Regions and Countries

	Table of Contents
p. 3 of 4 BACK | NEXT I. Current Development Trends and Issues II. Implementation of the Country Strategy and Program III. Portfolio Management Issues IV. Country Performance and Assistance Levels

Country Strategy and Program Update 2005-2006: Kyrgyz Republic

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III. Portfolio Management Issues

A. Portfolio Performance Implementation

20. The country has received 22 loans with a total net amount of $535.9 million equivalent (as of 31 March 2004). All these loans were provided on concessional terms from ADF. The ADB portfolio has 6 program loans totaling $182.8 million to support policy reforms to facilitate transition to a market economy, and 16 project loans totaling $353.1 million to support various physical investments. The transport and communications sectors accounted for the largest share (27.2%) of ADB assistance to the Kyrgyz Republic, followed by the financial sector (20.8%), and social infrastructure (16.6%). ADB’s annual lending levels averaged about $66 million during 1994-2001. ADB has also provided 52 TA grants amounting to about $31.5 million. Of these 14 are project preparatory TAs amounting to $9.69 million, and the remaining are advisory TAs for capacity building, policy, institutional strengthening, and training. Now 13 loans with a net approved loan amount of $288 million are ongoing. In 2003, the contract award ratio was 31.4% (ADB average 17.3%) and disbursement ratio, 15.7% (20.2%).

21. In 2003, ADB and the World Bank conducted the first joint review of portfolios with the Government to formulate and agree upon remedial measures to address common problems: (i) scarcity of counterpart resources and shortfalls in PIP allocations, (ii) deficient project implementation and weak institutional capacities, (iii) lack of understanding of and experience with policies and procedures of external aid agencies, and (iv) weak aid coordination. The joint review developed a time-bound action plan. Quarterly reviews showed generally satisfactory progress in implementing these measures. Cases of noncompliance were largely due to poor understanding of implementing agencies of their role, and inadequate follow-up by the Ministry of Finance (MOF).

22. The overall performance of ADB’s Kyrgyz portfolio is satisfactory although one of the 13 ongoing projects is rated at risk due to project implementation delays caused by reasons beyond the Government’s control. However, an analysis of the factors that affect performance points to budget-related problems as a major area of concern. ADB’s quarterly reviews indicate that, although the gap between the requirements of ongoing PIP projects and the levels set by IMF has steadily narrowed, inadequate and late release of counterpart funds hampers project implementation and compliance with some important loan covenants. Prioritization of the PIP could improve the situation. Other areas where Kyrgyz portfolio performance needs attention are compliance with environmental and social covenants. These are being monitored carefully and regularly, and discussions are ongoing with the Government to improve compliance.

B. Monitoring and Evaluation

23. ADB monitors project implementation through regular project review missions. Annual country portfolio review missions are conducted with the assistance of the KYRM. An aid and project management information system is being developed under an ongoing ADB-financed TA for strengthening capacity for project management. This will improve MOF’s capacity to monitor and evaluate foreign-assisted projects and coordinate aid. The TA will also improve MOF’s financial planning capacity by providing timely information about the counterpart fund requirements of ongoing projects and recurrent cost requirements of the completed ones.

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