Mozambique - Financial Sector DPO

The development objective of the Proposed Financial Sector Development Policy Operation (FSDPO) Series is to reinforce financial stability, increase access to finance by households and firms, and enhance the development of long-term financial markets. The DPO isorganized around three pillars: (I) Financial Stability; (ii) Financial Inclusion; (iii) and Long-Term Financial Markets. Actions to promote financial stability include improvements in banks’ risk management and asset soundness as well as safety net and crisis management resiliency frameworks. Actions to promote financial inclusion focus on the credit reporting system, branchless banking (key to promote access in rural areas), consumer protection, payment systems and the insolvency framework. Pillar III promotes the development of money, debt, and capital markets. The series has two single tranche operations and this is the first operation. It is 50percent IDA Credit and 50 percent IDA Grant with US$25 million equivalent. The results indicators (elaborated further in the ISR)for the three Pillars are: Pillar I: (i) percentage of banks classifying their Non-Performing Loans (NPLs) according to the new regulation; (ii) percentage of banks implementing the new risk management guidelines; (iii) percentage of deposits balances and accountscovered by the Deposit Guarantee Fund (DGF); (iv) criminalization of terrorism financing. Pillar II: (i) number of e-money accounts; (ii) percentage of the population with access to formal banking services, including “formal-other”; (iii) call for proposals fromservice providers to apply for a private credit bureau license or operate the bureau on behalf of BdM; (iv) percentage of banks disclosing to consumers the effective cost of banking services; (v) number of days to clear a cheque; (vi) percentage of transactions settled through the Real Time Gross Settlement System (RTGS). Pillar III: (i) number of short and medium term bonds issued and reopened in the domestic market through competitive auctions; (ii) Level of dematerialization and immobilization of all medium and long term debt securities listed in Central Securities Depository (CSD).