Document of The World Bank FOR OFFICIAL USE ONLY Report No. 53764-UZ INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION AND INTERNATIONAL FINANCE CORPORATION COUNTRY ASSISTANCE STRATEGY PROGRESS REPORT FOR REPUBLIC OF UZBEKISTAN FOR THE PERIOD FY08-11 May 20, 2010 Central Asia Country Unit Europe and Central Asia Region International Finance Corporation Southern Europe and Central Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. The last Country Assistance Strategy was discussed by the Board on June 12, 2008 CURRENCY EQUIVALENTS Currency Unit = Uzbekistan Sum US$1 = 1575.6 Sum GOVERNMENT FISCAL YEAR (January 1 to December 31) WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS AAA Analytical and Advisory Activities ISN Interim Strategy Note ADB Asian Development Bank IWMI International Water Management Institute AML/CFT Anti-Money Laundering and Combating the JETRO Japanese Trade & Industry Organization Financing of Terrorism JICA Japanese International Cooperation Agency CAREC Central Asia Regional Economic Cooperation KfW Kreditanstalt für Wiederaufbau CAS Country Assistance Strategy LSA Living Standards Assessment CASPR Country Assistance Strategy Progress Report NCU National Coordinating Unit CBU Central Bank of Uzbekistan NGOs Non-governmental Organizations CDM Clean Development Mechanism MDGs Millennium Development Goals CPIA Country Policy and Institutional Assessment MIGA Multilateral Investment Guarantee Agency CIS Commonwealth of Independent States MFERIT Ministry of Foreign Economic Relations CSTO Collective Security Treaty Organizations Investment and Trade EBRD European Bank for Reconstruction and OECD Organization for Economic Co-operation and Development Development ECA Europe and Central Asia OSCE Organization for Security and Co-operation ESW Economic and Sector Work in Europe EU European Union PEFA Public Expenditure & Financial EurAsEc Eurasian Economic Community Accountability FDI Foreign Direct Investment PFIs Participating Financial Intermediaries FRD Fund for Reconstruction and Development PHRD Policy and human Resource Development GDP Gross Domestic Product PIU Project Implementation Unit GFS Government Finance Statistics PPPs Public Private Partnerships GFMIS Government Financial Management PRSP Poverty Reduction Strategy Paper Information System SDC Swiss Development Corporation GGFR Global Gas Flaring Reduction SECO Swiss State Secretariat for Economic Affairs GTZ Deutsche Gesellschaft für Technische SCO Shanghai Cooperation Organization Zusammenarbeit (GermanAgency for SME Small and Medium Enterprise Technical Cooperation TB Tuberculosis HBS Household Budget Survey UN United Nations IBRD International Bank for Reconstruction and UNDP United Nations Development Programme Development UNFPA United Nations Population Fund ICARDA International Centre for Agricultural UNICEF United Nations Children's Fund Research in the Dry Areas UNODC United Nations Office on Drugs &Crime IDA International Development Association USAID United States Agency for International IDF Institutional Development Fund Development IEG Independent Evaluation Group WBI World Bank Institute IFC International Finance Corporation WBG World Bank Group IFIs International Financial Institutions WHO World Health Organization IFS International Financial Statistics WIS Welfare Improvement Strategy IMF International Monetary Fund WUAs Water User Associations IBRD IFC Vice President: Philippe Le Houérou Rashad Kaldany Country Director: Motoo Konishi Shahbaz Mavaddat Task Team Leaders Loup Brefort & Fabrice Houdart Tomasz Telma & Oksana Nagayets Team Members: Chirine Alameddine, Salman Anees, Tijen Arin, Christophe Bosch, Mansur Bustoni, Brett Coleman, Simon Croxton, Andrea Mario Dall'Ollio, Cem Dener, Yelena Fayedeva, Olesya Gafurova, Franz Gerner, Elena Glinskaya, Susanna Hayrapetyan, Jariya Hauffman, Takao Ikegami, Nedim Jaganjac, Enver Kamal, Zafar Khashimov, Yarissa Lyngdoh Sommer, Pier Francesco Mantovani, Mario Marchesini, Maureen McLaughlin, Iuliia Mironova, Matluba Mukhamedova, John Ogallo, K. Migara O. De Silva, Vsevold Payevski, David Pearce, Bryce Quillin, Cordula Rastogi, Rukshan Rodriguez, Anu Saxen, Cathy Summers, Mehrnaz Teymourian, Eskender Trushin, Ekaterine Vashakmadze, Mahwash Wasiq ACKNOWLEDGMENTS The preparation of this Progress Report involved the extended Uzbekistan Country team, including the Bank, IFC, and MIGA staff listed above. It also benefited from consultations with national and local government officials and representatives of development partners, civil society and academia. COUNTRY ASSISTANCE STRATEGYPROGRESS REPORT UZBEKISTAN TABLE OF CONTENTS I. INTRODUCTION ....................................................................................................................... 1 II. COUNTRY CONTEXT........................................................................................................................ 2 III. RECENT DEVELOPMENTS .............................................................................................................. 2 IV. PROGRESS TOWARDS CAS OUTCOMES ...................................................................................... 4 V. IMPLEMENTATION PROGRESS AND ADJUSTMENTS TO CAS ........................................... 7 VI. RISKS ................................................................................................................................................. 10 Annexes Annex 1: Results Matrix ............................................................................................................................. 11 Annex 2a: Planned versus Actual IDA-IBRD Lending ............................................................................. 19 Annex 2b: Proposed IDA-IBRD Lending Scenario FY10-FY11 ............................................................... 19 Annex B1: Country at a Glance .................................................................................................................. 20 Annex B2: Uzbekistan Selected Indicators of Bank Portfolio Performance and Management .................. 23 Annex B3: IBRD/IDA Program Summary Uzbekistan .............................................................................. 24 Annex B3: Uzbekistan IFC Investment Operations Program ..................................................................... 25 Annex B4: Summary of Nonlending Services ­ Uzbekistan ...................................................................... 26 Annex B5 Uzbekistan Social Indicators ..................................................................................................... 29 Annex B6: Uzbekistan - Key Economic Indicators .................................................................................... 28 Annex B7: Uzbekistan - Key Exposure Indicators ..................................................................................... 30 Annex B8: Uzbekistan Operations Portfolio (IBRD/IDA and Grants) ....................................................... 31 Annex B8: Uzbekistan Committed and Outstanding Investment Portfolio (IFC) ...................................... 32 UZBEKISTAN: COUNTRY ASSISTANCE STRATEGY PROGRESS REPORT I. INTRODUCTION 1. This Country Assistance Strategy Progress Report (CASPR) reviews implementation to date of the FY08-11 Country Assistance Strategy (CAS).1 In support of Uzbekistan's 2007-10 Welfare Improvement Strategy (WIS), the CAS comprises four pillars: (a) enabling environment for shared growth; (b) increasing economic opportunities in rural areas; (c) improving service delivery; and (d) managing environmental and global goods provision. It proposed a flexible approach to both lending and analytical and advisory activities to allow for adjustment in light of client demands and the extent of agreement on policy issues during implementation. 2. Uzbekistan's economy has been relatively unaffected by the global slowdown, due mainly to its limited integration with world financial markets and tight state control over the banking system. In addition the economy has been supported by a large fiscal stimulus and increased exports of key commodities (gold and gas). The Government put particular emphasis on measures and programs targeted toward the population in rural areas where poverty is higher. These included investments in basic and social infrastructure and housing. The Government also achieved significant progress in selected areas of reforms, including country-wide treasury modernization and public financial management. The issues of accountability, data publication, and widening of civic participation in policy making however remain to be addressed. Finally, while Uzbekistan's relations with key international development partners have continued to improve, relations with neighboring countries remain tense due to disputes over trans-boundary energy and water resource management. 3. Progress towards CAS outcomes since mid-2008 has been mixed. The main policy achievements are continued macroeconomic stability, improved public financial management, and modest enhancements to the business environment and investment climate. There was also progress towards country development objectives of increasing access to safe water and sanitation in project areas and measures to improve energy efficiency, reduce greenhouse gas emissions, and mitigate environmental and natural disaster risks. However, additional efforts will be needed during the rest of the CAS period to enhance agricultural productivity and, indirectly, increase rural incomes, as well as to improve service delivery, especially in education and health. Moreover, longstanding concerns about the authorities' policies and practices regarding access to economic and financial data and public procurement need to be resolved. 4. The CASPR proposes two adjustments to the FY10-11 program, within an otherwise unchanged strategic framework. The first is the addition of three new operations in energyone in FY10 and two in FY11. The second is the resumption of lending on IBRD terms up to $250 million through end- FY11 for two of these. These new operations are designed to facilitate much needed dialogue on several important issues, such as the economy's high energy intensity, gas production and pricing, and the scope for reducing electricity system losses and enhancing revenue collection, and would support actions to improve efficiency in these priority areas. 5. The risks identified in the CAS remain valid and the additional commitments envisaged in this CASPR add new onesfor example, the reputational risk to the WBG if the regional energy-water dialogue falters or fails. However, Bank lending for energy is consistent with the CASspecifically its fourth pillarand the country's creditworthiness, governance, and political economy have not changed materially since mid-2008. In addition, IBRD lending beyond the $250 million envelope authorized for the two new energy operations proposed will be subject to a full creditworthiness and risk assessment during preparation of the next CAS (FY12-14). 1 Uzbekistan: Country Assistance Strategy, FY08-11, May 14, 2008 (Report No. 43385-UZ) 1 II. COUNTRY CONTEXT 6. Uzbekistan is an upper low income, resource rich country accounting for nearly half of Central Asia's population. Following independence in 1991, the Government's home-grown, gradualist, state-led development strategy has delivered consistent, and since the mid-2000s, robust economic growth as well as gradually progressing reforms. This approach eased the social costs of transition and reduced the economy's vulnerability to external shocks. At this stage, a key priority is further development of the private sector to improve the potential for growth and the welfare of the population. 7. Since early 2008 when the CAS was prepared, Uzbekistan's political situation and outlook have remained basically unchanged. Islam Karimov is the president in office since before the country's independence in 1991. Elections to the Oliy Majlis, Uzbekistan's bicameral legislature, took place in December 2009 conserving the established political situation. 8. Externally, Uzbekistan's bilateral relations with key international development partnerse.g. the European Union, Japan, and the United Stateshave continued to improve, thanks mainly to its regional role in the international effort to rebuild and stabilize Afghanistan. Long standing ties with Russia, still Uzbekistan's largest trade partner, remain strong and its more recently burgeoning economic and trade links with China have continued to expand. Meanwhile Uzbekistan has suspended its membership in the Eurasian Economic Community (EurASEC) and has not been attending recent meetings of the Collective Security Treaty Organization (CSTO). Energy issues and related issues of trans-boundary water resources management, i.e. where the interests of upstream and downstream countries diverge, need to be resolved in order to realize the region's growth potential. Owing to its size and location, Uzbekistan's economic development is important not only for its own people but also for its neighborsAfghanistan, Kazakhstan, Kyrgyzstan, Tajikistan and Turkmenistanas well as for the Eurasian region. III. RECENT DEVELOPMENTS Economic Management 9. Uzbekistan's economy has been relatively unaffected by the global slowdown. This was due mainly to its cautious approach to participation in the world financial markets and tight state control over financial sector development; the effects of a large fiscal stimulus; and increased exports of key commodities. According to official data, GDP growth, after accelerating from 7 percent in 2005 to over 9 percent in 2008, slowed only slightly to 8.1 percent in 2009, in line with the government's target. 10. Until the crisis, the economic growth was largely fueled by booming commodity prices and manufactured exports. Construction, trade and services sectors accounted for approximately 2/3 of real GDP growth in 2007-2009. In the aftermath of the crisis with external demand for manufactured goods having declined, the growth was supported by large investments financed by an anti-crisis fiscal stimulus and increased domestic consumption. 11. Increased exports of key commodities contributed to sustain growth during the crisis.. Specifically, surging global demand for gold and increased prices for natural gas2 and foodstuffs sustained total exports, offsetting lower demand for copper, cotton and chemicals. In 2009 overall, total exports grew by 2.4 percent, the trade surplus was US$2.3 billion, and the current account surplus was 6.4 percent of GDP, down from 12.8 percent in 2008. 2 The price of gas exported to Russia increased from $180/1,000 m3 in 2008 to $300/1,000 m3 in 2009, or 67 percent. 2 12. A large fiscal stimulus, over 4 percent of GDP, was designed to help mitigate the potential social consequences of the slowdown. It included a 40 percent increase in public sector salaries in 2009, a further 30 percent increase in 2010, and an allocation of about US$1.7 billion equivalent for employment creation in rural areas. Prudent fiscal policy before the crisis provided space for this stimulus and, according to official data, the budget recorded a small surplus of 0.1 percent of GDP in 2009. The government targets a deficit of only 1 percent of GDP in 2010. Meanwhile, commodity-based revenues in the Fund for Reconstruction and Development (FRD) increased from US$2.7 billion in 2008 to US$3.3 billion by end- September 2009 and he consolidated budget surplus was an estimated 1.5 percent of GDP. Total external debt ­ the bulk of which is public - was US$4 billion, or 14 percent of GDP, down from 64 percent of GDP in 2001, reducing total debt service to less than 8 percent of exports. 13. While careful macroeconomic management before the global slowdown helped maintain growth during the crisis, the authorities face several difficult challenges in the near term. First, is the re-emergence of the spread between official and market foreign exchange rates3. This may require re- evaluation by the Central Bank of the current exchange rate anchor. Second, strengthening the role of state in the economy as a result of the anti-crisis stimulus measures needs to be balanced with the need to develop the private sector. An assessment of the fiscal impact of increased welfare spending and public sector wages is necessary to verify the sustainability of these measures. 14. In the medium term, the Government's development strategy will remain focused on manufacturing and agriculture. Uzbekistan has already achieved some success in automobile production, hydrocarbons and metals refining and production of complementary products which are considered "strategic industries". In these sectors, the Government attempts to encourage foreign investments in order to attract new technologies in the country. Outdated technology is hampering the potential of agriculture, food processing and textile sectors which otherwise benefit from cheap labor and a favorable climate. Structural Policies 15. Towards end-2008, the authorities adopted a program of measures designed to improve the regulatory environment for private business. These included: a 30 percent decrease in the number of inspections required; targeted tax cuts e.g. for manufacturing firms; and reduced fees for construction permits. These positive impacts risk being attenuated by the proposed increase in minimum capital requirements for joint stock companies. 16. At the same time, the authorities also took steps to increase the capital of commercial bankspartly to strengthen the long-term resource base for investment, especially in small-scale private enterprise and rural housing, and partly to mitigate the consequences of the crisis. The capital adequacy of the banking system in terms of risk-weighted assets is about 23 percent, twice the Central Bank of Uzbekistan's minimum requirements and about three times that of international standards, which is nonetheless appropriate given the persisting high external risk environment. Social Developments 17. Uzbekistan's positive macro-economic performance has not translated fully into better living conditions. According to State Statistics Committee estimates based on the 2003 Household Budget Survey (HBS), headcount poverty rates fell from 27 percent in 2001 to 22 percent in 2008. Poverty is more prevalent in rural than in urban areasalmost 27 percentowing to the significant share of cotton in agricultural output, which is vulnerable to external factors (e.g. drastic climate changes). 18. Besides continued price and crop controls in the agriculture sector, the poorest have also been impacted by a large drop in current transfers from abroad, including workers' remittances, which peaked in 2008 at an estimated US$1.9 billion, or 7 per cent of GDP4. In 2009, these inflows are estimated 3 In mid-April 2010, the government initiated steps to reduce the spread inter alia by accelerating the devaluation of the official rate and reducing the overall demand for foreign exchange. 4 This number corresponds to net current transfers according to official balance of payments data. 3 to have fallen by about 30 percent, owing to slower economic growth in the neighboring countries, Russia and Kazakhstan. Finally, the increase in the spread between parallel and official exchange rate led to a higher level of implicit cotton taxation impacting negatively farmers' income. 19. Although social spending is highaccounting for 56 percent of public expenditure in 2009 and a projected 59 percent in 2010its quality and targeting need improvement. School enrolment, at 98 per cent, is almost universal, but disparities in quality remain, especially between urban and rural areas with schools in the latter still lagging behind those in the former in both physical (classrooms, desks, learning materials) and human (qualified teachers) resources. Health outcomes appear to be improvingUzbekistan has achieved its MDG for maternal health and is on track to reach the one for child mortality although methodological issues need to be addressed. Finally, social safety net targeting needs further upgrading. Public Sector Management 20. Progress continues on selected aspects of the governance reform agenda, such as treasury modernization, public financial management, anti-money laundering and counter-terrorism financing, and transparency. However, it remains a top-down driven process that needs to address more systematically issues such as: public accountability of state agents; access to, and transparency of socio-economic data and independent verification of information. This would help eliminate rent-seeking opportunities and ensure more widespread public participation in policy making and the monitoring and evaluation of results. While some measures have been taken to improve the investment climate, much remains to be done to facilitate private sector activities and investment, particularly by small and medium sized firms. IV. PROGRESS TOWARDS CAS OUTCOMES Overview 21. The enhanced quality of the policy dialogue and operational engagement underway at the time of CAS preparation in early 2008 has continued to improve. Two factors account for this: first, the authorities' progress in implementing selected, demand-driven reforms included in the CAS, especially those linked to investment projects where impact can be demonstrated by results on the ground; and second, the continued gradual turnaround in certain aspects of the WBG's program and portfolio. 22. Dialogue in areas where the Bank and the Government had not yet defined sequencing or a timetable led to some promising openings. The CAS differentiated between those areas where there was strong Government engagement and where the WBG had a successful track record (first level) and other areas where there was broad agreement but where reform sequencing and a timetable remained to be articulated (second level). While progress at the second level was slower, as expected, dialogue on governance (particularly data availability and transparency), social protection, and the fiduciary environment led to the development of a strengthened AAA program as well as specific government actions to be implemented in the second half of the CAS period. 23. Meanwhile, policy achievement include support for continued macroeconomic stability, improved public financial management, and modest enhancements to the business environment and investment climatethe latter supported by IFC advisory services. There has also been progress towards outcomes related to increasing access to safe water and sanitation and measures to improve energy efficiency, reduce greenhouse gas emissions, and mitigate environmental and natural disaster risks. However, additional efforts will be needed to enhance agricultural productivity and, indirectly, increase rural incomes, as well as to improve service delivery, especially in education and health. Moreover, remaining concernsshared by other development partnersabout the authorities' policies and practices relating to economic and financial data sharing and rigid regulation of public procurement need to be resolved. Regarding the former, technical assistance for targeted publication of official data has recently been agreed. As for procurement, the Ministry of Foreign Economic Relations, Investment and Trade's procedures for contract registration needs to be streamlined; and its practice of so-called `price verification' of already awarded/signed contracts needs to be eliminated under Bank-financed contracts. 4 CAS Outcomes 24. Details of progress to date and updated outcomes are provided in the Results Matrix (Annex 1) and are summarized below (under each of the CAS' four pillars). Enabling environment for shared growth Macro-economic stability and poverty monitoring. Institutional support for WIS implementation included technical assistance to help strengthen the macroeconomic analysis and forecasting capacity of the Ministry of Economy and its Institute of Forecasting and Macroeconomic Research (IFMR). Its focus was on helping the latter produce pragmatic, policy-oriented results using new macroeconomic tools and techniques. Outcomes included several brainstorming sessions with policy makers and researchers to analyze the overall impact of the crisis on Uzbekistan's economy, potential channels of crisis transmission, and possible mitigation measures. A small IDF-financed project supported monitoring and evaluation capacity building in health and education in the Ministries of Economy, Health and Education, including survey instruments and identification of data sources for over 170 indicators. It also enabled the Ministry of Economy to link WIS monitoring and evaluation data to budget planning and policy making. In addition, it helped improve user groups' access to primary data and its dissemination. These activities facilitated renewed dialogue with the authorities on poverty and social protection that is expected to lead to further analytical work in FY11. Governance. Technical assistance related to the recent Country Policy and Institutional Assessment (CPIA) facilitated dialogue and the exchange of information on issues such as public finance management, data transparency, and international governance indicators. In this context, the authorities undertook to improve policies and procedures in several areasthe business environment and data transparency regarding the budget and external debtthat negatively affect Uzbekistan's governance indicators. They also expanded access to information through several government and publicly-run websites. Meanwhile, the Bank and IMF have initiated work aimed at publishing key government statistics through the International Financial Statistics (IFS) database and Government Finance Statistics (GFS). Finally, a health governance assessment was disseminated and led to recommendations for improvements in service delivery. Public Financial Management. Supported by joint ADB/Bank/IMF technical assistance and the ADB- financed Treasury Modernization Project, the Ministry of Finance's Treasury department has developed a Chart of Accounts. In 2009, the Ministry also completed installation of a uniform treasury system, which applies GFSM 2001 standards and conforms to good international practice. A Government Financial Management Information System (GFMIS) is expected to be completed in 2011-12. Finally, as noted earlier, CPIA-related technical assistance helped introduce new external debt management and reporting policies and procedures in the Ministry's External Assets and Liabilities Department, including criteria and thresholds for evaluating and forecasting external debt. Financial sector. The CPIA also facilitated renewed dialogue with the Central Bank of Uzbekistan, focusing on bank privatization, mortgage market development, and financing for small and medium enterprises. IFC advisory work on leasing helped define a regulatory framework, addressed legislative inconsistencies, included extensive training and consulting for potential lessors. To stimulate practical development of leasing, IFC has provided financing to a private leasing company, and to build on customized advisory support to a leading private bank, IFC provided debt and equity financing to Hamkorbank. IFC's advisory work on housing finance contributed to the development of `Appraisal Standards for Real-Estate Property', facilitated creation of a housing price index, prepared a mortgage borrower's guide, disseminated mortgage lending best practices to commercial banks, and helped set up a training course for banks. Business environment. Dialogue in the context of Doing Business (DB) informed internal debate on priorities for improving the country's business environment. Specific measures taken and implemented include: a 25 percent reduction in building permit fees; a new tax code, which incorporated recommendations made by IFC's Investment Climate project; a 30 percent reduction in business inspections required; and adoption of a regulation on the use of cameral (off-site) control of businesses. 5 Increasing income and economic opportunities in rural areas Rural Enterprise Support Project (RESP)Phase II. Although initial implementation was delayed, 81 project beneficiaries' credit applications totaling over US$9 million were approved in the first quarter of 2010 by Participating Financial Intermediaries (PFIs). In addition, the Government introduced legislation allowing cotton farmers in districts covered by Bank-financed projects to sell their crops outside the national state order system. Irrigation and drainage infrastructure. Irrigation and drainage infrastructure was improved in 100,000 hectares during 2005-09, as a result of works and agricultural and institutional support activities completed under the Drainage, Irrigation & Wetlands Improvement Project, which helped lower the water table to acceptable levels in 90 percent of the project areas, leading to decrease in soil salinity, and increase in crop yields and farmers' income. Financial and institutional support is being provided to 105 Water User Associations (WUAs). In addition, a Bank-financed water sector investment planning study led to the development of a methodology for prioritizing individual irrigation and drainage investment projects. Strengthening human development and social protection through better service delivery Water and sanitation. CAS outcomes for increased access to clean watermeasured by improved reliability, enhanced water quality, and better financial viability under the Bukhara and Samarkand Water Supply Projectare on track for attainment by end-FY11. Institutional development experience gained under this project, which has potential for replication in other cities, helped inform the design of the recently approved Bukhara and Samarkand Sewerage Project, which will address these two cities' sanitation and wastewater management needs. Meanwhile, a comprehensive Water Supply and Wastewater Sector Note, outlining recommendations for policy and investment priorities, was well received at a March 2010 workshop, which is expected to be followed by a donor conference this year. Health. CAS outcomes for healthmeasured inter alia by the share of health budget expenditures on primary and outpatient care, increased utilization of primary care services, and, indirectly, infant and maternal mortalityare mixed. Primary care expenditures are on track to reach the targeted 50 percent by end-FY11, allowing for a 40 percent increase in medical staff salaries. Further, rural clinics included in the 2nd Health Project have been upgraded with modern equipment and their staff re- trained. IFC, through an advisory PPP mandate, is exploring a possibility of attracting private investment to develop a network of regional diagnostic centers. More broadly, the country's development goals for infant and maternal mortality by 2011 have both been achieved. On the other hand, the proportion of women receiving early stage antenatal care (77 percent in 2010) and the incidence of anemia among women of fertile age (65% in 2009) remain unchanged; and, action to improve governance, in particular financial and management accountability and the piloting of output- based hospital financing, has been slow. Finally, there has been little or no progress in Uzbekistan's component of the Central Asia HIV/AIDs Project, which was recently restructured. Education. The focus on quality in education is producing positive changes. For example, per capita financing was introduced nationwide in 2010, standardized assessments of student learning for 4th and 8th graders have been rolled out, and the goal of 85 percent of project schools having active school boards by 2011 has already been fully achieved. Despite these reforms, implementation of the Basic Education Project (BEP)-Phase 1 has progressed more slowly than expected due to initial delays and procurement issues. Meanwhile, Phase 2, designed to build upon and extend capacity created under BEP-1 to encourage greater education reform, was approved in June 2009. The overlap of the two phases is ensuring continuity of reforms. Environmental management, disaster risk management and global goods provision Improving energy efficiency. The Bank has contributed to enhanced awareness about energy efficiency, conservation, and savings opportunities in small- and medium-sized enterprises by conducting workshops for light industry, textiles, building materials, electrical equipment and food and meat processing. 6 Reducing greenhouse gas emissions. Dialogue on Uzbekistan's participation in the Global Gas Flaring Reduction Partnership (GGFR) and Carbon Financing Mechanisms continues. Uzbekneftegaz, the national oil and gas company, has confirmed its participation in the GGFR Partnership for 2010-12, aiming to reduce gas flaring from its oil production. A possible Clean Development Mechanism (CDM) Gas Flare Reduction Project under the Kyoto Protocol is also under preparation. Environmental Management, Disaster Risk Management (DRM) and Global Goods Provision. An energy sector vulnerability to climate change study has been initiated. A regional workshop took place in 2009 to launch regional DRM reports and initiate a regional hydromet program. Technical capacity was built in inventorying obsolete pesticide-contaminated burial sites; inventories and risk assessments were carried out; and recommendations for remediation were prepared for two priority burial sites. At the regional level, an independent assessment of the Regional Impact of Vakhsh River Basin Development was initiated. V. IMPLEMENTATION PROGRESS AND ADJUSTMENTS TO CAS Portfolio Performance--IBRD, IFC and MIGA 25. World Bank Group progress in terms of lending and analytical and advisory services has been at the high end of expectations in mid-2008. Including the proposed $25 million Energy Efficiency Industrial Enterprises Project being considered with this CASPR, commitments since mid-2008 total $226.5 million. Two factors account for this outcome: the continued improvement in the Bank Group's overall and sector-specific dialogue with Uzbekistan, exemplified inter alia by the authorities' progress in implementing the reforms noted above; and, the strengthening of certain aspects of its program and portfolio. Meanwhile, the active portfolio currently comprises two loans and six credits totaling U$371 million of which $252 million, or 68 percent, is undisbursed (Annex B2). IFC's portfolio comprises investments in seven companies totaling $13.9 million. MIGA has no guarantees currently outstanding. 26. Uzbekistan's portfolio performance has continued to improve, although key longstanding challenges remain. These include: (a) reducing start-up and implementation delays, significant for most operations, by better project preparation; and (b) exploiting successful projects in terms of scaling up and learning experiences. The latest CPPR lists contract registration and price verification, low PIU salaries, weak implementation capacity, cumbersome government procedures, slow decision-making on procurement issues, and delayed project start-ups as the main implementation issues. These are being addressed as part of the dialogue with the government and routine project supervision. Meanwhile, the modest 17 percent disbursement ratio in FY09 is expected to increase in FY10-11 as implementation of recently approved projects accelerates. The share of commitments and projects at risk is 25 percent and 37 percent respectively. An IEG evaluation of the RESP in FY08 rated it satisfactory, although shortcomings in project design were noted. IEG's overall rating for projects closing between FY96-08 was 67 percent satisfactory and for the last two years of this period, FY06-08, 100 percent satisfactory. Lending and Grants--IDA/IBRD and IFC 27. Table 2b in Annex 2 compares originally planned and actual lending. Since mid-2008, three specific investment loansRural Enterprise SupportPhase 2, Ferghana Valley Water Resources Management, and Bukhara & Samarkand Sewerageand one programmatic loanBasic Education II have been approved. Two loans closed during the same period--Rural Enterprise Support and Rural Water Supply and Sanitation. The Second Health Project was also restructured in FY10. 28. Uzbekistan's modest trust fund portfolio is also growing14 activities, totaling about $12 million. Since mid-2008, two major grants have been approved: a $1 million PHRD grant to help prepare the Syr Darya Water Supply Project and a $200,000 First Initiative grant to strengthen insurance supervision. It also includes two IDF grants for health and education monitoring and for capacity building of public sector audit institutions. At the regional level, a multi-donor trust fund has been created to support the proposed Central Asia Water and Development Framework. 7 29. Meanwhile, IFC has invested just over $9 million in three projects since mid-2008a modest outcome that is due to the constraints affecting the country's private sector, including significant challenges with disclosure by private companies. In banking, a new $3 million credit line to Uzbek Leasing will provide SMEs with medium-term leases for industrial equipment and machinery. A $5 million debt and equity financing package to Hamkorbank supports one of the country's few private banks. The Hamkorbank investment is accompanied by advisory services to strengthen Management Information Systems (MIS), human resources, risk management and corporate governance practices. A $1.2 million loan to Uzbekistan's first modern do-it-yourself (DIY) store will create positive upstream linkages for SMEs. Analytical and Advisory Activities (AAA) 30. An active program of analytical work was completed during FY08-10, including five reports and ten technical assistance activities (Annex B4). This work supported the policy dialogue and, based on the recommendations of an earlier QAG assessment, its quality has improved substantially. There has also been a notable increase in the range of advisory services requested by the authorities. Technical assistance was provided in: (a) macro-economic monitoring; (b) social vulnerability; (c) financial sector development; (d) growth and innovation; (e) private sector development; (f) energy; and (g) governance and transparency. At the same time, support has been provided at the regional level in transport, water, energy, and environmental management. The Bank is collaborating with CAREC's Energy Sector Coordinating Committee on a Central Asia Energy Action Plan. Within the CAREC framework, a regional study on selected road corridors is being complemented by technical assistance, including logistics chain analysis for specific products and transport routes, focusing on railways, and policy advice on logistics and transport. 31. IFC advisory services, comprising four projects costing almost $2 million, promoted improvements in the business environment and financial sector development. IFC's long-standing investment climate advisory project, which will be discontinued in the summer of 2010 (with elements of the previous work program to be pursued by the Doing Business team), assessed the impact of proposed regulations affecting businesses and simplifying tax administration. In addition to advisory work on leasing and housing finance noted earlier, a recently launched regional financial markets infrastructure advisory project focuses on the further development of credit information sharing systems and formal risk management education and certification. An infrastructure advisory project is developing a pilot PPP for medical diagnostic centers. IFC is also considering a proposal to improve efficiency in water management systems, combining PPP and policy advisory services, possibly with a farm level engagement. 32. All these activities were complemented by increased involvement by the World Bank Institute (WBI). Its main areas of engagement included: climate change, education policy reform and statistics, training of trainers on gender data analysis, workshops on inter-governmental fiscal relations, monitoring and evaluation, and performance budgeting and public sector governance. Planned Lending -- IBRD/IDA 33. The CASPR proposes two adjustments to the FY10-11 program, within an otherwise unchanged overall strategic framework. The first is the addition of three new operations in energyone in FY10 and two in FY11. The second is the resumption of lending on IBRD terms up to $250 million through end-FY11, at the authorities' request, for two of these three operations. 34. While energy sector reforms have been underway for several years, in particular regarding tariffs, much work remains and planned lending will facilitate much needed policy dialogue and technical assistance. Insufficient and unreliable electric power is now ranked the 3rd most important obstacle to doing business in Uzbekistan, up from 8th in 2005. At the same time, the economy's energy intensity is the highest in Europe and Central Asia and its conservation potential is huge. 35. Against this background, an IDA-financed Energy Efficiency for Industrial Enterprises project is being presented with this CASPR, and two IBRD-financed projects are under preparation for FY11: the first, in collaboration with ADB and JICA, will finance transmission systems associated with the 8 expansion of the Talimarjan gas-fired thermal power plant with efficient combined cycle gas turbines, and strengthening the transmission system for the South-Western region; the second will finance an automatic metering project that would not only promote demand-side energy conservation, efficiency, and management, but also improve governance through better accountability. More generally, planned lending is designed to facilitate the Bank's efforts to promote greater regional cooperation in energy and water. 36. In addition, the following modifications have been made to the lending program (Annex 2). nd The 2 Irrigation and Drainage operation originally planned for FY11 was folded into the larger Ferghana Valley Water Resources Management Project for which a $65.5 million credit was approved earlier in FY10; the proposed 3rd Health Project originally planned for FY10focused on delivery of more efficient, higher quality essential health services and strengthening their ability to respond to epidemicshas been slipped to FY11; and a municipal infrastructure project tentatively planned for FY11 has been replaced by two water supply operations. The first would extend access to over 300,000 town and village dwellers in Syr Darya and the second would upgrade services for a population of about 120,000 people in the Alat Karakul district south of Bukhara. A sewerage project in Karakalpakstan is tentatively planned for FY12. 37. Responding to a Government request, a limited creditworthiness analysis was recently undertaken to assess Uzbekistan's eligibility to resume borrowing on IBRD terms. The outcome was a decision to permit Bank lending up to $250 million for energy during the balance of the CAS period, i.e., through June 30, 2011. This qualified approach, which the authorities understand and accept, reflects: (a) the fact that Uzbekistan's GNI per capita of $910 remains well below the IDA operational cutoff of $1,135 in 2008; (b) issues about the limited access to official economic and financial data; and (c) Uzbekistan's low ranking on a number of international governance and transparency indices, especially the country's challenging business environment and the latter's impact on private sector development, including foreign direct investment (FDI). Continued access to IBRD lending in FY12 and beyond will depend on progress in these areas and on the outcome of a full creditworthiness analysis during preparation of the next CAS. Planned activities -- IFC and MIGA 38. IFC will maintain its focus on private sector development through a combined advisory and investment approach. Despite the challenging environment, it will seek out investment opportunities in the following priority areas i) making direct real sector investments, with the focus on general manufacturing, services and agribusiness sectors; ii) strengthening the privately owned segment of the banking sector, and iii) encouraging private sector participation in infrastructure. IFC will provide lines of credit for small and medium sized enterprises, trade finance, and, potentially, loans for energy efficiency projects, complementing all these efforts with its financial markets infrastructure project to further develop credit information sharing systems and facilitate introduction of risk management certification. Infrastructure advisory work is expected to create new opportunities for private sector participation, building on IFC's first ongoing engagement to attract private investors to develop regional medical diagnostic centers on a PPP basis. The increasing prominence of water issues in Uzbekistan may present opportunities for IFC to help develop sustainable solutions though a combination of advisory and investment support. The IFC is targeting about US$12 million in three new investments in FY11. 39. MIGA has identified two areas where its guarantees could facilitate private sector development. First, is the Navoi Free Industrial Zone, which focuses on the manufacture of white goods and electronics for a potential market of up to 300 million consumers in wider Central Asia. Second, are investments in energy, oil and gas, especially electric power generation and infrastructure for gas production and transportation. Planned Analytical and Advisory Services 40. Policy dialogue and analytical and advisory services will focus on macroeconomic management issues, support planned loans for energy and, potentially, transport, and improving the overall business climate. The Bank will conduct with the authorities a Public Expenditure Review (PER) of the social sectors. It also plans to undertake Public Expenditure and Financial Accountability (PEFA) 9 performance measurements, using self-assessments with external validation. On the business environment side, the country team will engage in dialogue focused on Doing Business indicators and quality infrastructure (standardization and certification processes of goods and services). Finally, the Bank will engage on exchange rate policy dialogue. 41. At the regional level, the Bank has already initiated a Central Asian Energy-Water Development Framework. In cooperation with other development partners, it has initiated an inter-sectoral programmatic approach designed to offer incentives for regional cooperation through analytical work, institutional development, and, eventually, major infrastructure investments that would optimize regional synergies between water and energy. 42. WBI will offer a number of face-to-face and e-learning regional and global programs through its Global Partner Platform and Practitioner exchange program. In FY10-11, capacity building programs will be delivered in the areas of public financial management (PFM), procurement, trade, health, climate change, and public-private partnerships. 43. The CAS results framework has been revised, updated and streamlined to reflect adjustments to the FY10-11 program, as well as implementation progress. Some indicators have been removed or revised, taking into account the adjustments discussed above. However, indicators for the new energy operations have not been added since there will be no results to monitor before the end of the CAS period. VI. RISKS 44. The fiduciary, development effectiveness, exogenous and natural disaster risks identified in the CAS remain relevant and the additional commitments proposed in this CASPR add new ones. While a recent assessment noted significant progress in public financial management, fiduciary risks remain high. Improvement in external and internal audit, which continue to focus on inspections and compliance with rules and regulations, require further attention. Exogenous risks such as regional relations over the use and exchange of energy and water continue to be significant. Compounding the latter is the potential reputational risk to the World Bank Group if the planned regional energy-water dialogue falters or fails. 45. However, the Bank's overall dialogue with Uzbekistan has clearly strengthened during the CAS. Moreover, planned new lending for energy is consistent with the CASspecifically its fourth pillar; and the country's creditworthiness, governance, and political economy have not changed materially since mid-2008. In addition, lending beyond the $250 million envelope now authorized will be subject to a full creditworthiness and risk assessment during preparation of the next CAS. Although risks stemming from possible deficiencies in the capacity of Uzbekenergo to manage reforms in the energy sector are real, the enhanced dialogue triggered by the Bank's strategic investments in the sector should help mitigate them. Finally, recent progress in disaster risk management at the regional level through the endorsement of a draft program of regional activities is a mitigating factor. 46. In addition, continued overall risk mitigation measures include inter alia: (a) hands-on support for government efforts to address capacity issues (e.g. through technical assistance) and intensification of the dialogue with key stakeholders to reinforce the constituency for reforms; (b) support for economic diversification, including reduced reliance on gas revenues, as well as for strengthening of the country's social service delivery; and (c) renewed emphasis on activities and operations aimed at improving regional cooperation and security, particularly on issues related to water and energy. 10 Annex 1: Results Matrix Country Development Outcomes influenced by the CAS Program World Bank Group's Mode of Goals and progress to Intervention and Main date (in italics) End-CAS Outcomes by end- Progress to date since the Milestones for monitoring further Instruments FY11 beginning of the CAS period progress (towards end-CAS in the Coming Period5 (towards end-CAS outcomes) outcomes) by June 2011 PILLAR 1. Enabling environment for shared growth Institutional support for WIS implementation and Promoting Good Governance Maintain Macroeconomic policy Introduction of advanced Macro-economic advice is Mode of intervention: Integrated macroeconomic formulation is informed by macroeconomic tools and models provided to the policy-makers on a package of analytical work, stability(on track) analytical research and and strengthening links between regular basis to adjust technical assistance and international experience research and the policy macroeconomic framework to monitoring Contain inflation: formulation. global economic developments Economic monitoring (TA) Baseline: 12 percent CPIA Policy Dialogue (TA) (2007) Agreement with the National Internationally recognized Vulnerability Assessment (TA) Target: 6 percent The Government adopts Institute for social research (ISR) methodology of (i) designing, Dialogue on Poverty and Social (2008-2011) techniques consistent with on joint analytical work on collecting, and analyzing HBS and Protection (TA) (inflation at 7.1 percent international practice for poverty monitoring has been (ii) estimating the informal sector in WIS implementation support in 2010) Household Budget Surveys reached and two workshops on the economy is adopted by the (TA) (HBS) and Labor Force Surveys were conducted relevant government agencies Dialogue on Governance in Reduce poverty rate: (LFS) Health Sector (TA) Baseline: 25 percent WIS monitoring is conducted The government carries out joint Innovation and growth (TA) (2006) by the newly established M&E analytical work on living conditions A&A ROSC dissemination (TA) Target: 20 percent Unit of the MoE. Improved with the WBG PEFA self assessment (TA) (2010) The Government is equipped statistical indicators are being Country Economic Memorandum (no reliable data) with a M&E system for developed to be integrated in WIS WIS monitoring framework is (ESW) implementation of the WIS M&E process. developed and implemented; IDF grant on Monitoring and Improved health and education Evaluation (TF) indicators integrated in M&E IDF Grant on External and process Internal Audit (TF) 5 LEN=new IBRD, IDA loan, SPN=ongoing IDA project, ESW=IDA analytical work, TA=IDA/IFC technical assistance, IFC=IFC investment, TF = Trust Fund 11 Country Development Outcomes influenced by the CAS Program World Bank Group's Mode of Goals and progress to Intervention and Main date (in italics) End-CAS Outcomes by end- Progress to date since the Milestones for monitoring further Instruments FY11 beginning of the CAS period progress (towards end-CAS in the Coming Period5 (towards end-CAS outcomes) outcomes) by June 2011 Increase the Efficiency Public Financial Management Agreement reached on Agreement is reached on of Public Financial reform process is informed by conducting joint PEFA benchmarking elements of the PFM Management good international practice of system based on a completed joint Partnership: IMF, UNDP, ADB benchmarking Uniform Treasury system and PEFA assessment procurement system fully More Effective Service Increased transparency in the consistent with international GMIS procurement process Provision utilization of public resources as standards GFSM 2001 introduced completed in FY11 measured by publication of Budget implementation reports Reporting to the WB on budget Uzbekistan is in the International execution and external debt has Financial Statistics (IFS) database Dialogue on Governance improved challenges progresses and is The government is engaged on gradually extended from sector Primary Health Care improving transparency and specific to broader common Governance assessment findings accountability under the CPIA issues are disseminated dialogue Access to public information improved through introduction government and publicly run websites and implementation of decree #116 Private Sector Development, Business Environment and Investment Climate Increase investment-to- Improvement in the Business Regulation of lease of state Recommendations to improve Mode of intervention: GDP ratio Environment as measured by property was introduced tax code completed Benchmarking, analytical work, Baseline: 18.6 percent Doing Business survey ­ by end- technical assistance, and IFC (2006) CAS Drafting of a law "On Permit Review of land registration investments and advisory services Target: 24 percent procedures" is included on the policy and legal framework Benchmarking through Doing (2011) 2010 State Program and draft law supporting the cadastre completed Business (TA) (23 percent in 2009) on "Credit Information" Dialogue on Private Sector reform submitted for review Laws "On Permit procedures", and Development (TA) 12 Country Development Outcomes influenced by the CAS Program World Bank Group's Mode of Goals and progress to Intervention and Main date (in italics) End-CAS Outcomes by end- Progress to date since the Milestones for monitoring further Instruments FY11 beginning of the CAS period progress (towards end-CAS in the Coming Period5 (towards end-CAS outcomes) outcomes) by June 2011 Increase share of SME "Credit Information Sharing and Introduction of PPP support (TA) in GDP A first ever tax compliance Credit Bureau Activity" and Financial sector policy dialogue Baseline: 42.1 percent costs survey completed, results "Conformity Assessment" passed (TA) (2006) presented to GoU Growth and Innovation (TA) Target: 52 percent Article-by-article Commentary Strengthening Insurance (2011) to the Tax Code approved supervision - First initiative (50 percent in 2009) Grant (TF) Tax compliance costs report IFC financial and real sector Increase share of private published investments sector in GDP Strengthen insurance regulation Insurance sector analytical work Better risk management by IFC Infrastructure/PPP Advisory Baseline: 45 percent and supervision to promote and completed and training program insurance companies (2006) secure a sound and stable prepared for SISB" Action plan to further improve Partnership: IMF, EBRD Target: >45 percent insurance market in Uzbekistan 11,000 MSME loans provided accounting and auditing practices is (2011) by IFC client Banks developed and implementation (no reliable data) Private participation in started infrastructure projects increases Plan to privatize Asaka Bank is on hold Guidance for appraising housing Leasing and housing finance given on mortgage loan approved sectors develop in accordance IFC signed first PPP mandate with international best practices Law "On Credit Bureaus and Favorable regulatory base for Credit Histories" adopted Tax administration simplified leasing sector sustained, value of lease financing doubled An internationally recognized risk The system for credit between 2007 and 2008 (from management certification program information sharing is improved US$144 mln to US$266 mln) introduced and is available to Uzbek (as measured by the DB risk professionals in Russian indicator and by increased # of "Appraisal Standards for credit reports issued) Real-Estate Property" adopted Successful completion of the pilot PPP on medical diagnostic IFC amendements to the Tax centers Code adopted 13 Country Development Outcomes influenced by the CAS Program World Bank Group's Mode of Goals and progress to Intervention and Main date (in italics) End-CAS Outcomes by end- Progress to date since the Milestones for monitoring further Instruments FY11 beginning of the CAS period progress (towards end-CAS in the Coming Period5 (towards end-CAS outcomes) outcomes) by June 2011 PILLAR II INCREASE INCOME AND ECONOMIC OPPORTUNITIES IN RURAL AREAS Increased productivity of Area of irrigated land with Improved irrigation and drainage Mode of intervention: integrated Increase productivity of farming in a total area of 2 adequate irrigation and drainage system for rural producers: package of analytical work, agriculture million ha as measured by: facilities increased by 100,000 ha Area of irrigated land with technical assistance, and IBRD Yields of cotton, wheat, under the DIWIP project (50,000 adequate water supply is increased lending for infrastructure Increase farmers' potatoes, fruits and of which have groundwater table by 40,000 ha (RESP II area) Drainage, Irrigation and wetlands incomes vegetables, and silage corn up to 2.0 m below the surface) Area of irrigated land with improvement project (SPN) adequate drainage is increased by Rural Enterprise Reform project Increasing efficiency, Enhanced farm access to International prices of by- 30,000 ha (RESP II area) RESP II (SPN) effectiveness and commercial financial services in products such as vegetable oil are Fergana Valley Water Resources environmental seven provinces as measured included to fix the state purchase Improved soil quality in project Management project (SPN) sustainability of by: price for Cotton (prices increased areas as measured by: Water Sector Investment Planning irrigation and soil 500 new microcredit lines by 20 percent in 2008-2009) Water table below the ground: study (ESW) improvement Baseline: 1.5 m (2007) Policy Dialogue on Agriculture Capacity and financial viability 60 sub-loans applications Target: > 2.0 m (2011) (TA) of the Water User Associations were approved during the last is enhanced as measured by: agricultural season Financial and institutional - Increase amount of support is provided to 84 Water Partnership: ADB, UNDP, USAID maintenance conducted by Institutional support and User Associations (WUAs) ICARDA, IWMI, SDC/SECO, WUAs from 30 percent to 45 reorganization of WUAs has been KfW percent initiated - Increase water fee collection from 15 percent to 30 percent 14 PILLAR III. STRENGTHENING HUMAN DEVELOPMENT AND SOCIAL PROTECTION THROUGH BETTER SERVICE DELIVERY Improved provision of safe water and sanitation Universal consumption Improved access to safe and Reliability of water supply Mulyon Water Treatment plant Mode of intervention: integrated of safe water sustainable water supply and services has improved and is 98% built package of analytical work, sanitation services in project in project areas. technical assistance, and IDA Baseline: 80 percent areas measured by: Water Supply Sector strategy is lending for infrastructure (2006) Improved reliability of water Mulyon Water Treatment plant disseminated and discussed at a Bukhara-Samarkand Water Target: 86.8 percent supply design was completed and work workshop Supply Project (SPN) (2011) Baseline : Bukhara 87.3 % & commissioned Bukhara-Samarkand Sewerage (no updated data) Samarkand 48% (2007) 100% of targeted water meter Project (SPN) Target: Considerable Water quality sampling and installation is completed Syr DaryaWater Supply Project improvement in water services testing program is in place in (LEN) (2011) both cities. Hydraulic Water Network Alat-Karakul Water Supply Modeling information in place to project (LEN) Enhanced water quality Water quality has improved ensure better monitoring of the Karakalpakstan Sewerage project Baseline : 7.9 % & 40% failing considerably in project areas. Abt water supply system (LEN) water quality test in Bukhara and 3% of the water tested failed Water Sector Policy Note (ESW) Samarkand respectively (2007)) chlorine residual standards 110 km and 130km of Water sector dialogue (TA) Target: <5% of samples failing dilapidated pipes replaced in water quality test (2011) 103 km of pipe replaced in Bukhara and Samarkand Bukhara and 126 km in respectively Better financial viability as Samarkand indicated by improved revenue 100% conversion of unregistered collection rates. Billing system has been water connections in project areas Baseline : 67% & 44% in installed in both water utilities Bukhara and Samarkand /vodokanals in project cities respectively (2007)) Target: 87% & 80% collection Collection rates have rates for Bukhara and Samarkand improved and are 86% and 89% respectively (2011) in Bukhara and Samarkand respectively. Improved health indices Improved health status, Access to quality Health Care Case-based and output-based percent of women who receive Mode of intervention: integrated particularly among the enhanced as measured by: financing have not yet started antenatal care in the early stage of package of analytical work, rural population Increased utilization of pregnancy (up to 12-week technical assistance, and IDA Infant mortality per primary care services 20 percent of urban PHC pregnancy period) lending 15 1000 live born - % of women who receive facilities converted to per capita Baseline ­ 77 percent (2010) Health - II project (SPN) Baseline: 15 (2005) antenatal care in the early stage financing and management Target ­ 95 percent (2011) Central Asia AIDS project (SPN) Current: 11,3 (2009) of pregnancy (up to 12-week system in pilot areas National Flour Fortification Target: 12 (2011) pregnancy period Output based financing pilot Project (GIAN-financed) Baseline ­ 85% (2007) In the last 2 years there was a introduced in at least 1oblast Health System Improvement Maternal mortality Target ­ 95% (2010) deterioration of the situation with Project(LEN) per 100 thous. live- Recent-77% (2008) the utilization of antenatal care 100 percent percent of SVPs are Health & Education ME& born and level of anemia in fertile age fully equipped Capacity Building IDF Grant Baseline: 28 (2007) Number of CRHs using case- women(from 60% to 64.8% in (TF) Current 25.5 (2009) based financing 2009). 3000 SVP doctors are retrained Social sectors PER (ESW) Target: 24 (2011) Baseline : 0 percent (2007) Avian Flu Grant (TF) Current: 0 percent 2009) Target: 100 percent in at least 1 oblast (2011) Partnership: ADB, FAO, USAID, WHO, UNICEF Percent of health budget expenditures on PHC and outpatient care Baseline ­ 43 percent (2007) Current: 47 percent (2009) Target ­ 50 percent (2011) Reduced health risk Heath risk from global Pregnant women voluntarily from global pandemic pandemic is reduced through: Little progress was achieved in testing for HIV as a percent of all Improved HIV/AIDs Uzbekistan through the regional pregnant women increase by 10 prevention and control project percent - percent of HIV positive women receiving ARV treatment among those voluntarily requesting treatment Baseline: 70 percent(2007) Current: 70 percent (2009) Target: 100 percent(2011) 16 Improved basic education and learning Increase access to Schools adopt quality enhancing Availability of teaching and 80 percent of project schools Mode of intervention: integrated quality basic education: techniques, materials and learning materials has not yet have core set of educational package of analytical work, participatory practices increased for grades 1-4 but has materials available for grades 1-4 technical assistance, and IDA increased for project preschools Baseline: 0 percent (2009) lending Target: 80 percent (2011) Basic Education Project - I (SPN) 100 percent of school boards Basic Education Project - II active in BEP1 project schools 20,000 teachers at preschools (SPN) and schools trained Education AAA National standardized test for grades 4 and 8 implemented Partnership: ADB, UNDP, UNICEF, JICA, BC Per capita financing introduced nationwide in 2010 All experts and facilitators who will provide teacher training have been trained PILLAR IV. ENVIRONMENTAL MANAGEMENT, DISASTER RISK MANAGEMENT, AND GLOBAL GOODS PROVISION Improvement of energy Awareness on energy savings Energy Efficiency workshops Communication strategy on EE Mode of intervention: integrated efficiency and renewable energy supply held for light industry, textiles, developed package of analytical work, sources is enhanced in selected building materials and electrical national and regional technical remote areas: equipments industry Region-wide master plan for assistance, Carbon Fund grant, - Number of Public service generation and transmission and IDA and IBRD lending for buildings in rural/remote areas Metering strategy was investments is being discussed infrastructure equipped reviewed by international expert Talimarjan Transmission Project (LEN) Reducing greenhouse Reduction of greenhouse gas Uzbekenergo endorsed Global Project documentation for South Central Asia Regional Hydromet gas emissions emissions as measured by: Gas Flaring Reduction (GGFR) Kemachi and Zervardi oil fields is (LEN) Emissions: Baseline: 121 mln. Partnership and confirmed presented for potential CDM Energy Efficiency for Indust tons CO2,(2004) participation in the period 2010 ­ financing Enterprises (LEN) (no data beyond 2005) 2012 Uzbekneftegaz Associated Gas Associated Gas Recovery Plan UNG carries out gas flaring Project (Carbon Fund) Intensity: Baseline: 2686 tons (AGRP) prepared measurements independently Uzbekistan Municipal 17 CO2 per mln. 2000 ppp US$ Governance (TA) GDP (highest in ECA) CDM workshop carried out Central Asia Energy Water (no data beyond 2005) with industry and Government Development Program (TA) Regional AAA Program on Uzbekneftegaz (UNG)is an Reducing Vulnerability to official GGFR member Climate Change in ECA Improved GoU has established optimal Energy Sector Vulnerability Energy Sector Vulnerability Agricultural Systems. (TA) Environmental adaptation strategies for Study initiated Feb 2010 Study finalized and presented to Multi-donor Trust Fund for Management, Disaster managing the risks for Govt by July 2010 Central Asia Energy Water Risk Management and Uzbekistan's energy sector from Development Program (TF) Global Goods Provision changing climatic hazards Inventory, risk assessment an Awareness raising workshop on Agricultural systems vulnerability recommendations provided for reducing vulnerability to climate to climate change (ESW) Uzbekistan initiated analytical two pilot burial sites for obsolete change in Agricultural Systems Energy Vulnerability to Climate work to prioritize obsolete pesticide burial sites takes place Change study (ESW) pesticide contaminated sites IFC Water Sector Advisory First phase of the Regional Roadmap for Adaptation to (under consideration) Impacts of Vakhsh River Basin Climate Change in the Amu Darya IFC Energy Efficiency Development completed River Basin is finalized Investments and Advisory (under consideration) Global Facility for Disaster Reduction and Recovery (GFDRR) Hydromet-funded Central Asia Disaster Risk Management and Hydromet Modernization(TF) Partnership: ADB, UNDP, IWMI, CAREC, UNECE, GFDRR 18 Annex 2a: Planned versus Actual IDA-IBRD Lending* CAS Program Summary (page 62 of the CAS) Actuals to date and Current Forecast FY08-10 FY08-10 Actual Rural Enterprise Support II (FY08) $68 m Rural Enterprise Support II(FY08) $68m Ferghana Valley (FY09) $40 m Ferghana Valley (FY10) $65m Basic Education II (FY09) $25 m Basic Education II (FY09) $28 m Health III TBD Bukhara and Samarkand Sewerage (FY10) $40 m Small Town/Rural communities infra TBD Energy Efficiency Industrial Enterprises (FY10) $25 m Uzbekneftegas Associated Gas Project (Carbon Fund) FY08-10 IDA$226.5 m FY11 FY11 Pipeline Municipal Infrastructure TBD Syrdarya Water Supply $108 m Irrigation and Drainage II TBD Health III $93m Alat-Karakul Water Supply $12m Talimarjan gas-fired thermal (IBRD) $170 m Automatic metering of electricity(IBRD) $80 m FY11 IDA $213 m ­ IBRD $250 m FY08- 11 IDA $439.5 m ­ IBRD $250 m *Uzbekistan is currently classified as a blend country. However, between FY04 and FY10, it was unable to access IBRD resources due to creditworthiness concerns. Annex 2b: Proposed IDA-IBRD Lending Scenario FY10-FY11 Project Name IDA IBRD FY10 FERGHANA Valley Water Resources Mgt 65.5 Bukhara & Samarkand Sewerage Project 55.0 Energy Efficiency for Industrial Enterprises 25.0 Result 145.5 FY11 Syrdarya Water Supply Project 108.0 Health 3 93.0 Alat-Karakul Water Supply WS Project 12.0 Talimarjan gas-fired thermal power plant (IBRD) 170.0 Automatic metering of electricity 80.0 Result 213.0 250.0 *Indicative IDA15 allocation: SDR 236.4 million, i.e. $348 million. Amounts for FY11 are indicative only and will be adjusted on the basis of final IDA allocation. 19 Annex B1: Country at a Glance Uzbekistan at a glance 2/25/10 Euro pe & Ke y D e v e lo pm e nt Indic a t o rs Central Lo w Uzbekistan A sia inco me Age distribution, 2008 (2008) Male Female P o pulatio n, mid-year (millio ns) 27.3 441 973 75-79 Surface area (tho usand sq. km) 447 23,916 9,31 1 0 60-64 P o pulatio n gro wth (%) 1.7 0.3 2.1 Urban po pulatio n (% o f to tal po pulatio n) 37 64 29 45-49 30-34 GNI (A tlas metho d, US$ billio ns) 24.7 3,274 510 15-19 GNI per capita (A tlas metho d, US$ ) 910 7,418 524 GNI per capita (P P P , internatio nal $ ) 2,660 12,220 1,407 0-4 10 5 0 5 10 GDP gro wth (%) 9.0 5.5 6.4 percent of total population GDP per capita gro wth (%) 7.2 5.2 4.2 ( m o s t re c e nt e s t im a t e , 2 0 0 3 ­ 2 0 0 8 ) .25 P o verty headco unt ratio at $ 1 a day (P P P , %) 46 4 .. Under-5 mortality rate (per 1,000) P o verty headco unt ratio at $ 2.00 a day (P P P , %) 77 9 .. Life expectancy at birth (years) 67 70 59 80 Infant mo rtality (per 1,000 live births) 36 21 78 Child malnutritio n (% o f children under 5) 4 .. 28 60 5 A dult literacy, male (% o f ages 1 and o lder) .. 99 72 40 5 A dult literacy, female (% o f ages 1 and o lder) .. 96 55 Gro ss primary enro llment, male (% o f age gro up) 97 99 102 Gro ss primary enro llment, female (% o f age gro up) 94 96 95 20 0 A ccess to an impro ved water so urce (% o f po pulatio n) 88 95 67 A ccess to impro ved sanitatio n facilities (% o f po pulatio n) 96 89 38 1990 1995 2000 2007 Uzbekistan Europe & Central Asia a N e t A id F lo ws 19 8 0 19 9 0 2000 2008 (US$ millio ns) Net ODA and o fficial aid .. 62 186 166 Growth of GDP and GDP per capita (%) To p 3 do no rs (in 2007): Japan .. 1 82 56 15 United States .. 0 36 19 10 Germany .. 0 9 17 5 A id (% o f GNI) .. 0.5 1.4 0.7 0 A id per capita (US$ ) .. 3 8 6 -5 -10 Lo ng- T e rm E c o no m ic T re nds -15 95 05 Co nsumer prices (annual % change) .. 3.1 25.0 10.0 GDP implicit deflato r (annual % change) .. 4.0 47.3 19.9 GDP GDP per capita Exchange rate (annual average, lo cal per US$ ) .. 0.0 236.6 ,31 1 8.8 Terms o f trade index (2000 = 100) .. 19 1 100 1 45 19 8 0 ­ 9 0 19 9 0 ­ 2 0 0 0 2 0 0 0 ­ 0 8 (average annual gro wth %) P o pulatio n, mid-year (millio ns) 16.0 20.5 24.7 27.3 2.5 1.8 1.3 GDP (US$ millio ns) .. 13,361 13,760 27,934 .. -0.2 6.6 (% o f GDP ) A griculture .. 32.8 34.4 21 .4 .. 0.5 6.6 Industry .. 33.0 23.1 30.8 .. -3.4 4.6 M anufacturing .. 22.1 9.4 12.1 .. 0.7 2.1 Services .. 34.3 42.5 47.9 .. 0.4 7.8 Ho useho ld final co nsumptio n expenditure .. 61.4 61.9 48.8 .. .. .. General go v't final co nsumptio n expenditure .. 25.4 18.7 17.8 .. .. .. Gro ss capital fo rmatio n .. 32.2 16.3 23.0 .. -2.5 8.3 Expo rts o f go o ds and services .. 28.8 24.6 41.9 .. 2.5 8.2 Impo rts o f go o ds and services .. 47.8 21.5 31.5 .. -0.4 10.4 Gro ss savings .. 3.6 17.9 40.5 20 Uzbekistan B a la nc e o f P a ym e nt s a nd T ra de 2000 2008 Governance indicators, 2000 and 2008 (US$ millio ns) To tal merchandise expo rts (fo b) 2,935 10,549 To tal merchandise impo rts (cif) 2,696 8,262 Voice and accountability Net trade in go o ds and services 422 2,895 Political stability Current acco unt balance 21 6 4,878 as a % o f GDP 1.6 17.5 Regulatory quality Rule of law Wo rkers' remittances and co mpensatio n o f emplo yees (receipts) .. .. Control of corruption Reserves, including go ld 1,273 2,684 0 25 50 75 100 2008 Country's percentile rank (0-100) C e nt ra l G o v e rnm e nt F ina nc e higher values imply better ratings 2000 (% o f GDP ) Current revenue (including grants) 36.8 30.1 Source: Kaufmann-Kraay-Mastruzzi, World Bank Tax revenue 34.8 28.0 Current expenditure 29.4 27.7 T e c hno lo gy a nd Inf ra s t ruc t ure 2000 2008 Overall surplus/deficit -2.5 5.3 P aved ro ads (% o f to tal) 87.3 .. Highest marginal tax rate (%) Fixed line and mo bile pho ne Individual 36 25 00 subscribers (per 1 peo ple) 7 53 Co rpo rate 26 10 High techno lo gy expo rts (% o f manufactured expo rts) .. .. E xt e rna l D e bt a nd R e s o urc e F lo ws E nv iro nm e nt (US$ millio ns) To tal debt o utstanding and disbursed 4,633 3,995 A gricultural land (% o f land area) 65 66 To tal debt service 886 692 Fo rest area (% o f land area) 7.6 7.7 Debt relief (HIP C, M DRI) ­ ­ Natio nally pro tected areas (% o f land area) .. 2.0 To tal debt (% o f GDP ) 33.7 14.3 Freshwater reso urces per capita (cu. meters) 647 608 To tal debt service (% o f expo rts) 26.1 5.0 Freshwater withdrawal (billio n cubic meters) 58.3 .. Fo reign direct investment (net inflo ws) 75 918 CO2 emissio ns per capita (mt) 4.8 4.3 P o rtfo lio equity (net inflo ws) 0 0 GDP per unit o f energy use (2005 P P P $ per kg o f o il equivalent) 0.8 1.2 Composition of total external debt, 2008 Energy use per capita (kg o f o il equivalent) 2,044 1,829 IBRD, 313 IMF, 0 Short-term, 211 IDA, 55 Wo rld B a nk G ro up po rt f o lio 2000 2008 Other multi- Private, 1,109 lateral, 563 (US$ millio ns) IB RD To tal debt o utstanding and disbursed 217 313 Disbursements 31 15 P rincipal repayments 5 29 Bilateral, 1,744 Interest payments 12 18 US$ millions IDA To tal debt o utstanding and disbursed 0 55 Disbursements 0 13 P riv a t e S e c t o r D e v e lo pm e nt 2000 2008 To tal debt service 0 0 Time required to start a business (days) ­ 15 IFC (fiscal year) Co st to start a business (% o f GNI per capita) ­ 10.3 To tal disbursed and o utstanding po rtfo lio 8 6 Time required to register pro perty (days) ­ 78 o f which IFC o wn acco unt 8 6 Disbursements fo r IFC o wn acco unt 2 1 Ranked as a majo r co nstraint to business 2000 2008 P o rtfo lio sales, prepayments and (% o f managers surveyed who agreed) repayments fo r IFC o wn acco unt 1 3 Tax rates .. 1 8.1 A ccess to /co st o f financing .. 16.0 M IGA Gro ss expo sure 10 ­ Sto ck market capitalizatio n (% o f GDP ) 0.2 4.2 New guarantees 0 0 B ank capital to asset ratio (%) .. .. No te: Figures in italics are fo r years o ther than tho se specified. 2008 data are preliminary. 2/25/10 .. indicates data are no t available. ­ indicates o bservatio n is no t applicable. Develo pment Eco no mics, Develo pment Data Gro up (DECDG). 21 Millennium Development Goals Uzbekistan With selected targets to achieve b etween 1990 and 2015 (estimate clo sest to date sho wn, +/- 2 years) Uzbe k is t a n G o a l 1: ha lv e t he ra t e s f o r e xt re m e po v e rt y a nd m a lnut rit io n 19 9 0 19 9 5 2000 2008 .25 P o verty headco unt ratio at $ 1 a day (P P P , % o f po pulatio n) <2 .. 42.3 46.3 P o verty headco unt ratio at natio nal po verty line (% o f po pulatio n) .. .. 27.5 .. Share o f inco me o r co nsumptio n to the po o rest qunitile (%) 10.9 .. 7.9 7.1 P revalence o f malnutritio n (% o f children under 5) .. 15.3 7.1 4.4 G o a l 2 : e ns ure t ha t c hildre n a re a ble t o c o m ple t e prim a ry s c ho o ling P rimary scho o l enro llment (net, %) 78 .. .. 91 P rimary co mpletio n rate (% o f relevant age gro up) .. .. 95 97 Seco ndary scho o l enro llment (gro ss, %) 101 92 88 102 Yo uth literacy rate (% o f peo ple ages 15-24) .. .. 99 .. G o a l 3 : e lim ina t e ge nde r dis pa rit y in e duc a t io n a nd e m po we r wo m e n Ratio o f girls to bo ys in primary and seco ndary educatio n (%) 94 .. 98 98 Wo men emplo yed in the no nagricultural secto r (% o f no nagricultural emplo yment) 46 44 .. .. P ro po rtio n o f seats held by wo men in natio nal parliament (%) .. 6 7 18 G o a l 4 : re duc e unde r- 5 m o rt a lit y by t wo - t hirds Under-5 mo rtality rate (per 1 ,000) 74 68 62 41 Infant mo rtality rate (per 1,000 live births) 61 57 53 36 M easles immunizatio n (pro po rtio n o f o ne-year o lds immunized, %) 84 91 99 99 G o a l 5 : re duc e m a t e rna l m o rt a lit y by t hre e - f o urt hs M aternal mo rtality ratio (mo deled estimate, per 1 00,000 live births) .. .. .. 24 B irths attended by skilled health staff (% o f to tal) .. 98 96 100 Co ntraceptive prevalence (% o f wo men ages 1 5-49) .. 56 67 65 G o a l 6 : ha lt a nd be gin t o re v e rs e t he s pre a d o f H IV / A ID S a nd o t he r m a jo r dis e a s e s P revalence o f HIV (% o f po pulatio n ages 1 5-49) .. .. 0.1 0.1 Incidence o f tuberculo sis (per 100,000 peo ple) 68 76 93 1 13 Tuberculo sis cases detected under DOTS (%) .. .. 4 45 G o a l 7 : ha lv e t he pro po rt io n o f pe o ple wit ho ut s us t a ina ble a c c e s s t o ba s ic ne e ds A ccess to an impro ved water so urce (% o f po pulatio n) 90 90 89 88 A ccess to impro ved sanitatio n facilities (% o f po pulatio n) 93 94 94 96 Fo rest area (% o f to tal land area) 7.1 7.4 7.6 7.7 Natio nally pro tected areas (% o f to tal land area) .. .. .. 2.0 CO2 emissio ns (metric to ns per capita) 6.1 4.3 4.8 4.3 GDP per unit o f energy use (co nstant 2005 P P P $ per kg o f o il equivalent) 0.9 0.8 0.8 1.2 G o a l 8 : de v e lo p a glo ba l pa rt ne rs hip f o r de v e lo pm e nt 00 Telepho ne mainlines (per 1 peo ple) 6.8 6.8 6.7 7.0 00 M o bile pho ne subscribers (per 1 peo ple) 0.0 0.0 0.2 46.3 00 Internet users (per 1 peo ple) 0.0 0.0 0.5 8.8 00 P erso nal co mputers (per 1 peo ple) .. .. .. 3.1 Education indicators (%) Measles immunization (% of 1-year ICT indicators (per 100 people) olds) 125 100 60 100 75 75 40 50 50 25 20 25 0 2000 2002 2004 2006 2008 0 0 1990 1995 2000 2007 2000 2002 2004 2006 2008 Primary net enrollment ratio Fixed + mobile subscribers Ratio of girls to boys in primary & secondary Uzbekistan Europe & Central Asia education Internet users No te: Figures in italics are fo r years o ther than tho se specified. .. indicates data are no t available. 2/25/10 Develo pment Eco no mics, Develo pment Data Gro up (DECDG). 22 Annex B2: Uzbekistan Selected Indicators of Bank Portfolio Performance and Management As of Date 3/18/2010 Indicator 2007 2008 2009 2010 Portfolio Assessment Number of Projects Under Implementation a 6 5 6 8 Average Implementation Period (years) b 4.7 3.4 3.6 3.4 Percent of Problem Projects by Number a, c N/A N/A N/A 37.5 Percent of Problem Projects by Amount a, c N/A N/A N/A 25.5 Percent of Projects at Risk by Number a, d 0 20.0 16.7 37.5 Percent of Projects at Risk by Amount a, d 0 6.7 15.9 25.5 Disbursement Ratio (%) e 24.2 25.9 17.4 15.7 Portfolio Management CPPR during the year (yes/no) Supervision Resources (total US$) $ 767,660 $ 835,628 $ 825,895 $ 970,012 Average Supervision (US$/project) $ 127,943 $ 119,375 $ 137,649 $ 121,252 Memorandum Item Since FY Last Five 80 FYs Proj Eval by OED by Number 10 3 Proj Eval by OED by Amt (US$ millions) 367.2 67.8 % of OED Projects Rated U or HU by Number 33.3 0 % of OED Projects Rated U or HU by Amt 50.2 0 a. As shown in the Annual Report on Portfolio Performance (except for current FY). b. Average age of projects in the Bank's country portfolio. c. Percent of projects rated U or HU on development objectives (DO) and/or implementation progress (IP). d. As defined under the Portfolio Improvement Program. e. Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the beginning of the year: Investment projects only. * All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio, which includes all active projects as well as projects which exited during the fiscal year. Source: World Bank 23 Annex B3: IBRD/IDA Program Summary Uzbekistan As of Date 3/18/2010 a Proposed IBRD/IDA Base-Case Lending Program Fiscal year Proj ID US$(M) Strategic Rewards b (H/M/L) Implementation b Risks (H/M/L) 2010 Energy Efficiency for Indust Enterprises 25 H H Result 25 2011 Alat-Karakul Water Supply Project 12 M M Health System Improvement Project 93 H M Syrdarya Water Supply Project 108 H H Talimarjan Transmission Project 170 H H Electricity Smart Metering Project 80 H M Result 463 Overall Result 488 a. IBRD financing for FY11, as for all IBRD countries, is uncertain and will be contingent on IBRD's overall lending capacity 24 Annex B3: Uzbekistan IFC Investment Operations Program 2007 2008 2009 2010* Commitments (US$m) Gross 3.00 - 4.25 5.20 Net** 3.00 - 4.25 5.20 Net Commitments by Sector (%) Financial Markets 100 - 71 100 General Manufacturing - - 29 - Total 100 - 71 100 Net Commitments by Investment Instrument (%) Loan 100 - 100 38 Equity - - - 62 Total 100 - 100 100 * As of May 10, 2010 ** IFC's Own Account only 25 Annex B4: Summary of Nonlending Services ­ Uzbekistan As of March 2010 a b Product Completion FY Cost (US$000) Audience Objective Recent completions Health Sector Governance Assessment 2008 385.4 Bank, Government Knowledge Generation Hospital Policy Note 2008 101.6 Bank, Government Knowledge Generation Clean Development Mechanism Forum 2008 - Bank, Government Knowledge Generation Poverty 2008 58.4 Bank, Government, Donors Knowledge Generation Private Sector/Financial Sector Policy Dialogue 2008 42.0 Bank, Government Knowledge Generation, Problem Solving Water Sector Investment Planning Study 2009 138.0 Bank, Government Knowledge Generation, Problem Solving ROSC accounting & Auditing 2009 153.6 Bank, Government Knowledge Generation Financial Sector Devpmt (FSD) Policy Dialogue 2009 54.8 Bank, Government Knowledge Generation Debt and Tax Reforms 2009 154.5 Bank, Government Knowledge Generation Water Supply and Sanitation Strategy 2009 Bank, Government, Donors Knowledge Generation Advice on Development of Treasury system 2009 Bank, Government Knowledge Generation, Problem Solving Underway Advice on Development of Treasury system 2010 Bank, Government Knowledge Generation Assessing Vulnerability 2010 Bank, Government Knowledge Generation Municipal Sector Development & Governance 2010 Bank, Government Knowledge Generation Growth and Innovation 2010 Bank, Government Knowledge Generation CPIA Policy Dialogue 2010 Bank, Government Knowledge Generation FSD Policy Dialogue 2010 Bank, Government Knowledge Generation Private Sector Development (PSD) Policy Dialogue 2010 Bank, Government Knowledge Generation Uzbekistan Municipal Governance TA 2010 Bank, Government Knowledge Generation Planned Insurance Sector Development 2011 Bank, Government Knowledge Generation Public Expenditure Review 2011 Bank, Government Knowledge Generation Policy Note on Basic and Pre-school Education 2011 Bank, Government Knowledge Generation Policy Notes on Fruit and Vegetables Sector 2011 Bank, Government Knowledge Generation Country Integrated Fiduciary Assessment (CIFA) 2011 Bank, Government Knowledge Generation Innovation and Growth TA 2011 Bank, Government Knowledge Generation Assessing Vulnerability TA 2011 Bank, Government Knowledge Generation Uzbekistan Municipal Governance TA 2011 Bank, Government Knowledge Generation Audit Firms Review Follow-up TA 2011 Bank, Government Knowledge Generation UAP-ES Assessment TA 2011 Bank, Government Knowledge Generation 26 Annex B5 Uzbekistan Social Indicators Latest single year Same region/income group Europe & Central Low- 1980-85 1990-95 2002-08 Asia income POPULATION Total population, mid-year (millions) 18.2 22.8 27.3 443.3 976.2 Growth rate (% annual average for period) 2.6 2.1 1.7 0.1 2.1 Urban population (% of population) 40.7 38.4 36.8 63.7 28.7 Total fertility rate (births per woman) 4.7 3.6 2.6 1.8 4.0 POVERTY (% of population) National headcount index .. .. 27.2 .. .. Urban headcount index .. .. 22.6 .. .. Rural headcount index .. .. 29.8 .. .. INCOME GNI per capita (US$) .. 580 910 7,350 523 Consumer price index (2000=100) .. .. .. 133 132 Food price index (2000=100) .. .. .. .. .. INCOME/CONSUMPTION DISTRIBUTION Gini index .. .. 36.7 .. .. Lowest quintile (% of income or consumption) .. .. 7.1 .. .. Highest quintile (% of income or consumption) .. .. 44.2 .. .. SOCIAL INDICATORS Public expenditure Health (% of GDP) .. .. 2.3 3.7 2.3 Education (% of GDP) .. 7.4 .. 4.5 3.4 Net primary school enrollment rate (% of age group) Total .. 78 90 92 80 Male .. 79 91 93 82 Female .. 78 89 92 78 Access to an improved water source (% of population) Total .. 90 88 95 67 Urban .. 97 98 99 86 Rural .. 85 82 88 60 Immunization rate (% of children ages 12-23 months) Measles .. 91 98 96 78 DPT .. 87 98 96 80 Child malnutrition (% under 5 years) .. .. 4 .. 27 Life expectancy at birth (years) Total 67 66 68 70 59 Male 63 63 65 66 58 Female 70 70 71 75 60 Mortality Infant (per 1,000 live births) 72 57 34 19 76 Under 5 (per 1,000) 89 68 38 22 118 Adult (15-59) Male (per 1,000 population) 219 207 240 305 295 Female (per 1,000 population) 116 109 137 126 254 Maternal (modeled, per 100,000 live births) .. .. 24 45 790 Births attended by skilled health staff (%) .. .. 100 97 44 Note: 0 or 0.0 means zero or less than half the unit shown. Net enrollment rate: break in series between 1997 and 1998 due to change from ISCED76 to ISCED97. Immunization: refers to children ages 12-23 months who received vaccinations before one year of age or at any time before the survey. 27 World Development Indicators database, World Bank - 23 April 2010. Annex B6: Uzbekistan - Key Economic Indicators Actual Estimate Projected Indicator 2005 2006 2007 2008 2009 2010 2011 2012 2013 National accounts (as % of GDP) Gross domestic producta 100 100 100 100 100 100 100 100 100 Agriculture 28.0 26.1 24.0 21.4 19.5 19.9 19.0 18.0 17.0 Industry 23.2 27.4 32.0 30.8 33.2 32.5 32.7 31.5 30.2 Services 48.9 46.5 44.0 47.9 47.3 47.6 48.3 50.5 52.8 Total Consumption 64.3 66.1 70.5 70.9 69.8 68.6 67.9 67.7 68.0 Gross domestic fixed investment 22.0 21.5 19.4 23.0 26.1 26.2 25.6 25.2 24.5 Government investment 3.3 2.6 3.2 5.8 3.7 3.1 3.0 2.7 2.7 Private investment 18.7 18.9 16.3 17.2 22.4 22.6 22.6 22.5 21.8 Exports (GNFS)b 37.9 37.5 40.3 44.9 38.6 42.2 42.2 41.4 40.8 Imports (GNFS) 28.7 27.4 30.2 38.8 34.4 37.0 35.6 34.4 33.3 Gross domestic savings 35.7 33.9 29.5 29.1 30.2 31.4 32.1 32.3 32.0 c Gross national savings 40.1 41.4 38.7 35.9 32.4 34.3 34.4 33.9 33.0 Memorandum items Gross domestic product 14308 17031 22308 27934 32797 34556 40001 45784 52241 (US$ million at current prices) GNI per capita (US$, Atlas method) 530 610 740 900 1070 1230 1370 1520 1720 Real annual growth rates (%, calculated from 97 prices) Gross domestic product at market prices 7.0 7.3 9.5 9.0 8.1 8.3 8.7 9.0 9.5 Gross Domestic Income 7.0 7.3 9.5 9.0 8.9 9.1 10.9 10.7 11.0 Real annual per capita growth rates (%, calculated from 97 prices) Gross domestic product at market prices 5.8 6.0 8.1 7.1 6.3 8.2 7.5 7.8 8.2 Total consumption 3.2 2.9 -1.3 7.6 5.9 7.3 7.4 8.1 8.4 Balance of Payments (US$ millions) Exports (GNFS)b 5416 6390 8991 12539 12655 14578 16865 18971 21311 Merchandise FOB 4757 5615 8026 11130 11771 13332 15460 17459 19684 Imports (GNFS)b 4101 4668 6736 10850 11292 12777 14244 15749 17394 Merchandise FOB 3310 3841 5730 8049 8779 10095 11216 11786 12935 Resource balance 1315 1722 2255 1690 1363 1800 2621 3222 3917 Net current transfers 658 1222 1990 1980 1210 1598 1694 1785 1864 Current account balance 1949 2984 4307 3585 2087 2806 3546 3981 4452 Net private foreign direct investment 88 194 734 711 1856 2050 2250 2531 2850 Long-term loans (net) -212 -152 -303 -103 -248 -159 -48 -85 0 Official 28 29 156 42 47 70 64 11 -18 Private -240 -182 -460 -146 -295 -229 -112 -96 18 28 Memorandum items Resource balance (% of GDP) 9.2 10.1 10.1 6.0 4.2 5.2 6.6 7.0 7.5 Real annual growth rates ( YR97 prices) Merchandise exports (FOB) 11.6 18.0 42.9 38.7 -0.8 13.3 10.6 9.4 9.5 Merchandise imports (CIF) 8.1 5.6 38.2 32.6 7.4 15.3 11.0 5.1 9.9 Public finance (as % of GDP at market prices)e Current revenues 30.8 31.4 31.7 31.6 32.3 32.6 32.3 32.2 32.2 Current expenditures 25.7 26.5 27.1 28.6 32.6 29.9 28.0 28.2 28.1 Current account surplus (+) or deficit (-) 5.1 4.9 4.5 2.9 -0.3 2.7 4.3 4.1 4.1 Capital expenditure 5.4 4.4 4.0 3.5 3.8 3.1 3.0 2.8 2.8 Foreign financing 0.7 0.4 0.3 0.2 0.3 0.3 0.2 0.1 -0.3 Monetary indicators M2/GDP 14.4 15.2 16.3 16.5 19.0 17.2 17.1 17.0 16.6 Price indices( YR97 =100) Merchandise export price index 100.0 100.0 100.0 100.0 105.1 106.6 111.7 115.3 118.8 Merchandise import price index 103.3 106.6 110.6 122.7 127.3 127.0 127.1 127.1 126.9 Merchandise terms of trade index 96.8 93.8 90.4 81.5 82.5 83.9 87.9 90.8 93.6 Real exchange rate (US$/LCU)f 77.6 91.7 108.2 114.8 126.5 121.4 125.6 131.1 135.8 Real interest rates Consumer price index (% change) 6.5 6.8 6.8 7.4 7.1 8.2 7.9 7.5 6.9 GDP deflator (% change) 21.4 21.5 24.0 19.9 20.8 21.2 21.1 17.8 16.9 a. GDP at factor cost b. "GNFS" denotes "goods and nonfactor services." c. Includes net unrequited transfers excluding official capital grants. d. Includes use of IMF resources. e. Consolidated central government. f. "LCU" denotes "local currency units." An increase in US$/LCU denotes appreciation. 29 Annex B7: Uzbekistan - Key Exposure Indicators Actual Estimated Projected Indicator 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total debt outstanding and 4226 4106 3747 3995 3747 3638 3600 3530 3437 a disbursed (TDO) (US$m) Net disbursements (US$m)a -372 -152 -253 -103 -248 -109 -38 -70 -93 Total debt service (TDS) 787 920 842 692 736 692 534 528 509 a (US$m) Debt and debt service indicators (%) TDO/XGSb 68.8 52.9 33.6 26.6 26.2 21.8 18.7 16.2 13.9 TDO/GDP 29.5 24.1 16.8 14.3 11.4 10.5 9.0 7.7 6.6 TDS/XGS 12.8 11.9 7.5 4.6 5.2 4.1 2.8 2.4 2.1 Concessional/TDO 37.6 38.5 42.8 44.3 48.5 51.1 53.1 54.8 56.2 IBRD exposure indicators (%) IBRD DS/public DS 4.9 5.8 8.2 8.2 9.7 10.0 11.8 11.3 11.0 Preferred creditor DS/public 18.3 21.2 17.7 19.2 26.6 29.7 37.0 37.8 38.1 c DS (%) IBRD DS/XGS 0.5 0.6 0.4 0.3 0.4 0.3 0.3 0.2 0.2 d IBRD TDO (US$m) 299 291 278 313 281 247 210 174 135 Share of IBRD portfolio (%) 0 0 0 0 0 0 0 0 0 d IDA TDO (US$m) 11 23 41 55 87 123 159 194 233 a. Includes public and publicly guaranteed debt, private nonguaranteed, use of IMF credits and net short- term capital. b. "XGS" denotes exports of goods and services, including workers' remittances. c. Preferred creditors are defined as IBRD, IDA, the regional multilateral development banks, the IMF, and the Bank for International Settlements. d. Includes present value of guarantees. e. Includes equity and quasi-equity types of both loan and equity instruments. 30 Annex B8: Uzbekistan Operations Portfolio (IBRD/IDA and Grants) As Of Date 3/18/2010 Closed Projects 11 IBRD/IDA * Total Disbursed (Active) 122.82 of which has been repaid 5.74 Total Disbursed (Closed) 108.30 of which has been repaid 163.58 Total Disbursed (Active + Closed) 231.12 of which has been repaid 169.32 Total Undisbursed (Active) 254.99 Total Undisbursed (Closed) 0 Total Undisbursed (Active + Closed) 254.99 Difference Active Projects Between Expected and Last PSR Actual Supervision Original Amount in US$ Disbursements a/ Rating Millions Frm Project ID Project Name DO IP FY IBRD IDA Cancel. Undisb. Orig. Rev'd P049621 Bukhara/Samarkand Water Supply MS MU 2002 20 20 0.2 4.4 0.5 1.7 P009127 Drainage, Irrig & Wetlands Imprvmt S MS 2003 35 25 21.1 15.8 P051370 Health 2 MU MU 2005 40.0 15.4 13.3 P094042 Basic Education MU MU 2007 15 8.4 7.9 7.8 P109126 Rural Enterprise Support Project II S S 2008 68.0 53.2 0.3 P107845 Basic Education - Phase Two S S 2009 28 30.5 P112719 Bukhara & Samarkand Sewerage Project S S 2010 55 57.3 0.5 P110538 Ferghana Valley Water Resources Mgt # # 2010 65.5 64.7 Overall Result 55 316.5 0.2 255.0 38.2 9.5 31 Annex B8: Uzbekistan Committed and Outstanding Investment Portfolio (IFC) As of May 10, 2010 US$ millions Committed portfolio Outstanding portfolio Commitment Institution LN EQ QL+QE Total LN EQ QL+QE Total Fiscal Year Short Name 2000/ 2003 Asaka Bank 0.53 - - 0.53 0.53 - - 0.53 2009 Katering 1.25 - - 1.25 - - - - 1997 RBS Uzbekistan - 1.00 - 1.00 - 1.00 - 1.00 1998/ 1999 SEF Fayz 0.01 - - 0.01 0.01 - - 0.01 2001/ 2007/ 2010 SEF Hamkorbank 4.25 3.20 - 7.45 2.25 - - 2.25 2001 SEF Parvina - - 0.09 0.09 - - 0.09 0.09 1996/ 2001/ 2003/ 2009 Uzbek Leasing 3.00 0.54 - 3.54 2.30 0.54 - 2.84 Total Portfolio: 9.05 4.74 0.09 13.87 5.10 1.54 0.09 6.72 32 33