Regions and Countries

	Table of Contents
p. 17 of 19 BACK | NEXT I. Country Performance 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 - Uzbekistan

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VII. ADB’s Operational Program

A. The Proposed Program

89. The proposed lending program for 2001-2003 is in line with the operational thrust of the new COS, the Government's development and sector priorities, and absorptive capacity. The selectivity and focus of the ADB's operations in Uzbekistan will be maintained during 2001 - 2003. The difficulties of processing and implementing loan projects in previous years demonstrate that justification of the current lending indicative planning figure (IPF) relative to the country's absorptive capacity will continue to be realistically assessed. Resolving implementation issues in the existing sectors is a condition for expanding the new sectors. While some flexible approach for the three-year rolling plan could be taken rather than a rigid annual IPF approach, the current lending level could be maintained only if there is clear evidence of progress on the implementation of the current program and positive development in policy dialogue on sector reform processes. Therefore, special emphasis will be given to enhancing the policy reform agenda in the sectors indicated in the new COS to ensure that the development impact of ADB assistance is maximized through a contribution to the sustainability of the transition to a market economy. Before processing an investment project under the loan in any sector, comprehensive sector analysis, capacity building, policy dialogue and good implementation performance will be conditions. It is important for ADB to design pilot projects to test policy environment and use TAs effectively as an instrument for promoting reform measures and for capacity building. Its satisfactory outcome will be a prerequisite before proceeding a loan project.

90. In the proposed program for 2001 - 2003, there are five poverty intervention projects out of 10 projects. Five projects are currently classified as other development interventions projects. Poverty classification for the lending pipeline is preliminary, and will be further adjusted based upon discussions with the Government and stakeholders on the project design, target, and components. As per cross-cutting operational priorities, projects will well address human development, gender and development, good governance, private sector development, environment protection, and regional cooperation.

91. Using OCR funds for poverty reduction is an issue for the Government. Uzbekistan is a Group C Country under the Graduation Policy. The ADB's financing limit will be reduced to 40 percent in 2002 (currently 50 percent in 2000). The World Bank, whose overarching objective is also poverty reduction, has financed on average more than 60 percent of total costs for approved loans in Uzbekistan. The World Bank takes a project-by-project approach to determine the financing limit. Terms and conditions of other major donors (such as JBIC and KfW) are softer than those of ADB. In this context, ADB will pursue its innovative assistance modalities by exploring possibilities of softening terms and conditions of OCR lending for poverty intervention and core poverty intervention projects, grant cofinancing and other assistance modalities (such as strategic use of the Japan Fund for Poverty Reduction).

92. The TA program during 2001 - 2003 is geared towards the priority sectors and cross-cutting operational issues identified in the new COS. The assistance will continue to support capacity-building initiatives to strengthen the Government's ability to implement its development agenda in a more effective manner and strengthen sustainability of lending programs. During the next country programming cycle, further adjustment of the TA program will be discussed with the Government to include more poverty-focused activities and the regional cooperation initiative, and further reprioritize the TA program.

93. The proposed loan and technical assistance pipeline for 2001-2003 is summarized in Table 1. Details of the pipeline and its poverty classification, and cross cutting operational priority and orientation are provided in Appendixes 4 and 5. Project profiles for firm 2001 loans are shown in Appendix 6.

B. Strengthening ADB's Liaison Office Facilities

94. The new Resident Mission policy that was approved by the ADB's Board on 17 February 2000 is being implemented in Uzbekistan Resident Mission (URM). Among others, URM is expected to increase in size from one professional staff to two professional staff with the increase of national officers over the next years. It is a major step in ADB's continuing efforts to strengthen country focus and client orientation. URM will be at the center of ADB's efforts to increase the efficiency, effectiveness, and development impact of ADB operations in Uzbekistan. In addition to the functions that any resident mission should perform as ADB's principal representative in the field, including (i) government, civil society, and private sector relations; (ii) policy dialogue and support; (iii) country reporting; (iv) aid coordination; and (v) external relations and information dissemination, as a pilot testing, project administration would be delegated to URM. To achieve redefined objectives and functions of URM, sufficient qualified staff and infrastructure are expected to be provided.

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