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World Bank Provides US$ 30 Million in Support of Governance and Social Protection Reforms in the Kyrgyz Republic

August 2, 2011

WASHINGTON, August 2, 2011 – The World Bank’s Board of Directors today approved a US$ 30 million equivalent amount for the Economic Recovery Support Operation (ERSO) for the Kyrgyz Republic. This operation is designed to support Government’s reforms for improving governance and strengthening accountability mechanisms, and for post-conflict recovery, transition to medium term growth and poverty reduction. The ERSO program includes a highly concessional IDA credit of US$ 16.5 million and an IDA grant of US$ 13.5 million.

More specifically, the ERSO will support the government budget and includes a program of policy reforms to improve public financial management, accountability and governance. In this regard, the new operation would put an emphasis on two main pillars: strengthening governance and transparency in the management of public assets and revenues, and safeguarding social protection and supporting the conflict affected population.

This Operation supports the key elements of the Government’s overall reform program that are essential for improving governance, sustaining the economic recovery and protecting the poor and vulnerable,” says Alexander Kremer, World Bank Country Manager in the Kyrgyz Republic. “It is critical for the country to protect pro-poor spending in the state budget, improve targeting of social safety net programs and at the same time increase their efficiency.

The package of reforms supported by the approved operation will aim, among others, at establishing transparent and rules-based processes in management of public assets and conduct of privatization, in management of electricity sector finances and monitoring sector performance, and in the National Bank’s supervision of the banking sector, and at addressing vulnerabilities in a timely manner.

The proposed ERSO program is the corner stone of the IDA Interim Strategy for the Kyrgyz Republic also approved by the Board of Directors today,” says Afsaneh Sedghi, World Bank Task Team Leader for this Project. “It supports a package of reforms needed to address the root causes of poor governance. The World Bank is committed to support the authorities’ efforts in all these important areas over the long term to continue the focus on post-crisis growth and on the strengthening of governance and safety net programs.”

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.

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