64640 v1
           Document of
        The World Bank


                                      Report No:




     RESTRUCTURING PAPER

             ON A

PROPOSED PROJECT RESTRUCTURING
              OF
             LOAN
       DECEMBER 15 2009


            TO THE

   BOSNIA AND HERZEGOVINA

          JULY 29 2011
       ABBREVIATIONS AND ACRONYMS




      ECA          Europe and Central Asia
      FBiH         Federation of Bosnia and Herzegovina
      OdRaz        Foundation in the Federation
      RSIDB        Republika Srpska Investment- Development Bank




Regional Vice President:       Philippe H. Le Houerou
      Country Director:        Jane Armitage
       Sector Manager:         Lalit Raina
                           2
Task Team Leader:       Isfandyar Zaman Khan




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                             BOSNIA AND HERZEGOVINA
                             ENHANCING SME ACCESS TO FINANCE
                                         P111780
                                       CONTENTS

                                                                                                                       Page
A.   SUMMARY ............................................................................................................... 4
B.   PROJECT STATUS ................................................................................................. 4
C.   PROPOSED CHANGES .......................................................................................... 4




                                                             4
                     ENHANCING SME ACCESS TO FINANCE

                             RESTRUCTURING PAPER


SUMMARY
1.     The restructuring paper is to authorize the increase in commercial practice
thresholds for Bosnia.



PROJECT STATUS
2.      The project became effective in August 2010 in the amount of EUR 47.8 million
(USD 70 million). Out of this amount, EUR 28.68 million is allocated to the FBiH and
EUR 19.12 million to the RS. OdRaz in FBiH and RS IDB in the RS are the PIUs
responsible for overall project implementation. As of July 11, 2011, 24.47 percent of total
project funds (USD 16.5 million out of USD 70 million) have been disbursed to the
special account.

3.      Overall progress in project implementation has been moderate and inconsistent
between the entities. Although progress improved in recent past the overall disbursement
ratio remains low.



PROPOSED CHANGES
4.      The only proposed change is to the procurement thresholds for the project that are
set in the Legal Agreement in Section III Point B Paragraph 2. There are no other
changes.

5.     In January 2011, the ECA Regional Procurement Manager’s office revised the
"Regional Threshold" matrix including the commercial practice threshold for Bosnia. The
new threshold matrix will be in effect for all projects to be negotiated after January 15,
2011. The Regional Procurement Manager also advised that all ongoing operations
which have substantially lower thresholds than those described in the newly issued matrix
may benefit from the increased threshold levels.

6.     A number of SMEs are not able to avail themselves of the project funds due to the
low threshold for commercial practice. As now the limit is increased the government has
requested the Bank to increase the threshold.

7.    It is requested that the commercial practice threshold in the project for goods and
works          be         increased         to         EUR           1.3          million.




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