For Official Use Only CLR Review Independent Evaluation Group 1. CPS Data Country: Georgia CPS Year: FY14 CPS Period: FY14 – FY17 CLR Period: FY14-FY17 Date of this review: May 10, 2018 2. Ratings CLR Rating IEG Rating Development Outcome: Moderately Satisfactory Moderately Satisfactory WBG Performance: Good Good 3. Executive Summary: i. This review of the Georgia Completion and Learning Report of the World Bank Group (WBG) Country Partnership Strategy (CPS) covers the CPS period, FY14-FY17, including the CPS Performance and Learning Review (PLR) of April 2017. The PLR was conducted a few months before the end of the CPS period, which was not extended. ii. Georgia is a lower-middle-income country with a GDP per capita of $3,866 (2016). 1 Its economy grew on average by 3.5 percent annually during the review period—higher than the 1.9 percent average for the ECA region—with persistently large external current account deficits in the 12-13 percent of GDP range financed mostly by foreign direct investments. The December 2017 IMF Review Under the Extended Fund Facility reported that in 2017 the external current account narrowed to an estimated 10 percent of GDP and economic activity strengthened on the back of higher growth in the main trading partners. 2 Twenty one percent of the population was poor in 2016 based on the national poverty line—among the highest rates in the ECA region—and 8.3 percent suffered extreme poverty in 2015 based on the international measure of $1.9/day (2011 PPP). Georgia ranked 76th of 188 countries in the 2015 Human Development Index (HDI). Improving infrastructure and competitiveness, increasing renewable energy exports, and enhancing the public sector’s capacity to deliver positive outcomes on poverty reduction and shared prosperity are key to addressing Georgia’s challenges. The challenge to reduce unemployment has shown to be particularly difficult to tackle. Despite showing a gradually declining trend during 2013-17, unemployment remained stubbornly high in the 11.5-12.5 percent range during the CPS period. iii. The CPS corresponded well with the government’s stated development objectives set out in the Socioeconomic Development Strategy 2020, which had as overarching aim to achieve faster, inclusive, and sustainable growth averaging 7 percent annually. The WBG’s country program pursued two strategic objectives or focus areas of strengthening public service delivery to promote inclusive growth and enabling private-sector-led job creation through improved competitiveness. The areas selected were congruent with the country’s development goals, and in sectors where it had shown capacity to deliver in the past. 1 Current US$. Georgia graduated to IBRD-only borrower on June 30, 2014. 2 “First Review Under the Extended Fund Facility,” IMF Country Report No. 17/361, International Monetary Fund: Washington, DC, December 2017. CLR Reviewed by: Panel Reviewed by: CLR Review Manager/Coordinator Juan José Fernández-Ansola Albert Martinez Pablo Fajnzylber IEGEC Consultant IEGEC Consultant Manager, IEGEC Lourdes Pagaran CLRR Coordinator, IEGEC For Official Use Only CLR Review 2 Independent Evaluation Group iv. At the beginning of the CPS period, total commitments were $512 million—a third of which were IDA funds—with a focus on road infrastructure development (or 88 percent of total financing) and comprised primarily of investment project financing (IPF). New lending commitments—planned and unplanned—during the CPS period amounted to $767 million spread over five areas including road infrastructure, competitiveness, regional development, private sector competitiveness, and agriculture. The new lending commitments included five DPO operations as part of the programmatic series on competitiveness and growth, inclusive growth, and private sector competitiveness. During the CAS period, seven trust fund (TFs) grants were approved in FY14-17 for a total of $19.1 million, primarily in support of sustainable wastewater management and co- financing the regional and municipal infrastructure development. Smaller trust fund amounts were used to help support empowering local community entrepreneurs and education. Lending during the CPS was about $300 million lower than planned. The last of the DPO series on inclusive growth and private sector competitiveness was truncated. According to the CLR, the Bank and the government agreed to conclude both programmatic series with the second operation and align future operations with the new CPF. v. On balance, IEG rates the CPS development outcome as Moderately Satisfactory. Seven out of nine objectives were Mostly Achieved or Achieved, one Partially Achieved, and one Not Achieved. Under Focus Area I, the program contributed to an expansion and strengthening of the social protection system, and increased coverage of the UHC, as well as helped develop the knowledge base for the general and pre-school education, improve public investments and public services, and improve fiscal management systems. While there was strengthened hospital reporting on compliance with safety and quality standards, there is no evidence of improved hospital standards leading to improvements in health service quality. WBG efforts also were partially successful in developing participatory local development. Under Focus Area 2, the program contributed to the provision of infrastructure and services to facilitate growth. It also addressed key legal, regulatory, and institutional constraints for the private sector, albeit in an unfocused way, with a set of outcomes that were weakly linked to WBG interventions. The objective to support development of a framework to match labor supply and demand showed limited progress. vi. IEG rates WBG performance as Good. The WBG strategy addressed the key challenges facing the country and benefited from congruence with government programs. The selected CPS areas were consistent with WBG poverty reduction and shared prosperity objectives, and responded to the government’s request in specific areas, which considered the WBG’s value-added potential and support from other development partners. It was selective in terms of focus areas and objectives, but the selected indicators were fragmented especially in the case of objective 7. The proposed WBG interventions could reasonably be expected to have an impact toward CPS objectives in most areas of the program. At the same time, the results framework had some weaknesses. In a few instances, baselines/targets were missing or inaccurate, or had no date. Analytical work informed well the WBG’s engagements, and ASA played contributed to some of the objectives where the Bank had no lending interventions and other donors took the lead. In addition, the WBG coordinated technical support in some instances—like the Targeted Social Assistance program—through partnering with other donors. There were synergies exploited across IBRD, IFC, and MIGA, particularly in support of SMEs, and in providing infrastructure and services to promote growth. The CPS and PLR appropriately identified and mitigated risks. The macro-economic risk has been mitigated to a large extent by Georgia’s program with the IMF, which is on track. vii. The modifications at PLR stage were minor and did not sufficiently address the shortcomings of the original results framework. Implementation benefited from a country environment without major adverse shocks during the CPS period. Bank performance on closed projects was better than ECA and WBG comparators. IFC investment and advisory services and MIGA guarantees complemented WB programs and projects in the energy and financial sectors. The Bank complied with environmental and social safeguard policies through capacity building and timely guidance. INT substantiated a case of collusion in procurement, and sanctions were pursued against the entities concerned. For Official Use Only CLR Review 3 Independent Evaluation Group viii. The CLR contains lessons on the need for a strong results framework, insufficient capacity in the procurement and contract management profession, positive results of DPOs tackling multi- sector issues, combination of WBG instruments, and implementation of innovative contracting approaches. ix. IEG adds the following lesson: • Competitiveness and labor market issues are key binding constraints for Georgia’s growth, and areas in which the Bank has comparative advantage. Yet, the Bank failed to address them adequately and effectively under this CPS. To maximize development effectiveness, the Bank should not miss opportunities to address effectively areas which are both significant binding constraints for country growth and in the domain of the Bank’s comparative advantage. 4. Strategic Focus Relevance of the WBG Strategy: 1. Congruence with Country Context and Country Program. The CPS pillars and objectives— maintained at PLR stage with minor modifications in the results framework—were broadly congruent with the government’s objectives on economic growth, with poverty and inequality reduction. 3For example, objective #1 envisaged to contribute to the expansion and strengthening of the social protection system and was linked to the government’s program to improve the social assistance program by improving its targeting and coverage. As part of this program, the government also intended to strengthen the old-age basic security through an indexation rule that maintains the purchasing power of the basic benefit. Similarly, objective #7 aimed to contribute to addressing key legal, regulatory or institutional constraints and was directly linked to government’s programs to improve Georgia’s investment and business environments, including in the regions. The CPS objectives to strengthen public service delivery (health and education) to promote inclusion and equity reflected government explicit objectives to provide accessible and high-quality healthcare, and improve the quality of education. However, there are several challenges to achieving these objectives including poor infrastructure, a low capacity to innovate, and difficulties in developing the export sector. Nearly one-third of young Georgians are not in school, employed, or in training, and it has proved difficult to integrate them in the formal labor market. The most dynamic economic activities are concentrated in Tbilisi—the capital—and it has been difficult to extend that dynamism to the regions and the rural economy, which shows little growth. Access to general education was expanded with gender parity, but the quality of education remains a pressing challenge given the low achievement level in international student assessments and unsatisfactory labor market outcomes for graduates. 2. Relevance of Design. The proposed WBG interventions could reasonably be expected to have an impact toward most areas of the CPS program. For example, energy projects on grid strengthening could increase power supply and improve the reliability of power grid infrastructure. Similarly, the land market development project that sought to improve the delivery of irrigation and drainage services in selected areas could be expected to improve irrigations services in a significant area. The program was anchored on programmatic DPOs—that underpinned reform measures, which were complemented by other donors particularly in the social sectors (EU, Millennium Challenge Corporation in education, USAID in health). Several of the objectives to support public investment and delivery of public services to citizens were based on diagnostic work, and it is difficult to establish the 3 The government’s Socioeconomic Development Strategy 2020 had as overarching aim to achieve faster, inclusive, and sustainable growth averaging 7 percent annually. Four priorities stood out: (i) a stable macroeconomic environment, effective public sector management, and fiscal efficiency and responsibility; (ii) strengthening human capital—health, education, and social safety nets; (iii) improve private sector competitiveness (enhance investment climate for SMEs and firm productivity); and (iv) increase access to finance. For Official Use Only CLR Review 4 Independent Evaluation Group contribution of such works to program results. Moreover, some objectives such as objective #7, had too many outcomes, and indicators that were fragmented and lacked appropriate WBG interventions to achieve them. IFC complemented well the work of IDA/IBRD in focus area 2 (competitiveness and employment) by focusing on investments and advisory services that contributed to financial intermediation and increased access to finance for MSMEs, promoted investment climate improvements, and supported development of hydropower and agribusiness, while seeking investment opportunities in other sectors and developing related advisory services. Selectivity 3. The CPS was selective with two focus areas and nine objectives, which were manageable for a country with Georgia’s level of development, administrative capacity, and experience with Bank programs. The WBG strategy addressed key challenges facing the country and reflected the government’s own strategy. The selection of areas was congruent with the Bank’s experience in Georgia, and responded to the government’s request in specific areas, which considered the WBG’s value-added potential and support from other development partners. One of the filters used by the WBG for the engagement was to build on successful elements of the existing program where the WBG had a good track record of implementation. Specifically, support would be stepped up in areas where good development outcomes had been achieved and strong capacity was in place to absorb additional resources effectively. In practice, this led to focusing on reform through two series of complementary development policy operations, and investment lending built on previously successful experiences, concentrated on infrastructure projects in transportation, regional development, energy, and the rural sector. While these areas were appropriate for the CPS, the program failed to tackle competitiveness and labor market issues—two critical constraints for Georgia’s growth—in a focused and effective way. Alignment 4. The program was well aligned with corporate twin goals. Although the CPS objectives did not target or monitor poverty and shared prosperity directly, the proposed interventions to improve the effectiveness and efficiency in delivery of public services—including social transfers, and access to and quality of healthcare—could conceivably contribute to the reduction of extreme poverty and increase of shared prosperity. For example, objective #1 contributed to increased coverage of targeted social assistance. Moreover, other interventions to enable private-sector-led job creation through improved competitiveness (Focus Area 2) to generate growth and employment, could also help raise incomes for the poorest 40 percent of the population by increasing overall economic growth. 5. Development Outcome Overview of Achievement by Objective: Focus Area I: Strengthening Public Service Delivery to Promote Inclusive Growth 5. This focus area had six objectives: (i) contribute to expansion and strengthening of social protection system, in particular targeted social assistance and pensions; (ii) support government efforts to expand the universal health care coverage program and institutionalize health service quality assurance processes; (iii) contribute to the elaboration of essential knowledge base for general and pre-school education; (iv) support improvements in public investments and delivery of public services; (v) contribute to sustained progress towards the adoption of modern public sector and fiscal management systems; and support efforts to strengthen participatory local development and greater social accountability. Objective 1: Contribute to expansion and strengthening of social protection system, in particular targeted social assistance and pensions 6. This objective was supported by a series of DPOs on Competitiveness and Growth (FY14/FY15) and on Inclusive Growth. The DPOs were complemented by ASA on Pension Reform (FY14-17), Targeted Social Assistance Implementation and Results Assessment (TA—FY14-17), For Official Use Only CLR Review 5 Independent Evaluation Group South Caucasus Poverty, Equity, and Gender (TA—FY14-17), and Country Gender Assessment (FY14). The objective had two indicators: • Increase the targeted social assistance coverage of the poorest decile, with equal coverage of men and women: The CLR reports that coverage was 56.6 percent (28.6 percent for women and 27.6 percent for men) based on the Integrated Household Survey 2016, compared with a 60 percent target. IEG could not verify this information. According to the Management report (ISR) of the First Inclusive Growth DPO (March 2016) the share of the bottom decile receiving targeted social assistance (TSA) was 62 percent compared with the 60 percent target in 2017. [Achieved] • Develop pension reform roadmap: The Program Document for the Second Private Sector Competitiveness DPO reports that the government approved the strategy and roadmap for pension reform in March 2016. It also notes that the draft law was approved by the Cabinet on March 2017 and presented to Parliament in December 2017. [Achieved] 7. This objective was Achieved. Objective 2: Support government efforts to expand the universal health care coverage program and institutionalize health service quality assurance processes 8. This objective was supported by the DPO series on Competitiveness and Growth (FY13/FY14), and the DPO series on Inclusive Growth (FY15/FY17). The DPOs were accompanied by TA on Service Delivery Quality Improvement (FY15). IFC had investments in two private healthcare facilities. The objective had one indicator: • Universal Health Coverage (UHC) registration rate of the target population. The CLR reports a registration rate of 90 percent (52 percent female) based on national data. The share of the population covered by the UHC program increased to 100 percent by December 2015 against a target of 90 percent in 2017. The ICRR for the Competitiveness and Growth DPO, however, indicates that the indicator of coverage is normative and does not reveal the share of the population effectively served. Although the target required tracking of the female registration rate, data for women was not tracked by the Competitiveness and Growth DPO. [Mostly Achieved] 9. The outcome indicator for this objective only refers to coverage. Information from the ICRR for the Competitiveness and Growth DPO series indicates that there was strengthened hospital reporting on compliance with safety and quality standards, although there is no evidence of improved health service quality. The ICRR also mentions that a higher percentage of the ill were seeking care in 2015, with four outpatient visits per capita per year in 2015 compared to 2.3 in 2012, and higher hospitalization rates. Georgia increased spending on health services by 2.4 percentage points of GDP during 2012-14. Taken together, this evidence suggests significantly increased coverage by the UHC. On balance, based on evidence of increased coverage and some evidence of institutionalized health service quality assurance processes, this objective was Mostly Achieved. Objective 3: Contribute to the elaboration of essential knowledge base for general and pre- school education 10. This objective was supported by DPO-3 (FY14) of the DPO series on Competitiveness and Growth and DPO-1 (FY15) and DPO-2 (FY17) of the DPO series on Inclusive Growth. The DPOs were accompanied by ASA on Implementation of Education Sector Strategy (TA—FY14-17), School Survey, Including Assessment of Learning Outcomes (FY14-15), and Pre-school Service Delivery and Quality Assurance Assessment (FY14-15), and IDF Advice on Education (FY17). The objective had three indicators: • Proportion of teachers accumulating at least 1 credit according to the credit accumulation manual. The CLR reports that—based on information provided by the Georgian Education Management Information System—the share increased to 62 percent at the For Official Use Only CLR Review 6 Independent Evaluation Group end of the 2016-17 year, compared with a target of 18 percent for 2018. The country team provided additional evidence that was not sufficient for IEG to verify such information. [Not Verified]. • Teacher effectiveness evaluation tools developed and adopted. The ICR for the Third Competitiveness and Growth DPO (FY14) reported that the Teacher Recruitment, Evaluation, Professional Development and Career Advancement Scheme was adopted on February 20, 2015, and the respective changes were introduced by law in December 2016. [Achieved] • Institutional framework elaborated for early and pre-school education service delivery and quality assurance, including support to piloting of priority interventions. The CLR reports that in June 2016 a law was passed for early and pre-school education and care. As a reported by the ICR of the Competitiveness and Growth DPO series, the new professional standard for teachers was adopted, and a new implementation-monitoring framework was established to evaluate the implementation of the new curriculum in classrooms for all levels of education. [Achieved] 11. This objective was Mostly Achieved. Objective 4: Support improvements in public investments and delivery of public services 12. This objective was supported by the DPO series on Inclusive Growth: DPO-1 (FY15) and DPO-2 (FY17); the Regional and Municipal Development projects (FY09, FY14), and ASA including a Public Expenditure Review (PER) on the Diagnostics of Public Investment Management System (FY14). 13. The objective had three indicators: • Initiate the piloting of the newly approved Public Investment Management (PIM) Guidelines in the Tbilisi Municipality for the selected projects with estimated costs that are above GEL 5 million. A prior action for the Inclusive Growth DPO2 was that five municipalities and one central ministry implement the framework adopted for project appraisal, selection, budgeting, implementation and evaluation of investment projects. The CLR reports that Tbilisi started using the PIM guidelines as part of a pilot involving five other municipalities. The country team provided evidence that confirms such information. Moreover, the 2017 PER reports that nation-wide Public Investment Management (PIM) guidelines were developed and approved in 2016, including for local governments, and that their implementation was yet to be launched in 2017. [Achieved] • Number of published annual IFRS-based financial statements of SOEs. The CLR reports that at least 15 SOEs have published IFRS-based financial reports on their websites. The Georgia team provided evidence on 8 SOEs IFRS-based financial reports. [Achieved] • Number of beneficiaries of improved municipal services and infrastructure. Based on ISRs for FY09 and FY 14 projects, a total of 256,591 people benefitted from improved municipal services and infrastructure, compared with a target of 500,000. [Partially Achieved] 14. Two indicators could not be verified by IEG, and the other one was partially achieved. This objective was Mostly Achieved. Objective 5: Contribute to sustained progress towards the adoption of modern public sector and fiscal management systems 15. This objective was supported by the DPO series on Competitiveness and Growth (FY13/FY14) and through the Public Expenditure Management Peer Assisted Learning (PEMPAL) and the PEFA Assessment Economic and Sector Work (FY14). The objective had two indicators: • Quality and timeliness of annual financial statements (PEFA Performance Indicator (PI)— 25). The CLR reports that the PEFA PI—25 target of B+ has been achieved based on the For Official Use Only CLR Review 7 Independent Evaluation Group 2016 PEFA self-assessment. The PEFA indicators in the new PEFA report have changed, and the substance of the old PI-25 is now captured under PI-29 (Annual Financial Reports). A draft of the PEFA 2017 provided by the country team shows a rating of B+ for indicator PI-29, against a target of a B rating for 2017. 4 [Mostly Achieved] • Effectiveness of internal audit (PEFA Performance Indicator—21). The CLR reports that a rating of B was achieved on the PEFA —21 based on the 2016 PEFA self-assessment. Internal Audit is indicator PI-26 under the new PEFA format. A draft of the PEFA 2017 provided by the country team shows a rating of B for indicator PI-26, against a target of B for 2017. [Mostly Achieved] 16. The ICRR for the Competitiveness and Growth DPO series notes that there is evidence that the level of completeness of financial statements (which is part of the PEFA PI-25 indicator) has improved following the Bank-supported program. In particular, there was progress on budget coverage, implementation of an integrated financial management system, and unification of all state financial transactions under a single treasury account. According to the ICRR, these developments would arguably lead to improving the PEFA PI-25 score to B. In addition, the IMF’s Fiscal Affairs Department Fiscal Transparency Evaluation for Georgia (September 2017) notes that audited annual budget execution reports and unaudited final annual consolidated statements for the central government are published before or around the end of June of the following year (timeliness of annual fiscal accounts is rated as advanced, the highest grade). On balance, this objective was Mostly Achieved. Objective 6: Support efforts to strengthen participatory local development and greater social accountability 17. This objective was supported by Youth Inclusion and Social Accountability Project (FY14), and the Regional and Municipal Development projects (FY09, FY14). The objective had two indicators: • New pilot mechanisms for citizen engagement and feedback are put in place (development of a new forum and establishment of feedback mechanisms). Under the Youth Inclusion project (FY14) 30 people participated directly in the Youth Municipal Action Plan—YMAP (21 youth and 9 municipal officials), which was extended to three other municipalities. Youth Committees involved hundreds of youth in their municipalities. The ICR for the Youth Inclusion project reports that activities planned to increase social accountability through feedback were not as successful as activities aiming to promote youth participation and influence in decision-making. [Partially Achieved] • Increased citizen satisfaction—from 40 percent to 70 percent—with municipal service provision and municipal response. The CLR reports that the satisfaction rate was 76 percent and 80 percent in the Telavi and Kvareli municipalities, respectively. IEG could not verify this information. [Not Verified] 18. The Worldwide Governance Indicators shows that Georgia’s ranking in voice and accountability declined slightly in percentile rank (from 57.6 in 2014 to 53.7 in 2016). On balance, this objective was Partially Achieved. 19. On balance, IEG rates Focus Area I as Moderately Satisfactory given the ratings of objectives 1 to 6. The program contributed to an expansion and strengthening of the social protection system, and increased coverage of the UHC, as well as helped develop the knowledge base for the general and pre-school education, improve public investments and public services, and improve fiscal management systems. While there was strengthened hospital reporting on compliance with safety and quality standards, there is no evidence of improved hospital standards leading to improvements in 4 This is a draft PEFA Assessment which is to be reviewed by the PEFA Secretariat, and it is unclear if the ratings for PI-29 and PI-26—showing achieved targets—are already “PEFA-checked.” Therefore, IEG gives a Mostly Achieved rating for the two indicators and Objective 5. For Official Use Only CLR Review 8 Independent Evaluation Group health service quality. WBG efforts also were partially successful in developing participatory local development. Focus Area II: Enabling Job Creation by the Private Sector Through Improving Competitiveness 20. This Focus Area had three objectives: (i) contribute to addressing key legal, regulatory, and institutional constraints for the private sector, (ii) contribute to provision of infrastructure and services to facilitate growth, and (iii) support development of improved framework for matching labor supply with demand. Objective 7: Contribute to addressing key legal, regulatory and institutional constraints for the private sector 21. This objective was supported by a series of several DPOs: DPO series on Competitiveness and Growth; DPO series on Inclusive Growth: DPO-1 (FY15) and DPO-2 (FY17); and DPO series on Private Sector Competitiveness: DPO-1 (FY15) and DPO-2 (FY17). This objective also was supported through the National Innovation Ecosystem (FY16) and the First Regional Development project (FY12). About half of IFC lending was in the financial sector--two of the banks supported by IFC that represent 60 percent of banking system assets—and IFC Advisory Services contributed through the Investment Climate Advisory project, the SME Banking Advisory project, and ECA Region SME Resilience Advisory project. The objective had five outcomes with ten indicators: Outcome 1: Stronger regulatory framework • Enhance business environment and property rights protection measured by ranking of economic freedom (Heritage Foundation) and the Intellectual Property Rights ranking. Georgia’s ranking in the Index of Economic Freedom (Heritage Foundation) improved from 34th in 2012 to 13th in 2017. Georgia’s ranking in the International Property Rights Ranking improved from 110th (out of 124 countries) to 88th (out of 127 countries) during 2013-17. The Competitiveness and Growth DPO series supported legislative and regulatory reforms to promote and facilitate trade and foreign investment, streamline customs procedures, and a program of regulatory and legislative harmonization with the EU that would attract investors, particularly in the renewable energy sector. [Achieved] Outcome 2: Increase Innovation Capacity • Increase Georgia’s innovation index ranking from 73rd in 2013 (INSEAD-WIPO report). Georgia’s ranking in the innovation index (INSEAD-WIPO) improved from 73th (out of 142 countries) in 2013 to 68th (out of 127 countries) in 2017. However, the number of countries diminished between these two rankings, hence, Georgia’s relative ranking did not increase but slightly decreased. [Not Achieved] Outcome 3: Strengthen competition in key product markets • Improve Georgia’s intensity of local competition from 123rd (out of 142 in 2012) in the Global Innovation Index. According to the WIPO Global Competition Index, Georgia’s ranking increased from 123rd out of 141 countries in 2012 to 75th out of 127 countries in 2017. The Private Sector Competitiveness DPO series contributed to improving efficiency, competition, and access in telecommunications and internet services. As part of this the Bank provided TA on ICT and Innovation Strategy in Georgia (FY14) and on Connecting to Work—ICTs for Employment (FY15). [Achieved] Outcome 4: Increased access to finance • Increase access by SMEs to bank financing with share of loans to SMEs in bank loans increased from 20 percent (baseline 2013). The share of Small and Medium Enterprises (SME) loans in total bank loans increased from 20 percent in 2013 to 21 percent in 2016 (target to increase to more than 20 percent). IFC was the main contributor to this indicator by increasing access for SMEs through financial intermediaries it supported, which represented about two-thirds of the financial system in asset size. [Mostly Achieved] For Official Use Only CLR Review 9 Independent Evaluation Group • Improved access of SMEs to more diversified products and sources of funds, with share of NBFI assets in total financial sector assets increased from 3 percent in 2013. The 2017 IMF Article IV Consultation Report indicates a doubling of gross liabilities and gross assets of non-bank financial institutions as a percent of GDP during 2013-16 (target to increase to more than 3 percent). The Private Sector Competitiveness DPO series supported a pillar on establishing the conditions for financial sector deepening and diversification, and the Bank and other donors provided technical assistance on capital markets reform. [Mostly Achieved] • Increase volume of outstanding loans to MSMEs in portfolio of financial intermediaries supported by IFC by 50 percent from US$0.8 billion to US$1.2 billion. 5 Based on audited financial statements, the combined MSME portfolio of Bank of Georgia and TBC Bank reached US$2.00 billion in 2016. [Achieved] • Increase financial penetration, with share of private credit to GDP increasing from 30 percent in 2013. 6 The share of bank private credit to GDP increased 38.7 percent in 2013 to 55 percent in 2017 according to the IMF First Review Under the Extended Fund Facility (December 2017). [Achieved] Outcome 5: Facilitate investment in the regions through support to improved business climate and infrastructure • Tourism-related SMEs (points of sales) in renovated cultural heritage sites and cities. According to the latest ISR of the First Regional Development project—RDP (FY12) the number of points of sales in renovated culture heritage sites and cities increased from 248 to 337 between May 2012 and December 2017, against a target of 323. [Achieved] • Growth of tourism employment in project region Kakheti as measured by increase of number of people employed in hotels and restaurants. The CLR reports an increase in the number of employed people from 507 to 1,045 during 2012-15. IEG could not verify these figures because supervision (ISR) reports of the RDP (FY12) do not report disaggregated data by type of beneficiaries. Additional information from the World Travel and Tourism Council (2017), however, indicates that the numbers from the CLR are realistic. [Achieved] • Increase tourism spending in targeted regions as measured by increased tourism enterprise VAT receipts. IEG could not verify tax payments related to tourism in the Kakheti region, which the CLR reports to have increased by a multiple of 8 during 2013- 16. Other sources of information confirm ta significant increase in tourism spending in the Kakheti region. The World Travel and Tourism Council (2017) reports that the direct contribution of Travel & Tourism to GDP increased from GEL1,832 million in 2013 to GEL 2,722 million in 2016, measured in 2016 prices—an increase of nearly 50 percent in real terms—with Kakheti the third most popular destination. 7 [Achieved] • While the First Regional Development project (FY12), and the Kakheti Regional Roads Improvement project (FY10) contributed to outcome 5—by improving travel conditions to the region—the indicators for the outcome (all related to tourism) are very weakly connected to the purpose of facilitating investment in regions through improved business climate and infrastructure. 5 During the CPS period – there are no specific dates for baseline and target. 6 IFC contributed partially to this indicator by increasing loans to MSMEs through financial intermediaries it supported with lending and equity. Two of the banks supported by IFC account for more than 60 percent of assets in the banking system, and hence contribute significantly to increases in loans (including to SMEs) at the banking system level. 7 Georgian Tourism Figures—Structure & Industry Data, Georgian National Tourism Administration, 2016. For Official Use Only CLR Review 10 Independent Evaluation Group 22. Objective #7 attempted to addressing constraints (legal, regulatory and institutional) for the private sector and hence on competitiveness issues. However, the objective was broad, indicators not well focused and in most instances only partially measuring the outcomes at best. In turn, some outcomes were not well linked to the objective. In addition, a number of indicators are composites— mostly indexes—which makes it difficult to establish the contribution that the WBG program made to achieve the outcomes and objective. 23. While a majority of indicators Achieved or Mostly Achieved, the contribution of the WBG in some outcomes such as #5 are indirect. The objective is rated Mostly Achieved. Objective 8: Contribute to provision of infrastructure and services to facilitate growth 24. This objective was supported by the Third (FY10) and Fourth (FY13) East-West Highway Improvement project, the Second (FY15) and Third (FY15) Secondary and Local Roads project, the Kakheti Regional Roads project (FY10), the Transmission Grid Strengthening project (FY14), and the Land Market Development project (FY14). One of IFC’s largest investments during the CPS period was a US$70 million loan to an energy company (Shuakevi). It also invested in another energy company (Paravani). The objective had two outcomes and eight indicators: Outcome 1: Improve Road Infrastructure and Energy Market Rules • Decrease travel time by 30 percent and vehicle operating costs (VOC) by 10 percent in rehabilitated East-West Highway sections. Travel time decreased by about 28 percent in the rehabilitated East-West Highway sections and VOC by nearly 12 percent (6.2 percent for trucks) during the program period (through FY17). The Bank contributed to this result through the Third (FY10) and Fourth (FY13) East-West Highway Improvement projects, and the East-West Highway Corridor Improvement project (FY16). [Mostly Achieved] • Reduce travel time in rehabilitated secondary and local road sections by 47 percent. Supervision reports of the Third East-West Highway Improvement project (FY15) and the Kakheti Regional Roads project (FY10) report a substantial reduction in travel time, in the range of 40-50 percent. [Mostly Achieved] • Reduce vehicle operating costs in rehabilitated secondary and local road sections by 22 percent for cars and 27 percent for trucks. Supervision reports of Second (FY12) and Third (FY15) East-West Highway Improvement projects and the Kakheti Regional Roads project (FY10) suggest a reduction of vehicle operating costs of about 30 percent for both cars and trucks. [Achieved] • Implement enhanced energy regulatory system and electricity market rules in line with the EU Energy Policy applicable to Georgia under the AA and Energy Community Treaty. 8 The CLR reports that plans for revising regulations to allow new trading arrangements are in preparation, and that parliament adopted amendments on June 30, 2017 to electricity and gas law setting a deadline of May 1, 2018 to introduce the new electricity trading arrangements. It also reports that full adoption of a new trading arrangement fully consistent with the Energy Community Treaty acquis may take longer. [Partially Achieved] • In sum, this outcome is rated Mostly Achieved. Outcome 2: Increase power supply and improve reliability of power grid infrastructure • Reduce number of interruptions in the south-western part of the grid, particularly Batumi areas, measured by number of electricity interruptions at KV220. The ISR for the grid strengthening project (FY14) reports that during the 11-month period to November 2017 there were no emergency outages in the Batumi areas recorded. [Achieved] • Increase use of net transfer capacity at new back-to-back station from close to zero in 2013 to 300 MW in 2017. The CLR reports that the use of net transfer capacity of power 8 This indicator was supported by the Competitiveness and Growth DPO2 (FY13) and DPO3 (FY14). For Official Use Only CLR Review 11 Independent Evaluation Group through back-to-back station to Turkey reached 253MW in 2016. However, the January 2018 ISR for the Transmission Grid Strengthening project (FY14) reports no progress in total electricity evacuated from the newly developed power generation stations. [Partially Achieved] • Increase power generation capacity by 274 MW. The CLR reports that the 187 MW hydropower plant (Shuakhevi)—supported by IFC through lending, equity, and advisory services and through a MIGA guarantee- is under construction. No additional information is available whether the plant has been completed and commissioned. IFC also provided funding for an 87 MW plant (Paravani) that started generating power in October 2014.The completed plant was for 85 MW. These projects were done in cooperation with the Asian Development Bank and the European Bank for Reconstruction and Development. [Partially Achieved] • Area provided with improved irrigation services is at least 10,000 has. According to November 2017 ISR of the land market project (FY14), there was no increase in the area provided with increased irrigation services. [Not Achieved] • In sum, this outcome is rated as Partially Achieved 25. With substantial improvement in road infrastructure and energy market rules (outcome 1), and some progress in increasing capacity to supply power, and improving reliability of the power grid infrastructure (outcome 2) this objective was Mostly Achieved. Objective 9: Support development of improved framework for matching labor supply with demand 9 26. This objective was supported by the First (FY15) and Second (FY17) Programmatic Inclusive Growth DPOs and by the First (FY15) and Second (FY18) Private Sector Competitiveness DPOs. The objective had two indicators: • Develop and implement procedure to match unemployed people with training programs. The CLR reports that the indicator was not met. An online system provides automatic matching possibilities between job-seekers and employers, but the system is not yet able to match the unemployed with respective training programs. [Not Achieved] • Put in place labor market information system that will allow evidence-based policy making. The CLR reports that a Labor Market information system is developed and provides updated information on labor market trends, career guidance and occupational profiles for various stakeholders. None of the interventions supported by the WBG tracked this indicator). [Partially Achieved] 27. This objective was Not Achieved. 28. Given the ratings of objectives 7 to 9, IEG rates the outcome of WBG support under focus area 2 as Moderately Satisfactory. The program contributed to developing the provision of infrastructure and services to facilitate growth. It also addressed key legal, regulatory, and institutional constraints for the private sector, albeit in an unfocused way, with a set of outcomes that were weakly linked to WBG interventions. The objective to support development of a framework to match labor supply and demand showed limited progress. Overall Assessment and Rating 29. IEG rates the CPS development outcome as Moderately Satisfactory. Seven out of nine objectives were Mostly Achieved or Achieved, one Partially Achieved, and one Not Achieved. Under Focus Area I, the program contributed to an expansion and strengthening of the social protection 9 Supported by the First Inclusive Growth DPO (FY15) and the First Private Sector Competitiveness DPO (FY15). For Official Use Only CLR Review 12 Independent Evaluation Group system, and increased coverage of the UHC, as well as helped develop the knowledge base for the general and pre-school education, improve public investments and public services, and improve fiscal management systems. While there was strengthened hospital reporting on compliance with safety and quality standards, there is no evidence of improved hospital standards leading to improvements in health service quality. WBG efforts also were partially successful in developing participatory local development. Under Focus Area 2, the program contributed to the provision of infrastructure and services to facilitate growth. It also addressed key legal, regulatory, and institutional constraints for the private sector, albeit in an unfocused way, with a set of outcomes that were weakly linked to WBG interventions. The objective to support development of a framework to match labor supply and demand showed limited progress. Objectives CLR Rating IEG Rating Focus Area I: Strengthening Public Service Delivery to N/A Moderately Satisfactory Promote Inclusion and Equity Objective 1: Contribute to expansion and strengthening of social Mostly Achieved Achieved protection system in particular targeted social assistance Objective 2: Support government efforts to expand the universal health care coverage program and institutionalize health service Achieved Mostly Achieved quality assurance processes Objective 3: Contribute to the elaboration of essential knowledge Achieved Mostly Achieved base for general and pre-school education Objective 4: Support improvements in public investments and Mostly Achieved Mostly Achieved delivery of public services Objective 5: Contribute to sustained progress towards the Achieved Mostly Achieved adoption of modern public sector and fiscal management systems Objective 6: Support efforts to strengthen participatory local Achieved Partially Achieved development and greater social accountability Focus Area II: Enabling Job Creation by the Private Sector N/A Moderately Satisfactory Through Improving Competitiveness Objective 7: Contribute to addressing key legal, regulatory and Achieved Mostly Achieved institutional constraints for the private sector Objective 8: Contribute to provision of infrastructure and services Mostly Achieved Mostly Achieved to facilitate growth Objective 9: Support development of improved framework for Partially Achieved Not Achieved matching labor supply with demand 6. WBG Performance Lending and Investments 30. At the beginning of the CPS period, total commitments were $512 million—a third of which were IDA funds—with a focus on road infrastructure development (or 88 percent of total financing) and comprised primarily of investment project financing (IPF). New lending commitments—planned and unplanned—during the CPS period amounted to $767 million spread over five areas including road infrastructure, competitiveness, regional development, private sector competitiveness, and agriculture. The new lending commitments included five DPO operations as part of the programmatic series on competitiveness and growth, inclusive growth, and private sector competitiveness. During the CAS period, seven trust fund (TFs) grants were approved in FY14-17 for a total of $19.1 million, primarily in support of sustainable wastewater management and co-financing the regional and municipal infrastructure development. Smaller trust fund amounts were used to support empowering local community entrepreneurs and education. 31. Lending during the CPS was about $300 million lower than planned. The last of the three- programmatic DPO series on inclusive growth and private sector competitiveness was truncated. For Official Use Only CLR Review 13 Independent Evaluation Group According to the CLR, the Bank and the government agreed to conclude both programmatic series with the second operation and align future operations with the new CPF. The program document for the Second Programmatic Private Sector Competitiveness DPO (FY17) asserts that some triggers for the third operation were already completed and others at advanced stage of implementation at the time of truncation, and that most of those under implementation were captured as structural benchmarks of the IMF Extended Arrangement program (EFF) to mitigate implementation risks. 10 32. During the CPS period, Georgia’s portfolio performance at exit was better on average than for the ECA region and the Bank. IEG outcome ratings for the four closed Georgia projects were Moderately Satisfactory or better compared to the global average of 74 percent and ECA average of 80 percent. In commitment volume, Georgia had an average outcome rating of 100 percent MS or better, compared to ECA (93 percent) and the Bank (85 percent). The risk to development outcome measured as percent with moderate or lower risk is better for Georgia (100 percent) than for ECA (51 percent) and the Bank average (44 percent). Self-ratings of ongoing projects were generally good except for four projects that had to be restructured due to poor project readiness and quality at entry issues. 33. At the start of the CPS period, IFC active projects had a net commitment of $257.2 million, of which 84 percent was in the financial sector and 15 percent in the energy sector. During the CPS period, IFC made a total commitment of $404.5 million, of which 44% was in financial markets, 26% in infrastructure, 15% in trade finance, and 10% in health, education and life sciences. IFC diversified its portfolio during the CPS period. IFC’s largest investments were a $70 million loan to an energy company and a $70 million loan to a commercial bank. Seventy percent of the trade finance commitments went to one bank. In addition to its own commitments, IFC mobilized $825 million from other financial institutions. IFC’s programmatic engagement in the energy sector, including advisory services, resulted in the development of a hydropower project where IFC took the lead in arranging financing. IFC investments in two leading private health services companies complemented Bank support to universal health care reforms. 34. During the CPS period, IEG validated one Expanded Project Supervision Report (XPSR) covering an IFC investment project in the construction and real estate sector. The IEG XPSR Evaluative Note assigned the project an Unsuccessful rating for development outcome. The project was not generating enough cash to pay its debts, and had a negative economic rate of return. 35. MIGA underwrote $121.1 million of guarantees for this WBG program, of which 52% covered a foreign investment in an energy project and 48% covered the equity investments of a foreign bank in its subsidiary in Georgia and in a microfinance institution. The energy project was a joint hydropower project with IFC and would enable Georgia to export energy to Turkey. Analytic and Advisory Activities and Services 36. During the CPS period, the Bank delivered 18 Economic and Sector Work (ESW) products, and 16 Technical Assistance (TA) pieces. Major ESW products included a series of Country Economic Memoranda (CEM)—Sources of Growth, Inclusive Growth, Social Analysis reports--in FY14, FY15, and FY17, and a series of Public Expenditure Reviews (FY14, FY15, FY17). In addition, there was a PEFA assessment (FY14) and a Country Environmental Analysis (FY15). In FY14, the Bank also prepared Policy Notes for the new government that were well received both by the government and donor partners, and provided the basis for engaging the new government on key priority issues. Technical assistance in climate change and disaster risk management, air pollution and forestry, and green transport, contributed to program development and implementations. Overall, the analytical work informed well the WBG’s engagements (lending and/or policy dialogue). In addition, ASA played an important role in contributing to some of the objectives where the Bank had no lending interventions and other donors took the lead. The WBG coordinated technical support to the Targeted Social Assistance program through partnering with UNICEF, EU, USAID and the Sweden 10 See program document for the Second Programmatic Private Sector Competitiveness Development Policy Operation, June 27, 2017, Table 6 on pages 19-20. For Official Use Only CLR Review 14 Independent Evaluation Group Development Assistance Program. There is inadequate attention in the CLR to the role ASA may have played in the WBG program, including no mention on dissemination of results of economic sector work. 37. IFC approved eight advisory services projects amounting to $7.9 million of which 44 percent supported private public partnerships (PPP) and 46 percent provided advice on investment climate reforms. Two smaller projects accounting for 10 percent of total approved amount helped a hydropower project strengthen its stakeholder engagement and support local economic development. Two of the PPP projects representing about 10 percent of total approved amount were terminated – in one case, the project was assessed to be not feasible and in the other case, the client decided to develop the project on its own. IFC work on PPP supported infrastructure investments, including the hydropower project. The investment climate advisory services helped Georgia improve its rankings in competitiveness surveys. In the financial sector, IFC advisory work addressed demand side constraints to SME financing. IFC promoted capital market development by supporting the local currency bond issuances of one of its clients. 38. During the CPS period, IEG validated three Project Completion Report (PCRs) for IFC advisory services. The IEG Evaluative Note assigned a Mostly Successful rating for development effectiveness to one project which improved food safety practices of producers. Two projects, one on mobile banking the other on SME finance, had Unsuccessful ratings. The mobile banking institution supported by the AS project closed down, while the AS on upscaling of SME lending in a bank did not achieve the project objectives. Results Framework 39. The results framework reflected a logical chain beginning with the country’s development goals, issues and obstacles, outcomes and intermediate indicators to which WBG expects to contribute, and WBG instruments supporting the program objectives. Yet, in some objectives, such as objective #7, some of the indicators were weakly connected with economic sector work, and the Bank contribution to those indicators is difficult to establish. In some parts, the results framework was unnecessarily complex. For example, objective #7 was broad and lacked selectivity in the choice of indicators, which are not well linked to the Bank’s interventions. It was measured by five outcomes and ten indicators, which made it unwieldy. Moreover, in a few cases baselines/targets were missing or inaccurate, and indicators contained baselines and targets that had no date. Some indicators rely on indicators that depend on reports that would be available at CLR stage, and this was not always the case (e.g., PEFA indicators for objective #5). Proxy or intermediate indicators could have been provided to monitor and report progress during implementation and completion. Moreover, some outcome indicators do not fully measure the objectives- for example under objective #2. 40. The PLR—issued three months before the end of the CPS period—clarified some objectives to reflect better WBG contributions. Moreover, four indicators were reformulated, two were dropped, the targets of three indicators revised, and two indicators added. However, the modifications were minor and did not sufficiently address the shortcomings of the original results framework. Partnerships and Development Partner Coordination 41. The Bank collaborated with development partners through coordination and division of labor. For example, in the case of education and health the Bank contributed through ASA, and relied on EU and the Millennium Challenge Corporation to take the lead on education, and USAID on health. The WBG coordinated technical support to the Targeted Social Assistance program through partnering with UNICEF, EU, USAID and the Sweden Development Assistance Program. There was also collaboration in the transport sector—with the Bank leading donor meetings—and especially the East- West Highway Corridor Development Program (with ADB, EIB, and JICA). IFC worked closely with ADB and EBRD on developing hydropower energy (objective #8). In addition, the Bank cooperated closely with the IMF on issues related to the macro-framework, including debt sustainability, which are essential for the DPO programmatic series. Reforms not undertaken under the Bank’s third DPO operation or substantially completed were included as structural benchmarks of the IMF’s EFF program when the DPO series was truncated. A shortcoming in the division of labor was that the Bank For Official Use Only CLR Review 15 Independent Evaluation Group did not take the opportunity to focus more effectively on helping Georgia overcome constraints to competitiveness and labor markets which is essential to unleash the country’s growth. Safeguards and Fiduciary Issues 42. The Bank safeguards policies were triggered in the three operations that were closed and validated by IEG during the CPS period (social development and the transport practices). The CLR reports that the Bank complied with environmental and social safeguard policies thanks to a rigorous WBG supervision, constant client capacity building, and timely guidance. The ICRs and ICRRs noted temporary noncompliance during implementation (due to failures in country systems, weak national regulations, low capacity, poor reporting and delays); but noted satisfactory compliance with safeguards requirements and the resolution of all project by projects’ closure. No request for investigation was submitted to the Inspection Panel during the review period. 43. In 2016, INT substantiated a case of collusion related to procurement in the Second Secondary and Local Roads project (FY12). Risk-mitigation measures included recommendations to the implementing agency to review existing contracts and act appropriately on any wrongdoing found. Sanctions were pursued against the entities concerned. Ownership and Flexibility 44. The WBG carried out dialogue with the government as well as roundtables with development partners, civil society, and the private sector during the preparation of the CPS. The program was organized around a series of programmatic DPOs which required government commitment to policy reforms related to competitiveness and growth, inclusive growth, and private sector competitiveness. 45. On the whole, the government showed ownership and commitment to the policy reform supported by the WBG agenda. However, both DPO series on inclusive growth and private sector competitiveness were truncated (DPO3 cut from the series) without a clear explanation, aside from the PLR mentioning better alignment with a “changed country environment.” This may suggest weak ownership in some areas of the WBG program. WBG Internal Cooperation 46. Program implementation showed internal coordination. IFC investment and advisory services and MIGA guarantees complemented WB programs and projects in the energy and financial sectors. Bank support to universal health care reforms paved the way for IFC investments in health care. The IFC advisory services in the area of investment climate also complemented the WB programmatic Private Sector Competitiveness DPOs. Risk Identification and Mitigation 47. The CPS identified as major risks the domestic political context, public sector capacity to deliver results, the external environment, private sector capacity to innovate and grow, and macroeconomics (high external debt, dollarized financial system, and limited scope for monetary and fiscal policies). Mitigation measures included identifying capacity gaps and capacity building support from the WBG—primarily as part of DPOs—and other donors, adapting the program to changes in the external environment, focusing the program on both public and private sector roles in equitable growth and job creation, and strengthening the macro-economic framework. Risks were correctly identified, and the macro-economic risk has been mitigated to a large extent by Georgia’s program with the IMF, which is on track. Overall Assessment and Rating 48. IEG rates WBG performance as Good. The WBG strategy—under both the CPS and the CPS performance and learning review—addressed the key challenges facing the country and benefited from congruence with government programs. The selected CPS areas were consistent with WBG poverty reduction and shared prosperity objectives. The CPS was selective—with exception of objective #7 on eliminating private sector development constraints—based on areas congruent with the Bank’s experience in Georgia, and responded to the government’s request in specific areas, which For Official Use Only CLR Review 16 Independent Evaluation Group considered the WBG’s value-added potential and support from other development partners. The proposed WBG interventions could reasonably be expected to have an impact toward CPS objectives in most areas of the program. At the same time, in a few instances of the results framework, baselines/targets were missing or inaccurate, and indicators contained baselines and targets that had no date. Some indicators assumed that reliable data would be available at CLR stage, and this was not always the case (e.g., PEFA indicators for objective #5). Analytical work informed well the WBG’s engagements (lending and/or policy dialogue), and ASA played contributed to some of the objectives where the Bank had no lending interventions and other donors took the lead. In addition, the WBG coordinated technical support in some instances—like the Targeted Social Assistance program— through partnering with others. The CPS and PLR appropriately identified and mitigated risks. The macro-economic risk has been mitigated to a large extent by Georgia’s program with the IMF, which is on track. 49. Implementation benefited from a country environment without major adverse shocks during the CPS period, and Bank performance on closed projects was better than ECA and WBG comparators. The last of the three-programmatic DPO series on inclusive growth and private sector competitiveness was truncated. The CLR explained that the truncation was intended to align future WBG operations with the new CPF. Program implementation showed internal coordination. IFC investment and advisory services and MIGA guarantees complemented WB programs and projects in the energy and financial sectors. The Bank collaborated with development partners through coordination and division of labor. The Bank complied with environmental and social safeguard policies through capacity building and timely guidance. INT substantiated a case of collusion in procurement, and sanctions were pursued against the entities concerned. 7. Assessment of CLR Completion Report 50. The CLR provides evidence on the extent to which outcomes were achieved, although it could have been more explicit on how the WBG contributed to those outcomes. There was inadequate attention on the role ASA may have played in the WBG program, and the dissemination of results of economic sector work, and how technical assistance contributed to results across the WBG program. Given its importance, the truncation of the programmatic DPOs should have been discussed in a more prominent place in the text as opposed to a footnote. Also, it would have been useful to have a discussion in the CLR on the possible effects on policy dialogue and reforms of the truncation of the DPO series. The CLR includes lending delivered in FY18 as part of the CPS delivery, which is not in line with the Shared Approach to assessing Country Partnership Frameworks (the CPS period goes through FY17). 8. Findings and Lessons 51. The CLR contains lessons about the need for a strong results framework, insufficient capacity in the procurement and contract management profession, positive results of DPOs tackling multi- sector issues, combination of WBG instruments, and implementation of innovative contracting approaches. 52. IEG adds the following lesson: • Competitiveness and labor market issues are key binding constraints for Georgia’s growth, and areas in which the Bank has comparative advantage. Yet, the Bank failed to address them adequately and effectively under this CPS. To maximize development effectiveness, the Bank should not miss opportunities to address effectively areas which are both significant binding constraints for country growth and in the domain of the Bank’s comparative advantage. Annexes CLR Review 17 Independent Evaluation Group Annex Table 1: Summary of Achievements of CPS Objectives – Georgia Annex Table 2: Georgia Planned and Actual Lending, FY14-FY17 Annex Table 3: Analytical and Advisory Work for Georgia, FY14-FY17 Annex Table 4: Georgia Trust Funds Active in FY14-17 Annex Table 5: IEG Project Ratings for Georgia, FY14-17 Annex Table 6: IEG Project Ratings for Georgia and Comparators, FY14-17 Annex Table 7: Portfolio Status for Georgia and Comparators, FY14-17 Annex Table 8: Disbursement Ratio for Georgia, FY14-17 Annex Table 9: Net Disbursement and Charges for Georgia, FY14-17 Annex Table 10: Total Net Disbursements of Official Development Assistance and Official Aid for Georgia Annex Table 11: Economic and Social Indicators for Georgia, 2014-2016** Annex Table 12: List of IFC Investments in Georgia Annex Table 13: List of IFC Advisory Services in Georgia Annex Table 14: IFC net commitment activity in Georgia, FY14 - FY17 Annex Table 15: List of Active MIGA Activities in Georgia, 2014-2017 Annexes CLR Review 19 Independent Evaluation Group Annex Table 1: Summary of Achievements of CPS Objectives – Georgia CAS FY14-FY17: Focus Area I: Strengthening Public Service Actual Results IEG Comments Delivery to Promote Inclusion and Equity CPS Objective 1: Contribute to expansion and strengthening of social protection system, in particular TSA and pensions Indicator 1: Targeted Social This indicator was supported by the Third This objective was Assistance (TSA) Coverage of Competitiveness and Growth Development clarified at PLR stage: the poorest decile Policy Operation (P146890, FY14) and by the the original objective First (P149991, FY15) and Second (P156444, was, "Expanded and Baseline (2013): 50% FY17) Programmatic Inclusive Growth DPOs strengthened social Target (2017): 60% with equal which sought to improve coverage and quality protection system (TSA coverage of men and women of of social services and strengthen monitoring of and pensions)." the poorest decile (2017) outcomes, as well as by Technical Assistance (TA). After the PLR, the baseline was changed The CLR reports that TSA coverage was from the original 56.6% (28.6% for women and 27.6% for men) baseline 40%. based on the 2016 Integrated Household Survey not verified by IEG. The target for this indicator was the The only available ISR: MS for the First baseline for the DPO Inclusive Growth DPO (March 2016) reported series. that the share of bottom decile receiving TSA was 62%, as of December 2014 (compared to 60% as of 2013, as reported in the ISR and in the Program Document for the First series). Major Achieved Outcome Indicator 2: Pension reform The First (P149998, FY15) and Second Measures roadmap developed Private sector competitiveness DPO (P155553, FY18) supported this indicator as Baseline (2013): No roadmap well as the Pension Reform TA (P158195). Target (2017): Roadmap The Program Document for the Second DPO developed reports that the government approved the strategy and roadmap for comprehensive pension reform in March 2016. A draft law on Private Pensions was approved by the Cabinet for public consultation on March 2017 (see Program Document for the Second DPO). The CLR reported that it was presented to Parliament for discussion in December 2017. Achieved CPS Objective 2: Support government’s efforts of expansion “universal health coverage (UHC)” program and institutionalization of health service quality assurance processes Indicator: Universal Health The operations reported for CPS Objective 1 This objective was Coverage (UHC) registration rate also supported this CPS Objective as well as clarified at PLR stage: of the target population the Service Delivery Quality Improvement TA the original objective (P156476, FY15). was, "Expanded Baseline (2013): 60% ICRR IEG: MS for the Competitiveness and universal health Target (2017): 90% with tracking Growth DPO reports that the share of the coverage (UHC) of female registration rate population covered by the UHC program program and increased to 100% as of December 2015, institutionalization of Annexes CLR Review 20 Independent Evaluation Group CAS FY14-FY17: Focus Area I: Strengthening Public Service Actual Results IEG Comments Delivery to Promote Inclusion and Equity without presenting data for women. However, health service quality the ICRR reports that the indicator of coverage assurance processes." is normative (100% coverage by decree) and does not reveal the share of the population effectively being served - consequently, there is no evidence of improvements in health service quality. The CLR reports a registration rate of 90% (52% females) based on various national data not verified by IEG Mostly Achieved CPS Objective 3: Contribute to elaboration of essential knowledge base for general education and pre- school education Indicator 1: Proportion of This indicator was supported by the This objective was teachers accumulating at least 1 First (P149991, FY15) and Second (P156444, clarified at PLR stage. credit according to the credit FY16) Programmatic Inclusive Growth DPOs; The original CPS accumulation manual the adoption, by the Ministry of Education and objective was "Essential Science, of the credit accumulation manual for knowledge base for Baseline: 21% (2015) teachers was a trigger for the Second DPO general education and Target: 65% (2018) (January 2016). The only available ISR: MS for preschool education the DPO series (March 2016) does not report elaborated." information related to this indicator. The PD for the 2nd Series reports that this prior action changed from the 1st series, to better capture improvement in the quality of teachers The Country Team but it does not report progress in relation to the provided an e-mail from indicator. the Teachers Professional The CLR reports that the share of teachers Development Center, who have acquired one credit through their which requested the registered and evaluated professional information from EMIS. development activities has increased to 62% IEG could not verify the as of the end of the 2016-2017 year, based on source of the evidence. information provided by the Georgian The team could not Education Management Information System provide the (EMIS). IEG could not verify the information. documentation. Not Verified Indicator 2: Teacher This indicator was supported by the effectiveness evaluation tools First (P149991, FY15) and Second (P156444, developed and adopted FY17) Programmatic Inclusive Growth DPOs: the Program Document for the First DPO Baseline: No tools or roadmap reports that the exiting teacher evaluation (2013) system would change, based on teacher self- Target: Tools developed and assessment; school-based assessment and adopted (2017) external assessment. The only available ISR: MS for the DPO series (March 2016) does not report information related to this indicator. The PD for the 2nd Series reports that the prior action “Ministry of Education rolls out the Annexes CLR Review 21 Independent Evaluation Group CAS FY14-FY17: Focus Area I: Strengthening Public Service Actual Results IEG Comments Delivery to Promote Inclusion and Equity teacher evaluation system using the classroom observation tool throughout the country was dropped but was in progress and to completed in April 2017. However, the PD reports that a new scheme for teacher entry into profession, evaluation and professional development was adopted in February 2015 and supported by the 1st series – the new scheme evaluates teachers on their participation in professional development activities, subject and aptitude examinations, teacher performance in the classrooms, assessment of teacher portfolios and teacher self-evaluation. The Program Document for the Third Competitiveness and Growth Development Policy Operation (P146890, FY14) reports that the Ministry of Education had launched teacher certification examinations and developed a performance appraisal system for teachers. In addition, the ICR: S indicates that the Ministry of Education has implemented the new assessment system for the evaluation of school principals and that the teacher certification program has been expanded to include teachers across grades. The ICR also reports that the Teacher Recruitment, Evaluation, Professional Development and Career Advancement Scheme was adopted in February 20, 2015 (Government’s Teacher Recruitment, Evaluation, Professional Development and Career Advancement Scheme Decree No. 68) and that the respective changes were introduced in the Law on General Education in December 2016. Achieved Indicator 3: Institutional This indicator was also supported by the framework elaborated for early First (P149991, FY15) and Second (P156444, and pre-school education service FY17) Programmatic Inclusive Growth DPOs delivery and quality assurance, and by the Competitiveness and Growth DPO. including support to piloting of for the Competitiveness and Growth DPO priority interventions reports that new professional standard for teachers was adopted, and that a new Baseline: No institutional implementation-monitoring framework was framework (2013) established to evaluate the implementation of Target: Institutional framework the new curriculum in classrooms for all levels developed (2017) of education. The CLR reports that in 2016 a law was passed for early and preschool education, Annexes CLR Review 22 Independent Evaluation Group CAS FY14-FY17: Focus Area I: Strengthening Public Service Actual Results IEG Comments Delivery to Promote Inclusion and Equity setting a clear institutional framework (Law on Early and Preschool Education and Care (EPEC) of June 2016). Achieved CPS Objective 4: Support improvements in public investments and delivery of public services to citizens Indicator 1: Initiating the piloting This indicator was supported by a Public This objective was of the newly approved PIM Expenditure Review (PER) on the Diagnostics clarified at PLR stage. Guideline in Tbilisi Municipality of Public Investment Management System The original CPS for the selected projects with the (P143721, FY14), by the Enhancing Public objective was, "The estimated costs that are above Investment Management TA and the First identification, GEL 5 million (P149991, FY15) and Second (P156444, prioritization and FY17) Programmatic Inclusive Growth DPOs. implementation of The only available ISR: MS for the DPO series public investments (March 2016) does not report information improve." related to this indicator. However, the 2017 PER reports that nation- The latest ISRs of the wide Public Investment Management (PIM) Second, P147521, guidelines were developed and approved in FY15, latest ISR: S , 2016, including for the Local Governments and November 2017 and that their implementation was to be launched Third, P150696, FY16, in 2017. latest ISR: MS of November 2017 The CLR reports that Tbilisi municipality has Regional Development begun to use PIM guidelines as part of a pilot projects do not present involving five other municipalities (see the data related to this March 2018 Outputs and Deliverables indicator neither do the document of the Programmatic Public Program Document and Financial Management (PFM) Task (P152688, latest ISR: S, FY15). The document also reports that the September 2017, of the PIM guidelines were prepared and adopted by Third and Local Roads the Government – but were pending approval Project by the Council of Ministers - and that all new public investment projects will be evaluated in accordance with this framework. Achieved Indicator 2: Number of A Report on the Observance of Standards and At PLR stage, this published annual IFRS based Codes (ROSC) Accounting and Auditing indicator was modified financial statements of SOEs (A&A) was prepared in FY15 (see report). The downwards due to an ROSC indicated that, as of 2014, it was not overestimation of the Baseline (2013): 4 clear which State Owned Enterprises (SOEs) capacity of SOEs to Target (2017): 8 prepared their financial statements according comply with IFRS. to International Financial Reporting Standards The original indicator (IFRS). The CLR reports that following the was specified as ROSC AA dissemination, the Government has follows, "Increased taken most of the recommendations into number of published account. annual IFRS based financial statements of The Reform Momentum and Support SOEs with unqualified (STAREP) TA (P146154) supported the Annexes CLR Review 23 Independent Evaluation Group CAS FY14-FY17: Focus Area I: Strengthening Public Service Actual Results IEG Comments Delivery to Promote Inclusion and Equity Government in drafting the 2016 Law on audit opinion from 4 in accounting, reporting and auditing and in the 2013 to 8 in 2017." establishment of a Service for Accounting, Reporting, and Auditing Supervision (SARAS), accounting for progress in implementing a previous recommendation from the WBG. Additional information provided by the Country Team, 8 SOEs from the Transport, Industry and Energy sectors, have published IFRS- based financial reports on their websites for calendar year 2016. Achieved Indicator 3: Number of Various projects contributed to this indicator: At PLR stage, the target beneficiaries of improved - The First Regional Development Project- value for this indicator municipal services and RDP (P126033, FY12): the latest ISR: MS was revised downwards infrastructure (December 2017) reports 32,319 direct from 2.4 to 1 million due project beneficiaries as of December 2017 to an overestimation of Baseline (2013): 0 - The Second RDP (P130421, FY13): the the number of Target (2017): 0.5 million latest ISR: S (October 2017) reports 10,000 beneficiaries during the direct project beneficiaries (50% female)in CPS preparation stage. April 2017 Moreover, the results of - The Second Regional and Municipal the 2014 census Infrastructure Development Project - revealed a sharp SRMIDP (P147521, FY15): the latest ISR: decline in the overall S (November 2017), reports 214,000 direct population. project beneficiaries as of October 2017 (51.25% female) - The Third RDP (P150696, FY16): the latest ISR: MS (November 2017) reports 272 direct project beneficiaries (50% female) as of December 2017 In total, 256,591 people beneficiated from improved municipal services and infrastructure. Partially Achieved CPS Objective 5: Contribute to sustained progress towards the adoption of modern public sector and fiscal management systems Indicator 1: Quality and The Public Expenditure Management Peer This objective was timeliness of annual financial Assisted Leaning (PEMPAL) activities and clarified at PLR stage. statements (PEFA Performance knowledge-sharing supported this Objective. The original CPS Indicator-25) Georgia also benefited from the PEFA Repeat objective was, Assessment Economic and Sector Work "Sustained progress Baseline (2013): C+ (P131501, FY14) for the preparation of the towards the adoption of Target (2017): B 2012 PEFA Assessment Report and from the modern public sector Financial Sector Assessment Update and fiscal management (P148563, FY14, see final report). systems." The latest available PEFA assessment (2014) The County Team could not be accessed (the report is still at indicated that the World Draft stage) and no 2017 PEFA assessment Bank’s team expects to Annexes CLR Review 24 Independent Evaluation Group CAS FY14-FY17: Focus Area I: Strengthening Public Service Actual Results IEG Comments Delivery to Promote Inclusion and Equity was publicly available. As reported in the CLR, finalize the review and PEFA performance Indicator-25 is B+ as of validation of the PEFA 2017, based on the 2016 PEFA self- report by the end of assessment carried out by the Government FY18. through an inter-agency working group established for this purpose that was finalized and shared with the WBG in 2017. The PEFA indicators in the new PEFA report have changed, and the substance of the old PI-25 is now captured under PI-29 (Annual Financial Reports). A draft of the PEFA 2017 provided by the country team shows a rating of B+ for indicator PI-29, against a target of a B rating for 2017. Mostly Achieved Indicator 2: Effectiveness of The latest available PEFA assessment (2014) internal audit (PEFA could not be accessed (the report is still at Performance Indicator-21) Draft stage) and no 2017 PEFA assessment was available for the country. Baseline: C+ (2013) As reported in the CLR, PEFA performance Target: B (2017) Indicator-26 is B as of 2017, based on the 2016 PEFA self-assessment carried out by the Government though an inter-agency working group established for this purpose that was finalized and shared with the WBG in 2017. Internal Audit is indicator PI-26 under the new PEFA format. A draft of the PEFA 2017 provided by the country team shows a rating of B for indicator PI-26, against a target of B for 2017. Mostly Achieved CPS Objective 6: Support efforts to strengthen participatory local development and greater social accountability Indicator 1: New pilot (i) The ICR: MS for the Youth Inclusion and This objective was mechanisms for citizen Social Accountability Project (P150310, FY14) clarified at PLR stage. engagement and feedback are reports that 30 people directly participated in The original CPS put in place including: Youth Municipal Action Plan – YMAP- objective was, Preparation (21 youth and 9 municipal "Strengthening (i) development of new forum for officials). It also reports that Youth Committees participatory local youth to engage with local successfully involved hundreds of youth in development and government in the creation of their municipalities. Finally, as reported in the greater social joint action plans; and CLR, the YMAP were implemented in three accountability." other municipalities. Achieved The CLR reports that (ii) establishment of pilot (ii) The CLR reports that a tool for feedback various operations beneficiary feedback mechanism has been developed as part of supported this indicator. mechanisms to provide feedback broader social inclusion approach and piloted However, the latest on municipal services in seven municipalities. The ICR: MS for the ISRs for the SRMIDP Youth Inclusion and Social Accountability (P147521, FY15): the Project does not report on such tool although it First RDP (P126033, reports that the activities planned to increase FY12); the Second RDP social accountability were not as successful as (P130421, FY13) and Annexes CLR Review 25 Independent Evaluation Group CAS FY14-FY17: Focus Area I: Strengthening Public Service Actual Results IEG Comments Delivery to Promote Inclusion and Equity activities aiming to promote youth participation the Third RDP and influence in decision-making. Partially (P150696, FY16) do not Achieved present indicators related to Indicator 1. Indicator 2: Increased citizen The CLR reports that various operations satisfaction with municipal supported this indicator. However, the latest service provision and municipal ISRs for the SRMIDP (P147521, FY15), the response from 40% to 70%. First RDP (P126033, FY12); the Second RDP (P130421, FY13) and the Third RDP Baseline (2013): 40% (P150696, FY16) do not present indicators Target (2017): 70% related to Indicator 1. The satisfaction rate reported in the CLR - 76% and 80% respectively in the Telavi and Kvareli municipalities – cannot be verified based on the available WBG documents. Not Verified CAS FY14-FY17: Focus Area II: Enabling job creation by the Actual Results IEG Comments private sector through improving competitiveness CPS Objective 7: Contribute to addressing key legal, regulatory or institutional constraints for the private sector Outcome 1: Stronger As reported in the CLR, various operations At PLR stage, the regulatory framework: supported this Outcome: objective was clarified. - The Third Competitiveness and Growth Original objective was, Indicator 1: Business DPO (P146890, FY14): in relation to "Key legal, regulatory or environment and property rights business environment protection, IEG: MS institutional constraints protection enhanced with reports that customs violation detections for the private sector are Major Georgia’s ranking in economic increased by 116% from 2011 to 2015. The addressed, including in Outcome freedom (Heritage Foundation) ICR: S also reports that the Deep and the regions." Measures improved from 34th position in Comprehensive Free Trade Agreement 2012 and intellectual property (DCFTA) implementation – supported by The First (P149991, rights enhanced from 129th the DPL - involved capacity building on FY15) and Second position in 2013 (out of 130) as (….) intellectual property rights (P156444, FY17) ranked by the International Programmatic Inclusive Intellectual Property Rights - Georgia National Innovation Ecosystem Growth DPOs and the Ranking Project (P152441, FY16) supports start-up First (P149998, FY15) matching grants for early-stage, MSMEs, in and Second Private the proof of concept stage or that have sector competitiveness technological innovation with potential for DPOs (P155553, FY18) creation of a new intellectual property. The also supported this latest ISR: MU (January 2018) reported no Outcome as they aim at progress in relation to the number of creating a fair business enterprises and start-ups financed through environment. matching grants According to the Heritage Foundation, Georgia’s raking in the Index of Economic Freedom improved from 34th in 2012 (see Annexes CLR Review 26 Independent Evaluation Group CAS FY14-FY17: Focus Area II: Enabling job creation by the Actual Results IEG Comments private sector through improving competitiveness report) to 13th in the 2017 (and 16th in the 2018 Index). Regarding intellectual property rights; according to the International Intellectual Property Rights Ranking, Georgia’s ranking improved from 110th (out of 124 countries) to 88th (out of 127 countries) between 2013 and 2017. Achieved Outcome 2: Increased The operations reported for Outcome 1 also The ratio for 2013 innovation capacity: contributed to Outcome 2. ranking is: 73/142= 0.51 The latest ISR: MU (January 2018) of the and the ratio for 2017 Indicator 1: Increased Georgia’s Georgia National Innovation Ecosystem ranking is 68/127 =0.53. innovation index ranking from Project (P152441, FY16) reported no 73rd in 2013 (INSEAD-WIPO progress in relation to the number of new or report) improved products or services introduced to existing or new markets by the project beneficiaries. The Program Document for the Second Private sector competitiveness DPOs (P155553, FY18) reports that the First Series supported the government’s efforts to develop more effective innovation policies, through the establishment (in 2014) and operationalization of the Georgia Innovation and Technology Agency (GITA) and the Research and Innovation Council. As part of the Series’ prior actions, the Government adopted a new Law on Innovations, in June 2016. The PD also reports that, as of end-2016, 167 beneficiaries received innovation finance from GITA. According to the World Intellectual Property Organization (WIPO), Georgia’s ranking in the innovation index went from 73th (out of 142 countries) in 2013 (see 2013 report) to 68th (out of 127) in 2017 (see 2017 report). However, the number of countries diminished between these two rankings, hence, Georgia’s relative ranking did not increase but slightly decreased. Not Achieved Outcome 3: Strengthening The operations and results reported for The First (P149998, competition in key product Outcome 2 also contributed to Outcome 3. FY15) and Second markets The ICR: S of the Competitiveness and Private sector Growth DPO Series reports that the series competitiveness DPOs Indicator 1: Georgia’s intensity of supported the setup of the Competition (P155553, FY18) also local competition improved from Agency for the Implementation of the Law on supports this Outcome, Competition (in April 2014), which supports supporting competition in Annexes CLR Review 27 Independent Evaluation Group CAS FY14-FY17: Focus Area II: Enabling job creation by the Actual Results IEG Comments private sector through improving competitiveness 123rd (out of 142 in 2012) in the the liberalization of the Georgia market and telecommunication and Global Innovation Index promote competition. IEG: MS also reports on internet services. Georgia’s enacted legislation to promote competition. The Georgia National Innovation Ecosystem Project (P152441, FY16) supports the building of the innovation community in the country and the organization and implementation of innovation competition. The latest ISR: MU (January 2018) reported no progress in relation the number of supported competition. According to the Global Innovation Index from the WIPO, Georgia’s raking increased from 123rd out of 141 in 2012 (see 2012 report) to 75th (out of 127) in 2017 (see 2017 report). Achieved Outcome 4: Increased access IFC Advisory Services in Georgia – such as As reported in the CLR: to finance: the Investment Climate Advisory Project; the due to a change in the SME Banking Advisory Project and ECA classification of the loans Region SME Resilience Advisory Project – (according to NBG supported Outcome 4. IFC has investments in reports, some retail loans several financial institutions, including in the were reclassified as SME two largest banks. The First (P149998, FY15) in 2015 and reclassified and Second Private sector competitiveness as retail in 2016), it is DPO (P155553, FY18) also contributed to this difficult to estimate actual Outcome. growth of the SME loans during the CPS period. Indicator 1: Increased access by Indicator 1: The Program Document of the SMEs to bank financing with Second Private Sector Competitiveness DPO The CLR commented on share of loans to SMEs in banks’ reports that one of the DPO’ prior action was the fact that the baseline loans that the Government would implement an of 3% seems to be a increased from 20 percent SME Development Strategy, by delivering typo. (baseline 2013) access to finance programs and micro and small business support programs and that the Entrepreneurship Development Agency (EDA) services would reach about 8,000 SMEs. The PD also reports that the SME sector increased by 300% between 2006 and 2015 and that SMEs accounted for about 20% of GDP. However, the PD does not report on access by SMEs to bank financing The CLR reports that the share of Small and Medium Enterprises (SME) loans in total banks’ loans increased slightly between 2013 and 2016: 2013 – 20%; 2014 – 19%; 2015 – Annexes CLR Review 28 Independent Evaluation Group CAS FY14-FY17: Focus Area II: Enabling job creation by the Actual Results IEG Comments private sector through improving competitiveness 23% and 2016 – 21% (see the2016 report from the National Bank of Georgia). Mostly Achieved Indicator 2: Improved access of Indicator 2: The Program Document of the SMEs to more diversified Second Private Sector Competitiveness DPO products and sources of funds, reports that one of the DPO’s pillar was to with share of support the development of instruments that NBFI assets (including MFI, promote financial access, especially for SME. leasing, factoring and other In this way, the DPO supports the formal financial sector lenders) implementation of the SME development in total private financial sector Strategy by EDA but the Program Document assets increased from 3 percent does not report data on improved access to (in 2013) SMEs to more diversified products and sources of funds. The CLR reports that the share of non-banking financial institutions’ assets increased from 9.3% (2013) to 10.2% (2016) and that the share of non-bank credit institutions assets increased from 6.1% (2013) to 8.1% (2016), without specifying the source. The 2017 IMF Article IV for Georgia reports in increase in the gross liabilities and gross assets of non-banks institutions, as a share of GDP that doubled between 2013 and 2016. Mostly Achieved Indicator 3: Volume of Indicator 3: the CLR reports that the volume of outstanding loans to MSMEs in outstanding loans to MSMEs in the portfolio of the portfolio of financial financial intermediaries supported by IFC intermediaries supported by IFC increased to around USD 1.6 billion. increased by 50% from US$0.8 billion to US$1.2 billion Based on audited financial statements, the combined MSME portfolio of Bank of Georgia and TBC Bank, which are supported by IFC, reached $2.0 billion in 2016. Achieved Indicator 4: Increased financial Indicator 4: The Program Document of the penetration, with share of private Second Private Sector Competitiveness DPO credit to GDP from 30 percent in reports that the Bank extended TA to the 2013. government for the creation of an EDA and possible financial and non-financial instruments it could roll out to support SME development. However, the PD does not report on an increase of financial penetration. The CLR reports that Loans to Non-Financial Sector and Households/GDP were as follows: December 2013 – 39%; December 2014 – 44%; December 2015 – 51%; December 2016 – 56% based on the Assets and Liabilities of Annexes CLR Review 29 Independent Evaluation Group CAS FY14-FY17: Focus Area II: Enabling job creation by the Actual Results IEG Comments private sector through improving competitiveness Commercial Banks data from the National Bank of Georgia. Alternative information sources: The share of bank private credit to GDP increased 38.7 percent in 2013 to 55 percent in 2017 according to the IMF First Review Under the Extended Fund Facility (December 2017). Achieved Outcome 5: Facilitate Indicator 1: The First Regional Development At PLR stage, the investment in the regions Project- RDP (P126033, FY12) contributed to formulation of this through support to an this indicator: the latest ISR: MS (December indicator was changed to improved investment climate 2017) reports that the number of points of make it more accurate and infrastructure sales in renovated culture heritage sites and and more reliably cities increased from 248 to 337 between May measurable. The original Indicator 1: Tourism related 2012 and December 2017. indicator was, "Increased SMEs (points of sales) in Achieved tourist spending in renovated cultural heritage sites targeted regions by 20 and cities percent." Baseline: 248 (2013) Target: 323 (2017) The WBG also supported Indicator 2: The First RDP (P126033, FY12) the development of the Indicator 2: Growth of tourism also contributed to this indicator: the latest tourist sector in Georgia employment in project region ISR: MS (December 2017) does not report through the preparation Kakheti as measured by disaggregated data by type of beneficiaries of a National Tourism increase of number of people (32,319 people are reported, as of December Strategy 2015-2015 employed in hotels and 2017, including, among others, the number of (P158281, FY16) restaurants. permanent employees in private sector investments supported by the project). The previous ISRs do not report either on the number of employed people. The number reported in the CLR (an increase in the number of employed people from 507 in 2012 to 1,045 in 2015) could not be verified.Additional information from the World Travel and Tourism Council (2017), however, indicates that the numbers from the CLR are realistic. Achieved Indicator 3: Increased tourism Indicator 3: The First RDP (P126033, FY12) spending in targeted regions as also contributed to this indicator: The latest measured by increased tourism ISR: MS (December 2017) does not present a enterprise VAT receipts specific related indicator. The CLR reports that, according to Communication from the Ministry of Finance, VAT Payments by the Tourism Sector in Annexes CLR Review 30 Independent Evaluation Group CAS FY14-FY17: Focus Area II: Enabling job creation by the Actual Results IEG Comments private sector through improving competitiveness Kakheti region increased from GEL 231,731 in 2013 to GEL 1,855,954 in 2016. This information could not be verified by IEG. Other sources of information confirm the significant increase in tourism spending in the Kakheti region. The World Travel and Tourism Council (2017) reports that the direct contribution of Travel & Tourism to GDP increased from GEL1,832 million in 2013 to GEL 2,722 million in 2016, measured in 2016 prices—an increase of nearly 50 percent in real terms—with Kakheti the third most popular destination. Achieved CPS Objective 8: Contribute to provision of infrastructure and services to facilitate growth. Indicator 1: Decreased travel This indicator was supported by: At PLR stage, the time and vehicle operating costs - The Third East West Highway objective was clarified. (VOC) in rehabilitated East-West Improvement project (P112523, FY10): Original objective was, Highway sections by 30% and IEG: S reports: "Provision of 10% respectively.  Sveneti – Agara route: a 22% infrastructure and reduction in transit time and a 10% services to facilitate reduction (5.3% for trucks) in VOC growth."  Sveneti – Ruisi route: a 32.5% reduction in transit time and a 15% The target value for this reduction (6.6% for trucks) in VOC indicator was also - The Fourth East West Highway revised downwards Improvement Project (P130413, FY13): the because the original latest ISR:S (January 2018) reports: target of 40% was  Agara – Kashury route: a 30% considered too ambitious reduction in transit time and a 10% and to align the CPS reduction (6.6% for trucks) in VOC targets values with those - The East West Highway Corridor used in the roads improvement project (P149952, FY16): the projects. latest ISR: S (October 2017) reports no No baseline was progress in relation to travel time reduction specified. and VOC, on the Zemo Osiauri- Chumateleti route section Through these three projects, travel time decreased by about 28.2% and VOC decreased by about 11.6% (6.2 for trucks). Mostly Achieved Indicator 2: Reduction of travel This indicator was supported by: At PLR stage, the time in rehabilitated secondary - The Second (P122204, FY12) Secondary original indicator was and local roads sections by 47%. and Local Roads project: the April 2017 split into two indicators ISR: S reported a 42% average decrease and the respective targets were revised. Annexes CLR Review 31 Independent Evaluation Group CAS FY14-FY17: Focus Area II: Enabling job creation by the Actual Results IEG Comments private sector through improving competitiveness in travel time in the rehabilitated road sections. The original indicator - The Third (P148048, FY15) Secondary was as follows, and Local Roads project: the latest ISR: S "Reduction of travel time (September 2017) presents data on the and vehicle operating average vehicle speed, as a proxy variable costs in rehabilitated for a reduction in travel time and reports secondary and local that average vehicle speed increased by roads sections by 20% about 30% (from 40 km/h to 52.10 km/h) and 30% respectively." between April 2014 and August 2017 The target values for the - The Kakheti Regional Roads project indicator were revised (P117152, FY10): IEG: S, reports that downwards to comply travel time between Vaziani and Telavi via with the targets set in the Gombori halved (from 120 to 55 minutes). respective roads Mostly Achieved projects: travel time reduction targets for SLRP2 and SLRP3 are 44% and 50% respectively which is around 47% if weighted for respective lengths of roads. Indicator 3: Reduction in vehicle This indicator was supported by: The target values for the operating costs in rehabilitated - The Third (P148048, FY15) Secondary indicator were revised secondary and local roads and Local Roads project: the latest ISR: S downwards to comply sections by 22% for cars and (September 2017)reports a 28% reduction with the targets set in the 27% for trucks in vehicle operating for cars and 30% respective roads decrease in cost for trucks between April projects: the reduction in 2014 and August 2017 operating costs targets - The Kakheti Regional Roads project are 22% for cars and (P117152, FY10): IEG: S, reports a 31% 27% for trucks. reduction in vehicle operating for cars and 31% decrease in cost for trucks. The Second Secondary Achieved and Local Roads project did not measure this indicator. Indicator 4: Enhanced energy This indicator was supported by the regulatory system and electricity Competitiveness and Growth DPOs II market rules are implemented in (P143060, FY13), and III (P146890, FY14) line with EU Energy Policy which aimed to support the development of an applicable to Georgia under the efficient and reliable supply of energy to AA and Energy Community domestic businesses and consumers. ICR: S Treaty reports that a new transmission grid code was developed and approved and the code was fully harmonized with EU requirements and approved by the Electricity Regulatory Authority in 2014. According to media reports, the Parliament of Georgia ratified on April 21, 2017 the Annexes CLR Review 32 Independent Evaluation Group CAS FY14-FY17: Focus Area II: Enabling job creation by the Actual Results IEG Comments private sector through improving competitiveness agreement to join the Energy Community, an organization uniting the European Union member states and its neighbors with the aim to create an integrated European energy market. The CLR reported that detailed plans for the revision of regulations to allow new trading arrangements are being prepared and that the Parliament adopted amendments to the Law on Electricity and Gas on June 30, 2017 which set a deadline of May 1, 2018 for the introduction of the new trading arrangements for electricity. It also reports that full adoption of new trading arrangement fully consistent with Energy Community Treaty acquis may take longer. Partially Achieved Outcome: Increased power This outcome was supported by the At PLR stage, this supply and improved Transmission Grid Strengthening Project outcome was reliability of power grid (P147348, FY14) whose objective was to reformulated. The infrastructure. provide reliable power transmission to the original outcome was, southwestern part of the grid, upgrade "Improved reliability of electricity exchange systems, and provide the power grid economically efficient, environmentally and infrastructure." socially sustainable electricity sector planning. Partially Achieved Indicator 1: A reduced number of Indicator 1: according to the January 2018 electricity interruptions in the ISR: MS of project P147348 the total duration south-western part of the grid, of outages in Batumi substation was reduced particularly Batumi areas, from 136 hours in June 2014 to zero in measured by number of November 2017. The ISR also indicates that electricity during the 11 month period up to November interruptions at KV220 2017, no emergency outages of Batumi substation were recorded. Achieved Indicator 2: Use of net transfer Indicator 2: the January 2018 ISR: MS of capacity at new back-to-back project P147348 reports not progress, as of At PLR stage, the value station increased from close-to- November 2017, in relation to the total of this target was revised zero to 300 MW. electricity evacuated from the newly downwards to take into Baseline: Close to zero (2013) developed power generation stations. account the delays with Target: 300 MW (2017) The CLR reports that the use of net transfer the structuring of the capacity of power through back-to-back Nenskra HPP project. station to Turkey reached 253 MW in 2016; The original target value this progress was supported by the Paravani was MW550 of added HPP project. generation capacity. Partially Achieved Annexes CLR Review 33 Independent Evaluation Group CAS FY14-FY17: Focus Area II: Enabling job creation by the Actual Results IEG Comments private sector through improving competitiveness Indicator 3: Increased power Indicator 3: the IFC supported the These two operations generation capacity by 274MW. development of: were accompanied by Baseline: Close to zero (2013) - the Shuakhevi 187MW Hydropower Plant IFC transaction Advisory Target: 300 (2017) in FY15, through a loan (Shuakhevi HPP Services. project, USD 70 million) and equity (USD 34 million) in cooperation with MIGA Guarantee, the Asian Development Bank and the European Bank for Reconstruction and Development. The plant is not yet operational. - the 85MW Paravani plant (IFC Paravani HPP project, USD 40.5 million), in cooperation with the European Bank for Reconstruction and Development (EBRD, see EBRD operations Portal) which was opened in October 2014 (see EBRD release) Partially Achieved Indicator 4: The area provided This indicator was supported by the Irrigation At PLR stage, this with improved irrigation services and Land Market Development Project indicator was is at least 10,000 ha. (P133828, FY14) which sought to improve reformulated. The delivery of irrigation and drainage services in revised indicator better Baseline: 248 (2013) selected areas. measured the results of Target: 323 (2017) According to the November 2017 ISR:MU, the interventions there was no increase in the area provided envisaged in the CPS with improved irrigation services. and was also aligned Not Achieved with the results of the irrigation project under implementation. The original indicator was, "There is an increase in agricultural productivity (15%) in at least 75 percent of the area where irrigation rehabilitation takes place." CPS Objective 9: Support development of improved framework for matching labor supply with demand. The CLR reports that this Objective was At PLR stage, the supported by the First (P149991, FY15) and objective was clarified. Second (P156444, FY17) Programmatic Original objective was, Inclusive Growth DPOs and by the First "Improved framework for (P149998, FY15) and Second Private sector matching labor supply competitiveness DPOs (P155553, FY18) with demand." Partially Achieved Indicator 1: The only available ISR: MS for the First Inclusive Growth DPO (March 2016) and Annexes CLR Review 34 Independent Evaluation Group CAS FY14-FY17: Focus Area II: Enabling job creation by the Actual Results IEG Comments private sector through improving competitiveness Indicator 1: Procedure to match ISR: S (January 2016) for the First Private unemployed with training Sector Competitiveness DPO do not present programs developed and related indicators. implemented. The CLR reports that the indicator was not met since an online system provides automatic matching possibility between job- seeker and employers but is not yet able to match the unemployed with respective training programs. Not Achieved Indicator 2: Labor Market Indicator 2: The only available ISR: MS for the information system is in place First Inclusive Growth DPO (March 2016) and that will allow for evidence-based ISR: S (January 2016) for the First Private policy making. Sector Competitiveness DPO do not present related indicators. However, the Program Document for the Second Inclusive Growth DPO reports that, as prior action for the second DPO, the Geostat (the national technical office) completes the collection of data for the first month under the labor force survey using a revised framework . A larger sample size, with higher frequency of reporting is also supported by the DPO (the cleaning up of the newly collected census data was completed in April 2016 and the labor force survey was launched in January 2017). The CLR reports that a Labor Market information system is developed and provides updated information on labor market trends, career guidance and occupational profiles for various stakeholders. Partially Achieved Annexes CLR Review 35 Independent Evaluation Group Annex Table 2: Georgia Planned and Actual Lending, FY14-FY17 Proposed Approved Project Proposed Approval Closing Project name IBRD IBRD/IDA ID FY FY FY Amount Amount Project Planned Under CPS/PLR FY14-17 CPS P133828 Irrigation and Land Market Development Project 2014 2014 2020 50.0 50.0 P146890 Georgia Competitiveness and Growth DPO3 2014 2014 2014 92.8 92.7 P147348 Transmission Grid Strengthening Project 2014 2014 2019 60.0 60.0 Second Regional and Municipal Infrastructure P147521 2014 2015 2019 30.0 30.0 Development Project P148048 Third Secondary and Local Roads Project 2014 2015 2019 75.0 75.0 P149991 Inclusive Growth DPO 2015 2015 2016 50.0 60.0 P149998 Private Sector Competitiveness DPO1 2015 2015 2016 50.0 60.0 P149952 East-West Highway Corridor Improvement 2016 2016 2024 140.0 140.0 P150696 Third Regional Development Project 2015 2016 2020 95.0 60.0 Georgia National Innovation Ecosystem (GENIE) P152441 2015 2016 2021 40.0 40.0 Project P156444 Georgia Inclusive Growth DPO 2 2016 2017 2018 50.0 50.0 DROPPED Third Secondary and Local Roads Project - AF 2016 50.0 P155553 Private Sector Competitiveness DPO2 2016 2018 2019 50.0 Georgia Inclusive Growth DPO 3 2017 60.0 Private Sector Competitiveness DPO 3 2017 60.0 East-West Highway Corridor Improvement -AF 2017 80.0 Agriculture Project 2017 60.0 Total Planned 1,092.8 717.7 Unplanned Projects during the CPS Period P149953 Secondary Road Asset Management Project 2016 2022 40.0 P157465 Second Regional Development Project - AF 2016 2019 9.0 Total Unplanned 0 49.0 Approved Approval Closing On-going Projects during the CPS/PLR Period IBRD FY FY Amount P110126 REG & MUNI INFRA DEV 2009 2015 40.0 P112523 EW HIGHWAY IMP 3 2010 2016 147.0 P117152 KAKHETI REGIONAL ROADS 2010 2016 30.0 P122204 Second Secondary and Local Roads Project 2012 2019 70.0 P126033 REG DEV 1 2012 2018 60.0 P130413 EAST-WEST HIGHWAY 4 2013 2019 75.0 P130421 REG DEV 2 2013 2019 30.0 P143060 GEORGIA Competitiveness and Growth DPO2 2013 2014 60.0 Total On-going 512.0 Source: Georgia CPS and PLR, WB Business Intelligence Table 2b.1, 2a.4 and 2a.7 as of 01/23/18 *LIR: Latest internal rating. Annexes CLR Review 36 Independent Evaluation Group Annex Table 3: Analytical and Advisory Work for Georgia, FY14-FY17 Fiscal Proj ID Economic and Sector Work Output Type Global Practice year Georgia Country Social Social, Urban, Rural and Resilience P156404 FY17 Sector or Thematic Study/Note Analysis Global Practice Public Expenditure Review Macroeconomics, Trade and P156724 PER2016 FY17 (PER) Investment Social, Urban, Rural and Resilience P146594 Georgia Urban Strategy FY16 Sector or Thematic Study/Note Global Practice P147865 Georgia Energy Sector Strategy FY16 Sector or Thematic Study/Note Energy & Extractives Impacts of East-West Highway P154067 FY16 Other Poverty Study Transport & Digital Development Corridor Economic Impact of EW P157016 FY16 Sector or Thematic Study/Note Transport & Digital Development Highway Phase 2 Georgia National Tourism Social, Urban, Rural and Resilience P158281 FY16 Sector or Thematic Study/Note Strategy Global Practice Accounting and Auditing P132977 ROSC A&A update FY15 Governance Assessment (ROSC) Programmatic CEM: Inclusive Country Economic Memorandum Macroeconomics, Trade and P147344 FY15 Growth (CEM) Investment Country Environmental Analysis P147475 Country Environmental Analysis FY15 Environment & Natural Resources (CEA) Financial Sector Assessment Finance, Competitiveness and P148563 Georgia - FSAP Update FY15 Program (FSAP) Innovation Public Expenditure Review Macroeconomics, Trade and P151523 Georgia Programmatic PER FY15 (PER) Investment CEM - Sources of Growth Country Economic Memorandum Macroeconomics, Trade and P127774 FY14 Report (CEM) Investment Social, Urban, Rural and Resilience P129624 Georgia Urbanization Review FY14 Sector or Thematic Study/Note Global Practice Public Expenditure Financial P131501 Georgia PEFA Assessment FY14 Governance Accountability Public Expenditure Review Macroeconomics, Trade and P143721 Georgia PER-2 FY14 (PER) Investment Policy Notes for the new Macroeconomics, Trade and P143911 FY14 Sector or Thematic Study/Note Government Investment Debt management Performance Macroeconomics, Trade and P145964 DeMPA Georgia FY14 Assessment(DeMPA) Investment Fiscal Proj ID Technical Assistance Output Type Global Practice year Finance, Competitiveness and P155869 Georgia Financial Advisory TA FY17 Technical Assistance Innovation Green Freight Transport and P148812 FY16 Technical Assistance Transport & Digital Development Logistics Social, Urban, Rural and Resilience P151284 Georgia Policy Review for IDPs FY16 Technical Assistance Global Practice Social, Urban, Rural and Resilience P156588 Tbilisi Flash Flood Response FY16 Sector or Thematic Study/Note Global Practice P158195 Georgia Pension Reform TA FY16 Technical Assistance Social Protection & Labor Social, Urban, Rural and Resilience P158282 S-J Regional Tourism Strategy FY16 Technical Assistance Global Practice Azerbaijan Agribusiness Dev Social, Urban, Rural and Resilience P158285 FY16 Technical Assistance Analysis (includes Georgia) Global Practice Social Accountability Municipal Social, Urban, Rural and Resilience P146590 FY15 Technical Assistance services Global Practice Annexes CLR Review 37 Independent Evaluation Group TA Support for Education P148580 FY15 Technical Assistance Education Sector Strategy P150668 PFM Workshop FY15 Technical Assistance Governance Connecting to work: ICTs for P150753 FY15 Technical Assistance Transport & Digital Development employment Smallholders in agrifood value P155429 FY15 Technical Assistance Agriculture chains Health Utilization & Expenditure P156280 FY15 Technical Assistance Health, Nutrition & Population Survey Service Delivery Quality P156476 FY15 Technical Assistance Health, Nutrition & Population Improvement Georgia Payment System Finance, Competitiveness and P130433 FY14 Technical Assistance Modernizing Innovation ICT and innovation strategy in P147316 FY14 Technical Assistance Transport & Digital Development Georgia Georgia PPP High Level Policy Macroeconomics, Trade and P148871 FY14 Technical Assistance Workshop Investment Source: WB Business Intelligence 2/5/18 *NO RAS Annex Table 4: Georgia Trust Funds Active in FY14-17 Project Approval Closing Approved Project name TF ID ID FY FY Amount Improving Preschool Education in Georgia through P161435 TF A4473 2017 2020 680,000 Social Accountability Processes Advancing Public Participation in the Audit Process P155543 TF A1357 2016 2016 125,000 in Georgia IT Audit Development in the State Audit Office of P152658 TF 18381 2015 2019 500,000 Georgia P146123 Empowering Local Community Entrepreneurs TF 18661 2015 2018 2,500,000 Second Regional and Municipal Infrastructure P147521 TF 18090 2015 2019 5,000,000 Development Project P150310 Youth Inclusion TF 16978 2014 2016 500,000 P145040 Supporting Sustainable Wastewater Management TF 14912 2014 2018 10,052,155 Capacity Building For Georgia's National P144453 TF 14363 2013 2017 315,500 Examination Center Preparatory Work for 2014 Georgia National P125424 TF 14382 2013 2015 250,000 Population Census Regional and Municipal Infrastructure Development P110126 TF 12891 2013 2014 1,483,000 Project Strengthening Parliament's Capacity for Legal P125997 TF 99612 2012 2015 474,500 Drafting and Policy Formulation Tbilisi City Capital Investment Planning and P124176 TF 98647 2011 2015 350,000 Budgeting P101625 HYDRO REHABILITATION TF 90253 2008 2018 1,197,000 Total 23,427,155 Source: Client Connection as of 2/5/18 ** IEG Validates RETF that are 5M and above Annexes CLR Review 38 Independent Evaluation Group Annex Table 5: IEG Project Ratings for Georgia, FY14-17 Exit Total IEG Risk to Proj ID Project name IEG Outcome FY Evaluated ($M) * DO 2015 P110126 REG & MUNI INFRA DEV 82.5 SATISFACTORY MODERATE 2016 P112523 EW HIGHWAY IMP 3 182.5 SATISFACTORY MODERATE 2016 P117152 KAKHETI REGIONAL ROADS 29.0 SATISFACTORY MODERATE Total 294.0 Source: AO Key IEG Ratings as of 2/5/18 Annex Table 6: IEG Project Ratings for Georgia and Comparators, FY14-17 Total Total RDO % RDO % Outcome Outcome Region Evaluated Evaluated Moderate or Lower Moderate or Lower % Sat ($) % Sat (No) ($M) (No) Sat ($) Sat (No) Georgia 294.0 3 100.0 100.0 100.0 100.0 ECA 13,309.5 118 93.3 79.7 63.9 51.3 World 73,307.1 798 85.4 74.1 52.7 43.5 Source: WB AO as of 2/5/18 * With IEG new methodology for evaluating projects, institutional development impact and sustainability are no longer rated separately. Annex Table 7: Portfolio Status for Georgia and Comparators, FY14-17 Fiscal year 2014 2015 2016 2017 Ave FY14-17 Georgia # Proj 12 17 15 17 15 # Proj At Risk 1 1 1 % Proj At Risk 8.3 - - 5.9 6.6 Net Comm Amt 743.4 802.9 752.1 801.9 775 Comm At Risk 190.0 40.0 115 % Commit at Risk 25.6 5.0 14.8 ECA # Proj 280 290 279 292 285 # Proj At Risk 37 36 47 37 39 % Proj At Risk 13.2 12.4 16.8 12.7 13.8 Net Comm Amt 26,927.9 26,544.5 27,637.3 25,808.5 26,730 Comm At Risk 2,635.4 3,533.8 4,350.5 5,466.2 3,996 % Commit at Risk 9.8 13.3 15.7 21.2 15.0 World # Proj 2,048 2,022 1,975 2,072 2,029 # Proj At Risk 412 444 422 449 432 % Proj At Risk 20.1 22.0 21.4 21.7 21.3 Net Comm Amt 192,610.1 201,045.2 220,331.5 224,458.9 209,611 Comm At Risk 40,933.5 45,987.7 44,244.9 52,549.1 45,929 % Commit at Risk 21.3 22.9 20.1 23.4 21.9 Source: WB BI as of 2/5/18 Note: Only IBRD and IDA Agreement Type are included Annexes CLR Review 39 Independent Evaluation Group Annex Table 8: Disbursement Ratio for Georgia, FY14-17 Fiscal Year 2014 2015 2016 2017 Overall Result Georgia Disbursement Ratio 24.0 22.5 25.2 17.7 21.4 Inv Disb in FY 46.3 57.4 75.8 90.3 269.9 Inv Tot Undisb Begin FY 192.7 255.6 301.0 511.2 1,260.5 ECA Disbursement Ratio 22.8 23.5 17.5 20.7 21.0 Inv Disb in FY 2,612.0 2,664.4 2,275.6 2,857.1 10,409.1 Inv Tot Undisb Begin FY 11,467.5 11,342.1 13,028.9 13,776.0 49,614.4 World Disbursement Ratio 20.8 21.8 19.5 20.5 20.6 Inv Disb in FY 20,757.7 21,853.7 21,152.9 22,129.9 85,894.1 Inv Tot Undisb Begin FY 99,854.3 100,344.9 108,600.3 108,175.4 416,974.9 * Calculated as IBRD/IDA Disbursements in FY / Opening Undisbursed Amount at FY. Restricted to Lending Instrument Type = Investment. Source: AO disbursement ratio table as of 2/5/18 Annex Table 9: Net Disbursement and Charges for Georgia, FY14-17 Period Disb. Amt. Repay Amt. Net Amt. Charges Fees Net Transfer FY14 107,475,162.5 18,965,051.4 88,510,111.1 4,254,864.0 9,924,324.5 74,330,922.6 FY15 269,436,724.1 50,235,066.8 219,201,657.3 5,668,652.4 10,376,398.8 203,156,606.1 FY16 76,191,903.8 56,675,524.5 19,516,379.3 8,417,462.8 9,773,529.3 1,325,387.1 FY17 138,104,456.6 63,242,768.0 74,861,688.6 13,541,558.0 9,934,975.1 51,385,155.5 Report 591,208,246.9 189,118,410.6 402,089,836.3 31,882,537.2 40,009,227.7 330,198,071.3 Total World Bank Client Connection 2/5/18 Annexes CLR Review 40 Independent Evaluation Group Annex Table 10: Total Net Disbursements of Official Development Assistance and Official Aid for Georgia Development Partners 2014 2015 2016 All Donors, Total 563.76 448.93 462.74 DAC Countries, Total 258.15 204.06 176.72 Australia 0.01 .. .. Austria 3.42 3.98 6.58 Belgium .. .. 0.02 Canada 0.11 0.35 0.07 Czech Republic 2.69 2.8 2.77 Denmark 3.27 1.6 4.09 Finland 2.82 1.79 1.36 France 5.72 5.6 10.11 Germany -16.39 15.95 22.94 Greece 0.38 0.33 0.02 Hungary 0.09 0.16 0.49 Iceland .. .. 0.06 Ireland 0.22 0.1 0.15 Italy 0.11 0.17 0.14 Japan 57.39 39.72 15.42 Korea 0.06 0.2 0.52 Luxembourg .. .. 0.08 Netherlands 0.52 0.44 0.61 Norway 4.99 5.66 2.79 Poland 2.54 1.99 1.84 Portugal 0.06 0.02 0.07 Slovak Republic 0.37 0.37 0.44 Slovenia .. 0 .. Spain 0.03 0.01 0.59 Sweden 18.46 13.26 12.03 Switzerland 13.97 14.54 11.63 United Kingdom 7.14 4.36 1.03 United States 150.17 90.65 80.89 Multilaterals, Total 299.65 240.86 280.22 EU Institutions 167.17 146.31 189.09 International Monetary Fund, Total -27.66 -21.55 -13.62 IMF (Concessional Trust Funds) -27.66 -21.55 -13.62 Regional Development Banks, Total 117.69 115.8 121.71 Asian Development Bank, Total 117.69 115.8 121.71 AsDB Special Funds 117.69 115.8 121.71 United Nations, Total 8.42 3.91 2.37 Annexes CLR Review 41 Independent Evaluation Group Development Partners 2014 2015 2016 International Atomic Energy Agency 0.64 0.27 0.24 [IAEA] IFAD 5.2 0.84 -0.5 International Labour Organisation [ILO] 0.03 0.07 0.03 UNDP 0.78 0.55 0.58 UNFPA 0.65 0.6 0.56 UNICEF 0.9 1.27 1.01 World Health Organisation [WHO] 0.22 0.3 0.45 World Bank Group, Total 20.3 -16.72 -30.41 World Bank, Total 20.3 -16.72 -30.41 International Development Association 20.3 -16.72 -30.41 [IDA] Other Multilateral, Total 13.73 13.11 11.08 Adaptation Fund 1.5 1.46 .. Global Alliance for Vaccines and 0.58 0.6 0.85 Immunization [GAVI] Global Environment Facility [GEF] 2.23 2.54 2.65 Global Fund 9.42 8.51 7.59 Non-DAC Countries, Total 5.96 4.01 5.8 Bulgaria 0.01 0.09 0.26 Estonia 1.12 1.1 0.94 Israel 0.39 0.56 0.33 Kuwait -2.1 -1.92 -1.91 Latvia 0.2 0.19 0.19 Lithuania 0.12 0.18 0.26 Romania 0.16 0.11 0.39 Russia .. .. 0.01 Thailand 0.01 0.01 0 Turkey 6.05 3.69 5.31 Source: OECD Stat, [DAC2a] as of 2/5/18 * Data only available up to FY16 Annexes CLR Review 42 Independent Evaluation Group Annex Table 11: Economic and Social Indicators for Georgia, 2014-2016* Georgia ECA World Series Name 2014 2015 2016 Average 2014-2016 Growth and Inflation GDP growth (annual %) 4.6 2.9 2.8 3.5 1.9 2.7 GDP per capita growth (annual %) 6.0 3.2 2.8 4.0 1.5 GNI per capita, PPP (current 9,130.0 9,370.0 9,530.0 9,343.3 30,359.6 15,698.6 international $) GNI per capita, Atlas method (current 4,490.0 4,120.0 3,830.0 4,146.7 24,502.6 10,608.1 US$) (Millions) Inflation, consumer prices (annual %) 3.1 4.0 2.1 0.5 2.0 Composition of GDP (%) Agriculture, value added (% of GDP) 9.3 9.1 9.0 2.2 3.8 Industry, value added (% of GDP) 24.0 24.7 24.9 25.7 27.5 Services, etc., value added (% of 66.7 66.2 66.1 72.1 68.6 GDP) Gross fixed capital formation (% of 25.8 28.4 30.3 28.2 20.2 23.4 GDP) Gross domestic savings (% of GDP) 12.3 14.0 17.0 14.4 23.9 24.8 External Accounts Exports of goods and services (% of 42.9 44.7 43.6 43.8 41.6 29.3 GDP) Imports of goods and services (% of 60.5 62.3 59.3 60.7 38.4 28.7 GDP) Current account balance (% of GDP) (10.7) (12.0) (12.8) External debt stocks (% of GNI) 85.8 108.9 118.0 Total debt service (% of GNI) 11.0 15.2 19.7 Total reserves in months of imports 2.9 3.1 3.3 7.3 13.0 Fiscal Accounts /** General government revenue (% of 28.0 28.1 28.4 28.2 GDP) General government total expenditure 29.9 29.4 30.0 29.8 (% of GDP) General government net (1.9) (1.3) (1.6) -1.6 lending/borrowing (% of GDP) General government gross debt (% of 35.6 41.4 44.6 40.5 GDP) Health Life expectancy at birth, total (years) 72.8 73.0 .. 72.9 77.3 71.8 Immunization, DPT (% of children 91.0 94.0 92.0 92.3 93.1 85.4 ages 12-23 months) Improved sanitation facilities (% of 86.9 86.3 .. 86.6 93.1 67.3 population with access) Improved water source (% of 99.1 100.0 .. 99.6 96.0 84.2 population with access) Mortality rate, infant (per 1,000 live 11.0 10.2 9.5 10.2 8.8 31.4 births) Education School enrollment, preprimary (% .. .. .. 74.6 48.1 gross) School enrollment, primary (% gross) 116.9 116.8 .. 116.8 103.3 104.2 Annexes CLR Review 43 Independent Evaluation Group Georgia ECA World Series Name 2014 2015 2016 Average 2014-2016 School enrollment, secondary (% 99.4 103.7 .. 101.6 106.0 76.4 gross) Population Population, total (Millions) 3,727,000 3,717,100 3,719,300 3,721,133 907,504,936 7,355,447,389 Population growth (annual %) (1.3) (0.3) 0.1 -0.5 0.5 1.2 Urban population (% of total) 53.5 53.6 53.8 53.6 70.9 53.8 Poverty Poverty headcount ratio at $1.90 a 9.8 8.3 .. day (2011 PPP) (% of pop) Poverty headcount ratio at national 22.4 20.8 21.3 21.5 poverty lines (% of pop) Rural poverty headcount ratio at .. .. .. national poverty lines (% of rural pop) Urban poverty headcount ratio at national poverty lines (% of urban .. .. .. pop) GINI index (World Bank estimate) 40.1 38.5 .. 39.3 Source: DDP as of 1/25/18 * Data only available up to FY16 ** International Monetary Fund, World Economic Outlook Database, October 2017 Annexes CLR Review 44 Independent Evaluation Group Annex Table 12: List of IFC Investments in Georgia Investments Committed in FY14-FY17 Project Cmt Project Primary Sector Original Original Original Loan Equity Net Net Project Size Net Comm ID FY Status Name Loan Equity CMT Cancel Cancel Loan Equity 37574 2017 Active Health Care 16,432 13,842 - 13,842 - - 13,842 - 13,842 37824 2017 Active Health Care 25,000 25,000 - 25,000 - - 25,000 - 25,000 Finance & 38541 2017 Active 70,000 70,000 - 70,000 - - 70,000 - 70,000 Insurance Finance & 36683 2016 Closed 30,000 30,000 - 30,000 - - 30,000 - 30,000 Insurance Accommodation 37431 2016 Active & Tourism 7,000 7,000 - 7,000 - - 7,000 - 7,000 Services Construction 37432 2016 Active 26,500 11,500 - 11,500 - - 11,500 - 11,500 and Real Estate Nonmetallic 34591 2015 Active Mineral Product 17,500 8,500 - 8,500 - - 8,500 - 8,500 Manufacturing Food & 34907 2015 Active 7,200 2,000 - 2,000 - - 2,000 - 2,000 Beverages Food & 35109 2015 Active 5,000 2,000 - 2,000 - - 2,000 - 2,000 Beverages 35386 2015 Active Electric Power 4,300 4,300 0 4,300 - - 4,300 0 4,300 Finance & 36640 2015 Active 90,000 70,000 - 70,000 - - 70,000 - 70,000 Insurance Finance & 33007 2014 Closed 20,000 20,000 - 20,000 - - 20,000 - 20,000 Insurance Finance & 33135 2014 Closed 320 320 - 320 320 - - - - Insurance 33435 2014 Active Electric Power 598,000 70,000 31,400 101,400 - - 101,400 31,400 101,400 Sub-Total 917,252 334,461 31,400 365,862 320 - 365,542 31,400 365,542 Annexes CLR Review 45 Independent Evaluation Group Investments Committed pre-FY14 but active during FY14-17 Project CMT Project Primary Original Original Original Loan Equity Net Net Net Project Size ID FY Status Sector Name Loan Equity CMT Cancel Cancel Loan Equity Comm Finance & 34092 2014 Active 4,000 4,000 - 4,000 - - 4,000 - 4,000 Insurance Finance & 27604 2012 Active 5,000 25,510 - 25,510 - - 25,510 - 25,510 Insurance Finance & 30683 2012 Active 50,000 25,000 - 25,000 - - 25,000 - 25,000 Insurance Food & 30992 2012 Active 3,000 1,500 - 1,500 - - 1,500 - 1,500 Beverages Collective 28709 2011 Active Investment 10,000 - 10,000 10,000 - 650 10,000 9,350 9,350 Vehicles 28985 2011 Active Electric Power 207,500 40,500 - 40,500 - - 40,500 - 40,500 Finance & 25423 2010 Active 25,000 134,282 - 134,282 - - 134,282 - 134,282 Insurance Finance & 27301 2010 Active 10,000 16,771 - 16,771 - - 16,771 - 16,771 Insurance Finance & 29421 2010 Active 2,000 2,000 - 2,000 1,718 - 282 - 282 Insurance Sub-Total 316,500 249,563 10,000 259,563 1,718 650 257,844 9,350 257,194 TOTAL 1,233,752 584,024 41,400 625,424 2,038 650 623,386 40,750 622,736 Source: IFC-MIS Extract as of 8/30/17 Annexes CLR Review 46 Independent Evaluation Group Annex Table 13: List of IFC Advisory Services in Georgia Advisory Services Approved in FY14-17 Impl Impl Primary Project Total Funds, Project Name Start End Project Status Business ID US$ FY FY Line Georgia Trade, Investment and 601292 2018 2021 ACTIVE TAC 1,850,000 Agricompetitiveness Project 601932 AGL Hydropower 2018 2021 ACTIVE INR 660,000 600447 Agriculture Georgia PPP 2016 2017 TERMINATED CAS 560,000 AGL Hydropower Stakeholder 601449 2016 2017 ACTIVE INR 98,882 Engagement Ukraine and Caucasus PPP 601723 2016 1900 ACTIVE CAS 327,000 BD 600180 Georgia, Gori Wind PPP 2015 2015 TERMINATED CAS 265,000 599537 Georgia IC Project 2014 2017 ACTIVE TAC 1,834,000 599817 Nenskra HPP 2014 2018 ACTIVE CAS 2,349,999 Sub-Total 7,944,881 Advisory Services Approved pre-FY14 but active during FY14-17 Primary Project Impl Impl Project Total Project Name Business ID Start FY End FY Status Funds, US$ Line 591647 Georgia Oni Cascade HPP 2013 2015 TERMINATED PPP 2,548,000 589428 Bank Constanta-SME Banking AS 2012 2014 CLOSED FIG 200,000 591687 Machakhela Hydros in Georgia 2012 2014 TERMINATED PPP 1,826,000 30006 Georgia East-West Highway 2011 2014 CLOSED CAS 943,941 Sub-Total 5,517,941 TOTAL 13,462,822 Source: IFC AS Data as of 10/15/17 Annexes CLR Review 47 Independent Evaluation Group Annex Table 14: IFC net commitment activity in Georgia, FY14 - FY17 2014 2015 2016 2017 Total Commercial (12,249,596) 68,261,207 29,924,439 66,470,588 152,406,638 Banking Financial Markets Housing 20,000,000 - - 3,529,412 23,529,412 Finance Microfinance 4,320,000 - (320,000) - 4,000,000 Trade Finance GTFP 27,602,700 4,382,699 8,257,411 18,457,332 58,700,142 (TF) Packaged Agribusiness & Food & - 2,000,000 - - 2,000,000 Forestry Beverages Animal - 2,000,000 - - 2,000,000 Protein Construction Manufacturing - 8,500,000 - - 8,500,000 Materials Tourism, Retail, Tourism - - 7,000,000 - 7,000,000 Construction & Real Estates (TRP) Housing - (10,000,000) 11,500,000 - 1,500,000 Health, Education, Health - - - 39,143,750 39,143,750 Life Sciences Electric Infrastructure 101,364,930 4,300,000 - - 105,664,930 Power Total 141,038,033 79,443,906 56,361,850 127,601,082 404,444,871 Source: IFC MIS as of 2/1/18 Annex Table 15: List of Active MIGA Activities in Georgia, 2014-2017 Max Project ID Contract Enterprise FY Sector Investor Gross Status Issuance ProCredit Group Central Bank 9192 2017 Active Banking Germany 13.5 Mandatory Reserves Coverage 12315 Adjaristsqali Hydro Project 2016 Proposed Power Norway 12315 Adjaristsqali Hydro Project 2015 Active Power Singapore 63 ProCredit Group Central Bank 9161 Mandatory Reserves Coverage, 2015 Active Banking Germany 6.8 Georgia ProCredit Group Central Bank 9192 2015 Active Banking Germany 13.5 Mandatory Reserves Coverage 11597 GeoCapital, Georgia 2013 Active Banking United States 1.8 ProCredit Group Central Bank 9192 2012 Active Banking Germany 13.5 Mandatory Reserves Coverage ProCredit Group Central Bank 9192 2011 Active Banking Germany 9 Mandatory Reserves Coverage Total 121.1 Source: MIGA 2/1/18