Page 1
REPUBLIC OF LATVIA
June 13, 2002
International Bank for
  Reconstruction and Development
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Re:
Loan No. 7114 LV
(Housing Project)
Performance Monitoring Indicators
Dear Sirs and Mesdames:
Referring to the provision of Section 3 (a) of Schedule 4 of the Loan Agreement (the Housing
Project) of even date herewith between Republic of Latvia and the International Bank for Reconstruction
and Development (the Bank), Latvia hereby confirms to the Bank that the indicators set forth in the
attachment to this letter shall serve as a basis for Latvia to monitor and evaluate the progress of the
Project and the achievement of the objectives thereof.
Very truly yours,
REPUBLIC OF LATVIA
By _____________________
    Authorized Representative
Attachment
Key Performance Indicators
Sector Indicators:
·
Reduced need for public transfers to housing while helping to build the financial sector.
·
Reduced burden of utility costs by improving the energy efficiency of housing.
·
Increased private sector involvement on improving the efficiency with which housing assets are
used.
·
Increasing trend towards personal ownership of housing.
Page 2
·
Private insurers willing to offer the guarantee products or banking sector willing to provide the
three new financial products without additional enhancements.
Outcome/Impact Indicators:
1.
Increasing demand for the three financial products as evidenced by the number, value, and trend
of applications received and transactions approved.
2.
Satisfaction of beneficiaries:
·
Low down payment
·
Reverse mortgage (includes improved physical quality and reduced operating expenses)
·
HOAs (includes improved physical quality and reduced operating expenses).
3.
Low default rates by product.
4.
Satisfaction of financial institutions at end of project (includes continued willingness of PFIs to
support sales of the guarantee products and willingness of non-participating financial institutions to
introduce or use similar products).
5.
Willingness of PFIs to provide rehabilitation and maintenance loans in future to HOAs without
guarantees.
Output Indicators:
1.
Low Down-Payment Component:
At least two PFIs participate
2.
Reverse Mortgages for Elderly Component:
At least one PFI participates
3.
Common Area Borrowing Component:
At least two PFIs participate
4.
Institutional Strengthening Component:
Timeliness of quality reporting
Inputs:
(budget for each component)
1.
Low Down-Payment Component:
$0.75 million
(guarantee)
(The guarantee is expected to leverage
$7.5 million in housing loans and own
contributions by the beneficiaries).
2.
Reverse Mortgages for Elderly Component:
$0.50 million
(guarantee)
(The guarantee is expected to leverage
$1.25 million in reverse mortgage
loans).
3.
Common Area Borrowing Component:
$0.75 million
Page 3
(guarantee)
(The guarantee is expected to leverage
$3.33 million in rehabilitation and
maintenance loans and own
contributions by the HOAs)
4.
Institutional Strengthening Component:
$0.80 million
- institutional strengthening
- monitoring and evaluation surveys
- government “Exit Strategy� study