The World Bank Implementation Status & Results Report STATE OWNED ENTERPRISES RELATED FISCAL MANAGEMENT PROJECT (P160796) STATE OWNED ENTERPRISES RELATED FISCAL MANAGEMENT PROJECT (P160796) AFRICA WEST | Cabo Verde | Governance Global Practice | IBRD/IDA | Investment Project Financing | FY 2018 | Seq No: 6 | ARCHIVED on 29-Jun-2021 | ISR47408 | Implementing Agencies: Ministry of Finance, Republic of Cabo Verde Key Dates Key Project Dates Bank Approval Date: 04-Jun-2018 Effectiveness Date: 22-Oct-2018 Planned Mid Term Review Date: 01-Nov-2021 Actual Mid-Term Review Date: Original Closing Date: 31-Jul-2023 Revised Closing Date: 31-Dec-2025 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The Project Development Objective is to strengthen SOE related fiscal management. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Component 1: Results-Based Financing:(Cost $16.00 M) Component 2: Technical Assistance:(Cost $10.50 M) Component 3: Project Management:(Cost $0.50 M) Component 4: IFH and housing sector reform:(Cost $3.00 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Satisfactory Moderately Satisfactory Overall Risk Rating Moderate Moderate Implementation Status and Key Decisions The Cabo Verde State-Owned Enterprises (SOEs) Related Fiscal Management became effective on October 22, 2018. The five year project is financed through an International Development Association (IDA) credit of U$20 million. An additional Financing (AF) of U$10 million was approved by the IDA Board on June 18, 2021. The proposed AF aims to scale-up, and expand on activities financed under the Parent Project by: (i) supporting the restructuring and privatization of State-Owned Enterprises (SOEs) in line with the Government privatization agenda; (ii) promoting reform in the housing sector and the SOE mandated to provide social housing services; (iii) strengthening SOE oversight, and concession contracts and PPP fiscal risk monitoring; and (iv) promoting Foreign Direct Investment in the SOE sector. The overall Project Development Objective (PDO) is to strengthen SOE related fiscal management. This will be achieved through: (i) restructuring and privatization of the SOEs in line with Government’s SOE reform plans; (ii) providing high quality after care service to private investors; (iii) improving transparency of the SOE fiscal risk reporting; and (iv) reforming of the social housing sector. The project responds to a context in which SOE's fiscal burden is unsustainable for public finances. The project is aligned with the Government’s privatization and divestment agenda and is 6/29/2021 Page 1 of 9 The World Bank Implementation Status & Results Report STATE OWNED ENTERPRISES RELATED FISCAL MANAGEMENT PROJECT (P160796) consistent with the Cabo Verde Strategic Plan for Sustainable Development (2017–2021). The project is also consistent with the World Bank Cabo Verde Country Partnership Framework for the period FY2020-2025 (Report No. 127164-CV). Progress towards the achievement of the PDO and overall Implementation Progress are currently rated as Moderately Satisfactory. While the progress towards the achievement of the PDO has been Satisfactory during the fiscal years 2019 and early 2020, as evidenced by the achievement of two out of three PDO indicators and four out of six Intermediate Result Indicators, the Corona Virus Disease 2019 (COVID-19) has since negatively impacted on the SOE sectors’ operational and financial performance. For instance, while the Cabo Verde Airline (CVA)’s 2020 loss improved by 36 percent, the company still recorded significant financial deficit and negative operating margin. As a result, annual revenue generated by the SOE, in terms of tax payments, dividends, concession payments, divestment proceeds, to the Government budget is estimated at US$6.2 million. This is below the target of US$7 million, and represents a 72.44 percent decline compared to the 2019 actual of US$22.5 million. Meanwhile, the Government’s policy to mitigate the impacts of the pandemic has led to a selective temporary increase of financial support to SOEs which could further increase fiscal risks from the sector. The Government of Cabo Verde has disclosed the pipeline of 23 companies to be restructured and/or divested and remains committed to reform the SOE sector. Nonetheless, the SOE reform momentum has been delayed by the negative impact of COVID-19, the election period and the overall global private investment context characterized by low private sector appetite. Reform momentum requires turnaround, in order to complete the restructuring/privatization of remaining SOEs, the 2020 SOE’s report (covering 2019), and the new SOE policy. The Government counterpart and project team are monitoring these reform actions closely to accelerate implementation momentum. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance High Substantial Substantial Macroeconomic Substantial Substantial Substantial Sector Strategies and Policies Moderate Moderate Moderate Technical Design of Project or Program Moderate Moderate Moderate Institutional Capacity for Implementation and Substantial Moderate Moderate Sustainability Fiduciary Moderate Moderate Moderate Environment and Social Substantial Moderate Moderate Stakeholders Substantial Moderate Moderate Other Substantial -- -- Overall Substantial Moderate Moderate Results PDO Indicators by Objectives / Outcomes Strengthen SOE related fiscal management IN01015344 ►Reduced public financing to SOEs - including transfers from the budget and capitalization (% of GDP) (Percentage, Custom) 6/29/2021 Page 2 of 9 The World Bank Implementation Status & Results Report STATE OWNED ENTERPRISES RELATED FISCAL MANAGEMENT PROJECT (P160796) Baseline Actual (Previous) Actual (Current) End Target Value 10.90 7.00 7.00 6.00 Date 29-Dec-2017 30-Nov-2019 31-Dec-2020 31-Dec-2025 IN01015363 ►Improved operating margin of CVA (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 144.00 219.00 193.00 80.00 Date 29-Dec-2017 30-Nov-2019 31-Dec-2020 31-Dec-2025 IN01015367 ►Annual public revenues from SOEs (Millions USD - in tax payments, dividends, concession payments, divestment proceeds) (Amount(USD), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 5.00 22.00 6.20 20.00 Date 31-Dec-2017 30-Nov-2019 31-Dec-2020 31-Dec-2025 Intermediate Results Indicators by Components Component 2: Technical Assistance IN01015345 ►IRI1: Comprehensive SOE policy adopted (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Current (2016) SOE The government framework law outlines adopts a policy on general rules for SOEs including clear Value No policy adopted No policy adopted corporate governance of performance targets SOEs and government and transparency oversight and reporting obligations of SOEs Date 29-Dec-2017 31-Dec-2018 31-May-2021 31-Mar-2022 Not achieved. The delay is namely due to the impact of Covid 19 which prevents the travel of the firm providing Technical assistance to the Government. The SOE policy is now planned to be delivered in Comments: January 2021 IN01015364 ►IRI2: Implementation and utilization of the SOE financial database (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Database with UASE operates general complete financial and excel sheet with basic Revamped Database operational Value Database up and running aggregated information is not up and running performance on six (6) largest SOEs information on the entire SOE portfolio 6/29/2021 Page 3 of 9 The World Bank Implementation Status & Results Report STATE OWNED ENTERPRISES RELATED FISCAL MANAGEMENT PROJECT (P160796) Date 29-Dec-2017 29-Mar-2019 31-May-2021 31-Mar-2022 Achieved Comments: IN01015368 ►IRI3: Strengthened legal framework for debt management with a greater emphasis on contingent liabilities (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target new law for debt new law for debt maangement including manangement A clear legal Fragmented debt contingent liabilities including contingent framework that is Value management legislative approved by the liabilities approved by respected by SOEs framework Parliament in December the Parliament in and Government 2018 December 2018 Date 29-Dec-2017 29-Mar-2019 31-May-2021 31-Mar-2022 Achieved Comments: IN01015371 ►IRI4: Review of SOE Portfolio and structuring oversight/holding of SOEs (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Some individual The government has The government has Greater clarity on performance reviews disclosed the pipeline of disclosed the pipeline SOEs that need to be Value carried out as part of 23 companies to be of 23 companies to be restructured, sold or performance agreement restructured and/or restructured and/or partially privatized preparations divested divested Date 29-Dec-2017 01-Nov-2018 31-May-2021 31-Mar-2022 Achieved Comments: IN01015373 ►IRI5: Fiscal risk monitoring reports on SOE portfolio published (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Comprehensive reports on all SOEs published on MoF’s web site including analysis of financial Yes - 2017, 2018, and operational Annual report on Yes - 2017 Fiscal Risk 2019 Fiscal Risk performance Value contingent liabilities from Report issued in June Report issued, 2020 is (including, 6 largest SOE 2018 pending benchmarking) and all financial transfers with the state (including all transfers, arrears, implicit subsidies, etc.) Date 31-Dec-2017 01-Nov-2018 31-May-2021 31-Dec-2022 Achieved. 2019 report published in March 2020 Comments: IN01015374 ►IRI6: Citizen Feedback on SOE Reform Process with sex disaggregated data (Text, Custom) 6/29/2021 Page 4 of 9 The World Bank Implementation Status & Results Report STATE OWNED ENTERPRISES RELATED FISCAL MANAGEMENT PROJECT (P160796) Baseline Actual (Previous) Actual (Current) End Target Information available on citizens' opinion on how well government Surveys to be carried out has planned for, No information on citizen Surveys to be carried Value two years into the communicated and opinion out in 2022 reforms implemented SOE sector reforms. The information is also gender disaggregated Date 31-Dec-2017 01-Nov-2018 31-May-2021 31-Dec-2025 Not yet due Comments: IN01015375 ►IRI 7: SOE restructured or privatized (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- 0.00 8.00 Date 30-Apr-2021 -- 31-May-2021 31-Dec-2025 This is a new indicator added via the AF. The restructuring and privatization of SOE such ENAPOR, IMPHARMA, ELECTRA, ASA are ongoing and progress on this IRI will be recorded once the process Comments: completed. The IRI will be updated each Semester. IN01015376 ►IR 8: Improved SOE financial accountability and transparency (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- 0.00 100.00 Date 30-Apr-2021 -- 31-May-2021 31-Dec-2025 Newly added IRI. Progress will be recorded after implementation of the technical assistance included in the AF. The IRI will be updated on annual basis as SOE financial statement is prepared at the end of the Comments: year. IN01015377 ►IRI9 Improved capacity of SOE’s Board members including women (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- 0.00 100.00 Date 30-Apr-2021 -- 31-May-2021 31-Dec-2025 Newly added IRI. Progress will be recorded after implementation of the technical assistance included in Comments: the AF, The IRI will be measured each year. IN01015381 Female SOE Board members trained (Percentage, Custom Breakdown) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- 0.00 100.00 6/29/2021 Page 5 of 9 The World Bank Implementation Status & Results Report STATE OWNED ENTERPRISES RELATED FISCAL MANAGEMENT PROJECT (P160796) Date 30-Apr-2021 -- 31-May-2021 31-Dec-2025 IN01015378 ►IRI10 Enhance co climate benefits of SOE’s investment (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- 0.00 100.00 Date 30-Apr-2021 -- 31-May-2021 31-Dec-2025 Newly added IRI. Progress will be recorded after implementation of the technical assistance included in Comments: the AF. The IRI will be measured and updated each year. IN01015379 ►IRI 11 Grievances received and addressed through the project GRM within the specified timeframe (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- 0.00 100.00 Date 31-May-2021 -- 31-May-2021 31-Dec-2025 The IRI is newly added and will be measured and updated on annual basis Comments: Component 4: IFH and housing sector reform IN01015361 ►IRI 12: Improved social housing (class A) rent collection (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value na -- na 90.00 Date 30-Apr-2021 -- 31-May-2021 31-Dec-2025 Newly added IRI. Progress will be recorded after implementation of the technical assistance included in Comments: the AF. The IRI will be measured and updated on annual basis. IN01015365 ►IRI 13 IFH business plan informed by the institutional, organizational, and business review adopted (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No -- No Yes Date 30-Apr-2021 -- 31-May-2021 31-Dec-2025 Newly added IRI. Progress will be recorded after implementation of the technical assistance included in Comments: the AF. The IRI will be measured and updated on semester basis. IN01015370 ►IRI 14 Increase the satisfaction of class A housing beneficiaries (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 6/29/2021 Page 6 of 9 The World Bank Implementation Status & Results Report STATE OWNED ENTERPRISES RELATED FISCAL MANAGEMENT PROJECT (P160796) 50 percent increase in overall level of Value na -- 0.00 satisfaction and by gender Date 30-Apr-2021 -- 31-May-2021 31-Dec-2025 Newly added IRI. Progress will be recorded after implementation of the technical assistance included in Comments: the AF. The IRI will be measured and updated on annual basis. IN01015380 Satisfaction rate from female beneficiaries (Text, Custom Breakdown) Baseline Actual (Previous) Actual (Current) End Target Value na -- Na 50 percent increase Date 30-Apr-2021 -- 31-May-2021 31-Dec-2025 Performance-Based Conditions IN01015362 ►PBC 1 TACV has adopted and announced a Retrenchment Plan acceptable to the Bank (Yes/No, Output, 3,000,000.00, 100.00%) Baseline Actual (Previous) Actual (Current) Fiscal Year 2022 Value No Yes Yes -- Date -- 18-Apr-2018 30-Apr-2020 -- IN01015366 ►PBC 2 TACV has established Grievance mechanism acceptable to the Bank (Yes/No, Process, 3,000,000.00, 100.00%) Baseline Actual (Previous) Actual (Current) Fiscal Year 2022 Value No Yes Yes -- Date -- 28-Jun-2018 31-Dec-2020 -- IN01015369 ►PBC 3 Staff targeted by the Retrenchment Plan has been retrenched (Number, Intermediate Outcome, 8,000,000.00, 77.29%) Baseline Actual (Previous) Actual (Current) Fiscal Year 2022 Value 0.00 123.00 160.00 -- 6/29/2021 Page 7 of 9 The World Bank Implementation Status & Results Report STATE OWNED ENTERPRISES RELATED FISCAL MANAGEMENT PROJECT (P160796) Date -- 29-Mar-2019 30-Nov-2020 -- Comments: 38 staff received packages and a further 74 received early retirement packages. IN01015372 ►PBC 4 Detailed annual SOE reports prepared by UASE (Number, Output, 2,000,000.00, 40.00%) Baseline Actual (Previous) Actual (Current) Fiscal Year 2022 Value 0.00 1.00 2.00 5.00 Date -- 31-Dec-2018 30-Nov-2020 -- Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P160796 IDA-62510 Effective USD 20.00 20.00 0.00 16.24 2.92 85% Not P160796 IDA-69240 USD 10.00 10.00 0.00 0.00 10.00 0% Effective Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P160796 IDA-62510 Effective 04-Jun-2018 22-Jun-2018 22-Oct-2018 31-Jul-2023 31-Jul-2023 Not P160796 IDA-69240 18-Jun-2021 -- -- 31-Dec-2025 31-Dec-2025 Effective Cumulative Disbursements 6/29/2021 Page 8 of 9 The World Bank Implementation Status & Results Report STATE OWNED ENTERPRISES RELATED FISCAL MANAGEMENT PROJECT (P160796) PBC Disbursement Achievement Disbursed amount in Disbursement % PBC ID PBC Type Description Coc PBC Amount Status Coc for PBC Restructuring History There has been no restructuring to date. Related Project(s) P172528-State-Owned Enterprises related Fiscal Management Project - Additional Financing 6/29/2021 Page 9 of 9