The World Bank Report No: ISR14365 Implementation Status & Results Kyrgyz Republic KG Financial Sector Development Project (P125689) Public Disclosure Copy Operation Name: KG Financial Sector Development Project (P125689) Project Stage: Implementation Seq.No: 5 Status: ARCHIVED Archive Date: 25-Apr-2014 Country: Kyrgyz Republic Approval FY: 2012 Product Line: IBRD/IDA Region: EUROPE AND CENTRAL ASIA Lending Instrument: Specific Investment Loan Implementing Agency(ies): Kyrgyz Post Office, National Bank of the Kyrgyz Republic Key Dates Board Approval Date 08-Mar-2012 Original Closing Date 30-Jun-2017 Planned Mid Term Review Date 30-Jul-2015 Last Archived ISR Date 14-Mar-2014 Effectiveness Date 25-Dec-2013 Revised Closing Date 30-Jun-2018 Actual Mid Term Review Date Project Development Objectives Project Development Objective (from Project Appraisal Document) Project Development Objectives are to: (i) enhance financial sector stability, and (ii) increase access to financial services. Has the Project Development Objective been changed since Board Approval of the Project? Yes No Component(s) Component Name Component Cost Strengthening the legal, regulatory, and supervisory framework for banks, MFOs, and credit unions 1.50 Enhancing financial services via KPOs network 5.55 Modernizing the secured transactions and debt resolution regime 1.00 Project coordination and monitoring 0.80 Overall Ratings Public Disclosure Copy Previous Rating Current Rating Progress towards achievement of PDO Moderately Unsatisfactory Satisfactory Overall Implementation Progress (IP) Moderately Unsatisfactory Satisfactory Overall Risk Rating Substantial Substantial Implementation Status Overview Since the project was only declared effective on December 25, 2013, it is still in too early a stage to report on progress towards the development objective of enhanced financial sector stability and increased access to finance. However, the project has made satisfactory progress on the administrative arrangement for (i) improving the legal, regulatory, and supervisory framework for the banking sector and to increasing the National Bank of the Kyrgyz Republic's capacity to monitor and address vulnerabilities; (ii) transforming Kyrgyz Page 1 of 5 The World Bank Report No: ISR14365 Post Office’s existing operation into a more cost effective distribution channel for basic financial services to increase access by poor and rural communities, and; (iv) strengthening the regime for moveable collateral registration and execution. Locations Public Disclosure Copy Country First Administrative Division Location Planned Actual Kyrgyz Republic Gorod Bishkek Gorod Bishkek ✔ Results Project Development Objective Indicators Indicator Name Core Unit of Measure Baseline Current End Target Legal, regulatory, and supervisory framework Number Value 0.00 0.00 12.00 following international good practice to Date 01-Dec-2011 21-Feb-2014 30-Jun-2018 enhance stability is developed, adopted, and Comments implemented Number of transactions through KPO related to Number Value 10000000.00 8200000.00 17000000.00 financial services Date 15-Jan-2012 31-Dec-2013 30-Jun-2018 Comments data for 2013 and excluding government payments (e.g., pensions and social benefits) Number of new annual registrations in the Percentage Value 0.00 20.00 secured transactions registry, using moveable Date 31-Dec-2011 31-Dec-2013 30-Jun-2018 assets as collateral (alone or in combination Comments Number of new registrations Number of new registrations increase with immoveable collateral) in 2011 - 36,000 in 2013 - 50,962 Intermediate Results Indicators Indicator Name Core Unit of Measure Baseline Current End Target Adoption of modern supervision methods Text Value Supervisory framework Implementation of Pillar 2 and lacking modern supervision 3 of Basel II Public Disclosure Copy methods Date 15-Jan-2012 21-Feb-2014 30-Jun-2018 Comments Upgraded ICT system Text Value No No incident of supervisory setback for want of IT support. Date 15-Jan-2012 21-Feb-2014 30-Jun-2018 Comments Page 2 of 5 The World Bank Report No: ISR14365 Contingency planning and crisis management Text Value No No systemic crisis that was framework not adequately addressed in time Public Disclosure Copy Date 15-Jan-2012 21-Feb-2014 30-Jun-2018 Comments According to the agreed plan the WB TA will commence in August 2014 Improved staff capacity, measured in terms of Number Value 2.00 2.00 4.50 number of years of staff experience in Date 15-Jan-2012 21-Feb-2014 30-Jun-2018 supervision departments Comments Number of ICT-equipped Post Offices (with Number Value 0.00 0.00 360.00 installed, operational front office cash Date 01-Jan-2012 21-Feb-2014 30-Jun-2018 terminals) connected to the central hub Comments Revenues from non-government transactions Percentage Value 15.00 8.60 20.00 as a share of total KPO revenues from financial Date 15-Jan-2012 31-Dec-2013 30-Jun-2018 services Comments Improved quality, reliability and cost-efficiency Text Value 0% >30% of small value payments operations, measured Date 15-Jan-2012 21-Feb-2014 30-Jun-2018 in terms of same day Straight Through Comments Processing as a share of total transactions to&from bank accounts Enhanced transparent financial performance Text Value No Annual audited statements Date 15-Jan-2012 21-Feb-2014 30-Jun-2018 Comments Introduction of performance measurement, in Text Value 0 Monthly financial reports terms of accounting reports with separated Date 15-Jan-2012 21-Feb-2014 30-Jun-2018 profitability and risk analysis for financial Comments services and postal services Public Disclosure Copy Number of cashiers, tellers, postmasters and Number Value 0.00 0.00 1200.00 other operational staff completed NBKR Date 15-Jan-2012 21-Feb-2014 30-Jun-2018 training to operate financial services at KPO Comments Enhanced competitive outreach for last mile Percentage Value 0.00 0.00 2.00 delivery of remittances, measured in terms of Date 15-Jan-2012 21-Feb-2014 30-Jun-2018 market share of KPO in total remittances Comments Amended legal framework for moveable Text Value No Yes collateral and debt resolution regimes Date 15-Jan-2012 21-Feb-2014 30-Jun-2018 Page 3 of 5 The World Bank Report No: ISR14365 Comments 2013 Diagnostic Report on Secured Transactions was provided to the Central Collateral Registry and other Public Disclosure Copy stakeholders. Issued regulations for the well-functioning of Text Value No Yes the collateral registry Date 15-Jan-2012 21-Feb-2014 30-Jun-2018 Comments The TOR for legal framework activity has been finalized. Procurement is planned in March 2014. Online system for registering collateral is Text Value No online system Yes operational Date 15-Jan-2012 21-Feb-2014 30-Jun-2018 Comments Number of dissemination and capacity-building Number Value 0.00 0.00 6.00 and training events held Date 15-Jan-2012 21-Feb-2014 28-Feb-2017 Comments Increase in lending based on new registration Percentage Value 0.00 20.00 of security interests in the registry, using Date 15-Jan-2012 05-Oct-2012 28-Feb-2017 moveable assets as collateral Comments To be measured at end-2011 N/A, the Registry does not increase collect such data Increase in the debt recovery rate for creditors Text Value To be measured at end-2011 30 cents on the dollar of 4% of insolvent companies Date 15-Jan-2012 30-Jun-2018 Comments N/A, the Registry does not collect such data Volume of Bank Support: Enabling Amount(USD) Value 0.00 0.00 0.00 Environment - SME Date 15-Jan-2012 21-Feb-2014 30-Jun-2018 Comments Public Disclosure Copy Data on Financial Performance (as of 18-Mar-2014) Financial Agreement(s) Key Dates Project Ln/Cr/Tf Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date P125689 IDA-50670 Effective 08-Mar-2012 11-Jul-2013 25-Dec-2013 30-Jun-2017 30-Jun-2018 P125689 IDA-H7600 Effective 08-Mar-2012 11-Jul-2013 25-Dec-2013 30-Jun-2017 30-Jun-2018 Disbursements (in Millions) Page 4 of 5 The World Bank Report No: ISR14365 Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P125689 IDA-50670 Effective XDR 2.62 2.62 0.00 0.00 2.62 0.00 P125689 IDA-H7600 Effective XDR 3.28 3.28 0.00 0.29 2.99 9.00 Public Disclosure Copy Disbursement Graph Key Decisions Regarding Implementation There are no pending key decisions arising from the recent supervision missions. Restructuring History Board/AOB Decision on 21-May-2013 Public Disclosure Copy Related Projects There are no related projects. Page 5 of 5