World Bank Activities in Kazakhstan

Transcription

1 World Bank Activities in Kazakhstan Historically, the World Bank is one of the major sources of external assistance to Kazakhstan. Since July 1992 the Bank has provided 32 loans to Kazakhstan for the total amount of more than 2.1 billion dollars. The first projects were focused on building fundamentals of market economy, as such: transfer of the state assets to private property; financial revival and restructuring of state enterprises; modernization of financial system; and creation of basis for market oriented banking sector. After 1997, the focus shifted towards reforming civil service and strengthening overall structure of the state resources management, developing special policy of social securities and targeted social protection of population, as well as mobilizing local savings for economic growth acceleration areas which needed substantive institutional improvements Disbursements under the World Bank Financed Projects in Kazakhstan (USD mln.) In 1990-ies the major part of the World Bank investments (66%) has been made in three main sectors: state management, finance management, and energy. Structural loans made about 50% of the total portfolio. Now that significant progress has been achieved on the implementation of key structural reforms, and Kazakhstan does not experience either budget or balance of payments problems anymore, World Bank support is exclusively focused on investment projects. Current project portfolio of the World Bank is mainly concentrated on agriculture, environment protection, and infrastructure. Nowadays this list is being expanded by the projects in social and science intensive sectors. In the past several years the co-financing arrangements for projects have also changed. Compared to 1990-ies when the World Bank s loans were 100% used for projects, recently the Republican budget of the Republic of Kazakhstan has become the main source for project financing, while the share of World Bank s loans is smaller. Projects Under Implementation The following twelve projects are now under implementation: 1. Syr Darya Control and Northern Aral Sea Project ( , total cost $85.79 mln USD, including the World Bank loan of $64.5 mln USD and Republican budget co-financing of $21.29 mln USD) has a goal of reviving and securing agricultural production and fisheries

2 in the Syr Darya River basin, and preserving environmental conditions of the Northern Aral Sea. 2. Electricity Transmission Rehabilitation Project ( , total cost $258.4 mln USD, including the World Bank loan of $140 mln USD) is aimed at strengthening the national Kazakhstan Electricity Grids Operating Company (KEGOC), improving safety and quality of electricity supply, and facilitating competitive electricity market development. 3. Nura River Cleanup Project ( , total cost $98 mln USD, including the World Bank loan of $40.39 mln USD and Republican budget co-financing of $57.03 mln USD) is aimed at improving living conditions of people residing in the Nura River basin, and providing alternative water supply sources in the region. 4. Agriculture Post-Privatization Assistance Project Phase 2 ( , total cost $71.4 mln USD, including the World Bank loan of $35 mln USD and Republican budget cofinancing of $36.4 mln USD) is aimed at facilitating provision of financial services to farmers, and small and medium rural enterprises. 5. Agriculture Competitiveness Project ( , total cost $83.2 mln USD, including the World Bank loan of $24 mln USD and Republican budget co-financing of $46.8 mln USD), is aimed at improving competitiveness of agriculture in Kazakhstan by stimulating access to markets and knowledgebase. 6. Drylands Management Project ( , 9.7 USD mln. including 5.27 USD mln. Global Environment Fund (GEF) grant) is aimed at stimulating sustainable use of dry lands ecosystems on the pilot territory of Shetski rayon of Karaganda Oblast. 7. Kazakhstan North-South Electricity Transmission Project ( , total cost $160.8 mln USD, including the World Bank loan of $100 mln USD) is aimed at ensuring access of Kazakhstan population and enterprises to reliable, economically effective, and high quality electricity supply. 8. Forestry Rehabilitation and Reforestation Project ( , total cost $63.8 mln USD, including the World Bank loan of $30 mln USD and Republican budget co-financing of $28.8 mln USD, co-funding from GEF $5 USD mln. grant) is aimed at supporting economically viable and sustainable rehabilitation of environment and management of forests and associated rangelands with a special focus on pine tree forests of Irtysh river, dry Aral Sea bed, and planning of saksaul. 9. Ust-Kamenogorsk Environmental Rehabilitation Project ( , total cost $40.09 mln USD, including the World Bank loan of $24.29 mln USD and Republican budget cofinancing of $15.8 mln USD.) is aimed at cleaning underground waters of Ust-Kamenogorsk city from solid and liquid industrial wastes, and improving environmental conditions in the city and adjacent territories. 10. Customs Modernization Project ( , total cost $62 mln USD, including the World Bank loan of $18.5 mln USD and Republican budget co-financing of $43.5 mln USD) is aimed at reforming and modernizing customs administration in Kazakhstan by: increasing revenue collection; improving transparency of customs operations and reducing potential for corruption; and promoting use of internationally accepted practices. 11. Health Sector Technology Transfer and Institutional Reform Project ( , total cost $296.1 mln USD, including the World Bank loan of $117.7 mln USD and Republican budget co-financing of $178.4 mln USD) is aimed at introducing international standards and building long-term institutional capacity in the Ministry of Health and related healthcare institutions. 12. Technology Commercialization Pilot Project ( , total cost $75 mln USD, including the World Bank loan of $13.4 mln USD and Republican budget co-financing of $61.6 mln USD) is aimed at demonstrating significantly improved performance and

3 commercial relevance of scientific research in the country by strengthening and restructuring selected segments of Kazakhstan s research and development base (R&D), and helping link this new rejuvenated R&D capacity to national and international technology markets. The following projects are under preparation: 1. Western Europe Western China Corridor Road Rehabilitation Project (implementation launched is scheduled for the second half of 2009) 2. Tax Reform Project (implementation launched is scheduled for January 1, 2010) 3. Irrigation and Drainage Improvement Project (Phase 2) 4. Technical Vocational Education Reform Project 5. Syr Darya Control and Northern Aral Sea Project (Phase 2) 6. Moynak Modernization Project Joint Economic Research Program (JERP) Given the country s reduced need for external financing, priorities of the World Bank s assistance have shifted towards more targeted investment loans, policy dialogue, and knowledge transfer. A multi-year Joint Economic Research Program (JERP), an innovative mechanism for planning and financing analytical work, is being implemented by the Bank and the Government of Kazakhstan under a cost-sharing arrangement. JERP implementation started in 2002, and analytical work carried out within JERP framework has proven to be very effective in supporting Government s vision and process of decision-making in key strategic policy areas. Themes and volume of the economic research works are identified on the annual basis by the Government with consultations with the Bank. The effectiveness of this model is supported by the fact that several countries took it as a blueprint. In FY2009 JERP covers the following themes: higher education, poverty assessment, vocational education and training (Feasibility Study for investment project), pension system, Extractive Industry Transparency Initiative (EITI), tax administration (Feasibility Study for investment project), administrative reform, macroeconomic forecasting and simulation, e-government review, budget transfers methodology analysis, public finance management review, Government services quality review, continued work on financial stability assessment, investment climate assessment, brainstorming on financial markets volatility, markets with poor competition, improving country s Doing Business rating, public finance audit system development, Public Private Partnerships (PPP) and fiscal risk management, financial monitoring system introduction. Country Partnership Strategy Every three to four years, the World Bank designs a work plan to guide its operations in a client country. Previously such work plan was outlined in a document called Country Assistance Strategy or CAS, but since 2004 the Bank shifted its focus from assistance to the country to partnership with the country given positive changes in Kazakhstan s economy. Focus of the new Country Partnership Strategy approved in September 2004 is on increasing diversification and competitiveness of Kazakhstan economy. Country Partnership Strategy Progress Report for the Republic of Kazakhstan was issued on May 1, The current World Bank s Country Partnership Strategy will focus on the following areas:

4 Prudently managing oil revenues and increasing public sector efficiency. The National Fund of the Republic of Kazakhstan was established in 2000 to prudently manage oil revenues. The Government has since focused on the optimal size of the National Fund, as well as on the level of public spending and ways to increase its efficiency. The Bank is offering best-practice experience and analytic studies on oil-fund management to help the Government manage oil windfalls. Strengthening the Government s capacity to identify and reduce barriers to businesses and private investors. To ensure economic diversification, the government is committed to reducing the barriers for new businesses and to maintaining the country's liberal trade regime. WTO accession and greater regional cooperation, particularly in areas such as infrastructure as well as customs and trade facilitation, are seen as vehicles to help Kazakhstan s firms to link into the global marketplace. The Bank s technical assistance under the JERP assists Kazakhstan with selected areas of its WTO accession process. Building the foundation for future competitiveness by investing in human capital and basic infrastructure. Consensus has recently been reached in the Government that capital and labor productivity must be enhanced to achieve the country s long-term vision of development. With this aim, the Bank is helping the Government identify options for reforming the railways, road management, telecommunications, and electricity markets. Bank assistance in this sphere includes four infrastructure projects. A Regional HIV/AIDS program that includes Kazakhstan is also being supported. In addition, the Bank's Joint Economic Research Program is helping to lay out the strategic direction for the modernization of the country's health, water and sanitation, and education systems. Sustaining competitive growth through a focus on the environment. Kazakhstan inherited significant environmental liabilities related to past military, industrial, and mining activities. It also faces land degradation and desertification and water scarcity. The National Environmental Action Plan for Sustainable Development prepared in 1999 sets out remedial investments that are now being undertaken by the government. The Bank supports the Government s activities through the implementation of four ecological projects that address the management of drylands, preservation of the northern part of the Aral Sea, cleaning up the pollution of river and underground water, and the environmental rehabilitation of an oil field. BOTA Foundation In May 2007, the World Bank agreed to assist the governments of Kazakhstan, the United States, and Switzerland in setting up an independent foundation in Kazakhstan that will use approximately $84 million in frozen funds for development projects involving poor children and youth of Kazakhstan. The concept and program of the Bota Foundation (meaning baby camel in Kazakh) was developed by the World Bank in response to a request from the three governments to develop a transparent mechanism to use the funds for the direct benefit of the people of Kazakhstan. All parties agreed that supporting the development of poor children and youth by improving access and equity of opportunities for their education would have the most direct and lasting impact. The Bota Foundation s purposes are to implement a multi-year program through such activities as: (i) conditional cash payments to Kazakh families to help poor children (ages 6-18) stay in school, and for those under school age to receive adequate health care; (ii) educational scholarships to the poorest Kazakh youth to attend university, and (iii) grants to local and

5 international NGOs aimed at improving child and youth welfare in Kazakhstan. The Bank s activities are limited to providing services for establishing the Bota Foundation and implementing the Bota Program by: 1) providing technical assistance for the establishment of the Bota Foundation and selection of the Foundation Founders, Supervisory Board members and Program Manager; 2) undertaking training and capacity-building activities; 3) assisting with preparation of the Bota program s Operational Manual; and 4) supervising project implementation in accordance with the Operational Manual. The BOTA Foundation was registered on May 14, 2008 as an independent non-profit organization under the legislation of the Republic of Kazakhstan. On June 4, 2008, the inaugural meeting of the BOTA Foundation Board of Trustees took place. The five independent Founders, known for their integrity and as community leaders in Kazakhstan, will serve both as Founders and as members of the Board of Trustees of the BOTA Foundation. On November 19, 2008, International Research and Exchanges Board Inc. (IREX) together with Save the Children (SC) were selected to be Program Managers team for BOTA. Now Management Agreement is being negotiated, which after finalization, is subject to approval by the Parties (3 Governments). It is expected Management Agreement will become effective at the beginning of Civil Society Social Development Fund (CSSDF, former Small Grants Program) To maintain dialogue with civil society organizations in Kazakhstan the World Bank administers annual Civil Society Social Development Fund for local non-governmental and public organizations. Any institution involved in development broadly defined may apply for a grant. The Program supports projects aimed at engagement of vulnerable and marginalized groups of population in development and promoting civic participation. Since the Program implementation started in Kazakhstan in 1998, 74 projects were supported for the total amount of about 333,000 USD.