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Document of The World Bank Public Disclosure Authorized Report No: ICR0000496 IMPLEMENTATION COMPLETION AND RESULTS REPORT (AID-23502 IDA-32640) ON A Public Disclosure Authorized CREDIT IN THE AMOUNT OF SDR 12.2 MILLION (US$ 15.5 MILLION EQUIVALENT) TO THE GEORGIA FOR A GEORGIA STRUCTURAL SUPPORT PROJECT Public Disclosure Authorized December 2007 Human Development Unit South Caucasus Country Unit Europe and Central Asia Region Public Disclosure Authorized 1 CURRENCY EQUIVALENTS (Exchange Rate Effective: May 1999) Currency Unit = Lari 1.00 = US$ [0.5] US$ 1.00 = [2.00] FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS CAS Country Assistance Strategy ESAC Energy Sector Adjustment Credit FSAP Financial Sector Assessment Program GNCC Georgian National Commission on Communications GNERC Georgian National Electricity Regulatory Commission GIOC Georgian International Oil Corporation GOG Government of Georgia HRF Hospital Restructuring Fund HMP Hospital Master Plan IBC Institution Building Credit IDA International Development Association IMF International Monetary Fund KPI Key Performance Indicators MOE Department for State Procurement MOF Ministry of Finance MOLHSA Ministry of Health, Labor and Social Affairs MOJ Ministry of Justice MTEF Medium term Expenditure Framework NBG National Bank of Georgia NDC Non-financial Defined Contribution PCU Project Coordination Unit PDO Project Development Objective PIU Project Implementation Unit PSR Public Sector Reform SAC II Second Structural Adjustment Credit SAC III Third Structural Adjustment Credit SATAC II Second Structural Adjustment Technical Assistance Credit SDS State Department of Statistics SHF State Health Fund SMIC State Medical Insurance Company SPA State Procurement Agency SPC State Pension Fund SRS Structural Reform Support Credit TA Technical Assistance UNDP United Nations Development Program 2 Vice President: Shigeo Katsu Country Director: Donna M. Dowsett-Coirolo Sector Manager: Armin Fidler Project Team Leader: Tamar Gotsadze ICR Team Leader: Rianna Mohammed 3 Georgia Structural Reform Support Project CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph 1. Project Context, Development Objectives and Design............................................... 5 2. Key Factors Affecting Implementation and Outcomes .............................................. 9 3. Assessment of Outcomes.......................................................................................... 14 4. Assessment of Risk to Development Outcome......................................................... 19 5. Assessment of Bank and Borrower Performance ..................................................... 20 6. Lessons Learned ....................................................................................................... 24 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 24 Annex 1. Project Costs and Financing.......................................................................... 26 Annex 2. Outputs by Component ................................................................................. 27 Annex 3. Economic and Financial Analysis................................................................. 35 Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 36 Annex 5. Beneficiary Survey Results........................................................................... 38 Annex 6. Stakeholder Workshop Report and Results................................................... 39 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR..................... 40 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders....................... 46 Annex 9. List of Supporting Documents ...................................................................... 47 MAP 4 A. Basic Information Structural Reform Country: Georgia Project Name: Support Project Project ID: P052154 L/C/TF Number(s): AID-23502,IDA-32640 ICR Date: 04/01/2008 ICR Type: Core ICR GOVERNMENT OF Lending Instrument: SIL Borrower: GEORGIA Original Total XDR 12.2M Disbursed Amount: XDR 12.2M Commitment: Environmental Category: B Implementing Agencies: Health and Social Projects Implementation Center Ministry of Finance Government Chancellery Cofinanciers and Other External Partners: B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 05/10/1999 Effectiveness: 09/22/1999 09/22/1999 Appraisal: 05/18/1999 Restructuring(s): 12/20/2004 Approval: 06/29/1999 Mid-term Review: 01/01/2002 Closing: 03/31/2002 06/30/2007 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Moderately Satisfactory Risk to Development Outcome: Moderate Bank Performance: Moderately Unsatisfactory Borrower Performance: Moderately Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Moderately Quality at Entry: Government: Moderately Satisfactory Unsatisfactory Moderately Implementing Moderately Quality of Supervision: Unsatisfactory Agency/Agencies: Unsatisfactory Overall Bank Moderately Overall Borrower Moderately Satisfactory Performance: Unsatisfactory Performance: i C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry No None at any time (Yes/No): (QEA): Problem Project at any Quality of Yes None time (Yes/No): Supervision (QSA): DO rating before Moderately Closing/Inactive status: Satisfactory D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 28 35 Compulsory pension and unemployment insurance 9 10 General industry and trade sector 10 10 Health 50 35 Law and justice 3 10 Theme Code (Primary/Secondary) Health system performance Primary Primary Law reform Secondary Secondary Public expenditure, financial management and Primary Primary procurement Regulation and competition policy Secondary Secondary State enterprise/bank restructuring and privatization Primary Primary E. Bank Staff Positions At ICR At Approval Vice President: Shigeo Katsu Johannes F. Linn Country Director: D-M Dowsett-Coirolo Judy M. O'Connor Sector Manager: Tamar Manuelyan Atinc Annette Dixon Project Team Leader: Tamar Gotsadze Laura L. Rose ICR Team Leader: Rianna Lisa Mohammed ICR Primary Author: Rianna Lisa Mohammed ii F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) In the Development Credit Agreement (DCA), the project development objective (PDO) is stated as: #to support the implementation of key reform measures in the Borrower#s economic reform program, including: (a) improving the balance between public and private sectors through technical assistance to increase private economic activities and to reform public sector entities and information systems; (b) improving the social sustainability of economic reforms; and (c) supporting the implementation of the Hospital Restructuring Program.# It should be noted that the stated objective in the Project Appraisal Document (PAD) was #to accelerate the change in the respective functions of the public and private sectors in delivering key services in Georgia#. This was followed by a detailed description of components each of which corresponds to the various parts of the PDO as stated in the DCA. Revised Project Development Objectives (as approved by original approving authority) (a) PDO Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Indicator 1 : Laws and regulations in place in time to attract foreign investors Independent regulators for No independent telecom Regulations to telecoms (GNCC) Value regulator. Energy attract strategic and energy quantitative or regulator established in investors in (GNERC) Qualitative) 1997 (GNERC) but with infrastructure established in 2000 only partial competencies enterprises. and 1999 respectively. Date achieved 06/29/1999 06/30/1999 12/31/2000 Comments (incl. % Target achieved. achievement) Indicator 2 : Establishment of regulatory capacities GNERC and GNCC Value Limited regulatory demonstrated Establish quantitative or capacity in electricity and regulatory capacity regulatory capacity Qualitative) energy by adjusting tariffs on a timely basis for example. Date achieved 06/29/1999 06/30/1999 09/30/1999 Comments Target achieved. iii (incl. % achievement) Indicator 3 : Improved capacity of NBG to manage failing banks Improved capacity Limited capacity of in banking banking supervision supervision (trained department due to staff of banking Value Improved capacity shortage of trained staff supervision quantitative or of NBG to manage (around 30 staff members department Qualitative) failing banks in banking supervision increased to around dept in 1999) and of 50 by 2001) and equipment upgraded IT equipment. Date achieved 06/29/1999 06/30/1999 06/30/2007 Indicator shows positive change: The number of trained staff increased by approx Comments 66%. Also, according to the 2006 FSAP update, progress in both on-site and off- (incl. % site supervision has been strengthened recently through staff training and new achievement) regulations. Department of State Procurement (MOE) fully operational and fulfilling its Indicator 4