The World Bank Group works with countries in Europe and Central Asia to help improve people's lives and achieve shared prosperity in a variety of ways, including through financial lending and analytical and advisory services. Our work aims to help countries achieve better competitiveness, more inclusive growth, and to adapt to climate change and improve energy efficiency.
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The Programmatic Public Expenditure Review (PPER) is the part of the World Bank's ongoing analytical and advisory activities, which provide a solid platform for policy dialogue and discussions with th... Show More +e Government of Tajikistan and other stakeholders on a range of key issues and reforms. The PPER consists of three policy notes – “Government Expenditures: Size, Composition and Trends”, “Review of Public Expenditures on Health”, “Review of Public Expenditures on Education” - completed in 2013, and three policy notes - “Key Issues in Public Finance Management”, “Fiscal Risks from State-Owned Enterprises”, “Capital Expenditures and Public Investment Management” - completed in 2014. The Policy notes aimed to inform fiscal policy and expenditure prioritization in key areas of the budget to improve the efficiency and quality of public spending and to support the structural transformation of the economy.More specifically, they are:1) The Policy Note No. 1 “Government Expenditures: Size, Composition and Trends” sets a stage for the further in-depth discussion of the issues, identified in the note, based on the analysis of trends and composition of public spending during the last six years. It begins with a brief review of macroeconomic context to provide the background for analysis of fiscal policy during the last six years and implications for fiscal policy going forward; presents the overall fiscal picture and highlights the fiscal risks to be addressed to sustain the recent progress in fiscal consolidation; shows composition and trends of expenditures and revenues and provides brief conclusions.2) The Policy Note No. 2 “Review of Public Expenditures on Health” examines public expenditures on health in Tajikistan. The note describes the institutional and administrative structure of the health sector; presents health outcomes and health care utilization indicators; describes health financing and presents the main options to expand fiscal space for health; reviews the health financing and organizational reforms implemented in Tajikistan.3) The Policy Note No. 3 “Review of Public Expenditures on Education” examines public expenditures on education in Tajikistan, focusing on assessing efficiency and equity of general education spending. It reviews the characteristics of Tajikistan’s educational system, including access and equity in enrollment and quality of education; analyzes overall public spending on education and a breakdown by financing source, subsector, and expenditure category, as well as unit costs by level of education; examines general education financing—the largest spending unit within the education sector—in more depth; covers demographic trends and enrollment projections and their implications on education spending.4) The Policy Note No. 4 “Key Issues in Public Finance Management” describes the current state of public finance management (PFM) reform in Tajikistan; examines the amount and nature of public spending; and explores the objectives the Government aims to accomplish through its spending. This note provides a number of recommendations to the Government to help achieve its stated PFM reform objectives.5) The Policy Note No. 5 “Fiscal Risks from State-Owned Enterprises” reviews the role of state-owned enterprises (SOE) in Tajikistan's economy and identifies key issues. It assesses the fiscal risks posed by SOEs, especially those in the energy sector; and provides possible solutions. The Note also benchmarks SOEs governance framework and practices in Tajikistan against OECD principles and provides recommendations for strengthening the SOE governance and transparency.6) The Policy Note No. 6 “Capital Expenditures and Public Investment Management” analyzes the composition and trends in capital expenditures; reviews a public investment management process in Tajikistan along the capital budgeting cycle (planning, budgeting, implementation, and audit) and provides recommendations for improving efficiency of capital spending and strengthening public investment management. Show Less -
ASTANA, October 23, 2014 – Today, the World Bank Group’s Managing Director and Chief Operating Officer, Ms. Sri Mulyani Indrawati, paid an official visit to Kazakhstan. The main goal of the visit was ... Show More +to discuss the World Bank Group enhanced collaboration with Kazakhstan under the new Partnership Framework Arrangement signed in May 2014.During the meetings with President Nursultan Nazarbayev, Prime-Minister Karim Massimov, and other high-level government officials, Ms. Indrawati encouraged Kazakhstan for continued prudent macroeconomic management and discussed further measures necessary for successful diversification of the economy.“It’s really fascinating to see the dynamics of the development in Kazakhstan,” said Sri Mulyani Indrawati at the media briefing in the Office of the President. “Moving forward, it is critical for the country to continue the implementation of stability-oriented macroeconomic and financial sector policies, and to sharpen the focus on higher productivity in the non-extractive sectors thus contributing to shared prosperity.”Ms. Indrawati highlighted the new type of engagement that the Bank and Kazakhstan embark on under the Partnership Framework Arrangement. In coordination with other international financial institutions, the Partnership will involve design and implementation of programs in major areas to help sustain economic growth in Kazakhstan, promote private sector and innovation, and develop institutional and human capital. She noted that the Bank also learns from Kazakhstan, as the country has become a source of good practices for other countries.At the regional level, the World Bank Group’s Managing Director and Chief Operating Officer highlighted the need for a cooperative approach to water resource management across Central Asia to sustain economic growth and mitigate climate change effects. Ms. Indrawati noted the progress Kazakhstan made in its regional and global integration efforts, and expressed the hope that the country will continue to facilitate regional dialogue and capacity development on the water and energy issues over the coming period.Kazakhstan joined the World Bank Group in 1992. Since then, the World Bank has become a major development partner with total commitments of US$6.8 billion for 41 projects. Show Less -
Kosova Sot: What happens if the budget does not get approved this year?Jan-Peter Olters: There are emergency provisions in Kosovo's legislation that give the authorities a little extra time to finance... Show More + current -- but not capital -- expenditures, in function of the previous year's budget. But even this contains a number of important implications and risks. First, by having to delay public investments until a new budget will have been approved by a Parliament that was able to constitute itself will reduce overall growth rates in the economy -- beyond the amounts not spent by Government. The uncertainty alone will have the private sector delay its own decisions on large expenditures as well. Second, without the mid-year budget review for the current budget, the ability to accommodate the salary increases within existing line-item constraints risks the Government's ability to pay (all) public sector salaries by year's end and rectify any arrears situation early in 2015. If the January emergency budget only allows one-twelfth of the previous year's budget for the wage bill, the Government will face immense difficulty in paying all January salaries and repaying any outstanding December wages. This would lead to an accumulation of payment arrears with a considerable risk of, ultimately, asphyxiating private sector activities. Even healthy and profitable companies would see their ability to honor payment obligations affected, resulting in arrears spreading throughout the economy. And third, if the politico-constitutional crisis goes beyond the emergency period specified in the laws, the ultimate risk consists of the Government's inability to authorize any spending, with incalculable risks to the economy and the country's socio-economic development potential. KS: Can it happen that the 2015 budget brings the country to bankruptcy?Olters: Parliament's inability to vote on and approve a 2015 budget could provoke a very serious crisis, given the time limits that Kosovo's laws define on a budgetary emergency period. Beyond that initial phase, as said before, it is unclear on what basis the Government could authorize any payments, which, of course, contains the risk of a fiscal crisis of difficult-to-contain proportions.KS: Any possible alternative to get out of the budgetary crisis?Olters: Sure. Parliament will have to find some way to adopt, in time, a budget for 2015. No political grouping with any hope of being able to form Kosovo's next Government could afford to have the country fall off the fiscal cliff. Beyond the resolution of the overarching politico-constitutional crisis, which represents a separate challenge, Members of Parliament will have to devise -- in parallel, if the formation of institutions extends well into 2015 -- an agreed-upon procedure that would allow for agreement on, and the adoption of, a "consensus" budget. Show Less -
To Market, To MarketSo far the technology commercialization project has promoted 33 new ideas or infused older ideas with Kazakh refinements in fields ranging from agriculture to oil and gas to roboti... Show More +cs. “Kazakhstan has done a great job of making a lot of money off resource extraction,” says Erik Azulay, who helps manage the project as part of the Civilian Research Development Fund. “But to already concentrate on diversification and, in our case, not only basic science but applied science and innovation and making sure these guys, these scientists are not just sitting in the labs but getting out into the market.” Show Less -
A new World Bank Country Economic Memorandum (CEM), titled Poland: Saving for Growth and Prosperous Aging, is attempting to address this issue of saving by looking at whether the Polish economy is sav... Show More +ing enough to finance its growth and whether citizens in the country are saving enough to ensure they are financially secure into old age.As the country continues to age, a greater share of its population is heading into retirement, while fewer and fewer workers are entering the workforce to replace them. This trend not only affects the future supply of labor in the country, it also impacts social systems such as pensions. This is particularly worrisome in Poland, where retirees draw 80 percent of their income from their pensions – compared to just 60 percent in other, similar economies. As the population ages, household savings - which amounted to just 3% of Gross Domestic Product (GDP) in 2012 - are expected to reduce even further. As pensions transform in response to reforms introduced in 1999, household savings will need to increase in order to bridge income gaps not filled by public pensions in the future and avoid old age poverty.According to this CEM, individuals are not the only group that needs to alter its saving habits. At the macroeconomic level, both the state and the corporate sector will need to make adjustments to their savings to help the country meet the economic challenges of the next phase of Poland’s development. Today, government policies do not provide incentives to private savings, while corporate savings often occur in the absence of reinvestments into new technologies, training, and innovation. Policies and regulations may need to be reformed at the state level in order to better incentivize savings at the individual level, while the corporate sector is tasked with a difficult balancing act – the need to sustain high saving and translate these into productive investments.In addition to identifying key areas of engagement, the CEM also provides a series of actions and recommendations that can help mitigate the negative impacts of aging. For individuals, the report argues that increased levels of education and a higher retirement age can help bolster income and savings in the future. By supporting income and growth – through the introduction of measures that can increase employment and remove disincentives to work – the government can play a key role in encouraging households to save more for their futures.Finally, further development of Poland’s financial sector beyond the current credit penetration of 54% of GDP would benefit saving and growth. The promotion of savings and their efficient use is closely linked to the issue of developing a local currency capital market. Local currency capital markets can provide savers with long-term investment instruments. In order to promote capital market development the report advise regulatory changes to improve functioning of the second pillar (OFE) and third pillar and facilitate bond issuance such as covered bonds or corporate bonds.A complex understanding of both the causes and solutions of Poland’s growth dilemmas, like the one offered in the latest Country Economic Memorandum, can be an invaluable tool in helping policymakers design appropriate measures today that can have a lasting impact tomorrow. But time is of the essence. The cost of delaying this response is high. If Poland takes immediate action to moderate the impacts of the challenges being posed by aging – primarily by handling projected growth in health spending – GDP in 2050 could be 1.5% higher than in the baseline developed in the report. Show Less -
WARSAW, October 20, 2014 – Growth boosted by increased household and public savings can help the Polish economy stay on a path of sustained long-term economic development, says a new World Bank report... Show More +, Poland Country Economic Memorandum (CEM): Saving for Growth and Prosperous Aging. Recent economic trends in advanced and emerging economies point to a lukewarm growth outlook. Against the backdrop of rapidly aging populations and slowing productivity growth, Poland too wrestles with the challenge of revisiting its growth model.The report emphasizes the importance of national saving in promoting economic growth and development. Sustaining growth in Poland, with remaining infrastructure gaps and an aging population, will require further investment as well as continuous improvements in productivity. In order to keep the balance of payments and net international investment position intact, the increased level of investment spending needs to be financed by increased savings. The report says that in order for Poland to sustain its per-capita economic growth at 3.5 percent annually, the national saving rate needs to increase from below the current 18 percent to 23 percent by 2030, provided a strong total-factor productivity (TFP) growth continues.“Poland’s economy has grown impressively over the last two decades and the country has become the European growth champion. Now the main challenge is to ensure that these achievements are sustained going forward so that income levels in Poland continue to converge with those in the rest of Europe,” said Marina Wes, World Bank Country Manager for Poland and the Baltic Countries.The rapid aging of the Polish population not only acts as a possible brake on growth, but also raises challenges for the sustainability of the pension scheme. The pension reform of 1999 made the pension system fiscally sustainable and fair, but the cost of achieving this will be a substantial fall in the average replacement rate. Additional transfers of part of national income to pensioners will be needed to prevent from old-age poverty. Part of the solution is individual saving and asset accumulation. The report demonstrates that the current working age population will have to save an additional 10 percent of their annual earnings to guarantee current replacement rates.“With this report we hope to stimulate public discussion and help policymakers design appropriate measures to support saving-based growth agenda in Poland,” said Emilia Skrok, Senior Economist and the author of the report.A number of complementary policy changes are likely to be needed to achieve a sustained increase in national saving in Poland. Government policy choices influence how individuals save. According to the report, policies to mobilize national savings in Poland will need to cover five areas: i) policies to support incomes and growth; ii) policies to encourage households to save; iii) policies to limit government dis-saving; iv) policies to substitute for foreign savings; and, v) policies to develop a long-term local currency capital market. Hence, the recommended policies cover a wider range of measures aiming at increasing the employment and quality of education, strengthening the balance of payments, limiting fiscal dis-saving, encouraging banks to be more assiduous in soliciting deposits and domestic borrowings, improving tax treatment of assets, developing a more functional domestic capital market, and encouraging individuals to save more for their own retirement as well as for precautionary purposes. In the case of the latter, there is a strong case for introducing a new savings product to give new life to the third pillar of Poland’s pension system. Show Less -