B. Recent Economic Developments
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Document of the World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No. 67876-KZ INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND INTERNATIONAL FINANCE CORPORATION Public Disclosure Authorized COUNTRY PARTNERSHIP STRATEGY FOR THE REPUBLIC OF KAZAKHSTAN FOR THE PERIOD FY12-FY17 March 30, 2012 Public Disclosure Authorized Central Asia Country Management Unit Europe and Central Asia Region International Finance Corporation Europe and Central Asia Region This document is being made publicly available prior to Board consideration. This does Public Disclosure Authorized not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank‘s Policy on Access to Information. CURRENCY EQUIVALENTS (as of March 5, 2012) US$1 = 147.93 KZT GOVERNMENT FISCAL YEAR (January 1 to December 31) WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS AAA Advisory and Analytical Services IPSAS International Public Sector Accounting ADB Asian Development Bank Standards AML/CFTAnti-Money Laundering and Combating JERP Joint Economic Research Program Financing of Terrorism JPMT Joint Portfolio Monitoring Team BEEPS Business Environment and Enterprise KEGOC Kazakhstan Electricity Grid Operating Performance Survey Company BTA Bank Turan Alem KZT Kazakhstan Tenge CAREC Central Asia Regional Economic MDGs Millennium Development Goals Cooperation MICs Middle Income Countries CPA Competition Protection Agency MIGA Multilateral Investment Guarantee Agency CPI Consumer Price Index MoU Memorandum of Understanding CPIA Country Policy and Institutional Assessment MSME Micro and Small/medium Enterprises CPPR Country Portfolio Performance Review NBK National Bank of Kazakhstan CPS Country Partnership Strategy NF National Fund of the Republic of CPS CR Country Partnership Strategy Completion Kazakhstan Report NPL Non-performing loans CSO Civil society organizations OECD Organization for Economic Co-operation DAF-2 Second Distressed Asset Fund and Development DeMPA Debt Management Performance Assessment OSCE Organization for Security and Co-operation DPL Development Policy Loan in Europe EBRD European Bank for Reconstruction and PAYG Pay-As-You-Go pension system Development PCBs Polychlorbiphenyls EC European Commission PEFA Public Expenditure and Financial ECA Europe and Central Asia Responsibility Framework ECD Early childhood development PFM Public Finance Management EE Energy Efficiency PISA Program for International Student EITI Extractive Industries Transparency Initiative Assessment EU European Union POPs Persistent Organic Pollutants FDI Foreign direct investment PPP Public Private Partnership FSA Financial Supervision Agency RK Republic of Kazakhstan FY Financial Year ROSC Report on Observance of Standards and GDP Gross Domestic Product Codes GGFR Global Gas Flaring Reduction Partnership SAFE Strengthening Accountability and the GIZ German Development Agency Fiduciary Environment GOK Government of Kazakhstan SME Small and Medium Enterprise IBRD International Bank for Reconstruction and SOE State Owned Enterprises Development SPV special purpose vehicles IDA International Development Agency SYNAS II Syr Darya Control and Northern Aral Sea IDF Institutional Development Fund Project – Phase II IDIP II Irrigation and Drainage Improvement TSA Targeted Social Assistance Project – Phase II UN United Nations IDR Issuer Default Rating UNDP United Nations Development Program IEG Independent Evaluation Group US United States of America IFC International Finance Corporation USAID United States Agency for International IFI International Financial Institution Development IFRS International Financial Reporting Standards WB World Bank ILO International Labor Organization WBG World Bank Group IMF International Monetary Fund WHO World Health organization WTO World Trade Organization IBRD IFC Vice President: Philippe Le Houerou Dimitris Tsitsiragos Country Director: Saroj Kumar Jha Tomasz Telma Task Team Leader: Sebnem Akkaya Oksana Nagayets ACKNOWLEDGEMENTS The World Bank Group greatly appreciates its sustained close collaboration with the Government of Kazakhstan in shaping development of this World Bank Group Country Partnership Strategy. The document benefited from thoughtful discussions with government representatives and was enriched by feedback from representatives of development partners, members of civil society organizations, academics and representatives of the private sector—all of whom should be warmly thanked. This Country Partnership Strategy (CPS) was prepared by a team lead by Sebnem Akkaya, Country Manager for the World Bank in Kazakhstan and TTL of this CPS, with overall direction from the former Country Director Motoo Konishi and ECA senior management. The core team included Sebnem Akkaya, Saumya Mitra, Ilyas Sarsenov, Oksana Nagayets and Irina Galimova. The preparation of this CPS involved a large number of contributors from the extended Kazakhstan country team. Although it is impossible to name them all, they are all to be thanked and congratulated for their excellent collaboration and teamwork. The following members made especially important contributions: Andrei Busuioc, Aliya Mukay, Ahmed Shawky, Bakhtiyar Karimaov, Baktybek Zhumadil, Bakyt Arystanov, Dingyong Hou, Ekaterine Vashakmadze, Elena Glinskaya, Emanuel Salinas, Fabrice Houdart, Frank Van Woerden, Ignacio Jauregui, Imtiaz Hizkil, Ivor Beazley, Isak Froumin, Istvan Dobozi, Jacques Bure, John Otieno Ogallo, Katelijn Van den Berg, Klaudijo Stroligo, Lars Jessen, Luis Sanchez, Malcolm Childress, Mark Thomas, Michael Carroll, Munawer Khwaja, Mustafa Dinc, Natasha Kapil, Nedim Jaganjac, Nurbek Kurmanaliev, Peter Goodman, Rakhymzhan Assangaziev, Salamat Kusainova, Sandra Broka, Sarosh Sattar, Serdar Jepbarov, Shynar Jetissova, Steen Byskov, Sunil Kumar Khosla, Talimjan Urazov, Tatiana Sedova, Tatyana Li, William Dillinger, Yearly Beksultan and Yerlan Akishev. REPUBLIC OF KAZAKHSTAN COUNTRY PARTNERSHIP STRATEGY FOR THE PERIOD FY12-17 TABLE OF CONTENTS EXECUTIVE SUMMARY ......................................................................................................... i I. INTRODUCTION ............................................................................................................... 1 II. COUNTRY CONTEXT ................................................................................................... 1 A. Political Context ........................................................................................................... 1 B. Recent Economic Developments .................................................................................. 2 C. Poverty, Social and Gender Indicators ......................................................................... 5 D. Economic Prospects ...................................................................................................... 8 III. DEVELOPMENT CHALLENGES AND GOVERNMENT AGENDA......................... 9 A. Development Challenges .............................................................................................. 9 B. The Government‘s Medium Term Strategy................................................................ 13 IV. WORLD BANK GROUP PARTNERSHIP STRATEGY............................................. 15 A. Lessons Learned from Previous CPS and Stakeholder Feedback .............................. 15 B. Proposed World Bank Group Partnership Strategy .................................................... 16 V. IMPLEMENTING THE STRATEGY ........................................................................... 26 A. Managing Program Implementation ........................................................................... 26 B. Measuring Performance .............................................................................................. 28 C. Deepening Engagement with Civil Society and Development Partners .................... 28 VI. RISKS............................................................................................................................. 29 VII. ANNEXES ..................................................................................................................... 31 Annex 1. FY05-11 Country Partnership Completion Report ............................................... 31 Annex 2. Country Partnership Strategy, FY12-17; Results Framework Ongoing and Confirmed Program ......................................................................................... 51 Annex 3. Anti-Crisis Response ............................................................................................. 56 Annex 4. Government‘s Road Map Program (2009-10) and Road Map for Business 2020 59 Annex 5. Country Partnership Strategy – CSO Consultations ............................................ 60 Annex A2: Country at a Glance ............................................................................................ 62 Annex B2: Selected Indicators of Bank Portfolio Performance and Management .............. 65 Annex B3: IFC Investment Operations Program .................................................................. 66 Annex B5: Key Social Indicators ......................................................................................... 67 Annex B6: Key Economic Indicators ................................................................................... 68 Annex B7: Key Exposure Indicators ...................................................................................