1 - World Bank Documents & Reports

Report No. 34891-TJ
Tajikistan
Public Expenditure and Institutional Review Volume I: Main Document December 21, 2005 Poverty Reduction and Economic Management Unit
Europe and Central Asia Region
Document of the World Bank TAJIKISTAN- Government Fiscal Year
January-December
Currency Equivalents
(Exchange Rate Effective as of November 30, 2005) |Currency Unit |Tajikistan |
| |Somoni |
|USD1.00 |3.1955 |
Weights and Measures: Metric System ABBREVIATION AND ACRONYMS |AAA |Analytical and Advisory |MOET |Ministry of Economy and |
| |Activities | |Trade |
| IDA |International Development |MOF |Ministry of Finance |
| |Association | | |
|ACU |Aid Coordination Unit |MSRD |Ministry of State Revenues |
| | | |and Duties |
|ADB |Asian Development Bank |MTBF |Medium-Term Budget |
| | | |Framework |
|BC |Budget Commission |NBT |National Bank of Tajikistan|
|CAS |Country Assistance Strategy|PEIR |Public Expenditure and |
| | | |Institutional Review |
|CEM |Country Economic Memorandum|PEP |Private Enterprise |
| | | |Partnership |
|CFAA |Country Financial |PHC |Primary Health Care |
| |Accountability Assessment | | |
|CIS |Commonwealth of Independent|PIP |Public Investment Program |
| |States | | |
|CPIA |Country Policy and |PPP |Purchasing Power Parity |
| |Institutional Assessment | | |
|CSIP |Centralized State |PRGF |Poverty Reduction Growth |
| |Investment Program | |Facility |
|EBRD |European Bank for |PRSP |Poverty Reduction Strategy |
| |Reconstruction and | |Paper |
| |Development | | |
|ECA |Europe and Central Asia |PSD |Private Sector Development |
| |Region | | |
|ECSPE |Poverty Reduction and |PWG |Presidential Working Group |
| |Economic Management Unit, | | |
| |Europe and Central Asia | | |
| |Region | | |
|ESAF |Enhanced Structural |RRS |Regions of Republican |
| |Adjustment Facility | |Subordination |
|ESW |Economic and Sector Works |SAC1 |First Structural Adjustment|
| | | |Credit |
|EU |European Union |SAC2 |Second Structural |
| | | |Adjustment Credit |
|FSU |Former Soviet Union |SEDP |Socio Economic Development |
| | | |Program |
|GBAO |Gorno Badakhsan Autonomous |SFCC |State Financial Control |
| |Oblast | |Committee |
|GDP |Gross Domestic Product |SLC |State Land Committee |
|GOT |Government of Tajikistan |SMEs |Small and Medium |
| | | |Enterprises |
|GTZ |Gesellschaft fur Technische|SOEs |State-Owned Enterprises |
| |Zusammenarbeit | | |
|HIPC |Heavily Indebted Poor |SPC |State Property Committee |
| |Countries | | |
|IAS |International Accounting |TADAZ |Aluminum Plant |
| |Standards | | |
|IBTA2 |Second Institution Building|TJS |Tajik Somoni |
| |Technical Assistance | | |
|IFC |International Finance |UNDP |United Nations Development |
| |Corporation | |Program |
|IMF |International Monetary Fund|USAID |United States Agency for |
| | | |International Development |
|I-PRSP|Interim Poverty Reduction |USD |US Dollar |
| |Strategy Paper | | |
|JSA |Joint Staff Assessment |VAT |Value Added Tax |
|MIGA |Multilateral Investment |WB |World Bank |
| |Guarantee Agency | | |
|MLSP |Ministry of Labor and |WTO |World Trade Organization |
| |Social Protection | | | | Vice President: |Shigeo Katsu |
|Country Director: |Dennis de Tray |
|Sector Director: |Cheryl Gray |
|Sector Manager: |Carlos Felipe Jaramillo |
|Task Team Leader: |Cevdet Denizer |
Acknowledgements
The Public Expenditure and Institutional Review is based on the findings of
several missions that visited Tajikistan as well as simultaneous
consultations with authorities. The team that prepared the report wishes to thank the Government of
Tajikistan for the constructive discussions during and after the various
missions. The team is particularly grateful for the inputs provided by Mr.
Faizullo Kholboboev, State Adviser to the President on Economic Policy; Mr.
Gulyam Babaev, Minister of State Revenues and Duties; Mr. Safarli
Najmuddinov, Minister of Finance; Mr. Khakim Soliev, Minister of Economy
and Trade; Mr. Mahmadsho Ilolov, Member of Parliament (former Minister of
Labor and Social Protection); Mr. Murotali Alimardonov, NBT Chairman; Mr.
Mahmud Kasimov, First Deputy Minister of Labor and Social Policy; Mr.
Bakhtior Sultanov, First Deputy Minister of State Revenues and Duties; Ms.
Gulmira Khamrakulova, First Deputy Director of the State Treasury; Mr.
Narzullo Abibullaev, Head of the Budget Department, Ministry of Finance. Cevdet Denizer, William Dillinger, Tony Verheijen, Roland Clarke, Jariya
Hoffman, Alexander Morozov and Utkirdjan Umarov are the authors of the
report. The report benefited from insightful and constructive comments from
the peer reviewers, Mustapha Rouis and Anand Rajaram. This report was prepared under the general guidance and advice of Samuel
Otoo, Helga Muller, Deborah Wetzel, Dennis de Tray, Cevdet Denizer and
Lilia Burunciuc. The report also benefited from valuable suggestions and
inputs received at different stages of preparation from Jakob von
Weizsacker, Aziz Khaidarov. Helpful logistical assistance was also received
from Janna Yunusova, Takhmina Jumaeva and Saodat Ibragimova.
TAJIKISTAN
PUBLIC EXPENDITURE AND INSTITUTIONAL REVIEW
TABLE OF CONTENTS
Executive Summary i Background i
A. Strategic Policy Formulation And Policy Management iii
B. Budget Management and Execution vi
C. Public Investment Planning and Process viii
D. Central-Sub-National Relations x Chapter 1. STRATEGIC CONTEXT AND MACROECONOMIC SETTING 1 INITIAL CONDITIONS AND THE REFORM PROCESS 1
A. Reform Outcomes: Economic Growth, Poverty Reduction, and Public
Service Delivery 2
B. Government's Poverty Reduction Strategy and Implementation
Challenges 4
C. Key Issues 5
FOCUS OF THE REPORT 10
MACROECONOMIC FRAMEWORK 12
A. Macroeconomic Stability and Policy Performance 12
B. External Debt and Vulnerabilities 15
C. Fiscal Performance and Policy 17
SUSTAINABILITY OF GROWTH 22
A. Macroeconomic Management, Structural Reforms, and External Debt 22
B. Institutional Reforms and Growth Links: The Broader Agenda 25
C. A Summing-Up 30 Chapter 2. PUBLIC EXPENDITURE TRENDS .................................31 INTRODUCTION 31
RECENT TRENDS IN PUBLIC EXPENDITURES 34
A. Functional Composition of Expenditure 38
B. Economic Classification of Expenditures 41
C. Sectoral Components of Capital Expenditures 43
REVIEW OF PUBLIC EXPENDITURES IN PRIORITY SECTORS 47
A. Education 47
B. Health 54
C. Social Protection 64 Chapter 3. STRATEGIC POLICY FORMULATION AND HUMAN RESOURCES 75 INTRODUCTION 75
POLICY MANAGEMENT PROCESSES AND STRUCTURES: A CONVOLUTED POLICY PROCESS 77
A. Policy Management: Conditions For An Effective Process 77
POLICY FORMULATION FOR PRIORITY SETTING 84
A. Parallel Resource Allocation Mechanisms 84
B. Complex Administrative Structure and Governance of State-Owned
Enterprises 85
SYSTEMIC ISSUES: MANAGING POLICY IMPLEMENTATION 87
CIVIL SERVICE AND PERSONNEL ISSUES 92
A. Appointment Processes And Career Management 94
B. Remuneration Issues 95
C. Expenditure Planning And Execution Of Staffing Budgets 99
REFORM MANAGEMENT ISSUES: THE LACK OF A CENTRAL ADMINISTRATIVE REFORM
MANAGEMENT UNIT 100
ROADMAP FOR REFORM 100
A. A Complex Reform Agenda: What Needs To Be Done? 100
B. Central Government Reform: Developing Policy-Making Capacity And
Reforming Incentive Structures 101
C. Reforming Policy Implementation Systems 103
D. Civil Service Development: Fra