Transcript Bank Program

Consultations for
the World Bank’s
Country Partnership Strategy
with Romania
May-June, 2009
What is the CPS?
The Country Partnership Strategy is the World
Bank's roadmap for its operations in Romania for
2009-2013
Identifies key Government objectives where
the Bank can provide support:
Short-term crisis management
Medium-term EU convergence priorities
Prepared in partnership with the Government
and in consultation with other stakeholders
including the Parliament, business community,
trade unions, NGOs, local government, academia
CPS Objectives
To inform the Board of the Bank on Romania’s
development objectives and proposed WB
program (lending, project portfolio, analytical and
advisory activities - AAA)
To build partnership with the Government on
its development objectives and the Bank program
To get feedback and advice from all
stakeholders on objectives of the Bank’s
program
Why the CPS now?
A new CPS was due
Needed to underpin the rationale for
the development policy loan series
providing budget support
Timely input for the Government
agenda
Context
Political: consensus on crisis management
and renewed reform, tempered by coalition
politics
Economic&Financial: after eight years of solid
growth, the crisis exposed vulnerabilities
(sources of growth, business environment,
financial sector)
Social: impressive poverty reduction gains are
put at risk by the crisis
Growth & Poverty 2002-2009
35
12000
30
10000
28.9
25.1
25
20
8000
18.8
15
6000
15.1
13.8
4000
10
9.8
5.7
5
2000
(p
ro
je
ct
ed
)
20
08
20
07
20
06
20
05
GDP per capita, 2002 prices
20
09
Poverty Rate
20
04
20
03
0
20
02
0
7.4
Fiscal deficit 2005-2008…
Percent of GDP
0
-1
-2
-3
-4
Fiscal balance
Structural balance
-5
-6
-7
2005
2006
2007
2008
…driven in part by public pay policy
350
Gross wage (2003=100)
Economy wide
Public Administration
Education
Health
300
250
200
150
100
50
0
2005
2006
2007
2008
Economic Outlook
Economic contraction 2009, stagnation 2010,
renewed growth as of 2011 contingent on
reform
Fiscal discipline to maintain manageable
deficits and contain inflation – EUROZONE
convergence
Reduced current account deficits
Balance of payments financing gap in 20092010 projected at EUR 20 billion is fully
financed
Macro Indicators 2005-2011
2005
Actual
2006
2007
2008
2009
Annual percentage change
Projected
2010
2011
Output and prices
Real GDP
Domestic demand
Consum er price index (CPI av)
Unemployment rate
Nominal wages
Public sector wages
Private sector wages
4.1
8.3
9.0
5.8
17.0
25.9
14.7
7.9
12.8
6.6
5.8
18.9
27.3
16.5
6.2
7.1
14.3
8.9
4.8
7.8
4.3
4.0
22.6
23.6
18.5
31.0
23.2
21.2
In percent of GDP
-4.1
-8.2
5.9
8.9
5.9
5.1
6.2
0.0
-3.3
3.9
9.7
3.8
3.9
3.8
5.0
6.0
3.5
7.7
5.2
3.5
5.7
Savings and investment
Gross domestic savings
Gross national savings
23.3
14.4
26.5
16.1
31.1
17.3
31.4
19.0
30.8
23.2
29.9
23.4
31.9
25.7
General government
Revenue
Expenditure
Fiscal balance
Privatization proceeds
External financing
Domestic financing
Structural balance 1/
Gross public debt (direct debt only)
30.1
30.9
-0.8
1.3
0.5
-1.0
-0.6
15.6
31.0
31.6
-0.6
0.4
0.1
0.1
-2.1
15.4
32.5
35.6
-3.1
0.1
0.1
2.9
-4.2
17.5
32.6
37.5
-4.9
0.1
0.5
4.4
-6.5
20.1
33.0
37.5
-4.6
0.0
2.8
1.8
-3.8
23.6
33.4
37.0
-3.6
0.0
1.1
2.4
-1.7
25.7
33.1
35.8
-2.7
0.0
0.2
2.5
-1.2
25.7
The Crisis = Opportunity for Reform
Reforms have stalled since EU accession
Crisis exposed need for renewed reform
and helped build broader national
consensus
EU, IMF and IFI’s support reform and ease
the adjustment
Romania’s Development Agenda
The Basis
The program of the Governing Coalition 20092012
The May 2009 Convergence Program for
joining the EUROZONE in 2014
The 2007 National Reform Program based on
Lisbon Agenda
Romania’s Development Agenda
Pillar I – Public Sector Reform
Public financial management:
unified compensation, MTEF, tax administration,
fiscal responsibility law
Decentralization: health, education
Governance: reform of the judiciary (CSM,
integrity and anticorruption)
Romania’s Development Agenda
Pillar II – Growth and Competitiveness
Sound macroeconomic management
Financial sector health
Improved business environment
Education reform
Competitive agriculture and mobilization of EU
funds
Improved quality and access to infrastructure
Energy efficiency and climate change mitigation
Romania’s Development Agenda
Pillar III – Social and Spatial Inclusion
Poverty alleviation during the crisis
More equitable social safety net
Fiscally sustainable and equitable pension
system
Improved health outcomes and cost
effectiveness
Inclusion and equal opportunities for the Roma
Social benefits for the rural poor
Employment opportunities and pay for women
Effectiveness of Social Assistance
percent reduction in poverty after non-contributory social benefits
60%
50%
40%
30%
20%
10%
0%
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Bank Program: Principles and Outline
Principles
Outcome-based activities based on the Government’s
strategic pillars and the Bank’s comparative advantage
Flexible Bank response based on evolving objectives and
needs from government and Bank’s comparative
advantage
Outline
2009-2010 program: crisis response
 DPL series (EUR 1 billion)
 Ongoing portfolio (EUR 1.2 billion)
 AAA to inform DPL and support its implementation
2011 –2013 program: sustainable growth with equity
 Ongoing portfolio
 New lending: general or sector-specific budget support
 AAA or knowledge services to the government
Bank Program – Public Sector Reform
Objective:
Short-term: reduce fiscal vulnerabilities while protecting priority
services and social assistance
Medium-term: improve accountability and responsiveness of public
administration, and predictibility, transparency and efficiency of
public resource management
Actions:
Public Financial Management:
 DPL: support for anchoring annual budget in MTEF
 AAA: programatic PER’s to identify short term savings and
efficiency gains in major public expenditures; systemic and
institutional issues of budget formulation and execution
 Possible new activities: support decentralization and tax
administration reform, or/and performance-based budget in
selected sectors
Bank Program – Public Sector Reform
(cont’d)
Public Administration Reform:
 DPL: support of public pay system reform
 AAA: analytical support for public pay system reform
 Possible new activities (AAA, lending): functional
reviews of administration and institutional reforms
Governance:
 Ongoing Judicial Reform Project - efficiency of courts,
accountability of judiciary
 DPL: Governance theme intrinsic to most actions
 AAA: Governance theme intrinsic to most activities
Bank Program – Growth and competitiveness
Objective:
 Short-term: crisis management in the financial sector
 Medium-term: EU convergence goals through improved business
environment, enhanced skills and innovation, upgraded
infrastructure, and more efficient agriculture
Actions:
Financial sector strengthening
 DPL: support for Strategic Action Plan to guide response to
potential financial crisis, strengthen supervision, and ensure
independence of sector regulators
 AAA: analytical work in outer years if external conditions or
regulations change
 Possible new activities: to be determined by mid-term review
Bank Program – Growth and competitiveness
(cont’d)
Business environment
 AAA: advisory work considered on tax administration;
 Possible new activities: support for implementation of 20082013 Better Regulation Strategy
Education, Skills & Knowledge
 DPL: focus sector, support for design & implementation of
decentralization of pre-university education, key reforms in
resource allocation, quality and access to public services
 AAA: TA on decentralization of pre-university education and on
introduction of a Student Loan scheme; future TA to be
determined my mid-term review
 Investment Lending: ongoing Knowledge Economy Project;
possible future output-based investment operation
Bank Program – Growth and competitiveness
(cont’d)
Agriculture:
 Ongoing operations: three projects suppor land tenure &
titling reform, absorbtion of EU funds, competitiveness of
farmers and agroprocessors, agricultural research, improved
food safety, rehabilitation and reform of irrigation systems
 AAA: possible support on optimal mix of EU and national
funds to maximize impact on competitiveness, to build
strategic planning and programming capacity
 Possible new lending: output-based operations
Transport:
 AAA: PER to inform fiscal savings & efficiency gains;
possible future support for strategic planning, institutional
and policy reforms, safety
 Possible new lending: output-based operations
Bank Program – Growth and competitiveness
(cont’d)
Energy and Environment
 Ongoing lending: rehabilitation of a hydropower station, a
guarantee operation, adoption of energy efficient
technologies, support to meet water quality commitments
and facilitate absorbtion of EU funds
 AAA: TA on energy strategies, energy efficiency by stateowned energy companies, possible future support on climate
change adaptation and mitigation
 New lending: Integrated Nutrients Pollution Control loan to
help meet EU Nitrates Directive
Bank Program - Social & Spatial Inclusion
Objectives:
Short-term: address core and transient poverty during crisis
Medium-term: promote social inclusion and rural development
Actions:
Social Assistance
 DPL: core theme; support for better design and coverage of the
most efficient and well targeted social assistance programs, and
gradually rationalize coverage of less efficiently targeted ones
 AAA: programatic poverty monitoring series to support
monitoring and evaluation and design of future improvements
 Possible new lending: output-based operations to develop
activation policies and programs
Bank Program - Social & Spatial Inclusion
(cont’d)
Inclusion
 Ongoing operations: Social Inclusion Project
addresses needs of Roma, persons with
disabilities, children at risk, victims of family
violence. Knowledge Economy Project
targets remote and disadvantaged
communities. Rural Education Project
supports innovation in remore regions. Mine
Closure Project supports socio-economic
regeneration opportunities.
 AAA: programmatic poverty monitoring
Bank Program - Social & Spatial Inclusion
(cont’d)
Health sector
 Ongoing operations: modernization of
maternity and emergency services
 DPL: focus sector, supports government
policies on drug pricing, prescription of
generic drugs, review of health benefit
package, co-payment system with
exemptions for poor, hospital
rationalization, shift in focus to primary
care
 AAA: analytical work for the above
 Possible new lending: output-based
Bank Program - Social & Spatial Inclusion
(cont’d)
Pension System
 DPL: support to pension reform for fiscal sustainability
 AAA: analytical work on social protection of elderly
poor farmers, capacity building pension administration
Regional Development
 Ongoing operations: build on lessons from the Rural
Development Project
 AAA: possible support for decentralization
 Possible new lending: support for decentralization
Next steps…
CPS available on WB Country Office Webpage
to inform and get feedback from stakeholders
Stakeholders’ comments and suggestions will be
factored in the CPS, and documented in CPS
annex
Consultations of stakeholders is ongoing process
and will continue under all Bank operations