Policies and Strategies to Improve Competitiveness

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Policies and Strategies to Improve Competitiveness

• Karen Grigorian,
• Senior Economist, WB

AIPRG International Conference Yerevan, 2009
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Introduction

• The Country Partnership Strategy (CPR) is
  centered around two main themes
• Addressing Vulnerability
• Strengthening Competitiveness for Post-Crisis
  Growth

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Two Main Directions for Strengthening
Competitiveness

• Competition and Governance
• Trade expansion strategy/preparedness for FTA
  with EU
• Financial sector update or FSAP update
• PEFA follow-up/PSM agenda
• Improvements in the business climate
• Higher education reforms
• Knowledge Economy, Regulation and Infrastructure
• Regular development
• Telecoms reforms/ICT
• Energy sector strategy
• Advisory assistance to banks on energy efficiency
  and housing financing
• Structural reforms supported by DPOs (tax/royalty
  regime in mining, telecom, spectrum, civil
  aviation forms, regulation of railways, health
  policy)

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Two Results Areas of Strengthening Competitiveness

• Governance is strengthened as a result, public
  sector efficiency rises
• Improvements in shape of desired outcomes
  expected to be seen in the following areas
• Competition Conflict of Interest
• Revenue Agency Reforms
• Public Service reforms
• Foundations for knowledge economy and
  competitiveness strengthened
• Improvements in shape of desired outcomes
  expected to be seen in the following areas
• Knowledge Competitiveness
• PPP framework
• Private Sector
• Education
• Transport
• Energy
• Water

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Results Area 1Strengthening Governance

• Competition and Conflict of Interest
• The advisory work will cover conflict of interest
  policy within the umbrella of a coherent strategy
  on governance and anti-corruption reforms.
• Measures are being designed to add to the powers
  and the reach of the Competition Commission and
  to enhance its technical skills.
• Both a strong competition focus across the board
  and vigorous enforcement of an appropriate
  competition law are needed to prevent private
  market abuses from reversing the benefits of
  reform and stifling the growth and development
  potential of markets.

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Results Area 1Strengthening Governance(contd)

• Revenue Agency Reforms
• Technical advice to the revenue raising agency in
  both the areas of customs and tax will be
  provided under the DPO.
• Modern business processes to be developed for
  integration base and management across customs
  and tax, with heavy reliance on risk based
  management methods.
• Customs reforms will provide full
  behind-the-border support to the operation of a
  free trade agreement (FTA) with EU.

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Results Area 1Strengthening Governance(contd)

• Public Service Reforms
• Improving governance - recently completed series
  of PRSCs, and ongoing Judicial Reform II and
  Public Sector Management projects.
• Further improvements in civil service reform -
  new follow-on loans in public sector management
  and financial management (FY11-12).
• Preparation of PEFA as well as CFAA will be
  followed up with further analysis and technical
  assistance.

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Results Area 2 Strengthening Knowledge Economy
Competitiveness

• Knowledge and Competitiveness
• Developing a comprehensive strategy towards a
  knowledge-based economy and the designing the
  supporting infrastructure.
• Reforms in governance and financing of
  universities to create the conditions and
  provide the incentives for their increased
  involvement in research, development and
  innovation.

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Results Area 2 Strengthening Knowledge Economy
Competitiveness

• E-Society and Innovation for Competitiveness
  Project (EIC)
• Providing technical support and financing for key
  infrastructure
• The projects ultimate aim is
• to contribute to the governments higher level
  strategic objective of creating a world class
  competitive Armenian economy anchored on a modern
  Knowledge-and Information-based Society.
• Project Structured around three main components
• E-Society Infrastructure development
• Innovation Infrastructure Development
• IT Industry and E-Society Demand Stimulation

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Results Area 2 Strengthening Knowledge Economy
Competitiveness (contd)

• PPP Framework
• Regulatory reforms on private sector
  participation in the following fields will be
  analyzed in the context of the lending being
  prepared
• Infrastructure and utility services,
• Policy reforms in telecommunications,
• Civil aviation liberalization.
• The Bank will provide advice on the management of
  PPPs.
• Outcomes will provide for the auctioning of
  commercially valuable radio spectrum and the full
  liberalization of civil aviation, once the
  existing monopolistic commercial agreement comes
  to an end in 2013.
• IFC may also support the development of
  particular PPPs either through advisory or
  investment work.

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Results Area 2 Strengthening Knowledge Economy
Competitiveness (contd)

• Private Sector
• Improvements in the business environment
• IFC has launched an advisory initiative to
  support improvements in the business enabling
  environment, which will decrease the costs of
  doing business in Armenia and increase the
  competitiveness of its private sector.
• A related priority reform area concerns the
  inspections regime, which imposes inordinately
  high financial and transaction costs on firms.

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Results Area 2 Strengthening Knowledge Economy
Competitiveness (contd)

• Finance/Banking sector reforms
• Prior actions in fortifying financial sector
• strengthening surveillance and liquidity
• undertaking frequent banking system stress tests
• introducing enhanced reporting requirements
• making available liquidity to banks on a
  temporary basis through accepting a wider range
  of collateral.
• IFC to resume longer term lending to facilitate
  access to finance to a broad number of private
  companies.

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Results Area 2 Strengthening Knowledge Economy
Competitiveness (contd)

• Access to Finance for Small and Medium
  Enterprises
• A Financial Intermediary Loan (FIL), providing
  IBRD funds to the Central Bank of Armenia, with a
  guarantee from the Republic of Armenia, made
  effective on 16 April 2009
• The project's development objective is to
  maintain or increase Armenian small and medium
  enterprises access to medium-term finance.
• The Project has successfully taken off with 25MM
  disbursed already in May, 2009

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Results Area 2 Strengthening Knowledge Economy
Competitiveness (contd)

• Education
• Higher education reforms will focus on
  innovation, and on governance and financing
  aspects.
• The Education APL-II Project (FY09) will enhance
  school learning by supporting the completion of
  the 12-year general education system while
  improving the school readiness of children
  entering primary education.
• The project will also help develop the quality
  assurance framework.
• IFC will support the development of student loans
  through its client banks.

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Results Area 2 Strengthening Knowledge Economy
Competitiveness (contd)

• Transport
• Studies will cover management of transport assets
  and associated regulatory reforms.
• The Road Sector Operation (FY10) will improve
  quality.
• IFC will seek opportunities to capitalize private
  sector participation in transport and logistics
  projects, facilitating improved access to markets.

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Results Area 2 Strengthening Knowledge Economy
Competitiveness (contd)

• Energy
• Analytical and Advisory Services (AAA) will
  support the authorities in the development of an
  energy strategy in light of the need to
  decommission the existing nuclear power plant.
• The Current Renewable Energy Project and
  Geothermal GEF Project are supporting the
  development of alternative energy sources.
• New Energy Supply Reliability and Energy
  Efficiency Project (FY11-12) will enhance
  electricity supply reliability, reduce
  transmission losses and energy intensity of the
  economy, and contribute to the export of
  electricity.

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Results Area 2 Strengthening Knowledge Economy
Competitiveness (contd)

• Water
• The bank has been very active in building a new
  PPP in the delivery of water supply to businesses
  and the public through two ongoing projects
• Yerevan Water, and
• Municipal Water projects.
• Additional finance for the Municipal Water
  Project was provided in FY09 to help extend the
  management contract and set further quality
  benchmarks.

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THANK YOU
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