ADDENDUM TO BUSINESS CASE FOR BRIDGE FUNDING AND SCALE-UP COST EXTENSIONS
SUMMARY INFORMATION
Project Name Punjab Education Support Programme II
(PESP II)
Country or region targeted Pakistan
Type of cost extension Cost extension (no change in project end
date)
Original project budget £350.5 million
Original project start and end dates February 2013 to March 2019
Cost extension value £70 million
New project end date March 2019 (no change in project end date)
Business Case Quest Document No. 3879535
INFORMATION
What is the project’s purpose?
The Punjab Education Sector Programme (PESP II) aims to support more children in
school for longer while learning more. Punjab is Pakistan’s biggest province and home
to over 100 million people (around 56% of the country’s population). As a result of its size,
Punjab has the highest number of out of school children (13 million of which 6.8 million are
girls1) aged 6-16 years, and the highest number of children with low learning levels in
Pakistan. Pakistan cannot hope to end its education emergency without a substantial
sustained increase in both the access and quality of education that children receive in
Punjab.
PESP II is complemented by the Roadmap process which drives change and unblocks
political barriers to reform. The Chief Minister, Shahbaz Sharif, and the UK Special
Representative for Education in Pakistan, Sir Michael Barber, conduct bi-monthly stocktakes
to assess progress. This has driven the ambition and pace of change and deepened political
commitment to education reform.
PESP II aims to deliver equitable access to better quality education across the whole
province through a range of innovative interventions with the Government of Punjab
(GoPb), the private sector and civil society organisations (CSOs). It consists of seven
components and the total value is £350.5 million.
1. A sector budget support (SBS) component provides funds to GoPb to improve access
to education and quality in Government schools. (£100 million).
2. A school infrastructure component upgrades facilities in existing public schools to
ensure they are fit for purpose. This is managed through technical assistance provided
by IMC. (£104 million).
3. Support to the Punjab Education Foundation (PEF) to build the capacity and quality of
Punjab’s growing low cost private sector which is concentrated in urban areas. (£68.6
million).
4. Given PEF’s capacity constraints, a credit guarantee scheme will be piloted through an
access to finance component, focusing on expanding the low-cost private sector in rural
areas. (£9 million).
1 Alif Ailaan 25 million broken promises report (An estimate for children in primary to high secondary (grade 12)).
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5. Tackling social exclusion and inequality by providing targeted support through civil
society in eleven priority districts. (£10.8 million).
6. A scholarship programme for university level study and girls’ higher secondary
education enables the poorest to enter higher education and creates role models.
(£18.2 million).
7. Technical assistance to underpin delivery of the other six components. (£39.7 million).
PESP II is in its second year of implementation and has already contributed to an extra
one million children attending school. The long-term ambition is to be
transformational over the remaining four years of the programme’s lifetime. The
programme scored an ‘A’ in its most recent Annual Review in November 2014. Notable
results include:
• Increased student attendance from 79% to 92.8% from September 2011 to December
2014, equivalent to 1,012,000 additional students attending schools.
• Improved teacher attendance from 84.7% to 92.9% from September 2011 to December
2014, equivalent to 24,010 more teachers attending each day.
• Increased number of functioning facilities from 75.1% to 94.7% from September 2011
to December 2014. This includes schools with boundary walls, running water, toilets
and electricity.
Log frame targets met include:
• 215,213 children supported through PEF’s education voucher scheme.
• 436,527 secondary school girls supported through stipends in 16 priority districts.
• 17,330 scholarships for poor and able girls for higher secondary education.
• 846 tertiary level scholarships for both boys and girls.
• Grade 1 maths and English textbooks developed in line with the new curriculum for 2
million children.
• Bi-annual assessment system in order to establish an acceptable standard of learning
quality.
• Support to the Punjab Inclusive Education Programme (PIEP) to mainstream children
with disabilities into public schools.
What is the objective of the cost extension?
The Chief Minister’s high-level political commitment to education reform in Punjab
presents a unique window of opportunity for transformation. The PESP II business
case set a high level of ambition but the Chief Minister, through the Roadmap process,
has set an even higher level through the 2018 goals to improve learning outcomes for
the complex Punjab public and low-cost private education system. These goals aim to
make “Punjab more like Malaysia” and focus on four policy areas: high-quality teaching and
enhancing the learning environment through high-quality school infrastructure (See Annex
1). Putting strong institutions and systems in place is central to addressing the quality of
education and the service provided in the public sector.
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INFORMATION
Leadership of the main education institutions is becoming increasingly capable but
capacity at the middle and lower levels remains weak. Additional SBS funding will help
build systems and staff capability; and improve the services provided by critical institutions.
These include the Directorate of Staff Development (DSD), the Punjab Curriculum and
Textbook Board (PCTB), the Punjab Examination Commission (PEC) and the Programme
Management and Implementation Unit (PMIU).
The challenge is not only to convince Government to spend more but to use existing
funds better. The percentage increase in Government allocation of budget to
education from 2013/14 to 2014/15 was 8% in Punjab. In 2014/15 DFID SBS represented
3% of the education budget. DFID’s SBS through PESP II is critical to our ability to
engage, influence and maintain policy dialogue with the Government of Punjab
(GoPb). Additional SBS will play a key role in driving and incentivising the Government to
deliver on policy priorities around improved learning outcomes and build on:
The successful continuation of a whole system reform approach
Since 2009, DFID has promoted an integrated range of interventions to strengthen
Government systems and build institutions. An estimated one million more students are now
attending school every day and an estimated 50,000 more teachers are turning up to school
to teach everyday under the supervision of District Education Officers. The overall learning
environment has also improved as 94.7% schools now have four basic facilities including
boundary walls, running water, toilets and electricity.
Support to Government of Punjab’s ambitious 2018 goals
The 2018 goals aim to have a major emphasis on improving the learning outcomes of
children studying in Government schools while continuing to push for the remaining out-of-
school children to attend.
The Government has set ambitious targets and budgets to improve learning outcomes for
the complex public and low-cost private system that includes 54,000 schools and 10.5 million
children. The new 2018 goals for a refreshed Road Map from January 2015 are:
(1) High-quality teaching and learning in the classroom which supports: teachers
training and support; and classroom-level monitoring to ensure quality lesson delivery
and regular assessment of pupil.
(2) Strong leadership and accountability to assist GoPb develop a better system of
selection, training and accountability of District and sub-District level managers and
teachers.
(3) A conducive learning environment which provides remedial support to primary and
lower secondary classes to improve learning levels and ensure no child falls behind.
(4) Enhancing the learning environment through improved school infrastructure and
reducing the incidence of multi-grade teaching.
Each area has five result targets which will be monitored through the stock take process2.
2 For example for the first area ‘high quality teaching and learning in the classroom’ the five actions are: the
revision of the curriculum, the development of world class texts books, the reform of the examination and
student assess systems, strengthened teacher training content and pedagogy and the increased quality and
frequency of teacher support.
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INFORMATION
The GoPb has already allocated an additional Rs. 20 billion over the course of the next four
years to focus on goals (1) and (2). In order to address all four goals, the GoPb requires
more funding than the Rs. 20 billion already committed and requested DFID to raise its
allocation of SBS through PESP II. A full summary of the Government’s goals is at Annex 1.
Other development partners
In 2012, GoPb requested further support to a second phase of PESP from the World Bank,
DFID and CIDA. DFID worked closely with the World Bank and Government to help design
PESP II and pushed for a bolder, more ambitious programme with a stronger focus on
results. The World Bank allocated $350 million for three years from 2012-2015. Through the
PESP II business case, DFID allocated £100 million of SBS from 2013-2019 of which £53
million was fully aligned with the World Bank’s programme from 2013 to 2015. Funding was
released against the achievement of Disbursement Linked Indicators (DLIs). CIDA
subsequently withdrew from the education sector in Punjab.
In 2013, at the GoPb’s request and on the basis of performance, DFID agreed to front load
£47 million of unallocated SBS funds against five additional result areas from 2013 to 2015.
These focused on: teacher recruitment, learning, strengthening examination and
assessment system, strengthening financial capacity and supporting inclusive education. All
the funds in the SBS component have now been utilised.
The World Bank is currently considering a successor PESP III agreement with GoPb for
another 3 years in line with the 2018 goals. This has an indicative value of $500 million
(£328.3 million equivalent). However, there will be a time lag as World Bank funding to PESP
II ends in December 2015 and they have not yet started appraisal. DFID is in dialogue with
the World Bank to ensure alignment with this potential next phase of support.
Need for additional SBS funding
£130 million of the total budget has already been spent over the first two years of
implementation. The remaining PESP II funds are already fully committed against the other
six components of the programme. Additional DFID SBS funding is therefore needed to
support the GoPb realise the ambition of the 2018 goals; and build the institutions and
capability to deliver increased access and a better level of learning. This is key to addressing
the quality of education and service provided in both the public and low-cost private sectors.
Government institutions in the education sector typically struggled to deliver quality
educational services, especially in the area of effective lesson delivery at classroom level
and in mentoring teachers, in developing quality text books and in managing the poor
performance of staff working at various levels of the education department.
The risks of not extending the SBS component in line with the rest of the programme are
considerable. These include: (a) insufficient funding to deliver the ambitious new GoPb 2018
agenda; (b) restricted DFID ability to continue policy dialogue with GoPb to influence reform;
and (c) inability to meet our current Operational Plan 2015/16 targets.
What is the additional and total support the UK will provide?
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INFORMATION
A cost extension of an additional £70 million is requested for the SBS component of PESP
II. This will increase the total value of the SBS component from £100 million to £170 million;
and the total value of PESP II from £350.5 million to £420.5 million from 2013 to 2019.
To meet the 2018 goals, the GoPb currently faces an estimated funding gap of Rs. 75 billion
(£477 million equivalent). Discussions are ongoing with the Punjab Departments of Finance,
and Planning and Development, to look at other financing options including dialogue with
the World Bank and public/private partnerships. However, it looks unlikely that the funding
needs can be sufficiently met without shifting substantial resources away from other sectors
within the province. If the World Bank provides new funding from FY 2016-17 and aligns
behind the Government’s reform plans, this will reduce the funding gap further. With an
additional £70 million SBS from DFID, the remaining gap could be closer to Rs. 20 billion
(£127 million equivalent). We are therefore confident that the Government can meet the
remaining financing needs.
The additional funding of £70 million will be forecast as follows:
Forecast for additional funding SBS tranche releases to date
Year Amount (£) Year Amount (£)
2015/16 10,000,000 2012/13 20,000,000
2016/17 20,000,000 2013/14 45,300,000
2017/18 25,000,000 2014/15 32,100,000
2018/19 15,000,000 2015/16 2,600,000
(payment expected in June
2015 pending the achievement
of two outstanding DLIs)
Total 70,000,000 Total 100,000,000
Disbursements are profiled to allow for funding on a predominantly reimbursement basis and
will be tied to progress against a new Results and Activities Framework (RAF). Funds peak
in 2017-18 in line with higher expected costs to meet the 2018 goals and tail off moderately
in the final year, more in line with GoPb annual allocations.
DFID’s SBS will provide additional financing to the education budget in support of system-
wide reform to improve education quality. The GoPb will determine the allocation of funds
within the budget. Disbursements will however be conditional on sufficient expenditure in the
following five areas to which DFID’s funds are notionally prioritised:
1. Employee-related expenditure for District education managers and staff appointed to
improve school leadership;
2. Resourcing of the Programme Management and Implementation Unit (PMIU)
(Government’s data collection and monitoring unit);
3. Support to Department of Staff Development (Government’s teacher training and
mentoring agency);
4. Support to Punjab Curriculum and Text Book Board;
5. Support to Punjab Examination Commission; and
6. Expenditure for public financial management reforms at the Provincial and District level
(to be determined as reforms are identified).
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INFORMATION
The PMIU will provide DFID with quarterly, 6 monthly and annual budget execution reports
as well as an annual audit report confirming expenditure in the priority areas. This will ensure
that DFID funds are not replacing GoPb funds and are additional.
What are the expected results?
This additional £70 million contribution to education reform in Punjab will benefit all
6 million primary and 4 million secondary school children in the province up to
2018/19 (including the 3 million expected to complete primary school between 2016/17
and 2018/19). These children who attend public sector schools will benefit from
improvements in the way the sector is resourced and managed in terms of budgets and
quality human resources at the provincial and district level; as well as improved teaching
quality and materials.
In terms of DFID attribution of results, the additional SBS will directly support at least 90,000
additional primary school children and 60,000 secondary school children by 2018/19. This is
in line with DFID’s current Departmental Results Framework methodology for SBS.
The Independent Commission for Aid Impact’s recent visit to Pakistan underlined the
need for long term, predictable support to bring about the transformational change
needed to build institutions and systems to deliver results. To achieve the 2018 goals,
GoPb will need to bring about a step change in school service delivery, for example teacher
training and mentoring; and effective school management. Learning levels will not increase
until the quality of lesson delivery, teacher supervision and mentoring is not improved.
Focus on girls3
Over 50% of out of school children are girls (6.8 million). While the leadership of the key
Departments is growing progressively more capable; middle and lower level staff are less
sensitive and aware of the barriers faced by girls. This extension will focus on building the
capability of these institutions to ensure increased girls’ enrolment and retention in schools
by:
• Ensuring that female staff in the Directorate of Staff Development have equal
opportunities to apply for key posts and for training and development.
• The Punjab Curriculum and Textbook Board is a relatively new institution. DFID
support will focus on improving the content of textbooks to ensure girls are portrayed
in a positive light; as well as strengthening procurement systems.
• Focusing on the Programme Management and Implementation Unit as the hub of
policy reforms inside Government. DFID support will enable the PMIU to develop better
policy, management and leadership skills through staff training. Data collection will be
carried out in all schools and analysed showing gender disaggregation on more than
fifteen indicators to aid decision-making mainly related to students’ and teachers’
presence and conditions of school buildings.
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Compliance with the International Development (Gender Equality) Act 2014.
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INFORMATION
• Improving district and sub-district level education leadership by focusing on the
recruitment and training of Education District Officers. The training programme will
ensure that competent women are given the opportunity to be part of a professional
education cadre in both boys’ and girls’ schools.
What is the approach to implementation?
The SBS extension will continue to follow the management arrangements set out in the
PESP II business case. The proposed results areas are in line with GoPb’s 2018 goals,
therefore the political oversight and monitoring system will continue through the Roadmap.
DFID technical assistance will also provide technical and management support. DFID
Pakistan will maintain strategic and implementation oversight.
Results and Activities Framework
Pending approval, a detailed Results and Activities Framework (RAF) linked to
disbursements will be developed and agreed with GoPb. The five result areas provisionally
agreed with GoPb (Annex 2) will be reviewed every year and linked to disbursement in the
month of June4. DFID’s Annual Review process will also evaluate progress on the whole
PESP II programme, including SBS, and ensure important lessons and recommendations
are captured. The RAF will also be reviewed as part of every Annual Review to ensure it is
still context specific.
Monitoring and reporting
The PMIU is responsible for performance monitoring and managing donor reviews. As
recommended by the recent Annual Review, DFID will explore the possibility of setting up a
steering committee for PESP II headed by the Secretary Education that brings the SBS
component together with other PESP II components critical to the reform effort.
PESP II technical assistance will report on RAF progress on a quarterly basis which will be
cross referenced with progress on the log frame. This will ensure that progress is being
regularly tracked with risks identified and managed in a timely manner. The focus of this cost
extension is on the quality of education which is why DSD, PCTB and PMIU will develop
their own implementation plan against each of the indicators. Progress against the plan will
be driven through monthly internal stocktake processes developed for all three departments
with DFID technical assistance.
Additional technical assistance will be required to safeguard UK funds, support delivery of
the RAF, build capacity and support the GoPb to deliver on the 2018 goals. This will be
sourced through the existing technical assistance budget. No additional resources are
required.
Method of disbursement
PESP II will disburse through the State Bank of Pakistan to the GoPb Provincial
Consolidated Non-Food Account 1. DFID will secure its funds through a monitoring
framework comprising budget execution reports with an additional focus on newly defined
4 GoPb has requested disbursement in June because (i) provides the government one full fiscal year to spend
the money before it lapses causing delays; (ii) early discussions indicate the funds to be disbursed and are
reflected in the budget; and (iii) DFID releases will be aligned with World Bank releases.
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priority areas of expenditure, annual Auditor General (external) audit, third party validations,
and Annual Reviews. DFID will also monitor the additionally of SBS through monitoring real
increases in annual education budgets and execution rates.
Risk management
PESP II has a well-established fiduciary risk mitigation strategy. DFID will secure its funds
through the monitoring framework described above. Other risks related to implementation
and delivery and politics are tracked systematically in DFID’s annual review and are tracked
on regular basis.
In 2014, DFID Pakistan assessed the fiduciary risk for Punjab to be substantial but stable
over the preceding three years.
Through the Sub-National Governance (SNG) programme, DFID Pakistan is working to
mitigate system level fiduciary risks in Punjab. DFID will also continue to actively manage
risk though the PESP II delivery plan on a monthly basis.
Value for money
The SBS component of PESP II aims to deliver value for money through:
• The policy dialogue and influence that SBS affords and the resulting policy reforms that
government is encouraged to design and implement.
• Driving and supporting system reforms that secure savings through improvements in
resource allocations and more efficient and effective service delivery.
• Supporting additional children in school at relatively low cost and improving the learning
outcomes of existing students.
• Tackling issues of equity by targeting enrolment of out-of-school children and
supporting more girls in school.
PESP II already supports a set of reforms alongside the bi-monthly Roadmap stocktake with
the Chief Minister. This provides considerable specialist expertise and influence to drive
delivery. Teacher and pupil attendance rates are now higher than ever (from 79% to 92.8%
from September 2011 to December 2014).
There is evidence from utilisation figures on recurrent and capital budgets that resources are
being used more effectively and financial releases are in time. Additional allocations by
Government to primary education show that at a minimum UK support is not displacing GoPb
own funding (allocations up from Rs 211 billion to Rs 255 billion); and there are good grounds
to claim that DFID support (technical and financial) is leveraging additional allocations from
GoPb to education, especially in the development budget (allocations up from Rs 29 billion
to 48 billion; a 67% increase).
The use of public funds to encourage more enrolment in the low-cost private sector appears
to be scaling up successfully from Rs 6.5 billion in 2012 to Rs 10 billion in 2014, a 54%
increase; with the cost of getting an additional child into education significantly lower than in
public sector (£40 per child per year vis a vis £80 per child per year in the low cost private
sector). At the moment 1.5 million children are enrolled in publically funded privately
managed Punjab Education Foundation.
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Partnership principles
DFID support to PESP is classified as Sector Budget Support. The business case states that
funding is based on the Government of Pakistan’s commitment to: poverty reduction;
protection of human rights; and strengthening public financial management and
accountability as set out in the UK’s ten year Development Partnership Arrangement with
Pakistan. DFID Pakistan has reviewed this arrangement periodically since it was agreed in
2006 but not published any formal assessments.
A new Partnership Principles Assessment (PPA) is currently being negotiated with the
Government of Pakistan. This sets out the Government of Pakistan’s commitment to the four
Partnership Principles as demonstrated through its policies and actions and will supersede
the previous Development Partnership Arrangement. The four Partnership Principles
represent a commitment to: reducing poverty and achieving the Millennium Development
Goals; respecting human rights and other international obligations; strengthening financial
management and reducing the risk of funds being misused through weak administration or
corruption; and a commitment to strengthening domestic accountability.
DFID Pakistan’s overall assessment is that the Federal Government is demonstrating a
credible commitment to the four Partnership Principles, particularly given the fragile security
and the challenges of the country’s democratic evolution. Pakistan lifted the moratorium on
the implementation of the death penalty following the school attack in Peshawar in December
2014. The UK remains opposed to the death penalty in all cases and will continue to raise
this as a concern in our dialogue with the government. In the meantime, we judge that it
would not be fair that the poorest across the country should suffer from a withdrawal or
reduction of UK support. A continuing substantive direct partnership is therefore justified.
With support from PESP II technical assistance, the Government is working on a medium-
term budgetary framework and formal budget execution reporting. PESP II is also working
closely with the DFID funded Sub-National Governance programme in the conduct of pay
roll audit for education employees (approximately 30% of the Punjab civil service). DFID’s
support for the Public Expenditure Review has also led to a better focus on better budget
utilization within the overall budgeting process on primary education as well as on non-salary
and development budget expenditure.
Describe any key changes to the original business case?
While the overall impact and outcome level results of the programme remain consistent with
the original business case, the key changes are below:
SBS eligible expenditure areas
The addendum reflects a shift from the original focus of PESP II on access to quality
services, with better learning outcomes as the major objective. Consequently the new priority
areas of expenditure for the time period of the addendum (2015-2019) will include: (a)
Employee related expenditure; including District Education managers and employees to
improve school leadership; (b) Improved data collection and analysis at Programme
Management and Implementation Unit; (c) Support to the Department of Staff Development;
(d) Institutional strengthening of the Punjab Curriculum and Text Book Board for better text
books development; (e) Support to the Punjab Examination Commission; and (f)
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Expenditures pertaining to public financial management reforms at Provincial and District
levels.
1. The percentage of PESP II funds allocated to SBS
The original business case allocated 34% of the total programme budget to SBS. At the time,
this was considered the optimal share to maximise results when balanced against the other
programme components. The extension will increase the percentage of SBS within the
overall PESP II budget to 40%. This takes into account a number of developments in the
programme and wider context:
• Increased Government reform ambitions focused on improved the quality of education,
resulting in an imminent funding gap but also opportunities to improve the effectiveness
of public spend.
• A marked improvement in budget execution in the education sector in 2013-14.
• Progress made on previous reform efforts to improve the efficiency of public spend
including: teacher rationalisation; merit-based teacher appointments; and increased
use of data and monitoring.
The key risks in the original business case remain the same and were assessed at the last
Annual Review in November 2014. Two additional risks around the delivery challenge and
the complexity and co-ordination of PESP II were added. Risks are also monitored through
the PESP II delivery plan by DFID Pakistan.
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Annex 1: Chief Minister Government of Punjab 2018 goals
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Annex 2: Preliminary Result Areas
Key Result Areas Details
Ensuring teachers deliver • Step change in quality of services of teachers training and
quality lessons at class mentoring services in Directorate of Staff Development
room level (DSD).
• 2000 additional teacher’s mentors for improved mentoring
across the province.
• Added capacity and performance management in the
system at each management step right from the province
to down at school level.
• Effective data driven implementation of numeracy and
literary services.
• DSD playing a role of resource centre for teachers and
private sector needs, disseminating knowledge and
shaping learning policy outward effectively.
• DSD solving students key learning problems by working
systematically on weaker areas of academic development
of students.
Accountable performance • Movement towards professionalization of Education cadre
management system for including district and sub district level officers.
teachers and school • Proposal for selection of 6000 head teachers of high and
leaders middle schools on improved criteria and through a cadre
and progress towards their recruitment.
• Improved skill and leadership training programme for
Education District Officers is developed.
• Cluster head teachers supervision of primary schools pilot
is enlarged.
Child friendly text book • Improved textbook development process: bringing in new
development capable staff and specialist text book authors, enlarged and
more inclusive book review process, transparent bidding
processes, text book testing process.
• Practicing transparency as a key cornerstone of
operations in Punjab Text Book Board ensuring that
selection of text books authors, review committee
members, selection of private sector publishers and
bidding process is completely transparent with information
easily available.
• Minimize fiduciary risk by improving budgeting,
procurement, financial management and auditing.
Meeting commitments on • Shift to Medium Term Budgetary Framework.
Public Financial • Quarterly budget execution analysis and dialogue.
Management • Follow up on recommendations of Public Expenditure
Tracking Survey.
• Timely audit reporting.
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