For Official Use Only CLR Review Independent Evaluation Group 1. CPS Data Country: Republic of Guatemala CPS Year: FY13 CPS Period: FY13 – FY16 CLR Review Period: FY13 – FY16 Date of this review: November 3, 2016 2. Ratings CLR Rating IEG Rating Development Outcome: Moderately Satisfactory Moderately Unsatisfactory WBG Performance: Fair Fair 3. Executive Summary i. This Review assesses the design and implementation of the World Bank Group’s (WBG) Country Partnership Strategy (CPS) for Guatemala covering the period FY13-16. Following the shared approach methodology, the program’s development outcomes are assessed based on the Performance Learning Review (PLR) which was undertaken towards the end of the CPS period in September 2015. ii. Guatemala is a lower middle income country and the largest economy in Central America. During the CPS period, Guatemala had been implementing prudent macroeconomic policies with a relatively stable GDP growth rate. However, shared prosperity, as measured by income growth among the poorest 40 percent of the population, declined during 2000-2014. Guatemala’s Gini coefficient of income and human development index in 2014 continued to lag the Latin America and Caribbean (LAC) region. Low public revenue collection limited the ability of the State to provide basic public goods and services, and to undertake public investment essential to achieving its development goals. Guatemala has weak institutional quality, scoring in the lowest quartile in three and below the median in all of the six Worldwide Governance Indicators, with no significant improvement over the last two decades. iii. The new Government that took office in 2012 aimed to address key economic challenges with an ambitious agenda that had five strategic pillars: (a) social development; (b) competitive economic growth; (c) productive and social infrastructure for development; (d) sustainable rural infrastructure for development; and (e) justice and democratic security. The reform agenda would be supported by three pacts covering: (a) fiscal reform; (b) zero hunger; and (c) security, peace and justice. The Government also presented the National Competitiveness Agenda 2012-2021 to attract investment and increase job opportunities. iv. The CPS was built on the Government agenda with five results areas: (a) create fiscal space and improve transparency in the budgeting process; (b) improved results in the social sectors; (c) improved infrastructure and logistics; (d) environment and disaster management; and (e) rural and CLR Reviewed by: Peer Reviewed by: CLR Review Coordinator Albert Martinez Nils Fostvedt Zeljko Bogetic Consultant Consultant Acting Manager IEGEC IEGEC IEGEC Lourdes Pagaran Nathaniel Jackson Takatoshi Kamezawa CLRR Coordinator Consultant Senior Evaluation Officer IEGEC IEGEC IEGEC For Official Use Only CLR Review 2 Independent Evaluation Group SME development. At the PLR stage undertaken in September 2015, the results framework was significantly revised and consolidated to focus on three specific objectives: (a) enhance tax administration; (b) improve access to and efficiency of social programs; and (c) increase productive opportunities. However, there was no substantive change in the program. v. Overall, the WBG program development outcome is rated Moderately Unsatisfactory. • With respect to Objective 1, while the program achieved its target of widening the tax base, the overall tax-to-GDP ratio did not improve due to deterioration in the collection of indirect taxes particularly on customs. On balance, taking into account the mixed results in increasing tax revenues and weak governance in tax administration, Objective 1 is rated Moderately Unsatisfactory. • With respect to Objective 2, there has been increased access to social programs in the areas of Bank intervention, with improvements in the maternal mortality overall. However, malnutrition among children remains chronic and the impact of institutional reforms on efficiency of social spending has not been realized. Objective 2 is therefore rated Moderately Satisfactory. • With respect to Objective 3, program performance has been poor with partial achievement of PLR targets. Bank projects in rural development and SME productivity have not been able to produce sustainable and scalable models of support. While IFC investments contributed to increased lending to MSMEs, advisory service (AS) products were not effective. Guatemala continues to lag its peers in terms of financial inclusion. Objective 3 is rated Unsatisfactory. vi. IEG rates WBG performance as Fair. In terms of design, The CPS was too ambitious with a program that did not match the government’s implementation capacity. The mix of instruments was not consistent with the country’s institutional weaknesses. There was too much reliance on Analytical and Advisory Assistance (AAA), which did not provide the same level of support and engagement as IPF projects. The CPS results framework was poorly constructed, with weak linkages between the WBG program and objectives, and outcome indicators that were not well defined. While the results framework was revised during the PLR by linking the WBG program to higher level objectives, the program interventions were not substantially changed. More importantly, the PLR was undertaken towards the end of the CPS period, which was too late to effect any significant changes to the program results. vii. In terms of implementation, the generally good performance of the fiscal DPLs and the education and health projects contributed to the achievement of PLR targets for Objectives 1 and 2. However, the poor performance of the rural development and MSME projects resulted in partial achievement of PLR targets in Objective 3. While there was improvement in the overall performance of the portfolio as a result of project restructurings and joint Bank-Government efforts to improve implementation and disbursement, this took place towards the end of the CPS period. AAA and AS products generally suffered from poor follow-up and implementation of recommendations. A major IFC investment in ports has been put on hold due to ongoing corruption issues and several planned advisory service (AS) products were not pursued due to lack of client support. Finally, the PLR was completed during the last year of the CPS period with no explanations provided both in the PLR and CLR. The revised program dropped the strategic objectives and underlying components where there was limited or no progress. The additional information provided by the Region during the comment period indicated that the PLR was initiated by the country team in early September 2015. However, with the deepening of the political and institutional crisis leading to the arrest of top government officials in the country, the WBG considered alternative options including extending the CPS period. Eventually, the decision was reached to proceed with PLR albeit at the late stage of the CPS period. viii. This review generally agrees with the CLR lessons and recommendations: the need for WBG to be a steadfast and flexible partner, recognizing that change will be incremental and over the long term; the importance of a selective program with a straightforward design and clear implementation For Official Use Only CLR Review 3 Independent Evaluation Group arrangements; the importance of a well-designed and measurable results framework and accompanying indicators; and the need to consider reputational risk in all aspects of engagement. This review provides additional lessons for consideration in the next CPS. • The right mix of WBG instruments aligned with country’s institutional capacity is critical to ensure effective implementation support to policy and institutional reforms. Despite the tax reforms supported by the DPLs, weak governance continued to undermine revenue collection efforts. • The effectiveness of AAA and AS products could be improved by focusing on and supporting implementation of recommendations, and ensuring at the approval stage sufficient ownership by clients. The CLR noted limited government capacity to undertake AAA recommendations, and IEG reviews of AS indicate lack of ownership. • Closed projects provide lessons of what worked and did not work and could inform future operations. Many projects went through numerous restructurings and identified measures to improve project design and implementation, including stronger coordinated efforts with the Inter-American Development Bank (IDB). • Timely delivery of the PLR improves ability of WBG to effect meaningful changes to the strategy and program. The PLR for this CPS was completed during the last year of the CPS limiting its value added. 4. Strategic Focus Relevance of the WBG Strategy: 1. Congruence with Country Context and Country Program. While economic performance had been relatively stable in the decade leading up to the CPS, Guatemala had been lagging the LAC region in terms of real per capita growth and shared prosperity as measured by income growth among the poorest 40 percent of the population. More than half of the population was living in poverty at the beginning of the CPS period, with about 70 percent of the poor living in rural areas; among indigenous groups, the poverty rate was 75 percent. Because of a low level of revenue mobilization with a tax-to- GDP ratio well below the average for all of LAC, Guatemala had the lowest per capita spending on social sectors in the region. Malnutrition affected half the children under five and 70 percent of indigenous children. Increasing rates of economic growth had been challenging and would require increasing economic opportunities for the rural population, developing the agriculture sector, improving infrastructure, and encouraging growth of SMEs. In addition, Guatemala would have to address the quality of its institutions which were lagging the LAC region based on scores in World Governance Indicators. 2. The new administration elected in 2011 developed an ambitious program built around five strategic pillars: (a) social development; (b) competitive economic growth; (c) productive and social infrastructure for development; (d) sustainable rural infrastructure for development; and (e) justice and democratic security. The implementation of the program would be supported by three pacts addressing: (a) fiscal reform; (b) zero hunger; and (c) security, peace and justice. During the first quarter of 2012, Congress approved a comprehensive reform of the tax system, and the Government launched the Zero Hunger Pact to reduce the incidence of malnutrition in children under the age of five. The Government also presented the National Competitiveness Agenda 2012-2021 to attract investment and increase job opportunities. 3. The CPS was designed to be closely aligned with the Government’s priorities and was organized around two strategic objectives and five results areas. The first strategic objective – strengthen public policies for social development – would support fiscal reforms (results area #1) and efforts to improve effectiveness of social expenditures (results area #2). Two fiscal DPLs, complemented by ongoing IPF For Official Use Only CLR Review 4 Independent Evaluation Group projects in the social sectors and AAA products, would support the first strategic objective. The second strategic objective – promote inclusive and sustainable growth – would cover infrastructure and logistics development (results area #3), environment and disaster risk management (results area #4), and rural development and SMEs (results area #5). IFC would contribute to results areas #3 and #5, with a risk management DPL and AAA supporting results area #4. The PLR program focused on results areas #1, #2, and #5 and continued to be aligned with Government priorities. 4. The IFC program was mainly in the financial sector, supporting SMEs through loans, investments, and risk management advisory work for local financial institutions. Other IFC projects were an investment in a port container project and a PPP advisory project to support a public lighting project. However, the port container project is currently held up due to corruption investigation issues, and several planned AS products did not materialize. 5. Relevance of Design. The original CPS design covered too many areas and the program did not match country capacity. There was an over-reliance on non-lending technical assistance (NLTA) to deliver many important outcomes – NLTA was the main instrument supporting six of the 20 CPS outcomes. There was no systematic support to improving the business environment. Some of the program components were not well developed, with outcomes and targets to be defined during the PLR. The CPS results framework reflected the lack of focus of the program and did not take into account IFC activities in the financial sector. The PLR streamlined the program and revised the results framework by redefining objectives and designing indicators that more closely reflected the contributions of the WBG program, including IFC activities supporting access to finance for MSMEs. The main weakness was the results framework for Objective 3 (Increase Productive Opportunities) where the higher level country development goal was not well defined and the outcome indicators were project results that did not match the scale of the development challenge. Selectivity 6. The original CPS was too ambitious and tried to address a wide range of development challenges, while the program articulated in the PLR was more selective. Objective 1 of the revised program focused on enhancing tax administration with DPLs as the main instrument of support. Objective 2 was designed to cover two aspects of social programs: (a) specific interventions supported by ongoing IPF projects in lower secondary education, maternal health, and malnutrition in children; and (b) improvements in efficiency and targeting supported by the DPLs. In addition, the specific interventions in Objective 2 focused on low-income, rural, and indigenous communities. Notwithstanding the broad title of Objective 3 (Increase Productive Opportunities), the Bank program had a very narrow focus – development of value chains in the rural and MSME sector – while IFC employed selectivity in its investment program by focusing on financial institutions that would expand services in underserved areas and finance MSMEs. However, the program lacked sufficient instruments to address institutional weaknesses in the implementation of tax and budget reforms. Alignment 7. The CPS and PLR program and design supported WBG’s corporate goals of reducing poverty and increasing shared prosperity in a sustained manner. While the main program instruments focused on supporting tax reforms, improved revenue mobilization and greater efficiency in social spending were critical to the ability of the Government to address the high poverty rates and low human development indicators of indigenous and rural communities. The outcome indicators in the education and health interventions focused on project areas where access and outcomes were lagging the rest of the country. The growth related objective of the CPS focused on inclusion, with Bank and IFC projects targeting rural areas and MSMEs. About 60 percent of the active trust fund projects in terms of amount targeted low- income and indigenous communities. For Official Use Only CLR Review 5 Independent Evaluation Group 5. Development Outcome Overview of Achievement by Objective: 8. Following the shared approach, the assessment of the development outcomes is based on the PLR results framework. At the PLR stage, the CPS strategic objectives and five results areas in the CPS results framework were dropped, and replaced by three objectives with a total of eight indicators (from the original 20 indicators). Objective 1: Enhance Tax Administration 9. Guatemala’s tax to GDP ratio was well below the averages for Central America and all of LAC, constraining the government’s ability to increase social spending. Objective 1 of the CPS sought to enhance tax administration and support the implementation of tax reforms which were approved prior to the CPS. The achievement of this objective was to be measured mainly by the widening of the tax base. 10. Widening of the tax base. The main instrument of Bank support was through two DPL series (the FY13 Fiscal Space for Greater Opportunities DPL and the FY14 Enhanced Fiscal and Financial Management for Greater Opportunities DPL). The outcome indicator was an increase in the number of effective taxpayers making direct payments to the Tax Administration Office (SAT), from 1.4 million in 2011 to 1.6 million in 2016. The CLR cited Tax Administration Office (SAT) data that 1.7 million taxpayers made payments to SAT in 2015. The Implementation Completion and Results Report Review (ICRR) of the series reported that the tax base target was surpassed. However, this indicator is only one dimension of the objective, and hence does not sufficiently measure its achievement. 11. The reforms supported by WBG interventions resulted in an increase in income tax collections, with an improvement in the income tax-to-GDP ratio from 2.7 percent in 2011 to 3.2 percent in 2014. However, there was a decline in VAT collections on imports, despite an increase in the volume of trade. The ICRR noted that there has been no improvement in the overall tax-to-GDP ratio due to a deterioration in indirect tax compliance, particularly on customs. The DPLs included policy areas aimed at strengthening of tax and customs administration, and the PLR results framework included milestones on progress in customs administration activities. The ICRR noted that weak governance continued to undermine tax collection efforts and rated as Modest the DPL objective of strengthening tax administration and tax policy. This review noted the various initiatives undertaken to improve tax administration and the increase in audits and administrative sanctions in customs administration. Taking into account the mixed results in increasing tax revenues and the weak governance in tax administration, Objective 1 is rated Moderately Unsatisfactory. Objective 2: Improve Access and Efficiency of Social Programs 12. Guatemala’s high poverty rates were reflected in the poor social indicators, with low levels of educational attainment, particularly for indigenous communities, and childhood malnutrition that was among the worst in the world. Objective 2 aimed to support improved social outcomes by increasing access to and enhancing efficiency of social programs. This objective was supported by several Bank interventions: fiscal DPLs, FY07 Education Quality and Secondary Education Project, FY13 Maternal and Infant Health and Nutrition Project, and the FY14 Health and Social Protection Non-Lending TA. 13. Increased lower secondary education (9th grade) completion rate in 196 targeted municipalities. While education results in access to primary and lower secondary education had been improving, indigenous communities had worse education outcomes. The CPS target was an increase in lower secondary education completion rates from 37 percent in 2011 to 42 percent in 2016. The FY16 Implementation Completion and Results Report (ICR) for the education project reported that completion rates in lower secondary education (9th grade) for targeted low-income communities increased from 31 percent in 2007 to 41 percent in 2015. Based on this information, the target for the education indicator is Achieved. 14. Improved nutritional status of young children as measured by two indicators. The CPS supported the Government’s Zero Hunger program, which would give priority to municipalities with the For Official Use Only CLR Review 6 Independent Evaluation Group highest rate of malnutrition. The outcome indicators were: (a) increase in percentage of children receiving weight and height check-ups from 37.5 percent in 2011 to 50 percent in 2016; and (b) increase in percentage of children receiving Vitamin A (from 12.9 percent in 2011 to 30 percent in 2016) and micronutrients (from 4.7 percent in 2011 to 15 percent in 2016). The ICRR for the DPL series reported that the CPS targets were surpassed: percentage of children receiving weight and height check-ups was over 87 percent at end-2014, and percentage of children under one year old receiving Vitamin A and micronutrient supplements was 77 percent and 73 percent, respectively, in 2015. FY16 ICRR of the Maternal and Infant Health and Nutrition Project rated the project objective reduction of chronic malnutrition among children younger than two years old in targeted rural communities as Substantial. The target for the nutrition indicator is rated Achieved. 15. Increased percentage of women in 83 prioritized municipalities attended to during labor in facilities by qualified providers. To maintain gains in maternal and infant mortality, the availability of professional attention to expecting mothers in Ministry of Public Health and Social Assistance facilities would be increased in 83 priority municipalities. The CPS target was 25 percent of women in 83 prioritized municipalities attended to by qualified providers during labor in Ministry of Public Health and Social Assistance facilities in 2015. The CLR reported a 42 percent achievement rate in 2015 for the outcome indicator. The FY16 ICRR for the Maternal and Infant Health and Nutrition Project reported that the percentage of deliveries in health institutions in 40 project areas increased from 22.3 percent in 2006 to 42 percent in 2012, and that the ratio of indigenous to non-indigenous maternal mortality in project areas decreased from 3.2 in 2006 to 1.24 in 2012, exceeding the project target of 10 percent reduction. In addition, the ICRR rated achievement of the project objective improvement of maternal and infant health as Substantial. The target for the maternal health indicator is rated Achieved. 16. Improved quality and transparency of public expenditure. This outcome would contribute to the effectiveness of social expenditures and sustainability of ongoing education and health and nutrition interventions. The outcome indicator was the establishment of at least one results-based budgeting (RBB) pilot that includes an operational monitoring and evaluation framework for priority programs. The Ministry of Health and Social Protection prioritized three sub-programs (immunization, malnutrition, and reproductive health) for the RBB pilot and signed a Results-Based Management Agreement with the Ministry of Finance including targets for nutrition and maternal health. The framework to monitor and evaluate the implementation of three sub-programs is in place. The ICRR for the DPL series noted that the RBB covered a total of four ministries. The target for the public expenditure indicator is rated Achieved. 17. Social Information System operational. The Unique Beneficiary Registry was created with support from the FY13 Fiscal Space for Greater Opportunities DPL to help decision makers assess the effectiveness of social policies and reduce administrative costs by avoiding duplication. The outcome indicator was the operationalization of the Unique Beneficiary Registry with information on social programs and policies related to beneficiaries, geographic coverage, and type of program. The CLR reported that the Registry contained beneficiary information from 75 programs, and tools and systems had been developed to assess the targeting effectiveness of the social programs. The combined ICRR for the fiscal DPLs reported the operationalization of the Registry which expanded coverage to 90 percent of beneficiaries. The ICRR rated the DPL objective on improving management and coordination of social policies as Substantial. Based on the progress in operationalizing the Registry, the target for this indicator is rated Achieved. 18. The Bank program supporting this objective combined DPLs with ongoing IPF projects and AAA and produced concrete results in several areas. With respect to access to education, there has been progress in access to lower secondary education, particularly for low income and indigenous students. The FY16 ICR for the Education Quality and Secondary Education Project reported that enrollment in lower secondary education for targeted communities increased from 41 percent to 51 percent during 2007-2015. In terms of maternal health, WDI data show improvement in maternal mortality ratio (per 100,000 live births) from 105 in 2012 to 88 in 2015. In terms of sustainability of efforts to address malnutrition in children, the CLR reports that Ministry of Health data for 2016 indicate that progress on growth promotion and nutritional support for children has been sustained even after project closing. WDI For Official Use Only CLR Review 7 Independent Evaluation Group data also show increased Vitamin A coverage rate (percent of children ages 6-59 months) from 14 percent in 2012 to 19 percent in 2015. However, impact evaluation data found no significant reduction in chronic malnutrition among children 3-59 months in the Zero Hunger Pact’s 166 prioritized municipalities. With respect to improved efficiency through improved budgeting and information systems, the ICRR for the fiscal DPL series did not find indications that the actions improved the key social program management and coordination dimensions, including targeting, synergies across programs, and monitoring and evaluation. While the WBG program achieved the targets for process and intermediate outcome indicators, achievement of higher level outcomes have been mixed. On this basis, Objective 2 is rated Moderately Satisfactory. Objective 3: Increase Productive Opportunities 19. In 2011, about 70 percent of the population below the poverty line lived in the rural areas. Integrating the rural population in terms of economic opportunities was one of the development challenges in Guatemala. Objective 3 sought to increase rural incomes and improve access to financial services by micro, small and medium enterprises. The Bank’s interventions supporting this objective included: FY06 Project to Support the Rural Economic Development Program, FY11 Enhancing MSME Productivity Project, and IFC investments. 20. Increased rural incomes. The CPS aimed to help foster productive opportunities, particularly for rural and indigenous communities, by developing and operationalizing new supply chain partnerships. The outcome indicator was the increase of total sales of rural supply chain partnerships by $16 million during 2011-2016. The FY15 ICR for the Project to Support the Rural Economic Development Program reported that total sales of the rural supply chain partnerships supported by the project increased from $0.1 million in 2011 to $16.3 million in 2014. While the CPS target was met, the ICRR reported that increase in sales represented an achievement rate of only 47 percent of the project target, and rated the project objective of improving the competitiveness of rural productive supply chains with strong indigenous participation as Modest. It is also noted that increased sales do not necessarily translate to increased rural incomes. Taking into account the ICRR findings, the target for the rural incomes indicator is rated Partially Achieved. 21. Increased number of people, microenterprises, and SMEs reached with financial services. The main WBG instruments were the Bank FY11 Enhancing Micro, Small and Medium Enterprise Productivity Project and the IFC investments in the financial sector. The target was an increase in the number reached from 357,000 in 2011/12 to 650,000 in 2017, with a gender target of women reached from 45,900 in 2011/12 to 190,000 in 2017. Based on IFC project data, the CLR reported that actual total number reached in 2016 was 564,268 of which 76,971 were women (though this figure was mainly in the area of microloans). The IFC Development Outcomes Tracking System reported 76,971 women reached in 2014, about 40 percent of the 2017 target. The June 2016 ISR for the MSME project rated both progress towards achievement of PDO and overall implementation progress as Unsatisfactory – the project was closed in June 2016, earlier than planned due to implementation issues that led to cancellation of the remaining credit. In addition to investments, IFC provided risk management advisory services to help stimulate SME lending, but IEG rated this AS product Moderately Unsatisfactory due to lack of implementation of recommendations. An advisory support to a rural cooperative was dropped due to lack of client support. Based on the progress in total number reached but poor progress in reaching the women segment, the overall target for the financial services indicator is rated Partially Achieved. 22. The Bank program focused on developing value chains to integrate the rural sector and MSMEs with the rest of the economy. However, the supply chain sales target ($16 million increase in sales) was small and not consistent with the scale of the development challenge. More importantly, the CLR reported problems scaling up the rural development project results due to design issues and implementation challenges. The MSME project, which was under implementation throughout the CPS period, was intended to sustain the work started in the rural development project on value chains, but did not produce results. While IFC had substantial equity investment in a major financial group to support SME lending, the impact on system wide SME lending is unclear. The 2016 IMF Article IV Country Report for Guatemala notes that only 60 percent of SMEs have a bank account compared to 90 percent for LAC. In For Official Use Only CLR Review 8 Independent Evaluation Group addition, IFC’s AS products have not performed well. In view of the poor performance of Bank projects and IFC AS, Objective 3 is rated Unsatisfactory. Overall Assessment and Rating 23. IEG rates overall development outcome of the Guatemala CPS as Moderately Unsatisfactory. This is based on the Moderately Unsatisfactory rating for Objective 1, Moderately Satisfactory rating for Objective 2, and the Unsatisfactory rating for Objective 3. The fiscal DPLs, which were the only new lending operations during the CPS period and which were frontloaded, made significant contributions to the achievement of CPS targets in Objectives 1 and 2. However, increases in income tax collection were offset by declines in VAT collection on imports, tax administration continued to be characterized by weak governance, and greater efficiency of social expenditures has yet to be achieved. The ongoing IPF projects approved prior to CPS period had mixed results, with positive contributions in the education and health sectors but minimal impact on the development of the rural and MSME sectors, the latter contributing to the Unsatisfactory rating for Objective 3. While some AAA products supported Government policies and programs (e.g. the regional pilot on the application of behavioral economics on tax collection), many knowledge products suffered from limited government capacity to implement recommendations. Finally, with the frontloading of the DPLs, lack of sustained support for implementation of initiatives, such as the piloting of results based budgeting and establishment of the Unique Beneficiary System, puts the reforms at risk. 6. WBG Performance Lending and Investments 24. At the start of the CPS period, there were nine ongoing lending operations with a total approved amount of $590 million, of which about 80 percent was accounted for by eight investment project financing (IPF) projects and the remainder by one Development Policy Lending (DPL) which was a deferred drawdown option (DDO). The IPF projects covered a variety of areas: MSME productivity, rural development, land administration, roads, and emergency support for social services, health, and education. The DPL supported disaster risk management. During the CPS period, two new lending operations – a two series programmatic DPL - amounting to $540 million were approved, compared to three operations – all DPLs – amounting to $425 million proposed in the CPS. The PLR dropped one of the planned DPLs (a DDO for disaster risk management) and did not add any new lending operations for delivery during the CPS period. At the start of the CPS period, there were six ongoing TF projects amounting to $9.7 million, 80 percent of which were accounted for by two projects: the FY12 Strengthening the Resilience Capacity of Maya Indigenous Peoples and Peasants to Cope with Food Insecurity and Climate Change in Guatemala ($2.5 million); and the FY09 Support to the General Auditor’s Office Project ($2.3 million). During the CPS period, two TF projects amounting to $3.7 million were approved: the FY14 SPF Municipal Citizen Security ($1.0 million); and the FY15 Pilot to Improve the Development and Nutrition of Young Children in Poor Rural Areas in Guatemala ($2.8 million). 25. All 11 lending operations that were active during the CPS have closed. Of the seven closed operations rated by IEG, six – including all three DPLs - were rated Moderately Satisfactory or better and one was rated Moderately Unsatisfactory. Five of the IEG rated operations had Significant or High Risk to Development Outcomes. Of the four closed projects not yet rated by IEG, two had ICRs with ratings of Moderately Satisfactory or better for outcomes, one had a June 2016 ISR with a rating of Unsatisfactory for progress towards PDO, and one did not have any ISRs during the past five years. Based on IEG ratings for closed projects during FY13-15, the Guatemala performance was better than those of LCR and Bank-wide based on both number and amount of projects, though the result will have to take into account Guatemala’s relatively small portfolio. In terms of portfolio performance during the CPS period, percentage share of projects at risk of the Guatemala portfolio fared better than the LCR and Bank-wide portfolio in terms of both number and commitments, with much of the improvement occurring towards the end of the For Official Use Only CLR Review 9 Independent Evaluation Group CPS period. The good performance of the DPLs and the restructuring of many problem projects such as the Project to Support the Rural Economic Development Program during the previous CPS period contributed to the portfolio performance during this CPS period. The Guatemala portfolio also performed better than LCR and Bank-wide with respect to the disbursement ratio. Because many of the ongoing IPF projects were relatively old with no new IPF projects, undisbursed balances were low contributing to a higher disbursement ratio. In addition, there were efforts to improve disbursement performance during the CPS period, through project restructurings and Bank-Government portfolio reviews. 26. Prior to the CPS period, IFC had eight net commitments amounting to $1.06 billion. During the CPS period, IFC made 10 new net commitments amounting to $72.3 million, dominated by a $44.7 million commitment to a port container project. Other than the port container project, IFC’s investments were highly concentrated in the financial sector, with all nine remaining net new commitments going to the financial and insurance sector. Within that sector, seven of the nine investments were related to one major financial group. IFC also had significant net commitments to short-term financing under the global trade finance program (GTFP), with a total of $643.0 million over FY13-16. This represents 90 percent of IFC’s total net commitments over the period. There were no IEG evaluations of investment projects during the CPS period. Analytic and Advisory Activities and Services 27. A total of 19 AAA products were delivered during the CPS period, of which 17 were non-lending technical assistance (NLTA). There were two Economic and Sector Work (ESW) products: the FY15 Economic Diagnostic for National Action and the FY15 Financial Sector Assessment Program Update. Five of the NLTA products were in the areas of renewable/clean energy and infrastructure, including one on transport and logistics – these products supported the infrastructure and logistics results area in the original CPS results framework. Four NLTA products supported improved governance and included TA on recovery of stolen assets, use of behavior economics in improving tax compliance, and initiatives to reduce crime in communities. Three focused on agriculture and rural development and two on the financial sector. The two NLTA products in the social sector complemented the fiscal DPLs and the health IPF project. There was one NLTA on earthquake damage assessment. 28. IFC had a small advisory service (AS) program. At the beginning of the CPS period, IFC had a small AS project targeting rural cooperatives amounting to $35,000. During the CPS period, IFC approved two AS projects with a total funding of $0.7 million. IEG reviewed one Advisory Services Completion Report, which assessed the impact of risk management support for a major financial group in Guatemala. The IEG rated the project Moderately Unsatisfactory in terms of Development Effectiveness, largely due to the indeterminate nature of whether the client’s management would ultimately implement the suggested risk management changes. IEG also reviewed two dropped AS projects where the client was either unable or unwilling to provide the counterpart funding for the advisory project. Results Framework 29. The original CPS results framework was based on an ambitious program with two strategic objectives, five results areas and 20 outcome indicators, reflecting the lack of focus and selectivity of the program. The CPS results framework was poorly constructed, with weak linkages between the WBG program and objectives, and outcome indicators that were not well defined. The contribution of IFC activities in the financial sector – a major component of the IFC program in the country – was not represented in the results framework. At the PLR, there were significant revisions to the results framework, which was structured around three restated objectives and eight indicators. The objectives and the indicators in the revised results framework were defined to better reflect the contribution of the WBG program and to establish a stronger link between WBG interventions and objectives. The use of the intervention logic in the results framework provided a statement of the higher level objectives (including how these are to be measured) to which the WBG program contributes, as well as the constraints addressed by the program. However, the results framework for Objective 3 (Increase Productive For Official Use Only CLR Review 10 Independent Evaluation Group Opportunities) lacked the same clarity on higher level outcomes compared to the other two objectives and was focused on project level results. Partnerships and Development Partner Coordination 30. In the course of CPS preparation, WBG engaged in a series of consultations with other development partners, including discussions on how to better coordinate activities in the country. In addition, the WBG, IMF, and IDB held joint discussions with the incoming government. The Bank coordinated with UN agencies through the UN Country Team, e.g. the Stolen Asset Recovery Initiative is co-managed by WBG and the UN Office on Drugs and Crimes. The Bank is an active member of the G- 13, a grouping of bilateral and multilateral donors in Guatemala. The Bank used its convening power to work with development partners in resolving some of the country’s difficult issues. For example, the Bank and other development partners’ facilitated an agreement reached between the Government and the Coordinating Committee of Communities Affected by the Construction of the Chixoy Dam (COCAHICH) on the implementation of the Reparations Plan, which had been delayed due to unresolved issues. The Bank also participated in the joint Public Expenditure and Financial Accountability (PEFA) Update that included the EU and IDB. The Bank has been coordinating with IDB at different levels and in several areas in view of the active role of IDB in the country, e.g., the CPS and the DPLs were prepared in close collaboration with IDB and the Support for Rural Economic Development Project included funding from IDB. Safeguards and Fiduciary Issues 31. In four IPF projects closed and evaluated by IEG during the review period, compliance with the Bank’s environmental and social safeguards was considered satisfactory to moderately satisfactory overall. Involuntary Resettlement (OP 4.12) was triggered during the implementation of the Second Rural and Main Roads Project, after resettlement activities had been discovered by the Bank supervision mission. It identified 82 cases of dwellings and other structures as affected, of which 56 involved total or partial loss of dwellings. A Corrective Action Plan was prepared and a project restructuring was undertaken. The Bank reported that all resettlement issues were resolved by project closure although there was no detailed assessment of its quality and how the cases were processed. Population displacement and house reconstructions resulted in more than four years delay in project implementation. 32. In 2011, four bidders participated in a shopping process for the reconstruction and repair of houses and other structures under the Guatemala Second Rural and Main Roads Project (P055085). INT received allegations that the director of one of the PCUs involved in the Project had pre-selected the winning company during the shopping process. While INT did not find sufficient evidence to support these allegations, there were several indications that the director concerned was the beneficial owner of one of the losing bidders. Additionally, INT discovered that a second losing bidder was not a legitimate company and that the bidder affiliated with the director and this losing bidder had the same person prepare their bids, had the same accountant and lawyer, and had submitted guarantees from the same company on the same day. INT concluded that these two losing bidders engaged in collusive practices in order to interfere with the bidding process. INT also found that the second losing bidder and a third losing bidder engaged in fraud. Ownership and Flexibility 33. To help ensure ownership, the CPS was aligned with government priorities and was built on a broad consultative process that included civil society and private sector groups. It also took into account the results of the FY13 Guatemala Country Survey where the Bank received lower ratings for alignment of its work with country priorities, realism of programs, flexibility in the context of changing domestic circumstances, and sustainability of results. In the course of CPS implementation, the Bank sought to engage civil society and communities in specific areas, e.g., there was an NLTA for improving civil society engagement in the Extractive Industries Transparency Initiative (EITI), and the Bank played an active role in engaging with communities on the Chixoy Dam Reparations Plan. In addition, the Bank engaged closely with the private sector and civil society during the preparation of the fiscal DPLs, including formal For Official Use Only CLR Review 11 Independent Evaluation Group consultations held in Guatemala City and Quetzaltenango. However, there is evidence of lack of ownership in many of the AAA and AS products, as reflected in the poor implementation of AAA and AS recommendations and droppage of several AS initiatives. In terms of flexibility, the PLR dropped the planned disaster risk management (CAT DDO) due to a change in government priorities, and streamlined the program by eliminating components with little or no progress. Two important IPF projects under preparation – which were not in the original CPS - were deferred to the next CPS period to ensure ownership by the incoming administration. WBG Internal Cooperation 34. In the financial sector, the work of the Bank and IFC has been complementary, with Bank projects supporting the demand side of MSME finance and IFC providing investments and advisory services to financial institutions. The Bank has been carrying out a number of NLTA activities in the infrastructure sector, where IFC was planning to expand its investments (a major port project was approved but put on hold). IFC operations were important instruments supporting Objective 3 of the revised results framework with one of the two outcome indicators based on the results of IFC investments. While the CPS was a joint product, IFC activities in the financial sector were not incorporated in the original results framework. This was corrected in the PLR. Risk Identification and Mitigation 35. Both the CPS and PLR identified the risks to the implementation of the CPS, mainly political uncertainty, weak institutional capacity, and fiduciary risk. The political risk became magnified during the CPS period. The Bank mitigated political risk by frontloading the fiscal DPLs to support tax reforms approved by Congress and deferring the approval of two IPF projects under preparation during the latter part of the CPS period until a new administration is in place. There was a joint (Government, EU, IDB and WB) Public Expenditure and Financial Accountability Assessment Update to address fiduciary risk. However, there was no complementary instrument to support the implementation of the reforms supported by the fiscal DPLs. In addition, with the closing of Bank projects, the PLR did not address how the Bank would ensure sustainability of positive project results in several areas during the remainder of the program period. Overall Assessment and Rating 36. IEG rates WBG performance as Fair. Design. The CPS was too ambitious with a program that did not match country capacity. The mix of instruments was not consistent with the country’s institutional capacity. There was an over-reliance on NLTA to support implementation – NLTA as an instrument could not provide the same level of support and engagement as IPF projects. Bank AAA and IFC AS were the main instruments supporting six of the 20 CPS outcomes. The CPS results framework was poorly constructed, with weak linkages between the WBG program and objectives, and outcome indicators that were not well defined. In particular, the results area on transport and logistics was not well developed, with supporting activities to be determined in the progress report. In addition, the contribution of IFC activities in the financial sector – the major component of the IFC program in the country – was not represented in the results framework. 37. Implementation. The DPLs supporting fiscal reforms were implemented successfully, contributing to the achievement of targets in Objectives 1 and 2. In addition, the education and health IPF projects that complemented the DPLs in Objective 2 were also implemented successfully. However, the rural development and MSME projects encountered implementation issues, resulting in partial achievement of targets in Objective 3. During the CPS period, there were some improvements in the performance of the lending portfolio as a result of project restructurings and joint Bank-Government efforts to improve implementation and disbursement. However, AAA products generally suffered from poor follow-up and implementation of recommendations, reducing their effectiveness. IFC also had mixed performance in the delivery of planned AS, with projects outside of the financial sector dropped due to lack of client ownership. Finally, the PLR was completed during the last year of the CPS period and revised the For Official Use Only CLR Review 12 Independent Evaluation Group program by excluding several program components – including two of the five CPS results areas - where there was limited or no progress. The late delivery of the PLR limited its value added. The dropping of the risk management DPL, the IFC investment in a port container project being put on hold, and poor performance of AAA and AS projects were the main factors contributing to limited progress in the two CPS results areas not included in the PLR. 7. Assessment of CLR Completion Report 38. The CLR provided an assessment of both the direct results of program interventions and the progress in achieving higher level outcomes. The CLR could have strengthened discussion in several areas. First, given the importance placed by the CPS on knowledge products, the CLR could have expanded on the reasons for the lack of effectiveness of a number of AAA products developed under the CPS with proposed improvements for the next CPF. Second, the CLR could have discussed the efficacy of measures undertaken to improve IPF project performance, including what worked well and what did not, and identified lessons from projects that were closed during the CPS period. Third, the CLR could have provided a deeper analysis of the underlying reasons behind the lack of success in meeting the inclusive growth objective (Objective 3), and provided lessons for future engagement, e.g., how to improve synergy of Bank-IFC work and how to improve targeting of WBG interventions to achieve inclusion. Finally, the CLR could have explained the rationale for the late PLR and why it was undertaken at all. 8. Findings and Lessons 39. This review generally agrees with CLR lessons and recommendations: the need for WBG to be a steadfast and flexible partner, recognizing that change will be incremental and over the long term; the importance of a selective program with a straightforward design and clear implementation arrangements; the importance of a well-designed and measurable results framework and accompanying indicators; and the need to consider reputational risk in all aspects of engagement. 40. This review provides the following lessons for consideration in the next CPS. • The mix of WBG instruments requires review to ensure effective implementation support to policy and institutional reforms. Despite the tax reforms supported by the DPLs, weak governance continued to undermine revenue collection efforts. • The effectiveness of AAA and AS products could be improved by focusing on and supporting implementation of recommendations, and ensuring at the approval stage sufficient ownership by clients. The CLR noted limited government capacity to undertake AAA recommendations and IEG reviews of AS indicate lack of ownership. • Closed projects provide lessons of what worked and did not work and could inform future operations. Many projects went through numerous restructurings and identified measures to improve project design and implementation, including stronger coordinated efforts with the Inter- American Development Bank (IDB). • Timely delivery of the PLR improves ability of WBG to effect meaningful changes to the strategy and program. The PLR for this CPS was completed during the last year of the CPS period, limiting the PLR’s value added. Annexes CLR Review 13 Independent Evaluation Group Annex Table 1: Summary of Achievements of CPS Objectives Annex Table 2: Guatemala Planned and Actual Lending, FY13-FY16 Annex Table 3: Analytical and Advisory Work for Guatemala, FY13-FY16 Annex Table 4: Guatemala Grants and Trust Funds Active in FY13-16 Annex Table 5 IEG Project Ratings for Guatemala, FY13-15 Annex Table 6: IEG Project Ratings for Guatemala and Comparators, FY13-15 Annex Table 7: Portfolio Status for Guatemala and Comparators, FY13-16 Annex Table 8: Disbursement Ratio for Guatemala, FY13-16 Annex Table 9: List of IFC Investments in Guatemala Annex Table 10: List of IFC Advisory Services in Guatemala Annex Table 11: IFC net commitment activity in FY13-FY16 Annex Table 12: Net Disbursement and Charges for Guatemala, FY13-16 Annex Table 13: Total Net Disbursements of Official Development Assistance and Official Aid for Guatemala Annex Table 14: Economic and Social Indicators for Guatemala, 2013-2015 Annexes CLR Review 15 Independent Evaluation Group Annex Table 1: Summary of Achievements of CPS Objectives Actual Results CPS FY13-16 Comments (as of current month/year) Objective 1: Enhance Tax Administration Indicator: Widening of the Actual: 1,700,586 (2015) Source: CLR, PLR, ICRR. tax base, as measured by an increase in the number The I DPL series Enhanced Fiscal and The number of effective of effective tax payers Financial Management for Greater taxpayers making direct making direct payments to Opportunities DPL (P133738: MS) and payments to the Tax SAT: the Fiscal Space for Greater Administration Office Opportunities DPL (P131763: MS) reached 15 percent of the Baseline: 1,441,246 (2011) supported this objective. total population in 2014 and 18 percent in 2015. Target: 1,600,000 (2016) Through the Behaviorally Informed However, this indicator is Public Policy non-lending technical only one dimension of the assistance (P147858), the WBG also objective, and hence does supported improving voluntary tax not sufficiently measure its compliance through the use of achievement. Major behavioral economics to motivate Outcome citizens to pay their taxes. Measures Objective 2: Improve Access to and Efficiency of Social Programs Indicator: Increased lower Actual: 40.9% (2016) Source: CLR, PLR, ISR, secondary education ICRR. completion (9th grade) in This indicator was one of the PDO-level 196 targeted municipalities: indicators for the Education Quality and The ICR stated that the Secondary Education project indicator was reached by Baseline: 37% (2011) (P089898: MS). dividing the real enrollment of students in 9th grade at Target: 42% (2015) the start of the school year in the 196 municipalities (numerator) by the population of 15 year olds in a given year. Indicator: Improved Actual: 112% (2016) Source: CLR, PLR, ICR, nutritional status of young ICRR. children, as measured by: The ICRR for DPL series Enhanced Fiscal and Financial Management for The implementation of the a) Percentage of children Greater Opportunities DPL (P133738: Zero Hunger Pact and the receiving weight and height MS) and Fiscal Space for Greater Municipal Councils of Food check-ups: Opportunities DPL (P131763: MS) and Nutritional Security reports on the actual result for this from the DPL played an Baseline: 37.5% (2011) indicator; the result was inconsistent with instrumental role in the Target: 50% (2016) what was reported in the CLR but achievement of these nonetheless showed that the CPS target indicators. was surpassed: Over 87% (2014). b) Percentage of children receiving Vitamin A and Actual: 74% (Vitamin A); 71% micronutrients: (micronutrient) (2016) Annexes CLR Review 16 Independent Evaluation Group Actual Results CPS FY13-16 Comments (as of current month/year) Baseline: 12.9% (Vitamin The ICRR does not report on the actual A); 4.7% (micronutrient) results of these indicators. The ICR for (2011) the DPL series reported consistent baselines and targets. Actual results Target: 30% (Vitamin A); from ICR include: 77% (Vitamin A) 15% (micronutrient) (2016) 73% (micronutrient) (2015) (baseline for micronutrient was 6.4%, not 4.7% (2011). These results surpassed the targets. Indicator: Increased Actual: 41% (2016) Source: CLR, PLR. percentage of women in 83 prioritized municipalities This objective is supported under the The actual figures are attended to during labor in Extension of Coverage Program under based on results from 40 facilities by qualified the Maternal and Infant Health and health units while target providers Nutrition Project (P077756: MS) with refers to 83 municipalities. an objective to improve maternal and Baseline: 0 (2011)* infant health in the project’s 40 areas of Indicator adjusted from ICR intervention. Deliveries in health to be more closely aligned Target: 25% (2015) (9% by institutions in project areas increased to the objective. 2014 at ICR) from 22.3% in 2006 to 42% in 2012, surpassing the CPS target. *At CLR, the baseline was 14% (2011), not 0%. Indicator: Improved quality Actual: 4 pilots (2016) Source: CLR, PLR. and transparency of public expenditure, as measured Based on the ICRR for the DPL series by at least one results Enhanced Fiscal and Financial based Management for Greater budgeting pilot that includes Opportunities DPL (P133738: MS) and an operational monitoring Fiscal Space for Greater and evaluation framework Opportunities DPL (P131763: MS), the for priority health programs target (to increase the percentage of the total budget under the results-based Baseline: 0 (2011) budgeting framework from zero in 2011 to 9 percent in 2014) was surpassed (9.5 Target: 1 pilot (2016) percent). The Results Based Budgeting (RBB) covers the Ministries of Finance, Economy, Health and Social Assistance, and Sports and Culture. Indicator: Social Actual: Achieved Source: CLR, PLR, ICRR Information System operational, with (i) Unique Per the CLR, the Registry contains Beneficiary Registry and (ii) beneficiary information from 75 Information on social programs, including Bono Seguro and programs and policies Bolsa Segura. related to beneficiaries, geographic coverage and The ICRR for the DPL series noted the type of program. implementation of the single registry of beneficiaries of all social programs, Baseline: No which expanded its coverage to 90%. The objective of improving the Target: Yes Annexes CLR Review 17 Independent Evaluation Group Actual Results CPS FY13-16 Comments (as of current month/year) management and coordination of social policies was rated Substantial. Objective 3: Increase Productive Opportunities Indicator: Increased rural Actual: 16.31 million (2015) Source: PLR, CLR, ICRR. incomes, as measured by increased total sales of Data is from the ICRR for the Support The project supported rural productive supply the Rural Economic Development training and outreach chain partnerships Program (P094321: MS) programs through which 216 partnerships were Baseline: 0 (2011) created between organized producers, commercial Target: $16 million (2016) buyers and service provider. These partnerships helped increase sales of the rural productive organizations by improving access to markets and providing seed capital and productive investments, such as storage rooms and processing facilities. Overall, the Program resulted in an increase in total sales of the rural productive supply chain partnerships of over US$16 million. Supporting milestones to the indicator: - New rural productive supply chain partnerships operational - At least 80 percent of partnership beneficiaries are indigenous people - Percentage of female producers participating in PDER project supported training and outreach programs Indicator: Increased Actual: 564,268; of which 76,971 are Source: CLR, PLR, ISR, number of people, women (2016) Restructuring Paper microenterprises, and SMEs reached with The IFC Development Outcome Tracking financial services System shows the following data for the IFC investment in Compartamos: number Annexes CLR Review 18 Independent Evaluation Group Actual Results CPS FY13-16 Comments (as of current month/year) Baseline: 357,000; of of women borrowers based on the The Bank Enhancing Micro, which 45,900 are women microfinance portfolio was 62,166 as of Small, and Medium (2011/12) 2014. Project target is 190,000 by 2017. Enterprise Productivity For the IFC investment in Banco GyT, Project faced a number of Target: 650,000; of 14,805 women were reached through implementation challenges, which190,000 are women microloans. There was no data in DOTS and led to a cancellation of (2017) on total number of people, $25 million (of the total microenterprises, and SMEs reached. project cost of $32 million) and early closure of the project. IFC trade finance facilities have supported the banks by providing US$643 million in trade finance transactions. Annexes CLR Review 19 Independent Evaluation Group Annex Table 2: Guatemala Planned and Actual Lending, FY13-FY16 Approved Proposed Approval Closing Proposed Proposed Outcome Project ID Project name IBRD FY FY FY Amount Amount Rating Amount Project Planned Under CPS CPSPR CPS/CPSPR 2013-2016 GT First P131763 2013 2013 2014 200 200 IEG: MS Programmatic DPL GT 2nd Prog DPL P133738 2014 2014 2015 150 340 IEG: MS Fiscal Space DROPPED CAT DDO 2 2013-2016 75 DROPPED Total Planned 425 0 540 Unplanned Projects during the CPS Period None Total Unplanned On-going Projects during the Approval Closing Approved CPS/CPSPR Period FY FY Amount GT Enhancing P112011 MSME Productivity 2011 2016 32 LIR: U Project GT Emergency P122370 Support for Social 2011 2013 100 IEG: S Services GT Expanding P107416 Opport. Vulnerable 2010 2016 115 LIR: MS Groups P112544 GT CAT DDO 2009 2013 85 IEG: MS GT (APL2)LAND P087106 2007 2016 20 LIR: MS ADMINISTRATION GT (CRL1) P089898 Education Quality 2007 2016 62 LIR: MU and Sec. Edu GT-Maternal & Infant P077756 2006 2013 80 IEG: MS Health & Nutrition GT Support Rural P094321 2006 2015 49 IEG: MS Econ.Dev. Program SECOND RURAL P055085 AND MAIN ROADS 2003 2014 47 IEG: MU PROJECT Total On-going 590 Source: Guatemala CPS and PLR, WB Business Intelligence Table 2a.1, 2a.4 and 2a.7 as of 8/24/16 *LIR: Latest internal rating. MU: Moderately Unsatisfactory. MS: Moderately Satisfactory. S: Satisfactory. HS: Highly Satisfactory. Annexes CLR Review 20 Independent Evaluation Group Annex Table 3: Analytical and Advisory Work for Guatemala, FY13-FY16 Proj ID Economic and Sector Work Fiscal year Output Type Financial Sector Assessment Program FSAP Update Guatemala P148074 FY15 (FSAP) Guatemala Economic Diagnostic for National RN#90491 Action FY15 Working Paper Proj ID Technical Assistance Fiscal year Output Type P144921 Sustainable Hydroelectric Development FY16 Advisory Services Document P147423 GT Guatemala Health System NLTA FY16 Advisory Services Document P153409 Sustainable mineral resource management FY16 Advisory Services Document P154681 GT POWER SYSTEM WIND FY16 Advisory Services Document P147858 6C CAR Behaviorally Informed Pub Policy FY15 Advisory Services Document P128883 CSO - Guatemala FY15 Advisory Services Document P131295 GT TF Agriculture Insurance Market Dev FY15 Advisory Services Document P131658 GT HNP and SP NLTA FY15 Advisory Services Document P133049 Urban Infrastructure Upgrading FY15 Advisory Services Document P145325 GT Transport and Logistics NLTA FY15 Advisory Services Document P149140 Agric. for Food Security & Shared Prosp. FY15 Advisory Services Document P155556 Guatemala NRA FY15 Advisory Services Document P127536 GT Clean Technology with value chains FY14 Advisory Services Document P144015 GT 7.2 Earthquake Damage Assessment FY14 Advisory Services Document P144514 GT Citizen Security NLTA FY14 Advisory Services Document P127419 Guatemala #10150 Inst & Leg Frmwk for CM FY13 Advisory Services Document P131828 Guatemala Country Engagement FY13 Advisory Services Document Source: WB Business Intelligence 8/24/16 Annex Table 4: Guatemala Grants and Trust Funds Active in FY13-16 Project Approval Closing Approved Project name TF ID ID FY FY Amount Pilot to Improve the Development and Nutrition of P145410 TF 17709 2015 2019 2,750,935 Young Children in Poor Rural Areas in Guatemala P151950 GT - SPF Municipal Citizen Security TF 15977 2014 2017 1,000,000 Strengthening the resilience capacity of Maya P130412 indigenous peoples and peasants to cope with food TF 11700 2012 2016 2,507,050 insecurity and CC in G T dry-corridor Guatemala: Extractive Industries Transparency P125451 TF 10050 2012 2015 380,000 Initiative Implementation Promotion of Public Participation in the Public P120498 TF 96147 2012 2014 396,000 Financial Management Oversight Empowering Guatemala's Indigenous P121137 TF 97649 2011 2013 199,966 Communities to Cope with Climate Change Building capacity to stimulate private investment in P115061 basic services and housing for the poor in TF 96048 2010 2013 248,675 Guatemala Guatemala Dutch Grant for the Support to the P121505 TF 93824 2009 2014 2,238,362 General Auditor's Office Project Total 9,720,988 Source: Client Connection as of 8/25/16 ** IEG Validates RETF that are 5M and above Annexes CLR Review 21 Independent Evaluation Group Annex Table 5: IEG Project Ratings for Guatemala, FY13-15 Total Exit IEG Risk to Proj ID Project name Evaluated IEG Outcome FY DO ($M) MODERATELY MODERATE 2013 P112544 GT CAT DDO 85.0 SATISFACTORY MODERATELY SIGNIFICANT 2013 P077756 GT-Maternal & Infant Health & Nutrition 47.6 SATISFACTORY MODERATELY SIGNIFICANT 2013 P131763 GT First Programmatic DPL 200.0 SATISFACTORY 2013 P122370 GT Emergency Support for Social Services 100.0 SATISFACTORY SIGNIFICANT MODERATELY GT SECOND RURAL AND MAIN ROADS UNSATISFACTO HIGH 2014 P055085 PROJ. 45.4 RY MODERATELY MODERATE 2015 P094321 GT Support Rural Econ.Dev. Program 28.5 SATISFACTORY MODERATELY SIGNIFICANT 2015 P133738 GT 2nd Prog DPL Fiscal Space 340.0 SATISFACTORY Total 846.5 Source: AO Key IEG Ratings as of 8/26/16 P112544 Exit FY originally shows FY10 Annex Table 6: IEG Project Ratings for Guatemala and Comparators, FY13-15 RDO % RDO % Total Total Outcome Outcome Moderate or Moderate or Region Evaluated Evaluated % Sat ($) % Sat (No) Lower Lower ($M) (No) Sat ($) Sat (No) Guatemala 846.5 7 94.6 85.7 17.5 13.4 LCR 18,771.1 141 90.5 73.4 69.9 58.6 World 61,134.2 725 86.2 72.0 63.2 47.6 Source: WB AO as of 8/25/16 * With IEG new methodology for evaluating projects, institutional development impact and sustainability are no longer rated separately. Annex Table 7: Portfolio Status for Guatemala and Comparators, FY13-16 Fiscal year 2013 2014 2015 2016 Ave FY13-16 Guatemala # Proj 9 9 7 3 7 # Proj At Risk 1 1 2 1 % Proj At Risk 11.1 11.1 28.6 - 19.0 Net Comm Amt 456.0 552.1 180.9 4.1 298 Comm At Risk 46.7 32.0 34.5 38 % Commit at Risk 10.2 5.8 19.1 12.7 LCR # Proj 332 315 291 259 299 # Proj At Risk 72 70 68 63 68 % Proj At Risk 21.7 22.2 23.4 24.3 22.8 Net Comm Amt 30,843.3 29,271.0 27,713.0 29,360.3 29,297 Annexes CLR Review 22 Independent Evaluation Group Fiscal year 2013 2014 2015 2016 Ave FY13-16 Guatemala Comm At Risk 6,097.4 6,355.6 5,866.5 5,535.5 5,964 % Commit at Risk 19.8 21.7 21.2 18.9 20.4 World # Proj 1,964 2,048 2,022 1,975 2,002 # Proj At Risk 414 412 444 422 423 % Proj At Risk 21.1 20.1 22.0 21.4 21.1 Net Comm Amt 176,202.6 192,610.1 201,045.2 220,331.5 197,547 Comm At Risk 40,805.6 40,933.5 45,987.7 44,244.9 42,993 % Commit at Risk 23.2 21.3 22.9 20.1 21.8 Source: WB BI as of 8/25/16 Annex Table 8: Disbursement Ratio for the Guatemala, FY13-16 Fiscal Year 2013 2014 2015 2016 Overall Result Guatemala Disbursement Ratio (%) 36.5 27.5 32.5 20.6 31.4 Inv Disb in FY 61.5 29.3 24.7 10.4 125.8 Inv Tot Undisb Begin FY 168.6 106.5 75.9 50.3 401.3 LCR Disbursement Ratio (%) 24.0 18.8 20.8 20.8 21.2 Inv Disb in FY 3,524.0 2,491.1 2,560.2 2,663.6 11,238.9 Inv Tot Undisb Begin FY 14,712.3 13,281.0 12,336.9 12,779.1 53,109.4 World Disbursement Ratio (%) 20.6 20.8 21.8 19.5 20.6 Inv Disb in FY 20,440.3 20,703.0 21,833.3 21,149.3 84,125.8 Inv Tot Undisb Begin FY 99,403.3 99,754.3 100,304.1 108,592.8 408,054.4 * Calculated as IBRD/IDA Disbursements in FY / Opening Undisbursed Amount at FY. Restricted to Lending Instrument Type = Investment. AO disbursement ratio table as of 8/25/16 Annexes CLR Review 23 Independent Evaluation Group Annex Table 9: List of IFC Investments in Guatemala Investments Committed in FY13-FY15 Primary Original Original Loan Loan Equity Cmt Project Greenfield Project Original Equity Net Net Net Project ID Sector Risk Risk FY Status Code Size Loan Equity CMT Cancel Cancel Loan Equity Comm Name Rating Rating Finance & 37807 2016 Active E 1,304 - 1,304 1,304 - - 1,304 1,304 1,304 3B 4B Insurance Finance & 33696 2015 Active E 10,000 10,000 - 10,000 - - 10,000 - 10,000 3B Insurance Finance & 34953 2015 Active E 5,000 - 5,000 5,000 - - 5,000 5,000 5,000 3B 4B Insurance Finance & 35846 2015 Active E 115 - 115 115 - - 115 115 115 3B 4B Insurance Finance & 31600 2012 Active E 17,500 99,057 - 99,057 - - 99,057 - 99,057 3B Insurance Finance & 31742 2012 Active E 1,115 - 1,119 1,119 - 27 1,119 1,092 1,092 3B 4B Insurance Finance & 32314 2012 Active E 2,208 - 2,208 2,208 - - 2,208 2,208 2,208 3B 4B Insurance Finance & 32478 2012 Active E 2,105 - 2,105 2,105 - - 2,105 2,105 2,105 3B 4B Insurance Chemical 28558 2010 Active E 10,000 10,000 - 10,000 - - 10,000 - 10,000 4A s Finance & 26634 2009 Active G 70,000 - 69,995 69,995 - - 69,995 69,995 69,995 3B 4B Insurance Finance & 27834 2009 Active E 22,500 364,219 - 364,219 - - 364,219 - 364,219 3B 4B Insurance Finance & 27836 2009 Active E 32,500 511,602 - 511,602 - - 511,602 - 511,602 3B Insurance Sub-Total 157,928 984,877 75,427 1,060,304 - 27 1,060,304 75,399 1,060,277 TOTAL 384,621 1,039,561 97,649 1,137,210 4,610 27 1,132,600 97,622 1,132,573 Annexes CLR Review 24 Independent Evaluation Group Investments Committed pre-FY13 but active during FY13-15 Primary Loan Equity Project CMT Project Greenfield Project Original Original Oiginal Loan Equity Net Net Net Sector Risk Risk ID FY Status Code Size Loan Equity CMT Cancel Cancel Loan Equity Comm Name Rating Rating Finance & 31600 2012 Active E 17,500 99,057 - 99,057 - - 99,057 - 99,057 3B Insurance Finance & 31742 2012 Active E 1,115 - 1,119 1,119 - 27 1,119 1,092 1,092 3B 4B Insurance Finance & 32314 2012 Active E 2,208 - 2,208 2,208 - - 2,208 2,208 2,208 3B 4B Insurance Finance & 32478 2012 Active E 2,105 - 2,105 2,105 - - 2,105 2,105 2,105 3B 4B Insurance Chemical 28558 2010 Active E 10,000 10,000 - 10,000 - - 10,000 - 10,000 4A s Finance & 26634 2009 Active G 70,000 - 69,995 69,995 - - 69,995 69,995 69,995 3B 4B Insurance Finance & 27834 2009 Active E 22,500 364,219 - 364,219 - - 364,219 - 364,219 3B 4B Insurance Finance & 27836 2009 Active E 32,500 511,602 - 511,602 - - 511,602 - 511,602 3B Insurance Sub- 157,928 984,877 - 27 1,060,304 75,399 1,060,277 Total 75,427 1,060,304 TOTAL 384,621 1,039,561 97,649 1,137,210 4,610 27 1,132,600 97,622 1,132,573 Source: IFC-MIS Extract as of end July 31, 2016 Annexes CLR Review 25 Independent Evaluation Group Annex Table 10: List of IFC Advisory Services for Guatemala Advisory Services Approved in FY13-15 Impl Impl Primary Total Project Project Project Name Start End Business Funds, ID Status FY FY Line US$ 599989 Banco GyT Risk Management TA 2014 2015 ACTIVE FIG 180,327 575407 Guatemala Public Lighting 2013 2015 TERMINATED PPP 517,277 Sub-Total 697,604 Advisory Services Approved pre-FY13 but active during FY13-15 Impl Impl Primary Project Project Total Project Name Start End Business ID Status Funds, US$ FY FY Line 577887 Vegetable Linkages Guatemala 2011 2013 TERMINATED SBA 35,000 Sub-Total 35,000 TOTAL 732,604 Source: IFC AS Data as of 7-31-16 Annex Table 11: IFC net commitment activity in FY13 - FY16 2013 2014 2015 2016 Total Financial Markets 13,714,989 2,061,813 10,543,428 1,282,728 27,602,958 Trade Finance (TF) 159,483,456 128,239,050 138,076,212 217,242,257 643,040,975 Infrastructure Transportation & Warehousing - 35,000,000 9,700,000 - 44,700,000 Total 173,198,445 165,300,863 158,319,640 218,524,985 715,343,933 Source: IFC MIS as of 8-26-16 Annex Table 12: Net Disbursement and Charges for Guatemala, FY13-16 Period Disb. Amt. Repay Amt. Net Amt. Charges Fees Net Transfer FY13 61,581,683.6 85,538,073.3 (23,956,389.7) 53,944,953.2 85,006.2 (77,986,349.1) FY14 228,377,880.6 78,522,948.4 149,854,932.2 54,628,902.0 503,084.5 94,722,945.7 FY15 364,692,535.0 82,856,175.3 281,836,359.7 59,058,809.7 850,462.3 221,927,087.7 FY16 9,776,313.5 85,916,560.2 (76,140,246.7) 69,653,832.0 - (145,794,078.7) Report 664,428,412.7 332,833,757.2 331,594,655.5 237,286,496.9 1,438,553.0 92,869,605.6 Total World Bank Client Connection 8/25/16 Annexes CLR Review 26 Independent Evaluation Group Annex Table 13: Total Net Disbursements of Official Development Assistance and Official Aid for Guatemala Development Partners 2013 2014 2015 Australia 0.37 0.26 .. Austria 5.66 5.45 .. Belgium 4.27 3.92 .. Canada 9.99 6.12 .. Czech Republic 0.01 0.02 .. Denmark 0.02 .. .. Finland 1.34 0.34 .. France 3.87 3.39 .. Germany 10.76 22.61 .. Greece .. .. .. Iceland .. .. .. Ireland 0.98 0.98 .. Italy 2.48 1.39 .. Japan 7.82 -1.96 .. Korea 2.73 4.39 .. Luxembourg 0.4 0.4 .. Netherlands 2.92 0.09 .. New Zealand 0.17 0.22 .. Norway 12.39 12.67 .. Poland 0.01 0.01 .. Portugal .. .. .. Slovak Republic .. .. .. Slovenia .. .. .. Spain 14.39 16.01 .. Sweden 33.66 33.92 .. Switzerland 3.45 3.5 .. United Kingdom 77.03 1.77 .. United States 102.67 126.04 .. DAC Countries, Total 297.39 241.54 Adaptation Fund 1.24 .. .. EU Institutions 25.13 21.05 .. Food and Agriculture Organisation [FAO] 0.09 .. .. Global Environment Facility [GEF] 1.77 0.86 .. Global Fund 10.01 14.32 .. International Atomic Energy Agency [IAEA] 0.57 0.32 0.21 International Bank for Reconstruction and Development [IBRD] .. .. .. International Development Association [IDA] .. .. .. IDB Special Fund 157.99 -8.52 .. IFAD -2.86 -2.41 .. International Finance Corporation [IFC] .. .. .. OPEC Fund for International Development [OFID] -3.39 -2.63 .. UNAIDS 1.13 1.07 .. UNDP 0.93 1.09 .. UNFPA 1.68 1.69 .. UNHCR 0 .. .. UNICEF 1.1 1.24 .. UN Peacebuilding Fund [UNPBF] 1.99 4.43 .. WFP 0.15 2.73 0.87 Multilateral, Total 197.53 35.24 1.08 Annexes CLR Review 27 Independent Evaluation Group Development Partners 2013 2014 2015 Israel 0.23 0.13 Kazakhstan 0.05 .. Malta .. 0.03 Turkey 0.01 0.01 United Arab Emirates 0 0.03 Non-DAC Countries, Total 0.29 0.2 0 Development Partners Total 495.21 276.98 1.08 Source: OECD Stat, [DAC2a] as of 8/25/16 Annex Table 14: Economic and Social Indicators for Guatemala, 2013 - 2015 GTM LCR World Series Name 2013 2014 2015 Average 2013-2015 Growth and Inflation GDP growth (annual %) 2.7 2.8 3.1 2.9 1.0 2.5 GDP per capita growth (annual %) 0.4 0.6 0.8 0.6 -0.1 1.3 GNI per capita, PPP (current international $) 11,400.0 11,660.0 11,910.0 11,656.7 15,065.2 14,969.4 GNI per capita, Atlas method (current US$) (Millions) 4,660.0 4,940.0 5,160.0 4,920.0 9,602.0 10,664.9 Inflation, consumer prices (annual %) 4.5 4.8 2.9 4.1 3.0 2.3 Composition of GDP (%) Agriculture, value added (% of GDP) 3.1 3.4 3.8 3.4 5.3 3.9 Industry, value added (% of GDP) 30.1 29.7 29.8 29.8 28.9 27.8 Services, etc., value added (% of GDP) 66.8 66.9 66.4 66.7 65.7 68.3 Gross fixed capital formation (% of GDP) 26.0 27.2 27.2 26.8 20.8 23.3 Gross domestic savings (% of GDP) (1.1) (1.4) 2.0 -0.2 19.2 24.5 External Accounts Exports of goods and services (% of GDP) 46.2 42.5 43.3 44.0 21.0 30.1 Imports of goods and services (% of GDP) 74.3 72.0 69.2 71.8 23.2 29.5 Current account balance (% of GDP) (15.2) (10.3) (6.8) -10.8 External debt stocks (% of GNI) 60.5 69.7 68.5 66.2 Total debt service (% of GNI) 3.2 3.0 3.9 3.4 3.4 Total reserves in months of imports 4.4 6.6 7.4 6.1 9.0 13.3 Fiscal Accounts /1 Annexes CLR Review 28 Independent Evaluation Group GTM LCR World Series Name 2013 2014 2015 Average 2013-2015 General government revenue (% of GDP) 11.643 11.481 10.786 11.3 General government total expenditure (% of GDP) 13.772 13.371 12.244 13.1 General government net lending/borrowing (% of GDP) -2.129 -1.889 -1.458 -1.8 General government gross debt (% of GDP) 24.619 24.24 24.255 24.4 Health Life expectancy at birth, total (years) 73.7 73.9 74.1 73.9 74.8 71.3 Immunization, DPT (% of children ages 12-23 months) 98.0 98.0 98.0 98.0 88.8 85.9 Improved sanitation facilities (% of population with access) 98.6 98.6 98.6 98.6 82.9 67.0 Improved water source (% of population with access) 92.1 92.2 92.3 92.2 83.5 83.9 Mortality rate, infant (per 1,000 live births) 16.8 16.3 15.8 16.3 15.6 32.7 Education School enrollment, preprimary (% gross) 32.2 .. .. 32.2 76.5 53.8 School enrollment, primary (% gross) 88.7 .. .. 88.7 104.5 108.0 School enrollment, secondary (% gross) 84.3 .. .. 84.3 92.9 75.2 Population Population, total (Millions) 6,318,000 6,460,000 6,607,000 6,461,667 626,252,730 7,261,168,502 Population growth (annual %) 2.2 2.2 2.3 2.2 1.1 1.2 Urban population (% of total) 83.0 83.2 83.4 83.2 79.6 53.4 Source: DDP as of 8/26/16 *International Monetary Fund, World Economic Outlook Database, April 2016