Financial and Private Sector Development Project

active

The proposed Project is a US$50 million Investment Project, with the MoF as the Borrower and primary implementing agency. It includes four components: Component 1: Deposit Insurance Fund. The component will fund the IDIF and finance payout automation software and public awareness campaigns, in order to reduce bank runs and improve depositor trust. Component 2: Partial Risk-Sharing Facility (PRSF).The component will finance a partial risk-sharing facility (PRSF) and related capacity building to share the credit risk of eligible MSME loans with participating financial institutions (PFIs), in order to support MSMEs facing collateral constraints in normal times and the higher risk aversion of banks during the COVID-19 crisis aftermath. It is proposed that this component be managed under ESS 9 (Financial Intermediaries). The PRSF could be used by PFIs to partially guarantee short-term credits and overdrafts, restructured MSME loans that were in good standing prior to the COVID-19 crisis, and new MSME loans. The PIU will require PFIs to develop and implement an Environmental and Social Management System (ESMS), acceptable to the PIU and the World Bank, to classify and manage the environmental and social risks of their financing activities. Component 3: Supplier and Export Development Program (SEDP).The component will fund under the Supplier and Export Development Program (SEDP) capacity building and partial reimbursement grants for MSMEs, in order to increase MSME market linkages to large local and multinational corporations. Component 4: Project implementation, coordination, and managementComponent 4 will finance overall project implementation, coordination, and management. The component will finance relevant expenses, including incremental implementation costs for staff and operating expenses, and commission fees to agencies and Government entities in project implementation. The Project is aligned with the World Bank Group’s Country Partnership Framework (CPF) for Tajikistan for FY19–23. The Project’s interventions will enable the private sector to create more and better jobs, and thus contribute to private-sector led growth - aligning with CPF’s Pillar I, “Strengthening the role of the private sector”. In addition, the Project will allow MSMEs to better connect with firms in regional value chains - contributing to the CPF’s Pillar III, “Promoting regional connectivity”.