Argentina - Capital Market Development Technical Assistance Project (CMDTAL)

Document of The World Bank FOR OFFICIAL USE ONLY Report No: 19953-AR IMPLEMENTATION COMPLETION REPORT (Core ICR) ONA CAPITAL MARKET DEVELOPMENT TECHNICAL ASSISTANCE PROJECT (CMDTAL) IN THE AMOUNT OF US$8.5 MILLION TO THE ARGENTINE REPUBLIC FOR PROJECT ID: P006062 L/C NUMBER: 37100; 3710A; 3710S December 21, 1999 Finance, Private Sector & Infrastructure Country Management Unit 7 Latin America and the Caribbean Region This document has a restricted distribution and may be used by recipient only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (Exchange Rate Effective December 1999) Currency Unit = Argentinean Piso 1 Peso= US$ 1.00 US$ 1.00=1 Peso FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS BCRA Banco Central de la Repuiblica Argentina BICE Banco de Inversi6n y Comercio Exterior CMDTAL Capital Market Development Technical Assistance Project CNV Comisi6n Nacional de Valores PCU Project Coordinating Unit SAFJP Superintendencia de Administradores de Jubilaciones y Pensiones SBS Subsecretaria de Bancos y Seguros, Ministerio de Economia y Obras y Servicios Publicos. SEPYME Secretarfa de la Pequenia y Mediana Empresa SSN Superintendencia de Seguros de la Naci6n SSS Secretariat of Social Security Vice President: David De Ferranti Country Manager/Director: Myrna Alexander Sector Manager/Director: Danny M. Leipziger Task Team Leader/Task Manager: Margaret Miller  FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT Argentina: Capital Market Development Technical Assistance Project (CMDTAL) CONTENTS Page No 1. Project Data 1 2. Principal Performance Ratings 1 3.. Assessment of Development Objective and Design, and of Quality at Entry 3 4. Achievement of Objective and Outputs 7 5. Major Factors Affecting Implementation and Outcome 12 6. Sustainability 14 7. Bank and Borrower Performance 15 8. Lessons Learned 17 9. Partner Comments 18 10. Additional Information 20 Annex 1. Key Performance Indicators/Log Frame Matrix 21 Annex 2. Project Costs and Financing 22 Annex 3. Economic Costs and Benefits 24 Annex 4. Bank Inputs 25 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 26 Annex 6. Ratings of Bank and Borrower Performance 27 Annex 7. List of Supporting Documents 28 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   Project ID: P006062 Project Name: CAPITAL MKT TA Team Leader: Margaret J. Miller TL Unit: LCSFF ICR Type: Core ICR Report Date: 12/21/99 03:49:56 PM December 21, 1999 1. Project Data Name: CAPITAL MKT TA LIC Number: 37100; 3710A; 3710S Country/Department: ARGENTINA Region: Latin America and Caribbean Region Sector/subsector: FK - Capital Markets Development KEY DATES Original Revised/Actual PCD: 09/18/91 Effective: 12/20/94 Appraisal: 08/10/93 MTR: Approval: 03/01/94 Closing: 06/30/98 09/30/99 Borrower/Implementing Agency: MIN OF ECONOMY/MIN. OF ECO Other Partners: STAFF Current At Appraisal Vice President: David De Ferranti Shahid Javed Burki Country Manager: Myrna Alexander Gobind T. Nankani Sector Manager: Danny M. Leipziger Paul Meo Team Leader at ICR: Margaret Miller Alfredo Dammert ICR Primary Author: Claudio A. Pardo 2. Principal Performance Ratings (S=Satisfactory, HS=Highly Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: HL Institutional Development M Impact: Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S S Project at Risk at Any Time: No  3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: 1. The Project had three original objectives: (a) the institutional strengthening of the National Securities Commission (CNV) and the reinforcement of the Borrower's securities market regulations; (b) the development of independent pension funds and the establishment of the supervisory agency for such funds; and (c) the improvement of the capabilities of middle and senior level staff of financial institutions in Argentina in the area of term financing for investment projects. 2. The first two objectives were clear, realistic, reasonably matched with the capacities of the implementing agencies, and important for the country and the financial sector structural reforms that the Bank was actively supporting at the time-and which it continues to support until today. The institutional strengthening pursued by these first two objectives also were very much in consonance with the Bank's Country Assistance Strategy (CAS). From this perspective, the technical assistance provided by the CMDTAL was reasonably targeted to support the creation of a new regulatory agency and the strengthening of another, as well as geared to reinforce and develop more effective capital market regulation and supervision. 3. The third objective of improving project financing lending capabilities, although clear, ended up being harder to implement, particularly since the use of direct government subsidies for training staff of financial institutions was discarded from the outset. While the need to improve term lending capabilities in the local banking sector remains, the immediate motivation for including this third objective was to facilitate the implementation of the parallel, US$500 million Capital Market Development Project (Loan 3709-AR). This Bank loan supported a backstop facility administered by BICE, a state-owned second-tier bank. From this perspective, this third original objective was in response to perceived shortcomings in the local banks and other financial institutions, which had to be addressed in order for the financial sector to take full advantage of the opportunities created by the new backstop facility. However, the objective of training staff of financial institutions in project financing techniques became unachievable once it became clear that BICE was not going to be able to implement successfully the two-tier credit line to finance training activities, which was the chosen vehicle to achieve the proposed objective. Thus, the original (c) objective in paragraph 2 above was dropped in October 1996, when the first Amendment to the Loan Agreement was signed. In addition, BICE was also unable to achieve a successful implementation of the backstop facility that was to benefit directly from this training program supported by the CMDTAL. The Capital Market Development Project was cancelled in early 1997 and the ICR for that project found its performance unsatisfactory since it did not meet its fundamental capital market objectives. 3.2 Revised Objective.: 4. The objectives of the Project were revised twice in two Amendments to the Loan Agreement. In the first one already mentioned, the original (c) objective was replaced by the objective of developing prudential norms and strengthening supervision of the insurance industry. As was the case with the two remaining original objectives of the Project, this new objective was - 2 -  clear, realistic and necessary. Furthermore, it also pointed in the direction of seeking institutional strengthening and reinforcement of more effective regulations in an important industry for capital market development. 5. Amendment 1 also added a fourth Project objective: the strengthening of the legal and regulatory framework for credit reporting systems. The Central Bank of Argentina (CBRA) was the designated implementing agency, as this was already actively engaged in taking public an ambitious credit reporting system. The Bank and the Borrower felt that this new Project objective could greatly improve the legal underpinning of credit reporting in Argentina, benefit the efficiency of financial resource intermediation in the local financial markets and effectively complement the efforts of the CBRA. The major impact of this new objective was aimed at banking lending activities, but there were also benefits expected in the area of financial asset securitization. 6. Amendment 2, dated March 31, 1998, added a fifth objective to the CMDTAL: the strengthening of the Borrower's legal and institutional framework in support of the accessibility by small and medium-sized enterprises in Argentina to credit from the private sector. The inclusion of this objective was basically in response to the creation by the Borrower of the Secretariat of Small- and Medium-Size Enterprise (SEPYME) and the need to rapidly find a source of technical assistance to support one of the central objectives of this new Secretariat. However, this new priority in the Government's agenda of financial reform was only marginally relevant to the reform efforts in the capital market. Its inclusion in the Project was mainly a matter of convenience as it served the purpose of securing funding for technical assistance from a source already in place. From the perspective of the Bank, the staff felt that capital market reforms had not reached down and that this was an opportunity to make progress in at least a couple of issues-secured credit transactions and leasing-which had been part of the ongoing dialog with the Government and would be of considerable potential benefit to SMEs. 3.3 Original Components . 7. The original components were reasonably designed to achieve the objectives of the Project and they related well to the administrative and financial management capacities of the four implementing agencies: the CNV, the SSS (Secretariat of Social Security)/SAFJP (Superintendence of Pension Fund Managers) and BICE. In addition, the Project design incorporated the main lessons from previous Bank involvement in technical assistance operations. In particular, the original design limited the scope of the Project, making sure that there was strong commitment by the Borrower as well as a solid Project management and coordination team during implementation. Also, terms of reference for consultants and studies were prepared in advance of effectiveness for all activities included in the implementation schedule. However, in the end these were only partially used. In practical terms, the work of preparing detailed terms of reference for each identified activity well in advance of its execution added some inflexibility to the implementation process. In fact, the dynamics of the capital market reform exposed the process to changes in the scheduled activities and their priorities, which made it almost impossible to adhere to the original implementation program. In retrospect, it appears to have been too much to ask that the Project preparation process could have foreseen the specific nature of each activity that had to be carried out in order to achieve the Project objectives, particularly of those -3 -  activities planned for the medium term. 8. The development of the securities market. Two components were included to achieve this objective, with a total budget of US$4.55 million equivalent, of which Bank financing was US$3.25 million and the rest Government counterpart. The first component was the strengthening of CNV's organization and management, which considered five activities addressing a wide range of management issues. They included an evaluation of the CNV's structure, the design of a restructuring program and its implementation according to an agreed upon action plan; the development and implementation of a training program; the preparation of a business plan for the CNV; and the installation of an adequate management information system. 9. The second component was the upgrading of securities market regulations, with two specific activities, which included an evaluation of market trends and proposals for new regulations, and the installation of computerized information systems to support CNV's supervisory function. 10. The implementation of the new pension funds system. The component to achieve this objective was the implementation of the newly passed legislation on the subject. To this end, the SSS started by preparing the groundwork for the establishment of the proper regulatory environment for the new, fully funded private pension system. Once the SAFJP became operational and had its professional staff in place,the agency started to implement the necessary norms and regulations for the smooth and transparent operation of the new industry of private pension fund administrators. There were three specific activities considered under this component, with a total budget of US$3.8 million equivalent (US$3,4 million in Bank financing and US$0.4 million in Government counterpart). Basically, these activities covered the development of the set of norms and regulations required by the newly created SAFJP to carry out its functions; the technical assistance necessary to create and establish the SAFJP as an operating agency, including the required initial management support; and the consolidation into one body of all norms, regulations and procedures that were to remain active from the previous social security legislation. 11. Training program for long term financial intermediation. This objective was pursued by three different activities, which had a total budget of US$1.5 million, all of it financed by the Bank. Money was allocated to train regulators and the development of course modules, but the bulk (US$ 1.1 million) went for BICE's credit facility to support lending by commercial banks to those engaged in training activities. 12. Project coordination. The Ptoject also included Bank funding of US$350,000 to support the Project Coordinating Unit (PCU) at the Ministry of Economy, which was required by the Loan Agreement to support the day-to-day implementation of the Project. A National Director- either a Secretary or Undersecretary of the Ministry of Economy-headed the PCU and was assisted by a full-time Coordinator satisfactory to the Bank and other PCU staff. The PCU was to follow a detailed implementation calendar, which contained the expected initiation and completion dates for each activity (Schedule 5 of the Loan Agreement). Project activities were originally scheduled to be completed by December 31, 1997, so the Closing Date for the Project was set for -4 -  June 30, 1998. Eventually, and in part due to the addition of new objectives to the Project, but also because of delays in the completion of some of the original activities associated with the CNV, the implementation schedule and the Closing Date were extended for over a year. The Project was finally closed on September 30, 1999. 3.3 Revised Components: 13. Improved insurance regulation and supervision. Amendment 1 included two activities to achieve this new objective. They were important for the future of the insurance industry and crucial to achieve the stated objective. One of the activities was aimed at reviewing the existing legislative and regulatory framework of the insurance industry, so that draft amendments could be prepared both to promote the financial integrity of the industry and to improve the Borrower's regulatory role over insurance activities. The other activity was designed to evaluate the institutional capacity of the Nation's Superintendence of Insurance (SSN) and to develop and implement a program to strengthen it, especially regarding enforcement of prudential regulations. The leading implementing agency for these components was the Sub-secretariat of Banks and Insurance (SBS) of the Ministry of Economy, which carried out the first activity mentioned. However, the second one was executed with the direct involvement of the SSN, once the initial groundwork had taken place. Initially, the SSN was not an implementing agency, but it ended up being an active participant in the implementation of the second activity of the insurance component. 14. Changes in the regulatory framework and in the supervision of the insurance industry were long over due, following major changes in this industry in the early 1 990s, when the insurance market was deregulated, the state reinsurance monopoly was put into liquidation and the largest insurance company was privatized. Also, the emphasis of the regulatory and supervision effort had shifted from focusing on premiums and product controls to monitoring the solvency of insurance companies. In this context, the technical assistance provided by the CMDTAL was aimed at addressing core regulatory and supervision problems, in an industry still going through a delicate stage, with high fragmentation, many weak companies and high operational inefficiencies in some segments of the industry. 15. Strengthening the legal and regulatory framework of credit reporting. When this component was added to the Project, three activities were considered for technical assistance. One was a review of the existing legal and regulatory framework, to be followed by the preparation of draft amendments necessary to improve such framework. The second one was to carry out a comparative analysis of credit reporting systems in Argentina and in other countries. The third activity was aimed at evaluating privacy issues with regard to credit reporting, including an assessment of how such issues were treated internationally. As already mentioned, these activities were complementary to those being carried out by the BCRA in connection with its efforts to implement a free-access reporting system on the status of bank credit of each debtor. 16. Strengthening the accessibility by small and medium-sized enterprises to private credit. While the Amendment 2 of the Loan Agreement did not identify specific activities to be carried out by the SEPYME-the implementing agency-under this component, an understanding with the Borrower singled out initially five different activities, two of which were of particular interest - 5 -  to the Bank. One was the review of the legal framework governing secured transactions in Argentina, followed by the preparation of a draft law to establish the legal framework for the use of movable goods as collateral for credit operations. The other activity included the review of legislation covering leasing operations and preparation of a draft law aimed at removing legal barriers that discourage the growth of lease financing in Argentina. The general thrust was supportive of the overall objective of expanding term lending to SMEs. 17. The table below shows the revised allocations of Bank funding to each of the components that remained part of the CMDTAL until the Closing Date: Allocation by Component (in US$ million equivalent) Component Allocation at Revised Appraisal Allocation Development of the Securities Market 3.25 2.80 Implementation of the New Pension Funds System 3.40 2.40 Improved Insurance Regulation and Supervision 0.00 1.50 Strengthened Credit Reporting Systems 0.00 0.10 Strengthened Accessibility to Private Credit by Small 0.00 0.80 and Medium-size Enterprises Support to the Project Coordinating Unit 0.35 0.80 Bank Financing to Revised Components 7.00 8.40 3.4 Quality at Entry: 18. The performance rating for qualitv of entry of the CMDTAL is considered to have been satisfactory. At that time, all objectives and activities scheduled under the Project responded to priorities in the National Government's agenda for financial reform. As stated in the CAS, the Bank was-and remains-a strong supporter of the ambitious Argentine reform program. In this respect, the Project was contributing directly to at least two priorities in the Bank's financial development strategy: the strengthening of greatly weakened public institutions and the fostering of private sector development, in particular financial intermediation and capital market development. Also, the Project was consistent with the Bank's safeguard policies. Perhaps the main design shortcoming was the selection of a training credit facility as the vehicle to foster and upgrade project financing capabilities in the financial sector. To be sure, the need was there, but - 6 -  the demand for credit to provide such training never materialized in the marketplace nor did banks show any interest to lend or borrow for that purpose. The two Project objectives that were added in the Amendments and that finally were not pursued also diminished the quality of Project design. Not only they were not implemented, but they did not address directly issues in the capital market reform agenda. Although the two issues were important for the functioning of financial markets, the rationale for their inclusion in the Project had more to do with convenience. In a sense, the resources available under the Project, in those instances, made sure that technical assistance was available for some pressing new activities even though they were not primarily part of capital market reform, but complementary. 19. At appraisal, the main perceived risks were delays in implementation due to management changes in the implementing agencies and to lack of adequate counterparts. Actually, these risks materialized to a degree that had a noticeable bearing on Project implementation, mostly by delaying it. During the Loan's existence there were 4 (or 5?) National Project Directors, a change in the Minister of Economy which resulted in some shifting of priorities and delays related to changing leadership at critical moments in project execution at the CNV and SSN. In fact, implementation progress was even downgraded to unsatisfactory during the supervision mission of end-1996, a rating that was reverted once again six months later. No doubt it was a wise design decision to rely on an existing Project Coordinating Unit-headed by a senior National Project Director-which had been successful in a prior technical assistance operation. However, this was not sufficient to guarantee a timely implementation. In addition and in retrospect, the perception by the Bank staff is that it could have helped to contain the bulging administrative costs of the PCU to have insisted that they be covered by Government counterpart funds rather than by the Bank loan. 20. One of the implementation risks not perceived during Project preparation was the already mentioned inflexibility introduced in the Project design by the Bank TA policy at the time of detailing every activity under the CMDTAL, even those that were to be carried out much later. 21. In summary, weaknesses in Project implementation were not the result of unreasonable assumptions at the time of Project design, except perhaps for the training credit facility component and some of the other minor factors mentioned above. Rather, managerial changes and political factors both at the level of the central economic team and some of the implementing agencies had much more of a bearing on implementation. Also, the absence of a successful Bank-supported, policy-oriented capital market operation had an impact and contributed to the observed shortcomings during implementation. Macro events as well, such as the recession caused by the so-called "Tequila effect", had a much bigger impact during implementation than deficiencies in Project design. 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: 22. This ICR assesses the Project's outcome as satisfactorv, although performance varied by component. This rating is based on the success in achieving the revised list of Project objectives. The assessment of the CMDTAL should not be distracted by the fact that some of its specific -7 -  objectives were finally abandoned. The fact remains that the technical assistance provided by the Project was crucial in the implementation of activities related to three important objectives of the capital market reform in Argentina. Indeed, the Project was instrumental in the creation of the new private pension system in Argentina. In fact, the outcome of the work to establish a sound private pension system, to which the CMDTAL made an active and timely contribution, is worth highlighting. Also, the Project provided resources to support the modernization of the information systems and enhancement of the professional capabilities and training at the CNV. Further, it allowed carrying out most of the groundwork necessary to enhance the legal framework of the insurance industry and the feasibility work to upgrade the institutional capabilities of the SSN. All this is of substance and crucial to the successful reform of capital markets in Argentina. 23. The reservations derive mainly from the significant delays in the implementation of some activities that have left some of the reforms still unfinished. To a degree, this makes overall Project outcome somewhat uncertain, particularly with respect to the legal, regulatory and institutional work done to upgrade the insurance industry. To a lesser degree, this problem is also present in the work done at the CNV. The current economic crisis illustrates the urgent need to consolidate and accelerate the pace of capital market reform in Argentina, as delays in the reform process add to the difficulties to make the economy more productive and competitive. Also, now that the country is due for a change in Administration unfinished reform processes are exposed to further delays. The higher than anticipated administrative costs that resulted mainly from the delays were also detrimental to the global outcome. Indeed, operational costs of the Project Coordination Unit ended up being 12% of the total Project cost, as compared with the 3% figure originally budgeted. 4.2 Outputs by components: 24. The assessment of the developmental achievements of the CMDTAL is summarized in Annex 5. The effort here is to try to evaluate how each of the Project components contributed to the general outcome. 25. Development of the securities market. Given the narrowly defined scope of the Project, in retrospect the output of the CMDTAL was satisfactory, although initial delays in implementation by the CNV undermined the effectiveness of the technical assistance it received. However, implementation eventually got back on track, once Project activities got renewed management attention and commitment by the CNV. Some activities supported by the Project, such as the advanced investor information system for which the CMDTAL provided some technical assistance as well as computing equipment and software financing, still are in the process of being fully implemented. The same can be said of the extensive institutional restructuring efforts that were backed by the Project and which by far absorbed the single largest amount of Bank financing. However, there was noticeable progress in the supervisory work of the CNV, a process that was supported by several Project activities, including the preparation of operational manuals and intensive staff training in key areas of responsibility. Also, the CMDTAL facilitated the introduction of better human resources policies and practices, which were much enhanced. In particular, the Project supported a permanent and modern training program at the CNV. -8 -  26. In summary, this component of the Project had a substantial impact on institutional development and public sector management. Its impact on financial policy was more modest, although as in the case of its impact on private sector development, this could be much more substantial in the future once the promoted reforms become fully operational. Nonetheless, some tasks originally envisioned under the Project still remain unfulfilled, such as the completion of an in-depth restructuring of the CNV, ideally based on a revised organic law. Also, there are indications of other pressing needs to further strengthen the securities market legal and regulatory framework, including a revamping of the private rating industry, the launching of successfully regulated future markets and the enactment of a new bankruptcy law. 27. Implementation of the new pension funds system. The outcome of this component is rated as highly satisfactory, due to the key and timely impact that the technical assistance provided by the CMDTAL had on the launching and development of the new private pension fund industry in Argentina. As scheduled, the Project gave support to the implementation of the initial set of norms and regulations necessary to reform the pension system of Argentina. The Project also supported the implementation and start up of the SAFJP, the regulatory agency for the pension system and the newly created private pension administrators. The CMDTAL also provided assistance to consolidate and enhance the operation of the SAFJP until late in Project implementation. In addition, it financed equipment and technical assistance to develop the Superintendence's database and its information system. All this allowed the consolidation of norms and procedures. In addition, the CMDTAL supported the integration of the old regulatory framework for social security into the functions of the SAFJP. 28. Judging by the significant impact they already have in the local capital market and by the growing importance of the new private pension funds and pension fund administrators, the Project had high achievements on institutional development, private sector development and financial market issues. The CMDTAL played a key role in supporting the implementation of the new pension fund legislation from the outset, both with financial resources and timely technical assistance. Also important was the Project's impact on public sector management, as the new pension system has had important fiscal implications, besides modernizing a function traditionally mismanaged when in public hands. Eventually, it should have a major impact on poverty alleviation if the new pension system improves as expected-as it matures in the years to come- the economic well being of retiring workers. In the meantime, the large pools of new financial savings made available by private pension funds is having a substantial impact on financial intermediation in Argentina and its capital market in particular. 29. Improved insurance regulation and supervision. There was progress under the two activities included under this component, particularly in the area of assessing the legal and regulatory framework of the insurance industry. The evaluation of the institutional capacity of the SSN and of ways to strengthen its capacity also was carried out. However, implementation of recommendations under all these activities did not make as much progress as expected, so the outcome for this component is rated as satisfactory. but with some reservations. 30. Insurance Law Reform. To be sure, the Project supported a thorough review of the two laws that define the legal framework for the industry, which was completed in early 1998. Also, -9-  draft laws were prepared to amend Law 17,418 pertaining to the issuance of insurance policies and insurance contracting, and Law 20,091 covering the legal underpinnings of the insurance industry, its companies, regulations and the SSN. After some initial delays, the Government circulated the newly drafted laws within the Government and the industry, which resulted in new revisions and changes. Submission of these new laws to Congress was made a third-tranche condition of the November 1998 Special Structural Adjustment Loan (SSAL), which should help ensure that they make it to the Legislature. They are expected to be sent to Congress within the next one to two months. 31. Strengthening Enforcement by the SSN. The other objective of the insurance component was to strengthen enforcement by the Superintendency of Insurance. The Borrower took an important step in this direction with the adoption of drastically increased minimum capital requirements for insurance companies (SSN Resolution 25,804). The adoption by the SSN of an action plan for enforcement of the new capital requirements set forth by its Resolution 25,804 was one of the financial sector actions included in the SSAL of November 1998. Progress also has been made in the supervisory function, including the implementation by the SSN of its first early warning system, which the Superintendency formalized via a Resolution 27198 on December 3, 1999. Nonetheless, the early warning system that has been implemented by the SSN remains a first approximation to the topic. In fact, the initial early warning system recommended by the foreign expert hired through the CMDTAL was rejected by the SSN. This felt that the proposed system, although applied in more mature insurance markets, was impractical in Argentina, given the current status of historical databases and the fragile conditions of a large segment of insurance companies. Also a matter of concern is that there has been limited progress in the implementation of an action plan to strengthen the SSN operationally, which to be effective most likely will require substantial changes in its organic law and a new, more market oriented human resources policy. In summary, much remains to be done to improve the working and safety of the insurance industry, increase its transparency and achieve a reasonable resolution of the serious solvency and liquidation problems faced by a significant portion of casualty insurance companies. It should be noted that the SSAL also accelerated and reinvigorated activities to strengthen enforcement of insurance, in particular through conditions related to the adoption of an early-warning system and review of the satisfactory enforcement of the new capital requirements. The work done on insurance under the CMDTAL provided the basis for including this issue in the SSAL conditions, while at the same time, the SSAL increased the pressure for adopting reforms in this area. 32. In summary, the achievements concerning public sector management of insurance activities were modest under this component. More substantive were the achievements on private sector development and financial issues that followed mainly after the market-entry liberalization of 1998. In the insurance sector considerable obstacles to reform remain, derived from the persistent solvency problems of many of the old players, which contrasts with the solid capital base of recent, mostly foreign entrants, as illustrated by the solid capital base of companies offering annuities and life insurance policies. In this environment, it appears that a broad consensus within this highly segmented industry as well as political compromise is required for the necessary legal reforms first to be enacted and then implemented. 33. Training program for long-term financial intermediation. . After several efforts to make - 10-  the two-tier training credit line operational, it became apparent that there was practically no interest in the marketplace in lending or borrowing for the implementation of training programs and courses in the field of project financing. There was agreement between the Borrower and the Bank that the proposed objective was unachievable in the context of the CMDTAL. As a result, there was no tangible development outcome. Thus, this Project component is rated as unsatisfactory. 34. Strengthened credit reporting systems. Even though the Central Bank did accomplish its original objective of setting up and maintaining a freely available credit information databank of bank debtors accessible via the internet, the related Project objective of improving the legal and regulatory framework of credit reporting was not pursued by the BCRA. None of the three activities identified under this component was carried out and the BCRA did not get any finding from the CMDTAL. In retrospect, this component should not have been included in the Loan, since the commitment of the BCRA to this legal reform agenda was weak and, as was learned subsequent to the ammendment, the BCRA was opposed in principle to using funds from Loans administered by the Ministry of Economy. It remains the case, however, that the legal and regulatory framework for credit reporting is still in need of significant improvement, so that the outcome for this component is rated as unsatisfactory. 35. Strengthened accessibility to private credit by small and medium-size enterprises. This component was not carried out by the SEPYME and it is rated as unsatisfactory. In the end, this new Secretariat was able to use alternative sources of funding for its activities and it basically abandoned its initial commitment, not using any funding from CMDTAL. Furthermore, the capacity of the SEPYME as an implementing agency has remained limited. Thus, it has made only partial progress towards fulfilling the objectives for which it was created, in particular that of improving the legal and institutional framework in support of better accessibility to private credit by small and medium-size enterprises. Although two of the activities identified under the CMDTAL to achieve this fifth objective of the Project were later on successfully carried out by the SBS, much remains to be done on the subject of accessibility by small and medium-size enterprises to private credit. A successful implementation of this component could have had a substantial impact on poverty reduction, but so far there has been no developmental achievements under it. This could well be reversed if the two pieces of legislation prepared by the SBS with the support of the Project and now in Congress are enacted. One of these two laws improves the legal framework for the use of movable goods as collateral for credit operations - this law faces a difficult approval process. The other piece of legislation removes legal and tax barriers that discourage the use of lease financing in Argentina and has already been approved by the House (Diputados). Both pieces of legislation would greatly enhance the ability of small and medium-size enterprises to access formal, cheaper credit sources in the local financial market. As with insurance, the SSAL accelerated and reinvigorated these legal reforms which had been advanced previously through the CMDTAL; presentation of both the leasing law and secured transactions law to Congress were fulfilled as second tranche conditions. 36. Support to the PCU. The work done by the PCU in support of Project implementation is considered to have been satisfactory. The Borrower, prior to the Bank's Board presentation, appointed the Project's National Director and the Coordinator in charge of day-to-day operations. - 11 -  In spite of this Unit's satisfactory work, the Project had initial delays, until the National Director of the Project-originally a Secretary at the Ministry of Economy, whose position was eliminated, and then the new Undersecretary of Banking and Insurance-started to focus on Project implementation. In fact, the Project actually became effective almost ten months after its Board approval, just at the onset of the external crisis of December 1994. The Project faired better under the Under-secretariat of Banking and Insurance, which took over the Project in 1995. 37. One of the results of delayed implementation was inflated administrative costs, which were financed by the Bank loan. To be sure, the Government was responsive to the mounting costs of the Unit, reducing its staffing in early 1997 to fit the actual workload. Another source of administrative cost inflation was the fees paid to UNDP, which were not originally budgeted. The hiring of UNDP to facilitate contracting under the Project was an issue of contention with the Borrower, with the Bank initially opposed. In the end it was agreed that UNDP be used, with its fees paid by the Borrower. Bidding for public contracts in Argentina can be quite cumbersome and is often exposed to delays and uncertainties, which are normally avoided by contracting via UJNDP. By contracting under the umbrella of the UNDP, bidders are ruled by the international framework applied by the United Nations, eliminating the usual delays and practices that normally undermine direct public sector procurement in Argentina. In the case of the CMDTAL, the PCU was able to avoid significant delays in the implementation of one of the insurance activities by using the contracting services of the UNDP. Contracting under the UNDP umbrella also provides more latitude and flexibility (e.g., income tax issues and salary levels) to the Central Government in the fee scheme it applies in the hiring of consultants under a project. 4.3 Net Present Value/Economic rate of return: 38. This section is not applicable in the present ICR. 4.4 Financial rate of return: 39. This section is not applicable in the present ICR. 4.5 Institutional development impact: 40. <Rating of Institutional Development Impact is not being implemented at this time pending further analysis to permit meaningful and consistent guidance for its application.) 5. Major Factors Affecting Implementation and Outcome 5.1 Factors outside the control of government or implementing agency: 41. Basically, most factors were within control of the Government or its agencies. Perhaps the main potential obstacle to capital market reform outside the Government's control was the legislative process in Congress, which is often needed for in-depth reform, as is the case with the modernization of the insurance industry. However, obstacles in passing legislation did not play a major role since the Government did not make much progress in sending draft legislation to Congress in the first place. Considerably more bearing on Project implementation was the fact that this technical assistance operation lacked a successful, parallel and comprehensive policy - 12 -  oriented Bank operation supporting capital market reform in Argentina. This is perceived as having caused the Project to lose some of its focus, which also helps in explaining some of the delays in its execution. The fact that the big Capital Market Development project (Loan 3709-AR) was unsuccessful and had to be canceled did not help in keeping the focus of the Government on the objectives of the CMDTAL. 5.2 Factors generally subject to government control: 42. The previous paragraph indirectly suggests that central to reform is the commitment of the Government to the objectives of a project. In the case of CMDTAL, the initial priorities were clearly with the reform of the pension system, which helps explaining the success in implementing the new legislation with the support of the Project. On the other hand, the Project suffered initially from lack of attention by key decision-makers at the Ministry of Economy, who could have improved Project effectiveness as well as accelerated implementation of the agenda of activities at the CNV. One question is why the reform of the insurance industry was not part of the original list of objectives. To be sure, the need to reform this industry had been recognized for some time. However, the Government became resolved to address the important issues it faced in the insurance sector only after the Project was being implemented. Its commitment became evident once the Government decided to change the old business model for the casualty insurance industry. The liberalization and privatization that took place also required a full revamping of the legal and regulatory framework of the insurance industry. It was for this purpose and to enhance supervision of the insurance industry that the Government decided to use the technical assistance provided by the CMDTAL. While the Project provided the technical assistance and the means to support the reformulation of the legal and regulatory framework for the insurance industry, this has not been enough for achieving a successful reform. Faster progress has been delayed by the political, fiscal and financial difficulties of successfully solving the complex issues of insolvency and bankruptcy faced by the old segment of the casualty insurance industry. The difficulties of dealing with many weak companies in a highly fragmented industry and with a SSN in need of a major overhaul have added to the Government's difficulties to consolidate the reform of the insurance business in Argentina. 5.3 Factors generally subject to implementing agency control: 43. In the case of the CMDTAL, the factors that stand up behind the success of implementing agencies are the commitment, dedication, leadership, continuity and professional capabilities behind each of the teams. Those components, such as those dealing with the pension reform, that had continuity and an able team from the outset, accomplished the most. In the case of training at the CNV the incorporation of a dedicated implementation team was able to retake this activity and finally execute it successfully. On the other hand, the objective of strengthening accessibility to private credit by small and medium-size enterprises suffered from a lack of implementation skills at the SEPYME. In the case of the credit reporting system, the lack of initial commitment and identification by the BCRA and identification with the objective of reforming the legal and regulatory framework-strongly favored by the Bank-led to failure in the implementation of the selected activities. In summary, the CMDTAL was able to present a coherent and useful package of activities, with a high potential for a developmental impact. Implementation success came most often when the implementing agencies showed both commitment and professional capabilities to - 13-  execute their assigned responsibilities. 5.4 Costs andfinancing: 44. At the end, the total cost of the Project amounted to some US$7.4 million, of which the Bank Loan 3710-AR contributed close to US$7 million-the original loan amount was US$8.5 million. Other Project costs were covered by Government counterpart funds. Most of the financial resources of the Project were used to hire consulting services, which explained some 79% of the total spent. In comparison, during appraisal that percentage was projected at 73% of the total Project cost. The rest of Project resources, some US$1.58 million, were spent on equipment and materials. Annex 2 presents more detailed figures on Project costs and financing. 6. Sustainability 6.1 Rationale for sustainability rating: 45. Practically all achievements under the Project are highly likely to be sustainable. In particular, it is highly likely that what was accomplished in connection with the private pension reform and actions successfully completed at the CNV and SSN will be sustained over the foreseeable future. Also, there is a good chance that financial reform will deepen in the years to come. This view is reinforced by the fact that the Government remains formally committed to financial reform, including that of capital markets, as illustrated by the policy matrix of the SSAL currently being implemented. Furthermore, the economic programs of the recently elected Administration has reaffirmed its commitment to the prevailing economic model and to further financial reform, in particular. 6.2 Transition arrangement to regular operations: 46. Currently, the Bank does not plan a follow-up capital market TAL. However, some of the objectives of the Project are being pursued further under the current SSAL of November 1998. As already mentioned, this policy operation included specific financial sector actions for which the CMDTAL provided necessary technical assistance groundwork. In particular, the S SAL required as part of its conditionality the adoption by the SSN of an action plan for enforcement of minimum capital requirements by insurance companies. Also, it included the presentation to Congress of draft laws to strengthen and facilitate the use of movable goods as secured collateral in credit operations and to remove barriers limiting the use of lease financing. 47. In the current transitional political environment in Argentina, the desirability of follow-up work to the CMDTAL should be evaluated once the new Administration is established in office. The identification of a new operation in the sector ideally should wait to see the progress made under the current SSAL and any further TAL should be addressed as a complement to a parallel, policy oriented operation geared to deepen financial reform in Argentina. The experience gained through the CMDTAL and SSAL does suggest high-priority issues which the Bank should continue to address in its on-going dialogue with the Borrower. These include deepening reform of the insurance industry, in terms of a new legal framework, restructuring of the Superintendency and enhancing its enforcement capabilities, and strengthening the legal and regulatory framework for capital market and financial sector development including reform of the ratings industry and - 14-  related regulations, tax treatment of financial instruments, secured transactions reform and leasing law reform. New impetus is now being given to SMEs in policy dialogues. Since many of the legal reforms are in discussion in Congress, the Bank should consider how it might contribute to informing legislators, members of the new executive Government and even a more general public regarding their merits. 7. Bank and Borrower Performance Bank 7. 1 Lending: 48. The Bank's performance in the identification, preparation assistance and appraisal of the Project was satisfactorv. The original objectives of the CMDTAL and those added during execution were consistent with the Government's agenda for financial reform and the Bank's CAS. Also, the Project design incorporated the lessons from past technical assistance operations and relied on the existing staff and setup of an already experienced Project Coordination Unit. Furthermore, the Bank knew well and had contributed heavily already to the financial reform in Argentina. The Bank's experience was well documented and it was familiar to the staff that worked on Project preparation. (The Bank inputs to the Project are summarized in Annex 4). As already mentioned, the Bank recognized during appraisal the risks of delays in implementation due to management changes in the implementing agencies and to lack of adequate counterparts. These were risks worth taking, however, given the importance of the Project objectives to capital market reform and the exceptional track record of the Argentine Government in reforming the economy during the years preceding the approval of the CMDTAL. Perhaps the main shortcoming in Project design was the inclusion of the training credit facility as one of the components. However, there were practically no other options once the use of direct Government subsidies was ruled out for the training of the staff of banks and other financial institutions. Once the non-viability of this component was confirmed during implementation, it was dropped from the Project. 7.2 Supervision: 49. The Bank performance in supervision also is considered to have been satisfactory. In general, the Supervision Forms 590 were realistic and adequately reported implementation progress. However, at the beginning of Project implementation there was a lack of continuity in supervision due to frequent changes in Task Managers. Full-fledged supervision missions took place at least once a year, although following the review of the Project agenda in mid-1996 the frequency of supervision missions was increased. From then on the staff reviewed the Project agenda often and the two Loan Amendments that took place tried to reflect new priorities in the reform effort. In this respect, the staff was responsive to the Borrower's changing needs, although some of the activities incorporated by the Amendments were only complementary to the main thrust of the capital market reform effort. In retrospect, it might have been better to have reduced the loan amount when BICE's training credit facility was cancelled. Also, technical assistance operations tend to be demanding on staff time on a day-to-day basis due to the large number of relatively small non-objections that have to be reviewed and processed. The CMDTAL was no exception, and at times there were delays on the approval process that actually slowed down Project implementation. - 15 -  7.3 Overall Bank performance: 50. Given the Bank's lending and supervision performances analyzed above, the Bank's overall performance can be considered satisfactorv. Borrower 7.4 Preparation: 51. The Government preparatory work for the Project was satisfactory. By the time of negotiations, the Government had reviewed and agreed to a detailed matrix of project activities. Also, the terms of reference for all activities included under the securities market and the new pension fund system components had been agreed on with the Bank. In addition, the National Project Director and the Coordinator of the PCU were confirmed prior to Board presentation. Besides, some of the work on the new pension system and the securities market had been initiated prior to Loan signing, so US$850 thousand in retroactive financing was allowed. Together with the Bank, the Borrower went along with the design of the training credit facility for which BICE was the implementing agency. 7.5 Government implementation performance: 52. The Government's implementation performance can be considered satisfactory, but with some reservations. The work done by the Govermnent under the Project had tangible results in improving the regulatory framework and supervision in three important industries, crucial to the development of capital markets: pension funds, securities and insurance. However, work progress was slower than originally scheduled and this was due, to an extent, to the unevenness over time of the Government's commitment to some of the Project objectives, commitment that was particularly weak at the beginning of Project implementation. In part this was the result of lack of involvement by the Project's National Director, with the CMDTAL regaining momentum when there was a National Director focused on carrying out the agreed on activities-as was the case when the Project was under the Under-secretariat of Banking and Insurance. To be sure, the successful pension fund-related component had a momentum of its own and moved forward smoothly, taking advantage of an efficient implementing agency and the broad political consensus around the need to create and develop the new privately managed, fully funded pension funds. The other components, original ones and those added during implementation, did not have the same degree of political momentum behind them, so they could have benefited from a little more attention from those in the Governmnent leading the -often successful-financial reform effort. 7.6 Implementing Agency: 53. The record of the nine implementing agencies involved in Project execution was mixed (see Annex 6). Some of them, like the SAFJP, had a highly satisfactory performance. Others (SBS, CNV, PCU) did satisfactory work, while others (BCRA, BICE, SSN and SEPYME) performed unsatisfactorily. The BCRA was never committed formally to carry out the actions required from it and in this respect the Bank and the Borrower should have made efforts to secure the BCRA commitment prior to the inclusion of the credit-reporting component. In the case of BICE, this did not formalize its participation in the Project until the summer of 1995, even though - 16 -  it participated in Project preparation and negotiations. Furthermore, it never produced the credit regulations for the two-tier facility providing loans for training activities or named an official counterpart to carry out Project-related activities. Besides the problems of design already mentioned, this attitude of BICE certainly contributed further to undermine the viability of the training component and the valid objective it pursued. 7. 7 Overall Borrower performance: 54. As already pointed out, the CMDTAL had significant and sustainable achievements, adequately contributing to the advancement of the capital market reform in Argentina. Thus, in retrospect, the overall performance of the Borrower is considered to have been satisfactory. However, some reservations are in order, particularly in connection with the overall commitment to the objectives of the Project during execution. In practical terms, all this translated into delays, first in meeting the effectiveness conditions and later on in the slower than expected progress made in reforming the legal and regulatory framework of the insurance industry. Also, much work remains to be done on regulatory and supervision issues in the securities market. The fact that more progress was not made is understandable to some extent in view of the heavy agenda of financial reform that the Government had to address simultaneously with the implementation of the CMDTAL. Indeed, there were many urgent and demanding banking issues that had to be addressed at the same time. This included, among other things, ways to diffuse the serious liquidity crisis suffered by provincial banks and some private banks after the onset of the late-1994 financial crisis. Also, the Government opened up financial markets further to competition (e.g., expansion of securitization through financial trusts, streamlining of pension fund regulation, etc.), improved banking regulation and supervision and accelerated the processes of liquidation of provincial and other insolvent banks. It also pushed for the privatization of public banks, provincial and national. In this buoyant environment of financial reform, some implementing agencies, as already explained, were not able to keep pace with the agreed upon implementation schedule, which was detrimental to Project execution. 8. Lessons Learned 55. Several of the lessons derived from the execution of the CMDTAL have already been suggested earlier in the text. This section summarizes them and highlights those of more general applicability and relevance for similar projects. * Technical assistance projects have limitations in addressing structural issues. It is much more effective to have them be a complement to a policy-oriented operation to which they provide their support. In the case of the CMDTAL, there was a larger, parallel Capital Market Development project, but when the latter did not work as expected, the Project was left somewhat orphaned in its effort to support capital market reform in Argentina. It is often too much to expect of a technical assistance operation, however effective, that it performs well on its own in matters that require decisive political action or complex decisions, which probably was the case of insurance and securities market reform. The experience with CMDTAL suggests that this could have been more successful supporting a policy oriented Bank operation. * There is a tendency by borrowers and the Bank to overestimate the capacity to absorb - 17-  technical assistance. The CMDTAL had a limited list of objectives and activities, all of which had been clearly identified and for which-with the exception of the training credit facility-terms of reference had been agreed on. However, even in this clearly thought out Project, there were significant limitations in the capacity of the Borrower to carry out the implementation schedule in the Loan Agreement. The lesson here is that even when there is a sound administrative structure in place, the capacity to procure is limited and is a victim of unforeseen frictions, particularly in countries like Argentina, where contracting by the public sector can be quite cumbersome. TALs are administratively demanding and management intensive operations. More emphasis should be put on contracting and procurement issues during Project design. * Project design should not overestimate the capacity to foresee each activity necessary to achieve a given objective, particularly those far into the future. The experience with the CMDTAL is that the inclusion of a detailed, comprehensive implementation schedule in the Loan Agreement did not improve project implementation. On the contrary, to assume perfect vision of future project activity at the time of project preparation can even be counterproductive. Perhaps, project design should be less ambitious and, and while spelling out clearly the TAL objectives, include only a detailed work plan for the first year of implementation, leaving agreement on the activity pipeline from the second year on to a detailed annual review process. * It pays to include a sound project management structure as part of the design of a technical assistance project. The CMDTAL once more showed the importance of having an experienced Project Coordinating Unit. The commitment and dedication of the Project's National Director also were crucial for a fluid implementation. However, the Bank should 'try to avoid financing the administrative cost of the PCUs, since a Government funded unit would improve overall accountability and make the Borrower more cost conscious. Moreover, an effort should be made at the time of project preparation to formalize as much as possible the commitment of implementing units to the objectives and activities of the project, particularly when those implementing units are autonomous governmental agencies, as was the case of the CMDTAL. 9. Partner Comments (a) Borrower/implementing agency: The Borrower provided the Bank with a detailed, 35-page evaluation of Project implementation, which was prepared by the Undersecretary of Banks and Insurance of the Ministry of Economy of Argentina. This report has been placed in the Project files and is available to interested readers. This ICR only includes Section V of the report (unedited and in Spanish), which contains its global evaluation and conclusions. An English translation is also attached for the convenience of readers. Section V: Evaluaci6n Global - Conclusiones Este Proyecto tenia en su diseno inicial una segunda parte relacionada, que era el prestamo 3709-AR y que no pudo concretarse. Esto cambi6 sustancialmente el sentido general e inicial de este pr6stamno. Ello determin6 que luego el Proyecto quedara circunscripto a financiar componentes de Asistencia Tecnica. - 1 8-  No obstante ello, se considera que constituy6 un acierto el haber mantenido el proyecto por cuanto los objetivos para los distintas partes eran sumamente valiosos para el mejoramiento del mercado de capitales y financiero de la Argentina Ademas, debe merituarse que sin este Prestamo, dificilmente se contaria con los variados e importantes aportes que han resultado para cada una de las areas involucradas las nuevas herramientas que deja la implementaci6n de este proyecto. Estas herencias consisten tanto en equipamientos, capacitaci6n, proyectos de Leyes, Regulaciones, Planes Estrategicos, analisis de tuncionamiento de los entes de supervision, e informes tecnicos. Por lo expuesto se considera que la correcta valoraci6n del Proyecto debe ser tomada a partir de la revisi6n de los objetivos iniciales, y los resultados obtenidos. Se considera que quizas existi6 un cierto grado de rigidez en la formulaci6n un tanto excesivamente especifica de ciertos componentes, y hubiera sido deseable un mayor grado de flexibilidad para adaptarse a cambios en las prioridades o problematicas que la prestataria resolvi6 de otras formas. Es ineludible que los sucesivos cambios en los responsables de los O-anismos de Ejecuci6n como en la Direcci6n Nacional del Proyecto, le quitaron continuidad a la ejecuci6n del prestamo. Pero ello deberia contemplarse en el -turo como algo esperable en proyectos de plazos extensos de duraci6n en paises en vias de desarrollo. Sin perjuicio de estas observaciones, se considera que ellas no afectaron la obtenci6n de los resultados definidos bajo el prestamo y s6lo se tradujeron en una necesidad de mayor tiempo para la conclusi6n de ciertos componentes La prestataria considera que ha obtenido en forma satisfactoria los objetivos esenciales del Proyecto, y que ellos han constituido una contribuci6n decisiva para el mejoramiento del mercado de capitales, financiero, seguros y fondos de pensiones en la Argentina. Por ultimo se entiende que ha sido clave y altamente favorable el rol de asistencia de los integrantes del Banco para obtener estos resultados, quienes actuaron con una colaboraci6n * amplia y oportuna en todo momento. Section V (English Translation) Global Evaluation - Conclusions This project was initially designed as a complement to Loan 3709-AR, which was not implemented as planned. This substantially changed the initial and general objectives of this loan. It resulted in this loan being limited in scope to financing specific technical assistance activities. Despite the change noted above, we believe that it was appropriate to have maintained the project since the objectives in the different project components were highly valuable, improving the capital markets and financial sector in Argentina. In addition, it should be acknowledged that - 19 -  without this loan, it is unlikely that the various and important contributions that have resulted for each of the involved financial sectors would have materialized. These contributions include equipment, training, new draft laws, regulations, strategic planning, analysis of coordination between financial sector regulators and technical reports. Given the preceding comments, we believe that a correct evaluation of the Project should be based upon the revised objectives and, consequently, the results obtained. There was perhaps an excessive rigidity in the specificity of the descriptions of certain project components, and greater flexibility would have been desirable in order to adapt to changes in priorities or problems; this rigidity required the Borrower to address these changes in other ways. It is evident that the successive changes in the officials responsible for the project in the Implementing Agencies, as well as in the National Project Direction, created discontinuities in the implementation of the loan. But personnel changes should be expected in the future when planning for long-term projects in developing countries. In spite of the above observations, we believe that these difficulties did not affect the accomplishment of defined results under the loan, only translating into a need for an extended time period to conclude certain project components. The Borrower believes that it has obtained, in a satisfactory manner, the essential objectives of the Project, and that these constitute a decisive contribution toward the improvement of the capital, financial, insurance and pension fund markets in Argentina. Finally, the assistance of Bank staff has been very significant and highly favorable in achieving these results, encompassing both a collaborative attitude and timely assistance throughout the project. (b) Cofinanciers: Not applicable. (c) Other partners (NGOs/private sector): Not applicable. 10. Additional Information Preparation of this Core ICR was begun during a Bank mission that took place in early August 1999. Also, it is based on material in the project files and on perspectives gained by the Region during its continued involvement in the financial reform that has been carried out in Argentina during the nineties. The Borrower contributed to the preparation of the ICR by commenting on the draft ICR and by preparing its own evaluation of the Project's execution, a summary of which has been reproduced (unedited) in Section 9. - 20 -  Annex 1. Key Performance Indicators/Log Frame Matrix Not applicable. - 21 -  Annex 2. Project Costs and Financing 2.A Project Cost by Component (in US$ million equivalent) Percentage Project Cost by Component Appraisal Actual/Latest of Estimate Appraisal Original Components 1. Development of the Securities Market 4.55 2.71 59.6% 2. Implementation of the New Pension Funds 3.80 2.69 70.8% System 3. Training Program for Long-term Financial 1.50 0.00 0.0% Intermediation 4. Support to the Project Coordinating Unit 0.35 0.91 260.0% Added Components during Implementation 5. Improved Insurance regulation and Supervision n.a. 1.06 6. Strengthened Credit Reporting Systems n.a. 0.00 7. Strengthened Accessibility to Private Credit by n.a. 0.00 Simall and Medium-size Enterprises Total Project Costs 10.20 7.37 Total World Bank Financing 8.50 6.96 2.B Project Costs by Procurement Arrangements (in US$ million equivalent) Expenditure Category Appraisal Actual/Latest Estimate Estimate 1. Consultant Services and Training: of which 7.48 5.58 Individual consultants 1.44 Firms 3.58 Training 0.29 UNDP fees 0.19 Travel 0.09 2. Equipment and Materials 2.32 1.58 3. Miscellaneous 0.00 0.21 10.20 7.37 Figures include all types of procurement methods. There are no disaggregated figures for this project. -22 -  2.C Project Financing by Component (in US$ million equivalent) _Actual/Latest Percentage of Appraisal Estimate Appraisal Component Bank Gov. Bank Gov. Bank Gov. Original Components 1. Development of the Securities Market 3.25 1.30 2.63 0.08 80.9 6.1 2. Implementation of the New Pension 3.40 0.40 2.47 0.22 72.7 55.0 Funds System . 3. Training Program for Long-term 1.50 0.00 0.00 0.00 0.0 0.0 Financial Intermediation 4. Support to the Project Coordinating 0.35 0.00 0.84 0.07 240.0 n.a. Unit Added Components during Implementation 5. Improved Insurance Regulation and n.a. n.a. 1.03 0.04 Supervision 6. Strengthened Credit Reporting Systems n.a. n.a. 0.00 0.00 7. Strengthened Accessibility to Private n.a. n.a. 0.00 0.00 Credit by Small and Medium-size Enterprises____ Total Proiect Costs 8.50 1.70 6.96 0.40 81.9 23.5 - 23 -  Annex 3: Economics Costs and Benefits Not applicable. -24 -  Annex 4. Bank Inputs (a) Missions: [Stage of Project Cycle No. of Persons and Specialty Performance Rating (e.g. 2 Economists, I FMS, etc.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 8/1993 1 1 TM Appraisal/Negotiation 9/1993 2 1 TM & 1 Consultant 12/1993 5 1 TM, 1 Economist, 1 Lawyer, 1 Disbursement Officer, 1 Capital Market Analyst Supervision June 1996 2 1 Sr.Financial Market U S Specialist & I Economist Nov. 1996 1 1 Economist - Task Manager U S March 1997 1 1 Economist - Task Manager S S Dec. 1997 1 1 Economist - Task Manager S S May 1998 1 1 Economist - Task Manager S S Jan. 1999 1 1 Economist - Task Manager S S ICR Aug 1999 1 1 Consultant Aug 1999 1 1 Economist - Task Manager (b) Staff: Stage of Project Cycle Actual/Latest Estimate ___ . ...No. Staff weeks MS (l00) Identification/Preparation 7.8 21.7 Appraisal/Negotiation 19 46.2 Supervision 80.4 165.3 ICR 5.13 11.3 Total 112.33 244.5 - 25 -  Annex 5. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating .N Macro policies OH OSUOM ON *NA Sector Policies O H OSU*M ON ONA O Physical O H OSUOM ON *NA I Financial O H *SUOM O N O NA 2 Institutional Development 0 H O SU O M 0 N 0 NA j Environmental Social S Poverty Reduction 0 H O SU O M 0 N 0 NA OGender C H OSUOM O N * NA OOther (Please specify) O H OSUOM O N * NA