The World Bank Access to Longer Term Finance for Micro, Small and Medium Enterprises Project (P159515) REPORT NO.: RES29049 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF ACCESS TO LONGER TERM FINANCE FOR MICRO, SMALL AND MEDIUM ENTERPRISES PROJECT APPROVED ON NOVEMBER 18, 2016 TO THE ARGENTINE REPUBLIC Finance, Competitiveness, and Innovation Global Practice Latin America and the Caribbean Region Regional Vice President: Jorge Familiar Calderon Country Director: Jesko S. Hentschel Senior Global Practice Director: Ceyla Pazarbasioglu-Dutz Practice Manager/Manager: Zafer Mustafaoglu Task Team Leader: Bujana Perolli The World Bank Access to Longer Term Finance for Micro, Small and Medium Enterprises Project (P159515) ABBREVIATIONS AND ACRONYMS BCRA Central Bank of Argentina (Banco Central de la República de Argentina) BICE Bank for Investment and Foreign Trade (Banco de Inversión y Comercio Exterior S.A.) BNA National Bank of Argentina (Banco de La Nación Argentina) DA Designated Account DL Disbursement Letter IBRD International Bank for Reconstruction and Development MoF Ministry of Finance MoP Ministry of Production PDO Project Development Objective PFI Participating Financial Institution PIU Project Implementation Unit WB World Bank The World Bank Access to Longer Term Finance for Micro, Small and Medium Enterprises Project (P159515) BASIC DATA Product Information Project ID Financing Instrument P159515 Investment Project Financing Original EA Category Current EA Category Financial Intermediary Assessment (F) Financial Intermediary Assessment (F) Approval Date Current Closing Date 18-Nov-2016 30-Nov-2021 Organizations Borrower Responsible Agency Ministry of Finance Banco de Inversión y Comercio Exterior (BICE) Project Development Objective (PDO) Original PDO The Project Development Objectives (PDO) are to improve access to, and strengthen the framework for the provision of, longer term finance for eligible micro, small and medium enterprises. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-86590 18-Nov-2016 30-Nov-2021 50.00 0 50.00 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Access to Longer Term Finance for Micro, Small and Medium Enterprises Project (P159515) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status The Project was approved by the Board on November 18, 2016. Project signing and effectiveness are still pending. The implementation agency for this Project, the Bank for Investment and Foreign Trade (BICE), has established a Project Implementation Unit (PIU) with its core team members. The PIU has updated and prepared project implementation documents in coordination with WB technical and fiduciary team members. Likewise, the PIU has made important progress preparing terms of reference and technical specifications for several selection processes listed in the procurement plan. B. Rationale for Restructuring The proposed restructuring consists on introducing modifications to the Disbursement Letter and Legal Agreement to reflect minor changes to the flow of funds arrangements. This change was requested by the Borrower. The request entailed to disburse the project’s funds into a designated account held by the Ministry of Production (MoP) and then transferred to BICE in local currency, instead of being disbursed directly from the World Bank to the Ministry of Finance and then to BICE. This change is needed due to internal government procedures. The BCRA account at MOF only serves as transitory/pass through account to transfer funds to the relevant implementing entities, instead of being the main designated account. Thus, MoF will register World Bank funds in a transitory account at the BCRA, which will then be transferred to MoP to pass on to BICE. In addition, BICE can not maintain a loan account at BCRA, as was previous envisioned in the flow of funds arrangements. The modification does not entail a change in PDO, scope, project activities, or implementation arrangements. II. DESCRIPTION OF PROPOSED CHANGES The proposed changes consist of minor changes in the flow of funds description of the project. The disbursement letter and legal agreement have been revised accordingly. The main objective of the changes is to reflect that the project’s funds will be disbursed into a U.S. dollar designated account in the National Bank of Argentina (Banco de la Nación Argentina) held by the Ministry of Production (MoP) and then transferred to BICE in local currency, instead of being disbursed directly from the World Bank to Ministry of Finance to BICE as previously stated in the PAD. MoF will only register World Bank funds in a transitory account at the BCRA, which will be transferred to MoP to pass on to BICE to onlend to PFIs. MOP’s role will be limited to transfer the funds to BICE upon their request, as established in the subsidiary agreement between MoF, MoP, and BICE. BICE retains all the financial management responsibilities associated to the execution of the project including making payments under Components 1, 2 and 3. The World Bank Access to Longer Term Finance for Micro, Small and Medium Enterprises Project (P159515) III. SUMMARY OF CHANGES Changed Not Changed Change in Disbursements Arrangements ✔ Change in Institutional Arrangements ✔ Change in Financial Management ✔ Change in Implementing Agency ✔ Change in DDO Status ✔ Change in Project's Development Objectives ✔ Change in Results Framework ✔ Change in Components and Cost ✔ Change in Loan Closing Date(s) ✔ Cancellations Proposed ✔ The World Bank Access to Longer Term Finance for Micro, Small and Medium Enterprises Project (P159515) Reallocation between Disbursement Categories ✔ Change in Disbursement Estimates ✔ Change in Systematic Operations Risk-Rating Tool ✔ (SORT) Change in Safeguard Policies Triggered ✔ Change of EA category ✔ Change in Legal Covenants ✔ Change in Procurement ✔ Change in Implementation Schedule ✔ Other Change(s) ✔ Change in Economic and Financial Analysis ✔ Change in Technical Analysis ✔ Change in Social Analysis ✔ Change in Environmental Analysis ✔ IV. DETAILED CHANGE(S)