World Bank Continues Supporting Local Governance and Rural Development in the Kyrgyz Republic

March 27, 2015

WASHINGTON, March 27, 2015 – The World Bank’s Board of Executive Directors today approved financing in the amount of US$12 million equivalent for the Third Village Investment Project in the Kyrgyz Republic.  US$6.6 million is a highly concessional credit and US$ US$5.4 million is a grant.

The Third Village Investment Project (VIP-3) aims to build the capacity of local self-governments to work with their communities to plan and implement local development programs. In particular, the project will work with local community members, local administration staff and local council members to increase their capacity for participatory development through social mobilization, training and peer-to-peer learning activities. It will also support the design and implementation of sub- and micro-projects from local investment plans to improve access of rural citizens to quality community infrastructure services.

The project will be implemented over five years by the Community Development and Investment Agency (ARIS) in four northern regions (Naryn, Issykkul, Chui and Talas oblasts) and will directly benefit 266 communities with nearly 29,000 citizens. Targeted villages will develop local investment plans through a participatory process in which communities assess local needs and identify priorities for investments, taking into account needs of women and vulnerable groups such as youth and children.

Village investment projects for financing under VIP-3 will be selected through a competitive process. Local development plans will be judged against a set of criteria, and those ranked highest will have their priorities funded. A comprehensive selection process will be developed, with special attention paid to criteria that will help engage and strengthen weaker municipalities in the competition.

“The VIP-3 project will work with only rural communities, where the highest number of low-income people reside. The investments will provide important enduring benefits for poor communities, reflecting national development strategy and local priorities,” says Jean-Michel Happi, World Bank’s Country Manager for the Kyrgyz Republic.  “For example, rehabilitation of schools and health clinics will contribute to reducing high maternal mortality rates and improving education services for the rural poor. Other demand-driven investments will help expand the power supply and thus support productive activity.”

The VIP-3 project will build on the achievements of the World Bank-supported Village Investment Project (VIP-1, 2003-2008) and Second Village Investment Project (VIP-2, 2006-2014), both implemented by ARIS. These projects helped to establish village and local investment committees that mobilize communities and internal resources for planning and implementing investment activities.  The VIP-1 Project helped 1,661 villages to implement 4,344 micro projects. 475 ayil aymaks (local municipalities) participated in VIP-2 Project and about 2.3 million people benefited directly from the completion of about 6,000 micro projects.

The World Bank’s overall mission in the Kyrgyz Republic is to reduce poverty, promote economic growth and shared prosperity. 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 with no interest, and only a 0.75 percent service charge. Credits are repayable in 38 years, including a 6-year grace period, while grants require no repayment. The Bank’s financial assistance to the Kyrgyz Republic since 1992 amounts to over US$1 billion.


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