The World Bank Implementation Status & Results Report KG Financial Sector Development Project (P125689) KG Financial Sector Development Project (P125689) EUROPE AND CENTRAL ASIA | Kyrgyz Republic | Finance, Competitiveness and Innovation Global Practice | IBRD/IDA | Investment Project Financing | FY 2012 | Seq No: 14 | ARCHIVED on 11-Jul-2019 | ISR37784 | Implementing Agencies: Ministry of Finance, Kyrgyz Post Office, National Bank of the Kyrgyz Republic, Ministry of Justice Key Dates Key Project Dates Bank Approval Date: 08-Mar-2012 Effectiveness Date: 25-Dec-2013 Planned Mid Term Review Date: 31-Mar-2016 Actual Mid-Term Review Date: 31-Mar-2016 Original Closing Date: 30-Jun-2017 Revised Closing Date: 30-Jun-2020 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) Project Development Objectives are to: (i) enhance financial sector stability, and (ii) increase access to financial services. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Strengthen Institutional capacity of the NBKR:(Cost $0.33 M) Enhancing financial services via KPOs network:(Cost $6.60 M) Modernizing the secured transactions and debt resolution regime:(Cost $1.12 M) Project coordination and monitoring:(Cost $0.80 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Satisfactory Overall Risk Rating High High Implementation Status and Key Decisions The overall implementation progress remains Moderate Satisfactory, but may be downgraded in the third quarter of 2019 if the implementation progress stagnates. - Component 1 Strengthening institutional capacity of the NBKR - NBKR needs to expedite the finalization and execution of the procurement plan of the remaining funds. The funds will be used for capacity building of supervisory staff. - Component 2 Enhancing financial transactions through the KPO - KPO is implementing the IT system to equip and connect the post offices with financial institutions such as banks and remittances service providers. KPO completed the test phase on May 31, 2019 and will continue with the national roll-out in the coming 6 months. This will give Kyrgyz people in the rural area the opportunity to have access to financial services, which is a key development objective of the project. In addition, the audit of the financial statements of 2016 and 2017 has also been finalized on May 24, 7/11/2019 Page 1 of 7 The World Bank Implementation Status & Results Report KG Financial Sector Development Project (P125689) 2019. The financial statement and the audit opinion are published on the website of the KPO on June 18, 2019. Nevertheless, KPO needs to keep on schedule with the national roll-out of the IT system, start building staff capacity, and establish a comprehensive bank agency agreement in order to offer a full range of financial transactions at the Post Offices. Component 3 Modernization of the collateral registry and debt resolution - MOJ started execution of the procurement plan of the remaining funds. The funds will be used to further improve the regulatory framework, update the online collateral registration system, and increase its efforts to raise awareness for its stakeholders and provide training for its employees. The progress towards achievement of PDO remains Moderate Satisfactory because it is expected that at this point in time the PDO could be achieved by June 30, 2020. However, the project may be downgraded to Moderate Unsatisfactory in the third quarter of 2019 if the implementation progress stagnates. - The PDO under component 1 - enhancing financial stability by strengthening the legal, regulatory and supervisory frameworks for banks, micro finance institutions and credit unions - is likely to be partially achieved (by design of the restructured project) under the Bank Executed Trust Fund (BETF) that finances most of the activities to strengthen the regulatory and supervisory framework. - The PDO indicator of Component 2 is to increase financial transactions going through the Kyrgyz Post Office (KPO). In order to achieve the target of this indicator KPO is in the process of establishing the preconditions (implementation of an IT system that connects Post Offices in the rural are with Financial Institutions, transition from decentral and paper based to a central and electronic based financial administration, and build staff capacity). However, there is a need for KPO to establish a comprehensive bank agency agreement with a bank. So KPO could offer a full range of financial products (e.g. loan installments, deposit taking, international remittances) and work together with banks on building staff capacity and setting-up a joint marketing strategy. Although there are some initiatives and pilots initiated, there is no comprehensive bank agency agreement yet. KPO is asked to systematically work towards a comprehensive bank agency agreement. - The PDO indicator of Component 3 is to increase the amount of on-line registrations. The MOJ needs to expedite the execution of the procurement plan in order to increase the amount of on-line registrations. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance -- Substantial Substantial Macroeconomic -- Moderate Moderate Sector Strategies and Policies -- Moderate Moderate Technical Design of Project or Program -- High High Institutional Capacity for Implementation and Sustainability -- High High Fiduciary -- Substantial Substantial Environment and Social -- Low Low Stakeholders -- High High Other -- -- -- Overall -- High High Results PDO Indicators by Objectives / Outcomes 7/11/2019 Page 2 of 7 The World Bank Implementation Status & Results Report KG Financial Sector Development Project (P125689) Strengthening legal, regulatory and supervisory framework for banks, MFOs and credit unions. IN00720868 ►Number of changes to the legal, regulatory and supervisory framework are implemented (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 2.00 Date 30-Jun-2018 21-Nov-2018 20-Jun-2019 30-Jun-2020 Enhancing financial services via KPO network IN00720869 ►Number of financial services transactions going through KPO (e.g. payment transactions, remittances, bank transaction) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 10,000,000.00 8,200,000.00 8,200,000.00 17,000,000.00 Date 08-Mar-2012 21-Nov-2018 20-Jun-2019 30-Jun-2020 Modernizing secured transactions and debt resolution regime IN00720870 ►Number of new annual registrations in the secured transactions registry, using moveable assets as collateral (alone or in combination with immoveable collateral) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 1,354.00 1,400.00 1,700.00 2,500.00 Date 31-Dec-2017 21-Nov-2018 30-Jun-2019 30-Jun-2020 Intermediate Results Indicators by Components Strengthening Institutional Capacity of the NBKR IN00720876 ►Improved staff capacity, measured in terms of number of years of staff experience in supervision departments (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 2.00 2.00 2.00 4.50 Date 15-Jan-2012 21-Nov-2018 20-Jun-2019 30-Jun-2020 IN00720879 ►Supervisory staff conducted spacialist training (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 25.00 Date 30-Jun-2018 21-Nov-2018 20-Jun-2019 30-Jun-2020 7/11/2019 Page 3 of 7 The World Bank Implementation Status & Results Report KG Financial Sector Development Project (P125689) Enhancing financial services via KPOs network IN00720877 ►Number of ICT-equipped Post Offices (with installed, operational front office cash terminals) connected to the central hub (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 360.00 Date 01-Jan-2012 21-Nov-2018 21-Nov-2018 30-Jun-2020 KPO finished the test phase of implementation of the IT system and started the national role out. Comments: IN00720880 ►Revenues from non-government financial services transactions (payment, remittances, bank) as a share of total KPO revenues from financial services (including also pension pay out and social allowances (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 15.00 8.60 8.60 20.00 Date 15-Jan-2012 21-Nov-2018 20-Jun-2019 30-Jun-2020 IN00720882 ►Improved quality, reliability and cost-efficiency of small value payments operations, measured in terms of same day Straight Through Processing as a share of total transactions to&from bank accounts (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0% 0% 0% >30% Date 15-Jan-2012 21-Nov-2018 20-Jun-2019 30-Jun-2020 IN00720884 ►Enhanced transparent financial performance (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Financial audit 2016 KPO issued the IFRS and 2017 are financial statements of completed. Financial Annual audited Value No 2016 and 2017 and Statement and audit statements 2016, contracted an opinion are published 2017, and 2018. independent auditor. on the website of the KPO. Date 15-Jan-2012 21-Nov-2018 20-Jun-2019 30-Jun-2020 IN00720886 ►Introduction of performance measurement, in terms of accounting reports with separated profitability and risk analysis for financial services and postal services (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target KPO is working KPO is working together together with a with a consultant on consultant on piloting piloting financial reports. financial reports. This This work will be finished work will be finished Monthly financial Value 0.00 after full implementation after full reports of the IT system, implementation of the including a Financial IT system, including a Management Application. Financial Management Application. Date 15-Jan-2012 21-Nov-2018 08-Jul-2019 30-Jun-2020 IN00720888 7/11/2019 Page 4 of 7 The World Bank Implementation Status & Results Report KG Financial Sector Development Project (P125689) ►Number of cashiers, tellers, postmasters and other operational staff completed NBKR training to operate financial services at KPO (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 1,200.00 Date 15-Jan-2012 21-Nov-2018 21-Nov-2018 30-Jun-2020 IN00720890 ►Enhanced competitive outreach for last mile delivery of remittances, measured in terms of market share of KPO in total remittances (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 2.00 Date 15-Jan-2012 21-Nov-2018 21-Nov-2018 30-Jun-2020 Modernizing the secured transactions and debt resolution regime IN00720878 ►Amended legal framework for moveable collateral and debt resolution regimes (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 1.00 1.00 2.00 Date 15-Jan-2012 21-Nov-2018 21-Nov-2018 30-Jun-2020 IN00720881 ►Issued regulations for the well-functioning of the collateral registry (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 2.00 2.00 4.00 Date 08-Mar-2012 21-Nov-2018 21-Nov-2018 30-Jun-2020 IN00720883 ►Online system for registering collateral is operational and connected to other assets registrations (for example (registration of vehicle registration) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target On-line registration Online registration system is operational Online registration system is operational and at least connected system is operational but Value No online system but not yet connected to another asset not yet connected to to other asset registration system (for other asset registrations. registrations. example system of vehicle registration) Date 15-Jan-2012 21-Nov-2018 21-Nov-2018 30-Jun-2020 IN00720885 ►Number of dissemination and capacity-building and training events held (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 1.00 1.00 6.00 Date 15-Jan-2012 21-Nov-2018 21-Nov-2018 30-Jun-2020 IN00720887 7/11/2019 Page 5 of 7 The World Bank Implementation Status & Results Report KG Financial Sector Development Project (P125689) ►Increase in lending based on new registration of security interests in the registry, using moveable assets as collateral (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target To be determined before To be determined before To be determined by To be determined by Value the end of 2018. the end of 2018 September 30, 2019 September 30, 2019 Date 08-Mar-2012 21-Nov-2018 08-Jul-2019 30-Jun-2020 IN00720889 ►Increase in the debt recovery rate for creditors (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 30 cents on the dollar Value zero 36.20 36.20 of 4% of insolvent companies Date 15-Jan-2012 21-Nov-2018 21-Nov-2018 30-Jun-2020 Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P125689 IDA-50670 Effective USD 7.15 4.03 3.12 0.73 2.90 20% P125689 IDA-H7600 Effective USD 5.85 4.92 0.93 3.42 1.21 74% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P125689 IDA-50670 Effective 08-Mar-2012 11-Jul-2013 25-Dec-2013 30-Jun-2017 30-Jun-2020 P125689 IDA-H7600 Effective 08-Mar-2012 11-Jul-2013 25-Dec-2013 30-Jun-2017 30-Jun-2020 Cumulative Disbursements 7/11/2019 Page 6 of 7 The World Bank Implementation Status & Results Report KG Financial Sector Development Project (P125689) Restructuring History Level Approved on 21-May-2013 ,Level 2 Approved on 29-Jun-2018 ,Level 2 Approved on 18-Feb-2019 Related Project(s) There are no related projects. 7/11/2019 Page 7 of 7