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Document of

The World Bank FOR OFFICIAL USE ONLY

Report No: PAD2666

INTERNATIONAL DEVELOPMENT ASSOCIATION

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED CREDIT

IN THE AMOUNT OF EUR 30.1 MILLION

(US$ 35 MILLION EQUIVALENT)

TO THE

REPUBLIC OF MOLDOVA

FOR A

LAND REGISTRATION AND PROPERTY VALUATION PROJECT August 3, 2018

Social, Urban, Rural and Resilience Global Practice

Europe and Central Asia Region

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.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective June 30, 2018)

Currency Unit = EUR

US$1 = EUR 0.859

US$1 = XDR 0.711

US$1 = MDL 16.824

FISCAL YEAR

January 1 - December 31

Regional Vice President: Cyril E Muller

Country Director: Satu Kristiina J. Kahkonen

Senior Global Practice Director: Ede Jorge Ijjasz-Vasquez

Practice Manager: Jorge A. Muñoz

Task Team Leader(s): Olivera Jordanovic, Aanchal Anand

ABBREVIATIONS AND ACRONYMS

ALRC Agency for Land Relations and Cadastre

BAFO Best and Final Offer

CALM Congress of Local Authorities of Moldova

CORS Continuously Operating Reference System

CPF Country Partnership Framework

DA Designated Account

DFIL Disbursement and Financial Information Letter

ECA Europe and Central Asia

EMP Environment Management Plan

ESMF Environment and Social Management Framework

ESMP Environment and Social Management Plan

EU European Union

FA Fixed Asset

FEA Financial and Economic Analysis

GPS Global Positioning System

GRM Grievance Redress Mechanism

GRS Grievance Redress Service

IA Implementing Agency

IBRD International Bank for Reconstruction and Development

ICT Information and Communication Technology

IDA International Development Association

IFR Interim Financial Reports

INDC Intended Nationally Determined Contributions

IPF Investment Project Financing

IRR Internal Rate of Return

ISP Implementation Support Plan

LAC Latin America and the Caribbean

LPA Local Public Authority

M&E Monitoring & Evaluation

MFD Maximizing Finance for Development

MOLDLIS Moldova Land Information system

NPV Net Present Value

NSDI National Spatial Data Infrastructure

PAC Public Awareness and Engagement Campaign

PC Project Council

PDO Project Development Objective

PIU Project Implementation Unit

POM Project Operational Manual

PP Procurement Plan

PPA Public Property Agency

PPP Purchasing Power Parity

PPSD Project Procurement Strategy for Development

PSA Public Services Agency

SEC State Enterprise Cadastru

SMP Social Management Plan

SoPs Standard Operating Procedures

SORT Systematic Operations Risk-rating Tool

STEP Systematic Tracking of Exchanges in Procurement

ToR Terms of Reference

TS Technical Specifications

UNDP United Nations Development Program

WB World Bank

WG Working Group

The World Bank Land Registration and Property Valuation Project (P161238)

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BASIC INFORMATION BASIC_INFO_TABLE

Country(ies) Project Name

Moldova Land Registration and Property Valuation Project

Project ID Financing Instrument Environmental Assessment Category

P161238 Investment Project Financing

B-Partial Assessment

Financing & Implementation Modalities

[ ] Multiphase Programmatic Approach (MPA) [ ] Contingent Emergency Response Component (CERC)

[ ] Series of Projects (SOP) [ ] Fragile State(s)

[ ] Disbursement-linked Indicators (DLIs) [ ] Small State(s)

[ ] Financial Intermediaries (FI) [ ] Fragile within a non-fragile Country

[ ] Project-Based Guarantee [ ] Conflict

[ ] Deferred Drawdown [ ] Responding to Natural or Man-made Disaster

[ ] Alternate Procurement Arrangements (APA)

Expected Approval Date Expected Closing Date

30-Aug-2018 30-Jun-2024

Bank/IFC Collaboration

No

Proposed Development Objective(s)

To improve the quality and transparency of the land administration and property valuation systems.

Components

Component Name Cost (US$, millions)

First Property Registration 17.80

Property Valuation 5.80


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Land Administration System Strengthening 9.00

Capacity Building and Project Management 2.40

Organizations

Borrower: Ministry of Finance

Implementing Agency: Public Service Agency, Department of Cadastre

PROJECT FINANCING DATA (US$, Millions)

SUMMARY-NewFin1

Total Project Cost 35.00

Total Financing 35.00

of which IBRD/IDA 35.00

Financing Gap 0.00

DETAILS-NewFinEnh1

World Bank Group Financing

International Development Association (IDA) 35.00

IDA Credit 35.00

IDA Resources (in US$, Millions)

Credit Amount Grant Amount Total Amount

National PBA 35.00 0.00 35.00

Total 35.00 0.00 35.00

Expected Disbursements (in US$, Millions)

WB Fiscal Year 2018 2019 2020 2021 2022 2023 2024

Annual 0.00 1.52 3.09 5.73 7.99 8.63 8.04

Cumulative 0.00 1.52 4.61 10.34 18.33 26.96 35.00


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INSTITUTIONAL DATA

Practice Area (Lead) Contributing Practice Areas

Social, Urban, Rural and Resilience Global Practice Governance

Climate Change and Disaster Screening

This operation has been screened for short and long-term climate change and disaster risks

Gender Tag

Does the project plan to undertake any of the following?

a. Analysis to identify Project-relevant gaps between males and females, especially in light of country gaps identified through SCD and CPF

Yes

b. Specific action(s) to address the gender gaps identified in (a) and/or to improve women or men's empowerment

Yes

c. Include Indicators in results framework to monitor outcomes from actions identified in (b) Yes

SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT)

Risk Category Rating

1. Political and Governance High

2. Macroeconomic Moderate

3. Sector Strategies and Policies High

4. Technical Design of Project or Program Moderate

5. Institutional Capacity for Implementation and Sustainability High

6. Fiduciary Substantial

7. Environment and Social Substantial

8. Stakeholders High

9. Other


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10. Overall High

COMPLIANCE

Policy

Does the project depart from the CPF in content or in other significant respects?

[ ] Yes [✓] No

Does the project require any waivers of Bank policies?

[ ] Yes [✓] No

Safeguard Policies Triggered by the Project Yes No

Environmental Assessment OP/BP 4.01 ✔

Performance Standards for Private Sector Activities OP/BP 4.03 ✔

Natural Habitats OP/BP 4.04 ✔

Forests OP/BP 4.36 ✔

Pest Management OP 4.09 ✔

Physical Cultural Resources OP/BP 4.11 ✔

Indigenous Peoples OP/BP 4.10 ✔

Involuntary Resettlement OP/BP 4.12 ✔

Safety of Dams OP/BP 4.37 ✔

Projects on International Waterways OP/BP 7.50 ✔

Projects in Disputed Areas OP/BP 7.60 ✔

Legal Covenants

Sections and Description Schedule 2, Section I. A.1. Project Implementation Unit Covenant: The Recipient shall not later than one month

after the Effective Date, through PSA’s Cadastru, establish and thereafter maintain, throughout Project

implementation, a Project Implementation Unit under terms and conditions acceptable to the Association, with a

project director, a financial management specialist, a procurement specialist, a monitoring and evaluation

specialist, an environmental specialist, a social specialist and other technical and fiduciary staff, as needed, with

terms of reference, qualifications and experience satisfactory to the Association, all as set forth in the POM, as

needed.


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Sections and Description Schedule 2, Section I. A.2. Project Council Covenant: The Recipient shall not later than one month after the Effective

Date establish and thereafter maintain throughout Project implementation, a council with composition, terms of

reference and resources satisfactory to the Association to advise on policy decisions concerning Project

implementation and overall Project supervision, and powers to approve the annual work plans, training plans and

Project Reports; all as set forth in the POM.

Sections and Description Schedule 2, Section I. A.3. Supporting Agencies Covenant: The Recipient shall not later than one month after the

Effective Date, enter into a implementation agreement each with:

(a) the Part A.2 Supporting Agency,

(b) the Parts B.1 and B.2 Supporting Agency and

(c) the Part C.3 Supporting Agency

to set forth, under terms and conditions acceptable to the Association, their respective responsibilities in the

implementation of the respective Parts of the Project (the Implementation Agreements).

Conditions

Type Description Effectiveness The Project Operational Manual has been adopted by the PSA’s Cadastru in form and

substance satisfactory to the Association.


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REPUBLIC OF MOLDOVA

LAND REGISTRATION AND PROPERTY VALUATION PROJECT

TABLE OF CONTENTS

I. STRATEGIC CONTEXT ...................................................................................................... 8

A. Country Context .................................................................................................................. 8

B. Sectoral and Institutional Context ...................................................................................... 9

C. Higher Level Objectives to which the Project Contributes ............................................... 10

II. PROJECT DEVELOPMENT OBJECTIVES ............................................................................ 11

A. PDO .................................................................................................................................... 11

B. Project Beneficiaries .......................................................................................................... 11

C. PDO-Level Results Indicators ............................................................................................. 11

III. PROJECT DESCRIPTION .................................................................................................. 12

A. Project Components .......................................................................................................... 12

B. Project Cost and Financing ................................................................................................ 13

C. Lessons Learned and Reflected in the Project Design ...................................................... 14

IV. IMPLEMENTATION ........................................................................................................ 16

A. Institutional and Implementation Arrangements ............................................................. 16

B. Results Monitoring and Evaluation ................................................................................... 17

C. Sustainability ..................................................................................................................... 17

D. Role of Partners................................................................................................................. 18

V. KEY RISKS ..................................................................................................................... 18

A. Overall Risk Rating and Explanation of Key Risks .............................................................. 18

VI. APPRAISAL SUMMARY .................................................................................................. 19

A. Financial and Economic Analysis ....................................................................................... 19

B. Technical ............................................................................................................................ 20

C. Financial Management ...................................................................................................... 22

D. Procurement ..................................................................................................................... 22

E. Social (including Safeguards) ............................................................................................. 22


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F. Environment (including Safeguards) ................................................................................. 23

G. Other Safeguard Policies (if applicable) ............................................................................ 24

H. World Bank Grievance Redress ......................................................................................... 24

VII. RESULTS FRAMEWORK AND MONITORING .................................................................... 25

ANNEX 1: DETAILED PROJECT DESCRIPTION ......................................................................... 39

ANNEX 2: IMPLEMENTATION ARRANGEMENTS .................................................................... 49

ANNEX 3: IMPLEMENTATION SUPPORT PLAN ...................................................................... 59

ANNEX 4: FINANCIAL AND ECONOMIC ANALYSIS ................................................................. 62


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I. STRATEGIC CONTEXT

A. Country Context 1. Moldova is a small, economically and culturally open, lower middle-income country with 3.5 million people

in 2016.1 Recently, the economy has grown by an average of 5 percent per year, fueled largely by consumption. Remittances from Moldovans abroad account for a quarter of Moldova’s GDP, one of the highest shares in the world. The country is vulnerable to climatic and regional economic conditions and its economic performance remains volatile. The poverty rate measured at the upper-middle-income line of purchasing power parity (PPP) of US$ 5.50/day is projected to decrease by 3.2 percent in 2016–19, supported by real wage growth, remittances and public transfers.2 The poor and the bottom 40 percent are concentrated in rural areas, which are significantly less well-off than urban areas. In 2016, inequality, as measured by the Gini coefficient, decreased to 26.3 after a minor uptick between 2014 and 2015.3

2. Moldova ranks among the most climate-vulnerable countries in the Europe and Central Asia (ECA) region based on a range of social and economic indicators. Climate projections indicate increasing mean annual temperatures (exceeding 2 degrees Celsius by 2050), decreasing (in some regions increasing) precipitation and an increase in extreme weather events, such as droughts and floods, as well as other severe weather events such as hailstorms, torrential rains, late frosts, or heavy winds. The INDC4 of Moldova particularly requested a developing mechanism for monitoring climate change vulnerabilities, impacts and costs, promoting crop and flood related insurances and disseminating climate relevant information. Systematic land valuation data prepared before disasters is shown to be essential for estimating the costs of climate disaster damage, cost-benefit analysis of recovery planning and disaster-related compensation and insurance systems5. Climate-induced disasters, mainly floods, are also shown to cause significant temporal population displacements and a loss of housing and other property in Moldova.6 The Post Disaster Needs Assessment of the 2010 floods underlines the need for property registration and improved tenure security to ensure that exposed people can relocate without fear of losing their land rights.

3. Moldova is divided into thirty-two districts (raions), three municipalities and two autonomous regions

(Gagauzia and Transnistria7). There are 1,681 localities, of which 982 localities have their own local public authority (LPA). Five localities have municipality status, 66 have city status and 916 are villages with commune status. The remaining 699 villages are too small to have an independent administration and belong to either cities (40) or communes (659). LPAs exercise local autonomy through elected local councils and mayors. There are also councils at the district level. The Territorial Office of the State Chancellery is

1 Country Context: http://www.worldbank.org/en/country/moldova/overview 2 Country Snapshot: http://pubdocs.worldbank.org/en/754831507194525377/Moldova-Snapshop-Fall2017.pdf 3 Moldova, Poverty and Equity Brief, Spring Meetings 2018, World Bank. 4 Intended Nationally Determined Contributions for reduction in greenhouse emissions under the United Nations Framework Convention on Climate Change (UNFCCC) 5 Mitchell, D., Myers, M. & Grant, D. (2014). Land Valuation: A Key Tool for Disaster Risk Management, Land Tenure Journal, 1:14, 36-69. 6 Republic of Moldova (2010). Post Disaster Needs Assessment: Floods 2010. 40 p. 7 The status of Transnistria is disputed and the central government does not control this region. Therefore, the proposed project will not support activities in Transnistria.

http://www.worldbank.org/en/country/moldova/overview

http://pubdocs.worldbank.org/en/754831507194525377/Moldova-Snapshop-Fall2017.pdf


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responsible for the administrative control of the LPAs.

4. European Union (EU) integration prospects have driven the Government's policy reform agenda since 2009. Political instability, however, impedes the progress of the reforms and governance and corruption challenges remain high. In recent years, the Government’s reform priorities have included business environment reforms, modernization of public services and more balanced regional development. In this context, the Government would need to work to improve security of property rights and further develop real estate markets; enhance e-services for enabling access to real estate information, which will attract investors and reduce transaction costs and time; and expand the property valuation system and improve public property management to generate more revenues from properties, which would be important for local authorities, as they rely significantly on intergovernmental transfers.

B. Sectoral and Institutional Context 5. Like many other former Soviet Union republics, Moldova conducted a land reform in 1992 that included the

transfer of land from state to private ownership, followed by allocation of individual titles to land and property (or real estate) and, finally, registration of those individual private rights. In 1998-1999 a real estate registry was established. Following a major restructuring, Cadastru (formerly State Enterprise Cadastru (SEC))—which is responsible for the management of the cadastre, land registry and valuation—is now a department under the newly-created Public Services Agency (PSA), the implementing agency of the project. Prior to the restructuring, Cadastru was hosted by the Agency for Land Relations and Cadastre (ALRC). The Public Property Agency (PPA) is responsible for public property management. Both ALRC and PPA are being transformed under the ongoing government agencies reform.

6. In Moldova, there is currently an estimated 1.1 million unregistered properties (of the total estimated 5.85 million) divided into around 800,000 privately-owned and 325,000 publicly-owned.8 The project seeks to complete the registration of 95 percent of all unregistered properties (both private and public) through systematic registration.9 During the First Cadastre Project (P035771) financed by the World Bank (1998-2007),10 4.7 million private properties were registered, including 4.2 million through the systematic process and 0.5 million through the sporadic procedure.

7. Moldova’s public land is divided into around 25 percent state-owned and 75 percent LPA-owned. Only 7

percent, or approximately 25,000 of the total 350,000 parcels accounting for 45 percent of the country’s total surface area, are currently registered. Such a high share of unregistered public land provides fertile ground for corruption and causes conflicts and insecurity for people with land rights adjacent to, or inside, public lands. It also causes significant income losses for the state and LPAs due to unauthorized uses of public land and/or natural resources, including an increased risk of carbon pool losses caused by deforestation and other unsanctioned, environmentally-unfriendly activities. Incomplete documentation causes additional problems pertaining to the registration of publicly-owned assets, principally those under the control of ministries or

8 Based on the data from the Public Service Agency, Department of Cadaste (Cadastru) 9 Based on the experience of the First Cadastre Project and the pilot project conducted by Cadastru in Varatic community in 2017, there would be 3 to 5 percent of properties which could not be registered during systematic registration but would be registered through subsequent processes which are likely to run beyond the project period. 10 First Cadastre Project included original credit (US$ 15 million) and additional financing in 2005 (US$ 3 million) for scaling up the project activities. The project supported registration of private land only.


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LPAs.

8. From 2004 to 2008, Moldova implemented a successful reform of recurrent property taxation, which changed the system of taxation based upon the area of the property to one based on its value by using mass valuation for urban residential and commercial properties. This reform, however, has never been fully implemented. The new mass valuation system was applied to urban areas but not to rural housing, agricultural land, or special properties such as utility networks. As Moldova is a predominantly rural country, only 12.5 percent of properties were included in the mass valuation system. Thus, the system is yet to be rolled out to include the majority of properties. The new system was also expected to result in revaluations taking place every three years. None of this has occurred, with the result that the current valuations and tax rolls in urban areas are well out-of-date. It is estimated that current market values exceed the appraised values of apartments in Chisinau, which were valued in 2004, by 60 percent. Similarly, the current market values of commercial properties, which were valued in 2009, exceeds the appraised values by an estimated 15 percent. Moldova’s fiscal situation, particularly the financial position of its LPAs, would be considerably improved by a program to extend the system of mass valuation nationwide, as was originally intended, and to carry out revaluations of the properties included in the mass valuation reform and to embed regular revaluations into the system.

9. With donor support, a National Spatial Data infrastructure (NSDI) is being created in Moldova under the responsibility of ALRC. A law on NSDI has been adopted and a prototype geo-portal, including a number of geospatial datasets and services, has been developed. Good progress has been made but further support is required if the achievements made so far are to be developed into meaningful economic benefits. In particular, data exchange protocols and procedures need to be developed, standards have to be defined and adopted, more data must be made available in the correct format and further capacity must be built in the sector.

C. Higher Level Objectives to which the Project Contributes 10. The project will support the following key priority areas of the new Country Partnership Framework (CPF) for

FY18-21: (i) Strengthening the rule of law and the accountability of institutions by enhancing the security of property rights, increasing the transparency of property data and improving efficiency of the cadastre system; and (ii) Improving efficiency, quality and inclusive access to public services by completing the cadastre and conducting property valuation to improve equity and fairness of the property valuation system and ensure equal opportunities for all to exercise their property rights. The project will also address the climate vulnerability context of Moldova and contribute to the climate cross-cutting theme, Objective 4A: Greater adaptation, resilience and response to climate change by improving tenure security and property registration data needed during climate disaster response and recovery, pooling essential data for climate related disaster risk management, climate-smart service, infrastructure and land use planning and by creating property value data needed to monitor the costs of climate related disasters and for related compensation and insurance systems.

11. By clarifying private and public property land and property rights, the project will contribute towards Maximizing Finance for Development (MFD). Clarification of private land and property rights is linked to greater private sector investment in the economy because constraints such as insecurity of tenure are reduced or entirely removed, giving the private sector greater incentives to use the land and property


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resources available in the country. The clarification of public land and property rights is linked to improved management of public property assets, which, in turn, can create a crowding-in effect because public property assets that are deemed unnecessary for the public-sector portfolio can be sold or leased to the private sector.

12. The project will build on and/or be complementary to the ongoing Government and World Bank joint work

on the tax administration modernization and modernization of Government services (eGovernment).

13. The project is complementary to a number of donor-funded projects, such as the EU Twinning Project financed by the European Commission for development of NSDI in Moldova; Norwegian support for development of a Geoportal and improvements to the Information and Communication Technology (ICT) system; and United Nations Development Program (UNDP) support to Cadastru for a new information system for the address register that is compliant with the EU INSPIRE standards.

II. PROJECT DEVELOPMENT OBJECTIVES

A. PDO

To improve the quality and transparency of the land administration and property valuation systems. B. Project Beneficiaries 14. The primary beneficiaries of the project would be the general population, particularly members of the public

within Moldova, but also foreign investors and overseas Moldovan nationals, who currently own real estate or who will acquire real estate in the future. Special attention would be paid to women and vulnerable members of society to ensure that the benefits are more equally distributed. Beneficiaries would also include the land market professionals (surveyors, valuers) and organizations associated with mortgaging (commercial banks), who would benefit from more accurate and accessible real estate data and who will be able to provide better services to the public. Further, government institutions and agencies, such as the Ministry of Finance, PSA and the LPAs, would benefit as they will be able to easily access information about real estate for planning and property tax purposes; for providing social and other local government services; and through improvements in the use of the real estate that they manage.

C. PDO-Level Results Indicators 15. The project will have the following PDO-level indicators:

• Percentage of land in Moldova recorded in cadastre increased (target: 95 percent for both private and public land);

• Percentage of urban residential and commercial properties revalued (target: 95 percent for both urban residential and urban commercial);

• Percentage of customers satisfied with Cadastru services (target: 70 percent; gender-disaggregated);

• Land administration system information easily and widely accessible (target: Data available online and/or offline); and


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• Information on property values and property valuation methodologies easily and widely accessible (target: Data available online and/or offline)

III. PROJECT DESCRIPTION

A. Project Components

16. The project consists of four components: (A) First Property Registration; (B) Property Valuation; (C) Land

Administration System Strengthening; and (D) Capacity Building and Project Management. Component A – First Property Registration (EUR 15.3 million) 17. This component will support the first registration of public and private land in Moldova and strengthen the

data quality for records already in the land register. This component will also organize mandatory public displays and public awareness campaigns to ensure citizens are engaged and aware of the procedures, activities and benefits during first property registration. Additionally, a comprehensive Grievance Redress Mechanism (GRM) will be set up at Cadastru to monitor feedback received from beneficiaries and provide a formal avenue to appeal. The component consists of three subcomponents: (i) systematic registration of private land—including implementation of public displays, public awareness campaigns and a grievance mechanism; (ii) systematic registration of public land; and (iii) improvement of the quality and reliability of the cadastre data.

Component B – Property Valuation (EUR 5 million) 18. This component will support extending mass valuation to incorporate those properties not currently included

and to carry out selected revaluation of properties to help improve the transparency of the property market and keep the property valuation system current and usable through inter alia: (i) initial valuation of properties; (ii) revaluation of properties which have not been revalued since 2008; and (iii) setting up of a property valuation infrastructure and an independent appeals system to challenge valuations.

Component C – Land Administration System Strengthening (EUR 7.7 million) 19. This component will support the strengthening of the land sector in Moldova by facilitating policy dialogue

and conducting a review of the existing institutional and regulatory frameworks, proposing improvement where possible. It will also encourage a development of simplified business processes and modernization of cadastre services through use of ICT and support the development of NSDI. The component will support: (i) development of land sector and land sector sustainability polices covering governance, organizational systems, the roles of different process participants, notaries and private sector and registration and valuation processes and including, if applicable, the preparation of legal or regulatory reforms; (ii) strengthening information and communications technology capacities; and (iii) strengthening of the NSDI including preparation of a business plan, expansion of the geoportal and capacity building activities for agencies responsible for the provision of core reference datasets on data standards, maintenance of metadata and creation of interoperable datasets.


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Component D – Capacity Building and Project Management (EUR 2.1 million) 20. This component will support capacity building at stakeholder agencies and institutions to ensure the smooth

implementation of project activities and support project sustainability, as well as provide support for project implementation through inter alia: (i) training and capacity building and equipping for LPA’s staff as needed to support the systematic registration and valuation at the local level; (ii) training and capacity building activities at PSA’s Cadastru to improve their client orientation and servicing skills; (iii) design and implementation of a comprehensive social assessment (including a social management plan) and three customer satisfaction surveys; (iv) monitoring and evaluation (M&E) of the Project; and (v) operation of Project Implementation Unit (PIU).

B. Project Cost and Financing

Project Components Project cost

(EUR million) IDA Financing (EUR million)

Trust Funds (EUR million)

Counterpart Funding

(EUR million)

A. First Property Registration B. Property Valuation C. Land Administration System Strengthening D. Capacity Building and Project Management

15.3 5.0 7.7

2.1

15.3 5.0 7.7

2.1

0.0 0.0 0.0

0.0

0.0 0.0 0.0

0.0

Total Costs 30.1 30.1 0.0 0.0

Total Project Costs 30.1 30.1 0.0 0.0

Total Financing Required 30.1 30.1 0.0 0.0

Cross-cutting Activities 21. Gender. By global and regional standards, gender equality in Moldova is high. The country‘s constitution

provides for gender equality as does the 2006 Law on Ensuring Equal Opportunities for Men and Women11. A legal assessment conducted during project preparation confirmed that the legal framework in Moldova supports equal land rights for men and women. Women can buy, sell, inherit, lease, or mortgage their property. Joint rights over the spousal property can be registered. Land sector was not identified as a sector with a gender gap in the Gender Assessment conducted by the World Bank in Moldova in 2013. However, an analysis of property data is needed to understand how the gender equality guaranteed by laws is being implemented in practice. Currently, Cadastru’s systems do not enable property data collection in a gender disaggregated manner. The project will thus support an upgrade of Cadastru’s ICT system for collecting property data in a gender disaggregated manner to enable analysis and reporting for informed planning and policy making. It will also be used for reporting on project results. Additionally, any reforms supported by the

11 Country Partnership Framework for the Republic of Moldova for the period FY18 to FY 21, World Bank Group, June 2017


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project will be tailored whenever necessary such that the impact on male and female beneficiaries is equal. Policy guidance provided by the project will also be gender-sensitive. Public awareness and communications campaign, customer surveys and training activities carried out as part of the project will be designed in such a way that they reach male and female beneficiaries, and in full understanding and acknowledgement of the different ways that men and women obtain information.

22. Citizen Engagement. Several citizen engagement tools will be mainstreamed into different sub-components: (i) frequent public consultations (at least bi-annually) supporting effective public awareness and engagement campaigns (PAC); (ii) participatory monitoring through small participatory committees in each local community accompanying mandatory public display to register and follow up on citizens’ observations, comments and grievances about the systematic registration to ensure accountability, manage local conflicts should they arise, and propose possible adjustments to the public display process to Cadastru; (iii) a comprehensive GRM, set up at Cadastru who will respond to all feedback; the information gathered will also be used to improve services provided and to mitigate any negative social impacts on individuals (all three tools supported under sub-component A.1.); and (iv) three customer satisfaction surveys (at the beginning, mid-term and close to the end of the project and supported under sub-component D.2), which will be used to inform Cadastru’s strategies and plans for improved servicing and client orientation. Survey results will be published on Cadastru’s website and will be communicated through the PAC together with Cadastru’s action plan to address issues/gaps identified through the customer surveys.

23. Climate Change. The project will support the addressing of Moldova’s climate vulnerability context. Systematic registration (Component A) of private and public lands will improve climate disaster response and recovery in cases of temporal displacement and/or property loss, as it will allow relocation without fear of losing land rights and enhance the repossession of property. In addition, the support to the country’s NSDI (Component C) will strengthen Moldova’s INDC goal for improved dissemination of climate relevant information by pooling relevant geospatial datasets. Property valuation (Component B) will strengthen INDC goals to monitor climate change impacts and promote disaster-related insurances by providing economic property value data essential for estimating costs of climate disasters and for related compensation and insurance claims.

C. Lessons Learned and Reflected in the Project Design 24. The World Bank has funded land administration projects across the globe and particularly focused on the

ECA region just after the collapse of the Soviet Union given the need to secure property rights in order to develop well-functioning market economies. Over forty land administration projects were completed in ECA since 1991. Before Bank-financed projects, ECA countries did not have good land registers or cadastres and the land administration sectors were operationally and institutionally fragmented, paper-based and bureaucratic. Today, many of these countries operate fully digital systems for land and property registers and cadastres12 and are moving to the next generation of services with geospatial data and online services as part of the eGovernment initiatives. Therefore, the Bank’s strong foundations and track record in ECA helped to gather the right experience for project design. At the same time, lessons learned from other regions, particularly Latin America and the Caribbean (LAC), are reflected in areas where interventions and policies relate to public land delineation, which was not previously tackled under ECA projects.

12 In Doing Business 2018, six ECA countries (Lithuania, Georgia, Belarus, Estonia, Slovak Republic and Kyrgyz Republic) were ranked in the top 10 countries on Registering Property.


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25. Overall, this project design has incorporated the following lessons learned from the Bank’s experience in land

projects:

a. Policy and legal reforms need to be conducted alongside technical investments to achieve strategic goals and harness the complete benefits of investments;

b. Public awareness and participation is critical for success and public awareness and education campaigns add important value. Results of customer surveys are a valuable channel for feedback from the public and suggests important corrective actions for agencies;

c. Investments in transparency (e.g. publication of valuation methodologies and market values) can help reduce costs in other areas (e.g. appeals systems) and are, therefore, highly beneficial and make the system financially sustainable;

d. Communication and training need to reach out to multiple stakeholders and different social groups including vulnerable groups and women, considering their priorities and varying ways they access information;

e. Addressing gender inequality in access to formal property rights is important even if the law prescribes equal rights. Providing access to gender disaggregated data and including gender specific messages in public awareness campaigns, training and education can have significant positive impact. Tailoring project activities to men and women when appropriate can help to prevent unintended biases and mitigate negative gender impacts; and

f. Strong safeguards and grievance redress mechanisms need to be in place when it comes to investments in public land delineation. Once again, transparency and public perception will be important in ensuring the success of the investments.

26. In addition, country-specific lessons learned from previous Bank engagements in Moldova have also been

incorporated. Some key design lessons include: (i) mobilizing LPAs and citizens in the registration project as the lack thereof was identified as a the reason some areas of the territory could not be covered under the previous Bank-financed registration project; (ii) public displays of survey data and focused awareness raising campaigns to minimize errors in data collected during first registration; (iii) a focus on the valuation of urban residential and commercial properties to generate tax revenues; and (iv) an emphasis on revaluations to make the valuation system both relevant and sustainable.

27. Another important lesson was considered during project preparation: a long preparation period with time invested that conducts extensive consultations with sector stakeholders (public and private), donor partners and communities (local authorities but also citizens) often pays off during project implementation. It ensures the project has broad, in-country support and that key stakeholders are mobilized for implementation.

28. Finally, the design of a project amidst major Government restructurings is always difficult. Care has been taken to make the design flexible to allow room for maneuvering should anything change. At the same time, the client will need to be proactive and restructure the project should the need arise.


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IV. IMPLEMENTATION

A. Institutional and Implementation Arrangements 29. The implementing agency for the project is the Public Service Agency (PSA) through its Department of

Cadastre (Cadastru). PSA will be responsible for project implementation with support from (i) the Agency for Land Relations and Cadastre (ALRC) on activities related to property valuation and NSDI (subcomponents B1, B2 and C3); and (ii) the Public Property Agency (PPA) on activities related to registration of public land (subcomponent A2). PSA will enter into implementation agreements with ALRC and PPA to set forth the respective responsibilities of each supporting agency in the implementation of the respective project activities by no later than one month after the Effective Date of the project. Should the ongoing institutional reform in Moldova result in a change in the organizational structure, roles and/or responsibilities of any of the supporting agencies in a manner affecting the project, the Government of Moldova may designate another agency as a supporting agency per the Bank’s prior agreement.

30. The PSA will coordinate project with the Ministry of Finance, Ministry of Agriculture, Regional Development and Environment, Ministry of Justice, eGovernment Center, LPAs and public and private sector institutions that produce and manage geospatial data on project implementation. The cooperation and coordination between the PSA and relevant government agencies and LPA representatives will be implemented through a Project Council (PC) that will be established no later than one month after the Effectiveness Date of the project. The PC will provide policy guidance and direction to project implementation. The PC will tentatively include representatives of the State Chancellery (chairing the PC), Ministry of Finance, Ministry of Agriculture, Regional Development and Environment, Ministry of Justice, Congress of Local Authorities of Moldova (CALM), ALRC, PPA and PSA.

31. The PIU will be established in Cadastru no later than one month after the Effectiveness Date of the project and will be responsible for day-to-day implementation and for providing specific technical oversight to project activities. The PIU will be responsible for procurement, financial management, M&E and safeguards under the project. It will be led by a project director and will include specialists in procurement, financial management, M&E, environmental and social safeguards and other technical and fiduciary specialist, as needed. Heads of the relevant Cadastru divisions will act as component/subcomponent coordinators. Fiduciary staff familiar with the Bank procedures will be recruited externally on a competitive basis following the Bank’s Procurement Regulations. Although Cadastru has a decade of experience in implementing World Bank projects (e.g. First Cadastre Project implemented through 1998-2007) the current institutional memory is limited.

32. Thematic working groups (WG) may be established to provide technical guidance to project implementation and could tentatively include Cadastre WG, Public Land Delineation WG, Property Valuation WG, Policy and Regulatory WG and Geospatial WG.

33. In terms of collaboration and synergies among external parties, EU, Norwegian donor and UNDP will be

natural partners as they support the Government of Moldova on NSDI, ICT and address registry through policy advisory and technical support. The PSA, through the PIU, will carry out the important function of donor coordination to ensure that priorities are clearly identified and implemented and that effort is not duplicated.


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B. Results Monitoring and Evaluation 34. Project monitoring will include two areas: (i) a regular output monitoring of project performance and an

evaluation system to be established in the first few months of project implementation. This system will monitor the PDO and intermediate indicators; and (ii) customer surveys conducted biannually will monitor customer satisfaction and provide a venue for citizen engagement and an important feedback loop for the project. In total, there will be three surveys conducted during the life of the project. The survey results will influence further capacity building efforts at Cadastru and relevant customer suggestions or complaints will guide further improvements of registration services. Survey results and certain activities on how the customers’ considerations have been taken into account will be disseminated to the wider public in a user-friendly format. A baseline survey will be conducted during the first year of project implementation. Where there are yes/no indicators, interim checkpoints will be set to monitor progress towards the achievement of the respective indicator.

35. A project GRM will be set up at Cadastru to monitor feedback (including appeals) received from beneficiaries, including citizens, specialized users (e.g. valuers, notaries) and Government agencies and LPAs. The GRM is supported by an information campaign and training for responsible Cadastru staff. Cadastru will respond to all feedback and the information gathered will also be used to improve services provided and to mitigate any negative social impacts on individuals. The GRM will increase transparency and accountability and aims to reduce the risk of the project’s possible unintended adverse effects on citizens and will serve as an important feedback and learning mechanism for improving project impact.

36. A dedicated PIU expert will be assigned with the M&E function to provide not only statistical reports but also

analysis for the quarterly progress reports, which will be provided to Cadastru, PSA and the Bank team.

C. Sustainability

37. Cadastru has proven capacity to implement systematic registration and property valuation program as shown

by the success in implementing the First Cadastre Project. The PSA operates on a fee basis and the one-time investment in first registration pays off through fees charged to subsequent property transactions. As for property valuation, the project will support the development and implementation of a sustainable methodology for property revaluation. The project will finance developing and testing periodic revaluations because regular revaluations are more efficient than one-time revaluations after long periods of time. Regular revaluations also maintain a high usability of the property valuation system in areas like value-based property taxation, valuing public sector assets, valuations for investment portfolios and company balance sheets and estimating the cost of projects that involve expropriation. As for investments in ICT (e.g. procurement of software upgrades and e-services), the technical capacity is in place and these systems will operate on the existing eGovernment platform using the government’s information infrastructure that operates on the basis of “cloud computing” technology (e.g. MCloud Platform). The project's investments in institutional capacity building for improved service delivery with a clear customer focus will also enable Cadastru to provide information to both the government and private sector and support the sustainability of project results.


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D. Role of Partners 38. There is no co-financing or parallel financing for the project. However, there are several donor partners

supporting the Government of Moldova in improving the Cadastru’s ICT systems and geospatial information sharing. The core partners to the project are the European Commission, which is supporting the development of NSDI in Moldova; the Government of the Kingdom of Norway is supporting the development of a Geoportal and improvements to the ICT system; and UNDP, which supports Cadastru with a new information system for establishing the address register that is compliant with the EU INSPIRE standards.

V. KEY RISKS

A. Overall Risk Rating and Explanation of Key Risks 39. The project overall risk is rated High due to the following five prominent risks associated with the project: (i)

Political and Governance; (ii) Sector Strategies and Policy; (iii) Institutional Capacity for Implementation and Sustainability; (iv) Stakeholders; and (v) Social risk.

40. Political and Governance (High). Political changes in Moldova have been frequent in the recent past. Such fragile political stability poses a substantial risk. Upcoming parliamentary elections in February 2019 might bring significant changes in the government, resulting in a change of priorities, suspensions or delays of reforms, or replacement of key staff. The recent banking sector crises have had a negative impact on the citizens’ trust in public institutions. However, the project is expected to have broad support from different political parties given its focus on strengthening the security of property rights through registration and improving the transparency of the registration and valuation system. This risk will be mitigated through early engagement with the new government and the establishment of the PC that will consist of key government institution representatives to ensure that the government is kept informed about project activities and will provide policy guidance to the implementing agency.

41. Sector Strategies and Policy (High). This risk stems from the ongoing institutional reform, the results of which

are still uncertain. Cadastru has been transformed from a self-financing agency to a department of the PSA. The ALRC is no longer closely associated with Cadastru but is an entity which is likely to be further reorganized. Other important sector agencies—IPOT, INGEOCAD and the Soil Institute—are also no longer under the same umbrella as ALRC. The details as well as a timeline for completion of the reforms are unknown. Flexibility will, therefore, be required to respond to changing institutional circumstances. The project has been designed to provide for such flexibility (for instance, focusing on activities that are and will remain clearly in the mandate of Cadastru). Stakeholder coordination will also be key in ensuring that there is sufficient communication across key agencies and entities in terms of strategy, policy, data sharing and activity implementation.

42. Institutional Capacity for Implementation and Sustainability (High). Cadastru successfully implemented the

World Bank-funded First Cadastre Project and has substantial experience and technical capacity to implement this project. The risk is rated Substantial, because of: (i) Cadastru’s loss of executive, self-funding agency status, which might result in difficulties for Cadastru to attract and retain high quality staff; and (ii) expected territorial reform that might lead to a fewer number of LPAs. In such circumstances, managing a


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complex project could be a major challenge. The project design includes certain measures to address such risks by providing substantial international and local technical support for project implementation, including the establishment of a specialized PIU. Major shares of project supported activities are to be done once (e.g. first registration, first valuation) and the need for extensive technical support would cease to exist with project completion. The project also includes support to LPAs to conduct the systematic registration process in their territories. A reduced number of LPAs resulting from the territorial reform would require adjusting the systematic registration implementation plan to accommodate fewer LPAs but for a longer period. The project design provides for flexibility in terms of systematic registration planning and implementation.

43. Fiduciary (Substantial). While the financial management risk is Moderate, the overall fiduciary risk is considered Substantial due to procurement. The PSA/Cadastru lacks experience and knowledge of Bank procurement procedures. The implementing agency also lacks an internal manual that provides practical guidance on the steps of the procurement process. Risk mitigation measures are described in detail in Annex 2.

44. Stakeholders (High). The success of the project will depend on the cooperation between Cadastru and LPAs

and coordination between the PSA (Cadastru) and relevant government agencies, such as ALRC, PPA and various ministries. To mitigate the risk of insufficient coordination and cooperation causing the project to fail to meet its objectives, a set of activities was incorporated in the project design such as public awareness raising campaigns (both at the national and local level), capacity building and technical assistance to LPAs, the organization of public displays of cadastre data in local communities, etc. Additionally, as part of institutional arrangements, the PC will be established to include representatives from key stakeholder institutions.

45. Social (Substantial). Through a social risk survey conducted in December 2017 and a pilot systematic

registration project conducted by Cadastru in Varatic community during 2017, a number of social risks were identified. The most typical social risks identified include potential excess land use, absentee titleholders, titles with land plots geographically unidentified, as well as risks associated with lack of legal clarity. Risk mitigation plans includes public awareness activities, consultations and the establishment and maintenance of a project-level GRM. Mitigation measures are envisioned under the Environmental and Social Management Framework (ESMF), such as the Comprehensive Social Assessment and Social Management Plan (SMP), and are financially supported through the project components to ensure their adequate implementation.

VI. APPRAISAL SUMMARY

A. Financial and Economic Analysis 46. In terms of the financial benefit, the revaluation of urban residential and commercial properties is expected

to boost appraised property values by 60 percent and 15 percent, respectively. Additional property tax revenues are possible with first valuation of agricultural and rural residential properties but this would involve changes to the property tax policy, which is not a part of this project. The key statistics for the financial analysis are presented below. Based on the model assumptions, the estimated financial net present value


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(NPV) is positive and the financial internal rate of return (IRR) is greater than the discount rate of 5 percent.13 This implies that the project is considered financially viable. This consideration is also reinforced by cost-benefit ratios greater than 1 and a positive return on investment. For details, see Annex 4.

47. The economic benefits of this project will be largely driven by the registration of public and private lands due to an increase in access to credit and an increase in the value of public land leases, respectively. Though not quantified, investments in NSDI are also expected to reduce duplicated costs by promoting data sharing and improve decision making for Government agencies, private sector and citizens by providing certain datasets on the Geoportal. The key statistics for the economic analysis are presented below. Based on the model assumptions, the estimated economic NPV is positive and the economic IRR is greater than the discount rate of 5 percent. The project can, therefore, be expected to be economically beneficial. See Annex 4 for details.

B. Technical

48. The proposed project builds on the country's experience and capacities developed over the years with the support of the Bank and other development partners. It supports the enhancement of the established and well-operating land registry and cadastre system in Moldova. The methodology used for cadastral parcel surveying is reflecting current good international practices and includes using modern technologies such as orthophotos and Global Positioning Systems (GPS) that are cost efficient. The current registration procedures operate well. The experience gained through previous systematic registration enabled more precise costs estimates as well as identification of the technical capacity needs to conduct registration and valuation activities. Moldova has a mass valuation system established and the methodology used for valuing different types of properties has been developed and will need to be developed to be brought in line with best international practices. There are several ongoing interventions in the ICT sector leading toward developing an improved automated integrated real estate cadastre system that will use the Government’s information infrastructure operating on the basis of “cloud computing” technology (MCloud Platform). In terms of the digital archive, Cadastru has established a workflow for digitizing old paper documents and storing them in

13 In the absence of a property tax policy review, financial sustainability has been safeguarded through the assumption that even though the project would finance both revaluation and first valuation of properties under Component B so that relative valuations across Moldova are fair, only revaluation will be used for property tax purposes because the use of first valuation for property tax purposes without an accompanying property tax policy review is likely to reduce the current property tax collection and reduce LPA own-source revenues.

Key Financial Analysis Results

Financial NPV USD M 4.21

Financial IRR % 9.5%

Benefit-Cost Ratio (discounted values) x 1.14x

Benefit-Cost Ratio (cumulative values) x 1.34x

Return on Investment % 34.4%

Key Economic Analysis Results

Economic NPV USD M 4.17

Economic IRR % 10.0%




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an archive with approximately 30 million of an estimated 100 million documents already processed. The work on developing Moldova’s NSDI based on the EU INSPIRE standards is underway with donor support.

49. The legal framework for first registration, valuation, NSDI and other areas covered under the project is well-developed and provides a suitable basis for project activities to be implemented. The legislation has been developed with extensive international technical assistance and improved through many years of practical experience. In relation to the first registration, the current legal framework was used to successfully register approximately 85 percent of private land under the previous Bank-sponsored project (First Cadastre Project), and no issues would appear to arise regarding the registration of state land using the current framework. However, it is clear from pilot work that a small number of situations (3 to 5 percent) would possibly require amendments to the regulations (mostly by-laws) to increase the efficiency of the registration process, particularly to deal with abandoned land and occupations of small areas of state land adjacent to plots. Thus, the land sector review envisaged under Component C is designed to support the legal reform process. The Government has shown a willingness to make amendments where they are required (either to laws or regulations), so it can be expected that the necessary reforms will be adopted promptly. Any delays in adopting the changes would mean that certain parcels (estimated 3 to 5 percent) could not be fully titled in a single process, meaning that the final steps would need to be completed within the project implementation period or after the project depending on the speed of adopting regulatory changes. However, the project targets the registration of 95 percent of land in Moldova, which is supported by the existing regulatory framework.

50. The project readiness for implementation is assessed as high. The procurement plan, which is an integral part of the Project Procurement Strategy for Development (PPSD), has identified activities that need to be carried out in the first year. These activities include preliminary data collection for registration and valuation, market data collection for valuation, completion of datasets that are inputs for activities starting Year 2, purchase of IT equipment and public awareness campaigns. Cadastru and ALRC have prepared Terms of Reference (ToR) for consultants to support preparation of technical specifications (TS) for goods and technical works supporting the launch of the procurement of these activities in Year 1 of the project. Additionally, Cadastru and ALRC have prepared ToR for consultants, including essential PIU staff, who need to be hired to carry out or oversee these activities in Year 1. Therefore, the project can begin disbursing shortly after effectiveness. Examples of TS and ToR that represent international good practices in registration and valuation have been used to support the preparation of these documents.

51. PSA/Cadastru is preparing draft Project Operational Manual (POM) to guide project implementation. POM consists of different schedules setting forth, respectively, rules, methods, guidelines, specific development plans, standard documents and procedures for the carrying out of the project. The final POM agreed with the Bank and adopted by PSA will be prepared by the Effectiveness Date of the project (POM is the effectiveness condition for the project.)

52. The project is expected to become effective by January 1, 2019 and is expected to close on June 30, 2024. It

is designed as a five-and-a-half (5.5) years operation based on the average duration of similar land projects in ECA.14

14 Keys to Successful Land Administration, Lessons Learned in 20 Years of ECA Land Projects, 2016, World Bank Group, Mika-Petteri Torhonen, https://openknowledge.worldbank.org/handle/10986/24623


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C. Financial Management 53. The financial management arrangements in place at PSA were reviewed and were assessed overall as

acceptable to the Bank for the project implementation. Since the PSA does not have prior experience in the implementation of World Bank-financed projects and its Department of Cadastru has limited institutional memory of past experience, an external fiduciary support by qualified consultants is critical for mitigating capacity risks and ensure successful project implementation. The PSA/Cadastru, with support of a Financial Management consultant to be hired once the project becomes effective, will handle project planning, budgeting, accounting, financial reporting, funds flow, internal controls and auditing under supervision of the PSA’s economic-financial division. The project will rely extensively on several elements of financial management country systems, like the PSA’s internal control, budgeting and accounting procedures and state treasury system. The project accounting will be integrated in the PSA’s accounting system, which is currently being developed and is expected to become functional on January 1, 2019. The project financial management arrangements, including an internal control framework, will be described in detail in the POM. Project funds will be deposited in a Designated Account to be opened for the project in the National Bank of Moldova. The annual audited financial statements, together with the auditor’s opinion and the management letter, will be provided to the Bank within six months of the end of each fiscal year and at the closing of the project. The PSA/Cadastru will be responsible for competitive selection and appointment of the project auditor in accordance with the ToR agreed in advance with the World Bank, and a financial audit will be financed from the project funds.

54. The overall Financial Management risk for the project is assessed as Moderate with the Inherent Risk and Control risk also assessed as Moderate.

D. Procurement

55. Applicable Procurement Arrangements: Procurement under the project will be carried out in accordance

with the World Bank Procurement Regulations for Investment Project Financing (IPF) Borrowers – Procurement in IPF of Goods, Works, Non-Consulting and Consulting Services, issued in July 2016, revised in November 2017 (hereinafter referred to as “Procurement Regulations”) and with the latest Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits.

56. Capacity Assessment: An assessment of the capacity of the PSA/Cadastru to implement procurement was carried out by the Bank team in February 2018 and recorded in the Procurement Risk Assessment and Management System. The findings of the assessment are detailed in Annex 2.

57. Project Procurement Strategy for Development (PPSD): Based on the project requirements, operational context, economic aspects, technical solutions and market analysis, a PPSD has been developed for the project by the IA with the support from the Bank team. The PPSD concluded with a Procurement Plan (PP). Most of the contracts to be financed under the project are of small value and low risk. A summary of the PPSD is provided in Annex 2.

E. Social (including Safeguards) 58. Overall, the project is expected to have positive social impacts. The impacts come mainly from the project’s


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focus on property registration and valuation which will improve the security of property rights and fairness of the property tax system, but also from the project contribution to the greater transparency and availability of information and increased capacity of the public sector.

59. A social risk survey conducted in December 2017 identified certain social risks, which were elaborated in the ESMF prepared for the project. The most typical risks identified through the survey include potential excess land use, absentee titleholders, titles with land plots geographically unidentified and risks associated with a lack of legal clarity. While focus group discussions conducted during project preparation in diverse communities illustrated a lack of awareness of the need for the registration of ownership, citizens are generally well informed about the benefits of systematic property registration. Regarding mitigation measures, public awareness activities, consultations and the establishment and maintenance of a project-level GRM play important roles. Some of these mitigation measures are financially supported through the project components to ensure their adequate implementation. Moreover, the project’s component on Strengthening of Land Administration Systems will support the preparation of a comprehensive Social Assessment. The Social Assessment’s output will be to develop recommendations for the government of Moldova in addressing the existing gaps to make them in line with international standards. The Social Assessment will also take into account the principles of the World Bank’s social safeguards policies and will include measures to address potential negative impacts of the project. These mitigation measures will be developed as part of the SMP that will follow the same consultations procedures as the ESMF.

60. The current project will not trigger the World Bank’s Policy OP 4.12 on Involuntary Resettlement (similarly to

the First Cadaster Project in Moldova). The project will not cause or require any land acquisition, physical or economic displacement.

61. The project will support property registration for both men and women equally. A significant share of project support is in data improvement, data access improvement and technical upgrades and therefore the project does not have a great deal of gender differentiated impacts. However, any reforms supported by the project will be tailored whenever necessary such that the impact on male and female beneficiaries is equal. Additionally, all citizen engagement-related activities carried out as part of the project will be designed in such a way that they reach male and female beneficiaries. The project will address the specific gaps identified in Cadastru’s systems that do not enable property data to be collected in a gender disaggregated manner. The project will finance an upgrade of Cadastru’s ICT system for collecting data in a gender disaggregated manner to enable analysis and reporting for informed planning and policy making. It will also be used for reporting on project results.

62. Citizen engagement tools, such as frequent public consultations supporting public awareness and

engagement campaigns, participatory monitoring through small participatory committees in each local community accompanying public display of survey data, a comprehensive GRM and three customer satisfaction surveys, will be mainstreamed into different sub-components (mainly A.1 and D.2).

F. Environment (including Safeguards)

63. The project is classified as Environmental Category B, partial assessment, with the Bank’s safeguards policy

OP 4.01 Environmental Assessment triggered. While most of the project activities are environmentally-neutral, some minor renovation and remodeling works of office space would be funded on buildings already


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owned by or for which the PSA (Cadastru) has the right to use, build or renovate. The civil works activities are not expected to have any major or negative environmental impacts and would be both temporary and at a local scale. They are to be successfully mitigated through the application of good engineering and construction practices with mitigation and monitoring measures that are specified in the project ESMF prepared by the PSA (Cadastru) and approved by the World Bank. Site-specific Environmental and Social Management Plans (ESMPs) for selected project interventions and/or Environmental Management Plan (EMP) Checklists for minor rehabilitation or small-scale works will be prepared in accordance with the ESMF provisions aiming to mitigate any environmental impacts. The EMP checklist-type format will cover typical core mitigation approaches to civil works contracts with small, localized impacts. The intention of EMP Checklist is that it would be applicable as guidelines for the small works contractors and constitute an integral part of bidding documents for contractors carrying out small civil works under the project.

64. There will be no works in protected areas or outside urban areas. There will neither be works in nor adjacent to cultural heritage protected sites. During project implementation, agricultural landowners and protected areas systems will not be affected and land will not be withdrawn or alienated. It is expected that owners and land users will comply with the existing legal framework in the field of using natural resources. The draft ESMF, cleared by the Bank on April 25, 2018, was disclosed on the PSA (Cadastru) website on April 26, 2018 and the public consultation took place on May 15, 2018 at the PSA premises. The final ESMF was disclosed on the Bank’s website on May 22, 2018 and in-country on May 31, 2018.

65. The PIU (established at the PSA/Cadastru) will include a Social Safeguards Specialist and will be responsible

for the project’s day-to-day implementation and technical oversight to the project activities including safeguards.

G. Other Safeguard Policies (if applicable)

N/A

H. World Bank Grievance Redress

Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported project may submit complaints to existing project-level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/en/projects-operations/products-and-services/grievance-redress-service. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org.

.

http://www.worldbank.org/en/projects-operations/products-and-services/grievance-redress-service

http://www.inspectionpanel.org/


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VII. RESULTS FRAMEWORK AND MONITORING

Results Framework

Project Development Objective(s) To improve the quality and transparency of the land administration and property valuation systems.

RESULT_FRAME_T BL_ PD O

PDO Indicators by Objectives / Outcomes DLI CRI Unit of Measure

Baseline End Target

Quality of the land administration and property valuation systems

Percentage of land in Moldova recorded in cadastre (private/public) Percentage 84.00 95.00

Percentage of private land in Moldova recorded in cadastre Percentage 85.00 95.00

Percentage of public land in Moldova recorded in cadastre Percentage 7.00 95.00

Percentage of urban residential and commercial properties revalued Percentage 0.00 95.00

Percentage of urban residential properties revalued Percentage 0.00 95.00

Percentage of urban commercial properties revalued Percentage 0.00 95.00

Percentage of customers satisfied with Cadastru services Percentage 0.00 70.00

Percentage of customers satisfied with Cadastru services - female Percentage 0.00 70.00

Transparency of land administration and property valuation systems

Land administration system information easily and widely accessible Text Limited availability Data available online and/or offline

Information on property values and property valuation methodologies easily and widely accessible

Text Limited availability Data available online and/or offline


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RESULT_FRAME_T BL_ IO

Intermediate Results Indicators by Components DLI CRI Unit of Measure

Baseline End Target

Component A: First Property Registration

Number of private land parcels registered Number 4,700,000.00 5,200,000.00

Number of private land parcels registered in women's names Text To be determined No target; indicator to be monitored

Number of public land parcels delineated Number 25,000.00 330,000.00

Percentage of land parcels with known errors for which the quality of data was improved

Percentage 0.00 80.00

Component B: Property Valuation

Percentage of rural residential properties valued for the first time Percentage 0.00 95.00

National valuation standards developed Yes/No N Y

Component C: Land Administration System Strenghtening

Number of datasets in compliance with INSPIRE standards Number 0.00 4.00

Percentage of Digital Archive complete Percentage 25.00 85.00

Component D: Capacity Building and Project Management

Percentage of local public authorities trained in supporting first property registration


Percentage of customers reporting that local participatory committees supporting the process of first property registration were helpful


Cadastru ICT system to report gender-disaggregated property ownership data for policy and decision making

Yes/No N Y


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Monitoring & Evaluation Plan: PDO Indicators

Indicator Name Percentage of land in Moldova recorded in cadastre (private/public)

Definition/Description This indicator measures private and public lands as a percentage of total private and public lands respectively that are recorded in the cadastre. For the purpose of this project, the territory does not include Transnistria.

Frequency Semi-annual

Data Source PSA/Cadastru, PIU

Methodology for Data Collection The data will be collected through PSA/Cadastru and Local Cadastru Offices.

Responsibility for Data Collection PSA/Cadastru, PIU


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Indicator Name Percentage of private land in Moldova recorded in cadastre

Definition/Description This indicator measures private lands recorded in the cadaster as percentage of total private lands in the country. For the purpose of this project, the territory does not include Transnistria.



Methodology for Data Collection The data will be collected through PSA/Cadastru and Local Cadastru Offices.


Indicator Name Percentage of public land in Moldova recorded in cadastre

Definition/Description This indicator measures public lands recorded in cadastre as percentage of total public lands in Moldova. For the purpose of this project, the territory does not include Transnistria.



Methodology for Data Collection The data will be collected through PSA/Cadastru and Local Cadastru Offices



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Indicator Name Percentage of urban residential and commercial properties revalued

Definition/Description

This indicator measures the percentage of urban residential and commercial properties that undergo a revaluation for the first time since 2004 and 2009 respectively.

Frequency Annual

Data Source PSA/Cadastru, ALRC, PIU

Methodology for Data Collection The data will be collected through the ALRC ICT system.

Responsibility for Data Collection PSA/Cadastru, ALRC, PIU

Indicator Name Percentage of urban residential properties revalued

Definition/Description This indicator measures the percentage of urban residential properties that undergo a revaluation for the first time since 2004.

Frequency Annual





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Indicator Name Percentage of urban commercial properties revalued

Definition/Description This indicator measures the percentage of urban commercial properties that undergo a revaluation for the first time since 2009.

Frequency Annual




Indicator Name Percentage of customers satisfied with Cadastru services

Definition/Description This indicator measures the percentage of users who are satisfied or partly satisfied with the services of Cadastru. This indicator will be measured during the Customer Satisfaction Survey.

Frequency Years 1, 3, 5

Data Source PSA/Cadastru, ALRC, LPAs, PIU

Methodology for Data Collection The data will be collected through customer surveys planned for Years 1, 3, and 5 of the project.

Responsibility for Data Collection PSA/Cadastru, ALRC, LPAs, PIU


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Indicator Name Percentage of customers satisfied with Cadastru services - female

Definition/Description This indicator measures the percentage of female users who are satisfied or partly satisfied with the services of Cadastru. This indicator will be measured during the Customer Satisfaction Survey.


Data Source PSA/Cadastru, ALRC, LPAs, PIU

Methodology for Data Collection The data will be collected through customer surveys planned for Years 1, 3, and 5 of the project.


Indicator Name Land administration system information easily and widely accessible


This indicator measures whether or not public access to the land administration system information has improved through online and offline means of access to information, procedures, methodologies, forms, and helpline numbers. This indicator will be measured through the customer surveys planned in Years 1, 3, and 5 of the project.



Methodology for Data Collection The data will be collected through PSA/Cadastru and ALRC databases.



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Indicator Name Information on property values and property valuation methodologies easily and widely accessible


This indicator measures whether or not public access to the information on property values and valuation methodologies used to establish those values has improved through online and offline means of access to information, procedures, methodologies, forms, and helpline numbers. This indicator will be measured through the customer surveys planned in Years 1, 3, and 5 of the project.


Data Source PSA/Cadastru, ALRC, MoF, PIU

Methodology for Data Collection The data will be collected through PSA/Cadastru and ALRC databases.

Responsibility for Data Collection

Monitoring & Evaluation Plan: Intermediate Results Indicators

Indicator Name Number of private land parcels registered

Definition/Description This indicator measures the number of private land parcels registered during the course of the project



Methodology for Data Collection The data will be collected through PSA/Cadastru and Local Cadastre Offices.



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Indicator Name Number of private land parcels registered in women's names

Definition/Description This indicator will be monitored for SDG target reporting and to inform the public awareness campaign to promote women's property rights



Methodology for Data Collection The data will be collected through PSA/Cadastru and Local Cadastre Offices.


Indicator Name Number of public land parcels delineated

Definition/Description This indicator measures the number of public parcels delineated during the course of the project



Methodology for Data Collection The data will be collected through PSA/Cadastru, Local Cadastre Offices, and LPAs.



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Indicator Name Percentage of land parcels with known errors for which the quality of data was improved

Definition/Description This indicator measures the parcels for which data quality is improved in the project as a percentage of the total number of parcels that were identified as having errors



Methodology for Data Collection The data will be collected through the Cadastru ICT system.


Indicator Name Percentage of rural residential properties valued for the first time

Definition/Description This indicator measures the percentage of rural residential properties that undergo first valuation

Frequency Annual





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Indicator Name National valuation standards developed

Definition/Description This indicator measures whether or not national valuation standards are developed in line with international standards

Frequency Annual


Methodology for Data Collection The data will be collected through the ALRC ICT system and interviews with the Association of Valuers.


Indicator Name Number of datasets in compliance with INSPIRE standards

Definition/Description This indicator measures the number of EU INSPIRE-compliant datasets that are developed under the project

Frequency Annual


Methodology for Data Collection

The data will be collected through ALRC and donor-funded projects supported by the EU and the Kingdom of Norway.



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Indicator Name Percentage of Digital Archive complete

Definition/Description This indicator measures the percentage of the digital archives into which records are scanned and uploaded. The total for this indicator that would determine the percentage of records scanned and completed is estimated as of 2018 (~120 million pages).





Indicator Name Percentage of local public authorities trained in supporting first property registration

Definition/Description This indicator measures the percentage of LPAs that will be trained in supporting activities related to first property registration (e.g. data collection, public awareness etc,)


Data Source PSA/Cadastru, ALRC, LPAs

Methodology for Data Collection The data will be collected through the Local Cadastru Offices and LPAs.



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Indicator Name Percentage of customers reporting that local participatory committees supporting the process of first property registration were helpful

Definition/Description This indicator measures the percentage of Cadastru customer opting for property registration under the project who found the local participatory committees helpful.

Frequency Annual

Data Source PSA/Cadastru, Local Cadastru Offices, LPAs

Methodology for Data Collection

The data will be collected through the Local Cadastru Offices and LPAs, as well as the GRM set up through the Project.

Responsibility for Data Collection Local Cadastru Offices

Indicator Name Cadastru ICT system to report gender-disaggregated property ownership data for policy and decision making

Definition/Description This indicator measures whether or not the Cadastru ICT system can produce gender-disaggregated property ownership information.

Frequency Annual

Data Source PSA/Cadastru


Responsibility for Data Collection PSA/Cadastru


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ANNEX 1: DETAILED PROJECT DESCRIPTION

COUNTRY : Moldova

Land Registration and Property Valuation Project

1. The proposed PDO is to improve the quality and transparency of the land administration and property valuation systems.

2. The project will have the following PDO-level indicators:

a. Percentage of land in Moldova recorded in cadastre increased (target: 95 percent for both private and public land)

b. Percentage of urban residential and commercial properties revalued (target: 95 percent for both urban residential and urban commercial)

c. Percentage of customers satisfied with Cadastru services (target: 70 percent; gender-disaggregated)

d. Land administration system information easily and widely accessible (target: Data available online and/or offline)

e. Information on property values and property valuation methodologies easily and widely accessible (target: Data available online and/or offline)

3. The project costs are estimated at EUR 30.1 million. The project will include four components:

4. Component A: First Property Registration (EUR 15.3 million): This component will support the first registration of public and private land in Moldova and strengthen the data quality for records already in the land register. This component will also organize mandatory public displays and public awareness campaigns to ensure citizens are engaged and aware of the procedures, activities and benefits during first property registration. Additionally, a comprehensive Grievance Redress Mechanism (GRM) will be set up at Cadastru to monitor feedback received from beneficiaries and provide a formal avenue to appeal. The component consists of three subcomponents: (i) systematic registration of private land—including implementation of public displays, public awareness campaigns and a grievance mechanism; (ii) systematic registration of public land; and (iii) improvement of the quality and reliability of the cadastre data.

5. A1. Systematic Registration of Private Lands (EUR 8 million): This sub-component will support first

registration of private lands. Approximately 85 percent of private lands have already been registered and this subcomponent will finance the registration of additional 10 percent of private land parcels, targeting a total of 95 percent of land registered (both the land and the rights). This target is based on the experience of the First Cadastre Project and the recent pilot conducted by Cadastru in Varatic community, where in some 3 to 5 percent of cases, registration of rights could not be completed during systematic registration but was conducted through a subsequent process. Overall, this subcomponent will finance preliminary data collection, data acquisition from other sources (INGEOCAD, IPOT, etc), updating and establishing territorial boundaries, field surveying and data collection, data verification, updating records and registration. This sub-component will also organize (i) effective public awareness campaigns to ensure citizens understand, are engaged and aware of the procedures and benefits of systematic registration (involving local media, disseminating information brochures and organizing public hearings at the local level for citizens, including


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vulnerable people, and local leaders); (ii) mandatory public displays involving a small participatory committee in each local community , which is intended to register and follow up on citizens’ observations and comments and ensure accountability; and (iii) a comprehensive GRM, which will be set up at Cadastru to monitor, address and resolve feedback and complaints received from beneficiaries, to review decisions and to allow for appeals.

6. The legal framework for first property registration15 is well-developed and provides an adequate basis for the project to be implemented. Cadastru has defined procedures for systematic delineation, survey adjudication and registration to support first registration. The current procedures will be developed further, to introduce a use of a new data capture methodology based upon national orthophotography. Further clarification of the procedures and the roles of the parties involved (including, for example, Cadastru, LPAs, private surveyors, etc.) will follow an organizational and legal review of the Land Sector (under Component C.1), which will highlight any potential bottlenecks and suggest options for change.

7. Pilot trials already conducted by Cadastru have enabled metrics to be calculated for resource calculations.

Registration work will be staged and evaluated in order to optimize the working methodology. Standardized processes will be developed and communication links established between the various parties. More cost-effective and efficient registration procedures are envisaged by maximizing the use of new orthophotography and digital means of data transfer between the parties involved in the registration process. New Standard Operating Procedures (SoPs) for digital data capture will be developed, and then required changes to the regulatory framework will be followed by process documentation and training.

8. Existing land records and mapping data will have to be gathered and organized to support the first

registration process (e.g. orthophotos, existing cadastral plans and lists of historical/existing registered properties). The Government’s mConnect16 infrastructure will be used to distribute data between the stakeholders and ICT support will be provided by the project to develop a dedicated web environment for storing, managing and accessing data prior to loading it into the official cadastre and land register databases (see C.2 for details).

9. The size of the private survey community is limited and systematic registration work will be programmed to

gradually increase in volume over the 5 years of the project with the intention of allowing capacity to build to match the work requirements. LPA staff will be supported with training and materials – standardized forms, for example – and access to the eGovernment infrastructure.

10. A2. Systematic Registration of Public Land (EUR 5.3 million): Public Land, both State- and LPA-owned,

represents approximately 45 percent of the land in Moldova. This is divided into around 25 percent State-owned and 75 percent LPA-owned. Only 7 percent, or approximately 25,000 is currently registered. This subcomponent will support delineation of approximately 308,000 public land parcels, targeting a total of 95 percent of public land registered at the end of the project (approximately 330,000 land parcels). The business process for the systematic registration of public land follows the same general set of activities as the

15 Land Code 2001; Decision No 1030 on Measures to Create a Real Estate Cadastre 1998; Law on Cadastre 1998; Instruction for Registration under the Law on Cadastre 2005; Law on the Formation of Real Estate 2004; Law on Monitoring of Real Estate 2012 16 Digital interoperability platform of the Government of Moldova


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systematic registration of private land, but with some different sets of sources and preliminary data. The current regulatory framework related to public land delineation17 is found to be adequate for the implementation of project activities. Further improvements, where needed, would be considered and possibly supported under C1.

11. The work on public land delineation involves close coordination with the representatives of hundreds of LPAs and multiple state agencies. The delimitation of public property is conducted upon the request of the public authorities managing public lands. The state budget finances the delimitation of the state-owned lands and local authorities finance locally-owned land delimitation. The PPA under the Ministry of Economy maintains an inventory of state-owned land and property but does not interact directly with the Cadastru and the property register. There may be some reduction in the eventual numbers of LPAs due to changes that may follow public sector reforms at central level. It will thus be needed to revisit some of the processes related to communication between various agencies and different levels of public administration to make the process of review and decision-making on delineation outputs more efficient.

12. The project provides an opportunity to perform these activities together as well as correcting previous errors already in the cadastral database (see A.3). This is an efficient way of working, and should ensure a consistent and complete set of land records. Other databases will be updated at the same time to ensure compatibility. For example, the current database of Protected Areas, under the management of the Ministry of Environment, will be reconciled with the most up to date cadastral maps, and will provide a valuable layer to the NSDI (see C.3 below).

13. A3. Data Quality Improvement (EUR 2 million): The quality of the data in the cadastre remains mixed, and

over large areas of agricultural land it is very poor, reflecting the problems encountered by previous projects that implemented systematic first registration. For example, the registration of 2.8 million agricultural land titles that took place during privatization of the agricultural lands between 1997 and 2004 did not involve the use of maps. Agricultural lands in four districts/raions (approximately 20,600 parcels) remain unregistered due to lack of funds (and will be registered as part of the systematic first registration under Subcomponent A1.) The second systematic registration project, ending in 2007 (First Cadastre Project funded by the WB), resulted in fewer mistakes but the data are still somewhat unreliable due to the lack of clear procedures and lack of quality control during registration. Therefore, the project will finance the streamlining of procedures related to data collection (where required), error correction and other data quality improvement measures followed by quality control and data acceptance at Cadastru. Accordingly, registration records will be updated where needed. The project will finance consultants to conduct the data quality improvement, who will be trained by Cadastru in the new methodology.

14. The main categories of existing errors in the cadastre have been identified, and the numbers of those errors has been assessed. The three main categories of error are: (i) registered titles with graphical parts not defined spatially (approximately 50,000); (ii) registered parcels or buildings that are overlapping, i.e. without unambiguous boundaries (approximately 100,000); and (iii) titles with no corresponding graphical part (approximately 120,000). Methodologies for correction have been developed, and resources calculated, as part of the preparation for the project. Changes to the current Cadastre Law will be necessary, and are being

17 In addition to laws listed under footnote 10 the following laws are relevant for public land delineation: Law on Public Property of Administrative-Territorial Units 1999; Law on Expropriation 1999; Law on Public Property Delineation 2018 (at second reading at the Parliament in April 2018)


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put in place, followed by training of Cadastru and LPA staff and private sector surveyors. The complete national coverage of high quality orthophotography (December 2016) will be the control reference for error correction and updating methodologies. The project will finance data quality correction through hiring and training of consultants who will help update the database.

15. All three subcomponents described above will address the climate vulnerability context of Moldova. The

systematic registration of private lands (Subcomponent A.1) and improvement of data quality (Subcomponent A.3) will improve climate disaster recovery in cases of temporary displacement as it allows people to relocate without fear of losing their property. It will also provide official information about the property location, size and ownership that might be needed as evidence in cases of complete loss of property or property boundaries after climate related disasters and in related disaster insurance claims. The systematic registration of public land (Subcomponent A.2) will contribute similarly to climate disaster recovery as subcomponents A.1 and A.3, but in the context of public land ownership. Improved geospatial cadastral data (Subcomponent A.3), together with fully registered private and public lands (Subcomponents A.1 and A.2) will also help the Government to achieve its target to develop monitoring and planning mechanisms for climate change vulnerabilities and impacts, as this information is essential for determining who are the potential and actual victims of climate disasters.

16. Component B: Property Valuation (EUR 5 million): This component will support extending mass valuation to incorporate those properties not currently included and to carry out selected revaluation of properties to help improve the transparency of the property market and keep the property valuation system current and usable through inter alia: (i) initial valuation of properties; (ii) revaluation of properties which have not been revalued since 2008; and (iii) setting up of a property valuation infrastructure and an independent appeals system to challenge valuations.

17. B1. Initial Mass Valuations (EUR 3.1 million): This subcomponent will develop valuation models for the types

of properties not currently included in the mass valuation system. These are residential properties in rural areas, agricultural land, special purpose properties (e.g. utility networks) and property in public ownership, including that let to commercial operations. In most cases, automated modelling approaches will be used as this is the most cost-effective approach. For a minority of property types, individual valuation will be necessary because their unique qualities mean that mass valuation models cannot be applied. Pilot studies will be needed to develop the models and identify the data that must be collected about individual properties. The methods currently used to value these properties are not in line with international best practice but reflect approaches that were expedient during the early years of Moldova becoming a market economy and before the property market was fully established. Research will be needed into the markets for these types of properties. As these are properties for which there has been no previous experience of mass valuation, it will be necessary to hire international consultants with expertise in valuing the different types of properties to support this work. Once the assessments of individual properties have been produced, it will be necessary to put the results and the methods used in compiling them on public display and to determine appeals against assessments. It is estimated that the properties to be brought into the mass valuation system would contribute to approximately 44 percent of the current revenue from the land and property taxes.

18. The properties to be valued under the initial mass valuation have in many cases not yet been registered. Registration (Component A) is a necessary first step in mass valuation because it identifies the properties to


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be taxed. In the case of public sector properties, it will be necessary to delineate them. There are estimated to be 900,000 residential properties in rural areas, 3,830,000 agricultural properties and 10,000 special purpose properties to be valued through mass valuation.

19. B2. Revaluations (EUR 1 million): This subcomponent will develop the revaluation of different categories of

properties that have not been revalued since 2005 (residential properties), 2009 (commercial and industrial properties) and 2011 (agricultural land with structures). Overall, the subcomponent will finance the revaluation of an estimated 660,000 residential properties, 145,000 commercial and industrial properties and 55,000 garages through mass valuation methods. There are two planned revaluations of the commercial and industrial properties during the project. As revaluation is a new process, international consultants will be hired to provide advice.

20. B3. Valuation Infrastructure and Appeals (EUR 0.9 million): The subcomponent will finance the improvement

of valuation infrastructure (including the publication of valuations to boost transparency) and the establishment of an independent appeals system for people to appeal against property valuations.

21. This subcomponent also provides for the development of national standards for valuation and the

measurement of land and property, codes of professional practice and ethical standards for valuers and standards for education and training. It is anticipated that Moldova will be able to draw on international best practices in the development of these, particularly the standards published by the International Valuation Standards Council and the European Group of Valuers’ Associations, and in the sphere of property taxation, the standards of the International Association of Assessing Officers.

22. These subcomponents (B.1, B.2 and B.3) will support climate change adaptation and Moldova’s and INDC’s

request for improved monitoring of climate related impacts, promotion of crop and flood insurances and integrating climate considerations into planning. This is done through production and dissemination of economic property value data that is essential for monitoring costs of climate change and for climate disaster related insurance claims. Also, additional information related to property type, soil quality, vegetation and topography are collected during the valuation process, which would be valuable for improving integration of climate considerations into planning.

23. Component C: Land Administration System Strengthening (EUR 7.7 million): This component will support

the strengthening of the land sector in Moldova by facilitating policy dialogue and conducting a review of the existing institutional and regulatory frameworks, proposing improvement where possible. It will also encourage a development of simplified business processes and modernization of cadastre services through use of ICT and support the development of NSDI. The component will support: (i) development of land sector and land sector sustainability polices covering governance, organizational systems, the roles of different process participants, notaries and private sector and registration and valuation processes and including, if applicable, the preparation of legal or regulatory reforms; (ii) strengthening information and communications technology capacities; and (iii) strengthening of the NSDI including preparation of a business plan, expansion of the geoportal and capacity building activities for agencies responsible for the provision of core reference datasets on data standards, maintenance of metadata and creation of interoperable datasets.

24. C1. Land Sector Policy Development and Sustainability (EUR 0.3 million): This sub-component addresses the goals and objectives of the land sector in Moldova, its contribution to overall government policy and to the


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economic and social development of the country. The current status will be described, including its strengths and weaknesses, as well as the current and anticipated changes under the Government’s reform program. The land sector review will mainly focus on the organizational framework, governance arrangements and the legal framework. This review will involve a thorough assessment of the current system and will produce a set of proposals and options for change. The completion of first property registration of all properties in Moldova in the most efficient manner is partly dependent on Component C—i.e. fully clarifying legal rights and obligations, addressing any ambiguities and more fully defining institutional roles and responsibilities. There is an estimated 5 percent of cases where the land could not be registered through systematic registration and would need to be registered through subsequent processes. These cases include abandoned land, land for which the title was issued during privatization but could not be geographically mapped, registration in cases where the title holder was a deceased person, total land area granted to one person was in excess to quota applied during land privatization, etc.

25. The review of the land administration system will include an analysis of the current and potential future roles played by the notaries and the private sector survey community, including licensing, development of electronic processes and the development of effective professional associations. An overall objective will be to adopt a “joined up” approach that can deliver the outcomes required, provide efficient and equitable services and be more accountable.

26. The subcomponent will also finance a Land Sector Capacity Review to identify means to (i) strengthen the ability of the sector to deal with current operational needs; (ii) deal with the added needs brought about by the project; and (iii) anticipate future changes in order to identify those areas in which further capacity building will be required; for example, as Cadastru continues to develop there will be a gradual change of emphasis from an operational role to a customer-focused service delivery role.

27. This subcomponent will also support a review of the numbers of staff available in the land sector and their current skills and skill levels. A training needs assessment will then be based upon the gap between the current status and the foreseen future needs (as reported in the land sector review).

28. Further, the subcomponent will look into the registration fee structures for Cadastru services. The existing

structure has not been adjusted since 2006 even though salaries have increased by a factor of three over the same period. An additional factor is that by keeping fees charged by Cadastru low in cases where surveys are involved (although this might be justified in rural communities) it places a ceiling on the fee levels that can be charged by private surveyors. This has resulted in a decrease in the number of companies providing surveying services. It will be necessary to look at this aspect, formulate a solution and update the current Cadastru Business Plan into a Service Development and Sustainability Plan. At the same time, it will be possible to look at the potential to develop and sell new services based upon the complete cadastre that will be available at the completion of the project.

29. C2. ICT System Strengthening (EUR 6 million): This subcomponent will support a number of ICT measures

needed to improve the efficiency of the cadastre and land register and to support the development of new services. The Moldova Land Information System (MOLDLIS) has been in development since 2014 and is expected to be fully operational by the end of 2018. It is a web-based system developed using free and open-source tools and platforms and incorporates a unified database for property rights, cadastre and valuation. The project will add modules to the current system that will improve operational efficiency and support data


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collection and systematic registration.

30. Workflows and stakeholder roles for eConveyancing will be defined and necessary legal changes identified and drafted. The development of new methods and software will include trialing the eConveyancing processes in pilot areas and then rolling out the procedures once the system has been optimized. The result will be more efficient data processing and improved services to users of the cadastre and a contribution to the eGovernment transformation in Moldova.

31. Cadastru has established a workflow for digitizing old paper documents and storing them in an archive. Approximately 30 million out of an estimated 100 million documents have already been processed. The subcomponent will evaluate the remaining documentation to assess the need to digitize all or part of it. The option of outsourcing or digitizing “in-house” will be evaluated, and storage solutions will be proposed and implemented for the old documents.

32. The digital data storage needs of the cadastre and land register have grown significantly in recent years and

this trend will continue as the registration process continues, the eArchive is completed and more eServices are developed. This needs to be managed so the project will support measures to ensure sustainability by providing additional ICT capacity within Cadastru. A number of project funded consultancy contracts will address specific ICT issues, including an overarching ICT strategy.

33. This subcomponent will also support the initial development of a Utility Cadastre. In 2015, the Government

approved—in principle—the inclusion of public utilities in the cadastre and a first set of draft laws has been submitted for approval. Changes will need to be made to a number of existing laws. Support is needed to complete the regulatory/legislative changes and to create the ICT and organizational changes to include data from the utilities companies. Technical specifications for the utilities cadastre have already been drafted. Studies will confirm whether the utility cadastre should be developed as a separate system, integrated with the main cadastre database, or added to the MOLDLIS system (extended with appropriate data model and modules to implement required functionality). The project would then involve some initial population of data in the utility database.

34. This subcomponent will support improvement of Cadastru ICT system so that the property data are collected

and could be reported in the gender disaggregated manner.

35. Lastly, this subcomponent will finance the procurement of ICT hardware and software for activities across all project components, particularly registration and valuation.

36. C3. Support to the National Spatial Data Infrastructure (EUR 1.4 million): This subcomponent will support

existing work to develop Moldova’s NSDI. Development of the NSDI has been impressive in recent years and has resulted in a NSDI Law, a NSDI Strategy, a pilot geoportal containing interoperable data and services, a stakeholder group, a NSDI pilot demonstrator, some metadata definitions and a growing inventory of geospatial data. Support from donors is ongoing but some gaps have been identified that will be filled by support from the project. Specifically, this subcomponent will finance:

a. A Business Plan for NSDI – A long-term implementation plan for development of the NSDI should be accompanied by a business model that considers all aspects (including pricing and licensing


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options) and presents options for long-term sustainability. A socioeconomic justification would help to focus on the benefits of NSDI, show how the assets could be used more and support future funding requests;

b. Expansion of the current pilot project – The current pilot project to demonstrate how datasets can be made interoperable via the geoportal will be expanded to include specific use cases. The purpose of this is to raise awareness of the value of geospatial data and thereby encourage (i) its use by government for decision-making; and (ii) the creation of further datasets. There is generally low awareness of the power of geospatial data in supporting government decision-making and the demonstrator can provide powerful examples (e.g. planning flood mitigation measures and dealing with natural disasters), or providing data to support activities targeted at addressing the UN Sustainable Development Goals.

c. Datasets – The current NSDI pilot geoportal contains provides access to 37 datasets and 17 data services provided by 22 different public institutions. Some datasets, considered “core” because of their importance, require additional support to be fully developed and made available. The project will support the compilation of an inventory of geospatial data, and the development of a road map for bringing these data to interoperable standards and made accessible via the geoportal. Some activities will be supported for specific datasets such as geographical names, protected sites and areas, the soil quality dataset and statistical units.

d. Integration with INSPIRE European geoportal – The INSPIRE Directive has resulted in the creation of a community geoportal (http://inspire-geoportal.ec.europa.eu) and the Member States are encouraged to link to their infrastructures through the geoportal. This would also be a positive step for Moldova.

e. Capacity Building – Technical capacity will be addressed in a number of agencies responsible for the provision of core reference datasets, to support the development of standards, maintenance of metadata and creation of interoperable datasets.

f. Standards – EU INSPIRE compatible standards have been drafted for cadastral parcels in Moldova, but not for other core datasets. These are being developed for some datasets but more work is required to complete the work and this will be supported through the project.

g. CORS network support – The current MOLDPOS Continually Operating Reference Stations (CORS) network has been operational since 2007. This project will support the purchase of additional receivers to densify and improve the current network. This will improve quality and further enhance the service offered to paying users.

37. The NSDI subcomponent will provide major contributions to both climate change mitigation and adaptation. The datasets provided by the NSDI will help in the following ways the datasets found in the geoportal provided by separate government institutions will help climate-smart service, infrastructure and land-use planning in the key sectors highlighted by the INDC as well as in climate related disaster risk management. Without pooling these datasets into one location and providing easy access to them, climate-smart planning will be seriously hindered if not impossible. The development of NSDI is also directly in-line with Moldova’s INDC, which aims for the improved dissemination of climate relevant information.

38. Component D: Capacity Building and Project Management (EUR 2.1 million): This component will support capacity building at stakeholder agencies and institutions to ensure the smooth implementation of project

http://inspire-geoportal.ec.europa.eu/


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activities and support project sustainability, as well as provide support for project implementation through inter alia: (i) training and capacity building and equipping for LPA’s staff as needed to support the systematic registration and valuation at the local level; (ii) training and capacity building activities at PSA’s Cadastru to improve their client orientation and servicing skills; (iii) design and implementation of a comprehensive social assessment (including a social management plan) and three customer satisfaction surveys; (iv) monitoring and evaluation (M&E) of the Project; and (v) operation of Project Implementation Unit (PIU).

39. D1. Training and Capacity Building (EUR 0.7 million): The objective of this subcomponent is to build the

capacity of LPAs, Cadastru and other stakeholder agencies to ensure efficient project implementation and sustainability of project interventions.

40. LPAs play a critical role in both systematic registration and valuation. Their role is two-fold. First, the records

on land privatization are held by LPAs, and therefore LPA participation is important because these records will be used during the process of systematic registration. Second, LPA participation is critical in mobilizing their citizens to participate in the systematic registration process, valuation data collection, coordinating the data collection process and public display. Cadastru will support LPA staff to prepare the records for systematic registration. The project will finance incremental costs of consultant services, communications, equipment and operations to facilitate the project. These costs are included in Components A, B and C. Under Subcomponent D1, the project will support: (i) strengthening the capacity of LPAs to provide appropriate support to the systematic registration and valuation programs; and (ii) in the longer term, equipping LPAs with the necessary tools and methods to help generate more revenues from land and properties. Training will be provided to help LPA staff collect and forward ownership records and coordinate public displays and meetings in a citizen-centric and customer-oriented manner. LPA staff will also be trained in utilizing online access to property data held by Cadastru and other institutions.

41. In addition, this subcomponent will finance the trainings and capacity building activities at Cadastru and other land and geospatial agencies. Topics will include but will not be limited to: technical areas (like registration and valuation), project management reporting, ICT, fiduciary and safeguards. Where appropriate, private sector professionals (surveyors, valuers, real estate agents, lawyers, notaries) will be invited to take part in project supported training sessions. Early in the project, a thorough training needs assessment will be conducted and a detailed long-term training plan prepared; specific training plans will be prepared annually. The training plan will include: (i) an overview of the scope and content of the training programs or activities; (ii) an explanation of how each training program or activity is expected to contribute to achieving the objectives of the project; (iii) the budget to be made available that takes into account the considerations of the economy and efficiency; (iv) the criteria for the selection of the beneficiaries and the providers of training; and (v) the schedule for implementation of the training activities. Training data will be recorded on a gender-disaggregated basis.

42. D2. Customer Orientation and Servicing (EUR 0.4 million): The objective of this subcomponent is to improve Cadastru's client orientation and servicing. Three customer satisfaction surveys (at the beginning, mid-term and close to the end of the project) will be conducted. The survey results, particularly relevant customer suggestions or complaints, will be used to guide further improvement of services and influence further capacity building efforts at Cadastru. The survey results and certain activities how the customers’ considerations have been taken into account will be disseminated to the wider public in an understandable and usable format. A set of service standards will be published and a code of conducts and ethics will be


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developed for Cadastru staff to improve their responsiveness to customers’ needs and raise professional standards. Finally, good governance initiatives (such as expanding the customer hotline and mechanisms for feedback and grievance redress) that draw upon international experience will be introduced as part of improving customer services and institutional development.

43. This subcomponent will also finance the design and implementation of a comprehensive social assessment

that will include an institutional and regulatory framework review and will propose improvement where possible. A review of existing systems regulating the roles and responsibilities of local authorities as well as the ways to create opportunities for Cadastru offices to liaise more with them would be explored in more detail. The Social Assessment will also take into account the principles of the World Bank’s social safeguards policies and include measures to address potential future negative impacts of the project. These mitigation measures will be developed as part of the SMP. The SMP will follow the same consultations procedures as the ESMF. The ToR for said Social Assessment (including the SMP) will be reviewed and approved by the World Bank.

44. D3. Project Management (EUR 1 million): The objective of this subcomponent is to ensure efficient

implementation of the project. A PIU will be established in Cadastre and financed under this subcomponent. The PIU will be responsible for day-to-day implementation of project activities, the project’s fiduciary functions, safeguards and M&E. The core PIU will include: (i) a project director; (ii) a financial management specialist; (iii) a procurement specialist; (iv) a M&E specialist; (v) environmental and social safeguards specialists (one PIU position with two specialists on a part-time basis); and (vi) other technical staff as needed. Cadastru will appoint a coordinator for each project component to oversee project activities and outputs. A M&E system will be designed and implemented. This subcomponent will also support technical assistance for project implementation not provided through other subcomponents on a need basis.


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ANNEX 2: IMPLEMENTATION ARRANGEMENTS

COUNTRY : Moldova


Project Institutional and Implementation Arrangements 1. The implementing agency for the project is the Public Services Agency (PSA) through its Department of

Cadastre (Cadastru). The PSA will be responsible for project implementation with support from: (i) the Agency for Land Relations and Cadastre (ALRC) on activities related to property valuation and NSDI (subcomponents B1, B2 and C3); and (ii) the Public Property Agency (PPA) on activities related to registration of public land (subcomponent A2). PSA will enter into implementation agreements with ALRC and PPA to set forth the respective responsibilities of each supporting agency in the implementation of the respective project activities by no later than one month after the Effectiveness Date of the project. Should the ongoing institutional reform in Moldova result in a change in the organizational structure, roles and/or responsibilities of any of the supporting agencies in a manner affecting the project, the Government of Moldova may designate other agency as a supporting agency with the prior agreement of the Bank.

2. The PSA will coordinate with the Ministry of Finance, Ministry of Agriculture, Regional Development and Environment, Ministry of Justice, eGovernment Center, LPAs and public and private sector institutions producing and managing geospatial data on project implementation. The cooperation and coordination between PSA and relevant government agencies and LPAs representatives will be implemented through a Project Council (PC) that will be established no later than one month after the Effectiveness Date of the project. The PC will provide policy guidance and direction to project implementation. The PC will tentatively include representatives of the State Chancellery (chairing the PC), Ministry of Finance, Ministry of Agriculture, Regional Development and Environment, Ministry of Justice, Congress of Local Authorities of Moldova (CALM), ALRC, PPA and PSA.

3. The PIU will be established in Cadastru no later than one month after the Effectiveness Date of the project

and will be responsible for day-to-day implementation and for providing specific technical oversight to project activities. The PIU will be responsible for procurement, financial management, M&E and safeguards under the project. It will be led by a project director and will include specialists in procurement, financial management, M&E, environmental and social safeguards and other technical and fiduciary specialist, as needed. Heads of the relevant Cadastru divisions will act as component/subcomponent coordinators. Fiduciary staff familiar with the Bank procedures will be recruited externally on a competitive basis following the Bank’s Procurement Regulations. Cadastru's experience in implementing past World Bank loan projects is over a decade old (First Cadastre Project 1998-2007) and there is limited relevant institutional memory in place.

4. Thematic working groups (WG) may be established to providing technical guidance to project implementation and could tentatively include Cadastre WG, Public Land Delineation WG, Valuation WG, Policy and Regulatory WG and Geospatial WG.

5. In terms of collaboration and synergies among external parties, EU, Norwegian donor and UNDP will be natural partners as they provide support to the Government of Moldova on NSDI, ICT and address registry


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through policy advisory and technical support. PSA through PIU will carry out the important function of donor coordination to ensure that priorities are clearly identified and implemented and that effort is not duplicated.

Financial Management 6. The findings of the financial management assessment conclude that the proposed financial management

systems and framework are adequate to support the implementation of the project. The project will rely on institutional and procedural set-up established by the PSA. The PSA/Cadastru will be responsible for carrying out the financial management function of the project, including planning and budgeting, accounting, flow of funds, financial reporting, internal control and auditing. The project’s Financial Management assessment established that the PSA has acceptable Financial Management arrangements in place provided it is supported by a qualified fiduciary team to be hired after the project effectiveness. The overall Financial Management risk for the project is assessed as moderate, with the Inherent Risk and Control Risk also assessed as Moderate.

7. Budgeting and Planning: PSA has adequate planning and budgeting capacity and the project budget will follow the established Government’s procedures for approval, budget execution, reporting and monitoring. The PSA will submit the project budget proposals to the State Chancellery as its founder to be further included in the annual budget law. Budget execution will be monitored through the regular budget reports submitted through the State Chancellery to the Ministry of Finance. The approved annual budget will be entered into the accounting system and used for periodic comparison with actual results as part of the interim reporting.

8. Staffing: The General Economic-Financial Division is responsible for statutory accounting, planning and

financial analysis within PSA, and it will undertake the Financial Management function of the project. The PSA has an adequate internal control system in place for implementation of the project, including adequate segregation of duties among its accounting staff.

9. Accounting Information Systems and accounting policies and procedures: Project records will be kept by the

PSA in its integrated accounting application that is currently being developed to substitute the old one, which is an outdated and less flexible accounting system. The new system is expected to be functional as of January 1, 2019 and will have a special module for project accounting and reporting. The accounting policies applicable for the PSA are those for public institutions as prescribed by the Ministry of Finance, and the same policies will apply for the project. All fixed assets (FAs) of the PSA are properly registered. PSA maintains lists of FAs assigned to each employee and FAs’ registration cards. Stocktaking is performed annually (usually by the end of each calendar year).

10. Internal Controls and Internal Audit: The PSA has in place a good internal controls system capable of providing

reliable and adequate controls over Financial Management and disbursement processes and procedures. These include controls for the safeguarding of assets, segregation of duties, authorization of transactions, review and approval of invoices and contract management, among others. An internal control system as well as additional reporting and auditing requirements will be specified in detail in the POM. The POM will be prepared by the PSA prior to project effectiveness.

11. Financial Reporting: Project management-oriented Interim Financial Reports (IFRs) will be prepared under


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the project within a specified time. The PSA/Cadastru will produce a full set of IFRs every quarter throughout the life of the project. The format of IFRs has been agreed during the assessment and includes: (i) Project Sources and Uses of Funds; (ii) Uses of Funds by Project Activity; (iii) a Project Balance Sheet; (iv) a Designated Account Statement; and (v) a SOE Withdrawal Schedule. These financial reports will be submitted to Bank within 45 days of the end of each calendar quarter for the quarter. The first quarterly IFRs will be submitted after the end of the first full quarter following the initial disbursement.

12. External Audit: The PSA will be responsible for regular audit of the project financial statements to be carried

out by the audit firms acceptable to the World Bank and on agreed Terms of Reference. The annual project’s audited financial statements, including the audit opinion and Management Letter, will be provided to the Bank within six months of the end of each fiscal year, and also at the project closing. The Borrower has agreed to disclose the audit reports for the project within one month of their receipt from the auditors, by posting the reports on the PSA Website. Following the Bank's formal receipt of these reports from the Borrower, the Bank will make them publicly available according to World Bank Policy on Access to Information. If the period from the date of effectiveness of the loan to the end of the Borrower’s fiscal year is no more than six months, the first audit report for the project may cover financial statements for the period from effectiveness to the end of the second fiscal year. The contract for the audit awarded during the first year of project implementation may be extended from year to year with the same auditor, subject to satisfactory performance. The cost of the audit will be financed from the proceeds of the project.

Disbursements 13. The PSA will establish and manage a Designated Account (DA) that will be opened specifically for this project

by the Ministry of Finance in the National Bank of Moldova. The National Bank holds all DAs for ongoing World Bank projects in Moldova. Project funds will flow from the Bank to either the DA, which will be replenished based on Statement of Expenditures or full documentation, or directly to contractors according to direct payment withdrawal applications and/or special commitments received from PSA. Withdrawal applications that document funds used from the DA will be sent to the Bank at least every three months. The following disbursement methods may be used under the project: (i) reimbursement; (ii) advance; (iii) direct payment; and (iv) special commitment. The DA ceiling will be reflected in the Disbursement and Financial Information Letter (DFIL). Detailed instructions on withdrawal of loan proceeds are provided in the DFIL.

Procurement 14. Capacity Assessment: The team assessed the risks that may negatively affect the ability of the Implementing

Agency (IA) to carry out procurement processes. The key issues, risks and mitigation measures concerning procurement for implementation of the project are detailed in the table below:

Identified Risk Proposed Mitigation Measure

Responsible Party Timeframe

No knowledge of Bank procurement procedures and no previous experience with Bank-funded operations

Bank procurement team to provide procurement training for IA/PIU

Bank Team Shortly after project approval


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staff (when employed) which will cover the approach to procurement, Procurement Regulations and the Systematic Tracking of Exchanges in Procurement (STEP)

The structure of the PMU has not been decided yet and important skills, such as procurement and Financial Management, are still missing

IA to: (i) hire a qualified and experienced Procurement Specialist to enhance their procurement capacity; and (ii) to employ technical experts to enhance their capacities in particular areas where there is a lack of expertise

Implementing Agency During project preparation

Lack of practical guidance on the steps of the procurement process, in particular, the IA does not have internal manuals, including the POM, which would guide staff in carrying out procurement

IA to: (i) develop a POM which would include a detailed chapter on steps in the procurement cycle, roles and responsibilities of IA staff in the procurement process; and (ii) to assign qualified staff to ensure that the procurement plan is implemented, monitored and updated in a proper and timely manner

Implementing Agency After project approval


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15. Project Procurement Strategy for Development (PPSD): The PPSD identifies the following types of activities: (i) Surveying (cadastral) and registration of land contracts (approx. EUR 8.6 million); (ii) various consulting contracts, including software development and public awareness (approx. EUR 8.6 million); (iii) minor goods contracts; and (iv) minor civil works contracts. For the procurement of surveying contracts, the estimated cost per package is around EUR 0.5 million. The strategy also analyzes the supply positioning to determine the positioning of specific procurement based on its relative supply risk and value within the project. This exercise revealed that all the contracts planned to be financed under the project have a relatively low value and low level of supply risk. The PPSD showed that there are a lot of potential suppliers in the country for the type of services procured (nature and size) and an open competition approaching the national market was found to be the most suitable choice. Nevertheless, foreign contractors are still allowed to participate if they wish to do so. No packages of large value and complex nature that would require prequalification are foreseen. There will be procurement of non-complex goods that will be either purchased by applying Request for Bids or Request for Quotations methods. For consulting services, the estimated cost ranges from EUR 70,000 to EUR 0.9 million and will require both national and international approach. The project will also finance small value remodeling/refurbishment works mainly for the purpose of public display processes. These will be purchased by either applying the Request for Quotations or Request for Bids methods.

16. Although market research demonstrates that there is a significant number of potential consultants/suppliers in the country for the type of services to be procured under the project, the participation of reputable and qualified international firms will be beneficial to the project implementation and therefore for some consulting services, the project will be approaching the international market. It has been agreed that the Bank’s Standard Procurement Documents will be used for international tenders and other Procurement Documents agreed with the Bank will be used for national tenders. The PPSD also revealed a number of potential risks that may affect the success of the procurement process, including: (i) low competition or low interest from local firms to participate in tenders; (ii) low quality bids/proposals; (iii) failure of contract parties to fulfill their contractual obligations; and (iv) delays in the approval of cadastral documents by the beneficiaries of the project (central and local authorities). The PPSD also provides a set of mitigation measures to address these potential risks.

17. Procurement Plan: The IA developed a PP that will be consistent with the project implementation plan. The PP provides information on procurement packages, selection methods, procurement approach and evaluation methods to be adopted for each contract to be financed under the project. Any updates to the PP shall be subject to Bank’s prior review. STEP will be used to prepare, clear and update the PP and conduct all procurement transactions for the project. Accordingly, all the procurement activities under the project will be entered into, tracked and monitored online through the system. Once approved by the Bank, the PP will be published on the Bank’s website. A summary of the PP is provided in the table below.

18. Procurement Prior Review Thresholds: The Procurement Prior Review Thresholds were set by the Bank based on the project procurement risk level. All contracts at or above the set thresholds are subject to international advertising and the use of the Bank’s Standard Procurement Documents. The thresholds will be specified in the PP. While currently Best and Final Offer (BAFO) procurement processes involving contract negotiations, competitive dialogue and sustainable procurement are not foreseen under the project, these will be subject to the Bank’s procurement prior review, irrespective of the contract value, if the decision is taken during project implementation to apply them.


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19. Record Keeping: All documentation with respect to each procurement will be retained by IA according to the requirements of the Financing Agreement. IA will furnish such documentation to the Bank upon request for examination by the Bank or by its consultants/auditors. Documents with respect to procurement subject to post review will be furnished to the Bank upon request.

20. Bank’s procurement oversight: The Bank will exercise its procurement oversight through a risk-based approach comprising prior and post review and independent procurement reviews, as appropriate. Procurement supervision visits will be carried out at least once in 12 months. These will include special procurement supervision for post-review on procurement processes undertaken by the IA to determine whether they comply with the requirements of the Legal Agreement. The post review will be conducted with an initial sampling rate of 15 percent which could be adjusted periodically during project implementation based on the project performance.

Summary of the Major Procurement Packages for the first 18 months of the Project

Number Contract Description

Category Review Procedure

Estimated Contract Amount

(EUR mln)

Selection Method

Market Approach

Estimated Contract

Signing Date

1 Surveying Services (three contracts covering different geographical zones)

NCS Post 1.5

RFB National July -November 2019

2 Digital Archive (three contracts covering different geographical zones)

NCS Post 2.3 RFB National June 2019

3 Development of the Module for Systematic Registration, QA improvement and Valuation & MOLDLIS Modifications

CS Prior 0.9 QCBS International January 2020

4 Support to create Core Datasets

CS Prior 0.9 QCBS International January 2020


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5 Public Awareness Campaign

CS Post 0.6 QCBS International May 2019

NCS – Non-Consulting Services CS – Consulting Services RFB – Request for Bids QCBS – Quality Cost Based Selection Environmental and Social (including safeguards) 21. The project supports the development of national level systems for land administration and property

registration and valuation. The registration of private land, estimated 560,000 land plots will take place in approximately 290 rural locations scattered around the country. As for public land delineation and registration it will involve approximately 300,000 land plots in 850 so called territorial administrative units (locations). Property valuation will involve properties in all 900 locations in all 32 districts (raions) in Moldova. Systematic registration brings benefits both to the State (the Government, the LPA) and to the population.

22. Institutional arrangements and EA capacity. The implementing agency for the project will be the PSA through Cadastru. The PIU will be established to manage the project's day-to-day implementation and to provide specific technical oversight to project activities. The PIU will be responsible for procurement, financial management, M&E and safeguards under the project. The overall capacity PSA to implement the World Bank’s safeguards policies is limited, and therefore, will need capacity building and permanent training. The PIU that will be established within PSA would be responsible for all fiduciary aspects, as well as implementation of the ESMF. Land management issues are mainly regulated by local authorities in Moldova. PSA, through the PIU, will have to ensure a close coordination with all relevant local authorities, especially in establishing and operationalizing the GRM to be used by project-affected people for any disputes (including boundary) that may arise during project implementation. The Bank team will closely monitor ESMF implementation, providing, when needed, relevant assistance.

23. Environmental Monitoring and Reporting during implementation will be carried out by the PIU’s safeguards specialist who will provide information on the project environmental-social impacts and the effectiveness of mitigation measures. Such information will allow corrective action(s) to be implemented if and when they are needed. The PSA (Cadastru) will report the status of compliance in their regular (semiannual) reports to the World Bank on project implementation and during periodic World Bank supervision visits. In cases of non-compliance, the PSA (Cadastru) safeguards specialist will investigate the nature and reason(s) for non-compliance, and decide whether remedial actions to bring a sub-project into compliance should be implemented, or whether financing should be suspended.

24. Integration of the ESMPs into Project documents. The ESMF is providing the necessary environmental and social conditions, safety measures for workers, guidelines and measures to be taken by the small works contractors to ensure that health, safety and environmental standards are met. Site-specific ESMPs for selected project interventions and/or EMP Checklists for minor rehabilitation or small-scale works will be prepared in accordance with the ESMF provisions aiming to mitigate any environmental impacts. In the case of project interventions which would involve typical small scale (re)construction activities, it is proposed such


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generic EMP checklist-type format (“EMP Checklist”) to be used, developed by the World Bank to provide “pragmatic good practice” and designed to be user-friendly and compatible with safeguard requirements. The EMP checklist-type format will cover typical preventive and mitigation approaches to civil works contracts with small, localized impacts. It is anticipated, that this format would provide the key elements of an environmental monitoring plan to meet Environmental Assessment requirements of the World Bank (under OP/BP/GP 4.01). As such, of the EMP Checklist is that it would be applicable as guidelines for the small works contractors and constitute an integral part of bidding documents for contractors carrying out small civil works under the project. Safety measures for workers dealing with dangerous/hazardous materials (e.g. materials containing asbestos) will include a detailed specification of the “building decommissioning method” during preparation of the technical specification, as well as specific Health & Safety equipment to be used. Both the contractors and the waste management company will need to have a valid license to work with this type of waste. The ESMF and, in particular, ESMP provisions will form part of the design documents and small construction works contracts for project activities. Contractors will be required to include the cost of ESMP/EMP Checklist requirements in their financial bids/project documents and are required to comply with them while implementing the project activities.

25. Social Safeguards. Overall, the project is expected to have positive social impacts. Along with environmental issues, the ESMF includes the following: (i) a review of national and pertinent international legislation and regulations relevant to the project activities; (ii) a description of institutional framework (including the role of local authorities in land management); (iii) a description of positive (and potential negative) impacts, direct or indirect, and cumulative social impacts of the proposed project (using various survey/focus group discussion methodologies); (iv) a description of the most common types of disputes that may arise as a result of the project (including those identified in the pilot project carried out in Varatic community); (v) where applicable, concrete recommendations to mitigate identified risks; and (vi) a description of the structure and procedures of a comprehensive GRM set up at Cadastru, as well as detailed step-to-step instructions on how citizens can use such a mechanism.

26. A social risk survey was conducted in December 2017. The results of the survey identified risks that are elaborated in the ESMF. While consultation during preparation in diverse communities illustrated a lack of awareness of the need for the registration of ownership, citizens are generally well informed about the benefits of systematic property registration. Citizens most willing to register their property rights are retirees, who are aware of the need to bequest property. Possible fears include the loss of any illegally-acquired land, demolition of unauthorized construction and the loss of unregistered land by emigrants or deceased relatives.

27. Similar to the First Cadaster Project in Moldova, the current project will not trigger the World Bank’s Policy OP 4.12 on Involuntary Resettlement. The project will not cause or require any land acquisition, physical or economic displacement. The Bank’s OP 4.01 on Environmental Assessment provides basis and guidance to establish viable GRM as well as carry out proactive public outreach and consultations with project beneficiaries.

28. The First Cadaster Office has gone a long way to establish the land register. 4.7 million land parcels currently registered in Moldova make up 85 percent of the estimated 5.5 million private properties in Moldova. The proposed project will support the registration of the remaining 15 percent of properties. The analysis of the 4.7 million land parcels registered showed that there only 419 cases where private and public land parcels


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overlapped (to various extent), which makes up 0.008 percent of the registered properties. In these cases, local authorities did not take any immediate punitive measures. Moreover, the project would not support enforcement activities that would lead to involuntary taking of land or restriction of access to natural resources in legally designated parks or protected areas.

29. The project will support property registration for both men and women equally. A significant share of project support is in data improvement, data access improvement and technical upgrades and therefore the project does not have a great deal of gender-differentiated impacts. However, any reforms supported by the project will be tailored whenever necessary such that the impact on male and female beneficiaries is equal. Policy guidance provided by the project will also be gender-sensitive. In addition, public awareness and communications campaigns, customer surveys and training activities carried out as part of the project will be designed in such a way that they reach male and female beneficiaries, and in full understanding and acknowledgement of the different ways that men and women obtain information. The project’s support to improved quality and accessibility of property data will include systems for collecting data in a gender disaggregated manner which will be also used for reporting on project results.

30. Several citizen engagement tools will be mainstreamed into different sub-components: (i) frequent public consultations (at least bi-annually) supporting effective public awareness and engagement campaigns; (ii) participatory monitoring through small participatory committees in each local community accompanying mandatory public displays; (iii) a comprehensive GRM set up at Cadastru – all three tools supported under Subcomponent A1; and (iv) three customer satisfaction surveys (at the beginning, mid-term and close to the end of the project) – supported under Subcomponent D2.

31. Frequent public consultations (or public hearings) will strengthen effective public awareness campaigns at the local level involving local media and disseminating information. The public consultations aim to engage citizens at the local level, and specifically target and invite vulnerable communities and individuals (e.g. retirees, migrants, Roma and other minorities, women, youth etc.) as well as local leaders (e.g. local councilors, LPA representatives, school representatives, social workers, etc.). All participants will be instructed on expected results of the project and the timing of activities in their neighborhoods, and informed of their role in providing information and helping with decisions over unclear land delineation. The leadership of the local administrations will play important roles in raising awareness regarding the benefits of systematic registration and obtaining feedback from the local community during consultations. These public consultations will be held as needed—but at least every six months.

32. Participation will be organized through small participatory committees in each local community accompanying mandatory public displays. The committee will be weekly present during the opening hours of the public display and will consist of at least one member from the community, one LPA representative and local cadastre office representative. Local participatory committees supporting public display will register and follow up on citizens’ observations, comments and grievances about the systematic registration to ensure accountability and to manage local conflicts should they arise. The public display committees will regularly exchange and work in close cooperation with the Cadastru and the GRM.

33. The project’s ESMF describes the structure and procedures of a comprehensive GRM set up at Cadastru, as well as provide detailed step-to-step instruction on how citizens can use such a mechanism in line with existing Moldovan legislation, including the Law of the Republic of Moldova “On Submission of Petitions.”


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This GRM will monitor feedback received from beneficiaries, including citizens, specialized users (e.g. valuers, notaries), government agencies and LPAs. It will be supported by an information campaign and training for responsible Cadastru staff. Cadastru will respond to all feedback, and the information gathered will also be used to improve services provided and to mitigate against negative social impacts on individuals. The GRM will increase transparency and accountability and aims to reduce the risk of the project inadvertently affecting citizens and serves as an important feedback and learning mechanism that can help improve project impact.

34. Under Subcomponent D2, three customer satisfaction surveys will be implemented. The survey results, and relevant customer suggestions or complaints will be used to guide further improvement of services and influence further capacity building efforts at Cadastru. The survey results and certain activities how the customers’ considerations have been taken into account will be disseminated to the wider public in an understandable and usable format. A set of service standards will be published, and a code of conducts and ethics will be developed for Cadastru staff to improve their responsiveness to customers’ needs and raise professional standards.

Monitoring and Evaluation 35. Monitoring and Evaluation (M&E) will be essential in determining the effectiveness of the project. Project

monitoring will include two areas: (i) regular output monitoring of project performance and an evaluation system to be established in the first few months of project implementation. This system will monitor the PDO and intermediate indicators; and (ii) Biannual customer satisfaction surveys (a total of three surveys during the life of the project) will monitor customer satisfaction. A baseline survey will be conducted during the first year of project implementation to establish starting points for targets. In cases where the indicators are yes/no indicators, interim checkpoints will be set to monitor progress towards the achievement of the respective indicator.

36. A dedicated officer in the PIU will be assigned to the M&E function who will provide not only statistical reports but also an analysis of the statistics produced within the quarterly progress reports. These reports and analyses will be provided to Cadastru, PSA and the Bank team.

Role of Partners (if applicable) 37. As described in the Section IV D of this PAD.


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ANNEX 3: IMPLEMENTATION SUPPORT PLAN

COUNTRY : Moldova


Strategy and Approach for Implementation Support

1. The Implementation Support Plan (ISP) describes how the World Bank will support the implementation of the risk mitigation measures identified in the Systematic Operations Risk-rating Tool (SORT) and provide the technical advice necessary to facilitate the implementation of project activities for achieving the project development objective. The main objective of the ISP is to ensure timely award of contracts, quality of consultants’ outputs including timely review and decision-making on outputs by the Cadastru, effective knowledge transfer and adherence to the implementation schedule.

2. The ISP also identifies the minimum requirements to meet the World Bank’s fiduciary obligations. Emphasis will be placed on upstream reporting, auditing and accountability and technical compliance measures to ensure early detection and remedy of problems.

3. The Cadastru/PIU will prepare and submit to the Bank a detailed project implementation progress report on a bi-annual basis, which will provide the status of project activities and identify implementation issues. These reports combined with site visits will be used as the basis for undertaking substantive reviews of implementation progress and reaching agreement with the client on: (i) the outcome of the reviews; (ii) project areas requiring strengthening and more targeted capacity building; (iii) approaches for the resolution of implementation issues; and (iv) revision of the implementation schedule and verification of consistency between the project activities as planned and the financing plan, if needed. The PIU will also submit an annual work plan, updated budget, training and procurement plan at the end of the calendar year for World Bank no-objection for the following year.

4. The Bank’s project team will provide timely and effective implementation support through a combination of regular supervision and liaison with the client via audio/video and visiting the country at least semiannually to conduct implementation support missions. An effort will be made to have a project focal person in the country office in Chisinau to provide more effective supervision and timely implementation support to Cadastru. Two key members of the Bank’s team, the Procurement Specialist and the Financial Management Specialist, are based in the country office and will also provide timely support and guidance.

Implementation Support Plan and Resource Requirements

5. Technical inputs. Technical knowledge of land registration and cadastre, information technology, property valuation, geographic technical standards and engineering works and site supervision are required for reviewing bid documents to ensure fair competition through proper technical specifications and fair assessment of the technical aspects of bids/contracts. During project implementation, technical supervision is required to ensure contractual obligations are met. The Bank’s project team and Cadatsru/PIU staff will conduct regular site visits to regional cadastru offices and local communities where the systematic property registration is being conducted to review the progress.


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6. Fiduciary requirements and inputs. Training will be provided by the Bank’s Financial Management Specialist and the Procurement Specialist during project implementation. The team will support the PIU/Cadastru in their financial management capacity and to improve procurement management efficiency. The Financial Management and Procurement Specialists will be based in the field and thus will be able to provide timely support. Supervision of financial management arrangements will be carried out semi-annually as part of the project supervision plan and support will be provided on a timely basis to respond to client needs. Procurement supervision will be carried out on a timely basis as required by the client. Concerning financial management, the World Bank will conduct risk-based financial management implementation support and supervision within six months from the project effectiveness date, and then at appropriate intervals, as part of its project implementation and supervision missions. During project implementation, the World Bank will supervise the project’s financial management arrangements in the following ways: (i) review the project’s quarterly IFRs as well as the project’s annual financial statements and the auditor’s management letters and remedial actions recommended in the auditor’s management letters; and (ii) during the World Bank’s on-site missions, review the following key areas: (a) project accounting and internal control systems; (b) budgeting and financial planning arrangements; (c) disbursement arrangements and financial flows, including counterpart funds, as applicable; and (d) any incidences of corrupt practices involving project resources. As required, a World Bank-accredited financial management specialist will participate in the implementation support and supervision process.

7. Environmental and Social Safeguards: The Bank’s environmental and social safeguards specialists will provide regular support in strengthening the safeguards management capacity of Cadastru. In particular, the Social Specialist will provide guidance to Cadastru on the comprehensive social impact assessment to be conducted during project implementation.

Time Focus Skills Needed Resource Estimate Partner Role

First twelve months

Start-up of cadastre survey contracts, and review of bidding documents; start-up of individual consultants contracts and review of ToRs; M&E arrangements/ defining baselines; Support with implementation of policy review and institutional capacity building

Operations Management Land Registry and Cadastre ICT M&E Legal FM Procurement Social Environmental

$105,000

12-48 months

Other


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Skills Mix Required

Skills Needed Number of Staff Weeks

Number of Trips

Comments

Task Team Leader Co-Task Team Leader Cadastre and Registration Specialist Valuation Specialist Land Law Specialist Procurement Specialist Financial Management Specialist ICT Specialist Environmental Specialist Social Specialist

8 6 5 4 3 4 3 3 2 3

3 2 3 3 2 0 0 2 2 2

Based in ECA Based in DC Based in ECA Based in ECA Variable cost to be shared Based in Chisinau Based in Chisinau Based in ECA Based in ECA Based in DC

Partners

Name Institution/Country Role


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ANNEX 4: FINANCIAL AND ECONOMIC ANALYSIS

COUNTRY : Moldova


Introduction 1. The Financial and Economic Analysis (FEA) describes the financial and economic benefits stemming from

the project. The main objective of the FEA is to present the financial and economic net present value (NPV) and internal rate of return (IRR) to ensure that the project investment has positive financial and economic benefits for the country.

2. The analysis assumes a discount rate of 5 percent, which is in line with discount rates for similar projects in post-communist countries in the ECA region. The analysis also assumes a 10-year period, of which 5 years are the project implementation period and 5 years are the post-implementation period. This 10-year period is assumed as land projects show benefits far beyond the project implementation period, often lasting decades. Therefore, the inclusion of a 5-year post-implementation period helps better quantify the project benefits while still being conservative with a 5-year timeline.

Financial Analysis 3. The Financial Analysis of the project is based on Component B activities, where the revaluation of urban

residential and commercial properties is planned. Even though first valuation of other property types—such as rural residential, agricultural land and special purpose properties—will be done, there is no expected increase in related property taxes or improvement in the equity of the property tax burden without a corresponding change in tax policy from an area-based system, at which most of these properties are typically valued, to a value-based system. Since property tax policy has not been requested as a part of this project, only increased revenues from the revaluation are presented here.

4. The revaluation-driven increase in property tax revenues, key assumptions and the financial NPV and financial IRR are presented in this section.

Revaluation: Increase in Property Tax Revenues 5. Moldova developed a strong property valuation system in the early 2000s. However, a key drawback has

been that revaluations have not been performed regularly in line with international best practices. More specifically, urban residential properties have not been revalued since 2004 and urban commercial since 2009. Based on market data and estimates made by ALRC and Cadastru, revaluation would lead to a 60 percent increase in the appraised value of urban residential properties and a 15 percent increase in the appraised value of urban commercial properties. Maintaining the same tax rates that are LPAs applied18 in 2017, the estimated increase in property tax revenues for urban residential and urban commercial would

18 Tax rate ranges are set by the Ministry of Finance. The LPAs can select a tax rate within the prescribed ranges.


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be 60 percent19 and 15 percent20 respectively.

6. However, these changes will not be immediate. Given the time needed to implement project activities such as field and market data collection, modeling, calculation of appraised values, and the verification of results, the aforementioned increase in appraised values is expected in Year 4 of the project. The project will also support the development of a business plan for the sustainability of the mass valuation system where a percentage of property tax revenues, typically 3 to 5 percent per international best practices, can be used for future revaluations. The second revaluation is expected 3 years after the first revaluation (Year 7) so the subsequent increase in appraised values is expected the following year (Year 8). However, due to the major correction in appraised values in Year 4 of the project, the increase in the appraised value due to the second revaluation is estimated at only 5 percent for urban residential and 2 percent for urban commercial properties.

7. Additionally, the revaluations are expected to result is greater equity related to how the tax burden is spread. At this stage, there is not enough data to calculate the exact increases in equity but based on experience with similar projects, such an increase can be expected. This is expected to reduce the tax burden on the bottom 40 percent.

8. The expected increase in property tax revenues and the project’s financial viability is presented in Table 1. The costs amount of USD 35 million but are spread according to projected calendar year disbursement projections. The summary of the financial NPV, IRR and other important metrics is presented below.

9. Based on the model assumptions, the estimated financial NPV is positive and the financial IRR is greater

than the discount rate of 5 percent.21 This implies that the project is considered to be financially viable. This is also reinforced by benefit-cost ratios greater than 1 and a positive return on investment.

10. The sensitivity analysis below shows how the financial NPV and IRR might change if the estimated increase

in the appraised values of urban residential and commercial properties changes.

19 Source: ALRC estimate based on current appraised and market values. 20 Source: ALRC estimate based on current appraised and market values. 21 In the absence of a property tax policy review, financial sustainability has been safeguarded through the assumption that even though the project would finance both revaluation and first valuation of properties under Component B so that relative valuations across Moldova are fair, only revaluation will be used for property tax purposes because the use of first valuation for property tax purposes without an accompanying property tax policy review is likely to reduce the current property tax collection and reduce LPA own-source revenues.








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11. The numbers in green show assumption scenarios under which the financial NPV is positive and the financial IRR is greater that the discount rate of 5 percent, i.e. the project remains financially viable. Overall, the sensitivity analysis shows that the financial NPV and IRR estimates for the project are fairly robust. Additional increases in property tax revenues and greater robustness under the sensitivity analysis could be possible with property tax policy reform but these policy interventions are not foreseen in the project.

Economic Analysis 12. The Economic Analysis of the project is based on activities under Components A, C and D that support the

registration of private and public lands. In the case of private lands, the activity refers primarily to rural lands and economic benefits are expected to come from an increase in access to credit. In the case of public lands, the activity refers to both rural and urban areas and economic benefits are expected to come from an increase in the value of leases made out by the government at the local and national levels. Registration is also expected to increase the length of the lease and offer more stable revenues to the government. However, for simplicity, the model here does not factor in an increase in average lease time and focuses only on the increase in the average lease value.

13. Land registration brings with it several other economic benefits. Security of tenure is linked to increased domestic investment and productivity of land. Ease of Registering Property, a major Doing Business indicator, is linked to a higher investments and greater transparency. Error correction helps to reduce the cost of appeals. It can also reduce the time needed to use process a land parcel for construction, which is a major economic sector and creates several jobs. Investments in NSDI often result in increased efficiency and productivity, improved decision-making and reduced cost of collecting the same data multiple times across various registers. Even though the economic benefits of this project are manifold, it is not always easy to quantify such effects. Therefore, this section will focus on quantifying the economic benefits from private and public land registration discussed above.

Private Land Registration: Increase in Access to Credit

NPV (USD M) Estimated increase in the appraised value of urban residential properties

4.21 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0%

5% -13.03 -8.77 -4.50 -0.24 4.02 8.29 12.55

10.0% -10.80 -6.54 -2.28 1.99 6.25 10.51 14.78

15.0% -8.58 -4.31 -0.05 4.21 8.48 12.74 17.00

20.0% -6.35 -2.09 2.18 6.44 10.70 14.97 19.23

25.0% -4.12 0.14 4.40 8.67 12.93 17.20 21.46

IRR (%) Estimated increase in the appraised value of urban residential properties

0.10 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0%

5% -11.2% -5.4% -0.2% 4.7% 9.3% 13.7% 17.8%

10.0% -8.1% -2.6% 2.4% 7.2% 11.6% 15.8% 19.9%

15.0% -5.2% 0.1% 4.9% 9.5% 13.8% 18.0% 21.9%

20.0% -2.4% 2.7% 7.4% 11.8% 16.0% 20.1% 23.9%

25.0% 0.3% 5.2% 9.7% 14.0% 18.2% 22.1% 25.9%

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14. As private land is registered, the certified owners can use their registered land as collateral to access credit. The project plans to register 550,000 private parcels, a majority of which are located in rural areas. Due to the overwhelming number of rural parcels in this target, the model is based on the conservative assumptions that each year only 5 percent of the cumulative number of registered parcels would seek access to credit and the average credit amount sought per parcel would be USD 50 (MDL 600). As parcels become registered, the owners will be able to use the registration documents to acquire this credit, which can then be invested in other economic activities. The expected increase in access to credit and the private land-driven economic benefits of the project are presented in Table 2.

Public Land Registration: Increase in Average Lease Value 15. The registration of public lands is expected to increase clarity on parcel boundaries, especially when

neighboring parcels are private parcels. The project plans to register 308,750 public parcels. This increase in clarity would make it easier for the government to lease the same parcels for a higher average lease value. For this analysis, the model assumes that average lease values go up by USD 100 (MDL 1,600) per lease. Additionally, it assumes that a total of 16.4 percent of public lands will be leased out, which includes new leases of USD 100 per lease per year or increases in existing leases of USD 100 per lease per year. The 16.4 percent assumption is derived using results from Cadastru’s pilot in Varatic municipality and additional assumptions on the percentage of public authorities opting for new leases or increasing the value of current leases. First, the pilot in Varatic found that there were a total of 163 public parcels, of which 106 (65 percent) are owned by the municipality, 55 (34 percent) by the national government and 2 (1 percent) by the raion level. Second, the model assumes that 20 percent of the locally-owned public parcels, 10 percent of centrally-owned public parcels, and none of the raion-owned parcels would benefit from the increase in lease values. 16.4 percent is the weighted average of the percentage of publicly owned properties that would benefit from the increase in lease value whether the lease is new or existing. This increase in lease values for the government is assumed to be channeled to improving citizens services like education, health, employment support, thereby creating economic benefits for the citizens of Moldova. The expected increase in lease values and the related economic benefits of the project are presented in Table 2.

16. The summary of the economic NPV, IRR and other important metrics is presented below.

17. Based on the model assumptions, the estimated economic NPV is positive and the economic IRR is greater

than the discount rate of 5 percent. The project can, therefore, be expected to be economically beneficial.







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Table 1: Financial Analysis Model

Color Key Assumption Actual Value Calculation

Baseline (2017) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Cumulative

Urban Residential Property Tax Collection USD M 8.37 8.37 8.37 8.37 13.39 13.39 13.39 13.39 14.06 14.06 14.06 120.83

% change in appraised value as a result of reevaluation % 0% 0% 0% 60% 0% 0% 0% 5% 0% 0%

Increased Tax Collection USD M 0.00 0.00 0.00 5.02 5.02 5.02 5.02 5.69 5.69 5.69 37.15

Urban Commercial Property Tax Collection USD M 8.84 8.84 8.84 8.84 10.17 10.17 10.17 10.17 10.37 10.37 10.37 98.32

% change in appraised value as a result of reevaluation % 0% 0% 0% 15% 0% 0% 0% 2% 0% 0%

Increased Tax Collection USD M 0.00 0.00 0.00 1.33 1.33 1.33 1.33 1.53 1.53 1.53 9.89

Total Increase in Tax vs. Baseline USD M 0.00 0.00 0.00 6.35 6.35 6.35 6.35 7.22 7.22 7.22 47.05

NPV and IRR Calculations Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Increased tax revenues USD M 0.00 0.00 0.00 6.35 6.35 6.35 6.35 7.22 7.22 7.22 47.05

Project cost USD M -2.97 -3.91 -6.09 -7.76 -14.28 -35.00

Project cash flow USD M -2.97 -3.91 -6.09 -1.41 -7.93 6.35 6.35 7.22 7.22 7.22 12.05

Discount Rate % 5.0%








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Table 2: Economic Analysis Model

Color Key Assumption Actual Value Calculation

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Cumulative

Private land - Increase in Access to Credit

Number of private parcels to be registered # 550,000 550,000 550,000 550,000 550,000 550,000 550,000 550,000 550,000 550,000 550,000

% of parcels registered % 0% 10% 30% 30% 30% 0% 0% 0% 0% 0% 100%

Number of private parcels registered - new # 0 55,000 165,000 165,000 165,000 0 0 0 0 0 550,000

Number of private parcels registered - cumulative % 0 55,000 220,000 385,000 550,000 550,000 550,000 550,000 550,000 550,000 550,000

% of newly registered parcels seeking credit % 5% 5% 5% 5% 5% 5% 5% 5% 5% 5%

Number of registered parcels seeking credit # 0 2,750 11,000 19,250 27,500 27,500 27,500 27,500 27,500 27,500 198,000

Average credit amount per parcel USD 50 50 50 50 50 50 50 50 50 50

Total new credit generated in the economy USD M 0.0 0.1 0.6 1.0 1.4 1.4 1.4 1.4 1.4 1.4 9.90

Public Land - Increase in Lease Value

Number of public parcels to be registered # 308,750 308,750 308,750 308,750 308,750 308,750 308,750 308,750 308,750 308,750

% of parcels registered % 0% 10% 30% 30% 30% 0% 0% 0% 0% 0%

Number of public parcels registered - new # 0 30,875 92,625 92,625 92,625 0 0 0 0 0 308,750

Number of public parcels registered - cumulative # 0 30,875 123,500 216,125 308,750 308,750 308,750 308,750 308,750 308,750 308,750

% of newly registered parcels leased at higher value % 16.4% 16.4% 16.4% 16.4% 16.4% 16.4% 16.4% 16.4% 16.4% 16.4%

Number of registered parcels leased at higher value # 0 5,057 20,230 35,402 50,574 50,574 50,574 50,574 50,574 50,574 364,136

Expected increase in average lease value per parcel USD 100 100 100 100 100 100 100 100 100 100

Total increase in lease values USD M 0.00 0.51 2.02 3.54 5.06 5.06 5.06 5.06 5.06 5.06 36.4

NPV and IRR Calculations Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Increased access to credit USD M 0.00 0.14 0.55 0.96 1.38 1.38 1.38 1.38 1.38 1.38 9.90

Increase in lease values USD M 0.00 0.51 2.02 3.54 5.06 5.06 5.06 5.06 5.06 5.06 36.41

Total economic benefits 0.00 0.64 2.57 4.50 6.43 6.43 6.43 6.43 6.43 6.43 46.31

Project cost USD M -2.97 -3.91 -6.09 -7.76 -14.28 -35.00

Project cash flow USD M -2.97 -3.27 -3.52 -3.25 -7.84 6.43 6.43 6.43 6.43 6.43 11.31

Discount Rate % 5.0%






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