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Document of The World Bank

Report No: ICR00003207

IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-H3880)

ON A

GRANT

IN THE AMOUNT OF SDR 1.9 MILLION (US$ 3.0 MILLION EQUIVALENT)

TO THE

GOVERNMENT OF THE KYRGYZ REPUBLIC

FOR A

CAPACITY BUILDING FOR ECONOMIC MANAGEMENT PROJECT

April 30, 2015 Macroeconomic and Fiscal Management Global Practice Central Asia Country Unit (ECCU8) Europe and Central Asia Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective as of April 25, 2015)

Currency Unit = Kyrgyz Som (KGS)

US$ 1.00 = KGS 61.0968

FISCAL YEAR January 1-December 31

ABBREVIATIONS AND ACRONYMS

ADB Asian Development Bank CADII Central Agency for Development, Investments and Innovation CAS Country Assistance Strategy 2007-2010 CBEM Capacity Building for Economic Management CIS Confederation of Independent States EU European Union GTZ German Aid Agency ICRR Implementation Completion Results Report HRM Human Resources Management IDA International Development Assistance IEG Implementation Evaluation Group (WB) IMF International Monetary Fund JCSS Joint Country Support Strategy M&E Monitoring and Evaluation MEDT Ministry of Economic Development and Trade MOE Ministry of Education MOF Ministry of Finance NBKR National Bank of the Kyrgyz Republic NGO Non-governmental Organization OECD Organization for Economic Co-operation and Development PAD Project Appraisal Document PDG Policy Development Group PDO Project Development Objective PIU Project Implementation Units PM Prime Minister PPP Public Private Partnerships PSRR Public Sector Reform Roadmap RIA Regulatory Impact Assessment RMSM Revised Minimum Standard Model SECO Swiss Economic Cooperation SC Steering Committee TA Technical Assistance USAID United States Aid VAT Value Added Tax WB World Bank

Vice President: Laura Tuck Country Director: Saroj Kumar Jha

Senior Director Marcelo Giugale Practice Director Satu Kahkonen Practice Manager Miria Pigato

Project Team Leader Bakyt Dubashov ICR Team Leader Kamer Karakurum Ozdemir

Kyrgyz Republic

Capacity Building for Economic Management Project

CONTENTS

Data Sheet A. Basic Information .................................................................................................................... i B. Key Dates ................................................................................................................................. i C. Ratings Summary .................................................................................................................... i D. Sector and Theme Codes ....................................................................................................... ii E. Bank Staff ............................................................................................................................... ii F. Results Framework Analysis ................................................................................................. ii G. Ratings of Project Performance in ISRs ............................................................................ vii H. Restructuring (if any) .......................................................................................................... vii I. Disbursement Profile ........................................................................................................... viii 1. Project Context, Development Objectives and Design ............................................................. 1 2. Key Factors Affecting Implementation and Outcomes ............................................................. 3 3. Assessment of Outcomes .......................................................................................................... 9 4. Assessment of Risk to Development Outcome ....................................................................... 11 5. Assessment of Bank and Borrower Performance ................................................................... 11 6. Lessons Learned ..................................................................................................................... 13 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ......................... 14 Annex 1. Project Costs and Financing ........................................................................................ 15 Annex 2. Outputs by Component ............................................................................................... 16 Annex 3. Economic and Financial Analysis ............................................................................... 19 Annex 4. Bank Lending and Implementation Support/Supervision Processes ........................... 20 Annex 5. Beneficiary Survey Results ......................................................................................... 21 Annex 6. Stakeholder Workshop Report and Results ................................................................. 22 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ................................... 23 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ..................................... 27 Annex 9. List of Supporting Documents .................................................................................... 28

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A. Basic Information

Country: Kyrgyz Republic Project Name: Capacity Building for Economic Management Grant

Project ID: P108525 L/C/TF Number(s): IDA-H3880

ICR Date: 04/30/2015 ICR Type: Core ICR

Lending Instrument: TAL Borrower: KYRGYZ REPUBLIC

Original Total Commitment:

XDR 1.90M Disbursed Amount: XDR 1.84M

Revised Amount: XDR 1.84M

Environmental Category: C

Implementing Agencies: Ministry of Economy

Cofinanciers and Other External Partners: B. Key Dates

Process Date Process Original Date Revised / Actual

Date(s)

Concept Review: 03/12/2008 Effectiveness: 12/18/2008 12/18/2008

Appraisal: 05/08/2008 Restructuring(s): 11/10/2011 03/04/2013 10/30/2013

Approval: 07/01/2008 Mid-term Review:

Closing: 12/31/2012 06/30/2014 C. Ratings Summary C.1 Performance Rating by ICR

Outcomes: Moderately Satisfactory

Risk to Development Outcome: Moderate

Bank Performance: Moderately Satisfactory

Borrower Performance: Moderately Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)

Bank Ratings Borrower Ratings Quality at Entry: Moderately satisfactory Government: Moderately satisfactory

Quality of Supervision: Moderately satisfactoryImplementing Agency/Agencies:

Moderately satisfactory

Overall Bank Performance:

Moderately satisfactoryOverall Borrower Performance:

Moderately satisfactory

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C.3 Quality at Entry and Implementation Performance Indicators Implementation

Performance Indicators

QAG Assessments (if any)

Rating

Potential Problem Project at any time (Yes/No):

No Quality at Entry (QEA):

None

Problem Project at any time (Yes/No):

Yes Quality of Supervision (QSA):

None

DO rating before Closing/Inactive status:

Moderately Satisfactory

D. Sector and Theme Codes

Original Actual

Sector Code (as % of total Bank financing)

Central government administration 100

Theme Code (as % of total Bank financing)

Administrative and civil service reform 24

Analysis of economic growth 25

Macroeconomic management 25

Public expenditure, financial management and procurement

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Regulation and competition policy 13 E. Bank Staff

Positions At ICR At Approval

Vice President: Laura Tuck Shigeo Katsu

Country Director: Saroj Kumar Jha Annette Dixon

Practice Manager/Manager:

Miria Pigato Kazi Mahbub-Al Matin

Project Team Leader: Bakyt Dubashov Roland Clark and Ekaterina Vashakmadze

ICR Team Leader: Kamer Karakurum Ozdemir

ICR Primary Author: Kamer Karakurum Ozdemir F. Results Framework Analysis Project Development Objectives The objective of the Project is to assist the Recipient in establishing and institutionalizing an efficient and effective framework for formulating and implementing sustainable economic policies

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as well as in enhancing the capacity of public institutions responsible for the development and implementation of such policies to formulate and carry out the policies. The most important project objectives are: a) contribute to government-wide coherent macro-economic policy development and decision making through establishing strong inter-ministerial coordination and interface; b) support process of economic policy development and implementation through enabling public institutions (and particularly the MEDT, through capacity building and restructuring) to formulate sound and analytically informed policy measure and proposals; and c) support reform of employment practices and wages in the civil service by building the capacity in a special task force in this area. Revised Project Development Objectives (a) PDO Indicators

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised Target Values

Actual Value Achieved at Completion or

Target Years

Indicator 1: Enhanced interministerial coordination and capacity to ensure a coherent economic policy decision-making process.

Value quantitative or Qualitative)

Poor coordination

Procedures formalized and coordination mechanisms established; Regular meetings of coordination committee with relevant agenda.

N/A

Met. The government adopted a system for economic forecasting and a procedure for socio-economic development prognosis. A macroeconomic and investment policy coordination council and a technical group on financial programming have been established.

Date achieved 12/31/2013 Comments (incl. % achievement)

The meetings of the macroeconomic and investment policy council occur as needed with no predetermined time schedule. (60%)

Indicator 2: Public institutions (and particularly the MEDT, through capacity building and restructuring) are enabled to formulate sound and analytically informed policy measure and proposals.


MEDT has old dysfunctional structure and low analytical capacity.

MEDT reorganized consistent with new structure.

N/A

Met. The new structure of the Ministry of Economy has been adopted and better suited to carry out the tasks assigned to the Ministry.

Date achieved 06/30/2014

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Comments (incl. % achievement)

Frequent restructurings within the government were an impediment to establishing capacity. (60%)

Indicator 3 : Capacity for carrying out a reform of wages and employment in the civil service, together with options developed.


No existing capacity to carry out a pay reform.

Salary task force presents options for wage and employment reform.

N/A

Met. The government adopted a new wage system for civil servants and is implementing measures to improve remuneration in the civil service.


In addition to the new wage system, the government adopted a regulation to evaluate civil servants' performance, requirements standards and job instructions for the civil servants. (75%)

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised

Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1: Presidential Decree/Government Regulation which (a) clearly defines roles and responsibilities in economic policy design, implementation and evaluation at central level, and (b) establishes an effective coordination mechanism.

Value (quantitative or Qualitative)

No existing coordination procedures

Coordination procedures formalized in decree or regulation. Agreement reached on composition and agenda of coordination committee.

N/A

Met. The macroeconomic and investment policy council was established (the regulation and composition of the council).


To support the work of the council, a technical group on financial programming was also established. (100%)

Indicator 2: Regular meetings of coordination group taking place, with appropriate agenda and relatively few major economic policy decisions being taken outside the mechanism.


N/A Coordination committee meeting regularly

N/A Not met. The macroeconomic and investment policy

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with substantive appropriate agenda.

council meets only as needed with no predetermined regular schedule.

Date achieved Comments (incl. % achievement)

The technical group on financial programming meets regularly, while the high-level coordination council does not. (50%)

Indicator 3 : Publication of macroeconomic and fiscal forecasts with evidence that these forecasts provide the basis for budget and economic policy discussions.


Not currently published.

Publication of more detailed forecasts at least twice during the year, and evidence that forecasts form the basis of budget planning.

N/A

Met. The government publishes the Mid-term Socio-economic Development Prognosis, the Mid-term Budget Framework and annual budget laws with explanatory notes, once a year.


These documents are published on the Ministry of Finance and the Ministry of Economy web-sites once a year, rather than twice a year. (90%)

Indicator 4: New structure of MEDT corresponds to that proposed in the SDP.


Dysfunctional current structure.

MEAMP reorganized consistent with new structure.

N/A

Met. The new structure of the Ministry of Economy has been adopted and is adequate to address the tasks assigned to the Ministry.


The current structure is adequate to address the assigned tasks. (75%)

Indicator 5: Satisfactory implementation (according to private sector surveys) of significant measures to improve the business environment proposed by the investment council.


N/A

Surveys indicate progress in other areas of business environment and increase satisfaction with

N/A

Not met. The 2013 BEEPS results suggest that companies' perceptions of various aspects of the business climate

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the performance of IC and MEDT.

have improved since 2008. According to surveys conducted by the Bishkek International Business Council, the business environment improved in some areas.

Date achieved


According to the National Statistics Committee, the trust of the population to the Ministry of Economy and the quality of services by the Ministry improved but still remain low. (50%)

Indicator 6 : High quality policy papers are produced and subsequently translated into policy decisions.


N/A

At least six policy papers developed, of which three are judged to be of high quality and at least one forms the basis of a significant policy decision.

N/A Met. Eight studies have been conducted.


The studies included the following themes: the shadow economy, the tourism sector, corruption, the impact of the accession to the CU on the textile industry, the fiscal and monetary policies and economic institutions. (75%)

Indicator 7: Pay and grading reform group established.


No existing task force.

Salary task force established and basic data collected.

N/A

Met. The task force was established and it developed and basic data was collected.


Action fully achieved. (100%)

Indicator 8: Options paper for pay reform is produced.


N/A


N/A

Met. The task force developed and submitted the civil service wage strategy and an action plan to

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implement the strategy.

Date achieved 06/30/2013


The government adopted a new wage system for civil servants and is implementing measures to improve remuneration in the civil service. It also adopted a regulation to evaluate civil servants' performance, requirements standards and job instructions. (90%)

G. Ratings of Project Performance in ISRs

No. Date ISR Archived

DO IP Actual

Disbursements (USD millions)

1 06/25/2009 Satisfactory Satisfactory 0.10 2 01/30/2010 Satisfactory Satisfactory 0.24

3 12/31/2010 Moderately

Unsatisfactory Moderately

Unsatisfactory 0.39

4 07/08/2011 Moderately Satisfactory Moderately Satisfactory 0.48 5 03/26/2012 Moderately Satisfactory Moderately Satisfactory 0.98 6 09/12/2012 Moderately Satisfactory Moderately Satisfactory 1.41 7 02/27/2013 Moderately Satisfactory Moderately Satisfactory 1.91 8 10/08/2013 Moderately Satisfactory Moderately Satisfactory 2.12 9 04/26/2014 Moderately Satisfactory Moderately Satisfactory 2.46

10 06/21/2014 Moderately Satisfactory Moderately Satisfactory 2.60 H. Restructuring (if any)

Restructuring Date(s)

Board Approved

PDO Change

ISR Ratings at Restructuring

Amount Disbursed at

Restructuring in USD millions

Reason for Restructuring & Key Changes Made

DO IP

11/10/2011 MS MS 0.71 Reallocation among categories.

02/13/2013 MS MS 1.7

Extension of the closing date and reallocation among categories with the aim of strengthening the capacity of the Ministry of Economy in its current and new policy priorities including anti-corruption.

10/30/2013 MS MS 2.15

Extension of the closing date and reallocation among categories to further strengthen capacity of the Ministry of Economy.

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I. Disbursement Profile

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1. Project Context, Development Objectives and Design

1.1 Context at Appraisal Kyrgyz Republic has faced overwhelming development challenges in the post-1991 transition. Growth has been sporadic and average growth rate during 1996-2006 was below many other CIS. Among the main constraints to a better economic performance were heavy involvement of the public sector, weak governance and flaws in public administration, leading to a poor business environment. According to the 2005 Investment Climate Assessment while the authorities made significant upgrades to the legal framework for doing business, weak implementation capacity and lack of enforcement mechanisms undermined the impact of the regulatory reforms. The project appraisal document thus identified the following as the key development issues facing the authorities in achieving high and sustainable growth: (i) the development of the capacity to maintain macroeconomic stability using domestic institutional and analytical capacities; (ii) the ability to develop and implement policies to improve the business environment; and (iii) the need to build and retain capacity in the public sector for both of these objectives. The project was grounded in the Joint Country Support Strategy (JCSS) which underlined business environment as a one of the key areas of engagement and suggested that capacity building in economic policy formulation and implementation will be critical. While other donors such as USAID, GTZ and the EU have also been involved in activities aiming to improve the business environment, the appraisal document of the project argues the Bank has a clear comparative advantage. This is due to the Bank’s ability to provide direct support for capacity building to the Ministry of Economy and support policy coordination at the government level, building on the Bank’s ongoing engagement on public financial management reform and through the Country Economic Memorandum TA.

1.2 Original Project Development Objectives (PDO) and Key Indicators

The objective of the Project was to assist the Recipient in establishing and institutionalizing an efficient and effective framework for formulating and implementing sustainable economic policies as well as in enhancing the capacity of public institutions responsible for the development and implementation of such policies to formulate and carry out the policies. The most important project objectives were: a) contribute to government-wide coherent macro-economic policy development and decision making through establishing strong inter-ministerial coordination and interface; b) support process of economic policy development and implementation through enabling public institutions (and particularly the MEDT, through capacity building and restructuring) to formulate sound and analytically informed policy measure and proposals; and c) support reform of employment practices and wages in the civil service by building the capacity in a special task force in this area.

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1.3 Revised PDO and Key Indicators, and Reasons/Justification There was no revision to the original PDO.

1.4 Main Beneficiaries, The main direct beneficiary of the project is the Ministry of Economy through the second component on capacity building in improving economic policy making and implementation. The first component on improving the inter-agency coordination has aimed multiple agencies including the Ministry of Finance and the Government’s office. Similarly, the third component on the pay and grading reform has been aimed at benefitting all civil servants across government agencies.

1.5 Original Components The project was aimed at financing training, consultancy services and capacity building in the following areas:

Component 1. Institutional and technical framework for government-wide macroeconomic policy development and co-ordination (US$0.563 million);

Component II. Strengthening the capacity of MEDT and the MOF to fulfill an effective role in macro-economic analytical work and policy development (US$1.969 million);

Component III. Development of capacity to carry out a pay and grading reform in the civil service (US$0.381 million); and

Component IV. Project management and coordination (US$0.328million) The project emphasized building local capacity and wherever possible the use of local consultants and resources. In addition, the project recognized that one of the key constraints to any institutional reform process is the difficulty in attracting and retaining skilled personnel given the poor remunerations and incentives. It therefore supported the use of locally financed salary supplements for key officials engaged in the reform process, after their selection through a competitive and transparent process. The use of such supplements was suggested as a means to initiate a virtual circle whereby through recruiting and retaining qualified professionals, the quality of the working environment in selected areas of the public sector is raised, and disincentives are reduced. Moreover it was foreseen that the practice of provision of such incentives may be extended as an interim measure until a full pay and grading reform would be instituted for the Civil Service, on the basis of the detailed work carried out by the Salary Task Force supported under component three. The salary supplements would be paid by the authorities as co-financing of the project, and would constitute the first phase of a reform program that would extend beyond the life of the project, in which such supplements would be incorporated into a revised salary structure, on a timescale consistent with resources available, to ensure that all institutional changes supported by the project are sustained and extended.

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1.6 Revised Components There were no substantive revisions to the components of the project. However the March 4, 2013 Level 2 restructuring aimed at reallocating funds to support the Government reform on anti-corruption under Component 2.

1.7 Other significant changes There were two extensions to the closing date of the project. The original closing date of December 31, 2012 was first extended to December 31, 2013 and then to June 30, 2014. The main rationale for the first extension was the late start to the project which was at least partly due to the turbulence in the Kyrgyz Republic during this period (2010 revolution and price and supply shocks). The second extension aimed to continue supporting monitoring and evaluation of anti-corruption policies, which was brought under the mandate of the Ministry of Economy during the implementation phase of the CBEM. In addition, three rounds of reallocation of funds were made during the life of the project, as displayed in Table 1 below. While the shares of the Consultants Services and Training and Study Tours categories changed only marginally, the share of the Operating Costs category increased from 5 percent to 14 percent.

(in SDRs) Initial

Dec 2008

Initial (%

share) Revised

Nov 2011 Revised

March 2013

Revised March 2014

Final (%

share)

Goods 173,000 9 173,000 173,000 173,000 9 Consultants Services 995,000 52 899,600 923,707 973,707 51 Training and Study Tours 460,000 24 460,000 460,000 478,000 25 Operating Costs 90,000 5 185,400 253,813 275,293 14 Unallocated 182,000 10 182,000 89,480 0 0 Total 1,900,000 100 1,900,000 1,900,000 1,900,000 100

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry The project design builds on the experiences of the Bank in both lending operations and analytic work, combined with technical assistance. The team makes references in the project document to recent IEG reviews of technical assistance projects and Bank support for public sector reform, OECD report on capacity development as well as Joint Country Support Strategy and CAS completion report of 2007. Important points acknowledged in the preparatory phase are: (i) the ineffectiveness of previous development policy lending in a weak institutional environment and fragile political structure; (ii) the need to be realistic about political and institutional capacity, while also being opportunistic by preparing technical foundations for future engagement; (iii) the difficulty of changing behavior and organizational culture that need to accompany technical improvements; and (iv) the effectiveness of focusing on simple and basic reforms rather than sophisticated ones.

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Building on these principles, the project focused primarily on macroeconomic and fiscal policy coordination and strengthening the capacity of the Ministry of Economy but also included a wage and grading reform component.

2.2 Implementation Several political disruptions following the inception of the project negatively affected the management of the project and implementation in the early phases. The initial design established a Steering Committee for supervision of the project, consisting of the representatives of the key government agencies (Ministry of Economy, Ministry of Finance, PM’s office, National Bank, State Personnel Service as well as NGOs). The Steering Committee (SC) would be chaired by the Head of the Economic and Social policy Division of the President’s Administration and would be responsible for the overall guidance of the project and formal approval of TORs for consultants. The first SC was established in October 2008 but within a year, in October 2009, this structure was effectively dissolved due to the change in the government. The second SC was established by the Central Agency for Development, Investments and Innovation (CADII) in early 2010 albeit being very short-lived, as CADII was subsequently abolished. The gaps that followed these disruptions lead to delays in the activities of the project, by for example, causing suspensions in the recruitment of consultants and cancellation of training events. Finally, the third and final SC was established by the government in September 2010 and the Ministry of Economy was appointed as the chair of the Committee. Day-to-day project management and procurement and financial management issues were undertaken by the Project Implementation Unit within the Ministry of Economy. The risks identified at appraisal were relevant and the project was deemed as a high-risk operation at inception in 2008. In particular, implementation capacity and sustainability were identified as “high-risk” for the operation. There were two challenges in this area however: (i) the political disruption in 2010 provided additional constraints to effective implementation due to frequent changes in the management structure of the project and the multiple restructurings of the main beneficiary agency, the Ministry of Economy; and (ii) the mitigating measure identified in the PAD, i.e. top-up payments to attract and retain qualified staff, was not sufficient to ensure sustainability. Despite these distinct challenges, however, overall project implementation has been broadly satisfactory in achieving the outcome indicators towards meeting the overarching project development objective. There was no mid-term review (on file) and no project at risk status was assigned. The 3rd and 4th implementation status reports assessed the project as moderately unsatisfactory. This was the result of significant delays in the implementation of the project vis-à-vis the original plan which in turn was due to two rounds of disruptions in government in 2009 and 2010. Component 1. Institutional and technical framework for government-wide macroeconomic policy development and coordination. The overarching goal of this component was to set up a framework for sound economic policy-making including macroeconomic forecasting, primarily through establishing an inter-ministerial policy coordination council. Such a council was established through a government decree in May 2011 and its functions were revised through another decree in June 2012. A technical group on financial programming supported the coordination council and project consultants helped with the preparation of the coordination meetings. The coordination council was headed by the Prime Minister and included as members the Minister of Economy, the Minister of Finance, the Minister

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of Labor, the Governor of the National Bank and the Head of the Social Fund. The technical group comprised representatives from their institutions. The coordinating council did not meet regularly as foreseen by the project. There are two reasons behind this: (i) the fundamental change in the regime; while before 2010 the President was responsible for economic development, after the shift to Parliamentary system in 2010, the leadership has moved to the Prime Minister; and (ii) the Prime Minister and the council members have had a heavy agenda and the cabinet meetings partially took over the council meetings. The difficulty in convening the coordination council was further complicated by the frequent changes in the Cabinet. Furthermore, the regulation establishing the council referred to specific names and not titles. As a result, a new regulation would be needed for the new members of the cabinet to serve on the council. Within the technical group, capacity for macroeconomic forecasting was improved. The project supported the establishment of an expert team for forecasting and a government resolution set the deadlines for forecasting and budget preparation. The project provided the tools for and training on IMF financial programming model to a core group of staff in the key central agencies for economic policy-making. One of the main achievements of the project has been the harmonization and increasing the quality of economic forecasting and facilitating coordination among central agencies at the technical level. However, the consultation mechanism between the technical group and the high-level coordination council has not functioned effectively, limiting the impact of the newly developed capacity for forecasting. The first component under the CBEM project was coordinated with the financial programming capacity building under a SECO-funded project.

Component 2. Strengthening the capacity for economic management, analysis and policy development

This is the largest component of the project, receiving over 60 percent of total spending under the project. The objective of strengthening the capacity for economic management, analysis and policy making within Ministry of Economy (and to a lesser extent in the Ministry of Finance) was pursued through several distinct activities. Overall, the project was successful in meeting the objective. Functional Review of the Ministry. The Ministry of Economy (Ministry of Economic Development and Trade at the time of project preparation) was newly established1 and was assigned a central role in economic policy making. The Ministry needed to develop capacity to develop sound economic and structural policies and to harmonize policy making across the different government agencies. Against this background, one of the main activities under the project was a functional review of the Ministry, which identified the roles and responsibilities of its structural divisions, culminating in the restructuring of the Ministry through a government resolution issued in August 2011. However, the development strategy of the Ministry was not implemented and the Bank’s project team advised to stop supporting this strategy through the CBEM project. The current structure of the Ministry was adopted in August 2013. There are separate departments in charge of

1 The Ministry of Economy was initially established in 2004. The agency changed names several times since then, also reflecting the roles and responsibilities assigned.

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policy development, macroeconomic analysis and projections, anti-corruption policy and regulatory impact analysis. Macroeconomic Projections. With the help of the project, the Ministry of Economy developed its capacity to make macroeconomic projections and generate different macroeconomic scenarios. A core group of ministry staff is able to use (i) the financial programming model (as indicated in component 1 above) (ii) the RMSM-x model and (iii) an inflation forecasting model—primarily as an input to the macro models. The project also funded training on forecasting for 300 regional staff of the ministry and provided support on fiscal modeling, such as on analysis of taxes or VAT refunds, however the outputs relied heavily on consultant support. In addition, the institutional mandate for tax policy was moved from MoE to MoF during the project implementation period, making unclear the role of MoE in fiscal policymaking, while this change was later reversed. Human Resources Management. The main aim of this sub-component was to initiate the concept of human resource management in the Ministry and eventually roll-out to other ministries and public agencies. In August 2009, the HR department was separated from the Personnel department. Subsequently, a chief specialist was hired for the new department, but the head of department could not be hired for about a year. During 2010-13, the officials aimed to establish the institutional framework for an effective Human Resources Management (HRM) system. The state secretary position (who would be responsible for HRM) was also not filled during this period, which created another constraint in further progress in this area. An extra salary coefficient was foreseen based on performance and provisions were developed towards this. However in order to put into effect this new remuneration scheme, an amendment to the civil servants law was needed, which extended beyond the mandate of the Ministry of Economy.2 Under this component, several training activities took place and local academics were involved in many of these activities. In addition, an internal survey was conducted, new techniques such as psychological testing was introduced. Overall, this sub-component helped the authorities establish the concept of HR management and progress was made in (i) developing a better recruitment process based on qualification, (ii) developing training programs based on actual needs and (iii) introduction of performance evaluation. Implementing and monitoring the government’s anti-corruption action plan. This sub-component was not explicitly included in the project design, but was added following the 2010 developments which put improved governance at the core of improving public services. The government approved the national anti-corruption action plan for 2012-14 in August 2012 (supported by the World Bank’s First Development Policy Operation - DPO1) and the Ministry of Economy was put in charge of monitoring and coordination of the implementation of the action plan. As a result, there was a need to establish a monitoring mechanism for the implementation of the action plan and build capacity within the Ministry for this purpose. This later augmentation of the project with capacity building in anti-corruption monitoring, in addition to a slow take-off of the project due to political constraints, led to a need to extend the project to June 2014. A dedicated unit—Department of Anti-corruption Policy was established in August 2013. With the Ministry of Economy acting as the secretariat for the anti-corruption action plan, the new anti-corruption department took on responsibility on behalf of the Ministry. The anticorruption unit continues to produce monitoring reports on the implementation of the government’s anticorruption plan. Moreover, the unit prepared a new government program for anticorruption for 2014-17.

2 This is officially the mandate of the State Personnel Service.

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Policy Development Group (PDG). The PDG was established as a division within the MoE with the objective of developing policy and providing analysis of the economic impact of external events and new developments in the economy. The PDG was envisaged to play a key role in linking the activities of the Ministry of Economy to the Investment Council under the President. While the PDG was established as a department within the MoE, the abolishment of the Investment Council as a result of the changes in the political regime in the country undermined the function of the PDG in supporting policymaking. The department was restructured as the division of Strategic planning in June 2013 subsuming the duties of PDG. While the group produced a number of reports on different issues in public administration and new legislation during the lifetime of the project, it is not clear whether sustainable capacity has been built to produce analytic or strategic documents. According to the project completion report by the Project Manager, this was primarily due to capacity constraints and other assignments within the Ministry taking over as priorities. Regulatory Impact Assessment (RIA). A new department was established in 2009 within the Ministry of Economy with the objective of undertaking RIAs for government agencies. The terms of reference for this department were also coordinated with USAID and ADB in the context of their projects in the area of investment climate. While the methodology for carrying out RIAs was developed under the USAID project, there was a need to enhance it and make it more specific. At the same time, it was also essential to equip staff with the right skills to conduct RIAs. The CBEM project aimed to fill in this gap. Under the project an international consultant was hired to develop a more detailed methodology. While the newly developed methodology reflected the global experience in this field, it was not fully applicable in the country, given the current structure and inter-governmental relations and dialogue with the private sector. For example, the absence of a mechanism that facilitates receiving systematic feedback from all stakeholders remained as an obstacle. A document on the standards for conducting RIAs was prepared and submitted to the government. Economic assessment of investment projects. Under this sub-component, the project implementation relied more heavily on consultants, and limited training was provided to the Ministry staff during project implementation. Consultants produced a number of papers on public investment management and PPPs. While there are diverging views within government agencies on the degree of usefulness of the activities, (suggesting for example that the recommendations of the consultants on improving public investment management were quite general and made it difficult to implement.) Currently public investment management remains fragmented, with most public investment projects being financed by donors and no centralized system for fund allocation. Component 3. Development of capacity to carry out a pay and grading reform in the civil service While not clearly integrated with the other two components of the project, Component 3, which was led by the State Personnel Service, helped government progress in reforming its pay and grading system. The Wage Reform Strategy for civil servants in both central and local government agencies covering 2013-20 and an action plan for its implementations was approved by the Government in June 2013 (through resolution number 383). The pay system was unified for 28 state agencies and a baseline salary of 5,000 Soms was established, with a built-in gradual increase to this base amount until 2020. This amount was for the first time made public, representing a move towards a more transparent system. However there is a need to institutionalize these changes

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through legal amendments. 3 The Government also adopted standards for job description and qualifications in civil service and regulations for assessing performance of civil servants and the President approved a new civil service registry in June 2013 (through order number 145). The Public Sector Reform Roadmap provides a good framework for the implementation of these improvements to the pay and grading system.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization The results framework consisting of project outcome indicators as well as intermediate outcome indicators served as the basis for monitoring and evaluation of the project. Eight implementation status reports were prepared and filed during the course of the project. A mid-term review was not undertaken. The transfer of the team leadership of the project to a Bishkek-based staff in early 2013, last phase of the project, provided an opportunity for a more continuous supervision arrangement for the project as well as increased interaction with the project implementation unit. On the client side, the project implementation unit with the support of two core economic advisors provided M&E services, primarily by producing annual reports. However, since beneficiaries of the project was split between several agencies (MoE, MoF, SPS) under the different components, supervision of all activities by the PIU may have been more constrained by the level of interaction between these agencies.

2.4 Safeguard and Fiduciary Compliance

The project did not trigger any of the Bank’s safeguards. No fiduciary issues were encountered and financial management practices were satisfactory.

2.5 Post-completion Operation/Next Phase There was a formal request from the government, during a meeting with the Minister of Economy on November 27, 2013, to continue receiving technical and advisory services following the closing of the CBEM project. The request refers to a number of areas including anti-corruption, Customs Union, business environment and investment climate, and state property management. The Bank responded to this request with a letter dated December 25, 2013. In most of the areas of interest, the World Bank is providing support through different instruments, rather than a follow-up capacity building project. For example, the Bank has taken an important role in the implementation of anti-corruption action plan through the work under Public Sector Reform Roadmap (PSRR).

3 On December 18, 2014, the Government adopted Resolution #712 for approval of the draft Law of the Kyrgyz Republic “On Public Civil and Municipal Service”. As of April 2015, the draft law is being reviewed by the Parliament.

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3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation Relevance. Effective policy-making, including macroeconomic and fiscal policies and institutional capacity to design and implement such policies are at the core of a solid and sustainable development program of the Kyrgyz Republic. As a result, the project development objective continues to be highly relevant after over six years since project inception. However it is quite general and high-level for a small project like the current CBEM project. The design of the project is a reflection of the goal to achieve this high-level objective. Design and scope. The scope of the project, with its three main components, also seems relevant for the continued development challenges of the country. However, the very broad and cross-cutting nature of the project was itself a challenge to achieving results. The third component on pay and grading reform, for example, does not present itself as a natural complement to the first two components. While establishing a modern pay and grading system is a priority reform area, a more comprehensive approach within the context of a full and self-standing civil service reform agenda may be more effective in addressing the pay and grading system issues. Similarly, the second component includes a vast number of sub-components, ranging from very strategic “functional review” to very narrow “evaluation of infrastructure projects”. This wide-ranging design of the project made it difficult to have a coherent project management while also posing challenges to implementation. Implementation. The project clearly suffered from the political disruptions in 2009 and 2010 in its early stages, as these were not really foreseeable. More structurally, the country still has low institutional capacity and challenges in coordinating macro policies, despite improvements made with the support of the project. In the absence of clear designation of responsibility for the sub-components of the project, implementation proved to be challenging particularly under the very wide-ranging second component.

3.2 Achievement of Project Development Objectives The project was moderately satisfactory in achieving the overarching project development objective. The objective was “to assist the Recipient in establishing and institutionalizing an efficient and effective framework for formulating and implementing sustainable economic policies as well as in enhancing the capacity of public institutions responsible for the development and implementation of such policies to formulate and carry out the policies.” As such, the PDO was quite high-level and ambitious. Yet, the following sub-components were important in partially achieving the main objective. First, the training and consultancy provided for building macro modelling capacity, under the second component, has led to new and improved practices. Macroeconomic and fiscal forecasts are now being published at least annually in the Mid-term socioeconomic development prognosis and the mid-term budget framework. The technical group has been operational and instrumental in improving coordination among different agencies involved in macroeconomic and fiscal forecasting. Second, capacity has been created in monitoring and evaluation of anti-corruption programs, under the second component. While, originally not part of the capacity-building program, the assignment of the responsibility of monitoring and evaluation of the implementation of the anti-corruption action plan led to a significant need to improve capacity in the Ministry to fulfill this function.

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Establishment of a separate unit within MoE and the training provided through the project helped the authorities reach out to both central and local agencies to support them in designing their own measures and implementing them to reduce the levels of corruption. Over the last few years, Kyrgyzstan’s ranking on Transparency International’s Corruption Perception Index has improved, from 164th (out of 178 countries) in 2010 to 136th (out of 175 countries) in 2014. Third, the efforts under the third component on wage and grading reform were also worthwhile in reaching project’s development objective. A Salary Task Force was established to help the government reform its pay and grading system. The Wage Reform Strategy for civil servants in both central and local government agencies covering 2013-2020 and an action plan for its implementations were approved by the Government in June 2013. An improved wage and grading system is an important ingredient to creating a more capable civil service. Clearly, there is a longer term agenda that will ensure the government to achieve levels of policy formulation and implementation capacity at international best practice levels.

3.3 Efficiency The PAD anticipated that CBEM would strengthen the institutional mechanisms and capacity for policy making which would contribute fundamentally to the growth and development prospects of the Kyrgyz economy. However, as a TA project, no cost-benefit analysis was undertaken at appraisal. As section 3.2 above argues, the project has led to significant gains in policy development capacity. Although the exact gains are not possible to measure quantitatively and attribution of benefits is not straightforward, the assessment of the outcomes of the project in this report suggests the use of funds was broadly efficient.

3.4 Justification of Overall Outcome Rating Rating: Moderately Satisfactory As described in section 3.2 above, satisfactory outcomes in the core activities of the project is the driving force behind the moderately satisfactory rating.

3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development No specific poverty impact, gender aspects and social development issues were discussed in the project document nor were they considered during implementation. Any potential impact would be indirect and an assessment in these areas could not be made. (b) Institutional Change/Strengthening Institutional capacity building was at the core of the CBEM project. The most significant improvement was experienced in the macro modeling capacity of the Ministry of Economy. Despite various institutional and political constraints, the Ministry was able to enhance its capacity and to adopt new and improved modeling practices. Macroeconomic and fiscal forecasts are now being published at least annually in the Mid-term socioeconomic development prognosis and the mid-term budget framework. The technical group has been operational and instrumental in improving coordination among different agencies involved in macroeconomic and fiscal forecasting. In

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addition, in the area of policy-making, capacity has been created in monitoring and evaluation of anti-corruption programs within the Ministry of Economy. While, originally not part of the capacity-building program, the assignment of the responsibility of monitoring and evaluation of the implementation of the anti-corruption action plan led to a significant need to improve capacity in the Ministry to fulfill this function. Establishment of a separate unit within MoE and the training provided through the project helped the authorities reach out to both central and local agencies to support them in designing their own measures and implementing them to reduce the levels of corruption. Finally, the Ministry has increased its capacity to develop and review strategic documents. This improved capacity has helped them contribute to the National Sustainable Development Strategy, and particularly take on the role of harmonizing sectoral strategies within a larger framework. (c) Other Unintended Outcomes and Impacts (positive or negative) No unintended positive or negative outcomes have been identified.

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops No beneficiary survey or stakeholder workshops were conducted as part of this ICR.

4. Assessment of Risk to Development Outcome Rating: Moderate The most significant risk to higher capacity created, particularly in the area of macro modeling, is the high staff turnover in the MoE. This is a common risk faced by capacity-building projects in similar countries and more broadly. Several staff have already left during the lifetime of the project. There is no evidence that suggests top-up payments have proven effective in retaining staff, as they were transitionary and introduced high degrees of discretion.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately satisfactory The design of the project was aligned with the needs of the country and its priorities. It also built on the 2007 Country Development Strategy. The Project Appraisal Document referred to the Independent Evaluation Group’s recommendation of focusing projects on basics and that TA is essential to upgrade capacity for implementation. The Project did focus on basics and did not aim for supporting sophisticated reforms. However, the design of the project encompassed three wide areas of support—not very well integrated and involving multiple beneficiary agencies. This created a challenge for effective implementation towards meeting the development objective. The challenge was aggravated by the political disruption in the early phase of the project and a less burdened capacity building program could have taken off sooner in the wake of these disruptions. Moreover, the top-up payments built into the program did not prove to be effective in improving the implementation of the capacity-building program.

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(b) Quality of Supervision Rating: Moderately satisfactory The Bank’s supervision was broadly satisfactory. The core team stayed engaged and new team members were brought in, when the capacity building program was augmented by anti-corruption monitoring and evaluation program. Eight implementation status reports were prepared and were filed, while no mid-term review was prepared. The TTL-ship changed three times after inception, with the last change moving task management to a country office based staff in early 2013. The latter transfer, in the last phase of the project, provided an opportunity for a more continuous supervision arrangement for the project as well as increased interaction with the project implementation unit. There were some delays on the Bank side in responding to no-objection requests from the PIU particularly in the early phase of the project. (c) Justification of Rating for Overall Bank Performance Rating: Moderately satisfactory The overall Bank performance for the project is rated moderately satisfactory. Although the project development objective is an overarching and ambitious one, progress towards meeting the objective was moderately satisfactory. The project did assist the government in “establishing and institutionalizing an efficient and effective framework for formulating and implementing sustainable economic policies as well as enhancing the capacity of public institutions responsible for the development of such policies to formulate and carry out the policies”. Clearly, there is a longer term agenda that will ensure the government to achieve levels of policy formulation and implementation capacity at international best practice levels. As Annex 2 shows, progress towards meeting the results indicators in three components has been satisfactory. The design of the project included selected priority needs of the counterpart, and capacity building activities in all three components provided positive contributions.

5.2 Borrower Performance (a) Government Performance Rating: Moderately satisfactory The authorities greatly value the partnership with the World Bank. The counterparts have expressed their contentment with the contribution of the CBEM project. Over the lifetime of the project there were multiple changes in the structure of the government, as a result of which project initiation was delayed and overall progress slowed down. However, despite these challenges the authorities managed to keep project implementation broadly on track. The main direct area of involvement for the Government was the Coordination Council under the first component. The Council was established in May 2011 and its membership and duties were revised in June 2012. However, the Council did not meet regularly as envisaged as a result of structural changes in the governing structure in the country in the early period and then frequent changes in the government with a continued heavy agenda. The meetings of the Council took place as needed with no pre-determined schedule. The technical group also facilitated coordination among various agencies.

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(b) Implementing Agency or Agencies Performance Rating: Moderately satisfactory The performance of the two main implementing agencies, the Ministry of Economy and the State Personnel Service was broadly satisfactory. Most importantly under component 1, participation of key staff from the Government’s Office, Ministry of Economy, Ministry of Finance, NBKR, National Statistical Committee and Social Fund in monthly meetings of the technical group on financial programming helped coordination among agencies. As a result of this effective coordination mechanism, the inter-agency communication on economic forecasting became more operational and the economic team was better positioned to negotiate with the IMF the 2011-14 program. At the same time, activities relating to the functional responsibilities of the Ministry of Economy and human resources management under component 2 suffered from lack of leadership in the early phases of the project due to vacancy of the state secretary position and the head of the Human Resource management unit. Two key issues that had an impact on the performance of the project were the high turnover of staff and the workload of the project staff. Departmental responsibilities arising from institutional needs undermined staff’s ability to focus on policy development and impact assessment. (c) Justification of Rating for Overall Borrower Performance Rating: Moderately satisfactory Despite difficulties at the project inception and early phases and staff constraints, the authorities facilitated the project to build capacity in the areas described above. The lack of a properly functioning senior level Coordination Council under the first component did not have substantive impact on the results, due to two reasons. First, the high-level decisions were considered and taken in the Council of Ministers meetings, if and when needed. Second, the technical group was fully operational and was influential in coordination among agencies mitigating partially the consequence of lack of regular meetings of the Coordination Council.

6. Lessons Learned There are three main lessons learned from the CBEM project experience. Focus. Bundling very important but not directly complementary components under a single project made it challenging to coordinate and implement. Thus, more targeted capacity building programs could have yielded better results. Capacity constraints. Factoring in institutional constraints more explicitly in the implementation design could be more effective in achieving higher level results. An assessment of the initial capacity could have been useful. An initial constraint for the implementation of the project was the relatively inexperienced staff at the ministry which led to a longer time period for getting the project up and running. Engaging a combination of young well-educated staff and experienced staff who would have a deep understanding of the policy-making processes of the country would have created a better basis for effective implementation. Sustainability. Finally, incorporating in the project top-up payments by the government to the project staff did not prove to be useful. One issue with this practice was the discretionary nature of who would receive these additional payments, with the Deputy Minister selecting eligible staff. This practice ended in December 2013 and there is no evidence that the top-up payments helped

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retain the project staff or incentivized them to perform better. In addition, to mitigate the risk of high staff turnover, a more systematic handover process could be built into project implementation.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies Comments were received from the Ministry of Economy and State Personnel Service. The comments are very brief and are attached as an annex to this report. There were two comments that the team would like to highlight:

(i) The Ministry of Economy asked that the following statement in section 2.2, component 1 be taken out: “The difficulty in convening the coordination council was further complicated by the frequent changes in the Cabinet. Furthermore, the regulation establishing the council referred to specific names and not titles. As a result, a new regulation would be needed for the new members of the cabinet to serve on the council.” The team’s assessment is that this statement reflects the actual challenges faced during the implementation of the project and hence should be kept in the report.

(ii) The Ministry of Economy did not agree with the statement “the top-up payments have proven ineffective in retaining staff, as they were transitionary and introduced high degrees of discretion.” in section 4. The team changed the wording slightly to suggest “there is no evidence” for any positive impact.

(b) Cofinanciers (c) Other partners and stakeholders

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Annex 1. Project Costs and Financing

(a) Project Cost by Component (in USD Million equivalent)

Components Appraisal

Estimate (USD millions)

Actual/Latest Estimate (USD

millions)

Percentage of Appraisal

Component 1. Government wide macro-economic policy development and coordination

0.563 0.382 67.9%

Component 2. Strengthening capacity of MEDT

1.969 2.035 103.3%

Component 3. Pay and grading reform in the civil service

0.381 0.286 75.0%

Component 4. Project management

0.328 0.600 182.8%

Total Baseline Cost 3.241 3.303

Physical Contingencies Price Contingencies 0.201

Total Project Costs1 3.442

Interest during construction Front-end fee

Total Financing Required 3.442

(b) Financing

Source of Funds Type of

Cofinancing

Appraisal Estimate

(USD millions)

Actual/Latest Estimate

(USD millions)

Percentage of Appraisal

Borrower 0.45 0.47 .00 IDA Grant 3.00 2.83 .00

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Annex 2. Outputs by Component

Outcome Output Indicators Status Component 1. Institutional and technical framework for government-wide macroeconomic policy development and co-ordination (US$0.563 million) Enhanced inter-ministerial coordination and capacity to ensure a coherent economic policy decision-making process.

Procedures formalized and coordination mechanisms established; Regular meetings of coordination committee with relevant agenda.

Met. The government adopted a system for economic forecasting and a procedure for socio-economic development prognosis. A macroeconomic and investment policy coordination council and a technical group on financial programming have been established. The meetings of the macroeconomic and investment policy council occur as needed with no pre-determined time schedule. (60%)

Component II. Strengthening the capacity of MEDT and the MOF to fulfill an effective role in macro-economic analytical work and policy development (US$1.969 million) Public institutions (and particularly the MEDT, through capacity building and restructuring) are enabled to formulate sound and analytically informed policy measure and proposals.

MEDT reorganized consistent with new structure.

Met. The new structure of the Ministry of Economy has been adopted and better suited to carry out the tasks assigned to the Ministry. Frequent restructurings were an impediment to establishing capacity. (60%)

Component III. Development of capacity to carry out a pay and grading reform in the civil service (US$0.381 million) Capacity for carrying out a reform of wages and employment in the civil service, together with options developed.


Met. The government adopted a new wage system for civil servants and is implementing measures to improve remuneration in the civil service. In addition to the new wage system, the government adopted a regulation to evaluate civil servants' performance, requirements standards and job instructions for the civil servants. (75%)

Intermediate outcomes Presidential Decree/Government

Coordination procedures formalized in decree or

Met. The macroeconomic and investment policy council

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Regulation which (a) clearly defines roles & responsibilities in economic policy design, implementation & evaluation at central level (b) establishes an effective coordination mechanism.

regulation. Agreement reached on composition and agenda of coordination committee. Coordination procedures formalized in decree or regulation. Agreement reached on composition and agenda of coordination committee.

was established (the regulation and composition of the council).

Regular meetings of coordination group taking place, with appropriate agenda and relatively few major economic policy decisions being taken outside the mechanism.

Coordination committee meeting regularly with substantive appropriate agenda.

Not met. The macroeconomic and investment policy council meets only as needed with no predetermined regular schedule. The technical group on financial programming meets regularly.

Publication of macroeconomic and fiscal forecasts with evidence that these forecasts provide the basis for budget and economic policy discussions.

Publication of more detailed forecasts at least twice during the year and evidence that forecasts form the basis of budget planning.

Met. The government publishes the Mid-term Socio-economic Development Prognosis, the Mid-term Budget Framework and annual budget laws with explanatory notes. These documents are published on the Ministry of Finance and the Ministry of Economy web-sites.

New structure of MEDT corresponds to that proposed in the SDP.

MEAMP reorganized consistent with new structure.

Met. The new structure of the Ministry of Economy has been adopted and is adequate to address the tasks assigned to the Ministry.

Satisfactory implementation (according to private sector surveys) of significant measures to improve the business environment proposed by the investment council.

Surveys indicate progress in other areas of business environment and increase satisfaction with the performance of IC and MEDT.

Not met. The 2013 BEEPS results suggest that companies' perceptions of various aspects of the business climate have improved since 2008. According to surveys conducted by the Bishkek Intl Business Council, the business environment improved in some areas. According to the National

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Statistics Committee, the trust of the population to the Ministry of Economy and the quality of services by the Ministry improved but still remains low.

High quality policy papers are produced and subsequently translated into policy decisions.

At least six policy papers developed, of which three are judged to be of high quality and at least one forms the basis of a significant policy decision.

Met. Eight studies have been conducted. The studies included the following themes: the shadow economy, the tourism sector, corruption, the impact of the accession to the CU on the textile industry, the fiscal and monetary policies and economic institutions.

Pay and grading reform group established.

Salary task force established and basic data collected.

Met. The task force was established and it developed and submitted the civil service wage strategy and an action plan to implement the strategy.

Options paper for pay reform is produced.


Met. The task force was established and it developed and submitted the civil service wage strategy and an action plan to implement the strategy. The government adopted a new wage system for civil servants and is implementing measures to improve remuneration in the civil service. It also adopted a regulation to evaluate civil servants' performance, requirements standards and job instructions.

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Annex 3. Economic and Financial Analysis N/A

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Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members

Names Title Unit Responsibility/

Specialty Lending Damir Esenaliev Economist ECSP1 Nurbek Kurmanaliev Procurement Specialist ECSO2 Iuliia Alexandrovna Mironova

Research Analyst CEUST-

UNIT

John Otieno Ogallo Sr Financial Management Specialist OPSOR Natalia Pisareva Senior Economist ECSP1 Ekaterine T. Vashakmadze Sr Country Economist DECPG

Supervision/ICR Bakyt Dubashov Economist GMFDR Kamer Karakurum Ozdemir (ICR main author)

Sr Economist GMFDR

(b) Staff Time and Cost

Stage of Project Cycle Staff Time and Cost (Bank Budget Only)

No. of staff weeks USD Thousands (including travel and consultant costs)

Lending 29.04 90,918.78 Supervision/ICR 199.26 337,728.61

Total: 228.3 428,647.4

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Annex 5. Beneficiary Survey Results N/A

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Annex 6. Stakeholder Workshop Report and Results

N/A

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Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR

Ministry of Economy of the Kyrgyz Republic

Memo 11-1 / ___

To: Development Department,

Ministry of Economy of the Kyrgyz Republic From: N. Sh. Shamshijev, Head of the Macroeconomic Policy Office Regarding: WB project Date: 04.17.2015

Herewith, the Macroeconomic Policy Office refers to the relevant components of the

reviewed Capacity Building for Economic Management Project implementation completion and results report falling within the terms of its reference, and would like to inform you regarding the following:

The Ministry of Economy of the Kyrgyz Republic has originally set a goal of invigorating (“resuscitating”) the already existing Macroeconomic and Investment Policy Coordination Council, not “creating” it. Therefore:

In section “(a) PDO Indicator(s)”: sentence “A macroeconomic and investment policy coordination council and a

technical experts group have been established” in the column “Actual Value Achieved at Completion or Target Years” that refers to “Indicator 1” should be reworded to read as follows: “Efforts of the Macroeconomic and Investment Policy Coordination Council have been strengthened, and a technical group has been established”;

In section “(b) PDO Indicator(s)”: sentence “The macroeconomic and investment policy council was established (the

regulation and composition of the council)” in the column “Actual Value Achieved at Completion or Target Years” that refers to “Indicator 1” should be reworded to read as follows: “Efforts of the Macroeconomic and Investment Policy Coordination Council have been strengthened”;

Paragraph 1 of section “Component 1” on page 4 should be reworded to read as follows: “The overarching goal of this component was to set up a framework for sound economic policy-making including macroeconomic forecasting, primarily through efficient performance of the technical group established within the Macroeconomic and Investment Policy Coordination Council.”

Paragraph 3 of section “Component 1” on page 5 should be deleted. In paragraph 2 of subsection “Macroeconomic Projections” in section “Component

2” on page 6, words “in consultation with the Central Bank” should be replaced with “in the course of operation of the interdepartmental working group”, because in the forecasting of inflation the Ministry does not consult the Central (National) Bank, but coordinates its forecasts with the latter.

In paragraph 1 of section 4 “Assessment of Risk to Development Outcome” on page 11, the sentence “The top-up payments have proven ineffective in retaining staff, as they were transitionary and introduced high degrees of discretion” appears to be inappropriate and should be amended or restated in its entirety, because the top-up payments have been an incentive for better performance and motivated staff of the Macroeconomic Policy Office.

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In the Annexes, words “A macroeconomic and investment policy coordination council and a technical experts group have been established” should be brought in line with section “(a) PDO Indicator(s)”.

In addition, proper name of the group established under the Macroeconomic and Investment Policy Coordination Council should be used across the text.

Head of the Macroeconomic Policy Office N. Sh. Shamshijev Prepared by I. Kim, A. Suynalijeva, tel.: 62-05-35 (174); Department of Macroeconomic Forecast

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Kyrgyz State Personnel Service Outgoing #: No. 02-2-09/1393 Date: April 29, 2015 Re: 2015-3-13 dated April 10, 2015 World Bank Country Office in the Kyrgyz Republic The State Personnel Service of the Kyrgyz Republic would like to express its respect and appreciation to the World Bank for its cooperation and continued support for development of the public service of the Kyrgyz Republic. Having reviewed the Implementation Completion and Results Report for the Capacity Development in Economic Management Project, we would like to inform you that on December 18, 2014, the Government adopted Resolution #712 for approval of the draft Law of the Kyrgyz Republic “On Public Civil and Municipal Service”. Currently, the draft law is being reviewed by the Parliament. This is the only comment we could offer at this stage. Acting Director Kyrgyz State Personnel Service B. Sagynbaev

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Kyrgyz Government Office Reference No. 16-1387 Date: April 28, 2015 To: World Bank Country Office in the Kyrgyz Republic Re: Letter No. 2015-3-13 dated April 10, 2015 Herewith, the Kyrgyz Government Office would like to express its appreciation to the World Bank Country Office in the Kyrgyz Republic for our close and productive cooperation under the jointly implemented projects. Having reviewed the Implementation Completion and Results Report for the Capacity Building for Economic Management Project, we would like to inform you that we do not have any further comments and recommendations. Best regards, N. Chuikov Head of the Economy and Investment Department

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Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders

N/A

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Annex 9. List of Supporting Documents N/A