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Limited Liability Company «N AMO» 1 TABLE OF CONTENTS Executive summary 1. Introduction 6 1.1. Aim, scope and structure of the report 6 1.2. Water PEER in the context of the water sector and the PFM reforms 7 1.2.1. Context 7 1.2.2. W ater 8 1.2.3. Public expenditure 9 1.3. Methodology and data issues 9 1.3.1. Data sources 10 1.3.2. PEER challenges and information gaps 1 0 Public Finance Management inф the water sector 2. Public Finance Management in the water sector 12 2.1. Setting the stage 12 2.1.1. Macroeconomic and fiscal policy context, national planning and budgeting 12 links 2.1.2. Water related expenditure 1 4 2.1.3. High level Public Expenditure overview 1 6 2.1.4. Budgetary processes , budget classification and budgeted information in 17 Tajikistan 2.1.5. PFM in Tajikistan, progress and future directions on on - going reforms 2 5 2.1.6. Public Exenditures Reviews – relevant finding from World Bank studies 35 2.2. Developing MTEF for the water sector – analysis and recommendations 3 4 Public Expenditures in the Water Resource Management sub sector 3. Public Expenditures in the Water Resource Management sub sector 40 3.1. Overview of subsector objectives, policies, programs and agencies 4 0 3.1.1. Institutional and policy framework for WRM 4 0 3.1.2. Legal and institutional basis for WRM in Tajikistan 4 1 3.1.3. WRM in Tajikistan – challenging transition 4 2 3.1.4. Water sector objectives 4 2 3.1.5. Organizations/Agencies involved in WRM and links to Budgeting 45 3.1.6. Policy implementation in WRM 47 3.1.7. Water sector policies and programs 53 3.1.8. Climate ch ange – Impact on the water sector 54 3.1.9. WRM Sector performance 56 3.2. Principles of IWRM and Proposed Institutions at basins and sub - basins 58 3.2.1. River basin council (rbc) 59 3.2.2. River basin organization (rbo) 59 3.3. Public expenditures, budget allocation, executi on and evaluation 62 3.4. Sub - sector findings and financial sustainability analysis 64 3.5. Conclusions and recommendations 65 TABLE OF CONTENTS Irrigation and drainage 4. Irrigation and drainage 68 4.1. Overview of sub sector objectives, policies, programs and agencies 68 4.1.1. Sector objectives 68 4.1.2. Sec tor policies and programs 69 4.1.3. Sector agencies 69 4.2. Sub sector performance 72 4.2.1. Overview 72 4.2.2. Impact of weak irrigation systems 7 3 4.2.3. Investment needs 74 4.2.4. Funding sources 75 4.3. Process of budget allocation, execution control and evaluation in the sub 77 sector 4.4. Analysis of public expenditures in the sub sector 78 4.4.1. Ministry of Finance data 78 4.4.2. Overall funding according to ALRI 81 4.4.3. Tariffs and costs 83 4.4.4. User fees 85 4.4.5. Debts 87 4.4.6. Tax 88 4.4.7. Capital expenditure 88 4.4.8. ALRI expenditure 90 4.5. Sub sector findings a nd financial sustainability analysis 91 4.6. Conclusions and recommendations 91 Review of Public Expenditures in the Drinking Water Sub - sector 5. Review of Public Expenditures in the Drinking Water Sub - sector 94 5.1. Overview of sub - sector objectives, policies, programs and agencies 94 5.2. Subsector performance 99 5.2.1. Access to Water 100 5.2.2. Operations 101 5.2.3. Quality of water 105 5.3. Process of budget allocation, execution control and evaluation in the sub 106 sector 5.4. Analysis of public expenditures in the WSS sub - sector 107 5.4.1. Housing and Communal management, environment and fores try 107 5.4.2. Water supply and Sanitation (WSS) subsector 110 5.5. Sub - sector findings and financial sustainability 119 5.6. Conclusions and recommendations 120 Conclusions TABLE OF CONTENTS Annexes Annex 1. Characteristics of the main glaciers of Tajikistan 130 Annex 2. Characteristics of the biggest rivers of Tajikistan 131 Annex 3. Rivers Streamflow data for the years 1960 - 1999 132 Annex 4. Characteristics of the main lakes of Tajikistan 133 Annex 5. Characteristics of the main water reservoirs 134 Annex 6. The use of water from water reservoirs (in mln. м3) 134 Annex 7. Predicted approved operational reserves of groundwater 134 Annex 8. The territorial distribution of groundwater reserves, thousand. 135 м3/day Annex 9. The list of enterprises subordinated to the Ministry of Energy and 135 Water Resources System of the Republic of Tajikistan Annex 9.1. The list of the State unitary enterprises operating in the oil and gas 135 industry subordinated by the Ministry and funded partly from budget and partly from their commercial activity Annex 9.2. the list of enterprises, land reclamation and irrigation Agency under 136 the government of the republic of Tajikistan Annex 9.3. List of Non - profit organizations in the system of ALRI 136 Annex 9.4. The list of non - profit and commercial organizations to Committee for 136 Environmental Protection System of the Government of t he Republic of Tajikistan Annex 9.5. The list of units of the Main Geology Management System of the 137 Government of the Republic of Tajikistan Annex 9.6. List of joint stock companies, state enterprises, organizations and 137 institutions, under the ma nagement of Open Joint Stock Holding Company "Barki Tojik" Annex 10. List of counterparts met during conducting the WPEER 138 List of Acronyms ACU Aid Coordination Unit ALRI Agency on Land Reclamation and Irrigation CoEP Committee on Environmental Protection CPI Consumer Price Index CSIP Centralised State Investment Programme (domestic capital expenditure) DCC Development Coordination Committee DFID Department for International Development (UK) DRS District of Republican Subordination EBRD European Bank for Reconstruction and Development ENRM Environmental and Natural Resources Management FMIS Financial Management Information System GBAO Gorno - Badakhshan Autonomous Oblast GFS Government Finance Statistics GWP Global Water Partnership ID Irrigatio n and Drainage IPSAS International Public Sector Accounting Standards JSC Joint Stock Company KBO Key Budgetary Organisation KMK Khojagii Manziliyu Kommunali KUSD Kilo USD (thousand USD) LSIS Living Standards Improvement Strategy MABA Main Administr ator of Budget Allocation MEWR Ministry of Energy and Water Resources M E D T Ministry of Economic Development and Trade MTEF Medium Term Expenditure Framework NDS National Development Strategy NDS National Development Strategy PARS Public Administratio n Reform Strategy PEFA Public Expenditure and Financial Assessment PEER Public Environmental Expenditure Review PER Public Expenditure Review PFM Public Finance Management PFMRS Public Finance Management Reform Strategy PIP Public Investment Program me (externally financed capital expenditure) PPER Programmatic Public Expenditure Review PRS Poverty Reduction Strategy SDG Sustainable Development Goal s SUE State Unitary Enterprise TPSFRS Tajikistan Public Sector Financial Reporting Standards TSA T reasury Single Account WRM Water Resources Management WSS Water Supply and Sanitation WUA Water User Association 1 Executive summary This report 1 provides findings from a P ublic Environmental Expenditure Review (PEER) of the water sector in Tajikistan. The review has focused on the two main aspects of water usage in the country – water supply and sanitation (WSS) and irrigation and drainage. PEER aimed to identify financing sources as well as the institutional structures through which fu nds are disbursed. In addition, the review looks at the wider context of public financial management and Water Resources Management (WRM) and the institutional framework for this. This is an opportune time for the PEER in Tajikistan for a number of reasons . The sector is embar king on a new reform programme, which was approved in 2015, which is going to bring about a fundamental change in the approach to water management with the introduction of IWRM. In addition , water features in the global Sustainable Development Goals (SDGs) and the country has just launched its second National Development Strategy. Social and economic conditions in Tajikistan (and Central Asia) are more closely related to water than in other locations . The country is situated (along with Kyrgyzstan ) on the upper reaches of the major rivers Syr Darya and Amu Darya, rivers which are used downstream by Kazakhstan, Turkmenistan and Uzbekistan. Transboundary water resource management is significant for the geopolitics of the region. Tajikistan is water - rich and t his has shaped economic development with extensive hydropower resources (with some exports and plans to significantly expand) as well as economic reliance on water intensive agricultural crops (wheat and cotton) and water/energy intensive aluminum smelting . Despite having access to extensive water resources, the country faces numerous challenges . Climate change poses a significant threat to the region and may reduce supplies in water Tajikistan with potential adverse impacts on supplies for farming, WSS an d hydropower. Melting of the country’s glaciers as a result of global warming could lead to a catastrophic decline in water availability in many Central Asian rivers, affecting the water flow, with implications for water for agriculture and household consu mption as well as energy production. The country has been through a number of reforms to improve public financial management (PFM). These include strategies to strengthen coordination in national planning and to link broader strategies more closely to fina ncial practices to increase the efficiency of the management of public finances. Ongoing initiatives include the ten - year Public Administration Reform Strategy (PARS) and the Public Finance Management Reform Strategy. In January 2014, new budgetary classi fications were introduced. A further Public Finance Management Moderni z ation Project was approved in 2015 to continue reforms to 2021. In 2012 the Medium Term Expenditure Framework (MTEF) was introduced in six pilot sectors.
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