Bosnia and Herzegovina - Emergency Pilot Credit Project
POLLNAC, R.
The assessment of outcome is satisfactory, sustainability likely, and the institutional development impact modest. While the Bank performance is rated satisfactory, the performance by the Borrower is highly satisfactory, given the level of commitment to preparation, and the outstanding performance of the Project Coordination Unit (PCU). Lessons are as follows. The credit line design, in spite of the emergency situation, succeeded because participating banks were allowed to take the risk, rather than to act on an agency basis; this provided an incentive to the banks to rapidly upgrade credit management performance, despite the difficult environment. Moreover, the effectiveness of the project also stemmed from close Bank supervision, complemented by good PCU management. However, problems of donor funding shortfalls for the credit line, and general donor coordination became more acute, because the Bank was the minority financier. While this minority financing was justified, Bank caution should be exercised if the Bank is the lead donor agency, unless resources are available for active donor coordination. One result of this difficult donor coordination, was that trust fund clearance within the Bank, was also delayed, and reflected lack of resources for implementing complex co-financing. Optimal design for a non-emergency operation might differ from this project design in that: the Credit Line Section might require greater institutional autonomy to reduce political interference; bank accreditation standards could be tighter; and sub-loan approval simplified; and, technical assistance be more cost-effective, particularly in enterprise support.
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