for official use only public disclosure authorized cpscr...

For Official Use Only

CPSCR Reviewed by: Peer Reviewed by: CPSCR Review Coordinator

Florence Charlier Senior Economist, IEGCC

Shoghik Hovhannisyan Consultant, IEGCC

Jaime Jaramillo-Vallejo Lead Economist, IEGCC

Igor Artemiev Consultant, IEGCC

Xiaolun Sun Senior Evaluation Officer, IEGCC

CPSCR Review Independent Evaluation Group

2. Executive Summary

i. This review examines the implementation of the FY05-FY11 Kazakhstan Country Partnership Strategy (CPS) of FY05 and the CPS Progress Report (CPSPR) of FY08, and evaluates the CPSCR. The strategy was joint between IBRD and IFC and this review covers the joint program of the two institutions.

ii. The WBG sought to support Kazakhstan’s efforts organizing its objectives around four pillars that revolved around the central issue of improving its competitiveness. Under Pillar1, the WBG’s support aimed at reducing losses in competitiveness through prudent management of the oil revenues and increased public sector efficiency. Under Pillar 2, the WBG strategy focused on buttressing efforts to promote competitiveness by strengthening the government’s capacity to identify and reduce barriers to businesses and private investors. Under Pillar 3, the WBG supported building the foundation for future competitiveness by investing in human capital and basic infrastructure. Under Pillar 4, the WBG support aimed at supporting Kazakhstan in ensuring future growth will not harm the environment and past liabilities are mitigated. These objectives were reaffirmed at the time of the CPSPR.

iii. IEG rates overall outcome of the WBG’s strategy as moderately unsatisfactory. Kazakhstan saved part of its oil revenues in the National Fund of the Republic of Kazakhstan (NFRK) through the CPS period, and introduced a medium term expenditure framework in 2009. Progress in complying with the Extractive Industries Transparency Initiative (EITI) has been slower than expected, and the NFRK has mixed ratings within the sovereign wealth funds. Macroeconomic policy was thwarted by failures in macro-prudential regulations of the banking system and bank supervision. Kazakhstan’s efforts to decentralize to lower levels of government through legal changes have yet to overcome the culture of strong centralization in decision making. Similarly, Kazakhstan’s moves to improve governance, including through better customs and tax administration, have had little effect. Kazakhstan has slowed its accession to the World Trade Organization (WTO) path by entering into trade agreements inconsistent with WTO principles. Similarly, the country has made scant progress in technology transfer, and innovative production has declined as a share of GDP. The share of SMEs in GDP seems to have declined, reflecting the contradictory policy framework that they face regarding competition on the one hand, and import substitution and government support schemes on the other. The share of agriculture in GDP and in total exports also declined, and there is no information on the effectiveness of the changes in agricultural quality and safety standards. Kazakhstan high coverage of education remains challenged by its quality, with students performing below OECD standards. Health indicators show the country making progress, backed in part by a large increase in public expenditure in health. In the provision of basic services, Kazakhstan has improved the electric grid, and provides its people with ample improved water. The quality of electric service, however, remains weak. Kazakhstan’s progress in improving basic services has been slowed by the regulatory framework, which discourages investments in electricity generation and water treatment. Kazakhstan improved its road infrastructure, but remains challenged by their maintenance. Kazakhstan’s efforts to move towards environmentally sustainable growth, as demonstrated by new

1. CPS Data

Country: Kazakhstan

CPS Year: FY05 CPS Period: FY05 – FY11

CPSCR Review Period: FY05- FY11 Date of this review: April 25, 2012

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legislation and higher expenditures, have yet to yield results despite having been in place for five years. The circumscribed interventions of the WBG in helping Kazakhstan address regional development issues have been mostly positive, but have failed to bring about their scaling up or replication in the country.

iv. IEG stresses five findings. First, full country ownership of an advisory agenda does not guarantee its effectiveness. While being a necessary condition, it is by no means a sufficient one as the Kazakhstan example shows. Second, a flexible approach such as the one embodied in the JERP calls for effective and regular monitoring of the two factors that were identified in the FY05 CPS as central to the relevance of the interventions, namely the contribution of these interventions in terms of results (value added) and the progress being made in the policy framework. Third, WBG’s flexible approaches with middle income countries need to be coupled with results frameworks that allow valuable and operative monitoring and evaluation of the strategy and its implementation throughout its period. In the absence of monitoring, WBG efforts may turn out to be ineffective from a development perspective. Fourth, the CPSPR is the stage where the objectives of the strategies can be adjusted to what is feasible and to the WBG contributions. The Kazakhstan strategy could have been seen in a better light under a more realistic set of objectives. Fifth, careful constant monitoring of the macroeconomic conditions, including the financial sector, and a persuasive policy dialogue with the government about them would allow the WBG to be a more effective and opportune development partner. A more compelling early engagement by the WBG in dealing with the core issues may have lessened the effects and duration of the domestic banking crisis of Kazakhstan.

3. WBG Strategy Summary

Overview of CPS Relevance:

Country Context:

1. Over 2000-2005, Kazakhstan grew rapidly at around 10% driven mostly by its hydrocarbon and metal extraction industries, and GDP per capita reached US$7,800 (PPP). During this period, the country saved some of the revenue stemming from its extractive industries in the National Fund of the Republic of Kazakhstan (NFRK), which was created in 2000 and is administered by the Central Bank. Kazakhstan’s fast pace of growth continued through 2007, but slowed considerably with the global financial crisis. Kazakhstan’s banking sector was particularly hardly hit by weak funding practices before the crisis, and remains weak. At the heart of the weakness of the domestic banks lies their overleveraging using foreign financial sources (over 140 percent of domestic deposits at its peak in 2007), which dropped considerably with the global financial crisis. Accordingly, the ratio of non-performing loans of the financial sector rose sharply to over 25 percent, as domestic banks tried to adjust their balance sheets to the lower levels of financing available from abroad. Nevertheless, GDP growth rebounded in 2010, aided by favorable commodity prices, an accommodative monetary policy and the use of US$17 billion of NFRK resources to support banks and a fiscal expansion. Meanwhile, poverty declined from 46.7 percent in 2001 to 6.5 percent in 2010, but is twice as high in rural areas as compared to urban areas. On the operational side, Kazakhstan had created, together with IBRD, a Joint Economic Research Program (JERP) in 2006, which was cofinanced and served as to frame IBRD’s contributions to the country through analytic and advisory activities (AAA). Under this framework, the yearly AAA program was defined based on Kazakhstan’s demand for services.

2. The Kazakhstan Government’s vision for the country’s development was initially laid out in 1997 “Prosperity, Security and Ever Growing Welfare of All the Kazakhstanis,” which was further updated in a Presidential Address in 2007. The updated Strategy’s main priorities include (i) the successful integration of Kazakhstan in the world economy through existing and new competitive advantages; (ii) the management of growth and sustainability through diversification, infrastructure development and the development of hi-tech industry; (iii) providing education and professional training at international standards; (iv) the adoption of a modern social policy in housing, healthcare



and pensions; (v) strengthening the foundation of the political system; and (vi) facing the new regional and geopolitical responsibilities of Kazakhstan.

Objectives of the WBG Strategy:

3. The WBG sought to support Kazakhstan’s efforts organizing its objectives around four pillars that revolved around the central issue of improving its competitiveness. Under Pillar1, the WBG’s support aimed at reducing losses in competitiveness through prudent management of the oil revenues and increased public sector efficiency. Under Pillar 2, the WBG strategy focused on buttressing efforts to promote competitiveness by strengthening the government’s capacity to identify and reduce barriers to businesses and private investors. Under Pillar 3, the WBG supported building the foundation for future competitiveness by investing in human capital and basic infrastructure. Under Pillar 4, the WBG support aimed at supporting Kazakhstan in ensuring future growth will not harm the environment and past liabilities are mitigated. These objectives were reaffirmed at the time of the CPSPR.

Relevance of the WBG Strategy: 4. Congruence with Country Context and Program. The WBG strategy was broadly aligned with Kazakhstan’s country context and own vision. Nevertheless, the WBG strategy was selective and mostly focused on the competitiveness aspects of macroeconomic management, private sector development, human capital, infrastructure and environmental sustainability. The CPSPR did not elaborate on how the strategy would be adjusted to support Kazakhstan’s efforts to face the domestic banking system crisis, which had by then emerged.

5. Relevance of Design: The design of the strategy derived relevance from the fact that the main set of interventions of the WBG, analytical and advisory activities, was driven by the yearly agreements with Kazakhstan on the JERP. To enhance the relevance of these interventions, the FY05 CPS stated that relevance would “be assessed against three criteria : (i) the demand for Bank’s services, (ii) the value added of the development process and (iii) Kazakhstan’s overall policy environment.” Moreover, the CPS identified a set of indicators and related regional and world benchmarks that would guide the assessment, particularly as regards to progress in economic management, poverty abatement, and improvements in competitiveness and governance. The conditions and indicators for relevance were downplayed in the FY08 CPSPR and were not reported in the CPSCR. As anticipated in the FY05 CPS, the relevance of these interventions weakens when judged against the effective value added to the country and the progress (or lack of) in the policy framework, as appears to be the case in Kazakhstan. While country ownership is a necessary condition for relevance, it is certainly not a sufficient condition.

6. Relevance of Response to Market: Until 2007 IFC fostered private-sector-led growth focusing on non-extractive sectors and on the frontier regions of the country. These interventions responded to the country’s market conditions, and covered the financial sector (mostly larger banks) as well as targeted investments in manufacturing and services, construction and construction materials, hotels, retail trade and leasing. Providing financing to overleveraged financial institutions at the time of the bubble was not sound from a macroeconomic standpoint and went against the objectives of the WBG strategy. After 2007, when the banking system went into a crisis because of the withdrawal of foreign financing to domestic banks, IFC adjusted its approach. IFC raised total country commitments more than five times focusing mostly on supporting ailing banks, providing them with equity, quasi-equity, senior debt and trade finance. IFC focused mostly on mid-cap and smaller niche banks, which had larger share of SME loans in their portfolio. In contrast with the pre-crisis interventions, these were relevant in that they helped palliate the rapid decline in foreign financing faced by domestic banks, while aiding financing flows to SMEs.

7. Risk Identification and Mitigation: The strategy identified as main risks the macroeconomic factors as well as the government’s lack of commitment to policy reform. The CPS also recognized



the risk associated with the change in business model, as defined by the JERP. The WBG did not identify as a major risk, however, the foreign leveraging of Kazakhstan’s banking system, which reached over 140 percent of domestic deposits in 2007. Moreover, the strategy was not adjusted at the time of the CPSPR to take this crisis into account.

Overview of CAS/CPS Implementation: Lending and Investments: 8. IBRD approved financing for US$ 3.7 billion through 15 operations (investment and policy based lending) during the CPS. Under Pillar 1, which focused on managing the oil windfall and increasing public sector efficiency, IBRD delivered three projects, including Customs Development (CDP, FY08), Tax Administration Reform (TARP, FY10), Strengthening the National Statistical System (NSSP, FY11), as well as the Kazakhstan Development Policy Loan (KZ-DPL, FY10). Under Pillar 2, which focused on the business environment, IBRD delivered three projects, including Agricultural Post-Privatization Assistance APL 2 (APL2, FY05), Agricultural Competitiveness (ACP, FY05), and Technology Commercialization (TCP, FY08). Under Pillar 3, which aimed at supporting human capital and basic infrastructure, IBRD delivered six projects, including North-South Electricity Transmission (NSET, FY06), Health Sector Technology Transfer and Institutional Reform (HSTTP, FY08), South-West Roads: Western Europe-Western China International Transit Corridor (CARECP, FY09), Moinak Electricity Transmission (METP, FY10), Technical & Vocational Education Modernization (TVEMP, FY11), and Alma Transmission (ATP, FY11). Finally, under Pillar 4 on environment, IBRD delivered two projects, including Ust-Kamenogorsk Environmental Remediation (UKERP, FY06) and Forest Protection and Reforestation (FPRP, FY06). In addition, IBRD continued implementing seven projects that had been approved under the previous CPS.

9. IBRD’s share of commitments at risk fluctuated during the strategy period, starting from nil, reaching 16.5 percent in 2007 and falling to 2.5 percent in 2011. About one fifth of the projects by number were at risk in 2011. While the share of commitments at risk is low by ECA standards, the share of operations by number is as high as the rest of the World Bank. Of seven projects exited during the CPS period and evaluated by IEG, six received a rating of satisfactory and one of moderately satisfactory.

10. IFC invested in 18 new projects, four of which closed during the CPS period. In addition, it saw 18 other projects from before exit during the CPS period. Out of the 18 new projects, 10 were green field projects and in the remaining ones were in existing enterprises. Total IFC commitments in Kazakhstan reached approximately US$ 750 million in 2011, three times as much as all pre-2005 commitments. For the most part due to the domestic banking crisis, 85 percent of these financings have been in the financial sector. The remaining 15 percent were in the manufacturing and services sectors. During FY05-FY11, IFC’s net commitment activity in equity participations was 16 percent of the total with loans accounting for the remaining part. In contrast with the past, no new IFC investment commitment went to the oil, gas, mining, metal and steel industries.

11. On the IFC side, all four investments evaluated by IEG received a positive development outcomes rating. However, IFC did not seem to give enough attention to monitoring and evaluation in Kazakhstan. Out of 41 investment projects active during the review period, only 11 had Development Outcome Tracking System (DOTS) forms completed with seven evaluated internally as successful in their overall development outcome. In addition, one project was rated as mostly successful and another one as mostly unsuccessful on development outcomes. A number of projects were not subjected to DOTS exercise at all.



Analytic and Advisory Activities and Services

12. IBRD provided Kazakhstan with 129 pieces of AAA through the Joint Economic Research Program (JERP), covering issues in all four pillars of the strategy. A portion of the cost of the JERP is covered by Kazakhstan; that share stood at 30 percent at the beginning of the CPS period and increased gradually to an estimated 85 percent this fiscal year.

13. IFC had five advisory services (US$4 million) during the CPS period, two of which predated the CPS. Advisory activities covered corporate governance improvement closer to international standards in their corporate practices (including the national legal and regulatory framework), as well developing access to finance to MSMEs located near a restructured iron and still mill. Other smaller advisory services focused on facilitating SME certification and quality improvement, equipment leasing, and evaluation of a regional co-generation company’s investment program. The advisory service on primary mortgage institutional support project was rated by IEG as unsuccessful in development effectiveness due to a weak project design, insufficient supervision, and understaffing.

Partnerships and Development Partner Coordination 14. IBRD worked jointly with the IMF in preparing an FSAP, and with the OECD in a Higher Education Report. The WBG also worked in collaboration with the European Commission (EC), USAID, the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD), and several United Nations agencies.

Safeguards and Fiduciary Issues 15. There was one safeguard issue related to the South-West Roads project brought to the Inspection Panel’s attention in June 2011. The issue related to loss of assets and livelihood from land acquisition for the project and potential adverse environmental impacts with regard to works on different sections of the road. In October 2011, the Panel concluded that IBRD was taking actions to resolve these concerns and did not recommend further action on its part. IEG is not aware of any INT investigations on Kazakhstan over the CPS period, but INT has opened an information item on the Kazak East West Highway.

Overview of Achievement by Objective: Pillar 1: Reducing losses in competitiveness through prudent management of the oil revenues and increased public sector efficiency. 16. Under this pillar, the WBG strategy aimed at helping Kazakhstan in managing the oil revenues (including their transparency) and the government’s medium term expenditure framework (MTEF), developing the local and central government capacity to implement public spending, and address corruption.

17. Managing the oil revenues and the government’s MTEF. During the CPS period, Kazakhstan saved some of the revenue stemming from its extractive industries, including oil, in the National Fund of the Republic of Kazakhstan (NFRK), which was created in 2000 and is administered by the Central Bank. Accumulated savings, which amounted to US$38 billion in 2011, were drawn down to face the impact of the global financial crisis, as noted above. Oil revenues are substantial, accounting for about 50 percent of total government revenue. Kazakhstan has yet to participate in the International Forum of Sovereign Wealth Funds (IFSWF) and adopt the so-called Santiago Principles that are followed by 21 other sovereign wealth funds (SWFs) since October 2008. The NFRK scores an 8 (out of a possible10) in the Sovereign Wealth Fund Institute’s Transparency rating, higher than



some countries in the region and at the benchmark rating of 8 that reflects adequate transparency arrangements. Nevertheless, the Peterson Institute for International Economics, which also rates SWFs, gave a rating of 65 over 100 to the NFRK in August 2011, lower than Chile, Azerbaijan, Trinidad and Tobago and Timor Leste. As for the Extractive Industries Transparency Initiative (EITI), Kazakhstan endorsed the principles in 2005 and was admitted as an EITI Candidate country on 27 September 2009, after having received a special price for its efforts to raise awareness of the EITI across the country. On 14 December 2010, the EITI Board designated Kazakhstan, as an EITI Candidate country that is “Close to Compliant.” The initial six-month grace period has been extended and now goes until August 2013. The Board granted the extension with the expectation that Kazakhstan will increase the coverage of material payments and revenues in its EITI reports.

18. On fiscal policy and the government’s MTEF, the government approved a three year budget based on strategic plan at the national and regional level in 2009. However, the IMF has noted that the fiscal framework remains weak because of the sizeable quasi-fiscal and off-budget items. Indeed, the budget does not include all public and quasi-public enterprises, which remain involved in many off budget deficit transactions and have built-up external debt outside of the government’s tally. Nevertheless, the government avoided a wholesale bailout approach in the wake of financial crisis, increasing instead public wages, pensions and public works. The effectiveness of this expenditure reallocation has yet to be assessed.

19. IBRD provided support through the Kazakhstan Development Policy Loan (KZ-DPL, FY10), the Strengthening the National Statistical System Project (NSSP, FY11), and several pieces of AAA. The KZ-DPL focused on the rules to access the NFRK and the reallocation of expenditures towards social spending. The improvements in the statistical system were expected to help, among other things, in public expenditure management. Chief among the AAA was the work in helping Kazakhstan with the extension of the grace period of the EITI, and the dialogue on Kazakhstan macroeconomic response to the global financial crisis and its own banking system crisis. A 2005 report made recommendations to strengthen the government’s economic policy and contain overheating and preserve competitiveness during the boom years. IBRD also provided technical assistance on managing public investments and through a policy note on the financial sector, and an FSAP prepared jointly with the IMF. The FSAP and the policy note played a role in alerting the government about some of the causes of the crisis in domestic banks, but robust foreign leveraging limits were addressed clearly only in July 2011, in the wake of the domestic crisis and despite having been identified clearly in an IBRD policy note of 2004.

20. Developing the local and central government capacity to implement public spending. Kazakhstan has a three level government structure (central, regional and local). Budget relations between these levels as defined in the Budget Code were revised in 2008. The 2008 amendment decentralized spending further and introduced elements of strategic and results-oriented budgeting at all levels of government. However implementation remains a challenge. Although some delegation and improved oversight is taking place within the central government, the strong centralization in decision making limits the degree to which subnational units can be held accountable for results. The link between the performance of subnational units and budget transfers is, thus, weak.

21. IBRD provided analytical support through the 2006 report on intergovernmental fiscal relations and the 2010 public financial management review of the system of budgetary relations and management of local budget expenditure for education and social protection. The CPSCR doesn’t report on the implementation of the recommendations stemming from these reports.

22. Addressing corruption. As reported by the World Economic Forum (WEF), Kazakhstan made little progress in increasing the transparency of its public sector, and corruption remains the most problematic factor for doing business, according to the latest Global Competitiveness Report (GCR). The Wastefulness of Government Spending index improved marginally from 3.4 over 7.0 in 2006-2007 to 3.5 in 2011-2012. However, the index on the Diversion of Public Funds to Companies and Individuals or Groups due to Corruption worsened from 3.9 over 7.0 to 2.8, while that on the Favoritism in Decisions of Government Officials when Deciding upon Policies and Contracts

http://eiti.org/files/Minutes_14th_Board_Meeting_ENG.pdf

http://eiti.org/files/Minutes_14th_Board_Meeting_ENG.pdf



deteriorated somewhat from 3.1 over 7 to 2.6, and that on Institutions deteriorated slightly from 3.6 to 3.5 over the same period. The lack of progress is also reflected in the corruption indicators reported by different sources. Two of these sources show insignificant change. For the period 2005-11, the Corruption Perception index of the International Property Right Index changed from 2.6 over 10.0 to 2.7, while the indicator on Control of Corruption of the World Bank Governance Indicators in terms of percentiles deteriorated slightly from 15.6 to 15.3. In 2008 Kazakhstan adopted changes to its procurement law, strengthening the submission processes and the free standing complaint mechanisms, while introducing e-procurement. However, there is limited evidence on the effectiveness of this new law with e-procurement just beginning (0.07 percent of current expenditures). Efforts to improve customs and the customs union lowered the percentage of physical inspections from 70.0 percent in 2007 to 18.6 percent in 2009, but Kazakhstan ranks poorly on the GCR’s indicator related to the burden of customs procedures (102 out of 142 in the 2011/12), particularly the large number of documents required for exporting or importing as well as the long time needed to export or import. As for tax efficiency, the IMF reports in its 2011 Article IV Consultation that non oil tax revenues remain below the pre-crisis level.

23. IBRD supported Kazakhstan through two projects whose central objective was to reduce corruption in customs and tax administration-- Customs Development Project (CDP, FY08) and Tax Administration Reform (TARP, FY10). In addition, the Kazakhstan Development Policy Loan (KZ-DPL, FY10) included actions to strengthen public financial management, based on a Public Finance Management Assessment (PEFA-based) report undertaken by IBRD in 2008.

24. IEG rates the achievement of the WBG strategy under pillar 1 as moderately unsatisfactory. Kazakhstan saved part of its oil revenues in the National Fund of the Republic of Kazakhstan (NFRK) through the CPS period, and introduced a medium term expenditure framework in 2009. Progress in complying with the Extractive Industries Transparency Initiative (EITI) has been slower than expected, and the NFRK, albeit being ranked as transparent by some, does not rank well within the sovereign wealth funds in other ratings. Macroeconomic policy was thwarted by failures in macro-prudential regulations of the banking system and bank supervision. Kazakhstan’s efforts to decentralize to lower levels of government through legal changes have yet to overcome the culture of strong centralization in decision making. Similarly, Kazakhstan’s moves to improve governance, including through better customs and tax administration, have had little effect.

Pillar 2: Promoting competitiveness by strengthening the government’s capacity to identify and reduce barriers to businesses and private investors. 25. Under this pillar, the WBG strategy aimed at supporting Kazakhstan’s efforts to (i) make progress in WTO accession and bilateral trade agreements; (ii) fostering technology transfer and commercialization of research and development; (iii) developing SMEs, including their linkages to the rest of the economy; and (iv) developing agricultural support policies, including quality and safety standards.

26. WTO accession and bilateral trade agreements. Kazakhstan has yet to complete its accession to the World Trade Organization (WTO). Accession, which was foreseen for 2009, was delayed because the country entered into a customs union with Belarus and raised its tariffs by an average of five percentage points. The customs union, which was formalized in 2010, led to an increase in physical controls at borders, except for those with Russia that were eliminated in July 2011 when Russia joined the customs union. Kazakhstan also embarked on a pilot program on joint customs control with China and Kyrgyz Republic in the context of the trade facilitation program under the Central Asian Regional Economic Cooperation Program (CAREC).

27. IBRD supported work in this area through two pieces of AAA.

28. Technology transfer and commercialization of research and development. Despite being a priority for the government, there has been scant progress in transferring technology and commercializing research and development. The share of innovative production in GDP decreased



from 1.27 percent in 2004 to 0.66 percent in 2010, according to the Statistical Agency of Kazakhstan. In addition, the country’s expenses in research and development declined from 0.25 percent in 2004 to 0.16 percent in 2011. Moreover, the WEF index for innovation rated Kazakhstan with a 2.6 over 7.0 in 2011/12. Actual diversification towards non extractive tradables has been relatively limited. The economy remains highly resource dependent with agriculture accounting for 5 percent and manufacturing for 11 percent of GDP. Nevertheless, the number of organizations conducting research and development increased from 295 in 2004 to 412 in 2010.

29. IBRD provided support through the Technology Commercialization Project (TCP, FY08), as well as three pieces of AAA. The project has been delayed considerably in its implementation, starting operations three years after Board approval.

30. SMEs development, including their linkages to the rest of the economy. The state continues to dominate the non-oil economy and large state companies have squeezed the SME sector. According to the Statistical Agency of Kazakhstan, the share of SMEs in GDP declined from 40.5 percent in 2005 to 31.2 percent in 2008 (latest data; the methodology has been revised and the new data is not consistent), while the share of SMEs in total employment increased marginally from 22.8 percent in 2005 to 32.4 percent in 2010 (latest data). IBRD reports that a steady decline in total factor productivity has subtracted 1.5 percentage points per annum from growth, with the decline being most noticeable in mining, construction and the processing industries. Despite efforts to improve competition legislation and ease public private partnerships (PPPs) in 2010, Kazakhstan continues to pursue policies on import substitution and local content requirements, as well as government support schemes which hinder productivity.

31. IBRD provided support through one piece of AAA. IFC had an enterprise restructuring project that focused on financing employees of large enterprises willing to receive student loans for retraining and start their own business. The outcomes of this intervention are not known at this stage. In addition, IFC provided assistance on leasing, corporate governance and SME development, including to those serving the oil and gas sector. There is no independent evaluation of development effectiveness of SME-support programs sponsored by IFC (e.g., number of SMEs created, amount of financing provided to MSMEs, number of loans extended to MSMEs, sustainability of MSMEs supported by these programs, etc.) A flagship advisory and investment project aimed at creating a fund to facilitate access to credit for SME-input suppliers resulted in a modest number of loans (only six active accounts out of 16 committed), poor performance of the fund after the largest borrower defaulted on its obligations in the midst of the crisis, and an impairment in the fund’s capacity to repay at maturity the full loan to IFC.

32. Agricultural support policies, including quality and safety standards. The agriculture share in GDP declined from 6.8 percent in 2005 to 4.8 percent in 2010 and the agricultural raw materials exports as a percentage of exported merchandises decreased from 1 percent in 2004 to 0.2 percent in 2009. The agricultural sector’s access to and usage of credit remains very limited. Kazakhstan introduced some regulations on quality and safety standards, but the extent of their implementation and its impact are not known at this stage.

33. IBRD supported Kazakhstan’s efforts through two projects, the Agricultural Post-Privatization Assistance APL 2 (APL2, FY05) and the Agricultural Competitiveness Project (ACP, FY05). The ACP has experienced delays in its implementation. Additional support came from components in a pilot GEF project, the Drylands Management Project (GEF FY03, closed FY10). IBRD also delivered one piece of AAA.

34. IEG rates the achievements of outcomes under Pillar 2 as unsatisfactory. Kazakhstan has slowed its accession to the World Trade Organization (WTO) path by entering into trade agreements inconsistent with WTO principles. Similarly, the country has made scant progress in technology transfer, and innovative production has declined as a share of GDP. The share of SMEs in GDP seems to have declined, reflecting the contradictory policy framework that they face regarding competition on the one hand, and import substitution and government support schemes on the other.



The share of agriculture in GDP and in total exports also declined, and there is no information on the effectiveness of changes in agricultural quality and safety standards.

Pillar 3: Building the foundation for future competitiveness by investing in human capital and basic infrastructure.

35. Under this pillar, the WBG strategy sought to support the government in improving (i) health; (ii) education; (iii) basic services; and (iv) transport.

36. Improving education. The 2011 UNESCO report shows Kazakhstan achieving universal primary education (99.1 percent), adult literacy (99.7 percent); gender parity (99.3 percent); and survival rate to grade 5 (99.5 percent). These figures show a slight improvement over those of 2007, which were also high. By contrast, the PISA 2009 results show that 59% of students score below the basic competency level in mathematics, 58% in reading and 55% in sciences, which are significantly below the OECD average. At the same time, the WEF indicator Quality of the Education System declined from 3.8 over 7.0 in 2006-2007 to 3.0 in 2011-2012. In higher education sector, the government has established a national accreditation center and joined the Bologna process in 2010.

37. IBRD support was through the Technical & Vocational Education Modernization Project (TVEMP, FY11) and six pieces of AAA.

38. Improving health. Reflecting economic development and increases in public expenditure on health, Kazakhstan has seen improvements in key health indicators such as life expectancy (68.4 years in 2009 from 66.0 in 2005), under five mortality (39.4 per 1000 live births in 2004 to 33.2 in 2010) and tuberculosis incidence (223 in 2004 to 151 for 100000 in 2010). Maternal mortality remains high (36.9 per 100000 births). Non communicable diseases such as cardiovascular and cancers, other tobacco and alcohol related diseases remain the major cause of adult mortality.

39. IBRD provided support through the Health Sector Technology Transfer and Institutional Reform Project (HSTTP, FY08) and five pieces of AAA. As of FY11, IFC started to venture into regional health insurance on a small scale basis.

40. Improving basic services. While Kazakhstan has made strong progress in electricity transmission, but regressed in water supply and the quality of electricity service. In the electric grid the country refurbished transmission substations and modernized the dispatch control system, reducing the average deviation of system frequency from 500 mHz in 2005 to 20 mHz in 2009. Kazakhstan also increased the volume of electricity transferred from the northern to the southern parts of the country from 650 MW in 2005 to 1,350 MW in 2010. Transmission losses on the North-South interconnector declined from 8.8 percent in 2005 to 5.5 percent in 2011. However, the WEF’s index on quality of electricity supply declined from 4.3 over 7.0 in 2006-2007 to 3.9 in 2011-2012. Moreover, the 2009 enterprise survey reported a higher number of power outages in a typical month (5) and higher value lost due to power outages (3.5% of sales) than in the ECA region or in upper middle income countries. In addition, the share of Kazakhstan’s population with access to improved water declined from 96.0 percent in 2005 to 95.0 percent in 2008.

41. Kazakhstan’s progress in improving basic services has been slowed by the regulatory framework. Strong competition among the electricity generation companies in the wholesale market has resulted in relatively low prices and lack of sufficient resources to finance investments in new capacity. In addition, the government has set the retail tariff at a level that does not ensure the full recovery of expenses, leading companies to rely on obsolete technology and plants. In the water sector, the National Agency for Natural Monopolies enforces low tariffs which are among the lowest in the world (roughly 3-4 times below affordability level).

42. IBRD provided support to the electricity sector through three projects, the North-South Electricity Transmission Project (NSET, FY06), the Moinak Electricity Transmission (METP, FY10), and the Alma Transmission (ATP, FY11). In the water sector IBRD provided support through the Nura



River Clean-up Project (NRCP, FY03), which closed in FY11. In addition, IBRD delivered ten pieces of AAA. In 2009 – 2010 IFC had a due diligence advisory project to assess the investment needs of a generation/heating company servicing regions in northeast Kazakhstan.

43. Improving transport. According to the WEF, the indicator on road quality of the Global Competitiveness Index improved slightly from 2.3 over 7.0 in 2006-2007 to 2.5 in 2011-2012. The total road network increased from 90,018km in 2004 to 93,612km in 2008, while the percentage of paved roads declined from 93.4 in 2004 to 88.5 in 2009. The WEF also reports that the indicator on the Quality of Railroad Infrastructure improved from 2.6 in 2006-2007 to 3.9 in 2010-2011. While major rehabilitation road works are carried out by private contractors, routine maintenance is still carried out by a state owned enterprise. Studies highlight that Kazakhstan’s expenditures in roads have an imbalance between expenditures on maintenance and new construction (the latter being too high), and face corruption and high cost of civil works.

44. IBRD supported Kazakhstan’s efforts through the South-West Roads: Western Europe-Western China International Transit Corridor Project (CARECP, FY09), as well as through the completion of the Road Transport Restructuring Project (FY99), which closed in 2007. IBRD also produced three pieces of AAA.

45. IEG rates the achievement of outcomes of the WBG strategy under pillar 3 as moderately satisfactory. Kazakhstan high coverage of education remains challenged by its quality, with students performing below OECD standards. Health indicators show the country making progress, backed in part by a large increase in public expenditure in health. In the provision of basic services, Kazakhstan has improved the electric grid, and provides its people with ample improved water. The quality of electric service, however, remains weak. Kazakhstan’s progress in improving basic services has been slowed by the regulatory framework, which discourages investments in electricity generation and water treatment. Kazakhstan improved its road infrastructure, but remains challenged by their maintenance.

Pillar 4: Ensuring future growth will not harm the environment and past liabilities are mitigated.

46. Under this pillar, the WBG strategy aimed at supporting Kazakhstan in (i) dealing with the consequences of growth on the environment; and (ii) addressing regional development issues.

47. Dealing with the consequences of growth on the environment. According to the Statistical Agency of Kazakhstan, the government’s expenses on environment protection tripled from US$ 209 million in 2004 to US$ 682 million in 2010, while the air emissions from stationary sources declined from 3.0 million tons in 2004 to 2.3 million in 2011.. Policy-wise, the government adopted a new environmental code in 2007. At the same time, however, the CO2 emissions increased from 172,158 kt in 2004 to 236,954 kt in 2008. Also, combustible renewables and waste increased from 44 metric tons of oil equivalent in 2004 to 157 in 2009. The higher expenses and regulatory changes have yet to yield results.

48. IBRD provided support in this area through the Ust-Kamenogorsk Environmental Remediation (UKERP, FY06) which included a component on water quality monitoring. In addition there were two pre-CPS projects that were active. One was the Drylands Management Project (GEF, FY03, closed in FY10) and the other one the Uzen Oil Field Rehabilitation Project (FY97, closed in FY07). IBRD also provided one AAA.

49. Addressing regional development issues. IBRD provided support on a limited scale on reducing the salinity of the Aral Sea, dry lands management, forest protection, reforestation, recovery of some lands polluted by heavy metals, rehabilitating an oil field, and cleaning a river. In the absence of a clear definition of this objective, IEG interprets it by the general thrust of the WBG interventions. All the six projects have a local focus, and four of them received moderately satisfactory ratings or better in internal evaluations. Two of them, however, were rated moderately unsatisfactory in internal



evaluations. These projects are the Syr Darya Control and Northern Aral Sea Phase I project (FY01, closed FY11), the Drylands Management Project (GEF FY03, closed FY10), the Forest Protection and Reforestation Project (FY06, still active), the Ust Kamenogorsk Environmental Remediation Project (FY06, still active), the Uzen Oil Field Rehabilitation Project (FY97, closed FY07), and the Nura River Clean Up Project (FY03, closed FY11).

50. IEG rates the strategy’s outcome under Pillar 4 as moderately unsatisfactory. Kazakhstan’s efforts to move towards environmentally sustainable growth, as demonstrated by new legislation and higher expenditures, have yet to yield results despite having been in place for five years. The circumscribed interventions of the WBG in helping Kazakhstan address regional development issues have been mostly positive, but have been slow in bringing about their scaling up or replication in the country.

Achievement of CPS Objectives

Objectives IEG Rating

Pillar 1: Reducing losses in competitiveness through prudent management of the oil windfall and increased public sector efficiency

Moderately Unsatisfactory

Pillar 2: Promoting competitiveness by strengthening the government’s capacity to identify and reduce barriers to businesses and private investors

Unsatisfactory

Pillar 3: Building the foundation for future competitiveness by investing in human capital and basic infrastructure

Moderately Satisfactory

Pillar 4: Ensuring future growth will not harm the environment and past liabilities are mitigated

Moderately Unsatisfactory

4. Overall IEG Assessment

Overall Outcome: Moderately Unsatisfactory

IBRD/IDA Performance: Moderately Unsatisfactory

IFC Performance: Moderately Satisfactory

Overall outcome:

51. IEG rates overall outcome of the WBG’s strategy as moderately unsatisfactory. Kazakhstan saved part of its oil revenues in the National Fund of the Republic of Kazakhstan (NFRK) through the CPS period, and introduced a medium term expenditure framework in 2009. Progress in complying with the Extractive Industries Transparency Initiative (EITI) has been slower than expected, and the NFRK has mixed ratings within the sovereign wealth funds. Macroeconomic policy was thwarted by failures in macro-prudential regulations of the banking system and bank supervision. Kazakhstan’s efforts to decentralize to lower levels of government through legal changes have yet to overcome the culture of strong centralization in decision making. Similarly, Kazakhstan’s moves to improve governance, including through better customs and tax administration, have had little effect. Kazakhstan has slowed its accession to the World Trade Organization (WTO) path by entering into trade agreements inconsistent with WTO principles. Similarly, the country has made scant progress in technology transfer, and innovative production has declined as a share of GDP. The share of SMEs in GDP seems to have declined, reflecting the contradictory policy framework that they face regarding competition on the one hand, and import substitution and government support schemes on



the other. The share of agriculture in GDP and in total exports also declined, and there is no information on the effectiveness of the changes in agricultural quality and safety standards. Kazakhstan high coverage of education remains challenged by its quality, with students performing below OECD standards. Health indicators show the country making progress, backed in part by a large increase in public expenditure in health. In the provision of basic services, Kazakhstan has improved the electric grid, and provides its people with ample improved water. The quality of electric service, however, remains weak. Kazakhstan’s progress in improving basic services has been slowed by the regulatory framework, which discourages investments in electricity generation and water treatment. Kazakhstan improved its road infrastructure, but remains challenged by their maintenance. Kazakhstan’s efforts to move towards environmentally sustainable growth, as demonstrated by new legislation and higher expenditures, have yet to yield results despite having been in place for five years. The circumscribed interventions of the WBG in helping Kazakhstan address regional development issues have been mostly positive, but have failed to bring about their scaling up or replication in the country.

IBRD Performance

52. IEG rates IBRD’s performance as moderately unsatisfactory. The JERP provided a flexible framework for IBRD’s AAA activities in Kazakhstan, and ensured the country’s ownership of that program. IBRD also reacted in a timely manner to provide financial support to Kazakhstan at the time of the global financial crisis. However, the relevance of IBRD’s approach to Kazakhstan waned due to the weak contributions of the interventions in terms of results (value added) and the policy framework. These two points, which were foreseen in the original CPS of FY05 and were intended to be monitored throughout the strategy period, were not followed in the CPSPR and in the CPSCR. The results framework of the strategy was ill defined and did not allow IBRD to have a working monitoring and evaluation of the strategy and its implementation. The opportunity to adjust the objectives at the time of the CPSPR was missed. Nevertheless, the supervision of the portfolio was in line with that of the rest of IBRD. Coordination with other development partners was included the IMF, the EC, USAID, ADB, EBRD, some UN agencies, and a report with OECD. Attention to safeguard and fiduciary issues was adequate.

IFC Performance:

53. IEG rates IFC performance as moderately satisfactory. IFC reacted quickly to changing country conditions and provided support to a number of domestic banks when their foreign sources dried up. IFC also did a good job in implementing its interventions, and made an effort to contribute to the SME sector using different approaches. However, the investments and the financing of financial institutions before 2008, at a time when these institutions were overleveraged abroad was not sound from a macroeconomic standpoint and was counter to the objective of the WBG strategy of maintaining a stable macroeconomic environment.

5. Assessment of CAS/CPS Completion Report

54. The CPSCR provides a description of the WBG strategy implementation, including the finding and lessons learned. An important shortcoming is that the CPSCR deviated from the objectives set out under the CPS and the CPSCR, and chose instead to report on selected Government’s core development goals. Reporting on CPS objectives and result would have been more effective if the 2008 CPSPR had redefined more specific objectives under each pillar to limit their scope, identify measurable outcomes and elaborate an M&E framework. While the need for a flexible, demand-driven strategy is understandable, that fact does not deter from the need to monitor and evaluate the strategy and its implementation. The CPSCR also failed to report on the conditions and indicators for relevance set out in the original strategy, which were central to evaluate the effectiveness of the business model used by the WBG in Kazakhstan.



6. Findings and Lessons

55. IEG stresses five findings. First, full country ownership of an advisory agenda does not guarantee its effectiveness. While being a necessary condition, it is by no means a sufficient one as the Kazakhstan example shows. Second, a flexible approach such as the one embodied in the JERP calls for effective and regular monitoring of the two factors that were identified in the FY05 CPS as central to the relevance of the interventions, namely the contribution of these interventions in terms of results (value added) and the progress being made in the policy framework. Third, WBG’s flexible approaches with middle income countries need to be coupled with results frameworks that allow valuable and operative monitoring and evaluation of the strategy and its implementation throughout its period. In the absence of monitoring, WBG efforts may turn out to be ineffective from a development perspective. Fourth, the CPSPR is the stage where the objectives of the strategies can be adjusted to what is feasible and to the WBG contributions. The Kazakhstan strategy could have been seen in a better light under a more realistic set of objectives. Fifth, careful constant monitoring of the macroeconomic conditions, including the financial sector, and a persuasive policy dialogue with the government about them would allow the WBG to be a more effective and opportune development partner. A more compelling early engagement by the WBG in dealing with the core issues may have lessened the effects and duration of the domestic banking crisis of Kazakhstan.

Annexes

15


Annex Table 1: Planned and Actual Lending, FY05-11

Annex Table 1.a: Planned and Actual Lending, FY05-11

Annex Table 1.b: Trust Funds, FY05-11

Annex Table 2: Planned and Actual Analytical and Advisory Work, FY05-11

Annex Table 3a: IEG Project Ratings for Kazakhstan, FY05-FY11

Annex Table 3b: IEG Project Ratings for Kazakhstan and Comparators, FY05-11

Annex Table 4: Portfolio Status for Kazakhstan and Comparators, FY05-11

Annex Table 5: IBRD/IDA Net Disbursements and Charges Summary Report for Kazakhstan (in US$ million)

Annex Table 6: Total Net Disbursements of Official Development Assistance and Official Aid, 2005- 2010 (in US$ million)

Annex Table 7: Economic and Social Indicators for Kazakhstan and Comparators, 2005- 2010

Annex Table 8: Kazakhstan - Millennium Development Goals

Annex Table 9: List of IFC's investments in Kazakhstan that were active during FY05-11

Annex Table 10: List of IFC's Large Advisory Services in Kazakhstan, FY05-11

Annex Table 11: Summary of Achievements of the CAS Objectives

Annexes

17


Annex Table 1.a: Planned and Actual Lending, FY05-111 Project

ID Project

Proposed FY

Approval FY

Proposed Amount

Approved Amount

Planned

P058015 Agricultural Post-Privatization Assistance 2 Project (APL Phase 2) 2005 2005

35

P049721 Agricultural Competitiveness Project 2005 2005

24

P078301 Forest Protection & Reforestation Project 2006 2006

30

P078342 Ust-Kamenogorsk Environmental Remediation Project 2005 2006

24.3

P096998 Customs Development Project

2008

18.5

P090695 Technology Commercialization Project

2008

13.4

P099270 South-West Roads: Western Europe-Western China International Transit Corridor (CAREC 1B & 6B)

2009

2125

P102177 Technical & Vocational Education Modernization (TVEM) 2009 2011

29.2

Syr Darya Control & Northern Aral Sea (SYNAS-2) 2009 Pipeline

Territorial Development 2009 Dropped

Irrigation and Drainage Phase 2 2006 Pipeline

Municipal Water Supply Project

Dropped

Modernization of government institutions

Dropped

Railways Program Implementation Support

Dropped

Road Management Modernization

Dropped

PCBs and persistent organic pollutants 2009 Dropped Total programmed projects 2,299.4

Non planned

P095155 North-South Electricity Transmission Project

2006

100

P101928 Health Sector Technology Transfer and Institutional Reform

2008

117.7

P119856 Kazakhstan Development Policy Loan

2010

1000

P116696 Kazakhstan - Tax Administration Reform Project

2010

17

P114766 Kazakhstan Moinak Electricity Transmission Project

2010

48

P116919 Alma Transmission Project

2011

78

P120985 Kazakhstan: Strengthening the National Statistical System of Kazakhstan

2011

20

Total non-programmed projects 1380.7

Total projects CPS FY05-11 3,680.2

Ongoing projects

Project ID

Project Approval

FY Closed FY

Approved Amount

P008510 Irrigation & Drainage Project

1996 2005 80

P008507 Uzen Oil Field Rehabilitation Project

1997 2007 109

P008500 Atyrau Pilot Water Supply & Sanitation Project

1999 2005 16.5

P008499 Road Transport Restructuring Project

1999 2008 100

P065414 Electricity Transmission Rehabilitation Project

2000 2009 140

P046045 Syr Darya Control & Northern Aral Sea Phase I Project (SYNAS-1)

2001 2011 64.5

P059803 Nura River Clean-Up Project 2003 2011 40.4

Total ongoing projects CAS FY05-11 550.4

Source: Kazakhstan FY 05-11 CPS/CPSPR and WB Business Warehouse Table 2a.1, 2a.4 and 2a.7 as of 03/12/2012.

1 Overall breakdown by planned and non-planned activities is conditional since projects had been planned on annual basis, and not for CPS period.

Annexes

18


Annex Table 1.b: Trust Funds, FY05-11

Project ID

Project TF ID Approval

FY Closing

FY Approved Amount

P049721 Agricultural Competitiveness Project TF 26444 2001 2005 623,600.00

P071525 Drylands Management GEF Project TF 52161 2003 2010 5,270,000.00

P078342 Ust-Kamenogorsk Environmental Remediation Project TF 58070 2004 2011 3,430,000.00

P078342 Ust-Kamenogorsk Environmental Remediation Project TF 51352 2004 2007 860,700.00

P078301 Forest Protection & Reforestation Project TF 51351 2004 2007 410,600.00

P058015 Agricultural Post-Privatization Assistance 2 Project (APL Phase 2) TF 51894 2004 2005 680,050.00

P086592 Second Irrigation and Drainage Improvement Project TF 54598 2006 2008 600,000.00

P087485 Forest Protection & Reforestation TF 55731 2007 Active 5,000,000.00

P093825 Syr Darya Control and Northern Aral Sea Project - Phase II TF 56573 2007 2009 800,000.00

P046045 Syr Darya Control & Northern Aral Sea Phase I Project TF 56801 2008 Active 1,902,285.00

P116536 Public Sector Audit Capacity Building IDF TF 94540 2010 Active 455,000.00

P114732 Enhancement of M&E System in the Roads Administration TF 93848 2010 Active 413,000.00

P116606 IDF for Building Capacity in the Procurement Audit Agency TF 94539 2011 Active 450,000.00

Total FY05-11 20,895,235.00

Source: Kazakhstan FY05-11 CPS/CPSPR and WB Business Warehouse Table 2a.1, 2a.4 and 2a.7 as of 03/09/2012

Annexes

19


Annex Table 2: Planned and Actual Analytical and Advisory Work, FY05-112

Project

ID Proposed

FY

Delivered to Client

FY Output Type

Economic and Sector Work

Planned (CPS FY05-11) Agriculture sector competitiveness and productivity

2009 Dropped

Programmatic Country Economic Memorandum (CEM) P078926

FY05 Report

Health Sector Reform P093099

FY05 Report

Water-Energy consortium P090550

FY05 Institutional Development Plan

Transport Sector Strategy P088643

FY05 Report

Programmatic Public Expenditure and Institutional Review (PEIR) P088990

FY06 Report

Education Sector Reform P097536

FY07 "How-To" Guidance

Survey of the quality of Health and Education services P111933 2009 FY08 "How-To" Guidance

Analysis and forecasting of macroeconomic and financial sector risks P113888 2009 FY09 Report

Poverty Assessment P112991 2009 FY10 Policy Note

PFMR (1&2) P107737 2009 FY10 Report

Non-planned Livestock Study P078300

FY05 Report

Fisheries Sector Study P083363

FY05 Report

Tech & Competitiveness P092343

FY05 Policy Note

Financial Sector Reform P092483

FY05 Policy Note

Soe Corp Governance Pol Note P094894

FY05 Policy Note

Pension Pol Note P080299

FY05 Policy Note

Fin Systems Enhancement P096661

FY06 Policy Note

ROSC P094972

FY06 Report

E-Govt P097614

FY06 Report

Agriculture Policy Assessment P092877

FY07 Report

Tax Policy P096940

FY07 Policy Note

Educ And Innov Dev P104563

FY07 Report

Pension Study P102198

FY07 Policy Note

Utilities Tariff Reform P106271

FY07 Report

FSAP Update Kazakhstan P110451

FY08 Report

Investment Climate Assessment (ICA) P113823

FY10 Report

KER 3 P119347

FY11 Report

DeMPA Assessment - P122536

FY11 Report

Economic Report 4 P126209

FY11 Report

Dev. Of Fair Competition P123561

FY11 Report

PFMR 3 P119346

FY11 Report

Improvements In Social Safety Net P119511

FY11 Policy Note

Technical Assistance

Planned (CAS FY05-11) Technical Assistance on WTO Accession P083571


Environmental Control and Strategic Assessment P085460

FY06 Report

Territorial Development Program P090555


Technical Assistance on WTO Accession P104202


Markets with limited competition P109614 2009 FY08 Client Document Review

Revision of the Tax and Budget Codes P114164 2009 FY09 "How-To" Guidance

Survey of the quality of government services P111702 2009 FY09 "How-To" Guidance

Reform of utility tariffs P115189 2009 FY09 "How-To" Guidance

2 Overall breakdown by planned and non-planned activities is conditional since the AAA activities had been planned on annual basis, and not for CPS period.

Annexes

20


Project

ID Proposed

FY

Delivered to Client

FY Output Type

PPP P112735 2009 FY10 "How-To" Guidance

Non-planned Oil Revenus Management TA/Pol DLG P095545


Water Sector Dialog P091159


Health Dialogue P079077


Private Public Partnership P099510

FY06 Client Document Review

TA On Private Sector Acct & Audit P094173

FY06 Knowledge-Sharing Forum

Health Dialogue P097855


E-Govt Phase 2 P102001


Fodder & Pasture Mgt Stgy P104409


Mgmt & Gov Of State Sharehold TA P096848


Health Care Qual TA P102271


Private Partnership TA 1 P102829


Brainstorming KZ Govt P101627


Kazakhstan Customs Peer-Learning Visits P104078


Private Partnership TA 2 P090494


Public Investment & Auditing P102360


Tax Administration P102815


Enhancing Competitiveness P104082


Policy Advice On Par & Economic Policy P105979


Utilities Tariff Reform 2 P107949


Technoparks P108783


Pension System Support P108810


Supply Chain Development P108938


Revision Of The Tax Code P111105


Development Of Statistical Master Plan P108530


Brainstorming KZ Govt P107474


Implementation of IFPS P107930


Review Of The E-Gov Program P112861


Public Administration Reform P113409


Competition And Policy Work P113805


FSAP Follow Up P113817


Higher Education P114472


Doing Business Reform in KZ P115729


Economic Forum P116297


Pension System Support P116757


Peer Learning - Study Tour P116813


General Budget Transfers P113411


Establishment of the Financial Monitoring System AML/CFT System in KZ P115387


Internal Audit (IA) Peer Learning Event P112839


Pub Fin Audit Sys P112840


Brainstorming on Fin. Volatility P114772


Kazakhstan Tax Peer-Learning Visit P116691


Brainstorming P117130


Kazakhstan EITI P104941


Insolvency And Corporate Restructuring P112504


HCS/ Water & Sanitation P118879


Fiscal Risk Mgmt In PPPs P118881


KZ Doing Business Reform P119266


Pension System P119510


State Planning System’s Review P119578


Improvement Of Nat'L. Fund Mgmt. P119579


Annexes

21


Project

ID Proposed

FY

Delivered to Client

FY Output Type

Advisory Support to Ministry Of Justice P119580


Kazakhstan EITI P119803


Higher Education P120177


Competition Policy P120592


Secondary Education P120943


Water Tariffs Lac Workshops P121978


Devel. AML/CFT System In Kazakhstan P119565


Strengthening Statistical Capacity P122034


KZ Regional Devel. Brainstorming P113843


Brainstorming P118882


KZ 2020 Brainstrmg Sess1 P119582


Development of a New Sample for HBS P119496

FY10 Model/Survey

Options Formalization Self Employment P114771


KZ Competition Policy Intership P118069


Kazakhstan - #8135 Strength. Catastrop. P118622


Kazakhstan Small Business Taxation P121252


Kazakhstan EITI (FY11) P122958


KZ Technological Innovations P123559


KZ Doing Business Reforms P123638


KZCompetion Protec & Dev Goods Mkt P123668


KZExpansion Of Kz Enterprises In Gvc P123669


KZInsolvency System Improvement P123680


KZ Mining Strategy Development P124784


FY11 - Brainstorming On Decentralization P125614


Comparative Analysis SSN P125650


KZ FY11-E-Governance Assessment P125839


KZ FY11 - Top Civil Service Pay P125840


KZ DB Study Tour (Funded By Gvt) P127167


KZ Tech. Mod. & Restruct. of Enter P123670


Advisory Assistance on the New Financial Initiative In Rk P123735


Study Of Int'L Practice Integ Union P123799


FY11-Brainstrming: Contingnt Liabil P123800


Kazakh SMP Update P121378


Further Development Of Kazakh Financial Monitoring System P124686


PROST P114645


FY11-3Rd Astana Econ Form (ConFY10) P119581


SSC - Phaze 2 Study Tour P124682


KZ Financial Sector Monitoring P108724 FY11 Model/Survey

Source: Kazakhstan FY 05-11 CPS/CPSPR and WB Business Warehouse Table ESW/TA 8.1.4 as of 03/01/2012.

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Annex Table 3a: IEG Project Ratings for Kazakhstan, FY05-FY11

Project ID Exit FY

Project Name Total

Evaluated (US$M)

IEG Outcome IEG Risk to

Development Outcome*

P008500 2005 Atyrau Pilot Water 11.5 Satisfactory #

P008510 2005 Irrig & Drainage 72.3 Satisfactory #

P008507 2007 Uzen Oil Field Rehab 104.7 Satisfactory Moderate

P008499 2008 Road Transpt Restruct 95.6 Satisfactory Moderate

P065414 2009 Elec Trans Rehab 125.3 Satisfactory Moderate

P071525 2009 Drylands Mgmt (GEF) 0.0 Satisfactory Moderate

P046045 2011 Syr Darya Control N. Aral Sea

59.5 Moderately Satisfactory Moderate

Source: WB Business Warehouse Table 4a.6 as of as of 03/09/2012. * With IEG new methodology for evaluating projects, institutional development impact and sustainability are no longer rated separately.

Annex Table 3b: IEG Project Ratings for Kazakhstan and Comparators, FY05-11

Region

Total Evaluated ($M)

Total Evaluated

(No)

Outcome % Sat ($)

Outcome % Sat (No)

RDO % Moderate or Lower

Sat ($)*

RDO % Moderate or Lower

Sat (No)*

Kazakhstan 468.8 7 100.0 100.0 100.0 100.0

Russian Federation

1,139.0 18 85.0 83.3 64.5 69.2

Ukraine 1,099.4 14 77.9 53.8 39.9 42.9

Uzbekistan 165.2 6 94.4 83.3 0.0 0.0

ECA 14,319.4 321 89.9 83.8 77.4 65.7

World 89,480.3 1,499 84.1 77.3 71.8 61.3

Source: WB Business Warehouse Table 4a.5 as of as of 03/09/2012. * With IEG new methodology for evaluating projects, institutional development impact and sustainability are no longer rated separately.

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Annex Table 4: Portfolio Status for Kazakhstan and Comparators, FY05-11 Fiscal year 2005 2006 2007 2008 2009 2010 2011

Kazakhstan

# Proj 8 10 10 12 11 14 14

# Proj At Risk 0 2 3 2 3 2 3

% At Risk 0 20 30 17 27 14 21

Net Comm Amt 518.2 653.2 568.5 618.1 2,597.8 3,662.8 2,665.5

Comm At Risk 0.0 124.0 94.0 59.0 83.4 48.4 66.6

% Commit at Risk 0.0 19.0 16.5 9.5 3.2 1.3 2.5

Russian Federation

# Proj 22 22 20 18 14 12 10

# Proj At Risk 4 2 0 1 5 2 3

% At Risk 18 9 0 6 36 17 30

Net Comm Amt 1,977.0 1,950.7 1,770.5 1,676.1 1,297.0 1,136.5 987.0

Comm At Risk 379.5 250.0 0.0 80.0 310.0 100.0 110.0

% Commit at Risk 19.2 12.8 0.0 4.8 23.9 8.8 11.1

Ukraine

# Proj 12 12 11 12 12 11 11

# Proj At Risk 5 3 4 6 4 3 0

% At Risk 42 25 36 50 33 27 0

Net Comm Amt 796.1 1,008.6 924.1 1,207.5 1,430.7 1,428.7 1,571.6

Comm At Risk 304.0 260.1 430.5 725.6 346.6 295.3 0.0

% Commit at Risk 38.2 25.8 46.6 60.1 24.2 20.7 0.0

Uzbekistan

# Proj 7 5 6 5 6 8 10

# Proj At Risk 3 3 0 1 1 2 2

% At Risk 43 60 0 20 17 25 20

Net Comm Amt 285.0 237.5 252.3 222.8 250.8 356.5 632.5

Comm At Risk 153.3 141.3 0.0 15.0 40.0 55.0 65.0

% Commit at Risk 53.8 59.5 0.0 6.7 15.9 15.4 10.3

ECA

# Proj 297 315 306 303 287 276 251

# Proj At Risk 26 31 27 38 52 50 40

% At Risk 9 10 9 13 18 18 16

Net Comm Amt 15,882.7 16,513.9 16,687.4 17,966.1 21,383.2 24,340.5 22,535.4

Comm At Risk 1,427.4 1,196.7 1,680.9 2,257.0 3,460.2 4,357.1 2,116.9

% Commit at Risk 9.0 7.2 10.1 12.6 16.2 17.9 9.4

World

# Proj 1,455 1,468 1,485 1,525 1,552 1,590 1,595

# Proj At Risk 233 199 243 276 344 366 337

% At Risk 16 14 16 18 22 23 21

Net Comm Amt 13.3 11.6 15.3 17.3 15.2 17.8 13.7

Comm At Risk 12,697.7 11,000.1 15,354.3 18,428.2 19,929.9 28,186.1 22,978.5

% Commit at Risk 13.3 11.6 15.3 17.3 15.2 17.8 13.7

Source: WB Business Warehouse Table 3a.4 as of 03/09/2012.

Annexes

24


Annex Table 5: IBRD Net Disbursements and Charges Summary Report for Kazakhstan (in US$ million)

FY Disb. Amt. Repay Amt. Net Amt. Charges Fees Net Transfer

2005 42,520,243.16 318,944,239.46 -276,423,996.30 42,039,258.98 5,337,118.78 -323,800,374.06

2006 31,048,865.91 429,567,856.29 -398,518,990.38 35,142,693.28 6,954,388.07 -440,616,071.73

2007 45,467,950.82 159,963,586.60 -114,495,635.78 28,395,993.93 2,472,406.87 -145,364,036.58

2008 57,214,985.63 80,232,539.64 -23,017,554.01 23,763,628.23 1,551,891.75 -48,333,073.99

2009 75,128,188.01 30,905,336.59 44,222,851.42 14,090,978.45 814,038.09 29,317,834.88

2010 168,954,909.29 33,907,027.99 135,047,881.30 5,854,631.15 5,827,104.21 123,366,145.94

2011 1,307,989,008.51 42,416,074.65 1,265,572,933.86 10,153,938.72 2,945,254.93 1,252,473,740.21

Total (2005-2011) 1,728,324,151.33 1,095,936,661.22 632,387,490.11 159,441,122.74 25,902,202.70 447,044,164.67

Source: WB Loan Kiosk, Net Disbursement and Charges Report as of 03/09/2012

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Annex Table 6: Total Net Disbursements of Official Development Assistance and Official Aid, 2005- 2010 (in US$ million)

Development Partners 2005 2006 2007 2008 2009 2010 2005-2010

Bilaterals

Austria 0.29 0.16 0.34 0.27 0.34 0.31 1.71

Belgium 0.41 .. 0.06 .. 0.05 .. 0.52

Canada 1.18 0.07 0.63 0.18 0.08 0.05 2.19

Denmark 0.18 0.24 0.36 0.01 0.25 0.65 1.69

Finland 0.13 0.1 0.22 0.1 0.05 0.07 0.67

France 2.57 2.96 3.54 3.41 2.92 4.08 19.48

Germany 14.1 11.3 49.58 18.4 17.52 13.57 124.47

Greece 0.22 0.15 0.36 0.53 0.43 0.43 2.12

Ireland 0.03 .. 0.06 .. .. .. 0.09

Italy .. 0.03 .. 0.33 0.04 .. 0.4

Japan 66.17 24.87 43.31 37.9 37.13 -1.82 207.56

Korea 3.68 2.64 2.21 3.45 5.52 3.76 21.26

Luxembourg 0.05 .. 0.15 .. 0.02 0.06 0.28

Netherlands 2.36 0.25 0.37 0.03 0.63 0.43 4.07

Norway 2.33 2.63 2.46 4.88 3.06 4.25 19.61

Portugal .. .. 0.01 .. .. .. 0.01

Spain 1.12 0.54 0.25 0.06 -0.39 0.11 1.69

Sweden 0.8 0.86 0.65 0.34 0.2 0.93 3.78

Switzerland 1.04 0.18 0.13 0.17 0.09 0.01 1.62

United Kingdom 1.65 0.17 0.66 5.42 6.95 0.34 15.19

United States 51.58 51.5 77.65 157.57 97.31 68.07 503.68

DAC Countries, Total 149.89 98.65 183 233.05 172.2 95.3 932.09

Cyprus .. .. .. 0.02 0.02 0.01 0.05

Czech Republic 0.45 0.9 0.41 0.52 2.53 0.88 5.69

Estonia 0.01 0.01 .. .. .. .. 0.02

Hungary .. 0.08 .. 0.03 0.07 0.03 0.21

Israel 1.23 0.85 0.63 0.92 1.18 1.07 5.88

Kuwait 1.84 1.95 0.36 -0.39 -0.8 -0.79 2.17

Lithuania .. .. .. .. 0.02 0.01 0.03

Poland 1.38 1.06 2.51 0.54 2.26 2.17 9.92

Romania .. .. .. .. .. 0.01 0.01

Slovak Republic 0.88 0.34 0.11 0.07 0.01 0.03 1.44

Thailand .. .. 0.01 0.01 0.01 0.01 0.04

Turkey 46.4 45.34 42.81 61.56 62.53 54.12 312.76

United Arab Emirates 1.41 3.15 5.15 1.69 21.21 9.89 42.5

Non-DAC Countries, Total 53.6 53.68 51.99 64.97 89.04 67.44 380.72

Multilaterals AsDB Special Funds 0.09 -0.95 -49.13 0.42 0.41 -0.19 -49.35

EBRD 2.1 0.71 0.72 0.2 .. .. 3.73

EU Institutions 7.42 12.35 9.43 16.24 13.26 17.39 76.09

GEF 8.55 .. 2.42 .. 6.01 19.15 36.13

Global Fund 2.78 5.43 4.59 14.78 12.64 18.93 59.15

IAEA .. 0.58 0.74 0.35 0.45 0.46 2.58

Isl.Dev Bank -0.55 -0.85 2.76 1.14 0.19 -0.7 1.99

UNAIDS 0.35 0.22 0.22 0.51 0.45 0.51 2.26

UNDP 0.87 1.14 0.68 0.84 0.68 0.83 5.04

UNFPA 0.61 0.56 0.58 0.59 0.6 0.89 3.83

UNHCR 0.86 0.84 0.64 0.97 0.57 0.46 4.34

UNICEF 1.37 1.1 1.14 1.05 1 1.25 6.91

UNTA 0.94 0.84 1.04 0.3 .. .. 3.12

Multilateral, Total 25.39 21.97 -24.17 37.39 36.26 58.98 155.82

All Development Partners Total 228.88 174.3 210.82 335.41 297.5 221.72 1,468.63

Source: OECD DAC Online database, Table 2a. Destination of Official Development Assistance and Official Aid - Disbursements, as of 03/09/2012.

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Annex Table 7: Economic and Social Indicators for Kazakhstan and Comparators, 2005- 2010

Series Name Kazakhstan Kazakhstan Ukraine Uzbekistan Russian ECA World

2005 2006 2007 2008 2009 2010 Average 2005-2010

Growth and Inflation

GDP growth (annual %) 9.7 10.7 8.9 3.3 1.2 7.3 6.9 1.6 8.2 4.1 1.4 2.3

GDP per capita growth (annual %) 8.7 9.5 7.7 2.0 -0.4 4.7 5.4 2.2 6.7 4.4 1.0 1.1

GNI per capita, PPP (current international $) 7,830.0 8,690.0 9,540.0 9,710.0 10,250.0 10,770.0 9,465.0 6,436.7 2,540.0 16,638.3 22,642.5 10,510.4

GNI, Atlas method (current US mil. $) 44,325.7 59,023.5 76,930.1 96,225.5 108,903.8 123,800.8 84,868.3 116769.5 23,357.1 1,107,785.8 19,097,460.1 56,721,244.9

Inflation, consumer prices (annual %) 7.6 8.6 10.8 17.2 7.3 7.1 9.8 14.3 .. 10.7 .. ..

Composition of GDP (%)

Agriculture, value added (% of GDP) 6.8 5.9 6.1 5.7 6.4 4.8 6.0 8.5 23.1 4.5 2.0 2.9

Industry, value added (% of GDP) 40.1 42.1 40.6 43.3 40.3 42.4 41.5 33.2 30.3 36.4 26.5 27.0

Services, etc., value added (% of GDP) 53.1 52.0 53.3 51.0 53.3 52.8 52.6 58.3 46.6 59.1 71.4 70.1

Gross fixed capital formation (% of GDP) 28.0 30.2 30.0 26.8 27.8 24.1 27.8 22.9 23.1 20.6 19.8 20.7

Gross domestic savings (% of GDP) 38.9 44.1 42.2 47.6 37.6 39.8 41.7 19.7 27.6 32.1 21.6 21.0

External Accounts

Exports of goods and services (% of GDP) 53.5 51.2 49.4 57.2 42.0 44.0 49.6 47.7 37.7 31.4 38.9 27.9

Imports of goods and services (% of GDP) 44.7 40.5 42.8 37.1 33.8 29.2 38.0 51.1 34.1 21.4 37.4 28.0

Current account balance (% of GDP) -1.8 -2.5 -7.9 4.7 -3.5 2.0 -1.5 -2.2 .. 6.9 .. ..

External debt (% of GDP) 84.5 101.3 104.1 94.2 108.4 94.3 97.8 61.9 21.5 28.4 .. ..

Total debt service (% of GNI) 25.6 20.2 29.6 29.3 25.2 36.2 27.7 12.7 3.6 4.6 .. ..

Total reserves in months of imports 2.7 5.2 3.4 3.3 5.2 5.3 4.2 4.8 .. 13.6 5.6 12.3

Fiscal Accounts /1

Revenue (% of GDP) 28.1 27.5 22.9 24.8 21.3 20.6 24.2 29.9 31.7 21.7 .. ..

Total Expenditure (% of GDP) 22.3 20.2 24.6 26.9 24.3 23.2 23.6 33.3 31.1 19.3 .. ..

Overall Balance After Grants (% of GDP) 5.8 7.2 -1.7 -2 -3 -2.5 0.6 -3.3 1.4 2.4 .. ..

Public Sector Gross Debt (% of GDP) .. .. 7.8 8.6 13.5 15.5 11.4 .. .. 9.1 .. ..

Social Indicators

Health

Life expectancy at birth, total (years) 65.9 66.2 66.5 67.0 68.4 66.8 68.3 67.5 67.2 74.8 69.0

Immunization, DPT (% of children ages 12-23 months) 98.0 99.0 93.0 99.0 98.0 99.0 97.7 93.7 97.7 98.0 95.4 83.1

Improved sanitation facilities (% of population with access) 97.0 97.0 97.0 95.0 98.5 87.0 94.0 60.6

Improved water source (% of population with access) 96.0 95.0 95.5 98.0 87.5 96.0 97.9 86.8

Mortality rate, infant (per 1,000 live births) 33.2 32.6 31.6 30.7 29.9 29.1 31.2 12.3 45.9 11.1 13.1 43.0

Population

Population, total (in million) 15.1 15.3 15.5 15.7 15.9 16.3 15.6 46.4 27.1 142.2 881.7 6,686.9

Population growth (annual %) 0.9 1.1 1.1 1.2 1.6 2.4 1.4 -0.6 1.4 -0.2 0.4 1.2

Urban population (% of total) 57.1 57.4 57.7 57.9 58.2 58.5 57.8 68.0 36.8 72.9 69.7 50.0

Education

School enrollment, preprimary (% gross) 34.0 35.6 37.9 38.7 38.6 .. 36.9 93.7 26.8 88.8 72.6 46.0

School enrollment, primary (% gross) 104.2 104.5 106.6 111.1 111.7 111.0 108.2 101.2 95.4 97.2 101.5 106.2

School enrollment, secondary (% gross) 95.3 94.9 92.8 91.7 93.9 97.0 94.3 94.0 102.2 85.1 95.8 66.9

1/ IMF. Kazakhstan June 2011 Article IV Consultations and The Economist Intelligence Unit database. Data for Revenue and Total Expenditure for Ukraine is the average of the years 2007 to 2010. Source: WB World Development Indicators for all indicators excluding Fiscal Accounts data.

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27


Annex Table 8: Kazakhstan - Millennium Development Goals 1990 1995 2000 2009

Goal 1: Eradicate extreme poverty and hunger

Employment to population ratio, 15+, total (%) 63 61 60 64

Employment to population ratio, ages 15-24, total (%) 46 44 42 42

Income share held by lowest 20% 9.5 6.7 8.1 8.7

Malnutrition prevalence, weight for age (% of children under 5) .. 6.7 3.8 ..

Poverty gap at $1.25 a day (PPP) (%) 1 1 1 1

Poverty headcount ratio at $1.25 a day (PPP) (% of population) 2 5 2 2

Prevalence of undernourishment (% of population) 5 5 8 5

Vulnerable employment, total (% of total employment) .. .. 40 ..

Goal 2: Achieve universal primary education

Literacy rate, youth female (% of females ages 15-24) 100 .. 100 100

Literacy rate, youth male (% of males ages 15-24) 100 .. 100 100

Persistence to last grade of primary, total (% of cohort) .. .. 96 99

Primary completion rate, total (% of relevant age group) .. 47 94 105

Total enrollment, primary (% net) .. .. 95 99

Goal 3: Promote gender equality and empower women

Proportion of seats held by women in national parliaments (%) .. 13 10 18

Ratio of female to male primary enrollment (%) .. 101 101 100

Ratio of female to male secondary enrollment (%) .. 103 102 98

Ratio of female to male tertiary enrollment (%) .. 125 118 145

Share of women employed in the nonagricultural sector (% of total nonagricultural employment) .. .. 48.4 ..

Goal 4: Reduce child mortality

Immunization, measles (% of children ages 12-23 months) 89 95 99 99

Mortality rate, infant (per 1,000 live births) 51 48 38 26

Mortality rate, under-5 (per 1,000) 60 56 44 29

Goal 5: Improve maternal health

Adolescent fertility rate (births per 1,000 women ages 15-19) .. .. 34 30

Births attended by skilled health staff (% of total) .. 100 99 ..

Contraceptive prevalence (% of women ages 15-49) .. 59 66 ..

Maternal mortality ratio (modeled estimate, per 100,000 live births) 78 76 59 45

Pregnant women receiving prenatal care (%) .. 93 91 ..

Unmet need for contraception (% of married women ages 15-49) .. 16 9 ..

Goal 6: Combat HIV/AIDS, malaria, and other diseases

Children with fever receiving antimalarial drugs (% of children under age 5 with fever) .. .. .. ..

Condom use, population ages 15-24, female (% of females ages 15-24) .. .. 32 ..

Condom use, population ages 15-24, male (% of males ages 15-24) .. .. 50 ..

Incidence of tuberculosis (per 100,000 people) 140 140 200 180

Prevalence of HIV, female (% ages 15-24) .. .. .. 0.1

Prevalence of HIV, male (% ages 15-24) .. .. .. 0

Prevalence of HIV, total (% of population ages 15-49) .. .. 0.1 0.1

Tuberculosis case detection rate (all forms) 48 51 88 85

Goal 7: Ensure environmental sustainability

CO2 emissions (kg per PPP $ of GDP) 3.6 2.9 1.8 1.3

CO2 emissions (metric tons per capita) 18.0 10.5 8.6 14.7

Forest area (% of land area) 1 1 1 1

Improved sanitation facilities (% of population with access) 96 96 97 97

Improved water source (% of population with access) 96 96 96 95

Marine protected areas (% of total surface area) .. .. .. 0

Terrestrial protected areas (% of total surface area) .. .. .. 2.8

Goal 8: Develop a global partnership for development

Debt service (PPG and IMF only, % of exports, excluding workers' remittances) .. 4 9 0

Internet users (per 100 people) 0.0 0.0 0.7 10.9

Mobile cellular subscriptions (per 100 people) 0 0 1 95

Net ODA received per capita (current US$) 7 4 13 21

Telephone lines (per 100 people) 8 12 12 22

Other

Fertility rate, total (births per woman) 2.7 2.3 1.8 2.6

GNI per capita, Atlas method (current US$) .. 1,280 1,260 6,920

GNI, Atlas method (current US$) (billions) .. 20.2 18.7 110.0

Gross capital formation (% of GDP) 31.5 19.9 18.5 30.4

Life expectancy at birth, total (years) 68 65 66 66

Literacy rate, adult total (% of people ages 15 and above) 98 .. 100 100

Population, total (millions) 16.3 15.8 14.9 15.9

Trade (% of GDP) 149.3 82.5 105.7 75.8

Source: World Development Indicators database as of 03/09/2012.

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Annex Table 9: List of IFC's investments in Kazakhstan that were active during FY05-11

Project ID

First Cmt FY

Closure FY

Project Status Primary Sector

Project Size

Net Equity

Net Loans

Total Net Commitment

Investments approved pre-FY05, but active during FY05-11

3946 1994 Active Finance & Insurance 2,000 2,000 0 2,000

7287 1997 2007 Closed Finance & Insurance 30,000 0 10,000 10,000

7416 1998 2008 Closed Oil, Gas and Mining 307,825 623 22,300 22,923


7837 1998 2007 Closed Primary Metals 132,500 0 19,500 19,500

8074 2000 Active Finance & Insurance 15,000 0 15,000 15,000



8940 1999 2006 Closed Nonmetallic Mineral Product Manufacturing 1,150 0 700 700

9098 1999 2007 Closed Primary Metals 238,110 0 11,234 11,234

9271 2000 2010 Closed Wholesale and Retail Trade 35,450 0 11,000 11,000

9862 2001 2008 Closed Accommodation & Tourism Services 7,570 0 2,500 2,500

9867 2000 2005 Closed Utilities 4,700 0 1,000 1,000



10411 2001 2006 Closed Oil, Gas and Mining 8 8 0 8

10448 2002 Active Collective Investment Vehicles 6,900 127 1,500 1,627

10558 2003 2005 Closed Accommodation & Tourism Services 22,000 0 3,000 3,000

10602 2002 2010 Closed Wholesale and Retail Trade 3,855 0 1,925 1,925



21332 2003 2006 Closed Oil, Gas and Mining 3,577 3,577 0 3,577

22526 2004 2006 Closed Oil, Gas and Mining 1,711 1,716 0 1,716

Investments approved pre-FY05, but active during FY05-11 Total 1,478,763 10,622 229,659 240,280

Investments approved in FY05-11

11507 2005 Active Finance & Insurance 6,200 1,099 5,000 6,099

23963 2005 Active Finance & Insurance 0 0 10,000 10,000

25659 2008 2010 Closed Wholesale and Retail Trade 30,000 0 0 0





26891 2009 Active Nonmetallic Mineral Product Manufacturing 245,000 14,343 50,000 64,343


27217 2009 2011 Closed Accommodation & Tourism Services 17,000 0 0 0


27476 2009 Active Construction and Real Estate 163,020 0 45,000 45,000

28071 2010 Active Finance & Insurance 185,000 86,123 85,000 171,123

28112 2010 Active Agriculture and Forestry 26,100 0 2,000 2,000


30249 2011 Active Pulp & Paper 4,250 0 2,250 2,250

30588 2011 Active Food & Beverages 13,384 0 13,384 13,384

30719 2011 Active Nonmetallic Mineral Product Manufacturing 3,000 3,000 0 3,000

Investments approved in FY05-11, Total 936,416 118,028 632,714 750,742

Grand Total 2,415,179 128,650 862,373 991,022

Source: IFC, June 2011

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Annex Table 10: List of IFC's Large Advisory Services in Kazakhstan, FY05-11

Project ID Project Name

Project Status

Approval FY

Primary Business Line

Start Date FY

End Date FY

Total Funds, US$

Advisory Services operations approved pre-FY05, but active during FY05-11

507141 Ispat Karmet SME Resource Closed FY05

Sustainable Business Advisory 2001 2009 182,021

522126

Kazakhstan Leasing Development Project Closed FY05 Access To Finance 2001 2006 324,425

Total 506,446

Advisory Services operations approved in FY05-11

534269

Central Asia Corporate Governance Project Active FY05

Sustainable Business Advisory 2006 2011 2,592,663

547628 CA Mortgage-KZH Closed FY07 Access To Finance 2007 2010 528,037

572850 TsATEK Power Company Closed FY10

Sustainable Business Advisory 2010 2010 200,000

Total 3,320,700

3,827,146

Source: IFC, June 2011

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Annex Table 11: Summary of Achievements of the CPS Objectives CAS 07-11: Pillar 1 Reducing losses in competitiveness through prudent management of the oil windfall and increased public sector efficiency

Objectives 1. Management of the oil windfalls (including transparency in oil revenues) 2. Management of the government’s MTFF 3. Local and central governments capacity to absorb public spending 4. Addressing various levels of corruption

Ongoing pre CPS 05-11 Support NA

New Lending Support P119856 Kazakhstan Development Policy Loan Approved FY10. Closed FY11. Latest IR: Moderately Satisfactory.

P120985 Kazakhstan: Strengthening the National Statistical System of Kazakhstan

Approved FY11. Active. Latest IR: Moderately Satisfactory.

P096998 Customs Development Project

Approved FY08. Active. Latest IR: Satisfactory.

P116696 Kazakhstan - Tax Administration Reform Project


Non-Lending Support (Grants

and Special Financing Projects)

P116536 Public Sector Audit Capacity Building IDF

Approved FY10. Active.

Planned AAA P078926 Programmatic Country Economic Memorandum (CEM) (ESW)

Delivered to Client FY05

P088990 Programmatic Public Expenditure and Institutional Review (PEIR) (ESW)


P107737 PFMR (1&2)* (ESW) Delivered to Client FY10

P114164 Revision of the Tax and Budget Codes (TA)


P112735 PPP (TA)


P111702 Survey of the quality of government services (TA)


Additional AAA P080299 Pension Policy Note (ESW)


P094894 SOE Corp Governance Pol Note (ESW)


P094972 ROSC (ESW)


P097614 E-Govt (ESW)


P096940 Tax Policy (ESW) Delivered to Client FY07

P102198 Pension Study (ESW) Delivered to Client FY07

P122536 DeMPA Assessment (ESW) Delivered to Client FY11

P126209 Economic Report 4 (ESW) Delivered to Client FY11

P119346 PFMR 3 (ESW)


P095545 Oil Revenus Management TA/Pol DLG (TA)


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P099510 Private Public Partnership (TA)


P094173 TA On Private Sector Acct & Audit (TA)


P102001 E-Govt Phase 2 (TA)


P096848 Mgmt & Gov Of State Sharehold (TA)


P102829 Private Partnership 1 (TA)


P104078 Kazakhstan Customs Peer-Learning Visits (TA)


P102360 Public Investment & Auditing (TA)


P102815 Tax Administration (TA)


P105979 Policy Advice On Par & Economic Policy (TA)


P108810 Pension System Support (TA)


P111105 Revision Of The Tax Code (TA)


P108530 Development Of Statistical Master Plan (TA)


P112861 Review Of The E-Gov Program (TA)


P113409 Public Administration Reform (TA)


P116757 Pension System Support (TA)


P113411 General Budget Transfers (TA)


P112839 Internal Audit (IA) Peer Learning Event (TA)


P112840 Pub Fin Audit Sys (TA)


P116691 Kazakhstan Tax Peer-Learning Visit (TA)


P117130 Brainstorming (TA)


P104941 Kazakhstan EITI (TA)


P118881 Fiscal Risk Mgmt In PPPs (TA)


P119510 Pension System (TA)


P119578 State Planning System’s Review (TA)


P119579 Improvement Of Nat'L. Fund Mgmt (TA)


P119580 Advisory Support to Ministry Of Justice (TA)


P119803 Kazakhstan EITI (TA)


P122034 Strengthening Statistical Capacity (TA)


P121252 Kazakhstan Small Business Taxation (TA)


P122958 Kazakhstan EITI (FY11) (TA) Delivered to Client FY11

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P124784 KZ Mining Strategy Development (TA)


P125614 FY11 - Brainstorming On Decentralization (TA)


P125839 KZ FY11-E-Governance Assessment (TA)


P125840 KZ FY11 - Top Civil Service Pay (TA)


P123735 Advisory Assistance on the New Financial Initiative In Rk (TA)


P123800 FY11-Brainstrming: Contingnt Liabil (TA)


P121378 Kazakh SMP Update (TA) Delivered to Client FY11

P114645 PROST (TA)


P119581 FY11-3Rd Astana Econ Form (ConFY10) (TA)


P124682 SSC - Phase 2 Study Tour (TA) Delivered to Client FY11

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CPS 07-11: Pillar 2 Promoting competitiveness by strengthening government’s capacity to identify and reduce barriers to business and private investors

Objectives 1. WTO accession and bilateral trade agreements 2. Technology transfer and commercialization of research and development 3. SME development and linkages 4. Agricultural support policies (including quality and safety standards)

Ongoing pre CPS 05-11 Support

P008510 Irrigation & Drainage Project Approved FY96. Closed FY05. IEG rating: Satisfactory.


Approved FY01. Closed FY11. IEG rating: Moderately Satisfactory

New Lending Support

P090695 Technology Commercialization Project

Approved FY08. Active. Latest IR: Moderately Unsatisfactory.

P058015 Agricultural Post-Privatization Assistance 2 Project (APL Phase 2)

Approved FY05. Closed FY12. Latest IR: Moderately Unsatisfactory.

P049721 Agricultural Competitiveness Project Approved FY05. Active. Latest IR: Moderately Satisfactory.

P096998 Customs Development Project Approved FY08. Active. Latest IR: Satisfactory.

Non-Lending Support (Grants

and Special Financing Projects)

P071525 Drylands Management GEF Project Approved FY03. Closed FY10. IEG rating: Satisfactory.

Planned AAA P113888 Analysis and forecasting of macroeconomic and financial sector risks (ESW)


P083571 Technical Assistance on WTO Accession (TA)


P104202 Technical Assistance on WTO Accession (TA)


P109614 Markets with limited competition (TA) Delivered to Client FY08

Additional AAA P083363 Fisheries Sector Study (ESW)


P092343 Tech & Competitiveness (ESW)


P092483 Financial Sector Reform (ESW)


P096661 Fin Systems Enhancement (ESW)


P092877 Agriculture Policy Assessment (ESW)


P110451 FSAP Update Kazakhstan (ESW)


P113823 Investment Climate Assessment (ICA) (ESW)


P119347 KER 3 (ESW)


P126209 Economic Report 4 (ESW)


P123561 Dev. Of Fair Competition (ESW)


P104409 Fodder & Pasture Mgt Stgy (TA)


P104082 Enhancing Competitiveness (TA)


P108783 Technoparks (TA)


P108938 Supply Chain Development (TA) Delivered to Client FY08

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P107930 Implementation of IFPS (TA)


P113805 Competition And Policy Work (TA)


P113817 FSAP Follow Up (TA)


P115729 Doing Business Reform in KZ (TA)


P116297 Economic Forum (TA)


P116813 Peer Learning - Study Tour (TA)


P115387 Establishment of the Financial Monitoring System AML/CFT System in KZ (TA)


P114772 Brainstorming on Fin. Volatility (TA)


P112504 Insolvency And Corporate Restructuring (TA)


P119266 KZ Doing Business Reform (TA)


P120592 Competition Policy (TA)


P119565 Devel. AML/CFT System In Kazakhstan (TA)


P113843 KZ Regional Devel. Brainstorming (TA)


P118069 KZ Competition Policy Intership (TA)


P118622 Kazakhstan - #8135 Strength. Catastrop (TA)


P121252 Kazakhstan Small Business Taxation (TA)


P123559 KZ Technological Innovations (TA)


P123638 KZ Doing Business Reforms (TA)


P123668 KZ Competion Protec & Dev Goods Mkt (TA)


P123669 KZ Expansion Of Kz Enterprises In Gvc (TA)


P123680 KZ Insolvency System Improvement (TA)


P127167 KZ DB Study Tour (Funded By Gvt) (TA)


P123670 KZ Tech. Mod. & Restruct. of Enter (TA)


P124686 Further Development Of Kazakh Financial Monitoring System (TA)


P108724 KZ Financial Sector Monitoring (TA)


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CPS 07-11: Pillar 3 Building the foundation for future competitiveness by investing in human capital and basic infrastructure

Objectives 1. Health (including HIV/AIDS) 2. Education 3. Basic services (water, heat, power) 4. Transport (including roads and railway modernization)

Ongoing pre CPS 05-11 Support

P008499 Road Transport Restructuring Project

Approved FY99. Closed FY08.

IEG rating: Satisfactory.

P065414 Electricity Transmission Rehabilitation Project


IEG rating: Satisfactory.

P059803 Nura River Clean-Up Project


Latest IR: Moderately Satisfactory.

P102177 Technical & Vocational Education Modernization (TVEM)


New Lending Support P102177 Technical & Vocational Education Modernization (TVEM)

Approved FY11. Active. NA

P101928 Health Sector Technology Transfer and Institutional Reform


P099270 South-West Roads: Western Europe-Western China International Transit Corridor (CAREC 1B & 6B)


P095155 North-South Electricity Transmission Project


Latest IR: Satisfactory.

P116919 Alma Transmission Project


P114766 Kazakhstan Moinak Electricity Transmission Project


Non-Lending Support (Grants and Special Financing Projects)

NA

Planned AAA P093099 Health Sector Reform (ESW)


P097536 Education Sector Reform (ESW)


P112991 Poverty Assessment (ESW)


P090550 Water-Energy consortium (ESW)


P088643 Transport Sector Strategy (ESW)


P111933 Survey of the quality of Health and Education services (ESW)


P090555 Territorial Development Program (TA)


P111702 Survey of the quality of government services (TA)


P115189 Reform of utility tariffs (TA) Delivered to Client FY09

Additional AAA P104563 Educ And Innov Dev (ESW)


P106271 Utilities Tariff Reform (ESW) Delivered to Client FY07

P119511 Improvements In Social Safety Net (ESW)


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36


P091159 Water Sector Dialog (TA)


P079077 Health Dialogue (TA)


P097855 Health Dialogue (TA)


P102271 Health Care Qual (TA) Delivered to Client FY07

P090494 Private Partnership 2 (TA)


P107949 Utilities Tariff Reform 2 (TA)


P114472 Higher Education (TA)


P118879 HCS/ Water & Sanitation (TA)


P120177 Higher Education (TA)


P120943 Secondary Education (TA)


P121978 Water Tariffs Lac Workshops (TA)


P119496 Development of a New Sample for HBS (TA)


P114771 Options Formalization Self Employment (TA)


P125650 Comparative Analysis SSN (TA)


Annexes

37


CPS 07-11: Pillar 4 Ensuring future growth will not harm the environment and past liabilities are mitigated

Objectives 1. Consequences of growth on the environment 2. Regional environmental issues

Ongoing pre CAS 07-11

Support

P008507 Uzen Oil Field Rehabilitation Project

Approved FY07. Closed FY07. IEG rating: Satisfactory.


Approved FY01. Closed FY11. IEG rating: Moderately Satisfactory.

P059803 Nura River Clean-Up Project

Approved FY03. Closed FY11. Latest IR: Moderately Satisfactory

P008500 Atyrau Pilot Water Supply & Sanitation Project

Approved FY99. Closed FY05. IEG rating: Satisfactory

New Lending Support

P078342 Ust-Kamenogorsk Environmental Remediation Project


P078301 Forest Protection & Reforestation Project


Non-Lending Support

(Grants and Special

Financing Projects)

P071525 Drylands Management GEF Project Approved FY03. Closed FY10. IEG rating: Satisfactory.

Planned AAA

P090555 Territorial Development Program (TA)


P085460 Environmental Control and Strategic Assessment (TA)


Additional AAA NA

for official use only public disclosure authorized cpscr...

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