Regions and Countries

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p. 4 of 4 BACK | NEXT I. Development Situation II. Implementation of the Country Strategy and Program III. Portfolio Management Issues IV. Country Performance and Lending Levels

Country Strategy and Program Update 2002-2004: Kyrgyz Republic

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IV. Country Performance and Lending Levels

A. Proposed Lending Levels

23. From 2002, the level of ADF allocation to the Kyrgyz Republic will be linked to the country’s performance in line with ADB’s performance-based allocation (PBA) policy. The actual lending level will be determined each year, keeping in mind the Government’s capacity to borrow, and using as a yardstick the triggers identified under the PBA exercise. These triggers will focus on macroeconomic performance, structural reforms, social development, good governance, and portfolio performance (Appendix 4, page 7). As the new CSP will be prepared during 2002, the lending scenarios with triggers will be further refined for 2003-2005.

24. The base case for 2002 assumes steady progress on key reform issues, but most crucially the formulation of a satisfactory external debt strategy. Under a base case scenario, maximum ADF assistance would be about $60 million.

25. A decisive slowdown in reforms and a deteriorating macroeconomic performance are identified in the low case scenario for 2002. Moreover, as the NPRS is the key document that will guide funding agency commitment to the country in the future, NPRS delay as well as delay in the signing of the partnership agreement will have a serious impact on ADB activities. Lending under the low case scenario would be $30 million or less.

26. No high case has been identified, given that developments beyond 2001 are still very uncertain. The possibility of the high-case scenario is subject to the scrutiny of lending scenarios in the context of the new CSP.

B. Loan Program

27. The loan program for 2002-2004 as agreed with the Government is shown in Appendix 4. The project selection briefs are in Appendix 6. For the reasons stated in para.9, this program will have to be reviewed and adjusted next year. However, the projects in the 2002-2004 pipeline, with their strong element of poverty reduction and support for other strategic areas that are emerging in the NPRS and CDF strategies, have considerable priority and Government support.

C. Technical Assistance and Economic and Sector Work Program

28. The proposed TA program for 2002-2004 in Appendix 4 focuses on assisting the Government in developing and implementing policy and institutional reforms in aid monitoring and coordination; in agriculture, education, and power sectors; and for poverty reduction. The TA program covers projects totaling $8.25 million. The TA concept papers are in Appendix 6. Economic and sector work to be undertaken in 2001 will involve (i) preparing a country economic review; (ii) assisting in finalizing the NPRS; and (iii) initiating work on the key activities of a poverty partnership agreement and a new operational strategy for the Kyrgyz Republic (Appendix 5).

D. Summary of Changes⁸

29. The only major change from the loan program shown in the country assistance plan (2001-2003) is that based on processing schedules. At the request of the Government, the second-phase program support for Corporate Governance and Enterprise Reform, which was previously in the 2002 lending program; and the Community-Based Early Childhood Development Project, which was previously in the 2001 lending program, have traded places.

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