Countries and Regions

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Country Strategy and Program Update 2005-2007: Kazakhstan

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IV. Country Performance and Assistance Levels

A. Lending Level Proposed

25. The Government is willing to continue borrowing with a view to benefiting from knowledge transfer. Government borrowing is thus likely to remain highly selective. Strong development impact and/or innovative approach, in particular, the kind that will help mobilize central Government funds for local investment needs, will be key to realizing the willingness to borrow. The lending level will remain low, and will likely decrease over the medium term, if the current Government plan of reducing the budget deficit progressively to 0.5% in 2007 stays on course. The average loan size of $50 million, as envisioned in the CSP, will remain the target. Given these uncertainties, target lending level of $50 million a year and approval of one loan per year on average are considered reasonable for planning purposes.

B. Nonlending Program

26. The nonlending program will continue to be the main instrument for ADB operations in Kazakhstan. ADB will maintain the current annual level of $1.9 million for the TA program. The Government will increase TA cost-sharing to maximize the development impact. TA cost sharing will (i) remain as 30% Government and 70% ADB for ADB processing of TAs in 2004–2005, (ii) be 40% Government and 60% ADB in 2006, and (iii) be 50% each for the Government and ADB in 2007. The TA program for 2005–2007 includes 13 TAs totaling $4.8 million (Appendix 1, Table A1.11). They include project preparatory and advisory TAs, as well as economic, thematic, and sector work.

C. Summary of Changes to Lending and Nonlending Program

27. Changes from the CSP are mainly adjustments of schedule to meet developments since the CSP was finalized.¹¹ Nonlending programs have been adjusted to the revised lending programs. Proposed loans for Regional Rural Development, Second Rural Area Water Supply and Sanitation, and Second Water Resources Management and Land Improvement projects, and associated TAs, are among such cases. Newly added projects include (i) Storm-Water Management (loan), for 2006, with project preparatory TA in 2005; (ii) financial sector governance TAs (three: one each over 2004–2006); and (iii) railroad capacity strengthening advisory TA, planned for 2005. In view of the pending Government decisions on financing plans, the proposed Aktau-Atyrau Road Rehabilitation and Borovoe-Petropavlovsk Road Rehabilitation projects (both are loans) are on standby for 2004 and 2005, respectively. Details of the lending and nonlending programs for 2005–2007 are in Appendix 1, Tables A1.10 and A1.11, respectively, while those for 2004 are in Appendix 4, Tables A4.1 and A4.2, respectively. The concept papers for 2005 lending and nonlending products are in Appendixes 2 and 3, respectively.

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