Document of
                                          The World Bank

                                    FOR OFFICIAL USE ONLY

                                                                                   Report No: 74057-YF




                                    RESTRUCTURING PAPER

                                                  ON A

                     PROPOSED PROJECT RESTRUCTURING
                                   OF
             THE DELIVERY OF IMPROVED LOCAL SERVICES PROJECT

                                     LOAN NUMBER 7510-YF

                                APPROVED ON MARCH 18, 2008

                                                TO THE

                                      REPUBLIC OF SERBIA



                                        NOVEMBER 30, 2012




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 authorization.
Regional Vice President:       Philippe H. Le Houérou
      Country Director:        Jane Armitage
       Sector Manager:         Roberta Gatti
     Task Team Leader:         Christoph Kurowski




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                         Extension of Closing Date
_______________________________________________________________________



     REPUBLIC OF SERBIA – DELIVERY OF IMPROVED LOCAL SERVICES
                              PROJECT
                               P096823
                           LOAN NO. 7510-YF

                                   Restructuring Paper

1.      The closing date for the Republic of Serbia, Delivery of Improved Local Services
Project, Loan Number 7510-YF, P096823 will be extended by 12 months from December
31, 2012 until December 31, 2013.

2.      The Board approved a Loan in the amount of €32 million for the Delivery of
Improved Local Services Project on March 18, 2008 with the objective to assist the
Borrower in increasing the capacity of institutional actors and beneficiaries to improve
access to and the efficiency, equity and quality of local delivery of health, education and
social protection services in a decentralizing environment. The loan became effective on
March 10, 2009.

3.      At the time of the loan closing – December 31, 2012 - the Project is likely to
achieve its objectives with moderate shortcomings. By then, the Project will have
achieved targets for three out of four key performance indicators. Project implementation
significantly improved over time and benefited from a level two restructuring approved
on June 26, 2012. At the time of the loan closing, the majority but not all of the project
outputs will have been achieved. There are no outstanding audits and auditors have issued
unqualified opinions throughout.

4.      Following the general elections in May 2012, a new government assumed office
and confirmed the relevance as well as stated its commitment to achieve the Project
Development Objectives. In a letter dated November 21, 2012, the Minister of Finance
and Economy requested an extension of the loan closing date by 12 months to achieve all
of the Project objectives in a fully satisfactory manner. The government also submitted
and the Bank reviewed and found acceptable an action plan that specifies all activities
proposed for the extension period.

5.     This will be the first extension of the loan closing date.




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