Poland - Development Policy Loan 2 : P130459 - Implementation Status Results Report : Sequence 02

The World Bank Report No: ISR14821 Implementation Status & Results Poland Development Policy Loan 2 (P130459) Public Disclosure Copy Project Name: Development Policy Loan 2 (P130459) Program Stage: Implementation Seq.No: 2 Status: ARCHIVED Archive Date: 31-May-2014 Country: Poland Approval FY: 2013 Product Line: IBRD/IDA Region: EUROPE AND CENTRAL ASIA Lending Instrument: Development Policy Lending Implementing Agency(ies): Key Dates Board Approval Date 18-Jun-2013 Original Closing Date 30-Jun-2014 Planned Mid Term Review Date Last Archived ISR Date 03-Sep-2013 Effectiveness Date 11-Jul-2013 Revised Closing Date 30-Jun-2014 Actual Mid Term Review Date Program Development Objectives Program Development Objective (from Program Document) The programmatic DPL is structured around three pillars with the following development objectives: (i) consolidating public finances to ensure a steady decline of the fiscal deficit to stabilize and over the medium term reduce public debt; (ii) strengthening fiscal institutions to ingrain a prudent fiscal stance (including at the sub-national level) over the medium term; and (iii) advancing long-term fiscal reforms to secure the sustainability of social spending in view of Poland’s demographic challenge. These policies aim to enhance Poland’s economic resilience in the face of adverse times and to protect fiscal space for key growth-enhancing investments. Has the Program Development Objective been changed since Board Approval of the Program? Yes No Overall Ratings Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory Implementation Status Overview Public Disclosure Copy The second (in the series of two) DPLs became effective in July 2013, achieving progress on the results and subsequently the PDO. After the loan closure (end-June 2014), the Implementation Completion Report will be published to assess the acquirement of the development objective. The results indicator status to date is: 1. By the end of 2013, the public debt-to-GDP ratio (national definition) is stabilized at or below the 2011 level Weak domestic demand led to a significant drop in revenues in 2013, partly reversing fiscal consolidation of the previous two years. Despite further consolidation measures in 2013 , the pro-cyclicality of CIT and weaker domestic demand, which lowered VAT revenues, resulted in a higher than expected fiscal deficit. The government allowed automatic stabilizers to operate, in part, and the budget deficit increased to 4.3% of GDP, up from 3.9% in 2012, largely due to lower-than-expected government revenues. despite additional fiscal measures being introduced mid-year to control expenditures (equivalent to about 0.5 percent of GDP). Recognizing the weak growth, the EU extended the deadline for correction under the Excessive Deficit Procedure (EDP) by one additional year, to 2015, given that the structural deficit did improve, declining further to 3.8% of GDP. Higher fiscal deficit did Page 1 of 4  The World Bank Report No: ISR14821 lead to an increase in public-debt to GDP ratio in 2013 to 53.9% of GDP (national methodology), still staying below 55 percent of GDP threshold. 2. By the end of 2013, the local governments’ debt-to-GDP ratio (ESA’95 definition) is stabilized at or below the 2011 level In 2013, the local governments debt-to-GDP ratio decreased to 4.1 percent of GDP (below the 2011 level), thus achieving the set target. Public Disclosure Copy 3. By the end of 2013, the social security funds’ deficit-to-GDP ratio (ESA’95 definition) is reduced compared to 2010 The social security funds’ deficit deteriorated further to -0.5 percent of GDP in 2013, not achieving the target set for 2013, given the deterioration of the economic situation. 4. Hospital arrears are reduced by 8 percent by end-2013 compared to end-2011 The Government's health policy reforms, supported by the operation, were seen as the continuation of Government policies to improve service delivery, efficiency and financial accountability. The DPL supported their efforts towards the hospital system accumulation of debt and debt arrears. Through the enactment of Law on Therapeutic Activity, the Government aimed to further increase the accountability of hospital owners for the financial results and advance the hospital system restructuring. Furthermore, the DPL supported the Government in introducing health insurance contributions for farmers. However, due to the still continued process of restructuring, the health arrears have remained at the elevated level at PLN 2.5 billion (end-September 2013 last available data). 5. The last-resort minimum income benefit for a “typical” poor family is increased in 2013 compared to 2011 The DPL supported the Government effort to strengthen the targeting of particular social assistance programs. The operation supported: (i) restricting the eligibility of the child-birth allowance benefit, (ii) improving of the coverage of the last-resort minimum-income social assistance benefits for the poorest, and (iii) introducing partial income-testing for receiving the benefit for care-givers of disabled dependents. As a result, the generosity of the minimum income benefit for a “typical” poor family, defined as a two-parent household with two children with a benefit package comprised of minimum-income social assistance benefit plus family benefit and no other income sources, increased from 36.5% in 2011 to 46.4% in 2013 of the "At-risk-of-poverty" threshold (Eurostat definition). Results Results Indicators Indicator Name Core Unit of Measure Baseline Current End Target Public debt-to-GDP ratio (national definition) is Percentage Value 54.00 53.90 54.00 stabilized. Date 31-Dec-2011 31-Dec-2013 31-Dec-2013 Comments Public debt to GDP ratio Public debt to GDP ratio Public debt to GDP ratio (national definition) was 54 (national definition) was 53.9 (national definition) is at or percent in 2011 percent in 2013 below 54 percent of GDP in 2013 LGs’ debt-to-GDP ratio (ESA’95 definition) is Percentage Value 4.30 4.10 4.30 Public Disclosure Copy stabilized. Date 31-Dec-2011 31-Dec-2013 31-Dec-2013 Comments LGs’ debt-to-GDP ratio LGs’ debt-to-GDP ratio LGs’ debt-to-GDP ratio (ESA’95 definition) was 4.3 (ESA’95 definition) was 4.1 (ESA’95 definition) is at or percent in 2011 percent in 2013 below 4.3 percent of GDP in 2013 Social security funds’ deficit-to-GDP ratio Percentage Value -0.10 -0.50 -0.10 (ESA’95 definition) is reduced. Date 31-Dec-2011 31-Dec-2013 31-Dec-2013 Comments Social security funds’ deficit- Social security funds’ Social security funds’ deficit- to-GDP ratio (ESA’95 Page 2 of 4  The World Bank Report No: ISR14821 to-GDP ratio (ESA’95 balance-to-GDP ratio (ESA’95 definition) is lower than -0.1 in definition) was -0.1 in 2011 definition) was -0.5 in 2013 2013 Hospital arrears are reduced. Text Value PLN 2.4 billion PLN 2.5 billion PLN 2.2 billion Public Disclosure Copy Date 31-Dec-2011 30-Sep-2013 31-Dec-2013 Comments Hospital arrears were PLN 2.4 Hospital arrears were PLN 2.5 Hospital arrears are at or billion in 2011 billion at end-September 2013 below PLN 2.4 billion in 2013 The last-resort minimum income benefit for a Percentage Value 36.00 46.40 36.00 “typical” poor family is improved. Date 31-Dec-2011 31-Dec-2013 31-Dec-2013 Comments The last-resort minimum The last-resort minimum The last-resort minimum income benefit for a “typical” income benefit for a “typical” income benefit for a “typical” poor family was at 36 percent poor family was at 46.4 poor family is higher than 36 of the Eurostat "at-risk-of- percent of the Eurostat "at- percent of the Eurostat "at- poverty" thresholdin 2011 risk-of-poverty" threshold in risk-of-poverty" threshold in 2013 2013 Data on Financial Performance (as of 26-Jul-2013) Financial Agreement(s) Key Dates Project Ln/Cr/Tf Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date P130459 IBRD-82730 Effective 18-Jun-2013 02-Jul-2013 11-Jul-2013 30-Jun-2014 30-Jun-2014 Disbursements (in Millions) Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P130459 IBRD-82730 Effective USD 1,307.80 1,307.80 0.00 1,327.05 0.00 101.00 Tranches Tranche 1 Public Disclosure Copy Amount (USD) Expected Release Date Actual Release Date Status 0 Pending Released Key Decisions Regarding Implementation None Restructuring History There has been no restructuring to date. Page 3 of 4  The World Bank Report No: ISR14821 Related Operations There are no related projects. Public Disclosure Copy Public Disclosure Copy Page 4 of 4