The World Bank Implementation Status & Results Report Georgia Relief and Recovery for Micro, Small, and Medium Enterprises (P173975) Georgia Relief and Recovery for Micro, Small, and Medium Enterprises (P173975) EUROPE AND CENTRAL ASIA | Georgia | IBRD/IDA | Investment Project Financing (IPF) | FY 2021 | Seq No: 7 | Archived on 20-Jun-2024 | ISR01084 Implementing Agencies: Enterprise Georgia, Ministry of Economy and Sustainable Development, Ministry of Economy and Sustainable Development, National Bank of Georgia 1. OBJECTIVE 1.1 Development Objective Original Development Objective (Approved as part of Approval package on 10-May-2021) The Project Development Objective (PDO) is to provide relief to micro, small, and medium-size enterprises and support their recovery, including by strengthening the enabling environment for access to finance. Has the Development Objective been changed since Board Approval of the Project Objective? No 2. COMPONENTS Name Component 1: Financial relief and recovery for MSMEs:(Cost 82,300,000.00) Component 2: Digital payments and financial infrastructure upgrading:(Cost 14,500,000.00) Component 3: Project management and monitoring:(Cost 5,800,000.00) Component 4: Contingent Emergency Response Component (CERC):(Cost 0.00) 3. OVERALL RATINGS Name Previous Current Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Satisfactory Overall Risk Rating Moderate Moderate Jun 20, 2024 Page 1 of 15 The World Bank Implementation Status & Results Report Georgia Relief and Recovery for Micro, Small, and Medium Enterprises (P173975) 4. KEY ISSUES & STATUS 4.1 Implementation Status and Key Decisions The progress towards achievement of the Project Development Objective (PDO) remains Satisfactory. The overall Implementation Progress (IP) remains at Moderately Satisfactory to reflect moderate implementation challenges and additional time needed for the preparatory activities. Mid-term review of the project confirmed continued relevance of the PDO and commitment of the authorities. Potential risks were discussed and analyzed. Overall, a good progress was achieved so far: - Under component 1, since disbursements commenced in September 2022, the Project has already provided about GEL 174 million in financial support (grants, co-financing, and guaranteed loans) to MSMEs by March 2024, which are expected to continue ramping up in coming months. Three regional centers are operating, and the deliveries of trainings and workshops have started. In addition, Enterprise Georgia accomplished one more performance-based condition (in total, four out of nine). - Under component 2, the National Bank of Georgia finalized selection of the vendor for the Instant Payment System. Ministry of Economy and Sustainable Development (MOESD) is preparing legislative amendments on secured transactions. MOESD and the Public Service Delivery Agency (PSDA) remain committed to the Know-Your-Customer (KYC) reform and a consultant was hired to support implementation of this subcomponent. 5. SYSTEMATIC OPERATIONS RISK-RATING TOOL Rating at Approval Last Approved Rating Risk Category Approval Package - ISR Seq. 06 - 26 Apr Proposed Rating 11 May 2021 2024 Political and Governance Moderate Moderate Moderate Macroeconomic Substantial Moderate Moderate Sector Strategies and Policies Substantial Moderate Moderate Technical Design of Project or Program Moderate Moderate Moderate Institutional Capacity for Implementation and Moderate Moderate Moderate Sustainability Fiduciary Substantial Substantial Substantial Environment and Social Substantial Substantial Substantial Stakeholders Moderate Moderate Moderate Jun 20, 2024 Page 2 of 15 The World Bank Implementation Status & Results Report Georgia Relief and Recovery for Micro, Small, and Medium Enterprises (P173975) Overall Substantial Moderate Moderate Jun 20, 2024 Page 3 of 15 The World Bank Implementation Status & Results Report Georgia Relief and Recovery for Micro, Small, and Medium Enterprises (P173975) 6. RESULTS 6.1 PDO Indicators by PDO Outcomes Relief for MSMEs Baseline Actual (Previous) Actual (Current) Closing Period Indicator Name Value Month/Year Value Date Value Date Value Month/Year Volume of financial support 0 Jun/2021 174 30-Mar-2024 174 30-Mar-2024 450 Jun/2026 provided to MSMEs affected Comments on Volume of financial support provided to MSMEs affected by the pandemic (cumulative, in by the pandemic (GEL achieving targets GEL million). Volume of financial support is the sum of: (i) grants; (ii) co-financing of interest million) (Text) payments; and (ii) volume of approved guaranteed loans supported by the Project. Survivorship ratio: ratio of NA Dec/2020 NA 30-Mar-2024 NA 30-Mar-2024 <1 Dec/2025 inactive enterprises to total Comments on Survivorship ratio: ratio of inactive enterprises to total beneficiaries of Enterprise Georgia, beneficiaries of Enterprise achieving targets divided by ratio of inactive enterprises to total active enterprises in the economy Georgia, divided by ratio of inactive enterprises to total active enterprises in the economy (Text) Resilient Recovery of MSMEs Baseline Actual (Previous) Actual (Current) Closing Period Indicator Name Value Month/Year Value Date Value Date Value Month/Year Revenue multiplier: ratio of NA Dec/2020 NA 30-Mar-2024 NA 30-Mar-2024 >1 Dec/2025 revenue-weighted average Comments on Ratio of revenue-weighted average annual change in MSME revenue of Project beneficiaries, annual change in MSME achieving targets divided by the average change of revenue in their respective sector. revenue of Project beneficiaries, divided by the average change of revenue in Jun 20, 2024 Page 4 of 15 The World Bank Implementation Status & Results Report Georgia Relief and Recovery for Micro, Small, and Medium Enterprises (P173975) their respective sector (Text) Number of digital 0.00 Jun/2021 0.00 30-Mar-2024 0.00 30-Mar-2024 17.00 Jun/2026 transactions facilitated Comments on Number of digital transactions through the new instant payment system (annual). Note: the through the new instant achieving targets actual number might be higher if government payments are included. payment system (million) (Number) Strengthening the enabling environment for access to finance for SMEs Baseline Actual (Previous) Actual (Current) Closing Period Indicator Name Value Month/Year Value Date Value Date Value Month/Year Establishment of an No Jun/2021 No 30-Mar-2024 Yes Jun/2026 upgraded movable collateral Comments on Establishment of an upgraded movable collateral registry. registry (Yes/No) achieving targets 6.2 Intermediate Results Indicators by Components Component 1: Financial relief and recovery for MSMEs Baseline Actual (Previous) Actual (Current) Closing Period Indicator Name Value Month/Year Value Date Value Date Value Month/Year Number of MSMEs 0.00 Jun/2021 2,167 30-Mar-2024 5,000.00 Jun/2026 supported by grants under Comments on Number of enterprises supported by Enterprise Georgia's Micro and Small Entrepreneurship the Project (Number) achieving targets Support Program (cumulative). Volume of grants disbursed 0 Jun/2021 47.4 31-Mar-2024 47.4 31-Mar-2024 70 Jun/2026 to MSMEs under the Project Comments on Volume of grants disbursed under Enterprise Georgia's Micro and Small Entrepreneurship (GEL million) (Text) achieving targets Support Program (cumulative, in GEL) 0.00 Jun/2021 350 31-Mar-2024 350 31-Mar-2024 200.00 Jun/2026 Jun 20, 2024 Page 5 of 15 The World Bank Implementation Status & Results Report Georgia Relief and Recovery for Micro, Small, and Medium Enterprises (P173975) Number of enterprises Comments on Number of enterprises supported by co-financing of interest payments provided by supported by co-financing of achieving targets Enterprise Georgia's Produce in Georgia program (industrial component) (cumulative) interest payments under the Project (Number) 0 Jun/2021 303 31-Mar-2024 303 31-Mar-2024 83 Jun/2026 Volume of loans supported Comments on Volume of loans in GEL supported by co-financing of interest payments provided by by co-financing under the achieving targets Enterprise Georgia's Produce in Georgia program (industrial component) with support of the Project (GEL million) (Text) Project (cumulative, GEL million) 0.00 Jun/2021 165 31-Mar-2024 165 31-Mar-2024 200.00 Jun/2026 Number of guarantees issued Comments on Number of guarantees approved by Enterprise Georgia (annual). under the Project (Number) achieving targets Volume of loans guaranteed 0 Jun/2021 123 30-Sept-2023 420 Jun/2026 with support of the Project Comments on Volume of loans supported by the guarantee mechanism provided by Enterprise Georgia in (GEL million) (Text) achieving targets GEL (annual). The historic Jun/2021 0 31-Mar-2024 0 31-Mar-2024 NPL ratio in the Jun/2026 NPL ratio for co-financing NPL ratio of co-financing of EG's programs loan portfolio interest payments program is 0.6% should be (%) (Text) below 8% Comments on Percentage of NPLs in the portfolio of loans that received co-financing of interest payments. achieving targets NPLs as reported by PFIs according to NBG prudential definition. The historic Jun/2021 0 31-Mar-2024 0 31-Mar-2024 NPL ratio of the Jun/2026 NPL ratio for PCG program NPL ratio of the partial credit EG's programs should be guarantee program (%) is 0.6% below 8% (Text) Comments on Percentage of NPLs in the portfolio of loans that partial credit guarantees. NPLs as reported achieving targets by PFIs according to NBG prudential definition 0.00 Jun/2021 69 30-Mar-2024 300.00 Jun/2026 Jun 20, 2024 Page 6 of 15 The World Bank Implementation Status & Results Report Georgia Relief and Recovery for Micro, Small, and Medium Enterprises (P173975) Number of MSMEs receiving Comments on Number of MSMEs receiving training and/or technical assistance for digital transformation training and/or technical achieving targets and/or COVID-proofing (cumulative) assistance for digital transformation and/or COVID-proofing (Number) 0.00 Jun/2021 N/A 31-Mar-2024 N/A 31-Mar-2024 15.00 Jun/2026 Share of volume of financial Comments on Share of volume of financial support under the Project that is channeled to investments in support under the Project achieving targets the green economy and climate financing (mitigation and/or adaption measures) (%) channeled to investments in Adaptation measures might include investments that reduce MSMEs’ exposure to climate the green economy and change related risks or recover from damages incurred by impacts of climate change. climate financing (%) Mitigation measures include investments that reduce, capture, or sequester GHG emissions (Percentage) (renewable energy, energy audit, energy efficiency, sustainable forest management, climate- smart agriculture, waste management). 0.00 Jun/2021 98 17-Jun-2024 98 17-Jun-2024 60.00 Jun/2026 Comments on This includes share of beneficiaries of all Project supported programs (micro grants, interest EG Citizen Engagement: achieving targets co-financing, and partial credit guarantee) that stated that they are either “satisfied” or “very share of MSMEs reporting satisfied” with Enterprise Georgia’s programs. 90 percent of beneficiaries mentioned that that programs reflected their they would not have been able to implement their project without the support from needs (%) (Percentage) Enterprise Georgia. In addition, as part of its programs’ awareness campaign, EG has conducted meetings with potential beneficiaries and financial institutions and disseminated information through online channels to reach wider audience. NA Nov/2020 EG (1) adopted 31-Mar-2024 EG (1) adopted 31-Mar-2024 EG has adopted Dec/2025 of a robust of a robust a robust M&E M&E M&E framework and Institutional actions to framework, framework, used evidence strengthen the grants which which to improve the program (Text) PBC improves the improves the design of its methodology methodology grants program for monitoring for monitoring and develop the impact of the impact of sustainable Jun 20, 2024 Page 7 of 15 The World Bank Implementation Status & Results Report Georgia Relief and Recovery for Micro, Small, and Medium Enterprises (P173975) the program the program options for its on MSME on MSME development. beneficiaries; beneficiaries; and (2) and (2) launched a launched a pilot pilot graduation graduation scheme to scheme to provide provide institutional institutional support to support to selected high- selected high- performance performance beneficiaries. beneficiaries. Comments on Institutional actions to strengthen the grants program include: (1) the adoption of a robust achieving targets M&E framework, which improves the methodology for monitoring the impact of the program on MSME beneficiaries; (2) the amendments of the resolution governing the program to reflect improvements; and (3) launch of a pilot graduation scheme to provide institutional support to selected high-performance beneficiaries. EG does not Nov/2020 NA 31-Mar-2024 NA 31-Mar-2024 EG has adopted Dec/2025 have a robust M&E evaluation framework and systems and conducted an Institutional actions to measures in evaluation of its strengthen the co-financing place to assess co-financing of interest payments the program, using program (Text) PBC effectiveness evidence to of its co- propose financing of amendments to interest improve Jun 20, 2024 Page 8 of 15 The World Bank Implementation Status & Results Report Georgia Relief and Recovery for Micro, Small, and Medium Enterprises (P173975) payments on targeting, an frequent eligibility basis and criteria and better align its other aspects targeting of the program. towards strategic sectors and/or thematic areas. Comments on Institutional actions to strengthen the co-financing of interest payments program include: (1) achieving targets the adoption of a robust M&E framework, which improves the methodology for monitoring the impact of the program; (2) the completion of an evaluation of the co-financing program; (3) the amendments of the resolution governing the program to reflect improvements. EG currently Nov/2020 EG has (a) 30-Mar-2024 EG has Dec/2025 does not have launched a strengthened a monitoring campaign to the design and system, a risk share implementation management information arrangements framework, and raise of the program, Institutional actions to and an awareness including more strengthen the partial credit outreach among PFIs, robust risk guarantees program strategy to (b) introduced monitoring, (Text) PBC evaluate the a risk awareness performance monitoring campaigns, and risks of system for EG stronger the program supported participation and propose loans and (c) agreements adopted a with PFIs, and Jun 20, 2024 Page 9 of 15 The World Bank Implementation Status & Results Report Georgia Relief and Recovery for Micro, Small, and Medium Enterprises (P173975) improvements financial financial in its design. modelling tool. modelling tool. Comments on Institutional actions to strengthen the partial credit guarantee programs include: (1) achieving targets introduction of measures to engage with PFIs, including the launch of an information and awareness campaign among PFIs, as well as the introduction of a risk monitoring system; (2) amendment of the participation agreements signed with PFIs to specify that EG can impose sanctions, remedies, and termination on PFIs; (4) adoption of a financial modelling tool. No Nov/2020 Yes 31-Mar-2024 Yes 31-Mar-2024 Yes Dec/2025 Comments on The introduction of a new managerial capabilities program includes the development of the Introduction of a managerial achieving targets design of the program, preparation and presentation of concept paper to MOESD and MOF, skills program (Yes/No) if applicable, including economic justification grounded on evidence collected from stakeholders consultation, incorporation of design and implementation arrangements in relevant regulation, and adoption of a M&E framework for implementation. Share of financial resources 24.00 Dec/2020 38.00 31-Mar-2024 38.00 31-Mar-2024 35.00 Dec/2025 (grants, co-financing, Comments on Note: indicator as of September 30, 2023 does not yet include data for the guarantee guarantees) under the achieving targets program. Project channeled to women- inclusive firms (Percentage) Component 2: Digital payments and financial infrastructure upgrading Baseline Actual (Previous) Actual (Current) Closing Period Indicator Name Value Month/Year Value Date Value Date Value Month/Year Volume of retail transactions 0.00 Jun/2021 0.00 31-Mar-2024 0.00 31-Mar-2024 10.00 Jun/2026 recorded in the IPS (GEL Comments on Volume of retail transactions recorded in the IPS (annual, in GEL billion). Note: the actual billion) (Number) achieving targets number might be higher if government payments are included. 0.00 Jun/2021 0.00 31-Mar-2024 0.00 31-Mar-2024 15.00 Jun/2026 Share of instant payment Comments on Number of instant payments transactions divided by the total number of non-cash retail transactions (%) (Number) achieving targets payment transactions (%). Jun 20, 2024 Page 10 of 15 The World Bank Implementation Status & Results Report Georgia Relief and Recovery for Micro, Small, and Medium Enterprises (P173975) No Jun/2021 No 31-Mar-2024 No 31-Mar-2024 Yes Jun/2026 Establishment of a functional Comments on Establishment of a KYC registry. KYC registry (Yes/No) achieving targets Approval of amendments to No Jun/2021 No 31-Mar-2024 No 31-Mar-2024 Yes Dec/2024 legal framework for secured Comments on Proposed amendments to the legal framework for secured transactions are approved. transactions (Yes/No) achieving targets Establishment of a working No Jun/2021 Yes 31-Mar-2024 Yes 31-Mar-2024 Yes Jun/2023 group for KYC Registry Comments on Establishment of a working group formed by MOESD, MOJ and other stakeholders. (Yes/No) achieving targets Preparation of technical No Jun/2021 No 31-Mar-2024 No 31-Mar-2024 Yes Mar/2025 specifications for the Comments on Preparation of technical specifications for the modernization of the collateral registry. modernization of the achieving targets collateral registry (Yes/No) 6.3 Performance Based Conditions (PBC) Actual (Previous) Actual (Current) PBC Name Baseline Closing Period Value Date Value Date EG (1) adopted of a EG (1) adopted of a robust M&E robust M&E 1:Institutional framework, which framework, which actions to improves the improves the strengthen the Value NA methodology for 30-Mar-2024 methodology for 30-Sept-2023 grants program monitoring the monitoring the (Text) impact of the impact of the program on MSME program on MSME beneficiaries; and beneficiaries; and (2) Jun 20, 2024 Page 11 of 15 The World Bank Implementation Status & Results Report Georgia Relief and Recovery for Micro, Small, and Medium Enterprises (P173975) (2) launched a pilot launched a pilot graduation scheme graduation scheme to provide to provide institutional institutional support support to selected to selected high- high-performance performance beneficiaries. beneficiaries. Allocated 0.00 0.00 0.00 Amount PBC allocation 13.60 EG does not have evaluation systems and measures in place to assess the effectiveness of its 2:Institutional co-financing of actions to Value interest payments on NA NA strengthen the co- an frequent basis and 30-Mar-2024 30-Sept-2023 financing of interest better align its payments program targeting towards (Text) strategic sectors and/or thematic areas. Allocated 0.00 0.00 1.80 Amount PBC allocation 6.70 3:Institutional EG currently does not EG adopted a EG adopted a actions to Value have a monitoring financial modelling 30-Mar-2024 financial modelling 30-Sept-2023 strengthen the system, a risk tool. tool. Jun 20, 2024 Page 12 of 15 The World Bank Implementation Status & Results Report Georgia Relief and Recovery for Micro, Small, and Medium Enterprises (P173975) partial credit management guarantees program framework, and an (Text) outreach strategy to evaluate the performance and risks of the program and propose improvements in its design. Allocated 0.00 0.00 5.00 Amount PBC allocation 13.60 Jun 20, 2024 Page 13 of 15 The World Bank Implementation Status & Results Report Georgia Relief and Recovery for Micro, Small, and Medium Enterprises (P173975) 7. DATA ON FINANCIAL PERFORMANCE 7.1 Cumulative Disbursements 7.2 Disbursements (by loan) Loan/Credit/TF Status Original Revised Cancelled Disbursed Undisbursed % Disbursed IBRD-92390 Effective 102.90 102.90 0.00 36.78 60.59 35.74% 7.3 Key Dates (by loan) Loan/Credit/TF Status Approval Signing Effectiveness Orig. Closing Rev. Closing IBRD-92390 Effective 11-May-2021 17-May-2021 17-Aug-2021 30-Jun-2026 30-Jun-2026 8. KEY DATES Jun 20, 2024 Page 14 of 15 The World Bank Implementation Status & Results Report Georgia Relief and Recovery for Micro, Small, and Medium Enterprises (P173975) Key Events Planned Actual Approval 11-May-2021 11-May-2021 Effectiveness 17-Aug-2021 17-Aug-2021 Mid-Term Review No. 01 23-Apr-2024 21-Mar-2024 Operation Closing/Cancellation 30-Jun-2026 9. RESTRUCTURING HISTORY 10. ASSOCIATED OPERATION(S) There are no associated operations Jun 20, 2024 Page 15 of 15