Program information document (pid) concept stage
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- Sector Development Policy Lending Project ID
- Date PID Prepared 01/22/2007 Estimated Date of Appraisal Authorization
- Scope and objectives of the operation.
- Linkages to Government reform program and expected benefits
- PRSC IV Policy and Institutional Reform Actions
- Strengthening tax administration Strengthening customs administration
- Strengthening competition
- Reducing risks in natural resource management for sustainable livelihoods
| PROGRAM INFORMATION DOCUMENT (PID)
CONCEPT STAGE Report No.: AB2932
(This section should discuss whether there has been good progress on important institutional and structural reforms. Highlight specific measures taken by the government and supported by this proposed loan. Note recent macroeconomic performance and poverty reduction efforts, if supported by sustainable policies.) Armenia has a creditable record of economic stability. The Armenian authorities continue carrying out a successful stabilization and structural reform program following the hyperinflation, fiscal crisis and severe economic contraction immediately after independence in 1991-93. Reforms accelerated after 2000 with trade and prices liberalized and most small and medium-sized enterprises privatized. Macroeconomic stability was maintained, inflation was low, structural reforms were carried out and economic recovery began. Successful implementation of economic reforms contributed to an average growth of 5.5 percent per year during 1994-2000 given the focus of reform on improving the business environment and public utilities management, strengthening governance, competition and financial intermediation as well as promoting structural changes in public service delivery. Deepening structural and institutional reforms resulted in a stellar annual average growth rates in double digits for the last 5 year in a row, averaging 12.9 per cent were achieved over 2001-06, peaking at 14 percent in 2005. Such high rates of sustained growth have led to a fall in poverty from over half of the population in 1999 to less than 30 percent in 2005, and an even sharper fall in severe poverty from 21 percent to less than 5 per cent. Growth has recently begun to dent unemployment which stands at nearly one-third of the labor force. During this time, economic growth was driven for the first time by a high rate of export expansion, which tripled in 2001-2005. In 2001-2006 the average inflation remained at around 3.5 percent. Monetary policy is intended to be geared to keeping inflation low; the central bank has announced that inflation targeting will be formally adopted as soon as preparations are completed. The exchange rate regime is assumed to be a floating one, with the dram likely to continue to appreciate in real terms in parallel with high rates of productivity growth in the economy. The external debt and debt service burden is low and is expected to remain comfortably low. By the standards of CIS or of emerging economies, the economic record and the medium term outlook are enviable. The government continues to be committed to the reform program and macroeconomic performance continues to be most impressive. In governance, tax administration reforms have been persistent with steady progress in designing self assessment of taxes and the strengthening of the functioning of the large tax payer unit. Direct trader input systems have been introduced in the major custom houses and implementation will continue to be monitored closely in the coming months. Risk-based systems are being adapted to support rules-based selectivity in import examinations, but will require a further year to be fully functional to international standards. In the area of public management reforms, substantial gains have been realized. Budgets follow GFS classification standards, with integrated charts of accounts and reporting standards. Programme budgeting has been piloted in key spending ministries. Staff performance appraisal in the civil service is being adapted to allow for a merit based wage and bonus system. Second generation reforms to sharpen competition and entrench property rights have been undertaken consisting of a cluster of crucial micro-economic reforms to reduce costs and raise efficiency. The authorities have adopted a policy of liberalizing international civil aviation, railways, telecommunication and public utilities. To strengthen property rights and create the conditions for an efficient loans market, steps have been taken to strengthen creditor rights and make secured transactions possible. Further more reforms also focused on mitigating social and environmental risks. In education and health, reforms were directed at re-ordering priorities in spending, whilst spending in real terms were raised very substantially. Environmental risks have been reduced by the adoption of a national forestry policy and codes and by an increased role for environmental impact assessment and supervision in public policy. Reforms directed at modernizing the rural economy centered on stimulating farm incomes through implementing effective programmes for agricultural extension, research, the adoption of best practice seeds law and certification procedures and steps towards harmonizing food safety legislation to international standards. A major focus remains the development of rural infrastructure development plan.
(This section should describe the operation, including a clear, succinct statement of development objectives. It discusses the expected benefits of the proposed operation, expected impacts, and linkages to the Government’s program. A description of the prior actions, i.e., conditions, for Board presentation should also be included in this section. ) Scope and objectives of the operation. The three main areas of focus for the operation are: (i) consolidating macroeconomic discipline and strengthening public and corporate governance, (ii) strengthening competition; and (iii) reducing environmental risks. In addition to the fact that the proposed PRSC builds on the Government’s PRSP themes, it is also closely linked to the FY05-08 Country Assistance Strategy (CAS) which focuses on three main objectives: (i) promoting private sector led growth; (ii) making growth more pre-poor; and (iii) reducing non-income poverty. 2007 CAS-PR also envisions the proposed PRSC as the key elements of supporting PRSP implementation. The PRSC preparation is also closely coordinated with the IMF Poverty Reduction and Growth Facility (PRGF) and activities of other donors in Armenia. Linkages to Government reform program and expected benefits. The proposed PRSCIV is an extension to the set of three annual PRSCs rooted in the medium term Poverty Reduction Strategy Paper (PRSP) of the authorities. The proposed credit is proposed to be extended on the basis of policy and institutional reform actions taken by the authorities as agreed with IDA. Given substantial progress made, PRSC-IV will be made available as the agreed triggers of policy and institutional reforms are satisfied. The main benefits of the proposed credit are to help sustain economic growth and poverty reduction by deepening Government’s high priority reforms and channeling financial and policy assistance in support of the implementation of the PRSP objectives to improve business environment, advance social sector reforms, and strengthen the rural economy Full description of prior actions is given below:
Expected outcomes and operation impact. In macroeconomic area it is expected that the national output will grow by 65 percent over the 2004-09/10 period, with income per head approximating $2300 in constant 2004 dollars. Inflation is expected to be kept below 3 percent throughout 2004-07, consistent with fiscal deficits in the 2-3 percent of GDP range, on the basis of tax revenues rising from the equivalent of 14 percent of GDP in 2003 to 16 percent of GDP in 2008. Key institutional outcomes are expected to include attainment of international standards in customs control and in tax administration. Under PRSC-IV, risk-based selectivity will be used throughout customs by the introduction of the Asycuda selectivity module at networked customs locations. The introduction of Asycuda World will make possible a single window approach for all imports, strengthen the transit process and facilitate the elaboration of a proper import valuation system. These reforms would lead to greater automaticity and predictability in clearance of goods, will reduce discretion and lower business costs. The two key reform actions in tax administration – self-assessment and large taxpayer units - have been chosen on the basis of the expected impact on the criteria outlined above – efficiency, probity, and business impact.The improved competition environment will be evident in a fall in transport costs in aviation, rail services and in quality gains in utilities services in line with quantitative indicators set as minimum service quality standard for frequency and duration of available service. A new telecommunication and aviation policy statements are planned which would provide pre-conditions for the entry of new operators. Strengthened corporate governance via increasing transparency and accountability will be assisted by: (i) establishing internet access to the business registry; (ii) developing a plan for public disclosure of the ultimate owners of publicly traded companies; and (iii) conducting an Accounting and Auditing ROSC to identify ways of strengthening financial reporting practices. Accountability will be promoted by preparing a model charter that will strengthen the responsibilities of supervising boards of directors and ensure that they maintain minimum levels of qualifications. It is expected that these measures will be a critical underpinning to a vibrant and competitive market economy, with strong governance increasing transparency and reducing opportunities for corruption. Strengthening illegal logging authority in Armenia will have a tremendous effect on natural resource management systems. The impact of PRSC supported forestry reforms and illegal logging in Armenia is also likely to have a substantial impact on sustainable livelihoods. Forests serve as the safety nets for rural population. Forests served as safety net during the period of harsh economic and energy crises in early 1990s. Wild food and fuel-wood were by far the two most important forest products harvested from forests. The over-exploitation of forests continues, which will result in considerable negative impact of sustainable livelihoods in Armenia. To avoid degradation of its already scarce forest resources, Armenia must maintain efficient forest management institutions.
(This section should describe the main areas where specific actions are supported by the proposed operation. List the principal benefits of the proposed operation. Note how the proposed operation would support the government to pursue its policy objectives within a structured macroeconomic framework and how the operation would strengthen overall performance of the economy and contribute to poverty alleviation.) The proposed credit will continue help strengthen overall performance of the economy and will contribute to further poverty alleviation by building up on previous measures (PRSC I, II and III). Specifically, the Credit will support measures in three main areas: (i) strengthening public (tax and customs) management and corporate governance; (ii) sharpening competition, in particular focusing on aviation and telecommunication sectors; and (iii) reducing risks in natural resource management for sustainable livelihoods by advancing illegal logging agenda. The proposed PRSC program is fully aligned with the principal priorities of the authorities’ PRSP. The chief linkages to an enhanced effort on poverty reduction are several.(i) Ensuring that high rates of growth are sustained over the medium term through the strengthening of the environment for competition and private markets, the economy will benefit from employment and opportunities arising from business formation and expansion, and budgetary resources will be increased for PRSP objectives. (ii) Continued strong re-direction of public expenditures towards activities that add to human capital, enhance opportunities for the poor, reduce social risk and offer improved social protection, will add to the flexibility of labor supply and to incentives for enterprise, thereby reducing poverty. (iii) Continuation of deep-seated structural reforms in public governance will raise the quality of public services and administration, thereby addressing a key weakness in Armenia’s transition record thus far. 4. Environnent Aspects (The Bank determines whether specific country policies supported by the operation are likely to cause significant effects on the country’s environment, forests, and other natural resources. For country policies with likely significant effects, this section should discuss any relevant relevant country-level or sectoral environmental analysis of the borrower’s systems for reducing such adverse effects and enhancing positive effects.) The PRSC supports several policy and institutional reforms in the environment and forestry sector by focusing on environmental supervision, national forest policy, combating illegal logging, establishing community forestry, and institutional restructuring in the forestry sector. Key government policies and programs that are addressed through the PRSC cover (i) environmental impact assessment and supervision and (ii) policy and institutional reforms in the forest sector. These actions are partially supported by the ongoing Natural Resources Management and Poverty Reduction Project (NRMPRP), which aims to support sustainable natural resource management in mountainous areas of Armenia, where degradation of natural resources is reaching a critical point. Actions under the PRSC are expected to have a substantial beneficial impact on environmental management. Key environmental risks in the country are expected to be reduced by creation of community forestry programs and reduction of illegal logging, and improvement in water supply. 5. Tentative financing
6. Contact point Contact: Saumya Mitra Title: Lead Economist Tel: (202) 458-9713 Fax: (202) 522-2753 Email: Smitra@worldbank.org Directory: curated curated -> Concept stage curated -> Concept stage curated -> Republic of Côte d'Ivoire Urbanization Review curated -> Report No: aus11011 Central America curated -> Report No. 94474-pk fiscal Disaster Risk Assessment Options for Consideration curated -> Environmental and Social Management Framework for the Costa Rica Telecommunications Sector Modernization Project curated -> Environment Impact Assessment For Jiangxi Shangrao Sanqingshan Airport Beijing Guohuantiandi Environmental Technology Development Center. Ltd. Oct. 2012 Content curated -> Growth through Innovation An Industrial Strategy for Shanghai By Shahid Yusuf Kaoru Nabeshima April 22nd, 2009 curated -> Report No: 70178. People's Republic of China Download 36.38 Kb. Share with your friends:
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