IDB support for STR in Jamaica (2008 – 12) Context: STR initiative is part of “Jamaica Competitiveness Enhancement Program” to improve business climate Initiatives include: Tax policy and tax administration reform Divestment of State Owned Enterprises SME access to finance Secured Transactions Reforms Credit bureaus Mobile banking Reduction in business costs through expedited land titling Modality: Sequence of four Policy Based Loan operations Program targets (conditionality) for STR (and all other initiatives) based on diagnostic of country specific problems, best international practice tempered by feasibility of reforms in Jamaica.

Prior Diagnostic Study (2005/06) Multi-sector “Private Sector Assessment” In financial sector found that: Domestic Credit low - around 20% of GDP Laws governing collateral are outdated: They require lawyers to draw up individual instruments and examine the law to ascertain what is permissible Banks rarely lend to sole proprietors (vast majority of Jamaica Businesses)

4 PBLs: Sequence of STR Targets 1 st loan (2008): Time-bound action plan to build consensus 2 nd loan (2010): ST position paper submitted to Cabinet & Cabinet approval of “concept of reforming laws… and commencement on reform process” 3 rd loan (2011): Consultations w/ stakeholders & STR law drafting instructions approved by Cabinet 4 th loan (2012): STR law and implementing regs. in effect -- Central Registry fully operational.

Parallel Technical Cooperation: Consultation & Tailored briefing papers “Private Sector Assessment”: dissemination & public dialogue (2006/07) “Legal diagnostic & action plan” (2007) “Implementing STR in Jamaica: Issues and Policy Options” (2008) STR stakeholder workshop (early 2009) Cabinet briefing papers & further stakeholder consultation (2009/10) Preparation of Discussion Bill (2010) Close collaboration during legislative process & Registry design & startup (2011 – 12) Continuous support from PIOJ & Bank country office

Political Support & Resistance Main Champion: Minister and PS - Ministry of Industry Investment and Commerce Also support from Minister of Finance and PIOJ Resistance from CPC, Registrar General, & MoF Fin. Institutions Unit CPC resents outsourcing of legal drafting Registrar General worried about losing current Bill of Sale and Company Charge registration fees. MoF worried about consequential amendments

Different Approaches to TA IFC (incomplete listing) Well developed Toolkit adaptable to countries worldwide Strong in-house STR practice group w/ dedicated funding Teams ready to work with countries on implementation IDB Permanent in-country presence & dialogue at all levels w/ counterparts Tailored advice & program design, based on in-depth, country-specific diagnostics PBL (and parallel TA) is very useful tool in raising profile & providing incentives Synergies of packaging STR w/ other reforms

Peru Case: A Brief Review Basic Approach: Three Policy Based Loan Operations supported by Technical Assistance 1999: 1 st Operation: Consensus building workshops 2000/03: Internalization process: Book published, MEF white paper, SBS trans cost study 2003/07: 2 nd Operation: ST law in effect & Moveable Property registry nominally functioning Quasi legal registry instead of notice registry – applications frequently denied on legalistic formality Unnecessary but mandated use of notary public services Law permits, but regulations deny, pledging of future assets (goods not yet in possession of borrower) Law does not allow preference for creditors financing new equipment vs. those financing inventory or the fixed assets to which the equipment is attached Lack of norms for repossessing collateral in the event of default. 2008/09: Further diagnostic work and consensus building on shortcomings of first STR law 2010/12: 3 rd Operation: - Reform of the legal framework to correct errors and shortcomings of the first law and regulations - Improvement of the Registry to convert it to a true notice registry. -