FIRST Initiative Six Month Update

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Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized FIRST Initiative Six Month Update Strengthening Financial Sectors JANUARY JUNE 2013

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized FIRST Initiative Six Month Update Strengthening Financial Sectors JANUARY JUNE 2013 FIRST Initiative Update is a monthly newsletter aimed at providing the latest information on the activities of FIRST to its donors, partners and other interested stakeholders. Due to the change of staff, these monthly updates were discontinued for a short period. This update provides a summary of FIRST s activities for the period, January through June and includes the last batch of Phase II projects approved in January. The update next month will resume the monthly pattern. For further details please send your request to first@worldbank.org NICARAGUA: CONSUMER PROTECTION FIRST Initiative assisted the Superintendency of Banks and Other Financial Institutions of Nicaragua, in developing a national program to improve consumer protection specifically for banking, microfinance and insurance sectors. This project aimed to establish a system that will provide adequate consumer protection for financial services, and ultimately greater access to finance. Project activities included assessing the legal, regulatory and institutional frameworks for consumer protection in December 2011; developing consensus of key stakeholders in the form of a prioritized action plan to implement recommendations of the diagnostic review in June 2012; and implementing priority measures identified in the action plan to strengthen consumer protection in Nicaragua in With the support of this project, a new consumer protection law was enacted in June 2013 and related regulations are now being prepared. As a result, overall consumer protection for financial services has increased in Nicaragua. PROJECT APPROVALS In the six month period from January to June, project approvals added to $ 4.4 million, with additional $ 4.2 million prepared and submitted to PAC. Projects approved, January June 2013 US$ 4,419,867 Azerbaijan Bosnia and Herzegovina Development of Supervision Framework for Operational Risk Liberalizing MTPL Insurance Market Assisting the Central Bank of the Republic of Azerbaijan (CBA) in developing a comprehensive framework for effective supervision of operational risk in the banking system, both to ensure that banks are aware of and able to manage operational risks and for the CBA to oversee operational risks in the banking system. Developing a detailed road map and know-how for the liberalization of the MTPL insurance market in Bosnia and Herzegovina and Republika Srpska. In the long-run, the project is expected to be instrumental to the implementation of the proposed market liberalization strategy, improved MTPL pricing and reserving practices, and ultimately major improvement in the overall technical fundamentals of 237, ,372

2 the insurance market. El Salvador Insurance Sector Reform Providing support to the Central Bank of El Salvador in establishing an appropriate legal and regulatory framework for the insurance sector to bring it in line with international standards and to develop a plan to build supervisory capacity in the Superintendency. 277,260 Guyana Pensions Regulation Assisting Bank of Guyana in strengthening the regulation and the supervision of the non-bank financial institution (NBFI) sector, focusing most specifically on the primary legislation covering the supplementary pension sector. This project would be a follow-up to project Supervision of Non-Bank Financial Institutions (#10195), which focused on insurance and other NBFIs supervised by the Bank of Guyana (BoG), which included an assessment of the pension sector. 123,166 Mexico Contingency plan for Cooperatives Financial Institutions Supporting an orderly consolidation of cooperative financial institutions (CFIs) in the State of Oaxaca and advice authorities in case of a potential crisis after the Dec. 31, 2012 deadline to file for CNBV authorization has passed. In addition, this TA will advise on the preparation of guidelines and procedures to monitor the establishment of new CFIs in order to help reestablish the soundness of a sector that caters in particular to the lower income population in rural areas. 124,475 Nicaragua Payment Systems Legal and Oversight Framework Providing resources and expertise to develop and review the national legal framework in the area of Payment, Remittances and Securities Settlement Systems (PRSSS), and support the Central Bank of Nicaragua in designing the structure and tasks of the their oversight function for the National Payment Systems. 110,000 Paraguay Strengthening Pensions Supervision Supporting the Central Bank of Paraguay to adopt a modern legal framework for the pension sector, including the creation of a dedicated sector supervisor to fill a critical vacuum in the financial system s oversight framework. 120,860 Armenia Supporting Capital Market Development Assisting the Central Bank of Armenia (CBA) with (i) the development of pilot structures for securitizations and issuance of other financial instruments, (ii) reviewing the existing legal framework (enacted between 2007 and 2012) and (iii) assisting CBA to draft regulations or amendments to regulations where needed. 273,850

3 Armenia Regulatory and Supervisory Framework for Funded Pensions and Life Insurance Assisting the Central Bank of Armenia in developing the pension system supervisory/regulatory framework for the investment policy and asset manager regulations for pension funds and life insurance companies as well as the actuarial soundness of the life insurance industry; and to strengthen pension and insurance regulation capacity at Central Bank of Armenia. 383,315 Armenia Enhancing Corporate Financial Reporting Assisting the Ministry of Finance (Republic of Armenia) in improving Financial Reporting Legislation through a legislation gap analysis and roadmap and also in systematizing the approach to corporate financial reporting through a comprehensive Country Strategy and Action Plan. 233,050 Lesotho Financial Sector Development Strategy Supporting the authorities in Lesotho to elaborate a detailed financial sector development strategy (FSDS) and related action plan, using as a basis the financial sector development chapter in Lesotho s National Strategic Development Plan (NSDP) for the period 2012 to ,000 South Africa Regulatory Reform on Resolution and Financial Inclusion Assisting the National Treasury of South Africa in the improvement of regulatory structure s capacity to safeguard financial stability and effectively regulate market conduct and consumer protection, which has been an important item in the agenda of the government of South Africa. 278,750 Tunisia A001 Establishment of an Asset Management Company Enabling the Tunisian Authorities establish an AMC in order to solve the long-standing tourism sector NPL issues and improve banking sector soundness. 124,915 Sri Lanka A003 (April) Implementation of Risk-Based Supervision Strengthening the supervisory function of the Insurance Board of Sri Lanka (IBSL) through the implementation of a risk-based supervision framework and enhancing IBSL s supervisory capacity in the area of reinsurance, reinsurers, loss adjusters, investments and investment linked products. 386,243 Sierra Leone A005 (April) Financial Stability and Banking Supervision (IMF) Assisting the Bank of Sierra Leone (BSL) in upgrading the framework for effective implementation of the Banking Act of 2011 and enhancing staff's capacity in the areas covered by the law. 377,569 Tunisia A002 (May) State Owned Banks Restructuring Supporting the Government of Tunisia in the restructuring of its three commercial State-owned Banks in order to i) restore banking sector stability, ii) improve banking sector competition and innovation, and iii) improve access to finance. 232,073

4 Swaziland A014 (May) Regulation and Supervision of Insurance and Pensions (IMF) Assisting the new Financial Services Regulatory Authority (FSRA) to continue to build capacity in Swaziland for the regulation and supervision of the insurance companies and pension funds. 191,799 Projects submitted to PAC, pending approval as on June 30 Colombia A006 Improving Access to Housing Finance for Low-income and Informally employed segments Assisting Fondo Nacional de Ahorro (FNA) in expanding access to affordable, market based housing finance, especially among informally employed and lower income households in Colombia. US$ 4,256, ,220 Morocco, Tunisia, Libya and Palestine A007 Strengthening Insurance Supervision in the MENA Region Assisting the Insurance Commissions of selected countries (Morocco, Tunisia, Libya and Palestine) in conducting self-assessments of their supervisory systems against new global IAIS standards in order to identify gaps in insurance sector regulation and supervisory practices; and in developing effective and time-bound country Action Plans to address key issues identified for each jurisdiction. 407,793 Philippines A019 Crisis Preparedness Framework II Assisting in enhancing the ability of the Financial Stability Coordination Council (FSCC) to manage a possible financial crisis through the development of a Crisis Preparedness Framework that provides for working arrangements both before and during a crisis. 280,027 Jordan A020 Payment Systems Reforms Assisting Central Bank of Jordan in (i) improving systemically important payment systems, (ii) strengthening legal and regulatory framework for the Jordan National Payments System (iii) improving payments systems oversight, and (iv) creation of an enabling environment for development of innovative payment mechanisms and rapid expansion in usage of electronic payment mechanisms. 223,707 Pakistan A021 Strengthening Insurance Regulatory and Supervision Framework Supporting the Securities and Exchange Commission of Pakistan (SECP) to reform and upgrade the insurance legal, regulatory and supervisory framework to increase stability in the insurance sector and contributing to insurance sector growth. 332,078

5 Rwanda P1 Strengthening Financial Stability Assisting National Bank of Rwanda (BNR) to strengthen the legal and regulatory framework of Rwanda s financial sector and to contribute to financial stability. 2,053,569 Seychelles A026 Secured Lending and Collateral Registry Assisting Central Bank of the Seychelles to increase access to credit to the private sector by introducing a secured lending legal framework and collateral registry, thus strengthening lenders' rights in movable assets. 336,484 Seychelles A027 Financial Sector Development Implementation Plan Assisting Central Bank of the Seychelles in facilitating financial sector reforms by helping national authorities adopt a coherent vision and strategy for financial sector development in Seychelles including a well-sequenced, time-bound and prioritized roadmap for implementing reforms. 378,508 OTHER The Program Manager traveled to Marrakesh to attend the Annual Meetings of the African Development Bank, and the Advisory Council Meeting of Making Finance Work for Africa. (MFW4A). MONTHLY DATA Number of projects in the portfolio, by project status: Monthly Project Portfolio Inquiry Proposal Active

Number of projects in the pipeline, by project status: 30

distribution ($ amounts), by region, as on June 30: 19% 6% ECA

million) Project approvals (Jan - June) 4.

3 Project disbursements during the month 1.

6 Number of projects in the pipeline, by project status: 30 Monthly Pipeline Inquiry Proposal Pipeline distribution ($ amounts), by region, as on June 30: 19% 6% ECA AFR 13% 47% EAP SAR LCR 8% MNA 7% Operational figures ($ million) Project approvals (Jan - June) 4.4 Total Phase II approvals (last batch) 3.1 Project disbursements (Jan - June) 4.9 Total Phase III approvals (as on June 30) 1.3 Project disbursements during the month 1.1 Current pipeline (number of projects) 35 Active project portfolio (as on June 30) 26.5 New inquiries received Jan June (number) 35 Active project portfolio (number of projects) 102

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