WASHINGTON, September 30, 2010 – The World Bank’s Board of Directors today approved US$ 70 million for the Emergency Recovery Project to the Kyrgyz Republic to finance urgent social reconciliation efforts and infrastructure reconstruction needs following the civil unrest and violence earlier this year. The funding will be nearly half as a grant and half as a highly concessional credit (with no interest and repayable over 40 years).
“This Project was prepared swiftly following the donor conference at the end of July that raised $1.1 billion for a three year recovery program,” said Afsaneh Sedghi, the leader of the World Bank team. “The Kyrgyz government is facing a daunting task of restoring social stability, reconstructing infrastructure, and mitigating the shock to the economy. The Project will forestall a large decline in public expenditures, especially social expenditures, at a time when the fiscal accounts are under severe stress.”
This Project is the initial step in a multi-year World Bank program of assistance to the country. By strengthening macroeconomic stability and the fiscal resilience of the government, it will help the country to meet high priorities in recovery and reconstruction spending. Resources from the Project will finance purchases (domestic or imports) of eligible essential goods and commodities, including fuels, as well as finance the repair and restoration of the electricity network so as to ensure adequate energy supplies throughout the country in the winter.
These activities reflect the high priorities of the government and complement assistance in other areas being provided by other donors.
The World Bank’s overall mission in the Kyrgyz Republic is to promote economic growth, reduce poverty, and encourage a better quality of life. The Kyrgyz Republic borrows from the World Bank on highly concessional terms – no interest, and only a 0.75 percent service charge. Credits are repayable in 40 years, including a 10-year grace period, while grants require no repayment. The financial assistance to the Kyrgyz Republic since 1992 amounts to over US$ 894 million, in the form of grants and highly concessional credits.