The World Bank Implementation Status & Results Report Belarus MSME Access to Finance Project (P152276) Belarus MSME Access to Finance Project (P152276) EUROPE AND CENTRAL ASIA | Belarus | Finance, Competitiveness and Innovation Global Practice | IBRD/IDA | Investment Project Financing | FY 2018 | Seq No: 8 | ARCHIVED on 25-Feb-2021 | ISR45453 | Implementing Agencies: Development Bank of the Republic of Belarus, MoF's IT Center, Development Bank of the Republic of Belarus Key Dates Key Project Dates Bank Approval Date: 28-Sep-2017 Effectiveness Date: 19-Apr-2018 Planned Mid Term Review Date: 31-Aug-2020 Actual Mid-Term Review Date: 24-Jul-2020 Original Closing Date: 31-Dec-2022 Revised Closing Date: 31-Dec-2022 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The Project Development Objective (PDO) is to improve access to finance for private MSMEs and enhance governance and the institutional capacity of the Development Bank of the Republic of Belarus. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Component I: Line of Credit to MSMEs:(Cost $56.20 M) Component II: Institutional Strengthening of DBRB:(Cost $3.25 M) Component III: Project Management and Implementation:(Cost $0.55 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory Overall Risk Rating Moderate Moderate Implementation Status and Key Decisions The Project continues to be rated satisfactory, including specific project ratings such as financial management and procurement. The purpose of this ISR is to report on the progress of the Project since the mid-term review in July 2020. The Project disbursement currently stands at 99.9 percent (with USD 0.06 million undisbursed), due to rapid acceleration under the Credit Line following the two partial currency conversions of parts of the loan from USD to EUR in 2020. As of January 1, 2021, the Project provided financing through 347 sub-projects to 286 unique private micro, small and medium-sized enterprise (MSME) beneficiaries, which implies 110 new sub- projects and 81 new beneficiaries since the beginning of July 2020. 95.1 percent of entities that obtained credit under the project were private micro and small enterprises and individual entrepreneurs. Very importantly, the Project has enabled Participating Financial Institutions to extend longer- term loans to MSMEs than what is available in the domestic market, with the average maturity of the sub-loans exceeding 6 years. 2/25/2021 Page 1 of 6 The World Bank Implementation Status & Results Report Belarus MSME Access to Finance Project (P152276) Following the approved Project restructuring in April 2020, the institutional strengthening component will focus on new product development in line with DBRB's expanded mandate in the areas of venture financing and export finance, knowledge events, and capacity building of micro, small, and medium-sized enterprises and Participating Financial Institutions. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance Moderate Moderate Moderate Macroeconomic Substantial Substantial Substantial Sector Strategies and Policies Moderate Moderate Moderate Technical Design of Project or Program Moderate Low Low Institutional Capacity for Implementation and Substantial Moderate Moderate Sustainability Fiduciary Substantial Moderate Moderate Environment and Social Moderate Moderate Moderate Stakeholders Moderate Moderate Moderate Other -- -- -- Overall Substantial Moderate Moderate Results PDO Indicators by Objectives / Outcomes Improve access to finance for MSMEs IN00952362 ►Growth of DBRB MSME loan portfolio provided through participating financial institutions (PFIs) (percent) (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 410.00 469.20 170.00 Date 30-Sep-2017 01-Jul-2020 01-Jan-2021 31-Dec-2022 The indicator measures the outreach of the WB funding on MSME bank financing beyond the funds through the project, in line with MSME Finance Core Indicators. The WB seeks to support the development of a sound financial sector and well-managed financial intermediaries (PFIs), which lend to SMEs on a commercial basis. Comments: This indicator is tracked on an annual basis, using end of year financials. The indicator measures the growth rate of DBRB loans to private MSMEs through PFIs. US$33 million outstanding portfolio to commercial banks in support of private MSMEs as of January 1, 2017 corresponds to the baseline of 0%. The growth rate is calculated based on unconsolidated financial statements of the DBRB. It includes all of 2/25/2021 Page 2 of 6 The World Bank Implementation Status & Results Report Belarus MSME Access to Finance Project (P152276) DBRB's financing activities to commercial banks in support of private MSMEs both via the Bank-financed portion and DBRB's own MSME programs. It is calculated as follows: [Outstanding Portfolio (year n) / Outstanding Portfolio (baseline)] - 1 IN00952363 ►Number of MSME beneficiaries that obtained credit under the project (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 205.00 286.00 150.00 Date 30-Sep-2017 01-Jul-2020 01-Jan-2021 31-Dec-2022 Enhance the governance and institutional capacity of DBRB IN00952361 ►Governance and business model of DBRB strengthened (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Yes Yes Value No Yes Date 30-Sep-2017 01-Jul-2020 01-Jan-2021 31-Dec-2022 The indicator ensures that DBRB meets the following conditions: (i) operates on a financially sustainable basis, (ii) is in compliance with applicable NBRB regulations, (iii) operates increasingly on a wholesale basis (with new loans and guarantees extended via other Belarusian banks), (iv) has a majority of independent supervisory board members. (i) As of January 2021, DBRB had a positive return on assets and regulatory capital (according to the national standards). (ii) DBRB was also in compliance with the applicable requirements of the NBRB including capital adequacy, liquidity, and asset quality. (iii) DBRB granted 3,928.8 million BYN new loans in 2020, 6.8% of which through PFIs and leasing companies (and 93.2% directly), compared to 2.4% percent through PFIs (and 97.6% directly) in 2016. (iv) As of March 24, 2017, the DBRB Supervisory Board has no NBRB representative and consists of 9 members, 6 of whom are independent (more than Comments: half of the Supervisory Board), which corresponds to the best international practice of corporate governance. In July 2019, DBRB purchased the shares that were under the operational management of the NBRB. In December 2019, the Head of State signed the amended decree on the DBRB, which was discussed extensively with the WB, and incorporates several recommendations made by the WB. Changes to the mandate of the DBRB will strengthen its position as a national development bank and continue the successful implementation of the tasks set for the Bank to activate long-term financing of large investment projects, finance exports, and support small and medium-sized enterprises in order to promote sustainable economic growth of the Republic of Belarus. Intermediate Results Indicators by Components Credit Line IN00952364 ►Volume of loans disbursed under the project (US$, millions) (Amount(USD), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 51.90 59.63 56.20 2/25/2021 Page 3 of 6 The World Bank Implementation Status & Results Report Belarus MSME Access to Finance Project (P152276) Date 30-Sep-2017 28-Aug-2020 19-Feb-2021 31-Dec-2022 IN00952366 ►Number of active PFIs under the project (cumulative) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 9.00 9.00 3.00 Date 30-Sep-2017 01-Jul-2020 01-Feb-2021 31-Dec-2022 There are 9 PFIs, all of which are active (have extended credit). Comments: IN00952368 ►Portfolio Quality: Portfolio at risk (%) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value n/a 2.17 2.06 n/a Date 30-Sep-2017 01-Jul-2020 01-Jan-2021 31-Dec-2022 This is a MSME Core Intermediate Result Indicator. It offers no baseline or targets, as PFIs were not preselected at the time the project was approved and the indicator collection is for analytical purposes and project implementation adjustments. The Portfolio-At-Risk (share of non-performing assets) as of January 1, 2021 was 2.06% for DBRB, 1.9% Comments: for Belagroprombank, 5.08% for Belinvestbank, 1.6% for Alfa-Bank, 2.64% for Belaruski Narodny Bank, 3.3% for MTBank, 1.97% for Priorbank, 3.2% for Belgazprombank, 0.63% for Bank Dabrabyt and 6.61% for Belarusbank. IN00952370 ►Gender: share of businesses beneficiaries that obtained credit under the project with at least 15 percent female workforce participation (percent) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 55.60 54.20 n/a Date 30-Sep-2017 01-Jul-2020 01-Jan-2021 31-Dec-2022 The gender data has no target as it is collected for analytical purposes and towards the design of future projects. Comments: IN00952371 ►Citizen Engagement: MSMEs that report that project sub-finance reflected their needs (Percentage) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 96.00 96.00 >90 Date 30-Sep-2017 01-Jul-2020 01-Jul-2020 31-Dec-2022 The PIU completed the survey in June 2020. Comments: Institutional Strengthening 2/25/2021 Page 4 of 6 The World Bank Implementation Status & Results Report Belarus MSME Access to Finance Project (P152276) IN00952365 ►Financial Sustainability: Return on Assets (%) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value n/a 1.60 1.40 n/a Date 30-Sep-2017 01-Jul-2020 01-Jan-2021 31-Dec-2022 This is a MSME Core Intermediate Result Indicator. It offers no baseline or targets, as PFIs were not preselected at the time the project was approved and the indicator collection is for analytical purposes and Comments: project implementation adjustments. IN00952367 ►Financial Sustainability: Return on Equity (%) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value n/a 8.80 8.40 n/a Date 30-Sep-2017 01-Jul-2020 01-Jan-2021 31-Dec-2022 This is a MSME Core Intermediate Result Indicator. It offers no baseline or targets, as PFIs were not preselected at the time the project was approved and the indicator collection is for analytical purposes and Comments: project implementation adjustments. IN00952369 ►Compliance with prudential regulation (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value Yes Yes Yes Yes Date 30-Sep-2017 01-Jul-2020 01-Jan-2021 31-Dec-2022 DBRB and the PFIs are in full compliance with the prudential requirements of the National Bank of the Republic of Belarus (NBRB). Comments: Performance-Based Conditions Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P152276 IBRD-86960 Effective USD 60.00 60.00 0.00 63.65 1.09 98% Key Dates (by loan) 2/25/2021 Page 5 of 6 The World Bank Implementation Status & Results Report Belarus MSME Access to Finance Project (P152276) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P152276 IBRD-86960 Effective 28-Sep-2017 12-Oct-2017 19-Apr-2018 31-Dec-2022 31-Dec-2022 Cumulative Disbursements PBC Disbursement Achievement Disbursed amount in Disbursement % PBC ID PBC Type Description Coc PBC Amount Status Coc for PBC Restructuring History Level 2 Approved on 15-Apr-2020 Related Project(s) P174664-Belarus MSME A2F COVID-19 AF ,P174665-Belarus MSME Access to Finance COVID-19 Additional Finance 2/25/2021 Page 6 of 6