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Implementation Completion Report (ICR) Review - Trade & Transport Facilitation In South East Europe

1. Project Data:   
ICR Review Date Posted:
Project Name:
Trade & Transport Facilitation In South East Europe
Project Costs(US $M)
 12.70  12.66
Loan/Credit (US $M)
 7.5  8.41
Sector, Major Sect.:
Central government administration,
Law and justice and public administration
Cofinancing (US $M)
 1.5  0.0
L/C Number:
Board Approval (FY)
Partners involved
Closing Date
12/31/2003 09/30/2005
Evaluator: Panel Reviewer: Division Manager: Division:  
Michael R. Lav
Peter Nigel Freeman Kyle Peters IEGCR

2. Project Objectives and Components:

a. Objectives
i. To reduce non-tariff costs to trade and transport, and

ii. To reduce smuggling and corruption at border crossings.

b. Components (or Key Conditions in the case of Adjustment Loans):
1. Customs Administration Institutional Reform (US$ 0.90 million at appraisal, nil actual/latest estimate):
(i) technical services to monitor Bulgarian Customs Administration's (BCA) performance;
(ii) technical services to streamline operations at two border posts and one inland terminal on a pilot basis, and
(iii) training for inter-agency awareness and cooperation.
2. Trade Facilitation Development (US$ 0.40 million at appraisal, nil actual/latest estimate):
(i) provision of technical assistance and advisory services to trade and international transport participants through the Chamber of Commerce;
(ii) improvement of cooperation between public and private parties using a virtual forum, and
(iii) provision of equipment to support information availability.
3. Improvement of Bulgaria Integrated Customs Information System (US$ 0.1 million at appraisal and actual/latest estimate) including a regional experience-sharing program on integrated systems for border agencies.
4. Improvement of border crossing facilities (US$8.9 million at appraisal and US$12.12 million actual/latest estimate) comprising civil works and improvement of utilities,exit and entry processing lanes, new buildings, booths and canopies, heating, sanitary, and electrical systems, and truck terminal areas at Gyueshevo, Vidin, Rousse, Kapitan, Andreevo, Kulata, and Bourgas.
5. Program and project implementation (US $ 0.60 at appraisal and US$0.44 million actual/latest estimate).

c. Comments on Project Cost, Financing, Borrower Contribution, and Dates
The project cost US$12.66 million financed by an IBRD loan for US$8.41 million and the borrower's contribution of US$4.25 million (Annex 2 of the ICR shows a government contribution of US$ 4.83 million). The Bank's loan was made in Euros and valued at 7.73 million Euros, or US$7.5 million at the time of commitment, the difference being due to exchange rate fluctuations. The project was appraised in February, 2000, approved by the Board on May 25, 2000, made effective on November 29, 2000, and closed on September 30, 2005, 21 months behind schedule to allow for delays in constructing facilities at border crossing, especially at Gyueshevo, and delays in obtaining a grant to finance some project facilities at Vidin.

3. Relevance of Objectives & Design:

The objectives and design of the project were fully relevant to Bulgaria's needs and priorities. The Country Assistance Strategy (CAS) for Bulgaria discussed by the Board in 1998 (which supported the strategy set out in the Government of Bulgaria's strategy document for 1997-2001) identified promoting structural reform and private sector development, as well as strengthening and rationalizing the role of the state as two key priorities. This project is fully consistent with that strategy and its design facilitated achieving these objectives. Further, the regional program for Trade and Transport Facilitation in Southeast Europe (TTFSE) provided the substantive, regional, and country context for this operation. The project was the result of collaborative efforts among the Government of Bulgaria, the World Bank and the United States of America (USA), and there was collaboration with the EU during project implementation.

4. Achievement of Objectives (Efficacy) :

1. Reduce the non-tariff costs to trade and transport- substantial achievement. The ICR provides data on 3 pilot sites. The Plovdiv inland terminal showed substantial and unambiguous improvements over time, with import clearance time reduced from more than 190 minutes in 2000 and 2001 to 42 minutes in 2003 but then increased to about 1 hour in 2004 and in June, 2005. The Rousse border crossing showed uneven but distinct improvements in exit times and some improvement in average entry times. The Gyueshevo border crossing showed improvement in border exit and entry times from 2000 to 2002 but then experienced sustained increases from 2003 to 2005. This deterioration after 2002 may have been caused by increases in traffic volumes as stated in the ICR. Traffic volumes for Bulgaria certainly increased substantially, as the nominal value of imports and exports more than doubled during this period. The ICR could have reduced uncertainty about this situation by reporting on traffic volumes at the pilot sites, and, in addition, reporting on processing times at non-pilot sites. However, the PSRs indicate continuing and successful implementation of the reforms and investments supported by the project, so increased traffic volumes appear to be the most likely cause for this deterioration. Additional circumstantial evidence on this point is that the improved procedures at these sites are being replicated at 3 customs offices at seaports and 12 inland customs offices.
2. Reduce smuggling and corruption at border crossings - substantial achievement. Concerning corruption, the BEEPs survey shows that the percent of firms saying that bribery (unofficial payments) to deal with customs/imports is frequent has declined from 26% in 2002 to 16% in 2005. However, this 16% in 2005 is still higher than the average for the other countries in Southeast Europe. Concerning smuggling, new inspection facilities financed by the project led to seized goods valued in the range of US$300,000 to US$400,000 per annum. Penalties for bribery have been made more severe.

5. Efficiency:

The ICR estimates the project's rate of return more than 50%, compared to the estimate of 31% at appraisal, on account of greater increases in traffic than anticipated in the PAD. The ICR uses an estimate of the daily unit costs of US$300 based on information from the Bulgarian Road Transport Association, lower than estimates of US$350 used in some other TTFSE countries. In addition to the direct cost reduction benefits of the project, the ICR also used an estimate of benefits due to increased volumes of trade related to the improvements supported by the project equivalent to 20 percent of the cost reduction benefits of the project, considered by the ICR to be a conservative estimate. However, this estimate is based on a model which uses a large number of assumptions, so that the estimate must be regarded as speculative.
6. M&E Design, Implementation, & Utilization:

Monitoring and evaluation aspects of the project concerning reduction of non-tariff costs to trade and transport were built into the structure of the project, although it would have been more useful had the ICR reported on traffic volumes at all of the pilot sites, and the rationale for monitoring outcomes in only 3 of the 7 project cites is not clear. In addition, had monitoring and evaluation been conducted at non-project cites, this would have provided "without" project data which could have been used to evaluate the benefits of the project. Concerning smuggling and corruption, M&E does not appear to have been built into the structure of the project. While evidence cited by the ICR is sufficient to evaluate progress, future projects should have M&E aspects incorporated into the structure of the project.
7. Other (Safeguards, Fiduciary, Unintended Impacts--Positive & Negative):

Safeguards and Fiduciary aspects of the project have been addressed in the PSRs and raise no special issues. There appear to have been no unintended impacts.

8. Ratings:
ICR Review
Reason for Disagreement/Comments
Institutional Dev.: 
Bank Perf.: 
Borrower Perf.: 
Quality of ICR: 

- When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006.
- ICR rating values flagged with ' * ' don't comply with OP/BP 13.55, but are listed for completeness.

9. Lessons:

1. Systemic reforms in processing imports and exports can be as important as improvements in physical infrastructure. Therefore, policy dialogues regarding these reforms should be started early enough to ensure that they can be fully incorporated in project formulation and implementation, as was this case with this project. 2. A high degree of ownership by a champion, in this case, the Deputy Finance Minister, is important in leading to the coordination needed in projects such as this where a number of agencies are involved.

10. Assessment Recommended?  No


11. Comments on Quality of ICR:

The ICR is rated satisfactory and provides a clear picture of project implementation, presents a thoughtful evaluation of the rate of return, and draws on indicators to show progress in reducing corruption and smuggling. However, the ICR presents a somewhat confusing picture of costs. The tables in annex II are inconsistent among themselves and with section 3.3 of the ICR which appears to give only cost data at appraisal, rather than actuals. The ICR should have explained how some of the project components were implemented at "nil cost" as suggested by the tables in Annex 2. Data on financing to be provided by the USA is given in the PAD (US$1.5 million toward the total project of US12.5 million) and the PAD cost estimate is consistent with the Annex 2 data on cost of the project at appraisal. Yet, the contribution of the US is only reflected as cofinancing in the table on "Project Financing by Component" in Annex 2 (which appears to contain typographical errors). The Borrower's contribution is unusually complete and quite thoughtful, thereby giving credence to the Borrower's intention to continue to implement the reforms.

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