The World Bank Group in Georgia
Chapter 2 | Evolution of the World Bank Group’s Strategy and Operations
Highlights
Strategies were coherent and relevant, while being responsive to government priorities, addressing the country’s main development challenges as identified in core diagnostics, and considering the World Bank Group’s comparative advantage.
The continued engagement through analytics and advisory services helped inform the dialogue with the government and supported the evolution of the strategy toward new priorities and lending engagement.
In line with the Bank Group’s relatively small share of overall financial support to the government, the Bank Group, informed by knowledge products, focused on using innovative approaches, creating programmatic engagements, and providing global knowledge.
Engagement on environment, climate, and resilience issues gained importance over the evaluation period.
World Bank Group Support Strategy
Country strategies targeted areas of Bank Group comparative advantage and evolved in response to government priorities and a changing external environment. The strategies emphasized growth, job creation, and competitiveness with a mix of second-generation business environment reforms and enabling conditions, such as improved infrastructure, access to financial services, innovation, and creation of a qualified and productive workforce (figure 2.1). Tourism and agriculture were identified as priority sectors. Through support for better, more efficient health services, both strategies incorporated inclusion issues. In the area of resilience, a Country Partnership Strategy (CPS) focus on public sector and fiscal management evolved to a broader theme of improved macrofiscal management. The Country Partnership Framework (CPF) included an explicit area on natural resources and climate risks. Consistency across strategy cycles helped deliver on longer-term agendas, such as a comprehensive program in transport, an approach to the energy sector facilitating private investment, and a programmatic, results-based approach for human capital.
Both the CPS and CPF were closely coordinated with the government’s plan—Georgia 2020 (Georgia 2014)—and based on the Bank Group’s core diagnostic. Georgia 2020 was informed by a growth diagnostic study, supported by the United States Agency for International Development, and a comprehensive series of 17 World Bank policy notes completed in 2013. Country Economic Memorandums (CEMs), prepared in 2013 and 2014, provided additional analytic underpinnings on the nexus of growth, economic integration, and jobs. The 2018 Systematic Country Diagnostic (SCD) focused on relevant firm-level constraints relating to formality and capacity, including horizontal constraints of gaps in infrastructure, financial access, and human capital (World Bank 2018b). Sectoral mini deep dives in the SCD identified agriculture, tourism, energy exports, and textiles as potential areas to drive export-led growth.
Figure 2.1. Evolution of Country Strategies During the Evaluation Period
Figure 2.1. Evolution of Country Strategies During the Evaluation Period
Source: Independent Evaluation Group.
Note: CPF = Country Partnership Framework; CPS = Country Partnership Strategy; TSA = targeted social assistance.
The World Bank engagement incorporated lessons identified in learning documents. Lessons from the 2014 CPS Completion Report Review, validated by IEG, emphasized the need for more effective coordination within the Bank Group and with other development partners. It also confirmed the positive impact of increased selectivity and encouraged phasing out financing in the transport sector in favor of engagement in education and agriculture (World Bank 2014a). The recommendations were incorporated into the new CPF. The 2017 Performance and Learning Review and the 2018 CPS Completion and Learning Review Validation highlighted emerging fiscal issues and climate risks related to power purchase agreements (PPAs) entered by the government (World Bank 2017a, 2018d). The 2022 Performance and Learning Review primarily reflected the impact of COVID-19 on the program (World Bank 2022b).
World Bank Group–Supported Program
The Bank Group’s lending represented a relatively small share of overall financial support by development partners. Georgia had access to support from the EU and several major multilateral lenders (figure 2.2) with grant or concessional funding. Between 2014 and 2023, the World Bank committed more than $2.1 billion (figure 2.3)—less than 13 percent of overall support during the period. Volumes dropped toward the end of the CPS cycle, whereas the use of advisory services and analytics (ASA) reached its peak. Approvals increased with the start of the CPF cycle but dipped during the second year of the COVID-19 pandemic. IFC committed $479 million in funding with a focus on financial institutions and the energy sector. This was complemented by projects in health care, agribusiness, tourism, and real estate. MIGA issued guarantees amounting to $185 million in support of the financial and infrastructure sectors.
The government took a strong role in coordinating the work of development partners, requesting from the Bank Group innovative approaches and global knowledge. Partner activity was coordinated by a dedicated Donor Coordination Unit of the Department of Policy Planning and Government Coordination. The share of Bank Group support was highest during the evaluation period in communications (44 percent of total sector commitments), human capital (31 percent), agriculture (28 percent), and the private sector (26 percent)—areas where the Bank Group had a pioneering role or contributed work based on global expertise. This mirrors the pattern in the transport sector where the World Bank was the largest development partner before 2014 but ceded the financing role to other institutions as programs initiated with World Bank support became well established. The government sought out World Bank support for the early COVID-19 response (box 2.1) to capitalize on the institution’s global expertise. Key informant interviews among government agencies, bilateral and multilateral partners, and civil society indicate that the structure worked well and contributed to the overall complementarity of work.
Figure 2.2. Funding Commitments by World Bank Strategy Cycle
Figure 2.2. Funding Commitments by World Bank Strategy Cycle
Source: OECD 2024b.
Note: ADB = Asian Development Bank; AIIB = Asian Infrastructure Investment Bank;CAS = Country Assistance Strategy; CPF = Country Partnership Framework; CPS = Country Partnership Strategy; EBRD = European Bank for Reconstruction and Development; EU = European Union; OPEC = Organization of the Petroleum Exporting Countries.
Figure 2.3. Evolution of World Bank Lending, FY14–23
Figure 2.3. Evolution of World Bank Lending, FY14–23
Source: Independent Evaluation Group (as of December 8, 2023).
Note: Trust fund projects are excluded. ASA = advisory services and analytics; CPF = Country Partnership Framework; CPS = Country Partnership Strategy; DPF = development policy financing; IPF = investment project financing; PforR = Program-for-Results.
The Bank Group’s strategy and operations were designed to support critical areas of the EU’s acquis communautaire (box 2.2). Development policy lending contributed to improvements in the free movement of goods and services and helped create institutions supporting components of competition policy, enterprise and industrial policy, and consumer and health protection. Bank Group engagement in support of connectivity infrastructure was aligned with the chapter of the acquis on trans-European networks and the relevant sector chapters on education and information society. Bank Group engagement on environmental issues complemented the EU priorities expressed in the acquis. Progress was made through a series of World Bank and IFC advisory engagements and a development policy operation (DPO), with prior actions creating the conditions for the greening of the economy.
Box 2.1. World Bank Group Support for Georgia’s COVID-19 Response
The Georgia Emergency COVID-19 Response Project, approved on April 30, 2020, under the Fast-Track COVID-19 Facility, helped the government set up its initial emergency response, including testing, treatment, and purchase of personal protective equipment. It further provided support for vulnerable Georgians economically affected by COVID-19–related shutdowns. The US$180 million project included US$100 million in cofinancing from the Asian Infrastructure Investment Bank and US$34.5 million in additional financing in 2021, which supported vaccine procurement and deployment. The 2021 Georgia Relief and Recovery for Micro, Small, and Medium Enterprises Project supported mitigation of the impact of COVID-19 on micro, small, and medium enterprises and adaptation and resilience of the broader private sector through promotion of digitization and electronic payments. An evaluation of the World Bank’s early support to addressing COVID-19 identified Georgia’s COVID-19 support as innovative and highly aligned with needs (World Bank 2023d). Overall, the World Bank Group provided 13.2 percent of support to address the pandemic, whereas the Asian Development Bank, the Asian Infrastructure Investment Bank, and the European Union and its member states jointly provided about 85 percent of financing. Key informant interviews emphasized that Bank Group support, including global knowledge early in the pandemic and constant informal engagement, was a key factor in Georgia’s ability to reopen safely and conserve its economic structures, enabling a quick economic rebound.
Source: Independent Evaluation Group.
ASA helped inform the dialogue with the government and supported the evolution of the strategy toward new priorities and lending engagement. Key informant interviews indicated that the World Bank used analytic work and policy dialogue to make the case for increased involvement in human development where coordination gaps among development partners existed. In sectors with ongoing World Bank support, such as transportation, the World Bank’s role evolved toward addressing novel areas, such as performance-based road management, road safety, and climate resilience.
Box 2.2. Complementary Agenda of the European Union and the World Bank Group
Starting with the 2006 action plan for political and economic reform in the context of the European Neighbourhood Policy, Georgia increased the alignment of its development strategy with requirements in the acquis communautaire of the European Union (EU). The World Bank Group supported this priority through reforms related to the relevant areas of the acquis, such as free movement of goods and capital, competition policy, public procurement, transport policy, environmental standards, and energy. EU institutions accounted for 16 percent of funding during the evaluation period, whereas, in aggregate, EU member countries contributed 21 percent of official development assistance commitments. Funding by EU institutions and members was disproportionately targeted toward energy, government, agriculture, water, conflict and security, and the environment (figure B2.2.1).
Figure B2.2.1. Share of Support of the European Union Institution, the European Union Member States, and the World Bank Group per Sector
Figure B2.2.1. Share of Support of the European Union Institution, the European Union Member States, and the World Bank Group per Sector
Source: OECD 2024b.
Note: Data are for sectors exceeding total funding of US$100 million during the valuation period. EU = European Union.
Bank Group priorities were largely in complementary areas, with significant overlap in energy and agriculture, where engagement was well coordinated. EU partners and the Bank Group also collaborated on analytic work (for example, in innovation and rural broadband infrastructure) and cofinancing projects (such as the East-West Highway project and the Georgia Human Capital Program), whereas in education, the World Bank focused on preprimary to secondary education, and EU partners led on vocational training.
Source: Independent Evaluation Group.
Support for strengthening core public service delivery performed well. Support for macrofiscal management and public service delivery relied heavily on development policy lending with strong analytic underpinnings—with relevant DPOs rated moderately satisfactory or better. The World Bank supported improvements to the targeted social assistance program and the pension system through various policy actions, which were substantially achieved, helping increase the coverage of the targeted social assistance program and improve the efficiency of pensions. In addition, technical assistance supported the improvement of the pension system, and key informant interviews indicated that the government valued the World Bank’s unique role in providing global knowledge and expertise related to best practices in targeting beneficiaries. A series of three investment finance projects supporting local development was implemented and delivered moderately satisfactory outcomes. However, support for an improved framework for matching labor supply and demand consisted primarily of technical assistance and policy lending and did not achieve its targets.
Bank Group engagement on environmental, climate, and resilience issues gained importance during the evaluation period. Environmental challenges and climate change were highlighted in the SCD, and support for environmental issues started with the CPS. During the CPS period, collaboration with the government on environmental issues was mainly provided through ASA. They supported work to better understand the economic cost of inaction and identified policy responses in areas such as climate adaptation, landscape restoration, greening of the economy, and improved regulation for the use of renewable energy. During the CPF cycle, engagement picked up through several ASA, and the 2023 Green and Resilient Georgia DPO targeted a range of relevant policies, such as the alignment of industry emission standards with EU policies.
World Bank Group Performance
Strong World Bank project implementation and close coordination with the government led to positive project outcomes. All but one of the World Bank projects evaluated during the period were rated moderately satisfactory or above. IEG validated the self-evaluations of 14 projects in Georgia that closed during the evaluation period. Of these, 7 projects were rated moderately satisfactory, 6 projects were rated satisfactory, and 1 project was rated moderately unsatisfactory (figure 2.4). A key factor contributing to higher performance of evaluated projects was strong government ownership based on a shared strategic vision and agreement on analytic underpinnings.
Figure 2.4. Outcome and Bank Performance Ratings of Projects Closed During FY14–23
Figure 2.4. Outcome and Bank Performance Ratings of Projects Closed During FY14–23
Source: Independent Evaluation Group.
Implementation was aided by strong government capacity, well-designed monitoring and evaluation systems, and regular supervision by the World Bank. Strong monitoring and supervision were particularly noticeable for projects identified as having high implementation risks, with the Georgia National Innovation Ecosystem (GENIE) project being a notable example (see chapter 3). High levels of ambition occasionally led to complex designs with many objectives, which gave rise to recommendations of further emphasizing programmatic approaches that were implemented in subsequent projects. Better project outcomes were associated with more outcome-oriented indicators, although on occasion, this led to difficulties tracking relevant data. Bank performance was rated moderately satisfactory for 71 percent of projects and satisfactory for 29 percent.
IFC’s performance was less consistent. Of the 11 validated IFC Expanded Project Supervision Reports issued during the evaluation period, 3 projects were rated successful, 3 mostly successful, 3 mostly unsuccessful, and 2 unsuccessful (figure 2.5). Projects rated mostly unsuccessful or worse were generally approved before the evaluation period and were negatively affected by the 2008 crises, the 2014 Russian financial crisis, and implementation issues. Projects performed better in cases where IFC had a strong sponsor with a track record of IFC engagement and a deep understanding of the country and the sector. No MIGA self-evaluation documents are available for the evaluation period.
Figure 2.5. Outcome Ratings of International Finance Corporation Projects Evaluated During FY14–23
Figure 2.5. Outcome Ratings of International Finance Corporation Projects Evaluated During FY14–23
Source: International Finance Corporation.