Tajikistan - Second Institution Building Technical Assistance Credit Project

Report No. PID7274 Project Name Tajikistan-Second Institution Building... Technical Assistance (IBTA2) Credit Region Europe and Central Asia Sector Technical Assistance Project ID TJPE59755 Borrower Republic of Tajikistan Implementing Agency Office of the Prime Minister Date this PID January 4, 1999 Projected Board Date June 17, 1999 1. Background. Following the adoption of its economic reform program in 1995 and the progressive restoration of political stability since the 1997 peace agreement, the Government of Tajikistan has made considerable progress in reorienting the role of the State and implementing structural reforms in the economy. The fiscal deficit has been lowered, inflation controlled and necessary conditions for economic recovery established. These initiatives helped restore economic growth. Real GDP increased by an estimated 6.5 percent during the nine months of 1998, making it the first increase in over six years. However, the organization of public administration and the budgeting of the public expenditure program still strongly reflect structures and practices that existed under the former command economy. As the economic reform process further deepens, Tajikistan's public administration must be restructured to enable government ministries and departments to better facilitate and stimulate economic activity and to ensure more efficient and effective public services. Tajikistan's Country Assistance Strategy supports the proposed IBTA2 Credit which focuses on public sector institutional capacity building. This proposed Credit will be the primary vehicle for preparation of the Second Structural Adjustment Credit (SAC2) in Tajikistan which will support the Government in implementation of the necessary public sector reforms. 2. Project Scope and Objectives. The objectives of the proposed IBTA2 Credit are assisting the Government to: (i) implement public sector reform; (ii) improve essential public services delivery; (iii) prioritize and rationalize fiscal expenditures; and (iv) reform public enterprises and develop the private sector. The main sector issues and Government public sector strategy are on how to reform: (i) Government Structure, Organization and Management of the Civil Service; (ii) Budget Management Systems, and (iii) Public Enterprise and Private Sector. The proposed technical assistance under the proposed IBTA2 Credit to support the three elements of public sector reform outlined above would cover: (i) Consultancy Services, (ii) Training Support, and (iii) Information Technology. 3. Environmental Aspects. In accordance with the Association's operational Directive on Environmental Assessment (OD 4.01, Annex E), the proposed credit is expected to be placed in Category "C" and does not require an environmental assessment. 4. Benefits. The proposed project would help the Government support private  sector development while simultaneously strengthening the public sector's capacity to perform its core functions. The focus of the proposed credit on institutional restructuring of public organizations, supported by performance reviews, surveys and incentives to participating public organizations, reflects the Government's desire to promptly improve essential public sector delivery. Together with civil service and budgetary management reform, continuation of private sector development and privatization of state-owned enterprises, selective investment in information technology and training for key staff, the proposed IBTA2 Credit should help improve efficiency, effectiveness and transparency of public sector operations. Success in terms of improved public service delivery and budgetary savings would allow the Government to better implement its investment and social program, positively affecting business confidence and investment. 5. Potential Risks. Three potential risks exist that are associated with the proposed credit: (i) deterioration in the political and security environment may undermine the Government's support and commitment to the proposed project and could delay project implementation; (ii) decisions on identifying and phasing out of redundant Government functions are taken outside of public resources constrained decision making exercise; and (iii) opposition to reforms by some vested interests may result in implementation delay. 6. The risks minimizing measures include: (i) With the signing of the peace agreement on June 27, 1997, and the operation of the Commission for National Reconciliation in Dushanbe, the country's political situation is gradually improving. At the same time, Government's efforts to foster economic recovery will facilitate the transitional process towards national reconciliation and peace. (ii) Stronger linkage between public administration and budget management. (iii) Various stakeholders, including the government officials and managers of the enterprises that are expected to be privatized, would be fully informed about the objectives of the privatization program, the nature of the process and the opportunities available. They will also be brought into the design and implementation of the proposed project to the extent that it is possible. Contact Point: The InfoShop The World Bank 1818 H Street, N.W. Washington, D.C. 20433 Telephone No. (202)458 5454 Fax No. (202) 522 1500 Team Leader: M. R. Ghasimi, ECSPE Tel.: (202) 473-5868 Fax.: (202) 522-2755 Note: This is information on an evolving project. Certain activities and/or components may not be included in the final project. Processed by the InfoShop week ending January 22, 1999. - 2 -