Environment and institution building operations in high priority areas. Continued emphasis on project implementation , with an agreed target of 80 percent of projects to be rated satisfactory by mid-1997. This strategy involves substantial risks, as well as large potential rewards . Provided that the Government moves forward as expected with an accelerated structural reform program, the Bank Group cannot afford to miss this opportunity to support Russia during a critical phase in its transition process. Economic performance remains fragile, and inflationary expectations continue to be high.
Experience shows that the Russia portfolio is subject to a high degree of inherent project risk .
Limited Government institutional capacity to manage an expansion of the Bank's program. The Bank Group can partially mitigate these risks by monitoring the reform program closely, using specific triggers to link operations to progress on reforms, and strengthening non-lending services and knowledge dissemination activities in support of the reform process. Implementing this strategy will require a substantial up-front investment of administrative resources by the Bank Group to strengthen our institutional capacity to support an expanded program in Russia . In line with the recent Strategic Compact, Bank management has decided to allocate additional resources to strengthen the Russia program. Additional administrative resources will be used to strengthen the lending pipeline and the economic and sector work program, continue the strong emphasis on portfolio implementation, and finance the costs of shifting country management functions to Moscow.