Russia: World Bank Helps to Improve Customs

WASHINGTON, April 22, 2003 - The World Bank today approved a US$140 million loan to the Russian Federation for the Customs Development Project, which will help Russia make international commerce more transparent, as well as promote private sector development.  The project will help to further integrate the country into the world trading community and secure the benefits from foreign and domestic investments in the economy. In addition it will increase taxpayer compliance and uniform application with the Customs Code.  It will also help to improve the integrity and professional skills of customs officers, as well as substantially reduce the opportunities for rent seeking by them and by foreign trade participants.

 “The project will significantly support the State Customs Committee's implementation of the three-year Targeted Program for the development of customs, and is intended to help increase trust in customs administration in Russia,” says Carlos D.C. Ferreira, Task Manager for the project.

The main objective of the project is to support reform and modernization of the Russian customs administration: aligning the Customs institutions, their organization, and procedures to international practice and ensuring their expected role in a modern market economy.  The project will promote internationally acceptable conditions for international trade by:

Adopting Customs standards that facilitate trade by implementing procedures to expedite the processing of low-risk transactions while improving the detection and prevention of contraband;

• Facilitating international commerce and accession to the World Trade Organization (WTO);
• Promoting the participation of the trade community and other key stakeholders in the strategic planning to foster a stronger partnership between State Customs Committee and participants of foreign economic activities;
• Transforming the mindset of customs officers towards the trade activity from one of protection of country borders to one of facilitating legitimate international commerce;
• Modernizing the Information Technology infrastructure of the State Customs Committee, and instituting e-Government facilities for information and interaction with the trade community, including electronic filing of declarations;
• Increasing the effectiveness of the Customs service and reducing the compliance burden imposed on traders; and
• Increasing taxpayer compliance with and uniformity of application of the Customs Code.

The project has four main components:

• Institutional Development: The project will support management and organizational reforms to help the State Customs Committee to match the new requirements for a risk-based operation, and to strengthen legal and regulatory framework.   It includes the adoption of an efficient conflict resolution strategy.  This component will also improve human resource management and training, thus enhancing the integrity/ethics framework, as well as enhancing the human resource policy and regulatory frameworks.
• Operational Development.   The project will help to adopt a risk-based multichannel approach to the operations of Customs in order to expedite the processing, control, and clearance of cargo for low-risk transactions; to improve Customs ability to detect irregularities and contraband; to facilitate international trade; and to pilot and deploy innovative approaches in priority Customs posts across Russia.
• ICT and Infrastructure Development.   The project will improve the quality of ICT   management and systems.  It will overhaul the Informatics infrastructure of Customs through the provision of systems, computers, telecommunications, and other technological infrastructure needed to create an efficient and effective environment for Customs management and operations.
• Project Management.   This component will support the operation of the project implementation unit, monitoring and evaluation, training for staff of the implementation unit and project audits, as well as interaction with local and international entities involved in project execution.

The project has a total cost of $187.2 million, of which $140 million will be financed by IBRD, and $47.2 million will be counterpart financing provided by the Russian Federation.      

The terms of the loan include a 5-year grace period and 17 years’ maturity.

The Russian Federation joined the World Bank in 1992.   Since then, commitments to the country total to more than US$13 billion for 56 operations.

For more information on the World Bank's work in Russia, please visit
http://www.worldbank.org.ru

To view project documents, visit
http://www4.worldbank.org/sprojects/Project.asp?pid=P072960