Partnerships and Leveraging

 

  1. The mainsignificant development with regard to partnerships and leveraging was the signing on May 1, 2014 of a PFA with the Government.The Governmentalso entered into similar PFAs with three other IFIs active in the country (Asian Development Bank [ADB], European Bank for Reconstruction and Development [EBRD], and Islamic Development Bank [IsDB]).Anchored in the CPS and valid throughDecember 31, 2017, the PFA’s stated goal is ‘. . . to facilitate a more diversified economy with improved competitiveness . . .’ by (a) attracting investments into non-extractive sectors; (b) developing private entrepreneurship and innovation; (c) fostering the growth of SMEs; (d) promoting human capital and institutional development; and (e) improving access to and the quality of public services, as well as sustainable regional development. To this end, the PFA coordinates and oversees implementation of several nationwide programs for which the authorities have allocated KZT500 billion and plan to borrow up to US$2 billion from the World Bank during the three years from FY15 to FY17. The PFA provides for a high-level Coordination Council comprising senior government and IFI, including World Bank Group representatives, which meets bimonthly to review implementation of PFA programs and to ensure prompt attention to ongoing or emerging issues. This Government-led initiative has enabledcloser interagency coordination, ensured complementarity between World Bank Group interventions and those of other IFIs, and thus leveraged their respective contributions to and impact on the country’s development.
  2. The portfolio is aligned with the Strategic Framework for Mainstreaming Citizen Engagement in World Bankoperations, with100 percent compliance for citizen-oriented design and 67–100 percent for citizen engagement (CE) outcomes/processes during FY14–16.Several projects incorporated good practice frameworks for CE, including Education Modernization, Social Health Insurance, andClimate Change and Mitigation for the Aral Sea Basin. Each includes a national CE platform promoting disclosure, awareness building, dialogue and accountability mechanisms to engage civil society, as well as more direct CE in community-level planning and decisionmaking, representing some of the most significant progress in Central Asia. Meanwhile, the Government has taken measures to inform the public about its reform agenda, including the creationof a new Ministry of Information and Communications to improve policy outreach. Nevertheless, the operating environment for independent civil society organizations (CSOs) and for issues of inclusion,especially of vulnerable groups, remains a challenge.Recognizing the need to focus on the quality of CE to ensure and enhance project impact, an assessment of beneficiary feedback was recently completed and a CE country roadmapdeveloped to articulate objectives, clarify priority areas, define responsibilities, and specify steps to meet country targets. Further detail about CE is provided inAnnex 7.

Progress toward Achieving CPS Objectives

  1. Progress toward achieving the CPS’ intended outcomes is satisfactory, with seven already completed and six on track for completion by end-FY17 out of 19[1].Seven objectives were achieved in the reporting period. Four of theseseven objectives were measurable physical targets of respectiveprojects. On the other hand, six outcomes, or one-third, are currently off-track, though one issimply the consequence of a proposed operation that did not materialize and two were affected by the delays in effectiveness of respective operations. In summary, three outcomes need to be revised and four dropped.Annex 3 records the status of all intended CPS outcomes as of June 30, 2016. Meanwhile, the highlights of progress in each of the areas of engagement are summarized below.
  2. Area of Engagement 1—improving competitiveness and fostering job creation.CPS activities in this area are aligned with four country development goals, namely: achieving competitiveness through macro-stability and international integration; bolstering human capital; boosting employment in agriculture; and developing infrastructure connectivity to reduce economic distance. TheWorld Bank Grouplending operations and JERP/RAS/advisory products are designed, among others,to help achieve nine CPSoutcomes. Three outcomes were achieved: technology commercialization and innovation; a 50 percent reduction in the ratio of NPLs to total loans; and a 5 per cent increase in electricity transmission capacity in the south and east of the country.Four outcomes are on track:prudent management of oil revenues (with government net financial worth above its 2012 level of 20 percent of GDP by 2017); improved regulatory environment (as measured by the country’s Doing Business rating, up to 41 in 2016, and its Business Environment and Enterprise Performance Survey (BEEPS) target for a reduction in the share of firms citing business licensing and permits as a major constraint down from 25.2 percent in 2009 to 4.7 percent in 2013); building skills for employment (as measured by the share of technical vocational education programs revised in line with new competency standards by at least 20 percent by 2017); and building transport connectivity and reducing costs (as measured by the 66 percent reduction in crash fatalities in the South Kazakhstan and Kyzylorda regions and the 72 percent reduction in road-user costs as of December 2015). Two outcomes are off-track: the share of firms with female ownership and top managers, which fell during the period, andthe application of new technologies in agriculture, as measured by the output of meat, due to a delay in the processing of a planned livestock project.

 

  1. IFC has been making the planned investments, and MIGA is exploring opportunities to support on-lending to priority sectors.As planned, IFC invested in rail transport, manufacturing, agribusiness, real estate, microfinance, and financial institutions including trade finance in particular those focused on SMEs. IFC is also advising companies on corporate governance and food safety standards and financial institutions on building their capacity to increase their SMEs portfolio. Moreover, IFC is advising the Government on implementation of a PPP project for the Big Almaty Ring Motor Road, tax transparency, and regulatory reform.Owing to the difficulty inassessing the impact of Bank interventions, the gender-related outcome has been dropped from the CPS.MIGA, jointly with the CMU, is exploring opportunities of providing non-honoring of financial obligations coverage in support of financial sector SOEs for on-lending to priority sectors and projects. MIGA is also exploring opportunities in respect of public and private infrastructure projects and renewable energy.

 

  1. Area of Engagement 2—strengthening governance andimproving the efficiency of public servicesdelivery. CPS activities in this area covered six outcomes and focused on two country development goals: i) improving public financial management and combatting corruption; and ii) raising the efficiency of essential public services. These activitiesincluded two CPS outcomes that are already achieved:the design and piloting of conditional cash transfer programs and enhancedstatistical capacity. Of the fourremaining outcomes, as of mid-2016,two remain on track: relating to the number of physical inspections of import declarations by customs, and e-procurement of public goods and services.Two outcomes were off-track: one relating to strengthening of budgetary and accounting institutions, as measured by the introduction of targeted reviews of public expenditure, and the other to strategic health reforms, as measured by the population’s out-of-pocket health expenditures. Both outcomes are nonetheless retained for the balance of the CPS.
  2. Area of Engagement 3—ensuring development is environmentally sustainable.This area of engagement supports the long-term country development goal to combat climate change, with two broad-based outcomes: safeguarding the environment and raising energy efficiency. Knowledge products for the former included designing benchmark pilots to measure and reduce the environmental impact and energy intensity of selected industries. Ust-Kamenogorsk Environmental Remediation Project (a Bank loan,approved during the last CPS)completed the remediation of five contaminated industrial sites and established a groundwater quality monitoring system leading to a reduction in heavy metal pollution―one of the CPS outcomes achieved. A second outcome achievedunder the Forest Protection and Reforestation Project was the replanting of46,000 ha in the Irtysh Pine Forest, the covering of 61,000 ha of the dry Aral seabed with vegetation, and improved fire management of 650,000 ha of forest. Meanwhile, ongoing TA through the PMR supports implementation of Kazakhstan’s Emissions Trading Scheme and strategic planning around its intended Nationally Determined Contribution (iNDC) declared in the Paris climate change agreement.The third intended outcome in this area―rehabilitation ofwater supply systems in 113,000 ha covering four southern oblasts, bringing water distribution to levels demanded by farmers―remains off-track, due to the delayed effectiveness of the 2nd Irrigation and Drainage Project; and the fourth outcome―reduction incomparative energy consumption in targeted public and residential sectors by at least 10 percent―is similarly off-track, due to the delayed effectiveness of the Energy Efficiency Project.

[1] The original 17 outcomes were updated to 19 to reflect specific outcomes for two operations (Ust Kamenogorsk Environmental Remediation and Energy Efficiency) included in the CPS Results Framework as shown in Annex 2.

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