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Implementation Completion Report (ICR) Review - Bulgaria Agriculture Sector Adjustment Loan


  
1. Project Data:   
ES Date Posted:
08/09/2000   
PROJ ID:
P057925
Appraisal
Actual
Project Name:
Bulgaria Agriculture Sector Adjustment Loan
Project Costs(US $M)
 75.8  75.8
Country:
Bulgaria
Loan/Credit (US $M)
 75.8  75.8
Sector, Major Sect.:
Agriculture Adjustment,
Agriculture
Cofinancing (US $M)
 0  0
L/C Number:
L4499      
   
Board Approval (FY)
  99
Partners involved
 
Closing Date
07/31/2000 07/31/2000
         
Prepared by: Reviewed by: Group Manager: Group:  
Madhur Gautam
G.T.K. Pitman Alain Barbu, Acting OEDST

2. Project Objectives and Components:

a. Objectives
The main objective of the Agriculture Sector Adjustment Loan (ASAL) was rapid development of a more efficient and responsive agricultural sector, the principles of which were enunciated in the Government's medium-term program. The loan sought to support a comprehensive reform of agricultural sector policies. Reform areas included: pricing, trade, agricultural subsidies and finance, land markets, cereals markets, and enterprise privatization.

b. Components
(i) Land market development: to promote private land markets through restitution, registration and cadastre, and amending laws and tax structure to promote land market transactions. (ii) Food security and cereals marketing: rationalize state reserves, adoption of a grain policy to promote private grain storage and registration of traders, and privatize about 50% of the storage capacity of the state enterprise Zarneni Hrani; (iii) Privatization of agricultural enterprises in areas of grain milling, seeds, food industry and enterprises in the Ministry of Agriculture, Forestry and Agrarian Reforms, and privatization of irrigation systems. (iv) Rural and agricultural finance: reduce short-term financing and revised criteria for long-term funding by the State Fund for Agriculture (SFA); (v) Trade regime, Market Regulation and Incentives: rationalization of registration, licensing, taxes, tariffs and restrictions for exports and imports, and liberalization of agricultural products pricing.

c. Comments on Project Cost, Financing and Dates
The loan was fully disbursed on time.


3. Achievement of Relevant Objectives:

The ASAL substantially met all of its objectives. All conditions were met before Board presentation. The policy reforms supported by the loan have significantly changed the incentive and institutional frameworks in the sector. There was temporary backsliding in grain storage agreements but that has since been rectified. There was also a temporary set back in the rural finance conditions with the government acquiring a controlling interest in the Commercial Credit Bank through share purchase by SFA. These were subsequently divested following discussions with the Bank. There has also been reluctance on the part of the government to scale back short-term credit of the SFA as agreed.

While the component objectives were met for rural finance, there remains room for much improvement. Similarly, for land markets, while project objectives were met, work remains in land titling and registration. These are undoubtedly complex issues that require longer time frames to address than a quick disbursing ASAL. They issues are part of an on-going dialogue and are expected to be vigorously pursued.


4. Significant Outcomes/Impacts:

Transformation, in a very short period of time, from being one of the worst trade regimes to one of the most open in the region. The loan has also had significant institutional development impact through privatization in the areas of grain marketing, input marketing and farmer services. These achievements are particularly significant given the potentially politically challenging nature of the reforms needed. Strong borrower ownership, with constructive dialogue between the Bank, borrower and other stakeholders, and high quality economic sector work have contributed significantly to this success and likely sustainability of the outcomes.

5. Significant Shortcomings (include non-compliance with safeguard features):

None.

6. Ratings:ICROED ReviewReason for Disagreement/Comments
Outcome:
SatisfactorySatisfactory
Institutional Dev.:
SubstantialSubstantial
Sustainability:
LikelyLikely
Bank Performance:
SatisfactorySatisfactory
Borrower Perf.:
SatisfactorySatisfactory
Quality of ICR:
Satisfactory

7. Lessons of Broad Applicablity:

1. The success of the ASAL demonstrates the value of good quality sector work. Effective use of policy notes to engage the government and other stakeholders can help build support for far reaching and difficult reforms.
2. Timing of Bank interventions is equally important. As the ICR notes, constructive disengagement in a period of poor policy environment helped develop credibility with the new government which was serious about economic reforms.
3. In the contribution to the debate on the "big bang" approach to reform in the transition economies, the success of ASAL shows that under the right conditions, it is possible for big bang to work. The caveat, however, is that this big bang followed a fairly long period of slow or no change.
4. Finally, the project demostrates the positive impact of proactive and constructive engagement of the borrower by the Bank in ensuring progress on all elements of the reform package, and to prevent back-sliding in important reform areas.

8. Audit Recommended?  No

          Why?  

9. Comments on Quality of ICR:

Succinct yet comprehensive and well presented ICR.

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