Document of The World Bank Group FOR OFFICIAL USE ONLY Report No. 118511-LAC INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL FINANCE CORPORATION MULTILATERAL INVESTMENT GUARANTEE AGENCY PERFORMANCE AND LEARNING REVIEW OF THE REGIONAL PARTNERSHIP STRATEGY FOR THE ORGANISATION OF EASTERN CARIBBEAN STATES (OECS) FOR THE PERIOD FY15-FY19 May 1, 2018 The International Bank for Reconstruction and Development Caribbean Country Management Unit Latin America and Caribbean Region The International Finance Corporation Caribbean Regional Unit Latin America and the Caribbean Region The Multilateral Investment Guarantee Agency This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank Group authorization. 1 The FY15-19 Regional Partnership Strategy for the OECS was discussed by the Board of Executive Directors of the World Bank Group on November 13, 2014 Report No: 85156- LAC FISCAL YEAR January 1 – December 31 (Antigua and Barbuda, Grenada, St. Kitts and Nevis, St. Vincent and the Grenadines) April 1- March 31 (St. Lucia) July 1 – June 30 (Dominica) CURRENCY EQUIVALENTS US$ 1 = EC$ 2.7 ABBREVIATIONS AND ACRONYMS AML/CFT Anti-Money Laundering and Combating the Financing of Terrorism APL Adjustable Program Loan ASA Advisory Services and Analytics ATG Antigua and Barbuda BETF Bank-Executed Trust Fund CARCIP Caribbean Regional Communications Infrastructure Program CARICOM Caribbean Community CARPHA Caribbean Public Health Agency CAT-DDO Catastrophe Deferred Draw-down Option CBR Correspondent Banking Relationships CCRIF Caribbean Catastrophe Risk Insurance Facility CDB Caribbean Development Bank CVQ Caribbean Vocational Qualification DARP Distressed Asset Recovery Program DB Doing Business DeMPA Debt Management Performance Assessment DfID Department for International Development DMA Commonwealth of Dominica DO Development Objective DPC Development Policy Credit DPF Development Policy Financing DRM Disaster Risk Management DTF Distance to Frontier DVRP Disaster Vulnerability Reduction Project EC Eastern Caribbean ECCB Eastern Caribbean Central Bank ECCU Eastern Caribbean Currency Union ECERA Eastern Caribbean Energy Regulatory Authority ECDPG Eastern Caribbean Donors and Partners Group EPIC Entrepreneurship Program for Innovation in the Caribbean FY Fiscal Year GAC Global Affairs Canada GDP Gross Domestic Product GRD Grenada HD Human Development i IBRD International Bank for Reconstruction and Development ICT Information and Communications Technology IDA International Development Association IFC International Finance Corporation ILO International Labour Organization IMF International Monetary Fund IP Implementation Progress IPF Investment Project Financing KNA Federation of Saint Kitts and Nevis LAC Latin America and the Caribbean LCA Saint Lucia MFD Maximizing Finance for Development MIC Middle-Income Country MIGA Multilateral Investment Guarantee Agency MPA Multiphase Programmatic Approach MSMEs Micro, Small and Medium-Sized Enterprises MTDS Medium-Term Debt Management Strategy NCD Non-Communicable Disease NLTA Non-Lending Technical Assistance NPL Non-Performing Loan NRA National Risk Assessment OECS Organisation of Eastern Caribbean States PA Programmatic Approach PCG Partial Credit Guarantee PDNA Post-Disaster Needs Assessment PFM Public Financial Management PLR Performance and Learning Review PPP Public-Private Partnership RETF Recipient-Executed Trust Fund RF Results Framework RPF Regional Partnership Framework RPS Regional Partnership Strategy SFC Sagicor Financial Corporation SEMCAR Supporting Economic Management in the Caribbean SRD Systematic Regional Diagnostic TA Technical Assistance TF Trust Fund TVET Technical and Vocational Education and Training UNDP United Nations Development Programme US United States USD United States Dollar VCT Saint Vincent and the Grenadines WBG World Bank Group IBRD/IDA IFC MIGA Vice President: Jorge Familiar Georgina Baker Keiko Honda Director: Tahseen Sayed Khan Gabriel Goldschmidt Merli Margaret Baroudi Regional Manager: Luc Grillet Task Team Leaders: Juan Diego Alonso Judith Green Bexi Jiménez Mota Antonio Skarica Gero Verheyen ii OECS PERFORMANCE AND LEARNING REVIEW OF THE REGIONAL PARTNERSHIP STRATEGY (FY15-FY19) I. INTRODUCTION ..........................................................................................................1 II. MAIN CHANGES IN REGIONAL AND COUNTRY CONTEXT .........................3 A. Recent political developments ................................................................................ 3 B. Recent economic developments and prospects ....................................................... 3 C. Update on poverty, inequality and gender issues.................................................... 5 III. SUMMARY OF PROGRAM IMPLEMENTATION ..............................................6 A. Progress toward achieving RPS objectives ............................................................. 6 B. Portfolio performance ............................................................................................. 9 IV. EMERGING LESSONS ...........................................................................................10 V. ADJUSTMENTS TO REGIONAL PARTNERSHIP STRATEGY ......................12 VI. RISKS TO RPS PROGRAM ....................................................................................17 Annex 1: Key Macroeconomic Indicators for the OECS (CY14-CY19) ................... 19 Annex 2: Updated Results Framework - RPS FY15-FY20 ........................................ 22 Annex 3: Summary of Proposed Changed to Results Framework ............................. 28 Annex 4: Progress Towards RPS Outcomes............................................................... 38 Annex 5: Findings of the Country Opinion Survey .................................................... 45 Annex 6: World Bank Group Portfolio....................................................................... 46 iii I. INTRODUCTION 1. This Performance and Learning Review (PLR) assesses progress to date in implementing the World Bank Group (WBG) FY15-19 Regional Partnership Strategy (RPS) for the Organisation of the Eastern Caribbean States (OECS), discussed by the Board of Executive Directors on November 13, 2014. The RPS covers six OECS countries – Antigua and Barbuda (ATG), Dominica (DMA), Grenada (GRD), Saint Kitts and Nevis (KNA), Saint Lucia (LCA), and Saint Vincent and the Grenadines (VCT) – with a total population of little over 600,0001. The RPS was organized around three strategic areas in support of sustainable and inclusive growth: (i) Competitiveness; (ii) Public Sector Modernization; and (iii) Resilience. The Strategy was well aligned with OECS governments’ priority of tackling long-standing issues of low growth and high debt, exacerbated by heightened vulnerability due to frequent natural disasters. It placed special emphasis on potential regional synergies, recognizing the unique challenges associated with small island states. 2. The PLR validates the overall strategic areas of the RPS, while introducing adjustments in response to recent developments, both of external and internal nature. The main external development is the 2017 hurricane season, which left widespread devastation because of two unprecedented Category 5 hurricanes - Irma and Maria - within a two-week period. In the aftermath of this natural disaster, adjustments in the RPS are recommended taking stock of these developments, but also strengthening the WBG program support within an overarching resilience approach to cope with what is now perceived as the “new normal”: the impact of extreme weather events. In parallel, the content and size of the RPS financing program has undergone a major shift due to the more than three-fold increase in IDA 18 financing for four OECS countries2 and the new strategic corporate vision to addressing the developmental challenges in small states. The PLR offers the opportunity to significantly enhance policy dialogue and reform engagement, complemented by much higher financial support for resilience building and sustainable growth, while continuing to leverage analytics and knowledge engagement in both IDA and IBRD countries. This heightened support is anchored in the “Small States Roadmap”, a document that articulates the Bank’s response to the core priority areas identified by 50 WBG member countries with a population of less than 1.5 million.3 3. The PLR introduces adjustments that include flexibility in implementation of the regional approach while anchoring the strategic engagement in fewer consolidated areas. The key shift relates to reducing the predominant dependence on the regional approach that had been deployed for the RPS to accomplish efficiency and economies of scale. While the approach led to engagement in a few areas - in strong partnership with regional institutions - it did not yield the extensive, and across-the-board, progress anticipated at the time of RPS formulation. This 1 All 6 OECS countries are members of the International Bank for Reconstruction and Development (IBRD) and the Multilateral Investment Guarantee Agency (MIGA). Five OECS countries are members of the International Development Association (IDA) – all but Antigua and Barbuda – and the International Finance Corporation (IFC) is – all but St.Vincent and the Grenadines. 2 Dominica, Grenada, St.Lucia, and St.Vincent and the Grenadines are eligible for concessional financing from IDA. The other two OECS countries – Antigua and Barbuda, and Saint Kitts and Nevis - are only eligible for borrowing from IBRD. 3 See WBG (2017); “Small States: A Roadmap for World Bank Group Engagement”; Operations Policy and Country Services. 1 experience and limited progress in delivery have led to a reassessment with a less exclusive focus on pursuing regional operations, and adopting more flexibility in balancing appropriate approaches for a more accelerated implementation. With respect to consolidation, the PLR proposes fewer engagement areas with deeper engagement on policy and institutional reforms, and a much stronger focus on macro-fiscal and climate change resilience areas. This engagement will be emphasized through budget support operations and advisory services. Finally, this PLR proposes to adopt more flexibility in exploring different approaches in delivery models to address implementation and capacity constraints that are far more pronounced in a small island state context. This includes exploring options such as: joining forces during project preparation and implementation with other multilateral and bilateral partners to reduce transaction costs for the small states operating under high capacity constraints; providing more direct hands-on and ongoing implementation support; and considering more engagement with regional institutions on areas of common interest across the OECS. 4. These adjustments are embedded within the three strategic areas of the RPS now consolidated into two pillars in this PLR. The original two strategic areas Competitiveness and Public-Sector Modernization are consolidated into Pillar 1: Fostering Conditions for Growth and Competitiveness thereby merging the private- and public-sector contributions to growth, and incorporating human capital areas of education and health. The major shift is a much sharper focus on macroeconomic and fiscal policies through enhancing support for macro-fiscal stability. The third original strategic area, Resilience, is expanded, deepened, and renamed as Pillar 2: Enhancing Resilience. This now incorporates a broader resilience agenda to include the blue economy, reflecting deeper engagement on climate change resilience also encompassing disaster risk financing and management areas, and social protection areas. The PLR’s Results Framework (RF) is adjusted in line with these shifts, and appropriately updated to incorporate the slower-than- expected progress due to delays in program delivery. 5. The revised RPS reflects these adjustments and implementation experience. The PLR incorporates: (i) a combination of Bank instruments, including budget support operations that have innovative resilience-building components – e.g. pursuing Blue Economy agenda and use of the Catastrophic Deferred Draw-Down Option (CAT-DDO), including for WBG IDA-eligible countries; (ii) an increase in the size of investment operations for key sectors; (iii) a more selective approach to regional operations; and (iv) a consolidation of advisory services and analytics (ASA), as well as activities financed from Trust Funds (TFs). The PLR recognizes the need for a differentiated approach to engage in the two IBRD countries where WBG can better leverage its knowledge support and global experiences. 6. The PLR proposes an extension of one year in the RPS timeframe. A one-year extension would allow time to refine the Bank strategy in the aftermath of the hurricanes of 2017, also helping to align the end of the RPS with the current IDA18 cycle. Moreover, the next OECS Regional Partnership Framework (RPF) will benefit from the OECS Systematic Regional Diagnostic (SRD) currently under preparation. 2 II. MAIN CHANGES IN REGIONAL AND COUNTRY CONTEXT A. RECENT POLITICAL DEVELOPMENTS 7. The political situation has been stable in all six countries, with national elections held in all OECS countries leading to changes in government in two (Saint Kitts and Nevis, and Saint Lucia). Political changes stemming from change in leadership led to some adjustments in country priorities. The impact on the RPS was however limited, as only Saint Lucia had a relatively large WBG-supported program. The change of government, in this case, was also followed by a rise in IDA financing, thereby leading the Government to redirect some of its priorities for WBG-financed programs. In addition, the leadership role of regional institutions of which the OECS countries are members – most notably the Caribbean Community (CARICOM), the Eastern Caribbean Central Bank (ECCB) and the OECS Commission - was evident in the aftermath of extreme weather events. The CARICOM-led donor conference for recovery and reconstruction in November 2017 served as a catalyst for mobilizing international support and financing. The OECS Commission, in collaboration with private international entities, is coordinating and facilitating the creation of a coalition of Caribbean countries for building the foundations for climate-smart resilience in the region. Stronger regional collaboration led by regional bodies presents a promising outlook for strengthening partnerships among these countries. B. RECENT ECONOMIC DEVELOPMENTS AND PROSPECTS 8. Economic recovery from the global economic and financial crisis of 2008, which had begun to take hold at the time of RPS preparation, has continued since, even improving the economic projections at the time (See Annex 1, Table 1). Economic growth for the 2014-2016 period averaged 3.1 percent, although with marked variations among the six countries (see Annex 1, Table 2). Recovery was helped by strengthened tourism and construction, as well as a recovery in foreign direct investment flows, and the flagship ‘Citizenship by Investment’ programs in five of the six countries. However, the recent natural disasters – Category 5 Hurricanes Irma and Maria, which struck the region in September 2017 – have severely impacted macroeconomic projections, especially for Dominica, the hardest-hit country, according to the most recent growth estimates for 2017 and projections for subsequent years from the International Monetary Fund (IMF). 9. The countries continued to face the structural rigidities and challenges inherent to small states, notwithstanding some improvement on the macroeconomic front over the past few years. OECS governments contained overall public spending to about 29.0 percent of their Gross Domestic Product (GDP) in the 2014-2016 period, a 3.5 percentage point-improvement compared with the prior 3-year period (2011-2013), while total public debt-to-GDP ratios declined by about 11 percentage points for the average of the six countries (see Annex 1, Table 3).4 Debt reduction and debt sustainability were key objectives for all OECS governments since the start of the RPS, with notable performances in the cases of Grenada and Saint Kitts and Nevis, which 4 According to the latest 2017 estimates, total public debt to GDP ranges from about 62 percent in Saint Kitts and Nevis to about 88 percent in Dominica, averaging roughly 77 percent for the OECS region (i.e. the six OECS countries), more than twice the average for the Latin America and the Caribbean region (about 36 percent). For consistency purposes and methodology, IMF data are being used, even if different from official figures from countries. 3 reduced their debt-to-GDP ratio by 20 and 16 percentage points, respectively.5 Notwithstanding these improvements, available fiscal space in the OECS continues to remain sharply limited by inadequate revenue collection. With tax receipts averaging 13.6 percent of GDP between 2013-16, revenue generation in all six countries compares poorly with the Latin America and Caribbean (LAC) region average, hampered by high levels of informality, tax evasion, and tax exemptions. In addition, the wage bill, transfers and debt service remain key sources of expenditure pressure, with debt service (interest payments) averaging 3 percent of GDP in 2016. 10. The economies of the OECS are likely to remain un-diversified over the medium term, due to their small size and remoteness from their main markets. Dependent primarily on tourism and agriculture, and importing most food and fuel, they are subject to excessive terms of trade volatility. Reliance on imported fuel results in very high domestic electricity prices, averaging more than 0.30 United States Dollars (USD) per kilowatt/hour – more than 3 times the United States (US) average. The shift to renewables is taking root in several countries including Dominica and Saint Lucia, with WBG support. 11. The Eastern Caribbean Currency Union (ECCU) has been among the most affected jurisdictions for termination of Correspondent Banking Relationships (CBRs) in the past few years.6 In large part, this is due to international banks refocus on more established markets. While many affected banks have reportedly been able to find replacements, or rely on remaining CBRs, this has the potential to disrupt financial services, especially tourism and cross-border flows. It also impacts trade finance and remittances, undermines financial stability and growth. With support from the WBG, all six OECS countries have completed or are in the process of finalizing National Risk Assessments (NRAs) to help address this issue through appropriate de- risking measures. The NRAs are providing OECS with tools to bolster their effective implementation of international Anti-Money Laundering - Counter-Financing of Terrorism (AML-CFT) standards. Continued technical support to the ECCB on banking supervision standards and legislation is expected to further reinforce the countries’ capabilities to deal with these issues. 12. The natural environment of these six island states, one of their most notable economic assets, is under increasing threat. Environmental degradation, including the impact of natural disasters, is in many cases exacerbated by inadequate disaster preparedness, poor land use planning, enforcement and management of their natural resources. The environmental quality of the waters surrounding most OECS islands is being degraded rapidly and risks compromising their reputation as an unspoiled tourist destination.7 In the last couple of years, countries are beginning to focus on the blue economy, with Grenada well advanced in instituting necessary safeguards to protect and harness ocean wealth. 5 All six OECS countries saw improvements in their debt ratios between 2014 and 2016. In the case of Grenada, its performance was anchored on a strong program of structural reforms with the IMF, supported also through the FY16/17 WBG budget support series under IDA17 financing. 6 For example, more than 75 percent of banks in Dominica and more than 50 percent of banks in Antigua and Barbuda and St.Kitts and Nevis lost their CBR during the last five years. See Alleyne et al, eds. (2018); “Unleashing Growth and Strengthening Resilience in the Caribbean”, International Monetary Fund, Washington, DC, p.267. 7 See WBG (forthcoming); “Marine Pollution in the Wider Caribbean: Not a Minute to Waste”, Washington, DC. 4 13. Weather-related shocks continue to present major risks to the entire Caribbean region. The small island economies of the OECS are especially vulnerable. In the event of a major disaster, their entire geographic area and population can be affected with a larger share of their economy wiped out. Such was the case of Dominica after the 2017 hurricane season, with damages and losses from Hurricane Maria estimated at over 220 percent of its 2016 GDP.8 14. The region’s vulnerabilities are further exacerbated by exogenous risks that affect the economic outlook. In particular, risks have stemmed from: (i) uncertainty related to the US foreign and trade policy, which may affect remittances and exports (especially goods eligible for US tariff preferences or subject to US regulations); (ii) higher-than-anticipated oil prices, reversing recent trends, which would immediately worsen external balances; and (iii) the effects of a sharp USD appreciation and/or higher global interest rates, affecting the OECS’ international borrowing costs. The USD appreciation also heightens debt-sustainability risks as an increasing portion of the countries’ liabilities are denominated in USD. C. UPDATE ON POVERTY, INEQUALITY AND GENDER ISSUES 15. Official poverty rates in the OECS are estimated at between 22 and 38 percent, but data is limited and outdated.9 In the absence of up-to-date statistics, the latest household surveys suggest that the OECS is a region where extreme poverty rates are low, but moderate poverty rates are high. The OECS Commission has launched a major data improvement initiative - the Enhanced Country Poverty Assessment Project - to address data deficiencies. WBG has been enhancing its engagement in this area to help towards reducing data deprivation in the OECS. 16. Women in the OECS have made significant strides. However, continued policy and operational support is required for maintaining and enhancing, where needed, women’s participation in the economy. Whereas women in the OECS face no legal discrimination in business in areas measured by the Doing Business (DB) 2018 report, female labor force participation in the formal economy in the Caribbean is estimated by the International Labour Organization (ILO) to average 65 percent, compared to 73 percent for males. In a similar vein, unemployment is 24 percent higher for females when compared to males.10 17. Youth unemployment rates in the OECS countries (except in St Kitts and Nevis) are estimated to be among the highest in the world.11 Young people, between the ages of 18 and 30 years old, are at a much higher risk of being unemployed, with their unemployment rates at least double the overall unemployment rate, thereby contributing to rising social issues including high levels of crime and violence. Issues with quality of education, together with lack of the right 8 See Government of the Commonwealth of Dominica (2017); “Post -Disaster Needs Assessment – Hurricane Maria – September 18, 2016”. 9 Official estimates of moderate poverty are: ATG and KNA < 22 percent (2007); DMA 28.8 percent (2009); LCA 25 percent (2016); VCT 30 percent (2008); GRD 38 percent (2008). LAC comparisons ~30 percent (2008) and 25 percent (2015). 10 Statistics are calculated as simple averages for the 6 OECS countries from the latest surveys conducted by ILO in each of the countries, as follows: ATG and VCT (2015), GRD and LCA (2016), and KNA (2013). 11 ATG 34.6 percent (2015); DMA 35.8 percent (2014); GRD 50.4 percent (2016); KNA 8.5 percent (2013); LCA 43.1 percent (2016); VCT 36.2 percent (2015). Source: World Bank staff estimates based on each OECS country’s official definition (except DMA); Central Statistics Office “Report on Millennium Development Goal Achievements 2015” for DMA. 5 skills for the job, are considered as contributing factors. The small economies further reduce the scope to generate employment opportunities, even in more promising sectors like agriculture and tourism. III. SUMMARY OF PROGRAM IMPLEMENTATION A. PROGRESS TOWARD ACHIEVING RPS OBJECTIVES 18. Progress towards achieving RPS objectives has been far slower than anticipated. At the time of PLR, only two of the eighteen indicators in the original Results Framework (RF) have achieved their targets; six are on track while more than half are unlikely to be achieved within the RPS timeframe (see Annex 4 for details). Slower-than-expected progress was largely due to the following: (i) late delivery of the program, with all of the planned Investment Project Financing (IPF) operations delivered in the last quarter of FY17, much later than originally foreseen; (ii) gaps in the RF, with several targets not aligned to specific WBG support areas and some others left unspecified; (iii) high expectations from successful implementation of regional approach for delivery of multi-country and multi-sector operations, which complicated project design - in all cases requiring substantial project redesign, eventually splitting multi-sector into single-sector projects, and multi-country into single-country projects; and (iv) serious implementation constraints in a low capacity environment. While performance and results were not in line with expectations, there has been progress in several intermediate steps linked to institutional dimensions, with support from the WBG (see paragraphs 23-25). 19. A lending program of eight projects was envisaged during the five-year period of the RPS, consisting of two country-specific Development Project Financing (DPFs) and six IPFs. All IPFs were expected to be multi-country and multi-sectoral in line with the regional approach, but were eventually restructured into either single-country or single-sector projects. This delayed project preparation and approval, leading to delayed progress towards meeting RPS outcomes in tourism, agriculture, education and social protection. Some USD 71 million IBRD/IDA financing has been committed to date, 82 percent IDA (see Table 1). A special feature of WBG support to OECS has been leveraging considerable grant financing (USD 118.7 million) through both Recipient-Executed Trust Funds (RETFs) and Bank-Executed Trust Funds (BETFs) – see Annex 6. This contributed to deepening engagement in disaster vulnerability reduction areas as well as developing new areas of engagement. However, the increasing number of TFs during the RPS added further challenges in a low-capacity environment and led to proliferation of several small activities. Some 52 ASAs, mostly financed by TFs, complemented the operational portfolio; with 33 delivered to date (see Annex 6). 6 Table 1: Status of Planned RPS Financing Trust Total IBRD IDA Fiscal RPS Funds committed Planned RPS Program (USD (USD Status Year Planned 4 (USD (USD million) million) million) million) Regional – Regional Disaster FY15 Vulnerability Reduction Project ✓ 13.8 13.8 Delivered (Additional Financing) FY16 Grenada - DPC II ✓ 5.0 10.0 15.0 Delivered Grenada - DPC III ✓ 9.3 9.3 Delivered Regional - OECS Tourism 6.0 20.0 0.4 26.4 Competitiveness Project ✓ Delivered 1 Regional - OECS Agriculture 1.8 6.5 8.3 Competitiveness Project Regional – Regional Disaster FY17 Vulnerability Reduction Project ✓ 6.1 6.1 Delivered (Additional Financing) St. Lucia - Disaster Vulnerability  1.6 5.5 7.2 Delivered Reduction Project (Additional Financing) St. Vincent and the Grenadines - HD 10.7 10.7 Delivered 2 Service Delivery Project 2 St. Lucia - Health System Strengthening ✓ 20.0 20.0 Project 2 St. Vincent and the Grenadines - Health 10.0 10.0 Project 2 Under FY19 Dominica - Geothermal Risk Mitigation preparation 17.2 40.0 57.2 Project 3 ✓ St. Lucia - Renewable Energy Sector 5.0 25.5 30.5 Devt. Project 3 3 Total Planned RPS Financing 12.8 110.3 91.3 214.5 1 Originally planned as one multi-sector regional project, finally split into two single-sector regional projects. 2 Originally planned as one multi-sector regional Project, finally split into three separate country-specific projects: one multi-sector (Education and Social Protection) delivered in FY17 (VCT) and two single-sector (Health) on track to be delivered in FY19 (LCA, VCT). 3 Originally planned as one single-sector regional project, finally split into two country-specific single-sector projects. 4 Two projects originally programmed for RPS have been dropped: (i) the Caribbean Regional Communications Infrastructure Program (CARCIP) for Antigua and Barbuda; and (ii) a Regional Financial Sector Project. 5 Grant-funded portions of the Additional Financing for both Disaster Vulnerability Reduction Projects in FY17 were provided by the European Union. The Additional Financing operation for St. Lucia Disaster Vulnerability Reduction Project did not appear as planned in the RPS. 20. As planned at RPS’s start, the International Finance Corporation (IFC) supported the program’s strategic objectives with selective support, given the specific challenges posed by the OECS. The focus areas were tourism, infrastructure, and agribusiness, in addition to continually pursuing viable public-private partnership (PPP) opportunities. IFC currently has an active portfolio in both investment and advisory projects, with four active investment projects, focusing on tourism, insurance and distressed asset relief. IFC is currently investing in two tourism projects in the region. The first project was made possible through a USD 20 million equity stake in Portland Private Investment, a regional fund including OECS countries. The fund currently has one active investment in a tourism project in St. Lucia. The second project is a recent investment in Sunwing – Blue Diamond Hotels and Resort, a USD 70 million project with USD 35 million in mobilization. This project was approved by the Board in January 2018, and is expected to be fully committed by end-FY18.12 With regards to insurance, IFC is 12 Sunwing stands out as an example of effective cascade approach, as it comes out of several years of IFC Advisory and Trade and Competitiveness technical assistance to the government of St. Lucia in addressing the turnaround of non-productive hotels. Sunwing generated 1,300 direct jobs during construction phase, and currently employs 900 people for its operations, of which about 50 percent are female. 7 supporting the insurance sector in the OECS through Sagicor Financial Corporation (SFC), which is present in all OECS countries. IFC has been a shareholder in SFC and supported its operations since 2009. As for distressed asset relief, IFC is providing support for distressed assets in the retail sector and non-performing loans (NPLs) for small and medium enterprises through a USD 20 million investment in the Distressed Asset Recovery Program (DARP) Caribbean Platform. DARP was set up to purchase secured and unsecured NPLs in the Caribbean. Total investments in IFC portfolio for the OECS are roughly USD 50 million (see Annex 6). 21. The sections below represent a summary assessment of progress in each strategic area and associated outcomes. The overall assessment points to slow progress towards accomplishing outcomes in most areas. However, progress was achieved in improving processes and adoption of intermediate measures to help accomplish results. A more detailed assessment can be found in Annex 4. Strategic Area 1. Competitiveness 22. Overall progress has been quite slow, despite good progress on a few fronts. The RPS envisaged WBG support to help create a more effective business environment and increased competitiveness in leading industries. The areas related to “improved investment climate” show moderately positive results, as indicated in Annex 4. A new banking regulatory framework covering all six countries was put in place in 2015. In addition, in several of the countries some barriers to cross-border trade have been removed; a new insolvency law, consistent with best practices, was adopted; and Governments made it easier to pay taxes, introducing electronic value- added tax filing, and reducing compliance time from days to a few hours. National energy sector regulatory bodies were established in Grenada and St Lucia, while common energy standards were set across the region. However, the planned regional energy regulator covering at least three countries did not happen due to a lack of necessary traction from countries, some of which – most notably Grenada and St. Lucia – preferred to prioritize first the creation of their national regulatory agencies. Moreover, the stated RPS goal of improving the aggregated Doing Business indicator has recorded little progress (see Annex 4 for details). Areas related to “increased tourism benefits, with stronger linkages to agribusiness” showed little progress mainly because the Regional Agriculture Competitiveness and Regional Tourism Competitiveness projects were approved late in FY17. In Grenada’s agriculture sector, with support from the DPF series, important reforms were achieved in the commercialization of agricultural estates and in the adoption of new phytosanitary rules. Strategic Area 2: Public Sector Modernization 23. Overall progress for this area has also been slow, while there were some process improvements. Outcomes included strengthening: statistical capacity; capacity to manage PPPs; and budget management and transparency. Under the OECS Commission’s leadership, and in close partnership with the Global Affairs Canada (GAC), the United Nations Development Programme (UNDP) and the Caribbean Development Bank (CDB), the statistical capacity of all six countries is being strengthened. There is also progress in improving the overall PPP policy and institutional framework, as well as the PPP framework for Information and Communication 8 Technologies (ICTs). A Caribbean PPP toolkit was launched to complement country capabilities, while Grenada also established a PPP unit, supported by the DPF series. However, despite initial promising progress on a few IFC-led PPP operations, Governments subsequently chose not to pursue these transactions, including a Hospital PPP in Grenada and an Airport PPP in St Lucia. In terms of improving budget management and transparency, while multi-year budget programs are yet to be in place, some building blocks have been laid. St. Lucia and Grenada now use strategic tools in their budget planning, with incipient forms of rolling budget estimates and multiannual budgeting. In Grenada, the programmatic DPF series supported establishment of fiscal rules as part of a Medium-Term Debt Management Strategy (MTDS) framework for the 2016-2018 period, approved by the government in the context of an IMF-supported program. Strategic Area 3: Resilience 24. Overall progress for this area has been mixed, with some outcomes demonstrating strong performance. Outcomes include: improved targeting of social protection system; establishment of quality education standards; and increased capacity to manage natural hazards. Grenada, St. Lucia and St. Vincent and the Grenadines each introduced objective targeting mechanisms for cash transfer programs, although only Grenada has so far introduced a unique registry of beneficiaries for its social protection support. With respect to education, quality standards for language, arts, math, social studies and science and technology were established in 2016, in line with the OECS Education Strategy 2012-2021. There has been limited progress on indicators for Non-Communicable Diseases (NCDs) as OECS countries currently do not submit such information to the Caribbean Public Health Agency (CARPHA). Good progress has been made in capacity-enhancement measures to manage natural hazards including support for Grenada and St. Lucia to formulate a draft National Disaster Risk Financing and Insurance Framework. With WBG support, both countries are considering the adoption of a more systematic approach to assess and quantify the direct contingent liabilities from natural hazards. The WBG has also helped to put in place coping mechanisms, notably through: (i) establishment of insurance mechanisms against disaster events, such as the Caribbean Catastrophe Risk Insurance Facility (CCRIF), mandated to payout within 14 days of disaster; and (ii) the use of new financing instruments, such as the CAT-DDO through IDA financing, which offers immediate liquidity in the event of a nationally declared state of emergency. Technical assistance for important policy reforms for resilience building are also ongoing. B. PORTFOLIO PERFORMANCE 25. Slow progress in the RPS strategic areas is also mirrored in portfolio performance. The current IDA/IBRD portfolio consists of nine projects for a total of USD 197 million, 96 percent IDA, with an undisbursed balance of 50 percent, very high for a WBG-funded portfolio with an average age of 4.2 years. The pace of implementation did not improve significantly since RPS’s start. As expected in a small state environment, public sector capacity is extremely restricted and hiring of skilled project staff remains a challenge. Often intra-government coordination arrangements are cumbersome further slowing project implementation. The average disbursement ratio of about 10 percent for OECS during the FY15-17 period was half that of LAC average. Slow project implementation often led to extensions and a longer project implementation 9 period. Four of the six IPFs active at the start of the RPS required restructuring with portfolio age averaging over 7 years. 26. An increasing number of operations in the OECS are financed by Trust Funds. Annex 6 provides the complete IBRD/IDA/TF portfolio. At RPS’s start there was only one stand-alone TF-funded IPF for USD 8.7 million, whereas by end-Q3 FY18, there were nine free-standing TF- funded IPF for USD 24.1 million, averaging USD 2.7 million per operation. TFs amounting to about USD 100 million were used to significantly top-up three IDA-financed disaster vulnerability reduction projects enabling a deeper response to country needs. The TFs have provided much needed grant financing, with faster disbursement ratios seen in TFs compared to IDA/IBRD financed projects. However, overall the low implementation capacity of OECS remained evident during this period. 27. Both IFC and the Multilateral Investment Guarantee Agency (MIGA) face challenges in the OECS due to the small size of markets. The countries’ high indebtedness and planned debt reduction strategies make them reluctant to borrow on commercial terms. All six OECS countries are members of MIGA and five are members of IFC (except St. Vincent and the Grenadines). IFC has been supporting the OECS through a variety of advisory services in the areas of financial markets, PPPs, Doing Business, and tax reform (see Annex 6). IFC is looking to engage with all OECS members as per the framework developed in the WBG’s Small States Roadmap.13 IV. EMERGING LESSONS 28. The WBG is considered a trusted partner, bringing global knowledge and expertise for small states. Its role as a long-term partner was also highlighted by respondents in the 2017 Country Survey (see Annex 5 for details). It has demonstrated its convening skills in engaging a range of development partners around common objectives. In the wake of the 2017 hurricanes, the Bank brought its extensive global knowledge and experience leading to the fast-track preparation of post-disaster needs assessments for Antigua and Barbuda and Dominica in coordination with Government and development partners. WBG will continue to play a convening role on issues of importance for the OECS such as building resilience against shocks. 29. The WBG has significant value addition in Middle-Income Countries (MICs) and the OECS demonstrate this amply as seen by the strong demand for ASA. The Bank has provided support across the OECS in areas such as NRAs, DB reforms, and disaster risk management, among others. While IBRD countries - Antigua and Barbuda, and St. Kitts and Nevis - do not qualify for concessional financing, and their high debt levels preclude further non-concessional borrowing14, they derive benefit from the Bank’s convening power, technical assistance, knowledge and capacity support. A few examples of this WBG value addition are the technical assistance support – through funding from GAC - to St. Kitts and Nevis in developing appropriate de-risking for its financial sector, or the business taxation reform work currently underway for Antigua and Barbuda. Working in these country contexts also provides valuable lessons and 13 See WBG (2017), Chapter III (Attracting Private Financing for Diversification), pp.13-20. 14 Examining the linkages between vulnerability and concessional financing is one of the core goals identified in the WBG’s Small States Roadmap. See WBG (2017), pp.9-11. 10 experiences that the WBG can bring to bear in its work in other countries and regions – e.g. the Pacific region, which also presents small island states with similar challenges. 30. The high relative cost of natural disasters, their undiversified economies, and high debt of OECS countries underscores the need for a much stronger focus on macroeconomic and fiscal policies, and resilience building. While several regional institutions help OECS in cases of natural disaster, including with weather-related insurance, the WBG will play a more active role with regional bodies and countries in strengthening resilience-building across broader macro-fiscal, financial and climatic-resilience dimensions. The engagement will encompass financing and knowledge support, employing a broader mix of instruments – policy lending, CAT- DDOs, IPFs, and ASA. 31. Policy dialogue and continuity of engagement on reforms can produce long-term dividends in small states. The policy engagement in Grenada through the DPF series and associated technical support enabled the country to develop more prudent fiscal policies that are now being deepened through a next phase of reform engagement encompassing fiscal and blue economy areas. At RPS’s start, Grenada was the OECS country with the second largest debt-to- GDP ratio (101.8 percent) while, by RPS closure, Grenada is projected to be the OECS country with the second lowest debt-to-GDP ratio (65.0 percent) (see Annex 1, Table 3). Policy engagement will be enhanced in other IDA-eligible countries – most notably St. Lucia and St. Vincent and the Grenadines - with a strong emphasis on resilience building. In addition, technical and advisory support for resilience building is also expected to be stepped up in IBRD countries. 32. Capacities are severely constrained in small island states calling for greater consolidation, more selectivity and less complexity in Bank-supported interventions. While several approaches have been tested, the critical lesson is to employ greater selectivity, consolidate the program and develop deeper synergies with development partners. Fewer, albeit larger in size, operations can reduce transaction costs by avoiding multiple spread-out interventions. As the limitations to Bank’s field presence in small states will continue, there will be a greater need to examine a variety of options and reassess the existing delivery models. Several models are being examined for the program going forward including developing large investment operations together with partners such as the CDB, along with setting up joint project units; moving more to single-country operations; developing simpler investment operations; providing hands-on -- in- country -- implementation support to project units; pursuing the model of one central project implementation unit (PIU); developing targeting training programs, especially in the fiduciary areas; and instituting regular portfolio reviews complemented by high-level annual reviews. Among all these elements, a high priority will be accorded to the provision of more systematic and regular in-country support. To strengthen WBG’s footprint in the small states, cost-sharing arrangements with other institutions – e.g. CDB - for enhancing field presence in the OECS are being assessed. Furthermore, project readiness remains a chronic concern with several delays encountered after project effectiveness. Project readiness filters may also be considered that could contribute to relatively faster implementation. 33. Bank engagement will adopt flexibility in exploring options that promote economies of scale. RPS focused more exclusively on the regional approach and pursued multi-country 11 and/or multi-sector projects. However, implementation was far below expectations. Key lessons point to the need to tailor such approaches to the unique dynamics and challenges of small island states. These call for less complexity, some modicum of pre-existing inter-country alignment around components and objectives, presence of regional champions and existence of some inter- sector coordination mechanisms to build upon. Building on this lesson, and the extremely slow progress on regional operations, far more selectivity and flexibility is being adopted, moving to a regional approach when there is political traction and strong alignment among countries (e.g. around the issues of inter-island connectivity, as in the Regional Tourism Competitiveness Project), or championship by existing regional structures such as the ECCB – like in the case of the regional Micro-, Small- and Medium-Enterprise (MSME) Partial Credit Guarantee (PCG) Facility Project. The new Multiphase Programmatic Approach (MPA) is a promising operational instrument that could be tapped for building regional projects, with new countries entering successive stages of a single program. 34. Speed and coordinated support are essential when providing support to countries after severe natural disasters. The post-hurricanes’ WBG engagement was a good example of the value of a speedy and coordinated response, where the Bank and development partners worked together to deliver the post-disaster needs assessments in record time, which formed the basis of subsequent recovery and reconstruction interventions. In addition, contingency emergency components within the ongoing Disaster Vulnerability Reduction Project (DVRP) for Dominica allowed the Bank to respond immediately to the Government’s request for just-in-time financial support. This demonstrated the benefits of incorporating “contingency components” in operations for highly vulnerable regions, such as the Caribbean. The CAT-DDO operation for St. Lucia, a key operation for the LAC Region under IDA financing, is expected to provide contingent financing in the aftermath of future emergencies. 35. Strong partnerships with development institutions are critical for impact and reducing transaction costs for small states. There are good examples of close collaboration in key sectors with the main multilateral institutions - IMF, CDB - and the main donor community for the Eastern Caribbean based in Barbados – the Eastern Caribbean Donors and Partners Group (ECPCG). The joint WBG-CDB financing of the budget support series for Grenada under IDA17 (FY16-17), or the joint WBG-IMF Climate Change Policy Assessment for St. Lucia, are just two examples of concrete partnership in support of an improved adequacy and understanding of the needed macroeconomic framework in the face of new challenges. Likewise, the joint post-disaster collaboration with the UNDP in the aftermath of the 2017 natural disasters, led to significant harmonization efforts with key bilateral institutions – most notably, the United Kingdom (UK)’s Department for International Development (DfID), the European Union, and GAC – that helped to reduce duplication and enhance targeting. These examples provide a good basis to further deepen operational partnerships and reduce transaction costs in a low-capacity environment. V. ADJUSTMENTS TO REGIONAL PARTNERSHIP STRATEGY 36. The strategic areas of the RPS remain valid. Proposed adjustments respond to the recent developments, most notably the 2017 natural disasters, the significant expansion in concessional 12 financing for IDA-eligible countries – spearheaded by the WBG’s Small States Roadmap,15 and the countries’ emerging priorities. The PLR strengthens the strategic focus on macro-fiscal issues due to these countries continued economic volatility and heavy debt burden, and deepens engagement to support resilience, incorporating a focus on the blue economy, environmental resilience and human capital resilience. In addition to consolidation of Strategic Areas 1 and 2 into a single Pillar, accompanying adjustments are made to outcomes and indicators in the RF, as noted in detail in Annexes 2 and 3. The sizeable expansion in the financing envelope for the four IDA- eligible countries enables a stepped-up response to the adjustments reflected in the PLR. The main adjustments to each of the now two RPS pillars are the following: • Pillar 1: Fostering Conditions for Growth and Competitiveness. This pillar merges two previous strategic areas that dealt separately with public and private sector aspects of reform. This strengthens their interdependent focus around five key themes: (i) macro-fiscal management - stronger support to countries for improving fiscal and financial resilience, adding indicators on improved management of public expenditures and debt; (ii) transparency and statistical capacity of the public sector, exploring opportunities for building efficiency of public services through use of technology, openness of information systems and building institutional capacity for data management; (iii) regulatory reforms for productivity and competitiveness, with focus on banking, energy, and PPPs; (iv) investment climate and female entrepreneurship, measuring concrete improvement in overall business climate, and a special lens to the role of women in core areas of lending support (ICT, agriculture, tourism, and access to finance); and (v) human capital accumulation, focusing on building skills through appropriate quality standards for education at the regional level16 and enhancing health facility standards for NCD responsiveness. Support under this pillar will be provided through a combination of financing instruments, including budget support, investment financing and ASA. • Pillar 2: Enhancing Resilience. This pillar underscores the criticality of building broader resilience. While financial, economic and human capital resilience are addressed in Pillar 1, this strategic area supports OECS Governments’ efforts to improve resilience in three key areas: (i) disaster management preparedness – in light of the region’s continued exposure to climatic shocks; (ii) environmental management – adding the blue economy agenda, which is now being captured in the RF, in line with the high relevance of the topic for the region and the substantive support from the RPS Program; and (iii) social protection – through continued support to the improvement of targeting of social safety nets and to the reduction of fragmentation in social programs. Opportunities for enhancing engagement in these areas will continue to be explored including through analytical support and knowledge exchanges for both IDA and IBRD countries. 37. Based on these adjustments, the RPS program will explore opportunities to deepen engagement in the two strategic areas. It will significantly expand the dialogue around policy 15 The expansion in concessional financing approved for the IDA18 cycle (July 2017 -June 2020) was one of the responses to enhance the value proposition of the WBG for small states. See WBG (2017), pp. 7-9. 16 Among other initiatives, the WBG is planning to set a high-level dialogue with key regional stakeholders, to be held in the last semester of 2018, around the issue of skills development, critical element to start curbing the steadily rising youth unemployment situation in the region. Such regional initiative complements the Human Capital Project launched by the Bank in October 2017. 13 and institutional reforms to support resilience-building, macroeconomic stability and fiscal sustainability in the face of shocks. Support measures include the establishment of contingency funds for disaster management, establishing fiscal responsibility frameworks, strengthening revenue-enhancement capacity, enhancing public financial management (PFM)’s transparency and efficiency, using technology for efficient delivery of public services, and reforms for promoting climate and disaster resilience (including through CAT-DDOs). A specific focus on developing the blue economy - protecting ocean resources and promoting economic activities that use ocean resources sustainably - is being incorporated in the proposed DPC for Grenada and being considered for the other IDA-eligible countries. Deeper reform engagement with Dominica will be explored to support its aspiration of being a Climate-Resilient country, possibly through a combination of policy lending and knowledge work. Potential use of policy guarantees will also be considered should there be an opportunity. 38. WBG support for building human capital and social resilience straddles across the program, while opportunities for deepening the engagement will be further explored. Jobs and education were cited as top priorities by respondents in the OECS Country Opinion Survey (see Annex 5). In education, the focus on quality and skills will continue through the ongoing regional project supporting the OECS Education Sector Strategy 2012-2021.17 Issues of education quality, skills and jobs will be reflected in policy dialogue with senior policy makers to examine areas for future engagement through deeper analytics and financing. In health, new work on St. Lucia and St. Vincent and the Grenadines aims at increasing health facilities’ standards for NCD management. The area of health insurance reform will be the key aspect of support in the case of St. Lucia. In social protection, the ongoing support will be supplemented with ASA aiming to improve targeting and reduce fragmentation of social protection systems18. 39. The RPS RF has been significantly revised and updated to reflect the adjustments and program shifts. While the original RF was outcome-focused, the associated indicators were not always closely aligned with the WBG program, reducing the degree of attribution. The delayed delivery of operations and challenges encountered in implementing the regional approach also impacted the RF. Due to these, several key changes have been made to the RF, as follows: (i) revision/reformulation of three outcomes and eleven indicators to align better with the program; (ii) merging of seven outcomes into four and deletion of seven indicators in line with changes in the program, progress to date, and need for consolidation of the RF; and (iii) addition of two outcomes and five indicators to reflect the significant support through IDA18-financing including policy lending. Recognizing the unique needs of small states, the RPS engagement supported institutional improvements leading to a greater inclusion of process indicators in the original RF. The updated RF retains several of these indicators in view of the ongoing operational assistance, while other indicators have been incorporated reflecting the impact on outcomes. 17 This is the “Support to the Implementation of the Regional Education Strategy ” Project, financed from a USD 2 million grant from the Global Partnership for Education. 18 Objective and well-designed targeting instruments will also help countries better target households with specific vulnerabilities, including gender, through identification of households with single mothers etc. With updated poverty household surveys to be implemented throughout the OECS over the RPS period, these instruments will be better linked to current data and gender-specific poverty trends for more effective response. 14 Table 2: New Planned RPS Financing for FY18-FY20 Fiscal RPS IBRD IDA** Planned RPS Program Year Planned (US$M) (US$M) Regional - MSME PCG Facility Project  2.0 8.0 Dominica - Emergency Agriculture Resilience and Livelihoods FY18  25.0 Enhancement Project *** Dominica - Resilient Housing Reconstruction Project ***  40.0 Grenada - Blue Growth DPC I  30.0 Dominica - Additional Financing to Disaster Vulnerability  TBD Reduction Project Dominica - Geothermal Risk Mitigation Project* ✓ 17.2 Grenada - Blue Growth DPC II  TBD Grenada - Digital Governance for Resilience  TBD St. Lucia - CAT DDO  20.0 FY19/20 St.Lucia - Health System Strengthening Project * ✓ 20.0 St.Lucia - Renewable Energy Sector Development Project * ✓ 5.0 St. Lucia - DPC  TBD St.Vincent and the Grenadines - Port Modernization Project  30.0 St.Vincent and the Grenadines - DPC  TBD St.Vincent and the Grenadines - Health Project * ✓ TBD Total New Planned RPS Financing FY18-20  2.0 330.0 TBD = To be determined * These operations had originally been planned as part of Regional Projects (see Table 1). ** IDA Allocations for FY19 and FY20 are indicative. *** These two operations were approved by the Board on April 13, 2018. 40. The PLR projects a significant enhancement to the volume of the financing program. Although the anticipated IDA18 allocations are still indicative for FY19 and FY20, the programmed envelope for the IDA18 cycle amounts to USD 330 million, of this USD 280 million is from IDA18 and USD50 million granted from the Crisis Response Window (CRW) for emergency-recovery operations in Dominica. The proposed financing program balances WBG financing instruments to include DPF operations potentially in all 4 IDA-eligible countries,19 as well as a CAT-DDO for St Lucia, an IDA-financed instrument for the LAC Region. The planned pipeline is estimated at USD 273 million – including the proposed USD 50 million from CRW. The PLR reflects the currently estimated amounts. As several proposed operations in FY19 and FY20 are at an early stage of dialogue with the countries, there could be variations in the actual and final amounts, and potentially some realignment of priorities by countries (see Table 2). A balance of close to USD 50 million will be allocated across a few remaining operations noted in the table, and a few others still under discussion with authorities. Based on strong country demand and the nature of policy and institutional reforms, a significant share of the IDA18 financing is earmarked for policy-based lending, with budget support operations planned already for three IDA-eligible countries. The remaining IDA includes emergency-recovery projects, financing for previous projects that were under preparation, and potential new operations in infrastructure and 19 Policy-based lending through Development Policy Credits is at various stages of preparation for delivery between FY18-FY20. 15 human development. A key shift from the RPS is the reduction in the share of regional projects. A targeted set of ASA, making full use of the WBG’s comparative advantage and convening power, is expected to strategically support the engagement (see Annex 6).20 41. Technical and advisory services and knowledge support will remain high priority for IBRD countries. WBG will continue its role as convener on issues of regional significance such as financial sector stability, climate-smart resilience, regional IT connectivity, doing business, and skills and jobs. These are key areas of importance for small island MICs where cross-learning among OECS, the wider Caribbean community and with small states in other regions will be explored, along with developing linkages with small states undergoing similar experiences in other regions. Further benefit would be derived from more relevant collaboration and closer technical engagement with regional entities to advance shared regional priorities. 42. The PLR proposes a one-year extension to the current closing date from FY19 to FY20. A one-year extension will fully align the RPS timeframe with the IDA18 cycle. In addition, this extra year will give more time to show results, accounting for the slow implementation pace since RPS’s start, and to incorporate, as much as possible, emerging results from the IDA18 program, including the hurricane emergency response in Dominica. The next RPS will benefit from the lessons learnt through the adjustments in the PLR and from the SRD, currently under preparation. 43. The strategic engagement also envisages a stronger stakeholder engagement and dialogue at country and regional level. The OECS countries’ and population’s knowledge about the WBG’s operations and analytic engagement will be enhanced through more systematic stakeholder engagement that would contribute towards raising awareness about the WBG strategy and the associated program. In-country engagement, and wider dissemination of WBG operations and analytics would assist the countries’ efforts for promoting deeper stakeholder ownership of the programs. 44. Corporate priorities will continue to receive focused attention in the new operations. Attention to governance and accountability will be maintained, by building adequate social accountability mechanisms into new project design and program monitoring, e.g. grievance- redress mechanisms and citizen engagement indicators, thus aiming for greater transparency. This is also reflected in the emergency support operations. Gender will be mainstreamed for all new operations, with gender-disaggregated data to be included in their respective RFs. The gender dimension is also included in the RPS, through the addition of a new indicator on impact on female entrepreneurship measured across the four key regional lending projects (see Annex 2). Finally, climate change co-benefits will be documented in all new projects. 45. IFC and MIGA will explore opportunities for deeper engagement via investment and advisory support. The goal is to maximize finance for development by encouraging countries to support an enabling environment for private sector participation. Progress has already been made in introducing a suitable PPP toolkit for the Caribbean and proposed PPP policies and frameworks 20 One of such areas is support for competitiveness and private sector-led growth, where the WBG will ramp up technical assistance to help OECS achieve reforms in key areas for improving the overall investment climate in the region. 16 for the OECS. With support from IFC, Grenada now has a PPP help desk. MIGA is open to considering investment opportunities in the OECS countries as they present themselves. IFC is keen on complementing the efforts of IDA/IBRD, especially within the Maximizing Finance for Development (MFD) framework21 and the ongoing work in the renewable energy sector. VI. RISKS TO RPS PROGRAM 46. The overall risk rating to the program remains high, unchanged from the RPS (see Table 3). This evaluation is in line with the three major risk factors identified in the RPS: (i) fragile macroeconomic framework; (ii) low institutional capacity for implementation; and (iii) exposure to exogenous shocks and natural disasters. Table 3. Risks to the Revised RPS Risk Categories Rating 1. Political and governance Moderate 2. Macroeconomic High 3. Sector strategies and policies Substantial 4. Institutional capacity for implementation and sustainability High 5. Technical design of program Substantial 6. Fiduciary Substantial 7. Environmental and social High 8. Stakeholders Substantial Overall High 47. Macroeconomic risks remain high, especially with respect to policy and structural reforms. Small states’ disproportionately higher volatility/exposure to economic and physical shocks, compounded with the inherent stresses on public finances and limited concessional borrowing opportunities has led to a build-up of significant debt levels in several small states. The revised RPS is expected to mitigate these risks by working closely with OECS governments on core policy reforms that support prudent fiscal policies. The policy engagement with authorities, underpinned by analytical work and budget support operations, provides the opportunity to support Government programs for strengthening core governance areas and reducing macroeconomic volatility. Closer partnership with other institutions (IMF, CDB) will be maintained, especially in debt management. In the aftermath of Hurricanes Irma and Maria, countries could mobilize funding for post-disaster reconstruction. However, to mitigate debt sustainability risks and associated high risks of natural calamities, deeper work on debt management is anticipated. This work will build on the Debt Management Performance Assessments (DeMPAs) completed for five of the six OECS countries – all but Dominica – to date. 48. Institutional risks remain high due to limited Government capacity, impacting project design and implementation. Finding and retaining qualified project-related staff remains a major challenge in the Caribbean. Risks mitigation measures include: (i) partnership with other development actors in providing support and technical assistance to central PIUs; (ii) closer consultation and information sharing with regional institutions to shape design of engagement, and 21 The MFD is an approach, spearheaded by the WBG and the IMF, to leverage resources from the private sector for optimizing support for growth and sustainable development. See Development Committee (2017); “Maximizing Finance for Development: Leveraging the Private Sector for Growth and Sustainable Development”. 17 develop better understanding of synergies with regional and national priorities; (iii) collaboration with key development partners, notably the CDB, in parallel financing of larger operations with joint PIU and monitoring arrangements; (iv) exploring different delivery models more appropriate for a small state; and (v) continued training for PIU and Government staff as well as support for fiduciary-related training courses at the University of the West Indies. 49. Risks associated with environmental and social aspects remain high, as already transpired. To mitigate the risk of natural disasters affecting RPS outcomes, work is already underway to help these countries: (i) prepare better for national disasters through development of their National Disaster Risk Financing Strategies, together with policy reforms supported through policy-based lending, including CAT-DDOs; (ii) adopt a broader menu of support areas for resilience-building; and (iii) re-build better through the resilience-building approach in the ongoing series of Disaster Vulnerability Reduction Projects (DVRPs), and the emergency support operations for Dominica, recently approved. 50. Risks for the “technical design of the program”, “sector strategies and policies” and “stakeholders” domains are all rated substantial. To mitigate these risks, new operations during the remainder of the RPS period will seek simpler designs. Option of introducing readiness filters during preparation will be assessed. In line with the new Environmental and Social Management Framework recently approved by the Board (which will apply to all new IPF operations once it becomes effective), necessary stakeholders’ consultations will take place. In addition, due to the expanded RPS program potentially touching upon sensitive policy reforms, mitigation measures would include deeper consultations at country level, using regional forums and agencies to build support for reforms and programs. 51. Fiduciary and safeguard risks remain respectively substantial and high. Fiduciary risks related to procurement and financial management are related to the market size of OECS economies, a lack of capacity in these countries, and weak country systems, among other factors. Safeguard risks (social and environmental) have similar sources of weakness, although the assessment of gaps in country systems in this area are higher, hence the “high” risk rating in this case. To mitigate these risks, the WBG will seek to move from a transaction-based approach to a country systems-based support balancing with direct capacity building support for counterpart staff. WBG fiduciary teams – procurement, financial management, social safeguards and environmental safeguards – have been deeply engaged in supporting countries in their efforts for improving country systems. Recent capacity building work in financial management to strengthen the Caribbean Organisation of Supreme Audit Institutions or the ongoing work to raise the quality of public procurement regimes in the OECS to international standards are some examples of risk mitigating efforts. Deeper collaboration with development partners, most notably the CDB, is expected to further reinforce this engagement. 18 ANNEX 1: KEY MACROECONOMIC INDICATORS FOR THE OECS (CY14-CY19) Table 1 Selected Economic Indicators for the OECS - CY14-CY19 Projected /Actual Indicators 2014 2015 2016 2017 2018 2019 2020 Projected Actual Projected Actual Projected Actual Projected Actual Projected at PLR at RPS at RPS at RPS at RPS Real GDP growth 1.6 3.6 2.2 2.6 2.5 3.2 2.5 1.4 -0.2 4.5 3.4 (percent change) General Government Total 27.6 27.6 27.3 28.0 27.1 31.0 27.0 29.8 27.5 26.4 24.9 Revenue (percent of GDP) General Government Total 33.5 29.1 30.8 28.4 29.8 29.4 29.7 29.2 29.4 28.5 27.9 Expenditure and Net Lending (percent of GDP) General Government Gross 88.8 85.8 89.6 80.4 88.0 76.8 86.3 76.7 76.8 74.6 74.3 Debt (percent of GDP) Current account balance -18.9 -6.1 -17.8 -2.8 -16.9 -5.2 -16.3 -9.7 -14.0 -9.3 -8.5 (percent of GDP) Sources: WB (2014); “Regional Partnership Strategy for the Organisation of Eastern Caribbean States FY15 -19”, Table 1, p.6; and IMF World Economic Outlook Database; Latest update (April 2018) Note: Figures are calculated as the unweighted averages for the 6 OECS countries. 19 Table 2 Real GDP Growth* in the OECS - CY2014-2020 (percentage annual change – year to year) 2014 2015 2016 2014- 2017 2018 2019 2020 OECS Country 2016 Actual (average) Estimated Projected Antigua & Barbuda 5.1 4.1 5.3 4.8 2.8 3.5 3.0 2.5 Dominica 4.4 -2.5 2.6 1.5 -4.2 -16.3 12.2 7.1 Grenada 7.3 6.4 3.7 5.8 3.5 3.6 3.6 2.9 St. Kitts & Nevis 5.1 4.9 3.1 4.4 2.6 3.5 3.2 3.0 St. Lucia -0.9 2.0 3.4 1.5 3.0 2.5 2.3 2.2 St. Vincent & the Grenadines 0.3 0.9 0.8 0.6 1.0 2.1 2.5 2.8 Unweighted Average 3.6 2.6 3.2 3.1 1.4 -0.2 4.5 3.4 * Gross Domestic Product at constant prices (annual variation) Source: IMF World Economic Outlook Dataset, latest update (April 2018) 20 Table 3 General Government Gross Debt in the OECS - CY2014-2019 (percentage of GDP) 2014 2015 2016 2014- 2017 2018 2019 2020 OECS Country 2016 Actual (average) Estimated Projected Antigua & Barbuda 102.1 98.2 86.2 95.5 86.8 88.2 90.2 91.9 Dominica 81.1 77.2 74.9 77.7 87.6 93.6 87.3 89.7 Grenada 101.8 90.6 82.1 91.5 71.4 64.0 56.7 50.2 St. Kitts & Nevis 81.4 70.6 65.6 72.5 62.4 60.3 57.5 55.7 St. Lucia 69.2 66.7 69.2 68.4 71.3 73.1 74.9 77.3 St. Vincent & the Grenadines 79.5 79.4 82.9 80.6 80.8 81.4 81.2 80.9 Unweighted Average 85.8 80.4 76.8 81.0 76.7 76.8 74.6 74.3 Source: IMF World Economic Outlook Dataset, latest update (April 2018) 21 ANNEX 2: UPDATED RESULTS FRAMEWORK - RPS FY15-FY20 RPS Outcomes and Indicators WBG Program Strategic Area 1: Fostering Conditions for Growth and Competitiveness Outcome 1: Improved Macro-Fiscal Policies for Debt Management and Public Procurement Indicator 1: Number of OECS countries that adopt a medium-term debt management Financing: strategy (MTDS) ✓ Regional: Support for Economic Management in the Caribbean Region (SEMCAR) Phase 1 (P123665) and Phase II (P160774) Baseline: 0 ✓ DPC Series: Grenada FY16-17 (completed) and Blue Growth DPCs ✓ DPC St. Lucia Target: 3 ✓ DPC St. Vincent and the Grenadines Source: Official MTDS documents in OECS countries ASA: ✓ Debt Management Performance Assessment (DeMPA) Series: Antigua and Barbuda (P157123); Grenada (P155980); St. Vincent and the Grenadines (P162230); St Kitts and Nevis (P163448); and St Lucia (P162330) ✓ Regional: Programmatic TA for SEMCAR, Phase 1 (P128874) and Phase II (P160774) Indicator 2: Number of OECS countries with legal public procurement regimes Financing: updated to international standards ✓ Regional: OECS Public Procurement Network (P166039) Baseline: 0 ASA: ✓ Regional: OECS and Jamaica Public Expenditure Management and Target: 2 Digital Governance Project (P161942) Source: New Public Procurement Bills approved in OECS countries Outcome 2: Enhanced Transparency and Statistical Capacity of Public Sector Information Systems Indicator 1: Number of OECS countries with Open Data policies approved and ASA: Open Data portals implemented ✓ Regional: Caribbean Open Data (P148056) ✓ Regional: OECS and Jamaica Public Expenditure Management and Baseline: 0 Digital Governance Project (P161942) 22 RPS Outcomes and Indicators WBG Program Target: 2 Source: Open Data Policies and Open Data Websites for OECS countries Indicator 2: Number of OECS countries with new modules to measure ASA: multidimensional and monetary poverty piloted and implemented ✓ Regional: Caribbean Poverty NLTA (P151093) ✓ Regional: OECS Statistics and Poverty NLTA (P151133) Baseline: 0 ✓ Regional: Caribbean: Poverty and Equity PA (P160347) Target: 2 Source: Statistical Offices and Websites of the OECS countries Outcome 3: Strengthened Regulatory Frameworks for Competitiveness and Productivity Indicator 1: New banking regulatory framework adopted Financing: ✓ Regional: MSME PCG Facility Project (P157715) Baseline: Outdated regulatory framework with insufficient range of banking ✓ Regional: IFC DARP Adamantine supervision and resolution tools ASA: Target: New regulatory framework with regulations in line with international ✓ Regional ASA: standards for supervision and resolution o Continued Resilience of ECCU Financial System (P145745) o Asset Management Expertise for ECCU Financial System (P146727) Source: Banking Acts passed in each of the OECS countries since RPS’s start o Financial Analysis and Dynamic Modelling Expertise (P150825) o Strengthening Financial Sector in the Eastern Caribbean (P150897) o OECS Diversifying the Financial System (P156396) o Caribbean PA: Development of Sound Financial Systems (P158320) 23 RPS Outcomes and Indicators WBG Program Indicator 2: Energy regulatory framework updated with renewable energy-specific Financing: regulations ✓ Regional: Eastern Caribbean Energy Regulatory Agency (ECERA) (P101414) Baseline: Only one country (Dominica) with an established independent ✓ Regional: Solar PV Demonstration and Scale-Up Project (P153404) regulatory commission, but no renewable energy-specific regulations in place ✓ Regional: Caribbean Energy Statistics Capacity Enhancement Project (P155034) Target: At least 3 countries have fully functioning independent regulatory ✓ Antigua and Barbuda Roadmap to Improve Water and Energy Services commissions, with renewable energy-specific regulations in place and (P150338) enforced by regulator ✓ Dominica Geothermal Risk Mitigation Project (P162149) ✓ Grenada DPC Series (FY16/17) Source: New energy regulatory frameworks approved in OECS countries since ✓ Geothermal Resource Development in St. Lucia (P149959) RPS’s start and operational to date ✓ St. Lucia Renewable Energy Sector Development Project (P161316) ✓ Potential IFC involvement in renewable energy concessions ASA: ✓ Geothermal Development in Dominica (P143708) ✓ Technical Assistance for Geothermal Development in Dominica (P156500) Indicator 3: Number of OECS countries with national public-private partnership (PPP) policies approved and PPP regulatory frameworks operationalized Financing: ✓ DPC Series: Grenada FY16-17 (completed) and Blue Growth DPCs Baseline: 0 ✓ DPC St. Lucia ✓ DPC St. Vincent and the Grenadines Target: 2 countries ASA: Source: PPP policies and regulatory frameworks approved in OECS countries since ✓ St Lucia PPP Policy (P149915) RPS’s start and operational to date ✓ Caribbean: Regional PPP Support (P151976) Outcome 4: Improved Business Environment and Conditions for Female Entrepreneurship Indicator 1: Number of OECS countries with increased capacity and geographical Financing: reach of regional broadband networks ✓ Regional: Caribbean Regional Communications Infrastructure Program (CARCIP) (P114963) Baseline: 0 24 RPS Outcomes and Indicators WBG Program Target: 3 Source: Country-specific contracts of OECS countries with regional network provider Indicator 2: Number of business climate reforms recorded since RPS’s start ASA: ✓ Regional: Caribbean Growth Forum – Phase 1 (P130208) and Phase II Baseline: 0 (P159034) Source: Doing Business (DB) Report 2015 ✓ Regional: Trade Support – Phase I (P146683) and Phase II (P159061) ✓ Regional (IFC-funded): Target: At least 10 o Indicator-Based Reform Advisory (IBRA) in LAC (P599907) Source: DB (2016) - DB (2021) o OECS Business Taxation Reform Project (P600212) o Caribbean Secured Transactions and Collateral Registries Project (P600729) Indicator 3: Percentage of female-led firms directly benefitting from WBG Financing: interventions in selected sectors (ICT, agriculture, tourism, and access to ✓ Regional: Caribbean Regional Communications Infrastructure Program finance) (CARCIP) (P114963) ✓ Regional: OECS Regional Tourism Competitiveness Project (P152117) Baseline: 24 percent ✓ Regional: OECS Agriculture Competitiveness Project (P158958) Source: Compete Caribbean – PROTEqIN (2014) ✓ Regional: MSME PCG Facility Project (P157715) Target: 30 percent Source: WBG Regional Projects (2020) Outcome 5: Improved Human Capital Results through Higher Quality Standards for Education and Health Indicator 1: Established quality standards for education in line with the OECS Financing: Education Strategy, including gender-disaggregated assessments of learning ✓ Regional: Support to the Implementation of the Regional Education outcomes Strategy (P158336) Baseline: No regional quality standards for the OECS ASA: ✓ Regional: OECS Social Resilience and Human Development TA Target: Quality standards established in all 6 OECS countries (P157072) 25 RPS Outcomes and Indicators WBG Program Source: Regional Strategy for Education in the OECS 2012-2021 and country- specific national strategies for OECS countries Indicator 2: Number of OECS countries with at least 25 percent of primary care Financing: health facilities equipped for NCD management ✓ St. Lucia Health System Strengthening Project (P166783) ✓ St. Vincent & the Grenadines Health Project (P167099) Baseline: 0 ASA: Target: 2 (St. Lucia and St. Vincent & the Grenadines) ✓ Regional: OECS Social Resilience and Human Development TA (P157072) Source: Implementation Status Reports from IPFs in St.Lucia and St.Vincent & the Grenadines Strategic Area 2: Enhancing Resilience Outcome 6: Improved targeting of social protection systems Indicator 1: Number of OECS countries that establish objective poverty-based Financing: targeting mechanisms for cash transfer programs ✓ Grenada - Safety Net Advancement Project (P123128) ✓ DPC Series: Grenada FY16-17 (completed) Baseline: 1 (Dominica) ASA: Target: 3 (Grenada, St. Lucia, and St. Vincent and the Grenadines) ✓ Regional: OECS Social Resilience and Human Development TA (P157072) Source: Ministries of Social Protection in OECS countries ✓ Regional: Building Blocks for Disaster-Responsive Social Protection Systems in Dominica and Grenada (P159285) ✓ Regional: Strengthening Social Protection System for Disaster Preparedness and Response in Saint Vincent and the Grenadines (P161103) ✓ Regional: Knowledge Exchange on Adaptive Social Protection Systems as a Disaster Risk Mitigation Mechanism (P165263) ✓ St.Lucia - Transforming Social Protection in St. Lucia (P149120) 26 RPS Outcomes and Indicators WBG Program Outcome 7: Improved capacity to prepare for, respond to, and mitigate natural disasters Indicator 1: Number of OECS countries that have formulated and adopted a Financing: National Disaster Risk Financing Strategy ✓ St.Lucia CAT-DDO (P154829) ✓ DPC Series: Grenada FY16-17 (completed) and Blue Growth DPCs Baseline: 0 ✓ DPC St. Lucia ✓ DPC St. Vincent and the Grenadines Target: 3 ASA: Source: National Disaster Risk Financing Strategy for OECS countries ✓ Regional: 6R Programmatic Engagement in DRM & CCA (P129813) ✓ Regional: Caribbean Resilience Initiative PA (P152884) Indicator 2: Number of OECS countries with strengthened hydro-meteorological Financing: systems for disaster preparedness ✓ Regional Disaster Vulnerability Reduction Project (P117871) ✓ Dominica Disaster Vulnerability Reduction Project (P129992) Baseline: 0 ✓ St. Lucia Disaster Vulnerability Reduction Project (P127226) ✓ St.Lucia CAT-DDO (P154829) Target: 6 ASA: ✓ Regional: 6R Programmatic Engagement in DRM & CCA (P129813) Source: Caribbean Disaster Emergency Management Agency (CDEMA) ✓ Regional: Caribbean Resilience Initiative PA (P152884) Outcome 8: Better management of marine and coastal natural assets Indicator 1: Number of OECS countries that have developed either marine spatial or Financing: coastal master plans ✓ Regional: Sustainable Financing & Management of Eastern Caribbean Marine Ecosystem Project (P103470) Baseline: 0 ✓ Regional: Caribbean Regional Oceanscape Project (CROP) (P159653) ✓ DPC Series: Grenada (FY18-20); St. Lucia (FY19-20); St. Vincent and Target: 2 the Grenadines (FY19-20) ASA: Source: Oceans Governance and Fisheries Department (OECS Commission) ✓ Regional: Caribbean Regional Oceanscape Program NLTA (P153427) 27 ANNEX 3: SUMMARY OF PROPOSED CHANGED TO RESULTS FRAMEWORK Original RPS Outcomes and Revision Rationale for Change Indicators Strategic Area 1: Competitiveness Revised. Original Strategic Areas (pillars) 1 and 2 are now merged under the new Strategic Area 1 for consolidation purposes. Strategic Area 2: Public Sector Strategic Area 1: Fostering Conditions for Growth The rationale is the emphasis on the conditions for growth and Modernization and Competitiveness competitiveness, regardless of whether these are generated within the public or the private sector domains. New. A new Outcome 1 is added to emphasize the importance of the management of macroeconomic and fiscal policies, one of Outcome 1: Improved Macro-Fiscal Policies for Debt the key strategic shifts of the PLR, now supported through Management and Public Procurement DPF series in at least three OECS countries and targeted ASA. Wording for Outcome 1 emphasizes the specific areas for improvement, directly linked to support under the RPS. New. New indicator added in line with the addition of new outcome. Indicator 1: Number of OECS countries that adopt a medium-term debt management strategy (MTDS) Baseline: 0 Target: 3 Source: Official MTDS documents in OECS countries New. New indicator added in line with the addition of new outcome. Indicator 2: Number of OECS countries with legal public procurement regimes updated to international standards Baseline: 0 Target: 2 Source: New Public Procurement Bills approved in OECS countries 28 Outcome 3 (Strategic Area 2: Public Sector Revised, and merged into Outcome 2. Outcomes 3 and 4 under the former Strategic Area 2 (Public Modernization): Improved budget Sector Modernization) are now merged into a new Outcome management and transparency Outcome 2: Enhanced Transparency and Statistical 2. Wording for this new indicator revises the former Capacity of Public Sector Information Systems formulations by: (i) deleting the “budget management” part of Outcome 4 (Strategic Area 2: Public Sector Outcome 3, which has now been incorporated into the new Modernization): Strengthened statistical Indicator 2 (Outcome 1) on public procurement; and (ii) capacity focusing the emphasis on specific characteristics (transparency and technical strength) of public sector information systems. Indicator 2 (Outcome 3): Develop/ Revised, and becomes Indicator 1 (Outcome 2). The indicator was revised to emphasize the importance of both implement open budget index approving open data policies and operationalizing these Indicator 1: Number of OECS countries with Open Data policies through the implementation of Open Data Portals. Baseline: 0 policies approved and Open Data portals implemented The Open Budget Data Index, which appeared in the original Target: at least 2 countries Baseline: 0 indicator, is a metrics run by the International Budget Partnership and less impactful than the development and Target: 2 implementation of open data policies beyond budget data. Source: Open Data Policies and Open Data Websites for OECS countries Indicator 1 (Outcome 4): The new modules Revised, and becomes Indicator 2 (Outcome 2). Wording for this indicator was shortened and revised for to measure multidimensional and monetary clarity. poverty (enhanced Labor Force Surveys) Indicator 2: Number of OECS countries with new are piloted and implemented in at least two modules to measure multidimensional and monetary member states. poverty piloted and implemented Baseline: 0 Baseline: 0 Target: St. Lucia pilots the new modules Target: 2 needed to measure multidimensional and monetary poverty by 2015; at least two Source: Statistical Offices and Websites of the OECS member states implement the new modules countries to measure multidimensional and monetary poverty by 2019 Indicator 1 (Outcome 3): Introducing Dropped. Indicator was dropped for consolidation purposes. Budget strategic budgeting tools management issues are now being captured through the new 29 Baseline: 0 Indicator 2 (Outcome 1), with a focus on public procurement reforms. Target: at least 2 countries with rolling forward budget estimates and multiannual budget ceilings. Outcome 1 (Strategic Area 1: Revised, and merged into Outcome 3. Outcomes 1 (Competitiveness) and 5 (Public Sector Competitiveness): Improved investment Modernization) are now merged into a new Outcome 3 that climate lumps together three original indicators with one common Outcome 3: Strengthened Regulatory Frameworks feature: the focus on regulatory frameworks that are key to Outcome 5 (Strategic Area 2: Public Sector for Competitiveness and Productivity enhanced competitiveness and productivity. Modernization): Strengthened capacity to manage PPP Indicator 2 (Outcome 1): New banking Revised, and becomes Indicator 1 (Outcome 3). Wording for this indicator was revised for clarity. regulatory framework adopted Indicator 1: New banking regulatory framework adopted Baseline: Outdated regulatory framework and deficient supervision. Baseline: Outdated regulatory framework with insufficient range of banking supervision and Target: Banking regulation consistent with resolution tools international standards Target: New regulatory framework with regulations in line with international standards for supervision and resolution Source: Banking Acts passed in each of the OECS countries since RPS’s start Indicator 3 (Outcome 1): Improved market Revised, and becomes Indicator 2 (Outcome 3). Wording for the indicator was slightly revised for clarity. conditions for renewables by updated Baseline and targets were significantly revised to focus on: (i) energy sector regulatory framework Indicator 2: Energy regulatory framework updated with the operationalization of country-level regulators instead of renewable energy-specific regulations the regional regulatory body (ECERA); and (ii) the Baseline: 2 countries part of the Eastern importance of updating the regulatory framework with Caribbean Energy Regulatory Agency Baseline: Only one country (Dominica) with an specific regulations for renewable energy. (ECERA) project (Grenada and St.Lucia) established independent regulatory commission, but no renewable energy-specific regulations in place Target: At least 3 countries part of the Eastern Caribbean Energy Regulatory Agency Target: At least 3 countries have fully functioning (ECERA) project. independent regulatory commissions, with 30 renewable energy-specific regulations in place and enforced by regulator Source: New energy regulatory frameworks approved in OECS countries since RPS’s start and operational to date Indicator 1 (Outcome 5): Implementation of Revised, and becomes Indicator 3 (Outcome 3). Wording for the indicator was slightly revised for clarity. PPP policy and institutional frameworks Indicator 3: Number of OECS countries with national IFC target was reduced given performance to date and realistic Baseline: 0 (2013) public-private partnership (PPP) policies approved and assessment through revised closing date. PPP regulatory frameworks operationalized Target: At least 2 countries have introduced national PPP policy and institutional Baseline: 0 framework Target: 2 IFC aims to support at least 3 successful PPP transactions over the RPS period. 1 successful PPP transaction closed by IFC Source: PPP policies and regulatory frameworks approved in OECS countries since RPS’s start and operational to date Outcome 1 (Strategic Area 1: Revised, and merged into Outcome 4. Competitiveness): Improved investment climate Outcome 4: Improved Business Environment and Outcome 2 (Strategic Area 1: Conditions for Female Entrepreneurship Competitiveness): Increased tourism benefits, with stronger linkages to agribusiness New, and becomes Indicator 1 (Outcome 4). Indicator 1: Number of OECS countries with increased This indicator was added as ICT is a core requirement for capacity and geographical reach of regional productivity and competitiveness. In addition, it has been a broadband networks key regional focus for transformational impact throughout the RPS cycle. Baseline: 0 Target: 3 31 Source: Country-specific contracts of OECS countries with regional network provider Indicator 1 (Outcome 1): Improvement in Revised, and becomes Indicator 2 (Outcome 4). Doing Business (DB) indicators Indicator 2: Number of business climate reforms recorded Indicator was revised for comparability over time and Baseline: DB (2014), Enterprise Surveys since RPS’s start simplicity compared to the DTF metrics. (2010), Product Market Regulations/ + other data sources will be used Baseline: 0 Source: Doing Business (DB) Report 2015 Target: To be determined in diagnostic phase Target: At least 10 Source: DB (2016) - DB (2021) Indicator is to be measured as the cumulative number of positive reforms recorded in Doing Business: a) in any of the 11 DB domains; b) achieved by any of the 6 OECS countries; c) during the RPS period (FY2014-20). Baseline will be DB2015 but positive reforms recorded in that report will not be counted towards the total for that report, as the DB2015 report reported on information collected through March 2014 and got published in October 2014. Therefore, this baseline has not been impacted by the RPS. Target will be DB2021, which is expected to be published in October 2020 and will capture information through March 2020, 3 months prior to the revised closing date of the RPS. New, and becomes Indicator 3 (Outcome 4). Indicator 3: Percentage of female-led firms directly Indicator was added to incorporate the measurement of the benefitting from WBG interventions in selected gender dimension in the Results Framework, while capturing sectors (ICT, agriculture, tourism, and access to the essential role of women in the labor market for increasing finance) productivity and competitiveness. 32 Baseline: 24 percent This indicator also attempts to strengthen the degree of Source: Compete Caribbean – PROTEqIN (2014) attribution to RPS support through building an aggregate metrics that captures the bulk of RPS financing for regional Target: 30 percent projects targeting entrepreneurship and business development Source: WBG Regional Projects (2020) in the OECS. This indicator will be calculated as the simple average of four sub-indicators directly related to regional financing support under the RPS, as follows: a) Percentage of female-led ICT businesses receiving support (CARCIP Project); b) Percentage of female-led firms benefiting from private sector initiatives (Regional Tourism Competitiveness Project); c) Percentage of female-led business proposals approved and developed into an evaluated business plan (Regional Agricultural Competitiveness Project); and d) Percentage of female-led MSMEs receiving guaranteed loans (MSME Guarantee Facility Project). Each sub-indicator will be collected as of end-June 2020, from which target will be calculated. Indicator 1 (Outcome 2): Increase in local Dropped. This indicator was dropped in line with the delayed approval currency spent per tourist arrival of the regional project (OECS Regional Tourism Competitiveness Project) from which indicators would be Baseline: To be determined at the time of the calculated. Significant impact from this project is not diagnostic for the Regional Adaptable expected by the revised closing date for the RPS. Program Loan (APL) on Tourism / Agriculture Competitiveness Target: To be determined during diagnostic phase Indicator 2 (Outcome 2): Increased demand Dropped. This indicator was dropped in line with the splitting of the for food sourced locally by tourism sector original Regional Project referred in the baseline into two different Regional Projects, one for Tourism and one for Agriculture. 33 Baseline: 32% (WB, 2008) to be updated at time of the diagnostic for the Regional Project on Tourism / Agricultural Competitiveness Target: To be determined during diagnostic phase Indicator 3 (Outcome 2): # of organized Dropped. This indicator was dropped in line with the delayed approval agro-producers who have adopted promoted of the regional project (OECS Agriculture Competitiveness technology who sell their products to Project) from which indicators would be calculated. tourism sector Significant impact from this project is not expected by the revised closing date for the RPS. Baseline: 0 Target: 2,000 (of which at least 30 percent22 are women) Outcome 7 (Strategic Area 3: Resilience): Revised, and merged into Outcome 5. Outcomes 7 and 8 from Strategic Area 3 (Resilience) are now Establishment of quality education subsumed under the new Outcome 5, in order to align the logic standards Outcome 5: Improved Human Capital Results of human development (HD) interventions with the ongoing through Higher Quality Standards for Education and WBG Strategy for Latin America and the Caribbean (LAC). Outcome 8 (Strategic Area 3: Resilience): Health Enhanced data to support evidence-based policy to address NCDs Indicator 1 (Outcome 7): Established quality Revised, and becomes Indicator 1 (Outcome 5). Indicator’s baseline and target were revised for clarity, adding standards for education in line with the the relevant feature of the assessments of student learning, per OECS Education Strategy Indicator 1: Established quality standards for education in these new standards, to be collected and reported for boys and line with the OECS Education Strategy, including girls. Baseline: None gender-disaggregated assessments of learning outcomes Target: Quality standards established Baseline: No regional quality standards for the OECS Target: Quality standards established in all 6 OECS countries 22 To be confirmed during the diagnostic phase of the Regional Competitiveness project. 34 Source: Regional Strategy for Education in the OECS 2012-2021 and country-specific national strategies for OECS countries Indicator 1 (Outcome 8): OECS countries Revised, and becomes Indicator 2 (Outcome 5). Indicator was revised to focus on NCD quality standards for annually submitting agreed-upon common responsiveness instead of NCD reporting, in line with new set of NCD indicators to CARPHA using a Indicator 2: Number of OECS countries with at least 25 financing support under the RPS. The target was reduced from standard form percent of primary care health facilities equipped for NCD three countries to two as support is now envisaged to happen management only in St.Lucia and St.Vincent & the Grenadines. Baseline: 0 countries Baseline: 0 Target: At least three countries Target: 2 (St. Lucia and St. Vincent & the Grenadines) (Data Source: CARPHA reporting) Source: Implementation Status Reports from IPFs in St.Lucia and St.Vincent & the Grenadines Indicator 2 (Outcome 7): Number of youth Dropped. Indicator was dropped since financial support for technical who receive the Caribbean Vocational and vocational education and training (TVET) education is Qualification now specifically being earmarked only for St.Vincent & the Grenadines and not for any other OECS country. Baseline: 1800 (currently achieved through the OECS Skills and Jobs projects in Grenada and St.Lucia), of which females 1368 and males 432 Target: 2600 (including an additional 300 each for Grenada and for St. Lucia, and 200 for other OECS), of which females 1820 and males 780 Strategic Area 3. Resilience Revised, and becomes Strategic Area 2. Wording for this Strategic Area was revised for emphasis. Revised Strategic Area: Enhancing Resilience Outcome 6: Improved targeting and Revised. Wording revised for clarity and consolidated around the key reduced fragmentation of social protection outcome of improved targeting. system Revised Outcome: Improved targeting of social protection systems 35 Indicator 1 (Outcome 6): Number of Revised. Wording for the indicator was slightly revised. Target was countries that establish objective targeting revised downwards to focus only on the countries for which mechanisms for cash transfer programs Indicator 1: Number of OECS countries that establish RPS support is ongoing or expected through the extended objective poverty-based targeting mechanisms for closing date (FY20). Baseline: 1 (Dominica); cash transfer programs Target: 4 (Antigua & Barbuda, Grenada, St Baseline: 1 (Dominica) Kitts and Nevis, St Lucia) Target: 3 (Grenada, St. Lucia, and St. Vincent and the Grenadines) Source: Ministries of Social Protection in OECS countries Indicator 2 (Outcome 6): Number of Dropped. Indicator was dropped for consolidation purposes (only one countries where ministry in charge of social indicator per thematic area/sector supported under the RPS). protection uses unique registry of beneficiaries Baseline: 0 Target: 5 (Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis, St Lucia) Outcome 9: Increased capacity to manage Revised, and becomes Outcome 8. Indicator was revised to make for a more comprehensive natural hazards definition for the resilience to climate change shocks. Revised Outcome: Improved capacity to prepare for, respond to, and mitigate natural disasters Indicator 1 (Outcome 9): Number of OECS Revised, and becomes Indicator 1 (Outcome 8). Indicator was reformulated to emphasize the importance of governments that have formulated a adopting, not only formulating, National Disaster Risk National Disaster Risk Financing and Indicator 1: Number of OECS countries that have Financing Strategies. The gender consideration is being Insurance Framework and associated Action formulated and adopted a National Disaster Risk removed from the indicator as the gender dimension is being Plan, taking account of gender Financing Strategy strengthened for other indicators in the RF. consideration, where feasible Baseline: 0 Baseline: 0 Target: 3 Target: 2 36 Source: National Disaster Risk Financing Strategy for OECS countries Indicator 2 (Outcome 9): Number of OECS Revised, and becomes Indicator 2 (Outcome 8). Indicator was reformulated to emphasize the importance of governments that assessed natural hazard adequate hydro-meteorological information systems. Target related contingent liabilities Indicator 2: Number of OECS countries with was increased to cover all 6 OECS countries. strengthened hydro-meteorological systems for Baseline: 0 disaster preparedness Target: 3 Baseline: 0 Target: 6 Source: Caribbean Disaster Emergency Management Agency (CDEMA) Indicator 3 (Outcome 9): Number of days of Dropped. Indicator was dropped due to difficulty to track progress interrupted traffic due to landslips, flooding, through end of revised closing date for RPS. other climate-related events in selected areas Baseline: 30 Target: 12 New. Outcome was added to account due to enhanced relevance of the blue economy agenda and continued RPS support. Outcome 9: Conservation and protection of marine resources New. Indicator was added in line with the addition of the new outcome. Indicator 1: Number of OECS countries that have developed either marine spatial or coastal master plans Support from RPS is being provided to a regional organization (the OECS Commission) and to 5 OECS countries (all but Baseline: 0 Antigua & Barbuda). All 5 OECS countries are expected to develop either marine spatial or coastal master plans, but the Target: 2 target is the realistic expectation through end of RPS period (FY20). Source: Oceans Governance and Fisheries Department (OECS Commission) 37 ANNEX 4: PROGRESS TOWARDS RPS OUTCOMES Outcomes Indicators Status Comments Pillar 1: Competitiveness Outcome 1: Indicator 1: Improvement in Doing Business (DB) On track The RPS Program has been supporting this Indicator through a series of ASA, notably the Improved indicators Entrepreneurship Program for Innovation in the Caribbean (EPIC), the Caribbean Investment investment Policy TA, the Analytical and Advisory Work EFO, the Caribbean Growth Forum TA series, climate Baseline: DB (2014), Enterprise Surveys (2010), and the IFC-funded Indicator-Based Reform Advisory (IBRA) Program. The latter two Product Market Regulations/ + other data sources activities are expected to continue through RPS closure. These TA tasks were also supported will be used by relevant ESW studies on Trade (Caribbean New Trade Environment) and Growth (OECS Growth Report). Target: To be determined in diagnostic phase DB indicators underwent significant methodological changes to date – see http://www.doingbusiness.org/methodology/changes-to-the-methodology. This precludes meaningful comparability over time in the most-known metrics: the DB rankings. However, since DB 2015, the only metrics that can be compared over time is the Distance to Frontier (DTF) – for an explanation, see http://www.doingbusiness.org/methodology/distance-to- frontier-metrics. As shown in the table below, there were negligible changes in DB DTF scores between DB2015 and DB2018, with half the OECS countries experiencing slight improvements. Country ATG DMA GRD KNA LCA VCT DTF DB 2015 58.88 60.35 53.25 55.11 62.81 56.06 DTF DB 2018 59.28 60.80 53.30 54.14 62.81 55.93 % Improved 0.7% 0.7% 0.1% -1.8% 0.0% -0.2% Note that DB2015 DTF represents a better baseline than DB2014, the one suggested in the RPS, since the former collected information through March 2014, three months prior to the starting date of the RPS. Enterprise Surveys were not conducted for any of the OECS countries since 2010. Indicator 2: New banking regulatory framework Achieved The RPS Program has been supporting Indicator 2 mostly through many separate financial adopted sector TA activities, including “Continued Resilience of the ECCU Financial System”, “Asset 38 Outcomes Indicators Status Comments Management Expertise for the ECCU Financial System”, “Financial Analysis and Dynamic Baseline: Outdated regulatory framework and Modeling Expertise”, “Strengthening the Financial Sector in the Eastern Caribbean”, and deficient supervision. “OECS - Diversifying the Financial System”. The ongoing “Caribbean PA - Development of Sound Financial Systems” expects to deepen reforms already achieved. A planned financial Target: Banking regulation consistent with sector support project was dropped from the program early in the PRS as the enabling international standards conditions had not been met, and risks for global financial crisis’ continuation diminished. New banking regulatory framework (Banking Act) consistent with international standards was adopted in each OECS country, except Dominica, between October 2015 and May 2016 (www.eccb-centralbank.org/p/legal-and-regulatory-framework). This harmonized framework improved the Regulator’s supervisory tools for dealing with problem banks and strengthened banks through higher capital requirements. In addition, all 6 OECS countries passed and operationalized the Asset Management Corporation Law, which has helped to improve management of delinquent bank assets and to restore balance sheets affected since the global financial crisis. Indicator 3: Improved market conditions for Not on The RPS Program has been supporting this indicator both through lending, mainly the renewables by updated energy sector regulatory track ECERA Project, complemented by the “Geothermal Resource Development in St. Lucia” framework ASA, and the regional Solar PV Demonstration and Scale-Up Project. Related TA included the TA series for geothermal development in Dominica. Baseline: 2 countries part of the Eastern Caribbean Energy Regulatory Agency (ECERA) project (GRD, The market conditions for renewables improved in the region through the creation of national LCA) energy regulators in Grenada and St.Lucia. However, the emphasis in all countries remains on their national regulatory body rather than the Regional body authority (ECERA). Target: At least 3 countries part of the Eastern Caribbean Energy Regulatory Agency (ECERA) project. Outcome 2: Indicator 1: Increase in local currency spent per Not on The RPS Program’s support to this indicator was expected to come mainly from the FY15 Increased tourism tourist arrival track Regional Competitiveness project, covering tourism and agriculture. In the end, the project benefits, with was split into two single sector regional projects: one on Tourism, one on Agriculture, and stronger linkages Baseline: To be determined at the time of the approved in late FY17, with implementation just starting. Complementary support was to agribusiness diagnostic for the Regional APL on Tourism / provided in FY15 through the “OECS Tourism Competitiveness” ASA and in FY16 through Agriculture Competitiveness the ESW “Linking Farmers and Agro-processors to the Tourism Industry in the OECS”. Target: To be determined during diagnostic phase Indicator on expenditure per tourist arrival in WBG’s database has not been updated since 2015 for any OECS country. 39 Outcomes Indicators Status Comments Indicator 2: Increased demand for food sourced Not on The RPS Program’s support to this indicator was expected to come mainly from the FY15 locally by tourism sector track Regional Competitiveness project, covering tourism and agriculture. In the end, the project was split into two single sector regional projects: one on Tourism, one on Agriculture, and Baseline: 32% (WB, 2008) to be updated at time of approved in late FY17, with implementation just starting. Complementary support was the diagnostic for the Regional Project on Tourism / provided in FY15 through the “OECS Tourism Competitiveness” ASA and in FY16 through Agricultural Competitiveness the ESW “Linking Farmers and Agro-processors to the Tourism Industry in the OECS”. Target: To be determined during diagnostic phase The recent hurricanes in Antigua & Barbuda and Dominica have extensively damaged tourism and agriculture infrastructure and results. Indicator 3: # of organized agro-producers who Not on Ditto Indicator 2 above. have adopted promoted technology who sell their track products to tourism sector Baseline: 0 Target: 2,000 (of which at least 30 percent23 are women) Pillar 2: Public Sector Modernization Outcomes Indicators Status Comments Outcome 3: Indicator 1: Introducing strategic budgeting tools Not on RPS Program’s support to public sector modernization in OECS has been provided mostly Improved budget track through Trust-funded Investment Project Financing (IPF) funded by Global Affairs Canada management and Baseline: 0 (GAC) -the “Support for Economic Management for the Caribbean Region” or SEMCAR - transparency and the United Kingdom’s Department for International Development (DfID)-funded “OECS Target: at least 2 countries with rolling forward and Jamaica Public Expenditure Management and Digital Governance Project”, as well as budget estimates and multiannual budget ceilings the series of Development Policy Financing (DPF) operations for Grenada. Unused funding from SEMCAR was restructured into an Externally-Financed Output (EFO) to reflect emerging Public Financial Management (PFM) reform priorities in the region around the overarching theme of public sector resilience, with specific focus on PFM systems and state- owned enterprise (SOE) governance, among others. Several OECS countries, notably St.Lucia and Grenada, use more strategic tools in their budget planning with incipient forms of rolling forward budget estimates and multiannual budgeting. Grenada, in particular, now has a multiyear fiscal framework which informs the 23 To be confirmed during the diagnostic phase of the Regional Competitiveness project. 40 Outcomes Indicators Status Comments establishment of rolling forward budget estimates. Introduction of a medium-term perspective in budgeting is, however, largely an area that other multilaterals have spearheaded across the region - e.g. the International Monetary Fund-led Caribbean Regional Technical Assistance Centers (CARTAC). TA support through the SEMCAR EFO and the DFID TF is expected to continue to build on the progress in this area through strengthening additional aspects of strategic budgeting, including public investment and public procurement management and incorporation of climate resilience considerations into PFM systems. Indicator 2: Develop/ implement open budget index On track RPS Program’s support has been provided mainly through two ASAs: the “Caribbean Open Data” and the “OECS and Jamaica Public Expenditure Management and Digital Governance” Baseline: 0 Projects. Target: at least 2 countries St.Lucia developed open budget data visualizations and its Ministry of Finance staff was trained on how to update them each year. The authorities have not yet launched their Open Data portal, so the visualizations have not yet been published. With support from Phase 2 of “Supporting Open Data in the Caribbean”, embedded within the DfID -funded ASA mentioned above, both the developing and the implementation of open data portals are expected in 3 OECS countries (Grenada, St.Lucia, and St.Vincent & the Grenadines). Outcome 4: Indicator 1: New modules to measure On track RPS Program’s support has been provided through a series of ASA, like the “Caribbean Strengthened multidimensional and monetary poverty (enhanced Poverty NLTA”, the “OECS Statistics and Poverty NLTA”, and the “Caribbean: Poverty and statistical capacity Labor Force Surveys) piloted and implemented in at Equity PA”. The recently approved Human Development Service Delivery Project for least two member states St.Vincent & the Grenadines is also providing support to the whole survey design, data collection and data analysis process in that country. Baseline: 0 All OECS countries, except Dominica, include the multidimensional poverty index module in their Labor Force Surveys. The revised consumption module, needed to estimate monetary Target: St. Lucia pilots new modules by 2015; at poverty has been added to these countries’ Surveys of Living Conditions / Household Budget least 2 member states implement new modules by Surveys. St.Lucia piloted that type of survey in 2016. Currently, St.Vincent & the Grenadines 2019 has already started data collection; St.Kitts & Nevis is preparing for field work to pilot the same version of the survey; and Grenada is in the process of sampling and questionnaire design. Outcome 5: Indicator 1: Implementation of PPP policy and On track RPS Program’s support to this indicator has been provided mostly in the form of ASA through Strengthened institutional frameworks the Caribbean: Regional PPP Support and, in the case of St.Lucia, with a country-specific capacity to Reimbursable Advisory Service (RAS) – “St Lucia PPP Policy”. This support was manage PPP Baseline: 0 (2013) complemented by targeted support from two operations: the FY16/FY17 DPC series for 41 Outcomes Indicators Status Comments Target: At least 2 countries have introduced national Grenada and the Caribbean Regional Communications Infrastructure Program (CARCIP) PPP policy and institutional framework Project. The latter provided specific support for PPPs in the area of ICT. IFC aims to support at least 3 successful PPP PPP policy and institutional frameworks were recently introduced in Grenada, and across the transactions over the RPS period. OECS for ICT PPPs. St.Lucia is expected to be the next country to implement a PPP policy and institutional framework. In addition, a number of PPPs were developed with support from IFC, but failed to conclude to date. Prospects for a PPP operation in Grenada appear feasible by the revised closing date of the RPS. Pillar 3. Resilience Outcome 6: Indicator 1: # of countries that introduce objective Not on RPS Program’s support to this indicator has been provided through both financing (e.g. Improved targeting mechanisms for cash transfer programs track Grenada’s Safety Net Advancement Project, Grenada’s FY16/17 DPC series, and St.Vincent targeting and and the Grenadines’s HD Service Delivery Project) and ASAs (e.g. “Strengthening Social reduced Baseline: 1 (Dominica) Protection System for Disaster Preparedness and Response in Saint Vincent and the fragmentation of Grenadines”, “Transforming Social Protection in St.Lucia”, and “Building Blocks for social protection Target: 4 (Antigua & Barbuda, Grenada, St Kitts and Disaster-Responsive Social Protection Systems in Dominica and Grenada”). system Nevis, St Lucia) Grenada has already introduced objective targeting mechanisms for cash transfer programs. The targeting tool has also been developed in St.Lucia. St.Vincent and the Grenadines (not included as a target country, initially) is expected to achieve a similar outcome by the revised closing date. Similar programs have not yet been assessed in the two IBRD countries (Antigua & Barbuda and St.Kitts & Nevis). Indicator 2: # of countries where ministry in charge Not on RPS Program’s support has been provided to date through both financing and ASAs, as of social protection uses unique registry of track explained for indicator 1 above. beneficiaries The only OECS country to make progress on this indicator so far is Grenada, where the Baseline: 0 unique registry of beneficiaries for the flagship social program (known as SEED) is in place. A similar undertaking is planned to be developed under the financing project in St.Vincent Target: 5 (Antigua and Barbuda, Dominica, Grenada, and the Grenadines. In St.Lucia, the initial outline of the registry has been prepared, but the St Kitts and Nevis, St Lucia) development and the population of the registry are on hold awaiting for earmarked financial resources. Outcome 7: Indicator 1: Established quality standards for Achieved RPS Program’s support for this indicator has been provided through the “OECS Social Establishment of education in line with the OECS Education Strategy Resilience and Human Development TA” ASA and also through the preparation of the Grant- quality education funded operation “Support to the Implementation of the Regional Education Strategy ”. standards Baseline: None 42 Outcomes Indicators Status Comments Target: Quality standards established Quality standards for language, arts, math, social studies and science and technology were established in 2016, in line with the OECS Education Strategy. Indicator 2: # of youth who receive the Caribbean Not on RPS Program’s support was expected to be provided from the originally planned Regional Vocational Qualification (CVQ) track Social Resilience and Human Development Project, which would Grenada, St.Lucia, and St.Vincent & the Grenadines. Further preparatory support came from the “OECS Social Baseline: 1800 (achieved through OECS Skills and Resilience and Human Development TA” and also through the preparation of the Grant- Jobs projects in Grenada and St.Lucia), of which funded operation “Support to the Implementation of the Regional Education Strategy ”. females 1368 and males 432 Eventually, the regional project would not materialize and only St.Vincent & the Grenadines would get sector-specific financing support through the Human Development Service Target: 2600 (including an additional 300 each for Delivery Project, approved in May 2017. This project is supporting TVET leading to the CVQ Grenada and St.Lucia, and 200 for other OECS), of for approximately 1,200 poor and unemployed at-risk youth. No further RPS Program’s which females 1820 and males 780 support is expected for CVQ in Grenada and St.Lucia, thus making the original target not feasible. Outcome 8: Indicator 1: OECS countries annually submitting Not on RPS Program’s support was expected to be provided through the aforementioned Regional Enhanced data to agreed upon common set of NCD indicators to track Social Resilience and Human Development Project. Due to the complexity of the OECS HD support evidence- CARPHA using a standard form project and synergies in the health sector across countries, a decision was made to focus on based policy to public health emergencies through two country-specific projects in Saint Lucia and St. address NCDs Baseline: 0 countries Vincent and the Grenadines, both of which are expected to incorporate some aspects of NCD management. Target: At least three countries Currently no country is submitting NCD indicators to CARPHA. Outcome 9: Indicator 1: # of OECS governments that have On track RPS Program’s support for this indicator has been provided from two core ASA: the “6R Increased formulated a National Disaster Risk Financing & Programmatic Engagement in DRM & CCA”, which closed in FY15, and the ongoing capacity to Insurance Framework & associated Action Plan, “Caribbean Resilience Initiative PA”, one of whose subtasks provides targeted support for manage natural taking account of gender consideration, where comprehensive disaster risk financing strategies. hazards feasible The Governments of Grenada and St.Lucia have already completed a draft framework and Baseline: 0 recommendations for a national disaster risk financing strategy. Both final reports are expected to be implemented by both countries by RPS closure. Target: 2 Indicator 2: Number of OECS governments that have On track As referred above, RPS Program’s support has taken the form of a succession of regional and assessed natural hazard-related contingent liabilities country-specific financing, as well as TA. Support through these instruments led to the development of an innovative analytical approach to assess and quantify the direct contingent Baseline: 0 liability related to natural hazards, especially for Grenada and St.Lucia. 43 Outcomes Indicators Status Comments Target: 3 Both aforementioned countries have received the results of the assessment. A similar exercise for St.Vincent & the Grenadines is expected to be completed in FY19 as part of a separate TA. Assuming the countries concerned accept the WBG’s assessment and quantification, this indicator will have been met. Indicator 3: Number of days of interrupted traffic due Not on As mentioned in the case of Indicators 1 and 2, RPS Program’s support to the disaster risk to landslips, flooding, other climate-related events in track management agenda was ample, and involved both a significant volume of financing through selected areas operations and continuous support through ASAs. Baseline: 30 This indicator, in that sense, was therefore supported through the same “package”. However, in practice, WBG support has not succeeded in terms of actively measuring this indicator to Target: 12 track progress. The lack of comprehensive systems of information for capturing these data then precludes from assessing whether the target has been met, despite overall improvements in resilience in the OECS countries. 44 ANNEX 5: FINDINGS OF THE COUNTRY OPINION SURVEY From April to May 2017, 423 stakeholders of the World Bank Group in four OECS countries were invited to provide their opinions on the Bank’s assistance to the country by participating in a country survey. The Survey was fielded prior to September 2017’s severe hurricanes. A total of 231 stakeholders participated in the survey, bringing the response rate to 55% compared to 79% response rate for the FY14 Country Survey24. Respondents included government and public institutions (54%); judiciary and parliament (8%); PMUs and other WBG-supported activities (2%); private sector (19%); community based organizations; academia/research institutes/think tanks; youth groups; the media, and other organizations25. Overall Development Priorities. Stakeholders consider growth and jobs as top development priorities. The highest rank priority for achieving shared prosperity is education and training to better ensure job opportunities, with some country differences. Crime and violence was listed among the top three development priorities in St. Kitts and Nevis by more than 80% of respondents while it ranked high in Saint Vincent and the Grenadines and Saint Lucia. Agriculture is considered one of the top three priorities by nearly half the respondents in Dominica and Grenada, and less in other OECS. Overall respondents are more positive about their country’s direction in FY17 than in FY14 (55% vs 42%). Overall Perception of the WBG. Respondents’ familiarity with WBG (6.7 out of 10) was close to that of CDB (6.9). Effectiveness rating of the WBG was 6.2 out of 10, compared to 6.9 for CDB. Respondents from Grenada gave significantly higher ratings of effectiveness. WBG is strongly regarded as a long-term partner (some of the highest ratings in the survey). The WBG’s greatest value is considered its financial resources (55%), down from 65% in FY14, with policy advice and capacity development each at about 30%, down from 36% in FY14. Additional feedback for the WBG relate to how well the WB and IFC work together, with more than half responding the two institutions work well together. Trust funds, grants, followed by IFC’s advisory services and DPFs are considered most effective instruments in supporting Government’s efforts to reduce poverty. Among the six OECS, Saint Lucia respondents were the most familiar with the WBG, and Saint Vincent and the Grenadines the least. All countries gave positive responses to questions about the WBG’s relevance and effectiveness. More than a third of respondents cited the following two most important reasons for slow or failed WBG supported reform efforts: (i) Reforms are not well thought out considering country challenges; and (ii) poor coordination within Government. Other responses include, lack of capacity in Government (18%), the Government works inefficiently (17%). Suggestions for the WBG going forward. The Survey suggests ways the WBG can add greater value in future: Collaborate more with the private sector and civil society organization to complement Government capacity; reduce complexity of WBG financing; increase support for capacity development; and support growth, jobs, agriculture, education, governance. 24 Because of insufficient responses in some categories as well as methodological differences, data were weighted to reach similar stakeholder compositions across the survey years, allowing more statistically reliable comparisons. 25 See FY17 OECS Country Opinion Survey Report, by Public Opinion Research Group, The World Bank Group 45 ANNEX 6: WORLD BANK GROUP PORTFOLIO IDA/IBRD/TRUST-FUNDED ACTIVE OPERATIONAL PORTFOLIO Project Total value of the Project, by Closing Disbursed Disbursed Project Countries Approval Last Last financing source (USD million) # Project Name 1 Type Age (USD (percent ID involved Date Date 2 DO IP Trust Total (years)3 IDA IBRD million) of total) Funds Commited Eastern Caribbean Energy 1 P101414 Regional GRD; LCA 16-Jun-11 30-Nov-18 6.8 MS MU 5.6 0.2 5.8 2.6 44.9 Regulatory Authority (ECERA) Regional Disaster Vulnerability Reduction Project APL I - 2 P117871 Regional GRD; VCT 23-Jun-11 31-Dec-18 6.8 MU MU 56.5 46.0 102.5 39.8 38.8 Grenada and St.Vincent & the Grenadines Grenada Safety Net Country- 3 P123128 GRD 5-Jul-11 30-Sep-18 6.8 MS MS 5.0 5.0 3.7 73.2 Advancement Project specific Caribbean Regional GRD; LCA; 4 P114963 Communications Infrastructure Regional 22-May-12 1-Aug-18 5.9 MS MS 25.0 25.0 13.7 54.6 VCT Program (CARCIP) Third Phase Disaster Country- 5 P129992 Vulnerability Reduction DMA 1-May-14 1-Jul-20 4.0 S MS 17.0 21.0 38.0 17.1 45.1 specific Project APL St. Lucia Disaster Vulnerability Country- 6 P127226 LCA 4-Jun-14 31-Dec-19 3.9 MU MU 42.6 32.5 75.2 19.6 26.1 Reduction Project specific Caribbean Climate Innovation 7 P131734 Regional All 6 27-Mar-15 30-Nov-18 3.1 S MS 1.5 1.5 1.4 92.7 Center4 Caribbean Mobile Innovation 8 P132570 Regional All 6 10-Jul-14 30-Nov-18 3.8 MS MS 1.5 1.5 1.4 94.7 Project4 Geothermal Resource Country- 9 P149959 LCA 3-Dec-14 31-Dec-18 3.4 MS MS 2.0 2.0 1.3 64.0 Development in St. Lucia specific Central America & Caribbean 10 P149670 Catastrophe Risk Insurance Regional All 6 30-Jun-15 30-Jun-19 2.8 S S 6.9 6.9 0.0 0.0 Project 5 Solar PV Demonstration and GRD; LCA; 11 P153404 Regional 11-Mar-16 31-Dec-18 2.1 MU MU 1.8 1.8 0.6 31.1 Scale-up Project VCT Caribbean Investment 12 P157484 Regional All 6 18-Apr-16 31-Dec-18 2.0 MS MS 1.6 1.6 1.5 91.9 Facilitation Project 4 Support to the Implementation Non-country OECS 13 P158836 of the Regional Education 18-Jul-16 30-Sep-19 1.7 MU MU 2.0 2.0 0.4 20.5 entities Commission Strategy OECS Regional Tourism GRD; LCA; 14 P152117 Regional 6-Apr-17 1-Sep-23 1.0 S S 20.0 6.0 0.4 26.4 0.8 2.9 Competitiveness Project VCT Human Development Service Country- 15 P154253 VCT 25-May-17 31-Jul-22 0.9 S S 10.7 10.7 0.3 2.8 Delivery Project specific OECS Agricultural 16 P158958 Regional GRD; VCT 25-May-17 31-May-23 0.9 S MS 6.5 1.8 8.3 0.6 7.1 Competitiveness Project Caribbean Energy Statistics 17 P155034 Regional LCA 21-Sep-17 16-Sep-19 0.6 S S 0.5 0.5 0.1 10.0 Capacity Enhancement Project Caribbean Regional Non-country OECS 18 P159653 25-Sep-17 31-Dec-21 0.6 S S 6.3 6.3 0.6 8.9 Oceanscape Project (CROP) entities Commission TOTAL OECS ACTIVE PORTFOLIO 4.5 188.9 7.8 124.2 321.0 105.2 32.8 59% 2% 39% 1 Projects are sorted in chronological order of Bank approval. 2 Closing date refers to the current closing date. This may differ from the original closing date for projects whose restructuring involved an extension of the closing date. 3 Average age of the portfolio is calculated as the weighted average of the portfolio, with weights given by the size of the financing of the project to the total portfolio. Simple average age of the portfolio is 3.2 years. 4 This Project is part of the Entrepreneurship Program for Innovation in the Caribbean (EPIC) Program (P124771). 5 CCRIF covers both Central America and the Caribbean. The total value of the Project is $43.3 million. Value reported is the pro-rated estimation benefitting only the 6 OECS countries. Disbursement reported corresponds only to the Caribbean component, adequately pro-rated. 46 SUMMARY OF ONGOING ADVISORY SERVICES AND ANALYTICS Expected OECS countries / Delivery Product ASA regional Task ID Task Name Theme Name (Fiscal Line Coverage organizations Year) supported DRM / Climate 2018 P152884 Caribbean Resilience Initiative PA PA Regional All 6 Resilience Caribbean Regional Oceanscape Program 2018 P153427 PA Regional All 6 Blue Economy NLTA Technical Assistance for Geothermal Country- 2018 P156500 TA DMA Renewable Energy Development in Dominica specific Caribbean PA: Development of Sound 2018 P158320 PA Regional ECCB Financial Systems Financial Systems Building Blocks for Disaster-Responsive Social Protection 2018 P159285 Social Protection Systems in Dominica TA Regional DMA; GR Systems and Grenada Statistical Capacity 2018 P160347 Caribbean: Poverty and Equity PA PA Regional All 6 Building Strengthening Social Protection System for Country- Social Protection 2018 P161103 Disaster Preparedness and Response in TA VCT specific Systems Saint Vincent and the Grenadines AML/CFT National Risk Assessment 2018 P161339 TA Regional DMA AML/CFT EFO III St. Lucia Joint IMF-WB pilot CCPA and Country- Climate Change Macro- 2018 P163897 Climate Change Macro-Model for St TA LCA specific Models Lucia 2018 P600212* OECS Business Taxation Reform Project TA Regional All 6 Doing Business / Taxes Private sector-led 2019 P159034 Caribbean Growth Forum Phase II PA PA Regional All 6 growth 2019 P159061 Caribbean Trade Support PA PA Regional CARICOM Trade Illicit Financial Flows (IFFs) - FMI-Led 2019 P162036 TA Regional GRD AML/CFT Activities Knowledge Exchange on Adaptive Social Social Protection 2019 P165263 Protection Systems as a Disaster Risk KE Regional All 6 Systems Mitigation Mechanism Doing Business / 2019 P599907* Indicator-Based Reform Advisory in LAC TA Regional All 6 Several Caribbean Secured Transactions and Doing Business / 2020 P600729* TA Regional All 6 Collateral Registries Financial Markets OECS and Jamaica Public Expenditure DMA; GR; LCA; PFM; Open Data; 2021 P161942 Management and Digital Governance TA Regional VCT Procurement Reform Project Inclusive Economic Management in the 2022 P160774 TA Regional All 6 Public Sector Reforms Caribbean (SEMCAR - Phase 2) Financial Market Integrity - Multi-Donor 2022 P164515 TA Regional KNA; LCA AML/CFT Trust Fund * IFC-funded ASA 47 ADVISORY SERVICES AND ANALYTICS DELIVERED TO DATE OECS countries / Fiscal ASA regional Task ID Task Name Product Line Theme Name Year Coverage organizations supported 6R Programmatic Engagement in DRM DRM / Climate P129813 TA Regional All 6 & Climate Change Adaptation (CCA) Resilience P130208 Caribbean Growth Forum TA Regional All 6 Private sector-led growth Country- P143708 Geothermal Development in Dominica TA DMA Renewable Energy specific Caribbean Analytical and Advisory P144730 PA Regional All, except ATG Private sector-led growth Work Externally-Financed Output (EFO) P146683 Caribbean New Trade Enviroment ESW Regional CARICOM Trade LC (Latin America and the Caribbean) Country- 2015 P149915 RAS (Reimbursable Advisory Services) TA LCA PPP specific St Lucia PPP Policy Caribbean Report on Observance of ICAC (Institute of P150087 Standards and Codes - Accounting and ESW Regional Chartered Accountants PFM Auditing in the Caribbean) P150107 Investment Policy - Caribbean Region TA Regional All 6 Private sector-led growth All 6 + OECS Statistical Capacity P151093 Caribbean Poverty NLTA TA Regional Commission Building OECS Statistics and Poverty Non- All 6 + OECS Statistical Capacity P151133 TA Regional Lending Technical Assistance (NLTA) Commission Building P152118 OECS Tourism Competitiveness TA Regional All 6 Tourism Open Data / E- P148056 Caribbean Open Data TA Regional LCA Government Transforming Social Protection in Country- P149120 TA LCA Social Protection Systems St.Lucia specific Financial Analysis and Dynamic P150825 TA Regional ECCB Financial Systems Modelling Expertise Strengthening the Financial Sector in the P150897 TA Regional ECCB Financial Systems Eastern Caribbean Linking Farmers and Agro-processors to Agri-business linkages 2016 P154171 ESW Regional All 6 the Tourism Industry in the OECS with tourism P154718 OECS Growth Report ESW Regional All 6 Growth Country- P155980 DeMPA Grenada ESW GRD Debt Management specific Country- P157123 DeMPA Antigua and Barbuda ESW ATG Debt Management specific LC3 Caribbean Implementation External P157361 Regional All 6 Financial Management Workshop Training 48 OECS countries / Fiscal ASA regional Task ID Task Name Product Line Theme Name Year Coverage organizations supported Continued Resilience of the ECCU P145745 TA Regional ECCB Financial Systems Financial System Asset Management Expertise for the P146727 TA Regional ECCB Financial Systems ECCU Financial System OGE (US Office of Government Ethics): P153695 AML/CFT National Risk Assessment PA Regional ATG AML/CFT 2017 EFO OECS Social Resilience and Human Education and Social P157072 TA Regional LCA; VCT Development TA Protection Country- P162230 St. Vincent and the Grenadines DEMPA ESW VCT Debt Management specific Country- P162330 ECCB WB DEMPA St. Lucia ESW LCA Debt Management specific Programmatic TA for the Support for P128874 Economic Management in the Caribbean TA Regional All 6 Public Sector/Governance Region (SEMCAR) Phase 1 Institutional Development Fund Grant for Financial Management / P149007 TA Regional All 6 Strengthening Country Systems Governance P151976 Caribbean: Regional PPP Support TA Regional All 6 PPP 2018 PA for Violence Prevention in the P156111 PA Regional All 6 Violence Prevention Caribbean OECS #B052 Diversifying the Financial P156396 PA Regional ECCB Financial Systems System Risks and Opportunities for the P156931 ESW Regional All 6 Tourism Caribbean of Cuba's Reintegration St. Kitts Debt Management Performance Country- P163488 ESW KNA Debt Management Assessment (DeMPA) specific 49 SUMMARY OF ONGOING TRUST FUNDS Amount Project Proposal Grant Task Name (USD ID Approval Closing thousands) P117871 Regional Disaster Vulnerability Reduction Project * 6/23/2011 12/31/2018 46,020 P129992 Disaster Vulnerability Reduction Project * 5/1/2014 7/1/2020 21,000 P127226 St. Lucia Disaster Vulnerability Reduction Project * 6/4/2014 12/31/2019 32,530 P149959 Geothermal Resource Development in St. Lucia * 12/3/2014 12/31/2018 2,000 P153404 Solar PV Demonstration and Scale-up Project * 3/11/2016 12/31/2018 1,800 Building Blocks for Disaster-Responsive Social Protection P159285 4/12/2016 5/1/2018 298 Systems in Dominica and Grenada Support to the Implementation of the Regional Education P158836 7/18/2016 9/30/2019 2,000 Strategy * Inclusive Economic Management in the Caribbean (SEMCAR - P160774 8/12/2016 12/31/2021 1,183 Phase 2) Strengthening Social Protection System for Disaster P161103 11/7/2016 6/25/2018 154 Preparedness and Response in Saint Vincent and the Grenadines OECS and Jamaica Public Expenditure Management and Digital P161942 11/10/2016 10/15/2020 4,900 Governance Project P156500 Technical Assistance for Geothermal Development in Dominica 1/23/2017 6/29/2018 359 Knowledge Exchange on Adaptive Social Protection Systems as P165263 9/11/2017 6/10/2019 200 a Disaster Risk Mitigation Mechanism P159653 Caribbean Regional Oceanscape Project (CROP) * 9/25/2017 12/31/2021 6,300 Total 118,744 * Recipient-Executed Trust Fund (TFs supporting specific investment project financing operations) Note: Trust Funds are sorted in chronological order of approval by the Bank. 50 SUMMARY OF IFC PORTFOLIO Statement of IFC's Committed and Outstanding Portfolio, in USD million Quasi-Loan + Risk Quasi-Loan + Risk Commitment Institution Loan Loan Equity Guarantee ALL Loan Equity Guarantee ALL Quasi-Equity Management Quasi-Equity Management Outstandin Fiscal Year Short Name Committed Repayment Committed Committed Committed Committed Committed Outstanding Outstanding Outstanding Outstanding Outstanding g 2002 Bel Air 0.9 0.1 0 1.0 0 0 1.9 0.9 0 1.0 0 0 1.9 2013 Portland Private 0 0 19.3 0 0 0 19.3 0 13.7 0 0 0 13.7 2011 Sagicor 0 0 10.5 0 0 0 10.5 0 10.5 0 0 0 10.5 2018/ 2017 DARP SPV Adamantine 12.0 0 6.7 0 0 0 18.6 2.4 2.0 0 0 0 4.4 Total Portfolio 12.9 0.1 36.4 1.0 0 0 50.3 3.3 26.2 1.0 0 0 30.5 Note: Portfolio includes the following OECS countries: Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia and St. Vincent and the Grenadines. It also includes Caribbean-wide products where OECS countries are part. 51