IFC Debt Resolution Program, Phase II


The Debt Resolution Program contributes to effective debt management frameworks in Serbia, Albania, Bosnia and Herzegovina, Macedonia and Kosovo.

Country/region Period Budget
Albania
Bosnia and Herzegovina
Macedonia
Serbia
01.11.2017 - 31.03.2022
CHF 4'350'000
Background

Effective insolvency regimes are key features of a modern market economy. They allow sound but temporarily troubled firms to keep functioning. Furthermore, they offer an alternative approach to bankruptcy in a way that protects lenders? and employees? interests in the best possible way. As a result, modern insolvency regimes keep productive assets in the economy, free-up the unproductive ones and play a crucial role retaining jobs that would otherwise be lost. The Debt Resolution Program addresses key constraints to economic development in the Western Balkan region and is well aligned with SECO's strategic objectives.

Objectives

The objective of the program is to contribute to effective insolvency frameworks in order to reduce the levels on non-performing loans and to allow for currently unproductive assets to re-enter the investment cycle. This second phase will focus on the practical application of the newly introduced frameworks in Serbia, Albania and Bosnia. Furthermore, it aims to replicate the success in improving the existing legal and regulatory framework in Macedonia and in Kosovo.

Medium-term outcomes

The program countries have a modern legal and regulatory insovency framework that allows for effective corporate debt restructuring.

The relevant actors (judges, administrators, etc.) dispose of the necessary expertise to make effective use of the improved insolvency frameworks.

The private sector (banks, companies, etc.) are aware of the improved insolvency framework and make active use of it.

Results

Expected results:  

Technical assisstance in drafting relevant laws, bylaws and regulations tailored to the individual country context.

Capacity development in the form of training for insolvency judges, administrators, practitionners, law enforcement bodies, etc.

Peer learning opportunities through workshops and seminars.

Awareness raising activities such as conferences, public discussions and media coverage.


Results from previous phases:  

During the first phase Serbia, Albania and Bosnia and Herzegovina have adopted improved insolvency frameworks in line with international best practice following an extensive consultation process involving all relevant stakeholders. As a result the debt recovery rates have improved pursuant to the program?s targets from 21 cent/USD up to 30 cent/ USD. Furthermore, over 500 jobs have been retained and compliance cost savings for the private sector in the amount of more than USD 200 million have been realized. Finally, high-level trends such as declining levels of NPLs and accelerating credit growth in the region confirm the overall relevance of the program although a direct attribution is obviously not possible.


Directorate/federal office responsible SECO
Credit area Development cooperation
Project partners Contract partner
  • International Finance Corporation


Budget Current phase Swiss budget CHF   4'350'000 Swiss disbursement to date CHF   0 Budget inclusive project partner CHF   4'350'000
Project phases Phase 3 01.11.2017 - 31.03.2022   (Current phase) Phase 2 01.09.2014 - 30.04.2018   (Completed)