1 1. CPS Data Country: Serbia CPS Year: FY08 CPS Period: FY08 FY11 CPSCR Review Period: FY08 FY11 Date of this review: December 7, 2011 2. Executive Summary i. This review examines the implementation of the FY08 Serbia Country Partnership Strategy (CPS) and the FY10 CPS Progress Report (CPSPR), and evaluates the CPS Completion Report (CPSCR). The strategy was joint between IBRD, IFC and MIGA, and this review covers the joint program of the three agencies. ii. The WBG strategy was organized around three pillars: (i) encouraging private sector led growth and EU convergence; (ii) providing opportunities and broadening participation in growth; and (iii) managing emerging environmental and disaster risks. Pillar 1, growth and EU convergence, focused on improving the business environment, competitiveness and the country s infrastructure, as well as strengthening financial intermediation. Pillar 2, opportunities and participation in growth, aimed at balanced regional development, effective social protection for the vulnerable, and strengthened social services. Pillar 3, environmental and disaster risk management, sought to support improved environmental management, including risks, and enhance the efficiency in the use of natural resources. IFC and MIGA interventions aimed at developing the private sector, as well as providing guarantees to foreign banks to maintain or augment their exposure to Serbia within the context of the crisis response. iii. This was an ambitious program with modest results because of an overly optimistic strategy given the institutional capacities, compounded by the adverse effects of the global financial crisis. The overall outcome is rated moderately unsatisfactory. Under Pillar 1, WBG assistance helped strengthen competitiveness in the enterprise sector and succeeded in strengthening the financial sector. The business climate improved only marginally and there was slight progress in improving infrastructure and making it more efficient. Under Pillar 2, the efforts centered, sensibly, on regional development. But results were modest as a key project on agriculture reform performed poorly, which partly explains underachievement in this sub-objective. The WBG strategy succeeded in improving the quality of, and access to, social services. Pillar 3, less important than the other two and the weakest of the three in terms of outcomes, had modest or negligible results in improving reducing pollution coming from targeted agricultural activities, strengthening environmental management, enhancing the efficiency in the use of natural resources, and managing environmental and disaster risk. iv. IEG agrees with the CPSCR lessons and recommendations for the next CPS, particularly on the need to continue the alignment of CPS activities with the EU integration agenda, focus investment operations on a narrow set of objectives, and try to avoid involvement of multiple agencies in project management. Moreover, proposed outcomes in partnership strategies need to reflect genuine government priorities and be supported by appropriate interventions to achieve stated outcomes. IEG notes the creative way in which IBRD/IDA responded to changing circumstances, as evidenced by the policy based guarantee that it used to leverage additional resources for Serbia. CPSCR Reviewed by: Peer Reviewed by: CASCR Review Coordinator Juan Jose Fernandez-Ansola Consultant, IEGCC Albert Martinez, Consultant, IEGCC Rene Vandendries Consultant, IEGCC Steve F. Pirozzi Senior Evaluator, IEGCC Jaime Jaramillo-Vallejo, Lead Economist, IEGCR
2 3. CPS Summary Overview of CAS Relevance: Country Context 1. Serbia is a middle-income country that emerged from a decade of regional conflict to become a candidate for EU accession. It has, however, been slow in reducing high government employment, restructuring the large enterprise sector, and improving the adverse investment climate, due in part to political fragmentation. 2. Over the past decade, strong growth was led mostly by the non-tradable sector (e.g., financial, telecoms, retail), with heavy reliance on external borrowing. This combination left Serbia vulnerable to the 2008 global financial crisis the country s sovereign spreads soared, the exchange rate depreciated by about 20 percent against the euro over a six-month period, and the economy went into recession. Serbia has been recovering since, growing by 1 percent in 2010 and an expected 2 percent in 2011. The main challenges facing Serbia are implementing structural reforms that support balanced catch-up growth to EU income levels, strengthening its financial sector stability, securing low and stable inflation, and achieving durable fiscal adjustment that gives space for investment. 3. Serbia s priorities were consistent with its strategy for EU integration, which calls for maintaining macroeconomic stability, promoting economic growth through accelerated economic reforms, increasing employment and living standards, and balancing regional development. Objectives of WBG Strategy 4. The WBG strategy was organized around three pillars: (i) encouraging private sector led growth and EU convergence; (ii) providing opportunities and broadening participation in growth; and (iii) managing emerging environmental and disaster risks. Pillar 1, growth and EU convergence, focused on improving the business environment, competitiveness and the country s infrastructure, as well as strengthening financial intermediation. Pillar 2, opportunities and participation in growth, aimed at balanced regional development, effective social protection for the vulnerable, and strengthened social services. Pillar 3, environmental and disaster risk management, sought to support improved environmental management, including risks, and enhance the efficiency in the use of natural resources. IFC and MIGA interventions aimed at developing the private sector, as well as providing guarantees to foreign banks to maintain or augment their exposure to Serbia within the context of the crisis response. Relevance of the WBG Strategy 5. The WBG strategy addressed some of the key challenges facing Serbia, particularly on the growth, inclusion, social services and environmental management, and, at the CPSPR stage, responded flexibly to the evolving global financial crisis. In addition, the WBG strategy was well aligned with Serbia s EU integration policy. In light of uncertainties, the CPS intended to provide program flexibility, with lending in FY10 and FY11 to be identified at the time of the CPSPR based on evolving country needs. At the same time, the strategy underestimated difficulties of inter-agency and inter-ministry coordination in complex operations and the need for project preparatory work which led to significant delays in effectiveness and hindered project implementation (e.g., road corridor project). Moreover, the relevance of design was weakened by an apparent lack of government ownership regarding some of the objectives, as well as by the lack of interventions that could help bring about the expected results. The strategy also had a monitoring and evaluation framework that included results that could not or were not measured. 6. Consistent with the overall WBG strategy and congruent with market demand, both IFC and MIGA targeted private sector growth. IFC responded to changing circumstances by addressing the
3 financial sector s systemic stability within the context of the Joint International Financial Institution Action Plan launched in February 2009 in response to the global financial crisis. In addition, and also as part of the crisis response IFC provided long term funding as well as a capital injection to both existing and new client banks, and to leasing companies. MIGA, which had three consecutive years without new activities in Serbia, stepped in after the CPSPR and approved five new guarantees, four of them to parent banks that were providing shareholder loans to Serbian subsidiaries and the fifth to a retail trade company. 7. Interventions were well coordinated between IBRD, IFC, and MIGA, as well as with other international organizations operating in Serbia, particularly the IMF and the EU. Risk Identification and Mitigation 8. The CPS indicated that the main risks to the program were regional instability stemming from developments in Kosovo, and vulnerabilities from the widening current account deficit and rapidly growing private external debt. The 2008 global financial crisis made the external imbalance a much greater problem than was initially foreseen in the strategy. With the CPSPR, the WBG addressed this risk by providing augmented support to Serbia so that it could tackle its imbalances and maintain a strong commitment to EU integration. The WBG support was part of a joint program with the EU and the IMF, with IBRD increasing its lending program from US$ 600 million to US$ 900 million, IFC s extending support to strengthen the financial sector, and MIGA helping sustain the financial sector by guaranteeing key investments in it. Overview of CAS Implementation: Lending and Investments 9. The CPS envisaged an indicative base-case IBRD lending envelope of US$600 million, comprising a development policy loan series, and lending for railways, delivery of integrated local services, health, regional disaster preparedness, and energy generation. At CPSPR stage the authorities asked that about two thirds (US$388 million) of the original CPS envelope be allocated to help complete a major European road network (Corridor X); and the remainder to be devoted to the delivery of improved local services and health. Moreover, in response to the global financial crisis, the original CPS allocation was augmented by US$300 million allocated to development policy lending to support a joint assistance package with the IMF and EU. This increase included a policy based guarantee for US$100 million, which leveraged an additional US$300 million in lending from private sources. IFC invested US$350 million during FY08-11, about half in the financial sector and the rest in the real sector. Financial sector investments funded energy efficiency projects, expansion of leasing to agri-business, and support to medium and small enterprises. In addition, IFC invested in PPP solid waste management projects. Also in response to the crisis, MIGA issued five new guarantees during FY08-11, four of which were issued to strengthen financial institutions and the other one a retail company. 10. Performance of IBRD projects was adequate despite implementation problems and the portfolio remained healthy. The proportion of commitments at risk a measure of the likelihood that projects will not achieve their stated development objectives on time represented 8.3 percent of the portfolio, better than the average for ECA as a whole (16 percent). Slow disbursements in FY11 (Annex table 5) reflect significant delays in making projects effective; deficiency in project preparation, where client preparation of designs, feasibility studies, and bid documents began after effectiveness, as did difficulties in inter-agency and inter-ministry coordination in complex operations. Out of an active portfolio of 12 projects in March 2011 one is rated unsatisfactory. 11. IEG evaluated four IFC investment projects all approved prior to FY08 and rated them above the line for development outcome. Of the eight active projects with ratings in IFC s internal review not validated by IEG, five had weak overall development effectiveness.
4 Advisory and Analytical Activities and Services 12. IBRD/IDA delivered 25 analytical and advisory activities (AAA), 16 of which were not planned in either of the strategy documents. Meanwhile it dropped or did not deliver 10 activities that had been planned in the strategies. The areas covered by AAA included a Country Economic Memorandum (CEM), a Public Expenditure Review, an FSAP update, programmatic poverty assessments, as well as topics such as road financing, justice and governance, disaster risk management, education strategy, employment generation, private sector participation in social services, corporate governance, municipal enterprise restructuring, primary health centers, capital markets development, and innovation policy. 13. During the review period, four IFC advisory services (AS) were started building on previous work on alternative dispute resolution (ADR), corporate governance, international standards and technical regulations (ISTR), and solid waste management. Most of the active AS during the CPS period were started prior to FY08, including projects for reducing the regulatory burden on businesses, promoting foreign investments (originally a MIGA initiative), and providing technical assistance to targeted companies. Two of three AS evaluated by IEG were rated above the line, the third not receiving rating. Safeguards and Fiduciary Issues 14. There were no significant safeguards issues or fiduciary complaints that IEG is aware of. Overview of Achievement by Objective: Pillar 1: Encourage Private Sector Led Growth to Ensure Income Convergence with Europe 15. Under this pillar the WBG s support was to focus on (i) improving the business environment; (ii) bolstering the competitiveness of the enterprise sector; (iii) strengthening financial intermediation; and (iv) contributing to an improved, well-maintained and efficient infrastructure. 16. Improving the business environment. The World Economic Forum (WEF) identifies, among other things, the most problematic factor for doing business. For Serbia, in 2008-09, the WEF identified as the most pressing factors policy instability (17 respondents), corruption (12.2 percent) and inefficient government bureaucracy (10.5 percent). By 2011-12, policy instability had almost disappeared as an issue. However, concerns with corruption and government inefficiency had increased (14.2 and 15.0 percent respectively). WBG interventions did not address all of these factors directly, but helped reduce the number of days to register a business. At the same time, the WEF notes that, while the cost to obtain a construction permit decreased during the CPS period, the number of procedures did not change and the time required actually increased significantly. These numbers suggest that the business environment is still a concern in Serbia. WBG support came through the Private Financial Sector (PFS) DPL (FY09) and PFS DPL2 (FY10), an asset registration IDF grant, and targeted advisory services, particularly from IFC. IFC s AS focused on reducing regulations at the national and regional levels; improving the institutional framework for investment promotion; promoting alternative dispute resolution mechanisms, improving corporate governance, and helping the Belgrade Stock Exchange adopt a corporate governance code. 17. Bolstering the competitiveness of the enterprise sector. By end-2008, the government expected to have completed the divestiture of its portfolio of one thousand socially-owned enterprises. Companies for which privatization had not started by then would be closed. Over 2008-09, 430 companies on the list were sold for 362 million; and 162 socially owned enterprises were sent into bankruptcy in 2010. The onset of the financial crisis delayed the process for the rest of the companies, and many privatization contracts had to be cancelled as private investors failed to fulfill contractual obligations. Of the large state companies, the government was able to sell a 51 percent
5 stake in the oil company and readied for sale the telecoms and state pharmaceutical companies. In addition the government is making progress carving out good assets of the national airline company (JAT) to create a new financially viable airline that will be offered for sale. Although privatization has slowed due to the difficult market conditions, progress made so far have curtailed subsidies in the budget from about 2 percent of GDP in 2007 to less than 1 percent of GDP last year. 18. WBG support consisted of the Private Financial Sector DPL (FY09) and DPL2 (FY10) and its related advice, as well as IFC investments and advice. IFC supported the expansion of the largest wood paneling plant (in a predominantly rural area), strengthened the financial structure of one of the largest employers and exporters in the country, and helped a food processing company implement its postprivatization investments. IFC work on International Standards and Technical Regulations (ISTR) improved export marketability of products by helping implement ISTR in food processing and other companies. Moreover, it conducted a strategic study for the restructuring of JAT airways. 19. Strengthening financial intermediation. The WBG strategy included among its objectives the divestiture of stakes in all state banks (up to minority holdings) and insurance sector holdings, as well as improving both property registration and financing. Of the four majority state-owned banks, one was sold to a foreign investor and two were merged, while a large state-owned insurer was privatized. However, the government still retains minority stakes in six banks. Nevertheless, the government strengthened the financial system by increasing the capital adequacy ratio, introducing a deposit insurance scheme, improving the bank resolution system, capitalizing those banks where the government has majority ownership, and decreasing by half the state share in the insurance sector to 35 percent of insurance premiums in 2010. These reforms helped Serbia s financial system weather the global financial crisis on a sounder footing. Evidence of stronger financial intermediation is the increase in mortgage financing of housing and commercial real estate, which went from about five percent of all property transactions in 2007 to over thirty percent of transactions in the third quarter of 2010. 20. Interventions were supported by IBRD through the Private Financial Sector (PFS) DPL (FY09) and PFS DPL2 (FY10), the PFS Policy Based Guarantee (FY11), a cadastre project, and by IFC and MIGA through support in response to the global financial crisis (see below), and related advice. IFC engaged in a joint investment project in the financial sector with EBRD, and took minority stake in seven banks to channel lending to SMEs, agriculture and agribusiness. MIGA issued guarantees for investments in four financial institutions. 21. Contributing to improved, well-maintained and efficient infrastructure. The strategy focused on roads and the energy sector. On roads, the strategy targeted constructing the missing highway links on a major European road corridor; and increasing transport efficiency and safety on two sections of the corridor. There is little information about the improvement of transport efficiency and safety on the road corridor. On other roads, there is a reported reduction of a third in road crash related injuries, but the target of performance based contracting used in all regions was not achieved (many regions do not use it yet). Against a target of 530 km of roads rehabilitated with road roughness reduced on the international roughness index scale only 155 km were rehabilitated. Substantial delays in the implementation of the road corridor project reflected poor institutional coordination within the government, disagreements about the need to create an independent unit to manage the project, and slow preparation of technical and procurement documents. The main interventions in the transport sector were the Transport Rehabilitation Project (FY04), which is still active, and the Corridor X Highway Project (FY10). 22. On energy, the strategy focused on improving financial sustainability of the energy sector, as well as electricity market access for consumers and suppliers, and upgrading institutional capacity to participate in the regional electricity market. On the energy sector, tariffs are still below cost-recovery which impairs the financial viability and investment of the energy company (EPS). EPS s still dominant in Serbia s electricity market restructuring is delayed and there were no private investments in new generation capacity. Although these were significant partnership strategy objectives, there were no instruments in the program to support their achievement.
6 23. WBG assistance contributed significantly to strengthen competitiveness in the enterprise sector and succeeded in strengthening the financial sector. On the other hand, the business climate improved marginally and there was slight progress in improving infrastructure and making it more efficient. The WBG had no interventions to support the energy sector objectives of the strategy. On balance, the outcome under this pillar was moderately satisfactory. Pillar 2: Providing Opportunities and Broadening Participation in Growth 24. Under this pillar the WBG s support was to focus on (i) contributing to balanced regional development; (ii) improving effective social protection for the vulnerable; and (iii) strengthening social service quality and access in a decentralized environment. 25. Contributing to balanced regional development. The WBG strategy was to overcome significant regional disparities, as poverty is particularly evident in depressed former mining and industrial centers in Southern and Eastern Serbia (Bor region for example). The focus was on upgrading the regional infrastructure, the provision of economic incentives and roll-out of active labor market programs to ensure more balanced country-wide development. IEG has no information about the improvement of incomes in the regions. Market support of agriculture has improved, but during the CPS irrigation development made negligible progress. And the management and monitoring of agricultural systems are not operational as targeted under the CPS (EU-compliant rural development program).the main interventions were the Transitional Agriculture Reform Project (FY07), the Bor Regional Development Project (FY07), the Local Services Delivery Project (FY08), and a Public Expenditure DPL (FY10). The Transitional Agriculture Reform Project performed poorly (unsatisfactory rating) which explains in part underachievement in this sub-objective. Results were modest in the Bor region: 1200 people received employment support services (against a target of 2500) and 24 loans were provided through the microfinance program for US$110,000 (against a target of 1,000 micro-credit loans). 26. Improving effective social protection for the vulnerable. The strategy was to have a more effective and financially sustainable pension system, and better targeted social welfare programs. There was progress in pension reform despite strong headwinds from a difficult political environment, including resistance from the pensioner s party, a member of the governing coalition. However, the pension system remains unsustainable and its reform was based on a change in the indexation formula that deals with short term fiscal constraints but does not address the medium term sustainability of the system which still requires a parametric reform. The main interventions were the Consolidated Collection and Pension Administration Reform Project (FY05) still active, the Public Expenditure DPL (FY10), the Public Expenditure Review, and additional policy advice. 27. Strengthen social service quality and access in a decentralized environment. The strategy was to have an efficient, sustainable, and decentralized delivery of health, education, and social protection services. Social protection coverage improved significantly the number of beneficiaries for family and child allowances increased by over a third between 2008 and 2010 and coverage among the poorest quintile increased from 8 percent in 2008 to 9 percent in 2010. In health, patients registered in the 11 most vulnerable municipalities increased by sixty percent between 2009 and 2011 and the increase was over 70 percent in the five most vulnerable municipalities. Although IBRD prepared the relevant analysis, progress in implementing education reform and improving service delivery was effective, but very slow. Main interventions were projects on Local Services Delivery (FY08) and Health (additional financing) (FY09). 28. WBG assistance succeeded in improving the quality of and access to social services. But the WBG s contribution to balance regional development was modest and the pension system remains unsustainable. On balance, the outcome under this pillar is rated moderately unsatisfactory.
7 Pillar 3: Managing Emerging Environmental and Disaster Risks 29. Under this pillar the WBG s support was to focus on (i) improving environmental management; (ii) enhancing the efficiency in the use of natural resources; and (iii) strengthening the ability to prepare for, manage and mitigate environmental and disaster risks. 30. Improving environmental management. The strategy was to improve implementation and enforcement of environmental regulations controlling different pollution sources, while improving waste management, and biodiversity and natural resource management Among sources of pollution targeted were water pollution emanating from municipal and industrial sources, as well as air pollution coming from industry, thermal energy generation and transportation. The only available information on progress under this objective is that the annual decrease in the amount of nutrients (nitrogen and phosphorus) that eventually flow out of targeted farms is estimated to have declined by 44 percent for nitrogen and 100 percent for phosphorus since 2006.IBRD provided support through the Danube River Enterprise Pollution Reduction GEF Project (FY05), and an environmental compliance policy note. 31. Enhancing the efficiency in the use of natural resources. The WBG s strategy focused on a small part of this broad objective: to improve by 45 percent energy efficiency in over 200 public buildings. About 40 public buildings have been retrofitted to date and the energy efficiency achieved in them is over 40 percent. The main intervention was an Energy Efficiency Project (FY04) that is still active. 32. Strengthen the ability to prepare for, manage and mitigate environmental and disaster risks. The WBG objective was to reduce the risk of damage from flooding to land, crops, property, infrastructure, as well as reduce the risk of loss of life from flooding. Results have been modest. Sixteen flood protection programs were completed covering over 60,000 hectares (the target was 550,000 hectares), and there s no information on the number of people protected (target was 2 million). The main intervention was the regional Catastrophic Risk Insurance Facility Project approved in FY11. 33. WBG assistance had modest results in all the sub-objectives of this pillar, whose outcome is rated moderately unsatisfactory. Modest progress was made in reducing the flow of water pollution from farming, in enhancing the efficiency in the use of natural resources, and in preparing for and mitigating unexpected environmental and disaster risks. In addition, there was negligible progress in remediating urgent environmental hazards, while there was unknown progress in reducing pollution flows due to non-farming activities. Objectives Pillar I: Encouraging private sector led growth to ensure income convergence with Europe Pillar II: Providing opportunities and broaden participation in growth Pillar III: Managing emerging environmental and disaster risks IEG Rating Moderately Satisfactory Moderately Unsatisfactory Moderately Unsatisfactory
8 4. Overall IEG Assessment Outcome: Bank Performance: IFC Performance MIGA Performance Moderately Unsatisfactory Moderately Satisfactory Moderately Satisfactory Satisfactory Overall outcome: 34. This was an ambitious program with modest results because of an overly optimistic strategy given the institutional capacities, compounded by the adverse effects of the global financial crisis. The overall outcome is rated moderately unsatisfactory. Under Pillar 1, WBG assistance helped strengthen competitiveness in the enterprise sector and succeeded in strengthening financial sector. The business climate improved only marginally and there was slight progress in improving infrastructure and making it more efficient. Under Pillar 2, the efforts centered, sensibly, on regional development. But results were modest as a key project on agriculture reform performed poorly, which partly explains underachievement in this sub-objective. The WBG strategy succeeded in improving the quality of, and access to, social services. Pillar 3, less important than the other two and the weakest of the three in terms of outcomes, had modest or negligible results in improving reducing pollution coming from targeted agricultural activities, strengthening environmental management, enhancing the efficiency in the use of natural resources, and managing environmental and disaster risk. IBRD/IDA Performance: 35. IBRD/IDA performance is rated moderately satisfactory. The WBG s strategy and program were well aligned with Serbia s development strategy, and well-coordinated between IBRD/IDA, IFC and MIGA, as well as other development partners. The lending program underwent significant changes at CPS progress report stage reflecting changing government priorities more emphasis on developing highway major European road network and coping with the adverse effects of the global financial crisis. IBRD/IDA s response was flexible and creative, as evidenced by the policy based guarantee used to leverage additional resources. The strategy was relevant touching, for the most part, on key priorities with appropriate interventions but implementation could have improved by making projects effective faster in significant sub-objectives of the strategy (e.g. infrastructure). This would have required better project preparation to improve inter-agency and inter-ministry coordination in complex operations. AAA was useful and generally well-timed. At the same time, as regards program design, it is unclear that the pillar on environment and disaster risk reflected a genuine government priority, and it appears as an add-on in the partnership strategy. As a result, its outcomes were poor. Moreover, some targeted outcomes were unrealistic because they lacked supporting instruments (e.g., energy sector), or were directly not measured (e.g. pollution flows to the Danube River due to non-agricultural sources, transport efficiency, incomes in Bor and Resavica). IFC Performance: 36. IFC performance is rated moderately satisfactory. It responded to the financial crisis by strengthening selected banks and increasing its support to the real sector. Advisory services contributed to the competitiveness and environmental management sub-objectives, in several cases building on previous advisory services projects. IFC achieved additionality mainly through provision of long term finance and capital contributions at a time when funding was scarce, as well as through collaboration with other IFIs and utilization of advisory services to support investments. However, IFC missed the opportunity to refocus advisory services towards strengthening of the financial system as envisaged in the CPSPR.
9 MIGA Performance: 37. MIGA performance is rated satisfactory. MIGA s work was relevant and focused, providing guarantees to five projects four in the financial sector following three years of no new projects. The guarantees were well targeted, with appropriate collaboration with IFC. MIGA s response to the financial crisis helped strengthen the banking system by enabling additional investments in financial institutions. 5. Assessment of CAS Completion Report 38. This is a well-written CPSCR. The evaluation is detailed and comprehensive for the most part, although it could have dealt more in-depth with areas of the program where things did not go well, to find out the reasons and draw lessons. 6. Findings and Lessons 39. IEG agrees with the CPSCR lessons and recommendations for the next CPS, particularly on the need to continue the alignment of CPS activities with the EU integration agenda, focus investment operations on a narrow set of objectives, and try to avoid involvement of multiple agencies in project management. Moreover, proposed outcomes in partnership strategies need to reflect genuine government priorities and be supported by appropriate interventions to achieve stated outcomes. IEG notes the creative way in which IBRD/IDA responded to changing circumstances, as evidenced by the policy based guarantee that it used to leverage additional resources for Serbia.
11 Annex Table 1: Planned and Actual Lending, FY08-11 Annex Table 2: Planned and Actual Analytical and Advisory Work, FY08-11 Annex Table 3a: IEG Project Ratings for Serbia, FY08-11 Annex Table 3b: IEG Project Ratings for Serbia and Comparators, FY08-11 Annex Table 4: Portfolio Status for Serbia and Comparators, FY08-11 Annex Table 5: IBRD/IDA Net Disbursements and Charges Summary Report for Serbia (in US$ million) Annex Table 6: Net Partnership Flows (in US$ million) Annex Table 7: Economic and Social Indicators for Serbia and Comparators, 2007-2010 Table 8a. Serbia: IFC Investment Projects Approved During FY08-11 Table 8b. Serbia: IFC Investment Project Approved Prior To and Active During FY08-11 Table 9a. Serbia: IFC Advisory Services Projects Approved During FY08-11 Table 9b. Serbia: IFC Advisory Services Projects Approved Prior To and Active During FY08-11 Annex Table 10: Serbia Summary of Achievements of the CPS Objectives
13 Annex Table 1: Planned and Actual Lending, FY08-11 Project Project ID Proposed FY Approval FY Proposed Amount 1/ Approved Amount Programmed projects Private Financial Sector DPL P096711 2008 2009 50.0 50.0 Local Services Delivery P096823 2008 2008 40.0 46.4 Health Additional Financing P110593 2008 2009 15.0 13.5 Railways 2008 Dropped 75.0 Dropped Private Financial Sector DPL 2 P115958 2009 2010 50.0 100.0 Resavica Regional Development P109999 2009 Dropped 40.0 Dropped Regional Disaster Preparedness 2009 Dropped 25.0 Dropped Energy Generation Rehabilitation 2009 Dropped 55.0 Dropped Corridor X Highway Project P108005 2010 2010 388.0 388.0 Public Expenditure DPL P108759 2010 2010 100.0 100.0 Public Expenditure DPL 2 P120399 2011 2011 100.0 100.0 PF PBG P101618 2011 100.0 Dropped Total Programmed projects CPS FY08-11 797.9 Non-programmed projects CRIF P110910 2011 5.0 Total Non-programmed projects CPS FY08-11 5.0 Grants and Special Financing Projects Danube River Enterprise Pollution Reduction GEF Project P084604 2005 14.1 INDJIJA Infrastructure Investment Program P120892 2010 YF-PFS Policy Based Guarantee P102651 2011 100.0 2 IDF-Regulatory Impact Assessment P112508 2010 IDF-SOE Incorporation P113242 2010 IDF-Serbia Asset Registry P114825 2009 IDF-E-Government Approaches P120273 2010 Total Grants and Special Financing Projects CPS FY08-11 114.1 Total projects CPS FY08-11 917.0 Source: Serbia CPS, 2010 CASPR and WB Business Warehouse Table 2a.1, 2a.4 and 2a.7 as of 10/31/2011. 1. The proposed CPS amount was $600 mln, comprising $350 mln in identified projects for FY09-FY09 and an indicative amount of $250 mln for projects in FY10-11 to be identified later. At CPS progress report stage the lending program was augmented to $900 mln as reflected in last column of the table and projects identified for FY10-11. 2. 25 percent of IBRD guarantee for $400 mln. The rest--$300 mln is booked against a set-aside fund that pulls together IBRD capital.
14 Annex Table 2: Planned and Actual Analytical and Advisory Work, FY08-11 Project Proposed Delivered to Client ID FY FY Output Type Economic and Sector Work Planned (CAS FY08-11) Serbia Economic Memorandum P123023 2008 Forwarded to FY12 Policy Note Justice and Governance IDF 2008 Dropped Disaster Risk Mitigation and Adaptation (Regional) 2008 Dropped South East Europe Regional Higher Education Study 2008 Dropped Road financing and institutional study P099311 2008 2009 Report Programmatic poverty assessments 2008 Dropped Public Investment and Expenditure Management Review P107513 2009 2008 Report Employment Generation Options 2009 Dropped Private Sector Participation in Social Services (with IFC) 2009 Dropped PPP Analysis: Opportunities and Contingent Liabilities 2009 Dropped Corporate Financial Reporting IDF 2009 Dropped Municipal Enterprise Restructuring/ Privatization P110742 2009 2010 Policy Note Programmatic poverty assessments 2009 Dropped Non-Planned Environmental Compliance Policy Note P101217 2008 Policy Note Baseline Survey Primary Health Centers P110244 2009 Report Public Expenditure Review P111499 2009 Report Policy Notes on Growth P106864 2010 Policy Note PER Follow up P118155 2010 Report FSAP Update Serbia P118184 2010 Report Technical Assistance Planned (CPS FY08-11) ROSC Follow-up TA YF P107926 2008 2008 "How-To" Guidance Capital Markets Development TA P112482 2009 2010 "How-To" Guidance Public Financial Management (SAI) TA 2009 Dropped Roundtables P117671 2010 2010 Knowledge-Sharing Forum Education Strategy P115212 2010 2011 "How-To" Guidance Non-Planned Road Safety Mgt Cap Review (ETWTR) P105154 2008 Institutional Development Plan CF ASSIST - NATL TRNG WORKSHOP-JI/GIS P108152 2009 Knowledge-Sharing Forum Roundtables P112472 2009 Knowledge-Sharing Forum Innovation Promotion TA P112489 2009 "How-To" Guidance YF Innovation Promotion TA 2 P114767 2010 "How-To" Guidance Serbia Crisis Preparedness Assessment P116790 2010 Client Document Review Serbia Capital Markets Development TA 2 P120882 2011 "How-To" Guidance Regulatory Reform: Capacity Building P103725 2011 Institutional Development Plan Pension TA P115391 2011 "How-To" Guidance Serbia Innovation Promotion TA P078885 2011 "How-To" Guidance Source: Serbia 2008 CPS, 2010 CASPR and WB Business Warehouse Table 2a.1, 2a.4 and 2a.7 as of 10/31/2011.
15 Exit FY Annex Table 3a: IEG Project Ratings for Serbia, FY08-11 Total Project Name Evaluated IEG Outcome (US$M) IEG Risk to Development Outcome * Project ID NA Closed Projects Not Evaluated by IEG Exit FY 2010 Project Name Second Programmatic Private Financial Sector Development Ongoing Projects: ISR ratings Closing FY Project Name Total Evaluated (US$M) Outcome Risk to Development Project ID 148.8 Satisfactory Modest P096711 Total Evaluated (US$M) ISR DO ISR IP ISR Date PIN 2012 Health Project (Serbia) 20.0 Satisfactory Moderately Satisfactory 1/26/2011 P077675 2013 Energy Efficiency Project 21.0 Moderately Satisfactory Moderately Satisfactory 5/19/2011 P075343 2012 Transport Rehabilitation Project (Serbia) 55.0 Satisfactory Satisfactory 3/29/2011 P075207 2012 2013 2012 2013 Real Estate Cadastre & Registration Project (Serbia) Consolidated Collection & Pension Administration Reform Project (Serbia) Energy Community of South East Europe (APL) Program - Serbia and Montenegro Component - Serbia Project Irrigation & Drainage Rehabilitation Project (Serbia) 30.0 Satisfactory 25.0 Moderately Satisfactory Moderately Satisfactory Moderately Satisfactory 8/29/2011 P078311 7/10/2011 P090418 21.0 Satisfactory Satisfactory 5/19/2011 P088867 25.0 Moderately Satisfactory Satisfactory 6/6/2011 P087964 2012 Transitional Agriculture Reform Project 17.0 Unsatisfactory Unsatisfactory 8/27/2011 P094212 2013 YF BOR Reg Devt Proj 43.0 Moderately Satisfactory Moderately Satisfactory 3/27/2011 P092999 Annex Table 3b: IEG Project Ratings for Serbia and Comparators, FY08-11 Region Total Evaluated ($M) Total Evaluated(No) Outcome % Sat ($) Outcome % Sat (No) RDO % Moderate or Lower ($) * RDO % Moderate or Lower (No) * Serbia NA Croatia 270.6 10 96.1 80.0 96.1 70.0 Bulgaria 169.0 8 100.0 75.0 100.0 100.0 Montenegro 8.7 2 51.9 50.0 51.9 50.0 Albania 52.1 6 80.3 66.7 39.9 33.3 ECA 5,990.0 132 88.4 79.8 75.5 60.5 World Bank 31,813.7 620 84.6 74.8 68.8 56.8 Source: WB Business Warehouse Table 4a.5 and 4a.6 as of as of 10/19/2011
16 Annex Table 4: Portfolio Status for Serbia and Comparators, FY08-11 Fiscal year 2008 2009 2010 2011 Serbia # Proj 11 12 12 12 # Proj At Risk 1 1 3 1 % At Risk 9.1 8.3 25.0 8.3 Net Comm Amt 444.3 507.8 845.8 936.8 Comm At Risk 9.0 74.4 138.9 21.5 % Commit at Risk 2.0 14.6 16.4 2.3 Croatia # Proj 16 17 14 12 Net Comm Amt 2 2 3 1 # Proj At Risk 12.5 11.8 21.4 8.3 % At Risk 1,062.7 1,082.7 1,134.4 1,007.9 Comm At Risk 265.4 163.2 186.9 28.3 % Commit at Risk 25.0 15.1 16.5 2.8 Montenegro # Proj 6 9 7 6 Net Comm Amt 1 1 1 1 # Proj At Risk 16.7 11.1 14.3 16.7 % At Risk 43.0 88.3 80.5 80.9 Comm At Risk 7.0 7.0 7.0 16.2 % Commit at Risk 16.3 7.9 8.7 20.0 Bulgaria # Proj 8 5 4 3 # Proj At Risk 0 0 2 2 % At Risk 0.0 0.0 50.0 66.7 Net Comm Amt 383.8 313.5 353.0 230.5 Comm At Risk 0.0 0.0 181.5 171.5 % Commit at Risk 0.0 0.0 51.4 74.4 Bosnia & Herzegovina # Proj 14 13 15 11 # Proj At Risk 1 1 2 1 % At Risk 7.1 7.7 13.3 9.1 Net Comm Amt 243.4 261.4 434.4 296.3 Comm At Risk 10.0 36.0 29.9 21.0 % Commit at Risk 4.1 13.8 6.9 7.1 Albania # Proj 18 17 14 12 # Proj At Risk 3 3 6 2 % At Risk 16.7 17.6 42.9 16.7 Net Comm Amt 310.5 300.5 265.6 253.6 Comm At Risk 59.9 61.6 120.4 50.0 % Commit at Risk 19.3 20.5 45.3 19.7 ECA # Proj 303 287 276 251 # Proj At Risk 38 52 50 40 % At Risk 12.5 18.1 18.1 15.9 Net Comm Amt 17,966.1 21,383.2 24,340.5 22,535.4 Comm At Risk 2,257.0 3,460.2 4,357.1 2,116.9 % Commit at Risk 12.6 16.2 17.9 9.4 World # Proj 1,525 1,552 1,590 1,595 # Proj At Risk 276 344 366 337 % At Risk 18.1 22.2 23.0 21.1 Net Comm Amt 106,761.7 131,076.4 158,287.4 168,248.7 Comm At Risk 18,428.2 19,929.9 28,186.1 22,978.5 % Commit at Risk 17.3 15.2 17.8 13.7 Source: WB Business Warehouse Table 3a.4 as of 10/3/2011.
17 Annex Table 5: IBRD/IDA Net Disbursements and Charges Summary Report for Serbia (in US$ million) FY Disb. Amt. Repay Amt. Net Amt. Charges Fees Net Transfer 2008 47.7 20.6 27.1 126.5 2.6-102.0 2009 34.1 21.3 12.8 112.0 5.3-104.5 2010 273.4 34.8 238.6 48.7 7.2 182.7 2011 69.5 74.6-5.1 47.1 5.6-57.7 Total (08-11) 424.71 151.29 273.42 334.29 20.61-81.48 Source: WB Loan Kiosk, Net Disbursement and Charges Report as of 10/31/2011. Annex Table 6: Net Partnership Flows (in US$ million) Development Partners 2006 2007 2008 2009 2006-2009 Bilaterals Germany 2.3 13.0 9.9 71.3 96.5 Italy 5.1 13.7 11.7 0.0 30.6 Norway 0.0 0.0 0.0 1.1 1.1 Spain 0.0 2.1 10.1 0.0 12.2 Switzerland 2.1 0.0 0.0 0.0 2.1 United Kingdom 0.0 0.0 0.0 2.3 2.3 United States 0.0 0.0-0.4-0.1-0.5 DAC Countries, Total 9.5 28.7 31.3 74.6 144.2 Poland 0.0-3.5-3.4-3.4-10.2 Other Development Partners, Total 0.0 0.0 0.0 0.0 0.0 Non-DAC Countries, Total 0.0-3.5-3.4-3.4-10.2 Multilaterals IDA 42.6 47.4 34.5 16.6 141.0 Multilateral Agencies, Total 42.6 47.4 34.5 16.6 141.0 All Development Partners, Total 52.1 72.6 62.4 87.8 275.0 Source: WB Loan Kiosk, Net Disbursement and Charges Report as of 10/31/2011.
18 Growth and Inflation Annex Table 7: Economic and Social Indicators for Serbia and Comparators, 2007-2010 Series Name Serbia Serbia Croatia Montenegro Bulgaria Bosnia & Herzegovina 2007 2008 2009 2010 Average 2007-2010 Albania ECA World GDP growth (annual %) 6.9 5.5-3.1 1.8 2.8 0.0 3.2 1.8 2.5 5.1 0.5 1.9 GDP per capita growth (annual %) 7.3 6.0-2.7 2.2 3.2 0.1 3.1 2.4 2.6 4.7 0.1 0.7 GNI per capita, PPP (current international $) 4450.0 5520.0 5930.0 5810.0 5427.5 13372.5 6167.5 5640.0 4462.5 3762.5 22922.8 8673.4 GNI, Atlas method (billions of current US$) 10010.0 11420.0 11280.0 11230.0 10985.0 18987.5 12952.5 12797.5 8717.5 8252.5 23754.7 10645.0 Inflation, consumer prices (annual %) 6.4 12.4 8.1 6.1 8.3 3.1 4.3 6.5 2.7 3.0...... Composition of GDP (%) Agriculture, value added (% of GDP) 13.2 13.0 12.9 12.9 13.0 6.3 9.6 6.0 8.8 20.7 1.9 2.9 Industry, value added (% of GDP) 29.1 28.0 27.7 27.7 28.1 28.2 20.5 30.8 28.2 19.5 26.2 27.3 Services, etc., value added (% of GDP) 57.7 59.0 59.4 59.5 58.9 65.5 69.9 63.2 63.0 59.8 71.9 69.7 Gross fixed capital formation (% of GDP) 24.0 23.2 24.6 25.4 24.3 25.4 30.3 26.5 24.2 29.2 20.2 20.9 Gross domestic savings (% of GDP) 4.3 5.3 7.6 8.8 6.5 22.7-7.5 17.1-2.3 4.2 21.7 21.0 External Accounts Exports of goods and services (% of GDP) 30.2 30.4 28.3 30.9 30.0 39.5 37.8 56.3 37.4 29.1 38.8 27.6 Imports of goods and services (% of GDP) 54.1 53.7 45.3 47.6 50.2 44.8 76.7 69.1 65.8 54.2 37.4 27.8 Current account balance (% of GDP) -17.5-21.3-6.9-7.2-13.2-5.6... -15.0-9.2-13.4...... External debt, total (% of GNI) 68.3 64.7 79.7.. 70.9... 41.0 87.0 51.4 32.2...... Total debt service (% of GNI) 8.4 10.0 11.4.. 9.9... 2.5 10.9 2.9 1.6...... Total reserves in months of imports 7.3 4.6 9.0 7.5 7.1 5.4... 6.0 5.1 4.1 6.0 12.8 Fiscal Accounts /1 Revenue (% of GDP) 41.3 41.4 39.6 38.4 40.2 38.8 45.1 36.7 46.4 3/ 26.0 Total Expenditure (and net lending, % of GDP) 42.3 44.0 43.7 42.5 43.1 41.9 45.8 36.3 49.5 3/ 30.5 Overall Balance (% of GDP) -1.0-2.6-4.2-4.1-3.0-3.1-0.6 0.3-3.1 3/ -4.5 Public Sector Debt (% of GDP)2/ 34.3 33.1 36.4 36.0 35.0 34.5 36.0 17.1 32.2 3/ 56.7 Social Indicators Health
19 Series Name Serbia Serbia Croatia Montenegro Bulgaria Bosnia & Herzegovina 2007 2008 2009 2010 Average 2007-2010 Albania ECA World Life expectancy at birth, total (years) 73.4 73.6 73.7.. 73.6 75.9 74.1 73.0 75.1 76.6 75.1 69.1 Immunization, DPT (% of children ages 12-23 months) 94.0 95.0 95.0.. 94.7 96.0 93.0 94.7 92.0 98.3 95.6 81.5 Improved sanitation facilities (% of population with access).. 92.0.... 92.0 99.0 92.0 100.0 95.0 98.0 94.1 60.6 Improved water source (% of population with access).. 99.0.... 99.0 99.0 98.0 100.0 99.0 97.0 98.0 86.8 Mortality rate, infant (per 1,000 live births) 7.2 6.8 6.5 6.1 6.7 5.0 7.7 11.4 7.6 17.5 12.6 42.5 Population Population, total (in million) 7.4 7.4 7.3 7.3 7.3 4.4 0.6 7.6 3.8 3.2 885.1 6725.2 Population growth (annual %) -0.4-0.4-0.4-0.4-0.4-0.1 0.2-0.5-0.1 0.4 0.4 1.15 Urban population (% of total) 51.9 52.0 52.2 52.4 52.1 57.4 60.0 71.3 47.7 47.0 69.8 50.2 Education School enrollment, preprimary (% gross) 57.0 57.3 51.3.. 55.2 55.1... 81.2 12.8 58.3 73.4 44.7 School enrollment, primary (% gross) 101.1 100.6 97.7.. 99.8 96.9 111.3 101.3 111.1 118.9 101.6 106.6 School enrollment, secondary (% gross) 89.5 90.5 91.5.. 90.5 94.4 98.0 88.7 89.2 72.4 96.2 67.4 Source: WB World Development Indicators as of date 10/31/2011 for all indicators excluding those noted. 1/ IMF 2010 Republic of Serbia Article IV 2/ 2009 and 2010 data are IMF's projections 3/Data for 2010 are not included.
20 Table 8a. Serbia: IFC Investment Projects Approved During FY08-11 Project ID Approval FY Closure FY Project Status Cluster Dept LN Net Cmt EQ Net Cmt Total Net Cmt 27078 2008 Active FM $0 $21,055 $21,055 26749 2008 Active FM $15,678 $0 $15,678 28172 2009 2011 Closed MAS $56,406 $0 $56,406 28503 2010 Active MAS $29,786 $0 $29,786 28867 2010 Active FM $24,822 $0 $24,822 29836 2010 Active FM $49,644 $0 $49,644 28589 2010 Active FM $24,211 $0 $24,211 27986 2010 Active MAS $2,888 $0 $2,888 27619 2010 Active MAS $3,192 $0 $3,192 27802 2011 Active FM $0 $11,699 $11,699 29985 2011 Active FM $49,999 $0 $49,999 30167 2011 Active MAS $57,610 $0 $57,610 29685 2011 Active MAS $34,179 $0 $34,179 Table 8b. Serbia: IFC Investment Project Approved Prior To and Active During FY08-11 Project ID Approval FY Closure FY Project Status Cluster Dept LN Net Cmt EQ Net Cmt Total Net Cmt 798 1985 Active FM $23,035 $0 $23,035 10882 2002 2007 Closed FM $4,000 $1,041 $5,041 11171 2002 2007 Closed MAS $14,004 $3,588 $17,592 20957 2003 2008 Closed FM $8,000 $0 $8,000 24061 2005 2007 Closed FM $3,332 $0 $3,332 24085 2005 2007 Closed FM $0 $0 $0 24214 2005 2007 Closed MAS $0 $4,082 $4,082 24062 2005 2008 Closed FM $0 $0 $0 24063 2005 2008 Closed FM $1,033 $0 $1,033 24230 2005 Active FM $37,611 $0 $37,611 25263 2006 2009 Closed FM -$2,306 $0 -$2,306 25265 2006 2009 Closed FM -$186 $0 -$186 24471 2006 2009 Closed FM $13,441 $0 $24,471 24472 2006 2009 Closed FM $40,324 $0 $40,324 24247 2006 Active FM $76,590 $48,694 $125,284 24700 2006 Active FM $25,530 $0 $25,530 25063 2007 Active FM $19,021 $0 $19,021
21 Project ID Table 9a. Serbia: IFC Advisory Services Projects Approved During FY08-11 Project Name Status Dept Business Line Start FY End FY Total Funds Managed by IFC as of April 30, 2011 563707 ADR Serbia Construction Sector Active CEUBG Investment Climate 2009 $671,094 564609 Integrated Solid Waste Management Program - Sustainable Business Active CEUBF Serbia Advisory 2009 $987,478 565469 ISTR Serbia Ext Active CEUBG Sustainable Business Advisory 2009 $740,382 566967 CorpGovSerbia-II Active CEUBG Sustainable Business Advisory 2009 $656,571 Project ID 550050 Table 9b. Serbia: IFC Advisory Services Projects Approved Prior To And Active During FY08-11 Project Name Status Dept Business Line Regulatory Impact Analysis - Improvements in efficiency and transparency of the legislative process Start FY End FY Total Funds Managed by IFC as of April 30, 2011 Active CICRS Investment Climate 2007 $809,938 555366 Serbia Sub-national Competitiveness Active CEUBG Investment Climate 2007 $1,050,760 554825 ProCredit Bank EE TA - Serbia Closed CF3F8 Access To Finance 2007 2008 $133,125 24684 JAT Airways Closed C3PDR Public-Priv Partnerships Transaction Advisory 2006 2007 $520,000 537423 ADR PEP SE Ser Closed CEUBG Investment Climate 2006 2009 $1,114,750 538913 CTR Tigar Closed CSBCP Sustainable Business Advisory 2006 2007 $22,362 540244 Corporate Governance Project in Serbia Closed CEUBG Sustainable Business Advisory 2006 2009 $941,470 543064 International Technical Standards and Sustainable Business Closed CEUBG Regulations Serbia Advisory 2006 2009 $ 559,900 543086 Recycling PEP SE Serbia Closed CEUBG Sustainable Business Advisory 2006 2009 $1,342,040 558225 Serbia Investment Promotion Program Closed CICIG Investment Climate 2006 2009 $4,775,000 22270 Sustainable Business Belgrade Water Closed CSEIF (TATF) Advisory 2004 2011 $1,521,920 11176 Belgrade: Municipal Solid Waste Disposal Sustainable Business Closed CASDR (TATF) Services PPP Advisory 2002 2008 $2,000,827