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Implementation Completion Report (ICR) Review - Pre-Export Guarantee Facility

1. Project Data:   
ES Date Posted:
Project Name:
Pre-Export Guarantee Facility
Project Costs(US $M)
 600  N/A
Loan/Credit (US $M)
 120  0
Sector, Major Sect.:
Other Agriculture,
Cofinancing (US $M)
 0  N/A
L/C Number:
Board Approval (FY)
Partners involved
Closing Date
Prepared by: Reviewed by: Group Manager: Group:  
Gianni Zanini
Alice Galenson Ruben Lamdany OEDCR

2. Project Objectives and Components:

a. Objectives
The objective of the PGF was to mitigate the perceived political risks--government compliance and political force majeure risks--that inhibit foreign private input producers and distributors, trading companies, and commercial lenders from financing the provision of inputs on commercial terms to Ukrainian agricultural and agro-processing enterprises. The PGF was expected to help: (i) agricultural enterprises build links with foreign partners, thereby diversifying their supply sources and improving their market access; (ii) restore employment and commercially viable production for export in the short term, while reforms were taking hold; (iii) foster the introduction of increasingly sophisticated trade finance mechanisms; and (iv) promote a transparent business climate in which the rule of law would prevail. The PGF was meant to complement a parallel Ag SECAL (completed and evaluated, with a marginally unsatisfactory outcome) and a Seed Development project (still under implementation).

b. Components
The PGF was to support self-liquidating, short-term pre-export transactions and self liquidating fixed capital investments that would not create a long term debt for local enterprises or the government.

c. Comments on Project Cost, Financing and Dates
The World Bank Guarantee would have backstopped payment obligations on up to $120 million of outstanding guarantee contracts issued by the government's Gurantee Administration Unit (GAU) during the GAU's first five years of operations. Assuming that the average tenor of each guarantee transaction is one year and the PGF is fully utilized, the GAU could have potentially guaranteed $600 million of transactions during this five year period. There were no other co-financiers.

3. Achievement of Relevant Objectives:

NA. Loan never became effective. As required under Ukrainian law, the loan agreement was submitted to the Ukrainian Parliament for ratification, but the Parliament failed to do so for mainly political reasons that had little to do with the project itself. When all prospects for reviving the operation faded, the Bank terminated the loan in June 1999.

4. Significant Outcomes/Impacts:

NA. Loan never became effective.

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

NA. Loan never became effective.
6. Ratings:ICROED ReviewReason for Disagreement/Comments
Not RatedNot Rated
    Relevance was substantial, but efficacy and efficiency cannot be rated.
Institutional Dev.:
Not RatedNot Rated
Not RatedNot Applicable
Bank Performance:
Not RatedSatisfactory
    Quality at entry (identification and appraisal) was satisfactory, but supervision cannot be rated
Borrower Perf.:
Not RatedHighly Unsatisfactory
    Borrower's preparation could not be rated on the basis of the information provided in the President's Report and the PCN, but Ukraine failed to implement the project.
Quality of ICR:
Not Rated

7. Lessons of Broad Applicablity:

The main lesson is that the Bank should better understand at the project preparation phase the political complexity and the decision making processes in the country that would affect the project approval and implementation. In situations of conflict between executive and legislative branches, the Bank should brief parlamentarians directly to ensure proper understanding of the coverage and operational mechanism of the project and to assess ownership beyond government ministries. When an operation such as the PGF is an integral part of the sector assistance strategy, consideration should be given to possible cross-conditionality among operations in the sector (e.g. making parlamentiary approval of the PGF a condition of the Ag SECAL in the case of Ukraine).

8. Audit Recommended?  No


9. Comments on Quality of ICR:

A three page Project Completion Note (PCN) explains quite well what happened, but lacks an adequate assessment of the project's relevance, quality at entry, and Borrower's preparation.

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