First Private Sector Development Project

closed

The principal objective of the First Private Sector Development Project is to support and help accelerate the government reform program in the enterprise and financial sectors, focusing especially on measures enhancing the links between commercial banks and enterprises. In particular, the project will: 1) accelerate the emergence and growth of small and medium scale enterprises (SMEs); 2) streamline larger enterprises and release currently unproductive assets into the market, thus creating smaller, focused companies; 3) increase the efficiency of resource mobilization and credit allocation through the provision of assistance to restructure the banking system; and 4) strengthen the infrastructure for banking activity, and provide institutional development support for solvent banks. The project will comprise two components: 1) an enterprise sector strengthening component (ESSC); and 2) a financial sector strengthening component (FSSC). The ESSC will facilitate the growth of a population of viable and competitive enterprises by providing technical assistance for rationalizing selected larger enterprises and by providing private SMEs with the technical assistance necessary to prepare bankable investment projects. The ESSC will also provide computer hardware and software to assist in strengthening the ability of the tax administration within the Ministry of Finance to collect taxes in a timely fashion and lower transaction costs. The FSSC will provide resources -a credit line- through qualified participating banks, for medium-term loans to private and privatized enterprises. This component will also: 1) assist with the development of banking skills in the participating banks; 2) strengthen the payments system through the provision of computer software and hardware for the clearing center at the National Bank of Moldova (NBM); and 3) support further institutional development -including automation- for NBM as a whole.