Курсовая работа: Private sector and human-resource development in Georgia

·     In education the Education Adaptable Program Credit aims at improving the learning out­comes of primary and secondary students, through curriculum reform, development of an examina­tion system, training of teachers, provision of learn­ing materials, and development of capacity to make better use of Georgia’s physical, financial and human resources.  While the investment needs of school buildings are substantially higher than is currently affordable for Georgia, the Social Investment Fund projects continue to assist in financing urgent repairs to school facilities in many communities. 

·     In health IDA Credits to support the Government in improving the health care financing system, exploring risk-pooling options, introducing a new system of primary health care and improving the focus of services funded through public funds on the poor and on priority public health interventions.  In addition hospital restructuring has been supported by SAC 3 and the Structural Reform Support Credit.

·     In infrastructure support is being provided through the Municipal Development and Decen­tralization Credit and the Social Investment Fund Credit. These projects are providing financing at the community level for critical infrastructure needs, primarily for school and health facili­ties heat­ing and repair, small hydropower schemes to provide electricity, drinking water and sanitation reha­bilitation, as well as transportation infrastructure rehabilitation. 

·     In rural development IDA credits have supported the development of private sector farming and agro-processing improvements, agricultural credit, irrigation and drainage, and agriculture research and extension.  IDA has also been supporting the creation of local institutions such as rural credit unions and water users associations through its Credits.

Areas in which the World Bank leads and its analysis serves as input into the IMF program

4.          The Bank has been leading the dialogue on structural reforms through SAC 3, approved by the Bank’s Board of Executive Directors in June, 1999, and closed in October, 2002.  Despite considerable delays, the core conditions of SAC 3 were met, but their impact was reduced by poor governance.  Institution building and technical assistance has been supported through the Structural Reform Support Credit, also approved by the Bank’s Board of Executive Directors on June 29, 1999.   The Bank also leads in the areas of:

·     Private sector development.  SAC 3 supported improvements in the environment for private sector development, focusing on: (i) simpler licensing regulations; (ii) more transparent government procurement; (iii) reduced cost of entry for businesses; and (iv) privatization of state-owned commercial assets.  IDA has also been supporting private sector participation in other areas such as energy, telecommunications, urban services and agriculture.  The IMF has worked with the authorities to initiate audits of the 2002 accounts of three major state owned enterprises.

·    Energy.  The energy system is in poor condition, with unreliable supply, massive non-pay­ment and mounting debts.  IDA has been working with other donors, including the IMF, to encourage more private management and ownership, and to implement a series of short-term action plans to improve the overall functioning of the sector.  The IMF has also been focus­ing on improved payments for electricity.

·    Public Sector Management.  The Bank is supporting the development of a civil service reform program, while the Fund is providing technical assistance in support of tax and customs administration reform. 

Areas of shared responsibility of the World Bank and IMF

5.          The Bank and the Fund have been working jointly in the following main areas (supported by the Bank’s SAC 3 and Structural Reform Support Credit, several investment operations and the Fund’s PRGF):

·     Poverty Reduction Strategy.  Both institutions have been working closely with the Govern­ment to provide support to the development of the PRSP, through seminars and workshops, direct staff input, and a multi-donor Trust Fund to support the work of the PRSP secretariat..  

·     Budget Planning and Execution.  The annual process-based Public Expenditure Reviews will provide the underpinnings for systemic changes in expenditure management, with the immediate aim being improved budget formulation in 2004.  The IMF is focusing on Treas­ury reform within the Ministry of Finance.

·     Financial Sector Reforms.  The joint Financial Sector Assessment Program has supported: (i) strengthened banking and non-banking supervision; (ii) introduction of international accounting standards; (iii) and consolidation of banks through higher capital requirement ratios; and (iv) anti money-laundering legislation.  The IMF has focused in particular on banking supervision.

·     Debt Sustainability Analysis (DSA).  Given Georgia’s heavy external debt burden, the Bank and the Fund conduct joint Debt Sustainability Analysis on a regular basis. 

Areas in which the IMF leads and its analysis serves as input into the World Bank program

·       Fiscal Framework.  The IMF’s focus on prudent fiscal policy has served as an impor­tant framework for IDA’s work on public expenditure management.

Areas in which the IMF leads and there is no direct World Bank involvement

·       Monetary Framework. The IMF closely collaborates with the NBG in the design and implementation of a monetary program that aims at remonetization of the economy, while keeping inflation low and the exchange rate of the Lari stable

·     Economic Statistics. IMF technical assistance has been conducive to improvements in national accounts, price, monetary and government financial statistics.

5.1.5     The World Bank Country Assistance Strategy for Georgia

5.1.6     The World Bank Partners in Georgia

5.2  USAID

USAID assistance in the economic growth area focuses on strengthening agriculture sector, assisting the NBG to improve its supervision, inspection, and enforcement capacity, and  furthering land market reform. The Georgian Enterprise Growth Initiative (GEGI) is a major new private sector development activity to be implemented in close coordination with the CAS programs.  USAID has been actively involved in the energy and environmental sectors providing TA to regulatory bodies, supporting privatization of the energy sector and improvement of the international investment climate, assisting in elaboration of environmentally sound laws in the energy sector as well as policies in the sector oriented towards energy efficiency, conservation and water management. Through democracy and governance oriented projects USAID supports increased awareness of legal rights, judicial and BAR reform initiatives, strengthening local governments, building professionalism of independent mass media as well as capacity of civil society and NGOs. USAID initiatives in the social sectors include programs in the regions to support income generation and economic self-reliance activities among internally displaced persons, crisis assistance to the most vulnerable, health care partnership programs and reproductive health programs which promote improved maternal and perinatal services, safe motherhood, family planning, health information systems, and STI/HIV awareness and prevention.

5.3  EBRD

EBRD main objective in Georgia is to expand private sector development activities in the country. During years 2002 and 2003 it has been engaged in the active political dialogue with the Government to support the substantial reduction of administrative barriers to investments, representation on the board of companies and banks, support of the initiatives of local business associations. EBRD aims at further strengthening of the Georgian banking sector through ongoing support to the regulator, management training, and further consolidation. EBRD’s interventions include financing to business start-ups and existing micro, small and medium-sized enterprises as well as selectively supporting critical investments in infrastructure with specific focus on those projects that promote the commercialization of infrastructure, particularly of the energy sector.

5.4  EU

EU’s Partnership and Cooperation Agreement (PCA) provides for cooperation in a wide range of areas including Food Security Program (in amount of € 25 million for the period 2002-2003), rehabilitation in conflict zones (Engury Power Plan in Abkhazia), macro-financial assistance (establishment of an agricultural credit institutions, reforms in accountancy and audit, assistance to the insurance sector and securities market regulation), support to trade liberalization, customs, and development of transport infrastructure networks, advice on economic legislation  and country legislature harmonization with the EU standards, investments in primary health care reconstruction program and  development of the Georgian National Health Program and training of medical and administrative personnel as well as provision of the technical assistance for the development of the model of Regional Health financing. TACIS is the main financial instrument supporting the implementation of the PCA.

5.5  GTZ

GTZ, working on behalf of German Government, provides support in the health sector  primarily focusing on structural improvements and training for medical technicians, promotes vocational training sector to improve commercial and agricultural training and upgrading, implements projects to privatize agriculture and build up effective land- and debt-management systems, promotes export and investment, and has been assisting in judicial and legal training as well as practical  application of civil law in Georgia. German assistance is also channelled through KfW supporting credit line to agriculture sector enterprises, participating with an equity stake in Procredit Bank, is conducting cadastral works almost all over the country, and contributing to social infrastructure in the districts bordering Borjomi-Kharagauli National Park as well as supporting the Government to rehabilitate schools and health facilities damaged during the recent earthquake.

5.6  CIDA

Bilateral assistance also comes from Canada (CIDA) mostly through the regional projects supporting trade policy capacity, expanding the micro credit programs, promoting NGO capacity development program that supports the principles of good governance, strengthening health reform through the appropriate application of health information technology and information management strategies, and contributing drought victims relief operations.

5.7  DFID

DFID has recently approved a new Primary Health Care (PHC) Development project through which technical assistance will be provided to the Government in the areas of human resource development for the PHC system, health care financing, health management information systems, capacity building for the health policy development. DFID has been supporting the SDS in the multi-sector household and labor market surveys. The ongoing program also has a component aiming at development of good governance and civil society in two regions of Georgia as well as conflict reduction and confidence-building component.

5.8  The Government of the Netherlands

The Netherlands has provided support for a wide range of activities, focusing on good governance, human rights and peace building, as well as substantial budget support in conjunction with SAC III.  Dutch support in the three focus areas will continue, including for .  election preparation, prevention of trafficking in human beings, confidence building measures in Abkhazia  and support for NGOs involved in poverty alleviation and human rights

5.9  IFAD

In the agriculture sector IFAD supports rural development program for mountainous and highland areas and credit-union development and rural credit activities for small farmers, while FAO provides financial support to hazelnut sector rehabilitation project.

5.10      UNDP

UNDP in Georgia focuses its program activities in three areas: (a) democratic governance; (b) poverty reduction; and (c) environmental protection, as outlined in the second Country Cooperation Framework for Georgia (2001-2005).  In the sphere of Governance, major ongoing initiatives include support to Foreign Investment Advisory Council, strengthening the Anti-corruption Promotion Group, and assistance to the Constitutional Court and Public Defender’s Office. UNDP has been active in capacity building of the Georgian International Oil Corporation and of the National Security Policy Management. UNDP is contributing to land market development through creation of a computerized program of registration. Technical and financial inputs have been provided to strengthen the capacity of Georgian institutions responsible for national statistics, notably the State Department of Statistics. Environmental challenges are being addressed through the projects supporting  recovery, conversation and sustainable use of Georgia’s agro-biodiversity, removal of  barriers to small hydro power sector development, and capacity building of the Ministry of Environment.

5.11      UNICEF

UNICEF priorities in Georgia include: education, integrated childhood development, immunization, fighting HIV/AIDS, and protecting children from violence, exploitation, abuse and discrimination. It has been assisting the Government in national training of health workers and professionals and in providing universal access to basic health services for women and children. UNICEF has been helping the Government in promoting the implementation of the Convention on the Rights of the Child. Support also includes ensuring inclusive education for children with disabilities and providing psychosocial support to children in need of special protection as well as introducing alternative, non-institutional methods of childcare. Child de-institutionalization has been also supported by SIDA through provision of technical assistance during social protection reform  project preparation and implementation phases.

[1] Presidential Decree 678 calls for elaboration of a new law on privatization of agricultural land and completion of the national land cadastre by the year 2005. Apparently a draft of such a law is already circulated in the Parliament.

[2] Amended September 3, 1997; September 18, 1997; December 12, 1997; February 5, 1998; May 1, 1998; May 13, 1998; May 29, 1998; June 26, 1998; October 13, 1998; October 30, 1998; December 24, 1998; April 2, 1999; April 16, 1999; June 8, 1999; June 9, 1999; June 25, 1999; July 23, 1999; September 9, 1999; December 9, 1999; December 24, 1999; December 28, 1999; March 24, 2000; June 28, 2000; July 13, 2000; September 27, 2000; September 28, 2000; October 11, 2000; October 13, 2000; November 10, 2000; November 24, 2000; December 5, 2000; December 13, 2000; December 29, 2000; March 16, 2001; April 27, 2001; June 8, 2001.

[3] Resident physical persons: who received income that was not taxed at the source of payment in Georgia; who have funds in accounts in foreign banks; or whose expenditures during the tax year exceed 25,000 GEL.  As well as, non-resident physical persons with income from a Georgian source that is not taxed at the source of payment.

[4]  In hindsight, the VAT threshold should have been much higher when the VAT was adopted.

[5]  For example, it would help screen shell companies created for the very purpose to evade tax payments.

[6]  FIAS, Georgia: Study of administrative barriers to investment, December 2001.

[7]  This also applies to foreign investors, as numerous critical articles on taxation in Georgia published by the American Chamber of Commerce newspaper demonstrate.

[8] O: Observed.

[9] LO: Largely Observed.

[10] MNO: Materially Non-Observed.

[11] NO: Non-Observed.

[12] NA: Not Applicable.

[13] Although a draft law on Investment Funds has been prepared with assistance from USAID (IOSCO, 2001)

[14] C: Compliant.

[15] PC: Partially Compliant.

[16] MNC: Materially Non-Compliant.

[17] NC: Non-Compliant.

[18] NA: Not Applicable.

[21] Because Georgia is a member of the 1961 Hague Convention, on the abolition of legalization requirements of documents issued in foreign countries, only documents originating from countries not signatories to the Hague Convention require legalization by the consular offices.

[22] Article 4.3

[23] No. 2132-11s