Helping Kazakhstan Meet its Development Goals

Challenge

Over the past decade, Kazakhstan has aimed at rapid transformation through economic and social modernization. The World Bank Group supported this process primarily by transferring cutting-edge knowledge, and the JERP became a key instrument in responding to the country’s core priorities in the development agenda. Today, this unique program of analytical work and technical assistance is structured around the Country Partnership Strategy pillars focusing on development gaps in growth, governance and public service delivery, and sustainable development.

Solution

The JERP is a distinctive program targeted at building up the capacity to adapt the transfer of knowledge. It gives answers to the “what and why” by providing policy analysis, strategic planning expertise, and good practice options, and to the “how” by providing capacity-building assistance on a cost-sharing arrangement, with the Government’s share accounting for the majority of funding. 

A highlight of the JERP—the brainstorming session, co-chaired by the Prime Minister of Kazakhstan—brings together the highest level of government officials, World Bank management, and experienced practitioners for in-depth discussions on key development issues. Since 2003, 16 brainstorming sessions have provided direct input into the Government’s ambitious reform agenda.

Results

Under the JERP, the World Bank provides policy analysis, strategic planning expertise, practice options, and capacity-building assistance in wide-ranging areas of the Government’s reform program, such as macroeconomic and public financial management, social sector development, financial sector supervision, private sector development, and environmental protection.

Among the key results are:

• Advisory support on public resource management led to improvements in budget and financial management systems, resulting in a new budget code, a new multiyear budget preparation system, an effective treasury system, and other efficiency-improving measures.
• A review of Kazakhstan’s tax policy and administration framework led to the development of a new tax code based on JERP recommendations.
• Advisory services helped the Government avoid fiscally risky general bailout strategies in the wake of the financial sector crisis, and balance macroeconomic and monetary stability with sustainable growth objectives and prudent management of oil revenues. Design of a countercyclical fiscal policy helped assess and improve the cyclicality of the Government’s economic policies.
• Advisory assistance helped establish a Committee for Financial Monitoring under the Ministry of Finance to lead efforts in anti-money laundering and combating terrorism financing.
• Assistance with civil service reform, enhancement of the public sector audit system, and implementation of the Extractive Industries Transparency Initiative contributed to increased transparency and accountability in public sector operations through the introduction of new legislation, regulations, and institutional arrangements.
• Policy advisory support is translating into a new employment program and social safety net system with a conditional cash transfer component to improve the balance between the protection and promotion objectives of the Government’s interventions.
• Initial analytical work has evolved into a comprehensive joint project (covering health program planning, financial management, quality improvements, reform of medical education and pharmaceutical policy, and food safety measures) that is now building international standards and institutional capacity in the health sector.
• Advisory support to the development of a new social modernization strategy informs the Government’s evolving program on financing and delivering social services for the accelerated improvement of human capital outcomes.
• Assistance with business environment reforms facilitated a steady improvement in business entry and exit conditions, the payment of taxes, and the protection of investments rights, improving Kazakhstan’s overall Doing Business rating to 50th in 2014 from 63rd in 2010, and the simplification of the licensing and permits regime through the development of a risk-based methodology.  
• Assistance to Kazakhstan’s export and foreign direct investment promotion agency, Kaznex Invest, helped strengthen its institutional capacity to support local exporters and potential foreign investors with the aim of establishing sustainable long-term partnerships in foreign markets.
• An assessment to strengthen national statistics supported the development of a statistical master plan, which is now being implemented through a joint project and other government interventions.
• Analytical work on improving industrial competitiveness through cleaner and greener production helped with assessing the economic and health costs of air pollution and the subsequent design of air pollution monitoring and emission registration systems.
• Technical assistance on agricultural reform helped deepen the analysis of the specific subsidies program and supported the development of the monitoring and evaluation tools needed for reform.

Bank Group Contribution

The program works on a cost-sharing arrangement between the Bank and the Government to ensure relevance on both sides of the table. Government ownership has increased over the past decade, as has the country’s financial contribution, which has risen from 30 percent in 2003 to 85 percent in 2013.

Partners

The areas of focus and scope of the economic research program are determined by the Government in consultation with the World Bank. The program is designed to ensure strong government ownership while maximizing the World Bank’s contribution to the country’s development that goes beyond funding.  

Moving Forward

In order to boost its effectiveness as a knowledge service instrument, the JERP was transformed into a programmatic structure in mid-2011, with activities developed as multiyear and interconnected engagements. The new structure proved to be more effective in increasing and tracking the impact of the JERP by improving the strategic focus of the program, and providing much larger room for fully applying analytical insight, capacity support, and synergies between sector works.

Beneficiaries

Kazakhstan has been a pioneer in tapping into the World Bank’s global knowledge under the JERP, which now serves as an example to other advanced middle-income countries that are increasingly requesting similar Bank assistance. As Deputy Prime Minister of the Republic of Kazakhstan Yerbol Orynbayev highlighted during the 20-year partnership celebration event, “In the 10 years since its launch, the JERP has grown several-fold and proven an innovative instrument for bringing the World Bank’s expertise to the benefit of the government’s policy decision making and enhancing the institutional capacity of public agencies.”