Private sector and human-resource development in Georgia

         In infrastructure support is being provided through the Municipal Development and Decentralization Credit and the Social Investment Fund Credit. These projects are providing financing at the community level for critical infrastructure needs, primarily for school and health facilities heating and repair, small hydropower schemes to provide electricity, drinking water and sanitation rehabilitation, as well as transportation infrastructure rehabilitation.

         In rural development IDA credits have supported the development of private sector farming and agro-processing improvements, agricultural credit, irrigation and drainage, and agriculture research and extension. IDA has also been supporting the creation of local institutions such as rural credit unions and water users associations through its Credits.

Areas in which the World Bank leads and its analysis serves as input into the IMF program

4.                  The Bank has been leading the dialogue on structural reforms through SAC 3, approved by the Banks Board of Executive Directors in June, 1999, and closed in October, 2002. Despite considerable delays, the core conditions of SAC 3 were met, but their impact was reduced by poor governance. Institution building and technical assistance has been supported through the Structural Reform Support Credit, also approved by the Banks Board of Executive Directors on June 29, 1999. The Bank also leads in the areas of:

         Private sector development. SAC 3 supported improvements in the environment for private sector development, focusing on: (i) simpler licensing regulations; (ii) more transparent government procurement; (iii) reduced cost of entry for businesses; and (iv) privatization of state-owned commercial assets. IDA has also been supporting private sector participation in other areas such as energy, telecommunications, urban services and agriculture. The IMF has worked with the authorities to initiate audits of the 2002 accounts of three major state owned enterprises.

      Energy. The energy system is in poor condition, with unreliable supply, massive non-payment and mounting debts. IDA has been working with other donors, including the IMF, to encourage more private management and ownership, and to implement a series of short-term action plans to improve the overall functioning of the sector. The IMF has also been focusing on improved payments for electricity.

      Public Sector Management. The Bank is supporting the development of a civil service reform program, while the Fund is providing technical assistance in support of tax and customs administration reform.

 

Areas of shared responsibility of the World Bank and IMF

5.                  The Bank and the Fund have been working jointly in the following main areas (supported by the Banks SAC 3 and Structural Reform Support Credit, several investment operations and the Funds PRGF):

         Poverty Reduction Strategy. Both institutions have been working closely with the Government to provide support to the development of the PRSP, through seminars and workshops, direct staff input, and a multi-donor Trust Fund to support the work of the PRSP secretariat..

         Budget Planning and Execution. The annual process-based Public Expenditure Reviews will provide the underpinnings for systemic changes in expenditure management, with the immediate aim being improved budget formulation in 2004. The IMF is focusing on Treasury reform within the Ministry of Finance.

         Financial Sector Reforms. The joint Financial Sector Assessment Program has supported: (i) strengthened banking and non-banking supervision; (ii) introduction of international accounting standards; (iii) and consolidation of banks through higher capital requirement ratios; and (iv) anti money-laundering legislation. The IMF has focused in particular on banking supervision.

         Debt Sustainability Analysis (DSA). Given Georgias heavy external debt burden, the Bank and the Fund conduct joint Debt Sustainability Analysis on a regular basis.


Areas in which the IMF leads and its analysis serves as input into the World Bank program

 

            Fiscal Framework. The IMFs focus on prudent fiscal policy has served as an important framework for IDAs work on public expenditure management.

Areas in which the IMF leads and there is no direct World Bank involvement

            Monetary Framework. The IMF closely collaborates with the NBG in the design and implementation of a monetary program that aims at remonetization of the economy, while keeping inflation low and the exchange rate of the Lari stable

         Economic Statistics. IMF technical assistance has been conducive to improvements in national accounts, price, monetary and government financial statistics.


5.1.5        The World Bank Country Assistance Strategy for Georgia

 

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

: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54