Public Disclosure Copy The World Bank Implementation Status & Results Report Kosovo Financial Sector Strengthening & Market Infrastructure Project (P108080) Kosovo Financial Sector Strengthening & Market Infrastructure Project (P108080) EUROPE AND CENTRAL ASIA | Kosovo | Finance & Markets Global Practice | IBRD/IDA | Technical Assistance Loan | FY 2008 | Seq No: 16 | ARCHIVED on 29-Dec-2016 | ISR25222 | Implementing Agencies: Central Banking Authorities of Kosovo, Kosovo Banking Association, Association of Microfinance Institutions of Kosovo (AMIK), Deposit Insurance Fund of Kosovo Key Dates Key Project Dates Bank Approval Date:13-Dec-2007 Effectiveness Date:03-Jan-2008 Planned Mid Term Review Date:04-Mar-2015 Actual Mid-Term Review Date:04-Mar-2015 Original Closing Date:30-Jun-2010 Revised Closing Date:31-Dec-2016 Project Development Objectives Project Development Objective (from Project Appraisal Document) The main objective of the project is to enhance CBAK's capacity to oversee the financial system's stability and its developmentinKosovo. The project will focus on strengthening the capacity of CBAK to supervise banks and non bank financial institutions(inparticular insurance companies and pension funds). Has the Project Development Objective been changed since Board Approval of the Project Objective? Yes Board Approved Revised Project Development Objective (If project is formally restructured)PHRPDODEL The objectives of the Project are to (i) enhance the stability and development of the financial sector; and (ii) strengthen thefinancial sector’s underlying market infrastructure. Components Name Assistance to CBK:(Cost $1.67 M) Assistance to AMIK:(Cost $0.24 M) Assistance to KBA:(Cost $0.20 M) Establishment of a RTGS:(Cost $1.87 M) Provision of seed funding to the DIFK:(Cost $4.00 M) Establishment of a BCC:(Cost $0.85 M) Overall Ratings 12/29/2016 Page 1 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Kosovo Financial Sector Strengthening & Market Infrastructure Project (P108080) Name Previous Rating Current Rating Progress towards achievement of PDO  Moderately Satisfactory  Satisfactory Overall Implementation Progress (IP)  Moderately Satisfactory  Moderately Satisfactory Overall Risk Rating  High  High Implementation Status and Key Decisions The project was implemented overall successfully and is closing on December 31, 2016 after nine years of implementation. The project development objective (PDO) was achieved and confirmed by the project indicators. Key reforms on the legal and supervisory framework for banks and non-bank financial institutions (NBFIs) and capacity building in the financial sector have been successfully achieved under the project. The Deposit Insurance Fund of Kosovo (DIFK) is fully operational and seed capital in the amount of US$4m has been satisfactorily disbursed. The Automated Transfer System (ATS), which incorporates both a Real Time Grosse Settlement System (RTGS) and Automated Clearing House (ACH), was launched on July 4, 2016 and is fully operational. It supports a major reform of the payment system in Kosovo by reducing operating costs for banks, increasing the speed, and shortening execution times for high value payments as well as minimizing the payment risk and increasing the confidence in the banking sector. A fully operational Business Continuity Center (BCC) was launched on November 7, 2016 playing a crucial role in safeguarding the stability of the financial sector and more broadly the economy as a whole in the event of a disaster. Disbursement of the loan funds are at 96% in mid-December 2016, with several outstanding payments due in the next few months. 12/29/2016 Page 2 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Kosovo Financial Sector Strengthening & Market Infrastructure Project (P108080) 12/29/2016 Page 3 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Kosovo Financial Sector Strengthening & Market Infrastructure Project (P108080) Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance  --  Substantial  Substantial Macroeconomic  --  Low  Low Sector Strategies and Policies  --  Moderate  Moderate Technical Design of Project or Program  --  Moderate  Moderate Institutional Capacity for Implementation and Sustainability  --  Moderate  Moderate Fiduciary  --  Moderate  Moderate Environment and Social  --  Low  Low Stakeholders  --  Moderate  Moderate Other  --  --  -- Overall  --  High  High Results 12/29/2016 Page 4 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Kosovo Financial Sector Strengthening & Market Infrastructure Project (P108080) Project Development Objective Indicators PHINDPDOTBL  Status of updated legal and regulatory framework for banks and NBFIs and capacity building in the financial sector (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value Non existent Achieved Achieved Achieved Date 01-Jan-2008 13-Jun-2016 16-Dec-2016 30-Dec-2016 Comments Key reforms on the legal and supervisory framework for banks and NBFIs and capacity building in the financial sector have been achieved under the project. A total of 14 training sessions were held for microfinance institutions. Moreover, 23 training sessions were held for bank officers and KBA staff on banking sector topics. The project provided support in the drafting of around 70 regulations, laws and directives (Insurance Rules: 16, Pension Rules: 26, Banking Rules: 28). Implementation of the off-site supervision software and training of all supervisors was completed on May 15, 2016. A number of individual trainings for CBK staff for the period of February – December 2016 as well as a training center feasibility study were also funded under Component 1. PHINDPDOTBL  Status of operationalization of RTGS (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value Non existent In progress Achieved Achieved Date 14-Jun-2011 13-Jun-2016 16-Dec-2016 30-Dec-2016 Comments The Automated Transfer System (ATS)* was launched on July 4, 2016 and is fully operational. *Component 4 in the FSSMIP PAD refers to Establishment of a Real Time Gross Settlement (RTGS) system. The scope of the system was broadened during the bidding process to an Automated Transfer System (ATS), which incorporates both RTGS and Automated Clearing House (ACH) components. PHINDPDOTBL  Status of establishment of a fully operational Business Continuity Center (BCC) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value Non existent In progress Achieved Achieved Date 14-Jun-2011 13-Jun-2016 16-Dec-2016 30-Dec-2016 Comments Fully operational Business Continuity Center was launched in November 2016. The inauguration ceremony took place on November 7 2016. 12/29/2016 Page 5 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Kosovo Financial Sector Strengthening & Market Infrastructure Project (P108080) PHINDPDOTBL  Status of establishment of the DIFK (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value Non existent Operational Operational Operational Date 14-Jun-2011 13-Jun-2016 16-Dec-2016 30-Dec-2016 Overall Comments Intermediate Results Indicators PHINDIRITBL  Intermediate Result 1.1. - Number of missing and/or outdated regulations and directives drafted for banks and NBFIs which have been passed recently or to be passed over the life of the proje (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 70.00 70.00 70.00 Date 14-Jun-2011 13-Jun-2016 16-Dec-2016 30-Dec-2016 Comments The project provided support in the drafting of around 70 regulations, laws and directives. PHINDIRITBL  Intermediate Result 1.2. - Automated database for off-site supervision acquired and implemented (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Off-site Off-site database for database for Off-site database for Off-site supervision monitoring and monitoring and Value monitoring and analysis database is non existent analysis used in day to analysis used used in day to day work day work in day to day work 12/29/2016 Page 6 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Kosovo Financial Sector Strengthening & Market Infrastructure Project (P108080) Date 14-Jun-2011 13-Jun-2016 16-Dec-2016 30-Dec-2016 PHINDIRITBL  Intermediate Result 1.3. - Percentage of CBK supervisors trained in using analytical tool and regarding new regulations (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 100.00 100.00 100.00 Date 14-Jun-2011 13-Jun-2016 16-Dec-2016 30-Dec-2016 PHINDIRITBL  Intermediate Result 1.4. - Number of training sessions to MFIs in transforming into deposit taking institutions and to other MFIs (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 20.00 14.00 14.00 Date 01-Jan-2008 13-Jun-2016 16-Dec-2016 30-Dec-2016 Comments Indicator result on number of trainings was adjusted in line with final data provided by the Microfinance Association (AMIK). PHINDIRITBL  Intermediate Result 1.5. - Number of training sessions to bank officers and KBA staff on banking sector topics (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 23.00 23.00 23.00 Date 01-Jan-2008 13-Jun-2016 16-Dec-2016 30-Jun-2016 12/29/2016 Page 7 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Kosovo Financial Sector Strengthening & Market Infrastructure Project (P108080) PHINDIRITBL  Intermediate Result 2.1. - Status of operational integration of the RTGS system with the existing Electronic Interbank Clearing System (EICS) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value Non existent In progress Achieved Achieved Date 14-Jun-2011 13-Jun-2016 16-Dec-2016 30-Dec-2016 Comments This indicator has been achieved through implementing the EICS functionality in the ATS system. PHINDIRITBL  Intermediate Result 2.2. - Status of operational integration of the RTGS system with the Central Securities Depositary (CSD) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value Non existent In progress Achieved Achieved Date 14-Jun-2011 13-Jun-2016 16-Dec-2016 30-Dec-2016 PHINDIRITBL  Intermediate Result 2.3. - Percentage of transactions in GoK and CBK securities settled in the RTGS system in conformity with the principles of Delivery versus Payment (DvP) (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 100.00 100.00 Date 14-Jun-2011 13-Jun-2016 16-Dec-2016 30-Dec-2016 PHINDIRITBL  Intermediate Result 2.4. - Percentage of payments settled immediately or with a short delay (<15 minutes) (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 100.00 95.00 Date 14-Jun-2011 13-Jun-2016 16-Dec-2016 30-Dec-2016 12/29/2016 Page 8 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Kosovo Financial Sector Strengthening & Market Infrastructure Project (P108080) PHINDIRITBL  Intermediate Result 3.1. - Status of completion of refurbishment of the BCC facility (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value Non existent In progress Achieved Achieved Date 14-Jun-2011 13-Jun-2016 16-Dec-2016 30-Jun-2016 PHINDIRITBL  Intermediate Result 3.2. - Percentage of failover from the CBK's primary processing site to BCC, and restoration back to the primary site, successfuly demonstrated for all CBK's critical systems (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- 100.00 100.00 Date 14-Jun-2011 13-Jun-2016 16-Dec-2016 30-Jun-2016 Comments End target has been corrected from '0' to '100'. This is an editorial error in the PAD. The number should be 100%, showing that all CBK’s critical systems have failed over to the BCC and have been successfully restored to the primary. Anything less than 100% is not acceptable, because that would indicate that the systems which have not been failed-over and restored are at severe risk in the event of a disaster. PHINDIRITBL  Intermediate Result 3.3. - Number of regular failover exercises conducted on a quarterly basis per year (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- 1.00 4.00 Date 14-Jun-2011 13-Jun-2016 16-Dec-2016 30-Jun-2016 Comments This indicator foresees 4 regular failover exercises per year. Given that the BCC was only made operational in November 2016 and CBK confirmed its plans to conduct quarterly regular failover exercise going forward this indicator can be considered as met. 12/29/2016 Page 9 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Kosovo Financial Sector Strengthening & Market Infrastructure Project (P108080) PHINDIRITBL  Intermediate Result 4.1.- Contributed amount from GoK (Amount(USD), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 3.30 3.30 3.30 Date 14-Jun-2011 13-Jun-2016 16-Dec-2016 30-Jun-2016 PHINDIRITBL  Intermediate Result 4.2.- Premiums received from member banks (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 14-Jun-2011 13-Jun-2016 16-Dec-2016 31-Dec-2016 Overall Comments Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed P108080 IDA-50060 Effective XDR 4.30 4.30 0.00 4.15 0.15 96% P108080 IDA-H3410 Effective XDR 1.30 1.30 0.00 1.24 0.06 95% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P108080 IDA-50060 Effective 14-Jun-2011 03-Aug-2011 25-Jan-2012 30-Jun-2014 31-Dec-2016 P108080 IDA-H3410 Effective 13-Dec-2007 14-Dec-2007 03-Jan-2008 30-Jun-2010 31-Dec-2016 Cumulative Disbursements 12/29/2016 Page 10 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Kosovo Financial Sector Strengthening & Market Infrastructure Project (P108080) Restructuring History Level Approved on 27-Apr-2010 ,Level 2 Approved on 18-Jun-2014 ,Level 2 Approved on 21-Jun-2016 Related Project(s) P122084-Kosovo, Financial Sector Strengthening and Markets Infrastructure Project - Additional Finance 12/29/2016 Page 11 of 11 Public Disclosure Copy