83949 FIRST Initiative • Six Month Update Strengthening Financial Sectors JANUARY – JUNE 2013 FIRST Initiative Update is a monthly newsletter aimed at providing the latest information on the activities of FIRST to its donors, partners and other interested stakeholders. Due to the change of staff, these monthly updates were discontinued for a short period. This update provides a summary of FIRST’s activities for the period, January through June and includes the last batch of Phase II projects approved in January. The update next month will resume the monthly pattern. For further details please send your request to first@worldbank.org NICARAGUA: CONSUMER PROTECTION FIRST Initiative assisted the Superintendency of Banks and Other Financial Institutions of Nicaragua, in developing a national program to improve consumer protection specifically for banking, microfinance and insurance sectors. This project aimed to establish a system that will provide adequate consumer protection for financial services, and ultimately greater access to finance. Project activities included assessing the legal, regulatory and institutional frameworks for consumer protection in December 2011; developing consensus of key stakeholders in the form of a prioritized action plan to implement recommendations of the diagnostic review in June 2012; and implementing priority measures identified in the action plan to strengthen consumer protection in Nicaragua in 2013. With the support of this project, a new consumer protection law was enacted in June 2013 and related regulations are now being prepared. As a result, overall consumer protection for financial services has increased in Nicaragua. PROJECT APPROVALS In the six month period from January to June, project approvals added to $ 4.4 million, with additional $ 4.2 million prepared and submitted to PAC. Projects approved, January – June 2013 US$ 4,419,867 Azerbaijan Development of Assisting the Central Bank of the Republic of 237,170 10253 Supervision Azerbaijan (CBA) in developing a comprehensive (January) Framework for framework for effective supervision of operational Operational Risk risk in the banking system, both to ensure that banks are aware of and able to manage operational risks and for the CBA to oversee operational risks in the banking system. Bosnia and Liberalizing MTPL Developing a detailed road map and “know-how” for 467,372 Herzegovina Insurance Market the liberalization of the MTPL insurance market in 10295 Bosnia and Herzegovina and Republika Srpska. In the (January) long-run, the project is expected to be instrumental to the implementation of the proposed market liberalization strategy, improved MTPL pricing and reserving practices, and ultimately major improvement in the overall technical fundamentals of the insurance market. El Salvador Insurance Sector Providing support to the Central Bank of El Salvador 277,260 10310 Reform in establishing an appropriate legal and regulatory (January) framework for the insurance sector to bring it in line with international standards and to develop a plan to build supervisory capacity in the Superintendency. Guyana 10298 Pensions Regulation Assisting Bank of Guyana in strengthening the 123,166 (January) regulation and the supervision of the non-bank financial institution (NBFI) sector, focusing most specifically on the primary legislation covering the supplementary pension sector. This project would be a follow-up to project Supervision of Non-Bank Financial Institutions (#10195), which focused on insurance and other NBFIs supervised by the Bank of Guyana (BoG), which included an assessment of the pension sector. Mexico 10288 Contingency plan for Supporting an orderly consolidation of cooperative 124,475 (January) Cooperatives financial institutions (CFIs) in the State of Oaxaca and Financial Institutions advice authorities in case of a potential crisis after the Dec. 31, 2012 deadline to file for CNBV authorization has passed. In addition, this TA will advise on the preparation of guidelines and procedures to monitor the establishment of new CFIs in order to help re- establish the soundness of a sector that caters in particular to the lower income population in rural areas. Nicaragua Payment Systems Providing resources and expertise to develop and 110,000 10312 Legal and Oversight review the national legal framework in the area of (January) Framework Payment, Remittances and Securities Settlement Systems (PRSSS), and support the Central Bank of Nicaragua in designing the structure and tasks of the their oversight function for the National Payment Systems. Paraguay Strengthening Supporting the Central Bank of Paraguay to adopt a 120,860 10259 Pensions Supervision modern legal framework for the pension sector, (January) including the creation of a dedicated sector supervisor to fill a critical vacuum in the financial system’s oversight framework. Armenia Supporting Capital Assisting the Central Bank of Armenia (CBA) with (i) 273,850 10313 Market Development the development of pilot structures for securitizations (February) and issuance of other financial instruments, (ii) reviewing the existing legal framework (enacted between 2007 and 2012) and (iii) assisting CBA to draft regulations or amendments to regulations where needed. Armenia Regulatory and Assisting the Central Bank of Armenia in developing 383,315 10316 Supervisory the pension system supervisory/regulatory (February) Framework for framework for the investment policy and asset Funded Pensions and manager regulations for pension funds and life Life Insurance insurance companies as well as the actuarial soundness of the life insurance industry; and to strengthen pension and insurance regulation capacity at Central Bank of Armenia. Armenia Enhancing Corporate Assisting the Ministry of Finance (Republic of 233,050 10232 Financial Reporting Armenia) in improving Financial Reporting Legislation (February) through a legislation gap analysis and roadmap and also in systematizing the approach to corporate financial reporting through a comprehensive Country Strategy and Action Plan. Lesotho 10272 Financial Sector Supporting the authorities in Lesotho to elaborate a 478,000 (February) Development detailed financial sector development strategy (FSDS) Strategy and related action plan, using as a basis the financial sector development chapter in Lesotho’s National Strategic Development Plan (NSDP) for the period 2012 to 2017. South Africa Regulatory Reform on Assisting the National Treasury of South Africa in the 278,750 10278 Resolution and improvement of regulatory structure’s capacity to (February) Financial Inclusion safeguard financial stability and effectively regulate market conduct and consumer protection, which has been an important item in the agenda of the government of South Africa. Tunisia A001 Establishment of an Enabling the Tunisian Authorities establish an AMC in 124,915 (February) Asset Management order to solve the long-standing tourism sector NPL Company issues and improve banking sector soundness. Sri Lanka A003 Implementation of Strengthening the supervisory function of the 386,243 (April) Risk-Based Insurance Board of Sri Lanka (IBSL) through the Supervision implementation of a “risk-based” supervision framework and enhancing IBSL’s supervisory capacity in the area of reinsurance, reinsurers, loss adjusters, investments and investment linked products. Sierra Leone Financial Stability and Assisting the Bank of Sierra Leone (BSL) in upgrading 377,569 A005 (April) Banking Supervision the framework for effective implementation of the (IMF) Banking Act of 2011 and enhancing staff's capacity in the areas covered by the law. Tunisia A002 State Owned Banks Supporting the Government of Tunisia in the 232,073 (May) Restructuring restructuring of its three commercial State-owned Banks in order to i) restore banking sector stability, ii) improve banking sector competition and innovation, and iii) improve access to finance. Swaziland Regulation and Assisting the new Financial Services Regulatory 191,799 A014 (May) Supervision of Authority (FSRA) to continue to build capacity in Insurance and Swaziland for the regulation and supervision of the Pensions (IMF) insurance companies and pension funds. US$ 4,256,386 Projects submitted to PAC, pending approval as on June 30 Colombia Improving Access to Assisting Fondo Nacional de Ahorro (FNA) in 244,220 A006 Housing Finance for expanding access to affordable, market based Low-income and housing finance, especially among informally Informally employed employed and lower income households in segments Colombia. Morocco, Strengthening Assisting the Insurance Commissions of selected 407,793 Tunisia, Libya Insurance Supervision countries (Morocco, Tunisia, Libya and Palestine) and Palestine in the MENA Region in conducting self-assessments of their supervisory A007 systems against new global IAIS standards in order to identify gaps in insurance sector regulation and supervisory practices; and in developing effective and time-bound country Action Plans to address key issues identified for each jurisdiction. Philippines Crisis Preparedness Assisting in enhancing the ability of the Financial 280,027 A019 Framework II Stability Coordination Council (FSCC) to manage a possible financial crisis through the development of a Crisis Preparedness Framework that provides for working arrangements both before and during a crisis. Jordan A020 Payment Systems Assisting Central Bank of Jordan in (i) improving 223,707 Reforms systemically important payment systems, (ii) strengthening legal and regulatory framework for the Jordan National Payments System (iii) improving payments systems oversight, and (iv) creation of an enabling environment for development of innovative payment mechanisms and rapid expansion in usage of electronic payment mechanisms. Pakistan A021 Strengthening Supporting the Securities and Exchange 332,078 Insurance Regulatory Commission of Pakistan (SECP) to reform and and Supervision upgrade the insurance legal, regulatory and Framework supervisory framework to increase stability in the insurance sector and contributing to insurance sector growth. Rwanda P1 Strengthening Financial Assisting National Bank of Rwanda (BNR) to 2,053,569 Stability strengthen the legal and regulatory framework of Rwanda’s financial sector and to contribute to financial stability. Seychelles Secured Lending and Assisting Central Bank of the Seychelles to increase 336,484 A026 Collateral Registry access to credit to the private sector by introducing a secured lending legal framework and collateral registry, thus strengthening lenders' rights in movable assets. Seychelles Financial Sector Assisting Central Bank of the Seychelles in 378,508 A027 Development facilitating financial sector reforms by helping Implementation Plan national authorities adopt a coherent vision and strategy for financial sector development in Seychelles including a well-sequenced, time-bound and prioritized roadmap for implementing reforms. OTHER • The Program Manager traveled to Marrakesh to attend the Annual Meetings of the African Development Bank, and the Advisory Council Meeting of Making Finance Work for Africa. (MFW4A). MONTHLY DATA Number of projects in the portfolio, by project status: Monthly Project Portfolio 120 100 80 Inquiry 60 Proposal 40 20 Active 0 Number of projects in the pipeline, by project status: Monthly Pipeline 30 25 20 15 10 Inquiry 5 Proposal 0 Pipeline distribution ($ amounts), by region, as on June 30: 6% 19% ECA AFR EAP 13% SAR 47% LCR 8% MNA 7% Operational figures ($ million) Project approvals (Jan - June) 4.4 Total Phase II approvals (last batch) 3.1 Project disbursements (Jan - June) 4.9 Total Phase III approvals (as on June 30) 1.3 Project disbursements during the month 1.1 Current pipeline (number of projects) 35 Active project portfolio (as on June 30) 26.5 New inquiries received Jan – June (number) 35 Active project portfolio (number of projects) 102