Transcript poland proposed country partnership strategy (cps)

DRAFT
COUNTRY PARTNERSHIP
STRATEGY (CPS) for POLAND
for 2009 - 2013
Consultations with Civil Society
May 2009
OUTLINE
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What is a CPS?
Country Context
Country Development Program
World Bank Program
Risks
WHAT IS A CPS ?
• A World Bank document usually made public
• Guides our work in a country based on the
country’s own development program
• It defines key areas of value-added and strategic
areas of engagement/collaboration
• It attempts to define expected results of the
partnership
• It is not a negotiated document
• It is consulted with Government and civil society
COUNTRY CONTEXT
• Geopolitical, EU relations, and political situation
- a successful integration into the EU since 2004 with EU
institutions being now main external partners
- access to considerable external financing: both EU and market
- stable majority government with strong social support but lack of
parliamentary majority
- no significant governance problems
• Economic developments, labor market and poverty
profile
- strongly affected by the deterioration in external environment but
moderate vulnerability
- well poised financial system, inflation slowed down during crisis,
balance of payments relatively strong
- growth to slow down but to remain positive in 2009
- unemployment on the rise after a remarkable improvement in
recent years (which led to lower poverty)
COUNTRY CONTEXT (continued)
• Medium-term economic and fiscal outlook
- Poland is faring better than other countries in the region
although global crisis has worsened its macroeconomic and
fiscal outlook
- medium term economic prospects seriously affected by
shrinking demand and tighter international and domestic credit
conditions (growth projected to slow down to 0-1 percent in
2009)
- sharp economic slowdown may make it difficult to maintain
budget deficit below 3 percent of GDP
- an ambitious Government euro adoption course (by 2012); may
be delayed by 1-2 years
- authorities took steps to preserve financial stability and
support the economy (Plan for Stability and Development)
Country Development Program
Overarching objectives: rapid convergence to EU living
standards with joining the euro-zone as the main strategy to
achieve this; also acceleration of structural reforms
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Public finance management
Tax reform
Raising employment (especially among elderly and
women)
Strengthening education policies
Improving efficiency and quality in health care
Developing infrastructure
Deregulation and privatization
Low-carbon growth and energy security
WORLD BANK PROGRAM
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Implementation
of CPS 2005 and lessons learned:
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it did not adequately differentiate the Bank’s potential role from that of
other partners
2009 CPS APPROACH: Need to define better the Bank’s role and valueadded
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flexibility was appropriate but did not facilitate a focused or
strategic dialogue as it was designed at a time of uncertain interest
in cooperation with the Bank for a MIC which just joined the EU
2009 CPS APPROACH: Need to establish a more strategic yet flexible
framework of activities that can be scaled up or down
- implementation was hindered by successive changes in counterparts
2009 CPS APPROACH: Need to strenghten collaboration at director level
and broader dialogue across political spectrum
WORLD BANK PROGRAM
External partners and key areas of Bank value added:
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EU at large main partner (to support income convergence, knowledge
economy and infrastructure); also EIB (co-financing, energy efficiency,
infrastructure, subnational). EBRD and IFC mainly phased out but coming
back in response to the crisis
WB can still add value within the domain of its broader institutional and
regional strategic priorities and as a complement to EU programs: global
and regional goods, knowledge on development lessons, complement to
the EU Lisbon Agenda, social sector reform
The knowledge acquired in Poland and the lessons learned can be of
great value to less advanced clients in the region and beyond
WORLD BANK PROGRAM
Strategic pillars of collaboration
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1) Social and Spatial Inclusion
Social sectors reform:
areas: labor market and social protection (employment promotion and
pensions), education, health, and long-term care
instruments: DPL program; AAA; subnational lending?
Regional Development
areas: infrastructure development, social service delivery; monitoring and
evaluation
instruments: subnational lending; AAA to the Ministry of Regional
Development (largely on a fee4service basis)
WORLD BANK PROGRAM
2) Public Sector Reform
areas: i) analysis and capacity building aimed at improving the quality
of public finances; (ii) strengthening public finance management
practices and institutions, including performance-based budgeting,
public investment planning, and the medium-term fiscal framework; and
(iii) efforts to enhance public administration and governance (both at
central and subnational level)
instruments: DPL program; subnational lending?; AAA (national and
subnational Public Expenditure Reviews; Public Finance Management
TA; potential cooperation with Ministry of Justice and Central Anticorruption Bureau
WORLD BANK PROGRAM
3)- Growth and Competitiveness :
Infrastructure
areas: maintenance and rehabilitation, policy reforms and investment
lending to improve public transport in urban area
instruments: investment lending; potential policy lending; AAA (mainly
on Fee4Service basis)
Private sector development
areas: deregulation, PPPs, privatization, streamlining tax
administration, gender aspects
instruments: DPL program, AAA (mainly on a Fee4Service basis)
WORLD BANK PROGRAM
4) Global and Regional Public Goods
Climate Change:
areas: energy efficiency, abatement of carbon emissions, transport,
greening investments
instruments: AAA (e.g. Climate Change CEM); potential lending for energy
efficiency, natural disaster mitigation, renewable energy investments, or clean
carbon technologies)
Financial Sector Stability
areas: stress test for banks; easing of credit conditions
instruments: AAA (e.g. FSAP w. IMF); lending (credit line to support SMEs
through PKO BP)
WORLD BANK PROGRAM
PROGRAM WILL DEPEND LARGELY ON DEPTH AND DURATION OF CRISIS:
BASELINE: Assumes crisis will abate in 2010. Total exposure increasing to about
USD 7 billion in 2010 with new lending declining quickly thereafter. Instruments:
ongoing Development Policy Lending (DPL) program (focusing on public finance
reforms, labor market and social sector reforms, and private sector development)
and a limited number of other operations supporting economic activity and the
longer-term development agenda; moderate AAA program in public finance, human
development, private sector development, and infrastructure.
PROLONGED ENGAGEMENT: If crisis turns out to be deeper or more prolonged,
Bank lending could possibly be scaled up and extended for a longer period.
Instruments: scaling up of lending program through additional DPLs or additional
lending to support subnational or longer-term development agenda (infrastructure,
climate change). Lending still assumed to be phased-out by 2013. AAA program
might also be expanded.
It is planned that fee-for-service business would be phased in as crisis subsides and
that this would gradually become the main business model. Could be viable for
many years to come.
WORLD BANK PROGRAM
Current portfolio:
Relatively small with total exposure of about USD 3 billion: recently
disbursed DPL, four investment operations (roads, flood protection, rural
support and energy efficiency); two PCF operations
Planned lending activities:
First year: Anchored in the DPL series (second and third loans), while
supporting economic activity and the longer-term development agenda
through innovative, non-sovereign loans (planned loans for the City of
Warsaw to support transport infrastructure developemnt and to PKO BP for
onlending to financial instituions engaged with SMEs)
Beyond the first year: less well-defined at present but could be scaled up to
incorporate more lending or down towards a more limited program of feebased services, depending upon client demand; potential focus on energy and
climate change agenda; expansion of subnational cooperation
WORLD BANK PROGRAM
Proposed
Baseline Lending Program
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DPL 2
Warsaw City SIL/Swap
PKO BP Credit Line
DPL3
City 2
Climate Change 1
City 3
Climate Change 2
TOTAL
FY
2009
2010
2010
2010
2011
2011
2012
2012
4500
Amount
US$(M)
1250
500
500
1250
250
300
150
300
WORLD BANK PROGRAM
Recent/Proposed Nonlending (AAA) Services
Performance-Based Budgeting
Poznan Climate Change
DPL Education Reform TA
Mazowieckie Public Expenditure Review
Climate Change CEM
PER
DPL Health TA
DPL Social Protection TA
Warsaw City ESW
Transport Policy Note
City 2/3 AAA
Energy ESW
Transport/railways ESW
City 4/5/6 AAA
Completion FY
2009
2009
2009-10
2009-10
2009-10
2009-10
2010
2010
2010
2010
2011
2011
2011
2012
WORLD BANK PROGRAM
RISKS:
Economic: a more severe crisis and prolonged economic downturn may
undermine fiscal consolidation and early euro adoption plans; could affect
confidence and lead to balance of payments pressures
Political: the projected deterioration of economic prospects may
undermine political support to the Government and reduce its willingness to
push for more radical reforms; elections in 2009 – 2011 (European
Parliament and Local Government; Presidential; general) may make
political environment less stable; difficulties obtaining qualified majority
support needed to amend Constitution for euro-adoption or overturn
Presidential vetos on reforms
For more information on the World Bank
and it’s activities in Poland, please:
• visit the following web page:
www.worldbank.org.pl
• call the following number:
22 520 80 00
• visit our office in Warsaw, located at:
53 E. Plater Str., 9th Floor