Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Copy Public Disclosure Copy II. I. Decision Estimated DateofBoardApproval Estimated DateofAppraisalCompletion Date PIDPrepared Environmental Category Implementing Agency Borrower(s) Project ID Lending Instrument Sector(s) Country Region Project Name reach about5million by2014.Nonetheless,theGovernment recognizedthatrestoration ofbuildingsandmunicipal infrastructurealonewasnot Georgia National InvestmentAgency,thenumber oftouriststoGeorgiaincreased from 560,000in2005to2.7million in2011,withaprojectionto complete revampofmunicipalinfrastructure andrestorationofoldbuildingsstock(mostwhichfeatured heritagevalues).Accordingtothe 2005-2011, ineconomicandphysical revitalizationofTbilisi,Signagi,Mtskheta,BatumiandKutaisi cities.Implementedprojectsfocusedona sector investments,especiallyin tourism. Inlinewiththisstrategicdirection,theGovernmentinvested aboutUS$300millionbetween stimulate jobcreationbyreducing imbalancesamongandwithinregions,improvingpublicservices, andattractingincreasedvolumeofprivate among theregions.Initiatedregional developmentstrategiesinthecountry,includingWorldBank supporttotheKakhetiRegion,intend are tobeachievedthroughbalanced socio-economicdevelopmentpolicy,increasedcompetitiveness, andgreatersocio-economicequality in June2010,aretocreateafavorable environmentforregionalsocio-economicdevelopmentand to improvelivingstandards.Theseobjectives Georgia RegionalDevelopmentStrategy:TheobjectivesoftheGovernment’s StateStrategyonRegionalDevelopmentfor2010-2017,approved Sectoral andInstitutionalContext Project Context a seriesofregionaldevelopmentoperationsbeingimplementedunder theCPS,focusingonImeretiregion. loan, wasapprovedbytheBoardinMarch20,2012,focusingonKakheti region,andisnowunderimplementation.ThisProjectthesecondin applying aprogrammaticapproach.ThefirstProjectundertheprogram, RegionalDevelopmentProject(RDP-P126033),US$60millionIBRD FY13 presentedtotheBoardinApril2011(ReportNumber:58287-GE), theGovernmentaskedBanktosupportregionaldevelopmentby promising regions,suchasKakhetiandImererti.Intheframework oftheCountryPartnershipStrategyProgressReport(CPS-PR)forFY10- Within theabove-mentionedregionaldevelopmentframework,Georgia intendstofullytapitspotentialpromotesustainabletourismin constraints toattractprivateinvestmentsinregionswithhigheconomic developmentpotential. to enhancethepotentialandcomparativeadvantagethatregions have. Therestillremain,however,somephysicalandinstitutionalcapacity efforts inthepastyearsonattractingprivateinvestorssecondarycitiesacrossvarioussectors,includingtourism.Theultimateaim hasbeen process ofregainingprivatesector'sconfidenceafterthetwinshocks,Governmentdevelopedaregionaldevelopmentframework tofocusits investor protection,accesstocredit,enforcementofcontracts,registeringpropertyandissuingconstructionpermits.Tocontinuethe gradual —ranked 16thoutof183countriesintheIFC2012“DoingBusiness”Report.Georgiascoreswelltermsbusinessstart-ups,tax processes, creation efforts.Georgia'sreformsinthepastyearshaspositionedcountrytobeoneofworld'smostcompetitivebusinessenvironments Supportive EnvironmentforPrivateSectorGrowth:Theauthoritiescontinuetosupporttheprivatesectorleadsucheconomicgrowth andjob job creation. public interventionsininfrastructure,regionaldevelopment,agriculture,andeducation.Theseeffortsareallseenaskeycatalystfor accelerating deficit. Thisistobeachievedbypromotingprivateinvestmentsinsectors,suchastourism,powerandlogistics,continuethe focused At theaggregatelevel,Government'sreformaimstoaddresstwopriorities–increasingemploymentandnarrowingcurrentaccount contributors tothepaceofeconomicexpansion. Europe, theGeorgianeconomygrewstronglyby7%in2011.Strongexports,tourisminflowsandhighlevelsofpublicinvestmentwere themain government's policyreformagenda.WhiletheeurozonecrisisdraggeddowngrowthinmanyotheremergingeconomiesEastern and Central recovery andpreparingGeorgiaforapost-crisisgrowthinthemediumterm.Economictookhold2010–11asresultof the loss. Theauthoritieswerefacedwiththedualchallengesofmitigatingimpacteconomicdownturninshortterm,andfacilitating of theconflict,Georgiafounditselfwiththousandsnewinternallydisplacedpersons(IDPs)andmorehurtfromjob and income growth, whichhadbeeninexcessof9%between2005andmid-2008,fellsharplyto2.3%2008contractedby3.8%2009. As aresult 2008-09, Georgia'seconomywashitbythetwinshocksofAugust2008armedconflict,followedglobaleconomiccrisis.Economic A PostConflictCountryinEconomicRecovery:Withapopulationof4.48million,Georgiaisresourcerichlowermiddle-incomecountry. In Country Context 06-Nov-2012 21-Sep-2012 24-Sep-2012 B-Partial Assessment Municipal DevelopmentFund Ministry ofFinance P130421 Specific InvestmentLoan government administration(8%),Vocationaltraining(2%) General water,sanitationandfloodprotectionsector(60%),UrbanTransport(30%),Sub-national Georgia EUROPE ANDCENTRALASIA Regional DevelopmentProjectII(P130421) PROJECT INFORMATIONDOCUMENT(PID) APPRAISAL STAGE Report No.:PIDA598 Public Disclosure Copy Public Disclosure Copy the region'srich nature andculturalheritageleave withveryhighlevelofsatisfaction (8.5/10). (the UK,Netherlands, France,ItalyandIsrael),while 11percentareregional(Ukraine, ArmeniaandAzerbaijan).Most touristsdoreportenjoying The numberoftouristswithatleast onenightstayisprojectedtoreach300,000by2020.About23 percentofvisitorstoImeretiareinternational serve anexpectedincreaseinnumber oftouristswithatleastonenightstayfrom32,500in2010to 110,000by2016andto300,000in2020. houses andfamily-housesisprojected togrowfrom2,661in2010(in34hotelsandguestfamily houses)toabout3,193in2016—to Georgian visitorsand155,000foreign visitors)in2010to1.20millionby2016and2.00 2020.Thenumberofbedsinhotels,guest- international airport,thetourismstrategy projectsthattheannualnumberofvisitingtouristsisexpect edtoincreasefrom740,000(585,000 Projected TourismGrowth:With the implementationofanintegratedapproachtotourismdevelopment inImereti,andtheoperationofKutaisi in Kakheti(winetourism,cultureheritageandadventure),orAdjara (seasports,natureandrecreation). construction oftourismamenitiesattheneighboringhistoricalsites. Thiscomplementsthetourismdevelopmentvisionofotherregions,suchas approach, usingtheconceptofgeotourism,comprehensiveurban renewalinTskaltubo,rehabilitationandextensionofVaniMuseum nature andculturalheritagedestination.Seekingtoattractbothdomestic andinternationaltouristsinImereti,thestrategyproposesanintegrated tourism developmentstrategyproposestodevelopImereti,withKutaisi, TskaltuboandVaniatitscore,asahigh-quality,year-roundwellness/ business activity,defineafull-fledgedregionaltourismcircuit,and fostertwoleisuretravelclusters(wellness/natureandculturalheritage).The some elementsoftheGovernmenttoKutaisi.Thegoalisattract privateinvestments,promotepublic-privatepartnerships,revitalizelocal The governmentrecognizestheneedtoenhanceamenitiesandurban servicestoalsosupportbusinesstourismrelatedtherelocationof • • As aresult: • • • • • capital cityofKutaisi; • • including: The tourismdevelopmentstrategyfurtheridentifieskeychallenges,whichmayhinderandrequireinvestment attention, public toilets,cafes,restaurantsandinformationcenters. and architecturally-significanthotelbuildingsarenowvacantorunder-utilized.Thereisabsenceoftourismfacilities,suchaspublicparking, inefficient streetlightingsystem,degradedurbanroadsandunder-utilized70hectarecentralparkwithseveralspringwaterbaths.Several old wellness tourismdestinationintoonecharacterizedwithdilapidatedbuildings,unreliableinfrastructure,poorwatersupplyandsanitation system, prominence asawellnessdestinationbasedonhotspringsandnaturalspas.Yearsofneglectafterindependencehaveturnedonce vibrant Katskhi ChurchandMonasteryColumn).InfrastructurehistoricalbuildingsinTskaltuboaredegeneratingdespitethecity’s historic and publicadministration,withlittleattentiontoTskaltuboitsneighboringhistoricalsites(GelatiChurch,VaniMuseum,UbisaMonastery, Degraded InfrastructureLegacyinTskaltubo:GovernmentInvestmentImeretiwasfocusedmainlyKutaisiondevelopmentofthe parliament protected areaofBorjomi-KharagauliNationalPark,onethelargestnationalreserveinEuropewithrichlandscape,isadjacentto Imereti. Sataplia; and9wellness/spadestinationsinTskaltuboSairmebasedonspringthermalwaterwithuniquetherapeuticqualities. The Gordi gorge,oneofthedeepestandmostattractiveinEurope;12uniquecavesincludingsignificantEurope-Prometheus and church alsofeatureuniquemonumentswithimpressivearchitectureandgeographiclandscape.Therearethreesignificantnaturalareas: the associated withthemythofGoldenFleece.TheKatskhimonasterycolumn,church,Motsametaand Ubisa monastery, whicharelistedasUNESCOWordHeritageSites.TheancienttownofVanianditsmuseumfeaturesauniquearchaeological area underpin thisProject’sdesign.Imeretiishometoseveralculturalheritagepatrimonies,mostsignificantlyareBagraticathedralandGelati prepared bytheGovernmentwithhelpofaninternationalconsultingfirmtodefinelongtermtourismdevelopmentvisionImeretiand industry andtradeasthemaindriversofeconomicgrowthinregion.Inaddition,TheImeretiTourismDevelopment&MarketingStrategywas Tourism DevelopmentPotential:TheImeretispatialeconomicanalysisandRegionalStrategyhaveidentifiedtourism, The GovernmentisalsodevelopingtheBlackSearesortsofBatumi,KobuletiandAnakliaskiresortUpperSvaneti. privatized, withinvestorsrestoringthearchitecturally-significantbuildingsandGovernmentisupgradingexpandmunicipalinfrastructure. currently partneringwiththeWorldBanktoexpandrehabilitationofEast-WesthighwayImereti.AllsparesortsinTskaltubohavebeen addition, theGovernmenthasinvestedinrestorationofSatapliaandPrometheuscaves,Borjomi-KharagauliNationalPark,is Kutaisi InternationalAirport,whichwillopenattheendof2012,bringingregular-fareandbudgetflightsfromwithinoutsideGeorgia.In government regionalbuildingsandotherfacilitiesarealsobeingconstructedinthedowntownKutaisi.TheGovernmenthasrehabilitated major impetusforthecitytoreapbenefitsfromsignificantpresenceo The vastmajorityofdayvisitorsspendaslittleUS$25/day. Only 5percentofvisitorstoImereti(32,500visitors)spendatleast onenightinImereti,oftenthecapitalcityKutaisi;and Inadequate skillsforaservices-basedeconomyandlimitedproficiencyinforeignlanguages. Lack ofinvestorinformation,communicationsandcooperationamonginvestorstoattractprivateinvestment; Lack ofactivitiestopromotetheregionasanattractivetourismdestination; Limited sports&adventureoffers; Limited numberoffood&beveragefacilities(48restaurants,31cafesand15bars); limited hotelcapacity(only34accommodationstructures,mostlyguest-housesandfamily-houses)concentrationofhotelsinthe Poor physicalconditionsandunder-utilizationofVaniMuseumitssurroundingethnographicsite; Public Disclosure Copy Public Disclosure Copy VII. VI. V. IV. III. Infrastructure Investment Institutional Development Component Name the localeconomyinImeretiRegion. The ProjectDevelopmentObjectiveistoimproveinfrastructureservicesandinstitutionalcapacitysupportincreasedcontributionof tourismin development andspatialplanningvision. pillars ofgrowthandattractioninthebroaderGeorgiancontext.TheProjectisimportantgeneralcontextGeorgia'sregional to tapthehithertountappedyetpotentiallysignificanttourismandhospitalityindustrypotentials.Imeretishallbereinvigoratedasoneofkey attract privatesectorinvestments.TheProjectisexpectedtosupportbetteranchoringoftheImeretiregionGeorgia-widetourismcircuits, development, focusingoninfrastructure,urbanregeneration,culturalheritagerestoration,skillsdevelopmentandenablingtheenvironmentto and internationalexperience.TheProjectwillaimtosupportthelocaleconomyinregionbycarryingoutanintegratedapproachtourism The designoftheProject–aproposedblendinstitutions,infrastructure,andtargetedinterventionsisinformedbycomprehensivediagnostic and maintenance. • and • financially andenvironmentalsustainablemanner; • • • improve publicservicesandtheparkforresidentsvisitorsalike,attractprivatesectorinvestments; • Bank inthefollowingareas: World BankSupport:Launchinganambitioustourismdevelopmentstrategywillrequireamulti-prongedinterventionwiththesupportof Safeguard Policies (includingpublicconsultation) Meetings havebeenheldregularly withthePrimeMinisterandofFinance,whoalsoleads donorcoordination. Board metseveraltimesduringProject preparationandendorseditsdesign,cost,implementationarrangements andprocurementplan. Project objectives;and(c)review andapprovaloftheannualworkprograms,budgetsreportsfor theMDFoperations.TheSupervisory prepare theProject.TheBoard's functions include:(a)overallsupervisionofProjectimplementation; (b)inter-agencycoordinationtoachievethe Minister, HeadofPresident'sAdministration, keyMinisters,parliamentariansandNGOshasbeenworking closelywiththeBanktoidentifyand The MDF'sgovernancestructure:Thereisstrongclientownership oftheProject.ASupervisoryBoardMDFcomposedPrime approved bytheBank. analyzed theavailabilityoffundsforoperationsandmaintenance of therestoredassetstoensuresustainability.AllSARswereappraisedand proposed subprojectstobeimplementedduringthefirstyearofproject implementation,whichdiscussedtheirfeasibility,safeguardsissues,and As astandardpracticeestablishedundertheRMIDP,RMIDP-AFand RDP,theMDFpreparedSubprojectAppraisalReports(SARs)forall involved invariousaspectsofbidevaluationandsupervision. All agenciesintheWorkingGroupandLSGsImeretihavebeen activelyinvolvedwiththeMDFinProjectpreparationactivities,andwillbe Working GroupperformedwellduringProjectpreparation. Company (UWC),ImeretiRegionalAdministrationandLSGs,Ministry ofFinance,theMinistryRegionalDevelopmentandInfrastructure.The (GNTA), AgencyforCulturalHeritagePreservationofGeorgia(ACHP), CultureHeritageFund(CHF),theNationalMuseum,UnitedWater work duringimplementation.TheWorkingGroupincludesalltheagenciesinvolved-namely,MDF,GeorgiaNationalTourismAdministration Working GrouphasbeenestablishedandactingasacounterparttotheBankteamduringidentificationpreparation.Itwill continueto substantial roleinfundinganddevelopingregionalmunicipalinfrastructure.DuetotheProject'smulti-sectoralnature,amulti-agency aspects ofProjectimplementationincludingfinancialmanagement.TheMDFhasbecomeanon-bankintermediary(FI)that playsavery implementation, procurement,safeguards,financialmanagementanddisbursementsasalsoundertheRDP.TheMDFwillberesponsible forall Infrastructure DevelopmentProjectAdditionalFinancing(RMIDP-AF),theproposedwillrepeatsamearrangementsfor Building onthesuccessfulexperienceofRegional&MunicipalInfrastructureDevelopmentProject(RMIDP)and Implementation Total International DevelopmentAssociation(IDA) BORROWER/RECIPIENT For Loans/Credits/Others Financing Project Description Project DevelopmentObjectives Strengthening tourismandculturalheritageinstitutionsbuildingcapacityatthelocallevelforimprovedsystemofassetsoperation Developing tourismclusters,mappinggeo-tourismsites,developingcircuitsandimprovingvisitorservices,markingpromotion; Improving planningandorganizationaroundthetargetedsegmentstourismindustry,e.g.,managing/organizingdestinationsina Rehabilitating andexpandingVaniMuseum; Improving accessroadsandconstructnewtourismamenitiesinthefivemajorculturalheritagesites; Rehabilitating municipalinfrastructure(water,sanitation,streetlightingandaccessroads)urbanregenerationinTskaltuboto (in USDMillion) Amount 37.50 30.00 7.50 Public Disclosure Copy Public Disclosure Copy IX. VIII. Web: http://www.worldbank.org/infoshop Fax: (202)522-1500 Telephone: (202)458-4500 Washington, D.C.20433 1818 HStreet,NW The WorldBank The InfoShop Email: Tel: Title: Contact: Name: Borrower/Client/Recipient Email: Tel: Title: Contact: For moreinformationcontact: Email: Tel: Title: Contact: Name: Implementing Agencies World Bank Contact point Projects inDisputedAreasOP/BP7.60 Projects onInternationalWaterwaysOP/BP7.50 Safety ofDamsOP/BP4.37 Involuntary ResettlementOP/BP4.12 Indigenous PeoplesOP/BP4.10 Physical CulturalResourcesOP/BP4.11 Pest ManagementOP4.09 Forests OP/BP4.36 Natural HabitatsOP/BP4.04 Environmental AssessmentOP/BP4.01 Safeguard PoliciesTriggeredbytheProject [email protected] (995-32) 446-447 Minister Mr. AlexanderKhetaguri Ministry ofFinance [email protected] 995-32-291-3 Sector Leader Ahmed A.R.Eiweida [email protected] 995322437001 Executive Director Mr. LevanChichinadze Municipal DevelopmentFund Yes ✖ ✖ ✖ No ✖ ✖ ✖ ✖ ✖ ✖ ✖