINED at the national level, to be

able to collect data from the educational system on the learning that takes place in the classroom, as well as on enrollment and dropout rates, among others. Of these computers, 900 were delivered for use at innovation centers as learning tools, and others for administrative use in educational centers and departmental directorates, in order for them to use the new SIGES. The pilot test of the Regional Comparative and Explanatory Study (ERCE, for its Spanish initials) of the Latin American Laboratory for the Assessment of the Quality of Education (LLECE, for its Spanish initials) was conducted on a sample of 1,871 students from 49 educational centers. The areas that will be assessed for third grade are: mathematics, reading, and writing; and, for sixth grade: mathematics, reading, writing, and science. The outcomes of the pilot test are used to adjust the definitive instruments that shall be used for the assessment in 2019. In seeking a non-sexist education model and an inclusive approach in all the actions that are being carried out, the Gender Equity and Equality Policy was formulated and disseminated by MINED under the leadership of said Ministry and with the support of the UCA-UN-WOMEN Partnership. Additionally, the following actions have been initiated in the implementation thereof: training of 251 teachers from all levels of schooling at the national level, in order to turn them into specialists on non-sexist education; a postgraduate course on non-sexist inclusive education with 18 professionals and management from the MINED, in order to strengthen the installed capacities for gender mainstreaming in the National Education System; and undertaking of the national study on the situation of sexual violence in educational centers in the country, in order to improve the national response on registration, detection, and action. The study will be published in early 2019. Other gender mainstreaming actions have also been carried out during the extension of the school day, such as non-sexist education training at 179 educational centers to 15,564 students (54.79% men and 45.21% women), 221 workshop facilitators

and extended day staff (63% men and 37% women); in addition to equipping 90 libraries, which for the first time contain bibliography and literature on gender equality. Teachers from 25 SI-EITP have received induction on education and gender and the gap in the number of technical assistants has been closed by sex, going from 20% to 1% in the 8 departments serviced by FOMILENIO II.

Finally, following the plan to absorb recurrent costs in order to ensure the sustainability of the intervention, in 2018 MINED has already absorbed the operating costs for preventive maintenance of the infrastructure and for the teaching staff that will teach the new high school degree plans.

Moreover, almost all of the infrastructure designs for the educational centers that will be improved or built to respond to the needs of each system were finalized and approved by the respective Departmental Education Directorates and consulted with the educational community of the corresponding SI-EITP, who have also stated their endorsement. Works have already begun for the first 12 schools. The development of the designs and the entire construction process of schools incorporate standards that ensure that various social, environmental and gender aspects are respected, with consultation mechanisms and attention being paid to requests and complaints from the communities, obtaining environmental permits for construction, policies that foster the employability of women and the local labor force, and protocols to prevent and detect any form of gender violence in construction spaces.

Main outcomes achieved during the period

It should be noted that MINED has been working on the identification of a relocation strategy for the educational communities, seeking the best alternative to install them during the intervention for the construction or rehabilitation of infrastructure. As a support measure to be able to receive future aid, work has continued to be carried out in order to legalize the situation of all educational centers that are not under the title and possession of MINED, and 149 out of 190 properties that had problems of this nature have been legalized.

The institutions Fundaciรณn Salvador del Mundo (FUSALMO), American Association, Plan International, EDUCO, FHI, UCA, UN WOMEN and SOFIS were contracted, which implement all the intervention lines of the Quality of Education Activity. They have sent the project's actions to the schools in the territories, which have been designed based on the characterization that has been conducted at the beginning of the compact. 12,077 students have benefited from the extended school day workshops. The new offering of technical high school degrees on service enterprises and agri-businesses was implemented 14 educational centers. Designs were finalized for 43 school centers that would be intervened with infrastructure, in response to their educational and technical specialization needs. Out of these 43, construction works have already gotten underway in the first 12 schools located in the municipalities of: Guaymango, Jujutla, Juayรบa, Santa Isabel Ishuatรกn, La Libertad, Chiltiupรกn, Teotepeque, San Juliรกn, San Antonio del Monte, Salcoatitรกn, Santa Catarina Masahuat, and San Pedro Puxtla. 20 deeds to land were legalized, for a total to date of 149 beneficiary schools.

Budget execution Of the total allocated amount, the obligated and disbursed amount of this Activity as of September 2018 is:

Quality of Education

Accrued as of September 2018

Obligation

$ 46,326,424.31

Disbursement

$ 14,285,751.68

The following chart shows how the budget execution of the Activity will behave during the five years of the Compact. The accrued obligations and disbursements that would reach 100% of the execution before September 9, 2020 are presented.

Chart 1 | Human Capital Project: Projection of the budgetary execution for the 2018-2020 Improvement of Educational Quality Activity

Obligations

2018 Accountability Report

Disbursements

New High Schools

d f

7 8 1

4 d

d d 3

2 d

e g

8 Departments 40 Municipalities

b g a

f c

g 2

6 d

Maritime Vocational Technical High School Degree (BTV) on sea tourism | 1 municipality #

Technical High School Degree (BTV) on agribusiness | 10 municipalities a. Aquaculture production b. Processing of dairy products Technical High School Degree (BTV) on service enterprises | 13 municipalities c. Preparation of food and beverages d. Hotel services

General High School Degree (BG) with a Diploma Course on: | 10 municipalities 1. 2. 3. 4. 5. 6. 7. 8.

Tourism culture and promotion Production of organic and hydroponic vegetables Logistical and customs operation Marketing of fruits, vegetables and fruit or vegetable products Management in hosting services Adventure tourism Production of dairy products Gastronomy

Technical High School Degree (BTV) on industry and innovation | 8 municipalities e. Pattern design and textile tailoring f. Design and manufacture of furniture in wood and wood products g. Maintenance and sustainable assembly of electrical installations h. Servicing of vehicle systems

The provision of computer equipment is a fundamental part for the implementation of the information system that will enable: teachers to facilitate the academic registry of their students (enrollment, grades and attendance records); principals to facilitate and organize school management; establish a channel of communication between schools and parents about school activities and their children's grades, among other features.

October 2018 - September 2019 Projection Installation and operation of the Support Unit for users of the SIGES and the Digital Transformation Unit of MINED in October 2019.

Award of 34 new contracts for the construction and supervision of works in school centers, and completion of the construction of 19 schools.

Provision of 30,000 books and 2,700 digital readers to complete the delivery to the 90 installed libraries.

Activity 2 Strengthening of the National System for Professional Technical Training (FTP, for its Spanish initials)

Implementation of the national English language curriculum by trained teachers.

What have we done?

Continuation of training processes for teachers in disciplinary, methodological, socio-emotional and communication skills. Implementation of the support strategy for teachers who service multi-grade classrooms at educational centers. Teaching, family and student councils operational after receiving leadership and participation workshops. Curricular redesign of vocational technical high school degree programs and technical diploma courses, and their implementation in 45 educational centers, with continuous training of teachers from the technical area; establishment of partnerships with the productive sector. Continuation of the implementation of MINED's Gender Equity and Equality Policy: training of specialists, teachers, and MINED staff on gender at the national level; national study of gender-sexual violence conducted; mechanisms for the prevention and action to prevent pregnancies in adolescents designed; training of children initiated. Completion of operation and maintenance training for 347 schools belonging to the 45 SI-EITP, in December 2018.

2018 Accountability Report

The existing gaps between the supply and the demand for training are the cause of various problems in the Salvadorian labor market, and they manifested themselves, among other things, in the difficulties faced by the productive sectors to find personnel with the required technical skills, as well as in the underutilization of people's capacities (unemployment, underemployment, among others). Faced with this problem, FOMILENIO II works on two strategies: the development of capacities at different levels (persons, organizations and the public policy environment) and the coordination of the supply and demand of technical education and professional training throughout different levels (productive sectors, interagency/inter-sectorial and territorial), using a skills-based approach. In order to strengthen the skills of the private sector to identify and address the technical education and vocational training needs, FOMILENIO II is supporting the creation of sectorial committees composed of workers, technicians and entrepreneurs from the different economic branches. In the period reported in this report, in addition to the plastic, textile and apparel, sugar, tourism, construction and poultry sectors formed in 2017, an agreement was signed for the creation of the technical and professional training sectorial committee with the coffee sector (signed between FOMILENIO II and union representatives from the sector on February 6, 2017) and with the MSME-women sector (signed between Voces Vitales-El Salvador Chapter and FOMILENIO II on June 27, 2018). In addition, efforts have been made to comprise two

new Committees with the information and communication technologies (ICT) sector and the energy sector. FOMILENIO II provides technical assistance to the Committees with which it has signed an agreement in order to support their institutionalization and operation, as well as to generate the conditions that ensure their staying power and sustainability. Likewise, it aims to establish working models so that other interested sectors can move in this direction in an autonomous manner and make use of the lessons learned. The construction sector, for example, has already published the reform to the CASALCO bylaws in the Official Gazette, which are permanently activated by the Committee. The formal creation of the Committee of the plastic sector is expected during the last quarter of 2018. FOMILENIO II also supports the Committees to develop skill-based job profiles. The starting off point is a sectorial diagnosis, completed for six sectors in September 2018, which constitutes the basis for the prioritization, design, and implementation of the professional training programs that will be financed in 2019 with FOMILENIO II funds. On the other hand, in order to strengthen the institutional capacities for responding to the demands of technical education and professional training, and to materialize outcomes at the public-policy level, a Letter of Understanding was signed on January 24, 2018 between the Salvadorian Vocational Training Institute (INSAFORP), the Technical and Planning Secretariat of the Presidency (SETEPLAN), MINED and FOMILENIO II for the establishment of the Coordination Council for Technical Education and Vocational Training which, among other things, will establish the basis for a national qualifications framework. The letter also supports the creation and operation of other entities to link the training being supplied with the demand from the productive sectors: Sectorial Committees

and the Board of Sectorial Committees. In compliance with the provisions of the Letter of Understanding, an interagency technical team was comprised in March with MINED, INSAFORP, SETEPLAN and FOMILENIO II for the formulation of a technical note describing the operation of the Council and which served as an input for the preparation of the draft of the Executive Decree that shall formalize its institutionalization.

Main outcomes achieved during the period Two new Technical and Professional Training Committees (coffee and women-led MSMEs) were established. With the addition of these two, there are 8 sectorial committees formed to date to strengthen the capacities of the private sector to influence the training offering. A Letter of Understanding was signed between INSAFORP, MINED, SETEPLAN and FOMILENIO II for the establishment of the Technical Education and Vocational Training Coordination Council, which will be permanently installed in order to achieve outcomes at the public-policy level in the strengthening of institutional capacities aimed at responding to the demands of technical education and professional training from the private sector. The draft Executive Decree for the creation of the Coordination Council for Technical Education and Vocational Training was prepared by the MINED, INSAFORP, SETEPLAN and FOMILENIO II interagency team.

Budget execution The obligated and disbursed amount of this Activity as of September 2018 is: Reform to the FTP system

Accrued as of September 2018

Obligation

$ 672,160.61

Disbursement

$ 388,558.08

The following chart shows the way in which the budget execution for this Activity will behave during the five years of the Compact. The accrued obligations and disbursements that would reach 100% of the execution before September 9, 2020 are presented.

Chart 2 | Human Capital Project: Projection of the budgetary execution for the 2018-2020 Strengthening of the National System for Professional Technical Training (FTP) Activity

Obligations

October 2018 - September 2019 Projections Incorporation of two new sectors for the composition of a total of 10 Sectorial Committees. Design of three professional training programs by sector and implementation of at least one of them in each sector. Award of equipment for the implementation of program. Approval of the executive decree for the creation of the Coordination Council for Technical Education and Vocational Training. Design of the skills-based certification model, applicable to technical education and vocational training processes.

Disbursements

Summary of Budget Execution for the Human Capital Project

As of September 2018, out of the US$115.7 million allocated to the Human Capital Project, 40.6% of the total funds have been obligated, for an amount of US$47 million. The following table consolidates the execution of the two activities:

Budget allocated to the Human Capital Project: US$115.7 million Activity

Obligation

Disbursement

Improvement of educational quality

$46,326,424.31

$14,285,751.68

Strengthening of the National FTP System

$ 672,160.61

$ 388,558.08

TOTAL

$46,998,584.92

$14,674,309.76

Logistical Infrastructure Project

Coastal Highway, airport-Zacatecoluca stretch 8 municipalities El Amatillo Border Facilities 1 municipality

2018 Accountability Report

It seeks to facilitate trade between El Salvador and the countries of the Central American region by reducing costs and times related to logistics and transportation. It allocates US$125.3 million to minimize congestion in critical sections of the country's logistical corridors through two activities:

2 Departments 9 Municipalities

Activity 1: Expansion of the Coastal Highway What have we done? This activity finances two stretches: 24.2 km between the detour of the highway to the â&#x20AC;&#x153;MonseĂąor Oscar Arnulfo Romero y GaldĂĄmezâ&#x20AC;? El Salvador International Airport and Zacatecoluca, and 2.09 km from the intersection of the detour to the Port of La Libertad until the intersection of the highway to the Airport. Prior to the commencement of the construction works for the expansion of the Coastal Highway, and in accordance with the social norms that FOMILENIO II complies with, a compensation and resettlement process was undertaken for the people located in the stretch that would be intervened. This process entailed a continuous dialogue with each one of the persons who would benefit, either with a monetary amount as compensation for lost profits or with the construction of a home or business, seeking to leave them either in the same or better conditions than where they were prior to the execution of the project. This meant finding the best alternative so as to not separate them from their daily life

(community, work, school, etc.), which is why the new location was proposed and jointly agreed upon. To date, keys to new houses have been handed out to 39 families and 3 businesses. At the same time, the tender process was carried out for the supervision and execution services of the expansion works on the Coastal highway. The bids for both processes were opened in a public and transparent event and, once the awarded bidders were selected on January 29, 2018, the project could begin with the construction works. Under the commitment to gender equity and social inclusion, a policy has been implemented with the contractor on the development of capacities for the employability of women and youth, generating to date 15% employment for women (with the national average for infrastructure works being 2%); many of them working in positions that are not traditionally associated with their sex. Likewise, 27% of young people from areas surrounding the project have been employed. It is worth mentioning that in order to favor these women and youths from the eight municipalities along the stretch of the highway, a construction work course was provided to them, with the support of the Gender Unit of the Ministry of Public Works (MOP). Said course would teach them the necessary capacities to apply to the labor opportunities that the construction project would open up. In this course, 27 youths and 43 women were trained. Along with the technical support of Ciudad Mujer and the Social Inclusion Secretariat, FOMILENIO II has promoted awareness on the risks of human trafficking and sexual harassment, aimed specifically at the Highway workers of the contractor and supervisory companies. A total of 242 employees have participated: 47 women and 195 men. In addition to this, protocols of action have been elaborated and applied to fight against risks of human trafficking, sexual harassment and guide the behavior towards the communities. With regards to offsetting the environmental impact of felling trees from the expansion of

2018 Accountability Report

the highway, an agreement was signed, through the MOP, with the initiative for the Americas Fund (FIAES), who will administer US$490,890 of the FOMILENIO II fund through local organizations in the implementation of 5 projects that, at the request of the communities during public consultations, will be carried out in the area of influence: restoration of 16 km of gallery forests along the banks of the Jiboa River, creation of 50 hectares of agroforestry systems in areas surrounding the Nahualapa Lagoon; protection and restoration of 60 hectares of forest cover at the Jaltepeque estuary Ramsar site; protection and conservation of sea turtles at the Los Blancos and El Zapote beaches, at Costa del Sol; and restoration of 600 hectares of mangrove forest at the Jaltepeque estuary Ramsar site. Finally, in seeking to maintain a continuous dialogue with the communities in the project's intervention area, spaces for citizen care have been opened up, with two offices having been strategically located in accessible places within the area whose purpose is to receive complaints and requests of information.

Main outcomes achieved during the period Deeds of property, housing and businesses with all basic utilities were delivered to 42 families. Construction work began in January 2018, which showed a progress of 9.5% by the end of September. 70 women and youths were trained on construction work, favoring the hiring thereof in the construction of the highway extension. 242 employees of the company contracted to build the highway were sensitized about the risks of human trafficking and sexual harassment, seeking to reduce such risks in the project. An agreement with FIAES was signed through MOP to implement five environmental projects to offset the felling of trees in the area of influence of the project.

Budget execution Of the total allocated amount, the obligated and disbursed amount of this Activity as of September 2018 is: Coastal Highway

Accrued as of September 2018

Obligation

$ 69,427,577.55

Disbursement

$ 11,128,128.41

Chart 3 | Projection of the budgetary execution for the 2018-2020 Expansion of the Coastal Highway Activity

Obligations

Disbursements

October 2018 - September 2019 Projection To reach 85% progress in the implementation of the Activity.

Activity 2 Facilitation of trade through the El Amatillo border crossing. What have we done? With the objective of facilitating trade by land to other Central American countries, through the modernization of the facilities, computer systems and risk management of the El Amatillo border facilities, agreements were signed with three institutions linked to its modernization: the Center for Import and Export Procedures of the Central Reserve Bank (BCR-CIEX), the Ministry of the Economy (MINEC), the General Customs Directorate of the Ministry of Finance (MH-DGA). In addition, 14 professionals who will work on the modernization of the International Trade Single Window of the BCR were contracted and the necessary furniture and equipment was procured for them to perform their duties. These professionals have comprised three teams that work at the Ministry of Agriculture and Livestock (MAG), the Ministry of Health (MINSAL) and the Directorate General of Internal Taxes of the Ministry of Finance (DGII). With the Shared Services Office of the BCR, work continues to be performed on the systematization of the MAG, MINSAL and DGII processes and on the preparation of the technical documents for the construction of the El Salvador document manager, a tool that will enable the use of computer systems to verify payments and permits associated with foreign trade. Technical documents were generated for contracting the implementation of two computer systems of vital importance for trade facilitation and coordinated border management: the Comprehensive Risk Management System and the Automated System for Customs Data of the DGA (ASYCUDA WORLD) On the other hand, the tender and bidding processes got underway in order to select the contractor and supervisor who will build a new and modern border building at El Amatillo, under the design + construction modality; bids have been received which, at the close of this document, were undergoing the final evaluation phase.

In the case of the rehabilitation of the Pan-American Highway, a 5.7 km stretch between the Sirama bridge and El Amatillo, progress has been made in the process of compensating persons and the procurement of land located along the road, and different courses are being taught on work reconversion. In addition, the tender guidelines for the construction and supervisory companies were created, which are expected to be contracted during the first quarter of 2019.

Main outcomes achieved during the period The final phase of the contracting process for the construction and supervisory company for the border area has been reached. Technical personnel was hired to modernize El Salvador's International Trade Single Window. Terms of reference were formulated for the contracting of special systems: Comprehensive Risk Management System and the Automated System for Customs Data of the DGA (ASYCUDA WORLD).

Budget execution Of the total allocated amount, the obligated and disbursed amount of this Activity as of September 2018 is:

Border crossing El Amatillo

Accrued as of September 2018

Obligation

$ 1,289,082.23

Disbursement

$ 862,863.23

Chart 4 | Projection of the budgetary execution for the 2018-2020 Facilitation of trade through the El Amatillo border crossing Activity

Obligations

October 2018 - September 2019 Projection Contracting of construction and supervisory companies for the design + construction of El Amatillo Border Crossing in the last quarter of 2018. Development of design and start of implementation of the modernization of the El Amatillo border facilities.

Disbursements

Summary of Budget Execution for the Logistical Infrastructure Project As of September 2018, out of the US$125.3 million allocated to the Human Capital Project, 56.43% of the total funds have been obligated, for an amount of US$70.7 million. The following table consolidates the execution of the two activities:

Contracting of construction and supervisory companies for the construction of the El Amatillo highway stretch in the first quarter of 2019. Start of construction of the El Amatillo highway stretch. Budget allocated to the Logistical Infrastructure Project: US$125.3 million Activity

Obligation

Coastal Highway

$69,427,577.55

Trade facilitation through the El Amatillo border crossing

TOTAL

$1,289,082.23

$70,716,659.78

Disbursement $11,128,128.41

$862,863.23 $11,990,991.64

Investment Climate Project

Investment Challenge Fund

Bypass. Pub. 23.5 Mill 4 municipalities

Priv. 32 Mill

AnguiatĂş. Pub. 28.9 Mill 2 municipalities

Priv. 37.7 Mill

Irrigation Districts. Pub. 10.1 Mill Priv. 13.8 Mill 1 municipality Treatment plant and water system. Pub. 14.4 Mill 4 municipalities AEROMAN/APANC Training. Pub. 2.5 Mill 2 municipalities

2018 Accountability Report

Priv. 26.2 Mill

Priv. 32.3 Mill

5 Departments 12 Municipalities

It seeks to improve the conditions for investing in the country and has a budget of US$92.4 million to benefit over 25,000 companies that operate in El Salvador, which will encounter savings in fixed or variable costs as a result of the reforms. It consists of two activities:

Activity 1: Development of partnerships Sub activity 1: EL Salvador Investment Challenge Fund (API, for its Spanish initials) What have we done? Through this innovative tool, private entrepreneurs request FOMILENIO II public goods and services that, in addition to generating high economic and social benefits to the communities, reduce some of their costs and increase their competitiveness. In return, entrepreneurs take on the commitment to promote new investment projects or the expansion of their productive capacity. Under this rationale, applications have been received a wide range of projects. For the period reported herein, the implementation of the project requested by the Association of Agricultural Producers of Nueva Concepciรณn (APANC) came to its conclusion, which consisted of providing technical assistance and training for the processing of dairy products for US$58,849.56 dollars in exchange of a private investment of US$135,639.31. During the implementation of this project, 110 persons (84 men and 26 women) were trained in the fields of: production, stockpiling, and collection of milk, marketing, accounting, generational, social, and gender changes.

in addition, 254 people have been certified as aeronautical technicians and a further 271 are undergoing training as part of the investment agreement signed with the company AEROMAN, with the aim of providing the labor force required for the operation of a new hangar, in which the company invested US$32.2 million. After having completed the pre-feasibility studies for the projects: “Solution to wastewater treatment in the Playa El Zonte tourist area” and “Improvement of potable water and sanitation in the community of San Carlos, El Paisnal, El Salvador”, and based on their results, they were presented to the Investment Committee in order to obtain the approval thereof and proceed to the subsequent phases and sign the investment agreements. In this regard, public and private investment agreements were signed for both projects with companies from the Alianza El Zonte (Roberto Océano, S.A. de C.V., Menéndez Zometa, S.A. de C.V. and Surfing Pacífica, S.A. de C.V.), Asociación Cooperativa San Carlos (ACOPASCA de R.L.), the Municipal Mayoralty of Chiltiupán and the Municipal Mayoralty of El Paisnal. The tender processes for the development of designs and construction of the “Solution to wastewater treatment in the Playa El Zonte tourist area” project were published on June 4, 2018. At the close of this report, the final stage of contracting was underway. Further progress made during this period includes: the contracting and start of the pre-feasibility study for the project “Improvement and/or expansion of the potable water supply service in the homesteads of El Julupito and El Palmar in Chiltiupán, La Libertad” The design of the “Improvement of potable water and sanitation in the community of San Carlos, El Paisnal, El Salvador” project was also carried out. On the other hand, two support services were contracted for the undertaking of the prefeasibility study for the project “Modernization of the Anguiatú border post”, to conduct the economic assessment thereof and to support the General Directorate of Customs in outlining the blueprints that define the physical interventions at the Santa Ana and Anguiatú sites. Subsequently, an external consultant was hired to systematize all the importing and exporting processes, with the prefeasibility document for the project being elaborated based on that input. This document will serve as an input for the analysis and approval of the project by the Investment Committee.

2018 Accountability Report

The prefeasibility studies for the “Mitigation works in Plan de La Laguna” project were completed. The studies showed that the required investment does not enable compliance with the minimum requirement of the internal rate of economic return. The pre-feasibility studies for the “Irrigation Districts in El Paisnal and Nueva Concepción” projects were completed (initially, the possibility of expanding these studies for two more irrigation districts was contemplated, namely Lempa Acahuapa and Zapotitán, however private investment has not been confirmed by the applicant company), and “Improvement of the internal street of the Zapotitán irrigation district (bypass CA: 01 and CA: 08)”, which showed the best alternative for the improvement of the road and its design is expected to start in November 2018. During this period, the fifth investment agreement of the El Salvador Investment Challenge (API) fund was signed between the company LACTOLAC, S.A. de C.V., FOMILENIO II and the Municipality of Nejapa to promote the project “Wastewater treatment system for the urban and industrial area of the municipality of Nejapa”. Private investment amounts to US$15.4 million and public investment is estimated at US$5.2 million. On June 25, 2018, the tender processes for the design and construction of this project were published. At the close of this report, it is undergoing the final stage of contracting. A proposal was made, jointly with the plastic and textile sector, for the creation of a technological development center for the entire industry, with the possibility of incorporating more sectors into it in the future. Although this project will not be implemented as part of FOMILENIO II, it will be included as part of the pool of future projects to be developed by the entity that takes over the continuity of the tool as a coordination mechanism between the private and the public sectors. As is already known, an assessment is conducted for each proposal on the potential social, environmental, and gender risks in order to define critical aspects that must be overcome during the implementation stage. In order to achieve the desired outcomes and to contribute to their sustainability, joint work has been undertaken with key stakeholders for each project that was studied. Among these stakeholders, there are the respective Municipal Mayoralties, ANDA, the Ministry of the Environment and Natural Resources (MARN), the Presidency of the Republic, the applicant companies and the communities of the intervention area, who have shared their opinions on each phase of the

projects during the various public consultations that were held.

Main outcomes achieved during the period Investment agreements were signed to develop public investment projects in: â&#x20AC;&#x153;APANC Technical assistance and trainingâ&#x20AC;?, on December 4, 2017 in Nueva ConcepciĂłn, Chalatenango; â&#x20AC;&#x153;wastewater treatment in the Playa El Zonte tourist area, from the municipality of Chiltiupanâ&#x20AC;?, on March 6, 2018; and â&#x20AC;&#x153;Wastewater treatment system of the urban and industrial area of the municipality of Nejapaâ&#x20AC;? signed on April 12, 2018. The first API fund:APNC project was completed, which has trained 150 persons. The design for the supply of drinking water and sanitation for the San Carlos community was finalized in September 2018. 254 persons have been certified as technicians trained with the AEROMAN project.

Budget execution Of the total allocated amount, the obligated and disbursed amount of this Activity as of September 2018 is: Investment Challenge

Accrued as of September 2018

Obligation

$ 4,142,818.96

Disbursement

$ 1,968,420.39

Chart 5 | Projection of the budgetary execution for the 2018-2020 Investment Challenge Fund Activity

Obligations

Disbursements

October 2018 - September 2019 Projections Contracting of the design, construction, and supervision of the WWTPs of Nejapa and El Zonte in October 2018. Contracting of the execution for the provision of potable water and sanitation for the San Carlos community in the first quarter of 2019. Signing of an investment agreement for the project to improve potable water in the Playa El Zonte and El Palmar areas in January 2019. Signing of the investment agreement for the trade facilitation project with an emphasis on the modernization of AnguiatĂş in November 2018 and contracting of the design, construction, supervision and equipment in February 2019. Signing of the investment agreement for the Bypass project between CA1 and CA8 in November 2018 and contracting of the design in February 2019. Contracting of the construction for the supply of drinking water in the Playa El Zonte and El Palmar areas in September 2019.

Sub activity 2: Public-private partnerships (PPP) What have we done? With the aim of supporting the government with an alternative modality to provide public goods and services, FOMILENIO II contributed to the process of reforming the Special Law on Public-Private Partnerships, which was submitted to the Legislative Assembly for the purpose of expanding and specifying the scope of the sectors in which public-private partnerships can be promoted. It was approved and entered into force in January 2018. The goal of FOMILENIO II is to sign two PPP projects for five prioritized projects during the term of the program: the Cargo Terminal of the â&#x20AC;&#x153;MonseĂąor Ă&#x201C;scar Arnulfo Romero y GaldĂĄmezâ&#x20AC;? El Salvador International Airport; Street Lighting and Video Surveillance in selected sections, Pacific Corridor (CA02) between the La Hachadura border and the CA12 highway (â&#x20AC;&#x153;kilo 5â&#x20AC;?); Selected border crossings; and the new Government Center.

There are two projects that record the highest degree of progress. On the one hand, the Cargo Terminal, which will contribute to increase the volume of merchandise managed for both imports and exports. The project has a favorable ruling from the Ministry of Finance regarding its fiscal impact, which enabled the next stage consisting of the contracting of an expert firm to formulate the business model for the project and generate the tender guidelines, which have already been submitted to the Export and Investment Promotion Agency of El Salvador (PROESA) and to the Autonomous Executive Port Commission (CEPA) for approval. To follow up on this issue, an interagency team composed of CEPA, PROESA and FOMILENIO II was also created. On the other hand, the street lighting and video surveillance project, designed to reduce the risk of accidents and deter crime in specific stretches of main highways, was made viable by the approval from the Legislative Assembly of the reform to Art. 26 of the Law on Highways and Neighboring Roads, on May 24, 2018. With this, one of the commitments taken on by the Millennium Challenge Compact was fulfilled. The street lighting and video surveillance project also obtained a favorable fiscal ruling issued by the Ministry of Finance, which allows FOMILENIO II to proceed with the contracting of the Transaction Advisor, which will be the firm responsible for preparing the respective business model and the tender guidelines. With regards to the other three projects in the prioritized portfolio, they will be supported in different phases: prefeasibility and feasibility studies for the rehabilitation or operation and maintenance of the La Hachadura-kilo 5 highway and the AnguiatĂş, La Hachadura, El Poy and El Amatillo border facilities, and contracting of the transaction advisor for the new Government Center. FOMILENIO II also supports the strengthening of the capacities of government institutions in the field of PPP. The training and certification process on support tools and on the structuring of PPP projects has continued during this period, contracting the delivery of several courses (general course on PPP, Crystal Ball Software, Project Finance) in which 40 people from CEPA, MH, PROESA, and MOPTVDU have participated.

Main outcomes achieved to date

Budget execution

On May 24, 2018, the reform to Art. 26 of the Law on Highways and Neighboring Roads was approved, which makes the PPP Street Lighting and Video Surveillance project feasible.

Of the total allocated amount, the obligated and disbursed amount of this Activity as of September 2018 is:

A favorable ruling was obtained from the Ministry of Finance on the study of the fiscal impact of both the Cargo Terminal project and the street lighting and video surveillance project, which allows for proceeding with the development of their respective business models and tender guidelines. 40 people from MOPTVDU, CEPA, MH and PROESA were trained on support tools and the structuring of PPP projects.

Public Private Partnerships

Accrued as of September 2018

Obligation

$ 2,775,363.87

Disbursement

$ 2,107,802.65

The following chart shows the way in which the budget execution for this Activity will behave during the five years of the Agreement. The accrued obligations and disbursements that would reach 100% of the execution before September 9, 2020 are presented.

Chart 6 | Projection of the budgetary execution for the 2018-2020 Public-Private Partnerships Activity

Obligations

Disbursements

Public-Private Partnerships El Poy AnguiatĂş

8 Departments 30 Municipalities La Hachadura

El Amatillo

The Alianza El Zonte signed an investment agreement with FOMILENIO II and the municipality of ChiltiupĂĄn for $10.8 million, which will enable improving the quality of life of over 2,000 people from the area, avoid the pollution of the El Zonte river, maintain the attractiveness of the beach area and incentivize a higher influx of tourists.

2018 Accountability Report

October 2018 - September 2019 Projections Approval by the Legislative Assembly for the contract of the first Cargo Terminal PPP project in August 2019. Approval by the Legislative Assembly for the contract of the second street lighting and video surveillance PPP project in September 2019. Contracting of the Transaction Advisor for the PPP project of the new Government Center in March 2019. Performance of the technical studies for the highway stretch between La Hachadura-kilo 5. Contracting of technical studies for the border crossings project.

Activity 2: Regulatory improvement What have we done? The Regulatory Improvement Organization (OMR, for its Spanish initials) was created by FOMILENIO II in order to review processes, laws, and regulations related to the world of business and to recommend the elimination, reformulation, or simplification thereof in light of technical and legal criteria. In this regard, and in order to comply with one of the main commitments of the Millennium Challenge Compact and achieve the permanent institutionalization of the Regulatory Improvement System in the country, the first draft of the Draft Law on Regulatory Improvement was developed, based on best international practices on the matter, as well as on the operation of the Salvadorian public administration.

Decreasing corruption with transparent processes and response times

This Law seeks not only to set forth the roles, functions, and relationships within the Regulatory Improvement System in El Salvador, but also to define its main tools. The draft was shared with the members of the Regulatory Improvement Council and work groups were set up, both with the main actors from the public sector (SETEPLAN and MINEC) and with representatives of the private sector (ANEP and CIFACIL). Likewise, a rapprochement was initiated with the Ad Hoc commission at the Legislative Assembly that will be in charge of studying this preliminary draft law and a joint mission was carried out to learn about the experiences in Peru and Mexico, in order to have a better idea of the scope and tools that the proposed Law must contain. The OMR has promoted the process of permanent institutionalization of the regulatory improvement policy, through participation in the committees of the Legislative Assembly and the promotion of the Law on Administrative Procedures, which was approved in December 2017 This law provides a regulatory and institutional framework to develop activities for administrative simplification and the analysis of the quality of regulations within the public administration. During this period, a Cooperation Agreement was signed with the Court of Audits of the Republic [es. Corte de Cuentas de la República] in order to ensure the adoption and implementation of plans, guidelines, and methodologies for Regulatory Improvement in the institutions that are part of the Regulatory Improvement System in accordance with Executive Decree No. 90. A proposal was agreed upon with the Ministry of Housing and Urban Development (VMVDU) for reforms to the Special Law for the Streamlining of Procedures for the Promotion of Construction Projects (LEAT). The construction of this proposal was preceded by a broad consultation process, involving CASALCO, ANDA, MARN, VMVDU, the Fire Department, MTPS and OPAMSS; these same entities are now being consulted for the validation of the text of the proposed reforms. On the other hand, in seeking to improve regulatory environment, the Technical and Planning Secretariat of the Presidency conducted the public launch of the project to simplify the registry of procedures in October 2017, in conjunction with the Executive Director of the OMR and the Secretariat for Citizen Participation,

2018 Accountability Report

Transparency and Anti-Corruption (SPCTA), with which we have worked arduously to purge this registry. There is already considerable progress that has been made and it is expected to be presented to the public in the last quarter of 2018. Each ministry has signed a Regulatory Improvement Plan, setting out the implementation timeline for the project, as well as the persons who will be in charge of the various activities with the OMR. During this year, information gathering took place on the 839 procedures, as well as their 2,287 modalities, from the 14 ministries of the Executive Branch. There was technical support from the Federal Commission on Regulatory Improvement of Mexico (COFEMER), now the National Commission for Regulatory Improvement (CONAMER), for the development and adaptation of data processing tools, the cost analysis of procedures, and the generation of public outcomes reports. The Social-Economic Cost of procedures is around 1.6% of El Salvador's GDP, equivalent to US$389.4 million per year. Consistently with the commitment to transparency and citizen participation, “Legisla” was publicly presented on July 16, 2018, which is a platform for public consultation on regulations, prepared jointly with the Institute for Access to Public Information. The main audiences of this activity were think tanks, universities, and NGOs. Subsequently, on July 20, a training was held at the Presidential House with the regulatory improvement liaisons, information officers, and technicians from the Executive Branch involved in the preparation of regulations. In addition, based on the improvement of the indicators in the World Bank's 2018 Doing Business report, a meeting was held with construction users and entrepreneurs to show them the progress made in simplifying procedures for the sector and to collect inputs in order to perform improvements and for the country to obtain a better score in the 2019 Doing Business. Participants included representatives of the OMR, OPMASS, VMVDU, as well as the people who collaborate with the annual survey conducted by the World Bank. Finally, a letter of intent was signed between the OMR and the Organization for Economic Cooperation and Development (OECD), to strengthen the alliances between the organization and El Salvador, as well as to secure their support during the construction of the Regulatory Improvement system in the country and its implementation.

Outcomes achieved during the period

Budget execution

The preliminary draft of the Law on Regulatory Improvement was generated, which will be submitted to the Legislative Assembly for discussion and approval during the last quarter of 2018.

Of the total allocated amount, the obligated and disbursed amount of this Activity as of September 2018 is:

A proposal for reforms to the LEAT was made. Information gathering and a cost analysis took place on the 839 procedures, as well as their 2,287 modalities, from the 14 ministries of the Executive Branch. As a result of this endeavor, the signing of plans to simplify procedures by the ministries has already begun. The â&#x20AC;&#x153;Legislaâ&#x20AC;? platform was launched, which is a tool for the public consultation of regulations, developed in jointly with the Institute for Access to Public Information: https://participacion.iaip.gob.sv/home

Regulatory Improvement

Accrued as of September 2018

Obligation

$ 2,652,067.21

Disbursement

$ 2,139,282.24

Chart 7 | Projection of the budgetary execution for the 2018-2020 Regulatory improvement Activity

Obligations

Disbursements

October 2018 - September 2019 Projections

Summary of Budget Execution for the Investment Climate Project

20% reduction of costs of the procedures at the 14 Ministries of the Executive Branch as of December 2018.

As of September 2018, out of the US$92.4 million allocated to the Investment Climate Project, 10.36% of the total funds have been obligated, for an amount of US$9.57 million. The following table consolidates the execution of the two activities:

Registration of all procedures of the Executive Branch in the Registry of Procedures in December 2018. Approval and application of the guidelines to conduct Regulatory Impact Assessments (RIA) and plans for the simplification of procedures. Follow-up on the implementation of the plans for the simplification of procedures.

Budget allocated to the Investment Climate Project: US$92.4 million Activity

Obligation

Disbursement

Activity 1: Development of Partnerships

$6,918,182.83

$4,076,223.04

El Salvador Investment Challenge (API) Fund

$4,142,818.96

$1,968,420.39

Public-private partnerships (PPP)

$2,775,363.87

$2,107,802.65

Activity 2: Regulatory Improvement

$2,652,067.21

$2,139,282.24

$9,570,250.04

$6,215,515.28

TOTAL

Allocated, obligated, and disbursed Program Budget The $365.2 million allocated to FOMILENIO II are distributed as follows:

Project

MCC Contribution

GOES Contribution

Total Investment

Percentage

Obligated as of September

Disbursed

Percentage as of September

Millions of US dollars Investment climate

42.4

92.4

25.30%

10.36%

6.22

Human capital

100.7

115.7

31.68%

47.00

40.62%

14.67

Logistical infrastructure

109.6

15.7

125.3

34.31%

70.72

56.44%

11.99

4.3

1.18%

0.43

9.99%

0.43

60.57%

15.96

9.57

Monitoring and evaluation

4.3

Program Administration

7.5

27.5

7.53%

16.66

277.00

88.20

365.20

100%

144.37

Total

40%

49.27

The following table shows the amount obligated and disbursed by FOMILENIO II, from the beginning of the Program until September 2018.

FOMILENIO II

Accrued as of September 2018

Obligation

144,371,721.21

Disbursement

49,267,231.36

The following chart shows the way in which the budget execution of FOMILENIO II will behave during the five years of the Compact. The accrued obligations and disbursements that would reach 100% of the execution before September 9, 2020 are presented.

Chart 8 | 2018-2020 Budgetary Execution Projection

Obligations

2018 Accountability Report

Disbursements

Difficulties faced Year after year, FOMILENIO II has faced great and diverse challenges which it has worked to address in the most positive and proactive manner; always remaining open to dialogue with different sectors and actors, both internal and external. Internally, we know that the limited disclosure of our activities has generated some lack of knowledge among the population. To address it, work is being undertaken with a communication strategy that can disseminate the main interventions of each Project, with activities such as national radio and television interviews to explain the scope and benefits of their implementation; publications in the most widely read newspapers; public events to inaugurate works; and directing meetings with various stakeholders; among others. One latent concern among the population is the potential environmental damage that the infrastructure works will cause. A specific dissemination plan was designed to this end on the environmental offset mechanisms that will be carried out through FIAES with regards to the felling of trees for the expansion of the Coastal Highway.

Likewise, the procurement of construction permits, a sequence of necessary requirements in order to be able to initiate the works, also entails an established process and timeline, and although it is indeed necessary, it can bring about complications for a program like FOMILENIO II which has a specific end date. However, the support of the institutions involved is assured and is coordinated through the Technical and Planning Secretariat of the Presidency (STPP) in order to avoid significant delays because of this. A race against the clock in the implementation of our Projects is present in each difficulty faced, and the time it takes for the approval of reforms to laws, which are donor conditions for the disbursement of funds for various actions, has not been the exception, sometimes resulting in the delay of some activity. FOMILENIO II is aware that there are still many challenges to come in the two years of execution that lie ahead, but it will continue to work towards the achievement of the desired outcomes.

On the other hand, the little interest shown in some tender processes has caused delays, since in such cases the process must be re-launched if the bids received do not comply with the requested requirements. To mitigate this problem, work is being undertaken to disseminate the processes in a sufficient and timely manner, so that a good competition is generated that enables contracting the company with the best capacities.

Control and Auditing The internal audit and the various external audits that control the institution continue to take place each year so as to verify the performance of FOMILENIO II with regards to the fulfillment of the objectives and goals of each project, as well as the financial side of things. They contribute with their observations to better institutional management and to make good use of available resources, which in turn decreases the probability of committing errors or irregularities. In the period reported for this report, the following audits have been conducted:

Oct 2017- sept 2018

No.

Control agents

Internal Audit

Compliance Advisor

Private audit firms

Court of Audits of the Republic

MCC Audits

US Government Audits (GAO)

United States Office of the Inspector General

Management and Budget Office

Total

2018 Accountability Report

Total

Annexes Public tenders 2017-2018 All FOMILENIO II contracts and procurements are carried out through public tenders and these can be consulted on our website:

https://www.fomilenioii.gob.sv/contratados Environmental offset for works on the Coastal Highway https://www.fomilenioii.gob.sv/mejorando-la-vida-de-las-personas Technical Factsheets of FOMILENIO II Projects https://www.fomilenioii.gob.sv/informe-de-rendicion-de-cuentas-2018

Drafting: MarĂa Elena EnrĂquez Layout: Nelson Valle Orellana Printing: Editorial e Impresora Panamericana Photography: FOMILENIO II This material is possible thanks to the support of the people of the United States of America, through the Millennium Challenge Corporation (MCC) The content of this material is not the responsibility of MCC or the Government of the United States of America., nor does it reflect the point of view thereof.

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FOMILENIO II

2018 Accountability Report

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2018 Accountability Report