Transcript Russia Recent Economic Developments and Medium

The World Bank: Moving Closer
to Russia’s Regions
Republic of Tatarstan
The City of Kazan
Michal Rutkowski
The World Bank
Country Director
The Russian Federation
7/17/2015
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Presentation Outline
1. Russia’s Development Challenges
2. The World Bank Group in Russia
3. 2012-2016: The New Country
Partnership Strategy for Russia (CPS)
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1. Russia’s Development Challenges
•
•
•
•
Russia’s Economic Outlook
Constraints to Growth and Diversification
Challenges for Skills and Social Services
Governance Challenges
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Russia’s Economic Outlook and Policy
Challenges
* Conditions in global financial markets have improved during the first quarter of
2012 after several months of heightened uncertainty. But global recovery remains
fragile.
* Russia’s economy is expected to grow in the range of 3.5-4 percent in 2012,
depending on oil prices and the rate of recovery in global demand.
* The balance of payments position is expected to deteriorate in 2012, while capital
flows are likely to remain volatile, reflecting remaining global uncertainties.
* Aggregate unemployment is expected to remain under 7 percent but as the
economic activity returns to pre-crisis level, further reduction in unemployment and
poverty will be slow.
* Russia may also face fiscal pressure, if the prices for its main commodity exports
decline due to a slowdown in global demand.
* To reduce fiscal vulnerability, Russia needs to exercise fiscal restraint and
to rebuild fiscal buffers while oil prices are still high.
* Russia needs to establish a new growth model that addresses two critical
challenges: increasing the competitiveness of the economy; and coping with
demographic change.
Constraints to Growth and Diversification
Dependency on fossil fuel production and export
– a dominant concern
Low level of technology and knowledge
Huge variations among regions
Weak business environment
Weaknesses in the financial system
Infrastructure constraints
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Challenges for Skills and Social Services
Vulnerability to poverty remains a concern
Low fertility, high adult mortality and morbidity rates
Skill mismatches in the labor market
Inequality and social exclusion
Regional disparities in development and living standards
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Governance Challenges
Excessive and often ineffective regulation
Corruption seen as an obstacle for growth
The judiciary viewed as weak
Disparity among the regions
Low efficiency of public services
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The Word Bank Principles of Engagement
with Russia
>> Global Knowledge and Innovation
>> Focus on Results
>> Flexibility and Selectivity
>> Timeliness/ Fast Response
>> Coordinated WBG Support
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2012-2016 CPS Engagement Areas
Increasing
Growth and
Diversification
Expanding
Human
Potential
Deepening
Russia’s
Global Role
Management of
public finances
Education, health,
and social
protection
Global public
goods
Investment
climate/innovation
Improving
Governance
and
Transparency
Public
administration,
procurement, and
financial
management
Skills for economic
development
Russia as a donor
Financial sector
development
Sustainable
development and
effective protection
of the environment
Socially inclusive
development
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2012-2016 CPS Choice of Instruments
- AAA – ESW, TA
- Reimbursable TA, Fee-Based Services
- Investment Lending – SIL, FIL, TA
- Results-Based Lending (if approved)
- Sub-national lending (direct or through intermediary)
- Guarantees
- “Virtual” Lending (project services without lending)
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2012-2016 CPS Levels of Engagement
Global
Regional
Federal
Subnational
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Regional Focus: Overview
1. Russia’s Regions: Diversity of Challenges
2. The World Bank Group: Activities and Instruments
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Russia’s Regions: Diversity of Challenges
Regional Human Development Indicators
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Russia’s Regions: Diversity of Challenges
Some regions
are experiencing very high unemployment rates
with attendant social risks
Unemployment, %, average for November - January 2012
Ingush Republic
Chechnya Republic
Tyva Republic
Kalmykia Republic
Kabardino-Balkaria Republic
Dagestan Republic
Altai Republic
Zabaikalskii krai
Kurgan oblast
Republic Saha-Yakutia
Republic North Osetia-Alania
Murmansk oblast
Kaliningrad oblast
Marii El Republic
Astrakhan oblast
Russian Federation
Tatarstan Republic
0
5
10
15
20
25
30
35
40
45
50
Source: Rosstat.
7/17/2015
Unemployment in Tatarstan
Republic is below Russian average
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Enhanced Focus on Sub-national Level
Lending instruments to reach regions
• IFC Sub-national Financing (no sovereign
guarantee)
• IBRD Financial Intermediary Loans (FILs)
• IBRD Direct Lending (with sovereign guarantee)
• (conditions apply, e.g. fiscal situation)
TA support for less advanced regions
• Possible federal government/IBRD fund to finance
analytical/advisory work in poor regions
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The World Bank Group: Activities and Instruments
Lending Products for Regions
• IBRD Flexible Loans
― Require federal intermediary or sovereign guarantee
― Long maturities up to 30 years
― Competitive and flexible pricing in USD
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The World Bank Group: Activities and Instruments
Providing Finance and Advice
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The World Bank Group: Activities and Instruments
Knowledge Products for Regions
• Analytical
and Advisory Activities (AAA)
e.g. Studies on
- Doing Business in Russia 2009
- Monocities
- Regional Development and
Growth Agglomeration
- Social Expenditures
•Reimbursable Technical Assistance (RTA)
- More
than 20 RTAs completed
- Current RTAs in regions:
Education (Kazan, Yakutia)
Health (Kirov)
Urban Transport (Moscow, St. Petersburg)
Investment Climate (Moscow)
Doing Business (30 regions)
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www.worldbank.org/russia
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