The World Bank Report No: ISR11081 Implementation Status & Results Moldova Competitiveness Enhancement Project (P089124) Public Disclosure Copy Operation Name: Competitiveness Enhancement Project (P089124) Project Stage: Implementation Seq.No: 13 Status: ARCHIVED Archive Date: 25-Jun-2013 Country: Moldova Approval FY: 2006 Product Line: IBRD/IDA Region: EUROPE AND CENTRAL ASIA Lending Instrument: Specific Investment Loan Implementing Agency(ies): Key Dates Board Approval Date 27-Oct-2005 Original Closing Date 31-Dec-2009 Planned Mid Term Review Date Last Archived ISR Date 31-Mar-2013 Effectiveness Date 10-Feb-2006 Revised Closing Date 30-Jun-2013 Actual Mid Term Review Date Project Development Objectives Project Development Objective (from Project Appraisal Document) The Project will assist Moldova in enhancing competitiveness of enterprises through improvements in the business environment, enhancing access to finance, and making adequate standards, testing, and quality improvement services available to enterprises. Has the Project Development Objective been changed since Board Approval of the Project? Yes No Component(s) Component Name Component Cost Regulatory Reform Component 3.28 MSTQ Component 8.60 Enterprise Access to MSTQ Services 1.44 Facilitation of Access to Finance 0.01 Implementation Support 0.97 Line of Credit 22.50 Public Disclosure Copy Enterprise Access to Business Development Services 1.50 Overall Ratings Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory Overall Risk Rating Low Low Implementation Status Overview Page 1 of 10 The World Bank Report No: ISR11081 The Competitiveness Enhancement Project (CEP) is almost finalized. The few remaining activities will be finished by June 30. Project beneficiaries are very pleased with the support they have received through this project. Preparation of a new investment loan (possibly to be called CEP II) will begin in July, and preliminary discussions are already ongoing with MoE. The components of the loan have Public Disclosure Copy been agreed to in principle. Locations Country First Administrative Division Location Planned Actual Moldova Municipiul Chisinau Chisinau ✔ Results Project Development Objective Indicators Public Disclosure Copy Page 2 of 10 The World Bank Report No: ISR11081 Indicator Name Core Unit of Measure Baseline Current End Target Demonstrated capacity of the government to Text Value No mechanism for evaluating There is a fully-functioning Development of new Strategy coordinate and implement regulatory reforms in the impact of new regulations system of Regulatory Impact for the Regulatory Reform Public Disclosure Copy compliance with OECD principles on business operations Assessment and a new Implementation based on through consultation process Regulatory Reform Strategy smart regulation principles within the Governmentand based on "smart regulation" with the public principles. It tackles the main constraints in the business environment. Date 30-Dec-2005 01-Jun-2013 30-Jun-2013 Comments RIA has become mandatory for all new legislation affecting businesses starting Jan 2008, creating a standardized consultation mechanism within the Govt and with business. The new RRS has been fully consulted with relevant parties and is expected to be adopted soon (there was slight delay due to the government crisis in Feb-May 2013). The newly-formed government intends to tackle business environment issues well, and will use the RRS as one of its main road-maps for doing so. Management time spent on meeting regulatory Text Value 17 percent (Cost of Doing 10.7 percent (CODB 2013) 10 percent requirements Business Report, 2005) Date 31-Dec-2004 31-Dec-2012 30-Jun-2013 Comments End target met. Public Disclosure Copy MSTQ system development meeting the WTO Text Value Existing obsolete MSTQ A modernized and Modernized and commitments (measured by periodic surveys of infrastructure is not compliant internationally recognized internationally recognized progress as per the WTO agreement) with Moldova's commitments MSTQ system. MSTQ system, meeting the to WTO, which jeopardizes WTO commitments the growth of Moldova'sexport Date 30-Dec-2005 31-Dec-2012 30-Jun-2013 Comments As part of the WTO commitments regarding MSTQ system, the Page 3 of 10 The World Bank Report No: ISR11081 Government approved short to medium term (2007-2020) MSTQ Strategy with detailed action plans for each field of Public Disclosure Copy quality infrastructure (Governmental Decision nr. 859 dated 31.07.2006). The Law on Technical Regulations, which foresees the activity and agenda of the technical committees, was approved. The new Law on Standardization, new Law on Metrology, and the new Law on Accreditation were approved. The institutional reorganization of NISM into the National Institute of Metrology and National Institute of Standardization is underway. NIM and NIS have been established, and the government is in the process of distributing NISM's assets to NIM and NIS. The government will also establish a SOE that provides metrology services across the spectrum, to build the market of service providers and ensure there is some competition in all areas of metrology. (There are 9 private service providers, but Public Disclosure Copy some segments of metrology are served by only 1 company). NISM's metrology sector (now NIM) has received the ISO certification in this field (17025), and already has 5 measurements recognized in the international CMAC tables, and is working on Page 4 of 10 The World Bank Report No: ISR11081 more. NISM (NIM) was able to achieve this recognition relatively quickly. There is draft legislation to Public Disclosure Copy transpose 6 EU directives, awaiting first discussion in government. Intermediate Results Indicators Indicator Name Core Unit of Measure Baseline Current End Target Inspections per year per firm Text Value 18 (Cost of Doing Business 3.6 10 2004) Date 31-Dec-2003 01-Jun-2013 30-Jun-2013 Comments From the results of the CODB Revised from 12 to 10 in 2012 2013 survey. End target restructuring paper exceeded by several times. Number of government officials and experts Number Value 0.00 1120.00 1100.00 trained in RIA (cumulative) Date 31-Dec-2005 01-Jun-2013 30-Jun-2013 Comments End target met. EU compatible standards adopted (cumulative) Text Value 133 5438 2800 Date 31-Dec-2004 01-Jun-2013 30-Jun-2013 Comments End target exceeded by nearly double. This is lower than the previous period because of the following. Periodically (once a year) CEN (European Standardization Council) abrogates some standards, which are obsolete or should be changed, etc. Public Disclosure Copy Consequently, this information and the list of abrogated standards is submitted to all European National Standardization bodies (in our case NISM), who exclude abrogated by CEN standards from their list. In conclusion - the difference between 5860 and 5438 are abrogated standards. Page 5 of 10 The World Bank Report No: ISR11081 Accredited testing facilities available to Text Value 36 117 At least 100 enterprises Date 31-Dec-2004 01-Jun-2013 30-Jun-2013 Comments Reduced from last year Public Disclosure Copy because last year's number included testing facilities and certification bodies. This number is only for testing facilities. Number of calibration services provided by Number Value 5.00 655.00 1000.00 NISM to enterprises (annual) Date 31-Dec-2004 01-Jun-2013 30-Jun-2013 Comments The date of the baseline is not 655 services provided in included in the restructuring January-May 2013. This is paper in which this indicator 1572 services on an was introduced. However, it is annualized basis. End target likely that it was prior to 2006, met/exceeded. because the 2006 target is 50 inspections. Matching Grants disbursed for international Number Value 70.00 249.00 210.00 certifications of quality (cumulative) Date 31-Dec-2004 01-Jun-2013 30-Jun-2013 Comments End target exceeded. Matching grants disbursed for business Number Value 0.00 246.00 250.00 development (cumulative) Date 31-Dec-2009 01-Jun-2013 30-Jun-2013 Comments A few more grants may be approved and disbursed by June 30. Expected final result is approx. 248, which is very close to the end target. There was high demand for this component, but because the grant cycle is only annual and the MGF administrator cannot Public Disclosure Copy commit to disburse more money than is in the budget, the design of the project presented some difficulties. Amount of term credit disbursed through the Amount(USD) Value 0.00 22500000.00 22500000.00 Line of Credit (cumulative) Date 31-Dec-2009 01-Jun-2013 30-Jun-2013 Comments Credit line was 100% disbursed by Dec. 31, 2011. Government is managing repayments in a revolving Page 6 of 10 The World Bank Report No: ISR11081 fund, from which 28 loans for a total of USD9.1 million have been disbursed to date. Sub-loans approved to beneficiary enterprises Number Value 0.00 87.00 120.00 Public Disclosure Copy (cumulative) Date 31-Dec-2009 01-Jun-2013 30-Jun-2013 Comments 59 sub-loans approved and The only target established in disbursed directly from the the results framework is for credit line; 28 sub-loans 2012. End target of 120 sub- disbursed from revolvingcl loans not met due to higher fund. than expected average loan amount (USD 381K vs USD 188K planned). All CEP Credit Line funds have been disbursed in full. Percentage of non-performing loans Text Value 0 0 <5 Date 31-Dec-2009 31-Mar-2013 30-Jun-2013 Comments 0% NPLs for loans from the For CEP loans credit line; 14.5% for the banking system as a whole. Adjusted Return on Assets/Equity Percentage Value 1.04 1.09 1.09 Date 31-Dec-2009 31-Mar-2013 30-Jun-2013 Comments ROA Average ROE for the banking No target available (this core system is 10.9% indicator is not used for measuring project success) Percentage of project-supported institutions Percentage Value 100.00 100.00 100.00 that are reporting on this indicator Sub Type Supplemental Portfolio at Risk - SME Percentage Value 9.30 10.52 10.52 Date 31-Dec-2009 31-Dec-2012 30-Jun-2013 Comments PFI asset-weighted 60 day No target available (this core Public Disclosure Copy overdue loans to total loans indicator is not used for measuring project success) Percentage of project-supported institutions Percentage Value 100.00 100.00 100.00 that are reporting on this indicator Sub Type Supplemental No of active loan accounts -SME Number Value 871100.00 Date 31-Dec-2009 31-Dec-2012 30-Jun-2013 Page 7 of 10 The World Bank Report No: ISR11081 Comments Baseline not available PFIs No target available (this core requested to provide. indicator is not used for measuring project success) Public Disclosure Copy Percentage of project-supported institutions Number Value 100.00 100.00 100.00 that are reporting on this indicator Sub Type Date 31-Dec-2012 30-Jun-2013 Breakdown Comments Outstanding SME Loan Portfolio Amount(USD) Value 0.00 22500000.00 22500000.00 Date 31-Dec-2009 01-Jun-2013 30-Jun-2013 Comments Note: This indicator measures Project credit line fully Note: This indicator measures only the outstanding SME disbursed. only the outstanding SME portfolio funded by the CEP portfolio funded by the CEP (project's) credit line, and not (project's) credit line, and not the whole outstanding SME the whole outstanding SME loan portfolio as in the core loan portfolio as in the core indicator definition. indicator definition. Percentage of project-supported institutions Percentage Value 100.00 100.00 100.00 that are reporting on this indicator Sub Type Supplemental Volume of Bank Support: Lines of Credit - SME Amount(USD) Value 0.00 22500000.00 22500000.00 Date 13-Apr-2010 01-Jun-2013 30-Jun-2013 Comments Credit line was fully disbursed and is now in a revolving fund, which has funded an additional USD9.1 million in loans. Therefore theBank's credit line has facilitated nearly USD32 million in financing for exporters. Credit information system set-up Text Value No functioning credit Credit information system is Credit information system is information system exists fully operational, with all 14 fully operational, with more Public Disclosure Copy banks participating than 70% of Moldova's banking sector (by total assets) participating Date 31-Dec-2004 01-Jun-2013 29-Jun-2013 Comments End target met. Some non- Note: Indicator not included in bank financial institutions also results framework in 2012 participate. restructuring paper. Data on Financial Performance (as of 03-Jun-2013) Financial Agreement(s) Key Dates Page 8 of 10 The World Bank Report No: ISR11081 Project Ln/Cr/Tf Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date P089124 IDA-41190 Effective 27-Oct-2005 14-Nov-2005 10-Feb-2006 31-Dec-2009 30-Jun-2013 P089124 IDA-46550 Effective 29-Oct-2009 17-Nov-2009 13-Apr-2010 30-Jun-2012 30-Jun-2013 Public Disclosure Copy P089124 IDA-H1870 Effective 27-Oct-2005 14-Nov-2005 10-Feb-2006 31-Dec-2009 30-Jun-2013 P089124 TF-55175 Effective 14-Nov-2005 14-Nov-2005 14-Nov-2005 31-Dec-2009 30-Jun-2013 Disbursements (in Millions) Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P089124 IDA-41190 Effective USD 4.90 4.90 0.00 4.71 0.41 96.00 P089124 IDA-46550 Effective USD 24.00 24.00 0.00 24.04 0.00 100.00 P089124 IDA-H1870 Effective USD 4.90 4.90 0.00 4.83 0.28 99.00 P089124 TF-55175 Effective USD 4.50 4.50 0.00 4.43 0.07 98.00 Disbursement Graph Public Disclosure Copy Key Decisions Regarding Implementation All key issues raised in the last ISR have been resolved. i) The Ministry of Economy expects that the Ministry of Finance will agree to fund the operational costs during the grace period (July 1-October 31). ii) The Ministry of Economy has found alternatives for funding the consultants to the Regulatory Impact Assessment (RIA) Secretariat (through the USAID BRITE project and IFC, although the agreements are still being finalized). iiI) The PIU/MoE has made progress on the description of how the project has achieved "MSTQ system development meeting the World Trade Organization (WTO) commitments". A summary is included in this ISR, and more detail will be included in the client's implementation completion report, as expected. Page 9 of 10 The World Bank Report No: ISR11081 In addition, guidelines for the client's implementation completion report have been provided to the borrower. Restructuring History Public Disclosure Copy CD Approval on 29-Oct-2009, Level two Approved on 28-Jun-2012 Related Projects P116187-Additional Financing for Competitiveness Enhancement Project Public Disclosure Copy Page 10 of 10