The World Bank Implementation Status & Results Report STATE OWNED ENTERPRISES RELATED FISCAL MANAGEMENT PROJECT (P160796) STATE OWNED ENTERPRISES RELATED FISCAL MANAGEMENT PROJECT (P160796) AFRICA | Cabo Verde | Governance Global Practice | IBRD/IDA | Investment Project Financing | FY 2018 | Seq No: 3 | ARCHIVED on 13-Dec-2019 | ISR39742 | Implementing Agencies: Ministry of Finance, Republic of Cabo Verde Key Dates Key Project Dates Bank Approval Date: 04-Jun-2018 Effectiveness Date: 22-Oct-2018 Planned Mid Term Review Date: 01-Dec-2020 Actual Mid-Term Review Date: Original Closing Date: 31-Jul-2023 Revised Closing Date: 31-Jul-2023 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The Project Development Objective is to strengthen SOE related fiscal management. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Component 1: Results-Based Financing:(Cost $16.00 M) Component 2: Technical Assistance:(Cost $3.50 M) Component 3: Project Management:(Cost $0.50 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory Overall Risk Rating Substantial Substantial Implementation Status and Key Decisions After the project effectiveness on 22 October 2018, the overall progress toward the achievement of targets set for the PDO indicators and intermediate results remains Satisfactory. one PDO indicator has been achieved, one has exceeded the end year target and is on track of achieving the end of project. Transfers from the Government budget to SOEs for their operations, including lending subsidies, capital injections and guarantees for target loans represented 7 percent of the GDP in 2019 which is the expected target for 2020 compared to 9,57 percent of GDP in 2018 and the baseline of 10,90 percent of GDP. The 2019 public revenues from SOEs in tax payments, dividends, concession payments and divestment proceeds have gone from US$ 348,772 to US$ 22,5 million. However, the operating margin of TACV has not yet improved. The operational costs represented 175 percent of operating revenues as reported in the 2017 TACV audited annual financial statements. The operating margin was estimated to 219 percent in the 2018 unaudited financial statements. 12/13/2019 Page 1 of 6 The World Bank Implementation Status & Results Report STATE OWNED ENTERPRISES RELATED FISCAL MANAGEMENT PROJECT (P160796) Some intermediate results related to the component 2 on technical assistance have also been achieved. The government has disclosed the pipeline of companies to be restructured and/or divested and reinforced the SOE oversight and monitoring. As a result, a comprehensive report on the SOE portfolio including analysis of financial and operational performance was published on the Ministry of Finance’s website for 2017. The 2019 SOE report covering the year of 2018 has also been shared with the World Bank for advice before disclosure on the Ministry of Finance website. The first year Disbursement Linked Indicators (DLIs 1 to 4) have been achieved leading to a sharp increase of the disbursement ratio from 0,2 percent to 56 percent and the second year DLIs are on track. The Recipient submitted on March 19, 2019, the evidence of the achievement of the DLIs 1, 2, 3 and 4. The evidence has been verified by the Independent Verification Agent. The World Bank, based on the information available and after getting a reasonable assurance on the achievement of the DLIs, reimbursed a total amount of $9,898,834 million in May 2019. The mission agreed with the Government mainly to complete and adopt the SOEs policy, submit the second year DLIs achievement evidence for disbursement and complete remaining technical assistance activities under the component 2 of the project. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance High Substantial Substantial Macroeconomic Substantial Substantial Substantial Sector Strategies and Policies Moderate Moderate Moderate Technical Design of Project or Program Moderate Moderate Moderate Institutional Capacity for Implementation and Sustainability Substantial Substantial Substantial Fiduciary Moderate Moderate Moderate Environment and Social Substantial Substantial Substantial Stakeholders Substantial Substantial Substantial Other Substantial -- -- Overall Substantial Substantial Substantial Results PDO Indicators by Objectives / Outcomes Strengthen SOE related fiscal management IN00778823 ►Reduced public financing to SOEs - including transfers from the budget and capitalization (% of GDP) (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 10.90 9.57 7.00 6.00 Date 29-Dec-2017 29-Mar-2019 30-Nov-2019 31-Mar-2022 IN00778824 ►Improved operating margin of TACV (Percentage, Custom) 12/13/2019 Page 2 of 6 The World Bank Implementation Status & Results Report STATE OWNED ENTERPRISES RELATED FISCAL MANAGEMENT PROJECT (P160796) Baseline Actual (Previous) Actual (Current) End Target Value 144.00 137.00 219.00 80.00 Date 29-Dec-2017 29-Mar-2019 30-Nov-2019 31-Mar-2022 IN00778825 ►Annual public revenues from SOEs (Millions USD - in tax payments, dividends, concession payments, divestment proceeds) (Amount(USD), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 5.00 5.14 22.00 10.00 Date 31-Dec-2017 29-Mar-2019 30-Nov-2019 20-Jul-2022 Intermediate Results Indicators by Components Component 2: Technical Assistance IN00778826 ►IRI1: Comprehensive SOE policy adopted (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Current (2016) SOE The government framework law outlines adopts a policy on general rules for SOEs including clear Value No policy adopted No policy adopted corporate governance of performance targets SOEs and government and transparency oversight and reporting obligations of SOEs Date 29-Dec-2017 31-Dec-2018 31-Dec-2018 31-Mar-2022 IN00778827 ►IRI2: Implementation and utilization of the SOE financial database (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Database with UASE operates general complete financial and excel sheet with basic Database up and operational Value Database up and running aggregated information running performance on six (6) largest SOEs information on the entire SOE portfolio Date 29-Dec-2017 29-Mar-2019 29-Mar-2019 31-Mar-2022 IN00778828 ►IRI3: Strengthened legal framework for debt management with a greater emphasis on contingent liabilities (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target new law for debt new law for debt maangement including maangement including A clear legal Fragmented debt contingent liabilities contingent liabilities framework that is Value management legislative approved by the approved by the respected by SOEs framework Parliament in December Parliament in and Government 2018 December 2018 Date 29-Dec-2017 29-Mar-2019 29-Mar-2019 31-Mar-2022 IN00778829 12/13/2019 Page 3 of 6 The World Bank Implementation Status & Results Report STATE OWNED ENTERPRISES RELATED FISCAL MANAGEMENT PROJECT (P160796) ►IRI4: Review of SOE Portfolio and structuring oversight/holding of SOEs (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Some individual The government has Greater clarity on performance reviews disclosed the pipeline SOEs that need to be Value carried out as part of No SOE review of 23 companies to be restructured, sold or performance agreement restructured and/or partially privatized preparations divested Date 29-Dec-2017 01-Nov-2018 01-Nov-2018 31-Mar-2022 IN00778830 ►IRI5: Fiscal risk monitoring reports on SOE portfolio published (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Comprehensive reports on all SOEs published on MoF’s web site including analysis of financial and operational Annual report on Yes - 2017 Fiscal Risk Yes - 2017 Fiscal Risk performance Value contingent liabilities from Report issued in June Report issued in June (including, 6 lar 2018 2018 benchmarking) and all financial transfers with the state (including all transfers, arrears, implicit subsidies, etc.) Date 31-Dec-2017 01-Nov-2018 01-Nov-2018 31-Dec-2022 IN00778831 ►IRI6: Citizen Feedback on SOE Reform Process (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Information available on citizens' opinion on Surveys to be carried out Surveys to be carried how well government No information on citizen Value two years into the out two years into the has planned for, opinion reforms reforms communicated and implemented SOE sector reforms. Date 31-Dec-2017 01-Nov-2018 01-Nov-2018 15-Sep-2023 Disbursement Linked Indicators IN00778832 ►DLI 1 TACV has adopted and announced a Retrenchment Plan acceptable to the Bank (Yes/No, Output, 3,000,000.00, 100.00%) Baseline Actual (Previous) Actual (Current) Fiscal Year 2022 Value No Yes Yes -- Date -- 18-Apr-2018 18-Apr-2018 -- IN00778833 ►DLI 2 TACV has established Grievance mechanism acceptable to the Bank (Yes/No, Process, 3,000,000.00, 100.00%) 12/13/2019 Page 4 of 6 The World Bank Implementation Status & Results Report STATE OWNED ENTERPRISES RELATED FISCAL MANAGEMENT PROJECT (P160796) Baseline Actual (Previous) Actual (Current) Fiscal Year 2022 Value No Yes Yes -- Date -- 28-Jun-2018 28-Jun-2018 -- IN00778834 ►DLI 3 Staff targeted by the Retrenchment Plan has been retrenched (Number, Intermediate Outcome, 8,000,000.00, 48.73%) Baseline Actual (Previous) Actual (Current) Fiscal Year 2022 Value 0.00 123.00 123.00 -- Date -- 29-Mar-2019 29-Mar-2019 -- Comments: 38 staff received packages and a further 74 received early retirement packages. IN00778835 ►DLI 4 Detailed annual SOE reports prepared by UASE (Number, Output, 2,000,000.00, 20.00%) Baseline Actual (Previous) Actual (Current) Fiscal Year 2022 Value 0.00 1.00 1.00 5.00 Date -- 31-Dec-2018 31-Dec-2018 -- Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P160796 IDA-62510 Effective USD 20.00 20.00 0.00 10.68 8.35 56% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P160796 IDA-62510 Effective 04-Jun-2018 22-Jun-2018 22-Oct-2018 31-Jul-2023 31-Jul-2023 Cumulative Disbursements 12/13/2019 Page 5 of 6 The World Bank Implementation Status & Results Report STATE OWNED ENTERPRISES RELATED FISCAL MANAGEMENT PROJECT (P160796) Restructuring History There has been no restructuring to date. Related Project(s) P172528-Cabo Verde Electra Restructuring Project 12/13/2019 Page 6 of 6