PUBLIC

DOCUMENT OF THE INTER-AMERICAN DEVELOPMENT BANK

ARGENTINA

DEVELOPMENT PROGRAM FOR METROPOLITAN AREAS OUTSIDE THE

CAPITAL
(AR-L1101)

LOAN PROPOSAL

This document was prepared by the project team consisting of Eduardo Figueroa
(FMM/CAR), Project Team Leader; Veronica Adler (FMM/CUR); Natalia Benasso
(CSC/CAR); Fernando Orduz (TSP/CAR); Eduardo Rojas (ICF/FMM);
GumersindoVelzquez (PDP/CAR); Gustavo Sierra (PDP/CAR); Gernimo Frigerio
(LEG/SGO); Alfredo Garay (Consultant); Maximiliano Marqus (Consultant); Jorge
Mendoza (Consultant); and Diana Bejar (ICF/FMM).

Under the Access to Information Policy, this document is subject to Public Disclosure
 CONTENTS

PROGRAM SUMMARY

I. DESCRIPTION AND RESULTS MONITORING ...................................................................... 1

A. Background, problem and rationale ...................................................................... 1

B. Objectives, components and cost........................................................................... 5
C. Key indicators in the results matrix ....................................................................... 7

II. FINANCING STRUCTURE AND RISKS ................................................................................. 7

A. Financing instruments ............................................................................................ 7

B. Environmental and social safeguard risks ............................................................. 7
C. Fiduciary aspects .................................................................................................... 8
D. Other special aspects and risks .............................................................................. 9

III. IMPLEMENTATION AND ACTION PLAN ........................................................................... 11

A. Summary of the execution mechanism ............................................................... 11

B. Summary of monitoring and evaluation arrangements ...................................... 12
C. Significant activities subsequent to approval ...................................................... 14
 - ii -

ANNEXES
Annex I Development Effectiveness Matrix (DEM) summary
Annex II Results matrix
Annex III Summary procurement table

ELECTRONIC LINKS
REQUIRED
1. Annual work plan
2. Monitoring and evaluation arrangements
3. Full procurement plan
4. Environmental and social management report
5. Risk mitigation matrix

OPTIONAL
1. Fiduciary arrangements and requirements
2. Economic benefits of urban agglomerations
3. Institution-building in metropolitan areas outside the capital
4. Legal and regulatory environmental requirements at the subnational level
5. Diagnostic assessment of the metropolitan areas in the sample
6. Program Operating Regulations
 - iii -

ABBREVIATIONS

CEU Central Executing Unit

LIBOR London Interbank Offered Rate
PEU Provincial executing unit
PROMEBA Programa de Mejora de Barrios [Barrio Improvement Program]
SEPA Sistema de Ejecucin de Planes de Adquisicin [Procurement Plan
Execution System]
UEPEX Unidades Ejecutoras de Prstamos Externos [External Loan Execution
Units]
 PROGRAM SUMMARY

ARGENTINA
DEVELOPMENT PROGRAM FOR METROPOLITAN
AREAS OUTSIDE THE CAPITAL
(AR-L1101)

Financial Terms and Conditions

Borrower: Argentine Republic Amortization period: 25 years
Grace period: 5 years
Executing agency: Ministry of the Interior Disbursement period: 5 years
Source Amount % Interest rate: LIBOR-based
(US$ millions)
IDB (Ordinary Capital) 40.0 80 Inspection and supervision fee: *
Local 10.0 20 Credit fee: *
Total 50.0 100 Currency: U.S. dollars from the
Single Currency Facility
Program at a Glance
Objective:
The goal of the program is to help improve service delivery in metropolitan areas outside the capital so as to improve quality of life for their
residents and make their urban economies more competitive. The specific objective is to design and implement innovative approaches to
managing projects and delivering services where efficient performance requires cooperation between two or more territorial jurisdictions
(national/provincial/municipal governments).

Special contractual clauses:

As conditions precedent to the first disbursement, evidence must be provided that: (i) the executing agency has put the Operating
Regulations and procedures into effect, with the Banks no objection (paragraph 3.2); (ii) the External Loan Execution Units (UEPEX)
system (paragraph 2.4) has been implemented; and (iii) the program's executive coordinator has been appointed (paragraph 2.3).

Special execution conditions:

As conditions precedent to the transfer of resources to the programs subexecuting agencies: (i) the framework participation agreement
between the executing agency and each subexecuting agency, under the terms agreed with the Bank, must take effect (paragraph 3.4); and
(ii) an agreement between jurisdictions for coordinated management of investments and service delivery must be formalized
(paragraph 1.19).

Exceptions to Bank policies:

None.

Project consistent with country strategy: Yes [X] No [ ]

Project qualifies as: SEQ [ ] PTI [ ] Sector [ ] Geographic [ ] Headcount [ ]

*
The credit fee and inspection and supervision fee will be established periodically by the Board of Executive Directors as part of its review of the Banks
lending charges, in accordance with the applicable provisions of the Banks policy on lending rate methodology for Ordinary Capital loans. In no case
will the credit fee exceed 0.75% or the inspection and supervision fee exceed, in a given six-month period, the amount that would result from applying
1% to the loan amount divided by the number of six-month periods included in the original disbursement period.
 I. DESCRIPTION AND RESULTS MONITORING
A. Background, problems to be addressed, and rationale
1.1 Background. Argentina is one of the most highly urbanized countries in Latin
America. UN Habitat estimates that more than 90% of Argentina's 40 million
people were living in towns with more than 2,000 inhabitants in 2010. The urban
population is growing at an estimated 1.02%, consistent with a slowing trend in the
national population growth rate (estimated at 0.88%).
1.2 The country has a total of 17 metropolitan areasurbanized areas that extend over
the territory of more than one subnational entityincluding greater Buenos Aires,
which, with 13 million inhabitants, is one of the 10 biggest cities in the world.
There are also large metropolitan areas in some of the provinces, which have
emerged as large cities (Crdoba, Mendoza, Rosario, and Tucumn) spread out into
the surrounding municipios. Together with Buenos Aires, these urban
agglomerations account for 50% of the country's urban population.
1.3 A characteristic feature of urban development in Argentina, as in other countries of
Latin America and the Caribbean, is the growing sociospatial fragmentation of
cities, with increasingly polarized income distribution. The resulting residential
segregation is generally accompanied by uneven delivery of basic services such as
sanitation, health, transportation, and education, which further deepens sociospatial
divides. Despite their serious social problems, however, urban areas also offer
greater opportunities to boost productivity and economic competitiveness, and to
deliver public services efficiently. Delivery of these services is unquestionably
more complicated in metropolitan areas, where inhabitants and their economic
activities occupy territory belonging to multiple local jurisdictions, creating systems
with marked functional interdependence. As a result, service delivery and urban
development planning cannot be approached independently within each
jurisdiction, but require solutions that encompass the entire territory and that will
promote efficiency and equity in the functioning of the entire metropolitan area.
1.4 There are basically three types of metropolitan area in Argentina: (i) monocentric
areas that have emerged as one city spread into adjacent municipios; (ii) polycentric
areas, where a number of neighboring cities within a province have grown together;
and (iii) polycentric areas that extend across the territory of two provinces or into
neighboring countries. The current legal framework in most of the provinces does
not provide for formal entities to coordinate the action of neighboring or contiguous
municipios. Consequently, action is needed on the part of higher levels of
government, to allow for intermunicipal or interprovincial territorial planning and
project implementation for a single urban agglomeration.
1.5 Problems to be addressed. It is a more complicated matter to organize services
and distribute their costs fairly when they need to be delivered across several
jurisdictions. For example, the coordination of public transit services requires the
cooperation of several municipios, which are responsible for regulating private
transportation services at the local level; the provincial government, which is
 -2-

responsible for intermunicipal services; and occasionally the federal government,

which has jurisdiction over interprovincial transportation services. Final solid waste
disposal is another area that requires coordination among various municipios in
order to achieve the economies of scale needed for efficient, environmentally sound
waste treatment. Planning for the stormwater drainage system is yet another
example of a service that must be coordinated in order to ensure efficient delivery,
good management, and equitable funding, given that the functioning of drainage
systems in upstream municipios is affected by the operation and maintenance of
systems in downstream municipios. Other facets of metropolitan development that
require coordinated management include: (i) land-use planning and oversight;
(ii) watershed management; (iii) site authorization for activities with adverse
impacts on their surroundings (e.g., water treatment plants, polluting industries, and
prisons); and (iv) emergency services in case of natural disaster. Optional link 3
contains an analysis of Argentina's metropolitan areas and the cross-jurisdictional
coordination challenges they face.
1.6 In summary, it may be said that problems lie in three main areas: (i) the absence or
weakness of territorial planning instruments that embody a strategic vision of the
city in the context of the global, regional, and national economy and that can serve
to guide sector investments (transportation, land use, housing); (ii) the shortage of
investment financing for integrated urban development projects for transportation
and road systems, basic sanitation, solid waste management, environmental
management, and other regional projects; and (iii) a lack of effective institutions
and capacities to deal with matters of common concern in the management of
finances, administrative services, basic services, the urban environment, etc.
1.7 The Bank's experience with the operations it has financed in support of
decentralization and subnational management suggests that there will be no single
model for metropolitan management in Argentina, as the municipal regime differs
from province to province and the need to coordinate metropolitan services depends
on the type of service. Currently, coordination among the various jurisdictions in
the major urban agglomerations is takes place informally or through a variety of
partial institutional arrangementsconsortiums of municipios, local development
councils, supra-municipal coordination boards, special-purpose cooperation
contracts, and voluntary cooperation. To ensure effective development of
metropolitan areas, the existing coordination mechanisms will have to be improved
and new forms of management will be needed to respond to the complexity of these
challenges.
1.8 There are also opportunities to achieve economies of scale at the metropolitan level.
Pooling efforts for the delivery of common services can reduce overall costs, avoid
redundancies, and provide economies of scale, while making it possible to set up
compensatory mechanisms to mitigate externalities. Urban systems can be made
more efficient and operational by establishing consistent regulatory frameworks
governing land use allocation and recommended densities and growth patterns.
 -3-

1.9 Experience and lessons learned. The Bank's experience supporting metropolitan
development issues began only recently, but its pioneering effort was undertaken in
Argentina, with the Integrated Development Program for Large Urban Areas in the
Argentine Interior (loan 1068/OC-AR) and support for preparation of strategic
guidelines for Metropolitan Buenos Aires (AR-T1010). The outcomes of the big
cities program suggest that in Argentina, over the short and medium term, it will
not be possible to reach comprehensive metropolitan development agreements
among the various territorial jurisdictions responsible for service delivery. That
conclusion is consistent with the findings of the evaluation of international
experience that was part of the metropolitan governance study summarized in the
Bank-published book entitled Governing the Metropolis.1 That study
demonstrated the technical and political difficulty of establishing a one-tier
metropolitan government responsible for providing all services, or two-tier
arrangements where a metropolitan authority and local governments share service
delivery. With politically fragmented federal systems such as Argentinas,
experience shows that it is better to establish metropolitan agencies specializing in
the delivery of one or just a few common services, as a first step toward more
ambitious schemes. Experience with urban issues in Argentina has also been
derived from the Barrio Improvement Program (PROMEBA) I and the conditional
credit line for investment projects (CCLIP) for PROMEBA II (loan 1842/OC-AR),
as well as the Rosario Habitat program (loan 1307/OC-AR), and reinforced with
institutional strengthening of local governments supported through the Program to
Improve Municipal Management (loan 1855/OC-AR). Specifically with regard to
metropolitan issues, the lessons learned from these operations point to the need to
include coordination mechanisms and incentives for interagency cooperation and to
engage the interest of local governments via the shared benefits associated with the
investments, and they also highlight the key role of the provinces in balancing out
basic differences between municipios with common interests and problems by
cofinancing the local contribution. All these considerations were factored into this
operation.
1.10 Rationale. Addressing metropolitan problems in a comprehensive manner is a
public management strategy that can generate economic and social returns. A
number of studies on public transit, solid waste management, sanitation, and other
sectors have demonstrated the efficiency and equity gains from integrated service
delivery in metropolitan areas. For example, coordination of public transportation
services affects the efficiency of labor markets by increasing the number of jobs
available within a given commuting time (as well as the size and diversity of the
workforce available to businesses).2 Sanitary solid waste disposal is made more
1
E. Rojas, J. R. Cuadrado-Roura, and J. M. Fernndez-Gell, eds., Governing the Metropolis (Washington,
D.C.: Inter-American Development Bank, 2005).
2
R. Prudhomme and C.W. Lee, 1999, Size, Sprawl, Speed and the Efficiency of Cities, Urban Studies
36[11]: 1848-1858. Prudhomme estimated these impacts for the metropolitan areas of Buenos Aires and
So Paulo in studies conducted for the Inter-American Development Bank during preparation of the
PROCENTRO project in So Paulo and in seminars with Argentinas Ministry of the Interior.
 -4-

efficient and environmentally sound by using treatment plants whose technology

demands large volumes of waste, properly accompanied by an efficient waste
collection system and distribution of costs among a group of neighboring
municipios.3 These are just two examples of the efficiency and equity gains that can
be achieved by coordinating service delivery across metropolitan areas.
1.11 Integrated urban development planning also makes metropolitan areas operate more
efficiently and can reduce their urban footprint. In Argentina urban development is
the responsibility of the municipalities, which have nearly full autonomy in
managing their territory. Among other problems, this situation leads to duplication
of land use, for example for industrial parks, or the designation of urban expansion
zones that are much larger than necessary, thereby encouraging discontinuous, low-
density (and hence, inefficient) urban sprawl. Metropolitan areas would benefit
from an integrated approach to planning and managing their territory, developing
new governance mechanisms, promoting new forms of intergovernmental
collaboration, and developing new partnerships with the private sector and civil
society.
1.12 There are opportunities to promote various forms of coordinated management of
metropolitan issues in Argentina. The coordination challenges are specific,
depending on the sector problems that need to be addressed in each city.
International experience suggests that no single model can be developed for
metropolitan management: rather, it is best to take a gradual approach, developing
specialized sector entities to manage specific problems, and encouraging voluntary
participation and cooperation among the different entities concerned (governments
at different levels, the private sector, and civil society).4
1.13 The main challenge in the design of this operation lies in consolidating
management models in the absence of a legal framework for metropolitan
governance. To overcome this difficulty, the program takes a pragmatic approach,
offering incentives and promoting coordination and management mechanisms
geared to the needs of each metropolitan area and each individual service.
1.14 This operation is in line with the Bank's 20042008 country strategy with
Argentina, updated for 20092011, in that it will contribute to institution-
strengthening for better governance and fiscal sustainability in metropolitan areas.
It is also fully consistent with the Bank's subnational development strategy
(document GN-2125-3), which promotes the establishment of efficient and
effective institutional structures for managing investments and services. The
program is consistent with the mandate of the Ninth General Increase in Resources
of the Bank (Board of Governors document AB-2764) in that it supports the

3
Optional link 2. Economic benefits of urban agglomerations.
4
For a discussion of the advantages of this approach in Latin America, see E. Rojas, J. R. Cuadrado-Roura,
and J. M. Fernndez-Gell, 2005, op. cit.
 -5-

development of institutions for growth and social welfare by strengthening

subnational institutions operating under a framework of transparency and
accountability.
B. Objectives, components and cost
1.15 Objectives. The goal of the program is to help improve service delivery in
metropolitan areas outside the capital (hereinafter referred to simply as
metropolitan areas) so as to improve quality of life for their residents and make
their urban economies more competitive. To this end, the program will support the
design and implementation of innovative approaches to managing projects and
delivering services where efficient performance requires cooperation between two
or more territorial jurisdictions. The program will support institution-strengthening
and the design and implementation of multi-jurisdictional management
arrangements, and will finance investments in the infrastructure, equipment, and
goods necessary for their operation. The program is divided into three components:
1.16 Component 1. Support for metropolitan area governance (US$2.9 million).
This component will place the issue of metropolitan management on the public
agenda by helping to create discussion forums for identifying and analyzing
metropolitan problems and exchanging information on metropolitan planning
activities and policies. It will finance consulting services and workshops to position
and publicize the importance of managing metropolitan issues. This component will
specifically support: (i) preparation of diagnostic assessments for building
metropolitan priority agendas; (ii) design of regulatory frameworks for
metropolitan institutions; (iii) training for officials; (iv) documentation and
dissemination of good practices in metropolitan management; and (v) development
of a community of practice in metropolitan management in coordination with the
website www.gobiernolocal.gob.ar. Two international workshops will be held to
disseminate outcomes and share experiences.
1.17 Component 2. Metropolitan area management (US$44.5 million). This
component includes two subcomponents:
1.18 Subcomponent 2.1. Institutional strengthening of metropolitan areas
(US$7.4 million), to support the processes of institutional development and
building provincial and municipal capacities to address metropolitan problems. This
subcomponent will finance consulting services to: (i) design and implement
partnership initiatives between municipios for carrying out investments and
delivering common services; (ii) formulate integrated strategic metropolitan
guidelines; (iii) support preparation of plans and programs to promote, regulate, and
monitor urban development and metropolitan sector master plans to coordinate
municipal land-use plans, including the designation of urban expansion areas and
environmental protection and watershed management measures; and (iv) prepare
metropolitan-scale investment projects to submit for federal or provincial financing
in such sectors as water and sanitation, stormwater drainage, mobility, road safety,
 -6-

health and education infrastructure, and minor infrastructure for sports and
recreation.
1.19 Subcomponent 2.2. Investments (US$37.1 million) will finance specific
investments for a set of three to six demonstration metropolitan regions, in areas
that require coordinated action by more than two territorial jurisdictions. Eligible
investments will be located in urbanized areas that extend across municipal
boundaries or involve two provinces, and where the total population exceeds
100,000. As conditions for eligibility, works will have to be a necessary
metropolitan priority and be technically, economically, and environmentally
feasible, and there must be a minimum level of institutional development for
purposes of coordinating operations. As a condition precedent to the financing of
investments, there must be an agreement between the jurisdictions for coordinated
management of investments and service delivery.
1.20 Preference will be given to the following sectors: (i) metropolitan mobility, road
safety, coordination and improvement of public transportation services, and
introduction of dedicated public transit lanes, bicycle paths, and pedestrian
walkways; (ii) integrated solid waste management; (iii) coordination of municipal
service delivery in the metropolitan area and its sustainable financing, in particular
for health and education (technical and vocational) services in support of
sustainable metropolitan management and development; (iv) implementation of
metropolitan networks of parks and recreation areas; (v) integrated maintenance
systems for roads and public spaces; (vi) coordination of measures to promote local
economic development (harmonization, rationalization, and reform of municipal tax
codes and licensing procedures for production activities); (vii) planning for the
siting of industrial zones and fairgrounds; (viii) wholesale markets; and
(ix) promotion of new urban centers. Investments have already been preidentified in
the areas of integrated solid waste management, road safety, and construction of
bicycle paths in three representative metropolitan areas, as described in paragraphs
2.9 and 2.10.
1.21 Component 3. Administration and management (US$2.6 million). In addition to
the above components, the program will finance consulting services and equipment
for program supervision, audits, monitoring and evaluation, communication and
dissemination, management, and administration. The amount of US$100,000 has
been earmarked for program evaluation.
 -7-

1.22 Cost. The following table summarizes program costs:

Table I.1. Cost and Financing (in thousands of U.S. dollars)
Local
Categories Bank Total %
counterpart
1. Support for metropolitan area governance 2,900 0 2,900 5.8
2. Metropolitan area management 34,500 10,000 44,500 89.0
2.1 Institution-strengthening 6,700 700 7,400 14.8
2.2 Investments 27,800 9,300 37,100 74.2
3. Administration and management 2,600 0 2,600 5.2
Total 40,000 10,000 50,000 100
% 80 20 100

C. Key results indicators

1.23 The main outcomes of the program relate to the creation of new institutional
arrangements for the management of metropolitan areas, to improve quality of life
for their residents and make them more competitive. Results will be measured in
three areas: (i) efficiency gains through joint organization of services; (ii) effective
implementation of metropolitan management mechanisms; and (iii) formulation and
execution of demonstration projects that take an integrated approach to
metropolitan problems. The indicators and their projected values are shown in
detail in the Results Matrix (Annex II).

II. FINANCING STRUCTURE AND RISKS

A. Financing instruments
2.1 Program resources and disbursement schedule. The total cost of the program is
US$50 million; 80% of this will be financed by the Bank from its Ordinary Capital,
and the remaining 20% will constitute the counterpart contribution. The execution
period will be five years running from the effective date of the loan contract. The
disbursement schedule is presented below:
Table 2.1. Disbursement Schedule (in thousands of U.S. dollars)
Source of financing/ Year 1 2 3 4 5 TOTAL
IDB 3.55 6.87 12.21 11.52 5.85 40.0
Local 0.53 1.32 3.03 3.35 1.77 10.0
Annual TOTAL 4.08 8.19 15.24 14.87 7.62 50.0
% 8% 16% 31% 30% 15% 100%

B. Environmental and social safeguard risks

2.2 Consistent with the Bank's safeguards policy, a program environmental assessment
was conducted during preparation, jointly with the Ministry of the Interior. That
assessment evaluated the system of legal and regulatory jurisdictions and
environmental procedures at the national, provincial, and municipal levels. The
document spells out the environmental procedures to be followed during program
 -8-

execution, including: (i) environmental eligibility criteriaprojects with a high

potential to cause significant adverse environmental or social impacts will not be
eligible; (ii) instructions for processing environmental permits for works; and
(iii) procedures for developing routine environmental supervision, auditing, and
monitoring. The program is geared primarily to institution-strengthening, but
includes demonstration projects relating to metropolitan management. The
anticipated adverse impacts will be temporary and moderate, and will be restricted
to the works execution stage; no resettlement will be necessary. The program calls
for measures to mitigate such impacts, as described in the environmental and social
management report. In light of its characteristics, the program has been classified as
a category B operation under the Bank's Environment and Safeguards
Compliance Policy (operational policy OP-703). The operation was considered by
the Environmental and Social Impact Review Committee on 28 June 2010 (meeting
ESR 26-10).
C. Fiduciary considerations
2.3 The Ministry of the Interior, the programs executing agency, has a Central
Executing Unit (CEU) within its administrative structure whose purpose is to
manage all programs with multilateral lending agencies that target provinces and
municipios. The CEU, which dates from 1991, has a structure consistent with Bank
requirements and has prepared a plan to assist decentralized units with project
administration. Appointment of the program coordinator will be a condition
precedent to the first disbursement under this operation.
2.4 Financial management. The loan proceeds may be disbursed as advances,
reimbursements, and/or direct payments.5 In the case of advances, disbursements
will be based on a financial plan6 for up to 120 days. The External Loan Execution
Units (UEPEX) system will be used, both at the central level at the CEU and by
the subexecuting agencies in each provincial executing unit (PEU), for more
efficient and effective financial management. Implementation of the UEPEX
system will be a condition precedent to the first disbursement.
2.5 Procurement. The procurement plan will be managed using the on-line electronic
Procurement Plan Execution System (SEPA). The CEU will have direct
responsibility for procurement under components 1 and 3, while the PEUs in each
metropolitan area will handle procurement under component 2, with supervision by
the CEU.
2.6 Works and goods will be procured and consulting services contracted in accordance
with the policy for the procurement of goods and works financed by the IDB
(document GN-2349-7) and the policy for the selection and contracting of

5
IDB disbursement guide. III. Disbursement methods (pages 1 and 2).
6
For the Bank loan, all estimated costs/expenses for each investment category, month by month, covering the
disbursement request period; for the local counterpart and other sources, the resources that these parties will
contribute to the project for the same period (total by investment category).
 -9-

consultants financed by the IDB (document GN-2350-7), both of July 2006, and
with the specifications in the loan contract and the document on fiduciary
arrangements and requirements. Those documents will also identify the review
modalities for the procurement of goods and nonconsulting services and the
contracting of works and consulting services financed by the Bank.
2.7 Advance procurement and retroactive financing. It is expected that consulting
services will be contracted and goods will be procured for the program prior to
program eligibility. Retroactive financing for such expenditures will be provided
for up to 3% of the loan (US$1.2 million) and 3% of the local counterpart
contribution (US$0.3 million). These expenditures are associated with completion
of the preinvestment studies, development of final designs for works, and
continuation of land-use planning activities in the city of Mendoza. Consistent with
the Banks policy for the recognition of expenditures, retroactive financing, and
advance procurement (operational policy OP-504), these are expenditures that the
borrower incurs from the date of approval by the Board of Executive Directors until
project eligibility, though not prior to the date the project profile was approved by
Bank Management (4 August 2010).
D. Other special considerations and risks
2.8 Program risks. During the risk identification and analysis process, a total of
14 risks were identified, nine of which were assessed as being of low severity, four
of medium severity, and one of high severity. The analysis is described in detail in
Appendix I to this document; the most severe risk identified is summarized here,
with the corresponding mitigation measures. That risk relates to the sustainability of
the proposed management arrangements, and has to do with the difficulty of
coordinating among players for the purpose of collective activities. To mitigate this
risk, the following measures have been included: (i) for each metropolitan area
there will be a detailed analysis of the players involved and their particular interests
and motivations; (ii) meetings will be held with key stakeholders; and
(iii) communication plans will be implemented to position the issue and
demonstrate the effectiveness of addressing metropolitan issues in an articulated
manner.
2.9 Technical issues. During program preparation, the country's main types of urban
agglomeration were identified, and three representative areas where coordinated
management mechanisms are already operating were selected: (i) Greater Salta, a
unicentric agglomeration located within a single province, where the city of Salta
dominates the smaller municipios surrounding it; (ii) Greater Mendoza, a
polycentric agglomeration within a single province, where several important
municipios make up the greater metropolitan area; and (iii) Neuqun-Cipolletti, a
bicentric agglomeration spanning two different provincial jurisdictions (Neuqun
and Rio Negro).7

7
See optional link 3, Institution-building in metropolitan areas outside the capital.
 - 10 -

2.10 In the three selected regions, the program will help to strengthen coordination and
management mechanisms between the metropolitan municipios. For Greater Salta
and Neuqun-Cipolletti, the program will finance the preparation of mobility and
transportation master plans and integrated management plans for the disposal of
solid wastetwo major issues for metropolitan management for which sector
diagnostic assessments and terms of reference are available. Also for these two
regions, the program will finance environmental remediation activities for the open
garbage dumps with the most harmful impact on health and the environment. These
projects have conceptual designs that will be reviewed during program startup, to
look at alternative solutions and select the least-cost option. The two systems will
not require new landfills for final disposal, and improved management of sanitary
landfills in the municipio of Salta and in Neuqun will be included as part of the
program. For Greater Salta, funding will also be provided for a metropolitan road
safety program, with participation by the Metropolitan Transport Agency.
2.11 For Greater Mendoza, the program will support preparation of the land use plan for
the metropolitan area and its strategic environmental assessment. A strategy will
also be prepared to promote cycling as an urban transportation alternative and as an
experiment in good metropolitan management practice. An investment project will
be financed involving preparation of final designs and implementation of bicycle
paths in the municipios of the metropolitan area, as part of its traffic separation
strategy. Future projects will be selected based on demand, in the order in which
they are submitted, after verification that they meet the corresponding eligibility
and feasibility criteria. For investments in health, education, transportation, water
supply, basic sanitation, drainage, and solid waste, work will be coordinated with
the respective sector divisions.
2.12 Economic appraisal. The economic appraisal of this operation is based on other
similar metropolitan projects. The mechanisms for cooperation and coordination
among subnational entities belonging to an urban agglomeration have many
advantages, the most important being the economic benefits of optimizing the use
of available infrastructure and achieving economies of scale. The specific benefits
relate to the delivery of public services (primarily water and sanitation, trash
collection, and coordination of transportation). These include economies of scale,
enhanced bargaining power with suppliers of goods and services, avoidance of
redundancies, greater propensity to innovation, access to advanced technologies,
and lower costs related to congestion and pollution.
2.13 The conceptual economic appraisal (optional link 2) presents the results of several
appraisal exercises conducted for metropolitan projects. These results suggest that
this program will achieve satisfactory rates of return. In the case of waste
management, existing studies8 show that regional management of final disposal
sites produces economies of scale on the order of 20% to 30% over decentralized

8
Under IDB loan 1868/OC-AR for integrated solid waste management in tourist municipios in Argentina,
the least-cost criterion was used for comparative evaluation of alternatives.
 - 11 -

management. To determine the feasibility of each sector intervention, alternatives

will be analyzed and the least-cost alternative will be financed.
2.14 Financial feasibility. The financial analysis focused on the financial capacity of the
subnational entities to carry the annual operating and maintenance costs of the
projects, including future investments that will be required as each urban
agglomeration develops. Previous experience9 shows that the requirement for
accountability between the various agencies leads to more transparent, orderly, and
efficient administration while obliging them to give out more information to civil
society on matters of public interest. The local counterpart funds will be provided
by the participating provinces, as set out in detail in the framework participation
agreements, which will serve as binding instruments.

III. IMPLEMENTATION AND ACTION PLAN

A. Summary of implementation arrangements

3.1 The borrower will be the Argentine Republic. The executing agency will be the
Ministry of the Interior, acting through its Central Executing Unit (CEU). The CEU
will be the central office responsible for program coordination and for execution of
component 1 (Support for metropolitan area governance).
3.2 Component 2 (Metropolitan area management) will be implemented in a
decentralized manner by the participating provinces and municipios, as
subexecuting agencies. The participating metropolitan areas will propose projects
for financing under the program, in line with the criteria and conditions described in
the Operating Regulations, which set out the responsibilities of the participating
metropolitan areas to be included in the framework participation agreements.
Through these agreements, the provincial or municipal executive branch will accept
the program conditions and the clauses of the contract to be signed between the
borrower and the Bank. The Operating Regulations have been developed and
reviewed with the national authorities and are ready for approval. Evidence that
the executing agency has put the Operating Regulations into effect will be a
condition precedent to the first disbursement.
3.3 The CEU will be responsible for coordinating and implementing the various actions
and interventions, as well as for promoting communication and integration between
the agencies involved in the program, and will serve as the Ministry of the Interiors
direct interlocutor with the Bank. It will also be responsible for financial and
accounting management of the operation. The main functions of the CEU include:
(i) program investment planning and budget coordination with the subexecuting
agencies; (ii) evaluation of final designs for institution-strengthening and works;
(iii) implementation of management and accounting systems for physical and
financial supervision; (iv) physical and financial supervision and preparation of the
respective progress reports; (v) preparation and monitoring of bidding processes for
9
Development Consortium for Northwest Buenos Aires (CODENOBA).
 - 12 -

works, goods, and services; (vi) monitoring of works supervision and inspections;
(vii) coordination and supervision of social and environmental aspects;
(viii) accounting and record-keeping controls, submittal of disbursement requests,
and rendering of accounts; (ix) oversight and coordination of compliance with the
clauses of the loan contract; (x) monitoring and evaluation of outcomes and of the
targets and indicators in the Results Matrix; (xi) preparation and monitoring of
annual work plans; (xii) preparation and supervision of the terms of reference for
contracting individual consultants and consulting firms; (xiii) preparation of all
technical and administrative documentation relating to bidding and contracting
processes; and (xiv) preparation of such other reports as the Bank may require.
3.4 In the metropolitan areas, project management will fall to the provincial executing
units (PEUs) or to other designated metropolitan management entities, provided
that they have the institutional and technical capacity, the CEU has assessed the
merits of the arrangement, and the Bank has expressed its agreement. It is important
to note that the PEUs or management entities may be strengthened using program
resources. Before transfer of the funds (which will be nonreimbursable), the
executing agency will sign a framework participation agreement with the
coexecuting agency. Entry into force of the framework participation agreement
between the executing and subexecuting agency, under the terms agreed with
the Bank, will be a condition precedent to the first transfer of resources to
each subexecuting agency.
3.5 Audits. During program execution the CEU will present annual audited financial
statements for the program, in accordance with Bank policies. It has been agreed
that the executing agency will contract an external audit firm. The audited financial
statements will be presented within 120 days after the end of the fiscal year. The
programs closing audit report will be presented within 120 days after the last
disbursement.
B. Summary of monitoring and evaluation arrangements
3.6 Monitoring system. The CEU has developed a system for monitoring and tracking
operations under its responsibility. That system produces detailed reports on outputs
by project as well as general summaries. The system makes it possible to define
project-specific output and outcome indicators, with the associated targets for each
period. To date, the system only monitors physical targets, but work is under way to
integrate it with the UEPEX system so that it can track financial execution of
projects. For monitoring fiduciary matters, the CEU will continue to use the country
systems already in place, which are satisfactory to the Bank. All project transactions
will be conducted through the computerized system established for UEPEX. The
required financial reports will include: (i) a financial execution plan for 180 days
following the request for advances; (ii) annual audited financial statements; and
(iii) such other reports as the fiduciary specialists may require. Procurement will be
monitored on the basis of the Procurement Plan Execution System (SEPA) already
in place.
 - 13 -

3.7 The program monitoring system comprises the multiyear work plan, annual work
plans, progress reports, and the field supervision plan. This will be supplemented
with periodic updates to the risk mitigation matrix. The CEU will load the output
and outcome indicators into its monitoring system. The program includes funds to
improve that system, which will be made available to the subexecuting units, along
with training for responsible staff.
3.8 The midterm and final reviews will be key milestones in the monitoring system.
The CEU will prepare a midterm evaluation report and deliver it to the Bank
90 days after 50% of the loan proceeds have been disbursed, or 30 months into the
execution period, whichever comes first. It will also submit to the Bank a final
evaluation report, which will serve as input for the project completion report,
90 days after 90% of the loan proceeds have been disbursed. These reports will
include: (i) financial execution results by component; (ii) achievement of output
and outcome targets and progress toward expected impacts, based on the indicators
in the Results Matrix; (iii) compliance with the environmental requirements for
works, as established in the program environmental assessment, as well as
operation and maintenance of the completed works; (iv) compliance with
contractual commitments; (v) a summary of the findings of all audits conducted
during program execution; and (vi) a summary of the principal lessons learned.
Once accepted by the Bank, these two reports will be made publicly available on
the Ministry of the Interior website. The two evaluations will be carried out by
consulting firms, which will be contracted by the CEU using the loan proceeds.
3.9 Evaluation. The program's impact will be evaluated using the before and after
method. The expected outcomes are described in the Results Matrix (Annex II), the
main indicators for which were agreed during preparation, along with the methods
and means of verification. Funds have been specifically earmarked for evaluation,
separate from the funds for the monitoring system.
3.10 Given the nature of the program, with projects not all identified in advance, the
planned evaluation is based on the most viable projects. The program's impact will
be expressed in terms of efficiency gains from the joint implementation of services
by the municipalities in the targeted metropolitan areas. The impact assessment will
compare current costs with post-project costs for the delivery of three categories of
services (solid waste disposal, public transit, and environmental control), including
the negative costs (losses) generated by externalities and inefficiencies in the
service. The services and the metropolitan areas to be evaluated will be selected
based on the feasibility of formalizing the respective agreements. Thus, the ex ante
study of each service will be done after its economic, financial, and institutional
feasibility has been determined. The impact will be measured after the collaborative
schemes or services have been implemented, at the end of the program.
3.11 Evaluation work will be performed by consultants qualified in development project
impact assessment, with a specifically earmarked budget of US$100,000.
 - 14 -

C. Significant activities subsequent to approval

3.12 The works investments in the three metropolitan areas selected are intended to
strengthen joint management mechanisms between the participating municipios and
the provinces. While proposals have already been preliminarily agreed between the
participants, they still require full implementation of the proposed management
mechanisms and preparation of final designs for the works. During program startup,
a major effort will be needed to make the proposed management mechanisms
operational, contract the final designs for the works, and then contract the works
themselves, which is planned for the second year of execution. The project team
will monitor preparation of the final designs for the works and will provide ongoing
assistance during startup in order to help implement the institutional agreements.
 Annex I
(AR-L1101)

Development Effectiveness Matrix

Summary

Maximum
Indicator Score
Score
I. Strategic Relevance Low-High
1. IDB Strategic Development Objectives 3.2 10
Country Diversification 0.7 2
Corporate Initiatives 2.5 2.5
Harmonization and Alignment 0.0 3.5
Beneficiary Target Population 0.0 2
2. Country Strategy Development Objectives 9.6 10
Country Strategy Sector Diagnosis 6.0 6
Country Strategy sector objective & indicator 3.6 4
Highly
II. Development Outcomes - Evaluability
Satisfactory
3. Evidence-based Assessment & Solution 9.1 10
4. Evaluation & Monitoring Plan 5.8 10
5. Cost-Benefit or Cost-Effectiveness 7.0 10
6. Risks & Mitigation Monitoring Matrix 10.0 10
III. IDBs Role - Additionality
7. Additionality 7.0 10
Technical Assistance provided prior the project 3.0 3
Improvements in management of financial, procurement, monitoring or statistics internal controls 4.0 4
Improvements in environmental, health and labor performance 0.0 3

I. Strategic Relevance: This is an investment project in Argentina, an A country in South America. The project aims to
improve the operation of basic services, through innovative management systems for project execution and service
provision that require coordination of several territorial jurisdictions. The operation includes activities for institutional
strengthening, as well as concrete investment actions in pre-selected demonstrative areas. The project is aligned with the
Banks Country Strategy, regarding inter-jurisdictional governance, urban development and improvement of quality of life
in cities, and it also aligned to the Banks corporate initiative in infrastructure.

II. Evaluability: The document presents a solid diagnostic of the problem and the proposed solutions. The projects main
activities are logically related to the objectives and problems identified. The project has adequate indicators to track
outputs, results and the ultimate impacts. The baselines for impact inidcators are needed, and will be developed during
the process of defining the policies supported by the Program. Risks have been adequately identified, as well as their
mitigation measures and corresponding indicators. The project includes arrangements for monitoring and evaluation. An
economic analysis of some of the urban agglomerations has been carried out and budget has been devoted for a reflexive
evaluation at the end of the project.

III. Additionality: While there are no technical assistance resources directly linked to this operation, several
consultancies on environmental, economic and management issues have been carried out. A workshop to expose the
international experience on management systems for metropolitan areas has also taken place. The project has
encouraged the decision to adopt the UEPEX system in the executing and sub-executing agencies.
 Annex II
Page 1 of 2

ARGENTINA
DEVELOPMENT PROGRAM FOR METROPOLITAN AREAS OUTSIDE THE CAPITAL
(AR-L1101)

RESULTS MATRIX
The goal of the program is to help improve service delivery in metropolitan areas outside the capital so as to improve quality of life for their residents
Project objective and make their urban economies more competitive. The specific objective is to design and implement innovative approaches to managing
metropolitan areas.

Impact Baseline Final target Means of verification

Economic efficiency gains in the delivery 20% increase in average performance of

of metropolitan services 0 the metropolitan systems supported by the Program impact evaluation surveys
program

Final
Base YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 Comments
target

Component 1. Support for metropolitan area governance:

Output indicators
Diagnostic assessments of metropolitan area issues 0 1 2 2 1 6
Discussion/awareness/consultation workshops in
0 5 10 10 5 30
6 metropolitan areas (5 workshops each)
International workshops on metropolitan issues 0 1 1 2
Officials trained each year in metropolitan issues 0 120 120 120 120 120 Noncumulative target
Design and implementation of a metropolitan issues portal 0 1 1 1 1 1 1 Noncumulative target
Outcome indicators
Metropolitan priority agendas formulated 0 2 2 2 6
Nonparticipating metropolitan areas interested in establishing
1 2 2 2 7
institutional arrangements for managing metropolitan issues
Annex II
Page 2 of 2

Component 2. Metropolitan area management:

Output indicators
Strategic integrated metropolitan guidelines formulated 0 1 1 2
Metropolitan sector plans formulated 0 1 2 2 1 6
Investment prefeasibility studies 0 2 2 2 6
Investment feasibility studies 0 1 2 1 4
Institutional development projects formulated and
0 2 2 2 6
implemented
Integrated solid waste management projects in progress 0 0 1 1 2
Road safety projects in progress 1 1
Bicycle path projects in progress 1 1
Other metropolitan projects in progress 1 1
Outcome indicators
Institutional arrangements agreed and metropolitan project
0 1 3 2 0 6
profiles identified

Institutional structures working on metropolitan issues 0 2 2 2 6

Sector issues resolved through investments financed by the
0 2 2 1 5
program
Component 3. Administration and management
Output indicators
Executing unit operating 1 1 1 1 1 1 1 Noncumulative target
Audit firm contracted 1 1 1 1 1 1 1 Noncumulative target
Program communication and dissemination strategy designed Noncumulative target
1 1 1 1 1 1 1
and being implemented
Outcome indicators
Executing unit formed and operating 0 1 1 1 1 1 1 Noncumulative target
 Annex III
Page 1 of 3

ARGENTINA
DEVELOPMENT PROGRAM FOR METROPOLITAN AREAS OUTSIDE THE CAPITAL
(AR-L1101)

PROCUREMENT PLAN (SUMMARY)

Source of financing
Estimated dates Status
Estimated and percentage
Review (pending, in
Category and description of the procurement Procurement
Ref. No. (ex ante or Publication of process, Comments
procurement contract cost method1
ex post) Local/ Specific Completion of awarded,
(US$000) IDB %
other % Procurement contract cancelled)
Notice
I GOODS
I.1 Computer equipment for strengthening 50 S Ex ante 75% 25% 2nd quarter 2012 4th quarter 2012 Pending
metropolitan area 1
I.2 Computer equipment for CEU 50 S Ex ante 100% 1st quarter 2012 3rd quarter 2012 Pending
I.3 Computer equipment for strengthening 50 S Ex post 75% 25% 3rd quarter 2012 1st quarter 2013 Pending
metropolitan area 2
I.4 Operating expenses (miscellaneous 22.5 S Ex post 100% 3rd quarter 2011 4th quarter 2012 Pending
goods, inputs, etc.)
Subtotal 172.5
II. WORKS
II.1 Refurbishment as part of metropolitan 50 S Ex ante 75% 25% 2nd quarter 2012 4th quarter 2012 Pending
area strengthening project
II.2 Metropolitan area solid waste works 7,000 ICB Ex ante 75% 25% 3rd quarter 2011 4th quarter 2013 Pending
II.3 Metropolitan area mobility and 8,000 ICB Ex ante 75% 25% 3rd quarter 2011 4th quarter 2013 Pending
transportation works
Subtotal 15,050
III. NONCONSULTING SERVICES
III.1 Publications from the first international 6.25 S Ex post 100% 1st quarter 2012 4th quarter 2012 Pending
workshop
III.2 Publications from the second 6.25 S Ex post 100% 1st quarter 2013 4th quarter 2013 Pending
international workshop
Annex III
Page 2 of 3

III.3 Publications on metropolitan issues 13 S Ex post 100% 1st quarter 2012 4th quarter 2012 Pending
III.4 Miscellaneous materials and expenses 15.75 S Ex ante 100% 3rd quarter 2011 2nd quarter 2012 Pending
for international workshop 1
III.5 Miscellaneous materials and expenses 15.75 S Ex post 100% 3rd quarter 2012 2nd quarter 2013 Pending
for international workshop 2
III.6 Miscellaneous materials and expenses 27.5 S Ex ante 100% 3rd quarter 2011 2nd quarter 2012 Pending
for workshops in metropolitan areas
(various contracts) for 5 workshops in
2011
III.7 Miscellaneous materials and expenses 55 S Ex post 100% 3rd quarter 2012 2nd quarter 2013 Pending
for workshops in metropolitan areas
(various contracts) for 5 workshops in
2012
III.8 Materials and expenses for training 74 S Ex ante 100% 3rd quarter 2011 4th quarter 2012 Pending
plan (3 seminars)
III.9 Operating expenses (various services) 15 S Ex post 100% 3rd quarter 2011 4th quarter 2012 Pending
Subtotal 213.5
IV. CONSULTING SERVICES (firms and individual consultants)
IV.1 Sector diagnostic assessment 2011 200 QCBS Ex ante 100% 3rd quarter 2011 2nd quarter 2012 Pending
IV.2 Sector diagnostic assessment 2012 200 QCBS Ex post 100% 1st quarter 2012 4th quarter 2012 Pending
IV.3 Sector diagnostic assessment 2012 200 QCBS Ex post 100% 1st quarter 2012 4th quarter 2012 Pending
IV.4 Metropolitan forum facilitators and 102.5 3CV Ex post 100% 1st quarter 2011 4th quarter 2012 Pending
speakers (5 positions per area)
IV.5 Metropolitan forum facilitators and 205 3CV Ex post 100% 1st quarter 2012 4th quarter 2012 Pending
speakers (5 positions per area)
IV.6 Integrated strategic metropolitan 500 QCBS Ex ante 100% 4th quarter 2011 4th quarter 2012 Pending
guidelines for 1 metropolitan area
IV.7 Sector strategic metropolitan 350 QCBS Ex ante 100% 3rd quarter 2011 1st quarter 2012 Pending
guidelines for a metropolitan area
IV.8 Sector strategic metropolitan 350 QCBS Ex ante 100% 3rd quarter 2011 2nd quarter 2012 Pending
guidelines for a metropolitan area
IV.9 Sector strategic metropolitan 350 QCBS Ex ante 100% 1st quarter 2012 4th quarter 2012 Pending
guidelines for a metropolitan area
IV.10 Project prefeasibility study 200 QCBS Ex ante 100% 3rd quarter 2011 2nd quarter 2012 Pending
 Annex III
Page 3 of 3

metropolitan area 1
IV.11 Project prefeasibility study 200 QCBS Ex post 100% 1st quarter 2012 4th quarter 2012 Pending
metropolitan area 2
IV.12 Feasibility study 400 QCBS Ex ante 100% 3rd quarter 2011 3rd quarter 2012 Pending
IV.13 Training for officials in metropolitan 54 3CV Ex ante 100% 3rd quarter 2011 4th quarter 2014 Pending
issues (36 person-months)
IV.14 Community of practice in metropolitan 297 3CV Ex post 100% 3rd quarter 2011 2nd quarter 2015 Pending
issues (portal) (204 person-months)
IV.15 Specialists for international workshops 31 3CV Ex post 100% 1st quarter 2012 4th quarter 2012 Pending
in metropolitan issues1st workshop
(includes 4 consultants)
IV.16 Specialists for international workshops 31 3CV Ex post 100% 1st quarter 2013 4th quarter 2013 Pending
in metropolitan issues2nd workshop
(includes 4 consultants)
IV.17 Capacity-building plan trainers 24 3CV Ex ante 100% 3rd quarter 2011 4th quarter 2012 Pending
(3 national seminars x 4 specialists)
IV.18 External audit 75 QCBS Ex ante 100% 3rd quarter 2011 4th quarter 2013 Pending
IV.19 Technical assistance to metropolitan 108 3CV Ex post 100% 2nd quarter 2011 4th quarter 2015 Pending
areas for project development and
implementation (72 person-months)
IV.20 Technical team for program 1,795 3CV Ex post 100% 1st quarter 2011 4th quarter 2015 Pending
management and administration
(17 specialists)
Subtotal 5,672.5
TOTAL 21,108.5

1
Goods and Works: ICB: International competitive bidding; S: Shopping
Consulting Firms: QCBS: Quality- and cost-based selection
Individual Consultants: 3CV: Selection of individual consultant based on 3 curricula vitae