WASHINGTON, June 28, 2011 – The World Bank’s Board of Directors today approved Additional Financing in the amount of US$ 15 million for the Second On-farm Irrigation Project (OIP-2) in the Kyrgyz Republic. The funding in the amount of US$ 8.3 million is a highly concessional credit, while the US$ 6.7 million is a grant. The goal of the additional financing is to help 34,000 farmers country-wide with the rehabilitation and management of their irrigation systems and contribute to higher agricultural productivity.
More than half of rural households in Kyrgyzstan are dependant to some extent on crop and livestock sales, from which they earn more than a third of their income. Irrigation is a critical input for profitable crop production in Kyrgyzstan and therefore has a major influence on rural household incomes and on food security. Many irrigation systems need to be rehabilitated, especially the on-farm systems which are managed by water users themselves.
Since the mid-1990s the World Bank has been supporting the irrigation sector with financing for irrigation and drainage (I&D) rehabilitation and with support to the on-going reform to transfer the on-farm irrigation systems to Water Users Associations (WUAs). Building on the success of this portfolio, the Additional Financing will finance rehabilitation of I&D systems for around 18 WUAs on 34,800 hectares, directly benefitting 34,000 farmers. The project will finance the repair of irrigation canals and hydraulic structures and the cleaning of drains and reservoirs. In addition, the rehabilitation works will create temporary jobs for around 700 people.
“Agriculture is the heart of the Kyrgyz economy; creating jobs and boosting incomes, particularly in rural areas where most of the poor live, is critical in the current post-crisis environment,” says Alexander Kremer, Country Manager in the Kyrgyz Republic. “We saw how our irrigation rehabilitation projects raised farmers’ crop yields by at least 15 percent, so of course we were delighted to respond to the government’s request to help another 34,000 families.”
The project also finances training, equipment and capacity building for all 475 WUAs in Kyrgyzstan, which will benefit almost 285,000 water users. This support will increase the capacity of WUAs to sustainably manage the on-farm irrigation and drainage systems.
“This Project is important to sustain the progress made in the reform of the irrigation sector,” added David Meerbach, Task Team Leader for this Project. “Water Users Associations became an essential institution for water management in Kyrgyzstan, and the project will help the WUAs to improve the irrigation service delivery to their members.”
The additional financing for the OIP-2 will be implemented throughout four years by the State Committee for Water Resources and Land Improvement of the Kyrgyz Republic.
The World Bank’s overall mission in the Kyrgyz Republic is to promote economic growth, reduce poverty, and encourage a better quality of life. 45 percent of the World Bank’s assistance to the Kyrgyz Republic is in the form of grants. The other 55 percent is in highly concessional credits – 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 1 billion, in the form of grants and highly concessional credits.