The World Bank Moldova Agriculture Competitiveness Project (P118518) REPORT NO.: RES45917 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF MOLDOVA AGRICULTURE COMPETITIVENESS PROJECT APPROVED ON MAY 1, 2012 TO MINISTRY OF FINANCE AGRICULTURE AND FOOD EUROPE AND CENTRAL ASIA Regional Vice President: Anna M. Bjerde Country Director: Arup Banerji Regional Director: Steven N. Schonberger Practice Manager/Manager: Frauke Jungbluth Task Team Leader(s): Anatol Gobjila The World Bank Moldova Agriculture Competitiveness Project (P118518) I. BASIC DATA Product Information Project ID Financing Instrument P118518 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 01-May-2012 31-Dec-2024 Organizations Borrower Responsible Agency Ministry of Agriculture, Regional Development and Ministry of Finance Environment Project Development Objective (PDO) Original PDO The Project Development Objective is to enhance the competitiveness of the agro-food sector by supporting the modernization of the food safety management system, facilitating market access for farmers, and mainstreaming agro- environmental and sustainable land management practices. Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-67490 30-Jul-2020 01-Oct-2020 25-Jan-2021 31-Dec-2024 15.00 0 16.36 IDA-58580 07-Jul-2016 08-Jul-2016 20-Dec-2016 30-Jun-2021 10.00 7.45 2.54 IDA-56390 19-May-2015 21-May-2015 07-Jul-2015 30-Nov-2020 12.00 12.11 0 IDA-50950 01-May-2012 28-May-2012 20-Sep-2012 31-May-2019 17.99 16.39 0 TF-14946 15-Nov-2013 15-Nov-2013 15-Nov-2013 30-Jun-2016 2.11 2.26 0 The World Bank Moldova Agriculture Competitiveness Project (P118518) TF-12145 28-May-2012 28-May-2012 20-Sep-2012 31-May-2019 4.44 4.44 0 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No II. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES The Moldova Agriculture Competitiveness Project aims to enhance the competitiveness of the agro-food sector by supporting the modernization of the food safety management system, facilitating market access for farmers, and mainstreaming agro-environmental and sustainable land management practices. The project has been supported by GEF (US$4.44 M) and SIDA (US$2.11 M) grants, and three IDA credits (original credit of US$18 M, approved on May 1, 2012 and an AF of US$12 M, approved on May 19, 2015), all fully disbursed and closed. The project is currently financed by the second AF (US$10 M), approved on July 6, 2016, with the closing date of June 30, 2021, and the third AF (US$15 M), approved on July 30, 2020 and effective as of January 25, 2021. Board approval of a second GEF grant (US$13.11 M) is expected on June 1, 2001. The third AF and the second GEF grant are expected to close on December 31, 2024, which is the project’s closing date. Since approval in 2012, the project has successfully implemented a wide range of activities which laid the foundations for enhancing the technical functionality of the country’s food safety system, improving the marketability and market integration of horticultural producers through productive partnerships, and promoting sustainable land management practices and climate resilience. Additional activities aimed at providing compensatory grants to fruit producers affected by a Russian trade ban in 2014 have also been implemented successfully. Major milestones have been achieved across all areas of the project’s interventions, and a recently approved AF for tackling the animal-by products management agenda, as well as the GEF CEO endorsement for a second GEF Grant (under GEF-7) for scaling up SLM practices and climate resilience, have set the stage for additional strides in achieving the project’s development objective. Project performance is rated Satisfactory both for progress towards achieving the PDO and IP. The latter rating was upgraded in December 2020, as a result of a sustained positive implementation dynamic in 2020, despite the challenges posed by the COVID-19 pandemic. In terms of historic performance, the project has consistently been rated Moderately Satisfactory or better both for IP and PDO. The project’s total disbursement percentage is 69.17% (92% excluding the newly approved AF) with an age of 8.8 years. The Government of Moldova has generally provided constructive and timely support in sustaining the project’s progress, although throughout the years there have been slowdowns in the implementation pace caused by political developments. Government performance in the past 18 months has been satisfactory and conducive to the achievement of the PDO. The Project’s financial management, procurement and safeguards arrangements remain satisfactory. The Project is compliant with financial reporting and auditing requirements, and there are no overdue audits or any other outstanding financial management issues. The World Bank Moldova Agriculture Competitiveness Project (P118518) The Government of Moldova has requested, in a letter dated February 24, 2021, an extension to the closing date for IDA Credit #5858 (US$10 million equivalent), from June 30, 2021 to June 30, 2022, to ensure smooth completion of funded activities and full disbursement of the remaining balance of US$2.6 million. The credit was approved by the Board of Executive Directors on July 7, 2016 as the project’s second AF. The rationale for the request is based on arguments related entirely to the disruptive impacts of the COVID-19 pandemic on the Moldovan economy, access to finance, supply chains and civil works, that have affected the project’s ability for a timely completion of the remaining activities financed by the respective credit. The affected activities are supported under the project's Component 1: Enhancing Food Safety Management and Component 2: Enhancing Market Access. Under Component 1, there is an on-going activity related to the construction of an additional Border Inspection Point at the country’s border with Romania. The works are progressing in line with updated plans, but COVID-19 has already, and may again in the future impact the implementation pace. Additionally, a major procurement for several large lots of food safety laboratory equipment, which was launched in January 2021, is at risk of not being properly completed (including final delivery and transfer of goods), as potential suppliers have already requested from the project’s implementation agency an extension of the bid submission period, citing problems in supply chains. Finally, under Component 2, there are four producer groups, which have obtained a grant award in July of 2020, but due to the COVID-induced economic malaise have only been able to secure co-financing and technical works contracts with suppliers in early 2021. All four producer groups continue to be eligible and have presented enough evidence to that extent to the management authority in charge of the grant program – the Agency for Interventions and Payments in Agriculture. The extension will not only allow the investment by the producer groups to be realized without a rush but would also give the project the necessary space to provide the essential post- creation support to these nascent entities. None of these activities were affected by delays other than COVID-related and were firmly on schedule to be completed before the current credit closing date of June 30, 2021. However, processes were disrupted in late February - early March 2020, both locally and internationally, by the emergence and spread of COVID-19. A general state of emergency was declared by the Moldovan authorities, with an ensuing lock-down until May 15, 2020, with strict guidelines on social distancing and suspension of non-essential productive and commercial activities. The country continues to struggle with the spread of COVID-19 as a public health emergency situation was extended on February 15, 2021 through April 15, 2021, with deepened restrictions on economic activity. The proposed extension of the credit closing date would be its second, with a cumulative extension period of 36 months. The credit’s original closing date was June 30, 2019, and its original purpose was to fund solely activities under Component 2, but it was restructured in 2019 to also finance Component 1 to scale up food safety modernization activities, and the credit's closing date was extended by 24 months to June 30, 2021. The proposed extension would not entail any incremental supervision costs on the part of the World Bank, while the project will be overaged at the time of its closing (12.7 years), project age will not be affected by the proposed extension. The PDO would remain achievable with the proposed extension. The proposed extension was raised with the authorities during the project’s last implementation support effort and was reflected in the project’s last ISR dated December 11, 2020. The World Bank Moldova Agriculture Competitiveness Project (P118518) III. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications 31-May-2019, 12- IDA-50950 Closed 30-Jun-2017 Aug-2020 31-May-2019, 31- IDA-56390 Closed 30-Jun-2017 May-2020, 30-Nov- 2020 IDA-58580 Effective 30-Jun-2019 30-Jun-2021 30-Jun-2022 30-Oct-2022 IDA-67490 Effective 31-Dec-2024 31-Dec-2024 30-Apr-2025 31-May-2019, 13-Oct- TF-12145 Closed 30-Jun-2017 2020 30-Jun-2016, 08-Nov- TF-14946 Closed 30-Jun-2015 2016