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World Bank Document Document of The World Bank Public Disclosure Authorized Report No: 17275GE Public Disclosure Authorized PROJECT APPRAISAL DOCUMENT FOR A PROPOSED LEARNING and INNOVATION LOAN (LIL) IN THE AMOUNT OF SDR 3.4 MILLION EQUIVALENT TO GEORGIA Public Disclosure Authorized FOR A CULTURAL HERITAGE PROJECT January 29, 1998 Public Disclosure Authorized Human Development Sector Europe and Central Asia Region CURRENCY EQUIVALENTS (as of end October 1997) Currency Unit = Lari Lari 1 US $0.80 US$1.00 = 1.30 Lari FISCAL YEAR Jan. 1-Dec. 31 ABBREVIATIONS AND ACRONYM CAS Country Assistance Strategy CH = Cultural Heritage CHEC Cultural Heritage Executive Committee CHI Cultural Heritage Initiative ECA Europe and Central Asia GEF = Global Environment Facility GoG Government of Georgia IDF = Institutional Development Fund IDA International Development Association ICOMOS = International Council of Monumnentsand Sites LIL = Learning and Innovation Loan MoC = Ministry of Culture MoF = Ministry of Finance NGO Non-governmental Organization PIU Project Implementation Unit UNESCO = United Nations Educational, Scientific and Cultural Organization WMF = World Monuments Fund Vice President: Johannes Linn Country Manager/Director: Judy O'Connor Sector Acting Director: J. Christopher Lovelace Program Team Leader: Thomas Blinkhorn i Georgia Cultural Heritage Project CONTENTS A. Project Development Objective 1. Project development objective and key performance indicators B. Strategic Context I. Sector-related CAS goals supported by the project 2. Main sector issues and Govemment strategy 3. Sector issues to be addressed by the project and strategic choices C. Project Description Summary 1. Project components 2. Key policy and institutional reforms supported by the project 3. Benefits and target population 4. Institutional and implementation arrangements D. Project Rationale 1. Project alternatives considered and reasons for rejection 2. Major related projects financed by the Bank and/or other development agencies 3. Lessons learned and reflected in proposed project design 4. Indications of borrower commitment and ownership 5. Value added of Bank support in this project E. Summary Project Analyses 1. Economic 2. Financial 3. Technical 4. Institutional 5. Social 6. Environmental assessment 7. Participatory approach F. Sustainability and Risks 1. Sustainability 2. Critical risks 3. Possible controversial aspects G. Main Loan Conditions 1. Effectiveness conditions 2. Disbursement conditions 3. Dated Covenant H. Readiness for Implementation I. Compliance with Bank Policies Annexes Annex 1. Project Design Summary Annex 2. Detailed Project Description Annex 3. Estimated Project Costs Annex 4. Financial Summary Annex 5. Procurement and Disbursement Arrangements Table 5A. Project Costs by Procurement Arrangements Table 5B. Procurement Schedule Table 5C. Thresholds for Procurement Methods and Prior Review Table 5D. Allocation of Credit Proceeds Annex 6. Project Processing Budget and Schedule Annex 7. Documents in Project File Annex 8. Statement of Loans and Credits Annex 9. Country at a Glance Annex 10. Historical Context of Cultural Heritage in Georgia Annex 11. Environmental Data Sheet Map No. IBRD 29231R Georgia Cultural Heritage Project Project Appraisal Document ECA Region Georgia Country Unit Date: January 29, 1998 Program Team Leader: Thomas Blinkhorn Country Director: Judy O'Connor Sector Acting Director: J. Christopher Lovelace Project ID: GE-PE-55573 Sector: Multi-sectoral Program Objective Category: EA, PA, EN, PV Lending Instrument: LIL Program of Targeted Intervention: [] Yes [X] No Project Financing Data [] Loan [X] Credit [ Guarantee [ Other [Specify] For Loans/Credits/Others: Amount(US$m/SDRmr):US$4.49 million / SDR3.4 million Proposed terms: [X] Multicurrency [ Single currency, specify Grace period (years): 10 years [ Standard Variable [ Fixed [ LIBOR-based Years to maturity: 35 years Commitment fee: 0.5% on undisbursed credit balance, beginning 60 days after signing less any waiver. Service charge: 0.75% Financing plan (US$m): Source Local Foreign Total Government 0.36 0.12 0.48 IDA 2.96 1.53 4.49 Total 3.32 1.65 4.97 Borrower: Government of Georgia (GoG) Guarantor: N/A Responsible agency(ies): Cultural Heritage Project Implementation Unit (PIU) and Board of Trustees Estimated disbursements (Bank FY/US$M): 1998 1999 2000 2001 Annual 0.58 1.32 1.32 1.27 Cumulative 0.58 1.90 3.22 4.49 Project implementation period: 3 yrs. Expected effectiveness date: 04/01/98 Expected closing date: 06/30/2001 OSD PAD Form: July 30. 1997 Page 2 A: Project Development Objective 1. Project development objective and key performance indicators (see Annex 1): The project development objective is to improve the management and promotion of Georgia's rich cultural heritage by (a) testing approaches that could revive the once dynamic tourism industry and (b) engendering social cohesion and national identity during the difficult economic transition. Performance Indicators: I. Increase in number of tourists, foreign and local, to pilot restoration sites and other sites benefiting from emergency repairs. 2. Incorporation by Government and communities of lessons from pilot project institution- building and physical investments into future new site restorations and cultural activities. 3. Improvement of capacities and skills of cultural heritage institutions, including at the community level, and stimulation of public-private partnerships in cultural heritage tourism. 4. Increase in numbers of cultural heritage related activities, such as national music competitions, arts festivals, and experimental dance troupes during project life. B: Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project (see Annex 1). CAS document number: 17000-GE Date of latest CAS discussion: October 21, 1997 The CAS supports the Government's development agenda in four broad areas: economic growth and diversification; strengthening of public finance; environmental protection, and poverty reduction. The proposed LIL supports the latter two objectives in the following ways: 1. Protecting the Environment. The project has already inspired a sequence of actions in the historic area of Old Town Tbilisi to address a serious underground water/wastewater problem (i.e. well monitoring investigation followed by detailed feasibility study, both financed by trust funds). Long term resolution of this problem can only be handled through other assistance activities such as the proposed Tbilisi Water and Wastewater Improvement project. In addition, the development of a Old Town, Tbilisi Integrated Conservation Management Plan will combine historic preservation guidelines with environmental planning principles. Environmental analyses will be carried out at the pilot sites, and specific site management and conservation plans will be developed for the two most environmentally sensitive sites (Uplistsikhe and Shatili). 2. Reducing Poverty. The CAS envisaged that this objective would be achieved indirectly, mainly through achieving sustained growth by sound macroeconornic policies, fostering development of the private sector, and through short term interventions targeted to vulnerable groups. Social analysis has revealed that most people living in or near the four pilot cultural heritage (CH) sites selected for assistance under this project are poor. By upgrading cultural sites and testing new opportunities for tourism development, the project will provide employment to some of these people. In addition, physical infrastructure and environmental improvements should enhance their standard of living. The proposed LIL indirectly supports the other two CAS objectives by (a) piloting public- private partnerships for revival of tourism; if successful, this could serve the CAS goal of fostering new sources of growth; and (b) testing cost recovery mechanisms in selected cultural heritage areas that could, over time, supplement government finance and thus strengthen public finance. Page 3 Consistent with the CAS' overarching aims to foster a stronger private sector role in the Georgian economy while encouraging Government to pursue a supportive enabling environment, this project is intended as a single intervention in support of those goals. No follow-on assistance operation is planned by the Bank. 2. Main sector issues and Government strategy: The Government places high priority on sustained growth by encouraging the emerging private sector in all key economic areas. Among other things, the Government is beginning to implement plans to strengthen the legal system, reorient the structure of government (national and local), and rehabilitate basic infrastructure. Parallel investments to (a) protect and save unique cultural heritage sites from further deterioration and (b) revive or establish basic tourist infrastructure and services, offer high potential for future revenue generation in Georgia. Small but visible investments in historically distinctive cultural landmarks can also attract private investors. In discussions with the Bank's country management team in Tbilisi in October 1997, the Government of Georgia (GoG) requested assistance from the Bank to provide a stronger cultural heritage dimension to its economic and social development program. Historically, Georgia's economy was highly dependent on tourism due to its unique ecological diversity, ancient cultural sites, rich traditions in art and music, and thriving crafts and handicraft industry. Before independence, the city of Tbilisi and
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