ADB

Asian Development Bank and Kyrgyz Republic

Partnerships

The Asian Development Bank (ADB) has partnered with the Government of the Kyrgyz Republic since 1994, and the Kyrgyz Republic was selected as one of the pilot countries during the February 2003 Rome Conference on Harmonization. Since then, key development partners have learned to better coordinate and harmonize procurement procedures, oversee financial management and monitoring, share project implementation units, and conduct joint country portfolio reviews. The joint country support strategy (JCSS) for the Kyrgyz Republic was one of the best examples of cooperation. The major development partners, including ADB, have started preparation of the next joint JCSS. Joint country portfolio reviews have been conducted since 2003.

ADB has played a lead role in promoting regional cooperation in Central Asia and its neighbors through the Central Asian Regional Economic Cooperation (CAREC) Program. Since its establishment in 1997, the program has provided a platform for participating member countries to discuss and resolve regional cooperation issues and gain wider perspective on the region. As a landlocked country, the Kyrgyz Republic needs to strengthen regional cooperation with neighboring countries to improve its investment climate and business environment, essential for creating productive employment and reducing poverty. The Kyrgyz Republic has been an active partner in CAREC.

ADB cooperates extensively with civil society organizations in the Kyrgyz Republic to strengthen the effectiveness, quality, and sustainability of the services it provides. ADB’s Kyrgyz Republic Resident Mission continues to establish stronger links with local civil society groups by organizing project site tours that demonstrate ADB’s development initiatives in the country.

Operational Challenges

The Kyrgyz Republic faces considerable challenges of recovery and reconciliation following the events of April and June 2010, when a popular uprising led to the dismissal of President Kurmanbek Bakiev.

Supporting sustainable economic growth remains the major challenge facing the country. The government is currently preparing its long-term development strategy, with a focus on inclusive growth and poverty reduction.

ADB, together with other development partners, is working closely with the government to improve the effectiveness of development assistance and implement wide-ranging reforms in various sectors of the national economy to support sustainable economic growth.

Future Directions

The selection of ADB interventions is guided by the government’s priorities, performance of the portfolio, the institutional framework, and the activities of other development partners in the country.

The strategic thrust of the program for 2011–2012 continues to help finance public infrastructure and institutional reforms, which will contribute to a favorable environment for sustainable growth with broader private sector participation. ADB will continue to support transport, municipal infrastructure and services, energy, and public sector management. ADB has begun preparatory work to support a new JCSS for the Kyrgyz Republic, which will cover 2013–2017.

Context

The Kyrgyz Republic joined ADB in 1994, and ADB’s resident mission in the Kyrgyz Republic was established in April 2000, enhancing ADB’s capacity for policy dialogue, programming, and project implementation. Since joining ADB, the Kyrgyz Republic has received $791.2 million in Asian Development Fund (ADF) loans, $256.1 million in ADF and Japan Fund for Poverty

Reduction Program (JFPR) grants, and $43.2 million in technical assistance.

ADB loans are helping the economy recover from political upheaval in 2010. Presidential elections were held in October 2011, and a new government formed in December. The events of 2010 led to a decline in investor confidence and the disruption to agriculture, trade, and other services. But the recovery has been faster than expected, with gross domestic product growth reaching 5.7% in 2011.

ADB-Supported Projects and Programs

Roads play a crucial role for the landlocked Kyrgyz Republic by ensuring cost-effective access to regional and domestic markets, generating employment, and providing services. ADB assistance focused on rehabilitation of the major transport corridors that are critical in regional trade, particularly with the People’s Republic of China (PRC) and the Russian Federation. By 2010, 765 kilometers (km) of regional corridors had been rehabilitated with support from ADB and an additional 310 km will have been rehabilitated by 2015. These investments have already reduced transport costs and times.

Provision of basic services such as safe drinking water, sanitation, and sewerage for rural and urban populations is important to improve living standards and public health. After the transport and information and communications technology (ICT) sectors, urban development occupies the second largest share of ADB’s assistance to the country, focusing on rural and urban water supply and sanitation in Chui, Issyk-Kul, Osh, Jalal-Abad, and Batken regions.

The Power Sector Improvement Project, approved last year, helps achieve the country’s strategic vision and brings more reliability, transparency, and accountability to the sector, while the follow-on project will improve regionally important generation facilities. Future ADB projects may support urgent needs for the rehabilitation of generation, transmission, and distribution facilities and the development of renewable-energy plants such as small hydro, wind, and solar.

The Investment Climate Improvement Program focuses on reforms that will reduce entry and exit barriers, lower compliance costs for businesses, and create a clear legal and regulatory framework for public–private partnerships in infrastructure. ADB has been a key investor in education, and secondary school enrollment has increased to 97% in 2009 from 95% in 2005. Total social sector assistance amounted to $72.4 million.

In education, ADB-supported reforms developed a new student-centered, skills-oriented curriculum for the school education (grades 1–11) and introduced the new curriculum in the primary school (grades 1–4). More than 500,000 textbooks were distributed and more than 17,000 teachers trained. Hardware and laboratory equipment were delivered to 90 rehabilitated schools and seven teacher training centers.

Cofinancing

Cofinancing operations enable ADB’s financing partners, government or their agencies, multilateral financing institutions, and commercial organizations, to participate in the financing of ADB projects. The additional funds are provided in the form of official loans and grants, and commercial cofinancing, such as B loans, risk transfer arrangements, parallel loans, and cofinancing for transactions under the ADB’s Trade Finance Program.

By the end of 2011, cumulative direct value-added official cofinancing for the Kyrgyz Republic amounted to $54.7 million for eight investment projects and $3.0 million for seven technical assistance projects.

A summary of projects with cofinancing from 1 January 2007 to 31 December 2011 is available www.adb.org/countries/kyrgyzrepublic/cofinancing

Procurement

From 1 January 1968 to 31 December 2011, contractors and suppliers were involved in 197,338 contracts for ADB loan projects worth $109.78 billion. During the same period, contractors and suppliers from the Kyrgyz Republic were involved in 897 contracts for ADB loan projects worth $184.65 million.

From 1 January 1968 to 31 December 2011, consultants were involved in 12,179 contracts for ADB loan projects worth $4.81 billion. During the same period, consultants from the Kyrgyz Republic were involved in 388 contracts for ADB loan projects worth $10.51 million.

From 1 January 1968 to 31 December 2011, consultants were involved in 24,484 contracts for ADB technical assistance projects worth $3.42 billion. During the same period, consultants from the Kyrgyz Republic were involved in 201 contracts for ADB technical assistance projects worth $3.69 million.

About the Kyrgyz Republic and ADB

ADB Membership

Joined 1994

About the Asian Development Bank

ADB is a multilateral development bank owned by 67 members, 48 from the region and 19 from other parts of the world. ADB’s main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance (TA). In 2011, lending volume was $12.61 billion (104 projects), with TA at $148 million (212 projects) and grant-financed projects at $614 million (23 projects). In addition, $7.7 billion was generated in direct value-added cofinancing in the form of official loans and grants and commercial cofinancing such as B loans, risk transfer arrangements, parallel loans, and cofinancing for transactions under ADB’s Trade Finance Program. From 1 January 2007 to 31 December 2011, ADB’s annual lending volume averaged $11.34 billion. In addition, TA and investment grants funded by ADB and special funds resources averaged $755.3 million and $175.0 million in TA over the same period. As of 31 December 2011, the cumulative totals excluding cofinancing were $179.7 billion in loans for 2,423 projects in 42 countries, $5.0 billion in 186 grants, and $3.3 billion in TA grants, including regional TA grants.