Document of The World Bank Public Disclosure Authorized Report No: 131853 - MZ IMPLEMENTATION COMPLETION AND RESULTS REPORT ON A SERIES OF DEVELOPMENT POLICY CREDITS (IDA-55200; IDA-H9750; IDA-57290) Public Disclosure Authorized IN THE AMOUNT OF SDR 34.2 MILLION (US$ 50 MILLION EQUIVALENT) TO THE REPUBLIC OF MOZAMBIQUE FOR FIRST PROGRAMMATIC FINANCIAL SECTOR DEVELOPMENT POLICY OPERATION (FSDPO I) SECOND PROGRAMMATIC FINANCIAL SECTOR DEVELOPMENT POLICY Public Disclosure Authorized OPERATION (FSDPO II) October 31, 2018 Finance, Competitiveness and Innovation Global Practice Southern Africa Country Department 2 Africa Region Public Disclosure Authorized i CURRENCY EQUIVALENTS Exchange Rate Effective July 16, 2014 (IDA-55200; IDA-H9750) Exchange Rate Effective September 29, 2015 (IDA-57290) Currency Unit US$1.00 Currency Unit = New Metical (MZN) IDA-55200 and IDA-H9750 US$1.00 = MZN 31.25 US$ 1.00 = SDR 0.648688 IDA-57290 US$1.00 = MZN 42.725 US$ 1.00 = SDR 0.711869 MOZAMBIQUE – GOVERNMENT FISCAL YEAR January 1- December 31 WEIGHTS AND MEASURES Metric System Country Director: Mark R. Lundell Senior Global Practice Director: Alfonso Garcia Mora Practice Manager: Douglas Pearce Task Team Leader: Julian Casal ICR Team Leader: Julian Casal ii ABBREVIATIONS AND ACRONYMS AML Anti-Money Laundering ATM Automated Teller Machine ATS Automated Transfer System BOM Bank of Mozambique BT Bilhetes do Tesouro BVM Bolsa de Valores de Moçambique CDD Customer Due Diligence CEL Sistema de Compensação Electrónica CFT Combating the Financing of Terrorism CoM Council of Ministers CPFL Consumer Protection and Financial Literacy CPS Country Partnership Strategy CSD Central Securities Depository CSE Crisis Simulation Exercise DFID Department for International Development DGF Deposit Guarantee Fund DPO Development Policy Operation DVP Delivery Versus Payment ELA Emergency Liquidity Assistance ESAAMLG Eastern and Southern Africa Anti Money Laundering Group e-SISTAFE Sistema de Administração Financeira do Estado FDI Foreign Direct Investment FIRST Financial Sector Reform and Strengthening Initiative FISF Financial Inclusion Support Framework FSAP Financial Sector Assessment Program FSDPO Financial Sector Development Policy Operation FSDT Financial Sector Deepening Trust FSTAP Financial Sector Technical Assistance Project GBM Governor Bank of Mozambique GDP Gross Domestic Product GIFiM Financial Intelligence Unit of Mozambique GIZ Gesellschaft für Internationale Zusammenarbeit GoM Government of Mozambique GRS Grievance Redress Service GTZ Gesellschaft für Technische Zusammenarbeit ICA Investment Climate Assessment ICAAP Internal Capital Adequacy Assessment Process ICR Implementation Completion and Results Report IDA International Development Association IFC International Finance Corporation IFRS International Financial Reporting Standards IMF International Monetary Fund ISSM Instituto de Supervisão de Seguros de Moçambique KfW Kreditanstalt für Wiederaufbau iii KYC Know-Your-Customer LNG Liquefied Natural Gas LOLR Lender of Last Resort MDM Mozambique Democratic Movement M&E Monitoring and Evaluation MFSDS Mozambique Financial Sector Development Strategy ML Money Laundering MEF Ministry of Economy and Finance MPD Ministry of Planning and Development MSME Micro, Small and Medium Enterprise MTDS Medium-Term Debt Management Strategy MZN Mozambican Metical NFIS National Financial Inclusion Strategy NGO Non-Governmental Organization NPL Non-Performing Loan OEOT Obligations and Incentives of Primary Dealers OT Obrigações de Tesouro (t-Bills) PA Prior Actions PARP Plano de Acção para Redução da Pobreza PCN Project Concept Note PDO Project Development Objective PFM Public Financial Management PRSC Poverty Reduction Support Credit PQG Plano Quinquenal do Governo PSD Payment Systems Department PSI Policy Support Instrument ROA Return on Assets ROE Return on Equity RTGS Real Time Gross Settlement System SC Steering Committee SDR Special Drawing Rights SISTAFE Government Financial Management Information System SME Small and Medium Enterprise SOEs State Owned Enterprises SSA Sub-Saharan Africa TA Technical Assistance TF Terrorism Financing UN United Nations UNCDF United Nations Capital Development Fund USAID United States Agency for International Development USD United States Dollar WB World Bank iv MOZAMBIQUE FINANCIAL SECTOR DEVELOPMENT POLICY OPERATIONS CONTENTS 1. Program Context, Development Objectives and Design ................................................ 1 Context at Appraisal ................................................................................................. 1 Original Program Development Objectives (PDO) and Key Indicators ................... 4 Revised PDO and Key Indicators, and Reasons/Justification .................................. 5 Original Policy Areas Supported by the Program .................................................... 6 Revised Policy Areas ................................................................................................ 9 Other significant changes .......................................................................................... 9 2. Key Factors Affecting Implementation and Outcomes .................................................. 9 Program Performance ............................................................................................... 9 Major Factors Affecting Implementation ............................................................... 10 Monitoring and Evaluation (M&E) Design, Implementation and Utilization: ....... 13 Expected Next Phase/Follow-up Operation: ........................................................... 14 3. Assessment of Outcomes .............................................................................................. 14 Relevance of Objectives, Design and Implementation ........................................... 14 Achievement of Program Development Objectives ............................................... 16 Justification of Overall Outcome Rating ................................................................ 22 Overarching Themes, Other Outcomes and Impacts .............................................. 22 4. Assessment of Risk to Development Outcome ............................................................. 24 5. Assessment of Bank and Borrower Performance ......................................................... 25 Bank Performance ................................................................................................... 26 Borrower Performance ............................................................................................ 28 6. Lessons Learned............................................................................................................ 29 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners............... 31 Annex 1 Bank Lending and Implementation Support/Supervision Processes.................. 32 Annex 2. Summary of Borrower's ICR and/or Comments on Draft ICR ......................... 34 Annex 3. List of Supporting Documents .......................................................................... 35 Annex 4. Analytical underpinnings of the FSDPO series................................................. 38 Annex 5. Results Indicators for FSDPO I and II and Status of Prior Actions .................. 39 v A. Basic Information FSDPO I Country Mozambique Program Name FSDPO II FSDPO I: IDA-55200 & FSDPO I: P133687 Program ID L/C/TF Number(s) IDA-H9750 FSDPO II: P151861 FSDPO II: IDA-57290 ICR Date 09/29/2018 ICR Type Core ICR GOVERNMENT OF Lending Instrument DPL Borrower MOZAMBIQUE Original Total FSDPO I: XDR 16.2 M FSDPO I: XDR 16.2 M Disbursed Amount Commitment FSDPO II: XDR18 M FSDPO II: XDR 18 M Implementing Agencies Ministry of Economy and Finance (MEF); Bank of Mozambique (BoM) Co-financiers and Other External Partners: There were no co-financers to FSDPO I and II Budget support partners: African Development Bank, Austria, Belgium, Canada, Denmark, European Union, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and UK B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: Effectiveness: 05/16/2013 FSDPO I 05/16/2013 FSDPO I 09/22/2014 04/02/2015 FSDPO II 04/02/2015 FSDPO II 12/15/2015 Appraisal: Closing: FSDPO I 11/11/2013 FSDPO I 06/30/2015 06/30/2015 FSDPO II 08/06/2015 FSDPO II 06/30/2016 06/30/2016 Approval: FSDPO I 07/15/2014 FSDPO II 09/29/2015 C. Ratings Summary C.1 Performance Rating by ICR Overall Program Rating Outcomes Moderately Satisfactory Risk to Development Outcome Significant Bank Performance Moderately Satisfactory Borrower Performance Moderately Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Overall Program Rating Bank Ratings Borrower Ratings Quality at Entry Moderately Satisfactory Government Moderately Satisfactory Implementing Quality of Supervision: Moderately Satisfactory Moderately Satisfactory Agency/Agencies Overall Bank Overall Borrower Moderately Satisfactory Moderately Satisfactory Performance Performance vi C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments (if Indicators Rating: Performance any) Potential Problem Program No Quality at Entry (QEA) None at any time (Yes/No): Problem Program at any Quality of Supervision No None time (Yes/No): (QSA) DO rating before Not available Closing/Inactive status D. Sector and Theme Codes First Programmatic Financial Sector Development Policy Operation – P133687 Original