DRAFT FOR DISCUSSION 1 OECS REGIONAL PARTNERSHIP STRATEGY FY15-19

OECS Context Lessons Learned Prioritization Criteria Proposed RPS FY15-19 Program Issues for Discussion 2 OUTLINE

OECS REGIONAL PARTNERSHIP STRATEGY FY OECS CONTEXT

OECS COUNTRIES FACE A NUMBER OF COMMON CHALLENGES 4 Weak macro framework: Insufficient growth High debt Limited fiscal space Low competitiveness and productivity Dependence on a few economic sectors Unfavorable investment climate Infrastructure gaps High cost of energy Low connectivity Mismatches between skills and job market needs Public Sector weaknesses Weak financial resilience Vulnerability to Natural Disasters Fragile social resilience

THE LAST DECADE WAS MARKED BY SUBDUED GROWTH AND HIGH DEBT LEVELS Slow growth High debt 5

THE INCIDENCE AND COSTS OF DISASTERS HAVE INCREASED 6 Select Damages from Disasters (% of GDP) Evolution of Damages from Disasters (US$ millions)

7 LOW GROWTH, DISASTERS, AND INSUFFICIENT INCLUSIVENESS HAVE IMPACTED POVERTY

Growth:  Address key obstacles to growth, including in the investment climate and infrastructure  Facilitate private sector development and job creation  Accelerate public sector modernization Inclusiveness:  Enhance shared prosperity, accelerate poverty reduction, address gender issues, strengthen social protection, enhance employability (esp. women, youth) Sustainability:  Build economic, financial, fiscal, environmental, and social resilience 8 GIVEN THIS BACKGROUND, OECS COUNTRIES FACE A NUMBER OF INTERRELATED DEVELOPMENT PRIORITIES LAYING THE FOUNDATIONS FOR A RETURN TO SUSTAINABLE INCLUSIVE GROWTH LAYING THE FOUNDATIONS FOR A RETURN TO SUSTAINABLE INCLUSIVE GROWTH

OECS REGIONAL PARTNERSHIP STRATEGY FY LESSONS LEARNED

Key Pillars  Building resilience  Enhancing competitiveness and stimulating growth over the medium term What we have achieved  Comprehensive Debt Framework  Caribbean Growth Forum  Comprehensive framework for Disaster Risk Management  Approach to improve skills and build up ICT competences  Successful activities in Energy, Public Sector, Agriculture & Social Safety Nets 10 OUR CURRENT PROGRAM (OECS RPS )

LESSONS LEARNED  Flexibility is required to respond to evolving circumstances  Alignment to national priorities ensures stronger ownership  A combination of regional and national support enhances results  Coordination with other development partners enhances impact and efficiency  Enhanced selectivity enables sharper focus and greater impact  Quality of project designs and implementation flexibility are key PROPOSED SOLUTIONS GOING FORWARD  CPS based on one focused overall objective and a few key pillars and interventions  A steering committee will be established with key development partners and government representative  Support will be provided for regional priorities, with implemetation at national level (e.g., tourism)  We will use of APLs for greater flexibility  We will bringing the entire World Bank Group to the OECS 11 LESSONS FROM THE OECS RPS

OECS REGIONAL PARTNERSHIP STRATEGY FY PRIORITIZATION CRITERIA

 Which:  Have a transformational impact on OECS economies  Are aligned with regional and national priorities  Will help us achieve, in the OECS, the WBG twin goals to eradicate poverty and boost shared prosperity  Coincide with areas where the WBG can bring value- added or has a strong ongoing engagement 13 WE PROPOSE TO FOCUS OUR SUPPORT ON SELECTIVE AREAS

OECS REGIONAL PARTNERSHIP STRATEGY FY PROPOSED RPS FY15-19 PROGRAM

PROPOSED STRUCTURE OF THE RPS FY PILLAR 1: REVITALIZING SOURCES OF GROWTH Focus Area 1 Facilitating private sector development and job creation Objective 1: Removing key constraints to growth Objective 2 Fostering industries with the highest potential for inclusive sustainable growth Focus Area 2 Enhancing the effectiveness of the public sector Objective 3 Promoting a more effective Public Financial Management Objective 4 Improving institutional capacity PILLAR 2: STRENGTHENING RESILIENCE Focus Area 3 Managing Disaster Risks Objective 5 Increasing capacity of OECS governments to manage natural hazards or climate change impacts Focus Area 4 Increasing social resilience Objective 6 Building the OECS human capital and strengthening the productivity of its labor force Objective 7 Strengthening the efficiency and responsiveness of social protection programs Focus Area 5 Improving financial resilience Objective 8 Promoting economic, fiscal and financial resilience

Objective 1: Removing key constraints to growth  Improve the business environment and investment climate  Strengthen the capacity of financial institutions to provide funding to support growth of the economy  Foster entrepreneurship and innovation  Address critical infrastructure and connectivity gaps Objective 2: Fostering industries with the highest potential for inclusive sustainable growth  Tourism  Agriculture/Agribusiness  ICT/Creative industries  Logistics/Transport 16 FOCUS AREA 1: FACILITATING PRIVATE SECTOR DEVELOPMENT & JOB CREATION

Objective 3: Promoting a more effective Public Financial Management  Improve public financial and fiscal management and administration  Increase quality of public service delivery  Improve customs administration  Enhance transparency of public information  Strengthen State-Owned Enterprise (SOE) management, when suitable  Objective 4: Improving institutional capacity  Strengthen institutional capacity of the public sector  Build PPP capacity and a pipeline of bankable transactions 17 FOCUS AREA 2: ENHANCING THE EFFECTIVENESS OF THE PUBLIC SECTOR

18 FOCUS AREA 3: MANAGING DISASTER RISKS Establish effective administrative systems for post-disaster approval, transfer and monitoring of funds Reduce contingent liability Reduce disaster impact through integrating risk information in public investments Reduce economic impact by creating incentives for private sector resilience Assess and quantify risks Define and measure contingent liabilities Pre-Disaster Post-Disaster Reduce Financial Risk Secure Financing Deploy and Monitor Funding Assess Risks Assess Risk Reduce Disaster Risk Objective 5: Increasing the capacity of OECS countries to manage natural hazards or climate change impacts Integrate disaster risk in fiscal risk and public debt management Improve post- disaster budget response capacity Clarify post- disaster financial assistance

Objective 6: Building the OECS human capital and strengthening the productivity of its labor force  Improve quality standards for education  Upgrade skills for jobs  Enhance capacity to plan, implement and monitor Non Communicable Diseases (NCDs) Objective 7: Strengthen the efficiency and responsiveness of social protection programs  Consolidate systems  Strengthen efficiency  Improve targeting and effectiveness 19 FOCUS AREA 4: INCREASING SOCIAL RESILIENCE

Objective 8: Promoting economic, fiscal and financial resilience  Enhance risk management  Reduce vulnerability to external shocks  Strengthen banking and non banking sector  Enhance fiscal and debt sustainability 20 FOCUS AREA 5: IMPROVING FINANCIAL RESILIENCE

21 PROPOSED LENDING PROGRAM FY15FY16FY17 Regional DPL/APL Financial Sector DPL-III Grenada Regional APL CGF Reform Implementation DPL-II Grenada Regional APL Geothermal Project Regional APL Tourism Sector Regional APL Agriculture Competitiveness Regional APL Social Vulnerability Reduction

 IBRD envelope FY15-19 USD 120mln (up to USD 20mln per country)  IDA-17 envelope (FY15-17) not yet known; estimated at around SDR 50 mln (roughly USD 75 mln)  DOM: SDR 11.3 mln (USD 17mln)  GRE: SDR 11.6 mln (USD 17.4 mln)  SLU: SDR 14.8 mln (USD 22.2 mln)  SVG: SDR 12.6 mln (USD 18.9 mln) 22 FINANCIAL ENVELOPE (ASSUMPTIONS)

OECS REGIONAL PARTNERSHIP STRATEGY FY ISSUES FOR DISCUSSION

 Are we focusing on the right strategic priorities? Are there critical areas missing? Can this program have a transformational impact?  Which area would the OECS need additional assistance? Which areas suffers from knowledge gaps?  Are there lessons to incorporate on the way we work? Are there things we can do better? 24 ISSUES FOR DISCUSSION