The World Bank Country Assistance Strategy for Georgia

2020-03-19

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Activities ( as identified in the EDPRP)	Responsible Agencies	Focus of Bank Actions	Expected Results FY04-06	Bank Group Program	Part-ners	WB Performance Indicators for End FY06
Improvement of Governance
· Development of a comprehensive, long-term concept and action plan of executive government reforms, and of a program to improve structure and number of employees in organizations under budgetary financing	State Chancellery, Ministry of Justice, Ministry of Finance relevant executive government bodies	Assistance to the State Chancellery in carrying out a functional analysis of the central government agencies and assessment of budgetary employment, remuneration, and training policy; on the basis of the above studies, develop recommendations	Widely owned program to improve functioning of government administration and agencies; remuneration and retrenchment policy for core civil service introduced, and plans for civil service training developed	Public Sector Management Project	DFID, USAID, UNDP	Initiation of reform and restructuring of civil service
· Inventory of normative acts defining the competence of government agencies to avoid duplication of local government functions	State Chancellery of Georgia, Ministry of Justice	Review of the existing legal framework	Initiation of legislative change and amendments	Public Sector Management Project; Public Expenditure Reviews	DFID EU USAID UNDP	Duplications and overlap among the central state agencies reduced, mandates more clearly defined
· Distinction of municipal property from central government and private property	State Chancellery, Ministry of Economy, Industry and Trade, Agency of State Property Management, Ministry of Justice, Ministry of Finance	Advice on financing mechanism for transfer of road and transport properties and legal mechanisms for owning and managing very low volume farm access roads	Revised functional/administration classification of roads; sound allocation formula for dividing Road Fund revenues between road owners	Secondary Roads Project; Trade and Transport Facilitation Project; Rural Infrastructure Study	Kuwait Fund for Economic Development	New road classification; new procedures for managing the road fund, including allocation of funds between road owners
Macroeconomic Stability
· Preparation of indicative plans of development for the economy for 2004 and 2005	Ministry of Economy, Industry and Trade	Improvement of linkage between policy, resource constraints and budgets	Develop a more realistic medium-term budget framework	Public Expenditure Reviews, PRSC in High Case	IMF DFID	Budget execution closer to planned
· Initiate the process to convert a portion of government debt liabilities into long-term debt instruments	National Bank	Assistance to the MoF develop long-term debt instruments, e.g. government bond market	MoF starts to use medium to long-term government bonds to replace the rolling of short-term debt instruments	Financial Sector Advisory Program	IMF	1-10 year government bond market in place
· Improvement of the management of international reserves of the NBG	National Bank	Advise to National Bank on management of reserves	Increased import coverage	Financial Sector Advisory Program	IMF	Gross foreign reserves to reach over 2 months of imports
· Completion of tax and customs administration reform	Ministry of Finance, State Tax and Customs Departments	Development of a business-friendly tax environment	Increased collection of excise taxes and improved VAT administration	Public Expenditure Reviews, Business Environment Study, PRSC in High Case	IMF USAID EU	Collection of excise taxes to reach over 2 percent of GDP
· Implementation of treasury reform, centralization of treasury service; development and introduction of commitment accounting and control system; development and introduction of expenditure control system	Ministry of Finance	Assistance to the MOF to improve its cash and debt management capacity and skills	Consolidation of effective control system, and adoption of a single treasury account	CPAR Updates, Public Expenditure Reviews, PRSC in High Case	IMF	Improved cash management and debt management capacity
· Improve government procurement system and expand scope of its coverage	State Procurement Department, Ministry of Economy, Industry and Trade	Establishment of a transparent state procurement system; decentralization of State procurement functions to line agencies	Greater efficiency and competition within the system; reduced delays and corruption in procurement process	CPAR, Public Expenditure Reviews, PRSC, project lending (e.g. Secondary Roads and Trade and Transport Facilitation)		Recommendations of Country Portfolio Assessment Report implemented
· Gradual increase of the share of targeted programs in the state budget	Ministry of Finance, Ministry of Economy, Industry and Trade	Develop program-based budgeting	Improve consistency between medium-term indicative plan and the budget	Public Expenditure Reviews, Public Sector Management Credit, PRSC in High Case	DFID	Public Expenditure Reviews assessment of better targeting of programs in the budget
· Inventory of budgetary arrears	Ministry of Finance	Establish accurate estimates of past government liabilities	Better information on, and reduction in, arrears	CFAA Updates, Public Expenditure Reviews	IMF	Reduced arrears
· Increase the number of participants in treasury bill market and improve bidding mechanisms to increase maturity and reduce the discount rate through market	Ministry of Finance, National Bank, National Commission of Securities	More competitive and efficient T-bill market	Short term: more participants for competitive bidding, and for non-competitive quota; medium term: cash management, coordination between MOF & NBG on T-bills/open market operations; long term: independent debt management office	Financial Sector Advisory Program, PRSC in High Case	USAID FIRST	Lower T-bill yield
· Develop legislation promoting the activities of investment funds in order to introduce best corporate management practice in enterprises and develop stock market	Ministry of Finance, National Commission of Securities	Help build legal environment for investment funds; provide information/advice	Establishment of legal environment for investment funds	Financial Sector Advisory Program		Regulation of investment funds in place; NCS has capacity to supervise those funds
· Prepare and adopt bill “on Personification and Registration of Insurance Contributions to Social Insurance System” required for regularizing first (distributive) pillar of pension system and development of pensioners’ personified registration system	Ministry of Labor, Health and Social Protection	Support to Ministry of Labor, Health and Social Protection on legal reforms and their implementation	Law adopted successfully	Social Protection Reform Project		Regularization of 1st pillar of pension system; better links between pensions and contributions
· For private pension funds, adopt statutory normative acts in accordance with the laws “on Non-Government Pension Funds” and “on Securities Market”	National Securities Commission, Ministry of Labor, Health and Social Protection	Support to National Securities Commission and Ministry of Labor, Health and Social Protection on legal reforms and their implementation	Normative acts developed and adopted	Social Protection Reform Project		Improved regulatory environment in the area of private pensions
· Prepare amendments to the Tax Code and investment rules of pension assets to promote the development of non-banking financial sector, including nongovernmental voluntary insurance system	Ministry of Finance, State Service of Insurance Supervision, National Commission of Securities	Support to relevant agencies on amendments to tax code and investment rules	Improved functioning of non-banking financial sector, including insurance companies/private pension funds	Social Protection Reform Project		Greater and more effective role for non-banking financial sector, including insurance companies and private pension funds

Structural Reforms
· Assess magnitude and share smuggled goods and those manufactured in informal sector of the economy by various commodity groups	Ministry of Economy, Industry and Trade; State Department of Statistics	Support for initiatives to reduce smuggling and the shadow economy	Reduction in smuggling and in the shadow economy	Trade Facilitation Project; Private Sector Development Project; Public Sector Reform Project; PRSC in High Case	USAID	Increase in tax revenues, including increase in revenues from petroleum products and cigarettes to over 2.5% of GDP
· Develop proposals to encourage investment	Ministry of Economy, Industry and Trade; Ministry of Finance; Ministry of Justice	Intensified dialogue with Government on reform of the banking system as a means of improving the investment climate	Increase in banks’ capitalization; better corporate governance principles and internal control systems; expansion of banking networks; real time banking settlement; anti-money-laundering legislation; deposit insurance introduced	Private Sector Development Project; Financial Sector Advisory Program; Business Environment Study	USAID IMF FIRST	Minimum capital raised to ?3.5m; improved confidence in banking system; better access to finance; anti money laundering regulations in compliance with FATF requirements
· Implement export promotion measures	Ministry of Economy, Industry and Trade; Ministry of Finance	Support for removal of institutional (governance) obstacles to fulfilling Georgia’s Export Potential	Progress in implementing recommendations of Trade Study/Workshop	Trade and Transport Facilitation Project; Private Sector Development Project; Business Environment Study; Rural Development Project	USAID	Improved perception of environment for exporters in business surveys
Human Capital Development
Improvement of Health
· Revise government commitments in healthcare sector to ensure full financing	Ministry of Labor, Healthcare and Social Protection; Ministry of finance	Assist government to define health financing strategy focusing on improvements in mobilization, allocation and management of public and private resources, help build government capacity in evidence based policy-making, planning, monitoring and evaluation, as well as regulation	Definition of basic benefit package, financing methodology and co-payments, as well as recurrent costs; improved resource mobilization and allocation, including introduction of incentive-compatible provider payment systems	Health Sector Note, JSDF Grant on community health insurance	JSDF SIDA DFID WHO	Definition of basic benefit package, financing methodology, co-payments, and recurrent costs; better resource mobilization and allocation, including introduction of incentive-compatible provider payment systems
Improvement of Education
· Develop programs for basic education	Ministry of Education, Ministry of Culture	Improving quality of education and access of the poor	Stakeholders actively engaged in improving education quality and outcomes	Education Project	SOROS	97 percent enrollment in basic education for the poorest quintile; 60% of consolidated education expenditures continue to be allocated to primary/secondary education
Improvement of Social Risks Management
· Definition of nature and periodicity of government commitments in the social sector to ensure full financing	Ministry of Labor, Healthcare and Social Protection; State Social Security Fund; Ministry of Finance	Timely execution of Government obligations in the social sectors; fiscal affordability and sustainability	No-arrears in social transfers, increased poverty alleviation impact	Public Expenditure Reviews, PRSC in High Case		No new arrears; poverty incidence decreased by 6 percentage points
· Enforce package of draft bills on compulsory social insurance	Ministry of Labor, Healthcare and Social Protection, State Social Security Fund	Support to implementation of social insurance system	Better performance of the pension system	Social Protection Reform Project		No pension arrears; financing of social insurance/assistance benefits separated
· Phased increase of pensions	Ministry of Labor, Healthcare and Social Protection, State Social Security Fund	Dialogue on pension policies	Increase in pensions	Public Expenditure Reviews; Social Protection Reform Project		Average real pension increased by 20%; extreme poverty among elderly reduced
· Fiscal sustainability of pension system based on compulsory social insurance	Ministry of Labor, Healthcare and Social Protection, State Social Security Fund	Dialogue on pension policies	Satisfactory performance of the pension system	Public Expenditure Reviews; Social Protection Reform Project		Improved fiscal sustainability of pension system
Development of Priority Branches of the Economy
Energy and Infrastructure
· Reorganize electricity wholesale market to resume the functions of financial and technical operator	Ministry of Fuel and Energy	Support for direct contracts between generators and large end consumers, subject to transparent terms and implementation	Direct contracts between generators and large end consumers	EMSP	EBRD KfW USAID	Electricity market successfully reorganized
· Amend tariff policy in line with model of wholesale market and consider liberalization of prices	Ministry of Fuel and Energy; Energy Regulatory Commission; Ministry of Economy	Tariff policy; adequate appropriations to energy in state budgets	Lower commercial losses; state budgets fully cover energy costs; higher collections by state energy companies in distribution, transmission; improved financial viability	EMSP	EBRD IMF KfW USAID	Cash payment collections at the wholesale electricity market above 65%; dissemination to public of detailed sector performance indicators
· Approve strategy to manage energy sector debts	Ministry of Fuel and Energy, Ministry of Finance	Establishment of a professional Debt Restructuring Agency for the power sector	Legacy debt no longer a threat to the financial viability of the power sector	EMSP	EBRD IMF KfW USAID	Debt Restructuring Agency led by international experts in full operation; legacy debt issue resolved
· Transfer energy sector companies, including National Distribution Company, under management contract in accordance with existing strategy	Ministry of Fuel and Energy	Georgian Unified Distribution Company (GUDC) under long-term management contract	GUDC under long-term management contract	EMSP	EBRD KfW USAID	GUDC under long-term management contract; other management contracts fully operational
· Improve transport regulatory administration	Ministry of Transport and Communication	MOTC restructuring	Improved functioning of restructured MOTC	Secondary Roads Project; Transport Facilitation Project		SDRG restructured and road financing arranged to provide stable source for road funding to maintain and improve roads
· Technical monitoring of emergency conditions, restore status of premises and constructions of strategic importance and special complexity of the energy, transportation, communication and construction infrastructure as well as those damaged from earthquakes	Ministry of Economy, Industry and Trade, Ministry of Fuel-Energy, Ministry of Transportation and Communication, State Department of Highways	Development of road data bank for SDRG to take prompt, cost-effective action in emergencies	The data bank is used to prioritize annual road program	Secondary Roads Project; Transport Facilitation Project		Road data bank in use and SDRG expanded to cover local rural roads
· Improve implementation of road construction plan, identify strategic projects and sources of financing	State Department of Highways	Road construction plan, equipping SDRG with tools to develop and manage the plan	5 year rolling plan a standard procedure in SDRG	Secondary Roads Project; Transport Facilitation Project	EU, Kuwait Development Fund	Performance indicators to be developed in Secondary Roads project
· Form information network covering the entire country	State Department of Information	Improving rural access to telecommunications services	Better and more affordable access by the rural population to telecommunications	Rural Telecommunications Project		Higher proportion of the rural population having affordable access to telecommunications
Tourism
· Prepare special program to attract additional funding from international donor organizations to develop tourism	State Department of Tourism and Resorts	Development of community-based tourism	Realistic development strategy for tourism -- especially community-based tourism -- that promotes broad-based local development, reduces administrative barriers to tourism, and supports preservation	Community-based tourism		Realistic development strategy for community-based tourism, including reduced administrative barriers and more focus on preservation
Agriculture and Food
· Establish water consumer associations in rural areas	Ministry of Agriculture, Melioration System Management Department	Support to establishing new, and strengthening existing, water users associations to manage irrigation facilities	More and better functioning water user associations	Irrigation and Drainage Rehabilitation Project	EU TACIS	Legal framework for WUAs established; number of water user associations registered increased
· Develop unified geographic computer system of land cadastre and registration	Ministry of Agriculture and Food, State Department of Land Management	Support to strengthening capacity of State Department of Land Management to carry out land registration based on cadastre survey	Increased capacity of State Department of Land Management	Agriculture Development Project	IFAD, USAID KfW	Eleven land registration centers established; satellite imagery used for titling in mountainous regions
· Establish private veterinary services	Ministry of Agriculture and Food, Veterinary Department	Dialogue with Government on Veterinary reforms	Law to establish private veterinarians passed	ARET	USAID	Government starts veterinary reform process
· Structural reorganization of plants protection services	Ministry of Agriculture and Food, Plant Protection Service	Discussion with MAF on reform of plant protection services	Follow-up to merging of three agencies into a single plant protection agency	ADP	USAID	Reduced illegal trade of agro-chemicals; relevant laws passed

2020-03-19

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