Document of The World Bank FOR OFFICIAL USE ONLY Report No. 115306-MM INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL FINANCE CORPORATION MULTILATERAL INVESTMENT GUARANTEE AGENCY PERFORMANCE AND LEARNING REVIEW OF THE COUNTRY PARTNERSHIP FRAMEWORK FOR REPUBLIC OF THE UNION OF MYAMAR FOR THE PERIOD FY15-FY17 Myanmar Country Management Unit East Asia Pacific Region The International Finance Corporation East Asia and Pacific Department The Multilateral Investment Guarantee Agency 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 Group authorization. The date of the last Country Partnership Framework is April 23, 2015 FISCAL YEAR (April 1st – March 31st) CURRENCY EQUIVALENTS (Exchange Rate Effective May 2, 2017) Myanmar Kyat (MMK) 1,362.01 = US$1.00 ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank AIIB Asian Infrastructure Investment Bank ASEAN Association of Southeast Asian Nations BETF Bank Executed Trust Fund CBM Central Bank of Myanmar CPF Country Partnership Framework CSO Civil Society Organization DLI Disbursement Linked Indicator DSA Debt Sustainability Analysis DTIS Diagnostic Trade Integration Study EITI Extractive Industries Transparency Initiative ESIA Environmental and Social Impact Assessment FDI Foreign Direct Investment GHG Greenhouse gas GSP Generalized System of Preferences ICA Investment Climate Assessment ICT Information and Communications Technology IDA International Development Association IDP Internally Displaced People IFC International Finance Corporation IHLCA Integrated Household Living Conditions Assessment INDC Intended Nationally Determined Contribution INGO International Non-Governmental Organizations IPF Investment Project Financing JICA Japan International Cooperation Agency MEB Myanmar Economic Bank MFI Micro Finance Institution MDTF Myanmar Multi Donor Trust Fund M&E Monitoring and Evaluation MIGA Multilateral Investment Guarantee Agency i MONREC Ministry of Natural Resources and Environmental Conservation MOPF Ministry of Planning and Finance MPLCS Myanmar Poverty and Living Condition Survey MPT Myanmar Posts and Telecommunications MSME Micro Small Medium Enterprise MTFF Medium Term Fiscal Framework NCDDP National Community Driven Development Project NGO Non-Governmental Organization NLD National League for Democracy NSDS National Strategy for Development of Statistics PDNA Post Disaster Needs Assessment PEFA Public Expenditure and Financial Accountability PER Public Expenditure Review PFM Public Financial Management PforR Program for Results PLR Performance and Learning Review PPP Public-Private Partnership PSW Private Sector Window QSEM Qualitative Social and Economic Monitoring RETF Recipient Executed Trust Fund RPBA Recovery and Peace Building Assessment RRA Risks and Resilience Assessment SCD Systematic Country Diagnostic SDG Sustainable Development Goals SEC Securities and Exchange Commission SEE State Economic Enterprise SEZ Special Economic Zone SME Small and Medium Enterprise SOE State Owned Enterprise SUF IDA Scale-Up Facility SWG Sector Working Group TF Trust Fund UHC Universal Health Coverage UNFCCC United Nations Framework Convention on Climate Change UNDP United Nations Development Program WB World Bank WBG World Bank Group IDA IFC MIGA Vice President: Victoria Kwakwa Dimitris Tsitsiragos Keiko Honda (EVP) Director: Ulrich Zachau Vivek Pathak Merli Baroudi Task Team Leader: Abdoulaye Seck Vikram Kumar Paul Barbour ii ACKNOWLEDGEMENTS The World Bank Group would like to thank our counterparts in the Ministry of Planning and Finance, the Development Assistance Coordination Unit, and across the Government of Myanmar, for their country leadership, inputs and advice throughout the PLR engagement. We would also like to thank all development partners and all stakeholders participating in consultations for their valuable comments and suggestions. The PLR was led by Abdoulaye Seck, Nikolas Myint and Basil Kavalsky (IDA), Vikram Kumar (IFC) and Paul Barbour (MIGA), under the guidance of Ulrich Zachau. The CPF core team included Ye Thu Aung, Reena Badiani-Magnusson, Anthony Gaeta, Xuemei Guo, Aye Me Me Htun, Chutima Lowattanakarn, Kyaw Soe Lynn, Shabih Mohib, Khin Thida Maw, Vachraras Pasuksuwan, Habib Rab, Nurani Oktavia Robelus, Rawong Rojvanit, Lou Scura, Lars Sondergaard, Daniel Street, Pamornrat Tansanguanwong, and Andrea Woodhouse. Peer Reviewers were: Constantine Chikosi, Markus Kostner, Naseer Ahmad Rana and Keta Ruiz. The team is most thankful for their invaluable contributions and helpful feedback and guidance. The team also wishes to thank the following people for their contributions: Nagavalli Annamalai, Zubair Khurshid Bhatti, Michael Bonte-Grapentin, Henrike Brecht, Edith Bowles, Greg Browder, Rome Chavapricha, Chenjerani Simon Chirwa, Marie-Helene Cloutier, Soren Davidsen, Atul Deshpande, Indira Ekanayake, Christopher Fabling, Martin Fodor, Manush Hristov, Sunil Khosla, Siou Chew Kuek, Morten Larsen, Kate Lazarus, Arvind Nair, Tenzin Dolma Norbhu, Myoe Myint, Jason Pellmar, Wolfhart Pohl, Hnin Hnin Pyne, Sjamsu Rahardja, Charles Schneider, Rajendra Singh, Jane Treadwell, Min Nwe Tun, Ikuko Uochi, Vanessa Vizcarra, Xiaoping Wang, Ingo Wiederhofer, Khin Aye Yee, Degi Young, May Thet Zin, and Sergiy Zorya. iii REPUBLIC OF THE UNION OF MYAMAR PERFORMANCE AND LEARNING REVIEW OF THE COUNTRY PARTNERSHIP FRAMEWORK I.  INTRODUCTION ...................................................................................................................................... 1  II.  MAIN CHANGES IN COUNTRY CONTEXT .................................................................................................. 2  A.  2  POVERTY PROFILE ...............................................................................................................................................  B.  KEY MACROECONOMIC AND DEBT DEVELOPMENTS  3  ...................................................................................................  C.  EMERGING COUNTRY ISSUES  4  .................................................................................................................................  III.  SUMMARY OF PROGRAM IMPLEMENTATION ......................................................................................... 6  A.  PORTFOLIO PERFORMANCE ...................................................................................................................................  6  B.  9  PARTNERSHIPS ...................................................................................................................................................  C.  PROGRESS TOWARD ACHIEVING CPF OBJECTIVES ....................................................................................................  10  Focus Area 1: Reducing Rural Poverty. ........................................................................................................  11  Focus Area 2: Investing in people and effective institutions for people.......................................................  12  Focus Area 3: Supporting a dynamic private sector to create jobs.  13  .............................................................  D.  CROSS‐CUTTING THEMES ...................................................................................................................................  13  IV.  16  EMERGING LESSONS ..............................................................................................................................  A.  MAIN LESSONS FROM PORTFOLIO AND PROGRAM IMPLEMENTATION AND PERFORMANCE ...............................................  16  B.  17  LESSONS FROM EXPERIENCE IN OTHER COUNTRIES/REGIONS APPLICABLE TO MYANMAR .................................................  V.  19  ADJUSTMENTS TO THE COUNTRY PARTNERSHIP FRAMEWORK ..............................................................  VI.  RISKS TO CPF PROGRAM  23  ........................................................................................................................  ANNEX 1: UPDATED CPF RESULTS MATRIX  26  .........................................................................................................  35  ANNEX 2: MATRIX SUMMARIZING PROGRESS TOWARDS CPF RESULTS ..............................................................  42  ANNEX 3: MATRIX OF CHANGES TO ORIGINAL CPF RESULT MATRIX ...................................................................  52  ANNEX 4: ECONOMIC POLICY OF THE UNION OF MYANMAR .............................................................................  54  ANNEX 5: WORLD BANK FINANCING (US$ MILLION) ..........................................................................................  56  ANNEX 6: WORLD BANK ACTIVE PORTFOLIO .....................................................................................................  62  ANNEX 8: IFC PORTFOLIO (US$ MILLION) ...........................................................................................................  64  ANNEX 9: MIGA PORTFOLIO (US$ MILLION) .......................................................................................................  ANNEX 10: KEY ECONOMIC INDICATORS 2014/15 – 2018/19 (% OF GDP)1 ..........................................................  65  Boxes: Box 1: Myanmar’s Triple Transition .............................................................................................. 5  Box 2: The Capacity-Building Challenge in Myanmar. ................................................................. 7  Box 3: Myanmar Partnership Multi-Donor Trust Fund ................................................................ 10  Box 4: Integrating conflict sensitivity in the Myanmar NCDD project........................................ 15  Box 5: Implementation challenges and measures to help strengthen Myanmar program ............ 18  iv Box 6: Crowding in private investment in the energy sector of Myanmar ................................... 22  Figure: Figure 1: Poverty reduction between 2004/2005 and 2015 ............................................................ 2  Tables: Table 1: Assessment of Progress against CPF objectives indicators ............................................ 11  Table 2: Summary of main adjustments to the CPF results framework ....................................... 23  Table 3: Standardized Operations Risk-Rating Tool for Myanmar Risk Categories ................... 25  v REPUBLIC OF THE UNION OF MYAMAR PERFORMANCE AND LEARNING REVIEW OF THE COUNTRY PARTNERSHIP FRAMEWORK I. INTRODUCTION 1. The Myanmar Country Partnership Framework (CPF) for FY15-17 (Report No. 95183-MM), discussed at a Board meeting on April 23, 2015, is the WBG’s first full country strategy for Myanmar in over 30 years. It aims to support Myanmar’s ongoing “triple transition:” from military rule to democratic governance, from a state-directed to a market-oriented economy, and from decades of conflict with ethnic minorities to a historic peace initiative. Considering the fundamental transition, great uncertainty, and high risks, the CPF was developed for an initial period of three years. 2. During the implementation of the CPF to date, changes in Myanmar have continued to unfold at a rapid pace. On November 8, 2015 open elections in Myanmar ushered in a successful transition. A new Government formed by the National League for Democracy (NLD) took office on April 1, 2016. 3. This Performance and Learning Review (PLR), originally planned in FY16, has been prepared during FY17, in order to provide an opportunity to review and discuss Myanmar's evolving development challenges and opportunities and the World Bank Group (WBG) program fully with the new Government. Over the past 12 months, the WBG engaged in extensive consultations with government at all levels on an ongoing basis, including with the State Counsellor’s office, line ministries, the government’s Development Aid Coordination Unit (DACU), as well as members of parliament and parliamentary committees. In addition, consultations were held with civil society, the private sector, development partners, and other actors, continuing the emphasis on openness and inclusion developed in the preparation of the original CPF. 4. These consultations confirmed the continued relevance of the CPF objectives and pillars: (i) reducing rural poverty; (ii) investing in people and effective institutions for people; and (iii) supporting a dynamic private sector to create jobs. The new government noted specifically the alignment between the CPF objectives and its own economic policy issued in July 2016, and welcomed the emphasis in the CPF on building country systems and the commitment to rigorous monitoring of programs to ensure aid effectiveness. 5. Reflecting the results of the consultations over the last year, and given demand from the new administration and the continued relevance of the CPF program, management has decided to extend the period of the current CPF by two years to June 30, 2019. The extension reflects the key directions in which the new Government is proposing to steer the country, as well as lessons from analytic work which has confirmed the priorities set out in the Systematic Country Diagnostic, and the fact that in the original CPF period in which Myanmar went through an extended political transition, several programs and investments supported by the WBG have not 1 achieved their projected results fully yet, but are likely to do so over the next two years. This extension will allow the government to consolidate progress and advance toward achieving key development priorities, including on rural development and jobs. It also provides time to lay the foundations for the next WBG partnership framework. II. MAIN CHANGES IN COUNTRY CONTEXT A. Poverty profile 6. Myanmar has seen substantial poverty reduction between 2004/2005 and 2015 (Figure 1). Poverty declined from 32.1 percent in 2004/05 to 25.6 percent in 2009/10 and 19.4 percent in 2015 using the measurement methodology of the Government of Myanmar. A decline of a similar magnitude was registered using the World Bank’s revised estimate1 2: poverty went down from 44.5 percent in 2004 to 37.5 percent in 2009/10 and 26.1 percent in 2015. These improvements in well-being are also reflected in multiple measures of welfare, including average consumption expenditures and asset ownership. Figure 1: Poverty reduction between 2004/2005 and 2015 50% 50% 45.3% 44.5% 45% 45% 38.5% 40% Headcount poverty rate Headcount poverty rate 40% 37.5% 42.1% 35% 35% 32.1% 28.8% 30% 34.6% 30% 25.6% 26.1% 25% 25% 20% 19.4% 15% 19.2% 20% 10% 15% 5% 10% 0% 2004/05 2009/10 2015 2004/05 2009/10 2015 GoM et al (2007), based in 2004/05 living World Bank (2014) ‐ Urban conditions World Bank (2014), based in 2009/10 living World Bank (2014) ‐ Rural conditions 7. Despite these improvements in living conditions, many individuals live just above the poverty line and are at risks of falling back into poverty. The share of the population who are 1 The poverty analysis uses data from the 2004/05 and 2009/10 Integrated Household Living Conditions Survey and the 2015 Myanmar Poverty and Living Conditions Survey. 2 Although a handful of technical choices differentiate the Government and Bank methods, only a few have substantial explanatory power in explaining the differences in the estimates produced. The first important difference reflects the base year for anchoring the standard of living and definition of poverty. The second difference reflects methodological choices, in particular how household consumption was translated into individual consumption using adult equivalence scales. Due to the number of people in Myanmar living near the poverty line, small changes in assumptions can lead to large changes in poverty estimates. 2 near poor, that is, whose income is within 20 percent of the poverty line, was 61 percent3 of the population in 2004/2005, and still stood at 40 percent in 2015. 8. Rural and urban poverty have declined over the past years, with urban areas experiencing faster growth in household welfare, and a sharper decline in poverty in percentage terms. Urban poverty fell from 34.6 percent in 2009/10 to 19.2 percent in 2015, and rural poverty fell from 38.5 percent to 28.8 percent over the same time horizon. The more rapid decline in urban poverty relative to rural poverty is mirrored in sectoral growth figures, which show a more rapid rate of growth in manufacturing and services than in the agricultural sector over the same period. These developments underline the benefits of labor’s reallocation to faster growing sectors of the economy, while pointing to the importance of rural development for promoting inclusive growth in Myanmar. 9. There does not appear to be a significant relationship between the gender of household head and the economic welfare of the household. The share of households headed by women in 2015 is similar among poor households and the general population. The gender gap has narrowed over time across a wide range of socioeconomic indicators, including enrollment at primary and middle school levels, and grade completion. Girls have higher net enrollment rates at high schools as boys are either dropping out or falling behind. However, there is a substantial gap in annual labor force participation across men and women. Annual employment participation is 59 percent for women aged 15 and over, compared to 84 percent for men. B. Key Macroeconomic and Debt Developments 10. The CPF implementation period was marked by several exogenous shocks that have heightened challenges for macroeconomic management. The earlier period of CPF preparation had been one of rapid economic growth, reflecting the opening of the economy through a large number of measures including the unification of exchange rates, and the removal of trade and foreign exchange restrictions. The economy grew at an average of 8.2 percent per year in 2013/14 and 2014/15. Economic growth then eased to 7.3 percent in 2015/16 and an estimated 6.5 percent in 2016/17, essentially reflecting a supply shock due to the impact of severe flooding on agricultural production, and lower production of natural gas. While macroeconomic policy in earlier years succeeded in keeping deficits below 3 percent of GDP and inflation at around 6 percent per year, the supply shock to agriculture contributed to a sharp rise in inflation, which peaked at 16 percent (year on year) in October 2015, and an increase in the fiscal deficit by 2 percentage points of GDP (1.1 percent of GDP in 2014/15 to 3.2 percent in 2015/16) reflecting lower revenues from Myanmar’s sales of natural gas, as both production and world prices declined. 11. Recent economic developments have brought to the fore institutional and capacity constraints for dealing with external shocks and macroeconomic imbalances. On fiscal policy, pressures from a weakening Kyat and falling commodity prices led to a sharp increase in monetary financing of the deficit in 2015/16. This compounded supply led inflationary pressures. The domestic market for government securities is gradually taking off, but it will take a long time to develop the market for much needed long-term financing, which is critical for large investment 3 Using the World Bank (2014) definition 3 projects. Initial pressures on the exchange rate in May 2015 prompted administrative controls, which led to a widening gap between the official and parallel market rates. Rapid growth in credit to the private sector coupled with weaknesses in banking sector oversight has led to some deterioration in banking assets. 12. Despite these constraints, the government’s macroeconomic policy responses to external shocks have been broadly consistent with ensuring fiscal and external sustainability, and sustaining macroeconomic stability. Fiscal policy adjustments have been implemented through tax administration reforms (e.g. rollout of self-assessment at the Large Taxpayers’ Office starting FY 2015/16 and expected at Medium Taxpayers’ Office starting in FY 2017/18); expenditure reallocations, which have tried to protect spending on high priority areas such as education, health and energy (see 2017/18 Budget approved by Parliament in March 2017); and imposition of limits on the monetization of the deficit (borrowing strategy submitted to Parliament in March 2017). The Central Bank has been working to enhance its monetary policy capacity, including improved liquidity forecasting to better target reserve money, and enhanced monetary operations. The Central Bank has maintained exchange rate flexibility, allowing the Kyat to depreciate from Kyat 1,080 per US dollar in 2015 to closer to Kyat 1,360 per US dollar in 2017. 13. Myanmar has remained at low risk of external debt distress. A WB-IMF Debt Sustainability Analysis in 2016 found that total public debt, and Public and Publicly Guaranteed (PPG) external debt indicators are projected to remain sustainable. Public and publicly guaranteed external debt is estimated at 15.5 percent of GDP in 2015, and total public debt is 33.8 percent of GDP. Current account shocks and currency depreciation are the main sources of vulnerability for external debt, while public sector debt is vulnerable to extreme shocks relating to slowdown in GDP growth or fiscal slippages. Looking ahead, Myanmar will require proactive debt management to ensure that the debt portfolio rebalances away from short-term to longer-term financing4, as supported by the Stability and Resilience Support DPO series under the CPF. C. Emerging Country Issues 14. During the implementation of the CPF to date, Myanmar has continued its triple transition (Box 1) and the fundamental shifts described in the CPF – from state control and exclusion to empowerment and inclusion – have continued to improve lives for millions of people across Myanmar. The country’s first free national elections in a generation took place in November 2015, and the subsequent transfer of power to a National League for Democracy (NLD) government in March 2016 was peaceful. These high profile events have been accompanied by incremental (though not always linear) progress in participation, inclusion, and transparency, including greater media freedoms, the rejuvenation of the country’s universities and other institutions of higher learning, growth in the number and membership of trade and professional associations, and an increased number of voices active on social issues ranging from landlessness to corruption to exploitative working conditions. 15. Along with increased freedoms, improved access to information has facilitated citizen engagement on a broad range of issues. The percentage of the population with access to mobile 4 Governments and the general public in Myanmar have traditionally been hesitant to borrow externally, but this is changing especially for concessional financing such as IDA. 4 phones, in the single digits as recently as 2012, now exceeds 505 percent. Members of parliament as well as Government departments are now using social media platforms to communicate with citizens, and efforts are underway to capitalize on the digital revolution in areas from mobile money to citizen feedback to local economic development. In 2016, Myanmar ranked 136 out of 176 on the Transparency International corruption perceptions index, with a score of 28, up from 15 in 20126. This accelerating level of adoption of ICTs is creating new public and private business models and service opportunities involving digital platforms: digital ID and off-grid electrification from spare capacity of mobile phone towers as examples; as well as having the ability to avoid costly lessons of advanced economies of duplicated, fragmented and conflicting forms of technologies and information sources applied in multiple government agencies, rather than for the whole of government. Box 1: Myanmar’s Triple Transition The WBG’s Interim Strategy Note (ISN) for Myanmar, prepared in 2012 at the beginning of the WBG’s re-engagement with the country, opened by noting that Myanmar was “embarking on a triple transition: from an authoritarian military system to democratic governance; from a centrally-directed economy to market-oriented reforms; and from 60 years of conflict to peace in the border areas.” Acknowledging the complexity of these transitions, the ISN set out a program that would “support the success of these three transitions, promote poverty reduction, and pave the way for the resumption of a full country program.” Since the ISN was discussed in November 2012, the WBG’s program in Myanmar has grown to an IDA portfolio of $1.96 billion, but the emphasis on supporting the country’s triple transition, including as the basis for achieving poverty reduction and shared prosperity, remains. Much progress has been made in these transitions over the past five years: the country’s first free national elections were held in 2015 and a peaceful transfer of power to a civilian government took place in 2016; economic reforms have unleashed rapid growth and investment, with the Bank Group playing a critical role in establishing essential reforms such as a new Financial Institutions Law, a new Investment Law, the modernization of Myanmar’s Public Finance Management Systems, application to EITI membership etc.; and a national peace initiative has seen the signing of a national ceasefire agreement, bringing an end to some of the world’s longest running civil conflicts. And yet, as anticipated in the ISN, these transitions remain long- term, generational endeavors – democratic institutions need time to take root, poverty remains high, and conflict continues in parts of Shan, Kachin and Rakhine States. The WBG has supported Myanmar’s triple transition through a range of efforts aimed at strengthening transparent, accountable and effective governance, promoting economic growth and poverty reduction, and supporting the peace process and national reconciliation. In doing so, the WBG aims to be a reliable partner for Myanmar in the country’s historic transformation, and to ensure that the results under the CPF help a dynamic country realize its full potential. 16. Meanwhile, the new government has continued to pursue an end to decades of ethnic conflicts through a peace process involving negotiations with over a dozen armed groups, offering the country’s best hope for peace in a generation. In its initial phase in 2012 and 2013, 5 According to the Ministry of Transport and Telecommunications, there are 107 mobile phones for every 100 people in Myanmar. 6 The Corruption Perceptions Index aggregates data from a number of different sources that provide perceptions of business people and country experts of the level of corruption in the public sector. It is on a scale of 0-100 where a 0 equals the highest level of perceived corruption and 100 equals the lowest level of perceived corruption. 5 the process led to the signing of a series of bilateral ceasefire agreements, including with the Karen National Union, ending the world’s longest-running civil conflict. In October 2015, eight ethnic armed organizations signed a Nationwide Ceasefire Agreement with the Government, committing to a political dialogue aimed at a comprehensive national peace agreement. However, despite this promising start and the significant achievements of the peace process to date, progress remains uneven and fighting in recent months has intensified in the country’s northeast. This includes in particular, high intensity conflict with the Kachin Independence Organization, but also armed clashes with smaller groups in Shan State which displaced thousands of civilians in late 2016 alone. The government’s efforts to agree on a ceasefire with these groups and have them join the political process have so far been unsuccessful, in part reflecting a deep legacy of distrust following decades of conflict. 17. Even as the government seeks to advance the national peace process, new sources of conflict have erupted, including in Rakhine State. Long-simmering tensions between the predominantly Buddhist population and the state’s Muslim minority led to communal violence in 2012, and the uneasy peace that prevailed thereafter (with 120,000 Muslims who self-identify as Rohingya living in segregated IDP camps) was broken with an attack on a police border post in October 2016. The government authorized a military-led security and clearance operation after this attack which caused some 65,000 people to flee to Bangladesh amid allegations of widespread human rights violations, including killings, torture, and rape of civilians. An Office of United Nations High Commissioner for Human Rights (OHCHR) report released in February 2017 described it as “very likely” that crimes against humanity occurred in this operation7. The need to restore stability in Rakhine State and find a political solution to the fate of the country’s Muslim populations have thus become even more urgent, but no less intractable. III. SUMMARY OF PROGRAM IMPLEMENTATION A. Portfolio performance 18. As of May 2017, the International Development Association (IDA) portfolio includes 12 projects totaling about US$1.96 billion in commitments. One operation is planned for the remaining of FY17: South East Asia Disaster Risk Management Project (US$116 million). Myanmar is on track to fully commit its IDA 17 allocation, along with additional IDA of about US$100 million from the Crisis Response Window (to support government response to the 2015 floods and landslides), plus an estimated US$54 million as a result of reallocations within the EAP region, and allocations for regional projects. In addition to IDA, there is a Multi-Donor Trust Fund (see Box 3), jointly implemented with International Finance Corporation (IFC), with a commitment of US$136.3 million as of April 2017. Besides the MDTF, other TF have commitments of US$42.5 million as of April 2017. 19. The IDA portfolio is in overall good standing but disbursement remains a challenge. One out of 12 operations has a Marginally Unsatisfactory (MU) rating on Implementation Progress (IP). However, 5 operations have Moderately Satisfactory ratings for Development Outcome (DO) or Implementation Progress (IP), or both. The disbursement ratio 7 United Nations, Human Rights, Office of the High Commissioner, Report of OHCHR mission to Bangladesh -Interviews with Rohingyas fleeing from Myanmar since 9 October 2016, 3 February 2017 6 was 16 percent in FY15 and 13 percent in FY16. It stands at 10 percent as of May 2, 2017. The relatively low disbursement ratio reflects in part the young age of the portfolio (2.4 years compared to an EAP average of 3.6 years) and in part severe implementation challenges in a country with extraordinarily limited capacity. Initiated in 2015, a Joint Country Portfolio Review (JCPR) – a collaborative undertaking involving the Government, Japan International Cooperation Agency (JICA), Asian Development Bank (ADB), and the Bank – currently focuses on three cross-cutting implementation challenges: (i) processing approval of new projects; (ii) implementation procedures; and (iii) procurement. A Joint Action Plan (JAP) was agreed between the Government and ADB, JICA and the WBG to tackle these challenges. IDA is providing intensive implementation support to address these challenges, including through a growing number of country-based task team leaders. Box 2 below discusses the complexity of the capacity-building challenge in Myanmar. Box 2: The Capacity-Building Challenge in Myanmar. The challenge of building capacity in Myanmar is massive in scope and time—similar to that in the transition countries after the break-up of the former Soviet Union, and quite possibly even deeper, because of lower initial education levels. It is a matter of unlearning the entrenched approaches and practices that have been followed in the administration for decades, as well as learning fundamentally new skills. Developing and strengthening capacity requires strong commitment from the heads of ministries and agencies, the courage and resolve to take risks, and an ability to motivate middle- managers and officials who have reached where they are because of their success in carrying out functions that are no longer needed or even counter-productive in the new environment. The state- owned banks, for example, have been used as an instrument for transferring funds in support of specific government programs. They bear little relation to a modern commercial bank. In almost every sector capacity building requires first, helping to develop an understanding of the objectives of development administration in a market economy, second, putting in place the legal framework and implementing regulations needed to support it, and then training and motivating staff to adopt and carry out a new set of objectives aimed at supporting private-sector-led growth. Obviously new investment for growth has to take place pari passu with building capacity. The Bank’s work in the education sector is a good model of what can be achieved through identifying ongoing government programs and building on them to support Myanmar’s development objectives. There are limits however, and with the success the program is having in increasing access to schooling, the Government now finds itself facing the challenge of training large numbers of new school teachers. The focus of Bank support is now shifting to this area. This is the kind of careful sequencing that the Bank and other development partners need to design into their support for the Government. 20. The WBG has undertaken a wide-ranging program of analytic work, advisory services and technical cooperation given the importance of building up Myanmar’s institutional capacity. Ahead of the 2015 elections, the World Bank Group prepared a series of policy notes to promote debate and ideas on inclusive growth in Myanmar as new policy makers were preparing to govern. The policy notes highlight six priority areas – access to social services, reducing rural poverty, private sector competitiveness, financial inclusion, access to energy, and public sector governance. Each policy note summarizes the context and opportunities for change, including recent reforms and developments, and highlight regional experiences and lessons. The WBG has assisted Myanmar in undertaking first ever analytical work in a number of fields, including two Public Expenditure Reviews, an Extractive Industries Transparency Initiative (EITI) 7 reconciliation report, power sector financial viability, natural gas supply economics and a Diagnostic Trade Integration Study (DTIS). The World Bank also launched and delivered 3 Myanmar Economic Monitors, which has become a widely read and quoted bi-annual publication. Through its knowledge work, the WBG has helped inform policy and programs on issues such as Universal Health Coverage (UHC), qualitative and quantitative poverty measurement and analysis, a Post Disaster Needs Assessment (PDNA) after the 2015 floods and landslides, public finance allocations and reforms etc. Ongoing technical assistance aims to improve the legal and regulatory framework for banking and non-banking financial institutions and supervisory capacity of Central Bank and Financial Regulation Department of Ministry of Planning and Finance (MOPF). Work is underway on jobs; social inclusion; a study on the economy of Rakhine, and others. Most IDA- funded projects also include significant capacity building components. 21. IFC has a total commitment (own account of US$482 million and mobilization of US$403 million) of about US$885 million as of May 2017, in the information, transportation, tourism, construction, agro-business, retail, and finance sectors in Myanmar. By June 2017, IFC expects its total commitments to be US$1.0 billion which was the original target under the CPF. IFC’s strategy in Myanmar is directly linked to the WBG CPF. Within the CPF, IFC has pursued three strategic themes: (i) access to reliable and affordable infrastructure, particularly power; (ii) development of the agriculture and tourism sectors; and (iii) financial inclusion. 22. IFC has significant advisory services, totaling US$32.1 million in value as of April 2017. In line with the CPF, the IFC advisory work has focused on helping the Government of Myanmar and private firms to implement reforms that improve the business environment and encourage and retain investment in infrastructure, financial sector and in sectors which create jobs. This includes improving the investment climate in Myanmar, both through regulatory reform (e.g., new Investment Law, Myanmar Business Forum, Credit Bureau, Secured Transactions Framework, Corporate Governance, and Environment and Social Sustainability Performance Standards), supporting policy dialogue (for example through the Myanmar Business Forum as a platform between government officials and the private sector) and support for infrastructure, including power, telecommunications, and ports. IFC advised the Government for the first internationally tendered Independent Power Producer (IPP) in Myanmar (225 MW Combined Cycle Gas Turbine or CCGT Myingyan IPP) which resulted in price discovery that will save the Government several billion dollars over the life of the concessions. 23. Although the IFC portfolio is in good standing with no non-performing loans, implementation remains challenging. The main challenges include the inability to date to provide B-loans (see below); limited capacity in the domestic private sector to meet the international standards expected of IFC’s investments, poor corporate governance; and weak capacity of the Environmental Conservation Departments to enforce the existing regulation on environmental safeguards. IFC has also not received B-loan tax letters from the Myanmar Government yet, which is limiting its ability to mobilize long term private finance, particularly for large infrastructure. IFC has also signed a Technical Assistance MOU with the Securities and Exchange Commission of Myanmar (SEC) to help improve corporate governance of private firms in Myanmar. 8 24. The Multilateral Investment Guarantee Agency (MIGA) has two active projects with a total exposure of US$511.94 million in the telecommunications sector. The guarantees cover the risks of currency convertibility, transfer restriction, expropriation, and war and civil disturbance. The expected development impact of the projects benefitting from MIGA guarantees is the improvement of the telecommunications infrastructure sector and economic growth in Myanmar. One project’s activities include the construction of a fiber optic cable which will increase access to telecom services in urban and rural areas; provide additional tax revenues for the government; and boost economic activity and employment opportunities, directly and indirectly, during the construction and operational phases. The second project involves a joint operation between the Myanmar Post and Telecom (MPT) and KDDI Summit Global Myanmar (KSGM) to operate, upgrade, reactivate, and expand MPT’s fixed line and wireless telecom network and service offerings in Myanmar, thus leading to an increase in the number of connections that are affordable. 25. MIGA is currently considering another guarantee in the electricity sector. The proposed project is the IPP which IFC advised the Government on and which IFC may also support financially. It involves the development, financing, construction, testing, commissioning, operation, and maintenance of a 225-megawatt gas-fired combined cycle power station on a build- operate-transfer basis. The proposed project will help address the current severe power shortage in Myanmar. In addition, the project’s combined-cycle gas turbine is more energy efficient than single-cycle gas power plants currently in use in the country. The proposed project will create significant employment opportunities during the construction and operational phases. B. Partnerships 26. The CPF described partnerships as being at the core of the WBG’s engagement in Myanmar, and during the CPF implementation, important progress has been made to broaden and deepen partnerships in the CPF focus areas. Specifically, the WBG was able through its financing to create platforms that allowed other development partners to begin channeling resources through the government budget, instead of the parallel systems that had characterized the aid landscape in Myanmar for many years. As of March 2017, a broad range of development partners were co-financing WBG-supported programs, ranging from public financial management, to health and education, to community-driven development and energy. Many of these partnerships used an innovative trust fund covering both the World Bank and IFC (see Box 3) to channel their resources. IFC is mobilizing the Asia Infrastructure Investment Bank (AIIB) to take up to US$20 million of IFC’s exposure into the proposed Myingyan IPP, and this transaction will represent AIIB’s first private sector investment in Myanmar. 9 Box 3: Myanmar Partnership Multi-Donor Trust Fund The Myanmar Partnership Multi-Donor Trust Fund (MDTF), established in 2014, has expanded significantly during CPF implementation. Donor contributions have risen from US$10.3 million in 2014 to US$136.3 million by April 2017. In April 2017, the Finland Ministry of Foreign Affairs joined the partnership, along with the United Kingdom Department for International Development, the Australian Department of Foreign Affairs and Trade, the Kingdom of Denmark, and the Government of Myanmar (GoM). Within the three development areas of the MDTF ((i) Social Inclusion and Development; (ii) Institutional Strengthening; and (iii) Private Sector Development), the scope of activities has also expanded during the CPF implementation to now include support to the EITI, the financial sector, and poverty work. Selected results achieved include: 1) providing stipends to over 100,000 students from poor families; 2) provision of grants to government-sanctioned basic education schools and monastic schools to help them improve their education outcomes; 3) helping to increase tax collection through the introduction of self- assessment system at the Large Taxpayer’s office; 4) improvement of in-year financial reporting; 5) saving the private sector US$3.8 million in compliance costs as a result of introducing a negative list for trade licensing; and 6) the enactment of a modern Investment Law on October 18, 2016. 27. By building platforms of scale and avoiding fragmentation, these partnerships help increase aid effectiveness while reducing transaction costs and associated burdens on overstretched government systems. The WBG has played a catalytic role in initiating these partnerships, by providing donors with sufficient fiduciary, safeguards and technical oversight of the programs they are co-financing. For example, the World Bank Group was instrumental in helping the Government of Myanmar establish a national electrification plan and aligning support from development partners and the private sector toward the goal of achieving universal electricity access by 2030. More than US$600 million of donor financing, including IDA, Italy, Germany, etc. have been mobilized to support ‘one goal, one plan’ of national electrification. At the same time, these partnerships are beneficial to the WBG in that they help leverage IDA resources to maximize their impact on reducing poverty and boosting shared prosperity. C. Progress toward achieving CPF Objectives 28. Significant progress has been made to date (Annex 2), although some targets will not be met or fully met by the CPF’s original end date of June 30, 2017. The PLR analysis highlights both the potential impact of effective WBG assistance in Myanmar, and the difficulty in designing and implementing effective projects with a new client in a fragile, low capacity context. In particular, the PLR found that the Bank at times was overly optimistic in estimating implementation timelines, as complex government decision-making procedures and capacity constraints led to longer implementation delays than anticipated. Moreover, in some instances, project design was ambitious, assuming for example that support under an IDA operation could help tackle limited inter-ministerial coordination, while coordination problems turned out to be too deeply rooted to be overcome rapidly. Finally, the government transition that 10 took place during the CPF period has delayed implementation, as new ministers and senior officials needed time to come up to speed on projects under their purview. As part of the PLR, the results framework for the CPF has been revised to account for lessons learned in implementation to date. 29. The CPF supported three focus areas: reducing rural poverty; investing in people and effective institutions for people; and supporting a dynamic private sector to create jobs. Activities in these focus areas integrate four cross-cutting issues: gender, conflict, governance and climate change and disaster risk. Progress to date under each of these focus areas and cross-cutting issues is summarized in Table 1 and discussed below. Table 1: Assessment of Progress against CPF objectives indicators CPF Objectives Indicators # 22 Focus areas Achieved Likely Watch Total with additional time Reducing Rural Poverty 2 2 2 6 Investing in people and effective institutions for people 5 1 2 8 Supporting a dynamic private sector to create jobs 7 1 8 Total 14 4 4 22 Focus Area 1: Reducing Rural Poverty. 30. As of May 2017, it appears that targets for the CPF objectives of increased productivity in farming and agribusiness will not be achieved in FY17, while the targets for the CPF objectives of improved power generation and access to electricity are likely to be achieved in FY18. WBG programs supporting these objectives have experienced delays in preparation, securing final approvals from the Government and, in the case of IDA projects, in putting in place the major procurement packages for the core investments. There have been major positive developments in the power sector though, as the competitive procurement introduced by the WBG has led to decreased prices, with potential savings of several billion US$ over the life of future concessions. In addition to demonstrating substantially lower prices and establishing new efficiency norms resulting from competitively procured gas-fired generation, whether public or private, more than 50 percent cost savings (compared to cost estimates) were achieved in the competitively bid solar home systems under the Bank project. 31. Targets for the CPF objective of improved access to critical infrastructure and services for the rural poor have been achieved, in the process demonstrating the effectiveness of a participatory model. As of early 2017, the National Community Driven Development Project (NCDDP) financed over 6,500 subprojects in 27 townships, home to 3.5 million people. Subprojects included the rehabilitation of over 2,300 kms of roads, extensions and renovations of 1,400 schools, along with investments in new water supplies, sanitation facilities, electrification, jetties, libraries and health centers amid a broad range of community level infrastructure. To date, the project has created over one million days of paid labor. An independent technical audit in 2016 found that 92 percent of subprojects met or exceeded technical 11 specifications, and that subprojects were cost effective when compared to the construction of similar infrastructure through other programs. 32. Besides infrastructures and jobs, the NCDDP has helped in using innovative tools and approaches that have the potential to increase social capital and support the peace process. This includes: (i) the transformation of the relation between the State and the citizens (from top down to bottom up governance); (ii) the organization of communities into an active and inclusive (gender) force for changes; (iii) annual performance reviews, including social audits; (iv) large scale grievance handling mechanisms; and (v) confidence building measures and partnerships between Union Governments and Ethnic Armed Organizations (EAOs) to serve communities in townships that are still contested. 33. To achieve original CPF objective of improved national capacity for sustainable environmental and natural resource management will require engagement and time beyond the CPF period ending June 30, 2017. This objective pertains to the capacity of the Government to carry out Environmental Impact Assessments (EIAs) for projects – both those domestically financed and those supported by development partners. The picture is mixed. While there is clear accountability with the Ministry of Natural Resources and Environmental Conservation (MONREC) and high-standard legislation is in place, there is a serious mismatch between this and the Ministry’s capacity to manage the EIA process and enforce compliance with the regulations. The WBG is working with the Government towards an approach that can prioritize those areas where the EIA process needs to move ahead most urgently, and to prioritize targeted capacity building for sustainable environmental management in key natural resource subsectors. Focus Area 2: Investing in people and effective institutions for people. 34. The targets for the CPF objective of improved capacity to manage public finances and Central/Local relations for better services delivery are partially achieved as of April 2017. The Ministry of Planning and Finance has made the budget more transparent and accessible to the Myanmar public (e.g. publication of Citizens’ Budget; budget proposal to Parliament (for the first time ever starting this year)); budget execution reports; information on State Enterprise finances), has prepared a medium-term fiscal framework (MTFF), and is using formula-based transfers from the center to state and regions. Myanmar has also reformed some of the outdated financial rules and regulations that were a major impediment to services delivery at the local level. Regarding transparency in the reporting of revenue from natural resources, Myanmar published its first EITI reconciliation report in January 2016, but there has been a significant delay since then, and the second report is not expected until early 2018. 35. In education and health there has been significant progress in increasing resources available to schools and local health personnel. The targets of the CPF objective of expanding and improving education coverage and measurement of learning outcomes were exceeded. Stipends allow over 150,000 students from poor households to continue their education. The program has also revealed the urgent need to address poor learning outcomes by undertaking assessment of early grade reading performance. The targets of the CPF objective of expanding health services and improving health financing, with a focus on maternal, newborn and child health, are not met yet but more funding is channeled to front line service providers to improve 12 health services. Some of the success of the health and education programs are attributed to the use of block grants and disbursement-linked indicators (DLIs) rather than traditional IPFs. 36. The Bank has supported a substantial program of analytic work for increased understanding of poverty and key governance issues. The Bank contributed to a new household survey and a poverty assessment which are helping to build a consensus on the levels and distribution of poverty in Myanmar. A first-ever Public Expenditure Review has also helped to shed light on intergovernmental fiscal transfers and recent trends in public spending in the health and education sectors. A second PER is looking at ways to create fiscal space and protect spending on economic and social trends. Spending trends have been monitored and reported on through bi- annual Myanmar Economic Monitors, which have also looked at links between growth and migration, job creation, and the impact of natural disasters. The Bank has supported a “Pay, Compensation and Human Resource Review” jointly undertaken with the Ministry of Planning and Finance and other key public sector agencies. The policy recommendations, including the use of a customized pay and compensation model that has been applied in the MTFF process, are likely to be approved by the cabinet in June 2017. Focus Area 3: Supporting a dynamic private sector to create jobs. 37. All the targets but one of the CPF objectives indicators were achieved, though there remains a large unfinished agenda to enable the private sector to reach its full potential. Of the eight objectives indicators under this focus area – which covers access to finance, ICT, better business climate and improved trade regulations – only one target relative to trade regulations was partially achieved. The Government of Myanmar has taken a number of important steps in the past few years to liberalize markets for finance, trade and telecommunications, and improve the enabling environment for private sector. The WBG Group has played a supporting role in all these areas, though given the evolving context, attribution is difficult. In the telecommunications sector for instance, mobile communications have expanded rapidly as a result of low prices brought about by the competitive market, to which the WBG has contributed. A new Banking and Financial Institutions Law, developed with the assistance of the WB, defines the scope of power of the Central Bank of Myanmar (CBM) adequately, marks the perimeter of exercise of discretion, sets out clear procedures to guide, and ensures consistency. Additionally, the law includes upgrading the regulatory framework for mobile financial services, which is expected to be a game changer in the area of expanding financial inclusion in Myanmar in light of the rapid uptake of smartphones. 38. The progress has been slower in improving the investment climate more generally where Myanmar’s indicators have only improved marginally during the CPF period ending June 30, 2017. However, the new Investment Law – drafted with the help of IFC –which came into effect on April 1, 2017 brings fundamental changes such as providing a level playing field for foreign and domestic investors alike, simplifying the investment approval process (including by reducing the discretionary authority of the Myanmar Investment Commission), improving minority protection rights, financial reporting and auditing requirements, managing investor grievances, directing tax incentives to where they are needed most etc. D. Cross-Cutting themes 13 39. Gender. As planned in the CPF, all IDA-supported operations are gender informed8, and a Country Gender Action Plan (CGAP) was developed. As an illustration, under the Essential Health Services Access Project, approximately 4 million pregnant women and their young children would potentially benefit from the project, and gender is mainstreamed throughout the project design, implementation and monitoring. The NCDDP is ensuring women have substantive voice in the decision making forum, through a representation of a least 50 percent in Village Development Committees; at least one sub-project per village tract annually that will directly respond to women’s priorities; and equal pay for equal work for women and men for work performed for sub-projects. The CGAP which is aligned with and supports CPF implementation has three strategic priority areas: (i) addressing relevant gender aspects in operational work; (ii) improving gender knowledge and data on key development issues, and promote policy dialogue on gender issues; and (iii) providing capacity building and learning support to clients and WBG staff. The CGAP will be updated to cover the CPF extension timeframe, and will identify gender disaggregated indicators for relevant CPF outcomes, whenever data allows. 40. Climate Change and Disaster Risk. Myanmar submitted its Intended Nationally Determined Contribution (INDC) to the United Nations Framework Convention on Climate Change (UNFCCC) in 2015. The INDC recognizes that Myanmar is highly vulnerable to the adverse impacts of climate change, including extreme weather events, sea level rise, flooding and drought. Myanmar is a net Greenhouse gas (GHG) sink as a result of having the largest standing forests on mainland South East Asia, low level of development and still relatively clean energy sources. Adaptation to climate change is a strong priority of the WBG in Myanmar. The WBG has assisted Myanmar to enhance the efficiency of existing gas-fired plants and develop energy sources and operations that will help power the country in a sustainable and clean manner. Under the Ayeyarwady Integrated River Basin Management Project, enhancing hydromet services is helping to strengthen climate adaptation capacity and disaster risk management, including a national system to produce and disseminate disaster warning information. A disaster risk management operation planned in FY17 will strengthen resilience against floods and earthquake in the city of Yangon while improving the capacity for disaster risks financing. Building “emergency response contingencies” into IDA supported operations where appropriate, has allowed the rapid reprogramming of funds to respond to natural disasters. 41. Conflict. At a strategic level, the WBG – as a founding member – has maintained an active role in the Peace Support Group9 which works towards ensuring effective coordination of the international community’s support to peace in Myanmar. At the operational level, the WBG is striving to ensure its portfolio is conflict sensitive by undertaking conflict assessment prior to engagement and engaging with all stakeholders, including with ethnic armed organizations, and by piloting operational adaptations where needed. At both the strategic and operational level, this engagement has benefitted from the Korean Trust Fund for Economic Transitions. In addition to proactively mitigating risks, the WBG has also aimed at maximizing opportunities for supporting 8 A Project is “gender informed” if the PAD and/or supporting documents at the time of Board approval document demonstrates that the project address gender in all 3 dimensions of the gender flag: analysis, actions, M&E. 9 It currently includes Australia, Canada, Denmark, the European Union, Finland, Indonesia, Japan, New Zealand, Norway, Sweden, Switzerland, the United Kingdom, the United Nations, the United States of America and the World Bank Group. 14 peace in Myanmar by supporting increased access to services and opportunities for communities affected by conflict. The case of the NCDDP is discussed in Box 4. Box 4: Integrating conflict sensitivity in the Myanmar NCDD project Approved in November 2012 as the WBG’s first project in Myanmar after a 25-year absence, NCDDP was not originally intended to address the government’s long-running conflicts with ethnic groups along the country’s periphery. However, changes in Myanmar unfolded at a dramatic pace, with the signing of a nationwide ceasefire agreement in October 2015 paving the way for the NCDDP to expand to areas under the influence of various ethnically-based armed groups and home to some of the country’s poorest and most vulnerable communities. At the same time, conflict erupted in a project area in Shan State, necessitating a review of operational procedures to ensure the safety of project staff and communities. To address conflict, the project team took a three-fold approach. First, the Bank and the government actively engaged in a dialogue with local stakeholders, including ethnic armed organizations, in conflict- affected townships and built relations to introduce the project. Second, the project built knowledge and skills within the project, both upstream by undertaking participatory township-specific, in-depth conflict assessments and during implementation by hiring staff from a variety of ethnic groups, who spoke the local languages, knew local actors, and had an in-depth understanding of local context. And finally, it adapted operations to fit the local context. Negotiations with armed groups ensured unhindered access of staff to key areas, conflict sensitivity training increased staff skills, while regular review meetings were held with civil society to build trust and address problems, and additional villages were allowed to participate in the project in the second year of operations while maintaining access to four annual cycles of grants. These adaptations were time intensive, required a spirit of openness and learning, and leadership on the part of the government, plus additional resources on the task team side, but they allowed the NCDDP to become the first government project to operate at scale in conflict-affected parts of Myanmar, and to do so while building mechanisms for collaboration and communication with previously marginalized groups. 42. Governance. As envisioned in the CPF, Governance has been mainstreamed in the WBG Program at the project, sectoral and country level. As an illustration at the sectoral level, the WBG has helped identify governance issues in the management of natural resources, and have assisted Myanmar in publishing its first EITI reconciliation report in 2016. The WBG – along with UK and Australia – has also helped to mobilize resources to continue supporting EITI implementation. In the financial sector, the WBG is providing technical assistance for assessment and improvement of governance arrangements, including auditing and accounting standards and disclosure requirements of financial institutions. Furthermore, during CPF implementation, the WB has broadened its public sector engagement along three major themes: (i) making the Central-Local architecture work better; (ii) resolving bottlenecks in economic and social services through policy dialogue and capacity development; (iii) improving performance through streamlining government structure and improving systems for rewarding, recruiting, deploying and retaining public servants. In addition to the Pay, Compensation and Human Resources study mentioned above, the WB has also expanded collaboration with State and Region governments on Public Administration Performance, including improving delivery of administrative and social services; strengthening the organizational and staff capacity of civil servants; and strengthening citizen engagement. 43. Jobs. While implicit in other topics discussed above, job creation is being given increased importance in the overall program moving forward, through systematically ensuring that these 15 cross-cutting areas are taken up in the Bank’s analytic work and the design of lending operations. The Bank is currently undertaking a Jobs report to inform the dialogue with the Government of Myanmar on this topic. Bank and IFC support for the financial sector will play an important role through widening access to Bank credit for all, and particularly for women: indeed, access to finance is the first bottleneck listed by firms for their expansion. Bank analytic work will include coverage of the topic of migration and explore how Myanmar can derive greater benefits from its high rate of migration. IV. EMERGING LESSONS A. Main lessons from portfolio and program implementation and performance 44. The triple transition remains work in progress. Myanmar is still a fragile state with significant violence, major tensions, and a difficult interplay between political realities and economic policies. In this context it is essential for the World Bank Group to have access to the best possible knowledge and understanding of what is happening on the ground. This requires well-staffed local offices (in Yangon and Nay Pyi Taw). In addition, the Bank has found it useful to establish links with agencies that are able to report on and evaluate the situation in the states and provinces where intermittent violence is still occurring. Factoring the evolving political economy in Myanmar into the design of the Bank’s program is key to the achievement of the objectives the Bank is supporting. 45. There are a number of lessons from Myanmar’s experience for application in other FCV contexts. They include the following: (i) the importance of being present in the country in sufficient strength, including local staff who brings local language skills and an intimate country knowledge; (ii) a solid understanding of the social and political dimensions of fragility and conflict; (iii) the willingness to enter into policy dialogue on sensitive issues; (iv) the willingness to take risks, e.g., by reaching out to ethnic armed groups and civil society; (v) the aptitude to work in partnerships. 46. Need for factoring in the relative inexperience in handling World Bank Group projects and procedures into more realistic assessments of the likely pace of program implementation. In particular, the Bank tended to under-estimate the costs associated with learning curves and transition in terms of program delays. Looking forward, project design should also emphasize simplicity. IFC and MIGA initially under-estimated the lead time in seeking approvals for projects from the Government, especially during a time of transition. Having a joint WBG approach such as in the case of the energy sector with a Joint Implementation Plan is an effective way to address these issues of low capacity and coordination challenges across Ministries. The positive experience from the energy Joint Implementation Plan (JIP) in Myanmar is being replicated into the financial sector engagement. 47. The value of consulting broadly in advance of changes of Government. The Myanmar experience is a good practice example of the Bank’s building up close relationships with both the outgoing and incoming administrations. 16 48. The Joint Country Portfolio Review has identified the implementation bottlenecks for WBG portfolio, chiefly a strong centralization, lengthy and sometimes unpredictable internal decision mechanisms, in addition to weak capacity on handling fiduciary and safeguards aspects. With the recent establishment of DACU that is tasked to enhance the effectiveness of external assistance, there is an opportunity to simplify, rationalize and streamline internal decision mechanisms, and adopting a more structured approach to capacity building, while avoiding the risk that DACU would constitute an additional bureaucratic layer. 49. Analytical and technical assistance activities have played a critical role during the CPF period in assisting the authorities with managing the economic transition, and the next round of knowledge work may shift toward advising policy makers on prospective risks in the medium to long terms. In a time of transition, the WBG has responded well to the needs to inform major institutional changes. Examples include the first-ever Public Expenditure Review to guide the preparation of a first MTFF; the technical assistance in setting up a Large Taxpayer Office (LTO) and moving to a self-assessment system; support to the new Financial Institutions Law and new Investment Law; and advice leading to the first-ever EITI reconciliation report. With these major reforms now in place, it may be appropriate to rethink the approach and coverage of the knowledge program, with a shift to forward-looking products. An example of the latter would be a comprehensive Country Economic Memorandum that seeks to advise policy makers on the key economic challenges that they are likely to confront in the next three to five years. The WBG will initiate a discussion with the authorities on the need for such shifts in the knowledge program. B. Lessons from experience in other countries/Regions applicable to Myanmar 50. Myanmar’s experience is unique but it can learn from countries that have emerged from long years of isolation or have overcome protracted civil or inclusion challenges. The WBG is supporting a range of south-south exchanges to enable Myanmar government officials to learn from other countries and build networks with their peers. On the NCDDP, sustained exchanges with Philippines and Indonesia have brought useful lessons on how to manage a nationwide scale up, integrate disaster risk management in CDD platforms, and how to operate effectively in areas affected by armed conflict. On Public Finance Management, the WBG has supported Myanmar in organizing major learning events with the participation of ASEAN officials, including study tours on: project appraisal and prioritization to Vietnam; SEE fiscal management to Indonesia; and fiscal management and national accounts to Thailand. The WBG is also supporting Myanmar officials in undertaking study tours on land reforms in Malaysia and Kyrgyz Republic; and on cybersecurity to Israel, given the transformative impact of technology and data on all ways of life and doing business and government in developing and advanced states. A final example is a visit to Vietnam to learn from the successful Vietnam Business Forum, a public private partnership to improve investment climate. 17 Box 5: Implementation challenges and measures to help strengthen Myanmar program Implementation of a rapidly expanding portfolio in a context of limited capacity and significant knowledge gaps requires close monitoring and support. Experience to date since reengagement reveals a number of portfolio implementation challenges. These include:  Knowledge Gaps: Prolonged WBG absence from Myanmar has led to significant gaps in WBG knowledge of Myanmar’s context and institutions and in the Government of Myanmar’s understanding of WBG policies and procedures. This translates into a need for broader and more thorough analysis to inform effective project design and implementation.  Working through Country Systems: In contrast with other limited capacity countries where a parallel structure of project implementing units is established to implement development projects, the Bank has committed to building country institutions by working through country systems. The long-term nature of institutional change, and the limited time Government staff dedicate to Bank-financed project implementation, and capacity constraints in implementing agency staff to perform key operational tasks, have also impacted portfolio performance. Moreover, a need for project expenses to be included in the Government’s budget also leads to important delays, as this can only be conducted as part of the Government’s semi-annual budget review process.  Rapid Expansion of Investment Portfolio in Low Capacity Environment: The need to ensure rapid channeling of development resources to Myanmar, in a context of limited knowledge base and government capacity, compromises project implementation readiness at approval. Thus, preparatory activities such as preparation of procurement documents, etc. often carry into the first year of implementation, slowing down project start-up. In addition to continuous implementation support and a rapid increase in country-based WBG staff and task teams, the WBG has proactively addressed these challenges by:  Deepening Understanding of Policies and Procedures: the ongoing JCPR indicates that capacity constraints are one of the key impediments to effective project implementation. In response, the Bank has developed a systematic approach to capacity building in Myanmar, taking on lessons from relevant Bank’s experiences in other countries such a Vietnam, and reflecting local context and dynamics. This approach has built on existing training programs to develop into a more systematic and coordinated program with clear delivery by theme (project management, results-based management, financial management, procurement, safeguards, communication, etc.). Three different program levels: orientation (beginners), intermediate and advanced are offered. Training needs are identified and prioritized through a demand- driven assessment and built-in feedback mechanism. Two critical aspects of the training are: (i) co- facilitator (s) from the project implementing agency will deliver the training jointly with Bank staff; and (ii) a client database will be set-up for medium term tracking and monitoring of the progress of this initiative. The Bank has delivered the first orientation in April 2017 and will deliver the intermediate training in June 2017 with follow-on training planned for FY2018 and beyond.  Simplifying Project Design: Ensure project implementation arrangements are consistent with the constrained capacity environment in Myanmar by minimizing the scope of activities and the number of Government agencies implementing a particular project.  Promoting Stronger Staffing Arrangements in Government Agencies Implementing Bank-financed Projects: Stronger commitment will be sought from counterparts to ensure the appointment of sufficiently qualified staff who can prioritize implementation of Bank-financed projects.  Addressing Systemic Implementation Bottlenecks: The WBG led the first JCPR, launched together with ADB, JICA, and the Government in 2015 to identify cross-cutting implementation challenges and measures to improve project implementation. JCPR will continue to focus on facilitating the implementation of the actions identified in the Joint Action Plan in the following areas: streamlining processing approvals of new projects, rationalizing implementation procedures, and streamlining procurement. 18 V. ADJUSTMENTS TO THE COUNTRY PARTNERSHIP FRAMEWORK 51. The PLR extends the period of the CPF by two years. There are a number of compelling arguments for this extension. First and foremost, the CPF objectives reflect the key directions in which the new Government is proposing to steer the country. Second, the analytic work undertaken during the past three years has confirmed the priorities set out in the SCD, while allowing for a sharpening of the focus of Bank support in particular areas. Third, given the fact that the original CPF covered FY15-FY17, a period in which Myanmar went through an extended political transition, several programs and investments supported by the Bank Group have not achieved their projected results fully yet, but are likely to do so over the next two years. Drawing from the lessons of CPF implementation to date, such as the need for strong in-country presence, the WBG is strengthening its footprint in Myanmar. Lessons from implementation challenges will be reflected in simpler project designs and the expansion or introductions of instruments that shift the emphasis from inputs to results, such as PforR or DLI-type IPF. The extension is expected to provide the current programs with the time they need to mature, and also build the additional experience, further deepen the Bank’s knowledge base, and allow for the level of dialog needed to underpin the next CPF starting in FY20. 52. Since taking office, the new government has defined its overall priorities and identified the key areas where it looks for support from development partners. The government has consistently reiterated the importance it places on national reconciliation, and its view that balanced growth is critical to that goal. The Economic Policy of the Union (Annex 4) released by the Government in July 2016 describes the policies that will support national reconciliation. Consistent with the Economic Policy, DACU has outlined priorities for support from the WBG along with the continuous implementation of the ongoing programs: agriculture and rural development; fostering human capital; and infrastructure. 53. World Bank Group programs are being adjusted to emphasize the priority areas identified by the DACU and the deeper understanding the Bank Group has gained of the development constraints in the areas in which it has been operating and which have been the subject of its analytic and advisory work. Annex 5 summarizes the envisaged IDA partnership program of support for FY18-19, which is tentative and subject to adjustment in view of country developments. While the priorities set by DACU are consistent with the strategic focus of IFC and MIGA, their actual program during the CPF extended period will be also determined by private sector’s demand. a. Agriculture and rural development. IDA will develop a new agriculture project to promote agricultural diversification, and innovative, high-value organic production systems. IFC will support agribusiness, improved input supply, storage and logistics. Through the repair of rural roads under the ongoing Floods and Landslides Emergency Recovery Credit, the Bank Group will improve connectivity and allow farmers to seize market opportunities in their states/regions and beyond. The Bank will also support the Government in undertaking an independent evaluation of the NCDDP, and will respond positively should such an evaluation lead to a Government’s request for additional financing. In addition, the Bank Group will continue to advise on the restructuring needed to turn the State-owned Myanmar Agriculture Development 19 Bank into a positive force for the development of the sector rather than simply a channel for delivering government subsidies. Access to finance is the most important challenge for SMEs in Myanmar as per the Investment Climate Assessment (2014), and the challenge is highest in rural areas. The Bank Group will support improved access during the CPF extended period. b. Fostering human capital. The program is being adjusted to further strengthen the emphasis placed by the SCD in the need for ensuring that Myanmar’s social services and social protection system contribute effectively to poverty reduction. A first nutrition project will be added to the program, in recognition of the strong demand from the Government, and the importance of nutrition both in its direct contribution to poverty reduction in the short term, as well as the contribution to productivity in the long run by preventing stunting and cognitive impairment of infants and young children. The ongoing IDA education project while continuing to support the stipends program which helps to enable poor children to continue their schooling, will be scaled up and expanded to include a significant teachers mentoring program and clusters support. At the request of the Government, IDA will also prepare a new education project to help improve inclusive access and quality of basic education services in Myanmar. The health project will be restructured and scaled up to align with and support the UHC goal of the new National Health Policy, specifically greater access to essential health services and better financial protection. The CGAP will be revised during the CPF extended implementation period to ensure further alignment with gender strategic priorities under IDA 18, including equal access to improved public services. c. Infrastructure. The Government posits that better infrastructure (electricity and roads) will lead to job creation. Beyond its sizeable investment in rural infrastructure through the national CDD program (6,898 community subprojects in the first three years of operations under which rural roads account for 50 percent of the infrastructure constructed and electrification of public facilities for another 5.3 percent) and the off- grid component of the National Electrification Project (NEP) (which will provide electricity access to over 140,000 households this year), the WBG will scale up its support for enhanced access to reliable, safe and affordable power, including the development of the significant hydropower potential in Myanmar. The WBG support will be critical to the implementation of Myanmar’s ambitious climate action plan10 including achieving 30 percent renewables in rural electrification and building 9.4 GW hydroelectric generation capacity by 2030. The ongoing JIP in the electricity sector will also leverage private investment (Box 6). Through the Flood and Landslides Emergency Recovery Credit, IDA will support a program of reconstruction of national and rural roads, “building back better” to meet standards of environmental resilience, and setting standards for future road construction in Myanmar. The WBG will also selectively consider further support to the transport sector, particularly given the strong correlation between the growth in agriculture sector and the access to markets through an efficient logistics supply chain. Reflecting on the contemporary infrastructure policies of many countries, the WBG will also consider the integrative 10 World Bank Group Climate Policy Team, “Myanmar INDC Content Brief”, 2016. 20 benefits of ‘dig once’ infrastructure implementation and maintenance for water, power and ICT sectors; and the ICT common infrastructure for government and public services (including One Stop Shops). d. Enhanced Social Inclusion. The Systematic Country Diagnostic highlights social inclusion as a prerequisite to achieving inclusive growth, poverty reduction and shared prosperity in Myanmar. Indeed, adverse developments, during CPF implementation, in Rakhine State, Kachin State and Northern Shan Stare are stalling progress in Myanmar. There are opportunities in the years ahead for the WBG to support Myanmar’s national reconciliation priority. In Rakhine State, the interim recommendations by the Advisory Commission chaired by Kofi Annan for sustainable solutions to the challenges facing Rakhine State were accepted by the Government, with final recommendations expected in August 2017. The recommendations recognized the nexus between humanitarian and development programs, calling for example for increased access to services such as health and education for all groups in Rakhine. The existing Bank portfolio provides the government with a number of potential instruments to achieve these goals. In addition, the Bank is undertaking major analytical work, the findings of which along with the investment portfolio could help enhance social inclusion: (i) a study on the economy of Rakhine; (ii) a social inclusion study that maps out the landscape of exclusion in Myanmar and identifies the drivers for such exclusions; (iii) a capacity building program for raising awareness and mainstreaming human rights considerations in WB portfolio; (iv) embedding social protection in sectoral engagements, such as the expanded coverage of the stipends program that is keeping poor children in school; and (v) ensuring all IDA- funded operations remain gender-informed under IDA18 and beyond. The Bank will also explore conducting Risks and Resilience Assessments (RRA) and Recovery and Peace Building Assessments (RPBAs) when appropriate, to further identify drivers of conflicts and initiate recovery in areas emerging from conflicts, including areas where refugees may return to, such as in South East Myanmar. e. Financing and Instruments. The indicative IDA18 allocation for Myanmar is on the order of US$1.3 - US$1.6 billion.11 During the two years of the CPF extension, financing of up to US$1.2 billion could be considered by Myanmar. The indicative IDA program for FY18-19 is shown in Annex 5. This includes the use of Development Policy Operations (DPO), as envisaged under the original CPF. Due to the political transition, the enabling conditions for effective DPO support have materialized only recently. Naturally, future IDA DPO support will complement IPF financing, and will depend on the pace and scope of continuing policy and institutional reforms. IDA will also consider the PforR instrument in the education sector to shift the emphasis from input to results, thus also addressing implementation challenges. On the one hand the use of these instruments reflects recognition of the need for fungible budget resources and the evidence, based on Bank analytical work that additional resources are being 11 Referenced IDA18 volumes are indicative. Actual PBA allocations will be determined annually during the FY18- 20 period and will depend on (i) total IDA resources available; (ii) the number of IDA-eligible countries; (iii) the country’s performance rating, per capita GNI, and population; and (iv) the performance and other allocation parameters for other IDA borrowers. 21 allocated for poverty reducing expenditures. Bank, IFC and MIGA teams will collaborate closely to identify options to tap the IDA 18 IFC-MIGA Private Sector Window. Bank will also explore to access the Scale-Up Facility as well as financing for regional programs under IDA 18. Box 6: Crowding in private investment in the energy sector of Myanmar Investment needs for Myanmar’s Energy Sector are very high of the order of over US$20 billion during the next decade. Energy being a key infrastructure sector, institutional and implementation capacity would need to be significantly augmented; transparent and investor friendly regulations need to be developed. These are critical to support the economic growth needed and targeted for the country and to meet the GoM target of providing Electricity Access to all by 2030. The Myanmar World Bank Group energy team (IFC, MIGA and World Bank) will continue supporting private sector participation through a well-coordinated approach, underpinned by a Joint Implementation Plan. The JIP is reviewed and updated to incorporate any new developments in the sector, based on periodic joint strategy discussions to respond to new demands from the Government and other stakeholders. The WBG has helped support development of two efficient Combined Cycle Gas Turbine (CCGT) plants. IDA supported modernizing the old plant at Thaton to produce three times the power from the same amount of gas being used by existing plant. IFC and MIGA supported private developer Sembcorp, Singapore at Myingyan, which has set a new benchmark for the capital cost for efficient CCGT plants. WBG also jointly supports energy related policy. While the major share is supported by the World Bank team, IFC is helping with Strategic Environment Assessment to identify best hydro basins for development and also jointly advising the government on natural gas sector development. The plan is to jointly help the Government to develop the next hydro project and natural gas infrastructure through the best combination of private and public support. To ensure full alignment with the goal to enhance private sector participation, the WBG will carry out a study in FY18, to review conditions under which private financing should be favored, and circumstances where full or partial public investment may be the preferred or more viable option. The study will also identify, in situations where private or commercial financing is not viable, the nature of the perceived underlying market risks or failures, as well as possible future support to address these, through reforms to strengthen country and sector policies, regulations and institutions. 54. Table 2 summarizes the changes to the results framework drawing from lessons learned on implementation pace and reflecting to some extent the introduction of new programs. Given actual experience of delayed effectiveness, the assumption is that most of the new IPF, and all planned for FY19, would not progress in time to deliver results by FY19. Annex 3 provides the full picture of the changes to the CPF results framework. 22 Table 2: Summary of main adjustments to the CPF results framework Objectives and indicators in the original CPF Unchanged Dropped Revised (definition and/or target New date/value) Objectives 10 0 2 0 Objectives indicators 12 0 16 6 Supplementary indicators 0 10 14 8 VI. RISKS TO CPF PROGRAM 55. The CPF noted that while Myanmar’s ongoing transitions presented a unique opportunity for Myanmar to reduce poverty and boost shared prosperity, these transitions also presented significant risks. Seven of the ten categories of risks identified as part of the WBG’s Standardized Operations Risk-Rating Tool (SORT) were rated high, two were rated substantial, and only one (technical design of project or program) was rated moderate. The PLR has reviewed the specific risks under each of these categories and given the continuing high levels of contextual and capacity risks and their potential implications for the effectiveness of portfolio outcomes, proposes to maintain the current ratings except in the case of the technical design of the program where the experience of program implementation during the CPF period suggests a rating of substantial is more appropriate. (see Table 3 below). 56. Specifically, the CPF identified six key country risks as being critical for the WBG’s operational engagement. These risks captured core country issues that will be resolved over decades rather than years, and that remain relevant today.  Political risks and the continued fragility of reforms. The 2015 elections and the 2016 transfer of power proceeded peacefully, with the country managing a potentially difficult period exceptionally well. However, discontinuity in policy formulation and decision making have affected the WBG portfolio, and may continue to do so for the remainder of the CPF.  Conflict risks. As noted above, the ongoing peace process offers Myanmar’s best chance for peace in a generation. At the same time, some important armed groups remain outside of the process, and late 2016 and early 2017 saw an intensification in fighting, including in the country’s northeastern region (Kachin State and northern Shan State).  Social inclusion. Religious and ethnic tensions continue to linger, as demonstrated not just in the significant deterioration of the situation in Rakhine State, but also in public debates over citizenship and entitlement to government services.  Governance risks. Government institutional and private sector capacity are top constraints. Skilled resources are in serious shortage in Myanmar. While WBG operations are aimed at building capacity, this will take time, and the capacity gaps noted in the original CPF remain. In a growing portfolio, limited transparency and limited experience with issues such as for example land acquisition and resettlement create higher risks for some types of WBG operations. 23  Economic risks. As noted above, Myanmar remains vulnerable to global economic developments, including changes in commodity prices, while the increasing complexity of the country’s financial markets and economy may test the government’s regulatory capacity.  Disaster risks. As the devastating impact of the 2015 floods showed, Myanmar remains highly vulnerable to the impact of natural disasters. 57. The CPF recognized that some of these risks were largely outside the control of the WBG, and thus proposed a focus both on mitigating risks where possible, and managing these where not. On the mitigation side, the WBG has been actively involved in mitigating a range of risks, including for example reducing Myanmar’s vulnerability to natural disasters (including through disaster mitigation measures included in the Ayeyarwady Integrated River Basin Management project, as well as in the proposed Disaster Risk Management project), economic risks (through ongoing economic monitoring, policy dialogue and capacity building) and governance risks (by supporting the development of national frameworks for environmental impact assessments, procurement, and others). 58. The key risks to meeting the revised objectives of the CPF/PLR remain those related to the motivation and capacity of the government to achieving the agreed results on the ground. The experience of past three years of program implementation indicate the importance of ownership of programs by the core and line ministries, of effective delegation of decision- making on approved projects within the ministerial hierarchy, and of designs that do not overstretch the available capacity and systems in place. The existing portfolio has been systematically adapted to reflect these principles and the pipeline will be subject to careful review to ensure that proposed projects embody these approaches. 59. Given the overall high level of risk and the implications for operational results, with support from the Korean Trust Fund for Economic Transitions, the WBG has taken a proactive approach to monitoring and managing risks. This process includes an ongoing risk monitoring mechanism that includes a monthly risk monitor capturing country developments across the dimensions outlined above, monthly discussions with a small group of top Myanmar experts to provide real time analysis for country developments affecting the portfolio, and annual workshops for the country team to ensure team leaders as well as fiduciary, legal, safeguards and communication teams were aware of the evolving risk landscape in which the WBG was operating. 60. Going forward, the PLR recognizes that Myanmar remains a high-risk environment for the WBG, but also one in which its engagement can have transformational impacts. The above risk mitigation measures will continue to help the country address some of the longer-term risks it faces, while ongoing risk management will seek to ensure that the WBG program is informed by and fit for context, and that WBG management is kept apprised of developments with the potential to impact the WBG portfolio. In line with the approach described in the original CPF, this PLR proposes to mitigate and manage specific risks on a case-by-case basis, retaining the set of guiding criteria that span the portfolio and individual projects: (i) manage risks at portfolio level which will facilitate an understanding of the balance of risks and results across the portfolio; (ii) calibrate support and use of country systems. For instance, on the macroeconomic risks, absent an 24 adequate macro framework, Development Policy Operations may not materialize or could be delayed; (iii) manage reputational risks through clear communication on the WBG program, including a monthly open door with civil society organizations; (iv) pace reforms both to adapt and phase WBG support in line with country developments, thus avoiding overloading systems with limited institutional capacity. Table 3: Standardized Operations Risk-Rating Tool for Myanmar Risk Categories Risk Categories CPF Rating PLR Rating Political and governance High High Macroeconomic Substantial Substantial Sector strategies and policies Substantial Substantial Technical design of project or program Moderate Substantial Institutional capacity for implementation and High High sustainability Fiduciary High High Environment and Social High High Stakeholders High High Knowledge Gaps High High Overall High High 25 Annex 1: Updated CPF Results Matrix CPF Objective Indicators Key WBG Activities Focus Area 1: Reducing Rural Poverty Objective #1.1: Improved power generation and access to electricity Indicator #1. People provided with new or improved electricity service Financial Services (million) Ongoing: Baseline: 0 (2014)  MM Electric Power Project (P143988) Target: 3 (2019)  National Electrification Project (P152936)  Ayeyarwady Integrated River Basin Management Project (P146482) Indicator #2. Expanded conventional/renewable power generation  Myingyan IPP AS (600181) (gigawatt hours, annual)  Yangon Electricity Supply Corporation (33865) Baseline: 260 (2014)  Political Risk Guarantee of Myingyan Target: 660 (2018)  First Macroeconomic Stability and Fiscal Resilience DPO (P152734) Supplementary Indicators Pipeline:  Energy efficiency improvement/system strengthening project a. Thermal efficiency of energy conversion (%)  Second Macroeconomic Stability and Fiscal Resilience DPO Baseline: 20 (2014) Target: 48 (2019)  Mandalay Electricity Supply Corporation b. Adoption of a pricing policy toward full operating cost recovery Knowledge services over 4 years. Delivered: Baseline: tariffs are below cost (2017)  Power Sector Financial Viability Study Target: new pricing policy is adopted (2019)  Natural gas supply economics and import options  Strategic communications for the Power Sector  Geospatial least-cost electrification planning  Gender and social inclusion in electricity services Ongoing:  Strategic environmental and social Assessment of all hydropower concessions 26 CPF Objective Indicators Key WBG Activities Objective #1.2: Increased productivity in farming and agribusiness Indicator #3. Average rice yields in targeted irrigated areas Financial Services Baseline: 2.7 tons/ha (wet season rice) and 3.0 tons/ha (dry season rice) Ongoing: (2019)  Ayeyarwady Integrated River Basin Management Project (P146482) Target: 2.9 tons/ha (wet season rice) and 3.2 tons/ha (dry season rice)  Agricultural Development Support Project (P147629) (2019)  Myanmar Agricultural Input Reform and Standards  Myanmar Awba Agricultural Products (agri-chemicals and fertilizer) Indicator #4. Cropping Intensity in targeted areas (ratio)  Fullerton Myanmar (MSME finance) Baseline: 1.3 (2015)  Acleda Myanmar (Micro-finance) Target: 1.4 (2019)  Myanmar Industrial Port, Yangon (Container port)  Yoma fleets (transport leasing for commodity movements) Supplementary Indicators Pipeline: c. Advisory agreements signed  Support for commodity storage and warehousing facilities Baseline: 0 (2014) Target: 2 (2019) Knowledge Services Ongoing: d. Area provided with improved irrigation and drainage services (ha) Baseline: 0 (2015)  Advisory support to Ministry of Agriculture, Livestock and Irrigation. Target: 10,000 ha (2019) Delivered: e. Clients who have received improved agricultural technologies  MM Agriculture Policy Alternatives: Status, Opportunities and Risks promoted by WBG financed projects. AAA (P144951) Baseline: 0 (2015)  Greater Mekong Rice Policy AAA (P152624) Target: 4,500 (2019) f. Seed farms identified for upgrading to produce improved seeds. Baseline: 0 (2015) Target: 2 (2019) 27 CPF Objective Indicators Key WBG Activities Objective #1.3. Improved Access to Critical Infrastructure and Services for the Rural Poor Indicator # 5. Population in townships benefiting from improved Financial Services access to and use of rural infrastructure and services under the WBG Ongoing: interventions (number)  National Community Driven Development Project (P132500) Baseline: 0.8 million (2014)  Flood and Landslide Emergency Recovery Credit (P158194) Target: 7.0 million (2019); of which at least 40 percent female Pipeline: Indicator #6. Rural roads damaged by floods reconstructed (kms)  Additional Financing for NCDDP (P153113) Baseline: 0 (2015) Target: 200 (2019) Objective #1.4. Improved National Capacity for sustainable environmental and natural resource management Myanmar has abundant natural resources which are being exploited unsustainably, e.g. through deforestation and uncontrolled gemstone mining, both of which are associated with large rents from illicit logging and gemstone smuggling, and through activities in key sectors, such as energy, infrastructure or agriculture where environmental impact assessment and management is inadequate. The Bank is pursuing two parallel streams in this area. First, there is a focus on the capacity to manage the environmental impact assessment process and ensure that environmental safeguards are met both for Bank and donor projects. Second, there is effort to improve analytical basis for engagement in sectors depending on the exploitation or affecting the productivity of natural resources (forests, fisheries, minerals) including on EITI to provide the governance framework for enhanced NRM (see also objective 2.1). Indicator #7. Inclusion and implementation of environmental Financial Services safeguards capacity building components in WBG investment Ongoing: operations (number of projects)  Ayeyarwady Integrated River Basin Management Project (P146482) Baseline: 4 (2014)  Myanmar EITI Implementation Project (P156124) Target: 8 (2019) Pipeline: Supplementary Indicators  Support to the Environment Conservation Department  Preparation of Future Investments in Water Resources under the g. Environmental risk management report for one or two key sectors ongoing Ayeyarwady Integrated River Basin Management Project completed (P152942) Baseline: None (2017) Target: Yes (2019) Delivered:  Extractive Industries Transparency Initiative Implementation Grant h. An Ayeyarwady State of the Basin Assessment, which covers (P143321) strategic environmental and social issues, completed. Baseline: No (2014) Knowledge Services Target: Yes (2018) Ongoing: 28 CPF Objective Indicators Key WBG Activities i. The Ayeyarwady River Basin Master Plan is initiated  Building national capacity for sustainable management of NRM Baseline: None (P152942) Target: (2019). Delivered:  Myanmar EITI Preparation Support (P145465)  Country Safeguard Assessment Report Focus Area 2: Investing in People and Effective Institutions for People Objective #2.1. Improved capacity to manage public finances and Union-State/Region relations for better services delivery Indicator #8. Increase in the tax revenue/GDP ratio Financial Services Baseline 7.8 (2014/15) Ongoing: Target: 10.0 (2019)  Modernization of Public Finance Management Project (P144952)    MM Decentralizing Funding to Schools (P146332) Indicator #9. Formula for intergovernmental transfers  Macroeconomic Stability and Fiscal Resilience DPO (P152734) Baseline: No formula (2014) Target: Approval of formula (2016) Planned:  Second Macroeconomic Stability and Fiscal Resilience DPO Indicator #10. Budget preparation process in place, including issuance  Programmatic TA for Governance of ceilings and preparation of a medium-term fiscal framework Baseline: No (2014) Knowledge Services Target: Yes (2017) Ongoing:  Support to Peace Process (P146479) Supplementary Indicators Delivered: j. Government commitment of fiscal transparency in line with global  MM Programmatic Public Expenditure Review (P132668) good practice, including second EITI report on revenues from natural resources Baseline: No (2014) Target: Yes (2018) k. Auditor General’s Reports are made publicly available. Baseline: Not available (2016) Target: Publication on line (2019) 29 CPF Objective Indicators Key WBG Activities Objective #2.2. Expanded Health Services and Improved Health Financing with a focus on Maternal, Newborn and Child Health Indicator #11. Deliveries with skilled birth attendant (percentage) Financial Services Baseline: 60 (2015/16) Ongoing: Target: 65 (2019)  Essential Health Services Access Project (P149960) Indicator #12. Deliveries which are followed by adequate post-natal Pipeline: care (percentage)  Proposed Support for Improved Nutrition Project Baseline: New born 36 (2015/16); Mothers 57 (2015/16)  Additional Financing for Essential Health Services Access Project Target: Newborn: 60 (2019); Mothers: 60 (2019) (P160208) Supplementary Indicators Knowledge Services Ongoing: l. Health financing strategy toward UHC is approved  MM Health Systems Strengthening Advisory and Technical Services Baseline: Strategy not yet approved (2016) (P145346) Target: Strategy approved (2018) m. Health facility grants transferred to township and below based on formula Baseline: No (2014) Target: Yes (2018) Objective #2.3. Expanded and improved education coverage and measurement of learning outcomes Indicator #13. Students who have received stipend payments Financial Services Baseline: 0 (2014) Ongoing: Target: 200,000 (2019); of which at least 40 percent female  MM Decentralizing Funding to Schools (P146332) Indicator #14. Nationally representative assessment for early grade Pipeline: reading performance (EGRA) in primary schools  Additional Financing for Decentralized Funding to Schools project Baseline: No (2014) (P157231) Target: Yes (2019)  Inclusive Access and Quality Education Project Supplementary Indicators Knowledge Services Ongoing: n. Teachers in the mentoring program  Monitoring school grants and stipends (P151137) Baseline: 0 (2016) Target: 2000 (2019) 30 CPF Objective Indicators Key WBG Activities Objective #2.4. Increased understanding of poverty and key related issues Indicator #15. Agreement reached on respective roles of central and Financial Services line ministries in implementing the National statistics strategy Delivered: Baseline: No agreement (2014)  Developing a National Strategy for Development of Statistics for Target: Agreement (2018) Myanmar (P146127) Indicator #16. Increase government knowledge on poverty and public Knowledge services expenditures Ongoing: Baseline: no fiscal incidence (2014)  MM Poverty Monitoring and Diagnostics (P146898) Target: Fiscal incidence report completed (2019)  Myanmar Poverty Programmatic AAA (P146920)  MM Economic Monitoring (P092731) Indicator #17. Poverty baseline for 2016 is defined  Qualitative Social and Economic Monitoring (P130963) Baseline: Different figures used (2014) Target: Agreement on a set of numbers and the methodology for updating. Planned: (2018)  Second Poverty Assessment Supplementary Indicators o. Poverty assessment published Baseline: No updated assessment (2014) Target: Published assessment (2017) 31 CPF Objective Indicators Key WBG Activities Focus Area #3: Supporting a dynamic private sector to create jobs Objective #3.1 Improved financial infrastructure and access to finance Indicator #18. Adults with active transaction accounts (%) Financial Services Baseline: Male 28.6 – Female 17.4 (2016) Ongoing: Target: Male 33 – Female 27 (2019)  Myanmar Financial Sector Development Project (P154389)  ACLEDA Myanmar I (32731) Indicator #19. Adults in the poorest 40% with accounts at a financial  GTFP MOB Bank (33664) institution (%)  Yoma Equity (34178) Baseline: 16.1 (2016) Target: 20 (2019) Pipeline:  Investments in SME banks and MFIs (PACT Myanmar, World Vision, Indicator #20. Additional people, microenterprises and SMEs reached Proximity). with financial services  Political risk guarantees for commercial bank expansion Baseline: 0 (2014) Target: 200,000 (2017) Knowledge Services Ongoing: Indicator #21. Additional financing facilitated (US$ million)  Scaling Up Financial Services for the Poor (P153898) Baseline: 0 (2014)  Assistance to review and amend laws and regulations for bank and Target: 40 (2017) microfinance institutions  New Financial Sector Development Strategy Supplementary Indicators  Assessment of all state-owned banks. p. Credit Bureau established and operational  Myanmar Corporate Governance Baseline: not established.  Secured Transaction Reform Target: up and running (2019)  Myanmar Credit Bureau project (599806) q. Reform of State-Owned bank begun Delivered: Baseline: No formal restructuring plan (2017)  Building Financial Sector Development ASA (P145173) Target: Approval of a comprehensive restructuring plan for one of the State-Owned banks (20190 r. Supervisory manuals or internal guidelines for insurance, microfinance, and state-owned banks are developed Baseline: 0 (2016) Target: 2 (2019) 32 CPF Objective Indicators Key WBG Activities Objective #3.2. Improved the legal and regulatory environment for private sector investment in productive and services sectors Indicator #22. Additional private investment (US$ millions): Knowledge Services Baseline: 0 (2017) Ongoing: Target: 200 (2019)  Myanmar Investment Policy (600309)  Myanmar IC Reforms and Myanmar Business Forum (600430) Indicator #23. New laws/regulations/ amendments/codes enacted or  Agricultural Input Reform and Standards government policies adopted  Lighting Myanmar Baseline: 0 (2017)  City Mart Holding (Retail) Target: 4 (2019) Delivered: Indicator #24. Reform - investment policy (number)  Investment Climate Assessment (P143595) Baseline: 0 (2014) Target: 1 (2017) Objective #3.3. Increasing effectiveness and transparency of trade regulations Indicator #25. New laws, regulations, amendments, codes enacted or Financial Services government policies adopted Planned: Baseline: 0 (2017)  DPO on Private Sector Development (P161189) Target: 3 (2019)  Myanmar Industrial Port, Yangon (Container port);  Yoma fleets (transport leasing for commodity movements). Indicator #26. Reform - trade policy (number)  Investment in Hospitality Sector (Hotels) Baseline: 0 (2014) Target: 1 (2017) Knowledge Services Ongoing:  Trade Facilitation and Competitiveness in Myanmar (P149672)  Trade component of project (600430)  Myanmar ICT Reforms Delivered:  Diagnostic Trade Integration Study (P153934) Planned:  Agribusiness Investment Climate; 33 CPF Objective Indicators Key WBG Activities  Possible investments in PPPs for river training/dredging; improving the navigability of Yangon ports, development of dry ports and inland container depots.  Possible support for commodity storage and warehousing facilities  Myanmar Sustainable Tourism Project Objective #3.4. Increased access to ICT Indicator #27. Access to telephone services (fixed mainlines and Financial Services cellular phones per 100 people) Ongoing: Baseline: 10 (2014)  MM Telecommunications Sector Reform (P145534) Target: 100 (2019)  Ooredoo Myanmar Indicator #28. Access to Internet services (number of broadband Knowledge services subscribers per 100 people) Delivered: Baseline: less than 2 (2014)  ICT Sector Policy Dialogue (P132295) Target: 15 (2019) Supplementary Indicators s. Universal service strategy adopted Baseline: No strategy (2014) Target: Strategy adopted (2018) t. Licensed telecommunications operators (number) Baseline: 3 (2014) Target: 8 (2019) u. MPT is corporatized Baseline: No (2016) Target: Yes (2018) 34 Annex 2: Matrix summarizing Progress towards CPF Results Focus Area 1: Reducing Rural Poverty Objective #1.1. Improved power generation and access to electricity OBJECTIVE INDICATORS 1. People provided with new or 1. Likely with delay. 140,000 units of solar PV systems to serve 1.2 million people improved electricity service (million) have been delivered to Myanmar and under installation. Additional 100,000 units are Baseline: 0 (2014) under procurement. Procurement packages for grid extension totaling US$160 Target: 3 (2017) million will be contracted in 2018. In parallel to its direct funding, the WBG has enabled electricity access to an additional one million households between FY14-17 through technical assistance leading to Government adoption of a national electrification plan to provide universal access by 2030. 2. Expanded conventional and 2. Likely with delay. The planned commissioning of Thaton (MM EPP) and renewable power generation (gigawatt Myingyan IPP plants in FY18 will increase generation capacity by 340MW. In hours, annual) addition to these, 784 MW capacity has been added to Myanmar grid through public Baseline: 260 (2014) and private funding. Target: 660 (2017) Supplementary Indicators a. Thermal efficiency of energy a. Likely with delay. Related to the above commissioning of two plants financed conversion (%) by the WBG. Baseline: 20 (2014) Target: 48 (2017) b. Investment/financing facilitated from b. Achieved. The target relates to IFC and MIGA’s investment in Myingyan IPP. private sector (US$ million) The figure is the full cost of the project including financing from ADB and a Baseline: 0 (2014) Singapore firm. The Government has approved the investment after a year’s delay. Target: 300 (2017) c. National electrification executive c. Not Achieved. The National Secretariat has been established on paper with the secretariat (NEES) functional member agencies designated. By early FY16 however the staff had not been Baseline: Established (2014) assigned and no budget had been approved, and the Secretariat was disbanded during Target: Adequately staffed and the political transition. functional (2016) Objective #1.2. Increased productivity in farming and agribusiness 3. Average rice yields in targeted 3. Not achieved yet. The Agriculture Development Support Project (ASDP) became irrigated areas effective in September 2015 but physical works are unlikely to begin before late Baseline: 2.7 tons/ha (wet season rice) 2017. These improvements in yields should be achieved when the project’s irrigation and 3.0 tons/ha (dry season rice) (2015) components get off the ground in FY18. Target: 2.9 tons/ha (wet season rice) and 3.2 tons/ha (dry season rice) (2017) 4. Cropping Intensity in targeted areas 4. Not achieved yet. The explanation above also refers to the cropping intensity. (ratio) Baseline: 1.3 (2015) Target: 1.4 (2017) Supplementary Indicators 35 d. Advisory agreements signed d. Partially achieved. IFC has signed one advisory agreement with the Ministry of Baseline: 0 (2014) Agriculture (now Ministry of Agriculture, Livestock and Irrigation) for the Myanmar Target: 2 (2017) Agricultural Input Reform and Standards project. e. Area provided with improved e. Not achieved yet. This requires that one of the identified sites for irrigation and irrigation and drainage services (ha) drainage rehabilitation and upgrading is completed in 2017. Baseline: 0 (2015) Target: 10,000 ha (2017) f. Clients who have received improved f. Not achieved yet. Work with the extension service, demonstration plots and agricultural technologies promoted by farmer field schools has only just begun. It is likely that this number of stakeholders WB financed projects. who receive various forms of advice or training will be met by FY19. Baseline: 0 (2015) Target: 4,500 (2017) Objective #1.3. Improved Access to Critical Infrastructure and Services for the Rural Poor This relates to the achievements under the NCDDP which has been successful in moving resources for critical local infrastructure to the village level and securing widespread participation in decision-making. The Department of Rural Development (DRD) has proven an effective counterpart in its leadership of the project. 5. Population in townships benefiting 5. Achieved: By FY16 about 3 million were already benefiting from access to rural from improved access to and use of infrastructure and this number has increased to over 5 million in FY17. rural infrastructure and services under the WBG interventions (number) Baseline: 0.8 million (2014) Target: 3.3 million (2017); of which at least 40 percent female Supplementary Indicators g. Households in project villages g. Achieved: Participation rates were already at over 70 percent by FY16. participating in planning, decision- making, and implementation of sub- projects (percent) Baseline: 0 (2014) Target: >50 (2017) Objective #1.4 Improved National Capacity for sustainable environmental and natural resource management. There is a large gap between the legislative requirements and the capacity of the Ministry of Natural Resources and Environmental Conservation (MONREC) to implement them. 36 6. Country demonstrates capacity for 6. Achieved. The objective here reflects the fact that all WB projects by definition sustainable environmental and natural need to follow quality safeguards and performance standards. However this is only resource management by preparing and a partial indication of the country’s overall capacity to sustainably manage all implementing investment projects projects funded domestically and externally. following quality safeguards and performance standards (number of projects) Baseline: 4 (2014) Target: 8 (2017) Supplementary Indicators h. Country Safeguard Assessment h. Partially Achieved. The Country Safeguard assessment reported was completed Report completed with delay in FY17. Its main focus is on environmental safeguard and the Bank is Baseline: No (2014) planning a separate social safeguard assessment in FY18. Target Yes (2016) i. Report on analysis of one key natural i. Not Achieved yet. A consultant-led study on gemstones was completed in FY16 resource completed but has not gone through Bank’s quality assurance yet. Baseline: No (2014) Target: Yes (2016) j. Environmental risk management j. Not achieved yet. The report is planned for early FY19. report for one or two key sectors completed Baseline: None (2014) Target: Yes (2017) k. Strategic Environmental and Social k. Achieved. An Ayeyarwady State of the Basin Assessment, which covers strategic Assessment for the Ayeyarwady River environmental and social issues, was initiated in 2016. Basin (ARB) initiated. Baseline: No (2014) Target: Yes (2017) Focus Area 2: Investing in People and Effective Institutions for People Objective #2.1. Improved capacity to manage public finances and Union-State/Region relations for better service delivery Overall the technical support provided by the Bank to the Ministry of Planning and Finance and the Central Bank of Myanmar has resulted in considerable achievements. Beyond the indicators below, there have also been the increased transparency of the budget with its publication and the preparation of a Citizen’s budget. OBJECTIVE INDICATORS 7. Formula for intergovernmental 7. Achieved. The formula, developed in consultation with the Bank, was used for transfers the 2016/17 budget and voted by Parliament. Baseline: No formula (2014) Target: Approval of formula (2016) 8. Budget preparation process in place, 8. Achieved. Ceilings are in place and have been communicated to the Ministries. including issuance of ceilings and A Medium-Term Fiscal Framework has been prepared and used for the 2016/17 preparation of a medium-term fiscal budget. framework Baseline: No (2014) Target: Yes (2017) 37 Supplementary Indicators l. Public expenditure review completed l. Achieved. The public expenditure review was completed in FY16. Baseline: No review (2014) Target: Review completed (2015) m. Government commitment of fiscal m. Substantially Achieved. In 2014 Myanmar was admitted to EITI as a candidate transparency in line with global good country, producing its first report in January 2016. Given delays in finalizing the practice, including report on revenues financing of the next phases and reestablishing new oversight structures after the from natural resources political transition, the Government has been granted an extension of the deadline Baseline: No (2014) for publication of the second EITI Report. The new deadline is March 31, 2018. Target: Yes (2017) Currently, the oversight and implementation structures have been reconfirmed and the drafting of the second report is underway. The Ministry of Planning and Finance has made the budget more transparent and accessible to the Myanmar public, through publication: of Citizens’ Budget; budget proposal to Parliament (for the first time ever starting FY 17/18); budget execution reports and information on State Enterprise finances. Objective #2.2. Expanded Health Services and Improved Health Financing with a focus on Maternal, Newborn and Child Health. The performance against the Bank Group’s specific objectives is yet to be assessed. However, the broad objective of moving more resources to the local level and the front lines is being achieved through Disbursement Linked Indicators, despite obstacles posed by outdated financial rules and regulations. 9. Deliveries with skilled birth 9. Yet to be assessed given new data and evidence from the 2015/16 Demographic attendant (percentage) and Health Survey (DHS). The DHS shows a baseline of 60 percent as of 2015/16. Baseline: 71 (2014) Target: 75 (2017) 10. Deliveries which are followed by 10. Yet to be assessed given new data and evidence from the 2015/16 Demographic adequate post-natal care (percentage) and Health Survey (DHS). The DHS indicates a lower baseline of 57 percent for Baseline: 78 (2014) mothers and 36 percent for newborn. Target: 80 (2017) Supplementary Indicators n. Health financing strategy n. Partially achieved. A strategy has been prepared and the Bank regards it as being Baseline: None (2014) of high quality, but has not yet been approved by the Ministry and the expectation is Target: Approved (2016) that the Ministry will revise it before approval. o. Health facility grants transferred to o. Partially achieved. The Department of Health was split and the one successor township and below based on formula Department applied the formula but the other did not. Baseline: No (2014) Target: Yes (2016) Objective #2.3. Expanded and improved education coverage and measurement of learning outcomes All indicators have been achieved reflecting the decision to focus initially on inputs. Over time the Bank will support building the capacity to monitor and evaluate whether the inputs are producing the expected outputs in terms of enabling students from poor households to achieve additional years of schooling. 11. Students receiving stipend 11. Achieved. The target has been far surpassed and already in FY16 100,000 payments students received stipends, which rose to 150,000 in FY17. Baseline: 0 (2014) Target: 30,000 (2017); of which at least 40 percent female 38 12. States/Regions that have conducted 12. Achieved. EGRA assessments were carried out in 1 State/Region in the first year, assessment for early grade reading an additional 4 in the second, and 1 in the third. performance (EGRA) in primary schools Baseline: 1 (2014) Target: 5 (2017) Supplementary Indicators p. States/regions with revised p. Achieved. Each year the guidelines are revised on the basis of the experience on guidelines for student stipends and implementing the stipends and grants program in the previous year. This is now a school grants nation-wide program so coverage of all 15 states/regions has been achieved. Baseline: 1 (2014) Target: 15 (2017) Objective #2.4. Increased understanding of poverty and key related issues The delays in this area reflect the efforts to reach a consensus on the poverty data, including addressing disagreements on which household survey should be used to derive the data. 13. National statistics development 13. Achieved. The NSDS was endorsed at the cabinet level, though not by strategy endorsed Parliament. Parliamentary approval is not a requirement however. While there are Baseline: No strategy (2014) still a number of technical issues regarding the division of responsibilities between Target: Government endorsement the central agency and the line ministries, by and large there is commitment and the (2015) program is broadly on track. 14. Increase government knowledge on 14. Partially Achieved. There has been a major investment both by the Bank and poverty and public expenditures other donors in Poverty Surveys and Assessments. A Public Expenditure Review Baseline: limited data (2014) was completed in early 2016. A Poverty Assessment was discussed in the course of Target: Poverty assessment and FY17. A fiscal incidence report is planned in FY18 expenditure review completed (2015) Supplementary Indicators q. Poverty assessment conducted q. Partially achieved. Updated Poverty Assessment completed in FY17. Baseline: No updated assessment (2014) Target: Updated assessment (2016) Focus Area 3: Supporting a dynamic private sector to create jobs Objective #3.1. Improved financial infrastructure and access to finance Both the Bank and IFC are actively engaged in supporting the financial sector. There is substantial progress on the ground, as a result of an active dialog and technical support for both the Ministry of Planning and Finance and the Central Bank of Myanmar. 15. Additional people, microenterprises 15. Achieved. From January 2014 to December 2016, IFC provided five MFIs with and SMEs reached with financial investments and advisory services related to operational support and capacity services building, new product development, institutional transformation, and training to Baseline: 0 (2014) personnel on best microfinance and commercial practices. This has resulted in Target: 200,000 (2017) 1,066,047 MFI clients reached in the market. IFC has also supported two local banks as they expanded their SME loan portfolios, reaching 8,914 SME clients from September 2014 to December 2016. 16. Value of additional financing 16. Achieved. From January 2014 to December 2016, IFC provided advisory and facilitated investments support, which has facilitated a total of $1.09 billion in financing: $553.5 (US$ million) million has been disbursed through SME loans, and $540 million has been disbursed Baseline: 0 (2014) through 2,078,281 microloans. 39 Target: 40 (2017) Supplementary Indicators r. Achieved. This was prepared with Bank Group support and the Government has r. Financial sector master plan adopted it. Baseline: No master plan (2014) Target: Master plan developed (2015) s. Achieved. The Financial Institutions Law was enacted in early 2016. s. Bank and Financial institutions law Baseline: Outdated law (2014) Target: A new Bank and Financial Institutions Law passed by Parliament (2015) t. Achieved. By April 2017, IFC had approved 14 investments cumulatively and 5 t. Number of investments committed new investments in FY17. (IFC) Baseline: 3 (2014) Target: 5 (2017) Objective #3.2. Improved enabling environment for private sector investment in productive and services sector The enactment of the Investment Law is a major development, but there is still need of wide range progress on simplifying licensing and start-up requirements for both foreign and domestic investors, including for SMEs. 17. Reform - investment policy 17. Achieved. In October 2016 the new Investment Law was approved by (number): Parliament. IFC contributed advisory services to the preparation of the law. Baseline: 0 (2014) Target: 1 (2017) 18. Mobilization of private investment 18. Achieved. IFC has mobilized $403m through its investment activities. The (millions): impact of the new Investment Law on mobilization of private investment will only Baseline: 0 (2014) become clear and be monitored once the implementing regulations have been issued. Target: 150 (2017) IFC expects to start monitoring this in FY18. Supplementary Indicators u. Number of recommended u. Achieved. 3 implementing regulations related to the new Investment Law have laws/regulations/ amendments/codes been issued in addition to a number of reforms covering the Doing Business enacted or government policies adopted Indicators: Baseline: 0 (2014) Target: 4 (2017)  Implementation regulation and procedures of the investment law  Revision of investment incentives  Revision of investment restriction list.  Doing Business reforms: o In 2015 Myanmar made starting a business easier by eliminating the minimum capital requirement for local companies o In 2015 Myanmar streamlined incorporation procedures by removing the process of issuing a provisional incorporation certificate while the file is checked by the Ministry of Home Affairs and the Police. Full certificate is now issued immediately without the need for these checks, which removed 60 days from time needed to start a business. o In 2016 Myanmar made starting a business easier by reducing the cost (fees paid to registry) to register a company 40 o In 2016 Myanmar simplified the process of starting a business by removing the requirement to submit a reference letter and a criminal history certificate in order to incorporate a company. o In 2016 Myanmar improved its credit information system by enacting a law (Financial Institutions Law) that allows the establishment of a new credit bureau o On March 31, 2017 Myanmar issued the Regulation on Credit Information Reporting System, which provides the basis for the establishment and operations of credit reporting companies, such as credit bureaus Objective #3.3. Improved capacity to facilitate (and benefit from) trade 19. Reform - trade policy (number): 19. Achieved. There have been significant policy reforms. At the end of 2015 there Baseline: 0 (2014) was a reduction in the import licensing requirements of about 50 percent of the Target: 1 (2017) products that previously required licenses. 20. Number of recommended 20. Partially Achieved. The government issued notification to eliminate duplication laws/regulations/amend-ments/codes in valuation of cargo for imports. The Government also has launched a medium term enacted or government policies adopted reform program based on the findings of the Diagnostic Trade Integration Study, the Baseline: 0 (2014) Exports Strategy and other reports, and implementation is ongoing. Target: 3 (2017) Supplementary Indicators v. Trade related regulations published v. Achieved. In May 2016 a new Trade Portal was launched by the Ministry of on public website Commerce. The intention is that eventually it will be possible to make license Baseline: No (2014) applications on-line. Target: Yes (2017) Objective #3.4. Increased access to ICT There has been rapid progress in expanding services associated with Bank, IFC and MIGA support for ensuring an appropriate regulatory framework and for sufficient competition to bring down prices. 21. Access to telephone services (fixed 21. Achieved. This reflects the rapid growth of the cellular network. mainlines and cellular phones per 100 people) Baseline: 20 (2014) Target: 50 (2017) 22. Access to Internet services (number 22. Achieved. of subscribers per 100 people) Baseline: 10 (2014) Target: 15 (2017) Supplementary Indicators w. Universal service strategy adopted w. Not achieved yet. The adoption of the Universal Service Strategy has been Baseline: No strategy (2014) delayed but should be achieved by end 2017. Target: Strategy adopted (2015) x. Licensed telecommunications x. Achieved. The number of licensed telecommunications operators has exceeded operators (number) the 2017 target and has reached about 34 by end-2016. While there are only four Baseline: 3 (2014) nationwide service operators, a large number of local companies have taken licenses Target: 8 (2017) to provide more limited services. 41 Annex 3: Matrix of Changes to Original CPF Result Matrix Original Objectives and Indicators Revised Rationale for Change Objectives/Indicators Focus Area 1: Reducing Rural Poverty Objective #1.1. Improved power generation and access to Unchanged electricity 1. People provided with new or improved electricity service (million) New Target date: Acknowledging a slow start due to capacity and Baseline: 0 (2014) (2019) implementation challenges, but recognizing recent pickup Target: 3 (2017) in activities which may deliver the planned outcome given 2. Expanded conventional and renewable power generation (gigawatt additional time. hours, annual) Baseline: 260 (2014) Target: 660 (2017) Supplementary Indicators a. Thermal efficiency of energy conversion (%) Baseline: 20 (2014) Target: 48 (2017) b. Investment/financing facilitated from private sector (US$ million) Dropped. The milestone has been achieved and will no longer be Baseline: 0 (2014) required in the remainder of the CPF period, in light of Target: 300 (2017) lessons from recent engagement, and while assisting the Government on electricity tariff adjustment. New: Below cost tariffs are a large burden on the state budget Adoption of a pricing policy with annual subsidies above US$400 million, and a major toward full operating cost impediment to private sector involvement in the power recovery over 4 years sector. The Bank provided technical assistance for a Baseline: tariff below cost review of power sector financial viability and is now (2017) supporting the tariffs reform through programmatic DPO Target: New pricing policy is on macroeconomic stability and fiscal resilience. adopted (2019) c. National electrification executive secretariat (NEES) functional Dropped. The new administration has not expressed support for such Baseline: Established (2014) institution and it is not being considered in the ongoing Target: Adequately staffed and functional (2016) discussion on sectoral coordination and working groups. Objective #1.2. Increased productivity in farming and agribusiness Unchanged. 3. Average rice yields in targeted irrigated areas New target date: 42 Original Objectives and Indicators Revised Rationale for Change Objectives/Indicators Baseline: 2.7 tons/ha (wet season rice) and 3.0 tons/ha (dry season (2019) The achievement of the objective indicators of increased rice) (2015) yields and cropping intensity was dependent on the Target: 2.9 tons/ha (wet season rice) and 3.2 tons/ha (dry season rice) progress of the Agriculture Development Support Project. (2017) Under the new Government, the three Rural Development ministries (Agriculture; Livestock and Fisheries; and 4. Cropping Intensity in targeted areas (ratio) Irrigation) have been merged into a single ministry. The Baseline: 1.3 (2015) challenges of moving to a new structure have contributed Target: 1.4 (2017) to implementation delays. This means that the rehabilitation of irrigation works on which the Supplementary Indicators achievement of the indicators is dependent, will at best d. Advisory agreements signed only begin in 2017. The objective indicators relating to Baseline: 0 (2014) increased output will therefore not be achieved within the Target: 2 (2017) original time-frame. For the extension, a new supplementary indicator has been added on the number of e. Area provided with improved irrigation and drainage services (ha) seed farms identified for upgrading under the project. IFC Baseline: 0 (2015) is providing support in this area through focus on more Target: 10,000 ha (2017) efficient and higher quality input supply. Support for fertilizer supply is ongoing. In addition, IFC is providing f. Clients who have received improved agricultural technologies advisory services to the Ministry of Agriculture, Livestock promoted by WB financed projects. and Irrigation. Baseline: 0 (2015) Target: 4,500 (2017) New: New IFC activities Seed farms identified for upgrading to produce improved seeds Baseline: 0 (2015) Target: 2 (2019) Objective #1.3. Improved Access to Critical Infrastructure and Unchanged. Services for the Rural Poor 5. Population in townships benefiting from improved access to and use Revised beneficiaries target: At present the Myanmar national community-driven of rural infrastructure and services under the WBG interventions 7 million (2019); of which at development program (NCDDP) covers some 8,800 (number) least 40 percent female villages, home to 5.2 million people. Notably, the program Baseline: 0.8 million (2014) has also exceeded targets on the levels of community Target: 3.3 million (2017); of which at least 40 percent female participation and satisfaction rates, and achieved targets on participation of women. The additional time as well as 43 Original Objectives and Indicators Revised Rationale for Change Objectives/Indicators additional resources from Japan and UK will allow reaching more beneficiaries. New: In the 2015 flood hundreds of kilometers of rural roads Rural roads damaged by were washed away. These represent a lifeline for poor floods reconstructed (kms) rural villagers and the Government has assigned high Baseline: 0 (2015) priority to repairing them. Obviously there were no Target: 200 (2019) indicators for this program in the original CPF, but the extended CPF includes indicators of the roads to be rehabilitated. Supplementary Indicators g. Households in project villages participating in planning, decision- Dropped. The milestone has been achieved and will no longer be making, and implementation of sub-projects (percent) required in the remainder of the CPF period, Baseline: 0 (2014) Target: >50 (2017) Objective #1.4. Improved National Capacity for sustainable Unchanged. environmental and natural resource management. 6. Country demonstrates capacity for sustainable environmental and Revised: natural resource management by preparing and implementing Inclusion and implementation investment projects following quality safeguards and performance of environmental safeguards standards (number of projects) capacity building components Baseline: 4 (2014) in WBG investment Target: 8 (2017) operations (number of projects) Baseline: 4 (2014) Target: 8 (2019). Supplementary Indicators h. Country Safeguard Assessment Report completed Dropped. This supplementary indicator has been achieved (albeit Baseline: No (2014) with delay, Annex 2) and will no longer be required in the Target Yes (2016) remainder of the CPF period. i. Report on analysis of one key natural resource completed Dropped. The EITI Multi-stakeholder, a body bringing together Baseline: No (2014) Government and civil society has independently Target: Yes (2016) commissioned a review of the gemstone sector of Myanmar. j. Environmental risk management report for one or two key sectors Revised Target date: Plans for this task are being initiated following the completed (2019) completion of the overall country safeguard assessment Baseline: None (2014) report. Target: Yes (2017) 44 Original Objectives and Indicators Revised Rationale for Change Objectives/Indicators k. Strategic Environmental and Social Assessment for the Ayeyarwady Revised: The original indicator called for the initiation of a River Basin (ARB) initiated. The State of the Ayeyarwady “Strategic Social and Environmental Assessment” by Baseline: No (2014) River Basin is completed 2017. During the early project implementation this activity Target: Yes (2017) Baseline: No (2014) name was changed to “State of the Basin Assessment” at Target: Yes (2018) the request of the client. The Assessment focuses on environmental and social issues. The kick-off workshop was held in November 2016, and as such the initial milestone is met. New: The Ayeyarwady River Basin Master Plan, a core The Ayeyarwady River Basin component of the IDA-funded Ayeyarwady Integrated Master Plan is initiated River Basin Management Project, will guide the Baseline: None sustainable development and management of the Target: (2019). Ayeyarwady river basin. Focus Area 2: Investing in People and Effective Institutions for Unchanged. People Objective #2.1. Improved capacity to manage public finances and Unchanged. Union-State/Region relations for better service delivery 7. Formula for intergovernmental transfers Unchanged. Baseline: No formula (2014) Target: Approval of formula (2016) 8. Budget preparation process in place, including issuance of ceilings Unchanged. and preparation of a medium-term fiscal framework Baseline: No (2014) Target: Yes (2017) New: The revenue/GPD ratio is a critical issue for the long-term Increase in the tax revenue to resilience of the fiscal sector and the capacity to support GDP ratio (percent) expanded public service provision. Baseline: 7.8 (2014/15) Target: 10.0 (2018/19) Supplementary Indicators l. Public expenditure review completed Dropped. This supplementary indicator has been achieved and will Baseline: No review (2014) no longer be required in the remainder of the CPF period. Target: Review completed (2015) m. Government commitment of fiscal transparency in line with global Revised: After a promising start with the successful preparation of good practice, including report on revenues from natural resources Second EITI reconciliation the first EITI reconciliation report in January 2016, Baseline: No (2014) report is published. progress has stalled as a consequence of the political Target: Yes (2017) Baseline: No (2014) transition. The extension of the time-frame of the CPF will 45 Original Objectives and Indicators Revised Rationale for Change Objectives/Indicators Target: Yes (2018) allow for the resumption of progress towards full compliance. New: The Auditor General Office is supported through the Auditor General’s Reports are Bank-funded PFM project. Stronger external oversight made publicly available. will raise accountability and help improve the quality and Baseline: Not available (2016) cost effectiveness of public services delivery. Target: Publication on line (2019) Objective #2.2. Expanded Health Services and Improved Health Unchanged. Financing with a focus on Maternal, Newborn and Child Health. 9. Deliveries with skilled birth attendant (percentage) Revised: A Demographic and Health Survey (DHS) conducted in Baseline: 71 (2014) Deliveries with skilled birth 2015 provided new data on the main indicators, revealing Target: 75 (2017) attendant (percentage) a poorer situation than assumed in the CPF baseline, so Baseline: 60 (2015/16) both baselines and targets needed to be re-set. Target: [65] (2019) 10. Deliveries which are followed by adequate post-natal care Revised: (percentage) Deliveries which are followed Baseline: 78 (2014) by adequate post-natal care Target: 80 (2017) (percentage) For newborns Baseline: 36 (2015/16) Target: 60 (2019) For mothers Baseline: 57 (2015/16) Target: 60 (2019) Supplementary Indicators n. Health financing strategy Revised Target date: The new administration has prioritized the preparation of Baseline: None (2014) Target: Approved (2018) a National Health Plan (presented in March 2017) to guide Target: Approved (2016) subsequent sub-strategies or operational mechanisms, such as the Health financing strategy. o. Health facility grants transferred to township and below based on formula Baseline: No (2014) Target: Yes (2016) Objective #2.3. Expanded and improved education coverage and Unchanged. measurement of learning outcomes 11. Students receiving stipend payments Revised beneficiaries target Over 150,000 students have received stipend payments as Baseline: 0 (2014) Baseline: 0 (2015) of the school year 2016-17. With additional financing 46 Original Objectives and Indicators Revised Rationale for Change Objectives/Indicators Target: 30,000 (2017); of which at least 40 percent female Target: 200,000 (2019), of coming into the program which is one of the most which at least 40 percent successful IDA-financed programs in Myanmar (a result female of simple design and alignment with country systems), it is expected that more students will benefit during the CPF extension. 12. States/Regions that have conducted assessment for early grade Revised: The Government has decided to go from a regionally reading performance (EGRA) in primary schools Nationally representative representative to nationally representative Early Grade Baseline: 1 (2014) EGRA is conducted Reading Performance (EGRA) Target: 5 (2017) Baseline: No (2017) Target: Yes (2019) Supplementary Indicators p. States/regions with revised guidelines for student stipends and Dropped. The target for this supplementary indicator is met and is school grants not needed in the remainder of the CPF period. Baseline: 1 (2014) Target: 15 (2017) New: An additional financing supported by the Bank, Australia, Teachers in the mentoring Denmark and Finland is building on the success of the program Decentralizing Funding to Schools Project, to provide Baseline: 0 (2016) teachers mentoring and cluster support to the many new, Target: 2000 (2019) inexperienced teachers hired by the Ministry in its efforts to increase coverage. Objective #2.4. Increased understanding of poverty and key Unchanged. related issues 13. National statistics strategy endorsed Revised: With the initial indicator being met, the focus is on Baseline: No strategy (2014) Agreement reached on implementation. Target: Government endorsement (2015) respective roles of central and line ministries in implementing the national statistics development strategy. Baseline: No Agreement (2014) Target: Agreement (2018) 14. Increase government knowledge on poverty and public Revised: The poverty assessment is completed. The public expenditures Increase government expenditure review is narrowly defined as a fiscal Baseline: limited data (2014) knowledge on poverty and incidence analysis. Target: Poverty assessment and expenditure review completed (2015) public expenditures 47 Original Objectives and Indicators Revised Rationale for Change Objectives/Indicators Baseline: no fiscal incidence (2014) Target: Fiscal incidence is completed (2019) New: The wide range of views on what poverty levels and Poverty baseline for 2016 is poverty dynamics are adversely affecting the discussions defined. on the appropriate policies and program designs to Baseline: Different figures eliminate extreme poverty. used (2014) Target: Agreement on a set of numbers and the methodology for updating (2018) Supplementary Indicators q. Poverty assessment conducted Revised: Next steps after completion of the assessment. Baseline: No updated assessment (2014) Poverty assessment published Target: Updated assessment (2016) Baseline: No updated assessment (2014) Target: Published assessment (2016) Focus Area 3: Supporting a dynamic private sector to create jobs Unchanged. Objective #3.1. Improved financial infrastructure and access to Unchanged. finance 15. Additional people, microenterprises and SMEs reached with Unchanged. financial services Baseline: 0 (2014) Target: 200,000 (2017) 16. Additional financing facilitated (US$ million) Unchanged. Baseline: 0 (2014) Target: 40 (2017) New: Activities supported under the Financial Sector Adults with active transaction Development Project approved in December 2016 accounts (%) Baseline: Male 28.6 – Female 17.4 (2016) Target: Male 33 – Female 27 (2019) 48 Original Objectives and Indicators Revised Rationale for Change Objectives/Indicators New: Activities supported under the Financial Sector Adults in the poorest 40% Development Project approved in December 2016 with accounts at a financial institution (%) Baseline: 16.1 (2016) Target: 20 (2019) Supplementary Indicators r. Financial sector master plan Dropped. The milestone was achieved and is no longer required in Baseline: No master plan (2014) the remainder of the CPF extension period. Target: Master plan developed (2015) s. Bank and Financial institutions law Dropped. The milestone was achieved and is no longer required in Baseline: Outdated law (2014) the remainder of the CPF extension period. Target: A new Bank and Financial Institutions Law passed by Parliament (2015) t. Number of investments committed (IFC) Revised Target date: High Transaction costs in Myanmar require longer Baseline: 3 (2014) (2019) implementation period. The target is expected to be Target: 5 (2017) achieved within the CPF extension period. New: Reflect WB and IF activities that have started after the Credit Bureau established and preparation of the CPF, and are relevant to the operational achievement of the CPF objective of improved financial Baseline: not established. infrastructure and access to finance. Target: up and running (2019) New: Reform of State-Owned bank begun. Baseline: No formal restructuring plan (2017) Target: Approval of a comprehensive restructuring plan for one of the State- Owned banks (2019) New: Supervisory manuals or internal guidelines for insurance, microfinance, and state-owned banks are developed Baseline: 0 (2016) 49 Original Objectives and Indicators Revised Rationale for Change Objectives/Indicators Target: 2 (2019) Objective #3.2. Improved enabling environment for private sector Improving legal and To be more specific and align closer with the instrument investment in productive and services sector regulatory environment for and activities supported by the WBG. private sector investment in productive and services sector. 17. Reform - investment policy (number): Unchanged. Baseline: 0 (2014) Target: 1 (2017) 18. Mobilization of private investment (millions): Revised target date and data Initial CPF target is met, and the CPF extension will allow Baseline: 0 (2014) (additional financing in to scale up initial gains. Target: 150 (2017) 2017-2019). Baseline: 0 (2017) Target: 200 (2019) Supplementary Indicators u. Number of recommended laws/regulations/ amendments/codes Revised target: Initial CPF target is met. enacted or government policies adopted Additional recommended Baseline: 0 (2014) laws, regulations, amendments Target: 4 (2017) enacted or government policies adopted. Baseline: 0 (2017) Target: 4 (2019) Objective #3.3. Improved capacity to facilitate (and benefit from) Increasing effectiveness and To be more specific and align closer with the instrument trade transparency of trade and activities supported by the WBG. regulations. 19. Reform - trade policy (number): Unchanged. Baseline: 0 (2014) Target: 1 (2017) 20. Number of recommended laws/regulations/amendments/ codes Revised: enacted or government policies adopted New laws, regulations, Baseline: 0 (2014) amendments, codes enacted or Target: 3 (2017) government policies adopted Baseline: 0 (2017) Target: 3 (2019) Supplementary Indicators v. Trade related regulations published on public website Dropped. Target achieved, and will no longer be sought in the Baseline: No (2014) remainder of the CPF period. 50 Original Objectives and Indicators Revised Rationale for Change Objectives/Indicators Target: Yes (2017) Objective #3.4. Increased access to ICT Unchanged 21. Access to telephone services (fixed mainlines and cellular phones Revised: According to Ministry of Transport and per 100 people) Baseline: 10 (2014) Telecommunications, current mobile penetration is 107%. Baseline: 20 (2014) Target: 100 (2019) Target: 50 (2017) 22. Access to Internet services (number of subscribers per 100 people) Revised: Measure broadband subscription specifically, and adjust Baseline: 10 (2014) Access to Internet services target date accordingly. Target: 15 (2017) (number of broadband subscribers per 100 people) Baseline: 10 (2014) Target: 15 (2019) Supplementary Indicators w. Universal service strategy adopted Revised target date: The reform was delayed. Baseline: No strategy (2014) (2018) Target: Strategy adopted (2015) x. Licensed telecommunications operators (number) Dropped. Target achieved, and this supplementary indicator will not Baseline: 3 (2014) be used in the remainder of the CPF extension period. Target: 8 (2017) New: MPT is the former public monopoly with still significant MPT is corporatized market share, though declining. A professional Baseline: No (2017) management will be instrumental in supporting MPT and Target: Yes (2018) overall market development. 51 Annex 4: Economic Policy of the Union of Myanmar Vision The economic policy of the Union of Myanmar is people-centered, and aims to achieve inclusive and continuous development. It aims to establish an economic framework that supports national reconciliation, based on the just balancing of sustainable natural resource mobilization and allocation across the States and Regions. Objectives 1. To support national reconciliation and the emergence of a united federal democratic union. 2. To achieve balanced economic development across the States and Regions 3. To create opportunities for the emergence of capable and skilled new generations for the benefit of the country. 4. To establish an economic system that can achieve and maintain positive development outcomes through the participation, innovation and efforts of all citizens. Policies (1) Expanding our financial resources through transparent and effective public financial management. (2) Improving the operations of state-owned enterprises, and privatizing those state-owned enterprises that have the potential to be reformed, while promoting and assisting small and medium enterprises as generators of employment and growth. (3) Fostering the human capital that will be needed for the emergence of a modern developed economy, and improving and expanding vocational education and training. (4) Prioritizing the rapid development of fundamental economic infrastructure such as electricity generation, roads and ports, and establishing a data ID card system, a digital government strategy, and an e-government system. (5) Creating employment opportunities for all citizens including those returning from abroad, and giving greater priority in the short term to economic enterprises that create many job opportunities. (6) Establishing an economic model that balances agriculture and industry, and supports the holistic development of the agriculture, livestock and industrial sectors, so as to enable rounded development, food security, and increased exports. (7) Asserting the right of individuals to freely pursue the economic opportunities they choose, so as to enable private sector growth in line with a market economy system; formulating specific policies to increase foreign investment; and strengthening property rights and the rule of law. (8) Achieving financial stability through a finance system that can support the sustainable long-term development of households, farmers and businesses. (9) Building environmentally sustainable cities, upgrading public services and utilities, expanding public spaces, and making greater efforts to protect and conserve our cultural heritage 52 (10) Establishing a fair and efficient tax system in order to increase government revenues, and protecting individual rights and property rights through enacting laws and regulations. (11) Establishing technical systems and procedures to support intellectual property rights that can encourage innovation and the development of advanced technology. (12) Identifying the changing and developing business environment both in ASEAN and beyond, so as to enable our own businesses to situate themselves to take advantage of potential opportunities. 53 Annex 5: World Bank Financing (US$ million) World Bank Financing in FY15-17 (US$ million) Focused Project Project Approval FY Financing Areas ID No. (US$ FY15 FY16 FY17 million) Focus area P146482 Ayeyarwady Integrated December 100 1: River Basin Management 2014 Reducing P147629 Agriculture Development April 100 rural Support Project 2015 poverty P132500 National Community June 2015 400 Driven Development Project – Additional Financing P152936 National Electrification September 90 Project (off grid ) 2015 P158194 Floods and Landslides July 2016 200 Emergency Recovery Credit Of which US$100 million from the Crisis Response Window P160931 Disaster Risks Management Planned 116 Project June 2016 Focus P149960 Access to Essential Health October 100 Area 2: Services Project 2014 Investing P152734 First Macroeconomic April 200 in People Stability and Fiscal 2017 and Resilience Development effective Policy Operation institutions for people Focus P152936 National Electrification September 310 Area 3: Project (Grid) 2015 Supporting a dynamic P154389 Financial Sector December 100 private Development Project 2016 sector to create jobs Total 1,716 54 FY18-19 Indicative IDA Lending US$ million FY18 FY19 IDA 18 - Indicative Amount * 560 440 Focus area 1**: Reducing rural poverty 140 Agriculture 140 Focus Area 2: Investing in People and effective institutions for people 200 100 Additional Financing for the Essential Health Services Access 100 Inclusive Access and Quality Education Project 100 Nutrition 100 Focus Area 3: Supporting a dynamic private sector to create jobs 360 200 Development Policy Operation for Private Sector Development 200 Energy efficiency improvement/system strengthening project 160 Development Policy Operation for Macroeconomic Stability and Fiscal Resilience 200 IDA 18 Regional Integration Window To be explored IDA 18 Scale-Up Facility To be explored IDA18 IFC-MIGA Private Sector Window To be explored * US$ amounts are indicative as IDA18 country level allocations have not been finalized; also, IDA allocations are expressed in SDRs (Special Drawing Rights), whose exchange rate to the dollar may fluctuate. ** Upon completion of an independent evaluation of the National Community Driven Development Project, the Union Government may request World Bank support for additional financing of US$200 million in FY19.   55 Annex 6: World Bank Active Portfolio Advisory Services and Analytics (ASA) Practice Area FY15 FY16 FY17 FY18 and beyond (indicative) Focus Area 1: Reducing rural poverty Agriculture  Myanmar Agriculture  Myanmar Agricultural Policy Alternatives: Policy Dialogue (Ongoing Status & Opportunities – To be completed in (Completed) FY19)  Myanmar Food Systems (To be completed in FY19) Energy and Extractives  Myanmar Extractive  Energy policy dialog and Industries sector reform in Myanmar Transparency Initiative Programmatic ASA (EITI) Preparation (Ongoing –To be Support – completed in FY19) Programmatic ASA (Completed)  Infrastructure/Diagnostics/ Assessment (Cascade) in  EITI Scoping Study & Energy (To be completed Legal Review in FY18) (Completed)  Political Economy Study of Extractives Industry (Completed)  EITI Constituency Building and Outreach (Completed) 56 Practice Area FY15 FY16 FY17 FY18 and beyond (indicative)  TA on EITI implementation (Completed) Environment & Natural  Safeguards  Country Environmental Resources Systems/Capacity Analysis (To be Assessment (Ongoing completed in early FY19) – To be completed in FY17) Social, Urban, Rural and  Myanmar: Floods  Social Inclusion in Resilience Needs Assessment and Myanmar (Ongoing – to Recovery Planning be completed in FY18) (Completed)  Myanmar Land Assessment (Ongoing – To be completed in FY18)  Myanmar Post-earthquake Rapid Assessment and Recovery Planning (Ongoing - To be completed in FY18)  Support to Myanmar Peace Center (Ongoing – To be completed in FY18)  Post Nargis Final Impact Monitoring (Ongoing – To be completed in FY18)  Urbanization Review (To be completed in FY18) 57 Practice Area FY15 FY16 FY17 FY18 and beyond (indicative)  Social Safeguards Assessment for Environment and Social Framework (To be completed in FY18  Qualitative Social and Economic Monitoring of Livelihoods in Myanmar (Ongoing – To be completed in FY19)  Integrating Human rights in the WBG Myanmar (Ongoing – To be completed in FY19)  Myanmar Community Driven Development: Italian Financing Supervision (Ongoing – To be completed in FY21) Focus Area 2: Investing in people and effective institutions for people Education  Providing technical  M&E Activities for  Monitoring school grants assistance to Myanmar Grants and Stipends and stipends (Ongoing – Comprehensive (Completed) to be completed in FY21) Education (Completed) Governance  Strengthening Auditing  Pay, Compensation, HR and Accounting Review and Sub-national (Ongoing – To be Service Delivery completed in FY17) 58 Practice Area FY15 FY16 FY17 FY18 and beyond (indicative) (Ongoing – To be completed in FY19) Health, Nutrition and  Advisory and Technical Population Services for Myanmar Health Systems Strengthening (Ongoing – To be completed in FY18)  Strengthening Health Financing Systems for UHC in Myanmar (Ongoing – To be completed in FY18)  Myanmar Universal Health Coverage Programmatic ASA (Ongoing – To be completed in FY19) Macro Economics &  Myanmar Public  Myanmar Policy Notes  Myanmar Public  Myanmar Macro-Fiscal Fiscal Management Expenditure Reviews for Incoming Expenditure Review 2 Program Programmatic 2013 (Completed) Government (Ongoing – To be ASA (Ongoing – To be (Completed) completed in FY17) completed in FY18)  Myanmar Economic Monitor (Ongoing – To be completed in FY17) Poverty and Equity  Strengthening  Myanmar Poverty  Myanmar Poverty Household Welfare Monitoring & Programmatic ASA Surveys (Completed) Diagnostics (Ongoing - (Ongoing – To be completed in FY18) 59 Practice Area FY15 FY16 FY17 FY18 and beyond (indicative) To be completed in FY17)  Data-driven Analysis for Better Public Spending in Myanmar (Ongoing – To be completed in FY19) Social Protection and  Myanmar Social  Myanmar Future Jobs  Myanmar TA on Labor Protection Reform (Ongoing – To be Targeting (To be (Completed) completed in FY17) completed in FY18) Focus Area 3: Supporting a dynamic private sector to create jobs Finance and Market  Financial Inclusion for  Myanmar Scaling Up National Development Financial Services for the (Completed) Poor Programmatic ASA (Ongoing – To be  Building Financial completed in FY18) Sector Development in Myanmar (Completed)  Modernizing Payment Systems (Ongoing – To be completed in FY18)  Myanmar Macro-Fiscal Programmatic ASA (Ongoing- To be completed in FY18) Trade & Competitiveness  Myanmar Investment  Diagnostic Trade  Trade Facilitation and Climate Assessment Integration Study Competitiveness in (Completed) (Completed) Myanmar – Programmatic ASA (Ongoing- To be completed in FY17) 60 World Bank Active Financing (As of May 2017) No. Project Project Loan/TF Approved Percent Approval Closing ID Account Amount (US$) Disbursed 1 P152734 First Macroeconomic IDA 60660 200,000,000.00 0.00% 27-Apr-17 31-Dec-17 Stability and Fiscal Resilience DPO 2 P154389 Myanmar Financial IDA 59300 100,000,000.00 0.00% 20-Dec-16 30-Jun-21 Sector Development Project 3 P158194 Myanmar Flood and IDA 58890 200,000,000.00 0.21% 14-Jul-16 31-Dec-21 Landslide Emergency Recovery Project 4 P156124 Myanmar EITI TF A1901 2,500,000.00 9.70% 11-Apr-16 31-Dec-19 Implementation Project 5 P158724 Survey on Household TF A3458 670,000.00 81.28% 14-Sep-16 18-May-18 Living Conditions 6 P152936 National Electrification IDA 57270 400,000,000.00 2.23% 16-Sep-15 30-Sep-21 Project 7 P147629 Agricultural IDA 56240 100,000,000.00 6.00% 23-Apr-15 30-Jun-22 Development Support Project 8 P143321 Myanmar EITI TF A0156 290,000.00 100.00% 25-Jun-15 31-Dec-15 Implementation Grant 9 P146482 Ayeyarwady Integrated IDA 55590 100,000,000.00 4.52% 9-Dec-14 30-Sep-20 River Basin Management Project 10 P149960 Essential Health IDA 55420 100,000,000.00 43.85% 14-Oct-14 30-Jun-19 Services Access Project 11 P146332 Myanmar TF 17814 17,000,000.00 69.35% 11-Oct-14 31-Dec-18 Decentralizing Funding to Schools IDA 54550 80,000,000.00 77.10% 20-May-14 31-Dec-18 12 P144952 Modernization of TF 17910 20,000,000.00 17.80% 4-Sep-14 30-Sep-19 Public Finance Management IDA 54020 30,000,000.00 19.55% 2-Apr-14 30-Sep-19 13 P145534 MM: IDA 53530 31,500,000.00 28.32% 6-Feb-14 31-Dec-19 Telecommunications Sector Reform 14 P143988 Electric Power Project IDA 53060 140,000,000.00 14.52% 24-Sep-13 30-Apr-18 15 P132500 Myanmar National IDA 56870 400,000,000.00 21.38% 30-Jun-15 30-Nov-21 Community Driven Development Project IDA H8140 80,000,000.00 92.23% 1-Nov-12 30-Nov-21     IDA US$1,961,500,000 Trust Funds US$40,460,000 61 Annex 8: IFC PORTFOLIO (US$ million) IFC Investment Portfolios Quasi- Mobili- No. Client Sector Debt Equity GTFP Total equity zation FM 1 Acleda Microfinance Microfinance 6 2 0 0 0 8 2 Myanmar Oriental Bank Banking 0 0 7 5 0 12 3 Yoma Bank Banking 0 0 5 20 0 25 4 Fullerton Myanmar MF Microfinance 0 2 0 0 0 2 Sub-total 6 4 12 25 0 47 MAS 7 Shangrila-Myanmar Hotels 80 0 0 0 0 80 8 City Mart Holding Retail 0 0 25 0 0 25 9 Landmark Project* Property 50 20 0 0 105 175 10 Yoma Fleet Logistics 10 0 0 0 0 10 11 Myanma Awba Agribusiness 0 0 10 0 0 10 12 United Hotels Hotels 8.5 0 0 0 0 8.5 13 Oway Travels Travels&Tour 2 0 0 0 0 2 Sub-total 151 20 35 0 105 311 INFRA 14 Myanmar Industrial Port Port 0 0 40 0 0 40 15 Ooredoo Myanmar Telecom 150 0 0 0 150 300 Sembcorp/Myingyan 16 Proj* Energy 57 0 0 0 273 330 Sub-total 207 0 40 0 423 670 Total 370 24 87 25 528 1028 Note: * expected by June 30, 2017 62 IFC Advisory Services CPF Focus areas Supporting a dynamic private sector to create Project Name Date Reducing Rural Poverty jobs Myanmar Investment Policy 2013-18 √ Myanmar Investment Climate 2014-18 √ Myanmar Agri Input Reform and Standards 2015-19 √ Myanmar Sustainable Tourism 2015-18 √ E&S Standards of Hydropower Sector 2015-19 √ Corporate Governance 2016-21 √ Lighting Myanmar 2016-20 √ Credit Bureau Project 2014-19 √ Secured Transaction Reform 2016-21 √ Banking Sector Development 2014-17 √ Microfinance Sector Development 2014-17 √ Yoma Bank 2013-17 √ Myanmar Oriental Bank 2014-19 √ Acleda MFI 2013-16 √ Fullerton 2014-17 √ 63 Annex 9: MIGA PORTFOLIO (US$ million) Total Transfer War & Civil Breach of Project Name Sector Expropriation Guarantee Restriction Disturbance Contract Amount KDDI Summit Infrastructure 406.2 406.2 Global Myanmar (Telecom) Company Ltd. Myanmar Fiber Infrastructure 105.7 105.7 105.7 105.7 Optic (Telecom) Communication Network Co., Ltd Total 511.9 105.7 105.7 511.9 64 Annex 10: Key Economic Indicators 2014/15 – 2018/19 (% of GDP)1 2013/14 2014/15 2015/16 2016/17 e 2017/18 p 2018/19 p 2019/20 p Output and prices (% change) Real GDP (% change) 8.4 8.0 7.3 6.5 6.9 7.2 7.3 Agriculture 3.6 2.8 3.4 4.3 5.4 5.3 5.3 Industry 11.4 12.1 8.7 4.5 6.5 7.2 7.3 Services 10.3 9.1 9.1 9.5 8.2 8.5 8.5 CPI (% change, Period average) 5.7 5.9 11.4 8.9 6.3 5.7 5.5 Public sector (% of GDP)2, 3 Revenue 20.2 22.3 19.9 16.8 16.7 16.3 16.8 Union Government 10.2 12.4 12.4 9.6 9.6 9.5 10.2 Tax 7.7 10.0 8.7 7.7 7.9 7.9 8.7 Non-Tax 2.4 2.2 3.4 1.4 1.3 1.2 1.2 Grants 0.1 0.3 0.3 0.4 0.4 0.4 0.4 Expenditure 21.7 23.4 23.2 21.3 20.5 19.6 19.9 Union Government 13.1 14.6 15.1 13.9 13.5 13.1 13.4 Recurrent 7.4 9.3 10.3 9.8 9.7 9.5 9.6 Wages4 1.5 1.7 2.2 2.0 1.9 2.0 2.1 Transfers 1.0 2.6 2.7 2.4 2.2 2.0 1.9 Interest 1.1 1.1 1.0 1.1 1.3 1.4 1.4 Other 3.8 3.8 4.4 4.3 4.2 4.1 4.1 Capital 5.7 5.4 4.9 4.0 3.8 3.7 3.8 Balance5 -1.5 -1.1 -3.2 -4.5 -3.8 -3.3 -3.1 Public debt 34.2 29.5 33.8 33.8 33.8 34.3 34.7 Money and credit (% change) Reserve money 16.0 5.0 20.0 13.4 9.7 9.4 10.5 Net claims on Government 6.6 13.5 31.5 24.5 12.8 10.0 6.0 Broad money 32.7 19.6 23.2 20.8 16.5 18.6 18.0 Private sector credit 52.5 36.5 34.0 21.0 19.0 25.0 24.0 Balance of payments (% of GDP) Current account balance -4.9 -3.3 -4.8 -6.7 -6.8 -6.7 -6.6 Trade balance -5.1 -6.3 -8.6 -10.2 -10.4 -10.4 -10.2 Financial account 7.4 7.1 6.6 6.5 7.8 8.1 8.3 FDI (net) 4.4 7.1 6.6 5.9 6.4 6.7 6.9 Overall balance 2.0 1.8 -0.7 -0.3 1.0 1.3 1.8 Sources: MOPF, CBM, IMF BoP Statistics, WB Staff estimates 1/ e = estimates; p = projections 2/ The recently approved 2017/18 Union Budget envisages a large increase in the deficit. The figures in Annex 9 however are WB Staff estimates of expected fiscal outturns for 2017/18. 3/ Union Government is the equivalent of General Government. SEE operations are equivalent to public sector financial and non- financial corporations. The consolidated public sector aggregates Union Government and SEE operations (netting out SEE payments to the Union Government). 4/ Excludes military wages, which are captured in “Other” recurrent expenditure. 5/ Fiscal balances are calculated on the basis of net financing (GFS standards) 65