CPSCR Review Independent Evaluation Group

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized 1. CPS Data Country: BULGARIA CPS Year: FY 2006 CPSCR Review CPS Period: FY07- FY09 CPSCR Review Period: FY 07 FY 11 Date of this review: May 17, Executive Summary Public Disclosure Authorized i. This review examines the implementation of the Country Partnership Strategy (CPS) that was issued on May 16, 2006, and was meant to cover the period July 1, 2006 through December 31, No progress report was issued and the strategy has remained in effect to date. The strategy was joint between IBRD, IFC and MIGA, and this review covers the joint program of the three agencies. ii. The World Bank Group (WBG) strategy was designed with the overarching objective of facilitating Bulgaria s economic and social integration with the EU. Support was organized around three pillars, which aimed at fostering productivity and employment (Pillar I), helping the country move toward fiscal sustainability and absorb the EU funds appropriately (Pillar II), and supporting poverty reduction and social inclusion (Pillar III). Within the first broad objective, IFC was to support integration through a more efficient and sustainable financial sector, improving competitiveness of exports, and fostering public-private partnerships in infrastructure. Meanwhile MIGA was to provide insurance to foreign investors in line with the EU integration process. iii. With support from the WBG, Bulgaria made progress in a number of areas, most notably the flexibilization of the labor market, the improvement of tax administration, the sustainability of the education and social security systems. At a lower level, progress was made in improving regulations on corporate governance and the water sector, and on the adoption of environmentally friendly technologies and renewable energy. WBG support did not yield good results in dealing with the transport bottleneck, with bringing in a medium-term expenditure framework, with helping Bulgaria use EU funds more intensively and better, and, especially, in the area of social inclusion. Overall, a rating of moderately satisfactory is warranted, albeit marginally so because the support to Bulgaria seems to have not materialized in a number of areas that were considered as priorities in the CAS, while some of the interventions were not relevant enough to bring their expected outcomes. iv. The WBG should be realistic in setting its objectives, especially when supporting areas where full country ownership is essential for their success. In this case, the politically-sensitive area of hospital consolidation and areas requiring significant development of institutional capacity, such as the development of a medium-term expenditure framework and the institutional arrangements for greater absorption of EU funds, were particularly challenging. In addition, situations characterized by a highly uncertain environment, like the one of the forthcoming CPS, require great care in the formulation of the results framework. This should take a close look at the relationships between objectives, expected outcomes and interventions, to ensure that all necessary measures are in place to achieve the desired objective -- unlike in the case of the monitoring system for education, which alone could not, and did not, result in greater skills development. In light of the extended period in which the CPS remained in effect, well beyond the original time frame and into the aftermath of the global crisis, resorting to CPS Progress Reports (CPSPR) is the best way to deal with these conditions while keeping the Executive Board informed. Lastly, strategies that are joint between WB, IFC and MIGA should fully integrate IFC's and MIGA's interventions and expected results and be followed by a comprehensive reporting on activities of IFC and MIGA, in the interest of transparency. In this case, on IFC side, the role for CPSCR Reviewed by: Peer Reviewed by: CPSCR Review Coordinator Robert J. Anderson and Tim De Vaan, Consultants, IEGCC Unurjargal Demberel, Consultant, IEGPE Shoghik Hovhannisyan Consultant, IEGCC Amitava Banerjee, Senior Manager, IEGPE Jaime Jaramillo-Vallejo, Lead Economist, IEGCC

2 IEG CPSCR Review 2 investments seems to have declined, while there was a higher engagement through advisory services. Understanding this trend,the W BG should fully integrate IFC's interventions and expected results within the W BG strategy in defining the new strategy. Strategies that are joint between IBRD/IDA and IFC and MIGA could best be followed by a comprehensive reporting on the objectives and activ ities of IFC and MIGA in the interest of transparency. 3. CPSCR Summary Overview of CPS Relevance: Country Context and Strategy Objectives: 1. Bulgaria was within five months of expected EU accession at the time the FY 2006 CPS was discussed by the Bank's Board of Directors, and successful conclusion of the accession process was the Government's top priority at this time. Access ion called for efforts to address EU concerns about Bulgaria's weak justice system, perceived rampant organized crime and corruption, and the need to bolster the credibility and effectiveness of Bulgaria's institutional structures for managing anticipated large volumes of EU grant money. After accession, the challenges of economic and social integration with the EU would have to be met. 2. The joint FY07-FY09 W BG CPS was designed with the overarching objective of facilitating Bulgaria's economic and social integration with the EU. Support was organized around three pillars. Under Pillar I, IBRD support was to be targeted toward improved productivity and higher employment. Special focus was placed on implementing education reforms that would help to meet the skill needs of the knowledge economy, continuing the reform of the labor framework, health system, and social protection system, aiming to increase labor force participation, and alleviating transport bottlenecks to trade and improving service infrastructure, identified as key constraints to growth. IFC's main area of focus was under this pillar, aiming to help increase efficiency and sustainability of the financial sector, support the rehabilitation and modernization of export-or iented companies, and foster public-private partnerships (PPPs) while catalyzing foreign direct investment in the infrastructure sector. MIGA was to provide insurance to foreign investors in line with the EU integration process. Under Pillar II, the IBRD sought to buttress capacity building to improve public expenditure management and investment planning through promoting financ ing reforms in education and health, improved efficiency of social protection, and increased capacity to absorb effectively EU funds in infrastructure. Under Pillar Ill, IBRD sought to grant the poor equitable access to basic social services and support their insertion into the labor force. IFC identified the support of local and international private investments in social sectors as another area of its focus. Relevance of the Strategy: 3. The strategy was relevant in terms of Bulgaria's EU-accession-and-integration driven policy objectives. 4. IBRD's strategy, in retrospect, was ambitious with respect to the pace at which progress could be made in politically-sensitive areas and in those requiring development of institutional capacity. A good example of the challenges in politically-sensitive areas was the resistance to the targeted consolidation of hospitals, which resulted in a multiplication of hospitals instead. The design of the strategy was also wanting as some interventions were only loosely related to the objective and its expected outcomes, as was the case with the monitoring introduced in education which was not sufficient to support the development of the knowledge economy. Nevertheless, the proposed IBRD operations were well selected based on the Bank's previous operational experience, and the planned AAA oroaram was well-desianed to feed the deve lopment of the lendina oroaram as i t was foreseen at

3 3 the time of the strategy. Yet in other areas the strategy foresaw interventions that were too limited to yield the expected results, as were the interventions intended to bring about the needed improvement in governance to allow for a greater absorption of EU funds. 5. The relevance of IFC s strategic focus was confirmed by the 2008 Bulgaria Investment Climate Assessment (ICA), which showed that low penetration of advanced technologies resulted in low productivity, and weak labor skills were the main obstacle to improving the competitiveness of domestic companies. The banking sector was relatively well developed with most of the banks being majority owned by large European banks. Access to finance and cost of capital were not top concerns of enterprises surveyed for the above assessment in Thus IFC s plan to help deepen financial markets through development of the non-bank financial sector was appropriate. Also, in light of the country s need to meet stricter EU requirements for environmental performance, it was appropriate to support development of the sustainable products. Upgrading the outdated physical infrastructure, particularly those for power, transportation and water at the municipal level, and strengthening social infrastructure were necessary to sustain the economic growth, as well as to meet EU standards. IFC s proposed interventions, however, were not integrated into the CPS results framework. 6. MIGA s strategic role was complementary to that of IBRD and IFC, helping insure foreign direct investment. The CAS did not elaborate on how this support was expected to materialize. The relevance of including MIGA as a partner in the WBG strategy remains an open question, in light of its lack of activity and reporting in Bulgaria. Overview of CPS Implementation: IBRD operations: 7. The FY 2006 CPS remained in implementation for almost two years beyond its original horizon. Implementation of the IBRD program over this longer period has been roughly consistent with CPS objectives. Eight operations have been approved, for a cumulative total of about US$ 875 million, with policy based lending proceeding basically according to plan (3 DPLs, US$ 500 million over a 3 year period, but with some delay in processing of DPL II and an increase in the amount of DPL III), and a slight shortfall in investment lending from the anticipated pace. The CPSCR attributes the latter to delays in preparation of these operations, as the Government diverted resources to deal with problems related to its ability to manage EU funds. Non-lending deliveries departed substantially from those envisaged in CPS, with more deliveries focusing on the CAS priorities and on key topics related to EU accession, such as governance. 8. Indicators of quality of Bank products and services delivered over this period are sparse, but with one exception, strong. QAG evaluated two operations for quality at entry: One (SIR DPLI) was rated Moderately Unsatisfactory; the other (SIEF Supplement) was rated Satisfactory. Portfolio implementation has been strong however, with 0 projects and 0 commitments rated as at risk during the CPS implementation period to date. Five projects exited the portfolio during the period. Of these two (Registration and Cadastre, and Revenue Administration Reform) were rated Satisfactory, and three (District Heating, Health Sector Reform, and Wetlands Restoration and Pollution Reduction GEF) were rated Moderately Satisfactory. IFC operations: 9. As IFC grew more selective in its investments with the expected inflow of EU funds, its portfolio in Bulgaria decreased between FY06 and FY10. The stock of the portfolio committed in FY10 was US$239.0 million, which was eight percent lower than the US$261.0 million in FY06. As a result, IFC s exposure in Bulgaria as a share in IFC s worldwide exposure decreased from 1.2 percent in FY06 to 0.6 percent in FY10. During FY07-10, IFC approved six investments for US$134.6 million, as

4 4 compared with ten investments approved for US$197 million in previous three years. However, the average investment size in Bulgaria increased from US$19.7 million to US$22.4 million during this period. Moreover, the proportion of equity investments substantially increased during this period to account for 16 percent of new investments. In addition, IFC carried out three Advisory Services operations with a total funding amount of US$1.4 million for projects dealing with water and wastewater management, enhancement of corporate governance, and improvement of environmental and social sustainability of a tire recycling company. 10. All five IFC investment projects in Bulgaria that were active during the review period and that have been evaluated by IEG upon their operational maturity had positive development outcomes at the time of their evaluation at maturity. These five projects remained in the portfolio and thus continued to be monitored by IFC s Development Outcome Tracking System (DOTS) together with other five active projects. DOTS report as of April 26, 2011 indicates that four of the five evaluated projects continue to have positive development results, while one project s performance suffered from the recent financial crisis. As for the DOTS reports on the remaining five active projects, two are successful, one is unsuccessful and two are too recent and, hence, too early to tell. MIGA operations: 11. MIGA made no operations in Bulgaria within the CPS period, although several providers of political guarantees, public and private, did business in the country during the CPS period. The nature of their business is unknown. In addition, IEG notes that Bulgaria was not one of the 13 Eastern European and Central Asian countries where MIGA was active during the financial crisis within the Joint IFI Action Plan providing political risk insurance on cross-border investments by financial institutions to recapitalize or provide liquidity to their subsidiaries. Overview of Achievement by Objective: Pillar I: Productivity and Employment 12. The WBG sought to help Bulgaria (i) achieve a sustained increase in productivity and employment through interventions to support implementation of education reforms that would help to meet the skill needs of the knowledge economy; (ii) continue the reform of the labor framework, health system, and social protection system, aiming to increase labor force participation; and (iii) alleviate transport bottlenecks to trade, identified as one of the main constraints to growth, and improving service infrastructure. In addition, IFC s support aimed at helping increase efficiency and sustainability of the financial sector, supporting the rehabilitation and modernization of export-oriented companies, and fostering public-private partnerships (PPPs) while catalyzing foreign direct investment in the infrastructure sector. MIGA was to provide insurance to foreign investors in line with the EU integration process. (i) Education reforms to meet the skill needs of the knowledge economy. There is no information on completion rates, on compulsory education completion rates, or on indicators on the quality of education, which were the indicators chosen for this objective. IBRD focused its support to Bulgaria on three activities: (a) developing institutional capacity for measuring education quality through introduction of national and international assessment tests, (b) expanding the use of information technology in education, and (c) training teachers and school directors. According to the Implementation Completion Report of the DPL series, substantive progress was only made on the national and international assessment tests. While being an important diagnostic tool in estimating the impact of educational reforms and helping the Government design and implement more effective and targeted policies, monitoring and evaluation alone cannot improve education quality without policy interventions. On the other two areas some progress was made in adopting an action plan on information technology in schools and in training school directors.

5 5 These developments, while positive, are not enough in themselves to improve skills. Indeed, the Implementation Completion Reports states that the tests scores show a deterioration in the area of mathematics. (ii) Reform of the labor framework, health system, and social protection system to increase labor force participation. Bulgaria s employment rate increased from 56 percent in 2005 to 60 percent in 2009, while the share of long-term unemployment to total unemployment declined from 56 percent in 2006 to 44 percent in Despite this progress, Bulgaria s labor force participation rates remain far below the EU27 average, reflecting the distortions in the labor market and shortage of skilled human capital. Nevertheless, reforms supported by IBRD seem to have laid a good foundation for employment creation: measures were taken to improve labor market flexibility, the disability system was reformed and dependence on social assistance was reduced, employers contribution rate for pension insurance was lowered, incentives were created to participate in the formal economy, and active labor market programs were implemented. Although these activities may have contributed to an improvement of employment rates and long-term unemployment, their impact on employment are difficult to disentangle from those stemming from Bulgaria s recent rapid economic growth. (iii) Alleviation of transport bottlenecks to trade and improving infrastructure. There was no progress in the outcomes proposed for the monitoring and evaluation of the Road Infrastructure Rehabilitation Project within the CPS period, constrained in part by the shortage of counterpart funding stemming from the fiscal impact of the global crisis. Nevertheless, IBRD contributed to institutional development helping introduce a fully functional Road Management System that monitors road conditions. Also, IFC made positive contributions in the area of infrastructure, particularly in enhancing water, wastewater and power infrastructure. IFC gave advice to the Government on private sector participation (PSP) policy and legislation in the water sector. At the end of June 2009, the National Assembly adopted amendments to the Water Act and related legislation that provided clear ownership principles for all regions and clarified institutions that would be the contracting authorities. Also, IFC extended its support for the construction of 156 Megawatt capacity wind farm helping the country develop clean energy sources and reduce its dependency on fossil fuels, reducing carbon emissions by more than 300,000 tons annually. (iv) Increasing the efficiency and sustainability of the financial sector: No direct activities were reported by IFC or MIGA in this area, and IBRD did not have interventions in it either. IFC however, fostered the development of capital markets by supporting a national corporate governance code, which was successfully adopted and incorporated into the listing rules of the stock exchange. (v) Rehabilitation and modernization of export-oriented companies: IFC supported some glass manufacturing firms in adopting energy efficient and environmentally friendly glass manufacturing technologies the outputs of these companies were closely tied to Bulgaria s exports and export sector. Less successful were the efforts to support recycling of tires in the transportation sector, which did not materialize. More remotely related to export-oriented companies, IFC helped an agricultural real estate investment trust, which was acquiring fragmented agricultural lands and leasing them to farmers, by securing the capital needed for its expansion plans at a time of dry global financial markets. 13. The outcome of the WBG s assistance for productivity and employment is rated moderately satisfactory. The strong outcomes on labor market and levies reform, as well as on infrastructure and corporate governance, were offset by the weaker outcomes on education and on road rehabilitation. No information is available on IFC s interventions in the financial sector beyond the corporate governance reform.

6 6 Pillar II. Fiscal Sustainability and Absorption of EU Funds 14. The WBG aimed to support the Government s fiscal consolidation efforts and to effectively and efficiently manage the substantial funds it would receive from the EU after accession. Key within the effort on fiscal sustainability were (i) improving government revenue administration; (ii) boosting the efficiency of the health, education, pension and social assistance systems to support their financial sustainability and effectiveness; and (iii) ensuring that needed investments were undertaken within a sustainable medium-term expenditure framework, absorbing in the best possible way the EU funds. (i) Improving government revenue administration: Good progress was made in improving government revenue administration. IBRD s Revenue Administration Reform Project contributed substantially to these outcomes via support of a comprehensive program of reforms focused on maximizing voluntary tax compliance, increasing effectiveness and efficiency, establishing a professional workforce, reducing corruption, and improving equity and fairness in the administration of the tax and social contribution collection system, while reducing the taxpayer/contributor compliance burden (ii) Boosting the efficiency of the health, education, pension and social assistance systems. Progress was made in reforming the financing of the education system. Measures supported by the DPL series contributed significantly to these outcomes. In addition, IBRD contributed to the improvement of the efficiency of social protection and employment through analytical work. Before the global downturn, there was a significant reduction in a number of social system beneficiaries attributable to the improvement of the social assistance program. However, progress with regard to making the health system financially sustainable was mixed. The volatile trend of the health arrears and the unclear picture with regard to the actuarial sustainability of the National Health Insurance Fund (NHIF) indicate that the health system objective was not fully accomplished. Moreover, little if any progress was made in the consolidation of hospitals, a key component of health reforms. Nevertheless, major contributions of IBRD were the introduction of the per capita hospital spending limits as part of the DPL and the establishment of the information system for the National Health Insurance Fund under the pre-cps Health Sector Reform project. (iii) A sustainable medium-term expenditure framework and absorption of EU funds. There is no evidence of progress in the adoption of a medium-term expenditure framework. In addition, progress on improving absorption of EU funds was highly limited. Under the support of the Municipal Infrastructure Development Project, IBRD s expected contribution in helping Bulgaria build a project pipeline and implementation capacity was delayed, and the results are expected beyond the CPS timeframe. The ongoing Social Investment and Employment Promotion Project from the previous CPS helped communities and municipalities apply directly for EU structural funds in areas other than transport, which, regrettably, was the main focus of EU grants. IBRD provided positive inputs in the area of governance through AAA focusing on the budgeting, accountability and transparency in judiciary and capacity enhancement of the Office of the Prosecutor General to combat corruption. 15. This review rates the outcome of the WBG s assistance for fiscal sustainability and absorption of EU funds as moderately satisfactory, but marginally so. Progress was made in improving fiscal consolidation in expenditures related to education, social protection, energy consumption and tax administration. However, the achievements in health expenditures and the absorption of EU funds were weak, and there is no evidence of progress in the adoption of the medium-term expenditure framework.

7 7 Pillar III. Social Inclusion 16. The main theme of this pillar was helping Bulgaria grant the poor, Roma in particular, equitable access to basic social services, and supporting their insertion into the labor force. In particular, IBRD aimed to promote social inclusion via improving access to quality health services, increasing the participation of marginalized groups such as youth, elderly unemployed, and the disabled, and reducing the gap between urban and rural poverty. There is no information available on how the needs of Roma were addressed IEG understands that Bulgaria does not produce statistics on separate ethnic groups. In addition, no progress was made in reducing the percentage of people who forego medical care for financial reasons. The measures undertaken with IBRD support were directed toward strengthening the primary healthcare system under the Health Sector Reform Project. There were also reforms on reimbursement policies for basic drugs under the DPL series, but these had no impact on the affordability of the healthcare for the vulnerable groups of the population. No opportunities arose for IFC to engage in the health and education sectors. Furthermore, labor participation of marginalized groups has not improved. However, the gap between urban and rural poverty has been good narrowing within the context of declining overall poverty rates. 17. IEG rates the outcome of the WBG s assistance on social inclusion as moderately unsatisfactory. The only area where progress was made within the pillar was on reducing the gap between urban and rural poverty. Although WBG activities may have contributed to this reduction, Bulgaria s recent rapid economic growth may have been a major force behind it. Objectives Pillar I: Productivity and Employment Pillar II: Fiscal Sustainability and Absorption of EU Funds Pillar III: Social Inclusion IEG Rating Moderately Satisfactory Moderately Satisfactory Moderately Unsatisfactory Comments on Bank Performance: 18. The CPS objectives were relevant to Bulgaria s development challenges and, for the most part, its development priorities. However, under Pillar I the Bank activities only indirectly targeted both the adopted outcomes and the overall objective of helping the country to meet the skill needs of the knowledge economy. In retrospect, IEG questions the realism of IBRD s engagement with regard to absorption of EU funds, in view of the systemic problems standing in the way of progress in governance and the limited scope of IBRD s support to tackle them. The results framework contained in the CPS was of uneven quality. In general, the framework is better for outcomes associated with the implementation of the DPL series, possibly due to the clarity required by policy based lending in delineating outcomes and triggers. There are some areas where results should clearly have been contemplated e.g. revenue administration and are not reflected in the framework. In some other areas, mainly in the social inclusion area, targeted outcomes are drawn very broadly in relation to the instruments IBRD had at its disposal under the strategy and no monitoring was made of their impact on the Roma segment of the population. A major weakness was in omission of IFC and MIGA results in the integrated results framework. 19. The WBG coordinated well with the relevant EU agencies and maintained good relationships with Government counterparts. No safeguard or fiduciary issues specific to the WBG s program have been identified by this Review. Per evaluated projects, the quality of IFC s work (appraisal and supervision), and role and contribution in the country was satisfactory.

8 8 4. Overall IEG Assessment Outcome: Bank Performance: IFC Performance: MIGA Performance: Rating: Moderately Satisfactory Rating: Moderately Satisfactory Rating: Moderately Satisfactory Rating: Not Rated 20. Outcomes, as reflected by the ratings above, showed uneven accomplishments. IEG gives the benefit of the doubt to the WBG by rating the second pillar, and thus the overall outcome, as moderately satisfactory. While the ratings of the first and third pillars are clear, the second one is just marginal. 21. IBRD performance was moderately satisfactory overall. IEG believes the CPS was not as well thought out as it could have been in some dimensions, particularly with regard to Pillar I - Productivity and Employment. It must be recognized that there was considerable uncertainty at the time of the CPS concerning the future course of the Bank s engagement particularly post accession in Bulgaria. IBRD, however, had the option of preparing a CPS Progress Report; where the strategy could have been adjusted and updated to take into account the changing needs and circumstances in Bulgaria. Bank products and services (lending, supervision, AAA, and program coordination) all appear to have been satisfactory. 22. IFC performance was moderately satisfactory. IFC made important contributions on corporate governance and sustainable energy, and water, within a trend of declining engagement in line with its country graduation strategy. However, little is known on how IFC dealt with the challenges of helping on the efficiency and sustainability of the financial sector, and on the social sectors. IFC s role and contribution was clearly demonstrated in the three successful areas. 23. MIGA performance is not rated. While IEG understands that MIGA s business model is demand-driven, this review notes that several providers of political guarantees, public and private, did business in Bulgaria during the CPS period; IEG has no information about the nature of these guarantees. IEG also understands that the Government of Bulgaria was not inclined to have MIGA guarantee foreign commercial banks their shareholder loans to their Bulgarian subsidiaries. However, the CPSCR does not provide information on how MIGA s strategy was implemented or on MIGA s activities in Bulgaria. 5. Assessment of CPS Completion Report 24. The CPSCR covered both IBRD and IFC operations, a welcome development. Nevertheless, the CPSCR did not address all the objectives defined for IFC in the CPS. More importantly, despite being a joint strategy, it did not cover MIGA, where an explanation as to its activities would be expected, as would an explanation on why there were no new operations, especially in light of MIGA s role in the Joint IFI Action Plan in other countries in the region. In addition, the CPSCR reports progress on performance indicators in most cases relative to baselines that are outside of the CPS timeframe, and ignored the Roma segment of the population. The quality of attribution of outcomes is uneven, but could in some instances have been strengthened with more information on the outcomes of IBRD operations and their related developments. An integration of IFC results in the CPSCR results framework would also have been desirable. The lessons drawn are reasonable in light of implementation experience as reported in the CPSCR and relevant with regard to successful implementation of the WBG s new strategy.

9 9 6. Findings and Lessons 25. The WBG should be realistic in setting its objectives, especially when supporting areas where full country ownership is essential for their success. The CPS was ambitious with regard to the pace at which progress could be made in politically-sensitive areas and areas requiring significant development of institutional capacity, as was the case with hospital consolidation or with the adoption of a medium term expenditure framework. It remained in implementation for almost two years beyond its original horizon. A CPSPR was clearly needed and warranted. 26. Results frameworks in strategies need to take a closer look at the relationship between objectives, expected outcomes and interventions. The CPS had a considerable disconnect between the outcomes pursued and what the operations could deliver, particularly with regard to the objective of sustained increases in productivity through education. Staff needs to work on defining more precisely and effectively the outcome indicators that are being pursued. 27. IEG recommends that, within the new CPS and as the Bulgaria program evolves, the WBG use the opportunity of a CPSPR to clarify and document the results framework for the program. The next phase of the WBG s engagement in Bulgaria will take place in an extraordinarily challenging and highly uncertain environment, dominated by difficult institutional capacity development issues that need to be addressed, and in an environment in which the EU itself faces daunting challenges. This, of course, does not obviate the need for a results framework which is needed both to focus implementation and to clarify accountability but rather changes the way in which it is produced. 28. On IFC side, the role for investments seems to have declined, while there was a higher engagement through advisory services. Understanding this trend, the WBG should fully integrate IFC s interventions and expected results within the WBG strategy in defining the new strategy. 29. Strategies that are joint between IBRD/IDA and IFC and MIGA could best be followed by a comprehensive reporting on the objectives and activities of IFC and MIGA in the interest of transparency.

10

11 Annexes 11 Annex Table 1: Planned and Actual Lending, FY07-09 Annex Table 2: Planned and Actual Analytical and Advisory Work, FY07-09 Annex Table 3a: IEG Project Ratings for Bulgaria, FY07-09 Annex Table 3b: Annex Table 4: IEG Project Ratings for Bulgaria and Comparators, FY07-09 Portfolio Status for Bulgaria and Comparators, FY07-09 Annex Table 5: Annex Table 6: IBRD/IDA Net Disbursements and Charges Summary Report for Bulgaria, FY07-09(in US$ million) Total Net Disbursements of Official Development Assistance and Official Aid, (in US$ million) Annex Table 7: Economic and Social Indicators for Bulgaria and Comparators, Annex Table 8: Annex Table 9: Annex Table 10: Annex Table 11: Annex Table 12: Bulgaria - Millennium Development Goals List of IFC investments in Bulgaria that were active during FY07-FY10 (US$ 000) List of IFC Advisory Services in Bulgaria, FY07-FY10 Bulgaria Country Risk Rating Summary of Achievements of the CPS Objectives

12

13 Annexes 13 Annex Table 1: Planned and Actual Lending, FY07-09 Product Line Project Programmed projects Proposed FY Approval FY Propose d Amount Approve d Amount First Social Sectors Institutional Reform Development IBRD/IDA Policy Loan (SIR DPL1) IBRD/IDA Road Infrastructure I SIL IBRD/IDA Trade and Transport Facilitation for SE Europe II SIL IBRD/IDA DPL IBRD/IDA Municipal infrastructure SIL IBRD/IDA Social Inclusion SIL IBRD/IDA DPL Road Infrastructure II SIL 2009 Dropped 100 Regional Development SIL 2009 Dropped 50 Total Programmed projects CAS FY Non-programmed projects IBRD/IDA SIEP Supplement Total projects CAS FY07-10 excluding Grants and Special Financing Projects Grants and Special Financing projects Capacity Building for Quality Improvement and IDF Modernization of the Education System Global Road Safety Program Road Safety Grant IDF Combating Corruption: Strengthening Anti Corruption Capacity in the Office of the Prosecutor General Total projects CAS FY05-09 including Grants and Special Financing projects Source: Bulgaria CAS/CPS/CASPR/ and WB Business Warehouse Table 2a.1, 2a.4 and 2a.7 as of 3/14/2011.

14 Annexes 14 Annex Table 2: Planned and Actual Analytical and Advisory Work, FY07-09 Economic and Sector Work Proposed FY Delivered to Client FY Output Type Planned (CAS FY ) Public Finance Policy Review II Report Energy Sector Advisory Policy Note Fiduciary Update Report Poverty and Living Standards Assessment Policy Note Public Finance Management Update Report Non-planned Poverty Monitoring 2007 Policy Note Bulgaria Judicial Public Expenditure & Institutional 2008 Report Review (JPEIR) Investment Climate Assessment 2008 Report Bulgaria II Corporate Governance ROSC Assessment 2008 Report ROSC - BG 2008 Report FSAP Bulgaria Update 2009 Report Black Sea Coastal Pollution Reduction Study 2009 Report Bulgaria Railways Policy Note 2009 Policy Note Poverty Monitoring Policy Note 2009 Policy Note Technical Assistance Planned (CAS FY ) Regional Development TA "How-To" Guidance Investment Climate for Private Sector Growth and Report Employment Energy Sector TA "How-To" Guidance Energy Sector TA How-To" Guidance Non-planned Support for Justice Sector Reform and Modernization 2007 FIRST: Bulgaria Financial Services Commission 2007 "How-To" Guidance Bulgaria Regulatory Impact Assessment 2007 Institutional Development Plan Green Investments Funding Framework Development 2008 "How-To" Guidance Bulgaria Catastrophe Insurance Pool Feasibility Study 2008 "How-To" Guidance Bulgaria Forest Sector Brief TA 2009 Institutional Development Plan Public Expenditure Review for Agriculture 2009 "How-To" Guidance Monitoring and Evaluation Study 2009 "How-To" Guidance Source: Bulgaria CAS/CPS/CASPR and WB Business Warehouse Table 2a.1, 2a.4 and 2a.7 as of 3/14/2011

15 15 Annex Table 3a: IEG Project Ratings for Bulgaria, FY07-09 Exit FY Project Name Total Evaluated (US$M) IEG Outcome District Heating 40.5 Moderately Satisfactory Reg and Cadastre 33.9 Satisfactory Health Sect Reform 66.8 Moderately Satisfactory Wetland Rest (GEF) 0 Moderately Satisfactory IEG Risk to Development Outcome * Moderate Moderate Moderate Moderate 2009 RARP 27.7 Satisfactory Moderate Source: WB Business Warehouse Table 4a.5 and 4a.6 as of as of 3/14/2011. * With IEG new methodology for evaluating projects, institutional development impact and sustainability are no longer rated separately. Annex Table 3b: IEG Project Ratings for Bulgaria and Comparators, FY07-09 Region Total Evaluated ($M) Total Evaluated (No) Outcome % Sat ($) Outcome % Sat (No) RDO % Moderate or Lower ($) * RDO % Moderate or Lower (No) * Bulgaria ECA World Bank 6, Source: WB Business Warehouse Table 4a.5 and 4a.6 as of as of 3/14/2011. * With IEG new methodology for evaluating projects, institutional development impact and sustainability are no longer rated separately.

16 16 Annex Table 4: Portfolio Status for Bulgaria and Comparators, FY07-09 Fiscal year Bulgaria # Proj Net Comm Amt # Proj At Risk % at Risk Comm At Risk % Commit at Risk Poland # Proj Net Comm Amt ,764 # Proj At Risk % at Risk Comm At Risk % Commit at Risk Lithuania # Proj Net Comm Amt # Proj At Risk % at Risk Comm At Risk % Commit at Risk Romania # Proj Net Comm Amt 1,760 1,768 1,548 # Proj At Risk % at Risk Comm At Risk % Commit at Risk ECA # Proj Net Comm Amt 16,687 17,966 21,383 # Proj At Risk % at Risk Comm At Risk 1,681 2,257 3,460 % Commit at Risk World # Proj 1,485 1,832 1,925 Net Comm Amt 100, , ,706 # Proj At Risk % at Risk Comm At Risk 15,354 18,968 20,858 % Commit at Risk Source: WB Business Warehouse Table 3a.4 as of 3/14/2011.

17 17 Annex Table 5: IBRD/IDA Net Disbursements and Charges Summary Report for Bulgaria, FY07-09 (in US$ million) FY Disb. Amt. Repay Amt. Net Amt. Charges Fees Net Transfer ,942,299 58,537, ,404,832 49,388, ,213 83,776, ,838, ,140, ,302,139 73,490,563 4,789, ,582, ,048,967 63,010, ,038,796 55,040,109 1,499, ,499,210 Total (Year 1-3) 639,829, ,688,089 47,141, ,918,852 6,529, ,306,958 Source: WB Loan Kiosk, Net Disbursement and Charges Report as of 3/14/2011.

18 18 Annex Table 6: Total Net Disbursements of Official Development Assistance and Official Aid, (in US$ million) Bilaterals Norway Finland Ireland Luxembourg Korea Canada Sweden Belgium Netherlands Austria Greece Denmark Spain United Kingdom Italy Switzerland France Portugal Japan Germany United States DAC Countries, Total Israel Czech Republic Hungary Slovak Republic Poland Turkey Arab Countries Non-DAC Countries,Total Multilaterals EU Institutions EBRD GEF UNDP UNFPA UNHCR UNTA Multilateral Agencies, Total All Donors Total Source: OECD DAC Online database, Table 2a. Destination of Official Development Assistance and Official Aid - Disbursements, as of 3/14/2011.

19 Annexes 19 Annex Table 7: Economic and Social Indicators for Bulgaria and Comparators, Series Name Bulgaria Bulgaria Poland Lithuania Romania Europe and Central Asia World Average Growth and Inflation GDP growth (annual %) GDP per capita growth (annual %) GNI per capita, PPP (current international $) 9,840 10,790 11,340 13,070 12,750 11, , , ,462 22,329 9,964 GNI, Atlas method (current US mil. $) 28,170 31,417 34,725 43,424 45,961 36, , , ,136 18,772,849 53,367,115 Inflation, consumer prices (annual %) Composition of GDP (%) Agriculture, value added (% of GDP) / / Industry, value added (% of GDP) / / Services, etc., value added (% of GDP) / / Gross fixed capital formation (% of GDP) / Gross domestic savings (% of GDP) / External Accounts Exports of goods and services (% of GDP) / Imports of goods and services (% of GDP) / Current account balance (% of GDP) External debt (% of GDP) / Total debt service (% of GNI) Total reserves in months of imports Fiscal Accounts 7/ Revenue (% of GDP) Total Expenditure (% of GDP) Overall Balance (% of GDP) Public Sector Debt (% of GDP) Social Indicators Health Life expectancy at birth, total (years) / / / Immunization, DPT (% of children ages months) Improved sanitation facilities (% of population with access) / 72 2/ / Improved water source (% of population with access) / / Mortality rate, infant (per 1,000 live births) Population Population, total (in million) ,620.9 Population growth (annual %) Urban population (% of total) Education School enrollment, preprimary (% gross) / / / / / School enrollment, primary (% gross) / / / / School enrollment, secondary (% gross) / / / / 1/ 2009 data are missing. 2/ 2006, 2007 and 2009 data are missing 3/ 2008 and 2009 data are missing 4/ 2009 data are missing 5/ Source: Republic of Poland: 2010 Article IV Consultation Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for the Republic of Poland. July, / 2009 data are from "Republic of Poland: 2010 Article IV Consultation Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for the Republic of Poland. IMF. July, 2010". 7/ Source: Article IV Consultation for relevant countries. IMF Source: WB World Development Indicators for all indicators excluding those noted.

20 Annexes 20 Annex Table 8: Bulgaria - Millennium Development Goals Goal 1: Eradicate extreme poverty and hunger Employment to population ratio, 15+, total (%) Employment to population ratio, ages 15-24, total (%) Income share held by lowest 20% Malnutrition prevalence, weight for age (% of children under 5) Poverty gap at $1.25 a day (PPP) (%) Poverty headcount ratio at $1.25 a day (PPP) (% of population) Prevalence of undernourishment (% of population) Vulnerable employment, total (% of total employment) Goal 2: Achieve universal primary education Literacy rate, youth female (% of females ages 15-24) Literacy rate, youth male (% of males ages 15-24) Persistence to last grade of primary, total (% of cohort) Primary completion rate, total (% of relevant age group) Total enrollment, primary (% net) Goal 3: Promote gender equality and empower women Proportion of seats held by women in national parliaments (%) Ratio of female to male primary enrollment (%) Ratio of female to male secondary enrollment (%) Ratio of female to male tertiary enrollment (%) Share of women employed in the nonagricultural sector (% of total nonagricultural employment) Goal 4: Reduce child mortality Immunization, measles (% of children ages months) Mortality rate, infant (per 1,000 live births) Mortality rate, under-5 (per 1,000) Goal 5: Improve maternal health Adolescent fertility rate (births per 1,000 women ages 15-19) Births attended by skilled health staff (% of total) Contraceptive prevalence (% of women ages 15-49) 86.0 Maternal mortality ratio (modeled estimate, per 100,000 live births) Pregnant women receiving prenatal care (%) Unmet need for contraception (% of married women ages 15-49) Goal 6: Combat HIV/AIDS, malaria, and other diseases Children with fever receiving antimalarial drugs (% of children under age 5 with fever) Condom use, population ages 15-24, female (% of females ages 15-24) Condom use, population ages 15-24, male (% of males ages 15-24) Incidence of tuberculosis (per 100,000 people) Prevalence of HIV, female (% ages 15-24) Prevalence of HIV, male (% ages 15-24) Prevalence of HIV, total (% of population ages 15-49) Tuberculosis case detection rate (all forms) Goal 7: Ensure environmental sustainability CO2 emissions (kg per PPP $ of GDP) CO2 emissions (metric tons per capita) Forest area (% of land area) Improved sanitation facilities (% of population with access) Improved water source (% of population with access) Marine protected areas (% of total surface area) 0.0 Terrestrial protected areas (% of total surface area) 10.1 Goal 8: Develop a global partnership for development Debt service (PPG and IMF only, % of exports, excluding workers' remittances) Internet users (per 100 people) Mobile cellular subscriptions (per 100 people) Net ODA received per capita (current US$) Telephone lines (per 100 people) Other Fertility rate, total (births per woman) GNI per capita, Atlas method (current US$) 2, , , ,060.0 GNI, Atlas method (current US$) (billions) Gross capital formation (% of GDP) Life expectancy at birth, total (years) Literacy rate, adult total (% of people ages 15 and above) Population, total (millions) Trade (% of GDP) Source: World Development Indicators database as of 3/14/