The World Bank Report No: ISR7363 Implementation Status & Results Kyrgyz Republic Payments & Banking System Modernization Project (P074881) Public Disclosure Copy Operation Name: Payments & Banking System Modernization Project Project Stage: Implementation Seq.No: 14 Status: ARCHIVED Archive Date: 14-Jan-2012 (P074881) Country: Kyrgyz Republic Approval FY: 2004 Product Line: IBRD/IDA Region: EUROPE AND CENTRAL ASIA Lending Instrument: Technical Assistance Loan Implementing Agency(ies): NBKR-PIU Key Dates Board Approval Date 16-Mar-2004 Original Closing Date 31-Oct-2008 Planned Mid Term Review Date 19-May-2008 Last Archived ISR Date 14-Jan-2012 Effectiveness Date 23-Sep-2004 Revised Closing Date 30-Oct-2012 Actual Mid Term Review Date 19-May-2008 Project Development Objectives Project Development Objective (from Project Appraisal Document) The main objective of the project is to develop a modern integrated national payments system that is accepted and used by the commercial banks and their clients. This will provide basic infrastructure that is essential for the development of a modern banking system that will increase the efficiency of payment services and facilitate the growth of financial intermediation. Has the Project Development Objective been changed since Board Approval of the Project? Yes No Component(s) Component Name Component Cost PAYMENTS SYSTEM MODERNIZATION 6.69 GENERAL LEDGER (NBKR) 1.60 BANKING SECTOR 1.36 PROJECT IMPLEMENTATION AND ADMIN. 0.04 Public Disclosure Copy Overall Ratings Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Satisfactory Overall Risk Rating Implementation Status Overview Substantial progress in implementing the project has been achieved in all components related to the modernization of the national Kyrgyz payments system infrastructure. The Bulk Clearing System (BCS) introduced in October 2006 to support small and medium value size payments in the economy continues to operate well. The new Real Time Gross Page 1 of 4 The World Bank Report No: ISR7363 Settlement (RTGS) System introduced in June 2008 to support large value payments already led to a decrease in the operating cost of the National Bank of the Kyrgyz Republic (NBKR) which was passed on to users through a decrease in transaction costs. The adoption of the new RTGS system positively impacted the Kyrgyz economy by stimulating a substantial increase in its payment system turnover. In spite of last year✇ s political disruptions, the total value of individual transactions processed through the RTGS reached about 3 times their original target value. The inter-bank Card Processing Center (CPC) has been operational since December 2006 and usage of the national El-Card continues to grow, Public Disclosure Copy reaching over 126,000 cards as of end June, 2011. Another important planned application, the Government payroll reform initiative whereby Government employees salaries are paid through bank accounts instead of cash, also continues to grow with approximately 64,000 employees as of end March 2011 receiving direct deposits of their salaries through commercial bank accounts. The tender for the General Ledger of the NBKR has also been completed successfully with contract implementation launched in September 2011. Due to the recent political developments and turmoil in the Kyrgyz Republic, the planned privatization of the Aiylbank was however postponed and - while still planned is likely to be supported under the new Financial Sector Development operation currently under preparation. Finally, given the limited time left under the Project, the large state-owned bank SSC (Settlement and Savings Company) opted to acquire its new core banking system independently so as not to be bound by restrictive time limits while using the detailed specifications and bidding documents developed under PBSM. The Project was also extended until October 31, 2012 and restructured to allow for full completion of the ongoing General Ledger contract as well as to adjust its scope and size to better capture its actual focus and impact. Locations No Location data has been entered Results Project Development Objective Indicators Indicator Name Core Unit of Measure Baseline Current End Target Total value of transactions channeled through Text Value 90.000 180.000 and processed by the national payments Date 31-Dec-2003 30-Sep-2011 30-Apr-2010 system (in Som mlns) Comments The current value exceeds twice the value of the original target Total number of bank accounts Text Value 140.000 500.000 Date 31-Dec-2003 30-Sep-2011 30-Apr-2010 Comments The current value exceeds 1.5 times the original target value Public Disclosure Copy Intermediate Results Indicators Page 2 of 4 The World Bank Report No: ISR7363 Indicator Name Core Unit of Measure Baseline Current End Target Bulk Clearing: Total number of transactions Text Value 600.000 20.000.000 processed through the system. Date 31-Dec-2003 30-Sep-2011 30-Apr-2010 Public Disclosure Copy Comments Note that the packaging of separate individual transactions in one batch by some banks and payment operators distorts the statistics of the real number of transactions Inter-bank card system: Total number of cards Text Value 5.000 400.000 Date 31-Dec-2003 30-Sep-2011 30-Apr-2010 Comments Inter-bank card system: Average monthly Text Value 15.000 600.000 volume of transactions processed with bank Date 31-Dec-2003 30-Sep-2011 30-Apr-2010 cards compatible with the shared system. Comments RTGS: Total value of individual transactions Text Value 60.000 120.000 (yearly) (Som mln) Date 31-Dec-2003 01-Apr-2011 30-Apr-2010 Comments Banking Sector: Operating efficiency of SSC Text Value 28% 23% measured as percentage of total operating Date 31-Dec-2003 31-Dec-2010 30-Apr-2010 expenses/total deposits Comments Data on Financial Performance (as of 21-May-2012) Financial Agreement(s) Key Dates Project Ln/Cr/Tf Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date P074881 IDA-38710 Effective 16-Mar-2004 09-Jun-2004 23-Sep-2004 31-Oct-2008 30-Oct-2012 Public Disclosure Copy P074881 TF-56725 Closed 06-Apr-2007 06-Apr-2007 06-Apr-2007 21-Oct-2008 21-Apr-2009 Disbursements (in Millions) Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P074881 IDA-38710 Effective USD 9.00 9.00 0.00 6.40 2.83 71.00 P074881 TF-56725 Closed USD 0.33 0.33 0.00 0.33 0.00 100.00 Disbursement Graph Page 3 of 4 The World Bank Report No: ISR7363 Public Disclosure Copy Key Decisions Regarding Implementation None Restructuring History RVP Approved on 12-Mar-2009, Level two Approved on 26-Apr-2012 Related Projects There are no related projects. 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