There is currently no Country Assistance Strategy (CAS) for Iran. The last Interim Assistance Strategy which covered the period 2002-2003 was extended through 2005. No new World Bank loans to Iran have been approved since 2005 and all projects have closed.
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A forthcoming World Bank report, Trust, Voice, and Incentives: Learning from Local Success Stories in Service Delivery in the Middle East and North Africa finds solutions within the region itself. The... Show More + report identifies a series of local successes in delivering quality public services in Jordan, Morocco and the Palestinian Territories. The examples show that resources are not the determining factor. “It is national and local leadership, and the building of accountability relationships around shared goals that make the difference,” said World Bank Global Lead for Public Service Delivery Hana Brixi, lead author of the report. “They hold the key to unlocking the full potential of the region’s vast human potential.”The success of a girls’ high school outside Jenin in the West Bank is traced to local leadership, specifically the principal’s ability to involve parents, motivate her teachers, and forge a collaborative framework with the directorate, underpinned by mutual trust. The success of another public school—this time in a deeply traditional community in Jordan—again springs from efforts by an Education Council, consisting of representatives from the community and ten schools in the area, to create new power structures where schools and community work together to make decisions and find solutions to local problems. “Student performance in national tests have now become a source of community prestige and pride,” observed Jumana Alaref, a member of the World Bank team that visited the school as part of the research for the report. ”Tackling problems, such as the school’s power supply, are now a shared responsibility,” she added.These examples offer valuable lessons, all the more urgent during this time of crisis, on how to rebuild institutions and engage local leaders and citizens in designing solutions. Better quality of health and education services and greater citizen satisfaction, trust, and engagement would make societies across the region politically more stable and economically more just. The cycle of poor performance must first be broken, and replaced with the interlocking chains of norms and accountability that nurture and reinforce good service delivery and citizens’ trust in public institutions and engagement with the state. Show Less -
Judging by the futures market, where the price of oil for delivery in August 2015 is US$56 per barrel, there is little optimism about a recovery in oil prices. With cheap oil looking like it is here t... Show More +o stay, the latest Quarterly Economic Bulletin offers a breakdown by country of the potential regional consequences. Here are the highlights: Gulf Cooperation Council (Loss) oil and gas revenues in 2013 accounted for over half of the Gulf economies’ GDP and 75% of total exports earnings. If prices stay low for a sustained period it is estimated that the region’s governments will face over a US$215 billion loss in oil revenues, more than 14% of their combined GDP. Gulf countries had on average been earning more than they spent, but the combination of rising government spending and falling oil prices could reverse that. The combined fiscal surplus of about 10% of GDP in 2013 could turn into a deficit of 5% of GDP. While they have significant reserves to cover any shortfalls, there are signs that regional governments are re-thinking their spending. Saudi Arabia – with reserves of US$700 billion – is preparing to increase energy and fuel prices. Bahrain, the most severely affected, is contemplating a request for budget support from its Gulf allies. Oman has released a 2015 budget that includes no spending cuts or additional revenues, but may resort to both in the year ahead. The UAE has begun searching for additional sources of revenue, including a tax on remittances – if this policy is adopted throughout the Gulf, it could impact the hiring of expatriates and the flow of remittances. Total remittances from GCC countries to the rest of the Middle East and North Africa region amounted to US$21 billion in 2013, with Saudi Arabia accounting for half that figure.Egypt (Gain) Oil consumption in Egypt has been rising by an average of 3% per year, outstripping what the country can produce. Cheaper oil will allow Egypt to buy more of it from a greater variety of sources to meet its rising demand. Look for fewer blackouts this summer, which would be a boost to political and social stability. If oil stays at the current price of around US$50 per barrel, Egypt will be able to save on the EGP 100.4 billion budgeted for energy subsidies (based on an expected price of US$105 per barrel.) Cheap oil is also expected to lower inflation and poverty rates – the one downside is potentially fewer tourists from the Gulf, and fewer expatriates sending money home. The impact of the latter will depend on how long lower oil prices stick around.Iran (Gain/Loss) politics will be as important as the price of oil for Iran. If a deal is reached in the nuclear talks with the P5+1 (the United Nations Security Council and Germany) and oil sanctions are lifted, oil exports are expected to rebound to pre- sanctions levels by 2017. As oil makes up about 80 %of total export earnings and 50 to 60% of government revenues, the economy could grow substantially under this scenario. With no deal, cheap oil could mean a 60% drop in fiscal revenues, down to $23.7 billion in 2015 from its peak of $120 billion in 2011/12. Under this scenario, a loss of about 20% of GDP would be expected, bringing GDP growth down to zero (from the previous year’s 1.5%), and the economy would continue to shrink. This will put tremendous pressure on inflation, unemployment, the fiscal deficit and the currency.Iraq (Loss) oil exports have increased, despite the current turmoil, reaching an average of 2.9 million barrels per day in December 2014, the highest level since 1980. Oil revenues, however, fell from May to December, 2014 – the value of monthly exports dropped from $8 billion to $5.4 billion. This comes at a time when spending is higher than usual as the government battles to regain ground from ISIS. Lower oil prices will further squeeze government finances, with GDP growth expected to fall to 1.5% in 2015 – remarkably low for a country that should still be in reconstruction-driven growth. The draft 2015 budget – which was based on an anticipated price of US$70 per barrel – is being revised to identify savings through a freeze on public hiring and rooting out abuses (such as the infamous 50,000 ‘ghost soldiers.’) The government is also seeking to delay its final reparation payments to Kuwait, which would defer nearly $5 billion. Even with these savings, maintaining government spending in the face of falling oil revenues will pose a significant challenge. The situation is further complicated by ISIS cutting off the main northern supply routes, raising the price on all imports, including food. This will make the country’s universal food ration system, which is the sole source of nutrition for many Iraqis, more expensive to maintain. Jordan (Gain) the large drop in oil prices is a positive shock, promoting growth by lowering the cost of production. The government will be able to save the US$300 million budgeted in 2015 to compensate households for the lifting of fuel subsidies (the system of cash transfers was designed to stop automatically once oil fell below US$100 per barrel.) Both citizens and refugees will benefit from lower prices, as inflation dropped to its second lowest level since December 2009. Over the medium term, though, if cheap oil persists Jordan could see fewer remittances from its expatriate workers in the Gulf (over 60% of remittances to Jordan originate from the Gulf.) With lower revenues, Gulf countries could also be less generous with grants. Jordan relies heavily on these grants, and they were expected to form 2.7% of GDP in 2015.Lebanon (Gain) one significant way in which cheap oil will save the government money is by lowering the cost of supporting the national electric utility, Electricité du Liban (EdL). With tariffs unchanged since 1996 – when oil was $23 per barrel – EdL only covers a fraction of its costs. The government picks up the difference, with transfers to EdL amounting to 4.7% of Gross Domestic Product (GDP) since 2011. Lower oil prices will lower the cost of generating electricity and shrink EdL’s shortfall. This will in turn lower the transfers to EdL, albeit with a 6-9 month lag given the structure of outstanding contracts with fuel oil and gasoil providers. At an average of 8.3% of GDP, imported oil is also a significant component of Lebanon’s trade deficit, which cheaper oil will help to improve. The benefits will be counter balanced by the fact that, like other countries in the region, cheaper oil could affect the amount of money sent home by Lebanese expatriates in the Gulf. Yet as energy imports are greater than the total value of all remittances, a cheaper price per barrel is expected to improve the country’s balance of payments.Libya (Loss) there will be a high price to pay in lost oil revenues if rival political factions do not reach an agreement. Oil production is currently at one-fifth of its pre-crisis 1.6 million barrels per day. Libya has accumulated substantial financial reserves but the combination of low oil prices and low output has forced the government to draw on it. Reserves reached $100 billion in August 2014, falling by 20% since the start of the year, and could be depleted in four years if the current situation persists. One quarter of the population is on the public payroll, and public sector wages have been increased by 250% since the 2011 revolution. With no increase in oil production on the horizon, the government will struggle to meet its obligations. The Tripoli-based rival parliament recently announced that it was considering lifting fuel subsidies which stand at 20% of GDP – a move that would help close some of the widening gap between public spending and revenues.Tunisia (Gain) the newly approved budget was based on an anticipated oil price of $95 per barrel. Cheaper oil will mean the government will have to spend far less on energy subsidies. Lower oil prices will also lower the cost of producing and transporting food. A 15% drop in energy prices coupled with a 5% drop in the price of food could increase real incomes of the poor by 3 percent and of the bottom 40 percent of the population by 2.5 percent.Yemen (Loss) oil dominates the government budget. Lower prices combined with ongoing political instability (including frequent sabotage of oil pipelines) halved oil revenues. Receipts from May to September, 2014 totaled US$1.4 billion, compared with US$2.4 billion for the same period in 2013. Yemen also relies on remittances from expatriate workers in the Gulf – the source of 90% of all remittances – which may also be affected. Lower oil prices are expected to reduce prices of imported goods, though, and boost household consumption, especially for food items, as 55% of food products are imported. In addition, inflation would likely drop, as food constitutes about 44% of the Yemeni consumer’s spending. Yet to protect its currency and compensate for the drop in oil revenues, Yemen has been drawing on its foreign reserves. The country currently has enough to cover 4.6 months of imports, down from 5.1 months in September. This downward trend is likely to continue in the face of cheap oil and continued instability – and the decision by Saudi Arabia to suspend most of its aid. Yemen will need ongoing assistance from its development partners if it is to avoid a balance of payments crisis in the coming years in which it is unable to afford critical imports.*For more detailed analysis, please visit the latest issue of the Quarterly Economic Brief Show Less -
The millions of workers, consumers, and entrepreneurs who bear the cost of this are often unaware the impact these policies have on the opportunities to which they aspire. In Egypt, for example, aggre... Show More +gate employment growth declines by about 1.4 percentage points a year when connected firms enter new business sectors. Without grasping this, the internal debate critical for economic reform is curtailed.In economies in MENA, like economies everywhere else, it is the start-ups and the most productive firms that are the engines of job creation. The report provides plenty of evidence to support this: in Lebanon, about 177 per cent of net job creation from 2005 to 2010 was generated by micro start-ups; in Tunisia, small startups created 580,000 jobs from 1996 to 2010—92 percent of all net job creation. Although it has fewer start-ups overall, Jordan provides a striking example of what entrepreneurs can achieve against the odds. Unable to tap start-up capital, a Jordanian couple who returned home in 2002 after working for the Swedish communications firm, Ericsson, used their own contacts and money to set-up a software company. By 2008, it employed 100 engineers locally and exported 80 percent of its products.The region needs a larger pool of young firms and productive firms like this to unleash private sector job creation. However, existing rules tend to protect established insiders rather than encourage new ventures, creating few incentives to turn good ideas into new ventures. Only six limited liability companies are created per 10,000 working-age persons on average each year in the region, compared to 20 across 91 developing nations, and as many as 40 and 80 in Chile and Bulgaria.This means that despite the fact that more than 65 percent of the populations of most MENA countries are of working age, the energy of a growing workforce has largely gone to waste. Instead of filling skilled, high-productivity jobs (such as those in the software industry), relatively well-educated jobseekers have disappeared into low-productivity services in the retail trade, hotels and restaurants— often jobs with fewer benefits or opportunities for advancement. Women, who face cultural hurdles, have the lowest representation in the labor force anywhere in the world.Only by removing the type of privileges described in this report can the region move toward the level of job creation it needs. The report shows that promoting open markets and competition, and leveling the playing field, will provide an environment conducive to entrepreneurship and the emergence of dynamic firms. Reforms initiated transparently would make sure citizens are aware of what their governments are doing and can provide input into policymaking. Show Less -
The success of the program allowed the WSC to de commission two desalination plants and reduce the level of water extraction from the island’s aquifer to levels not seen since the 1960s. The leakage i... Show More +n the water distribution network “was around 4000m3/hr in 1995, yet [has] decreased to below 450m3/hr today”, according to Stephan Riolo, executive director of the network’s infrastructure in Malta.Malta clearly had lessons to share in reducing water losses and operating desalination plants. As part of their program of support for MENA countries, the World Bank therefore organized a conference on the small Mediterranean island that brought together 30 senior officials from major water utilities in Morocco, Tunisia, Libya, Lebanon, the Palestinian Territories and Yemen.All the countries that participated are facing similar problems and have keen interest in reducing losses and improving the management of their water supply. Most said that in their experience, however, reducing water losses had proved difficult and complex. Malta’s case was particularly valuable as it shows that countries can achieve successful water loss reduction, as long as it is part of a comprehensive, well-designed program.The WSC had applied a structured approach based on four pillars: (i) the acknowledgement of the many components of water loss and the interaction between them, (ii) the need to take into consideration, when setting targets, the economically acceptable level of non-revenue water (water supplied but not billed for), (iii) the need to move away from short-term interventions, and (iv) the recognition that water loss lies at the core of assets management.Participants agreed that replicating the WSC’s success in other MENA countries would require a similarly structured approach, based on long-term strategic planning. This would have to include the following phases: (i) a careful diagnosis of the water loss situation, identifying activities that would generate the largest savings, and setting realistic targets, (ii) a comprehensive program of intervention covering all relevant aspects of water loss (as opposed to “one shot” actions), and (iii) institutional reforms to establish the right framework for maintaining the utility’s economic performance.There was great interest from all participants to move forward with specific technical assistance, with the WSC transferring its knowledge through peer-to-peer exchanges and a twinning approach. It was agreed that twinning activities between the WSC, Tunisia’s SONEDE utility, and utilities in Gaza, would be supported, in part through a grant from the Center Mediterranean Integration.Other participants, such as Morocco’s ONEE, Northern Lebanon’s water establishment, and utilities from Sana’a and Aden, also expressed their interest in exchanges with the WSC. Based on this, a comprehensive twinning program between the WSC and MENA utilities will be finalized in the next few months, so as to start exchanges in the field before the end of 2014. Show Less -
ARADO is the training arm of the Arab League, and the Network of Experts is tapping into it to facilitate a regional training program that builds on existing resources in the various countries, addres... Show More +ses common challenges, and capitalizes on existing strengths.“When it comes to the effectiveness of public procurement,” said MENA Regional Procurement Manager, Yolanda Tayler, “it is striking how similar many of the challenges that MENA countries face are, and how little has been done in the past to take advantage of cross-border training programs.”Capacity building programs often have problems in common. These include a lack of sufficient funding, the lack of an assessment of existing skills and competencies—and gaps—and the frequent exodus of highly-qualified staff to other government positions or to private companies offering higher pay.Many countries have taken a highly fragmented approach to capacity building, and have not yet been able to build a body of knowledge within the country. Other shared challenges include the lack of qualified trainers and specialized training institutes, the quality and coverage of the training programs, and the limited knowledge or dissemination of modern procurement tools like e-procurement.The Network of Experts’ regional capacity building program seeks to address some of these shared challenges, following the model of the Sharjah event on SMEs. Trainers from nine MENA countries attended it—Morocco, Tunisia, Iraq, Jordan, Lebanon, Djibouti, Egypt, Yemen, and the Palestinian Territories.A regional capacity building strategy for public procurement will be developed for training materials in Arabic and French for the ‘training of trainers’ programs, and for building partnerships with training institutions. Subsequent country-level training sessions will leverage each country’s existing institutions, infrastructure and expertise, while putting World Bank President Jim Yong Kim’s science of delivery methodology to good use to make sure that everyone knows how to implement the training programs. In the longer term, there could be a regional certification program for procurement professionals. Some countries have already made ground-breaking advances in terms of the coordination between their public procurement departments. Collaboration allows stakeholders to learn from the successes of others in the region. At the regional level, countries could coordinate to create economies of scale, taking advantage first of the resources and knowledge that already exist on the ground. Show Less -