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Russia: A Partnership for Development, Knowledge and Investment

October 15, 2010


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A decade of robust growth prior to 2008 helped Russia cut the poverty rate nearly in half. Through concerted reforms, public finances and the financial sector were put back on a sound footing after 1998 – a major achievement. In 2010, Russia’s economy is poised for a robust but relatively jobless recovery from the global crisis and. The International Bank for Reconstruction and Development (IBRD) will continue to play a role through policy guidance, and targeted projects that range from strengthening the role of local government to restructuring the health sector to better fight disease.

Challenge

Russia, the world’s largest country by area, presents significant contrasts in socio-economic, climatic and geographic conditions across its 83 regions. Headcount poverty rates in 2008 ranged from 38 percent in Kalmykia in the south to 7.4 percent in oil-rich Khanty-Mansiysk. Hence, a principal development challenge is providing access to social services and infrastructure of comparable quality across this expansive terrain. Health outcomes remain well below comparators in Europe. A major decentralization reform in 2006 has increased the scope to improve regional and local approaches to governance, public sector management and public service delivery.

Given Russia’s successful stabilization effort after 2008, which built upon solid macroeconomic management over the previous decade, another major challenge is to achieve sustainable diversification and modernization of the economy.


" The Russian Federation keeps an eye on, analyzes and generally pays a lot of attention to all analytic materials prepared by the World Bank. The World Bank Russian Economic Report is of great interest to us in the Ministry. We realize that the Bank, as a creditor, needs to analyze all economic processes in Russia as well as macroeconomics, economic perspectives, balance of payments and fiscal balance. We think their work is very professional, performed at a high economic level. We value it highly and apply it in practice. "

Dmitry Pankin

Deputy Minister of Finance, the Russian Federation


Approach

Given Russia’s size and strong financial position, engagement with the World Bank Group has been selective and strategic.  By working in partnership, the Bank has increasingly found innovative delivery mechanisms for the specialized knowledge services most in demand from Russian counterparts.

Results

Maintaining prudent macroeconomic policies.  Russia saved large oil windfalls in reserve funds in the decade prior to the global financial crisis and also repaid a significant portion of its external debt, thereby reducing external vulnerabilities.  This fiscal buffer helped Russia weather the crisis by financing a large stimulus package that stabilized the banking sector and contained unemployment and poverty.  Moreover, fiscal reforms improved the use of expenditures through better budget planning and execution.  The Bank’s analytical work and policy dialogue – for example, on long-term fiscal sustainability, performance-based budgeting, and periodic Russian Economic Reports – are supporting government efforts.

Making public administration more efficient. Several projects are increasing transparency and service orientation of public agencies for business and citizens.  For example, in the Cadastre Agency, the number of land plot registrations has increasd to 45.4 million at the beginning of 2009 from 14.8 million in 2004.  In pilot regions, the time needed to complete real estate transactions declined during the same period to 59 days from four months, and waiting time for clients was cut in half, to 59 minutes from two hours to 59 minutes.

Restructuring the health sector.  Since 2003, Russian authorities, local institutions, and international partners have worked together to address Russia's poor health profile, yielding significant results, particularly in fighting tuberculosis and HIV/AIDS.  With support from the World Bank, between 2003 and 2007, tuberculosis (TB) mortality declined by 18 percent and the rate of growth of HIV/AIDS prevalence declined by 5 percent.  In the health reform project over 2003-2009, pilot regions with 2.5 million people (Chuvash Republic and Voronezh) significantly restructured health services.

Educating children for the global information society. The E-Learning Support Project increased competence in information and communication technologies (ICT).  Seven pilot regions became leaders in applying ICT in education, leading to adoption by 30 regions.  Since 2005, ICT skills of advanced teachers doubled, while the number of inexperienced users declined by 200 percent.  Ninth graders performing above average on use of ICT increased to 63 percent from 48 percent. Benefits are equal in urban and rural schools.



Partners

Building on strong relations with key ministries and agencies at the federal level, the Bank is increasingly working with counterparts at the regional and sub-regional level, including governors, municipalities and local communities.  The Bank also coordinates closely in Russia with many partner groups, including international organizations such as the World Health Organization, The Global Fund to Fight AIDS, TB and Malaria, Food and Agriculture Organization, and European Bank for Reconstruction and Development; It also works with bilateral agencies including the United Kingdom’s Department for International Development (DFID), United States Agency for International Development, and the Canadian International Development Agency,  as well as technical partners such as World Wildlife Fund, and the United States National Oceanic and Atmospheric Administration.

Toward the Future

The Bank will continue to support Russia in four areas: (i) diversifying the economy for sustainable development and growth; (ii) improving public sector management and performance; (iii) improving the delivery of communal and social services; and (iv) supporting Russia’s global role.  New IBRD assistance will be selective, with the choice of instruments aligned with the government’s modernization priorities and external position. 


Yakutia's sparse population with deep roots in Sakhan language and culture, and tough weather have to be reckoned with as Yakutia embarks on a priority reform: modernizing early childhood development and education.

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45.4 M
increase in land plot registrations from 14.8 million in 2004
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