The World Bank and the Kyrgyz Republic: A strengthened partnership: $200 Million Committed Since July 2010

May 11, 2012

In the difficult year of 2010, the World Bank led the Joint Economic Assessment to identify immediate emergency needs, initiated and organized the July 2010 Donors Conference, and tripled the value of project approvals from  June 2010 to June 2011 to adequately respond to the country’s urgent recovery needs.

The rapid response of the World Bank to the events of 2010 was acknowledged and praised by the Kyrgyz Government. Since the Donor Conference the Bank has approved $200 million in new projects, of which around $100 million in grants.

The Bank’s Interim Strategy Note (ISN) was approved in 2011 and covers the period from August 2011 to June 2013.  The need for an interim strategy approach was underscored by the fragile political, social and economic situation in the country in the aftermath of 2010 events.  The ISN focuses on the country’s recovery and stabilization needs, while paving the way for long-term development.  The World Bank will begin discussing the next strategy with government this year.

The Bank is now playing a major role in supporting the new government’s active governance and anti-corruption reform program, either with grants or from the World Bank’s own operating budget:

  • Development planning and public finance management:  macro-economic forecasting, preparation of the Medium Term Development Program, the annual budget preparation process, establishment of a single Treasury account; treasury computerization; multi-year budgeting; the chart of accounts, civil service pay and grading; internal auditing,  procurement.
  • The financial sector:  accounting standards, anti-money laundering, bank resolution, the privatization of Zalkar Bank, bank supervision, the framework for troubled banks.
  • Investment climate:  the commercial legal system; the sub-soil law, the subsoil regulation, the award of the Togolok gold concession for bidding, and road asset management.
  • Private sector development:  preparation of a medium term PSD strategy including a short term action plan, SOEs corporate governance, competitive industries development, technologies.

All these advisory services were provided in response to specific requests from government entities or the National Bank.

Below is the brief summary of the World Bank-supported projects in the Kyrgyz Republic (July 2010 - Dec.2012):

Emergency Recovery Project, US$70 mln. The project supports implementation of the government's emergency program for social reconciliation, recovery and reconstruction.

  • US$ 28 million was disbursed to support the state budget; US$ 6 million will support the Ministry of Education’s request for procurement of books, computers, and furniture for schools.
  • Essential equipment, goods, and materials have been provided to the power distribution companies to urgently restore the power to the damaged districts.

Two Additional Financings (AF) for the National Road Rehabilitation Project (Osh-Batken-Isfana), US$26 mln. The first AF in the amount of $10 mln. to the on-going NRRP finances road repair within Osh city and rehabilitation of roads within and around the cities of Osh and Jalal-Abad. The second AF in the amount of $16 mln. will scale up project activities through the rehabilitation of an additional section of the Osh-Batken-Isfana road corridor (including 18 km long Nookat Pass) and the provision of technical assistance to improve road safety planning and road asset management in the country. Currently, the Government is negotiating with the Bank a follow-up project to complete this road construction.

AF for the Second On-Farm Irrigation Project, US$15 mln.  34000 farmers country-wide within the respective 17 Water Users Associations will benefit with the rehabilitation and management of their irrigation systems and contribute to higher agricultural productivity.

AF for the Disaster Hazard Mitigation Project, US$1 mln. The project has reduced the impact of uranium tailings and waste dumps in Mailuu-Suu. Additional financing was secured to address newly discovered quantities of radioactive waste, repair flood damage to project infrastructure and implement a monitoring program for radionuclides in Mailuu Suu’s drinking water supply.

Economic Recovery Support Operation, US$30 mln., supports implementation of the government policy reforms aimed at stabilizing the economy, strengthening governance, and safeguarding social protection.

¤ The authorities have taken measures to re-assert control over capital spending and have tightened standards and enhanced transparency on the management of the budget and public assets. The off-budget Development Fund was abolished.
¤ Critical steps have been taken towards establishing greater transparency over energy sector accounts and operational performance; efforts to raise transparency standards in mining have resulted in the country's achieving full compliance with the norms of the Extractive Industries Transparency Initiative (EITI).

 ¤ Measures taken to ensure financial stability allowed the National Bank to provide timely response to manage the financial stress within a major bank and prevent contagion.

 ¤ The authorities have raised the level of general social benefits and reformed the eligibility criteria to improve targeting.

Second AF for the Health and Social Protection Project, US$24 mln. The Project supports implementation of the government’s Manas Taalimi (MT) and Den Sooluk Health Reform Programs and strengthening the administrative systems of the Ministry of Social Development to enable social protection to become more effective at targeting assistance and subsidies.

AF for the Bishkek & Osh Urban Infrastructure Project, US$ 15.8 mln., helps to improve the living conditions in semi-informal settlements (novostroiki) and other communities in Bishkek and Osh. It will also help continue the municipal and social infrastructure investments to the country’s 23 small towns, and finance community-level investments.

  • In Bishkek the project supports the construction of the Bashkarasuu water production plant with about 6.5 km of transmission main (aqueduct) to connect the plant with the existing Bishkek Water Utility network and the Ak-Ordo novostroiki; in Batken - construction of new chlorination plant: construction of distribution networks in Kyzyl Chol and Chet Bulak districts; in Isfana - construction of a new well-field and networks in town center; in Naryn - rehabilitation of the “West” well-fiel, construction of supply main to Tosh Bulak novostroika; in Talas - replacement of sewer collector, installation of standby sewer pump.

Financial Sector Development Project, US$ 13 mln. will enhance financial sector stability and increase access to finance throughout the country, including remote rural areas. Those living in remote or rural areas will get improved access to financial services, through new points of sales in post offices, possibilities to better leverage their assets to obtain loans, greater access to safe deposit facilities, and expanded payment and remittance services.  Given the explicit targeting of women as good clients by many microfinance organizations and credit unions, it is expected that women will particularly benefit from this project.

The last three projects are pending ratification by the Parliament to become effective.