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Seminannual Report on Project Administration and Technical Assistance Implementation for the Period Ending 30 June 1999 : Country Implementation Highlights
KazakhstanThe number of ongoing loans decreased to six with no loans approved and one closed during the period. All ongoing loans were rated satisfactory in terms of both implementation progress and achievement of development objectives. No loan was pending for signing or effectiveness. Two loans underwent minor changes in implementation arrangements. The country's absorptive capacity was limited by (i) the difficult fiscal situation and resultant scarcity of local counterpart funds; (ii) a weak administrative structure with limited policy formulation and implementation capabilities; (iii) lack of exposure to and inadequate experience with policies, procedures, and practices of external funding agencies; and (iv) communication, cultural and language barriers. Also, funding agency coordination and management was constrained by frequent changes in the Government's institutional arrangements. Often, delays were encountered in the Government's fulfillment of conditions to make loans effective; parliament's approval of individual loans is part of the Government's internal requirements. The Bank has been dealing with these issues through capacity building and institutional strengthening efforts under TAs and loans, and with assistance of the RM. The shortage of counterpart funds is the most serious current concern. The Bank will therefore need to pay increasing attention to the availability of counterpart funding not only during implementation, but more importantly during project processing. At the request of the Government, the Bank resumed its operations during the period after a one-year hiatus. This year's program includes two loans and four TAs. This modest program reflects the fiscal reality of the country, which has continued to be affected adversely by the languishing Russian economy, weak export commodity prices, and uncertain prospects for the recovery of oil prices. The severe fiscal difficulty is likely to persist throughout 1999. There was no lending and only one TA (to support the publicity campaign for the new pension system) was extended in 1998. Fiscal constraints seriously affected the Government's ability to provide counterpart funds for externally financed projects, including the Bank's. Arrears in the payment of counterpart funds (about $0.4 million) for civil works occurred in the Road Rehabilitation Project, but this was resolved after the Bank's intervention. Contract awards and commitments reached $13.4 million, or 110 percent of the semiannual projection of $12.1 million and 60 percent of the annual projection of $22.5 million. Disbursements reached only $4.2 million, or 73 percent of the semiannual projection of $5.8 million and only 28 percent of the annual projection of $14.9 million. There were no disbursements from program loans. The low level of disbursements resulted from lower than expected disbursements for the Road Rehabilitation Project. The disbursement ratio decreased from 35.5 percent as of 30 June 1998 to 3.6 percent as of 30 June 1999, against the Bankwide average of 11.9 percent. Net resource transfer also decreased from $50.9 million as of 30 June 1998 to a negative $6.8 million as of 30 June 1999. The high net resource transfer in 1998 was due to disbursements from program loans. Audited project accounts and financial statements were due for two loans. These were received, but with delays of less than six months. Of the six ongoing loans, environmental covenants were met for three while the covenants did not apply to the other three. Compliance with social covenants was in progress for five loans but did not apply to one loan. Tables 31 and 32 summarize the data for Kazakhstan.  
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