World Bank Supports Critical Reforms in the Kyrgyz Republic

July 25, 2013

WASHINGTON, July 25, 2013 – The World Bank Board of Executive Directors today approved a US$25 million First Development Policy Operation (DPO1) for the Kyrgyz Republic.  This is the first in a programmatic series of two operations designed to support implementation of key areas of the Government’s reform program over the period of 2012-2014. The operation is a mix of a highly concessional credit of US$ 13.75 million and a grant of US$ 11.25 million.

The proposed DPO program has an overarching focus on good governance and will provide budgetary support to the Kyrgyz Government in implementing reforms and policy priorities highlighted in the 2013-2017 National Sustainable Development Strategy and the Medium-Term Development Program of the Kyrgyz Republic for 2012-14. 

“The Kyrgyz Republic has taken significant steps with its program of economic recovery following the 2010 crisis, and we commend the Government’s commitment and determination to set the country on the path of strong and sustainable growth,” said Alexander Kremer, the World Bank’s Country Manager in the Kyrgyz Republic.

“By providing the DPO financing, the World Bank supports the Government’s efforts in maintaining macro-economic stability, promoting crucial governance and anti-corruption reforms, and enhancing structural reforms that improve the investment climate and stimulate growth,” added Afsaneh Sedghi, Task Team Leader of the DPO1 program.

The two broad policy themes supported by the DPO series are: 

1. Strengthening governance and fighting corruption; and

2. Sharpening competitiveness and enhancing the attractiveness for private investment.

The policy areas under Theme 1 support the government’s anti-corruption program and development of a judiciary reform action plan, identifying key priorities for implementation. Theme 1 also supports reforms in public finance management – including procurement reform – aimed at increased budget transparency, planning and monitoring, and enhanced accountability over the use of public resources.

Theme 2 focuses on competitiveness and improving the environment for private investment through a) removing barriers that hinder business registration and operation, b) reforming the energy sector, which is critical for economic growth, and c) the welfare of the population, and ensuring financial sector stability to address vulnerabilities and support private sector growth.

The proposed DPO program builds on the government reform agenda that was supported by the Economic Recovery Support Operation (ERSO), a single tranche development policy operation approved in 2011, by supporting reforms that remain critical for macroeconomic management and good governance. The ERSO provided budget financing to the Kyrgyz Republic immediately after the 2010 conflict, and supported critical reforms in the areas of public sector governance, transparency, and accountability. 

World Bank’s overall mission in the Kyrgyz Republic is to reduce poverty, and to promote economic growth and shared prosperity. Forty-five 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 with 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$1 billion, in the form of grants and highly concessional credits.

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