88755 IEG CPSCR Review Independent Evaluation Group 1. CPS Data Country: FYR MACEDONIA CPS Year: FY 2007 CPS Period: FY2007 -FY2010 CPSCR Review Period: FY2007 - FY2010 Date of this review: September 23, 2010 2. Executive Summary i. The FY 2007-2010 FYR Macedonia Country Partnership Strategy (CPS) was a joint strategy of the World Bank (WB) and International Finance Corporation (IFC). This review evaluates the FY 2007 CPS, its FY 2009 CPS Progress Report (CPSPR) and their implementation, and evaluates the CPS Completion Report. The review covers both IBRD and IFC activities. ii. The 2007 CPS was launched in a favorable environment characterized by a strong political consensus on development objectives, a program for achieving them , and an impressive recent track record on economic management and strong development program implementation . It presented a Bank Group program focused on: (i) fostering job-creating economic growth and increasing living standards for all; and (ii) improving governance and transparency in public sector delivery to support a market economy. In the CASPR, prepared in 2009 to meet a commitment made in the original CPS, the Bank Group's objectives were disaggregated into four clusters of outcomes: (a) competitiveness and growth; (b) business environment; (c) human development; and (d) infrastructure. These objectives as originally cast and as disaggregated were highly relevant and realistic in view of the country consensus on policies and priorities and its track record, although there was some uncertainty at the outset concerning the pace and extent to which opportunities for private sector investment suitable for IFC support would emerge. iii. The record is mixed with regard to achievement of the outcomes supported by World Bank Group assistance. Good progress was made with regard to most of the specific achievement benchmarks set in the competitiveness and growth and business environment areas. Progress was more mixed with regard to human development and infrastructure objectives, with limited or no progress registered against some benchmarks . Taken as a whole, an overall outcome rating of World Bank Group assistance of moderately satisfactory is indicated. 1v. IBRD and IFC performance are also rated as moderately satisfactory . There was proactive coordination between IBRD and IFC, which was welcomed by the Government. The main areas in which performance could have been better were the design and implementation of the results framework for the CPS and in exploiting IBRD-IFC synergies in the growth and competitiveness and business environment areas, and in promoting public private partnerships in human development and infrastructure . On the Bank side, there is also some evidence in supervision reports that design complexity of some non-policy-based lending operations is contributing to implementation problems - particularly recently - and that designs could have been simplified. v.IEG underscores three findings of the CPSCR. First, IEG concurs with the need for greater selectivity going forward and notes that this may imply a need for more budget (Bank and trust fund) resources on the IBRD side for the in-depth analytical work needed to support selective lending development and analytical and advisory activities (AAA) . Second, IEG concurs with the need for better intra-Bank Group coordination and exploitation of latent synergies, and notes that in addition to the instruments identified in the CPS for better integration of the results framework, it should also CPSCR Reviewed by: Peer Reviewed by: Group Manager Robert J. Anderson Jr, Consultant, Nils Fostvedt, Consultant, Jaime Jaramillo-Vallejo, Lead IEGCR and IEGCR and, Economist, IEGCR Unurjargal Demberel, Consultant, Asita De Silva, Senior Stoyan Tenev , Head, Macro IEG-IFC Evaluation Officer, IEG-IFC Evaluation, IEG-IFC 2. IEG CPSCR Review Independent Evaluation Group explicitly reflect inputs, outputs, and outcomes of both IBRD and IFC. Third, IEG concurs with the need for the results framework for the new CPS to include monitorable outcome indicators. This framework should, as noted previously encompass both IBRD and IFC activities and be updated frequently as a basis for continuing efforts to keep program performance on track. 3. CPSCR Summary Overview of CPS Relevance: 1. Country Context : FYR Macedonia's development prospects and prospects for productive partnership with the Bank were strong at the time of the FY 2007 CPS. It had achieved EU candidate status (December 2005) and was also working toward NATO membership, its two overarching medium term political goals. While still some distance from the membership thresholds- long lists of policy and institutional developments yet to be completed-EU accession and NATO membership were attainable in the medium-term . The 2006 elections had delivered a coalition government with broad commitment to implementing the changes needed to attain these goals , which were spelled out in a program (Rebirth in 100 Steps) endorsed by all members of the coalition. Strong economic management delivered macroeconomic stability and structural reform: FYR Macedonia gained direct access to foreign capital markets (2005) , its bonds had been rated just below investment grade, and it had successfully issued its first Euro bond on relatively favorable terms. Growth, however, had been disappointing and unemployment high. The IBRD-FYR Macedonia partnership had been strengthened considerably during the FY 2004-06 CAS period, with successful completion of a high case support program , with good implementation performance. During this period, IFC focused on advisory services to overcome shortcomings in the business environment, and could not find appropriate investment opportunities. 2. World Bank Group Strategy : The FY 2007-10 CPS presented a WBG program of support for the Government's program focused on (i) fostering job-creating economic growth and increasing living standards for all, and (ii) improving governance and transparency in public sector delivery to support a market economy . It envisaged an IBRD lending envelope of between US$ 220 million (Base Case) and US$ 280 million (High Case), comprised of up to three development policy operations, nine investment operations, and one project supported by the Global Environment Facility (GEF), complemented by a program of 17 AAA deliveries (11 economic and sector work-ESW, 6 non-lending technical assistance--NLTA) . The CPS set forth a fully articulated results framework, linking portfolio and planned products to expected CPS outcomes, but did not include expected IFC results . 3. IFC focused on the first pillar of the CPS, where it aimed to enhance competitiveness of firms in strategic sectors and improve the business environment through both its investments and advisory services. IFC planned to seek investment opportunities in sectors such as infrastructure (public­ private partnerships--PPPs in energy and gas distribution sectors), social (education) and financial (with small and medium enterprise--SME focus) sectors, as well as SMEs, either directly or through regional investors-any of these investments would be the first since 2003 . IFC also planned advisory services in the areas of alternative dispute resolution, corporate governance, recycling, international technical standards , simplification of business licensing and inspections regulations, industry and sub-national competitiveness . 4. The CPS was updated in a Progress Report (CPSPR) in 2009. While confirming the two broad pillars of the original strategy, it revamped the program and its results framework into four clusters : competitiveness and growth, business environment, human development, and infrastructure. These clusters were more thematically coherent and had a smaller number of progress indicators and benchmarks. IFC's strategy was recast to add emphasis on support to the banking sector in the form of possible advisory services, and investment through a recapitalization fund in response to global financial crisis . The other objectives of the IFC strategy remained largely the same. 3. IEG CPSCR Review Independent Evaluation Group 5. Relevance: The relevance of the World Bank Group's objectives is high. They are well- aligned with the objectives of the Government's "Rebirth Program", as updated and expanded in a revision completed in 2008, and in terms of the current Government's priorities. Individual planned IBRD interventions were well-grounded in prior analytical work . They were underpinned by a substantial body of Bank and other analytical work on development constraints. Areas identified by IFC for possible investment and advisory activities were also well aligned with country priorities and, in substance, with IBRD planned operations. The World Bank Group's overall program design was well-integrated into a broader development partnership framework including activities of the EU and bilateral donors, although opportunities for closer collaboration within the World Bank Group, between IBRD and IFC, were not fully exploited . For example , IBRD and IFC activities in support of an improved business licensing and inspection regulating environment proceeded in parallel until, at the client's request, they were merged into a "one-stop" approach. 6. Planned IBRD delivery volumes were reasonable in view of prior implementation experience, although the span of proposed Bank assistance was very broad-as it probably had to be, given the Government's aspiration to achieve EU membership at the earliest possible date and the many areas that needed to be addressed to achieve that objective . Faced with limited investment opportunities, IFC focused more on advisory services to help create an investment enabling environment and to enhance competitiveness. IFC's investment program was largely conditioned by the implementation of the Government's reforms and privatization programs, over which IFC had no direct control. The reformulation of the CPSPR provided a more coherent framework for describing the program, but the span of operations and the complexity of individual operations on the IBRD side remained significant. 7. The least satisfactory aspect of the strategy, both as propounded originally and as updated, was the results framework linking country objectives to CPS outcomes to CPS outputs. Most of the indicators specified with regard to achievement of targeted outcomes related primarily to project level outputs . Very few indicators pertained to outcomes as reformulated in terms of the four clusters and specific outcomes envisaged. Another serious shortcoming - impeding realization of within-Bank Group synergies - was the failure to integrate IFC's anticipated activities into the CPS results framework. (See below discussion of the results framework in sections on Bank Group Performance and CPSCR quality). Overview of CPS Implementation: 8. The CPS program was implemented generally as envisaged and with proactive cooperation between IBRD and IFC. IBRD committed US$ 295 million - modestly above the upper end of the envelope envisaged in the CPS, but roughly consistent with the sectoral and lending-instrument profiles anticipated in the CPS. IBRD AAA deliveries were also broadly consistent with the CPS program. IFC delivered two investment operations totaling US$90 million and ten advisory service operations. Independent evaluation evidence is sparse, but what is available on the IBRD side (ICR Reviews, portfolio implementation data - no QAG data are available) indicates that products delivered - lending, supervision, and AAA - were of satisfactory quality . On the IFC side, investment projects (supervision, role, and contribution) and the advisory projects were of satisfactory quality, according to the evaluative notes of the Expanded Project Supervision Reports for three investment projects approved in FY98-FY02 and a Project Completion Report of one advisory project approved in FY06. IFC's evaluated investments, however, overall did not result in satisfactory development and investment outcomes, due to both project operational issues and a difficult business environment (that worsened after an ethnic conflict in the country in 2001). 9. IBRD: CPS implementation was broadly consistent with overall CPS design. Of IBRD's 11 planned lending operations (including one GEF operation), 8 were delivered, 3 were dropped, and 2 not originally envisaged were added. The volume of actual lending was somewhat more than the high case of the approved CPS envelope, with slightly more policy based lending than envisaged (US$ 80 million actual versus US$ 70 million originally oroarammed) . The sectoral composition of 4. IEG CPSCR Review Independent Evaluation Group lending was roughly as originally envisaged , although in the infrastructure sector the Bank concentrated more on roads and less on energy and rail than originally foreseen . AAA deliveries were also roughly in line with expectations . 10. Available indicators of the quality of the IBRD's support work are generally positive. Of the four operations exiting the portfolio during the CPS period, outcomes were rated by IEG as moderately satisfactory (2) or satisfactory (2).1 Risk to development outcome was rated as moderate (3) or significant (1). Of the two operations that both entered and exited the portfolio during the CPS period, Bank performance was rated by IEG as satisfactory in all dimensions. Portfolio implementation performance data indicate better-than-regional average performance on percent of projects at risk and percent of commitments at risk, although FYR Macedonia's performance was declining somewhat during the last two years of the CPS period. 11. IFC: During the CPS period, IFC approved two loans for a total of $89 million: a US$55 million post-privatization loan to the Austrian owned electricity distribution company, EVN; and a US$34 million loan to NLB Tutunska Banka, the country's third largest bank, to support the SME sector. The two investments were greenfield projects (where no institution, asset or operations existed before) in the infrastructure and financial sectors, representing a total project value of $210 million. IFC supplemented its investments with 10 advisory operations (including issues such as corporate governance, alternative dispute resolution mechanisms, and international standards) with a total funding of $4.4 million, including four programs approved in the earlier CAS period and their follow-on extension projects. 12. The three IFC investments evaluated by IEG upon their operational maturity (approved in FY98-FY02), and that were active during the review period, had low development outcomes . One project remained in the portfolio and thus continued to be monitored by IFC's Development Outcome Tracking System (DOTS) together with other active projects. The latest DOTS report indicates that this project.,.-as is also the case for two other mature projects in the portfolio-has satisfactory development results. The two projects approved in the CPS period are at an early stage of implementation, and development outcomes are therefore not yet available. In terms of investment outcomes, one out of the five investments in IFC's portfolio was performing poorly as of end-FY10 according to IFC's Credit Risk Ratings, owing to operating challenges mainly due to external factors such as regulatory changes and legacy debt issues. 13. Safeguards and Fiduciary Issues: IEG is not aware of any specific safeguards or fiduciary issues arising from implementation of the World Bank Group's program in Macedonia over this period. Overview of Achievement by Clusters: Cluster 1: Growth and Competitiveness 14. Increase labor market flexibility and decrease the tax wedge created by social security contributions and income taxes. Specific targets for achievement during the CPS period were : (a) revision of labor laws to introduce greater flexibility in labor contracts; and (b) reduce the wedge created by the labor tax between the amount paid by the firms and what workers receive from a 2006 baseline of 34.5 percent of gross wage for average workers and from 42 percent of gross wage for workers earning 50 percent of the average wage (including fringe benefits) . Good progress was made in this area. On labor market flexibility , a new Labor Law (a measure supported by the Bank's Programmatic Development Policy Loan 1--PDPL 1) was enacted expanding possibilities to use fixed-term employment, including seasonal and part-time employment, removing most restrictions on work-hours as well as introducing voluntary participation to collective bargaining. Under PDPL 2 a legislative framework establishing alternative labor dispute resolution mechanisms was drafted, and a 1 Based on desk reviews of implementation completion reports (ICRs). None of these projects was independently assessed by IEG in the field. 5. IEG CPSCR Review Independent Evaluation Group law on Peaceful Resolution of Labor Disputes was adopted under PDPL 3. There was some small reduction in unemployment rates, and there was an increase in the share of the labor force with part­ time and fixed term contracts: fixed term contracts increased from 43.3 percent of the labor force in 2004 to 57.6 percent in 2008 . The labor tax wedge declined modestly, although this decline is not attributed to any specific Bank intervention, aside from policy dialogue. 15. Establish efficient land administration system . Specific targets of Bank assistance in this area were to increase substantially the coverage of the real estate cadastre (90 percent coverage by 2009), to reduce registration times (90 percent of offices register transactions in 3 days or less), and to build Government capacity in land policy analysis and formulation . Good progress was made on increasing the coverage of the cadastre: it has now been completed on at least 98 percent of the territory of the country . Some progress was made in reducing the time required to register land transactions (90 percent of offices now register transactions in 5 days or less) and build the Government's land policy analysis capacity. While the Bank completed four studies on land policy, there is no indication in the CPSCR of the effect this ESW on land policy analysis capability or on land policy decisions. 16. The Real Estate Cadastre and Registration project provided the financing and technical assistance needed for the establishment of the real estate cadastre and extending its coverage. It also financed the strengthening of the Agency of Real Estate Cadastre, including its policy analysis capability , by initiating formation of a Land Policy Advisory Committee and by financing land policy studies related to the security of tenure, access to land for investments, state land management, as well as an initiation of a state indemnity fund . 17. Improve institutional capacity of agriculture sector public institutions in line with EU accession requirements. The CPS identified 2 benchmarks for evaluating progress in this area: (a) Ministry of Agriculture is able to disburse and track use of all Government subsidies and rural development funds through a payment agency that is compatible with the Instrument for PreAccession for Rural Development (IPARD) program-an an EU program(by July 2010) ; and (b) all seven water companies initiate collection of water user fees (by December 2009). Progress in this area was mixed. Country management of IPARD funds was achieved in 2009. Institution of collection of water management fees has commenced in 5 of the 7 targeted areas. The Government also made progress in other areas of the sector relevant to EU accession . 18. Bank support contributing to these developments has been provided through the Agriculture Strengthening and Accession project (2007) , and a previous Bank Irrigation Restructuring and Rehabilitation Project. 19. IEG rates the outcome of the World Bank Group's support under Cluster 1 as satisfactory . Progress was sustained in all three focus areas of the cluster. Cluster 2: Business Environment 20. Improve business environment as measured by Doing Business Indicators (DBls). Regardless of whether the changes in the laws and regulations were as expected using the DBls, comparisons of Business Environment and Enterprise Performance Survey (BEEPS) 2008 data with data from the 2005 BEEPS show improvement in a number of areas.2 Specific measures supported under the PDPL series (e.g., enactment of a Law on Business Registration under PDPL 2, further simplification of business registration procedures and requirements under PDPL 3) contributed to these improvements, as did technical assistance provided under IBRD's Business Environment Reform and Institutional Stren thenin BERIS ro'ect. 2IEG does not use rankings and inter-country comparisons due to concerns about the comparability of DB data across countries, and more importantly, because these changes only reflect changes on the regulations and the degree of implementation of those regulations typically does not follow at the same pace. 6. IEG CPSCR Review Independent Evaluation Group 21. Reduce the burden of regulation on businesses . Specific benchmarks set by the CPS were: (a) regulatory impact assessment (RIAs) is systematically used for all new legislation; (b) regulations eliminated or amended by after a thorough analysis of their relevance (the "regulatory guillotine"); first round of guillotine is fully implemented (64 laws and 481 bylaws eliminated or amended}, and at least one more round initiated by December 2009; (c) decrease in regulatory compliance costs measured by senior management time spent on compliance with regulatory requirements (BEEPS); and (d) a single national electronic registry containing all legal acts in force is fully functional by December 2009. 22. Good progress was made in instituting (RIAs and in instituting the unique national electronic registry of regulatory laws. Some progress was made in reducing the burden of regulation on business. A large number of laws and decrees regulating business were reviewed and flagged to be "axed" (61 laws and 481 decrees were identified for "axing") under the "regulatory guillotine" . By September 2009, action was completed on 39 laws and 382 decrees, short of the targets. No progress was made on the compliance time target. Senior management time spent on compliance with regulatory requirements (as measured by BEEPS) increased from 11 percent in 2005 to 17 percent in 2008, casting doubts on the efficacy of the efforts to reduce burdensome regulation. 23. IBRD support was critical to implementation of RIAs and the guillotine. In July 2005, under PDPL 2, the Section for Economic Policies and Regulatory Reforms (SER) was established within the Government's General Secretariat to implement regulatory reforms and the "regulatory guillotine" was launched. Under PDPL 3, the "guillotine" process has been continued with amendment/derogation of laws and decrees identified as imposing unreasonable regulatory burdens, a "Unique National Electronic Registry" of laws and decrees regulating businesses was established, and the Government adopted procedures to introduce the RIA system. BERIS also contributed to the development and implementation of the RIA system. 24. To help improve corporate governance, since FY06 IFC has implemented an advisory program to raise awareness and build capacity of various stakeholders . The poor corporate governance in FYR Macedonia, reflected by substandard practices in financial reporting, auditing, information disclosure and transparency, seems to be one of the barriers to private company access to financing, and interest and confidence of potential investors. Previously, IBRD had assessed FYR Macedonia's corporate governance policy framework, enforcement and compliance practices in 2005, which resulted in several recommendations, including for overhauling the disclosure framework and completion of the corporate governance code. IFC's advisory assisted the Macedonian Stock Exchange and Securities and Exchange Commission to develop corporate governance code and scorecards and at the same time, worked with companies on implementation of best practices. The available monitoring data indicates that some participating firms were able to get access to financing ($2.5 million) . 25. Increase the efficiency of judicial system and improve courthouse infrastructure . Specific benchmarks for achievement during the CPS period were : (a) 25 percent increase in client satisfaction with court operations from 2007 to end-2009 as assessed through court users survey; (b) eight out of ten court facilities renovated (by end 2009) ; and (c) new court 'information system is introduced (by end 2009). The evolution of satisfaction with courts cannot be determined yet because the planned baseline surveys were delayed, but other targets were achieved. The results of this support on court functioning as measured by a number of indicators other than those used by the CPS to track progress have been impressive: the case backlog fell by 576 cases from June 2005 to June 2007 with 22 of the 27 basic courts recording a reduction in backlogs; enforcement of court cases increased from 18 percent in 2005 to 39 percent in 2009; the average duration of bankruptcy procedures declined from 3 years and seven months to two years and two months; according to the 2008 BEEPS, the percentage of firms that found the courts to be a problem of doing business declined from 55 percent in 2005 to 50 percent in 2008. 7 IEG CPSCR Review Independent Evaluation Group 26. These outcomes were contributed to by the Bank via a number of measures and investments supported through the PDPL series and the associated Legal and Judicial Improvement and Institutional Support project. Specific measures included the adoption of a number of new laws that improved court functioning (e.g., new laws supported by PDPL 1 on Civil Procedure, Enforcement, Bankruptcy, and new laws supported by PDPL 2 on Courts, Misdemeanors, and General Administrative Procedure), and technical assistance and investments in court infrastructure and information systems supported via the Bank's Legal and Judicial Implementation and Institutional Support Project. IFC's contribution was through an advisory program on alternative dispute resolution that promoted mediation of commercial disputes . Within this program, IFC facilitated an amendment to the Mediation law in 2009. Although a number of cases were resolved and disputed funds (for approximately US$ 3.5 million) released through this mechanism, recourse to mediation has remained only moderate . IFC's support in establishing pilot mediation centers and training mediators, judges, lawyers and other stakeholders was crucial to support implementat ion of the Mediation Law and led to subsequent amendments to redress shortfalls in the law. 27. IEG rates the outcome of the World Bank Group's assistance under Cluster 2 as satisfactory. Strong outcomes on business regulation simplification and impact awareness , combine with improvements in corporate governance and judicial reform. However, the changes in legislation did not lead into changes on the ground, particularly on the time that managers have to spend complying with regulations, casting doubts about the relevance of the reform program. Cluster 3: Effectiveness of Education, Health And Social Protection 28. Improve school infrastructure and quality of education in basic and secondary education. Specific achievements targeted for the CPS period emphasized : (a) infrastructure improvement and teacher training; and (b) the establishment of a national education management and information system to provide it with baseline data. 29. Good progress was made on the first of these objectives, with substantial improvements in school infrastructure and teacher training . Progress on the information system has, however, been limited and there is relatively little information on the effects of these improvements on educational outcomes . Available data indicate, however, that secondary enrollment increased to 95 percent from 85 percent, and dropout rates decreased to 1.9 percent from 2.1 percent between 2004 and 2008. Regrettably, there is no data on schooling performance indicators . 30. The Bank has played a major role in these outcomes through the Education Modernization Project. 31. Improve efficiency and transparency of Health Insurance Fund operations and institutional and management capacity of Ministry of Health. Specific outcomes targeted for achievement during the CPS period were: (a) transparent financial management, expenditure control and performance indicators for all hospitals established ; (b) implementation of diagnosis-related groups (DRGs) payment system for hospitals with 20 percent share of the hospital budgets; and (c) reference pricing for most important drugs in place. Good progress was made on each of these benchmarks, although there are still obstac les to be overcome (e.g., in the case of financial management, while systems have been improved, actual expenditure patterns have not) to achieve the efficiency improvement outcomes targeted. Bank support was via the Health Sector Management project (which supports MOH institutional and management capacity-buildi ng) and the PDPL series (which supported, inter alia, amendment of the Health Insurance Law, and supported competitive procurement of pharmaceuticals) . 32. Improve administration and targeting of cash benefits and strengthen the pension system. Specific outcomes targeted for achievement during the CPS period were: (a) integrated management and information system covering all cash benefit programs including database of all beneficiaries established and o erational ; b first conditional cash transfer CCT ro ram in education desi ned 8 IEG CPSCR Review Independent Evaluation Group and introduced; (c) Framework developed to allow for further consolidation of cash benefits, and (d) voluntary pension system introduced .. Good progress was made on developing a framework for consolidation of cash benefits and introducing a voluntary pillar into the pension system . Progress on establishing the management information system for cash benefit programs and design and introduction of the first CCT program in education was limited due to delays in the design and implementation of the cash benefits information system . 33. The Bank has been a key contributor in these areas through a long-running dialogue on pension reform and social protection, assistance provided through the Social Protection Implementation Loan, and the new Conditional Cash Transfer Project. 34. IEG rates the outcome of the World Bank Group's assistance under Cluster 3 as moderately satisfactory. While there was progress in the hardware side of education and health, outcomes on the ground did not follow due to weak development of the information systems . Cluster 4: Infrastructure 35. Improve road and rail infrastructure and management capacity . Specific benchmarks for achievement during the CPS period in this area were: (a) 50 percent of the construction of the Tabanovce-Kumanovo highway completed; (b) Agency for State Roads (ASR) is adequately managing and implementing road investments as confirmed by regular technical audits; (c) the successors of Macedonian Railways reduced operating losses as indicated by a drop in working ratios (operating costs before deprec iation divided by operating revenues without subsidy) from 100 percent in 2005 to 80 percent at end-2009; (d) 140 km of regional and 75 km of local roads improved; and (e) significant decrease in freight train processing time at border stations on Corridor X, the Trans European Network Corridor linking Greece to Serbia and the rest of Europe.. Good progress was made on the Tabanovce-Kumanovo highway, and some progress was registered with regard to reduction of operating losses in railways and improvement in local and regional roads. Progress on regular technical audits of the Agency of State Roads was limited - the first audits are not yet complete, and no progress has been made in reducing freight train processing time at border stations on Corridor X. 36. Achievements with respect to highways and roads construction/improvement and ASR capacity development are directly attributable to Bank support via the Regional and Local Road and Trade and Transport Facilitation in Southeast Europe (TTFSE) 2 projects, which are funding these specific activities . The Bank is pursuing improvements in railway performance via TTFSE 2 and Railway Reform projects. 37. Improve the efficiency and sustainability of the energy sector . Specific benchmarks to be achieved during the CPS period in this area included: (a) the adoption of a sound medium term energy strategy ; (b) introduction of a regulatory and incentive framework for renewable energy; (c) construction of at least 10 MW of new renewable energy capacity by the end of the strategy period; (d) implementation of at least 5 energy efficiency projects; and (e) satisfactory assessment of Macedonia's performance by the 2009 Energy Community of South East Europe (ECSEE) report. Good progress was made on adoption of an energy strategy, a regulatory and incentive framework for renewable energy, and overall performance of the sector as assessed by ECSEE. Bank support in these areas was provided via the Energy Policy Dialogue and the regional ECSEE Adaptable Program Loan (APL) 3. No progress, on the other hand, was made on energy efficiency and renewable energy generating capacity benchmarks, reflecting serious problems in the implementation of the Bank's principal instrument for these objectives - the GEF-funded Sustainable Energy project. 38. IFC supported the country's only electricity distribution utility company in its post-privatization turn-around efforts to enhance operating efficiency by reducing energy losses and increasing bill collection rates. The initial develo ment outcomes of this investment were ositive with the client 9 IEG CPSCR Review Independent Evaluation Group company reducing the system losses from 22 percent in 2007 to 16 percent in 2009 and increasing the bill collection rate from 60 percent at privatization to 89 percent in 2009. However, these results need to be sustained and depend on the company's ability to cope with several external factors, such as regulatory changes and legacy debt issues. Recently, IFC signed an infrastructure advisory mandate with the Government to provide transaction advice for the development of the Cebren and Galiste hydro power plants ( negotiations with the sole bidder are ongoing). 39. Improve local services and infrastructure in selected municipalities . Specific benchmarks targeted to be achieved during the CPS period included: (a) the implementation of the First Municipal Infrastructure and Services Improvement projects financed through Government on-lending launched (by December 2009); and (b) the development of a national strategy to strengthen communal services enterprises in place (by December 2009) . Some progress was made with respect to implementation of municipal services improvement projects. The contract for one project had been negotiated and signed by the December 2009 target date. As of June 2010, two sub-loans have been signed. Through an advisory program on recycling, IFC has been facilitating the drafting of laws on waste packaging and waste batteries, and building capacity of recycling businesses. Building on this experience, IFC's ongoing Integrated Solid Waste Management Project aims to support possible private sector participation in municipal solid waste management. 40. IEG rates the outcome of the World Bank Group's assistance under Cluster 4 as moderately satisfactory. This rating would be downgraded to moderately unsatisfactory if IEG were to take into account only those outcome indicators identified in the CPS/CPSPR results framework. The Bank's significant contribution to strengthening the intergovernmental fiscal framework for municipal development, noted in the CPSCR, and the improvement in power system efficiency and finances supported by an IFC investment justifies an upgrade of this rating to moderately satisfactory . Achievement of CPS Objectives by Cluster Clusters CASCR Rating IEG Rating Explanation I Comments Growth and Satisfactory Satisfactory Competitiveness Business Environment Satisfactory Satisfactory Human Development Moderately Moderately Satisfactory Satisfactorv Infrastructure Moderately Moderately Satisfactory Satisfactory Comments on Bank Group Performance: 41. The CPS strategy, as originally propounded and as updated at the CPSPR stage, was highly relevant and realistic in 2007, and remains so today . While IEG agrees with the CPSCR observation that the FY 2007-2010 program was somewhat unfocussed, IEG also concurs that this was an appropriate Bank response to the client's past performance and its over-arching objective to move as quickly as possible to EU and NATO membership. The CPSPR was unusually informative, to a large extent as a result of the creative use of the LEADS (a system for assessing progress toward goals as "L - little or no progress", "E - elements exist/being considered", "A - action being taken" , "D-largely developed, or "S - substantially in place") as a framework for assessing progress, and constructive - in its effort to bring a bit more strategic coherence into the Bank's program. 42. The weakest aspect of Bank Group performance is the results framework for the CPS period, both as originally formulated and as revised at the PR stage. The indicator framework relies heavily on project implementation milestones, with few indicators related to assessing the degree of achievement of the CPS outcomes targeted by Bank assistance, and without bringing on board 10 IEG CPSCR Review Independent Evaluation Group expected IFC results. The CPSCR is informative, presenting some very useful data on, e.g., improvements in various dimensions of court performance, achievements of measures to reform intergovernmental finances, which could and should have been incorporated into the CPS/CPSPR results framework. 43. Appraisal, supervision, and AAA operations carried out within the strategy, appear to have been well-coordinated and, although not extensively evaluated, well within Bank quality norms. Investment and TA lending operations, because of their broad, multi-component scope, have tended to be complex - as reflected in observations made in several supervision reports, contributing to some implementation difficulty, which emerged clearly in trends in the last two years of the CPS period. 44. The Bank also appears to have been a constructive participant in FYR Macedonia's broader development partnership, working productively with the EU and with several of FYR Macedonia's bilateral development partners both on individual projects as well as broader aid coordination, donor harmonization, and country process issues. As noted above, however, within-Bank-Group coordination between the Bank and IFC might have been improved, as exemplified by lack of coordination of work in the business environment area in the earlv part of the CPS period. 4. Overall IEG Assessment Outcome: Moderately Satisfactory Bank Performance: Moderately Satisfactory IFC Performance: Moderately Satisfactory 45. This review rates outcomes with regard to growth and competitive and business environment at just above the threshold required to warrant a rating of Satisfactory, while both human development and infrastructure are rated at the middle of the moderately satisfactory range. Accordingly, an overall outcome rating of moderately satisfactory is warranted. 46. Bank performance is rated as moderately satisfactory. The Bank coordinated well with IFC. The main areas in which Bank performance could have been better was in the design and implementation of the results framework for the CPS and in exploiting synergies between IBRD and IFC both in the obvious growth and competitiveness and business environment areas, but also in promoting public private partnerships in human development and infrastructure. On the Bank side, there is also some evidence in supervision reports that design complexity of some nonpolicy-based lending operations is contributing to implementation problems - particularly recently - and that designs could and should have been simplified . The CPSCR also cites some Government factors - e.g., weak capacity of Government institutions in charge of underachieving projects, poor managerial practices - changes of project management teams, and lack of coordination among key players involved in project implementation - as possible contributing factors. 47. IFC performance is rated as moderately satisfactory . IFC's stated strategy in FYR Macedonia over the review period was comprehensive, indicating active participation of IFC in the formulation of the CPS. However, IFC's objectives were not well integrated in the results framework . As indicated above, IFC should have also made greater efforts to foresee synergies with the Bank's objectives in the country. On the implementation side, IFC has made a complex post-privatization investment in the energy distribution company and is currently providing transaction advice to the government on a PPP in energy generation. IFC has also made positive efforts to help improve the business environment and enhance competitiveness through advisory work in corporate governance, alternative dispute resolution, and international technical standards, which have not yet achieved full potential. 11 IEG CPSCR Review Independent Evaluation Group 5. Assessment of CPS Completion Report 48. The CPSCR provides a good discussion. of what was achieved with the Bank Group support over the CPS period. It is particularly strong on the contributions of individual Bank lending operations . It does not, however, contain as much about the contribution of the Bank's AAA to program outcomes. Statements in some places seem a bit more positive than is justified by the evidence presented. The discussion on results of IFC's investment and advisory projects both in terms of outputs and outcomes was comprehensive : however, no explanation was provided on anticipated projects that did not materialize (e.g., gas distribution, education) . 49. It's most serious shortcoming derives, however, from the inadequacy of the CPS results framework . The most serious defect in this regard is the relative lack of indicators of Bank program outcome achievement, and a lack of integration of IFC's objectives into the results framework . A strong feature of the CPSCR document is its effort to provide such evidence via additional indicators where available, even though not contemplated in the formal results framework . Many of these (e.g., the data on court performance, BEEPs data, data on achievements in streamlining Macedonia's system of intergovernmental finances and decentralization) would have been excellent choices for the results framework . 6. Findings and Lessons 50. IEG concurs broadly with the lessons drawn in the CPSCR, but would underscore three for special attention during implementation of the forthcoming CPS. 51. IEG underscores the CPSCR finding, which is reflected in the design of the new CPS, for greater selectivity going forward. FYR Macedonia is now at the threshold of EU accession, with many challenges that were unresolved in 2007 now addressed and good progress made in improving modalities for development partnership . Because the EU Accession agenda is now considerably narrowed, it should be easier for the Bank Group to move to a more focused support strategy, quite possibly one with an increasing knowledge focus and decreasing finance focus on the IBRD side, and with greater investment opportunity in prospect for IFC. Greater selectivity and a shifting emphasis toward knowledge products would both imply more budget resources (Bank and trust fund) on the IBRD side for Lending Development and AAA type activities. This is because selectivity and advice and assistance in a focused environment require in-depth analysis, which is costly. This program architecture - particularly one heavily weighted to the knowledge side - has proven difficult to sustain under the IBRD's administrative budget allocation systems , which needs to be kept in mind to ensure a balance between administrative resources made available for the country program and the nature of country program objectives and instruments . 52. IEG also underscores the CPSCR 's finding concerning the need for better intra-Bank Group coordination and exploitation of latent synergies. The new CPS identifies a number of areas for IBRD-IFC cooperation. In addition to the instruments ihdentified in the CPS for promotion of better integration (e.g., by involving Bank staff in the concept phases of IFC advisory services, and supporting Bank-IFC consultations on key knowledge and analytical activities), the design of the results framework for the strategy as it emerges during implementation preferably should explicitly reflect inputs, outputs and outcomes of both IBRD and IFC activities in an integrated results-based matrix framework . 53. As recognized in the CPSCR, it will be important to elaborate a results framework for the new .CPS with monitorable outcome indicators, as distinguished from benchmarks and indicators related to outputs. As noted above, this framework preferably should encompass both IBRD and IFC activities, and be updated frequently as a basis for continuing efforts to keep performance on track . This will allow the World Bank Group to respond flexibly to FYR Macedonia's evolving needs, particularly on the IFC side where investment activity is private-sector demand-driven . Annexes IEG CPSCR Review Independent Evaluation Group ANNEXES Annex Table 1: Planned and Actual Lending, FY07-10 Annex Table 2: Planned and Actual Analytical and Advisory Work, FY07-10 Annex Table 3a: IEG Project Ratings for Macedonia, FY07-10 Annex Table 3b: IEG Project Ratings for Macedonia and Comparators, FY07-10 Annex Table 4: Portfolio Status for FYR Macedonia and Comparators, FY07-10 Annex Table 5: IBRD/IDA Net Disbursements and Charges Summary Report for FYR Macedonia Annex Table 6: FYR Macedonia--otal Net Disbursements of Official Development Assistance and Official Aid, FY05-08 (in US$ million) Annex Table 7: Economic and Social Indicators for FYR Macedonia and Comparators, FY05-08 Annex Table 8: FYR Macedonia - Millennium Development Goals Annex Table 9: List ofIFC's investments in Macedonia that were active during FY07- FY10 (US$'000) Annex Table 10: List ofIFC's Advisory Services in Macedonia, FY07-FY10 (US$) Annex Table 11: Macedonia - Doing Business Rank 2010 Annex Table 12: Macedonia -Country Risk Rating Annex Table 13: Summary of Achievements of the FYR Macedonia CPS Objectives IEG CPSCR Review Independent Evaluation Group Annexes Annex Table 1:Planned and Actual Lending, FY07-10 Proposed Approval Proposed Approved FY FY Amount Amount Programmed projects TTFSE 2 2007 2007 20.0 20.0 PDPL 2 2007 2007 30.0 30.0 Agriculture Strengthening and Accession Project 2007 2007 20.0 20.0 PDPL 3 2008 2008 25.0 25.0 Conditional Cash Transfers Project 2008 2009 25.0 25.0 Urban Development 2009 Dropped 25.0 Transport (Regional and Local Roads) 2009 2008 25.0 105.2 Energy project (gas, electricity) 2009 Dropped 30.0 Macedonia DPL 1 2009 2010 20.0 30.0 Additional Financing: Railways Reform 2010 Dropped 15.0 Total Proarammed oroiects CPS FY07-10 235.0 255.2 Non-programmed projects Municipal Development 2009 25.0 Additional Financing-Real Estate Cadastre & Registration project 2010 12.1 Total projects CPS FY07-10 235.0 292.3 Source: FYR Macedonia FY07-10 CPSICASPR and WB Business Warehouse Table 2a. 1, 2a.4 and 2a. 7 as of July 9,2010 I I EG · CPSCR Review Independent Evaluation Group Annexes Annex Table 2: Planned and Actual Analytical and Advisory Work, FY07-10 Proposed Delivered to FY Output Type Client FY Planned (CPS FY07-10) MK PEIR Update FY07 FY07 Report Programmatic Poverty Assessment FY07 FY09 Report CFAA - CPAR Update FY07 FY08 Report Macro Monitoring FY0?-10 Dropped Agriculture & EU Accession FY07 Dropped Urban & Municipal Development Study FY07 FY07 Policy Note Competitivess Study FY07 Dropped FSAP Update FY08 FY08 Report Employment Study FY08 FY08 Report Country Economic Memorandum FY09 FY09 Report Trade Logistics Policy Note FY09 Dropped Non-planned Programmatic Poverty Work FY08 Report Policy Response to the World Crisis FY09 Policy Note Planned (CPS FY07-10) REPARIS Supervision FY0?-10 FY08 Institutional Development Plan ENERGY POLICY NOTE FY09 FY10 Client Document Review National Energy Strategy Support FY09 FY09 Employment I Labpr Market Follow up FY09 FY09 "How-To" Guidance National Water Strategy Support FY10 FY10 Non-planned Promoting Carbon Finance in Macedonia FY07 FY07 Knowledge-Sharing Forum Source: FYR Macedonia FYOl- 10 CPSICASPR and WB Business Warehouse Table ESWITA 8.1.4 as of July 9, 2010. IEG CPSCR Review Independent Evaluation Group Annexes Annex Table 3a: IEG Project Ratings for Macedonia, FY07-10 Total IEG Risk to Exit FY Project Name Evaluated IEG Outcome Development (US$M) Outcome * MODERATELY 2007 IRRIG REHAB 12.4 SATISFACTORY SIGNIFICANT MODERATELY 2007 CHILD/YOUTH DEVT LIL 2.6 SATISFACTORY MODERATE 2008 PDPL 2 34.1 SATISFACTORY MODERATE 2009 PDPL 3 0.0 SATISFACTORY MODERATE Source: WB Business Warehouse Table 4a.5 and 4a.6 as of as of July 9, 2010 * With IEG new methodology for evaluating projects, institutional development impact and sustainability are no longer rated separately . Annex Table 3b: IEG Project Ratings for Macedonia and Comparators, FY07-10 Total RDO % RDO % Region Total Evaluated Outcome Outcome Evaluated ($M) % Sat ($) Moderate or Moderate % Sat (No) (No) or Lower ($) * Lower (No) * FYR Macedonia 49.1 4 100.0 100 74.8 75 Albania 93.2 5 90.5 80 10.9 20 Bosnia & Herzegovina 153.9 8 83.5 57 93.1 86 Bulgaria 102.2 3 100.0 100 100.0 100 Romania 326.6 11 100.0 100 84.9 80 ECA 6,389.4 135 88.0 84.8 74.3 69.5 World Bank 36,377.0 585 83.7 76 69.6 63 Source: WB Business Warehouse Table 4a.5 and 4a.6 as of as of July 9, 2010 * With IEG new methodology for evaluating projects, institutional development impact and sustainability are no longer rated separately . Annexes IEG CPSCR Review Independent Evaluation Group Annex Table 4: Portfolio Status for FYR Macedonia and Comparators, FY07-10 Fiscal year FY07 FYOS FY09 FY10 Macedonia # Proj 12 13 14 14 # Proj At Risk 0 0 2 3 % At Risk 0.0 0.0 14.3 21.4 Net Comm Amt 182.4 282.6 307.6 319.7 Comm At Risk 0.0 0.0 25.5 41.8 % Commit at Risk 0.0 0.0 8.3 13.1 Albania # Proj 18 18 17 14 # Proj At Risk 2 3 3 6 % At Risk 11.1 16.7 17.6 42.9 Net Comm Amt 271 .5 310.5 300.5 265.6 Comm At Risk 17.0 59.9 61.6 120.4 %·Commit at Risk 6.3 19.3 20.5 45.3 Bosnia # Proj 16 14 13 15 # Proj At Risk 1 1 1 2 % At Risk 6.3 7.1 7.7 13.3 Net Comm Amt 300.9 243.4 261.4 434.4 Comm At Risk 10.0 10.0 36.0 29.9 % Commit at Risk 3.3 4.1 13.8 6.9 Bulgaria # Proj 9 8 5 4 # Proj At Risk 0 0 0 2 % At Risk 0.0 0.0 0.0 50.0 Net Comm Amt 418.0 383.8 313.5 353.0 Comm At Risk 0.0 0.0 0.0 181.5 % Commit at Risk 0.0 0.0 0.0 51.4 Romania # Proj 21 20 16 12 # Proj At Risk 3 3 6 5 % At Risk 14.3 15.0 37.5 41.7 Net Comm Amt 1759.8 1768.4 1548.0 1032.6 Comm At Risk 462.0 217.7 556.4 330.3 % Commit at Risk 26.3 12.3 35.9 32.0 Region # Proj 306 303 287 . 274 # Proj At Risk 27 38 52 50 % At Risk 8.8 12.5 18.1 18.2 Net Comm Amt 16687.4 17966.1 21383.2 24293.1 Comm At Risk 1680.9 2257.0 3460.2 4360.3 % Commit at Risk 10.1 12.6 16.2 17.9 Source: WB Business Warehouse Table 3a.4 as of July 9, 2010 IEG CPSCR Review Independent Evaluation Group Annexes Annex Table 5: IBRD/IDA Net Disbu rsements and Charges Summary Report for FYR Macedonia {in US$ million} Disb. Repay Net FY Net Amt. Charges Fees Amt. Amt. Transfer FY2007 15.8 140.1 -124.2 14.6 1.0 -139.9 FY2008 64.6 13.2 51.4 8.6 1.8 41.0 FY2009 49.3 14.1 35.2 10.3 3.4 21.4 FY2010 68.5 18.1 50.4 4.2 3.3 42.9 FY07-10 198.2 185.4 12.8 37.7 9.6 -34.5 Source: WB Loan Kiosk, Net Disbursement and Charges Report as of July 9, 2010 IEG CPSCR Review Independent Evaluation Group Annexes Annex Table 6: FYR Macedonia--otal Net Disbu rsements of Official Development Assistance and Official Aid, FY05-08 (in US$ million) Year 2005 2006 2007 2008 Donor All Donors, Total 227.16 205.19 200.86 220.54 DAC Countries, Total 165.41 131.03 134.05 140.98 Multilateral Agencies, Total 54.57 68.48 56.22 65.35 Non-DAC Countries, Total 7. 18 5.68 10.59 14.21 G7, Total 92.48 77.01 82.84 84.46 DAC EU Members, Total 88.38 63.88 66.65 72.57 Austria 4.42 4.64 8 3.86 Belgium 0.36 0.11 0.14 0.2 Canada 0.29 0.09 0.24 " Denmark 0.22 0.18 0.39 .. Finland 0.4 0.3 0.09 0.2 France 3 3.31 3.48 3.75 Germany 28.89 17.21 18.42 24.77 Greece 3.69 1.68 2.06 1.51 Ireland 0.01 0.02 " 0.14 Italy 2.59 7.16 7.34 0.33 Japan 11.27 9.46 20.18 21.39 Luxembourg 0.25 0.07 0.34 0.1 Netherlands 29.7 11.37 8.98 20.17 Norway 12.54 12.42 9.42 6.09 Portugal 0.06 0.01 Spain 0.85 3.82 1.38 4.07 Sweden 11.16 13.38 14.1 11.32 Switzerland 9.27 6.03 6.31 8.85 United Kingdom 2.78 0.63 1.93 2.14 United States 43.66 39.15 31.25 32.08 EC 47 .62 58.71 63.23 61.57 Czech Republic 0.35 0.21 0.34 0.39 Hungary 0.02 0.12 0.01 . Iceland 0.22 .. Poland 0.06 0.06 0.22 0.2 Slovak Republic 0.17 0.17 0.04 0.39 Turkey 6.57 5.17 9.18 9.86 Arab Countries Other Donor Countries, Total 0.03 0.05 0.47 3.36 EBRO 1.28 0.26 0.21 0.08 GEF 5.85 1.1 Global Fund 0.62 3.25 2.13 . 3.17 IAEA 0.66 0.4 0.95 IBRD IDA 5.64 1.78 -4.64 -5.85 IDB Spec. Fund IFAD 3.16 2.75 0.68 .. IFC IMF Trust Fund IMF (SAF,ESAF,PRGF) -8.06 -8.53 -10.45 .. UNAIDS 0.08 0.09 0.03 0.04 UNDP 1.24 1.24 0.95 0.83 UNFPA 0 0.13 0.16 UNHCR 1 0.82 2.03 1.68 UNICEF 1.07 0.56 0.81 0.66 UNRWA UNTA 0.92 1.04 0.71 0.96 WFP data extracted on 09 Jul 2010 13:45 UTC (GMT) from OECD.Stat IEG CPSCR Review Independent Evaluation Group Annexes A nnex Table 7 : Econom1c an d Soc1 . cators fior FYR M acedoma an d Compara tors, FYOS -08 . aIIn d1 FYR Macedoni a Fc Ma YR .e do I Albania I BHoseneiago& I 8u1 an· 1 Romania I ECureonprea& l I World Series Name ma vma Asia FY05 FY06 FY07 FYOS FY09 Average FYOS-08 Growth and Inflation - GDP growth (annual %) 4.1 4.0 5.9 5.0 .. 4.7 5.6 5.9 6.3 6.9 6.3 3.2 GDP per capita growth (annual%) 3.9 3.8 5.8 4.9 4.6 5.2 5.9 6.8 7.1 6.2 2.0 GNI per capita, PPP (current international$) 7120.0 7720.0 8490.0 9250.0 .. 8145.0 6662.5 7142.5 9862.5 10860.0 10565.0 9608.2 GNI per capita, AUas method (current US$) 2840.0 3110.0 3470.0 4130.0 .. 3387.5 3202.5 3665.0 4335.0 5875.0 5563.0 7829.8 Inflation, consumer prices (annual %) 0.2 3.3 3.6 7.2 .. 3.6 2.8 .. 8.3 7.1 .. .. Comosition of GDP {%} - Agriculture, value added (% of GDP) 12.8 12.6 11.0 10.9 .. 11.8 21.7 10.0 7.9 9.1 7.3 3.0 Industry,value added (% of GDP) 29.6 30.1 32.6 34.0 .. 31.6 20.3 26.4 30.8 33.2 33.2 27.9 Services, etc., value added (% of GDP) 57.6 57.3 56.4 55.1 .. 56.6 58.0 63.6 61.3 57.6 59.5 69.0 Gross fixed capital formation (% of GDP) 17.0 18.2 20.2 23.9 .. 19.8 27.8 22.1 28.3 26.6 21.7 21.6 Gross domestic savings (% of GDP) 3.5 3.3 5.4 1.7 .. 3.5 1.9 -12.2 13.8 16.2 23.7 22.1 External Accounts - Exports of goods and services (% of GDP) 45.5 48.1 53.4 52.6 .. 49.9 26.7 36.3 62.2 30.8 34.4 28.1 Imports of goods and services (% of GDP) 62.8 66.8 72.3 78.6 .. 70.1 52.6 71.0 82.1 41.3 34.2 28.2 Current account balance (% of GDP) -2.7 -0.9 -3.1 -12.7 .. -4.9 -10.1 -12.6 -20.4 -11.1 .. .. External debt stocks (% of GNI) 52.1 51.8 54.5 49.6 .. 52.0 24.2 53.2 72.9 47.5 38.1 .. Total debt service (% of GNI) 4.8 8.9 9.1 5.1 .. 6.9 1.3 2.6 11.2 7.6 7.5 .. Total reserves in months of imports 4.2 5.1 4.5 3.2 .. 4.3 4.3 4.1 5.0 5.5 9.3 10.0 Fiscal Accounts 11 - Revenue and Grants (% of GDP) 35.2 32.9 34.3 33.5 31.4 33.5 Total Expenditure (and net lending, % of GDP) 35.3 33.4 33.7 34.5 34.3 34.2 Central Government Balance(% of GDP) 0.3 -0.5 0.6 -1.0 -2.8 -0.7 Public Sector Gross Debt (% of GDP) 39.5 35.4 26.1 24.5 27.3 30.6 Social Indicators Health - Life expectancy at birth, total (years) 73.8 73.9 74.1 74.2 .. 74.0 76.4 74.9 72.9 72.8 69.5 68.6 Immunization , DPT (% of children ages 12-23 months) 97.0 93.0 95.0 95.0 .. 95.0 98.0 91.5 95.3 .. 95.3 80.9 Improved sanitation facilities (% of population with access) .. 89.0 .. .. 89.0 97.0 95.0 99.0 72.0 88.7 60.0 Improved water source (% of population with access) .. 100.0 .. .. .. 100.0 97.0 99.0 99.0 88.0 95.0 86.2 Mortality rate, infant (per 1,000 live births) 12.6 11.8 11.1 10.5 .. 11.5 13.8 13.0 9.9 13.1 21.0 47.5 Population Population, total (in million) 2.0 2.0 2.0 2.0 2.0 3.1 3.8 7.7 21.6 441.8 6,582 Population growth (annual%) 0.2 0.1 0.1 0.1 .. 0.1 0.36 -0.06 -0.51 .20 0.16 1.2 Urban population (% of total) 65.4 65.9 66.4 66.9 66.2 45.76 46.57 70.65 53.97 63.60 49.3 Education School enrollment, preprimary (% gross) 32.4 34.7 38.5 .. .. 35.2 .. 11.0 81.4 72.7 52.3 43.2 School enrollment , primary (% gross) 95.9 93.9 92.8 .. .. 94.2 .. 111.0' 100.9 105.0 98.2 105.5 School enrollment, secondarv (% arossl 84.2 .. 84.2 .. 84.2 .. 89.1 104.9 86.3 88.7 1/ IMF. FYR Macedonia: Article IV 2009 & 2010 Source: WB World Development Indicators (July, 2010) for all indicators excluding those noted. Annexes IEG CPSCR Review Independent Evaluation Group Annex Table 8: FYR Macedonia - Millennium Develo ment Goals 1990 1995 2000 2009 Goal 1:Eradicate extreme poverty and hunger Employment to population ratio, 15+, total (%) 37 36 35 35 Employment to population ratio, ages 15-24, total(%) 17 19 16 13 Income share held by lowest 20% 6.7 Malnutrition prevalence, weight for age (% of children under 5) 1.9 Poverty headcount ratio at national poverty line (% of population) .. 1 Prevalence of undernourishment (% of population) 3 Vulnerable employment, total (% of total employment) 5 5 5 Goal 2: Achieve universal primary education 21 22 Literacy rate, youth female (% of females ages 15-24) Literacy rate, youth male (% of males ages 15-24) 99 98 99 Persistence to last grade of primary, total (% of cohort) 99 99 99 Primary completion rate, total(% of relevant age group) 97 Total enrollment, primary (% net) 97 100 92 Goal 3: Promote gender !QUal and empower women 98 92 Proportion of seats held by women in national parliament (%) Ratio of female to male enrollments in tertiary education 3 8 28 Ratio of female to male primary enrollment 100 99 100 Ratio of female to male secondary enrollment 97 98 Ratio of young literate females to males (% ages 15-24) 128 127 Share of women employed in the nonagricultural sector (% of total nonagricultural employment) 38.3 38.5 41.6 42.4 Goal 4: Reduce child mortal Immunization, measles (% of children ages 12-23 months) 97 97 98 Mortality rate, infant (per 1,000 live births) 32 23 17 10 Mortality rate, under-5 (per 1,000) 36 26 19 11 Goal 5: Improve maternal health Adolescent fertility rate (births per 1,000 women ages 15-19) 30 20 Births attended by skilled health staff (% of total) Contraceptive prevalence (% of women ages 15-49) Maternal mortality ratio (modeled estimate, per 100,000 live births) Pregnant women receiving prenatal care (%) 100 81 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) 81 58 41 24 Prevalence of HIV, female (% ages 15-24) Prevalence of HIV, total(% of population ages 15-49) Tuberculosis cases detected under DOTS (%) 0.1 Goal 7: Ensure environmental sustainability 72 52 98 Annual freshwater withdrawals, total (% of internal resources) C02 emissions (kg per PPP $ of GDP) 1.1 1.1 1 C02 emissions (metric tons per capita) 5.6 5.5 6 Forest area (% of land area) 36 36 36 36 Improved sanitation facilities (% of population with access) 88 Improved water source (% of population with access) 100 Marine protected areas, (% of surface area) Nationally protected areas (% of total land area) Goal 8: Develop a global partnership for development Aid per capita (current US$) 4 5 3 Debt service (PPG and IMF only, % of exports of G&S, excl. workers' remittances) 0 0 2.5 41.5 Internet users (per 100 people) 0 0 6 123 Mobile phone subscribers (per 100 people) 40 125 108 Telephone mainlines (per 100 people) 15 18 25 22 Other Fertility rate, total (births per woman) 2.1 1.9 1.7 1.4 GNI per capita, Atlas method (current US$) 1650 1710 1840 4130 GNI, Atlas method (current US$) (billions) 3.2 3.4 3.7 8.4 Gross capital formation (% of GDP) 18.7 20.8 22.3 27.7 Life expectancy at birth, total (years) 71 72 73 74 Literacy rate, adult total(% of people ages 15 and above) 94 96 97 Population,total (millions) 1.9 2 2 2 Trade (% of GDP) 61.7 75.8 112.2 131.1 Source: World Development Indicators database as of July, 2010. IEG CPSCR Review · Independent Evaluation Group Annexes Annex Table 9: List ofIFC's investments in Macedonia that were active du ring FY07-FY10 (US$'000) Greenfield Project Short Closure Project IFC Sector Project Total Net Project ID Approval FY I Existing Net Loans Net Equity Name FY Status Group Size Commitment loroiect Investments approved in the pre-CPS period,but active during the CAS period: 008173 SEF Masinomont 1997 Active Industrial E 1,746 802 0 802 007488 Stopanska Banka 1998 Active Finance G 70,000 428 5,349 5,776 008972 Macedonia Teleco 1998 Active Infrastructure E 75,000 25,000 0 25,000 009378 SEAF Macedonia 1999 Active Funds G 12,500 0 1,780 1,780 010050 Stooanska BankaB 2000 Active Finance E 30,000 0 4,097 4,097 010123 Komerciialna 2001 2007 Closed Finance G 5,000 3,059 0 3,059 010963 Stooanska RI 2001 Active Finance E 5,000 0 474 474 010627 Teteks 2 2002 2009 Closed Textiles E 10,400 5,165 0 5,165 011668 Stooanska RI II 2003 Active Finance E 17,000 0 1,718 1,718 011692 MFB Macedonia 2003 2008 Closed Finance G 5,000 0 1,019 1,019 Subtotal 231,646 34,453 14,437 48,889 Investments approved in the CPS period: 026093 ESM Macedonia 2008 Active Infrastructure G 173,655 55,326 0 55,326 029104 Tutunska BK Loan 2010 Active Finance G 35,995 33,966 0 33,966 Subtotal 209,650 89 293 0 89,293 Grand Total 441,296 123,745 14 437 138,182 Source: IFC , May 2010 Note : The list does not cover the regional projects. Annexes IEG CPSCR Review Independent Evaluation Group Annex Table 10: List ofIFC's Advisory Services in Macedonia, FY07-FY10 (US$) Project Project Start End Project Primary Total ID Name FY FY Status Business Line Funding AS ooerations aooroved in the ore-CPS oeriod but active durina the CPS oeriod: Corporate Governance Project in FYR 541343 Macedonia 2006 2009 Closed Corporate Advice 694,980 543066 Int Tech StdReoMK 2006 2009 Closed Corporate Advice 392,500 Environment and Social 543085 Recvclina PEP SE Macedonia 2006 2009 Closed Sustainability 530,500 543428 ADR PEPSE MK 2006 2009 Closed Investment Climate 563,350 Subtotal 2,181,330 AS operations aooroved in the CPS period: 555365 Macedonia FYR Reoulatorv Reform 2007 2009 Closed Investment Climate 75,000 563667 ADR Macedonia Phase II 2009 2011 Active Investment Climate 412,000 Integrated Solid Waste Management- 564809 Macedonia 2009 2011 Active Infrastructure 535,541 565427 ISTR MK Extension 2009 2011 Active Coroorate Advice 292,049 567047 CoroGovMAC-11 2009 2011 Active Corporate Advice 347,600 29202 Macedonia HPP 2010 2011 Active Infrastructure 543,807 Subtotal 2,205,997 Grand Total 4,387,327 Source: IFC TAAS as of April 20 I 0 Annexes IEG CPSCR Review Independent Evaluation Group Annex Table 11: Macedonia - Doing Business Rank 2010 Macedonia Macedonia Bosnia and Rank by 2010 2009 Albania Moldova Herzegovina Ease of Doino Business 32 69 82 94 116 Starting a Business 6 13 46 77 160 Dealing with Construction Permits 137 151 173 161 136 Employing Workers 58 122 105 141 111 Registering Property 63 88 70 17 139 Getting Credit 43 41 15 87 61 Protecting Investors 20 88 15 109 93 Paying Taxes 26 28 138 101 128 Trading Across Borders 62 63 66 140 63 Enforcing Contracts 64 62 91 22 124 Closing a Business 115 131 183 90 63 Source: Doing Business Report 2010 Note : A high ranking on the ease of doing business index means the regulatory environment is conducive to the operation of business . Annex Table 12: Macedonia - Country Risk Rating Country/ Region 2003 2004 2005 2006 2007 2008 2009 Macedonia 23.7 26.8 31.0 37.5 40.7 45.2 43.0 Albania 16.4 21.3 24.7 25.3 32.2 34.5 35.9 Bosnia & Herzegovina 26.0 25.2 27.5 28.6 30.7 32.9 31.6 Moldova 18.1 20.0 17.5 21.1 21.9 24.8 24.9 S. Europe Central Asia 27.2 30.4 33.6 36:1 38.7 40.9 39.0 Source: Institutional Investor Country Credit Risk, September 2009 Note: 30 or less: High risk ; 45 or above: Low risk Annexes IEG CPSCR Review Independent Evaluation Group Annex Tabl e 13:Summarv of Ach1 . evements of th e FYR Macedom.a CPS Ob1.1ectives CPS FY07-10: Cluster 1 Growth & Comoetitiveness Target Outcome Indicators Actual Results Comments (as of July 2010) Major Outcome Cluster 1: Growth & Comoetitiveness /Intermediate 1. Labor Market: Increase flexibili t of labor Outcome market and decrease tax wedae Measures Revision of labor laws to introduce greater The revised labor law promulgated in Good Progress flexibility in labor contracts 2008 introduced greater flexibility in labor contracts Reduce the wedge created by the labor tax The labor tax wedge was reduced to Good Progress between the amount paid by the firms and 32 percent (30 percent) of gross wage what workers receive from a 2006 baseline for average (50 percent of average) of 34.5 percent of gross wage for average wage earner, including fringe benefits. workers and from 42 percent of gross wage for workers earning 50 percent of the average wage (including fringe benefits) 2. Land Administration Sstem: Establish efficient land administration svstem 90 percent of real estate cadastre Real estate cadastre established in 98 Good Progress established (bv 2009) oercent of the countrv 90 percent of cadastre offices have 3-0ay 90 percent of offices in the country Some Progress sale registration times have reduced the time to register a sale transaction to 5 days or less Four land policy studies were adopted: (i) Achieved Good Progress access to land for investments; (ii) security of land tenure; (iii) land market; and (iv) state land management (pilot project Strumica). 3. Agricultural Ca[laci!}'.:lm[lrove i nstitutional ca[lacit of !!Qriculture sector [1ublic institutions in line with EU accession reauirements Ministry of Agriculture is able to disburse In 2009, the European Commission Good Progress and track use of all Government subsidies conferred the right to manage the and rural development funds through funds from the EU Instrument for Pre- Instrument for Pre-Accession for Rural Accession Assistance in the area of the Development (IPARD)-compatible payment rural development {IPA Fifth agency {by July 2010) Component -IPARD) to the Macedonian operative structure assigned for IPARD All seven water economies (districts) initiate Four water economies (districts) have Some Progress collection of water user fees (by December started with collection of water user 2009) fees before Dec 2009, one has started at the beginning of 2010, and two have not started vet. Ongoing pre Business Environment Reform and Approved FY05. Active. Latest PDO rating: CPS FY07-10 Institutional Strengthening project (BERIS) Moderately Support (P079552) Unsatisfactory (3/31/2010) . Real Estate Cadastre and Registration Approved FY05. Active . Latest PDO rating: Project (P083126) Highly Satisfactory (6/20/2010). Programmatic Development Policy Loan Approved FY06.Closed IEG Outcome Rating- (P090303) Satisfactorv 25 IEG CPSCR Review Independent Evaluation Group CPS FY07-10: Cluster 1 Growth & Comoetitiveness Target Outcome Indicators Actual Results Comments (as of July 2010) New Lending Agriculture Strengthening and Accession Approved FY07. Active Latest PDO rating: Support Project Satisfactory (03/25/2010) . Second Programmatic Development Policy Approved FY07. Closed IEG Outcome Rating- Loan Satisfactory Third Programmatic Development Policy Approved FY08. Closed IEG Outcome Rating- Loan Satisfactory Additional Financing-Real Estate Cadastre & Approved FY10. Active Latest PDO rating: Registration project Highly Satisfactory (6/20/2010) . (From the Mother project) Planned AAA World Bank Analytic and Advisory Services: Emplovment Studv Delivered FY08. Employment I Labor Market TA Delivered FY09. Country Economic Memorandum Delivered FY09. FSAP Update Delivered FY08. Country Fiduciary Assessment . Delivered FY08. Public Expenditure Review Update Delivered FY07. Road to Europe- Program of Accounting Delivered FY07. Reform and Institutional Strengthening (REPARIS) Land Policy Note Dropped IDF Public Accountina Delivered FY08. IFC Advisorv Services: International technical standards Phase I Delivered FY06-09. Project Completion Report (PCR) Development Effectiveness (DE) rating: Successful International technical standards Phase II Active 26 IEG CPSCR Review Independent Evaluation Group CPS FY07-10: Cluster 2 Business Environment Target Outcome Indicators Actual Results Comments (as of June 201Ol Major Cluster 2: Business Environment Outcome 1. Rulato[Y Reform: Reduce the burden of /Intermediate reaulation on businesses Outcome Regulatory Impact Assessment is Regulatory Impact Assessment is Good Progress Measures systematically used for all new legislation systematically used for all new legislation considered by the Government (except legislation proposed under urgent procedure) after January 1, 2009 Improve business environment as measured Time required to start a business fell from Good Progress by WB Doing Business report 18 days in 2007 to 4 days in 2010 Number of procedures needed to start a Source- Doing Business business fell from 10 days in 2007 to 4 website days in 2010 Regulations eliminated or amended by the In the first round of the guillotine, the Some Progress regulatory guillotine; first round of guillotine is Government identified 64 Laws and 481 fully implemented (64 laws and 481 bylaws by-laws which were supposed to be eliminated or amended} , and at least one · amended or eliminated , which it then more round initiated by December 2009 translated into 5 packages of measures . By September 2009, the Parliamentary procedure for amending 39 of the 64 laws was completed. At the same time, 382 of 481 by-laws had been abolished or amended through Ministerial decrees. The second phase of the "guillotine" is underway. Decrease in regulatory compliance costs According to the 2008 BEEPS, the No Progress measured by senior management time spent percentage of senior management's time on compliance with regulatory requirements spent on dealing with public Business Environment and Enterprise officials/services increased from 11 Performance Survey (BEEPS) percent in 2005 to 17 percent in 2008. Unique national electronic registry containing Unique national electronic registry Good Progress all legal acts in force is fully functional by containing all legal acts in force is fully December 2009 functional from December 2009 2. Judicial Reform : Increase efficienc:t of judicial Sl'.§tem and im12rove courthouse infrastructure 25 percent increase in client satisfaction with Delayed Unknown Progress court operations from 2007 to end-2009 as The initial Court User Survey was assessed through court users survey conducted in Sep-Oct 2009. 45.7 percent of court users were "very satisfied' or 'fairly satisfied" by the outcome of their court visit or case. The final Court Users Survey is planned towards the end of the oroiect, which is July 2011. Eight out of ten court facilities renovated (by Nine renovations complete Good Progress end 2009\ New court information system is introduced The new Automated Court Case Good Progress (by end 2009) Management Information System has been introduced.The Operations Acceptance Certificate was received on June 29. 27 IEG CPSCR Review Independent Evaluation Group CPS FY07-10: Cluster 2 Business Environment Target Outcome Indicators Actual Results Comments (as of June 20101 Ongoing i;ire Legal & Judicial Implementation & Approved FY06.Active. Latest PDO rating: CPS FY07-10 Institutional Support Project (P089859) Moderately Satisfactory Sui;ii;iort (12/01/2009) . Business Environment Reform and Approved FY05. Active . Latest PDO rating: Institutional Strengthening project (BERIS) Moderately (P079552) Unsatisfactory (3/31/2010). Programmatic Development Policy Loan Approved FY06. Closed IEG Outcome Rating- (P090303) Satisfactorv New l ending Second Programmatic Development Policy Approved FY07. Closed IEG Outcome Rating- Sui;ii;iort Loan Satisfactorv Third Programmatic Development Policy Approved FY08. Closed IEG Outcome Rating- Loan Satisfactorv IFC Tutunska Bank Loan Approved FY10. Active Latest DOTS rating: Not rated Planned AAA World Bank Analytic and Advisory Services: Employment Study Delivered FY08. Emolovment I Labor Market TA Delivered FY09. Countrv Economic Memorandum . Delivered FY09. Policy Resoonse to the World Crisis Delivered FY09. FSAP Uodate Delivered FY08. Country Fiduciary Assessment Delivered FY08. Public Expenditure Review Update Delivered FY07. REPARIS Delivered FY07. IFC Advisorv Services: Corporal Governance Phase I Delivered FY06-09. PCR DE rating: Mostly Successful Alternative Dispute Resolution Phase I Delivered FY06-09. PCR DE rating: Mostly Successful Regulatory Reforms Delivered FY0?-09. PCR DE rating: Not applicable . This was a bridge-financing operation for a follow-on program. Coroorate Governance Phase II Active Alternative Disoute Resolution Phase II Active Additional Land Policy Note Dropped AAA IDF Public Accountino Delivered FY08. 28 IEG CPSCR Review Independent Evaluation Group CPS FY07-10: Cluster 3 Human Development Target Outcome Actual Results Comments Indicators (as of June 2010) Major Outcome Cluster 3. Human Develooment /Intermediate 1. Education: lm11rove Outcome school infrastructure and Measures guali of education in basic and seconda!J'. education All 427 primary and Achieved Good Progress secondary schools have improved their basic The second round of School Improvement The secondary enrollment rate increased to 95 infrastructure, including Grants (through which the additional percent from 85 percent, and dropout rates teachings aids through infrastructure support and teacher training decreased to 1.9 percent from 2.1 percent between school grants program. was provided) was extended to 264 primary 2004 and 2008. However, there is no information 150 rural primary schools schools, of which 150 are in rural areas. Of on indicators on quality of education . will receive additional this assistance, the teacher training has infrastructure support and been fully delivered,the infrastructure works teacher training. are in their final phase, and teaching aids will be delivered to the schools with the start of the school vear in Seotember . National education National education management information Limited Progress management information system is not yet fully functional. The system established and hardware is procured and installed, the baseline data available (by software developed, installed and in a June 2010) testing phase, and there is a massive training program of end-users being imolemented. 2. Health: lm11rove efficiency and trans11arenc of Health Insurance Fund 011erations and institutional and management ca11aci of Ministrv of Health Transparent financial Transparent financial management Limited Progress management expenditure expenditure control and performance controland perrormance indicators for all hospitals has been indicators for all hospitals established, but the system is still being established challenged by unsound financial spending oattems Implementation of DRG Achieved Good Progress (diagnosis-related groups) Most recently, the authorities introduced payment system for Diagnosis Related Groups (DRGs) in measuring hospitals with 20 percent perrormance and financing health service, (though shareof the hospital only 20 percent of the Health Care Institution's budgets (by December budget is actually tied to DRG) which is a major 2009) change in the way hospitals are reimbursed. Source- PDPL1 ICR Reference pricing for most The target was to introduce the reference Good Progress important drugs in place pricing, which Macedonia did not have (by December 2009) before. Reference pricing for drugs reimbursable by the Health Insurance Fund are in place 3. Social Protection: lm11roved administration and targeting of cash benefits and strengthened and sustainable 11ension Integrated management Delayed Limited Progress and information system Development of the Management Information covering all cash benefit System {MIS) for Cash Benefits modules critical for oroorams including the CCT oroaram. The teams discussed at length 29 IEG CPSCR Review Independent Evaluation Group CPS FY07-10 : Cluster 3 Human Development Target Outcome Actual Results Comments Indicators lasof June 20101 database of all the development of the software modules for cash beneficiaries established benefits and concluded that none of the modules and operational (by June has been developed well enough to be ready for 2009) testing.As this implies that the software development is critically delayed ... Source- AM, March 2010 First CCT program in Delayed Limited Progress education designed and Critical modules not developed yet introduced (by September Source- AM, March 2010 2009) Framework developed to Achieved Good Progress allow for further consolidation of cash benefits (20101 Voluntary pension system Voluntary pension system was fully Good Progress introduced (by mid-2009) introduced and activated by mid-2009. Ongoing 11re Programmatic Approved FY06. Closed IEG Outcome Rating- Satisfactory CPS FY07-10 Development Policy Loan (P090303) Education Modernization Approved FY04. Active. Latest PDQ rating: I P066157\ Moderatelv Satisfactorv 111/29/2009\ . Health Sector Approved FY04. Active. Latest PDO rating: Satisfactory(02/17/2010) Manaaement IP086670l Social Protection Approved FY04. Active. Latest PDO rating: Moderately Satisfactory Implementation Loan (05/18/2010) P074358\ I New Lending Conditional Cash Approved FY09.Active Latest PDQ rating: Satisfactory (04/30/2010). Transfers Project Second Programmatic Approved FY07. Closed IEG Outcome Rating- Satisfactory Development Policv Loan Third Programmatic Approved FY08. Closed IEG Outcome Rating- Satisfactory Development Policv Loan Planned AAA Programmatic Poverty Delivered FY09 Assessment Programmatic Poverty Delivered FY08 Work Social Inclusion Dropped Assessment Transport Sector study Dropped Additional AAA Promoting Carbon Finance Delivered FY07 in Macedonia TA 30 IEG CPSCR Review Independent Evaluation Group CPS FY07·10: Cluster 4 Infrastructure and Enerav Target Outcome Indicators Actual Results Comments (as of June 201Ol Major Outcome Cluster 4.Infrastructure and Enemv /Intermediate 1. Trans12ort : lm12rove road and rail Outcome infrastructure and manaoement canacitv Measures 50 percent of the construction of the 50 percent of the construction of Good Progress Tabanovce-Kumanovo highway completed the Tabanovce-Kumanovo lbv December 2009) highway has completed Agency for State Roads is adequately The first set of technical audits Limited Progress managing and implementing road is expected to take place invesbnents as confirmed by regular technical July/August. audits The successors of Macedonian Railways The working ratios (without Some Progress reduced operating losses as indicated by a state support) is less than 92.6 drop in working ratios (without subsidy) from percent at end-2009 Improvement in 2008 to 64.2 percent 100 percent in 2005 to 80 percent at end- reflects good economic sib.lation with high 2009 . traffic offering whilst deterioration in 2009 due global economic crisis which has adversely affected Macedonia Rail- Transporfs performance in this regard. Action plan agreed with government should contribute to correcting the trend. Source- /SR for Railways Reform project (511912010) 140 km of regional and 75 km of local roads The rehabilitation of three of the Some Progress improved (by December 2009) regional roads has been completed . Contract for all 330 km under execution of which 72 km completed and others for completion between end May and aurumn 2010. Contracts have been awarded for 216km of local roads (more than 60 Local roads) via three tenderrounds. Source- Aide Memoire June 2010 team visit. Significant decrease in freight train Not Achieved No Progress processing time at border stations on Corridor X (baseline:450 minutes in 2007) 2. Energ:r:: lm12rove efficienQ:r: and sustainabilitv of the enernv sector Govemment adopts sound medium term Government adopted a medium Good Progress energy strategy (by September 2009) term energy strategy in April 2010. Regulatory and incentive framework for Privileged feed-in tariffs for all Good Progress renewable energy introduced (by September producers of renewable energy 2009) have been adopted in 2008. At least 10 MW of new renewable energy Not achieved. No Progress capacity under construction by September 2009 At least 5 energy efficiency projects under There are no GEF-financed No Progress implementation by September 2009 energy efficiency projects under implementation and the GEF- financed operation is underaoina maior reconstruction The 2009 ECSEE (Energy Community of Achieved . Good Progress South East Europe) report assesses Macedonia's oerformance as satisfactorv 3.Munici I Services: lm12rove local services and infrastructure in selected municioalities Implementation of first municipal The Ministry of Finance and the Good Progress infrastructure and services improvement Municipality of Kocani signed 31 IEG CPSCR Review Independent Evaluation Group CPS FY07·10: Cluster 4 Infrastructure and Enerav Target Outcome Indicators Actual Results Comments (as of June 2010) projects financed through Government on- the contract in December 2009 . lending launched (by December 2009) Implementation began in January 2010. National strategy to strengthen communal Strategy was not adopted No Progress services enterprises in place (by December 2009) Ongoing Rre CPS ECSEE (Energy Community of South East Approved FY06.Active. Latest PDO rating: Moderately FY07-10 SURRQrt Eurooe) APL 3 (P082337) Satisfactory (06/27/201Ol. Railways Reform (P083499) Approved FY06. Active. Latest PDO rating: Satisfactory (5/19/2010). New Lending Trade & Transport Facilitation in South East Approved FY07. Active Latest PDO rating: Moderately Europe 2 Satisfactory (05/13/2010). Transport (Regional and Local Roads) Approved FY08. Active Latest PDO rating: Moderately Satisfactory (5/05/2010). Municipal Development Approved FY09. Active Latest PDO rating: Moderately Satisfactory (06127/201Ol. Urban Develooment Droooed Enen:iY proiect (qas, electricitvl Droooed IFC Elektrostopanstvo na Makedonia-ESM Approved FY08. Active Latest DOTS rating: Too early to tell Macedonia Planned AAA World Bank Analytic and Advisory Services: Enemy Sector Policv Dialoque Delivered FY09 Urban & Municipal Development Study Delivered FY07 TA in suooort of National Water StratMv Delivered FY10 Competitiveness Study Droooed Transport Sector study Dropped IFC Advisorv Services: Recvclinq Delivered FY06-09. IEG DE ratinq: Suocessful lnteqrated Waste Manaqement Approved FY09. Active Macedonia HPPs Approved FY10.Active Additional AAA Promoting Carbon Finance in Macedonia TA Delivered FY07