This Executive Directors' strategic engagements work program covers FY18 Q1, Q2, Q3, and updated reports and other documents to be circulated for information for FY18 Q1.
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South Asia plays a key role in the global development arena, with the world’s largest working-age population, a quarter of the world’s middle-class consumers, the world’s greatest number of poor and undernourished people, and several fragile states of global geopolitical importance.
... See More + This study aims to identify countries that have demonstrated notable success in applying new e-money technologies and innovative thinking in providing first entry points into the financial system for poor and vulnerable population segments. Case studies are used to emphasize detailed contextual analysis of certain critical conditions and their relationships to the success or failure of these interventions. Although new technologies and innovative methodologies in the finance industry are numerous, the study narrowly focuses on e-money initiatives such as mobile money, interoperable and multifunctional automated teller machines (ATMs), and prepaid debit cards for social grant programs as the first entry points to financial inclusion. The focus is on analyzing the provision of cost-effective, reliable, and safe access to basic cash-in/cash-out, utility, and bill payment services to financially unserved or underserved people through the selected e-money interventions. This study also aims to identify new approaches to improving financial inclusion in South Asia. It documents innovative uses of technology in the form of digital financial services operating within a balanced regulatory environment that can be key to improving financial inclusion.
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Regardless of the field, forecasts are widely used and yet assessments of the embedded uncertainty—the magnitude of the downside and upside risks of the prediction itself—are often missing.
... See More + Particularly in policy-making and investment, accounting for these risks around baseline predictions is of outstanding importance for making better and more informed decisions. This paper introduces a procedure to assess risks associated with a random phenomenon. The methodology assigns probability distributions to baseline-projections of an economic or social random variable—for example gross domestic product growth, inflation, population growth, poverty headcount, and so forth—combining ex-post and ex-ante market information. The generated asymmetric density forecasts use information derived from surveys on expectations and implied statistics of predictive models. The methodology also decomposes the variance and skewness of the predictive distribution accounting for the shares of selected risk factors. The procedure relies on a Bayesian information-theoretical approach, which allows the inclusion of judgment and forecaster expertise. For reliability purposes and transparency, the paper also evaluates the constructed density forecasts assigning a score. The continuous ranked probability score is used to assess the prediction accuracy of elicited density forecasts. The selected score incentivizes the forecaster to provide its true and best predictive distribution. An empirical application to forecast world gross domestic product growth is used to test the Bayesian entropy methodology. Predictive variance and skewness of world gross domestic product growth are associated with ex-ante information of four risk factors: term spreads, absolute deviations of headline inflation targets, energy prices, and the Standard and Poor's 500 index prices. The Bayesian entropy technique is benchmarked with naïve-generated density forecasts that utilize information from historical forecast errors. The results show that the Bayesian density forecasts outperform the naïve-generated benchmark predictions, illustrating the value added of the introduced methodology.
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Policy Research Working Paper WPS8165 AUG 14, 2017
This note has been prepared to provide practical advice and guidance to World Bank task teams, clients, and donor partners who are contemplating support to partial credit guarantee (PCG) schemes in order to promote access to finance for commercial agriculture.
... See More + The note serves to highlight lessons learned from other PCGs, key features for the design of such schemes, and issues that should be considered during implementation. It does not include an exhaustive literature review, though it draws on evaluations already done. Ideally, this note would be reviewed together with the recently prepared note on matching grant schemes for agriculture; the two instruments complement one another, and they are being used jointly in a growing number of Bank-supported projects. Farmers, agribusiness small and medium enterprises (SMEs), and other SMEs in other sectors tend to be constrained in their access to credit by lack of collateral, credit history, and reliable financial accounts that will mitigate asymmetric information risks and enable financial institutions to better assess their creditworthiness. High interest rates on loans to farmers and SMEs reflect these conditions and inhibit credit demand, but even with high interest rates, supply of credit is greatly constrained for such borrowers, simply because financial institutions do not wish to take the risks. Moreover, most banks are not familiar with appraisal for small business credit, nor have they developed appropriate methodologies (such as credit scoring or cash flow-based appraisal) for assessing these types of loans; hence this market segment is not appealing to them.
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This newsletter includes the following headings: (i) taking stock; (ii) major data releases; (iii) activity and inflation; (iv) trade and finance; (v) financial markets; and (vi) commodity prices.
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Despite bold efforts to consolidate public finances, Ukraine’s growth potential remains undermined by a large public sector, high public debt levels and inefficient provision of critical public services.
... See More + The Ukraine government faces new public spending pressures which, if realized, would reverse recent fiscal consolidation gains. In this context, the objective of this Public Finance Review (PFR) is to inform the government of Ukraine about fiscal reform options to restore sustainability of public finances while improving critical public services and improving medium-term growth prospects. The PFR offers reform options for a gradual and sustainable fiscal deficit reduction and mitigation of risks to debt sustainability through broadening the tax base, improved tax administration, and more efficient public spending. Chapter 1 provides an overview of Ukraine’s fiscal situation and key pressures to fiscal sustainability. Chapter 2 focuses on options to broaden the tax base and improve tax administration following the recent tax reform measures. Although Ukraine already collects a high share of Gross domestic product as taxes, it can improve tax compliance, broaden the tax base, and reduce the tax burden. Improving tax administration and broadening the tax base are critical to improve fiscal sustainability in the short term and to create a foundation for sustainable economic growth in the medium term. Chapter 3 focuses on options to improve the fiscal sustainability of the pensions system, which is the largest public finance expenditure item and a source of fiscal vulnerability on the expenditure side. Chapters 4, 5, 6 and 7 look at opportunities for delivering public services, specifically, education, health, social assistance and decentralization, that are more efficient, equitable and higher quality. Reforms in these areas are anchors of Ukraine’s long-term fiscal sustainability and core elements of the strategy to reduce the fiscal deficit. Analyses of expenditures in this review are structured according to functions rather than economic categories.
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This newsletter includes the following headings: (i) taking stock; (ii) major data releases; (iii) activity and inflation; (iv) trade and finance; (v) financial markets; and (vi) commodity prices.
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Ratings of First and Second Programmatic Financial Sector Development Policy Loans (FSDPL 1 and 2) Project for Ukraine were as follows: outcomes were satisfactory, risk to development outcome was substantial, Bank performance was satisfactory, and Borrower performance was satisfactory.
... See More + Some of the lessons learned included: (i) The main positive difference seen in this operation in comparison to the previous crisis has been the ownership of reform by the authorities and commitment to its full implementation; (ii) The speed and quality of responsiveness from the international community, and cooperation and coordination among donors was also fundamental to the success of the reform program, given the urgency of the situation that Ukraine was facing; (iii) In particular, the ability to adjust policy actions and key indicators from the FSDPL1 to the FSDPL2, showed a degree of flexibility in the program design that contributed to its success; and (iv) The current financial sector reform program is a long term effort (going beyond the timespan of the FSDPL program) that requires continued ownership and commitment of the authorities at every level, and a lending operation has greater chances of achieving these objectives.
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Implementation Completion and Results Report ICR4023 JUN 19, 2017
Ratings of Public Finance Development Policy Loan and Public Finance Policy Based Guarantee Project for Albania were as follows: outcomes were satisfactory, risk to development outcome was substantial, Bank performance was satisfactory, and Borrower performance was satisfactory.
... See More + Some of the lessons learned included: (i) To the extent feasible, Bank-supported reforms need to take into account the political cycle, moving quickly when windows of opportunity present themselves; (ii) Development Policy Loan (DPL)/Policy Based Guarantee (PBG) operations can leverage International Bank for Reconstruction and Development (IBRD) resources by helping to de-risk a country to help attract financing from external (including private) sources as well as free resources tied up in less productive domestic use; (iii) A proactive and well-conceived public communications plan on potentially controversial reforms, including clear and concrete messages on the implications of not undertaking reforms, can play an important role in building public support for the reform agenda; (iv) A Strategic Planning Committee, chaired by the Prime Minister, was critical to the successful implementation of the program, providing a mechanism for holding ministers accountable and addressing bottlenecks in a timely manner; (v) Close coordination and collaboration among development partners enhanced the effectiveness and efficiency of support to the Government of Albania (GOA); (vi) There may be some value in the Bank providing targeted outreach to development partners on the structure and use of Bank lending instruments; and (vii) In articulating reforms and reform priorities, it is important to involve a broad range of stakeholders.
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Implementation Completion and Results Report ICR4044 JUN 17, 2017
This paper analyzes the spillover effects of U.S. monetary policy announcements on emerging market economies since end-2008, the period coinciding with the use of unconventional policy measures.
... See More + Monetary policy surprises are measured by changes in two-year Treasury yields in short windows of time around the Federal Reserve Board’s policy announcements. The analysis finds that U.S. monetary policy surprises have a significant impact on emerging economies' exchange rates, equity prices, and bond yields. The impact is larger for surprise tightening of policy than for surprise easing. The impact is disproportionately larger for large surprises, implying that emerging markets are relatively insulated from anticipated policy announcements. The spillover effects of policy announcements of other advanced economies, such as the euro area, Japan, and United Kingdom, are found to be much weaker than those of the United States.
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Policy Research Working Paper WPS8100 JUN 09, 2017
This Capacity Needs Assessment (CNA) Report is the first Deliverable in the Public Financial Management (PFM) CNA of the Iraq Ministry of Finance (MOF).
... See More + It details the capacity needs to achieve the objective, tasks and deliverables of the planned Modernization of Public Financial Management (PFM) Systems Project in the Government of Iraq (GOI). The CNA is focused primarily on the needs of all core financial directorates in MOF and achieving the successful development and implementation of the Iraqi Financial Management Information System (IFMIS). The inclusion of IFMIS also incorporates the needs of those offices identified as pilot offices. This reflects the direction from senior MOF stakeholders to prioritize the development of capacity to support IFMIS above capacity development for routine PFM operations. The prioritized capacity needs are those components essential to the successful implementation of IFMIS and its subsequent sustainability. The assessment commenced with Mission in July 2016 with a kick-off event with senior leaders from the Ministry of Finance who requested that the assessment also specifically consider their needs to prepare for forthcoming IFMIS project. There was then a series of workshops with operational staff to understand the working context and identify challenges. These points raised were taken as the starting point to identify issues and their capacity needs as the entry points for capacity development actions. In the final Mission in December 2016, the consolidated assessment findings and proposed capacity development interventions and priorities were presented to a central workshop with all stakeholders involved. This Capacity Needs Assessment Report has been completed to reflect the findings from this approach and stakeholder input.
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Founded in 1952, the National Bank for Economic and Social Development (BNDES) is a financial entity fully owned by the Brazilian government. It is in the process of redefining its priorities and its role going forward.
... See More + New operational policies (OPs) published on January 5, 2017, mark an important milestone. This report aims to contribute to the improvement of BNDES OPs and, more generally, provide a medium- to long-term view of BNDES’ role in the Brazilian economy. It provides a conceptual framework to establish BNDES as a development bank that aims to offset market failures that impose a wedge between private and social rates of return and limit access to term finance. The framework differentiates credit-constraining factors from the presence of externalities. The former might justify facilitating access to long-term financing; only the latter might justify subsidies. The paper then applies the framework and methodology to BNDES’ operations and finds that BNDES has in the past provided financing to many firms that have access to alternative sources and subsidies beyond what could be reasonable in economic terms. The paper provides recommendations to establish BNDES as a more effective and focused development bank, less dependent on the government for funding, and less subject to interference by improving its governance.
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The development objective of Financial Inclusion and Infrastructure Project is to contribute to increasing access and usage of digital payments and other financial services for households and businesses in Pakistan.
... See More + This project has three components. 1) The first component, Direct Support to the NFIS Implementation, aims to provide direct support to implementation of the NFIS in line with the priorities laid out in the NFIS action plan. This component is divided into three sub-components as follows: (i) Improving Financial and Market Infrastructure to Facilitate the Uptake of DTAs; (ii) Improving Access and Usage of Digital Payments and Digital Financial Services (DFS); and (iii) Enhancing NFIS Secretariat Capacity and Project Management and Monitoring. 2) The second component, Supporting Expansion of Access Points for Financial Services, aims to support investments, capacity building and analyses that will drive financial access points. 3) The third component, Improving Access to Microfinance and to Financial Services for Micro, Small, and Medium Enterprises, has the following subcomponents: (i) Improving Access to Microfinance and to Financial Services for Micro Enterprises; and (ii) Improving Access to Financial Services for Small and Medium Enterprises.
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Ratings of Development Policy Loan to Foster More Inclusive Growth Project for Philippines were as follows: outcomes were satisfactory, risk to development outcome was low or negligible, Bank performance was satisfactory, and Borrower performance was satisfactory.
... See More + Some lessons learned included: (i) Key lessons to inform any future engagement through DPO lending include the use of programmatic, multi-year programs, complementing prior actions with implementation support through other instruments and maintaining pragmatism in designing the monitoring and evaluation framework; (ii) A programmatic multi-year DPL can serve as an effective platform for promoting reform opportunities and institutional development for inclusive growth; (iii) Complementary technical assistance, economic and sector work, and close coordination from sector teams and other development partners was vital for both a well informed program and in maintaining relevance over the course of the program; and (iv) Monitoring and evaluation frameworks need to be realistic in view of the data gathering constraints.
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Implementation Completion and Results Report ICR3450 MAY 12, 2017
The Palestinian people face an increasingly uncertain political environment, and an economy that is failing to generate the jobs and incomes that are needed to improve living standards.
... See More + Restrictions on trade and the access to resources, along with a decade long blockade of Gaza have led to a continuing decline in the productive base of the economy – with the share of Gross Domestic Product (GDP) in manufacturing halved in the last twenty-five years. Unemployment is now approaching 30 percent on average, with youth unemployment in Gaza twice as high. Although 2016 witnessed an improvement from the economic recession of 2014 -driven by a surge in reconstruction activity in Gaza – this is not sustainable nor sufficient to raise per capita incomes of the Palestinians. Looking forward GDP growth is expected to hover around 3.3 percent leading to a near stagnation in per capita income. Further increases in unemployment are also expected.
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The Palestinian people face an increasingly uncertain political environment, and an economy that is failing to generate the jobs and incomes that are needed to improve living standards.
... See More + Restrictions on trade and the access to resources, along with a decade long blockade of Gaza have led to a continuing decline in the productive base of the economy – with the share of Gross Domestic Product (GDP) in manufacturing halved in the last twenty-five years. Unemployment is now approaching 30 percent on average, with youth unemployment in Gaza twice as high. Although 2016 witnessed an improvement from the economic recession of 2014 -driven by a surge in reconstruction activity in Gaza – this is not sustainable nor sufficient to raise per capita incomes of the Palestinians. Looking forward GDP growth is expected to hover around 3.3 percent leading to a near stagnation in per capita income. Further increases in unemployment are also expected.
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The authorities have actively pursued restoring credibility in the financial system following the collapse of the system’s fourth largest bank in 2014.
... See More + To restore credibility, the authorities - in addition to requesting a Basel Core Principles (BCP) assessment in 2015 and this financial sector assessment program (FSAP) - conducted an asset quality review (AQR) for banks and balance sheet review for non-banks, initiated reforms to Bulgarian National Bank (BNB) supervision and introduced a new bank resolution function. It is important that the authorities continue in their efforts to strengthen the banking sector. The FSAP stress test showed more pronounced effects, though broadly in line with that of the authorities, reflecting differences in approaches. While the financial safety net and crisis management arrangements are based on sound foundations, further effort is needed to fully develop the financial safety net’s components. This includes strengthening the early intervention framework, and defining joint BNB - Ministry of Finance (MoF) strategies for liquidity assistance. A more targeted strategy is needed to address high nonperforming loans (NPLs), which can help reinvigorate the economy. A number of reforms are necessary to support the prudent development of the pension and insurance sector.
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Financial Sector Assessment Program (FSAP) 116053 MAY 01, 2017
The authorities have actively pursued restoring credibility in the financial system following the collapse of the system’s fourth largest bank in 2014.
... See More + To restore credibility, the authorities - in addition to requesting a Basel Core Principles (BCP) assessment in 2015 and this financial sector assessment program (FSAP) - conducted an asset quality review (AQR) for banks and balance sheet review for non-banks, initiated reforms to Bulgarian National Bank (BNB) supervision and introduced a new bank resolution function. It is important that the authorities continue in their efforts to strengthen the banking sector. The FSAP stress test showed more pronounced effects, though broadly in line with that of the authorities, reflecting differences in approaches. While the financial safety net and crisis management arrangements are based on sound foundations, further effort is needed to fully develop the financial safety net’s components. This includes strengthening the early intervention framework, and defining joint BNB - Ministry of Finance (MoF) strategies for liquidity assistance. A more targeted strategy is needed to address high nonperforming loans (NPLs), which can help reinvigorate the economy. A number of reforms are necessary to support the prudent development of the pension and insurance sector.
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Financial Sector Assessment Program (FSAP) 116053 MAY 01, 2017
Ratings for Export Finance Intermediation Loan Project for Croatia were as follows: outcomes were moderately satisfactory, risk to development outcome was moderate, Bank performance was satisfactory, and Borrower performance was satisfactory.
... See More + Some lessons learned included: (i) flexibility of project design and responsiveness to market conditions reduced implementation delays; (ii) the ability to quickly adapt activities, increase resources, or amend project arrangements, as needed, in response to deteriorating economic conditions; (iii) a wholesale design increases the project’s overall impact; and (iv) implementation support missions and midterm reviews provide opportunities for strengthening the project.
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Implementation Completion and Results Report ICR3181 APR 24, 2017
