Document of THE WORLD BANK ONA PROPOSED LOAN TO THE REPUBLIC OF KAZAKHSTAN FOR A LEGAL REFORM PROJECT. April 19, 1999

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of THE WORLD BANK PROJECT APPRAISAL DOCUMENT ONA PROPOSED LOAN IN THE AMOUNT OF US$16.5 MILLION EQUIVALENT TO THE REPUBLIC OF KAZAKHSTAN FOR A LEGAL REFORM PROJECT April 19, 1999 Poverty Reduction and Economic Management Sector Unit Europe and Central Asia Regional Office Report No: KZ

2 CURRENCY EQUIVALENTS (Exchange Rate Effective ) Currency Unit = Tenge US$1 = Tenge FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS CAS CQ EBRD FMS FSU GDP ICB IS IT LAN MOF MOJ NS NCLI PHRD PPF PIU SS TA USAID WAN - Country Assistance Strategy - Competitive Quotations - European Bank for Reconstruction and Development - Financial Management Specialist - Former Soviet Union - Gross Domestic Product - International Competitive Bidding - International Shopping - Information Technology - Local Area Network - Ministry of Finance - Ministry of Justice - National Shopping - National Center for Legal Information - Policy and Human Resources Development - Project Preparation Facility - Project Implementation Unit - Single Source Selection - Technical Assistance - United States Agency for International Development - Wide Area Network ITask Vice President: Johannes Linn Country Director: Kiyoshi Kodera Sector Director: Pradeep Mitra Team Leader: Sandra Bloernenkamp

3 Republic of Kazakhstan Legal Reform Project Table of Contents A. Project Development Objective Project development objective and key performance indicators. 1 B. Strategic Context.. 1. Sector-related CAS goal supported by the Project Main sector issues and Government strategy Sector issues to be addressed by the Project and strategic choices. 2 C. Project Description Summary.6 1. Project components Benefits and target population Institutional and implementation arrangements. 7 D. Project Rationale Project alternatives considered and reasons for rejection Major related Projects financed by the Bank and/or other development agencies 9 3. Lessons learned and reflected in proposed Project design Indications of borrower commitrnent and ownership Value added of Bank support in this Project.10 E. Summary Project Analyses Institutional Environmental assessment Participatory approach.11 F. Sustainability and Risks Sustainability Critical risks Possible controversial aspects.13 G. Main Loan Conditions Effectiveness Conditions Disbursement Conditions.14 R. Readiness for Implementation.14 I. Compliance with Bank Policies.15

4 Annexes Annex 1. Project Design Summary Annex 2. Project Description Annex 3. Estimated Project Costs Annex 4. Procurement and Disbursement Arrangements Table A. Summary of Major Procurement Activities and Procurement Methods. 30 Table B. Consultant Selection Arrangements Table C. Thresholds for Procurement Methods and Prior Review Table D. Procurement Plan Table E. Estimated Loan Disbursement Schedule Table F Training, Information and Development on Procurement Table D. Allocation of Loan Proceeds Annex 5. Project Processing Budget and Schedule Annex 6. Documents in the Project File Annex 7. Statement of Loans and Credits Annex 8. Country at a Glance Map IBRD 29325

5 Kazakhstan, Republic of Legal Reform Project Project Appraisal Document Europe and Central Asia Regional Office Kazakhstan Date: April 19, 1999 Task Team Leader: Sandra Bloemenkamp Country Director: Kiyoshi Kodera Sector Director: Pradeep Mitra Project ID:KZ PA Sector: Technical Assistance Program Objective Category: Economic Management Lending Instrument: Technical Assistance Loan Program of Targeted Intervention: [] Yes [ x ] No Project Financing Data [X] Loan [] Credit [] Guarantee [] Other [Specify] For Loans/Credits/Others: Amount (US$m): 16.5 Proposed terms: [ Multicurrency [X] Single currency, specify US Dollars Grace period (years): 5 years [] Standard Variable [] Fixed [X] LIBOR-based Years to maturity: 20 years Commitment fee: 0.75% Front-end fee: 1.00% Financing plan (US$m): Source Local Foreign Total Government IBRD Borrower: Republic of Kazakhstan Guarantor: N/A Responsible agencies: Ministry of Justice, Supreme Court Total Estimated disbursements (Bank FY/US$M): FY00 FY01 FY02 FY03 FY04 Annual Cumulative Project implementation period: 4.5 years Expected effectiveness date: 8/1/99 Expected closing date: 2/1/04 OSD PAD Form: September 14, 1998

6 1 A. Project Development Objective 1. Project Development Objective and Key Performance Indicators (see Annex 1) 1. The Project's overall development objective would be to contribute to the strengthening of the implementation of the Rule of Law system in Kazakhstan. Specifically, the Project goals would be to strengthen the legal and judicial systems and selected institutions of the country in order to support and deepen the ongoing economic reform program. Key performance indicators: (a) improved quality and enforcement of legal enactments; (b) more efficient, accessible, transparent, and effective judicial system (including improved enforcement of judicial decisions); (c) strengthened system of judicial education resulting in a more professional and knowledgeable judges and court administrations; (d) increased public awareness of legal rights and greater public participation in the legal system; and (e) improved access by government officials, judges, parliamentarians, legal professional, the business community, and the public at large to more reliable, comprehensive and up-to date legal information. B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the Project (see Annex 1) CAS document number: Report No KZ Date of latest CAS discussion: August 26, Consistent with Kazakhstan's overall reform objectives, Bank Group assistance strategy during FY98-00 will evolve around two organizing principles: i) promoting private sector-led growth, including improving the legal and institutional framework necessary to the functioning of open and competitive markets; and (ii) strengthening social protection. This Project supports the first objective. 3. Issues of private sector development are of paramount importance for Kazakhstan at this stage of the country's economic transformation. Hence, the Bank will help support the development of basic building blocks to stimulate private sector development, e.g. the establishment of a conducive business environment, the strengthening of the administrative capacity of the state, and the reform of key sectors. 4. To help support the development of a private-sector friendly environment, the CAS identifies the need to improve Kazakhstan's legal and institutional arrangements which underpin longer term commitments, both between private parties and between the state and private sector investors. The CAS emphasizes the need to support medium and long-term institutional reforms of the legal system. Specifically, progress indicators would include stronger regulatory, legal and institutional framework, improved public access to legal information, better trained judiciary and legal staff, improved enforceability of contracts and greater public awareness of their legal rights.

7 2 2. Main Sector Issues and Government Strategy 5. During the last five years, Kazakhstan has been among the stronger reformers in the Former Soviet Union (FSU). The government has concentrated its efforts on maintaining macroeconomic stability through further reductions in inflation and the fiscal deficit, and continued tight monetary policy. On the structural side, significant results have been achieved, including price and trade liberalization, privatization of most small and medium size enterprises and the banking sector, and enactment of a broad framework of market-oriented legislation. The government's program envisages completion of the mass privatization and accelerated privatization of the largest enterprises, including public utilities and selected natural monopolies. Further emphasis will be given to improving the environment for Foreign Direct Investment (FDI) and private sector development, completion of banking sector reforms, and the creation of capital markets and a modem financial system. Finally, it stresses the importance of a medium-term strategy for the social sectors, including the implementation of the new pension system. 6. Development of a robust private sector remains a key challenge in Kazakhstan's efforts to complete the transition to a market economy. The government has consistently emphasized the need to develop the country's legal and judicial systems in parallel with the ongoing transition to a market economy. During the first five years of its independence, Kazakhstan, similar to other former Soviet Uniqn states, adopted numerous laws and regulations and tried to restructure its legal institutions to better support on-going market reforms. In the short-term, these actions were sufficient, but as the country has entered its second phase of economic reforms, it has become clear that short-term emergency measures to reform the legal system are no longer sufficient. Modification of the existing legal framework, and in particular the required comprehensive reforms of legal institutions have lagged behind the economic reform program. Additionally, many legal enactments were adopted in an ad hoc manner and have proved inconsistent and have been unevenly applied. 7. During the same period, other donor agencies and countries have provided significant technical legal assistance to Kazakhstan. However, this assistance has been primarily oriented toward the preparation of specific laws and regulations, and short-term training of judges and other legal professionals. Relatively little attention has been devoted to long-term institutional capacity building, although in a young country such as Kazakhstan this is essential. To be sustainable, such capacity building has to be locally driven and be developed over time. The Bank's and other agencies' sector work confirms that a more reliable legal/judicial system is essential for continuing development of the country's private sector. 3. Sector Issues to be Addressed by the Project and Strategic Choices 8. In general, Kazakhstan, similar to other countries in transition, especially those of the FSU, is in the process of establishing the Rule of Law and requires both time and assistance in achieving this goal. After extensive sector assessment, involving local and foreign experts, the government and Bank have identified a number of serious problems in the legal/judicial area. Three areas of systemic problems in Kazakhstan have been identified: 9. Legal Enactments. There is a large body of economic legal enactments that have been adopted since They deal with such important and diverse issues as the organization of the court system and the legal profession, private property, business forms, commercial transactions, privatization, real estate regulation, foreign investment, procurement, taxation, banking, environment, bankruptcy, natural resources, pension, currency regulation, capital markets regulation, corruption, state borrowing and guarantees, company law, arbitration, administrative procedures and regulations, licensing, pledges, etc. 10. Many legal enactments are subject to continuous reconsideration and revision. This leads to systematic problems in the implementation of the country's legislative framework, specifically:

8 3 (a) (b) (c) (d) (e) new laws and regulations are not always harmonized or consistent with existing enactments; laws and regulations are not always coherent, comprehensive and clear; subsequent regulations sometimes contradict laws pursuant to which they are enacted; there are cases of broad interpretation, and unwarranted discretion; moreover appropriate administrative standards do not exist for review of decisions to ensure their fairness; in some cases, the new legislation is directly "imported" from Western countries, without sufficient attention to its suitability to the Kazakhstan legal context; a body of regulations and regulatory procedures required for a developing market economy is only beginning to emerge; in some sectors such as banking regulation and accounting, the regulatory enactments are more developed than in other sectors, such as securities; and in some cases (e.g. regulation and licensing of businesses), the regulations are excessive and/or onerous -- this impedes the development of private business and invites corruption. 11. Legal Institutions. Several legal enactments passed in the last few years have sought to improve the effectiveness of the executive and judicial branches in the administration of justice. The government has adopted, among others, laws on the organization of the judiciary, legal education, prosecutor's office, and the organization of the public administration. A number of weaknesses, however, remain in the ability of legal actors to contribute to an efficient market-oriented legal regime. The key problems are: (a) (b) (c) (d) (e) (f) judges and court personnel are not well trained both in substance of the new legislation as well as in the policy rationale behind it, nor did they receive adequate training in professional skills development; courts lack funds and resources to process cases timely and effective manner; the executive branch with its law enforcement agencies dominate the judicial and parliamentary branches; as a result, an effective system of checks and balances is lacking; law enforcement staff lacks sufficient training and resources to fight economic crimes, an increasingly serious impedimento the effective functioning of the market; ministry and agency legal staff are poorly trained and lack legal/regulatory drafting skills; and judicial associations and independent legal associations are only beginning to emerge. 12. Legal Processes. Written laws and regulation alone will not yield a functioning legal system; the system as a whole requires legitimacy. For this it is crucial that legal processes be transparent, accessible, and fair. A new law on Normative Acts, regulating the process of drafting, coordinating, adopting, and publishing of new laws was adopted in However, the following problems in legal processes still compromise legitimacy of the legal system:

9 4 (a) (b) (c) (d) (e) (f) while the legal regime is relatively stable, the degree and scope of changes is not absorbed by the general population (e.g. pension; tax law), especially since there is little public discussion of or involvement in the legislative agenda; most legal enactments are proposed and prepared by the executive branch-parliament's role is minimal; there are too few mechanisms for public comment on draft laws and regulations; while by law legal enactments must be published to be effective, in practice, this does not always take place (e.g. international agreements); general population's access to legal informnation is limited; and not all regulations are being published; the process of legal drafting is fragmented, subject to ministerial and agency influence, in practice is poorly coordinated, and often takes place without the involvement of relevant constituencies; the effectiveness of legal enactments is minimized by problems in implementation and enforcement; enforcement is not always consistent and objective; corruption or perception of corruption undermines public confidence in the executive and judicial branches; once a law is adopted, there is relatively little discussion of its meaning and implications, or subsequent analysis of it effects; foreign legal technical assistance (in kind and financial) is not well coordinated and efficiently utilized; foreign and local legal consultants are poorly supervised by responsible agencies; underlying policy directives are often absent or not taken into account by them; there is a disconnect between executive branch authorities responsible for legal drafting and local authorities, who normally do not take any part in the legal drafting process; and (g) the system of administrative law remains poorly developed; there are no general guidelines for and effective constraints on rulemaking and adjudication by administrative agencies. 13. To address some of these problems, the government, with assistance of local and foreign consultants, has identified three general areas for intervention by the proposed Project. They are: (1) legal drafting and institutional strengthening; (2) judicial strengthening; and (3) legal information and public awareness. 14. First, in the legal drafting field, the quality and consistency of laws and regulations is still inadequate, and their enforcement is weak. These laws are often too numerous and are subject to so many amendments that they lose their force. In addition, agency interests often dictate the specific legal provisions being proposed, sometimes to the detriment of national economic policies or a coherent approach to the sector in question. 15. Second, the judiciary, which is still in the process of obtaining full and real independence, is only with difficulty assuming its new role in society as arbiter of rights and umpire of market disputes. There are approximately 2200 judicial positions and many judges were recently recruited. An attestation test conducted in 1997 showed that only 51% of the judges were able to achieve the passing grade. Although eventually 81% of the judges were reconfirmed on the basis of additional tests, these results suggest that significant efforts in both judicial education and in providing legal information to judges will be required to remedy a problem that carries the risk of gravely eroding public and professional confidence in the competence of the judiciary. Judges also are inadequately compensated and often do not have even basic office infrastructure and support. Indeed, the courts continue to operate with cumbersome manual case

10 5 management and court administration systems carried over virtually unaltered from Soviet times, which significantly retard the efficiency and effectiveness of the administration of justice. 16. Third, access to a reliable system of legal information is inadequate, and this is adding to the problems identified above. The problem of access is especially pronounced among judges, local government officials, academicians, law students and business community. More generally, the public at large is not adequately aware of its legal rights and responsibilities under the new economic and political framework, and, consequently, its respect for the Rule of Law and legal institutions is lacking, undermining the entire economic reform effort. (For a more detailed discussion of the three components, problems within them, and proposed remedies to be supported by the Project see Annex 2.) 17. Given the scope of and potential problems that exist in each of the three areas, the government and the Bank have included in the Project only the most critical and urgently needed activities. This selective process has also taken into account the current level of implementation capacity in the country and the proposed loan amount. The Project would build on and collaborate with assistance provided by bilateral and multilateral donors, as well as the government's own efforts. At the same time, the Project would emphasize a more long-term, strategic approach to strengthening legal institutions and systems. 2. Key Policy and Institutional Reforms Supported by the Project 18. The Project's main goal is to strengthen legal institutions and processes. Existing policy and institutional framework in the legal sector in general are considered not to pose a risk of inhibiting Project viability and sustainability. Indeed, during Project preparation, a number of key policy reforms have been agreed upon. To improve the coordination of the legal drafting process, the government adopted a new law on Normative Acts, and agreed to move the institute for legal drafting from the Ministry of Science to the Ministry of Justice. In the area of judicial reform, the government agreed to give the judiciary significantly greater role in determining the content and management of various training programs to be supported under the Project. Judges will be in control of the curricula and faculty selection in the newly established judicial training center (which for now will remain administratively under the MOJ). In the area of legal information, the government agreed that all users, including the business community and public at large, of legal information should have access to the information systems being supported under the Project. During Project preparation, governmental agencies, ministries, and courts began to more effectively coordinate their involvement in the Project design and, generally, legal reform process. The Project components and implementation arrangements are designed to support and deepen this collaborative process.

11 6 C. Project Description Summary 1. Project components (see Annex 2for a detailed description and Annex 3for a detailed cost breakdown) Component Category Indicative % of Bank- % of Costs Total financing Bank- (IJS$M) (US$M) financing A. Legal Drafting and Institutional Policy, and $4,400, $4,200, Strengthening institution building; legal drafting learning technical assistance for MOJ functional review training of government lawyers to improve their drafting skills B. Judicial Strengthening Institution $8,100, $7,000, building, support of the judicial training institute policy, improvement of court administration learning, and case management physical C. Legal Information and Public Institution $4,935, $4,235, Awareness building, physical, support of electronic system of policy legal information development of national legal classificator support of public awareness programs and campaigns D. Project Management and Project $400, $400, Implementation mgmt., superv., Implement E. Repayment of the PPF Advance $500, $500, F. Front End Fee (1 percent) $165, $165, Total $ 18,500, ,500,

12 7 2. Benefits and Target Population 19. In general, an effective, market oriented legal/regulatory regime contains the following characteristics: public participation, coherency, transparency, accessibility, non-discretionality, predictability, checks and balances, and effectiveness (i.e. equitable and fair enforcement). While the proposed Project will not, by itself, achieve all of the above goals, it is designed to advance them. The Project will result in enhanced training, drafting and administrative capacity in key elements of the legal system. The process of legal and regulatory enactments should also be improved through greater agency coordination, better trained staff, and a public that is more informed about its legal rights and, consequently, can be more engaged in the legal process. As a result of these initiatives, the developing business community will have access to a legal system that is more responsive to their needs, more transparent, and more predictable. Moreover, the public at large will benefit from the Project as its realization will contribute to the establishment of a stronger Rule of Law system. 3. Institutional and Implementation Arrangements 20. Executing Agency: Given the Project nature and proposed scope of activities, as well as the role afforded to the Ministry of Justice (MOJ) under Kazakhstan law, the MOJ will be the principal ministry responsible for Project implementation. 21. Project Coordination: An existing unit within the MOJ, called the Project Preparation and Implementation Unit (PIU), will be responsible for day-to-day technical aspects of Project execution. The PIU has been involved in all of the Project preparation activities and is well suited to serve in this additional capacity. The PIU will provide technical day-to-day support to the MOJ and other agencies and structures with overall responsibility for Project implementation. The PIU will be responsible for carrying out all of the procurement functions, will maintain Project accounts and financial management systems, and will accumulate and disseminate Project-related information. The PIU will furthermore conduct a mid-term review of the Project implementation. The office of the PIlJ will be located within the MOJ in Astana. 22. The MOJ role will be especially important in the implementation of the Legal Drafting and Institutional Strengthening Component and the Legal Information and Public Awareness Component (since the National Center of Legal Information, the primary agency responsible for the electronic legal information data base, is a part of the MOJ). 23. A supervisory council has been established to direct the implementation of the Judicial Strengthening Component. It includes MOJ officials and judges nominated by the Supreme Court and the union of judges, with the judges having the majority. Among other functions, this body also has decision making authority over the Judicial Training Institute (administratively under the MOJ). 24. Accounting, financial reporting, and auditing arrangements. Project records and accounts would be maintained by the PIU to reflect, in accordance with sound accounting practices, the operations, resources, and expenditures for each Project activity. The experience of keeping the accounts for the PPF and the PHRD, that has been the responsibility of the same unit during the past one and a half years will be most useful. Project records and accounts, including a special account, established for the PPF and the PHRD, were audited over 1997 by an auditor accepted by the Bank, and were found to be satisfactory. 25. An assessment of the Project's financial management system was carried out by a financial management specialist (FMS). The assessment covered the financial management systems presently existing in the PIU for the administration of the PPF and the PHRD, utilized for Project preparation. It was concluded that while the current systems in place were generally satisfactory (and the PIU has

13 8 acquired useful experience in procurement, disbursement and simple accounting), both the systems and staff will need to be expanded and appropriately modified to manage the greater volume and complexity of transactions under the Project. 26. It has thus been decided that the Project's financial management system is not yet adequate for the Project to qualify for periodic disbursement based on regular submission of Project management reports. However, the financial management structure is expected to be further strengthened over the coming year, with the objective to converting the Project's disbursement system and switch to disbursements based on quarterly project management reports (PMRs) by July 1, An action plan with the following steps has been agreed upon to achieve this goal: (a) The PIU will appoint within two weeks after Project effectiveness a financial controller (FC), with qualification and experience acceptable to the Bank, to be responsible for all financial functions, including procurement, disbursement, auditing, and accounting. (b) The FC will be supported by a procurement officer and an accountant specialist. Additionally, a senior procurement advisor, with acceptable qualification and experiences acceptable to the Bank; will be appointed no later than September 30, 1999, for a period of six to twelve months. (c) The PIU will introduce a set of financial procedures capable of generating PMRs every three months, within 2 to 3 months following the appointment of the FC. (d) The first set of quarterly PMRs will be prepared for the period of September/October/November of 1999, and these accounts will be submitted to and received by the Bank within 30 to 45 days following this period; the format of the fmancial statements shall be consistent with the samples presented in the LACI Implementation Handbook (September 1998). The Bank will review this set of accounts and provide comments, if need be. (e) Once the PMRs are deemed acceptable to the Bank expected on or before July 1 st 2000, the loan agreement would be amended and the disbursement of the loan proceeds will be based on PMRs, and the traditional disbursement requests based on Form 1903 and supporting documents will be discontinued. D. Project Rationale 1. Project Alternatives Considered and Reasons for Rejection 27. At the initial stages of Project design, the Bank considered an alternative of supporting a more narrow Project, which would primarily provide legal technical assistance to the government in the area of legal drafting, as well as support for studies and possibly preparation for a future legal reform Project. The benefits of such an operation would include quicker processing time, quicker and more defined results and fewer risks. However, this alternative was rejected for the following reasons. Legal technical assistance in the area of drafting specific enactment had already been provided by both the Bank (under the Technical Assistance Loan - $2 million) and by many other donors and agencies (i.e., USAID, EU- TACIS, EBRD, UK Know How Fund, SOROS). However, this limited TA was not addressing long-term systemic and institutional problems facing the country. The government recognizes this problem. The government requested the support of the Bank because of its unique comparative advantage and objectivity in the areas of institutional strengthening, judicial education, judicial administration reform, etc. The government also insisted on a more systemic and long-term Project. The Bank's management

14 9 agreed that the Bank should support a free standing Project that would help to strengthen the country's legal infrastructure and institutional capacity. 2. Major related Projects financed by the Bank and/or other development agencies (completed, ongoing and planned) Sector issue Project Latest Supervision (Form 590) Ratings (Bank-financed Projects only) Implementation Development Progress UP) Objective DO) Bank-financed To develop policy, legal and Technical Assistance Loan S S institutional structure for (3642 KZ) attracting foreign investment Attract foreign investment in Petroleum TA (3744 KZ) S S oil & gas sector Establish national Real Estate Pilot Real Estate Registration S S Registration System (41460 KZ) Other development agencies USAID Ongoing Judicial education and court commercial laws drafting administration judicial training TA in court administration New reform support to drafting and judicial New educational institute curriculum development for judicial education institute New SOROS: New support of legal education IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory) 3. Lessons Learned and Reflected in the Project Design 28. Reform of the legal systems in transition countries is a long term endeavor encompassing a wide array of tasks. Experience has shown that the impetus for legal reform must come from its own constituency rather than outside sources if it is to be successful. In first instance, government ownership to the process is critical to long-term sustainability. Such government ownership exists in Kazakhstan; the challenge will be to broaden its legitimacy and acceptance among a wider range of potential beneficiaries. During Project preparation, this process has made significant progress. e.g. the judiciary has become much more involved, which is demonstrated in the creation of a number of multi-agency working groups and committees responsible for various sub-tasks under the Project. 29. The Project also benefited from lessons learned in the design of legal reform Projects in the Russian Federation and other countries. One lesson is that, if possible, implementation and coordination mechanisms are better situated in existing agencies or ministries. Although a new agency might have the

15 10 benefit of neutrality, building a. new structure from scratch has a lot of start-up costs and bears the risk to build a parallel structure instead of replacing the old one. Bank staff and consultants working on the Project brought together experience of the Bank's Legal Department and the ECA region in law reform Projects, and experiences with judicial reform in Latin America and Asia. Also, during Project preparation, PIU staff visited the Russian Foundation for Legal Reform responsible for implementation of the Russian Legal Reform Project. Since then they have been actively sharing experiences. 30. Under four operations (Technical Assistance, Petroleum Technical Assistance, Finance and Enterprise Development, and Pension Reform Adjustment Loan), the Bank has supported the development of the initial legal framework for economic management, oil sector, financial sector, and pension regulations in Kazakhstan. Lessons learned are: (i) the legal system in general, and the judiciary in particular, has experienced difficulty in understanding and interpreting increasingly complex economic transactions; (ii) with the opening of the economy and the influx of foreign investments, the constituency for legal reform has moved beyond a small cadre of government officials and legal practitioners; the law has become more and more a vital instrument in daily economic life; (iii) the lack of domestic institutional capacity in the reform effort risks becoming a serious obstacle to the transition process as a whole; and (iv) the capacity of the government to design and execute implementing regulations is at least as important as its capacity to draft the laws themselves. 31. One area needs particular attention. In the above mentioned first Bank Projects, given the need for quick action, virtually all legal drafting and reform work has been led by foreign consultants. Increasingly, this has resulted in an adverse reaction from the Kazakhstan authorities, prefer to use available local expertise and build upon that capacity in a sustainable way. To respond to this concern, most of the initial analytical work for the Project has been carried out by local experts, and the loan design envisages to support a number of local institutions (such as the Judicial Education Institute), and aims to use local capacity (such as local academics to provide assistance to legal drafting) to the maximum extent. 4. Indications of Borrower Commitment and Ownership 32. The government has been quite keen to advance the legal reform agenda. In 1996, the government requested the Bank to help prepare a comprehensive Project for legal and judicial reform. To accelerate the process, the government established an inter-agency group, led by the Ministry of Justice. Subsequently, the government requested and obtained a PPF for the Project. In addition to a strong support and ownership of the Project by the MOJ, other central governmental ministries (i.e., Ministry of Finance, Education, Economy), the Procurator's office, and the judiciary (Supreme Court, oblast and rayon courts) have expressed support for the Project, as well as the public and private law schools. The Presidential administration has equally endorsed the Project concept, objectives, and components. The government has utilized the PPF advance as well as the PHRD grant to assess, with assistance of local and foreign consultants, areas of need and solutions. Strong government commitment to the Project is also demonstrated by the fact that the government decided to maintain the Project's timetable and allocate the required counterpart funding for it in the 1999 budget, even in a time of severe fiscal distress. The government furthermore made an effort to discuss the Project with and to involve the public at large through a first ever national conference on legal reform held in Several inter-agency working groups have been established including i) a supervisory council on judicial strengthening; ii) a working group to prepare the education grant program; and iii) a tender evaluation commission. 5. Value added of Bank Support in this Project 33. The Bank has an institutional advantage in the area of institution building, including in the area of legal reform. Hence, the government has sought Bank's advisory and financial assistance to support the

16 11 required legal transformation. The Bank's experience in economic reform, both globally and regionspecific, institutional and judicial reform, and organizational effectiveness, is expected to contribute significantly to the design of a program that is successful. By taking this approach, the government also hopes to be in a better position to coordinate and utilize smaller (grant) programs from other donors. E. Summary Project Analyses 1. Institutional 34. The institutional capacity of the government to implement a comprehensive legal reform program is fairly limited. That is the very reason that the government has requested the Bank's help through a technical assistance Project. The Project intends to provide the necessary resources for technical assistance, training and equipment to build up the required capacity in the government. The PIU will play a central role in Project implementation is already fairly experienced in its coordination function and is expected to strengthen further during next year. Other fairly new structures such as the Judicial Coordination Council and the Legal Drafting Fund, supporting inter-ministerial working groups responsible for legal drafts, will have to build expertise, assisted by resources provided through the Project. And the new Judicial Training Institute as well as the National Legal Information Institute will receive significant support through the Project, enabling them to grow into strong permanent structures within the government. If all these institutional initiatives are implemented successfully, the Project will have contributed significantly to the structural strengthening of the Government's capacity to design and implement future legal and judicial reform programs. 2. Environmental assessment 35. Environmental Category []A [Il B [X] C As a technical assistance Project in the area of legal and judicial reform, no environmental assessment is necessary. 3. Participatory approach 36. The government made a strong effort to involve non-governmental groups and specialists in Project design and preparation. Local legal experts and academics, judges, and NGOs (i.e. the union of judges), bilateral and multilateral donors, were consulted. In the summer of 1997, the government (MOJ) organized a national legal reform conference. Conference participants (which included the media, academics, government officials, judges, parliamentarians) discussed the overall status of legal reform in the country, as well as specific activities that were being considered for inclusion in the Project. Additionally, in preparing all three components, the government and consultants engaged by the government took surveys, and otherwise solicited public information and input. Also, in the Spring of 1999, a judicial conference is planned to solicit further judges' views on judicial education. A survey among oblast and raion judges is currently ongoing. And the PIU is planning to organize a public education campaign, including a conference, in the context of the public awareness program.

17 12 F. Sustainability and Risks 1. Sustainability 37. The specific programs that have been included in the Project reflect many months of extensive consultation and went through a number of modifications during its preparation. However, as Project preparation has been finalized, the base for government support for the Project activities has deepened significantly. The government, at the highest levels, now clearly understands the necessity for institutional capacity building and increased training for judges as the chief means for securing its legal reform goals. Hence, the Project focuses on the development of long-term local institutions and processes, such as the Judicial Training Institute, the legal drafting process, the National Center for Legal Information (NCLI), etc., to sustain the process of legal reform. These institutions and processes will serve to transmit and embody the new concepts, approaches, and ideas which the Project is designed to foster. 38. Fledgling institutions require concentrated support to establish themselves and gain sustainability. Although the government would be unable given its present resources to provide the necessary kind and level of support required in the first phase of institutional growth, it is committed to assuming increasing and ultimately full responsibility for the operating budget of all the institutional beneficiaries of loan assistance. Wherever possible, cost-recovery and self-financing schemes are being considered (e.g. fee schedules for use of the services of the NCLI, or would-be judges).

18 13 2. Critical Risks: Risk Risk Rating Risk Minimization Measure Government and Bank will not agree on list of M International consultant firm is legislative priorities under the legal drafting carrying out a legislative component assessment and advising on priority legislative interventions; annual consultations are built into project design Needed laws are not adopted. M Legislative fund only supports work on drafts that are agreed upon in principle between the government and the parliament Judicial independence is impeded upon and judicial M Judicial Training Institute has been role in administration and education is minimized established and judges have principal responsibility for curricula and faculty Joined Supreme Court/MOJ committee established to design and implement court administration program Legal information - restricted access; procurement M Agreement on broad public access delay to legal data base via internet and public access points (libraries/universities) Comprehensive system design and analysis performed during preparation; bidding documents to be prepared during first year of implementation Counterpart funds unavailable M Project (and counterpart funding) included in 99 budget. Overall Risk Rating M Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N (Negligible or Low Risk) 3. Possible Controversial Aspects 39. Governance: The Project-while rather technical in nature-- is implemented in a highly political environment, affecting the Role of the State, both internally -the relation between the executive, the legislature and the judiciary-- as externally, in its relation with society at large. The lawmaking process requires implementation of more transparent and coordinated procedures (following the new Law on Normative Acts), allowing for a more open process and more possibilities for parties outside the government to become involved. Extensive judicial training and implementation of new court and case

19 14 managementechniques are helping to increase the quality, transparency, and accountability of the courts, and may lead to a more independent judiciary, with significant political consequences. The legal information activities are aimed to increase the accessibility of up-to-date legal information to both private and public users, and the public awareness program aims to undertake active outreach programs to the public on legal reform issues. 40. Management Capacity: The Project design ensures that there is adequate capacity to manage the overall Project via the PIU, under MOJ supervision. In addition, supplementary managerial capacity will be provided for each of the individual components, either through augmentation of the consulting strength of the PIU or through the hiring of consultants for specific activities. G. Main Loan Conditions 1. Effectiveness Conditions 41. (i) In accordance with Section of the General Conditions, the Loan Agreement shall have been dully approved by Kazakhstan. This is a standard condition of effectiveness. (ii) In accordance with Section 5.01 of the Loan Agreement, the Borrower shall have appointed the auditors referred to in Section 4.01 (b)(i) of the Loan Agreement. This is a Project-specific condition of effectiveness. 2. Disbursement Conditions 42. No withdrawals shall be made in respect of payments made for expenditures related to: (i) Category (4) (b) of the loan agreement (roll-out of the court automatization program to all courts), unless the Borrower has developed and implemented court administration and case management techniques, and measures to improve enforcement of judicial decisions in the Supreme Court and the courts in the three selected oblasts of the Republic of Kazakhstan, and has prepared an action plan, acceptable to the Bank, in which (i) the experiences in the first phase are evaluated, including an indication how many cases are now processed using the new procedures, and (ii) an implementation plan for national roll-out of these techniques and measures. H. Readiness for Implementation [ ] The engineering design documents for the first year's activities are complete and ready for the start of Project implementation. [x] Not applicable. [ ] The procurement documents for the first year's activities are complete and ready for the start of Project implementation. [x] The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality.

20 15 I. Compliance with Bank Policies [x] This Project complies with all applicable Bank policies. [signature] Task Team Leader: Sandra Bloemenkamp Sector Director: Pradeep Mitra [signature] Acting Country Director: Nancy Cooke

21 16 Annex 1 Legal Reform Project Project Design Summary Narrative Summary Key Performance Monitoring and Evaluation Critical Assumptions Indicators Sector-related CAS Goal: Promoting private sector- Modernize public Progress on medium term Macroeconomic, Political led growth, including administration expenditure management, & Social Stability improving the legal and administrative institutional framework Strengthen Legal restructuring and capacity Continued commitmento for open and competitive Underpinnings of Market building transfornation towards markets. System democracy and market Project Development Objective: Progress in enforceability of contracts and access to legal information economy Public confidence in judiciary improves Develop legal and 1) laws and regulations Surveys of judges, legal Legitimacy of legal system regulatory systems and more consistent, professionals, domestic increased institutions for market comprehensive and foreign businesses, Corruption reduced economy 2) improved enforcement and the general public Public sector management 3) more independent, toward progress in legal improved transparent and qualified and judicial reforms Economic growth enables judiciary related to economic govemment to retain 4) increased awareness of reforms quality civil servants and public of its legal rights Project Supervision legal staff 5) Improved access to Reports, legal information Analysis of judicial performance Project components: 1) Improve institutional Timely implementation of Project reports, The new laws are adopted capacity for legal drafting an annual legal/regulatory supervision missions, and by Parliament and actually and quality of legal implementation plan; evaluation (midterm and implemented enactments MOJ organization final) reports. improved in accordance Annual Report on the with consultants' completion of the recommendations; legislative program more professional cadre of government lawyers who are responsible for legal drafting

22 17 2) Develop the Court administration Analysis of court statistics Courts function institutional capacity of Projects implemented on Evaluation of first phase independently, neutrally the court system to schedule for 3 out of 17 of court administration and not corrupt. implement and enforce oblast-level courts and the reform program the economic and Supreme court; Analysis on records of commercial legislative judicial training institute framework for market All sitting of judges Surveys, interviews economy trained for at least Annual reports hours per year via judicial Surveys training institute; Supervision reports all newly-recruited judges trained for at least 120 hours via judicial training institute 3) Improve the quality of Legal database Surveys Govemment continues to and access to legal strengthened and upgraded Supervision adhere to principal of information of in accordance with plan Procurement plans broad access to legal govemment officials, WEB page developed implemented on schedule information judges, legal education 30 public access points institutions, legal established, well professionals, the functioning and X number business community, and of end users access to the the public at large to up- system to-date legal information & increase the awareness Journalist and other media of the public at large of their legal rights prepare educational programs on legal issues; workshops and conferences are undertaken

23 18 Annex 2 Legal Reform Project Project Description Project Component 1 - Legal Drafting and Institutional Strengthening Component (Bank financing US$4.2 million or 26. 0% of total Bank financing) 1. This component would support the efforts of the government at the national level, in improving the quality, efficiency, transparency and effectiveness of the laws and regulations, and improving the lawmaking process, particularly with respect to economic enactments. Support would be directed to enhancing drafting capacity across principal government units with drafting responsibility and strengthening the organizational and technical capacity of the MOJ and its Institute of Legal Drafting. This component will consist of four principal activities: (a) legal drafting assistance to be provided to the MOJ and other government agencies by local and foreign legal consultants ($4.2 million); (b) an assessment of the functional, organizational, and management aspects of the MOJ (to be financed by donor funding or counterparts funding) and (c) training of government lawyers from the MOJ, MOF, National Bank, and other agencies in the area of legal drafting ($200,000). Specific activities: A. Legal Drafting Fund (US$4, 000, 000) 2. This sub-component will finance legal and regulatory drafting technical assistance, to be provided by local and international consultants. Each year under the Project, the government (MOJ) will submit to the Bank, for no objection, an annual plan describing the over-all level of proposed legal TA, specific legal/regulatory areas in which assistance would be required, problems that would be sought to be resolved through this TA, general qualifications and skills that would be required, and proposed outputs. On the basis of this plan, qualifying consultants will be ask to submit proposals for competitive review by the PIU, e.g. comparison of CVs and fees. Proposals for the first year have been put forward, and will be further refined during the "Legal/Regulatory Economic Review" that, financed by the PHRD, is being carried out by an international consultant firm. This study will also provide guidance for the use of the funds in the second and third years. The sub-component will be implemented and supervised by the MOJ (the Department of Legal Drafting), with day-to-day technical assistance provided by the PIU. At the end of each year (1999, 2000, 2001, 2002, 2003), the MOJ will provide a report to the Bank describing the results of assistance financed from the fund, summarizing the expenditures made from the fund, etc. B. Institutional Strengthening of the MOJ 3. The role of the MOJ has been significantly transformed over the past seven years. The ministry has emerged as a major source of legal policy guidance and legislative drafting expertise, in addition to its other functions. Not all of the features of its new role are currently reflected in its organizational and managerial structure, which thus requires reform. The MOJ has now assumed a number of new functions, including:

24 19 * as a service agency, responsible for the legal quality of all drafts of government legislation and regulation, including economic laws, providing advise to the government and its departments and agencies (including advise on the legal aspects of all operations of the government) and the regulation and the conduct of all litigation on behalf of the government; * as a central agency, providing coordination among government departments enduring government-wide consistency in the application and implementation of the law, helping to protect against abuse of the judicial process, abuse of criminal law power, inappropriate exclusion of the jurisdiction of courts, and infringement of basic legal precepts, such as expropriation without compensation etc.; and * as a policy department, the Ministry should carry out a general responsibility for policies related to the administration of justice, including the responsibility for criminal justice policy, as well as a leading role in human rights law, family and youth law, administrative law, and the executive's mandate with respect to judges and courts. 4. The MOJ in the exercise of these new functions would clearly benefit from technical assistance focused on professionalizing and modernizing its structure. Therefore, an assessment of the functional, organizational, and management aspects of the MOJ, both at the central level in Astana and in the regional justice administrations will be carried out as part of the Project. This review would include assessing the lines of decision-making and reporting and the establishment or reorganization of MOJ departments and a redefinition of their roles. The MOJ will be in charge of implementing this activity. The MOJ, with the assistance of the PIU, will attempt to identify donor funding to finance the review during the If successful, terms of reference for this study will be prepared by January 1, 2000 and a qualified consultant will be selected by March 31, If donor funding cannot be identified in time, loan funds will be reallocated to fund the study from loan proceeds. C. Training of Government Lawyers in Legal Drafting (US$200,000) 5. The sub-component will fund training programs in legislative drafting to respond to training needs of government lawyers from the MOJ, MOF, MOE, MOL, the National Bank and other central government agencies responsible for legal and regulatory drafting in the economic and regulatory sphere. Training courses may also be open for legislative drafters in Parliament. The MOJ will be in charge of implementing this activity. Each year during the implementation, approximately 10 lawyers from the MOJ and legal departments of other agencies and ministries will be trained locally or abroad in drafting skills. Project Component 2 - Judicial Strengthening Component (Bankfinancing US$7.0 million or 42.0% of total Bankfinancing) 6. The role of the judiciary in a market economy is fundamentally different and substantially greater than the role of the judiciary in a planned economy of the type that existed in Kazakhstan. The judicial strengthening component sets forth a program for assisting Kazakhstan in its continuing efforts to develop the institutional capacity of its court system to implement and enforce the legislative-regulatory framework required for the operation of a market economy. 7. Kazakhstan's judicial system consists of three-tiers: (i) the Supreme Court; (ii) Oblast and equivalent courts; and (iii) raion and equivalent courts. Supreme Court judges are ratified by the Senate, at the proposal of the President upon the recommendation of the Higher Judicial Council. Judges of other courts are appointed by the President, at the recommendation of the Higher Judicial Council. The Supreme Court has its own budget, other courts receive their material and financial support through the

25 20 MOJ. While there has been periodic discussion of modifying this system of budget, financial and material support, no major changes are envisaged for the short or medium term. Quite a significant effort and time might be needed to convince both the government and the judiciary of the benefits of more judicial leadership (and independence) on these issues. 8. On the basis of local and foreign consultancy reports, two areas stand out as the highest priorities for assistance under the Project: (A) the need for a comprehensive judicial training program, with particular emphasis upon areas of law relating to the legal/regulatory system for a market economy; and (B) the equally important need for modernization of court administrative systems, including both court management and case management, with the introduction of appropriate techniques and technologies to permit effective and efficient administration of justice and to supply the judiciary with legal information necessary for the competent and efficient performance of its duties, especially all current laws and other normative acts and the most important jurisprudence. Also, under this sub-component capacity-building in the area of enforcement of judgements; publication of court decisions and other measures to enhance the autonomy of the court system and enhance its role and influence can be financed. 2A. Judicial Education Program: (US$3.5 million) 9. In August of 1997, a Judicial Training Center (the Center) was created as a separate legal entity, with its own charted. In March 1999, it was renamed as the "Judicial Training Institute for improving the qualification level (Institute). The Institute is responsible for training newly appointed and sitting judges, as well as judicial support personnel and justice officials. The Project will fund a comprehensive program for modernizing the Center, including both institutional development (infrastructure, administration, faculty) and program development (curriculum, pedagogy, materials). 10. While ultimately the Institute should place control over judicial education completely in the hands of the judiciary-both to comply with the concept of judicial independence and to ensure judicial support-in the interim a supervisory council has been established to control the curriculum and faculty of judicial education. This interagency supervisory council is composed of nominees from the MOJ, the Supreme court and the judges' union, with the judges in the majority. The training of others than judges and judicial support staff will be conducted separately The Center will develop and articulate wider and more specific objectives of judicial education to support an impartial, independent, competent, efficient, and effective judiciary. The training provided by the institute will go beyond discussions of substance and procedural law, and will put emphasis on ensuring that judges understand the philosophy behind the new laws, teaching judges new intellectual approaches and inspiring attitudinal/behavior change. 11. The Institute at present consists of a minimal administrative and instructional staff at antiquated premises with exceeding limited resources and commensurately limited capacity to deliver programs. Under the loan, the Center will be the beneficiary of a comprehensive program of institutional capacitybuilding, including administrative reorganization, instructional programming development, and necessary infrastructure improvements, including renovation of a new central site and seven regional centers to enable cost-efficient delivery of training at the regional level together with procurement of necessary equipment. 12. At the start of the program, a senior administrative position at the Director of deputy Director level will be created as a consultancy with external funding (USAID), and thereafter, possibly from loan funding. Several other positions, recommended by international experts might be funded as well,--for the function of librarian, staff adult educator and others. 13. The judicial education component will help finance three major support programs:

26 21 Providing technical support to the initial operation of the Institute and its seven regional centers (US$800,00) This will include support for administration and instruction of the Institute (including a deputy director, technical assistance on administrative matters, and an adult education specialist, and some instructional staff), and will fund temporarily incremental operating costs to upkeep the central Institute and its regional affiliates. Such assistance could be provided by twinning with a western judicial training institute, an academic institute or a regular, specialized consultant firm. * Providing support to the creation of courses, training material, and actual delivery of the courses to new and existingjudges (US$1,600, 00) This part of the program aims to provide support to program development, methodology and teacher training, and the creation of course material adequate for adult education. It could also finance part-time trainers, travel and other related expenses for participants. * Rehabilitation and equipment of the regional center and its affiliates (US$1,100,00) It is estimated that architectural plans and construction for minimum rehabilitation of the eight buildings will amount to $650,000, and equipment and furniture will amount to $450, The preparation of a long range (3 year) judicial education plan to be discussed at donor coordination meetings will offer bilateral and private foundation donors the opportunity to choose to support areas in which they have a comparative advantage or particular interest. It will also allow multilateral and other donors to adopt a coordinated approach in supporting judicial education. Already, USAID and the SOROS foundation expressed interest in close collaboration. 2B. Reform of Court Administration (US$3.5 million) (A) Court Administration and Case Management (US$900, 000) 15. The existing system of court administration is in need of substantial improvement. As the caseload and complexity of cases increase, judges must make do with case and court management systems which are antiquated: for the most part manual, carried over largely intact from Soviet times, and generally inadequate to the demands of courts operating in a market context and on a radically altered legislative landscape. The system at present often impedes the administration of justice rather than facilitates: judges spend far too much time engaged in clerical tasks, information about cases is not always available and timely, case documents are difficult to find or access and are prepared, processed, and stored almost entirely by hand 16. The court administration program is designed to remedy the above problems, modernize administrative systems, and provide for efficient and effective administration of justice. The program is based on the current assignment of responsibilities for judicial administration in Kazakhstan. The lower courts are managed by the Ministry of Justice. The Supreme Court is responsible for its own budget and administration. The MOJ will be the lead agency, but the Supreme Court will also play key a role in implementation. 17. The planned improvements and activities are based on an analysis of regular court administration, and containing recommendations for reforms. The strategy contemplates implementation of proposed

27 22 activities for an initial period for all courts in threeoblasts or oblast-equivalents, as well as the Supreme Court. Based on the success of implementation of proposed improvements at these courts, a decision would be made on the extension of the program to other courts. The proposed activities include * Court management: ($350,000) activities would include 1) administration of a survey of courtusers and officials on management issues, 2) technical assistance and training in improved management (including public relations), 3) revision of the personnel system (including new job classifications), and 4) enhancement of budgeting and planning capacity. * Case management: ($85,000) activities would include: 1) analysis of workload distribution (timemanagement and efficiency study); 2) automation of control over case-flow; 3) development of new records-management and archival system; 4) development of new index-statistical system. * Evaluation and other activity ($115,000): activities would include: 1) an evaluation of the implementation of the court management and case management activities described above, with a view to applying the lessons learned and extending the improvements to the other courts; 2) an analysis on enforcement of court judgements, with recommendations focused on maximal reduction of corruption incentives; 3) draft and incorporate changes in court administration procedures on the basis of experiences in Y1 courts. * Component Management and' orientation training: ($350,000) activities would include: 1) intensive training abroad; and; 2) court management training and work shops for budgeting and planning, enforcement ofjudgements; and 3) consultant services to Oblast coordinators, It is planned to select a consultancy firm that could take charge of the above mentioned activities, involving as many local experts as possible. (B) Automation and Information (US$2.6 million) 18. Automation. This sub-component will be implemented in two stages. In the context of the improvements to be put into place under this sub-component, court administration will be shifted from manual to automated systems, in keeping with contemporary trends in judicial administration worldwide. Automation will be financed as a means and not an end, with three discrete objectives in view: 1) access to legal information systems that meet contemporary international standards for affording access to existing law and such other information required for competent and efficient performance of its duties; 2) electronic processing of court documents, including judicial decisions; and 3) automation of case and court management functions, to permit re-allocation of personnel to substantive tasks and to maximize administrative support to judges. The court automation program will be launched in the three selected oblasts and gradually be rolled out to all court contingent on the success of the first phase. 19. Access to Legal information for courts. This sub-component will finance the provision of needed hard and software to provide access for all courts to the electronic database of legal information, which is object of improvement under component 3. The Project will also finance the electronic publication of judicial decisions. The information system that will be provided to the courts under this sub-component must be of sufficient quality and quantity to meet the basic information needs of everyraion court, oblast court and the Supreme Court of Kazakhstan. This component will be further developed in coordination with the legal information work, supported under the Legal Information and Public Awareness Component (see below). 20. One critical element of the administrative reform program is procurement and installation of computer equipment and software adequate to meet the automation needs, including access to legal

28 23 information, of the courts. This will be effected in conjunction with appropriate training of the judicial and other personnel who will use these systems. While it is not practicable to provide a computer for each and every judge, the Project will finance at a minimum that quantity of equipment necessary to automate the YI courts as well as that quantity of equipment necessary to give every court in Kazakhstan access to the legal information database. Procurement of additional computer equipment for automation purposes will be contingent on the success of the administrative reforms introduced to the YI courts. A schedule for computerization of the remaining courts would be prepared at the appropriate time. Project Component 3 - Legal Information and Public Awareness Component (Bankfinancing US$4.235 million or 26.0% of total Bankfinancing) 21. The goal of the Legal Information and Public Awareness Component is to improve the quality of and access to legal information for government officials, judges, legal education institutions, legal scholars, practicing attorneys, businessmen and society as a whole, especially legal information concerning economic and market reforms and corresponding regulations. It will include the financing of some 30 public access points (at universities or libraries), and the creation of a WEB side making the information available to the public at large. The Legal Information and Public Awareness Component will also assist the government in determining the appropriate method of classification and codification of legal information and to raise the degree of unification and systematization of legal information. Finally, this component will finance public awareness programs, using mass media, and training programs for journalists on legal topics. 3A. Electronic System of Legal Information (US$3.955 million) 22. On the basis of an initial needs assessment by the MOJ with the assistance of local and foreign legal consultants, state officials from other agencies and the Bank, a team of experts in the legal information field has conducted a comprehensive analysis of existing electronic infrastructure for the collection, organization, analysis, classification, and dissemination of legal inforrnation in Kazakhstan, including computer hardware, software, and all peripheral equipment in executive agencies with legal responsibilities (MOJ, Prime Minister's office & central ministries and agencies such as the Ministry of Finance, Economy, the National Bank, etc), law enforcement agencies (General Procuracy), courts at all levels (Supreme, oblast, raion), parliamentary structures, legal education institutions, bar associations, and commercial and non-governmental entities. 23. The legal information consultants have determined that the database maintained by the National Center for Legal Information is modern, comprehensive and well-designed and can serve as a basis for growth of the information system to meet future needs. While the current system has great promise, it is in need of a number of improvements to attain truly national scope and stature. The component will thus have three principal foci, designed to strengthen and augment the NCLI system of legal information but not to replace it or alter it fundamentally: 1) enlarging the contents to include subsidiary regulations, judicial decisions, and other forms of information not currently collected and disseminated, 2) improving the functioning of the system: increasing the speed and efficiency with which information is collected and disseminated, and 3) expanding the system's reach and increasing access to it, especially for the courts and critical units of the legal system but also for other government offices and the public. Pending finalization of the expert recommendations, the component will finance the hardware, software, peripheral equipment, and training necessary to realize these improvements, via the establishment of a Wide Area Network and a legal information WEB-site, accessible to non-govermnent users, possibly for a fee. Also, the final system that will be established during Project implementation will encompass at least 30 sites at universities and public libraries throughout the country, to ensure that the public at large will have access to the system in an affordable way.

29 A draft final consultants report has been submitted, with recommendations as to the preferred option for dissemination of the information, and a phased implementation plan to roll it out during Project implementation. The government supports the broad trust of the recommendations, and is working out its final position. Subsequent technical work on developing specific bidding documentation for the appropriate system software and hardware, and peripheral equipment will take place during the implementation period. Training needs for anticipated end-users of the system are being identified as well. The costs of these activities will be financed from the loan proceeds. 3B. Design of National Classification and Codification System (US$100,000) 25. No unified classificator of legal acts exists in Kazakhstan. Several systems have been designed by various users of information, but there is great demand to further systemize the collection and dissemination of legal information. This component will help finance technical assistance to analyze the current system of classification of all legal enactments (laws, decrees, resolutions, and regulations) and help design a model classification system that, subsequently, can be implemented in the classification system in electronic format. The consultants recommended to have a close look at the new systems recently implemented in neighboring countries (Russia). 3 C. Public Awareness Program ($150, 000) 26. This sub-component will be implemented by the MOJ, with daily assistance from the PIU, through the development of a public outreach program, including workshops, programs for journalists and media organizations on legal topics, and other activities aimed at informing and involving the public in the new legal system. Project Component 4 - Project Management and Implementation (US$0.4 million or 2.0% of total Bankfinancing) 27. Given the nature of the Project and the proposed scope of activities, as well as the role afforded to the MOJ under Kazakhstan law, the MOJ will be the principle agency responsible for overall implementation. An existing unit within the MOJ, the PIU, will be responsible for day-to-day technical aspects of Project execution. The PIU has been involved in all of the Project preparation activities, and has been responsible for implementing the PPF and the PHRD Grant for this Project. The PIU is therefore well suited to serve in this additional capacity. 28. Currently the PIU consist of four local consultants: A Director, a legal expert, a procurementdisbursement officer and a secretary/translator. The PIU is assisted by a foreign consultant. However, the workload will expand significantly during Project implementation, since the PrU will provide technical day-to-day support to a number of consultants and will have overall responsibility for Project implementation. The PIU will be responsible for carrying out all of the procurement functions, will maintain Project accounts and financial management systems, and will accumulate and disseminate Project-related information. The office of the PIU is located in the MOJ in Astana. 29. The PIUJ will require approximately 5 central full-time professional staff (the PIU director, regular MOJ staff, a project coordinator, a financial controller, an accountant, a procurement officer) and 1 full-time secretary/interpreter. A experienced procurement advisor will be needed for the first 12 months. Additionally, I full-time professional position will be required to implement and monitor the Legal Drafting Component and 2 full-time professional position will be required for the Judicial Strengthening Component (one of which maybe financed by USAID and 1 (part-time internationallyexperienced position), to be financed under the judicial education sub-component. The 2 positions required for the Legal Information Component will be filled with current staff members of the National

30 25 Center of Legal Information. Their salaries will continue to be paid by the center. They will work closely with the PIU staff, and will be assisted in procurement, financial, contractual, and other similar areas by such PIU staff. 30. The above positions will be financed (unless otherwise indicated) by the bank loan for the first 24 months. After that period, the MOJ intends to transfer all PIUJ positions to regular MOJ positions, financed by the budget. Based on the above discussions and taking into account equipment and other operating needs of the PI1, the overall loan-financed two year budget for the PIU is approximately $0.4 million, with approximately $375,000 budgeted for consultants services and approximately $120,000 budgeted for equipment, auditing services, training, transportation, communications and other operating costs of the PIU. It is expected that in addition to this budget, there will be in kind (office space) and cash government contributions, as well as some limited USAID assistance, to the operations of the PIU. 31. The proposed loan will finance the incremental activities to Project management, which are the responsibilities of the PITJ under the MOJ. This will include the provision of all necessary incremental office space, utilities, repairs and maintenance, advertising and promotion, PIU staff fees and training, communication, and travel. Budgetary constraints are severe in Kazakhstan. Hence loan funding will ensure that funds are adequate and continuously available for proper function of the PITS which is critical for the success of Project implementation. This arrangement should not raise questions regarding government commitment to the Project; local counterpart funding could be up to 20% of total Project costs, exceptionally high for a technical assistance Project. Also, such an arrangement has been adopted before in Kazakhstan.

31 26 Annex 3 Legal Reform Project Estimated Project Costs Project Component Local Foreign Total US $ million Legal Drafting and Institutional Strengthening Judicial Strengthening Legal Information and Public Awareness Project Management and Implementation Total Total Baseline Cost Physical Contingencies Price Contingencies Total Project Cost (including repayment PPF and fee)

32 27 Annex 4 Legal Reform Project Procurement and Disbursement Arrangements Procurement 1. The procurement of goods, works and services of the Bank financed components would be procured in accordance with the Bank's Guidelines on Procurement under IBRD Loans and IDA Credits (January 1995, revised January and August 1996, and September 1997) and the Guidelines on Selection and Employment of Consultants by the World Bank Borrowers (January 1997, revised September 1997). The Project components not financed by the Bank would be procured in accordance with the national procurement regulations or the co-financing institutions procurement regulations. All goods contracts estimated to cost over US$200,000 equivalent each shall be subject to International Competitive Bidding (ICB). Contracts estimated to cost between US$50,000 - US$200,000 each shall be through International Shopping (IS) and contracts estimated to cost less than US$50,000 each shall be concluded through National Shopping (NS). Minor works (mainly renovation and refurbishing), of a total aggregated cost not exceeding US$700,000 shall be procured through competitive quotations. Bank's standard bidding documents will be used for procurement under the Project. 2. The procurement of goods through ICB is estimated at US$5.6 million and procurement contracts for a total of US$500,000 shall be through IS or NS (Table A). The selection of consulting firms or training providers (approximately 22 contracts, costing about US$6.0 million) shall be through Qualityand Cost-Based Selection (QCBS), Quality Based Selection (QBS) and Fixed Budget selection process (SFB), as defined in Annex 4, Table A. Selection of individual consultants (9 contracts, costing US$0.4 million) will be through competitive process in accordance with the Guidelines on Selection and Employment of Consultants by World Bank Borrowers. To ensure transparency in the selection process, all assignments for local consultants will be advertised in local newspapers and consultants will be selected on the basis of short list. 3. Under the legal drafting component, in addition to the services of consulting firms, a panel of individual national consultants will be selected for legal drafting (approximately 50 contracts over four years). These are relatively small assignments and a group of two/three local consultants will be called upon to draft or review a specific legislation. At the beginning of each year, the PIU will work out and submit for Bank's review a list of legislation proposed to be drafted or amended by the consultants. Selection of the panel will follow a competitive procedure, i.e. advertising in local newspapers, review of the CVs from individual consultants who have expressed interests, and a review of their fees. The panel will be updated every year following the same process. The consultants on the panel will be called upon to assist as and when required and will be remunerated on the basis of actual time spent on an activity. 4. The estimated incremental operating cost of $900,000 would be financed from the loan. This category would include (i) the critical office supplies and other support (administrative and technical) required for the consultants to be retained to assist PIU in implementation of the Project; (ii) the cost of additional staff and consultants required during the Project implementation, who would be hired on contract for a specific period to supplement the PIU's capacity, and (iii) critical office supplies and other operating support for the Judicial training Institute. 5. All ICB and the first two contracts under IS and NS, irrespective of the value, shall be subject to prior review by the Bank. The consultants' contracts estimated to cost over US$100,000 for firms and US$50,000 for individuals, as well as all sole source contracts, and all TORs and methods of selection of

33 28 consultant contracts, irrespective of the value, shall be subject to prior review by the Bank. All other contracts shall be subject to ex-post review. 6. The Project elements, their estimated cost and procurement methods are summarized in Annex 4, Table A and B, and the Bank's prior review thresholds is presented in Annex 4, Table C. A procurement plan detailing the packaging and estimated schedule of major procurement actions is presented in Annex 4, Table D. The estimated loan disbursement schedule is presented in Annex 4, Table E. The General Procurement Notice in Development Business will be issued in June 1999, and will be updated as appropriate and published annually thereafter. In addition, a Specific Procurement Notice in Development Business will be required for consultant contracts of $200,000 or more. The Project launch workshop is scheduled for September 1999 (Annex 4, Table F). Institutional Arrangements 7. The Bank has initiated the process to undertake a Country Procurement Assessment Report (CPAR) and plans to complete it by August Some significant recommendations would emerge from the CPAR, which would be included in an action plan directed to improve the procurement environment and enhance the transparency and accountability of procurement actions and decisions. The government has also launched an initiative in 1996 to reform the public procurement system in the country. The legal and institutional framework to govern the public procurement was completed in December 1998 and the introduction and enforcement of the system has started thereafter. An independent agency to regulate and exercise oversight on public procurement was established in December, The enforcement of a comprehensive public procurement system will introduce discipline on public expenditure, as well as transparency and accountability of the procurement process. It will also be an effective vehicle to combat corruption. 8. During the past five years, the government agencies have acquired some procurement management capacity and MOJ in particular has developed some procurement handling capability under the Bank supported Real Estate Registration pilot project. The PIU for the proposed Legal Reform Project in the MOJ has also acquired usefal experience in procurement and disbursement during project preparation and management of the Japanese Grant. It will continue to have the overall responsibility to coordinate and manage procurement under the Project. But the scope of the Japanese Grant was limited compared to the proposed Project under which both volume and complexity of procurement will increase significantly. About 100 consultant contracts and 27 contracts for procurement of goods and minor works will be concluded, of which at least three would be major ICB contracts. Therefore, procurement handling capacity would be critical to the success of the Project and procurement difficulties are likely to be encountered during implementation, particularly in its first year of operation. To further strengthen its procurement capacity, the PIU, in addition to the existing position of a procurement officer, should retain the service of a qualified and experienced procurement consultant (national or foreign), in the first year of operation to assist and advise the PIU and component implementation units on procurement processing and contract management, including staff training. The procurement arrangement in the PIU satisfactory to the Bank must be in place as soon as possible, and the procurement advisor will be on board no later than September Disbursement 9. The loan is expected to be fully disbursed over four and a half years, closing in The Bank would finance: (i) 100% expenditures for consultant services; (ii) 100% expenditures for study tours and other training; (iii) for goods, 100% foreign expenditures for direct imports, 100% local ex-factory costs for locally manufactured items and 80% local expenditures for other items procured locally; and (iv) 80% expenditures for civil works. Annex 4, Table D gives the estimated Project disbursement schedule.

34 Special Account. To facilitate timely Project implementation, the Borrower would establish, maintain and operate, under conditions acceptable to the Bank, a Special Account (SA) in US dollars in a commercial bank. The initial allocation of the Special Account would be US$ 350,000 when the aggregate disbursement under the loan have reached the level of US$ 2,000,000, the initial allocation may be increased up to the authorized allocation of $1,000,000 by submitting the relevant Application for Withdrawal. Replenishment applications should be submitted at least every three months, and must include reconciled bank statements as well as other appropriate supporting document. 11. The commercial bank holding the SA would be chosen on the basis of open competitive bidding, and would, as a pre-condition, be required to meet the following criteria: (a) It should be financially sound as demonstrated by their latest accounts which would be audited by an internationally recognized audit firm; (b) Have significant foreign correspondence banking in all major currencies; (c) Have some experience, or at least the capacity to acquire experience, in issuing letters of credit, transacting direct foreign payments; (d) Be a member of SWIIFT, or plan to use the facility to expedite payments; (e) Be willing and able to issue a Comfort Letter to assure that amounts deposited in the SA would not be set off, seized or otherwise attached to satisfy amounts due to the commercial bank by the Borrower; (f) Be willing and able to adequately maintain accounts as required by the Bank, including regular statements, and any other information that may be considered necessary; and (g) Charge competitive rates for services and other transactions fees. 12. Statement of Expenditure: Disbursements would be made on the basis of Statement of Expenditures (SOEs) as follows: (i) (ii) goods: expenditures under contract costing less than $200,000 equivalent; individual consultants: contracts less than $50,000 equivalent; (iii) consulting firms: contracts estimated less than $100,000 equivalent; (iv) operating costs: expenses less than $50,000 equivalent; (v) works: contracts costing less than $100,000 equivalent; and (vi) training: expenses less than $50,000 equivalent. Documentation supporting the SOEs would be retained at the PIU, and made available for review by Bank supervision missions and auditors.

35 30 Annex 4, Table A Summary of Major Procurement Activities and Procurement Methods CATEGORY PROCURE- MENT # OF CONTR- ACTS LOAN FUNDS METHOD A. Legal Drafting and Institutional 4,200,000 Strengthening Al. Legal Drafting Fund - consultants services for legal drafting QCBS 8 2,000,000 SIC 50 2,000,000 A2. Institutional Strengthening of the MOJ - training of staff from economic ministries SFB 5 200,000 (seminars & local training course and study tour abroad) B. Judicial Strengthening 7,000,000 B 1. Judicial Education - capacity building TA QCBS 1 1,100,000 -creation of teaching materials QCBS 2 355,000 - continuing education of judicial staff SFB 1 1,000,000 - teachers' training SFB 5 200,000 - equipment for training center NS 9 450,000 - small works (renovation of training centers) Q ,000 B2. Court Administration -automation of court administration ICB 2 2,500,000 -TA for capacity building QCBS 5 245,000 - incremental operating cost of the training center 500,000 C. Legal Information and Public Awareness 4,245,000 D 1. Electronic System of legal Information - workshop on public awareness SFB 1 150,000 - consulting services on codification SIC 1 100,000 - preparation of bidding documents QCBS 1 80,000 - procurement of hardware & software ICB 1 3,100,000 - training SIC 1 350,000

36 31 -capacity building TA QCBS 1 415,000 -minor works Q 50,000 D. Project Management & Implementation 400,000 - Procurement Consultant SIC 1 80,000 - Audit of the Project account LCS I 100,000 - Incremental Operating Expense 220,000 E. Miscellaneous -PPF repayment 500,000 -Front-end fee 165,000 Contingency TOTAL 16,500,000 QCBS QBS SFB LCS SIC SS ICB IS NS Q - Quality Cost Based Selection - Quality Based Selection - Selection under a Fixed Budget - Least Cost Selection - Selection for Individual Consultants - Sole Source Selection - International Competitive Bidding - International Shopping - National Shopping - Competitive Quotations

37 32 Annex 4, Table B: Consultant Selection Arrangements (in US$ million equivalent) Consultant Services Expenditure Category Selection Method QCBS QBS SFB LCS CQ Other N.B.F. Total Cost (including contingencies) A. Firms B. Individuals Total 7.26 Note: QCBS = Quality- and Cost-Based Selection QBS = Quality-based Selection SFB = Selection under a Fixed Budget LCS = Least-Cost Selection CQ Selection Based on Consultants' Qualifications Other = Selection of individual consultants (per Section V of Consultants Guidelines), Commercial Practices, etc.

38 33 Annex 4, Table C: Thresholds for Procurement Methods and Prior Review' Contracts Subject to Prior Review / Estimated Expenditure Contract Value Procurement Total Value Subject to Category (Threshold) Method Prior Review US $ thousands US $ millions 1. Works 2. Goods 50 or less NS or less IS ICB Services (Indiv.) 50 Other 2.40 (firm) 100 QCBS Miscellaneous Total value of contracts subject to prior review: 'Thresholds generally differ by country and Project. Consult OD "Review of Procurement Documentation" and contact the Regional Procurement Adviser for guidance.

39 34 Annex 4, Table D: Procurement Plan ESTIMATED DATIES Number of Invitation GPN/SPN slices/items/ Estimated Procurement BD/RFP Opening Eval & Contract Contract Description Type subpackages cost method Preparation recom. Award signing Completion A. Legal Drafting and 4,200,000 Institutional Strengthening - legal drafting CS 8 2,000,000 QCBS 06/99 12/99 02/00 50 (panel) 2,000,000 SIC 03/ / /00 03/ / /01 03/ / /01 - training TR 5 200,000 SFB 3/ /00 8/ / / /01 03/01 10/2003 3/ /01 08/01 10/ /02 02/02 3/ /02 08/02

40 35 B. Judicial Strengthening 7,000,000 - capacity building TA CS 1 1,000,000 QCBS 6/99 9/99 11/99 - creation of training CS 2 355,000 QCBS 3/2000 5/00 7/2000 materials -teacher training TR 5 239,000 SFB 9/99 11/99 12/99 5/2000 7/00 8/2000 9/ /00 12/2000 5/2001 7/01 8/ continuing education of CS/TR 1 1,000,000 9/ /01 12/2001 judicial staff - equipment for training G 9 45,000 NS 1/2000 3/00 5/2000 center 5/2000 7/00 8/ / /00 2/ small works (renovating CW ,000 Q 9/99 11/99 training centers) 4/2000 4/2000 -automation of court G 2 2,500,000 ICB 12/99 5/00 8/2000 administration 12/99 5/01 8/01 - TA for capacity building CS 5 245,000 QCBS/SIC 06/99 12/99 2/ /00 1/2001 3/01 05/01 8/01 10/01 12/01 2/01 4/01 06/02 09/02 11/02

41 36 C. Legal Information & 4,235,000 Public Awareness - preparation of bidding CS 1 80,000 QCBS 09/99 12/99 1/00 10/99 documents; -TA for capacity building CS 1 415,000 QCBS 08/99 11/99 11/ procurement of hardware G 1 3,100,000 ICB 05/2000 9/00 11/00 & software - training TR 1 300,000 SFB 5/01 8/01 10/01 -minor works CW 1 50,000 Q 3/00 6/00 8/00 -Codification CS 1 100,000 SIC 03/2000 5/00 07/2000 D. Project Management & 400,000 Implementation -Procurement Adv. CS 1 80,000 SIC 06/99 08/99 09/99 -Audit of the Project CS 1 100,000 LCS 6/2000 7/2000 8/2000 account -Incremental Operating 220,000 Expense E. Miscellaneous -PPF repayment 500,000 - Frond-end fee 165,000 QCBS QBS LCS SFB SIC SS ICB IS NS CQ - Quality Cost Based Selection - Quality Based Selection -Least Cost Selection - Selection under Fixed Budget - Selection for Individual Consultants - Sole Source Selection - Intemational Competitive Bidding - Intemational Shopping - National Shopping - Competitive Quotations

42 37 Annex 4, Table E: Estimated Loan Disbursement Schedule Disbursements over 48 months (US$ million) Bank Fiscal Year Semester Per Semester (%) _ Per Semester Cumulative (%) Cumulative _

43 38 Annex 4, Table F: Training, Information and Development on Procurement Estimated date Estimated Indicate if there Domestic Preference for Goods Domestic Preference for Works, if applicable of Project date of is procurement Launch publication subject to Workshop of General mandatory SPN Yes Yes 09/99/ Procureme in Development nt Notice Business No x No x 06/99 Yes x Retroactive financing No x Advance Procurement No x No x To monitor the procurement the PIU, responsible for all procurement activities and give periodic overviews on the progress. Project team in HQ will monitor the progress, assisted by a Project officer and a junior procurement specialist in the field.. PROCUREMENT STAFFING Staff part of Task Team responsible for the procurement in the Project: Lingzhi Xu Ext The Field Office is expected to facilitate and monitor the procurement process.

44 39 Annex 4, Table G: Allocation of Loan Proceeds Expenditure. Category Amount in US$million (1) Goods 6.1 (2) Consultants' Services 6.1 (3) Training (4) Works 0.7 (5) Incremental Operating Costs 0.9 (6) PPF Advance Repayment 0.50 (7) Front-end Fee Total 16.50

45 40 Annex 5 Legal Reform Project Project Processing Budget and Schedule A. Project Budget Planned Actual (At final PCD stage) US$207,000 US$298,000 B. Project Schedule Planned Actual (At final PCD stage) Time taken to prepare the Project (months) months 29 months First Bank mission (identification) 07/04/ /04/1996 Appraisal mission departure 09/29/ /29/1998 Negotiations 11/15/ /18/1998 Planned Date of Effectiveness 08/01/1998 Prepared by: Ministry of Justice Preparation assistance: PPF, PHRD, USAID Bank staff who worked on the Project included: Name: Sandra Bloemenkamp Gennady Pilch Maria Dakolias Zhanar Abdildina Linzghi Xu Abdul Haji Specialty: Team Leader Legal Counsel, Co-Task Manager Judicial Strengthening Operations Officer Procurement Analyst Financial Management Specialist

46 41 Annex 6 Legal Reform Project Documents in the Project File A. Project Implementation Plan Draft Project Description and Implementation Plan December 98 B. Bank Staff Assessments Back-to Office Reports of Identification, Pre-Appraisal, and Appraisal August 96 December 96 March 97 October 97 March 98 July 98 November 98 C. Other Reports On legal drafting issues: Khudiakov, Legal Drafting January 97 Yanachkov, Legal Drafting July 97 On Judicial Strengthening Berchigorova; Judicial Strengthening March 97 Goldstein, Judicial Strengthening July 97 Oxner, Judicial Training Institute September 98 Newton, Court Administration November 98 Newton, Supplement on Judicial Training November 98 On Legal Education & Public Awareness Manynovsky, Legal Education March 97 Ageeva, Shabarov, Report on preparation of Grants Program September 98 One Legal Information Other; Podoprigora, Judicial information March 97 ABT associates Preliminary report on Legal Information December 98 Proceedings of the National Legal Reform Conference, September 97

47 42 Annex 7 Legal Reform Project Status of Bank Group Operations in Kazakstan Operations Portfolio As of 12-Apr-99 Fiscal Project ID Year Borrower Purpose Difference Between expected Original Amount in US$ Millions and actual disbursements a/ IBRD IDA Cancellations Undisbursed Orig Frm Rev'd Number of Closed Projects: 4 Active Projects KZ-PE REPUBLIC OF KAZAKHSTAN ROAD TRANSP. RESTRUC KZ-PE REPUBLIC OF KAZAKSTAN PUBLIC SEC. RES.MGT KZ-PE GOVT. OF KAZAKSTAN PENSION REF. SAL KZ-PE REPUB. OF KAZAKSTAN AG POST PRIV. ASST KZ-PE REP OF KAZAKSTAN TREASURY MODERNIZATI KZ-PE GOVT. OF KAZAKSTAN PILOT WATER SUPPLY KZ-PE REPUBLIC OF KAZAKSTAN REAL ESTATE REG PLT KZ-PE REPUBLIC OF KAZAKHSTAN UZEN OIL FIELD REHAB KZ-PE REPUB. OF KAZAKHSTAN IRRIG. & DRAINAGE KZ-PE GOVT. OF KAZAKHSTAN SOCIAL PROTECTION KZ-PE GOVT OF KAZAKHSTAN FINANCE & ENT. DEVEL KZ-PE REP. OF KAZKHSTAN PETROLEUM TA KZ-PE REPUB.OF KAZKHSTAN TECHNICAL ASSISTANCE Total 1, Active Projects Closed Projects Total Total Disbursed (IBRD and IDA): of which has been repaid: Total now held by IBRD and IDA: 1, , Amount sold : Of which repaid : Total Undisbursed : a. Intended disbursements to date minus actual disbursements to date as projected at appraisal. Note: Disbursement data is updated at the end of the first week of the month and is currently as of 31-Mar-99.

48 43 Annex 8 Kazakhstan at a glance 9/28/98 Europa Lower.. POERYaio,ScAlu central mnlidd11e- K)altta Ai ijricon~ Development diamond* Population, (millions) mid-year 16.3 ~~ ,285 Life expectancy GNP per capita (Atlas m6thod~ US$) 4 23, GNP (Atlas/Metoik us$ blos) 21, I: Population r/o) -O~~~~~~~~~S ~~~2 GNP Gross Lalxwforce (96) ~~~~~~~~~~per primary Most recent estime (lts eraalte 917 aita enrollment Urbani population (96 of totappltin 0 Life expectancyatbirt (yaa Infant motlt pi,0 iebrh)24 25~ 38 Child mtalnutitio ~%fcide ne )1..Access to safe water Access te safe wate 9 fpoain 84 Illiter,acyf (%o(pp/to ae Grosspiir nolet(6o colaeppi t n 0 9 Kazakhstan Male ~~~~~~~~~~~~~~~~~~L.ower-middle-inc group 1976~ e ~ ~ ~ ~ ~ ~ GDP ((./S$ billions) Gross domestic investmentfgop..., 23.3 Exports of good[s and services/gid... 0Trade (Gross domestic s4vings/gbp.. 20.c Grs atoa savngs/gop i i Economic ratios* aurnt accoun balance/gop. -. oetcivsmn InterstpaymentrslGDP InvetSaving Total detalgdp Saving1s. TOta debt service/explorts Piresent value o dbt/odp Present valuve Of debt/exports ~. 3. Z.; ~~~~~~~~~~Indebtedness GOP., ~~~~~~~~~~~~.0 0-Kazakhstan GNP per capita ~~~~~~2 Lower-middle-income group STRUCTURE of the ECONOMY (9/6 of GOP)I Growth rates of output and investment (%/) Agriculture Industry Manufacturing Services Private consumption General govemment consumption GDGP Imports of goods and services GD -- GP (average growth) anual Growth rates of exports and imports(% Agriculture Industry Manufacturing Services Private consumption General govemment consumption Gross domestic investment Imports of goods and seyvices Exports - l-mports Gross national product Note: 1997 data are preliminary estimates. *The diamond show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete.

49 44 Kazakhstan PRICES and GOVERNMENT FINANCE Domestic prices Inflation (%) (% change) 2,000 Consumer prices ,500 Implicit GOP deflator Government finance SW (% of GDP, includes current grants) o Current revenue Current budget balance GDP deflator ^ CPI Overall surplus/deficit d TRADE Export and import levels (USS millions) (US$ millions) Total exports (fob).... 5, Oil and gas..,. 1, Il l Other metals Manufactures Total imports (cil... 5,166 3,ro Food 2, Fuel and energy.... 2,324 1,.000 Capital goods a Export price index (1995=100) i 97 Import price index (1995=100) mexports myimports Terms of trade (1995=100) BALANCE of PAYMENTS (US$ millions) Current account balance to GDP ratio (%) Exports of goods and services.... 6,966 7,611 o0 Imports of goods and services.... 7,546 8, Resource balance Net income Net current transfers I Current account balance Financing items (net) , Changes in net reserves Memo: Reserves including gold (US$ millions) Conversion rate (DEC, local/lus$) EXTERNAL DEBT and RESOURCE FLOWS (US$ millions) Composition of total debt, 1997 (US$ millions) Total debt outstanding and disbursed.... 3,122 4,278 IBRD G:349 A:648 IDA Total debt service IBRD IDA c: 511 Composition of net resource flows Official grants Official creditors F: 1, Private creditors Foreign direct investment.. 1,137 1,321 9:7._ Portfolio equity :788 Worid Bank program Commitments A - IBRD E - Bilateral Disbursements B- IDA 0 - Other multilateral F - Pnvate Principal repayments C - IMF G - Short-term Net flows Interest payments Net transfers Development Economics 9/28/98

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