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Georgia making clear progress on its reform agenda

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In 2018, Georgia confirmed its strong commitment to political association to and economic integration with the EU, as highlighted by its government’s high-level meeting with European Commissioners in November, and substantial progress in delivering on its Association Agreement commitments.

Today, the 3rd Association Implementation Report on Georgia was released. This report sets out the state-of-play of Georgia’s implementation of its commitments under the EU-Georgia Association Agreement over the past year, ahead of the EU-Georgia Association Council, to be held in Brussels on 5 March 2019. The report highlights that continued legislative reform and steady implementation of rules and standards in line with the Association Agreement are crucial to allow Georgian citizens to fully reap the benefits of this close relationship between the EU and Georgia.

“The European Union and Georgia have excellent relations that we further intensified over the past year. Since March 2017, more than 300,000 Georgian citizens have been able to travel visa-free to the Schengen area for short stays, and since 2009, more than 63,000 businesses and farmers have received loans. The European Union will continue to accompany and support the Georgian authorities in implementing important reforms under the Association Agenda, which provides priorities for our joint work until 2020 – reforms that are bringing more and more benefits to Georgian and EU’s citizens alike”, said the High Representative/Vice-President, Federica Mogherini.

The implementation of the Association Agreement continues to bring positive results to Georgian and EU citizens. The implementation of the agreed actions of our High-level Meeting back in November will provide further momentum to our relationship. The EU is Georgia’s largest trade partner and we will cooperate to further develop Georgia’s export potential. In September 2018, the first European School outside the EU was launched in Tbilisi, and Georgia is stepping up its participation in programmes such as Erasmus+, encouraging student and youth exchanges”, said the Commissioner for European Neighbourhood Policy and Enlargement Negotiations, Johannes Hahn

This 3rd Report takes stock of Georgia’s implementation of the Association Agreement and in particular the Association Agenda since the last EU-Georgia Association Council of 5 February 2018. Overall, Association Agreement commitments, including as regards its Deep and Comprehensive Free Trade Area, have been implemented in line with agreed timelines. Over the past year, Georgia has made progress in strengthening its democratic institutions, in the framework of the constitutional reform process and public administration reform. The Presidential elections were held in an overall competitive environment but also raised some shortcomings. Modest progress was made in reforming the justice sector, but challenges remain to consolidate the results achieved and to make further progress in this area. In that regard, it is noteworthy that the 4th wave of legislative reform was initiated upon establishment of the Parliament-led platform for judiciary reforms. Going forward it is important for the Georgian government to continue fostering an open dialogue with all political actors and civil society. In the past reporting period, Georgian authorities also continued their efforts to tackle the issues regarding irregular migration.

The report underlines the benefits for Georgian citizens of the country’s economic integration with the EU though the implementation of its Deep and Comprehensive Free Trade Area commitments. With the progressive approximation of technical regulations and standards with those of the EU, Georgia has been increasingly able to strengthen its participation in international value chains. Regarding external trade, the EU continued to be the most important partner of Georgia, with a 27% share in the country’s overall trade in 2017. Preliminary data for 2018 suggests a continuation of this trend. The opening of the EU market to new animal-origin products from Georgia was an important milestone in this regard.

Last year marked the 10 year anniversary of the conflict between Russia and Georgia. The European Union continues to firmly support Georgia’s sovereignty and territorial integrity within its internationally recognised borders. The European Union’s commitment to peaceful conflict-resolution remains as strong as ever, through the work of the EU Monitoring Mission in Georgia and the EU Special Representative for the South Caucasus and the crisis in Georgia. In June 2018, the Georgian Parliament adopted a legislative package “A Step for a Better Future” to promote peace and opportunities for the people in Abkhazia and South Ossetia. Georgia also continues to be an important partner of the EU in the area of security, the fight against terrorism and transnational organised crime. Georgia also participates in the EU-led missions and operations, which contribute to increasing the resilience of countries worldwide and strengthening the EU’s role as a global security provider.

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Côte d’Ivoire: The Economy is Still Dynamic, but not Inclusive

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For the seventh consecutive year, economic growth in Côte d’Ivoire was projected to exceed 7% and reach 7.4% in 2018, despite the country’s vulnerability to external shocks and political uncertainty in the run up to the presidential elections in 2020. This was the verdict of the Eighth Economic Update for Côte d’Ivoire published today by the World Bank. The country, therefore, continues to have one of the most dynamic economies in the world, boasting the highest growth rates in the West African Economic and Monetary Union (WAEMU), despite a slight drop of 0.3% in relation to its performance in 2017 (7.7%).

Entitled “Que la route soit bonne, améliorer la mobilité urbaine à Abidjan,” the report indicates that this decline results from the fact that the public and external sectors have been less supportive of growth and the contribution of the private sector has been more uneven.

The short- and medium-term outlook nonetheless remains favorable. The growth rate over the next few years is expected to be roughly 7%, provided that the global environment remains fairly stable and the Government continues its efforts to promote the private sector and foster more inclusive growth.

The report also devotes an entire section to the challenges of urban mobility in this country where the rate of urbanization soared from 17.7% in 1960 to over 50% in 2018. Today, 80% of economic activity in the country is concentrated in Abidjan, the economic capital of Côte d’Ivoire and home to over 5 million people.

Urbanization, once it is well planned and managed, can help the country’s businesses become more productive and improve households’ living conditions by offering them jobs, schools for their children, and better health care than in rural areas,” explains Jacques Morisset, World Bank Program Leader in Côte d’Ivoire and lead author of the report.

Given that by 2050, nearly two out of three Ivorians will be living in an urban center, over 10 million of whom will settle in Abidjan, urban mobility challenges will intensify if no action is taken, and solutions will become increasingly difficult to implement. The report analyzes the daily mobility constraints faced by commuters and proposes several avenues for improving urban transport and ensuring the success of the Greater Abidjan project adopted in 2016.

There are approximately 10 million trips taken every day in Abidjan and each household spends close to CFAF 1075 (about US$1.80) and loses over three hours a day in commuting time,” explains Anne Cecile Souhaid, Senior Transport Specialist and co-author of the report. “That is equivalent to nearly 5% of the national GDP in 2017. However, a 20% improvement in urban mobility in Abidjan could generate gains of almost 1% of annual GDP growth.”

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Belarus Rail Sector Reforms Would Boost Competitiveness, Contribution to Economy

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Organizational restructuring, tariff  reforms, and strategic use of digital technologies would boost the competitiveness of the Belarusian railway sector, improving rail passenger experience and contributing more to the economy, says a newly published World Bank Railway and Logistics sector study for Belarus.

Over the last decade, the railway sector’s share of transit traffic in Belarus has fallen from 35% to 29%, a decline caused largely by increased competition from road transport, combined with challenges in the railway sector’s organizational structure and tariff policies.

“Belarusian Railways isn’t a company in the conventional sense – it’s a Public Association that supervises 29 different state-owned legal entities, each with its own balance sheet, statement of accounts and assets, and decision-making processes,” says Alex Kremer, World Bank Country Manager for Belarus. “Consolidating all these entities into a single state-owned enterprise would help improve the sector’s overall management and competitiveness.”

The study recommends a new strategy for Belarusian Railways that includes revaluation of assets, changes to accounting practices, and development of commercial strategies and business plans both for freight and passenger units. The study also calls for the strategic use of digital technologies to improve customer service, increase operational efficiency, and support infrastructure management.

In Belarus, most rail prices are regulated by the state. While international passenger tariffs have increased, regional and local passenger service tariffs have declined considerably, compared with inflation and earnings. As such, Belarusian Railways has had to cross-subsidize passenger services by charging higher tariffs on its freight business, which adversely impacts its competitiveness against foreign carriers and road freight.

“Prices for passenger transport by rail are so low that a 30km rail journey costs less than a metro ride in Minsk,” says Winnie Wang, World Bank Senior Transport Specialist. “An obligation to cross-subsidizing loss-making passenger services which should be a public service has prevented Belarusian Railways from making critical investments in its freight network, and even threatens the railway’s financial viability. To enhance competitiveness, therefore, Belarusian Railways should review its tariffs and set its own prices.”

As an important first step in the long-term process of transforming the railway sector, the study suggests that Belarusian Railways undertakes analyses of freight and passenger markets and forecasts, investment needs and requirements, and organizational structure.

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Spending on health increase faster than rest of global economy

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Spending on health is outpacing the rest of the global economy, particularly in low- and middle-income countries, the World Health Organization (WHO) said on Wednesday.

According to the UN health agency, “countries are spending more on health, but people are still paying too much out of their own pockets”.

The agency’s new report on global health expenditure launched on Wednesday reveals that “spending on health is outpacing the rest of the global economy, accounting for 10 per cent of global gross domestic product (GDP).

The trend is particularly noticeable in low- and middle-income countries where health spending is growing on average six per cent annually compared with four per cent in high-income countries.

Health spending is made up of government expenditure, out-of-pocket payments and other sources, such as voluntary health insurance and employer-provided health programmes.

While reliance on out-of-pocket expenses is slowly declining around the world, the report notes that in low- and middle-income countries, domestic public funding for health is increasing and external funding in middle-income countries, declining.

Highlighting the importance of increasing domestic spending for achieving universal health coverage and the health-related Sustainable Development Goals (SDGs), Dr. Tedros Adhanom Ghebreyesus, WHO’s Director-General, said that this should be seen as “an investment in poverty reduction, jobs, productivity, inclusive economic growth, and healthier, safer, fairer societies.”

Worldwide, governments provide an average of 51 per cent of a country’s health spending, while more than 35 per cent of health spending per country comes from out-of-pocket expenses. One consequence of this is 100 million people pushed into extreme poverty each year, the report stresses.

When government spending on health increases, people are less likely to fall into poverty seeking health services. But government spending only reduces inequities in access when allocations are carefully planned to ensure that the entire population can obtain primary health care, the UN agency said.

“All WHO’s 194 Member States recognized the importance of primary health care in their adoption of the Declaration of Astana last October,” said Agnés Soucat, WHO’s Director for Health Systems, Governance and Financing. “Now they need to act on that declaration and prioritize spending on quality healthcare in the community,” she added.

The report also examines the role of external funding. As domestic spending increases, the proportion of funding provided by external aid has dropped to less than one per cent of global health expenditure. Almost half of these external funds are devoted to three diseases – HIV/AIDS, tuberculosis (TB) and malaria.

The report also points to ways that policy makers, health professionals and citizens alike can continue to strengthen health systems.

“Health is a human right and all countries need to prioritize efficient, cost-effective primary health care as the path to achieving universal health coverage and the Sustainable Development Goals,” Dr. Soucat concluded.

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