1

DRAFT FOR DISCUSSION

OECS REGIONAL PARTNERSHIP

STRATEGY FY15-19

2

OECS Context

Lessons Learned

Prioriti zation Criteria

Proposed RPS FY15-19 Program

Issues for Discussion

OUTLINE

3

OECS REGIONAL PARTNERSHIP STRATEGY FY15-19

OECS CONTEXT

4

OECS COUNTRIES FACE A NUMBER OF COMMON CHALLENGES

Weak macro framework:Insufficient growth

High debt Limited fiscal space

Low competitiveness and productivity

Dependence on a few economic sectors

Unfavorable investment climate

Infrastructure gapsHigh cost of energy

Low connectivity

Mismatches between skills and job market

needs

Public Sector weaknesses Weak financial resilience

Vulnerability to Natural Disasters

Fragile social resilience

5

THE LAST DECADE WAS MARKED BY SUBDUED GROWTH AND HIGH DEBT LEVELS

Slow growth High debt

-2.0

0.20.5 0.5 0.7

0.9 1.0 1.1 1.2 1.2 1.2 1.3 1.4 1.4 1.4 1.51.7 1.7 1.8 1.8 1.8 1.9 1.9

2.1 2.2 2.32.5 2.5 2.5 2.6

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

Zim

babw

e

Mic

rone

sia

The

Bah

amas

Jam

aica

Pal

au

Tuv

alu

Ton

ga

Hai

ti

Bru

nei D

arus

sala

m

Hun

gary

Bar

bado

s

Mar

shal

l Isl

ands

Erit

rea

Fiji

St.

Kitt

s an

d N

evis

Cro

atia

Ant

igua

and

Bar

buda

Kiri

bati

Côt

e d'

Ivoi

re

Com

oros

Gre

nada

Sw

azila

nd

El S

alva

dor

St.

Vin

cent

and

the

Gre

nadi

nes

Cen

tral

Afr

ican

Rep

ublic

Sam

oa

Yem

en

Gab

on

Gui

nea

St.

Luci

a

Slowest Growing Emerging Markets and Developing Countries 2003-2012

Source: IMF –WEO

Av. 4.8for 153 emerging

markets and developing countries

Av. 3.6for 32 LAC countries

147140

126113

103 9889 89

83 80 80 80 79 78 78 77 77 76 73 72 72 70 68 67 64 62 61 60 60 60

0

20

40

60

80

100

120

140

160

Jam

aica

Leba

non

Erit

rea

Gre

nada

Cap

e V

erde

Sud

an

St.

Kitt

s an

d N

evis

Ant

igua

and

Bar

buda

Sey

chel

les

Egy

pt

Mau

ritan

ia

Jord

an

Hun

gary

St.

Luci

a

Bel

ize

Mal

dive

s

The

Gam

bia

São

Tom

é an

d P

rínc

ipe

Bar

bado

s

Dom

inic

a

Bhu

tan

St.

Vin

cent

and

the

Gre

nadi

nes

Bra

zil

Indi

a

Ser

bia

Pak

ista

n

Alb

ania

Zim

babw

e

Guy

ana

Mar

shal

l Isl

ands

Emerging Markets and Developing Countries with General Government Gross Debt above 60 percent of GDP in 2012

Source: IMF -WEO

The debt-to-GDP ratio is high and above the emerging markets and developing countries average in most Caribbean countries.

In p

erce

nt

Av. 44.1

for 139 emerging

markets and developing countries

48

77

2214

26

0

10

20

30

40

50

60

70

80

90

St. Kitts and Nevis Jamaica Barbados Grenada Grenada Antigua and Barbuda

Debt Service to Total Revenue Ratios in 2011 for Countries in the Caribbean with Debt Ratios above 90 percent of GDP

Av. 5 countries 38

Source: IMF, Peron, G.N. (2013)

Per

cent

of R

even

ue a

nd G

rant

s

6

THE INCIDENCE AND COSTS OF DISASTERS HAVE INCREASED

Select Damages from Disasters (% of GDP)

Evoluti on of Damages from Disasters (US$ millions)

1961 - 1970

1971 - 1980

1981 - 1990

1991 - 2000

2001 - 2010

$0

$2,000

$4,000

SurinameSt. VincentSt. LuciaDominicaABBelizeGuyanaSt. Kitts & NevisGrenadaJamaicaDR

Souce: EM-DAT

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LOW GROWTH, DISASTERS, AND INSUFFICIENT INCLUSIVENESS HAVE IMPACTED POVERTY

8

Growth: Address key obstacles to growth, including in the investment

climate and infrastructure Facilitate private sector development and job creation Accelerate public sector modernization

Inclusiveness: Enhance shared prosperity, accelerate poverty reduction, address

gender issues, strengthen social protection, enhance employability (esp. women, youth)

Sustainability: Build economic, financial, fiscal, environmental, and social

resilience

GIVEN THIS BACKGROUND, OECS COUNTRIES FACE A NUMBER OF INTERRELATED DEVELOPMENT PRIORITIES

LAYING THE FOUNDATIONS FOR A RETURN TO SUSTAINABLE INCLUSIVE GROWTH

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OECS REGIONAL PARTNERSHIP STRATEGY FY15-19

LESSONS LEARNED

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Key Pillars

Building resilienceEnhancing

competi ti veness and sti mulati ng growth over the medium term

What we have achievedComprehensive Debt

Framework Caribbean Growth ForumComprehensive framework

for Disaster Risk Management

Approach to improve skil ls and build up ICT competences

Successful acti viti es in Energy, Public Sector, Agriculture & Social Safety Nets

OUR CURRENT PROGRAM(OECS RPS 2010-14)

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LESSONS LEARNED Flexibi l ity is required to respond

to evolving circumstances Alignment to nati onal prioriti es

ensures stronger ownership A combinati on of regional and

nati onal support enhances results Coordinati on with other

development partners enhances impact and effi ciency

Enhanced selecti vity enables sharper focus and greater impact

Quality of project designs and implementati on fl exibil ity are key

PROPOSED SOLUTIONS GOING FORWARD

CPS based on one focused overal l objecti ve and a few key pi l lars and interventi ons

A steering committ ee wi l l be establ ished with key development partners and government representati ve

Support wi l l be provided for regional prioriti es, with implemetati on at nati onal level (e.g. , tourism)

We wi l l use of APLs for greater fl exibi l i ty

We wi l l br inging the enti re World Bank Group to the OECS

LESSONS FROM THE OECS RPS 2010-14

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OECS REGIONAL PARTNERSHIP STRATEGY FY15-19

PRIORITIZATION CRITERIA

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Which:

Have a transformational impact on OECS economies

Are aligned with regional and national priorities

Will help us achieve, in the OECS, the WBG twin goals

to eradicate poverty and boost shared prosperity

Coincide with areas where the WBG can bring value-

added or has a strong ongoing engagement

WE PROPOSE TO FOCUS OUR SUPPORT ON SELECTIVE AREAS

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OECS REGIONAL PARTNERSHIP STRATEGY FY15-19

PROPOSED RPS FY15-19 PROGRAM

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PROPOSED STRUCTURE OF THE RPS FY15-19

PILLAR 1: REVITALIZING SOURCES OF

GROWTHFocus Area 1

Facilitating private sector development and job creation

Objective 1:Removing key constraints to

growth

Objective 2 Fostering industries

with the highest potential for inclusive

sustainable growth

Focus Area 2Enhancing the effectiveness

of the public sector

Objective 3 Promoting a more

effective Public Financial

Management

Objective 4 Improving

institutional capacity

PILLAR 2: STRENGTHENING RESILIENCEFocus Area 3

Managing Disaster Risks

Objective 5 Increasing capacity of OECS

governments to manage natural hazards or climate

change impacts

Focus Area 4 Increasing social

resilience

Objective 6 Building the OECS human capital and

strengthening the productivity of its labor force

Objective 7 Strengthening

the efficiency and responsiveness

of social protection programs

Focus Area 5Improving financial

resilience

Objective 8 Promoting economic,

fiscal and financial resilience

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Objecti ve 1: Removing key constraints to growth Improve the business environment and investment climate Strengthen the capacity of fi nancial institutions to provide funding to

support growth of the economy Foster entrepreneurship and innovation Address critical infrastructure and connectivity gaps

Objecti ve 2: Fostering industries with the highest potenti al for inclusive sustainable growth

Tourism Agriculture/Agribusiness ICT/Creative industries Logistics/Transport

FOCUS AREA 1: FACILITATING PRIVATE SECTOR DEVELOPMENT & JOB CREATION

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Objecti ve 3: Promoti ng a more eff ecti ve Public Financial Management

Improve public financial and fi scal management and administration Increase quality of public service delivery Improve customs administration Enhance transparency of public information Strengthen State-Owned Enterprise (SOE) management, when suitable

Objecti ve 4: Improving insti tuti onal capacity Strengthen institutional capacity of the public sector Build PPP capacity and a pipeline of bankable transactions

FOCUS AREA 2: ENHANCING THE EFFECTIVENESS OF THE PUBLIC SECTOR

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FOCUS AREA 3: MANAGING DISASTER RISKS

Establish effective administrative systems for post-disaster approval, transfer and

monitoring of funds

Reduce contingent liability

Reduce disaster impact through integrating risk information in public investments

Reduce economic impact bycreating incentives for private sector resilience

Assess and quantify risks

Define and measure contingent liabilities

Pre-Disaster

Post-Disaster

Reduce Financial Risk

Secure Financing

Deploy and Monitor Funding

Assess Risks

Assess Risk Reduce Disaster Risk

Objecti ve 5: Increasing the capacity of OECS countries to manage natural hazards or cl imate change impacts

Integrate disaster risk in fiscal risk and public debt management

Improve post-disaster budget response capacity

Clarify post-disaster financial assistance

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Objecti ve 6: Building the OECS human capital and strengthening the producti vity of its labor force

Improve quality standards for education Upgrade skills for jobs Enhance capacity to plan, implement and monitor Non Communicable

Diseases (NCDs)

Objecti ve 7: Strengthen the effi ciency and responsiveness of social protecti on programs

Consolidate systems Strengthen effi ciency Improve targeting and effectiveness

FOCUS AREA 4: INCREASING SOCIAL RESILIENCE

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Objective 8: Promoti ng economic, fiscal and fi nancial resilience

Enhance risk managementReduce vulnerability to external shocksStrengthen banking and non banking sectorEnhance fiscal and debt sustainability

FOCUS AREA 5: IMPROVING FINANCIAL RESILIENCE

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PROPOSED LENDING PROGRAM

FY15 FY16 FY17

Regional DPL/APL Financial Sector

DPL-III Grenada Regional APL CGF Reform Implementation

DPL-II Grenada Regional APL Geothermal Project

Regional APL Tourism Sector

Regional APL Agriculture Competitiveness

Regional APL Social Vulnerability Reduction

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IBRD envelope FY15-19 USD 120mln (up to USD 20mln per country)

IDA-17 envelope (FY15-17) not yet known; estimated at around SDR 50 mln (roughly USD 75 mln)DOM: SDR 11.3 mln (USD 17mln)GRE: SDR 11.6 mln (USD 17.4 mln) SLU: SDR 14.8 mln (USD 22.2 mln) SVG: SDR 12.6 mln (USD 18.9 mln)

FINANCIAL ENVELOPE (ASSUMPTIONS)

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OECS REGIONAL PARTNERSHIP STRATEGY FY15-19

ISSUES FOR DISCUSSION

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Are we focusing on the right strategic prioriti es? Are there

criti cal areas missing? Can this program have a

transformati onal impact?

Which area would the OECS need additi onal assistance? Which

areas suff ers from knowledge gaps?

Are there lessons to incorporate on the way we work? Are there

things we can do bett er?

ISSUES FOR DISCUSSION