The World Bank Trade Promotion and Quality Infrastructure (P146994) REPORT NO.: RES38609 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF TRADE PROMOTION AND QUALITY INFRASTRUCTURE APPROVED ON JULY 2, 2014 TO MINISTRY OF FINANCE FINANCE, COMPETITIVENESS AND INNOVATION EUROPE AND CENTRAL ASIA Regional Vice President: Cyril E Muller Country Director: Sebastian-A Molineus Regional Director: Lalita M. Moorty Practice Manager/Manager: Marialisa Motta Task Team Leader(s): Yeraly Beksultan, Karen Grigorian The World Bank Trade Promotion and Quality Infrastructure (P146994) ABBREVIATIONS AND ACRONYMS ANIF Armenian National Interests Fund CRM Customer Relations Management DFA Development Foundation of Armenia DPM Deputy Prime Minister EDGP Exporter Development Grant Program EIF Enterprise Incubator Foundation EIPI Investment, Export Promotion and Industrial Development Agency FCI Finance, Competitiveness and Innovation Global Practice FDI Foreign Direct Investment FFPMC Foreign Financial Projects Management Center FM Financial Management GDP Gross Domestic Product ICT Information and communications technology ILAC International Laboratory Accreditation Cooperation IMG Innovation Matching Grant IMGP Innovation Matching Grant Program IT Information Technology NVF National Venture Fund M&E Monitoring and Evaluation MLA Multilateral Agreement MoE Ministry of Economy MoF Ministry of Finance MRA Mutual Recognition agreement MTR Mid-term Review MU Moderately Unsatisfactory NAB National Accreditation Body NIM National Institute of Metrology NQI National Quality Infrastructure PDO Project Development Objective PID Project Implementation Department PM Prime Minister PMU Project Management Unit PPP Public Private Partnerships QER Quality Enhancement Review RBF Results-based financing SME Small and Medium Enterprise TPQI Trade Promotion and Quality Infrastructure Project WB World Bank The World Bank Trade Promotion and Quality Infrastructure (P146994) Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. BASIC DATA Product Information Project ID Financing Instrument P146994 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 02-Jul-2014 30-Jun-2020 Organizations Borrower Responsible Agency Ministry of Economy,Ministry of High-Tech Ministry of Finance Industry,Office of the Prime Minister Project Development Objective (PDO) Original PDO The Project Development Objective (PDO) is to strengthen the government's capacity to provide export promotion, investment attraction and quality management services to firms. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-83900 02-Jul-2014 06-Aug-2014 14-Jan-2015 30-Jun-2020 50.00 12.04 37.96 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Trade Promotion and Quality Infrastructure (P146994) Note to Task Teams: End of system generated content, document is editable from here. The World Bank Trade Promotion and Quality Infrastructure (P146994) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Background 1. The Project Development Objective (PDO) is to strengthen the Armenian government’s capacity to provide export promotion, investment attraction, and quality management services to firms. Table 1 shows other essential information about the project. TABLE 1. KEY PROJECT DATA Project Approval July 2, 2014 Project Effectiveness January 14, 2015 Original Closing Date June 30, 2020 Original Project Amount US$50 million Date of 1st Restructuring (Level 2)1 April 20, 2019 Total Disbursement as of 12/2019 US$12.04 million 2. Project components. The project aims to upgrade key services in investment, export promotion, and quality infrastructure that facilitate trade for exporters and promote Foreign Direct Investment (FDI) in tradable sectors. The project comprises one results-based financing (RBF) component, two technical components, and one implementation support component: a. Component 1. Improving the Effectiveness of the Trade Promotion and Quality System (US$10 million, US$9.2 million disbursed) is a results-based financing of agreed-upon actions, outputs and outcomes (“Disbursement-Linked Indicators” or DLIs) that result in improvements to the export and investment promotion and quality system. The Component consists of fourteen DLIs focused on strengthening the National Investment and Export Promotion Services, National Metrology Services, and National Accreditation Services. Specific project activities under Components 2 and 3 complement these reforms and actions. b. Component 2. Promoting Investment and Export (US$29.235 million, US$2.11 million disbursed) aims at strengthening the capacity of local exporters to compete in foreign markets, facilitating cluster development, and attracting FDI. Three subcomponents support achievement of the objective: i. Subcomponent 2.1. Support services provided by Investment, Export Promotion and Industrial Development Agency (EIPI) (US$6.3 million, no disbursement). ii. Subcomponent 2.2. Exporter Development Grants (US$3.65 million, US$1.5 million disbursed). iii. Subcomponent 2.3. Public Private Partnerships (PPPs) to promote research, skills and cluster Development (US$19.29 million, US$0.51million disbursement). 1As described in more detail below, the first restructuring entailed amendment of the Loan Agreement replacing the Foreign Financial Projects Management Center (FFPMC) as the project implementing agency responsible for fiduciary functions with the newly created Project Implementation Department of the Ministry of Finance. The restructuring did not envisage any other changes to the project. The World Bank Trade Promotion and Quality Infrastructure (P146994) c. Component 3. Modernizing the National Quality Infrastructure (NQI) (US$8.64 million, US$10,000 disbursed) aims at modernizing metrological, accreditation, and standards services to provide quality assurance services to industry. Three subcomponents support achievement of the objective: i. Subcomponent 3.1. Renovation of metrology building and laboratories, purchase of equipment and capacity building for National Institute of Metrology (NIM) staff (US$7.3 million, no disbursement). ii. Subcomponent 3.2. Refurbishment of the National Accreditation Body’s (NAB) offices and facilitating service delivery improvements (US$1.2 million, US$0.01 million disbursed). The objective of this Subcomponent is to support the NAB to achieve its goal of becoming an internationally recognized body by obtaining multilateral agreements (MLAs) and/or mutual recognition agreements (MRAs) with the international accreditation bodies. iii. Subcomponent 3.3. Development of a database for the catalogue of standards for the National Institute of Standards (SARM) (US$0.18 million, no disbursement). d. Component 4—Project Management and Monitoring and Evaluation (US$2 million, US$0.72 million disbursed). The objective of this component is to finance project implementation and monitoring. This component finances: (i) consultants employed as part of the Project Management Unit (PMU) including the Project Manager and other consultant staff including a Translator, a Social and Environmental Safeguards Specialist and a Monitoring and Evaluation (M&E) Specialist; (ii) goods and services to support the functioning of the PMU as needed, including office equipment; (iii) fiduciary consultants of PID, including a Procurement Specialist and Financial Management (FM) Specialist; (iv) the incremental operating costs; and (v) all project related audits. 3. Project Implementation Arrangements. The Deputy Prime Minister (DPM) chairs the Project Steering Committee. The Project Manager, reporting to the DPM’s office was hired to oversee and coordinate implementation of all project activities. The Project Implementation Department (PID) under the Ministry of Finance took over fiduciary functions, previously carried out by the Foreign Financing Projects Management Center (FFPMC). Three ministries are responsible for implementation of project components: a. The Ministry of Economy (MoE) is responsible for Component 1 (results-based financing of reforms), Subcomponent 2.1 (strengthening capacity of local exporters, attracting of FDI), and Component 3 (modernization of metrology and accreditation services). b. The Ministry of High-Tech Industry (through the Enterprise Incubator Foundation (EIF) is responsible for Subcomponents 2.2 (Innovation Matching Grants) and 2.3 (PPP activities). c. The Project Implementation Department of the Ministry of Finance (MoF) is responsible for fiduciary and safeguards compliance, procurement and disbursement under various project activities (Component 4). 4. Implementation delays. The project had faced significant implementation challenges since its effectiveness mainly caused by: a. Frequent changes in the MoE leadership created major delays in project implementation, weakened the ownership and commitment by implementing agencies for achievement of two DLIs related to quality infrastructure development (i.e., international accreditation of NIM and attainment of multilateral agreement or mutual recognition agreement by NAB), and delayed implementation of the exporter development and investment promotion activities (Subcomponents 2.1 and 2.2). The World Bank Trade Promotion and Quality Infrastructure (P146994) b. Fiscal rule constraints in 2016-2017 and the Velvet Revolution in 2018: With Armenia’s national debt exceeding the threshold established in the country’s fiscal rule—50 percent of GDP—the Government embarked on fiscal consolidation in 2016 and 2017. The new cabinet formed in mid-2016 stated reduction of the budget deficit (mainly through cutting government expenditures) as a key priority. While the government maintained the level of welfare spending constant, the burden of adjustment fell heavily on development projects, including WB-financed ones: capital expenditures contracted by almost 2% of GDP. In this context, given the lack of funds, the government decided to prioritize public expenditures that helped maintaining the social contract, which had a significant adverse impact on implementation TPQI in 2016 and 2017. c. In April 2018, the Velvet Revolution broke out and resulted in political turbulence that only settled down with election of a new parliament in December 2018 and formation of a new cabinet in February 2019. The staff reshuffles and uncertainty at all levels of government after the Velvet Revolution put project implementation on hold for most of 2018. This caused difficulties for implementation of TPQI. d. Insufficient capacity of Project Management Unit. FFPMC, which was under the Ministry of Finance and formally had a mandate only to oversee fiduciary aspects of implementation, de facto played PMU role from the beginning of the project2. The mandate, the number and expertise of FFPMC staff was not always sufficient for coordination of key stakeholders (Ministry of ICT and EIF, MoE and NQI institutes, DFA) and management of complex technical aspects of the project. In December 2018 the Government decided to abolish FFPMC and transfer its fiduciary functions to the Project Implementation Department of the Ministry of Finance. The process was completed in March 2019 with partial retention of FFPMC’s capacity at the PID. In response to the WB’s concerns about deteriorated project implementation capacity, following the MTR mission in March 2019, the government took the following steps to improve the situation: (a) The Chairmanship of the Project Steering Committee was transferred from the MoE to the Deputy Prime Minister’s Office in March 2019 and the Deputy Prime Minister’s Advisor was put in-charge of coordinating project activities, including establishment of Project Management Unit; and (b) the government recruited a Project Coordinator in August 2019. B. Project Status 5. The project has been effective since January 14, 2015. Since February 2017, the “Overall Implementation Progress” and the “Progress Towards Achievement of PDO” have been rated “Moderately Unsatisfactory” (MU). The current disbursement rate is 24% (US$12.04 million disbursed of US$50 million) after 4.5 years of implementation. Most of the amount disbursed (US$9.2 million) has been disbursed under Component 1, while other components have not disbursed much. Table 2 shows the amounts disbursed by component. TABLE 2. DISBURSED AMOUNTS, PER COMPONENT (US$ MILLION) Activity name Budget Disbursed as of 12/2019 Component 1. Result Based Financing 10 9.2 Component 2. Promoting Investment and Export 29.24 1.5 2.1. Services to Exporters & Investors (ANIF) 6.3 2.2. Innovation Financing 3.65 1.5 2.3 PPP Promotion 19.29 0.51 2.3.1 Engineering City 10.5 0.51 2.3.2 Cybersecurity Incubator 3 2 Staffed and operational Project Implementation Unit existed only between February 2016 and January 2017. The World Bank Trade Promotion and Quality Infrastructure (P146994) 2.3.3 Supercomputing Center 1.5 2.3.4 Advanced Industrial Research Labs 2 2.3.5 Advancing Engineering Education 2.3 Component 3. Modernizing NQI 8.68 0.01 3.1 Modernization of NIM infrastructure 7.3 3.2 NAB capacity building 1.2 0.01 3.3 Building a modern information technology infrastructure for SARM 0.18 Component 4. Project Management 2 0.7.2 Front end fee 0.1 0.1 TOTAL (Cumulative) 50 12.04 6. Component 1. Results Based Financing is progressing as planned except achievement of targets of two Disbursement Linked Indicators (#10 and #14) related to international recognition of selected parts of the National Quality Infrastructure supported by the Project. 7. Component 2. Promoting Investment and Export demonstrates limited progress in all three sub- components: i. Subcomponent 2.1. Support services provided by IEPI. On April 1, 2019 the Government of Armenia ceased financing of DFA, which was responsible for implementation and transferred the investment and export promotion to Armenia National Interests Fund (ANIF). During the project implementation support mission in July 2019, the counterparts confirmed that ANIF is considered DFA’s successor and proposed to the WB to implement the export and investment promotion activities through ANIF. On July 30, 2019 ANIF provided its action plan with planned disbursement of US$3 million by December 31, 2020 for the WB’s review. Updated Project Procurement Plan incorporating ANIF activities was cleared by the Bank on October 16, 2019. The ToRs for the first activity (PR campaign) were reviewed and cleared by the Bank on December 6, 2019. ANIF plans to sign a respective contract (in amount of approximately US$0.48 million) in April 2020. ii. Subcomponent 2.2. Exporter Development Grants. Implementation of exporter development grants was delayed throughout 2016–2018. Following consultations with the task team during implementation support missions, the government decided to launch the grant programs with two parallel grant windows:  Innovation Matching Grant Program (IMGP): on March 31, 2019, government approved the IMGP (aimed to support export-oriented high-tech startups) and launched the first call for proposals on July 12, 2019. The implementing agency is the Enterprise Incubator Foundation (EIF), which has accumulated relevant experience over the past 10 years in providing matching grants, technology support, and incubation services to hi-tech startups in Armenia. As of October 1, 2019, US$1.5 million disbursed.  Exporter Development Grant Program (EDGP): on July 31, 2019, Ministry of Economy (MoE) submitted EDGP implementation roadmap for the WB’s review with planned approval of the grant manual by October 2019 and announcement of the call for proposals by November 2019. The government proposed the Investment Support Center (successor of the Small and Medium Entrepreneurship Development National Center, SME DNC) as the implementing agency. The WB team reviewed the roadmap and provided feedback on August 20, 2019. The roadmap was cleared The World Bank Trade Promotion and Quality Infrastructure (P146994) by the Bank in October 2019 and the finalized grant implementation manual was cleared by the Bank on December 4, 2019. The grant program is expected to be announced by end of December 2019. iii. Subcomponent 2.3. Public Private Partnerships (PPPs) to promote research, skills and cluster Development. Out of several planned PPP Projects, the Engineering City (EC) is the most advanced in implementation. The implementing agency, EIF, is moving forward procurement along three main activities: (i) Design of EC master plan and infrastructure; (ii) Design of EC Accelerator Building and (iii) Purchase of EC lab equipment. Currently EIF is advancing implementation of activities (i) and (iii), while activity (ii) is pending the results of activity (i). The World Bank approved two additional PPP concepts (Cybersecurity Incubator and R&D Lab and National Supercomputer Center) in December 2019. EIF is planning to finalize and submit for Bank review the remaining two PPP packages – Establishing Advanced Industrial Research Labs and Advancing Engineering Education in Gyumri – in January 2020. 8. Component 3. Modernizing the National Quality Infrastructure. There were significant delays in execution of key procurement items of this component, such as upgrade of metrology laboratories and staff capacity building. As a result, the government failed to attain the two DLIs (#10 and #14) that envisage international recognition of Armenian quality assurance systems, which is critical for export promotion. Implementation started picking up in September 2019 currently the NIM is evaluating proposals for the equipment of two metrology laboratories. NIM intends to co-finance the development of online e-accreditation system from donor funds and plans to resubmit the revised TOR for Banks’ review by December 31, 2019. 9. Component 4. Project Management and Monitoring and Evaluation. The counterparts hired a Project Manager reporting directly to the Deputy Prime Minister’s Office to ensure efficient coordination and implementation of project activities. The Project Steering Committee is chaired by the Deputy Prime Minister. The Project Implementation Department of the Ministry of Finance is responsible for fiduciary aspects of project implementation. In addition to the Project Manager, PMU Environment and Social Specialist was hired to ensure compliance with WB safeguards policies applicable to the project. Starting January 1, 2020, the Government plans to transfer PID capacity and functions under the Prime Minister’s Office. 10. Currently the financial management under the project is satisfactory and there are no pending audits under the project. C. Rationale for Restructuring 11. This is the second proposed restructuring of the project. The first restructuring (a Level 2 Restructuring) took place on April 20, 2019 and entailed amendment of the Loan Agreement. It replaced the FFPMC as the project implementing agency responsible for fiduciary functions with the newly created Project Implementation Department of the Ministry of Finance. The first restructuring did not envisage any other changes to the project. 12. Amidst political uncertainties during 2018, the World Bank (WB) team continued working with the government to help the new counterparts learn about the TPQI Project and regain the full ownership of the project. During the implementation support mission in November 2018, the WB initiated discussions with the counterparts about the necessity to restructure the project to significantly improve its implementation. The Quality Enhancement Review (QER, held in January 2019) recommendations were communicated and discussed with the new government counterparts during the Mid-term Review (MTR) mission in March 2019. The counterparts did not agree to the partial cancellation options that were advised by the QER and confirmed their renewed commitment to accelerate project implementation at the highest government level, including during the meeting the World Bank Vice The World Bank Trade Promotion and Quality Infrastructure (P146994) President for Europe and Central Asia had with the Prime Minister of Armenia. The regional WB management acknowledged the government’s commitment and recognized the improved implementation momentum. 13. The project restructuring discussions were finalized in July 2019 during implementation support mission. The World Bank team, through the mission Aide Memoire, shared with the counterparts a project restructuring proposal that included: (i) extension of the Closing Date by 24 months to allow additional time to implement the envisaged activities, (ii) cancellation clauses for the Investment Attraction and Investment Promotion activities (subcomponent 2.1 and Export Development Grant Program under subcomponent 2.2), the Innovation Venture Fund (new subcomponent 2.4), National Quality Infrastructure activities (Component 3) in case if the agreed disbursement targets are not met by the due date, (iii) keeping the loan amount unchanged, (iv) introduction of a new activity on creation of a National Venture Fund, (v) reallocation of project funds between the components in favor of the most implementation ready activities and a new activity, and (vi) changes to the project’s Results Framework. 14. New activity: National Venture Fund. During the March 2019 MTR mission, the Minister of High-Tech Industry formally proposed to introduce a venture financing Subcomponent based on the successful implementation of an early-stage venture fund project supported by the WB loan few years ago. This activity aims to create a VC Fund to make VC financing available for technology start-ups. If successful, this demonstration effect is expected to attract other VC companies and therefore catalyze venture capital market in Armenia. The government suggested allocating US$10 million of project funds for this purpose using the amounts freed up from other subcomponents as a result of restructuring. The proposed size of the NVF is US$100 million, of which US$10 million is government co-financing through TPQI. 15. The government of Armenia sent its project restructuring request to the Bank on November 13, 2019. The requested changes to the project broadly corresponded with the Bank’s restructuring proposal shared after the implementation support mission in July 2019 but did not support cancellation clauses and advised new project implementation arrangement by vesting responsibility for fiduciary aspects of project implementation in the Prime Minister’s Office. 16. The World Bank team reiterated the discussion with the counterparts on loan cancellation clauses during the implementation support mission on December 2-12, 2019. Based on extensive discussions with the counterparts, consultations with the country lawyer and advice from the Country Management Unit, the Project team proposes to introduce loan cancellation clauses for the activities described earlier conditioned by the achievement of specified disbursement targets by certain dates into the Loan Agreement. The specific deadlines were discussed and agreed upon with the counterparts. II. DESCRIPTION OF PROPOSED CHANGES A. Change of implementation arrangements In Fall 2019, the government decided to cease the operation of the PID in the MOF and transfer PMUs under all WB funded projects to PM’s office or line ministries. This reform was discussed and agreed with CMU. In November 2019, the DPM and MOF requested the Bank to change the implementation arrangement for TPQI as follows: (i) PMU with fiduciary functions moves to the Prime Minister’s Office (OPM), (ii) Deputy Prime Minister coordinates the implementation . The World Bank Trade Promotion and Quality Infrastructure (P146994) B. Change of Closing Date Change the Project Closing Date from June 30, 2020 to May 31, 2022 based on the Borrower’s request and additional consultations. In task team’s assessment, extension of the Closing Date by 23 months provides sufficient time to complete all project activities and the matter was agreed with the counterparts. C. Component 1 Improving the Effectiveness of the Trade Promotion and Quality System (Result Based Financing: RBF). All activities under this component, except achievement of DLIs #10 and #14, were implemented by the government and Ministry of Economy (MoE) was responsible for Eligible Expenditure Program (EEP) and would submit semiannual reports to the Bank for reimbursement against the achieved DLIs. The proposed change is as follows: MoE will submit the EEP reports to the Bank through the PMU at Prime Minister’s Office. No changes in the amount allocated to the Component. D. Component 2: Promoting Investment and Export Subcomponent 2.1 Support services provided by Investment, Export Promotion and Industrial Development Agency: (i) change the implementing agency to the Armenian National Interests Fund (ANIF, the successor of the DFA), (ii) decrease of the original amount from US$6.3 million to US$3 million to finance investment promotion and export development activities. Subcomponent 2.2 Exporter Development Grants: (i) decrease of the original amount from US$3.65 million to US$3.6 million, (ii) introduce two windows of Exporter Development Grant Program: Exporter Development Grants (US$2.1 million), implemented by the Investment Support Center (previously SME DNC) and Innovation Matching Grants (US$ 1.5 million) implemented by the EIF. Subcomponent 2.4 (National Venture Fund, US$10 million): introduce as a new activity. E. Component 3: Modernizing NQI Subcomponent 3.1 Renovation of metrology building and laboratories, purchase of equipment and capacity building for NIM staff: reduce the original amount from US$7.3million to US$2.8 million. Subcomponent 3.2 Refurbishment of the National Accreditation Body’s (NAB) offices and facilitating service delivery improvements: reduce the original amount from US$1.4 million to US$0.2 million. Subcomponent 3.3 Development of a database for the catalogue of standards for the National Institute of Standards (SARM): drop the activity. F. Component 4 (Project Management and Monitoring and Evaluation, US$2 million) Component 4 will be reduced by US$1 million. The overall coordination of the Project, including fiduciary functions, will be transferred to the Prime Minister’s Office with establishment of the Project Management Unit under it. The World Bank Trade Promotion and Quality Infrastructure (P146994) G. Cancellation of undisbursed loan proceeds: Introduce the following loan cancellation clauses conditioned by specific disbursement targets to be achieved by the specified date: a. Subcomponent 2.1 Support services provided by Investment, Export Promotion and Industrial Development Agency: if by December 31, 2020, the Borrower has not made fifty percent (50%) of projected disbursements (or $1,500,000), the Bank may cancel an amount of three million dollars ($3,000,000) out of the Loan effective January 1, 2021 from Category 2. b. Subcomponent 2.2 Exporter Development Grants: if by June 30, 2021, the Borrower has not made fifty percent (50%) of projected disbursements (or $1,800,000), the Bank may cancel an amount of three million and six hundred thousand dollars ($3,600,000) out of the Loan effective July 1, 2021 from Category 3. c. Subcomponent 2.4 National Venture Fund: if by October 30, 2020, the Borrower has not made fifty percent (50%) of projected disbursements (or $5,000,000), the Bank may cancel an amount of ten million Dollars ($10,000,000) out of the Loan effective November 1, 2020 from Category 6. d. Subcomponent 3.1 Renovation of metrology building and laboratories, purchase of equipment and capacity building for NIM staff: if by March 31, 2021, the Borrower has not made fifty percent (50%) of projected disbursements (or $1,500,000), the Bank may cancel an amount of three million Dollars ($3,000,000) out of the Loan effective April 1, 2021 from Category 2. H. Changes to the Results Framework 17. Update the Project’s Results Framework to align it with the proposed changes: (i) improve PDO level indicators to capture project outcomes, update targets taking into account the changed financing volume and new Closing Date, (ii) improve intermediate indicators (PPP, exporter development grants) to better capture the results of relevant subcomponents and update the targets considering changed volume of funding and extension of the Closing Date, (iii) introduce indicators to capture establishment and operations of the National Venture Fund, (iv) introduce a new indicator on citizen engagement. Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. III. SUMMARY OF CHANGES Changed Not Changed Implementing Agency ✔ Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Reallocation between Disbursement Categories ✔ The World Bank Trade Promotion and Quality Infrastructure (P146994) Disbursement Estimates ✔ Institutional Arrangements ✔ Implementation Schedule ✔ DDO Status ✔ Project's Development Objectives ✔ Cancellations Proposed ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_IA_TABLE IMPLEMENTING AGENCY Implementing Agency Name Type Action Ministry of Economy Implementing New Agency Ministry of High-Tech Industry Implementing New Agency Office of the Prime Minister Implementing New Agency The World Bank Trade Promotion and Quality Infrastructure (P146994) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Component 1: Improving the Component 1: Improving the Effectiveness of the Trade 10.00 No Change Effectiveness of the Trade 10.00 promotion and Quality system promotion and Quality system Component 2: Promoting Component 2: Promoting 29.20 Revised 35.90 Investment and Exports Investment and Exports Component 3: Modernizing the Component 3: Modernizing the 8.70 Revised 3.00 National Quality Infrastructure National Quality Infrastructure Component 4: Project Component 4: Project Management and Monitoring 2.00 Revised Management and Monitoring 1.00 and Evaluation and Evaluation TOTAL 49.90 49.90 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IBRD-83900 Effective 30-Jun-2020 31-May-2022 30-Sep-2022 OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IBRD-83900-001 | Currency: USD iLap Category Sequence No: 1 Current Expenditure Category: Payments for EEP for Part A 10,000,000.00 9,200,000.00 10,000,000.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: GD, CW, Non-CS, CS, TRNG, Aud, IOC 18,500,000.00 228,143.18 6,975,000.00 100.00 100.00 The World Bank Trade Promotion and Quality Infrastructure (P146994) iLap Category Sequence No: 3 Current Expenditure Category: Grants for Part B.2 3,000,000.00 0.00 3,600,000.00 100.00 100.00 iLap Category Sequence No: 4 Current Expenditure Category: Financing for PPP Init for Part B.3 18,375,000.00 0.00 19,300,000.00 100.00 100.00 iLap Category Sequence No: 5 Current Expenditure Category: Front-end Fee 0.00 0.00 0.00 100 Current Expenditure Category: Goods, works, consulting services, non-consulting iLap Category Sequence No: 6 services for NVF Investments and NVF Subprojects under Part B.4 0.00 0.00 10,000,000.00 100 Total 49,875,000.00 9,428,143.18 49,875,000.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2015 500,000.00 1,675,000.00 2016 1,500,000.00 2,325,000.00 2017 2,000,000.00 2,000,000.00 2018 6,633,000.00 2,000,000.00 2019 17,000,000.00 3,910,526.00 2020 22,367,000.00 15,200,000.00 2021 0.00 22,889,474.00 . The World Bank Trade Promotion and Quality Infrastructure (P146994) . Results framework COUNTRY: Armenia Trade Promotion and Quality Infrastructure Project Development Objectives(s) The Project Development Objective (PDO) is to strengthen the government's capacity to provide export promotion, investment attraction and quality management services to firms. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 Strengthen the government's capacity to provide export promotion, investment attraction and quali 1. Number of exporters accessing new markets 0.00 0.00 6.00 12.00 18.00 18.00 20.00 50.00 50.00 and/or introducing new products (Number) Rationale: The Indicator Name changed from "New customers for exporters generated through the foreign representatives" to "Number of exporters accessing new markets Action: This indicator and/or introducing new products" to capture the end result across several subcomponents instead of one (Subcomponent 2.1). Target values revised in accordance has been Revised with agreements with the Borrower: (i) the Intermediate Target for Year 4 revised from 30 to 18, Intermediate Target for Year 5 revised from 35 to 18 to reflect actual results so far; (ii) introduced new Intermediate Targets for Years 6 and 7 in view of project extension; (iii) the End Target revised from 40 to 50. 2. Cluster development and research and skills 0.00 0.00 0.00 0.00 0.00 2.00 4.00 6.00 6.00 development PPPs established (Number) Rationale: Action: This indicator The Indicator Name changed from "Cluster development and research and skills development PPPs developed" to "Cluster development and research and skills has been Revised development PPPs established" to better capture the end result. Target values revised in accordance with agreements with the Borrower: (i) the Intermediate Target The World Bank Trade Promotion and Quality Infrastructure (P146994) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 for Year 2 revised from 2 to 0, the Intermediate Target for Year 3 revised from 3 to 0, the Intermediate Target for Year 4 revised from 5 to 0, the Intermediate Target for Year 5 revised from 6 to 2 to reflect actual results so far; (ii) introduced new Intermediate Targets for Years 6 and 7 in view of project extension; (iii) the End Target revised from 7 to 6. 3. Successful investments facilitated 0.00 0.00 0.00 0.00 0.00 2.00 4.00 10.00 10.00 by IEPI (Number) Rationale: Target values revised in accordance with agreements with the Borrower: (i) the Intermediate Target for Year 2 revised from 1 to 0, the Intermediate Target for Year Action: This indicator 3 revised from 2 to 0, the Intermediate Target for Year 4 revised from 3 to 0, the Intermediate Target for Year 5 revised from 3 to 2 to reflect actual results so far; (ii) has been Revised introduced new Intermediate Targets for Years 6 and 7 in view of project extension; (iii) the End Target revised from 4 to 10. 4 (DLI 10). Industrial Laboratories of the National Institute of Metrology (NIM) accredited by an 0.00 0.00 0.00 0.00 1.00 1.00 1.00 2.00 2.00 accreditation organization that is a signatory to an MLA/MRA from ILAC or IAF. (Number) Rationale: Action: This indicator Target values revised in accordance with agreements with the Borrower: (i) the Intermediate Target for Year 4 revised from 1 to 0 to reflect actual results so far; (ii) has been Revised introduced new Intermediate Targets for Years 6 and 7 in view of project extension. 5 (DLI 14). National NAB becomes an NAB achieves MLA Not a member Not a member Not a member Not a member Not a member Not a member Not a member Accreditation Body affiliate member or MRA The World Bank Trade Promotion and Quality Infrastructure (P146994) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 (NAB) becomes a of an signatory to a international Multilateral agreement organization (MLA) or Mutual (ILAC, IAF) Recognition agreement (MRA) with an international accreditation organization (Text) Rationale: Action: This indicator Target values revised in accordance with agreements with the Borrower: (i) originally, NAB was to become an affiliate member of ILAC or IAF in Year 2. The has been Revised proposed date of achieving this Intermediate Target is Year 7; (ii) introduced new Intermediate Targets for Years 6 and 7 in view of project extension. PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 Component 1: Improving the Effectiveness of the Trade promotion and Quality System 1.1. Strengthening investment and export See Sub See Sub See Sub See Sub See Sub See Sub See Sub Indicators See Sub indicators promotion services Indicators Indicators Indicators Indicators Indicators Indicators (Text) DLI 1. Decree on Decree on Investment Reform Not in existence Investment Map issued (Text) The World Bank Trade Promotion and Quality Infrastructure (P146994) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 Reform Map issued DLI 2. Merger of ADA and IDF into Merger of ADA Not in existence IEPI completed and IDF (Text) Rationale: Action: This Intermediate and end targets (and respective timeline) have not been changed. We corrected Indicator Name that is reflected in Portal incorrectly for some technical indicator has been reason: replaced DFA with IEPI (in line with Loan Agreement). Revised DLI 3. Government decree issued to Decree issued to Not in existence establish the NTO establish the NTO (Text) DLI 4. IEPI staffed with organizational IEPI staffed with IEPI staffed with IEPI staffed with IEPI staffed with IEPI staffed with structure in line IEPI staffed with organizational organizational organizational organizational organizational with international organizational structure in line structure in line structure in line structure in line structure in line best practice Not in existence structure in line with with with with with (monitored with international international international international international international throughout the best practice best practice best practice best practice best practice best practice project period) (Text) The World Bank Trade Promotion and Quality Infrastructure (P146994) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 Rationale: Action: This Intermediate and end targets (and respective timeline) have not been changed. We corrected Indicator Name that is reflected in Portal incorrectly for some technical indicator has been reason: replaced DFA with IEPI (in line with Loan Agreement). Revised DLI 5. Adequate budget for IEPI included in State Adequate budget Adequate budget Adequate budget Adequate budget Adequate budget IEPI budget for budget (monitored Not in existence for IEPI included for IEPI included for IEPI included for IEPI included for IEPI included agency included in throughout the in State budget in State budget in State budget in State budget in State budget State budget project period) (Text) Rationale: Action: This Intermediate and end targets (and respective timeline) have not been changed. We corrected Indicator Name that is reflected in Portal incorrectly for some technical indicator has been reason: replaced DFA with IEPI (in line with Loan Agreement). Revised DLI 6. Monitoring and Evaluation of IEPI conducted Monitoring and Monitoring and Monitoring and Monitoring and Monitoring and Monitoring and (monitored Not in existence Evaluation of IEPI Evaluation of IEPI Evaluation of IEPI Evaluation of IEPI Evaluation of IEPI Evaluation of IEPI throughout the conducted conducted conducted conducted conducted conducted project period) (Text) Rationale: Action: This Intermediate and end targets (and respective timeline) have not been changed. We corrected Indicator Name that is reflected in Portal incorrectly for some technical indicator has been reason: replaced DFA with IEPI (in line with Loan Agreement). Revised Component 2: Promoting Investment and Exports The World Bank Trade Promotion and Quality Infrastructure (P146994) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 2.1. Number of investment inquiries that lead to site visits 0.00 0.00 20.00 60.00 104.00 107.00 116.00 128.00 128.00 generated by foreign representatives (Number) Rationale: Target values revised in accordance with agreements with the Borrower: (i) the Intermediate Target for Year 2 revised from 3 to 20, the Intermediate Target for Year Action: This indicator 3 revised from 6 to 60, the Intermediate Target for Year 4 revised from 9 to 104, the Intermediate Target for Year 5 revised from 10 to 107 to reflect actual results so has been Revised far; (ii) introduced new Intermediate Targets for Years 6 and 7 in view of project extension; (iii) the End Target revised from 12 to 128. 2.2. Number of export related leads generated by foreign 0.00 0.00 30.00 80.00 259.00 262.00 292.00 342.00 342.00 representative offices (Number) Rationale: Target values revised in accordance with agreements with the Borrower: (i) the Intermediate Target for Year 3 revised from 50 to 80, the Intermediate Target for Action: This indicator Year 4 revised from 67 to 259, the Intermediate Target for Year 5 revised from 90 to 262 to reflect actual results so far; (ii) introduced new Intermediate Targets for has been Revised Years 6 and 7 in view of project extension; (iii) the End Target revised from 100 to 342. 2.3. Number of beneficiaries of the 0.00 0.00 0.00 0.00 0.00 25.00 30.00 50.00 50.00 Exporter Development Grants (Number) Rationale: Action: This indicator The Indicator Name changed from "Share of beneficiaries of the Exporter Development Grants that access new markets and introduce new products" to "Number of has been Revised beneficiaries of the Exporter Development Grants ". The new indicator makes the end result more attributable to the project. Target values revised in accordance The World Bank Trade Promotion and Quality Infrastructure (P146994) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 with agreements with the Borrower: (i) the Intermediate Target for Year 2 revised from 5 to 0, the Intermediate Target for Year 3 revised from 10 to 0, the Intermediate Target for Year 4 revised from 30 to 0, the Intermediate Target for Year 5 revised from 40 to 25 to reflect actual results so far; (ii) introduced new Intermediate Targets for Years 6 and 7 in view of project extension. Female beneficiaries of the Exporter 0.00 0.00 0.00 0.00 0.00 0.00 30.00 30.00 30.00 Development Grants (Percentage) Rationale: Action: This This is a supplemental indicator aimed to capture gender impact of Exporter Development grants indicator is New Number of public- private partnership 0.00 0.00 0.00 0.00 1.00 2.00 4.00 6.00 6.00 concepts approved (Number) Rationale: Action: This indicator is Indicator added to monitor progress of subcomponent 2.3 New Establishment of the National Venture Fund No No No No No No Yes Yes Yes (Yes/No) Rationale: Action: This indicator is Indicator added to monitor progress under subcomponent 2.4 New Investments made by the National Venture 0.00 0.00 0.00 0.00 0.00 0.00 5,000,000.00 10,000,000.00 10,000,000.00 Fund (Amount(USD)) The World Bank Trade Promotion and Quality Infrastructure (P146994) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 Rationale: Action: This indicator is Indicator added to monitor performance of NVF activities under subcomponent 2.4 New The beneficiaries who reported that the approaches discussed in the framework of 0.00 0.00 0.00 0.00 0.00 0.00 60.00 75.00 75.00 the discussions held during the Project reflect their opinion (Percentage) Rationale: Action: This indicator is Indicator added to capture efficiency of citizen engagement processes New Component 3: Modernizing the National Quality Infrastructure 1.2. Strengthening See Sub See Sub See Sub See Sub See Sub See Sub national metrology See Sub Indicators See Sub indicators indicators indicators indicators indicators indicators Indicators services (Text) DLI 7. NIM staffed with organizational NIM staffed with NIM staffed with NIM staffed with NIM staffed with NIM staffed with structure in line NIM staffed with organizational organizational organizational organizational organizational with international organizational Not adequately structure in line structure in line structure in line structure in line structure in line best practice structure in line staffed with with with with with (monitored with international international international international international international throughout the best practice best practice best practice best practice best practice best practice project period) (Text) The World Bank Trade Promotion and Quality Infrastructure (P146994) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 DLI 8. Adequate budget for NIM included in State Adequate budget Adequate budget Adequate budget Adequate budget Adequate budget Adequate budget Not adequately budget (monitored for NIM included for NIM included for NIM included for NIM included for NIM included for NIM included budgeted throughout the in State budget in State budget in State budget in State budget in State budget in State budget project period) (Text) DLI 9. Monitoring and Evaluation of NIM conducted Monitoring and Monitoring and Monitoring and Monitoring and Monitoring and Monitoring and (monitored Not in existence Evaluation of Evaluation of Evaluation of Evaluation of Evaluation of Evaluation of NIM throughout the NIM conducted NIM conducted NIM conducted NIM conducted NIM conducted conducted project period) (Text) DLI 10. International Accreditation attained for at least International International International International International International International International International 2 metrology Accreditation for Accreditation for Accreditation for Accreditation for Accreditation for Accreditation for Accreditation for Accreditation Accreditation laboratories (Please at least 2 at least 2 at least 2 at least 2 at least 2 at least 2 at least 2 attained for at attained for at see Indicator 4 in metrology metrology metrology metrology metrology metrology metrology least 2 metrology least 2 metrology the Project laboratories not laboratories not laboratories not laboratories not laboratories not laboratories not laboratories not laboratories laboratories Development attained attained attained attained attained attained attained Ojective Indicators) (Text) The World Bank Trade Promotion and Quality Infrastructure (P146994) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 Action: This Rationale: indicator has been It is proposed to move the target date of achievement of this DLI from Year 4 to Year 7. The date of end target changed to May 31, 2022 in view of project extension. Revised 1.3. Strengthening See Sub See Sub See Sub See Sub See Sub See Sub accreditation services See Sub Indicators See Sub indicators Indicators Indicators Indicators Indicators Indicators Indicators (Text) DLI 11. NAB staffed with organizational NAB staffed with NAB staffed with NAB staffed with NAB staffed with NAB staffed with structure in line NAB staffed with organizational organizational organizational organizational organizational with international organizational Not adequately structure in line structure in line structure in line structure in line structure in line best practice structure in line staffed with with with with with (monitored with international international international international international international throughout the best practice best practice best practice best practice best practice best practice project period) (Text) DLI 12. Adequate budget for NAB included in State Adequate budget Adequate budget Adequate budget Adequate budget Adequate budget Adequate budget Not adequately budget (monitored for NAB included for NAB included for NAB included for NAB included for NAB included for NAB included budgeted throughout the in State budget in State budget in State budget in State budget in State budget in State budget project period) (Text) DLI 13. Monitoring and Evaluation of NAB conducted Monitoring and Monitoring and Monitoring and Monitoring and Monitoring and Monitoring and (monitored Not in existence Evaluation of Evaluation of Evaluation of Evaluation of Evaluation of Evaluation of NAB throughout the NAB conducted NAB conducted NAB conducted NAB conducted NAB conducted conducted project period) (Text) The World Bank Trade Promotion and Quality Infrastructure (P146994) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 DLI 14. NAB attains MLA or MRA in NAB achieves NAB achieves MLA Not a member Not a member Not a member Not a member Not a member Not a member Not a member testing laboratories MLA or MRA or MRA (Text) Action: This Rationale: indicator has been It is proposed to move the target date for achievement of this DLI from Year 4 to Year 7. The End Target date moved to May 31, 2022 in view of project extension Revised 3.1. Number of Industrial metrology 0.00 0.00 0.00 0.00 0.00 0.00 1.00 2.00 2.00 laboratories built (Number) Rationale: Target values revised in accordance with agreements with the Borrower: (i) the Intermediate Target for Year 3 revised from 3 to 0, the Intermediate Target for Year Action: This indicator 4 revised from 5 to 0, the Intermediate Target for Year 5 revised from 6 to 0 to reflect actual results so far; (ii) introduced new Intermediate Targets for Years 6 and 7 has been Revised in view of project extension; (iii) the End Target revised from 7 to 2 (in view of reduced scope of the Subcomponent 3.1). 3.2. Number of accreditations conducted in line with 0.00 0.00 0.00 0.00 0.00 0.00 5.00 10.00 10.00 international practice issued by NAB (Number) Rationale: Target values revised in accordance with agreements with the Borrower: (i) the Intermediate Target for Year 2 revised from 5 to 0, the Intermediate Target for Year Action: This indicator 3 revised from 10 to 0, the Intermediate Target for Year 4 revised from 15 to 0, the Intermediate Target for Year 5 revised from 18 to 0 to reflect actual results so has been Revised far; (ii) introduced new Intermediate Targets for Years 6 and 7 in view of project extension; (iii) the End Target revised from 20 to 10 (the End Target downsized from 20 to 10 in view of reduced scope activities in Subcomponent 3.2). The World Bank Trade Promotion and Quality Infrastructure (P146994) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 3.3. Share of NIM technical staff trained in internationally 0.00 0.00 0.00 0.00 0.00 0.00 60.00 70.00 70.00 recognized calibration methods (Percentage) Rationale: Target values revised in accordance with agreements with the Borrower: (i) the Intermediate Target for Year 2 revised from 10 to 0, the Intermediate Target for Year Action: This indicator 3 revised from 20 to 0, the Intermediate Target for Year 4 revised from 40 to 0, the Intermediate Target for Year 5 revised from 50 to 0 to reflect actual results so has been Revised far; (ii) introduced new Intermediate Targets for Years 6 and 7 in view of project extension; (iii) the End Target revised from 60 to 70. 3.4. Share of NAB technical staff trained in international 0.00 0.00 0.00 0.00 0.00 0.00 10.00 40.00 40.00 methodology for Accreditation (Percentage) Rationale: Target values revised in accordance with agreements with the Borrower: (i) the Intermediate Target for Year 2 revised from 10 to 0, the Intermediate Target for Year Action: This indicator 3 revised from 20 to 0, the Intermediate Target for Year 4 revised from 40 to 0, the Intermediate Target for Year 5 revised from 50 to 0 to reflect actual results so has been Revised far; (ii) introduced new Intermediate Targets for Years 6 and 7 in view of project extension; (iii) the End Target revised from 50 to 40 (the End Target reduced based on updated projections and in view of reduced scope of activities under Subcomponent 3.2). The beneficiaries who reported that the approaches discussed 0.00 0.00 0.00 0.00 0.00 0.00 60.00 75.00 75.00 in the framework of the discussions held during the Project The World Bank Trade Promotion and Quality Infrastructure (P146994) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 reflect their opinion (Percentage) Rationale: Action: This indicator is To monitor efficiency of citizen engagement processes New IO Table SPACE The World Bank Trade Promotion and Quality Infrastructure (P146994) Note to Task Teams: End of system generated content, document is editable from here. Please delete this note when finalizing the document