Regions and Countries

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p. 5 of 20 BACK | NEXT I. Country Performance Assessment A. Economic Performance Assessment B. Poverty Assessment C. Assessment of Socio-Environmental Performance D. Governance E. Implementation Assessment II. Country Operational Strategy III. Sector Strategies IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Kyrgyz Republic : I. Country Performance Assessment

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D. Governance

14. Since independence the Kyrgyz Republic has achieved considerable progress in improving governance as reflected in the substantial reforms in public sector management and in increasing degrees of accountability, participation, predictability, and transparency. Government accountability is being improved in several ways, including better public financial management and civil service reform. Improving the management of public finance aimed at restoring fiscal balance constitutes one of the main elements of the Government's macroeconomic stabilization program. Besides instituting fundamental tax reforms, the Government has been making strenuous efforts to further rationalize expenditures, to strengthen the tax collection and administration, and to improve its budget process. The Government is also actively downsizing the civil service. Major ministries were reorganized in late 1996 and agencies privatized or contracted out. Civil service reforms are underway to strengthen local government administration, streamline central government policymaking, and progressively withdraw from directing and allocating the factors of economic production. In 1999 the Government instituted a stringent drive for the collection of overdue loans from the budget or guaranteed by the Government.

15. Areas in which the Government has taken steps to improve participation include: (i) strengthening the responsibilities and capabilities of local governments to better target the decentralization of development reforms; and (ii) laying special emphasis on decentralized social services delivery and the management of communal/urban utilities divested from state enterprises. As it privatizes state farms and state industrial enterprises, the Government is further encouraging and expanding the role for the private sector and non-government organizations. In the areas of predictability and transparency the Government recognizes that with limited state resources the private sector has to be the main engine of growth. With this in mind the Government has since independence embarked on a far reaching program of legal reform to create an environment supportive of the private sector. It has sought and obtained the assistance of various donor sources in improving the legal framework in a number of key areas and sectors such as agriculture, infrastructure, education, health, pensions and other social services, finance and the promotion of the private sector in general. While these have given a powerful stimulus to the development of the private sector in the country which now accounts by far for the majority of production, there is still much to be done. The Government needs to pay close attention to deepening the measures already undertaken to improve corporate governance and enterprise reform. Greater attention also needs to be paid to improving information flows between the Government and the private sector, which is so essential for efficiency in market-based economies. There is a pressing need to reduce corruption, to improve law enforcement systems, and to reduce excessive state interventions in licensing and inspections. The Government is aware of the need to take strong measures in these areas and is committed to the task, and it has finalized a program that addresses some of these concerns. The Government has started a drive against corruption, and criminal proceedings have been initiated against 213 state officials accused of committing economic crimes in 1999.

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